2014-01-13 Item 6.3 Appendices 1-5

5        Financial viability assessment of Remaining
         Council

QTC ratings              Nov 2012 Remaining Council Sound (Neutral outlook)


Based on the financial information available, QTC has assessed the Remaining Council’s
financial viability as Sound with a Neutral outlook.

Although the Remaining Council’s forecast shows minor operating deficits over the forecast
period it retains an adequate capacity to meet its financial commitments. This includes a
reasonable level of borrowings, which are able to be adequately serviced. The Remaining
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.


5.1      Proposed approach for regionally significant assets and services

5.1.1 Water and sewerage/wastewater

Existing Council would transfer 10.18 per cent of its current 41.76 per cent share in
Unitywater to the Proponent Council. This would leave the Remaining Council with a 37.51
per cent share of Unitywater. QTC has used the same regulated asset base methodology
adopted by Unitywater upon its establishment in July 2010

The Remaining Council would not need to purchase any additional assets under this approach.

5.1.2 Waste

Landfill

QTC has assumed that an arrangement will be agreed between the Proponent Council and
Remaining Council, negotiated on commercial terms, to access the Proponent Council’s
Eumundi Road landfill.

If there are difficulties with Remaining Council accessing the Eumundi Road landfill post de-
amalgamation and there are delays in bringing new treatment technologies or landfill capacity
online in the Remaining Council area, additional transportation costs to transfer this waste to
alternative landfill locations outside of the Remaining Council area are likely to be incurred.
Existing Council has estimated an additional $7 million in capital expenditure for a waste
transfer station and a further $5.3 million per annum in recurring transportation costs. QTC

De-amalgamation Analysis of Sunshine Coast Regional Council                               Page 27