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FINANCIAL PERFORMANCE REPORT – MAY 2025

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

Executive summary

Year-to-date (YTD) performance against current budget as at 31 May 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 $134.9 $137.1 $2.2 1.6% Above Budget Operating Expense $123.7 $122.7 $1.0 0.8% On Track Operating Position $11.2 $14.5 $3.3 Capital Revenue $47.8 $59.9 $12.1 25.3% On Track Capital Expenditure* $118.7 $70.5 $48.1 40.6% Behind Budget

  • Reflects constructed assets and intangibles only (excludes contributed assets). The $3.3 million full year positive interim operating variance comprises $2.4 million general operating surplus from activities that are funded through Council’s general rate, regulatory fees and sales of goods and services; as well as an additional $0.6 million from commercial operations with Waste operations contributing $0.5 million and a further $0.1 million from Holiday Parks. A further $0.3 million is contributed 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. Budget Variance Actual YTD Item

YTD

YTD

$m $m $m General business operating position (unconstrained funds) $5.0 $7.4 $2.4 Commercial operations (constrained funds) * $4.8 $5.4 $0.6 Unspent levies (constrained funds) $1.3 $1.6 $0.3 Total Council Operating Position $11.2 $14.5 $3.3

  • 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 is 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 25.0 25.1 0.2 3.9 4.3 0.4 Expenditure 20.8 20.5 0.4 3.2 3.5 -0.3 Net Operating Position 4.1 4.6 0.5 0.7 0.8 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 of May 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% 10.5% Net Financial Liabilities Ratio On Track <60% -7.0% -37.7% Cash Cover Ratio On Track 3 months 9.5 months 11.5 months Asset Sustainability Ratio Behind Budget > 90% 116.6% 70.2%

Recommendation

That Council note the report by the Financial Services Manager to the General Committee Meeting dated 16 June 2025 outlining the May 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 91.7%) Council has received 97.1% ($137.1 million) of its operating revenue budget ($141.3 million). Commentary on each revenue category is provided below.

Category

Summary

Comments • Waste utility charges $78.5k above YTD

Rates and Levies $94.1 million (99.8%) budget (100.1% or $17.1 million of $17.0 of the annual budget of million annual budget earned) $94.3 million has been • earned General rate (net of discounts) $232.0k below YTD budget (99.6% or $70.9 million of $71.2 million annual budget earned) • Waste $57.3k above YTD budget (174.2% or

Fees and Charges $9.1 million (82.5%) of $99.2k of $56.9k annual budget earned) the annual budget of • $10.9 million has been Cemeteries $53.4k above

YTD

budget earned (106.9% or $373.9k of $349.8k annual budget earned) • Development Assessment $696.4k below YTD budget (73.7% or $2.6 million of $3.6 million annual budget earned) • Local Laws $231.6k below YTD budget (77.1% or $1.7 million of $2.1 million annual budget earned) • Building & Plumbing Compliance $184.1k below YTD budget (84.5% or $2.2 million of $2.6 million annual budget earned) • Holiday Park revenue $365.0k above YTD

Sale of Goods and $15.1 million (95.2%) budget (98.5% or $4.2 million of $4.3 million

Services of the annual budget of annual budget earned), however any revenue $15.9 million has been upside will be generally offset by a earned corresponding increase in associated operating costs • Sports facilities revenue $244.8k above YTD budget (103.9% or $3.1 million of $2.9 million annual budget earned) • Arts & Culture facilities revenue $54.5k above YTD budget (95.8% or $571.2k of $596.1k annual budget earned) • Waste revenue $138.1k below YTD budget (89.9% or $6.9 million of $7.7million annual budget earned)

Category

Summary

Comments • Interest revenues have continued to track

Interest Received $6.1 million (164.8%) above budget with investment in higher of the $3.7 million yielding term deposits maximising the return annual budget has on surplus cash holdings. Cash holdings been earned remain high due to the advanced payment of grants & subsidies, restricted levy balances, future provision balances and delays in the delivery of the capital works program. • Plant recharge revenue is $116.4k above

Other Revenue $3.1 million (96.2%) of budget due to internal plant being utilised for the $3.2 million annual the delivery of disaster funded capital projects. budget has been • earned Ferry Service revenue $257.3k below YTD budget (69.5% or $757.9k of $1.1 million annual budget earned) • $74.9k partnership revenue for Cascading Climate risk project • $67.8k proceeds from Insurance claim for damage to Council property • Operating Grants and subsidies tracking

Operating Grants, $5.5 million (76.9%) of above budget expectations at this stage of the

Subsidies the $7.1 million annual year budget has been • received $1.4 million of the FY 2025 financial assistance grant allocation was received in July

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 91.7%) Actual operating expenditure is currently 86.9% ($122.7 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 $47.0 million (88.5%) of the and wages underspent ($2.8 million) due annual budget of $53.1 to position vacancies and the recoupment million has been expended of

YTD

vacancy dividend. This underspend is offset by additional spend on casual staff and external labour hire ($1.5 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 at $402.0k YTD or 104.1% of the annual budget spent ($386.1k) • Civil Operations $725.7k above YTD

Materials and $53.3 million (84.9%) of the budget (97.9% or $9.3 million of $9.5

Services $62.8 million annual budget million annual budget spent) has been expended. • Holiday Parks $263.3k above YTD budget (95.8% or $2.5 million of $2.6 million annual budget spent) however this is offset by additional revenue • Streetlighting $185.3k above YTD budget (105.9% or $1.2 million of $1.1 million annual budget spent) • Disaster Management $119.8k above YTD budget (234.7% or $145.3k of $61.9k annual budget spent) This includes costs relating to local disaster coordination

Category

Summary

Comments centre established for Tropical Cyclone Alfred. • ICT $98.9k above YTD budget (91.2% or $4.8 million of $5.3 million annual budget spent) • Waste Management $292.4k below YTD budget (86.9% or $12.9 million of $14.8 million annual budget spent) • Properties $146.2k below budget (84.5% or $2.4 million of $2.8 million annual budget spent) • Development Assessment $115.8k below budget (86.7% or $1.1 million of a $1.3 million annual budget spent) • Arts & Culture $113.1k below budget (76.4% or $2.0 million of $2.6 million annual budget spent) • Sports & Active lifestyles $61.1k below budget (85.7% or $1.4 million of a $1.7 million annual budget spent) • Buildings and Facilities $60.3k below budget (80.1% or $989.0k of a $1.2 million annual budget spent) • Whilst existing loan borrowings are set

Finance Costs Currently on track with 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 as of 31 May 2025 is outlined below:

Expenditure

YTD Budget

YTD Actual

Variance

$’000 $’000

$’000 Tourism Noosa Funding Agreement $2,520.0 $2,520.0 - Economic Development $1,032.5 $1,002.2 $30.3

Total

$3,552.5

$3,522.2

$30.3 All instalments payable under the Tourism Noosa agreement for the 2024-25 financial year have been made. In May 2025, Council resolved to extend the Tourism Noosa agreement for a further

month period. • Employee Costs $34.0k below YTD budget (86.2% or $564.0k of $654.6k annual budget spent) • Materials & Services are in line with budget YTD (93.5% or $2.7m of $3.0m annual budget spent)

Capital Revenue Year to date Capital revenue of $59.9 million received comprises cash contributions from developers ($1.3 million) and capital grants ($56.8 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 $24.0 million (YTD budget $40.7 million). Expenditure on disaster projects (excluding commitments) is $46.5 million (YTD budget $78.0 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 May was $111.6 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 May 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 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 $25.5 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

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

Target: Greater than 0% •

Result: 10.5% •

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: 11.5 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 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

Asset Sustainability Ratio to 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: 70.2% achieved, however below forecast result due to project delays and scheduling. •

Comment: The ratio will progressively increase 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. Ongoing delays in the delivery of the capital works program may impact the achievement of Council’s asset sustainability and renewal targets

Category

Comments •

Intent: Outlines the level

Net Financial Liabilities Ratio that net 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: (37.7%) •

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 (4.42%) •

Result: 4.57% •

Comment: Council has invested surplus cash in higher yielding term deposits to maximise returns. However with recent interest rate cuts, yields on surplus cash are likely to fall. Council’s investment returns remain on target. •

Intent: Ensuring that the

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

Target: 5.0% industry benchmark •

Result: 5.6% •

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

Report details

Deferred from: Deferred from General Committee Meeting dated 16 June 2025 Item 8.13

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