Quarterly Financial Report
December2025toMarch2026
Finance Message
The Mornington Peninsula Shire Council’s financial position continues to remain sound during our 3rd quarterly financial report, covering 1 January2026 – 31 March2026. Within the quarter, our Rates Strategy Review was presented and adopted by council after community feedback. We appreciate the feedback that was received which hashelped to shape our long-term financial sustainability. Our team has been working hard behind the scenes to prepare our FY26/27budget with the draft annual budget to be placed on public exhibition for community feedback from 20 April to 17 May. We are continuing to monitor the impact of the fuel crisis and are ensuring our budget will reflect the latest modelling upon adoption in June 2026.
Keyhighlights:
• OperatingIncome: $283M year-to-date, we are marginally behind Approved Forecast and 3% higher than the same period last year. Rates and chargescontributed 83.8% of total income.
• NetOperatingIncome: Currently at $84.5M, 11% above Approved Forecast.
• CapitalWorksSpend: At $36.5M year-to-date, this is below approved forecast by 18%. To date, we have spent 60.9% of capitalworks against our FY26 Forecasted Expenditure of $60M.
• Loanrepayments: $1.9M, reducing the principal balance to $28.4M as scheduled.
• CashandFinancialAssets: Our cashand financial assets as of 31 March2026 stand at $148.9M. This amount is driven byprior year capital works carry forwardsand collection of the 1st, 2nd & 3rd rate instalments. There is $95.6M invested in term deposits, $44.3M held in at-call accounts,and $9M held in Trust. The Shire reviews its treasury position monthly to optimise interest on cash assets.
In summary, we are tracking above Approved Forecast however, timing variances on expenditure are expectedto be received in Q4. The fuel crisis is being closely monitored and will continue to be reviewed to support long-term financial sustainability, including maintaining strong reserves and cash flows. Our focus continues to be on delivering optimal financial outcomes for our community. Thank you for your continued supportand trust.
Finance Highlights - 3rd Quarter
Sound Financial Performance compared to Approved Forecast
Our Net Operating position of $84.5M is 8.1M above the approved forecast $76.4M.
$1.9M in loan repayments year to date has reduced total borrowings to $28.4M.
Year to date spend on capital works is $36.5M, representing 60.9% of FY26 Forecasted Expenditure.
Spend in Materials and Services – Contracts of $88M is below forecast by $3M.
The overall Financial Performance has continued to remain stable. The key indicators contributing to this assessment include:
• Net Operating position tracking above forecast by 11%.
• Materials and Services - Contracts: Expenditure is below the forecast by 3%
• Spend on Capital Works Projects is 18% below approved forecast
• Loan repayments of 1.9M reducing loan
Cash Position
balance to $28.4M.
• Liquidity Ratio 263% demonstrates a strong capacity to meet short-term obligations.
Our Cash Position remains steady, encompassing term deposits, cash on call, and Funds held on Trust.
Cash and Cash Equivalents - $53.3M Other Financial Assets - $95.6M
Term deposits invested >90 days, $95.6M
Cash on call, $44.3M
Funds held on trust, $9.0M
Project Performance
196 funded capital works projects and programs.
41 funded operating projects.
Key activities impacting the financial performance include:
• Capital Works Projects – FY26 Planned expenditure on Capital Works Projects is $60M – year to date spend represents 60.9%.
• Total capital works program (including carry forwards) equates to $109.2M.
• Operating Projects - Year to date net
FY26 Capital Works Expenditure
Full program forecast - $109.2M
Capital works expenditure against planned expenditure.
Operating project expenditure against approved forecast.
spend currently at $0.1M compared to $1.5M forecast. Full year forecast equates to $4.4M.
• Grants, Subsidies and Sponsorships –Full year forecast is $4.1M with $3.5M paid year to date, reflecting strong grant activity.
FY26 Grants, Subsidies & Sponsorships
Paid - $3.5M Forecast - $4.1M
How to read the Financial Statements
The account description in line with the Annual Financial Statements.
Amounts recieved or paid during the period from 1 July 2025 to 31 March 2026. This period is refered to as 'Year to Date'.
Represents the budget adjusted for the period from 1 July 2025 to 31 March 2026.
The difference between the Actual FY26 amount and the Approved Forecast. Shown as a percentage. 'Favorable' is an improvement from the Approved Forecast and 'Unfavorable' is a decline from the Approved Forecast. The reason for the variance may be due to timing during the full year or may be due to a permanent future variance affecting the full year. The material variances are reported in Section 1.2.
The portion of the Full Year Adopted Budget allocated for the Year to Date period.
The difference between the Adopted Budget and the Actual FY26 amount for the Year to Date period. Shown as a percentage. 'Favorable' is an improvement from the Adopted Budget and 'Unfavorable' is a decline from the Adopted Budget.
Amounts recieved or paid during the last financial year for the same reporting period
The difference between the Actual FY25 amount and the Actual FY26 amount for the Year to Date period. Shown as a percentage. 'Favorable' is an improvement from the prior year and 'Unfavorable' is a decline from the prior year.
The Approved Forecast represents the Full Year Adopted Budget adjusted for carry forwards and updated The Adopted budget represents the Full Year Budget approved by Council.
The difference between the Full Year Approved Forecast and the Adopted Budget. Shown as a percentage. 'Favorable' is an improvement from the Adopted Budget and 'Unfavorable' is a decline from the Adopted Budget.
Financial Performance
Section 1.1 Financial Performance Statement
Section 1.1 Financial Performance Statement
The Shire produces a balanced budget each year. The deficit arises due to carry-forward capital works, not overspending. When the budget is adopted, the Financial Performance Statement (FPS) effectively balances to zero. The Shire is not spending more than its revenue - the Financial Performance Statement figures reflect how capital works are accounted for.
Year To Date(YTD) net operating income (as per FPS) is $84.5M which is 8.1M (11%) ahead of Approved Forecast YTD. Major YTD operating income and expense variances against Approved Forecast are detailed below.
User charges have been negatively impacted by a temporary variance related to the timing of Animal Registrations, which are anticipated to occur in April and May. This has been partially offset by a significant increase in Statutory Permits and Licenses for food registration renewals within Environmental Health during February and March. Both areas are projected to
50% of FY26 Grant funding was received in FY25. Balance expected in May and June
Materials and services expenditures are favourable due to the timing of payments made across the organisation. This includes waste strategies and landfill initiatives, water utilities, IT projects, and other programs, most of which will incur costs throughout the year. Additionally, there are some identified full-year savings across multiple teams.
Materials and Services – Contracts are well-positioned with respect to scheduling and execution for Roads and Drainage, Building Maintenance, Waste Services, and Leisure & Recreation Centres. All allocations are anticipated to be utilised within the current financial
Permanent savings in staff training and recruitment arise from services on hold during the organisation review and a waiver of prior years’ unpaid rent in Hastings for MCH. The remaining variance is due to timing delays for SSLSC and Visitor Economy Partnership Subsidy, both expected to be spent this year.
Section 1.2 Capital Works
Capital Works items have an annual gross forecast expenditure of $109.2M. The number of projects able to be physically delivered by Council every year is dependent on a number of internal and external factors, such as seasonality, external authority approvals, as well internal and external capacity constraints. In order to provide
transparency to the community an exercise has been undertaken to forecast when all the projects currently underway (2025/26 adopted budget and previous budgets) will be completed. The forecasted expenditure for 2025/26 is $60M
YeartoDate
Section 1.3 Treasury
As detailed below, MPS has paid $1.9M in scheduled principal debt repayments year to date (YTD). Full year principal debt repayments are on schedule, with a forecasted closing position of $30.7M. Interest expense for the full year is forecasted at $0.7M with a weighted average interest rate of 2.50%.
MPS has $95.6M in term deposits earning an average interest rate of 4.61%. As term deposits mature, funds will be reinvested where appropriate and equitable with longer maturity dates (>90 days) to more efficiently
manage the Shire’s funding requirements dependent on favorable interest rates.
Funds held in trust consists of holding bonds and deposits for works subdivisional maintenance, hall hire bonds, asset protection bonds, contract retentions etc.
The Shire reviews its treasury position monthly to optimise interest on cash assets. Surplus funds are invested in accordance with Council’s Investment Policy.
Financial Assets
Cash on call
Funds held on trust
Term deposits invested >90 days
$44.3M
$9.0M
$95.6M
Dept Repayment Schedule (FY26-FY40)
Financial Statements
Section 2.1 Income Statement
Section 2.2 Balance Sheet
Non-Current Liabilities
Section 2.3 Cashflow Statement
AppendixA Capital Works Listing
Capital Works Listing
Capital Works Listing
Capital Works Listing
Capital Works Listing
Capital Works Listing
Capital Works Listing
Capital Works Listing
AppendixB Operating Projects Listing
Operating Projects Listing
Operating Projects Listing