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FINANCIAL PERFORMANCE REPORT – DEC 2024

Financial Services Manager, Pauline Coles · Financial Services | Corporate Services Department

Executive summary

Year-to-date (YTD) performance against current budget as at 31 December 2024 is positive with operating revenues outperforming forecast and operating expenditure under forecast YTD. Capital revenues are above forecast with capital expenditure behind of forecast due to delays and rescheduled timing of project delivery. YTD Financial Performance Summary Budget Actual Variance Variance Status $m $m $m % Operating Revenue $70.4 $73.4 $3.0 4.3% On Track Operating Expense $66.6 $67.0 ($0.5) (0.7%) On Track Operating Position $3.8 $6.4 $2.6 Capital Revenue $30.5 $35.0 $4.5 14.7% On Track Capital Expenditure* $72.5 $46.7 $25.8 35.6% Behind Budget

  • Reflects constructed assets and intangibles only (excludes contributed assets). The $2.6 million full year positive interim operating variance comprises $1.9 million general operating surplus from activities that are funded through Council’s general rate, regulatory fees and sales of goods and services; as well an additional $0.7 million from waste operations and $0.1 million from holiday park operations. Any unspent levy and separate charge funds are constrained in reserve for future use where they are not fully utilised in a given year. Budget Actual Variance Item

YTD

YTD

YTD

$m $m $m $1.1 General business operating position (unconstrained funds) $3.0 $1.9 $2.0 Commercial operations (constrained funds) * $2.8 $0.8 $0.7 Unspent levies (constrained funds) $0.6 ($0.1) $3.8 Total Council Operating Position $6.4 $2.6

  • Includes Waste and Holiday Park operations as shown in the table below Council elects to apply National Competition Policy (NCP) reforms to its Waste Management and Holiday Parks which provides greater transparency and assists with removing anti-competitive conduct and ensures the best allocation of Councils limited resources. A summary of the YTD operational performance of these business activities are outlined below. Waste Operations Holiday Parks Budget Actual Variance Budget Actual Variance

YTD

YTD

YTD

YTD

YTD

YTD

$m $m $m $m $m $m Revenue 12.7 13.1 0.4 2.2 2.5 0.3 Expenditure 11.2 10.9 0.3 1.7 1.9 (0.2) Net Operating Position 1.5 2.2 0.7 0.4 0.5 0.1 Financial statements including Statement of Income & Expenditure, Statement of Financial Position (balance sheet), and Statement of Cash Flows are included as attachments for information for Council. Figure 1: Actual Performance Compared to Budget Council’s performance against key measures of financial sustainability has been calculated as at December 2024. These statutory indicators enable the reader to assess Council’s success in managing its budget, cash and debt as well as undertaking sustainable asset management. The table below contains a snapshot of a number of key measures, with full detail included in the report. YTD Measures of Financial Sustainability Current Target Actual YTD Status Budget Operating Surplus Ratio On Track 0-10% -0.1% 8.8% Net Financial Liabilities Ratio On Track <60% -3.2% -31.5% Cash Cover Ratio On Track 3 months 9.4 months 9.9 months Asset Sustainability Ratio Behind Budget > 90% 136.7% 38.7%

Recommendation

That Council note the report by the Financial Services Manager to the General Committee Meeting dated 20 January 2025 outlining the December 2024 year to date financial performance against budget, including changes to the financial performance report with the inclusion of key financial sustainability indicators.

Report

Operating Revenue (YTD Benchmark 50.0%) Council has received 52.5% ($73.4 million) of its operating revenue budget ($139.9 million). Commentary on each revenue category is provided below.

Category

Summary

Comments • Waste utility charges $90.0k above YTD budget

Rates and $47.0 million (49.8%) (50.3% or $8.5 million of $16.9 million annual budget

Levies of the annual budget of earned) $94.4 million has been • earned General rate (net of discounts) $157.9k below YTD budget (49.7% or $35.5 million of $71.4 million annual budget earned) • Building & Plumbing Compliance $165.7k above

Fees and $5.8 million (52.9%) of budget (50.7% or $1.3 million of $2.6 million annual

Charges the annual budget of budget earned) $10.9 million has been • earned Waste $56.0k above budget (147.4% or $83.9k of $56.9k annual budget earned) • Development Assessment $272.9k below budget (51.1% or $1.8 million of $3.6 million annual budget earned) • Holiday Park revenue $315.3k above budget (61.3%

Sale of Goods $7.6 million (55.0%) of or $2.5 million of $4.0 million annual budget earned).

and Services the annual budget of Any revenue upside will be generally offset by a $15.6 million has been corresponding increase in associated operating costs. earned • Waste $196.7k above budget (51.8% or $3.9 million of $7.7 million annual budget earned). • Sports facility revenue $167.7k above budget (56.1% or $1.7 million of $2.9 million annual budget earned) • Interest revenues have continued to track above

Interest $3.3 million (105.1%) budget with investment in higher yielding term

Received of the $3.1 million deposits maximising the return on surplus cash annual budget has holdings. Cash holdings are higher compared to been earned previous years due to the advanced payment of QRA disaster capital works grants and delays in the delivery of the capital works program. • Plant recharge revenue is $76.9k above budget due to

Other Revenue $1.9 million (59.2%) of internal plant being utilised for the delivery of disaster the $3.3 million funded capital projects. annual budget has • been earned Royalty income from landfill gas $22.4k above budget (88.5% or $51.5k of $58.1k annual budget earned). • Recoupment of Waste Bin (SULO) purchases $14.3k above budget (63.9% or $66.0k of $103.3k annual budget earned. • Operating Grants and subsidies are in line with budget

Operating $4.2 million (62.9%) of expectations at this stage of the year. YTD variance

Grants, the $6.6 million relates to $65k Floating Land grant, $75k for Disaster

Subsidies annual budget has Recovery & Resilience Officer funding program, $90k been received for Regional Enablers program and $98k final payment relating to Black Summer Bushfire Funding for the living tech fire lab. • $1.4 million of the FY 2025 financial assistance grant allocation was received in July 2024. This is a change from the previous approach of prepaying part or all of

Category

Summary

Comments the grant in the preceding year. This prepayment approach had been consistent over the past 7 years. • Council has received notification of the approved FY 2024/25 financial assistance grant allocation which is less than budgeted. As such there is potential for this to impact the FY 24/25 operating position if payment of future years allocations are not paid in the preceding year. • Unitywater distributions are fixed each year so there is

Unitywater On track limited budget variance risk

Distributions

Figure 2: Operating Revenue Position by Type (Excluding Rates)

Operating Expenditure (YTD Benchmark 50.0%) Actual operating expenditure is currently 47.8% ($67.0 million) of the full year budget ($140.1 million). Detailed commentary for each expenditure category is provided below.

Category

Summary

Comments • Expenditure for permanent staff salaries and wages

Employee Costs $25.7 million (49.0%) of underspent ($823.3k) due to position vacancies and the annual budget of recoupment of

YTD

vacancy dividend. This $52.6 million has been underspend is also partially offset by additional spend expended on casual staff and external labour hire ($823.3k). • Training costs are on target (58.9% or $227.3k of $386.1k annual budget spent). • Civil Operations $617.0k above budget (53.9% or

Materials and $29.1 million (46.7%) of $5.1 million of $9.5 million annual budget spent).

Services the $62.4 million annual • budget has been Holiday Parks $217.0k above budget (58.4% or $1.4 expended. million of $2.4 million annual budget spent). • Holiday Parks $217.0k above budget (58.4% or $1.4 million of $2.4 million annual budget spent). • Sustainable Transport above budget (14.8% or $141.8k of $962k annual budget spent). • Digital Hub above budget (56.0% or $204.8k of 365.4k annual budget spent. • Waste Management $313.3 below budget (45.0% or $6.6 million of $14.7 million annual budget spent). • Arts & Culture $99.8k below budget (41.3% or $1.1 million of $2.6 million annual budget spent).

Category

Summary

Comments • Development Assessment below budget (59.4% or $779.7 of a $1.3 million annual budget spent). • Transport and Traffic $40.1k below budget (28.1% or $64.6k of a $229.6k annual budget spent). • Sports facilities $52.3k below budget (45.8% or $730.1k of a $1.6 million annual budget spent). • Canals & Waterways $40.6 below budget (35.0% or $121.2k of $526.4k annual budget spent. • Whilst existing loan borrowings are set with fixed

Finance Costs Currently on track interest rates, any further RBA rate rises will impact finance costs on new loan borrowings. YTD underspend also relates to the timing of drawdown of forecast borrowings for FY 2025.

Depreciation Currently on track Nil

Other Expenses Currently on track Nil

Figure 3: Operating Expenditure Position by Type

Tourism and Economic Development Investment Summary Council resolved to report on a monthly basis, investment details for tourism and economic development. Tourism and economic development activity is funded through the general rates revenue. Expenditure at 31 December 2024 is outlined below:

Expenditure

YTD Budget

YTD Actual

Variance

$’000 $’000

$’000 - Tourism Noosa Funding Agreement $1,260.0 $1,260.0 $16.9 Economic Development $525.6 $508.7

Total

$1,785.6

$1,768.7

$16.9 Tourism and economic development activity is funded through the general rates. The first instalment payable under the Tourism Noosa agreement for the 2024-25 financial year was made in July 2024, with the second instalment due in January 2025. The Tourism Noosa agreement is due for renewal in June 2025. • Employee Costs are $18.0k below budget (46.7% or $301.4k of $644.4k annual budget spent) • Materials & Services are in line with budget at this stage of the year

Capital Revenue Year to date Capital revenue of $35.0 million received comprises cash contributions from developers ($0.6m) and capital grants ($34.4 million). Note that the timing of capital grant receipts are generally dependent on the timing of grant conditions and also capital delivery performance, and that the timing of the receipt of developer contributions (both cash and contributed) is unpredictable. Grants and subsidies are higher than prior years due to the receipt of funding from the Queensland Reconstruction Authority for reconstruction works relating to the Black Mountain landslip and several other flood impacted sites, which are currently under construction.

Figure 6: Capital Revenue by Type

Capital Program Actual capital expenditure (excluding commitments and disaster projects) is $13.6 million (YTD budget $23.8 million). Expenditure on disaster projects (excluding commitments) is $33.1 million (YTD budget $48.8 million). Detailed discussion of progress in the delivery of the capital works program is provided through a separate quarterly report by the infrastructure team.

Figure 7: Capital Program Delivery Performance

Cash Management and Investment Performance Total cash on hand at the end of December was $94.5 million. Included in this balance are funds held in trust and for restricted purposes (e.g. unexpended levy and grant funds), prepaid grants including the financial assistance grant, QRA disaster funding and other capital works grants, prepayment of Waste Levy subsidy (3 years), and unspent monies committed for funding capital projects which are underway and will continue during the financial year. The following pie charts present the mix of cash held at December 2024 by agency (graph on the left) and by credit risk rating (graph on the right). All funds have been invested in accordance with the Investment Policy and in consideration of the principles of ethical investment, preservation of capital, return on investment and counterparty thresholds.

Figure 8: Closing Cash Held by Agency and Credit Rating The following chart monitors the 12 month trend on total cash and the agencies invested. To maximise the return on in its cash holdings Council has invested $30.5 million in higher yielding term deposits. These investments were made in line with Council’s Investment of Surplus Funds policy.

Figure 9: 12 Month Trend of Cash Invested by Agency

Measures of Financial Sustainability The following table incorporates a set of financial sustainability indicators to further assist in managing Council financial performance. There are no significant emerging risks regarding performance identified at this stage, however the delay in the delivery of the capital program may impact Council’s asset sustainability and renewal targets.

Category

Comments •

Intent: Identifies the extent to which

Operating Surplus Ratio revenues cover operational expenses, to ensure community equity is not degraded •

Target: Greater than 0% •

Result: 8.8% •

Comment: The slowly declining ratio reflects the levying of 50% of rates in July and gradual utilisation of these monies as expenditure occurs on operations through to the next rating cycle in January 2025. •

Intent: Indicates how long council can

Cash Expense Cover continue paying its day-to-day expenses from cash at bank without needing additional cash flows •

Target: > 3 months •

Result: 9.9 months •

Comment: Cash cover remains above target, while business as usual expenditure through to 30 June 2025 will degrade Council’s cash holdings, albeit not below the target range of 3 –

months. Cash balances include funding for capital programs, unspent grant monies paid in advance, Waste Levy subsidy prepayments and

QRA

advance payments for disaster projects which are restricted for specific purposes and inflate the ratio. •

Intent: Measures the extent to which

Asset Sustainability Ratio assets are being replaced as their condition degrades to ensure service potential is maintained •

Target: 80% of depreciation budget spent on renewals annually •

Result: 38.7% achieved, however below forecast result due to project delays and scheduling. •

Comment: The ratio will progressively increases each month as expenditure on renewals occurs as part of the capital works program. For transparency QRA disaster projects have been excluded from the ratio calculations. Should capital works continue to fall forecast for the

Category

Comments remainder of the year this may impact the achievement of Council’s asset sustainability and renewal targets •

Intent: Outlines the level that net

Net Financial Liabilities Ratio Council debt can be serviced by operating revenues. A ratio below zero implies that liabilities are less than cash (and other current assets) and there is adequate borrowing capacity available if needed. •

Target: less than 60% •

Result: -31.5% •

Comment: Council has low debt levels and strong cash holdings. The advance payment of rates, grants and subsidies also inflates the YTD actual outcome. •

Intent: Ensure appropriate return on

Investment Return investment yield for cash at bank. •

Target: 0.25% above current Bloomberg commonwealth 10-year bond rate yield (4.45%) •

Result: 5.8% •

Comment: With higher-than- normal cash balances due to the advance payment of grants and subsidies and a delayed capital program, combined with bond rates remaining steady, Council has invested surplus cash in higher yielding term deposits to maximise returns. Council’s investment returns remain above target. •

Intent: Ensuring that the amount of

Rates in Arrears unpaid rates remains sustainable and does not negatively impact cash flows •

Target: 5% industry benchmark •

Result: 6.3% •

Comment: Rates arrears continue to decline from the high point in the cycle with payments coming due in August. Reminder notices have been issued, and arrears will continue to stabilise through to January as they are collected, and payment arrangements implemented.

Report details

Index: ECM/ Subject / 22.09 – Monthly Financial Performance Report