Canterbury Regional Landfill Joint Committee

Agenda

 

 

Notice of Meeting:

A meeting of the Canterbury Regional Landfill Joint Committee will be held on:

 

Date:                                     Wednesday 4 May 2016

Time:                                    9.30 am

Venue:                                 Committee Room 1, Level 2, Civic Offices,
53 Hereford Street, Christchurch

 

 

Membership

Chairperson

Deputy Chairperson

Members

Councillor David East                    

Councillor Robbie Brine               

Councillor Pauline Cotter            

Councillor Dick Davison                

Councillor Glenn Livingstone     

Councillor Grant Miller                 

Councillor Darryl Nelson              

 

 

28 April 2016

 

 

 

 

 

Petrea Downey

Committee Advisor

941 8999

 

www.ccc.govt.nz

Note:  The reports contained within this agenda are for consideration and should not be construed as Council policy unless and until adopted.  If you require further information relating to any reports, please contact the person named on the report.
To view copies of Agendas and Minutes, visit:
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Canterbury Regional Landfill Joint Committee

04 May 2016

 

 

 


Canterbury Regional Landfill Joint Committee

04 May 2016

 

TABLE OF CONTENTS

 

1.       Apologies................................................................................................................................... 4

2.       Confirmation of Previous Minutes.......................................................................................... 4

3.       Transwaste Canterbury Ltd - Interim Report to 31 December 2015.................................... 7

4.       Transwaste Canterbury Ltd – Comment on the Draft Statement of Intent for the Three Year Period Ending 30 June 2019................................................................................................... 37

5.       Resolution to Exclude the Public........................................................................................... 72

 

 


Canterbury Regional Landfill Joint Committee

04 May 2016

 

 

1.   Apologies

At the close of the agenda no apologies had been received.

2.   Confirmation of Previous Minutes

That the minutes of the Canterbury Regional Landfill Joint Committee meeting held on Friday 7 August 2015 be confirmed (refer page 5).

 


 

 

 


Canterbury Regional Landfill Joint Committee

04 May 2016

 

 

3.        Transwaste Canterbury Ltd - Interim Report to 31 December 2015

Reference:

16/439270

Contact:

Sandy Goode

Sandy.goode@ccc.govt.nz

941 6323

 

 

1.   Purpose of Report

1.1       This report reviews and comments on the half year accounts to 31 December 2015.

 

2.   Staff Recommendations

That the Canterbury Regional Landfill Joint Committee:

1.         Receive the information.

 

3.   Operations

3.1       The Statement of Objectives and Performance contained in the interim report has 24 performance measures to be achieved within the financial year.  19 of these have been achieved or are in progress; however, five targets have not been, or, are unlikely to be, met as shown in Table 1 below.

Table 1

Outcome Objective Area

Performance Measure and Target

Progress Toward Achievement

Shareholder Interests

Total Revenue (inclusive of waste levy) of $53,628,000

Forecast landfill revenue for the full year is $46,019,000.  The annual tonnage of waste to landfill is forecast to be 14% below budget.

Shareholder Interests

EBIT of $23,255,000

Estimated full year EBIT $4,686,000 below budget at $18,569,000, as a result of the forecast reduction in tonnes of waste to landfill compared to budget.

Shareholder Interests

Dividends of $16,100,000

Dividends totalling $14,800,000 forecast to be paid during the year.  Not achieved, due to lower than budgeted tonnage of waste received.

Shareholder Interests

Total BRRP Revenue of $17,053,000

Forecast revenue of the full year is $7,412,000.  The year to date tonnage of earthquake waste received is in line with budgeted levels, but processing has been suspended following the fire in August 2015, and is not expected to recommence until towards the end of the financial year.

Shareholder Interests

BRRP EBIT of $11,481,000

Estimated full year EBIT of $2,192,000, which is significantly below target due to the fire-related deferral of processing activities.

 

4.   Financial Performance, Financial Position and Cash Flows

4.1       Table 2 shows the key financial performance indicators and comparisons for the six month period ending 31 December 2015.

Table 2 – Financial Performance

FINANCIAL PERFORMANCE

% Change

6 months 31 Dec 15 ($m)

6 months 31 Dec 14 ($m)

12 months 30 Jun 15 ($m)

Operating Revenue

-21%

27.2

34.5

69.7

Total Revenue

-20%

27.7

34.8

70.6

Total Expenses

3%

16.3

15.7

33.5

NPAT (net profit after tax)

-41%

8.0

13.4

26.1

NPAT/Total Revenue %

-26%

29%

39%

37%

EBIT/Total Assets %

-42%

11%

19%

35%

 

4.2       Net Profit After Tax is down $5.5 million over last year which is driven by volume and associated revenue. Increased expenditure of $0.6 million and the decreased revenue of $7.1 million, resulted in a reduction of $7.6 million to operating profit before tax.  This has also caused the decrease in NPAT / Total Revenue from 39% to 29%.

4.3       Earnings before Interest or Finance Costs and Tax (EBIT) as a percentage of total assets shows an 11% return for the six month period.  This has decreased from 19% as a result of the reduction in revenue, due to the fire-related deferral of processing activities in the period.

4.4       Table 3 shows the key financial position indicators and comparisons as at 31 December 2015.

Table 3 – Financial Position

FINANCIAL POSITION

% Change

31-Dec-15

($m)

31-Dec-14

($m)

Last Year

30-Jun-15

($m)

Current Assets

13%

39.0

34.6

42.2

Non-current Assets

-5%

61.2

64.6

63.1

Current Liabilities

-56%

(16.3)

(10.4)

(20.1)

Non-current Liabilities

23%

(35.9)

(46.8)

(36.7)

Shareholders' Equity

15%

(48.1)

(41.9)

(48.6)

Working Capital Ratio (CA/CL)

-27%

2.4

3.3

2.1

Equity Ratio % (Equity/Total Assets)

14%

48%

42%

46%

 

4.5       Shareholders' Equity has decreased slightly since last balance date (30 June 2015) by $0.5 million because of net profit for the period of $8.0 million, less dividends paid in August 2015 of $8.5 million.

4.6       The $61.2 million of non-current assets has decreased since last balance date (30 June 2015) by $2.0 million. This largely relates to the BRRP fire during August 2015 resulting in the early closure of Cell A and the closure costs being incurred from August to November 2015.  Resource consent applications for replacement landfill cells are currently underway, consequently, there is currently no provision required for closure costs for this facility.

4.7       Non-current liabilities of $35.9 million have decreased compared to the previous six months (December 2014) by $10.9 million. This is largely due to the deferred income as explained below.   Because the release has slowed, more is identified as relating to the current year and is, therefore, not non-current.  This contrasts with current liabilities, under which, the deferred income have increased to $11.2 million in this six month period from $3.3 million in the same period last year.

4.8       Burwood Resource Recovery Park (BRRP) was commissioned on 1 May 2013. It stockpiles, then sorts and disposes of Christchurch's earthquake-related waste. The stockpile is treated as deferred income and as BRRP works its way through the stockpile, the income is released into the appropriate financial year.  Release of deferred income was slowed, while stockpiling continued, by the suspension of the processing and landfilling activities from the August 2015 fire in Cell A.

 

Change

2015

2014

Deferred income (represents stockpile)

-$2m

$24m

$26m

Income released

$41k

$781k

$740k

 

4.9       The Working Capital Ratio is 2.4 meaning for every $1 of current liability, there is $2.40 available to cover it.  Despite a reduction from last balance date (30 June 2015 3.3), this is still a healthy ratio showing that liquidity is not an issue.

4.10    Cash-flow performance is shown in Table 4.

Table 4 – Cash-flow Performance

CASH FLOWS

% Change

6 months

31-Dec-15

($m)

6 months

31-Dec-14

($m)

12 months

30-Jun-15

($m)

Operating

-40%

6.3

10.5

28.5

Investing

42%

(5.2)

(8.9)

(22.0)

Financing

-12%

(8.5)

(7.6)

(13.6)

Net Cash Flows

-23%

(7.4)

(6.0)

(7.1)

 

4.11    Operating cash flows reduced by $4.2 million for the six month period compared with the same timeframe last year because of decreased receipts from customers (-$4.5 million) which have been marginally offset by increased payments to suppliers and employees.

4.12    Investing cash flows in the current period reduced because $3.5 million less was put into term deposit.

4.13    Financing cash flows in the current period increased because of a $0.9 million increase in the interim dividend paid compared to the equivalent period last year.

 

Attachments

No.

Title

Page

a  

CRLJC encl Interim report 260216

9

b  

TCL 311215 Interim Accounts Final 260216

10

 

 

Signatories

Author

Sandy Goode

Planning & Performance Advisor

Approved By

Peter Langbein

John Mackie

David Adamson

Finance Business Partner

Head of Three Waters & Waste

General Manager City Services

  


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04 May 2016

 

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04 May 2016

 

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Canterbury Regional Landfill Joint Committee

04 May 2016

 

 

4.        Transwaste Canterbury Ltd – Comment on the Draft Statement of Intent for the Three Year Period Ending 30 June 2019

Reference:

16/439458

Contact:

Sandy Goode

Sandy.goode@ccc.govt.nz

941 6323

 

 

1.   Purpose of Report

1.1       This report has been prepared to review and comment on the draft Statement of Intent (SOI) (refer Attachment A) for the three years ending June 2019 provided by Transwaste Canterbury Ltd (TCL)

1.2       The letter from Gill Cox (Chairman) dated 26 February 2016 should be read in conjunction with this review.  The Board has provided best estimate provisional figures for this SOI with a finalised SOI to be provided to shareholders by 30 June 2016, following the full budget process for 2016 being completed.

 

2.   Staff Recommendations

That the Canterbury Regional Landfill Joint Committee:

1.         Amend the Statement of Intent to reflect that the current resource consent expires in September 2017, (although an extension to 2021 has been applied for, though not yet granted) and, subsequently;

2.         Include the forecast distribution of BRRP retained earnings, in line with the current resource consent conditions as stated in 3.1;

3.         Include interim and final dividends payable for the 2016/17, 2017/18 and 2018/19 financial periods; and

4.         Confirm the information that can be made publicly available

 

 

3.   Comments on the Draft SOI

3.1       There have been no major changes to the 2017 - 2019 SOI in terms of Objectives, Governance or Nature and Scope of Activities.

3.2       The following material changes to the Objectives and Performance Targets in section five of the SOI are noted in Table 1 and Table 2 below and are largely due to decreased volumes and the impact of the August 2015 BRRP fire.

Table 1 – Target changes from current SOI and last year's SOI

No.

Objective Category

Performance Measure

Target

2015/16

Target

2016/17

Variance

5.1

Shareholder Interests

Total Landfill Revenue

$53.63m

$49.28m

$(4.35m)

5.1

Shareholder Interests

Landfill EBIT

$23.26m

$20.45m

$(2.81m)

5.1

Shareholder Interests

Total BRRP Revenue

$17.05m

$20.03m

$ 2.98m

5.1

Shareholder Interests

BRRP EBIT

$11.48m

$ 7.17m

$(4.31m)

 

3.3       Last year's SOI included forecast figures for revenue, EBIT, return on invested capital and shareholders' funds to total assets. This has been removed from this year's SOI as the Board felt these were not appropriate objectives or performance targets.

3.4       The following table compares forecast dividends with last year’s SOI:

Table 2 – Forecast dividends from current SOI and last year's SOI

Indicative Dividends ($'000s)

2015/16

2016/17

2017/18

Current Forecast:

 

 

 

Total Dividend       (100%)

13,500

13,500

11,200

All Councils share   (50%)

6,750

6,750

5,600

Last Year’s Forecast:

 

 

 

Total Dividend       (100%)

10,700

10,800

10,500 

All Councils share   (50%)

5,350

5,400

5,250 

 

3.5       Indicative dividends in section 8.3 of the 2018 SOI have increased in line with the increase in revenue and EBIT forecasts above. The SOI assumes that BRRP's retained earnings are not distributed until the completion of the BRRP project, which is forecast to occur after the SOI period ends. However, the resource consent for BRRP ends within the SOI period, thus to extend the project past the SOI period would require an extension to the existing resource consents. It is recommended that assumptions around the distribution of BRRP's retained earnings are included in this SOI.

3.6       The following table shows forecast shareholders' funds to total assets:

 

                       Table 3 – Forecast shareholders' funds from current SOI

 

2016/17

2017/18

2018/19

Shareholders' funds to total assets

53.5%

61.5%

70.2%

 

3.7       The forecast increases assume that BRRP's retained earnings are not distributed until project completion, which is after this SOI period as explained in paragraph 2.5. That is why shareholders' funds to total assets increases each year.

 

Attachments

No.

Title

Page

a  

CRLJC 260216 encl Draft SoI 2017

39

b  

Transwaste Draft SoI 2017 260216

41

 

 

Signatories

Author

Sandy Goode

Planning & Performance Advisor

Approved By

Peter Langbein

John Mackie

David Adamson

Finance Business Partner

Head of Three Waters & Waste

General Manager City Services

  


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04 May 2016

 

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Canterbury Regional Landfill Joint Committee

04 May 2016

 

 

5.    Resolution to Exclude the Public

Section 48, Local Government Official Information and Meetings Act 1987.

 

I move that the public be excluded from the following parts of the proceedings of this meeting, namely items listed overleaf.

 

Reason for passing this resolution: good reason to withhold exists under section 7.

Specific grounds under section 48(1) for the passing of this resolution: Section 48(1)(a)

 

Note

 

Section 48(4) of the Local Government Official Information and Meetings Act 1987 provides as follows:

 

“(4)     Every resolution to exclude the public shall be put at a time when the meeting is open to the public, and the text of that resolution (or copies thereof):

 

             (a)       Shall be available to any member of the public who is present; and

             (b)       Shall form part of the minutes of the local authority.”

 

This resolution is made in reliance on Section 48(1)(a) of the Local Government Official Information and Meetings Act 1987 and the particular interest or interests protected by Section 6 or Section 7 of that Act which would be prejudiced by the holding of the whole or relevant part of the proceedings of the meeting in public are as follows:


Canterbury Regional Landfill Joint Committee

04 May 2016

 

 

ITEM NO.

GENERAL SUBJECT OF EACH MATTER TO BE CONSIDERED

SECTION

SUBCLAUSE AND REASON UNDER THE ACT

PLAIN ENGLISH REASON

WHEN REPORTS CAN BE RELEASED

6

Confirmation of Previous Public Excluded Minutes

s7(2)(b)(ii)

Prejudice Commercial Position

Confidentiality required due to commercial Information.

December 2016

7

Transwaste Agreements

s7(2)(b)(ii)

Prejudice Commercial Position

Start of comercially sensitive negotiations with business partner

31 May 2016

check with Zed Potgieter zp@ccc.govt.nz