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FINANCIAL PERFORMANCE REPORT – MAR 2025

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

Executive summary

Year-to-date (YTD) performance against current budget as at 31 March 2025 is positive with operating revenues outperforming forecast and operating expenditure slightly under forecast YTD. Capital revenues are above forecast with capital expenditure behind forecast due to delays and rescheduled timing of project delivery. YTD Financial Performance Summary Budget Actual Variance Variance Status $m $m $m % Operating Revenue $128.7 $130.9 $2.2 1.7% Above Budget Operating Expense $102.3 $102.1 $0.2 0.2% On Track Operating Position $26.4 $28.8 $2.4 Capital Revenue $40.9 $52.1 $11.2 27.3% On Track Capital Expenditure* $110.5 $61.8 $48.6 44.0% Behind Budget

  • Reflects constructed assets and intangibles only (excludes contributed assets). The $2.4 million full year positive interim operating variance comprises $1.6 million general operating surplus from activities that are funded through Council’s general rate, regulatory fees and sales of goods and services; Waste operations contributed an additional $0.7 with a further $0.2 million from unspent levy and separate charge funds, which are constrained in reserve for future use where they are not fully utilised in a given year. Holiday Parks are $0.1 million below forecast YTD due in part to the closure of the holiday parks, during Tropical Cyclone Alfred and higher than anticipated waste and maintenance charges. Budget Actual Variance Item

YTD

YTD

YTD

$m $m $m $17.3 General business operating position (unconstrained funds) $18.9 $1.6 $7.1 Commercial operations (constrained funds) * $7.7 $0.6 $2.0 Unspent levies (constrained funds) $2.2 $0.2 $26.4 Total Council Operating Position $28.8 $2.4

  • 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 23.7 24.2 0.5 3.3 3.4 0.1 Expenditure 17.2 17.0 0.2 2.7 2.9 (0.2) Net Operating Position 6.5 7.2 0.7 0.6 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 March 2025. 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% 22.0% Net Financial Liabilities Ratio On Track <60% -7.0% 39.5% Cash Cover Ratio On Track 3 months 9.5 months 12.7 months Asset Sustainability Ratio Behind Budget > 90% 116.6% 58.2%

Recommendation

That Council note the report by the Financial Services Manager to the General Committee Meeting dated 14 April 2025 outlining the March 2025 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 75.0%) Council has received 92.6% ($130.9 million) of its operating revenue budget ($141.3 million). Commentary on each revenue category is provided below.

Category

Summary

Comments • Waste utility charges $83.1k above YTD budget

Rates and $94.1 million (99.8%) (100.1% or $17.1 million of $17.0 million annual

Levies of the annual budget of budget earned) $94.3 million has been • earned General rate (net of discounts) $196.6k below YTD budget (99.6% or $70.9 million of $71.2 million annual budget earned) • Waste $64.8k above budget (187.5% or $106.8k

Fees and $7.9 million (72.8%) of of $56.9k annual budget earned)

Charges the annual budget of • $10.9 million has been Building & Plumbing Compliance $50.9k above earned budget (74.9% or $1.9 million of $2.6 million annual budget earned) • Cemeteries $36.1k above budget (85.3% or $298.4k of $349.8k annual budget earned) • Noosa Seniors $31.9k above budget (83.7% or $305.8k of $365.1k annual budget earned) • Development Assessment $478.8k below budget (66.0% or $2.3 million of $3.6 million annual budget earned) • Local Laws $72.4k below budget (71.0% or $1.5 million of $2.1 million annual budget earned) • Sports facility revenue $179.9k above budget

Sale of Goods $12.6 million (78.9%) (85.9% or $2.5 million of $2.9 million annual

and Services of the annual budget of budget earned) $15.9 million has been • earned Holiday Park revenue $44.8k above budget (79.4% or $3.4 million of $4.3 million annual budget earned). Any revenue upside will be generally offset by a corresponding increase in associated operating costs. Note: Holiday parks were closed for several days during Tropical Cyclone Alfred which has impacted revenue during March 2025. • Interest revenues have continued to track above

Interest $4.9 million (133.8%) budget with investment in higher yielding term

Received of the $3.7 million deposits maximising the return on surplus cash annual budget has holdings. Cash holdings remain high due to the been earned advanced payment of grants & subsidies,

Category

Summary

Comments restricted levy balances, future provision balances and delays in the delivery of the capital works program. • Plant recharge revenue is $108.0k above budget

Other Revenue $2.9 million (90.4%) of due to internal plant being utilised for the delivery the $3.2 million of disaster funded capital projects. annual budget has • been earned Recoupment of Utility charges on commercial properties $22.6k above budget (143.9% or $73.6k of $51.1k annual budget earned. • Operating Grants and subsidies are in line with

Operating $5.0 million (70.7%) of budget expectations at this stage of the year.

Grants, the $7.1 million •

Subsidies annual budget has $1.4 million of the FY 2025 financial assistance been received grant allocation was received in July 2024. This is a change from the previous approach of prepaying part or all of 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

Unitywater On track there is limited budget variance risk

Distributions

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

Operating Expenditure (YTD Benchmark 75.0%) Actual operating expenditure is currently 72.3% ($102.1 million) of the full year budget ($141.1 million). Detailed commentary for each expenditure category is provided below.

Category

Summary

Comments • Expenditure for permanent staff salaries

Employee Costs $38.9 million (73.3%) of the and wages underspent ($1.8 million) due to annual budget of $53.1 position vacancies and the recoupment of million has been expended YTD vacancy dividend. This underspend is offset by additional spend on casual staff and external labour hire ($1.3 million). • The renegotiation of the Council's certified agreement is still ongoing, accordingly the forecast salary increases commencing March 2025 have not yet taken effect. This is also contributing to the YTD underspend in employee costs. Once the agreement is finalised and backpay is approved, these savings will be used to cover these costs. • Training costs are ahead of forecast at this point in the year (85.0% or $328.1k of $291.3k annual budget spent) • Civil Operations $855.9k above YTD budget

Materials and $44.9 million (71.4%) of the (83.6% or $7.9 million of $9.5 million annual

Services $62.8 million annual budget budget spent) has been expended. • Holiday Parks $136.7k above YTD budget (78.7% or $2.0 million of $2.6 million annual budget spent) offset by additional revenue • Streetlighting $135.9k above YTD budget (84.8% or $951.2k of $1.1 million annual budget spent) • Disaster Management $103.1k above YTD budget (206.6% or $127.9k of $61.9k annual budget spent) This includes costs relating to the local disaster coordination centre established for Tropical Cyclone Alfred. • Fleet $65.0k above YTD budget (79.7% or $1.3 million of $1.6 million annual budget spent) • Waste Management $125.7k below YTD budget (71.7% or $10.6 million of $14.8 million annual budget spent) • Transport & Traffic planning $93.9k below YTD budget (58.1% or $203.3k of $349.6k annual budget spent) • Development Assessment $111.1k below budget (74.9% or $983.9k of a $1.3 million annual budget spent) • Arts & Culture $107.3k below budget (61.8% or $1.6 million of $2.6 million annual budget spent) • Sports & Active lifestyles $90.4k below budget (67.7% or $1.1 million of a $1.6 million annual budget spent) • Properties $83.4k below budget (69.9% or $1.9 million of $2.8 million annual budget spent) • Buildings and Facilities $69.7k below budget (64.5% or $796.6k of a $1.2 million annual budget spent)

Category

Summary

Comments • Whilst existing loan borrowings are set with

Finance Costs Currently on track fixed 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 March 2025 is outlined below:

Expenditure

YTD Budget

YTD Actual

Variance

$’000 $’000

$’000 - Tourism Noosa Funding Agreement $2,520.0 $2,520.0 $24.8 Economic Development $825.4 $800.6

Total

$3,345.4

$3,320.6

$24.8 All instalments payable under the Tourism Noosa agreement for the 2024-25 financial year have been made. The Tourism Noosa agreement is due for renewal in June 2025. • Employee Costs are $27.4k below budget (70.6% or $462.4k of $654.6k annual budget spent) • Materials & Services are in line with budget at this stage of the year.

Legal Cost Summary An update on legal costs and associated expenditure is provided on a quarterly basis. Legal and associated costs are $90.5k over budget YTD (91.1% or $1.2 million of $1.3 million annual budget spent). Legal and associated expenditure is dependent on the type and specialist nature of appeals being undertaken and costs and timing may fluctuate as a result. Year to date expenditure as at 31 March 2025 is outlined below:

Figure 4: Legal Costs (including legal consultancy) over time

Figure 5: Legal Cost by Department – 5 year trend

Consultancy Expenditure Summary An update on consultancy expenditure is provided on a quarterly basis. Consultancy costs are $330.1k over budget YTD (70.8% or $1.5 million of $2.1 million annual budget spent). Consultancy expenditure varies across Council and is generally of a specialist nature to supplement or complement existing resources or is required in order to undertake specific project works, as a result expenditure may fluctuate at different times.

Figure 6: Consultancy Expenditure over time

Figure 7: Consultancy Expenditure by Department – 5 year trend Note: the above amounts relate to operational projects only and do not reflect consultancy expenditure incurred in respect to capital projects.

Capital Revenue Year to date Capital revenue of $52.1 million received comprises cash contributions from developers ($1.0m) and capital grants ($49.3 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 8: Capital Revenue by Type

Capital Program Actual capital expenditure (excluding commitments and disaster projects) is $20.0 million (YTD budget $33.7 million). Expenditure on disaster projects (excluding commitments) is $41.8 million (YTD budget $76.8 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 9: Capital Program Delivery Performance

Cash Management and Investment Performance Total cash on hand at the end of March was $120.9 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 March 2025 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 10: 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 11: 12 Month Trend of Cash Invested by Agency

Quarterly Supplementary Information - Cash Components An update detailing the composition of Council’s cash reserves is provided quarterly. Council’s cash balance comprises a number of components – restricted cash (reserves), committed cash, financial sustainability requirements and unrestricted cash. These are outlined below.

Restricted Cash - In accordance with Council’s Management of Restricted Cash Policy, funds are set aside and restricted for a specific purpose. This can be either to meet regulatory requirements, allocate against specific future projects and activities, and to ensure sufficient working capital to meet current and long term financial obligations.

Committed Cash - A portion of cash reserves are committed to undertake current year capital works. At the start of the financial year, this commitment will be increased for any unfinished capital works from previous year which are carried over as part of the budget review process to ensure the projects can be completed.

Sustainability Requirement – Cash expense cover is a key statutory indicator to measure liquidity, ensure going concern and is a key measure considered in Council achieving its current credit rating (Sound with a Neutral Outlook) to ensure borrowing capacity. Cash expense cover calculates how long Council can continue to pay its day-to-day expenses without needing to seek borrowings or other external funding. A target minimum of three month’s cash cover is to be held in any given financial year to minimise financial risk.

Unrestricted Cash – These are funds where there is no regulatory, policy or budgetary commitment to retain funds for specific purposes. These funds can be separated into the following:

  • Working Capital – The cycle of revenue received twice yearly through rates that is held in the bank and spent over the following six months on operations and capital.
  • Long Term Surplus – Uncommitted cash set aside to fund the 10-year capital works program. Overall, Council’s $12.09 million total cash balance compromises:
  • $46.4 million (38.4%) in restricted cash. This has increased due to the receipt of levy funds from the second rates issue in January with funds to be utilised for levy programs through to 30 June 2025. Grant funds have also increased but will be utilised as programs are delivered.
  • $15.3 million (12.7%) committed for the delivery of capital works projects.
  • $29.0 million (24.0%) to meet sustainability requirements, equivalent to 3 months cash cover.
  • $23.3 million (19.2%) in working capital to pay for operations through to the end of the financial year.
  • $6.9 million (5.7%) in unrestricted free cash, which is the cash available to fund emergent or new capital works projects. There is no funding to replenish this unless Council generates a surplus operating position.

Figure 12: Allocation of Cash Balances

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

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

Target: Greater than 0% •

Result: 22.0% •

Comment: With the second rates cycle occurring in January, this ratio will slowly decline as expenditure on operations occurs through to the end of the financial year at 30 June 2025.

Category

Comments •

Intent: Indicates how long

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

Target: > 3 months •

Result: 12.7 months •

Comment: Council is forecast to remain above target for the financial year. Business as usual expenditure through to 30 June 2025 will continue to diminish Council’s cash holdings, albeit not below the target range of 3 – 6 months. Cash balances are at the peak of the cycle with the second rates issue occurring in January 2025. Cash reserves also include working capital requirements and 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

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

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

Result: 58.2% 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 below forecast for the remainder of the year this may impact the achievement of Council’s asset sustainability and renewal targets

Category

Comments •

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: -39.5% •

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

Investment Return return on investment yield for cash at bank. •

Target: 0.25% above current Bloomberg commonwealth 10- year bond rate yield (4.46%) •

Result: 5.23% •

Comment: 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

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

Target: 5% industry benchmark •

Result: 8.1% •

Comment: Rates arrears continue to decline from the high point in the cycle with payments coming due in February. This ratio will continue to decline from the high point in the cycle as payments are received. Recovery action may be considered where appropriate.

Report details

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