Southern Metropolitan Regional Council

Transcription

1 Southern Metropolitan Regional Council Draft Long Term Financial Plan June 2013

2 Contents 1 Message from the Chief Executive Officer 3 2 Long Term Financial Planning 4 3 Who Are We 6 4 Our Vision 7 5 Financial Strategies 8 6 Scenario Modelling 9 7 Key Assumptions 11 8 Measuring Sustainability 12 9 Financial Projections Risk Assessment Integrating Other Informing Plans Conclusion Implementation and Review of the LTFP Statements and Supporting Schedules 18 2 P age

3 1. MESSAGE FROM THE CHIEF EXECUTIVE OFFICER This document presents the long term financial plan of the Southern Metropolitan Regional Council (SMRC), covering the financial periods 2013/2014 to 2022/2023 The plan is to provide a financial framework to facilitate the delivery of the objectives in the Community Strategic Plan and Corporate Business Plan integrating the strategic direction to its financial planning in sustainable financial terms. The SMRC s goal is to continually improve its financial position and the plan summaries a number of key strategies, such as; Achieving balanced operating budgets with full cost recovery for its projects Exploring opportunities to increase the level of commercial return from our projects Increasing capacity and broadening the range of products and services within our regional purpose. Continuing to implement operational efficiencies across the organisation A planned customer growth strategy will provide financial sustainability for the RRRC Project, and whilst the plan considers the best estimates available at the time of its development. It also applies a prudent financial approach that allows flexibility in response to changing circumstances. The plan provides a sensitivity analysis of a number of key scenarios that may impinge on the financial forecasting. It is recognised that fluctuations in process volumes and commodity prices can have a major impact on the profitability and net cash flows from operations. The plan is reviewed annually or more frequently as determined by the Council and the projections are applied for the current and future annual budgets Tim Youé Chief Executive Officer Our Vision We have a business model that supports the delivery of long term sustainable waste solutions What this means Delivering sustainable waste management solutions in an efficient and effective manner is essential to our business Our business model must reflect the current commercial environment, and have the flexibility to continually evolve as conditions change We must be able to understand and integrate our expectations of our member councils into a governance structure that is equitable and representative Where we will be in 2023? By 2023 our member councils will be receiving social and economic dividends for their investment. We understand the acceptable level of cost our member councils are willing to pay, and have priced our services accordingly. Our capital investments are efficiently utilised and we are financially sustainable over the long term. Our business model and governance structure is appropriate to enable the delivery of our services.

4 2. LONG TERM FINANCIAL PLANNING Long term financial planning is a key element of the Integrated Planning and Reporting Framework. It enables local governments to set priorities, based on their resourcing capabilities, for the delivery of short, medium and long term priorities. The Long Term Financial Plan (LTFP) is a ten year rolling plan that informs the Corporate Business Plan to activate Strategic Community Plan priorities. From these planning processes, Annual Budgets that are aligned with strategic objectives can be developed. The LTFP details what the SMRC proposes to do over the next ten years as a means of ensuring SMRC s financial sustainability. This plan will be the basis for preparation of the SMRC s Annual Budgets in future. The LTFP covers the period 2013/14 to 2022/23. There is a high level of accuracy and detail in the first three years of the LTFP but this is underpinned by a number of assumptions. The remaining seven years of the LTFP are indicative figures and can be considered only as reasonable estimates. The SMRC intends to undertake a broad review of its LTFP every year and a full review is planned once in every three years. As future Annual Budgets are to be developed from the LTFP, there may be some annual variations between these two documents, which will be explained in the Annual Budget. The LTFP shows the linkages between specific plans. The following figure illustrates how the LTFP informs the Integrated Planning and Reporting Framework: All local governments Western Australia, including Regional Councils, are required to plan for the future in accordance with Section 5.56(1) of the Local Government Act 1995 and adopt an Integrated Planning and Reporting Framework. The diagram below depicts this framework: Source: Department of Local Government, Integrated Planning and Reporting Guidelines,

5 The table below summaries each of the framework s key components: Component Purpose Our Document Strategic Community Plan Corporate Business Plan Long Term Financial Plan Asset Management Plan Workforce Plan Information, Communications & Technology Issue Specific Strategies Annual Budget Measurement & Reporting To articulate the long term vision, aspirations and strategies for member councils and our communities Details the actions the Regional Council will undertake, and resources required, over a five year period to achieve stakeholders aspirations and objectives of the Strategic Community Plan. The Operational Plan is integrated as the first year of the Corporate Business Plan. Provides an outline of the financial position for SMRC for the next ten years. It indicates SMRC s long term financial sustainability and allows early identification of financial issues and their longer term impacts. The Annual Budget is integrated as the first year of the Long Term Financial Plan Outlines how the SMRC s assets will meet the service delivery needs of the community into the future the long term sustainable management of the assets based on a whole of life and whole of organisation approach. Outlines the workforce requirements and workforce strategies for the delivery of the current and future operations of SMRC. provides a high level framework for the effective management of information and technology, to ensure ICT systems are controlled and maintained in line with corporate objectives and emerging trends These are specific strategies that SMRC has developed to respond specific issues, or guide SMRC s approach to a program of work. A statutory requirement outlining the financial estimates to deliver the Corporate Business Plan The reporting process allows the Regional Council to inform its stakeholders and statutory bodies on its progress in delivering services, projects and other operations to meet the short term, medium term and long term aspirations. Strategic Community Plan This Document SMRC Long Tern Financial Plan SMRC Asset Management Plan SMRC Workforce Plan To be developed Strategic Waste Management Plan (SWMP) Community Engagement Strategy SMRC Marketing Plan Environmental Management System (EMS) Establishment Agreement Project Participants Agreement Annual Budget for the year ended of the Southern Metropolitan Regional Council Annual Report for the year ended RRRC Operating Licence Report 5

6 3. WHO ARE WE Southern Metropolitan Regional Council (SMRC) is a statutory local government authority representing local governments in the southern metropolitan area of Perth. It is responsible for delivering innovative and sustainable waste management solutions for our member local governments. Our five member local governments are: City of Cockburn, Town of East Fremantle, City of Fremantle, City of Kwinana and City of Melville. The member local governments have jointly agreed to establish the regional local government under an Establishment Agreement and each participant may participate in regional projects that are governed by a Participants Project Agreement. There are two core projects, being: 1. The Regional Resource Recovery Centre (RRRC) Project and; 2. The Office Accommodation Project. Both the projects were established through separate project participants agreements. The City of Kwinana is not a participant in RRRC project. In addition to the above two projects, support activities such as administration, education and research are also undertaken. Our Regional Resource Recovery Centre (RRRC) was the first of its kind in Western Australia, and remains a model for other local, regional, and state governments seeking sustainable solutions for waste. We operate a state of the art $100 million Regional Resource Recovery Centre at Canning Vale where we run three resource recovery facilities that form part of RRRC: 1. Organic waste (household and small garden waste) is collected using the green top bins, processed and turned into compost a the Waste Composting Facility; 2. Paper, cardboard, plastics, and metals are collected from households using the yellow top bins, are sorted and recovered in the Materials Recovery Facility, and then sold to domestic and international markets; and 3. Green waste is collected from the kerbside of households, and turned into mulch at the Green Waste Facility. The SMRC is committed to assisting the State Government to work towards achieving its State Waste Strategy 2012 targets of 50% for Metropolitan Perth by 2015, and 65% by As an organisation we inject over $20 million per year into the economy, employ over 65 staff and provide work for 100 local small businesses and contractors each month. 6

7 4. OUR VISION We are leaders in delivering innovative and sustainable waste management solutions for the benefit of our communities and the environment. 7

8 5. FINANCIAL STRATEGIES 5.1 Contributions and Gate Fee Income The SMRC s business plans. Policies and Project Participants Agreements provides for the calculation methodologies for applying Participant s contributions towards operating and capital expenditure. The SMRC s pricing policy provides the framework for the basis of charging gate fees to our commercial customers. 5.2 Financially Sustainable Operations The SMRC considers cost effective and efficient service delivery models in meeting our regional purpose and our stakeholder s capacity to pay. The SMRC will: Achieve balanced operating budgets with full cost recovery for its projects Explore opportunities to increase the level of commercial return from our projects. Increase capacity and broaden our range of products and services Continue to implement operational efficiencies across the organisation. Growth in customers and tonnage input will provide financial sustainability for the RRRC Project. The estimated surplus cash flow from operations will increase based on additional tonnage for the years covered by the plan. The surplus will be mainly utilised in the asset renewal programme and will ensure that the operations will be financially sustainable over the plan period. 5.3 Borrowings All existing RRRC project borrowings are to be repaid by 30 June Any new loans proposed for the RRRC project will be repaid either over the life of the asset or by the 30 June Any new projects require Business Plans that are approved by Participants. 5.4 Reserves The SMRC maintains the following cash backed reserve accounts: 1. RRRC Project Plant & Equipment Reserve To fund the purchase of plant and equipment for the RRRC Project Transfer to cash backed reserves to finance the asset renewal plan during the plan period will be made based on annual surpluses. The asset renewal programme will finance plant and equipment worth over $24.9 million over the plan period or average of $2.5 million per annum. During the plan period, the reserves will increase by $ 6.3 million. 2. RRRC Project Contingency Reserve To fund operating deficits, capital expenditure and loan borrowings for the RRRC Project 8

9 3. Travel and Conference Reserve To fund Councillors and employees of the SMRC for attending conferences and study tours. A maximum reserve balance of $50,000 has been set by council policy. 5.5 Capital Expenditure & Asset Renewals The Asset Management Plan has identified that plant and equipment worth over $24.9 million may need to be renewed over the plan period. The renewal of assets are to be financed by cash reserves. 6. SCENARIO MODELLING 6.1 Critical Assumptions Based on sensitivity analysis, it is recognised that variations in volumes and commodity prices can have a major impact on the profitability and net cash flows from operations. We have identified three critical assumptions and developed scenarios by varying these assumptions. Presently, the licence conditions restrict the processing capacity of our Waste Composting operations to 65% of the design capacity. In the base case, we have assumed that these restrictions will be removed due to the recently improved odour management systems. It is assumed that we will be able to achieve adequate commercial volumes to operate the Material Recycling Facility at around 75,000 tonnes by 2017/18 and further increase to 80,000 tonnes for the remainder of the facilities life. While the base case assumes that commodity prices will remain constant subject to CPI increases, we have three variants of the assumption, which consider the cyclical trend of the commodity prices. 9

10 6.2 List of Scenarios considered Scenario A (Base Case) B C D E F G H I Brief Description WCF operates at 85% of capacity. MRF volumes to increase to 75 KT in 4 years and reach 80 KT by 8 years. Current commodity prices, which are assumed to be lowest level, are estimated to remain the same in the plan period with a nominal CPI increase of 2.5% per annum. Greenwaste based on 8 months operations. WCF operates at 65% of the capacity due to Licence Conditions Commodity Prices will fall by 20% once in five years and recover over next two years. The fall assumed in the year 2017/18. Commodity Prices will fall by 40% once in five years and recover over next two years. The fall assumed in the year 2017/18. Due to difficulty in getting commercial volumes, the MRF operations will not exceed 50,000 Tonnes in LTFP period. Due to difficulty in getting commercial volumes, the MRF operations will not exceed 50,000 Tonnes in LTFP period. Commodity Prices will fall by 20% once in five years and recover over next two years. The fall assumed in the year 2017/18. Due to difficulty in getting commercial volumes, the MRF operations will not exceed 50,000 Tonnes in LTFP period. Commodity Prices will fall by 40% once in five years and recover over next two years. The fall assumed in the year 2017/18. Due to difficulty in getting commercial volumes, the MRF operations will not exceed 50,000 Tonnes in LTFP period. Commodity Prices will fall by 40% once in five years and recover over next two years. The two falls assumed in LTFP period. The first fall is assumed in 2015/16 and the second dip in 2020/21. Commodity Prices will fall by 40% once in five years and recover over next two years. The two falls assumed in LTFP period. The first fall is assumed in 2015/16 and the second dip in 2020/ Impact of different scenarios The impact of different scenarios and their combinations on the operating surplus as well as ability to incur the expenditure required for capital renewal is shown in the table What if Volumes and / or Commodity Prices fall?. The impact on sustainability can be summarised as follows: If there is one major fall in commodity prices during the Long Term Financial Plan Period, we can withstand the impact of reduction in volumes of either WCF or MRF but not both. If there are two major dips in commodity prices during the Long Term Financial Plan Period, we cannot withstand any impact of reduction in volumes either in WCF or in MRF. 10

11 What if Volumes and / or Commodity Prices fall? ($ M) Operating Surplus generated in Base Case in LTFP period ( ): (After MRF Loan Repayments) Asset Additions and Renewals planned in LTFP period: Net Surplus after Capital Expenditure (or Capex deferred) in LTFP period: 9.71 The above 3 figures will change in 16 different combinations as under: Volumes as per Base Case WCF Volumes Capped at 71,000 Tonnes MRF Volumes Capped at 50,000 Tonnes Both the above restrictions apply Commodity Prices as per 20 % Dip once in the plan 40 % Dip once in the plan 40 % Dip twice in the Base Case period period plan period Surplus Asset Renewal Net Surplus Surplus Asset Renewal Net Surplus (0.03) (2.25) (4.48) (8.53) Surplus Asset Renewal Net Surplus 0.10 (1.38) (2.85) (5.90) Surplus Asset Renewal Net Surplus (9.63) (11.11) (12.59) (15.63) 7. KEY ASSUMPTIONS The estimates in the LTFP are based on a number of assumptions and strategies. The base point for the modelling is the revised budget for 2012/13. The opening balances for the year 2012/13 are taken from the annual financial statements for the year ended 30 June Some of the assumptions are modified in developing the Scenarios. These changes are indicated in the section Scenario Modelling. The key assumptions used are listed below: The processed volumes will go up in line with projected population growth of the Member Councils. It is assumed that recycled quantity per person will go up 1 % every year as indicated in WA Waste Authority Report, December Commercial customers for each waste stream at the RRRC are estimated as follows MRF Total Estimated Commercial Tonnes 9,500 14,720 23,950 40,400 40,670 40,950 41,250 41,570 41,910 42,280 Total Tonnes (including Members) 40,000 46,500 56,740 74,050 74,980 75,940 76,930 77,950 79,010 80,120 Growth % from previous year 55% 63% 69% 1% 1% 1% 1% 1% 1% Green Waste Total Estimated Commercial Tonnes 6,986 7,125 7,268 7,414 7,562 7,714 7,868 8,026 8,187 8,351 Total Tonnes (including Members) 15,400 15,609 15,823 16,040 16,260 16,486 16,714 16,947 17,183 17,423 11

12 WCF Total Estimated Commercial Tonnes 10,876 19,253 19,446 19,446 19,310 18,666 18,155 17,640 17,135 Total Tonnes (including Members) 70,980 82,381 91,290 92,022 92,568 92,984 92,901 92,958 93,018 93,095 Growth % from previous year 100% 77% 1% Total tonnes for each facility is as follows: o MRF maximum 80,000 tonnes pa o GWF maximum 30,000 tonnes pa with the facility operating only for 8 months due to licence conditions (the capacity depends upon shredding equipment and space) o WCF maximum 109,200 tonnes pa (current digester misalignment allows up to 85%) Gate fee increases will consist of (i) General Price level changes based on CPI increases and (ii) specific cost increases expected such as power costs and wage increases etc. (refer to financial projections Members Contributions table at 13. Statements and Supporting Schedules). Consumer Price index growth is assumed at 2.25 % for the year 2013/14 and 2.5 % for 2014/15 and 2015/16 based on Commonwealth Budget for 2013/14. For remaining period of the LTFP, we have assumed a CPI increase of 2.5% per annum. Wage increases are assumed at 4 % per annum in line with the current wage agreement, which is valid until 2015/16. Utility costs are assumed to go up by 6 % annually. While Maintenance costs are expected to increase by 5 % per annum, processing and freight costs are projected to go up by 4 % per annum. It is assumed that Landfill fees are expected to go up by 6 % per annum. Landfill levy and carbon tax impact are assumed to increase at CPI increase. Insurance premium are projected to escalate at 6% per annum. The asset valuations for the insurance will also go up CPI increase. All other costs are expected by CPI increase. The landfill and compost quantities are assumed based on the current ratio of output to input. Additional staff will be added in MRF and WCF based on increases in the volumes. These increases will be required when the volumes reach a level where staff shifts will change, for instance double shift instead of single shift. Interest rates for new borrowings proposed in the financial year 2013/14 will be in line with current interest rates. There are no plans to borrow during the Plan period. Interest rates for invested funds will be 1.5 % over the expected CPI for that year. All asset renewal requirements identified in the Asset Management Plan will be financed from cash backed reserves. Cash reserves will continue to be maintained to fund future commitments. 8. MEASURING SUSTAINABILITY Several statutory key performance indicators (KPIs) have been prescribed in the Local Government (Financial Management) Regulations 1995 to measure the financial sustainability of local governments. The Long Term Financial Plan has been assessed against these KPIs and will be compared with KPIs measured from the Annual Budgets and Annual Financial Statements to provide clear targets for SMRC to report its progress to Stakeholders each year. 12

13 Rates Coverage Ratio is not applicable, as SMRC does not levy rates. In addition, the Asset Consumption Ratio is not appropriate for the RRRC Project at this time as it is was envisaged that the Project s assets have a 20 year life based on a one time major investment funded by way of Participant s contributions towards borrowings. The relevant KPIs, target rates and results measured from the LTFP are tabled below: Current Ratio This is a measure of a local government s liquidity and its ability to meet its short term financial obligations out of unrestricted current assets. This is measured as: Current Assets less Restricted Assets Current Liabilities less Current Liabilities associated with Restricted Assets Local Government Basic Standard greater than or equal to 1 : 1 Year Forecast Comments: Substantial reduction in interest payments and consequent increases in cash balances will result in higher current ratio by the end of the plan period. The Council will be able finance future renewals and replacements with internal generations during the plan period. Operating Surplus Ratio This is an indicator of the extent to which revenues raised cover operational expenses only or are available for capital funding purposes. We have appropriately modified the ratio as we do not have any income from Rates. The operating expenses do not include deprecation as the same is not considered in the gate fee calculations. This is measured as: Operating Revenue less Operating Expense Operating Revenue Local Government Basic Standard between 0% and 15% Year Forecast Comments: As we increase the capacity utilisation, the operating surplus ratio will increase. The targeted operational surplus is achieved in the each year of the plan, indicating surplus funds are available for asset renewals. Debt Service Cover Ratio This is an indicator of a local government s ability to produce enough cash to cover its debt payments. As our RRRC loans are repaid out of contributions from member councils, such contributions are added to Operating Revenues This is measured as: Operating Revenue less Operating Expenses except Interest Expense and Depreciation plus Member Contributions for loan repayments Principal and Interest Expenses Local Government Basic Standard greater than or equal to 2 Year Forecast Comments: As the loans are the sole source of financing the establishment of the facilities and acquiring major assets, the debt service cover ratio is low when compared to Local Government industry bench mark. However, the debt servicing pattern is in line with the other firms in our industry and other infrastructure providers. Asset Sustainability Ratio This is an indicator of the extent to which assets managed by a local government are being replaced as these reach the end of their useful lives. This is measured as: Capital Renewal Expenditure Depreciation Expense Local Government Basic Standard 90% or greater Year Forecast Comments: A major portion of our assets are plant & buildings, which are not due for replacement in the plan period. The new MRF plant and equipment was commissioned in the FY will be have useful life beyond the plan period. In view of this, there is substantial variance between Capital Renewal Expenditure and Depreciation Expenditure. 13

14 Asset Renewal Funding Ratio Indicates whether the local government has the financial capacity to fund asset renewal at continued existing service levels. This is measured as: Net present Value of Planned Renewal Expenditure Net Present Value of Asset Management Plan Projections Local Government Basic Standard between 95% and 105 % Year Forecast Comments: All assets that are due for replacement in Asset Management Plan will be replaced. In this way, the operations will be financially sustainable over the plan period. 14

15 9. FINANCIAL PROJECTIONS The financial projections in this LTFP have been developed in a format that conforms to the Local Government (Financial Management) Regulations 1996 and Australian Accounting Standards. This format has been chosen as it allows projections to feed into the statutory format of the Annual Budget and key performance measures in the LTFP to be compared with Annual Budgets and Annual Financial Reports. The Statutory schedules include: Statement of Financial Position Statement of Changes in Equity Statement of Comprehensive Income Statement of Cash Flows In addition to above statutory financial statements, we have included a Summary of the Statement of Financial Activity by Business Units to explain the sources of Operating Surpluses generated. The statements are supported by the following schedules: Fixed Asset Schedule indicating the movement of fixed assets including the funding sources Loan borrowings and repayments by division It should be noted that a Rate Setting Statement is not applicable, as SMRC does not levy any rates. All the Statutory and supporting schedules can be found in the last section of the report captioned as Statements and Supporting Schedules. 10. RISK ASSESSMENT The SMRC s Risk Management Plan follows the ISO 31000: 2009 principles and guidelines. The SMRC reviewed and adopted its Risk Management Policy in July The SMRC s Senior Management Group discusses major risks each week, operational risk treatment plans are reviewed each quarter and the Audit & Risk Committee reviews the SMRC s major risks each quarter. The risks associated with the LTFP relate to the following: Plant and equipment failure and renewal Business Continuity for recycling waste Adverse movements in commodity prices Withdrawal of any project participant from RRRC Cancelation or adverse changes to the RRRC Operating Licence The significant movements in commodity can be expected over the plan period. We have stress tested our model under two scenarios and found that we can sustain two commodity dips of 40% over the LTFP. While we cannot be sure of the magnitude and timing of the fall as pricing is dictated by global circumstances such as supply and demand, foreign exchange and price of substitutes, we can generalise that over the period of LTFP, our strength to withstand a dip in commodity prices will increase. 15

16 One of our marketing strategies is to go for long term contracts for sale of materials, as this reduces our dependence and consequently, the risks of dealing in highly volatile spot market. 11. INTEGRATING OTHER INFORMING PLANS 11.1 Asset Management Plan (AMP) The Asset Management Plan identifies assets that are critical to SMRC s operations and outlines three management strategies. 1. Annual Maintenance Program planned and preventative programs 2. Asset renewals program 3. New assets program The SMRC has adopted the guidance and best practices of PAS 55 Optimal Management of Physical Assets, issued by the British Standards Institution, in its Asset Management Plan. The standard is internationally accepted and particularly relevant for infrastructure industries. It is a mechanism to ensure that the principles of whole life cycle planning, risk management and sustainability are delivered within organisations. The following tables provide an outline of the key assets of the SMRC for the next four years: Maintenance Program Asset Management Plan 2013/ / / /17 Booragoon Building 27,000 28,350 29,768 31,256 RRRC Buildings 116, , , ,236 RRRC Fixed Plant 3,150,312 3,257,408 3,517,041 3,849,491 RRRC Mobile Plant & Equip 819, , , ,691 Total Maintenance Program 4,113,900 4,295,412 4,611,908 5,006,674 Renewals Program Asset Management Plan 2013/ / / /17 Booragoon Building RRRC Buildings RRRC Fixed Plant 1,281,390 1,509,494 1,645,968 1,665,800 RRRC Mobile Plant & Equip 648, , , ,695 Total Renewal Program 1,930,000 1,975,791 2,456,254 2,160,495 New Asset Program Asset Management Plan 2013/ / / /17 RRRC Buildings 1,500,000 RRRC Fixed Plant 500,000 RRRC Mobile Plant & Equip Total New Asset Program 1,500, ,000 16

17 11.2 Workforce Plan (WP) Workforce Planning is a continuous process of shaping the workforce to ensure that it is capable of delivering organisational objectives now and in the future (Australian National Audit Office 2004) The Workforce Plan identifies strategies to meet future workforce needs and the implications on current and future operating environments. The Long term financial plan has considered the following: Additional staff will be required to meet operational needs for the MRF and WCF based on increases in the volumes. These increases will be required when the volumes reach a level where staff shifts will change, for instance double shift instead of single shift. Compliance, environmental and research functions may also require new staffing positions to meet the direction of the Strategic Community Plan. Community engagement and education programs on a regional approach may also require new staffing positions. 17

18 12. CONCLUSION IMPLEMENTATION AND REVIEW OF LTFP The Council will consider the content of the LTFP when preparing the Annual Budget for and subsequent years and it is expected that adopted budgets will be closely aligned with the proposals in the LTFP and assumptions underpinning this. A review of the LTFP will occur each year as budgets are prepared to account for performance information and changing circumstances. The SMRC intends to undertake a broad review of its LTFP every year and a full review is planned once in every three years. The LTFP will allow SMRC to set priorities within its resourcing capabilities to sustainably deliver the services required by our member local governments and their communities. 13. STATEMENTS AND SUPPORTING SCHEDULES All the Statutory and supporting schedules can be found in pages of this report. KEY FINANCIAL RESULTS LONG TERM FINANCIAL PLAN FY FY FY FY FY FY FY FY FY FY Total Tonnes Input 126, , , , , , , , , ,638 Total Operating Revenue 25,782,536 29,457,020 32,872,357 37,028,540 38,767,948 40,604,081 42,462,209 44,453,028 46,562,455 48,831,861 Total Operating Exepnditure (before Deprecn) 24,313,684 26,868,581 29,851,533 33,028,910 34,406,308 36,125,617 37,653,453 39,279,819 41,343,952 43,894,558 Net Operating Surplus (Deficit) 1,468,852 2,588,439 3,020,824 3,999,630 4,361,640 4,478,464 4,808,756 5,173,209 5,218,503 4,937,303 Reserves Transfer to Reserves 795,087 1,719,376 2,102,910 3,030,031 4,080,015 4,185,403 3,678,708 3,828,238 3,830,633 3,994,709 Reserves Transfer from Reserves 1,650,000 2,475,791 2,456,254 2,480,495 2,225,193 3,013,149 2,360,706 2,431,528 3,269,595 2,579,608 Cash Backed Reserve Fund Balance 1,216, , , ,106 2,510,928 3,683,182 5,001,184 6,397,894 6,958,932 8,374,033 Cash at Bank 3,020,027 2,364,936 2,218,963 2,912,608 4,850,322 6,171,454 8,410,921 10,936,186 12,694,990 14,992,017 Outstanding Loans 32,466,304 29,133,992 25,621,241 21,917,913 18,755,942 15,427,747 11,924,222 8,261,556 5,029,373 1,923,032 Net Assets 52,386,028 48,805,274 45,437,462 42,743,505 41,027,020 39,407,844 37,908,067 36,771,443 36,012,026 35,311,944 STATEMENT OF COMPREHENSIVE INCOME BY NATURE OR TYPE LONG TERM FINANCIAL PLAN REVENUE FY FY FY FY FY FY FY FY FY FY Operating Grants and Contributions 2,398,785 2,236,924 2,137,733 2,032,488 1,920,815 1,802,321 1,676,589 1,543,172 1,414,476 1,302,521 Fees and Charges 23,177,551 27,122,432 30,650,942 34,898,111 36,692,556 38,565,861 40,465,078 42,490,739 44,629,672 46,893,248 Interest Earnings 176,200 66,989 52,240 65, , , , , , ,716 Other Revenues 30,000 30,675 31,442 32,228 33,034 33,860 34,707 35,575 36,464 37,376 Total Revenue 25,782,536 29,457,020 32,872,357 37,028,540 38,767,948 40,604,081 42,462,209 44,453,028 46,562,455 48,831,861 EXPENDITURE Employee Costs 5,552,136 6,362,517 7,356,502 8,195,975 8,523,815 9,106,491 9,470,748 9,849,577 10,243,560 11,343,174 Materials and Contracts 12,096,291 13,334,721 14,840,749 16,846,027 17,586,607 18,359,705 19,145,118 19,978,677 21,187,058 22,113,375 Utility Charges 2,756,278 3,224,857 3,687,578 3,992,767 4,252,526 4,524,924 4,798,795 5,093,916 5,407,842 5,741,480 Depreciation on Non current Assets 5,358,816 5,300,131 5,470,723 5,723,987 5,796,501 5,804,581 6,003,572 5,992,491 5,647,692 5,293,746 Interest Expenses 1,768,703 1,626,748 1,446,309 1,255,732 1,068, , , , , ,716 Insurance Cost 2,140,276 2,319,738 2,520,395 2,738,409 2,975,280 3,232,641 3,512,265 3,816,077 4,146,169 4,504,813 Total Expenditure 29,672,500 32,168,712 35,322,256 38,752,897 40,202,809 41,930,198 43,657,025 45,272,310 46,991,644 49,188,304 Net Surplus (Deficit) (3,889,964) (2,711,692) (2,449,899) (1,724,357) (1,434,861) (1,326,117) (1,194,816) (819,282) (429,189) (356,443) Net Surplus before Depreciation 1,468,852 2,588,439 3,020,824 3,999,630 4,361,640 4,478,464 4,808,756 5,173,209 5,218,503 4,937,303 18

19 STATEMENT OF COMPREHENSIVE INCOME BY PROGRAMME PROGRAMME FY FY FY FY FY FY FY FY FY FY Governance 284, , , , , , , , , ,719 Community Amenities 25,498,365 29,162,147 32,566,272 36,710,809 38,438,120 40,261,688 42,106,764 44,084,025 46,179,367 48,434,142 Total Revenue 25,782,536 29,457,020 32,872,357 37,028,540 38,767,948 40,604,081 42,462,209 44,453,028 46,562,455 48,831,861 EXPENDITURE Governance 364, , , , , , , , , ,462 Community Amenities 29,308,396 31,844,541 34,987,601 38,407,319 39,845,851 41,561,382 43,275,851 44,878,257 46,584,170 48,766,842 Total Expenditure 29,672,500 32,168,712 35,322,256 38,752,897 40,202,809 41,930,198 43,657,025 45,272,310 46,991,644 49,188,304 Net Surplus (Deficit) (3,889,964) (2,711,692) (2,449,899) (1,724,357) (1,434,861) (1,326,117) (1,194,816) (819,282) (429,189) (356,443) Net Surplus before Depreciation 1,468,852 2,588,439 3,020,824 3,999,630 4,361,640 4,478,464 4,808,756 5,173,209 5,218,503 4,937,303 STATEMENT OF FINANCIAL ACTIVITY LONG TERM FINANCIAL PLAN FY FY FY FY FY FY FY FY FY FY REVENUE Operating Grants and Contributions 2,398,785 2,236,924 2,137,733 2,032,488 1,920,815 1,802,321 1,676,589 1,543,172 1,414,476 1,302,521 Fees and Charges 23,177,551 27,122,432 30,650,942 34,898,111 36,692,556 38,565,861 40,465,078 42,490,739 44,629,672 46,893,248 Interest Earnings 176,200 66,989 52,240 65, , , , , , ,716 Other Revenues 30,000 30,675 31,442 32,228 33,034 33,860 34,707 35,575 36,464 37,376 Insurance Reimbursements (Non Op) Total Revenue 25,782,536 29,457,020 32,872,357 37,028,540 38,767,948 40,604,081 42,462,209 44,453,028 46,562,455 48,831,861 EXPENDITURE Employee Costs 5,552,136 6,362,518 7,356,502 8,195,975 8,523,815 9,106,491 9,470,748 9,849,577 10,243,560 11,343,174 Materials and Contracts 12,096,291 13,334,721 14,840,749 16,846,027 17,586,607 18,359,705 19,145,118 19,978,677 21,187,058 22,113,375 Utility Charges 2,756,278 3,224,857 3,687,578 3,992,767 4,252,526 4,524,924 4,798,795 5,093,916 5,407,842 5,741,480 Interest Expenses 1,768,703 1,626,748 1,446,309 1,255,732 1,068, , , , , ,716 Insurance Cost 2,140,276 2,319,738 2,520,395 2,738,409 2,975,280 3,232,641 3,512,265 3,816,077 4,146,169 4,504,813 Transfer to Reserves 795,087 1,719,376 2,102,910 3,030,031 4,080,015 4,185,403 3,678,708 3,828,238 3,830,633 3,994,709 Total Expenditure 25,108,771 28,587,958 31,954,443 36,058,941 38,486,323 40,311,020 41,332,161 43,108,057 45,174,585 47,889,267 NET SURPLUS (DEFICIT) 673, , , , , ,061 1,130,048 1,344,971 1,387, ,594 Transfer from Reserves 50,000 MRF Loan Repayments (723,765) (869,062) (917,914) (969,599) (281,625) (293,060) (304,960) (317,342) (330,228) (343,637) NET 1 825,088 1,027,629 1,057, ,957 STATEMENT OF FINANCIAL POSITION LONG TERM FINANCIAL PLAN CURRENT ASSETS FY FY FY FY FY FY FY FY FY FY Cash and Cash Equivalents 3,020,027 2,364,936 2,218,963 2,912,608 4,850,322 6,171,454 8,410,921 10,936,186 12,694,990 14,992,017 Trade Receivables 2,131,361 2,446,613 2,732,390 3,077,550 3,217,781 3,364,015 3,511,806 3,669,493 3,837,012 4,016,314 Loan Receivables 4,058,288 3,641,749 3,202,655 2,739,739 2,344,493 1,928,468 1,490,528 2,891,545 2,514,687 1,923,032 Inventories 235, , , , , , , , , ,982 Total Current Assets 9,444,882 8,712,584 8,442,578 9,057,459 10,754,558 11,820,931 13,785,521 17,885,698 19,458,660 21,361,345 NON CURRENT ASSETS Loan Receivables 28,408,016 25,492,243 22,418,586 19,178,174 16,411,449 13,499,279 10,433,694 5,370,011 2,514,686 Property, Plant & Equipment 50,526,997 47,702,657 44,688,189 41,444,696 37,873,389 35,081,958 31,439,091 27,878,128 25,500,031 22,785,891 Total Non Current Assets 78,935,013 73,194,900 67,106,775 60,622,870 54,284,838 48,581,237 41,872,785 33,248,139 28,014,717 22,785,891 TOTAL ASSETS 88,379,895 81,907,484 75,549,353 69,680,329 65,039,396 60,402,168 55,658,306 51,133,837 47,473,377 44,147,236 CURRENT LIABILITIES Trade and Other Payables 2,818,123 3,155,229 3,550,653 3,971,647 4,167,279 4,402,970 4,615,866 4,842,281 5,123,079 5,462,855 Long term Borrowings 4,058,288 3,641,749 3,202,655 2,739,739 2,344,493 1,928,468 1,490,528 2,891,545 2,514,687 1,923,032 Provisions 555, , , , , , , ,958 1,024,356 1,134,317 Total Current Liabilities 7,431,625 7,433,230 7,488,958 7,530,984 7,364,154 7,242,087 7,053,469 8,718,784 8,662,122 8,520,204 NON CURRENT LIABILITIES Loan Receivables 28,408,016 25,492,243 22,418,586 19,178,174 16,411,449 13,499,279 10,433,694 5,370,011 2,514,686 Provisions 154, , , , , , , , , ,088 Total Non Current Liabilities 28,562,242 25,668,980 22,622,933 19,405,840 16,648,222 13,752,237 10,696,770 5,643,610 2,799, ,088 TOTAL LIABILITIES 35,993,867 33,102,210 30,111,891 26,936,824 24,012,376 20,994,324 17,750,239 14,362,394 11,461,351 8,835,292 NET ASSETS 52,386,028 48,805,274 45,437,462 42,743,505 41,027,020 39,407,844 37,908,067 36,771,443 36,012,026 35,311,944 TOTAL EQUITY 52,386,028 48,805,274 45,437,462 42,743,505 41,027,020 39,407,844 37,908,067 36,771,443 36,012,026 35,311,944 Retained Surplus 42,913,107 40,088,768 37,074,299 33,830,807 30,259,499 27,468,068 24,650,290 22,116,956 20,796,501 18,681,320 Reserves Cash Backed 1,216, , , ,106 2,510,928 3,683,182 5,001,184 6,397,894 6,958,932 8,374,033 Asset Valuation Reserve 8,256,592 8,256,592 8,256,592 8,256,592 8,256,592 8,256,592 8,256,592 8,256,592 8,256,592 8,256,592 TOTAL EQUITY 52,386,028 48,805,274 45,437,461 42,743,505 41,027,019 39,407,842 37,908,066 36,771,442 36,012,025 35,311,945 19

20 STATEMENT OF CHANGES IN EQUITY LONG TERM FINANCIAL PLAN Retained Surplus FY FY FY FY FY FY FY FY FY FY Opening Balance 45,171,923 42,913,107 40,088,768 37,074,299 33,830,807 30,259,499 27,468,068 24,650,290 22,116,956 20,796,501 Surplus / (Deficit) for the year (3,889,964) (2,711,692) (2,449,899) (1,724,357) (1,434,861) (1,326,117) (1,194,816) (819,282) (429,189) (356,443) New Equity (Loans) 1,500,000 Loans paid from Equity (723,765) (869,062) (917,914) (969,599) (281,625) (293,060) (304,960) (317,342) (330,228) (343,637) Transfer from / (to) Reserves 854, , ,344 (549,536) (1,854,822) (1,172,254) (1,318,002) (1,396,710) (561,038) (1,415,101) Closing Balance 42,913,107 40,088,768 37,074,299 33,830,807 30,259,499 27,468,068 24,650,290 22,116,956 20,796,501 18,681,320 Reserves Cash Backed Opening Balance 2,071,242 1,216, , , ,106 2,510,928 3,683,182 5,001,184 6,397,894 6,958,932 Transfer from / (to) Reserves (854,913) (756,415) (353,344) 549,536 1,854,822 1,172,254 1,318,002 1,396, ,038 1,415,101 Closing Balance 1,216, , , ,106 2,510,928 3,683,182 5,001,184 6,397,894 6,958,932 8,374,033 Asset Revaluation Reserve Opening Balance 8,256,592 8,256,592 8,256,592 8,256,592 8,256,592 8,256,592 8,256,592 8,256,592 8,256,592 8,256,592 Changes Closing Balance 8,256,592 8,256,592 8,256,592 8,256,592 8,256,592 8,256,592 8,256,592 8,256,592 8,256,592 8,256,592 Total Equity Opening Balance 55,499,757 52,386,028 48,805,274 45,437,461 42,743,505 41,027,019 39,407,842 37,908,066 36,771,442 36,012,025 Surplus / (Deficit) for the year (3,889,964) (2,711,692) (2,449,899) (1,724,357) (1,434,861) (1,326,117) (1,194,816) (819,282) (429,189) (356,443) New Equity (Loans) 1,500,000 Loans paid from Equity (723,765) (869,062) (917,914) (969,599) (281,625) (293,060) (304,960) (317,342) (330,228) (343,637) Asset Revaluations Closing Balance 52,386,028 48,805,274 45,437,461 42,743,505 41,027,019 39,407,842 37,908,066 36,771,442 36,012,025 35,311,945 STATEMENT OF CASH FLOWS LONG TERM FINANCIAL PLAN FY FY FY FY FY FY FY FY FY FY OPERATIONS INCOME Operating Grants and Contributions 2,398,785 2,236,924 2,137,733 2,032,488 1,920,815 1,802,321 1,676,589 1,543,172 1,414,476 1,302,521 Fees and Charges 21,046,190 26,807,180 30,365,165 34,552,951 36,552,325 38,419,627 40,317,287 42,333,052 44,462,153 46,713,946 Interest Earnings 176,200 66,989 52,240 65, , , , , , ,716 Other Revenues 30,000 30,675 31,442 32,228 33,034 33,860 34,707 35,575 36,464 37,376 Total Revenue 23,651,175 29,141,768 32,586,580 36,683,380 38,627,717 40,457,847 42,314,418 44,295,341 46,394,936 48,652,559 OPERATIONS PAYMENTS Employee Costs (4,842,696) (6,258,968) (7,229,494) (8,088,708) (8,481,924) (9,032,039) (9,424,204) (9,801,171) (10,193,218) (11,202,668) Materials and Contracts (9,513,374) (13,021,695) (14,474,609) (16,464,025) (17,405,375) (18,139,046) (18,947,494) (19,768,470) (20,929,757) (21,791,610) Utility Charges (2,756,278) (3,224,857) (3,687,578) (3,992,767) (4,252,526) (4,524,924) (4,798,795) (5,093,916) (5,407,842) (5,741,480) Interest Expenses (1,768,703) (1,626,748) (1,446,309) (1,255,732) (1,068,080) (901,856) (726,527) (541,572) (359,323) (191,716) Insurance Cost (2,140,276) (2,319,738) (2,520,395) (2,738,409) (2,975,280) (3,232,641) (3,512,265) (3,816,077) (4,146,169) (4,504,813) Total Expenditure (21,021,327) (26,452,006) (29,358,385) (32,539,641) (34,183,185) (35,830,506) (37,409,285) (39,021,206) (41,036,309) (43,432,287) CASH FLOW FROM OPERATIONS 2,629,848 2,689,762 3,228,195 4,143,739 4,444,532 4,627,341 4,905,133 5,274,135 5,358,627 5,220,272 Capital Expenditure (1,600,000) (2,475,791) (2,456,254) (2,480,495) (2,225,193) (3,013,149) (2,360,706) (2,431,528) (3,269,595) (2,579,608) Investments Insurance Reimbursements CASH FLOWS TOWARDS INVESTMENTS (1,600,000) (2,475,791) (2,456,254) (2,480,495) (2,225,193) (3,013,149) (2,360,706) (2,431,528) (3,269,595) (2,579,608) New Loans 1,500,000 Loan Repayments (2,983,293) (3,332,312) (3,512,751) (3,703,328) (3,161,971) (3,328,195) (3,503,525) (3,662,666) (3,232,183) (3,106,341) Reimbursements for Loan Repayments 2,259,528 2,463,250 2,594,837 2,733,729 2,880,346 3,035,135 3,198,565 3,345,324 2,901,955 2,762,704 CASH FLOW TOWARDS FINANCING 776,235 (869,062) (917,914) (969,599) (281,625) (293,060) (304,960) (317,342) (330,228) (343,637) NET CASH INFLOW (OUTFLOW) 1,806,083 (655,091) (145,973) 693,645 1,937,714 1,321,132 2,239,467 2,525,265 1,758,804 2,297,027 Opening Cash & Cash Equivalents 1,213,944 3,020,027 2,364,936 2,218,963 2,912,608 4,850,322 6,171,454 8,410,921 10,936,186 12,694,990 CLOSING CASH & CASH EQUIVALENTS 3,020,027 2,364,936 2,218,963 2,912,608 4,850,322 6,171,454 8,410,921 10,936,186 12,694,990 14,992,017 Fixed Assets Summary All Assets FY FY FY FY FY FY FY FY FY FY Opening Balance 54,285,813 50,526,997 47,702,657 44,688,188 41,444,696 37,873,388 35,081,956 31,439,090 27,878,127 25,500,030 Additions 1,600,000 2,475,791 2,456,254 2,480,495 2,225,193 3,013,149 2,360,706 2,431,528 3,269,595 2,579,608 Revaluations Transfer from CWIP Disposals Depreciation for the year (5,358,816) (5,300,131) (5,470,723) (5,723,987) (5,796,501) (5,804,581) (6,003,572) (5,992,491) (5,647,692) (5,293,746) Closing Balance 50,526,997 47,702,657 44,688,188 41,444,696 37,873,388 35,081,956 31,439,090 27,878,127 25,500,030 22,785,892 Fixed Assets Summary by type of Assets Asset Type FY FY FY FY FY FY FY FY FY FY Leasehold Improvements 20,344,280 18,760,654 17,186,890 15,614,591 14,042,293 12,471,115 10,911,534 9,352,123 7,795,077 6,283,319 Freehold Land & Buildings 1,944,843 1,911,908 1,878,972 1,846,036 1,813,103 1,780,166 1,747,232 1,714,297 1,681,362 1,648,425 IT Equipment 4,320 3,050 2,193 1, Furniture 15,506 9,795 5,694 3,676 1, Plant & equipment 28,218,048 27,017,250 25,614,440 23,979,057 22,015,726 20,830,312 18,780,296 16,811,708 16,023,592 14,854,147 CWIP Closing Balance 50,526,997 47,702,657 44,688,189 41,444,696 37,873,389 35,081,958 31,439,091 27,878,128 25,500,031 22,785,891 20

21 Sources of funding of Fixed Assets Funding Sources FY FY FY FY FY FY FY FY FY FY Total Capex 1,600,000 2,475,791 2,456,254 2,480,495 2,225,193 3,013,149 2,360,706 2,431,528 3,269,595 2,579,608 Loans Cash Backed Reserves 1,600,000 2,475,791 2,456,254 2,480,495 2,225,193 3,013,149 2,360,706 2,431,528 3,269,595 2,579,608 Total 1,600,000 2,475,791 2,456,254 2,480,495 2,225,193 3,013,149 2,360,706 2,431,528 3,269,595 2,579,608 Capex as per Asset Management System (AMS) Capex as per AMS FY FY FY FY FY FY FY FY FY FY Capex as per AMS 1,930,000 2,475,791 2,456,254 2,150,495 2,225,193 3,013,149 2,360,706 2,431,528 3,269,595 2,579,608 Deferred (330,000) 330,000 Amount Spent 1,600,000 2,475,791 2,456,254 2,480,495 2,225,193 3,013,149 2,360,706 2,431,528 3,269,595 2,579,608 Loan borrowings and repayments Loans FY FY FY FY FY FY FY FY FY FY Admin Loans Opening Balance 1,800,000 1,800,000 1,800,000 1,800,000 1,800,000 1,800,000 1,800,000 1,800,000 1,800,000 1,800,000 Additions Interest 69,120 69,120 69,120 69,120 69,120 69,120 69,120 69,120 69,120 69,120 Payment of Interest (69,120) (69,120) (69,120) (69,120) (69,120) (69,120) (69,120) (69,120) (69,120) (69,120) Repayment Closing Balance 1,800,000 1,800,000 1,800,000 1,800,000 1,800,000 1,800,000 1,800,000 1,800,000 1,800,000 1,800,000 MRF Loans Opening Balance 3,851,192 4,627,427 3,758,365 2,840,451 1,870,852 1,589,227 1,296, , , ,637 Additions 1,500,000 Interest 211, , , ,679 70,645 59,210 47,310 34,928 22,042 8,634 Payment of Interest (211,407) (212,217) (163,364) (111,679) (70,645) (59,210) (47,310) (34,928) (22,042) (8,634) Repayment (723,765) (869,062) (917,914) (969,599) (281,625) (293,060) (304,960) (317,342) (330,228) (343,637) Closing Balance 4,627,427 3,758,365 2,840,451 1,870,852 1,589,227 1,296, , , ,637 RRRC Loans Opening Balance 28,298,405 26,038,877 23,575,627 20,980,790 18,247,061 15,366,715 12,331,580 9,133,015 5,787,691 2,885,736 Additions Interest 1,488,176 1,345,412 1,213,825 1,074, , , , , , ,962 Payment of Interest (1,488,176) (1,345,412) (1,213,825) (1,074,933) (928,315) (773,527) (610,097) (437,525) (268,160) (113,962) Repayment (2,259,528) (2,463,250) (2,594,837) (2,733,729) (2,880,346) (3,035,135) (3,198,565) (3,345,324) (2,901,955) (2,762,704) Closing Balance 26,038,877 23,575,627 20,980,790 18,247,061 15,366,715 12,331,580 9,133,015 5,787,691 2,885, ,032 Total Opening Balance 33,949,597 32,466,304 29,133,992 25,621,241 21,917,913 18,755,942 15,427,747 11,924,222 8,261,556 5,029,373 Additions 1,500,000 Interest 1,768,703 1,626,748 1,446,309 1,255,732 1,068, , , , , ,716 Payment of Interest (1,768,703) (1,626,748) (1,446,309) (1,255,732) (1,068,080) (901,856) (726,527) (541,572) (359,323) (191,716) Repayment (2,983,293) (3,332,312) (3,512,751) (3,703,328) (3,161,971) (3,328,195) (3,503,525) (3,662,666) (3,232,183) (3,106,341) Closing Balance 32,466,304 29,133,992 25,621,241 21,917,913 18,755,942 15,427,747 11,924,222 8,261,556 5,029,373 1,923,032 Member Contributions and estimated average cost per household ESTIMATED CONTRIBUTIONS LONG TERM FINANCIAL PLAN FY FY FY FY FY FY FY FY FY FY Total Estimated Population 273, , , , , , , , , ,053 Corporate Contributions Governance 246, , , , , , , , , ,377 Reserch & Development 61,638 64,104 66,668 69,335 72,108 74,992 77,992 81,112 84,356 87,730 Education 159, , , , , , , , , ,446 RRRC Education 238, , , , , , , , , ,750 Total Corporate Contributions 705, , , , , , , , ,676 1,004,303 FY FY FY FY FY FY FY FY FY FY Total Estimated Tonnes 109, , , , , , , , , ,872 RRRC Operating Contributions p/tonne Material Recovery Facility Waste Composting Facility Green Waste Facility FY FY FY FY FY FY FY FY FY FY RRRC Contributions towards Capital 3,747,704 3,808,662 3,808,662 3,808,662 3,808,661 3,808,662 3,808,662 3,782,849 3,170,115 2,876,666 Average Cost per Household