Annual Report 2016-17

Financial Ratios                                                                                                                             Asset sustainability ratio
Ratios are useful tools for getting a snap-shot of the financial status and trends of an organisation. Ratios                                 This ratio is calculated by measuring the annual expenditure on the renewal and rehabilitation of Council’s
can also be useful in comparing Noosa Council to other Councils to gain an understanding of relative                                         assets against the annual depreciation charge. It is a measure of whether Council is reinvesting in existing
financial strength. This analysis is undertaken periodically by the Queensland Treasury Corporation (QTC) in                                  assets to ensure that they meet required levels of service for the community.
assessing the financial sustainability of Council.
                                                                                                                                             Asset Sustainability Ratio – infrastructure                Asset Sustainability ratio – all assets (not
A number of sustainability ratios are mandated under the Local Government Regulation 2012, including                                         assets (audited)                                           audited)
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.                                                                     This is the ratio audited by the Queensland                When considering the replacement of all assets
                                                                                                                                             Government and specifically excludes the                    when measuring asset sustainability, Council
                                                                                                                                             replacement of non-infrastructure assets such as           achieved a ratio of 90.6% for the 2016/17 financial
Figure 10 - Financial Ratios 2016/17 (Actual) to 2025/26 (Forecast)
                                                                                                                                             Council plant and fleet. During 2016/17 Council             year. This is considered an excellent result and
Period ended 30 June                        2017      2018      2019      2020      2021       2022      2023         2024    2025    2026   achieved a ratio of 82%. This ratio is reflective of        reflects Council’s continued investment in asset
                                                                                                                                             the efficient delivery of the capital program during         replacement and implementation of the recently
Sustainability Ratios                                                                                                                        the year, including an investment of $13.5 million         developed asset management roadmap.
Operating Surplus Ratio                                                                                                                      in the replacement of infrastructure such as roads,
                                                                                                                                             bridges and buildings.
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)
                                                                                                                                             Summary
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%    The financial period ended 30 June 2017 represents an excellent financial result for Council, and provides a
Colour Scale:                            Within    Moderate   Outside                                                                        firm foundation for future operations. Ongoing innovation and a commitment to strong financial management
                                         Range                Range                                                                          through compliance with our Financial Sustainability policy will ensure that this position is maintained into the
Note: The asset sustainability ratio calculation includes both infrastructure asset renewal and plant asset renewal
                                                                                                                                             future.




Operating surplus ratio                                                 Net financial liabilities ratio
This ratio measures the operating surplus achieved                      This ratio represents Council’s net financial
for the period and represents the operating surplus                     liabilities (total liabilities less current assets)
/ (deficit) as a percentage of operating revenue. A                      expressed as a percentage of total operating
surplus will be represented by a positive result.                       revenue. The target range is less than 60%. A
                                                                        negative percentage indicates that current assets
Council’s should be aiming to achieve as a                              exceed total liabilities, and is considered a very
minimum a balanced operating position to                                strong position.
ensure that revenues received are sufficient to
fund operations and capital replacement works.                          The strong position of (11.6%) as at 30 June 2017
The 2016/17 operating surplus ratio of 9.2% is                          indicates that Council has capacity to service
a reflection of strong revenue growth along with                         higher levels of debt if needed, though additional
good management of our expenditure, as well                             debt funding has not been included in forward
as some unspent levy funds that are required to                         projections.
be held for future use. The forecast also shows
Council’s ongoing commitment to strong financial
management.




Page 38 | 2016-2017 Annual Report                                                                                                                                                                                            2016-2017 Annual Report | Page 39