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Financial Performance Report – June 2023 · Financial Performance Report
GENERAL COMMITTEE MEETING 17 JULY 2023
6.1 FINANCIAL PERFORMANCE REPORT – JUNE 2023
Author Financial Services Manager (Acting), Pauline Coles
Corporate Services Department
Index ECM/ Subject / 22.09 – Monthly Financial Performance Report
Attachments 1. Attachment 1 Statement of Income and Expenditure - Jun 2023
2. Attachment 2 Statement of Financial Position - Jun 2023
3. Attachment 3 Statement of Cashflows - Jun 2023
4. Attachment 4 Key Materials & Services Expenditure - Jun 2023
EXECUTIVE SUMMARY
Financial performance for the 2022/23 year has resulted in an interim operating position of $10.0
million, capital revenue of $40.6 million and capital expenditure of $46.6 million.
Note that this is only an interim position, year-end financial adjustments are still in progress
which may have material impacts to the interim financial position. A further report on the final
2022/23 financial performance will be provided to Council in November 2023 following the
finalisation and independent audit of the financial statements in October 2023.
* Reflects constructed assets and intangibles only (excludes contributed)
The $9.8 million full year operating surplus comprises $5.4 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 $4.4 million in
unspent levy and separate charge funds which are constrained in reserve for future use. This
was offset by a small operating deficit of $0.1 million in waste operations. The general operating
surplus position is also augmented by a number of incomplete grant-funded programs.
* 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 Council's limited resources.
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GENERAL COMMITTEE MEETING 17 JULY 2023
A summary of the interim operational performance of these business activities for the year end 30th
June 2023 are outlined below.
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
June 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.
YTD Measures of Financial Sustainability
Current
Target Actual YTD Status
Budget
Operating Surplus Ratio 0-10% 0.1% 8.0% On Track
Net Financial Liabilities
On Track
Ratio <60% -12.8% -33.6%
Cash Cover Ratio 3 months 10.3 months 14.1 months On Track
Asset Sustainability Ratio > 90% 176.7% 163.8% On Track
RECOMMENDATION
That Council note the report by the Manager Financial Services (Acting) to the General Committee
Meeting dated 17 July 2023 outlining the interim 2022/23 full year financial performance against
budget, including key financial sustainability indicators.
REPORT
Operating Revenue (YTD Benchmark 100.0%)
Council has received 102.9% ($126.3 million) of its operating revenue budget ($122.7 million).
Commentary on each revenue category is provided below.
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GENERAL COMMITTEE MEETING 17 JULY 2023
Category Summary Comments
Rates and Levies $83.2 million (100.0%) • Overall total rates and levies earned are in line
of the annual budget of with the annual budget
$83.2 million has been
earned
Fees and Charges $8.2 million (95.4%) of • Development Assessment $187.3k below
the annual budget of budget (92.2% or $2.2 million of $2.4 million
$8.7 million has been annual budget earned)
earned • Building fees $112.0k below budget (87.3% or
$770.0k of $882.2k annual budget earned)
• Plumbing fees $41.2k below budget (96.8% or
$1.2 million of $1.3 million annual budget
earned)
• Local Laws $66.3k below budget (95.9% or
$1.5 million of $1.6 million annual budget
earned)
• Waste Management $45.6k below budget
(95.27% of $918.8k of $964.4k annual budget
earned)
Sale of Goods and $13.9 million (105.1%) • Holiday Park revenue $406.1k above budget
Services of the annual budget of (110.26% or $4.3 million of $4.0 million annual
$13.2 million has been budget earned). Any revenue upside will be
earned generally offset by a corresponding increase in
associated operating costs
• Community Facility fees $270.0k above
budget (108.7% or $3.4 million of $3.1 million
annual budget earned)
Interest Received $4.4 million (138.5%) • Interest revenues continue to track above
of the $3.2 million budget with Council investing surplus cash in
annual budget has high yielding term deposits to maximise the
been earned return on its cash holdings. The interest rate
on the QTC and CBA facilities has also
increased in line with market pressures
generating increased interest revenue.
Other Revenue $3.6 million (134.8%) • Waste Management sundry revenue $107.7k
of the $2.7 million above budget (147.3% or $335.5k of $227.8k
annual budget has annual budget earned)
been earned • Community Facility revenue $71.3k above
budget (116.5% or $503.3k of $431.9k annual
budget earned)
• Properties and Facilities revenue is $127.7k
above budget due to the receipt of an
insurance reimbursement for damage to
Council properties from the February 2022
flood event.
Operating Grants, $6.9 million (120.9%) • Operating Grants and subsidies are above
Subsidies of the $5.7 million budget expectations due to the receipt of a
annual budget has QRA Local Economic Recovery Grant, QRA
been received Emergent Works and Disaster Funding,
Queensland Arts Showcase Program Grant,
Illegal Dumping Grant, Eco-Certified Tourism
Destination Program and Public Health
Network Grant.
• 100% ($2.0 million) of the financial assistance
grant in respect to the FY 2023/24 year was
prepaid in June 2023. In previous years this
prepayment has been 50-75%. As such this
may impact on Council’s 2023/24 final
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GENERAL COMMITTEE MEETING 17 JULY 2023
Category Summary Comments
operating 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 100.0%)
Actual operating expenditure is currently 94.9% ($116.2 million) of full year budget ($122.5
million). Detailed commentary for each expenditure category is provided below.
Category Summary Comments
Employee Costs $41.4 million (97.5%) of the • Expenditure for permanent staff salaries
annual budget of $42.4 and wages underspent ($2.3 million) due
million has been expended to position vacancies, partially offset by
additional spend on casual staff and
external labour hire ($1.4 million).
• Training costs $23.8k under full year
budget (93.6% or $350.3k of $374.0k
annual budget spent)
Materials and $53.6 million (91.1%) of the • Civil Operations $408.5k above budget
Services $58.9 million annual budget (104.7% or $9.1 million of $8.7 million
has been expended. annual budget spent)
• Holiday Parks $306.1k above budget
(113.2% or $2.6 million of $2.3 million
annual budget spent) – offset by additional
revenue.
• Community Facilities $94.5k above budget
(103.8% or $2.6 million of $2.5 million
annual budget spent)
• Governance $53.5k above budget
(106.3% or $902.4k of $848.9k annual
budget spent)
• Environmental Services $1.9 million below
budget (61.2% or $3.1 million of $5.0
million annual budget spent) Note: $420k
relates to levy funded projects any net
balance of levy funds will be transferred to
reserves for future use.
• Asset Management $557.9k below budget
(57.2% or $744.5k of $1.3 million annual
budget spent) Note: $476.4k relates to
levy funded projects any net balance of
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GENERAL COMMITTEE MEETING 17 JULY 2023
Category Summary Comments
levy funds will be transferred to reserves
for future use.
• Library and Galleries $480.5k below
budget (77.5% or $1.6 million of $2.1
million annual budget spent) Note:
$213.4k relates to levy funded projects any
net balance of levy funds will be
transferred to reserves for future use.
• Strategic Land Use Planning $429.1k
below budget (41.6% or $305.7k of
$734.8k annual budget spent.
• Sustainable Transport program $280.6k
below budget (73.4% or $775.9k of a $1.0
million annual budget spent) Note: any
balance of levy funded projects will be
transferred to reserves for future use
• Economic Development $178.7k below
budget (95.4% or $3.7 million of $3.9
million annual budget spent)
• Digital Hub $98.7k below budget (84.9% or
$553.1k of $651.8k annual budget spent)
• Information Communication & Technology
$251.4l below budget (93.9% or $3.9
million of $4.1 million annual budget spent)
• Infrastructure Planning, Design & Delivery
$208.7k below budget (51.5% or $221.2k
of $429.9k annual budget spent)
• Building and Facilities $206.1k below
budget (81.1% or $883.7k of $1.1 million
annual budget spent)
• Waste Management $194.5 below budget
(98.5% or $13.0 million of $13.2 million
annual budget spent)
• Development Assessment $189.7k below
budget (86.3% or $1.2 million of $1.4
million annual budget spent)
• Procurement $177.8k below budget
(87.0% or $1.2 million of $1.4 million
annual budget spent)
• Community Development $173.5k below
budget (87.9% or $1.2 million of $1.4
million annual budget spent)
• Fleet $86.2k below budget (94.0% or $1.3
million of $1.4 million annual budget spent)
• Council properties $69.4k below budget
(88.0% or $505.8k of $574.9k 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 • Current inflationary conditions for
construction inputs will continue to impact
the value of Council’s infrastructure assets
and depreciation. The annual asset
revaluation cycle will quantify the financial
risk by end of financial year.
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GENERAL COMMITTEE MEETING 17 JULY 2023
Category Summary Comments
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 June 2023 is outlined below:
Expenditure Annual Budget FY Actual Variance
$m $m $m
Payment to Tourism -
$2.65 $2.65
Noosa
Economic Development $1.27 $1.09 $0.18
Total $3.92 $3.74 $0.18
All instalments payable under the Tourism Noosa agreement for the 2022-23 financial year have
been made. The renewal of the Tourism Noosa agreement was endorsed by Council at the April
Ordinary Meeting.
Economic Development expenditure is slightly under the full year budget with the development of
the Destination Management Plan progressing.
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.
Page 7
GENERAL COMMITTEE MEETING 17 JULY 2023 Legal Cost Summary An update on legal costs and associated expenditure is provided on a quarterly basis. Expenditure as at 30 June 2023 is outlined below. Legal and associated costs are $26.5k below budget (98.6% or $1.59 million of $1.61 million of annual budget spent). Consultancy Cost Summary Council requested an overview of expenditure on consultancy costs at the General Committee Meeting on the 15th May 2023. Expenditure as at 30 June 2023 is outlined below.
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GENERAL COMMITTEE MEETING 17 JULY 2023 Consultancy costs are $488.3k below budget (77.2% or $1.6 million of $2.1 million of annual budget spent). The requirement for expenditure on external consultancy is dependent on the type and specialist nature of projects being undertaken and may fluctuate as a result. They may also relate to initiatives underway during 2023/23, not yet complete and some may carry over into 2023/24. Note: the above amounts relate to operational projects only and do not reflect consultancy expenditure incurred in respect to capital projects. Capital Revenue Full Year Capital revenue of $40.6 million received comprises cash contributions from developers ($3.2 million) and capital grants ($36.9 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 received 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. Following this approval, Council has received upfront payments of $23.9 million to fund these works. Figure 4: Capital Revenue by Type
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GENERAL COMMITTEE MEETING 17 JULY 2023 Capital Program Actual capital expenditure (excluding commitments) is $46.6 million (FY budget $56.6 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 5: Capital Program Delivery Performance Cash Management and Investment Performance Total cash on hand at the end of June was $115.4 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 June 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
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GENERAL COMMITTEE MEETING 17 JULY 2023 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 $50 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 Quarterly Supplementary Information - Cash Components An update detailing the composition of Council’s cash reserves is provided quarterly. Council’s cash balance comprises a number of components – restricted cash (reserves), committed cash, financial sustainability requirements and unrestricted cash. These are outlined below. Restricted Cash - In accordance with Council’s Management of Restricted Cash Policy, funds are set aside and restricted for a specific purpose. This can be either to meet regulatory requirements, allocate against specific future projects and activities, and to ensure sufficient working capital to meet current and long term financial obligations.
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GENERAL COMMITTEE MEETING 17 JULY 2023
Committed Cash - A portion of cash reserves are committed to undertake current year capital
works. At the start of the financial year, this commitment will be increased for any unfinished
capital works from previous year which are carried over as part of the budget review process to
ensure the projects can be completed.
Sustainability Requirement – Cash expense cover is a key statutory indicator to measure
liquidity, ensure going concern and is a key measure considered in Council achieving its current
credit rating (Sound with a Neutral Outlook) to ensure borrowing capacity. Cash expense cover
calculates how long Council can continue to pay its day-to-day expenses without needing to
seek borrowings or other external funding. A target minimum of three month’s cash cover is to
be held in any given financial year to minimise financial risk.
Unrestricted Cash – These are funds where there is no regulatory, policy or budgetary
commitment to retain funds for specific purposes. These funds can be separated into the
following:
• Working Capital – The cycle of revenue received twice yearly through rates that is held in
the bank and spent over the following six months on operations and capital.
• Long Term Surplus – Uncommitted cash set aside to fund the 10-year capital works
program.
Overall, Council’s $115.4 million total cash balance compromises:
• $51 million (44%) in restricted cash. This has increased since the previous quarter by
$11 million relating to advance payment for QRA Feb 22 flood event disaster works
(Black Mountain) and a total of $4.0 million expended year to date.
• $19 million (17%) committed for capital works, comprising $9 million current year projects
pushed to FY 2024 and $10 million expected to carryover from projects currently
underway.
• $7 million in working capital to pay for operations until the next rates and levies issue in
July.
• $5 million (4%) in unrestricted free cash, which is the cash available to fund emergent or
new capital works projects. There is no funding to replenish this unless Council generates
a surplus operating position.
• $9 million (8%) in interim operating result, which is higher than forecast, but subject to
the finalisation of levy and reserve balances and accounting adjustments and allocations
being finalised.
Figure 7: 12 Allocation of Cash Balances
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GENERAL COMMITTEE MEETING 17 JULY 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: 8.0%
• Comment: Strong sales,
increased interest and grant
revenue, operational
savings, unspent levies and
grants have contributed
toward a positive interim
annual result.
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.
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GENERAL COMMITTEE MEETING 17 JULY 2023
Category Comments
• Target: > 3 months
• Result: 14.1 months
• Comment: Whilst interim
annual cash cover result is
well above target, this
includes committed cash for
capital programs, unspent
grant monies paid in
advance, Waste Levy
subsidy prepayments and
QRA advance payments for
disaster projects
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: -33.6%
• Comment: Council has low
debt levels and strong cash
holdings which are reflected
in the annual result.
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 (3.40%)
• Result: 4.21%
• 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 17 JULY 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: 5.4%
• Comment: Rates arrears
are in line with performance
for the previous 6 and 12
monthly cycles. Where
appropriate recovery action
will be taken.
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
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GENERAL COMMITTEE MEETING 17 JULY 2023
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.
Consultation
External Consultation - Community & Stakeholder
Nil
Internal Consultation
All areas of Council are consulted as part of the regular monitoring of budget performance.
Departments/Sections Consulted:
Mayor Community Services Corporate Services
Councillors x Director x Director
Community Development x Financial Services
x Chief Executive Officer Community Facilities Fleet
Executive Support Libraries & Galleries ICT
Local Laws Procurement
Waste & Environmental Health Property
Revenue Services
Executive Services Environment & Sustainable Development Infrastructure Services
x Director x Director x Director
Community Engagement Building & Plumbing Services Asset Management
Customer Service Development Assessment Buildings and Facilities
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GENERAL COMMITTEE MEETING 17 JULY 2023
Governance Economic Development Civil Operations
People and Culture Environmental Services Disaster Management
Infrastructure Planning, Design
Strategic Land Use Planning
and Delivery