RHODIUM ASSET SOLUTIONS LIMITED
Objectives
Rhodium Asset Solutions Limited (Rhodium) provides fleet management services to the ACT Government, as well as private and Australian Government agencies.  The ACT Government has initiated a scoping study with a view to a future sale of Rhodium during 2006‑07.  In the meantime, Rhodium will continue to operate within its existing business parameters. 
2006-07 Priorities
Strategic and operational issues to be pursued in 2006‑07 include:
•	achieving business growth and an operational surplus;
•	focusing on ACT fleet management services as core business;
•	growing private sector business;
•	providing excellent customer service and demonstrating value for money;
•	providing a supportive work environment for staff that encourages personal development, growth and commitment to excellence; and
•	complying with all relevant legislation and standards.
Business and Corporate Strategies
Rhodium aims to re-focus on its ACT fleet management services by establishing an ACT Fleet Management Unit.  This will enable the organisation to determine the costs associated with the business and provide transparency to achieve cost recovery.  In addition, the establishment of key performance indicators in the Head Agreement with the Government will allow the organisation to measure its performance to meet or exceed agreed Key Performance Indicators. 
Rhodium will implement measures to ensure the growth of its commercial or non‑ACT Government business with the purpose of achieving profitability in 2006‑07 and going forward.  This involves an annual review and planning process.  For 2006‑07, efficiency gains will be implemented to reduce corporate overheads.
Rhodium will continue to conduct regular independent customer satisfaction surveys with the aim of improving its performance rating. Regular customer information and feedback sessions will be conducted.
The implementation of a change management program will help staff adapt to a revised structure.  Improvement of the level of accountability and responsiveness of staff in the delivery of services will be achieved through individual performance plans and reviews.  Rhodium will continue to provide training to its staff.
Estimated Employment Level 
	2005‑06
Est Outcome
	2006‑07
Budget
	
Staffing (Headcount)	34	30	

Rhodium Asset Solutions Ltd	
Operating Statement	
  2005-06			  2005-06	   2006-07		  2007-08	  2008-09	  2009-10		
    Budget			Est.Outcome	   Budget	   Var	  Estimate	   Estimate	  Estimate		
    $'000			   $'000	   $'000	    %	   $'000	    $'000	   $'000		
		Income								
		Revenue								
17,878		User Charges - Non ACT Government	12,707	12,310	-3	13,735	15,220	16,591		
3,614		User Charges - ACT Government	9,259	8,915	-4	9,945	11,021	12,014		
165		Interest	147	192	31	192	192	192		
90		Other Revenue	375	366	-2	366	366	366		
21,747		Total Revenue	22,488	21,783	-3	24,238	26,799	29,163		
		Gains								
0		Total Gains	0	0	-	0	0	0		
21,747		Total Income	22,488	21,783	-3	24,238	26,799	29,163		
		Expenses								
2,128		Employee Expenses	2,388	2,155	-10	1,821	1,778	1,850		
223		Superannuation Expenses	248	235	-5	209	206	215		
1,807		Supplies and Services	2,485	2,014	-19	2,038	2,196	2,348		
6,450		Depreciation and Amortisation	4,445	4,563	3	4,806	5,048	4,897		
5,101		Borrowing Costs	5,564	5,541	..	6,181	6,895	7,475		
4,188		Cost of Goods Sold	5,317	5,035	-5	5,815	6,473	7,112		
1,350		Other Expenses	1,819	2,160	19	2,511	2,770	2,989		
21,247		Total Ordinary Expenses	22,266	21,703	-3	23,381	25,366	26,886		
500		Operating Result From Ordinary Activities	222	80	-64	857	1,433	2,277		
150		Income Tax Equivalent	66	24	-64	258	429	683		
350		Operating Result	156	56	-64	599	1,004	1,594		

Rhodium Asset Solutions Ltd	
Balance Sheet	
    Budget			Est.Outcome	   Planned		   Planned	   Planned	   Planned		
as at 30/6/06			as at 30/6/06	as at 30/6/07	   Var	as at 30/6/08	as at 30/6/09	as at 30/6/10		
   $'000			   $'000	    $'000	    %	    $'000	    $'000	    $'000		
		Current Assets								
2,994		Cash	4,853	4,573	-6	5,732	6,923	8,308		
25,067		Receivables	5,280	4,705	-11	5,296	6,069	6,524		
275		Other	22,721	26,418	16	30,099	34,425	39,031		
28,336		Total Current Assets	32,854	35,696	9	41,127	47,417	53,863		
		Non Current Assets								
47,310		Property, Plant and Equipment	13,863	12,849	-7	12,991	13,490	14,429		
1,019		Intangibles	67	85	27	58	31	16		
0		Tax Assets	198	198	-	198	198	198		
47,057		Other	45,993	49,451	8	56,813	65,465	74,676		
95,386		Total Non Current Assets	60,121	62,583	4	70,060	79,184	89,319		
123,722		TOTAL ASSETS	92,975	98,279	6	111,187	126,601	143,182		
		Current Liabilities								
4,748		Payables	5,466	4,038	-26	3,897	4,064	4,164		
0		Interest Bearing Liabilities	0	4,692	#	13,406	15,600	15,600		
37,288		Finance Leases	27,081	24,851	-8	20,200	22,680	27,548		
146		Employee Benefits	234	327	40	333	339	345		
0		Other Provisions	10	28	180	29	54	58		
0		Income Tax Payable	190	24	-87	258	429	684		
0		Other	678	0	-100	0	0	0		
42,182		Total Current Liabilities	33,659	33,960	1	38,123	43,166	48,399		
		Non Current Liabilities								
0		Interest Bearing Liabilities	0	9,628	#	11,822	11,822	11,822		
74,576		Finance Leases	54,163	49,457	-9	55,390	64,738	74,473		
28		Employee Benefits	33	54	64	73	92	111		
792		Other Provisions	505	509	1	509	509	509		
75,396		Total Non Current Liabilities	54,701	59,648	9	67,794	77,161	86,915		
117,578		TOTAL LIABILITIES	88,360	93,608	6	105,917	120,327	135,314		
6,144		NET ASSETS	4,615	4,671	1	5,270	6,274	7,868		
		REPRESENTED BY FUNDS EMPLOYED								
6,144		Accumulated Funds	4,817	4,873	1	5,472	6,476	8,070		
0		Reserves	-202	-202	-	-202	-202	-202		
6,144		TOTAL FUNDS EMPLOYED	4,615	4,671	1	5,270	6,274	7,868		

Rhodium Asset Solutions Ltd	
Cash Flow Statement	
  2005-06			  2005-06	   2006-07		  2007-08	  2008-09	  2009-10		
    Budget			Est.Outcome	   Budget	   Var	  Estimate	   Estimate	  Estimate		
    $'000			   $'000	   $'000	    %	   $'000	    $'000	   $'000		
		CASH FLOWS FROM OPERATING ACTIVITIES								
		Receipts								
21,234		User Charges	20,536	21,882	7	23,172	25,553	28,233		
165		Interest Received	147	192	31	192	192	192		
21,399		Operating Receipts	20,683	22,074	7	23,364	25,745	28,425		
		Payments								
2,537		Related to Employees	2,621	2,276	-13	2,005	1,959	2,040		
1,746		Related to Supplies and Services	1,625	3,117	92	2,815	3,110	3,460		
5,101		Borrowing Costs	5,564	5,541	..	6,181	6,895	7,475		
5,814		Other	7,533	8,569	14	7,713	8,397	9,312		
15,198		Operating Payments	17,343	19,503	12	18,714	20,361	22,287		
6,201		NET CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES	3,340	2,571	-23	4,650	5,384	6,138		
		CASH FLOWS FROM INVESTING ACTIVITIES								
		Receipts								
1,800		Proceeds from Sale of Property, Plant & Equipment	1,998	2,545	27	2,545	2,545	2,545		
1,800		Investing Receipts	1,998	2,545	27	2,545	2,545	2,545		
		Payments								
20,000		Purchase of Property, Plant and Equipment	5,300	5,700	8	7,100	7,700	8,000		
1,000		Purchase of Land and Intangibles	400	0	-100	0	0	0		
21,000		Investing Payments	5,700	5,700	-	7,100	7,700	8,000		
-19,200		NET CASH INFLOW/(OUTFLOW) FROM INVESTING ACTIVITIES	-3,702	-3,155	15	-4,555	-5,155	-5,455		
		CASH FLOWS FROM FINANCING ACTIVITIES								
		Receipts								
1,500		Capital Injection from Government	0	0	-	0	0	0		
59,414		Borrowings Received	72,352	74,792	3	77,707	81,293	83,173		
60,914		Financing Receipts	72,352	74,792	3	77,707	81,293	83,173		
		Payments								
47,060		Repayment of Borrowings	71,942	74,488	4	76,643	80,331	82,471		
47,060		Financing Payments	71,942	74,488	4	76,643	80,331	82,471		
13,854		NET CASH INFLOW/(OUTFLOW) FROM FINANCING ACTIVITIES	410	304	-26	1,064	962	702		
855		NET INCREASE/(DECREASE) IN CASH HELD	48	-280	-683	1,159	1,191	1,385		
2,139		CASH AT BEGINNING OF REPORTING PERIOD	4,805	4,853	1	4,573	5,732	6,923		
2,994		CASH AT THE END OF THE REPORTING PERIOD	4,853	4,573	-6	5,732	6,923	8,308		

Rhodium Asset Solutions Ltd	
Statement of Changes in Equity	
    Budget			Est.Outcome	   Planned		   Planned	   Planned	   Planned		
as at 30/6/06			as at 30/6/06	as at 30/6/07	   Var	as at 30/6/08	as at 30/6/09	as at 30/6/10		
   $'000			   $'000	    $'000	    %	    $'000	    $'000	    $'000		
4,294		Opening Balance	4,661	4,615	-1	4,671	5,270	6,274		
		Accumulated Funds								
0		Net Effect of a Correction of an Error	-202	0	-100	0	0	0		
350		Operating Result for the Period	156	56	-64	599	1,004	1,594		
		Reserves								
350		Total Income And Expense For The Period	-46	56	-222	599	1,004	1,594		
		Transactions Involving Equity Holders Affecting Accumulated Funds								
1,500		Capital Injections	0	0	-	0	0	0		
6,144		Closing Balance	4,615	4,671	1	5,270	6,274	7,868		

Notes to Budget Statements
Significant variations are as follows:
Operating Statement
•	user charges – non ACT Government:  the decrease of $5.171 million in the 2005‑06 estimated outcome from the original budget is due to the incorrect treatment of user charges – ACT Government in the 2005‑06 Budget;
•	user charges – ACT Government:  the increase of $5.645 million in the 2005‑06 estimated outcome from the original budget is largely due to recognition of revenue from government as noted above, and higher revenues from novated leases from ACT Government employees.  The decrease of $0.344 million in the 2006‑07 Budget from the 2005‑06 estimated outcome reflects lower revenues from government for fleet management, partially offset by growth in novated lease revenue;
•	other revenue:  the increase of $0.285 million in the 2005‑06 estimated outcome from the original budget is due to gains from the disposal of assets, which were higher than expected due to conservative estimates set in the budget for vehicle residual disposal values;
•	employee expenses:  the increase of $0.260 million in the 2005‑06 estimated outcome form the original budget is due to the increased staff resources required to service the growth in novated leases and for finance and administration functions.  The decrease of $0.233 million in the 2006‑07 Budget from the 2005‑06 estimated outcome is due to a reduction in staffing levels;
•	supplies and services:  the increase of $0.678 million in the 2005‑06 estimated outcome from the original budget is due to higher professional fees, marketing and travel costs associated with establishing the Rhodium brand name in the marketplace.  The decrease of $0.471 million in the 2006‑07 Budget from the 2005‑06 estimated outcome is due to a reduction in these expenses as the brand name gains recognition;
•	depreciation and amortisation:  the decrease of $2.005 million in the 2005‑06 estimated outcome from the original budget was largely due to the reduced growth in operating leases to minimise residual risk and a decision to defer implementation of the new IT system ($0.325 million);
•	borrowing costs:  the increase of $0.463 million in the 2005‑06 estimated outcome from the original budget is due to the rise in interest rates in the final quarter of the financial year;
•	cost of goods sold:  the increase of $1.129 million in the 2005‑06 estimated outcome from the original budget was due to growth in novated leasing and the corresponding interest component of the leases; and
•	other expenses:  the increase of $0.469 million in the 2005‑06 estimated outcome from the original budget is due to an expected increase in vehicle expenses related to novated leases.  The increase of $0.341 million in the 2006‑07 Budget from the estimated outcome is due to the expectation of continued growth in the novated lease market.
Balance Sheet
•	cash:  the increase of $1.859 million in the 2005‑06 estimated outcome from the original budget is due to higher levels of cash and the decision to defer the purchase of the new IT system;
•	receivables:  the decrease of $19.787 million in  the 2005‑06 estimated outcome from the original budget is mainly due to a change in the method of recording this asset;
•	other:  the increase of $22.446 million in the 2005‑06 estimated outcome from the original budget is due to a change in the method of recording this asset and largely offsets the variance in receivables (above).  The increase of $3.697 million in the 2006‑07 Budget from the 2005‑06 estimated outcome is due to the projected growth in novated and finance leases;
•	property, plant and equipment:  the decrease of $33.447 million in the 2005‑06 estimated outcome from the original budget reflects the decrease in assets purchased due to lower than expected growth in the operating lease business;
•	intangibles:  the decrease of $0.952 million in the 2005‑06 estimated outcome from the original budget reflects the decision to defer the replacement of the IT system;
•	tax assets:  the increase of $0.198 million in the 2005‑06 estimated outcome from the original budget is due to a change in the way this account is recorded and largely offsets the variance in the income tax payable;
•	other non current assets:  the decrease of $1.064 million in the 2005‑06 estimated outcome from the 2005‑06 budget is due to lower than expected growth in commercial vehicles offered under operating leases.  The increase of $3.458 million in the 2006‑07 Budget from the 2005‑06 estimated outcome is due to the projected growth in novated and finance leases;
•	payables:  the increase of $0.718 million in the 2005‑06 estimated outcome from the original budget reflects the growth in the novated lease business and associated higher levels of running expenses related to insurance and fuel;
•	current and non current finance leases:  the decrease of $30.620 million in the 2005‑06 estimated outcome from the original budget is due to decreased borrowings from lower than expected operating leases.  The decrease of $6.936 million in the 2006‑07 Budget from the 2005‑06 estimated outcome is due to a change in the method of recording the new ACT fleet contract; and
•	other non current provisions:  the decrease of $0.287 million in the 2005‑06 estimated outcome from the original budget is due to the impact of AIFRS accounting policies.
Cash Flow Statement
The major variations within the Cash Flow Statement in the 2005‑06 estimated outcome from the original budget and the 2006‑07 Budget are explained within the Operating Statement above.
Other significant variations relate to:
•	investing payments:  the decrease of $15.3 million in the 2005‑06 estimated outcome from the original budget is due to the reduced focus on operating leases to minimise residual risk and the decision to defer the replacement of the IT system;
•	financing receipts:  the increase of $11.438 million in the 2005‑06 estimated outcome from the original budget is due to the continued growth in the novated leasing business; and
•	repayment of borrowings:  the increase of $24.882 million in the 2005‑06 estimated outcome from the original budget is due to an underestimation of the amounts required to repay residual values of maturing vehicles and other leases.