Marlborough District Council Roading Assets - Activity Management Plan 2015 - 2018 SECTION 1 EXECUTIVE SUMMARY 1.9 Financial Summary 1.9.1 Road Valuation The last valuation of the road network and associated assets was undertaken in August 2014 and is summarised in Table 9.1.1. The valuation is updated annually to take into account capital works and additions to the road network. The valuation excludes land value. Table 9.1.1 : MDC Road Infrastructure Valuation (22 Aug 2014) The valuation consists of an assessment of the optimised replacement cost, optimised depreciated replacement cost and the annual depreciation or decline in service potential of the network. The annual depreciation or decline in service potential is the amount the asset declines in value over a year as a result of the remaining life of the asset reducing. Provision is required to be made for funding this depreciation so as to make suitable allowance for the future replacement or renewal of the asset. Depreciation is provided on a straight-line basis on all physical assets at rates which write off the cost of the asset to the estimated residual value at the end of its service life. Expenditure on renewing or improving the capacity of the asset is capitalised annually as are assets which are vested in Council by developers. Capital work in progress is not depreciated. The total cost of this work is capitalised at the end of the financial year in which it is completed and depreciated from then onwards. The total replacement cost of the road infrastructure (excluding land) was assessed to be $642.359 million as at 22 Aug 2014. The total depreciated replacement cost (excluding land) was assessed to be $496.454 million. The optimised depreciated value has risen by 5.4% (1.8% per year) since the last Asset Management Plan in 2011. The ODRC has increased from $471.330M in 2011 to $496.454 in 2014. The increase is largely the result of a general increase in construction costs. The annual depreciation or decline in service potential has been determined to be $8.164 million for 2014/15. 30 September 2014 Page 157 of Section 1