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The Hills Shire Council FINANCIAL STATEMENTS 2015-16 1
THE HILLS SHIRE COUNCIL
FINANCIAL STATEMENTS 2015-2016
2 The Hills Shire Council FINANCIAL STATEMENTS 2015-16
GENERAL PURPOSE FINANCIAL STATEMENTS
for the financial year ended 30 June 2016
Boundary Adjustment 3
Chief Financial Officer’s Report 4
Understanding Council’s Financial Statements 6
Statement by Councillors & Management 7
Primary Financial Statements:
• Income statement 8
• Statement of Comprehensive Income 9
• Statement of Financial Position 10
• Statement of Changes in Equity 11
• Statement of Cash Flows 12
Notes to the Financial Statements 13
Independent Auditor’s Report
• On the Financial Statements (Sect 417 [2]) 86
• On the Conduct of the Audit (Sect 417 [3]) 88
OVERVIEW
(i) These financial statements are General Purpose Financial Statements and cover the operations for The Hills Shire
Council.
(ii) The Hills Shire Council is a body politic of NSW, Australia – being constituted as a local government area by
proclamation and is duly empowered by the Local Government Act 1993 (LGA).
• Council’s Statutory Charter is detailed in Paragraph 8 of the LGA and includes giving Council;
• the ability to provide goods, services and facilities, and to carry out activities appropriate to the current and
future needs of the local community and of the wider public,
• the responsibility for administering regulatory requirements under the LGA and
• a role in the management, improvement and development of the resources in the area.
A description of the nature of Council’s operations and its principal activities are provided in Note 2(b).
(iii) All figures presented in these financial statements are presented in Australian currency.
(iv) These financial statements were authorised for issue by the Council on 23 August 2016. Council has the power to
amend and reissue these financial statements.
THE HILLS SHIRE COUNCIL FINANCIAL STATEMENTS 2015-2016
Email: council@thehills.nsw.gov.au
Phone: (02) 9843 0555
The Hills Shire Council
www.thehills.nsw.gov.au
CONTENTS
The Hills Shire Council FINANCIAL STATEMENTS 2015-16 3
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 30 June 2016
BOUNDARY ADJUSTMENT
NSW Premier Mike Baird and the Minister for Local Government Paul Toole announced 19 new Councils in NSW commencing on 12 May 2016. Although The Hills Shire Council did not merge with another Council, its boundaries were adjusted.
Those suburbs south of the M2 (SM2) that are currently part of The Hills Shire Council will now form part of the City of Parramatta Council. These include: Carlingford, the majority of North Rocks, Oatlands, Northmead, North Parramatta, Winston Hills and parts of Baulkham Hills.
The former Hills Shire Council covered an area of 396 square kms, a population in excess of 180,000 people and 65,383 rate assessments. After the boundary adjustment, it will cover an area of 382 square kms, a population in excess of 159,000 and 55,763 number of rate assessments. However it is still estimated Hills Shire will increase to more than 260,000 people by 2031.
This matter directly affects the Financial Position of The Hills Shire Council. Loss reported in FY 15/16 Financial Statements of $478M relates mainly to transfer of Assets. This also resulted in a $1.1M impact on FY 15/16 Budget and an $8.8M impact on recurrent Budgets from FY 16/17 onwards. Although Council’s financial position has changed, it still remains positive.
The City of Parramatta has requested that The Hills Shire Council continue to provide the services to the suburbs SM2 on a cost recovery basis, so that the services are not disrupted to the residents until such time the City of Parramatta is ready to take over.
As per the Transitional Agreement between City Of Parramatta (CoP) and the Hills Shire Council the following amounts are due to CoP as at 30 June 2016. These amounts have been provided in the FY 15/16 Financial Statements and are detailed below.
Due To CoP $
Rates, Stormwater & Financial Assistance Grant* 1,557,973
North Rocks Child Care Centre * 34,871
Trust – Bonds 387,100
Section 94 – CP 7 & CP 14 10,479,496
Restorations Income received in advance 88,208
Waste Management Reserve 15.28% 461,595
Total Due to CoP 13,009,243
Due From CoP
Transitional Services provided* 497,626
Outstanding Rates & Annual Charges Debtors 349,171
North Rocks Preschool Expenditure incurred 260,053
Capital Expenditure incurred between 13 May & 30 June 2016 on SM2 Assets 1,035,463
Total due from CoP 2,142,314
Net Due To CoP 10,866,929
*Operating Loss FY15/16 $1,095,218
Table below details the Written Down Value of the assets transferred to City Of Parramatta as at 30 June 2016.
Category $'000 Balance prior to SM2 transfer of assets
Amounts transferred to CoP
Balance after transfer of assets
Plant & Office Equipment 6,304 - 6,304
Operational Land 119,906 (4,510) 115,396
Community Land 289,543 (40,825) 248,717
Land Under Roads 2,637,658 (244,670) 2,392,989
Buildings 248,360 (12,521) 235,841
Roads/Traffic/Footpath/Bridges 1,061,613 (118,855) 942,756
Bulk Earthworks 123,785 (14,703) 109,082
Stormwater Drainage 258,266 (25,715) 232,551
Parks Infrastructure 55,873 (6,236) 49,637
TOTAL 4,801,308 (468,035) 4,333,273
4 The Hills Shire Council FINANCIAL STATEMENTS 2015-16
CHIEF FINANCIAL OFFICER’S REPORT
“Council is in the strongest financial position it has been in throughout its history. The Hills Shire Council is prepared for the future.”
The Hills Shire Council is ‘Fit for the Future’, debt free and has a strong financial outlook as rated by NSW Treasury Corp. It was also reported by Council’s external Auditors PricewaterhouseCoopers, that this Council is if not the best, one of the best Council’s in NSW.
In FY 15/16 The Hills Shire Council expended $201M to provide recurrent operations and capital works. This expenditure covers a broad range of services including civil and parks asset maintenance, town planning, regulatory functions, waste and recycling, aged care, leisure and culture, children, family and youth, libraries, major festivals and community events, economic development and building infrastructure. Included in the above were 319 infrastructure projects totalling $57.6M.
Council manages $4.3B worth of assets infrastructure including roads, bridges, buildings, recreation and leisure facilities, drains, libraries and parks.
This financial sustainability rating further emphasises our status as one of the well-managed Local Government Areas in Australia. This has been made possible by strict budgetary control measures at all levels of operations, prudent investing in the maintenance of our infrastructure and adopting a cost-conscious approach to spending ratepayer’s money.
Total Cash and Investments held as at 30 June 2016 increased from $311M to $363M. This is mainly due to increased Developer Contributions received during the year and income from property development activities. As a result our unrestricted current ratio which measures the adequacy of working capital and the ability to satisfy obligations in the short term, was well above the benchmark.
The Infrastructure backlog of $52M reported in June 2011 has reduced to zero.
LOCAL GOVERNMENT REFORM - BOUNDARY ADJUSTMENTNSW Premier Mike Baird and the Minister for Local Government Paul Toole announced 19 new Councils in NSW commencing on 13 May 2016. Although The Hills Shire Council did not merge with another Council, its boundaries were adjusted.
Those suburbs south of the M2 (SM2) that are currently part of The Hills Shire Council will now form part of the City of Parramatta Council. These include: Carlingford, the majority of North Rocks, Oatlands, Northmead, North Parramatta, Winston Hills and parts of Baulkham Hills.
The former Hills Shire Council covered an area of 396 square kms, a population in excess of 180,000 people and 65,383 rate assessments. After the boundary adjustment, it will cover an area of 382 square kms, a population in excess of 159,000 and 55,763 number of rate assessments. However it is still estimated The Hills Shire will increase to more than 260,000 people by 2031.
This matter directly affects the financial position of The Hills Shire Council. Loss reported in FY 15/16
Operating loss due to boundary adjustments of $479M (10%) relates mainly to transfer of Assets. Although The Hills Shire Council did not merge with another Council, its boundaries were adjusted and all assets South of M2 (SM2) had to be transferred to City of Parramatta at book value with no compensation.
This also resulted in a $1.1M impact on FY 15/16 Operating loss for the period 13 May 2016 to 30 June 2016. It is also estimated that $8.8M will be lost from FY 16/17 onwards. Although Council’s financial position has changed, it still remains positive.
The City of Parramatta has requested that The Hills Shire Council continue to provide the services to the suburbs SM2 on a cost recovery basis, so that the services are not disrupted to the residents until such time the City of Parramatta is ready to take over.
LOOKING AHEADLooking forward, the 2016-2017 $257M budget was formulated on a general rates increase of 1.8% as per the guidelines issued by the Independent Pricing and Regulatory Tribunal (IPART).
This budget ensures that The Hills Shire Council remains in a strong position to not only deliver our current goals, but also to provide for future growth and make the Hills Shire an even greater place to live and do business. With the arrival of Sydney Metro Northwest in the near future, The Hills Shire Council is poised for a historic era of growth and development.
CHALLENGESThe biggest challenge this Council faces is managing land acquisition liabilities that are created by the Contribution Plans in the new release areas. Under the current legislation, Councils are required to acquire land listed under the Contribution Plans even though no contributions have been received from the developers.
Chandi Saba
The Hills Shire Council FINANCIAL STATEMENTS 2015-16 5
Samantha Riley Drive, Kellyville.
6 The Hills Shire Council FINANCIAL STATEMENTS 2015-16
INTRODUCTION
Each year, individual local governments across New South Wales are required to present a set of audited financial statements to their council and community.
WHAT YOU WILL FIND IN THE STATEMENTS
The financial statements set out the financial performance, financial position and cash flows of Council for the financial year ended 30 June 2016.
The format of the financial statements is standard across all NSW Councils and complies with both the accounting and reporting requirements of Australian Accounting Standards and requirements as set down by the Office of Local Government.
ABOUT THE COUNCILLOR/MANAGEMENT STATEMENT
The financial statements must be certified by senior staff as ‘presenting fairly’ the Council’s financial results for the year, and are required to be adopted by Council – ensuring both responsibility for and ownership of the financial statements.
ABOUT THE PRIMARY FINANCIAL STATEMENTS
The financial statements incorporate five ‘primary’ financial statements:
1. The Income Statement
This statement summarises Council’s financial Performance for the year, listing all income and expenses.
This statement also displays Council’s original adopted budget to provide a comparison between what was projected and what actually occurred.
2. The Statement of Comprehensive Income
This statement primarily records changes in the fair values of Council’s infrastructure, property, plant and equipment.
3. The Statement of Financial Position
An end of year snapshot of Council’s financial position indicating its assets, liabilities and equity (‘net wealth’).
4. The Statement of Changes in Equity
The overall change for the year (in dollars) of Council’s ‘net wealth’.
5. The Statement of Cash Flows
This statement indicates where Council’s cash came from and where it was spent. This statement also displays Council’s original adopted budget to provide a comparison between what was projected and what actually occurred.
ABOUT THE NOTES TO THE FINANCIAL STATEMENTS
The Notes to the Financial Statements provide greater detail and additional information on the five primary financial statements.
ABOUT THE AUDITOR’S REPORTS
Council’s financial statements are required to be audited by external accountants (that generally specialise in local government). In NSW, the auditor provides two audit reports:
1. An opinion on whether the financial statements present fairly the Council’s financial performance and position, and
2. Their observations on the conduct of the audit including commentary on the Council’s financial performance and financial position.
WHO USES THE FINANCIAL STATEMENTS?
The financial statements are publicly available documents and must be presented at a Council meeting between seven days and five weeks after the date of the Audit Report.
The public can make submissions to Council up to seven days subsequent to the public presentation of the financial statements.
Council is required to forward an audited set of financial statements to the Office of Local Government.
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 30 June 2016
UNDERSTANDING COUNCIL’S FINANCIAL STATEMENTS
The Hills Shire Council FINANCIAL STATEMENTS 2015-16 7
The attached General Purpose Financial Statements have been prepared in accordance with:
• the Local Government Act 1993 (NSW) (as amended) and the regulations made thereunder,
• the Australian Accounting Standards and professional pronouncements, and
• the Local Government Code of Accounting Practice and Financial Reporting.
To the best of our knowledge and belief, these financial statements:
• present fairly the Council’s operating result and financial position for the year, and
• accord with Council’s accounting and other records.
We are not aware of any matter that would render these statements false or misleading in any way.
Signed in accordance with a resolution of Council made on 23 August 2016.
THE HILLS SHIRE COUNCIL GENERAL PURPOSE FINANCIAL STATEMENTS for the year ended 30 June 2016
STATEMENT BY COUNCILLORS & MANAGEMENT made pursuant to Section 413(2)(c) of the Local Government Act 1993 (NSW) (as amended)
Financial Statements 2016
The Hills Shire Council
General Purpose Financial Statements for the year ended 30 June 2016
Statement by Councillors and Managementmade pursuant to Section 413(2)(c) of the Local Government Act 1993 (NSW) (as amended)
The attached General Purpose Financial Statements have been prepared in accordance with:
the Local Government Act 1993 (NSW) (as amended) and the regulations made thereunder,
the Australian Accounting Standards and professional pronouncements, and
the Local Government Code of Accounting Practice and Financial Reporting.
To the best of our knowledge and belief, these financial statements:
present fairly the Council’s operating result and financial position for the year, and
accord with Council’s accounting and other records.
We are not aware of any matter that would render these statements false or misleading in any way.
Signed in accordance with a resolution of Council made on 23 August 2016.
Dr Michelle Byrne Councillor Yvonne KeaneMayor Councillor
Dave Walker Chandi SabaGeneral manager Responsible accounting officer
page 4
8 The Hills Shire Council FINANCIAL STATEMENTS 2015-16
Financial Statements 2016
This statement should be read in conjunction with the accompanying notes. page 5
The Hills Shire Council
Income Statement for the year ended 30 June 2016
$ ’000
Income from continuing operationsRevenue:Rates and annual chargesUser charges and feesInterest and investment revenueOther revenuesGrants and contributions provided for operating purposesGrants and contributions provided for capital purposesOther income:Net gains from the disposal of assets
Total income from continuing operations
Expenses from continuing operationsEmployee benefits and on-costsMaterials and contractsDepreciation and amortisationOther expensesNet losses from the disposal of assetsNet share of interests in joint ventures andassociates using the equity method
Total expenses from continuing operations
Operating result from continuing operations
Boundary Adjustments
Net profit/(loss) from boundary adjustments
Net operating result for the year
Net operating result attributable to Council
Net operating result for the year before grants and contributionsprovided for capital purposes & boundary adjustments
Original budget as approved by Council – refer Note 161
18,668
3,292
3b 20,308 10,187 8,094
20,077 3e,f
–
48,168
40,441
16,993 42,348
Budget 1
3e,f
4d
5
20,290
95,577 97,855
Notes
3a
3d3c
2016
4,929
2016
–
(478,853)
(328,131)
–
95,686
95,686
22–
136,568
95,686
21,713
5
4a 52,025
– 21,869
132,743
150,722
19
20,924
49,584
–
12,856 42,981
4e3,012
4c
283,465
39,865 20,233
–
(328,131)
379,276 232,253
53,217
20,005 22,905
53,337
Actual 2015
Actual
94,327
9,873 130,014
248,670
130,606
17,710
129,009 102,962
4,313
–
248,670
248,670
145,708
INCOME STATEMENT for the financial year ended 30 June 2016
This statement should be read in conjunction with the accompanying notes.
The Hills Shire Council FINANCIAL STATEMENTS 2015-16 9
Financial Statements 2016
The Hills Shire Council
Statement of Comprehensive Income for the year ended 30 June 2016
$ ’000
Operating result for the year prior to boundary adjustments
Net profit/(loss) from boundary adjustments
Net operating result for the year (as per Income Statement)
Other comprehensive income:
Amounts which will not be reclassified subsequently to the operating result
Gain (loss) on revaluation of I,PP&EAdjustment to correct prior period errorsTotal items which will not be reclassified subsequentlyto the operating result
Amounts which will be reclassified subsequently to the operating resultwhen specific conditions are metNil
Total other comprehensive income for the year
Total comprehensive income for the year
Total comprehensive income attributable to CouncilTotal comprehensive income attributable to non-controlling interests
150,722 248,670
(478,853) –
410,513
410,513
Actual 2015
493,802 160,539
248,670
45,619 654,341
20b (ii) 30,673 14,945
NotesActual
(328,131)
– (282,512)
161,843
–
45,619
(282,512)
2016
This statement should be read in conjunction with the accompanying notes. page 6
STATEMENT OF COMPREHENSIVE INCOMEfor the financial year ended 30 June 2016
This statement should be read in conjunction with the accompanying notes.
10 The Hills Shire Council FINANCIAL STATEMENTS 2015-16
Financial Statements 2016
The Hills Shire Council
Statement of Financial Positionas at 30 June 2016
$ ’000
ASSETSCurrent assetsCash and cash equivalentsInvestmentsReceivablesInventoriesOtherNon-current assets classified as ‘held for sale’Total current assets
Non-current assetsInvestmentsReceivablesInventoriesInfrastructure, property, plant and equipmentInvestments accounted for using the equity methodInvestment propertyOtherTotal non-current assets
TOTAL ASSETS
LIABILITIESCurrent liabilitiesPayablesBorrowingsProvisionsTotal current liabilities
Non-current liabilitiesPayablesBorrowingsProvisionsTotal non-current liabilities
TOTAL LIABILITIES
Net assets
EQUITYRetained earningsRevaluation reservesCouncil equity interestNon-controlling equity interests
Total equity
140,000
4,664,825
8
5,783
–
4,823,400
10
10
17,004
5,105,912
5,105,912
1,281,955
– –
21
56,837
140,000
–
–
– –
4,678,838
–
–
10
– 20,863
9
1039,162
4,359,919
9,905
4,333,273
467,520
–
– 23,634 10
233
16,709
– 16,579
483
4,108
3,497,973
671 233
40,446
40,213
209
3,823,957
8,507
338,343 7,408
56,166
462
201,325,426 4,823,400
4,823,400 –
5,105,912 –
20
6a6b
10
7
6b
8
8
Notes
7
1419
8
520,318
2016
7,711 255
294,413 8,901
25,108
5,146,358
2015ActualActual
4,880,237
This statement should be read in conjunction with the accompanying notes. page 7
STATEMENT OF FINANCIAL POSITIONas at 30 June 2016
This statement should be read in conjunction with the accompanying notes.
The Hills Shire Council FINANCIAL STATEMENTS 2015-16 11
Financial Statements 2016
The Hills Shire Council
Statement of Changes in Equity for the year ended 30 June 2016
$ ’000
Opening balance (as per last year’s audited accounts)
a. Correction of prior period errorsb. Changes in accounting policies (prior year effects)
Revised opening balance (as at 1/7/15)
c. Net operating result for the year
d. Other comprehensive income – Revaluations: IPP&E asset revaluation rsve – Prior period errorsOther comprehensive income
Total comprehensive income (c&d)
e. Distributions to/(contributions from) non-controlling Interests
f. Transfers between equity
Equity – balance at end of the reporting period
$ ’000
Opening balance (as per last year’s audited accounts)
a. Correction of prior period errorsb. Changes in accounting policies (prior year effects)
Revised opening balance (as at 1/7/14)
c. Net operating result for the year
d. Other comprehensive income – Revaluations: IPP&E asset revaluation rsve – Prior period errorsOther comprehensive income
Total comprehensive income (c&d)
e. Distributions to/(contributions from) non-controlling Interests
f. Transfers between equity
Equity – balance at end of the reporting period
494,278
– –
654,817
–
– 160,539
– 160,539 160,539
TotalInterest
–
– –
654,817 494,278
4,823,400
– –
(282,512)
–
– – –
– –
(328,131)
5,105,912
5,105,912
–
Non-
(282,512)
– – –
1,281,955
14,945 – 45,619
– 30,673
(328,131)
controlling
5,105,912
5,105,912
–
Non-
– –
Councilinterest
–
equity
30,673
3,823,957
–
RetainedearningsNotes
– –
20b (ii) –
3,823,957
30,673
20 (c)
20 (d)
– (328,131)
12,798 43,471
14,945
–
20b (ii) 2,147 2,147
(Refer 20b)
Reserves
Reserves
43,471
1,325,426
–
1,281,955
(Refer 20b)
2016
–
– – –
5,105,912
–
1,281,955
20b (ii)
2015
– 248,670
3,081,009
– 1,121,416
1,121,416 –
20 (d)
3,823,957
494,278
– –
742,948
–
160,539 903,487
4,202,425–
20b (ii) 160,539
494,278
– –
– –
5,105,912
903,487
–
Council
4,823,400
3,081,009
–
–
Earnings
248,670
–
– 4,202,425
4,202,425
248,670
–
RetainedNotes
(325,984)
3,497,973
–
TotalInterest
controlling
–
EquityInterest
45,619
20 (c) – – –
4,202,425 –
This statement should be read in conjunction with the accompanying notes. page 8
STATEMENT OF CHANGES IN EQUITYfor the year ended 30 June 2016
This statement should be read in conjunction with the accompanying notes.
12 The Hills Shire Council FINANCIAL STATEMENTS 2015-16
Financial Statements 2016
The Hills Shire Council
Statement of Cash Flows for the year ended 30 June 2016
$ ’000
Cash flows from operating activitiesReceipts:Rates and annual chargesUser charges and feesInvestment and interest revenue receivedGrants and contributionsBonds, deposits and retention amounts receivedOtherPayments:Employee benefits and on-costsMaterials and contractsOtherNet cash provided (or used in) operating activities
Cash flows from investing activitiesReceipts:Sale of investment securitiesSale of real estate assetsSale of infrastructure, property, plant and equipmentPayments:Purchase of investment securitiesPurchase of investment propertyPurchase of infrastructure, property, plant and equipmentPurchase of real estate assetsNet cash provided (or used in) investing activities
Cash flows from financing activitiesNil
Net increase/(decrease) in cash and cash equivalents
Plus: cash and cash equivalents – beginning of year
Cash and cash equivalents – end of the year
Additional Information:
plus: Investments on hand – end of year
Total cash, cash equivalents and investments
Please refer to Note 11 for information on the following:– Non-cash financing and investing activities– Financing arrangements– Net cash flow disclosures relating to any discontinued operations
6b
Notes
9,382
(49,269)
39,113
88,045 4,209 2,588
20,308
15,853
20152016
73,864
57,155
16,709
(9,575)
11a
58,800
–
(50) (69,457)
1,133
–
–
66,730 (34,304)
4,085 –
59,341 4,929
97,422
Budget
(53,296) (29,224)
2016
17,778
(161,409)
363,451
338,343
25,108
311,122
16,709
294,413
–
11a
135,447
(196,652) (20,863)
(115) (63,437)
9,895
95,860
114,561
17,710
Actual
94,342
127,505
(43,670) (51,624)
(29,945) (28,137)
68,684 152,722 –
(123,083) (127,048)
(43,737)
12,287
4,422
16,709
8,399
Actual
(416)
(46,269) 11b
1,297 10,521 3,274
This statement should be read in conjunction with the accompanying notes. page 9
STATEMENT OF CASH FLOWSfor the year ended 30 June 2016
This statement should be read in conjunction with the accompanying notes.
The Hills Shire Council FINANCIAL STATEMENTS 2015-16 13
NOTES TO THE FINANCIAL STATEMENTS for the financial year ended 30 June 2016
CONTENTS OF THE NOTES ACCOMPANYING THE FINANCIAL STATEMENTS
Financial Statements 2016
page 10
The Hills Shire Council
Notes to the Financial Statements for the year ended 30 June 2016
Contents of the notes accompanying the financial statements
Details
Summary of significant accounting policiesCouncil functions/activities – financial informationCouncil functions/activities – component descriptionsIncome from continuing operationsExpenses from continuing operationsGains or losses from the disposal of assetsCash and cash equivalent assetsInvestmentsRestricted cash, cash equivalents and investments – detailsReceivablesInventories and other assetsInfrastructure, property, plant and equipmentExternally restricted infrastructure, property, plant and equipmentInfrastructure, property, plant and equipment – current year impairmentsPayables, borrowings and provisionsDescription of (and movements in) provisionsStatement of cash flows – additional informationCommitments for expenditureStatement of performance measures:13a (i) Local government industry indicators (consolidated)13a (ii) Local government industry graphs (consolidated)Investment propertiesFinancial risk managementMaterial budget variationsStatement of developer contributionsContingencies and other liabilities/assets not recognisedInterests in other entities
‘Held for sale’ non-current assets and disposal groupsImpact on Boundary AdjustmentsFair value measurement
Additional council disclosures
Council information and contact detailsStatement of developer contributions without internal borrowings
n/a – not applicable
43
42 n/a
42
39
5
38
35
3637
Note
21
14
10(a)10(b)
17
6(a)
4
6(c)
9(c)
11
2(a)
32(b)
6(b)
Page
1
19
1516
20
46
45
41
42 n/a
18
1213
11272829
78
9(a)9(b)
24
33
36
44
63
50
4749
64 n/a
5456
65
6822 69
25 75
Retained earnings, revaluation reserves, changes in accounting policies, changes in accounting estimates and errors
23 70
74
1430
3132
36
38
39
3940
41
424445
45
45
46
4748
4950
52
53
57
59
66
67
68
71
72
73
77
78
14 The Hills Shire Council FINANCIAL STATEMENTS 2015-16
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2016
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Financial Statements 2016_
The Hills Shire Council Notes to the Financial Statements for the year ended 30 June 2016 Note 1. Summary of significant accounting policies
page 11
The principal accounting policies adopted by Council in the preparation of these consolidated financial statements are set out below in order to assist in its general understanding. Under Australian Accounting Standards (AASBs), accounting policies are defined as those specific principles, bases, conventions, rules and practices applied by a reporting entity (in this case Council) in preparing and presenting its financial statements. (a) Basis of preparation (i) Background These financial statements are general purpose financial statements, which have been prepared in accordance with: Australian Accounting Standards and Australian
Accounting Interpretations issued by the Australian Accounting Standards Board,
the Local Government Act (1993) and Regulation,
and the Local Government Code of Accounting
Practice and Financial Reporting. For the purpose of preparing these financial statements, Council has been deemed to be a not-for-profit entity. (ii) Compliance with International Financial
Reporting Standards (IFRSs) Because AASBs are sector neutral, some standards either:
(a) have local Australian content and prescription that is specific to the not-for-profit sector (including local government) which are not in compliance with IFRSs, or
(b) specifically exclude application by not-for-profit entities.
Accordingly, in preparing these financial statements and accompanying notes, Council has been unable to comply fully with International Accounting Standards, but has complied fully with Australian Accounting Standards.
Under the Local Government Act (LGA), Regulation and Local Government Code of Accounting Practice and Financial Reporting, it should be noted that Councils in NSW only have a requirement to comply with AASBs. (iii) New and amended standards adopted by
Council There have been no new accounting standards adopted in this year’s financial statements which have had any material impact on reported financial position, performance or cash flows.
(iv) Early adoption of accounting standards Council has not elected to apply any pronouncements before their operative date in the annual reporting period beginning 1 July 2015, except for AASB2015-7 Amendments to Australian Accounting Standards – Fair Value Disclosures of Not-for-Profit Public Sector Entities, which has reduced the fair value disclosures for Level 3 assets. For summary information relating to the effects of standards with future operative dates refer further to paragraph (ab).
(v) Basis of accounting These financial statements have been prepared under the historical cost convention except for: (i) certain financial assets and liabilities at fair
value through profit or loss and available-for-sale financial assets, which are all valued at fair value,
(ii) the write down of any asset on the basis of impairment (if warranted), and
(iii) certain classes of non-current assets (eg.
infrastructure, property, plant and equipment and investment property) that are accounted for at fair valuation.
The accrual basis of accounting has also been applied in their preparation. (vi) Changes in accounting policies Council’s accounting policies have been consistently applied to all the years presented, unless otherwise stated.
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NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2016
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There have also been no changes in accounting policies when compared with previous financial statements unless otherwise stated [refer Note 20 (d)].
(vii) Critical accounting estimates The preparation of financial statements requires the use of certain critical accounting estimates (in conformity with AASBs). Accordingly this requires management to exercise its judgement in the process of applying the Council's accounting policies. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on Council and that are believed to be reasonable under the circumstances. Critical accounting estimates and assumptions Council makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are set out below: (i) Estimated fair values of investment properties
(ii) Estimated fair values of infrastructure, property,
plant and equipment,
(iii) Estimated remediation provisions.
(b) Revenue recognition Council recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to it, and specific criteria have been met for each of the Council’s activities as described below. Council bases any estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.
Revenue is measured at the fair value of the consideration received or receivable. Revenue is measured on major income categories as follows: Rates, Annual Charges, Grants and Contributions Rates, annual charges, grants and contributions (including developer contributions) are recognised as revenues when the Council obtains control over the assets comprising these receipts. Control over assets acquired from rates and annual charges is obtained at the commencement of the rating year as it is an enforceable debt linked to the rateable property or, where earlier, upon receipt of the rates. A provision for the impairment on rates receivables has not been established as unpaid rates represent a charge against the rateable property that will be recovered when the property is next sold. Control over granted assets is normally obtained upon their receipt (or acquittal) or upon earlier notification that a grant has been secured, and is valued at their fair value at the date of transfer. Revenue from contributions is recognised when the Council either obtains control of the contribution or the right to receive it, (i) it is probable that the economic benefits comprising the contribution will flow to the Council and (ii) the amount of the contribution can be measured reliably. Where grants or contributions recognised as revenues during the financial year were obtained on condition that they be expended in a particular manner or used over a particular period and those conditions were undischarged at balance date, the unused grant or contribution is disclosed in Note 3 (g). Note 3 (g) also discloses the amount of unused grant or contribution from prior years that was expended on Council’s operations during the current year. The Council has obligations to provide facilities from contribution revenues levied on developers under the provisions of s94 of the EPA Act 1979. Whilst Council generally incorporates these amounts as part of a Development Consents Order, such
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developer contributions are only recognised as income upon their physical receipt by Council, due to the possibility that individual development consents may not be acted upon by the applicant and accordingly would not be payable to Council. Developer contributions may only be expended for the purposes for which the contributions were required but the Council may apply contributions according to the priorities established in work schedules. A detailed note relating to developer contributions can be found at Note 17. User charges, fees and other Income User charges, fees and other income (including parking fees and fines) are recognised as revenue when the service has been provided, the payment is received, or when the penalty has been applied, whichever first occurs. A provision for the impairment of these receivables is recognised when collection in full is no longer probable. A liability is recognised in respect of revenue that is reciprocal in nature to the extent that the requisite service has not been provided as at balance date.
Sale of infrastructure, property, plant and equipment The profit or loss on sale of an asset is determined when control of the asset has irrevocably passed to the buyer.
Interest and rents Rental income is accounted for on a straight-line basis over the lease term. Interest income from cash and investments is accounted for using the effective interest rate at the date that interest is earned. Dividend income Revenue is recognised when the Council’s right to receive the payment is established, which is generally when shareholders approve the dividend.
Other Income Other income is recorded when the payment is due, the value of the payment is notified or the payment is received, whichever occurs first. (c) Principles of consolidation These consolidated financial statements include the financial position and performance of controlled entities from the date on which control is obtained until the date that control is lost. (i) The Consolidated Fund
In accordance with the provisions of section 409(1) of the LGA 1993, all money and property received by Council is held in the Council’s consolidated fund unless it is required to be held in the Council’s trust fund. The consolidated fund and other entities through which the Council controls resources to carry on its functions have been included in the financial statements forming part of this report. The following entities have been included as part of the consolidated fund: General purpose operations Hills community care Child care centres (ii) The trust fund In accordance with the provisions of section 411 of the Local Government Act 1993 (as amended), a separate and distinct trust fund is maintained to account for all money and property received by the Council in trust that must be applied only for the purposes of or in accordance with the trusts relating to those monies. Trust monies and property subject to Council’s control have been included in these statements. Trust monies and property held by Council but not subject to the control of Council have been excluded from these statements. A separate statement of monies held in the trust fund is available for inspection at the Council office by any person free of charge.
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(iii) Interests in other entities
Subsidiaries Council has no interest in any subsidiaries. Joint arrangements Council has no interest in any joint arrangements. Joint ventures
Council has no interest in any joint ventures.
Associates Council has no interest in any associates. County councils
Council is a member of the following county councils (which are bodies incorporated under the Local Government Act): Hawkesbury River County Council
Description of County Councils Functions Number of Constituent Councils
The governing body of each county council is responsible for managing its own affairs. Council is of the opinion that it neither controls nor significantly influences the above county council/s and accordingly these entities have not been consolidated or otherwise included within these financial statements. Unconsolidated structured entities Council has no interest in any unconsolidated structured entities. (d) Leases All leases entered into by Council are reviewed and classified on inception date as either a finance lease or an operating lease.
Finance leases Leases of property, plant and equipment where the Council has substantially all the risks and rewards of ownership are classified as finance leases.
Finance leases are capitalised at the lease’s inception at the lower of the fair value of the leased property and the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in borrowings. Each lease payment is allocated between the liability outstanding and the recognition of a finance charge. The interest element of the finance charge is costed to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Property, plant and equipment acquired under finance leases is depreciated over the shorter of each leased asset’s useful life and the lease term.
Operating Leases Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease. Lease income from operating leases is recognised in income on a straight-line basis over the lease term.
(e) Cash and Cash Equivalents For Statement of Cash Flows (and Statement of Financial Position) presentation purposes, cash and cash equivalents includes; cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with
original maturities of three months or less that are readily convertible to known amounts of cash and that are subject to an insignificant risk of changes in value, and
bank overdrafts.
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Bank overdrafts are shown within borrowings in current liabilities on the balance sheet but are incorporated into cash and cash equivalents for presentation of the Cash Flow Statement. (f) Investments and other financial assets Council (in accordance with AASB 139) classifies each of its investments into one of the following categories for measurement purposes: financial assets at fair value through profit or
loss, loans and receivables, held-to-maturity investments, and available-for-sale financial assets. Each classification depends on the purpose or intention for which the investment was acquired and at the time it was acquired. Management determines each investment classification at the time of initial recognition and re-evaluates this designation at each reporting date. (i) Financial assets at fair value through profit
or loss Financial assets at fair value through profit or loss include financial assets that are ‘held for trading’. A financial asset is classified in the ‘held for trading’ category if it is acquired principally for the purpose of selling in the short term. Assets in this category are primarily classified as current assets as they are primarily held for trading and/or are expected to be realised within 12 months of the balance sheet date.
(ii) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the Council provides money, goods or services directly to a debtor with no intention (or in some cases ability) of selling the resulting receivable.
They are included in current assets, except for those with maturities greater than 12 months after the balance sheet date, which are classified as non-current assets. (iii) Held-to-maturity investments Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Council’s management has the positive intention and ability to hold to maturity. In contrast to the ‘loans and receivables’ classification, these investments are generally quoted in an active market. Held-to-maturity financial assets are included in non-current assets, except for those with maturities less than 12 months from the reporting date, which are classified as current assets. (iv) Available-for-sale financial assets Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. Investments must be designated as available-for-sale if they do not have fixed maturities and fixed or determinable payments and management intends to hold them for the medium to long term. Accordingly, this classification principally comprises marketable equity securities, but can include all types of financial assets that could otherwise be classified in one of the other investment categories. They are generally included in non-current assets unless management intends to dispose of the investment within 12 months of the balance sheet date or the term to maturity from the reporting date is less than 12 months.
Financial assets – reclassification Council may choose to reclassify a non-derivative trading financial asset out of the held-for-trading category if the financial asset is no longer held for the purpose of selling it in the near term. Financial assets other than loans and receivables are permitted to be reclassified out of the held-for-trading category only in rare circumstances arising from a
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single event that is unusual and highly unlikely to recur in the near term. Council may also choose to reclassify financial assets that would meet the definition of loans and receivables out of the held-for-trading or available-for-sale categories if it has the intention and ability to hold these financial assets for the foreseeable future or until maturity at the date of reclassification. Reclassifications are made at fair value as of the reclassification date. Fair value becomes the new cost or amortised cost as applicable, and no reversals of fair value gains or losses recorded before reclassification date are subsequently made. Effective interest rates for financial assets reclassified to loans and receivables and held-to-maturity categories are determined at the reclassification date. Further increases in estimates of cash flows adjust effective interest rates prospectively.
General accounting and measurement offinancial instruments: (i) Initial recognition Investments are initially recognised (and measured) at fair value, plus in the case of investments not at ‘fair value through profit or loss’, directly attributable transactions costs. Purchases and sales of investments are recognised on trade-date – the date on which the Council commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Council has transferred substantially all the risks and rewards of ownership. (ii) Subsequent measurement Available-for-sale financial assets and financial assets at fair value through profit and loss are subsequently carried at fair value. Loans and receivables and held-to-maturity investments are carried at amortised cost using the effective interest method.
Realised and unrealised gains and losses arising from changes in the fair value of the financial assets classified as ‘fair value through profit or loss’ category are included in the income statement in the period in which they arise. Unrealised gains and losses arising from changes in the fair value of non-monetary securities classified as ‘available-for-sale’ are recognised in equity in the available-for-sale investments revaluation reserve. When securities classified as ‘available-for-sale’ are sold or impaired, the accumulated fair value adjustments are included in the income statement as gains and losses from investment securities.
Impairment Council assesses at each balance date whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. If there is evidence of impairment for any of Council’s financial assets carried at amortised cost (eg. loans and receivables), the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in profit or loss. If a loan or held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the group may measure impairment on the basis of an instrument’s fair value using an observable market price.
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(iii) Types of investments Council has an approved Investment Policy in order to invest in accordance with (and to comply with) section 625 of the Local Government Act and s212 of the LG (General) Regulation 2005. Investments are placed and managed in accordance with the policy and having particular regard to authorised investments prescribed under the Ministerial Local Government Investment Order. Council maintains its Investment Policy in compliance with the Act and ensures that it or its representatives exercise care, diligence and skill that a prudent person would exercise in investing Council funds. Council amended its policy following revisions to the Ministerial Local Government Investment Order arising from the Cole Inquiry recommendations. Certain investments that Council holds are no longer prescribed (eg. managed funds, CDOs, and equity linked notes), however they have been retained under grandfathering provisions of the Order. These will be disposed of when most financially advantageous to Council. (g) Fair value estimation – financial instruments The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes. The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. Council uses a variety of methods and makes assumptions that are based on market conditions existing at each balance date. Quoted market prices or dealer quotes for similar instruments are used for long-term debt instruments held.
If the market for a financial asset is not active (and for unlisted securities), the Council establishes fair value by using valuation techniques. These include reference to the fair values of recent arm’s length transactions, involving the same instruments or other instruments that are substantially the same, discounted cash flow analysis, and option pricing models refined to reflect the issuer’s specific circumstances. The nominal value less estimated credit adjustments of trade receivables and payables are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Council for similar financial instruments.
(h) Receivables Receivables are initially recognised at fair value and subsequently measured at amortised cost, less any provision for impairment. Receivables (excluding rates and annual charges) are generally due for settlement no more than 30 days from the date of recognition. The collectibility of receivables is reviewed on an ongoing basis. Debts that are known to be uncollectible are written off in accordance with Council’s policy. A provision for impairment (i.e. an allowance account) relating to receivables is established when objective evidence shows that Council will not be able to collect all amounts due according to the original terms of each receivable. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. Impairment losses are recognised in the Income Statement within other expenses. When a receivable for which an impairment allowance had been recognised becomes
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uncollectible in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against other expenses in the Income Statement. (i) Inventories (i) Raw materials and stores, work in progress
and finished goods Raw materials and stores, work in progress and finished goods in respect of business undertakings are all stated at the lower of cost and net realisable value. Cost comprises direct materials, direct labour and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the basis of normal operating capacity. Costs are assigned to individual items of inventory on the basis of weighted average costs. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. Inventories held in respect of non-business undertakings have been valued at cost subject to adjustment for loss of service potential. (ii) Inventory held for distribution Inventory held for distribution is held at cost, adjusted where applicable for any loss of service potential. (iii) Land held for resale/capitalisation of
borrowing costs Land held for resale is stated at the lower of cost and net realisable value. Cost is assigned by specific identification and includes the cost of acquisition, and development and borrowing costs during development. When development is completed borrowing costs and other holding charges are expensed as incurred.
Borrowing costs included in the cost of land held for resale are those costs that would have been avoided if the expenditure on the acquisition and development of the land had not been made. Borrowing costs incurred while active development is interrupted for extended periods are recognised as expenses.
(j) Infrastructure, property, plant and equipment (I,PP&E) Acquisition of assets Council’s non-current assets are continually revalued (over a 5-year period) in accordance with the fair valuation policy as mandated by the Office of Local Government. At balance date, the following classes of I,PP&E were stated at their fair value: - Plant and equipment
(as approximated by depreciated historical cost) - Operational land (external valuation) - Community land (external and internal valuation) - Land improvements
(as approximated by depreciated historical cost) - Buildings – specialised/non-specialised
(external valuation) - Other structures
(as approximated by depreciated historical cost) - Roads assets including roads, bridges and
footpaths (external valuation)
- Bulk earthworks (internal valuation) - Stormwater drainage (internal valuation) - Swimming pools
(internal valuation) - Other open space/recreational assets
(internal valuation) - Other infrastructure
(internal valuation)
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- Other assets (as approximated by depreciated historical cost)
- Investment properties – refer Note 1(p),
Initial recognition On initial recognition, an asset’s cost is measured at its fair value, plus all expenditure that is directly attributable to the acquisition. Where settlement of any part of an asset’s cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of recognition (i.e. date of exchange) of the asset to arrive at fair value. The discount rate used is the Council’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions. Where infrastructure, property, plant and equipment assets are acquired for no cost or for an amount other than cost, the assets are recognised in the financial statements at their fair value at acquisition date – being the amount that the asset could have been exchanged between knowledgeable willing parties in an arm’s length transaction. Subsequent costs Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to Council and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.
Asset revaluations (including indexation) In accounting for asset revaluations relating to infrastructure, property, plant and equipment: increases in the combined carrying amounts of
asset classes arising on revaluation are credited to the asset revaluation reserve,
to the extent that a net asset class increase
reverses a decrease previously recognised via
the profit or loss, then increase is first recognised in profit or loss,
net decreases that reverse previous increases of
the same asset class are first charged against revaluation reserves directly in equity to the extent of the remaining reserve attributable to the asset, with all other decreases charged to the Income Statement.
Water and sewerage network assets are indexed annually between full revaluations in accordance with the latest indices provided in the NSW Office of Water – Rates Reference Manual. For all other assets, Council assesses at each reporting date whether there is any indication that a revalued asset’s carrying amount may differ materially from that which would be determined if the asset were revalued at the reporting date. If any such indication exists, Council determines the asset’s fair value and revalues the asset to that amount. Full revaluations are undertaken for all assets on a 5-year cycle. Capitalisation thresholds Items of infrastructure, property, plant and equipment are not capitalised unless their cost of acquisition exceeds the following;
Land- Council land 100% capitalised - Open space 100% capitalised - Land under roads (purchases after 30/6/08) 100% capitalised
Plant and equipmentOffice furniture > $5,000 Office equipment > $5,000 Other plant and equipment > $5,000
Buildings and land improvementsPark furniture and equipment 100% capitalised Building - Construction/extensions 100% capitalised - Renovations 100% capitalised Other structures 100% capitalised
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Note 1. Summary of significant accounting policies (continued)
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Stormwater assets Drains and culverts 100% capitalised Other 100% capitalised
Transport assets Road construction and reconstruction 100% capitalised Reseal/re-sheet and major repairs 100% capitalised
Bridge construction and reconstruction 100% capitalised
Other infrastructure assets Swimming pools 100% capitalised Other open space/recreational assets 100% capitalised Other infrastructure 100% capitalised
Depreciation
Depreciation on Council's infrastructure and property is calculated on condition basis with the exception of plant and equipment assets which is on straight line.
Land is not depreciated.
Estimated useful lives for Council's I,PP&E include:
Plant and equipment - Office equipment expensed - Office furniture expensed - Computer equipment expensed - Vehicles 4 years - Heavy plant/road making equipment 4 years - Other plant and equipment 5 years
Other equipment - Playground equipment 5 years - Benches, seats etc. 5 years
Buildings - Buildings: masonry 100 years - Buildings: other 15 -100 years
Stormwater assets - Drains 100 years - Culverts 100 years
Transportation assets - Sealed roads: surface 15-50 years - Sealed roads: structure 50-100 years - Unsealed roads 50 years
- Bridge: concrete 100 years - Bridge: other 100 years
- Road pavements 50-100 years - Kerb, gutter and footpaths 35-100 years
Other infrastructure assets- Bulk earthworks Infinite
- Other open space/ recreational assets 15-80 years
All asset residual values and useful lives are reviewed and adjusted (if appropriate) at each reporting date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount – refer Note 1 (s) on asset impairment.
Disposal and de-recognition
An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal.
Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in Council’s Income Statement in the year the asset is derecognised.
(k) Land
Land (other than land under roads) is in accordance with Part 2 of Chapter 6 of the Local Government Act (1993) classified as either operational or community.
This classification of land is disclosed in Note 9 (a).
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(l) Land under roads
Land under roads is land under roadways and road reserves, including land under footpaths, nature strips and median strips. Council has elected to recognise land under roads acquired before 1 July 2008 in accordance with AASB 1051. Land under roads acquired after 1 July 2008 is recognised in accordance with AASB 116 – Property, Plant and Equipment.
(m) Intangible assets Council has not classified any assets as intangible. (n) Crown reserves Crown reserves under Council’s care and control are recognised as assets of the Council. While ownership of the reserves remains with the Crown, Council retains operational control of the reserves and is responsible for their maintenance and use in accordance with the specific purposes to which the reserves are dedicated. Improvements on Crown reserves are also recorded as assets, while maintenance costs incurred by Council and revenues relating to the reserves are recognised within Council’s Income Statement. Representations are currently being sought across state and local government to develop a consistent accounting treatment for Crown Reserves across both tiers of government. (o) Rural fire service assets
Under section 119 of the Rural Fires Act 1997, ‘all fire fighting equipment purchased or constructedwholly or from money to the credit of the Fund is to be vested in the council of the area for or on behalf of which the fire fighting equipment has been purchased or constructed’.
At present, the accounting for such fire fighting equipment is not treated in a consistent manner across all Councils. Until such time as discussions on this matter have concluded and the legislation changed, Council will continue to account for these assets as it has been doing in previous years, which is exclude the assets, their values and depreciation charges from these financial statements. (p) Investment property Investment property comprises land and/or buildings that are principally held for long-term rental yields, capital gains or both, that is not occupied by Council. Investment property is carried at fair value, representing an open-market value determined annually by external valuers. Annual changes in the fair value of investment properties are recorded in the Income Statement as part of ‘other income’. Full revaluations are carried out every year The last full revaluation for Council’s investment properties was dated 30/6/2016. (q) Provisions for close down, restoration and for environmental clean-up costs –
including tips and quarries Close down, restoration and remediation costs include the dismantling and demolition of infrastructure, the removal of residual materials and the remediation of disturbed areas. Estimated close down and restoration costs are provided for in the accounting period when the obligation arising from the related disturbance occurs, whether this occurs during the development or during the operation phase, based on the net present value of estimated future costs. Provisions for close down and restoration costs do not include any additional obligations that are expected to arise from future disturbance. Costs are estimated on the basis of a closure plan.
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page 22
The cost estimates are calculated annually during the life of the operation to reflect known developments, e.g. updated cost estimates and revisions to the estimated lives of operations, and are subject to formal review at regular intervals. Close down, restoration and remediation costs are a normal consequence of tip and quarry operations, and the majority of close down and restoration expenditure is incurred at the end of the life of the operations. Although the ultimate cost to be incurred is uncertain, Council estimates the respective costs based on feasibility and engineering studies using current restoration standards and techniques. The amortisation or ‘unwinding’ of the discount applied in establishing the net present value of provisions is charged to the Income Statement in each accounting period. This amortisation of the discount is disclosed as a borrowing cost in Note 4 (b). Other movements in the provisions for close down, restoration and remediation costs including those resulting from new disturbance, updated cost estimates, changes to the estimated lives of operations and revisions to discount rates are capitalised within property, plant and equipment. These costs are then depreciated over the lives of the assets to which they relate. Where rehabilitation is conducted systematically over the life of the operation, rather than at the time of closure, provision is made for the estimated outstanding continuous rehabilitation work at each balance sheet date and the cost is charged to the Income Statement. Provision is made for the estimated present value of the costs of environmental clean-up obligations outstanding at the balance sheet date. These costs are charged to the Income Statement. Movements in the environmental clean-up provisions are presented as an operating cost, except for the unwind of the discount, which is shown as a borrowing cost.
Remediation procedures generally commence soon after the time the damage, remediation process and estimated remediation costs become known, but may continue for many years depending on the nature of the disturbance and the remediation techniques. As noted above, the ultimate cost of environmental remediation is uncertain and cost estimates can vary in response to many factors, including changes to the relevant legal requirements, the emergence of new restoration techniques or experience at other locations. The expected timing of expenditure can also change, for example, in response to changes in quarry reserves or production rates. As a result there could be significant adjustments to the provision for close down and restoration and environmental clean-up, which would affect future financial results. Specific information about Council's provisions relating to close down, restoration and remediation costs can be found at Note 26. (r) Non-current assets (or disposal groups) ‘held for sale’ and discontinued operations Non-current assets (or disposal groups) are classified as held for sale and stated at the lower of either (i) their carrying amount and (ii) fair value less costs to sell, if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. The exception to this is plant and motor vehicles, which are turned over on a regular basis. Plant and motor vehicles are retained in non-current assets under the classification of infrastructure, property, plant and equipment – unless the assets are to be traded in after 30 June and the replacement assets were already purchased and accounted for as at 30 June. For any assets or disposal groups classified as non-current assets ‘held for sale’, an impairment loss is recognised at any time when the assets carrying value is greater than its fair value less costs to sell.
26 The Hills Shire Council FINANCIAL STATEMENTS 2015-16
Financial Statements 2016_
The Hills Shire Council Notes to the Financial Statements for the year ended 30 June 2016 Note 1. Summary of significant accounting policies (continued)
page 23
Non-current assets ‘held for sale’ are not depreciated or amortised while they are classified as ‘held for sale’. Non-current assets classified as ‘held for sale’ are presented separately from the other assets in the balance sheet. A discontinued operation is a component of Council that has been disposed of or is classified as ‘held for sale’ and that represents a separate major line of business or geographical area of operations, is part of a single co-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately on the face of the Income Statement. (s) Impairment of assets All Council's I,PP&E is subject to an annual assessment of impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. Where an asset is not held principally for cash- generating purposes (for example infrastructure assets) and would be replaced if the Council was deprived of it, then depreciated replacement cost is used as value in use, otherwise value in use is estimated by using a discounted cash flow model. Non-financial assets (other than goodwill) that suffered a prior period impairment are reviewed for possible reversal of the impairment at each reporting date. Goodwill and other intangible assets that have an indefinite useful life and are not subject to amortisation are tested annually for impairment.
(t) Payables These amounts represent liabilities and include goods and services provided to the Council prior to the end of financial year that are unpaid. The amounts for goods and services are unsecured and are usually paid within 30 days of recognition. (u) Borrowings Council does not have any borrowings. (v) Borrowing costs Council does not have any borrowings. (w) Provisions Provisions for legal claims, service warranties and other like liabilities are recognised when: Council has a present legal or constructive
obligation as a result of past events, it is more likely than not that an outflow of
resources will be required to settle the obligation, and
the amount has been reliably estimated. Provisions are not recognised for future operating losses. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small. Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the reporting date. The discount rate used to determine the present value reflects current market assessments of the
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2016
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
The Hills Shire Council FINANCIAL STATEMENTS 2015-16 27
Financial Statements 2016_
The Hills Shire Council Notes to the Financial Statements for the year ended 30 June 2016 Note 1. Summary of significant accounting policies (continued)
page 24
time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense. (x) Employee benefits (i) Short-term obligations Short-term employee benefit obligations include liabilities for wages and salaries (including non-monetary benefits), annual leave and vesting sick leave expected to be wholly settled within the 12 months after the reporting period. Leave liabilities are recognised in the provision for employee benefits in respect of employees’ services up to the reporting date with other short term employee benefit obligations disclosed under payables. These provisions are measured at the amounts expected to be paid when the liabilities are settled. All other short-term employee benefit obligations are presented as payables. Liabilities for non-vesting sick leave are recognised at the time when the leave is taken and measured at the rates paid or payable, and accordingly no Liability has been recognised in these reports. Wages and salaries, annual leave and vesting sick leave are all classified as current liabilities. (ii) Other long-term obligations The liability for all long service and annual leave in respect of services provided by employees up to the reporting date (which is not expected to be wholly settled within the 12 months after the reporting period) are recognised in the provision for employee benefits. These liabilities are measured at the present value of the expected future payments to be made using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service.
Expected future payments are then discounted using market yields at the reporting date based on national government bonds with terms to maturity and currency that match as closely as possible the estimated future cash outflows. Due to the nature of when and how long service leave can be taken, all long service leave for employees with 4 or more years of service has been classified as current, as it has been deemed that Council does not have the unconditional right to defer settlement beyond 12 months – even though it is not anticipated that all employees with more than 4 years service (as at reporting date) will apply for and take their leave entitlements in the next 12 months. (iii) Retirement benefit obligations All employees of the Council are entitled to benefits on retirement, disability or death. Council contributes to various defined benefit plans and defined contribution plans on behalf of its employees. Defined benefit plans A liability or asset in respect of defined benefit superannuation plans would ordinarily be recognised in the balance sheet, and measured as the present value of the defined benefit obligation at the reporting date plus unrecognised actuarial gains (less unrecognised actuarial losses) less the fair value of the superannuation fund’s assets at that date and any unrecognised past service cost. The present value of the defined benefit obligation is based on expected future payments which arise from membership of the fund to the reporting date, calculated annually by independent actuaries using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. However, when this information is not reliably available, Council can account for its obligations to defined benefit plans on the same basis as its obligations to defined contribution plans – i.e. as an expense when they become payable. Council is party to an Industry Defined Benefit Plan under the Local Government Superannuation
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2016
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
28 The Hills Shire Council FINANCIAL STATEMENTS 2015-16
Financial Statements 2016_
The Hills Shire Council Notes to the Financial Statements for the year ended 30 June 2016 Note 1. Summary of significant accounting policies (continued)
page 25
Scheme, named the ‘Local Government Superannuation Scheme – Pool B’. This scheme has been deemed to be a ‘multi-employer fund’ for the purposes of AASB 119. Sufficient information is not available to account for the Scheme as a defined benefit plan (in accordance with AASB 119) because the assets to the scheme are pooled together for all Councils. The last valuation of the scheme was performed by Mr Richard Boyfield , FIAA on 24th February 2016 and covers the period ended 30/6/2016. However the position is monitored annually and the actuary has estimated that as at 30 June 2016 the prior period deficit still exists. Effective from 1 July 2009, employers are required to contribute additional contributions to assist in extinguishing this deficit. The amount of employer contributions to the defined benefit section of the Local Government Superannuation Scheme and recognised as an expense and disclosed as part of superannuation expenses at Note 4 (a) for the year ending 30 June 2016 was $720,686.90. The amount of additional contributions included in the total employer contribution advised above is $ 570,399.28. The share of this deficit that can be broadly attributed to Council is estimated to be in the order of $ 1,216,000 as at 30 June 2016. Council’s share of that deficiency cannot be accurately calculated as the scheme is a mutual arrangement where assets and liabilities are pooled together for all member councils. For this reason, no liability for the deficiency has been recognised in these financial statements. Council has, however, disclosed a contingent liability in Note 18 to reflect the possible obligation that may arise should the scheme require immediate payment to correct the deficiency.
Defined contribution plans Contributions to defined contribution plans are recognised as an expense as they become payable. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.
(iv) Employee benefit on-costs Council has recognised at year end the aggregate on-cost liabilities arising from employee benefits, and in particular those on-cost liabilities that will arise when payment of current employee benefits is made in future periods. These amounts include superannuation and workers compensation expenses which will be payable upon the future payment of certain leave liabilities accrued as at 30/06/16.
(y) Self-insurance Council does not self-insure. Council also maintains cash and investments to meet expected future claims and these are detailed in Note 6 (c).
(z) Allocation between current and non-current assets and liabilities In the determination of whether an asset or liability is classified as current or non-current, consideration is given to the time when each asset or liability is expected to be settled. The asset or liability is classified as current if it is expected to be settled within the next 12 months, being the Council’s operational cycle. Exceptions In the case of liabilities where Council does not have the unconditional right to defer settlement beyond 12 months (such as vested long service leave), the liability is classified as current even if it is not expected to be settled within the next 12 months. In the case of inventories that are ‘held for trading’, these are also classified as current even if not expected to be realised in the next 12 months.
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2016
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
The Hills Shire Council FINANCIAL STATEMENTS 2015-16 29
Financial Statements 2016_
The Hills Shire Council Notes to the Financial Statements for the year ended 30 June 2016 Note 1. Summary of significant accounting policies (continued)
page 26
(aa) Taxes
The Council is exempt from both Commonwealth Income Tax and Capital Gains Tax. Council does, however, have to comply with both Fringe Benefits Tax and Goods and Services Tax (GST).
Goods and Services Tax (GST)
Income, expenses and assets are all recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office (ATO). In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of the revenue / expense.
Receivables and payables within the Balance Sheet are stated inclusive of any applicable GST. The net amount of GST recoverable from or payable to the ATO is included as a current asset or current liability in the Balance Sheet. Operating cash flows within the Cash Flow Statement are on a gross basis, i.e. they are inclusive of GST where applicable. Investing and financing cash flows are treated on a net basis (where recoverable from the ATO), i.e. they are exclusive of GST. Instead, the GST component of investing and financing activity cash flows that are recoverable from or payable to the ATO are classified as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from (or payable to) the ATO. (ab) New accounting standards and Interpretations issued (not yet effective) Certain new (or amended) accounting standards and interpretations have been published that are not mandatory for reporting periods ending 30 June 2016. Council has not adopted any of these standards early.
These include the following standards that are anticipated will impact on local government: AASB 9 – Financial Instruments
AASB 15 – Revenue from Contracts with Customers and associated amending standards AASB ED 260 – Income of Not-for-Profit Entities AASB16 – Leases
AASB2015-6 – Amendments to Australian Accounting Standards – Extending Related Party Disclosures to Not-for-Profit Public Sector Entities
AASB 2014 – 10 Sale or Contribution of Assets Between an Investor and its Associate or Joint Venture
AASB 2014 – 3 Amendments to Australian Accounting Standards – Accounting for Acquisitions of Interests in Joint Operations [AASB 1 and AASB 11] The full impact of the above standards has yet to be ascertained or quantified but will range from additional and/or revised disclosures to changes in how certain transactions and balances are accounted for.
(ac) Rounding of amounts Unless otherwise indicated, amounts in the financial statements have been rounded off to the nearest thousand dollars. (ad) Comparative figures To ensure comparability with the current reporting period’s figures, some comparative period line items and amounts may have been reclassified or individually reported for the first time within these financial statements and/or the notes. (ae) Disclaimer Nothing contained within these statements may be taken to be an admission of any liability to any person under any circumstance.
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2016
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
30 The Hills Shire Council FINANCIAL STATEMENTS 2015-16
Fina
ncia
l Sta
tem
ents
201
6
The
Hill
s S
hire
Cou
ncil
Not
es to
the
Fina
ncia
l Sta
tem
ents
for t
he y
ear e
nded
30
June
201
6
Not
e 2(
a). C
ounc
il fu
nctio
ns/a
ctiv
ities
– fi
nanc
ial i
nfor
mat
ion
1. In
clud
es: r
ates
and
ann
ual c
harg
es (i
ncl.
ex-g
ratia
), un
tied
gene
ral p
urpo
se g
rant
s an
d un
rest
ricte
d in
tere
st a
nd in
vest
men
t inc
ome.
27,7
39
7,
311
7,09
3
3,
042,
580
3,
277,
320
V
ibra
nt C
omm
uniti
es18
,280
72,5
02
62
,395
36,5
85
37
,708
34,6
56
(1
8,30
4)
34,7
94
(3,9
85)
–
–
547,
546
482,
098
33,5
17
31
,475
30,4
57
30
,047
(3,7
03)
10,8
10
3,
470
422
41
6
232,
551
244,
863
Pro
activ
e Le
ader
ship
(Gov
erna
nce)
3,11
3
4,
624
2,80
6
7,
419
7,50
7
6,
791
(4,3
06)
(2,8
83)
55,5
39
42
,329
28,7
67
14
2,77
9
7,46
6
4,
142
1,05
7,56
0
1,14
2,07
7
(3,1
96)
–
–
–
–
Mod
ern
Loca
l Eco
nom
y60
2
332
37
7
3,55
7
3,
480
3,57
3
(2
,955
)
(3
,148
)
2016
Act
ual
2015
Act
ual
2015
2016
$ ’0
00
Inco
me,
exp
ense
s an
d as
sets
hav
e be
en d
irect
ly a
ttrib
uted
to th
e fo
llow
ing
func
tions
/act
iviti
es.
Det
ails
of t
hese
func
tions
/act
iviti
es a
re p
rovi
ded
in N
ote
2(b)
.
Inco
me
from
con
tinui
ng
oper
atio
nsEx
pens
es fr
om c
ontin
uing
op
erat
ions
Tota
l ass
ets
held
(cur
rent
& n
on-c
urre
nt)
Fun
ctio
ns/a
ctiv
ities
2016
2015
Act
ual
Act
ual
Act
ual
Gra
nts
incl
uded
in
inco
me
from
co
ntin
uing
op
erat
ions
Ope
ratin
g re
sult
from
co
ntin
uing
ope
ratio
ns
Orig
inal
budg
etO
rigin
alA
ctua
l20
1620
1520
1620
16A
ctua
lO
rigin
albu
dget
2016
Act
ual
budg
et
Bal
ance
d U
rban
Gro
wth
99,8
61
82
,358
198,
318
57
,532
53,5
91
Pro
tect
ed E
nviro
nmen
t27
,771
41,2
67
Act
ual
2016
2015
Act
ual
–
68,3
40
130,
606
–
–
130,
606
–
15,1
99
16
6,80
7 24
8,67
0
13,0
60
95,6
86
–
–
150,
722
81,8
63
82
,625
82,3
82
11,6
51
5,
146,
358
4,
880,
237
5,14
6,35
8
–
–
4,88
0,23
7
–
18,3
85
–
6,
755
21
,954
–
6,73
4
132,
743
13
6,56
8
379,
276
–
–
–
–
–
–
297,
413
13
6,56
8
132,
743
81,8
63
201,
083
S
hare
of g
ains
/(los
ses)
in a
ssoc
iate
s
Gen
eral
pur
pose
inco
me
1
con
tinui
ng o
pera
tions
82,3
82
a
nd jo
int v
entu
res
(usi
ng th
e eq
uity
met
hod)
Ope
ratin
g re
sult
from
–
149,
628
T
otal
func
tions
and
act
iviti
es
82,6
25
283,
465
23
2,25
3
page
27
NO
TES
TO
TH
E F
INA
NC
IAL
STA
TE
ME
NT
S fo
r th
e ye
ar e
nd
ed 3
0 J
un
e 2
016
NO
TE 2
(A).
CO
UN
CIL
FU
NC
TIO
NS
/AC
TIV
ITIE
S -
FIN
AN
CIA
L IN
FOR
MA
TIO
N
The Hills Shire Council FINANCIAL STATEMENTS 2015-16 31
Details relating to the Council’s functions/activities as reported in Note 2(a) are as follows:
BALANCED URBAN GROWTH
Forward Planning, Infrastructure & Transport Planning, Community Planning & Special Infrastructure Projects, Place Management, Development Assessment Services and Subdivision & Development Certification.
MODERN LOCAL ECONOMY
Economic Development and Civic Events.
PROTECTED ENVIRONMENT
Waterways, Sustainability and Resource Recovery.
PROACTIVE LEADERSHIP
Costs relating to the Council’s role as a component of democratic government, including elections, members fees and expenses, subscriptions to local authority associations, meetings of council and policy making committees, area representation and public disclosure and compliance, together with related administration.
VIBRANT COMMUNITIES
Asset Planning, Community Buildings, Library Services, Children’s Services, Community Services, Community Facilities Hire, Fire Control & State Emergency Services, Aged & Disabled Services. Environmental Health Services, Development Monitoring and Compliance.
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2016
NOTE 2(B). COUNCIL FUNCTIONS/ACTIVITIES - COMPONENT DESCRIPTIONS
32 The Hills Shire Council FINANCIAL STATEMENTS 2015-16
Financial Statements 2016
page 29
The Hills Shire Council
Notes to the Financial Statements for the year ended 30 June 2016
Note 3. Income from continuing operations
$ ’000
(a) Rates and annual charges
Ordinary ratesResidentialFarmlandBusinessTotal ordinary rates
Special ratesNil
Annual charges (pursuant to s.496, s.496A, s.496B, s.501 & s.611)Domestic waste management servicesStormwater management servicesTotal annual charges
TOTAL RATES AND ANNUAL CHARGESCouncil has used 2015 year valuations provided by the NSW Valuer General in calculating its rates.
(b) User charges and fees
Specific user charges (per s.502 – specific ‘actual use’ charges)Nil
Other user charges and fees(i) Fees and charges – statutory and regulatory functions (per s.608)General administrationPlanning and building regulationRegistration feesSection 603 certificatesTotal fees and charges – statutory/regulatory
(ii) Fees and charges – other (incl. general user charges (per s.608))Aged careCemeteriesChild careEngineering worksLibraryOther support servicesParks and gardensPublic hallsCorporate servicesTotal fees and charges – other
TOTAL USER CHARGES AND FEES
10,879 9,918
9,429
341 5,077
7,792
Notes 2016 2015
1,571
94,327
Actual
62,051
7,360 564
Actual
68,739
629 60,858
7,252 69,975
8,683
24,017
6,961
25,5881,562
95,577
17,710
315 512
4
6 7
368 457 557
2,544 2,269
292 448
20,308
6
25,602
1
105
24,040
635 5,523
1,248
360
1
1,183
115
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2016
NOTE 3. INCOME FROM CONTINUING OPERATIONS
The Hills Shire Council FINANCIAL STATEMENTS 2015-16 33
Financial Statements 2016
page 30
The Hills Shire Council
Notes to the Financial Statements for the year ended 30 June 2016
Note 3. Income from continuing operations (continued)
$ ’000
(c) Interest and investment revenue (including losses)
Interest – Interest on overdue rates and annual charges (incl. special purpose rates) – Interest earned on investments (interest and coupon payment income)OtherTOTAL INTEREST AND INVESTMENT REVENUE
Interest revenue is attributable to:Unrestricted investments/financial assets:Overdue rates and annual charges (general fund)General Council cash and investmentsRestricted investments/funds – external:Development contributions – Section 94Total interest and investment revenue recognised
(d) Other revenues
Fair value increments – investment propertiesRental income – investment propertiesFinesLegal fees recovery – rates and charges (extra charges)Building controlCommunity services and educationCorporate supportEngineering worksEnvironmental protectionInsurance claim recoveriesPublic librariesTown planningSales - Biobanking CreditsOtherTOTAL OTHER REVENUE
2016
9,752 9,351
Actual
245
2015Actual
451
130,014 97
125,875 1,862
191
245
– 1,434
132 187 226 156
48
266
898
1,339 904
57
199
230 205
959
90
587
8,094
698 493 425
14
Notes
222
213
9,873
6,529
10,187
222 5,724
277
10,1873,099 4,241
9,873
– 14
99
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2016
NOTE 3. INCOME FROM CONTINUING OPERATIONS (continued)
34 The Hills Shire Council FINANCIAL STATEMENTS 2015-16
Financial Statements 2016
page 31
The Hills Shire Council
Notes to the Financial Statements for the year ended 30 June 2016
Note 3. Income from continuing operations (continued)
$ ’000
(e) Grants
General purpose (untied)Financial assistance – general componentFinancial assistance – local roads componentPensioners’ rates subsidies – general componentTotal general purpose
Specific purposeAged careBushfire and emergency servicesChild careCommunity careEnvironmental protectionLibraryParks, heritage and cultural servicesStreet lightingTransport (roads to recovery)Transport (other roads and bridges funding)Total specific purposeTotal grants
Grant revenue is attributable to:– Commonwealth funding– State funding– Other funding
–
– –
2016Capital
4,977
2,602
586
586
–
911
–
2,370
–
–
911
2,329
4,977
2,602
–
16,888
6,496 10,332
1,497
1,497
4,977
737
–
46 –
422
–
5,993
752
1,011
458
–
–
525
–
Capital
337
2015
– –
–
1,930 3,794
Operating 2015
Operating 2016
6,755
–
1,497
3,806
10,222
1,024
456 317
1,010
79 416
1,925
10,154
6,701
443
16,977
–
16,977
–
1,060
6,734
16,888
–
10,276
60
727 848 5 – –
78
–
–
5,717 –
–
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2016
NOTE 3. INCOME FROM CONTINUING OPERATIONS (continued)
The Hills Shire Council FINANCIAL STATEMENTS 2015-16 35
Financial Statements 2016
page 32
The Hills Shire Council
Notes to the Financial Statements for the year ended 30 June 2016
Note 3. Income from continuing operations (continued)
$ ’000
(f) Contributions
Developer contributions:(s93 & s94 – EP&A Act, s64 of the LGA):S 94 – contributions towards amenities/servicesTotal developer contributions
Other contributions:Bio bankingCommunity servicesDedications (other than by S94)
Fire protectionParks and gardensRoads and bridgesTown planningOther (Contribution from City of Parramatta)OtherTotal other contributionsTotal contributions
TOTAL GRANTS AND CONTRIBUTIONS
$ ’000
(g) Restrictions relating to grants and contributions
Certain grants and contributions are obtained by Council on conditionthat they be spent in a specified manner:
Unexpended at the close of the previous reporting period
Add: grants and contributions recognised in the current period but not yet spent:
Less: grants and contributions recognised in a previous reporting period now spent:
Net increase (decrease) in restricted assets during the period
Unexpended and held as restricted assets
Comprising: – Specific purpose unexpended grants – Developer contributions
53,744
3,621
121,072
121,072
121,072
95,798
(16,984)
2015
–
–
129,009
66,248
101,465
–
– –
2016
67,328
70,728
35,023
185,363
–
– –
64,291
– 194
117,451
–
(31,507)
4
17
311
– –
–
42 34,794
89,147
368
–
–
1,170 824
Actual
35,217
102,962
–
256 – –
501 149
3,189 34,88591
–
1,503 –
2016
23 47
3,189 3,313
Actual
3,313124,032
20,077
– 1,037
20,290
267
185,363
4,143
89,147
Operating 2016
Capital Capital 20152015
Operating
66,248
181,220
–
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2016
NOTE 3. INCOME FROM CONTINUING OPERATIONS (continued)
36 The Hills Shire Council FINANCIAL STATEMENTS 2015-16
Financial Statements 2016
page 33
The Hills Shire Council
Notes to the Financial Statements for the year ended 30 June 2016
Note 4. Expenses from continuing operations
$ ’000
(a) Employee benefits and on-costs
Salaries and wagesEmployee leave entitlements (ELE)Superannuation – defined contribution plansSuperannuation – defined benefit plansWorkers’ compensation insuranceFringe benefit tax (FBT)Training costs (other than salaries and wages)OtherTotal employee costsLess: capitalised costsTOTAL EMPLOYEE COSTS EXPENSEDNumber of ‘full-time equivalent’ employees (FTE) at year endNumber of ‘full-time equivalent’ employees (FTE) at year end (incl. vacancies)
(b) Borrowing costsNil
(c) Materials and contracts
Raw materials and consumablesContractor and consultancy costs – Waste Collection, Disposal & Recycling – Roads, Parks and Buildings – Aged & Disabled – Information Technology – Other Contractor and consultancy costsAuditors remuneration (1)
Legal expenses: – Legal expenses: planning and development – Legal expenses: otherOperating leases: – Operating lease rentals: minimum lease payments (2)
TOTAL MATERIALS AND CONTRACTS
1. Auditor remuneration During the year, the following fees were incurred for services provided by
the Council’s Auditor:
(i) Audit and other assurance services – Audit and review of financial statements: Council’s AuditorRemuneration for audit and other assurance servicesTotal Auditor remuneration
2. Operating lease payments are attributable to:Buildings
53
20,768
49,584
229
319
3,237 4,445
347
53
6,705
50
559
82
1,646
5,209
216
485
50,755
53
41,295
Actual Actual
79
575 591
(1,171)
–
532
262
39,865
2015
(917) 52,942
52,025
2,109
1,063
8,362
1,728
213
8282 79
50
7979
7,999
1,261
22,473
82
42,981
Notes 2016
931
42,891
356
3,366 453
240 518
4,443
240
–
1,911
50
540
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2016
NOTE 4. EXPENSES FROM CONTINUING OPERATIONS
The Hills Shire Council FINANCIAL STATEMENTS 2015-16 37
Financial Statements 2016
page 34
The Hills Shire Council
Notes to the Financial Statements for the year ended 30 June 2016
Note 4. Expenses from continuing operations (continued)
$ ’000
(d) Depreciation, amortisation and impairment
Plant and equipmentOffice equipmentInfrastructure: – Buildings – non-specialised – Roads – Stormwater drainageOther assets – OtherTOTAL DEPRECIATION ANDIMPAIRMENT COSTS EXPENSED
$ ’000
(e) Other expenses
Other expenses for the year include the following:
AdvertisingBank chargesContributions/levies to other levels of government – Department of planning levy – Emergency services levy (includes FRNSW, SES, and RFS levies)
– NSW fire brigade levy – NSW rural fire service levy – Other (incl. ferries, registrations, valuer general and other)Councillor expenses – mayoral feeCouncillor expenses – councillors’ feesCouncillors’ expenses (incl. mayor) – other (excluding fees above)Electricity and heatingInsuranceOffice expenses (including computer expenses)
Professional chargesProject costs (amounts that are not materially individual)Street lightingTelephone and communicationsVoluntary chargesOtherTOTAL OTHER EXPENSES
2,453
3,069
721 6,045
Actual 2016
20,233
2,527 2,576
5,386 10,032
2015
2016Actual
2015
–
263
365
626
122
693
2,501
12,856
274
1
240
280
1,148
309
1,301
573
1,163
20,924
372
Depreciation/amortisation
995
710
118
61
163
114
3,199
704
21,869
2,415
1,196
Actual
1,992
68
1,727
Notes
287
2,682
787
1,821
250
756 6,572
–
–
–
–
–
–
1,362
–
–
– –
– –
NotesActual
Impairment costs
2015
–
Actual Actual
–
–
2016
736
1,168 2,714
62
183
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2016
NOTE 4. EXPENSES FROM CONTINUING OPERATIONS (continued)
38 The Hills Shire Council FINANCIAL STATEMENTS 2015-16
Financial Statements 2016
page 35
The Hills Shire Council
Notes to the Financial Statements for the year ended 30 June 2016
Note 5. Gains or losses from the disposal of assets
$ ’000
Property (excl. investment property)Proceeds from disposal – propertyLess: carrying amount of property assets sold/written offNet gain/(loss) on disposal
Plant and equipmentProceeds from disposal – plant and equipmentLess: carrying amount of plant and equipment assets sold/written offNet gain/(loss) on disposal
InfrastructureProceeds from disposal – infrastructureLess: carrying amount of infrastructure assets sold/written offNet gain/(loss) on disposal
Real estate assets held for saleProceeds from disposal – real estate assetsLess: carrying amount of real estate assets sold/written offNet gain/(loss) on disposal
Financial assets*Proceeds from disposal/redemptions/maturities – financial assetsLess: carrying amount of financial assets sold/redeemed/maturedNet gain/(loss) on disposal
NET GAIN/(LOSS) ON DISPOSAL OF ASSETS
617
(3,012)
–
–
(7,293)
(876)
(753)
68,684
497
1,177
Actual
(3,835)
823
2015
4,313
(560)
–
3,228
(152,722)
724
2016
–
–
10,521
(256)
(68,684)
1,600
–
–
–
(474)
NotesActual
–
(3,835)
1,297
152,722
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2016
NOTE 5. GAINS OR LOSSES FROM THE DISPOSAL OF ASSETS
The Hills Shire Council FINANCIAL STATEMENTS 2015-16 39
Financial Statements 2016
page 36
The Hills Shire Council
Notes to the Financial Statements for the year ended 30 June 2016
Note 6a. – Cash assets and Note 6b. – investments
$ ’000
Cash and cash equivalents (Note 6a)Cash on hand and at bankCash-equivalent assets 1
– Deposits at callTotal cash and cash equivalents
Investments (Note 6b) – Long term depositsTotal investmentsTOTAL CASH ASSETS, CASHEQUIVALENTS AND INVESTMENTS
1 Those investments where time to maturity (from date of purchase) is < 3 mths.
Cash, cash equivalents and investments wereclassified at year end in accordance withAASB 139 as follows:
Cash and cash equivalentsa. ‘At fair value through the profit and loss’
Investmentsa. ‘Held to maturity’Investments
Note 6(b-i)Reconciliation of investmentsclassified as ‘held to maturity’Balance at the beginning of the yearAdditionsDisposals (sales and redemptions)Balance at end of year
Comprising:– Long term deposits
Total
Refer to Note 23. Fair value measurement for information regarding the fair value of investments held.
Current
–
–
2015
–
2015Actual
5,319
294,413
294,413 –
(68,684) 161,409
– –
–
– 201,688
–
–
294,413
–
Non-current
294,413 294,413
–
–
–
–
–
–
–
11,390
Actual
25,108
338,343
338,343
338,343 338,343
6(b-i)
196,652
–
311,122
–
–
– –
338,343
(152,722)
294,413
338,343
363,451
294,413
Non-current
294,413
16,70925,1083,944
–
2016
–
16,709
21,164
338,343
–
–
–
Notes
2016Actual
Current
–
–
Actual
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2016
NOTE 6A. CASH ASSETS & NOTES 6B. - INVESTMENTS
40 The Hills Shire Council FINANCIAL STATEMENTS 2015-16
Financial Statements 2016
The Hills Shire Council
Notes to the Financial Statements for the year ended 30 June 2016
Note 6c. Restricted cash, cash equivalents and investments – details
$ ’000
Total cash, cash equivalentsand investments
attributable to:External restrictions (refer below)
Internal restrictions (refer below)
Unrestricted
$ ’000
Details of restrictions
External restrictions – included in liabilitiesNil
External restrictions – otherDeveloper contributions – general (D)Developer contributions – City of Parramatta (D)Specific purpose unexpended grants (F)Domestic waste management (G)Domestic waste management - City of Parramatta(G)External restrictions – otherTotal external restrictions
Internal restrictionsCarry over recurrent operationsChild careFuture fundHills community careInfrastructureInsurance / workers compensationLand developmentPlantRecurrent operationsTotal internal restrictions
TOTAL RESTRICTIONS
D Development contributions which are not yet expended for the provision of services and amenities in accordancewith contributions plans (refer Note 17).
F Grants which are not yet expended for the purposes for which the grants were obtained. (refer Note 1 (b)) G Water, sewerage, domestic waste management (DWM) and other special rates/levies/charges are externally
restricted assets and must be applied for the purposes for which they were raised.
10,479
14,026
2,993
Transfers to
170,741
(71,800) 16,244
Non-current
–
–
2015Actual
153,110
–
(29,619)
balance
4,143 –
–
2016
–
23,149
93,910 462
(913)
(50)
4,059
93,910 (30,532)
16,561
(27,086) 88
–
(268)
(558)
(1,410) 3,382
(102,331)
46,597
988
1,754
1,115
2,993
7,473
16,561
5,255
73,897
127,908
317,792
126,506
256
38,230
2,485
–
522 – 10,479
3,621
8,445
189,884
153,110
279,616
311,122
1,634 (2,606)
(6,177) 1,417
670 (33,645) 3,038
950
6,177
106,972 93,388
77,834
4,972
140,507
462
balance restrictions
–
126,506
45,659 363,451
Actual Non-current
–
189,884 –
restrictions
126,506
Current
–
189,884 (30,532)
Current Actual
2016 Closing Transfers from
– 127,908
311,122
–
31,506
Opening
2016
363,451
Actual 2015
–
page 37
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2016
NOTE 6C. RESTRICTED CASH, CASH EQUIVALENTS & INVESTMENT - DETAILS
The Hills Shire Council FINANCIAL STATEMENTS 2015-16 41
Financial Statements 2016
page 38
The Hills Shire Council
Notes to the Financial Statements for the year ended 30 June 2016
Note 7. Receivables
$ ’000
PurposeRates and annual chargesInterest and extra chargesAccrued revenues – Interest on investmentsGovernment grants and subsidiesNet GST receivableDebtors – applicationsOther debtors – Bio bankingDebtor - City of Parramatta (see note v)
Other debtorsTotal
Less: provision for impairmentOther debtorsTotal provision for impairment – receivables
TOTAL NET RECEIVABLES
Externally restricted receivablesDomestic waste managementTotal external restrictionsInternally restricted receivablesNilUnrestricted receivablesTOTAL NET RECEIVABLES
Notes on debtors above:(i) Rates and annual charges outstanding are secured against the property.
(ii) Doubtful rates debtors are provided for where the value of the property is less than the debt outstanding. An allowance for other doubtful debts is made when there is objective evidence that a receivable is impaired.
(iii) Interest was charged on overdue rates and charges at 8.50% (2015 8.50%).Generally all other receivables are non-interest bearing.
(iv) Please refer to Note 15 for issues concerning credit risk and fair value disclosures.
(v) These balances are as at 30 June 2016 and will be finalised at conclusion of transitional agreements.
1,645
Notes Non-current
209
935
1,341
5,783
Current
157
2016
7,408
(356)
415
4,1087,408
836
5,7835,783 4,108
6,473
– –
–
2,501
935
8,901
9,10249 –
1,122 – –
(201) –
438 (434)
2,142 –
2,691
–
(201)
8,065
4,108
–
5,110
–
5,783
836
8,901
1,177
– –
567
2015
2,379
386 1,776
–
(667)
Non-current
25 – –
7,764
–
– –
3,516
–
212
(356)
4,108
–
–
Current
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2016
NOTE 7. RECEIVABLES
42 The Hills Shire Council FINANCIAL STATEMENTS 2015-16
Financial Statements 2016
page 39
The Hills Shire Council
Notes to the Financial Statements for the year ended 30 June 2016
Note 8. Inventories and other assets
$ ’000
(a) Inventories
(i) Inventories at costReal estate for resale (refer below)Stores and materialsOtherTotal inventories at cost
(ii) Inventories at net realisable value (NRV)Nil
TOTAL INVENTORIES
(b) Other assets
PrepaymentsTOTAL OTHER ASSETS
Externally restricted assetsThere are no restrictions applicable to the above assets.
Additional Note 8 disclosures can be found on the next page.
Notes
–
2015Non-current
483
–
Current
––
8,507
8,507
– 483 –
5,469 21
2,221
– 21
Current 2016
–
– 255 – 255
7,711 –– 2,882 –
7,711
Non-current
– 5,604
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2016
NOTE 8. INVENTORIES & OTHER ASSETS
The Hills Shire Council FINANCIAL STATEMENTS 2015-16 43
Financial Statements 2016
page 40
The Hills Shire Council
Notes to the Financial Statements for the year ended 30 June 2016
Note 8. Inventories and other assets (continued)
$ ’000
(i) Other disclosures
(a) Details for real estate developmentResidentialTotal real estate for resale(Valued at the lower of cost and net realisable value)
Represented by:Acquisition costsDevelopment costsTotal costsTotal real estate for resale
Movements:Real estate assets at beginning of the year – Purchases and other costs – Transfers in from (out to) Note 9 – Transfer from Investment Properties – Prior Period CorrectionTotal real estate for resale
(b) Current assets not anticipated to be settled within the next 12 monthsThe following inventories and other assets, even though classifiedas current are not expected to be recovered in the next 12 months;
Real estate for resale
(c) Inventory write downsThere were no amounts recognised as an expense relating to the write down of inventory balances held during the year.
Refer to Note 23. Fair value measurement for information regarding the fair value of other assets held.
–
––
–
416
2016
– 5,188
2,000
–
–
5,354
–
– 5,604
5,469
5,604
5,469
–5,604
–
Non-current
5,604
–
4,050
–
–
2016
4,050
2015
–
–– –
5,604
115
–
115 – 2,416 –
5,469– –
10,481
5,604
–
–
5,469
– –
Current
5,469
Non-current Current 2015
–
–
(2,208)
(42)
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2016
NOTE 8. INVENTORIES & OTHER ASSETS (continued)
44 The Hills Shire Council FINANCIAL STATEMENTS 2015-16
Fina
ncia
l Sta
tem
ents
201
6
The
Hills
Shi
re C
ounc
il20
135
Not
es to
the
Fina
ncia
l Sta
tem
ents
for t
he y
ear e
nded
30
June
201
6
Not
e 9a
. Inf
rast
ruct
ure,
pro
perty
, pla
nt a
nd e
quip
men
t
AtAt
Car
ryin
gAt
AtC
arry
ing
$ ’0
00co
stfa
ir va
lue
depr
ecia
tion
impa
irmen
tva
lue
cost
fair
valu
ede
prec
iatio
nim
pairm
ent
valu
e
Pla
nt a
nd e
quip
men
t–
28
,953
17,5
59
–
11
,394
–
3,00
7
(4
74)
(2
,576
)
–
(5,6
29)
0
–
–
–
–
–
23
,824
18,1
02
–
5,
722
O
ffice
equ
ipm
ent
–
1,22
1
656
–
565
–
131
–
(1
14)
–
–
(0)
–
–
–
–
–
1,35
2
770
–
582
Lan
d:
– O
pera
tiona
l lan
d13
3,50
2
–
–
13
3,50
2
–
–
–
–
(1
2,70
4)
(8,8
40)
(4,5
10)
42
7,90
5
–
–
–
11
5,39
6
–
–
11
5,39
6
– C
omm
unity
land
–
208,
802
–
–
208,
802
–
22,6
55
–
–
12
,201
15,2
11
(4
0,82
5)
–
–
–
30,6
73
–
24
8,71
7
–
–
24
8,71
7
– L
and
unde
r roa
ds (p
re 1
/7/0
8)–
2,
442,
522
–
–
2,
442,
522
–
–
–
–
–
–
(2
44,6
70)
–
–
–
–
–
2,19
7,85
2
–
–
2,19
7,85
2
–
Lan
d un
der r
oads
(pos
t 30/
6/08
)–
19
4,63
3
–
–
19
4,63
3
–
–
–
–
50
3
–
–
–
–
–
–
–
19
5,13
7
–
–
19
5,13
7
In
fras
truc
ture
:
– B
uild
ings
–
–
–
–
–
–
–
–
–
235,
839
–
–
–
–
–
–
–
270,
434
34,5
93
–
23
5,84
1
– B
uild
ings
– n
on-s
peci
alis
ed–
24
1,09
8
32
,329
–
208,
769
2,94
3
1,
592
(3,8
07)
(2,6
82)
(1
97,3
86)
(8
95)
(1
2,52
1)
–
–
3,98
7
–
–
–
–
–
–
– B
uild
ings
– s
peci
alis
ed–
45
,839
6,14
6
–
39,6
93
–
–
–
–
(3
8,45
3)
–
–
–
–
(1
,240
)
–
–
–
–
–
–
– R
oads
–
1,05
2,19
4
40,0
43
–
1,
012,
151
19
,291
29,9
46
–
(5
,386
)
(2,4
41)
134
(1
18,8
55)
–
–
7,91
7
–
–
97
5,71
1
32
,955
–
942,
756
–
Bul
k ea
rthw
orks
(non
-dep
reci
able
)–
11
8,53
2
–
–
11
8,53
2
–
2,
845
–
–
2,44
1
(3
3)
(1
4,70
3)
–
–
–
–
–
109,
082
–
–
109,
082
–
Sto
rmw
ater
dra
inag
e–
25
4,50
1
9,
638
–
24
4,86
3
1,
192
7,95
8
–
(7
36)
–
4,23
4
(2
5,71
5)
–
–
755
–
–
24
0,94
6
8,
395
–
23
2,55
1
O
ther
ass
ets:
–
Oth
er–
64
,421
15,0
22
–
49
,399
3,31
7
3,
349
(28)
(1,3
62)
–
(1
82)
(6
,236
)
–
–
1,38
0
–
–
63
,043
13,4
06
–
49
,637
TOTA
L IN
FRAS
TRU
CTU
RE,
PRO
PER
TY, P
LAN
T AN
D E
QU
IP.
Ren
ewal
s ar
e de
fined
as
the
repl
acem
ent o
f exi
stin
g as
sets
(as
oppo
sed
to th
e ac
quis
ition
of n
ew a
sset
s).
Ref
er to
Not
e 23
. Fai
r val
ue m
easu
rem
ent f
or in
form
atio
n re
gard
ing
the
fair
valu
e of
oth
er in
frast
ruct
ure,
pro
perty
, pla
nt a
nd e
quip
men
t.
as a
t 30/
6/20
16
Accu
mul
ated
Tfrs
fro
m/(t
o)
inve
stm
ent
prop
ertie
s
Am
alga
mat
ions
trans
fers
in/(o
ut)
–
4,00
0
(468
,035
)
4,33
3,27
3
42
7,90
5
12,7
98
30
,673
–
4,
441,
494
10
8,22
1
–
26,7
43
(4
,309
)
(12,
856)
71
,484
as a
t 30/
6/20
15As
set m
ovem
ents
dur
ing
the
repo
rtin
g pe
riod
Accu
mul
ated
Tfrs
fro
m/(t
o)
real
est
ate
asse
ts(N
ote
8)
Adj
ustm
ents
and
trans
fers
Oth
erm
ovem
ents
Prio
r Per
iod
Cor
rect
ions
Add
ition
sne
w a
sset
sA
dditi
ons
rene
wal
s
Car
ryin
g va
lue
of d
ispo
sals
Dep
reci
atio
n ex
pens
e
Prio
r Per
iod
Cor
rect
ions
to
equ
ity
(AR
R)
Rev
alua
tion
incr
emen
tsto
equ
ity
(AR
R)
–
4,
786,
218
12
1,39
3
–
4,66
4,82
5
page
41
NO
TES
TO
TH
E F
INA
NC
IAL
STA
TE
ME
NT
S fo
r th
e ye
ar e
nd
ed 3
0 J
un
e 2
016
NO
TE
9A
. IN
FAS
TR
UC
TU
RE
, PR
OP
ER
TY
, PL
AN
T &
EQ
UIP
ME
NT
The Hills Shire Council FINANCIAL STATEMENTS 2015-16 45
Financial Statements 2016
The Hills Shire Council
Notes to the Financial Statements for the year ended 30 June 2016
Note 9b. Externally restricted infrastructure, property, plant and equipment
$ ’000
Council has no externally restricted infrastructure, property, plant and equipment.
Note 9c. Infrastructure, property, plant and equipment – current year impairments
Council has recognised no impairment losses during the reporting period nor reversed any prior period losses.
Note 10a. Payables, borrowings and provisions
$ ’000
PayablesGoods and services – operating expenditurSecurity bonds, deposits and retentionsOther (City of Parramatta)Total payables
BorrowingsNil
ProvisionsEmployee benefits:Annual leaveSick leaveLong service leaveGratuitiesTotal provisions
(i) Liabilities relating to restricted assets
$10.9m payable to City of Parramatta relates to external restrictions relating to developer contributions anddomestic waste management.
16,579 209
56,166 233
233
–
–
– 4,153
451
671 40,213
377 209 233 –
39,162
430 12,026
4,220
– 11,619
TOTAL PAYABLES, BORROWINGS AND PROVISIONS
Notes
462 23,634
13,665 12,548
–
Actual
17,004 –
307
–
Non-current Current Non-current
– 17,874 –
–
Actual
2016Current
8,740 9,969
–
2015
–
462
page 42
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2016
NOTE 9B. EXTERNALLY RESTRICTED INFRASTRUCTURE, PROPERTY, PLANT & EQUIPMENT
NOTE 9C. INFRASTRUCTURE, PROPERTY, PLANT & EQUIPMENT - CURRENT YEAR IMPAIRMENTS
NOTE 10A. PAYABLES, BORROWINGS & PROVISIONS
46 The Hills Shire Council FINANCIAL STATEMENTS 2015-16
Financial Statements 2016
The Hills Shire Council
Notes to the Financial Statements for the year ended 30 June 2016
Note 10a. Payables, borrowings and provisions (continued)
$ ’000
(ii) Current liabilities not anticipated to be settled within the next twelve months
The following liabilities, even though classified as current, are not expectedto be settled in the next 12 months.
Provisions – employees benefitsPayables – security bonds, deposits and retentions
Note 10b. Description of and movements in provisions
a. Employees leave entitlements and on-costs represents those benefits accrued and payable and an estimate of those that will become payable in the future as a result of past service.
13,851
Unused amounts reversed
Remeasurement effects due to
discounting
–
2015
Decrease due to payments
12,783
2016
16,812 5,049
Sick leave
Openingbalance
as at 1/7/15
Long service leave
4,153
TOTAL69
–
2016
451 (48)
Class of provision
–
Additional provisions
Gratuities
(78)
– – (1,221)
Annual leave –
430
(3,301)
1,628 – 610
3,368
11,619
Closingbalance
as at 30/6/16
–
11,917
Actual
23,417
516 4,220
2015
(16)
9,566
–
24,700
(4,648)
Actual
17,213
12,026
–
page 43
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2016
NOTE 10A. PAYABLES, BORROWINGS & PROVISIONS (continued)
NOTE 10B. DESCRIPTION OF MOVEMENTS IN PROVISIONS
The Hills Shire Council FINANCIAL STATEMENTS 2015-16 47
Financial Statements 2016
The Hills Shire Council
Notes to the Financial Statements for the year ended 30 June 2016
Note 11. Statement of cash flows – additional information
$ ’000
(a) Reconciliation of cash assets
Total cash and cash equivalent assetsLess bank overdraftBalance as per the Statement of Cash Flows
(b) Reconciliation of net operating result to cash provided from operating activities
Net operating result from Income StatementAdjust for non-cash items:Depreciation and amortisationNet losses/(gains) on disposal of assetsNon-cash capital grants and contributionsLosses/(gains) recognised on fair value re-measurements through the P&L: – Investment propertiesNet Loss from disposal of assests due to Boundary adjustments
+/- Movement in operating assets and liabilities and other cash items:Decrease/(increase) in receivablesIncrease/(decrease) in provision for doubtful debtsDecrease/(increase) in inventoriesDecrease/(increase) in other assetsIncrease/(decrease) in payablesIncrease/(decrease) in employee leave entitlementsNet cash provided from/(used in)operating activities from the Statement of Cash Flows
2016
3,012
2015Notes
(155)
(328,131)
(3,013)
401
127
(35,023) (34,793)
19,678
(125,875)
16,709
12,856
248,670
–
(4,313)
135,447
661
127,506
5,036
(1,363)
15,990 228
468,391
315
21
Actual
10
6a 16,709 25,108 – –
Actual
20,233
25,108
–
page 44
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2016
NOTE 11. STATEMENT OF CASH FLOWS - ADDITIONAL INFORMATION
48 The Hills Shire Council FINANCIAL STATEMENTS 2015-16
Financial Statements 2016
The Hills Shire Council
Notes to the Financial Statements for the year ended 30 June 2016
Note 11. Statement of cash flows – additional information (continued)
$ ’000
(c) Non-cash investing and financing activities
Other dedications - developer contributions in kindTotal non-cash investing and financing activities
(d) Financing arrangements
(i) Unrestricted access was available at balance date to the following lines of credit:
Bank overdraft facilities (1)
Credit cards/purchase cardsTotal financing arrangements
1. The bank overdraft facility may be drawn at any time and may be terminated by the bank without notice. Interest rates on overdrafts are interest rates on loans and other payables are disclosed in Note 15.
(ii) Secured loan liabilitiesLoans are secured by a mortgage over future years rate revenue only.
(e) Bank guarantees
Workcover in the amount of $2,656,155 for the retro paid loss scheme.
Note 12. Commitments for expenditure
Capital commitments (exclusive of GST)
Capital expenditure committed for at the reporting date but notrecognised in the financial statements as liabilities:
Property, plant and equipmentBuildingsInfrastructureParksWaterwaysLandTotal commitments
These expenditures are payable as follows:Within the next yearTotal payable
Sources for funding of capital commitments:Unrestricted general fundsTotal sources of funding
38,841
5,064
–
34,793
198 9,665
6,070
2016
38,841 6,0706,070
4,414
6,070
761
Notes
5,000
35,023
5,000
34,793
Actual Actual
64
35,023
Actual
26,351 2,627
38,841
283
38,841 6,070
Actual
585 27
38,841
2015
107 5,107
page 45
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2016
NOTE 11. STATEMENT OF CASH FLOWS - ADDITIONAL INFORMATION (continued)
NOTE 12. COMMITMENTS FOR EXPENDITURE
The Hills Shire Council FINANCIAL STATEMENTS 2015-16 49
Financial Statements 2016
The Hills Shire Council
Notes to the Financial Statements for the year ended 30 June 2016
Note 13a(i). Statement of performance measurement – indicators (consolidated)
$ ’000
Local government industry indicators – consolidated
1. Operating performance ratioTotal continuing operating revenue (1) excluding capitalgrants and contributions less operating expensesTotal continuing operating revenue (1) excluding capitalgrants and contributions
2. Own source operating revenue ratioTotal continuing operating revenue (1)
excluding all grants and contributionsTotal continuing operating revenue (1)
3. Unrestricted current ratioCurrent assets less all external restrictions (2)
Current liabilities less specific purpose liabilities (3, 4)
4. Debt service cover ratioOperating result (1) before capital excluding interestand depreciation/impairment/amortisationPrincipal repayments (Statement of Cash Flows)plus borrowing costs (Income Statement)
5. Rates, annual charges, interest and extra charges outstanding percentageRates, annual and extra charges outstandingRates, annual and extra charges collectible
6. Cash expense cover ratioCurrent year’s cash and cash equivalentsplus all term depositsPayments from cash flow of operating andfinancing activities
Notes
(1) Excludes fair value adjustments and reversal of revaluation decrements, net gain/(loss) on sale of assets and the net share of interests in joint ventures and associates.(2) Refer Notes 6-8 inclusive. Also excludes any real estate and land for resale not expected to be sold in the next 12 months.(3) Refer to Note 10(a).(4) Refer to Note 10(a)(ii) – excludes all payables and provisions not expected to be paid in the next 12 months (incl. ELE).
47.33%
2.95%
Prior periods
0.00x
21.23 mths10,437
363,451
2,426
2016
2.46%
20.01x
–
2.80%
x12 30.19 mths
20152016
20,987 329,598 15.71x
2014
283,465
24,725
0.00x
16.01%
37,581
14.66%10.62%
98,727
134,166
Indicator
12.56x
154,456
34.82 mths
0.00x
62.67%50.60%
Amounts
page 46
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2016
NOTE 13A(I). STATEMENT OF PERFORMANCE MEASUREMENT - INDICATORS (consolidated)
50 The Hills Shire Council FINANCIAL STATEMENTS 2015-16
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2016
NOTE 13A(ii). LOCAL GOVERNMENT INDUSTRY INDICATORS - GRAPHS (consolidated)
Financial Statements 2016
The Hills Shire Council
Notes to the Financial Statements for the year ended 30 June 2016
Note 13a(ii). Local government industry indicators – graphs (consolidated)
Benchmark: ――― Minimum >=0.00% Ratio achieves benchmarkSource for benchmark: Code of Accounting Practice and Financial Reporting #24 Ratio is outside benchmark
Benchmark: ――― Minimum >=60.00% Ratio achieves benchmarkSource for benchmark: Code of Accounting Practice and Financial Reporting #24 Ratio is outside benchmark
Benchmark: ――― Minimum >=1.50 Ratio achieves benchmarkSource for benchmark: Code of Accounting Practice and Financial Reporting #24 Ratio is outside benchmark
This ratio continues to exceed the benchmark and demonstrates Council's ability to contain operating expenditure
within operating revenue.
2015/16 ratio 47.33%
Purpose of unrestricted current
ratio
This ratio measures Council’s
achievement of containing operating expenditure within operating revenue.
This ratio measures fiscal flexibility. It is
the degree of reliance on external funding
sources such as operating grants and
contributions.
To assess the adequacy of working capital and its ability to satisfy obligations in the short term for
the unrestricted activities of Council.
2015/16 ratio 16.01%
This ratio fell below the benchmark due to increases in developer contibutions and
subdivider dedications received compared to previous years.
This ratio continues to be well above industry benchmark of 1 indicating sound
liquidity.
Purpose of operating
performance ratio
Commentary on 2015/16 result
2015/16 ratio 15.71x
Commentary on 2015/16 result
Purpose of own source operating
revenue ratio
Commentary on 2015/16 result
3%
15%
11%
16%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
2013 2014 2015 2016
Rat
io %
1. Operating performance ratio
61% 63%
51% 47%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2013 2014 2015 2016
Rat
io %
2. Own source operating revenue ratio
11.112.6
20.0
15.7
0.0
5.0
10.0
15.0
20.0
25.0
2013 2014 2015 2016
Rat
io (
x)
3. Unrestricted current ratio
page 47
The Hills Shire Council FINANCIAL STATEMENTS 2015-16 51
Financial Statements 2016
page 48
The Hills Shire Council
Notes to the Financial Statements for the year ended 30 June 2016
Note 13a(ii). Local government industry indicators – graphs (consolidated)
Benchmark: ――― Minimum >=2.00 Ratio achieves benchmarkSource for benchmark: Code of Accounting Practice and Financial Reporting #24 Ratio is outside benchmark
Benchmark: ――― Maximum <5.00% Ratio is within BenchmarkSource for Benchmark: Code of Accounting Practice and Financial Reporting #24 Ratio is outside Benchmark
Benchmark: ――― Minimum >=3.00 Ratio achieves benchmarkSource for benchmark: Code of Accounting Practice and Financial Reporting #24 Ratio is outside benchmark
Commentary on 2015/16 result
Commentary on 2015/16 result
2015/16 ratio 2.46%
Council's cash expense ratio has been well above benchmark indicating Council's
ability to pay immediate expenses without additional cash flow.
Purpose of cash expense cover ratio
Commentary on 2015/16 result
2015/16 ratio 34.82 mths
This liquidity ratio indicates the number of months a Council can continue paying
for its immediate expenses without
additional cash inflow.
To assess the impact of uncollected rates and annual charges on Council’s liquidity and the adequacy of
recovery efforts.
This ratio continues to improve and remains well above benchmark.
Purpose of rates and annual charges
outstanding ratio
Purpose of debt service cover ratio
This ratio measures the availability of operating cash to
service debt including interest, principal and
lease payments
Council remains debt free since 2002.
2015/16 ratio 0.00x
0.0 0.0 0.0 0.00.0
0.5
1.0
1.5
2.0
2.5
2013 2014 2015 2016
Rat
io (
x)
4. Debt service cover ratio
3% 3% 3%2%
0%
1%
2%
3%
4%
5%
6%
2013 2014 2015 2016
Rat
io %
5. Rates, annual charges, interest andextra charges outstanding percentage
17.621.2
30.2
34.8
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
2013 2014 2015 2016
Rat
io (
mth
s)
6. Cash expense cover ratio
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2016
NOTE 13A(ii). LOCAL GOVERNMENT INDUSTRY INDICATORS - GRAPHS (consolidated)
52 The Hills Shire Council FINANCIAL STATEMENTS 2015-16
Financial Statements 2016
page 49
The Hills Shire Council
Notes to the Financial Statements for the year ended 30 June 2016
Note 14. Investment properties
$ ’000
(a) Investment properties at fair value
Investment properties on hand
Reconciliation of annual movement:Opening balance– Acquisitions– Net gain/(loss) from fair value adjustments– Transfers from/(to) inventories (Note 8)– Transfers from/(to) owner occupied (Note 9)– Transfer to non-current assets held for resaleCLOSING BALANCE – INVESTMENT PROPERTIES
(b) Valuation basis
The basis of valuation of investment properties is fair value, being the amounts for which the properties couldbe exchanged between willing parties in arms length transaction, based on current prices in an active marketfor similar properties in the same location and condition and subject to similar leases.
The 2016 revaluations were based on independent assessments made by:Independent Property Valuations Pty Ltd
(c) Contractual obligations at reporting date
Refer to Note 12 for disclosures relating to any capital and service obligations that have been contracted.
(d) Investment property income and expenditure – summary
Rental income from investment properties:– Minimum lease paymentsNet revenue contribution from investment propertiesplus:
Fair value movement for yearTotal income attributable to investment properties
Refer to Note 23. Fair value measurement for information regarding the fair value of investment properties held.
20,863
9,905
2016
– 125,875
9,905
451
126,326
–
20,863
–
2015
24,030
1,862
125,875
(7,905)
20,863
1,862 451
– 1,862
– (140,000) 9,905
Notes
(2,000) –
Actual Actual
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2016
NOTE 14. INVESTMENT PROPERTIES
The Hills Shire Council FINANCIAL STATEMENTS 2015-16 53
Financial Statements 2016
page 50
The Hills Shire Council
Notes to the Financial Statements for the year ended 30 June 2016
Note 15. Financial risk management
$ ’000
Risk management
Council’s activities expose it to a variety of financial risks including (1) price risk, (2) credit risk, (3) liquidity riskand (4) interest rate risk.
The Council’s overall risk management program focuses on the unpredictability of financial markets and seeksto minimise potential adverse effects on the financial performance of the Council.
Council does not engage in transactions expressed in foreign currencies and is therefore not subject to foreigncurrency risk.
Financial risk management is carried out by Council’s finance section under policies approved by the Council.
A comparison by category of the carrying amounts and fair values of Council’s financial assets and financialliabilities recognised in the financial statements is presented below.
Financial assetsCash and cash equivalentsInvestments – ‘Held to maturity’ReceivablesTotal financial assets
Financial liabilitiesPayablesTotal financial liabilities
Fair value is determined as follows:
– Cash and cash equivalents, receivables, payables – are estimated to be the carrying value that approximates market value.
– Borrowings and held-to-maturity investments – are based upon estimated future cash flows discounted by the current mkt interest rates applicable to assets and liabilities with similar risk profiles, unless quoted market prices are available.
– Financial assets classified (i) ‘at fair value through profit and loss’ or (ii) ‘available-for-sale’ – are based upon quoted market prices (in active markets for identical investments) at the reporting date or independent valuation.
Refer to Note 23. Fair value measurement for information regarding the fair value of financial assets and liabilities.
2016
16,709
Fair value
23,63439,62439,624
378,135 378,135
23,634
294,413
25,108
39,624
322,63811,516
338,343
25,108
14,684 322,638
16,709
11,516 294,413 338,343
2015Carrying value
14,684
2016
23,634 39,624
2015
23,634
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2016
NOTE 15. FINANCIAL RISK MANAGEMENT
54 The Hills Shire Council FINANCIAL STATEMENTS 2015-16
Financial Statements 2016
page 51
The Hills Shire Council
Notes to the Financial Statements for the year ended 30 June 2016
Note 15. Financial risk management (continued)
$ ’000
Council’s objective is to maximise its return on cash and investments whilst maintaining an adequate level ofliquidity and preserving capital.
Council’s finance area manages the cash and Investments portfolio with the assistance of independent advisors.
Council has an investment policy which complies with the Local Government Act 1993 and Minister’sinvestment order. This policy is regularly reviewed by Council and it’s staff and an investment report is tabledbefore Council on a monthly basis setting out the portfolio breakup and its performance.
The risks associated with the investments held are:
– Price risk – the risk that the capital value of Investments may fluctuate due to changes in market prices, whether there changes are caused by factors specific to individual financial instruments or their issuers or are caused by factors affecting similar instruments traded in a market.
– Interest rate risk – the risk that movements in interest rates could affect returns and income.
– Credit risk – the risk that the investment counterparty will not complete their obligations particular to a financial instrument, resulting in a financial loss to Council – be it of a capital or income nature.
Council manages these risks (amongst other measures) by diversifying its portfolio and only purchasinginvestments with high credit ratings or capital guarantees.
(a) Market risk – price risk and interest rate risk
The following represents a summary of the sensitivity of Council’s Income Statement and accumulated surplus(for the reporting period) due to a change in either the price of a financial asset or the interest rates applicable.
It is assumed that the change in interest rates would have been constant throughout the reporting period.
2016Possible impact of a 1% movement in interest rates
2015Possible impact of a 1% movement in interest rates (3,113)
3,634
3,113
Increase of values/rates Decrease of values/rates
(3,634) 3,634 Profit Equity
3,113 (3,113)
Profit Equity (3,634)
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2016
NOTE 15. FINANCIAL RISK MANAGEMENT (continued)
The Hills Shire Council FINANCIAL STATEMENTS 2015-16 55
Financial Statements 2016
The Hills Shire Council
Notes to the Financial Statements for the year ended 30 June 2016
Note 15. Financial risk management (continued)
$ ’000
(b) Credit risk
Council’s major receivables comprise (i) rates and annual charges and (ii) user charges and fees.
The major risk associated with these receivables is credit risk – the risk that debts due and payable to Councilmay not be repaid in full.
Council manages this risk by monitoring outstanding debt and employing stringent debt recovery procedures.It also encourages ratepayers to pay their rates by the due date through incentives.
Credit risk on rates and annual charges is minimised by the ability of Council to secure a charge over the landrelating to the debts – that is, the land can be sold to recover the debt. Council is also able to charge intereston overdue rates and annual charges at higher than market rates which further encourages the payment of debt.
There are no significant concentrations of credit risk, whether through exposure to individual customers,specific industry sectors and/or regions.
The level of outstanding receivables is reported to Council monthly and benchmarks are set and monitored foracceptable collection performance.
Council makes suitable provision for doubtful receivables as required and carries out credit checks on mostnon-rate debtors.
There are no material receivables that have been subjected to a re-negotiation of repayment terms.
A profile of Council’s receivables credit risk at balance date follows:
(i) Ageing of receivables – %Current (not yet overdue)Overdue
(ii) Ageing of receivables – valueRates and annual charges Other receivablesCurrent Current< 1 year overdue 0 – 30 days overdue1 – 2 years overdue 30 – 60 days overdue2 – 5 years overdue 60 – 90 days overdue> 5 years overdue > 90 days overdue
(iii) Movement in provision for impairment of receivablesBalance at the beginning of the year+ new provisions recognised during the year– amounts already provided for and written off this year– amounts provided for but recovered during the yearBalance at the end of the year
100%
0%
(17)
receivables charges Other
92%
184
–
100%
20152016
240 1,881
11,425
Rates and
receivables charges
annual
19%
124
2016
2,162
annual Other Rates and
annual
0% 81%
9,143
receivables Other
charges
100%
7,370
100%
annual Other
2015Rates and
charges receivables
418
74
–
2015
137
259 168 34
265
2,729
–
335
(244)
100%
43
1,238 616
356
100%
175 209
–
Rates and
201 356
8%
(138)
2,426 12,459
2016
page 52
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2016
NOTE 15. FINANCIAL RISK MANAGEMENT (continued)
56 The Hills Shire Council FINANCIAL STATEMENTS 2015-16
Financial Statements 2016
page 53
The Hills Shire Council
Notes to the Financial Statements for the year ended 30 June 2016
Note 15. Financial risk management (continued)
$ ’000
(c) Liquidity risk
Payables and borrowings are both subject to liquidity risk – the risk that insufficient funds may be on hand tomeet payment obligations as and when they fall due.
Council manages this risk by monitoring its cash flow requirements and liquidity levels and maintaining anadequate cash buffer.
Payment terms can (in extenuating circumstances) also be extended and overdraft facilities utilised as required.
The contractual undiscounted cash outflows (ie. principal and interest) of Council’s payables and borrowings areset out in the maturity table below:
$ ’000
Trade/other payablesTotal financial liabilities
Trade/other payablesTotal financial liabilities
Borrowings are also subject to interest rate risk – the risk that movements in interest rates could adverselyaffect funding costs and debt servicing requirements. Council manages this risk through the diversification ofborrowing types, maturities and interest rate structures.
The following interest rates were applicableto Council’s borrowings at balance date:
Trade/other payables
– 23,634
Average
39,624
cash
–
value
2015
39,624
–
outflows values
–
payable in: carrying
–
23,634 2015
2016–
to no3-4 Yrs1-2 Yrsmaturity 4-5 Yrs
Carrying
23,634
39,624 –
13,665
39,624 21,750
17,874
17,874
39,624 0.00%
–
–
9,969
23,634
–
–
interest rateCarrying
–
– 21,750
–
Averagevalue
2016
–
0.00%
interest rate
–
23,634
–
23,634 39,624
– 9,969
–
–
Subject
13,665
≤ 1 Year > 5 Yrs2-3 Yrs
ActualTotal
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2016
NOTE 15. FINANCIAL RISK MANAGEMENT (continued)
The Hills Shire Council FINANCIAL STATEMENTS 2015-16 57
Financial Statements 2016
page 54
The Hills Shire Council
Notes to the Financial Statements for the year ended 30 June 2016
Note 16. Material budget variations
$ ’000
Council’s original financial budget for 15/16 was adopted by the Council on 28 June 2016.
While the Income Statement included in this General Purpose Financial Report must disclose the originalbudget adopted by Council, the Local Government Act 1993 requires Council to review its financial budget on aquarterly basis, so that it is able to manage the various variations between actuals versus budget thatinvariably occur throughout the year.
This note sets out the details of material variations between Council’s original budget and its actualresults for the year as per the Income Statement – even though such variations may have been adjusted forduring each quarterly budget review.
Note that for variations* of budget to actual :Material variations represent those variances that amount to 10% or more of the original budgeted figure.F = Favourable budget variation, U = Unfavourable budget variation
$ ’000
REVENUESRates and annual chargesLoss of Rates, Waste and Stormwater Levies as a result of the Proclamation dated 12 May 2016.
User charges and feesIncreased activity in the Building Industry resulting in greater than anticipated income.
Interest and investment revenueDue to greater than anticipated Section 94 and more cash available for investing resulting in additional income
Other revenuesGreater than anticipated income from Parking Fines, and Legal Recoveries. New lease income, sale of minor property and easements; and sale of biobanking credits not budgeted orginally.
Operating grants and contributionsGreater than anticipated income from : Streetlighting Subsidy (due to recent audit); Restorations; and operating grants received in advance for FY 16/17.
Capital grants and contributionsGreater than anticipated capital grants and contributions received from Section 94 income and subdivider dedications.
Net gains from disposal of assetsBudget was based on a sale of a large parcel of investment properties. This sale has been negotiated withdelayed settlement and it will be reflected in FY 16/17.
U
F
(48,168) (100%)
3,297
86,661
4,802
1,640
19%
F42,348
48,168
16,993
–
205%129,009
20,290
146%3,292
F4,929
2016Budget
8,094
(2%)
F
(2,278)
2016
U
F
2016
5,258 107%
97,855
18,668 20,308
Actual
9%
---------- Variance* ----------
10,187
95,577
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2016
NOTE 16. MATERIAL BUDGET VARIATIONS
58 The Hills Shire Council FINANCIAL STATEMENTS 2015-16
Financial Statements 2016
page 55
The Hills Shire Council
Notes to the Financial Statements for the year ended 30 June 2016
Note 16. Material budget variations (continued)
$ ’000
EXPENSESEmployee benefits and on-costs
Materials and contracts
Depreciation and amortisationBudgeted depreciation based on percentage of book value. Council has implemented a new asset managementsystem which calculates depreciation based on asset condition based depreciation.
Other expenses
Net losses from disposal of assetsDue to demolition of buildings required for open space embellishment.
Budget variations relating to Council’s Cash Flow Statement include:
Cash flows from operating activitiesDue to greater than anticipated Section 94 Income and more cash available for investing resulting in additional income.
Cash flows from investing activitiesDue to delay in settlement of sale of assets and purchase of investment properties not originally budgeted.
(6%)
F103.0%
1226.9%(9,575) (117,473)
1,036
66,730 135,447
U(127,048)
–
68,717
2016
5%
U3,012
42,981
0%(3,012)
20,005 F12,856
U
22,905 F21,869
2016
F
36%7,149
---------- Variance* ----------
2%
2016
(2,540)
1,19252,025
Actual
40,441
Budget
53,217
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2016
NOTE 16. MATERIAL BUDGET VARIATIONS (continued)
The Hills Shire Council FINANCIAL STATEMENTS 2015-16 59
Fina
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6 of
$18
1.2m
, $10
.5m
is p
ayab
le to
City
of P
arra
mat
ta a
s it
rela
tes
to d
evel
opm
ents
loca
ted
Sou
th o
fM
2. T
he a
mou
nt c
ompr
ises
of $
6.3m
rela
ting
to C
ontri
butio
n P
lan
No.
7 a
nd $
4.2m
rela
ting
to C
ontri
butio
n P
lan
No.
14.
The
pay
able
is e
xpec
ted
to b
e se
ttled
in F
Y 16
/17.
The
follo
win
g ta
bles
det
ail t
he re
ceip
t, in
tere
st a
nd u
se o
f the
abo
ve c
ontri
butio
ns a
nd le
vies
and
the
valu
e of
all
rem
aini
ng fu
nds
whi
ch a
re ‘r
estri
cted
’ in
thei
r fut
ure
use.
SUM
MAR
Y O
F C
ON
TRIB
UTI
ON
S AN
D L
EVIE
S
Dra
inag
eR
oads
Traf
fic fa
cilit
ies
Ope
n sp
ace
Com
mun
ity fa
cilit
ies
Oth
er13
,020
8,
039
–
(15)
–
Tota
l S94
reve
nue
unde
r pla
ns
8,88
2
86,4
07
–
89,1
47
–
S94
not
und
er p
lans
Hel
d as
32,5
80
–
2,51
4
30,6
87
(4,0
54)
Inte
rnal
(15,
634)
1,
164
302
Expe
nditu
rebo
rrow
ing
1,92
3
rest
ricte
d(to
)/fro
mdu
ring
(4,7
68)
17,9
02
(5
,148
)
(29,
619)
4,
103
(457
)
4,24
1
168,
447
176,
486
4,73
4
7
181,
220
–
–
–
–
asse
t
(3,9
87)
13,0
83
in
yea
r
61,1
75
–
–
25,7
59
Cas
h 6,39
6
117,
451
4,59
6
–
922
9,01
9
138
112,
855
(29,
619)
3,54
9
17,1
85
–
9,15
5
earn
edC
ontr
ibut
ions
rece
ived
dur
ing
the
year
Inte
rest
–
year
Non
-cas
h
324
–
471
3,63
2
10
3,97
3
Tota
l con
trib
utio
ns
S94
cont
ribut
ions
– u
nder
a p
lan
PUR
POSE
Ope
ning
bala
nce
–
–
27
,141
48,9
61
4,00
6
15,7
14
50
9
41
1
–
3,15
1
20,3
44
–
–
–
2,74
0
S9
4A le
vies
– u
nder
a p
lan
(25,
565)
89,1
47
–
(2,5
17)
(6
,166
)
(1,5
18)
(1
,456
)
3,18
2
(7
)
(8
,482
)
8,48
2
–
–
Cum
ulat
ive
inte
rnal
bo
rrow
ings
du
e/(p
ayab
le)
page
56
NO
TES
TO
TH
E F
INA
NC
IAL
STA
TE
ME
NT
S fo
r th
e ye
ar e
nd
ed 3
0 J
un
e 2
016
NO
TE
17.
STA
TE
ME
NT
OF
DE
VE
LO
PE
R C
ON
TR
IBU
TIO
NS
60 The Hills Shire Council FINANCIAL STATEMENTS 2015-16
NO
TES
TO
TH
E F
INA
NC
IAL
STA
TE
ME
NT
S fo
r th
e ye
ar e
nd
ed 3
0 J
un
e 2
016
NO
TE
17.
STA
TE
ME
NT
OF
DE
VE
LO
PE
R C
ON
TR
IBU
TIO
NS
(co
nti
nu
ed)
Fina
ncia
l Sta
tem
ents
201
6
page
57
The
Hill
s S
hire
Cou
ncil
Not
es to
the
Fina
ncia
l Sta
tem
ents
for t
he y
ear e
nded
30
June
201
6
Not
e 17
. Sta
tem
ent o
f dev
elop
er c
ontri
butio
ns (c
ontin
ued)
$ ’0
00
S94
CO
NTR
IBU
TIO
NS
– U
ND
ER A
PLA
N
CO
NTR
IBU
TIO
N P
LAN
NU
MBE
R 5
- C
astle
Hill
Roa
dsO
pen
spac
eC
omm
unity
faci
litie
sO
ther
CO
NTR
IBU
TIO
N P
LAN
NU
MBE
R 6
- Ex
tract
ive
Indu
strie
s
Roa
ds
Cum
ulat
ive
inte
rnal
bo
rrow
ings
du
e/(p
ayab
le)
Cum
ulat
ive
inte
rnal
bo
rrow
ings
du
e/(p
ayab
le)–
– –
––
–
–
Con
trib
utio
ns
bala
nce
PUR
POSE
Non
-cas
h
9,77
6
–
earn
ed(to
)/fro
m
724
–
Ope
ning
87
rece
ived
dur
ing
the
year
Expe
nditu
rebo
rrow
ing
8
2,39
7
Inte
rest
in y
ear
291
(160
)
1,
531
year
durin
g
–
3,12
3
Ope
ning
323
Tota
l
PUR
POSE
–
1,19
3
–
Non
-cas
h
196
1,76
2
Cas
h
Expe
nditu
re
Tota
l
44
Cas
hCon
trib
utio
nsre
ceiv
ed d
urin
g th
e ye
ar
1,13
4–
1,19
3
8,31
3
–
–
Inte
rest
1,16
4
8,
313
71
(160
)
rest
ricte
dIn
tern
al
1–
(to)/f
rom
270
bala
nce
asse
t
1
earn
ed
–
123
in y
ear
–
borr
owin
g
9,77
6–
Hel
d as
–27
0–
4,22
0
–
asse
tre
stric
ted
–
Inte
rnal
–
Hel
d as
–
––
–
durin
gye
ar
The Hills Shire Council FINANCIAL STATEMENTS 2015-16 61
NO
TES
TO
TH
E F
INA
NC
IAL
STA
TE
ME
NT
S fo
r th
e ye
ar e
nd
ed 3
0 J
un
e 2
016
NO
TE
17.
STA
TE
ME
NT
OF
DE
VE
LO
PE
R C
ON
TR
IBU
TIO
NS
(co
nti
nu
ed)
Fina
ncia
l Sta
tem
ents
201
6
page
58
The
Hill
s S
hire
Cou
ncil
Not
es to
the
Fina
ncia
l Sta
tem
ents
for t
he y
ear e
nded
30
June
201
6
Not
e 17
. Sta
tem
ent o
f dev
elop
er c
ontri
butio
ns (c
ontin
ued)
$ ’0
00
S94
CO
NTR
IBU
TIO
NS
– U
ND
ER A
PLA
N
CO
NTR
IBU
TIO
N P
LAN
NU
MBE
R 7
- So
uthe
rn P
reci
ncts
Roa
dsTr
affic
faci
litie
sO
pen
spac
eC
omm
unity
faci
litie
sO
ther
CO
NTR
IBU
TIO
N P
LAN
NU
MBE
R 8
- R
ouse
Hill
Dra
inag
eR
oads
Traf
fic fa
cilit
ies
Ope
n sp
ace
Com
mun
ity fa
cilit
ies
Oth
er
Cum
ulat
ive
inte
rnal
bo
rrow
ings
du
e/(p
ayab
le)
Cum
ulat
ive
inte
rnal
bo
rrow
ings
du
e/(p
ayab
le) –
–
(15,
605)
15
,605
–
–
–
(333
)
–
333
–
–
–
Inte
rnal
borr
owin
g (333
)
10,7
39
Hel
d as 5,
175
(to)/f
rom
asse
tre
stric
ted
6,34
0(3
28)
2,91
2–41
–
153
–
33
3
10,4
92
––
20,5
89
–
borr
owin
g(to
)/fro
m
– –
45,7
5310
,737
Tota
l
Tota
l7,
201
–
Ope
ning 4,
749
19,6
49
926
10,3
58
PUR
POSE
7,72
3
5,
053
ba
lanc
e
44,3
75
2,33
4
C
ontr
ibut
ions
3,27
9
Expe
nditu
re
(6,8
15)
Inte
rnal 45
5
(127
)
–
56
3
316
in y
ear
(30)
year
593
–
Cas
h
–
4
–
Non
-cas
hin
yea
r
–
–
–
Inte
rest
(4,6
07)
–
(388
)
1,30
7
–
–
65
(3)
197
–
–
152
–
durin
g
–
(2,1
78)
–
453–
4
(455
)
6,88
625
7
–
347
–
–
10,0
97
–
earn
ed
–
15
43
–
Non
-cas
h
–
rece
ived
dur
ing
the
year
–
(2)
–
411
27
Inte
rest
317
rece
ived
dur
ing
the
year
149
PUR
POSE
Cas
h
Expe
nditu
re
bala
nce
year
Ope
ning
earn
ed
(388
)
Con
trib
utio
ns
89
rest
ricte
das
set
Hel
d as
durin
g
–
62 The Hills Shire Council FINANCIAL STATEMENTS 2015-16
Fina
ncia
l Sta
tem
ents
201
6
page
59
The
Hill
s S
hire
Cou
ncil
Not
es to
the
Fina
ncia
l Sta
tem
ents
for t
he y
ear e
nded
30
June
201
6
Not
e 17
. Sta
tem
ent o
f dev
elop
er c
ontri
butio
ns (c
ontin
ued)
$ ’0
00
S94
CO
NTR
IBU
TIO
NS
– U
ND
ER A
PLA
N
CO
NTR
IBU
TIO
N P
LAN
NU
MBE
R 9
- C
astle
Hill
Tow
n C
entre
Roa
dsO
pen
spac
eO
ther
CO
NTR
IBU
TIO
N P
LAN
NU
MBE
R 1
1 - A
nnan
grov
e In
dust
rial
Roa
dsTr
affic
faci
litie
s
Cum
ulat
ive
inte
rnal
bo
rrow
ings
du
e/(p
ayab
le)
Cum
ulat
ive
inte
rnal
bo
rrow
ings
du
e/(p
ayab
le)
(5,2
79)–
–
–
903
(6,1
82)
–
––
169
asse
tre
stric
ted 65
5
Hel
d as
Hel
d as
rest
ricte
d 784
asse
t
216
Inte
rnal
bala
nce
Ope
ning
643
PUR
POSE
169
–
784
Expe
nditu
re
961
–
–
–
(to)/f
rom
930
–
Non
-cas
h
930
Expe
nditu
re
in y
ear
rece
ived
dur
ing
the
year
(to)/f
rom
borr
owin
g
Inte
rest
(7)
–
–
–
in y
ear
28
(5)
durin
g
Cas
h
––
–
Con
trib
utio
ns
–
earn
ed
9
(216
)
earn
edIn
tere
st
19
–
–
75
(141
)
year
–
Con
trib
utio
ns
year
–
Inte
rnal
–
(5)
durin
gbo
rrow
ing
137
–
(216
)
–
–
940
Tota
l
PUR
POSE
Tota
l
Cas
h
–
128
Ope
ning
–
(7)
bala
nce
Non
-cas
h
–
rece
ived
dur
ing
the
year
NO
TES
TO
TH
E F
INA
NC
IAL
STA
TE
ME
NT
S fo
r th
e ye
ar e
nd
ed 3
0 J
un
e 2
016
NO
TE
17.
STA
TE
ME
NT
OF
DE
VE
LO
PE
R C
ON
TR
IBU
TIO
NS
(co
nti
nu
ed)
The Hills Shire Council FINANCIAL STATEMENTS 2015-16 63
Fina
ncia
l Sta
tem
ents
201
6
page
60
The
Hill
s S
hire
Cou
ncil
Not
es to
the
Fina
ncia
l Sta
tem
ents
for t
he y
ear e
nded
30
June
201
6
Not
e 17
. Sta
tem
ent o
f dev
elop
er c
ontri
butio
ns (c
ontin
ued)
$ ’0
00
S94
CO
NTR
IBU
TIO
NS
– U
ND
ER A
PLA
N
CO
NTR
IBU
TIO
N P
LAN
NU
MBE
R 1
2 - B
alm
oral
Roa
d
Dra
inag
eR
oads
Traf
fic fa
cilit
ies
Ope
n sp
ace
Com
mun
ity fa
cilit
ies
Oth
er
CO
NTR
IBU
TIO
N P
LAN
NU
MBE
R 1
3 - N
orth
Kel
lyvi
lle
Dra
inag
eR
oads
Traf
fic fa
cilit
ies
Ope
n sp
ace
Com
mun
ity fa
cilit
ies
Oth
er
Cum
ulat
ive
inte
rnal
bo
rrow
ings
du
e/(p
ayab
le)
Cum
ulat
ive
inte
rnal
bo
rrow
ings
du
e/(p
ayab
le)–
– –
(5,6
22)
8,53
3
–
–
–
2,91
1–
(1,0
11)
11,7
28
(13,
899)
3,18
2
5,30
433
,241
Hel
d as 6,
182
17,3
16
2,67
9
–
115
Inte
rest
–
(382
)
borr
owin
g
–
10,5
07
28
asse
t
–
rece
ived
dur
ing
the
year
382
–
Cas
h(to
)/fro
mdu
ring
in y
ear
Expe
nditu
re
–
Hel
d as
asse
t 1,06
8–
(2
2)
(9,8
37)
–
(360
)
rece
ived
dur
ing
the
year
earn
ed
–
(2,6
09)
–
(726
)
(2
82)
18,1
65
(4)
1,73
9
558
Inte
rnal
2,49
0
–
–
5,86
2
Non
-cas
h
–
11,6
66
16
2
–
(to)/f
rom
(4)
(1
,090
)
–
in y
ear
–
Cas
h
–
(4,6
50)
14,4
74
1,45
659
,957
123
28
4
Inte
rnal
bala
nce
earn
ed
year
–
–
33,2
85
(2,9
11)
(137
)
Con
trib
utio
ns
376
–
–
–
–
rest
ricte
d 790 –
rest
ricte
d
(1,6
02)
79
29,6
01
Ope
ning
Inte
rest
–
–
borr
owin
g
–
2,27
2
bala
nce
–
1,89
6
9,23
5
durin
g
–
328
3,64
8
74,6
56
Ope
ning
Tota
l
2,69
9
2,
806
30,2
06––
(1
4,05
2)7
15,2
96
Expe
nditu
re
22
79
0
–
Non
-cas
h
155
–
17
0
693
year
–
Con
trib
utio
ns
638
845
–
23
1
Tota
l
195
PUR
POSE
PUR
POSE
1,87
9
NO
TES
TO
TH
E F
INA
NC
IAL
STA
TE
ME
NT
S fo
r th
e ye
ar e
nd
ed 3
0 J
un
e 2
016
NO
TE
17.
STA
TE
ME
NT
OF
DE
VE
LO
PE
R C
ON
TR
IBU
TIO
NS
(co
nti
nu
ed)
64 The Hills Shire Council FINANCIAL STATEMENTS 2015-16
Fina
ncia
l Sta
tem
ents
201
6
page
61
The
Hill
s S
hire
Cou
ncil
Not
es to
the
Fina
ncia
l Sta
tem
ents
for t
he y
ear e
nded
30
June
201
6
Not
e 17
. Sta
tem
ent o
f dev
elop
er c
ontri
butio
ns (c
ontin
ued)
$ ’0
00
S94
CO
NTR
IBU
TIO
NS
– U
ND
ER A
PLA
N
CO
NTR
IBU
TIO
N P
LAN
NU
MBE
R 1
4 - C
arlin
gfor
d
Dra
inag
eR
oads
Traf
fic fa
cilit
ies
Ope
n sp
ace
Com
mun
ity fa
cilit
ies
Oth
er
CO
NTR
IBU
TIO
N P
LAN
NU
MBE
R 1
5 - B
ox H
ill Pr
ecin
ct
Dra
inag
eR
oads
Traf
fic fa
cilit
ies
Ope
n sp
ace
Oth
er
Cum
ulat
ive
inte
rnal
bo
rrow
ings
du
e/(p
ayab
le)
Cum
ulat
ive
inte
rnal
bo
rrow
ings
du
e/(p
ayab
le)
(103
)
8
(3
,495
)
(7)
(6
,114
)–
–
–
–
–
–
–
(2,5
17)
–
Non
-cas
h
(10)
(13)
898
Cas
h
331
in y
ear
–
durin
gEx
pend
iture
36
(304
)
527
32
269
–
–
29
Cas
h
8
100
(218
)
–
8
–
–
–
315
in y
ear
rece
ived
dur
ing
the
year
–
–
–
PUR
POSE
Ope
ning
bala
nce
Con
trib
utio
nsre
ceiv
ed d
urin
g th
e ye
ar
–(2
,830
)30
borr
owin
g
303
–
1,35
0–
12
(8)
2,91
1–
Tota
l
(95)
–
(7)
bala
nce
–
Tota
l
14
PUR
POSE
Ope
ning
Inte
rnal
–
–
275
–
–
10
–
–
–
2,51
4
(111
)–
–
11
(to)/f
rom
–38
5
–
–
3,01
095
8
267
–
–
–
181
658
(3)
–55
(2,5
09)
–
–
Hel
d as
rest
ricte
d
durin
g
4,24
2
year
asse
t
6
–
asse
t
–
–
(to)/f
rom
(218
)
rest
ricte
d
year
1,02
3
7
Inte
rest
earn
edC
ontr
ibut
ions
13
–
borr
owin
gN
on-c
ash
earn
edIn
tere
stEx
pend
iture
495
1,45
7
–
Inte
rnal
–
554
Hel
d as
–
–
NO
TES
TO
TH
E F
INA
NC
IAL
STA
TE
ME
NT
S fo
r th
e ye
ar e
nd
ed 3
0 J
un
e 2
016
NO
TE
17.
STA
TE
ME
NT
OF
DE
VE
LO
PE
R C
ON
TR
IBU
TIO
NS
(co
nti
nu
ed)
The Hills Shire Council FINANCIAL STATEMENTS 2015-16 65
Fina
ncia
l Sta
tem
ents
201
6
page
62
The
Hill
s S
hire
Cou
ncil
Not
es to
the
Fina
ncia
l Sta
tem
ents
for t
he y
ear e
nded
30
June
201
6
Not
e 17
. Sta
tem
ent o
f dev
elop
er c
ontri
butio
ns (c
ontin
ued)
$ ’0
00
S94A
LEV
IES
– U
ND
ER A
PLA
N
CO
NTR
IBU
TIO
N P
LAN
- Th
e H
ills S
ectio
n 94
A
Oth
er
CO
NTR
IBU
TIO
N P
LAN
- N
orth
Kel
lyvi
lle P
reci
nct 9
4A
Oth
er
S94
CO
NTR
IBU
TIO
NS
– N
OT
UN
DER
A P
LAN
Dra
inag
eR
oads
Park
ing
Ope
n sp
ace
Oth
er–
––
–
–
–
Cum
ulat
ive
inte
rnal
bo
rrow
ings
du
e/(p
ayab
le)–
–
Cum
ulat
ive
inte
rnal
bo
rrow
ings
du
e/(p
ayab
le)
8,48
2
8,
482
Cum
ulat
ive
inte
rnal
bo
rrow
ings
du
e/(p
ayab
le)
in y
ear
–
54
2
–
–
71
–
Cas
h
–
Non
-cas
hre
ceiv
ed d
urin
g th
e ye
ar
–
–
bala
nce
–
–
1
–
Con
trib
utio
nsH
eld
asre
stric
ted
Inte
rnal
borr
owin
gdu
ring
–
–
ye
arO
peni
ng
–
13
4
–
2
earn
ed
4,46
8
4,73
4–
4,60
2–
273as
set
–
1
(to)/f
rom
56–
–
–
(to)/f
rom
–
–
220
–
1382
–
Inte
rest
Expe
nditu
re
221
4
durin
gea
rned
Inte
rnal
–
borr
owin
gin
yea
r
–
Expe
nditu
rere
stric
ted
bala
nce
asse
t
8,87
2
Non
-cas
h
–
Cas
h
10
467
46
72,
519
(15)
–(1
5) –
Inte
rest
(4,0
39)
(4,0
39)
8,87
2
10
–
–
year
4
year
in y
ear
Con
trib
utio
ns
Cas
h
Inte
rest
Tota
l4,
596
––
Tota
l
bala
nce
Tota
l
Con
trib
utio
ns
PUR
POSE
Non
-cas
h
221
2,51
9
Ope
ning
rece
ived
dur
ing
the
year
rece
ived
dur
ing
the
year
PUR
POSE
PUR
POSE
Ope
ning
Expe
nditu
redu
ring
earn
edIn
tern
alre
stric
ted
Hel
d as
asse
t 220
–
7,81
97,
819
(to)/f
rom
borr
owin
g
Hel
d as
NO
TES
TO
TH
E F
INA
NC
IAL
STA
TE
ME
NT
S fo
r th
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ar e
nd
ed 3
0 J
un
e 2
016
NO
TE
17.
STA
TE
ME
NT
OF
DE
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LO
PE
R C
ON
TR
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NS
(co
nti
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66 The Hills Shire Council FINANCIAL STATEMENTS 2015-16
Financial Statements 2016
page 63
The Hills Shire Council
Notes to the Financial Statements for the year ended 30 June 2016
Note 18. Contingencies and other assets/liabilities not recognised
$ ’000
The following assets and liabilities do not qualify for 2. Other liabilitiesrecognition in the Statement of Financial Position, buttheir knowledge and disclosure is considered relevant (i) Insuranceto the users of Council’s financial report.
As at the 30/6/2016 there are three oustanding publicliability claims with Council or Council's insurer.
LIABILITIES NOT RECOGNISED: These are shown as contingent liabilities.
1. Guarantees (ii) Property
(i) Defined benefit superannuation A number of matters are currently listed to be heard contribution plans in the Land & Environment Court.
Council participates in an employer-sponsored (iii) Third party claimsdefined benefit superannuation scheme, and makescontributions as determined by the superannuation The Council is involved from time to time in variousscheme’s trustees. claims incidental to the ordinary course of business
including claims for damages relating to its services.Member councils bear responsibility of ensuring thereare sufficient funds available to pay out the required Council believes that it is appropriately coveredbenefits as they fall due. for all claims through its Insurance Coverage and
does not expect any material liabilities to eventuate.The schemes most recent full actuarial reviewindicated that the net assets of the scheme were (iv) S94 plansnot sufficient to meet the accrued benefits of theschemes defined benefit member category with Council levies Section 94/94A Contributions uponmember councils required to make significantly various development across the Council area throughhigher contributions in future years. the required Contributions Plans.
The Local Government Superannuation Scheme As part of these Plans, Council has received fundshowever is unable to provide Council with an accurate for which it will be required to expend the monies inestimate of its share of the net deficit and accordingly accordance with those Plans.Council has not recorded any net liability from it’sdefined benefit scheme obligations in accordance As well, these Plans indicate proposed futurewith AASB 119. expenditure to be undertaken by Council, which will
be funded by making levies and receipting funds inFuture contributions made to the defined benefit future years or where a shortfall exists by the use ofscheme to rectify the net deficit position will be Council's General Funds.recognised as an expense when they becomepayable – similar to the accounting for defined These future expenses do not yet qualify as liabilitiescontributions plans. as of the Reporting Date, but represent Councils
intention to spend funds in the manner and timingset out in those Plans.
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2016
NOTE 18. CONTINGENCIES AND OTHER ASSETS/LIABILITIES NOT RECOGNISED
The Hills Shire Council FINANCIAL STATEMENTS 2015-16 67
Financial Statements 2016
page 64
The Hills Shire Council
Notes to the Financial Statements for the year ended 30 June 2016
Note 18. Contingencies and other assets/liabilities not recognised (continued)
$ ’000
LIABILITIES NOT RECOGNISED (continued): ASSETS NOT RECOGNISED:
2. Other liabilities (continued) (i) Infringement notices/fines
(v) HIH Insurance Fines and penalty income, the result of Council issuing infringement notices is followed up and
Upon investigation, Council has determined that collected by the Infringement Processing Bureau.through Metropool, its public risk & professionalindemnity insurance cover for the period 1992 - 1996 Council’s revenue recognition policy for suchwas insured with the HIH group of companies. income is to account for it as revenue on receipt.
At this point in time, there are no outstanding claims. Accordingly, at year end, there is a potential assetdue to Council representing issued but unpaid
The statutory period has lapsed (3 yrs) with the only infringement notices. exception being that any minors that may have beeninjured in the 4 year period may lodge a claim up to Due to the limited information available on the status,the age of 21, although the likelihood of any claims is value and duration of outstanding notices, Council isthought to be minimal. unable to determine the value of outstanding income.
(vi) Potential land acquisitions due to planning restrictions imposed by Council
Council has classified a number of privately ownedland parcels as Local Open Space or Bushland.
As a result, where notified in writing by the variousowners, Council will be required to purchase theseland parcels.
At reporting date, reliable estimates as to the valueof any potential liability (& subsequent land asset)from such potential acquisitions has not beenpossible.
Note 19. Interests in other entities
Council has no interest in any controlled entities, joint arrangements or associates.
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2016
NOTE 18. CONTINGENCIES AND OTHER ASSETS/LIABILITIES NOT RECOGNISED (continued)
NOTE 19. INTERESTS IN OTHER ENTITIES
68 The Hills Shire Council FINANCIAL STATEMENTS 2015-16
Financial Statements 2016
The Hills Shire Council
Notes to the Financial Statements for the year ended 30 June 2016
Note 20. Retained earnings, revaluation reserves, changes in accountingpolicies, changes in accounting estimates and errors
$ ’000
(a) Retained earnings
Movements in retained earnings were as follows:Balance at beginning of year (from previous years audited accounts)
a. Prior Period Correctionsb. Net operating result for the yearBalance at end of the reporting period
(b) Revaluation reserves
(i) Reserves are represented by:
– Infrastructure, property, plant and equipment revaluation reserveTotal
(ii) Reconciliation of movements in reserves:
Infrastructure, property, plant and equipment revaluation reserve– Opening balance– Revaluations for the year– Correction of prior period errors– Balance at end of year
(iii) Nature and purpose of reserves
Infrastructure, property, plant and equipment revaluation reserve– The infrastructure, property, plant and equipment revaluation reserve is used to record increments/decrements of non-current asset values due to their revaluation.
20 (c)
3,823,9572,147
1,281,955
1,325,426
3,497,973
1,121,41630,673
1,281,955
160,539
Actual
3,081,009
2015
1,325,426
248,670494,278
1,281,955
9(a) 12,798
(328,131)
Notes 2016
1,325,4261,281,955
3,823,957
Actual
– 9(a)
page 65
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2016
NOTE 20. RETAINED EARNINGS, REVALUATION RESERVES, CHANGES IN ACCOUNTING POLICIES, CHANGES IN ACCOUNTING ESTIMATES & ERRORS
The Hills Shire Council FINANCIAL STATEMENTS 2015-16 69
Financial Statements 2016
The Hills Shire Council
Notes to the Financial Statements for the year ended 30 June 2016
Note 20. Retained earnings, revaluation reserves, changes in accountingpolicies, changes in accounting estimates and errors (continued)
$ ’000
(c) Correction of error/s relating to a previous reporting period
Correction of errors disclosed in this year’s financial statements:
Reinstatement of Land & Infrastructure Disposed from Previous PeriodsCommunity LandBuildingsRoadsStormwater DrainageOther Infrastructure - Parks
Disposal of Land & Infrastructure from Previous PeriodsReal EstateOperational LandCommunity LandBuildingsRoadsBulk EarthworksOther Infrastructure – Parks
Plant & Equipment incorrectly capitalised as Parks erroneously in 07/08
Profit on sale of Biobanking Credits previously written off againstInventory
As at 30 June 2015, Council started applying the Strategic Asset Management module to calculate depreciation based on assetcondition. Due to an error in the reports run at 30 June 15,accumulated depreciation reflected balances as at 30 June 16.Therefore in FY 14/15, accumulated depreciation was overstated.
As a result, Council has adjusted the accumulated depreciation forthe following asset classes as at 30/6/15 to reflect the correct valueof accumulated depreciation;
Adjustment to Accumulated Depreciation to reflect correct valueRoads Depreciation OverstatedBuildings Depreciation OverstatedDrainage Depreciation OverstatedParks Infrastructure Overstated
Council does not have sufficient and reliable information that willallow the restatement of information prior to 30/6/15 (the closing datefor the comparative figures in this report).
This adjustment resulted in net increase/(decrease) in Council’saccumulated surplus as at 30/6/15.
ActualActual2015
–
(3,132)
–
Notes
–
18,344
–
–
–
– –
(2,208)–
355
225 1,2354,234
314
(8,840)
(1,120)(1,101)
2016
(496)(33)
(5,629)
7,860 2,747
755 1,380
page 66
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2016
NOTE 20. RETAINED EARNINGS, REVALUATION RESERVES, CHANGES IN ACCOUNTING POLICIES, CHANGES IN ACCOUNTING ESTIMATES & ERRORS (continued)
70 The Hills Shire Council FINANCIAL STATEMENTS 2015-16
Financial Statements 2016
The Hills Shire Council
Notes to the Financial Statements for the year ended 30 June 2016
Note 20. Retained earnings, revaluation reserves, changes in accounting policies, changes in accounting estimates and errors (continued)
$ ’000
(c) Correction of error/s relating to a previous reporting period (continued)
Correction of errors as disclosed in last year’s financial statements:Reinstatement of land disposed from previous periods – Real estate– LandDisposal of land and buildings from previous periods – Land– BuildingsAs part of Council's transition to measuring all it's I,PP&E at fairvalues, Council this year reviewed and brought to account fair valuesfor the following asset classes:– Roads– Buildings– Drainage– Parks infrastructureAs part of that evaluation & measurement process, the remaininguseful life of each asset has been reassessed to actual.This reassessment has resulted in a material difference as to wheresome assets actually sit in relation to their asset life cycle relative towhat the value of accumulated depreciation in Council's financialreports had previously indicated.Council does not have sufficient and reliable information that willallow the restatement of information prior to 30/6/14 (the closing datefor the comparative figures in this report).As a result, Council has adjusted the accumulated depreciation forthe following asset classes as at 30/6/14 to reflect the correct valueof accumulated depreciation;Road Depreciation overstatedBuildings Depreciation overstatedDrainage Depreciation overstatedParks Infrastructure Depreciation overstatedThis adjustment resulted in a net increase/(decrease) in Council’saccumulated surplus as at 30/6/14.In accordance with AASB 108 – Accounting Policies, Changes inAccounting Estimates and Errors, the above prior period errorshave been recognised retrospectively.These amounted to the following equity adjustments:– Adjustments to opening equity – 1/7/14 (relating to adjustments for the 30/6/14 reporting year end and prior periods)– Adjustments to closing equity – 30/6/15 (relating to adjustments for the 30/6/15 year end)
Total prior period adjustments – prior period errors
(d) Voluntary changes in accounting policies Council made no voluntary changes in any accounting policies during the year.
Actual Actual Notes 2016 2015
494,279
(183)
2,000 2,103
(2,615)
62,213
2,147
389,459
2,147
32,743
–
494,279
8,559
–
page 67
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2016
NOTE 20. RETAINED EARNINGS, REVALUATION RESERVES, CHANGES IN ACCOUNTING POLICIES, CHANGES IN ACCOUNTING ESTIMATES & ERRORS (continued)
The Hills Shire Council FINANCIAL STATEMENTS 2015-16 71
Financial Statements 2016
page 68
The Hills Shire Council
Notes to the Financial Statements for the year ended 30 June 2016
Note 21. ‘Held for sale’ non-current assets and disposal groups
$ ’000
(i) Non-current assets and disposal group assets
Non-current assets ‘held for sale’LandTotal non-current assets ‘held for sale’
TOTAL NON-CURRENT ASSETSCLASSIFIED AS ‘HELD FOR SALE’
$ ’000
(ii) Reconciliation of non-current assets ‘held for sale’ and disposal groups – i.e. discontinued operations
Opening balanceBalance still unsold after 12 months:Plus new transfers in:– Investment property
Closing balance of ‘held for sale’non-current assets and operations – 140,000 – 140,000
Assets ‘held for sale’2015
– –
140,000
2016
–
2015
–
140,000
– – 140,000
140,000 –
2016
Non-current2015
– 140,000 –
–
Non-current2016 2016 2015
–140,000
– 140,000140,000140,000 –
Current
–
Disposal groups
Current
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2016
NOTE 21. ‘HELD FOR SALE’ NON-CURRENT ASSETS & DISPOSAL GROUPS
72 The Hills Shire Council FINANCIAL STATEMENTS 2015-16
Financial Statements 2016
page 69
The Hills Shire Council
Notes to the Financial Statements for the year ended 30 June 2016
Note 22. Boundary Adjustments
$ ’000
Boundary adjustmentGross profit/(loss) relating to boundary adjustment
NET PROFIT/(LOSS) FROM BOUNDARY ADJUSTMENT
Details of the boundary adjustment
Carrying amount of net assets transferredCarrying amount of developer contributions transferredCarrying amount of waste management external reserves transferred *Carrying amount of liability due to Hills ShireProfit/(loss) on boundary adjustment
* Note : These balances are as at 30 June 2016 and will be finalised at conclusion of transitional agreements.
–
(478,853)
–
–
Actual Actual
(478,853)
(468,035)
(478,853)
–
2016 2015
(10,479) (462) 123
NSW Premier Mike Baird and the Minister for Local Government Paul Toole announced 19 new Councils in NSW commencing on 13 May 2016. Although The Hills Shire Council did not merge with another Council, its boundaries were adjusted and all assets South of M2 (SM2) had to be transferred to City of Parramatta at book value with no compensation.
– – –
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2016
NOTE 22. BOUNDARY ADJUSTMENTS
The Hills Shire Council FINANCIAL STATEMENTS 2015-16 73
Financial Statements 2016
The Hills Shire Council
Notes to the Financial Statements for the year ended 30 June 2016
Note 23. Fair value measurement
$ ’000
The Council measures the following asset and liability classes at fair value on a recurring basis:
– Infrastructure, property, plant and equipment– Investment property
The fair value of assets and liabilities must be estimated in accordance with various accounting standards foreither recognition and measurement requirements or for disclosure purposes.
AASB 13 Fair Value Measurement requires all assets and liabilities measured at fair value to be assigned to a‘level’ in the fair value hierarchy as follows:
Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities that the entity can access at the measurement date.
Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs).
(1) The following table presents all assets and liabilities that have been measured and recognised at fair values:
2016
Recurring fair value measurements
Investment propertiesInvestment propertiesTotal investment properties
Infrastructure, property, plant and equipmentOperational landCommunity landLand under roadsBuildings (specialised and non-specialised)Roads, bridges, footpathsStormwater drainagePlant and equipmentOffice equipmentOtherBulk earthworksTotal infrastructure, property, plant and equipment
30/06/15 – –
– –
30/06/15 – – 49,637 49,637 30/06/15 – – 109,082 109,082
30/06/13 – – 235,841 235,841 30/06/15 – – 942,756 942,756 30/06/15 – – 232,551 232,551 30/06/15 – – 5,722 5,722
30/06/15 – – 2,392,989 2,392,989
– – 20,863 20,863
582
– 248,717
582
4,333,273 4,333,273
inputsinputsprices in observable
Fair value measurement hierarchyLevel 1 Level 2
SignificantLevel 3 Total
Date Quoted Significant
valuation active mktsof latest unobservable
dd/mm/yy – – 20,863 20,863
30/06/13 – – 115,396 115,396 30/06/16 – 248,717
page 70
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2016
NOTE 23. FAIR VALUE MEASUREMENT
74 The Hills Shire Council FINANCIAL STATEMENTS 2015-16
Financial Statements 2016
The Hills Shire Council
Notes to the Financial Statements for the year ended 30 June 2016
Note 23. Fair value measurement (continued)
$ ’000
(1) The following table presents all assets and liabilities that have been measured and recognised at fair values (continued):
2015
Recurring fair value measurements
Investment propertiesInvestment propertiesTotal investment properties
Infrastructure, property, plant and equipmentOperational landCommunity landLand under roadsBuildings (specialised and non-specialised)Roads, bridges, footpathsStormwater drainagePlant and equipmentOffice equipmentOtherBulk earthworksTotal infrastructure, property, plant and equipment
(2) Transfers between level 1 and level 2 fair value hierarchies
During the year, there were no transfers between level 1 and level 2 fair value hierarchies for recurring fairvalue measurements.
(3) Valuation techniques used to derive level 2 and level 3 fair values
Where Council is unable to derive fair valuations using quoted market prices of identical assets(ie. level 1 inputs) Council instead utilises a spread of both observable inputs (level 2 inputs) andunobservable inputs (level 3 inputs).
The fair valuation techniques Council has employed while utilising level 2 and level 3 inputs are as follows:
Investment properties
Investment properties were purchased in the current year and held at their purchase cost.
Infrastructure, property, plant and equipment (IPP&E)
Condition based assessments have been carried out on these assets to determine fair value, the rate of consumption of service potential and the residual life for valuation purposes
valuation active mkts
Level 1 Level 2Significant Significant
of latest prices in observableDate Quoted
–
30/06/15– –
30/06/13 – – 208,802 208,802 30/06/11 – – 133,502 133,502 30/06/15 – – 2,637,155 2,637,155
Fair value measurement hierarchy
– – 9,905 9,905 9,905 9,905
Level 3 Total
4,664,825
inputsunobservable
inputs
30/06/13 – – 248,462 248,462 30/06/15 – – 1,012,151 1,012,151 30/06/15 – – 244,863 244,863 30/06/15 – – 11,394 11,394 30/06/15 – – 565 565 30/06/15 – – 49,399 49,399 30/06/15 – – 118,532 118,532
– 4,664,825
page 71
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2016
NOTE 23. FAIR VALUE MEASUREMENT (continued)
The Hills Shire Council FINANCIAL STATEMENTS 2015-16 75
Fina
ncia
l Sta
tem
ents
201
6
page
72
The
Hill
s S
hire
Cou
ncil
Not
es to
the
Fina
ncia
l Sta
tem
ents
for t
he y
ear e
nded
30
June
201
6
Not
e 23
. Fai
r val
ue m
easu
rem
ent (
cont
inue
d)
$ ’0
00
(4).
Fair
valu
e m
easu
rem
ents
usi
ng s
igni
fican
t uno
bser
vabl
e in
puts
(lev
el 3
)
a. T
he fo
llow
ing
tabl
es p
rese
nt th
e ch
ange
s in
leve
l 3 fa
ir va
lue
asse
t cla
sses
.
Ope
ning
bal
ance
– 1
/7/1
4
Purc
hase
s (G
BV)
Dis
posa
ls (W
DV)
Dep
reci
atio
n an
d im
pairm
ent
Oth
er m
ovem
ent
Oth
er m
ovem
ent
Oth
er m
ovem
ent
Clo
sing
bal
ance
– 3
0/6/
15
Tran
sfer
s fro
m/(t
o) a
noth
er a
sset
cla
ssPu
rcha
ses
(GBV
)D
ispo
sals
(WD
V)D
epre
ciat
ion
and
impa
irmen
tFV
gai
ns –
oth
er c
ompr
ehen
sive
inco
me
FV g
ains
– In
com
e St
atem
ent
Oth
er m
ovem
ent (
Prio
r Per
iod
Cor
rect
ions
)O
ther
mov
emen
t (fro
m R
eal E
stat
e)O
ther
mov
emen
t (fro
m In
vest
men
t Pro
peer
ties
Oth
er m
ovem
ent (
Loss
of S
outh
M2)
Clo
sing
bal
ance
– 3
0/6/
16
2,44
1
2,44
1
–
(14,
703)
–
(12,
704)
12,2
00
50
3
–
(56,
493)
2,10
3
(2,6
15)
–
(1
84)
(57,
189)
–
–
–
–
103,
627
103,
627
118,
532
(87,
658)
87,7
28
–
36
11
8,63
8
–
–
–
–
(1,9
92)
(1
,992
)
(540
)
(1
,629
)
2,91
0
6,34
7
–
17,6
99
6,
661
2,63
7,15
5
2,84
5
–
Bul
kC
omm
unity
Ope
ratio
nal
Land
unde
rla
nd
212,
710
2,61
9,66
9
Bui
ldin
gs
140,
854
road
s
––
118,
532
3,34
6,45
313
3,50
2–
208,
802
eart
hwor
ksTo
tal
53,5
83
3,
151,
381
land
124,
565
–
(876
)
(2
13)
33,6
17
–
248,
462
30,0
35
–
(3
,807
)
–
–
22
,655
–
–
–
–
(2
,682
)
–
30,6
73
–
30
,673
–
–
42
42
(33)
–
–
(1
2,52
1)
235,
841–
4,
535
(3,8
07)
(2,6
82)
–
–
(244
,670
)
–
–
–
–
8,22
4
(8,8
40)
1,
853
–
–
15
,211
–
–
–
7,90
5
–
7,90
5
–
–
(40,
825)
24
8,71
7
(317
,229
) 3,
102,
024
115,
396
109,
082
(4,5
10)
2,39
2,98
9
(33)
NO
TES
TO
TH
E F
INA
NC
IAL
STA
TE
ME
NT
S fo
r th
e ye
ar e
nd
ed 3
0 J
un
e 2
016
NO
TE
23
. FA
IR V
ALU
E M
EA
SU
RE
ME
NT
(co
nti
nu
ed)
76 The Hills Shire Council FINANCIAL STATEMENTS 2015-16
Fina
ncia
l Sta
tem
ents
201
6
The
Hill
s S
hire
Cou
ncil
Not
es to
the
Fina
ncia
l Sta
tem
ents
for t
he y
ear e
nded
30
June
201
6
Not
e 23
. Fai
r val
ue m
easu
rem
ent (
cont
inue
d)
$ ’0
00
(4).
Fair
valu
e m
easu
rem
ents
usi
ng s
igni
fican
t uno
bser
vabl
e in
puts
(lev
el 3
) con
tinue
d
a. T
he fo
llow
ing
tabl
es p
rese
nt th
e ch
ange
s in
leve
l 3 fa
ir va
lue
asse
t cla
sses
. (co
ntin
ued)
Ope
ning
bal
ance
– 1
/7/1
4
Purc
hase
s (G
BV)
Dis
posa
ls (W
DV)
Dep
reci
atio
n an
d im
pairm
ent
Oth
er m
ovem
ent
Oth
er m
ovem
ent
Oth
er m
ovem
ent
Clo
sing
bal
ance
– 3
0/6/
15
Tran
sfer
s fro
m/(t
o) a
noth
er a
sset
cla
ssPu
rcha
ses
(GBV
)D
ispo
sals
(WD
V)D
epre
ciat
ion
and
impa
irmen
tO
ther
mov
emen
t (P
rior P
erio
d C
orre
ctio
ns)
Oth
er m
ovem
ent (
Loss
Sou
th o
f M2)
Clo
sing
bal
ance
– 3
0/6/
16
(5).
Hig
hest
and
bes
t use
All o
f Cou
ncil’s
non
-fina
ncia
l ass
ets
are
cons
ider
ed to
bei
ng u
tilis
ed fo
r the
ir hi
ghes
t and
bes
t use
.
–
–
942,
756
232,
551
6,30
4
49,6
37
1,
231,
248
–
(6,2
36)
(1
50,8
06)
–
–
–
(1
18,8
55)
(2
5,71
5)
–
–
–
–
–
8,
051
4,
989
(5
,629
)
1,19
8
8,60
9
–
–
49,2
37
9,
150
3,
138
6,
666
68
,191
(474
)
(2
8)
(5
02)
–
–
–
–
(5,3
86)
(7
36)
(2,6
90)
–
–
–
–
–
–
(1
,362
)
(10,
174)
49,3
99
1,
318,
372
(560
)
–
–
–
–
(5
60)
–
–
–
–
32,6
77
5,
141
3,
022
4,
305
45
,145
–
clas
scl
ass
clas
scl
ass
brid
ges
Stor
mw
ater
and
offic
eAs
set
Asse
tAs
set
Asse
tR
oads
Oth
er
–
–
–
–
Plan
t,equ
ip
here
here
here
here
foot
path
sdr
aina
geeq
uipm
ent
asse
tsTo
tal
578,
777
172,
004
6,46
3
47,0
44
80
4,28
8
–
–
–
1,01
2,15
1
244,
863
11,9
59
–
–
–
–
–
–
–
–
(10,
032)
(2,4
15)
(2
,595
)
(3,1
99)
(1
8,24
1)
–
–
–
–
55
,062
–
5,62
9
(4,0
00)
56
,691
–
–
–
–
355,
667
70,1
33
–
5,
555
43
1,35
5
–
–
–
–
–
–
–
(3
06)
(306
)
–
–
–
–
(2,4
41)
–
–
–
(2
,441
)
–
–
–
page
73
NO
TES
TO
TH
E F
INA
NC
IAL
STA
TE
ME
NT
S fo
r th
e ye
ar e
nd
ed 3
0 J
un
e 2
016
NO
TE
23
. FA
IR V
ALU
E M
EA
SU
RE
ME
NT
(co
nti
nu
ed)
The Hills Shire Council FINANCIAL STATEMENTS 2015-16 77
NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2016
NOTE 24. COUNCIL INFORMATION & CONTACT DETAILS
PRINCIPAL PLACE OF BUSINESS:
3 Columbia CourtBaulkham Hills. 2153
CONTACT DETAILS
Mailing address: Opening hours:
PO Box 7064 8.30am-4.30am | Monday - FridayBaulkham Hills BC. 2153
Telephone: 02 9843 0555 Internet: www.thehills.nsw.gov.au
Facsimile: 02 9843 0409 Email: council@thehills.nsw.gov.au
OFFICERS ELECTED MEMBERS
GENERAL MANAGER MAYOR
Dave Walker Dr Michelle Byrne
RESPONSIBLE ACCOUNTING OFFICER COUNCILLORS
Chandi Saba Dr Michelle Byrne
PUBLIC OFFICER Yvonne Keane (Deputy Mayor)
Peter Doyle Andrew Jefferies *
Dr Jeff Lowe JP
AUDITORS Tony Hay OAM
PricewaterhouseCoopers Ryan Tracey
201 Sussex Street Alan Haselden
Sydney. 2000 Robyn Preston
Dr Peter Gangemi
Mark Taylor, MP
Raymond Harty OAM
Mike Thomas
OTHER INFORMATION * Councillor until 31 July 2016
ABN: 25 034 494 656
78 The Hills Shire Council FINANCIAL STATEMENTS 2015-16
Fina
ncia
l Sta
tem
ents
201
6
The
Hill
s S
hire
Cou
ncil
Not
es to
the
Fina
ncia
l Sta
tem
ents
for t
he y
ear e
nded
30
June
201
6
Not
e 25
. Sta
tem
ent o
f dev
elop
er c
ontri
butio
ns w
ithou
t int
erna
l bor
row
ings
$ ’0
00
Cou
ncil
curr
ently
has
13
S94
deve
lope
r con
tribu
tion
plan
s.
The
tabl
e (o
n th
e ne
xt p
age)
refle
cts
the
posi
tion
of e
ach
Con
tribu
tion
Pla
n ex
clud
ing
Inte
rnal
Bor
row
ings
.
Of t
he D
evel
oper
Con
tribu
tion
cash
hel
d as
rest
ricte
d as
set a
s at
30
June
201
6 of
$18
1.2m
, $10
.5m
is p
ayab
le to
City
of P
arra
mat
ta a
s it
rela
tes
to d
evel
opm
ents
loca
ted
Sout
h of
M2.
The
am
ount
com
pris
es o
f $6.
3m re
latin
g to
Con
tribu
tion
Plan
No.
7 a
nd $
4.2m
rela
ting
to C
ontri
butio
n Pl
an N
o. 1
4. T
he p
ayab
le is
exp
ecte
d to
be
settl
ed in
FY 1
6/17
.
The
NS
W G
over
nmen
t has
est
ablis
hed
a P
riorit
y In
frast
ruct
ure
Fund
( P
IF )
for t
he F
Y 10
/11
, Hou
sing
Acc
eler
atio
n Fu
nd (H
AF)
for t
he F
Y 12
/13
and
Loca
l Inf
rast
ruct
ure
Gro
wth
Sch
eme
from
the
FY 1
3/14
to b
ridge
the
gap
betw
een
the
IPA
RT
App
rove
d E
ssen
tial I
nfra
stru
ctur
e C
ontri
butio
n ra
te a
nd th
e C
ap.
Cou
ncil
has
rece
ived
$70
.7m
from
Dep
artm
ent o
f Pla
nnin
g fo
r PIF
, HAF
& L
IGS
as a
t 30
June
201
6 fo
r dev
elop
men
t app
licat
ions
app
rove
d be
twee
n 4
June
201
0 an
d31
Jan
uary
201
6.
page
75
NO
TES
TO
TH
E F
INA
NC
IAL
STA
TE
ME
NT
S fo
r th
e ye
ar e
nd
ed 3
0 J
un
e 2
016
NO
TE
25
. STA
TE
ME
NT
OF D
EV
ELO
PE
R
CO
NT
RIB
UT
ION
S W
ITH
OU
T I
NT
ER
NA
L B
OR
RO
WIN
GS
The Hills Shire Council FINANCIAL STATEMENTS 2015-16 79
Fina
ncia
l Sta
tem
ents
201
6
page
76
The
Hill
s S
hire
Cou
ncil
Not
es to
the
Fina
ncia
l Sta
tem
ents
for t
he y
ear e
nded
30
June
201
6
Not
e 25
. Sta
tem
ent o
f dev
elop
er c
ontri
butio
ns w
ithou
t int
erna
l bor
row
ings
(con
tinue
d)
$ ’0
00
Cou
ncil
reco
vers
con
tribu
tions
, rai
ses
levi
es a
nd e
nter
s in
to p
lann
ing
agre
emen
ts o
n de
velo
pmen
t wor
ks th
at a
re s
ubje
ct to
a d
evel
opm
ent c
onse
nt is
sued
by
Cou
ncil.
All
cont
ribut
ions
mus
t be
spen
t/util
ised
for t
he s
peci
fic p
urpo
se th
ey w
ere
levi
ed a
nd a
ny in
tere
st a
pplic
able
to u
nspe
nt fu
nds
mus
t be
attri
bute
d to
rem
aini
ng fu
nds.
The
follo
win
g ta
bles
det
ail t
he re
ceip
t, in
tere
st a
nd u
se o
f the
abo
ve c
ontri
butio
ns a
nd le
vies
and
the
valu
e of
all
rem
aini
ng fu
nds
whi
ch a
re ‘r
estri
cted
’ in
thei
r fut
ure
use.
SUM
MA
RY
OF
CO
NTR
IBU
TIO
NS
AN
D L
EVIE
S
Dra
inag
eR
oads
Traf
fic fa
cilit
ies
Ope
n sp
ace
Com
mun
ity fa
cilit
ies
Pla
nnin
g ag
reem
ent
Oth
er
PUR
POSE
Con
trib
utio
nsIn
tere
stE
xpen
ditu
reIn
tern
al
Non
-cas
hin
yea
rye
ar(to
)/fro
mas
set
9,01
6
6,
396
–
302
(5
,148
)
–
10
,566
Hel
d as
Cum
ulat
ive
inte
rnal
bo
rrow
ings
du
e/(p
ayab
le)
Ope
ning
rece
ived
dur
ing
the
year
earn
eddu
ring
borr
owin
gre
stri
cted
bala
nce
Cas
h
30,7
73–
9,
920
20,3
44
–
50
9
–
–
–
13,2
34
3,
151
–
411
(4
,768
)
–
12
,028
–
4,14
7–
4,
147
–
–
–
–
–
59,8
86–
28
,773
4,00
6
–
92
2
–
–
33,7
01–
25
,395
48,9
61
–
1,
164
(15,
634)
–
–15
9,96
5–
S94
A le
vies
– u
nder
a p
lan
17,3
642,
740
–47
1(4
,054
)–
S94
con
trib
utio
ns –
und
er a
pla
n95
,491
86,4
07–
3,63
2(2
5,56
5)5,
006
3,54
9
–
32
4
(15)
–
8,86
4–
–
S94
not
und
er p
lans
4,59
6
–
–
13
8
–
–
4,73
4–
16,5
21–
Tota
l S94
rev
enue
und
er p
lans
112,
855
89,1
47–
4,10
3(2
9,61
9)–
176,
486
Tota
l con
trib
utio
ns11
7,45
189
,147
–4,
241
(29,
619)
–18
1,22
0–
NO
TES
TO
TH
E F
INA
NC
IAL
STA
TE
ME
NT
S fo
r th
e ye
ar e
nd
ed 3
0 J
un
e 2
016
NO
TE
25
. STA
TE
ME
NT
OF D
EV
ELO
PE
R
CO
NT
RIB
UT
ION
S W
ITH
OU
T I
NT
ER
NA
L B
OR
RO
WIN
GS
80 The Hills Shire Council FINANCIAL STATEMENTS 2015-16
NO
TES
TO
TH
E F
INA
NC
IAL
STA
TE
ME
NT
S fo
r th
e ye
ar e
nd
ed 3
0 J
un
e 2
016
NO
TE
25
. STA
TE
ME
NT
OF D
EV
ELO
PE
R C
ON
TR
IBU
TIO
NS
W
ITH
OU
T I
NT
ER
NA
L B
OR
RO
WIN
GS
(co
nti
nu
ed)
Fina
ncia
l Sta
tem
ents
201
6
page
77
The
Hill
s S
hire
Cou
ncil
Not
es to
the
Fina
ncia
l Sta
tem
ents
for t
he y
ear e
nded
30
June
201
6
Not
e 25
. Sta
tem
ent o
f dev
elop
er c
ontri
butio
ns w
ithou
t int
erna
l bor
row
ings
(con
tinue
d)
$ ’0
00
S94
CO
NTR
IBU
TIO
NS
– U
ND
ER A
PLA
N
CO
NTR
IBU
TIO
N P
LAN
NU
MBE
R 5
- C
astle
Hill
Roa
dsO
pen
spac
eC
omm
unity
faci
litie
sO
ther
CO
NTR
IBU
TIO
N P
LAN
NU
MBE
R 6
- Ex
tract
ive
Indu
strie
s
Roa
ds
in y
ear
year
(to)/f
rom
asse
t
Cum
ulat
ive
inte
rnal
bo
rrow
ings
du
e/(p
ayab
le)
Ope
ning
rece
ived
dur
ing
the
year
earn
eddu
ring
borr
owin
gre
stric
ted
bala
nce
Cas
hN
on-c
ash
PUR
POSE
Con
trib
utio
nsIn
tere
stEx
pend
iture
Inte
rnal
Hel
d as
196
87
–
8
–
–
291
–
2,39
7–
1,
164
32
3
–
44
–
–
1,
531
–
1,76
2
724
–
71
(160
)
–
–4,
220
–
PUR
POSE
Con
trib
utio
nsIn
tere
stEx
pend
iture
Inte
rnal
Hel
d as
Tota
l3,
123
1,13
4–
123
(160
)1
–
–
–
–
–
1
–
in y
ear
year
(to)/f
rom
asse
t
Cum
ulat
ive
inte
rnal
bo
rrow
ings
du
e/(p
ayab
le)
Ope
ning
rece
ived
dur
ing
the
year
earn
eddu
ring
borr
owin
gre
stric
ted
bala
nce
Cas
hN
on-c
ash
8,31
3
1,19
3
–
270
–
–
9,77
6–
–
9,77
6–
Tota
l8,
313
1,19
3–
270
–
The Hills Shire Council FINANCIAL STATEMENTS 2015-16 81
NO
TES
TO
TH
E F
INA
NC
IAL
STA
TE
ME
NT
S fo
r th
e ye
ar e
nd
ed 3
0 J
un
e 2
016
NO
TE
25
. STA
TE
ME
NT
OF D
EV
ELO
PE
R C
ON
TR
IBU
TIO
NS
W
ITH
OU
T I
NT
ER
NA
L B
OR
RO
WIN
GS
(co
nti
nu
ed)
Fina
ncia
l Sta
tem
ents
201
6
page
78
The
Hill
s S
hire
Cou
ncil
Not
es to
the
Fina
ncia
l Sta
tem
ents
for t
he y
ear e
nded
30
June
201
6
Not
e 25
. Sta
tem
ent o
f dev
elop
er c
ontri
butio
ns w
ithou
t int
erna
l bor
row
ings
(con
tinue
d)
$ ’0
00
S94
CO
NTR
IBU
TIO
NS
– U
ND
ER A
PLA
N
CO
NTR
IBU
TIO
N P
LAN
NU
MBE
R 7
- So
uthe
rn P
reci
ncts
Roa
dsTr
affic
faci
litie
sO
pen
spac
eC
omm
unity
faci
litie
sO
ther
CO
NTR
IBU
TIO
N P
LAN
NU
MBE
R 8
- R
ouse
Hill
Dra
inag
eR
oads
Traf
fic fa
cilit
ies
Ope
n sp
ace
Com
mun
ity fa
cilit
ies
Plan
ning
Agr
eem
ent
Oth
er
PUR
POSE
Con
trib
utio
nsIn
tere
stEx
pend
iture
Inte
rnal
Hel
d as
in y
ear
year
(to)/f
rom
asse
t
Cum
ulat
ive
inte
rnal
bo
rrow
ings
du
e/(p
ayab
le)
Ope
ning
rece
ived
dur
ing
the
year
earn
eddu
ring
borr
owin
gre
stric
ted
bala
nce
Cas
hN
on-c
ash
153
–
149
–
–
4
–
–
43
15
–
(2)
(3
88)
–
(332
)–
10,9
92–
(1
02)
27
–
(3)
–
–
(7
8)–
10
,264
411
–
317
–
–
–
10,7
39–
PUR
POSE
Con
trib
utio
nsIn
tere
stEx
pend
iture
Inte
rnal
Hel
d as
Tota
l10
,358
453
–31
6(3
88)
4
–
–
–
–
–
4–
in y
ear
year
(to)/f
rom
asse
t
5,05
2
–
–
152
(30)
–
Cum
ulat
ive
inte
rnal
bo
rrow
ings
du
e/(p
ayab
le)
Ope
ning
rece
ived
dur
ing
the
year
earn
eddu
ring
borr
owin
gre
stric
ted
bala
nce
Cas
hN
on-c
ash
(15,
604)
–
(15,
149)
–
–
(455
)
–
–
5,17
4–
7,
395
92
6
–
19
7
(2
,178
)
–
6,34
0–
4,14
7–
4,
147
–
–
–
–
–
18,5
19–
19
,647
347
–
593
–
–
20,5
87–
20
,229
2,33
4
–
563
(4,6
07)
–
–45
,752
–To
tal
44,3
746,
886
–1,
307
(6,8
15)
3,05
3
3,27
9
–
257
–
–
6,58
9–
82 The Hills Shire Council FINANCIAL STATEMENTS 2015-16
Fina
ncia
l Sta
tem
ents
201
6
page
79
The
Hill
s S
hire
Cou
ncil
Not
es to
the
Fina
ncia
l Sta
tem
ents
for t
he y
ear e
nded
30
June
201
6
Not
e 25
. Sta
tem
ent o
f dev
elop
er c
ontri
butio
ns w
ithou
t int
erna
l bor
row
ings
(con
tinue
d)
$ ’0
00
S94
CO
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astle
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entre
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nnan
grov
e In
dust
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PUR
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pend
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in y
ear
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ulat
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rnal
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rrow
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Ope
ning
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earn
eddu
ring
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owin
gre
stric
ted
bala
nce
Cas
hN
on-c
ash
643
–
–
19
(7)
–
65
5–
16
9–
16
9
–
–
–
–
–
–96
1–
PUR
POSE
Con
trib
utio
nsIn
tere
stEx
pend
iture
Inte
rnal
Hel
d as
Tota
l94
0–
–28
(7)
128
–
–
9
–
–
137
–
in y
ear
year
(to)/f
rom
asse
t
Cum
ulat
ive
inte
rnal
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rrow
ings
du
e/(p
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Ope
ning
rece
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dur
ing
the
year
earn
eddu
ring
borr
owin
gre
stric
ted
bala
nce
Cas
hN
on-c
ash
(6,1
82)
–
(5,9
66)
–
–
(2
16)
–
–
687
930
–
75
(5)
–
1,
687
–
–(4
,495
)–
Tota
l(5
,279
)93
0–
(141
)(5
)
NO
TES
TO
TH
E F
INA
NC
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STA
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S fo
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e ye
ar e
nd
ed 3
0 J
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e 2
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NO
TE
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. STA
TE
ME
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ITH
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NT
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L B
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GS
(co
nti
nu
ed)
The Hills Shire Council FINANCIAL STATEMENTS 2015-16 83
Fina
ncia
l Sta
tem
ents
201
6
page
80
The
Hill
s S
hire
Cou
ncil
Not
es to
the
Fina
ncia
l Sta
tem
ents
for t
he y
ear e
nded
30
June
201
6
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e 25
. Sta
tem
ent o
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NTR
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orth
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cilit
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POSE
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utio
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in y
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844
195
–
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nce
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ash
14,0
00–
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,728
1,89
6
–
376
–
–
1,06
7–
(6
27)
–
–
(22)
(360
)
–
(1
,009
)–
(3,3
94)
–
5,06
2
638
–
162
–
–
5,86
2–
(1
4,05
2)
11
,666
–
(282
)
(7
26)
–
–
17,3
15–
PUR
POSE
Con
trib
utio
nsIn
tere
stEx
pend
iture
Inte
rnal
Hel
d as
Tota
l3,
647
14,4
74–
284
(1,0
90)
692
79
–
22
(4)
–
78
9–
in y
ear
year
(to)/f
rom
asse
t
2,80
8
5,86
2
–
123
(2,6
09)
–
Cum
ulat
ive
inte
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bo
rrow
ings
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Ope
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ash
37,8
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,889
18,1
65
–
79
0
–
–
6,18
4–
(3
,593
)
–
–
(137
)
(1
,602
)
–
(5,3
32)
–
33,2
41–
2,
699
2,
490
–
11
5
–
–
5,
304
–
9,23
5
33,2
85
–
55
8
(9
,837
)
–
–
77,5
69–
Tota
l30
,208
59,9
57–
1,45
6(1
4,05
2)17
0
15
5
–
7
(4
)
–
328
–
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GS
(co
nti
nu
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84 The Hills Shire Council FINANCIAL STATEMENTS 2015-16
Fina
ncia
l Sta
tem
ents
201
6
page
81
The
Hill
s S
hire
Cou
ncil
Not
es to
the
Fina
ncia
l Sta
tem
ents
for t
he y
ear e
nded
30
June
201
6
Not
e 25
. Sta
tem
ent o
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ontri
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tinue
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ox H
ill Pr
ecin
ct
Dra
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fic fa
cilit
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Ope
n sp
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PUR
POSE
Con
trib
utio
nsIn
tere
stEx
pend
iture
Inte
rnal
Hel
d as
in y
ear
year
(to)/f
rom
asse
t
315
331
–
12
–
–
Cum
ulat
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inte
rnal
bo
rrow
ings
du
e/(p
ayab
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Ope
ning
rece
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year
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eddu
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owin
gre
stric
ted
bala
nce
Cas
hN
on-c
ash
554
–
269
275
–
10
–
–
658
–
267
–
–
6
(218
)
–
55
–
1,45
7–
30
3
18
1
–
11
–
–
49
5–
89
8
52
7
–
32
–
–
–4,
242
–
PUR
POSE
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1,35
0–
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8
36
–
29
–
–
1,
023
–
in y
ear
year
(to)/f
rom
asse
t
(3)
8
–
(1
3)
(2
,509
)
–
Cum
ulat
ive
inte
rnal
bo
rrow
ings
du
e/(p
ayab
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Ope
ning
rece
ived
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ing
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year
earn
eddu
ring
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owin
gre
stric
ted
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nce
Cas
hN
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ash
8–
–
8
–
–
–
–
(2,5
17)
–
(90)
–
–
(3)
(1
0)
–
(1
03)
–
(3,4
95)
–
(3,1
10)
14
–
(9
5)
(3
04)
–
–
(6,1
14)
–To
tal
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03)
30–
(111
)(2
,830
)–
–
–
–
(7
)
–
(7)
–
NO
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E F
INA
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TE
ME
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r th
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NO
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. STA
TE
ME
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NS
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ITH
OU
T I
NT
ER
NA
L B
OR
RO
WIN
GS
(co
nti
nu
ed)
The Hills Shire Council FINANCIAL STATEMENTS 2015-16 85
Fina
ncia
l Sta
tem
ents
201
6
page
82
The
Hill
s S
hire
Cou
ncil
Not
es to
the
Fina
ncia
l Sta
tem
ents
for t
he y
ear e
nded
30
June
201
6
Not
e 25
. Sta
tem
ent o
f dev
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ontri
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tinue
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- Th
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ectio
n 94
A
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orth
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lyvi
lle P
reci
nct 9
4A
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er
S94
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OT
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er
PUR
POSE
Con
trib
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nsIn
tere
stEx
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rnal
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d as
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ear
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asse
t
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ulat
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inte
rnal
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rrow
ings
du
e/(p
ayab
le)
Ope
ning
rece
ived
dur
ing
the
year
earn
eddu
ring
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owin
gre
stric
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nce
Cas
hN
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ash
–16
,301
–
PUR
POSE
Con
trib
utio
nsIn
tere
stEx
pend
iture
Inte
rnal
Hel
d as
Tota
l17
,354
2,51
9–
467
(4,0
39)
17,3
54
2,
519
–
46
7
(4
,039
)
–
16,3
01–
in y
ear
year
(to)/f
rom
asse
t
Cum
ulat
ive
inte
rnal
bo
rrow
ings
du
e/(p
ayab
le)
Ope
ning
rece
ived
dur
ing
the
year
earn
eddu
ring
borr
owin
gre
stric
ted
bala
nce
Cas
hN
on-c
ash
–22
0–
Tota
l10
221
–4
(15)
10
221
–
4
(15)
–
220
PUR
POSE
Con
trib
utio
nsIn
tere
stEx
pend
iture
Inte
rnal
Hel
d as
in y
ear
year
(to)/f
rom
asse
t
71
–
–
2
–
–
Cum
ulat
ive
inte
rnal
bo
rrow
ings
du
e/(p
ayab
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Ope
ning
rece
ived
dur
ing
the
year
earn
eddu
ring
borr
owin
gre
stric
ted
bala
nce
Cas
hN
on-c
ash
4,46
8
–
–
134
–
–
4,60
2–
73–
54
–
–
2
–
–
56
–
2–
2
–
–
–
–
–
–4,
734
–To
tal
4,59
6–
–13
8–
1
–
–
–
–
–
1–
NO
TES
TO
TH
E F
INA
NC
IAL
STA
TE
ME
NT
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r th
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nd
ed 3
0 J
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e 2
016
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TE
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. STA
TE
ME
NT
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PE
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TR
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W
ITH
OU
T I
NT
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NA
L B
OR
RO
WIN
GS
(co
nti
nu
ed)
86 The Hills Shire Council FINANCIAL STATEMENTS 2015-16
Page 83 Page 84
The Hills Shire Council FINANCIAL STATEMENTS 2015-16 87
Page 84
88 The Hills Shire Council FINANCIAL STATEMENTS 2015-16
PricewaterhouseCoopers, ABN 52 780 433 757Darling Park Tower 2, 201 Sussex Street, GPO BOX 2650, SYDNEY NSW 1171T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
The MayorDr Michelle Byrne Adjunct ProfessorThe Hills Shire CouncilDX 8455CASTLE HILL
Dear Councillor Byrne
Report on the conduct of the audit for year ended 30 June 2016 – Section 417(3)
We have completed our audit of the financial reports of The Hills Shire Council for the year ended30 June 2016, in accordance with Section 415 of the Local Government Act, 1993.
Our audit has been conducted in accordance with Australian Auditing Standards to provide reasonableassurance as to whether the financial reports are free of material misstatement. Our proceduresincluded examination, on a test basis, of evidence supporting the amounts and other disclosures in thefinancial reports, and the evaluation of accounting policies and significant accounting estimates.These procedures have been undertaken to form an opinion as to whether, in all material respects, thefinancial reports are presented fairly in accordance with Australian Accounting Standards as well asstatutory requirements so as to present a view which is consistent with our understanding of theCouncil’s financial position, the results of its operations and its cash flows.
This report should be read in conjunction with our audit opinion on the general purpose financialstatements provided under Section 417(2) of the Local Government Act 1993.
Flowing from our audit, there are a number of comments we wish to raise concerning the trends inCouncil's finances. These are set out below.
Operating Result
Council’s operating result declined from a $249 million surplus to a $328 million deficit during theperiod under review.
The main reasons for the decline were:
Loss on Boundary Adjustment $479m
Revaluation of investment property (Gay St) in2014 not repeated
$126m
The result before boundary adjustments and capital grants and contributions was, however, a surplusof $22m down from $146m in the prior year because of the Gay Street revaluation.
Cash Position
Council’s overall cash position increased from $311 million to $363 million during the period underreview. The following table highlights the composition of cash.
Page 85
The Hills Shire Council FINANCIAL STATEMENTS 2015-16 89
2015$m
2016$m
Externally restricted 126 190Internally restricted 153 128Unrestricted 32 45Total 311 363
Higher developer contributions mainly contributed to this increase.
Working Capital
Council’s net current assets also increased from $427 million to $463 million during the period underreview.
2015$m
2016$m
Net current assets 427 463Less:
External restrictions (127) (190)Internal restrictions (153) (128)
147 145Add:
Current Liabilities to be funded from othersources 23 25
Available Working Capital 170 170
The effective unrestricted or available working capital upon which Council could build its 2016/17budget upon was $170 million.
Performance Indicators
The financial reports disclose a number of useful indicators in Note 13 and these are detailed below.
June 2015%
June 2016%
Operating Performance Ratio 11 16Own Source Operating Revenue Ratio 51 47Unrestricted Current Ratio 2001 1571Debt Service Cover Ratio - -Rates Outstanding Ratio 2.8 2.5Cash Expense Cover Ratio 30 35
The operating performance ratio improved to 16% and remains well above the industry benchmark of‘above 0%’.
The own source operating revenue ratio declined to 47% and stands below the industry benchmark of60%. This ratio was impacted by significantly higher capital grants and contributions (up $26m)which, although bringing the ratio down, actually benefits Council financially.
Page 86
90 The Hills Shire Council FINANCIAL STATEMENTS 2015-16
The unrestricted current ratio declined but remained significantly above the accepted benchmark forthe industry of 150%.
The debt service cover ratio reflects the fact that Council continues to be debt free.
The rates outstanding ratio improved to 2.5% of collectibles and remains better than the industrybenchmark of 5%.
The cash expense cover ratio indicates that Council could continue to cover its operating costs for 35months should cash inflows cease. This compares very favourably with the industry benchmark of 3months.
The above indicators show that Council remains in a strong and stable financial position despite thenegative impact of the Boundary Change.
General
The books of accounts and records inspected by us have been kept in an accurate and conscientiousmanner. We thank the General Manager and his staff for the co-operation and courtesy extended touse during the course of our audit.
Yours faithfully
PricewaterhouseCoopers
Marc Upcroft SydneyPartner 24 August 2016
Page 87
The Hills Shire Council FINANCIAL STATEMENTS 2015-16 91
THE HILLS SHIRE COUNCIL
SPECIAL PURPOSEFINANCIAL STATEMENTS
2015-2016
92 The Hills Shire Council FINANCIAL STATEMENTS 2015-16
SPECIAL GENERAL PURPOSE FINANCIAL STATEMENTS
for the financial year ended 30 June 2016
Statement by Councillors & Management 93
Special Purpose Financial Statements:
• Income Statement – Other Business Activities 94
• Statement of Financial Position – Other Business Activities 95
Notes to the Special Purpose Financial Statements 97
Auditor’s Report 100
BACKGROUND
i. These Special Purpose Financial Statements have been prepared for the use by both Council and the Office of Local
Government in fulfilling their requirements under National Competition Policy.
ii. The principle of competitive neutrality is based on the concept of a ‘level playing field’ between persons/entities
competing in a market place, particularly between private and public sector competitors.
Essentially, the principle is that government businesses, whether Commonwealth, state or local, should operate
without net competitive advantages over other businesses as a result of their public ownership.
iii. For Council, the principle of competitive neutrality and public reporting applies only to declared business activities.
These include (a) those activities classified by the Australian Bureau of Statistics as business activities being water
supply, sewerage services, abattoirs, gas production and reticulation, and (b) those activities with a turnover of more
than $2 million that Council has formally declared as a business activity (defined as Category 1 activities).
iv. In preparing these financial statements for Council’s self-classified Category 1 businesses and ABS-defined activities,
councils must (a) adopt a corporatisation model and (b) apply full cost attribution including tax-equivalent regime
payments and debt guarantee fees (where the business benefits from Council’s borrowing position by comparison
with commercial rates).
THE HILLS SHIRE COUNCIL SPECIAL PURPOSE FINANCIAL STATEMENTS 2015-2016
Email: council@thehills.nsw.gov.au
Phone: (02) 9843 0555
The Hills Shire Council
www.thehills.nsw.gov.au
CONTENTS
The Hills Shire Council FINANCIAL STATEMENTS 2015-16 93
SPFS 2016
The Hills Shire Council
Special Purpose Financial Statements for the year ended 30 June 2016
Statement by Councillors and Management made pursuant to the Local Government Code of Accounting Practice and Financial Reporting
The attached Special Purpose Financial Statements have been prepared in accordance with:
the NSW Government Policy Statement ‘Application of National Competition Policy toLocal Government’,
the Division of Local Government Guidelines ‘Pricing and Costing for Council Businesses – A Guide to Competitive Neutrality’,
the Local Government Code of Accounting Practice and Financial Reporting,
the NSW Office of Water Best-Practice Management of Water and Sewerage Guidelines.
To the best of our knowledge and belief, these financial statements:
present fairly the operating result and financial position for each of Council’s declared businessactivities for the year, and
accord with Council’s accounting and other records.
We are not aware of any matter that would render these statements false or misleading in any way.
Signed in accordance with a resolution of Council made on 23 August 2016.
Dr Michelle Byrne Councillor Yvonne KeaneMayor Councillor
Dave Walker Chandi SabaGeneral manager Responsible accounting officer
page 2
SPECIAL GENERAL PURPOSE FINANCIAL STATEMENTS for the financial year ended 30 June 2016
STATEMENT BY COUNCILLORS & MANAGEMENT made pursuant to the Local Government Code of Accounting Practice & Financial Reporting
94 The Hills Shire Council FINANCIAL STATEMENTS 2015-16
SPFS 2016
page 3
The Hills Shire Council
Income Statement of Council's Other Business Activities for the year ended 30 June 2016
$ ’000
Income from continuing operationsAccess chargesUser chargesFeesInterestGrants and contributions provided for non-capital purposesProfit from the sale of assetsOther incomeTotal income from continuing operations
Expenses from continuing operationsEmployee benefits and on-costsBorrowing costsMaterials and contractsDepreciation and impairmentLoss on disposal of assets (due to Proclamation)Calculated taxation equivalentsDebt guarantee fee (if applicable)Other expensesTotal expenses from continuing operationsSurplus (deficit) from continuing operations before capital amounts
Grants and contributions provided for capital purposesSurplus (deficit) from continuing operations after capital amounts
Surplus (deficit) from boundary adjustmentSurplus (deficit) from all operations before taxLess: corporate taxation equivalent (30%) [based on result before capital]
SURPLUS (DEFICIT) AFTER TAX
Plus opening retained profitsPlus/less: prior period adjustmentsPlus/less: other adjustmentsPlus adjustments for amounts unpaid:– Taxation equivalent payments– Debt guarantee fees– Corporate taxation equivalentAdd:– Subsidy paid/contribution to operationsLess:– TER dividend paid– Dividend paidClosing retained profits
Return on capital %Subsidy from Council
Category 1 Category 1
17.4%
1,836
136.1%–
1,335
–
501(5)(150)
–
–
–
150–––
–
11
–
–
––
–5
–
88
–
––
–
1,3191,3352,435
351
91
304
(1,035)(731)
–
304–
2,728
––
5,903
(822)
(91)
5,599374
–
–
205
–293
293(88)
2,532
16
2,865
–
–
121
22
–
66
293
– ––
–––
55–
–
936 2,266148
5,173329
5,466
2016Actual
2015Actual Actual
20152016
–
56
–
5,717–
5,993
5106,961
–
–
–
–
5,523–
27337
–16
4,135
1,035
7,304
317–
3,842
5.6%
Child Care Hills Community Care
1,997
–
–
–
2,728
–
–
––
5.0%
1,248
50
–
501 16
– –––
3,086
5,077–
53–
Actual
1,183
–
6,9451,4271,303
16
6,803
–
501–
– – –
INCOME STATEMENT OF COUNCIL’S OTHER BUSINESS ACTIVITIES for the year ended 30 June 2016
The Hills Shire Council FINANCIAL STATEMENTS 2015-16 95
SPFS 2016
page 4
The Hills Shire Council
Statement of Financial Position – Council's Other Business Activities as at 30 June 2016
$ ’000
ASSETSCurrent assetsCash and cash equivalentsInvestmentsReceivablesInventoriesOtherTotal Current Assets
Non-current assetsInvestmentsReceivablesInventoriesInfrastructure, property, plant and equipmentInvestments accounted for using equity methodInvestment propertyIntangible assetsOtherTotal non-current assetsTOTAL ASSETS
LIABILITIESCurrent liabilitiesBank overdraftPayablesBorrowingsProvisionsTotal current liabilities
Non-current liabilitiesPayablesBorrowingsProvisionsOther LiabilitiesTotal non-current liabilitiesTOTAL LIABILITIESNET ASSETS
EQUITYRetained earningsRevaluation reservesCouncil equity interestNon-controlling equity interestTOTAL EQUITY
822
–
–
1,3351,836
–
222
–
734
––
1,3356,404
2,570
1,997
5,673–
3,676
–
5,673 6,404–
–
1,836–
–
–
–
822
–
1,044
–
1,836
5
1,836
–
Child Care
–
–
1,039
–
–
Category 1
–
Actual
1,313–
Hills Community Care
Category 1
–
2016
–
2015
–
Actual 2015
1,335
5–
734
2,728
–
6,4045,673
–
–
92
––
–
–
1,682
368
–
–
–
–
–
5,809
7,226
– – –
–
368––
3,676
–
4391,335
–
439
––––
439
1,774
–
Actual
512–
–
–
1,682
92
–
–
–185
5,8095,4046,717
–
822
1,417
–
–
–
–5,404
–
–
–
1,313
–
––
Actual 2016
– –
2,202
2,202
–1,417
854
–
–
– – – –
STATEMENT OF FINANCIAL POSITION - COUNCIL’S OTHER BUSINESS ACTIVITIES as at 30 June 2016
96 The Hills Shire Council FINANCIAL STATEMENTS 2015-16
SPFS 2016
page 5
The Hills Shire Council
Special Purpose Financial Statements for the year ended 30 June 2016
Contents of the notes accompanying the financial statements
Details
Summary of significant accounting policies
Water Supply Business Best-Practice Management disclosure requirements
Sewerage Business Best-Practice Management disclosure requirements n/a3
Note Page
1
2
6
n/a
SPECIAL PURPOSE FINANCIAL STATEMENTS for the financial year ended 30 June 2016
97
The Hills Shire Council FINANCIAL STATEMENTS 2015-16 97
SPFS 2016_
The Hills Shire Council
Notes to the Special Purpose Financial Statementsfor the year ended 30 June 2016
Note 1. Significant accounting policies
page 6
These financial statements are a Special Purpose Financial Statements (SPFS) prepared for use by Council and the Office of Local Government.
For the purposes of these statements, the Council is not a reporting not-for-profit entity.
The figures presented in the SPFS, unless otherwise stated, have been prepared in accordance with:
the recognition and measurement criteria of relevant Australian Accounting Standards,
other authoritative pronouncements of the Australian Accounting Standards Board (AASB), and
Australian Accounting Interpretations.
The disclosures in the SPFS have been prepared in accordance with:
the Local Government Act (1993) NSW,
the Local Government (General) Regulation, and
the Local Government Code of Accounting Practice and Financial Reporting.
The statements are also prepared on an accruals basis, based on historic costs and do not take into account changing money values nor current values of non-current assets (except where specifically stated).
Certain taxes and other costs (appropriately described) have been imputed for the purposes of the National Competition Policy.
National Competition Policy
Council has adopted the principle of ‘competitive neutrality’ to its business activities as part of the national competition policy which is being applied throughout Australia at all levels of government.
The framework for its application is set out in the June 1996 government policy statement, Application of National Competition Policy to Local Government.
The Pricing and Costing for Council Businesses, AGuide to Competitive Neutrality, issued by the Officeof Local Government in July 1997, has also been adopted.
The pricing and costing guidelines outline the process for identifying and allocating costs to activities and provide standards for disclosure. These disclosures are reflected in Council’s pricing and/orfinancial reporting systems and include taxation equivalents, Council subsidies, return on investments(rate of return), and dividends paid.
Declared business activities
In accordance with Pricing and Costing for Council Businesses – A Guide to Competitive Neutrality,Council has declared that the following are to be considered as business activities:
Category 1
(where gross operating turnover is over $2 million)
a. Child careProvision of child care service
b. HCCProvision of aged care service
Category 2
(where gross operating turnover is less than $2 million)
None
Monetary amounts
Amounts shown in the financial statements are in Australian currency and rounded to the nearest thousand dollars.
(i) Taxation-equivalent charges
Council is liable to pay various taxes and financial duties in undertaking its business activities. Where this is the case, they are disclosed in these statements as a cost of operations just like all other costs.
However, where Council is exempt from paying taxes which are generally paid by private sector businesses (such as income tax), equivalent tax payments have been applied to all Council-nominated business activities and are reflected inthese financial statements.
For the purposes of disclosing comparative information relevant to the private sector equivalent,
NOTES TO THE SPECIAL PURPOSE FINANCIAL STATEMENTS for the year ended 30 June 2016
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
98 The Hills Shire Council FINANCIAL STATEMENTS 2015-16
SPFS 2016_
The Hills Shire Council
Notes to the Special Purpose Financial Statementsfor the year ended 30 June 2016
Note 1. Significant accounting policies (continued)
page 7
the following taxation equivalents have been applied to all Council-nominated business activities (this does not include Council’s non-business activities):
Notional rate applied (%)
Corporate income tax rate – 30%
Land tax – the first $482,000 of combined land values attracts 0%. For that valued from $482,001 to $2,947,000 the rate is 1.6% + $100. For the remaining combined land value that exceeds $2,947,000, a premium marginal rate of 2.0%applies.
Payroll tax – 5.45% on the value of taxable salaries and wages in excess of $750,000.
Income tax
An income tax equivalent has been applied on the profits of each reported business activity.
While income tax is not a specific cost for the purpose of pricing a good or service, it needs to be taken into account in terms of assessing the rate of return required on capital invested.
Accordingly, the return on capital invested is set at a pre-tax level (gain or loss from ordinary activities before capital amounts) as would be applied by a private sector competitor – that is, it should include a provision equivalent to the corporate income tax rate, currently 30%.
Income tax is only applied where a positive gain/(loss) from ordinary activities before capital amounts has been achieved.
Since this taxation equivalent is notional – that is, it ispayable to Council as the ‘owner’ of business operations, it represents an internal payment andhas no effect on the operations of the Council.Accordingly, there is no need for disclosure ofinternal charges in Council’s General Purpose Financial Statements.
The 30% rate applied is the equivalent company tax rate prevalent as at balance date. No adjustments have been made for variations that have occurred during the year.
Local government rates and charges
A calculation of the equivalent rates and charges payable on all category 1 businesses has been applied to all land assets owned or exclusively used by the business activity.
Loan and debt guarantee fees
The debt guarantee fee is designed to ensure that council business activities face ‘true’ commercialborrowing costs in line with private sector competitors.
In order to calculate a debt guarantee fee, Council has determined what the differential borrowing rate would have been between the commercial rate and Council’s borrowing rate for its business activities.
(ii) Subsidies
Government policy requires that subsidies provided to customers, and the funding of those subsidies,must be explicitly disclosed.
Subsidies occur when Council provides services on a less-than-cost-recovery basis. This option is exercised on a range of services in order for Council to meet its community service obligations.
Accordingly, ‘subsidies disclosed’ (in relation to National Competition Policy) represents the difference between revenue generated from ‘rate of return’ pricing and revenue generated from prices set by Council in any given financial year.
The overall effect of subsidies is contained within the Income Statement of each reported business activity.
(iii) Return on investments (rate of return)
The policy statement requires that councils with category 1 businesses ‘would be expected togenerate a return on capital funds employed that is comparable to rates of return for private businessesoperating in a similar field’.
Such funds are subsequently available for meeting commitments or financing future investment strategies.
NOTES TO THE SPECIAL PURPOSE FINANCIAL STATEMENTS for the year ended 30 June 2016
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES (continued)
The Hills Shire Council FINANCIAL STATEMENTS 2015-16 99
SPFS 2016_
The Hills Shire Council
Notes to the Special Purpose Financial Statementsfor the year ended 30 June 2016
Note 1. Significant accounting policies (continued)
page 8
The rate of return on capital is calculated as follows:
Operating result before capital income + interest expense
Written down value of I,PP&E as at 30 June
As a minimum, business activities should generate a return equal to the Commonwealth 10 year bond rate which is 2.17% at 30/6/16.
The actual rate of return achieved by each business activity is disclosed at the foot of each respective Income Statement.
(iv) Dividends
Council is not required to pay dividends to either itself (as owner of a range of businesses) or to anyexternal entities.
NOTES TO THE SPECIAL PURPOSE FINANCIAL STATEMENTS for the year ended 30 June 2016
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES (continued)
100 The Hills Shire Council FINANCIAL STATEMENTS 2015-16
Page 9Page 10
The Hills Shire Council FINANCIAL STATEMENTS 2015-16 101
Page 10
102 The Hills Shire Council FINANCIAL STATEMENTS 2015-16
THE HILLS SHIRE COUNCIL
SPECIAL SCHEDULESfor the year ended 30 June 2016
The Hills Shire Council FINANCIAL STATEMENTS 2015-16 103
SPECIAL SCHEDULES
for the year ended 30 June 2016
Special Schedules1:
Special Schedule 1 Net Cost of Services 104
Special Schedule 7 Report on Infrastructure Assets 106
Special Schedule 8 Permissible Income Calculation 110
1 Special Schedules are not audited (with the exception of Special Schedule 8).
BACKGROUND
i. These Special Schedules have been designed to meet the requirements of special purpose users such as;
• the NSW Grants Commission
• the Australian Bureau of Statistics (ABS),
• the NSW Office of Water (NOW), and
• the Office of Local Government (OLG).
ii The financial data is collected for various uses including;
• the allocation of Financial Assistance Grants,
• the incorporation of Local Government financial figures in national statistics,
• the monitoring of loan approvals,
• the allocation of borrowing rights, and
• the monitoring of the financial activities of specific services.
THE HILLS SHIRE COUNCIL SPECIAL SCHEDULES
2015-2016
Email: council@thehills.nsw.gov.au
Phone: (02) 9843 0555
The Hills Shire Council
www.thehills.nsw.gov.au
CONTENTS
104 The Hills Shire Council FINANCIAL STATEMENTS 2015-16
Special Schedules 2016
page 2
The Hills Shire Council
Special Schedule 1 – Net Cost of Services for the year ended 30 June 2016
$’000
Governance
Administration
Public order and safety
Beach controlEnforcement of local government regulationsAnimal controlOtherTotal public order and safety
Health
EnvironmentNoxious plants and insect/vermin controlOther environmental protectionSolid waste managementStreet cleaningDrainageStormwater managementTotal environment
Community services and educationAdministration and educationSocial protection (welfare)Aged persons and disabledChildren’s servicesTotal community services and education
Housing and community amenitiesPublic cemeteriesPublic conveniencesStreet lightingTown planningOther community amenitiesTotal housing and community amenities
–
(1,586)–
–
–(2,114)
–
–
(2,760)–
–
500
914
414
(1,900)
–3,674
–
–736
27,100
31,9351,032
6,290
6,803
16,021
–
7,303–
6,290–
16,154
–
Net cost.of services.
(230)–
(3,210)
13,115
9,957542
7,507 4,624 – (2,883)
–––
–
–
–
–
Function or activity
–
Fire service levy, fire protection, emergency services
–
5,544
2,71413,440
–
3,717
–
– –(3,440)
– –
–
–
––
5,000–
–
507
–
–
10,278
–
–
––
2,376(1,962)
360–
–
–
–
–
––
–
9,526
14,1215,904
752
13,851
13,851–
Expenses from.continuing.operations. Non-capital.
1,283
–
1,574–
Capital.
Income fromcontinuing operations
1,053
–
953–
25,514
1,560
28,041
3,067
SPECIAL SCHEDULE 1 - NET COST OF SERVICES
for the year ended 30 June 2016
The Hills Shire Council FINANCIAL STATEMENTS 2015-16 105
Special Schedules 2016
The Hills Shire Council
Special Schedule 1 – Net Cost of Services (continued) for the year ended 30 June 2016
$’000
Recreation and culturePublic librariesMuseumsArt galleriesCommunity centres and hallsPerforming arts venuesOther performing artsOther cultural servicesSporting grounds and venuesSwimming poolsParks and gardens (lakes)Other sport and recreationTotal recreation and culture
Fuel and energy
Agriculture
Mining, manufacturing and constructionBuilding controlOther mining, manufacturing and constructioTotal mining, manufacturing and const.
Transport and communicationUrban roads (UR) – localUrban roads – regionalSealed rural roads (SRR) – localSealed rural roads (SRR) – regionalUnsealed rural roads (URR) – localUnsealed rural roads (URR) – regionalBridges on UR – localBridges on SRR – localBridges on URR – localBridges on regional roadsParking areasFootpathsAerodromesOther transport and communicationTotal transport and communication
Economic affairsCamping areas and caravan parksOther economic affairsTotal economic affairs
Totals – functionsGeneral purpose revenues (1)
NET OPERATING RESULT (2)
(1) Includes: rates and annual charges (including ex gratia, excluding water and sewer), non-capital general purpose (2) As reported in the Income Statement
grants, interest on investments (excluding externally restricted assets) and interest on overdue rates and annual charges
Income fromcontinuing operations
– – –
–
721
–
132,743
–
26,946 9,147
3,480 3,480
154,456
332
– –
82,382 132,743
332
–
72,074
– –
129,009
–
–
–
– –
–
– 860
–
2,154 – – –
–
–
– –
55,897
Function or activity
–
–
–
55,897
–
– –
–
–
–
–
–
–
–
–
–
–
–
– –
–
52,971 25,700 – –
3,971
– –
–
–
–
– – – –
–
–
Non-capital.
–
Expenses from.continuing.operations.
13,459
– –
–
2,227
– –
– –
– –
24,792 8,287
–
–
–
–
–
–
– –
–
31,242
48,966 1,023
–
Capital.
–
4,005
–
–
– – –
129,009
– – – –
150,722
–
68,340 (3,148)
–
38,098 (1,294)
(3,148)
–
–
–
–
–
82,382
6,621 –
–
(5,900) –
5,620
–
–
–
–
612
–
Net cost.of services.
–
–
–
–
39,392
–
–
– 36,530
Share of interests – joint ventures and associates using the equity method
page 3
SPECIAL SCHEDULE 1 - NET COST OF SERVICES (continued)
for the year ended 30 June 2016
106 The Hills Shire Council FINANCIAL STATEMENTS 2015-16
Spe
cial
Sch
edul
es 2
016
page
4
The
Hill
s S
hire
Cou
ncil
Spe
cial
Sch
edul
e 7
– R
epor
t on
Infra
stru
ctur
e A
sset
s as
at 3
0 Ju
ne 2
016
as
at 3
0 Ju
ne 2
016
$’00
0
Cou
ncil
publ
ic h
alls
––
834
1,29
363
,338
76,0
520%
95%
5%0%
0%Li
brar
ies
––
141
515
13,2
7615
,126
0%96
%4%
0%0%
228,
311
Asse
ts in
con
ditio
n as
a p
erce
ntag
e of
gro
ss
repl
acem
ent c
ost
Car
ryin
gva
lue
8,21
8
–
–
0%11
2,92
90%
1,03
815
%
– – – – –3,
690
8.2%
942,
756
7.1%
0.0%
39.8
%0%
Brid
ges
599,
962
109,
456
233,
338
72%
13%
347
5.3%
69%
28%
35,4
636,
439
77,7
60
235,
841
7,37
9
83,2
53
5%
1,16
7
– –
57
Hou
ses
Amen
ities
, spo
rting
, toi
lets
Bui
ldin
gs17
,296
10,0
254,
026
9
20,0
56
–13
1
73
21
3%Se
aled
road
s
Ass
et c
lass
to b
ring
asse
tsEs
timat
ed c
ost
2015
/16
to b
ring
to th
e20
15/1
6G
ross
stan
dard
mai
nten
ance
–
127
Asse
t cat
egor
y
Chi
ld c
are
174
221
Req
uire
dAc
tual
repl
acem
ent
cost
(GR
C)
mai
nten
ance
ato
sat
isfa
ctor
y
Estim
ated
cos
t
agre
ed le
vel o
fse
rvic
e se
t by
Cou
ncil – –
0.0%
19%
23%
–
Roa
ds
Sub-
tota
l
Cou
ncil
offic
es /
adm
inis
tratio
n ce
ntre
s
4,78
0– –
0%95
%
41,6
6182
%
4
78
0%0%
12%
10,2
57
0%
15%
– –
0%5%
90%
33
6%
0%
95%
10%
5%
5
5%
Rur
al F
ire S
ervi
ce
Aged
and
dis
able
dSw
imm
ing
pool
3
0% 0%
89.2
%
90%
85%
85%
0%
–
0% 0%11
,872
0% 0%
0%–
634,
471
6,96
9
5%
0%
0%
–Ke
rb a
nd g
utte
rSu
b-to
tal
67 664
270,
436
0.0%
5%72
%
2,68
1
153
39–
5,38
6
0%
0%
–32
2
0%0%43
9
8,04
6
–0%
53.1
%97
5,71
1
4,91
1
0.0%
SPEC
IAL S
CH
ED
ULE 7
- R
EP
OR
T O
N I
NF
RA
ST
RU
CT
UR
E A
SS
ET
S
as a
t 3
0 J
un
e 2
016
The Hills Shire Council FINANCIAL STATEMENTS 2015-16 107
Spe
cial
Sch
edul
es 2
016
The
Hill
s S
hire
Cou
ncil
Spe
cial
Sch
edul
e 7
– R
epor
t on
Infra
stru
ctur
e A
sset
s as
at 3
0 Ju
ne 2
016
(con
tinue
d) a
s at
30
June
201
6
$’00
0
Cou
ncil's
infra
stru
ctur
e ba
cklo
g ha
s no
w b
een
redu
ced
to z
ero
from
$52
m re
porte
d in
Jun
e 20
11.
This
has
bee
n as
a re
sult
of s
pend
ing
grea
ter t
han
wha
t is
requ
ired
in o
rder
to m
aint
ain
asse
ts in
a s
atis
fact
ory
cond
ition
.
Not
es:
aR
equi
red
mai
nten
ance
is th
e am
ount
iden
tifie
d in
Cou
ncil’
s as
set m
anag
emen
t pla
ns.
Infr
astr
uctu
re a
sset
con
ditio
n as
sess
men
t ‘ke
y’
Exce
llent
No
wor
k re
quire
d (n
orm
al m
aint
enan
ce)
Con
ditio
nD
escr
iptio
n he
re…
Goo
dO
nly
min
or m
aint
enan
ce w
ork
requ
ired
Con
ditio
nD
escr
iptio
n he
re…
Ave
rage
Mai
nten
ance
wor
k re
quire
dC
ondi
tion
Des
crip
tion
here
…Po
orR
enew
al re
quire
dC
ondi
tion
Des
crip
tion
here
…Ve
ry p
oorU
rgen
t ren
ewal
/upg
radi
ng re
quire
dC
ondi
tion
Des
crip
tion
here
…
5re
plac
emen
t
25%
5
–
Stor
mw
ater
mai
nten
ance
a
37%
Gro
ss
–
–
240,
946
mai
nten
ance
Act
ual
Req
uire
dto
sat
isfa
ctor
yst
anda
rd
recr
eatio
nal
232,
551
49,6
37
O
pen
spac
e/–
Car
ryin
gva
lue
240,
946
Su
b-to
tal
38.0
%
Ass
et c
ateg
ory
to b
ring
to th
e
Cou
ncil
Estim
ated
cos
t
agre
ed le
vel o
fse
rvic
e se
t by
3co
st (G
RC
)
1,36
2
1,69
2
0%23
2,51
1
736
478
20
15/1
6
0%
Par
ks In
frast
ruct
ure
–
–
2015
/16
38%
21
35%
0%42
.0%
35.0
%0.
0%0.
0%49
,637
–
25.0
%0.
0%37
.0%
0%
478
0.0%
736
4
asse
tsSu
b-to
tal
63,0
43
23
%42
%
to b
ring
asse
ts
Ass
et c
lass
Sto
rmw
ater
dra
inag
e
–
1,36
2
1,69
2
63,0
43
23
.0%
Estim
ated
cos
t
10,1
65
13,9
06
1,55
0,13
6
41
.7%
46.2
%12
.6%
0.0%
0.0%
–
Ass
ets
in c
ondi
tion
as a
per
cent
age
of g
ross
re
plac
emen
t cos
t
43216 10987
1,46
0,78
5
TO
TAL
– A
LL A
SSET
S–
page
5
SPEC
IAL S
CH
ED
ULE 7
- R
EP
OR
T O
N I
NF
RA
ST
RU
CT
UR
E A
SS
ET
S (c
on
tin
ued
)
as a
t 3
0 J
un
e 2
016
108 The Hills Shire Council FINANCIAL STATEMENTS 2015-16
Special Schedules 2016
The Hills Shire Council
Special Schedule 7 – Report on Infrastructure Assets (continued) for the year ended 30 June 2016
$ ’000
Infrastructure asset performance indicators * consolidated
1. Infrastructure renewals ratioAsset renewals (1)
Depreciation, amortisation and impairment
2. Infrastructure backlog ratioEstimated cost to bring assets to a satisfactory standardCarrying value of infrastructure assets
3. Asset maintenance ratioActual asset maintenanceRequired asset maintenance
Notes
* All asset performance indicators are calculated using the asset classes identified in the previous table.
(1) Asset renewals represent the replacement and/or refurbishment of existing assets to an equivalent capacity/performance as opposed to the acquisition of new assets (or the refurbishment of old assets) that increases capacity/performance.
13,906
Indicator Prior periods
– 0.00% 1.03% 2.67%1,460,785
2016 2016 2015 2014
26,743 263.09% 231.52% 194.20%10,165
Amounts
1.37 2.31 1.9410,165
page 6
SPECIAL SCHEDULE 7 - REPORT ON INFRASTRUCTURE ASSETS (continued) as at 30 June 2016
The Hills Shire Council FINANCIAL STATEMENTS 2015-16 109
Special Schedules 2016
The Hills Shire Council
Special Schedule 7 – Report on Infrastructure Assets (continued) for the year ended 30 June 2016
Benchmark: ――― Minimum >=100.00% Ratio achieves benchmarkSource for benchmark: Code of Accounting Practice and Financial Reporting #24 Ratio is outside benchmark
Benchmark: ――― Maximum <2.00% Ratio achieves benchmarkSource for benchmark: Code of Accounting Practice and Financial Reporting #24 Ratio is outside benchmark
Benchmark: ――― Minimum >1.00 Ratio achieves benchmarkSource for benchmark: Code of Accounting Practice and Financial Reporting #24 Ratio is outside benchmark
Council is continuing to renew its assets greater than the rate it is depreciating. It is
well above the benchmark of 100% and Council has now reduced its infrastructure
backlog to ZERO.
Commentary on 2015/16 result
2015/16 Ratio 0.00%
Council's infrastructure backlog has now reduced to zero from $52m reported in June
2011.
Commentary on 2015/16 result
2015/16 Ratio 1.37 x
Compares actual vs. required annual asset maintenance. A ratio above 1.0 indicates Council is investing
enough funds to stop the infrastructure backlog growing.
Purpose of asset renewals ratio
This ratio showswhat proportion the backlog is against
the total valueof a Council’s infrastructure.
To assess the rate at which these assets are being renewed
relative to the rate at which they are depreciating.
Purpose of infrastructurebacklog ratio
Purpose of asset maintenance ratio
Commentary on 2015/16 result
2015/16 Ratio 263.09%
Council continues to spend greater than what is required in order to maintain assets in a satisfactory condition and to stop the
infrastructure backlog from growing.
135%
194%232%
263%
0%
50%
100%
150%
200%
250%
300%
2013 2014 2015 2016
Rat
io %
1. Infrastructure renewals ratio
1.0%
0.0%
3.7%
2.7%
0.0%0.5%1.0%1.5%2.0%2.5%3.0%3.5%4.0%
2013 2014 2015 2016
Rat
io %
2. Infrastructure backlog ratio
1.53
1.94 2.32
1.37
0.00
0.50
1.00
1.50
2.00
2.50
2013 2014 2015 2016
Rat
io (
x)
3. Asset maintenance ratio
page 7
SPECIAL SCHEDULE 7 - REPORT ON INFRASTRUCTURE ASSETS (continued) as at 30 June 2016
110 The Hills Shire Council FINANCIAL STATEMENTS 2015-16
Special Schedules 2016
page 8
The Hills Shire Council
Special Schedule 8 – Permissible Income Calculation for the year ended 30 June 2017
$’000
Notional general income calculation (1)
Last year notional general income yieldPlus or minus adjustments (2)
Notional general income
Permissible income calculation
Special variation percentage (3)
Or rate peg percentageOr crown land adjustment (incl. rate peg percentage)
Less expiring special variation amountPlus special variation amount
Or plus rate peg amountOr plus Crown land adjustment and rate peg amount
Sub-total
Plus (or minus) last year’s carry forward totalLess valuation objections claimed in the previous yearSub-total
Total permissible income
Less notional general income yieldCatch-up or (excess) result
Plus income lost due to valuation objections claimed (4)
Less unused catch-up (5)
Carry forward to next year
Notes
(1) The notional general income will not reconcile with rate income in the financial statements in the correspondingyear. The statements are reported on an accrual accounting basis which include amounts that relate to prior years’rates income.
(2) Adjustments account for changes in the number of assessments and any increase or decrease in land value occurringduring the year. The adjustments are called ‘supplementary valuations’ as defined in the Valuation of Land Act 1916 .
(3) The ‘special variation percentage’ is inclusive of the rate peg percentage and where applicable Crown land adjustment.
(4) Valuation objections are unexpected changes in land values as a result of land owners successfully objecting to theland value issued by the Valuer-General. Councils can claim the value of the income lost due to valuation objections inany single year.
(5) Unused catch-up amounts will be deducted if they are not caught up within 2 years. Usually councils will have anominal carry forward figure. These amounts can be adjusted for in setting the rates in a future year.
(6) Carry forward amounts which are in excess (an amount that exceeds the permissible income) require ministerial approval by order published in the NSW Government Gazette in accordance with section 512 of the Local Government Act 1993 . The OLG will extract these amounts from Council’s Special Schedule 8 in the financial data return (FDR) to administer this process.
978 1,14569,140 71,943
68,162 70,798
0.00% 0.00%2.40% 1.80%0.00% 0.00%
– –– –
– 14
1,659 1,295– –
70,799 73,238
– (13)– 1
73,239
70,798 73,234
a
14 81
Calculation Calculation2015/16 2016/17
– –
1 5
13 76
70,799
l
m
n = (l + m)
o = k + n
g
k = (c + g + h + i + j)
b
d
e
f
j = c x f
i = c x e
h = d x (c – g)
c = (a + b)
p
q = o – p
r
st = q + r – s
SPECIAL SCHEDULE 8 - PERMISSABLE INCOME CALCULATION
for the year ended 30 June 2017
Page 9
The Hills Shire Council FINANCIAL STATEMENTS 2015-16 111Page 9
112 The Hills Shire Council FINANCIAL STATEMENTS 2015-16 Page 10
The Hills Shire Council FINANCIAL STATEMENTS 2015-16 113
THE HILLS SHIRE COUNCIL
FINANCIAL STATEMENTS
2015 - 2016
Email: council@thehills.nsw.gov.au
Phone: (02) 9843 0555
The Hills Shire Council
www.thehills.nsw.gov.au