Summary of financial outcomes
Financial performance
Table 1 compares the actual audited results for 2006–07 to budget for the year and to actual results for 2005–06.
| Actual 2006–07 |
Actual 2005–06 |
Variance | Budget 2006–07 |
Actual 2006–07 |
Variance | ||
|---|---|---|---|---|---|---|---|
| Revenue | 128.4 | 118.0 | 10.4 | 122.6 | 128.4 | 5.8 |  |
| Expenses | 115.8 | 120.5 | (4.7) | 122.6 | 115.8 | 6.8 |  |
| Operating result | 12.6 | (2.5) | 15.1 | 0.0 | 12.6 | 12.6 | |
CASA had an operating surplus of $12.6 million in 2006–07, compared to a $2.5 million deficit in 2005–06. This difference of $15.1 million is associated with a $10.4 million increase in revenue and a reduction in expenses of $4.7 million. The revenue increase is primarily from a $4.6 million increase in excise fuel volumes and a $4.1 million increase in regulatory service fees. The expense reduction is primarily due to significant restructure expenses being incurred in 2005–06 which were not repeated in 2006–07.
The unbudgeted 2006–07 surplus of $12.6 million is represented by a $5.8 million revenue surplus and a $6.8 million under-spend in expenses. The majority of revenue surplus ($3.9 million) is from the receipt of aviation fuel excise which is collected on aviation fuel used in domestic air travel and therefore indicative of industry activity, and regulatory service fee increases ($1.9 million). The under-budget expenses primarily include salaries of $3.3 million and supplies of $5.0 million.
Figure 1 shows the change in revenue and expenses.
Figure 1 – Actual results for 2005–06 and actual and budgeted results for 2006–07
Revenue
Figure 2 shows the change in revenue from 2005–06 to 2006–07 and compares actual revenue to budgeted revenue.
Figure 2 – Actual revenue for 2005–06 and actual and budgeted revenue for 2006–07
The $10.4 million increase in operating revenue from 2005–06 to 2006–07 is represented by:
- an increase in government appropriations ($0.6 million) for Office of Airspace Regulation funding
- an aviation fuel excise increase ($4.6 million) in line with strong excise fuel returns from the growing aviation sector
- an increase in regulatory service fees ($4.1 million) in line with CASA’s
long-term funding strategy - a miscellaneous revenue increase ($1.1 million) reflecting an increase in interest income ($0.9 million) due to lower than anticipated expenses coupled with higher cash balance and miscellaneous revenue ($0.2 million).
The revenue excess ($5.8 million) to budget is represented by:
- an aviation fuel excise increase ($3.9 million) above Treasury estimates
- a regulatory service fee increase ($1.9 million) due to the phasing in of the fee increase
- an increase in interest ($1.0 million) following the investment of the surplus
- an increase in sundry revenue ($0.3 million).
In 2006–07, CASA received 55 per cent of its revenue from aviation fuel excise (2005–06: 56 per cent) and 32 per cent from government appropriations (2005–06: 34 per cent). The remaining income was derived from regulatory service fees of 11 per cent (2005–06: 8 per cent), interest and other minor sundry revenue (see Figure 3).
Figure 3 – Sources of revenue, 2006–07
Expenses
The $4.7 million decrease in operating expenses from 2005–06 to 2006–07 is accounted for by the following factors:
- Employee costs decreased by $6.5 million due to lower redundancy costs ($4.5 million) in 2006–07, the impact of the new structure and some delays in recruiting. Average staffing levels fell from 692 in 2005–06 to 625 in 2006–07.
- Property operating expenses decreased by $2.0 million due to the reversal of the ‘onerous’ contract provision in 2006–07 for rent for head office.
- The above factors were partly offset by a write-down and impairment, mainly of fitout assets ($0.8 million), again due to the move to new head office premises.
- Depreciation ($0.6 million) was higher due to the capitalisation of certain software along with equipment for the new head office building.
Expenses were $6.8 million below budget in the following areas:
- Employee costs were lower than budget by $3.2 million due to delays in recruitment to the new structure and the tight labour market.
- Supplier expenses were lower by $5.0 million primarily in consultancies
($1.3 million), travel ($1.3 million) and projects ($1.3 million). - Other expenses were over budget by $1.3 million primarily in write-down
and impairment of assets ($0.9 million), depreciation and amortisation
($0.3 million) and losses from disposal of assets ($0.1 million).
In 2006–07, CASA spent 59 per cent of total expenditure on employee costs (2005–06: 62 per cent) and 34 per cent on suppliers (2005–06: 33 per cent). The remainder largely comprised depreciation and amortisation (see Figure 4).
Figure 4 – Expenditure, 2006–07
Cash flow
CASA’s cash balance at 30 June 2007 was $38.0 million (2005–06: $26.5 million), which was $11.5 million higher than at 30 June 2006.
The net cash generated from operating activities ($16.6 million) and the sale of motor vehicles and photocopiers ($0.3 million) funded investment in assets of $5.3 million (fitout for the new CASA head office and computer software).
Financial position
Key indicators of the health of CASA’s financial position are its ability to sustain its asset base, ability to pay debts as they fall due in the short term, and maintenance of prudent levels of long-term liabilities. CASA’s ability to sustain its asset base is indicated by changes in net assets.
Figure 5 shows that net assets are stable in relation to 2005–06 and forward estimates.
Figure 5 – Financial position, 2005–06 to 2009–10
