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Financial Performance Report – Jul 2024 · Financial Performance Report
GENERAL COMMITTEE MEETING 12 AUGUST 2024
6.6 FINANCIAL PERFORMANCE REPORT – JUL 2024
Author Financial Services Manager , Pauline Coles
Financial Services | Corporate Services Department
Index ECM/ Subject / 22.09 – Monthly Financial Performance Report
Attachments 1. Attachment 1 Statement of Income and Expenditure - July 2024
2. Attachment 2 Statement of Financial Position - Jul 2024
3. Attachment 3 Statement of Cashflows - Jul 2024
4. Attachment 4 Key Materials & Services Expenditure -July 2024
EXECUTIVE SUMMARY
Performance against current budget for the month of July 2024 aligns with YTD budget at this
early stage of the new financial year. Note that budget review (BR1) carryovers (also included
in the Council meeting agenda) have not yet been adopted and are excluded from these results.
YTD Financial Performance Summary
Budget Actual Variance Variance
Status
$m $m $m %
Operating Revenue $53.7 $54.1 $0.4 0.7% On Track
Operating Expense $12.3 $12.0 $0.3 2.6% On Track
Operating Position $41.4 $42.1 $0.7
Capital Revenue $0.9 $2.0 $1.1 112.4% Above Budget
Capital Expenditure* $2.5 $3.1 ($0.6) (23.7%) Above Budget
* Reflects constructed assets and intangibles only (excludes contributed assets).
The $0.7 million full year operating surplus comprises $0.3 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 $0.1 million from holiday park operations and $0.4 million
from waste operations, and a levy and separate charge funds which are constrained in reserve
for future use currently under budget $0.1 million.
Budget Variance
Actual YTD
Item YTD YTD
$m
$m $m
General business operating position (unconstrained funds) $31.3 $31.6 $0.3
Commercial operations (constrained funds) * $7.3 $7.8 $0.5
Unspent levies (constrained funds) $2.8 $2.7 ($0.1)
Total Council Operating Position $41.4 $42.1 $0.7
* Includes Waste and Holiday Park operations as shown in the table below
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Page 2
GENERAL COMMITTEE MEETING 12 AUGUST 2024
Council has 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.
Waste Operations Holiday Parks
Budget Actual Variance Budget Actual Variance
YTD YTD YTD YTD YTD YTD
$m $m $m $m $m $m
Revenue 9.1 9.5 0.4 0.3 0.4 0.1
Expenditure 1.8 1.8 0.0 0.3 0.3 0.0
Net Operating Position 7.3 7.7 0.4 0.0 0.1 0.1
Financial statements including Statement of Income & Expenditure, Statement of Financial Position
(balance sheet), and Statement of Cash Flows are included as attachments as further information
for Council.
Figure 1: Actual Performance Compared to Budget
Council’s performance against key measures of financial sustainability has been calculated as at
July 2024. 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.
YTD Measures of Financial Sustainability
Current
Target Actual YTD Status
Budget
Operating Surplus Ratio > 0% 0.1% 77.9% On Track
Net Financial Liabilities Ratio < 60% 0.7% -91.9% On Track
Cash Cover Ratio 3 months 8.9 months 10.2 months On Track
Asset Sustainability Ratio > 80% 102.7% 7.2% On Track
RECOMMENDATION
That Council note the report by the Financial Services Manager to the General Committee
Meeting dated 12 August 2024 outlining July 2024 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 12 AUGUST 2024
REPORT
Operating Revenue (YTD Benchmark 8.33%)
Council has received 39.0% ($54.1 million) of its operating revenue budget ($138.8 million).
Commentary on each revenue category is provided below.
Category Summary Comments
Rates and Levies $48.5 million (51.4%) • Waste utility charges $160.1k above YTD
of the annual budget of budget (51.2% or $8.7 million of $16.9 million
$94.4 million has been annual budget earned)
earned • General rate (net of discounts) $185.4k below
YTD budget (51.6% or $36.8 million of $71.4
million annual budget earned)
Fees and Charges $1.9 million (17.4%) of • Building & Plumbing Compliance $85.8k
the annual budget of above budget (14.5% or $376.5k of $2.6
$10.9 million has been million annual budget earned)
earned • Property $18.2k above budget (14.4% or
$104.9k of a 730.6k annual budget earned)
• Local Laws $10.0k above budget (18.66% or
$470.5k of $460.5k annual budget earned)
• Development Assessment $33.1k below
budget (23.46% or $840.4k of 3.6 million
annual budget earned)
Sale of Goods and $1.5 million (9.3%) of • Waste Management fees $139.3k above
Services the annual budget of budget (9.3% or $719.3 million of $7.7 million
$15.6 million has been annual budget earned)
earned • Holiday Park revenue $87.2k above budget
(9.09% or $364.6k of $4.0 million annual
budget earned). Any revenue upside will be
generally offset by a corresponding increase in
associated operating costs.
• Sports facility revenue $57.7k above budget
(9.3% or $277.3k of $2.9 million annual budget
earned)
• Cultural facility revenue $26.3k above budget
(10.5% or $62.5k of $596.1k annual budget
earned)
Interest Received $0.4 million (13.9%) of • Interest revenues are tracking above budget
the $3.1 million annual with investment in higher yielding term
budget has been deposits maximising the return on surplus
earned cash holdings. Cash holdings are higher
compared that normal due to delays in the
delivery of the capital works program and the
advance payment of grants funding.
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GENERAL COMMITTEE MEETING 12 AUGUST 2024
Category Summary Comments
Other Revenue $0.2 million (5.8%) of • Royalty and recoupment revenue $47.4k
the $3.3 million annual above budget relating to waste management
budget has been operations (35.4% or $47.4k of $174.9k annual
earned budget earned)
Operating Grants, $1.6 million (29.5%) of • Operating Grants and subsidies is in line with
Subsidies the $5.5 million annual budget expectations at this stage. YTD
budget has been variance relates to $65k Floating Land grant
received and $75k for Disaster Recovery & Resilience
Officer funding program
• $1.4 million of the FY 2025 financial assistance
grant allocation was received in July
2024. This is a change from the previous
approach of prepaying part or all of the grant
in the prior year. Council is yet to receive
confirmation of the full years funding allocation
but previous advice from the department has
been the funding amount allocated would
decrease, as such there is the potential that
this may impact Council's 2024/25 operating
position.
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 8.33%)
Actual operating expenditure is currently 8.7% ($12.0 million) of full year budget ($138.7 million).
Detailed commentary for each expenditure category is provided below.
Category Summary Comments
Employee Costs $3.9 million (7.5%) of the • Expenditure for permanent staff salaries
annual budget of $52.5 and wages underspent ($179.7k) due to
million has been expended position vacancies, partially offset by
additional spend on casual staff and
external labour hire ($99.2k).
• Training costs are $4.9k under budget
(5.7% or $20.9k of $371.1k annual budget
spent)
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GENERAL COMMITTEE MEETING 12 AUGUST 2024
Category Summary Comments
Materials and $6.1 million (10.0%) of the • Information Technologies Services $23.9k
Services $61.0 million annual budget above budget (8.8% or $468.8k of a $5.3
has been expended. million annual budget spent)
• Buildings & Facilities $41.4k below budget
(3.8% or $49.2k of $1.3 million annual
budget spent)
• Sports facilities are $27.1k below budget
(5.4% or 84.9k or a $1.6 million annual
budget spent)
• Environmental services are $24.1k below
budget (4.4% or $145.7k of a $3.3 million
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 31 July 2024 is outlined below:
Expenditure YTD Budget YTD Actual Variance
$’000 $’000 $’000
Tourism Noosa Funding Agreement $1,260 $1,260 -
Economic Development $67 $67 -
Total $1,327 $1,327 -
Tourism and economic development activity is funded through the general rates. The
first instalments payable under the Tourism Noosa agreement for the 2024-25 financial year was
Page 6
GENERAL COMMITTEE MEETING 12 AUGUST 2024 made in July 2024. Capital Revenue Full Year Capital revenue of $2.0 million received comprises cash contributions from developers ($0.4m) and capital grants ($1.6 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. Figure 6: Capital Revenue by Type Capital Program Actual capital expenditure (excluding commitments) is $3.1 million (YTD budget $2.5 million). Detailed discussion of progress in the delivery of the capital works program is provided through a separate quarterly report by the infrastructure team. Figure 7: Capital Program Delivery Performance Cash Management and Investment Performance Total cash on hand at the end of March was $95.9 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 (3 years), and unspent monies committed for funding capital projects which are underway and will continue during the financial year.
Page 7
GENERAL COMMITTEE MEETING 12 AUGUST 2024 The following pie charts present the mix of cash held at July 2024 by agency (graph on the left) and by credit risk rating (graph on the right). All funds have been invested in accordance with Council's Investment Policy and in consideration of the principles of ethical investment, preservation of capital, return on investment and counterparty thresholds. Figure 8: 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 $40 million in higher yielding term deposits. These investments were made in line with Council’s Investment of Surplus Funds policy. Figure 9: 12 Month Trend of Cash Invested by Agency 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.
Page 8
GENERAL COMMITTEE MEETING 12 AUGUST 2024
Category Comments
Operating Surplus Ratio • Intent: Identifies the extent to
which revenues cover
operational expenses, to ensure
community equity is not
degraded
• Target: Greater than 0%
• Result: 77.9%
• Comment: The high ratio
reflects the levying of rates in
July, which will degrade as
expenditure occurs on
operations through the financial
year to 30 June 2025.
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
• Target: Greater than 3 months
• Result: 10.2 months
• Comment: Current cash cover
remains above target, while
business as usual expenditure
through to 30 June 2025 will
degrade Council’s cash
holdings, albeit not below the
target range of 3 – 6 months.
Cash balances 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.
Asset Sustainability Ratio • Intent: Measures the extent to
which assets are being replaced
as their condition degrades to
ensure service potential is
maintained
• Target: 80% of depreciation
budget spent on renewals
annually
• Result: In line with budget.
• Comment: The capital program
has only just commenced. It is
expected that the ratio will
progressively increase each
month as expenditure on
renewals occurs.
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GENERAL COMMITTEE MEETING 12 AUGUST 2024
Category Comments
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: (91.9%)
• Comment: Council has low debt
levels and strong cash holdings.
The July rates revenue 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 (4.37%)
• Result: 5.53%
• Comment: With higher than
normal cash balances and bond
rates, Council has invested
surplus cash in higher yielding
term deposits to maximise
returns. Council's investment
returns remain above target.
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: 3.9%
• 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.
Page 10
GENERAL COMMITTEE MEETING 12 AUGUST 2024
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;
• 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.
• Strategies, plans and projects deliverables that have not been accurately costed
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
Page 11
GENERAL COMMITTEE MEETING 12 AUGUST 2024
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