The Queenstown Lakes District Council Annual Report, to be adopted by full council on Friday, reflects a strong financial result for the council in the 2004/2005 financial year, QLDC finance manager Stewart Burns said.

"The operating surplus of $26.7 million is well above the budget of $24 million, which is again a reflection of the continuing rate of growth in the district. The surplus is quite simply the difference between revenue and operating expenditure. It is not profit but represents funds tagged for debt repayment and an extensive capital works programme," Mr Burns said.

Combined strong cash flows and effective cost control have enabled council to reduce its external borrowings by $4 million for the year from $10.3 million to $6.3 million.

"To June this year the council has used $38.1 million of uncommitted cash as internal advances to fund capital projects. These advances are just like loans in that they eventually have to be paid back, because the council is not able to permanently use funds obtained for one purpose for an unrelated activity," Mr Burns said.

The report also showed that operating revenue was ahead of budget by 5.9 percent.

"Mainly due to the revenue from continuing high levels of development activity in the district, including capital contributions from developers of $8.3 million and land sales of $7.9 million," he said.

Operating expenses were 2.6 percent above budget, representing an acceptable result in terms of managing costs given the stronger than expected inflationary pressures.

Growth also had a part to play in the carrying forward of $19.86 million in capital budgets from the 2004/2005 year.

"Obviously if we commit to a capital project, such as roading, stormwater or water supply then we want to ensure those works are carried out, but we have been stalled on about 40 percent of projects due to matters like the availability of contractors, shortage of project management resource and in some cases we have set inadequate timeframes or budgeted for contingent projects," Mr Burns said.

The council had taken a number of steps to counter the problems.

"These include the provision of additional project management resource for reserves, walkways, utilities and planning," Mr Burns said.

The council had also introduced steps to monitor progress on the delivery of the capital projects during 2006/2006 in order to draft a realistic capital programme for the 2006 Council Community Plan.

ENDS

For further information please contact Stewart Burns 03 441 0499.

By: Tamah