Finance Portfolio Report - 21 September 2016

Finance

Financial Report

The attached periodic financial statements are as at 31 August 2016.

The financial ratios for cash, operating cash and working capital ratio are within the industry guide.

The funded long term liabilities ratio is below the target due to the extension of the discount date resulting from the transition to a six monthly rating.  

Council’s cash position is expected to improve upon collection of rates by the discount date on the 25th of October and the expected receipt of the $4.2 Million capital grant under the Royalties for Regions (R4R) for the Kingaroy Waste Water Treatment Plant.  

With regard to the Comprehensive Income Statement:

The half-year rates amounting to $26 Million were levied on the 23rd August and are now recognised in the Income Statement.  Fees and charges include developer contributions amounting to $276,180.  Actual sales revenue recorded is only 4% of budget as compared to the 17% expired portion of the year mainly due to timing difference of the claims for roads and drainage contracts (RMPC).  Financial assistance grants (FAGS) received as of the end of August amount to $1.7 Million.  Capital revenue is only 6% of budget mainly due to the timing difference in the projected receipt of the Royalties for the Region capital grant for the Kingaroy Waste Water Treatment Plant as mentioned earlier in the report.

Expenses are within budget limits except for finance cost that is only 1% of budget due to the timing difference in the recognition of quarterly interest expense.

2016-2017 First Quarter Operating Budget Review

A review of the 2016-2017 Operating Budget was undertaken as at 9 September 2016.  The review resulted to a proposed revision in the Operational Budget from an original net surplus of $789,691 to an increased revised net surplus of $878,684.  The increase in net result of $88,993 is a result of the proposed revisions under General Operations on account of a decrease in revenue amounting to $37,942 and a decrease in expenditure amounting to $126,935.  Of particular mention here is the decrease in WH&S premiums due to good work by the HR team in assisting staff with rehabilitation and safe work practises by all staff reducing accidents.

The review of capital revenue also resulted to a proposed revision on account of:

1. Adjustment to the Roads to Recovery (R2R) grant income by $1,130,334 incorrectly stated in the budget documents.  This has no impact on the Capital Work Program as the correct figures were utilised.
2. An increase in the Royalties for Regions (R4R) Kingaroy Waste Water Treatment Plant upgrade grant income by $280,000

2016-2017 First Quarter Capex Budget Review

A review of the 2016-2017 Capital Budget has been undertaken to consider the carryover projects from the financial year 2015-2016 and known changes to the current financial year budget.  The total carryover from financial year 2015-2016 amounts to $7,418,235. Of this amount $2.8 Million accounts for Roads and Drainage; $1.7 Million for Water; $1.0 Million for Waste Water and the remaining $1.9 Million for Buildings, Plant & Equipment and Waste.

A review of the Original 2016-2017 Capex Budget proposes an increase of $ 2,940,000 or a total revised Capex Budget amounting to $25,580,700. The proposed increase is mainly for the expenditure to be incurred in this current financial year for the Kingaroy Waste Water Treatment Facility, with the revenue source being the balance of Royalties for Regions (R4R) funding that will be received this 2016-2017 year. 

The proposed revised Capital Budget for 2016-2017 amounts to $32,998,935.  The proposed revised budget is allocated as follows:

2015-2016 Audit of Financial Statements

Council’s draft financial statements for financial year 2015-2016 have been completed.  The Audit Committee was able to review and discuss the statements prior to submission for external audit.  The two (2) weeks final audit visit was completed on 16 September.  Speaking to external auditors they praised the SBRC staff for their assistance during the audit process.

The target date for Queensland Audit Office (QAO) final sign-off of the financial statements is on the 21st of October. 

Congratulations to staff for getting the books ready for the audit so comprehensively and timely.