State of the Environment Report 2010/2011 - Liverpool City Council

PART 1 / Financial
Summary
29
Balance Sheet
The balance sheet shows what we own
(our assets) and what we owe (our
liabilities) and our net worth.
Assets –
what we own
The major components of our assets
include:
• property, plant and equipment
(land, buildings, roads, stormwater
drainage)
• capital works in progress; and
• cash assets
Together these asset categories account
for 98.2 per cent of all our assets. As at 30
June 2011 Council held assets worth $1.8
billion.
Cash reserves
Council’s cash holdings have increased
by $9.13 million during 2010-2011 with
an increase of $11.73 million in external
restrictions mainly attributable to S94
developer contributions.
Capital expenditure
The level of capital expenditure in 2010-
2011 strived to deliver on the challenge of
renewing community assets. $75.9 million
dollars was spent on capital works and
acquisitions during the year. This figure
includes $19.1 million for the acquisition
of the building at 33 Moore Street funded
from insurance proceeds, $20.37 million
for Land Under Roads dedicated to Council
from developers at West Hoxton, Carnes
Hill, Middleton Grange, Moorebank,
Edmondson Park and Voyager Point, $1.9
million for community land acquisition. To
assist council in ensuring that adequate
funding is available to address the backlog
of works that are required, Council lodged
an application for a special rate variation
with the Minister for Local Government
and was successful in receiving approval
for an additional 9 per cent increase to
notional income for a period of five years
that commenced in 2009-2010. This
increase provided an additional $5 million
for capital works throughout the city.
Reviewing our
liabilities –
what we owe
Council’s liabilities include debt, amounts
owed to suppliers and amounts owed to
employees for leave entitlements. Our
total liabilities of $76.06 million represent
a decrease of 6.4 per cent from the
previous year.
Debt levels
Council’s single largest liability is its
debt as a result of its loan borrowing
program; at 30 June 2011 this liability
was $49.99 million including $10.25
million interest free loan. Council did
not borrow funds during the 2010-2011
financial year to fund capital works. While
the notion of being in debt has some
negative connotations, borrowing to fund
community infrastructure results in the
cost being shared by the wider base of
rate payers in the future. The cost is borne
by those who will benefit from the use of
the infrastructure in years to come.
Council’s debt service ratio at around
6.01 per cent is well below the industry
benchmark of 10 per cent. Council’s
repayments will remain constant until the
end of 2012 when some of the older loans
start to mature resulting in a reduced debt
servicing costs and lower the debt service
ratio.
Conclusion
Council is continuing to work to ensure it
is in a strong financial position to provide
for the present and future needs of our
growing community. The keys to achieving
this goal are long term planning. Council
is finalising its Long Term Financial Plan
and Asset Management Plan to assist in
informing stakeholders what is required
to ensure a financially sustainable position
into the future.
Liverpool City Council ANNUAL REPORT