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The hills shire CounCilAnnuAl RepoRt 2009-2010Our General Purpose Financial Statements

2 The hills shire CounCil finanCial reporT 2009-2010

finanCial sTaTemenTs

Financial Statements 2010

The Hills Shire Council

General Purpose Financial Statements for the financial year ended 30 June 2010

Contents

1. Statement by Councillors & Management

2. primary Financial Statements:

- Income Statement- Statement of Comprehensive Income- Balance Sheet- Statement of Changes in Equity- Statement of Cash Flows

3. notes to the Financial Statements

4. Independent Auditor's Reports:

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

overview

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

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

Council's Statutory Charter is specified in Section 8 of the LGA and includes;

carrying out activities and providing goods, services & facilities appropriate to the current & futureneeds of the Local community and of the wider public

responsibility for administering regulatory requirements under the LGA and other applicable legislation, &

a role in the management, improvement and development of the resources of the local government area.

A description of the nature of Council's operations and its principal activities are provided in Note 2(b).

(iii) All figures presented in these financial statements are presented in Australian Currency.

(iv) These financial statements were authorised for issue by the Council on 14/09/10.Council has the power to amend and reissue the financial statements.

7

8

8586

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56

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Contents page

1. statement by Councillors & management 3

2. primary financial statements:

income statement 4

statement of Comprehensive income 5

Balance sheet 6

statement of Changes in equity 7

statement of Cash Flows 8

3. notes to the financial statements 9

4. independent auditor’s reports:

on the Financial statements (sect 417 [2]) 86

on the Conduct of the Audit (sect 417 [3]) 87


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General Purpose Financial Statements for the financial year ended 30 June 2010

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

the attached General purpose Financial Statements have been prepared in accordance with:

The Local Government Act 1993 (as amended) and the Regulations made thereunder,

The Australian Accounting Standards and professional pronouncements, and

The Local Government Code of Accounting Practice and Financial Reporting.

to the best of our knowledge and belief, these Financial Statements:

present fairly the Council’s operating result and financial position for the year, and

accords with Council’s accounting and other records.

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

Signed in accordance with a resolution of Council made on 14 September 2010.

Councillor Peter Dimbrowsky Councillor Mike ThomasMAYoR CounCIlloR

Dave WalkerGeneRAl MAnAGeR /ReSponSIBle ACCountInG oFFICeR

page 2


finanCial sTaTemenTsFinancial Statements 2010


Income Statement for the financial year ended 30 June 2010

$ '000

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

Total Income from Continuing Operations

expenses from Continuing operationsEmployee Benefits & On-CostsBorrowing CostsMaterials & ContractsDepreciation & AmortisationImpairmentOther Expenses

Total Expenses from Continuing Operations

Operating Result from Continuing Operations

Discontinued operations

Net Profit/(Loss) from Discontinued Operations

Net Operating Result for the Year

net operating Result attributable to Councilnet operating Result attributable to Minority Interests

net operating Result for the year before Grants andContributions provided for Capital purposes

Original Budget as approved by Council - refer Note 16

97,525

5,344

-

32,962

18,899 22,277

593

-

7,184

4e

26,511

24,156 26,268

32,962

39,358

134,545 130,487

45,172

-

14,063

-

-

24

108,034

- 14,633 14,056

-

- 19,955

32,962

21,961

15,076

26,511

4c

4a

4,234

18,939 26,511 -

18,939

(1)

18,939

-

2,330

-

4b

4d14,452

- 4d

-

23,722

905

122,090

44,629

20,348

19

103,151

Budget (1)

11,805 75,190

2010ActualActual

3b

Notes 2010 2009

7,247 3a 71,724 75,746

12,192

- -

3e,f16,609 14,327

5,516 3d12,731

3,349 1,501 5,013 3c 3,894

5

3e,f

This Statement should be read in conjunction with the accompanying Notes. page 3


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Statement of Comprehensive Income for the financial year ended 30 June 2010

$ '000

Net Operating Result for the year (as per Income statement)

other Comprehensive IncomeGain (loss) on revaluation & impairment of I,PP&EGain (loss) on revaluation of available-for-sale investmentsGain (loss) on revaluation of other reservesRealised (gain) loss on available-for-sale investments recognised in P&LRealised (gain) loss from other reserves recognised in P&LRecognition of Land Under RoadsAdjustment to correct prior period depreciation errors

Total Other Comprehensive Income for the year

Total Comprehensive Income for the Year

total Comprehensive Income attributable to Counciltotal Comprehensive Income attributable to Minority Interests

-

1,782,880

45,843

19,332 1,782,880

-

1,815,842

-

-

(139,895)

-

1,815,842

-

-

Actual

159,227 -

26,511

Actual

- -

32,962

-

2009

20b (ii)

20b (ii)

20b (ii)

20b (ii)

2010

20b (ii)

20b (ii)

45,843 -

-

Notes






Balance Sheetas at 30 June 2010

$ '000

ASSetSCurrent AssetsCash & Cash EquivalentsInvestmentsReceivablesInventoriesOtherNon-current assets classified as "held for sale"total Current Assets

non-Current AssetsInvestmentsReceivablesInventoriesInfrastructure, Property, Plant & EquipmentInvestments accounted for using the equity methodInvestment PropertyIntangible AssetsNon-current assets classified as "held for sale"Othertotal non-Current Assets

TOTAL ASSETS

lIABIlItIeSCurrent liabilitiesPayablesBorrowingsProvisionstotal Current liabilities

non-Current liabilitiesPayablesBorrowingsProvisionstotal non-Current liabilities

TOTAL LIABILITIES

Net Assets

eQuItYRetained EarningsRevaluation ReservesCouncil equity InterestMinority equity Interest

Total Equity

2009

-

-

3,270,719

3,291,498

3,245,212

3,245,212

249,002

3,245,212

5,078

322

3,291,498

1010

3,177,837 -

89,775

23,340

-

3,042,496

398

-

3,184,611 -

- -

7,217

5,595

1,179

13,017

25,507

69,902

86,108 -

3,510 401

Actual

7

Notes

6a

361 8

- 12,168

-

-

322

-

3,155,437

-

10

2020

25,185

10

398

-

10

13,085

7

- 3,229,115

- 8

19

22

9

377

23,738

3,291,498

10

6,171

10,255

3,315,236

-

3,235,663

14-

22

25

8 -

- 79,573

- 6b

2010Actual

4,526

64,051 3,314

7,321 8

6b



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Statement of Changes in Equity for the financial year ended 30 June 2010

$ '000

opening Balance (as per Last Year's Audited Accounts)

a. Correction of Prior Period Errorsb. Changes in Accounting Policies (prior year effects)

Revised opening Balance (as at 1/7/09)

c. net operating Result for the Year

d. Other Comprehensive Income- Revaluations : IPP&E Asset Revaluation Reserve- Revaluations: Other Reserves- Transfers to Income Statement- Other Movements (depreciation adjustments)

other Comprehensive Income

total Comprehensive Income (c&d)

e. Distributions to/(Contributions from) Minority Interests

f. Transfers between Equity

equity - Balance at end of the reporting period

$ '000

opening Balance (as per Last Year's Audited Accounts)

a. Correction of Prior Period Errorsb. Changes in Accounting Policies (prior year effects)

Revised opening Balance (as at 1/7/08)

c. net operating Result for the Year

d. Other Comprehensive Income- Revaluations : IPP&E Asset Revaluation Rsve- Revaluations: Other Reserves- Transfers to Income Statement- Other Movements (recognise land under roads)

other Comprehensive Income

total Comprehensive Income (c&d)

e. Distributions to/(Contributions from) Minority Interests

f. Transfers between Equity

equity - Balance at end of the reporting period

equity

443

Council

-

Retained

-

-

Interest

3,759

-

- 1,425,611

3,245,212

89,775

(Refer 20b)

Reserves

3,245,655

-

equityMinority

1,782,880-

1,815,842

3,245,212

-

159,227

1,425,611

45,843

3,291,498

total

(139,895) 19,332

- -

Minority

-

-

-

-

- -

443 - -

total

- 3,245,212 -

Interest Interest

- -

-

-

Interest

-

equity

26,511

-

- -

1,782,88020b (ii)

-

1,782,880

20b (ii)

20b (ii)

-

1,815,842

3,155,437 89,775

-

-

3,245,212

-

-

1,782,880

-

-

1,782,880

-

-

1,815,842

-

- -

- - -

3,759

- 20b (ii)

- -

20 (c) - 20 (d)

32,962

-

1,429,370- -

-

- 3,759

32,962

1,335,836

1,429,370

-

1,782,880-

-

-

- -

32,962

3,245,655

-

159,227 159,227 -

26,511

-

-

- - 89,775

(113,384)

(139,895) (139,895) (139,895)

- -

19,332

Notes

3,155,880443 20 (d)

20 (c)

26,511

3,155,437

earnings

20b (ii) -

2010

- 20b (ii)

20b (ii)

-

20b (ii)

Notes

-

159,227

249,002 3,042,496

45,843

89,775

-

-

Council

-

equityearnings

-

1,339,595

Retained Reserves

89,775

(Refer 20b)

-

-

-

159,227

-

3,291,498

-

-

2009






Statement of Cash Flows for the financial year ended 30 June 2010

$ '000

Cash Flows from operating ActivitiesReceipts:Rates & Annual ChargesUser Charges & FeesInvestment & Interest Revenue ReceivedGrants & ContributionsOtherpayments:Employee Benefits & On-CostsMaterials & ContractsBorrowing CostsOther

net Cash provided (or used in) operating Activities

Cash Flows from Investing ActivitiesReceipts:Sale of Investment SecuritiesSale of Real Estate AssetsSale of Infrastructure, Property, Plant & Equipmentpayments:Purchase of Investment SecuritiesPurchase of Infrastructure, Property, Plant & EquipmentPurchase of Real Estate Assets

net Cash provided (or used in) Investing Activities

Cash Flows from Financing ActivitiesNil

net Cash Flow provided (used in) Financing Activities

net Increase/(Decrease) in Cash & Cash equivalents

plus: Cash & Cash equivalents - beginning of year

Cash & Cash equivalents - end of the year

Additional Information:

plus: Investments on hand - end of year

total Cash, Cash equivalents & Investments

Please refer to Note 11 for additonal cash flow information.

6b

5,613 31,304

7,166

(26,098) -

(24,862)

3,678

(23,722)

Notes

(14,452)

2010

(20,348) (44,629)

Budget

75,190 12,192 11,805

1,501

3,349 29,340

(44,179)

2010

38,189

- 14,777

1,368

(18,303)

4,789

(25,323) -

(19,083) (39,310)

9,346 29,111

52,477

(46,626)

18,034

-

32,446 11b

1,168

(1,000)

10,000 -

5,905

(30,095)

- (45,000)

(5,183)

(43,703)

(1,007) (42,361) (36,362)

(4,844) 11a

7,217 11a

(12,061)

-

71,493

Actual2009

Actual

74,798

3,314 7,217

(36,349)

67,365

64,051 69,902

77,119

12,731

-

7,217

(5,514) (3,903)

-



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Notes to the Financial Statements for the financial year ended 30 June 2010

Contents of the Notes accompanying the Financial Statements

Details

Summary of Significant Accounting PoliciesCouncil Functions / Activities - Financial InformationCouncil Functions / Activities - Component DescriptionsIncome from Continuing OperationsExpenses from Continuing OperationsGains or Losses from the Disposal of AssetsCash & Cash Equivalent AssetsInvestmentsRestricted Cash, Cash Equivalents & Investments - detailsReceivablesInventories & Other AssetsInfrastructure, Property, Plant & EquipmentExternally Restricted Infrastructure, Property, Plant & EquipmentInfrastructure, Property, Plant & Equipment - Current Year ImpairmentsPayables, Borrowings & ProvisionsDescription of (& movements in) ProvisionsStatement of Cash Flows - Additional InformationCommitments for ExpenditureStatement of Performance Measures - Indicators (Consolidated)Statement of Performance Measures - Graphs (Consolidated)Statement of Performance Measures - Indicators (by Fund)Investment PropertiesFinancial Risk ManagementMaterial Budget VariationsStatement of Developer ContributionsContingencies and Other Liabilities/Assets not recognisedControlled Entities, Associated Entities & Interests in Joint VenturesEquity - Retained Earnings and Revaluation Reserves

Financial Result & Financial Position by Fund"Held for Sale" Non Current Assets & Disposal GroupsEvents occurring after Balance Sheet dateDiscontinued OperationsIntangible AssetsReinstatement, Rehabilitation & Restoration Liabilities

Additional Disclosures

S94 Developer Contributions with Internal Borrowings

n/a - not applicable

27 77

76 n/a

26

60

75

62

75 n/a

76 n/a

4446

47 n/a

47

75 n/a

76 n/a

55

72 n/a

51

47 n/a

72

49

70

53

56

48

n/a

54

43

37

926272834

383839

78

9(a)9(b)

1213a

20

25

note

22

14

10(a)10(b)

1718

4

6(a)5

page

1

19

1516

11

2(a)

32(b)

6(b)6(c)

9(c)

21

24

13b

23

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1027282935383939404445474848484950525455

56576163717373

767676777777

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Notes to the Financial Statementsfor the financial year ended 30 June 2010

Note 1. Summary of Significant Accounting Policies

page 9

The principal accounting policies adopted by Council in the preparation of these financial statements are set out below in order to assist in its general understanding.

Under Australian Accounting Standards, accounting policies are defined as those specific principles, bases, conventions, rules and practices applied by a reporting entity (in this case Council) in preparing and presenting it’s financial statements.

(a) Basis of preparation

(i) Background

These financial statements are general purpose financial statements which have been prepared in accordance with;

Australian Accounting Standards,

Urgent Issues Group Interpretations,

the Local Government Act (1993) and Regulation, and

the Local Government Code of Accounting Practice and Financial Reporting.

(ii) Compliance with International Financial Reporting Standards (IFRSs)

Because Australian Accounting Standards (AASB's) are sector neutral, some standards either:

(a) have local Australian content and prescription that is specific to the Not-For-Profit sector (including Local Government) which are not in compliance with IFRS’s, or

(b) specifically exclude application by Not for Profit entities.

Examples include;

excluding Local Government from applying AASB 120 (IAS 20) for Grant Accounting and AASB 118 (IAS 18) for Segment Reporting, &

different requirements on (a) Impairment of Assets relating to Not-For-Profit AASB 136 (IAS 36) and (b) AASB 116 (IAS 16) regarding accounting for the Revaluation of Assets.

Accordingly in preparing these financial statements and accompanying notes, Council has been unable to comply fully with International Accounting Standards, but it has complied fully with Australian Accounting Standards.

Under the Local Government Act, Regulations and Local Government Code of Accounting Practice & Financial Reporting, it should be noted that Councils in NSW only have a requirement to comply with Australian Accounting Standards.

(iii) Basis of Accounting

These financial statements have been prepared under the historical cost convention except for (i) financial assets and liabilities at fair value through profit or loss, available-for-sale financial assets and investment properties which are all valued at fair value, (ii) the write down of any Asset on the basis of Impairment (if warranted) and (iii) certain classes of Infrastructure, property, plant & equipment that are accounted for at fair valuation.

The accrual basis of accounting has also been applied in their preparation.

(iv) Changes in Accounting policies

Council’s accounting policies have been consistently applied to all the years presented, unless otherwise stated.

Unless otherwise stated, there have also been no changes in accounting policies when compared with previous financial statements.

(v) Critical Accounting estimates

The preparation of these financial statements requires the use of certain critical accounting estimates (in conformity with AASB's).

It also requires Council management to exercise their judgement in the process of applying Council’s accounting policies.

(vi) Financial Statements presentation

The Council has applied the revised AASB 101, presentation of Financial Statements which became effective on 1 January 2009.


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Note 1. Summary of Significant Accounting Policies (continued)

page 10

The revised standard requires the separate presentation of a statement of comprehensive income and a statement of changes in equity.

All non-owner changes in equity must now be presented in the statement of comprehensive income.

As a consequence, the Council had to change the presentation of its financial statements.

Comparative information has been re-presented so that it is also in conformity with the revised standard.

(b) Revenue recognition

Council recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the Council’s activities as described below.

Council bases any estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.

Revenue is measured at the fair value of the consideration received or receivable.

Revenue is measured on major income categories as follows:

Rates, Annual Charges, Grants and Contributions

Rates, annual charges, grants and contributions (including developer contributions) are recognised as revenues when the Council obtains control over the assets comprising these receipts.

Control over assets acquired from rates and annual charges is obtained at the commencement of the rating year as it is an enforceable debt linked to the rateable property or, where earlier, upon receipt of the rates.

A provision for the impairment on rates receivables has not been established as unpaid rates represent a charge against the rateable property that will be recovered when the property is next sold.

Control over granted assets is normally obtained upon their receipt (or acquittal) or upon earlier notification that a grant has been secured, and is valued at their fair value at the date of transfer.

Income from Contributions is recognised when the Council either obtains control of the contribution or the right to receive it, (i) it is probable that the economic benefits comprising the contribution will flow to the Council and (ii) the amount of the contribution can be measured reliably.

Where grants or contributions recognised as revenues during the financial year were obtained on condition that they be expended in a particular manner or used over a particular period and those conditions were undischarged at balance date, the unused grant or contribution is disclosed in Note 3(g).

Note 3(g) also discloses the amount of unused grant or contribution from prior years that was expended on Council’s operations during the current year.

The Council has obligations to provide facilities from contribution revenues levied on developers under the provisions of S94 of the EPA Act 1979.

Whilst Council generally incorporates these amounts as part of a Development Consents Order, such developer contributions are only recognised as income upon their physical receipt by Council, due to the possibility that individual Development Consents may not be acted upon by the applicant and accordingly would not be payable to Council.

Developer contributions may only be expended for the purposes for which the contributions were required but the Council may apply contributions according to the priorities established in work schedules.

A detailed Note relating to developer contributions can be found at Note 17.

user Charges, Fees and other Income

User charges, fees and other income (including parking fees and fines) are recognised as revenue when the service has been provided, the payment is received, or when the penalty has been applied, whichever first occurs.

A provision for the impairment of these receivables is recognised when collection in full is no longer probable.







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A liability is recognised in respect of revenue that is reciprocal in nature to the extent that the requisite service has not been provided as at balance date.

Sale of Infrastructure, property, plant and equipment

The profit or loss on sale of an asset is determined when control of the asset has irrevocably passed to the buyer.

Interest and Rents

Rents are recognised as revenue on a proportional basis when the payment is due, the value of the payment is notified, or the payment is received, whichever first occurs.

Interest Income from Cash & Investments is accounted for using the Effective Interest method in accordance with AASB 139.

(c) principles of Consolidation

These financial statements incorporate (i) the assets and liabilities of Council and any entities (or operations) that it controls (as at 30/6/10) and (ii) all the related operating results (for the financial year ended the 30th June 2010).

The financial statements also include Council’s share of the assets, liabilities, income and expenses of any Jointly Controlled operations under the appropriate headings.

In the process of reporting on Council’s activities as a single unit, all inter-entity year end balances and reporting period transactions have been eliminated in full between Council and its controlled entities.

(i) the Consolidated Fund

In accordance with the provisions of Section 409(1) of the LGA 1993, all money and property received by Council is held in the Council’s Consolidated Fund unless it is required to be held in the Council’s Trust Fund.

The Consolidated Fund and other entities through which the Council controls resources to carry on its functions have been included in the financial statements forming part of this report.

The following entities have been included as part of the Consolidated Fund:

General Purpose Operations Hills Community Care Child Care Centres

In 2009/10 Council's Section 355 Committee’s accounts have not been consolidated.

Although these Committees are a very important part of Council the total revenue and net assets are not material and therefore have not been consolidated into Council’s Financial Statements.

(ii) the trust Fund

In accordance with the provisions of Section 411 of the Local Government Act 1993 (as amended), a separate and distinct Trust Fund is maintained to account for all money and property received by the Council in trust which must be applied only for the purposes of or in accordance with the trusts relating to those monies.

Trust monies and property subject to Council’s control have been included in these statements.

Trust monies and property held by Council but not subject to the control of Council, have been excluded from these statements.

A separate statement of monies held in the Trust Fund is available for inspection at the Council office by any person free of charge.

(iii) Joint Venture entities

Jointly Controlled Assets & operations

The proportionate interests in the assets, liabilities and expenses of a Joint Venture Activity have been incorporated throughout the financial statements under the appropriate headings.

Jointly Controlled entities

Any interests in Joint Venture Entities & Partnerships are accounted for using the equity method and is carried at cost.


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Under the equity method, the share of the profits or losses of the partnership is recognised in the income statement, and the share of movements in retained earnings & reserves is recognised in the balance sheet.

(iv) Associated entities

Where Council has the power to participate in the financial and operating decisions (of another entity), ie. where Council is deemed to have “significant influence” over the other entities operations but neither controls nor jointly controls the entity, then Council accounts for such interests using the Equity Method of Accounting – in a similar fashion to Joint Venture Entities & Partnerships.

Such entities are usually termed Associates.

(v) County Councils

Council is a member of the following County Councils (which are bodies corporate under the Local Government Act);

Hawkesbury River County Council

The governing body of each County Council is responsible for managing its own affairs.

Council is of the opinion that it neither controls nor significantly influences the above County Councils and accordingly these entities have not been consolidated or otherwise included within these financial statements.

(vi) Additional Information

Note 19 provides more information in relation to Joint Venture Entities, Associated Entities and Joint Venture Operations where applicable.

(d) leases

All Leases entered into by Council are reviewed and classified on inception date as either a Finance Lease or an Operating Lease.

Finance leases

Leases of property, plant and equipment where the Council has substantially all the risks and rewards of ownership are classified as finance leases.

Finance leases are capitalised at the lease’s inception at the lower of the fair value of the leased property and the present value of the minimum lease payments.

The corresponding rental obligations, net of finance charges, are included in borrowings.

Each lease payment is allocated between the liability outstanding and the recognition of a finance charge.

The interest element of the finance charge is costed to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

Property, plant and equipment acquired under finance leases is depreciated over the shorter of each leased asset’s useful life and the lease term.

operating leases

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases.

Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease.

Lease income from operating leases is recognised in income on a straight-line basis over the lease term.

(e) Cash and Cash equivalents

Cash and cash equivalents includes;

cash on hand,

deposits held at call with financial institutions,

other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and

bank overdrafts.

Bank overdrafts are shown within borrowings in current liabilities on the balance sheet but are







page 13

incorporated into Cash & Cash Equivalents for presentation of the Cash Flow Statement.

(f) Investments and other Financial Assets

Council (in accordance with AASB 139) classifies each of its investments into one of the following categories for measurement purposes:

financial assets at fair value through profit or loss,

loans and receivables,

held-to-maturity investments, and

available-for-sale financial assets.

Each classification depends on the purpose/intention for which the investment was acquired & at the time it was acquired.

Management determines each Investment classification at the time of initial recognition and re-evaluates this designation at each reporting date.

(i) Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss include financial assets that are “held for trading”.

A financial asset is classified in the “held for trading” category if it is acquired principally for the purpose of selling in the short term.

Assets in this category are primarily classified as current assets as they are primarily held for trading &/or are expected to be realised within 12 months of the balance sheet date.

(ii) loans and receivables

Loans and receivables are non derivative financial assets with fixed or determinable payments that are not quoted in an active market.

They arise when the Council provides money, goods or services directly to a debtor with no intention (or in some cases ability) of selling the resulting receivable.

They are included in current assets, except for those with maturities greater than 12 months after the balance sheet date which are classified as non-current assets.

(iii) Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Council’s management has the positive intention and ability to hold to maturity.

In contrast to the “Loans & Receivables” classification, these investments are generally quoted in an active market.

Held-to-maturity financial assets are included in non-current assets, except for those with maturities less than 12 months from the reporting date, which are classified as current assets.

(iv) Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories.

Investments must be designated as available-for-sale if they do not have fixed maturities and fixed or determinable payments and management intends to hold them for the medium to long term.

Accordingly, this classification principally comprises marketable equity securities, but can include all types of financial assets that could otherwise be classified in one of the other investment categories.

They are generally included in non-current assets unless management intends to dispose of the investment within 12 months of the balance sheet date or the term to maturity from the reporting date is less than 12 months.

Financial Assets – Reclassification

Council may choose to reclassify a non-derivative trading financial asset out of the held-for-trading category if the financial asset is no longer held for the purpose of selling it in the near term.

Financial assets other than loans and receivables are permitted to be reclassified out of the held-for-trading category only in rare circumstances arising from a


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single event that is unusual and highly unlikely to recur in the near term.

Council may also choose to reclassify financial assets that would meet the definition of loans and receivables out of the held-for-trading or available-for-sale categories if it has the intention and ability to hold these financial assets for the foreseeable future or until maturity at the date of reclassification.

Reclassifications are made at fair value as of the reclassification date. Fair value becomes the new cost or amortised cost as applicable, and no reversals of fair value gains or losses recorded before reclassification date are subsequently made.

Effective interest rates for financial assets reclassified to loans and receivables and held-to-maturity categories are determined at the reclassification date. Further increases in estimates of cash flows adjust effective interest rates prospectively.

General Accounting & Measurement of Financial Instruments:

(i) Initial Recognition

Investments are initially recognised (and measured) at fair value, plus in the case of investments not at “fair value through profit or loss”, directly attributable transactions costs

Purchases and sales of investments are recognised on trade-date - the date on which the Council commits to purchase or sell the asset.

Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Council has transferred substantially all the risks and rewards of ownership.

(ii) Subsequent Measurement

Available-for-sale financial assets and financialassets at fair value through profit and loss are subsequently carried at fair value.

loans and receivables and held-to-maturityinvestments are carried at amortised cost using the effective interest method.

Realised and unrealised gains and losses arising from changes in the fair value of the financial assets classified as “fair value through profit or loss”category are included in the income statement in the period in which they arise.

Unrealised gains and losses arising from changes in the fair value of non monetary securities classified as "available-for-sale" are recognised in equity in the available-for-sale investments revaluation reserve.

When securities classified as "available-for-sale" are sold or impaired, the accumulated fair value adjustments are included in the income statement as gains and losses from investment securities.

Impairment

Council assesses at each balance date whether there is objective evidence that a financial asset or group of financial assets is impaired.

Council does not have any impaired assets.

(iii) types of Investments

Council has an approved Investment Policy in order to undertake its investment of money in accordance with (and to comply with) Section 625 of the Local Government Act and S212 of the LG (General) Regulation 2005.

Investments are placed and managed in accordance with the Policy and having particular regard to authorised investments prescribed under the Local Government Investment Order.

Council maintains its investment Policy in compliance with the Act and ensures that it or its representatives exercise care, diligence and skill that a prudent person would exercise in investing Council funds.

Council amended its policy following revisions to the Investment Order arising from the Cole Inquiry recommendations.

Council does not hold any managed funds, CDOs, and equity linked notes.







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(g) Fair value estimation

The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes.

The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date.

The fair value of financial instruments that are not traded in an active market is determined using valuation techniques.

Council uses a variety of methods and makes assumptions that are based on market conditions existing at each balance date.

Quoted market prices or dealer quotes for similar instruments are used for long-term debt instruments held.

If the market for a financial asset is not active (and for unlisted securities), the Council establishes fair value by using valuation techniques.

These include reference to the fair values of recent arm’s length transactions, involving the same instruments or other instruments that are substantially the same, discounted cash flow analysis, and option pricing models refined to reflect the issuer’s specific circumstances.

The nominal value less estimated credit adjustments of trade receivables and payables are assumed to approximate their fair values.

The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Council for similar financial instruments.

(h) Receivables

Receivables are initially recognised at fair value and subsequently measured at amortised cost, less any provision for impairment. Receivables (excluding Rates & Annual Charges) are generally due for settlement no more than 30 days from the date of recognition.

The collectibility of receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off in accordance with Council’s policy.

A provision for impairment (ie. an allowance account) relating to receivables is established when there is objective evidence that the Council will not be able to collect all amounts due according to the original terms of each receivable.

The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate.

Impairment losses are recognised in the Income Statement within other expenses.

When a receivable for which an impairment allowance had been recognised becomes uncollectible in a subsequent period, it is written off against the allowance account.

Subsequent recoveries of amounts previously written off are credited against other expenses in the income statement.

(i) Inventories

Raw Materials and Stores, Work in progress and Finished Goods

Raw materials and stores, work in progress and finished goods in respect of business undertakings are all stated at the lower of cost and net realisable value.

Cost comprises direct materials, direct labour and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the basis of normal operating capacity.

Costs are assigned to individual items of inventory on the basis of weighted average costs.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.


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Inventories held in respect of non-business undertakings have been valued at cost subject to adjustment for loss of service potential.

land Held for Resale/Capitalisation of Borrowing Costs

Land held for resale is stated at the lower of cost and net realisable value.

Cost is assigned by specific identification and includes the cost of acquisition, and development and borrowing costs during development.

When development is completed borrowing costs and other holding charges are expensed as incurred.

Borrowing costs included in the cost of land held for resale are those costs that would have been avoided if the expenditure on the acquisition and development of the land had not been made.

Borrowing costs incurred while active development is interrupted for extended periods are recognised as expenses.

(j) Infrastructure, property, plant and equipment (I,pp&e)

Acquisition of assets

Council’s non current assets are being progressively revalued to fair value in accordance with a staged implementation as advised by the Division of Local Government.

At balance date, the following classes of I,PP&E were stated at their Fair Value;

- Investment properties – refer Note 1(p),

- operational land (External Valuation)

- Buildings – Specialised/non Specialised (Externall Valuation)

- plant and equipment (as approximated by depreciated historical cost)

- Roads Assets incl. roads, bridges & footpaths Internal Valuation

- Drainage Assets Internal Valuation

- Bulk earthworks Internal Valuation

- land under Roads-using a shire average rate

The only remaining asset class that is to revalued in a future reporting period is;

- 2010/11: Community land, land improvements, other structures and other assets

Until the designated future reporting periods, the above remaining asset class is stated at cost (or deemed cost) less accumulated depreciation and any accumulated impairment losses.

Initial Recognition

On initial recognition, an assets cost is measured at its fair value, plus all expenditure that is directly attributable to the acquisition.

Where settlement of any part of an asset’s cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of recognition (ie. date of exchange) of the asset to arrive at fair value.

The discount rate used is the Council’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.

Where infrastructure, property, plant and equipment assets are acquired for no cost or for an amount other than cost, the assets are recognised in the financial statements at their fair value at acquisition date - being the amount that the asset could have been exchanged between knowledgeable willing parties in an arm’s length transaction.

Subsequent costs

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to Council and the cost of the item can be measured reliably.

All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.

Asset Revaluations (including Indexation)

In accounting for Asset Revaluations relating to Infrastructure, Property, Plant & Equipment:







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Increases in the carrying amounts arising on revaluation are credited to the asset revaluation reserve.

To the extent that the increase reverses a decrease previously recognised via the profit or loss, then increase is first recognised in profit or loss.

Decreases that reverse previous increases of the same asset are first charged against revaluation reserves directly in equity to the extent of the remaining reserve attributable to the asset, with all other decreases charged to the Income statement.

Water and sewerage network assets are indexed annually between full revaluations in accordance with the latest indices provided in the NSW Office of Water Rates Reference Manual.

For all other assets, Council assesses at each reporting date whether there is any indication that a revalued asset’s carrying amount may differ materially from that which would be determined if the asset were revalued at the reporting date.

If any such indication exists, Council determines the asset’s fair value and revalues the asset to that amount.

Full revaluations are undertaken for all assets on a 5 year cycle.

Capitalisation thresholds

Items of infrastructure, property, plant and equipment are not capitalised unless their cost of acquisition exceeds the following;

land - council land 100% Capitalised - open space 100% Capitalised - land under roads 100% Capitalised

plant & equipment Office Furniture > $5,000 Office Equipment > $5,000 Other Plant &Equipment > $5,000

Buildings & land Improvements Park Furniture & Equipment 100% Capitalised

Building - Construction/extensions 100% Capitalised - Renovations 100% Capitalised

Other Structures 100% Capitalised

Stormwater Assets Drains & Culverts 100% Capitalised Other 100% Capitalised

transport Assets Road construction & reconstruction 100% Capitalised Reseal/Re-sheet & major repairs: 100% Capitalised

Bridge construction & reconstruction 100% Capitalised

Depreciation

Depreciation on Council's infrastructure, property, plant and equipment assets is calculated using the straight line method in order to allocate an assets cost (net of residual values) over its estimated useful life.

Land is not depreciated.

Estimated useful lives for Council's I,PP&E include:

plant & equipment - Office Equipment expensed - Office furniture expensed - Computer Equipment expensed - Vehicles 4 years - Heavy Plant/Road Making equip. 5 years - Other plant and equipment 5 years

other equipment - Playground equipment 5 to 15 years - Benches, seats etc 10 to 20 years

Buildings - Buildings : Masonry 100 years - Buildings : Other 100 years

Stormwater Drainage - Drains 100 years - Culverts 100 years


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transportation Assets - Sealed Roads : Surface 20 years - Sealed Roads : Structure 50 years - Unsealed roads 20 years - Bridge : Concrete 100 years - Bridge : Other 50 years

- Road Pavements 60 years - Kerb, Gutter & Paths 40 years

other Infrastructure Assets- Bulk earthworks Infinite

All asset residual values and useful lives are reviewed and adjusted (where appropriate), at each balance sheet date.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount – refer Note 1(s) on Asset Impairment.

Disposal and De-recognition

An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal.

Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in Council’s Income Statement in the year the asset is derecognised.

(k) land

Land (other than Land under Roads) is in accordance with Part 2 of Chapter 6 of the Local Government Act (1993) classified as either Operational or Community.

This classification of Land is disclosed in Note 9(a).

(l) land under roads

Land under roads is land under roadways and road reserves including land under footpaths, nature strips and median strips.

Council has elected to recognise land under roads acquired before 1 July 2008 in accordance with AASB 1051.

Land under roads acquired after 1 July 2008 is recognised in accordance with AASB 116 – Property, Plant and Equipment.

(m) Intangible Assets

Council has not classified any assets as Intangible.

(n) Crown Reserves

Crown Reserves under Council’s care and control are recognised as assets of the Council.

While ownership of the reserves remains with the Crown, Council retains operational control of the reserves and is responsible for their maintenance and use in accordance with the specific purposes to which the reserves are dedicated. Improvements on Crown Reserves are also recorded as assets, while maintenance costs incurred by Council and revenues relating the reserves are recognised within Council’s Income Statement.

Representations are currently being sought across State and Local Government to develop a consistent accounting treatment for Crown Reserves across both tiers of government.

(o) Rural Fire Service assets

Under section 119 of the Rural Fires Act 1997, “all fire fighting equipment purchased or constructed wholly or from money to the credit of the Fund is to be vested in the council of the area for or on behalf of which the fire fighting equipment has been purchased or constructed”.

At present, the accounting for such fire fighting equipment is not treated in a consistent manner across all Councils.

Until such time as discussions on this matter have concluded and the legislation changed, Council will continue to account for these assets as it has been doing in previous years, which is to exclude the







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assets, their values and depreciation charges from these financial statements.

(p) Investment property

Investment property comprises land &/or buildings that are principally held for long-term rental yields, capital gains or both that is not occupied by Council.

Investment property is carried at fair value, representing an open-market value determined annually by external valuers.

Annual changes in the fair value of Investment Properties are recorded in the Income Statement as part of “Other Income”.

(q) provisions for close down, restoration and for environmental clean up costs –including tips and Quarries

Close down, Restoration and Remediation costs include the dismantling and demolition of infrastructure, the removal of residual materials and the remediation of disturbed areas.

Estimated close down and restoration costs are provided for in the accounting period when the obligation arising from the related disturbance occurs, whether this occurs during the development or during the operation phase, based on the net present value of estimated future costs.

Provisions for close down and restoration costs do not include any additional obligations which are expected to arise from future disturbance.

Costs are estimated on the basis of a closure plan.

The cost estimates are calculated annually during the life of the operation to reflect known developments, eg updated cost estimates and revisions to the estimated lives of operations, and are subject to formal review at regular intervals.

Close down, Restoration and Remediation costs are a normal consequence of tip and quarry operations, and the majority of close down and restoration expenditure is incurred at the end of the life of the operations.

Although the ultimate cost to be incurred is uncertain, Council estimates the respective costs based on feasibility and engineering studies using current restoration standards and techniques.

The amortisation or ‘unwinding’ of the discount applied in establishing the net present value of provisions is charged to the income statement in each accounting period.

This amortisation of the disclosed as a borrowing cost in Note 4(b).

Other movements in the provisions for Close down, Restoration and Remediation costs including those resulting from new disturbance, updated cost estimates, changes to the estimated lives of operations and revisions to discount rates are capitalised within property, plant and equipment.

These costs are then depreciated over the lives of the assets to which they relate.

Where rehabilitation is conducted systematically over the life of the operation, rather than at the time of closure, provision is made for the estimated outstanding continuous rehabilitation work at each balance sheet date and the cost is charged to the income statement.

Provision is made for the estimated present value of the costs of environmental clean up obligations outstanding at the balance sheet date. These costs are charged to the income statement.

Movements in the environmental clean up provisions are presented as an operating cost, except for the unwind of the discount which is shown as a borrowing cost.

Remediation procedures generally commence soon after the time the damage, remediation process and estimated remediation costs become known, but may continue for many years depending on the nature of the disturbance and the remediation techniques.

As noted above, the ultimate cost of environmental remediation is uncertain and cost estimates can vary in response to many factors including changes to the relevant legal requirements, the emergence of new restoration techniques or experience at other locations.


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The expected timing of expenditure can also change, for example in response to changes in quarry reserves or production rates.

As a result there could be significant adjustments to the provision for close down and restoration and environmental clean up, which would affect future financial results.

Specific Information relating to Council's provisions relating to Close down, Restoration and Remediation costs can be found at Note 26.

(r) non-Current Assets (or Disposal Groups) “Held for Sale” & Discontinued operations

Non-current assets (or disposal groups) are classified as held for sale and stated at the lower of either (i) their carrying amount and (ii) fair value less costs to sell, if their carrying amount will be recovered principally through a sale transaction rather than through continuing use.

The exception to this is plant and motor vehicles which are turned over on a regular basis. Plant and motor vehicles are retained in Non Current Assets under the classification of Infrastructure, Property, Plant and Equipment - unless the assets are to be traded in after 30 June and the replacement assets were already purchased and accounted for as at 30 June.

For any assets or disposal groups classified as Non-Current Assets “held for sale”, an impairment loss is recognised at any time when the assets carrying value is greater than its fair value less costs to sell.

Non-current assets “held for sale” are not depreciated or amortised while they are classified as “held for sale”.

Non-current assets classified as “held for sale” are presented separately from the other assets in the balance sheet. A Discontinued Operation is a component of the entity that has been disposed of or is classified as “held for sale” and that represents a separate major line of business or geographical area of operations, is part of a single co-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale.

The results of discontinued operations are presented separately on the face of the income statement.

(s) Impairment of assets

All Council's I,PP&E is subject to an annual assessment of impairment.

Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount.

The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use.

For non-cash generating assets of Council such as roads, drains, public buildings etc - value in use is represented by the “deprival value” of the asset which is approximated as it’s written down replacement cost.

Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

Goodwill & other Intangible Assets that have an indefinite useful life and are not subject to amortisation are tested annually for impairment.

(t) payables

These amounts represent liabilities and include goods and services provided to the Council prior to the end of financial year which are unpaid.

The amounts for goods and services are unsecured and are usually paid within 30 days of recognition.

(u) Borrowings

Council do not have any borrowings as at 30/6/2010.

(v) Borrowing costs

Borrowing costs are expensed.







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Borrowing costs incurred for the construction of any qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale.

(w) provisions

Provisions for legal claims, service warranties and other like liabilities are recognised when:

Council has a present legal or constructive obligation as a result of past events;

it is more likely than not that an outflow of resources will be required to settle the obligation; and

the amount has been reliably estimated.

Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole.

A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the reporting date.

The discount rate used to determine the present value reflects current market assessments of the time value of money and the risks specific to the liability.

The increase in the provision due to the passage of time is recognised as interest expense.

(x) employee benefits

(i) Short term obligations

Short term employee benefit obligations include liabilities for wages and salaries (including non-monetary benefits), annual leave and vesting sick

leave expected to be settled within the 12 months after the reporting period.

Leave liabilities are recognised in the provision for employee benefits in respect of employees’ services up to the reporting date with other short term employee benefit obligations disclosed under payables..

These provisions are measured at the amounts expected to be paid when the liabilities are settled.

Liabilities for non vesting sick leave are recognised at the time when the leave is taken and measured at the rates paid or payable, and accordingly no Liability has been recognised in these reports.

Wages & salaries, annual leave and vesting sick leave are all classified as Current Liabilities.

(ii) other long term obligations

The liability for all long service and annual leave (which is not expected to be settled within the 12 months after the reporting period) are recognised in the provision for employee benefits in respect of services provided by employees up to the reporting date.

These liabilities are measured at the present value of the expected future payments to be made using the projected unit credit method.

Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service.

Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currency that match as closely as possible, the estimated future cash outflows.

Due to the nature of when and how Long Service Leave can be taken and transferability, all Long Service Leave has been classified as Current, as it has been deemed that Council does not have the unconditional right to defer settlement beyond 12 months – even though it is not anticipated that all employees will apply for and take their leave entitlements in the next 12 months.


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(iii) Retirement benefit obligations

All employees of the Council are entitled to benefits on retirement, disability or death.

Council contributes to various defined benefit plans and defined contribution plans on behalf of its employees.

Defined Benefit plans

A liability or asset in respect of defined benefit superannuation plans would ordinarily be recognised in the balance sheet, and measured as the present value of the defined benefit obligation at the reporting date plus unrecognised actuarial gains (less unrecognised actuarial losses) less the fair value of the superannuation fund’s assets at that date and any unrecognised past service cost.

The present value of the defined benefit obligation is based on expected future payments which arise from membership of the fund to the reporting date, calculated annually by independent actuaries using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service.

However, when this information is not reliably available, Council can account for its obligations to defined benefit plans on the same basis as its obligations to defined contribution plans – i.e. as an expense when they become payable.

Council is party to an Industry Defined Benefit Plan under the Local Government Superannuation Scheme, named the “Local Government Superannuation Scheme – Pool B”

This Scheme has been deemed to be a “multi employer fund” for the purposes of AASB 119.

Sufficient information is not available to account for the Scheme as a defined benefit plan (in accordance with AASB 119) because the assets to the scheme are pooled together for all Councils. Accordingly, Council’s contributions to the scheme for the current reporting year have been recognised as an expense and disclosed as part of Superannuation Expenses at Note 4(a).

The Local Government Superannuation Scheme has advised member councils that, as a result of the

global financial crisis, it has a significant deficiency of assets over liabilities amounting to around $2.6 million at 30 June 2010.

As a result, they have asked for significant increases in future contributions to recover that deficiency.

Council’s share of that deficiency cannot be accurately calculated as the Scheme is a mutual arrangement where assets and liabilities are pooled together for all member councils.

For this reason, no liability for the deficiency has been recognised in these financial statements.

Council has, however, disclosed a contingent liability in note 18 to reflect the possible obligation that may arise should the Scheme require immediate payment to correct the deficiency.

Defined Contribution plans

Contributions to Defined Contribution Plans are recognised as an expense as they become payable. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.

(iv) employee Benefit on-Costs

Council has recognised at year end the aggregate on-cost liabilities arising from employee benefits, and in particular those on-cost liabilities that will arise when payment of current employee benefits is made in future periods.

These amounts include Superannuation and Workers Compensation expenses which will be payable upon the future payment of certain Leave Liabilities accrued as at 30/6/10.

(y) Self insurance

Council does not self insure.

Council was in an insurance pool called Metropool but exited in October 2003.







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

In the determination of whether an asset or liability is classified as current or non-current, consideration is given to the time when each asset or liability is expected to be settled.

The asset or liability is classified as current if it is expected to be settled within the next 12 months, being the Council’s operational cycle.

exceptions

In the case of liabilities where Council does not have the unconditional right to defer settlement beyond 12 months (such as vested long service leave), the liability is classified as current even if not expected to be settled within the next 12 months.

In the case of inventories that are “held for trading”, these are also classified as current even if not expected to be realised in the next 12 months.

(aa) taxes

The Council is exempt from both Commonwealth Income Tax and Capital Gains Tax.

Council does however have to comply with both Fringe Benefits Tax and Goods and Services Tax (GST).

Goods & Services tax (GSt)

Income, expenses and assets are all recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office (ATO).

In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of the revenue / expense.

Receivables and payables within the Balance Sheet are stated inclusive of any applicable GST.

The net amount of GST recoverable from or payable to the ATO is included as a current asset or current liability in the Balance Sheet.

Operating cash flows within the Cash Flow Statement are on a gross basis, ie. they are inclusive of GST where applicable.

Investing and Financing cash flows are treated on a net basis (where recoverable form the ATO), ie. they are exclusive of GST. Instead, the GST component of investing and financing activity cash flows which are recoverable from or payable to the ATO are classified as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from (or payable to) the ATO.

(ab) new accounting standards and uIG interpretations

Certain new (or amended) accounting standards and interpretations have been published that are not mandatory for reporting periods ending 30 June 2010.

Council has not adopted any of these standards early.

Council’s assessment of the impact of these new standards and interpretations is set out below.

Applicable to local Government with implications:

AASB 9 Financial Instruments and AASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9 (effective from 1 January 2013)

AASB 9 Financial Instruments addresses the classification and measurement of financial assets and is likely to affect Council’s accounting for its financial assets.

The standard is not applicable until 1 January 2013 but is available for early adoption.

Council is yet to assess its full impact.

However, initial indications are that it may affect Council’s accounting for its available-for-sale financial assets, since AASB 9 only permits the recognition of fair value gains and losses in other comprehensive income if they relate to equity investments that are not held for trading.


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Fair value gains and losses on available-for-sale debt investments, for example, will therefore have to be recognised directly in profit or loss.

Applicable to local Government but no implications for Council;

AASB 2009-8 Amendments to Australian Accounting Standards – Group Cash-Settled Share-based Payment Transactions [AASB 2] (effective from 1 January 2010)

The amendments made by the AASB to AASB 2 confirm that an entity receiving goods or services in a group share-based payment arrangement must recognise an expense for those goods or services regardless of which entity in the group settles the transaction or whether the transaction is settled in shares or cash.

They also clarify how the group share-based payment arrangement should be measured, that is, whether it is measured as an equity- or a cash-settled transaction.

AASB 2009-10 Amendments to Australian Accounting Standards – Classification of Rights Issues [AASB 132] (effective from 1 February 2010)

In October 2009 the AASB issued an amendment to AASB 132 Financial Instruments: Presentation which addresses the accounting for rights issues that are denominated in a currency other than the functional currency of the issuer.

Provided certain conditions are met, such rights issues are now classified as equity regardless of the currency in which the exercise price is denominated. Previously, these issues had to be accounted for as derivative liabilities.

The amendment must be applied retrospectively in accordance with AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors.

AASB 2009-14 Amendments to Australian Interpretation – Prepayments of a Minimum Funding Requirement (effective from 1 January 2011)

In December 2009, the AASB made an amendment to Interpretation 14 The Limit on a Defined Benefit

Asset, Minimum Funding Requirements and their Interaction.

The amendment removes an unintended consequence of the interpretation related to voluntary prepayments when there is a minimum funding requirement in regard to the entity's defined benefit scheme.

It permits entities to recognise an asset for a prepayment of contributions made to cover minimum funding requirements.

Council does not make any such prepayments. The amendment is therefore not expected to have any impact on Council.

AASB Interpretation 19 Extinguishing financial liabilities with equity instruments and AASB 2009-13 Amendments to Australian Accounting Standards arising from Interpretation 19 (effective from 1 July 2010)

AASB Interpretation 19 clarifies the accounting when an entity renegotiates the terms of its debt with the result that the liability is extinguished by the debtor issuing its own equity instruments to the creditor (debt for equity swap).

It requires a gain or loss to be recognised in profit or loss which is measured as the difference between the carrying amount of the financial liability and the fair value of the equity instruments issued.

Applicable to local Government but not relevant to Council at this stage;

None

not applicable to local Government per se;

Revised AASB 124 Related Party Disclosures and AASB 2009-12 Amendments to Australian Accounting Standards (effective from 1 January 2011)

In December 2009 the AASB issued a revised AASB 124 Related Party Disclosures. It is effective for accounting periods beginning on or after 1 January 2011 and must be applied retrospectively.







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The amendment removes the requirement for government-related entities to disclose details of all transactions with the government and other government-related entities and clarifies and simplifies the definition of a related party.

(ac) Rounding of amounts

Unless otherwise indicated, amounts in the financial statements have been rounded off to the nearest thousand dollars.

(ad) Comparative Figures

To ensure comparability with the current reporting period’s figures, some comparative period line items and amounts may have been reclassified or individually reported for the first time within these financial statements and/or the notes.

(ae) Disclaimer

Nothing contained within these statements may be taken to be an admission of any liability to any person under any circumstance.`


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Ts

The

Hill

s S

hire

Cou

ncil

Not

es to

the

Fina

ncia

l Sta

tem

ents

for t

he fi

nanc

ial y

ear e

nded

30

June

201

0

Not

e 2(

a). C

ounc

il Fu

nctio

ns /

Act

iviti

es -

Fina

ncia

l Inf

orm

atio

n

1. In

clud

es: R

ates

& A

nnua

l Cha

rges

(inc

l. E

x-G

ratia

), U

ntie

d G

ener

al P

urpo

se G

rant

s &

Unr

estri

cted

Inte

rest

& In

vest

men

t Inc

ome.

Act

ual

2009

20

09

2010

Act

ual

Act

ual

Act

ual

2010

orig

inal

Act

ual

2010

20

10

2010

Gra

nts

incl

uded

in

Inco

me

from

C

ontin

uing

2009

Bud

get

orig

inal

ope

ratin

g R

esul

t fro

m

Con

tinui

ng o

pera

tions

2009

Bud

get

Act

ual

orig

inal

Act

ual

Act

ual

2010

$ '0

00

Inco

me,

exp

ense

s an

d A

sset

s ha

ve b

een

dire

ctly

attr

ibut

ed to

the

follo

win

g Fu

nctio

ns /

Act

iviti

es.

Det

ails

of t

hese

Fun

ctio

ns/A

ctiv

ities

are

pro

vide

d in

not

e 2(

b).

Inco

me

from

Con

tinui

ng

ope

ratio

nsex

pens

es fr

om C

ontin

uing

o

pera

tions

tota

l Ass

ets

held

(C

urre

nt &

non

-cur

rent

) F

unct

ions

/Act

iviti

es

Bud

get

2010

134,

897

480,

174

239,

901

86,1

21

48

,265

-

225,

961

Act

ual

Act

ual

2010

2009

69,5

90

66

,479

97,5

25

57

,448

tot

al F

unct

ions

& A

ctiv

ities

130,

487

ope

ratin

g R

esul

t fro

m64

,008

Joi

nt V

entu

res

(usi

ng th

e E

quity

Met

hod)

-

-

134,

545

122,

090

Con

tinui

ng o

pera

tions

64,9

55

103,

151

108,

034

-

-

97,5

25

-

-

31,0

59

(45,

703)

(8,9

94)

-

(31,

046)

(38,

444)

-

-

-

17,2

71

5,04

8-

6,67

44,

469

21,7

40

3,

270,

719-

3,31

5,23

6-

20,9

8026

,511

32

,962

64,0

08

Sha

re o

f gai

ns/(l

osse

s) in

Ass

ocia

tes

&

Gen

eral

Pur

pose

Inco

me

164

,642

64,9

55

18,9

39

64,6

42

-

-

103,

151

10

8,03

4

-

-

-

-

14,3

06

3,

315,

236

3,

270,

719

Vib

rant

Com

mun

ities

13,8

18

25

,703

23,1

93

41

,470

44,1

83

37

,813

(27,

652)

(5,8

42)

(1

8,48

0)

(14,

620)

5,68

5

(5,9

42)

607,

777

8,38

9

9,

322

(5,8

71)

Act

ive

Lead

ersh

ip1,

906

2,54

7

3,

380

Pro

tect

ed E

nviro

nmen

t18

,868

19,4

21

17

,638

21,3

95

21

,861

18,7

04

(2

,527

)

(2

,440

)

(1

,066

)

46

3,

665

Mod

ern

Loca

l Eco

nom

y-

33

24

(6

03)

31

20

659

80

1

627

(6

59)

(10,

914)

(768

)

21,8

86

22

,244

31,8

50

32

,800


page 26

2,50

2,37

9(8

,815

)

11

,449

5,57

3

2,86

8,25

7

-

Bal

ance

d U

rban

Gro

wth

22,8

56






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

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

BAlAnCeD uRBAn GRoWtHHousing, town planning, domestic waste management services, other waste management services, streetcleaning, other sanitation and garbage, urban stormwater drainage, environmental protection, public cemeteries,public conveniences, other community amenities.

Building control, abattoirs, quarries and pits, other.

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

MoDeRn loCAl eConoMYCamping areas, caravan parks, tourism and area promotion, industrial development promotion, saleyards &markets, real estate development, commercial nurseries, other business undertakings.

pRoteCteD enVIRonMentFire protection, animal control, beach control, enforcement of local government regulations, emergency services,other.

Administration and inspection, immunisations, food control, insect/vermin control, noxious plants, health centres,other.

ACtIVe leADeRSHIpCosts relating to the Council’s role as a component of democratic government, including elections, members feesand expenses, subscriptions to local authority associations, meetings of council and policy making committees,area representation and public disclosure and compliance, together with related administration costs.

VIBRAnt CoMMunItIeSAdministration, family day care, child care, youth services, other family and children, aged and disabled, migrantservices, Aboriginal services, other community services, education.

Public libraries, museums, art galleries, community centres, public halls, other cultural services, swimming pools,sporting grounds, parks and gardens (lakes), other sport and recreation.

page 27


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Note 3. Income from Continuing Operations

$ '000

(a). Rates & Annual Charges

ordinary RatesResidentialFarmlandBusinesstotal ordinary Rates

Special Rates

Annual Charges (pursuant to s.496 & s.501)Domestic Waste Management ServicesStormwater Management Servicestotal Annual Charges

TOTAL RATES & ANNUAL CHARGES

Council has used 2008 year valuations provided by the NSW Valuer General in calculating its rates.

75,746

18,619

57,127 54,983

575 566

16,741

71,724

15,259 939 1,482

Actual

48,132

6,285

Actual2009

50,253

6,299

2010Notes

17,680

page 28






Note 3. Income from Continuing Operations (continued)

$ '000

(b). User Charges & Fees

Specific user Charges (per s.502 - Specific "actual use" charges)

Nil

other user Charges & Fees(i) Fees & Charges - Statutory & Regulatory Functions (per s608, 610A & 611)Planning & Building RegulationRegistration FeesSection 603 CertificatesGeneral Administrationtotal Fees & Charges - Statutory/Regulatory

(ii) Fees & Charges - other(incl. General user Charges (per s.610C))Aged CareCemeteriesChild CareCorporate ServicesEngineering WorksLibraryOther Support ServicesParks & GardensPublic Hallstotal Fees & Charges - other

TOTAL USER CHARGES & FEES

1 21

170

120

1,457

4,179

380

1

4 3,586

358 239

493

2010Notes

2,985 322 202

19

1,212

3,102

- 645

98

2,559

7,247

Actual Actual 2009

12,192

4,145

106 179

1,691 1,566 8,606

432

page 29


fin

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$ '000

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

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

Interest Revenue is attributable to:unrestricted Investments/Financial Assets:Overdue Rates & Annual ChargesGeneral Council Cash & InvestmentsRestricted Investments/Funds - external:Development Contributions - Section 94Restricted Investments/Funds - Internal:Internally Restricted Assetstotal Interest & Investment Revenue Recognised

(d). Other Revenues

Fair Value Adjustments - Investment PropertiesRental Income - Investment PropertiesFinesLegal Fees Recovery - Rates & Charges (Extra Charges)

Insurance Claim RecoveriesBuilding ControlCommunity Services & EducationCorporate SupportEngineering WorksEnvironmental ProtectionPublic LibrariesTown PlanningUrban RoadsOtherTOTAL OTHER REVENUE

47 161

122 852

39 105

84 72

3,894

1,010 1,356

547

1,075 1,176

2,477

76

215

932 139

470

14

5,013

3,607

Notes

14

412

5,344

2009Actual

230 287

Actual

4,783

1,130 230

2,600

102

3,894 5,013

56 102

287

433 576

2,183

5,516 -

2010

420

- -

138 143

page 30







$ '000

(e). Grants

General purpose (untied)Financial Assistance - General Component

Financial Assistance - Local Roads Component

Pensioners' Rates Subsidies - General Component

total General purpose

Specific purposeAged CareBushfire & Emergency ServicesChild CareCommunity CareCommunity CentresEnvironmental ProtectionLibraryParks, Heritage & Cultural ServicesPlanningStreet LightingTransport (Roads to Recovery)

Transport (Other Roads & Bridges Funding)

Storm Drainage WorksStormwater DrainageOtherOthertotal Specific purposeTotal Grants

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

- 241

-

101

7,257

13,035

- 7,302

969

5,737

41 13,035

Capitaloperating

797

-

- - -

Capitaloperating2010

1,951

6,674

3,926

2009

1,624 3,235

874 5,733

93

4,510

128

420

-

217 428 741

10 596 -

96

14,085

7,343 6,646

6,895

- -

- -

6,895

-

3,449 766

-

-

1,626

6,895

- -

4,489 780

472

100

- -

223

-

-

2009

8,705

-

5,244 4

8,705

692 235 -

647

-

412

-

4,157

-

- -

-

1,399

- -

2010

-

14

9

- 19

-

- -

1,340

8,705 336

1,063 7,306

14,085

- 20 7,411

- 76 696 1,885

page 31


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$ '000

(f). Contributions

Developer Contributions:(s93 & s94 - ep&A Act, s64 of the nSW lG Act):S 94 - Contributions towards amenities/servicestotal Developer Contributions

other Contributions:Community ServicesDedications (Subdivider Dedications)

Fire ProtectionParks & GardensRoad WorksJoint Contamination ManagementCommunity FacilitiesOthertotal other ContributionsTotal Contributions

TOTAL GRANTS & CONTRIBUTIONS

operating2010

operating

-

-

-

-

-

15,076

991 1,292

14,327

-

67

98 -

82

2009

- 17 -

137 -

-

32 499

- 233 1,292

991

42 - - -

5,319

22,277

4,977 12,004

18,899

6,685 6,685

2009Capital

100

- 5,177

-

2010

- 69

4,793

57 58

8,595 8,595

Capital

13,572

160 -

57

918

page 32







$ '000

(g). Restrictions relating to Grants and Contributions

Certain grants & contributions are obtained by Council on conditionthat they be spent in a specified manner:

Unexpended at the Close of the Previous Reporting Period

add: Grants and contributions recognised in the current period which havenot been spent:

less: Grants an contributions recognised in a previous reporting periodwhich have been spent in the current reporting period:

net Increase (Decrease) inRestricted Assets during the Current Reporting period

unexpended at the Close of thisReporting period and held as Restricted Assets

Comprising: - Specific Purpose Unexpended Grants - Developer Contributions - Other Contributions

7,328

(922)

7,328

- - 6,818

- 7,328

20092010Actual

-

6,148

(7,070)

Actual

8,250

6,818

(510)

(4,654)

4,144

7,328

6,818

page 33


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Note 4. Expenses from Continuing Operations

$ '000

(a) Employee Benefits & On-Costs

Salaries and WagesEmployee Leave Entitlements (ELE)Superannuation - Defined Contribution Plans

Superannuation - Defined Benefit Plans

Workers' Compensation InsuranceFringe Benefit Tax (FBT)Training Costs (other than Salaries & Wages)

Othertotal employee Costsless: Capitalised CostsTOTAL EMPLOYEE COSTS EXPENSED

Number of "Equivalent Full Time" Employees at year end

(b) Borrowing Costs

Nil

(c) Materials & Contracts

Raw Materials & ConsumablesContractor & Consultancy CostsAuditors Remuneration i. Audit Services - Council's AuditorLegal Expenses:- Legal Expenses - Planning & Development- Legal Expenses - OtherOperating Leases:Operating Lease Rentals - Minimum Lease Payments (1)

total Materials & Contractsless: Capitalised CostsTOTAL MATERIALS & CONTRACTS

1. operating lease payments are attributable to:- Other

-

186

480 497

72

4,141

36,042

491

32,423

1,967

Actual2010

Actual

691

39,358

45,788

3,545

206

2,216

(616)

313 272

39,856

4,781

928 248

224

2009Notes

186 186 265

708

4,055 16,440

491

21,961

21,961

1,036

45,172

584

14,500

265

- 19,955

19,955

265

81

605

261

(498)

page 34






Note 4. Expenses from Continuing Operations (continued)

$ '000

(d) Depreciation, Amortisation & Impairment

Plant and EquipmentOffice EquipmentBuildings - Non SpecialisedBuildings - SpecialisedOther StructuresInfrastructure: - Roads, Bridges & Footpaths - Stormwater DrainageOther Assets - Othertotal Depreciation & Impairment Costsless: Capitalised Costsless: Impairments offset in ARR (Equity)

TOTAL DEPRECIATION &IMPAIRMENT COSTS EXPENSED

-

Actual

-

2009

Impairment Costs

- -

Notes

-

2010

-

- -

-

- -

-

9a

-

1,773

2,154

-

- -

-

-

Actual

- -

-

- 14,056 14,633

- -

14,633 14,056

-

1,126

- 1,748

Actual

2,154

Actual

1,505

83

-

6,964

Depreciation/Amortisation

89

2010

- 2,202

2,137

2009

25

6,729

-

- -

page 35


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Note 4. Expenses from Continuing Operations (continued)

$ '000

(e) Other Expenses

Other Expenses for the year include the following:

AdvertisingContributions/Levies to Other Levels of GovernmentCouncillor Expenses - Mayoral FeeCouncillor Expenses - Councillors' FeesCouncillors' Expenses (incl. Mayor) - Other (excluding fees above)Election ExpensesElectricity & HeatingFinance ChargesInsuranceOffice Expenses (including computer expenses)Professional ChargesStreet LightingTelephone & CommunicationsVoluntary ChargesProject Costs (amounts that are not materially individual)Othertotal other expensesless: Capitalised CostsTOTAL OTHER EXPENSES

- 26,268

26,268 787

237

3,535

2010

345

-

894

223

268 8,958

155

52

2009Actual Actual

680

727

2,286

6,300

810

639

Notes

225

775

1,889

24,156

684

146 595

-

51

34

3,427 5,640

24,156

303

8,184

313 363

899

page 36






Note 5. Gains or Losses from the Disposal of Assets

$ '000

Plant & EquipmentProceeds from Disposalless: Carrying Amount of P&E Assets Soldnet Gain/(loss) on Disposal

InfrastructureProceeds from Disposalless: Carrying Amount of Infrastructure Assets Soldnet Gain/(loss) on Disposal

Real Estate Assets Held For SaleProceeds from Disposalless: Carrying Amount of Real Estate Assets Soldnet Gain/(loss) on DisposalFinancial Assets*Proceeds from Disposalless: Carrying Amount of Financial Assets Sold / Redeemednet Gain/(loss) on Disposal

NET GAIN/(LOSS) ON DISPOSAL OF ASSETS 593

(68,047) -

68,047 52,477 (52,477)

-

Actual

- - -

Notes

7,184

- -

- (97)

6,629 (8,148)

16

14,777

(113)

1,352 (700)

1,168

652

2009

(575) 593

2010Actual

page 37


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Note 6a. - Cash Assets and Note 6b. - Investment Securities

$ '000

Cash & Cash Equivalents (Note 6a)Cash on Hand and at BankCash-Equivalent Assets1

- Deposits at Calltotal Cash & Cash equivalents

Investment Securities (Note 6b)- Term Deposits

total Investment SecuritiesTOTAL CASH ASSETS, CASHEQUIVALENTS & INVESTMENTS

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

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

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

Investmentsb. "Held to Maturity"Investments

note 6(b)Reconciliation of Investmentsclassified as "Held to Maturity"Balance at the Beginning of the YearAdditionsDisposals (sales & redemptions)Balance at end of Year

Comprising:- Term Deposits

total - -

- -

- 69,902

- 69,902

64,051 -

- -

-

69,902

7,217

69,902 -

Actual

77,119

7,217

-

-

non Current

4,194

- -

Current

3,023

-

ActualNotes

(87,104) 105,407

51,599

2009

-

Actual2010

-

64,051 64,051

67,365

3,314

3,314

64,051 6(b-ii)

-

-

-

69,902

non Current

69,902

(52,477) 46,626

64,051

64,051 69,902

69,902 -

-

-

2010

CurrentActual

3,134

- 180

64,051 -

-

-

2009

-

-

page 38






Note 6c. Restricted Cash, Cash Equivalents & Investments

$ '000

Total Cash, Cash Equivalents andInvestment Securities

attributable to:External Restrictions (refer below)

Internal Restrictions (refer below)

Unrestricted

$ '000

Details of Restrictions

external Restrictions - Included in liabilitiesNil

external Restrictions - otherDeveloper Contributions - General (D)Specific Purpose Unexpended Grants (F)Domestic Waste Management (G)Stormwater Levy (G)external Restrictions - othertotal external Restrictions

D Development contributions which are not yet expended for the provision of services and amenities in accordancewith contributions plans (refer Note 17).

F Grants which are not yet expended for the purposes for which the grants were obtained. (refer Note 1) G Water, Sewerage, Domestic Waste Management (DWM) & other Special Rates/Levies/Charges are externally

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

11,523

(21,215)

- 5,032 847 -

(510) 6,818 -

(21,735) (10)

--

Restrictions

- 77,119

-

transfers to Balance

transfers from

77,119

Restrictions

51,444 14,152

Actual2009

- 7,328

10 4,185

-

21,215

-

non Current CurrentActual

opening

67,365

67,365

2010

10,452

11,850

-

11,523 22,062 11,850 11,850

Current

-

non Current Actual

Closing

2009

- -

Balance

22,062 (21,735)

-

2010

45,063

Actual2010

11,523 -

page 39


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

$ '000

Internal RestrictionsRefer Next Page Break Uptotal Internal Restrictions

totAl ReStRICtIonS 31,180

51,444 9,118 9,118

56,913

45,063

(37,234)

(15,499) 51,444

62,967

openingBalance

2010

45,063

ClosingBalanceRestrictions

(15,499)

transfers to Restrictions

transfers from

page 40



The

Hill

s S

hire

Cou

ncil

Not

es to

the

Fina

ncia

l Sta

tem

ents

for t

he fi

nanc

ial y

ear e

nded

30

June

201

0

Not

e 6c

. Res

trict

ed C

ash,

Cas

h E

quiv

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ts &

Inve

stm

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(con

tinue

d)

loa

ns to

S94

not

iona

l $

'000

& B

ound

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Rd

Bal

ance

Inte

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Res

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Bal

com

be H

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Car

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Exp

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Car

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Cas

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Res

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296

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Rep

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R

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Res

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Res

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1,26

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11

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-

112

4,09

2

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-

-

67

5

page 41

1,61

0

37

9

-

6,

311

-

(2

,219

)

523

47

9

-

Financial Report 2010

12

-

-

12

-

-

-

-

1,98

9

6,24

3

-

(4,2

96)

1,

947

20

2

-

-

202

47

47

-

94

4,56

5

-

(3,9

89)

57

6

1,

152

669

-

1,82

1

825

-

-

82

5

10

7

25

-

13

2

23

6

-

(5

4)

182

4,72

7

10

7

-

4,

834

38

5

255

-

640

159

77

-

236

550

-

-

55

0

8,

396

-

(3

,707

)

4,68

9

1,51

3

-

(54)

1,

459

1,

578

4,71

8

-

6,29

6

3,88

3

1,

307

-

5,

190

3,

420

-

(9

20)

2,50

0

221

-

(140

)

81

Clo

sing

Bal

ance

Res

tric

tions

Res

tric

tions

Bal

ance

2009

ope

ning

tran

sfer

s to

tran

sfer

s fr

om


fin

an

Cia

l s

TaT

em

en

Ts

The

Hill

s S

hire

Cou

ncil

Not

es to

the

Fina

ncia

l Sta

tem

ents

for t

he fi

nanc

ial y

ear e

nded

30

June

201

0

Not

e 6c

. Res

trict

ed C

ash,

Cas

h E

quiv

alen

ts &

Inve

stm

ents

(con

tinue

d)

loa

ns to

S94

not

iona

l $

'000

& B

ound

ary

Rd

Bal

ance

Inte

rnal

Res

tric

tions

(con

tinue

d)

Rur

al L

and

Stu

dy-

87

Tour

ist I

nfor

mat

ion

Cen

tre-

10

0

W

orkp

lace

Ref

orm

-

2,54

8

Sto

rmw

ater

-

286

HC

C E

LE-

31

9

H

CC

Pla

nt

-

380

HC

C K

itche

n-

43

HC

C B

uild

ing

Upg

rade

-

149

HC

C W

orkp

lace

Ref

orm

-

26

H

CC

Pro

ject

-

126

HC

C H

ome

Mod

ifica

tion

and

Mai

nten

ance

-

82

H

CC

Dom

estic

Ass

ista

nce

-

13

H

CC

Cen

tre B

ased

CA

LD M

eals

-

4

HC

C F

acili

ty D

evel

opm

ent N

ew R

elea

sed

Are

as-

20

0

C

CC

ELE

/Bon

ds-

48

4

C

CC

Pro

ject

s-

80

tota

l Int

erna

l Res

tric

tions

26,7

21

71

,784

totA

l R

eStR

ICtI

on

S26

,721

83

,634

**th

e C

losi

ng B

alan

ce is

the

actu

al b

alan

ce. t

he n

otio

nal B

alan

ce is

sho

wn

to id

entif

y bo

rrow

ings

from

rese

rves

.

Financial Report 2010

page 42

62,9

67

31,1

80

(3

7,23

4)

56

,913

51,4

44

9,11

8

(1

5,49

9)

45

,063

-

80

-

80

-

48

4

-

48

4

20

0

-

-

200

4

-

-

4

13

-

-

13

82

-

-

82

126

-

-

12

6

26

-

-

26

149

-

-

14

9

43

-

-

43

324

56

-

380

319

-

-

31

9

23

0

56

-

28

6

2,

169

379

-

2,54

8

220

-

(120

)

10

0

87

-

-

87

Clo

sing

Bal

ance

Res

tric

tions

Res

tric

tions

Bal

ance

2009

ope

ning

tran

sfer

s to

tran

sfer

s fr

om






Note 7. Receivables

$ '000

purposeRates & Annual ChargesInterest & Extra ChargesAccrued Revenues - Interest on InvestmentsGovernment Grants & SubsidiesNet GST ReceivableDebtors - ApplicationsOther Debtorstotal

less: provision for ImpairmentOther Debtorstotal provision for Impairment - Receivables

TOTAL NET RECEIVABLES

externally Restricted ReceivablesDomestic Waste Managementtotal external RestrictionsInternally Restricted ReceivablesNilunrestricted ReceivablestotAl net ReCeIVABleS

notes on Debtors above:(i) Rates & Annual Charges Outstanding are secured against the property.

(ii) Doubtful Rates Debtors are provided for where the value of the property is less than the debt outstanding. An allowance for other doubtful debts is made when there is objective evidence that a receivable is impaired.

(iii) Interest is charged on overdue rates & charges at 9.00% (2009 10.00%).Generally all other receivables are non interest bearing.

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

774

7,3214,475 6,547

377

57

320 1,111

68 603 68

57

- 544 -

46

1,179

1,179377

2,171 5,239

499 512

Notes

29

2010

774 603

1,1795,078

7,321

(216) (216) -

-

- 65

377

283

non Current

(161)

65

-

972

2009Current

-

- -

-

142

5,078

(161)

non Current

423

1,941 222

7,537

Current

380 2,962

1,006

1,325 142

- 603 -

page 43


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Note 8. Inventories & Other Assets

$ '000

InventoriesReal Estate for resale (refer below)

Stores & Materialstotal Inventories

other AssetsPrepaymentstotal other Assets

TOTAL INVENTORIES& OTHER ASSETS

Details for Real estate DevelopmentResidentialtotal Real estate for Resale(Valued at the lower of cost and net realisable value)

Represented by:Acquisition Coststotal Costsless: Provision for Under Recoverytotal Real estate for Resale

Movements:Real Estate assets at beginning of the year- Purchases and other costs- WDV of Sales (exp)total Real estate for Resale

4,887 - 3,911 -

- 5,183 - (8,148)

- -

-

-

- 3,298

3,298

- 3,298

- -

- 401

4,305 221

2010

3,510 212

-

361 - -

non Current CurrentNotes

- -

401

Current

3,298

2009

-

non Current

-

3,298

-

4,305

- 3,298 - 4,305

4,305

361

- 3,298

6,263 -

-

4,305 -

- -

-

- -

4,526

4,305

4,305

-

3,298

-

- 1,007

5

page 44






Note 8. Inventories & Other Assets (continued)

$ '000

(i) Externally Restricted Assets

Nil

total externally Restricted Assetstotal Internally Restricted Assetstotal unrestricted AssetstotAl InVentoRIeS & otHeR ASSetS

(ii) Other Disclosures

(a) Current Assets not anticipated to be settled within the next 12 monthsThe following Inventories & Other Assets, even though classifiedas current are not expected to be recovered in the next 12 months;

Real Estate for Resale

3,911

-

4,305

3,911

-

3,298 4,305

2010 2009

-

- -

-

non Current 2009

non Current Current 2010

Current

4,887 - -

4,887-

- -

3,298

-

page 45


fin

an

Cia

l s

TaT

em

en

Ts

The

Hill

s S

hire

Cou

ncil

Not

es to

the

Fina

ncia

l Sta

tem

ents

for t

he fi

nanc

ial y

ear e

nded

30

June

201

0

Not

e 9a

. Inf

rast

ruct

ure,

Pro

perty

, Pla

nt &

Equ

ipm

ent

(1)E

xclu

des

inve

stm

ent p

rope

rties

and

non

cur

rent

ass

ets

held

for r

esal

e(2

)Ass

et p

urch

ases

wer

e m

ade

up o

f ass

et re

new

als

of $

15,1

52,0

00 a

nd n

ew a

sset

s of

$31

,747

,000

page 46


-

147,

019

-

415,

392

-

-

-

-

1,78

2,88

0

1,78

2,88

0-

5,71

8

-

-

-

5,71

8

3,49

4

-

-

-

5,37

0

-

-

-

-

11

2,59

0

41

,267

8

-

-

16

4,74

348

,301

48,3

01-

38

3,38

990

2,79

9-

51

9,41

0

224,

653

59

,910

2,58

7

86

,411

175,

986

-

93,0

69

-

5,

554

8,

141

3,65

8

-

4,89

9

542

-

15,4

36-

-

-

147,

019

-

-

-

-

-

41

5,39

2-

(1,5

49)

(153

,498

)-

-

-

-

55

6,20

2

(2,1

54)

11,0

80

(6

,964

)

Bui

ldin

gs -

Spe

cial

ised

-

-

6,86

1

-

Car

ryin

gA

tA

t

Rev

alua

tion

Incr

emen

ts to

E

quity

(AR

R)

Impa

irmen

t

Acc

umul

ated

542

2,39

7

17,9

38-

Ass

et M

ovem

ents

dur

ing

the

Rep

ortin

g Pe

riod

-

Ass

etA

dditi

ons

-

3,65

8

WD

Vof

Ass

et

Dis

posa

lsFa

ir Va

lue

Dep

reci

atio

nE

xpen

seA

djus

tmen

ts&

Tra

nsfe

rs

as a

t 30/

6/20

10

Valu

eD

ep'n

Cos

t

-

-

2,90

9

-

-

-

-

-

(1

,727

)

3,75

5

-

-

-

2,49

4

Pla

nt &

Equ

ipm

ent

Offi

ce E

quip

men

t-

-

Cap

ital W

ork

in P

rogr

ess

5,38

5

542

-

542

19,8

62

14

,515

-

$ '0

00D

epre

c.Fa

ir Va

lue

At

Cos

t

At

Acc

umul

ated

Impa

irmen

t

-

-

-

5,38

5

Valu

e

-

-

(2,1

54)

(575

)

5,34

7

2,28

1

as a

t 30/

6/20

09

Car

ryin

g

-

-

-

-

Com

mun

ity L

and

388,

426

-

-

388,

426

-

147,

019

Lan

d:

- O

pera

tiona

l Lan

d-

-

-

-

-

-

14

7,01

924

,057

-

Land

und

er R

oads

(pre

1/7

/08)

-

-

Land

und

er R

oads

(pos

t 30/

6/08

)1,

782,

880

-

3,22

4

-

-

1,

782,

880

-

-

-

-

-

-

-

3,

224

B

uild

ings

- N

on S

peci

alis

ed-

-

8,

224

5,

554

17

7,53

5

91,5

572,

670

-

Roa

ds, B

ridge

s, F

ootp

aths

694,

175

-

In

fras

truc

ture

:-

(1

,773

)-

-

85

,978

-

-

Bul

k E

arth

wor

ks (n

on-d

epre

ciab

le)

-

-

(83)

-

Sto

rmw

ater

Dra

inag

e21

5,40

7

69,7

42

1,

900

17

3

6,

861

13

7,97

3-

13

,962

-

145,

665

-

-

Oth

er A

sset

s:-

330,

826

-

3,

177,

837

47,1

54

(5

75)

(1

4,63

3)

P

RO

PE

RTY

, PLA

NT

& E

QU

IP.

1,37

2,60

1

2,13

6,06

2

TOTA

L IN

FRA

STR

UC

TUR

E,

3,22

9,11

5

570,

525

15

9,22

7

3,30

8,25

9-

49

1,38

1

-

Oth

er59

,123

-

10,9

43

(1

,505

)1,

414

-

60

,722

12,6

25

48

,097

-

48,1

80

-

(139

,895

)

-






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

$ '000

Council has no Externally Restricted Infrastructure, Property, Plant & Equipment.

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

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

Note 10a. Payables, Borrowings & Provisions

$ '000

PayablesGoods & Services - operating expenditureSecurity Bonds, Deposits & RetentionsTotal Payables

BorrowingsNil

ProvisionsEmployee Benefits;Annual LeaveSick LeaveLong Service LeaveGratuitiesSub Total - Aggregate Employee Benefits

Total Provisions

Total Payables,Borrowings & Provisions

(i) Liabilities relating to Restricted Assets

Nil

Disclosures on Liability Interest Rate Risk Exposures, Fair Value Disclosures & Security can be found in Note 15.

Actual Actual Notes 2010 2009

186

398

Non Current

25,185 398

398

-

-

-

-

212 322

322

Non Current

322

2009

7,337 463

12,168

10,255

Notes Current 2010

- 4,902

13,017 5,353

4,030 627

Current

-

2009 Non Current

Actual

Current

- 7,794 5,223

2010

Actual

-

Non Current

12,168

198 -

-

8,004

23,340

Current

833 3,535

124

13,085

13,085

424

page 47


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

$ '000

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

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

Provisions - Employees BenefitsPayables - Security Bonds, Deposits & Retentions

Note 10b. Description of and movements in Provisions

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

13,483 636

813 8,004

4,030

2009

7,372

ClosingBalance

as at 30/6/10

3,597 10,969

-

Remeasurement effects due to

Discounting

4,823

Decrease due to Payments

2009

Class of ProvisionOpeningBalance

as at 1/7/09

Additional Provisions

3,214 (2,719) 3,535 Sick Leave 957 21 (165) Annual Leave

661 46 Long Service Leave 7,337 1,541

TOTAL 12,490 Gratuities

(3,829) 4,822

- -

- -

(874) - - (71)

-

2010

Unused amounts reversed

13,357

2010

-

-

8,534

page 48






Note 11. Statement of Cash Flows - Additional Information

$ '000

(a) Reconciliation of Cash AssetsTotal Cash & Cash Equivalent AssetsLess Bank OverdraftBALANCE as per the STATEMENT of CASH FLOWS

(b) Reconciliation of Net Operating Result to Cash provided from Operating Activities

Net Operating Result from Income StatementAdjust for non cash items:Depreciation & AmortisationNet Losses/(Gains) on Disposal of AssetsNon Cash Capital Grants and ContributionsLosses/(Gains) recognised on Fair Value Re-measurements through the P&L: - Investment PropertiesNet Effect of incorporating the HCC 2008/2009 and CCC 2009/2010

+/- Movement in Operating Assets and Liabilities & Other Cash Items:Decrease/(Increase) in ReceivablesIncrease/(Decrease) in Provision for Doubtful DebtsDecrease/(Increase) in InventoriesDecrease/(Increase) in Other Current AssetsIncrease/(Decrease) in PayablesIncrease/(Decrease) in accrued Interest PayableIncrease/(Decrease) in other accrued Expenses PayableIncrease/(Decrease) in Other Current LiabilitiesIncrease/(Decrease) in Employee Leave EntitlementsIncrease/(Decrease) in Other ProvisionsNET CASH PROVIDED FROM/(USED IN)OPERATING ACTIVITIES from the STATEMENT of CASH FLOWS

Actual

- 7,217

2009

14,056

(5,177)

10

(593)

- -

40 (2,892)

26,511

(7,184)

7,217

32,962

(102)

(1,496)

-

55

(1,126)

596 -

256 34

443 3,285

(9)

838

48

38,189

(297)

- -

3,314

(4,793)

14,633

Actual

- 3,314 6a

2010

(576)

32,446

993 130

Notes

page 49


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Note 11. Statement of Cash Flows - Additional Information (continued)

$ '000

(c) Non-Cash Investing & Financing Activities

Other Dedications - Developer Contributions in kindTotal Non-Cash Investing & Financing Activities

(d) Financing Arrangements

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

Bank Overdraft Facilities (1)

Credit Cards / Purchase CardsOtherTotal Financing Arrangements

Amounts utilised as at Balance Date:- Bank Overdraft Facilities- Credit Cards / Purchase Cards- OtherTotal Financing Arrangements Utilised

1. The Bank overdraft facility may be drawn at any time and may be terminated by the bank without notice.

Interest rates on overdrafts are Interest Rates on Loans & Other Payables are disclosed in Note 15.

(ii) Secured Loan Liabilities

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

(e) Net Cash Flows Attributable to Discontinued Operations

Please refer to Note 24 for details of Cash Flows that relate to Discontinued Operations

-

15,000 32

- 15,032

-

5,177

-

4,793

32

2010

4,793

-

5,177

- - -

-

15,032

-

15,000

Actual 2009

Actual Notes

page 50






Note 12. Commitments for Expenditure

$ '000

(a) Capital Commitments (exclusive of GST)

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

Property, Plant & EquipmentBuildingsInfrastructureWaterwaysParksTotal Commitments

These expenditures are payable as follows:Within the next yearLater than one year and not later than 5 yearsLater than 5 yearsTotal Payable

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

(b) Other Expenditure Commitments (exclusive of GST)

Other Non Capital expenditure committed for at the reportingdate but not recognised in the financial statements as liabilities:

DWM & Recycling ServicesAudit ServicesTotal Commitments

These expenditures are payable as follows:Within the next yearLater than one year and not later than 5 yearsLater than 5 yearsTotal Payable

64,788

4,911

-

2009 Actual Actual

47,048

2010

274 -

4,911 3,453

4,911

4,911 -

64,863

-

4,911

75

16,272 38,534

8,514

47,048

48,591 -

64,863 -

- 47,048

3,453

3,453

3,453

3,453

4,514 397

- -

2,095 1,084

-

Notes

page 51


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Note 12. Commitments for Expenditure (continued)

$ '000

(c) Finance Lease Commitments

Nil

(d) Operating Lease Commitments (Non Cancellable)

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

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

(e) Investment Property Commitments

Nil

(f) Remuneration Commitments

Commitments for the payment of salaries & other remunerationunder long-term employment contracts in existence at reportingdate but not recognised as liabilities are payable:

Within the next yearLater than one year and not later than 5 yearsLater than 5 yearsTotal Payable

(g) Investment in Associates / Joint Ventures - Commitments

For Capital Commitments and Other Commitments relating to Investments in Associates & Joint Ventures, refer to Note 19 (b)

-

Notes 2009 Actual

220

- - - -

286

66

4,036

5,233 -

1,197 4,802 1,114

5,916 -

Actual 2010

page 52






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

$ '000

1. Unrestricted Current RatioCurrent Assets less all External Restrictions (1)

Current Liabilities less Specific Purpose Liabilities (2,3)

2. Debt Service RatioDebt Service CostRevenue from Continuing Operationsexcluding Capital Items & SpecificPurpose Grants/Contributions

3. Rates & Annual Charges Coverage RatioRates & Annual ChargesRevenue from Continuing Operations

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

5. Building & Infrastructure Renewals RatioAsset Renewals(4) [Buildings & Infrastructure]Depreciation, Amortisation & Impairment(Building & Infrastructure Assets)

Notes

(1) Refer Notes 6-8 inclusive. Also excludes any Real Estate & Land for resale not expected to be sold in the next 12 months(2) Refer to Note 10(a).(3) Refer to Note 10(c) - excludes all payables & provisions not expected to be paid in the next 12 months (incl. ELE).(4) Asset Renewals represent the replacement &/or refurbishment of existing assets to an equivalent capacity or performance

as opposed to the acquisition of new assets (or the refurbishment of old assets) that increases capacity/performance.

0.00%103,674

-

6.28 : 162,644 9,983

2010

0.00%

15,152 142.05%

Amounts2010 2008

54.97%

0.00%

5.63

Prior PeriodsIndicator

4.64%

146.44%

3.47%

57.57%

3.27%

4.97

2009

3,654

75,746 56.30%

10,974

134,545

78,757

138.07%

page 53


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

$ '000

This is well above the industry benchmark of 1

Rates and charges coverage has increasedslightly due to a reduction in interest revenueand less proceeds from sale of assets.

Commentary on 2009/10 Result

This is a good result under the currenteconomic conditions.

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

recovery efforts.


2009/10 Ratio 4.64%

Council remains debt free.2009/10 Ratio 0.00%

2009/10 Ratio 56.30%


Commentary on 2009/10 ResultPurpose of

Unrestricted Current Ratio

To assess the degree of Council's

dependence upon revenue from rates and annual charges and to assess the

security of Council's income.

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

the unrestricted activities of Council.

To assess the impact of loan principal &

interest repayments on the discretionary revenue of council.

Purpose of Rates & Annual Charges Coverage Ratio

Purpose of Rates & Annual Charges

Outstanding Ratio

Purpose of Debt Service Ratio

2009/10 Ratio 6.28 : 1

1. Unrestricted Current Ratio

6.955.63

4.976.28

0.0

2.0

4.0

6.0

8.0

10.0

2007 2008 2009 2010Year

Rat

io :

1

2. Debt Service Ratio

0.00% 0.00% 0.00% 0.00%0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

2007 2008 2009 2010

Year

Rat

io %

3. Rates & Annual Charges Coverage Ratio

65.74%

57.57%54.97% 56.30%

40%

50%

60%

70%

80%

2007 2008 2009 2010

Year

Rat

io %

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

2.66%3.27% 3.47%

4.64%

0.0%1.0%2.0%3.0%4.0%5.0%6.0%

2007 2008 2009 2010

Year

Rat

io %

page 54






Note 14. Investment Properties

$ '000

(a) Investment Properties at Fair value

Investment Properties on Hand

Reconciliation of Annual Movement:Opening Balance- Net Gain/(Loss) from Fair Value AdjustmentsCLOSING BALANCE - INVESTMENT PROPERTIES

(b) Valuation Basis

The basis of Valuation of Investment Properties is Fair Value, being the amounts for which the properties couldbe exchanged between willing parties in arms length transaction, based on current prices in an active marketfor similar properties in the same location and condition and subject to similar leases.

The 2010 revaluations were based on Independent Assessments made by:R.G. Furney Projects P/L (RVN 1500)

(c) Contractual Obligations at Reporting Date

Refer to Note 12 for disclosures relating to any Capital and Service obligations that have been contracted.

(d) Leasing Arrangements

Details of leased Investment Properties are as follows;

(e) Investment Property Income & Expenditure - summary

Rental Income from Investment Properties:- Minimum Lease PaymentsNet Revenue Contribution from Investment Propertiesplus:

Fair Value Movement for yearTotal Income attributable to Investment Properties

5,595

102

420

1,009

433

102 576 522

6,171

Notes

433 420

576

Actual

5,595

5,595

Actual 2010

5,493

6,171

2009

page 55


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Note 15. Financial Risk Management

$ '000

Risk Management

Council's activities expose it to a variety of financial risks including (1) price risk, (2) credit risk, (3) liquidity riskand (4) interest rate risk.

The Council's overall risk management program focuses on the unpredictability of financial markets and seeksto minimise potential adverse effects on the financial performance of the Council.

Council does not engage in transactions expressed in foreign currencies and is therefore not subject to foreigncurrency risk.

Financial risk management is carried out by Council's Finance Section under policies approved by the Council.

A comparison by category of the carrying amounts and fair values of Council's Financial Assets & FinancialLiabilities recognised in the financial statements is presented below.

Financial AssetsCash and Cash EquivalentsInvestments- "Held to Maturity"ReceivablesTotal Financial Assets

Financial LiabilitiesPayablesTotal Financial Liabilities

Fair Value is determined as follows:

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

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

- Financial Assets classified (i) "at far value through profit & loss" or (ii) Available for Sale - are based upon quoted market prices (in active markets for identical investments) at the reporting date or independent valuation.

6,257

13,017

83,376

3,314

2009 2010 Carrying Value

2010

13,017 11,649 13,017 13,017 11,649

6,257 69,902

7,698 64,051

3,314 7,217

7,698 69,902

7,217

75,063 83,376

10,255 10,255

Fair Value 2009

75,063

64,051

page 56






Note 15. Financial Risk Management (continued)

$ '000

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

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

Council's Finance Section manages it's Cash & Investments portfolio with the assistance of independentadvisors.

Council has an Investment Policy which complies with the Local Government Act & Minister's Investment Order.This Policy is regularly reviewed by Council and it's staff and an Investment Report is tabled before Council ona monthly basis setting out the portfolio breakup and its performance.

The major risk associated with Investments is price risk - the risk that the capital value of Investments mayfluctuate due to changes in market prices, whether there changes are caused by factors specific to individualfinancial instruments or their issuers or are caused by factors affecting similar instruments traded in a market.

Cash & Investments are also subject to interest rate risk - the risk that movements in interest rates could affectreturns and income.

A further risk associated with Cash & Investments is credit risk - the risk that the counterparty (to an investment)will not complete their obligations particular to a financial instrument, resulting in a financial loss to Council - beit of a capital or income nature.

Council manages these risks (amongst other measures) by diversifying its portfolio and only purchasinginvestments with high credit ratings or capital guarantees.

Council also seeks advice from independent advisers before placing any funds in Cash Equivalents &Investments.

The following represents a summary of the sensitivity of Council's Income Statement and Accumulated Surplus(during the reporting period) due to a change in either the price of a financial asset or the interest ratesapplicable.

It is assumed that the change in interest rates would have been constant throughout the reporting period.

2010 Possible impact of a 10% movement in Market ValuesPossible impact of a 1% movement in Interest Rates

2009 Possible impact of a 10% movement in Market ValuesPossible impact of a 1% movement in Interest Rates (771)

(674)

(771)

(674)

Equity Profit Decrease of Values/Rates

674

771

Equity Profit

771

Increase of Values/Rates

674

page 57


fin

an

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en

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$ '000

(b) Receivables

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

The major risk associated with these receivables is credit risk - the risk that debts due and payable to Councilmay not be repaid in full.

Council manages this risk by monitoring outstanding debt and employing stringent debt recovery procedures.It also encourages ratepayers to pay their rates by the due date through incentives.

Credit risk on rates and annual charges is minimised by the ability of Council to secure a charge over the landrelating to the debts - that is, the land can be sold to recover the debt. Council is also able to charge intereston overdue rates & annual charges at higher than market rates which further encourages the payment of debt.

The level of outstanding receivables is reported to Council monthly and benchmarks are set and monitored foracceptable collection performance.

Council makes suitable provision for doubtful receivables as required and carries out credit checks on mostnon-rate debtors.

There are no material receivables that have been subjected to a re-negotiation of repayment terms.

A profile of Council's receivables credit risk at balance date follows:

(i) Ageing of ReceivablesCurrent (not yet overdue)Past due by up to 30 daysPast due between 31 and 180 daysPast due between 181 and 365 daysPast due by more than 1 year

(ii) Movement in Provision for Impairment of ReceivablesBalance at the beginning of the year+ new provisions recognised during the yearBalance at the end of the year

2009

Receivables Other Annual

Rates & 2009

1,114 2,297

973

Charges

210 -

- 279

3,697 80

2009

4,121 65

-

161 54

215 161

Rates &

629

Receivables Other

2,843 849

217

4,669 3,245

2010

161

131

2010 2010

Annual Charges

3,245

page 58







$ '000

(c) Payables & Borrowings

Payables & Borrowings are both subject to liquidity risk - the risk that insufficient funds may be on hand tomeet payment obligations as and when they fall due.

Council manages this risk by monitoring its cash flow requirements and liquidity levels and maintaining anadequate cash buffer.

As well, payment terms can (in extenuating circumstances) be extended & overdraft facilities can be drawndown.

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

$ '000

Trade/Other PayablesTotal Financial Liabilities

Trade/Other PayablesTotal Financial Liabilities

Borrowings are also subject to interest rate risk - the risk that movements in interest rates could adversely affectfunding costs & debt servicing requirements. Council manages this risk through the diversification of borrowingtypes, maturities & interest rate structures.

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

Trade/Other Payables

- -

5,353 4,902

- 5,353 4,902

10,255

Value10,255

Interest Rate

-

Carrying2009

-

-

Average

- -

-

2010

-

-

TotalCash

Actual

- 10,255 10,255 -

10,255 10,255

4-5 Yrs

---

5,223 7,794 -

2-3 Yrs 3-4 Yrs > 5 Yrs

7,794

-

-5,223

payable in:

2010

to noSubject

maturity 1-2 Yrs≤ 1 Year

2009

13,017

13,017 13,017

13,017 13,017

OutflowsCarrying

13,017 Nil

Values

Value

-

Carrying

Nil

Interest RateAverage

page 59


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an

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Note 16. Material Budget Variations

$ '000

Council's Original Financial Budget for 09/10 was incorporated as part of its Management Plan and wasadopted by the Council on 23rd June 2009.

While the Income Statement included in this General Purpose Financial Report must disclose the OriginalBudget adopted by Council, the Local Government Act requires Council to review its Financial Budget on aQuarterly Basis, so that it is able to manage the various variations between actuals versus budget thatinvariably occur throughout the year.

This Note sets out the details of MATERIAL VARIATIONS between Council's Original Budget and its Actualresults for the year as per the Income Statement - even though such variations may have been adjusted forduring each Quarterly Budget Review.

Material Variations represent those variances that amount to 10% or more of the original budgeted figure.

Note that for Variations: F = Favourable Budget Variation, U = Unfavourable Budget Variation

$ '000

REVENUES

Rates & Annual Charges

User Charges & Fees

Interest & Investment RevenueDue to recent increases in interest rates, sound timing of investment maturity and greater than anticipated cash flow available for investing

Other RevenuesIncreased revenue due to Investment Property fair value adjustments,increased lease income,legal expense recovery and cemetery income

Operating Grants & ContributionsIncrease mainly due to increase in Financial Assistance Grant,increase in Pensioner rebate subsidy and RTA gra

Capital Grants & Contributions

Net Gains from Disposal of AssetsReduction in profit due to lower written down values than anticipated.

5,668

(34%)(312) U

F

F

159%

F

F

34%16,609

905 593

22,277

1,501

3,349

12,731

75,746

14,327

11,805

5,516

3,894

75,190

2010 Budget Actual

2010

12,192

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

556 F

2,393

2010

1,596

65%

F

1%

2,167

387 3%

13%

page 60






Note 16. Material Budget Variations (continued)

$ '000

EXPENSES

Employee Benefits & On-Costs

Borrowing Costs

Materials & Contracts

Depreciation & Amortisation

Other ExpensesIncrease mainly due to additional property development activities,street lighting costs,utilities costs and an increase in HCC expenditure

0% F

(8%) U

(2,546)

U

U

(1%)

(11%)

U

(181)

-

(543)

2010 ---------- Variance* ----------

(1%)

2010 2010

14,633

26,268

14,452

Actual

45,172

23,722

-

(1,613)

Budget

44,629

-

20,348 21,961

page 61


fin

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l s

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The

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page 62

Financial Statements

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page 63


701

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page 64


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(253

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208

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(9)

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(2,2

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(1,5

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90

(6,5

43)

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(3

1)

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nditu

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)

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still

outs

tand

ing

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ing

-

(5

,933

)

12

(236

)

(6

65)

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0)

(962

)



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es to

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he fi

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6 -

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page 65


3,09

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due/

(pay

able

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1,73

3

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ulat

ive

3,09

6

Inte

rnal

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row

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Bor

row

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Inte

rnal71

6

1

359

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ulat

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91

6

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rnal

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ulat

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100

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(pay

able

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row

ings 758

32

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tal

-

PUR

POSE

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ance

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er

Non

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hre

ceiv

ed d

urin

g th

e Ye

arO

peni

ngB

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(431

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(22)

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(223

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(337

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(2)

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pend

iture

(24)

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rnal

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row

ing

(90)

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(543

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(543

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Year

in Y

ear

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Inte

rest

earn

ed

Year

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row

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durin

g(to

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rnal (2

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(1

8)

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trib

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pend

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rest

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rest

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r

-

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trib

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337

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on C

ash-

(68)

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61

1

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inco

me

(504

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(4,7

67)

(668

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Exp (5

38)

-

-

18

22

2

-

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24

90

rece

ived

dur

ing

the

Year

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trib

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ns

Com

mun

ity F

acili

ties

-

PUR

POSE

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ning

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l

223

-

Year

-

2

(68)

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(3

,065

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(3

,065

)

-

(6,6

64)

-

-

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ectio

ns

(to)/f

rom

Inte

rnal

(und

er)

still

Ove

r or

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d as

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row

ing

Ass

etR

estr

icte

d

-

inco

me

outs

tand

ing

-

-

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reFu

ndin

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(3,0

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3,77

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et

-

-

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re 260

-

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d as

-

-

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tric

ted

-

-

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earn

ed

611

-

Cas

h

-

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rece

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dur

ing

the

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-

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-

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ning

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l

Bal

ance

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ds-

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ds-

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n S

pace

-

C

omm

unity

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ilitie

s

Roa

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pen

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ce

PUR

POSE

-

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ash

still

(139

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(und

er)

Fund

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sset

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tric

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-

in

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r

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d as

6

(2

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528

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r or

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(278

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2,15

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(139

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-

Fund

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r or

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(und

er)(662

)

outs

tand

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983

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fin

an

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l s

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Ts

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he fi

nanc

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ear e

nded

30

June

201

0

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e 17

. Sta

tem

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ontri

butio

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ontin

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NTR

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DER

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7 -

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NTR

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8 -

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5,95

5

13,7

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6,

137

3,93

4

12

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ulat

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118

(3

40)

6,16

1

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rnal

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row

ings

page 66

-

Tota

l

-

Oth

er-

47

-

-


1,95

8

(1

1,93

4)

2,27

6

1,

915

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Year

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7

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trib

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in

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rre

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on C

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18

337

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tal

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trib

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-

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362

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pen

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ceC

omm

unity

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s-

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fic F

acili

ties

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ds

PUR

POSE

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mun

ity F

acili

ties

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n S

pace

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d as

-

-

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et

-

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tric

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(18)

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1,94

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(370

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551

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row

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7)

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(974

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197

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222

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rnal

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d as

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er)

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r or

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ndin

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ndin

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(7)

(8

45)

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still

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nditu

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(559

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in Y

ear

Inte

rest

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earn

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-

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2,38

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974

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oads

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nnin

g A

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e-

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(49,

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(9

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45,9

47

(und

er)

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-

4,39

2

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1

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r or

558

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12

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3

285

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370

3,

784

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e 17

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page 67

Cum

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able

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4

13

8

due/

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able

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120

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-

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r or

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44

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an

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ville


page 68

(6,6

58)

-

(1

,189

)

Tota

l10

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2

(200

,694

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(3

04,4

26)

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6,48

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35

86,0

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(22,

844)

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tric

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(1,8

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r or

38

(143

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484

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176)

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n S

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rece

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2,52

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36

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1,94

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in Y

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earn

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377

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26

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157

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ance

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Year

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he fi

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. Sta

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3,

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row

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in Y

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-

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Year

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(to)/f

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Year

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hCon

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-

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tand

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424

(1,7

63)

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61)

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Fund

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-

-

-

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-

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-

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-

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2,18

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tric

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inco

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Hel

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rece

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dur

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n S

pace

-

-

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-

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-

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h

Con

trib

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-

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-

PUR

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-

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hre

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urin

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ar -

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pen

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fic F

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ties

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tern

aldu

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r or

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2,

187

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1

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(2

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3,62

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page 69

Non

Cas

h


fin

an

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l s

TaT

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Ts




Note 18. Contingencies & Other Assets/Liabilities Not Recognised

$ '000

The following assets and liabilities do not qualify for 2. Other Liabilitiesrecognition in the Balance Sheet, but their knowledge& disclosure is considered relevant to the users of (i)InsuranceCouncil's Financial Report.

Council currently have with present insurers anexcess on public liability claims of $100,000 per

LIABILITIES NOT RECOGNISED: claim & at 30/06/2010 a number of claims were withCouncil requiring determination and these could

1. Guarantees amount to $123,000.

(i) Defined Benefit Superannuation (ii) Property Contribution Plans

A number of matters are currently listed to be heardCouncil participates in an employer sponsored in the Land & Environment Court.Defined Benefit Superannuation Scheme, and makescontributions as determined by the Superannuation (iii) Third Party ClaimsScheme's Trustees.

The Council is involved from time to time in variousMember Councils bear responsibility of ensuring there claims incidental to the ordinary course of businessare sufficient funds available to pay out the required including claims for damages relating to its services.benefits as they fall due.

Council believes that it is appropriately coveredThe Schemes most recent full actuarial review for all claims through its Insurance Coverage andindicated that the Net Assets of the Scheme were does not expect any material liabilities to eventuate.not sufficient to meet the accrued benefits of theSchemes Defined Benefit member category and that (iv) S94 Plansmember Councils will need to make significantly Council levies Section 94/94A Contributions uponhigher contributions from 2009/10 & beyond. various development across the Council area through

the required Contributions Plans.The Local Government Superannuation Schemehowever is unable to provide Council with an accurate As part of these Plans, Council has received fundsestimate of its share of the net deficit and accordingly for which it will be required to expend the monies inCouncil has not recorded any net liability from it's accordance with those Plans.Defined Benefit Scheme obligations in accordancewith AASB 119. As well, these Plans indicate proposed future

expenditure to be undertaken by Council, which willFuture contributions made to the defined benefit be funded by making levies and receipting funds inscheme to rectify the net deficit position will be future years or where a shortfall exists by the use ofrecognised as an expense when they become Council's General Funds.payable - similar to the accounting for DefinedContributions Plans.

page 70






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

$ '000

LIABILITIES NOT RECOGNISED (continued): ASSETS NOT RECOGNISED:

2. Other Liabilities (continued) (i) Infringement Notices/Fines

(iv) S94 Plans (continued) Fines & Penalty Income, the result of Council issuingInfringement Notices is followed up and collected by

These future expenses do not yet qualify as liabilities the Infringement Processing Bureau.as of the Reporting Date, but represent Councilsintention to spend funds in the manner and timing Councils Revenue Recognition policy for suchset out in those Plans. income is to account for it as revenue on receipt.

Accordingly, at Year End, there is a potential assetFuture projections indicate a shortfall of $418 million due to Council representing issued but updatedover the life of the plans. Infringement Notices.

(v) HIH Insurance Due to the limited information available on the status,value and duration of outstanding Notices, Council is

Upon investigation, Council has determined that unable to determine the value of outstanding income.through Metropool, its public risk & professionalindemnity insurance cover for the period 1992 - 1996 (ii) Metropoolwas insured with the HIH group of companies.

Council was a member of an Insurance Pool,At this point in time, there are no outstanding claims. Metropool, but exited in October 2003.

Metropool is considered to be a Joint Venture butThe statutory period has lapsed (3 yrs) with the only has not been incorporated in Council's Accounts onexception being that any minors that may have been the basis of materiality.injured in the 4 year period may lodge a claim up tothe age of 21, although the likelihood of any claims is Council still has however, an equity position in thethought to be minimal. pool based on its past membership.

(vi) Potential Land Acquisitions due to Planning In accordance with the most recent unaudited Restrictions imposed by Council Financial Report on Metropool (as at 30/6/10), the

pool dislcoses net assets over liabilities of $4.442m.Council has classified a number of privately owned The Hills Shire Council's equity is $575,000.land parcels as Local Open Space or Bushland.

As a result, where notified in writing by the variousowners, Council will be required to purchase theseland parcels.

At reporting date, reliable estimates as to the valueof any potential liability (& subsequent land asset)from such potential acquisitions has not beenpossible.

page 71


fin

an

Cia

l s

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em

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Ts




Note 19. Controlled Entities, Associated Entities & Interests in Joint Ventures

Council has no interest in any Controlled Entities, Associated Entities or Joint Ventures.

Note 20. Equity - Retained Earnings and Revaluation Reserves

$ '000

a. Retained Earnings

Movements in Retained Earnings were as follows:Balance at beginning of Year (from previous years audited accounts)

a. Correction of Prior Period Errorsb. Changes in Accounting Policies (Prior Period Effects)c. Other Comprehensive Income (excl. direct to Reserves transactions)d. Net Operating Result for the Yeare. Distributions to/(Contributions from) Minority Interestsf. Transfers between Equityg. Other ChangesBalance at End of the Reporting Period

b. Reserves

(i) Reserves are represented by:

- Infrastructure, Property, Plant & Equipment Revaluation ReserveTotal

(ii). Reconciliation of movements in Reserves:

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

TOTAL VALUE OF RESERVES

(iii). Nature & Purpose of Reserves

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

89,775

89,775 249,002

249,002 9(a)

249,002

3,155,437

89,775

3,042,496

-

32,962

20 (d)

Actual

20 (c) - 3,155,437

(139,895)

- -

26,511

-

159,227

443

89,775

249,002

2010 Notes

-

1,335,836

3,759 1,782,880

2009 Actual

- 89,775

89,775

- -

page 72






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

$ '000

c. Correction of Error/s

Council had not previously reassessed the useful lives of its Roads,Drainage,Bridges and Stormwater assets and as a result it was foundthat depreciation had been understated.

A revaluation exercise in the 2010 year identified this error and an adjustmenthas been made against the current year balances of IPPE and RetainedEarnings to correct the errors due to the impracticality of restating the prioryear comparatives.

These amounted to the following Equity Adjustments:

- Road depreciation understated- Drainage depreciation overstated

2009 Actual

2010 NotesActual

- -

-

(139,895)

(153,857) 13,962

page 73


fin

an

Cia

l s

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en

Ts




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

$ '000

d. Voluntary Changes in Accounting Policies

Recognition of Land Under Roads (YE 08/09)

Council recognised for the first time (in last year's Accounts) Land UnderRoads (LUR) in accordance with the application of AASB 1051 - LandUnder Roads.

This was a result of Council's election to recognise LUR owned by Councilas at 1/7/08.

This has had the effect of increasing I,PP&E by:

Consolidation of Hills Community Care(HCC) Accounts YE 08/09Consolidation of Child Care Centre(CCC) Accounts 09/10

Council has incorporated the Hills Community Care into its accounts forthe first time in 08/09 and Child Care Centres in 09/10

In previous years Council had not consolidated the operations and balancesheet of the HCC and CCC into it's Financial Reports.

Council's Balance Sheet incorporated the following balances as at 30/6/10

- Cash- Debtors- I,P,P,E- Liabilities

In accordance with AASB 108 - Accounting Policies, Changes inAccounting Estimates and Errors, the above changes inAccounting Policy have been recognised retrospectively.

These amounted to the following Equity Adjustments: 443 3,759

(878)

Notes 2010

920 146

(297)

3,285 120

255 651

1,782,880 -

Actual 2009

Actual

443 3,759

page 74






Note 21. Financial Result & Financial Position by Fund

Income Statement by FundCouncil's operations are all funded out of a General Fund only.

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

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

Note 23. Events occurring after Balance Sheet Date

Events that occur after the reporting date of 30 June 2010, up to and including the date when the financialstatements are "authorised for issue" have been taken into account in preparing these statements.

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

Accordingly, the "authorised for issue" date is 14/09/10.

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

(i) Events that have provided evidence of conditions that existed at the Reporting Date

These financial statements (and the figures therein) incorporate all "adjusting events" that provided evidence ofconditions that existed at 30 June 2010.

(ii) Events that have provided evidence of conditions that arose after the Reporting Date

These financial statements (and figures therein) do not incorporate any "non adjusting events" that haveoccurred after 30 June 2010 and which are only indicative of conditions that arose after 30 June 2010.

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

Actual Actual

2010 2009

Actual Actual

page 75


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Note 24. Discontinued Operations

$ '000

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

Note 25. Intangible Assets

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

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

Note 26. Reinstatement, Rehabilitation & Restoration Liabilities

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

2010 Actual Actual

2009

page 76



The

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page 77


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page 78


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page 79


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page 86


page 87


The hills shire CounCilSpecial Purpose Financial Statements 2009-2010




SPFS 2010


Special Purpose Financial Statements for the financial year ended 30 June 2010

Contents

1. Statement by Councillors & Management

2. Special purpose Financial Statements:

- Income Statement of Water Supply Business Activity- Income Statement of Sewerage Business Activity- Income Statement of Other Business Activities

- Balance Sheet of Water Supply Business Activity- Balance Sheet of Sewerage Business Activity- Balance Sheet of Other Business Activities

3. notes to the Special purpose Financial Statements

4. Auditor's Report

Background

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

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

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

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

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

In preparing these financial statements for Council's self classified Category 1 businesses and ABS defined activities,councils must (a) adopt a corporatisation model and (b) apply full cost attribution including tax equivalent regimepayments & debt guarantee fees (where the business benefits from councils borrowing position by comparison withcommercial rates).

n/a

page

n/an/a3

2

(iv)

5

4n/a

(i)

(ii)

9

(iii)

page 1

Contents page

1. statement by Councillors & management 91

2. special purpose financial statements:

income statement of other Business Activities 92

Balance sheet of other Business Activities 93

3. notes to the special purpose financial statements 94

4. auditor’s report 98


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SPFS 2010



Statement by Councillors and Management made pursuant to the Local Government Code of Accounting Practice and Financial Reporting

the attached Special purpose Financial Statements have been prepared in accordance with:

The NSW Government Policy Statement “Application of National Competition Policy toLocal Government”

The Division of Local Government Guidelines “Pricing & Costing for Council Businesses - A Guide to Competitive Neutrality”

The Local Government Code of Accounting Practice and Financial Reporting.

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

to the best of our knowledge and belief, these Financial Statements:

Present fairly the Operating Result and Financial Position for each of Council's declared BusinessActivities for the year, and

Accord with Council’s accounting and other records.

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

Signed in accordance with a resolution of Council made on 14 September 2010.

Councillor Peter Dimbrowsky Councillor Mike ThomasMAYoR CounCIlloR

Dave WalkerGeneRAl MAnAGeR / ReSponSIBle ACCountInG oFFICeR

page 2



SPFS 2010


Income Statement of Council's Other Business Activities for the financial year ended 30 June 2010

$ '000

Income from continuing operationsAccess chargesUser chargesFeesInterestGrants and contributions provided for non capital purposesProfit from the sale of assetsOther incometotal income from continuing operations

expenses from continuing operationsEmployee benefits and on-costsBorrowing costsMaterials and contractsDepreciation and impairmentLoss on sale of assetsCalculated taxation equivalentsDebt guarantee fee (if applicable)Other expensestotal expenses from continuing operationsSurplus (deficit) from Continuing operations before capital amounts

Grants and contributions provided for capital purposesSurplus (deficit) from Continuing operations after capital amounts

Surplus (deficit) from discontinued operationsSurplus (deficit) from All operations before taxless: Corporate Taxation Equivalent (30%) [based on result before capital]

SuRpluS (DeFICIt) AFteR tAX

plus opening Retained profitsplus/less: prior period Adjustmentsplus Adjustments for amounts unpaid:- Taxation equivalent payments- Debt guarantee fees- Corporate taxation equivalentadd:- Subsidy Paid/Contribution To Operationsless:- TER dividend paid- Dividend paidClosing Retained profits

Return on Capital %Subsidy from Council

-

-1.2%

1,232

-

16

-

264

-

ChildCare

HillsCommunity CareActual

768

2010Actual

2009Actual Actual

20092010

- - 1,004

65

- 3,154

- 149

-

(755) -

5,850 1,493 1,665

(624)

6,384

- 198

-

4,011 -

4,236

249 240 5,226

-

-

-

(755)

(755)

-

(624)

(624) -

-

3,172 -

632 259

1,036 797 240

3,304 - -

1,019

271

-

(243) -

(3)

18

188

544 88

4,456 4,091

-

108

3,429

4,459 210

(243) 4,334

28

-

(3)

- (3)

-

(3) -

1,047

188

-

-

-

-

4,180 -

33 216

- 27

-

-

- -

- -

-

(624)

-

854 -

3,295

(243)

- (243)

5,629

-

139

(755)

129

2,697

-

2,202

- - 271

- 139 129

-

-

-

-

-

-

-

- - -

1,047

-65.1% -25.6%

1,586

-34.3%-

2,202

867

page 3


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SPFS 2010


Balance Sheet of Council's Other Business Activities as at 30 June 2010

$ '000

ASSetSCurrent AssetsCash and cash equivalentsInvestmentsReceivablesInventoriesOtherNon-current assets classified as held for saletotal Current Assets

non-Current AssetsInvestmentsReceivablesInventoriesInfrastructure, property, plant and equipmentInvestments accounted for using equity methodInvestment propertyOthertotal non-Current AssetstotAl ASSetS

lIABIlItIeSCurrent liabilitiesPayablesInterest bearing liabilitiesProvisionstotal Current liabilities

non-Current liabilitiesPayablesInterest bearing liabilitiesProvisionsOther Liabilitiestotal non-Current liabilitiestotAl lIABIlItIeSNET ASSETS

eQuItYRetained earningsRevaluation reservesCouncil equity interestMinority equity interestTOTAL EQUITY

1,232

1,047

-

1,232

- -

1,412

1,243

695 -

-

373 251 1,663

-

2,290

427

- -

- -

-

- 251

-

-

-

- -

-

-

-

2010

1,412 851

-

-

-

990

-

-

373

1,917 -

-

76

-

2,438

-

-

-

-

2,198 - -

-

- -

-

-

(236)

354 194

-

-

- 612

-

1,586

1,243 -

-

-

- - - - 297

-

-

2,438 -

295

- -

2,202

2,202

1,586 -

1,586

ActualActual2009

317

-

Actual

- -

HillsCommunity Care

Category 1

(236)

2010

-

2009Actual

4

4 -

ChildCare

-

-

427

-

-

Category 1

431 2,2021,232

1,047

-

295

-

-

1,047

-

-

2,202 2,198

1,047 -

1,232-

-

- -

1,586

20

2,202

-

2,198

page 4



SPFS 2010



Contents of the Notes accompanying the Financial Statements

Details

Summary of Significant Accounting Policies

Water Supply Business Best Practice Management disclosure requirements

Sewerage Business Best Practice Management disclosure requirements n/a3

note page

1

2

6

n/a

page 5


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SPFS 2010


Notes to the Special Purpose Financial Statementsfor the financial year ended 30 June 2010

Note 1. Significant Accounting Policies

page 6

These financial statements are a Special Purpose Financial Statements (SPFS) prepared for use by Council and the Division of Local Government.

For the purposes of these statements, the Council’s business activities (reported herein) are not reporting entities.

These special purpose financial statements, unless otherwise stated, have been prepared in accordance with;

applicable Australian Accounting Standards,

other authoritative pronouncements of the Australian Accounting Standards Board,

Australian Accounting Interpretations,

the Local Government Act and Regulation, and

the Local Government Code of Accounting Practice and Financial Reporting.

The statements are also prepared on an accruals basis. They are based on historic costs and do not take into account changing money values nor current values of non-current assets (except where specifically stated).

Certain taxes and other costs (appropriately described) have been imputed for the purposes of the National Competition Policy.

national Competition policy

Council has adopted the principle of ‘competitive neutrality’ to its business activities as part of the national competition policy which is being applied throughout Australia at all levels of government.

The framework for its application is set out in the June 1996 Government Policy statement on the “Application of National Competition Policy to Local Government”.

The “Pricing & Costing for Council Businesses A Guide to Competitive Neutrality” issued by the Division of Local Government in July 1997 has also been adopted.

The pricing & costing guidelines outline the process for identifying and allocating costs to activities and provide a standard of disclosure requirements. These

disclosures are reflected in Council’s pricing and/or financial reporting systems and include taxation equivalents; council subsidies; return on investments (rate of return); and dividends paid.

Declared Business Activities

In accordance with Pricing & Costing for Council Businesses - A Guide to Competitive Neutrality, Council has declared that the following are to be considered as business activities:

Category 1

(where gross operating turnover is over $2 million)

a. Child Care Provision of Child Care Service

b. HCC Provision of Aged Care Service

Category 2

(where gross operating turnover is less than $2 million)

Council do not consider any of our other activities as Category 2 business activities.

Monetary Amounts

Amounts shown in the financial statements are in Australian currency and rounded to the nearest one thousand dollars.

(i) taxation equivalent Charges

Council is liable to pay various taxes and financial duties in undertaking it's business activities. Where this is the case, they are disclosed in these statements as a cost of operations just like all other costs.

However, where Council is exempt from paying taxes which are generally paid by private sector businesses (such as income tax), equivalent tax payments have been applied to all Council nominated business activities and are reflected in these financial statements.



SPFS 2010



Note 1. Significant Accounting Policies (continued)

page 7

For the purposes of disclosing comparative information relevant to the private sector equivalent, the following taxation equivalents have been applied to all council nominated business activities (this does not include council’s non-business activities):

notional Rate Applied %

Corporate Income Tax Rate – 30%

Land Tax – The first $376,000 of combined land values attracts 0%. From $376,001 to $2,299,000 the rate is 1.6% + $100. For the remaining combined land value that exceeds $2,299,000, a premium marginal rate of 2.0% applies.

Payroll Tax – 5.65% on the value of taxable salaries and wages in excess of $638,000.

Income tax

An income tax equivalent has been applied on the profits of the business.

Whilst income tax is not a specific cost for the purpose of pricing a good or service, it needs to be taken into account of in terms of assessing the rate of return required on capital invested.

Accordingly, the return on capital invested is set at a pre-tax level (gain/(loss) from ordinary activities before capital amounts) as would be applied by a private sector competitor – that is, it should include a provision equivalent to the corporate income tax rate, currently 30%.

Income Tax is only applied where a positive gain/(loss) from ordinary activities before capital amounts has been achieved.

Since this taxation equivalent is notional - that is, it is payable to the “Council” as the owner of business operations, it represents an internal payment and has no effect on the operations of the council. Accordingly, there is no need for disclosure of internal charges in Council's GPFS.

The rate applied of 30% is the equivalent company tax rate prevalent as at balance date. No adjustments have been made for variations that have occurred during the year.

local Government Rates & Charges

A calculation of the equivalent rates and charges payable on all Category 1 businesses has been applied to all land assets owned or exclusively used by the business activity.

loan & Debt Guarantee Fees

The debt guarantee fee is designed to ensure that council business activities face “true” commercial borrowing costs in line with private sector competitors.

In order to calculate a debt guarantee fee, council has determined what the differential borrowing rate would have been between the commercial rate and the council’s borrowing rate for its business activities.

(ii) Subsidies

Government policy requires that subsidies provided to customers and the funding of those subsidies must be explicitly disclosed.

Subsidies occur where council provides services on a less than cost recovery basis. This option is exercised on a range of services in order for council to meet its community service obligations.

Accordingly, Subsidies disclosed (in relation to National Competition Policy) represents the difference between revenue generated from ‘rate of return’ pricing and revenue generated from prices set by the council in any given financial year.

The overall effect of subsidies is contained within the Income Statement of Business Activities.

(iii) Return on Investments (Rate of Return)

The Policy statement requires that councils with Category 1 businesses “would be expected to generate a return on capital funds employed that is comparable to rates of return for private businesses operating in a similar field”.

Such funds are subsequently available for meeting commitments or financing future investment strategies.


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Note 1. Significant Accounting Policies (continued)

page 8

The Rate of Return on Capital is calculated as follows:

operating Result before Capital Income + Interest expense

Written Down Value of I,pp&e as at 30 June

As a minimum, business activities should generate a return equal to the Commonwealth 10 year bond rate which is 5.10% at 30/6/10.

The actual rate of return achieved by each business activity is disclosed at the foot of each respective Income Statement.

(iv) Dividends

Council is not required to pay dividends to either itself as owner of a range of businesses or to any external entities.



page 9

The hills shire CounCilSpecial Schedules 2009-2010




Contents page

special schedules1

special schedule no. 1 net Cost of services 101

special schedule no. 7 Condition of Public Works 103

special schedule no. 8 Financial Projections 105

Special Schedules 2010


Special Schedules for the financial year ended 30 June 2010

Contents

Special Schedules1

Net Cost of Services

Statement of Long Term Debt (all purposes)

Statement of Internal Loans (Sect. 410(3) LGA 1993)

Water Supply - Income StatementWater Supply - Balance Sheet

Sewerage Service - Income StatementSewerage Service - Balance Sheet

- notes to Special Schedules no. 3 & 5

Condition of Public Works

Financial Projections

1 Special Purpose Schedules are not audited.

Background

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

the NSW Grants Commissionthe Australian Bureau of Statistics (ABS),the NSW Office of Water,the Department of Environment, Climate Change and Water, andthe Division of Local Government (DLG).

The financial data is collected for various uses including;

the allocation of Financial Assistance Grants,the incorporation of Local Government financial figures in national statistics,the monitoring of loan approvals,the allocation of borrowing rights, andthe monitoring of the financial activities of specific services.

(ii)

- Special Schedule no. 6

6

4- Special Schedule no. 7

n/a

n/a

- Special Schedule no. 2(b)

- Special Schedule no. 3n/a


(i)

- Special Schedule no. 5 n/a

page

2

n/a

n/a


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


page 1


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Special Schedule No. 1 - Net Cost of Services for the financial year ended 30 June 2010

$'000

Administration

public order and Safety

Beach ControlEnforcement of Local Govt RegsAnimal ControlOthertotal public order & Safety

Health

environmentNoxious Plants and Insect/Vermin ControlOther Environmental ProtectionSolid Waste ManagementStreet CleaningDrainageStormwater Managementtotal environment

Community Services and educationAdministration & EducationSocial Protection (Welfare)Aged Persons and DisabledChildrens Servicestotal Community Services & education

Housing and Community AmenitiesPublic CemeteriesPublic ConveniencesStreet LightingTown PlanningOther Community Amenitiestotal Housing and Community Amenities

Water Supplies

Sewerage Services

4,565 11,616

-

- -

- - -

Capital

Income fromcontinuing operations

3,306

18

441

-

- 9

-

939

expenses from continuingoperations non Capital

466

-

-

17,486 -

9

18

- -

-

12,652 -

-

(2,324)

-

-

-

17,515

- 8

2,937

- -

508

1,258

6,716 - 5,192

- -

-

- (3,175)

-

-

-

-

-

1,755

4,941

-

10,366

5,771

21,861

7,179

Fire Service Levy, Fire Protection, Emergency Services

-

2,004

2,286

-

- -

-

(9,346)

-

2,154

655

-

-

6,330

(7,060)

653

-

1,766

-

19,519

3,306

- -

Function or Activity

- -

net Costof Services

(746) -

(2,429)

(1,524)

-

-

-

(2,286)

-

-

(109)

18,139

4,456

-

(4,932)

(5,890)

-

491

(849)

(1,314)

830

-

-

647

(2,154)

-

page 2





Special Schedule No. 1 - Net Cost of Services (continued) for the financial year ended 30 June 2010

$'000

Recreation and CulturePublic LibrariesMuseumsArt GalleriesCommunity Centres and HallsPerforming Arts VenuesOther Performing ArtsOther Cultural ServicesSporting Grounds and VenuesSwimming PoolsParks & Gardens (Lakes)Other Sport and Recreationtotal Recreation and Culture

Fuel & energy

Agriculture

Mining, Manufacturing and ConstructionBuilding ControlOther Mining, Manufacturing & Constructiontotal Mining, Manufacturing and Const.

transport and CommunicationUrban Roads (UR) - LocalUrban Roads - RegionalSealed Rural Roads (SRR) - LocalSealed Rural Roads - RegionalUnsealed Rural Roads (URR) - LocalUnsealed Rural Roads (URR) - RegionalBridges on UR - LocalBridges on SRR - LocalBridges on URR - LocalBridges on Regional RoadsParking AreasFootpathsAerodromesOther Transport & Communicationtotal transport and Communication

economic AffairsCamping Areas & Caravan ParksOther Economic Affairstotal economic Affairs

Totals – FunctionsGeneral purpose Revenues(1)

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

net opeRAtInGReSult FoR YeAR(1) Includes: Rates & Annual Charges (incl. Ex Gratia), Untied General Purpose Grants & Interest on Investments (excl. Restricted Assets)

14,075

-

Income fromcontinuing operations

-

-

23,730 -

non Capital Capital

1,974 17,564 10,786

-

5,610 -

316

- -

- - - -

664

1,806

-

- -

- -

-

-

expenses from continuingoperations

- -

-

net Costof Services

-

-

-

-

(4,946)

-

-

112,440

-

108,034

-

108,034 22,277

2,253

802

19,817 3,086 -

10,786

2,786

-

47,313

-

-

-

-

-

1,112

802 34

-

-

- -

-

-

9,349

-

1,468 -

-

- -

-

-

34 -

- -

-

-

- -

- -

-

-

-

-

- -

- - -

- -

-

- -

(4,410) -

(10,127) -

- -

-

(771)

- -

-

-

-

-

10,817

-

-

-

-

-

(4,804) -

(768)

-

(5,945)

-

-

(1,141)

- (768)

-

-

(38,444)

26,683

-

65,127 -

22,277

Function or Activity

65,127

-

-

-

-

-

- -

- 4,045

-

-

-

-

-

-

page 3


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15,5

10

D

rain

age

Wor

ksD

rain

age

Infra

stru

ctur

e1.

00%

2,15

4

1,42

8

236,

640

71

,897

67,5

251,

088,

573

31

5,78

7

77

6,73

2

1,42

816

4,74

3

15,5

10

totA

l - A

ll A

SSet

S15

,152

2

236,

640

4 5

10,8

91

3,

946

1

71,8

972,

154

-

su

b to

tal


fin

an

Cia

l s

TaT

em

en

Ts



Special Schedule No. 8 - Financial Projections as at 30 June 2010

(1)

$ millions

(i) ReCuRRent BuDGetIncome from continuing operationsExpenses from continuing operations

operating Result from Continuing operations

(ii) CApItAl BuDGetNew Capital Works (2)

Replacement/Refurbishment of Existing Assetstotal Capital Budget

Funded by:– Loans– Asset sales– Reserves– Grants/Contributions– Recurrent revenue– Other

notes:(1) From 09/10 Income Statement.(2) New Capital Works are major non-recurrent projects, eg new Leisure Centre, new Library, new Swimming pool etc.(3) If Council has only adopted 3 years of projections then only show 3 years.

- 1 1 1

51 43 -

32 1

27

- -

18

52 - - - -

21 54

17 8 31

52

-

13 35 1 - 1

18 1

-

14

- 1

13 41 15 15 28 37 38

8 13 13 43 21 54 51

13/14

135 130 108 111 120

150 125

11/12 12/13

33 27 19

148 115

32

157

Actual09/10

Forecast10/11

30

Forecast(3)Forecast(3) Forecast

page 6


The hills shire CounCilannual reporT 2009-2010our General purpose financial statements

email: [email protected]

Phone: (02) 9843 0555

The hills shire Council

Po Box 75 Castle hill nsW 1765


the hills shire council · for the hills shire council. (ii) the hills shire council is a body...

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