HOME LOAN PORTFOLIO
Objectives
The Home Loan Portfolio is responsible for the administration of home loans, which were granted by the Commissioner for Housing to assist low income households in achieving home ownership.  All ACT home buyer lending ceased in 1996.
The Portfolio’s objective is to administer the remaining home loans effectively and efficiently. 
2005‑06 Highlights
Strategic and operational issues to be pursued in 2005‑06 include:
•	improving internal management policies for the Home Loan Portfolio to reduce exposure to bad debts; and 
•	reviewing insurance coverage for all home loans.

Output Classes
	Total Cost	
	2004‑05
Est. Outcome
 $’000	2005‑06
Budget
$’000	
Output Class 1 Home Loan Portfolio	4  992	4  899	
Output 1.1 Home Loan Portfolio	4  992	4  899	
Output Description
Administer the Home Loan Portfolio in compliance with the loan and deferment agreements between the Commissioner for ACT Housing and the borrowers.
In 2005‑06 the Home Loan Portfolio will:
•	manage between 576 (2004‑05 estimated outcome) and 492 (30 June 2006) loans;
•	comply with the Commonwealth loan repayment schedule; and 
•	administer services provided in line with completion dates and agreed turnaround times.

Accountability Indicators
	2004‑05
Targets	2004‑05
Est. Outcome	2005‑06
Target	
1.1 Home Loan Portfolio	
a.	Increase in net assets for the financial year.  	>$2.5m	>$1.9m	$2.5m	
b.	Administration cost per home loan managed.	n/a	n/a	$816	
Budgeted Financial Results 
Section 31 of the Financial Management Act 1996 (FMA) advises that Chief Executives are responsible for achievement of financial results.  For the purpose of Section 31 of the FMA, key budgeted results are specified in the Budget papers to improve accountability. An outcome of the increased accountability will be the requirement for Chief Executives to explain material variances from specified budget results.  
In accordance with Section 31 of the FMA, following are the key budgeted results for the Home Loan Portfolio:
•	Operating result ($2.784m surplus) – this measure focuses on the financial performance of the Portfolio, and will measure the Portfolio’s success in managing expenditure levels within the Portfolio’s revenue limitations.
•	Current Ratio (3.8:1) – the current ratio is an indication of the ability to fund short‑term liabilities from short‑term assets.  The Home Loan Portfolio has sufficient funds to cover its short‑term liabilities in the next financial year.
•	Debt Ratio (0.85:1) – the debt ratio is a measure of the relationship between total liabilities and total assets.  The lower the ratio, the greater the asset protection.  The ratio marginally improves across the forward years to 0.78:1 by 2008-09.
•	Repayment of Borrowings Ratio (0.75:1) – the purpose of the ratio is to assess the entity’s ability to generate cash from operating activities for the purpose of covering its long term debt commitments in the current year.  The ratio is calculated as repayment of borrowings divided by cash from operating activities. The Home Loan Portfolio has the ability to generate cash to cover its long-term debt commitments in the current and the forward years.

Home Loan Portfolio	
Operating Statement	
  2004‑05			  2004‑05	   2005‑06		  2006-07	  2007-08	  2008-09		
    Budget			Est.Outcome	   Budget	   Var	  Estimate	   Estimate	  Estimate		
    $'000			   $'000	   $'000	    %	   $'000	    $'000	   $'000		
		Income								
		Revenue								
7  745		Interest	6  926	7  683	11	7  727	7  767	7  803		
7  745		Total Revenue	6  926	7  683	11	7  727	7  767	7  803		
		Gains								
0		Total Gains	0	0	-	0	0	0		
7  745		Total Income	6  926	7  683	11	7  727	7  767	7  803		
		Expenses								
132		Employee Expenses	134	137	2	140	144	147		
35		Superannuation Expenses	19	19	-	20	20	21		
210		Supplies and Services	243	245	1	242	244	246		
4  596		Borrowing Costs	4  596	4  498	-2	4  406	4  310	4  211		
4  973		Total Ordinary Expenses	4  992	4  899	-2	4  808	4  718	4  625		
2  772		Operating Result	1  934	2  784	44	2  919	3  049	3  178		

Home Loan Portfolio	
Balance Sheet	
    Budget			Est.Outcome	   Planned		   Planned	   Planned	   Planned		
as at 30/6/05			as at 30/6/05	as at 30/6/06	   Var	as at 30/6/07	as at 30/6/08	as at 30/6/09		
   $'000			   $'000	    $'000	    %	    $'000	    $'000	    $'000		
		Current Assets								
518		Cash	796	522	-34	443	494	674		
1  720		Receivables	1  337	1  221	-9	1  081	970	882		
13  000		Investments	6  500	6  500	-	6  500	6  500	6  500		
15  238		Total Current Assets	8  633	8  243	-5	8  024	7  964	8  056		
		Non Current Assets								
17  555		Receivables	11  444	9  506	-17	7  818	6  343	5  049		
81  639		Investments	93  939	97  023	3	99  731	102  100	104  164		
99  194		Total Non Current Assets	105  383	106  529	1	107  549	108  443	109  213		
114  432		TOTAL ASSETS	114  016	114  772	1	115  573	116  407	117  269		
		Current Liabilities								
17		Payables	21	21	-	21	22	21		
2  033		Interest Bearing Liabilities	2  033	2  124	4	2  220	2  320	2  424		
45		Employee Benefits	40	43	8	46	47	49		
2  095		Total Current Liabilities	2  094	2  188	4	2  287	2  389	2  494		
		Non Current Liabilities								
98  063		Interest Bearing Liabilities	97  913	95  789	-2	93  569	91  249	88  825		
48		Employee Benefits	52	54	4	57	60	63		
98  111		Total Non Current Liabilities	97  965	95  843	-2	93  626	91  309	88  888		
100  206		TOTAL LIABILITIES	100  059	98  031	-2	95  913	93  698	91  382		
14  226		NET ASSETS	13  957	16  741	20	19  660	22  709	25  887		
		REPRESENTED BY FUNDS EMPLOYED								
14  226		Accumulated Funds	13  957	16  741	20	19  660	22  709	25  887		
14  226		TOTAL FUNDS EMPLOYED	13  957	16  741	20	19  660	22  709	25  887		

Home Loan Portfolio	
Cash Flow Statement	
  2004‑05			  2004‑05	   2005‑06		  2006-07	  2007-08	  2008-09		
    Budget			Est.Outcome	   Budget	   Var	  Estimate	   Estimate	  Estimate		
    $'000			   $'000	   $'000	    %	   $'000	    $'000	   $'000		
		CASH FLOWS FROM OPERATING ACTIVITIES								
		Receipts								
7  563		Interest Received	7  789	7  620	-2	7  723	7  764	7  800		
7  563		Operating Receipts	7  789	7  620	-2	7  723	7  764	7  800		
		Payments								
160		Related to Employees	148	152	3	154	159	162		
216		Related to Supplies and Services	239	244	2	242	244	247		
4  596		Borrowing Costs	4  596	4  498	-2	4  406	4  310	4  211		
0		Other	2	0	-100	0	0	0		
4  972		Operating Payments	4  985	4  894	-2	4  802	4  713	4  620		
2  591		NET CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES	2  804	2  726	-3	2  921	3  051	3  180		
		CASH FLOWS FROM INVESTING ACTIVITIES								
		Receipts								
9  593		Proceeds from Sale/Maturities of Investments	0	0	-	0	0	0		
2  852		Repayment of Home Loan Principal	2  454	2  117	-14	1  832	1  590	1  384		
12  445		Investing Receipts	2  454	2  117	-14	1  832	1  590	1  384		
		Payments								
0		Purchase of Investments	3  788	3  084	-19	2  708	2  370	2  064		
0		Investing Payments	3  788	3  084	-19	2  708	2  370	2  064		
12  445		NET CASH INFLOW/(OUTFLOW) FROM INVESTING ACTIVITIES	-1  334	-967	28	-876	-780	-680		
		CASH FLOWS FROM FINANCING ACTIVITIES								
		Payments								
1  945		Repayment of Borrowings	2  095	2  033	-3	2  124	2  220	2  320		
1  945		Financing Payments	2  095	2  033	-3	2  124	2  220	2  320		
-1  945		NET CASH INFLOW/(OUTFLOW) FROM FINANCING ACTIVITIES	-2  095	-2  033	3	-2  124	-2  220	-2  320		
13  091		NET INCREASE/(DECREASE) IN CASH HELD	-625	-274	56	-79	51	180		
427		CASH AT BEGINNING OF REPORTING PERIOD	7  921	7  296	-8	7  022	6  943	6  994		
13  518		CASH AT THE END OF THE REPORTING PERIOD	7  296	7  022	-4	6  943	6  994	7  174		

Home Loan Portfolio	
Statement of Changes in Equity	
    Budget			Est.Outcome	   Planned		   Planned	   Planned	   Planned		
as at 30/6/05			as at 30/6/05	as at 30/6/06	   Var	as at 30/6/07	as at 30/6/08	as at 30/6/09		
   $'000			   $'000	    $'000	    %	    $'000	    $'000	    $'000		
11  454		Opening Balance	12  023	13  957	16	16  741	19  660	22  709		
		Accumulated Funds								
2  772		Operating Result for the Period	1  934	2  784	44	2  919	3  049	3  178		
		Reserves								
2  772		Total Income And Expense For The Period	1  934	2  784	44	2  919	3  049	3  178		
		Transactions Involving Equity Holders Affecting Accumulated Funds								
14  226		Closing Balance	13  957	16  741	20	19  660	22  709	25  887		
Notes to Budget Statements
Significant variations are as follows:
Operating Statement 
•	interest:
•	the decrease of $0.819m in the 2004‑05 estimated outcome from the original budget is primarily due to a lower than forecast value of outstanding loans and the interest rate for investments being lower than forecast in the 2004‑05 Budget; and
•	the increase of $0.757m in the 2005‑06 Budget from the 2004‑05 estimated outcome is due to a projected higher interest rate for investments, which offsets the continuing decline of home loan interest revenue.
•	unrealised gain or loss:  there is no projection of unrealised gain or loss for long term investments, because the rate of return for long term investment incorporates the net unrealised gain or loss from investment fluctuations.
Balance Sheet
•	current receivables:
•	the decrease of $0.383m in the 2004‑05 estimated outcome from the original budget is due to higher than expected discharge of outstanding loan amounts in the last quarter of 2003-04; and
•	the decrease of $0.116m in the 2005‑06 Budget from the 2004‑05 estimated outcome is due to natural reduction of outstanding loans and some anticipated early discharge by borrowers.
•	current investments:  the decrease of $6.5m in the 2004‑05 estimated outcome from the original budget is due to funds being transferred to long term investments in anticipation of a higher rate of return.
•	non-current receivables:
•	the decrease of $6.111m in the 2004‑05 estimated outcome from the original budget is due to higher than expected discharge of outstanding loan amounts in the last quarter of 2003‑04; and 
•	the decrease of $1.938m in the 2005‑06 Budget from the 2004‑05 estimated outcome is due to an expected early repayment of loans.
•	non-current investments:  
•	the increase of $12.3m in the 2004‑05 estimated outcome from the original budget is the combined result of the transfer of funds from short term investment to long term investment ($6.5m) and the higher than expected loan discharges in the last quarter of 2003-04; and
•	the increase of $3.084m in the 2005‑06 Budget from the 2004‑05 estimated outcome reflects higher interest revenue expected from long‑term investments than short term investments.
•	current and non-current interest bearing liabilities:  this represents the loan from the Commonwealth Government, which is scheduled to be fully paid in 2040.
Cash Flow Statement
The major variances within the Cash Flow Statement are explained within the Operating Statement and Balance Sheet above.
Other significant variances are as follows:
•	repayment of home loan principal:
•	the decrease of $0.398m in the 2004‑05 estimated outcome from the original budget reflects fewer early terminations of loans than expected and more deferred assistance than anticipated in the 2004‑05 Budget; and
•	the decrease of $0.337m from the 2005‑06 Budget from the 2004‑05 estimated outcome to the 2005‑06 Budget reflects the smaller balance of outstanding loans.