Gawler 2013-14 Annual Report - page 18

Town of GawlerAnnual Report 2013/14
Page18
introduction •
summary
• strategic directions • statutory information • index
2013/14Financial Summary
The informationbelow isprovidedasananalysisofCouncil’sfinancial performance for theyear ending30June2014.
Council uses the followingfinancial indicators tomeasure itsfinancial performanceonanannual basis:
(a)OperatingResult;
(b)Net Financial LiabilitiesRatio;
(c)Asset SustainabilityRatio.
Comments regarding theperformance for eachof these ratiosareoutlinedbelow.
1.OperatingResult
Theoperating result is thekeyfinancial performancemeasure for aCouncil,with theaccepted industrystandardbeing that a
sustainable recurrent operatingsurplus is the ideal financial performancegoal – i.e. annual expenditure is funded fromannual
revenue.
Anoperatingsurplusmeans that the full cost ofCouncil’s recurrent activities (includingdepreciationexpense reflecting the
annual consumptionof fixedassets) isbeingmet byexisting ratepayers–converselyanoperatingdeficitmeans that some
of thecostsarebeingdeferred toand funded from future ratepayers.As recentlyas the2010/11financial year,Council was
incurringunsustainableoperatingdeficitsof approximately$3mandwasalsomarkedly incrementally increasing its level of
external debt.
In response tosuchafinancial predicament, inFebruary2011, theAuditCommitteeofCouncil challengedCouncil
management to identifyopportunities to realiseanoperatingsurplusby the2014/15financial year (whichwas twoyearsearlier
thanenvisaged inCouncil’sLongTermFinancial Planprojectionsat the time).
Due to thesubstantial collectiveandcollaborativeworkundertakensincebyCouncil staff and theElectedMember body, it is
nowpleasing to report that, for the2013/14financial year,Council hasachievedanunderlyingoperatingsurplusof $169,000
(after allowing for anextraordinary$9mnon-cashassetwrite-downadjustment relating to thevaluationof fixedassets– total
valueofwhich is$196m).This represents thefirst time thatCouncil has realisedanoperatingsurplussince the2006/07
financial year,with theachievement beingsubsequently recognisedoneyear aheadof thechallengepreviously laiddownby
theAuditCommittee.
TheCouncil hassinceestimated toachieveanoperatingsurplusof $33,000 for the2014/15financial year.
The2013/14underlying result isparticularly impressiveconsidering theFederalGovernmentwithdrewbudgetedgrant funding
of $730,000as lateasMay2014, aspart of the2014FederalGovernment budget (all Councilsacross thenationwere
affectedby thisdecision todifferingdegrees).
Thedramaticandquick turnaround inCouncil’s recurrent financial performance isattributable toanumber of key factorsas
follows:
(a) Effectivebudgetmanagement principles, drivenandguidedbyCouncil’sBudgetManagement Policyadopted in
August 2011;
(b) Improved treasurymanagement practices, includinga revised loan fundingstrategy that hasculminated innofixed
long-term loanborrowingssince the2010/11financial year (whichhas resulted ina$2.8m (20%) reduction in loan
debt since that time);
(c) Effectivecost containment –since the2010/11financial year,Council hascontained itsannual increase inoperating
expenditure to, onaverage, approximately0.8% (i.e. less than1%averageannual increase);
(d) Service reviews– in recent years,Council has instigatedanumber of variousservice reviews, examplesofwhichare
outlinedon thenext page.
1...,8,9,10,11,12,13,14,15,16,17 19,20,21,22,23,24,25,26,27,28,...181
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