Local Government Forecasting Model v3 LGFP CFO and Finance Managers Forum 24 July 2015

2 Local Government Forecasting Model  LGFM Features and benefits  Using the LGFM to tell your Council’s financial story Agenda

Local Government Forecasting Model v3.0 Features and benefits 3

LGFM v3 New Features Business units “Bottom-up” revenue & expense forecasting Improved treatment of grants More accurate interest expense More accurate depreciation Run sensitivities and scenarios Ability to ‘normalise’ Different loan types are catered for Improved cash flow timings Better reporting User comments Improved notifications 4

5 LGFM v3 Features  Develop financial forecasts for up to six internal business units  Calculate financial sustainability metrics for each business unit  Assess the profitability of your commercialised business units  Model internal transactions, including internal operating revenues and expenses, borrowings, dividends and tax equivalents. Business Units

6 LGFM v3 Features Business units Whole of Council Revenue & Expenses Assets QTC Debt Cash Miscellaneous

7 LGFM v3 Features Business units Allocation to business units Whole of Council Revenue & Expenses Assets QTC Debt Cash Miscellaneous Business unit 5GeneralBusiness unit 1Business unit 2Business unit 3Business unit 4

8 LGFM v3 Features Business units – operating internals Business unit 5 Operating internals Whole of Council Revenue & Expenses Assets QTC Debt Cash Miscellaneous GeneralBusiness unit 1Business unit 2Business unit 3Business unit 4

9 LGFM v3 Features Business units – internal loans General Business unit 1 Internal Loan Loan repayments + internal margin Business unit 2Business unit 3Business unit 4Business unit 5

10 LGFM v3 Features Business units – dividends General Business unit 1 Tax equivalents and dividends Business unit 2Business unit 3Business unit 4Business unit 5

11 LGFM v3 Features  Efficiently develop scenarios to –Sensitise specific aspects of your business > Applying different growth factors to revenue and expense line items –Quantify how a particular course of action may impact your financial sustainability Built-in Scenario Manager

12 LGFM v3 Features  Model scenarios with a high degree of flexibility, including –Adding or removing a particular capex project –Adding or excluding additional debt repayments Built-in Scenario Manager

13 LGFM v3 Features  Easily eliminate the impact of the revenues and expenses associated with a specific subsidy program (eg, NDRRA) Normalise results

14 LGFM v3 Features  Generate dashboard-style, visual reporting for decision makers  Generate user-specific reports, including ‘favourite’ ratios and metrics  Create custom reports from blank templates  View reports for whole-of- council and individual business units Reporting capability

15 LGFM v3 Features  Add capital expenditure events on any date to produce more accurate depreciation estimates and cash balance forecasting  Assign residual values to new capital expenditure with the depreciation forecast adjusted automatically  Assign work-in-progress to individual assets or projects Asset flexibility  Base revaluations, for new assets, on user-defined rates according to asset class, with depreciation calculations adjusted automatically

16 LGFM v3 Features  Model debt with a greater range of loan types which closely approximate QTC debt products Improved debt forecasting  Add loans at any date in the forecast period (no longer fixed at 30 June)

17 LGFM v3 Features  Forecast with more flexibility around the timing of cash flows for revenues, expenses, capital expenditure, borrowings and debt repayments  More accurately estimate interest with bi-monthly cash forecasts that: –reflect council’s cash cycle –identify minimum cash requirements and surplus cash Cash forecasting

18 Dashboard Detailed cash forecasts

Local Government Forecasting Model v3.0 Telling your financial story 19

20 LGFM v3.0  Completeness check (Checklist)  Accuracy check (Notifications)  Interpret / analyse (Dashboard – sustainability indicators)  Normalise - elimination of abnormal items (eg, NDRRA)  Review standard or customised reports  Run sensitivities and scenarios Using LGFM to tell your financial story

Model completeness and accuracy 21 Checklist page

Model completeness and accuracy 22 Notifications page

23 Interpret and analyse Dashboard

24 Interpret and analyse Dashboard - key sustainability metrics

25 Generate standard and custom reports Operating performance report – extract

26 Generate standard and custom reports Liquidity position report – extract

27 Sensitivities and scenarios Control Panel allows users to sensitise, normalise and control outputs Select the Base Case or Alternate Case Look at either the whole-of-council or individual BUs On the dashboard, we can print specific sections Normalise resultsSelect which BUs to view

28 Summary Features  Business units  Scenario manager  Normalise results  Reporting capability  Asset & debt improvements  Enhanced cash forecasting LGFM v3 What to look for  Completeness (checklist)  Accuracy (notifications)  Interpret and analyse (dashboard)  Run standard and custom reports  Sensitivities and scenarios

29 Resources available to LGs  On QTC Connect: –Model –User guide –Quick Reference guide –FAQs guide –Video Tutorials  One-on-one training and support LGFM v3

Questions 30 Ross Kline, Senior Advisor T: E:

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