Cr Ros Heit - Finance Portfolio Report - 19 April 2017

Financial Report

Council’s actual financial results as at 31 March 2017 are presented in the comprehensive income statement alongside the Third Quarter Proposed Operating Budget.  The recurrent revenue and expense items are within budget.

The discount period for the final six monthly rating ended on 28 March.  As a result of the rates collection, the performance indicators for cash, operating cash, working capital and funded long term liabilities have improved and are all within the industry guide. 

The three (3) sustainability ratios that are reported in Council’s annual audited financial statements are also presented in this financial report as key performance indicators. 

1. The operating surplus ratio indicates the extent to which Council revenues cover its operational expenses. The desired target is between zero (0) to ten percent (10%).   The actual year to date ratio is 19.7% mainly due to the revenue recognition of the final six monthly rating as at 31st of March.  It is expected that once the remaining budgeted expenditures for the year have been disbursed, the operating surplus ratio for 2016-2017 will be 0.7%.
2. The asset sustainability ratio shows the rate of expenditures for asset renewal as compared to depreciation expense.  This ratio measures the expenditure to maintain and renew assets over the course of their respective useful lives.   Council is expected to renew its assets at a rate of ninety percent (90%) or more of the current year depreciation expense.  The year-to-date ratio is 210.3% and projected to be 158.3% at the end of the financial year upon recognition of the full year depreciation expense and additional capital expenditure.
3. The net financial liabilities ratio indicates the extent to which the net financial liabilities can be serviced by Council’s operating revenues.  An acceptable ratio should not be greater than sixty percent (60%).  This ratio as of the 31st of March is 38.6% and is projected to be 36.6% by year end. 

These results show that Council is able to achieve the targeted sustainability ratios applicable to local government.  

Additional key performance indicators are currently being reviewed and evaluated for inclusion in future financial reports to Council.

Third Quarter Operating Budget Review

A review of the 2016-2017 Operating Budget has been undertaken as at 31 March 2017.  The proposed budget forecasts an operating surplus of $422,531.  As compared to the 2nd Quarter Revised Budget, there is a decrease in the net operating result of $102,639 mainly due to the decrease in Fees & Charges for Lake Boondooma and Yallakool Tourist Parks.   

The proposed budget change in capital revenue amounting to $2.3 Million represents the sixty percent (60%) upfront payment received for the Work for Queensland (W4Q) projects.

The long term forecast for the comprehensive income statement, balance sheet and cash flow statement was also revised following the budget adjustments for the third quarter review.   The indexation was based on the 2016-2017 original budget assumptions.

Third Quarter Capex Budget Review

The 2016-2017 Capex Budget review resulted in a proposed increase of $2,081,500 mainly on account of the projected expenditure for the Work for Queensland (W4Q) Projects until the 30th of June.

The proposed capex budget amounts to $34,042,735.  The year-to date actual capital expenditure amounts to $ 14.6 Million and commitments total $7.0 Million.

Procurement Policy 2017

Council’s Procurement Policy is reviewed annually in accordance with the provisions of the Local Government Regulation 2012.  The policy sets out the guidelines and the purchasing principles for adherence by all Council employees responsible for the purchase of goods and/or services. 

The Procurement Policy was circulated to the Councillors and the Senior Management Team for their review.  There are no major revisions to the current policy. 

Loans to Community Organisations Request

The South Burnett Motors in Motion forwarded a loan request for Five Thousand Dollars ($5,000.00) for the purchase of materials to manufacture concrete safety barriers to be used in the street sprint at Wondai in June 2017.  The required supporting documents have been forwarded by the organisation to Council’s Finance Department and were accordingly assessed for loan eligibility based on the guidelines set in the Loans to Community Organisations Procedure.

It is recommended that Council approve the $5,000.00 loan request by the South Burnett Motors in Motion subject to the stipulated conditions as outlined in the relevant Council procedure.

Sale of Land for Overdue Rates

The notices of intention to sell land for overdue rates have been posted to the respective property owners on 13 April.  Property owners are given six (6) months to settle their overdue rates or make appropriate arrangements prior to Council proceeding with the auction to sell the identified properties. Projected auction date will be in November 2017.