The operating result year-to-date is higher than was anticipated when the annual budget was set, and the balance sheet position and the cash position are sound.
At the end of March 2019, the financial performance against budget from ordinary activities showed a positive variance of $6.66 million. This is due to higher than anticipated income of $4.69 million including: better than anticipated income received for statutory fees and fines $3.13 million, government grants $1.16 million and interest received $388,000. Operating expenditure is favourable by $1.0 million including: employee costs $1.45 million, maintenance $886,000 and materials and consumables $636,000, and reduced by unfavourable doubtful debt expense of $2.09 million as a result of the increased fee income.
The forecast result expected for the financial year is a surplus of $24.03 million compared with the original adopted 2018–19 Annual Budget of $18.66 million.
The Council’s current asset ratio, a measurement of our financial strength, increased to 1.49. This means for every $1 of current liability, the Council had $1.49 in current assets to meet those commitments. The Council remains financially well positioned and the 2018–19 surplus provides further financial flexibility to meet the city’s future infrastructure funding needs.
The table below details Council’s forecast performance based on the Victorian Auditor-General Financial Sustainability Risk Indicators.
|Financial sustainability risk indicators||Objectives||2017-2018 actuals based on VAGO Parliamentary report||2018-2019 Annual budget as at 30 June 2019||2018-2019 Annual forecast as at 30 June 2019||2018-2019 Risk based on Annual Forecast as of 30 June 2019||Comment|
|Net Result||To generate surpluses consistently greater than 0%.||17.05%||10.23%||12.78%||Low||Council is generating positive surpluses.|
|Underlying Result (%)||Ability to generate surplus in the ordinary course of business, excluding non-recurrent capital grants and non-monetary asset contributions to fund capital expenditure from net result. Low risk indicator to be more than 5%.||13.88%||9.52%||12.75%||Low||Council is generating positive surpluses to fund operations.|
|Liquidity||To measure Council's ability to repay short-term liabilities as they fall due. Low risk - indicator is to be greater than 1.0.||1.42||1.23||1.49||Low||Council's forecast to 30 June 2019 indicates a Liquidity Ratio of greater than 1.0.|
|Indebtedness||Lower than 40% relates to the ability to repay debt from own-source revenue.||13.06%||10.06%||10.02%||Low||Council is operating at a ratio of lower than 40%, therefore has the ability to repay debt from own-source revenue.|
|Internal Financing||Generating enough cash from operations to fund new assets. Low risk indicator is to be greater than 100%.||152.55%||112.45%||100.42%||Low||Council is generating enough cash from operations to fund new assets.|
|Capital Replacement||To ascertain the level of risk of insufficient spending on asset renewal. Low risk indicator is to be more than 1.5.||1.49||1.87||2.14||Low||Council operates at a low level of risk with respect to capital replacement.|
|Renewal Gap||To ensure there is sufficient spending on Council's asset base. Low risk indicator is to be greater than 1.0.||1.21||1.48||1.48||Low||Council spends sufficient funds on its asset base.|