4.5: Borrowing Capacity When analysing the financial capacity of the Council we believe Council will be able to incorporate the $2.0m LIRS loan facility but note its forecast liquidity issues in the medium and long term need to be addressed and resolved. Our recommendation for approval is on the basis that its DSCR and Interest Cover Ratio are comfortably above benchmark. Besides the liquidity issue, the recommendation is also subject to the achievement of the target expenditure savings. We would not recommend additional borrowings above the proposed LIRS borrowings until these issues are resolved. Section 5 Benchmarking and Comparisons with Other Councils As discussed in section 2 of this report, each council’s performance has been assessed against ten key benchmark ratios. This section of the report compares the Council’s performance with its peers in the same DLG Group. The Council is in DLG Group 5 and there are six councils in this group. In Figure 14 to Figure 20, the graphs compare the historical performance of Council with the benchmark for that ratio, with the average for the Group, with the highest performance (or lowest performance in the case of the Infrastructure Backlog Ratio where a low ratio is an indicator of strong performance), and with the forecast position of the Council as at 2016 (as per Council’s LTFP). Figures 21 to 23 do not include the 2016 forecast position as those numbers are not available. Where no highest line is shown on the graph, this means that Council is the best performer in its group for that Ratio. Financial Flexibility
4.5: Borrowing Capacity When analysing the financial capacity of the Council we believe Council will be able to incorporate the $2.0m LIRS loan facility but note its forecast liquidity issues in the medium and long term need to be addressed and resolved. Our recommendation for approval is on the basis that its DSCR and Interest Cover Ratio are comfortably above benchmark. Besides the liquidity issue, the recommendation is also subject to the achievement of the target expenditure savings. We would not recommend additional borrowings above the proposed LIRS borrowings until these issues are resolved. Section 5 Benchmarking and Comparisons with Other Councils As discussed in section 2 of this report, each council’s performance has been assessed against ten key benchmark ratios. This section of the report compares the Council’s performance with its peers in the same DLG Group. The Council is in DLG Group 5 and there are six councils in this group. In Figure 14 to Figure 20, the graphs compare the historical performance of Council with the benchmark for that ratio, with the average for the Group, with the highest performance (or lowest performance in the case of the Infrastructure Backlog Ratio where a low ratio is an indicator of strong performance), and with the forecast position of the Council as at 2016 (as per Council’s LTFP). Figures 21 to 23 do not include the 2016 forecast position as those numbers are not available. Where no highest line is shown on the graph, this means that Council is the best performer in its group for that Ratio. Financial Flexibility
Attachment_4_-_TCorp_Financial_Assessment.docx