We are pleased to provide this finance report, which outlines the main aspects of the operation of the finance team for the 2016 financial year.
In 2016 the finance team comprised three finance officers supported by an external consultant. Highlights in relation to the work undertaken by the finance team in 2016 include:
- Significant work has been undertaken in consolidating financial information to ensure that reporting more closely reflects funding requirements;
- The way in which we account for capital acquisitions has been reviewed and aligned with relevant accounting standards;
- Bi-monthly budget meetings with Executive Managers and Team Leaders have been undertaken;
- We have continued to implement policies and practices which strengthen WACHS financial performance and position
In terms of the policies and practices which we have adopted, the implementation of employee contributions for private use of motor vehicles has seen a significant reduction in the overall operating cost of vehicles. In 2015, the net cost of operating our fleet of vehicles was $108,478 (motor vehicles expenses less employee contributions). In 2016, the net cost was $44,975. From the 2017 Fringe Benefits Tax year forward, this measure will further save WACHS Fringe Benefits Tax estimated at $60,000 per annum, meaning more funds are available for direct service delivery.
Contribution to local economy
A surplus of $1,151,269 is reported, with $1,140,184 attributable to Management Fund. Of note, sensible financial management enabled increased self funded investment in our local community, including:
- Funeral and Medical assistance: which increased from $26,663 to $35,834 (an increase of 34%). This assistance is provided to assist with the cost of funerals or to assist with travel costs where a person is required to travel for medical assistance or to support someone who is travelling for medical reasons;
- Board sponsored community initiatives: which increased from $14,224 to $31,055 (an increase of 118%) with this increase attributable to self funded sponsorships (such as first aid kits for sporting clubs, the Elders Olympics and the Mick Brown Memorial Cricket Day).
Overall, we invested an estimated $3.8 million into the local Wellington community. A significant driver of this investment is our ability to self generate income and to utilise that income to employ local people, particularly local Aboriginal people. In 2016, over $3m was paid in wages and to contractors who live locally, with a little over $1m of that investment being self funded. This self generated income is used to support 15 unfunded or partially funded positions in Wellington – of which 11 are occupied by Aboriginal employees.
WACHS have a number of key strategic objectives in terms of financial management. The purpose of these objectives is:
- To develop our capacity to self fund priorities which we identify
- To ensure we hold sufficient funds to invest in our capital needs, without compromising our liquidity
- To grow our business by developing new revenue streams
- To manage funds appropriately and in accordance with the high expectations rightfully placed on community organisations by funding providers
To achieve these objectives a range of financial benchmarks have been established. These benchmarks inform decision making and guide growth. The following objectives are of particular importance:
- We will maintain a strong net asset position, with assets at least five times the value of all our liabilities;
- We will maintain strong liquidity, with current assets at least twice the value of current liabilities;
- We will develop our revenue streams, with target growth in revenue of 3% per annum
- We will maintain our profitability, with target surpluses in our Management Fund of $500,000 after capital acquisitions
W are pleased to report that the 2016 Balance Sheet indicates that WACHS is in a very strong financial position. Net Assets of $11,024,768 are reported, representing annual growth in net assets of $1,248,481 (12.7%).
The organisation’s ability to meet debts as and when they fall due, and to manage fluctuations in cash flow, has improved substantially over the past two years. As at the 30 June 2016 WACHS had $3.45 in current assets for every $1 in current liabilities, indicating that the organisation is in a very strong cash position. Building reserves is a strategic objective of WACHS, and will enable our future investment in capital items.
In 2016 there was continued growth in our revenue streams, with an additional $430,601 in revenue before losses on the disposal of capital items (an increase of 3.47%).
Our priorities over the next twelve months include:
- Implementing a fully operational plant fund as part of the Management Fund, acquiring assets required for the operation of services, and removing the one off capital cost of these items from our funded programs. This will free up more money within funded programs, and allow greater investment in front line service delivery.
- Continuing to grow our revenue streams, enabling more self funded investment in local priorities.
Managed by: Joseph Holloway & Co