Tag Archives: Annual reports

DCC: Full Council meeting Tue, 27 Oct 2015 at 1pm

Venue: Council Chamber, Municipal Chambers, The Octagon

Agenda – Council – 27/10/2015 (PDF, 51.3 KB)

Public Forum
a) Legal High Retail Location Policy – Carl Lapham, Cupid Shop
b) Work Opportunities within the Council – Anneloes de Groot
c) Oil and Gas Block Offers – Siana Fitzjohn, Annabeth Cohen, Rosemary Penwarden – Oil Free Otago
d) Trans Pacific Partnership Agreement and Council’s Previous Resolution – Jenny Olsen
e) Safety of Roads – Neil Burrow

Item of interest on the main agenda, apart from annual reports:

● 25 Delegations to Officers to mediate on the 2GP Dunedin District Plan
Report from Corporate Services. Refer to pages 25.1 – 25.5.

The general public should be wary of Proposed 2GP mediation processes and how they are to be conducted. Mediation processes could segment (playing to like interests) planning direction and rules to such an extent the public will lose the ‘big picture’ which includes, if needed, having the Proposed 2GP set aside and sections fully redrafted (!!) for community ownership; and, of course, the public not recognising or becoming oblivious to cumulative adverse effects promoted within the Proposed 2GP, and these not being dealt to with sufficient weight.
If in doubt at mediation, positively strive to be heard at hearing – slow the process down until you have individual clarity as a submitter. Do not be pressured by DCC staff and management to agree anything without your taking time and effort to carefully deliberate potential cumulative adverse and knock-on effects.
The current district plan took YEARS to become operational —note well, there is NO RUSH to settle the Proposed 2GP if it is inequitable.

Report – Council – 27/10/2015 (PDF, 255.8 KB)
Block Offer 2016 Submission

Report – Council – 27/10/2015 (PDF, 613.2 KB)
Legal High Retail Location Policy

Report – Council – 27/10/2015 (PDF, 224.8 KB)
Regional Policy Statement Further Submission

Report – Council – 27/10/2015 (PDF, 2.7 MB)
Dunedin City Council 2015 Annual Report

Report – Council – 27/10/2015 (PDF, 66.0 KB)
2015 Annual Reports of Dunedin City Holdings Limited, its Subsidiaries and Associate Companies

Report – Council – 27/10/2015 (PDF, 63.9 KB)
2015 Annual Reports from Dunedin Venues Management Limited and Dunedin Venues Limited

Report – Council – 27/10/2015 (PDF, 391.9 KB)
Waipori Fund – Report for Quarter Ending September 2015

Report – Council – 27/10/2015 (PDF, 540.7 KB)
Review of the Food Safety Bylaw

Report – Council – 27/10/2015 (PDF, 139.5 KB)
Boundary Backflow Prevention

Report – Council – 27/10/2015 (PDF, 97.0 KB)
Delegations to Officers to Mediate on the 2GP Dunedin District Plan

Report – Council – 27/10/2015 (PDF, 86.7 KB)
Theomin Gallery Management Committee – Appointment of Committee Members

Posted by Elizabeth Kerr

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DCHL: Annual Result for the year ended 30 June 2015

### dunedintv.co.nz Thu, 24 Sep 2015
DCHL in strong position
More than $15m has been paid out to the city council and its subsidiaries in the last financial year.
Ch39 Link

39 Dunedin News Published on Sep 24, 2015
DCHL in strong position

Dunedin City Council – Media release
Annual Result for the year ended 30 June 2015

This item was published on 24 Sep 2015

The Board of Dunedin City Holdings Limited (DCHL) is pleased to report the financial result for the DCHL group for the year ending 30 June 2015.

Highlights
● Profit after tax and subvention payments for the group was $12.9m.
● We have distributed to the Dunedin City Council (DCC) and its subsidiaries outside the DCHL group a total of $15.7m consisting of $4.5m in dividends, $5.9m in interest and $5.2m net in subvention payments.
● Cash from operations continues to remain strong at $32.3m. This was after paying the budgeted subvention payments of $7.9m to Dunedin Venues Limited.
Total borrowings across the group have reduced by $23m to $598m.
● The financial result for the year reflects the hard work and focus of the staff and directors of the DCHL group of companies, which is much appreciated.

Profit after tax for the group was $12.9m for the year consistent with last year’s result of $12.5m. The result for the year is a continuation of the solid returns for the group.

Aurora Energy Limited invested significantly in its network during the year, resulting in an overall increase of $23m in its asset base. This is a reflection of work being undertaken by the company in renewal investment on the Dunedin network and investment in the Central Otago network driven by growing consumer demand. Overall capital investment in the network over the next 10 years is expected to be $372m.

Now that Delta Utility Services Limited has fully exited its water and civil construction operations, it was able to have a full year concentrating on its core services. This saw a marked increase in demand and reflected positively on its results. Overall the company returned a surplus after tax of $4.7m.

City Forests Limited continues to consolidate its financial position through reduction in borrowings, an increase in its forestry investment and maintenance of its dividend distribution. The company had a net surplus of $7m after tax.

Taieri Gorge Railway Limited has turned around from a loss last year to record a surplus after tax of $173,000 in the year to 30 June 2015. The positive result is a reflection of an increase in passenger revenue and continued focus on costs within the business.

Dunedin International Airport Limited achieved an operating surplus of $1.7m for the year, consistent with its result of $1.8m for the previous financial year. The company was able to increase its dividend to DCHL in the year from $565,000 in 2013/14 to $640,000 in 2015/16.

A pleasing aspect of the financial performance is the continued drop in borrowings within the group’s balance sheet. Borrowings have decreased from $621 million at June 2014 to $598 million at June 2015. Most of this decrease has come from improved cashflow management within the group assisted by significantly reducing the interest costs for borrowing entities. All of the subsidiaries, other than Aurora Energy Limited, were able to reduce their debt levels during the year. An increase in debt levels by Aurora Energy Limited is expected given their capital investment programme.

Cash from operations continues to remain strong at $33m. The ability of the group to maintain strong operational cash flows is imperative to ensure that it can meet its dividends and capital investment requirements.

DCHL has signalled to the DCC, via its annual Statement of Intent, that its distributions to the Council will decrease from $15.7m to $11.2m over the next three years. With the planned capital investment being undertaken by Aurora, it is prudent that Aurora reduces dividend distributions to DCHL over the next three years to ensure the funds are invested into capital and to maintain an appropriate equity to total assets ratio. This naturally impacts in the distribution that DCHL can make to the Council.

Overall the upcoming 12 months for the group looks favourable. The capital investment by Aurora will provide financial stability for the company, Delta continues to grow its core contracts while maintaining its current contract base and improvements in the tourism market will continue to assist Taieri Gorge Railway. A favourable interest rate environment will assist in the cost of debt for Dunedin City Treasury Limited, and City Forests continues to operate well in the fluctuating forestry environment.

Contact DCHL Chair Graham Crombie on 0274 363 882
DCC Link

Related Post and Comments:
1.3.15 DCC: DCHL/DVL/DVML limited half year result | Term borrowings $586.5M
30.9.14 DCHL financial result

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Audit NZ making up for previous huge inadequacies over DCC books ?

LONG PROVEN:
Audit NZ as CAVALIER, INCOMPETENT and CORRUPT as DCC with regards to stewardship and protection of Ratepayer Funds —in particular, Harland era to the present

### ODT Online Fri, 20 Feb 2015
DCC censured by Audit NZ
By Chris Morris
The Dunedin City Council been criticised by Audit New Zealand after “significantly” underperforming in the delivery of last year’s annual report. The rebuke came in Audit NZ’s annual audit report, which said the council had missed deadlines to deliver last year’s annual report to Audit NZ by “a significant margin”. The quality of the council’s annual report was also “clearly below an appropriate standard”, and internal quality review processes appeared to be lacking, Audit NZ said.
Read more

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DCHL financial result

NO-ONE BELIEVES TERRY DAVIES ON DVML RESULT AND FORECAST (when DVL debt is deliberately not mentioned)

Terry Davies (1) 194022

Dunedin City Council – Media Release
DCHL Annual Result for the year ended 30 June 2014

This item was published on 30 Sep 2014

The Board of Dunedin City Holdings Limited (DCHL) is pleased to report the financial result for the DCHL group for the year ending 30 June 2014.

Highlights
● Profit after tax for the group was $12.5m.
● We have distributed to the Dunedin City Council (DCC) and its subsidiaries outside the DCHL group a total of $15.7m. This has fully met budget expectations and been achieved within the policy of not borrowing to pay dividends.
● Cash from operations remains strong at $30.1m. This was after paying the budgeted subvention payments of $7.9m to Dunedin Venues Limited.
● Total borrowings across the group have reduced by $4.7m to $621m.
● The financial result for the year reflects the hard work and focus of the staff and directors of the DCHL group of companies, which is much appreciated.

Profit after tax for the group was $12.5m for the year compared to $20.5m last year. This is a solid return for the year. The main difference between the 2014 and 2013 profit resulted from the 2013 year including a write up of approximately $7m in the value of the City Forests investment.

Aurora Energy Limited had a solid year, but profit was $1m less than last year due to the mild winter in 2013. Operating cashflow remained strong and was $4.1m higher than last year. 2014 also saw the company starting to increase investment in its asset base.

Delta’s profit was at a similar level to last year ($4.4m this year vs $4.6m last year). It has completed exiting its water and civil construction operations.

City Forests has had a strong year. Profit has reduced from $14.6m to $8.3m. This reduction in profit has been due to a lower write-up in value of the City Forests investment in the current year. The company paid a record dividend to Dunedin City Holdings Limited of $5.1m.

Taieri Gorge Railway experienced a small loss for the financial year of $51,000 compared to a surplus of $39,000 achieved last year. Operating cashflow remained strong at $433,000 and was also higher than last year.

Cash from operations has remained strong at $30.1m. Cashflow is the most critical measure as it is the basis for dividends and capital investment. The solid cash generation performance has also enabled the DCHL group to lower its net debt by $4.7m over the year.

Progress has continued to be made in restructuring the governance of the group. A number of directors resigned during the year and we need to thank them for their services. We need to specifically record the service of two directors who resigned this year after serving as members of the group’s board of directors for a significant number of years. Both Ray Polson and Ross Liddell resigned as directors during the year and contributed in a significant way to the development of the DCHL group in a wide range of roles. It is with sadness that I must note the passing of Ross in July of this year.

Given the normal operational challenges facing the members of the group the board of DCHL remain positive on the outlook for the group of companies.

Contact Graham Crombie, DCHL Chair on 0274 363 882.

DCC Link

### ODT Online Tue, 30 Sep 2014
‘Solid’ results from DCC companies
By Chris Morris
The Dunedin City Holdings Ltd group of companies have delivered “solid” results, despite an $8 million drop in profits and another loss for the entity running Forsyth Barr Stadium, chairman Graham Crombie says.
Read more

Posted by Elizabeth Kerr

*Image: Ch39 30.9.14 [screenshot tweaked by whatifdunedin] – Terry Davies

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Stadium costs, read uncapped multimillion-dollar LOSSES

Forsyth Barr Stadium critic Russell Garbutt, of Clyde, is not surprised by reports of looming stadium losses.

### ODT Online Wed, 26 Feb 2014
Opinion
Stadium costs predictable, so why the surprise now?
By Russell Garbutt
The ongoing revelations on stadium losses detailed today (ODT, 21.2.14) come as no surprise to anyone who has closely followed this debacle from when the Otago Rugby Football Union first gathered the Carisbrook working party together until now, when a succession of different managers, directors and councillors are all realising that what was promised is as chalk is to cheese.
While not directly specified in the article, the turnaround of an expected $10,000 profit to a $1,400,000 loss in 2014-15 is in the operational budget, and it seems Sir John Hansen, chairman of DVML, is putting most of the blame for this truly stupendous reversal of fortunes down to costs of running the stadium.

While ratepayers continue to face annual injections of over $9 million into the stadium, this is by no means the real figure.

The ”realities” of the real costs of running the stadium are now being recognised, it seems. But let us all just remember a few things that occurred when the stadium was being proposed and then built.
Read more

Related Posts and Comments:
11.2.14 Stadium: ‘Business case for DVML temporary seating purchase’
24.1.14 Stadium: It came to pass . . .
20.12.13 DVML: No harassment policy or complaints procedure, really?
3.12.13 DVML issues and rankles [Burden’s reply]
30.11.13 DVML in disarray
18.11.13 DVML: Burden heads to Christchurch #EntirelyPredictable
12.10.13 DVML works media/DCC to spend more ratepayer money
4.10.13 DVML . . . | ‘Make the stadium work’ losses continue
20.8.13 DVML foists invoices on DCC
20.6.13 Stadium: DVML, DVL miserable losers! #grandtheftdebt

For more, enter *dvml* or *stadium* into the search box at right.

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DCC meeting, Monday 7 October Annual reports

Meeting of the Dunedin City Council
Monday 7 October 2013 at 1.00 PM
Council Chamber, Municipal Chambers

Agenda – Council – 07/10/2013 (PDF, 73.5 KB)

Report – Council – 07/10/2013 (PDF, 42.4 KB)
Annual Reports of Dunedin City Holdings Ltd and Group Companies. The individual reports can be found at: www.dunedin.govt.nz/dchl

Report – Council – 07/10/2013 (PDF, 41.7 KB)
Annual Reports from Dunedin Venues Management Ltd and Dunedin Venues Ltd 2013. The individual reports can be found at: www.dunedin.govt.nz/dvml and www.dunedin.govt.nz/dvl

Report – Council – 07/10/2013 (PDF, 70.8 KB)
Delegations during the Election Period

Report – Council – 07/10/2013 (PDF, 112.6 KB)
Otago Rural Fire District Proposal

Report – Council – 07/10/2013 (PDF, 2.2 MB)
Approval and Adoption of Annual Report

DCC 41 staff copy

### ODT Online Sat, 5 Oct 2013
Staff numbers down, wage bill unchanged
By Debbie Porteous
The Dunedin City Council now has 41 staff earning more than $100,000, but spending on key management personnel is less than it was two years ago, chief executive Paul Orders says.
The council’s annual report for the year to June 30 showed that while the total number of council employees had declined, the council’s total annual wage and salary bill remained about the same. The report was published yesterday and will be considered at a full council meeting on Monday.
Mr Orders said overall the report revealed a series of positive trends. While staff numbers were reducing, service levels were being maintained.
Read more

● The DCC annual report shows a small operating surplus of about $8 million.
● It confirms the council’s consolidated debt – spread across the Forsyth Barr Stadium, the council and its companies – rose to $623 million, up from $616 million at the end of the 2011-12 financial year.
● The report notes 2012-13 was the last year of capital expenditure on a number of large debt-funded capital projects and upgrades.
● Core council debt is expected to continue to rise from $225 million at June 30 to peak at $272 million in 2015-16, before beginning a gradual decline.

Related Post and Comments:
26.9.13 DCC: Council consolidated debt $623 million

Posted by Elizabeth Kerr

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Stadium: DVML, DVL miserable losers! #grandtheftdebt

### ch9.co.nz June 20, 2013 – 6:18pm
DVML forecasts small profit
The company that runs Forsyth Barr Stadium has forecast a small surplus for the first time in 2015. DVML has been running at a loss, but forecasts that will change to a $10,000 surplus. But the company that owns the stadium, DVL, has forecast its loss will be about $1 million more than expected, at more than $5 million. DCC chief executive Paul Orders said both were just projections, and the DVL loss was due to tax changes. The forecasts will be considered by the council on Monday.
Ch39 Link [no video available]

SURPRISE
Reports for the Council meeting to be held on Monday 24 June 2013 at 1pm not yet available at the DCC website.

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Cull COVERS UP COUNCIL #massage

National Radio says Dunedin City Council’s debt has increased to $620 million.

@@@@ Actually, the debt is likely to be much higher than this.

Mayor’s shambolic response to botched SH88 realignment:

Asked if heads would roll over the council’s handling of the saga, Mr Cull replied “No”. “I think things in hindsight could have been handled better … Given the circumstances before the World Cup, there was a lot of pressure to get things done in a hurry. A few things slipped, it’s fair to say. At the time, council did not make the best decisions, but they probably made it in good faith, so that is the way it is.” ODT Link

### ch9.co.nz November 22, 2012 – 7:00pm
Nightly interview: Mayor Dave Cull
Dunedin Mayor Dave Cull has warned city council cost-cutting will continue next year, as the local authority looks to again cut into the rates increase. He suggested in an opinion piece in the Otago Daily Times debt and economic development were the headline issues. He is here to tell us why.
Video

### ODT Online Wed, 21 Nov 2012
Opinion
Debt reduction, economic development focus
Dunedin Mayor Dave Cull lays out what he sees as the challenges facing the city council next year. This year has been a time of challenge and achievement for the Dunedin City Council. Costs and rate rises were substantially contained despite significantly reduced cash-flows. Information flow and public transparency have been enhanced, council confirmed a visionary spatial plan and council company governance has been substantially overhauled and improved.
Read more

STANDARD & POOR’S Rating Services
Dunedin City Council
http://www.standardandpoors.com/prot/ratings/entity-ratings/en/us/?entityID=272160&sectorCode=GOVS

S&P Statement:
Outlook On New Zealand’s Dunedin City Council Revised To Negative; Ratings Affirmed At ‘AA/A-1+’
Publication date: 20-Nov-2012 23:07:36 EST
http://www.standardandpoors.com/prot/ratings/articles/en/us/?articleType=HTML&assetID=1245343655677

MELBOURNE (Standard & Poor’s) Nov. 21, 2012–Standard & Poor’s Ratings Services’ said today that it has revised its outlook on New Zealand’s Dunedin City Council (Dunedin) to negative, from stable. At the same time, the ‘AA/A-1+’ issuer credit ratings on Dunedin were affirmed. The outlook on Dunedin City Treasury Ltd. was also revised to negative, and the issuer credit ratings were affirmed at ‘AA/A-1+’.

“The negative outlook reflects our view that there is a one-in-three chance of a downgrade in the coming two years,” said credit analyst Anthony Walker. “This is based on our view that Dunedin may not achieve its financial targets outlined in its Long-Term Plan, with its after-capital account deficits not improving as quickly as forecast. If this scenario were to materialize, we consider that Dunedin would have limited budgetary flexibility to improve its financial position without deferring asset renewals, which may lead to future infrastructure backlogs.”

Further downward pressure could be placed on the ratings depending on the Auditor General’s investigation into the management of Dunedin’s council-controlled trading organization (CCTO)–Delta Utility Services–which may weaken our assessment of Dunedin’s management of CCTOs; or if there was a change in policy direction such as the introduction of a hard rates cap, or a revised capital-expenditure program without an offsetting increase in revenue which would result in Dunedin’s after-capital account deficits not improving as forecast.

“The ratings could be revised to stable if the council’s budgetary performance strengthens as it forecasts, specifically if the council achieves after-capital account deficits of about 2% of consolidated operating revenues in 2014 and beyond, while maintaining its current budgetary flexibility, and a stable political setting,” said Mr. Walker.

Dunedin City Council’s (Dunedin) individual credit profile reflects the predictable and supportive institutional framework available to local and regional councils within New Zealand, plus our very positive view of Dunedin’s financial management, and the council’s modest contingent liabilities. In our view, these strengths are partially offset by Dunedin’s high debt burden relative to international peers, and low debt-servicing ratio.

Comments received.

Martin Legge
Submitted on 2012/11/22 at 7:46 pm
The reality is most Government Regulatory Agencies are now filled with academics (usually law graduates) who love writing endless reports but lack the capacity, desire or hard edge to conduct interviews where the hard searching questions now being demanded by the “What if” mob will ever be asked.
The OAG have obviously held a cordial chat with the Mayor over this and I bet boundaries of the investigation have been set. OAG didn’t listen to Bev Butler, but the Mayor of Dunedin – he’s a man of importance so let’s get down there!!!!

Anonymous
Submitted on 2012/11/22 at 9:10 pm
The thing with the Delta transactions is that there is a fairly clear trail of what was purchased, where it was held and where the original money came from. The investigation should have Newtons Coachways and Delta Investments Ltd in its scope. If it doesn’t then it is toothless.

Related Posts and Comments:
18.11.12 DCC Annual Report to 30 June 2012 – borrowing and interpretation
12.11.12 Delta purchases | Vandervis OAG complaint accepted

Posted by Elizabeth Kerr

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DCC Annual Report to 30 June 2012 – borrowing and interpretation

DCC Annual Report (PDF, 1.1 MB)

Comments received.

Mike
Submitted on 2012/11/18 at 12:48 pm
well spotted – so in essence DVML quietly borrowed an extra $8.5m and managed to transfer it to the DCC without incurring any tax because it was a ‘capital gain’ rather than a ‘dividend’

Rob Hamlin
Submitted on 2012/11/18 at 2:07 am
Another little gem from the DCC annual accounts. A positive little Kimberly it is. Calvin Oaten and I found this little morsel from the sewers of local government yesterday and will now share it with you.

On page 132 it has a table of figures titled ‘Separately Disclosed Revenue’. One line entry towards the bottom is particularly interesting. The title is ‘Profit on sale of Stadium (2012)……. $8,480,000’. This profit appears in both ‘Core Council’ (DCC only) and ‘Consolidated’ (Council & DCHL) columns.

Initially, this seems like great news. We’ve sold the bloody thing and got eight and a half million dollars for it. But, as is always the case, things are not all as they appear.

Nearly sixty pages later, on page 188, we have the following sheet of gibberish:

“Sale of Forsyth Barr Stadium to Dunedin Venues Limited

On the 31 May 2012 the Council sold it’s [sic] interest in the stadium to a wholly owned subsidiary Dunedin Venues Limited. This was the culmination of a project spanning five years during which time the method of delivering the project changed and as a result there is a technical accounting surplus on disposal of $8,380,000. The following note is an explanation of these technical accounting issues.

Book Surplus on disposal of the stadium $ ‘000
Sale price 225,000
Capitalised stadium cost including interest 216,520
Surplus on sale of asset as per 2012 Annual Accounts 8,480
Less stadium costs written off to operations in 2007-2008 5,537
Plus stadium revenue included in operations in 2007-2008 (583)
Surplus on disposal 3,526

Book surplus on disposal of the stadium
The method of undertaking the stadium project changed over the years of the project. The accounting treatment always followed the method of project delivery and was audited as being the correct treatment at the time. In 2007–2008 year it was expected that the project would be delivered by a third party and that the Council expenditure was therefore operational. This resulted in $5,537,000 being correctly expensed in 2007–2008 year. In subsequent years once the decision was made that the Council would build the stadium, the expenditure was correctly capitalised. The surplus of $3,526,000 would remain as it is the difference between all the costs incurred by the Council and the sale proceeds received.”

Also on page 123 we have this note to one of the CCO fragmentary reports:

CCO Property Plant and Equipment
All CCO property, plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses.
The Stadium is a separate class of asset and is recorded at cost less any accumulated depreciation and any accumulated impairment losses.”

So what happened? Well, you may remember that the total cost of the Stadium came in at around $216.5 million. Then, last year the DCC acquired a ‘valuation’ for the Stadium (God knows how and God knows from who) of $225 million. Its commercially realisable value is in fact, as we all know, the commercial value of the site minus the costs of demolition and removal, which is as near zero as makes no difference.

However, it now appears that DVL then ‘bought’ the stadium from the DCC at this higher valuation. It is hard to see any good reason why they would do this, as the historical cost of the stadium itself was $216.5 million – this figure would have fitted well with their own policy for valuation in the note on page 123. As the structure was brand new when ‘bought’, a second valuation was unnecessary. The historical cost of construction would have been more than adequate as a transfer price.

However, it appears that this unnecessary valuation exercise and its absurd outcome has allowed a further $8.5 million to be transferred from DCHL to the DCC this year on top of the $17.95 million handed over as a dividend, for a total of $26.45 million. It can also be claimed now with a straight face that DVL are acting in accordance with their requirement to record assets at cost as $225 million is what they ‘paid’ for it!!

Now let’s deal with the gibberish on page 188, which covers the financial year 2007-2008 (presumably ending 1 April 2008). Apparently, this specific structure incurred over five and a half million dollars of costs and over half a million dollars of REVENUE!!! before it had been fully designed or even approved as a specific entity that the DCC was actually going to construct! The final approval came nearly a year later I seem to recall.

I personally find this reduction in this ‘accounting profit’ to be wholly incredible. I can also find no adjustments matching this $5 million or so in the costs side of the DCC’s figures – even though the $8.5 million extra revenue appears in its entirety. Mind you, in the 200 pages plus of fragmentary and largely useless figures, I guess that I could have missed it.

Page 13 is also interesting. It is entitled ‘Audit Report’. Properly audited accounts require a signed statement by the auditor to form part of them, stating that the auditor’s unqualified opinion that they are satisfied with the accounts – or a statement of their reservations (qualifications) if they are not.

Page 13 is blank (surprised?)

On page 1, we have the following statement:

“This report asks the Council to approve and adopt the Annual Report for the year ending 30 June 2012.

The Director of Audit New Zealand responsible for the audit and the Audit Manager will attend to discuss the audit and answer any questions from councillors.”

In my opinion this is utterly inadequate basis upon which to approve this report. It should not have been even presented to Council, let alone approved, without a complete auditor’s report being attached to it.

It seems that the Council will have to find $25 million plus in savings by next year just to tread water, and that’s if we don’t get any more unpleasant surprises. Interesting times.

[ends]

Posted by Elizabeth Kerr

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Afternoons with Jim Mora: The Panel today [DCC interest rate swaps]

### radionz.co.nz Monday 5 November 2012
Afternoons with Jim Mora
http://www.radionz.co.nz/national/programmes/afternoons

The flirtations of our local bodies with money mechanisms on money markets that may be getting ratepayers into schtuck.

16:35 The Panel with Garry Moore and Finlay MacDonald (Part 2)
Topics – Every schoolboy used to know that, at the height of the empire, almost a quarter of the atlas was coloured pink, showing the extent of British rule. An Otago University academic says Dunedin ratepayers should be very concerned about losses on interest and currency swap schemes that appear in the council’s annual report. Millionaire Kim Dotcom would be putting his money where other investors wouldn’t if he goes ahead with plans to relaunch Pacific Fibre, according to Prime Minister John Key. (24′42″)
Audio | Download: Ogg Vorbis MP3 | Embed

16:50 Jim Mora, Dr Robert Hamlin and guests discuss Auckland City Council and Dunedin City Council activities with respect to interest rate swaps (IRS). Together, the councils may have squandered up to $200 million of ratepayer funds. Is a royal commission of inquiry required? In Dunedin City Treasury’s case, interest swap rates and financial derivatives may be being used to ‘assist’ stadium financing, and much more. In the city council annual report the IRS activity goes unexplained, being recorded as (multi-million dollar) losses (see page 146).

****

The (NZ) Banking Ombudsman suggests some customers & their advisers don’t understand the product. [IRS and Derivatives]

http://en.wikipedia.org/wiki/Interest_rate_swap

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### stuff.co.nz Last updated 05:00 04/11/2012
Business
Banks ‘plundering society’ globally
By Rob Stock
Claims banks missold interest-rate swaps to businesses and local authorities have been making headlines around the world. Interest rate swaps are a derivative financial tool used by sophisticated businesses with skilled treasury functions to limit interest rate risk. But it is becoming clear that in places such as Britain, Italy and America, interest-rate swaps were sold by banks to organisations that did not understand the risks they were taking. In case after case, interest rate swaps often sold in 2007 and 2008 as “protection” against interest rates rising sharply have served mainly to protect bank profits by locking businesses and local bodies into high levels of interest ahead of those rates falling.
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This article is from the May/June 2012 issue of Dollars & Sense magazine.

The Swap Crisis
We have your city. Pay up, or else!
Interest rate swap deals have allowed the big banks to hold local governments and agencies hostage for tens of millions of dollars.
By Darwin BondGraham
In 2002 a little-known but powerful state agency in California and Wall Street titans Morgan Stanley, Citigroup, and Ambac consummated one of the biggest deals to date involving a type of financial derivative called an “interest rate swap.” A year later the executive director of the Bay Area’s Metropolitan Transportation Commission, Steve Heminger, proudly described these historic deals to a visiting contingent of Atlanta policymakers as a model to be emulated. Swaps were opening up a brave new world in public finance by extending the MTC’s purchasing power by $200 million, making a previously impossible bridge construction schedule achievable in a shorter timeframe. The deal would also protect the MTC from future volatile swings in variable interest rates. To top it off, the banks would make a neat little profit too. Everybody was winning.
Then in 2008 it all came crashing down. The financial system’s near collapse, the federal government’s unprecedented bailouts, and global economic stagnation mean that the derivative products once touted as prudent hedges against uncertainty have instead become toxic assets, draining billions from the public sector.
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Posted by Elizabeth Kerr

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Stadium: DCC caught in headlights

Blindsided?

The Otago Daily Times (1.11.12) states:
“Dunedin city councillors are pointing fingers after some were blindsided by a $3.2 million loss by the company running Forsyth Barr Stadium. Some councillors spoken to by the Otago Daily Times yesterday admitted they were unaware they had accepted reports detailing the loss at Monday’s council meeting. Other councillors were aware of the reports, but were still yet to read them properly.” ODT Link

Blissfully unaware, or deliberately avoiding and shielding knowledge of the fact, thereby keeping the public and media at arm’s length from the true state of council finances relating to the stadium project?

That is a question for all elected representatives at Dunedin City Council, the council’s chief executive, the executive management team (EMT), and the governance manager.

Sadly, the annual reports don’t tell the full story of the ‘stadium effect’ – that is, the figures that Dunedin renters and ratepayers will be facing, and unable to pay, when the whole system is called to ‘correct’.

Fire away, Dunedin public.

It’s as if the newspaper editor has suffered a blunt contusion. Sees the problem then runs away to John Wilson Ocean Drive (closed from August 2006), and ends weakly, out of steam, with the hope that those in power “will turn their full attention to making our new stadium a profitable investment of which the city can be proud”, and would they please read the annual report[s].

### ODT Online Sat, 3 Nov 2012
Editorial: Council must keep eye on the ball
Just as it seemed the Dunedin City Council was determined to focus on a different attitude towards debt, revelations that a worse-than-expected $3.2 million loss by the company running the Forsyth Barr Stadium was not even discussed at this week’s full council meeting have put it back in the firing line and raised questions about its priorities. The loss – nearly $1 million greater than forecast – was recorded in Dunedin Venues Management Ltd’s (DVML) 2011-12 annual report, which was released a day later to this newspaper. But it had flown under the radar at the council meeting, with no mention of the reports on DVML or Dunedin Venues Ltd (DVL), which owns the stadium, on the meeting’s public agenda, and no indication those reports had been circulated publicly and to media – as required under the Local Government Official Information and Meetings Act – ahead of the meeting. The reasons for that are unclear and convoluted.
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From our Northland cuzzies, some clues for rabbit hunting…

Image: NZ Herald

### New Zealand Herald 5:30 AM Saturday Nov 3, 2012
Inside Kaipara’s ratepayers revolt
By Andrew Laxon
Many residents of a small coastal town are refusing to pay for a $58 million debt that has crippled their local council and left them with the bill.
The Mangawhai Ratepayers and Residents Association chairman Bruce Rogan has at least 500 local residents refusing to pay an estimated $1 million in rates this year because the Kaipara District Council secretly ran up an unsustainable $58 million debt building a sewerage treatment scheme for about 2000 people who own homes here.
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Dare we say, Dunedin, the amount currently owed by each city ratepayer well exceeds that owed by the good ratepayers of Mangawhai, on the Kaipara.
So, what now?

Posted by Elizabeth Kerr

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Stadium financials: Calvin Oaten on DVML, DVL and DCHL

### ODT Online Fri, 2 Nov 2012
Opinion
DCHL covering DVL and DVML losses
By Calvin Oaten
Stadium finances dismay, says the headline (ODT, 31.10.12). The story states Dunedin Venues Management Ltd (DVML) as posting a loss of $3.214 million. Mayor Dave Cull says “it is not sustainable”.

But let’s look at the combined performance of DVML and Dunedin Venues Ltd (DVL) and we see a fuller picture. Let’s face it, these two entities are joined at the hip and are no more than an arrangement of convenience, for the dispersion of liabilities attached to the stadium. DVML’s loss at $3.214 million is arrived at after receiving revenue of $6.093 million, offset by expenses of $6.395 million.

It then pays DVL $3.667 million rental for the use of the stadium. This is offset by receiving a (subvention) payment of $782,000 from Aurora. Net loss $3.214 million. But we then need to add the carried forward loss of $3.256 million from the previous period to disclose the consolidated loss at $6.470 million.

Turning now to DVL, we find the declared position is: Revenue $3.672 million, expenses $16.051 million for a loss of $12.379 million. This is offset by a (subvention) payment from Aurora of $7.292 million leaving a loss of $5.087 million.

This is offset by a tax credit of what could be $775,000 for a net loss of $4.312 million To this is added interest rate swap losses (a totally incomprehensible concept) of $8.579 million for a total consolidated loss of $12.891 million.

So combining the two scenarios we have a total consolidated loss attributable to the stadium of $19.361 million. This, Mr Cull, is really what is not sustainable.

Interestingly, nowhere in either set of accounts can one find any evidence of income derived from the much vaunted private funding. Why? Is it because as the PwC report says, it can only be treated as operational revenue, and therefore goes direct to the events promoters such as the ORFU?

Looks like it. They in turn simply pay – or not – a rental to DVML for the use of the stadium by event. This is what is expressed in DVML’s revenue statement. All this raises the question: what happens if DCHL is unable to produce those subvention payments?

It has already served notice that since July 1, 2012, it will no longer borrow to provide payments of $23.2 million to the DCC which consisted of, $10.450 million dividend, $5.25 million capital repayment of stadium debt, and subvention payments to DVL and DVML. As can be seen this amounts to $17.25 million offsetting the already considerable losses incurred.

There is no doubt but that the stadium will figure very largely in the city’s future funding difficulties, which are so manifest.
ODT Link

Posted by Elizabeth Kerr

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Stadium financials: JimmyJones v Peter Hutchison (DVML) on accounting method

### ODT Online Wed, 31 Oct 2012
Stadium finances dismay
By Chris Morris
Dunedin Mayor Dave Cull says the Forsyth Barr Stadium’s finances are “not sustainable”, after confirmation the company running the venue lost nearly $1 million more than expected in its first year of operation. The result was contained in Dunedin Venues Management Ltd’s 2011-12 annual report, released to the Otago Daily Times yesterday, which showed the company lost $3.2 million in its first year. […]A copy of Dunedin Venues Ltd’s annual report was also released yesterday, and showed the company that owned the stadium – and received rent from DVML – recorded a $4.312 million loss for the same period.
Mr Hutchison cautioned against adding the two losses together, as they overlapped, and because DVL’s results were largely accounting losses – not cash – and expected. “It [DVL] is behaving exactly as it should do.”
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More ‘fallout’ stories at the Otago Daily Times:
● Wed, 31 Oct 2012 – Report about stadium loss slips under radar
● Thu, 1 Nov 2012 – Councillors blindsided by DVML results
● Thu, 1 Nov 2012 – Stadium loss rates fears
● Fri, 2 Nov 2012 – Stadium rate ‘tax on being busy’

The following comments appear at ODT Online, in reply:

DVL loss not as expected
Submitted by JimmyJones on Thu, 01/11/2012 – 2:56pm.

DVL and DVML director Peter Hutchison says that the size of DVML’s $4.3 million loss was as expected. This statement does not match with the official forecast in DVL’s Statement of Intent which predicted that the year’s result for 2012 would be $6.5 million (before the ratepayer subsidy). This latest result is a loss of $11.6 million (before ratepayer subsidy) – so this is much worse than expected.
The loss of $11.6 million is much bigger than the official $4.3 million loss because this doesn’t include the $7.3 million DCC subsidy. It is wrong to exclude the DCC subsidy when considering the overall effect on the finances of the DCC and the ratepayers. Both DVL and DVML are paid a subsidy that doesn’t show-up in their net profit/loss figures.

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Stadium losses add up
Submitted by JimmyJones on Thu, 01/11/2012 – 11:47pm.

Mr Hutchison, the director of the stadium owning company DVL, says that the losses of DVL and DVML can’t be added together because they overlap. This is misleading and seems to go against the basic principles of accounting. Each of the companies is a separate entity and they have separately audited accounts. To say that the losses overlap is to claim that one or both full year results are wrongly stated. As a director, Peter Hutchison did however vote that these accounts were true and correct; Their auditor has agreed with this. There is no overlap, and they can be added together.

Adding the two losses gives $3.2m + $4.3m = $7.5 million. The real loss is, however, a lot more than $7.5 million because this figure does not include a number of disclosed and undisclosed subsidies, paid either directly or indirectly by Dunedin’s renters and ratepayers. The DCC has so far actively avoided providing the total of all the ongoing losses and costs of their stadium.

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Big, real, ugly, stadium loss
Submitted by JimmyJones on Thu, 01/11/2012 – 11:57pm.

Mr Hutchison says that “DVL’s results were largely accounting losses – not cash – and expected”. In saying this he is implying that the year’s loss is mostly not a real loss. Our accounting system has evolved over a few thousand years to provide the most “real” measure of profit/loss. This is about the best we can do, and that means that both cash and non-cash items are included. If Mr Hutchison thinks he has a better way, he should write a book about it, but in the mean time he needs to stick to the standard NZIFRS method. His statement is in fact wrong, because most of DVL’s expenses are actually cash expenses and because the loss is a real, authentic, auditor certified loss. DVL’s finances are a sensitive area for the DCC, and Mr Hutchison should not be seen to be promoting any particular viewpoint.

Posted by Elizabeth Kerr

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Dunedin City Council – all reports posted, belatedly!

Annual reports for council-owned companies were withheld from public and media scrutiny, without notice, prior to the council meeting held on Monday, 29 October 2012. The Mayor of Dunedin Dave Cull and DCC chief executive Paul Orders are individually responsible for deliberately withholding this financial information. Although, along with them, we suspect other players in the woodpile.

### ODT Online Wed, 31 Oct 2012
Report about stadium loss slips under radar
By Chris Morris
A worse-than-expected $3.2 million loss recorded by the company running Dunedin’s Forsyth Barr Stadium did not rate a mention at this week’s Dunedin City Council meeting. It emerged yesterday Dunedin Venues Management Ltd and Dunedin Venues Ltd’s annual reports had quietly slipped through Monday’s full council meeting without a question or word of debate. There had been no mention of DVML or DVL on the meeting’s public agenda, and it appeared the reports had not been circulated publicly, to media or even some council staff, as required, in the days before the meeting, the Otago Daily Times discovered yesterday.
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DUNEDIN CITY COUNCIL AGENDA
MONDAY, 29 OCTOBER 2012, 2.00 PM
COUNCIL CHAMBER, MUNICIPAL CHAMBERS29 October 2012

Agenda – Council – 29/10/2012 (PDF, 118.9 KB)

Report – Council – 29/10/2012 (PDF, 77.9 KB)
ISCOM Approved Out of Water Supply Area Connection – Mr J D MacDonald, 3509 Sutton-Clarks Junction Road, RD 2, Outram 9074

Report – Council – 29/10/2012 (PDF, 1.1 MB)
Approval and Adoption of Annual Report

Report – Council – 29/10/2012 (PDF, 788.2 KB)
Vehicle Access John Wilson Ocean Drive

Report – Council – 29/10/2012 (PDF, 4.6 MB)
Speed Limits Bylaw Review

Report – Council – 29/10/2012 (PDF, 978.0 KB)
Speed Limits – Safer Speeds Demonstration Area

Report – Council – 29/10/2012 (PDF, 1.8 MB)
Submission on the Local Government Regulatory Performance Issues Paper

Report – Council – 29/10/2012 (PDF, 155.1 KB)
Meeting Schedule for 2013

Report – Council – 29/10/2012 (PDF, 1.2 MB)
Aurora Annual Report 2012

Report – Council – 29/10/2012 (PDF, 1.8 MB)
Delta Annual Report 2012

Report – Council – 29/10/2012 (PDF, 813.7 KB)
Dunedin International Airport Annual Report 2012

Report – Council – 29/10/2012 (PDF, 1.0 MB)
Dunedin Venues Limited Annual Report 2012

Report – Council – 29/10/2012 (PDF, 1.1 MB)
Dunedin Venues Management Limited Annual Report 2012

Report – Council – 29/10/2012 (PDF, 225.0 KB)
Taieri Gorge Railway Annual Report 2012

Report – Council – 29/10/2012 (PDF, 2.8 MB)
Dunedin City Treasury Annual Report 2012

DCC Link

### ODT Online Wed, 31 Oct 2012
Stadium finances dismay
By Chris Morris
Dunedin Mayor Dave Cull says the Forsyth Barr Stadium’s finances are “not sustainable”, after confirmation the company running the venue lost nearly $1 million more than expected in its first year of operation. The result was contained in Dunedin Venues Management Ltd’s 2011-12 annual report, released to the Otago Daily Times yesterday, which showed the company lost $3.2 million in its first year. That was $814,000 worse than the $2.4 million loss forecast in May, when DVML’s revelations of a half-year, $1.9 million loss prompted the council to launch a review of the entire stadium operation.
A copy of Dunedin Venues Ltd’s annual report was also released yesterday, and showed the company that owned the stadium – and received rent from DVML – recorded a $4.312 million loss for the same period.
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Posted by Elizabeth Kerr

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Dunedin Venues Limited – 2012 Annual Report now 2 months overdue

UPDATED POST 26.10.12 at 1:46 am

JimmyJones at ODT Online today mentioned this timing anomaly. DVL is late with its 2012 annual report. We all know how steep the numbers will be and just approximately, how decimating!

We don’t hold out any hopes for DVL.

● DVL 6-monthly result, $5.2 million loss.

● DVML (with the same board as DVL) annual result, $1.9 million loss.

● DCHL annual result, $5m loss for the group.

Dunedin City Council, the companies’ owner, persists in keeping public eyes away from the true state of the books, and the activities and wrongdoings that have led to gross mismanagement of council finances.

Fudging, obfuscation, corruption, fraudulence, lack of transparency and accountability – this is your council. Breaching its own prudential limits…

It keeps coming… (sample)
26.7.12 Cull’s council thinks $750,000pa to DVML represents good value?
30.8.12 DCC seen by Fairfax Business Bureau deputy editor Tim Hunter
11.9.12 Delta Utility Services Ltd

Denham Shale, Bill Baylis and Co have been hired to make it all go away.

Then, ah-ha! There’s our man Slippery aka Warren Larsen, who authored the report to salve DCC’s conscience and not much else.

Governance = ineptitude, manipulation and lots and lots of crime…

Posted by Elizabeth Kerr

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