2020-12-08 Services & Organisation Committee Agenda

SERVICES & ORGANISATION COMMITTEE MEETING AGENDA                                                     8 DECEMBER 2020


Interest Expense ($’000)
                                                                                     Interest expense reduces due to
                                                                                      the average interest rate reduction
                                                                                      under both scenarios
                                                                                     The interest expense reduction will
                                                                                      assist with Council’s financial
                                                                                      recovery plan objectives
                                                                                     Over 10 years interest expense
                                                                                      reduces by $869k under the ERA
                                                                                      cash scenario and $430k under the
                                                                                      ERA capitalise scenario
                                                                                     By 2025 the interest rate benefit is
                                                                                      largely negated (compared to the
                                                                                      current position) due to the change
                                                                                      in loan terms (i.e. debt will remain
                                                                                      for a longer period)
                                                                                     Prudent budgeting and planning
                                                                                      over the next few years will
                                                                                      adequately manage any outer year
                                                                                      operating position risk

Fiscal Flexibility

Debt Position ($’000)
                                                                                     Council’s debt position will increase
                                                                                      by $3 million (13%) under the ERA
                                                                                      recapitalisation scenario
                                                                                     The      debt    balance      remains
                                                                                      unchanged if the ERA is paid from
                                                                                      cash (however cash reserves
                                                                                      would reduce)
                                                                                     Future borrowing opportunities will
                                                                                      not be materially constrained by
                                                                                      either loan refinancing scenario



Note: Current debt balances are $1.9m lower than shown in the graph due to a debt repayment in August 2020



Net Financial Liabilities (NFL) Ratio (%)
                                                                                      Council is currently in a healthy
                                                                                       position regarding its debt position
                                                                                       with appropriate capacity to draw
                                                                                       down future debt as needed
                                                                                      Under each scenario the debt
                                                                                       refinancing transaction has a
                                                                                       marginal impact on the NFL ratio
                                                                                       for the next 10 years
                                                                                      Future borrowing opportunities will
                                                                                       not be materially constrained by
                                                                                       either debt refinancing scenario




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