| |
Budget $’000 |
Actual $’000 |
| Grants and other contributions |
111 865 |
109 208 |
User charges
|
2250 |
2573 |
| Other revenue |
1695 |
1444 |
| Total income |
115 810 |
113 225 |
| Employee expenses |
43 823 |
42 281 |
| Supplies and services |
69 753 |
68 233 |
| Grants and subsidies |
– |
369 |
| Depreciation and amortisation |
1800 |
1339 |
| Revaluation decrement |
– |
259 |
| Impairment losses |
250 |
112 |
| Other |
184 |
188 |
| Total expenses |
115 810 |
112 781 |
| Operating result from continuing operations |
– |
444 |
Table 1. Published 2014–15 budget versus actual performance
Our overall financial position for 2014–15 is healthy and reflects the board and management’s commitment to sound financial management principles, and ensuring the long term sustainability of core services. The operating surplus for 2014–15 of $0.444 million compared with a balanced budget reflects the organisation’s commitment to managing its financial resources to deliver on core services as well as living within our means. The organisation has performed well financially, with most revenue and expenditure categories in line with or under budget. The financial result for 2014–15 is consistent with our strategic plan value of delivering sustainable and cost effective services, and aligns with our financial strategy of delivering efficiently within our overall budget. In achieving this result we have continued our focus on financial management, maintaining the strength and stability of our balance sheet and continuing to deliver frontline services in a timely and effective way. Importantly, we have achieved this surplus result while also investing in our assets and operational infrastructure, which ultimately assists us in delivering services more efficiently to our clients. We will continue to minimise costs and risks in relation to liabilities and contingent liabilities through our ongoing focus on sound governance practices to our financial management.
The actual operating surplus of $0.444 million for the year ended 30 June 2015 was slightly lower than the actual surplus for the year ended 30 June 2014. This year’s actual operating surplus follows five previous years of operating surplus results and this provides a continued foundation for strong financial management into the future.
Income
Federal and state government grants are our main income source, with relatively little income derived from service charges or clients’ contributions towards their legal costs. We also receive a significant amount of funding from the Legal Practitioner Interest on Trust Accounts Fund (see Figure 4 for more information).
Another part of our overall income management focuses on interest income earned on cash investments. This portion of income is moderate in nature but important as it helps the delivery of core services and providing operational support functions.
Figure 3. Income and expenditure
Figure 4. Income 2014–15
Expenses
Our major expenditure categories cover salary and wages for our staff along with paying our statewide network of private law firms to carry out legal aid work on our behalf (see Figure 6 for more information). The expenditure paid to private law firms is consistent with our mixed serviced delivery model which allocates almost 80 percent of legally-aided matters to private lawyers. The remaining costs support the in-house legal practice and infrastructure for all service delivery (see Figure 5 for more information).
Our continued focus on expenditure management has contributed significantly to the organisational delivery and moderate actual surplus achieved for year ended 30 June 2015.
Figure 5. Expenses 2014–15
Figure 6. Payments to private lawyers 2014–15
Assets
The most valuable assets we have are cash and cash equivalents (of $40.2 million), and our land and building in Brisbane (currently valued at $19.5 million). Other assets we own include unique computer-based business systems and money owed to us by clients.
Liabilities
Our largest liability is money we have to put aside to pay private lawyers for work assigned to them but not yet completed. Sometimes these cases can take several years to complete so money needs to be kept aside from the outset of the matter. In addition to this, our other main liabilities include known future payments to suppliers and providing payments associated with annual leave entitlements for our staff.
Equity
Equity is made up of two components—first the accumulated surplus (also known as retained earnings), which essentially is money in the bank and available to use for business needs, and secondly the land revaluation reserve. The accumulated surplus balance as at 30 June 2015 was $24.3 million, which represents about 59 percent of our total equity. The second component of our equity is the land revaluation reserve and this represents the increase over time in the value of the land we own in Brisbane where our head office is located. Following the valuation of our Herschel Street property in 2014–15, the land revaluation reserve has increased to $16.9 million.
Cash
We have maintained and managed healthy cash levels over the past number of years to ensure we can pay our employees, ensure payment to our network of private lawyers for matters they finalise and to allow us to replace equipment and other assets along with upgrading our facilities when and where required. We invest this cash in low-risk funds managed by state government institutions. This investment strategy provides us with some income from interest earned but also protects us from market fluctuations.