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February, 2012 The bottom line of Lakes Environmental continues to be hammered by fallout from the global financial crisis. It has battered the company's income from processing resource consents.Figures for the second half of 2011, revealed in yesterday's Queenstown Lakes District Council finance and corporate committee meeting, showed total revenue was down by almost $450,000 on the same period in 2010, but the council-controlled company's bosses showed measures were in place to ride out their predictions of continued tough times. Chairman Anne Urlwin said resource consent applications were softer than expected, and the outlook for the rest of the financial year was the same. "We barely expect to break even," she said. "But this is not sufficient to eat into our cash reserves." While there was a "small green shoot" of hope in the soft outlook brought about by a small increase in subdivisions in Wanaka, and an ability to slow down interest repayments, this was tempered by the risk of costs claims for leaky homes and buildings before Lakes Environmental existed. So far, the only claim filed in relation to leaky homes was from the council's own insurer, Riskpool, which had filed an active costs claim of $94,000 plus interest and costs. The claim stemmed from a 2003 negligence claim against Civic Corporation, which was amalgamated into Lakes Environmental when the company was created in 2007. Lakes Environmental had legal advice that supported its position that it was not liable for any costs to Riskpool, Ms Urlwin said. "And we will vigorously defend that." However, the company could also be liable for repairs on leaky buildings inherited from Civic Corporation under the Weathertight Homes Resolution Service. By the end of last year, Lakes Environmental had two weathertight claims filed against it, both inherited from Civic Corporation. Councillor Mel Gazzard said there was an exposure risk to both the council directly, and Lakes Environmental, when it came to claims for leaky homes. Chief executive Hamish Dobbie said an assessment process to inspect blocks of units that might be susceptible to weathertightness issues had been started. Staffing levels had dropped by 10 per cent and employee expenses by $113,698 compared with the same half in 2010. Source: The Southland Times
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