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Financial Performance Report – November 2023 · Financial Performance Report
GENERAL COMMITTEE MEETING 11 DECEMBER 2023
6.3 FINANCIAL PERFORMANCE REPORT – NOVEMBER 2023
Author Financial Services Manager (Acting), Pauline Coles
Financial Services | Corporate Services Department
Index ECM/ Subject / 22.09 – Monthly Financial Performance Report
Attachments 1. Statement of Income and Expenditure - Nov 2023
2. Statement of Financial Position - Nov 2023
3. Statement of Cashflows - Nov 2023
4. Key Materials & Services Expenditure - Nov 2023
EXECUTIVE SUMMARY
Year-to-date (YTD) performance against current budget as at 30 November 2023 is positive with
operating revenues outperforming forecast and operating expenditure slightly under forecast
YTD. Capital revenues are above forecast with capital expenditure slight ahead of forecast due
to scheduled timing of project delivery.
* Reflects constructed assets and intangibles only (excludes contributed). Spend currently showing above YTD budget
due to the delivery of QRA funded disaster projects.
The $3.7 million full year operating surplus comprises $3.0 million general operating surplus
from activities that are funded through Council’s general rate, regulatory fees and sales of goods
and services; as well an additional $0.3 million from holiday park operations and $0.3 million
from waste operations, and a further $0.1 million in unspent levy and separate charge funds
which are constrained in reserve for future use.
* Includes Waste and Holiday Park operations as shown in the table below
Council elected to apply National Competition Policy (NCP) reforms to its Waste Management and
Holiday Parks which provides greater transparency and assists with removing anti-competitive
conduct and ensure the best allocation of Councils limited resources. A summary of the YTD
operational performance of these business activities are outlined below.
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GENERAL COMMITTEE MEETING 11 DECEMBER 2023 Financial statements including Statement of Income & Expenditure, Statement of Financial Position (balance sheet), and Statement of Cash Flows are included as attachments for information for Council. Figure 1: Actual Performance Compared to Budget Council’s performance against key measures of financial sustainability has been calculated as at November 2023. These statutory indicators enable the reader to assess Council’s success in managing its budget, cash and debt as well as undertaking sustainable asset management. The table below contains a snapshot of a number of key measures, with full detail included in the report. RECOMMENDATION That Council note the report by the Manager Financial Services (Acting) to the General Committee Meeting dated 11 December 2023 outlining November 2023 year to date financial performance against budget, including changes to the financial performance report with the inclusion of key financial sustainability indicators.
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GENERAL COMMITTEE MEETING 11 DECEMBER 2023
REPORT
Operating Revenue (YTD Benchmark 41.7%)
Council has received 49.3% ($65.3 million) of its operating revenue budget ($132.4 million).
Commentary on each revenue category is provided below.
Category Summary Comments
Rates and Levies $44.5 million (49.9%) • Waste utility charges $64.6k above YTD
of the annual budget of budget (50.2% or $7.9 million of $15.7 million
$89.3 million has been annual budget earned)
earned • General rate (net of discounts) $136.3k below
YTD budget (49.7% or $33.6 million of $67.7
million annual budget earned)
Fees and Charges $5.0 million (44.2%) of • Civil Operations $109.9k above budget
the annual budget of (3695.0% or $109.9 of $3.0k annual budget
$11.4 million has been earned) Relates to recoupment of works on
earned behalf of Energex
• Property and Facilities $50.4k above budget
(60.4% or $432.4 of $716.1k annual budget
earned)
• Development Assessment $78.0k below
budget (44.2% or $1.7 million of $3.8 million
annual budget earned)
• Community Facilities $71.3k below budget
(24.1% or $97.9k of $406.3k annual budget
earned)
• Building & Plumbing $69.5k below budget
(36.8% or $914.8k of $2.5 million annual
budget earned)
• Local Laws $53.7k below budget (45.08% or
$958.7k of $2.1 million annual budget earned)
Sale of Goods and $6.5 million (46.8%) of • Holiday Park revenue $451.0k above budget
Services the annual budget of (51.8% or $1.9 million of $3.7 million annual
$13.9 million has been budget earned). Any revenue upside will be
earned generally offset by a corresponding increase in
associated operating costs
• Community Facility fees $218.7k above
budget (49.7% or $1.5 million of $3.1 million
annual budget earned)
• Waste Management fees $126.2k above
budget (43.0% or $2.9 million of $6.8 million
annual budget earned)
Interest Received $2.9 million (105.7%) • Interest revenues are tracking above budget
of the $2.8 million with investment in higher yielding term
annual budget has deposits maximising the return on surplus
been earned cash holdings.
Other Revenue $1.3 million (45.4%) of • Other revenue is in line with budget
the $2.9 million annual expectations at this stage
budget has been
earned
Operating Grants, $2.8 million (46.1%) of • Operating Grants and subsidies is in line with
Subsidies the $6.2 million annual budget expectations at this stage
budget has been • 100% ($2.0 million) of the financial assistance
received grant was again prepaid in June 2023 and may
impact on Council’s 2023/24 final operating
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GENERAL COMMITTEE MEETING 11 DECEMBER 2023
Category Summary Comments
position if the prepayment approach is
discontinued by the Australian government.
Unitywater On track • Unitywater distributions are fixed each year so
Distributions there is limited budget variance risk
Figure 2: Operating Revenue Position by Type (Excluding Rates)
Operating Expenditure (YTD Benchmark 41.7%)
Actual operating expenditure is currently 39.3% ($52.3 million) of full year budget ($133.2
million). Detailed commentary for each expenditure category is provided below.
Category Summary Comments
Employee Costs $19.2 million (38.8%) of the • Expenditure for permanent staff salaries
annual budget of $49.6 and wages underspent ($1.7m) due to
million has been expended position vacancies, partially offset by
additional spend on casual staff and
external labour hire ($745.2k).
• Training costs $28.2k under budget
(22.3% or $82.9k of $372.6k annual
budget spent)
Materials and $23.4 million (38.7%) of the • Digital Hub $111.1k above budget
Services $60.6 million annual budget (109.8% or $218.4k of $198.9k annual
has been expended. budget spent) relates to grant funded
project with offsetting revenue.
• Governance $72.5k above budget (98.1%
or $889.8k of $906.6k annual budget
spent)
• Development Assessment $68.9k above
budget (60.1% or $813.8k of $1.4 million
annual budget spent)
• Buildings and Facilities $45.6k above
budget (37.1% or $425.1k of $1.1 million
annual budget spent)
• Civil Operations $220.8k below budget
(41.03% or $3.8 million of $9.4 million
annual budget spent)
• Waste Management $170.4k below
budget (36.2% or $5.3 million of $14.8
million annual budget spent)
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GENERAL COMMITTEE MEETING 11 DECEMBER 2023
Category Summary Comments
• Cemeteries $32.0k below budget (12.7%
or $41.3k of $325.6k annual budget spent)
Finance Costs Currently on track • Whilst existing loan borrowings are set
with fixed interest rates, any further RBA
rate rises will impact finance costs on new
loan borrowings.
Depreciation Currently on track Nil
Other Expenses Currently on track Nil
Figure 3: Operating Expenditure Position by Type
Tourism and Economic Development Investment Summary
Council resolved to report on a monthly basis, investment details for tourism and economic
development. Expenditure at 30 November 2023 is outlined below:
The first instalment payable under the Tourism Noosa agreement for the 2023-24 financial year was
made in July.
Tourism and economic development activity is funded through the general rate, with 5.8% of the
annual general rate committed towards tourism and economic development. Should actual general
rate revenue fall below budget, this does not impact Council’s contractual commitment to fully fund
its contribution to Tourism Noosa and all associated tourism activity. Any general rate revenue
shortfall is funded through other general revenue sources to ensure all planned activities are
undertaken in full.
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GENERAL COMMITTEE MEETING 11 DECEMBER 2023 Capital Revenue Full Year Capital revenue of $10.0 million received comprises cash contributions from developers ($1.2m) and capital grants ($6.3 million). Note that the timing of capital grant receipts are generally dependent on the timing of grant conditions and also capital delivery performance, and that the timing of the receipt of developer contributions (both cash and contributed) is unpredictable. Council has funding approval from the Queensland Reconstruction Authority for reconstruction works relating to the Black Mountain landslip and several other flood impacted sites, which occurred during the February 2022 rain event. Council has received upfront payments of $24.4 million to fund these works. Figure 4: Capital Revenue by Type Capital Program Actual capital expenditure (excluding commitments) is $24.5 million (YTD budget $20.1 million). Detailed discussion of progress in the delivery of the capital works program is provided through a separate quarterly report by the Infrastructure Services Department. Figure 5: Capital Program Delivery Performance
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GENERAL COMMITTEE MEETING 11 DECEMBER 2023 Cash Management and Investment Performance Total cash on hand at the end of November was $116.9 million. Included in this balance are funds held in trust and for restricted purposes (e.g. unexpended levy and grant funds), prepaid grants including the financial assistance grant, QRA disaster funding and other capital works grants, prepayment of Waste Levy subsidy (4 years), and unspent monies committed for funding capital projects which are underway and will continue during the financial year. The following pie charts present the mix of cash held at November 2023 by agency (graph on the left) and by credit risk rating (graph on the right). All funds have been invested in accordance with the Investment Policy and in consideration of the principles of ethical investment, preservation of capital, return on investment and counterparty thresholds. Figure 6: Closing Cash Held by Agency and Credit Rating The following chart monitors the 12 month trend on total cash and the agencies invested. To maximise the return on in its cash holdings Council has invested $30 million in higher yielding term deposits. These investments were made in line with Council’s Investment of Surplus Funds policy. Figure 7: 12 Month Trend of Cash Invested by Agency
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GENERAL COMMITTEE MEETING 11 DECEMBER 2023
Measures of Financial Sustainability
The following table incorporates a set of financial sustainability indicators to further assist in
managing Council financial performance. There are no current emerging risks regarding
performance noting the early stage of the financial year.
Category Comments
Operating Surplus Ratio • Intent: Identifies the extent
to which revenues cover
operational expenses, to
ensure community equity is
not degraded
• Target: 0 – 10%
• Result:19.9%
• Comment: The slowly
declining ratio reflects the
levying of 50% of rates in
July and gradual utilisation
of these monies as
expenditure occurs on
operations through to the
next rate run in January
2024 and then through to the
end of the financial year at
30 June 2024
Cash Expense Cover • Intent: Indicates how long
council can continue paying
its day-to-day expenses
from cash at bank without
needing additional cash
flows. Note this is calculated
based on total cash, and
includes both restricted and
unrestricted cash
components.
• Target: > 3 months
• Result: 12.6 months
• Comment: Current cash
cover remains above target,
while business as usual
expenditure through to 30
June 2024 will degrade
Council’s cash holdings,
albeit not below the target
range of 3 – 6 months. Cash
balance include funding for
capital programs, unspent
grant monies paid in
advance, Waste Levy
subsidy prepayments and
QRA advance payments for
disaster projects which are
restricted for specific
purposes and inflate the
ratio.
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GENERAL COMMITTEE MEETING 11 DECEMBER 2023
Category Comments
Asset Sustainability Ratio • Intent: Measures the extent
to which assets are being
replaced as their condition
degrades to ensure service
potential is maintained
• Target: 90% of depreciation
budget spent on renewals
annually
• Result: In line with budget
• Comment: The ratio will
progressively increase each
month as expenditure on
renewals occurs as part of
the capital works program.
Net Financial Liabilities Ratio • Intent: Outlines the level
that net Council debt can be
serviced by operating
revenues. A ratio below zero
implies that liabilities are
less than cash (and other
current assets) and there is
adequate borrowing
capacity available if needed.
• Target: less than 60%
• Result: -31.48%
• Comment: Council has low
debt levels and strong cash
holdings. The advance
payment of rates, grants and
subsidies also inflates the
YTD actual outcome.
Investment Return • Intent: Ensure appropriate
return on investment yield
for cash at bank.
• Target: 0.25% above
current Bloomberg
commonwealth 10-year
bond rate yield (3.99%)
• Result: 5.61%
• Comment: With bond rates
rising, Council has invested
surplus cash in higher
yielding term deposits to
maximise returns. Council’s
investment returns remain
above target.
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GENERAL COMMITTEE MEETING 11 DECEMBER 2023
Category Comments
Rates in Arrears • Intent: Ensuring that the
amount of unpaid rates
remains sustainable and
does not negatively impact
cash flows
• Target: 5% industry
benchmark
• Result: 5.8%
Comment: Rates arrears are in line
with performance for the previous 6
and 12 monthly cycles.
Link to Corporate Plan
Theme No. 5. - Excellence
This theme focuses on customer experience, financial sustainability, innovation and technology,
levels of service, governance, our employees and volunteers, funding streams and asset
management practices.
Objective 5.2 - Continue to deliver a financially sustainable Council that has the resources now and
into the future to achieve its strategic objectives. This will be supported through the introduction of
enhanced sustainability reporting and performance indicators, as well as ESG (environment social
and governance) accounting practices as guided by statutory requirements.
Previous Council Consideration
Nil
Finance
As above
Risk & Opportunities
Council’s risk register identifies a number of risks that could impact on its ongoing financial
sustainability. In order to manage and mitigate these risks Council uses various tools which include
monthly ongoing financial reporting to identify and address emerging issues, conservative budgeting,
compliance with the Financial Sustainability Policy, regular budget reviews, effective liquidity
management to ensure sufficient fiscal flexibility, as well as adhering to the Reserves and Restricted
Cash policy which requires that Council maintains both a disaster management reserve and a
minimum 3 months cash cover to fund emergent matters.
Some examples of potential risks that may impact on Council’s operational performance, capital
program delivery, cashflow and cash reserves include:
• Substantial damage to or failure of Council infrastructure due to natural disaster or other
emergent issue that may require significant unplanned investment;
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GENERAL COMMITTEE MEETING 11 DECEMBER 2023
• An extended closure of Council facilities impacting operational revenues;
• A prolonged IT system failure affecting Council’s ability to deliver services or issue rates
notices;
• Economic conditions affecting ratepayers’ ability to pay rates;
• Market driven increases in construction and operational costs significantly above estimates;
• Labour and material shortages and delays.
Consultation
External Consultation - Community & Stakeholder
Nil
Internal Consultation
All areas of Council are consulted as part of the regular monitoring of budget performance.
Departments consulted:
Office of the CEO, Mayor & Community Services Corporate Services
Councillors
Mayor & Councillors X Director X Director
X Chief Executive Officer Community Development X Financial Services
Executive Officers Sport & Active Lifestyles Fleet
Community Engagement Arts & Culture Revenue Services
People & Culture Community Connection ICT
Governance Customer Experience Procurement
Commercial Property
Strategy & Environment Development & Regulation Infrastructure Services
X Director X Director X Director
Strategic Land Use Planning Development Assessment Infrastructure Planning,
Design and Delivery
Economic Development & Local Laws Civil and Asset operations
Destination Management
Environmental Services Environmental Health Waste
Innovation & Digital Hub Building & Plumbing Building & Facilities
Property / Permits Disaster Management