2014-01-13 Item 6.3 Appendices 1-5

4        Financial viability assessment of Proponent
         Council

QTC ratings              Nov 2012 Proponent Council Moderate (Neutral outlook)
                         Feb 2007 Noosa Shire Council Strong (Developing outlook)


Based on information made available QTC has rated the Proponent Council as Moderate with
a Neutral outlook.

Although the Proponent Council’s forecast shows small and continuous operating deficits over
the forecast period it has adequate capacity to meet its financial commitments in the short to
medium term and acceptable capacity in the long term. The Proponent Council is likely to
have the ability to address its operating deficits, manage unforeseen financial shocks and any
adverse changes in its business, with minor or moderate revenue and/or expense adjustments.

A neutral outlook reflects QTC’s assumption that there are no known foreseeable significant
events within the next 24 months that are expected to have a direct impact on Council’s
capacity to meet its financial commitments.


4.1      Proposed approach for regionally significant assets and services

4.1.1 Water and sewerage/wastewater

The Proponent Council does not propose to take over any of the functions currently
performed by Unitywater. Rather, the Proponent Council expects to become a shareholder in
Unitywater alongside the Existing Council and MBRC. QTC understands the existing
Participation Agreement between Unitywater, SCRC and MBRC will permit this arrangement.

The Proponent Council has calculated its share of the Existing Council’s interest in Unitywater
using a net present value of future cashflows methodology. The Proponent Council estimates
this to be 11.2 per cent of the Existing Council’s 41.76 per cent share in Unitywater, which
would give it a 4.25 per cent share in Unitywater.

QTC has used a regulated asset base methodology to determine the Proponent Council’s share
in Unitywater. This methodology was adopted by SCRC and MBRC in establishing their
original investment. Using this methodology, the Proponent Council will receive 10.18 per cent
of the Existing Council’s share in Unitywater, giving it a 4.25 per cent share in the entity.

4.1.2 Waste

Landfill

The Proponent Council will own the Eumundi Road landfill under a de-amalgamation scenario
but may lack the necessary scale to maximise efficiency because of its high fixed costs relative


De-amalgamation Analysis of Sunshine Coast Regional Council                              Page 21