Terms of Reference
Responsibilities
The purpose of the committee is to:
·
have a general overview and insight into the strategy, direction
and priorities of all Council Controlled Organisations (CCO)
·
set policy relating to CCO governance
·
approve CCO Statements of Intent
·
monitor performance of CCOs and other entities in which the
council has an equity interest (such as CRLL, Tāmaki Regeneration Company
and Haumaru Housing).
Key responsibilities include:
·
monitoring the financial and non-financial performance targets,
key performance indicators, and other measures of each CCO and the performance
of each organisation
·
advising the mayor on the content of the annual Letters of
Expectations (LoE) to CCOs and Ports of Auckland Limited
·
exercising relevant powers under Schedule 8 of the Local
Government Act 2002, which relate to the Statements of Intent of CCOs
·
exercising relevant powers under Part 1 of the Port Companies Act
1988, which relate to the Statements of Corporate Intent for port companies
·
exercising Auckland Council’s powers as a shareholder or
given under a trust deed, including but not limited to modification of
constitutions and/or trust deeds, granting shareholder approval of major
transactions where required, exempting CCOs, and approving policies relating to
CCO and CO governance
·
approval of a work programme which includes a schedule of
quarterly reporting of each CCO to balance reporting across the meetings.
Powers
(i) All
powers necessary to perform the committee’s responsibilities.
Except:
(a)
powers that the Governing Body cannot delegate or has retained to itself
(section 2)
(b)
where the committee’s responsibility is limited to making a
recommendation only
(ii) Power to
establish subcommittees.
Auckland Plan Values
The Auckland Plan 2050 outlines a future
that all Aucklanders can aspire to. The values of the Auckland Plan 2050 help
us to understand what is important in that future:
Exclusion of the
public – who needs to leave the meeting
Members of the public
All members of the public must leave the
meeting when the public are excluded unless a resolution is passed permitting a
person to remain because their knowledge will assist the meeting.
Those who are not members of the public
General principles
·
Access to confidential information is managed on a “need to
know” basis where access to the information is required in order for a
person to perform their role.
·
Those who are not members of the meeting (see list below) must
leave unless it is necessary for them to remain and hear the debate in order to
perform their role.
·
Those who need to be present for one confidential item can remain
only for that item and must leave the room for any other confidential items.
·
In any case of doubt, the ruling of the chairperson is final.
Members of the meeting
·
The members of the meeting remain (all Governing Body members if
the meeting is a Governing Body meeting; all members of the committee if the
meeting is a committee meeting).
·
However, standing orders require that a councillor who has a
pecuniary conflict of interest leave the room.
·
All councillors have the right to attend any meeting of a
committee and councillors who are not members of a committee may remain,
subject to any limitations in standing orders.
Independent Māori Statutory Board
·
Members of the Independent Māori
Statutory Board who are appointed members of the committee remain.
·
Independent Māori Statutory Board
members and staff remain if this is necessary in order for them to perform
their role.
Staff
·
All staff supporting the meeting (administrative, senior
management) remain.
·
Other staff who need to because of their role may remain.
Local Board members
·
Local Board members who need to hear the matter being discussed
in order to perform their role may remain. This will usually be if the
matter affects, or is relevant to, a particular Local Board area.
Council Controlled Organisations
·
Representatives of a Council Controlled Organisation can remain
only if required to for discussion of a matter relevant to the Council Controlled
Organisation.
|
Council
Controlled Organisation Oversight Committee
23 March 2021
|
|
Council-controlled Organisations -
Quarter 2 Performance Reports ending December 2020
File No.: CP2021/01789
Te take mō te
pūrongo
Purpose of the report
1. To receive a high-level summary and comments on
the Council-controlled Organisation (CCO) half-yearly reports, ending 31
December 2020.
Whakarāpopototanga matua
Executive summary
2. The
quarterly performance of all the CCOs has been impacted to varying degrees by
COVID-19 lockdowns and alert level changes. Despite this, on the whole, good
progress is being made by the CCOs to meet their Key Performance Indicators
(KPIs), and deliver programmes.
3. Auckland
Transport’s (AT) performance has been significantly influenced by
COVID-19, especially its non-financial indicators such as rapid and frequent
network boardings (down against target), and punctuality and road productivity
(meeting or exceeding targets). Its financial performance shows a complex
picture, which is largely influenced by the abnormality of the current context.
4. The
amalgamation of Regional Facilities Auckland Limited (RFAL) and Auckland
Tourism, Events and Economic Development (ATEED) occurred successfully on 1
December 2020, to form the merged entity Auckland Unlimited. Much of the
quarter two report therefore reflects pre-merger activities. Net direct
expenditure is favourable against budget for the quarter, while capital
delivery is lower than budget. Of Auckland Unlimited’s 21 performance
measures, seven have been measured this quarter, and the majority of these have
been met.
5. Of
Panuku’s 19 measures, 12 have been measured in the first six months, and
all are on track to be achieved. Its operating expenditure is favourable to
budget, while its capital programme is slightly behind.
6. Watercare
has been performing well against its performance measures. One measure relating
to the percentage of real water loss from Watercare’s networked
reticulation system has not been reported due to data errors, and Watercare
will talk to this at the committee meeting. It is also involved in some
significant and complex policy and delivery programmes, which are covered in
the report. Its revenue is well ahead of budget.
Ngā tūtohunga
Recommendation/s
That the Council Controlled
Organisation Oversight Committee:
a) receive the second quarter reports of the
substantive council-controlled organisations, provided as attachments B to E of
the agenda report.
b) receive the half year reports of the non-substantive
council-controlled organisations, provided as attachments F-H of the agenda
report.
Horopaki
Context
7. Each
substantive CCO must provide a quarterly report to the Council-Controlled
Organisation Oversight Committee. They are required to:
· summarise
the CCO’s performance against the approved budget and agreed targets in
the 10-year Budget and statement of intent (SOI)
· provide
a forecast of the CCO’s performance
· identify
the cause of major variances
· highlight
major achievements for the quarter
· signal
any potential or developing issues
8. The
reports for the second quarter of 2020/2021 are contained in attachments B to
E.
9. Each non-substantive CCO must provide a half year report to the
council which contains the information required to be included by its statement
of intent. These reports are
contained in attachments F-H.
Auckland Unlimited
10. The amalgamation of RFAL and ATEED occurred on 1 December 2020. The
committee approved a 7-month consolidated 2020/21 SOI for Auckland Unlimited on
24 November 2020 (Resolution number CCO/2020/25).
11. Auckland Unlimited has produced its half-yearly report as an
amalgamated entity. As ATEED no longer exists, there is no half-yearly report
for them. The Auckland Unlimited report covers
primarily pre-merger activities. Auckland Unlimited anticipates reporting
more current post and consolidated post-merger activities for the next quarter.
Tātaritanga me ngā
tohutohu
Analysis and advice
Group financial results
12. The Auckland Council group financial results
were presented at the Finance and Performance Committee meeting on 18 March
2021. Particular points of note in relation to capital and operating results,
and CCO activity that influenced those results, are provided below. More
detailed comments about each CCO are included below, alongside non-financial
results.
13. Good
progress is being made, with capital investment of $1.2 billion over the six
months. This is in line with the same period last year and represents 93 per
cent of budgeted delivery despite the COVID-19 disruptions. Auckland Council
and AT made up the largest shortfall against budget. Both were behind budget
due to late adoption of budgets, with AT also experiencing delays because of
COVID-19 in Spain affecting EMU (Electric Multiple Units i.e., trains)
delivery, unexpected track maintenance by KiwiRail resulting in delays to
testing new EMUs, and the August 2020 COVID-19 Alert Level 3 lockdown in New
Zealand.
14. The
group achieved a positive operating performance result for the six months.
Direct revenue of $1 billion was $100 million ahead of budget, and direct
expenditure of $1.4 billion was $90 million favourable to budget. Included in
direct revenue is a $58 million surplus against budget related to
Watercare’s infrastructure growth charges. Overall, the net direct
operating result was $190 million favourable to budget.
CCO Review recommendations
15. A six-month progress report on the CCO Review
programme was provided to this committee in February. The CCOs report on those
recommendations that they are responsible for in their quarterly reports.
16. There are seven specific recommendations to
Panuku. Panuku, with AT, has made good progress on jointly communicating about
urban development and transport infrastructure matters (Recommendation 46).
Panuku have also worked with the council family and local boards on
Recommendation 34. In their draft SOI they will seek to more clearly outline
how their investments and activities contribute to meting their performance
targets (Recommendation 9).
17. The merger of RFAL and ATEED (recommendation 1)
was a key recommendation of the CCO review, and on 1 December 2020 the new
organisation, Auckland Unlimited, was launched. Key achievements over
quarter two and in the lead up to and subsequent to the merger have included
the appointment of Chief Executive, Nick Hill; approval of the new Auckland
Unlimited 2020/21 SOI (7-months), development of a new Auckland Unlimited
website and intranet. Over
quarter three and beyond, Auckland Unlimited staff will work on the target
operating model for Auckland Unlimited.
18. The key area of focus for Watercare is improving coordination
between council and Watercare on consenting, infrastructure planning and communications.
Watercare and council staff are jointly working on improvements in these areas.
Auckland Transport
Financial results
19. AT
had a favourable net operating result of $55 million for the quarter.
20. Revenue
is $4 million favourable to budget due to higher than anticipated infringement
ticket issuances and usage of on and off-street parking ($8.3 million), and
rental, permit and mooring fee revenue ($9.4 million) due to faster recovery
than expected. This is partly offset by lower than
budgeted public transport income ($4.5 million) due to the impact of COVID-19
on patronage, disruptions caused by KiwiRail track closures, and Waka Kotahi
operating subsidies being lower than budget ($9 million).
21. Direct
expenditure is below budget by $41 million, mainly due to lower than budgeted
professional services and maintenance activity (following July approval of the
emergency budget), strong management of COVID-19 related cleaning and safety
equipment costs and streetlight electricity expenditure. Depreciation is $10
million favourable to budget.
22. Capital
delivery is $51 million lower than budget mainly driven by delays caused by
COVID-19 in Spain affecting EMU delivery and unexpected track maintenance by
KiwiRail resulting in delays to testing of new EMUs. There is a further
underspend for the quarter which reflects the late release of the emergency
budget and COVID-19 related delays which will be addressed in the balance of
the year.
23. Waka
Kotahi capital funding revenue is $21 million unfavourable against budget,
mainly due to the timing of some capital projects leading to delayed Waka
Kotahi funding claims. This is partially offset by capital funding received
from the Crown as part of the post COVID-19 Crown Infrastructure funded capital
programme being $16 million favourable to budget. This includes funding for
prior year capital spend.
Performance against indicators
24. AT’s performance in quarter two has been excellent,
particularly in the context of COVID-19’s effects
on the transport network. Some of the issues raised by the quarterly
report are indicated below. These have been discussed with AT, which will
provide further information about them verbally at the meeting.
25. The
Regional Fuel Tax (RFT) enabled investment summary indicates that a little
under half of the full-year capex budget has been spent and is very close to
budget year-to-date, which is positive. More detail about these projects
and likelihood of the full-year budget being spent will be provided. In
addition, the opex result is behind budget, though it is relatively
small.
26. Rail
boardings and rapid and frequent network boardings are not on track to be
achieved. Given the disruptions on the rail network throughout quarters
one and two, this is not surprising. It will be useful to understand from
AT when it expects to get a good sense of how these numbers will recover, given
that the rail network is returning to full timetable and speed operation during
quarter three. Additionally, any information about the impact of the
February and early March lockdowns that is available would be useful, including
whether AT received an extended subsidy from government for these (though it is
does not relate to quarter 2).
27. The
flipside of the public transport issues is that results for punctuality on
public transport and road productivity are looking very good. It will be
useful to explore with AT whether these gains can be maintained, or whether
they will inevitably be eroded as networks return to full capacity.
28. Finally,
it is good to see that results relating to safety are also positive, with more
high-risk intersections being addressed than target, and lower numbers of
fatalities and serious injury crashes on the local road network. It is
clear that fewer major safety works than would be ideal are able to be
delivered in future due to funding constraints, and it is likely that COVID-19
and quieter roads may have played some role in the lower crash rate. It
will be useful to explore with AT the degree to which it projects these
improvements in safety can be maintained when networks return to full capacity,
and given a potentially lower level of investment. It is acknowledged
that this is a potentially sensitive conversation and should not detract from
the excellent results in terms of safety in the quarter two report.
Auckland Unlimited (AU)
Financial results
29. Auckland
Unlimited’s (AU) net direct expenditure for the quarter is $17.7 million
favourable against budget.
30. Direct
revenue is $7 million favourable, mainly due to the receipt of unbudgeted
Central Government grants from the wage subsidy extension, the first tranche of
Strategic Tourism Asset Protection Programme grant funding, as well as some
grants received earlier than budgeted.
31. Direct
expenditure is $10.7 million favourable to budget mainly due to tight
expenditure control including deferral of maintenance programmes, freeze on
recruitment along with staff taking annual leave and reduced hours.
32. Some of
these savings will be offset in the second half of the year as AU incurs
expenditure relating to the grants received in the first half of the year, fund
deferrals from the first six months and fund unbudgeted merger costs.
33. Capital
delivery is $12.5 million lower than budget. This is mainly due to COVID-19
related delays to renewals and the Zoo redevelopment, but these are expected to
be on track at year end. The Aotea Centre weathertightness works were
substantially disrupted during the COVID-19 lockdown and post-lockdown periods.
The programme is now expected to extend into quarter four of the Financial Year
2020/2021 (FY21), and risk being impacted further if future
lockdowns occur.
Performance against indicators
34. The key performance measures in the current 7-month SOI largely
represent legacy ATEED and RFA indicators, which have differing reporting
frequencies and methodologies. Auckland Unlimited is working to
implement a more streamlined approach to its performance measurement and
reporting framework through the development of its draft 2021-2024 SOI.
35. Out of a total of 21 performance measures, seven have been met. For
12 performance measures, results are not measured/not available this
quarter/have not yet been set, and two have not been met. A number of
those not measured/not available are due to baseline targets still to be set.
36. Of the two performance measures not met, one
can be attributed to the August 2020 level 3 lockdown (the number of people who experience RFA’s
arts, environment and sports venues and events). The other performance
measure (value of capital
improvements to RFA venues) did not meet target, however AU note that capital project work will be completed to budget
later in the financial year.
Panuku Development Auckland (Panuku)
Financial results
37. Panuku,
including the commercial property portfolio it manages, reported a $11.2
million favourable net direct expenditure result.
38. Direct
revenue for the quarter is $2.5 million favourable to budget mainly due to
COVID-19 related assumptions for reduced income due to hardship in the
Emergency Budget, which have not been fully realised.
39. Direct
expenditure is $8.7 million favourable to budget mainly due to staff cost
savings and delayed recruitment ($1.5 million), spend in Priority Locations is
favourable compared against budget by $2.6 million due to the impact of the
August COVID-19 lockdown on placemaking activities, coupled with prudent
spending in other areas. To date there has been a $2.6 million decrease in
Marina expenditure because of the COVID-19 impact on the America’s Cup
regatta. This will be offset in the next quarter with an expected similar
reduction in revenue (net effect on surplus expected to be zero).
40. Capital
delivery is $11.6 million lower than budget. The variance includes $3.7 million
of contamination payments to Waterfront development partners delayed by slower
pre-leasing in the property market. It also includes a delay of $1.5 million on
the Pile Mooring redevelopment due to equipment repairs by the contractor, as
well as acquisition of $2.5 million in Avondale delayed by Public Works Act
(PWA) process. A further $3.9 million relates to timing issues across other
locations. Panuku forecasts capital spend to be close to budget in the next
half of the year.
41. The
strategic development fund (SDF) is a credit facility available to take
advantage of any acquisition opportunities for town centre regeneration
outcomes. The fund is being used this year to purchase properties in Northcote
Town Centre. There is a delay as Panuku work through a PWA process on a number
of properties, leading to a variance of $6.1 million to date. Panuku is
forecasting that the spend will be close to budget at year
end.
Performance against indicators
42. 12 of the
19 measures are on track or have been met. Seven have not yet been measured.
43. Completed
projects and programmes in this quarter include: the America’s Cup 36
enabling works programme and in Takapuna the Toka Puia carpark is now open to
the public. In Northcote Te Ara Awatahu, the new greenway works have commenced
and in Manukau the Barrowcliffe Bridge enhancement works started in December.
44. Two risks
are identified, relating to the Wynyard Point and Onehunga wharf master plan
consultations which are delayed until after the Long-term plan (LTP) process.
Watercare Services Limited (Watercare)
Financial results
45. Watercare’s
net direct revenue is $52.1 million favourable against budget.
46. Direct
revenue is $58 million favourable against budget mainly due to higher than
budget infrastructure growth charges (IGCs) and revenue associated with new
developments. The impact of COVID-19 on revenue is assessed to be minimal at
this stage.
47. Direct
expenditure is $5.9 million unfavourable against budget mainly due to digital
project spend budgeted as Capex in their Statement of Intent
but treated as Opex in FY21 ($3.7 million).
48. Capital expenditure is tracking at $373 million against a budget of
$366 million. Most of the overspend is in the Waikato 50MLD project ($17.9m) as
the project is currently ahead of the programme to secure additional water
supply. The overspend is partially offset by some minor underspends.
Performance against indicators
49. Watercare
is continuing to deliver key drought augmentation projects and investigate
other options for water supply, such as the work with Auckland Council that has
identified four community parks where potable water can be replaced with ground
water for irrigation.
50. Watercare
has also been working closely with Auckland Council in responding to Department
of Internal Affairs for information request relating to the government’s
Water Reform programme.
51. As a
result of impacts from COVID-19, Watercare’s capex programme has been
impacted, with some delays. These impacts were discussed in the report to the
18 March Finance and Performance Committee.
52. Watercare
has 14 LTP measures and 16 SOI measures. All of the 13 measures that are
tracked monthly were met. One measure ‘the percentage of real water loss
from Watercare’s networked reticulation system’ has not been
reported on due to data errors. Last quarter, Watercare reported that it had
met this KPI and it was note that this was an improvement as it had not met it
in the last financial year. It would be good to understand from Watercare when
it will be in a position to provide accurate results.
53. Watercare
have added a new section ‘Waikato matters’ providing information on
the resource consent application to Waikato Regional Council to draw an
additional 200 million litres of water a day from the river. This
application has now been publicly notified (12 February 2021), with public
submissions closing on 26 March 2021.
COMET Auckland
54. Half
year financial performance (1 July-31 December 2020) was slightly better than
budgeted, with a deficit of $12,400, compared to the budgeted deficit of
$16,200.
55. Of
the six SOI performance measures, three are yet to be measured, as this occurs
via an annual stakeholder survey which is sent out in February 2021. Two
other measures (% of initiatives that fully meet
timelines and outputs as listed in the SOI and value of external funding as a
percentage of Auckland Council grant) are fully on
track. The remaining measure (number of media
articles generated) is below target for the half-year
due to education media cycles and the impact of COVID-19 on media focus.
However COMET Auckland expects to catch up in the next six months, to fully
meet the annual target.
Manukau Beautification Charitable Trust
56. Half year
financial performance (1 July -31 December 2020) shows a $114,000 net profit,
which is a $144,000 positive variance to the budget net loss of $31,000. This is largely attributed to cost savings in operational
expenditure and some activity that was cancelled due to the August 2020
lockdown.
57. Of the 23
SOI performance measures, 17 are measured in the current period. Of
those, Manukau Beautification Charitable Trust is on track with 74%. The
remainder have had corrective work undertaken, or in the case of the Boomer
Business performance measures, results have been impacted by other external
factors such as COVID-19.
Tauākī whakaaweawe
āhuarangi
Climate impact statement
58. The quarterly performance reports are a key tool
to monitor the progress of each CCO in action on climate change.
59. The Panuku Board adopted the Panuku Climate
Change Strategy in November 2020. Focus in the last quarter has been on
ensuring infrastructure projects (Northcote, Toka Puia carpark and
Barrlowcliffe Bridge) facilitate active modes and provide health and wellbeing
benefits.
60. Auckland Unlimited is developing climate change and sustainability actions for the Destination AKL
Recovery Plan. Work has started with key partners on establishing a climate
innovation hub to address climate challenges for industry, and Auckland region.
The initial focus of the hub will be on 4 challenges needing innovative
solutions as identified in the Emissions Reduction Pathway for Auckland’s
key sectors. Auckland Unlimited is commencing work on Toitū Carbon Zero
for Lantern Festival 2021.
Ngā whakaaweawe me
ngā tirohanga a te rōpū Kaunihera
Council group impacts and views
61. Each CCO’s quarterly report contains
information on how they are contributing to the council’s outcomes and objectives
for them.
Ngā whakaaweawe
ā-rohe me ngā tirohanga a te poari ā-rohe
Local impacts and local board views
62. The governance of CCOs is a responsibility
delegated to the CCO Oversight Committee. We have not sought the views of local
boards. CCOs provide six-monthly progress and performance reports to local
boards. The quarterly reports provide a summary of the engagement that CCOs
have carried out with local boards during the quarter.
Tauākī whakaaweawe
Māori
Māori impact statement
63. Each CCO
reports on their contribution towards achieving Māori Outcomes
in their quarterly report.
64. Panuku
has undertaken a significant amount of engagement to prepare for the upcoming
plan change for Wynyard Point. Mana whenua has gifted this project the name Te
Ara Tukutuku. They have also been talking to mana whenua around joint
development options in areas surrounding rail stations and in the disposal of
council property.
65. Auckland Unlimited key deliverables from
quarter two have included the launch of the Toi Tū Toi Ora: Contemporary Māori art exhibition, completion of the
draft Te Reo language plan for Auckland Zoo and confirmation of funding to
undertake bilingual signage and wayfinding for all RFA facilities over the
current and next financial year. Tāmaki Makaurau Taki Hua - the Māori Economic Summit 2020 also took
place late November at Aotea Centre. The programme attracted strong attendance,
as well as ministerial representation.
Ngā ritenga
ā-pūtea
Financial implications
66. The
financial results are discussed further as part of the Auckland Council Group
quarterly performance report received at the 18 March 2021 Finance and
Performance Committee.
67. Each of
the CCO’s quarterly reports contains information regarding their
financial performance.
Ngā raru tūpono me
ngā whakamaurutanga
Risks and mitigations
68. The quarterly reports provide a summary of the
top risks and mitigations. This supports more detailed quarterly reporting to
the Audit and Risk Committee.
Ngā koringa ā-muri
Next steps
69. This report is primarily for information
purposes. The next quarterly report will be provided to the CCO Oversight
Committee in June 2021.
Ngā tāpirihanga
Attachments
|
No.
|
Title
|
Page
|
|
a⇩
|
Auckland Transport Quarter 2 report 2020/21- Chair
cover letter
|
291
|
|
b⇩
|
Auckland Transport Quarter 2 report 2020/21
|
313
|
|
c⇩
|
Auckland Unlimited 2020/21 Quarter Two report
|
49
|
|
d⇩
|
Panuku Quarter 2 Performance Report 2020/2021
|
635
|
|
e⇩
|
Watercare Quarter 2 Performance Report Dec 2020
|
835
|
|
f⇩
|
COMET Auckland 2020/21 Half Year report
|
991
|
|
g⇩
|
Manukau Beautification Charitable Trust 2020/21 Half
Year report
|
1135
|
|
h⇩
|
Contemporary Art Foundation, Half-year report 2020/21
|
1291
|
Ngā kaihaina
Signatories
|
Authors
|
Claire Gomas - Principal Advisor
Edward Siddle - Principal Advisor
Sarah Johnstone-Smith - Principal Advisor
|
|
Authoriser
|
Alastair Cameron - Manager - CCO Governance &
External Partnerships
|
|
Council Controlled
Organisation Oversight Committee
23 March 2021
|
|
Ports of Auckland Limited Interim Report
for the six months ending 31 December 2020
File No.: CP2021/02055
Te take mō te
pūrongo
Purpose of the report
1. To
receive the Ports of Auckland Limited (POAL) Interim Report for the six months
ending 31 December 2020 and 2020-2023 Statement of Corporate Intent (SCI)
performance measure results for quarter two (1 October-31 December 2020).
These are provided as Attachments A and B to this report.
Whakarāpopototanga matua
Executive summary
2. The
POAL Interim Report for the six months ending 31 December 2020 reflects on a
challenging period for POAL. Much of this is attributed to the impacts of
COVID-19 driving global supply chain congestion and flow on effects to
POAL’s container automation project and delays to shipping through its
container terminal.
3. POAL’s
half year financial results, despite being lower than the comparative period
last year, were in line with the Emergency Budget and therefore do not have a
significant impact on council’s financial position.
4. POAL
expects to be able to lift performance in Financial Year 2021/2022 (FY22).
5. POAL’s
quarter two results against the 2021 annual targets for the performance
measures in its 2020-2023 SCI highlight that while some annual targets have
been exceeded (such as Return on Equity indicators and multi-cargo terminal
average car dwell times), others are well behind the annual target (such as
number of lost-time injuries and ship rate).
Ngā tūtohunga
Recommendation/s
That the Council Controlled
Organisation Oversight Committee:
a) receive
the Ports of Auckland Limited Interim Report for the six months ending 31
December 2020 and 2020-2023 Statement of Corporate Intent performance measure
results for quarter two (1 October-31 December 2020).
Horopaki
Context
6. Under
the Memorandum of Understanding between POAL and Auckland Council and as
required under the Port Companies Act 1988, POAL is to provide a half yearly
report to the council as shareholder.
Tātaritanga me ngā
tohutohu
Analysis and advice
7. The
POAL Interim Report for the six months ending 31 December 2020 is provided at
Attachment 1. POAL notes the challenges for the business over this period which
have included:
· Global
supply chain congestion as a result of COVID-19 and the flow on effects to its
container terminal automation project and delays to shipping through its
container terminal.
· COVID-19
impacts whereby normal
supply chain patterns disappeared and have not come back.
· Strikes at ports in
Australia which disrupted schedules and unexpectedly high volumes around the
world meant that by August, POAL were seeing more ships running off-schedule
than normal.
· Challenges in
maintaining the talent pool, with crane drivers being a particular case.
· An unusual pattern of
demand in the lead up to Christmas and a continuous flow of ships.
8. POAL
expects the current issues to be behind them in the second half of calendar
2021 and to be able to lift performance in FY22.
9. Phase
one of POAL’s automation project was meant to go-live in March 2020, but
days before the go-live date the country went into Level 4 lockdown and work
had to stop. POAL state that the project is back up and working now with
systems all running to plan. As soon as pavement remediation can be done a full
terminal roll-out will happen.
10. Looking
forward, POAL have other projects that will come to fruition this year.
Towards the end of 2021 POAL is due to take delivery of its electric tug
(Sparky), the world’s first electric ship-handling tug. POAL have
also installed a hydrogen refueller, which is part of their road-map toward a
zero-emission future.
POAL financial performance results
11. POAL’s revenue for the half year was $10 million lower than
the comparative period in the prior year. Capacity issues arising from the
delays of the automation project and stevedore shortages continued to cause
congestion at the port, resulting in decreased revenues compared to the prior
year. These decreases were budgeted for in the Emergency Budget.
12. Operating
expenditure is consistent with the same period in the prior year.
13. POAL
budgeted to pay $10.6 million in dividends to council in 2020/2021, made up of
a $9.7 million 2019/2020 final dividend and a $0.9 million 2020/2021 interim
dividend. The actual 2019/2020 final dividend paid was $4.6 million. No further
dividends are forecast to be paid for the remainder of the year.
SCI performance measure results
14. Attachment
B provides POAL’s quarter two results for the key performance indicators
in its 2020-2023 SCI, against 2021 annual targets. Year-to-date (YTD)
results are also included. A summary is provided below:
· Four
lost time injuries were recorded for quarter two, against an annual target of
zero.
· Crane rate (as measured by Ministry of Transport) was 24.61 for the
quarter against an annual target of 32.00. The crane rate is the number
of containers a crane lifts on and off a container ship in an hour.
· Ship rate (measured by Ministry of Transport) was 37.5 for the
quarter against an annual target of 75.0. The ship rate is the number of
containers moved on and off a container ship in an hour.
· Increase in revenue for quarter two was -6.8%, against an annual
target of 0.3%.
· Net Profit after Tax (NPAT) quarter two result was $9.5m against an
annual target of $20.4m. Quarter two results for return on equity
performance indicators have exceeded their annual targets.
· The multi-cargo terminal average car dwell time for the
quarter exceeded the annual target of 2.85 days with a result of 2.0 days.
15. During
the reporting period, an independent review of health and safety at POAL was
commissioned, conducted by the Construction Health and Safety Trust New Zealand
(CHASNZ). This review is due to conclude imminently.
Tauākī
whakaaweawe āhuarangi
Climate
impact statement
16. POAL’s 2020-2023 SCI
includes a performance measure “work towards
POAL’s long term environmental sustainability goals of being carbon
neutral by 2025, emission free by 2040 and zero waste to landfill by
2040.” This measure will be reported at the end of the financial year.
Ngā
whakaaweawe me ngā tirohanga a te rōpū Kaunihera
Council
group impacts and views
17. There are
no relevant council group impacts. Financial
implications are discussed below.
Ngā
whakaaweawe ā-rohe me ngā tirohanga a te poari ā-rohe
Local
impacts and local board views
18. The
governance of POAL is a responsibility delegated to the CCO Oversight
Committee. We have not sought the views of local boards.
19. POAL’s
2020-2023 SCI includes a performance measure “Attend all
relevant Auckland local board meetings where invited and strengthen
relationships with the Orakei, Waitemata and Devonport-Takapuna local
boards.” There have not been any invitations to local
board meetings during quarter two.
Tauākī
whakaaweawe Māori
Māori
impact statement
20. POAL’s 2020-2023 SCI includes the
performance measure “strengthen relationships with mana whenua.
Develop and implement a Māori Outcomes Framework by 2023.” Progress against this
measure will be reported at the end of the financial
year.
Ngā
ritenga ā-pūtea
Financial implications
21. POAL’s
half year results, despite being lower than the comparative period last year,
were in line with the Emergency Budget and therefore do not have a significant
impact on council’s financial position.
22. The
decreased dividend payments forecast for FY21 do not have an impact on the
council group’s financial position, as dividends are inter-company
payments that are eliminated for group consolidation purposes.
23. Input
and advice has been sought and received from Finance staff on the financial
implications of advice contained in this report.
Ngā
raru tūpono me ngā whakamaurutanga
Risks and
mitigations
24. The POAL
Interim Report for the six months ending 31 December 2020 does not detail any
significant risks.
Ngā
koringa ā-muri
Next steps
25. This
report is for information purposes only. POAL will next report to the
committee on its 2020-2023 SCI quarter three performance in May
2021.
Ngā tāpirihanga
Attachments
|
No.
|
Title
|
Page
|
|
a⇩
|
Ports of Auckland Limited Interim Report for the six months
ending 31 December 2020
|
1435
|
|
b⇩
|
Ports of Auckland Limited 2020-2023 Statement of
Intent performance measure results for quarter two (1 October-31 December
2020)
|
169
|
Ngā kaihaina
Signatories
|
Author
|
Sarah Johnstone-Smith - Principal Advisor
|
|
Authoriser
|
Alastair Cameron - Manager - CCO Governance &
External Partnerships
|
