Ordinary Meeting of Council 05 March 2014 Page 1 5.5 FINANCIAL MANAGEMENT REPORT - JANUARY 2014 Ward: (All Wards) (Financial Services and Rates) Disclosure of Interest: Nil Authorised Officer: (Executive Manager Corporate) KEY ISSUES This report provides Council with the suite of financial management reports in order for Council to monitor the financial performance and position of the City. A summary page has been developed that includes high level financial information, commentary and graphical representation from the various statements and schedules included in the report. Statements included are Financial Activity, Rate Setting, Cash Flow, Comprehensive Income, Financial Position, Changes in Equity, Capital Jobs, Cash and Investments and Net Current Funding. A Debtors Schedule has been included that lists the top 10 non-rate debtors (in value). For privacy purposes the names of the debtors are not included, however the report provides insight into the management of the aged debtors. It is recommended that Council resolve to note the monthly financial management reports for the period ended January 2014. BACKGROUND Section 6.4 of the Local Government Act 1995 requires an annual financial report to be prepared as well as such other financial reports as prescribed. Regulation 34(1) of the Local Government (Financial Management) Regulations 1996 (the Regulations) requires a local government to prepare each month a statement of financial activity reporting on the income and expenditure, as set out in the annual budget. The statement of financial activity is to be supported by such information as is considered relevant by the local government. A statement of financial activity and any accompanying documents are to be presented at the next ordinary council meeting following the end of the month to which the statement relates, or to the next ordinary council meeting after that meeting. In addition under regulation 34(5) of the Regulations each financial year, local government is to adopt a percentage or value, calculated in accordance with AASB 1031 to be used in the statement of financial activity for reporting material variances. The City of Swan Financial Management Reports use a materiality threshold to measure, monitor and report on financial performance and position of the City. The materiality threshold adopted by Council, together with the Annual Budget for 2013/2014 is
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Ordinary Meeting of Council
05 March 2014
Page 1
5.5 FINANCIAL MANAGEMENT REPORT - JANUARY 2014
Ward: (All Wards) (Financial Services and Rates)
Disclosure of Interest: Nil
Authorised Officer: (Executive Manager Corporate)
KEY ISSUES
This report provides Council with the suite of financial management reports in
order for Council to monitor the financial performance and position of the City.
A summary page has been developed that includes high level financial
information, commentary and graphical representation from the various
statements and schedules included in the report.
Statements included are Financial Activity, Rate Setting, Cash Flow,
Comprehensive Income, Financial Position, Changes in Equity, Capital Jobs,
Cash and Investments and Net Current Funding.
A Debtors Schedule has been included that lists the top 10 non-rate debtors (in
value). For privacy purposes the names of the debtors are not included,
however the report provides insight into the management of the aged debtors.
It is recommended that Council resolve to note the monthly financial management
reports for the period ended January 2014.
BACKGROUND
Section 6.4 of the Local Government Act 1995 requires an annual financial report to be
prepared as well as such other financial reports as prescribed.
Regulation 34(1) of the Local Government (Financial Management) Regulations 1996
(the Regulations) requires a local government to prepare each month a statement of
financial activity reporting on the income and expenditure, as set out in the annual
budget. The statement of financial activity is to be supported by such information as is
considered relevant by the local government.
A statement of financial activity and any accompanying documents are to be presented
at the next ordinary council meeting following the end of the month to which the
statement relates, or to the next ordinary council meeting after that meeting.
In addition under regulation 34(5) of the Regulations each financial year, local
government is to adopt a percentage or value, calculated in accordance with AASB 1031
to be used in the statement of financial activity for reporting material variances.
The City of Swan Financial Management Reports use a materiality threshold to measure,
monitor and report on financial performance and position of the City. The materiality
threshold adopted by Council, together with the Annual Budget for 2013/2014 is
Ordinary Meeting of Council
05 March 2014
Page 2
variances greater or lower than 10% of the original adopted budget and greater than
$10,000 in value.
DETAILS
The financial management report for the period ended January 2014 is included as an
attachment to this report.
As the information contained in the Statement of Financial Activity is repeated in the
Statements of Comprehensive Income and Financial Position, the analysis of the
information is included below.
1. Statement of Comprehensive Income
The actual revenue from ordinary activities for the year to date is $123.8m; this is less
than budget by $266k year to date.
Expenditure from ordinary activities for the year to date is $70.5m; this is less than
budget by $2.9m year to date.
The net result is currently $72.7m actual profit in comparison to $75.8m budget.
2. Statement of Financial Position
Current Assets of $152m for January 2014 are significantly higher than at year end
2012/13 which can be attributed to the rates being raised.
Current Liabilities are $22.8m year to date compared to $25.4m at year end 2012/13.
The main contributors are the decrease in Short Term Borrowings and Provisions.
3. Statement of Cash Flows
The report shows Cash and Cash Equivalents at the end of January 2014 with a balance
of $127m. Cash and Cash Equivalents at the end of January 2013 reflected a balance of
$89m.
CONSULTATION
Not applicable
ATTACHMENTS
Financial Report for the period ending January 2014.
Ordinary Meeting of Council
05 March 2014
Page 3
STRATEGIC IMPLICATIONS
Consistent with the City's Strategic Community Plan 2012-2022 Key Result Area -
Governance
Objectives: G1.1 - Provide accountable and transparent leadership, and G2.1 - Improve
capability and capacity.
Monitoring performance by comparison of budget and actual is an essential management
tool to ensure financial performance within acceptable pre determined limits.
STATUTORY IMPLICATIONS
Section 6.4 of the Local Government Act 1995 and regulation 34(1) of the Local
Government (Financial Management) Regulations 1996
FINANCIAL IMPLICATIONS
Compares financial activity with budget as detailed in this report.
VOTING REQUIREMENTS
Simple majority
RECOMMENDATION
That the Council resolve to:
1) Note the financial statements and report for the month ended 31 January 2014 in
accordance with regulation 34(1) of the Local Government (Financial
Management) Regulations 1996.
CARRIED
Financial Report
for the Period Ending
31 January 2014
Contents
1.0 Financial Summary 1.0
2.0 Statements of Comprehensive Income 2.1 - 2.2 (With Variance Analysis Commentary)
By Nature & Type 2.3 By Program 2.4
3.0 Statements of Financial Position & Equity 3.1 Statement of Financial Position 3.2 Statement of Changes in Equity 3.3 4.0 Capital Payment 4.1 Capital Works Schedules 4.2 - 4.6 5.0 Cash and Investments 5.1 Investment Report 5.2 - 5.3 6.0 Debtors Rates Debtors 6.1 Sundry Debtors 6.2 7.0 Statement of Financial Activity 7.1 - 7.2
(With Variance Analysis Commentary) Statement of Financial Activity 7.3 Net Current Funding Position 7.4
Liquidity Over Three Years 7.4
8.0 Other Statutory Reports 8.1 Statement of Cash Flow 8.2
Rate Setting Statement 8.3
1.0
City of Swan - Financial Management SummaryReport for the period ended 31st January 2014
2.0 Statement of Comprehensive Income (Performance)Year to 31st January 2014 Annual Annual
Budget Bgt Var$000's %
Revenue 123,857 124,123 0% 133,877 93%
Expenses (70,491) (73,392) -4% (125,767) 56%
Profit/Loss 53,366 50,731 5% 8,110 658%
Non-operating 19,389 25,136 -30% 71,631 27%
Net Result 72,755 75,867 -4% 79,741 91%
3.0 Statement of Financial Position2013 2013 2014June December January$000's $000's $000's
Current
Assets 86,641 150,774 152,167
Liabilities 25,424 21,264 22,846
Non Current
Assets 1,033,460 1,040,202 1,041,036
Liabilities 34,386 36,106 36,201
Net Assets 1,060,291 1,133,606 1,134,156
4.0 Capital PaymentsYear to 31st January 2014 Annual Annual
Act/Com Budget Var Budget Bgt Var$000's $000's % $000's %
At the end of January overall performance was 96% of ytd target. Revenue was on par with ytd budget. Fees and Charges and Interest Earnings were $1.9m above budget. Rates Revenue was $1.9m below budget due to timing of adjustments for rates in advance.
Operating expenses were 4% less than expected with Materials and Contracts ($972k), Utility Charges ($577k), and Depreciation ($761k) contributing 80% to the variance.
Non-Operating Expenses were 30% below budget. The main cause of the variance was Developers Contributions below ytd target by $6.3m.
The City's current investment holdings have good credit diversification, with 98% spread among the top three credit rating categories.
The Reserve Bank of Australia (RBA) kept the official rate at 2.5%.
98% of current holdings are considered to be sound with little risk of capital loss.
ANZ Climate Change Trust matured in January 2014 at full capital price of $1m.
Cash and Cash equivalents increased by $11.5m due to a decrease in Trade and Other Receivables and Capital Grants received as well as the sale of two City of Swan properties.
The proceeds of a new loan of $200k were received for the construction of the Aveley Community Centre.
Investments reduced by $1.4m mainly due to the reduction on the ANZ Climate portfolio.
Current ratio has marginally decreased as a result of the increase in Trades and Other Payables.
Overall Capital Expenditure was $31.7m. $23.6m was actual and $8.1m was committed costs.
Progress at Reid highway resulted in expenditure of $742k in January.
At the end of the month Buildings and Drainage were at 43% spend of their annual budget, while Parks was at 24%, and Plant and Equipment Other was at 74%.
In January Capital revenue recorded was: Gnangara Road $5.6m and Marangaroo Drive $44k. Swan Riverside Park received an additional $137k relating to prior years.
3.41
4.46 4.34
1.00 1.00 1.00
-
1.00
2.00
3.00
4.00
5.00
June 13 Dec-13 Jan-14
C.Assets C.Liabilities
0
200
400
600
800
1,000
Current > 30Days
> 60Days
> 90Days
$000
's
Trade Debtors
December January
AA+ to AA- 68%
A+ to A-
32% B
Range 0%
Total Trade Debtors increased by 6% due to a number of invoices being raised during the month. A large invoice has moved into the 30 days category causing an increase of 135%. The 83% increase in the 60 Day debtors was due to a large invoice that has moved from the 30 day category and remains unpaid.
Rates Debtors with Emergency Services Levy excluded, decreased by $7m. The large decrease was a result of instalment and interim notices that were due on the 6th of January 2014.
2.1
REVENUE FROM ORDINARY ACTIVITIES
Interest Earnings 24% Favourable Variance of $573,805
Other Revenue 37% Unfavourable Variance of $356,731
AASB 101.8 requires a financial report to include a "Statement of Comprehensive Income". The definition of "IncomeStatement" at Financial Management Regulation 3 is "income statement (or equivalent) that meets therequirements of Australian Accounting Standards for income statements". By virtue of the changes to terminology inAASB101, we now refer to the "income statement" as the "statement of comprehensive income" as that is the"equivalent" in the context of the Australian Accounting Standards.
The Statements of Comprehensive Income summarise the operating revenue and expenditure for a particular periodof a financial year. The principle aim of these financial statements are to report on the performance of the City inmeeting the approved budgets in both revenue and expenditure terms. An important aspect of The Statements ofComprehensive Income is the exclusion of capital and infrastructure project expenditure. There are two versionsthat are prepared with each presenting information in two distinct forms.
The first Statement of Comprehensive Income is by Nature & Type as prescribed by the Financial ManagementRegulations Schedule 1 Part 2 that ensures compliance with statutory requirements. The report categorisesrevenues and expenses into easy to understand types based on the nature of the individual revenue or expense. Forexample employee costs are made up of not only salaries and wages but also casual labour, labour hire, staffrecruitment, staff training etc.
The second Statement of Comprehensive Income is by Program. Since the withdrawal of AAS 27, AASB 1052.11(b)now governs the disclosure requirements relating to income and expenditure by program (function / activity). Thereport aims to give the reader information on what activity within the community revenue is generated from andwhere money is spent. For example the General Purpose Funding program is where most revenue is generated fromrates, the main source of local government funds. In regards to expenditure the program titled Recreation & Cultureoften has the greatest outlay. This program includes costs associated with operating Libraries, Leisure Centres,Street Lighting, maintaining Parks & Reserves and City owned Buildings.
Both reports calculate variances based on the Current Revised Budget. The actual figures for the year to date arecompared to the year to date current revised budget to present a monetary variance as well as a the variance shownas a percentage of the budget.
The following report on significant variances refers to those variances in the Statement of Comprehensive Income byNature and Type.
Report on Significant Variances of 10% of Current Revised Budget and greater than $10,000 in value
The City continues to attract higher than anticipated interest earnings due to higher than budgeted cash holdings. A budget adjustment is pending.
Recycling Revenue from the City of Wanneroo for November, December and January has not been received as anticipated. It is expected that actual will align with budget over time.
2.0 Statements of Comprehensive Income 2.0 Statements of Comprehensive Income
2.2
EXPENSES FROM ORDINARY ACTIVITIES
Utility Charges 19% Favourable Variance of $571,974
Insurance Expenses 14% Unfavourable Variance of $125,417
Other Expenses 16% Favourable Variance of $154,648
NON-ORDINARY ACTIVITIES
Developers Contribution: Cash24% Unfavourable Variance of $1,656,961
Developers Contribution: In Kind80% Unfavourable Variance of $4,633,235
Profit / Loss on Disposal of Assets 42% Favourable Variance of $570,685
Profit / Loss on Impairment of Investments 876% Favourable Variance of $235,134
Insurance Expenses reflect an unfavourable variance of 14% due to timing issues. This variance is expected to reduce as the year progresses.
This favourable variance is a mainly due to Elections spending only 5% of ytd budget of $101k and Members of Council only 29% of $102k ytd budget.
During the month $211k was received in Brabham. Determining the timing of Developers Contributions is complexand therefore variances are expected from time to time.
There were no In Kind Developers Contributions recognised in January. Developers Contributions are subject toseveral volatile factors. As such fluctuations of actual to budget are common.
The favourable variance is attributed to the sale of two City land assets.
In January an unbudgeted part payment of $200k was received from Lehman Brothers proceedings and was themain cause of this favourable variance. The proceeds will be allocated to the Strategic Land Reserve.
Electricity costs were $579k below budget and were the main cause of this favourable variance. Timing issuescontinue to be the main reason for the underspend.
24,748,100 24,748,100Non-Operating Gifted Assets from Developers: Other - - - - -
11,769,600 11,769,600 Developer Contribution Plans: Cash 6,865,600 5,208,639 (1,656,961) U (24%)10,727,860 10,677,860 Developer Contribution Plans: In Kind 5,801,560 1,168,325 (4,633,235) U (80%)
2,335,760 2,335,760 Profit / (Loss) on Disposal of Assets 1,362,527 1,933,211 570,685 F 42%
46,000 46,000Profit / (Loss) on Impairment of Investments 26,833 261,967 235,134 F 876%
5,000,000 5,000,000Unrealised Gain from Other Financial Assets: EMRC - - - -
77,604,180 79,741,070 Net Result 75,866,911 72,754,767 (3,112,144)
Financial Ratios 2011 2012 2013 Current Month
OPERATING SURPLUS RATIO 4.61% 11.02% 9.35%
DEBT SERVICE COVER RATIO 17.76 18.64 11.12
OWN SOURCE REVENUE COVERAGE RATIO 0.96 1.02 1.01
CITY OF SWANSTATEMENT OF COMPREHENSIVE INCOME BY NATURE OR TYPE
FOR THE PERIOD 1 JULY 2013 to 31 JANUARY 2014
The Debt Service Cover Ratio measures the ability to service debt. Also known as 'debt coverage ratio', this is the ratio of cash available for debt servicing to interest, principal and lease payments from the operations of the City. A ratio below 2.00 should be monitored carefully. A ratio above 5.00 is considered low risk. The higher the ratio, the better the City's financial capacity to meet the debt servicing commitments.
44.91%
21.44
1.69
The Operating Surplus Ratio highlights the extent of the operating surplus (deficit) relative to the revenues of the Council. This is an indicator of the extent to which revenue raised cover operational expenses and is available for capital funding purposes. The higher the ratio the more financial capacity to deal with asset renewal before reliance on external sources of revenue. A ratio above 15% is considered low risk - an indication that own source income is available to fund capital expenditure initiatives over and above depreciation. A ratio below 0% is considered high risk. The year to date ratios will vary considerably from year end results.
The Own Source Revenue Coverage Ratio measures the local government's ability to cover operating expenses from own source revenue. The higher the ratio, the more self reliant the City will be. This allows greater flexibility as less external funds are required for operational purposes. A ratio above 0.90 is considered low risk and less than 0.60 high risk.
2.4
OriginalBudget
2013/14
RevisedBudget
2013/14
YTD CURRENTREVISED BUDGET@ JANUARY 2014 YTD ACTUAL
@JANUARY 2014 $ VarianceVAR
NOTE
% VAR / CURRENT BUDGET
Revenues from Ordinary Activities99,112,650 99,112,650 General Purpose Funding 96,206,939 94,985,412 (1,221,527) - -
204,120 257,890 Governance 179,912 213,097 33,185 F 18%1,985,520 1,985,520 Law Order & Public Safety 1,757,931 1,851,080 93,149 - -
256,000 256,000 Health 149,333 122,921 (26,413) U (18%)4,095,790 4,145,440 Education & Welfare 3,033,603 3,218,467 184,863 - -
50,000 50,000 Housing 29,167 40,789 11,622 F 40%16,850,270 16,852,270 Community Amenities 15,930,082 16,563,097 633,015 - -
8,059,290 8,109,680 Net Operating Result 50,731,490 53,365,864 2,634,374 - -
Non-Operating Grants, Subsidies & Contributions
22,497,460 22,447,460 Governance 12,667,160 6,376,964 (6,290,196) U (50%)410,660 410,660 Education & Welfare 239,552 206,504 (33,048) U (14%)
9,970,030 10,095,530 Recreation & Culture 2,884,684 1,232,250 (1,652,434) U (57%)29,284,980 31,295,980 Transport 7,954,667 9,378,005 1,423,339 F 18%62,163,130 64,249,630 23,746,062 17,193,723 (6,552,339)
Profit/(Loss) on Disposal of Assets1,849,840 1,849,840 Recreation & Culture 1,079,073 1,753,632 674,559 F 63%
- - Governance - 8,942 8,942 - -485,920 485,920 Transport 283,453 170,637 (112,816) U (40%)
2,335,760 2,335,760 1,362,527 1,933,211 570,685Profit/(Loss) on Impairment of Investments
46,000 46,000 General Purpose Funding 26,833 261,967 235,134 F 876%Unrealised Gain from Other Financial Assets: EMRC
5,000,000 5,000,000 General Purpose Funding - - - - -
77,604,180 79,741,070 Net Result 75,866,911 72,754,767 (3,112,145) - -
CITY OF SWANSTATEMENT OF COMPREHENSIVE INCOME BY PROGRAM
FOR THE PERIOD 1 JULY 2013 to 31 JANUARY 2014
3.1
Description
2. Statement of Change in Equity
Financial Ratios 2011 2012 2013 Current MonthCURRENT RATIO 0.67 0.73 1.19 4.34
QUICK RATIO 0.57 0.72 1.18 4.34
UNTIED CASH TO TOTAL CREDITORS 0.09 2.53 3.96 13.84
1. Statement of Financial Position
AASB 101 requires all Councils to prepare a Statement of Financial Position, which discloses the assets, liabilities and equity ofthe Council as at the reporting date. The ratepayer equity in the Council can be calculated by deducting total liabilities fromtotal assets.
The purpose of the Statement of Financial Position is to provide a "snap - shot" of the overall financial position of the Council asat a particular date. An entity shall present current and non-current assets, and current and non-current liabilities, as separateclassifications on the face of its balance sheet and on the basis of liquidity. Subject to special requirements for revaluation ofvarious classes of assets, accepted accounting practice includes well defined accounting principles. This convention dictates thatan asset represents the value of an investment acquired to provide future economic benefit to an entity. The future economicbenefits may be in the form of cash or cash equivalents or in the case of not-for-profit (including public sector) entities, theeconomic benefits are derived from meeting the entities objectives of providing goods and services.
Councils are required by AASB 101 to prepare a Statement of Changes in Equity and include it in the Financial Statements. TheStatement of Changes in Equity reconciles the opening and closing balances of each class of the local government's equity overthe reporting period. It provides a summary of causes of the changes in equity and identifies specifically the changes incomposition of the local government's equity.
A Quick Ratio measures the short - term debt paying ability and the liquid position of the City of the Swan and the ability to pay its immediate debts with restricted assets and inventories removed from the calculation. The ratio should be greater than 1.00 (100%).
This ratio assesses the City's ability to meet immediate commitments from readily available cash. Trade creditors include orders for goods and services that have been received but not paid and any amount owing for GST. The higher the ratio the better placed Council is to pay its Creditors. This ratio is always at its lowest point at 30 June due to much of the cash reserves of the City having been expended by this time. This ratio has improved over the last couple of years with an improvement in net funds available at the end of the year.
A Current Ratio shows short - term paying ability with restricted assets removed from the current assets. It relates to the immediate financial sustainability of Council. A ratio greater than 1.00 (100%) indicates Council has more current assets than current liabilities. If less than 1.00 (100%), current liabilities are greater than current assets and there may be a short term funding issue.
3.0 Statement of Financial Position & Equity
3.2
ACTUAL @31 JANUARY 2014
ACTUAL @30 JUNE 2013
Current AssetsCash and cash equivalents 127,179,037 77,739,200Investments 361,269 1,791,679Trade and other receivables 24,052,837 6,696,696Other Assets 499,951 273,451Inventories 74,005 139,428
Total: Current Assets 152,167,098 86,640,454
Non Current AssetsTrade and other receivables 2,163,576 2,228,421Property, plant and equipment 1,006,157,662 998,516,796Other Financial Assets 32,715,166 32,715,166
Total: Non Current Assets 1,041,036,404 1,033,460,383
Total Assets 1,193,203,501 1,120,100,837
Current LiabilitiesShort term borrowings 1,391,115 3,795,791Trade and other payables 12,098,459 12,531,933Income in advance 1,233,722 -Provisions 8,122,733 9,096,450
Total: Current Liabilities 22,846,030 25,424,174
Non Current LiabilitiesLong term borrowings 26,980,961 26,784,943Trade and other payables 7,199,831 6,230,432Provisions 2,019,880 1,370,306
Total: Non Current Liabilities 36,200,673 34,385,680
► During the month Ferguson St Midland expended $107k, resulting in completion of the drainage installation.
► Overall Capital Expenditure at the end January was $31.7m. $23.6m was actual and $8.1 committed costs.
► Charlottes Vineyard Pavilion spent $390k during the month resulting in a 92% spend of annual budget. Practical completion of works was achieved during the month and post completion remedial works have begun.
► The following projects will be re-budgeted to 2014/15 financial year as part of the budget review process: Swan Youth Service $1.6m, Ellenbrook DOS North building $1.1m, Gnangara Road $2m, Midland Oval Realign Drainage $340k and the Avenue $610k.
► In January Capital revenue recorded was: Marangaroo Drive $44k and Gnangara Road $5.6m. Swan Regional Riverside Park received an additional $137k relating to prior years.
► Progress to remove the island continues at the Reid Highway Intersection. $742k was expended during the period bringing total spend to date to $3.1m.
1,164,640 752,917 65 696,012 56,904 1623 Purchase of Assets Computer
1,789,720 1,822,311 102 1,675,469 146,842 1628 Purchase of Assets Vehicle
1634 Purchase of Asset Other Rd Inf
(1,815)(1,815)1638 Purchase of Assets Parks & Res
(2,400)(2,400)1648 Purchase of Assets Other Infr
1692 Purchase of Other Assets
C A P I T A L A S S E T S T O T A L 13,410,610 10,303,277 77 7,476,508 2,826,770
G R A N D T O T A L 15,923,410 74,817,180 23,632,150 8,100,385 31,732,536 10,036,399 42 63
5.1
4.0 DInvestmentsSummary
Note: All figures have been updated to include Cash and Investments within the above graph.
The City's Investment advisors Prudential Investment Services Corp, have completed the bi-annual Investment Strategy and Portfolio Review. They advise that, "Councils investment portfolio continues to be managed prudently while taking advantage of market opportunities as they arise. Performance has been soundly above benchmark while maintaining a portfolio predominately comprised of deposits and securities issued by Australia's highest rated financial institutions."
5.0 Cash and Investments
0
10
20
30
40
50
60
1 2 3 4 5 6 7 8 9 10 11 12
Mill
ions
$
Total Investment Position showing Prior Year Comparisons
2009
2010
2011
2012
0
20
40
60
80
100
120
140
July Aug Sep Oct Nov Dec Jan Feb March April May June
Mill
ions
$
Total Cash and Investment Position showing Prior Year Comparisons
July Aug Sep Oct Nov Dec Jan Feb March April May June
Cash and Investment Mix (by Type)
24 Hour Call Cash Management Floating Rate Term Deposits Cash
5.0 Cash and Investments
City of Swan Economic and Investment Portfolio Commentary
January 2014 Global issues:
� In the US, the Federal Reserve shaved another $10bln per month off of its Quantitative Easing cash infusion program. Monthly purchases of mortgage backed securities and treasuries by the central bank is now $65bln/mo, down from the original $85bln/mo level. The market took comfort in the Fed’s assurances that official interest rates would remain nearly zero for the foreseeable future.
� Conflict and economic weakness in emerging markets, particularly the Ukraine, Argentina and Turkey, helped trigger a drop in share markets around the world (including -3% in Australia) as the threat of a currency crisis, and drop in commodity demand, amongst these countries grows.
� SE Asian countries and Japan all recorded good economic data over the month, helping keep concerns in check over slowing Chinese growth.
Domestic issues:
� In Australia, economic data was again mixed with retail sales surprising on the upside, double its expected monthly growth, but employment data showing a drop of >30,000 jobs in December. Then the release of much higher than expected inflation data for the Dec Qtr had economists re-evaluating the possibility of the interest rate hikes in 2014.
� Summing up the recent releases, the RBA stated that it “expects [domestic] growth to remain below trend for a time yet and unemployment to rise further before it peaks. Beyond the short term, growth is expected to strengthen, helped by continued low interest rates and the lower exchange rate.”
Interest rates
� The RBA kept the official cash rate unchanged, at 2.50%, following its first meeting for 2014. Market rates remain in the 2.60/2.65% area from 1 to 12 months, before increasing 2 years onward.
Investment Portfolio Commentary
Council’s investment portfolio posted a return in January of 4.17%pa versus the bank bill index benchmark return of 2.67%pa. For the financial year to date, Council’s investment portfolio has exceeded the bank bill index benchmark by 1.15%pa (3.84%pa vs 2.69%pa)
Council has a well-diversified portfolio with over 98% of the portfolio spread among the top three credit rating categories (A long term/A2 short term and higher). It is expected that Council can continue to achieve above benchmark returns with prudent investment selection for its short and long term holdings.
Investments with realised losses include:
Investment Purchase Price Realised value Crystallised Loss
Kalgoorlie 500,000 432,373 67,627
Bluegum 500,000 0 500,000
Deutsche Yield Curve 1,000,000 960,000 40,000
Scarborough 1,500,000 0 1,500,000
Parkes2A 500,000 0 500,000
Torquay 500,000 0 500,000
Flinders 250,000 215,000 35,000
Coolangatta 500,000 494,877 5,123
Merimbula 500,000 480,959 19,041
Esperance 500,000 348,658 151,342
Totals 6,250,000 2,931,867 3,318,133
Investments which matured without loss of capital include: Beech (500,000), Blaxland (500,000), Endeavour (500,000), Federation (500,000), Henley (150,000), and Lawson (500,000).
Alternative Investments 225,292
Face Value Last
Coupon
Borrower Rating Maturity Purchase
Price
Current Value Annualised
Monthly
Return
Reference
225,292 0.0000 Lehman Bros. Global Property Note D 7-Jul-15 300,000 0
225,292 0.0000 300,000 0
Credit Linked Notes 1,775,375 525,749
Face Value Current
Coupon
Borrower Rating Maturity Purchase
Price
Current Value Accrued
Interest
Reference
502,708 4.0183 Corsair (Cayman Islands) No 4 Ltd Series 6 CCC 20-Mar-14 550,000 25,135 664 Kakadu
22,667 4.5000 Helix Capital - OASIS A CC 4-Sep-14 1,000,000 113 78 Oasis A
1,000,000 4.3150 Aphex Pacific Capital Ltd Series 2006-5 CCC- 22-Dec-14 1,000,000 500,000 1,064 Glenelg
250,000 4.2433 MSM ACES SPC Series 2006 -7 Class 1A D 22-Jun-15 500,000 500 349 Parkes 1A
1,775,375 4.2233 3,050,000 525,749 2,155
Current Accounts 41670 34,458,092 #######
Face Value Current
Yield
Borrower Rating Maturity Current Value Reference
12,986,223 2.5000 Commonwealth Bank of Australia A-1+ 12,986,223 RBA
3,656,035 2.0000 Commonwealth Bank of Australia A-1+ 3,656,035 Cash at bank
3,165,793 2.0000 Commonwealth Bank of Australia A-1+ 3,165,793 Brabham
4,327,550 2.0000 Commonwealth Bank of Australia A-1+ 4,327,550 Caversham
10,322,490 2.0000 Commonwealth Bank of Australia A-1+ 10,322,490 Dayton
2,000,000 3.4500 Suncorp Bank A-1 03-Feb-14 2,000,000 2,016,731 16,825
2,000,000 3.7000 National Australia Bank Limited A-1+ 03-Feb-14 2,000,000 2,017,977 18,044
2,000,000 3.2400 St George Bank A-1+ 04-Feb-14 2,000,000 2,015,349 15,445
3,000,000 3.6000 Members Equity Bank A-2 05-Feb-14 3,000,000 3,025,454 25,447
2,000,000 3.0400 ANZ Banking Group A-1+ 10-Feb-14 2,000,000 2,008,925 8,995
2,000,000 3.4500 Bendigo and Adelaide Bank Limited A-2 12-Feb-14 2,000,000 2,015,137 14,934
4,000,000 3.7000 Suncorp Bank A-1 13-Feb-14 4,000,000 4,032,399 31,627
2,000,000 3.3300 Commonwealth Bank of Australia A-1+ 13-Feb-14 2,000,000 2,003,445 3,284
1,000,000 3.3300 Commonwealth Bank of Australia A-1+ 13-Feb-14 1,000,000 1,001,722 1,642 Dayton
1,000,000 3.3300 Commonwealth Bank of Australia A-1+ 13-Feb-14 1,000,000 1,001,722 1,642 Brabham
1,000,000 3.3300 Commonwealth Bank of Australia A-1+ 13-Feb-14 1,000,000 1,001,722 1,642 Caversham
1,000,000 3.4500 Bendigo and Adelaide Bank Limited A-2 17-Feb-14 1,000,000 1,007,272 7,089
1,000,000 3.3000 Commonwealth Bank of Australia A-1+ 17-Feb-14 1,000,000 1,001,476 1,356 Brabham
1,000,000 3.3000 Commonwealth Bank of Australia A-1+ 17-Feb-14 1,000,000 1,001,476 1,356 Dayton
1,000,000 3.3000 Commonwealth Bank of Australia A-1+ 17-Feb-14 1,000,000 1,001,476 1,356 Caversham
1,000,000 3.3000 Commonwealth Bank of Australia A-1+ 17-Feb-14 1,000,000 1,001,476 1,356 Dayton
2,000,000 3.4500 Bendigo and Adelaide Bank Limited A-2 19-Feb-14 2,000,000 2,014,042 13,611
2,000,000 3.6000 Suncorp Bank A-1 19-Feb-14 2,000,000 2,014,762 14,203
2,000,000 3.6600 National Australia Bank Limited A-1+ 19-Feb-14 2,000,000 2,015,057 14,439
2,000,000 3.6500 Suncorp Bank A-1 03-Mar-14 2,000,000 2,013,318 12,200
4,000,000 3.6300 National Australia Bank Limited A-1+ 04-Mar-14 4,000,000 4,026,519 24,266
3,000,000 3.7000 Members Equity Bank A-2 04-Mar-14 3,000,000 3,020,450 18,551
4,000,000 3.2500 St George Bank A-1+ 04-Mar-14 4,000,000 4,022,698 21,726
2,000,000 3.2600 St George Bank A-1+ 11-Mar-14 2,000,000 2,010,298 9,646
2,000,000 3.6600 National Australia Bank Limited A-1+ 12-Mar-14 2,000,000 2,012,350 10,830
2,000,000 3.6100 National Australia Bank Limited A-1+ 12-Mar-14 2,000,000 2,011,505 10,088
2,000,000 3.6200 National Australia Bank Limited A-1+ 19-Mar-14 2,000,000 2,010,452 8,728
2,000,000 3.2600 St George Bank A-1+ 19-Mar-14 2,000,000 2,008,683 7,860
3,000,000 3.0500 ANZ Banking Group A-1+ 25-Mar-14 3,000,000 3,002,572 2,005
3,000,000 3.3100 Commonwealth Bank of Australia A-1+ 25-Mar-14 3,000,000 3,003,849 2,176
3,000,000 3.6500 Members Equity Bank A-2 07-Apr-14 3,000,000 3,011,777 7,800
3,000,000 3.5000 Bendigo and Adelaide Bank Limited A-2 14-Apr-14 3,000,000 3,008,729 5,178
4,000,000 3.6500 National Australia Bank Limited A-1+ 14-Apr-14 4,000,000 4,013,010 7,200
2,000,000 3.5000 Suncorp Bank A-1 16-Apr-14 2,000,000 2,005,455 3,068
2,000,000 3.4000 Bendigo and Adelaide Bank Limited A-2 22-Apr-14 2,000,000 2,004,261 2,049
2,000,000 3.6500 Members Equity Bank A-2 22-Apr-14 2,000,000 2,005,500 2,200
2,000,000 3.4000 Suncorp Bank A-1 22-Apr-14 2,000,000 2,004,206 2,049
2,000,000 3.6000 National Australia Bank Limited A-1+ 23-Apr-14 2,000,000 2,005,235 2,170
4,000,000 3.2600 St George Bank A-1+ 24-Apr-14 4,000,000 4,006,394 3,215
91,000,000 3.4531 91,000,000 91,443,692 396,404
107,275,754 Investment Current Value 106,244,528
21,471,868 Cash Current Value 21,471,868
128,747,622 Total Current Value 127,716,396
Investment Face Value
Cash Face Value
Total Face Value Disclaimer: The statements and opinions contained in this report are based on currently prevailing conditions in financial markets and are so contained in good faith and in the belief that such statements and opinion are not false or misleading. In preparing this report, Prudential Investment Services Corp has relied upon information which it believes to be reliable and accurate. Prudential Investment Services Corp believes that this report and the opinions expressed in this report are accurate, but no warranty of accuracy or reliability is given. Prudential Investment Services Corp does not warrant that its investigation has revealed all of the matters which a more extensive examination might disclose. This report may not be reproduced, transmitted, or made available either in part or in whole to any third party without the prior written consent of Prudential Investment Services Corp. AFS Licence No. 430091.
6.1
5.0 Debtors
i) Rate Debtors ii) Sundry Debtors
i) Rate Debtors
Notes
TABLE 6.1 Rates Debtor Breakdown by Type
Type of DebtorTotal Levied $('000)Current & Arrears
GRAPH 6.2 Rates Debtor Position with Prior Year Comparisons
??? Prior year debtors
As at 31 January 2014
The City's Debtors can be divided into two types:
0
10
20
30
40
50
60
70
80
90
100
110
July Aug Sep Oct Nov Dec Jan Feb March April May June
$ M
illio
ns
2011
2012
2013
2014A high number of residential rates are paid in August as ratepayers take advantage of the early bird payment prize draw.
Current Position Rate Debtors in Arrears
outstanding $1.8m
Current Debtors outstanding $18.7m
Total Debtors $20.5m
6.0 Debtors
The second, third & fourth rate instalments are due in Oct, Jan & Mar respectively.
6.2
ii) Sundry Debtors
Notes
Table 6.3 shows a summary of the City's top 10 debtors 30 Days plus by dollar value divided by periods. Table 6.4 shows debt recovery comments for the top 10 debtors over 30 days. Graph 6.5 shows sundry debtors outstanding as a percentage based on payment period.
TABLE 6.3 Total Debtors including Top Ten 30 Days plus as at 31 January 2014
Total 446,383 599,620 169,508 808,737 2,024,248 100.00% 100.00%
TABLE 6.4 Progress on Debt Recovery. Comments for top 10 over 30 days from table above
Top Ten Debtors123456789
10
GRAPH 6.5 Outstanding Debtors as a percentage
Progress for the recovery of Funds Comment
Prosecution of debt has commenced.
Sundry debtors include all monies owed to the City other than those relating to Rates. This includes but is not limited toinvoices raised for grants, leasing of City's premises, and recovery of costs for services provided to developers. The City issuesinvoices with 7 day payment terms.
Payment plan in place.
Payment plan in place.Prosecution of debt has commenced.
The City has lodged a Caveat on the land title, monies to be recovered upon sale of property.Prosecution of debt has commenced.Reminder notice sent.
Reminder notice sent.
Reminder notice sent.
As % of 90 Days Plus Debtors
As % of Total Debtors
Top Ten Debtors
Reminder notice sent.
Current 22%
30 Days 14%
60 Days 8%
90 Days plus 40%
7.1
Income from Operating Activities
Grants and Other Contributions 17% favourable Variance of $660,352
Governance 69% Favourable Variance of $86,955
Health 18% Unfavourable Variance of $26,413
Housing 40% Favourable Variance of $11,622
Economic Services 19% Favourable Variance of $190,516
Expenditure from Operating Activities
General Purpose Funding 10% Favourable Variance of $120,938
Governance 15% Favourable Variance of $1,045,393
Rebates received from the City's Local Government Insurance Scheme has contributed to the favourable variance within Governance. A budget adjustment for $53.7k was processed in November.
The timing of the valuation charges received for the period ended January has caused a $67k favourable variance, it is expected a majority of these costs will be received in the last quarter of the financial year. Charges relating to the collection of rates is less than budget by $58k, It is expected this variance will decrease during the course of the year.
A Local Government is to prepare each month a statement of financial activity as prescribed by Regulation (34) of the Local Government (Financial Management) Regulations 1996. The statement of financial activity must report on the revenue and expenditure, as set out in the annual budget under FM Regulation 22(1)(d), taking into account any expenditure incurred for an additional purpose under section 6.8(1)(b) or (c). It includes original budget estimates to the end of the month to which the statement relates and actual amounts of expenditure and revenue to the end of the month. The statement must include material variances between the comparable amounts in ytd budget and ytd actual and an explanation of each. The net current assets at the end of each month have to be shown within the statement of financial activity.
The report calculates variances based on the Original Budget. The actual figures for the year to date are compared to the year to date original budget to present a monetary variance as well as the variance shown as a percentage of the budget.
The composition of net current assets is also required to be presented as support to the statement and this is presented showing funds at the end of the current month, those at the previous 30 June and also those at the end of the corresponding month in the previous year. A graph is also included that identifies the monthly movement in funds for the current year and the previous two years.
Report on Significant Variances of 10% of Original Budget and greater than $10,000 in value
Interest on Investments is showing a favourable variance of $461k due to cash levels being greater than originally budgeted. Penalty Interest on outstanding rates is higher than anticipated by $118k, this will reduce as outstanding rates are decreased. Property Information fees are showing a favourable result of $62k for the period ended January. These favourable variances have been taken into account as part of the annual budget review process.
The annual food safety service charge has produced a negative result for the period ended January due to the timing of the budget.
The Property Rental fee from the Elvire Chalets has produced a positive variance for January. It is anticipated that actual will align with budget as the year progresses.
Building application fees are greater than budget by $236k for January. Forecasts in building approvals are expected to increase this financial year and will be reflected in the budget review for 2013/14.
Employee costs show a favourable variance of $261k. Consultant expenditure is below original budget by $227k across all cost centres with the exception of Developers Contributions. Budget adjustments have been processed to reduce consultant expenditure by $58.9k . Legal expenses are less than budget by $98k with costs yet to be incurred. Project Studies & Surveys expenditure is showing a favourable variance of $248k for the period ended January.
1.0 Income Statement 7.0 Statement of Financial Activity
7.2
Housing 14% Favourable Variance of $11,478
Economic Services 28% Favourable Variance of $880,572
Other Property and Services 89% Unfavourable Variance of $1,208,169.
Non Cash Items
Movement in Employee Provisions and Adjustments
1294% Favourable Variance of $1,350,842
Capital Income & Expenditure
Capital Grants, Subsidies & Contributions 21% Favourable Variance of $1,874,357
Developer Contributions Plans: Cash 24% Unfavourable Variance of $1,656,961
Other Funding Sources
Profit on Impairment of Investments 876% Favourable Variance of $235,134
Proceeds from Sale of Assets 26% Favourable Variance of $574,479
Self Supporting Loans Repayment 49% Favourable Variance of $27,322
Opening Net Current Assets July 1 B/Fwd 14% Favourable Variance of $993,565
The City of Swan has received an unbudgeted part payment of $200k from the Lehman Brothers proceedings, this has resulted in a favourable variance for January.
Due to the sale of land, a favourable variance has resulted for the period ended January 2014.
Self Supporting Loan (167) for Foundation Housing, was fully discharged in November contributing to the favourable variance.
The Opening Net Current Asset position was greater than anticipated.
Contract expenditure for cleaning and gardening for the Elvire Chalets continues to create a favourable variance. It is anticipated that expenditure will align with budget by the end of the financial year.
Project Studies and Surveys expenditure is below budget by $384k ytd. Strategic Land Use Planning and Economic Development project expenditure is expected in the second half of the financial year. Contract expenditure has yet to be incurred. Employee costs are $192k less than budget for the period ended January.
Project and Asset Management costs being recovered are directly related to expenditure on capital projects. Actual expenditure year to date on capital projects is only 27% of the annual original budget. As part of the budget review, $6.6m capital works will be rebudgeted to 2014/15.
The Non Current Long Service Leave provision has increased by $649k for the period ended January. The net movement in the Long Service Leave reserve was $741k for the period. Movement in Deferred Rates for January was $65k.
Capital Road grants are $3.3m greater than original budget for the period ended January. A capital grant of $1.9m has been received in January for the Reid Highway project.The Gnangara Road project has received 140% of its full year budget in January. Building Capital Grants for the Swan City Youth Service and the Ellenbrook DOS Northern projects are yet to be received. An unbudgeted capital grant for $650k has been received for the Swan Regional Riverside Park Project. Budget adjstments are pending.
In Brabham, developers contributed $211k during January. The timing of future development and the method of contribution is subject to economic variables, variances to actual can be expected as a result.
7.3
Original Budget
2013/14Revised Budget
2013/14
YTD ORIGINALBUDGET
@JANUARY 2014YTD ACTUAL
@JANUARY 2014$
VARIANCEVAR
NOTE
% VAR /ORIGINAL BUDGET
YTDOPERATING ACTIVITIESIncome
92,803,400 92,803,400 Rates 92,420,959 90,539,081 (1,881,879) - -6,309,250 6,309,250 Grants and Other Contributions 3,785,980 4,446,332 660,352 F 17%
99,112,650 99,112,650 Total General Purpose Funding 96,206,939 94,985,412 (1,221,527) - -204,120 257,890 Governance 126,142 213,097 86,955 F 69%
1,985,520 1,985,520 Law, Order and Public Safety 1,757,931 1,851,080 93,149 - -256,000 256,000 Health 149,333 122,921 (26,413) U (18%)
4,095,790 4,145,440 Education and Welfare 2,983,953 3,218,467 234,513 - -50,000 50,000 Housing 29,167 40,789 11,622 F 40%
16,850,270 16,852,270 Community Amenities 15,928,082 16,563,097 635,015 - -6,303,010 6,326,770 Recreation and Culture 3,787,791 3,610,906 (176,885) - -1,344,280 1,344,280 Transport 956,397 994,752 38,356 - -1,742,400 1,742,400 Economic Services 1,016,400 1,206,916 190,516 F 19%1,803,640 1,803,640 Other Property and Services 1,052,123 1,049,478 (2,645) - -
133,747,680 133,876,860 Subtotal Income 123,994,259 123,856,915 (137,343)
Expenditure(2,453,121) (2,453,121) General Purpose Funding (1,266,307) (1,145,368) 120,938 F 10%
(11,634,657) (11,426,167) Governance (6,785,765) (5,740,372) 1,045,393 F 15%(5,334,845) (5,369,185) Law, Order and Public Safety (3,117,851) (2,970,250) 147,601 - -(1,520,491) (1,530,741) Health (886,801) (848,077) 38,723 - -(8,278,897) (8,529,047) Education and Welfare (4,867,893) (4,521,553) 346,340 - -
(142,119) (142,119) Housing (82,903) (71,425) 11,478 F 14%(19,112,532) (19,275,452) Community Amenities (11,132,503) (11,070,757) 61,747 - -(38,403,408) (38,207,368) Recreation and Culture (22,558,056) (21,939,699) 618,357 - -(31,163,165) (31,152,055) Transport (18,160,628) (17,395,246) 765,382 - -
(5,312,020) (5,320,390) Economic Services (3,098,285) (2,217,713) 880,572 F 28%(2,333,135) (2,361,535) Other Property and Services (1,362,422) (2,570,591) (1,208,169) U (89%)
178,932 178,932 Provisions and Other Accruals 104,377 1,455,219 1,350,842 F 1294%
29,472,012 29,472,012 Subtotal Non Cash Items 17,192,007 17,781,359 589,352
37,531,302 37,581,692 Net Operating Surplus / (Deficit) 67,866,852 71,147,224 3,280,371
LESS CAPITAL INCOME & EXPENDITURE14,917,570 17,054,070 Capital Grants, Subsidies & Contributions 8,942,402 10,816,760 1,874,357 F 21%11,769,600 11,769,600 Developers Contributions 6,865,600 5,208,639 (1,656,961) U (24%)
(32,988,670) (33,369,860) Purchase of Plant and Equipment (13,700,000) (12,799,968) 900,032 - -(39,398,720) (41,447,240) Purchase or Construction of Infrastructure (10,500,000) (9,771,136) 728,864 - -(45,700,220) (45,993,430) Subtotal Capital Income and Expenditure (8,391,998) (6,545,706) 1,846,292
LESS OTHER NON OPERATING ITEMS(3,850,709) (3,850,709) Loan Principal Repayments (2,246,247) (2,408,657) (162,410) - -
(34,877,781) (34,877,781) Transfer to Reserves (17,438,891) (16,158,921) 1,279,970 - -(38,728,490) (38,728,490) Subtotal Other Non Operating Items (19,685,138) (18,567,578) 1,117,560
OTHER FUNDING SOURCES25,758,843 25,961,743 Transfer from Reserves 12,879,421 12,744,129 (135,292) - -
198,990 198,990 Transfer from Trust Funds - - - - -46,000 46,000 Profit on Impairment of Investments 26,833 261,967 235,134 F 876%
3,843,780 3,843,780 Proceeds from Sale of Assets 2,242,205 2,816,684 574,479 F 26%95,895 95,895 Self Supporting Loans Repayments 55,939 83,261 27,322 F 49%
9,828,554 9,828,554 Proceeds from New Loans 200,000 200,000 - - -7,258,952 7,258,952 Opening Net Current Assets July 1 B/Fwd 7,258,952 8,252,517 993,565 F 14%
47,031,014 47,233,914 Subtotal Other Funding Sources 22,663,350 24,358,558 1,695,208
133,606 93,686 CLOSING NET CURRENT ASSETS YTD 62,453,067 70,392,498 7,939,431
CITY OF SWANSTATEMENT OF FINANCIAL ACTIVITY
FOR THE PERIOD 1 JULY 2013 to 31 JANUARY 2014
7.4
ACTUAL @JANUARY
2014
ACTUAL @JUNE 2013
ACTUAL @JANUARY
2013Current Assets
Unrestricted Cash, Cash Equivalents & Investments 65,013,765 21,388,530 39,178,161Restricted Cash, Cash Equivalents & Investments 62,526,540 58,142,349 51,350,235Rates Debtors Current 22,062,190 4,005,705 19,942,922Trade and Other Receivables 1,990,646 2,690,994 2,082,822Prepayments 499,951 273,453 370,609Inventory 74,005 139,430 101,640Total Current Assets 152,167,098 86,640,461 113,026,389
Less Current LiabilitiesIncome in Advance (1,233,722) - (1,029,659) Accounts Payable (12,098,462) (12,531,933) (9,611,913) Provisions - Employee Entitlements (8,122,733) (9,096,450) (7,434,712) Loan Repayments (1,391,115) (3,795,791) (888,681) Total Current Liabilities (22,846,030) (25,424,174) (18,964,965)
Net Current Assets 129,321,068 61,216,287 94,061,424
Adjusted Net Assets 132,919,040 66,394,866 95,654,668
Less Restricted Cash, Cash Equivalents & InvestmentsReserves: Cash Backed (55,326,708) (51,911,917) (46,593,736) Monies Held In Trust (7,199,831) (6,230,432) (4,756,498)
Closing Funds 70,392,498 8,252,517 44,304,433 *
* Changed to reflect Local Government of Western Australia Guideline - Number 8 - June 2013.
CITY OF SWANNET CURRENT FUNDING POSITION
AS AT 31 JANUARY 2014
0
20
40
60
80
100
120
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
Mill
ion
$
Liquidity Over Three Years
2011/122012/132013/14
8.1
1. STATEMENT OF CASH FLOW
Comments
2. RATE SETTING STATEMENT
Comments
Cash flow information provides users of financial reports with a basis to assess the ability of an entity to generatecash and cash equivalents and the needs of the entity to utilize those cash flows. The cash flow statement shallreport flows during the period classified by operating, investing and financing activities. The key objective of a cashflow forecast is to predict the period in which cash inflows and outflows will occur.
Cash and Cash Equivalents at the end of January 2014 are $127.2m compared to $77.7m as at June 2013. TotalOperating receipts for December are $111m. Operating payments for the period is $57m. Capital Grants, Subsidies &Contributions and Developers Contributions of $16m has been received. Payments for Capital Assets andInfrastructure costs ytd amounted to $22.5m.
It is essential that local governments have meaningful and accurate financial information on which to base decisions.The starting point for sound financial management is the preparation of the Rate Setting Statement. This statementis a crucial component of the budget process and shows how much rates are required to pay for the localgovernment's operations. The Rate Setting Statement is a statutory requirement and is unique to local governmentin that it contains values of opening funds and closing funds. Opening funds refer to 'net current assets lessrestricted funds and committed cash and amounts already reflected in the current year budget'. The opening fundforms part of the calculation of the amount of the deficiency to be raised from rates as referred to in s 6.2(2)(C) ofthe Local Government Act.
The City of Swan has levied all rateable properties as per the 2013/2014 Budget. Instalment interest Budget of $400k was levied in the month of Sept (excluding eligible pensioners and seniors). Penalty interest Budget of $450k will belevied throughout the year (excluding eligible pensioners and seniors). Ex-Gratia rates of $1.6m has been levied andcollected. Interim rates of $2.0m will be levied throughout the 2013/14 financial year.
8.0 Other Statutory Reports 8.0 Interim Other Statutory Reports
8.2
ORIGINALBUDGET2013/14
REVISEDBUDGET2013/14 CASH FLOWS FROM OPERATING ACTIVITIES
(99,608,450) (99,608,450) Total Payments (57,403,546) (88,318,109)38,258,252 38,258,252 Net cash provided / (used) by operating activities 53,601,878 43,679,216
CASH FLOWS FROM INVESTING ACTIVITIES Payments
(32,988,670) (33,369,860) Purchase / Construction of capital assets (12,799,968) (35,166,088)(39,398,720) (41,447,240) Purchase / Development of infrastructure (9,771,136) (15,344,641)
- - Proceeds from Disposal of Investments 1,692,377 2,874,955(72,387,390) (74,817,100) (20,878,727) (47,635,774)
3,843,780 3,843,780 Proceeds from Sale of Fixed Assets 2,816,684 1,393,725198,990 198,990 Transfer from Trust Funds - -
(22,644,400) (24,780,900) 18,842,083 23,717,675(95,031,790) (99,598,000) Net cash provided / (used) by investing activities (2,036,645) (23,918,100)
CASH FLOWS FROM FINANCING ACTIVITIES9,828,554 9,828,554 Proceeds from Loan Borrowings 200,000 9,482,570
(3,850,709) (3,850,709) Repayment of Borrowings (2,408,657) (2,526,393)95,895 95,895 Contributions to Repayments 83,261 82,928
- - ESL Movements - 99,215- - Other Loan Repayments Received - 160,000
6,073,740 6,073,740 Net cash provided / (used) by financing activities (2,125,396) 7,298,320(50,699,798) (55,266,008) Net increase / (decrease) in cash held 49,439,837 27,059,436
64,805,766 64,805,766 Cash at the beginning of the year 77,739,200 50,679,76514,105,968 9,539,758 CASH & CASH EQUIVALENTS AT THE END OF THE YEAR 127,179,037 77,739,200
CITY OF SWANSTATEMENT OF CASH FLOWS
FOR THE PERIOD 1 JULY 2013 to 31 JANUARY 2014
8.3
ORIGINALBUDGET2013/14
REVISEDBUDGET2013/14 OPERATING REVENUE
CURRENT REVISEDBUDGET YTD
@ JANUARY 2014
YTD ACTUAL@ JANUARY
2014976,250 976,250 Service Charges 976,250 1,024,819
(82,828,650) (82,778,260) Net cash from / (Non) operating activities (40,072,380) (35,175,669)Non Cash Items
- - Movement in Deferred Rates (Non Current) - 64,846178,932 178,932 Movement in Employee Provisions and Adjustments 104,377 1,390,372
29,293,080 29,293,080 Write Back Depreciation 17,087,630 16,326,14129,472,012 29,472,012 Total 17,192,007 17,781,359
Capital Works(39,398,720) (41,447,240) Purchase / Construction of infrastructure assets (10,500,000) (9,771,136)(32,988,670) (33,369,860) Purchase / Construction of other capital assets (13,700,000) (12,799,968)(72,387,390) (74,817,100) Total Capital Outlays (24,200,000) (22,571,104)
3,843,780 3,843,780 Proceeds from Sale of Fixed Assets 2,242,205 2,816,68411,769,600 11,769,600 Developers contributions 6,865,600 5,208,63914,917,570 17,054,070 Capital Grants, Subsidies & Contributions 11,078,902 10,816,760
(41,856,440) (42,149,650) Net Capital Outlays (4,013,293) (3,729,022)Debt Management
9,828,554 9,828,554 Proceeds from New Loans 200,000 200,000(3,850,709) (3,850,709) Repayment of Loans (2,246,247) (2,408,657)
95,895 95,895 Contributions to Debt 55,939 83,2616,073,740 6,073,740 Total (1,990,308) (2,125,396)
Other Funding Transactions46,000 46,000 Profit/Recovery Impairment of Investments 26,833 261,967
198,990 198,990 Transfer from Trust Fund - -25,758,843 25,961,743 Transfers from reserves 12,879,421 12,744,129
(34,877,781) (34,877,781) Transfers to reserves (17,438,891) (16,158,921)(8,873,948) (8,671,048) Net Movement in Reserves (4,532,637) (3,152,825)
7,258,952 7,258,952 Opening Funds 1 July - Net Current Assets 7,258,952 8,252,517(133,606) (93,686) Less Closing Funds 30 June - Net Current Assets (64,646,212) (70,392,498)7,125,346 7,165,266 Net Current Assets (Less Restricted) (57,387,260) (62,139,981)
90,887,940 90,887,940 SHORTFALL TO BE MADE UP FROM RATES 90,803,870 88,541,534