Long Term Financial Plan

Transcription

1 Gladstone Regional Council Long Term Financial Plan Revision No. 6 02/2016 1

2 Our Charter We are Gladstone Regional Council. Our Vision Our vision is to be the best local government in Queensland. Our Purpose Our purpose is to improve our community. Our Mission Our mission is to do the everyday things well, every day. Our Values We value respect - for our community, for the environment and for each other. We are Successful When Our community s needs are met. Our natural and built environment is preserved and enhanced to the benefit of our current generation, without disadvantaging the next. Our people enjoy a sense of both purpose and accomplishment each working day. 2

3 Table of Contents Overarching Vision & Direction 4 Rates and Charges 4 Sustainability Indicators 4 Operating Position 4 Asset Management 5 Capital Investment 5 Cash Investments 5 Debt 6 Our Long Term Financial Outlook 6 Major Infrastructure and Service Delivery Area Capital Expenditure 7 Key Operating Forecast Drivers 8 Expense Assumptions 10 Other Assumptions 11 Debt Analysis 11 Financial Sustainability Ratios 11 Summary 13 Appendices Appendix 1 Income Statement for the Forecast Period 16 Appendix 2 Balance Sheet for the Forecast Period 22 Appendix 3 Cash Flow Statement for the Forecast Period 26 Appendix 4 Water Charge Price Path 29 Appendix 5 Sewerage Charge Price Path 34 3

4 Overarching Vision and Directions Financial management within Gladstone Regional Council supports the delivery of objectives identified within Council s Community Plan. It also ensures that financial resources are allocated according to the annual priorities set by Council for achieving our vision, to be the best local government in Queensland, within the parameters determined through our long term financial planning. The long term financial plan is an integral part of the local government planning framework depicted below: Corporate Plan Annual Operational Plan Gladstone Region Community Plan Long Term Financial Plan Annual Budget The plan is informed not only by the Gladstone Region Community Plan and the Gladstone Regional Council Corporate Plan , but also takes into account the latest information available at the time of preparation of the long term financial plan with respect to: Master planning documents, inclusive of the Gladstone Region Social Infrastructure Strategic Plan and Sport and Recreation Master Plan; Infrastructure schedules (Local Government Infrastructure Plans) included within the Gladstone Regional Planning Scheme; Latest population growth estimates from relevant sources; Most recent estimates of development activity; and, Asset Management Plans for the various classes of assets. All financial decisions are made in the context of long term financial sustainability with funding decisions having due regard to intergenerational equity, so that those who enjoy the benefits of assets and services provided by Council contribute to the funding of those same assets and services. Conversely, assets and services that are consumed in the short term do not place a financial burden on future generations. Financial decisions are guided by corporate policies, strategies and principles of effective financial management. Rates and Charges Council applies the principles of equity, effectiveness and efficiency, simplicity and sustainability. Council aims to raise sufficient revenue to: Ensure a balanced budget and provide a strong financial basis for effective management of expenditure programmes and debt; Provide sustainable services to the community based on principles of intergenerational equity and deemed capacity to pay for Council services; Sustain operating capability on a long-term basis; Encourage a strong, growing and sustainable local economy with appropriate levels of infrastructure assets and facilities; and, Provide certainty of funding for the provision of infrastructure and services identified by Council in its long-term strategic financial plans. Sustainability Indicators Council uses the financial sustainability indicators mandated in the Local Government Act 2009 and Local Government Regulation 2012, in addition to other measures to assist in monitoring financial sustainability as recommended by Queensland Treasury Corporation. As is the case with all forecasts, when unforeseen circumstances change it can potentially impact on the financial forecast and may have a subsequent negative impact the sustainability ratios. When this occurs, Council will develop strategies to bring the forecast back to a sustainable outlook in the long term. Operating Position The net operating position (operating revenue less operating expenses) indicates the extent to which Council is raising sufficient operating revenue to cover operating expenses. Council aims to achieve a positive operating position in each financial year of the long term financial forecast as an indication that expenditure is being managed within the available revenue projections. 4

5 Council must make all endeavours to ensure a balanced budget is adopted each financial year, and seeks to achieve reliable and ongoing revenue sources to fund recurrent operating expenditure. One-off revenue sources should not be used to commit to new recurrent expenditure. This approach promotes financial sustainability by ensuring that new ongoing (recurrent) expenditure commitments have a reliable revenue source, not only in the current budget year, but for future years. Asset Management Council continues to place a high importance on ensuring the standard of assets in the region remains high. To this end asset management plans have been developed for the seven classes of assets under Council s control: Roads (including bridges and footpaths Water Sewerage Stormwater Parks Waste Buildings Both the Local Government Act 2009 and Local Government Regulation 2012 require local governments to place an even greater focus on asset management with the development of more comprehensive asset management plans and the integration of these plans with the long term planning process. The intention of this increased focus is to ensure an appropriate amount of the annual budget is dedicated to operating, maintaining and renewing assets, thus supporting service standards in the region. An improved asset management framework will deliver better financial data for financial planning and thus further promote financial sustainability. It is recognised that this is an evolutionary process; as Council s asset management systems and data analysis continue to mature, so too will the outputs from Asset Management Plans that feed into the Long Term Financial Plan. Capital Investment Council invests a significant amount of the annual budget into community and infrastructure assets to enable the delivery of services to the region s residents and visitors. Financial management necessarily requires balancing the level of rates burden on property owners with the overall demand for assets and services within the region. This requires planning for whole of life costs for new assets including operating, maintenance, renewal and financing costs. The long term financial forecast seeks to capture these costs to avoid underestimating the true cost of constructing or acquiring a new asset. In order to minimise the impact on ratepayers through user charges and general rates, and also to ensure that borrowings are minimised, Council has set a long term benchmark when assessing and reviewing its capital works programme that the total capital works programme is not to exceed annual depreciation and external funding sources such as capital grants, subsides and contributions. Cash Investments A significant proportion of Council s revenue is received once each year in conjunction with the annual rates levy. This causes a spike in Council s cash held after each rating period, with the cash to be used for budgeted purposes through to the next rating period. This cash flow profile requires prudent cash management processes to ensure funds are invested to maximise returns within the bounds of Council s conservative risk profile and also to ensure sufficient cash is on hand to meet obligations to employees and suppliers. A number of internal policies, controls and procedures are maintained to ensure the integrity of Council s funds. Council s policies are guided by the Statutory Bodies Financial Arrangements Act, which sets the bounds for acceptable investments. The management of the portfolio may be described as active; this relates mainly to the general positioning of the investment portfolio (short versus long dated maturities) by taking a view on the interest rate outlook. Once investments are made, Council holds those investments to maturity. 5

6 Council s Investment Policy is reviewed annually to ensure that it is structured appropriately to strike the balance between maximising returns and protecting Council s investment portfolio. Debt Debt is only used for capital purposes. The term of the debt is matched, as best as possible, to the life of the asset up to the maximum term imposed by Queensland Treasury Corporation (QTC). Borrowings usually have terms of nine, 12 or 15 years. Occasionally, for major capital projects, debt will be borrowed over the maximum term of 20 years. The level of borrowings drawn each financial year is carefully monitored through long term financial modelling to ensure affordability. A number of financial measures are utilised to assess sustainability, including those mandated by legislation. In addition to internal assessments, Council is required to submit an annual application to the State Government, which includes the long term financial forecast, to gain approval for all planned borrowings. QTC periodically undertakes a detailed credit assessment of Gladstone Regional Council. Such a credit review was conducted in April 2014, and Council was awarded a moderate financial rating based on Council s adopted budget and forward planning at that time. It is the intention of Council to continue these regular QTC assessments, with a credit review expected to be completed by QTC in quarter two of External debt assessments focus on the macro view of Council s ability to repay debt. However, Council manages debt at a more detailed funding level internally, further ensuring the financial sustainability of borrowing decisions. Council seeks to minimise general rates as a funding source to repay debt, preferring to rely on specific revenue sources (such as water charges, sewerage charges, etcetera) that are matched to the infrastructure being constructed. This ensures that Council is in a position to fund critical assets in areas that do not have a separate revenue source. Our Long term Financial Outlook Council regularly models financial performance, financial position and cash flow forecasts to monitor the long term sustainability of financial decisions. Projected financial statements for the 10 year period through to 30 June 2025 are included in Appendices 1, 2 and 3 to the plan. The long term financial forecast is set amidst the competing backdrop of the completion of capital works required to keep pace with recent industrial growth. It also recognises that economic activity has slowed in recent times, placing pressure on different sectors within our community. The capacity to pay of those sectors from a rating and user charges perspective will need to be closely monitored. With ongoing capital revenue constraints as a result of a series of State Government decisions over several years that has seen the removal of the 40 per cent capital grants and subsidies, as well as the capping of infrastructure charges for new development, the capital works programme has been reviewed significantly to take into account these constraints. The long term financial forecast continues to apply the following operational principles: the continued implementation of the price paths for utility charges. To this end the long term financial plan is based on the price paths in the respective utility schemes that aim to achieve a postage stamp price for those services across the region with this achieved within water charges by 2016/17 and sewerage charges by 2019/20. The price paths for water access charges are included as Appendix 4, wewerage charges as Appendix 5; level of fees and charges associated with building, plumbing and development activities that achieves cost recovery; and, continual review of operations to ensure that the operating position is optimised by one or more of the following means: Reducing costs through operational savings or reduced service delivery; Ensuring that overheads are appropriately recovered; Increasing charges; and/or, The restructuring of operations which may involve the divestment of activities or involvement of the private sector. 6

7 Some of the key challenges to be managed by Council include: Asset Management Council s infrastructure is relatively young and is in good condition. Despite this, preparation of future budgets will need to take a planned approach to funding the ongoing maintenance and renewal of infrastructure assets to ensure long term sustainability of Council services. To support this, Council is in the process of further advancing the Asset Management Plans for infrastructure assets in order to provide a more comprehensive picture of the costs and risks associated with current levels of service for asset-based services. The long term financial plan is based on current service levels for the respective asset classes and as these service levels continue to be reviewed (either to an increased level or to a reduced level) there will be impacts on Council s Long Term Financial Plan. Community Facilities and Infrastructure Program Council has a significant plan to improve the standard of community infrastructure in the region through the Gladstone Region Social Infrastructure Strategic Plan, as well as Council s Park and Recreation Facilities Strategic Plan. These plans identify the strategic needs for the Gladstone Region in these areas and include swimming pools, community and regional entertainment centres, youth facilities, social services precincts and libraries. Although funds have been set aside for this purpose and works are continuing, more funding is required to complete the full 10 year capital plan and the associated operating and maintenance costs that result from new infrastructure. Funding sources to complete the full program will need to be considered as part of future financial planning. Infrastructure Charges Infrastructure charges are raised from developers to help meet the cost of new infrastructure that Council must provide due to the growth of the region. The State Government cap on infrastructure charges and a change in the timing of Council collection of the charges from developers came into effect in July The impact of these charges will be realised across all facets of Council s business with the following impacts recognised in the financial plan: The service level of infrastructure included in priority infrastructure plans to be continually revised for optimal solutions that are cost effective in the long term; Increased service charges for utilities such as water and sewerage; and, Reduced developer charges based on current infrastructure charge cap available as a means of funding trunk infrastructure. Major Infrastructure and Service Delivery Area Capital Expenditure As part of the long term financial planning undertaken, 10 year financial plans are maintained for major service areas, which enable planning at a more detailed level for the delivery of major infrastructure and services to the community. These plans, which represent the majority of the total capital spend in the financial forecast period, are at varying levels of maturity for the various asset classes and are reviewed at least annually when incorporated into the corporate financial forecast. As planning and asset management systems become more informed, these figures are expected to change at each revision due to trigger points for various projects being met, which may lend itself to more certainty with respect to both expected expenditure and associated timing. Capital expenditure forecasts for the major service areas for 2015/16 and the following 10 years through to 2024/25 are shown above. The current long term plan provides for total capital spending over the period of $676.2 million, $430.4 million of which is identified as being replacement and upgrade of existing assets. Current capital expenditure Forecasts for the forecast period within the various service areas are: Roads, Bridges and Drainage $348.8 million Water Infrastructure $ 69.1 million Sewerage Infrastructure $100.5 million Parks and Sports & Recreation $ 47.1 million Community Buildings & Facilities $ 32.9 million Fleet $ 77.8 million 7

8 It should be noted that proposed plans for community services precincts and sport and recreation facilities are indicatively included in the above capital expenditure, however a number of these projects are subject to finding an appropriate funding solution. Funding solutions for all proposed asset investments are continually reviewed as part of the planning process. In line with the need to ensure that Council s capital investment is done in a manner that is timely, but limits the impact on the ratepayer, Council has set a long term benchmark when assessing and reviewing its capital works programme that the total capital works programme is not to exceed annual depreciation and external funding sources such as capital grants, subsides and contributions. Key Operating Forecast Drivers The following table lists the key assumptions used in developing the 10 year financial forecast. Whilst these broad assumptions give some indication of what may happen over the coming ten years, they remain flexible. Council will consider each annual budget in detail, departing from the assumptions where appropriate, to settle on an acceptable budget position for the region as a whole. Capital Spending vs Depreciation + External Funding 8

9 Revenue Items Key Growth Driver Comment General rates Property Growth Estimated at 2% pa General rates Price Path Residential - projected at a ½ the rate of CPI for to , then CPI for the life of the plan Industrial general rates CPI Water access Property Growth Lake Awoonga and Agnes Water schemes estimated at 2% pa, Miriam Vale at 1% Water access Price Path Transitioning to cost recovery, and postage stamp price across region, as per revised water access price path Water usage CPI Sewerage Property Growth Property Growth Estimated at 2 % pa for all schemes (price path adopted to transition to full cost recovery) Sewerage Price Path Transitioning to cost recovery, and postage stamp price across region, as per revised sewerage price path Waste management Property Growth Estimated at 2% pa Waste management CPI Discounts Calculated as a percentage of relevant charges at 2016/2017 rates Pensioner remissions Calculated as a percentage of items above Building and property related fees Property Growth & CPI Linked to property growth Licences Property Growth Estimated at 2% pa Licences CPI Infringements CPI Private works CPI Parking meters CPI Refuse tipping fees Property Growth Estimated at 2% pa General services fees CPI Other fees and charges CPI Sales - contract and recoverable works CPI Grants, subsidies, contributions and donations CPI Rental income CPI Interest revenue Investment Rate Government 10 year bond rate Other recurrent income - commissions CPI Other recurrent income - other revenue CPI Infrastructure charges (developer contributions) Other capital contributions Project dependant Other capital revenue Project dependant Local Government Cost Index as published by LGAQ = 2.2% CPI Rate Applied = 1.5% Drivers last updated February

10 Expense Assumptions Expense Items Key Growth Driver Comment Staff wages and salaries EBA Rate The current EBA expired on 18 September For modelling purposes.07% for through to % is then projected for the balance of the plan Staff wages and salaries Property Growth Staff numbers to grow at 1/8th of Property Growth, or 0.125% based on 2% growth rate Councillor remuneration CPI Other employee expenses CPI Materials and services LGCI Electricity CPI Water purchases LGCI Audit services CPI Bank fees CPI Materials and services LGCI Audit services CPI Bank fees CPI CPI Rate Applied = 1.5% Local Government Cost Index applied = 2.2% Other Assumptions Expense Items Key Growth Driver Comment Hoddinott Bridge (Second Boyne River Bridge) Contribution Estimated at 2/3rds of project cost Debt rate Estimated borrowing rate Not utilised as no debt required during period Airport loan repayment GAC Forecast Projected dividends and tax equivalents from 2015/2016 Drivers last updated February

11 Debt Analysis There are no planned borrowings for the forecast period. A critical review of projects during the development of this plan sees the ability for projected works to be funded without further debt funding by Council. 180, , , , , , , , , (20,000.00) (40,000.00) Cash assets and cash equivalents Debts Net position Financial Sustainability Ratios The Department of Infrastructure, Local Government and Planning released the Financial Management (Sustainability) Guideline 2011 that outlines the financial sustainability ratios that are required to be reported under both Local Government Act 2009 and Local Government Regulation This guideline describes each ratio and provides the benchmark for local governments. The following graphs indicate the projected results for Gladstone Regional Council against the benchmarks provided in the guideline. Operating Surplus 10% 9% 8% 7% 6% 5% 4% 3% 2% Target maximum 1% 0% Target minimum 2015/ / / / / / / / / /25 Council maintains a positive operating position for all years through to the end of the forecast. With the expiration of several loans from 2021/22 to the end of the reporting period, there is an increase in the forecast operating position as finance costs decline. 11

12 Working Capital Net Financial Liabilities % 60% 50% Target maximum % 3.00 Target minimum 30% % / / / / / / / / / /25 10% 0% -10% 2015/ / / / / / / / / /25 Council s liquidity as measured through the working capital ratio is maintained above the commercial minimum of 1:1 current assets to current liabilities. However, the long term average does sit below the Queensland Treasury Corporation s benchmark minimum of three times, at 2.69 times. This will continue to be monitored in future forecasts. Debt Service Target minimum / / / / / / / / / /25 12

13 Council s ability to service current debt levels is well within benchmark levels, with net financial liabilities and debt service cover reflecting a forecast period in which there are no forecast borrowings and debt is continued to be paid down over the period. Asset Sustainability 140% 120% 100% Target minimum Summary In summary, Council s Long Term Financial Plan has Council currently in a solid financial position over the forecast period as it deals with the expected impacts of industrial expansion over that time. As mentioned previously, the intention of this plan is to set a blue print for Council s financial future based on the planning and the understanding of the operating environment of Council as at the date of adoption. As planning and drivers change, this plan will be subject to constant review. 80% 60% 40% 20% 0% 2015/ / / / / / / / / /25 The asset sustainability ratio expresses expenditure on the renewal of assets as a percentage of the depreciation expense. Council is currently forecasting an average below the benchmark of 90 per cent for the ten year period at per cent. When considering the renewal of Council s asset base it is expected that there will be periods of heavier investment and it is important to consider long term trends when looking at this indicator. Data for the three years prior to forecast, which included a period of focus on asset renewals, shows an average ratio of per cent, well above the benchmark 90 per cent, which would move the long term average to per cent. As a collective set of indicators these ratios indicate a financially sustainable outlook based on the set of assumptions used to produce the forecast. Generally, all ratios assessed over the ten year period have a long term average within the established benchmarks set by Queensland Treasury Corporation. Plan Date: February 2016 Expected Date of Next Review: July

14 Appendices 14

15 List of Appendices Appendix 1 Income Statement for the forecast period Appendix 2 Balance Sheet for the forecast period Appendix 3 Cash Flow Statement for the forecast period Appendix 4 Water charge price Path Appendix 5 Sewerage Charge Price Path 15

16 Appendix 1 Income Statement for the Forecast Period 16

17 QTC Local Government Forecasting Model Gladstone Regional Council Statement of Comprehensive Income All outputs are in thousands ($'000) unless otherwise indicated 1 warning identified Whole of Council active Control Panel Select Scenario Whole of Council or Business Units? Select Business Units Whole of Council General Waste Normalise Results Use median cash balance for ratios 5. Print Print Summary Selected Business Units Water Fleet Normalise for selected grant program Sewerage Gladstone Line item Annual result Jun-11A Jun-12A Jun-13A Jun-14A Jun-15A Jun-16B Jun-17F Jun-18F Jun-19F Jun-20F Jun-21F Jun-22F Jun-23F Jun-24F Jun-25F Income Revenue Operating revenue General rates 55,940 62,191 65,637 72,584 77,983 82,208 84,203 86,249 88,347 90,498 93,201 95,992 98, , ,918 Separate rates Levies Water 17,996 26,440 23,698 11,294 13,116 14,945 15,428 15,957 16,404 16,961 17,433 17,917 18,449 18,959 19,336 Water consumption, rental and sundries ,893 15,569 16,301 16,844 17,406 17,987 18,588 19,210 19,853 20,518 21,206 21,919 Sewerage 12,232 14,055 18,501 24,982 26,656 28,843 29,770 30,801 31,864 32,983 33,800 34,577 35,219 35,721 36,389 Sewerage trade waste Waste management 10,357 6,042 6,442 6,880 7,520 7,745 7,977 8,218 8,467 8,725 8,992 9,268 9,554 9,851 10,157 Garbage charges ,724 8,288 7,677 7,949 8,229 8,520 8,820 9,132 9,454 9,788 10,133 10,491 Other rates, levies and charges Less: discounts (6,868) (7,837) (8,275) (9,518) (10,087) (10,957) (11,533) (11,955) (12,383) (12,836) (13,264) (13,701) (14,142) (14,594) (15,047) Less: pensioner remissions (752) (736) (703) (696) (1,076) (700) (725) (750) (777) (804) (833) (862) (892) (924) (957) Net rates, levies and charges 88, , , , , , , , , , , , , , ,207 Building and development fees 5,516 14,138 9,167 4,338 2,416 2,309 2,391 2,475 2,562 2,653 2,746 2,843 2,944 3,048 3,155 Infringements Licences and registrations Other fees and charges 7,166 8,225 10,502 1,951 1,502 1,654 1,679 1,704 1,729 1,755 1,781 1,807 1,834 1,861 1,889 Fees and charges 13,341 23,010 20,245 6,914 4,572 4,826 4,957 5,093 5,232 5,377 5,525 5,678 5,836 5,999 6,168 Other rental income Rental income Interest from overdue rates, levies and charges Interest received from investments 5,475 5,695 4,698 4,834-4,062 3,382 3,036 2,723 2,488 2,311 2,279 2,594 2,968 3,590 Other interest received ,434 4, Interest received 5,613 5,811 4,764 7,340 5,164 4,312 3,632 3,286 2,973 2,738 2,561 2,529 2,844 3,218 3,840 Contract and recoverable works 5,213 7,106 12,664 10,184 7,519 1,300 1,320 1,339 1,359 1,380 1,400 1,421 1,443 1,464 1,486 Gain/(loss) on sale of land held as inventory Gain/(loss) on sale of inventory held for sale Gain/(loss) on sale of non-current assets held as inventory Other sales revenue ,705 8,187 5,465 5,515 5,566 5,617 5,670 5,723 5,777 5,832 5,887 5,944 Sales revenue 5,594 7,106 12,664 17,889 15,706 6,765 6,834 6,905 6,977 7,050 7,123 7,198 7,275 7,352 7,430 Copy of LGFM version 3_0_2 Budget v3alternate Strategy xlsb LGFM v /02/2016 4:07 PM 'CompInc' Page 1 of 5 17

18 QTC Local Government Forecasting Model Gladstone Regional Council Statement of Comprehensive Income All outputs are in thousands ($'000) unless otherwise indicated 1 warning identified Whole of Council active Control Panel Select Scenario Whole of Council or Business Units? Select Business Units Whole of Council General Waste Normalise Results Use median cash balance for ratios 5. Print Print Summary Selected Business Units Water Fleet Normalise for selected grant program Sewerage Gladstone Line item Annual result Jun-11A Jun-12A Jun-13A Jun-14A Jun-15A Jun-16B Jun-17F Jun-18F Jun-19F Jun-20F Jun-21F Jun-22F Jun-23F Jun-24F Jun-25F Profit (loss) from joint ventures & associates Profit (loss) from controlled entities Profit (loss) from other investments Profit from investments External dividends received - 4,194 11, ,300 1, Internal charges received Other income 2,979 3,469 4, Other income 2,979 7,663 15, ,300 1, General purpose grants 6,388 10,628 9,858 3,762 7,690 7,691 7,690 7,859 8,032 8,209 8,389 8,574 8,763 8,955 9,152 State subsidies and grants operating 28,892 7,897 1, ,150 1,002 1,025 1,047 1,070 1,094 1,118 1,142 1,167 1,193 1,219 Commonwealth subsidies and grants operating ,572 1, Other non-government subsidies and grants Donations operating Contributions operating 3 1, ,008 2,008 2,008 2,008 2,008 2,008 2,008 2,008 2,008 2,008 Grants, subsidies, contributions and donations 35,683 20,724 12,162 6,489 10,464 11,438 11,475 11,684 11,896 12,114 12,336 12,564 12,796 13,033 13,276 Total operating revenue 152, , , , , , , , , , , , , , ,271 Capital revenue Government subsidies and grants capital 31,191 49,185 79,754 50,006 45,761 20,763 5,008 4,878 5,808 9,021 9,544 3,236 2,731 5,594 40,455 Donations capital ,154 19, Contributions capital 16,204 18,228 47,495 12,873 4, , Other capital contributions ,613 3,205 4,639 10,000 10,150 10,302 10,457 10,614 10,773 10,934 11,098 11,265 Grants, subsidies, contributions and donations 47,395 67, , ,646 72,326 25,510 18,074 15,028 16,164 19,478 20,158 14,009 13,666 16,692 51,719 Total revenue 200, , , , , , , , , , , , , , ,991 Capital income Profit/(loss) on disposal of property, plant & equipment (9,421) (2,294) (3,058) Profit/(loss) on sale of joint ventures & associates Profit/(loss) on sale of controlled entities Profit/(loss) on sale of other investments Profit/(loss) on sale of investment property Revaluation up of property, plant & equipment reversing previous revaluation down , Revaluation of investment property Revaluation up of joint ventures & associates Copy of LGFM version 3_0_2 Budget v3alternate Strategy xlsb LGFM v /02/2016 4:07 PM 'CompInc' Page 2 of 5 18

19 QTC Local Government Forecasting Model Gladstone Regional Council Statement of Comprehensive Income All outputs are in thousands ($'000) unless otherwise indicated 1 warning identified Whole of Council active Control Panel Select Scenario Whole of Council or Business Units? Select Business Units Whole of Council General Waste Normalise Results Use median cash balance for ratios 5. Print Print Summary Selected Business Units Water Fleet Normalise for selected grant program Sewerage Gladstone Line item Annual result Jun-11A Jun-12A Jun-13A Jun-14A Jun-15A Jun-16B Jun-17F Jun-18F Jun-19F Jun-20F Jun-21F Jun-22F Jun-23F Jun-24F Jun-25F Revaluation up of controlled entities Other capital income - 10, Total capital income (8,511) 8,254 (2,895) 98 1, Total income 191, , , , , , , , , , , , , , ,991 Expenses Operating expenses Total staff wages and salaries 49,153 41,771 44,297 45,610 39,828 57,196 57,785 58,380 58,980 60,354 61,760 63,198 64,669 66,174 67,712 Councillors' remuneration ,006 1,021 1,036 1,052 1,068 1,084 1,100 Employee provision expense ,003 7, Other employee related expenses 1,625 8,202 8,314 (3,830) (339) 2,333 2,357 2,382 2,406 2,462 2,519 2,578 2,638 2,700 2,762 Less: capitalised employee expenses ,092 6, Employee benefits 51,626 50,844 53,453 55,727 54,608 60,492 61,119 61,752 62,392 63,837 65,316 66,828 68,375 69,957 71,575 M&S sales contract & recoverable works M&S administration supplies M&S audit services M&S communication & IT M&S consultants 7,188 27,218-5,313 2,258 3,660 3,740 3,823 3,907 3,993 4,080 4,170 4,262 4,356 4,452 M&S contractors 6,785 6,663-9,593 17,283 12,297 12,567 12,844 13,126 13,415 13,710 14,012 14,320 14,635 14,957 M&S electricity ,157 3,801 1,243 1,262 1,281 1,300 1,319 1,339 1,359 1,380 1,400 1,421 M&S council maintenance M&S travel M&S other 42,918 32,328 77,687 54,197 48,621 44,819 46,418 46,813 47,842 48,895 49,971 51,070 52,194 53,342 54,515 Materials and services 57,050 66,383 77,841 73,404 72,112 62,180 64,151 64,926 66,344 67,793 69,274 70,788 72,334 73,915 75,530 Finance costs charged by QTC 7,118 3,485 4,519 6,106 7,611 9,625 9,022 8,409 7,755 7,080 6,324 5,546 4,894 4,329 3,706 Interest paid on overdraft Bank charges Interest on finance leases Other finance costs , Finance costs 7,455 3,961 5,862 6,601 8,561 9,825 9,225 8,615 7,964 7,292 6,539 5,765 5,116 4,554 3,935 Land improvements Buildings 2,791 2,760 2,320 2,867 3,388 3,679 3,799 4,070 4,236 4,423 4,561 4,731 4,910 5,112 5,123 Copy of LGFM version 3_0_2 Budget v3alternate Strategy xlsb LGFM v /02/2016 4:07 PM 'CompInc' Page 3 of 5 19

20 QTC Local Government Forecasting Model Gladstone Regional Council Statement of Comprehensive Income All outputs are in thousands ($'000) unless otherwise indicated 1 warning identified Whole of Council active Control Panel Select Scenario Whole of Council or Business Units? Select Business Units Whole of Council General Waste Normalise Results Use median cash balance for ratios 5. Print Print Summary Selected Business Units Water Fleet Normalise for selected grant program Sewerage Gladstone Line item Annual result Jun-11A Jun-12A Jun-13A Jun-14A Jun-15A Jun-16B Jun-17F Jun-18F Jun-19F Jun-20F Jun-21F Jun-22F Jun-23F Jun-24F Jun-25F Plant & equipment 2,616 3,654 3,566 4,250 5,166 4,093 4,908 6,295 7,051 9,755 12,730 15,006 13,457 10,838 12,927 Furniture & fittings (110) Roads, drainage & bridge network 7,145 9,978 13,520 14,884 19,566 19,182 19,446 21,417 20,175 20,421 19,314 19,232 19,902 21,069 22,918 Water 1,648 2,829 2,998 3,561 4,264 4,475 4,669 4,919 4,907 5,259 5,587 5,867 6,124 6,317 6,497 Sewerage 3,181 3,365 5,012 6,389 5,689 5,851 6,425 6,998 7,471 8,108 8,650 8,936 9,180 9,459 9,839 Miscellaneous Amortisation of intangible assets Depreciation and amortisation 18,743 23,931 28,987 33,369 38,802 38,443 40,415 44,927 44,769 48,673 50,732 53,822 53,601 52,812 57,487 Bad and doubtful debts Rentals & operating leases Payments Restructuring provision expense Other provision expense Other expenses - 1, Other expenses - 1, Total operating expenses 134, , , , , , , , , , , , , , ,851 Capital expenses Loss on impairment 6, Restoration & rehabilitation provision expense Revaluation decrement Other capital expenses ,781 4, Total capital expenses 6, ,781 4, Total expenses 141, , , , , , , , , , , , , , ,851 Net result 50,663 93, , ,356 69,764 28,733 21,742 17,704 21,184 23,084 24,507 18,277 21,370 28,274 62,140 Tax equivalents Net result before tax equivalents 50,663 93, , ,356 69,764 28,733 21,742 17,704 21,184 23,084 24,507 18,277 21,370 28,274 62,140 Tax equivalents payable Net result after tax equivalents 50,663 93, , ,356 69,764 28,733 21,742 17,704 21,184 23,084 24,507 18,277 21,370 28,274 62,140 Other comprehensive income Copy of LGFM version 3_0_2 Budget v3alternate Strategy xlsb LGFM v /02/2016 4:07 PM 'CompInc' Page 4 of 5 20

21 QTC Local Government Forecasting Model Gladstone Regional Council Statement of Comprehensive Income All outputs are in thousands ($'000) unless otherwise indicated 1 warning identified Whole of Council active Control Panel Select Scenario Whole of Council or Business Units? Select Business Units Whole of Council General Waste Normalise Results Use median cash balance for ratios 5. Print Print Summary Selected Business Units Water Fleet Normalise for selected grant program Sewerage Gladstone Line item Annual result Jun-11A Jun-12A Jun-13A Jun-14A Jun-15A Jun-16B Jun-17F Jun-18F Jun-19F Jun-20F Jun-21F Jun-22F Jun-23F Jun-24F Jun-25F Items that will not be reclassified to net result Increase (decrease) in asset revaluation surplus ,802 31, Miscellaneous comprehensive income Total other comprehensive income for the year ,802 31, Total comprehensive income for the year 50,663 93, , , ,950 28,733 21,742 17,704 21,184 23,084 24,507 18,277 21,370 28,274 62,140 Operating result Operating revenue 152, , , , , , , , , , , , , , ,271 Operating expenses 134, , , , , , , , , , , , , , ,851 Operating result 17,973 18,418 5,417 1, ,924 3,669 2,677 5,020 3,606 4,349 4,268 7,704 11,582 10,421 Copy of LGFM version 3_0_2 Budget v3alternate Strategy xlsb LGFM v /02/2016 4:07 PM 'CompInc' Page 5 of 5 21

22 Appendix 2 Balance Sheet for the Forecast Period 22

23 QTC Local Government Forecasting Model Gladstone Regional Council Statement of Financial Position All outputs are in thousands ($'000) unless otherwise indicated 1 warning identified Whole of Council active Control Panel Select Scenario Whole of Council or Business Units? Select Business Units Whole of Council General Waste Normalise Results Use median cash balance for ratios 5. Print Print Summary Selected Business Units Water Fleet Normalise for selected grant program Sewerage Gladstone Line item Annual result Jun-11A Jun-12A Jun-13A Jun-14A Jun-15A Jun-16B Jun-17F Jun-18F Jun-19F Jun-20F Jun-21F Jun-22F Jun-23F Jun-24F Jun-25F Assets Current assets Internally restricted component - - 6, Externally restricted component Unrestricted component 81,540 94, ,379 89, ,205 86,701 78,692 64,055 53,740 42,963 39,309 46,117 59,509 67,111 65,672 Cash and cash equivalents 81,540 94, ,242 89, ,205 86,701 78,692 64,055 53,740 42,963 39,309 46,117 59,509 67,111 65,672 General trade and other receivables 12,083 28,350 14,645 23,881 20,041 17,633 18,108 18,594 19,085 19,547 20,141 20,692 21,249 21,743 22,376 Internal loans outstanding Trade and other receivables 12,083 28,350 14,645 23,881 20,041 17,633 18,108 18,594 19,085 19,547 20,141 20,692 21,249 21,743 22,376 Inventories held for sale Inventories held for distribution 1,601 1,885 1,423 2,651 2,627 2,627 2,627 2,627 2,627 2,627 2,627 2,627 2,627 2,627 2,627 Land held for development or sale 2,769 2, Inventories 4,370 4,654 1,899 2,959 2,912 2,912 2,912 2,912 2,912 2,912 2,912 2,912 2,912 2,912 2,912 Tax equivalent assets 1, , Prepayments 778 1,455 1,598 1,604 1,389 1,389 1,389 1,389 1,389 1,389 1,389 1,389 1,389 1,389 1,389 Other current assets 5,162 8,627 8, Other current assets 7,931 10,948 12,392 1,604 1,389 1,389 1,389 1,389 1,389 1,389 1,389 1,389 1,389 1,389 1,389 Non-current assets held for sale Total current assets 105, , , , , , ,102 86,950 77,126 66,811 63,751 71,110 85,058 93,155 92,349 Non-current assets Land held for development for sale - 105, Inventories - 105, General trade and other receivables , Internal loans outstanding Trade and other receivables , Joint ventures & associates Controlled entities ,854 71,854 71,854 71,854 71,854 71,854 71,854 71,854 71,854 71,854 71,854 71,854 Other investments 4,910 4,958 43, Investment property - - 3,820 3,918 4,863 4,863 4,863 4,863 4,863 4,863 4,863 4,863 4,863 4,863 4,863 Copy of LGFM version 3_0_2 Budget v3alternate Strategy xlsb LGFM v /02/2016 4:05 PM 'FinPos' Page 1 of 4 23

24 QTC Local Government Forecasting Model Gladstone Regional Council Statement of Financial Position All outputs are in thousands ($'000) unless otherwise indicated 1 warning identified Whole of Council active Control Panel Select Scenario Whole of Council or Business Units? Select Business Units Whole of Council General Waste Normalise Results Use median cash balance for ratios 5. Print Print Summary Selected Business Units Water Fleet Normalise for selected grant program Sewerage Gladstone Line item Annual result Jun-11A Jun-12A Jun-13A Jun-14A Jun-15A Jun-16B Jun-17F Jun-18F Jun-19F Jun-20F Jun-21F Jun-22F Jun-23F Jun-24F Jun-25F Investments 4,910 4,958 47,674 75,772 76,717 76,717 76,717 76,717 76,717 76,717 76,717 76,717 76,717 76,717 76,717 Land , , , , , , , , , , , ,122 Land improvements 128, , , Buildings 98,903 94,013 97, , , , , , , , , , , , ,540 Plant & equipment 22,885 24,127 25,418 39,753 44,696 46,309 55,483 63,416 74,150 83,011 83,174 78,700 78,313 86, ,691 Furniture & fittings 14,038 14,006 14,663 3,554 3,948 3,191 2,465 1, ,212 1,165 1,141 1,126 7,958 Roads, drainage & bridge network 609, , ,402 1,086,560 1,185,682 1,220,124 1,268,974 1,304,349 1,345,713 1,391,025 1,458,252 1,531,872 1,595,169 1,649,396 1,793,101 Water 92, , , , , , , , , , , , , , ,930 Sewerage 146, , , , , , , , , , , , , , ,238 Miscellaneous ,025 1,056 1,088 1,121 1,155 1,190 1,226 1,263 1,301 Work in progress 83,053 98, ,235 77,670 37,958 73,444 59,219 65,474 64,023 69,714 65,373 51,968 50,903 62,255 - Property, plant & equipment 1,196,903 1,295,626 1,674,565 1,892,627 1,980,977 2,075,080 2,155,709 2,241,965 2,330,267 2,424,063 2,515,159 2,593,509 2,674,826 2,771,741 2,915,881 Intangible assets 1,372 1, Other non-current assets ,684 37,067 37,067 37,067 37,067 37,067 37,067 37,067 37,067 37,067 37,067 37,067 Other non-current assets 1,372 1, ,593 37,915 37,628 37,368 37,109 37,067 37,067 37,067 37,067 37,067 37,067 37,067 Total non-current assets 1,203,185 1,407,139 1,785,871 2,005,992 2,095,609 2,189,425 2,269,794 2,355,791 2,444,051 2,537,847 2,628,943 2,707,293 2,788,610 2,885,525 3,029,665 Total assets 1,309,109 1,545,099 1,927,049 2,123,774 2,221,156 2,298,061 2,370,896 2,442,742 2,521,177 2,604,658 2,692,694 2,778,403 2,873,668 2,978,681 3,122,014 Liabilities Current liabilities Overdraft Employee payables ,252 9,917 10,047 10,151 10,256 10,465 10,737 10,985 11,240 11,468 11,766 Other payables 18,889 14,879 25,418 16,396 9,471 8,561 8,855 8,962 9,158 9,332 9,561 9,769 9,982 10,172 10,422 Trade and other payables 18,889 14,879 25,418 16,396 18,723 18,477 18,902 19,113 19,414 19,797 20,298 20,755 21,222 21,640 22,188 Loans 5,378 5,209 9,313 9,372 9,644 10,475 11,089 11,615 12,290 12,967 12,758 10,106 10,661 11,270 11,292 Finance leases Borrowings 5,378 5,209 9,313 9,372 9,644 10,475 11,089 11,615 12,290 12,967 12,758 10,106 10,661 11,270 11,292 Employee 1,490 1,265 1,046 1, Restoration & rehabilitation Copy of LGFM version 3_0_2 Budget v3alternate Strategy xlsb LGFM v /02/2016 4:05 PM 'FinPos' Page 2 of 4 24

25 QTC Local Government Forecasting Model Gladstone Regional Council Statement of Financial Position All outputs are in thousands ($'000) unless otherwise indicated 1 warning identified Whole of Council active Control Panel Select Scenario Whole of Council or Business Units? Select Business Units Whole of Council General Waste Normalise Results Use median cash balance for ratios 5. Print Print Summary Selected Business Units Water Fleet Normalise for selected grant program Sewerage Gladstone Line item Annual result Jun-11A Jun-12A Jun-13A Jun-14A Jun-15A Jun-16B Jun-17F Jun-18F Jun-19F Jun-20F Jun-21F Jun-22F Jun-23F Jun-24F Jun-25F Restructuring Other Provisions 1,490 1,265 1,046 1, Tax equivalent liabilities Other Other current liabilities Total current liabilities 25,757 21,353 35,777 26,832 28,367 28,953 29,991 30,728 31,704 32,764 33,056 30,861 31,883 32,910 33,481 Non-current liabilities Trade and other payables 2,271 2,798 2,013 2, Loans 129,428 85, , , , , , , , ,085 87,327 77,221 66,560 55,290 43,998 Finance leases Borrowings 129,428 85, , , , , , , , ,085 87,327 77,221 66,560 55,290 43,998 Employee 8,461 6,314 6,693 6,970 7,258 7,258 7,258 7,258 7,258 7,258 7,258 7,258 7,258 7,258 7,258 Restoration & rehabilitation ,433 3,339 3,339 3,339 3,339 3,339 3,339 3,339 3,339 3,339 3,339 3,339 Restructuring Other - 2,859 4, Provisions 8,461 9,173 10,913 11,403 10,597 10,597 10,597 10,597 10,597 10,597 10,597 10,597 10,597 10,597 10,597 Other non-current liabilities - 66, Total non-current liabilities 140, , , , , , , , , ,682 97,924 87,818 77,157 65,887 54,595 Total liabilities 165, , , , , , , , , , , , ,040 98,797 88,075 Net community assets 1,143,192 1,359,778 1,698,217 1,915,222 2,023,441 2,110,464 2,193,350 2,276,074 2,365,824 2,461,212 2,561,714 2,659,725 2,764,628 2,879,883 3,033,938 Community equity Asset revaluation surplus 157, , , , , , , , , , ,380 1,053,114 1,136,647 1,223,629 1,315,544 Retained surplus 985,960 1,089,744 1,240,145 1,374,345 1,451,379 1,480,112 1,501,855 1,519,559 1,540,743 1,563,827 1,588,334 1,606,611 1,627,981 1,656,254 1,718,394 Total community equity 1,143,192 1,359,778 1,698,217 1,915,222 2,023,441 2,110,464 2,193,350 2,276,074 2,365,824 2,461,212 2,561,714 2,659,725 2,764,628 2,879,883 3,033,938 Copy of LGFM version 3_0_2 Budget v3alternate Strategy xlsb LGFM v /02/2016 4:05 PM 'FinPos' Page 3 of 4 25