Annual Report adopted, a better than expected financial outcome
Councillors have adopted the Annual Report for Hurunui District Council (HDC) for the 2020/21 year, and the Summary Annual Report.
There was a level of uncertainty created around the COVID-19 pandemic as HDC entered the financial year, with no certainty around when the Hanmer Springs Thermal Pools and Spa (HSTP&S) was able to operate without restrictions. Therefore, Council set its Annual Plan for the 2020/21 year with the background of that uncertainty.
Chief Financial Officer Jason Beck said Council conservatively budgeted that the HSTP&S would just break even for the year. As the returns from the HSTP&S are actively used to offset rates, Council was forced to make some difficult decisions on provision of services, to ensure that the rates increase was kept to a minimum.
In the end though, the HSTP&S had an exceptional year, recording an operating surplus of $3.3 million.
“This result, however, should be tempered by the fact that COVID-19 restrictions have been in place for a majority of the current 2021/22 year to date, so there is no guarantee that those profit projections can be maintained.”
The Report outlines the performance of the Council for the period from 1 July 2020 to 30 June 2021, the development of the preceding Annual Plan for the 2020/21 year carried out during the Alert Level 4 lockdown period early 2020.
Overall, Council’s revenue for the year was $64 million, some $24 million above the budgeted level for the year, with the key variances being the additional revenue generated by the HSTP&S, additional grant funding and the level of vested asset revenue received during the year.
“Total expenditure from the year was $47 million, some $4 million ahead of the budget and included increased costs related to the increased activity at the HSTP&S.”
The overall surplus was $17 million, further enhanced by accounting for the increase in value of Three Waters Assets of $11.7 million and the reversal of the remaining impairment to all the assets that were damaged by the 2016 Earthquake that have all been re-instated.
“This results in a Total Comprehensive Revenue and Expense of $31.4 million.”
Complementing the approved capital budget in the 2020/21 Annual Plan, additional grant funding was received for capital projects, particularly relating to three waters projects and also the completion of some earthquake related projects, such as the Waiau Hall. There was also a large level of assets that were vested in Council during the year.
Jason stated that this amounted to $8.5 million of assets with the most significant being the improvements made to the Inland Road in the period since the November 2016 earthquakes.
“There was a total of $4.8 million of improvements to the Inland Road which have all been recognised in the 2020/21 year, as the Council formally took back the road in December 2020.”
The total expenditure on assets amounted to $26.5 million, which is significantly ahead of the normal capital programme achieved by Council in most years. This has meant that Council has achieved the vast majority of the work it has set out to do at the start of the year.
Along with the expenditure and the revaluation to the three waters assets, the value of Council’s total assets is now in excess of half a billion. In the meantime, Council has reduced its term debt from $40 million to $38 million.