Delta #EpicFail : Strategic Reasons & Outrageous Logic

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

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.

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Posted by Elizabeth Kerr

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

QB 2014 gongs of ill-repute #Hudson COI = MNZM

(via ODT) Mon, 2 Jun 2014
Southern Queen’s Birthday Awards recipients

Paul Hudson
Dunedin
Services to business and the community
Paul Hudson (65), of Port Chalmers, said that he was “humbled and honoured” for the recognition of his involved with commerce, local government and the community in Dunedin for 50 years.
He worked for Cadbury Fry Hudson between 1973 and 1996 and, as managing director, led Cadbury’s transition to conducting its worldwide business from centralised locations.
He held elected positions on Port Chalmers and Dunedin City Councils between 1980 and 2013, including deputy mayor on both councils.
He was chairman of Dunedin City Holdings, Citibus-Dunedin Transport Ltd and Citiworks, and a board member of City Forests, Aurora Energy and Delta Utility Services.
He was chairman of Dunedin City Holdings for 18 years, when shareholder funds increased from $100,000 to more than $150 million and distributions to Dunedin City Council totalled more than $280 million.
He was council appointee for the Otago Theatre Trust, Dunedin Public Art Gallery Society and its acquisitions committee and the Dunedin Town Hall Organ Trust.
He was appointed treasurer to the Otago branch of the Save the Children Fund 50 years ago. “This was the beginning of my lifelong interest in serving the community.”
The service to the community included work for Port Chalmers Kindergarten, the Aramoana Trust, Regent Theatre, the Otago Arts Society, the Dunedin Council of Social Services and the Dunedin Community House Trust. “My involvement with the establishment of Community House, my early years in Save the Children Fund and various roles and involvement in local government have been very satisfying,” he said.

[ends]

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DECLARATION
“I, Paul Richard Hudson, do solemnly declare I did not squander ratepayers’ money for the chance to receive specific mention in the freshly minted report of the Office of the Auditor-General’s investigation into Delta (2014). Nor at any time did I place or declare my Conflicts of Interest ahead of my ability to be judge and jury at DCHL and other council-owned companies, so to infuriate Warren Larsen (Report, 2012). I did not personally receive ANYTHING by way of payment for termination of lease of restaurant space in the Municipal Chambers. And, I am not at all obsequious, a fence-sitter — or, make that slimy.” … “Honest.”

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Related Posts and Comments:
8.11.13 DCHL, long wait for review (Larsen sighs)
23.8.13 New DCHL Chair announced: Graham Crombie
24.7.13 DCC / DCHL shake up !!!
12.7.13 Hudson, DCC (ex DCHL)
7.7.13 DCHL changes lack transparency —where’s the report, Shale?
30.10.12 DCHL ‘run by a bunch of fools’ -agreed
26.10.12 DCHL borrowed $23 million to bail DCC
26.10.12 DCHL: New directors for Aurora, Delta, City Forests
17.10.12 DCC on DCHL, subsidiaries and DCTL
12.10.12 DCHL, subsidiaries and DCTL
30.8.12 Dunedin City Council seen by Fairfax Business Bureau deputy editor Tim Hunter
7.8.12 DCC, DCHL, debt, democracy (and professional rugby)
20.12.11 Delta and the GOBs #DCHL #DCC
28.10.11 DVML, DVL and DCHL annual reports
16.9.11 DCHL and subsidiaries: shuffling, no real clean out?
13.8.11 Ridding DCHL of conflicts of interest, Otago business monopoly ‘by director’, and other ghouls
9.2.11 DCC and DCHL, was there ever any doubt?
7.10.10 The time has come for biffing out
7.7.10 DCC, DCHL, CST, DVML, DVL?
22.10.09 DCHL chief executive replies to critics

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Posted by Elizabeth Kerr

Stadium: Animal safety and welfare top priority? #Dunedin

Screenshot.

“Doors open at 3:30pm with equestrian action kicking off the evening’s entertainment, thrilling the crowd from every angle. It will include everything from international show jumping and the high-paced action of mounted games, to the masterfully crafted grace, power and beauty of dressage to music. The stadium’s intimate feel will only add to the spectacle, bringing its own unique party atmosphere.

The highlight of the equestrian action will be the McMillian Equine Feeds Super Grand Prix, boasting a $50,000 prize, making it the second biggest Grand Prix in Australasia. Run over two rounds, the competition will feature some of Australasia’s leading jumping combinations.

As the equestrian entertainment draws to a close, The Hollies will take to the stage bringing down the curtain on Dunedin’s biggest night of the year, providing hours of entertainment.” http://www.ridetherhythm.co.nz/

Equestrian Information

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Comments received.

Phil
Submitted on 2013/01/03 at 9:53 am

I read somewhere that the “highlight” is an attempt on the NZ high jumping record for horses. I’ve seen these events many time around the world and they can be incredibly dangerous for the horses. The height and force they land from/with puts tremendous stresses on their frames. Because of this, any attempt competition is always made on a specially prepared surface. They do not, repeat NOT, come down from 2+ metres onto a heavily compacted football pitch with all the forgiving qualities of a concrete slab. The riders are only ever specialist jumpers on horses trained specifically for this one event. Allowing this cowboy production to perform in our town puts a cloud over us all. Leave the rest in, drop the prices to match the product and get rid of the ridiculous jump. Show the animals some respect.

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Phil
Submitted on 2013/01/03 at 9:43 am

You would think that someone with a knighthood would ask his reporters to check a story instead of simply posting a copy of the promoter’s advertising flyer and calling it journalism. Like the infamous rodeo, this is another overhyped event. There is only one legitimate show jumper on the start list, and she has sold the horse that gave her a name. Riding a new young horse is like expecting a Formula One driver to show his top skills while driving a Ford Escort. Riding is all about combinations. All top riders will be in Europe in February, at the height of the competition season, where their top horses are permanently based. The other so called “Olympians” date back almost 20 years and were Eventers. Expecting them to give a quality specialist display is like expecting a top Triathlete to win the Tour De France. These promoters are going to want to charge top dollar for tickets. The very least they could do is to be upfront about the product. Probably a bit much to ask. They have managed to shoot themselves in the foot a bit, however. So there is some justice. The date of the event is the same date as the national Dressage riding championships in Christchurch. A bit of a lesson in researching your target audience before trying to screw them.

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The Animal Welfare Act 1999 is a very wide-ranging Act and deals with offences in the handling and management of animals (including fish and birds) in this country. For a full guide to the Animal Welfare Act 1999, visit the Ministry for Primary Industries (MPI) webpage.

SPCA Otago – Dunedin
http://www.spcaotago.org.nz/

General Enquiries:
Email: office@otago-spca.org.nz
Phone: 03 473 8252
Fax: 03 473 8169
Please do not send an email for animal welfare or emergencies. Please phone us on the above number.

Opening Hours:
Monday to Friday: 10am to 4.30pm
Saturday and Sunday: 1pm to 3pm

The Haven:
SPCA Otago Centre, 1 Torridon Street, Opoho, Dunedin 9010

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Posted by Elizabeth Kerr

DCC Annual Report to 30 June 2012 – borrowing and interpretation

DCC Annual Report (PDF, 1.1 MB)

Comments received.

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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’

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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]

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Posted by Elizabeth Kerr

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).

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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.
Read more

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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.
Read more

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Posted by Elizabeth Kerr

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.

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### 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.
Read more

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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

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### 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.
Read more

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Posted by Elizabeth Kerr

DCHL ‘run by a bunch of fools’ -agreed

Comment received.

JimmyJones
Submitted on 2012/10/30 at 5:43 pm

DCHL is financially very sick: if it was a horse, you would have to shoot it to put it out of its misery. It is amusing to see how sensitive Dave Cull is to Lee Vandervis stating-the-bloody-obvious, that DCHL doesn’t make enough real money to pay its interest and dividends to the DCC, as well as the subsidies to DVL and DVML.
The DCC are forcing DCHL into more and more debt every year. For the 5 years that I have Annual Reports, DCHL has always paid for its distributions to the DCC by increasing their debt. Not just part of the distributions are borrowed money, but the whole amount each year.
In 2012 they added $50.3 million to their debt (page 37), so you can see that even without being forced to provide distributions of $23.2 million, it already had a severe cash-flow shortage. This negative cash-flow is the result of their own incompetence from spending very large amounts on new investments and expanding their operations. The incompetence comes from the fact that there has been no expansion in profits as a result of this low quality spending. They seem to be followers of the Homer Principle (if something doesn’t work, keep doing it), because not once in the last five years have they earned enough cash to pay for their spending on new stuff. Poor-old Dave and the new-guy, Paul, don’t seem to understand the problem. Let me summarize –

● DCHL is heading towards bankruptcy
● It is going bankrupt because DCC councillors and staff have been using it like a magic money-box where distributions are paid from debt (debt that doesn’t show up on DCC books – because of their choice)
● The LTP shows that they fully intend to continue this foolish practice, despite the DCHL Chairman’s aspirational comments to the contrary and Mayor Cull foaming at the mouth about it
● DCHL has been, and mostly still is, being run by a bunch of fools that need to be kept well away from anything financial or owned by the People Of Dunedin.

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### ODT Online Tue, 30 Oct 2012
Mayor sees red over Vandervis questions
By Chris Morris
Sparks flew as Mayor Dave Cull and Cr Lee Vandervis clashed repeatedly over debt and dividends at yesterday’s Dunedin City Council meeting. In what at times resembled a running battle, an angry Mr Cull eventually accused Cr Vandervis of giving in to his “obsession” and threatened to prevent him from speaking. The pair found themselves at loggerheads over reports detailing Dunedin City Holdings Ltd’s latest financial results and the council’s annual report.[…]Cr Vandervis attacked the figures at yesterday’s meeting, claiming the entire $23.2 million – which helped keep council rates increases to a minimum – had been funded from loans.
Read more

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Related Posts and Comments:
29.10.12 DCC consolidated debt substantially more than $616m…
26.10.12 DCHL borrowed $23 million to bail DCC
26.10.12 DCHL: New directors for Aurora, Delta, City Forests
25.10.12 Dunedin Venues Limited – 2012 Annual Report now 2 months overdue
17.10.12 The only thing up…. (for sale)
17.10.12 DCC on DCHL, subsidiaries and DCTL
12.10.12 DCHL, subsidiaries and DCTL
28.9.12 The End of The Golden Weather?
25.9.12 Cull’s state of denial…
24.9.12 DCC against imposition of local government reforms
11.9.12 Delta Utility Services Ltd
6.9.12 DCC pays out $millions to cover loss making stadium…
30.8.12 DCC seen by Fairfax Business Bureau deputy editor Tim Hunter
7.8.12 DCC, DCHL, debt, democracy (and professional rugby)
26.7.12 Cull’s council thinks $750,000 per annum to DVML…

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Posted by Elizabeth Kerr

DCHL borrowed $23 million to bail DCC

Why are the Otago Daily Times (Allied Press) and DScene (Fairfax) refusing to print the truth about Dunedin City Holdings accounts?

The $23 million that DCHL reportedly PAID as dividend etc to Dunedin City Council, is borrowed.

DCHL borrowed $23 million to bail the spendthrift DCC and make it look like we have a 5% rates increase instead of the real 25% increase without the new borrowing.

You’ll find all the details here:

DCHL Annual Report 2012 (PDF, 2.1 MB)

The ‘debt-deniers’ from DCHL are trying to characterise this year’s disastrous council-owned companies annual accounts as one of ‘ups and downs’.
ODT 18.10.12

The DCHL annual report actually shows:

● Delta business goodwill – Down
● Jacks Point/Luggate property values – Way Down
● City Forests carbon credits, log returns and valuations – All Down
● City Forests Milburn Wood Processing Mill – Down
● DCHL cashflow – Down
● DCHL profit – Down and Out and Negative: minus $5 million
● The only significant ‘Up’ is more DCHL borrowing

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Repeat:
What DCHL has delivered is another $23 million of debt which they have had to borrow against company assets because the council has already spent it.

The claim that DCHL’s borrowing to supply dividends will stop from next year is a claim with onerous consequences.

– The council’s gross spending continues unabated.
– Together, DCC and DCHL have racked up all possible debt.

Without serious moves to slash staff and shrink the number of company directors, the only option that remains is Asset Sales.

———————————————

A note on two DCHL subsidiaries

The directors of Delta Utility Services Ltd and Delta Investments Ltd are guilty of having made the decision(s) to speculate on property at Queenstown’s Jacks Point and Luggate, using ratepayer funds. No other conclusion is able to be drawn, they are all responsible. They are all liable.

The value of the properties has been written down by millions of dollars, a loss to the ratepayers who were unaware of the purchases until the deals were concluded.

This is not simply a matter of loss of ‘book value’.

The directors of the two companies had real and perceived conflicts of interest in conducting the property deals. They continue as directors with clear conflicts of interest.

The directors should be SACKED. Meanwhile, we await news of ‘board restructuring’. [see post]

DCHL chairman Denham Shale should be SACKED for misrepresenting the facts and condoning the actions of the two boards.

Who are/were the directors responsible?

Delta Utility Services Limited
[formerly Delta Energy Limited; The Electric Company of Dunedin Limited]
Michael Owen COBURN
Norman Gilbert EVANS
Ross Douglas LIDDELL
Stuart James MCLAUCHLAN
Raymond Stuart POLSON

Delta Investments Limited – property subsidiary
[formerly Newtons Coachways (1993) Limited]
Grady CAMERON [also, Chief Executive of Delta Utility Services]
Michael Owen COBURN
Stuart James MCLAUCHLAN
Raymond Stuart POLSON

Throw out Athol Stephens, DCHL Secretary, for good measure.

—

Posted by Elizabeth Kerr

The only thing up…. (for sale)

Email received.

—— Forwarded Message
From: Lee Vandervis
Date: Wed, 17 Oct 2012 19:51:39 +1300
To: Debbie Porteous , Chris Morris
Cc: EditorODT
Conversation: DCHL claim of ups and downs
Subject: DCHL claim of ups and downs

Hi Debbie and Chris,

The debt-deniers from DCHL are trying to characterise this year’s City Companies Annual Reports as one of ups and downs.
Delta business goodwill is down.
Jacks Point/Luggate property values are way down.
[City Forests] carbon credits, log returns and valuations are down.
[City Forests] Wood Processing Mill is down.
DCHL cash flow is down and profit is down and out and negative.

The only thing significantly up is DCC funding requirements for the Stadium, met by significant borrowing again this year, but with a promise that the DCHL borrowing will now stop.
Without the courage to slash and burn staff costs and biff all directors responsible for scandalously speculative Jacks Point/Luggate, Wood Processing Mill etc, the only option that remains is asset sales.
Look out City Properties, Waipori Fund, Forests etc.

Kind regards,
Lee

—

Posted by Elizabeth Kerr

DCC on DCHL, subsidiaries and DCTL

UPDATED POST 18.10.12

“It’s probably good to take all your bad news at the same time and look forward to the future.” -Denham Shale, DCHL

PROPERTY SPECULATION BY DELTA DIRECTORS WITH LOCAL COMPANY LINKS, IS THE MISUSE OF PUBLIC FUNDS. STOP.
GLARING CONFLICTS OF INTEREST ARE INVOLVED. STOP.
DCHL CHAIRMAN IS FULLY COMPLICIT, ALONG WITH DCHL BOARD OF DIRECTORS. STOP.
DUNEDIN CITY COUNCILLORS FAIL RATEPAYERS AND RESIDENTS SEVERALLY. STOP.

See link to ODT report added below.

—

DCHL Annual Report 2012 (PDF, 2.1 MB)
Dunedin City Holdings Ltd Annual Report 2012

Warren Larsen Report (PDF, 3.9 MB)
Governance review of all companies in which Dunedin City Council and/or Dunedin City Holdings Limited has an equity interest of 50% or more.

BUT WHAT’S THE REAL STORY?

—

Dunedin city Council
Media Release

Dunedin City Holdings Limited Annual Result for the year ended 30 June 2012

This item was published on 17 Oct 2012.

This past year has been a challenging year in which there has been a well publicised change in governance of the parent company. It has been a year that has been affected by a slow economy and poor export log prices and a year in which the subsidiary companies decided to write down the values of assets where impairment occurred.

Revenue has increased for the year by 3.7% to $254.9m, however, the profit has been affected by a series of factors that are fully explained in the Annual Report of the company. These factors are the effect of the Dunedin City Holdings (DCHL) group providing subvention payments directly to Dunedin Venues Limited in lieu of dividends to the Council, the effect of asset impairment provisions made by the Delta group in respect of goodwill on a number of past business acquisitions and land at Luggate and Jacks Point, pressure on margins in a slow economy, and lower carbon credit income in comparison with last year.

Separately from the activities of the subsidiaries the holding company board has been active working on a number of issues arising from the Larsen report. “Last December I stated that we have been charged with restructuring a number of aspects within the group. You have seen the recent appointment of two additional directors to the parent company board. We anticipate further announcements by year end from suggestions to be made to the Council over the next two months.” comments DCHL Chairman, Denham Shale.

“As a matter of principle, the current board has taken the view that borrowing should not be entered into for the payment of dividends. But it is important to note that much of the drop in profit last year was caused by the agreement in respect of Dunedin Venues Limited and accounting provisions rather than cash outflows. Against this, dividends in this current year will be paid from surpluses that we would expect to make over the year to June 2013. Therefore it is not necessarily correct to assume that because last year was poor that there will be no dividend this year. ”

Aurora Energy Limited has traded well although the economy has slowed the growth in the quantity of electricity carried on the network.

The NZ forestry industry has had another difficult year and, as the public is aware, City Forests Limited decided to cease operating its timber processing mill. The Milburn asset has been leased to Craigpine Timber Limited.

The electrical asset planning and maintenance businesses of Delta Utility Services Limited have operated well. But the demand for other infrastructure services weakened and company was forced to conduct a series of adjustments to reposition the company to match reduced demand. The land holdings of the Delta group, which have attracted media attention, are under close management.

The summer tourism season last year was well underpinned by the visits of cruise ships. We expect an improving cruise ship season over this next summer.

Overall passenger numbers into Dunedin International Airport were 9.9% up for the year. The operating surplus after tax achieved by the company for the year was an improvement on both budget and the same period last year. A substantial revaluation of the assets of the company has increased the carrying value of the investment in the books of the DCHL parent company.

Contact Denham Shale, Chairman, DCHL on 021 375 112.

DCC Link

—

### ODT Online Thu, 18 Oct 2012
$5m loss for DCC group
By Chris Morris
A $9 million write-down in Delta’s investments – including property at Jacks Point and Luggate – is partly to blame for a multimillion-dollar loss booked by the Dunedin City Council’s group of companies.[…]Mr Shale was reluctant to criticise yesterday when asked if the property purchases had proven to be a mistake. “I wouldn’t call it a mistake, no. As we see it today, it could be called an unfortunate decision, but that is very much in hindsight. It’s very easy in hindsight.” He also saw no need for the new DCHL board to investigate the rationale behind the purchases, saying they were “a fact that’s there”. “We can’t do anything to change it.” He blamed the result on the world economy…
Read more

—

Related Posts:
12.10.12 DCHL, subsidiaries and DCTL
30.8.12 Dunedin City Council seen by Fairfax Business Bureau deputy editor Tim Hunter

—

Posted by Elizabeth Kerr

DCHL, subsidiaries and DCTL

UPDATED

Agenda – Council – 15/10/2012 (PDF, 36.1 KB)
Extraordinary Council Meeting

Report – Council – 15/10/2012 (PDF, 32.2 KB)
DCHL Governance Structure

### ODT Online Fri, 12 Oct 2012
Further shake-ups for boards
By Chris Morris
The Dunedin City Council’s stable of companies is set for another injection of fresh blood as part of major restructuring prompted by a dividend shortfall last year and the political storm that followed. The changes will affect the boards of Delta Utility Services and Aurora Energy – governed by the same directors – and City Forests. Two directors from each are to be replaced by two new recruits, with fresh talent and skills. In addition, the board of Dunedin City Treasury Ltd (DCTL) will be completely replaced by the recently appointed directors of the council’s holding company, Dunedin City Holdings Ltd. The changes were outlined in a report by DCHL chairman Denham Shale and will be considered at an extraordinary council meeting on Monday.
Read more

Warren Larsen Report (PDF, 3.9 MB)
Governance review of all companies in which Dunedin City Council and/or Dunedin City Holdings Limited has an equity interest of 50% or more.

—

Related Posts:
1.11.11 Dunedin City Holdings Limited
28.10.11 DVML, DVL and DCHL annual reports
16.9.11 DCHL and subsidiaries: shuffling, no real clean out?
2.9.11 Dunedin City Council is buggered
13.8.11 Ridding DCHL of conflicts of interest, Otago business monopoly ‘by director’, and other ghouls
11.8.11 CRITICAL Dunedin City Council meeting
9.8.11 CRITICAL Dunedin City Council meeting
3.8.11 D Scene broke the news
29.7.11 WE ALL SAID IT #DunedinCityCouncil #SHAME
9.2.11 DCC and DCHL, was there ever any doubt?

—

Posted by Elizabeth Kerr

Dunedin’s 3 waters, no CCO

UPDATED POST

● Dunedin’s water, wastewater and storm water network

DCC Three Waters Strategy
Management of Water, Wastewater and Stormwater (The 3 Waters)
Our main objective is to protect public health and safety by delivering enough safe drinking water to, and safely removing waste and storm water from, everyone connected to the network, with minimal impact on the environment and at an acceptable financial cost. We also aim to provide protection from flooding and erosion as well as controlling and reducing pollution in stormwater discharges to waterways and the sea. As well as delivering services today, we need to plan for the future, making sure we will be able to deliver the service that future generations will need.
http://www.dunedin.govt.nz/your-council/council-projects/3waters

—

Dunedin City Council
Media Release

Working Party to Recommend Dunedin’s 3 Waters Remain In-House

This item was published on 24 Aug 2012.

The DCC’s 3 Waters Working Party has prepared a report for the Finance Strategy and Development Committee on 5 September, recommending that a Council-controlled organisation (CCO) should not be formed, but instead an enhanced status quo option should be developed.

With information gathered from numerous background reports, including the extensive assessment of the proposal from DELTA Utilities Ltd, commissioned from Morrison Low and Associates, the 3 Waters CCO Working Party has formulated a view on the preferred future structure for the delivery of 3 Waters services (waste [sic]* supply, wastewater and storm water).

The reasons supporting the recommendation that a CCO not be formed are:

● The DCC would be less able to directly manage and control a CCO to achieve its aims, particularly where those aims relate to a whole-of-DCC approach to achieve benefits for the wider city.

● The retention of full governance responsibilities with the Council means it can more directly make decisions about the present and future direction of the Water and Waste department.

● The DCC’s asset management capability is well-respected in New Zealand’s water industry and development of its capability has been underway for some time as part of existing business improvement processes. Retaining this sophisticated asset management capability in-house allows the DCC to have confidence in its ability to understand its assets and to plan for the future delivery of these services.

● Externally appointed directors bring additional skills but there are other ways such input can be provided for without requiring a change in governance structure.

The three subsequent recommendations in the report are to:

● Retain asset management in-house

● Review the service delivery options for operations and maintenance (This is in line with the review of other DCC services to ensure the best value for money.)

● Investigate the creation of an advisory board

The DCC’s Water and Waste Services staff, who are directly affected by this report have been informed today of its contents. They now await the decision that will be made when the report is presented to the Finance, Strategy and Development Committee on Wednesday 5 September.

The report and associated documents will be available shortly before the Committee meeting.

Contact General Manager City Operations on 477 4000.

DCC Link

—

* What if? suggests the paragraph should read: “…the 3 Waters CCO Working Party has formulated a view on the preferred future structure for the delivery of 3 Waters services (water supply, wastewater and storm water).” -Eds

Related Post:
16.8.12 Dunedin water assets

—

Posted by Elizabeth Kerr

Asset sales (would Dave’s council sell us up)

YOU BETCHA BUT NOT THE STADIUM, WHY NOT THE STADIUM, MALCOLM ALWAYS SAW IT AS A LEGACY, OH, NOT TO UPSET MALCOLM THEN, ANYWAY STUART SAYS THE WATER KEEPS FALLING OUT OF THE SKY

—

### 3news.co.nz Mon, 28 May 2012 7:00p.m.
Local councils under pressure to use asset sales
Assets sales are never far from the headlines, and always, it seems, controversial. The Government is pressing ahead with the partial sale of four state-owned energy companies and Air New Zealand. They made their plans clear during the elections and therefore claim a mandate to sell, but how far does that go? Because it’s no longer just state-owned assets being eyed for potential sale, local councils are under increasing pressure to consider asset sales to fund new projects and reduce debt. Auckland has already said no, and now Christchurch has suggested in a very polite fashion that central Government should sod off. The Christchurch Council and ratepayers face extraordinary costs following the earthquake, but the mayor is firm that there will be no sale of the family silver.
Read more + Video

—

Posted by Elizabeth Kerr

Total ratepayer impact: 6-month stadium operation estimated at $10.2m

Comment received.

—

JimmyJones
Submitted on 2012/05/19 at 9:59 am

…keeping the DVL 6-month loss out of the media was a PR success for the McKerracher Group. The size of the loss ($5.2 million) is very significant and so it is inconceivable that Dave Cull and Paul Orders were unaware of it. The idea of pretending that the stadium is completely represented by DVML is DCC policy. The plan was that DVML’s finances could be manipulated to break-even and all the losses would end up in DVL. DVL was to be swept under the carpet and not talked about.

This deception is the likely purpose of having both DVL and DVML. The real financial horror story is seen by simply adding the results of DVML and DVL and the DCC.

The size of the DCC costs is undisclosed, but my guess is maybe $3 million. So we have for the total ratepayer impact for the 6 months of operation $2.0m (DVML loss – not $1.9m) + $5.2m (DVL loss) + $3m (DCC costs) = $10.2 million.

It is a reasonable assumption that the full-year ratepayer impact will be double the 6-month result, i.e. $20 million (remember the $3m is a guess). I expect this to continue for the lifetime of the stadium. It is easy to hide this from the councillors, but the awareness and collaboration of Dave and Paul is shown by them promoting the “only $1.9m loss” spin.

Read the full comment here.

—

Posted by Elizabeth Kerr

Directorships and council-owned companies

### stuff.co.nz Last updated 05:00 10/03/2012
Business
So you want to be a director?
By Tom Pullar-Strecker
Harsh light of day: Finance company directors in court have provided a “wake-up call” to all board members, with some wondering if the work is worth it.
At the Institute of Directors’ offices in Featherston Street, 20 high-fliers have gathered for a day-long course that is designed to help prepare them to take a seat as a director at a boardroom table. Contrary to stereotypes, there is little grey hair, nine are female and none are in handcuffs. Their reasons for attending the course are similarly quite varied.

The institute has 5500 members and, among them, the median fee for a directorship is about $35,000, chief executive Ralph Chivers says. For positions on boards of companies with a turnover of more than $500 million a year, that rises to about $70,000. However, there are probably no more than 500-600 people sitting on boards of the top-100 listed and private companies and they are by and large people “at the top of their game”.

Read more

****

### ODT Online Sun, 11 Mar 2012
Magazine
Keeping it all above board
By Mark Price
With Dunedin City Council-owned companies undergoing a restructuring, and question marks over who will fill more than a dozen directors’ seats, what is required of an effective company director.
J. Denham Shale was appointed by the council after the “Larsen review” delivered the council a list of recommendations to improve the running of its companies – city councillors being barred from the company boardrooms the most radical of them.

Shale’s arrival, along with that of deputy Bill Bayliss, of Queenstown, coincided with the resignation of some members of the old holding company board and the sacking of the others, including chairman and city councillor Paul Hudson. Shale and Bayliss are just the interim board – given 12 months to restructure the holding company and its subsidiaries. Recruiting new directors is part of that job.

Read more

—

Posted by Elizabeth Kerr

Dunedin City Holdings Limited

Dunedin City Council
Media Release

New Start For DCHL

This item was published on 01 Nov 2011.

In keeping with the recommendations of the [Larsen] Report on the membership and operation of DCHL, the following measures have been endorsed by the Council at its meeting yesterday.

• Membership of DCHL board precludes membership of the boards of subsidiary companies
• Elected members and senior DCC staff not eligible for board membership
• There will be no multiple directorships
• The DCHL board will be reconstituted with three directors only.

The Council expects these measures to be implemented immediately.

To this end:

• DCHL board have all resigned or been removed.
• Two new DCHL board members announced today are Denham Shale and Bill Bayliss.
• They will be assisted by Warren [Larsen] who will act as a consultant to the DCHL board.
• There will be a further appointment to the board determined by Messrs Shale, Bayliss and [Larsen].
• The new/interim board will guide the implementation of the restructuring of the subsidiary companies’ boards.

Contact Dave Cull, Mayor of Dunedin on 477 4000.

DCC webpage

*Name correction in square brackets by What if? editors.

—

Larsen Report via this DCC weblink – published 11 August 2011.

Related Posts:
28.10.11 DVML, DVL and DCHL annual reports
16.9.11 DCHL and subsidiaries: shuffling, no real clean out?
2.9.11 Dunedin City Council is buggered
13.8.11 Ridding DCHL of conflicts of interest, Otago business monopoly ‘by director’, and other ghouls
9.8.11 CRITICAL Dunedin City Council meeting
3.8.11 D Scene broke the news
29.7.11 WE ALL SAID IT #DunedinCityCouncil #SHAME
9.2.11 DCC and DCHL, was there ever any doubt?

—

Posted by Elizabeth Kerr

D Scene broke the news

Register to read D Scene online at
http://fairfaxmedia.newspaperdirect.com/

### D Scene 3-8-11
Lights, camera… (page 1)
The spotlight has been turned on the Forsyth Barr Stadium. The new venue is under scrutiny not just because it is being officially opened on Friday, but because a major row has erupted over servicing Dunedin City Council’s debts – including money intended to fund the stadium project.
See pages 3, 5 and 21. #bookmark

****

Grand stadium opens (page 3)
By Wilma McCorkindale
Dunedin is invited to the opening of Forsyth Barr Stadium on Friday. At an early morning ceremony, the facility will receive a formal Maori blessing and Prime Minister John Key will do the official opening honours. Media and dignitaries are expected to attend the hour-long 7am event, which will unveil the facility, the only multi-purpose arena in the world with a fixed roof and a natural grass turf.
{continues} #bookmark

What the stadium means to me now – Bev Butler (page 3)
For me, the physical reality of the stadium is a constant reminder of a divided community…It has never added up, financially, as a prudent project for the council to spend money on. The consultants’ reports told us so. Even David Davies, Dunedin Venues Management manager, has admitted that the stadium’s “bread and butter” will be “conferences and meetings”.
{continues} #bookmark

What the stadium means to me now – Malcolm Farry (page 3)
While controversy may continue to cause debate over the coming year or two, there is no doubt that history will show this achievement to be a milestone in the development of Dunedin and the region…The benefits in economic impact, quality and vibrancy of life will be seen to be a major step forward.
{continues} #bookmark

****

Solutions would be tabled along with the two reviews at the next full council meeting set for Wednesday, August 10.

Council living beyond means (page 5)
By Mike Houlahan ad Wilma McCorkindale
Dunedin City Council (DCC) is in damage control this week in the wake of revelations last Friday it was facing a financial crisis. In an early evening press release, mayor Dave Cull announced an $8 million funding annual revenue shortfall, revealed in two internal reviews tabled at the previous day’s Finance, Strategy and Development Committee meeting. The reviews, one by the council’s Council-owned Companies (CCO) liaison group, the other by consultant Warren Larsen, found Dunedin City Holdings Ltd (DHCL) would not be able to continue paying $5 million annual dividends anticipated by council.
{continues} #bookmark

****

Personality debate ignores real issues (page 20)
By Wilma McCorkindale
Dunedin Mayor Dave Cull is defending his 11th hour announcement last Friday night that the city is in financial trouble…Cull is adamant council has been trying to pin down Dunedin City Holdings Ltd (DCHL) on what dividends it could sustain, in the wake of concerns during the past year on its ability to pay out…Cull said he was among those who voiced concerns about hiking demands on council company dividends, as far back as 2008.
{continues} #bookmark

Sources close to council say the Larsen report is scathing of DCHL.

Cr refuting claims of board neglect (page 20)
Dunedin City Holdings Ltd (DCHL) Chairman, Cr Paul Hudson, is refutung claims his board neglected to clarify its ability to meet dividends expected by Dunedin City Council (DCC). Hudson said the facts had been misrepresented in a press release announcing a city financial crisis on Friday, after Thursday’s Finance, Strategy and Development Committee meeting tabled the findings of two reviews…Councillors voted it was not appropriate for him to remain in the meeting, given his DCHL role…Hudson said he spent the weekend digging out documents to back up the DCHL stance on the matter.
{continues} #bookmark

—

Posted by Elizabeth Kerr

Dunedin City Holdings Ltd

### ODT Online Sat, 13 Mar 2010
Electricity companies spark city accounts
By Dene Mackenzie
The Dunedin City Council-owned electricity companies again provided some spark to the financial statements for the six months ended December 31. In an otherwise ordinary year for the council-owned companies, Aurora Energy and Delta Utility Services stood out. Dunedin City Holdings chairman Paul Hudson had no hesitation naming Delta as the star performer, in his opinion.
Read more

Post by Elizabeth Kerr

DCHL chief executive replies to critics

In his letter to the editor, Bevan Dodds explains that DCHL was established to allow Dunedin City Council-owned companies to operate commercially at arm’s length from the council while returning a dividend which the council can then use to offset rates. Although in conclusion he asks, “Why would you not smile at payments of $19.8m that help keep your rates down?”, this doesn’t begin to address – and doesn’t have to – the signalled rate increases ahead. Ahhh, the convenience of that arm’s length between truth or dare.

****

[here abridged]

### ODT Tue, 20 Oct 2009 (page 8)
Letters to the editor
Inconvenient truth: DCHL did well
By Bevan Dodds
Chief Executive, Dunedin City Holdings Ltd

Several “Letters to the Editor” have claimed ‘spin’ or challenged the expenditure of ratepayers’ money on celebrating, via a half page advertisement in your newspaper, the 2008-09 financial results posted by the Dunedin City Holdings Ltd Group of companies.
The payments made by DCHL to the council of $19.8 million comprised $9.5 million dividends and $10.3 million of interest, reflecting the investment in DCHL made up of both loans and shares. The breakdown is carefully set out in the annual report.
After tax profit figures calculated under NZ accounting standards for a group such as DCHL will never match cash or “what is left over in the bank”. Note 34 to the DCHL accounts lists 20 reconciling items between the accounting profit and the cash generated by the group from its business activities.
The total of the profits of the subsidiaries plus the profit of the parent company will only in very rare situations match the consolidated profit of an accounting group. There is no magic here, or mysterious losses because if there was Audit New Zealand and indeed the ODT’s own business reporters would make this very clear, just the pure principles of consolidated accounting.
{continues}

The full letter is available in print and digital editions of the Otago Daily Times.

—

Posted by Elizabeth Kerr