POLICY AND DEVELOPMENT COMMITTEE MEETING. Council Chamber Timaru District Council King George Place Timaru

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1 POLICY AND DEVELOPMENT COMMITTEE MEETING on Tuesday 22 March 2016 Council Chamber King George Place Timaru

2 TIMARU DISTRICT COUNCIL Notice is hereby given that a meeting of the will be held in the Council Chamber, District Council Building, 2 King George Place, Timaru on Tuesday 22 March 2016, at the conclusion of the District Services Committee meeting. Committee Members: Clrs Tracy Tierney (Chairperson), Anthony Brien (Deputy Chairperson), Peter Burt, Steve Earnshaw, David Jack, Richard Lyon, Pat Mulvey, Kerry Stevens, Steve Wills and the Mayor. LOCAL AUTHORITIES (MEMBERS INTERESTS) ACT 1968 Committee members are reminded that if you have a pecuniary interest in any item on the agenda, then you must declare this interest and refrain from discussing or voting on this item, and are advised to withdraw from the meeting table. Peter Nixon CHIEF EXECUTIVE

3 POLICY AND DEVELOPMENT COMMITTEE 22 MARCH 2016 AGENDA Item No Page No 1 Apologies 2 Identification of Items of Urgent Business 3 Identification of Matters of a Minor Nature 4 Chairperson s Report 5 1 Confirmation of Minutes 6 6 Orari-Temuka-Opihi-Pareora Water Zone Management Committee Annual Report Interview: 1.30pm 7 14 Timaru District Holdings Ltd Quarterly Report to December Timaru District Holdings Limited Draft 2016/17 Statement of Intent 9 35 Aorangi Stadium Trust Six Monthly Report to December Aorangi Stadium Trust Draft 2016/17 Statement of Intent 11 Standing Committee Recommendations 12 Consideration of Urgent Business Items 13 Consideration of Minor Nature Matters # March 2016

4 POLICY AND DEVELOPMENT COMMITTEE FOR THE MEETING OF 22 MARCH 2016 Report for Agenda Item No 5 Prepared by Tina Rogers Group Manager Corporate Services Confirmation of Minutes Minutes of the meeting. Recommendation That the minutes of the meeting held on 9 February 2016, be confirmed as a true and correct record. # March 2016

5 TIMARU DISTRICT COUNCIL MINUTES OF A MEETING OF THE POLICY AND DEVELOPMENT COMMITTEE HELD IN THE COUNCIL CHAMBER, DISTRICT COUNCIL BUILDING, 2 KING GEORGE PLACE, TIMARU ON TUESDAY 9 FEBRUARY 2016 AT 9.30AM PRESENT Clrs Tracy Tierney (Chairperson), Tony Brien, Peter Burt (until adjournment), Steve Earnshaw, Dave Jack, Richard Lyon, Pat Mulvey, Kerry Stevens and Steve Wills (until adjournment) and the Mayor (until adjournment) IN ATTENDANCE Aoraki Development (for item 15) Chairperson Brett King Chief Executive Wendy Smith Noeline Clarke Temuka Community Board (for public part of meeting) Chief Executive (Peter Nixon), Group Manager Corporate Services (Tina Rogers), Corporate Planning Manager (Mark Low)(until 9.40am) and Council Secretary (Joanne Brownie) 1 CONFIRMATION OF MINUTES Proposed Clr Earnshaw Seconded Clr Brien That the minutes of the meeting, held on 1 December 2015, excluding the public excluded items, be confirmed as a true and correct record. MOTION CARRIED 2 LOCAL GOVERNMENT NEW ZEALAND UPDATES The Committee noted correspondence released by LGNZ since the last Policy and Development Committee meeting. Proposed Clr Stevens Seconded Clr Burt That the information be received and noted. MOTION CARRIED 3 TIMARU DISTRICT HERITAGE FUND TRUST ANNUAL REPORT The Committee considered a report by the Group Manager Corporate Services presenting the Annual Report for the Timaru District Heritage Fund Trust. Proposed Clr Tierney Seconded the Mayor That the Timaru District Heritage Fund Trust Annual Report, be received and noted. MOTION CARRIED # March 2016

6 4 COUNCIL INVESTMENTS AND BORROWING AS AT 31 DECEMBER 2015 The Committee considered a report by the Group Manager Corporate Services on the Council investments and borrowing as at 31 December Proposed Clr Jack Seconded Clr Burt That the report be received and noted. MOTION CARRIED 5 PROPOSED CHANGES TO TIMARU DISTRICT COUNCIL STANDING ORDERS The Committee considered a report by the Chief Executive recommending changes to s Standing Orders to relocate policies that relate to meeting procedure into Standing Orders and to make other changes to align standing orders with current meeting practice. Proposed Clr Mulvey Seconded Clr Burt That the proposed amendments to the Standing Orders be adopted. MOTION CARRIED 6 POLICY ON FRAUD AND CORRUPTION CONTROL FOR ELECTED MEMBERS The Committee considered a report by the Group Manager Corporate Services, presenting the policy on Fraud and Corruption Control for Elected Members for approval. Proposed Clr Brien Seconded Clr Wills That it be recommended to Council that the policy be adopted. MOTION CARRIED 7 CODE OF CONDUCT OF ELECTED MEMBERS POLICY The Committee considered a report by the Group Manager Corporate Services presenting the policy for Code of Conduct of Elected Members, for approval. Proposed the Mayor Seconded Clr Stevens That it be recommended to Council that the policy be adopted. MOTION CARRIED # March 2016

7 8 COMMUNITY BOARD FUNCTIONS, DUTIES AND POWERS POLICY The Committee considered a report by the Chief Executive presenting the Community Board Functions, Duties and Powers policy for approval. Proposed Clr Jack Seconded Clr Wills That the Community Boards Functions Duties and Powers Policy be adopted. MOTION CARRIED 9 ENHANCING MAORI CONTRIBUTION TO DECISION-MAKING POLICY The Committee considered a report by the Chief Executive presenting the Enhancing Maori Contribution to Decision-Making policy for approval. Proposed Clr Wills Seconded the Mayor That the Enhancing Maori Contribution to Decision-Making policy be adopted. MOTION CARRIED 10 SMOKEFREE PUBLIC OUTDOOR AREAS POLICY The Committee considered a report by the Corporate Planning Manager presenting the draft Smokefree Public Outdoor Areas policy for approval. Proposed Clr Jack Seconded Clr Lyon That the Smokefree Public Outdoor Areas policy be adopted. MOTION CARRIED 11 CARBON POLICY REPORT AS AT 31 DECEMBER 2015 The Committee considered the half yearly carbon policy report for the period ending 31 December Proposed Clr Wills Seconded Clr Burt That the report be received and noted. MOTION CARRIED 12 RECEIPT OF AUDIT AND RISK SUBCOMMITTEE MINUTES The Committee considered the minutes of the Audit and Risk Subcommittee meeting. Proposed Clr Jack Seconded Clr Lyon That the minutes of the Audit and Risk Subcommittee meeting held on 2 December 2015, be received. MOTION CARRIED # March 2016

8 13 EXCLUSION OF THE PUBLIC Proposed Clr Jack Seconded Clr Stevens That the Committee resolves to exclude the public on the grounds contained in Section 48(1) of the Local Government Official Information and Meetings Act: Confirmation of Minutes Gleniti Infrastructure Development Section 7(2)(i) The withholding of the information is necessary to enable the Council to carry out, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations). MOTION CARRIED 14 READMITTANCE OF THE PUBLIC Proposed Clr Mulvey Seconded Clr Stevens That the public be readmitted to the meeting. MOTION CARRIED The Mayor and Clr Wills retired from the meeting. The meeting adjourned at 9.40am and reconvened at 1.30pm. 15 AORAKI DEVELOPMENT QUARTERLY REPORT Aoraki Development s Chairman Brett King and Chief Executive Wendy Smith presented the quarterly report for Aoraki Development for the period October to December Brett King advised that the Board and management focus for the beginning of the year has been on working towards the transition of services at 1 July 2016, the preparation of budgets and the drafting of a new Statement of Intent. The meeting concluded at 1.40pm. Chairperson # March 2016

9 POLICY AND DEVELOPMENT COMMITTEE FOR THE MEETING OF 22 MARCH 2016 Report for Agenda Item No 6 Prepared by Clr Richard Lyon Orari Temuka Opihi Pareora Zone Annual Report Purpose of Report To present the Orari Temuka Opihi Pareora (OTOP) Water Zone Committee s Annual Report Background, Mackenzie District Council and Environment Canterbury established the Orari-Opihi-Pareora (OOP) Zone Water Management Committee in 2010, to develop water management to protect and enhance water quality and the natural environment. Temuka has since been added to the zone as it was noted that Temuka is part of OOP s catchment. The OTOP Annual Report was presented to Environment Canterbury Council on 4 February 2016, and will be presented to the Mackenzie District Council on 29 March. Following this, the report will also be made publically available on the Zone Committee s website. Identification of relevant legislation, Council policy and plans Local Government Act 2002 Amendment Act 2014 Long Term Plan Consultation John Talbot, OTOP Chairperson and Christina Robb, Canterbury Water Management Strategy Programme Manager will be present to speak to the report. Recommendation That the report be received and noted. # March 2016

10 Orari-Temuka-Opihi-Pareora Zone Committee Annual Report Purpose To meet the requirements of the Environment Canterbury Long Term Plan, each Canterbury Water Management Strategy (CWMS) Zone Committee is required to report annually on progress in implementing their Zone Implementation Programme, and on progress in the ten CWMS target areas. The CWMS Regional Committee is also required to provide an annual update. The attached report fulfils the annual reporting requirement for the Orari-Temuka-Opihi- Pareora (OTOP) Zone Committee. Key Achievements of the Zone Committee As noted in the attached report, the OTOP Zone Committee has been driving on the ground actions to achieve their Zone Implementation Programme and CWMS goals. Highlights since the Committee s inception include: Forming eight catchment groups to work with communities to find local solutions to water challenges. Landcare Trust helped secure funding ($220K over three years) to develop and support these groups. Industry members have also supported these groups by running local field days and workshops on environmental management. Developing Farm Environment Plans for landowners in the Opuha and Rangitata South irrigation schemes. Investing almost $400,000 of Immediate Steps funding in local initiatives to protect and enhance the natural environment. This included support for dryland biodiversity, protection of wetlands and lagoons, and predator control. Key parties considering three options for bringing additional water into the zone (from the north, west, and south). To date, central government has committed more than $1m to investigate the cost and implications of these options. Promoting public awareness of water issues through community meetings, signage, newsletters, chair columns, and a museum exhibition. Upcoming activities for In 2016, the OTOP Zone Committee will begin a collaborative process to develop a solutions package (ZIP Addendum) which delivers community outcomes for freshwater management in the zone. The solution package will include specific water quality and water quantity limits, which will become part of a sub-regional plan change to the Land and Water Regional Plan. The first stage in this process is establishing community outcomes. These outcomes will then be used to assess the current state of the zone and to explore some future scenarios. These assessments will help the community identify key decision areas and aid in the development of a package of freshwater management solutions. # March 2016

11 Immediate Steps biodiversity projects 1. The Immediate Steps biodiversity protection and restoration programme was launched in 2010 and makes approximately $2million each year available to protecting biodiversity in and around freshwater habitats. Of this amount, two thirds comes from rates, and one third comes from land owners and other stakeholders. Zone Committees recommend how that money be spent, guided in their decisions by staff and biodiversity specialists at Environment Canterbury and other organisations. 2. The Zone Committee has directed over $400K support to over twenty-five projects since 2011, with issues ranging from carrying out dune and wetland restoration, to controlling plant pests and constructing rabbit proof fences. A full list of these projects is provided in Attachment 1. Funding of the CWMS 3. The CWMS has funding contributions from central, regional and local government. Many initiatives also receive funding from private individuals such as consent holders, irrigation scheme shareholders, farmers and local businesses and community groups. 4. Environment Canterbury raises $28.5 million per annum ( year) through a CWMS rate. The rate is specifically for the CWMS and has the same incidence as the general rate. It funds land and water activities that were in place before the formal introduction of the CWMS science, RMA planning, operations and activities introduced with the CWMS zone committee facilitation, regional water infrastructure and Immediate Steps Biodiversity. Specifically, the CWMS rate supports six activities: CWMS committee facilitation Environmental monitoring and progress reporting Resource Management Act (RMA) Plans Delivery of Zone Implementation Programmes Biodiversity and ecosystem health Regional Water Infrastructure 5. The expenditure in some of these activities committee facilitation and delivery of ZIPs- is spread evenly across the zones. Expenditure on biodiversity and ecosystem health is also spread evenly across the zones, with the exception of regional biodiversity initiatives. For the last three years, regional biodiversity initiatives have been underway in Te Waihora, Wainono Lagoon and the Upper Rangitata/Rakaia catchments, with expenditure on these projects coming from a regional level pool. The distribution of expenditure on environmental monitoring differs depending on the size of the zone and the complexity of water resources. These factors determine the number of rain gauges, groundwater monitoring bores, and river flow sites etc., which then affect monitoring costs. The distribution of expenditure on RMA plans moves around the region as each zone goes through its specific planning process over time each zone will be the focus of an RMA plan. Regional water infrastructure activities and their associated costs are concentrated in zones with large water infrastructure either planned, or in train. # March 2016

12 6. District/city councils share the costs of running the committees with Environment Canterbury, with committee honoraria and mileage split 50/50. District/city councils provide administration and secretarial support for the monthly public meetings of the zone committees, while Environment Canterbury provides administration and secretarial support for the CWMS Regional Committee. District/city councils also make a substantial investment in water infrastructure public water supply, drainage, stockwater, wastewater and stormwater all of which can contribute to achieving the CWMS targets. 7. Central government provides funding for specific projects, usually through grants. Grants for environmental restoration have been received for Whakaora Te Waihora and Wainono Lagoon which total $6.8 million (multi-year). The infrastructure work programme also receives central government funding in the order of $400,000 per annum through the Irrigation Acceleration Fund, which is administered by the Ministry of Primary Industries. Previous and Future Communication 8. The Zone Committee Annual Reports provide annual updates on the Committee s work toward implementing their ZIPs. The OTOP Committee s ZIP was endorsed by in The OTOP Annual Report was presented to Environment Canterbury Council on 4 February 2016, and will be presented to the Mackenzie District Council on 29 March, and the on 22 March. Following this, the reports will also be made publically available on the Zone Committee s website. 10. The Committee s 2016 Annual Report will be delivered to the councils in February Attachments Immediate Steps biodiversity projects in the Orari-Temuka-Opihi-Pareora zone Orari-Temuka-Opihi-Pareora Zone Committee Annual Report 2015 # March 2016

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17 POLICY AND DEVELOPMENT COMMITTEE FOR THE MEETING OF 22 MARCH 2016 Report for Agenda Item No 7 Prepared by Tina Rogers Group Manager Corporate Services Timaru District Holdings Ltd Quarterly Report to December 2015 (File F1/38) The Timaru District Holdings Ltd quarterly report for the period October to December 2015 is attached for the information of the Committee. Recommendation That the report be received and noted. # March 2016

18 TIMARU DISTRICT HOLDINGS LTD P O Box 522 TIMARU Tel (03) Fax (03) tina.rogers@timdc.govt.nz Files F1/38 & F1/26/1 4 February 2016 Chief Executive P O Box 522 Timaru 7940 Dear Peter TIMARU DISTRICT HOLDINGS LTD REPORT TO COUNCIL FOR THE PERIOD OCTOBER TO DECEMBER 2015 Timaru District Holdings Ltd (TDHL) is pleased to present this report for the period October to December Finance 1.1 Financial Statements The Timaru District Holdings Ltd financial statements for the period to 31 December 2015 are attached for information. Debt repayments of $1.5million have occurred in the 6 months to 31 December 2015 and a further $0.9m is expected to be repaid by the end of the financial year. 1.2 Dividend TDHL paid a dividend of $400,000 on 31 December 2015 to the Council in line with the Statement of Intent. 2 Governance 2.1 TDHL TDHL held its Annual General Meeting on 1 October, together with a presentation to councillors and an informal discussion. Councillor directors Damon Odey and Richard Lyon were reappointed to the Board for a further term. 2.2 PrimePort Timaru Ltd TDHL s Chairperson was appointed as a director on PrimePort as of 1 January # March 2016

19 TDHL received a healthy dividend of $652,950 from PrimePort in October which is a significant increase on dividends received over recent years and reflects the success of the joint venture. Year to date profit was ahead on budget. 2.3 Alpine Energy Ltd Alpine Energy is trialling a shipping container-sized battery that will allow it to feed stored power into the national grid. This is considered to be the biggest battery storage device connected to the NZ grid. The ultimate aim is to produce smaller versions of the battery that heavy power users could use to store power generated via solar photovoltaic cells or wind turbines. TDHL considered a review of AEL directors fees and agreed to a small increase, as recommended by the external consultants engaged to do the review, and which TDHL believed to be fair and reasonable. 3 Property Work continues on TDHL s property portfolio with a number of leases being tidied up and the Board continually bearing in mind the yield of the properties and their strategic and commercial value to the port and the wider community. Yours sincerely Tina Rogers Company Secretary # March 2016

20 TIMARU DISTRICT HOLDINGS LIMITED STATEMENT OF FINANCIAL PERFORMANCE FOR THE PERIOD TO 31 DECEMBER / / /15 Annual Forecast YTD Forecast YTD Actual YTD Actual Budget OPERATING REVENUE Interest 70,000 70,459 66, , ,000 Dividends - Alpine 1,609,818 1,609,772 1,515,598 3,985,100 3,985,100 Dividends - PrimePort Timaru 652, , , , ,950 Subvention (TDC Loan) 500, , ,309 1,108,800 1,000,000 Total Holding Company Operations revenue 2,832,768 2,826,842 2,442,941 5,633,900 5,778,050 Property operations revenue Leased property - Rents received 800, , ,715 1,554,000 1,600,000 Leased property - expenses reimbursed 135, , , , ,000 Leased property - Electricity Dividends Leased property - insurance proceeds 0 0 8, Total Property Operations renenue 935,000 1,067,211 1,019,709 1,734,000 1,870,000 Total Revenue 3,767,768 3,894,053 3,462,650 7,367,900 7,648,050 OPERATING EXPENDITURE Interest - TDC 500, , ,309 1,108,800 1,000,000 Interest - External 481, , , , ,500 Directors Fees 53,550 53,424 53, , ,100 Insurance 0 7,850 5,263 7,000 7,900 TDC Administration 45,000 43,065 21,058 45,000 90,000 Professional Fees - Deductible 12, ,538 25,000 25,000 Professional Fees - Non Deductible Printing & Stationary ,000 1,000 Tolls & Postage Travel & Entertaining Costs 3,750 2,360 3,845 10,000 7,500 Bank Fees Advertising 1, ,000 2,000 General Expenses ,800 1,800 Te Ana Whakario donation 0 0 3, Audit Fees ,000 18,000 Total Holding Company Operations expenses 1,098,750 1,068,958 1,163,211 2,288,800 2,223,400 Property operations expenses Leased property expenses - rates/water 160, , , , ,000 Leased property expenses - Electricity 25,000 32,734 15,055 30,000 50,000 Leased property expenses - insurance 15,000 14,799 19,456 25,000 15,000 Leased property expenses - maintenance 60,000 45,786 37, , ,000 Leased property expenses - mgmt/professional 50,000 64,791 73, , , , , , , ,000 1,408,750 1,406,508 1,439,266 2,853,800 2,828,400 OPERATING SURPLUS/(DEFICIT) 2,359,018 2,487,546 2,023,384 4,514,100 4,819,650 BEFORE TAXATION TAXATION EXPENSE/(BENEFIT) 27,000 63,000 59,000 36,100 50,800 NET SURPLUS/(DEFICIT) 2,332,018 2,424,546 1,964,384 4,478,000 4,768,850 STATEMENT OF MOVEMENTS IN EQUITY FOR THE PERIOD TO 31 DECEMBER / /16 YTD Actual Forecast Equity at 1 July 51,052,446 51,052,446 Net Surplus/(Deficit) 2,424,546 4,768,850 Total recognised revenues and expenses for the period 2,424,546 4,768,850 Dividends to Owners (1,376,000) (2,250,000) EQUITY AT 31 DECEMBER 52,100,992 53,571,296 # March 2016

21 TIMARU DISTRICT HOLDINGS LIMITED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2015/16 YTD Actual EQUITY Share Capital 1,000,186 Redeemable Preference Shares 0 Retained Earnings 51,100,806 TOTAL EQUITY 52,100,992 CURRENT ASSETS Bank 69,626 General Investment 5,450,000 Intercompany Receivable 1,606,010 Accounts Receivable 162,071 Prepayments 0 Taxation Benefit 0 GST Refund/(Payable) (4,190) TOTAL CURRENT ASSETS 7,283,518 NON CURRENT ASSETS Investments 0 Investment - PrimePort 19,610,750 Investment - Alpine 40,243,156 Investment - Te Ana 0 Investment - Hunter Downs 140,625 Future Tax Benefit 97,600 Fixed assets 24,008,500 TOTAL NON CURRENT ASSETS 84,100,631 TOTAL ASSETS 91,384,149 CURRENT LIABILITIES Bank Overdraft 0 Accounts Payable 165,171 Accrued Interest - TDC 1,606,010 Accrued Interest - External 0 Revenue in advance 0 Provision for Dividend 0 Derivative Financial Instruments 143,277 Current Portion Term Loans 0 Intercompany Advance 0 TOTAL CURRENT LIABILITIES 1,914,458 NON CURRENT LIABILITIES 22,180,613 Redeemable Preference Shares 0 Derivative Financial Instruments 588,086 Bank Loan 14,600,000 TOTAL LIABILITIES 39,283,157 NET ASSETS 52,100,992 # March 2016

22 TIMARU DISTRICT HOLDINGS LIMITED STATEMENT OF CASH FLOWS FOR THE PERIOD TO 31 DECEMBER /16 YTD Actual CASH FLOWS FROM OPERATING ACTIVITIES Cash was provided from: Receipts from Customers Subvention Receipt 0 Subvention Receipt Primeport 0 Rentals 1,102,355 Insurance proceeds 0 Dividends 3,778,175 Interest 97,165 4,977,695 Cash was disbursed to: Interest TDC 0 Interest External 487,474 Interest RPS 0 Payments to Suppliers 620,148 1,107,622 NET CASH INFLOW/(OUTFLOW) OPERATING ACTIVITIES 3,870,073 CASH FLOW FROM INVESTING ACTIVITIES Cash was provided from: Proceeds Sale Fixed Assets 76,000 Proceeds Sale Investments 0 76,000 Cash was disbursed to: Purchase of Fixed Assets 0 Purchase of Investments 0 0 NET CASH INFLOW/(OUTFLOW) FROM INVESTING ACTIVITIES 76,000 CASH FLOWS FROM FINANCING ACTIVITIES Cash was provided from: Loans Raised 0 Share Subscriptions 0 0 Cash was disbursed to: Dividends Paid 1,376,000 Loans Repaid 1,500,000 2,876,000 NET CASH INFLOW/(OUTFLOW) FROM FINANCING ACTIVITIES (2,876,000) NET INCREASE/(DECREASE) IN CASH HELD 1,070,073 OPENING CASH BALANCE 1 JULY 4,449,553 CLOSING CASH BALANCE 30 DECEMBER 5,519,626 Consisting of : Bank 69,626 Term Deposits 5,450,000 5,519,626 # March 2016

23 CASHFLOW 20-Jan-16 General 31-Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec-16 Alpine Energy , ,617, , ,863 Port of Timaru , Subvention Receipt 92,400 92,400 92,400 92,400 92,400 92,400 92,400 92,400 92,400 92,400 92,400 92,400 Interest 13,799 13,932 14,030 13,768 13,907 14,046 11,061 14,096 14,235 14,106 15,266 15, , , , , , ,446 1,721, , , , , ,691 Property Leased properties - rents 130, , , , , , , , , , , ,000 Leased properties - exps reim 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15, , , , , , , , , , , , ,000 Total Revenue 251, ,332 1,056, , , ,446 1,866, ,496 1,056, , ,666 1,057,691 General Expenses Directors Fees (8,900) (8,900) (8,900) (8,900) (8,900) (9,200) (8,900) (8,900) (8,900) (8,900) (8,900) (8,900) Insurance (7,000) TDC Administration (6,300) (6,300) (6,300) (6,300) (6,300) (6,300) (6,500) (6,300) (6,300) (6,300) (6,300) (6,300) Professional fees (1,000) (5,000) (1,000) (1,000) (1,000) (6,000) (1,000) (1,000) (2,000) (2,000) (2,000) (2,000) Printing & Stationary (20) (100) (20) (20) (20) (220) (20) (20) (20) (20) (500) (20) Tolls & Postage 0 (20) (20) (20) (20) (220) (20) (20) (20) (20) (20) 0 Travel Costs (800) (800) (1,200) (800) (800) (800) (800) (800) (800) (800) (800) (800) Bank Fees (15) (15) (15) (15) (15) (15) (15) (15) (15) (15) (15) (15) Advertising (2,000) General Expenses (100) (200) (200) (200) (100) (200) (100) (100) (100) (100) (200) (200) Audit Fees (18,000) Te Ana Donation 0 Loan Facility Interest (TDC) (92,400) (92,400) (92,400) (92,400) (92,400) (92,400) (92,400) (92,400) (92,400) (92,400) (92,400) (92,400) Interest(RPS dividend) Interest External (76,042) (76,042) (73,438) (73,438) (73,438) (71,354) (71,354) (71,354) (68,750) (68,750) (68,750) (66,146) (185,577) (189,777) (183,493) (183,093) (182,993) (206,709) (181,109) (187,909) (184,305) (179,305) (179,885) (176,781) Property expenses Property - rates/water 0 0 (65,000) 0 0 (65,000) 0 0 (65,000) 0 0 (65,000) Property - Electricity (2,500) (2,500) (2,500) (2,500) (2,500) (2,500) (1,000) (1,000) (2,000) (1,000) (1,000) (1,000) Property - Insurance (20,000) Property - Maintenance (8,000) (8,000) (8,000) (8,000) (8,000) (12,000) (5,000) (5,000) (5,000) (5,000) (5,000) (5,000) Property - Assessments (10,000) Property - Administration (2,000) (2,000) (2,000) (2,000) (2,000) (22,000) (2,000) (2,000) (2,000) (2,000) (2,000) (2,000) (12,500) (22,500) (77,500) (12,500) (12,500) (101,500) (28,000) (8,000) (74,000) (8,000) (8,000) (73,000) Total expenses (198,077) (212,277) (260,993) (195,593) (195,493) (308,209) (209,109) (195,909) (258,305) (187,305) (187,885) (249,781) Nett 53,122 39, ,300 55,575 55,814 (56,763) 1,656,976 55, , ,201 64, ,910 Dividend TDC 0 0 (400,000) 0 0 (550,000) (442,700) 0 (350,000) 0 0 (350,000) Property sales/(purchases) Investments (187,500) Principal Raised External Principal Repaid External (500,000) (400,000) (500,000) (500,000) Opening Balance 5,519,626 5,572,748 5,611,804 5,507,104 5,562,679 5,618,493 4,424,230 5,638,507 5,694,094 5,642,287 6,106,488 6,171,269 Closing Balance 5,572,748 5,611,804 5,507,104 5,562,679 5,618,493 4,424,230 5,638,507 5,694,094 5,642,287 6,106,488 6,171,269 6,129,179 # March 2016

24 POLICY AND DEVELOPMENT COMMITTEE FOR THE MEETING OF 22 MARCH 2016 Report for Agenda Item No 8 Prepared by Tina Rogers Group Manager Corporate Services Timaru District Holdings Limited Draft 2016/17 Statement of Intent The Timaru District Holdings Ltd draft Statement of Intent 2016/17 is attached for the approval of the Committee. Recommendation That the Timaru District Holdings Ltd Statement of Intent 2016/17 be approved. # March 2016

25 TIMARU DISTRICT HOLDINGS LIMITED STATEMENT OF INTENT 2016/2017 # March 2016

26 TIMARU DISTRICT HOLDINGS LIMITED STATEMENT OF INTENT 2016/ PREAMBLE Timaru District Holdings Limited is a Council Controlled Organisation as defined by Section 6 of the Local Government Act This Statement of Intent sets out the overall intentions and objectives for Timaru District Holdings Limited for the period 1 July 2016 to 30 June 2017 and the two succeeding financial years. Timaru District Holdings Limited contracts its administration from the Timaru District Council and as such does not have staff employed. 2 OBJECTIVES OF THE COMPANY Section 59 of the Local Government Act 2002 requires that the principal objectives of Timaru District Holdings Limited are to: a) achieve the objectives of its shareholder, both commercial and noncommercial, as specified in the statement of intent; and b) be a good employer; and c) exhibit a sense of social and environmental responsibility by having regard to the interests of the community in which it operates and by endeavouring to accommodate or encourage these when able to do so; and d) if the Council-controlled organisation is a Council-controlled trading organisation, conduct its affairs in accordance with sound business practice. Mission Statement To be a successful and growing business increasing the value of the Company and its return to its shareholder, while taking into account the special needs of the shareholder. General objectives are: To maximise the returns from, and the value of, the subsidiary and associate and joint venture trading companies to the Timaru District Council, as the shareholder in Timaru District Holdings Limited. 2.2 To ensure insofar as it is lawfully able, that the Statements of Intent of each of the Company s subsidiaries and associates reflects the policies and objectives of the and Timaru District Holdings Ltd in the area of activity or operation of that subsidiary or associate. 2.3 To monitor the activities of the companies, comprising the group, to ensure that the respective Statements of Intent are adhered to. 2.4 To keep the informed of matters of substance affecting the group. 2.5 To ensure that regular reporting of results from the subsidiaries and associates occurs to the holding company. # March 2016

27 2.6 To approve Statements of Intent, after reference to Council, for each of TDHL s subsidiaries and associates through which the performance (particularly the financial performance) will be monitored, and to confer with each company on their long term strategic direction. 2.7 To make other investments that will benefit the district. 2.8 To obtain a commercial return and build long term strategic value from the port property portfolio, but to have regard to working in conjunction with PrimePort to ensure operations contribute to the port business as far as practicable. Specific Objectives for 2016/17 are: 2.9 To liaise with Alpine Energy Ltd and PrimePort Timaru Ltd and the other shareholders in these companies on the development of strategic options for the future of these companies To achieve a Return on Investment of at least 7% on the leasable port property portfolio and ensure that all lease renewals are completed in a timely manner To develop a Risk Management Framework for the company, incorporating strategic risks associated with the investments in Alpine Energy, PrimePort Timaru and Hunter Downs Irrigation along with the property portfolio. 3 NATURE AND SCOPE OF ACTIVITIES TO BE UNDERTAKEN TDHL s business is that of an investor in companies in which Council has a substantial interest; specifically Alpine Energy Ltd 47.5% shareholding and PrimePort Timaru Ltd 50.0% shareholding. TDHL also owns a portfolio of investment properties located in the vicinity of PrimePort Timaru. Investments are also made where benefit to the district is identified, which has included an investment in Hunter Downs Irrigation Limited. 4 GOVERNANCE TDHL oversees the governance of the subsidiary trading companies of Alpine Energy Ltd, and PrimePort Timaru Ltd through monitoring the individual company s compliance with their Statement of Intent (as per 2.6 above); regular monthly reporting against the company s budgets; regular reports on the property portfolio; and meetings between representatives of the companies and TDHL, at both Board and officer level. 5 RATIO OF CONSOLIDATED SHAREHOLDERS FUNDS TO TOTAL ASSETS 5.1 This ratio shows the proportion of total assets financed by shareholders funds. 5.2 The Company will ensure that the ratio of Shareholders Funds to Total Assets remains above 25.00%. 5.3 For the purposes of this ratio shareholders funds are defined as the paidup capital plus any tax paid profits earned and less any dividends distributed to shareholders. They include undistributed profits, which have been accumulated to equity. 5.4 Total assets are defined as the sum of all current, fixed and investment assets of the group. # March 2016

28 6 STATEMENT OF ACCOUNTING POLICIES Timaru District Holdings Ltd is registered under the Companies Act The Company s accounting policies will comply with the legal requirements of the Companies Act Timaru District Holdings Ltd is a reporting entity for the purposes of the Financial Reporting Act The financial statements of Timaru District Holdings Ltd will be prepared in accordance with the Financial Reporting Act 1993, and section 69 of the Local Government Act Details of the current accounting policies and their application are contained in Appendix A. 7 PERFORMANCE TARGETS (Parent) The performance targets are based on the financial forecasts and the associated assumptions. The Company expects to have a gross income of $7,700,700 and to pay an ordinary dividend of $2,326,000 for 2015/2016, increasing to $2.6m in 2016/17, $2.65m in 2017/18 and $2.75m in 2018/19. These dividends are in excess of the dividends forecast and are more that has been included in the Councils Long Term Plan. 2014/15 actual 2015/16 forecast 2016/17 forecast 2017/18 forecast 2018/19 forecast Net profit after tax to shareholders funds Net Assets per fully paid share Earnings per fully paid share Dividend per fully paid share Shareholders Funds to Total Assets 9.78% 8.95% 9.34% 9.25% 9.04% $ $ $ % 58.96% 62.16% 65.41% 68.68% 8 FINANCIAL FORECASTS The financial forecasts are based on estimated revenue flows and estimated capital structures. The forecasts are based on the current operating environment and are subject to no major investments being undertaken. Note: the financial forecasts are based on the latest PrimePort Timaru Ltd, and Alpine Energy Ltd financial forecasts available at the time. # March 2016

29 Financial Projections 2014/15 Actual $000 s 2015/16 Forecast $000 s 2016/17 Forecast $000 s 2017/18 Forecast $000 s 2018/19 forecast $000 s Property Revenue 1,848 1,870 1,860 1,900 1,900 Other Revenue 11,893 5,831 6,712 6,182 6,182 Total Income 13,741 7,701 8,032 8,082 8,082 Expenses 3,440 2,851 2,683 2,440 2,253 Operating Surplus(deficit) before Income Tax Income Tax Expenses (Benefit) Operating Surplus (Deficit) after Income Tax 10,301 4,850 5,349 5,642 5, ,196 4,790 5,243 5,454 5,588 Share Capital 1,000 1,000 1,000 1,000 1,000 Retained Earnings 73,033 52,517 55,159 57,963 60,801 Shareholders Funds 74,033 53,517 56,159 58,963 61,801 Current assets 7,172 6,494 6,181 6,171 6,250 Non-current Assets 107,221 84,268 84,162 83,974 83,733 Total assets 114,393 90,762 90,343 90,145 89,983 Current Liabilities 1,492 1,365 1,303 1,301 1,301 Non-current Liabilities 38,868 35,880 32,881 29,881 26,881 Total Liabilities 40,360 37,245 34,184 31,182 28,182 Net Assets 74,033 53,517 56,159 58,863 61,801 It is forecast that term debt within the company be repaid in each of the years. External debt is forecast to reduce by $9.0 million, to $4.7 million, over the 3 year period from 2016/17 to 2018/19. This is assuming that alternative investment opportunities necessitating funds are not required. It is assumed that funds in excess of $4,000,000 will continue to be used for external debt repayments and this has been incorporated in the forecasts. # March 2016

30 9 REPORTING TO SHAREHOLDER The following information will be available to shareholder based on an annual balance date of 30 June. 9.1 Draft Statement of Intent By the 1 st of March each year, the directors shall (for so long as the company remains a Council Controlled Organisation), deliver to the shareholder a draft Statement of Intent for the following financial year which fulfils the requirements of Section 64 of the Local Government Act Completed Statement of Intent By the 30th June each year the directors shall deliver to the shareholder the final Statement of Intent for the following financial year which fulfils the requirements of Section 64 of the Local Government Act Quarterly Report Within 40 days after the end of the quarter, the directors shall deliver to the shareholder an unaudited report containing the following information as a minimum in respect of the quarter under review: - a) A Statement of Comprehensive Income disclosing actual revenue and expenditure including a comparison of actual against budget, and comparative figures b) A Statement of Changes in Equity c) A Statement of Financial Position d) A Cashflow Statement e) A commentary on the results for the quarter, together with a report on the outlook for the following quarter with reference to any significant factors that are likely to have an effect on the company s performance, including an estimate of the financial results for the year based on that outlook. 9.4 Half Yearly Report Within two months after the end of the first half of each financial year, the directors shall deliver to the shareholder an unaudited report containing the following information as a minimum in respect of the half year under review: a) A Statement of Comprehensive Income disclosing actual revenue and expenditure including a comparison of actual against budget, and comparative figures b) A Statement of Changes in Equity c) A Statement of Financial Position d) A Cashflow Statement e) A commentary on the results for the first six months, together with a report on the outlook for the second six months, with reference to any significant factors that are likely to have an effect on the company s performance, including an estimate of the financial results for the year based on that outlook. f) Overview of business risks and risk management processes. # March 2016

31 9.5 Annual Report Within eight weeks after the end of each financial year, the directors shall deliver to the shareholder unaudited financial statements in respect of that financial year, containing the following information as a minimum: - a) A Statement of Comprehensive Income disclosing actual revenue and expenditure including a comparison of actual against budget, and comparative figures b) A Statement of Changes in Equity c) A Statement of Financial Position d) A Cashflow Statement Within three months after the end of each financial year, the directors shall deliver to the shareholder, and make available to the public, an annual report and audited financial statements of that financial year, containing the following information as a minimum: - a) A directors report including a summary of the financial results, a review of operations, a comparison of performance in relation to objectives and any recommendation as to dividend; b) A Statement of Comprehensive Income disclosing actual revenue and expenditure including a comparison of actual against budget, and comparative figures; c) A Statement of Changes in Equity d) A Statement of Financial Position e) A Cashflow Statement f) Summarised list of Intercompany transactions for the year g) A Statement of Objectives and Performance h) An Auditor s report on the above statements and the measurement of performance in relation to objectives. In addition to the formal reporting noted above, it is anticipated that two workshops will be held annually with Councillors. 10 DIVIDEND POLICY The Parent Company will distribute a dividend of no more than 100% of the tax paid profit. It is the intention of TDHL to pay out interim dividends as cashflows allow. How this is distributed will be determined by the shareholder. 11 PROCEDURES FOR ACQUISITION OF OTHER INTERESTS The company will only purchase an interest in another business or invest in the shares of another company or organisation on the basis set out in its Constitution. # March 2016

32 12 ACTIVITIES FOR WHICH COMPENSATION IS SOUGHT FROM ANY LOCAL AUTHORITY It is not anticipated that the Company will seek compensation from any local authority otherwise than in the context of normal commercial contractual relationships. 13 ESTIMATE OF COMMERCIAL VALUE OF THE SHAREHOLDERS INVESTMENT The commercial value of the shareholders investment in Timaru District Holdings Limited is considered by the directors to be no less than the shareholders funds of the company as shown in the Statement of Financial Position. This will be considered annually when the Statement of Intent is completed. The shares held in Alpine Energy Limited were independently valued at $171 million as at 31 March 2015 whereas the cost and recorded value of these shares is $40.2 million. A review of this valuation, along with a valuation of PrimePort Timaru Limited, will be undertaken periodically. The shares held in PrimePort Timaru Limited are recorded at fair value. No independent valuation has been completed at this time. The investment properties that were purchased by TDHL in November 2013 are recorded at fair value as determined by an independent valuer as at 30 June This value was $24,084,000 as at 30 June These properties will be revalued annually. # March 2016

33 TIMARU DISTRICT HOLDINGS LIMITED - STATEMENT OF ACCOUNTING POLICIES Reporting entity Timaru District Holdings is a Council Controlled Organisation as defined in section 6 of the Local Government Act The company is wholly owned by. The company began operation on 29 October The entity consists of Timaru District Holdings Limited, and associated entities, PrimePort Timaru Limited (50%) and Alpine Energy Limited (47.50%). All entities are incorporated in New Zealand. The financial statements of Timaru District Holdings Limited have been prepared in accordance with the requirements of the Companies Act 1993, the Local Government Act 2002 and New Zealand International Financial Reporting Standards. The financial statements have been prepared in accordance with New Zealand Generally Accepted Accounting Practice (NZ GAAP). They comply with New Zealand equivalents to International Financial Reporting Standards (NZ IFRS), and other applicable Financial Reporting Standards, as appropriate for profit-oriented entities. Compliance with NZ IFRS ensures that the financial statements also comply with International Financial Reporting Standards (IFRS). The company is a Tier 2 reporting entity. The accounting policies set out below have been applied consistently to all periods presented in these financial statements. The financial statements are presented in New Zealand dollars and all values are rounded to the nearest thousand dollars ($000). The functional currency of Timaru District Holdings Limited is New Zealand dollars. Measurement base The accounting principles recognised as appropriate for the measurement and reporting of earnings and financial position on an historical cost basis are followed. Accounting policies The following particular accounting policies which materially affect the measurement of financial results and financial position have been applied: Associate companies These are companies in which Timaru District Holdings Limited has a significant influence over commercial and financial policy decisions. Timaru District Holdings Limited holds a 50% shareholding in PrimePort Timaru Limited and a 47.50% shareholding in Alpine Energy Limited, and participates in their commercial and financial policy decisions. The investments are included in the parent entity at cost less any impairment losses. The interest in the associate companies has been reflected in the financial statements on an equity accounting basis, which shows the share of surplus/deficits in the statement of comprehensive income and the share of post acquisition increases/decreases in net assets in the statement of financial position. Goods and Services Tax All items in the financial statements are exclusive of goods and services tax (GST) with the exception of receivables and payables which are stated with GST included. Where GST is irrecoverable as an input tax then it is recognised as part of the related asset or expense. Timaru District Holdings Limited became registered for GST in January 2007 and all parent transactions prior to this time are recorded inclusive of any GST. Revenue Revenue from the rendering of services is recognised in the profit or loss at the completion of transactions at balance date. Revenue from sale of goods is recognised when ownership is transferred. Rental and sub-lease income is recognised on a straight line basis over the term of the lease. # March 2016

34 No revenue is recognised if there are significant uncertainties regarding recovery of consideration due. Dividends are recognised net of imputation credits when the right to receive payments has been established. Expenses Operating lease payments are recognised in the profit or loss on a straight line basis over the term of the lease. All borrowing costs, except for those relating to a qualifying asset, are recognised as an expense in the period they are incurred using the effective interest rate method. Taxation The tax expense represents the sum of the tax currently payable and deferred tax. Current taxation is the amount of income tax payable based on the taxable profit for the current year, plus any adjustments to income tax payable in respect of prior years. Current tax is calculated using rates that have been enacted or substantively enacted at balance date. Deferred tax is the amount of income tax payable or recoverable in future periods in respect of temporary differences. Deferred tax liabilities are generally recognised for all temporary differences. Deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which the deductible temporary differences can be utilised. Deferred tax liabilities are recognised for taxable temporary differences arising on investments in associates, except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Current tax and deferred tax is charged or credited to the profit or loss, except when it relates to items charged or credited directly to equity or other comprehensive income, in which case the deferred tax is also dealt with in equity or other comprehensive income respectively. Cash and cash equivalents Cash and cash equivalents means cash balances on hand, held in bank accounts, demand deposits and other highly liquid investments in which the company invests as part of its day-today cash management. Accounts receivable Accounts receivable are initially measured at fair value and subsequently measured at amortised cost using the effective interest method less any provision for impairment. Investments Investments, including those in associate companies, are stated at cost less any impairment losses. Any decreases are recognised in the profit or loss. Investment properties Land and buildings held to earn rental income or for capital appreciation or both are deemed port related investment property. This includes land held for a currently undetermined use that is not owner-occupied property or for short term sale. Investment property is valued at the end of each financial year. Valuation is at fair value as determined by a qualified independent valuer. They are recorded at valuation and are not subject to annual depreciation. Variation in value is recorded in the profit or loss. # March 2016

35 Non Current assets intended for Sale Non-current assets held for sale are classified as held for sale if their carrying amount will be recovered principally through a sale transaction within the next financial year. Non-current assets held for sale are valued at the lower of carrying amount and fair value to sell less costs to sell. Any impairment losses for write-downs of non-current assets held for sale are recognised in the profit or loss. Any increases in fair value (less costs to sell) are recognised up to the level of any impairment losses that have been previously recognised. Non-current assets held for sale are not depreciated or amortised while they are classified as held for sale. Accounts Payable Trade and other payables are initially measured at fair value and subsequently measured at amortised cost using the effective interest method. Provisions A provision is recognised when the company has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market rates and the risks specific to the liability. Financial instruments The company is party to non-derivative financial instruments as part of its normal operations. These financial instruments include bank accounts, short term deposits, debtors, prepayments, creditors and loans. All financial instruments are recognised in the Statement of Financial Position and all revenues and expenses in relation to financial instruments are recognised in the profit or loss. Except for loans, which are recorded at cost, and those items covered by a separate accounting policy, all financial instruments are shown at their estimated fair value. The company uses derivative financial instruments to hedge its exposure to interest rate risks arising from its activities. Derivative financial instruments are stated at fair value. The gain or loss on re-measurement to fair value is recognised in the profit or loss. The fair value of interest derivatives is based on market factors the issuer believes to be relevant and in accordance with their policies. Financial instruments are recognised once the company becomes a party to the contractual provisions of the instrument. Financial instruments are derecognised once the contractual rights expire or are transferred to another party without retaining control or substantially all risks or rewards of ownership associated with the instruments. Fair values are determined at balance date when required. Leases A finance lease is a lease that transfers to the lessee substantially all the risks and rewards incidental to ownership of an asset. Financial leases are recognised as assets and liabilities in the Statement of Financial Position at the lower of the fair value of the leased item or the present value of the minimum base payments. The amount recognised as an asset is depreciated over its useful life. An operating lease is a lease that does not transfer substantially all the risks and rewards incidental to ownership of an asset. Lease payments under an operating lease are recognised as an expense on a straight-line based over the term. # March 2016