Annual Report 2015 for discussion

Annual accounts
The 2015 budget for the City of Hafnarfjörður will be presented for first reading in
Hafnarfjörður City Council today. An increase in salaries due to job evaluation and new
Collective bargaining agreements, along with pension commitments, are significant and largely explain the deviation.
from the municipality's budget for 2015. The first quarter of 2016 shows
that the evaluation and operational review in late 2015 will yield positive operational results
in the current financial year.

Wages, wage-related contributions and pension liabilities
Heavy operational costs

The 2015 annual report for the Municipality of Hafnarfjörður shows a negative
operating result of approximately 512 million króna. The main deviations from the plan, which made
The provision for operating surplus of 219 million can be mainly attributed to an increase
payments for job evaluation and new collective agreements amounting to approximately 595 million krónur
over budget. The council's pension liability increased by 1.042 million
crowns, or approximately 435 million crowns, over the estimate. Wages, wage-related contributions and
Changes to pension liabilities are the council's largest expenditure items and amounted to
a total of 113.72 million króna, which is 10.3 million króna higher than
as the plan provided for. Other costs were 7,441 million, 485 million over
plan. The operating result before depreciation amounted to 1,860 million króna.
Depreciation amounted to 877 million króna and financial items to 1,496 million króna which
is 344 million króna under budget. Operating cash flow amounted to around 953 million.
a króna which is 1.288 million krónur lower than the plan had provided for. Revenue was
459 million over budget, or about 20,673 in total. 

Higher total debts than lower
debt ratio

The town's total debt increased by 417 million króna on
for the year due to an increase in pension liabilities. The municipality's debt ratio
However, it continued to fall and reached 194% at the turn of the year. The debt ratio was at its highest
294% in 2009. The debt ratio had reached 170% at the end of 2015, a ratio that was 274%
in 2009. The running of the portfolios was over budget, which could be largely attributed to
for this year's pay rises. The largest department of the City of Hafnarfjörður is education and
leisure services, for which approximately 9.814 billion krónur were allocated in 2015,
to family services by approximately 2,930 million kroner and to youth and sports affairs by
1,730 million króna. Total assets at the end of the year amounted to a total of 48,480 million
crowns and they have decreased by 282 million year-on-year. Total liabilities and
Liabilities totalled 40,184 million króna.

Review and operational improvements
financial year 

The operation in 2015 was heavy. It was decided to undertake an operational review to eradicate the persistent operational problems and
opens up opportunities for a turnaround. A reform programme following an assessment and
The 2016 budget provides for such a turnaround and that operations
be positive for the equivalent of 361 million króna at the end of the current
financial year. Since the end of the last financial year, work has been systematically carried out with
the findings of the review, and it is hoped that with continued work,
With responsibility, stability and sound management, the council's financial position will improve.
to remember. In the coming weeks, works and development on just over 210 will be announced.
flats in the new Skarðshlíð housing estate, business plots at Völlum and at Hellnahraun,
Kapelluhraun and Selhraun, in addition to which further possibilities are being explored.
and opportunities exist for further development. A new primary school is in preparation and
A nursery school under construction in Völlunum, a new care home in Sólvangur and a sports hall.
at Ásvellir, all to meet the increased demand and need in the area. Number of
Companies have established themselves in and around Hellnahraun, and more are expected.
to the area, as it is a growing and exciting industrial area that offers
very great potential. A strong emphasis has been placed on securing all important
infrastructure, including the state accelerating the construction of the flyover at the junction of the Krýsuvíkurvegur
and Reykjanesbrautar. A growing population and increased activity are expanding the scope of operations there.
with the town's revenues. Continued
The council's task in the coming months will be to get an even better grip on spending.
and the repayment of debts in order to increase equity and thereby become more responsible
investments. The next few months will be spent following up on more of the review's recommendations.
All of which aim to strengthen and improve services for residents and workers
Responsibly run businesses in the town.

The 2015 annual report of the Municipality of Hafnarfjörður can be found here.