Attachments of Finance and Performance Committee

Attachment 1

Seaview Marina Draft Statement of Intent 2017-2020 - marked up version

Attachment 1

Seaview Marina Six Month Report to 31 December 2016

SEAVIEW MARINA

2016/2017 SIX MONTH REPORT

As at 31 December 2016

1. General Comments

The marina saw improved demand for a number of its products and services. However the largest income earner, berth rental, did not perform as well as expected. While this had an impact on budgeted income, the control of costs and the deferment of the in-water development resulted in the six month’s surplus from business as usual activities being in line with budget. Earthquake repair costs of $20k were the main cause for the reported surplus being under budget.

Boat Storage

The fully commercial boat storage business over the first six months has been flat, due mainly to lower than anticipated occupancy rates for berths. In particular the 12m berths have not reached the occupancy rates anticipated and only averaged 72.5%, while the overall berth occupancy achieved 83%. The opposite was experienced with the trailer boat storage with occupancy always close to 100%. Pole mooring revenue was not budgeted for but it has taken longer to remove the vessels and so there has been around $3k additional income generated from this source. The YTD income for boat storage for the six month period is 89% of budget. More marketing effort is being focused over the Christmas/New Year period on filling the 12m berths.

Hardstand

The boatyard business has produced the best six monthly results achieved in its history. It has produced 144% of budgeted income over the six months. This was due to an increase in the number of commercial vessels using the boatyard and the Wellington Marine Centre tenants attracting vessels to our boatyard. There has also been an increase in the lift activity with 255 lifts over the six month period.

In December a brand new diesel facility was installed providing clients with a ‘self-service’ credit card/eftpos system. This provides clients with access to diesel 24 hours a day, seven days per week.

Marine Centre

The Marine Centre has had only one tenancy vacant over the first six months of this financial year. YTD the income for the six months is 100% of budget.

Four units were due for renewal at the end of 2016 and these have all been renegotiated and signed off. The Board was successful in achieving an average rental increase of 21.5% for the four units.

The paint shop/workshop facility (Unit 3) is leased on a casual basis by SML and this has shown improving occupancy over the first six months of this financial year. It has averaged 75% and forward bookings indicate that this level of occupancy will continue. This facility is considered a strategic facility that SML provides boat owners and contractors. It is the only facility of its type in the Wellington Region.

Launching Ramp

Less than favourable weather over the first six months of the financial year has had an impact on the income from the launching ramp. The income was 75% of budget over the first six months, but it is anticipated this will improve as the weather settles down during the first three months of 2017.

Live-aboard

At the end of 2016 the marina had 43 vessels with the owners living aboard. This has generated around $25k for the six month period, which is 94% of the six monthly budget.

Development Projects

The development of the berths on G Pier was planned for the first six months of 2016/2017. However, with the lower than anticipated occupancy rates over the rest of the marina this development has been put on hold waiting a business case to be presented to the Board to confirm additional commercial demand exists. As a consequence a range of smaller capital expenditure items have been completed including a new gate structure on E Pier, the addition of a new diesel pump facility, a new dangerous goods store, upgrading the laundry with two new washing machine/drier units and the purchase of a mobile effluent pump unit.

Health and Safety

There were no notifiable health and safety incidents reported over the six month period. Much work has gone into upgrading the Health and Safety processes and procedures to line up with the new regulations. The hardstand has been identified as a dangerous workplace and therefore the Board approved limited access. This required another automated gate being installed at the east end. A health and safety report is provided each month to the Board at the board meetings.

The Kaikoura earthquake had an impact on SML. It tested out our Tsunami evacuation procedures. The majority of our liveaboard licensees evacuated the marina to higher ground. Damage was limited to tar seal cracking and a fence being broken with posts falling through it. The costs of repairs were close to $20k.

2. Financial Results

Detailed financial statements can be found in the Appendix. A summary of the financial results for the six month period is shown in the table below:

	YTD Actual	YTD Budget	YTD Variance	Annual Budget	Annual Forecast	Forecast Variance
Total Revenue	1,017,520	1,099,179	(81,659)	2,218,173	2,086,924	(131,249)
Total Expenditure	872,612	933,784	61,172	1,864,170	1,716,142	148,027
Net Surplus / (Deficit)	144,908	165,395	(20,487)	354,003	370,782	16,778

Operating Income:

Over the six months 93% of budgeted income was achieved.

Income YTD is up 2.3% on the same time last year while expenses are up on last year’s figures by 3%. Net profit YTD is down by 2% of last year’s six monthly results.

The core business of boat storage (comprising 66% of total budgeted revenue), is below budget by 11% or $81.659. This was due primarily to lower than predicted berth occupancy, as the trailer boat occupancy is tracking close to budget.

The boatyard business is significantly ahead of budget. Revenue from the Marine Centre is tracking to budget. Boat ramp revenue is $4.5k below budget due to poor weather over the past few months, whilst live-aboard income is below budget by $1.6k.

Bad debts are under control. Administrative staff all spent considerable time following up on poor payers and the success rate is high. No bad debts have had to be written off during this period.

Operating Expenditure:

Total expenditure, including depreciation and interest, is well below YTD budget by 7%. Interest is 66% of YTD budget due to the berth development being deferred. Likewise depreciation is 92% of YTD budget.

Operating expenses are being managed tightly and are tracking to budget YTD. Employee costs are 4% above YTD budget. Savings in interest and depreciation expenses due to the deferral of the pier development, as well as savings in insurance have contributed to lower than planned expenditure.

Capital Expenditure:

Expenditure on capital items for the six months ended 31 December 2016 totalled $214k, of which the main items of expenditure included:

· Upgrade to the launching ramp car/boat trailer parking area - $90k,

· Causeway floodlights - $18k,

· Two new washing machines/dryer units - $17k,

· Upgraded signage - $8k,

· Ten new pier trolleys - $5.7k

· Upgrading the sewage pump and warning system - $13k

· Security gates to comply with Health and Safety on the hardstand - $12.3k

· The balance, $37k, comprised minor business related items.

For the remainder of the year, the focus will be on extending the dock way, estimated at $120k, and a fit-out of unit 12 in the Wellington Marine Centre, $20k, to better utilise space and enhance revenue flows. Both of these projects require the completion of a business case before approval.

3. Forecasts

Overall revenue projections for the twelve month period indicate SML will achieve around 94% of budget, with total expenses expected to be about 92% of budget. Financial and depreciation expenses are projected to be 83% of budget. Overall a surplus at YE of $371k is projected, which is below budget by $17k. It is anticipated that SML will achieve its return on equity of 5%, as required in the Statement of Intent for 2016/17.

The capital expenditure is projected to be well below the full year budget as the berth development programmed on G Pier has been postponed until berth occupancy rates improve.

Appendix 1: FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2016

Attachment 1

New Zealand Local Government Funding Agency Annual Report 30 June 2016 )