Agenda of Special Council - 17 October 2011

COUNCIL CHAMBERS

The Lord Mayor Clr Lorraine Wearne -

Lachlan Macquarie Ward

Dr. Robert Lang, Chief Executive Officer - Parramatta City Council

Sue Coleman – Group Manager City Services			Assistant Minutes Clerk – Joy Bramham
Greg Smith – Group Manager Corporate			Minutes Clerk – Grant Davies
Sue Weatherley–Group Manager Outcomes & Development

Clr Paul Barber – Caroline Chisholm Ward			Clr John Chedid – Elizabeth Macarthur Ward
Clr Mark Lack – Elizabeth Macarthur Ward			Clr Paul Garrard - Woodville Ward
Clr Glenn Elmore – Woodville Ward			Clr Scott Lloyd – Caroline Chisholm Ward
Clr Pierre Esber– Lachlan Macquarie Ward			Clr Andrew Wilson, Deputy Lord Mayor – Lachlan Macquarie Ward
Clr Prabir Maitra – Arthur Phillip Ward			Clr Andrew Bide – Caroline Chisholm Ward
Clr Julia Finn – Arthur Phillip Ward	Clr Michael McDermott - Elizabeth Macarthur Ward	Clr Antoine (Tony) Issa, OAM MP – Woodville Ward	Clr Chiang Lim– Arthur Phillip Ward

Staff

GALLERY

Special Council 17 October 2011 Item 4.1

GOVERNANCE AND CORPORATE

ITEM NUMBER 4.1

SUBJECT 2010/11 Financial Report

REFERENCE F2009/01832 - D02106997

REPORT OF Manager Finance

PURPOSE:

1. To present Council’s 2010/11 Annual Financial Report for adoption and to receive the Auditor’s Report from Council’s Auditors PricewaterhouseCoopers.

2. Mr D. Banicevic, Director Local Government Services from PricewaterhouseCoopers, will be present at the Council meeting to present the Auditor’s Report.

RECOMMENDATION

(a) That Council adopt the Financial Report for the year ended 30 June 2011.

(b) That Council authorise the Lord Mayor, Deputy Lord Mayor, Chief Executive Officer and Manager Finance (Responsible Accounting Officer) to sign the following:

General Purpose Financial Report

Special Purpose Financial Report

(d) Further, that Council present the 2010/11 audited Financial Report and Auditor’s Report to the public at the Council Meeting of the 28 November 2011.

BACKGROUND

1. The Council’s Financial Report for the year ended 30 June 2011 has been completed and is submitted to Council for adoption and formal referral to Council’s Auditors, PricewaterhouseCoopers.

2. Council’s Financial Report includes the following:

2.1 The General Purpose Financial Report

2.2 The Special Purpose Financial Report

2.3 The Special Schedules.

3. The audited Financial Reports will be presented to the Audit Committee on

October 13. An update of the Audit Committee meeting will be provided at the Council meeting.

4. The full Financial Report is attached but does not include the Auditor’s Report.

5. Mr D. Banicevic, Director, Local Government Services of PricewaterhouseCoopers, will be in attendance at the Council Meeting on 17 October 2011 to present the Auditor’s Report and answer questions.

6. To meet statutory requirements, it is proposed that Council present the 2010/11 Financial Report and Auditor’s Report to the public at its meeting of the 28 November 2011. This is after the public exhibition period of 2 weeks which enables the public to make submissions.

7. Council must ensure that copies of all submissions received are referred to the Auditor, and may take such action as it considers appropriate with respect to any such submission, including the giving of notice to the Director-General of Local Government of any matter that appears to require amendment of the Council’s Financial Report.

ISSUES/OPTIONS/CONSEQUENCES

Financial Performance

8. The 2010/11 Financial Report reports Council’s financial performance along similar lines to financial reports in the commercial world, where the focus is on the bottom line profit of the company.

9. Council’s operating result has increased from a surplus of $9.3 million in the previous year to a $14.1 million surplus this year. The increase is due to an increase in Capital Grants and Contributions $2.2M, an increase in profit on Asset Sales ($1.221M) and a reduction in materials and contract costs ($2.7m).

10. Council is maintaining its asset base with $31 million (2009/10 $31 million) spent on capital works. This was funded from a mix of revenue, loans, special rates, sale of assets and capital grants and contributions. For further information see Note 9 in the Financial Reports.

11. Council’s cash position remained constant at $86.7 million.

12. Council’s loan liability decreased from $85.4 million to $84 million during the year. Of this amount, $55 million is in respect of Civic Place and the interest repayments are currently being partly serviced from the leasing income and interest on the unexpended balance of the loan.

13. The 2010/11 Financial Report contains a number of performance indicators (Note 13) and they are detailed below with commentary:

PERFORMANCE INDICATORS

2010/11 2009/10 2008/09 2007/08

Unrestricted

Current Ratio 2.86:1 1.84:1 1.86:1 1.82:1

(To assess the adequacy of working capital and the ability to satisfy obligations in the short term for the unrestricted activities of Council)

Comment/Explanation

For every $1 of current liabilities, Council has $2.86 of working capital to satisfy these obligations in the short term. (This is a useful indicator in that it takes into account restrictions placed on working capital.)

This ratio stands above the industry benchmark of 1:1.

2010/11 2009/10 2008/09 2007/08

% % % %

Debt Service Ratio 5.75 7.32 6.49 6.86

(To assess the degree to which revenues are committed to the repayment of debt)

Comment/Explanation

5.75% of our total revenue was committed to loan repayments for 2010/11. This is better than the industry benchmark of 10% for developed councils. (NB: The Civic Place borrowings are interest only loans.)

Rates & Annual Charges Coverage Percentage

2010/11 2009/10 2008/09 2007/08

% % % %

58.65 59.22 59.71 61.00

(To assess the degree of dependence upon revenues from rates)

Comment/Explanation

A major portion (59%) of our revenue is derived from Rates and Other Annual Charges such as Domestic Waste, Commercial Waste and the Stormwater Levy.

Rates Outstanding Percentage

2010/11 2009/10 2008/09 2007/08

% % % %

3.73 4.27 5.50 4.40

(To assess the impact of uncollected rates and annual charges on liquidity and the adequacy of recovery efforts)

Comment/Explanation

3.73% of rates and annual charges remained uncollected at year end which compares favourably with the industry benchmark of 5%. This is an outstanding result given economic conditions.

General Comments

14. Council’s performance indicators are all better than the industry benchmark.

15. Some of the major projects included are Ermington Bay Nature Pathway Parramatta Cycleway, Parks Improvements, Playground Replacement, Civic Place Project Management and the CITSR project.

16. Council has revoted approximately $2.8 million of projects from the 2010/11 budget to the 2011/12 budget. This represents 7% of the 2010/11 projects budget and 1.4% of total operating and capital expenditure.

17. Restrictions relating to grants and contributions provide information on unspent amounts. There continues to be an increase in the balance of unspent grants and contributions which is up from $18.8 million in 2009/10 to $24.5 million in 2010/2011. This increase is due to larger than usual developer contributions.

Special Purpose Financial Report

18. Council identified its Commercial Property Portfolio as a Category 1 business in accordance with the requirements of National Competition Policy (NCP) guidelines.

19. Council has imputed all normal taxation payments that would be faced by an equivalent private sector organisation as well as a return on investment.

Special Schedule 7 – Condition of Public Works

20. The purpose of this schedule is to allow an assessment of the condition of Council’s public works assets and how Council is performing in managing these assets. The schedule reports on our public works assets in respect of:

21.1 The assessed condition of the assets

21.2 The assessed expenditure required to bring the asset up to a satisfactory standard

21.3 The anticipated expenditure required to keep these assets at a satisfactory standard

21.4 The actual maintenance expenditure in 2010/11.

21. Council has developed an asset management strategy and progressively implement Whole of Life costing for all its classes of assets. An excellent example is the work done by City Services for the road pavements and footpath pavements and work on Council’s drainage assets.

22. Whilst the condition of our assets is generally satisfactory, the consequence of not finding the right balance will be that asset management costs will be deferred for future generations to address and lead to deterioration in asset performance.

CONSULTATION & TIMING

23. PricewaterhouseCoopers has completed its Annual Audit and no major issues have arisen. It is anticipated that Council will receive an unqualified Audit Report for 2010/11.

Francis Fernandes

Acting Manager Finance

Attachments:

1 View

Financial Statements 2010-11

79 Pages

REFERENCE MATERIAL

Item 4.1 - Attachment 1

Financial Statements 2010-11