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Auckland Council sets solid foundation for future growth


Media release
30 August 2012

Auckland Council sets solid foundation for future growth

Auckland Council Group has released its first full 12-month financial result to the NZX which shows a total comprehensive income surplus of $278 million, after other comprehensive income, including the revaluation of property, plant and equipment.

The results were for Auckland Council Group, which includes the seven council-controlled organisations (CCOs) that deliver some services and facilities on behalf of council. The Group’s balance sheet assets increased in value by $1.5 billion as it bought and built new assets such as libraries, roads and playgrounds, and also revalued existing assets. Its net cashflow from operating activities was $280 million in the 12 months ended June 30, 2012.

“It has been a year of consolidation and achievement for Auckland Council in a low growth environment. While there has been some tidying up of legacy council accounts, we have put in some excellent building blocks for success in the years ahead,” said Doug McKay, chief executive of Auckland Council, the largest local authority in Australasia. “The total value of council’s assets has gone up and the value of our land and buildings have improved.”

The 22-month-old organisation completed a number of major projects that will improve the quality of people’s lives and the liveability of Auckland, including:

• Approving the Auckland Plan, a world-class 30-year city plan involving ongoing dialogue with central government agencies, infrastructure network providers, other private sector organisations, and communities
• The $15.8 million refurbishment of the 98-year-old Tepid Baths
• Signing off council’s first Long-term Plan (LTP), a 10-year budget covering 2012-2022 which identifies $1.7 billion in savings and efficiencies
• Numerous awards including the Royal Institute of British Architects’ International Award for Architectural Excellence for the revamped Auckland Art Gallery and the 2012 New Zealand CFO Awards’ Financial Innovation Project of the Year plaudit for the 2010/11 Annual Plan team
• Auckland climbing four notches to ninth place in Monocle magazine's urban quality of life rankings, third according to Mercer’s survey and tenth according to the Economist Intelligence Unit
• Adopting the City Centre Masterplan, Waterfront Plan (prepared by Waterfront Auckland) and council’s Economic Development Strategy
• Successfully hosting the Rugby World Cup 2011 which resulted in more than $500 million in net additional expenditure in Auckland

Continued slow economic growth across the Auckland region reduced council revenue as subdued construction activity and fewer sub-divisions led to lower development contributions and the vesting of assets.

As part of developing its LTP, Auckland Council Group consolidated its accounting processes and practices, tidying up the legacy accounts, and reflecting the essential contribution that the CCOs make to Auckland Council’s operations.

“We introduced one consistent accounting practice across the council group, including for our CCOs,” said Mr McKay. “A number of budget items have been updated including the revision of growth assumptions for the region and also the timing of expenditure against income.”

Auckland Council Group’s statement of total comprehensive income shows that, before other comprehensive income, the group recorded a deficit after tax of $233 million. This deficit includes $167 million from the impact of falling interest rates on the value of borrowing held on the council's books.

Council is fixing interest rates in this low rate environment to reduce budget risk in the future. A further $83 million was booked for asset impairment, legacy costs and provisions including weathertightness.

Eighty per cent of the Auckland Council’s performance targets across a range of service areas achieved higher scores from 2010 to 2011.The final financial performance of the council will be included in its annual report to be tabled at its Accountability and Performance committee meeting in September.

Ends

© Scoop Media

 
 
 
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