2020-12-08 Services & Organisation Committee Agenda

SERVICES & ORGANISATION COMMITTEE MEETING AGENDA                8 DECEMBER 2020


Interest Cover Ratio (times)
                                                  This ratio indicates the ability for
                                                   Council to meet its annual interest
                                                   payment       obligations    without
                                                   compromising sustainability
                                                  Generally an interest coverage
                                                   ratio of at least two (2) times is
                                                   considered        the      minimum
                                                   acceptable amount
                                                  Under each scenario interest
                                                   coverage stabilises once the
                                                   financial    recovery     plan    is
                                                   implemented
                                                  Prudent budgeting and planning
                                                   over the next few years will
                                                   adequately manage any outer year
                                                   interest coverage risk

Liquidity Position

Cash Balance ($’000)
                                                  Cash flow benefits will be achieved
                                                   from 2022 under either loan
                                                   refinancing      scenario    through
                                                   reduced annual loan repayments of
                                                   $2.4 million if the ERA is funded by
                                                   debt or $2.6 million if funded by
                                                   cash
                                                  Under the current financial model
                                                   assumptions cash balances will
                                                   remain at appropriate levels to
                                                   ensure ongoing liquidity and
                                                   financial sustainability



Working Capital Ratio (times)
                                                 A working capital ratio of less than
                                                  one is taken as indicative of
                                                  potential future liquidity problems,
                                                  while a ratio of 1.5 to two is
                                                  interpreted appropriate for ongoing
                                                  liquidity
                                                 The working capital ratio (current
                                                  assets/current liabilities) remains
                                                  above minimum benchmarks under
                                                  each loan refinancing scenario




Previous Council Consideration
Nil.




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