69 01 March 2017
Finance and Performance Committee
10 February 2017
File: (17/193)
Report no: FPC2017/1/67
Review of Draft Statement of Intent 2017/2018 for Seaview Marina Limited
Purpose of Report
1. The purpose of the report is to provide a review of the draft Statement of Intent for Seaview Marina Limited as delivered to Council for Council’s consideration.
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Recommendations That the Committee recommends that Council: (i) notes that the Board of Seaview Marina Limited (SML) has submitted a draft Statement of Intent (SOI), attached as Appendix 1 to the report to Council, in accordance with the Local Government Act 2002; (ii) notes that officers have reviewed the draft SOI for compliance with the Local Government Act 2002 and provided their analysis; (iii) reviews the draft SOI and considers any modifications that should be made; (iv) receives the draft SOI; and (v) provides comment for the Board of the company to consider in finalising its SOI (including any modifications suggested by the Committee arising under part (iii) above). |
Background
2. The Local Government Act 2002 (LGA) requires the Board of a Council Controlled Organisation (CCO) to deliver to its shareholders a draft statement of intent on or before 1 March of each year.
Discussion
3. The Board of Seaview Marina Limited (SML) has submitted a draft SOI to Council. This is attached as Appendix 1 to the report.
4. The Board of a CCO must provide information prescribed by the LGA for the SOI to the extent they consider appropriate (s9 Schedule 8 of the LGA). The compliance of the company with the legislative requirements for the SOI and a summary of the amendments proposed by the Board for their 2017/2020 SOI are detailed below:
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Required Content |
SML Draft SOI Content |
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(a) the objectives of the company |
The objectives of the SML are stated. |
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(b) a statement of the board’s approach to governance of the group |
A comprehensive statement is included. |
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(c) the nature and scope of the activities undertaken by the group |
The nature and scope of activities are outlined. |
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(d) the ratio of consolidated shareholders’ funds to total assets, and the definition of those terms |
Statement of the ratio is not included and is stated as not being considered appropriate. |
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(e) the accounting policies of the group |
Accounting policies are outlined. |
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(f) the performance targets and other measures by which performance of the group may be judged in relation to its objectives |
Performance targets are included. |
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(g) an estimate of the amount or proportion of accumulated profits and capital reserves that it is intended to be distributed to the shareholders |
Information provided. There is no intention to pay a dividend to the shareholder. Trading profits are reinvested in the company. |
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(h) the kind of information to be provided to the shareholders by the group during the course of those financial years, including the information to be included in each half yearly report |
The kind of information to be provided is outlined, and includes half yearly reports and annual reports. Financial projections are included in the SOI. |
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(i) the procedures to be followed before any member or the group subscribes for, purchases, or otherwise acquires shares in any company or other organisation |
Information included. |
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(j) any activities for which the board seeks compensation from any local authority (whether or not the local authority has agreed to provide the compensation) |
No compensation requested. |
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(k) the boards estimate of the commercial value of the shareholders’ investment in the group and the manner in which and the times at which that value is to be reassessed |
A statement as to the net value of shareholders investment is included as well as a statement on the estimated commercial value. |
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(l) any other matters that are agreed by the shareholders and the board |
Forecast financial statements provided as per previous agreement. |
5. The company’s proposed key performance indicators for 2017/2020 are set out in section 11 of the report. There are no material changes from the previous year. Over the next three years SML is focused on continuing the development of the marina while maintaining the return on investment (ROI) agreed with the shareholder. The rate of return on shareholders’ funds remains at 5.0%.
6. The strategic objectives of the company have been added to and include:
(i) Removing residential development as an option on the marina;
(ii) The SOI states the legal advice on ownership of the seabed has been unclear. This is not correct. The advice is unequivocal. The Marine and Coastal Area (Takutai Moana) Act 2011 placed ownership with the Crown.
(iii) Completion of the final “in-water” development of 60 additional berths;
(iv) Providing a floating diesel/petrol facility at the southern end of the development;
(v) Resolving the tenure of the 2 breakwaters (currently owner by Council);
(vi) Reviewing the opportunity for additional retail and commercial facilities on the marina;
(vii) Providing facilities to support other marine related activities on the marina;
(viii)Expansion of the boat storage across Port Road;
(ix) Exploring the potential for a dry stack facility on the marina site;
(x) Continuing to improve the facilities.
Legal Considerations
7. Council may require changes to the appended draft SOI by using the modification requirements in Schedule 8 of the Act. Council may also suggest changes which the Board must consider in finalising its SOI.
8. There is an obligation to make the SOI available to the public “within one month after the date on which it is delivered to shareholders or adopted, as the case may be”. This obligation will be met by Council officers in respect of the SML SOI.
9. Note that despite anything in the company’s constitution, Council may, by resolution, require the board to modify the SOI and the Board must comply (section 5, Schedule 8), provided that Council first consults the Board.
Financial Considerations
10. The net shareholder’s investment in SML is estimated to be valued at $5.783m as at 30 June 2017 (compared with $5.413m at 30 June 2016).
Consultation
11. There are no consultation considerations.
Other Considerations
12. In making this recommendation, officers have given careful consideration to the purpose of local government in section 10 of the Local Government Act 2002. Officers believe that this recommendation falls within the purpose of the local government in that it meets the current and future needs of the community by providing marine recreational activities and facilities for the Wellington region.
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1View |
Seaview Marina Draft Statement of Intent 2017-2020 - marked up version (Under Separate Cover) |
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Author: Sharon Page
Senior Management Accountant
Reviewed By: Bradley Cato
Solicitor
Reviewed By: Brent Kibblewhite
Chief Financial Officer
Approved By: Joycelyn Raffills
General Manager, Governance and Regulatory