2014-01-13 Item 6.3 Appendices 1-5

4.2.2 Proponent Council financial information

Table 14 provides a summary of the Proponent Council’s key income statement, balance sheet
and cashflow items used by QTC to assess the financial viability of the Proponent Council.

TABLE 14 – SUMMARY OF KEY FINANCIAL INFORMATION

                                FY2013    FY2014    FY2015    FY2016     FY2017

Income Statement items ($000)
Net rates and utilities          56,486    59,894    63,559    67,451    71,585

Grants and subsidies              5,169     5,227     5,285     5,346     5,408

Total recurrent revenue          81,389    84,634    88,831    93,116    97,682

Employee expenses                31,099    32,413    33,784    35,212    36,701
Materials and services costs     31,988    33,235    35,047    36,977    37,349

Depreciation                     15,278    16,684    17,753    19,137    20,502

Interest expense                  2,501     2,831     3,104     3,374     3,485

Total recurrent expenses         84,470    85,163    89,688    94,700    98,037
Operating surplus/(deficit)     (3,081)     (529)     (857)    (1,584)    (355)



Balance Sheet items ($000)

Cash / (Overdrafts)              40,836    40,218    38,812    36,706    36,118

Property, plant and equipment   941,922   979,148 1,018,305 1,054,990 1,089,595

Total QTC borrowings             48,556    53,909    59,195    61,649    61,679



Cashflow items ($000)
Gross capital expenditure        31,413    25,935    28,300    26,657    25,426

New borrowings                    8,830     8,388     8,884     6,667     4,796


Key points to note from Table 14 include:
 Net rates and utilities revenue is forecast to increase in-line with the Existing Council’s
  assumptions, which are above current CPI in all years.
 Shareholder returns from Unitywater are included within total recurrent revenue. This
  revenue is forecast to fall from current levels commencing in FY2014 as a result of a
  reduction in the rate of interest being earned on renegotiation of the shareholder loans. In
  addition, dividends from Unitywater are expected to reduce because of the revised
  treatment of contributed assets within the context of full cost pricing.
 QTC has estimated the number of FTEs expected to transfer to the Proponent Council on
  de-amalgamation in addition to five identified new positions, (Chief Executive and four
  Executives), with current average salaries. Employee expenses are forecast to increase by
  an average of 4.2 per cent per annum in-line with the Proponent Council’s assumptions,
  including growth in FTEs of two FTEs per annum.
 QTC has included an additional cost within the materials and services costs of the
  Proponent Council to account for diseconomies of scale.
 Forecasts show operating deficits in all years.




De-amalgamation Analysis of Sunshine Coast Regional Council                              Page 24