The Agency was successful in retaining clients whose contracts came up for renewal in 2018, signing several long-term contracts of five-toten years and renewing the Agency’s contract with its largest client, the region of Peel, for a term of up to 20 years. In addition to retaining clients, the Agency was successful in attracting new clients, signing a new waste diversion contract with the City of Toronto. OCWA will be pursuing other similar projects in the future and anticipates that this will be an important driver of future revenue growth.
MANAGEMENT ANALYSIS OF FINANCIAL RESULTS OVERVIEW 2018 was another year of positive financial results for OCWA. The Agency realized a Net Income of $7.3 million, an increase of 27.5 percent when compared to 2017, and well ahead of the plan for the year. Contributing factors included a 6.8 percent growth in Total Operating Revenue, which was primarily driven by increases in Major Maintenance revenue. Other contributing factors include a $912,000 loan recovery, management of expenses and other cost savings, combined with higher investment income fueled by the three increases to the Bank of Canada overnight rate. These increases were enough to offset a 7 percent increase in Total Operating Expenses resulting from a combination of salary and benefits increases for bargaining unit staff and other cost increases.
Total Operating Revenues increased by 6.8 percent as compared to 2017, due to contractual increases and increased major maintenance services, as Agency clients upgraded aging water and wastewater infrastructure. Federal and provincial infrastructure funding through programs like the Clean Water and Wastewater Fund continued to enable municipalities to upgrade their water and wastewater infrastructure, with several of these projects contributing to a 12.3 percent increase in Major Maintenance revenues.
BALANCE SHEET Net Assets increased to $213.2 million, an increase of 3.6 percent as compared to 2017, due to the strong Net Income of $7.3 million. Cash and short-term investments increased by $19.3 million, primarily due to increased cash flows from investing and operating activities, which were partially offset by the purchase of capital assets. The Agency continues to meet its obligations without the use of debt, and as in prior years, had no outstanding financial obligations in 2018.
The Agency’s Other Business Revenue is comprised of revenue from the Engineering Services and Training Groups. In 2018 revenues from these services increased by 18.2 percent when compared to the prior year, primarily due to increases in project management services and increased demand for drinking water courses.
EXPENSES Total Operating Expenses increased by 7 percent, driven by increases in salaries, benefits and other operating expenses, which were partially offset by a reduction in the amortization of tangible capital assets.
REVENUE OCWA‘s long-term growth strategy continues to be focused on retaining current clients, expanding the scope of services provided to these clients and attracting new clients.
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