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Financial summary

CASA recorded an operating deficit of $12.4 million in 2019–20, compared to a $3.5 million deficit in 2018–19.

The difference of $8.9 million reflects an increase of $13.7 million in expenses, offset by a $4.8 million increase in income.

The increase in income was due to additional funding from government appropriations for the registration of drones and a supplementation due to a fall in fuel excise collected as a result of the impacts of COVID-19.

The increase in expenses was the net result of increases related to employee expenses – an increase in average staffing level (to 825 in 2019–20 from 806 in 2018–19), an increase in salaries under the CASA Enterprise Agreement 2016–19 (CASA placed a six-month pause on the 2020 remuneration increase in line with the Australian Public Service in April 2020), and increased expenses in consultancies and service contracts, offset by decreases in training and travel expenses.

In 2019–20, CASA’s operating result was $9.0 million less favourable than the revised estimate published in the 2019–20 Portfolio Budget Statements. The actual result was a deficit of $12.4 million, compared to an estimated deficit of $3.4 million.

The variance from the estimate was primarily due to lower than expected aviation fuel excise income of $27.5 million and regulatory fees of $11.8 million, amplified by the impacts of COVID-19, offset by additional appropriations of $15.0 million received for drone registration and COVID-19 relief. Table 1 provides further details.

Table 1 Comparison of actual results for 2019–20 with 2018–19 actual results and 2019–20 budgeted results

Actual
2019–20
$m

Actual
2018–19
$m

Variance

$m

Actual 2019–20

$m

Estimated actual

2019–20a

$m

Variance $m

Income

188.3

183.5

4.8 ^

188.3

212.5

-24.2 V

Expenses

200.7

187.0

13.7 ^

200.7

215.9

-15.2 V

Surplus/(Deficit)

-12.4

-3.5

-8.9v

-12.4

-3.4

-9.0 V

a Budget figures are 2019–20 estimated actuals based on the figures published in the 2019–20 Portfolio Additional Estimates Statements.

Net result

Income

The increased income reflects additional funding from the Government for the management of drones and COVID-19 support, offset by the loss in own-source revenue due to the COVID-19 impact.

Figure 1 shows the change in income from 2018–19 to 2019–20 and compares actual results to budget estimates for 2019–20. In 2019–20, approximately 54 per cent of CASA’s income was from aviation fuel excise (67 per cent in 2018–19) and 39 per cent was from government appropriations (24 per cent in 2018–19).

The remainder was derived from the revenue from contracts with customers, interest and minor sundry revenue (see Figure 2).

Figure 1 Actual revenue for 2018–19 and actual and budgeted results for 2019–20 shows the change in income from 2018-19 to 2019-20 and compares actual results to budget estimates for 2019-20 (page 20 for summary)

Figure 2 Sources of revenue, 2019–20 Sources of revenue for 2019-20 (straight forward figures)

Expenses

Total expenses increased by $13.7 million in 2019–20 compared to 2018–19. This was primarily attributable to increased employee expenses and increased expenses in consultancies and service contracts, offset by decreases in training and travel expenses.

The leased buildings and equipment that were reported as supplier expenses in prior years must be recognised as right-of-use assets in 2019–20, following the adoption of a new accounting standard, AASB 16 Leases. This resulted in a reduction in supplier expenses and an increase in depreciation and amortisation.

Figure 3 shows the change in expenses from 2018–19 to 2019–20 and compares actual results to budget estimates.

In 2019–20, CASA spent approximately 67 per cent of total expenditure on employee costs
(67 per cent in 2018–19) and approximately 24 per cent on suppliers (28 per cent in 2018–19).
The remainder comprised depreciation and amortisation expenses (see Figure 4).

Figure 3 Actual expenses for 2018–19 and actual and budgeted results for 2019–20 shows the change in expenses from 2018–19 to 2019–20 and compares actual results to budget estimates.

Figure 4 Expenditure, 2019–20 Expenditure, 2019-20 (The remainder comprised depreciation and amortisation expenses (see Figure 4).

Cash flow

CASA’s cash balance (including short-term investments) at 30 June 2020 was $49.8 million ($64.2 million in 2018–19). The decrease in the cash balance was represented by net cash received from operating activities of $12.5 million ($12.3 million in 2018–19) offset by an increase of $1.3 million in net cash used by investing activities (property, plant and equipment and intangibles) to $18.6 million ($17.3 million in 2018–19), as well as $8.3 million cash used in financing activities (leased buildings and equipment). The change of cash flow presentation is required by the new accounting standard AASB 16 Leases in 2019–20. The leasing expenditure was reported in operating activities in 2018–19.

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).

Financial position

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 $9.3 million in 2019–20.

Figure 5 shows that CASA maintains a sustainable net assets level in relation to 2019–20 and forward estimates.

Figure 5 Financial position, 2018–19 to 2022–23 – Financial position (Figure 5 shows that CASA maintains a sustainable net assets level in relation to 2019–20 and forward estimates.)

Financial outlook

The 2020–21 budget will be handed down on 6 October 2020. The details below are taken from the 2019–20 Infrastructure, Transport, Regional Development and Communications Portfolio Additional Estimates Statements and are subject to change pending government consideration.

CASA is budgeting for a small operating surplus for financial years 2020–21, 2021–22 and
2022–23.

CASA’s total forecast income for 2020–21 is $189.5 million, derived as follows:

  • $40.5 million from government appropriations
  • $129.8 million from the aviation industry through the collection of excise revenue on aviation fuel sold for domestic air travel
  • $17.5 million from regulatory service fees plus other revenue from industry
  • $1.7 million from interest from investments and cash deposits.

CASA’s balance sheet projection shows a modest increase in net assets 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 $52 million in the next three years. As published in the Portfolio Additional Estimates Statements, aviation fuel excise revenue is expected to increase by 6.2 per cent over the three forward years.

The retained surplus is budgeted to remain stable in the following years because of small operating surpluses.