Environment Waikato has delivered a satisfactory financial result for the year ending June 30 2009 and is forecasting improvements in the year ahead, the Finance and Audit Committee heard today.
Presenting the 2008/09 Annual Report, finance group manager Mike Garrett said the council had largely achieved its planned programme of work despite difficult financial conditions.
Mr Garrett said the global economic crisis had a significant impact on the value and projected returns of the council’s investment fund during the latter part of the 2008 calendar year, resulting in a $2.87 million unrealised loss in the value of the fund.
The council adjusted it budgets to account for the fall in investment fund income, from the projected $6.4 million to the actual return of $2.2 million.
"We kept a careful eye on the impact of falling equity markets on our investment fund and adjusted our budgets accordingly," he said.
"By reining in expenditure we have been able to deliver a satisfactory year-end result, improving our cash position relative to budget and the previous year’s result.
"Taking into account a number of technical adjustments, and after accounting for reserve transfers, the year-end position is a $2.795 million deficit against a budgeted deficit of $1.814 million." Included in this deficit were non-cash items of additional long service and gratuity entitlements, and the write-off of historical capital costs.
In line with the requirements of the International Financial Reporting Standards, the accounts show a deficit of $6.373 million. The contributors to this deficit were largely technical accounting adjustments, including Environment Waikato’s $1.859 million share of the Lake Taupo Protection Trust’s deficit*, $1.017 million additional depreciation charges arising from asset revaluations, and a net $2.87 million unrealised loss in value in the investment fund.
"These had no effect on the council’s cash funding position," Mr Garrett said.
International markets have since started to rally, with $2.23 million of the unrealised loss having been recovered in the past three months.
The committee approved the 2008/09 Annual Report to be presented to the full council for adoption later this month.
*It is important to note that over the 15-year life cycle of the Lake Taupo project, the trust’s accounts will show variously a deficit or surplus from year to year, depending on the phasing of land purchases aimed at permanently reducing the amount of nitrogen leaching from the land into the lake.