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Financials to 31 June 2013

Here is the Report

Here are the essentials:

Total Revenue was $5.2m down on budget at $73.3m

Total Expenditure was $5.6m down on budget at $69.5m

Net Surplus was $.38m up on budget at $3.9m

No surprises here - most was predicted. One item that can cause substantial variation – the Derivatives Valuation, resulted in a Gain of some $1.7m – as pointed out in my earlier comments on the premature (26 June 2013) production of the CEO’s Pre Election Report, this can go either way - the valuation cannot be completed until after 30 June.

What is concerning is the revenue shortfalls on every major line including Activity, Contributions, Rates, Subsidies and Assets Vested and Introduced. The shortfall on these items amounted to some $6.55m. There must surely be a better way to undertake the budgeting process in order to arrive at more accurate estimates. The Development Contribution shortfall at $1.89m continues a major problem – it may be better if they were start with zero-based budgeting on this item until staff can get a better handle on development activity around the Peninsula.

On the other hand, there has had to be some major cost-cutting in the works activity, both renewals and capital. Roads ($1.1m), Parks & Reserves ($.64m), Water Services ($.5m), Wastewater ($1.65m), and Stormwater ($.4m) have been the major areas where work has been curtailed, though in the case of Wastewater, savings have occurred mainly in operational expenditure – a major achievement, though costs on the Eastern Seaboard plants were clearly overestimated at the outset.  

External Borrowing ($49m) as at 30 June (has been kept well within ($30m) of the new 150% of annual rates income limit, but remains a risk when set alongside Annual Plan expenditure to 30 June 2014.and the TYP for 2015/16. Achieving planned revenue will be the key, and plans to restrain rate increases well below inflation will not assist in this regard. Additional borrowing is both planned, and inevitable, and raises philosophical issues that have been predictably avoided to date in the interests of achieving electoral advantage.   

With that caveat, this is a good result that should bring smiles to the faces of all concerned at Wednesday’s Meeting.





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