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Vancouver 2010 venue construction program on budget and on schedule
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The Vancouver Organizing Committee for the 2010 Olympic and Paralympic Winter Games (VANOC) today released interim financial statements for the quarter ending April 30, 2006. VANOC’s first quarterly financial report indicates that the Organizing Committee is tracking on budget and on schedule.
“This first quarterly report is an important step in providing a greater degree of transparency, public accountability and awareness to the taxpayers of BC and Canada – particularly as it relates to our venue construction budget. We have set the bar high to achieve excellence in management and the report speaks to not only what we are accomplishing but also how we are accomplishing it,” said Chief Executive Officer John Furlong.
“People are well aware of the challenges we face in managing a complex and multi-faceted venue construction program in light of significant inflationary pressures in Western Canada. The financial statements released today demonstrate the tremendous progress we’ve made against those challenges, and our confidence that the venue program will be delivered within the $580 million venue development budget announced this past February.”
VANOC’s interim financial statements have been prepared in accordance with Canadian Generally Accepted Accounting Principles (GAAP) for interim financial information. The results have been reviewed by Ernst & Young LLP and approved by VANOC’s Audit Committee of the Board of Directors. The report issued today presents both the interim financial statements and a management discussion and analysis including:
- operating revenues and expenditures
- venue development activities
- liquidity, capital resources and financial condition
- financial instruments and foreign currency hedging
risks
- outlook, including an update of the 2010 Games venue development budget and 2006 work plan
“The Audit Committee and the entire VANOC Board of Directors is pleased to fulfill our commitment to publish quarterly financial reports from the Games Organizing Committee,” said Board Chairman Jack Poole. “This process will allow all of our partners and stakeholders, including the Canadian public, to remain well-informed of VANOC’s financial and planning progress toward the 2010 Games.” A list of members of the VANOC Board of Directors is attached.
VANOC Executive Vice President and Chief Financial Officer Rex McLennan stated that while Games organizing committees are not required to issue quarterly financial reports, the decision to do so speaks to VANOC’s core values, which include building and maintaining public trust.
“Transparency and accountability are fundamental to the Executive and our Board – we believe that this kind of public reporting is simply the right thing to do,” said McLennan.
“We are operating a growing and complex business whose success relies not only on management and financial rigour, but on maintaining the confidence of our partners and the Canadian people through public oversight and accountability.”
In accepting the interim financial statements, VANOC Board Audit Committee Chair Peter Dhillon confirmed: “the VANOC Board is satisfied with the steps the Organizing Committee is taking to stage the 2010 Games in a financially responsible and sustainable manner.”
2010 Games Operating Revenue and Expenses
VANOC’s operating expenses for the quarter ending April 30, 2006 were $25.1 million and now total $78.8 million since project inception. The most significant expenditures during this period include a payment to the Canadian Olympic Committee for marketing rights, VANOC staff compensation and costs associated with completing and moving to Campus 2010 – VANOC’s new headquarters in East Vancouver.
The 2010 Games operating budget is to be funded through private revenue sources – including broadcast fees, sponsorship fees and ticket sales. Revenue from sponsorship and other sources for the quarter ending April 30, 2006 was $8.5 million and now totals $43.1 million since project inception.
VANOC’s operating cash flow deficiencies are funded through a credit facility. The pattern of early operating expenditures exceeding revenues is typical for Games organizing committees at this stage of planning and development.
2010 Games Venue Development Activities
VANOC’s venue development expenditures for the quarter ending April 30, 2006 were $6.9 million and now total $101.9 since project inception. Construction in the current fiscal year (beginning August 2005) has been most active at the Whistler nordic competition venue and the Whistler sliding centre.
VANOC’s venue development budget is to be wholly and equally funded by the Province of BC and the Government of Canada. Revenue from both levels of government for the quarter ending April 30, 2006 was $32.3 million and now totals $122 million since project inception.
The venue development budget to build sport venues and related infrastructure necessary to host the 2010 Games was revised from $470 million to $580 million in February 2006. The initial $470 million venue construction Bid budget was established in 2002 dollars with no adjustment for inflation, as required by the International Olympic Committee (IOC).
VANOC has formally asked the provincial and federal governments to share equally in funding an estimated $110 million increase in the 2010 Games venue program ($55 million each).
“While we await final confirmation from the federal and provincial governments on our venue development funding request, we are pleased to report that ongoing efforts to find efficiencies and manage venue costs are bearing fruit,” Furlong said. “With approximately two thirds of our venue development budget now committed, we remain on track to deliver the 2010 Games venue program for $580 million.
“I’m very proud of the work the VANOC team has done to limit our capital cost increases to a level well below construction industry norms in Western Canada.”
Furlong acknowledged that costs for certain venue projects – such as the Whistler sliding centre – have increased significantly from the 2002 Bid budget, however the new cost for this venue is achievable within the $580 million venue construction budget.
Furlong also noted that that savings have been found in many areas to offset venue cost increases, including a redesign of the trail system at the Nordic competition venue and moving the broadcast centre from Richmond to downtown Vancouver. He pointed to the recent agreement with the International Ice Hockey Federation to stage men’s and women’s hockey at the 2010 Games on North American-size ice surfaces (thereby saving $10 million in retrofit costs) as an example of creative approaches to cost savings. He also noted that the $580 million venue construction budget, which represents a 22 per cent increase over the 2002 Bid budget, is significantly less than the construction industry norm of 40 to 50 per cent cost increases over the same time period.
“Venue development is on budget and on schedule as we enter our busiest construction season yet,” he said. “As we proceed, we will continue to seek every possible efficiency and creative solution to reduce complexity, manage costs, meet our financial targets and deliver an exceptional Olympic and Paralympic Winter Games in 2010 that all Canadians can be proud of.”
See the Backgrounder for a summary of VANOC’s progress over the past year toward staging the 2010 Games.
VANOC’s next quarterly financial report will be issued in fall 2006 in conjunction with its audited annual financial statements.
VANOC is responsible for the planning, organizing, financing and staging of the XXI Olympic Winter Games and the X Paralympic Winter Games in 2010. The 2010 Olympic Winter Games will be staged in Vancouver and Whistler from February 12 to 28, 2010. Whistler will host the Paralympic Winter Games from March 12 to 21, 2010.
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