Lockhart Shire Council · 2015-11-26 · by proclamation and is duly empowered by the Local...

Lockhart Shire Council GENERAL PURPOSE FINANCIAL STATEMENTS for the year ended 30 June 2015

Part 2 of 3

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Financial Statements 2015

page 1

Lockhart Shire Council

General Purpose Financial Statements for the financial year ended 30 June 2015

Contents

1. Understanding Council's Financial Statements

2. Statement by Councillors & Management

3. Primary Financial Statements:

- Income Statement- Statement of Comprehensive Income- Statement of Financial Position- Statement of Changes in Equity- Statement of Cash Flows

4. Notes to the Financial Statements

5. Independent Auditor's Reports:

- On the Financial Statements (Sect 417 [2]) - On the Conduct of the Audit (Sect 417 [3])

Overview

(i) These financial statements are General Purpose Financial Statements and cover the consolidated operationsfor Lockhart Shire Council.

(ii) Lockhart Shire Council is a body politic of NSW, Australia - being constituted as a Local Government areaby proclamation and is duly empowered by the Local Government Act (LGA) 1993 of NSW.

Council's Statutory Charter is detailed in Paragraph 8 of the LGA and includes giving Council;

the ability to provide goods, services & facilities, and to carry out activities appropriate to the current & futureneeds 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 28 October 2015.Council has the power to amend and reissue these financial statements.

8

9

7476

Page

4

67

5

2

3

Financial Statements 2015_


Notes to the Financial Statements for the financial year ended 30 June 2015

Understanding Council's Financial Statements

page 2

Introduction

Each year, individual Local Governments across NSW are required to present a set of audited financial statements to their Council & Community.

What you will find in the Statements

The financial statements set out the financial performance, financial position & cash flows of Council for the financial year ended 30 June 2015.

The format of the financial statements is standard across all NSW Councils and complies with both the accounting & 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 & ownership of the financial statements.

About the Primary Financial Statements

The financial statements incorporate 5 "primary" financial statements:

1. The Income StatementSummarises Council's financial performance for the year, listing all income & 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 IncomePrimarily records changes in the fair values of Council's Infrastructure, Property, Plant & Equipment.

3. The Statement of Financial PositionA 30 June snapshot of Council's financial position indicating its Assets, Liabilities & “Net Wealth”.

4. The Statement of Changes in EquityThe overall change for the year (in dollars) of Council's "Net Wealth".

5. The Statement of Cash FlowsIndicates 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 5 primary financial statements.

About the Auditor's Reports

Council's financial statements are required to be audited by external accountants (that generally specialize in Local Government).

In NSW, the Auditor provides 2 audit reports:

1. An opinion on whether the financial statementspresent fairly the Council's financial performance& position, &

2. Their observations on the conduct of the Auditincluding commentary on the Council's financialperformance & financial position.

Who uses the Financial Statements ?

The financial statements are publicly available documents & must be presented at a Council meeting between 7 days & 5 weeks after the date of the Audit Report.

Submissions from the public can be made to Council up to 7 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.


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General Purpose Financial Statements for the financial year ended 30 June 2015

Statement by Councillors and Managementmade pursuant to Section 413(2)(c) of the Local Government Act 1993 (as amended)

The attached General Purpose Financial Statements have been prepared in accordance with:

The Local Government Act 1993 (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

accords with Council’s accounting and other records.

We are not aware of any matter that would render the Reports false or misleading in any way.

Signed in accordance with a resolution of Council made on 17 August 2015.

Clr Peter Yates Clr Rodger SchirmerMAYOR COUNCILLOR

Mr Rod Shaw Craig FletcherGENERAL MANAGER RESPONSIBLE ACCOUNTING OFFICER


This Statement should be read in conjunction with the accompanying Notes. page 4


Income Statement for the financial year ended 30 June 2015

$ '000

Income from Continuing OperationsRevenue:Rates & Annual ChargesUser Charges & FeesInterest & Investment RevenueOther RevenuesGrants & Contributions provided for Operating PurposesGrants & Contributions provided for Capital PurposesOther Income:Net gains from the disposal of assetsNet Share of interests in Joint Ventures &Associates using the equity method

Total Income from Continuing Operations

Expenses from Continuing OperationsEmployee Benefits & On-CostsBorrowing CostsMaterials & ContractsDepreciation & AmortisationImpairmentOther Expenses

Total Expenses from Continuing Operations

Operating Result from Continuing Operations

Discontinued Operations

Net Profit/(Loss) from Discontinued Operations

Net Operating Result for the Year

Net Operating Result attributable to CouncilNet Operating Result attributable to Non-controlling Interests

Net Operating Result for the year before Grants andContributions provided for Capital Purposes

Original Budget as approved by Council - refer Note 16

Actual 2014

1,204 2,036

Actual 2015

70

126

2,945 381

127

9,936

14

250 244

2,547

335 255

5,723

2,590

7,509

2,857

8,606

1,330

1,330

-

1,330

- -

7,034

2,076

9,110

1,646

1,924 -

1,003

24

1

2,076

-

1,366

4d1,097

7

3,083

- 2,827

-

2,002

4e

3,005

Notes

3a

3d3c

10,099

2,590

-

Budget 1

3e,f

4d

5

4b

5,849 554

87

281

2015

295

710

184

193

4c

3b

2,590

19

72 1,333 1,924

4a

2,076

3e,f

-

-

70 2,391

4,723

-

1,160




Statement of Comprehensive Income for the financial year ended 30 June 2015

$ '000

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&ETotal 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

1,431

188

-

188

101

1,431

Actual

101 188

Actual 2014

2,590

2,778

2,778

1,330

Notes

20b (ii) 101

-

2015




Statement of Financial Position as at 30 June 2015

$ '000

ASSETSCurrent AssetsCash & Cash EquivalentsInvestmentsReceivablesInventoriesOtherNon-current assets classified as "held for sale"Total Current Assets

Non-Current AssetsInvestmentsReceivablesInventoriesInfrastructure, Property, Plant & EquipmentInvestments accounted for using the equity methodInvestment PropertyIntangible AssetsTotal 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

7,537

8

7

Notes

58

-

22

2014Actual Actual

201,978

8,339

886 12

193,639

2,029

-

-

312 226

- -

-

195,348

9,887

-

203,409

10

10

125

8

205,438

366

1,077

3

194,969

952 964

2,171

1,207

95

194,262

110

204,149

573

854

10

66

10

10

195,825

7

14199

25

6b

1 -

193,868

29 605 680

-

40

31

- 319

203,409

203,409

8,440 201,978

8

6a6b

1,794 550

10

9,613

2015

1,754 3

7,542

-

201,978 -

2020




Statement of Changes in Equity for the financial year ended 30 June 2015

$ '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 RsveOther Comprehensive Income

Total Comprehensive Income (c&d)

e. Distributions to/(Contributions from) Non-controlling Interestsf. 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 1/7/13)

c. Net Operating Result for the Year

d. Other Comprehensive Income - Revaluations : IPP&E Asset Revaluation RsveOther Comprehensive Income

Total Comprehensive Income (c&d)

e. Distributions to/(Contributions from) Non-controlling Interestsf. Transfers between Equity

Equity - Balance at end of the reporting period

TotalInterest

188 188 -

188

209,769

199,200 -

(10,569)

-

-

2,590

-

188

-

188

199,200

188

(10,569) - -

8,339

101

-

Non-

1,431

controlling

201,978

212,547

- -

Council

1,330

212,547

201,978

101

-

- 101 - 101

-

101

(10,569)

EquityTotal

-

2,590

-

-

Interestcontrolling

209,769

InterestCouncil

8,440

-

-

- -

203,409

- -

1,431

-

20 (c) (10,569)

- -

194,969

1,330

EarningsRetained

Notes

1,330 -

Non-

- (10,569)

8,339

(Refer 20b)

-

(Refer 20b)Reserves

204,208

-

101

101

188 2,778

- - -

201,978

-

2,778 -

-

8,339 -

- -

2014

- 2,590

201,618

- 8,151

8,151 -

20 (d)

193,639

20b (ii)

- 191,049

- -

- -

2,590

Retained ReservesEarningsNotes

2015

- 20b (ii)

(10,569) 20 (c)

193,639 - 20 (d)

- 1,330

-

201,978

203,409

-

Interest

-

Equity




Statement of Cash Flows for the financial year ended 30 June 2015

$ '000

Cash Flows from Operating ActivitiesReceipts:Rates & Annual ChargesUser Charges & FeesInvestment & Interest Revenue ReceivedGrants & ContributionsOtherPayments:Employee Benefits & On-CostsMaterials & ContractsBorrowing CostsBonds, Deposits & Retention amounts refundedOtherNet Cash provided (or used in) Operating Activities

Cash Flows from Investing ActivitiesReceipts:Sale of Real Estate AssetsSale of Infrastructure, Property, Plant & EquipmentDeferred Debtors ReceiptsPayments:Purchase of Infrastructure, Property, Plant & EquipmentPurchase of Real Estate AssetsDeferred Debtors & Advances MadeContributions Paid to Joint Ventures & AssociatesNet Cash provided (or used in) Investing Activities

Cash Flows from Financing ActivitiesReceipts:NilPayments:Repayment of Borrowings & AdvancesNet Cash Flow provided (used in) Financing Activities

Net Increase/(Decrease) in Cash & Cash Equivalents

plus: Cash & Cash Equivalents - beginning of year

Cash & Cash Equivalents - end of the year

Additional Information:

plus: Investments on hand - end of year

Total Cash, Cash Equivalents & Investments

Please refer to Note 11 for additional cash flow information

6b

2,982

20142015Actual

NotesActual

6,139 252

294 353

(3,067)

783 7,091

(72)

338

(70) (2,761) (2,453)

(1,278) (5) (30)

4,089

199

30

11a

-

7,269

(273)

(27)

7,542

(4,245)

11a

(27)

-

- (4,458)

-

186 27

-

3,999 (1,003)

Budget

3,005

193 5,432

2015

184 295

(2,794)

(70) (1,243)

(30)

(7,461)

7,542

7,542

(4,064)

(7,369)

- (1) -

(140) (15)

(4,365)

-

7,537

-

7,537

(26)

10,812

(26)

(3,270)

7,542

(5)

(30)

2,864

(2,795)

945

4,217

(378)

(1,204) 11b

- 213

75 226


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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 & Cash Equivalent AssetsInvestmentsRestricted Cash, Cash Equivalents & Investments - DetailsReceivablesInventories and Other AssetsInfrastructure, Property, Plant & 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)13b Local Government Industry Indicators (by Fund)Investment PropertiesFinancial Risk ManagementMaterial Budget VariationsStatement of Developer ContributionsContingencies and Other Liabilities/Assets not recognisedInterests in Other EntitiesEquity - Retained Earnings and Revaluation Reserves

Financial Result & Financial Position by Fund"Held for Sale" Non Current Assets & Disposal GroupsEvents occurring after the Reporting DateDiscontinued OperationsIntangible AssetsReinstatement, Rehabilitation and Restoration LiabilitiesFair Value Measurement

Additional Council Disclosures

Council Information and Contact Details

n/a - not applicable

27 70

5149

69 n/a

52 n/a

62

56

69 n/a

58

67

65

73

69 n/a69 n/a

69 n/a

10272829

78

9(a)9(b)

28

33

38

46

59

52

Page

1

25

19

1516

20

21

48

47

42

43 n/a

18

1213

23

26

Note

22

14

10(a)10(b)

17

6(a)

4

6(c)

9(c)

11

24

40

37

38 n/a38

45

43

44

41

2(a)

32(b)

6(b)

5


Lockhart Shire Council Notes to the Financial Statements for the financial year ended 30 June 2015 Note 1. Summary of Significant Accounting Policies

page 10

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) & 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 IFRS’s, 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), Regulations and Local Government Code of Accounting Practice & 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 During the current year, the following relevant accounting standards became mandatory and have been adopted by Council: AASB 10 Consolidated Financial Statements AASB 11 Joint Arrangements AASB 12 Disclosures of Interests in Other

Entities AASB 10 introduced a new definition of control based on the substance of the relationship and required Councils to consider their involvement with other entities regardless of whether there was a financial interest. AASB 11 classified joint arrangements into either joint ventures (equity accounting) or joint operations (accounting for share of assets and liabilities). AASB 12 has increased the level of disclosures required where Council has any interests in subsidiaries, joint arrangements, associates or unconsolidated structured entities. (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 2014. Refer further to paragraph (ab) relating to a summary of the effects of Standards with future operative dates. (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,



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(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 & 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. 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 infrastructure, property,

plant and equipment.

Critical judgements in applying Council's accounting policies (i) Projected Section 94 Commitments - Council

has used significant judgement in determining future Section 94 income and expenditure in Note 17.

(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



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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 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 & 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 financial statements incorporate (i) the assets and liabilities of Council and any entities (or operations) that it controls (as at 30 June 2015) and (ii) all the related operating results (for the financial year ended the 30th June 2015). In the process of reporting on Council’s activities as a single unit, all inter-entity year end balances and reporting period transactions have been eliminated in full between Council and its controlled entities. (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.



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The following entities have been included as part of the Consolidated Fund: General Purpose Operations Fund Combined Sewerage Fund Due to their immaterial value and nature, the following Committees, Entities & Operations have been excluded from consolidation: Bidgeemia Hall Committee Lockhart Recreation Ground Management Committee Lockhart Showground & Racecourse

Management Committee The Rock Recreation Reserve Management

Committee The Rock Public Hall Committee The Rock Showground & Golf Course

Committee Milbrulong Hall Management Committee Osborne Recreation Ground Management

Committee Pleasant Hill Recreation Reserve Committee Pleasant Hills Public Hall Committee Yerong Creek Public Hall Committee Yerong Creek Recreation Ground Committee The (i) total income and expenditure from continuing operations and (ii) the net assets held by these excluded Committees & Operations is as follows: Total income from continuing operations $163,000 Total expenditure from continuing operations $186,000 Total net assets held (ie Equity) $155,000 Note: Where actual figures are not known, best estimates have been applied. (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 which 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. (iii) Joint Arrangements Joint Ventures Joint Ventures represent operational arrangements where the parties joint control parties have rights to the net assets of the arrangement. Any interests in Joint Ventures are accounted for using the equity method and are carried at cost. Under the equity method, Council’s share of the operation’s profits/(losses) are recognised in the income statement, and its share of movements in retained earnings & reserves are recognised in the balance sheet. Detailed information relating to Council’s Joint Ventures can be found at Note 19 (b). (iv) Associates Council has no interest in any Associates. (v) County Councils Council is a member of the following County Councils (which are bodies corporate under the Local Government Act); Riverina Water

-Distribution of Water Number of Constituent Councils-4

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.



page 14

(vi) 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 which are subject to an insignificant risk of changes in value, and

bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet but are incorporated into Cash & 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, Each classification depends on the purpose/intention for which the investment was acquired & 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.



page 15

Assets in this category are primarily classified as current assets as they are primarily held for trading &/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. 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 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 & Measurement of Financial 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



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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. (iii) Types of Investments Council has an approved Investment Policy in order to undertake its investment of money 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 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 & 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 which are known to be uncollectible are written off in accordance with Council’s policy. A provision for impairment (ie. an allowance account) relating to receivables is established when there is objective evidence that the 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.



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Impairment losses are recognised in the Income Statement within other expenses. When a receivable for which an impairment allowance had been recognised becomes 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 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. Land Held for Resale 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.

(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 Valuation) - Land Improvements

(as approximated by depreciated historical cost) - Buildings – Specialised/Non Specialised

(Externall Valuation) - Other Structures

(as approximated by depreciated historical cost) - Roads Assets incl. roads, bridges & footpaths

(Internal Valuation) - Bulk Earthworks (Internal Valuation) - Stormwater Drainage (Internal Valuation) - Sewerage Networks

(Internal Valuation) - Swimming Pools

(Internal Valuation) - Other Open Space/Recreational Assets

(Internal Valuation) - Other Infrastructure

(Internal Valuation) - Other Assets

(as approximated by depreciated historical cost)

- Investment Properties – refer Note 1(p),



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Initial Recognition On initial recognition, an assets 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 (ie. 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 & 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.

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 & Equipment Office Furniture > $1,500 Office Equipment > $1,500 Other Plant &Equipment > $1,500 Buildings & Land Improvements Park Furniture & Equipment > $2,000 Building - construction/extensions 100% Capitalised - renovations > $3,000 Other Structures > $1,500 Sewer Assets Reticulation extensions > $2,000 Other > $2,000 Stormwater Assets Drains & Culverts > $1,000



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Other > $1,000 Transport Assets Road construction & reconstruction > $10,000 Reseal/Re-sheet & major repairs: > $5,000 Bridge construction & reconstruction > $5,000 Other Infrastructure Assets Swimming Pools > $3,000 Other Open Space/Recreational Assets > $1,500 Depreciation Depreciation on Council's infrastructure, property, plant and equipment assets is calculated using the straight line method in order to allocate an assets cost (net of residual values) over its estimated useful life. Land is not depreciated. Estimated useful lives for Council's I,PP&E include: Plant & Equipment - Office Equipment 5-10 years - Office Furniture 5-20 years - Computer Equipment 3-7 years - Vehicles 2-10 years - Heavy Plant/Road Making equip. 5-20 years - Other Plant and Equipment 5-20 years Other Equipment - Playground equipment 20-50 years - Benches, seats etc 20-50 years Buildings - Buildings: Masonry 20-100 years - Buildings: Other 20-100 years Sewer Assets - Reticulation pipes: PVC 40-60 years - Reticulation pipes: Other 40-60 years - Pumps and telemetry 80-150 years Stormwater Assets - Drains 80-100 years - Culverts 50-75 years

Transportation Assets - Sealed Roads: Surface 10-20 years - Sealed Roads: Formation Infinite - Unsealed roads: Sub base 100 years - Unsealed roads: Base 20 years - Bridge: Concrete 70-100 years - Bridge: Other 70-100 years - Road Pavements 50-100 years - Kerb, Gutter & Paths 60-100 years Other Infrastructure Assets - Bulk earthworks Infinite - Swimming Pools 50-60 years - Other Open Space/ Recreational Assets 15-100 years - Other Infrastructure 15-100 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 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 constructed wholly 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 to exclude the assets, their values and depreciation charges from these financial statements. (p) Investment property Council has no investment properties. (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 which are expected to arise from future disturbance. 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. 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. 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.



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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 relating to 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” & 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. 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.



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Goodwill & 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 which are unpaid. The amounts for goods and services are unsecured and are usually paid within 30 days of recognition. (u) Borrowings Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Amortisation results in any difference between the proceeds (net of transaction costs) and the redemption amount being recognised in the Income Statement over the period of the borrowings using the effective interest method. Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. Borrowings are classified as current liabilities unless the Council has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date. (v) Borrowing costs Borrowing costs are expensed. (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 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.



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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 & 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 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 Mercer Consulting (Australia) and covers the period ended 30 June 2015. However the position is monitored annually and the Actuary has estimated that as at 30 June 2015 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



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expense and disclosed as part of Superannuation Expenses at Note 4(a) for the year ending 30 June 2015 was $83,300. The amount of additional contributions included in the total employer contribution advised above is $49,916. The share of this deficit that can be broadly attributed to Council is estimated to be in the order of $49,916 as at 30 June 2015. 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 30/06/15. (y) Self insurance Council does not self insure.

(z) Allocation between current and non-current assets & 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 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. (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 & 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.



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Operating cash flows within the Cash Flow Statement are on a gross basis, ie. they are inclusive of GST where applicable. Investing and Financing cash flows are treated on a net basis (where recoverable form the ATO), ie. they are exclusive of GST. Instead, the GST component of investing and financing activity cash flows which 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 Certain new (or amended) accounting standards and interpretations have been published that are not mandatory for reporting periods ending 30 June 2015. Council has not adopted any of these standards early. Council’s assessment of the impact of these new standards and interpretations is set out below. Apart from the AASB disclosures below, there are no other standards that are “not yet effective” which are expected to have a material impact on Council in the current or future reporting periods and on foreseeable future transactions. Applicable to Local Government: AASB 9 - Financial Instruments (and associated amending standards) AASB 9 replaces AASB 139 Financial Instruments: Recognition and Measurement and has an effective date for reporting periods beginning on or after 1 January 2018 (and must be applied retrospectively). The overriding impact of AASB 9 is to change the requirements for the classification, measurement and disclosures associated with financial assets. Under the new requirements the four current categories of financial assets stipulated in AASB 139 will be replaced with two measurement categories:

fair value and

amortised cost (where financial assets will only be able to be measured at amortised cost where very specific conditions are met).

AASB 15 - Revenue from contracts with customers and associated amending standards AASB 15 will introduce a five step process for revenue recognition with the core principle of the new Standard being that entities recognise revenue so as to depict the transfer of goods or services to customers in amounts that reflect the consideration (that is, payment) to which the entity expects to be entitled in exchange for those goods or services. The changes in revenue recognition requirements in AASB 15 may cause changes to accounting policies relating to the timing and amount of revenue recorded in the financial statements as well as additional disclosures. The full impact of AASB 15 has not yet been ascertained or quantified. AASB 15 will replace AASB 118 which covers contracts for goods and services and AASB 111 which covers construction contracts. The effective date of this standard is for annual reporting periods beginning on or after 1 January 2017. AASB 124 - Related Party Disclosures From 1 July 2016, AASB 124 Related Party Disclosures will apply to Council. This means that Council will be required to disclose information about related parties and Council transactions with those related parties. Related parties will more than likely include the Mayor, Councillors and certain Council staff. In addition, the close family members of those people and any organisations that they control or are associated with will be classified as related parties (and fall under the related party reporting requirements).



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AASB 2014 - 10 Sale or contribution of Assets between an Investor and its Associate or Joint Venture The amendments address an acknowledged inconsistency between the requirements in AASB 10 and those in AASB 128 (2011), in dealing with the sale or contribution of assets between an investor and its associate or joint venture. The main consequence of the amendments is that a full gain or loss is recognised when a transaction involves a business (whether it is housed in a subsidiary or not). A partial gain or loss is recognised when a transaction involves assets that do not constitute a business, even if these assets are housed in a subsidiary. The effective date of this standard is for annual reporting periods beginning on or after 1 January 2016. This standard will only impact Council where there has been a sale or contribution of assets between the entity and the associate/joint venture. Not applicable to Local Government per se; None (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.



Note 2(a). Council Functions / Activities - Financial Information

1. Includes: Rates & Annual Charges (incl. Ex-Gratia), Untied General Purpose Grants & Unrestricted Interest & Investment Income.

2015Actual

2014Actual

2014 2015

$ '000 Income, Expenses and Assets have been directly attributed to the following Functions / Activities.Details of these Functions/Activities are provided in Note 2(b).

Income from Continuing Operations

Expenses from Continuing Operations

Total Assets held (Current &

Non-current) Functions/Activities

20152014Actual Actual Actual

Grants included in Income from Continuing Operations

Operating Result from Continuing Operations

OriginalBudget

OriginalActual

2015 20142015(160)

(1,208) (1,417) 51

2015Actual

OriginalBudget

2015ActualBudget

(148) 211 24 45

- - 1,305

157 1,544

167 160 - 97 1,441

Health Environment 541

43 212 - -

65 191 Public Order & Safety

Governance Administration

(297) 838 71 30

579 731 918 (65)

7 7

86

-

81

- 99

83 140

572

192 Housing & Community Amenities 79

Recreation & Culture 30 Sewerage Services 425 425

272

38 Community Services & Education 21

461 262

3,849

(113) 538

11

199

817 439 388

4 2,855

417 777 762

Transport & Communication 2,007 Mining, Manufacturing & Construction 6 19

2,263 14 4

2,799 5

(1,586) 4,069 72 72

175,088

4,813 241 359 4,556

Actual2015

- 2014

48 25 359

37 2,820 6,752 8,933 9

(7) (161)

- - (157)

(1,499) (167)

Actual

- -

22 9

- 9,610 12,121

- 559

- 2,895 11 18

(146) - (92) -

22 (398)

100 141 17 -

538 478

- (346) (152)

(116) (43) (41)

(345) 163

(747) (545)

(69)

-

(792) 2

(4,497)

7,509

- -

7,509

-

7

-

1,136 (1,491)

2,590

(7) 2,423 710

- (205)

(3,779)

2,076

- 14

1,330

330

4,074 5,855 5,813


- 1,759

3,005 204,039

1,214 8

205,313

2,890 2,886

204,149

125 -

205,438

-

4,764

110 3,541

4,677

(181) 173,910

Economic Affairs

3,255 Total Functions & Activities

79

4,074 5,855

9,936 9,110 8,606 7,034 10,099

- 7 -

284 410

14 -

-

341 149

6,018 7,034 8,606

page 27

4,109 Share of gains/(losses) in Associates &

General Purpose Income 1

Continuing Operations

5,813 Joint Ventures (using the Equity Method)

Operating Result from

-


page 28



Note 2(b). Council Functions / Activities - Component Descriptions

Details relating to the Council's functions / activities as reported in Note 2(a) are as follows:

GOVERNANCE

ADMINISTRATION

PUBLIC ORDER & SAFETY

HEALTH

ENVIRONMENT

COMMUNITY SERVICES & EDUCATION

HOUSING & COMMUNITY AMENITIES

SEWERAGE SERVICES

RECREATION & CULTURE

MINING, MANUFACTURING & CONSTRUCTION

TRANSPORT & COMMUNICATION

ECONOMIC AFFAIRSCamping areas, caravan parks, tourism and area promotion, industrial development promotion, real estatedevelopment, other business undertakings.

Administration, youth services, other family and children, aged and disabled, Aboriginal services, othercommunity services, education.

Housing, town planning, street lighting, other sanitation and garbage, public cemeteries, public conveniences,

Public libraries, museums, art galleries, community centres, public halls, other cultural services, swimmingpools, sporting grounds, parks and gardens, other sport and recreation.

Building control, quarries & pits, other.

Urban roads, sealed rural roads, unsealed rural roads, bridges, footpaths, aerodromes, parking areas, busshelters and services, water transport, RMS works, other.

Noxious plants and insect/vermin control, other environmental protection, solid waste management, streetcleaning, drainage, stormwater management.

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 makingcommittees, area representation and public disclosure and compliance.

Corporate Support and Other Support Services (not otherwise attributed to the listed functions / activities).

Fire protection, animal control, enforcement of local government regulations, emergency services, other.

Inspection, food control, other, administration.


page 29



Note 3. Income from Continuing Operations

$ '000

(a) Rates & Annual Charges

Ordinary RatesResidentialFarmlandBusinessTotal Ordinary Rates

Special RatesBush FireTotal Special Rates

Annual Charges (pursuant to s.496, s.496A, s.496B, s.501 & s.611)Domestic Waste Management ServicesSewerage ServicesWaste Management Services (non-domestic)

Total Annual ChargesTOTAL RATES & ANNUAL CHARGESCouncil has used 2013 year valuations provided by the NSW Valuer General in calculating its rates.

(b) User Charges & Fees

Specific User Charges (per s.502 - Specific "actual use" charges)Sewerage ServicesTotal User Charges

Other User Charges & Fees(i) Fees & Charges - Statutory & Regulatory Functions (per s.608)Planning & Building RegulationPrivate Works - Section 67Section 149 Certificates (EPA Act)Section 603 CertificatesTipping FeesTown PlanningTotal Fees & Charges - Statutory/Regulatory

(ii) Fees & Charges - Other (incl. General User Charges (per s.608)AerodromeCaravan ParkCemeteriesQuarry RevenuesRecycling Income (Non Domestic)OtherTotal Fees & Charges - OtherTOTAL USER CHARGES & FEES

19 -

2,945

12

1 53 1

44

180

386 45

341

110 111

12

2,857

22 22

40

283

90

41 772

28

370

7 7

2014

111

313

2,063

Actual

289

91 1,683

Actual

2,022

110

10

164

5

251

724

44 27

51

5

Notes 2015

1,649

17 34

1

36

-

281 95 118

4

381

14


page 30



Note 3. Income from Continuing Operations (continued)

$ '000

(c) Interest & Investment Revenue (incl. losses)

Interest & Dividends - Interest on Overdue Rates & Annual Charges (incl. Special Purpose Rates) - Interest earned on Investments (interest & coupon payment income)TOTAL INTEREST & INVESTMENT REVENUE

Interest Revenue is attributable to:Unrestricted Investments/Financial Assets:Overdue Rates & Annual Charges (General Fund)General Council Cash & InvestmentsRestricted Investments/Funds - External:Development Contributions - Section 94Sewerage Fund OperationsTotal Interest & Investment Revenue Recognised

(d) Other Revenues

Rental Income - Other Council PropertiesFinesDiesel RebateEmployee Contribution to VehicleFoodshop InspectionInsurance Claim RecoveriesInsurance Policy Rebates/DividendMagnolia Entry FeesSales - GeneralOtherTOTAL OTHER REVENUE

6

197

1 60

-

5

6

86

5 6

7

250

12

335

35 42

14

2015

238

43

3

255

Actual 2014

Actual

14

Notes

12

335

321

10

-

279

96

250

48

24 27 15

14

43 244

-


page 31




$ '000

(e) Grants

General Purpose (Untied)Financial Assistance - General ComponentFinancial Assistance - Local Roads ComponentPensioners' Rates Subsidies - General Component

Total General Purpose1 The Financial Assistance Grant for the comparative 13/14 year reflects a one off timing difference (reduction). This grant ceased being paid in advance in the 13/14 year by up to 50% as had occurred in previous years.

Specific PurposePensioners' Rates Subsidies: - Sewerage - Domestic Waste ManagementBushfire & Emergency ServicesDA Tracking SoftwareEconomic DevelopmentEnvironmental ProtectionFire Protection - Hazard ReductionFlood Damage - March 2012Flood Damage - Regional RoadsHeritage & CultureHeritage Fund SubmissionLibraryLibrary - special projectsMuseum - Items Above Flood LevelMuseum AdvisorMuseum UpgradeNoxious WeedsRecreation Ground - Lockhart PlaygroundRecreation Ground - Pleasant HillsRecreation Ground - Pleasant Hills PaintingRecreation Ground - Pleasant Hills PlaygroundRecreational Ground - OsborneShowground Secretary's Office - LockhartStreet LightingTransport (Roads to Recovery)Youth ActivitiesLockhart Rec Ground - Toilet UpgradeBidgemia Hall GrantGalore Hill GrantCountry Passenger Transport GrantTotal Specific PurposeTotal Grants

Grant Revenue is attributable to:- Commonwealth Funding- State Funding- Other Funding

3,541

6

2015

1,759

2015

19

-

-

18 1,498

9

778 963

126

126

356

702

-

-

4

62

1

4,551

-

2,132

1

10

- -

- -

-

2,025

-

20

-

2014

4

-

4,233

- -

40

-

322

4,551

58

48

- -

-

16

Operating

18

27

-

10 -

-

-

-

9

18

14 4

-

-

8

25

-

-

- -

-

-

23

-

- -

-

2

10

5 5

2,474

4,233 4

- -

-

- - - -

4,225

18

69

-

18

Operating

-

-

100

3,873

2

-

-

-

126

-

-

-

- - -

100 187

10

5

-

72

-

10

-

2014Capital

-

- -

Capital

- -

- -

531

-

126

-

-

-

70

-

-

20

-

-

-

- -

-

- 50

-

461

- -

-

46 -

531

531

- 35

14 - 25

70

-

1,010

4


page 32




$ '000

(f) Contributions

Developer Contributions:(s93 & s94 - EP&A Act, s64 of the LGA):S 94 - Contributions towards amenities/servicesTotal Developer Contributions

Other Contributions:Bushfire ServicesPedestrian Access & Mobility PlanRecreation Ground - Pleasant HillsRMS Black SpotRMS Contributions (Regional Roads, Block Grant)RMS Regional Roads SupplementaryRMS Regional Roads Traffic FacilitiesRMS RRRP GrantTotal Other ContributionsTotal Contributions

TOTAL GRANTS & CONTRIBUTIONS

$ '000

(g) Restrictions relating to Grants and Contributions

Certain grants & 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 & contributions recognised in the current period but not yet spent:

less: Grants & 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 - Other Contributions

170

101 101 65

11

219

17 5

-

816

5,849

1,293

824

1,298

(265)

337

92

64

- 215

5,723

177 1,461

Operating Capital Operating

35

2015

29 -

-

29 -

-

1,490

126

- 23

-

(111)

20142015

-

Capital

- - -

-

- -

2014

-

-

289

448

- 159

448

Actual

-

154

Actual 2015

554

448

23

- -

251

-

- -

-

337

(63)

-

23

34

5

2014

167

197

260


page 33



Note 4. Expenses from Continuing Operations

$ '000

(a) Employee Benefits & On-Costs

Salaries and WagesTravellingEmployee Leave Entitlements (ELE)SuperannuationWorkers' Compensation InsuranceFringe Benefit Tax (FBT)Training Costs (other than Salaries & Wages)Protective ClothingOtherTotal Employee Costsless: Capitalised CostsTOTAL EMPLOYEE COSTS EXPENSED

Number of "Equivalent Full Time" Employees at year end

(b) Borrowing Costs

(i) Interest Bearing Liability CostsInterest on LoansTotal Interest Bearing Liability Costs Expensed

(ii) Other Borrowing CostsNilTOTAL BORROWING COSTS EXPENSED

469

16

Notes

96

51

2015

102 295

48

70

13

2,429

2014

318

Actual

463

(632)

72

91 2,583

96

20 67

3,083

18

3,715

2,547 (974)

70

110

48

2

Actual

3,521

72 70

72


page 34



Note 4. Expenses from Continuing Operations (continued)

$ '000

(c) Materials & Contracts

Raw Materials & ConsumablesContractor & Consultancy CostsAuditors Remuneration (1)

Legal Expenses: - Legal Expenses: Planning & Development - Legal Expenses: OtherOperating Leases: - Operating Lease Rentals: Minimum Lease Payment(2)

TOTAL MATERIALS & CONTRACTS

1. Auditor Remuneration During the year, the following fees were incurred for services provided by the Council's Auditor (& the Auditors of other Consolidated Entities):

(i) Audit and Other Assurance Services - Audit & review of financial statements: Council's Auditor - Other audit & assurance services: Internal AuditorRemuneration for audit and other assurance services

Total Auditor Remuneration

2. Operating Lease Payments are attributable to:Photocopiers

18

18

-

-

Notes

2

-

17

21

7 24

7

1,333 -

18

-

2,002

24

21

161 132

21

2014

18

Actual

1,120

24

-

2015Actual

1,850


page 35




$ '000

(d) Depreciation, Amortisation & Impairment

Plant and EquipmentOffice EquipmentFurniture & FittingsBuildings - Non SpecialisedBuildings - SpecialisedOther StructuresInfrastructure: - Roads - Bridges - Footpaths - Stormwater Drainage - Sewerage Network - Swimming Pools - Other Open Space/Recreational AssetsOther Assets - OtherTOTAL DEPRECIATION &IMPAIRMENT COSTS EXPENSED -

-

-

2015Actual

54

-

-

210

Actual

3 -

-

- 10

-

2

-

-

-

- -

- -

-

22

-

-

58

- -

-

-

2014

-

2,827

423

-

Impairment Costs

-

-

Notes

-

-

-

Depreciation/Amortisation

7 156 156

25

42 39

9

4

7

2015

2

30

461

Actual Actual

1,777

1,924

37 16 17 4

211

941

28

2014


page 36




$ '000

(e) Other Expenses

Other Expenses for the year include the following:

AdvertisingBad & Doubtful DebtsBank ChargesCleaningComputer Software & Maintenance Contributions/Levies to Other Levels of Government - Emergency Services Levy (includes FRNSW, SES, and RFS Levies) - NSW Fire Brigade Levy - NSW Rural Fire Service Levy - Contribution - Noxious Weeds - Contribution - Pleasant Hill Hotel - Contribution - REROC - Contribution - Riverina Regional Library - Contribution - Sec 355 Committees - Contribution - Sec 356 - Contribution - SES - Other Contributions/LeviesCouncillor Expenses - Mayoral FeeCouncillor Expenses - Councillors' FeesCouncillors' Expenses (incl. Mayor) - Other (excluding fees above)Electricity & HeatingFire Control ExpensesInsuranceKerbside RecyclingOffice Supplies & StationeryPostagePrinting & PhotocopyingSubscriptions & MembershipsTelephone & CommunicationsTourism Expenses (excluding employee costs)Valuation FeesDCP, S94 & S64 Plans UpdatesNewsletterOtherTOTAL OTHER EXPENSES

162

14

8

2014

-

16

12 20

45

145

6 6

19

16

77

19

116

2015

13

101 13

5

4

16

29

9

9

43

77

1

44

1,160

-

Notes

63

Actual

2

47

4

87

76

27

- 23

-

- 9

35

13

Actual

18

21

24

-

40

20

37

18 9

-

121

46

2

24

29 41

1,097

101

72

19

4

9

-

69

102


page 37



Note 5. Gains or Losses from the Disposal of Assets

$ '000

Plant & EquipmentProceeds from Disposal - Plant & Equipmentless: Carrying Amount of P&E 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

NET GAIN/(LOSS) ON DISPOSAL OF ASSETS

199

213

54

2015

(159)

Notes

127

(126)

Actual

(84)

87

73 (9)

2014

226

75

96 (130)

Actual


page 38



Note 6a. - Cash Assets and Note 6b. - Investments

$ '000

Cash & Cash Equivalents (Note 6a)Cash on Hand and at BankCash-Equivalent Assets 1

- Deposits at Call- Short Term Deposits

Total Cash & Cash Equivalents

Investments (Note 6b)Nil

TOTAL CASH ASSETS, CASHEQUIVALENTS & INVESTMENTS

1 Those Investments where time to maturity (from date of purchase) is < 3 mths.

Cash, Cash Equivalents & Investments wereclassified at year end in accordance withAASB 139 as follows:

Cash & Cash Equivalentsa. "At Fair Value through the Profit & Loss"

InvestmentsNil

Note 6c. Restricted Cash, Cash Equivalents & Investments - Details

$ '000

Total Cash, Cash Equivalentsand Investments

attributable to:External Restrictions (refer below)Internal Restrictions (refer below)Unrestricted

Non Current

Notes

2015Actual

Current Actual

Non Current Current Actual

20142015

7,100

437

-

7,542

7,537

-

7,542

2015Actual

Current

2,631

7,537 2,019

7,537

7,537

-

-

-

7,542

-

-

-

442

-

-

300

-

2014

Non Current

-

Non Current

Actual

-

-

6,800

2014Actual

2015

-

Actual 2014

4,324 2,512

7,542

- 2,887

7,542

-

706 -

-

-

- -

Current Actual

7,537 -


page 39



Note 6c. Restricted Cash, Cash Equivalents & Investments - Details (continued)

$ '000

Details of Restrictions

External Restrictions - Included in LiabilitiesNil

External Restrictions - OtherDeveloper Contributions - General (D)Developer Contributions - Sewer Fund (D)Specific Purpose Unexpended Grants (F)Sewerage Services (G)External Restrictions - OtherTotal External Restrictions

Internal RestrictionsPlant & Vehicle ReplacementEmployees Leave EntitlementComputer Software UpgradeDisaster ReserveEconomic DevelopmentFlood Damages ReserveFuture Election ExpensesFuture Infrastructure Improvements/ReplacementGalore Hill Reserve51 Galore StreetPublic HallsUnallocated FundsGravel Pit ReserveLockhart Swimming PoolMagolia Lodge Admin FeeMuseum DevelopmentYouth FlatsFuture Landfill Land AcquisitionTotal 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) G Water, Sewerage, Domestic Waste Management (DWM) & other Special Rates/Levies/Charges are externally

restricted assets and must be applied for the purposes for which they were raised.

42

-

7 169

-

(1,788)

-

122

6,836

351

-

- -

5,518

-

2,631

28 10

(122)

(50) -

-

-

(1,910)

10

592

2,887

2,512

-

129

16

6

27

4,324

-

167 5

Balance Restrictions

- 154

241

4

2,512

289 - 2,064 230

-

241

15

-

646

75

2,702

-

40

229

122

11

-

-

112

2,631

18

775 -

-

-

-

-

-

-

- 197

40

12 (1,667) 1,035

(122)

7 169

- 75

- (71) 16

-

101

6

-

28 50

18 193

71

-

11

2,294

165

-

Transfers to Balance

229 -

Restrictions 2015 Closing Transfers from Opening

(122) 5

-


page 40



Note 7. Receivables

$ '000

PurposeRates & Annual ChargesUser Charges & FeesAccrued Revenues - Interest on InvestmentsGovernment Grants & SubsidiesDeferred DebtorsOther Debtors - Net GST RecievableOther DebtorsTotal

less: Provision for ImpairmentNil

TOTAL NET RECEIVABLES

Externally Restricted ReceivablesSewerage Services - Rates & Availability Charges - OtherTotal External RestrictionsInternally Restricted ReceivablesNilUnrestricted ReceivablesTOTAL NET RECEIVABLES

Notes on Debtors above:(i) Rates & 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 & charges at 8.50% (2014 9.00%).Generally all other receivables are non interest bearing.

(iv) Please refer to Note 15 for issues concerning Credit Risk and Fair Value disclosures.

10 -

58

58 550

- -

2015Non Current

-

64

550

19 -

Current Non Current

- -

75

- -

167 - -

58 30

11

2014

-

- -

40

40

Current

34

18

86

274 319

45

550 40

- 17

100

319

160

40

40

123

319

- 3

42

45 - -

-

58 505

-

58

Notes


page 41



Note 8. Inventories & Other Assets

$ '000

InventoriesReal Estate for resale(refer below)Stores & MaterialsTotal Inventories

Other AssetsPrepaymentsTotal Other Assets

TOTAL INVENTORIES / OTHER ASSETS

Externally Restricted AssetsThere are no restrictions applicable to the above assets.

Other Disclosures

(a) Details for Real Estate DevelopmentResidentialIndustrial/CommercialTotal 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 - WDV of Sales (exp)Total Real Estate for Resale

(b) Current Assets not anticipated to be settled within the next 12 monthsThe following Inventories & 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 27 - Fair Value Measurement for information regarding the fair value of other assets held.

- 3

Current Non Current

1,617 137

3

312 226

1,617

1,477

-

1,287 1,498

20151,287

2014

1,689

1,498

226

1,689

1,689

5

- 1,617

312 226

- 1,689

1,689

- 1,617

(84)

140 312

312

86

-

1,689

- (126)

1,689

312

226 152

226

226

312

54

- 226

-

1,621

1,020 - 597

312

1,617

226

1,795 1,757

226

-

312

312

1

105 -

2014Non Current

1,754

2015Notes

226 -

Current

226 1,689

-

1,794

1 -



Note 9a. Infrastructure, Property, Plant & Equipment

At At Carrying At At Carrying$ '000 Cost Fair Value Dep'n Impairment Value Cost Fair Value Dep'n Impairment Value

Capital Work in Progress 91 - - - 91 14 - - (91) - - - 14 - - - 14 Plant & Equipment - 5,446 2,334 - 3,112 693 (152) (461) - - 29 - - 5,780 2,559 - 3,221 Office Equipment - 342 192 - 150 16 (2) (25) - - (27) - - 329 217 - 112 Furniture & Fittings - 145 58 - 87 - - (10) - - - - - 145 68 - 77 Land: - Operational Land - 1,219 - - 1,219 31 - - - - - - - 1,250 - - 1,250 - Community Land - 1,969 - - 1,969 - - - - - - - - 1,969 - - 1,969 Buildings - Non Specialised - 3,139 802 - 2,337 2 - (22) - 187 (164) - - 3,134 794 - 2,340 Buildings - Specialised - 10,236 4,060 - 6,176 473 - (210) 91 (187) 163 - - 10,743 4,237 - 6,506 Other Structures - 1,671 975 - 696 12 - (42) - (427) 32 - - 472 201 - 271 Infrastructure: - Roads - 186,039 26,337 - 159,702 2,928 - (1,777) - - - - - 188,967 28,114 - 160,853 - Bridges - 3,654 1,230 - 2,424 - - (37) - - - - - 3,653 1,266 - 2,387 - Footpaths - 1,205 315 - 890 120 - (17) - - - - - 1,325 332 - 993 - Bulk Earthworks (non-depreciable) - 7,198 - - 7,198 - - - - - - - - 7,198 - - 7,198 - Stormwater Drainage - 588 66 - 522 - - (7) - - - - - 588 73 - 515 - Sewerage Network - 12,660 5,907 - 6,753 - - (156) - - - 101 - 12,660 5,962 - 6,698 - Swimming Pools - 2,118 1,712 - 406 - - (58) - 427 41 - - 3,401 2,585 - 816 - Other Open Space/Recreational Assets - 72 4 - 68 77 (5) (2) - - (72) - - 74 8 - 66 Other Assets: - Other - 84 16 - 68 - - (3) - - (3) - - 81 19 - 62 TOTAL INFRASTRUCTURE,PROPERTY, PLANT & EQUIP.

Additions to Buildings & Infrastructure Assets are made up of Asset Renewals ($2,077) and New Assets ($1,324).Renewals are defined as the replacement of existing assets (as opposed to the acquisition of new assets).

Refer to Note 27 - Fair Value Measurement for information regarding the fair value of other Infrastructure, Property, Plant & Equipment.of future deficit is $49

page 42


14 241,769 46,435 - - 195,348 101 4,366 (159) (2,827) - (1)

as at 30/6/2014Asset Movements during the Reporting Period

AccumulatedWIP

Transfers

Adjustments& Transfers

(i)

Adjustments& Transfers

(ii)

91 237,785 44,008 - 193,868

as at 30/6/2015

Asset Additions

WDVof Asset

Disposals

Depreciation Expense

Revaluation Incrementsto Equity (ARR)

Accumulated


page 43



Note 9b. Externally Restricted Infrastructure, Property, Plant & Equipment

Note 9c. Infrastructure, Property, Plant & Equipment - Current Year Impairments

Council has recognised no impairment losses during the reporting period nor reversed any prior period losses.

TOTAL RESTRICTED I,PP&E 12,660

Actual

At A/Dep &At2015

Cost

6,698 Sewerage Services

12,660 Infrastructure

6,698

$ '000

Total Sewerage Services

Class of Asset

-

12,660 12,660 6,698 - 5,962 - 5,962

- -

Impairm'tFair ValueA/Dep & Carrying

ValueCostAtCarrying

ValueAt

Impairm'tFair Value

6,753 5,907

12,660 5,907 - 5,962

5,907 6,753 12,660

Actual2014

Actual Actual

6,753


page 44



Note 10a. Payables, Borrowings & Provisions

$ '000

PayablesGoods & Services - operating expenditurePayments Received In AdvanceSecurity Bonds, Deposits & RetentionsTotal Payables

BorrowingsLoans - Secured 1

Total Borrowings

ProvisionsEmployee Benefits;Annual LeaveLong Service LeaveELE On-CostsTotal Provisions

Total Payables, Borrowings & Provisions

(i) Liabilities relating to Restricted Assets

Externally Restricted AssetsSewerLiabilities relating to externally restricted assets

Internally Restricted AssetsNil

Total Liabilities relating to restricted assetsTotal Liabilities relating to Unrestricted AssetsTOTAL PAYABLES, BORROWINGS & PROVISIONS

1. Loans are secured over the General Rating Income of Council Disclosures on Liability Interest Rate Risk Exposures, Fair Value Disclosures & Security can be found in Note 15.

31

344

2015Current

3

12

- 348 560

10 - - 5

2

2

Current Notes Non Current

13

2014

1,077

573

886

- 234

27 30 65

- 93

Non Current

680 66

375

854 854 31

2014

1,207 964

605 95

275

366

1,077

7

7

5 1,202

2 7

29

5

13 2

952

Non Current

-

3

950 2

2015

2

1,070

Current

952

886

2

Current Non Current

29

2

1,207

5

1

962 964


page 45



Note 10a. Payables, Borrowings & Provisions (continued)

$ '000

(ii) Current Liabilities not anticipated to be settled within the next 12 months

The following Liabilities, even though classified as current, are not expectedto be settled in the next 12 months.

Provisions - Employees Benefits

Note 10b. Description of and movements in Provisions

a. Employees Leave Entitlements & On-Costs represents those benefits accrued and payable and an estimate of thosethat will become payable in the future as a result of past service.

468 -

2014

4

Annual LeaveSick Leave 106 Long Service Leave

234 -

186

409

2014

(279)

-

2015

440

-

Class of Provision Decrease due to Payments

87

OpeningBalance

as at 1/7/14

-

549

ELE On-Costs - (28)

TOTAL 671 383 28

Actual

549

-

440

ClosingBalance

as at 30/6/15

-

Remeasurement effects due to

Discounting

-

775 -

- -

275

32

-

Actual

Unused amounts reversed

2015

(106) (145)

Additional Provisions


page 46



Note 11. Statement of Cash Flows - Additional Information

$ '000

(a) Reconciliation of Cash Assets

Total Cash & 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 & AmortisationNet Losses/(Gains) on Disposal of AssetsShare of Net (Profits) or Losses of Associates/Joint Ventures

+/- Movement in Operating Assets and Liabilities & Other Cash Items:Decrease/(Increase) in ReceivablesDecrease/(Increase) in InventoriesDecrease/(Increase) in Other AssetsIncrease/(Decrease) in PayablesIncrease/(Decrease) in Other LiabilitiesIncrease/(Decrease) in Employee Leave EntitlementsNET CASH PROVIDED FROM/(USED IN)OPERATING ACTIVITIES from the STATEMENT of CASH FLOWS

(c) Non-Cash Investing & Financing Activities

Nil

(d) Financing Arrangements

(i) Unrestricted access was available at balance date to the following lines of credit:

Credit Cards / Purchase CardsTotal Financing Arrangements

(ii) Secured Loan Liabilities

Loans are secured by a mortgage over future years Rate Revenue only.

15 15 15

4 (578)

(44)

(211) (2)

2015

7,537

6a10

219

4,089

(5)

(7)

420

2014

1,924

-

NotesActual

7,537 -

7,542

7,542

2,827

Actual

(127)

1,330

104

(32)

(31) 26

2,590

(14)

15

4,217

(87)


page 47



Note 12. Commitments for Expenditure

$ '000

(a) Capital Commitments (exclusive of GST)

Capital expenditure committed for at the reporting date but notrecognised in the financial statements as liabilities:

Property, Plant & EquipmentMuseum UpgradeTotal Commitments

These expenditures are payable as follows:Within the next yearTotal Payable

Sources for Funding of Capital Commitments:Unrestricted General FundsTotal Sources of Funding

(b) Finance Lease Commitments

Nil

(c) Operating Lease Commitments (Non Cancellable)

a. Commitments under Non Cancellable Operating Leases at the Reporting date, but not recognised as Liabilities are payable:

Within the next yearLater than one year and not later than 5 yearsLater than 5 yearsTotal Non Cancellable Operating Lease Commitments

b. Non Cancellable Operating Leases include the following assets:Office RentalsContingent Rentals may be payable depending on the condition of items or usage during the lease term.

Conditions relating to Operating Leases:- All Operating Lease Agreements are secured only against the Leased Asset.- No Lease Agreements impose any financial restrictions on Council regarding future debt etc.

(d) Investment Property Commitments

Nil

2014

262

21

225

180

-

-

45

-

Actual

262

262

262 262

-

-

21 - -

-

262

Notes

-

2015Actual


page 48



Note 13a(i). Statement of Performance Measurement - Indicators (Consolidated)

$ '000

Local Government Industry Indicators - Consolidated

1. Operating Performance RatioTotal continuing operating revenue (1)

(excl. Capital Grants & Contributions) - Operating ExpensesTotal continuing operating revenue (1)

(excl. Capital Grants & Contributions)

2. Own Source Operating Revenue RatioTotal continuing operating revenue (1)

(excl. ALL Grants & Contributions)Total 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 (from the Statement of Cash Flows)+ Borrowing Costs (from the Income Statement)

5. Rates, Annual Charges, Interest & Extra Charges Outstanding PercentageRates, Annual and Extra Charges OutstandingRates, Annual and Extra Charges Collectible

6. Cash Expense Cover RatioCurrent Year's Cash and Cash Equivalents+ 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 & associates.(2) Refer Notes 6-8 inclusive. Also excludes any real estate & 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 & provisions not expected to be paid in the next 12 months (incl. ELE).

2014Prior Periods

1,063

Amounts

13.71 mths

5.75%

9,669

123

10.44x

2013

37.26%

5,439

20.55%

21.83

27.54%

2015

40.18

2015

7.93

x12

9,795

3,960 100

3.95%

12.58

Indicator

5.27%

31.46

10.99%

550 7,537

39.60x

3,820

14.69%

39.00%

521 6.85

3,117


page 49



Note 13a(ii). Local Government Industry Indicators - Graphs (Consolidated)

Benchmark: ――― Minimum >=0.00% Ratio is within BenchmarkSource for Benchmark: Code of Accounting Practice and Financial Reporting #23 Ratio is outside Benchmark


Benchmark: ――― Minimum >=1.50 Ratio is within BenchmarkSource for Benchmark: Code of Accounting Practice and Financial Reporting #23 Ratio is outside Benchmark

2014/15 Ratio 10.99%

Purpose of Operating

Performance Ratio

2014/15 Ratio 10.44x

Council has maintained a strong Operating Performance since the flood impairment

expenses in 2012.

2014/15 Ratio 39.00%

Councils Own Source revenue % has improved while only marginally from 2014, the improvement over prior three years has

been significant.

Purpose of Own Source Operating

Revenue Ratio

Council is well above the industry benchmark of 1.5 times. Council is in a strong position to pay its debts as and

when they fall due.

Commentary on 2014/15 Result

To assess the adequacy of working capital and its ability to satisfy obligations in the short term for

the unrestricted activities of Council.


This ratio measures fiscal flexibility. It is

the degree of reliance on external funding

sources such as operating grants &

contributions.


Purpose of Unrestricted Current

Ratio

This ratio measures Council’s

achievement of containing operating expenditure within operating revenue.

14.69% 20.55%

10.99%

-5.95% -10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

2012 2013 2014 2015

Rat

io %

1. Operating Performance Ratio

19.78% 27.54% 37.26% 39.00%

0%10%20%30%40%50%60%70%80%90%

100%

2012 2013 2014 2015

Rat

io %

2. Own Source Operating Revenue Ratio

8.07 6.85

7.93

10.44

0.0

2.0

4.0

6.0

8.0

10.0

12.0

2012 2013 2014 2015

Rat

io (x

)

3. Unrestricted Current Ratio


page 50



Note 13a(ii). Local Government Industry Indicators - Graphs (Consolidated)


Benchmark: ――― Maximum <10.00% Ratio is within BenchmarkSource for Benchmark: Code of Accounting Practice and Financial Reporting #23 Ratio is outside Benchmark


Purpose of Debt Service Cover Ratio

Council continues to have a good liquidity ratio which is well above the benchmark.

This ratio measures the availability of operating cash to

service debt including interest, principal and

lease payments

Council’s debt service costs are very low with Council having more than adequate

cash available to service its debt obligations.

Commentary on 2014/15 ResultPurpose of Rates & Annual Charges

Outstanding Ratio


2014/15 Ratio 39.60x

2014/15 Ratio 3.95%

To assess the impact of uncollected rates and annual charges on Council's liquidity and the adequacy of

recovery efforts.

The outstanding rates & annual charges % has reduced more than 1% which is a reflection of its strong debt collection

procedures and remains well below the benchmark for rural councils.

Purpose of Cash Expense Cover

Ratio


2014/15 Ratio 13.71 mths

This liquidity ratio indicates the number of months a Council can continue paying

for its immediate expenses without

additional cash inflow.

31.46 40.18 39.60

0.16 0.05.0

10.015.020.025.030.035.040.045.0

2012 2013 2014 2015

Rat

io (x

)

4. Debt Service Cover Ratio

5.46% 5.75% 5.27% 3.95%

0%

2%

4%

6%

8%

10%

12%

2012 2013 2014 2015

Rat

io %

5. Rates, Annual Charges, Interest & Extra Charges Outstanding Percentage

19.24 21.83

12.58 13.71

0.0

5.0

10.0

15.0

20.0

25.0

2012 2013 2014 2015

Rat

io (m

ths)

6. Cash Expense Cover Ratio


page 51



Note 13b. Statement of Performance Measurement - Indicators (by Fund)

$ '000

Local Government Industry Indicators - by Fund

1. Operating Performance RatioTotal continuing operating revenue (1)

(excl. Capital Grants & Contributions) - Operating ExpensesTotal continuing operating revenue (1)

(excl. Capital Grants & Contributions)

2. Own Source Operating Revenue RatioTotal continuing operating revenue (1)

(excl. ALL Grants & Contributions)Total 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 (from the Statement of Cash Flows)+ Borrowing Costs (from the Income Statement)

5. Rates, Annual Charges, Interest & Extra Charges Outstanding PercentageRates, Annual and Extra Charges OutstandingRates, Annual and Extra Charges Collectible

6. Cash Expense Cover RatioCurrent Year's Cash and Cash Equivalents+ All Term DepositsPayments from cash flow of operating andfinancing activities

Notes

(1) - (4) Refer to Notes at Note 13a(i) above.(5) General Fund refers to all of Council's activities except for its Sewer activity which is listed separately.

Water

n/a

prior period:

n/a

n/a

n/a

2015

36.21%

prior period: n/a 97.97% 34.45%

21.36%

prior period: 0.00

n/a

2015

38.42

prior period:

prior period: 9.13

x12

General 5

16.25%

334.14x

421.80

prior period: n/a 3.88%

11.35%

5.16

3.26%

0.00 9.53 mths

8.81%

n/a

n/a

4.42%n/a

2015

10.44x

10.74%

37.32x

97.97%

0.00

n/a

0.00

Sewer

n/a


page 52



Note 14. Investment Properties

$ '000

Council has not classified any Land or Buildings as "Investment Properties"

Note 15. Financial Risk Management

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 & FinancialLiabilities recognised in the financial statements is presented below.

Financial AssetsCash and Cash EquivalentsReceivablesTotal Financial Assets

Financial LiabilitiesPayablesLoans / AdvancesTotal Financial Liabilities

Fair Value is determined as follows:

- Cash & Cash Equivalents, Receivables, Payables - are estimated to be the carrying value which approximates mkt value.

- Borrowings & Held to Maturity Investments - are based upon estimated future cash flows discounted by the current market interest rates applicable to assets & liabilities with similar risk profiles, unless quoted market prices are available.

- Financial Assets classified (i) "at fair value through profit & 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 27 - Fair Value Measurement for information regarding the fair value of financial assets & liabilities

Notes

355 915

8,150 8,150 363

Actual

572

1,240 1,241 1,487

572 885

2014Actual

7,537 7,542 608 359

2015

915

7,900

7,542

Fair Value Carrying Value 201420152015

356 885

7,537

2014

1,487

608 7,896


page 53



Note 15. Financial Risk Management (continued)

$ '000

(a) Cash & Cash Equivalents, Financial assets 'at fair value through the profit & Loss' "Available-for-sale" financial assets & "Held-to-maturity" Investments

Council's objective is to maximise its return on cash & investments whilst maintaining an adequate level ofliquidity and preserving capital.

Council has an Investment Policy which complies with the Local Government Act & Minister's Investment Order.This Policy is regularly reviewed by Council and it's staff and an Investment Report is tabled before Council ona 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.

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.

2015Possible impact of a 1% movement in Interest Rates

2014Possible impact of a 1% movement in Interest Rates

Equity Profit 75 75

Increase of Values/Rates

75 (75)

Profit Equity (75) (75)

Decrease of Values/Rates

(75) 75


page 54




$ '000

(b) Receivables

Council's major receivables comprise (i) Rates & Annual charges and (ii) User Charges & 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 & 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.

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 & 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

Annual Other Annual Other Charges Receivables Charges Receivables

Rates & Rates &

Receivables Charges Charges

100%100%

160

17 89

2014

137

25

123

Other

42%

Receivables

58%

-

Annual

- 8 15

448

Rates &

7

100%

Other

98%

2015

2%

Annual

41%

29

- 25

72

63

0% 59%

2015Rates &

236

11

2014

1 43

100%

2

100%

351

72


page 55




$ '000

(c) Payables & Borrowings

Payables & Borrowings are both subject to liquidity risk - the risk that insufficient funds may be on hand to meetpayment 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 & overdraft facilities utilised as required.

The contractual undiscounted cash outflows (ie. principal and interest) of Council's Payables & Borrowings areset out in the maturity table below:

$ '000

Trade/Other PayablesLoans & AdvancesTotal Financial Liabilities

Trade/Other PayablesLoans & AdvancesTotal Financial Liabilities

Borrowings are also subject to interest rate risk - the risk that movements in interest rates could adverselyaffect funding costs & debt servicing requirements. Council manages this risk through the diversification ofborrowing types, maturities & interest rate structures.

The following interest rates were applicableto Council's Borrowings at balance date:

Trade/Other PayablesLoans & Advances - Fixed Interest Rate

2-3 Yrs 3-4 Yrspayable in:

≤ 1 Yearmaturity

-

2,207

10

10 661

99

- 562

99

99

99

99

5

5

2,207

Average

1,140

1,635 572

572 1,537 1,893

7.8% 1,635 7.8%

Value

2014Carrying

2,207

- 99

> 5 Yrs Values

99

99 99

99

99

449

ActualTotal

355

-

99

-

1,537 99

-

-

99

356 0.0% 0.0%Interest RateInterest Rate

Carrying

1,140

AverageValue

572

2015

1,635

1,537 356

99

1,042 -

99

1,893

99

1,892 99

CarryingSubject

to no

2014

2015-

1,042

Cash

- - 350 -

Outflows4-5 Yrs1-2 Yrs


page 56



Note 16. Material Budget Variations

$ '000

Council's Original Financial Budget for 14/15 was adopted by the Council on 17 June 2014.

While the Income Statement included in this General Purpose Financial Report must disclose the OriginalBudget adopted by Council, the Local Government Act 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 & Annual Charges

User Charges & FeesDue mainly to better than budgeted revenue from Caravan Park and unbudgeted Private Works of $180k.

Interest & Investment RevenueMore than forecast funds available to invest combined with conservative interest rate projections.

Other RevenuesAchieved over budget revenues due to $30k more in diesel fuel rebate than budgeted and $15k more in insurance rebates.

Operating Grants & ContributionsRoads to Recovery was included in Capital Grants in budget however in Statements have correctly been included in Operating Grants. If move Roads to Recovery budget to Operating changes the budget variance to 8%.

Capital Grants & ContributionsRoads to Recovery was included in Capital Grants in budget however in Statements have correctly been included in Operating Grants. Also the capital grants received were not budgeted.

Net Gains from Disposal of AssetsNo amount budgeted due to uncertainty of any gains.

Joint Ventures & Associates - Net ProfitsNo amount budgeted.

250

2,945

295

2015Budget

197

3,005

184 381

Actual

(2%)

F

2015---------- Variance* ----------

(60)

2015

U

F

(45) (15%)

24%

(584)

107%

F

244

14

U

51

U710

-

4,723

127

(82%)126

5,849

26%193

F

14

F

127 0%

-

1,126

0%


page 57



Note 16. Material Budget Variations (continued)

$ '000

EXPENSESEmployee Benefits & On-CostsThe amount in the budget only represents Employee Costs for indoor staff ie staff salaries that are not costed to jobs. In the budget all outdoor staff salaries, mainly, are included in jobs ie Council’s total budget for Roads Repairs & Maintenance is $1.06mil and Roads Capital Works is approx. $3.3mil. These budget items include salaries and cost of equipment and materials.

Borrowing Costs

Materials & ContractsIn the budget some general ledger accounts include salaries & wages for outdoor staff ie R&M on roads, whereasin the Statements all salaries & wages are included in Note 4a, thereby reducing Materials & Contracts actual.

Depreciation & AmortisationOver past 12 months, it has become more evident that Council’s roads depreciation is lower than industry average for Councils of similar size and roads network. (Resulting from comparative data from LG Solutions and attendance at Jeff Roorda & Associates Asset Management workshops). With the revaluation of roads infrastructure being undertaken, Council has moved to using BizeAssets for its roads infrastructure asset management and valuation. This resulted in BizeAssets producing depreciation reports which better aligns with industry average.

Other ExpensesOver budget was due to a combination of unders & overs and also some cost centres in Budget being coded to Raw Materials whereas in Statements same cost centres being coded to Other Expenses. Council will address such anomalies as part of Council's Improvement Plan to better align Budget & Statements.

Budget Variations relating to Council's Cash Flow Statement include:

Cash Flows from Operating Activities

Cash Flows from Investing Activities

Cash Flows from Financing ActivitiesAlthough variance is > 10%, dollar variance is immaterial

70

2015 2015

U

(47%)(903)

---------- Variance* ----------

(55%)

- F

1,160

389

(901) 2,547

Actual

70

16%2,391

Budget

1,646

2015

2,002

1,924 U2,827

F

1,003 U

0%

11.1%

(4.3%)

(30)

(4,245) 181

(157)

3,999 4,089

U(27)

F(4,064)

(3)

90 F2.3%

(16%)


Page 58



Note 17. Statement of Developer Contributions

$ '000

Council recovers contributions, raises levies & enters into planning agreements on development works that are subject to a development consent issued by Council.All contributions must be spent/utilised for the specific purpose they were levied and any interest applicable to unspent funds must be attributed to remaining funds.

The following tables detail the receipt, interest and use of the above contributions & levies and the value of all remaining funds which are "restricted" in their future use.

SUMMARY OF CONTRIBUTIONS & LEVIES

RoadsCommunity Facilities

S94 CONTRIBUTIONS - UNDER A PLAN

CONTRIBUTION PLAN - COUNCIL WIDE S94 CONTRIBUTIONS

RoadsCommunity Facilities

- 125

-

-

-

Borrowings(under)

164

outstanding

Projections

-

Exp

-

Futureincome

-

still

164 164

Funding

-

CumulativeProjections

- - 39

due/(payable)

InternalOver or

still

-

outstanding

-

Future

170

-

-

39

Held as Exp(under)Funding

39

-

income

-

BorrowingOver or

- -

due/(payable)

125

Internal

-

- -

Cumulative

-

Borrowings

164 164 - 120 -

Balance

- -

- Year (to)/from Asset

Total Contributions

PURPOSENon Cash

6 -

-

-

33

Opening

3

5

- 153

6

received during the Year

Total S94 Revenue Under Plans

Cash

-

S94 Contributions - under a Plan

S64 Contributions

3

-

Total -

Restricted(to)/from

Interest

in Year

-

AssetBorrowing

-

earnedin Year

during

5

-

Internal

-

6

6

6 -

-

Held as

- 125

125

InternalExpenditure

- 39 -

Restricted

164

duringExpenditureContributions

2 - -

5

3

Interest

33

earned

120

Cash

159

6

- 3

-

5

-

153

-

153

PURPOSE OpeningBalance

- Non Cash

2

Year

3 3

Contributionsreceived during the Year

-


page 59



Note 18. Contingencies & Other Assets/Liabilities Not Recognised

$ '000

The following assets and liabilities do not qualify for (ii) Statewide Limitedrecognition in the Statement of Financial Position, buttheir knowledge & disclosure is considered relevant Council is a member of Statewide Mutual, a mutualto the users of Council's Financial Report. pool scheme providing liability insurance to Local

Government.

LIABILITIES NOT RECOGNISED: Membership includes the potential to share in eitherthe net assets or liabilities of the fund depending on

1. Guarantees its past performance. Council’s share of the NetAssets or Liabilities reflects Councils contributions to

(i) Defined Benefit Superannuation the pool and the result of insurance claims within Contribution Plans each of the Fund Years.

Council participates in an employer sponsored The future realisation and finalisation of claimsDefined Benefit Superannuation Scheme, and makes incurred but not reported to 30 June this year may contributions as determined by the Superannuation result in future liabilities or benefits as a result of pastScheme's Trustees. events that Council will be required to fund or share

in respectively.Member Councils bear responsibility of ensuring thereare sufficient funds available to pay out the required (iii) StateCover Limitedbenefits as they fall due.

Council is a member of StateCover Mutual LimitedThe Schemes most recent full actuarial review and holds a partly paid share in the entity.indicated that the Net Assets of the Scheme werenot sufficient to meet the accrued benefits of the StateCover is a company providing workersSchemes Defined Benefit member category with compensation insurance cover to the NSW Localmember Councils required to make significantly Government Industry and specifically Council.higher contributions in future years. Council's shareof future deficit is $49,916.04. Council has a contingent liability to contribute further

equity in the event of the erosion of the Company'sThe Local Government Superannuation Scheme capital base as a result of the company's pasthowever is unable to provide Council with an accurate performance and/or claims experience or as a resultestimate of its share of the net deficit and accordingly of any increased prudential requirements from APRA.Council has not recorded any net liability from it'sDefined Benefit Scheme obligations in accordance These future equity contributions would be requiredwith AASB 119. to maintain the company’s minimum level of Net

Assets in accordance with its Licence Requirements.Future contributions made to the defined benefitscheme to rectify the net deficit position will be (iv) Other Guaranteesrecognised as an expense when they becomepayable - similar to the accounting for Defined Council has provided no other Guarantees other thanContributions Plans. those listed above.


page 60



Note 18. Contingencies & Other Assets/Liabilities Not Recognised (continued)

$ '000

LIABILITIES NOT RECOGNISED (continued): (iii) Potential Land Acquisitions due to Planning Restrictions imposed by Council

2. Other LiabilitiesCouncil has classified a number of privately owned

(i) Third Party Claims land parcels as Local Open Space or Bushland.

The Council is involved from time to time in various As a result, where notified in writing by the variousclaims incidental to the ordinary course of business owners, Council will be required to purchase theseincluding claims for damages relating to its services. land parcels.

Council believes that it is appropriately covered At reporting date, reliable estimates as to the valuefor all claims through its Insurance Coverage and of any potential liability (& subsequent land asset)does not expect any material liabilities to eventuate. from such potential acquisitions has not been

possible.(ii) S94 Plans

Council levies Section 94/94A Contributions upon ASSETS NOT RECOGNISED:various development across the Council area throughthe required Contributions Plans. (i) Land Under Roads

As part of these Plans, Council has received funds As permitted under AASB 1051, Council has electedfor which it will be required to expend the monies in not to bring to account Land Under Roads that itaccordance with those Plans. owned or controlled up to & including 30/6/08.

As well, these Plans indicate proposed future (ii) Infringement Notices/Finesexpenditure to be undertaken by Council, which willbe funded by making levies and receipting funds in Fines & Penalty Income, the result of Council issuingfuture years or where a shortfall exists by the use of Infringement Notices is followed up and collected byCouncil's General Funds. the Infringement Processing Bureau.

These future expenses do not yet qualify as liabilities Councils Revenue Recognition policy for suchas of the Reporting Date, but represent Councils income is to account for it as revenue on receipt.intention to spend funds in the manner and timingset out in those Plans. Accordingly, at Year End, there is a potential asset

due to Council representing issued but unpaidInfringement Notices.

Due to the limited information available on the status,value and duration of outstanding Notices, Council isunable to determine the value of outstanding income.


page 61



Note 18. Contingencies & Other Assets/Liabilities Not Recognised (continued)

$ '000

ASSETS NOT RECOGNISED (continued): OTHER

(iii) Rural Fire Fighting Assets Rehabilitation of Tips & Quarries

Council has title to and is the registered owner of 24 The rehabilitation of Council’s tips and quarries is rural fire fighting appliances and associated being considered by Council, with a long term planequipment. being developed. Council is of the view any

rehabilitation work will not be required for anotherThese assets are under the control of the Rural Fire ten or more years. Council is placing funds onServices to enable that Department to provide the Reserve for the future acquisition of land andbushfire protection defences set out in their Service rehabilitation of existing sites.Level Agreement with Council and accordingly theyhave not been recognised in these reports.


page 62



Note 19. Interests in Other Entities

$ '000

Council's objectives can and in some cases are best met through the use of separate entities & operations.

These operations and entities range from 100% ownership and control through to lower levels of ownershipand control via co-operative arrangements with other Councils, Bodies and other Outside Organisations.

The accounting and reporting for these various entities, operations and arrangements varies in accordancewith accounting standards, depending on the level of Councils (i) interest and (ii) control and the type (form) ofentity/operation, as follows;

Controlled Entities (Subsidiaries) Note 19(a)Operational arrangements where Council's control (but not necessarily interest) exceeds 50%.

Joint Ventures & Associates Note 19(b)Joint Ventures are operational arrangements where the parties that have joint control haverights to the net assets of the arrangement.Associates are separate entities where Council has significant influence over the operations(but neither controls nor jointly controls them).

Joint Operations Note 19(c)Operational arrangements where the parties that have joint control have rights to specificassets and obligations for specific liabilities relating to the arrangement rather than a rightto the net assets of the arrangement.

Unconsolidated Structured Entities Note 19(d)Unconsolidated Structured Entities represent “special vehicles” that Council has an interestin but which are not controlled by Council and therefore not consolidated as a Subsidiary,Joint Arrangement or Associate. Attributes of Structured Entities include restricted activities,a narrow and well-defined objective and insufficient equity to finance its activities withoutfinancial support.

Subsidiaries, Joint Arrangements and Associates not recognised Note 19(e)

Accounting Recognition:

(i) Subsidiaries disclosed under Note 19(a) and Joint Operations disclosed at Note 19(c) are accounted for on a "line by line" consolidation basis within the Income Statement and Statement of Financial Position.

(ii) Joint Ventures and Associates as per Notes 19(b)(i) & (ii) are accounted for using the Equity Accounting Method and are disclosed as a 1 line entry in both the Income Statement and Statement of Financial Position.

Joint VenturesAssociatesTotal 125

2014 2015

14

2015

- - 7

ActualCouncil's Share of Net Income

14 125

Council's Share of Net Assets

- 110

Actual Actual

7

2014110

Actual

-


page 63



Note 19. Interests in Other Entities (continued)

$ '000

(a) Controlled Entities (Subsidiaries) - being entities & operations controlled by Council

Council has no interest in any Controlled Entities (Subsidiaries).

(b) Joint Ventures and Associates

Council has incorporated the following Joint Ventures and Associates into it's consolidated Financial Statements.

(a) Net Carrying Amounts - Council's Share

Name of EntityRiverina Regional Library(Riverina Regional Library amounts are actually from their 2013-14 Statements)Total Carrying Amounts - Material Joint Ventures and Associates

(b) Details

Name of Entity Principal ActivityProvision of Library Services (2015 data is actually2014, as this is the most recent information available at time of preparing Lockhart's Statements)

(c) Relevant Interests & Fair Values

Name of EntityRiverina Regional Library

(d) Summarised Financial Information for Joint Ventures & Associates

Statement of Financial PositionCurrent AssetsCash and Cash EquivalentsOther Current AssetsTotal Current AssetsNon-Current AssetsCurrent LiabilitiesOther Current LiabilitiesTotal Current LiabilitiesNon-Current Liabilities

Net Assets

Reconciliation of the Carrying AmountOpening Net Assets (1 July)Profit/(Loss) for the periodClosing Net AssetsCouncil's share of Net Asets (%)Council's share of Net Assets ($)

-

125

Method

Fair Value2015

Joint Venture2015

3.4% 3.4%

Place of

2,705

2014

Business

3,040

-

Nature of

110

Proportion of

2014

3.4%

1,155

1,088

2015

QuotedOutputs

Interest inInterest in

3.4%

3,258

3.4%

Voting Power

125

707

110 125

2,908 1,469

67 79

3.4%2014

1,390

2014

Relationship

20142015n/a n/a

2014

2015

3,667

-

-

name here…#1

2015 2015

Measurement

2014

Riverina Regional Library

- -

-

-

3

Riverina Regional Library

707 601

3,258

409 218 -

Ownership

3.4%

3,258

3,667

1 601

- - 110 3.4%


page 64



Note 19. Interests in Other Entities (continued)

$ '000

(b) Joint Ventures and Associates (continued)

(d) Summarised Financial Information for Joint Ventures & Associates (continued)

Statement of Comprehensive IncomeIncomeInterest IncomeDepreciation & AmortisationInterest ExpenseIncome Tax ExpenseOther ExpensesProfit/(Loss) for Period

Total Comprehensive Income

Council's share of Income (%)Council's share of Profit/(Loss) ($)Council's share of Comprehensive Income ($)

(c) Joint Operations

Council has no interest in any Joint Operations.

(d) Unconsolidated Structured Entities

Council has no Unconsolidated Structured Entities

(e) Subsidiaries, Joint Arrangements & Associates not recognised

All Subsidiaries, Joint Arrangements and Associates have been recognised in this Financial Report.

(98) (1,346)

409 218

2015 2014

2,888 2,190

7

(564)

14

(10) (10) (1,766)

- - (85)

name here…#1 Riverina Regional Library2015 2014

23 33

3.4%

- -

- - 409 218

(628)

3.4%- - 14 7


page 65



Note 20. Equity - Retained Earnings and Revaluation Reserves

$ '000

(a) Retained Earnings

Movements in Retained Earnings were as follows:Balance at beginning of Year (from previous years audited accounts)a. Correction of Prior Period Errorsb. Net Operating Result for the YearBalance at End of the Reporting Period

(b) Reserves

(i) Reserves are represented by:

- Infrastructure, Property, Plant & Equipment Revaluation ReserveTotal

(ii) Reconciliation of movements in Reserves:

Infrastructure, Property, Plant & Equipment Revaluation Reserve- Opening Balance- Revaluations for the year- Balance at End of Year

TOTAL VALUE OF RESERVES

(iii) Nature & Purpose of Reserves

Infrastructure, Property, Plant & Equipment Revaluation Reserve- The Infrastructure, Property, Plant & Equipment Revaluation Reserve is used to record increments/decrements of Non Current Asset values due to their revaluation.

8,339 8,151

8,339 8,440

8,440 8,339

Actual

201,618 204,208

2,590

2014

(10,569) 1,330

Notes 2015

8,440

20 (c)

9(a)

8,339

(10,569)

8,440 8,339

193,639

Actual

194,969

188 101


page 66



Note 20. Equity - Retained Earnings and Revaluation Reserves (continued)

$ '000

(c) Correction of Error/s relating to a Previous Reporting Period

Correction of errors disclosed in this year's financial statements:

- Roads Infrastructure Revaluation

The prior period error/s were identified as a result of a change of valuation procedures (& migration to a new system, BizeAssets) which detected anomalies in Council’s Asset Register database & associated valuations resulting in reduced asset valuations (to what was recorded in the past). This reduction of course does not effect Council’s physical infrastructure assets (and does not mean that Councils infrastructure assets have in any way deteriorated) – instead it reflects nothing more than an errors in prior valuations and the finalisation of a more accurate database & valuation of Council’s infrastructure assets.

- RFS Sheds

Council in conjunction with the NSW Rural Fire Service (RFS) construct and/or replace RFS fire sheds within the Shire. RFS place the order with contractors, Council pay contractors and then invoice RFS for reimbursement of shed(s).

As a result of an audit on RFS sheds within the Shire in 2014-15, it was discovered that there were six RFS sheds that had not be capitalised and value recorded in Assets Register. This was the result of two sheds being paid by RFS direct to contractors (not going through Council) and the other four were incorrectly expensed in prior periods.

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 - 1/7/13 (relating to adjustments for the 30/6/13 reporting year end and prior periods)- Adjustments to Closing Equity - 30/6/14 (relating to adjustments for the 30/6/14 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

(10,756)

-

-

-

(10,569)

187

(10,569)

-

-

2014

-

2015


page 67



Note 21. Financial Result & Financial Position by Fund

Income Statement by Fund$ '000

Continuing OperationsIncome from Continuing OperationsRates & Annual ChargesUser Charges & FeesInterest & Investment RevenueOther RevenuesGrants & Contributions provided for Operating PurposesGrants & Contributions provided for Capital PurposesOther IncomeNet Gains from Disposal of AssetsShare of interests in Joint Ventures & Associatesusing the Equity MethodTotal Income from Continuing Operations

Expenses from Continuing OperationsEmployee Benefits & on-costsBorrowing CostsMaterials & ContractsDepreciation & AmortisationImpairmentOther ExpensesTotal Expenses from Continuing OperationsOperating Result from Continuing Operations

Discontinued Operations

Net Profit/(Loss) from Discontinued OperationsNet Operating Result for the Year

Net Operating Result attributable to each Council FundNet Operating Result attributable to Non-controlling Interests

Net Operating Result for the year before Grants and Con and Contributions provided for Capital Purposes

1 General Fund refers to all Council's activities other than Sewer. NB. All amounts disclosed above are Gross - that is, they include internal charges & recoveries made between the Funds.

Actual

9

35

-

-

-

1,258

-

133

-

General1Sewer

-

72

2,466

443

2,670

- 72 -

1,160

126

81

1,869

9,493

-

-

157

2,559

Actual

215

72 -

-

1,258

369

2015

386

2015

243 1

Water

Actual 2015 2015

Actual

12

127

14

5,840

371

- - - 1,258

-

-

-

8,235

70

-

-

1,132

-

72

-

- -

-


page 68


Notes to the Financial Statements as at 30 June 2015

Note 21. Financial Result & Financial Position by Fund (continued)

Statement of Financial Position by Fund$ '000

ASSETSCurrent AssetsCash & Cash EquivalentsInvestmentsReceivablesInventoriesOtherNon-current assets classified as 'held for sale'Total Current Assets

Non-Current AssetsInvestmentsReceivablesInventoriesInfrastructure, Property, Plant & EquipmentInvestments Accounted for using the equity methodInvestment PropertyTotal Non-Current AssetsTOTAL ASSETS

LIABILITIESCurrent LiabilitiesPayablesBorrowingsProvisionsTotal Current Liabilities

Non-Current LiabilitiesPayablesBorrowingsProvisionsTotal Non-Current LiabilitiesTOTAL LIABILITIESNet Assets

EQUITYRetained EarningsRevaluation ReservesTotal Equity1 General Fund refers to all Council's activities other than Sewer. NB. All amounts disclosed above are Gross - that is, they include internal receivables & payables between the Funds.

General1

5,238 -

274

-

9

187,435

-

- -

7,534

- -

9,033

950 2 2,020

1,070

194,376

2

194,376

-

-

93

-

-

3 854

7 7

-

-

-

-

2,299

20152015

Sewer

Actual Actual

1,754

189,127

188,650

-

Water

- -

-

7,269

-

2015

- -

2015

6,698

Actual

- 40

45

0

-

3

- -

196,396

366 -

-

-

2,344

673

125

-

31

6,698 9,042

Actual

-

-

312

1,499 6,941 - 9,033


page 69



Note 22. "Held for Sale" Non Current Assets & Disposal Groups

$ '000

Council did not classify any Non Current Assets or Disposal Groups as "Held for Sale".

Note 23. Events occurring after the Reporting Date

Events that occur between the end of the reporting period (ending 30 June 2015) and the date when the financialstatements are "authorised for issue" have been taken into account in preparing these statements.

Council has adopted the date of receipt of the Auditors' Report as the applicable "authorised for issue" daterelating to these General Purpose Financial Statements.

Accordingly, the "authorised for issue" date is 28/10/15.

Events that occur after the Reporting Period represent one of two types:

(i) Events that provide evidence of conditions that existed at the Reporting Period

These financial statements (and the figures therein) incorporate all "adjusting events" that provided evidence ofconditions that existed at 30 June 2015.

(ii) Events that provide evidence of conditions that arose after the Reporting Period

These financial statements (& figures therein) do not incorporate any "non-adjusting events" that have occurredafter 30 June 2015 and which are only indicative of conditions that arose after 30 June 2015.

Council is unaware of any material or significant "non-adjusting events" that should be disclosed.

Note 24. Discontinued Operations

Council has not classified any of its Operations as "Discontinued".

Note 25. Intangible Assets

Intangible Assets represent identifiable non-monetary asset without physical substance.

Council is unaware of any control over Intangible Assets that warrant recognition in the Financial Statements,including either internally generated and developed assets or purchased assets.

Note 26. Reinstatement, Rehabilitation & Restoration Liabilities

Council has no outstanding obligations to make, restore, rehabilitate or reinstate any of its assets/operations.

Actual Actual


page 70



Note 27. 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

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 & recognised at fair values:

2015

Recurring Fair Value Measurements

Infrastructure, Property, Plant & EquipmentPlant & EquipmentOffice EquipmentFurniture & FittingsOperational LandCommunity LandBuildings - Non SpecialisedBuildings - SpecialisedOther StructuresRoadsBridgesFootpathsBulk EarthworksStormwater drainageSewerage NetworkSwimming PoolsOther Open Space/Recreational AssetsOther AssetsTotal Infrastructure, Property, Plant & Equipment

993 30/06/14 - - 7,198 7,198 30/06/15 - - 515 515 30/06/14 - - 6,698 6,698 30/06/12 - - 816 816 30/06/11 - - 66 66 30/06/11 -

3,221 3,221

Total

of latest

112 - - 77 77 -

- 1,250 - 1,250 - - 1,969

- 3,590 191,744 195,334

1,969 - 2,340 - 2,340 -

- - 2,387 2,387

- 112

- 62 62

- 6,506 6,506

inputsinputs

- -

30/06/12

prices in observable unobservableQuoted Significant

Fair Value Measurement HierarchyLevel 1 Level 2

30/06/14 - - 993

- - 271 271 - - 160,853 160,853

Date

Valuation active mkts

SignificantLevel 3

30/06/12

30/06/1330/06/1230/06/1330/06/1330/06/1130/06/1430/06/14

30/06/12


page 71



Note 27. Fair Value Measurement (continued)

$ '000

(1) The following table presents all assets and liabilities that have been measured & recognised at fair values: (continued)

2014

Recurring Fair Value Measurements

Infrastructure, Property, Plant & EquipmentPlant & EquipmentOffice EquipmentFurniture & FittingsOperational LandCommunity LandBuildings - Non SpecialisedBuildings - SpecialisedOther StructuresRoadsBridgesFootpathsBulk EarthworksStormwater drainageSewerage NetworkSwimming PoolsOther Open Space/Recreational AssetsOther AssetsTotal Infrastructure, Property, Plant & Equipment

(2) Transfers between Level 1 & 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.

Valuation active mkts

Level 1 Level 2

30/06/12 - - 3,112

30/06/13 - 2,337

Date Quoted Significant Significantof latest prices in observable

-

- 3,556

1,969

unobservableinputs

Fair Value Measurement Hierarchy

1,969

890 890

Level 3 Total

30/06/12 - - 406 406

30/06/12 -

inputs

- 522 522 30/06/14 - - 6,753 6,753

3,112 30/06/12 - - 150 150 30/06/12 - - 87 87 30/06/13 - 1,219 - 1,219 30/06/12

- - 7,198 7,198

- 6,176 6,176

30/06/11 - - 68 68 30/06/11 - - 68 68

190,221 193,777

30/06/12

30/06/11 - - 696 696

- -

30/06/12 - - 159,702 159,702

- 2,337 30/06/13 -

30/06/12 - - 2,424 2,424 30/06/12 -


page 72



Note 27. Fair Value Measurement (continued)

$ '000

(3). Fair value measurements using significant unobservable inputs (Level 3)

a. The following tables present the changes in Level 3 Fair Value Asset Classes.

Opening Balance - 1/7/13

Purchases (GBV)Disposals (WDV)Depreciation & ImpairmentFV Gains - Other Comprehensive IncomeOther movement (details here)

Closing Balance - 30/6/14

Purchases (GBV)Disposals (WDV)Depreciation & ImpairmentFV Gains - Other Comprehensive Income

Closing Balance - 30/6/15

b. Information relating to the transfers into and out of the Level 3 Fair Valuation hierarchy (as disclosed in the Table above) includes:

Not applicable

(4). Highest and best use

All of Council's non financial assets are considered as being utilised for their highest and best use.

- - -

Asset

191,698

Here Here

-

Asset Asset

- 191,698

- -

TotalClass Class Class Class

202,501 202,501

- - - -

-

(130)

3,801

- - - 6,397 6,397

(1,894) (1,894) - - 3,801 -

- 4,410

-

- (130)

(159) -

- -

-

Here Here

Asset

918 918

- - - 265 265

- 200,790 200,790

(159)

- - -

4,410

-

- - (2,805) (2,805) -


page 73



Note 28. Council Information & Contact Details

Principal Place of Business:65 Green StreetLOCKHART NSW 2656

Contact DetailsMailing Address: Opening Hours:PO Box 21 8:30am to 4:00pmLOCKHART NSW 2656 Monday to Friday

Telephone: 02 6920 5305 Internet: www.lockhart.nsw.gov.auFacsimile: 02 6920 5247 Email: [email protected]

Officers Elected MembersGENERAL MANAGER MAYORMr Rod Shaw Clr Peter Yates

RESPONSIBLE ACCOUNTING OFFICER COUNCILLORSCraig Fletcher Clr Max Day

Clr Derek DouglasPUBLIC OFFICER Clr Gail DriscollCraig Fletcher Clr Rodney McDonnell

Clr Jim MorganAUDITORS Clr John Paterson (Past Away - Aug 2015)Crowe Horwath Auswild Clr Rodger Schirmer (Deputy Mayor)491 Smollett Street Clr Greg VerdonALBURY NSW 2640

Other InformationABN: 82 002 584 082

http://www.lockhart.nsw.gov.au/

mailto:[email protected]

page 74

page 75

Report on the Conduct of the Audit Lockhart Shire Council

Year Ended 30 June 2015

page 76

2

Contents

1 Report on the Conduct of the Audit ................................................................................ 3 2 Operating Result ............................................................................................................ 4 3 Financial Position ........................................................................................................... 6 4 Performance Indicators .................................................................................................. 7 5 Specific Balance Sheet Items ......................................................................................... 9 6 Other Matters ............................................................................................................... 12

page 77

3

1 Report on the Conduct of the Audit We have completed our audit of the financial statements for Lockhart Shire Council (Council) for the year ended 30 June 2015, in accordance with Section 415 of the Local Government Act, 1993. Our audit opinion under Section 417(2) has been issued to Council and this report on the conduct of the audit should be read in conjunction with the audit opinion.

The Council is responsible for the preparation and presentation of the financial statements and the information they contain. The financial statements consist of the general purpose financial statements and Council’s statement in the approved form required by Section 413 (2) and (3) respectively of the Local Government Act 1993.

Our audit has been conducted in accordance with Australian Auditing Standards to provide reasonable assurance as to whether the financial statements are free of material misstatement. Our procedures included examination, on a test basis, of evidence supporting the amounts and other disclosures in the financial statements, 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, the financial statements are presented fairly in accordance with Australian Accounting Standards and statutory requirements so as to present a view which is consistent with our understanding of the Council’s financial position, the results of its operations and its cash flows.

Our engagement is summarised as:

Nature of Engagement Opinion Basis of Preparation

General purpose financial statements Unqualified Going concern

Not for Profit entity

Special purpose financial statements

Unqualified with an emphasis of matter regarding basis of preparation

National Competition Policy requirements by area of business activity

Special Schedule 7 Agreed upon procedures

Report of factual findings to Council and OLG.

Special Schedule 9

Unqualified with an emphasis of matter regarding basis of preparation

OLG requirements

Following from our audit there are a number of comments we wish to raise concerning Council’s financial statements. These comments are set out in this report below.

page 78

4

2 Operating Result Lockhart Shire Council (the ‘Council’) is a rural Council in Southern New South Wales, whose affairs are governed by:

Local Government Act 1993;

Local Government Regulations;

Local Government Code of Accounting Practice and Financial Reporting; and

Local Government Asset Accounting Manual Regulations.

The Council is responsible for the administration and implementation of the strategic policies voted on in Council.

The Council achieved a surplus in net operating result from continuing operations (including capital contributions) of $1,330k (2014: $2,590k) for the year ended 30 June 2015. The net operating surplus for the year before grants and contributions provided for capital purposes is $1,204k (2014: $2,036k). A breakdown of Council’s revenues and expenses for the year are as follows:

Employee Benefits & On-Costs29.60%

Borrowing Costs0.81%

Materials &

Contracts23.26%

Depreciation &

Amortisation

32.85%

Impairment0.00%

Other Expenses13.48%

2015 Financial Year Expenses

Rates & Annual

Charges30.02%

User Charges &

Fees3.88%

Interest & Investment Revenue

2.55%Other

Revenues2.49%

Grants & Contributions Provided

for Operation Purposes59.63%

Grants & Contributions Provided for Capital Purposes

1.28%

Net gains from

disposal of assets0.14%

2015 Financial Year Revenue

page 79

5

Significant income and expense items in the current year were:

2015

$’000 2014

$’000 2013

$’000

Rates and annual charges 2,945 2,857 2,738

User charges and fees 381 281 229

Grants and contributions - operating 5,864 5,723 4,675

Grants and contributions - capital 126 554 4,801

Employee costs (2,547) (3,083) (2,489)

Materials and contracts (2,002) (1,333) (1,702)

Depreciation and amortisation (2,827) (1,924) (1,825)

The size of Council’s operations has remained relatively consistent over the past three years with increases in rates and annual charges being attributable to the annual permissible increase (2.3% in 2014/2015). User fees and charges have increased slightly from prior year due to higher Private Works being completed in 2015. Operating grants and contributions have stayed relatively consistent with prior year. Capital grants have reduced significantly as the flood damage restoration grant ended on 30 June 2014, along with one off funding in 2014 for Recreational Grounds.

Employee costs have decreased due to a reduction in casual staff and reduction of overtime in general, which was required to enable the significant roads works program to be achieved and finalised by 30 June 2014, to ensure Roads to Recovery grants were fully expended.

Depreciation has been a focus area for the Council over the past 12 months, following the review of useful lives and move to BizeAssest for its road infrastructure asset management and valuation management. This has resulted in an increase in depreciation in 2015, which now better aligns with industry average.

The above significant items are based on the operational results from Council as disclosed in the income statement and accompanying notes.

page 80

6

3 Financial Position A measure of the Council’s financial position is its unrestricted working capital. The following table sets out the unrestricted working capital position of Council as at the end of the financial year.

2015

$’000 2014

$’000 2013

$’000

Cash and Liquid Investments 7,537 7,542 10,812

External Restrictions - included in liabilities - - -

- not included in liabilities (2,631) (2,512) (2,323)

Internal Restrictions - included in liabilities (775) (646) -

- not included in liabilities (2,112) (3,678) (7,819)

Unrestricted Cash and Investments 2,019 706 670 Other Net Current Assets / (Liabilities) excluding anticipated LSL Provision & restrictions included in liabilities

1,336 1,439 1,194

Unrestricted Working Capital 3,355 2,145 1,864

The above represents the amount of working capital Council has available to meet its future spending requirements after making allowance for any restrictions in place over the use of such working capital.

Council has used internal restrictions which are a discretionary item specific to each individual Council. It should be noted that the level of internal restrictions can be adjusted via Council. The decrease in the 2015 internal restrictions is due to a reduction in the ‘Future Infrastructure Improvements/Replacement’ restriction.

We recommend that Council continue to monitor its unrestricted working capital position when reviewing its financial position. It is also recommended that Council continue to be mindful of its unrestricted working capital position when considering its future spending requirements.

page 81

7

4 Performance Indicators Refer to Note 13 of the financial statements. Sections 4.1 to 4.6 contemplate Council’s performance on a consolidated basis. Section 4.7 shows Council’s performance against the same ratios on a fund basis.

4.1 Operating Performance Ratio

This ratio measures Council’s achievement of containing operating expenditure within operating revenue.

Council's Operating Performance Ratio over the past 3 financial years has increased to 10.99% due to Council focussing on capital projects.

4.2 Own Source Operating Revenue Ratio

This ratio measures fiscal flexibility and shows the degree of reliance on external funding sources such as operating grants and contributions. A Council has improved financial flexibility with a higher level of own source revenue.

With a ratio of 38.85%, Council's ability to generate its own sources of funding from rates and user fees is sitting significantly below that of the NSW Treasury Corporation benchmark of 60%. Council has received significant funding in recent years in the way of flood grants and Roads to Recovery grants which has increased the proportion of external funding.

4.3 Liquidity (Unrestricted Current) Ratio

This ratio is used to assess the adequacy of working capital and Council’s ability to satisfy its obligations in the short term for the unrestricted activities of Council. Unrestricted current ratio is calculated by current assets less all external restrictions divided by current liabilities less specific purpose liabilities.

This ratio indicates that Council currently anticipates having 10.44x (excluding externally restricted funds such as Section 94 and grant funds) available to service every $1.00 of debt as it falls due at the end of the year, which clearly demonstrates Council's ability to satisfy its short term obligations.

4.4 Debt Service Ratio

This ratio demonstrates the percentage of Council revenue required to service the debts carried by Council.

With a ratio of 39.6:1, Council is above the benchmark and consistent with the prior year’s result..

page 82

8

4.5 Rates, Annual Charges, Interest & Extra Charges Outstanding Percentage

The outstanding percentage assesses the impact of uncollected rates and annual charges on Council’s liquidity and the adequacy of debt recovery efforts.

This ratio indicates the percentage of Rates and Annual Charges outstanding at the end of the financial year. Council has continued to maintain a very low percentage of outstanding rates, which sitting at 3.95% is pleasingly below the average for rural councils of 10%.

4.6 Cash Expense Cover Ratio

This liquidity ratio indicates the number of months Council can continue paying its immediate expenses without additional cash inflow.

As indicated with the ratio of 13.71 months, Council's ability to continue paying for its immediate expenses without additional cash inflow is sufficient and significantly exceeds the NSW Treasury Corporation benchmark of 3.00.

4.7 Performance Indicators by Fund

The following performance indicators are shown on a fund basis as at 30 June 2015. The below allows analysis of how Council performs at a fund level and would indicate the result of Council’s general operations excluding its sewer operations.

Indicators Sewer General

Operating performance ratio 16.25% 10.74%

Own source operating revenue 97.97% 36.21%

Unrestricted current ratio 334.14x 10.44x

Debt service cover ratio 0.00 37.32x

Rates, Annual Charges, Interest and extra charges outstanding %

8.81% 3.26%

Cash expense cover ratio 0.00 months 9.53 months

page 83

9

5 Specific Balance Sheet Items

5.1 Receivables

The total current receivables at 30 June 2015, net of allowance for impairment was $319k (2014: $550k).

This balance consists of user charges and fees of $86k (2014: $10k), rates and annual charges of $123k (2014: $160k), other debtors of $75k (2014: $167k) and government grants and subsidies of $0k (2014: $100k) which relates to flood grants. The percentage of rates and annual charges outstanding is referred to at Section 4.5 of this report.

There is no provision for impairment and our assessment of the collectability of the receivables balance indicated that no allowance for impairment was reasonable, based on materiality.

5.2 Capital Expenditure

During the reporting period Council spent $4,366k (2014: $7,367k) on items of an infrastructure, property, plant or equipment nature. The primary areas of capital expenditure (including reinstatement costs for impaired assets) were as follows:

2015 $’000

2014 $’000

2013 $’000

Capital work in progress 14 91 -

Land & improvements 31 - -

Buildings & other structures 487 522 324

Plant and equipment 693 595 1,038

Office equipment and furnishings 16 45 32

Roads, bridges and footpaths 3,048 6,114 6,772

Other assets 77 - 8

Total Capital Expenditure 4,366 7,367 8,174

page 84

10

5.3 Fair Value of Infrastructure Assets

In 2011 the Council should have completed the progressive revaluation of all property, plant and equipment to fair value where all assets are revalued on a 5 year cycle. The Office of Local Government minimum requirements timetable is as follows:

2011: Community land, land improvements, other structures and other assets; 2012: Water and sewer networks; 2013: Operational land and buildings; 2014: Land under roads (if applicable); and 2015: Roads, bridges, footpaths, drainage and bulk earthworks.

The revaluations in 2015 resulted in the following adjustments to Council’s assets against the opening balances, as an adjustment was put through against prior year. Refer to Note 20(c) for further details of this prior period adjustment in accordance with AASB 108 Accounting Polices, Change in Accounting Estimates and Errors:

Asset Category Revaluation Amount Increase/(Decrease)

$

Roads (11,857k)

Bridges 552k

Footpaths 484k

Drainage 92k

Bulk earthworks (27k)

Revaluation decrement

(prior year adjustment) (10,756k)

Further, we report that in accordance with the requirements of the code of Accounting Practice, Council’s sewage assets were indexed upward in accordance with the latest indices provided by the NSW Office of Water.

Sewerage assets have been indexed in 2015 at 1.5% in accordance with the rates per the NSW Reference Rates Manual from the NSW Office of Water.

Council has elected not to recognise land under roads acquired before 1 July 2008 in accordance with AASB 116 Property, Plant & Equipment.

As at June 2015 all Council’s infrastructure, property, plant and equipment is held at fair value with the exception of capital WIP which is held at cost.

page 85

11

5.4 Flood damaged assets

Flood damage to infrastructure assets occurred during the 2011 & 2012 financial years where there were flood events which occurred and resulted in damage to Council’s infrastructure assets. During the prior period there has been a reinstatement of the previous impairment adjustment ($918K). This was due to the completion of the repair work on these assets. No such repair work was conducted in the 2015 financial year.

5.5 New Standards and Interpretations Not Yet Adopted

Certain new accounting standards have been published that are not mandatory for the 30 June 2015 reporting period as follows:

• AASB 9 Financial Instruments and associated amending standards, effective 1 January 2018.

• AASB 15 Revenue from Contracts with Customers, effective1 January 2018,

• AASB 2014-3 Amendments to Australian Accounting Standards – Accounting for Acquisitions of Interests in Joint Operations (AASB1 and AASB11) and AASB 2014-10 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture, effective 1 January 2018.

• AASB 2015-2 Presentation of Financial Statements (amendments to AASB101), effective 1 January 2016.

Council is of the view that these standards not yet effective will not significantly affect any of the amounts recognised in the financial statements, however they may impact certain information otherwise disclosed, or the format in which information is disclosed.

page 86

12

6 Other Matters

6.1 Other Audit Reporting

Several performance improvement observations were noted during our audit and reported in an interim management letter. There were no major control deficiencies noted in Council’s systems from our post balance date testing performed.

6.2 Management Letter

A separate report is issued to Council’s management which covers in further detail the audit and accounting issues identified during our audit process.

6.3 Independence

In conducting our audit, we followed applicable independence requirements of Australian professional ethical pronouncements.

6.4 Assistance Provided

We recognise and appreciate the General Manager and staff of Council for their cooperation and courtesy extended to us during the course of the audit.

6.5 Reliance on the Report

The report on the conduct of the audit has been prepared for distribution to Council. We disclaim any assumption of responsibility for any reliance on this report to any person other than Council or for any purpose other than that for which it was prepared.

page 87

Contact Us

Crowe Horwath Auswild

491 Smollett Street Albury NSW 2640 Australia Tel +61 2 6021 1111 Fax +61 2 6041 1892 www.crowehorwath.com.au

Disclaimer

Crowe Horwath Auswild is a member of Crowe Horwath International, a Swiss verein. Each member firm of Crowe Horwath is a separate and independent legal entity. Liability limited by a scheme approved under Professional Standards Legislation other than for the acts or omissions of financial services licensees.

page 88

Lockhart Shire Council SPECIAL PURPOSE FINANCIAL STATEMENTS for the year ended 30 June 2015

SPFS 2015

page 1


Special Purpose Financial Statements for the financial year ended 30 June 2015

Contents

1. Statement by Councillors & Management

2. Special Purpose Financial Statements:

Income Statement - Sewerage Business Activity

Statement of Financial Position - Sewerage Business Activity

3. Notes to the Special Purpose Financial Statements

4. Auditor's Report

Background

These Special Purpose Financial Statements have been prepared for the use by both Council and the Division ofLocal Government in fulfilling their requirements under National Competition Policy.

The principle of competitive neutrality is based on the concept of a "level playing field" between persons/entitiescompeting in a market place, particularly between private and public sector competitors.

Essentially, the principle is that government businesses, whether Commonwealth, State or Local, should operatewithout net competitive advantages over other businesses as a result of their public ownership.

For Council, the principle of competitive neutrality & public reporting applies only to declared business activities.

These include (a) those activities classified by the Australian Bureau of Statistics as business activities beingwater supply, sewerage services, abattoirs, gas production and reticulation and (b) those activities with a turnoverof over $2 million that Council has formally declared as a Business Activity (defined as Category 1 activities).

In preparing these financial statements for Council's self classified Category 1 businesses and ABS definedactivities, councils must (a) adopt a corporatisation model and (b) apply full cost attribution including tax equivalentregime payments & debt guarantee fees (where the business benefits from councils borrowing position bycomparison with commercial rates).

Page

3

2

(iv)

5

4

(i)

(ii)

12

(iii)

SPFS 2015

page 2



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 & Costing for Council Businesses - A Guide to Competitive Neutrality”.

The Local Government Code of Accounting Practice and Financial Reporting.

The NSW Office of Water (Department of Environment, Climate Change and Water) Guidelines - "Best Practice Management of Water and Sewerage".

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 17 August 2015.

Clr Peter Yates Clr Rodger SchirmerMAYOR COUNCILLOR

Mr Rod Shaw Craig FletcherGENERAL MANAGER RESPONSIBLE ACCOUNTING OFFICER

SPFS 2015

page 3


Income Statement of Council's Sewerage Business Activity for the financial year ended 30 June 2015

$ '000

Income from continuing operationsAccess chargesUser chargesLiquid Trade Waste 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 sale of assetsCalculated 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 discontinued operationsSurplus (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 Adjustments for amounts unpaid:- Taxation equivalent payments- Debt guarantee fees- Corporate taxation equivalentless:- Tax Equivalent Dividend paid- Surplus dividend paidClosing Retained Profits

Return on Capital %Subsidy from Council

Calculation of dividend payable:Surplus (deficit) after taxless: Capital grants and contributions (excluding developer contributions)Surplus for dividend calculation purposesPotential Dividend calculated from surplus

- 7

- -

386 12

- -

35

- -

421 22

- 22

0.3%218

- 22 (7)

15

7,440 -

7,462

370 10

Actual 2014

-

Actual 2015

- 42 9 9

- 1

443

- 12

101 -

164 156

-

15 -

15 8

81 -

133 157

- -

- 72

-

- -

22

-

- 72

(22)

50

7,462

25

443

-

-

- 7,534

1.1%130

50 -

50

- -

371 72

SPFS 2015

page 4


Statement of Financial Position - Council's Sewerage Business Activity as at 30 June 2015

$ '000

ASSETSCurrent AssetsCash and cash equivalentsInvestmentsReceivablesInventoriesOtherNon-current assets classified as held for saleTotal Current Assets

Non-Current AssetsInvestmentsReceivablesInventoriesInfrastructure, property, plant and equipmentInvestments accounted for using equity methodInvestment propertyIntangible AssetsOtherTotal non-Current AssetsTOTAL ASSETS

LIABILITIESCurrent LiabilitiesBank OverdraftPayablesInterest bearing liabilitiesProvisionsTotal Current Liabilities

Non-Current LiabilitiesPayablesInterest bearing liabilitiesProvisionsTotal Non-Current LiabilitiesTOTAL LIABILITIESNET ASSETS

EQUITYRetained earningsRevaluation reservesCouncil equity interestNon-controlling equity interestTOTAL EQUITY

- -

-

-

-

8,867

7

8,860

- -

6,698 6,753 - -

-

- -

- - -

45 45 -

2014

2,299

2015

-

Actual Actual

2,069

-

-

-

9

- -

-

5 7 5

-

2,344 2,114

- -

9,042

-

7,534

-

- 2

1,499 1,398 9,033

-

8,860

8,860

2

7 2 2

7,462

9,033

9,033

- -

- -

6,698 6,753

SPFS 2015

page 5



Contents of the Notes accompanying the Financial Statements

Details

Summary of Significant Accounting Policies

Sewerage Business Best Practice Management disclosure requirements 93

Note Page

1 6

SPFS 2015_

Lockhart Shire Council Notes to the Special Purpose Financial Statements for the financial year ended 30 June 2015 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 these special purpose financial statements, 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) &

Australian Accounting Interpretations.

The disclosures in these special purpose financial statements have been prepared in accordance with: the Local Government Act and 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 on the “Application of National Competition Policy to Local Government”. The “Pricing & Costing for Council Businesses A Guide to Competitive Neutrality” issued by the Office of Local Government in July 1997 has also been adopted.

The pricing & costing guidelines outline the process for identifying and allocating costs to activities and provide a standard of disclosure requirements. These disclosures are reflected in Council’s pricing and/or financial reporting systems and include taxation equivalents; council subsidies; return on investments (rate of return); and dividends paid. Declared Business Activities In accordance with Pricing & 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) None Category 2 (where gross operating turnover is less than $2 million) a. Sewerage Service

Comprising the whole of the sewerage reticulation and treatment operations and net assets system servicing the villages of Lockhart, The Rock and Yerong Creek.

Monetary Amounts Amounts shown in the financial statements are in Australian currency and rounded to the nearest one thousand dollars, with the exception of some figures disclosed in Note 3 (Sewerage Best Practice Management Disclosures). As required by the NSW Office of Water (Department of Primary Industries) the amounts shown in Note 3 are disclosed in whole 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.

SPFS 2015_


page 7

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 in these financial statements. For the purposes of disclosing comparative information relevant to the private sector equivalent, 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 $432,000 of combined land values attracts 0%. From $432,001 to $2,641,000 the rate is 1.6% + $100. For the remaining combined land value that exceeds $2,641,000, 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. In accordance with the guidelines for Best Practice Management of Water Supply and Sewerage, a payment for the amount calculated as the annual tax equivalent charges (excluding income tax) must be paid from Sewerage Business activity. The payment of taxation equivalent charges, referred in the Best Practice Management of Water Supply and Sewerage Guides to as a “Dividend for Taxation equivalent”, may be applied for any purpose allowed under the Local Government Act, 1993. Achievement of substantial compliance against the guidelines for Best Practice Management of Water Supply and Sewerage is not a prerequisite for the payment of the tax equivalent charges, however the payment must not exceed $3 per assessment. Income Tax An income tax equivalent has been applied on the profits of each reported Business Activity. Whilst income tax is not a specific cost for the purpose of pricing a good or service, it needs to be taken into account of 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/(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 is payable to the “Council” as the owner of business operations, it represents an internal payment and has no effect on the operations of the council. Accordingly, there is no need for disclosure of internal charges in Council's General Purpose Financial Statements. The rate applied of 30% 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 & 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 & Debt Guarantee Fees The debt guarantee fee is designed to ensure that council business activities face “true” commercial borrowing 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 the 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 where council provides services on a less than cost recovery basis. This option is

SPFS 2015_


page 8

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 the 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 to generate a return on capital funds employed that is comparable to rates of return for private businesses operating in a similar field”. Such funds are subsequently available for meeting commitments or financing future investment strategies. 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 3.02% at 30/6/15. 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 any external entities. Local Government Sewerage Business is permitted to pay an annual dividend from its sewerage business surplus.

The dividend, calculated and approved in accordance with the Best Practice Management Guidelines, must not exceed either: (i) 50% of this surplus in any one year, or (ii) the number of sewerage assessments at 30

June 2015 multiplied by $30 (less the payment for tax equivalent charges, not exceeding $3 per assessment).

In accordance with the guidelines for Best Practice Management of Water Supply and Sewerage, a Dividend Payment form, Statement of Compliance, Unqualified Independent Financial Audit Report and Compliance Audit Report are required to be submitted to the NSW Office of Water prior to making the dividend and only after it has approved the payment.

SPFS 2015

page 9


Notes to the Special Purpose Financial Statements for the financial year ended 30 June 2015

Note 3. Sewerage Business Best Practice Management disclosure requirements

Dollars Amounts shown below are in WHOLE DOLLARS (unless otherwise indicated)

1. Calculation and Payment of Tax-Equivalents[All Local Government Local Water Utilities must pay this dividend for tax-equivalents]

Calculated Tax Equivalents

No of assessments multiplied by $3/assessment

Amounts payable for Tax Equivalents [lesser of (i) and (ii)]

Amounts actually paid for Tax Equivalents

2. Dividend from Surplus

50% of Surplus before Dividends[Calculated in accordance with Best Practice Management for Water Supply and Sewerage Guidelines]

No. of assessments x ($30 less tax equivalent charges per assessment)

Cumulative surplus before dividends for the 3 years to 30 June 2015, less thecumulative dividends paid for the 2 years to 30 June 2014 & 30 June 2013

2015 Surplus 2014 Surplus 2013 Surplus2014 Dividend 2013 Dividend

Maximum dividend from surplus [least of (i), (ii) and (iii) above]

Dividend actually paid from surplus [refer below for required pre-dividend payment Criteria]

3. Required outcomes for 4 Criteria [To be eligible for the payment of a "Dividend from Surplus", ALL the Criteria below need a "YES"]

Completion of Strategic Business Plan (including Financial Plan)

Pricing with full cost-recovery, without significant cross subsidies [Refer Item 2(a) in Table 1 on page 22 of the Best Practice Guidelines]

Complying charges Residential [Item 2(c) in Table 1] Non Residential [Item 2(c) in Table 1] Trade Waste [Item 2(d) in Table 1]

DSP with Commercial Developer Charges [Item 2(e) in Table 1] Liquid Trade Waste Approvals & Policy [Item 2(f) in Table 1]

Complete Performance Reporting Form (by 15 September each year)

a. Integrated Water Cycle Management Evaluation

b. Complete and implement Integrated Water Cycle Management Strategy

15,400 -

(v)

(iii)

(i)

(ii)

(a)(b)

(iv)

-

(i)

(iv)

(iii)

(ii)

(iii)

50,400

(i)

(ii) 27,660

(16,000)

(iv)

(c)

2015

YES

25,200

-

NO

-

-

YES

YES

49,800

YES

YES

-

2,766

YES

YES

YES

25,200

NO

SPFS 2015

page 10



Note 3. Sewerage Business Best Practice Management disclosure requirements (continued)


National Water Initiative (NWI) Financial Performance Indicators

Total Revenue (Sewerage)Total Income (s14) - Grants for Acquisition of Assets (s12a) - Interest Income (s10)- Aboriginal Communities W&S Program Income (w10a)

Written Down Replacement Cost of Fixed Assets (Sewerage)Written down current cost of system assets (s48)

Operating Cost (Sewerage)Management Expenses (s1) + Operational & Maintenance Expenses (s2)

Capital Expenditure (Sewerage)Acquisition of Fixed Assets (s17)

Economic Real Rate of Return (Sewerage)[Total Income (s14) - Interest Income (s10) - Grants for acquisition of Assets (s12a)- Operating cost (NWI F12) - Current cost depreciation (s3)] x 100 divided by[Written down current cost (ie. WDCC) of System Assets (s48) + Plant & Equipment (s34b)]

Capital Works Grants (Sewerage)Grants for the Acquisition of Assets (12a)

National Water Initiative (NWI) Financial Performance IndicatorsWater & Sewer (combined)

Total Income (Water & Sewerage)Total Income (w13 + s14) + Gain/Loss on disposal of assets (w14 + s15)minus Grants for acquisition of assets (w11a + s12a) - Interest Income (w9 + s10)

Revenue from Community Service Obligations (Water & Sewerage)Community Service Obligations (NWI F25) x 100 divided by Total Income (NWI F3)

Capital Expenditure (Water & Sewerage)Acquisition of Fixed Assets (w16 + s17)

Economic Real Rate of Return (Water & Sewerage)[Total Income (w13 + s14) - Interest Income (w9 + s10) - Grants for acquisition of assets(w11a + s12a) - Operating Cost (NWI F11 + NWI F12) - Current cost depreciation (w3 + s3)] x 100divided by [Written down replacement cost of fixed assets (NWI F9 + NWI F10)+ Plant & equipment (w33b + s34b)]

Dividend (Water & Sewerage)Dividend paid from surplus (2(v) of Note 2 + 2(v) of Note 3)

Dividend Payout Ratio (Water & Sewerage)Dividend (NWI F20) x 100 divided by Net Profit after tax (NWI F24)

NWI F16 $'000

NWI F27

NWI F18

NWI F15 $'000

%

$'000

NWI F2

NWI F10

NWI F12

$'000

$'000

0.96%

-

%

- $'000

0.00%

NWI F19

NWI F21

NWI F20

%

NWI F3 $'000 407

NWI F8 % 2.21%

2015

$'000

-

6,698

407

0.96%

187

-

SPFS 2015

page 11



Note 3. Sewerage Business Best Practice Management disclosure requirements (continued)


National Water Initiative (NWI) Financial Performance IndicatorsWater & Sewer (combined)

Net Debt to Equity (Water & Sewerage)Overdraft (w36 + s37) + Borrowings (w38 + s39) - Cash & Investments (w30 + s31)x 100 divided by [Total Assets (w35 + s36) - Total Liabilities (w40 + s41)]

Interest Cover (Water & Sewerage)Earnings before Interest & Tax (EBIT) divided by Net Interest

Earnings before Interest & Tax (EBIT):Operating Result (w15a + s16a) + Interest expense (w4a + s4a) - Interest Income (w9 + s10)- Gain/Loss on disposal of assets (w14 + s15) + Miscellaneous Expenses (w4b + w4c + s4b + s4c)

Net Interest:Interest Expense (w4a + s4a) - Interest Income (w9 + s10)

Net Profit After Tax (Water & Sewerage)Surplus before dividends (w15a + s16a) - Tax equivalents paid (Note 2-1(iv) + Note 3-1(iv))

Community Service Obligations (Water & Sewerage)Grants for Pensioner Rebates (w11b + s12b)

Notes: 1. References to w (eg. s12) refer to item numbers within Special Schedules No. 5 & 6 ofCouncil's Annual Financial Statements.

2. The NWI Performance Indicators are based upon the National Performance Framework Handbookfor Urban Performance Reporting Indicators & Definitions.

-25.45%

2015

9

> 100

72

35-

$'000

64

NWI F25 $'000

NWI F24

NWI F23

NWI F22 %

page 12

page 13

Lockhart Shire Council SPECIAL SCHEDULES for the year ended 30 June 2015

Special Schedules 2015

page 1


Special Schedules for the financial year ended 30 June 2015

Contents

Special Schedules1

Net Cost of Services

Statement of Long Term Debt (all purposes)Statement of Internal Loans (Sect. 410(3) LGA 1993)

Water Supply Operations - incl. Income StatementWater Supply - Statement of Financial Position

Sewerage Service Operations - incl. Income StatementSewerage Service - Statement of Financial Position

- Note to Special Schedule No. 5

Report on Infrastructure Assets (as at 30 June 2015)

Financial Projections

Permissible Income Calculation

1 Special Schedules are not audited (with the exception of Special Schedule 9).

Background

These Special Schedules have been designed to meet the requirements of special purpose users such as;

the NSW Grants Commissionthe Australian Bureau of Statistics (ABS),the NSW Office of Water (NOW), andthe Office of Local Government (OLG).

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, andthe monitoring of the financial activities of specific services.

- Special Schedule No. 5 5

Page

2

4

n/a

- Special Schedule No. 1

- Special Schedule No. 2(a)n/a


- Special Schedule No. 2(b)

- Special Schedule No. 3n/a

11- Special Schedule No. 7

10

9

(ii)


(i)

- Special Schedule No. 9 17


n/a


page 2


Special Schedule No. 1 - Net Cost of Services for the financial year ended 30 June 2015

$'000

Governance

Administration

Public Order and Safety

Beach ControlEnforcement of Local Govt. RegulationsAnimal ControlOtherTotal Public Order & Safety

Health

EnvironmentNoxious Plants and Insect/Vermin ControlOther Environmental ProtectionSolid Waste ManagementStreet CleaningDrainageStormwater ManagementTotal Environment

Community Services and EducationAdministration & EducationYouth ServicesSocial Protection (Welfare)Aged Persons and DisabledChildren's ServicesTotal Community Services & Education

Housing and Community AmenitiesPublic CemeteriesPublic ConveniencesStreet LightingTown PlanningCouncil HousingYouth FlatsOther Community AmenitiesTotal Housing and Community Amenities

Water Supplies

Sewerage Services

(45)

41 -

-

- (289)

(36)

-

37

(28)

-

-

(15)

2

-

(116)

(43)

-

30

-

36 17

397

918 -

-

36 -

-

- -

199

70

Net Cost.of Services.

- -

(163)

(17)

(346) -

167 - - (167)

2 - -

(1,499)

-

3

103

Function or Activity

-

Fire Service Levy, Fire Protection, Emergency Services

-

-

38 -

1,544

211

45

- - (161)

- (7)

-

7

1 -

212 -

-

48

-

-

(9)

(26) (22)

- (38)

- -

- 44

83

-

-

-

-

11 20

-

-

38 -

-

-

425 388

- - - -

51

81

-

- -

Expenses from. Continuing. Operations. Non Capital.

-

-

- -

Capital.

Income fromcontinuing operations

-

-

76 58

438

51

572

365

-

39 16 - (23) 10 12 - 2

22


page 3


Special Schedule No. 1 - Net Cost of Services (continued) for the financial year ended 30 June 2015

$'000

Recreation and CulturePublic LibrariesMuseumsCommunity Centres and HallsOther Cultural ServicesSporting Grounds and VenuesSwimming PoolsParks & Gardens (Lakes)Other Sport and RecreationTotal Recreation and Culture

Mining, Manufacturing and ConstructionQuarries & PitsTotal Mining, Manufacturing and Const.

Transport and CommunicationUnsealed Rural RoadsRural Roads SealedUrban Roads SealedRegional RoadsBridgesFootpathsKerb & GutterCausewaysCulvertsFlood March 2012AerodromesOther Transport & CommunicationTotal Transport and Communication

Economic AffairsCamping Areas & Caravan ParksTourism & Area PromotionIndustrial PromotionReal Estate DevelopmentPrivate WorksShops & OfficesOther Land & BuildingsLockhart Memorial HallThe Rock Medical CentreLockhart Medical CentreOther Economic AffairsTotal Economic Affairs

Totals – FunctionsGeneral Purpose Revenues (2)

NET OPERATING RESULT (1)

(1) As reported in the Income Statement (2) Includes: Rates & Annual Charges (incl. Ex Gratia, excl. Water & Sewer), Non Capital General Purpose Grants,

Interest on Investments (excl. Ext. Restricted Assets) & Interest on overdue Rates & Annual Charges

Share of interests - joint ventures & associates using the equity method

5

56

1

Net Cost.of Services.

(1,344) (859)

(154) (330)

5,813

106 21

(56) 77

126

(128) 505 (37)

1,330

14

(4,497) (69)

4

(1,586) 393

(7)

(3)

-

(19)

(133)

(6)

(545)

- 50

-

Capital.

-

-

-

- - 1,167

1,344 -

220

56

-

17

Non Capital.

Expenses from. Continuing. Operations.

380

- 133

6 18

-

-

-

70 817 154 -

202

Function or Activity

19 -

-

-

-

-

126

-

46

-

1 - 947 600

4

19 - 37

56

8,606

-

3,849 2,207

410 7

9,810

341

53 49

5,813 8,606

-

14

3,983

3 10

Income fromcontinuing operations

70 28 50

14 19 - 5

-

14

859 - 92

662

55 - - (55) 6 - - (6)

43 - - (43) - - 10 10

7 8 - 1 6 12 - 6

10 4 - (6) 12 1 - (11)

- 7 161 180 - 19

15 73 - 58 10 - - (10)

130 - - (130)


Page 4


Special Schedule No. 2(a) - Statement of Long Term Debt (all purpose) for the financial year ended 30 June 2015

$'000

Notes: Excludes (i) Internal Loans & (ii) Principal Inflows/Outflows relating to Loan Re-Financing. This Schedule is prepared using the face value of debt obligations, rather than fair value (which are reported in the GPFS).

Loans (by Source)Commonwealth Government

Current

- - - - - - -

Principal outstanding New Loans raised during

the year

at beginning of the year

Classification of DebtCurrent Non

Current Total

-

- - -

- - -

Debt redemption during the year

From Revenue

Sinking Funds

-

31 - -

70 -

70 -

854 -

-

-

-

-

Transfers to Sinking

Funds

Principal outstandingInterest

applicable for Year TotalNon

Current

at the end of the year

-

-

- - -

-

- - - -

885

- -

31 854 885 -

- - - Other State Government - - -

- - -

- - - -

Treasury Corporation-

-

- -

Public Subscription - -

- - - - -

-

Financial Institutions 29 886 915 - -

- -

-

-

- 30 - - -

30

29 886 Total Loans-

915 Other

- - - Other Long Term DebtRatepayers Advances - - -

- Government Advances - Finance Leases -

- - - - -

- -

- - - -

- - -

31

- - -

885

- - -

854

-

70 -

-

-

- Deferred Payments

- -

29

-

886

- - - - Total Long Term Debt - -

Total Debt

-

915

-

- 30


page 5


Special Schedule No. 5 - Sewerage Service Income Statement Includes ALL INTERNAL TRANSACTIONS, ie. prepared on a Gross Basis. for the financial year ended 30 June 2015

$'000

A Expenses and IncomeExpenses

1. Management expensesa. Administrationb. Engineering and Supervision

2. Operation and Maintenance expenses- Mainsa. Operation expensesb. Maintenance expenses

- Pumping Stationsc. Operation expenses (excluding energy costs)d. Energy costse. Maintenance expenses

- Treatmentf. Operation expenses (excl. chemical, energy, effluent & biosolids management costs)

g. Chemical costsh. Energy costsi. Effluent Managementj. Biosolids Managementk. Maintenance expenses

- Otherl. Operation expensesm. Maintenance expenses

3. Depreciation expensesa. System assetsb. Plant and equipment

4. Miscellaneous expensesa. Interest expensesb. Revaluation Decrementsc. Other expensesd. Impairment - System assetse. Impairment - Plant and equipmentf. Aboriginal Communities Water & Sewerage Programg. Tax Equivalents Dividends (actually paid)

5. Total expenses

Actuals 2015

Actuals 2014

-

156

16 28 - -

-

10 - -

-

3

370 421

5 - -

- -

-

27

- -

- -

-

-

- - -

- 4

- 89 117

-

7

- 34

42

156 -

13

- 16

9

-

30

5

24


page 6


Special Schedule No. 5 - Sewerage Service Income Statement (continued) Includes ALL INTERNAL TRANSACTIONS, ie. prepared on a Gross Basis. for the financial year ended 30 June 2015

$'000

Income

6. Residential charges (including rates)

7. Non-residential chargesa. Access (including rates)b. Usage charges

8. Trade Waste Chargesa. Annual Feesb. Usage chargesc. Excess mass chargesd. Re-inspection fees

9. Extra charges

10. Interest income

11. Other income11a. Aboriginal Communities Water & Sewerage Program

12. Grantsa. Grants for acquisition of assetsb. Grants for pensioner rebatesc. Other grants

13. Contributionsa. Developer chargesb. Developer provided assetsc. Other contributions

14. Total income

15. Gain (or loss) on disposal of assets

16. Operating Result

16a. Operating Result (less grants for acquisition of assets)

35 42

- -

- -

- - - -

-

-

-

72 22

72

- -

9 4 - -

442 443

-

22

- 5

12 15 - -

- -

-

- - -

-

-

377

Actuals

386

Actuals 20142015


page 7


Special Schedule No. 5 - Sewerage Service Income Statement (continued) Includes ALL INTERNAL TRANSACTIONS, ie. prepared on a Gross Basis. for the financial year ended 30 June 2015

$'000

B Capital transactionsNon-operating expenditures

17. Acquisition of Fixed Assetsa. New Assets for Improved Standardsb. New Assets for Growthc. Renewalsd. Plant and equipment

18. Repayment of debta. Loansb. Advancesc. Finance leases

19. Transfer to sinking fund

20. Totals

Non-operating funds employed

21. Proceeds from disposal of assets

22. Borrowing utiliseda. Loansb. Advancesc. Finance leases

23. Transfer from sinking fund

24. Totals

C Rates and charges

25. Number of assessmentsa. Residential (occupied)b. Residential (unoccupied, ie. vacant lot)c. Non-residential (occupied)d. Non-residential (unoccupied, ie. vacant lot)

26. Number of ETs for which developer charges were received

27. Total amount of pensioner rebates (actual dollars)

- - - -

-

-

- -

- -

-

- ET

9,389$

-

-

-

-

- -

- -

Actuals Actuals 2015 2014

-

- -

134 114

-

-

675

-

- -

-

9,694$

-

116

-

83

-

39

- ET

684


page 8


Special Schedule No. 5 - Sewerage Service Cross Subsidies for the financial year ended 30 June 2015

$'000

D Best practice annual charges and developer charges*

28. Annual chargesa. Does Council have best-practice sewerage annual charges, usage charges and trade waste fees & charges*?

If Yes, go to 29a.If No, please report if council has removed land value from accesscharges (ie rates)?

NB. Such charges for both residential customers and non-residentialcustomers comply with section 4.2 & 4.3 of the Water Supply,Sewerage and Trade Waste Pricing Guidelines, NSW Office ofWater, December, 2002. Such charges do not involve significantcross subsidies.

b. Cross-subsidy to non-residential customers (page 45 of Guidelines)

c. Cross-subsidy to trade waste discharges (page 46 of Guidelines)

29. Developer chargesa. Has council completed a sewerage Development Servicing** Plan?

b. Total cross-subsidy in sewerage developer charges for 2014/15 (page 47 of Guidelines)

** In accordance with page 9 of Developer Charges Guidelines forWater Supply, Sewerage and Stormwater, NSW Office of Water,December, 2002.

30. Disclosure of cross-subsidiesTotal of cross-subsidies (28b + 28c + 29b)

* Councils which have not yet implemented best practice sewer pricing & liquid waste prising should disclose cross-subsidies in items 28b and 28c above.

However, disclosure of cross-subsidies is not required where a Councilhas implemented best practice sewerage and liquid waste pricing andis phasing in such pricing over a period of 3 years.

-

AmountYes No


page 9


Special Schedule No. 6 - Sewerage Service Statement of Financial Position Includes INTERNAL TRANSACTIONS, ie. prepared on a Gross Basis. as at 30 June 2015

$'000

ASSETS31. Cash and investments

a. Developer chargesb. Special purpose grantsc. Accrued leaved. Unexpended loanse. Sinking fundf. Other

32. Receivablesa. Specific purpose grantsb. Rates and Availability Chargesc. User Chargesd. Other

33. Inventories

34. Property, plant and equipmenta. System assetsb. Plant and equipment

35. Other assets

36. Total Assets

LIABILITIES37. Bank overdraft38. Creditors39. Borrowings

a. Loansb. Advancesc. Finance leases

40. Provisionsa. Tax equivalentsb. Dividendc. Other

41. Total Liabilities

42. NET ASSETS COMMITTED

EQUITY42. Accumulated surplus44. Asset revaluation reserve

45. TOTAL EQUITY

Note to system assets:46. Current replacement cost of system assets47. Accumulated current cost depreciation of system assets48. Written down current cost of system assets

Actuals

2,294

34

Actuals

- - -

- -

Non Current Current

2,294 - -

-

-

Total Actuals

- -

2,344

-

- -

5 -

-

- 11 -

-

-

- - -

-

-

34

6,698

-

- -

-

5

-

9,042

6,698

6,698

11

- - -

-

-

-

-

- -

-

7,534

6,698

12,660 (5,962)

1,499

9,033

6,696

-

-

2,337

-

-

-

- -

- -

2

7 2

9

- -

9,033

9

7 - -


page 10


Note to Special Schedule No. 5 for the financial year ended 30 June 2015

Administration (1) Engineering and supervision (1)

(item 1a of Special Schedule 5) comprises the following: (item 1b of Special Schedule 5) comprises the following:

• Administration staff: • Engineering staff:− Salaries and allowance − Salaries and allowance− Travelling expenses − Travelling expenses− Accrual of leave entitlements − Accrual of leave entitlements− Employment overheads. − Employment overheads.

• Meter reading. • Other technical and supervision staff:− Salaries and allowance

• Bad and doubtful debts. − Travelling expenses− Accrual of leave entitlements

• Other administrative/corporate support services. − Employment overheads.

Operational expenses (item 2 of Special Schedule 5) comprise the day to day operational expensesexcluding maintenance expenses.

Maintenance expenses (item 2 of Special Schedule 5) comprise the day to day repair and maintenanceexpenses. (Refer to Section 5 of the Local Government Asset Accounting Manual regarding capitalisationprinciples and the distinction between capital and maintenance expenditure).

Other expenses (item 4c of Special Schedule 5) includes all expenses not recorded elsewhere.

Revaluation decrements (item 4b of Special Schedule 5) is to be used when I,PP&E decreases in FV.

Impairment Losses (item 4d & 4e of Special Schedule 5) are to be used when the carrying amount ofan asset exceeds its recoverable amount (refer to page D-31).

Aboriginal Communities Water and Sewerage Program (item 4f of Special Schedule 5) is to beused when operation and maintenance work has been undertaken on behalf of the Aboriginal CommunitiesWater and Sewerage Program. Similarly, income for item 12a of Special Schedule 5 is for services provided to the Aboriginal Communities Water and Sewerage Program and is not part of Council’s sewerage revenue.

Residential charges

(2) (item 6 of Special Schedule 5) include all income from residential charges.

Non-residential charges

(2) (items 7a, 7b of Special Schedule 5) include all income from non-residentialcharges separated into 7a Access Charges (including rates if applicable) and 7b Usage Charges.

Trade waste charges (item 8 of Special Schedule 5) include all income from trade waste charges separatedinto 8a Annual Fees, 8b Usage Charges and 8c Excess Mass Charges and 8d Re-inspection Fees.

Other income (item 11 of Special Schedule 5) include all income not recorded elsewhere.

Other contributions (item 13c of Special Schedule 5) incl. capital contributions for sewerage services received by Council under Section 565 of the Local Government Act.

Notes:(1) Administration and engineering costs for the development of capital works projects should be reported as part of the capital cost of the project and not as part of the recurrent expenditure (ie. in item 17 for sewerage, and not in items 1a and 1b).

(2) To enable accurate reporting of residential revenue from usage charges, it is essential for councils to accurately separate their residential (item 6) charges and non-residential (item 7) charges.


Page 11


Special Schedule No. 7 - Report on Infrastructure Assets as at 30 June 2015

$'000

refer (4) & (5)

38%15% 47%

0%

0%2,387

0%

1%

58,370

2,863

0.0%

13% 0%

0%

Assets in Condition as a % of WDV

0%0%

993

40.6% 0.0%36.5%

Buildings

Sealed Roads Surface Roads

Other Structuressub total

Other Structures

sub totalYouth

Council Offices

27.0%

100%20%0%

24%

97%

87%

2%

0%

22.9%

271 0.0%0% 0% 0%271

- -

0%0%

Unsealed Roads

Fire

Council Housing

Shops & Offices

-

-

-

- -

-

-

5

20

100

20 2

-

-

Asset Class

34%

Aged Care

to bring up to a Estimated cost

Actual Required Written

standard 2014/15

- 266 149

- -

- 4

- 385

0%40%

7

0%0%

Asset Category

0%

4Annual Maintenance Down Value

(WDV) Maintenance refer (4)

satisfactory 21

-

16%28%0%

0%

0%

23%1% 92%

23%

5

49%

Swimming Pools

Council Depot

Public HallsRecreation & Culture

3

Caravan Park/Tourism

0%

0%24%

0.0%

0%0%0%

85%

8%

0%0%

0.1%

840

Bridges

0%30.7%

460 0%

0%0%1,098

-

0%6%

80%52%

49%100%

-

0%

- -

6,792 89,415

487

-

2,555 -

sub total

Sealed Roads Structure

Footpaths & Cycleways

Kerb and Gutter

76%

0.0%100%

28.0%

56%

100.0%

10

- 3

3

7

0%

37%0%0%

10

-

3

380 120

7 8,846 14.2%

0%

73

20%

92%25%71%4%

15%

-

- 0%11 2

refer (2)

20 15 1%

refer (1) refer (3)

10%292

8%

921

7%

20%231 4%

-

-

0%

8 7

69

819 500

1,075 -

0%

164,233 0.0%1,408

- 7 6 1,649 100% 0% 0% 0% 0%

Culverts & Causeways - 30 - 3,413 79% 20% 1% 0% 0%

12


Page 12


Special Schedule No. 7 - Report on Infrastructure Assets (continued) as at 30 June 2015

$'000

refer (4) & (5)

TOTAL - ALL ASSETS - 1,361 1,658 181,445 22.1% 35.5% 40.0% 1.5% 0.8%

10

Stormwater Conduits/Inlet and Junction Pits 514

Buildings Effluent Water Reuse System

25%

25% 0%

- 5%

Assets in Condition as a % of WDV

4

- -

Assets sub total - 50 49 882 0.0% 15.0% 45.0% 35.0% 5.0%

Swimming Pools -

25%13

45% 35%

100%100.0%30

- 30

6,698 -

2.3% 45.4%24.5% 9.3%18.5%

100%

0.0% 0.0%0.0%-

137 sub total

50 49 882 0% 15%Recreational Other -

515 sub total 0.0%

Open Space/

1 Other -

80 - -

83 7 -

128 -

32 89

15%

50%15 - 4,874 10

20%30%

refer (4) 2

Down Value (WDV)

refer (3)

Treatment

Asset Class Asset CategoryMaintenance

to bring up to a

standard

Estimated cost

2014/15

0% 25%

refer (2)

Actual satisfactory Annual Maintenance

Required

45%5%

5

Written

31

20%16 5% 20%735 20%

10% 10%974 65% 15%45%

5%

25

0%10%

10%

-

-

-

StormwaterDrainage

Pumping Station/sMains

-

refer (1)

NetworkSewerage


Page 13


Special Schedule No. 7 - Report on Infrastructure Assets (continued) as at 30 June 2015

Notes:(1). Satisfactory is defined as “satisfying expectations or needs, leaving no room for complaint, causing satisfaction, adequate”.

The estimated cost to bring assets to a satisfactory standard is the amount of money that is required to be spent on an asset to ensure that it is in a satisfactory standard.This estimated cost should not include any planned enhancements (ie.to heighten, intensify or improve the facilities).

(2). Required Annual Maintenance is “what should be spent to maintain assets in a satisfactory standard.(3). Actual Maintenance is what has been spent in the current year to maintain the assets.

Actual Maintenance may be higher or lower than the required annual maintenance due to the timing of when the maintenance actually occurs.(4). Written Down Value is in accordance with Note 9 of Council's General Purpose Financial Statements

(5). Infrastructure Asset Condition Assessment "Key"

Excellent No work required (normal maintenance) Condition Description here…Good Only minor maintenance work required Condition Description here…Average Maintenance work required Condition Description here…Poor Renewal required Condition Description here…Very Poor Urgent renewal/upgrading required Condition Description here…10

67894

21

3

5


page 14


Special Schedule No. 7 - Report on Infrastructure Assets (continued) for the financial year ended 30 June 2015

$ '000

Infrastructure Asset Performance IndicatorsConsolidated

Depreciation, Amortisation & Impairment

2. Infrastructure Backlog RatioEstimated Cost to bring Assets to aSatisfactory ConditionTotal value(2) of Infrastructure, Building, Other Structures& depreciable Land Improvement Assets

3. Asset Maintenance RatioActual Asset MaintenanceRequired Asset Maintenance

4. Capital Expenditure RatioAnnual Capital ExpenditureAnnual Depreciation

Notes

(1) Asset Renewals represent the replacement &/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.

Asset Renewals include building, infrastructure & Other Structure assets only.

(2) Written Down Value

354.18%2,328

4,207 1.49 3.762,827

1,658 1.22 1.151,361

Indicator Prior Periods

- 0.00% 0.00% 0.00%181,445

2015 2015 2014 2013

2,077 89.22% 445.96%Asset Renewals(Building, Infrastructure & Other Structures) (1)

1. Building, Infrastructure & Other Structures Renewals Ratio

Amounts


page 15




Benchmark: ――― Maximum <0.02 Ratio is within BenchmarkSource for Benchmark: Code of Accounting Practice and Financial Reporting #23 Ratio is outside Benchmark

Benchmark: ――― Minimum >1.00 Ratio is within BenchmarkSource for Benchmark: Code of Accounting Practice and Financial Reporting #23 Ratio is outside Benchmark

Benchmark: ――― Minimum >1.10 Ratio is within BenchmarkSource for Benchmark: Code of Accounting Practice and Financial Reporting #23 Ratio is outside Benchmark

Purpose of Asset Maintenance Ratio 2014/15 Ratio 1.22 x

2014/15 Ratio 89.22%

To assess the rate at which these assets are being renewed

relative to the rate at which they are depreciating.

Purpose of Infrastructure Backlog Ratio 2014/15 Ratio 0.00%

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 Capital Expenditure Ratio

Purpose of Asset Renewals Ratio

This ratio showswhat proportion the backlog is against

the total valueof a Council’s infrastructure.

To assess the extent to which a Council is expanding its asset

base thru capital expenditure on both new assets and the

replacement and renewal of existing

assets.

2014/15 Ratio 1.49 x

197.64%

354.18% 445.96%

89.22% 0%

100%

200%

300%

400%

500%

2012 2013 2014 2015

Rat

io %

1. Building, Infrastructure & Other Structures Renewals Ratio

0.0% 0.0% 0.0% 0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

2013 2014 2015

Rat

io %

2. Infrastructure Backlog Ratio

1.15 1.22

0.000.200.400.600.801.001.201.40

2014 2015

Rat

io (x

)

3. Asset Maintenance Ratio

3.76

1.49

0.000.501.001.502.002.503.003.504.004.505.00

2014 2015

Rat

io (x

)

4. Capital Expenditure Ratio


page 16



$ '000

Infrastructure Asset Performance IndicatorsBy Fund

Depreciation, Amortisation & Impairment

2. Infrastructure Backlog RatioEstimated Cost to bring Assets to aSatisfactory ConditionTotal value(3) of Infrastructure, Building, Other Structures& Depreciable Land Improvement Assets

3. Asset Maintenance RatioActual Asset MaintenanceRequired Asset Maintenance

4. Capital Expenditure RatioAnnual Capital ExpenditureAnnual Depreciation

Notes

(1) General Fund refers to all of Council's activities except for its Sewer activities which is listed separately.

(2) Asset Renewals represent the replacement &/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.

Asset Renewals include building, infrastructure & Other Structure assets only.

(3) Written Down Value

n/a 0.00 1.58prior period: n/a 0.00 4.09

n/a 0.00% 0.00%prior period: n/a 0.00% 0.00%

n/a 0.93 1.25prior period: n/a 1.02 1.16

n/a 0.00% 95.63%

prior period: n/a 0.00% 499.31%

Water Sewer General(1)

2015 2015 2015

1. Building, Infrastructure & Other Structures Renewals RatioAsset Renewals(Building, Infrastructure & Other Structures) (2)


page 17


Special Schedule No. 9 - Permissible Income Calculation for the financial year ended 30 June 2016

$'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 byorder published in the NSW Government Gazette in accordance with section 512 of the Local Government Act 1993.The OLG will extract these amounts from councils’ Special Schedule 9 in the Financial Data Return (FDR) toadminister this process.

15 6 2,166 2,209

2,151 2,203

0.00% 0.00%2.30% 2.40%0.00% 0.00%

- - - -

9 22

50 53 - -

2,216 2,262

- - 9 22

2,284

2,203 2,277

a

22 7

Calculation Calculation2014/15 2015/16

- -

22 7

- -

2,225

lm

n = (l + m)

o = k + n

g

b

def

k = (c+g+h+i+j)j = c x fi = c x e

h = d x (c-g)

c = (a + b)

pq = o - p

rs

t = q + r - s

page 18

page 19

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Lockhart Shire Council · 2015-11-26 · by proclamation and is duly empowered by the Local...

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