Auckland Council Investor Update - Matthew Walker, Group Chief Financial Officer John Bishop, Group Treasurer - SGX.com
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Auckland Council Investor Update
Matthew Walker, Group Chief Financial Officer
John Bishop, Group Treasurer
March 2020
Classification: PROTECTED
Important disclaimer
The information in this presentation has been prepared by Auckland Council for general information purposes only. By listening
to or reading this presentation, you acknowledge and agree to the contents of this disclaimer.
Auckland Council makes no representation or warranty as to the accuracy, adequacy, reliability, completeness or currency of any
statements, estimates or opinions or other information contained in this presentation. This presentation has been prepared in
good faith but has not been independently verified. Certain information and data contained in this presentation was derived by
Auckland Council from other sources.
This presentation may contain forward-looking information including estimates, forecasts and projections. This forward-looking
information speaks only as of the date of this presentation and is based on assumptions which may or may not prove to be
correct. No express or implied representations or warranties are, or will be, made by Auckland Council or any other person as to
the accuracy or completeness of this forward-looking information or the reasonableness of any assumptions that underpin it.
The forward-looking information involves known and unknown risks, uncertainties and other factors, which may cause actual
results, performance or achievements to differ materially from any future results, performance or achievements expressed or
implied by this forward-looking information. Any opinions expressed in this presentation reflect the judgement of Auckland
Council as the date hereof, and do not bind Auckland Council.
This presentation does not, and is not intended to, constitute an offer, invitation or recommendation by Auckland Council to any
person to subscribe for, purchase or otherwise deal in any financial products. Any person considering investing in a financial
product offered by Auckland Council must refer to the relevant offer document that has been expressly issued by Auckland
Council for that purpose and the disclosures provided expressly in connection with those financial products and should take their
own independent financial and legal advice on their proposed investment.
This presentation is proprietary to Auckland Council and may not be copied, distributed, disclosed or used without Auckland
Council's express written consent.
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Classification: PROTECTED
Contents
Overview and Current Issues 4
Group Financial Highlights 7
Funding Approach and Debt Market Activity 14
Appendix 20
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Classification: PROTECTED
Overview and Current Issues
4
Classification: PROTECTED
Auckland – Overview
38% 1.64m
of New Zealand’s GDP Auckland population
Auckland
200+ 33%
of New Zealand’s
Ethnicities in Auckland population
and 44% of the
workforce born overseas
4
3rd= Out of every 10 New
Zealanders will live in
Most liveable city Auckland by 2048
globally*
5
Classification:Source: Stats NZ as at 30 June 2019, Auckland Council June 2019. * Mercer 2019 Global Quality of Living City Ranking
PROTECTED
Current Issues
• Capital delivery $1.3 billion at half-year (full year budget $2.7b) – up 35% on
previous year.
• Reduced transport capital subsidies from Central Government as we work
with them on accessing agreed funding levels.
• Reduced development contributions revenue – down 31% on previous year
due to policy change (likely to be $100m less than budget for full year).
• Debt to revenue ratio within budget projection – 253%.
• Central Government infrastructure spend.
• Central Government election.
• America’s Cup and APEC.
• CRL.
• Management changes.
Classification: PROTECTED
Group Financial Highlights
7
Classification: PROTECTED
Group Financial Highlights (31 December 2019*)
Strong Large
Asset Base Increased
Operational Investment
Growth Net Debt
Cashflows Programme
$746m $1.3b $54.7b $9.2b
Operating Capital Total assets Net debt
cashflows before investment
gains and losses
8 8
*Unaudited results
Classification: PROTECTED
Revenue and Expenditure
NZ$ millions
Forecast
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
-
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Year ending 30 June
Rates revenue Services and other revenue Total expenses
9
Classification: PROTECTEDCapital Investment
NZ$ millions
Forecast
3,500 16,000
3,000
14,000
2,500
12,000
2,000
1,500
10,000
1,000
8,000
500
- 6,000
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Year ending 30 June
Other Council assets Water infrastructure Transport infrastructure Net Debt
10
Classification: PROTECTEDCapital Funding Source
NZ$ millions
Forecast
3,000
2,500
2,000
1,500
1,000
500
-
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Year ending 30 June
Operating surplus Capital grants and subsidies Change in net debt Development contribution revenue Asset sales
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Classification: PROTECTEDNet Debt to Assets
NZ$ billions
Forecast
90 20%
80 18%
70 16%
14%
60
12%
50
10%
40
8%
30
6%
20 4%
10 2%
- 0%
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Year ending 30 June
Total assets - net of cash (LHS) Net debt (LHS) Net debt/total assets - net of cash % (RHS)
12
Classification: PROTECTEDGross Debt to Revenue Ratio
Forecast
270%
260%
250%
240%
230%
220%
210%
200%
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Year ending 30 June
Gross debt/total revenue Internal ceiling Internal policy limit
13
Classification: PROTECTEDFunding Approach and
Debt Market Activity
14
Classification: PROTECTEDFunding Diversity (as at 31 Dec 2019)
• Gross debt of NZ$9.4 billion
Auckland Council Group funding mix
• Multiple offshore issues
Retail bonds
(EUR, AUD, CHF and NOK) 2%
4% 9% 4%
Green retail
• Weighted average term of 5.4 years bonds
7% Wholesale bonds
• Funding via LGFA* = 25% of their
LGFA
lending (capped at 40%)
48%
26% Offshore bonds
• Backed by NZ$1.3 billion
Bank facilities
standby facility
Commercial
• Green bond issuance paper
* Local Government Funding Agency
15
Classification: PROTECTEDLong-term Debt Maturity Profile (as at 31 Dec 2019)
NZ$ millions
1,600
1,400
1,200
1,000
800
600
400
200
00
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2032 2033 2034
Year ending 30 June
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Classification: PROTECTEDCredit Ratings
• Rating target AA/Aa2 is a core treasury policy
• S&P Global Ratings: Local government rating methodology review
S&P Global Ratings Moody’s
AA (Stable Outlook) Aa2 (Stable Outlook)
reaffirmed September 2019 reaffirmed April 2019
“Supporting our ratings on Auckland “The stable outlook reflects the
are New Zealand’s institutional settings Crown's well-established
and the council's experienced institutional framework for local
management team that has delivered governments, as well as the
the city's large infrastructure program Council's healthy gross operating
to support Auckland's strong balance and robust local economy.”
population growth.”
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Classification: PROTECTEDAnnual Debt Requirement Forecast (as at Dec 2019)
NZ$ millions
2,000
1,500
1,000
500
-
2020 2021 2022 2023 2024 2025 2026 2027 2028
Year ending 30 June
Refinancing New debt
18
Classification: PROTECTEDProjected Debt Forecast
NZ$ millions
14,000
13,000
12,000
11,000
10,000
9,000
8,000
2020 2021 2022 2023 2024 2025 2026 2027 2028
Year ending 30 June
Gross debt
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Classification: PROTECTEDAppendix
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Classification: PROTECTEDComprehensive Revenue and Expenditure
31 December 2019
Six months to Six months to Year to Year to
For the period (NZ$m)
31 Dec 2019* 31 Dec 2018 30 Jun 2019 30 Jun 2018
Rates revenue 1,871** 1,778* 1,790 1,707
Services and other revenues 1,623 1,483 3,089 2,836
Total revenue 3,494 3,261 4,879 4,543
Operating expenses 1,928 1,809 3,610 3,412
Finance costs 217 238 478 472
Total expenses 2,145 2,047 4,088 3,884
Operating surplus before gains and losses 1,349 1,214 791 659
Surplus after adjustments 1,316 1,039 175 660
* Unaudited results
** Note full year rates revenue recognised in interim results
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Classification: PROTECTEDFinancial Position – 31 December 2019
As at (NZ$m) 31 Dec 2019* 31 Dec 2018 30 Jun 2019 30 Jun 2018
Cash 173 280 294 618
Total assets 54,692 52,405 52,873 51,462
Borrowings 9,378 8,564 8,958 8,832
Total liabilities 14,321 12,564 13,831 12,660
Net assets 40,371 39,841 39,042 38,802
Net debt to total assets 16.8% 15.8% 16.4% 16.0%
* Unaudited results
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Classification: PROTECTEDCash Flow – 31 December 2019
Six months to Six months to Year to Year to
For the period (NZ$m)
31 Dec 2019* 31 Dec 2018 30 Jun 2019 30 Jun 2018
Operating cash flow 746 707 1,248 1,101
Investing cash flow (1,370) (803) (1,713) (1,134)
Funding cash flow 497 (235) 146 312
* Unaudited results
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Classification: PROTECTEDContact Details
Group Chief Financial Officer
Matthew Walker
Tel: + 64 9 977 6761
email: matthew.walker@aucklandcouncil.govt.nz
Treasurer
John Bishop
Tel: + 64 9 977 6598
email: john.bishop@aucklandcouncil.govt.nz
Funding Manager
Andrew John
Tel: + 64 9 977 6592
email: andrew.john@aucklandcouncil.govt.nz
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Classification: PROTECTEDClassification: PROTECTED
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