CASA recorded an operating deficit of $3.5 million in 2018–19, compared to a $0.5 million surplus in 2017–18. The difference of $4.0 million reflects the overall result of an increase in income of $3.1 million and an increase in expenses of $7.1 million.
The increase in income was due to one year of additional funding from government appropriations in relation to the management of drones.
The increase in expenses was the net result of increases related to employee expenses – an increase in average staffing level (to 806 in 2018–19 from 799 in 2017–18), an increase in salaries under the CASA Enterprise Agreement 2016–19, and increased expenses in consultancies and service contracts, offset by decreases in training and travel expenses.
In 2018–19, CASA’s operating result was $3.5 million less favourable than the revised estimate published in the 2019–20 Portfolio Budget Statements. The actual result was a deficit of $3.5 million, compared to an estimated surplus of $0.014 million.
The variance from the estimate was primarily due to lower than expected aviation fuel excise income of $1.9 million, together with lower than expected regulatory services and other own source income of $2.0 million. Table 1 provides further details.
Table 1 Comparison of actual results for 2018–19 with 2017–18 actual results and 2018–19 budgeted results
a Budget figures are 2018–19 estimated actuals based on the figures published in the 2019–20 Portfolio Budget Statements.
The increase in income in 2018–19 was primarily associated with New Policy Proposal funding from government appropriations in relation to the management of drones.
Figure 1 shows the change in income from 2017–18 to 2018–19 and compares actual results to revised budget estimates for 2018–19.
Figure 1 Actual revenue for 2017-18 and actual and budgeted results for 2018-19
In 2018–19, approximately 67 per cent of CASA’s income was from aviation fuel excise (68 per cent in 2017–18) and 24 per cent was from government appropriations (23 per cent in 2017–18). The remainder was derived from the sale of goods and rendering of services, interest and minor sundry revenue (see Figure 2).
Figure 2 Sources of revenue 2018-19
Total expenses increased by $7.1 million in 2018–19 compared to 2017–18. This was primarily attributable to an increase in consultants and services contracts, mostly for CASA’s Service Delivery Transformation project, and an increase in employee expenses.
Figure 3 shows the change in expenses from 2017–18 to 2018–19 and compares actual results to revised budget estimates.
Figure 3 Actual expenses for 2017-18 and actual budgeted results for 2018-19
In 2018–19, CASA spent approximately 67 per cent of total expenditure on employee costs (68 per cent in 2017–18) and approximately 28 per cent on suppliers (26 per cent in 2017–18). The remainder comprised depreciation and amortisation expenses (see Figure 4).
Figure 4 Expenditure 2018-19
CASA’s cash balance (including short-term investments) at 30 June 2019 was $64.2 million ($69.2 million in 2017–18). The decrease in the cash balance was represented by net cash received from operating activities of $12.3 million ($7.8 million in 2017–18) offset by an increase of $9.4 million in net cash used by investing activities to $17.3 million ($7.9 million in 2017–18), attributable to increases in purchases of property, plant and equipment and intangibles.
The cash balance provides funding for CASA’s capital replacement and investment program, in line with its capital management plan. The cash balance also provides for the estimated future payments to be made in respect of services provided by employees (that is, employee provisions for leave entitlements).
Key indicators of the health of CASA’s financial position are its ability to sustain its asset base, pay debts as they fall due in the short term, and maintain prudent levels of long-term liabilities.
The ability of CASA to sustain its asset base is indicated by changes in net assets. The net asset position decreased by $4.0 million in 2018–19.
Figure 5 shows that CASA maintains a sustainable net assets level in relation to
2018–19 and forward estimates.
Figure 5 Financial position 2017-18 to 2022-23
CASA is budgeting for a one-off operating deficit position for 2019–20 of $3.4 million, turning back to small operating surpluses in the forward years 2020–21, 2021–22 and 2022–23.
CASA’s total forecast income for 2019–20 is $202.4 million, derived as follows:
$46.2 million from government appropriations
$130.5 million from the aviation industry through the collection of excise revenue on aviation fuel sold for domestic air travel
$23.1 million from regulatory service fees plus the issue of aviation security identification cards
$1.0 million from the sale of goods and services and other sundry income
$1.6 million from interest from investments and cash deposits.
CASA’s balance sheet projection shows a decrease in net assets for 2019–20 due to the deficit position, then turns back to modest increases in the forward years. The organisation’s financial position indicates its capacity to deal with financial pressures.
CASA’s cash and cash equivalents balance, including investments, is budgeted to remain above $53 million in the next four years. As published in the 2019–20 Portfolio Budget Statements, aviation fuel excise revenue is expected to increase by 4.1 per cent over the forward years.
The retained surplus is budgeted to decrease in 2019–20 and remain stable in the following years as a result of modest operating surpluses.