73 01 March 2017
Finance and Performance Committee
10 February 2017
File: (17/194)
Report no: FPC2017/1/68
Review of Draft statement of Intent 2017/2018 for UrbanPlus Limited
Purpose of Report
1. The purpose of the report is to provide a review of the draft Statement of Intent for UrbanPlus 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 UrbanPlus Limited (UPL) 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 paragraph (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 SOI on or before 1 March of each year.
Discussion
3. The Board of UPL 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 2017/2018 SOI are detailed below:
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Required Content |
UPL Draft SOI Content |
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(a) the objectives of the company |
The objectives of the UPL 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 – no significant changes. |
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(d) the ratio of consolidated shareholders’ funds to total assets, and the definition of those terms |
Ratio provided. |
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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 is intended to be distributed to the shareholders |
Information provided. There is no intention to pay a dividend to the shareholder. |
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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 (and, in particular, what prospective financial information is required and how it is to be presented) |
The kind of information to be provided is outlined. The Company will provide annual and six-monthly reports. Forecast financial information is 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 on procedures is not provided but it is noted that there is no intention to subscribe or invest in any other organisation. A further note states UPL has established a subsidiary. There are procedures in place which require approval from the CEO of Council, who can grant authority to UPL on certain conditions. |
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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 shareholder’s investment is provided. |
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(l) any other matters that are agreed by the shareholders and the board |
Some additional information is provided. |
Legal Considerations
5. Council may require changes to the appended draft SOI by using the modification requirements in Schedule 8 of the LGA. Council may also suggest changes which the Board must consider in finalising its SOI.
6. 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 UPL SOI.
7. 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
8. The net shareholder’s investment in UPL is estimated at $14.439m as at 30 June 2017 (compared with $15.123m at 30 June 2016).
Consultation
9. There are no consultation considerations.
Other Considerations
10. 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 through contributing the community outcomes.
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UrbanPlus Limited Draft Statement of Intent 2017-2018 (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