Appendix A" 2016 Financial Statement Summary & Analysis Significant events On January 1, 2016, the Town transferred the water/wastewater operations to InnServices Utilities Inc. Details of the assets and liabilities transferred are as follows: Cash 24,850,342 Other receivables 7,502,183 Prepaids 116,073 Tangible capital assets 156,118,071 Payables and accruals (6,615,882) Deferred revenue (14,823,892) Employee benefits payable (99,450) Equity in InnServices Utilities Inc. $ 167,047,445 Consolidated Statement of Financial Position (Balance Sheet) What we own (Assets) Assets 2016 2015 Change Cash 53,676,233 20.03% 62,940,060 63.95% (9,263,827) (14.72%) Investments 10,601,247 3.96% - 0.00% 10,601,247 0.00% Taxes receivable 6,455,421 2.41% 6,771,515 6.88% (316,094) (4.67%) Other receivable 5,571,648 2.08% 10,567,160 10.74% (4,995,512) (47.27%) Investment in subsidiaries 189,993,458 70.90% 17,244,800 17.52% 172,748,658 1,001.74% Long term receivable 1,675,689 0.63% 903,403 0.92% 772,286 85.49% $ 267,973,696 100.00% $ 98,426,938 100.00% $ 169,546,758 The $169M increase in financial assets for the Town is mainly attributed to the following: Cash has decreased by $9.3M due to $24.9M transferred to InnServices offset by the increase in development charges collected during the year. During the year the Town invested in bond portfolios with Local Authority Services (LAS) increasing investments by $10M Other Receivable largest portion of the decrease is as a result of the transfer to InnServices for items such as Bradford West-Gwillimbury(BWG) portion for phase 3 of the plant expansion and funds due from InnPower for water/wastewater revenues. As noted above the Town s initial investment is InnServices was $167M plus 2016 combined net income equity pickup for InnServices, InnPower and Innisfil Energy Services and the equity injection into InnPower of $1.6M increases the investment in subsidiaries by $172M An increase in long term receivables is primarily due to the future year repayments portion of the Kempenfelt Bay School Mortgage receivable of $.67M
Other $5.6 M Taxes $6.5 M Investments, $10.6 M Cash, $53.7 M 2016 Investment in subsidiaries, $190. M Taxes $6.8 M Other $10.3 M 2015 Investment in subsidiaries, $17.2 M Long term $.9 M Cash, $62.9 M Long term $1.7 M Non-Financial Assets 2016 2015 Change Prepaids 360,800 0.14% 542,255 0.13% (181,455) (33.46%) Other 251,278 0.10% 433,328 0.10% (182,050) (42.01%) Tangible capital assets 260,895,692 99.77% 415,983,656 99.77% (155,087,964) (37.28%) $ 261,507,770 100.00% $ 416,959,239 100.00% ($155,451,469) Of the $155M decrease in non-financial assets for the Town is mainly attributed the following: The Town transferred tangible capital assets to InnServices totaling $156M The increase in work in progress of $12M is offset by the annual amortization of the tangible capital assets totaling $10M
What we owe (Liabilities) Liabilities 2016 2015 Change Payables and accruals 15,239,275 17.77% 15,313,852 18.09% (74,577) (0.49%) Deferred revenue 32,519,421 37.92% 29,654,310 35.03% 2,865,111 9.66% Interest payable on debt 489,219 0.57% 525,457 0.62% (36,238) (6.90%) Municipal debt 25,597,670 29.85% 27,511,911 32.50% (1,914,241) (6.96%) Employee benefits payable 3,409,091 3.97% 3,302,607 3.90% 106,484 3.22% Capital lease obligations 14,911 0.02% 45,501 0.05% (30,590) (67.23%) Other 8,493,771 9.90% 8,288,644 9.79% 205,127 2.47% $ 85,763,358 100.00% $ 84,642,282 100.00% $ 1,121,076 Employee benefits payable, $3.4 M Other, $8.5 M 2016 Payables and accruals, $15.2 M Employee benefits payable, $3.3 M Other, $8.3 M 2015 Payables and accruals, $14. M Interest payable on debt, $.5 M Municipal debt, $25.6 M Deferred revenue, $32.5 M Interest payable on debt, $.5 M Municipal debt, $27.5 M Deferred revenue, $29.9 M The $11M increase in financial liabilities for the Town is primarily attributable to the following: $6.6M of payables and accruals were transferred to InnServices, this amount is offset by the development charges and other invoices owing to InnServices at the end of the year Deferred revenue has increased by $2.9M reflecting an increase in development activity and the resulting collection of development charges and unspent committed funds. Spending is planned to occur over the next several years Reduction in Municipal debt represents annual debt principal repayments for the Innisfil Recreation Centre, Town Hall, Police and Cookstown Library. Approved debt for the Lakeshore Library expansion, Lefroy & Cookstown Fire Stations and the new Operations Centre & Salt Management Facility has yet to be issued. The increase in other liabilities is due to higher refundable developer deposits being held reflecting the increased development activity occurring.
Net Worth (Accumulated surplus) Accumulated Surplus 2016 2015 Change Accumulated surplus - Operating 1,087,107 0.24% 1,457,700 0.34% (370,593) (25.42%) Accumulated deficit - Capital (3,144,027) (0.71%) (7,322,175) (1.70%) 4,178,148 (57.06%) Investment in tangible capital assets 260,895,692 58.80% 415,983,656 96.57% (155,087,964) (37.28%) Reserve and reserve funds 24,023,661 5.41% 34,410,752 7.99% (10,387,091) (30.19%) Investment in subsidiaries 189,993,458 42.82% 17,244,800 4.00% 172,748,658 1,001.74% Unfunded debt and other (29,137,783) (6.57%) (31,030,838) (7.20%) 1,893,055 (6.10%) $ 443,718,108 $ 430,743,895 $ 12,974,213 Accumulated surplus Operating: consists of the Town of $.96M and the Library $126,034 Accumulated deficit Capital: represents project costs that have been expended by the Town but not yet funded by sources such as long-term debt proceeds. These deficits have been offset by projects where funding sources have been applied (excluding development charges) but expenditures have not yet occurred. As the project proceeds and costs are incurred, the expenditures will form part of the tangible capital asset reported on the balance sheet. The balance in the reserve and reserve funds represent cash to the Town as they are set aside for future operating and capital needs. Unfunded debt and other largely represents unissued debt to be funded from future revenues.
Consolidated Statement of Operations and Accumulated Surplus (Income Statement) Where the money came from (Revenue) Revenue Budget 2016 Variance Taxation 37,147,339 38,038,225 60.78% 890,886 2.40% User Charges 2,734,673 3,234,664 5.17% 499,991 18.28% Grants and transfer payments 7,420,355 2,530,915 4.04% (4,889,440) (65.89%) Ontario Lottery and Gaming 4,900,000 5,141,167 8.22% 241,167 4.92% Development Charges 15,379,120 4,879,745 7.80% (10,499,375) (68.27%) Other 9,484,573 8,755,582 13.99% (728,991) (7.69%) $77,066,060 $62,580,298 100.00% ($14,485,762) The $14M less than budgeted revenue for the Town is mainly as a result of: Capital project Lockhart Road 20 th Sideroad to Lake Simcoe Reconstruction did not proceed due to unsuccessful grant application of $4.1M Approved Capital budgets include works scheduled to be completed in future years, and as such these revenues (Development Charge Contributions) in the amount of approximately $8.7M will be recognized when the works are completed. % of Revenue Development Charges 8% Ontario Lottery and Gaming 8% Other 14% Grants and transfer payments 4.04% User Charges 5% Taxation 61%
What the Money was used for (Expenditures) Expenditures Budget 2016 Variance General government 7,086,255 7,548,631 14.10% 462,376 6.52% Protection to persons and property 17,747,492 17,291,524 32.31% (455,968) (2.57%) Transportation services 20,549,670 14,361,615 26.83% (6,188,055) (30.11%) Environmental services 4,525 14,223 0.03% 9,698 214.32% Recreation and culture 11,038,470 10,636,396 19.87% (402,074) (3.64%) Planning and development 4,231,297 3,665,916 6.85% (565,381) (13.36%) $60,657,709 $53,518,305 100.00% ($7,139,404) The $7.1M less than budgeted expenditure for the Town is mainly attributable to $5.7M budgeted for work to be done on the South Innisfil drain which was not done in 2016. Until cancelled or completed any unexpended capital budget is brought forward to the following year to be reported against expenditures incurred in that year. % of Expenditures Planning and development 6.85% Recreation and culture 19.87% General government 14.10% Protection to persons and property 32.31% Environmental services 0.03% Transportation services 26.83%
Financial Indicators 2016 BMA Survey Average** 2016 2015 2014 2013 2012 Sustainability Financial Assets to Liabilities N/A 1.14 * 1.17 1.18 1.22 1.11 Financial Position per Capita $ 357 $ 339 * $ 412 $ 378 $ 413 $ 224 Flexibility Tax Discretionary Reserves as a % of Taxation 72% 63% 70% 76% 82% 66% Debt to Reserve Ratio 1.0 1.1 0.8 0.8 0.9 1.3 Vulnerability Taxes receivable as a % of Taxes Levied 8.9% 9.1% 10.2% 9.5% 9.0% 10.1% Tax Debt interest as a % of own source revenue 1.4% 2.1% 2.8% 3.0% 3.3% 4.3% * The Town's investment of $169M in InnServices has been removed in the calculation due to their lack of liquidity ** The 2016 BMA survey results are based on 2015 financial information Sustainability Sustainability measures the Town s ability to maintain its existing service and financial commitments without increasing debt or tax burden on its residents. The financial asset to liabilities ratio measures the Town s ability to pay short and long term obligations. To have a ratio greater than one demonstrates the Town s ability to pay off liabilities without burdening the tax payer. The Financial Position per Capita ratio is the net Financial Assets on a per capita basis. A positive balance indications the Town s ability to cover its debt obligations and funds have been set aside for future sustainability. Flexibility Flexibility measures the degree to which the Town uses debt instead of increasing taxation to meet its operating and capital commitments. The tax discretionary reserve as a percent of taxation measures the Town s flexibility in meeting operating needs & temporary internal borrowing for capital. The adequacies of reserves to meet future requirements are an integral indicator of long-term financial stability. The decrease in 2016 continues to reflect the enhanced capital replacement plan for road rehab and other asset renewal projects undertaken. The debt to reserve ratio indicates the relationship of reserves available to the amount of debt issued, it is ideal to have a ratio less than 1 as this means that the debt outstanding does not exceed the reserve balance. Although the Town s existing debt is retiring the reserves are also depleting leaving ratio just above 1 for 2016.
The 1% annual compounding capital levy being utilized to replace aging and end of life assets is being accessed more frequently and for greater amounts contributing to the decrease of the measure of the tax discretionary reserves as a % of taxation by 7% over 2015 (decrease of more than 19% since 2013). Ensuring that annual contributions continue and/or replacement programs decrease is the only way to maintain flexibility for the municipality in terms of meeting current and future needs. As asset management plans and programs continue to evolve the goal is to stabilize and slowly rebuild this ratio to averages similar to our comparator municipalities. Vulnerability Vulnerability measures the Town s dependence on external sources that it cannot always control and its exposure to risk. The taxes receivable as a percent of taxes levied is an indication of the local economy and the ability of the community to pay their annual tax billings. Tax debt interest as a % of own source revenue indicates the % of debt interest only compared to own revenues from taxation, user fees, permits, fines etc. (excluding development charges and government funding). The Town relies on OLG and DC revenue to pay for a significant portion of the debt (principal and interest) and this measure indicates vulnerability to the municipality if those revenues sources are not available.