Tag Archives: Cash flow

ORC $wimming in it —SHOULD afford more Otago environmental protection

….not a new office palace at Dunedin.

Spending figures on flood protection and river management, particularly on the Leith and Taieri systems, and public transport, are heavily weighted towards Dunedin.

### ODT Online Mon, 9 Jan 2017
‘Dunedin-centric’ ORC gets roasting
By David Williams
Michael Laws’ already poor appraisal of the Otago Regional Council just gets worse. Official council figures provided to the Otago Daily Times detail the council’s $56million in reserves, its plans for spending up to $24million on a new Dunedin headquarters and a breakdown of spending in the Queenstown Lakes, which is affected by lake snow. Mr Laws, who was elected to the council’s Dunstan ward in October, said: “It’s worse than we thought, to a degree. They’ve got a huge amount of money and they spend very little.”
….He accused the council of having a very hands-off policy towards Dunstan issues and particularly Queenstown and the lakes over the past five years. “It’s withdrawn staff from the area, it’s not monitored the lakes which is its basic statutory responsibility, it’s spent very little money dealing with pests, whether flora or fauna, and I think personally that the reason in large part is if you don’t live in an area you don’t properly understand it.”
Read more

****

L A K E ● S N O W

10.6.16
The alga called Cyclotella, or recently renamed by algologists as Lindavia intermedia, is related to the ‘rock snot’ alga didymo. The recent appearance of lake snot is associated with the emergence and dominance in Cyclotella, according to a team of scientists from the University of Otago, Landcare Research and Université Laval (Canada).
–Erica Mather, Sciblogs: Southern NZ lakes congested with algal snot

lake-snow-stuff-co-nzLake Snow [stuff.co.nz]

ORC – Lake Snow
In recent years, a slimy substance called ‘lake snow’ has been found in Lake Wanaka, Wakatipu and Hawea. Otago Regional Council (ORC) is working with stakeholders and researchers to find out more about where lake snow comes from, what influences it, and how it could be managed. Read more

Lake snow brochure (PDF, 1 MB)

QLDC – Lake Algae
For a number of years the Lake Wanaka water supply has been affected by the presence of algae. The algae is not harmful from a health perspective, but has had an effect water filters, irrigation fittings, new appliances and other equipment. The algae is not noticed at all the properties in Wanaka and no pattern has been found. In mid-2016 QLDC began receiving reports of algae build-ups in a number of water filters around Queenstown that take water from Lake Wakatipu. It has been identified as the same algae that has affected the water system in Wanaka for the past eight years or so.
Identifying and managing lake algae

In 2004 Didymosphenia geminata, a diatom commonly known as didymo or rock snot, was discovered in New Zealand, the first time it was found in the Southern Hemisphere. To restrict its spread, the whole of the South Island of New Zealand was declared a controlled area in December 2005. All items, such as boats, fishing gear, clothing, and vehicles, that have been in a stream, river or lake, must be cleaned before they enter another waterway.
Wikipedia: Didymo in New Zealand

****

### Stuff.co.nz Last updated 12:14, Sep 1 2016
Fears lake snow could make Lake Wakatipu ‘unfishable’
By Jo McKenzie-McLean
An experienced fishing guide fears Lake Wakatipu could end up “unfishable” with the invasive spread of the algae bloom, lake snow, and warns Lake Dunstan could be next. Queenstown fishing guide Stu Dever, armed with his rod and reel, voiced his concerns about the presence of lake snow in Lake Wakatipu to Otago Fish and Game committee members at a meeting in Cromwell last month. His rod was clogged with the thick globules of algae after only one day’s fishing on the lake … The mucous-like substance is produced by the algae cyclotella has now been observed in three South Island lakes.
Read more

### Stuff.co.nz Last updated 12:49, Nov 4 2016
Lake snow discovered in Hawea as algae spreads through southern lakes
The nuisance algae known as lake snow has been confirmed in Lake Hawea as it continues to spread through the southern lakes. Officially known as Cyclotella bodanica, it has been present in Lake Wanaka for several years and has this year been confirmed in Lake Wakatipu, Queenstown. It has also been found in Lake Coleridge in Canterbury. It does not present a health risk but can block water filters on commercial premises and residential appliances such as dishwashers and washing machines.
Read more 

### Stuff.co.nz Last updated 11:13, Dec 19 2016
Laws calls for Otago Regional Council to apologise over Lake Snow ‘inaction’
By Jo McKenzie-McLean
The Otago Regional Council needs to “apologise and atone” for its “grossly inadequate” action over the Lake Snow problem in the alpine lakes, newly-elected Otago regional councillor Michael Laws says. “Lake snow was notified to the Otago Regional Council in 2008. It did nothing until September 2016, and in that time the algae and its effects have taken a firm grip on Lake Wanaka and now spread to other lakes. As with the invasive weed lagorosiphon [oxygen weed], the ORC’s inertia on lake snow stands as an object lesson of what can go wrong when you react, and react late, rather than research. There are some massive lessons for our governance here. We dropped the ball big time and need to accept, apologise and atone.” Cr Laws said there needed to be a significant financial investment in the southern lakes and that any delay would only make the problems less manageable and more expensive. “The Otago Regional Council has no debt, and $56 million in reserves. It wants to spend $25 million on a new HQ in Dunedin. I say those priorities are dead wrong: The lakes and our waterways – along with pest destruction – must be our prime responsibilities.”
Read more

****

Dr Schallenberg and other scientists have been frustrated by rejected funding applications on research into lake snow, and the Otago Regional Council only stepped up monitoring last year, although it has paid for some research on Lake Wanaka’s health.

### ODT Online Sat, 7 Jan 2017
Editorial: The lake snow threat
It is past time to drive action on “lake snow” (“lake snot”). The slime produced by an  algae in Lake Wanaka — it is also in Lake Coleridge and was found last year in Lakes Hawea and Wakatipu — is unsightly and a significant nuisance. More importantly, it could have long-term and unknown ecological impacts.
….It was first noticed in Lake Wanaka about 2004 as those fishing spoke of fouled lines and blocked engine intakes. Washing machine and other filters in Wanaka began to become clogged because the town water supply comes from the lake. […] The same algae had also been found in another relatively unpolluted lake in Seattle in the United States. Just like didymo (“rock snot”), under certain conditions cyclotella secretes large amounts of mucus. This can all join together to form a mat. Just why it appears is still a mystery.
Read more

### ODT Online Sat, 7 Jan 2017
Lake snot costs hit six figures
By Guy Williams
Queenstown hotels are being forced to install expensive filtration systems to prevent lake snot (also called lake snow) damaging or blocking their water systems. Sofitel Queenstown Hotel manager Vincent Macquet said a self-cleaning filter identical to one operating at Dunedin Hospital was installed at the hotel five weeks ago at a cost of “hundreds of thousands” of dollars. Lake snot began clogging its water system last winter, causing hot-water valves to fail and reducing water pressure. […] Macquet said it was a “touchy subject” with hoteliers, with representatives from seven hotels meeting Queenstown Lakes District Council staff about a month ago to express their concerns.
Read more

didymo-hawea-landcareresearch-co-nzDidymo, Hawea [landcareresearch.co.nz]

Didymo (aka rock snot) [jrn.com via knownews.com]

Posted by Elizabeth Kerr

This post is offered in the public interest.

9 Comments

Filed under Architecture, Business, Central Otago, Construction, Democracy, Design, Dunedin, Economics, Finance, Geography, Infrastructure, Media, OAG, Ombudsman, ORC, Pet projects, Politics, Project management, Property, Public interest, Queenstown Lakes, Resource management, Tourism, University of Otago, What stadium

Delta #EpicFail : Strategic Reasons & Outrageous Logic

Election Year : The following opinion is offered in the public interest. -Eds

Delta - AuthorUphillBattle - The Books [blog.smashwords.com]

Received from Christchurch Driver [CD]
Tue, 19 Apr 2016 at 10:48 p.m.

Readers, tonight’s exposition is to examine the Dunedin City Council (DCC) worldview that does not contemplate a sale of Delta at less than $45M. Your correspondent says that will never happen on any rational economic basis, so the next best thing is to pretend that it would not be in the ratepayers’ best interests to sell at all, seemingly at any price.

However, annoyingly, logic and reasons must intrude at some point, and in the recent report on DCHL asset values, the DCC have a crack at pushing the Delta water uphill.

Agenda – Council – 11/04/2016 (PDF, 1.6 MB)
Item 22 Dunedin City Council Investments and Returns (pp 109 – 123)

Tonight, readers, we shall dwell on and allow the TWO big “strategic reasons”, the DCC propose to retain Delta, to stand in splendid isolation, while readers allow the cool chill of logic to bring these clouds of hot air back to reality.

We shall also overlay some markers over Delta’s financial figures that give support to your correspondent’s contention that Delta is at risk. (careful words needed here, readers !)

Safely camouflaged at para 55 (page 117), deep in the DCC report, the following statements appear : “If Delta were to be sold by the DCC, one likely outcome…. [it could be] purchased by a competing company in the same field. One consideration…. is the potential ‘head office’ job loss to Dunedin if Delta were to be sold to an existing company which is not locally owned.”

Stop right there, readers. The DCC say the first, most important consideration in retaining Delta is to retain the Delta ‘head office jobs’ in Dunedin. At one level we can take this to mean that the DCC are very fearful that the current occupiers of the Delta head office jobs in question would not find similar work in Dunedin. Your correspondent thinks that is a very well-founded fear. But the DCC head of economic development tells us the city is growing and it is hard to attract executive staff to the city…. it is a taxing puzzle why the authors of the report ignore their own staff…. At the next level, your correspondent is vexed at the concern shown by the DCC for the six figure inhabitants of the Delta Head Office suite. (Note, there are 70 people earning in excess of $100,000 at Delta, your correspondent guesses that the Head Office inhabitants occupy the highest echelons of those salaries). This brings a whole new meaning to the (draft) Statement of Intent requirement to be a “socially responsible …. corporate citizen”. At a higher level again, the DCC appear to say that the welfare and future of the head office positions rank ahead of the core task of providing returns to the ratepayers.

Readers, remember that DCC provide these reasons as reasons not to sell Delta even if someone paid the massive premium of 300-400% over the $15.804M shareholders equity (which is about to suffer a severe Noble induced virus).

Your correspondent is very sure these revolutionary themes of Soviet Style central planning and corporate welfarism were not intended in the Delta ‘Statement of Intent’ which is meant regulate how the company is run.

Next up as the DCC apologia for retaining Delta is the statement, “the loss of Delta from the local contracting market, particularly if through acquisition from an existing contractor, would remove an element of competition from an already limited local market”.

This is illogical. Let us count the ways:

1. If competition is “limited” then margins will be high, and demand for skilled staff intense, so any logical purchaser would leave the Delta structure alone to continue its high margin work…. but of course, if there is limited competition and Delta are not making good profits, then there is a problem…. and Delta should be sold to an entity that can generate good profits in a limited market.

2. It can be safely assumed that Delta’s local competitors Fulton Hogan, Downer, SouthRoads, Whitestone, Asplundh, Waste Management, and any of the local power contracting companies are not stupid and they would have no interest in paying the DCC $45-60M for $15.804M of equity (on a good day). If Delta expired, the limited competition just got less, and paydays all round for all left standing. Your correspondent says then that any purchaser is likely to be someone who does not have a presence in the market, and sees potential for profit in this market, allegedly with limited competition. If that were true they would leave Delta as it was, maybe even with some of its precious head office jobs, to continue their (merry and profitable ?) way. (For the time being at least).

3. The bottom line is your correspondent posits that Delta will never be sold in its current form, because its competitors know, even if DCC Treasury does not, that Banks have certain standards for lending money to companies, and an important one is the debt to equity ratio. Delta has $26.9M of debt and $15.804M of equity. That is a debt : equity ratio of 183 % which this correspondent says is far too high for a contracting company. A debt : equity of 100 % or less is usual in this sector. Another is the Liquidity (Quick) Ratio which is Current Assets / Current Liabilities. Contractors should have a minimum of 1.35 and many accountants would say 2. (What would Mr McLauchlan say ….?). Delta has $17.5M of current liabilities and just $220,000 of cash in the bank. This is one seriously undercapitalised contracting company.

Delta will no doubt say their quick ratio is fine because the accounts show $25.244M in receivables, but this includes the very non-current and very illiquid Noble debt of $13.2M. They do have $2.84M of Work In Progress (WIP) which is included under inventories. They then have proper current assets of $0.22M cash, $2.84M WIP, and $12.2M Receivables, ($25.24-13.2M) for a total of $15.08M and a quick ratio of 0.88. The bottom line is : even putting aside the elephantine $26.9M in debt, Delta have serious cash flow issues with a quick ratio of less than 1, and if they have a further problem contract, or even just a delay of a month or two getting paid on a larger contract, they are not just on a cashflow knife edge, but in serious trouble. Delta has basically no cash reserves as at June 2015. Of course, Mr Cameron did not dwell on that factoid in his report….

Readers, the quality of the excuses made in support of retaining Delta are of the same quality as the prediction of its value at $45-60M.

[ends]

█ For more, enter the term *delta* in the search box at right.

Posted by Elizabeth Kerr

1. factoid

*Image: blog.smashwords.com – AuthorUphillBattle, tweaked by whatifdunedin

5 Comments

Filed under Aurora Energy, Business, DCC, DCHL, DCTL, Delta, Democracy, Dunedin, Economics, Finance, Infrastructure, Name, New Zealand, OAG, People, Politics, Project management, Property, Public interest