Bayside records deficit of $15 million but maintains "healthy cash position"

Bayside records deficit of $15 million but maintains

Bayside Council has recorded a deficit of $15.801 million for the year ended 30 June, 2021.

But with capital grants and contributions, the council showed an overall positive net operating result of $18.479million, according to its Draft Financial Statements which were submitted to the October 13 council meeting.

The result was driven by irregular non-cash related expenditure associated with asset revaluations ($10.9million), asset disposals ($3.9millin) and increased depreciation expense ($3.2million), the council's Financial Strategy and Reporting Manager Rodney Sanjivi said.

"These accounting transactions are non-cash transactions which do not change the underlying capacity of the organisation to service the needs of the community.

"In terms of cash and investments, Council maintains one of the healthiest cash and investment portfolios in the state, with in excess of $448 million in cash and investments.

"This is comprised of external restrictions of $371.4 million, internal restrictions of $71.9 million and unrestricted cash of $0.96 million and equity investments of $4.19 million."

There were a number of factors contributing to the deficit in net operating result.

User fees and changes declined by approximately $800,000 (six per cent) compared with the prior year.

The decline in user fees and charges largely attributed to the impact of COVID19 and Bayside Council's community relief packages on items such as rentals.

Interest and investment income decreased significantly by $4.1 million (52 per cent) compared to the previous year.

The sharp decline in interest income is reflective of the current market conditions and record low interest rates, the council's report stated.

Depreciation expenses increased by approximately. $3.2 million (12 per cent) compared to prior year.

The Council undertook external revaluations of its assets, roads and stormwater drainage network and found a combined increase in the value of these assets of $51 million. This increased value resulted in a higher depreciation charge in the subsequent financial years.

There was a loss on disposal of assets of approximately $3.9 million compared to a gain on disposal in the prior year of $1.l5 million. A loss of $3 million was seen with certain building assets that were demolished as a result of the council's decision to undertake major capital redevelopment works.

The council carried out a revaluation of its building assets which saw a loss of approximately $10.9 million due to a higher-than-expected decay rate with certain building assets being in worse condition than initially anticipated.

There was also a reduction in the 'remaining service potential' of certain buildings based on approved plans to demolish the buildings as part of future capital works.

"Council continues to maintain a healthy cash position through exercising strong fiscal discipline through its budgeting process in balancing the needs of the Bayside community, where Council is spending within its means, but still continuing to deliver vital services for the community it is there to serve," Mr Sanjivi reported.