Annual Report 2010/11

Achieving results for you

The Council organises its workoad into 14 activities: Solid Waste Management, Wastewater, Stormwater, Water, Roads, Community Development, Economic Growth, Regulatory Services, Parks, Emergency Management, Cultural Services (Puke Ariki and Govett-Brewster Art Gallery), Recreation and Events, Management of Investments and Funding and Civic and Democracy Services.

Each of these activities have produced achievements during the 2010/11 year and some of these are listed below.

Solid Waste and Refuse Collection

• 85% of the population is served by a kerbside collection service (exceeding the target level of 80%).
• 100% compliance with conditions of resource consents.
• Waste quantity minimisation targets met or exceeded.
• High level of residents satisfaction with waste/refuse services provided (exceeded peer group average).
• The percentage of households that actively participate in kerbside recycling was below target (67% compared to 93%) and measures to increase the number of participants are currently being consulted on.

Wastewater

• High level of residents satisfaction with wastewater services provided (exceeds peer group average).
• A number of target measures relating to maintaining spare capacity at the wastewater treatment plant to accommodate future growth and peak loads were not fully met. The planned upgrade to the treatment plant to be commenced this year will address those capacity constraints.

Stormwater

• High level of residents satisfaction with the overall provision of stormwater services (exceeds the peer group average.)
• All resource consent conditions fully complied with.
• High percentage of urban dwellings protected by stormwater and flood protection systems.
• Measures relating to stream erosion and response times for reactive maintenance not met due to heavy rain events during September/October 2010 and reduced contractor staffing resources due to the Christchurch earthquake.

Water

• High level of residents satisfaction with water services (exceeds peer group average).
• Surplus capacity at the water treatment plant (to encourage new industry and residential development) has been maintained.
• Urban and rural minimum flow rate targets achieved or very close to achievement.
• 92% of dwellings in the district have access to a serviced safe, reliable and affordable water supply.
• Unseasonally dry weather experienced during November and December 2010 and beginning of February 2011 resulted in exceeding the target maximum number of days with water restrictions in force.

Roads

• All of the performance targets for the year were met, including those relating to road safety, road maintenance and community satisfaction.
• In particular the number of reported crashes per 100 million kilometres driven continues to decrease and is well ahead of the target reduction.
• Community satisfaction with the quality and safety of the district’s footpaths and cycleways exceeded the targets.
• The year saw the very successful commencement of the implementation of programmes and infrastructure improvements associated with the Model Community for Walking and Cycling (Lets Go) project.Return to top

Parks

• High levels of community satisfaction, above target levels, with the quality of the district’s parks and reserves (97%), quality of the urban landscapes and streets (96%), access to the natural environment (98%), quality of sports parks and playgrounds (96%) and quality of public toilets (79%).
• Volunteers contributed almost 9,000 hours to parks activities and programmes (well over the target of 2,000 hours).
• Customer satisfaction levels with the quality of the Brooklands Zoo, while still high at 90%, was below the target 95% level reflecting the fact that several exhibits were missing throughout the year, due to the unfortunate passing of some animals.

Regulatory Services

• High customer and resident satisfaction levels (above target levels) with services provided in the areas of regulatory information provided (94%) and animal control (92%).
• 73% of impounded dogs were reunited with their owners or found new homes (target 65%).
• 95% of the food premises inspected required no remedial steps (target 75%).
• 98% of noise complaints were resolved at first contact (target 95%).
• All building consents processed within required timeframes.
• All resource consent applications processed within required timeframes with the exception of 11 subdivision applications (due to the extremely high number of rural subdivision applications in the first half of the year.

During the year, the Council continued to manage the district’s finances prudently on behalf of the people of
New Plymouth.

The following pages provide an overview of the Council’s and the Group’s financial performance for the year to 30 June 2011. The presentational currency of the Council and Group is in New Zealand dollars.

Accounting Policies

New Plymouth District Council (NPDC) is a territorial local authority governed by the Local Government Act 2002 and domiciled in New Zealand.

The primary objective of NPDC is to provide goods or services for the community or social benefit rather than making a financial return.

The financial statements cover all the activities of NPDC (“District” – including trading activities – New Plymouth Airport Joint Venture, four Forestry Joint Ventures) and “Consolidated” including subsidiaries Taranaki Investment Management Limited, Venture Taranaki Trust, Yarrow Stadium Trust and Tasman Farms Limited. Taranaki Investment Management Limited, Venture Taranaki Trust, Yarrow Stadium Trust and Tasman Farms Limited are Council-controlled trading organisations as defined in Part 1, Section 6 of the Local Government Act 2002.

NPDC is involved in five joint venture agreements which are Council-controlled trading organisations. The ownership and operation of the New Plymouth Airport is undertaken as a joint venture between the NZ Government (50%) and NPDC (50%). There are four joint venture forestry agreements – the Tarata Ngatimaru Pukehou Joint Venture (60%), Oakura Farms Limited Joint Venture (60%), Duthie Joint Venture (54.82) and the McKay Joint Venture (56.5%). Separate financial statements have been prepared for each of the joint ventures for the year ended 30 June 2011.

Overall results - at a glance

The net operating surplus is calculated using the formula:Return to top

• Total income - total expenses = net surplus.

The Council has recorded a net surplus before taxation and Perpetual Investment Fund investments of $7.3 million which is better than the budgeted surplus of $2.9 million by $4.4 million. There were a number of factors which contributed to the surplus with the most significant being the reduction in interest paid against budget by $3.0 million. This has resulted from a reduction in external borrowing against our plan. The reduction in borrowing is because of the timing of our capital expenditure programme which is behind schedule for a variety of reasons, including consent requirements, weather and resourcing to achieve the work programme.

Our average cost of borrowing at approximately 6.2% was also lower than the budget percentage of 6.5%, which helped the reduction in interest expense.

Other factors which have helped produce the surplus are as follows:

1. An increase of vested assets of $1.8 million over budget. Vested assets are those assets, transferred to the Council from a third party and are recognised as income. The majority of the $3.2 million relates to infrastructural assets, such as drainage and water.
2. An increase of consents revenue of $1.3 million due to a high level of rural subdivision.
3. A reduction in depreciation against budget of $1.6 million.

The above benefits were reduced by a loss on disposal of assets of $3.4 million, the most significant item being the decommissioning of infrastructural assets ($1.9 million). The majority of the recorded surplus will be used to reduce borrowings.

Key facts at a glance

The Council’s Operating Income and Expenses

Income

We received $128.8 million of income from a variety of sources. The following graph shows the sources of the Council’s income of $128.8 million during 2010/11.

While rates continue to be the main source of funding, the Council also receives income from a number of other sources including funding for capital expenditure as well as fees and user charges. The breakdown is as follows:Return to top

Expenditure - What we spent

The Council maintained strong control of its operating expenditure throughout the year. Operating expenditure of $121.5 million was in line with budget. There were variations in some activities which are explained in the Council activity pages.

The following graph shows where the money was spent.

Financial Position

The Council’s total net worth at the end of the financial year was $2,117 million, a $69 million improvement from 2009/10.

The Summary Statement of Financial Position shows what we own (our assets), what we owe (our liabilities) and our net worth (represented by net assets).Return to top

Non-Current Assets are lower than budget primarily due to a far lower revaluation of our assets compared to budget.

Borrowings are lower as a result of the timing of our capital expenditure programme.

Our Assets - What we own

Our major assets include:

• Property, Plant and Equipment (including roads, land, buildings, drainage, waste and water assets) - $1,941 million.
• Investment assets ($268 million), most significantly the Perpetual Investment Fund (PIF) $253 million.
• Other assets $33 million.

The increase in the Council assets is due firstly to the three yearly valuation which revalues our assets at optimised depreciated replacement cost (effectively current market value) and secondly the $30 million of new assets we built around our district (e.g. roads, parks, stormwater pipes etc).

Our Liabilities - What we owe

The major components of our liabilities include:

• Borrowings $104 million.
• Trade and other payables $16 million.
• Other liabilities $4.7 million.Return to top

The Council’s borrowings have decreased over the current year due to the timing of a number of projects across roading, water and waste and parks. Completion is outstanding for a variety of reasons including consent requirements, weather and resourcing to achieve the work programme.

The Council borrows to fund the purchase or construction of new long life assets (assets with a life greater than 10 years) that are approved through the Community Plan process. 

The Council has managed its debt well by meeting all of the core policy compliance requirements set out in the Council’s Investment and Liability Management Policy.

The Council has hedged itself against the unexpected increases in interest rates by ensuring that a large portion of the debit is at fixed interest rates. Currently 90% of the total debt is effectively at fixed rates.

The table below shows the amount of borrowing hedged against changes in interest rates by maturity.

The Council manages its liquidity risk by spreading the maturity of debt by ensuring we have unused facilities available to fund future spending and by ensuring the maturity of our borrowings is well spread. There are $30 million of unused facilities available at 30 June 2011 to cover future spending requirements and ensure the Council has adequate access to funds at all times.

The table below shows the maturity profile of our total facilities.Return to top

Cash Flows

The Summary Statement of Cash Flows shows how we generated and used cash during the year.

Our operating activities generate cash inflows and the primary source is from rates and user charges. The net cash inflows from these activities together with borrowings (financing activities) are used to purchase and develop assets around the district (investing activities).

• Waitara leaseholders individual claims
  As at 30 June 2011, 74 individual claims seeking damages and costs, resulting from the resolution of the Council on 30 March 2004 to offer the Council’s Waitara endowment land to the Crown, remained. However following the Court of Appeal decision of 23 August 2011, which found in favour of the Council, the claims are now at an end and no contingent liability remains.
  
• Emissions Trading Scheme (ETS)
  Under the ETS the Council would be liable to financial penalties (approximately $192,000) if it does not replant 8.53 hectares of pre-1990 forest it has harvested. Replanting is intended within the required timeframes.