quarry business strategic business plan 2019 to 2022 draft v1.1 … … · 26-09-2019 · central...

Central Highlands Regional Council 1 Quarry Business Plan

Quarry Business

Strategic Business Plan

2019 to 2022

Draft

V1.1

26 September 2019


Table of Contents

1 The Quarry’s “Plan on a Page” ............................................................................................ 5

2 Glossary of Terms.............................................................................................................. 10

3 Purpose and Background................................................................................................... 12

3.1 Purpose of this Plan .................................................................................................. 12

3.2 Process for Developing the Plan ................................................................................ 13

3.3 Plan Structure (the Value Model) ............................................................................... 13

4 Overview of the Quarry ...................................................................................................... 15

4.1 CHRC Region ............................................................................................................ 15

4.2 Quarry Background ................................................................................................... 15

4.3 Site and planning ....................................................................................................... 17

4.4 Quarry sales .............................................................................................................. 17

4.5 Previous Quarry Review ............................................................................................ 20

4.6 SWOT Analysis ......................................................................................................... 21

5 Purpose of the Quarry ........................................................................................................ 22

5.1 Overview ................................................................................................................... 22

5.2 Council’s Strategic Framework .................................................................................. 23

5.3 Regional Public Value of the Quarry Business ........................................................... 24

5.4 Quarry’s Vision and Objectives .................................................................................. 26

6 The Business Model .......................................................................................................... 29

6.1 Overview ................................................................................................................... 29

6.2 Product ...................................................................................................................... 31

6.3 Price .......................................................................................................................... 33

6.4 Place and Accessibility .............................................................................................. 33

6.5 The Market ................................................................................................................ 34

6.6 Promotion & Channels to Market ............................................................................... 35

6.7 Business Model Summary ......................................................................................... 36

7 The Operating Model ......................................................................................................... 37

7.1 Overview ................................................................................................................... 37

7.2 Quarry Risk Assessment ........................................................................................... 38

7.3 Service Planning........................................................................................................ 39

7.4 Asset Management .................................................................................................... 39

7.5 Financial Management .............................................................................................. 41

7.6 Capability & People Management .............................................................................. 47

7.7 Management Systems and Compliance .................................................................... 51


8 Possible Sale of the Shepton Quarry ................................................................................. 53

8.1 Overview ................................................................................................................... 53

8.2 Assessing Any Expressions of Interest for Shepton ................................................... 54

9 Performance Measurement ................................................................................................ 56

10 3-Year Program of Initiatives .............................................................................................. 58

11 Governance and Oversight ................................................................................................ 63

12 Appendix A – Documents Reviewed .................................................................................. 64

13 Appendix B – Council’s Risk Framework ............................................................................ 66

14 Appendix C – Legislative and Other Obligations ................................................................ 67

15 Appendix D – Long Term Financial Plan Outputs ............................................................... 68


Schedule of Changes & Amendments

Version Date Changes/Amendments Author Accepted By

V0.1 June 2019 Draft Strategic Business Plan Inxure Strategy Group

V0.2 July 2019 Initial review by Coordinator Operations – Shepton Quarry

CHRC – Joe Newman

V0.3 July 2019 Review by Commercial Analyst – minor updates to financial information

CHRC – Andrew Gissel

V0.4 July 2019 Review by General Manager Customer and Commercial Services

CHRC – Michelle Webster

V0.5 August

2019

Inclusion of QTC long-term financial modelling

CHRC – Kerry Dobinson / Andrew Gissel

V0.6 September

2019

Review by General Manager Customer and Commercial Services – minor updates to formatting

CHRC – Michelle Webster

V1.0 September

2019

Prepared for endorsement – template, schedule of changes

CHRC – Kelly Gray

V1.1 September

2019 Update to column layout of risk table

CHRC – Andrew Gissel

Endorsement Table

Name Title Endorsed & Signature Date

Michelle Webster General Manager Customer and Commercial Services

Joe Newman Coordinator Operations – Shepton Quarry


1 The Quarry’s “Plan on a Page”

This business plan is for Central Highlands Regional Council’s Quarry business activity including:

• The Shepton Quarry, which provides a mix of products external to Council and to Council

itself;

• The Mungabunda Quarry which provides products directly to Council; and

• The various borrow pits that are quarried to also provide services directly to Council.

This Business Plan has a 3-year duration and has been developed to enable the Business Unit

to:

• Deliver upon the relevant elements of Council’s Corporate and Operational Plans;

• Gain agreement on the long-term aspirations and desired outcomes for the business;

• Ensure a line of sight from the overall objectives to the day to day operations; and

• Provide a basis for decision making to continuously improve the business unit’s operations

and as such, inform long term capital and operational expenditure plans.

Figure 1 is the Quarry Business’s “Plan on a Page”, which is a diagrammatic representation of

the overall Business Plan. This Figure also shows the key initiatives that are to be pursued over

the life of this plan. Features of this Business Plan include:

• The vision and objectives reflect the fact that the Quarry provides public value, beyond that

of a private sector run business activity. However, the Quarry must run with the discipline

of a private sector organisation;

• The importance to the Central Highlands Region of Council owning their own quarry is two-

fold.

o Firstly, it ensures there is a constant provider of high quality and compliant quarry

products to the region. This benefit is demonstrated by the fact that a number of

customers who have corporate goals of ensuring ethical and compliant purchasing

practices, that are customers of the quarry;

o The second benefit is that it is able to ensure the market for quarrying products remains

competitive and stable in all circumstances. Other regions have seen excessive pricing

during periods of high demand, such as when needing to respond to flood events or a

spike in the local economy;

• To ensure its competitiveness, the quarry must compete in the open market. However, it

must do so profitably. Otherwise Council’s ratepayers are subsidizing the provision of

quarrying products to the broader market. As such there is a performance target set for

the operation of the Shepton Quarry, that over 60% of its sales must be external to Council;


• A key aspect of the quarry is both its compliance with the various legislative requirements

involved in running a quarry, and high quality of the products it provides. Both

considerations feature in the vision and objectives; and

• It is also important that the quarry is financially sustainable into the longer term. To this

end, there is an objective focusing on maintaining investment in the facility to ensure the

desired levels of service are maintained.

It should be noted that this plan is based on a robust foundation, with the quarry business activity

recording robust financial outcome for the 18/19 financial year. If movements in inventory are

netted off the results, then the business activity recorded net earnings of $300,000. Furthermore,

Shepton recorded a positive turnaround of $680,000 compared with budget (net of movements in

inventory). This was based on a doubling of sales compared with budget. This has been achieved

in a flat market, which has not been influenced by an increase in mining activity or other factors

such as flood repair works.

This business plan assumes the Shepton Quarry remains part of the overall Quarrying business

activity. It is noted that Council is currently working through an Expression of Interest process for

the possible sale of the Quarry. This EoI process will have the following implications for the quarry

business activity and Council, that need to be noted as part of this plan:

• In the 18/19 financial year, Shepton made up 61% of total Sales for the Quarry business

unit. Furthermore, the remaining sales from Mungabunda and Council’s borrow pits, are

exclusively to Council. If Shepton was sold, the Quarry Business would no longer

constitute a business activity as defined by Council’s Water Reform and Competition

Policy. The unit would become an internal service provider - principally to the Infrastructure

and Utilities division of Council;

• It is noted that during the Expression of Interest process, Council has put a freeze on any

capital expenditure and appointment of permanent staff within the Quarry business. While

this is most likely an appropriate course of action, it must be noted that it is both inefficient

and is holding the Quarry business back from achieving its longer-term goals. The

business unit is having to appoint contractors at a high cost and a lack of capital investment

means that the asset service potential is being run down and opportunities for growth are

being delayed or missed. It would be important that council expedite the sale process to

provide certainty for the business unit, one way or another;

• If Council were to sell the Shepton quarry business, it would lose a revenue stream that

currently covers a range of costs that that must continue to be covered after a sale process

(these costs are spelt out in further detail in section 8.2 of this plan). There is an estimated

$4million worth of costs that are covered by the current revenue stream from Shepton.


These include, corporate overheads, interest on the current loan for the quarry, discounts

on product provided to Council, and a profit steam that partly covers the principal for the

quarry loan;

• There are also a range of intangible benefits that would be lost such as quarrying expertise

and an economy of scale that helps lower production costs at the remaining quarrying

activities; and

• Any sale will have balance sheet implications for Council, which should not be overlooked.

An overall asset write-down will be required. Should the value of this write down exceed

the sale price, then Council would record a one-off loss in the year of the sale. While it

would be a “paper” loss, it would potentially have broader reputational impacts for Council,

particularly if it puts the entire Council position into a loss for the year.

Figure 2 provides the performance measures that will be used to assess the Quarry’s

performance over the life of this plan. These performance measures map back to the plan’s

objectives and 3-year outcomes. These performance measures will enable the Quarry to maintain

and report on a “balanced scorecard” of financial and non-financial performance measures.

This result should position the Quarry well to realise its objectives of being a profitable business

unit and applying competitive pressure on quarry product prices across the region. Furthermore,

it provides a sound platform for considering a number of the growth opportunities outlined in 7.3

of this plan.


Vision Objectives 3 Year Outcomes Key Initiatives

To safely and profitably provide competitively priced, high-quality quarry products for the benefit of the Central Highland’s region

Provide competitively priced, high-quality quarry products across the Central Highlands Region

Evolve service offerings that meet customer’s needs

• Review options for new services

• Grow existing markets Ensure competitive pricing for the Quarry Business’s products and services

Provide high-quality products

Provide fit for purpose, safe and compliant quarry facilities

Maintain service levels through appropriate levels of investment

• Assess & re-value rehabilitation liabilities across the quarrying operations

• Review investment decision-making processes

• Review resourcing requirements for the business

• Develop a 5 to 10-year Renewals Program

• Develop a revised performance reporting regime

• Resource the support services functions

• Develop a Talent Management Plan

Maintain appropriate levels of compliance with all requirements

Ensure on-going profitability

Run the business activity profitably

• Restructure financial reports

• Develop EOY Reports for the business unit

• Develop a dynamic long-term financial plan

• Optimise the Depreciation charge

• Review application of Commercial Policies

Figure 1 - The Quarry's "Plan on a Page"


Vision Objectives Performance

Measures Targets Explanation



• Product growth

• External Sales / Total Sales

• Achieve MRD’s quality specifications

• 1 / year

• >60%

• 100% compliance

• The product growth measure is aimed at ensuring the business unit continues to innovate and adapt to meet its customer’s needs

• Maintaining external sales from Shepton above 60%, ensures the Quarry’s rates are market competitive and thus sets the benchmark for what it charges Council for its products

• Product quality is an important differentiator for the Quarry and is thus an important performance measure. The key benchmark is the Main Road’s Specifications


• Asset Sustainability Ratio

• Material audit non-compliance

• Lost Time Injuries

• 90%

• Zero

• Zero

• The Asset Sustainability Ratio reflects the service and financial sustainability of the business unit. Specially this measures the actual renewal spend, plus reserves set aside for depreciation, divided by the depreciation allowance

• Being compliant with its many obligations is critical for the business activity and this target is focused on ensuring there are no material audit non-compliances

• Safety is an important outcome for Council and the target always needs to be one of zero harm


• Current assets / current liabilities

• NPAT/Equity

• >1.5

• 5 to 15%

• (Current assets / current liabilities) reflects the liquidity or solvency of the business unit

• This KPI reflects the profitability of the business unit as a percentage of the business’s equity

Figure 2 - The Quarry's Performance Measures


2 Glossary of Terms

Terms within this plan have the following definitions:

Business Activities Council’s Competition and Water Reform Policy defines business

activities as those which trade in goods and services to clients and

could potentially be delivered by a private sector firm for the purposes

of earning profits in the absence of Council’s involvement. This

definition implies that there is a charge for and thus direct revenue from

the goods and services traded by those Business Units.

Business Units Those groups within Council with the lead carriage for each of the

business activities identified above.

Commercial Service

Provision

The provision of services in a highly transparent and efficient and

effective manner. Such transparency should be achieved through clear

directives from Council and robust financial and non-financial reporting.

A commercial Business Unit can be run either “for profit”, or “not for

profit”. Such outcomes should be defined by Council on a case by case

basis.

Community Service

Obligation

A Community Service Obligation (CSO) arises when Council wants a

Business Unit to carry out activities that they would not do on a

commercial basis. A CSO should be based on a directive by Council

and provide broader social benefit or community value to the region.

Community Value The broader value a Business Unit might provide to the region that is

beyond any direct commercial benefit that Council may receive from

the Business Units.

Business Model How a business creates value for its customers through its service

offerings, marketing strategies and tactics, pricing, and value

proposition


Operating Model How a business delivers value as defined by its Business Model by

having the right capability and capacity which consists of people,

processes, systems and structures

Market Scan The gathering of intelligence in relation to a business’s current and

prospective markets, competitors and business collaborators

Competitive

Neutrality

Competitive neutrality is about ensuring government owned monopoly

business activities do not have a competitive advantage over the

private sector due to their government ownership or monopoly powers


3 Purpose and Background

3.1 Purpose of this Plan

This plan is for CHRC’s regional Quarrying operations, including:

• The Shepton Quarry, which provides a mix of products external to Council and to Council

itself;

• The Mungabunda Quarry which provides products for Council’s own use; and

• The various borrow pits that are quarried to also provide products directly to Council.

This Business Plan has been developed to enable the Business Unit to:

• Deliver upon the relevant elements of Council’s Corporate and Operational Plans;

• Ensure that there is an understanding across Council on the long-term aspirations and

desired outcomes for the Quarry Business;

• Set the service requirements to help inform other key strategies such as asset

management, financial management, people management and governance;

• Ensure a line of sight from the overall Quarry Business’s objectives to its day to day

operations; and

• Provide a basis for decision making to continuously improve Quarry’s operations and as

such, inform long term capital and operational expenditure plans.

Inxure Strategy Group was engaged by Council to develop Strategic Business Plans for three

business units of Council (the Quarry Business, Emerald Airport and Saleyard). It was requested

that the plans:

• Be for a period of 3 years;

• Include Business Development Plans including business growth opportunities and key

customer relationships and business networks;

• Involve an assessment of the Long-Term Financial Sustainability of the business units;

• Include a consideration of strategic risks;

• Recommend commercial and financial policies that would support more effective operation

of the business units;

• Define performance measures; and

• Consider structural options to increase the commercial focus.


3.2 Process for Developing the Plan

The following steps were used to develop this plan:

• A review of documentation was undertaken;

• An inspection of the Shepton Quarry was conducted on 15 May 2019;

• Four days of interviews with various CHRC staff and external stakeholders were

conducted;

• A workshop was conducted on 17 May 2019 with CHRC staff and representatives of the

three business units; and

• Findings were developed from the above actions.

This Business Plan has been developed using a generic 3-step process, as represented by the

following diagram. This is typical for most strategic planning exercises.

Figure 3 - The Business Planning Process

3.3 Plan Structure (the Value Model)

The analysis of the Quarry Business has been based around what Inxure refers to as the ‘Value

Model’. The model is represented in the following diagram. The purpose of the model is to enable

a structured and coherent consideration of the important facets which must align and culminate

to allow the quarry services to provide value to CHRC and its key stakeholders. If there is any

misalignment across the elements of the Value Model, it is highly unlikely the optimum level of

value will be delivered. Ideally to achieve this alignment, the Business Model and then Operating

Model should cascade from one to the other and be developed from the overall vision and strategy

•Assess the current state of the business and its service outcomes

•Base this on input from staff and a range of reports undertaken over the last 5 years

Current State

•Set goals & objectives the Quarry Business

•Base this on Council plans and input from various Council stakeholders

Future Aspirations •Develop a work program to

bridge the gap between current state and future aspirations for the Quarry Business

•Prioritise the program based on risk

Work Program


for the business unit. This avoids an outcome of “the tail wagging the dog”, which can lead to

perverse outcomes for the overall CHRC businesses.

Figure 4 - The Value Model

For CHRC, its overarching vision is realised through a combination of plans including the

Community Plan and Corporate Plan. CHRC’s vision is “to be a progressive region creating

opportunities for all”. Hence the value the Quarry Business delivers must align with that vision.

Once the value is determined (which is a combination of markets, products, services and price),

the Operating Model shapes how the value is delivered upon.

It is important that the Value Model be worked through iteratively – testing the alignment of each

of the facets. If for example CHRC sets goals that are not feasible – then the Quarry Business

may be set up to fail. Therefore, it may be necessary to reconsider the vision and strategy for

Quarry Business, based on a robust analysis of the Business Model and the Operating Model.

This report is structured around the facets of this “Value Model”. The CHRC’s vision and strategy

for the Quarry is discussed in section 5 of this report. The Business Model is then addressed in

section 6 and the Operating Model in section 7.

Components

• Overall Strategic Direction• Strategy and tactics• Brand• Risk Appetite

• Product offerings • Market strategies and tactics• Pricing plans• Customer value propositions

• Financial management

• Resourcing talent management• Business Systems (Project/Risk/Quality

Management)• Systems• Governance (Board, Committees, Programs)

• Performance (Value) MeasurementCore Operations & Projects

(Delivery)

Vision & Strategy(Purpose)

Business Model(How value is created)

Operating Model(How value is delivered)


4 Overview of the Quarry

4.1 CHRC Region

The Central Highlands Regional Council was established in March 2008 based on the

amalgamation of four previous local government areas (the Shires of Bauhinia, Duaringa,

Emerald, and Peak Downs). The region encompasses an area of 59,968 square kilometres and

is bounded by the Rockhampton region and Banana Shire to the east, Isaac Shire to the north,

the Blackall Tambo region to the west and the Roma region and Murweh Shire to the south. It is

home to around 30,000 people most of whom live in the thirteen communities of Arcadia Valley,

Bauhinia, Blackwater, Bluff, Capella, Comet, Dingo, Duaringa, Emerald, Rolleston, Sapphire

Gemfields, Springsure and Tieri.

The region is rich in minerals and forms part of the Bowen Basin supporting a globally competitive

coal industry. The region also has the largest sapphire-producing fields in the Southern

Hemisphere.

4.2 Quarry Background

The following section of the plan describes the quarry business. It is made up of a range of quarry

sites (with a key part of the business being the Shepton and Mungabunda Quarries) and borrow

pits.

Shepton Quarry was established by the former Peak Downs Shire Council in 1991. The Quarry

is located 25km east of Capella and 40km north of Emerald. The site incorporates a large open

cut pit, a fixed crushing plant, office facilities and weighbridge. The Quarry resource is rock that

is olivine basalt, a basic igneous rock described as strong, hard and durable. Quarry resource

mapping in 2014 confirmed resources at 39 million tonnes. This would allow for an 80-year life of

the Quarry based on an estimated 500,000 tonnes per year. Shepton Quarry, in the heart of the

Bowen Basin, supports product delivery to Capella, Emerald, Clermont and surrounding areas.

The quarry supplies NATA certified, hard rock product from a high-grade geological source for

civil and road building and maintenance projects.

The fixed crusher plant is a feature of the Shepton Quarry and represents a significant investment

in materials and equipment that was seen to be viable when the quarry was achieving high

production levels. Much of the value from the fixed plant is derived from its current use, and the

underlying infrastructure (concrete support pads etc) would have little salvage value. A key

learning from the installation of the fixed crusher plant investment is that future decision making

associated with major investments should be supported by a well-developed business case

providing analysis on projected returns on investment for various future demand scenarios.


In late 2014, due to the market decline for products from the Quarry site in Capella, Shepton

Quarry diversified its internal supply operations within Council. A Quarrying license was

developed with a local property owner to undertake extraction activities at a project site known as

‘Deep Creek’ and produced 130,000 tonnes of road base material for the Arcadia Valley Road

project. This project was effectively a demonstration model of how quarry operations can be

diversified internally for the benefit of Shepton Quarry revenues and the provision of quality

product and controlled supply costs to other Council departments.

Further diversification has involved establishing operations at Mungabunda to ensure supply to

the southern part of the Central Highlands Region. A development permit was issued in July 2017

for operations at Mungabunda. The quarry was formerly used as a borrow pit for secondary roads,

however the site was found to have the potential to become a reliable source of quality road

maintenance and construction materials. This included works undertaken in the far south-east of

the Central Highlands region under the Natural Disaster Relief and Recovery Arrangement

(NDRRA) scheme. The geology of Mungabunda Quarry is basic volcanic igneous rock known as

olivine basalt, which is made up of hexagonal cooling column prisms referred to as columnar

basalt deposits. General quarrying practices have been established within the Mungabunda lease

area together with provisions for drill blast, mobile crushing and screening equipment to be

operated on a campaign basis. The quarry is certified to supply material for the Queensland

Government’s Department of Transport and Main Roads works and has recently become a

preferred supplier to Banana Shire Council.

Further gravel borrow pits (about 300 sites) are located throughout the Central Highlands region.

These sites are under the control of Council and are largely used for maintenance of Council’s

unsealed road network.

Whilst the quarry operations were initially established to provide aggregate and road base in-

house to council’s infrastructure and waste service areas, increasingly activities have expanded

to supply commercially to mining operations, Qld Department of Transport and Main Roads and

the public. Key customer groups include:

• Mining

• Local government

• State government

• Road construction

• Building construction

• Concrete manufacture

• Extractive industry


4.3 Site and planning

The Shepton quarry occupies a 64.74ha site area on land described as Lot 2 of SP 164551 and

incorporates the following major developments:

• Pit 1: a smaller work area in the south-western portion of the site;

• Pit 2: a deep, open cut pit extending down the southern portion of the site; and

• Northern Pit: a large, open cut pit at the north of the site (current operations).

The Quarry is leased under a 30-year lease agreement which expires on 30 September 2040.

The lessors are Kenneth John Ross and Jo-Anne Phoebe Ross. The lease agreement allows for

5 extensions of 10 years each which covers the total expected life of the Quarry. The lease is

transferable subject to the lessor’s consent.

The Mungabunda Quarry is located on ‘Cowandilla’ approximately 25 kilometres from Bauhinia.

The site is located at 1203 Mungabunda Road, Rhydding on land described at Lot 6 on BH108

and is leased under a 5-year agreement.

Council has in the order of 300 borrow pits across its region. Compliance audit of the borrow pits

is planned to be undertaken. Quarry may in future undertake a role in compliance management.

4.4 Quarry sales

4.4.1 Current Sales

Demand for quarry products is linked to the economic activity within the mining and construction

sectors and the follow-on effect of increased urban development. Following what is referred to

as a resources ‘boom’ that peaked in 2012, the region has experienced a significant retraction

within these sectors until recently. In addition, significant investment in public infrastructure in

the region was initiated due to flood damage to roads between 2008 and 2015 within the Central

Highlands Region, amounting to $165M in road construction works. With this work nearing

completion, a decline in Government spending on road infrastructure at both State and Local

levels will continue to impact on demand for quarry products.

These drivers for demand had a strong impact on sales between 2009 and 2012. From 2013/14,

demand for products dropped off, but since then sales have been increasing by around 9% per

annum. The 18/19 financial year has seen a significant jump in production to:

• 195,000 tonnes for Shepton; and

• 11,000 tonnes for Mungabunda.


The following table shows the breakdown of sales (by percentage) from the three components of

the Quarry Business. This breakdown is by internal and external sales. The table also shows

the percentage that each component makes up of total sales. These figures are based on the

18/19 financial year performance.

Item Shepton Mungabunda Council

Borrow Pits

Total

External Sales (%) 60% 0 0 36.6%

Internal Sales (%) 40% 100% 100% 63.4%

% of Total Sales 61% 4% 35% 100%

Table 1 - % Sales for the Quarry Business - 18/19 Financial Year

One of the objectives of this Business Plan is to ensure the Quarry business’s products are

competitively priced. This is a key feature for ensuring the Quarry business delivers value back

to Council. As there is a competitive market for quarry products in the Central Highlands region,

the most effective means of ensuring the Quarry business’s prices are competitive, is for it to

compete in this market.

As the table above shows, 60% of the product from Shepton is sold externally. This translates to

over 35% of total sales for the business unit. The Quarry business in turn provides Council with

a $1.50 per tonne discount on the products sold internally for its infrastructure requirements. To

maintain this competitive pressure, a target of 60% has been set for external sales from Shepton.

4.4.2 Future Demand

Future demand of Quarry products within the region is identified through the following potential

opportunities:

• Galilee Basin mining – rail development;

• Upgrade of Gregory Highway between Emerald and Clermont;

• Upgrade of Blackwater Rolleston Road;

• Upgrade of Tambo Springsure Road;

• Gas development projects throughout the Region; and

• Council internal projects.


Regional economic trends may play some part in future demand for quarry products. According

to REMPLAN economy1, a number of regional economic indicators for Gross Regional Product

(GRP, Building Approval (residential and non-residential) and population peaked between around

2010-2013. As shown in the figure below, the subsequent downturn is showing signs of

abatement with trends indicating small percentage increases in population, building approvals

and GRP for the region.

Figure 5 - Central Highlands Economic Trends

In summary, the operating environment for the quarry has experienced significant flux in recent

years, as the regional economy adjusts to a post resources boom period, together with on-going

planned investments in public infrastructure. That said, a further adverse event associated with

flooding is likely to result in immediate demand for quarry products as part of any reconstruction

efforts.

1 https://www.economyprofile.com.au/centralhighlands/trends/gross-regional-product

-150.00%

-100.00%

-50.00%

0.00%

50.00%

100.00%

150.00%

200.00%

250.00%

300.00%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Trends for Central Highlands region

GRP % Change Residential Buiding Approvals

Non-Residential Building Approvals Population % Change

2 per. Mov. Avg. (GRP % Change) 2 per. Mov. Avg. (Residential Buiding Approvals)

https://www.economyprofile.com.au/centralhighlands/trends/gross-regional-product


4.5 Previous Quarry Review

In 2013, Edge Advantage undertook a review of Council’s three commercial businesses, including

the quarry, to review the markets, operations and financial performance of these assets and to

assess a range of options for each asset against specific criteria. A number of turnaround

strategies were proposed to improve business performance (see Appendix A). As a result, a

number of changes have been implemented included the assignment of delegated authority to

the Operations Coordinator - Shepton Quarry and the General Manager of Customer and

Commercial Services. These improvements appear to be effective, with a corresponding turn

around in financial performance for the Quarry business in the 18/19 financial year (as discussed

in further detail in the following sections).

Furthermore, in early 2019, an Expression of Interest process was commenced seeking

submissions from the private sector to operate the Shepton Quarry operations.


4.6 SWOT Analysis

A high level, strategic level assessment of the strengths, weaknesses, opportunities and threats

for the Quarry Business has been developed as follows.

Strengths

• Quality of Shepton product - basalt and

other products

• The capabilities of the existing crushing

plant allow the ability to provide a range

of products

• Ability to provide mobile crushing

services at multiple locations

• Securing of some 300 pit sites across the

region

• Capability and experience of staff (ex

Holcim)

• Council’s delegation to adjust pricing to

meet market conditions

• Customer focus and lowering of

production costs

Weaknesses

• Location of the two quarry sites-

limitations to the area that can be

serviced

• Limited agreement that quarry

operations contribute to core Council

operations

• The quarry is subject to OHS

requirements of the Mining Act that is

more stringent than Council’s statutory

framework

• Lean staffing levels- loss of key staff is

an issue

• IT, communications and services

limitations to remote locations

Opportunities

• Pre-coat aggregate production

• Ability to meet specification for HPV

pavements

• Expanding customer base- mines, other

councils

• Piloting of mobile crusher for potential

investment

• Collaborations with other businesses to

provide products that meet market

demands

Threats

• Environmental licensing requirements

• Fluctuating markets

• Impediments to further mining activity


5 Purpose of the Quarry

5.1 Overview

As outlined in Section 3 of this report, Inxure has used the “Value Model” as the framework for

guiding this overall assessment (see diagram below). As this model depicts, a key starting point

for any business is having a clear purpose via a well-defined vision and strategy.

Figure 6 - Value Model - Focus on Purpose

The Value Model sees the purpose (or vision and strategy) being made up of:

• A clear overall strategic direction or vision for the Quarry Business;

• An understanding of how it links to Council’s overall Strategic Framework and then into

tangible and implementable actions and targets; and

• A clear risk appetite and tolerance (i.e. what strategic risks will the organisation take and

not take in respect of the Quarry Business).

Components







(Delivery)





5.2 Council’s Strategic Framework

Council’s Strategic Planning Framework provides a corporate context for the Quarry Business

Plan. This framework is shown below and is taken from the 2017 to 2022 Corporate Plan.

Figure 7 - Council's Strategic Framework

The Central Highlands 2022 Community Plan is a region-wide plan with outcomes and goals

forming the basis of a long term ‘road map’ setting out the steps for the community to achieve its

vision. The Community Plan involved extensive community consultation and sets out the priorities

for each of the region’s 13 individual communities.


Council’s Corporate Plan sets the strategic direction for Council and provides a number of

actions and strategies to ensure the region is socially, economically and environmentally

sustainable. It is the principal planning tool to guide decision making and balance the delivery of

services with available resources and other variables in Operational Plans. Council has six

strategic priorities as set out in the Corporate Plan. These are:

• Strong vibrant communities;

• Building and maintaining quality infrastructure;

• Supporting our local economy;

• Protecting our people and our environment;

• Leadership and governance; and

• Our organisation.

The Quarry Business Plan fits between the “Management Plan” and “Annual Operating Plan”

levels of Council’s overall Strategic Planning Framework. That is, the Quarry Business Plan is

guided by the Community Plan, Corporate Plan and Council’s Management Plans. The Business

Plan in turn informs the Annual Operational Plan, Budgets and Staff Performance Plans.

5.3 Regional Public Value of the Quarry Business

Business planning within the public sector needs to account for the broader public value that an

organisation delivers to the communities it serves. Bennington (2009)2 defines public value as a

concept that ‘extends beyond market economic considerations, and also encompasses

ecological, political, social, and cultural dimensions of value - all that adds value to the public

sphere’.

A clear indicator of the broader value that the quarry provides to the local and regional economy

is evidenced by its financial performance whereby external customers comprise 35% of the

quarry’s overall revenue. A range of factors underpin the attraction to broader industry customers,

however the quality of the product combined with the systems and processes that have been put

place to meet regulatory standards - means that contractors undertaking works for government

or mining operations include decision criteria that take account of quality of product and systems.

2 Benington, J., 2009. Creating the public in order to create public value? Intl Journal of Public

Administration 32, 232–249


It may also be noted that quarry operations have been retained by a number of councils across

Australia. Some examples include Whitsunday Regional Council (Foxdale Quarry), Brisbane City

Council (Bracalba Quarry), Campaspe Shire Council (Mt Scobie and Nanneella Quarries) and

Snowy Monaro Regional Council (Middlingbank Quarry), to name a few. In these cases, it would

follow that a clear public value motive drives a view to retain these facilities as part of council

operations.

For the Central Highlands, council’s quarry operations may be seen to deliver public value to the

local community in terms of Council’s Strategic Priorities as follows.

Council Strategic

Priorities

Quarry’s Public Value

Strong vibrant

communities • The quarry business supports the local economy through

collaborative partnerships with the business community

Building and

maintaining quality

infrastructure

• The quarry operations ensure that good quality, cost effective

materials are available to council and the wider industry

• Quarry materials contribute to durable pavement assets with lower

maintenance costs

Supporting our local

economy • The quarry business ensures cost effective quarry materials are

critical in the construction of economic infrastructure

• Quarry products are critical to supporting a resilient regional economy

when faced with adverse climate events by ensuring stable pricing

during such events

Protecting our people

and our environment • Safety is critical in quarry operations

• Through a focus on rehabilitation programs, Council seeks to leave

sites in better condition than before

• The water resources within the quarry provide a contingency water

supply in drought

Leadership and

governance • Council’s quarry products are produced based on robust Quality

Assurance systems and processes

Our organisation • The quarry business provides consistent high levels of customer

service in accordance with CHRC’s Customer Service Charter

• CHRC’s systems and processes provide industry with confidence

when using quarry services


5.4 Quarry’s Vision and Objectives

Previous plans3 have identified the Quarry’s vision as being “To provide a safe operating Quarry

that maximises opportunities for efficient and cost-effective production practices, that meets the

needs of both our internal and external customers”. This is to be delivered through the following

objectives:

• Ensure the Quarry Business and its operations meet all legislative requirements;

• Ensure planning of Quarry operations meets production targets in the most efficient and

cost-effective manner;

• Develop and maintain strong customer relationships to optimise opportunity for ongoing

sales;

• Produce quality quarry products within determined specification and customer needs;

• Develop operator training plans to ensure competent and skilled quarry operators;

• Develop and maintain preventative maintenance plans to ensure optimal production from

Quarry plant and equipment;

• Regularly review cost of production information to ensure competitive pricing and

achievable profit targets;

• Ensure operation in accordance with the Quarry’s Quality and Safety Management

Systems.

The vision and objectives for the current business plan are set out in Figure 8 below. These have

been based on the analysis of the Quarry Business’s links to Council’s Corporate Plan, the public

value it offers, and consideration of the objectives outlined in the Quarry’s 2014 Business Plan.

An explanation of this vision and the associated objectives and outcomes is provided below:

• The vision and objectives reflect the fact that the Quarry provides public value, beyond that

of a private sector run business activity. However, the Quarry must run with the discipline

of a private sector organisation;

• The importance to the Central Highlands Region of Council running their own quarry

operations is two-fold.

o Firstly, it ensures there is a constant provider of high quality and compliant quarry

products to the region. This benefit is demonstrated by the fact that a number of

3 Quarry Business Plan 2015


customers who have corporate goals of ensuring ethical and compliant purchasing

practices, that are customers of the quarry;

o The second benefit is that it is able to ensure the market for quarrying products remains

competitive and stable in all circumstances. Other regions have seen excessive pricing

during periods of high demand, such as when needing to respond to flood events or a

spike in the local economy;

• To ensure its competitiveness, the quarry must compete in the open market. However, it

must do so profitably. Otherwise Council’s ratepayers are subsidizing the provision of

quarrying products to the broader market. As such there is a performance target set for

the operation of the Shepton Quarry, that over 60% of its sales must be external to Council;

• A key aspect of the quarry is both its compliance with the various legislative requirements

involved in running a quarry, and high quality of the products it provides. Both

considerations feature in the vision and objectives; and

• It is also important that the quarry is financially sustainable into the longer term. To this

end, there is an objective focusing on maintaining investment in the facility to ensure the

desired levels of service are maintained.


Vision Objectives 3 Year Outcomes Links to Council’s Strategic

Priorities

To safely and profitably provide competitively priced, quality quarry products for the benefit of the Central Highland’s region


Evolve service offerings that meets customer’s needs

• Strong vibrant communities

• Supporting our local economy Provide high-quality products

Ensure competitive pricing for the Quarry Business’s products and services


Maintain service levels through appropriate levels of investment

• Building and maintaining quality infrastructure

• Protecting our people and environment

Maintain appropriate levels of compliance with all requirements

Ensure on-going profitability Run the business activity profitably • Leadership and governance

• Our organisation

Figure 8 - Quarry's Vision and Objectives


6 The Business Model

6.1 Overview

This section of the report focuses on the Business Model for the Quarry Business - or how value

is created (as depicted in the diagram below). Specifically, it examines:

• The value proposition to customers and the region;

• The products and services offered by the Quarry Business;

• Marketing strategy and tactics; and

• The pricing strategies.

Figure 9 - The Value Model focusing on The Business Model

An understanding of the basis of the value proposition for the Quarry Business Unit will inform the

group’s business model. As outlined in the previous section, the general principles underpinning

the Quarry’s business model include:

• The Quarry Business provides wider community value, and this should be built upon; and

• The Quarry is a commercial business unit seeking to be commercially self-sufficient of

Council and to run profitably.

Components







(Delivery)





The business model is best represented by the “4Ps of the marketing mix”. The following table

summarises the 4Ps model. The following sections analyse each of these elements in further

detail for the Quarry Business.

Category Definition Typical Marketing Decisions

Product Refers to an item that satisfies the

consumer's needs or wants. Products

may be tangible (goods) or intangible

(services, ideas or experiences).

Product quality

Product assortment – product range,

product mix, product lines

Branding

Associated services (complementary

service, after-sales service, service

level)

Price Price refers to the amount a customer

pays for a product. Price may also refer

to the sacrifice consumers are prepared

to make to acquire a product (e.g. time

or effort). Price should also include

considerations of perceived customer

value

Price strategy & tactics

Payment terms – credit, payment

methods

Place Refers to providing customer access

and considers providing convenience

for the consumer

Market coverage

Transport, and logistics

Promotion Promotion refers to marketing

communications and the associated

channels to market

Promotional mix - appropriate balance

of advertising, PR, direct marketing and

sales promotion

Message strategy - what is to be

communicated

Channel/ media strategy - how to reach

the target audience & frequency

Figure 10 - 4Ps Marketing Mix*

* Adapted from Needham, Dave (1996). “Business for Higher Awards”. Oxford, England: Heinemann


6.2 Product

6.2.1 Overview

The Quarry produces quality basalt rock products that are angular in shape and very strong, ideal

for road base as the pieces lock together which enhances road durability. Basalt is a dark-

coloured, very strong, fine-grained igneous rock, and is also used for concrete aggregate, asphalt

pavement aggregate, railroad ballast, filter stone in drains, and many other purposes. The Quarry

has approval from the Department of Transport and Main Roads for the production of aggregate

for the production of hot mix (asphalt) by others.

The quarry business is capable of producing quality ‘in specification’ road base products and

delivering material supply at controlled costs internally to Council. Products meet the following

technical specifications:

• Queensland Department of Transport and Main Roads specifications - MRTS70 Concrete

• Queensland Construction specifications - C242 Flexible Pavement

• Queensland Department of Transport and Main Roads specifications - MRTS22 Supply of

Cover Aggregate

• Queensland Department of Transport and Main Roads specifications - MRTS05 Unbound

Pavements.

A key feature of the Shepton Quarry operations is the fixed crushing plant comprising four

crushers and associated conveyors and operating plant. As such it is capable of (but not limited

to) producing the major products outlined in Table 1 below.


Material Description

Dust Crusher dust<5mm

Minus 11<10mm

Concrete Aggregate Concrete Aggregate 12mm & 22.5mm

Gravel Base Gravel (Type 2.1)

Base Gravel (Type 2.2)




Top 600

Minus 40mm Base Gravel

Unspec gravel

Screenings Un-precoated:7mm, 10mm,14mm, 16mm, 20mm

Screening mixes 7/10mm mix

12/24 mm

Rock Dumped shot rock

Gabion rock

Minus 100mm

Minus 75mm

Ballast Ballast 25-50 mm

Ballast mix 16/25-50mm

Table 2 - Quarry's Major Products

6.2.2 Opportunities for product growth

The Quarry Business has identified the following growth opportunities:

• Producing Manufactured Coarse Sand;

• Rail Ballast that may be loaded at a local rail siding;

• Provision of material for Concrete Manufacturing plants; and

• Internal supply to Council Departments.

The quarry business has previously supplied precoated aggregate for road pavements. This

market is seen to be highly profitable, and plans are currently in place to re-establish facilities for

pre-coated aggregate production.

The further development of the mobile quarry production model has been identified as a key

opportunity that can provide significant value to Council internal operations and road construction

operations throughout the region. The use of mobile crushers has now been effectively piloted by

the quarry business unit adding to a more diversified product mix with potentially lower cost due

to lower transport costs.


6.3 Price

Although the Quarry Business’s products are of good quality, this generally will not necessarily

motivate the customer to pay a premium price for better quality product. The quarry industry has

become highly competitive and price has become a key differentiating factor, followed by quality

of product and customer service. The need to understand cost of production expenditures is

critical to the development of the commercial price, as well as informing profit margins when

negotiating variable and competitive pricing.

In May 2014 a flexible pricing model was implemented by Council to facilitate the Quarry

Business’s competitiveness within the quarry product market. Council’s pricing policy ensures

that certain delegated authorities are available to officers in order to respond to market soundings

for products in a timely and competitive manner.

The Quarry Business has a production cost model for different modes of production. Pricing is

based on this model, plus an appropriate margin, depending on the market. Delegations are then

set for both the Operations Coordinator – Shepton Quarry and the General Manager Customer

and Commercial Services in respect of approving the final price for products. It is also noted that

over 60% of Shepton’s products are sold into an external competitive market, which also places

downward pressure on prices.

6.4 Place and Accessibility

Extractive resources are essential to the State and regional economies, and the community, as

the primary raw materials for the construction industry. The extractive industry does not have

flexible location options, because the extractive resources are fixed, finite and are limited in

occurrence.

Quarries provide a range of extractive materials, such as sand, gravel, crushed rock and clay,

which are processed and used as raw inputs for buildings and construction, agriculture and

industrial purposes. It is estimated that 90% of the output from quarries in Australia is used within

the building and construction industries. These extractive resources (or aggregates) include

processed rock, gravel and sand products that are used to build houses, schools, roads, bridges,

commercial and industrial buildings, airports, railways and other basic infrastructure.

Unlike mining for metals or coal, extractive materials (including road base, aggregate, sand and

clay) are high volume, low-cost materials that need to be extracted and ideally processed as close

as possible to the communities that use them. This is due to the high relative cost of transporting

low-cost heavy materials. Utilising extractive materials from outside the region brings with it

significant social, environmental and economic costs. However, the cost of transport also needs


to be balanced with the cost of ensuring the compliant use of borrow pits, which can be expensive

at a small scale.

Strategic quarry locations should be sourced, assessed for feasibility, and licenced. Quarry

location is of the utmost significance, as aggregates are low-value relative to weight, so increasing

the distance over which they are transported from quarry to road construction site adds

significantly to costs. Having strategic placed quarries throughout the Council area would enable

Council to pass on cost effectiveness for road reconstruction works, whilst maintaining a profitable

return with an overall cost benefit to the community.

The Shepton Quarry is well located in the heart of the Bowen Basin, and supports product delivery

to Capella, Emerald, Clermont and surrounding areas. The establishment of the Mungabunda

Quarry and the broader use of regional pits has allowed the quarry to extend its geographic reach

and supply to the southern part of the Central Highlands region. Having strategically placed

quarry operations, particularly in the south of the region allow the quarry to meet the requirements

of council and support other remote civil construction activities.

The Quarry Business uses both Council trucks and private contractors for delivery of products.

The use of private contractors for cartage purposes provides the Quarry with an additional

revenue opportunity, whereby a profit margin is included in the overall cost to the customer. Cost

of cartage however can be prohibitive in the catchment market, which is identified as

approximately a 70-kilometre radius from the Quarry. Costs of cartage beyond this area can

restrict the Quarry in its ability to compete with quarries located closer to customer sites

6.5 The Market

More recently, several additional quarries have emerged in close proximity to Shepton Quarry

with aggressive pricing strategies, initially having a significant impact on demand from Shepton

Quarry. The current Quarry management have responded by driving down production costs. A

brief description of various other quarries in the wider region is provided in the table below. These

quarries can be both customers and competitors to Council’s quarry business. Council’s robust

financial analysis and management associated with the quarry business unit, mitigates against

the risk of perceived market collusion.

Quarry Description

Quarries of

Queensland

Quarries of Queensland operates the Eureka Quarry located 23 kilometres east

of Capella in the Lilyvale Mining Area. This is the closest quarry to Council’s

Shepton Quarry


Glendon Quarry Located approximately 33kms west of Emerald, Glendon offers a range of blue

metal products having supplied road base, ballast and shot rock for residential,

infrastructure, commercial and civil projects in the region.

Emerald Quarries Emerald Quarries is located 58 kilometres due west of Emerald, between

Sapphire and Rubyvale on the Gemfields. The quarry site is over 600ha in size

and even though the quarry has been operating for over 25 years they are only

utilising 60 acres. The primary function of Emerald Quarries is to supply concrete

plants around Australia with decorative pebble. The stone / pebble in question is

round quartz stone with high strength. Emerald Quarries provides 3 different

coloured products, Honey, Gold and White which are sized in

1,2,3,4,5,6,7,10,12,14-16 and 20mm. With a sand drier newly commissioned on

site, they are now able to offer dried premix concrete mix in one and two tonne

bags.

Wallaby Hills Quarry Wallaby Hill Quarry is located adjacent to the 24 kilometres west of Springsure

and six kilometres south of the Dawson Developmental Road. The crushable

rock reserves at this site are approximately 2.0 million tonne of basalt rock. The

development approval application is for a maximum capacity of 50,000 tonnes

per annum. The life expectancy of this site in excess of is 25 years. The Quarry

is operated by Millibourne Pty Ltd t/a Lanes Land Developments.

Clermont Quarry

Blackwater Quarry Offers an extensive range of construction products either custom made for

individual requirements or as general industry standard products. This includes

aggregates; ready mixed concrete, high performance ready mixed concrete and

can undertake a range of precast concrete products.

Table 3 - Quarry's Competitors

6.6 Promotion & Channels to Market

The market for products of the quarry business lies largely within the government, mining and

construction sectors. An understanding of the pending pipeline of infrastructure works is critical

to being able to ensure that services can be promoted at the appropriate time to potential

customers. The nature of the construction industry means that business promotion is largely

built upon relationships to ensure on-going and effective communications with existing and

potential customers. At the same time, promotional material is necessary to ensure on-going

recognition by current clients, as well as raising awareness with potential new clients.

The following initiatives have been formalised as part of the Quarry Business’s marketing

activities:

• The development of a client database (comprising past, existing and prospective clients)


• Development of a marketing brochure (that requires updating as it features the previous

mine manager);

• Establishment of a dedicated web page on Council’s website; and

• Various marketing collateral and promotional products.

6.7 Business Model Summary

CHRC’s quarry operations provide broader value to the council and the Central Highlands

community and the business model for quarry services should reflect this value. Quarry services

contribute to wider public value and addresses Council’s corporate priorities by:

• supporting the local economy through collaborative partnerships with the business

community;

• ensuring that good quality, cost effective materials are available to council and the wider

industry;

• facilitating commercial opportunities in the region where cost effective quarry materials are

critical in the construction of economic infrastructure;

• supporting a resilient regional economy when faced with adverse climate events;

• effectively managing safety;

• through a focus on rehabilitation, leaving sites in better condition than before;

• providing consistently high levels of customer service in accordance with CHRC’s

Customer Service Charter; and

• having systems and processes that provide industry with confidence in using quarry

services.

As a commercial business unit, the consideration of providing value to the community must be

balanced with commercial considerations. For quarry services, maintaining a profitable business

is equally important. In order to maintain profitability, the focus needs to continue on building both

external and internal customer relationships and identifying new opportunities to support various

construction activities throughout the region.


7 The Operating Model

7.1 Overview

This section of the report focusses on the Operating Model for the Quarry Business and examines

how value is delivered. This section specifically considers the people capability, processes and

systems necessary to deliver upon the desired vision and objectives for the Quarry, and to support

its business model (discussed in the previous section).

Figure 11 - The Value Model focusing on The Operating Model

When considering the operating model, it is important to note that the Quarry is grouped with

other commercial business units within the Customer and Commercial Services division of

Council (including the Airport, Saleyard and Housing Services). This allows Council to achieve

synergies in the operation of these business units. As a result, a number of initiatives identified

in this section of the Plan can be progressed co-operatively with the other business units.

Furthermore, the 3 business units receive a range of corporate services from other divisions of

council including, Council wide financial management, asset management, HR services, IT

services and capital delivery services.

Components







(Delivery)





7.2 Quarry Risk Assessment

Council’s “Enterprise Risk Management Framework” has been used in this plan to assess the key

risks for the Quarry business. This helps inform the prioritisation of key initiatives within the plan.

As noted in the Risk Management Framework, “risk is inherent in all of council’s business

activities, programs, services, projects, processes and decisions. As such, council is committed

to consistent, efficient and effective risk management.” Council’s risk framework is summarised

in Appendix B of this Plan.

The following table summarises the Quarry business’s key risks, along with their respective

mitigations. This risk assessment has been adapted from the 2015 Business Plan and it remains

relevant. These risks are also considered in the following analysis of the Operating Model.

Risk Description Mitigated

Risk Rating

Risk Mitigation Unmitigated

Risk Rating

Loss of key personnel

Extreme Talent management plan Extreme

Ineffective or inadequate

processes

Medium Compliance and management

systems

High

Poor site induction Medium Induction program (including

adherence to that program)

Extreme

Out of specification product Medium Appropriately certified staff &

specification testing

Extreme

Operating at a financial loss

Medium Grow markets / revenue & manage

costs / robust financial management

Extreme

Poor site safety Medium Safety management system

Extreme

Inadequate facilities

maintenance

High Robust preventative maintenance

regimes

High

Inaccurate weigh bridge Medium Regular calibration and certification

checks

High

IT systems failure

Medium Corporate Services SLA High

Table 4 - Quarry Risks

It is noted that the “Loss of Key Personnel” remains as a high risk while there is uncertainty about

the quarry’s on-going operations in light of the Expression of Interest process. While this process

is running, Council is reluctant to invest in more permanent resourcing for the quarry business,

which places pressure on the existing personnel.


7.3 Service Planning

Service planning is about ensuring the Quarry business can continue to deliver the products and

services expected of it – along with planning for any improvements in such service. For the

Quarry business, significant work has been undertaken in recent years to upgrade the facilities to

improve levels of service. There has however, been a poor investment decision made in the

recent past at Shepton. The current crushing unit was built in the middle of a construction boom

and following a subsequent downturn, it had to be financially impaired by $7.8m (which represents

68% of the crusher’s production capacity). This led to financial impacts upon not just the business

unit, but also Council.

The Quarry has identified the following growth opportunities, which could in turn lead to the need

for future service planning:

• Producing Manufactured Coarse Sand;

• Rail Ballast that may be loaded at a local rail siding;

• Provision of material for Concrete Manufacturing plants;

• Internal supply to Council Departments;

• The supply of precoated aggregate for road pavements; and

• Developing a mobile quarry production business.

These growth opportunities are likely to require some level of capital investment to bring them to

fruition. Council’s past experience should not result in it avoiding such opportunities, but rather

improving the investment decision making process. There are a number of state-based

processes available from Departments such as Treasury or Building Queensland. Council should

adopt and where necessary adapt these processes for application within its commercial business

units such as the Quarry. A key part of such decision-making is undertaking long term financial

modelling to determine the possible impacts of such investments under a range of scenarios.

7.4 Asset Management

For asset intensive businesses such as the Quarry business, Asset Management is an important

input to service planning. It is critical that the assets are capable of achieving the outcomes

sought by the Operations Coordinator - Shepton Quarry. Council has a corporate Asset

Management service provider and this group:

• Sets overall corporate policies relating to asset management;

• Through a central pool of expertise - leads the development of the AMPs on behalf of the

various asset custodians. The AMPs provide a high-level statement regarding levels of


service, a detailed overview of the assets and contemporary asset valuations and

depreciation figures; and

• Where practical and efficient, the corporate service provider will coordinate condition

assessments for various asset types.

Through this model, AMPs have been established for all asset types including the Quarry. It is

then up to each asset custodian to:

• Be the owners of the AMPs;

• Optimise the plans and the associated information within them;

• Develop appropriate maintenance management plans; and

• Develop appropriate renewals plans.

The Quarry has a relatively high percentage of mechanical and electrical equipment. Furthermore, the is

equipment is essential to the production of product for sale. If this equipment fails, then the quarry’s

operations and revenues cease to flow. As a consequence, the Quarry has a robust preventative

maintenance plan for its “active assets”.

It will be important to both further optimize the AMP and develop an appropriate renewals plan.

Depreciation makes up a large proportion of the Quarry’s cost base and it compromises its ability

to operate with a positive operating position. Management needs to be satisfied that this figure

is as robust as possible and is thus informing sound management decisions.

Linked to the optimization of depreciation, is the need to have in place a robust renewals plan for

the facility. The goal of this plan is to maintain the service potential of the facility and it ideally

should have a 5 to 10-year outlook. If both the depreciation figure and the renewals plan are

robust, then there should be a broad matching between the two.

To this end, the Queensland Government legislates for Councils to measure the renewals capital

expenditure as a percentage of the depreciation expense (referred to as the Asset Sustainability

Ratio). This is an approximation of the extent to which infrastructure assets are being renewed

to maintain their intended service potential. The Queensland Audit Office (QAO) then reports

annually on this metric for all Councils. They will report a red for fail if the renewals expenditure

is well short of the depreciation figure (the target is 90%). This highlights the importance of both

figures being as robust as possible, otherwise:

• If the renewal expenditure is below what it should be (due to the absence of a renewals

plan), then it indicates that the service potential of the asset is being run down. It may also

be possible that the Council’s long-term financial sustainability is being compromised as it

is not setting aside the funds to renew or replace these assets; and


• If the depreciation figure is artificially high due to a lack of optimisation, then it will

incorrectly show an under expenditure on asset renewals. It will also artificially erode the

financial performance of the business unit.

Optimising the AMPs and developing a long-term renewals plan for the facility are important

actions for this business plan. Specific considerations for optimizing the depreciation allowance

are addressed in section 7.5 below.

7.5 Financial Management

7.5.1 General Financial Performance

The following table shows the 18/19 financial performance for the quarrying operations. The

financial performance is broken down by the key component of the overall quarrying business

being:

1. The Shepton Quarry, which sells in the order of 60% of its product externally and the

remainder is provided directly to Council for its infrastructure activities;

2. Mungabunda Quarry, which provides product exclusively to Council for its infrastructure

activities; and

3. The numerous borrow pits that are operated across the Central Highlands region, which

provide product exclusively to Council for its infrastructure activities.

Item Shepton Mungabunda Council

Borrow Pits

Total

Total Operating

Revenue

$4,445,662 $222,643 $2,252,048 $6,920,353

Total Operating

Expenses

($4,141,726) $323,850 ($2,030,594) ($6,496,170)

EBITDA $303,936 ($101,206) $221,453 $424,183

Total Non-Operating

Expenses

($554,712) 0 0 ($554,712)

NET EARNINGS (250,776) ($101,206) $221,453 (130,529)

Table 5 - 18/19 Actual Financial Performance


The net earnings for the Quarry business for 18/19 financial year is influenced negatively by

$420,000 worth of movement in inventory at Shepton and Mungabunda. If this movement was

netted off the results, then the net earnings would have been a positive $300,000. Furthermore,

the net earnings (less movement of inventory) for Shepton is $130,000, which compares very

favourably to the budgeted net earnings for Shepton of a negative $550,000. Put differently, this

is a $680,000 turn around for Shepton’s bottom line. This is based on a near doubling of sales

from Shepton compared with budget, and prudent cost control.

Hence, the 18/19 financial year result positions the Quarry well to realise its objectives of being a

profitable business unit into the future and applying competitive pressure on quarry product prices

across the region. Furthermore, it provides a sound platform for considering a number of the

growth opportunities outlined in 7.3 of this business plan.

7.5.2 Optimising the Financial Statements

Quite detailed and informative “Operating and Expense Statements” are produced quarterly for

the Quarry. However, it is noted that not all “full cost pricing elements” of Council’s Competition

and Water Reform Policy are applied within these statements. At present there is no inclusion of

a tax equivalent payment. Furthermore, as the quarry should be run at a profit, then there should

also be a return on capital that should in part flow back to the Council as a dividend. Hence, to

allow a full view of the commercial performance and position of the Quarry, it is recommended

that the statements be restructured to incorporate the following:

Earnings before interest, tax and depreciation (EBITDA) Operating revenue, less operating

expense

Earnings before interest and tax (EBIT) EBITDA less depreciation

Earnings before tax (EBT) EBIT less finance costs

Net profit after tax (NPAT) EBT less tax equivalent

Also, to make more informed commercial decisions there should be a balance sheet and cash

flow statement for the Quarry. The balance sheet would provide important information in relation

to the capital structure (debt and equity) and enable linkages to be made to the income statement

(i.e. depreciation and finance costs), as well as to retained earnings and reserves. The cash flow

statement provides critical information regarding the inflows and outflows of cash, along with and

understanding of the business unit’s solvency.


7.5.3 Accuracy of the Balance Sheet

A further consideration for the Quarry business is maintaining an accurate balance sheet. At

present there are a number of issues the business should be examining in relation to its Balance

Sheet, including:

• The rehabilitation costs for the various quarry sites needs to be reviewed and made

contemporary. The value of this liability for Shepton is based on some unsubstantiated

costs from approximately 5 years ago. The business needs to update the valuation of this

liability for Shepton;

• The current allowance in the Balance Sheet for rehabilitation at Mungabunda or the other

borrow pits appears understated. It is noted that Council has just initiated a piece or work

to help define its obligations in respect of these other sites;

• In respect of these rehabilitation costs, they should be measured at the present value of

the expected cash flows that will be required to perform the rehabilitation. The cost of the

‘provision’ should then be recognised as part of the cost of the asset when it is put in place

and depreciated over the asset’s useful life. A further consideration for the Quarry

business is whether the entire liability is recognised when quarrying activity begins or

whether it is recognised in increments as the activity is undertaken. This will need to be

resolved by the business in conjunction with Council;

• This leads to a further consideration for the Quarry business, which is that it presently does

not recognise the lease for Shepton Quarry in its Balance Sheet (or the other sites for that

matter). The incoming accounting standard AASB16, which will apply from 30 June 2019,

will require Council to include any operating leases in their Balance Sheet. Council will

need to assess whether the current lease agreement is captured by the requirements of

AASB16. Given Council is regonising the rehabilitation liability associated with Shepton, it

is likely this will need to be associated with an asset, being the lease for the site; and

• It is noted that Council is setting aside a provision within its reserves for the rehabilitation

of the Shepton site (currently in the order of $200,000). Council should consider whether

this needs to be recognised as an asset within the Quarry business’s Balance Sheet.

This work may re-value the annual provision being made for the cost of rehabilitating Shepton

and the other sites. Any such changes will also need to be reflected in the P&L.


7.5.4 Optimising Depreciation

Annual depreciation expenses are based on the Quarry’s 2018 Asset Management Plan (AMP).

These expenses are a material element of the Quarry’s cost base and is impacting the business

unit’s ability to maintain a positive operating result. There are opportunities to further optimize

the depreciation expense. It is likely that any changes made to the current approach will result in

a more reflective ‘depreciation expense’ for the business unit as well as lessening some of the

pressure on Council’s overall financial performance. It is expected that this in turn will result in a

more positive outcome for Council when it reports against the overall Asset Sustainability Ratio.

It would be prudent for the business unit to review the current approach to the accounting

depreciation to better understand how it has been determined and identify if any of these factors

could or should be reviewed. Considerations should include:

• Initial accounting recognition;

• Valuation or re-valuation of the site improvement asset class. It is recommended that

the business unit consider adopting a 5-yearly full revaluation cycle for this asset class.

This would reduce costs to undertake the revaluations as well as providing greater stability

in both asset values and subsequent depreciation expense year by year. The business

unit should also re-consider the decision to undertake an annual desktop valuation

(between full revaluations). The approach should align with the Council policy concerning

‘materiality’, which does not support annual indexation of the valuations;

• Useful life/remaining useful life estimates. Consider undertaking a benchmarking

exercise on the useful lives of assets of a similar nature and revising the policy accordingly.

Also check the approach for remaining useful life assessment, taking into consideration

renewal, improvement and upgrade expenditure; and

• Capitalisation threshold. Review the “site improvements” financial asset class and

identify those assets that may be included that are now below the current threshold.

7.5.5 Long Term Financial Planning

The 2015 Business Plan includes 10-year financial plans. Such plans play an important role in

helping the business unit understand its financial sustainability and put in place strategies for

maintaining that sustainability. This can include growing revenue as well as controlling costs.

Currently however, such plans are static, and it is recommended that Council develop dynamic

long-term financial plans for the business units so they can be readily updated and kept current

in the face of any material changes in business dynamics or assumptions. This enables the

business unit managers and Council to be making real time decisions relating to commercial

performance.


Such plans should:

• Be based on QTC’s long term financial models, thus allowing them to be rolled up into

Council’s overarching long term financial plans;

• Be structured around the recommendations above relating to the financial statements;

• Be based on robust projections of costs and capital programs;

• For the Quarry, be for a minimum of 5 years;

• Model a range of scenarios, including a worst-case revenue option, a “break even” option

and a revenue stretch option;

• The modelling can be used for investment planning on new revenue earning opportunities

for the Quarry.

The actual plans are held and maintained by the Commercial Analyst. Outputs from these plans

are provided in Appendix F of this document. It should be noted that the plans are living

documents and the inputs are to be refined over the life of this Business Plan.

7.5.6 Council’s Commercial Policies

Council has three policies relating to the commercial performance of the Quarry. These are

summarised in the following table:

Policy Description

Competition and Water

Reform Policy • Identifies the commercial business units within Council to

which this policy applies;

• This includes the Quarry; and

• Identifies the full cost pricing elements that must be applied

to these business units.

Reserves Policy • Relates to the creation and maintenance of reserves to

enable sound and prudent financial management of

Council and its various business activities;

• Reserves can cover untied infrastructure contributions not

used in a given year and the accumulation of depreciation

funding for infrastructure assets.

Asset Accounting Policy • The purpose of this policy is to provide guidance, clarity

and consistency regarding the treatment of capital

expenditure, depreciation, revaluations, disposals and

acquisitions which will provide greater understanding and

accuracy of Council’s capital requirements

Table 6 - Council's Commercial Policies


From the Quarry’s perspective, it is important that these policies enable it to be financially

sustainable by:

• Clearly defining the commercial expectations Council has of the business unit;

• Clearly defining what costs the business unit should be accounting for and ensuring there

is a robust basis those costs (e.g. corporate overheads);

• Ensuring the business is able to properly account for the cost of maintaining the service

potential of its assets (depreciation);

• Ensuring there is financial capacity for the business to maintain the service potential of its

assets (either through retained earnings or borrowing the necessary funds); and

• Clearly defining what funds can be taken by Council at year-end without compromising the

business unit’s financial sustainability (e.g. a tax equivalent payment).

When reviewing the current suite of commercial policies against these requirements:

• Council has not clearly defined its commercial expectations for the Quarry. This is

addressed in this Business Plan;

• Council does clearly define in its Competition Policy the costs the business units should be

accounting for. However, this is not being fully applied;

• Council does not have a robust method for determining corporate overheads;

• Council does clearly define how to account for the cost of maintaining the service potential

of its assets, but this policy is not correctly applied;

• Council’s Reserves Policy does allow for retained earnings to fund depreciation at the

Quarry, but this is not applied. It is noted that the current Policy gives the GM of Corporate

Services the discretion whether or not to set aside reserves for depreciation; and

• No existing policy defines what funds can be taken from the business units at the year-end.

It is recommended therefore, that Council reviews the application of its Commercial Policies to

enable its various business units to be financially sustainable. It is also recommended that the

Competition and Water Reform Policy be amended to define what funds can be taken from the

business units at the year-end.


7.5.7 Year End Reporting

At present, there is informal year-end financial reporting by the Quarry (and other business units)

to the Council and externally. Any financial reports are rolled up into Council’s overall year-end

reports, which compromises the transparency of the Quarry’s annual performance.

It is recommended that the Quarry, along with the other business units within the Customer and

Commercial Services division, provide separate year-end reports to Council on their financial and

non-financial performance for that year. As part of that year-end reporting, the business units

should recommend to Council, what funds should be retained to cover depreciation and what

funds can be taken from the business unit without compromising its financial sustainability.

Should Council elect to adopt a different position to that recommended, their reasoning would

then be clearly and transparently spelt out. This should also help inform a different course of

action for the business unit to help maintain its financial sustainability.

7.6 Capability & People Management

7.6.1 The Quarry’s Operations

The organisation structure for the Quarry is provided below:

Figure 12 - Quarry Organisational Structure

General Manager Customer and Commercial

Services

Coordinator Operations -

Shepton Quarry

Quarry Operator Quarry OperatorWeighbridge

Administration Officer Officer

Plant Fitter Quarry


The quarry operations have seen a significant reduction in staffing levels in recent years, whereby

the quarry had twelve fulltime staff in 2015. This has contributed to lower operating costs and the

ability to more flexibly respond to market demands. Any scaling up of staffing levels to meet

customer demand is provided by contractors who are engaged to operate and maintain plant and

equipment as required.

It is noted that a proposal has been put forward for the Plant Fitter role to become an SSE for the

borrow pit operations. This would assist council comply with its regulatory obligations and

potentially assist further with business opportunities in this area of the business.

The Quarry is open for business during the hours of 6.30 am to 3.30 pm on Monday to Thursday

and 6.30 am to 3.00 pm on Fridays. However, if sales permit or crushing is taking place the site

is open longer and sometimes Saturdays.

Plant and equipment include:

• 400 TPH Terex/Jaques fixed crushing and screening plant

• CAT 769C dump truck

• Komatsu WA480 wheel loader

• Cat 972H wheel loader

• 40-metre weighbridge

Suppliers to the Quarry include:

• Crushing plant maintenance and repair

• Mechanical and Equipment Maintenance and Repair

• Engineering

• Mobile crusher hire

• Plant and Labour Hire

• Electrical contractors

• Fuel

• Bituminous products

• Sandy loam

• Quality Management System auditing

• Office supplies

• Weighbridge software

• Calibration services

• First aid training

• Drug and alcohol testing


• Internal corporate services.

The operations at Shepton Quarry have been subject of on-going optimisation. Recent upgrades

to the Shepton site include the fixed crushing plant to run solely on generator power this will

eliminate the need for mains power to run the crushing plant.

Future plans include provision to install a facility to enable Shepton to supply pre-coated

aggregates to the market, extending its product portfolio and another source of revenue for the

quarry business.

7.6.2 Provision of Corporate Services

The Quarry receives a range of Corporate Services from Council to support its operations,

including corporate finance, corporate Asset Management, IT services, HR and safety services,

and capital delivery services via the newly established PMO with the Infrastructure and Utilities

division of Council. The need to improve the transparency of both the costs and standard of

corporate services has been identified during the development of this Business Plan. This could

be done by putting in place simple Service Level Agreements, or other mechanisms as seen fit.

An option used successfully in other jurisdictions, is the “business partner” model where personnel

from the Corporate Service providers embed themselves within the business units and develop

an intimate understanding of their requirements. It is also recommended that corporate

overheads be reviewed as they are a material input to the Quarry’s cost base.

7.6.3 Business Unit Support Services

It is noted that this Business Plan is being developed in conjunction with similar plans for the

Saleyard and Airport. Council has requested a review into the structure of Council’s commercial

businesses. A separate report and body of work has been undertaken to provide

recommendations to Council to ensure commercial businesses are operated and managed in an

efficient and effective structure. Outcomes from this review have not been considered by Council

at the time of preparation of the business plans and therefore not included in this business

plan. However, it is noted that the review has indicated that a more concerted focus also on

service and asset planning and compliance and management systems would provide benefit to

the business. The table below expands on this holistic approach to the businesses and the

relationship between the roles within Commercial Services and the Corporate Service providers.


Function Corporate Services Responsibilities Support Services Responsibilities

Management

Accounting

• Council wide budgeting, financial management and

long-term financial planning – including consolidation

of outputs from the business units

• Develop commercial policies for the BU’s

• Oversight the commercial performance of the BU’s

• Prepare Business Unit budgets

• Prepare quarterly financial reports

• Prepare and maintain dynamic long-term financial

plans

• Prepare and maintain dynamic price plans

• Identify operational efficiencies across BU’s

• Identify market opportunities for BU’s

Service and

Asset Planning

• Preparation of AMPs on behalf of the BU’s

• Asset valuations & depreciation charges

• Coordination of condition assessments

• Integration of AMP financial outputs to Council’s overall

budgets and long-term financial plans

• PMO to deliver capex programs

• Develop and implement BU Master Plans

• Develop and implement BU Business Plans

• Own the AMPs

• Validate key AMP inputs

• Prepare renewals and maintenance management

plans

• Develop and maintain BU capex programs &

coordinate their delivery with the PMO

• Undertake investment planning and prepare related

business cases

Compliance

and

Management

Systems

• Setting Council wide governance frameworks and

policies (e.g. delegations, reporting, auditing)

• Setting Council wide requirements relating to safety

policies and management systems

• Deliver upon Council’s safety management system

requirements (including assessing and managing BU

risks)

• Maintain and deliver on BU specific compliance and

management systems

• Coordinate compliance and management system

auditing across BU’s

• Report compliance to Council

• Coordinate with regulators on BU specific matters

(including reporting)


7.6.4 Talent Management

Loss of key personnel is identified as a key risk for the Quarry. It is proposed that a Talent

Management Plan be developed for the Commercial Services business units (including the

Quarry), which could include:

• Identifying key roles for the business units and ensuring there are successors for those

roles;

• Seeking external mentors for key personnel to help build commercial acumen;

• Planning the exit of employees reaching retirement age. This could include using them to

actively coach and mentor younger staff members;

• Organising secondments across Council and with other organisations to broaden the

experience of key staff members; and

• Working in partnership with the local University and/or schools to promote Council as an

attractive place to work.

7.7 Management Systems and Compliance

The Quarry has a wide range of legislative and other obligations it must adhere to in maintaining

a modern and compliant facility. These are listed in Appendix C of this plan. It maintains a variety

of compliance and management systems to achieve ensure it meets these obligations. Ensuring

these obligations are met is a key performance measure for the Quarry.

Safety is a key issue for quarry operations and is principally regulated under the Queensland

Government Department of Natural Resources and Mines that regularly audit and inspect the

quarry operations. The safety management system is documented and is regularly audited.

Resource extraction management and site rehabilitation plans are developed and utilised to

ensure that cost effective disturbance is balanced with considerations of impact and that

rehabilitation of the landform is undertaken ensuring sites are suitable for an appropriate use into

the future.

The environmentally relevant activities at the Quarry must be carried out by such reasonable and

practicable means necessary to prevent the emission or likelihood of emission of noise that

constitutes an unreasonable intrusive noise. The reasonable and practicable measures adopted

for the Quarry are incorporated into the relevant procedure(s) implemented under the Site Based

Management Plan. Dust management controls are in place for the purposes of achieving

compliance with the operational conditions of the Shepton Quarry licence, and to minimize


impacts on the neighbours and the adjoining environment. The need to manage stormwater runoff

onto neighbouring land and into adjoining watercourses is also part of site management plans.

Specifically, Quarry products are subject to extensive quality control testing and technical support.

Quarry operations require a range of compliance testing for aggregates, rocks, pavement

materials, soils and provides quality control testing for all of quarry products. The Quarry is

certified for the supply of quarry product under AS/NZS/ISO9001:2008. Certified by Sci Qual

International Pty Ltd on 1 July 2015.

The quarry is also capable of producing quality ‘in specification’ road base products and delivering

material supply at controlled costs internally to Council. Products meet the following technical

specifications:

• Queensland Department of Transport and Main Roads specifications - MRTS70 Concrete

• Queensland Construction specifications - C242 Flexible Pavement

• Queensland Department of Transport and Main Roads specifications - MRTS22 Supply of

Cover Aggregate

• Queensland Department of Transport and Main Roads specifications - MRTS05 Unbound

Pavements.


8 Possible Sale of the Shepton Quarry

8.1 Overview

Council is currently running an Expression of Interest process for the sale of the Shepton Quarry

business (noting that Council leases the Shepton site from a private land owner). A separate

business case analysing the merits or otherwise of any Expression of Interest will be prepared to

inform Council’s decision-making process in this regard. This section of the Plan addresses some

of the implications that the sale of Shepton may have on the long-term plans for the Quarrying

Business. This should in turn, feed into Council’s deliberations on any Expressions of Interest for

Shepton. Some considerations include:

• In the 18/19 financial year, Shepton made up 61% of total Sales for the Quarry business

unit. Furthermore, the remaining sales from Mungabunda and Council’s borrow pits, are

exclusively to Council. If Shepton was sold, the Quarry Business would no longer

constitute a business activity as defined by Council’s Water Reform and Competition

Policy. The unit would become an internal service provider - principally to the Infrastructure

and Utilities division of Council;

• Should that occur, Council should revisit this plan and determine if it is still required and if

so, what modifications are required to be made to it;

• It is noted that during the Expression of Interest process, Council has put a freeze on any

capital expenditure and appointment of permanent staff within the Quarry business. While

this is most likely an appropriate course of action, it must be noted that it is both inefficient

and is holding the Quarry business back from achieving its longer-term goals. The

business unit is having to appoint contractors at a high cost and a lack of capital investment

means that the asset service potential is being run down and opportunities for growth are

being delayed or missed. It would be important that council expedite the sale process to

provide certainty for the business unit, one way or another;

• If Council were to sell the Shepton quarry business, it would lose a revenue stream that

currently covers a range of costs that exist after a sale process. These costs are estimated

to be in the order of $5million and are spelt out in further detail in section 8.2 below; and

• Any sale will have balance sheet implications for Council, which should not be overlooked.

An overall asset write-down will be required. Should the value of this write down exceed

the sale price, then Council would record a one-off loss in the year of the sale. While it

would be a “paper” loss, it would potentially have broader reputational impacts for Council,

particularly if it puts the entire Council position into a loss for the year.


8.2 Assessing Any Expressions of Interest for Shepton

When considering any expression of interest for Shepton, it is worth noting that if Council were to

sell the business, it would lose a revenue stream, which currently covers a range of costs that are

set out in the following table. A number of these costs can be quantified, and a number are

intangible. The costs that have been quantified are the Net Present Values of future cash streams

over a period of 8 years, based on a discount rate of 2% (it is worth noting that a higher discount

rate does not materially change these figures). 8 years has been chosen as this matches the

remaining term of the current loan for the quarry. The figures are rounded up to the nearest

$100,000. The total Net Present Value of the costs that are covered by the revenue stream that

would be lost from the sale of the quarry would be in the order of $4million. In other words,

Council would need to receive an offer in excess of this amount to make it worthwhile selling the

Shepton quarry business.

It is also noted that should any sale proceed; Council would need to record an asset write-down

in the year of the sale. The 18/19 Balance Sheet shows that such a write-down would be in the

order of $3,500,000. This represents the net of the current assets and liabilities: less the loan for

the quarry, which Council would retain even if the quarry were sold. It should also be noted that

as of 30 June 2019, Council will most likely need to record the lease for the Shepton Quarry as

an asset, so the above figure could increase.

Finally, it is worth noting some of the factors that could influence the value of any offers for the

Shepton quarry business:

• The value of the offer will be determined by whether or not the prospective purchaser sees

Shepton as a going concern. If they do, then they should value the business based on

prospective future cash flows, less costs. If not, then any price would be based on the

scrap value of the assets;

• Unless Council guarantees to purchase a certain amount of product from Shepton, Council

has no forward contracts that underpin future revenue streams for Shepton. This stands

to reason given the uncertainty associated with the EoI process;

• The prospective purchasers are likely to discount any offers, by their estimate of the cost

to rehabilitate the site; and

• If any inventory is sold with the business, this should be factored into the sale price by the

prospective purchaser. Alternatively, Council could sell this inventory themselves ahead

of the sale if they felt this was more financially beneficial.


Item NPV Comment

Corporate Overheads Cost $1,800,000 These costs are fixed and would need to be borne by Council following any sale (the 18/19 overheads applied to Shepton were $230,000).

Interest Cost $1,300,000 This is the NPV of the interest cost on the remaining $8.5million loan for the quarry.

Loss of Profit & Tax Equivalents

$1,000,000 This is based on the net profit (including tax equivalents) of $130,000 for Shepton for the 18/19 financial year (net of movement in inventory). This was a normal trading year, with no abnormal economic conditions such as a mining boom or large volumes of flood works. This revenue stream would in part cover the principal component of the quarry loan.

Loss of Buffer to Economic Cycles

With Shepton and the other quarry sites, Council is able to meet all of its own needs. If Shepton is sold, it is likely Council would have to purchase a percentage of quarry product from the private sector. Hence it would be exposed to price fluctuations (good and bad) due to external economic cycles.

Loss of Economies of Scale

It is possible that the cost of production at Mungabunda and the borrow pits would go up due to a loss of scale, with Shepton currently accounting for 60% of the total quarry business output.

Loss of Expertise Shepton makes up 60% of Council’s total quarry business output. If Shepton were sold, then it is possible Council would need to downsize its staffing requirements in this area, loosing valuable quarrying expertise. This could in turn lead to a compromising of product quality.

Site Rehabilitation Current revenue streams from Shepton cover the costs of the site’s rehabilitation. This liability would presumably be transferred with any sale and be factored into the sale price.

Total $4,100,000

Table 7 – Council Related Costs covered by the Current Revenue Stream from Shepton


9 Performance Measurement

The following table sets out the proposed performance measures for the Quarry. These are mapped back

against the objectives for the Quarry. They represent a succinct list of measures that appropriately reflect

the financial and non-financial performance of the Quarry over the 3-year life of this plan. It is important

not to overwhelm the business unit with measures.

The measures reflect the outcomes the business unit is working to. These measures are to be cascaded

through to individual performance plans and would pick up the important inputs to achieving these outcomes

(for example, carrying out safety training or conducting periodic safety audits of the facilities). Collectively

the measures will provide a basis for a “balanced scorecard” on performance across the three objectives

for the Quarry.


Vision Objectives Performance

Measures Targets Explanation



• Product growth

• External Sales / Total Sales

• Achieve MRD’s quality specifications

• 1 / year

• >60%

• 100% compliance

• The product growth measure is aimed at ensuring the business unit continues to innovate and adapt to meet its customer’s needs

• Maintaining external sales from Shepton above 60%, ensures the Quarry’s rates are market competitive and thus sets the benchmark for what it charges Council for its products

• Product quality is an important differentiator for the Quarry and is thus an important performance measure. The key benchmark is the Main Road’s Specifications


• Asset Sustainability Ratio

• Material audit non-compliance

• Lost Time Injuries

• 90%

• Zero

• Zero

• The Asset Sustainability Ratio reflects the service and financial sustainability of the business unit. Specially this measures the actual renewal spend, plus reserves set aside for depreciation, divided by the depreciation allowance

• Being compliant with its many obligations is critical for the business activity and this target is focused on ensuring there are no material audit non-compliances

• Safety is an important outcome for Council and the target always needs to be one of zero harm


• Current assets / current liabilities

• NPAT/Equity

• >1.5

• 5 to 15%

• (Current assets / current liabilities) reflects the liquidity or solvency of the business unit

• This KPI reflects the profitability of the business unit as a percentage of the business’s equity

Figure 13 - Quarry 2019 - 2022 Performance Measures


10 3-Year Program of Initiatives

The following table provides a summary of the program of initiatives to progressed as part of this Business

Plan – along with the recommended timeframe within which the initiatives should be progressed.

Progressing these initiatives will help the Quarry achieve its 3-year outcomes and realise the performance

targets set within the plan. This Program is to be read in conjunction with subsequent table, which provides

the detail for each key initiative along with the outcome being sought from that initiative. Each key initiative

is uniquely numbered to allow cross-referencing between the two tables.

Key Initiative Task Timeline

Y 1 Y 2 Y3

Objective: Provide competitively priced high-quality products

A1 Products &

Services Review options for new services

Grow existing markets

Objective: Provide a fit for purpose, safe and compliant quarry facilities

B1 Service

Planning Assess & re-value rehabilitation liabilities across all

quarrying operations

Develop an Investment Decision Making process

B2 Asset

Management Develop a 5 to 10 renewals program

Update the Quarry AMP

B3 People

Management Review Resourcing Arrangements

Develop a Talent Management Plan

Modify employee performance plans

B4 Governance

Approve Quarry Business Plan

Develop a revised Council reporting regime

Review the Business Plan

B5 Support

Services Establish a Corporate Services SLA

Resource the support services functions


Objective: Ensure on-going profitability

C1 Financial

Management Restructure the financial reports

Develop EOY reports

Develop a dynamic long-term financial plan

Maintain the LTFP

C2 Commercial

Performance Review application of Commercial Policies

Optimise the Depreciation charge

Figure 14 - Summary of 2019-22 Key Initiatives


Key Initiative

Description Outcome

Objective: Provide competitively priced high-quality products

A2 Products and Services • Continue to review and consider new growth opportunities for the

business as outlined in this plan

• Assess these opportunities using the decision-making tool referenced

in key initiative B1 below

• Mine the relevant customer data with a view to growing existing

markets

Continue to grow the market,

revenue and financial performance

of the Quarry business unit, for the

benefit of the region

Objective: Provide a fit for purpose, safe and compliant quarry facilities

B1 Service Planning • Review the level of compliance of the various borrow pits operated by

Council and determine the tasks and costs necessary to make them

compliant

• Also assess and value (or re-value as necessary) the rehabilitation

liabilities assocaited with the quarrying operations and reflect these

revised valuations in the Balance Sheet

• Rationalise the number of Council borrow pits if necessary following

this review

• Develop an investment decision making tool for the business unit

• Base this tool on relevant State Government guidelines available from

Treasury and Building Queensland

Ensure all of Council’s Quarry

operations are compliant with

necessary regulatory requirements

Ensure there is a robust process

for investment planning to mitigate

the risk of poor and costly future

investments

B2 Asset Management • Develop a 10-year renewals program for the facility that will help

inform the optimization of the depreciation charge and inform the long-

term financial planning for the facility. This plan is to focus on

maintaining the service potential of the facility

• Update the AMP in 2022 based on the optimization of key inputs such

as valuations, depreciation and the renewals plan

Ensure the Quarry has proactive

planning in place to maintain the

service potential of the facility and

ensure the business unit’s financial

sustainability


Objective: Provide a fit for purpose, safe and compliant quarry facilities (cont.)

B3 People Management • Review the mix of self-performed and contracted out activities for the

Quarry. Also review the adequacy of the equipment for the operations

Develop a Talent Management Plan based on the aspects identified

in this business plan

• Cascade the performance measures and key initiatives in this

business plan through to individual’s performance plans so they are

aligned with objectives and outcomes of this plan

Ensure the Council mitigates

against the risk of losing personnel

who are vital to the effective

management of the Quarry

Ensure the effective

implementation of this Business

Plan

B4 Governance • Ensure the Business Plan is approved and progress against the

performance measures and initiatives are reported upon

• Revise the Business Plan in 3 years at the end of its life

Ensure Council is aligned with and

effectively overseeing the delivery

of this Business Plan

B5 Support Services • Establish an SLA with Corporate Services for the provision of these

services to the Quarry. This SLA should contemplate the embedding

of key Corporate Services staff within the business unit to deepen their

understanding of the business

• Resource the support services identified in this plan to enable to

efficient operation of the business unit. These services should be

shared among the Commercial Services business units

Ensure the efficient and effective

delivery of corporate and support

services to enable the Quarry to

fully deliver upon this business

plan


Objective: Ensure on-going profitability

C1 Financial Management • Restructure the financial reports for budgeting purposes and financial

management, as recommended in this plan

• Ensure any leases for quarrying operations are properly reflected in the Balance sheet to comply with the incoming accounting standard AASB16

• Update rehabilitation liability valuations and reflect these in the

Balance Sheet

• Incorporate any reserves that have been set aside for Quarrying

Operations in the Balance Sheet

• Also develop end of year reporting and engage Council in decisions

relating to retained earnings and returns to Council

• Develop a live and dynamic long-term financial plan for the Quarry as

described in this plan and based on the key inputs described above

• Use the LTFP for day to day decision making within the Quarry

Effectively manage the financial

performance of the Quarry to

ensure its long-term commercial

sustainability

C2 Commercial Performance • Review the commercial polices applicable to the Quarry based on the

recommendations within this plan

• Optimise the depreciation charge based on the recommendations

outlined in this plan

Effectively manage the financial

performance of the Quarry to

ensure its long-term commercial

sustainability


11 Governance and Oversight

The following table reflects the responsibilities for preparing, approving and overseeing the delivery

of this Business Plan.

Title Requirement

Council Accountable:

• Approve the Business Plan

• Oversee the implementation of the Business Plan

General Manager

Customer and

Commercial

Services

Manage:

• Endorse this document for Council approval

• Oversee implementation of the Plan and associated key initiatives

• Allocation of resources to deliver upon the Plan

Operations

Coordinator -

Shepton Quarry

Responsible:

• Preparing the Business Plan

• Reporting on the Plan’s implementation

Quarry Team Deliver:

• Understand and deliver on the Business Plan

To execute this Business Plan, the Operations Coordinator - Shepton Quarry will prepare annual

budgets which shall be derived from information within this Plan, along with any emerging issues

that may arise over the life of the Plan. Furthermore, the Operations Coordinator - Shepton Quarry

will report on their progress against the key initiatives in the Business Plan.

This Business Plan has a 3-year outlook and will be reviewed at least every 3 years or when there

is a major change in the assumptions underpinning this Plan.


12 Appendix A – Documents Reviewed

The following documents were reviewed to inform the development of this business plan.

Report Report Conclusion or Purpose

Edge Advantage In 2013, a report by Edge Advantage recommended the following

turnaround strategies to improve business performance:

• Increasing delegations for the Operations Coordinator - Shepton

Quarry to enable flexibility in pricing of product to meet market

demands and to be able to rapidly respond to customer

enquiries, in order to win business;

• Improving financial systems and analysis to understand the true

fixed and variable costs of running the business by product to

enable accurate pricing and effective management of operational

business costs;

• Reviewing the haulage agreements for product to ensure that the

most efficient services are provided by the haulage provider;

• Ensuring availability of highly experienced maintenance staff to

maintain the plant and implementing a rigorous maintenance

regime to preserve the value of the plant and maximise the

utilisation of the plant;

• Appointing an experienced Operations Coordinator - Shepton

Quarry at a competitive remuneration level that attracts the best

candidate;

• Continuing to reduce the reliance on external mobile plant

contractors, where it is financially viable to do so, to enable most

appropriate utilisation of fixed plant to reduce the cost of goods;

• Reviewing staff numbers, capacity and capability at the plant, to

ensure that the plant is run on a commercial basis, with the most

experienced and qualified;

• Ensuring that all staff are well trained in, and adhere to, the

Safety and Environment Management System for the quarry, and

that there are regular toolbox talks, and ongoing safety training

for all staff to target a zero-harm environment. This should be


associated with appropriate monitoring and reporting of all

incidents;

• The improvement of the business development, sales and

marketing expertise in the business, either through the

Operations Coordinator - Shepton Quarry, or by appointment of

an experienced Business Development Manager; and

• The Edge Advantage report stated that there is no real public

benefit for council to retain the quarry business and

recommended that council consider sub-leasing the operations

to a commercial operator.

CHRC Quarry

Sales Strategy

Implementation

Plan

A Gantt chart outlining tasks and timeframes in developing a marketing

strategy for the quarry

Shepton Quarry

Business Plan

November 2015

The Business Plan sets out goals and objectives for the business,

including financial forecasts and based on various sales scenarios over

ten years

Asset

Management Plan

Shepton Quarry

2015/16

Provides an assessment of asset condition and replacement value

ensuring a consistent approach to asset management and planning and

on-going financial viability.


13 Appendix B – Council’s Risk Framework

Council’s risk assessment matrix is as follows:

Consequence

Likelihood

1- Insignificant 2 - Minor 3 - Moderate 4 - Major 5 - Significant

5 - Almost Certain 5 - Moderate 10 - High 15 - Extreme 20 - Extreme 25 - Extreme

4 - Likely 4 - Moderate 8 - Moderate 12 - High 16 - Extreme 20 - Extreme

3 - Possible 3 - Low 6 - Moderate 9 - High 12 - High 15 - Extreme

2 - Unlikely 2 - Low 4 - Moderate 6 - Moderate 8 - Moderate 10 - High

1 - Rare 1 - Low 2 - Low 3 - Low 4 - Moderate 5 - Moderate

Figure 15 - Council Risk Matrix

Council’s Enterprise Risk Management Framework then recommends the following general risk

strategies and actions for the various risk severities:

Severity Treatment Strategy Treatment Action

Extreme Requires immediate action as the potential risk exposure could be devastating to the organisation.

Risk needs to cease immediately. Needs immediate mitigation strategies to be implemented. Risk must be treated unless it is not cost effective to do so.

High Requires action very soon (within 3 months), as it has the potential to be damaging to the organisation.

Treatment strategies should be developed and implemented as soon as possible. Risk must be treated unless it is not cost effective to do so.

Moderate Continue to monitor and re-evaluate the risk and treat with routine or specific procedures.

Treatment strategies should be developed and implemented as soon as practical. Risk must be treated unless it is not cost effective to do so.

Low Continue to monitor and re-evaluate the risk, treat with routine procedures.

This risk can be accepted if there are no readily available treatments. Must be regularly monitored and acted upon appropriately.

Figure 16 - Risk Treatment Table


14 Appendix C – Legislative and Other Obligations

Council has a wide range of legislative obligations that it must comply with in relation to the Quarry.

Relevant legislation applicable to Council and thus the Quarry, includes:

• Queensland Local Government Act 2009

• Queensland Local Government Regulation 2012

• Queensland Industrial Relations Act 1999

• Queensland Environmental Protection Act 1994

• Queensland Work Health and Safety Act 2011

Legislation and guidelines applicable directly to Quarry, include:

• Quarry Safety and Health Act 1999

• Mining and Quarry Safety and Health Regulations 2001

• Sustainable Planning Act 2009

• Cultural Heritage and Native Title Legislation

• Biosecurity Act 2014


15 Appendix D – Long Term Financial Plan Outputs

QTC Local Government Forecasting Model—CHRC

Dashboard Summary

6 errors identified—Quarry business unit active

Print5.

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Select Scenario Select Business Units

General Saleyards

[Inactive BU] 5

[Inactive BU] 6

Normalise Results1. 3. 4.2. Whole of Council or Business Units?

Whole of Council

Selected Business Units Normalise for selected grant program

Use median cash balance for ratios

Control Panel

23 All outputs are in thousands ($'000) unless otherwise indicated�

Budget Forecast

Key financial sustainability metrics Target Jun-15A Jun-16A Jun-17A Jun-18A Jun-19A Jun-20B Jun-21F Jun-22F Jun-23F Jun-24F Jun-25F Jun-26F Jun-27F Jun-28F Jun-29F

Operating surplus ratio 0% to 10% na na na na 5.7% 4.7% 5.0% 0.2% 0.4% 0.7% 1.0% 1.2% 1.5% 1.8% 5.9%na na na na 3.0 3.0 3.0 2.0 2.0 2.0 2.0 3.0 3.0 3.0 3.0

Cash expense cover ratio > 3 months na na na na 1.4 0.5 (2.8) (1.3) 0.2 1.7 3.2 4.8 6.4 8.0 9.5na na na na 1.0 1.0 1.0 1.0 1.0 1.0 2.0 3.0 3.0 3.0 3.0

Asset sustainability ratio > 90% na na na na -% -% 200.8% 22.8% 22.1% 21.4% 20.8% 20.2% 19.6% 19.1% 30.9%na na na na 1.0 1.0 3.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0

Average useful life of depreciable assets na na na na 18.1 17.8 23.5 11.3 10.1 9.0 8.0 6.9 5.9 5.0 7.3na na na na na na na na na na na na na na na

Net financial liabilities ratio <= 60% na na na na 181.8% 255.7% 274.4% 262.1% 248.7% 234.7% 220.9% 207.0% 193.2% 179.5% 167.0%na na na na 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0

Council controlled revenue ratio > 60% na na na na 20.7% 33.8% 33.8% 33.9% 33.8% 33.8% 33.7% 33.6% 33.5% 33.4% 33.3%na na na na 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0

Total debt service cover ratio > 2 times na na na na 2.5x 0.6x 2.8x 0.7x 1.2x 2.9x 3.1x 3.2x 3.3x 3.4x 3.5xna na na na 3.0 1.0 3.0 1.0 1.0 3.0 3.0 3.0 3.0 3.0 3.0

Capital expenditure ratio na na na na na na 6.7x 0.2x 0.2x 0.2x 0.2x 0.2x 0.2x 0.2x 0.3xna na na na na na na na na na na na na na na

Actual

-%

2%

4%

6%

8%

10%

12%

Jun-18A Jun-19A Jun-20B Jun-21F Jun-22F Jun-23F Jun-24F Jun-25F Jun-26F Jun-27F Jun-28F Jun-29F

Operating surplus ratio (%)

Operating surplus ratio DILGP—lower bound DILGP—upper bound

Operating Performance Liquidity

-

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0


Cash expense cover ratio (months)

Cash expense cover ratio QTC—lower bound

Fiscal Flexibility Asset Sustainability

-%

50%

100%

150%

200%

250%

300%


Net financial liability (%)

Net financial liabilities ratio DILGP—upper bound

-%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


Council controlled revenue ratio (%)

Council controlled revenue ratio QTC—lower bound

-

0.5x

1.0x

1.5x

2.0x

2.5x

3.0x

3.5x

4.0x


Total debt service cover ratio (times)

Total debt service cover ratio QTC—lower bound

-%

50%

100%

150%

200%

250%


Asset sustainability ratio (%)

Asset sustainability ratio QTC—lower bound

-

5.0

10.0

15.0

20.0

25.0


Average useful life of depreciable assets (years)

Average useful life of depreciable assets

-%

100%

200%

300%

400%

500%

600%

700%

800%


Capital expenditure ratio (times)

Capital expenditure ratio

CHRC Business Units 10June

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Budget Forecast Annual average

Operating performance indicators Jun-18A Jun-19A Jun-20B Jun-21F Jun-22F Jun-23F Jun-24F Jun-25F Jun-26F Jun-27F Jun-28F Jun-29FActual

(FY15-19)

Forecast

(FY20-24)

Forecast

(FY20-29)

Operating performance metrics

Operating surplus ratio (%) -% 5.7% 4.7% 5.0% 0.2% 0.4% 0.7% 1.0% 1.2% 1.5% 1.8% 5.9% 5.7% 2.2% 2.2%

Operating efficiency ratio (%) -% 106.0% 105.0% 105.3% 100.2% 100.4% 100.7% 101.0% 101.2% 101.5% 101.8% 106.3% 106.0% 102.3% 102.3%

Sales, contracts and recoverable works margin (%) -% -% -% -% -% -% -% -% -% -% -% -% -% -% -%

Creditor days - 96.6 30.0 30.0 30.1 30.0 30.0 30.0 30.0 30.0 30.0 30.0 96.6 30.0 30.0

Debtor days - 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0 30.0

Gross interest expense as a portion of average term debt (%) -% -% 4.9% 4.7% 4.7% 4.8% 4.9% 4.9% 4.9% 4.9% 4.9% 4.9% -% 4.8% 4.9%

Interest revenue as a portion of average cash (%) -% -% 3.5% -3.9% -% -1.1% 5.0% 3.4% 3.1% 2.9% 2.8% 2.8% -% 0.7% 1.8%

Operating result ($'000)

Actual


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-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Jun-18AJun-19AJun-20BJun-21FJun-22F Jun-23FJun-24F Jun-25FJun-26F Jun-27FJun-28FJun-29F

Operating result ($'000)

Operating result Operating revenue Operating expenses

-%

20%

40%

60%

80%

100%

120%


Operating efficiency ratio (%)

Operating efficiency ratio (%)

-%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


Sales, contracts and recoverable works margin (%)

Sales, contracts and recoverable works margin (%)

-%

1%

2%

3%

4%

5%

6%

7%




-

20

40

60

80

100

120

Jun-18A Jun-19AJun-20B Jun-21F Jun-22F Jun-23F Jun-24F Jun-25F Jun-26F Jun-27F Jun-28F Jun-29F

Debtor and creditor days

Creditor days Debtor days

-5%

-4%

-3%

-2%

-1%

-%

1%

2%

3%

4%

5%

6%


Interest to debt and interest to cash balance ratios (%)

Gross interest expense as a portion of average term debt (%)

Interest revenue as a portion of average cash (%)

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Operating Performance

Fiscal Flexibility

Asset Sustainability

Liquidity



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Operating revenue - 6,539 4,503 4,603 4,689 4,794 4,913 5,034 5,158 5,285 5,416 5,550 na -5.6% -1.6%

Operating expenses - 6,169 4,290 4,372 4,681 4,774 4,881 4,986 5,094 5,205 5,320 5,220 na -4.6% -1.7%

Operating result - 370 214 231 8 20 33 48 64 80 96 330 na -38.5% -1.1%


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Operating performance indicators Jun-18A Jun-19A Jun-20B Jun-21F Jun-22F Jun-23F Jun-24F Jun-25F Jun-26F Jun-27F Jun-28F Jun-29FActual

(FY15-19)

Forecast

(FY20-24)

Forecast

(FY20-29)

Key general rates drivers

Population 30,093 30,093 30,394 30,968 31,005 31,315 31,628 31,944 32,264 32,586 32,912 33,241 -1.2% 1.0% 1.0%

Rateable properties 14,804 14,804 14,878 14,900 14,952 15,100 15,300 15,375 15,450 15,530 15,600 15,670 -1.1% 0.7% 0.6%

Residents per rateable property 2.0 2.0 2.0 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 -0.1% 0.3% 0.4%

Average general rates per rateable property ($) na na na na na na na na na na na na na na na

Average operating cost per rateable property ($) na na na na na na na na na na na na na na na

Council FTEs

Elected officials - 9 9 9 9 9 9 9 9 9 9 9 na -% -%

Staff FTEs (excluding contractors) - 502 503 505 505 508 508 511 511 511 513 513 na 0.3% 0.2%

Contractor FTEs - - - - - - - - - - - - na na na

Total FTEs 481 511 512 514 514 517 517 520 520 520 522 522 3.5% 0.3% 0.2%

Average council wages & salaries ($)

Staff FTEs na 919 1,127 1,145 1,168 1,185 1,208 1,225 1,250 1,275 1,295 1,321 na 5.6% 3.7%

Contractor FTEs na na na na na na na na na na na na na na na

All FTEs excluding elected officials na 919 1,127 1,145 1,168 1,185 1,208 1,225 1,250 1,275 1,295 1,321 na 5.6% 3.7%

Actual

-

0

0

0

0

1

1

1

1

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1

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

Jun-19A Jun-20B Jun-21F Jun-22F Jun-23F Jun-24F Jun-25F Jun-26F Jun-27F Jun-28F Jun-29F

Rateable properties vs. general rates per rateable property ($)

Rateable properties (LHS) Average general rates per rateable property ($) (RHS)

-

200

400

600

800

1,000

1,200

1,400

-

100

200

300

400

500

600

Jun-19AJun-20BJun-21FJun-22FJun-23FJun-24FJun-25FJun-26FJun-27FJun-28FJun-29F

Ave

rag

e sa

lary

($)

FT

Es

Council FTEs vs. average wages & salaries per FTE ($)

Elected officials (LHS) Staff FTEs (LHS)

Contractor FTEs (LHS) Average wages & salaries (RHS)

1.98

2.00

2.02

2.04

2.06

2.08

2.10

2.12

2.14

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000LGA population vs. rateable properties

Residents per rateable property (RHS) Population (LHS) Rateable properties (LHS)


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Fiscal Flexibility Page 1 of 3


Fiscal flexibility indicators Jun-18A Jun-19A Jun-20B Jun-21F Jun-22F Jun-23F Jun-24F Jun-25F Jun-26F Jun-27F Jun-28F Jun-29FActual

(FY15-19)

Forecast

(FY20-24)

Forecast

(FY20-29)

Key metrics

Net financial liabilities ratio (%) -% 181.8% 255.7% 274.4% 262.1% 248.7% 234.7% 220.9% 207.0% 193.2% 179.5% 167.0% 181.8% 255.1% 224.3%

Council controlled revenue ratio (%) -% 20.7% 33.8% 33.8% 33.9% 33.8% 33.8% 33.7% 33.6% 33.5% 33.4% 33.3% 20.7% 33.8% 33.6%

Self generated revenue ratio (%) -% 106.0% 105.0% 105.3% 100.2% 100.4% 100.7% 101.0% 101.2% 101.5% 101.8% 106.3% 106.0% 102.3% 102.3%

Total debt service cover ratio (times) - 2.5x 0.6x 2.8x 0.7x 1.2x 2.9x 3.1x 3.2x 3.3x 3.4x 3.5x 2.5 1.7 2.5

Interest cover ratio (times) - 2.5x 2.1x 2.1x 2.0x 2.1x 2.1x 2.2x 2.3x 2.3x 2.3x 2.4x 2.5 2.1 2.2

Net operating cash flow as a percentage of net capital expenditure (%) -% -% -% 25.7% 439.4% 466.6% 490.3% 515.0% 540.2% 566.0% 591.7% 555.0% -% 355.5% 465.5%

Actual

-%

50%

100%

150%

200%

250%

300%


Net financial liabilities ratio (%)

Net financial liabilities ratio (%)

-%

5%

10%

15%

20%

25%

30%

35%

40%




-%

20%

40%

60%

80%

100%

120%


Self generated revenue ratio (%)

Self generated revenue ratio (%)

-

0.5x

1.0x

1.5x

2.0x

2.5x

3.0x

3.5x

4.0x




-

0.5x

1.0x

1.5x

2.0x

2.5x

3.0x


Interest cover ratio (times)

Interest cover ratio (times)

-%

100%

200%

300%

400%

500%

600%

700%


Net operating cash flow as a percentage of net capital expenditure (%)

Net operating cash flow as a percentage of net capital expenditure (%)


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(FY15-19)

Forecast

(FY20-24)

Forecast

(FY20-29)

Operating revenues—by category ($'000)

Net rates, levies and charges - - - - - - - - - - - - na na na

Fees and charges - 1,351 1,520 1,553 1,588 1,623 1,658 1,695 1,732 1,770 1,809 1,849 na 4.2% 3.2%

Operating grants and subsidies - - - - - - - - - - - - na na na

Sales revenue - - - - - - - - - - - - na na na

Interest received - - 14 14 - 2 15 29 42 57 73 89 na na na

Other operating income - 5,188 2,970 3,035 3,102 3,170 3,240 3,311 3,384 3,458 3,534 3,612 na -9.0% -3.6%

Total - 6,539 4,503 4,603 4,689 4,794 4,913 5,034 5,158 5,285 5,416 5,550 na -5.6% -1.6%

Operating revenues—annual growth rates (%)

Net rates, levies and charges na na na na na na na na na na na na -% -% -%

Fees and charges na na 12.5% 2.2% 2.2% 2.2% 2.2% 2.2% 2.2% 2.2% 2.2% 2.2% -% -% -%

Operating grants and subsidies na na na na na na na na na na na na -% -% -%

Sales revenue na na na na na na na na na na na na -% -% -%

Interest received na na na 3.2% -100.0% na 631.1% 85.2% 48.7% 34.6% 27.1% 22.5% -% -% -%

Other operating income na na -42.8% 2.2% 2.2% 2.2% 2.2% 2.2% 2.2% 2.2% 2.2% 2.2% -% -% -%

Total na na -31.1% 2.2% 1.9% 2.2% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% -% -% -%

Operating revenues—percentage of total operating revenue (%)

Net rates, levies and charges na -% -% -% -% -% -% -% -% -% -% -% -% -% -%

Fees and charges na 20.7% 33.8% 33.8% 33.9% 33.8% 33.8% 33.7% 33.6% 33.5% 33.4% 33.3% 20.7% 33.8% 33.6%

Operating grants and subsidies na -% -% -% -% -% -% -% -% -% -% -% -% -% -%

Sales revenue na -% -% -% -% -% -% -% -% -% -% -% -% -% -%

Actual

-

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3,000

4,000

5,000

6,000

7,000

Jun-18AJun-19AJun-20B Jun-21F Jun-22F Jun-23F Jun-24F Jun-25F Jun-26F Jun-27F Jun-28F Jun-29F

Operating revenues—by category ($'000)

Net rates, levies and charges Fees and charges Operating grants and subsidies

Sales revenue Interest received Other operating income

-%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


Operating revenues—percentage of total operating revenue (%)

Net rates, levies and charges Fees and charges Operating grants and subsidies

Sales revenue Interest received Other operating income

-200%

-100%

-%

100%

200%

300%

400%

500%

600%

700%


Operating revenues—annual growth rates (%)

Total Net rates, levies and charges Fees and charges

Operating grants and subsidies Sales revenue Interest received

Other operating income


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Interest received na -% 0.3% 0.3% -% 0.0% 0.3% 0.6% 0.8% 1.1% 1.3% 1.6% -% 0.2% 0.6%

Other operating income na 79.3% 65.9% 65.9% 66.1% 66.1% 65.9% 65.8% 65.6% 65.4% 65.3% 65.1% 79.3% 66.0% 65.7%

Total na 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%


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(FY15-19)

Forecast

(FY20-24)

Forecast

(FY20-29)

Operating expenses—by category ($'000)

Employee benefits - 461 569 580 592 604 616 628 641 653 666 680 na 6.0% 4.0%

Materials and services - 3,539 2,202 2,251 2,300 2,351 2,403 2,455 2,509 2,565 2,621 2,679 na -7.5% -2.7%

Depreciation and amortisation - 233 224 224 438 453 467 481 495 510 524 324 na 14.9% 3.4%

Finance costs - 396 415 418 432 428 436 441 447 453 462 468 na 2.0% 1.7%

Other operating expenses - 1,541 879 899 918 939 959 980 1,002 1,024 1,047 1,070 na -9.0% -3.6%

Total - 6,169 4,290 4,372 4,681 4,774 4,881 4,986 5,094 5,205 5,320 5,220 na -4.6% -1.7%

Operating expenses—annual growth rates (%)

Employee benefits na na 23.5% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% -% -% -%

Materials and services na na -37.8% 2.2% 2.2% 2.2% 2.2% 2.2% 2.2% 2.2% 2.2% 2.2% -% -% -%

Depreciation and amortisation na na -3.7% -% 95.6% 3.3% 3.2% 3.1% 3.0% 2.9% 2.8% -38.2% -% -% -%

Finance costs na na 4.8% 0.8% 3.4% -0.9% 1.8% 1.1% 1.4% 1.5% 1.8% 1.3% -% -% -%

Other operating expenses na na -42.9% 2.2% 2.2% 2.2% 2.2% 2.2% 2.2% 2.2% 2.2% 2.2% -% -% -%

Total na na -30.5% 1.9% 7.1% 2.0% 2.2% 2.2% 2.2% 2.2% 2.2% -1.9% -% -% -%

Operating expenses—percentage of total operating revenue (%)

Employee benefits na 7.5% 13.3% 13.3% 12.6% 12.6% 12.6% 12.6% 12.6% 12.6% 12.5% 13.0% 7.5% 12.9% 12.8%

Materials and services na 57.4% 51.3% 51.5% 49.1% 49.2% 49.2% 49.2% 49.3% 49.3% 49.3% 51.3% 57.4% 50.1% 49.9%

Depreciation and amortisation na 3.8% 5.2% 5.1% 9.4% 9.5% 9.6% 9.7% 9.7% 9.8% 9.9% 6.2% 3.8% 7.8% 8.4%

Finance costs na 6.4% 9.7% 9.6% 9.2% 9.0% 8.9% 8.8% 8.8% 8.7% 8.7% 9.0% 6.4% 9.3% 9.0%

Other operating expenses na 25.0% 20.5% 20.6% 19.6% 19.7% 19.7% 19.7% 19.7% 19.7% 19.7% 20.5% 25.0% 20.0% 19.9%

Actual

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000


Operating expenses—by category ($'000)

Employee benefits Materials and services Depreciation and amortisation

Finance costs Other operating expenses

-%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


Operating expenses—percentage of total operating revenue (%)

Employee benefits Materials and services Depreciation and amortisation

Finance costs Other operating expenses

-60%

-40%

-20%

-%

20%

40%

60%

80%

100%

120%


Operating expenses—annual growth rates (%)

Total Employee benefits Materials and services

Depreciation and amortisation Finance costs Other operating expenses


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Total na 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%


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Asset Sustainability Page 1 of 4


Asset sustainability indicators Jun-18A Jun-19A Jun-20B Jun-21F Jun-22F Jun-23F Jun-24F Jun-25F Jun-26F Jun-27F Jun-28F Jun-29FActual

(FY15-19)

Forecast

(FY20-24)

Forecast

(FY20-29)

Key metrics

Asset sustainability ratio (%) -% -% -% 200.8% 22.8% 22.1% 21.4% 20.8% 20.2% 19.6% 19.1% 30.9% -% 53.4% 37.8%

Asset renewal funding ratio (%) -% -% -% -% -% -% -% -% -% -% -% -% -% -% -%

Depreciation as a percentage of closing written down value of property, plant & equipment (%)-% 5.5% 5.6% 4.2% 8.9% 9.9% 11.1% 12.5% 14.4% 16.8% 20.1% 13.6% 5.5% 7.9% 11.7%

Capital expenditure ratio (times) - - - 6.7x 0.2x 0.2x 0.2x 0.2x 0.2x 0.2x 0.2x 0.3x - 1.8 0.9

Average useful life by asset class (years)

Land improvements na na na na na na na na na na na na na na na

Buildings na na na na na na na na na na na na na na na

Plant & equipment na na 17.8 23.5 11.3 10.1 9.0 8.0 6.9 5.9 5.0 7.3 na 14.4 10.5

Furniture & fittings na na na na na na na na na na na na na na na

Roads, drainage & bridge network na - na na na na na na na na na na - na na

Water na na na na na na na na na na na na na na na

Actual

-%

50%

100%

150%

200%

250%




-%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


Asset renewal funding ratio (%)

Asset renewal funding ratio (%)

-%

5%

10%

15%

20%

25%


Depreciation as a percentage of closing written down value of property, plant & equipment (%)

Depreciation as a percentage of closing written down value of property, plant & equipment (%)

-

1.0x

2.0x

3.0x

4.0x

5.0x

6.0x

7.0x

8.0x




-

5

10

15

20

25

Jun-20B Jun-21F Jun-22F Jun-23F Jun-24F Jun-25F Jun-26F Jun-27F Jun-28F Jun-29F

Average useful life by asset class

Average useful life of depreciable assets Land improvementsBuildings Plant & equipmentFurniture & fittings Roads, drainage & bridge networkWater SewerageMiscellaneous

(10,000)

(5,000)

-

5,000

10,000

15,000


Community equity ($'000)

Community equity Total assets Total liabilities


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Sewerage na na na na na na na na na na na na na na na

Miscellaneous na na na na na na na na na na na na na na na

Average useful life of depreciable assets na 18.1 17.8 23.5 11.3 10.1 9.0 8.0 6.9 5.9 5.0 7.3 18.1 14.4 10.5


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(FY15-19)

Forecast

(FY20-24)

Forecast

(FY20-29)

Capital expenditure—by asset class ($'000)

Land - - - - - - - - - - - - na na na

Land improvements - 474 - - - - - - - - - - na -100.0% -100.0%

Buildings - - - - - - - - - - - - na na na

Plant & equipment - - - 1,500 100 100 100 100 100 100 100 100 na na na

Furniture & fittings - - - - - - - - - - - - na na na

Roads, drainage & bridge network - - - - - - - - - - - - na na na

Water - - - - - - - - - - - - na na na

Sewerage - - - - - - - - - - - - na na na

Miscellaneous - - - - - - - - - - - - na na na

Intangible - - - - - - - - - - - - na na na

Total capital expenditure - 474 - 1,500 100 100 100 100 100 100 100 100 na -26.7% -14.4%

Capital expenditure—by asset type ($'000)

New - - - - - - - - - - - - na na na

Renewal - - - 450 100 100 100 100 100 100 100 100 na na na

Upgrade - - - 1,050.0 - - - - - - - - na na na

Total capital expenditure - - - 1,500 100 100 100 100 100 100 100 100 na na na

Closing book value of PP&E—by asset class ($'000)

Land - - - - - - - - - - - - na na na

Land improvements - - - - - - - - - - - - na na na

Buildings - - - - - - - - - - - - na na na

Plant & equipment - 4,222 3,998 5,274 4,936 4,583 4,216 3,835 3,439 3,029 2,605 2,381 na -0.0% -5.6%

Furniture & fittings - - - - - - - - - - - - na na na

Roads, drainage & bridge network - - - - - - - - - - - - na na na

Water - - - - - - - - - - - - na na na

Sewerage - - - - - - - - - - - - na na na

Actual

-

200

400

600

800

1,000

1,200

1,400

1,600

Jun-18AJun-19A Jun-20B Jun-21F Jun-22F Jun-23F Jun-24F Jun-25F Jun-26F Jun-27F Jun-28F Jun-29F

Capital expenditure—by asset class ($'000)

Land Land improvements BuildingsPlant & equipment Furniture & fittings Roads, drainage & bridge networkWater Sewerage MiscellaneousIntangible

-

200

400

600

800

1,000

1,200

1,400

1,600


Capital expenditure—by asset type ($'000)

New Renewal Upgrade

-

1,000

2,000

3,000

4,000

5,000

6,000


Closing book value of PP&E—by asset class ($'000)

Land Land improvements BuildingsPlant & equipment Furniture & fittings Roads, drainage & bridge networkWater Sewerage MiscellaneousIntangible


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Miscellaneous - - - - - - - - - - - - na na na

Intangible - - - - - - - - - - - - na na na

Total closing book value - 4,222 3,998 5,274 4,936 4,583 4,216 3,835 3,439 3,029 2,605 2,381 na -0.0% -5.6%


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(FY15-19)

Forecast

(FY20-24)

Forecast

(FY20-29)

Capital expenditure—by funding source ($'000)

New borrowings - - - - - - - - - - - - na na na

Grants - - - - - - - - - - - - na na na

Subsidies - - - - - - - - - - - - na na na

Contributions - - - - - - - - - - - - na na na

Donations - - - - - - - - - - - - na na na

Working capital - - - 1,500 100 100 100 100 100 100 100 100 na na na

Total - - - 1,500 100 100 100 100 100 100 100 100 na na na

Term debt ($'000)

Long-term portion of term debt - 7,379 8,558 8,665 8,777 8,895 9,019 9,149 9,285 9,429 9,580 9,738 na 4.1% 2.8%

Current portion of term debt - 980 (101) (107) (112) (119) (124) (130) (136) (144) (150) (158) na na na

Total term debt - 8,359 8,457 8,558 8,665 8,777 8,895 9,019 9,149 9,285 9,429 9,580 na 1.3% 1.4%

Net debt position - 7,695 8,317 9,432 9,092 8,726 8,336 7,921 7,480 7,014 6,523 6,068 na 1.6% -2.3%

Actual

-

200.00

400.00

600.00

800.00

1,000.00

1,200.00

1,400.00

1,600.00


Capital expenditure—by funding source ($'000)

New borrowings Grants Subsidies Contributions Donations Working capital

-

2,000.00

4,000.00

6,000.00

8,000.00

10,000.00

12,000.00


Term debt ($'000)

Long-term portion of term debt Current portion of term debt

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000


Net debt position

Net debt position


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(FY15-19)

Forecast

(FY20-24)

Forecast

(FY20-29)

Forecasted debt repayments ($'000)

Scheduled principal repayments - - (98) (101) (107) (112) (119) (124) (130) (136) (144) (150) na na na

Additional principal repayments na na - - - - - - - - - - na na na

Interest repayments - - 415 419 424 429 436 441 447 453 462 468 na na na

Total payments - - 317 317 317 317 317 317 317 317 317 317 na na na

Key debt measures

Total debt to operating revenue (times) na 1.3x 1.9x 1.9x 1.8x 1.8x 1.8x 1.8x 1.8x 1.8x 1.7x 1.7x 1.3x 1.8x 1.8x

Total debt to community equity (times) na -1.1x -1.1x -1.2x -1.2x -1.2x -1.2x -1.2x -1.3x -1.3x -1.3x -1.4x -1.1x -1.2x -1.2x

Total debt per capita ($) na na 277 289 299 285 279 280 282 283 284 286 na 286 284

Total debt per rateable property ($) na na na na na na na na na na na na na na na

Actual

(200)

(100)

-

100

200

300

400

500


Forecasted debt repayments ($'000)

Scheduled principal repayments Additional principal repayments Interest repayments

-2.0x

-1.5x

-1.0x

-0.5x

-

0.5x

1.0x

1.5x

2.0x

2.5x


Total debt to operating revenue & community equity (times)

Total debt to operating revenue (times) Total debt to community equity (times)

-

50

100

150

200

250

300

350


Total debt per capita & rateable property ($)

Total debt per capita ($) Total debt per rateable property ($)


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Liquidity Position Page 1 of 2

Time period for the chart from the start of the forecast 10 years

(4.0)

(2.0)

-

2.0

4.0

6.0

8.0

10.0

12.0


Cash expense cover (months)

Cash expense cover (months) QTC—lower bound QTC—upper bound

-

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x


Working capital ratio (times)

Working capital ratio (times) QTC—lower bound QTC—upper bound

(1,500)

(1,000)

(500)

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000


Closing cash balance and median annual cash balance

(3,000)

(2,000)

(1,000)

-

1,000

2,000

3,000

4,000

5,000

Jul-1

9B

Sep

-19B

Nov

-19B

Jan-

20B

Mar

-20B

May

-20B

Jul-2

0F

Sep

-20F

Nov

-20F

Jan-

21F

Mar

-21F

May

-21F

Jul-2

1F

Sep

-21F

Nov

-21F

Jan-

22F

Mar

-22F

May

-22F

Jul-2

2F

Sep

-22F

Nov

-22F

Jan-

23F

Mar

-23F

May

-23F

Jul-2

3F

Sep

-23F

Nov

-23F

Jan-

24F

Mar

-24F

May

-24F

Jul-2

4F

Sep

-24F

Nov

-24F

Jan-

25F

Mar

-25F

May

-25F

Jul-2

5F

Sep

-25F

Nov

-25F

Jan-

26F

Mar

-26F

May

-26F

Jul-2

6F

Sep

-26F

Nov

-26F

Jan-

27F

Mar

-27F

May

-27F

Jul-2

7F

Sep

-27F

Nov

-27F

Jan-

28F

Mar

-28F

May

-28F

Jul-2

8F

Sep

-28F

Nov

-28F

Jan-

29F

Mar

-29F

May

-29F

Cash cycle by cash segments ($'000)

Cash cover Externally restricted Internally restricted Long-term surplus Short-term surplus

Overdraft Cash cover (unfunded) Cash balance Net cash balance Approved working capital facility limit

(1,500)

(1,000)

(500)

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000


Closing balance of cash and cash equivalents ($'000)

(2,000)

(1,000)

-

1,000

2,000

3,000

4,000

5,000


Annual unrestricted cash balance range (high, median, low)


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Cash and cash equivalents—closing balance Cash and cash equivalents—median balance


Externally restricted Internally restricted Unrestricted



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Liquidity Position Page 2 of 2

Budget Forecast Average annual rates

Liquidity position indicators Jun-18A Jun-19A Jun-20B Jun-21F Jun-22F Jun-23F Jun-24F Jun-25F Jun-26F Jun-27F Jun-28F Jun-29FActual

(FY15-19)

Forecast

(FY20-24)

Forecast

(FY20-29)

Liquidity metrics

Cash and cash equivalents—closing balance - 664 140 (874) (428) 51 560 1,098 1,668 2,271 2,907 3,512 na -3.4% 18.1%

Cash and cash equivalents—median balance - - 697 653 (346) 115 609 1,133 1,687 2,273 2,901 3,545 na na na

Cash expense cover (months) - 1.4 0.5 (2.8) (1.3) 0.2 1.7 3.2 4.8 6.4 8.0 9.5 1.4 (0.4) 3.0

Working capital ratio (times) - 0.5x 1.6x 0.3x 0.5x 1.4x 3.0x 4.7x 6.5x 8.4x 10.4x 12.2x 0.5x 1.4x 4.9x

Closing balance of cash and cash equivalents ($'000)

Externally restricted - - - - - - - - - - - - na na na

Internally restricted - - - - - - - - - - - - na na na

Unrestricted - 664 140 (874) (428) 51 560 1,098 1,668 2,271 2,907 3,512 na -3.4% 18.1%

Total cash - 664 140 (874) (428) 51 560 1,098 1,668 2,271 2,907 3,512 na -3.4% 18.1%

Actual


30/07/19 10:44 AM Page 17 of 17LGFM v3.0.1

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Statement of Comprehensive Income

Line item Annual result

Jun-15A Jun-16A Jun-17A Jun-18A Jun-19A Jun-20B Jun-21F Jun-22F Jun-23F Jun-24F Jun-25F Jun-26F Jun-27F Jun-28F Jun-29F


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Income

Revenue

Operating revenue

General rates - - - - - - - - - - - - - - -

Separate rates - - - - - - - - - - - - - - -

Levies - - - - - - - - - - - - - - -

Water - - - - - - - - - - - - - - -

Water consumption, rental and sundries - - - - - - - - - - - - - - -

Sewerage - - - - - - - - - - - - - - -

Sewerage trade waste - - - - - - - - - - - - - - -

Waste management - - - - - - - - - - - - - - -

Garbage charges - - - - - - - - - - - - - - -

Other rates, levies and charges - - - - - - - - - - - - - - -

Less: discounts - - - - - - - - - - - - - - -

Less: pensioner remissions - - - - - - - - - - - - - - -

Net rates, levies and charges - - - - - - - - - - - - - - -

Building and development fees - - - - - - - - - - - - - - -

Infringements - - - - - - - - - - - - - - -

Licences and registrations - - - - - - - - - - - - - - -

Other fees and charges - - - - 1,351 1,520 1,553 1,588 1,623 1,658 1,695 1,732 1,770 1,809 1,849

Fees and charges - - - - 1,351 1,520 1,553 1,588 1,623 1,658 1,695 1,732 1,770 1,809 1,849

Other rental income - - - - - - - - - - - - - - -

Rental income - - - - - - - - - - - - - - -

Interest from overdue rates, levies and charges - - - - - - - - - - - - - - -

Interest received from investments - - - - - 14 14 - 2 15 29 42 57 73 89

Other interest received - - - - - - - - - - - - - - -

Interest received - - - - - 14 14 - 2 15 29 42 57 73 89

Contract and recoverable works - - - - - - - - - - - - - - -

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 - - - - - - - - - - - - - - -

Sales revenue - - - - - - - - - - - - - - -

Profit (loss) from joint ventures & associates - - - - - - - - - - - - - - -

Profit (loss) from controlled entities - - - - - - - - - - - - - - -


30/07/19 10:44 AM Page 1 of 5LGFM v3.0.1

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Profit (loss) from other investments - - - - - - - - - - - - - - -

Profit from investments - - - - - - - - - - - - - - -

External dividends received - - - - - - - - - - - - - - -

Internal charges received - - - - - - - - - - - - - - -

Other income - - - - 5,188 2,970 3,035 3,102 3,170 3,240 3,311 3,384 3,458 3,534 3,612

Other income - - - - 5,188 2,970 3,035 3,102 3,170 3,240 3,311 3,384 3,458 3,534 3,612

General purpose grants - - - - - - - - - - - - - - -

State subsidies and grants—operating - - - - - - - - - - - - - - -

Commonwealth subsidies and grants—operating - - - - - - - - - - - - - - -

Other non-government subsidies and grants - - - - - - - - - - - - - - -

Donations—operating - - - - - - - - - - - - - - -

Contributions—operating - - - - - - - - - - - - - - -

Grants, subsidies, contributions and donations - - - - - - - - - - - - - - -

Total operating revenue - - - - 6,539 4,503 4,603 4,689 4,794 4,913 5,034 5,158 5,285 5,416 5,550

Capital revenue

Government subsidies and grants—capital - - - - - - - - - - - - - - -

Donations—capital - - - - - - - - - - - - - - -

Contributions—capital - - - - - - - - - - - - - - -

Other capital contributions - - - - - - - - - - - - - - -


Total revenue - - - - 6,539 4,503 4,603 4,689 4,794 4,913 5,034 5,158 5,285 5,416 5,550

Capital income

Profit/(loss) on disposal of property, plant & equipment - - - - - - - - - - - - - - -

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 - - - - - - - - - - - - - - -

Revaluation up of controlled entities - - - - - - - - - - - - - - -

Other capital income - - - - - - - - - - - - - - -

Total capital income - - - - - - - - - - - - - - -

Total income - - - - 6,539 4,503 4,603 4,689 4,794 4,913 5,034 5,158 5,285 5,416 5,550


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Expenses

Operating expenses

Total staff wages and salaries - - - - 461 567 578 590 602 614 626 639 651 664 678

Councillors' remuneration - - - - - - - - - - - - - - -

Employee provision expense - - - - - 2 2 2 2 2 2 2 2 2 2

Other employee related expenses - - - - - - - - - - - - - - -

Less: capitalised employee expenses - - - - - - - - - - - - - - -

Employee benefits - - - - 461 569 580 592 604 616 628 641 653 666 680

M&S—sales contract & recoverable works - - - - 714 563 576 589 601 615 628 642 656 671 685

M&S—administration supplies - - - - - - - - - - - - - - -

M&S—audit services - - - - - - - - - - - - - - -

M&S—communication & IT - - - - - - - - - - - - - - -

M&S—consultants - - - - 520 205 209 214 218 223 228 233 238 243 249

M&S—contractors - - - - 2,184 1,352 1,381 1,412 1,443 1,474 1,507 1,540 1,574 1,609 1,644

M&S—electricity - - - - - - - - - - - - - - -

M&S—council maintenance - - - - 121 83 85 86 88 90 92 94 96 99 101

M&S—travel - - - - - - - - - - - - - - -

M&S—other - - - - - - - - - - - - - - -

Materials and services - - - - 3,539 2,202 2,251 2,300 2,351 2,403 2,455 2,509 2,565 2,621 2,679

Finance costs charged by QTC and General - - - - 396 415 419 424 429 436 441 447 453 462 468

Interest paid on overdraft - - - - - - - 15 - - - - - - -

Bank charges - - - - - - - - - - - - - - -

Interest on finance leases - - - - - - - - - - - - - - -

Other finance costs - - - - - - (1) (7) (1) - - - - - -

Finance costs - - - - 396 415 418 432 428 436 441 447 453 462 468

Land improvements - - - - - - - - - - - - - - -

Buildings - - - - - - - - - - - - - - -

Plant & equipment - - - - - 224 224 438 453 467 481 495 510 524 324

Furniture & fittings - - - - - - - - - - - - - - -

Roads, drainage & bridge network - - - - 233 - - - - - - - - - -

Water - - - - - - - - - - - - - - -

Sewerage - - - - - - - - - - - - - - -

Miscellaneous - - - - - - - - - - - - - - -

Amortisation of intangible assets - - - - - - - - - - - - - - -

Depreciation and amortisation - - - - 233 224 224 438 453 467 481 495 510 524 324


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Bad and doubtful debts - - - - - - - - - - - - - - -

Rentals & operating leases - - - - - - - - - - - - - - -

Payments - - - - - - - - - - - - - - -

Restructuring provision expense - - - - - - - - - - - - - - -

Other provision expense - - - - - - - - - - - - - - -

Other expenses - - - - 1,541 879 899 918 939 959 980 1,002 1,024 1,047 1,070

Other expenses - - - - 1,541 879 899 918 939 959 980 1,002 1,024 1,047 1,070

Total operating expenses - - - - 6,169 4,290 4,372 4,681 4,774 4,881 4,986 5,094 5,205 5,320 5,220

Capital expenses

Loss on impairment - - - - - - - - - - - - - - -

Restoration & rehabilitation provision expense - - - - - - - - - - - - - - -

Revaluation decrement - - - - - - - - - - - - - - -

Other capital expenses - - - - - - - - - - - - - - -

Total capital expenses - - - - - - - - - - - - - - -

Total expenses - - - - 6,169 4,290 4,372 4,681 4,774 4,881 4,986 5,094 5,205 5,320 5,220

Net result - - - - 370 214 231 8 20 33 48 64 80 96 330

Tax equivalents

Net result before tax equivalents - - - - 370 214 231 8 20 33 48 64 80 96 330

Tax equivalents payable - - - - - 64 69 0 6 10 14 19 24 29 99

Net result after tax equivalents - - - - 370 150 162 8 15 23 34 45 56 67 231

Other comprehensive income

Items that will not be reclassified to net result

Increase (decrease) in asset revaluation surplus - - - - - - - - - - - - - - -

Miscellaneous comprehensive income - - - - - - - - - - - - - - -

Total other comprehensive income for the year - - - - - - - - - - - - - - -

Total comprehensive income for the year - - - - 370 214 231 8 20 33 48 64 80 96 330

Operating result

Operating revenue - - - - 6,539 4,503 4,603 4,689 4,794 4,913 5,034 5,158 5,285 5,416 5,550


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Operating expenses - - - - 6,169 4,290 4,372 4,681 4,774 4,881 4,986 5,094 5,205 5,320 5,220

Operating result - - - - 370 214 231 8 20 33 48 64 80 96 330


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Statement of Financial Position




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Assets

Current assets

Internally restricted component - - - - - - - - - - - - - - -

Externally restricted component - - - - - - - - - - - - - - -

Unrestricted component - - - - 664 140 - - 51 560 1,098 1,668 2,271 2,907 3,512

Cash and cash equivalents - - - - 664 140 - - 51 560 1,098 1,668 2,271 2,907 3,512

General trade and other receivables - - - - 537 368 377 385 394 401 411 420 430 438 449

Internal loans outstanding - - - - - - - - - - - - - - -

Trade and other receivables - - - - 537 368 377 385 394 401 411 420 430 438 449

Inventories held for sale - - - - - - - - - - - - - - -

Inventories held for distribution - - - - - - - - - - - - - - -

Land held for development or sale - - - - - - - - - - - - - - -

Inventories - - - - - - - - - - - - - - -

Tax equivalent assets - - - - - - - - - - - - - - -

Prepayments - - - - - - - - - - - - - - -

Other current assets - - - - - - - - - - - - - - -

Other current assets - - - - - - - - - - - - - - -

Non-current assets held for sale - - - - - - - - - - - - - - -

Total current assets - - - - 1,201 508 377 385 445 961 1,510 2,089 2,700 3,345 3,961

Non-current assets

Land held for development for sale - - - - - - - - - - - - - - -

Inventories - - - - - - - - - - - - - - -

General trade and other receivables - - - - - - - - - - - - - - -

Internal loans outstanding - - - - - - - - - - - - - - -

Trade and other receivables - - - - - - - - - - - - - - -

Joint ventures & associates - - - - - - - - - - - - - - -

Controlled entities - - - - - - - - - - - - - - -

Other investments - - - - - - - - - - - - - - -

Investment property - - - - - - - - - - - - - - -

Investments - - - - - - - - - - - - - - -

Land - - - - - - - - - - - - - - -


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Land improvements - - - - - - - - - - - - - - -

Buildings - - - - - - - - - - - - - - -

Plant & equipment - - - - 4,222 3,998 5,274 4,936 4,583 4,216 3,835 3,439 3,029 2,605 2,381

Furniture & fittings - - - - - - - - - - - - - - -

Roads, drainage & bridge network - - - - - - - - - - - - - - -

Water - - - - - - - - - - - - - - -

Sewerage - - - - - - - - - - - - - - -

Miscellaneous - - - - - - - - - - - - - - -

Work in progress - - - - - - - - - - - - - - -

Property, plant & equipment - - - - 4,222 3,998 5,274 4,936 4,583 4,216 3,835 3,439 3,029 2,605 2,381

Intangible assets - - - - - - - - - - - - - - -

Other non-current assets - - - - - - - - - - - - - - -

Other non-current assets - - - - - - - - - - - - - - -

Total non-current assets - - - - 4,222 3,998 5,274 4,936 4,583 4,216 3,835 3,439 3,029 2,605 2,381

Total assets - - - - 5,423 4,505 5,651 5,321 5,028 5,177 5,345 5,528 5,730 5,950 6,342

Liabilities

Current liabilities

Overdraft - - - - - - 874 428 - - - - - - -

Employee payables - - - - 37 46 48 48 49 50 51 52 54 54 56

Other payables - - - - 1,429 253 259 265 270 276 282 289 295 301 308

Trade and other payables - - - - 1,466 299 306 313 320 326 334 341 349 355 364

Loans - - - - 980 (101) (107) (112) (119) (124) (130) (136) (144) (150) (158)

Finance leases - - - - - - - - - - - - - - -

Borrowings - - - - 980 (101) (107) (112) (119) (124) (130) (136) (144) (150) (158)

Employee - - - - 67 67 67 67 67 67 67 67 67 67 67

Restoration & rehabilitation - - - - 51 51 51 51 51 51 51 51 51 51 51

Restructuring - - - - - - - - - - - - - - -

Other - - - - - - - - - - - - - - -

Provisions - - - - 118 118 118 118 118 118 118 118 118 118 118

Tax equivalent liabilities - - - - - - - - - - - - - - -

Other - - - - - - - - - - - - - - -


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Other current liabilities - - - - - - - - - - - - - - -

Total current liabilities - - - - 2,564 316 1,191 747 319 320 322 323 322 323 324

Non-current liabilities

Trade and other payables - - - - - - - - - - - - - - -

Loans - - - - 7,379 8,558 8,665 8,777 8,895 9,019 9,149 9,285 9,429 9,580 9,738

Finance leases - - - - - - - - - - - - - - -

Borrowings - - - - 7,379 8,558 8,665 8,777 8,895 9,019 9,149 9,285 9,429 9,580 9,738

Employee - - - - 7 9 11 13 15 17 19 21 23 25 27

Restoration & rehabilitation - - - - 3,138 3,138 3,138 3,138 3,138 3,138 3,138 3,138 3,138 3,138 3,138

Restructuring - - - - - - - - - - - - - - -

Other - - - - - - - - - - - - - - -

Provisions - - - - 3,145 3,147 3,149 3,151 3,153 3,155 3,157 3,159 3,161 3,163 3,165

Other non-current liabilities - - - - - - - - - - - - - - -

Total non-current liabilities - - - - 10,524 11,705 11,814 11,928 12,048 12,174 12,306 12,444 12,590 12,743 12,903

Total liabilities - - - - 13,088 12,021 13,005 12,674 12,368 12,494 12,628 12,767 12,913 13,066 13,227

Net community assets - - - - (7,665) (7,515) (7,354) (7,354) (7,340) (7,317) (7,283) (7,239) (7,183) (7,115) (6,884)

Community equity

Asset revaluation surplus - - - - - - - - - - - - - - -

Retained surplus - - - - (7,665) (7,515) (7,354) (7,354) (7,340) (7,317) (7,283) (7,239) (7,183) (7,115) (6,884)

Total community equity - - - - (7,665) (7,515) (7,354) (7,354) (7,340) (7,317) (7,283) (7,239) (7,183) (7,115) (6,884)

Reconciliation

Net community assets to community equity - - - - - - - - - - - - - - -


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Statement of Cash Flows




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Cash flows from operating activities

Receipts from customers - - - - - 4,659 4,579 4,681 4,784 4,890 4,996 5,107 5,219 5,335 5,450

Payments to suppliers and employees - - - - - (4,816) (3,721) (3,802) (3,885) (3,970) (4,054) (4,143) (4,233) (4,325) (4,417)

Payments for land held as inventory - - - - - - - - - - - - - - -

Proceeds from sale of land held as inventory - - - - - - - - - - - - - - -

Dividend received - - - - - - - - - - - - - - -

Interest received - - - - - 14 14 (15) 2 15 29 42 57 73 89

Rental income - - - - - - - - - - - - - - -

Non-capital grants and contributions - - - - - - - - - - - - - - -

Borrowing costs - - - - - (415) (419) (424) (429) (436) (441) (447) (453) (462) (468)

Tax equivalents paid to General - - - - - (64) (69) (0) (6) (10) (14) (19) (24) (29) (99)

Dividend paid to General - - - - - - - - - - - - - - -

Payment of provision - - - - - - - - - - - - - - -

Other cash flows from operating activities - - - - - - - - - - - - - - -

Net cash inflow from operating activities - - - - - (622) 385 439 467 490 515 540 566 592 555

Cash flows from investing activities

Payments for property, plant and equipment - - - - - - (1,500) (100) (100) (100) (100) (100) (100) (100) (100)

Payments for intangible assets - - - - - - - - - - - - - - -

Net movement in loans and advances - - - - - - - - - - - - - - -

Proceeds from sale of property, plant and equipment - - - - - - - - - - - - - - -


Other cash flows from investing activities - - - - - - - - - - - - - - -

Net cash inflow from investing activities - - - - - - (1,500) (100) (100) (100) (100) (100) (100) (100) (100)

Cash flows from financing activities

Proceeds from borrowings - - - - - - - - - - - - - - -

Repayment of borrowings - - - - - 98 101 107 112 119 124 130 136 144 150

Repayments made on finance leases - - - - - - - - - - - - - - -

Net cash inflow from financing activities - - - - - 98 101 107 112 119 124 130 136 144 150

Total cash flows


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Statement of Cash Flows




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Net increase in cash and cash equivalent held - - - - - (524) (1,013) 446 479 509 539 570 602 636 605

Opening cash and cash equivalents - - - - - 664 140 (874) (428) 51 560 1,098 1,668 2,271 2,907

Closing cash and cash equivalents - - - - 664 140 (874) (428) 51 560 1,098 1,668 2,271 2,907 3,512

Reconciliation

Closing cash balance to Statement of Financial Position - - - - - - - - - - - - - - -


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Statement of Changes in Equity




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Asset revaluation surplus

Opening balance - - - - - - - - - -

Net result na na na na na na na na na na

Increase in asset revaluation surplus - - - - - - - - - -

Internal payments made na na na na na na na na na na

Closing balance - - - - - - - - - - -

Retained surplus

Opening balance (7,665) (7,515) (7,354) (7,354) (7,340) (7,317) (7,283) (7,239) (7,183) (7,115)

Net result 214 231 8 20 33 48 64 80 96 330

Increase in asset revaluation surplus na na na na na na na na na na

Internal payments made (64) (70) (7) (7) (10) (14) (19) (24) (29) (99)

Closing balance (7,665) (7,515) (7,354) (7,354) (7,340) (7,317) (7,283) (7,239) (7,183) (7,115) (6,884)

Total

Opening balance (7,665) (7,515) (7,354) (7,354) (7,340) (7,317) (7,283) (7,239) (7,183) (7,115)

Net result 214 231 8 20 33 48 64 80 96 330

Increase in asset revaluation surplus - - - - - - - - - -

Internal payments made (64) (70) (7) (7) (10) (14) (19) (24) (29) (99)

Closing balance (7,665) (7,515) (7,354) (7,354) (7,340) (7,317) (7,283) (7,239) (7,183) (7,115) (6,884)


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'ChgEquity'


Metrics

User selected ratios Annual metric

ID Name Jun-15A Jun-16A Jun-17A Jun-18A Jun-19A Jun-20B Jun-21F Jun-22F Jun-23F Jun-24F Jun-25F Jun-26F Jun-27F Jun-28F Jun-29F

Selected Metrics

Selected metric charts


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Metrics




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Selected metrics

1 na na na na na na na na na na na na na na na













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Metrics




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DILGP financial sustainability measures

R1.1 Operating surplus ratio na na na na 5.7% 4.7% 5.0% 0.2% 0.4% 0.7% 1.0% 1.2% 1.5% 1.8% 5.9%

= Operating result / total operating revenue

R1.2 Net financial liabilities ratio na na na na 181.8% 255.7% 274.4% 262.1% 248.7% 234.7% 220.9% 207.0% 193.2% 179.5% 167.0%

R1.3 Asset sustainability ratio na na na na -% -% 200.8% 22.8% 22.1% 21.4% 20.8% 20.2% 19.6% 19.1% 30.9%

QTC credit metrics

R2.1 Council controlled revenue ratio na na na na 20.7% 33.8% 33.8% 33.9% 33.8% 33.8% 33.7% 33.6% 33.5% 33.4% 33.3%

R2.2 Cash expense cover ratio na na na na 1.44 0.46 -2.81 -1.35 0.16 1.69 3.24 4.82 6.42 8.05 9.52

R2.3 Total debt service cover ratio na na na na 2.5x 0.6x 2.8x 0.7x 1.2x 2.9x 3.1x 3.2x 3.3x 3.4x 3.5x

R2.4 Capital expenditure ratio na na na na na na 6.7x 0.2x 0.2x 0.2x 0.2x 0.2x 0.2x 0.2x 0.3x

R2.5 Average useful life of depreciable assets na na na na 18.14 17.84 23.54 11.26 10.12 9.03 7.97 6.94 5.94 4.97 7.35

Operating items statistics

R3.1 Growth in rateable properties na -5.0% -% 0.5% -% 0.5% 0.1% 0.3% 1.0% 1.3% 0.5% 0.5% 0.5% 0.5% 0.4%

R3.2 Growth in average general rates per property na na na na na na na na na na na na na na na

R3.3 Growth in FTE numbers na 6.3% 1.7% -% 6.1% 0.3% 0.4% -% 0.6% -% 0.6% -% -% 0.4% -%

R3.4 Growth in EBA agreements -% -% -% -% -% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%

R3.5 Change in net rates, levies and charges na na na na na na na na na na na na na na na

R3.6 Change in sales - contract and recoverable works na na na na na na na na na na na na na na na

R3.7 Change in operating subsidies, grants, contributions and donations na na na na na na na na na na na na na na na


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R3.8 Change in other operating revenue na na na na na -31.1% 2.2% 1.9% 2.2% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5%

R3.9 Change in employee benefits na na na na na 23.5% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%

R3.10Change in materials and services not used for sales and recoverable

worksna na na na na -42.0% 2.2% 2.2% 2.2% 2.2% 2.2% 2.2% 2.2% 2.2% 2.2%

R3.11 Change in total materials and services na na na na na -37.8% 2.2% 2.2% 2.2% 2.2% 2.2% 2.2% 2.2% 2.2% 2.2%

R3.12 Change in depreciation & amortisation expenses na na na na na -3.7% -% 95.6% 3.3% 3.2% 3.1% 3.0% 2.9% 2.8% -38.2%

R3.13 Change in other operating expenses na na na na na -33.2% 1.7% 2.6% 1.2% 2.1% 1.9% 2.0% 2.0% 2.1% 1.9%

R3.14 Change in total operating revenue na na na na na -31.1% 2.2% 1.9% 2.2% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5%

R3.15 Change in total operating expenses na na na na na -30.5% 1.9% 7.1% 2.0% 2.2% 2.2% 2.2% 2.2% 2.2% -1.9%

R3.16 Change in operating result na na na na na -42.2% 7.9% -96.6% 156.5% 60.1% 47.8% 31.9% 25.7% 20.1% 243.3%

R3.17 Change in selected cash closing balance na na na na na -79.0% -726.1% -51.1% -111.9% 1,000.4% 96.2% 51.9% 36.1% 28.0% 20.8%

R3.18 Cash expense cover ratio—excluding externally restricted na na na na 1.44 0.46 - - 0.16 1.69 3.24 4.82 6.42 8.05 9.52

R3.19 Cash expense cover ratio—excluding externally & internally restricted na na na na 1.44 0.46 - - 0.16 1.69 3.24 4.82 6.42 8.05 9.52

R3.20 Alternative minimum liquidity measure na na na na na 473 980 427 441 454 468 482 497 512 527

R3.21 Alternative minimum liquidity—months na na na na na 1.55 3.15 1.35 1.36 1.37 1.38 1.39 1.41 1.42 1.43

R3.22 Gross interest expense as a portion of average term debt na na na na na 4.9% 4.7% 4.7% 4.8% 4.9% 4.9% 4.9% 4.9% 4.9% 4.9%

R3.23 Interest revenue as a portion of average cash na na na na na 3.5% -3.9% -% -1.1% 5.0% 3.4% 3.1% 2.9% 2.8% 2.8%

R3.24 Average general rate per property na na na na na na na na na na na na na na na

R3.25 Average operating cost per property na na na na na na na na na na na na na na na

R3.26 Average term debt per property na na na na na na na na na na na na na na na

R3.27 Calculated creditor days na na na na 96.57 30.00 30.00 30.05 30.01 30.00 30.00 30.00 30.00 30.00 30.00

R3.28 Calculated debtor days na na na na 29.97 30.00 30.00 30.00 30.00 30.00 30.00 30.00 30.00 30.00 30.00

Capital items statistics


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R4.1 Gross capital expenditure - - - - - - 1,500 100 100 100 100 100 100 100 100

R4.2 Net capital expenditure - - - - - - 1,500 100 100 100 100 100 100 100 100

R4.3 New borrowings - - - - - - - - - - - - - - -

R4.4Depreciation as a percentage of closing written down value of

property, plant & equipmentna na na na 5.5% 5.6% 4.2% 8.9% 9.9% 11.1% 12.5% 14.4% 16.8% 20.1% 13.6%

R4.5 Average useful life—land improvements na na na na na na na na na na na na na na na

R4.6 Average useful life—buildings na na na na na na na na na na na na na na na

R4.7 Average useful life—plant & equipment na na na na na 17.84 23.54 11.26 10.12 9.03 7.97 6.94 5.94 4.97 7.35

R4.8 Average useful life—furniture & fittings na na na na na na na na na na na na na na na

R4.9 Average useful life—roads, drainage & bridge network na na na na - na na na na na na na na na na

R4.10 Average useful life—water na na na na na na na na na na na na na na na

R4.11 Average useful life—sewerage na na na na na na na na na na na na na na na

R4.12 Average useful life—miscellaneous na na na na na na na na na na na na na na na

R4.14Cash capital grants, subsidies, contributions & donations as a

percentage of gross capital expenditurena na na na na na -% -% -% -% -% -% -% -% -%

R4.15Non-cash capital grants, subsidies, contributions & donations as a

percentage of gross capital expenditurena na na na na na -% -% -% -% -% -% -% -% -%

R4.16 New borrowings as a percentage of gross capital expenditure na na na na na na -% -% -% -% -% -% -% -% -%

R4.17Closing revaluation balance as a percentage of opening written down

value of property, plant & equipmentna na na na na -% -% -% -% -% -% -% -% -% -%

R4.18 Asset renewal funding ratio na na na na na na na na na na na na na na na

Operating position indicators

R5.1 Relative operating growth rate na na na na na -0.7% 0.3% -5.2% 0.3% 0.2% 0.3% 0.3% 0.3% 0.3% 4.4%

R5.2 Sales, contracts and recoverable works margin na na na na na na na na na na na na na na na

R5.3 Operating efficiency ratio na na na na 106.0% 105.0% 105.3% 100.2% 100.4% 100.7% 101.0% 101.2% 101.5% 101.8% 106.3%

Fiscal flexibility indicators


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R6.1 Interest cover ratio na na na na 2.5x 2.1x 2.1x 2.0x 2.1x 2.1x 2.2x 2.3x 2.3x 2.3x 2.4x

R6.2 Leverage ratio na na na na 117.7% 184.7% 185.9% 184.8% 182.0% 169.7% 157.3% 145.0% 132.7% 120.4% 109.3%

R6.3 Self generated revenue ratio na na na na 106.0% 105.0% 105.3% 100.2% 100.4% 100.7% 101.0% 101.2% 101.5% 101.8% 106.3%

R6.4Operating grants, subsidies, contributions & donations as a

percentage of total operating revenuena na na na -% -% -% -% -% -% -% -% -% -% -%

R6.5Contract and recoverable works as a percentage of total operating

revenuena na na na -% -% -% -% -% -% -% -% -% -% -%

R6.6 Other operating revenue as a percentage of total operating revenue na na na na 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

R6.7 Total employee benefits as a percentage of total operating expenses na na na na 7.5% 13.3% 13.3% 12.6% 12.6% 12.6% 12.6% 12.6% 12.6% 12.5% 13.0%

R6.8Total materials and services as a percentage of total operating

expensesna na na na 57.4% 51.3% 51.5% 49.1% 49.2% 49.2% 49.2% 49.3% 49.3% 49.3% 51.3%

R6.9Total depreciation & amortisation as a percentage of total operating

expensesna na na na 3.8% 5.2% 5.1% 9.4% 9.5% 9.6% 9.7% 9.7% 9.8% 9.9% 6.2%

R6.10 Other operating expenses as a percentage of total operating expenses na na na na 31.4% 30.2% 30.1% 28.9% 28.6% 28.6% 28.5% 28.4% 28.4% 28.3% 29.4%

R6.11 Net operating cash flow as a percentage of net capital expenditure na na na na na na 25.7% 439.4% 466.6% 490.3% 515.0% 540.2% 566.0% 591.7% 555.0%

Liquidity indicators

R7.1 Working capital ratio na na na na 0.5x 1.6x 0.3x 0.5x 1.4x 3.0x 4.7x 6.5x 8.4x 10.4x 12.2x

R7.2 Total restricted cash as a percentage of total cash na na na na -% -% na na -% -% -% -% -% -% -%

R7.3 Internally restricted cash as a percentage of total cash na na na na -% -% na na -% -% -% -% -% -% -%

R7.4 Externally restricted cash as a percentage of total cash na na na na -% -% na na -% -% -% -% -% -% -%

Equity maintenance indicators

R8.1 Net results - - - - 370 214 231 8 20 33 48 64 80 96 330

R8.2 Net margin na na na na 5.7% 4.7% 5.0% 0.2% 0.4% 0.7% 1.0% 1.2% 1.5% 1.8% 5.9%

R8.3New capital expenditure as a percentage of opening written down

value of property, plant & equipmentna na na na na -% -% -% -% -% -% -% -% -% -%

R8.4 Change in community equity excluding asset revaluation surplus na na na na na -2.0% -2.1% -0.0% -0.2% -0.3% -0.5% -0.6% -0.8% -0.9% -3.2%


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