Banyule City Council Ordinary Meeting 19 October 2015 - Item 6.1 Attachment 3

Annual Report 2014-2015 Part Three of Three Financial Report for the Year Ended 30 June 2015

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

Page 1

BANYULE CITY COUNCIL

Financial Report for the year ended 30 June 2015

Table of Contents

Page

FINANCIAL REPORT Financial Statements Comprehensive Income Statement Balance Sheet Statement of Changes in Equity Statement of Cash Flows Statement of Capital Works Notes to the Financial Statements Introduction Note 1 Significant accounting policies Note 2 Budget comparison Note 3 Rates and charges Note 4 Grants Note 5 Statutory fees and fines Note 6 User fees and charges Note 7 Interest income Note 8 Rental income Note 9 Contributions income Note 10 Net gain/(loss) on disposal of infrastructure, property, plant and equipment Note 11 Other income Note 12 Share of net profits/(losses) of Associates Note 13 Employee costs Note 14 Materials, contracts and services Note 15 Utility charges Note 16 Depreciation and amortization Note 17 Donations expenditure Note 18 Borrowing costs Note 19 Contributions expense Note 20 Other expenses Note 21 Auditors’ remuneration Note 22 Bad and doubtful debts Note 23 Cash and cash equivalents Note 24 Other financial assets Note 25 Trade and other receivables Note 26 Inventories Note 27 Non-current assets classified as held for sale Note 28 Other assets Note 29 Investments Note 30 Infrastructure, property, plant and equipment Note 31 Intangible assets Note 32 Trade and other payables Note 33 Provisions Note 34 Trust funds and deposits Note 35 Interest bearing loans and borrowings Note 36 Reserves Note 37 Reconciliation of cash flows from operating activities to surplus/(deficit) Note 38 Reconciliation of cash and cash equivalents Note 39 Financing arrangements Note 40 Superannuation Note 41 Contractual commitments Note 42 Operating leases

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

4 5 6 7 8 10 10 21 26 27 31 31 31 31 31 32 32 32 32 33 33 33 34 34 34 34 34 34 35 35 36 37 37 37 38 40 46 46 47 48 49 50 55 55 55 56 57 58

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BANYULE CITY COUNCIL

Financial Report for the year ended 30 June 2015

Contents (cont) Note 43 Note 44 Note 45 Note 46

Contingent liabilities Financial instruments Related party transactions Events occurring after balance date

Page 59 62 65 66

Certification of the Financial Statements

67

Independent Auditor’s Report

68

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

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BANYULE CITY COUNCIL Financial Report 2015

Comprehensive Income Statement for the year ended 30 June 2015

INCOME Rates and charges Grants - operating Grants - capital Statutory fees and fines User fees and charges Interest income Rental income Contributions income Net gain on disposal of infrastructure, property, plant and equipment Other income Share of net profits/(losses) of associates Total Income EXPENSES Employee costs Materials, contracts and services Utility charges Depreciation and amortization Donations expenditure Borrowing costs Contributions expense Net loss on disposal of infrastructure, property, plant and equipment Other expenses Total Expenses

Note

2015 $‘000

%

2014 $‘000

%

3 4 4 5 6 7 8 9

86,287 14,008 2,015 6,977 14,557 2,390 1,916 3,044

60.2 9.8 1.4 4.9 10.1 1.7 1.3 2.1

79,794 10,037 1,438 6,338 14,698 2,068 1,942 2,729

66.8 8.4 1.2 5.3 12.3 1.8 1.6 2.3

10 11 12

11,771 114 336 143,415

8.2 0.1 0.2 100.0

176 274 119,494

0.1 0.2 100.0

13 14 15 1(xiii),16 17 18 19

54,653 38,405 4,136 18,572 708 3,795 5,799

42.8 30.1 3.2 14.5 0.6 3.0 4.5

51,511 33,020 4,446 15,911 669 3,477 5,652

43.8 28.1 3.8 13.5 0.6 3.0 4.8

10 20

1,662 127,730

1.3 100.0

1,306 1,531 117,523

1.1 1.3 100.0

Surplus/(Deficit) for the year OTHER COMPREHENSIVE INCOME Items that will not be reclassified to surplus or deficit in future periods: Net asset revaluation increment/(decrement) Impairment loss Total Comprehensive Result

30(i) 27

15,685

1,971

(2,582) 13,103

50,314 52,285

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

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

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BANYULE CITY COUNCIL Financial Report 2015

Balance Sheet

as at 30 June 2015

ASSETS Current Assets Cash and cash equivalents Other financial assets Trade and other receivables Inventories Non-current assets classified as held for sale Other assets Total current assets Non-Current Assets Trade and other receivables Investments Infrastructure, property, plant and equipment Intangible assets Total non-current assets

Note

2015 $‘000

2014 $‘000

23 24 25 26 27 28

64,795 21,330 6,801 32 22,385 946 116,289

56,835 2,083 6,924 41 35,200 814 101,897

25 29 30 31

517 3,068 1,247,674 1,643 1,252,902

615 2,732 1,247,902 1,064 1,252,313

1,369,191

1,354,210

32 33 34 35

12,544 13,432 677 2,647 29,300

9,357 12,343 931 2,267 24,898

33 34 35

404 478 55,366 56,248

326 434 58,012 58,772

85,548

83,670

1,283,643

1,270,540

412,565 871,078

422,018 848,522

1,283,643

1,270,540

Total Assets LIABILITIES Current Liabilities Trade and other payables Provisions Trust funds and deposits Interest bearing loans and borrowings Total current liabilities Non-Current Liabilities Provisions Trust funds and deposits Interest bearing loans and borrowings Total non-current liabilities Total Liabilities Net Assets EQUITY Accumulated surplus Reserves

36(ii)

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

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

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BANYULE CITY COUNCIL Financial Report 2015

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

2015 Balance at beginning of the financial year Surplus for the year Impairment Loss on revalued assets Transfers from asset revaluation reserve Transfers to other reserves Transfers from other reserves Balance at end of the financial year

2014 Balance at beginning of the financial year Surplus for the year Net asset revaluation increment Transfers from revaluation reserve Transfers to other reserves Transfers from other reserves Balance at end of the financial year

(a)

Total $‘000 1,270,540 15,685 (2,582) 1,283,643

Accumulated Surplus $‘000 422,018 15,685 1,743 (34,855) 7,974 412,565

Asset Revaluation Reserve $‘000 833,409 (2,582) (1,743) 829,084 (a)

Asset Replacement Reserves $‘000 15,113 34,855 (7,974) 41,994 (a)

Total $‘000 1,218,255 1,971 50,314 1,270,540

Accumulated Surplus $‘000 419,655 1,971 2,279 (35,381) 33,494 422,018

Asset Revaluation Reserve $‘000 785,374 50,314 (2,279) 833,409 (a)

Asset Replacement Reserves $‘000 13,226 35,381 (33,494) 15,113 (a)

Refer to Note 36 for more information on reserves

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

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

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BANYULE CITY COUNCIL Financial Report 2015

Statement of Cash Flows

for the year ended 30 June 2015

Note

Cash Flows from Operating Activities Receipts: Rates and charges Grants - operating Grants - capital Statutory fees and fines User fees and charges Contributions - monetary Interest received Rent Other receipts Payments: Employee costs Materials, contracts and services Trust funds and deposits net refunded Other payments Net cash provided by operating activities Cash Flows from Investing Activities Payments for property, plant and equipment Payments for infrastructure assets Payments for intangible assets Proceeds from sale of property, plant and equipment Net (purchases)/redemption of financial assets Net cash (used in) investing activities

34 37

10

Cash Flows from Financing Activities Borrowing costs - interest Repayment of borrowings Proceeds from borrowings Net cash provided by/(used in) financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the financial year Cash and cash equivalents at the end of the financial year Financing arrangements Restrictions on cash assets

23,38

2015 Inflows/ (Outflows) $‘000

2014 Inflows/ (Outflows) $‘000

85,344 14,010 1,964 6,846 13,081 4,203 2,311 2,026 1,824

79,608 11,521 6,178 14,744 1,247 2,033 1,804 49

(54,395) (35,320) (210) (12,050) 29,634

(50,448) (33,801) (236) (12,571) 20,128

(17,056) (4,270) (374) 25,413 (19,247) (15,534)

(34,036) (5,101) (912) 3,421 4,295 (32,333)

(3,874) (2,266) (6,140)

(3,519) (1,457) 30,000 25,024

7,960

12,819

56,835

44,016

64,795

56,835

39 23

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

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

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BANYULE CITY COUNCIL Financial Report 2015

Statement of Capital Works for the year ended 30 June 2015

Note

2015 $‘000

2014 $‘000

30(i) 30(i) 30(i) 30(i)

2,608 225 1,429 378 4,640

2,387 46 2,623 251 5,307

30(i) 30(i)

296 10,130 10,426

25,811 1,792 27,603

30(i) 30(i) 30(i)

4,215 871 153 5,239

4,513 1,390 165 6,068

30(i)

1,642 1,642

1,444 1,444

31(i)

374 374

549 549

27

11 11

-

22,332

40,971

2,975 16,365 1,466 1,141 374 11 22,332

27,096 10,731 2,423 172 549 40,971

Capital Works Infrastructure: Roads, streets and bridges Drainage Parks and gardens Playgrounds Total infrastructure Property: Freehold land Freehold buildings Total property Plant and equipment: Motor vehicles Plant and equipment Furniture and fittings Total plant and equipment Work in progress: Work in progress Total work in progress Intangible Assets: Intangible Assets Total intangible assets Non-current assets classified as held for sale: Non-current assets classified as held for sale Total non-current assets classified as held for sale Total capital works expenditure Represented by: New assets Asset renewal Asset upgrade Asset expansion New intangible assets New non-current assets classified as held for sale Total capital works expenditure

(a) (b) (c) (d)

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

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

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BANYULE CITY COUNCIL Financial Report 2015

Statement of Capital Works for the year ended 30 June 2015

Definition of asset categories (a)

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

New capital expenditure may or may not result in additional revenue for Council and will result in an additional burden for future operation, maintenance and capital renewal.

(b)

Renewal Expenditure on an existing asset which returns the service potential or the life of the asset up to that which it had originally. It periodically requires expenditure, relatively large (material) in value compared with the value of the components or sub-components of the asset being renewed. As it reinstates existing service potential, it has no impact on revenue, but may reduce future operating and maintenance expenditure if completed at the optimum time.

(c)

Upgrade Expenditure which enhances an existing asset to provide a higher level of service or expenditure that will increase the life of the asset beyond that which it had originally. Upgrade expenditure is discretional and often does not result in additional revenue unless direct user charges apply. It will increase operating and maintenance expenditure in the future because of the increase in the Council’s asset base.

(d)

Expansion Expenditure which extends an existing asset, at the same standard as is currently enjoyed by residents, to a new group of users. It is discretional expenditure which increases future operating and maintenance costs, because it increases Council’s asset base, but may be associated with additional revenue from the new user group.

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

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BANYULE CITY COUNCIL Financial Report 2015

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

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

Council has three Service Centres located at:  Ivanhoe – 275 Upper Heidelberg Road  Rosanna – 44 Turnham Avenue  Greensborough – 9-13 Flintoff Street Council’s website address is : www.banyule.vic.gov.au STATEMENT OF COMPLIANCE These Financial Statements are a general purpose Financial Report that consists of a Comprehensive Income Statement, Balance Sheet, Statement of Changes in Equity, Statement of Cash Flows, Statement of Capital Works and notes accompanying these Financial Statements. The general purpose Financial Report complies with Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board, the Local Government Act 1989, and the Local Government (Planning and Reporting) Regulations 2014.

1.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

Basis of Accounting The accrual basis of accounting has been used in the preparation of these Financial Statements, whereby assets, liabilities, equity, income and expenses are recognised in the reporting period to which they relate, regardless of when cash is received or paid.

The Financial Statements have been prepared on the accrual and going concern basis under the historical cost conventions except where specifically stated in:  Note 1 - (xii): Recognition and measurement of assets  Note 1 - (xiii): Valuation of assets  Note 1 - (xvi): Impairment of assets  Note 1 - (xxxii): Accounting for investments in associates  Note 1 - (x): Non-current assets classified as held for sale  Note 1 - (xvii): Investment property  Note 1 - (xxv): Financial guarantees Judgements, estimates and assumptions are required to be made about the carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated judgements are based on professional judgement derived from historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.

Revisions to accounting estimates are recognised in the period in which the estimate is revised and also in future periods that are affected by the revision. Judgements and assumptions made by management in the application of AASs that have significant effects on the Financial Statements and estimates relate to:   

the fair value of land, buildings, infrastructure, plant and equipment (refer to Note 1 (xii)) the determination of depreciation for buildings, infrastructure, plant and equipment (refer to Note 1 (xiii)) the determination of employee provisions (refer to Note 1 (v))

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

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BANYULE CITY COUNCIL Financial Report 2015

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

1.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont)

(i)

Basis of Accounting (cont) Unless otherwise stated, the accounting policies adopted for the reporting period are consistent with those in the prior year. Where appropriate, comparative figures have been amended to accord with current presentation, and disclosure has been made of any material changes to comparatives.

The figures presented in all the Financial Statements and the notes to the Financial Statements are expressed as thousands of dollars when indicated by “$‘000”. Otherwise, the figures are exact to the nearest one dollar.

(ii)

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

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

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BANYULE CITY COUNCIL Financial Report 2015

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

1.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont)

(iii)

Principles of Consolidation There are no other entities controlled by Council, material or otherwise, which are required to be included in the Financial Statements.

(iv)

Revenue Recognition Income is recognised when Council obtains control of the income or the right to receive the income, it is probable that the economic benefits comprising the income will flow to the Council and the amount of the income can be measured reliably.

Rates and Charges Annual rates and charges are recognised as revenues when Council issues annual rates notices, as a result of the adoption by Council of its annual budget and fulfilling the statutory process. Supplementary rates are recognised when a valuation and reassessment is completed and a supplementary rates notice issued, as a result of the adoption by Council of its annual budget and fulfilling the statutory process.

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

Special Rates and Charges Income from construction special rates and special charges is recognised at the commencement of each scheme. Income from shopping centre special rates and charges schemes is recognised on a yearly basis, for the length of each scheme, as the schemes run on a year by year basis.

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

User Fees and Charges User fees and charges are recognised as revenue when the service has been provided or the payment is received, whichever first occurs.

Grants Grant income is recognised when Council obtains control of the grant. This is normally obtained upon their receipt (or acquittal) or upon earlier notification that a grant has been secured and are valued at their fair value at the date of transfer.

Where grants recognised as revenues during the financial year were obtained on the condition that they be expended in a particular manner or used over a particular period and those conditions were undischarged at balance date, the unused grant is disclosed in Note 4. That note also discloses the amount of unused grant, recognised as revenue, in prior years that was expended on Council’s operations during the current year.

Contributions Monetary and non-monetary contributions are recognised as revenue when Council obtains control over the income and/or contributed asset.

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

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

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

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BANYULE CITY COUNCIL Financial Report 2015

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

1.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont)

(iv)

Revenue Recognition (cont) Sale of Infrastructure, Property, Plant and Equipment The profit or loss on sale of an asset is determined when control of the asset has irrevocably passed to the buyer.

Interest and Rent Interest and rent are recognised as they are earned.

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

Other Income Other income is measured at the fair value of the consideration received or receivable and is recognised when Council gains control over the right to receive the income.

(v)

Employee Costs and Benefits The calculation of employee costs and benefits includes all relevant on-costs and are calculated as follows at reporting date: Wages and salaries and annual leave Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be wholly settled within 12 months of the reporting date are recognised in the provision for employee benefits in respect of employee services up to the reporting date, classified as current liabilities and measured at their nominal values.

Liabilities that are not expected to be wholly settled within 12 months of the reporting date are recognised in the provision for employee benefits as current liabilities, measured at present value of the amounts expected to be paid when the liabilities are settled using the remuneration rate expected to apply at the time of settlement.

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

Current liability – unconditional long service leave is disclosed as a current liability even when Council does not expect to settle the liability within 12 months because it will not have the unconditional right to defer settlement of the entitlement should an employee take leave within 12 months.

The components of this current liability are measured at:  Present value – component that is not expected to be wholly settled within 12 months.  Nominal value – component that is expected to be wholly settled within 12 months.

Classification of employee costs Non-current liability – conditional long service leave that has been accrued, where an employee is yet to reach a qualifying term of employment, is disclosed as a non-current liability. There is an unconditional right to defer settlement of the entitlement until the employee has completed the requisite years of service.

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

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

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BANYULE CITY COUNCIL Financial Report 2015

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

1.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont)

(vi)

Cash and Cash Equivalents Cash and cash equivalents include cash on hand, deposits at call and other highly liquid investments with original maturities of 90 days or less, net of outstanding bank overdrafts.

(vii)

Trade and Other Receivables Receivables are carried at amortised cost using the effective interest rate method. A provision for doubtful debts is recognised when there is objective evidence that an impairment has occurred.

(viii) Other Financial Assets Other financial assets are valued at fair value, being market value, at balance date. Term deposits are measured at amortised cost. Any unrealised gains and losses on holdings at balance date are recognised as either a revenue or expense. (ix)

Inventories Inventories held for distribution are measured at cost or weighted average cost adjusted, when applicable, for any loss of service potential. Inventories are measured at the lower of cost and net realisable value.

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

Where inventories are acquired for no cost or nominal consideration, they are measured at current replacement cost at the date of acquisition.

(x)

Non-Current Assets Classified as Held for Sale A non-current asset classified as held for sale (including disposal groups) is measured at the lower of its carrying amount and fair value less costs to sell and are not subject to depreciation. Non-current assets, disposal groups and related liabilities and assets are treated as current and classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset’s sale (or disposal group sale) is expected to be completed within 12-months from the date of classification.

(xi)

Fair Value Measurement Council measures certain assets and liabilities at fair value where required or permitted by Australian Accounting Standards. AASB 13 Fair Value Measurement, aims to improve consistency and reduce complexity by providing a definition of fair value and a single source of fair value measurement and disclosure requirements for use across Australian Accounting Standards.

AASB 13 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value under AASB 13 is an exit price regardless of whether that price is directly observable or estimated using another valuation technique.

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

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BANYULE CITY COUNCIL Financial Report 2015

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

1.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont)

(xi) Fair Value Measurement (cont) All assets and liabilities for which fair value is measured or disclosed in the Financial Statements are categorised within a fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:  Level 1:  Level 2:  Level 3:

Quoted (unadjusted) market prices in active markets for identical assets or liabilities; Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable; and Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

For the purpose of fair value disclosures, Council has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.

In addition, Council determines whether transfers have occurred between levels in the hierarchy by reassessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period. (xii) Recognition and Measurement of Infrastructure, Property, Plant and Equipment, and Intangibles Acquisition The purchase method of accounting is used for all acquisitions of assets, being the fair value of assets provided as consideration at the date of acquisition plus any incidental costs attributable to the acquisition.

Fair value is the amount for which the asset could be exchanged between knowledgeable willing parties in an arm’s length transaction.

Where assets are constructed by Council, cost includes all materials used in construction, direct labour, borrowing costs incurred during construction and an appropriate share of directly attributable variable and fixed overheads.

In accordance with Council’s Policy, the threshold limits detailed in Note 1(xiii) have applied when recognising assets within an applicable asset class and unless otherwise stated are consistent with the prior year.

Roads, drainage and building assets have been brought to account in the Balance Sheet of Council at cost in the year of acquisition or construction and are subject to depreciation on a straight line basis over their useful lives from the financial year following acquisition. These assets were revalued at 30 June 2014 at their current replacement cost less accumulated depreciation (calculated on a straight line basis).

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

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

Parks and gardens assets, playgrounds, motor vehicles, plant and equipment, furniture and fittings, art collection assets, waste management big bins and intangible assets have been brought to account in the Balance Sheet of Council at cost in the year of acquisition or construction and are valued at cost.

Council does not recognise land under roads that it controlled prior to 30 June 2008. Land under roads acquired after 30 June 2008, if material, will be brought to account using the cost basis.

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

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BANYULE CITY COUNCIL Financial Report 2015

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

1.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont)

(xii) Recognition and Measurement of Infrastructure, Property, Plant and Equipment, and Intangibles (cont) Revaluation Subsequent to the initial recognition of assets, non-current physical assets, other than plant and equipment, are measured at their fair value, being the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. At balance date, the Council reviewed the carrying value of the individual classes of assets measured at fair value to ensure that each asset materially approximated its fair value. Where the carrying value materially differed from the fair value at balance date, the class of asset was revalued.

Fair value valuations are determined in accordance with a valuation hierarchy. Changes to the valuation hierarchy will only occur if an external change in the restrictions or limitations of use of an asset result in changes to the permissible or practical highest and best use of the asset. Further details regarding the fair value hierarchy are disclosed at Note 30, Infrastructure, Property, Plant and Equipment.

Where the assets are revalued, the revaluation increments are credited directly to the asset revaluation reserve except to the extent that an increment reverses a prior year decrement for that class of asset that had been recognised as an expense in which case the increment is recognised as revenue up to the amount of the expense. Revaluation decrements are recognised as an expense except where prior increments are included in the asset revaluation reserve for that class of asset in which case the decrement is taken to the reserve to the extent of the remaining increments. Within the same class of assets, revaluation increments and decrements within the year are offset.

The Financial Statements for the Year Ended 30 June 2015 reflect the revaluation of assets that occurred on 30 June 2014. The next revaluation is due to be reflected in the Financial Statements for year ending 30 June 2016.

Council’s Valuer’s valuation, in the case of land and buildings is determined in accordance with the Valuation of Land Act 1960. The valuation is calculated using market value, as a fair value, based on existing use.

For drainage, roads, streets and bridges assets, the valuation represents an estimate of written down current replacement costs determined by reference to engineering construction plans and Melbourne Water base maps after taking into account construction costs written down for the current condition of the assets and the impact of any economic or technical obsolescence.

Other class of assets are not revalued. (xiii) Depreciation and Amortisation of Infrastructure, Property, Plant and Equipment and Intangibles Infrastructure assets, buildings, land improvements, plant and equipment, and other assets having limited useful lives are systematically depreciated over their useful lives to Council in a manner which reflects consumption of the service potential embodied in those assets. Estimates of remaining useful lives and residual values are made on a regular basis with major asset classes reassessed annually. Depreciation rates and methods are reviewed annually. Depreciation for roads and drainage assets are depreciated from the financial year following acquisition or construction.

Where assets have separate identifiable components that are subject to regular replacement, these components are assigned distinct useful lives and residual values and a separate depreciation rate is determined for each component.

Straight line depreciation is charged based on the residual useful life as determined each year. Depreciation periods used are listed below and are consistent with the prior year unless otherwise stated.

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

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

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BANYULE CITY COUNCIL Financial Report 2015

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

1.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont)

(xiii) Depreciation and Amortisation of Infrastructure, Property, Plant and Equipment and Intangibles (cont) Depreciation of all assets is provided using the straight line basis with rates that are reviewed each reporting period. The 2015 depreciation rates have changed for the asset categories listed in the 2014 table below. The new depreciation rates are incorporated in the 2015 table along with the unchanged asset categories. The changes occurred on 1 July 2014. Council conducted a review of the useful lives of assets, with assistance from a consultant, to reflect the usage of the assets in the current environment.

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

2015 Asset Category Roads, streets and bridges  Roads – seals  Roads – sub-structure  Bridges, medians & local area traffic management  Footpaths  Kerb, channel and medians Drainage Parks and gardens Playgrounds Freehold buildings Freehold land Motor vehicles Plant and equipment Furniture and fittings Waste management big bins Works of art

Depreciation Rate %

Useful Life Years

Threshold Limit $

4 1 1 1.67 1.18 – 1.42 1 4 – 20 5.55 1.25 15 4 – 33.33 5 – 10 10

25 100 100 60 85 – 70 100 25 – 5 18 80 6.60 25 – 3 20 – 10 10

All All 10,000 All All 5,000 1,000 1,000 5,000 All All 1,000 5,000 10,000 All

Depreciation Rate %

Useful Life Years

Threshold Limit $

2.50 .66 .66 1.33 4 1

40 150 150 75 25 100

All All 10,000 All 1,000 5,000

2014 Asset Category Roads, streets and bridges  Roads – seals  Roads – sub-structure  Bridges, medians & local area traffic management  Footpaths Playgrounds Freehold buildings

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

In 2015, the impact on depreciation expenses across the asset classes due to the changes in depreciation rates is shown in the following table:

Asset Class

Roads – seals Roads – sub-structure Roads – bridges Roads – footpaths Buildings Playgrounds

Depreciation Rates 2015 %

4 1 1 1.67 1.25 5.55

Useful Life 2015 Years

Depreciation Rates 2014 %

Useful Life 2014 Years

25 100 100 60 80 18

2.5 0.66 0.66 1.33 1 4

40 100 150 150 75 100 25

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

Increase/ (decrease) Depreciation Expense $

Page 17

980,104 326,950 7,825 400,260 604,930 100,770

BANYULE CITY COUNCIL Financial Report 2015

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

1.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont)

(xiv) Work in Progress Any work in progress at the end of a financial year is identified and recorded as a non-current asset in the Balance Sheet. Upon completion of each project, the value of work in progress will be transferred to the appropriate non-current depreciable asset class within infrastructure, property plant and equipment of the Balance Sheet and will be subject to appropriate depreciation charges thereafter. (xv)

Repairs and Maintenance Routine maintenance, repair costs and minor renewal costs are expensed as incurred. Where the repair relates to the replacement of a component of an asset and the cost exceeds the capitalisation threshold, the cost is capitalised and depreciated. The carrying value of the replaced asset is expensed.

(xvi) Impairment of Assets At each reporting date, the Council reviews the carrying value of its assets to determine whether there is any indication that these assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the assets carrying value. Any excess of the assets’ carrying value over its recoverable amount is expensed to the comprehensive income statement, unless the asset is carried at the revalued amount in which case, the impairment loss is recognised directly against the revaluation surplus in respect of the same class of asset to the extent that the impairment loss does not exceed the amount in the revaluation surplus for that same class of asset. (xvii) Investment Property Investment property, if any, is held to generate long-term rental yields. Investment property is measured initially at cost, including transaction costs. Costs incurred subsequent to initial acquisition are capitalised when it is probable that future economic benefit in excess of the originally assessed performance of the asset will flow to Council. Subsequent to initial recognition at cost, investment property is carried at fair value, determined annually by a valuer. Changes to fair value are recorded in the Comprehensive Income Statement in the period that they arise. Rental income from the leasing of investment properties is recognised in the Comprehensive Income Statement, when invoiced, on a straight line basis over the lease term. (xviii) Accounting for Investments in Associates Associates are all entities over which Council has significant influence, but not control or joint control.

Investments in associates are accounted for using the equity method of accounting. The investment was initially recorded at cost and adjusted thereafter for post-acquisition changes in the Council’s share of the net assets of the entities. Council’s share of the financial result of the entities is recognised in the Comprehensive Income Statement.

Council has an equity interest share in the following associate:  42.40% (42.86% in 2014) in the Yarra Plenty Regional Library; Council’s share is based on the total of contributions paid by Council, since the inception of the Library, as a percentage of the total contributions paid by the three Councils.

The Yarra Plenty Regional Library is an independent legal entity with an Executive Management Team, which is responsible for the day-to-day operations of the organisation. Banyule is one of three Councils with a stake in the Library and each of the three Councils has put forward two members which make up the six-person Regional Library Board.

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

Page 18

BANYULE CITY COUNCIL Financial Report 2015

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

1.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont)

(xix) Investments Investments other than investments in associates are measured at cost.

Regional Kitchen Pty Ltd and RFK Pty Ltd (trading as Community Chef) are related but separate entities involved in the production of delivered meals. Regional Kitchen Pty Ltd owns its land, buildings and the production facilities where the meals are made. Regional Kitchen Pty Ltd leases the building and facilities to RFK Pty Ltd who are responsible for the operation of the facility including the production of the meals and their delivery to the Council members. (xx) Trust Funds and Deposits Amounts received as deposits and retention amounts controlled by Council are recognised as trust funds until they are returned, transferred in accordance with the purpose of the receipt, or forfeited (refer to Note 34). (xxi) Borrowings Borrowings are initially measured at fair value, being the cost of the interest bearing liabilities, net of transaction costs. The measurement basis subsequent to initial recognition depends on whether the Council has categorised its interest bearing liabilities as either financial liabilities designated at fair value through the profit and loss, or financial liabilities at amortised cost. Any difference between the initial recognised amount and the redemption value is recognised in net result over the period of the borrowing using the effective interest method. The classification depends on the nature and purpose of the interest bearing liabilities. The Council determines the classification of its interest bearing liabilities at initial recognition. (xxii) Borrowing Costs Borrowing costs are recognised as an expense in the period in which they are incurred, except where they are capitalised as part of a qualifying asset constructed by Council. Except where specific borrowings are obtained for the purpose of specific asset acquisition, the weighted average interest rate applicable to borrowings at balance date is used to determine the borrowing costs to be capitalised.

Borrowing costs include interest on bank overdrafts, interest on borrowings and finance lease charges (if any). (xxiii) Allocation between Current and Non-Current In the determination of whether an asset or liability is current or non-current, consideration is given to the time when each asset or liability is expected to be settled. The asset or liability is classified as current if it is expected to be settled within the next 12 months, being the Council’s operational cycle, or if Council does not have an unconditional right to defer settlement of a liability for at least 12 months after the reporting date. (xxiv) Contingent Assets and Contingent Liabilities and Commitments Contingent assets (if any) and contingent liabilities are not recognised in the Balance Sheet, but are disclosed by way of a Note (Note 43) and, if quantifiable, are measured at nominal value. Contingent assets and liabilities are presented inclusive of GST receivable or payable respectively.

Commitments are not recognised in the Balance Sheet. Commitments are disclosed at their nominal value and inclusive of the GST payable (Notes 41 and 42).

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

Page 19

BANYULE CITY COUNCIL Financial Report 2015

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

1.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont)

(xxv) Financial Guarantees Financial guarantee contracts are not recognised as a liability in the balance sheet unless the lender has exercised their right to call on the guarantee or Council has other reasons to believe that it is probable that, that right will be exercised. Details of guarantees that Council has provided, that are not recognised in the balance sheet are disclosed at Note 43 Contingent Liabilities and Contingent Assets. (xxvi)Operating Leases Lease payments for operating leases are required by the accounting standard to be recognised on a straight line basis, rather than expensed in the years in which they are incurred. (xxvii)Goods and Services Tax (GST) Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the balance sheet are shown inclusive of GST. Cash flows are presented in the cash flow statement on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows. (xxviii)Pending Accounting Standards Certain new Australian Accounting Standards have been issued that are not mandatory for the 30 June 2015 reporting period. Council has assessed these pending standards and has identified that no material impact will flow from the application of these standards in future reporting periods.

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

Page 20

BANYULE CITY COUNCIL Financial Report 2015

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

2.

BUDGET COMPARISON

The budget comparison notes compare Council’s financial plan, expressed through its annual budget, with actual performance. The Local Government (Planning and Reporting) Regulations 2014 requires explanation by any material variances. Council has adopted a materiality threshold of the lower of $1.0million or 20% (if over $500,000) where further explanation is warranted. Explanations have not been provided for variations below the materiality threshold unless the variance is considered to be material because of its nature.

The budget figures detailed below are those adopted by Council on 23 June 2014. The Budget was based on assumptions that were relevant at the time of adoption of the Budget. Council sets guidelines and parameters for the revenue and expense targets in this budget in order to meet Council’s planning and financial performance targets for both the short and long-term.

These notes are prepared to meet the requirements of the Local Government Act 1989 and the Local Government (Planning and Reporting) Regulations 2014. (a)

Income and Expenditure Budget 2015 $‘000

Actual 2015 $‘000

Variance 2015 $‘000

85,912 12,724 1,001 6,787 14,585 1,431 1,910 2,124

86,287 14,008 2,015 6,977 14,557 2,390 1,916 3,044

375 1,284 1,014 190 (28) 959 6 920

4

1,588 99 128,161

11,771 114 336 143,415

10,183 15 336 15,254

5 6

56,715 42,013 3,802 18,991 928 3,874 5,712 2,195 134,230

54,653 38,405 4,136 18,572 708 3,795 5,799 1,662 127,730

(6,069)

15,685

Note INCOME Rates and charges Grants – operating Grants – capital Statutory fees and fines User fees and charges Interest income Rental income Contributions – income Net gain on disposal of infrastructure, property, plant and equipment Other income Share of net profits/(losses) of associates Total income EXPENSES Employee costs Materials, contracts and services Utility charges Depreciation and amortization Donations expenditure Borrowing costs Contributions expense Other expenses Total expenses Surplus/(deficit) for the year

1 1 2 3

7

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

Page 21

2,062 3,608 (334) 419 220 79 (87) 533 6,500 21,754

BANYULE CITY COUNCIL Financial Report 2015

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

2.

BUDGET COMPARISON (cont)

(a)

Income and Expenditure (cont)

Explanation of Material Variations – Income and Expenditure Note

1

Item Grants – operating and capital

Explanation  

2

Interest income

 

3

Contributions income

 

Council received 50% ($1.83M) (operating) and $454K (capital) of next year’s Victoria Grants Commission funding paid in advance.

Subsidies for the operation of St Hellier and Joyce Avenue Child Care Centres were $347K more than budgeted. These subsidies allow the Centres to care for more children with a lower cost to parents in the form of fees.

Interest income received was $785K above budget, as Council had additional cash holdings from the sale of a former school site.

Interest on General Rates is $177K above budget. Additional interest was earned due to change in instalments and more frequent interest calculations.

Council received income that was not budgeted for as part of a profit sharing agreement in relation to the operation of WaterMarc Banyule.

Due to a greater amount of subdivision/building activity during the year than originally anticipated, Public Open Space contributions exceeded budget by $427K.

4

Net gain on disposal of infrastructure, property, plant and equipment



Council sold one former school site during the year and made a net gain of $10.18M on the sale. At the time the budget was set, this sale was expected to occur during the 2016 financial year.

5

Employee costs



The yearly costs of workcover for Council staff came in $211K under budget as a result of Council maintaining a safe work environment with less claims.

Across Council there were savings related to the Enterprise Agreement increase being slightly less than budgeted, as well as overtime and training savings within the Leisure Department due to the new Enterprise Agreement provisions.

There were savings within the Corporate Services department due to the merging of two managerial roles as well as a number of staff retirements and vacancies that were not immediately back-filled.





6

Materials, contracts and services

   

The energy efficient public lighting project was $1.74M under budget, with $1.66M in savings for the project and a small balance to be carried forward to finalise the works.

The expenditure cost for the West Heidelberg Community Hub project is $400K under budget as the works will be capitalised as leasehold improvements instead of expensed.

The operational costs for running Council’s plant/fleet came in $685K under budget. Any savings are put towards the Plant Reserve.

Waste Disposal costs for Council had savings of $824K which relate to the repeal of the carbon tax, a reduction in general waste disposal and a reduced need for green waste collection, due to a dry year.

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

Page 22

BANYULE CITY COUNCIL Financial Report 2015

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

2.

BUDGET COMPARISON (cont)

(a)

Income and Expenditure (cont)

Explanation of Material Variations – Income and Expenditure (cont) Note

7

Item Other expenses

Explanation 

  

$97K worth of past expenses/liabilities have been reversed and reclassified as transfers to reserves. These transactions relate to putting aside a portion of the building department’s profit for future investment within the building department.

There were $44K worth of savings made for internal communications, as better prices were achieved from contractors and the amount of physically published material was reduced.

Council received $115K in reimbursements for out of pocket costs associated with Workcover. Due to the unpredictable nature of this item, it was not budgeted.

There was $272K worth of internal waste disposal costs, which were budgeted as other expenses, but have since been reclassified as materials, contracts and services.

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

Page 23

BANYULE CITY COUNCIL Financial Report 2015

Statement of Capital Works for the year ended 30 June 2015

2.

BUDGET COMPARISON (cont)

(b)

Capital Works

Note Capital Works Roads, streets and bridges Drainage Parks and gardens Playgrounds Freehold land Freehold buildings Motor vehicles Plant and equipment Furniture and fittings Art collection Intangible assets Non-current assets classifieds held for sale Work in progress Total capital works expenditure Represented by: Assets acquired as per Note 30(i) New assets Asset renewal Asset upgrade Asset expansion Total assets acquired as per Note 30(i) Assets acquired as per Note 31 New intangible assets Total assets acquired as per Note 31

1 2 3 4 4

5

Budget 2015 $‘000

Actual 2015 $‘000

Variance 2015 $‘000

3,609 466 2,253 404 12,715 7,282 3,010 15 736 30,490

2,608 225 1,429 378 296 10,130 4,215 871 153 374 11 1,642 22,332

1,001 241 824 26 (296) 2,585 3,067 2,139 (153) 15 362 (11) (1,642) 8,158

946 22,714 5,248 846 29,754

2,975 16,365 1,466 1,141 21,947

(2,029) 6,349 3,782 (295) 7,807

736 736

374 374

362 362

-

11 11

(11) (11)

30,490

22,332

8,158

Assets acquired as per Note 27 New non-current assets classified as held for sale Total assets acquired as per Note 27 Total capital works expenditure

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

Page 24

BANYULE CITY COUNCIL Financial Report 2015

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

2.

BUDGET COMPARISON (cont)

(b)

Capital Works (cont)

Explanation of Material Variations – Capital Works Note

Item

Explanation

1

Roads, streets and bridges



The maintenance work on road patching, footpaths and bridges was initially budgeted as capital works projects, however, it has been reclassified as maintenance in the Income Statement after re-assessing the nature of the works.

2

Parks and gardens



Two sections of the Plenty river trail have delayed completion due to unexpected weather. $469K of unspent budget has been carried forward to the next financial year.

Macleod Tennis Club four court renewal is still work in progress at year end due to some minor repairs.

 3

Freehold buildings



Banksia College basketball stadium concept design has been completed. The $2.72M development budget has been rescheduled to the next financial year after revising the construction phase.

4

Motor vehicles and plant and equipment



The motor vehicles and heavy plant budgets incorporated the unspent carry forward budgets from previous financial years. As a result of this, the budgets exceeded the Depot’s operational requirements significantly. The budget process for future years have been reassessed and unspent carry forward budgets are no longer being taken into account.

A number of trucks have been ordered, but delayed in delivery. These trucks are now expected to be delivered in the first quarter of next financial year.



5

Work in progress



A number of projects, including the Greensborough office accommodation, are still in the work in progress stage of their construction or development.

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

Page 25

BANYULE CITY COUNCIL Financial Report 2015

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

Note 3.

2015 $‘000

2014 $‘000

RATES AND CHARGES

For the basis of rates calculation, Council uses Capital Improved Value as the basis of valuation of all properties within the municipality. The Capital Improved Value of a property is the value of the land, dwellings and all its improvements.

The valuation base used to calculate general rates for 2014/2015 was $31,294,019,100 ($29,751,433,300 for 2013/2014).

A revaluation of land for rating purposes within the Municipality was done on 1 January 2014 and the valuation was first applied in the rating period commencing on 1 July 2014.

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

Residential Commercial Industrial Cultural and Recreational Total general rates

70,554 5,840 2,032 68 78,494

64,824 5,565 1,917 64 43,357 72,370

General Rates Supplementary Rates Municipal Charge Total general rates and charges Special Rates and Charges – Shopping Centres Total rates and charges

78,494 585 6,627 85,706 581 86,287

72,370 274 6,580 79,224 570 79,794

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

Page 26

BANYULE CITY COUNCIL Financial Report 2015

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

Note 4.

2015 $‘000

2014 $‘000

Summary of Grants Recurrent operating grants Recurrent capital grants Non-recurrent operating grants Non-recurrent capital grants Total grants

13,679 1,813 329 202 16,023

9,886 943 151 495 11,475

Summary of Grants Recurrent Non-recurrent Total grants

15,492 531 16,023

10,829 646 11,475

Summary of Grants State Government funded grants Federal Government funded grants Other grants Total grants

14,408 1,578 37 16,023

9,966 1,458 51 11,475

Summary of Grants Operating grants Capital grants Total grants

14,008 2,015 16,023

10,037 1,438 11,475

Operating Grants Recurrent - State Government Access all abilities Children’s services Delivered meals HACC assessment and care management Home care Immunisation Maternal and child health centres Maternal and child health outreach worker Metro access program PAG (inc carer support) Personal care Pre-schools and child day care Respite care School crossing supervisors Vic Roads maintenance and traffic management Victoria Grants Commission – general purpose Youth services Other grants Total State Government

47 248 792 1,709 147 725 122 122 671 733 449 538 185 86 5,503 351 188 12,616

6 86 307 782 1,657 118 698 109 117 704 719 522 507 183 82 1,842 313 186 8,938

GRANTS Grants were received in respect of the following:

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

Page 27

BANYULE CITY COUNCIL Financial Report 2015

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

Note 4.

2015 $‘000

2014 $‘000

1,008 32 1,040

863 58 921

23 23

27 27

13,679

9,886

59 64 59 38 220

9 80 18 107

Non-Recurrent – Commonwealth Government Child Care Centres Other grants Total Commonwealth Government

64 31 95

20 20

Non-Recurrent – Other Sources Other grants Total other sources

14 14

24 24

329

151

14,008

10,037

GRANTS (cont) Operating Grants (cont) Recurrent – Commonwealth Government Child day care Other grants Total Commonwealth Government Recurrent – Other Sources Other grants Total other sources Total recurrent operating grants Non-Recurrent – State Government Engineering HACC assessment and care management Youth and community development Other grants Total State Government

Total non-recurrent operating grants Total operating grants

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

Page 28

BANYULE CITY COUNCIL Financial Report 2015

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

Note 4.

2015 $‘000

2014 $‘000

1,370 1,370

466 466

443 443

477 477

1,813

943

51 90 61 202

138 166 125 26 455

-

40 40

202

495

2,015

1,438

16,023

11,475

GRANTS (cont) Capital Grants Recurrent - State Government Victoria Grants Commission – local roads Total State Government Recurrent - Commonwealth Government Roads to recovery Total Commonwealth Government Total recurrent capital grants Non-Recurrent – State Government A safer mall Anthony Beale Regional Play space Sports grounds and pavilions Watsonia Library development Other grants Total State Government Non-Recurrent – Commonwealth Government Other grants Total Commonwealth Government Total non-recurrent capital grants Total capital grants Total grants

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

Page 29

BANYULE CITY COUNCIL Financial Report 2015

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

Note 4.

2015 $‘000

2014 $‘000

Grants which were recognised as revenue in prior year/years and were expended during the current year in the manner specified by the grantor were:

2,553

3,189

Prior year grants expended during the current year

2,553

3,189

Grants recognised as revenue during the year that were obtained on condition that they be expended in a specified manner that had not occurred at balance date were:

2,782

624

Current year grants not yet expended

2,782

624

Net increase/(decrease) in restricted assets resulting from grant revenues for the year.

229

(2,565)

Grants which were recognised as revenue in prior financial years and have not been expended during the current year in the manner specified by the grantor were:

550

2,479

Unspent grants from prior years

550

2,479

2,782 550 3,332

624 2,479 3,103

GRANTS (cont) Conditions on Grants:

Summary of Unexpended Grants Grants received in current year, but remain unspent Grants received in prior years which remain unspent Total unspent grants

23

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

Page 30

BANYULE CITY COUNCIL Financial Report 2015

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

Note 5.

3,299 514 2,465 361 130 208 6,977

3,126 494 2,271 218 229 6,338

5,049 139 1,340 285 428 111 244 419 590 105 197 4,890 760 14,557

5,251 120 1,290 292 451 78 380 400 349 102 202 4,986 797 14,698

2,149 25 8 198 10 2,390

1,954 31 8 121 (46) 2,068

USER FEES AND CHARGES Aquatic Centre fees and charges Building and Planning permits and fees Child Day Care charges Community buses, halls and events Delivered meals charges Engineering services’ fees Functions Centre charges Home care charges Local laws fees Planned Activity Group fees and charges Sports ground rentals income Transfer station tipping fees Other fees and charges Total user fees and charges

7.

2014 $‘000

STATUTORY FEES AND FINES Building and Planning permits and fees Food Act and Health registrations Local laws infringements and fines Property valuations Road and footpath reinstatement Others fees and fines Total statutory fees and fines

6.

2015 $‘000

INTEREST INCOME Interest on investments Interest from sporting clubs Other interest Interest on rates Interest on special rates and charges Total interest income

(a)

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

8.

RENTAL INCOME Recreational facilities rental Residential/commercial rental Recycling centre rental Total rental income

9.

19 1,252 645 1,916

145 1,171 626 1,942

Monetary contributions: Public Open Space – contributions Contributions for capital works projects Contributions from sporting clubs Other contributions

1,452 653 238 701

1,310 1,208 77 97

Non-monetary contributions: Land Total contributions income

3,044

37 2,729

CONTRIBUTIONS INCOME

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

Page 31

BANYULE CITY COUNCIL Financial Report 2015

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

Note 10.

2015 $‘000

2014 $‘000

24,437 (12,832)

815 (499)

11,605

316

976 (810) 166

2,606 (4,228) (1,622)

11,771

(1,306)

28 9 30 31 16 114

64 48 35 29 176

336 336

274 274

43,767 4,145 1,240 4,353 1,088 769 (567) (142) 54,653

41,566 3,726 1,312 4,036 1,015 690 (667) (167) 51,511

NET GAIN/(LOSS) ON DISPOSAL OF INFRASTRUCTURE, PROPERTY, PLANT AND EQUIPMENT Non-current assets classified as held for sale Proceeds from sale of assets Less: Written down value of assets sold Total net gain on sale of assets classified as held for sale Fixed assets Proceeds from sale of assets Less: Written down value of assets disposed Total net gain/(loss) on sale of fixed assets

(a)

(a) 30(i)

Total net gain/(loss) on disposal of infrastructure, property, plant and equipment (a) Proceeds for sale of land and motor vehicles.

11.

OTHER INCOME Insurance claims Sale of right-of-ways Sale of drainage reserves Sponsorship Other revenue Total other income

12.

SHARE OF NET PROFITS/(LOSSES) OF ASSOCIATES Yarra Plenty Regional Library Corporation Total share net profits/(losses) of associates

13.

29

EMPLOYEE COSTS Salaries and wages Annual leave and loading Long service leave Superannuation Workcover Other oncosts Less: Capitalised labour Less: Capitalised oncosts Total employee costs

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

Page 32

BANYULE CITY COUNCIL Financial Report 2015

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

Note 14.

21

213 206 409 100 1,156 19,797 3,565 1,076 2,635 762 699 342 5,972 1,473 38,405

281 237 465 102 1,078 14,256 3,448 946 2,832 829 653 354 6,302 1,237 33,020

2,150 250 994 742 4,136

2,505 292 758 891 4,446

6,884 1,837 1,126 367

5,548 1,615 1,028 247

2,899

2,276

2,314 2,641 336 8 18,412

2,019 2,550 322 235 15,840

160 160

71 71

18,572

15,911

UTILITY CHARGES Gas and electricity Telephone Water Public street lighting Total utility charges

16.

2014 $‘000

MATERIALS, CONTRACTS AND SERVICES Advertising Auditing services Building and Planning charges and government fees Child care expenses Community program costs Contractor costs General materials and supplies Insurances Plant and motor vehicle operating Printing, stationery and external communications Staff training and equipment Sundry expenses Waste disposal general Other Total materials, contract and services

15.

2015 $‘000

DEPRECIATION AND AMORTIZATION Depreciation Infrastructure - Roads, streets and bridges - Drainage - Parks and gardens - Playgrounds Property - Freehold buildings Plant and equipment - Motor vehicles - Plant and equipment - Furniture and fittings - Waste management Total depreciation

(a)

Amortization Intangible asset -Software Total amortization Total depreciation and amortization (a) Refer also to Note 1(xiii)

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

Page 33

BANYULE CITY COUNCIL Financial Report 2015

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

Note 17.

2015 $‘000

2014 $‘000

97 68 192 110 241 708

92 67 132 107 271 669

3,880 (85) 3,795

3,505 (28) 3,477

4,195 1,132 100 372 5,799

4,073 1,086 100 393 5,652

359 374 248 144 537 1,662

154 423 254 126 574 1,531

14

53 150 3 206

59 176 2 237

20

318 28 13 359

84 21 49 154

DONATIONS EXPENDITURE Banyule Housing Support group Banyule Support and Information Community Services grants Volunteers of Banyule Resources Centre Other donations Total donations expenditure

18.

BORROWING COSTS Interest on borrowings – total Less: Capitalised borrowing costs on qualifying assets Total finance costs

(a)

(a)

(a) Rate used to capitalise borrowing costs 4.48% (2014 4.48%) 19.

CONTRIBUTIONS EXPENSE Yarra Plenty Regional Library Contributions to shopping centres YMCA contributions Other contributions Total contributions expense

20.

OTHER EXPENSES Bad and doubtful debts Operating lease rental Councillor allowances and reimbursements Fire Service Property Levy on Council properties Other Total other expenses

21.

AUDITORS’ REMUNERATION Audit fee to conduct external audit – Victorian Auditor General Internal audit fee Fees for minor audits – other external auditors Total auditors’ remuneration

22.

22

BAD AND DOUBTFUL DEBTS Parking fines debtors Animal fines debtors Other debtors Total bad and doubtful debts

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

Page 34

BANYULE CITY COUNCIL Financial Report 2015

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

Note 23.

2015 $‘000

2014 $‘000

10 4,290 8,010 52,485 64,795

9 2,059 3,448 51,319 56,835

CASH AND CASH EQUIVALENTS Cash on hand Cash at bank Money market call account Short term deposits Total cash and cash equivalents

38

Council has cash and cash equivalents that are subject to external restrictions that limit amounts available for discretionary use. These include: Public open space reserve Off-street parking reserve Trust funds Deposits held Total restricted funds Total unrestricted cash and cash equivalents

36(ii)b 36(ii)b 34 34

1,702 252 625 531 3,110 61,685

1,706 252 671 694 3,323 53,512

Intended allocations Although not externally restricted, the following amounts have been allocated for specific future purposes by Council: Long service leave 33 9,190 8,586 Unexpended grants 4 3,332 3,103 Unexpended contributions 52 11 Cash held to fund carried forward capital works 3,303 13,791 Total funds subject to intended allocations 15,877 25,491 Unrestricted cash and cash equivalents adjusted for intended allocations 45,808 28,021 24.

OTHER FINANCIAL ASSETS Current Term deposits

(a)

Total other financial assets

21,330 21,330

2,083 2,083

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

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

Page 35

BANYULE CITY COUNCIL Financial Report 2015

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

Note 25.

2015 $‘000

2014 $‘000

2,348 41 1,326 (760) 172 (70) 74 3,731 (61) 6,801

1,497 47 2,006 (1,419) 220 (152) 73 4,724 (72) 6,924

24 81 342 70 517 7,318

19 108 417 71 615 7,539

TRADE AND OTHER RECEIVABLES Current Rates debtors Special rates and charges debtors Parking infringement debtors Provision for doubtful debts – parking infringements Other by-laws debtors Provision for doubtful debts – other by-laws Club contribution debtors Other debtors Provision for doubtful debts – other debtors Total current Non-Current Rates debtors Special rates and charges debtors Club contribution debtors Other debtors Total non-current Total trade and other receivables

(a) (a)

(a) (a)

(a) Ageing of Receivables At balance date other debtors representing financial assets were past due, but not impaired. These amounts relate to a number of independent customers for whom there is no recent history of default.

The ageing of Council’s Trade and Other Receivables (excluding statutory receivables) was: Current – not yet due Past due – by up to 30 days Past due – between 31 and 60 days Past due – between 61 and 90 days Past due – more than 91 days Total trade and other receivables

(a)

3,521 144 108 45 399 4,217

4,665 284 60 26 250 5,285

Note: Rates debtors, special rates and charges debtors and by-laws debtors, which include parking and animal infringements, among others, are not considered financial instruments as they are considered to be statutory receivables. Also, provision for doubtful debts are excluded. (b) Movement in Provisions for Doubtful Debts Balance at beginning of the year Amounts provided for but recovered during the year New provisions recognised during the year Amounts already provided for and written off as uncollectable Balance at end of the year

72 (11) 3

53 (1) 23

(3) 61

(3) 72

(c) Ageing of individually impaired receivables At balance date, other debtors representing financial assets with a nominal value of $61,000 (2014 $72,000) were impaired. The amount of the provision raised against these debtors was $61,000 (2014 $72,000). The individually impaired debtors related to general and sundry debtor and have been impaired as a result of their doubtful collection. Many of the long outstanding past due amounts have been lodged with Council’s debt collectors or are on payment arrangements.

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

Page 36

BANYULE CITY COUNCIL Financial Report 2015

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

Note 26.

2015 $‘000

2014 $‘000

32 32

41 41

35,200 11

9,003 -

2,588 (2,582) (12,832) 22,385

26,696 (499) 35,200

INVENTORIES Inventories held for distribution Total inventories

27.

NON-CURRENT ASSETS CLASSIFIED AS HELD FOR SALE Opening balance on Council’s valuation Capitalised development cost Transfer from infrastructure, property, plant and equipment Less: Impairment loss Less: Written down value of assets sold Total non-current assets classified as held for sale (a) (b) (c)

(a) (b) (c)

Refer to Statement of Capital Works The impairment loss refers to two lots of land and two buildings, held for sale.

Fair Value Hierarchy Fair value assessments have been performed at 30 June 2015 for assets held for sale. Details of the Council’s assets held for sale and information about the fair value hierarchy as at 30 June 2015 are as follows:

Assets held for sale–land (non-specialised) (d) Assets held for sale–buildings (non-specialised)(d) Total

Level 1 $‘000

Level 2 $‘000

Level 3 $‘000

-

15,851 6,534 22,385

-

No transfers between levels occurred during the year. (d) Classified in accordance with fair value hierarchy – see Note 1(xi) and Note 30.

Note 28.

2015 $‘000

2014 $‘000

946 946

814 814

OTHER ASSETS Current Prepayments Total other assets

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

Page 37

BANYULE CITY COUNCIL Financial Report 2015

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

Note 29.

(ii)

2014 $‘000

239 2,829 3,068

239 2,493 2,732

9 230 239

9 230 239

2,829

2,493

INVESTMENTS Investments include the following: Investments – unlisted shares Investments in associates Total investments

(i)

2015 $‘000

Investments – unlisted shares Non-Current MAPS Group Ltd – at cost Regional Kitchen Pty Ltd – at cost Total investments – unlisted shares Investments in associates Non-Current Share of Yarra Plenty Regional Library Corporation – at Officer’s valuation

(a),12

The Investment in Associates accounted for by the equity method is:  Yarra Plenty Regional Library Corporation (a) Council takes up its share of the net surplus/(deficit) of the associate, 42.40% in 2015 (2014 42.86%).

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

The valuation is made as at 30 June each year. The 2015 valuation is based on draft Financial Statements (2014 was based on audited Financial Statements).

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

Page 38

BANYULE CITY COUNCIL Financial Report 2015

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

Note 29.

INVESTMENTS (cont)

(a)

Investments in Associates

2015 $‘000

2014 $‘000

Council’s share of accumulated surplus/(deficit): Council’s share of accumulated surplus/(deficit) at start of year Reported surplus/(deficit) for year Distributions for the year Council’s share of accumulated surplus/(deficit) at end of year

2,493 336 -

2,165 328 -

2,829

2,493

Movement of carrying value of specific investment: Carrying value of investment at start of year Share of surplus/(deficit) for year Share of asset revaluation Distributions received Carrying value of investment at end of year

2,493 336 2,829

2,219 274 2,493

239 511 71 821

394 77 471

Council’s share of expenditure commitments: Operating lease commitments Operating commitments Capital commitments Council’s share of expenditure commitments

Council’s share of contingent liabilities and contingent assets: The Yarra Plenty Regional Library Service has no known contingent liabilities as at 30 June 2015 nor as at 30 June 2014.

Significant restrictions: Yarra Plenty Regional Library does not pay any dividends to Council. No loans or monetary advances are made between Council and the Library.

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

Page 39

BANYULE CITY COUNCIL Financial Report 2015

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

Note

30.

2015 $‘000

2014 $‘000

INFRASTRUCTURE, PROPERTY, PLANT AND EQUIPMENT Summary of Infrastructure, Property, Plant and Equipment - by Cost/Valuation 116,612  at cost less accumulated depreciation (54,324) 62,288 

100,972 (50,814) 50,158

1,469,493 (284,107) 1,185,386

1,472,246 (274,502) 1,197,744

1,247,674

1,247,902

Summary of Infrastructure, Property, Plant and Equipment - by Section 356,684  infrastructure 863,923  property 23,984  plant and equipment 3,083  other assets Total infrastructure, property, plant and equipment 1,247,674

362,245 857,752 24,852 3,053 1,247,902

at Council’s valuation at 30 June 2014 less accumulated depreciation

Total infrastructure, property, plant and equipment

INFRASTRUCTURE: Roads, Streets and Bridges  works at cost less accumulated depreciation  at Council’s valuation at 30 June 2014 less accumulated depreciation

(a)

Total roads, streets and bridges Drainage  works at cost less accumulated depreciation  at Council’s valuation at 30 June 2014 less accumulated depreciation

(a)

Total drainage

2,608 2,608

-

372,293 (144,032) 228,261

372,293 (137,148) 235,145

230,869

235,145

240 240

-

183,619 (80,610) 103,009

183,619 (78,772) 104,847

103,249

104,847

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

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

Page 40

BANYULE CITY COUNCIL Financial Report 2015

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

Note

30.

2015 $‘000

2014 $‘000

INFRASTRUCTURE, PROPERTY, PLANT AND EQUIPMENT (cont) Parks and Gardens  works at cost less accumulated depreciation Total parks and gardens

41,412 (23,450) 17,962

39,982 (22,324) 17,658

Playgrounds  works at cost less accumulated depreciation Total playgrounds

8,159 (3,555) 4,604

7,928 (3,333) 4,595

296 690,663 690,959

686,958 686,958

11,362 (31) 11,331

-

221,098 (59,465) 161,633

229,376 (58,582) 170,794

172,964

170,794

PROPERTY: Freehold Land  at cost  at Council’s valuation of market value at 30 June 2014 Total freehold land

(b)

Freehold Buildings  at cost less accumulated depreciation 

at Council’s valuation of market value at 30 June 2014 less accumulated depreciation

(b)

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

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

Page 41

BANYULE CITY COUNCIL Financial Report 2015

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

Note

2015 $‘000

2014 $‘000

30. INFRASTRUCTURE, PROPERTY, PLANT AND EQUIPMENT (cont) Plant and Equipment: Motor Vehicles  at cost less accumulated depreciation Total motor vehicles

19,206 (9,498) 9,708

18,809 (10,195) 8,614

Plant and Equipment  at cost less accumulated depreciation Total plant and equipment

21,397 (9,853) 11,544

20,683 (7,368) 13,315

Furniture and Fittings  at cost less accumulated depreciation Total furniture and fittings

5,695 (2,963) 2,732

5,543 (2,628) 2,915

Waste Management  at cost less accumulated depreciation Total waste management

4,974 (4,974) -

4,974 (4,966) 8

1,225 1,225

1,225 1,225

16 407 30 34 1,192 77 36 66 1,858

14 9 30 34 1,340 36 365 1,828

1,247,674

1,247,902

Other Assets: Art collection  at cost Total art collection Work in Progress – at cost  roads  drainage  parks and gardens  playgrounds  freehold land  freehold buildings  plant and equipment  furniture and fittings  intangible assets  leasehold improvements Total work in progress Total infrastructure, property, plant and equipment

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

Page 42

BANYULE CITY COUNCIL Financial Report 2015

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

30. INFRASTRUCTURE, PROPERTY, PLANT AND EQUIPMENT (cont) Valuation of Land and Buildings At 30 June 2014, Council’s land and buildings were restated to Council’s valuation of fair value based on existing use. The valuations were carried out by Council’s Valuer, Mr P Kemm, A.A.P.I. in accordance with the basis of valuation referred to in Note 1(xi).

The valuation of land and buildings is at fair value, being market value based on highest and best use permitted by relevant land planning provisions. Where land use is restricted through existing planning provisions, the valuation is reduced to reflect this limitation. This adjustment is an unobservable input in the valuation. The adjustment has no impact on the comprehensive Income Statement.

Specialised land is valued at fair value using site values adjusted for englobo (undeveloped and/or unserviced) characteristics, access rights and private interests of other parties and entitlements or infrastructure assets and services. This adjustment is an unobservable input in the valuation. The adjustment has no impact on the comprehensive Income Statement.

Any significant movements in the unobservable inputs for land and land under roads (if any) will have a significant impact on the fair value of these assets.

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

Freehold land – (specialised) Freehold buildings – (specialised) Total

Level 1 $‘000

Level 2 $‘000

Level 3 $‘000

-

-

690,959 172,964 863,923

No transfers between levels occurred during the year.

Valuation of Infrastructure As at 30 June 2014, valuation of Council’s bridges, median and drainage assets has been determined by the valuation undertaken by Ms Claudia Oqueli, Council’s Asset Engineer – Asset Management. The valuation is at fair value based on replacement cost, less accumulated depreciation in accordance with the basis of valuation referred to in Note 1(xi).

As at 30 June 2014, Council’s road assets (excluding bridges and medians) were restated to Council’s valuation of current replacement cost. The valuation of these assets was carried out by Peter Batson, Manager – Asset System Victoria, SMEC Australia Pty Ltd, in accordance with the basis of valuation referred to in Note 1(xi).

SMEC Pavement Management system software was used to assist with this process. A small portion of the road asset valuations was conducted by Ms Claudia Oqueli, Council’s Asset engineer, using the same basis of valuation as SMEC, to complement the area variances caused by the limitation of SMEC’s software.

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

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

Roads, streets and bridges Drainage Total

Level 1 $‘000

Level 2 $‘000

Level 3 $‘000

-

-

230,869 103,249 334,118

No transfers between levels occurred during the year.

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

Page 43

BANYULE CITY COUNCIL Financial Report 2015

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

30. INFRASTRUCTURE, PROPERTY, PLANT AND EQUIPMENT (cont) Description of Significant Unobservable Inputs into Level 3 Valuations Specialised land is valued using a market based direct comparison technique. Significant unobservable inputs include the extent and impact of restriction of use and the market cost of land per square metre. The extent and impact of restrictions on use varies and results in a reduction to surrounding land value between 0% and 90%. The market value of land varies significantly depending on the location of the land and the current market conditions.

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

Specialised buildings are valued using a depreciated replacement cost technique. Significant unobservable inputs include the current replacement cost and remaining useful lives of buildings. Current replacement costs is calculated on a square metre basis and ranges from $265 to $3,820 per square metre. The useful lives of buildings are 100 years. Replacement cost is sensitive to changes in market conditions, with any increase or decrease in cost flowing through to the valuation. Useful lives of buildings may be subject to variation due to changes in expectations or requirements that could either shorten or extend the useful lives of buildings.

Infrastructure assets are valued based on the depreciated replacement cost. Significant unobservable inputs include the current replacement cost and remaining useful lives of infrastructure. The useful lives of infrastructure vary from 25 years to 100 years. Replacement cost is sensitive to changes in market conditions, with any increase or decrease in cost flowing through to the valuation. Useful lives of infrastructure may be subject to variation due to changes in use, expectations or requirements that could either shorten or extend the useful lives of infrastructure assets.

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

Page 44

BANYULE CITY COUNCIL Financial Report 2015

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

30.

INFRASTRUCTURE, PROPERTY, PLANT AND EQUIPMENT (cont)

(i)

Reconciliation Reconciliations of the carrying amounts of each class of infrastructure, property, plant and equipment at the beginning and end of the current financial year are set out below:

2015 Infrastructure Roads, streets and bridges Drainage Parks and gardens Playgrounds Total infrastructure

Carrying Amount at 2014 $‘000

Transfer Between Classes $‘000

Plus Change in Valuations $‘000

Plus Additions $‘000

Less WDV of Disposals $‘000

235,145 104,847 17,658 4,595 362,245

14 1 15

-

2,608 225 1,429 378 4,640

Property Freehold land Freehold buildings Total property

686,958 170,794 857,752

3,705 (5,061) (1,356)

-

8,614 13,315 2,915 8

-

24,852

Plant and Equipment Motor vehicles Plant and equipment Furniture and fittings Waste management Total plant and equipment Other Assets Art collection Work in progress Total other assets TOTAL

(a)

  

Less Depreciation $‘000

Carrying Amount at 2015 $‘000

(2) (2)

(6,884) (1,837) (1,126) (367) (10,214)

230,869 103,249 17,962 4,604 356,684

296 10,130 10,426

-

(2,899) (2,899)

690,959 172,964 863,923

-

4,215 871 153 -

(807) (1) -

(2,314) (2,641) (336) (8)

9,708 11,544 2,732 -

-

-

5,239

(808)

(5,299)

23,984

1,225 1,828 3,053

(1,612) (1,612)

-

1,642 1,642

-

-

1,225 1,858 3,083

1,247,902

(2,953) (a)

-

21,947

(810)

(18,412)

1,247,674

$(13,888,400) of land and buildings was transferred to non-current assets classified as held for sale (refer Note 27). $11,300,000 of non-current assets classified as held for sale was transferred back to land (refer Note 27). $(364,617) of work in progress was transferred to intangible assets.

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

Page 45

BANYULE CITY COUNCIL Financial Report 2015

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

Note 31.

1,874 (231) 1,643 1,643

1,135 (71) 1,064 1,064

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

2015

IT Software TOTAL

2014

IT Software TOTAL

Carrying Amount at 2014 $‘000

Transfer Between Classes $‘000

Plus Additions $‘000

Less WDV of Disposals $‘000

1,064 1,064

365 365

374 374

-

Carrying Amount at 2013 $‘000

Transfer Between Classes $‘000

Plus Additions $‘000

Less WDV of Disposals $‘000

-

586 586

549 549

-

Note 32.

2014 $‘000

INTANGIBLE ASSETS IT Software  at cost Less accumulated amortization Total IT Software Total intangible assets

(i)

2015 $‘000

Less Amortization $‘000

(160) (160)

Less Amortization $‘000

(71) (71)

Carrying Amount at 2015 $‘000

1,643 1,643 Carrying Amount at 2014 $‘000

1,064 1,064

2015 $‘000

2014 $‘000

9,163 3,381 12,544

6,591 2,766 9,357

TRADE AND OTHER PAYABLES Current Trade creditors Accrued expenses Total trade and other payables

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

Page 46

BANYULE CITY COUNCIL Financial Report 2015

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

33.

Annual Leave $‘000

Long Service Leave $‘000

Total $‘000

4,083 4,104 (3,622)

8,586 418 (721)

12,669 4,522 (4,343)

81

907

988

4,646

9,190

13,836

3,872 3,697 (3,554)

8,321 449 (1,101)

12,193 4,146 (4,655)

68

917

985

4,083

8,586

12,669

2015 $‘000

2014 $‘000

4,002 807 4,809

3,543 862 4,405

Total current provisions

644 7,979 8,623 13,432

540 7,398 7,938 12,343

Non-current Long Service Leave Total non-current provisions Total provisions

404 404 13,836

326 326 12,669

13,432 404

12,343 326

13,836

12,669

PROVISIONS 2015 Balance at beginning of the financial year Additional provisions Amounts used Increase in the discounted amount arising because of time and the effect of any change in the discount rate Balance at the end of the financial year 2014 Balance at beginning of the financial year Additional provisions Amounts used Increase in the discounted amount arising because of time and the effect of any change in the discount rate Balance at the end of the financial year

Note Employee Provisions: Current Current provisions expected to be wholly settled within 12 months: Annual Leave Long Service Leave Current provisions expected to be wholly settled after 12 months: Annual Leave Long Service Leave

1(v)

Provisions Summary: Current Non-current Total aggregate carrying amount of employee provisions

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

Page 47

BANYULE CITY COUNCIL Financial Report 2015

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

Note 33.

2015 $‘000

2014 $‘000

PROVISIONS (cont) The following assumptions were used in measuring the present value of employee provisions:   

34.

Weighted average increase in employee costs 3.35% (3.50% in 2014) Discount rates from 1 year to 16 years within the range of 1.93% to 3.14 % (2.46% to 3.67% in 2014) Settlement period from 1 year to 16 years.

TRUST FUNDS AND DEPOSITS Summary Current Non-current Total trust funds and deposits

677 478 1,155

931 434 1,365

Summary Trust funds Deposits held Total trust funds and deposits

625 530 1,155

671 694 1,365

1 93 53

50 47 50 25 65

163 24 104 190 49 677

163 97 24 68 292 50 931

117 296 65 478 1,155

158 43 167 66 434 1,365

Current Trust Funds Subdivision street trees Streeton Views community facilities Eagle Views Estate Parking Planning Contributions Other trust funds Deposits held Tender contracts Function deposits Sub-divisions Road opening permits Sundry Other deposits Total current Non-current Trust Funds Subdivision street trees Eagle Views Estate Parking Planning Contributions Other trust funds Total non-current Total trust funds and deposits

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

Page 48

BANYULE CITY COUNCIL Financial Report 2015

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

Note 34.

2015 $‘000

2014 $‘000

TRUST FUNDS AND DEPOSITS (cont) Purpose and nature of items Refundable Deposits – Deposits are taken by Council as a form of surety in a number of circumstances, including in relation to building works, tender deposits, contract deposits and the use of civic facilities.

Retention Amounts – Council has a contractual right to retain certain amounts until a contractor has met certain requirements or a related warrant or defect period has elapsed. Subject to the satisfactory completion of the contractual obligations, or the elapsing of time, these amounts will be paid to the relevant contractor in line with Council’s contractual obligations.

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

35.

INTEREST BEARING LOANS AND BORROWINGS Current Borrowings – secured Total current Non-Current Borrowings – secured Total non-current Total interest bearing loans and borrowings

(a)

2,647 2,647

2,267 2,267

(a)

55,366 55,366 58,013

58,012 58,012 60,279

(a) The interest bearing loans are secured by a deed of charge over Council rates The maturity profile of Council’s borrowings is: Not later than one year Later than one year, but not later than five years Later than five years Total interest bearing loans and borrowings

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

2,647 16,258 39,108 58,013

2,267 15,241 42,771 60,279

Page 49

BANYULE CITY COUNCIL Financial Report 2015

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

36.

RESERVES

(i)

Summary of Reserve Types Balance as at 30/6/15

Asset Revaluation Reserve Asset Replacement Reserves Total Reserves (ii)

Balance as at 30/6/14

$‘000

$‘000

829,084 41,994 871,078

833,409 15,113 848,522

Reserve Movements

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

Asset Revaluation Reserve

2015 Infrastructure  Roads and streets  Bridges, medians and local area traffic management  Drainage Property  Freehold land  Freehold buildings Other assets  Heritage and culture – including art collection  Parks and gardens Non-current assets Classified as Held for Sale  Freehold land  Freehold buildings Total asset revaluation reserve

Balance as at 30/6/14

Increment (Decrement)

Balance as at 30/6/15

$‘000

$‘000

$‘000

133,569 1,744 70,825 206,138

-

133,569 1,744 70,825 206,138

541,531 76,247 617,778

(2,528) (2,748) (5,276)

539,003 73,499 612,502

283 471 754

-

283 471 754

8,157 582 8,739

530 421 951

8,687 1,003 9,690

833,409

(4,325)

829,084

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

Page 50

BANYULE CITY COUNCIL Financial Report 2015

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

36.

RESERVES (cont)

(ii)

Reserve Movements (cont)

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

2014 Infrastructure  Roads and streets  Bridges, medians and local area traffic management  Drainage Property  Freehold land  Freehold buildings Other assets  Heritage and culture – including art collection  Parks and gardens Assets Held for Sale  Freehold land  Freehold buildings Total asset revaluation reserve

Balance as at 30/6/13

Increment (Decrement)

Balance as at 30/6/14

127,780 2,072 56,840 186,692

5,789 (328) 13,985 19,446

133,569 1,744 70,825 206,138

528,240 67,841 596,081

13,291 8,406 21,697

541,531 76,247 617,778

283 471 754

-

283 471 754

174 1,673 1,847

7,983 (1,091) 6,892

8,157 582 8,739

785,374

48,035

833,409

$‘000

$‘000

$‘000

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

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

Page 51

BANYULE CITY COUNCIL Financial Report 2015

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

36.

RESERVES (cont)

(ii)

Reserve Movements (cont)

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

Asset Revaluation Reserve (cont) Details of movements.

Note

2015 $‘000

2014 $‘000

833,409

785,374

-

5,789 (328) 13,985

-

23,474 7,394

Amount transferred as a result of selling assets: Property - Freehold land - Freehold buildings - Assets held for sale – freehold land

(1,743)

(2,200) (79) -

Amount transferred as a result of transferring from assets held for sale to property assets: - Assets held for sale – freehold land - Assets held for sale – freehold buildings - Freehold land - Freehold buildings

(3,789) 3,789 -

(174) (1,673) 174 1,673

Amount transferred as a result of transferring from property assets to assets held for sale: - Assets held for sale – freehold land - Assets held for sale – freehold buildings - Freehold land - Freehold buildings

6,318 2,748 (6,318) (2,748)

8,157 582 (8,157) (582)

(255) (2,327) 829,084

833,409

ASSET REVALUATION RESERVE Balance at beginning of the financial year Amount transferred as a result of revaluing assets: Infrastructure - Roads and streets - Bridges, medians and local area traffic management - Drainage Property - Freehold land - Freehold buildings

Amount transferred as a result of impairment loss: - Asset held for sale – freehold land - Asset held for sale – freehold buildings Balance at end of the financial year

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

Page 52

BANYULE CITY COUNCIL Financial Report 2015

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

36.

RESERVES (cont)

(ii)

Reserve Movements (cont)

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

Asset Replacement Reserves

2015 Statutory Reserves Public Open Space Off-Street Car Parking Discretionary Reserves General Plant and Equipment Strategic Properties Asset Renewal Car Parking Meters BPI Investment WaterMarc renewal Asset replacement reserves

2014 Statutory Reserves Public Open Space Off-Street Car Parking Discretionary Reserves General Greensborough Project - RALC Plant and Equipment Strategic Properties Asset Renewal Car Parking Meters Asset replacement reserves

Balance as at 30/06/14 $‘000

Transfers Between $‘000

Transfers To $‘000

Transfers From $‘000

Balance as at 30/06/15 $‘000

1,706 252

-

1,452 -

(1,456) -

1,702 252

2,541 6,150 4,229 124 111 15,113

-

733 5,936 25,050 880 274 130 400 34,855

(975) (3,759) (1,705) (79) (7,974)

2,299 8,327 27,574 1,004 306 130 400 41,994

Balance as at 30/06/13 $‘000

Transfers Between $‘000

Transfers To $‘000

Transfers From $‘000

Balance as at 30/06/14 $‘000

1,478 252

(336) -

1,310 -

(746) -

1,706 252

1,196 155 6,216 3,791 124 14 13,226

336 -

1,434 4,824 27,680 133 35,381

(89) (155) (4,890) (27,578) (36) (33,494)

2,541 6,150 4,229 124 111 15,113

The above tables generally indicate usage of funds for budgeted capital works and recovery of capital from previous expenditures and investment projects in the ordinary course of business. These amounts are determined in accordance with the approved budget and subsequent Council reports.

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

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

The Off-Street Car Parking Reserve is no longer operational due to a change in legislation. Developers did contribute income to the reserve. Funds were used to provide additional car parking spaces in the area where the funds were generated from.

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

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

The Strategic Properties Reserve is maintained to fund the purchasing, development and selling of properties with a view to add income to Council.

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BANYULE CITY COUNCIL Financial Report 2015

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

36.

RESERVES (cont)

(ii)

Reserve Movements (cont)

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

Asset Replacement Reserves (cont)

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

The Car Parking Meters Reserve receives all the income collected from parking meters. The Reserve will be used to purchase new parking meters and fund the maintenance of existing parking meters.

The Bpi Investment Reserve receives a portion of the BPI department’s profit each year. The Reserve is used to fund equipment and software to enhance their competitiveness with external businesses.

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

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BANYULE CITY COUNCIL Financial Report 2015

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

Note 37.

2014 $‘000

RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES TO SURPLUS/(DEFICIT) Surplus for the year (Profit)/loss on disposal of infrastructure, property, plant and equipment Depreciation and amortization Finance costs - interest Capitalised interest in assets held for sale Share of profit of associate Non-monetary contribution of land

10 16 18 18 12 30(i)

Change in assets and liabilities, excluding investing activities:Decrease/(increase) in receivables Decrease/(increase) in inventories (Increase)/decrease in prepayments Increase/(decrease) in payables Increase in employee provisions Increase/(decrease) in trust funds and deposits Net cash provided by operating activities 38.

2015 $‘000

15,685

1,971

(11,771) 18,572 3,880 (85) (336) -

1,306 15,911 3,504 (28) (274) (37)

221 9 (132) 2,634 1,167 (210) 29,634

(1,571) (10) 80 (964) 476 (236) 20,128

RECONCILIATION OF CASH AND CASH EQUIVALENTS For purposes of the Cash Flow Statement, cash and cash equivalents include cash on hand, deposits at call and other highly liquid investments with original maturities of three months or less, net of outstanding bank overdrafts. Cash at the end of the period as shown in the Cash Flow Statement is reconciled to the related items in the Balance Sheet.

Cash and cash equivalents

39.

23

64,795

56,835

Overdraft facilities

700

700

Unused facilities Used facilities Total overdraft facilities

700 700

700 700

FINANCING ARRANGEMENTS

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BANYULE CITY COUNCIL Financial Report 2015

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

40.

SUPERANNUATION

Banyule City Council makes the majority of its employer superannuation contributions in respect to its employees to the Local Authorities Superannuation Fund – Vision Super (the Fund). This Fund has two categories of membership, accumulation and defined benefit, each of which is funded differently.

Obligations for contributions to the Fund are recognised as an expense in the Comprehensive Income Statement when they are made or due.

Accumulation Fund The Fund’s accumulation categories, Vision MySuper/Vision Super Saver, receives both employer and optional employee contributions on a progressive basis. Employer contributions are normally based on a fixed percentage of employee earnings (for the year ended 30 June 2015, this was 9.50% required under Superannuation Guarantee legislation) (for 2013/2014, this was 9.25%).

Defined Benefit Plan Banyule City Council does not use defined benefit accounting for its defined benefit obligations under the Fund’s Defined Benefit category. This is because the Fund’s Defined Benefit category is a pooled multi-employer sponsored plan.

There is no proportional split of the defined benefit liabilities, assets or costs between the participating employers as the defined benefit obligation is a floating obligation between the participating employers and the only time that the aggregate obligation is allocated to specific employers is when a call is made. As a result, the level of participation of Banyule City Council in the Fund cannot be measured as a percentage compared with other participating employers. Therefore, the Actuary is unable to allocate benefit liabilities, assets and costs between employers for the purposes of AASB 119.

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BANYULE CITY COUNCIL Financial Report 2015

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

Note 41.

2015 $‘000

2014 $‘000

Capital expenditure Contractual commitments at balance date were for: WaterMarc Project Ivanhoe Aquatic Centre Redevelopment Sports grounds and facilities Streetscape works Electronic Document and Records Management System Pre-school capital works Greensborough office accommodation Olympic Village Learning Hub Parking Meter Installation Storage area network Bike paths/trails Total contractual capital commitments

158 7 163 5 84 88 31 268 238 297 1,339

218 4,635 639 769 666 27 6,954

Capital expenditure commitments Not later than one year Later than one year, and not later than two years Total contractual capital commitments

1,339 1,339

6,668 286 6,954

Operating expenditure Contractual commitments at balance date were for: Cleaning services Internal audit fee Tree maintenance Cemetery landscaping Leisure facilities – management and operations Mail distribution Streetlight replacement - Greenpower Total contractual operating commitments

590 238 188 290 197 105 106 1,714

164 322 668 1,357 158 2,669

Operating expenditure commitments Not later than one year Later than one year, and not later than two years Later than two years, and not later than five years Total contractual operating commitments

900 336 478 1,714

2,104 406 159 2,669

CONTRACTUAL COMMITMENTS Council has entered into the following commitments:

(i)

(ii)

(iii)

(iv)

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BANYULE CITY COUNCIL Financial Report 2015

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

Note

2015 $‘000

2014 $‘000

42.

OPERATING LEASES

(i)

Operating Lease Commitments At the reporting date, Council had the following obligations under non-cancellable operating leases for the lease of equipment, land and/or buildings, for use within Council’s activities (these obligations are not recognised as liabilities): Not later than one year Later than one year and not later than two years Later than two years and not later than five-years Total operating lease commitments

(ii)

200 139 61 400

374 161 59 594

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

These properties held under operating leases have remaining non-cancellable lease terms of between 1 and 13-years. Some leases include a CPI based revision of the rental charge annually.

Future minimum rental income under non-cancellable operating leases is as follows: Not later than one year Later than one year and not later than five years Later than five years Total operating lease receivables

1,741 2,571 435 4,747

1,930 2,382 656 4,968

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

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

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BANYULE CITY COUNCIL Financial Report 2015

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

43.

CONTINGENT LIABILITIES

(i)

Guarantees The Banyule City Council has undertaken to act as bank guarantor for: - various local organisations’ outstanding loans - Council’s corporate business card facilities Total guarantees

Note

2015 $‘000

2014 $‘000

(a) (b)

48 165 213

91 155 246

(a) Council is currently acting as guarantor for loans taken out by four Sporting Clubs to be used for significant capital improvements to the Council’s sporting facilities that are on Council land. At balance date, the total outstanding balance on these loans is $48,476 ($91,112 in 2014). At balance date we have received assurances from the Clubs that they are continuing to meet repayments in accordance with the requirements of their individual loan agreements.

The amount disclosed for financial guarantee in this note is the nominal amount of the underlying loan that is guaranteed by Council, not the fair value of the financial guarantee. (b)

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

(ii) Contingent Liabilities arising from Public/Products Liabilities As a local authority with ownership of numerous parks, reserves, roads and other land holdings, the Council is regularly met with claims and demands allegedly arising from incidents which occur on land belonging to Council. There are a number of outstanding claims against Council in this regard. Council carries $400 million of public/products liability insurance however the maximum liability of Council in any single claim is the extent of its excess. The primary insurer is MAV Insurance – Liability Mutual Insurance.

There are no claims of which Council is aware which would fall outside the terms of Council’s policy. (iii) Contingent Liability arising from Professional Indemnity As a local authority with statutory regulatory responsibilities, including the responsibility of issuing permits and approvals, Council is met with claims and demands for damages allegedly arising from actions of Council or its Officers. Council carries $300 million of professional indemnity insurance however the maximum liability of Council in any single claim is the extent of its excess. The primary insurer is MAV Insurance – Liability Mutual Insurance. There are no instances or claims of which Council is aware which would fall outside the terms of Council’s policy. (iv)

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

(v)

Superannuation Contributions Banyule City Council has obligations under a defined benefit superannuation scheme that may result in the need to make additional contributions to the scheme to ensure that the liabilities of the Fund are covered by the assets of the Fund. As a result of the volatility in financial markets the likelihood of making such contributions in future periods exists. At this point in time it is not known if additional contributions will be required, their timing or potential amount.

Funding arrangements Council makes employer contributions to the defined benefit category of the Fund at rates determined by the Trustee, on the advice of the Fund’s Actuary. The Fund’s latest actuarial investigation was held as at 30 June 2014 and it was determined that the Vested Benefit Indexed (VBI) of the defined benefit category of which Banyule City Council is a contributing employer was 103.4%.

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BANYULE CITY COUNCIL Financial Report 2015

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

Note

43.

CONTINGENT LIABILITIES (cont)

(v)

Superannuation Contributions (cont)

2015 $‘000

2014 $‘000

To determine the VBI, the Fund Actuary used the following long-term assumptions: Net investment returns Salary information Price inflation (CPI)

7.50%pa 4.25%pa 2.75%pa

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

The VBI is to be used as the primary funding indicator. Because the VBI was above 100%, the actuarial investigation determined the defined benefit category was in a satisfactory financial position and that no change was necessary to the defined benefit category’s funding arrangements from prior years.

Employer Contributions Regular Contributions On the basis of the results of the most recent full actuarial investigation conducted by the Fund’s Actuary as at 30 June 2014, Council makes employer contributions to the Fund’s Defined Benefit category at rates determined by the Fund’s Trustee. For the year ended 30 June 2015, this rate was 9.50% of members’ salaries. This rate will increase in line with any increase to the Superannuation Guarantee contribution rate.

In addition, Council reimburses the Fund to cover the excess of the benefits paid as a consequence of retrenchment above the funded resignation or retirement benefit.

Funding Calls If the Defined Benefit category is in an unsatisfactory financial position at actuarial investigation or the Defined Benefit category’s VBI is below its shortfall limit at any time other than the date of the actuarial investigation, the Defined Benefit category has a shortfall for the purposes of SPS 160 and the Fund is required to put a plan in place so that the shortfall is fully funded within three years of the shortfall occurring. The Fund monitors its VBI on a quarterly basis and the Fund has set its shortfall limit at 97%.

In the event that the Fund Actuary determines that there is a shortfall based on the above requirement, the Fund’s participating employers (including Banyule City Council) are required to make an employer contribution to cover the shortfall.

Using the agreed methodology, the shortfall amount is apportioned between the participating employers based on the pre-1 July 1993 and post-30 June 1993 service liabilities of the Fund’s Defined Benefit category, together with the employer’s payroll at 30 June 1993 and at the date the shortfall has been calculated.

Due to the nature of the contractual obligations between the participating employers and the Fund, and that the Fund includes lifetime pensioners and their reversionary beneficiaries, it is unlikely that the Fund will be wound up.

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

In the event that a participating employer is wound-up, the Defined Benefit obligations of that employer will be transferred to that employer’s successor.

Latest actuarial investigation surplus amounts The Fund’s latest actuarial investigation as at 30 June 2014 identified the following in the defined benefit category of which Banyule City Council is a contributing employer.

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BANYULE CITY COUNCIL Financial Report 2015

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

Note

43.

CONTINGENT LIABILITIES (cont)

(v)

Superannuation Contributions (cont)

2015 $‘000

2014 $‘000

 A VBI surplus of $77.1 million; and  A total service liability surplus of $236 million.

The VBI surplus means that the market value of the Fund’s assets supporting the defined benefit obligations exceed the vested benefits that the defined benefit members would have been entitled to if they had all exited on 30 June 2014.

The total service liability surplus means that the current value of the assets in the Fund’s defined benefit category plus expected future contributions exceeds the value of expected future benefits and expenses.

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

Superannuation Contributions Contributions by Banyule City Council (excluding any unfunded liability payments) to the above superannuation plans for the financial year ended 30 June 2015 are as follows: Scheme Vision Super Vision Super Employee’s Personal

Type of Scheme Defined benefits Accumulation Accumulation

Rate

2015 $‘000

2014 $‘000

9.50%/9.25% 9.50%/9.25% N/A

539 3,855 2

565 3,491 21

-

24 129 2 155

Council’s employer contributions outstanding at reporting date were:   

Defined Benefits Fund Accumulation Funds (Vision) Accumulation Funds (Personal)

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

The expected contributions to be paid to the defined category of Vision Super for the year ending 30 June 2016 is $562,200.

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Page 61

BANYULE CITY COUNCIL Financial Report 2015

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

44.

FINANCIAL INSTRUMENTS

(i)

Objectives and Policies Council’s principal financial instruments comprise cash assets, term deposits, receivables (excluding statutory receivables), payables (excluding statutory payables) and bank borrowings. Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument is disclosed in Note 1 of the Financial Statements.

Risk management is carried out by senior management under policies approved by Council. These policies include identification and analysis of the risk exposure to Council and appropriate procedures, controls and risk minimisation.

(ii)

Market Risk Market risk is the risk that the fair value or future cash flows of our financial instruments will fluctuate because of changes in market prices. The Council’s exposures to market risk are primarily through interest rate risk with only insignificant exposure to other price risks and no exposure to foreign currency risk.

(iii)

Interest Rate Risk Interest rate risk refers to the risk that the value of a financial instrument or cash flows associated with the instrument will fluctuate due to changes in market interest rates. Interest rate liability risk arises primarily from long term loans and borrowings at fixed rates which exposes Council to fair value interest rate risk.

Council does not hold any interest bearing financial instruments that are measured at fair value, and therefore has no exposure to fair value interest rate risk. Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

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

Investment of surplus funds is made with approved financial institutions under the Local Government Act 1989. Council manages interest rate risk by adopting an investment policy that ensures:   

Diversification of investment product; Monitoring of return on investments; and Benchmarking of returns and comparison with budget.

There has been no significant change in Council’s exposure, or its objectives, policies and processes for managing interest rate risk or the methods used to measure this risk from the previous reporting year.

Interest rate movements have not been sufficiently significant during the year to have an impact on Council’s year end result.

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BANYULE CITY COUNCIL Financial Report 2015

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

44.

FINANCIAL INSTRUMENTS (cont)

(iv)

Credit Risk Credit risk is the risk that a contracting entity will not complete its obligations under a financial instrument and cause Council to make a financial loss. Council has exposure to credit risk on some financial assets included in Council’s Balance Sheet. To help manage this risk Council:  has a policy for establishing credit limits for the entities Council deals with  may require collateral where appropriate  will only invest surplus funds with financial institutions which have a recognised credit rating specified in our investment policy.

Trade and other receivables consist of a large number of customers, spread across the ratepayer, business and government sectors. Credit risk associated with the Council’s financial assets is minimal because the main debtor is secured by a charge over the rateable property.

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

Council may also be subject to credit risk for transactions which are not included in the Balance Sheet, such as when a guarantee is provided for another party. Details of Council’s contingent liabilities are disclosed in Note 43.

The maximum exposure to credit risk on recognised financial assets at the reporting date is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the Balance Sheet and notes to the Financial Statements. Council does not hold any collateral.

(v)

Liquidity Risk Liquidity risk includes the risk that, as a result of our operational liquidity requirements, Council:  will not have sufficient funds to settle a transaction when required,  will be forced to sell a financial asset at below value, or  may be unable to settle or recover a financial asset.

To help reduce these risks Council:  has a liquidity policy which targets a minimum and average level of cash and cash equivalents to be maintained  has readily accessible standby facilities and other funding arrangements in place  has a liquidity portfolio structure that requires surplus funds to be invested within various bands of liquid instruments  monitors budget to actual performance on a regular basis  set limits on borrowings relating to the percentage of loans to rate revenue and percentage of loan principal repayments to rate revenue.

The Council’s maximum exposure to liquidity risk is the carrying amounts of financial liabilities as disclosed in the face of the Balance Sheet and the amounts related to financial guarantees disclosed in Note 43 and is deemed insignificant based on prior periods data and current assessment of risk.

There has been no significant change in Council’s exposure, or its objectives, policies and processes for managing liquidity risk or the methods used to measure this risk from the previous reporting year.

With the exception of borrowings, all financial liabilities are expected to be settled within normal terms of trade. Details of the maturity profile for borrowings are disclosed at Note 35.

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

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BANYULE CITY COUNCIL Financial Report 2015

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

44.

FINANCIAL INSTRUMENTS (cont)

(vi)

Sensitivity Disclosure Analysis Taking into account past performance, future expectations, economic forecasts and management’s knowledge and experience of the financial markets, Council believes the following movements are ‘reasonably possible’ over the next 12 months: - A parallel shift of +0.5% and -0.5% in market interest rates (AUD) from year end rates of 2.76%.

These movements will not have a material impact on the valuation of Council’s financial assets and liabilities, nor will they have a material impact on the results of Council’s operations.

(vii)

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

Fair Value Hierarchy Council’s financial assets and liabilities are not valued in accordance with the fair value hierarchy. Council’s financial assets and liabilities are measured at amortised cost.

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BANYULE CITY COUNCIL Financial Report 2015

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

45.

RELATED PARTY TRANSACTIONS

(i)

Responsible Persons Names of persons holding the position of a Responsible Person at Banyule City Council at any time during the reporting period are: 2015 Councillors Rick Garotti Wayne Phillips Jenny Mulholland Mark Di Pasquale Steven Briffa Tom Melican Craig Langdon (Mayor) Council elections were last held on 27/10/2012.

Chief Executive Officer Simon McMillan Acting Chief Executive Officer Scott Walker Allison Beckwith

(ii)

Remuneration of Responsible Persons The numbers of Responsible Officers whose total remuneration from Council and any related entities, excluding retirement benefits, fall within the following bands:

Income range: $1 - $9,999 $20,000 - $29,999 $40,000 - $49,999 $70,000 - $79,999 $90,000 - $99,000 $300,000 - $309,999 $320,000 - $329,999 Total

Total Remuneration for the reporting period for Responsible Persons included above, amounted to: (iii)

2015 No.

2014 No.

2 6 1 1 10

5 1 1 1 8

$‘000

$‘000

581

568

Responsible Persons Retirement Benefits The aggregate amount paid during the reporting period by Council in connection with the retirement of responsible persons was $Nil (2014: $Nil).

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BANYULE CITY COUNCIL Financial Report 2015

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

45.

RELATED PARTY TRANSACTIONS (cont)

(iv)

Loans to Responsible Persons The aggregate amount of loans in existence at balance date that have been made, guaranteed or secured by Council to a responsible person of the Council, or a related party of a responsible person is $Nil (2014: $Nil).

(v)

Transactions with Responsible Persons Other related party transactions requiring disclosure have been considered and there are no matters to report for this reporting year or the prior reporting year.

No transactions other than remuneration payments or the reimbursement of approved expenses were entered into by Council with Responsible Persons or Related Parties of such Responsible Persons during the reporting year. (2014: $Nil).

(vi)

Senior Officers’ Remuneration A Senior Officer other than a Responsible Person, is an Officer of Council:  

who has management responsibilities and reports directly to the Chief Executive Officer; or whose total annual remuneration exceeds $136,000 (2014 exceeds $133,000).

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

Income range: $136,000 - $139,999 $140,000 - $149,999 $150,000 - $159,999 $160,000 - $169,999 $170,000 - $179,999 $180,000 - $189,999 $200,000 - $219,999 $230,000 - $239,999 $240,000 - $249,999 Total

Total Remuneration for the reporting year for Senior Officers included above, amounted to: 46.

2015 No.

2014 No.

1 3 7 3 1 4 19

1 2 12 1 1 2 1 20

$‘000

$‘000

3,481

3,523

EVENTS OCCURING AFTER BALANCE DATE

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

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BANYULE CITY COUNCIL Financial Report 2015

Certification of Financial Statements for the year ended 30 June 2015

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

Page 67

Victorian Auditor General Independent Audit Report

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

Page 68

Victorian Auditor General Independent Audit Report (cont)

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