2011-2012 Annual Report - Full Version - PDF - Palmerston North ...

Comprehensive detail of both financial and nonfinancialperformance of each activity is providedin the ‘What the Council Does’ section of this annualreport.Key VariancesOverall services provided by PNCC have tracked closeto budget. Some variances have occurred during theyear and the significant variances are detailed below.Significant Variances within the Operating Result:Significant operating revenue variances:1. Leadership - lower revenues from reducednumber of private plan change requests.2. Community Support - higher rental revenuesfrom community housing were received,revenue received for contract management(offset by same amount of expenses) andunbudgeted rental for Community House.3. Economic Development - recovery of RugbyWorld Cup costs offset by lower revenuesachieved by the Convention Centre withoffsetting lower expenses.4. Leisure - Library lower revenues. ArenaManawatu higher revenues, including recoveryof Rugby World Cup costs and unbudgetedrevenue from harvest of Arapuke Forest.5. Environmental Sustainability and Health- Regulatory had lower building consentrevenue offset by higher animal licenserevenues. Roading and Parking lower revenueswere received than budget for NZTA roadingsubsidies and lower parking revenue offsetby gain on sale of land. For Water and Wasteactivities , lower water by meter revenue,lower electricity generation, carbon creditrevenue from reduced landfill gas availabilityand recycling revenues with higher collectionrevenues, unbudgeted revenue from sale ofaccess rights.6. Support Services - lower investment propertyrentals received, lower external servicerevenues (with decrease in expenses to offset),lower investment fund earnings followingwithdrawals from investment fund, offset byhigher public rental housing revenues.7. Rates penalties - more penalties were chargedthan was budgeted with total outstandingsimilar to previous year.Significant operating expenditure variances:8. Leadership - reduced costs incurred forprofessional services and operating costs(partly related to the lower revenue).9. Community Support - expenses incurredagainst contract management revenue, offsetby lower grants paid, lower net personnel costsand reduced maintenance required.10. Economic Development - lower levels ofexpenses incurred by the Convention Centre,consistent with the lower revenues.11. Leisure - Library lower operating costs offsetby higher depreciation. Parks and Recreationlower operating costs, interest, depreciationoffset by charge for programme budgeted ascapital charged to operating.12. Environmental Sustainability and Health - forRegulatory lower net personnel and operatingcosts in line with lower revenue offset byhigher legal litigation costs. For Roading andParking lower maintenance (with lower NZTAsubsidy revenue), depreciation, interest. ForWater and Waste activities higher operatingcosts, higher chemical use, other operatingcosts, depreciation offset by lower financecost.13. Support Services - lower expenses withthe lower external services revenue above,depreciation offset by higher net personnelcosts.Significant variances within the net result:14. Derivative financial instruments - fordownward revaluations of derivatives. Thisis a non-cash write down of the fair value ofthe derivatives and during the period of thecontracts will be offset by cash transactionsfrom delivery of settlements being included ininterest expense.15. Long term investment fund valuation - fordownward revaluations of the investment fund.This is a non-cash write down of the fair valueof the investment fund.16. Asset valuation and fair value adjustments- annual revaluation of operating investmentassets. These are non-cash.17. Gain/(loss) on disposal of fixed assets - thisis the net difference on disposal of assets frombook value largely not charged as depreciation.For prior year the majority related todecommissioning of infrastrusture assets asupgraded as part of essential capital work.18. Investment forest harvest revenue - for theharvest of part of Gordon Kear Forest duringthe year. Proceeds used to repay part of theforestry loan and therefore unbudgeted as noimpact on rates.19. Development contributions - this year-endvariance reflects the development slowdownand is an inter-period timing issue as it cantake upward of eight years for PNCC to collectcontributions from developers and thereforecan be inherently difficult to budget.20. NZ Transport Agency capex subsidies -reduction due to programmes planned notbeing approved by NZTA and not beingcompleted or deferred.21. Revenue for capital expenditure - this isinherently difficult to budget and includesamounts received as contributions towardscapital projects undertaken. Includesadditional amounts received in relation to2010/11 projects.22. Vested assets - for infrastructure assets vestedto Council during the year. As for developmentcontributions this reflects the developmentslowdown and can be inherently difficult tobudget.23. Taxation losses received - PNCC was ableto convert to cash, (through a transactioninvolving PNCC, Palmerston North Airport Ltdand the Inland Revenue Department), $166kof previously unrecognised tax loss creditsowed to PNCC by the IRD. This non-operatingrevenue is recognised after the net result.Financial Statements Note 2Palmerston North City Council Annual Report 2011/12147