FINANCIAL INFORMATION Statement of Prospective Financial Information
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FINANCIAL INFORMATION Statement of prospective financial Information ..............................................................................................................1 Funding of operating expenditure....................................................................................................................................1 Funding impact statement .............................................................................................................................................10 Statement of Accounting Polices....................................................................................................................................26 STATEMENT OF PROSPECTIVE FINANCIAL INFORMATION The financial information contained within this Long Term Plan is prospective financial information which complies with the Financial Reporting Standard 42 (FRS42). FRS42 sets the principles and specifies minimum disclosures for the preparation and presentation of general purpose prospective financial information. The purpose of this financial information is to enable the public to participate in the decision making process as to the services that Waipā District Council (Council) will provide over the financial years 2021-31, and as an accountability mechanism for the community. The financial information may not be appropriate for purposes other than those described. In relation to the FRS42, the financial years 2021/22 to 2030/31 are considered to be ‘forecast years’ and based on future events, which are expected to occur. The actual results achieved for the financial years 2021-31 are likely to vary from the information presented and may vary depending upon the circumstances that arise during the period. The forecast financial information has been prepared in accordance with Council’s current policies which comply with the New Zealand International Financial Reporting Standards. Council is responsible for the prospective financial statements, including the appropriateness of the underlying assumptions and all other required disclosures. The Annual Plan budget for 2020/21 and/ or the Forecast values for the 2020/21 have been included in the forecasted statements, as presented in the 4 month report to 31 October 2020. The forecasted 2020/21 year, while based on the actual transactions occurring during the 2020/21 year, is still only a forecast as the financial year 2020/21 had not been completed by the time the forecast financial information was prepared. The prospective statements in the Long Term Plan were adopted by Waipa District Council on XX 2021 and takes effect from 1 July 2021. The Long Term Plan is formally reviewed and updated every three years. FUNDING OF OPERATING EXPENDITURE Section 100 of the Local Government Act 2002 requires councils to fund operating expenditure from operating revenue. The reasons for not fully funding selected operating expenses are detailed below: Infrastructural assets Document Set ID: 10533867 Version: 31, Version Date: 22/03/2021 The value of assets written off as a result of the renewal of infrastructural assets is not funded in the current or future years. The following group of activities are affected: Table 1: Infrastructural assets Group of Activities 2021/31 ($000) Transportation $1,022 Stormwater $215 Water Treatment and Supply $512 Wastewater Treatment and Disposal $410 These estimates were based on trends relating to asset write-offs over the preceding three years. Community services and facilities and support services Council does not fund depreciation on buildings and improvements where future renewals would be from community sources or through raising new debt. This type of facility is primarily community occupied, has a life in excess of 50 years and renewal would only occur if future generations so decided. The amount of depreciation not funded in 2021/22 is $858,273. We do not fully fund depreciation on computer software and hardware as Council is moving towards cloud-based software and leasing of hardware not funded in 2021/22 is $700,000. Forestry Council has an investment in forestry and we generate income from logging sales and expenditure to maintain and manage the forest. The income and expenditure do not necessarily match each year, with some years having higher sales than other years. To ensure that there is no-flow on impact to ratepayers this activity will be managed through a reserve account which over a number of years should show a surplus. Housing for the elderly Council has an investment in residential housing and we generate income from rent and expenditure to maintain and manage the properties. The income and expenditure do not necessarily match each year and to ensure that there is no flow-on impact to ratepayers this activity is managed through a reserve account to ensure that any rents collected are used for the benefit of the property. Operating surplus Council’s operating surplus is the result of income funding asset development, and various non-cash items such as revaluation gains, being included in the Statement of Comprehensive Revenue and Expense in line with accounting requirements. Council only sets rates and fees and charges income to the levels needed to meet its operating costs. Any operating surpluses generally come from non-cash items; we budget for a general funds cash breakeven position. The Statement of Comprehensive Revenue and Expense also includes significant infrastructural revaluations which are non-cash items. Table 2: Prospective statement of comprehensive revenue and expense Document Set ID: 10533867 Version: 31, Version Date: 22/03/2021 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 2026/27 2027/28 2028/29 2029/30 2030/31 Annual Plan Budget Budget Budget Budget Budget Budget Budget Budget Budget Budget $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 OPERATING INCOME Rates 68,263 72,788 77,584 81,709 84,590 88,543 92,539 96,615 100,064 104,927 109,325 Fees & Charges 14,720 13,150 13,376 13,843 14,303 14,766 15,138 15,871 16,573 17,049 17,530 Reserve contributions 522 1,415 1,485 1,823 1,997 1,910 1,799 1,182 1,202 1,169 1,144 Development contributions 12,072 17,172 21,565 24,062 28,886 28,142 27,832 24,144 24,076 23,547 22,749 Gain on revaluation of investment properties & forestry 447 447 450 450 450 450 450 450 450 450 450 Vested assets 15,176 26,515 12,126 12,464 12,824 13,203 13,587 14,012 14,470 14,953 15,412 Discovered assets - - - - - - - - - - - Dividends 20 20 20 20 20 20 20 20 20 20 20 Finance income 271 15 15 15 50 50 50 50 50 50 50 Subsidies and Grants 11,327 15,304 20,782 15,790 13,666 14,500 10,139 11,787 10,853 10,395 10,888 Other revenue 1,563 2,182 1,341 458 461 462 458 459 463 471 468 Gain on swap derivative - - - - - - - - - - - Total Operating Income 124,381 149,008 148,744 150,634 157,247 162,046 162,012 164,590 168,221 173,031 178,036 OPERATING EXPENDITURE Employee benefit expenses 27,023 28,738 29,027 29,964 30,816 31,675 33,394 34,269 34,887 35,748 36,616 Depreciation & amortisation 25,461 27,329 29,119 30,877 31,449 30,512 30,340 30,637 30,729 31,949 31,722 Other expenses 43,465 39,814 43,059 44,883 47,018 47,528 51,578 51,502 52,242 53,877 57,819 Finance costs 1,870 2,602 3,383 3,732 3,398 3,561 3,514 4,096 4,539 4,701 4,368 Loss on revaluation - - - - - - - - - - - Loss on swap derivative - - - - - - - - - - - Total Operating Expenditure 97,819 98,483 104,588 109,456 112,681 113,276 118,826 120,504 122,397 126,275 130,525 OPERATING SURPLUS 26,562 50,525 44,156 41,178 44,566 48,770 43,186 44,086 45,824 46,756 47,511 Other Comprehensive Income recognised directly in Equity Property Plant and Equipment Revaluation gains/(losses) taken to equity 20,819 9,053 81,080 29,945 62,227 67,452 72,797 56,045 114,998 82,294 100,731 Intangible Revaluation gains/(losses) taken to equity - - - - - - - - - - - Investment Revaluation gains/(losses) taken to equity - - - - - - - - - - - Cash flow hedges 206 - 1,292 - - - - - - - - Total Other Comprehensive Income for the year 21,025 9,053 82,372 29,945 62,227 67,452 72,797 56,045 114,998 82,294 100,731 Total Comprehensive Income for the year 47,587 59,578 126,528 71,123 106,793 116,222 115,983 100,131 160,822 129,050 148,242 Table 3: Targeted water rates 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 2026/27 2027/28 2028/29 2029/30 2030/31 Annual Plan Budget Budget Budget Budget Budget Budget Budget Budget Budget Budget $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 Targeted Water Rates 11,210 11,546 12,321 13,021 13,790 14,620 15,487 16,462 17,538 18,693 19,856 Table 4: Depreciation and amortisation 2020/21 2021/22 2022/23 2023/24 2024/25 2025/26 2026/27 2027/28 2028/29 2029/30 2030/31 Annual Plan Budget Budget Budget Budget Budget Budget Budget Budget Budget Budget $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 $000 Governance 7 7 5 4 3 3 2 0 - - - Environmental Services 6 9 13 30 30 29 29 28 28 28 27 Community Facilities 3,382 4,543 4,828 5,059 5,277 4,340 4,696 4,941 5,156 5,112 5,157 Transportation 10,976 10,957 11,297 11,617 11,498 11,273 11,085 10,757 10,448 10,313 10,237 Stormwater 1,683 1,959 2,430 2,625 2,779 2,895 2,934 3,005 3,036 3,140 3,176 Wastewater 3,709 3,425 3,512 3,606 3,675 3,709 3,711 4,167 4,206 4,751 4,965 Water 4,375 4,486 4,500 4,711 4,890 4,961 5,099 5,302 5,369 5,522 5,545 Support Services 1,322 1,945 2,535 3,225 3,296 3,301 2,784 2,437 2,486 3,084 2,616 25,461 27,329 29,119 30,877 31,449 30,512 30,340 30,637 30,729 31,949 31,722 Document Set ID: 10533867 Version: 31, Version Date: 22/03/2021 Table 5: