Long-Term Financial Plan

Our Long-Term Financial Plan (LTFP) reflects CN’s actual and projected financial position over the next 10 years. The forecast is driven by the assumed financial resources required to deliver the priorities and objectives of Newcastle 2040; appropriate management of our assets as outlined in our Asset Management Strategy and Asset Management Plan; and our workforce requirements and development as guided by our Workforce Development Strategic Plan. Our LTFP incorporates CN’s current financial position, strategies and assumptions (including economic assumptions) and analyses the potential financial impact of a number of alternate future funding scenarios. The plan assists in determining the most appropriate course of action to support delivery of Newcastle 2040 priorities to our community through effective and cost-efficient management of our service delivery, while ensuring our financial resources are managed sufficiently to provide for the identified asset and workforce management requirements to ensure long-term financial sustainability. Sensitivity analysis has also been undertaken on various scenarios to further assess potential risks associated with each scenario. COVID-19 has added another level of complexity to our LTFP forecast assumptions. The pandemic has had a significant financial impact, affecting user-paid services, causing financial hardship and prompting a shift in the services and assets the community needs, now and into the future. Through the LTFP, we will manage our financial resources to efficiently manage our assets and sustain and develop our workforce to provide assets and services that meet our community’s current and future needs, all while ensuring long-term financial sustainability.

CN’s four financial sustainability objectives are the foundation for achieving this: 1. Maintain regular net operating surpluses 2. Renew and maintain assets within a sustainable range 3. Maintain a strong cash and liquidity position 4. Foster a financial legacy of being prudent and responsible.

These four financial sustainability pillars build on the guidance outlined in the Local Government Act 1993:

1. Spending should be responsible and sustainable, aligning revenue and expenses 2. Invest in responsible and sustainable infrastructure for the benefit of the local community 3. Carry out effective financial and asset management 4. Consider intergenerational equity in financial management. To monitor performance and ensure the effective management of CN’s financial resourcing, several financial ratios are included in the LTFP and reported on annually in CN’s audited financial statements. These ratios include:

Operating performance ratio Own source operating revenue ratio Unrestricted current ratio Debt service cover ratio Rates and annual charges outstanding percentage Cash expense cover ratio.

Ratios

Indicator on track Indicator off track

Ratio Benchmark Per OLG 2021/22 2022/23 2023/24 2024/25 2025/26 2026/27 2027/28 2028/29 2029/30 2030/31 2031/32

Operating performance ratio > 0.00% 1.67% 1.56% 1.95% 2.7% 4.16% 3.55% 4.33% 4.62% 5.55% 6.07% 6.5%

Own source operating revenue ratio

> 60.00% 91.28% 86.75% 86.86% 87.04% 87.14% 87.21% 87.2% 87.35% 87.43% 87.49% 87.55%

Unrestricted current ratio

> 1.5x 2.07x 2.41x 2.36x 2.51x 2.47x 2.46x 2.44x 2.41x 2.42x 2.4x 2.49x

Debt service cover ratio

Rates, annual charges, interest and extra charges outstanding percentage

Cash expense cover ratio

> 2x 5.55x 4.65x 5.73x 6.12x 6.82x 6.83x 7.56x 8.3x 8.88x 10.77x 12.04x

< 10% regional & rural 4.14% 4.07% 4.24% 4.07% 4.07% 4.07% 4.07% 4.07% 4.06% 4.06% 4.06%

> 3 mths 7.85 mths 7.16 mths 7.31 mths 7.12 mths 7.18 mths 6.96 mths 6.85 mths 6.71 mths 6.61 mths 6.52 mths 6.41 mths