part three of three financial report for the year … city council annual report 2014-2015 part...

Banyule City Council Annual Report 2014-2015 Part Three – Financial Report

Annual Report 2014-2015 Part Three of Three

Financial Report for the Year Ended 30 June 2015


BANYULE CITY COUNCIL Financial Report for the year ended 30 June 2015

Table of Contents Page

FINANCIAL REPORT

Financial Statements

Comprehensive Income Statement 4

Balance Sheet 5

Statement of Changes in Equity 6

Statement of Cash Flows 7

Statement of Capital Works 8

Notes to the Financial Statements

Introduction 10

Note 1 Significant accounting policies 10

Note 2 Budget comparison 21

Note 3 Rates and charges 26

Note 4 Grants 27

Note 5 Statutory fees and fines 31

Note 6 User fees and charges 31

Note 7 Interest income 31

Note 8 Rental income 31

Note 9 Contributions income 31

Note 10 Net gain/(loss) on disposal of infrastructure, property, plant and

equipment

32

Note 11 Other income 32

Note 12 Share of net profits/(losses) of Associates 32

Note 13 Employee costs 32

Note 14 Materials, contracts and services 33

Note 15 Utility charges 33

Note 16 Depreciation and amortization 33

Note 17 Donations expenditure 34

Note 18 Borrowing costs 34

Note 19 Contributions expense 34

Note 20 Other expenses 34

Note 21 Auditors’ remuneration 34

Note 22 Bad and doubtful debts 34

Note 23 Cash and cash equivalents 35

Note 24 Other financial assets 35

Note 25 Trade and other receivables 36

Note 26 Inventories 37

Note 27 Non-current assets classified as held for sale 37

Note 28 Other assets 37

Note 29 Investments 38

Note 30 Infrastructure, property, plant and equipment 40

Note 31 Intangible assets 46

Note 32 Trade and other payables 46

Note 33 Provisions 47

Note 34 Trust funds and deposits 48

Note 35 Interest bearing loans and borrowings 49

Note 36 Reserves 50

Note 37 Reconciliation of cash flows from operating activities to surplus/(deficit) 55

Note 38 Reconciliation of cash and cash equivalents 55

Note 39 Financing arrangements 55

Note 40 Superannuation 56

Note 41 Contractual commitments 57

Note 42 Operating leases 58


BANYULE CITY COUNCIL Financial Report for the year ended 30 June 2015

Contents (cont) Page

Note 43 Contingent liabilities 59

Note 44 Financial instruments 62

Note 45 Related party transactions 65

Note 46 Events occurring after balance date 66

Certification of the Financial Statements 67

Independent Auditor’s Report 68


BANYULE CITY COUNCIL Financial Report 2015

Comprehensive Income Statement for the year ended 30 June 2015

Note 2015

$‘000

%

2014

$‘000

%

INCOME

Rates and charges 3 86,287 60.2 79,794 66.8

Grants - operating 4 14,008 9.8 10,037 8.4

Grants - capital 4 2,015 1.4 1,438 1.2

Statutory fees and fines 5 6,977 4.9 6,338 5.3

User fees and charges 6 14,557 10.1 14,698 12.3

Interest income 7 2,390 1.7 2,068 1.8

Rental income 8 1,916 1.3 1,942 1.6

Contributions income 9 3,044 2.1 2,729 2.3

Net gain on disposal of infrastructure, property,

plant and equipment

10

11,771

8.2

-

-

Other income 11 114 0.1 176 0.1 Share of net profits/(losses) of associates 12 336 0.2 274 0.2

Total Income 143,415 100.0 119,494 100.0

EXPENSES

Employee costs 13 54,653 42.8 51,511 43.8

Materials, contracts and services 14 38,405 30.1 33,020 28.1

Utility charges 15 4,136 3.2 4,446 3.8

Depreciation and amortization 1(xiii),16 18,572 14.5 15,911 13.5

Donations expenditure 17 708 0.6 669 0.6

Borrowing costs 18 3,795 3.0 3,477 3.0

Contributions expense 19 5,799 4.5 5,652 4.8

Net loss on disposal of infrastructure, property,

plant and equipment

10

-

-

1,306

1.1

Other expenses 20 1,662 1.3 1,531 1.3

Total Expenses 127,730 100.0 117,523 100.0

Surplus/(Deficit) for the year 15,685 1,971

OTHER COMPREHENSIVE INCOME

Items that will not be reclassified to surplus

or deficit in future periods:

Net asset revaluation increment/(decrement) 30(i) - 50,314

Impairment loss 27 (2,582) -

Total Comprehensive Result 13,103 52,285

The above Comprehensive Income Statement should be read in conjunction with the accompanying notes.



Balance Sheet as at 30 June 2015

Note 2015

$‘000

2014

$‘000

ASSETS

Current Assets

Cash and cash equivalents 23 64,795 56,835

Other financial assets 24 21,330 2,083

Trade and other receivables 25 6,801 6,924

Inventories 26 32 41

Non-current assets classified as held for sale 27 22,385 35,200

Other assets 28 946 814

Total current assets 116,289 101,897

Non-Current Assets

Trade and other receivables 25 517 615

Investments 29 3,068 2,732

Infrastructure, property, plant and equipment 30 1,247,674 1,247,902

Intangible assets 31 1,643 1,064

Total non-current assets 1,252,902 1,252,313

Total Assets 1,369,191 1,354,210

LIABILITIES

Current Liabilities

Trade and other payables 32 12,544 9,357

Provisions 33 13,432 12,343

Trust funds and deposits 34 677 931

Interest bearing loans and borrowings 35 2,647 2,267

Total current liabilities 29,300 24,898

Non-Current Liabilities

Provisions 33 404 326

Trust funds and deposits 34 478 434

Interest bearing loans and borrowings 35 55,366 58,012

Total non-current liabilities 56,248 58,772

Total Liabilities 85,548 83,670

Net Assets 1,283,643 1,270,540

EQUITY

Accumulated surplus 412,565 422,018

Reserves 36(ii) 871,078 848,522

Total Equity 1,283,643 1,270,540

The above Balance Sheet should be read in conjunction with the accompanying notes.



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

2015

Total

$‘000

Accumulated

Surplus

$‘000

Asset

Revaluation

Reserve

$‘000

Asset

Replacement

Reserves

$‘000

Balance at beginning of the financial year 1,270,540 422,018 833,409 15,113

Surplus for the year 15,685 15,685 - -

Impairment Loss on revalued assets (2,582) - (2,582) -

Transfers from asset revaluation reserve - 1,743 (1,743) -

Transfers to other reserves - (34,855) - 34,855

Transfers from other reserves - 7,974 - (7,974)

Balance at end of the financial year 1,283,643 412,565 829,084 41,994

(a) (a)

2014

Total

$‘000

Accumulated

Surplus

$‘000

Asset

Revaluation

Reserve

$‘000

Asset

Replacement

Reserves

$‘000

Balance at beginning of the financial year 1,218,255 419,655 785,374 13,226

Surplus for the year 1,971 1,971 - -

Net asset revaluation increment 50,314 - 50,314 -

Transfers from revaluation reserve - 2,279 (2,279) -

Transfers to other reserves - (35,381) - 35,381

Transfers from other reserves - 33,494 - (33,494)

Balance at end of the financial year 1,270,540 422,018 833,409 15,113

(a) (a)

(a) Refer to Note 36 for more information on reserves

The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.



Statement of Cash Flows for the year ended 30 June 2015

Note 2015

Inflows/

(Outflows)

$‘000

2014

Inflows/

(Outflows)

$‘000

Cash Flows from Operating Activities

Receipts:

Rates and charges 85,344 79,608

Grants - operating 14,010 11,521

Grants - capital 1,964 -

Statutory fees and fines 6,846 6,178

User fees and charges 13,081 14,744

Contributions - monetary 4,203 1,247

Interest received 2,311 2,033

Rent 2,026 1,804

Other receipts 1,824 49

Payments:

Employee costs (54,395) (50,448)

Materials, contracts and services (35,320) (33,801)

Trust funds and deposits net refunded 34 (210) (236)

Other payments (12,050) (12,571)

Net cash provided by operating activities 37 29,634 20,128

Cash Flows from Investing Activities

Payments for property, plant and equipment (17,056) (34,036)

Payments for infrastructure assets (4,270) (5,101)

Payments for intangible assets (374) (912)

Proceeds from sale of property, plant and equipment 10 25,413 3,421

Net (purchases)/redemption of financial assets (19,247) 4,295

Net cash (used in) investing activities (15,534) (32,333)

Cash Flows from Financing Activities

Borrowing costs - interest (3,874) (3,519)

Repayment of borrowings (2,266) (1,457)

Proceeds from borrowings - 30,000

Net cash provided by/(used in) financing activities (6,140) 25,024

Net increase/(decrease) in cash and cash equivalents 7,960 12,819

Cash and cash equivalents at the beginning of the financial

year

56,835

44,016

Cash and cash equivalents at the

end of the financial year

23,38

64,795

56,835

Financing arrangements

39

Restrictions on cash assets 23

The above Statement of Cash Flows should be read in conjunction with the accompanying notes.



Statement of Capital Works for the year ended 30 June 2015

Note 2015

$‘000

2014

$‘000

Capital Works

Infrastructure:

Roads, streets and bridges 30(i) 2,608 2,387

Drainage 30(i) 225 46

Parks and gardens 30(i) 1,429 2,623

Playgrounds 30(i) 378 251

Total infrastructure 4,640 5,307

Property:

Freehold land 30(i) 296 25,811

Freehold buildings 30(i) 10,130 1,792

Total property 10,426 27,603

Plant and equipment:

Motor vehicles 30(i) 4,215 4,513

Plant and equipment 30(i) 871 1,390

Furniture and fittings 30(i) 153 165

Total plant and equipment 5,239 6,068

Work in progress:

Work in progress 30(i) 1,642 1,444

Total work in progress 1,642 1,444

Intangible Assets:

Intangible Assets 31(i) 374 549

Total intangible assets 374 549

Non-current assets classified as held for sale:

Non-current assets classified as held for sale 27 11 -

Total non-current assets classified as held for sale 11 -

Total capital works expenditure 22,332 40,971

Represented by:

New assets (a) 2,975 27,096

Asset renewal (b) 16,365 10,731

Asset upgrade (c) 1,466 2,423

Asset expansion (d) 1,141 172

New intangible assets 374 549

New non-current assets classified as held for sale 11 -

Total capital works expenditure 22,332 40,971

The above Statement of Capital Works should be read in conjunction with the accompanying notes.




Definition of asset categories

(a) New

New capital expenditure does not have any element of renewal, expansion or upgrade of existing assets.

New capital expenditure may or may not result in additional revenue for Council and will result in an

additional burden for future operation, maintenance and capital renewal.

(b) Renewal

Expenditure on an existing asset which returns the service potential or the life of the asset up to that

which it had originally. It periodically requires expenditure, relatively large (material) in value compared

with the value of the components or sub-components of the asset being renewed. As it reinstates

existing service potential, it has no impact on revenue, but may reduce future operating and maintenance

expenditure if completed at the optimum time.

(c) Upgrade

Expenditure which enhances an existing asset to provide a higher level of service or expenditure that will

increase the life of the asset beyond that which it had originally. Upgrade expenditure is discretional and

often does not result in additional revenue unless direct user charges apply. It will increase operating and

maintenance expenditure in the future because of the increase in the Council’s asset base.

(d) Expansion

Expenditure which extends an existing asset, at the same standard as is currently enjoyed by residents, to

a new group of users. It is discretional expenditure which increases future operating and maintenance

costs, because it increases Council’s asset base, but may be associated with additional revenue from the

new user group.



Notes to and Forming Part of the Financial Statements for the year ended 30 June 2015

INTRODUCTION

Banyule City Council was established by an Order of the Governor in Council on 14 December 1994 and is a

Body Corporate.

Council has three Service Centres located at:

Ivanhoe – 275 Upper Heidelberg Road

Rosanna – 44 Turnham Avenue

Greensborough – 9-13 Flintoff Street

Council’s website address is : www.banyule.vic.gov.au

STATEMENT OF COMPLIANCE

These Financial Statements are a general purpose Financial Report that consists of a Comprehensive Income

Statement, Balance Sheet, Statement of Changes in Equity, Statement of Cash Flows, Statement of Capital Works

and notes accompanying these Financial Statements. The general purpose Financial Report complies with

Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards

Board, the Local Government Act 1989, and the Local Government (Planning and Reporting) Regulations 2014.

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant policies which have been adopted in the preparation of these Financial Statements are:

(i) Basis of Accounting

The accrual basis of accounting has been used in the preparation of these Financial Statements, whereby

assets, liabilities, equity, income and expenses are recognised in the reporting period to which they relate,

regardless of when cash is received or paid.

The Financial Statements have been prepared on the accrual and going concern basis under the historical

cost conventions except where specifically stated in:

Note 1 - (xii): Recognition and measurement of assets

Note 1 - (xiii): Valuation of assets

Note 1 - (xvi): Impairment of assets

Note 1 - (xxxii): Accounting for investments in associates

Note 1 - (x): Non-current assets classified as held for sale

Note 1 - (xvii): Investment property

Note 1 - (xxv): Financial guarantees

Judgements, estimates and assumptions are required to be made about the carrying values of assets and

liabilities that are not readily apparent from other sources. The estimates and associated judgements are

based on professional judgement derived from historical experience and various other factors that are

believed to be reasonable under the circumstances. Actual results may differ from these estimates.

Revisions to accounting estimates are recognised in the period in which the estimate is revised and also in

future periods that are affected by the revision. Judgements and assumptions made by management in the

application of AASs that have significant effects on the Financial Statements and estimates relate to:

the fair value of land, buildings, infrastructure, plant and equipment (refer to Note 1 (xii))

the determination of depreciation for buildings, infrastructure, plant and equipment (refer to Note 1

(xiii))

the determination of employee provisions (refer to Note 1 (v))

http://www.banyule.vic.gov.au/




1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont)

(i) Basis of Accounting (cont)

Unless otherwise stated, the accounting policies adopted for the reporting period are consistent with those

in the prior year. Where appropriate, comparative figures have been amended to accord with current

presentation, and disclosure has been made of any material changes to comparatives.

The figures presented in all the Financial Statements and the notes to the Financial Statements are

expressed as thousands of dollars when indicated by “$‘000”. Otherwise, the figures are exact to the

nearest one dollar.

(ii) Changes in Accounting Policies

There have been no changes in accounting policies from the previous period.





(iii) Principles of Consolidation

There are no other entities controlled by Council, material or otherwise, which are required to be included

in the Financial Statements.

(iv) Revenue Recognition

Income is recognised when Council obtains control of the income or the right to receive the income, it is

probable that the economic benefits comprising the income will flow to the Council and the amount of the

income can be measured reliably.

Rates and Charges

Annual rates and charges are recognised as revenues when Council issues annual rates notices, as a result

of the adoption by Council of its annual budget and fulfilling the statutory process. Supplementary rates are

recognised when a valuation and reassessment is completed and a supplementary rates notice issued, as a

result of the adoption by Council of its annual budget and fulfilling the statutory process.

A provision for doubtful debts on rates has not been established as unpaid rates represent a charge against

the rateable property that will be recovered when the property is next sold.

Special Rates and Charges

Income from construction special rates and special charges is recognised at the commencement of each

scheme. Income from shopping centre special rates and charges schemes is recognised on a yearly basis,

for the length of each scheme, as the schemes run on a year by year basis.

Statutory Fees and Fines

Statutory fees and fines (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.

User Fees and Charges

User fees and charges are recognised as revenue when the service has been provided or the payment is

received, whichever first occurs.

Grants

Grant income is recognised when Council obtains control of the grant. This is normally obtained upon

their receipt (or acquittal) or upon earlier notification that a grant has been secured and are valued at their

fair value at the date of transfer.

Where grants recognised as revenues during the financial year were obtained on the 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 is disclosed in Note 4. That note also discloses the amount of unused

grant, recognised as revenue, in prior years that was expended on Council’s operations during the current

year.

Contributions

Monetary and non-monetary contributions are recognised as revenue when Council obtains control over

the income and/or contributed asset.

Unreceived contributions over which the Council has control are recognised as receivables.

Donations

Donations are recognised as revenue when the Council obtains control over the assets comprising the

receipts.





(iv) Revenue Recognition (cont)

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 Rent

Interest and rent are recognised as they are earned.

Dividends

Dividend revenue is recognised when the Council’s right to receive payment is established.

Other Income

Other income is measured at the fair value of the consideration received or receivable and is recognised

when Council gains control over the right to receive the income.

(v) Employee Costs and Benefits

The calculation of employee costs and benefits includes all relevant on-costs and are calculated as follows at

reporting date:

Wages and salaries and annual leave

Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be wholly

settled within 12 months of the reporting date are recognised in the provision for employee benefits in

respect of employee services up to the reporting date, classified as current liabilities and measured at their

nominal values.

Liabilities that are not expected to be wholly settled within 12 months of the reporting date are recognised

in the provision for employee benefits as current liabilities, measured at present value of the amounts

expected to be paid when the liabilities are settled using the remuneration rate expected to apply at the

time of settlement.

Long service leave

Liability for long service leave is recognised in the provision for employee benefits.

Current liability – unconditional long service leave is disclosed as a current liability even when Council does

not expect to settle the liability within 12 months because it will not have the unconditional right to defer

settlement of the entitlement should an employee take leave within 12 months.

The components of this current liability are measured at:

Present value – component that is not expected to be wholly settled within 12 months.

Nominal value – component that is expected to be wholly settled within 12 months.

Classification of employee costs

Non-current liability – conditional long service leave that has been accrued, where an employee is yet to

reach a qualifying term of employment, is disclosed as a non-current liability. There is an unconditional right

to defer settlement of the entitlement until the employee has completed the requisite years of service.

This non-current long service leave liability is measured at present value.





(vi) Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, deposits at call and other highly liquid investments with

original maturities of 90 days or less, net of outstanding bank overdrafts.

(vii) Trade and Other Receivables

Receivables are carried at amortised cost using the effective interest rate method. A provision for doubtful

debts is recognised when there is objective evidence that an impairment has occurred.

(viii) Other Financial Assets

Other financial assets are valued at fair value, being market value, at balance date. Term deposits are

measured at amortised cost. Any unrealised gains and losses on holdings at balance date are recognised as

either a revenue or expense.

(ix) Inventories

Inventories held for distribution are measured at cost or weighted average cost adjusted, when applicable,

for any loss of service potential. Inventories are measured at the lower of cost and net realisable value.

All other inventories, including land held for sale, are measured at the lower of cost and net realisable value.

Where inventories are acquired for no cost or nominal consideration, they are measured at current

replacement cost at the date of acquisition.

(x) Non-Current Assets Classified as Held for Sale

A non-current asset classified as held for sale (including disposal groups) is measured at the lower of its

carrying amount and fair value less costs to sell and are not subject to depreciation. Non-current assets,

disposal groups and related liabilities and assets are treated as current and classified as held for sale if their

carrying amount will be recovered through a sale transaction rather than through continuing use. This

condition is regarded as met only when the sale is highly probable and the asset’s sale (or disposal group

sale) is expected to be completed within 12-months from the date of classification.

(xi) Fair Value Measurement

Council measures certain assets and liabilities at fair value where required or permitted by Australian

Accounting Standards. AASB 13 Fair Value Measurement, aims to improve consistency and reduce

complexity by providing a definition of fair value and a single source of fair value measurement and

disclosure requirements for use across Australian Accounting Standards.

AASB 13 defines fair value as the price that would be received to sell an asset or paid to transfer a liability

in an orderly transaction between market participants at the measurement date. Fair value under AASB 13

is an exit price regardless of whether that price is directly observable or estimated using another valuation

technique.





(xi) Fair Value Measurement (cont)

All assets and liabilities for which fair value is measured or disclosed in the Financial Statements are

categorised within a fair value hierarchy, described as follows, based on the lowest level input that is

significant to the fair value measurement as a whole:

Level 1: Quoted (unadjusted) market prices in active markets for identical assets or liabilities;

Level 2: Valuation techniques for which the lowest level input that is significant to the fair value

measurement is directly or indirectly observable; and

Level 3: Valuation techniques for which the lowest level input that is significant to the fair value

measurement is unobservable.

For the purpose of fair value disclosures, Council has determined classes of assets and liabilities on the basis

of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as

explained above.

In addition, Council determines whether transfers have occurred between levels in the hierarchy by re-

assessing categorisation (based on the lowest level input that is significant to the fair value measurement as

a whole) at the end of each reporting period.

(xii) Recognition and Measurement of Infrastructure, Property, Plant and Equipment, and

Intangibles

Acquisition

The purchase method of accounting is used for all acquisitions of assets, being the fair value of assets

provided as consideration at the date of acquisition plus any incidental costs attributable to the acquisition.

Fair value is the amount for which the asset could be exchanged between knowledgeable willing parties in

an arm’s length transaction.

Where assets are constructed by Council, cost includes all materials used in construction, direct labour,

borrowing costs incurred during construction and an appropriate share of directly attributable variable and

fixed overheads.

In accordance with Council’s Policy, the threshold limits detailed in Note 1(xiii) have applied when

recognising assets within an applicable asset class and unless otherwise stated are consistent with the prior

year.

Roads, drainage and building assets have been brought to account in the Balance Sheet of Council at cost in

the year of acquisition or construction and are subject to depreciation on a straight line basis over their

useful lives from the financial year following acquisition. These assets were revalued at 30 June 2014 at

their current replacement cost less accumulated depreciation (calculated on a straight line basis).

Land assets have been brought to account in the Balance Sheet of Council at cost in the year of acquisition.

These assets were revalued at 30 June 2014 at their current replacement cost. Land is not subject to

depreciation.

Parks and gardens assets, playgrounds, motor vehicles, plant and equipment, furniture and fittings, art

collection assets, waste management big bins and intangible assets have been brought to account in the

Balance Sheet of Council at cost in the year of acquisition or construction and are valued at cost.

Council does not recognise land under roads that it controlled prior to 30 June 2008. Land under roads

acquired after 30 June 2008, if material, will be brought to account using the cost basis.





(xii) Recognition and Measurement of Infrastructure, Property, Plant and Equipment, and

Intangibles (cont)

Revaluation

Subsequent to the initial recognition of assets, non-current physical assets, other than plant and equipment,

are measured at their fair value, being the price that would be received to sell an asset or paid to transfer a

liability in an orderly transaction between market participants at the measurement date. At balance date,

the Council reviewed the carrying value of the individual classes of assets measured at fair value to ensure

that each asset materially approximated its fair value. Where the carrying value materially differed from the

fair value at balance date, the class of asset was revalued.

Fair value valuations are determined in accordance with a valuation hierarchy. Changes to the valuation

hierarchy will only occur if an external change in the restrictions or limitations of use of an asset result in

changes to the permissible or practical highest and best use of the asset. Further details regarding the fair

value hierarchy are disclosed at Note 30, Infrastructure, Property, Plant and Equipment.

Where the assets are revalued, the revaluation increments are credited directly to the asset revaluation

reserve except to the extent that an increment reverses a prior year decrement for that class of asset that

had been recognised as an expense in which case the increment is recognised as revenue up to the amount

of the expense. Revaluation decrements are recognised as an expense except where prior increments are

included in the asset revaluation reserve for that class of asset in which case the decrement is taken to the

reserve to the extent of the remaining increments. Within the same class of assets, revaluation increments

and decrements within the year are offset.

The Financial Statements for the Year Ended 30 June 2015 reflect the revaluation of assets that occurred on

30 June 2014. The next revaluation is due to be reflected in the Financial Statements for year ending 30

June 2016.

Council’s Valuer’s valuation, in the case of land and buildings is determined in accordance with the Valuation

of Land Act 1960. The valuation is calculated using market value, as a fair value, based on existing use.

For drainage, roads, streets and bridges assets, the valuation represents an estimate of written down

current replacement costs determined by reference to engineering construction plans and Melbourne

Water base maps after taking into account construction costs written down for the current condition of

the assets and the impact of any economic or technical obsolescence.

Other class of assets are not revalued.

(xiii) Depreciation and Amortisation of Infrastructure, Property, Plant and Equipment and

Intangibles

Infrastructure assets, buildings, land improvements, plant and equipment, and other assets having limited

useful lives are systematically depreciated over their useful lives to Council in a manner which reflects

consumption of the service potential embodied in those assets. Estimates of remaining useful lives and

residual values are made on a regular basis with major asset classes reassessed annually. Depreciation rates

and methods are reviewed annually. Depreciation for roads and drainage assets are depreciated from the

financial year following acquisition or construction.

Where assets have separate identifiable components that are subject to regular replacement, these

components are assigned distinct useful lives and residual values and a separate depreciation rate is

determined for each component.

Straight line depreciation is charged based on the residual useful life as determined each year. Depreciation

periods used are listed below and are consistent with the prior year unless otherwise stated.

Land is not a depreciable asset. Council’s art collection assets are not considered depreciable.





(xiii) Depreciation and Amortisation of Infrastructure, Property, Plant and Equipment and

Intangibles (cont)

Depreciation of all assets is provided using the straight line basis with rates that are reviewed each

reporting period. The 2015 depreciation rates have changed for the asset categories listed in the 2014

table below. The new depreciation rates are incorporated in the 2015 table along with the unchanged asset

categories. The changes occurred on 1 July 2014. Council conducted a review of the useful lives of assets,

with assistance from a consultant, to reflect the usage of the assets in the current environment.

The threshold limit for capitalisation remains unchanged for all asset classes.

2015

Asset Category

Depreciation

Rate %

Useful Life

Years

Threshold

Limit $

Roads, streets and bridges

Roads – seals 4 25 All

Roads – sub-structure 1 100 All

Bridges, medians & local area traffic management 1 100 10,000

Footpaths 1.67 60 All

Kerb, channel and medians 1.18 – 1.42 85 – 70 All

Drainage 1 100 5,000

Parks and gardens 4 – 20 25 – 5 1,000

Playgrounds 5.55 18 1,000

Freehold buildings 1.25 80 5,000

Freehold land - - All

Motor vehicles 15 6.60 All

Plant and equipment 4 – 33.33 25 – 3 1,000

Furniture and fittings 5 – 10 20 – 10 5,000

Waste management big bins 10 10 10,000

Works of art All

2014

Asset Category

Depreciation

Rate %

Useful Life

Years

Threshold

Limit $

Roads, streets and bridges

Roads – seals 2.50 40 All

Roads – sub-structure .66 150 All

Bridges, medians & local area traffic management .66 150 10,000

Footpaths 1.33 75 All

Playgrounds 4 25 1,000

Freehold buildings 1 100 5,000

The depreciation rates for asset categories not shown in the 2014 Asset Category Table have not changed.

In 2015, the impact on depreciation expenses across the asset classes due to the changes in depreciation

rates is shown in the following table:

Asset Class Depreciation

Rates 2015 %

Useful Life

2015 Years

Depreciation

Rates 2014

%

Useful Life

2014

Years

Increase/

(decrease)

Depreciation

Expense $

Roads – seals 4 25 2.5 40 980,104

Roads – sub-structure 1 100 100 0.66 150 326,950

Roads – bridges 1 100 0.66 150 7,825

Roads – footpaths 1.67 60 1.33 75 400,260

Buildings 1.25 80 1 100 604,930

Playgrounds 5.55 18 4 25 100,770





(xiv) Work in Progress

Any work in progress at the end of a financial year is identified and recorded as a non-current asset in the

Balance Sheet. Upon completion of each project, the value of work in progress will be transferred to the

appropriate non-current depreciable asset class within infrastructure, property plant and equipment of the

Balance Sheet and will be subject to appropriate depreciation charges thereafter.

(xv) Repairs and Maintenance

Routine maintenance, repair costs and minor renewal costs are expensed as incurred. Where the repair

relates to the replacement of a component of an asset and the cost exceeds the capitalisation threshold, the

cost is capitalised and depreciated. The carrying value of the replaced asset is expensed.

(xvi) Impairment of Assets

At each reporting date, the Council reviews the carrying value of its assets to determine whether there is

any indication that these assets have been impaired. If such an indication exists, the recoverable amount of

the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the

assets carrying value. Any excess of the assets’ carrying value over its recoverable amount is expensed to

the comprehensive income statement, unless the asset is carried at the revalued amount in which case, the

impairment loss is recognised directly against the revaluation surplus in respect of the same class of asset to

the extent that the impairment loss does not exceed the amount in the revaluation surplus for that same

class of asset.

(xvii) Investment Property

Investment property, if any, is held to generate long-term rental yields. Investment property is measured

initially at cost, including transaction costs. Costs incurred subsequent to initial acquisition are capitalised

when it is probable that future economic benefit in excess of the originally assessed performance of the

asset will flow to Council. Subsequent to initial recognition at cost, investment property is carried at fair

value, determined annually by a valuer. Changes to fair value are recorded in the Comprehensive Income

Statement in the period that they arise. Rental income from the leasing of investment properties is

recognised in the Comprehensive Income Statement, when invoiced, on a straight line basis over the lease

term.

(xviii) Accounting for Investments in Associates

Associates are all entities over which Council has significant influence, but not control or joint control.

Investments in associates are accounted for using the equity method of accounting. The investment was

initially recorded at cost and adjusted thereafter for post-acquisition changes in the Council’s share of the

net assets of the entities. Council’s share of the financial result of the entities is recognised in the

Comprehensive Income Statement.

Council has an equity interest share in the following associate:

42.40% (42.86% in 2014) in the Yarra Plenty Regional Library;

Council’s share is based on the total of contributions paid by Council, since the inception of the Library, as

a percentage of the total contributions paid by the three Councils.

The Yarra Plenty Regional Library is an independent legal entity with an Executive Management Team,

which is responsible for the day-to-day operations of the organisation. Banyule is one of three Councils

with a stake in the Library and each of the three Councils has put forward two members which make up

the six-person Regional Library Board.





(xix) Investments

Investments other than investments in associates are measured at cost.

Regional Kitchen Pty Ltd and RFK Pty Ltd (trading as Community Chef) are related but separate entities

involved in the production of delivered meals. Regional Kitchen Pty Ltd owns its land, buildings and the

production facilities where the meals are made. Regional Kitchen Pty Ltd leases the building and facilities to

RFK Pty Ltd who are responsible for the operation of the facility including the production of the meals and

their delivery to the Council members.

(xx) Trust Funds and Deposits

Amounts received as deposits and retention amounts controlled by Council are recognised as trust funds

until they are returned, transferred in accordance with the purpose of the receipt, or forfeited (refer to

Note 34).

(xxi) Borrowings

Borrowings are initially measured at fair value, being the cost of the interest bearing liabilities, net of

transaction costs. The measurement basis subsequent to initial recognition depends on whether the

Council has categorised its interest bearing liabilities as either financial liabilities designated at fair value

through the profit and loss, or financial liabilities at amortised cost. Any difference between the initial

recognised amount and the redemption value is recognised in net result over the period of the borrowing

using the effective interest method. The classification depends on the nature and purpose of the interest

bearing liabilities. The Council determines the classification of its interest bearing liabilities at initial

recognition.

(xxii) Borrowing Costs

Borrowing costs are recognised as an expense in the period in which they are incurred, except where they

are capitalised as part of a qualifying asset constructed by Council. Except where specific borrowings are

obtained for the purpose of specific asset acquisition, the weighted average interest rate applicable to

borrowings at balance date is used to determine the borrowing costs to be capitalised.

Borrowing costs include interest on bank overdrafts, interest on borrowings and finance lease charges (if

any).

(xxiii) Allocation between Current and Non-Current

In the determination of whether an asset or liability is 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, or if Council does

not have an unconditional right to defer settlement of a liability for at least 12 months after the reporting

date.

(xxiv) Contingent Assets and Contingent Liabilities and Commitments

Contingent assets (if any) and contingent liabilities are not recognised in the Balance Sheet, but are

disclosed by way of a Note (Note 43) and, if quantifiable, are measured at nominal value. Contingent assets

and liabilities are presented inclusive of GST receivable or payable respectively.

Commitments are not recognised in the Balance Sheet. Commitments are disclosed at their nominal value

and inclusive of the GST payable (Notes 41 and 42).





(xxv) Financial Guarantees

Financial guarantee contracts are not recognised as a liability in the balance sheet unless the lender has

exercised their right to call on the guarantee or Council has other reasons to believe that it is probable

that, that right will be exercised. Details of guarantees that Council has provided, that are not recognised

in the balance sheet are disclosed at Note 43 Contingent Liabilities and Contingent Assets.

(xxvi)Operating Leases

Lease payments for operating leases are required by the accounting standard to be recognised on a straight

line basis, rather than expensed in the years in which they are incurred.

(xxvii)Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST

incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised

as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables

in the balance sheet are shown inclusive of GST.

Cash flows are presented in the cash flow statement on a gross basis, except for the GST component of

investing and financing activities, which are disclosed as operating cash flows.

(xxviii)Pending Accounting Standards

Certain new Australian Accounting Standards have been issued that are not mandatory for the 30 June

2015 reporting period. Council has assessed these pending standards and has identified that no material

impact will flow from the application of these standards in future reporting periods.




2. BUDGET COMPARISON

The budget comparison notes compare Council’s financial plan, expressed through its annual budget, with actual

performance. The Local Government (Planning and Reporting) Regulations 2014 requires explanation by any material

variances. Council has adopted a materiality threshold of the lower of $1.0million or 20% (if over $500,000)

where further explanation is warranted. Explanations have not been provided for variations below the materiality

threshold unless the variance is considered to be material because of its nature.

The budget figures detailed below are those adopted by Council on 23 June 2014. The Budget was based on

assumptions that were relevant at the time of adoption of the Budget. Council sets guidelines and parameters for

the revenue and expense targets in this budget in order to meet Council’s planning and financial performance

targets for both the short and long-term.

These notes are prepared to meet the requirements of the Local Government Act 1989 and the Local Government

(Planning and Reporting) Regulations 2014.

(a) Income and Expenditure

Note

Budget

2015

$‘000

Actual

2015

$‘000

Variance

2015

$‘000

INCOME

Rates and charges 85,912 86,287 375

Grants – operating 1 12,724 14,008 1,284

Grants – capital 1 1,001 2,015 1,014

Statutory fees and fines 6,787 6,977 190

User fees and charges 14,585 14,557 (28)

Interest income 2 1,431 2,390 959

Rental income 1,910 1,916 6

Contributions – income 3 2,124 3,044 920

Net gain on disposal of infrastructure,

property, plant and equipment

4

1,588

11,771

10,183

Other income 99 114 15

Share of net profits/(losses) of associates - 336 336

Total income 128,161 143,415 15,254

EXPENSES

Employee costs 5 56,715 54,653 2,062

Materials, contracts and services 6 42,013 38,405 3,608

Utility charges 3,802 4,136 (334)

Depreciation and amortization 18,991 18,572 419

Donations expenditure 928 708 220

Borrowing costs 3,874 3,795 79

Contributions expense 5,712 5,799 (87)

Other expenses 7 2,195 1,662 533

Total expenses 134,230 127,730 6,500

Surplus/(deficit) for the year (6,069) 15,685 21,754



Notes to and Forming Part of the Financial Statements

for the year ended 30 June 2015

2. BUDGET COMPARISON (cont)

(a) Income and Expenditure (cont)

Explanation of Material Variations – Income and Expenditure

Note

Item Explanation

1

Grants – operating

and capital

Council received 50% ($1.83M) (operating) and $454K (capital) of next

year’s Victoria Grants Commission funding paid in advance.

Subsidies for the operation of St Hellier and Joyce Avenue Child Care

Centres were $347K more than budgeted. These subsidies allow the

Centres to care for more children with a lower cost to parents in the form

of fees.

2

Interest income Interest income received was $785K above budget, as Council had

additional cash holdings from the sale of a former school site.

Interest on General Rates is $177K above budget. Additional interest was

earned due to change in instalments and more frequent interest calculations.

3

Contributions

income

Council received income that was not budgeted for as part of a profit

sharing agreement in relation to the operation of WaterMarc Banyule.

Due to a greater amount of subdivision/building activity during the year than

originally anticipated, Public Open Space contributions exceeded budget by

$427K.

4

Net gain on

disposal of

infrastructure,

property, plant and

equipment

Council sold one former school site during the year and made a net gain of

$10.18M on the sale. At the time the budget was set, this sale was expected

to occur during the 2016 financial year.

5

Employee costs The yearly costs of workcover for Council staff came in $211K under budget

as a result of Council maintaining a safe work environment with less claims.

Across Council there were savings related to the Enterprise Agreement

increase being slightly less than budgeted, as well as overtime and training

savings within the Leisure Department due to the new Enterprise

Agreement provisions.

There were savings within the Corporate Services department due to the

merging of two managerial roles as well as a number of staff retirements and

vacancies that were not immediately back-filled.

6 Materials, contracts

and services

The energy efficient public lighting project was $1.74M under budget, with

$1.66M in savings for the project and a small balance to be carried forward

to finalise the works.

The expenditure cost for the West Heidelberg Community Hub project is

$400K under budget as the works will be capitalised as leasehold

improvements instead of expensed.

The operational costs for running Council’s plant/fleet came in $685K under

budget. Any savings are put towards the Plant Reserve.

Waste Disposal costs for Council had savings of $824K which relate to the

repeal of the carbon tax, a reduction in general waste disposal and a

reduced need for green waste collection, due to a dry year.






(a) Income and Expenditure (cont)

Explanation of Material Variations – Income and Expenditure (cont)

Note

Item Explanation

7 Other expenses $97K worth of past expenses/liabilities have been reversed and reclassified

as transfers to reserves. These transactions relate to putting aside a portion

of the building department’s profit for future investment within the building

department.

There were $44K worth of savings made for internal communications, as

better prices were achieved from contractors and the amount of physically

published material was reduced.

Council received $115K in reimbursements for out of pocket costs

associated with Workcover. Due to the unpredictable nature of this item, it

was not budgeted.

There was $272K worth of internal waste disposal costs, which were

budgeted as other expenses, but have since been reclassified as materials,

contracts and services.





(b) Capital Works

Note

Budget

2015

$‘000

Actual

2015

$‘000

Variance

2015

$‘000

Capital Works

Roads, streets and bridges 1 3,609 2,608 1,001

Drainage 466 225 241

Parks and gardens 2 2,253 1,429 824

Playgrounds 404 378 26

Freehold land - 296 (296)

Freehold buildings 3 12,715 10,130 2,585

Motor vehicles 4 7,282 4,215 3,067

Plant and equipment 4 3,010 871 2,139

Furniture and fittings - 153 (153)

Art collection 15 - 15

Intangible assets 736 374 362

Non-current assets classifieds held for sale - 11 (11)

Work in progress 5 - 1,642 (1,642)

Total capital works expenditure 30,490 22,332 8,158

Represented by:

Assets acquired as per Note 30(i)

New assets 946 2,975 (2,029)

Asset renewal 22,714 16,365 6,349

Asset upgrade 5,248 1,466 3,782

Asset expansion 846 1,141 (295)

Total assets acquired as per Note 30(i) 29,754 21,947 7,807

Assets acquired as per Note 31

New intangible assets 736 374 362

Total assets acquired as per Note 31 736 374 362

Assets acquired as per Note 27

New non-current assets classified as held for sale - 11 (11)

Total assets acquired as per Note 27 - 11 (11)

Total capital works expenditure 30,490 22,332 8,158






(b) Capital Works (cont)

Explanation of Material Variations – Capital Works

Note

Item Explanation

1

Roads, streets and

bridges

The maintenance work on road patching, footpaths and bridges was initially

budgeted as capital works projects, however, it has been reclassified as

maintenance in the Income Statement after re-assessing the nature of the

works.

2

Parks and gardens Two sections of the Plenty river trail have delayed completion due to

unexpected weather. $469K of unspent budget has been carried forward to

the next financial year.

Macleod Tennis Club four court renewal is still work in progress at year end

due to some minor repairs.

3

Freehold buildings Banksia College basketball stadium concept design has been completed. The

$2.72M development budget has been rescheduled to the next financial year

after revising the construction phase.

4

Motor vehicles and

plant and

equipment

The motor vehicles and heavy plant budgets incorporated the unspent carry

forward budgets from previous financial years. As a result of this, the

budgets exceeded the Depot’s operational requirements significantly. The

budget process for future years have been reassessed and unspent carry

forward budgets are no longer being taken into account.

A number of trucks have been ordered, but delayed in delivery. These

trucks are now expected to be delivered in the first quarter of next financial

year.

5

Work in progress A number of projects, including the Greensborough office accommodation,

are still in the work in progress stage of their construction or development.




Note 2015

$‘000

2014

$‘000

3. RATES AND CHARGES

For the basis of rates calculation, Council uses Capital Improved Value as the basis of valuation of all properties

within the municipality. The Capital Improved Value of a property is the value of the land, dwellings and all its

improvements.

The valuation base used to calculate general rates for 2014/2015 was $31,294,019,100 ($29,751,433,300 for

2013/2014).

A revaluation of land for rating purposes within the Municipality was done on 1 January 2014 and the valuation was

first applied in the rating period commencing on 1 July 2014.

These valuations were used in the calculation of rates in the current financial year.

Residential 70,554 64,824

Commercial 5,840 5,565

Industrial 2,032 1,917

Cultural and Recreational 68 64

Total general rates 78,494 43,357 72,370

General Rates 78,494 72,370

Supplementary Rates 585 274

Municipal Charge 6,627 6,580

Total general rates and charges 85,706 79,224

Special Rates and Charges – Shopping Centres 581 570

Total rates and charges 86,287 79,794




Note 2015

$‘000

2014

$‘000

4. GRANTS

Grants were received in respect of the following:

Summary of Grants

Recurrent operating grants 13,679 9,886

Recurrent capital grants 1,813 943

Non-recurrent operating grants 329 151

Non-recurrent capital grants 202 495

Total grants 16,023 11,475

Summary of Grants

Recurrent 15,492 10,829

Non-recurrent 531 646


Summary of Grants

State Government funded grants 14,408 9,966

Federal Government funded grants 1,578 1,458

Other grants 37 51


Summary of Grants

Operating grants 14,008 10,037

Capital grants 2,015 1,438


Operating Grants

Recurrent - State Government

Access all abilities - 6

Children’s services 47 86

Delivered meals 248 307

HACC assessment and care management 792 782

Home care 1,709 1,657

Immunisation 147 118

Maternal and child health centres 725 698

Maternal and child health outreach worker 122 109

Metro access program 122 117

PAG (inc carer support) 671 704

Personal care 733 719

Pre-schools and child day care 449 522

Respite care 538 507

School crossing supervisors 185 183

Vic Roads maintenance and traffic management 86 82

Victoria Grants Commission – general purpose 5,503 1,842

Youth services 351 313

Other grants 188 186

Total State Government 12,616 8,938




Note 2015

$‘000

2014

$‘000

4. GRANTS (cont)

Operating Grants (cont)

Recurrent – Commonwealth Government

Child day care 1,008 863

Other grants 32 58

Total Commonwealth Government 1,040 921

Recurrent – Other Sources

Other grants 23 27

Total other sources 23 27

Total recurrent operating grants 13,679 9,886

Non-Recurrent – State Government

Engineering 59 9

HACC assessment and care management 64 -

Youth and community development 59 80

Other grants 38 18

Total State Government 220 107

Non-Recurrent – Commonwealth Government

Child Care Centres 64 -

Other grants 31 20

Total Commonwealth Government 95 20

Non-Recurrent – Other Sources

Other grants 14 24

Total other sources 14 24

Total non-recurrent operating grants 329 151

Total operating grants 14,008 10,037




Note 2015

$‘000

2014

$‘000

4. GRANTS (cont)

Capital Grants

Recurrent - State Government

Victoria Grants Commission – local roads 1,370 466

Total State Government 1,370 466

Recurrent - Commonwealth Government

Roads to recovery 443 477

Total Commonwealth Government 443 477

Total recurrent capital grants 1,813 943

Non-Recurrent – State Government

A safer mall 51 138

Anthony Beale Regional Play space 90 -

Sports grounds and pavilions 61 166

Watsonia Library development - 125

Other grants - 26

Total State Government 202 455

Non-Recurrent – Commonwealth Government

Other grants - 40

Total Commonwealth Government - 40

Total non-recurrent capital grants 202 495

Total capital grants 2,015 1,438





Note 2015

$‘000

2014

$‘000

4. GRANTS (cont)

Conditions on Grants:

Grants which were recognised as revenue in prior

year/years and were expended during the current year in

the manner specified by the grantor were:

2,553

3,189

Prior year grants expended during the current

year

2,553

3,189

Grants recognised as revenue during the year that were

obtained on condition that they be expended in a specified

manner that had not occurred at balance date were:

2,782

624

Current year grants not yet expended 2,782 624

Net increase/(decrease) in restricted assets

resulting from grant revenues for the year.

229

(2,565)

Grants which were recognised as revenue in prior

financial years and have not been expended during the

current year in the manner specified by the grantor were:

550

2,479

Unspent grants from prior years 550 2,479

Summary of Unexpended Grants

Grants received in current year, but remain unspent 2,782 624

Grants received in prior years which remain unspent 550 2,479

Total unspent grants 23 3,332 3,103




Note 2015

$‘000

2014

$‘000

5. STATUTORY FEES AND FINES

Building and Planning permits and fees 3,299 3,126

Food Act and Health registrations 514 494

Local laws infringements and fines 2,465 2,271

Property valuations 361 -

Road and footpath reinstatement 130 218

Others fees and fines 208 229

Total statutory fees and fines 6,977 6,338

6. USER FEES AND CHARGES

Aquatic Centre fees and charges 5,049 5,251

Building and Planning permits and fees 139 120

Child Day Care charges 1,340 1,290

Community buses, halls and events 285 292

Delivered meals charges 428 451

Engineering services’ fees 111 78

Functions Centre charges 244 380

Home care charges 419 400

Local laws fees 590 349

Planned Activity Group fees and charges 105 102

Sports ground rentals income 197 202

Transfer station tipping fees 4,890 4,986

Other fees and charges 760 797

Total user fees and charges 14,557 14,698

7. INTEREST INCOME

Interest on investments 2,149 1,954

Interest from sporting clubs 25 31

Other interest 8 8

Interest on rates 198 121

Interest on special rates and charges (a) 10 (46)

Total interest income 2,390 2,068

(a) Previously charged interest on special rates and charges was written off during the 2014 year.

8. RENTAL INCOME

Recreational facilities rental 19 145

Residential/commercial rental 1,252 1,171

Recycling centre rental 645 626

Total rental income 1,916 1,942

9. CONTRIBUTIONS INCOME

Monetary contributions:

Public Open Space – contributions 1,452 1,310

Contributions for capital works projects 653 1,208

Contributions from sporting clubs 238 77

Other contributions 701 97

Non-monetary contributions:

Land - 37

Total contributions income 3,044 2,729




Note 2015

$‘000

2014

$‘000

10. NET GAIN/(LOSS) ON DISPOSAL OF INFRASTRUCTURE,

PROPERTY, PLANT AND EQUIPMENT

Non-current assets classified as held for sale

Proceeds from sale of assets (a) 24,437 815

Less: Written down value of assets sold (12,832) (499)

Total net gain on sale of assets classified as

held for sale

11,605

316

Fixed assets

Proceeds from sale of assets (a) 976 2,606

Less: Written down value of assets disposed 30(i) (810) (4,228)

Total net gain/(loss) on sale of fixed assets 166 (1,622)

Total net gain/(loss) on disposal of

infrastructure, property, plant and equipment

11,771

(1,306)

(a) Proceeds for sale of land and motor vehicles.

11. OTHER INCOME

Insurance claims 28 64

Sale of right-of-ways 9 48

Sale of drainage reserves 30 -

Sponsorship 31 35

Other revenue 16 29

Total other income 114 176

12. SHARE OF NET PROFITS/(LOSSES) OF ASSOCIATES

Yarra Plenty Regional Library Corporation 29 336 274

Total share net profits/(losses) of associates 336 274

13. EMPLOYEE COSTS

Salaries and wages 43,767 41,566

Annual leave and loading 4,145 3,726

Long service leave 1,240 1,312

Superannuation 4,353 4,036

Workcover 1,088 1,015

Other oncosts 769 690

Less: Capitalised labour (567) (667)

Less: Capitalised oncosts (142) (167)

Total employee costs 54,653 51,511




Note 2015

$‘000

2014

$‘000

14. MATERIALS, CONTRACTS AND SERVICES

Advertising 213 281

Auditing services 21 206 237

Building and Planning charges and government fees 409 465

Child care expenses 100 102

Community program costs 1,156 1,078

Contractor costs 19,797 14,256

General materials and supplies 3,565 3,448

Insurances 1,076 946

Plant and motor vehicle operating 2,635 2,832

Printing, stationery and external communications 762 829

Staff training and equipment 699 653

Sundry expenses 342 354

Waste disposal general 5,972 6,302

Other 1,473 1,237

Total materials, contract and services 38,405 33,020

15. UTILITY CHARGES

Gas and electricity 2,150 2,505

Telephone 250 292

Water 994 758

Public street lighting 742 891

Total utility charges 4,136 4,446

16. DEPRECIATION AND AMORTIZATION

Depreciation

Infrastructure

- Roads, streets and bridges 6,884 5,548

- Drainage 1,837 1,615

- Parks and gardens 1,126 1,028

- Playgrounds 367 247

Property

- Freehold buildings 2,899 2,276

Plant and equipment

- Motor vehicles 2,314 2,019

- Plant and equipment 2,641 2,550

- Furniture and fittings 336 322

- Waste management 8 235

Total depreciation (a) 18,412 15,840

Amortization

Intangible asset

-Software 160 71

Total amortization 160 71

Total depreciation and amortization 18,572 15,911

(a) Refer also to Note 1(xiii)




Note 2015

$‘000

2014

$‘000

17. DONATIONS EXPENDITURE

Banyule Housing Support group 97 92

Banyule Support and Information 68 67

Community Services grants 192 132

Volunteers of Banyule Resources Centre 110 107

Other donations 241 271

Total donations expenditure 708 669

18. BORROWING COSTS

Interest on borrowings – total 3,880 3,505

Less: Capitalised borrowing costs on qualifying assets (a) (85) (28)

Total finance costs 3,795 3,477

(a) (a) Rate used to capitalise borrowing costs 4.48% (2014 4.48%)

19. CONTRIBUTIONS EXPENSE

Yarra Plenty Regional Library 4,195 4,073

Contributions to shopping centres 1,132 1,086

YMCA contributions 100 100

Other contributions 372 393

Total contributions expense 5,799 5,652

20. OTHER EXPENSES

Bad and doubtful debts 22 359 154

Operating lease rental 374 423

Councillor allowances and reimbursements 248 254

Fire Service Property Levy on Council properties 144 126

Other 537 574

Total other expenses 1,662 1,531

21. AUDITORS’ REMUNERATION

Audit fee to conduct external audit – Victorian Auditor

General

53

59

Internal audit fee 150 176

Fees for minor audits – other external auditors 3 2

Total auditors’ remuneration 14 206 237

22. BAD AND DOUBTFUL DEBTS

Parking fines debtors 318 84

Animal fines debtors 28 21

Other debtors 13 49

Total bad and doubtful debts 20 359 154




Note 2015

$‘000

2014

$‘000

23. CASH AND CASH EQUIVALENTS

Cash on hand 10 9

Cash at bank 4,290 2,059

Money market call account 8,010 3,448

Short term deposits 52,485 51,319

Total cash and cash equivalents 38 64,795 56,835

Council has cash and cash equivalents that are subject to external restrictions that limit amounts

available for discretionary use. These include:

Public open space reserve 36(ii)b 1,702 1,706

Off-street parking reserve 36(ii)b 252 252

Trust funds 34 625 671

Deposits held 34 531 694

Total restricted funds 3,110 3,323

Total unrestricted cash and cash equivalents 61,685 53,512

Intended allocations

Although not externally restricted, the following amounts have been allocated for specific future

purposes by Council:

Long service leave 33 9,190 8,586

Unexpended grants 4 3,332 3,103

Unexpended contributions 52 11

Cash held to fund carried forward capital works 3,303 13,791

Total funds subject to intended allocations 15,877 25,491

Unrestricted cash and cash equivalents adjusted

for intended allocations

45,808

28,021

24. OTHER FINANCIAL ASSETS

Current Term deposits (a) 21,330 2,083

Total other financial assets 21,330 2,083

(a) The term deposits have a maturity date of more than three months.




Note 2015

$‘000

2014

$‘000

25. TRADE AND OTHER RECEIVABLES

Current

Rates debtors 2,348 1,497

Special rates and charges debtors 41 47

Parking infringement debtors 1,326 2,006

Provision for doubtful debts – parking infringements (760) (1,419)

Other by-laws debtors 172 220

Provision for doubtful debts – other by-laws (70) (152)

Club contribution debtors (a) 74 73

Other debtors (a) 3,731 4,724

Provision for doubtful debts – other debtors (61) (72)

Total current 6,801 6,924

Non-Current

Rates debtors 24 19

Special rates and charges debtors 81 108

Club contribution debtors (a) 342 417

Other debtors (a) 70 71

Total non-current 517 615

Total trade and other receivables 7,318 7,539

(a) Ageing of Receivables

At balance date other debtors representing financial assets were past due, but not impaired. These

amounts relate to a number of independent customers for whom there is no recent history of default.

The ageing of Council’s Trade and Other Receivables (excluding statutory receivables) was:

Current – not yet due 3,521 4,665

Past due – by up to 30 days 144 284

Past due – between 31 and 60 days 108 60

Past due – between 61 and 90 days 45 26

Past due – more than 91 days 399 250

Total trade and other receivables (a) 4,217 5,285

Note: Rates debtors, special rates and charges debtors and by-laws debtors, which include parking and

animal infringements, among others, are not considered financial instruments as they are considered to

be statutory receivables. Also, provision for doubtful debts are excluded.

(b) Movement in Provisions for Doubtful Debts

Balance at beginning of the year 72 53

Amounts provided for but recovered during the year (11) (1)

New provisions recognised during the year 3 23

Amounts already provided for and written off as

uncollectable

(3)

(3)

Balance at end of the year 61 72

(c) Ageing of individually impaired receivables

At balance date, other debtors representing financial assets with a nominal value of $61,000 (2014

$72,000) were impaired. The amount of the provision raised against these debtors was $61,000 (2014

$72,000). The individually impaired debtors related to general and sundry debtor and have been

impaired as a result of their doubtful collection. Many of the long outstanding past due amounts have

been lodged with Council’s debt collectors or are on payment arrangements.




Note 2015

$‘000

2014

$‘000

26. INVENTORIES

Inventories held for distribution 32 41

Total inventories 32 41

27. NON-CURRENT ASSETS CLASSIFIED AS HELD FOR SALE

Opening balance on Council’s valuation 35,200 9,003

Capitalised development cost (a) 11 -

Transfer from infrastructure, property, plant and

equipment

2,588

26,696

Less: Impairment loss (b) (2,582) -

Less: Written down value of assets sold (12,832) (499)

Total non-current assets classified as held for sale (c) 22,385 35,200

(a) Refer to Statement of Capital Works

(b) The impairment loss refers to two lots of land and two buildings, held for sale.

(c) Fair Value Hierarchy

Fair value assessments have been performed at 30 June 2015 for assets held for sale. Details of the

Council’s assets held for sale and information about the fair value hierarchy as at 30 June 2015 are

as follows:

Level 1

$‘000

Level 2

$‘000

Level 3

$‘000

Assets held for sale–land (non-specialised) (d) - 15,851 -

Assets held for sale–buildings (non-specialised)(d) - 6,534 -

Total - 22,385 -

No transfers between levels occurred during the year.

(d) Classified in accordance with fair value hierarchy – see Note 1(xi) and Note 30.

Note 2015

$‘000

2014

$‘000

28. OTHER ASSETS

Current

Prepayments 946 814

Total other assets 946 814




Note 2015

$‘000

2014

$‘000

29. INVESTMENTS

Investments include the following:

Investments – unlisted shares 239 239

Investments in associates 2,829 2,493

Total investments 3,068 2,732

(i) Investments – unlisted shares

Non-Current

MAPS Group Ltd – at cost 9 9

Regional Kitchen Pty Ltd – at cost 230 230

Total investments – unlisted shares 239 239

(ii) Investments in associates

Non-Current

Share of Yarra Plenty Regional Library Corporation –

at Officer’s valuation

(a),12

2,829

2,493

The Investment in Associates accounted for by the equity method is:

Yarra Plenty Regional Library Corporation

(a) Council takes up its share of the net surplus/(deficit) of the associate, 42.40% in 2015 (2014 42.86%).

Refer also to Policy Note 1(xviii) – ‘Accounting for Investments in Associates’.

The valuation is made as at 30 June each year. The 2015 valuation is based on draft Financial Statements

(2014 was based on audited Financial Statements).




Note 2015

$‘000

2014

$‘000

29. INVESTMENTS (cont)

(a) Investments in Associates

Council’s share of accumulated surplus/(deficit):

Council’s share of accumulated surplus/(deficit) at start of year 2,493 2,165

Reported surplus/(deficit) for year 336 328

Distributions for the year - -

Council’s share of accumulated surplus/(deficit) at end

of year

2,829

2,493

Movement of carrying value of specific investment:

Carrying value of investment at start of year 2,493 2,219

Share of surplus/(deficit) for year 336 274

Share of asset revaluation - -

Distributions received - -

Carrying value of investment at end of year 2,829 2,493

Council’s share of expenditure commitments:

Operating lease commitments 239 394

Operating commitments 511 -

Capital commitments 71 77

Council’s share of expenditure commitments 821 471

Council’s share of contingent liabilities and contingent assets:

The Yarra Plenty Regional Library Service has no known contingent liabilities as at 30 June 2015 nor as at

30 June 2014.

Significant restrictions:

Yarra Plenty Regional Library does not pay any dividends to Council. No loans or monetary advances

are made between Council and the Library.




Note 2015

$‘000

2014

$‘000

30. INFRASTRUCTURE, PROPERTY, PLANT AND EQUIPMENT

Summary of Infrastructure, Property, Plant and Equipment - by Cost/Valuation

at cost 116,612 100,972

less accumulated depreciation (54,324) (50,814)

62,288 50,158

at Council’s valuation at 30 June 2014 1,469,493 1,472,246


1,185,386 1,197,744

Total infrastructure, property, plant and equipment 1,247,674 1,247,902

Summary of Infrastructure, Property, Plant and Equipment - by Section

infrastructure 356,684 362,245

property 863,923 857,752

plant and equipment 23,984 24,852

other assets 3,083 3,053


INFRASTRUCTURE:

Roads, Streets and Bridges

works at cost 2,608 -

less accumulated depreciation - -

2,608 -

at Council’s valuation at 30 June 2014 (a) 372,293 372,293


228,261 235,145

Total roads, streets and bridges 230,869 235,145

Drainage

works at cost 240 -

less accumulated depreciation - -

240 -

at Council’s valuation at 30 June 2014 (a) 183,619 183,619


103,009 104,847

Total drainage 103,249 104,847

(a) See Note 30, sub-heading ‘Valuation of Infrastructure’.




Note 2015

$‘000

2014

$‘000

30. INFRASTRUCTURE, PROPERTY, PLANT AND EQUIPMENT (cont)

Parks and Gardens

works at cost 41,412 39,982


Total parks and gardens 17,962 17,658

Playgrounds

works at cost 8,159 7,928


Total playgrounds 4,604 4,595

PROPERTY:

Freehold Land

at cost 296 -

at Council’s valuation of market value at 30 June 2014 (b) 690,663 686,958

Total freehold land 690,959 686,958

Freehold Buildings

at cost 11,362 -

less accumulated depreciation (31) -

11,331 -

at Council’s valuation of market value at 30 June 2014 (b) 221,098 229,376


161,633 170,794

Total freehold buildings 172,964 170,794

(b) See Note 30, sub-heading ‘Valuation of Land and Buildings’.




Note 2015

$‘000

2014

$‘000


Plant and Equipment:

Motor Vehicles

at cost 19,206 18,809


Total motor vehicles 9,708 8,614

Plant and Equipment

at cost 21,397 20,683


Total plant and equipment 11,544 13,315

Furniture and Fittings

at cost 5,695 5,543


Total furniture and fittings 2,732 2,915

Waste Management

at cost 4,974 4,974


Total waste management - 8

Other Assets:

Art collection

at cost 1,225 1,225

Total art collection 1,225 1,225

Work in Progress – at cost

roads 16 -

drainage - 14

parks and gardens 407 9

playgrounds 30 30

freehold land 34 34

freehold buildings 1,192 1,340

plant and equipment 77 -

furniture and fittings 36 36

intangible assets - 365

leasehold improvements 66 -

Total work in progress 1,858 1,828






Valuation of Land and Buildings

At 30 June 2014, Council’s land and buildings were restated to Council’s valuation of fair value based on existing

use. The valuations were carried out by Council’s Valuer, Mr P Kemm, A.A.P.I. in accordance with the basis of

valuation referred to in Note 1(xi).

The valuation of land and buildings is at fair value, being market value based on highest and best use permitted

by relevant land planning provisions. Where land use is restricted through existing planning provisions, the

valuation is reduced to reflect this limitation. This adjustment is an unobservable input in the valuation. The

adjustment has no impact on the comprehensive Income Statement.

Specialised land is valued at fair value using site values adjusted for englobo (undeveloped and/or unserviced)

characteristics, access rights and private interests of other parties and entitlements or infrastructure assets and

services. This adjustment is an unobservable input in the valuation. The adjustment has no impact on the

comprehensive Income Statement.

Any significant movements in the unobservable inputs for land and land under roads (if any) will have a

significant impact on the fair value of these assets.

Details of Council’s land and buildings and information about the fair value hierarchy as at 30 June 2015 are as

follows:

Level 1

$‘000

Level 2

$‘000

Level 3

$‘000

Freehold land – (specialised) - - 690,959

Freehold buildings – (specialised) - - 172,964

Total - - 863,923


Valuation of Infrastructure

As at 30 June 2014, valuation of Council’s bridges, median and drainage assets has been determined by the

valuation undertaken by Ms Claudia Oqueli, Council’s Asset Engineer – Asset Management. The valuation is at

fair value based on replacement cost, less accumulated depreciation in accordance with the basis of valuation

referred to in Note 1(xi).

As at 30 June 2014, Council’s road assets (excluding bridges and medians) were restated to Council’s valuation

of current replacement cost. The valuation of these assets was carried out by Peter Batson, Manager – Asset

System Victoria, SMEC Australia Pty Ltd, in accordance with the basis of valuation referred to in Note 1(xi).

SMEC Pavement Management system software was used to assist with this process. A small portion of the

road asset valuations was conducted by Ms Claudia Oqueli, Council’s Asset engineer, using the same basis of

valuation as SMEC, to complement the area variances caused by the limitation of SMEC’s software.

The valuation is at fair value based on replacement cost less accumulated depreciation as at the date of

valuation.

Details of Council’s infrastructure and information about the fair value hierarchy as at 30 June 2015 are as

follows:

Level 1

$‘000

Level 2

$‘000

Level 3

$‘000

Roads, streets and bridges - - 230,869

Drainage - - 103,249

Total - - 334,118






Description of Significant Unobservable Inputs into Level 3 Valuations

Specialised land is valued using a market based direct comparison technique. Significant unobservable inputs

include the extent and impact of restriction of use and the market cost of land per square metre. The extent and

impact of restrictions on use varies and results in a reduction to surrounding land value between 0% and 90%. The

market value of land varies significantly depending on the location of the land and the current market conditions.

Currently land values range between $25 and $2,500 per square metre.

Specialised buildings are valued using a depreciated replacement cost technique. Significant unobservable inputs

include the current replacement cost and remaining useful lives of buildings. Current replacement costs is

calculated on a square metre basis and ranges from $265 to $3,820 per square metre. The useful lives of buildings

are 100 years. Replacement cost is sensitive to changes in market conditions, with any increase or decrease in

cost flowing through to the valuation. Useful lives of buildings may be subject to variation due to changes in

expectations or requirements that could either shorten or extend the useful lives of buildings.

Infrastructure assets are valued based on the depreciated replacement cost. Significant unobservable inputs

include the current replacement cost and remaining useful lives of infrastructure. The useful lives of infrastructure

vary from 25 years to 100 years. Replacement cost is sensitive to changes in market conditions, with any increase

or decrease in cost flowing through to the valuation. Useful lives of infrastructure may be subject to variation due

to changes in use, expectations or requirements that could either shorten or extend the useful lives of

infrastructure assets.





(i) Reconciliation

Reconciliations of the carrying amounts of each class of infrastructure, property, plant and equipment at the

beginning and end of the current financial year are set out below:

2015

Carrying Amount at

2014

$‘000

Transfer Between

Classes

$‘000

Plus Change in Valuations

$‘000

Plus

Additions

$‘000

Less WDV of

Disposals

$‘000

Less

Depreciation

$‘000

Carrying Amount at

2015

$‘000

Infrastructure Roads, streets and bridges 235,145 - - 2,608 - (6,884) 230,869 Drainage 104,847 14 - 225 - (1,837) 103,249 Parks and gardens 17,658 1 - 1,429 - (1,126) 17,962 Playgrounds 4,595 - - 378 (2) (367) 4,604 Total infrastructure 362,245 15 - 4,640 (2) (10,214) 356,684 Property Freehold land 686,958 3,705 - 296 - - 690,959 Freehold buildings 170,794 (5,061) - 10,130 - (2,899) 172,964 Total property 857,752 (1,356) - 10,426 - (2,899) 863,923 Plant and Equipment Motor vehicles 8,614 - - 4,215 (807) (2,314) 9,708 Plant and equipment 13,315 - - 871 (1) (2,641) 11,544 Furniture and fittings 2,915 - - 153 - (336) 2,732 Waste management 8 - - - - (8) - Total plant and

equipment

24,852

-

-

5,239

(808)

(5,299)

23,984 Other Assets Art collection 1,225 - - - - - 1,225 Work in progress 1,828 (1,612) - 1,642 - - 1,858 Total other assets 3,053 (1,612) - 1,642 - - 3,083 TOTAL 1,247,902 (2,953) - 21,947 (810) (18,412) 1,247,674

(a)

(a) $(13,888,400) of land and buildings was transferred to non-current assets classified as held for sale (refer Note 27).

$11,300,000 of non-current assets classified as held for sale was transferred back to land (refer Note 27).

$(364,617) of work in progress was transferred to intangible assets.




Note 2015

$‘000

2014

$‘000

31. INTANGIBLE ASSETS

IT Software

at cost 1,874 1,135

Less accumulated amortization (231) (71)

Total IT Software 1,643 1,064

Total intangible assets 1,643 1,064

(i) Reconciliation

Reconciliation of the carrying amount of the intangible assets at the beginning and end of the current financial

year.

2015

Carrying Amount at

2014 $‘000

Transfer Between

Classes $‘000

Plus

Additions $‘000

Less WDV of

Disposals $‘000

Less

Amortization $‘000

Carrying Amount at

2015 $‘000

IT Software 1,064 365 374 - (160) 1,643

TOTAL 1,064 365 374 - (160) 1,643

2014

Carrying

Amount at 2013 $‘000

Transfer

Between Classes

$‘000

Plus Additions

$‘000

Less WDV of Disposals

$‘000

Less Amortization

$‘000

Carrying

Amount at 2014 $‘000

IT Software - 586 549 - (71) 1,064

TOTAL - 586 549 - (71) 1,064

Note 2015

$‘000

2014

$‘000

32. TRADE AND OTHER PAYABLES

Current

Trade creditors 9,163 6,591

Accrued expenses 3,381 2,766

Total trade and other payables 12,544 9,357




Annual

Leave

$‘000

Long Service

Leave

$‘000

Total

$‘000

33. PROVISIONS

2015

Balance at beginning of the financial year 4,083 8,586 12,669

Additional provisions 4,104 418 4,522

Amounts used (3,622) (721) (4,343)

Increase in the discounted amount arising

because of time and the effect of any change

in the discount rate

81

907

988

Balance at the end of the financial year

4,646

9,190

13,836

2014

Balance at beginning of the financial year 3,872 8,321 12,193

Additional provisions 3,697 449 4,146

Amounts used (3,554) (1,101) (4,655)

Increase in the discounted amount arising

because of time and the effect of any change

in the discount rate

68

917

985

Balance at the end of the financial year

4,083

8,586

12,669

Note 2015

$‘000

2014

$‘000

Employee Provisions:

Current

Current provisions expected to be wholly settled within 12 months:

Annual Leave 4,002 3,543

Long Service Leave 807 862

4,809 4,405

Current provisions expected to be wholly settled after 12 months:

Annual Leave 644 540

Long Service Leave 7,979 7,398

8,623 7,938

Total current provisions 13,432 12,343

Non-current

Long Service Leave 404 326

Total non-current provisions 404 326

Total provisions 1(v) 13,836 12,669

Provisions Summary:

Current 13,432 12,343

Non-current 404 326

Total aggregate carrying amount of employee

provisions

13,836

12,669




Note 2015

$‘000

2014

$‘000

33. PROVISIONS (cont)

The following assumptions were used in measuring the present value of employee provisions:

Weighted average increase in employee costs 3.35% (3.50% in 2014)

Discount rates from 1 year to 16 years within the range of 1.93% to 3.14 % (2.46% to 3.67% in 2014)

Settlement period from 1 year to 16 years.

34. TRUST FUNDS AND DEPOSITS

Summary

Current 677 931

Non-current 478 434

Total trust funds and deposits 1,155 1,365

Summary

Trust funds 625 671

Deposits held 530 694


Current

Trust Funds

Subdivision street trees - 50

Streeton Views community facilities 1 47

Eagle Views Estate 93 50

Parking Planning Contributions - 25

Other trust funds 53 65

Deposits held

Tender contracts 163 163

Function deposits - 97

Sub-divisions 24 24

Road opening permits 104 68

Sundry 190 292

Other deposits 49 50

Total current 677 931

Non-current

Trust Funds

Subdivision street trees 117 158

Eagle Views Estate - 43

Parking Planning Contributions 296 167

Other trust funds 65 66

Total non-current 478 434





Note 2015

$‘000

2014

$‘000

34. TRUST FUNDS AND DEPOSITS (cont)

Purpose and nature of items

Refundable Deposits – Deposits are taken by Council as a form of surety in a number of

circumstances, including in relation to building works, tender deposits, contract deposits and the use

of civic facilities.

Retention Amounts – Council has a contractual right to retain certain amounts until a contractor has

met certain requirements or a related warrant or defect period has elapsed. Subject to the

satisfactory completion of the contractual obligations, or the elapsing of time, these amounts will be

paid to the relevant contractor in line with Council’s contractual obligations.

Trust Funds – Funds are received by Council and they are to be spent for a specific purpose.

35. INTEREST BEARING LOANS AND BORROWINGS

Current

Borrowings – secured (a) 2,647 2,267

Total current 2,647 2,267

Non-Current

Borrowings – secured (a) 55,366 58,012

Total non-current 55,366 58,012

Total interest bearing loans and borrowings 58,013 60,279

(a) The interest bearing loans are secured by a deed of charge over Council rates

The maturity profile of Council’s borrowings is:

Not later than one year 2,647 2,267

Later than one year, but not later than five years 16,258 15,241

Later than five years 39,108 42,771

Total interest bearing loans and borrowings 58,013 60,279




36. RESERVES

(i) Summary of Reserve Types

Balance as at

30/6/15 $‘000

Balance as at

30/6/14 $‘000

Asset Revaluation Reserve 829,084 833,409

Asset Replacement Reserves 41,994 15,113

Total Reserves 871,078 848,522

(ii) Reserve Movements

The following transfers to and from Council’s reserves occurred during the reporting period:

(a) Asset Revaluation Reserve

2015

Balance as at

30/6/14 $‘000

Increment

(Decrement) $‘000

Balance as at

30/6/15 $‘000

Infrastructure

Roads and streets 133,569 - 133,569

Bridges, medians and local area traffic management 1,744 - 1,744

Drainage 70,825 - 70,825

206,138 - 206,138

Property

Freehold land 541,531 (2,528) 539,003

Freehold buildings 76,247 (2,748) 73,499

617,778 (5,276) 612,502

Other assets

Heritage and culture – including art collection 283 - 283

Parks and gardens 471 - 471

754 - 754

Non-current assets Classified as Held for Sale

Freehold land 8,157 530 8,687

Freehold buildings 582 421 1,003

8,739 951 9,690

Total asset revaluation reserve

833,409

(4,325)

829,084




36. RESERVES (cont)

(ii) Reserve Movements (cont)

The following transfers to and from Council’s reserves occurred during the reporting period (cont):

(a) Asset Revaluation Reserve (cont)

2014

Balance as at

30/6/13 $‘000

Increment

(Decrement) $‘000

Balance as at

30/6/14 $‘000

Infrastructure

Roads and streets 127,780 5,789 133,569

Bridges, medians and local area traffic management 2,072 (328) 1,744

Drainage 56,840 13,985 70,825

186,692 19,446 206,138

Property

Freehold land 528,240 13,291 541,531

Freehold buildings 67,841 8,406 76,247

596,081 21,697 617,778

Other assets

Heritage and culture – including art collection 283 - 283

Parks and gardens 471 - 471

754 - 754

Assets Held for Sale

Freehold land 174 7,983 8,157

Freehold buildings 1,673 (1,091) 582

1,847 6,892 8,739

Total asset revaluation reserve

785,374

48,035

833,409

The asset revaluation reserve is used to record the increased (net) value of Council’s assets over time.




36. RESERVES (cont)



(a) Asset Revaluation Reserve (cont)

Details of movements.

Note 2015

$‘000

2014

$‘000

ASSET REVALUATION RESERVE

Balance at beginning of the financial year 833,409 785,374

Amount transferred as a result of revaluing assets:

Infrastructure

- Roads and streets - 5,789

- Bridges, medians and local area traffic management - (328)

- Drainage - 13,985

Property

- Freehold land - 23,474

- Freehold buildings - 7,394

Amount transferred as a result of selling assets:

Property

- Freehold land - (2,200)

- Freehold buildings - (79)

- Assets held for sale – freehold land (1,743) -

Amount transferred as a result of transferring from assets

held for sale to property assets:

- Assets held for sale – freehold land (3,789) (174)

- Assets held for sale – freehold buildings - (1,673)

- Freehold land 3,789 174

- Freehold buildings - 1,673

Amount transferred as a result of transferring from property

assets to assets held for sale:

- Assets held for sale – freehold land 6,318 8,157

- Assets held for sale – freehold buildings 2,748 582

- Freehold land (6,318) (8,157)

- Freehold buildings (2,748) (582)

Amount transferred as a result of impairment loss:

- Asset held for sale – freehold land (255) -

- Asset held for sale – freehold buildings (2,327) -

Balance at end of the financial year 829,084 833,409




36. RESERVES (cont)



(b) Asset Replacement Reserves

2015

Balance as

at 30/06/14

$‘000

Transfers

Between

$‘000

Transfers

To

$‘000

Transfers

From

$‘000

Balance as

at 30/06/15

$‘000

Statutory Reserves

Public Open Space 1,706 - 1,452 (1,456) 1,702

Off-Street Car Parking 252 - - - 252

Discretionary Reserves

General 2,541 - 733 (975) 2,299

Plant and Equipment 6,150 - 5,936 (3,759) 8,327

Strategic Properties 4,229 - 25,050 (1,705) 27,574

Asset Renewal 124 - 880 - 1,004

Car Parking Meters 111 - 274 (79) 306

BPI Investment - - 130 - 130

WaterMarc renewal - - 400 - 400

Asset replacement reserves 15,113 - 34,855 (7,974) 41,994

2014

Balance as

at 30/06/13

$‘000

Transfers

Between

$‘000

Transfers

To

$‘000

Transfers

From

$‘000

Balance as

at 30/06/14

$‘000

Statutory Reserves

Public Open Space 1,478 (336) 1,310 (746) 1,706

Off-Street Car Parking 252 - - - 252

Discretionary Reserves

General 1,196 - 1,434 (89) 2,541

Greensborough Project - RALC 155 - - (155) -

Plant and Equipment 6,216 - 4,824 (4,890) 6,150

Strategic Properties 3,791 336 27,680 (27,578) 4,229

Asset Renewal 124 - - - 124

Car Parking Meters 14 - 133 (36) 111

Asset replacement reserves 13,226 - 35,381 (33,494) 15,113

The above tables generally indicate usage of funds for budgeted capital works and recovery of capital from

previous expenditures and investment projects in the ordinary course of business. These amounts are determined

in accordance with the approved budget and subsequent Council reports.

The Public Open Space Reserve is a statutory reserve where developers contribute income to the reserve by law.

The funds are spent on ‘public open spaces’, for example playgrounds.

The Off-Street Car Parking Reserve is no longer operational due to a change in legislation. Developers did

contribute income to the reserve. Funds were used to provide additional car parking spaces in the area where the

funds were generated from.

The General Reserve is maintained to have money set aside for future projects.

The Plant and Equipment Reserve is used to fund the purchase of vehicles (all types) and some items of plant and

equipment.

The Strategic Properties Reserve is maintained to fund the purchasing, development and selling of properties with

a view to add income to Council.




36. RESERVES (cont)



(b) Asset Replacement Reserves (cont)

The Asset Renewal Reserve is used to fund the renewal of assets in the future.

The Car Parking Meters Reserve receives all the income collected from parking meters. The Reserve will be used

to purchase new parking meters and fund the maintenance of existing parking meters.

The Bpi Investment Reserve receives a portion of the BPI department’s profit each year. The Reserve is used to

fund equipment and software to enhance their competitiveness with external businesses.

The WaterMarc Renewal Reserve accumulates fund to replace or repair assets, at the WaterMarc Aquatic Centre,

as required.




Note 2015

$‘000

2014

$‘000

37. RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES

TO SURPLUS/(DEFICIT)

Surplus for the year 15,685 1,971

(Profit)/loss on disposal of infrastructure, property, plant

and equipment

10

(11,771)

1,306

Depreciation and amortization 16 18,572 15,911

Finance costs - interest 18 3,880 3,504

Capitalised interest in assets held for sale 18 (85) (28)

Share of profit of associate 12 (336) (274)

Non-monetary contribution of land 30(i) - (37)

Change in assets and liabilities, excluding investing

activities:-

Decrease/(increase) in receivables 221 (1,571)

Decrease/(increase) in inventories 9 (10)

(Increase)/decrease in prepayments (132) 80

Increase/(decrease) in payables 2,634 (964)

Increase in employee provisions 1,167 476

Increase/(decrease) in trust funds and deposits (210) (236)

Net cash provided by operating activities 29,634 20,128

38. RECONCILIATION OF CASH AND CASH EQUIVALENTS

For purposes of the Cash Flow Statement, cash and cash equivalents include cash on hand, deposits at call

and other highly liquid investments with original maturities of three months or less, net of outstanding

bank overdrafts. Cash at the end of the period as shown in the Cash Flow Statement is reconciled to the

related items in the Balance Sheet.

Cash and cash equivalents 23 64,795 56,835

39. FINANCING ARRANGEMENTS

Overdraft facilities 700 700

Unused facilities 700 700

Used facilities - -

Total overdraft facilities 700 700




40. SUPERANNUATION

Banyule City Council makes the majority of its employer superannuation contributions in respect to its employees

to the Local Authorities Superannuation Fund – Vision Super (the Fund). This Fund has two categories of

membership, accumulation and defined benefit, each of which is funded differently.

Obligations for contributions to the Fund are recognised as an expense in the Comprehensive Income Statement

when they are made or due.

Accumulation Fund

The Fund’s accumulation categories, Vision MySuper/Vision Super Saver, receives both employer and optional

employee contributions on a progressive basis. Employer contributions are normally based on a fixed percentage

of employee earnings (for the year ended 30 June 2015, this was 9.50% required under Superannuation Guarantee

legislation) (for 2013/2014, this was 9.25%).

Defined Benefit Plan

Banyule City Council does not use defined benefit accounting for its defined benefit obligations under the Fund’s

Defined Benefit category. This is because the Fund’s Defined Benefit category is a pooled multi-employer

sponsored plan.

There is no proportional split of the defined benefit liabilities, assets or costs between the participating employers

as the defined benefit obligation is a floating obligation between the participating employers and the only time that

the aggregate obligation is allocated to specific employers is when a call is made. As a result, the level of

participation of Banyule City Council in the Fund cannot be measured as a percentage compared with other

participating employers. Therefore, the Actuary is unable to allocate benefit liabilities, assets and costs between

employers for the purposes of AASB 119.




Note 2015

$‘000

2014

$‘000

41. CONTRACTUAL COMMITMENTS

Council has entered into the following commitments:

(i) Capital expenditure

Contractual commitments at balance date were for:

WaterMarc Project 158 218

Ivanhoe Aquatic Centre Redevelopment - 4,635

Sports grounds and facilities 7 639

Streetscape works 163 -

Electronic Document and Records Management System 5 -

Pre-school capital works 84 769

Greensborough office accommodation 88 666

Olympic Village Learning Hub 31 -

Parking Meter Installation 268 -

Storage area network 238 -

Bike paths/trails 297 27

Total contractual capital commitments 1,339 6,954

(ii) Capital expenditure commitments


Later than one year, and not later than two years - 286

Total contractual capital commitments 1,339 6,954

(iii) Operating expenditure

Contractual commitments at balance date were for:

Cleaning services 590 164

Internal audit fee 238 322

Tree maintenance 188 668

Cemetery landscaping 290 -

Leisure facilities – management and operations 197 1,357

Mail distribution 105 158

Streetlight replacement - Greenpower 106 -

Total contractual operating commitments 1,714 2,669

(iv) Operating expenditure commitments

Not later than one year 900 2,104

Later than one year, and not later than two years 336 406

Later than two years, and not later than five years 478 159

Total contractual operating commitments 1,714 2,669




Note 2015

$‘000

2014

$‘000

42. OPERATING LEASES

(i) Operating Lease Commitments

At the reporting date, Council had the following obligations under non-cancellable operating leases for

the lease of equipment, land and/or buildings, for use within Council’s activities (these obligations are not

recognised as liabilities):

Not later than one year 200 374

Later than one year and not later than two years 139 161

Later than two years and not later than five-years 61 59

Total operating lease commitments 400 594

(ii) Operating Lease Receivables

At the reporting date, Council has entered into commercial property leases on some of its properties.

These properties held under operating leases have remaining non-cancellable lease terms of between 1

and 13-years. Some leases include a CPI based revision of the rental charge annually.

Future minimum rental income under non-cancellable operating leases is as follows:


Later than one year and not later than five years 2,571 2,382

Later than five years 435 656

Total operating lease receivables 4,747 4,968

The income for the period is shown in the Comprehensive Income Statement, under revenue as rental income.




Note 2015

$‘000

2014

$‘000

43. CONTINGENT LIABILITIES

(i) Guarantees

The Banyule City Council has undertaken to act as bank

guarantor for:

- various local organisations’ outstanding loans (a) 48 91

- Council’s corporate business card facilities (b) 165 155

Total guarantees 213 246

(a) Council is currently acting as guarantor for loans taken out by four Sporting Clubs to be used for significant

capital improvements to the Council’s sporting facilities that are on Council land. At balance date, the total

outstanding balance on these loans is $48,476 ($91,112 in 2014). At balance date we have received

assurances from the Clubs that they are continuing to meet repayments in accordance with the

requirements of their individual loan agreements.

The amount disclosed for financial guarantee in this note is the nominal amount of the underlying loan that

is guaranteed by Council, not the fair value of the financial guarantee.

(b) Business card facility limit $200,000 ($200,000 in 2014).

(ii) Contingent Liabilities arising from Public/Products Liabilities

As a local authority with ownership of numerous parks, reserves, roads and other land holdings, the

Council is regularly met with claims and demands allegedly arising from incidents which occur on land

belonging to Council. There are a number of outstanding claims against Council in this regard. Council

carries $400 million of public/products liability insurance however the maximum liability of Council in any

single claim is the extent of its excess. The primary insurer is MAV Insurance – Liability Mutual Insurance.

There are no claims of which Council is aware which would fall outside the terms of Council’s policy.

(iii) Contingent Liability arising from Professional Indemnity

As a local authority with statutory regulatory responsibilities, including the responsibility of issuing permits

and approvals, Council is met with claims and demands for damages allegedly arising from actions of Council

or its Officers. Council carries $300 million of professional indemnity insurance however the maximum

liability of Council in any single claim is the extent of its excess. The primary insurer is MAV Insurance –

Liability Mutual Insurance. There are no instances or claims of which Council is aware which would fall

outside the terms of Council’s policy.

(iv) Flood Damage

There may be some unquantified costs, to be borne by Council, relating to a potential flood damage claim

against Council.

(v) Superannuation Contributions

Banyule City Council has obligations under a defined benefit superannuation scheme that may result in the

need to make additional contributions to the scheme to ensure that the liabilities of the Fund are covered

by the assets of the Fund. As a result of the volatility in financial markets the likelihood of making such

contributions in future periods exists. At this point in time it is not known if additional contributions will be

required, their timing or potential amount.

Funding arrangements

Council makes employer contributions to the defined benefit category of the Fund at rates determined by

the Trustee, on the advice of the Fund’s Actuary. The Fund’s latest actuarial investigation was held as at 30

June 2014 and it was determined that the Vested Benefit Indexed (VBI) of the defined benefit category of

which Banyule City Council is a contributing employer was 103.4%.




Note 2015

$‘000

2014

$‘000

43. CONTINGENT LIABILITIES (cont)

(v) Superannuation Contributions (cont)

To determine the VBI, the Fund Actuary used the following long-term assumptions:

Net investment returns 7.50%pa

Salary information 4.25%pa

Price inflation (CPI) 2.75%pa

Vision Super has advised that the estimated VBI as at 30 June 2015 was 105.8%.

The VBI is to be used as the primary funding indicator. Because the VBI was above 100%, the actuarial

investigation determined the defined benefit category was in a satisfactory financial position and that no

change was necessary to the defined benefit category’s funding arrangements from prior years.

Employer Contributions

Regular Contributions

On the basis of the results of the most recent full actuarial investigation conducted by the Fund’s

Actuary as at 30 June 2014, Council makes employer contributions to the Fund’s Defined Benefit

category at rates determined by the Fund’s Trustee. For the year ended 30 June 2015, this rate was

9.50% of members’ salaries. This rate will increase in line with any increase to the Superannuation

Guarantee contribution rate.

In addition, Council reimburses the Fund to cover the excess of the benefits paid as a consequence of

retrenchment above the funded resignation or retirement benefit.

Funding Calls

If the Defined Benefit category is in an unsatisfactory financial position at actuarial investigation or the

Defined Benefit category’s VBI is below its shortfall limit at any time other than the date of the actuarial

investigation, the Defined Benefit category has a shortfall for the purposes of SPS 160 and the Fund is

required to put a plan in place so that the shortfall is fully funded within three years of the shortfall

occurring. The Fund monitors its VBI on a quarterly basis and the Fund has set its shortfall limit at 97%.

In the event that the Fund Actuary determines that there is a shortfall based on the above requirement,

the Fund’s participating employers (including Banyule City Council) are required to make an employer

contribution to cover the shortfall.

Using the agreed methodology, the shortfall amount is apportioned between the participating employers

based on the pre-1 July 1993 and post-30 June 1993 service liabilities of the Fund’s Defined Benefit

category, together with the employer’s payroll at 30 June 1993 and at the date the shortfall has been

calculated.

Due to the nature of the contractual obligations between the participating employers and the Fund, and

that the Fund includes lifetime pensioners and their reversionary beneficiaries, it is unlikely that the Fund

will be wound up.

If there is a surplus in the Fund, the surplus cannot be returned to the participating employers.

In the event that a participating employer is wound-up, the Defined Benefit obligations of that employer

will be transferred to that employer’s successor.

Latest actuarial investigation surplus amounts

The Fund’s latest actuarial investigation as at 30 June 2014 identified the following in the defined benefit

category of which Banyule City Council is a contributing employer.




Note 2015

$‘000

2014

$‘000

43. CONTINGENT LIABILITIES (cont)

(v) Superannuation Contributions (cont)

A VBI surplus of $77.1 million; and

A total service liability surplus of $236 million.

The VBI surplus means that the market value of the Fund’s assets supporting the defined benefit

obligations exceed the vested benefits that the defined benefit members would have been entitled to if

they had all exited on 30 June 2014.

The total service liability surplus means that the current value of the assets in the Fund’s defined benefit

category plus expected future contributions exceeds the value of expected future benefits and expenses.

Council was notified of the results of the actuarial investigation during January 2015.

Superannuation Contributions

Contributions by Banyule City Council (excluding any unfunded liability payments) to the above superannuation

plans for the financial year ended 30 June 2015 are as follows:

Scheme

Type of Scheme

Rate

2015

$‘000

2014

$‘000

Vision Super Defined benefits 9.50%/9.25% 539 565

Vision Super Accumulation 9.50%/9.25% 3,855 3,491

Employee’s Personal

Accumulation N/A 2 21

Council’s employer contributions outstanding at reporting date were:

Defined Benefits Fund - 24

Accumulation Funds (Vision) - 129

Accumulation Funds (Personal) - 2

- 155

There were no loans issued from or to the above schemes as at 30 June 2015.

The expected contributions to be paid to the defined category of Vision Super for the year ending 30 June 2016 is

$562,200.




44. FINANCIAL INSTRUMENTS

(i) Objectives and Policies

Council’s principal financial instruments comprise cash assets, term deposits, receivables (excluding

statutory receivables), payables (excluding statutory payables) and bank borrowings. Details of the

significant accounting policies and methods adopted, including the criteria for recognition, the basis of

measurement and the basis on which income and expenses are recognised, in respect of each class of

financial asset, financial liability and equity instrument is disclosed in Note 1 of the Financial Statements.

Risk management is carried out by senior management under policies approved by Council. These policies

include identification and analysis of the risk exposure to Council and appropriate procedures, controls and

risk minimisation.

(ii) Market Risk

Market risk is the risk that the fair value or future cash flows of our financial instruments will fluctuate

because of changes in market prices. The Council’s exposures to market risk are primarily through interest

rate risk with only insignificant exposure to other price risks and no exposure to foreign currency risk.

(iii) Interest Rate Risk

Interest rate risk refers to the risk that the value of a financial instrument or cash flows associated with the

instrument will fluctuate due to changes in market interest rates. Interest rate liability risk arises primarily

from long term loans and borrowings at fixed rates which exposes Council to fair value interest rate risk.

Council does not hold any interest bearing financial instruments that are measured at fair value, and

therefore has no exposure to fair value interest rate risk. Cash flow interest rate risk is the risk that the

future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

Council has minimal exposure to cash flow interest rate risk through its cash and deposits that are at

floating rates.

Investment of surplus funds is made with approved financial institutions under the Local Government Act

1989. Council manages interest rate risk by adopting an investment policy that ensures:

Diversification of investment product;

Monitoring of return on investments; and

Benchmarking of returns and comparison with budget.

There has been no significant change in Council’s exposure, or its objectives, policies and processes for

managing interest rate risk or the methods used to measure this risk from the previous reporting year.

Interest rate movements have not been sufficiently significant during the year to have an impact on

Council’s year end result.




44. FINANCIAL INSTRUMENTS (cont)

(iv) Credit Risk

Credit risk is the risk that a contracting entity will not complete its obligations under a financial instrument

and cause Council to make a financial loss. Council has exposure to credit risk on some financial assets

included in Council’s Balance Sheet. To help manage this risk Council:

has a policy for establishing credit limits for the entities Council deals with

may require collateral where appropriate

will only invest surplus funds with financial institutions which have a recognised credit rating specified in

our investment policy.

Trade and other receivables consist of a large number of customers, spread across the ratepayer, business

and government sectors. Credit risk associated with the Council’s financial assets is minimal because the

main debtor is secured by a charge over the rateable property.

There are no material assets which are individually determined to be impaired.

Council may also be subject to credit risk for transactions which are not included in the Balance Sheet, such

as when a guarantee is provided for another party. Details of Council’s contingent liabilities are disclosed in

Note 43.

The maximum exposure to credit risk on recognised financial assets at the reporting date is the carrying

amount, net of any provisions for impairment of those assets, as disclosed in the Balance Sheet and notes to

the Financial Statements. Council does not hold any collateral.

(v) Liquidity Risk

Liquidity risk includes the risk that, as a result of our operational liquidity requirements, Council:

will not have sufficient funds to settle a transaction when required,

will be forced to sell a financial asset at below value, or

may be unable to settle or recover a financial asset.

To help reduce these risks Council:

has a liquidity policy which targets a minimum and average level of cash and cash equivalents to be

maintained

has readily accessible standby facilities and other funding arrangements in place

has a liquidity portfolio structure that requires surplus funds to be invested within various bands of

liquid instruments

monitors budget to actual performance on a regular basis

set limits on borrowings relating to the percentage of loans to rate revenue and percentage of loan

principal repayments to rate revenue.

The Council’s maximum exposure to liquidity risk is the carrying amounts of financial liabilities as disclosed

in the face of the Balance Sheet and the amounts related to financial guarantees disclosed in Note 43 and is

deemed insignificant based on prior periods data and current assessment of risk.

There has been no significant change in Council’s exposure, or its objectives, policies and processes for

managing liquidity risk or the methods used to measure this risk from the previous reporting year.

With the exception of borrowings, all financial liabilities are expected to be settled within normal terms of

trade. Details of the maturity profile for borrowings are disclosed at Note 35.

Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value.




44. FINANCIAL INSTRUMENTS (cont)

(vi) Sensitivity Disclosure Analysis

Taking into account past performance, future expectations, economic forecasts and management’s

knowledge and experience of the financial markets, Council believes the following movements are

‘reasonably possible’ over the next 12 months:

- A parallel shift of +0.5% and -0.5% in market interest rates (AUD) from year end rates of 2.76%.

These movements will not have a material impact on the valuation of Council’s financial assets and liabilities,

nor will they have a material impact on the results of Council’s operations.

(vii) Fair Value

Unless otherwise stated, the carrying amount of financial instruments reflect their fair value.

Fair Value Hierarchy

Council’s financial assets and liabilities are not valued in accordance with the fair value hierarchy. Council’s

financial assets and liabilities are measured at amortised cost.




45. RELATED PARTY TRANSACTIONS

(i) Responsible Persons

Names of persons holding the position of a Responsible Person at Banyule City Council at any time during

the reporting period are:

2015

Councillors

Rick Garotti

Wayne Phillips

Jenny Mulholland

Mark Di Pasquale

Steven Briffa

Tom Melican

Craig Langdon (Mayor)

Council elections were last held on 27/10/2012.

Chief Executive Officer

Simon McMillan

Acting Chief Executive Officer

Scott Walker

Allison Beckwith

(ii) Remuneration of Responsible Persons

The numbers of Responsible Officers whose total remuneration from Council and any related entities,

excluding retirement benefits, fall within the following bands:

2015

No.

2014

No.

Income range:

$1 - $9,999 2 -

$20,000 - $29,999 6 5

$40,000 - $49,999 - 1

$70,000 - $79,999 - 1

$90,000 - $99,000 1 -

$300,000 - $309,999 - 1

$320,000 - $329,999 1 -

Total 10 8

$‘000 $‘000

Total Remuneration for the reporting period for

Responsible Persons included above, amounted to:

581

568

(iii) Responsible Persons Retirement Benefits

The aggregate amount paid during the reporting period by Council in connection with the retirement of

responsible persons was $Nil (2014: $Nil).




45. RELATED PARTY TRANSACTIONS (cont)

(iv) Loans to Responsible Persons

The aggregate amount of loans in existence at balance date that have been made, guaranteed or secured by

Council to a responsible person of the Council, or a related party of a responsible person is $Nil (2014:

$Nil).

(v) Transactions with Responsible Persons

Other related party transactions requiring disclosure have been considered and there are no matters to

report for this reporting year or the prior reporting year.

No transactions other than remuneration payments or the reimbursement of approved expenses were

entered into by Council with Responsible Persons or Related Parties of such Responsible Persons during

the reporting year. (2014: $Nil).

(vi) Senior Officers’ Remuneration

A Senior Officer other than a Responsible Person, is an Officer of Council:

who has management responsibilities and reports directly to the Chief Executive Officer; or

whose total annual remuneration exceeds $136,000 (2014 exceeds $133,000).

The numbers of Senior Officers, other than the Responsible Persons, are shown below in their relevant

income bands:

2015

No.

2014

No.

Income range:

$136,000 - $139,999 - 1

$140,000 - $149,999 1 -

$150,000 - $159,999 3 2

$160,000 - $169,999 7 12

$170,000 - $179,999 3 1

$180,000 - $189,999 1 -

$200,000 - $219,999 - 1

$230,000 - $239,999 - 2

$240,000 - $249,999 4 1

Total 19 20

$‘000

$‘000

Total Remuneration for the reporting year for

Senior Officers included above, amounted to:

3,481

3,523

46. EVENTS OCCURING AFTER BALANCE DATE

No matters have occurred after balance date that require disclosure in the Financial Report.



Certification of Financial Statements for the year ended 30 June 2015


Victorian Auditor General Independent Audit Report


Victorian Auditor General Independent Audit Report (cont)

part three of three financial report for the year … city council annual report 2014-2015 part...

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