2017-11-07 S&O Agenda - Attachment 1 to Item 10 - Annual Report 2016-17

Financial ratios
Ratios are useful tools for getting a snap-shot of the financial status and trends of an organisation.
Ratios can also be useful in comparing Noosa Council to other Councils to gain an understanding of
relative financial strength. This analysis is undertaken periodically by the Queensland Treasury
Corporation (QTC) in assessing the financial sustainability of Council.

A number of sustainability ratios are mandated under the Local Government Regulation 2012, including
target ranges for each measure. Details of these ratios are shown in the table below, including actual
results for the current reporting period plus projections over the next 9 years.

Figure 10 – Financial Ratios 2016/17 (Actual) to 2025/26 (Forecast)
Period Ended 30 June                 2017        2018       2019      2020       2021      2022       2023      2024    2025    2026
Sustainability Ratios
Operating Surplus Ratio
Operating Position                   9.2%        0.0%       0.2%      0.2%       0.6%      0.6%       0.6%      0.5%    0.3%    0.3%
Local Govt Act upper indicator       10%         10%        10%       10%        10%       10%        10%       10%     10%     10%
Net Financial Liabilities Ratio
Net Financial Liabilities Ratio    (11.6)%       (8.3)%   (13.5)%    (11.9)%   (12.3)%    (7.0)%     (3.7)%    (1.2)%   0.1%    1.9%
Local Govt Act upper indicator       60%          60%       60%        60%       60%       60%        60%       60%     60%     60%
Asset Sustainability Ratio (not audited)
Asset Sustainability Ratio          90.6%       109.5%     105.3%     75.6%     78.5%     85.1%      93.5%     90.2%    86.9%   92.4%
Local Govt Act minimum indicator     90%         90%        90%        90%       90%       90%        90%       90%      90%     90%

Colour Scale:                         Within   Moderate Outside
                                      range              range

Note: The asset sustainability ratio calculation includes both infrastructure asset renewal and plant asset renewal.



Operating surplus ratio
This ratio measures the operating surplus achieved for the period and represents the operating surplus
/ (deficit) as a percentage of operating revenue. A surplus will be represented by a positive result.

Council’s should be aiming to achieve as a minimum a balanced operating position to ensure that
revenues received are sufficient to fund operations and capital replacement works. The 2016/17
operating surplus ratio of 9.2% is a reflection of strong revenue growth along with good management of
our expenditure, as well as some unspent levy funds that are required to be held for future use. The
forecast also shows Council’s ongoing commitment to strong financial management.


Net financial liabilities ratio
This ratio represents Council’s net financial liabilities (total liabilities less current assets) expressed as a
percentage of total operating revenue. The target range is less than 60%. A negative percentage
indicates that current assets exceed total liabilities, and is considered a very strong position.

The strong position of (11.6%) as at 30 June 2017 indicates that Council has capacity to service higher
levels of debt if needed, though additional debt funding has not been included in forward projections.




                                                                                             Noosa Council | Annual Report 2016 - 2017
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