lithgow city councilarchive.lithgow.nsw.gov.au/gipa/financialreport1314.pdf · 2014. 11. 28. ·...

Lithgow City Council GENERAL PURPOSE FINANCIAL STATEMENTS for the year ended 30 June 2014

“A centre of regional excellence that: - encourages community growth and development, - contributes to the efficient and effective management of the environment, community and economy for present and future generations.”

Financial Statements 2014

page 1

Lithgow City Council

General Purpose Financial Statements for the financial year ended 30 June 2014

Contents

1. Understanding Council's Financial Statements

2. Statement by Councillors & Management

3. Primary Financial Statements:

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

4. Notes to the Financial Statements

5. Independent Auditor's Reports:

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

Overview

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

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

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

the ability to provide goods, services & facilities, and to carry out activities appropriate to the current & futureneeds of the local community and of the wider public,

the responsibility for administering regulatory requirements under the LGA and

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

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

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

(iv) These financial statements were authorised for issue by the Council on 31 October 2014.Council has the power to amend and reissue these financial statements.

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9

7779

Page

4

67

5

2

3

Financial Statements 2014_

Lithgow City Council Notes to the Financial Statements for the financial year ended 30 June 2014 Understanding Council's Financial Statements

page 2

Introduction Each year, individual Local Governments across NSW are required to present a set of audited financial statements to their Council & Community. What you will find in the Statements The financial statements set out the financial performance, financial position & cash flows of Council for the financial year ended 30 June 2014. The format of the financial statements is standard across all NSW Councils and complies with both the accounting & reporting requirements of Australian Accounting Standards and requirements as set down by the Office of Local Government. About the Councillor/Management Statement The financial statements must be certified by Senior staff as "presenting fairly" the Council's financial results for the year, and are required to be adopted by Council - ensuring both responsibility for & ownership of the financial statements. About the Primary Financial Statements The financial statements incorporate 5 "primary" financial statements: 1. The Income Statement

Summarises Council's financial performance for the year, listing all income & expenses. This statement also displays Council's original adopted budget to provide a comparison between what was projected and what actually occurred. 2. The Statement of Comprehensive Income

Primarily records changes in the fair values of Council's Infrastructure, Property, Plant & Equipment. 3. The Statement of Financial Position

A 30 June snapshot of Council's financial position indicating its Assets, Liabilities & “Net Wealth”. 4. The Statement of Changes in Equity

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

5. The Statement of Cash Flows

Indicates where Council's cash came from and where it was spent. This statement also displays Council's original adopted budget to provide a comparison between what was projected and what actually occurred.

About the Notes to the Financial Statements The Notes to the financial statements provide greater detail and additional information on the 5 primary financial statements. About the Auditor's Reports Council's financial statements are required to be audited by external accountants (that generally specialize in Local Government). In NSW, the Auditor provides 2 audit reports: 1. An opinion on whether the financial statements

present fairly the Council's financial performance & position, &

2. Their observations on the conduct of the Audit

including commentary on the Council's financial performance & financial position.

Who uses the Financial Statements ? The financial statements are publicly available documents & must be presented at a Council meeting between 7 days & 5 weeks after the date of the Audit Report. Submissions from the public can be made to Council up to 7 days subsequent to the public presentation of the financial statements. Council is required to forward an audited set of financial statements to the Office of Local Government.


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


Income Statement for the financial year ended 30 June 2014

$ '000

Income from Continuing OperationsRevenue:Rates & Annual ChargesUser Charges & FeesInterest & Investment RevenueOther RevenuesGrants & Contributions provided for Operating Purposes 2

Grants & Contributions provided for Capital PurposesOther Income:Net gains from the disposal of assets

Total Income from Continuing Operations

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

Total Expenses from Continuing Operations

Operating Result from Continuing Operations

Net Operating Result for the Year

Net Operating Result attributable to Council

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

Original Budget as approved by Council - refer Note 16Financial Assistance Grants for 13/14 are lower, reflecting a timing difference due to a change in how the grant is paid - refer Note 3 (e)

(2,213)

9,689 8,804

Actual 2014

1,213

5,240

22,800 6,256

Actual 2013

(1,753)

21,523

37,877

3,027

3,027

3,027

36,988

-

1

11

(1,595)

11

1,726 9,832

22,873

39,469

11

39,480

14,007

9,216 4,688

2014

918

1,606

6,144

491 7,448

3b

Notes

3a

3d3c

3e,f

5,342 969 588

6,715

837 646

14,441

129

40,904

4,996 12,449

98

4d

5

4b

Budget 1

4c

3e,f

4,164

10,696

10,696

3,730

4a

47,684

14,430 1,572 8,736 8,086

10,696

4e

2




Statement of Comprehensive Income for the financial year ended 30 June 2014

$ '000

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

Other Comprehensive Income:

Amounts which will not be reclassified subsequently to the Operating Result Gain (loss) on revaluation of I,PP&ETotal Items which will not be reclassified subsequentlyto the Operating Result

Amounts which will be reclassified subsequently to the Operating Resultwhen specific conditions are metNil

Total Other Comprehensive Income for the year

Total Comprehensive Income for the Year

Total Comprehensive Income attributable to Council

Actual

27,729

27,729

5,032 17,033

Actual

17,033

2013

17,033

10,696

5,032

8,059

8,059

2014

5,032

3,027

Notes

20b (ii)




Statement of Financial Position as at 30 June 2014

$ '000

ASSETSCurrent AssetsCash & Cash EquivalentsInvestmentsReceivablesInventoriesOtherTotal Current Assets

Non-Current AssetsInventoriesInfrastructure, Property, Plant & EquipmentTotal Non-Current Assets

TOTAL ASSETS

LIABILITIESCurrent LiabilitiesPayablesBorrowingsProvisionsTotal Current Liabilities

Non-Current LiabilitiesPayablesBorrowingsProvisionsTotal Non-Current Liabilities

TOTAL LIABILITIES

Net Assets

EQUITYRetained EarningsRevaluation ReservesCouncil Equity Interest

Total Equity

37,836

333,477

333,477

234,141 99,336

333,477

30,175

3,266

1,338

901 3,494 7,661

10,827

371,313

348,255

18,010

Actual 2012

10,535 8,310

347,517

23,058

3,707 331

3,104

181 175

738

10 4,551

405,291

371,028 380,052

8379,314

479

9

Actual

20,812 2,833

2014

15,162

Actual 2013

3,934

Notes

6a6b

514

738 738 370,290

27,444

1,237 3,857

10

10

-

10,696 15,685

9,168

11,125 16,973

398,472

4,127

4,053 988

9,645

788

25,239

5,460

204

1010

361,206

-

20 244,837

369,265

369,265

36,026

28,098

247,864 116,369 121,401

37,266

361,206

361,206 369,265

20

26,381

10




Statement of Changes in Equity for the financial year ended 30 June 2014

$ '000

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

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

Revised Opening Balance (as at 1/7/13)

c. Net Operating Result for the Year

d. Other Comprehensive Income - Revaluations : IPP&E Asset Revaluation Rsve - Revaluations: Other Reserves - Transfers to Income StatementOther Comprehensive Income

Total Comprehensive Income (c&d)

e. Distributions to/(Contributions from) Non-controlling Interests

f. Transfers between Equity

Equity - Balance at end of the reporting period

$ '000

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

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

Revised Opening Balance (as at 1/7/12)

c. Net Operating Result for the Year

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

Total Comprehensive Income (c&d)

e. Distributions to/(Contributions from) Non-controlling Interests

f. Transfers between Equity

Equity - Balance at end of the reporting period

Total

121,401

-

Reserves Council controlling

17,033

10,696

335,877

-

Retained Reserves Total

3,027

-

Non-

8,059

27,729 -

-

-

Interest

-

10,696

-

Council controllingInterest

-

- - -

-

- -

17,033

-

-

-

-

5,032

-

- 5,032

361,206 -

5,032

3,027

361,206

Equity

-

Interest

369,265

116,369

5,032

- -

-

5,032

369,265

(2,400)

Equity

17,033

333,477 -

335,877

333,477 -

(2,400)

-

-

17,033

(Refer 20b)

361,206

361,206 -

- -

8,059

- -

-

-

- 5,032

-

5,032

-

-

244,837 116,369 -

- -

- - - -

-

361,206

10,696

20b (ii)

116,369

RetainedNotes

234,141

20 (c) (2,400)

-

247,864

-

361,206

Interest

17,033 17,033 - -

17,033 27,729

-

3,027

20b (ii)

2013

- 10,696

236,541

- 99,336

99,336 -

20 (d) -

Earnings (Refer 20b)

-

2014

- 20b (ii)

20b (ii)

- 20 (c)

-

244,837

-

3,027

244,837 - 20 (d)

Earnings

Non-

Notes




Statement of Cash Flows for the financial year ended 30 June 2014

$ '000

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

Cash Flows from Investing ActivitiesReceipts:Sale of Investment SecuritiesSale of Infrastructure, Property, Plant & EquipmentPayments:Purchase of Investment SecuritiesPurchase of Infrastructure, Property, Plant & EquipmentDeferred Debtors & Advances MadeNet Cash provided (or used in) Investing Activities

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

Net Increase/(Decrease) in Cash & Cash Equivalents

plus: Cash & Cash Equivalents - beginning of year

Cash & Cash Equivalents - end of the year

Additional Information:

plus: Investments on hand - end of year

Total Cash, Cash Equivalents & Investments

Please refer to Note 11 for information on the following:- Non Cash Financing & Investing Activities.- Financing Arrangements.- Net cash flow disclosures relating to any Discontinued Operations

6b

Actual Notes

22,395

20132014Actual

6,265

(2,943)

752 5,449 1,061

(13,871)

353 15,629

21,473

(8,090)

(1,003)

(20) (86)

-

-

- (14,021) (1,101)

11a9,227

9,227

-

-

-

11a

(9,832)

-

491

-

-

9,227 (4,688)

Budget

22,873

9,054

2014

6,144 918

10,302

(14,007)

(5,312) (106)

(1,187)

(11,160) (15,335)

469 371

10,296 16,731

20,812 -

23,645

20,812

(1,142)

10,535

(1,142)

10,277

2,833

19,096

3,934

(14,759)

15,162

20,812

(5,650)

(1,187)

(1,726)

-

(1,082) (2,316) (8,499)

(14,637)

-

(4,105) 11b


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Notes to the Financial Statements for the financial year ended 30 June 2014

Contents of the Notes accompanying the Financial Statements

Details

Summary of Significant Accounting PoliciesCouncil Functions / Activities - Financial InformationCouncil Functions / Activities - Component DescriptionsIncome from Continuing OperationsExpenses from Continuing OperationsGains or Losses from the Disposal of AssetsCash & Cash Equivalent AssetsInvestmentsRestricted Cash, Cash Equivalents & Investments - DetailsReceivablesInventories & Other AssetsInfrastructure, Property, Plant & EquipmentExternally Restricted Infrastructure, Property, Plant & EquipmentInfrastructure, Property, Plant & Equipment - Current Year ImpairmentsPayables, Borrowings & ProvisionsDescription of (and movements in) ProvisionsStatement of Cash Flows - Additional InformationCommitments for ExpenditureStatement of Performance Measures:13a (i) Local Government Industry Indicators (Consolidated)13a (ii) Local Government Industry Graphs (Consolidated)13b Local Government Industry Indicators (by Fund)Investment PropertiesFinancial Risk ManagementMaterial Budget VariationsStatement of Developer ContributionsContingencies and Other Liabilities/Assets not recognisedControlled Entities, Associated Entities & Interests in Joint VenturesEquity - Retained Earnings and Revaluation Reserves

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

Additional Council Disclosures

Council Information & Contact Details

n/a - not applicable

27 72

5452

70 n/a

55 n/a

65 n/a

59

70 n/a

61

68

66

76

7170 n/a

70 n/a

10282930

78

9(a)9(b)

28

36

39

49

63

55

Page

1

25

19

1516

20

21

51

50

45

46 n/a

18

1213

23

26

Note

22

14

10(a)10(b)

17

6(a)

4

6(c)

9(c)

11

24

42

38

3940

48

46

47

43

2(a)

32(b)

6(b)

5


Lithgow City Council Notes to the Financial Statements for the financial year ended 30 June 2014 Note 1. Summary of Significant Accounting Policies

page 10

The principal accounting policies adopted by Council in the preparation of these consolidated financial statements are set out below in order to assist in its general understanding. Under Australian Accounting Standards (AASBs), accounting policies are defined as those specific principles, bases, conventions, rules and practices applied by a reporting entity (in this case Council) in preparing and presenting its financial statements. (a) Basis of preparation (i) Background These financial statements are general purpose financial statements which have been prepared in accordance with; Australian Accounting Standards and Australian

Accounting Interpretations issued by the Australian Accounting Standards Board,

the Local Government Act (1993) & Regulation,

and the Local Government Code of Accounting

Practice and Financial Reporting. For the purpose of preparing these financial statements, Council has been deemed to be a not-for-profit entity. (ii) Compliance with International Financial Reporting Standards (IFRSs) Because AASBs are sector neutral, some standards either:

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

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

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

Under the Local Government Act (LGA), Regulations and Local Government Code of Accounting Practice & Financial Reporting, it should be noted that Councils in NSW only have a requirement to comply with AASBs. (iii) New and amended standards adopted by Council During the current year, the following relevant standards became mandatory for Council and have been adopted: AASB 13 Fair Value Measurement AASB 119 Employee Benefits AASB 13 Fair Value Measurement has not affected the assets or liabilities which are to be measured at fair value, however it provides detailed guidance on how to measure fair value in accordance with the accounting standards. It introduces the concept of highest and best use for non-financial assets and has caused the Council to review their valuation methodology. The level of disclosures regarding fair value have increased significantly and have been included in the financial statements at Note 27. AASB 119 Employee Benefits introduced revised definitions for short-term employee benefits. Whilst the Council has reviewed the annual leave liability to determine the level of annual leave which is expected to be paid more than 12 months after the end of the reporting period, there has been no effect on the amounts disclosed as leave liabilities since Council’s existing valuation policy was to discount annual leave payable more than 12 months after the end of the reporting period to present values. (iv) Early adoption of Accounting Standards Council has not elected to apply any pronouncements before their operative date in the annual reporting period beginning 1 July 2013. Refer further to paragraph (ab) relating to a summary of the effects of Standards with future operative dates.



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(v) Basis of Accounting These financial statements have been prepared under the historical cost convention except for: (i) certain financial assets and liabilities at fair

value through profit or loss and available-for-sale financial assets which are all valued at fair value,

(ii) the write down of any Asset on the basis of Impairment (if warranted) and

(iii) certain classes of non current assets (eg.

Infrastructure, Property, Plant & Equipment) that are accounted for at fair valuation.

The accrual basis of accounting has also been applied in their preparation. (vi) Changes in Accounting Policies Council’s accounting policies have been consistently applied to all the years presented, unless otherwise stated. There have also been no changes in accounting policies when compared with previous financial statements unless otherwise stated [refer Note 20(d)]. (vii) Critical Accounting Estimates The preparation of financial statements requires the use of certain critical accounting estimates (in conformity with AASBs). Accordingly this requires management to exercise its judgement in the process of applying the Council's accounting policies. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on Council and that are believed to be reasonable under the circumstances. Critical accounting estimates and assumptions Council makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results.

The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are set out below:

(i) Estimated fair values of infrastructure, property,

plant and equipment.

(ii) Estimated remediation provisions.

Critical judgements in applying Council's accounting policies (i) Impairment of Receivables - Council has made

a significant judgement about the impairment of a number of its receivables in Note 7.

(ii) Projected Section 94 Commitments - Council

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

(b) Revenue recognition Council recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to it and specific criteria have been met for each of the Council’s activities as described below. Council bases any estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement. Revenue is measured at the fair value of the consideration received or receivable. Revenue is measured on major income categories as follows: Rates, Annual Charges, Grants and Contributions Rates, annual charges, grants and contributions (including developer contributions) are recognised as revenues when the Council obtains control over the assets comprising these receipts. Control over assets acquired from rates and annual charges is obtained at the commencement of the rating year as it is an enforceable debt linked to the rateable property or, where earlier, upon receipt of the rates.



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A provision for the impairment on rates receivables has not been established as unpaid rates represent a charge against the rateable property that will be recovered when the property is next sold. Control over granted assets is normally obtained upon their receipt (or acquittal) or upon earlier notification that a grant has been secured, and is valued at their fair value at the date of transfer. Revenue from Contributions is recognised when the Council either obtains control of the contribution or the right to receive it, (i) it is probable that the economic benefits comprising the contribution will flow to the Council and (ii) the amount of the contribution can be measured reliably. Where grants or contributions recognised as revenues during the financial year were obtained on condition that they be expended in a particular manner or used over a particular period and those conditions were undischarged at balance date, the unused grant or contribution is disclosed in Note 3(g). Note 3(g) also discloses the amount of unused grant or contribution from prior years that was expended on Council’s operations during the current year. The Council has obligations to provide facilities from contribution revenues levied on developers under the provisions of S94 of the EPA Act 1979. Whilst Council generally incorporates these amounts as part of a Development Consents Order, such developer contributions are only recognised as income upon their physical receipt by Council, due to the possibility that individual Development Consents may not be acted upon by the applicant and accordingly would not be payable to Council. Developer contributions may only be expended for the purposes for which the contributions were required but the Council may apply contributions according to the priorities established in work schedules. A detailed Note relating to developer contributions can be found at Note 17. User Charges, Fees and Other Income User charges, fees and other income (including parking fees and fines) are recognised as revenue

when the service has been provided, the payment is received, or when the penalty has been applied, whichever first occurs. A provision for the impairment of these receivables is recognised when collection in full is no longer probable. A liability is recognised in respect of revenue that is reciprocal in nature to the extent that the requisite service has not been provided as at balance date. Sale of Infrastructure, Property, Plant and Equipment The profit or loss on sale of an asset is determined when control of the asset has irrevocably passed to the buyer. Interest and Rents Rental income is accounted for on a straight-line basis over the lease term. Interest Income from Cash & Investments is accounted for using the effective interest rate at the date that interest is earned. Other Income Other income is recorded when the payment is due, the value of the payment is notified or the payment is received, whichever occurs first. (c) Principles of Consolidation These financial statements incorporate (i) the assets and liabilities of Council and any entities (or operations) that it controls (as at 30 June 2014) and (ii) all the related operating results (for the financial year ended the 30th June 2014). The financial statements also include Council’s share of the assets, liabilities, income and expenses of any Jointly Controlled Operations under the appropriate headings. In the process of reporting on Council’s activities as a single unit, all inter-entity year end balances and reporting period transactions have been eliminated in full between Council and its controlled entities.



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(i) The Consolidated Fund In accordance with the provisions of Section 409(1) of the LGA 1993, all money and property received by Council is held in the Council’s Consolidated Fund unless it is required to be held in the Council’s Trust Fund. The Consolidated Fund and other entities through which the Council controls resources to carry on its functions have been included in the financial statements forming part of this report. The following entities have been included as part of the Consolidated Fund: General Purpose Operations Water Supply Sewerage Service (ii) The Trust Fund In accordance with the provisions of Section 411 of the Local Government Act 1993 (as amended), a separate and distinct Trust Fund is maintained to account for all money and property received by the Council in trust which must be applied only for the purposes of or in accordance with the trusts relating to those monies. Trust monies and property subject to Council’s control have been included in these statements. Trust monies and property held by Council but not subject to the control of Council, have been excluded from these statements. A separate statement of monies held in the Trust Fund is available for inspection at the Council office by any person free of charge. (iii) Joint Ventures Council has no interest in any Joint Venture Entities, Assets or Operations. (iv) Associated Entities Where Council has the power to participate in the financial and operating decisions (of another entity), ie. where Council is deemed to have “significant influence” over the other entities operations but neither controls nor jointly controls the entity, then Council accounts for such interests using the equity

method of accounting – in a similar fashion to Joint Venture Entities & Partnerships. Such entities are usually termed Associates. (v) County Councils Council is a member of the following County Councils (which are bodies corporate under the Local Government Act); Upper Macquarie County Council

Weed Control in the Local Government area.

The governing body of each County Council is responsible for managing its own affairs. Council is of the opinion that it neither controls nor significantly influences the above County Councils and accordingly these entities have not been consolidated or otherwise included within these financial statements. (d) Leases All Leases entered into by Council are reviewed and classified on inception date as either a Finance Lease or an Operating Lease. Finance Leases Leases of property, plant and equipment where the Council has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease’s inception at the lower of the fair value of the leased property and the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in borrowings. Each lease payment is allocated between the liability outstanding and the recognition of a finance charge. The interest element of the finance charge is costed to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.



page 14

Property, plant and equipment acquired under finance leases is depreciated over the shorter of each leased asset’s useful life and the lease term. Operating Leases Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease. Lease income from operating leases is recognised in income on a straight-line basis over the lease term. (e) Cash and Cash Equivalents For Statement of Cash Flows (and Statement of Financial Position) presentation purposes, cash and cash equivalents includes; cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with

original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and

bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the balance sheet but are incorporated into Cash & Cash Equivalents for presentation of the Cash Flow Statement. (f) Investments and Other Financial Assets Council (in accordance with AASB 139) classifies each of its investments into one of the following categories for measurement purposes: financial assets at fair value through profit or

loss, loans and receivables,

held-to-maturity investments, and available-for-sale financial assets. Each classification depends on the purpose/intention for which the investment was acquired & at the time it was acquired. Management determines each Investment classification at the time of initial recognition and re-evaluates this designation at each reporting date. (i) Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss include financial assets that are “held for trading”. A financial asset is classified in the “held for trading” category if it is acquired principally for the purpose of selling in the short term. Assets in this category are primarily classified as current assets as they are primarily held for trading &/or are expected to be realised within 12 months of the balance sheet date. (ii) Loans and receivables Loans and receivables are non derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the Council provides money, goods or services directly to a debtor with no intention (or in some cases ability) of selling the resulting receivable. They are included in current assets, except for those with maturities greater than 12 months after the balance sheet date which are classified as non-current assets. (iii) Held-to-maturity investments Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Council’s management has the positive intention and ability to hold to maturity. In contrast to the “Loans & Receivables” classification, these investments are generally quoted in an active market.



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Held-to-maturity financial assets are included in non-current assets, except for those with maturities less than 12 months from the reporting date, which are classified as current assets. (iv) Available-for-sale financial assets Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. Investments must be designated as available-for-sale if they do not have fixed maturities and fixed or determinable payments and management intends to hold them for the medium to long term. Accordingly, this classification principally comprises marketable equity securities, but can include all types of financial assets that could otherwise be classified in one of the other investment categories. They are generally included in non-current assets unless management intends to dispose of the investment within 12 months of the balance sheet date or the term to maturity from the reporting date is less than 12 months. Financial Assets – Reclassification Council may choose to reclassify a non-derivative trading financial asset out of the held-for-trading category if the financial asset is no longer held for the purpose of selling it in the near term. Financial assets other than loans and receivables are permitted to be reclassified out of the held-for-trading category only in rare circumstances arising from a single event that is unusual and highly unlikely to recur in the near term. Council may also choose to reclassify financial assets that would meet the definition of loans and receivables out of the held-for-trading or available-for-sale categories if it has the intention and ability to hold these financial assets for the foreseeable future or until maturity at the date of reclassification. Reclassifications are made at fair value as of the reclassification date. Fair value becomes the new cost or amortised cost as applicable, and no reversals of fair value gains or losses recorded before reclassification date are subsequently made.

Effective interest rates for financial assets reclassified to loans and receivables and held-to-maturity categories are determined at the reclassification date. Further increases in estimates of cash flows adjust effective interest rates prospectively. General Accounting & Measurement of Financial Instruments: (i) Initial Recognition Investments are initially recognised (and measured) at fair value, plus in the case of investments not at “fair value through profit or loss”, directly attributable transactions costs Purchases and sales of investments are recognised on trade-date - the date on which the Council commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Council has transferred substantially all the risks and rewards of ownership. (ii) Subsequent Measurement Available-for-sale financial assets and financial assets at fair value through profit and loss are subsequently carried at fair value. Loans and receivables and held-to-maturity investments are carried at amortised cost using the effective interest method. Realised and unrealised gains and losses arising from changes in the fair value of the financial assets classified as “fair value through profit or loss” category are included in the income statement in the period in which they arise. Unrealised gains and losses arising from changes in the fair value of non monetary securities classified as "available-for-sale" are recognised in equity in the available-for-sale investments revaluation reserve. When securities classified as "available-for-sale" are sold or impaired, the accumulated fair value adjustments are included in the income statement as gains and losses from investment securities.



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Impairment Council assesses at each balance date whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. If there is evidence of impairment for any of Council’s financial assets carried at amortised cost (eg. loans and receivables), the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in profit or loss. If a loan or held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the group may measure impairment on the basis of an instrument’s fair value using an observable market price. (iii) Types of Investments Council has an approved Investment Policy in order to undertake its investment of money in accordance with (and to comply with) Section 625 of the Local Government Act and S212 of the LG (General) Regulation 2005. Investments are placed and managed in accordance with the Policy and having particular regard to authorised investments prescribed under the Ministerial Local Government Investment Order. Council maintains its investment Policy in compliance with the Act and ensures that it or its representatives exercise care, diligence and skill that a prudent person would exercise in investing Council funds.

Council amended its policy following revisions to the Ministerial Local Government Investment Order arising from the Cole Inquiry recommendations. Certain investments that Council holds are no longer prescribed (eg. managed funds, CDOs, and equity linked notes), however they have been retained under grandfathering provisions of the Order. These will be disposed of when most financially advantageous to Council. (g) Fair value estimation The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes. The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. Council uses a variety of methods and makes assumptions that are based on market conditions existing at each balance date. Quoted market prices or dealer quotes for similar instruments are used for long-term debt instruments held. If the market for a financial asset is not active (and for unlisted securities), the Council establishes fair value by using valuation techniques. These include reference to the fair values of recent arm’s length transactions, involving the same instruments or other instruments that are substantially the same, discounted cash flow analysis, and option pricing models refined to reflect the issuer’s specific circumstances. The nominal value less estimated credit adjustments of trade receivables and payables are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Council for similar financial instruments.



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(h) Receivables Receivables are initially recognised at fair value and subsequently measured at amortised cost, less any provision for impairment. Receivables (excluding Rates & Annual Charges) are generally due for settlement no more than 30 days from the date of recognition. The collectibility of receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off in accordance with Council’s policy. A provision for impairment (ie. an allowance account) relating to receivables is established when there is objective evidence that the Council will not be able to collect all amounts due according to the original terms of each receivable. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. Impairment losses are recognised in the Income Statement within other expenses. When a receivable for which an impairment allowance had been recognised becomes uncollectible in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against other expenses in the income statement. (i) Inventories Raw Materials and Stores, Work in Progress and Finished Goods Raw materials and stores, work in progress and finished goods in respect of business undertakings are all stated at the lower of cost and net realisable value. Cost comprises direct materials, direct labour and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the basis of normal operating capacity.

Costs are assigned to individual items of inventory on the basis of weighted average costs. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. Inventories held in respect of non-business undertakings have been valued at cost subject to adjustment for loss of service potential. Land Held for Resale/Capitalisation of Borrowing Costs Land held for resale is stated at the lower of cost and net realisable value. Cost is assigned by specific identification and includes the cost of acquisition, and development and borrowing costs during development. When development is completed borrowing costs and other holding charges are expensed as incurred. Borrowing costs included in the cost of land held for resale are those costs that would have been avoided if the expenditure on the acquisition and development of the land had not been made. Borrowing costs incurred while active development is interrupted for extended periods are recognised as expenses. (j) Infrastructure, Property, Plant and Equipment (I,PP&E) Acquisition of assets Council’s non current assets are continually revalued (over a 5 year period) in accordance with the fair valuation policy as mandated by the Office of Local Government. At balance date, the following classes of I,PP&E were stated at their Fair Value; - Investment Properties – refer Note 1(p), - Water and Sewerage Networks

(External / Internal Valuation)

- Operational Land (External Valuation)



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- Buildings – Specialised/Non Specialised (External Valuation)

- Plant and Equipment

(as approximated by depreciated historical cost)

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

- Drainage Assets (Internal Valuation) - Bulk Earthworks (Internal Valuation)

- Community Land (Internal Valuation)

- Land Improvements

(as approximated by depreciated historical cost)

- Other Structures (as approximated by depreciated historical cost)

- Other Assets (as approximated by depreciated historical cost)

Initial Recognition On initial recognition, an assets cost is measured at its fair value, plus all expenditure that is directly attributable to the acquisition. Where settlement of any part of an asset’s cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of recognition (ie. date of exchange) of the asset to arrive at fair value. The discount rate used is the Council’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions. Where infrastructure, property, plant and equipment assets are acquired for no cost or for an amount other than cost, the assets are recognised in the financial statements at their fair value at acquisition date - being the amount that the asset could have been exchanged between knowledgeable willing parties in an arm’s length transaction. Subsequent costs Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow

to Council and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred. Asset Revaluations (including Indexation) In accounting for Asset Revaluations relating to Infrastructure, Property, Plant & Equipment: Increases in the combined carrying amounts of

asset classes arising on revaluation are credited to the asset revaluation reserve.

To the extent that a net asset class increase

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

Net decreases that reverse previous increases of

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

Water and sewerage network assets are indexed annually between full revaluations in accordance with the latest indices provided in the NSW Office of Water - Rates Reference Manual. For all other assets, Council assesses at each reporting date whether there is any indication that a revalued asset’s carrying amount may differ materially from that which would be determined if the asset were revalued at the reporting date. If any such indication exists, Council determines the asset’s fair value and revalues the asset to that amount. Full revaluations are undertaken for all assets on a 5 year cycle. Capitalisation Thresholds Items of infrastructure, property, plant and equipment are not capitalised unless their cost of acquisition exceeds the following; Land - council land 100% Capitalised



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- open space 100% Capitalised - land under roads (purchases after 30/6/08) 100% Capitalised Plant & Equipment Office Furniture > $2,000 Office Equipment > $2,000 Other Plant &Equipment > $2,000 Buildings & Land Improvements Park Furniture & Equipment > $2,000 Building - construction/extensions 100% Capitalised - renovations > $10,000 Other Structures > $2,000 Water & Sewer Assets Reticulation extensions > $5,000 Other > $5,000 Stormwater Assets Drains & Culverts > $5,000 Other > $5,000 Transport Assets Road construction & reconstruction > $10,000 Reseal/Re-sheet & major repairs: > $10,000 Bridge construction & reconstruction > $10,000 Depreciation Depreciation on Council's infrastructure, property, plant and equipment assets is calculated using the straight line method in order to allocate an assets cost (net of residual values) over its estimated useful life. Land is not depreciated. Estimated useful lives for Council's I,PP&E include: Plant & Equipment - Office Equipment 5 to 10 years - Office furniture 10 to 20 years - Computer Equipment 4 years - Vehicles 5 to 8 years - Heavy Plant/Road Making equip. 5 to 8 years - Other plant and equipment 5 to 15 years

Other Equipment - Playground equipment 5 to 15 years - Benches, seats etc 10 to 20 years Buildings - Buildings : Masonry 50 to 100 years - Buildings : Other 20 to 40 years Stormwater Drainage - Drains 80 to 100 years - Culverts 50 to 80 years Transportation Assets - Sealed Roads : Surface 20 years - Sealed Roads : Structure 50 years - Unsealed roads 20 years - Bridge : Concrete 100 years - Bridge : Other 50 years - Road Pavements 60 years - Kerb, Gutter & Paths 40 years Water & Sewer Assets - Dams and reservoirs 80 to 100 years - Bores 20 to 40 years - Reticulation pipes : PVC 80 years - Reticulation pipes : Other 25 to 75 years - Pumps and telemetry 15 to 20 years Other Infrastructure Assets - Bulk earthworks Infinite All asset residual values and useful lives are reviewed and adjusted (if appropriate), at each reporting date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount – refer Note 1(s) on Asset Impairment. Disposal and De-recognition An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal.



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Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in Council’s Income Statement in the year the asset is derecognised. (k) Land Land (other than Land under Roads) is in accordance with Part 2 of Chapter 6 of the Local Government Act (1993) classified as either Operational or Community. This classification of Land is disclosed in Note 9(a). (l) Land under roads Land under roads is land under roadways and road reserves including land under footpaths, nature strips and median strips. Council has elected not to recognise land under roads acquired before 1 July 2008 in accordance with AASB 1051 Land under roads acquired after 1 July 2008 is recognised in accordance with AASB 116 – Property, Plant and Equipment. (m) Intangible Assets Council has not classified any assets as Intangible. (n) Crown Reserves Crown Reserves under Council’s care and control are recognised as assets of the Council. While ownership of the reserves remains with the Crown, Council retains operational control of the reserves and is responsible for their maintenance and use in accordance with the specific purposes to which the reserves are dedicated. Improvements on Crown Reserves are also recorded as assets, while maintenance costs incurred by Council and revenues relating the reserves are recognised within Council’s Income Statement.

Representations are currently being sought across State and Local Government to develop a consistent accounting treatment for Crown Reserves across both tiers of government. (o) Rural Fire Service assets Under section 119 of the Rural Fires Act 1997, “all fire fighting equipment purchased or constructed wholly or from money to the credit of the Fund is to be vested in the council of the area for or on behalf of which the fire fighting equipment has been purchased or constructed”. At present, the accounting for such fire fighting equipment is not treated in a consistent manner across all Councils. Until such time as discussions on this matter have concluded and the legislation changed, Council will continue to account for these assets as it has been doing in previous years, which is to incorporate the assets, their values and depreciation charges within these financial statements. (p) Investment property Investment property comprises land &/or buildings that are principally held for long-term rental yields, capital gains or both that is not occupied by Council. Council currently does not have any properties that have been classified as investment properties (q) Provisions for close down, restoration and for environmental clean up costs – including Tips and Quarries Close down, Restoration and Remediation costs include the dismantling and demolition of infrastructure, the removal of residual materials and the remediation of disturbed areas. Estimated close down and restoration costs are provided for in the accounting period when the obligation arising from the related disturbance occurs, whether this occurs during the development or during the operation phase, based on the net present value of estimated future costs.



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Provisions for close down and restoration costs do not include any additional obligations which are expected to arise from future disturbance. Costs are estimated on the basis of a closure plan. The cost estimates are calculated annually during the life of the operation to reflect known developments, eg updated cost estimates and revisions to the estimated lives of operations, and are subject to formal review at regular intervals. Close down, Restoration and Remediation costs are a normal consequence of tip and quarry operations, and the majority of close down and restoration expenditure is incurred at the end of the life of the operations. Although the ultimate cost to be incurred is uncertain, Council estimates the respective costs based on feasibility and engineering studies using current restoration standards and techniques. The amortisation or ‘unwinding’ of the discount applied in establishing the net present value of provisions is charged to the income statement in each accounting period. This amortisation of the discount is disclosed as a borrowing cost in Note 4(b). Other movements in the provisions for Close down, Restoration and Remediation costs including those resulting from new disturbance, updated cost estimates, changes to the estimated lives of operations and revisions to discount rates are capitalised within property, plant and equipment. These costs are then depreciated over the lives of the assets to which they relate. Where rehabilitation is conducted systematically over the life of the operation, rather than at the time of closure, provision is made for the estimated outstanding continuous rehabilitation work at each balance sheet date and the cost is charged to the income statement. Provision is made for the estimated present value of the costs of environmental clean up obligations outstanding at the balance sheet date. These costs are charged to the income statement.

Movements in the environmental clean up provisions are presented as an operating cost, except for the unwind of the discount which is shown as a borrowing cost. Remediation procedures generally commence soon after the time the damage, remediation process and estimated remediation costs become known, but may continue for many years depending on the nature of the disturbance and the remediation techniques. As noted above, the ultimate cost of environmental remediation is uncertain and cost estimates can vary in response to many factors including changes to the relevant legal requirements, the emergence of new restoration techniques or experience at other locations. The expected timing of expenditure can also change, for example in response to changes in quarry reserves or production rates. As a result there could be significant adjustments to the provision for close down and restoration and environmental clean up, which would affect future financial results. Specific Information relating to Council's provisions relating to Close down, Restoration and Remediation costs can be found at Note 26. (r) Non-Current Assets (or Disposal Groups) “Held for Sale” & Discontinued Operations Non-current assets (or disposal groups) are classified as held for sale and stated at the lower of either (i) their carrying amount and (ii) fair value less costs to sell, if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. The exception to this is plant and motor vehicles which are turned over on a regular basis. Plant and motor vehicles are retained in Non Current Assets under the classification of Infrastructure, Property, Plant and Equipment - unless the assets are to be traded in after 30 June and the replacement assets were already purchased and accounted for as at 30 June.



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For any assets or disposal groups classified as Non-Current Assets “held for sale”, an impairment loss is recognised at any time when the assets carrying value is greater than its fair value less costs to sell. Non-current assets “held for sale” are not depreciated or amortised while they are classified as “held for sale”. Non-current assets classified as “held for sale” are presented separately from the other assets in the balance sheet. A Discontinued Operation is a component of Council that has been disposed of or is classified as “held for sale” and that represents a separate major line of business or geographical area of operations, is part of a single co-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately on the face of the income statement. (s) Impairment of assets All Council's I,PP&E is subject to an annual assessment of impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. Where an asset is not held principally for cash generating purposes (for example Infrastructure Assets) and would be replaced if the Council was deprived of it then depreciated replacement cost is used as value in use, otherwise value in use is estimated by using a discounted cash flow model. Non-financial assets (other than goodwill) that suffered a prior period impairment are reviewed for possible reversal of the impairment at each reporting date.

Goodwill & other Intangible Assets that have an indefinite useful life and are not subject to amortisation are tested annually for impairment. (t) Payables These amounts represent liabilities and include goods and services provided to the Council prior to the end of financial year which are unpaid. The amounts for goods and services are unsecured and are usually paid within 30 days of recognition. (u) Borrowings Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Amortisation results in any difference between the proceeds (net of transaction costs) and the redemption amount being recognised in the Income Statement over the period of the borrowings using the effective interest method. Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. Borrowings are classified as current liabilities unless the Council has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date. (v) Borrowing costs Borrowing costs are expensed (w) Provisions Provisions for legal claims, service warranties and other like liabilities are recognised when: Council has a present legal or constructive

obligation as a result of past events;



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

the amount has been reliably estimated. Provisions are not recognised for future operating losses. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small. Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the reporting date. The discount rate used to determine the present value reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense. (x) Employee benefits (i) Short Term Obligations Short term employee benefit obligations include liabilities for wages and salaries (including non-monetary benefits), annual leave and vesting sick leave expected to be wholly settled within the 12 months after the reporting period. Leave liabilities are recognised in the provision for employee benefits in respect of employees’ services up to the reporting date with other short term employee benefit obligations disclosed under payables. These provisions are measured at the amounts expected to be paid when the liabilities are settled. All other short-term employee benefit obligations are presented as payables.

Liabilities for non vesting sick leave are recognised at the time when the leave is taken and measured at the rates paid or payable, and accordingly no Liability has been recognised in these reports. Wages & salaries, annual leave and vesting sick leave are all classified as Current Liabilities. (ii) Other Long Term Obligations The liability for all long service and annual leave in respect of services provided by employees up to the reporting date (which is not expected to be wholly settled within the 12 months after the reporting period) are recognised in the provision for employee benefits. These liabilities are measured at the present value of the expected future payments to be made using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are then discounted using market yields at the reporting date based on national government bonds with terms to maturity and currency that match as closely as possible the estimated future cash outflows. Due to the nature of when and how Long Service Leave can be taken, all Long Service Leave for employees with 4 or more years of service has been classified as Current, as it has been deemed that Council does not have the unconditional right to defer settlement beyond 12 months – even though it is not anticipated that all employees with more than 4 years service (as at reporting date) will apply for and take their leave entitlements in the next 12 months. (iii) Retirement benefit obligations All employees of the Council are entitled to benefits on retirement, disability or death. Council contributes to various defined benefit plans and defined contribution plans on behalf of its employees. Defined Benefit Plans A liability or asset in respect of defined benefit superannuation plans would ordinarily be recognised



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in the balance sheet, and measured as the present value of the defined benefit obligation at the reporting date plus unrecognised actuarial gains (less unrecognised actuarial losses) less the fair value of the superannuation fund’s assets at that date and any unrecognised past service cost. The present value of the defined benefit obligation is based on expected future payments which arise from membership of the fund to the reporting date, calculated annually by independent actuaries using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. However, when this information is not reliably available, Council can account for its obligations to defined benefit plans on the same basis as its obligations to defined contribution plans – i.e. as an expense when they become payable. Council is party to an Industry Defined Benefit Plan under the Local Government Superannuation Scheme, named the “Local Government Superannuation Scheme – Pool B” This Scheme has been deemed to be a “multi employer fund” for the purposes of AASB 119. Sufficient information is not available to account for the Scheme as a defined benefit plan (in accordance with AASB 119) because the assets to the scheme are pooled together for all Councils. The position is monitored annually and the Actuary has estimated that as at 30 June 2014 the prior period deficit still exists. Effective from 1 July 2009, employers are required to contribute additional contributions to assist in extinguishing this deficit. Council’s share of that deficiency cannot be accurately calculated as the Scheme is a mutual arrangement where assets and liabilities are pooled together for all member councils. For this reason, no liability for the deficiency has been recognised in these financial statements. Council has, however, disclosed a contingent liability in Note 18 to reflect the possible obligation that may

arise should the Scheme require immediate payment to correct the deficiency. Defined Contribution Plans Contributions to Defined Contribution Plans are recognised as an expense as they become payable. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available. (iv) Employee Benefit On-Costs Council has recognised at year end the aggregate on-cost liabilities arising from employee benefits, and in particular those on-cost liabilities that will arise when payment of current employee benefits is made in future periods. These amounts include Superannuation and Workers Compensation expenses which will be payable upon the future payment of certain Leave Liabilities accrued as at 30/6/14. (y) Self insurance Council does not self insure. (z) Allocation between current and non-current assets & liabilities In the determination of whether an asset or liability is classified as current or non-current, consideration is given to the time when each asset or liability is expected to be settled. The asset or liability is classified as current if it is expected to be settled within the next 12 months, being the Council’s operational cycle. Exceptions In the case of liabilities where Council does not have the unconditional right to defer settlement beyond 12 months (such as vested long service leave), the liability is classified as current even if not expected to be settled within the next 12 months. In the case of inventories that are “held for trading”, these are also classified as current even if not expected to be realised in the next 12 months.



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(aa) Taxes The Council is exempt from both Commonwealth Income Tax and Capital Gains Tax. Council does however have to comply with both Fringe Benefits Tax and Goods and Services Tax (GST). Goods & Services Tax (GST) Income, expenses and assets are all recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office (ATO). In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of the revenue / expense. Receivables and payables within the Balance Sheet are stated inclusive of any applicable GST. The net amount of GST recoverable from or payable to the ATO is included as a current asset or current liability in the Balance Sheet. Operating cash flows within the Cash Flow Statement are on a gross basis, ie. they are inclusive of GST where applicable. Investing and Financing cash flows are treated on a net basis (where recoverable form the ATO), ie. they are exclusive of GST. Instead, the GST component of investing and financing activity cash flows which are recoverable from or payable to the ATO are classified as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from (or payable to) the ATO. (ab) New accounting standards and interpretations Certain new (or amended) accounting standards and interpretations have been published that are not mandatory for reporting periods ending 30 June 2014. Council has not adopted any of these standards early.

Council’s assessment of the impact of these new standards and interpretations is set out below. Applicable to Local Government with implications: AASB 9 Financial Instruments, associated standards, AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 and AASB 2012-6 Amendments to Australian Accounting Standards – Mandatory Effective Date of AASB 9 and transitional disclosures and AASB 2013-9 Amendments to Australian Accounting Standards – Conceptual Framework, Materiality and Financial Instruments (effective from 1 January 2017) AASB 9 Financial Instruments addresses the classification, measurement and de-recognition of financial assets and financial liabilities. The standard is not applicable until 1 January 2015 but is available for early adoption. When adopted, the standard will affect in particular Council’s accounting for its available-for-sale financial assets, since AASB 9 only permits the recognition of fair value gains and losses in other comprehensive income if they relate to equity investments that are not held for trading. Fair value gains and losses on available-for-sale debt investments, for example, will therefore have to be recognised directly in profit or loss although there is currently a proposal by the IASB to introduce a Fair value through Other Comprehensive Income category for debt instruments. There will be no impact on Council’s accounting for financial liabilities, as the new requirements only affect the accounting for financial liabilities that are designated at fair value through profit or loss and Council does not have any such liabilities. The de-recognition rules have been transferred from AASB 139 Financial Instruments: Recognition and Measurement and have not been changed. The Council has not yet fully assessed the impact on the reporting financial position and performance on adoption of AASB 9.



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Applicable to Local Government but no implications for Council; AASB 2013-3 Amendments to AASB 136 Recoverable Amount Disclosures for Non-Financial Assets (effective for 30 June 2015 Financial Statements) There are no changes to reported financial position or performance from AASB 2013 – 3, however additional disclosures may be required. Applicable to Local Government but not relevant to Council at this stage; AASB 10 Consolidated Financial Statements, AASB 11 Joint Arrangements, AASB 12 Disclosure of Interests in Other Entities, revised AASB 127 Separate Financial Statements and AASB 128 Investments in Associates and Joint Ventures and AASB 2011-7 Amendments to Australian Accounting Standards arising from the Consolidation and Joint Arrangements Standards (effective for 30 June 2015 Financial Statements for not-for-profit entities) This suite of five new and amended standards address the accounting for joint arrangements, consolidated financial statements and associated disclosures. AASB 10 replaces all of the guidance on control and consolidation in AASB 127 Consolidated and Separate Financial Statements, and Interpretation 12 Consolidation – Special Purpose Entities. The core principle that a consolidated entity presents a parent and its subsidiaries as if they are a single economic entity remains unchanged, as do the mechanics of consolidation. However, the standard introduces a single definition of control that applies to all entities. It focuses on the need to have both power and rights or exposure to variable returns. Power is the current ability to direct the activities that significantly influence returns. Returns must vary and can be positive, negative or both. Control exists when the investor can use its power to affect the amount of its returns.

There is also new guidance on participating and protective rights and on agent/principal relationships. Council does not expect the new standard to have a significant impact on its composition. AASB 11 introduces a principles based approach to accounting for joint arrangements. The focus is no longer on the legal structure of joint arrangements, but rather on how rights and obligations are shared by the parties to the joint arrangement. Based on the assessment of rights and obligations, a joint arrangement will be classified as either a joint operation or a joint venture. Joint ventures are accounted for using the equity method, and the choice to proportionately consolidate will no longer be permitted. Parties to a joint operation will account their share of revenues, expenses, assets and liabilities in much the same way as under the previous standard. AASB 11 also provides guidance for parties that participate in joint arrangements but do not share joint control. Council's investment in the joint venture partnership will be classified as a joint venture under the new rules. As Council already applies the equity method in accounting for this investment, AASB 11 will not have any impact on the amounts recognised in its financial statements. AASB 12 sets out the required disclosures for entities reporting under the two new standards, AASB 10 and AASB 11, and replaces the disclosure requirements currently found in AASB 127 and AASB 128. Application of this standard by Council will not affect any of the amounts recognised in the financial statements, but will impact the type of information disclosed in relation to Council's investments. Amendments to AASB 128 provide clarification that an entity continues to apply the equity method and does not remeasure its retained interest as part of ownership changes where a joint venture becomes an associate, and vice versa.



page 27

The amendments also introduce a “partial disposal” concept. Council is still assessing the impact of these amendments. Council does not expect to adopt the new standards before their operative date. They would therefore be first applied in the financial statements for the annual reporting period ending 30 June 2015. Not applicable to Local Government per se; None There are no other standards that are “not yet effective” and expected to have a material impact on Council in the current or future reporting periods and on foreseeable future transactions. (ac) Rounding of amounts Unless otherwise indicated, amounts in the financial statements have been rounded off to the nearest thousand dollars. (ad) Comparative Figures To ensure comparability with the current reporting period’s figures, some comparative period line items and amounts may have been reclassified or individually reported for the first time within these financial statements and/or the notes. (ae) Disclaimer Nothing contained within these statements may be taken to be an admission of any liability to any person under any circumstance.



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

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

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

2014Actual

2013Actual

2013 2014

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

Income from Continuing Operations

Expenses from Continuing Operations

Total Assets held (Current &

Non-current) Functions/Activities

20142013Actual Actual Actual

Grants included in Income from Continuing Operations


Original Budget

Original Actual

2014 20132014(195)

(4,379) (1,560) 458

2014Actual

Original Budget

2014Actual Budget

(238) 1,228 2,710 2,510

1 3 5,494 1,461

641 161 196 10

1,115 4,270

Health Environment 3,570

298 912 218 215

285 536 Public Order & Safety

Governance Administration

(854) 4,424 602 31

3,742 3,820 3,553 (1,207)

- 577

1,291

701

1,231

(483) -

838 209

3,803

3,722 Housing & Community Amenities 623 Water Supplies

Recreation & Culture 313

5,455 Sewerage Services 7,922

6,879 9,575 7,895 2,000

116 Community Services & Education 84

6,327 5,521 7,583 7,029 8,884

4,808

(3,099) 1,741 (66)

1,448

2,359

5,279 5,631 9,290

460 4,291

3,441 4,271 4,106

Transport & Communication 505 Mining, Manufacturing & Construction - -

1,248 - -

4,069 -

(3,560) 5,198 - -

-

- 64 53 38,635

Actual 2014

314,636 2013

- - 2,696

(1,395) 25,996

5,345

56,053 29,721 60,934 367

3,174

(362) (454)

- 52 (1,451)

1,869 (158)

Actual

- 130

1,398 3,248

931 510

- - 49,253

- 134

14,679 - - 367

(943) - - -

- (1,532)

1,408 - - -

- - - 250 (78)

(704) (1,521) (1,115) (571)

(665) (962)

(3,958) (3,279)

(912)

-

(3,564) -

(11,341)

36,988

- -

36,988

-

-

-

5,737 (5,484)

10,696

(988) 4,824 2,772

- (1,183)

(17,369)

11

- -

3,027

839

16,180 17,380 14,368

Financial Statem

ents 2014

- 4,745

8,923 398,472

907 8

405,291

4,131 -

398,472

- -

405,291

-

13,668

- 2,561

8,298

(430) 201,550

Economic Affairs

22,100 Total Functions & Activities

401

16,180 17,380

40,904 39,480 37,877 39,469 47,684

- - -

1,584 1,483

- -

-

571 409

31,504 39,469 37,877

page 28

26,536 Share of gains/(losses) in Associates &

General Purpose Income 1

Continuing Operations

14,368 Joint Ventures (using the Equity Method)

Operating Result from

-


page 29



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

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

GOVERNANCE

ADMINISTRATION

PUBLIC ORDER & SAFETY

HEALTH

ENVIRONMENT

COMMUNITY SERVICES & EDUCATION

HOUSING & COMMUNITY AMENITIES

WATER SUPPLIESSEWERAGE SERVICES

RECREATION & CULTURE

MINING, MANUFACTURING & CONSTRUCTION

TRANSPORT & COMMUNICATION

ECONOMIC AFFAIRSCamping areas, caravan parks, tourism and area promotion, industrial development promotion, saleyards andmarkets, real estate development, commercial nurseries, other business undertakings.

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

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

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

Building control, abattoirs, quarries & pits, other.

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

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

Costs relating to the Council’s role as a component of democratic government, including elections, members’fees and expenses, subscriptions to local authority associations, meetings of council and policy makingcommittees, area representation and public disclosure and compliance.

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

Fire protection, animal control, beach control, enforcement of local government regulations, emergencyservices, other.

Inspection, immunisations, food control, health centres, other, administration.


page 30



Note 3. Income from Continuing Operations

$ '000

(a) Rates & Annual Charges

Ordinary RatesResidentialFarmlandMiningBusinessTotal Ordinary Rates

Special RatesSewerage ServicesParkingTotal Special Rates

Annual Charges (pursuant to s.496, s.496A, s.496B, s.501 & s.611)Domestic Waste Management ServicesStormwater Management ServicesWater Supply ServicesSewerage ServicesGas MainsTotal Annual Charges

TOTAL RATES & ANNUAL CHARGES

Council has used 2013 year valuations provided by the NSW Valuer General in calculating its rates.

3,746 237

5,528

22,800

1,176 347 22

21,523

5,234

5,795

1,522

236

1,859

10,970

6,075 227

6,302

1,122 339

Actual

6,066

1,588

1,383

Actual

5,559

10,508

1,933 1,332

222

Notes 2014

21

2013

5,781

3,516


page 31



Note 3. Income from Continuing Operations (continued)

$ '000

(b) User Charges & Fees

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

Water Supply ServicesTrade WasteSeptic Approval Septic Inspections Total User Charges

Other User Charges & Fees(i) Fees & Charges - Statutory & Regulatory Functions (per s.608)

Planning & Building RegulationPrivate Works - Section 67Total Fees & Charges - Statutory/Regulatory

(ii) Fees & Charges - Other (incl. General User Charges (per s.608)

Leaseback Fees - Council VehiclesSwimming CentresOtherTotal Fees & Charges - Other

TOTAL USER CHARGES & FEES

13 14 10 10

201 116

145

6,256

114

5,342

240 11

4,782

Notes

262

2014Actual

5,006

4,082

4,222

2013Actual

729 151

718

980 880

15 270

148 77


page 32




$ '000

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

Interest & Dividends - Interest on Overdue Rates & Annual Charges (incl. Special Purpose Rates)

- Interest earned on Investments (interest & coupon payment income)

- Interest on Deferred DebtorsTOTAL INTEREST & INVESTMENT REVENUE

Interest Revenue is attributable to:Unrestricted Investments/Financial Assets:Overdue Rates & Annual Charges (General Fund)

General Council Cash & InvestmentsRestricted Investments/Funds - External:Development Contributions - Section 94Total Interest & Investment Revenue Recognised

(d) Other Revenues

Rental Income - Other Council PropertiesLegal Fees Recovery - Rates & Charges (Extra Charges)

Esbank HouseInspectionsLibrary ChargesSales - TourismOtherTOTAL OTHER REVENUE

27 11 8 5

22 23 98 59

436 451

837

116

721

721

116

1 -

2013Actual

111 857

646 55

588 36

42

3

816

837 -

Actual Notes 2014

111

969

969

-


page 33




$ '000

(e) Grants

General Purpose (Untied)Financial AssistancePensioners' Rates Subsidies - General Component

Total General Purpose

1 The Financial Assistance Grant for 13/14 reflects a one off reduction due to the fact that this grant is no longer being paid in advance by up to 50% as has occurred in previous years - it does not represent a loss of income but is instead a timing difference.

Specific PurposePensioners' Rates Subsidies: - Water - SewerageWater SuppliesSewerage ServicesCommunity CentresEconomic DevelopmentFlood RestorationHeritage & CulturalLibrary - per capitaRecreation & CultureStreet LightingTransport (Roads to Recovery)

Transport (Other Roads & Bridges Funding)

OtherTotal Specific PurposeTotal Grants

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

3,416 39

2,940

-

- -

-

2014Operating

2013

- 8

855

5,014

-

3,416 5,826

304 2,257

88 93

-

49

2,561

-

-

745

561 -

49 560

437

-

-

64

-

1,081

4,745

-

-

Operating 2014

-

8

-

98

299

843

2013

183

88 320

53

4,446

- -

Capital

-

-

-

-

1,408 120

3,000

130

5,826 67 349

7,842

- 2,211

-

23

2,791

64

7,842

4,882

4,882

-

4,215

- -

22

-

223

-

- -

-

226

-

3,076

-

100 4,882

1,868

Capital

7,842

-

4,493

1


page 34




$ '000

(f) Contributions

Developer Contributions:(s93 & s94 - EP&A Act, s64 of the LGA):S 93F - Contributions using Planning AgreementsS 94 - Contributions towards amenities/servicesS 94A - Fixed Development Consent LeviesS 64 - Water Supply ContributionsS 64 - Sewerage Service ContributionsOther Developer ContributionsTotal Developer Contributions

Other Contributions:EmploymentFire ContributionHazard ReductionHeritage/Cultural UWSKerb & GutterRebatesRecreation & CultureRoads & BridgesRMS Contributions (Regional Roads, Block Grant)

Sewerage (excl. Section 64 contributions)

TourismWater Supplies (excl. Section 64 contributions)

OtherTotal Other ContributionsTotal Contributions

TOTAL GRANTS & CONTRIBUTIONS

54

2,940 13

889

4,996

1,580 282 13

889

407 44

-

1,580

- 5

-

460

17 23

-

42

9

-

-

41

-

-

458 300 63 35

174 45

31 -

-

2014Operating

- 17 -

-

-

Operating

18 -

-

- -

6,715

- -

248

-

-

- -

- -

291

22

Capital

9

2013

- -

- - -

-

2013

12,449

-

-

- 837

-

5,240

50 329

- 47

4,607

185

358 4,278

-

-

67

-

21 -

501

-

Capital

-

-

20 -

20

2014


page 35




$ '000

(g) Restrictions relating to Grants and Contributions

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

Unexpended at the Close of the Previous Reporting Period

add: Grants & contributions recognised in the current period but not yet spent:

less: Grants & contributions recognised in a previous reporting period now spent:

Net Increase (Decrease) in Restricted Assets during the Period

Unexpended and held as Restricted Assets

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

(1,056)

Actual

12 16 1,553

4,780

(210)

1,616

2013

1,347

2,406 3,374

2014Actual

3,724

(3,462)

3,417

4,780

4,780

3,724

3,164

2,159


page 36



Note 4. Expenses from Continuing Operations

$ '000

(a) Employee Benefits & On-Costs

Salaries and WagesTravellingEmployee Leave Entitlements (ELE)

SuperannuationWorkers' Compensation InsuranceFringe Benefit Tax (FBT)

Payroll TaxTraining Costs (other than Salaries & Wages)

Employee MedicalsCentral West Group ApprenticesTotal Employee Costsless: Capitalised CostsTOTAL EMPLOYEE COSTS EXPENSED

Number of "Equivalent Full Time" Employees at year end

(b) Borrowing Costs

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

(ii) Other Borrowing CostsDiscount adjustments relating to movements in Provisions (other than ELE)

- Remediation LiabilitiesInterest applicable on Interest Free (& favourable) Loans to CouncilTotal Other Borrowing CostsTOTAL BORROWING COSTS EXPENSED

(c) Materials & Contracts

Raw Materials & ConsumablesContractor & Consultancy CostsAuditors Remuneration (1)

Legal Expenses: - Legal Expenses: Planning & Development - Legal Expenses: OtherTOTAL MATERIALS & CONTRACTS

82 7 15

2014

1,065

180

885

1,353

88

Notes

402

11,083

209

49

- 26

69

29 27

52

1,213

8,736 8,804

19

148

1,065

297 192

-

8,644

2,139

2

102

15,606

-

187

15,272

2013

108

10,594 694

1,343

Actual

(1,176)

148

Actual

44

14,430

70

8,487

489

-

17

1,520

-

35

1,083 1,081

1,572

14,441 (831)

252


page 37



Note 4. Expenses from Continuing Operations (continued)

$ '000

(c) Materials & Contracts (continued)

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

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

Total Auditor Remuneration

$ '000

(d) Depreciation, Amortisation & Impairment

Plant and EquipmentOffice EquipmentFurniture & FittingsBuildings - SpecialisedOther StructuresInfrastructure: - Roads - Bridges - Footpaths - Stormwater Drainage - Water Supply Network - Sewerage Network - Swimming PoolsOther Assets - Library BooksAsset Reinstatement CostsTotal Depreciation & Impairment Costsless: Capitalised CostsTOTAL DEPRECIATION &IMPAIRMENT COSTS EXPENSED

966

-

- -

-

2014

52

52

-

-

Actual

-

35

429

-

Depreciation/Amortisation

-

-

- -

-

9 & 26

Impairment Costs

- -

-

Notes

-

- -

Actual 2013

-

- -

-

-

-

60

-

-

-

-

- 168 -

- -

- -

9,689

3

Actual Actual 2014

27

2013

965

751 1,271

35

3,216

2,036

1,021

427

(523)

6

286 335

9,689

8,609

100 105 168 166

164

35 52

2,112

2,056

168

8,086

1,058

-

48

Actual Actual Notes 2014 2013

186


page 38



Note 4. Expenses from Continuing Operations (continued)

$ '000

(e) Other Expenses

AdvertisingBad & Doubtful DebtsBank ChargesCommissionsCouncillor Expenses - Mayoral FeeCouncillor Expenses - Councillors' FeesCouncillors' Expenses (incl. Mayor) - Other (excluding fees above)

Donations, Contributions & Assistance to other organisations (Section 356)

- Donations, Contributions & Assistance - Contributions Emergency Services - Contributions Weeds InspectionsElection ExpensesElectricity & HeatingInsuranceOffice Expenses (including computer expenses)

PostagePrinting & StationeryStreet LightingSubscriptions & PublicationsTelephone & CommunicationsValuation FeesOtherTOTAL OTHER EXPENSES

Note 5. Gains or Losses from the Disposal of Assets

Property (excl. Investment Property)Proceeds from Disposal - Propertyless: Carrying Amount of Property Assets Sold / Written OffNet Gain/(Loss) on Disposal

Plant & EquipmentProceeds from Disposal - Plant & Equipmentless: Carrying Amount of P&E Assets Sold / Written OffNet Gain/(Loss) on Disposal

Financial Assets*Proceeds from Disposal / Redemptions / Maturities - Financial Assetsless: Carrying Amount of Financial Assets Sold / Redeemed / MaturedNet Gain/(Loss) on DisposalNET GAIN/(LOSS) ON DISPOSAL OF ASSETS

30

100 72

4

- 758

1,061

8

Notes

80

65

(85)

694

60

324

69

145

-

63

-

Actual

14

Actual

98

129

98

-

77

685

160 435

-

-

(273)

-

Actual

73 3

179

1,299

34 448

13

24

3,730

29

166

373

101

-

(255)

78

(20,812)

98 -

71

111

4,164

30

31

63

2014

123

-

24

-

371

Actual 2013

125

92

-

20,812


page 39



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

$ '000

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

- Deposits at Call- Short Term Deposits

Total Cash & Cash Equivalents

Investments (Note 6b)- Long Term Deposits

Total InvestmentsTOTAL CASH ASSETS, CASHEQUIVALENTS & INVESTMENTS

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

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

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

Investmentsb. "Held to Maturity"Investments

Note 6(b-i)Reconciliation of Investmentsclassified as "Held to Maturity"Balance at the Beginning of the YearAdditionsDisposals (sales & redemptions)

Balance at End of Year

Comprising:- Long Term Deposits

Total

Refer to Note 27 - Fair Value Measurement for information regarding the fair value of investments held.

2,833 2,833

- 2,833 (20,812)

-

Notes

2014Actual

Current Actual

20,812

Actual

2,833 2,833

19,011

2013

Current

-

20,812

6(b-ii)

23,645

-

-

10,701

19,096

-

-

3,934

1,101 2,833

15,162

1,711

3,547

3,934

15,162

-

3,934

3,934

914

-

-

- -

2014

-

-

3,934

3,934

3,934

Non Current

- 15,335

-

- -

- -

8,310

-

-

-

- 2,833

-

-

90

Non Current

-

Actual

-

-

2,833

-

-

2013

-

-


page 40



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

$ '000

Total Cash, Cash Equivalentsand Investments

attributable to:External Restrictions (refer below)

Internal Restrictions (refer below)

Unrestricted

$ '000

Details of Restrictions

External Restrictions - Included in LiabilitiesSpecific Purpose Unexpended Loans-General (A)Specific Purpose Unexpended Loans-Sewer (A)External Restrictions - Included in Liabilities

External Restrictions - OtherDeveloper Contributions - General (D)RMS (formerly RTA) Contributions (E)Specific Purpose Unexpended Grants (F)Specific Purpose Unexpended Grants-Water Fund (F)Water Supplies (G)Sewerage Services (G)Domestic Waste Management (G)External Restrictions - OtherTotal External Restrictions

A Loan moneys which must be applied for the purposes for which the loans were raised. D Development contributions which are not yet expended for the provision of services and amenities in accordance

with contributions plans (refer Note 17). E RMS Contributions which are not yet expended for the provision of services and amenities in accordance with

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

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

- -

1,155 -

- 3,007

(42) (4)

529

2,159 -

4,492 (489)

(1,685)

1,553

2013

-

2013Actual

23,645

Current Actual

Balance

-

Restrictions

11,370

(1,155)

-

(311)

-

Non Current

311

2014

Balance

-

-

16

-

- -

Transfers to

Non Current Actual

598

2,158 -

738

- 19,096

1,968 678 959

Current

2,478

10,445 11,370 9,904

4,492 (3,951) (5,417) 10,445

- 2,077 1,637

11,194

(1,731) 12

1,347

1,466

Restrictions

- 19,096

248

-

1,685 1,732

Actual

10,445

2014

2014 Closing Transfers from

- 7,913

23,645

-

1,081

Opening

(1,466)


page 41



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

$ '000

Internal RestrictionsPlant & Vehicle ReplacementEmployees Leave EntitlementDeposits, Retentions & BondsElectionLand & BuildingWorks in ProgressTotal Internal Restrictions

TOTAL RESTRICTIONS

Transfers from

- (3,918) 3,359 341

681

Balance

-

5,455

Opening

7,913

(9,661)

7,277 1,118

62 35

18,358

963 (4,244)

22,564

-

687

11,194

2014

587 1,162

Closing

-

Restrictions Transfers to

575 - 1,475

Balance

1,459 - 97

Restrictions

(6) 1,155 (320)


page 42



Note 7. Receivables

$ '000

PurposeRates & Annual ChargesInterest & Extra ChargesUser Charges & FeesAccrued Revenues - Interest on InvestmentsGovernment Grants & SubsidiesDeferred DebtorsNet GST ReceivableOther DebtorsTotal

less: Provision for ImpairmentRates & Annual ChargesUser Charges & FeesTotal Provision for Impairment - Receivables

TOTAL NET RECEIVABLES

Externally Restricted ReceivablesWater Supply - Specific Purpose Grants - Rates & Availability Charges - OtherSewerage Services - Specific Purpose Grants - Rates & Availability Charges- OtherTotal External RestrictionsInternally Restricted ReceivablesNilUnrestricted ReceivablesTOTAL NET RECEIVABLES

Notes on Debtors above:(i) Rates & Annual Charges Outstanding are secured against the property.(ii) Doubtful Rates Debtors are provided for where the value of the property is less than the debt outstanding. An allowance for other doubtful debts is made when there is objective evidence that a receivable is impaired.(iii) Interest was charged on overdue rates & charges at 9.00% (2013 10.00%).

Generally all other receivables are non interest bearing.(iv) Please refer to Note 15 for issues concerning Credit Risk and Fair Value disclosures.

38

-

634 304 -

-

-

(11)

-

1,868 3,104

-

3,115 -

- -

335

-

-

-

- 266 -

-

-

2,812

- 3

-

-

- -

-

1,937

-

3,104

(11) -

-

-

- 1,236

- -

- 10

- -

(19)

5,460

284

2014

-

-

2,648

106

94

5,479

- -

1,303

(8)

-

-

-

1,509

- -

Non Current 2013

Current Non Current

5,460

357 - -

-

- 219 828

781

767 -

247

-

-

-

-

Notes

604

74

(11)

701

1,241

Current


page 43



Note 8. Inventories & Other Assets

$ '000

InventoriesReal Estate for resale (refer below)

Stores & MaterialsTotal Inventories

Other AssetsPrepaymentsTotal Other Assets

TOTAL INVENTORIES / OTHER ASSETS

Externally Restricted Assets

WaterStores & MaterialsTotal Water

SewerageStores & MaterialsTotal Sewerage

Domestic Waste ManagementNil

OtherNil

Total Externally Restricted AssetsTotal Internally Restricted AssetsTotal Unrestricted AssetsTOTAL INVENTORIES & OTHER ASSETS

-

514

181

129

19

-

738

738

738

-

-

547

148 -

-

738

479

- 479

738

2014Notes

-

-

Current

738

- 514

695

Non Current

129

- 17

-

181

- 17

-

683 541

695 738

142 -

2013

683

Current

204

-

204

125 125

- -

738

19

-

Non Current

-

738

-

738 -


page 44



Note 8. Inventories & Other Assets (continued)

$ '000

Other Disclosures

(a) Details for Real Estate DevelopmentResidentialTotal Real Estate for Resale(Valued at the lower of cost and net realisable value)

Represented by:Acquisition CostsTotal CostsTotal Real Estate for Resale

Movements:Real Estate assets at beginning of the yearTotal Real Estate for Resale

(b) Inventory Write DownsThere were no amounts recognised as an expense relating to the write down of Inventory balances held during the year.

Refer to Note 27 - Fair Value Measurement for information regarding the fair value of other assets held.

738 - 738

-

738

738

738

738

- 738

738

2014Non Current Current

- -

-

Non Current

-

2013

738

-

- -

738

-

-

738 -

738

738

-

Current

738



Note 9a. Infrastructure, Property, Plant & Equipment

At Carrying At Carrying

$ '000 Fair Value Dep'n Value Fair Value Dep'n Value

Plant & Equipment 18,466 14,852 3,614 868 (255) (965) - - - - 19,079 15,817 3,262 Office Equipment 3,619 3,077 542 156 - (186) - - - - 3,775 3,263 512 Furniture & Fittings 269 252 17 17 - (6) - - - - 286 258 28 Land: - Operational Land 7,721 - 7,721 - (85) - - - - - 7,634 - 7,634 - Community Land 14,679 - 14,679 160 - - - - - 11 14,850 - 14,850 Buildings - Specialised 106,431 52,033 54,398 612 - (3,216) - - - - 107,043 55,249 51,794 Other Structures 13,963 8,967 4,996 577 - (286) - (1,250) (1,656) - 12,884 8,003 4,881 Infrastructure: - Roads 216,673 65,049 151,624 5,316 - (2,056) - (5,801) (23,384) - 198,605 61,304 137,301 - Bridges - - - 186 - (100) - 1,948 9,627 - 9,813 2,048 7,765 - Footpaths - - - 115 - (168) - 3,853 13,757 - 13,871 4,021 9,850 - Bulk Earthworks (non-depreciable) 31,853 - 31,853 - - - - - - - 31,853 - 31,853 - Stormwater Drainage 34,470 18,353 16,117 352 - (429) (160) - - - 34,662 18,622 16,040 - Water Supply Network 83,015 57,021 25,994 2,154 - (751) - - - 2,324 87,493 57,772 29,721 - Sewerage Network 96,333 40,280 56,053 3,455 - (1,271) - - - 2,697 102,485 41,551 60,934 - Swimming Pools - - - 437 - (27) - 1,250 1,656 - 2,093 1,277 816 Other Assets: - Library Books 799 601 198 47 - (60) - - - - 846 661 185 Reinstatement, Rehabilitation & Restoration Assets (refer Note 26): - Tip Assets 3,996 1,512 2,484 854 (1,282) (168) - - - - 3,568 1,680 1,888 TOTAL INFRASTRUCTURE,PROPERTY, PLANT & EQUIP.

Additions to Buildings & Infrastructure Assets are made up of Asset Renewals ($11,449) and New Assets ($1,318).Renewals are defined as the replacement of existing assets (as opposed to the acquisition of new assets).

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

page 45

Financial Statem

ents 2014

650,840 271,526 379,314 5,032 15,306 (1,622) (9,689) (160) - -

as at 30/6/2013Asset Movements during the Reporting Period

AccumulatedAdjustments& Transfers

Accumulated Depreciation

Transfers

632,287 261,997 370,290

as at 30/6/2014

Asset Additions

WDVof Asset

Disposals

Depreciation Expense

Revaluation Increments

to Equity (ARR)

AccumulatedTransfers due to

Asset Class splits


page 46



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

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

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

60,934 60,934

706 210 210

102,485

- Operational Land

- Community Land -

Plant & Equipment

Infrastructure

Land

192,655

Total DWM

-

2014

Sewerage Services

-

- 101,084 TOTAL RESTRICTED I,PP&E

$ '000

Class of Asset

Water Supply

Infrastructure Office Equipment Plant & Equipment

Total Water Supply

-

Actual

At A/Dep &At

-

Office Equipment-

-

Total Sewerage Services -

Domestic Waste Management

- - -

-

- 916

210

182,184 99,217

706

96,492 -

87,493

-

57,772 -

1,704

25,996

- 151 - -

89,254 -

-

1,705 - -

- 59,533 84,776

Fair Value

56

Cost

29,721 -

1,705

55

1 1,705 -

56 -

Impairm't

29,721

1 8

150

7 - 1

83,015

A/Dep & Carrying ValueCost

At

-

Carrying Value

At

56 1 -

Impairm'tFair Value

- -

56,055 40,437

-

41,551 41,551 102,485

210 -

706 - 706 -

916

Actual

- 916

91,571

Actual

82,967

57,021

40,280 56,053 96,333

58,780 25,994

916

Actual2013


page 47



Note 10a. Payables, Borrowings & Provisions

$ '000

PayablesGoods & Services - operating expenditureAccrued Expenses: - Borrowings - Other Expenditure AccrualsAdvancesSecurity Bonds, Deposits & RetentionsATO - Net GST PayableTotal Payables

BorrowingsLoans - Secured 1

Total Borrowings

ProvisionsEmployee Benefits;Annual LeaveLong Service LeaveSub Total - Aggregate Employee BenefitsAsset Remediation/Restoration (Future Works)

Total Provisions

Total Payables, Borrowings & Provisions

(i) Liabilities relating to Restricted Assets

Externally Restricted AssetsWaterSewerLiabilities relating to externally restricted assets

Internally Restricted AssetsNil

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

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

-

21 49

14,348

-

3,093

Current Notes2014

Current

-

-

2014

26,381

Non Current

1,619

2,372

-

14,348

9,645

1,594

10,696 11,125

2,700

Current

- 26

- -

16,973 15,685

4,551

3,857

1,237

1,485

-

Non Current 2013

681

4,127 65

- -

-

- - -

-

2,823

-

Non Current

17

701 - 707 521

-

15,685

4,053

1,435 544

1,979

1,237

3,857 -

16,973

8,727 16,934

Non Current

988

1,353

-

-

-

988

-

9,168

1,979 7,189

918

488 12,754

11,164

9,645

9,545

2013

9,168 28,098

4,053

918

10,696

11,164

Current

11,125

430

28,098 12,033

26,381


page 48



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

$ '000

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

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

Provisions - Employees Benefits

Note 10b. Description of and movements in Provisions

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

b. Asset Remediation, Reinstatement & Restoration Provisions represent the Present Value estimate of future costs Council will incur in order to remove, restore & remediate assets &/or activities as a result of past operations.

2013

Unused amounts reversed

2014

2014

Class of Provision Decrease due to Payments

Additional Provisions

OpeningBalance

as at 1/7/13

2,975

Actual

2013

Asset RemediationTOTAL 11,125

11,125 (1,283) -

Remeasurement effects due to

Discounting

- - 10,696

ClosingBalance

as at 30/6/14

2,490

-

2,490

Actual

10,696 854 (1,283)

2,975

854


page 49



Note 11. Statement of Cash Flows - Additional Information

$ '000

(a) Reconciliation of Cash Assets

Total Cash & Cash Equivalent AssetsLess Bank OverdraftBALANCE as per the STATEMENT of CASH FLOWS

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

Net Operating Result from Income StatementAdjust for non cash items:Depreciation & AmortisationNet Losses/(Gains) on Disposal of AssetsNon Cash Capital Grants and ContributionsAmortisation of Premiums, Discounts & Prior Period Fair Valuations - Interest Exp. on Interest Free Loans received by Council (previously Fair Valued)

Unwinding of Discount Rates on Reinstatement Provisions

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

192

-

9,689 (98)

32

16,731

- 854

101

(2,258)

(1,283)

10,696

(196)

10,296

21

(6)

15,162

-

(4,277)

8

297

8,086

32

2013

20,812

Actual

- 6a

10

NotesActual

-

35 (23)

-

603

559

830

(183)

(129)

3,027

270

148

15,162 20,812 -

2014


page 50



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

$ '000

(c) Non-Cash Investing & Financing Activities

Other Non Cash Items: Hoskins Bld UWSOther Non Cash Items: PWD Past Yrs Total Non-Cash Investing & Financing Activities

(d) Financing Arrangements

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

Bank Overdraft Facilities (1)

Credit Cards / Purchase CardsTotal Financing Arrangements

1. The Bank overdraft facility may be drawn at any time and may be terminated by the bank without notice. Interest rates on overdrafts are Interest Rates on Loans & Other Payables are disclosed in Note 15.

(ii) Secured Loan Liabilities

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

Note 12. Commitments for Expenditure

(a) Capital Commitments (exclusive of GST)

Nil

(b) Finance Lease Commitments

Nil

(c) Operating Lease Commitments (Non Cancellable)

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

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

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

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

25

-

93

1,338

-

-

525

Actual

25

Actual

-

500

2,939

28

525

4,277

Actual 2013

Actual 2014

-

65

-

Notes

500


page 51



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

$ '000

Local Government Industry Indicators - Consolidated

1. Operating Performance RatioTotal continuing operating revenue (1)

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

(excl. Capital Grants & Contributions)

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

(less ALL Grants & Contributions)

Total continuing operating revenue (1)

3. Unrestricted Current RatioCurrent Assets less all External Restrictions (2)

Current Liabilities less Specific Purpose Liabilities (3, 4)

4. Debt Service Cover RatioOperating Result (1) before capital excluding interestand depreciation / impairment / amortisation (EBITDA)

Principal Repayments (from the Statement of Cash Flows)

+ Borrowing Interest Costs (from the Income Statement)

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

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

Notes

(1) Excludes fair value adjustments and reversal of revaluation decrements, net gain/(loss) on sale of assets and net share of interests in joint ventures.(2) Refer Notes 6-8 inclusive. Also excludes any Real Estate & Land for resale not expected to be sold in the next 12 months(3) Refer to Note 10(a).(4) Refer to Note 10(a)(ii) - excludes all payables & provisions not expected to be paid in the next 12 months (incl. ELE).

35,535

Amounts Prior Periods

-5.27%

Indicator

30,539 40,775

8,560 2,400

11,840

2013

(2,342) -6.59%

2014

3.49

59.73%

2014

4.63%

3.57

10.00

1.90 : 1

7.74

4.70%

6,237

6.33%

x122,467

19,096

74.90%

4.83

2.88

1,517 23,963

2012


page 52



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

―― Minimum 0.00%

Source for Benchmark: Code of Accounting Practice and Financial Reporting

―― Minimum 60.00%


―― Minimum 1.50


This ratio measures fiscal flexibility. It is

the degree of reliance on external funding

sources such as operating grants &

contributions.

Purpose of Operating

Performance Ratio 2013/14 Ratio -6.59%

2013/14 Ratio 1.90 : 1

Commentary on 2013/14 Result

The ratio is higher than expected due to lower than normal financial assistance

grant

Ratio has declineddue to financial assistance grant no longer being paid in advance - effect $2.2M. Also Council's

externally restricted assets have increased meaning there is less unrestricted current

assets.


2013/14 Ratio 74.90%

Purpose of Own Source Operating

Revenue Ratio

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

the unrestricted activities of Council.

While Council continues to have a net operating deficit before capital grants and

contributions, This ratio will be below benchmark. If a full years allocation of

financial assistance grant had been received this ration would have almost

achieved the benchmark


Purpose of Unrestricted Current

Ratio

This ratio measures Council’s

achievement of containing operating expenditure within operating revenue.

4.83

3.49

1.90

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

2012 2013 2014

Rat

io :

1

3. Unrestricted Current Ratio

0.00%

-5.27%

-6.59%

-9%

-8%

-7%

-6%

-5%

-4%

-3%

-2%

-1%

0%2012 2013 2014

Rat

io %

1. Operating Performance Ratio

0.00%

59.73%

74.90%

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

100%

2012 2013 2014

Rat

io %

2. Own Source Operating Revenue Ratio


page 53



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

―― Minimum 2.00

Source for Benchmark: NSW Treasury Corporation

―― Minimum 3.00


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

recovery efforts.


This ratio measures the availability of operating cash to

service debt including interest, principal and

lease payments

A Debt Service Ratio of 3.49% means Council has capacity to borrow more funds

if required.

2013/14 Ratio 3.57

2013/14 Ratio 6.33%

This ration shows how many months worth of expenses ouncil can meet with its

current level of cash. 7 months worth of cash means Council would receive 2 rates

installments meaning it has plenty of usable cash.

Increase in ratio is caused by a change in accounting process, where rates paid in

advance are not offset against rates receivable

Purpose of Rates & Annual Charges

Outstanding Ratio

Commentary on 2013/14 ResultPurpose of Debt

Service Cover Ratio

Purpose of Cash Expense Cover

Ratio

Commentary on Result

2013/14 Ratio 7.74

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

for its immediate expenses without

additional cash inflow.

4.70% 4.63%

6.33%

0%

2%

4%

6%

8%

10%

2012 2013 2014

Rat

io %

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

0.00

2.88 3.57

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

2012 2013 2014

Rat

io (

x)

4. Debt Service Cover Ratio

0.00

10.00

7.74

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

2012 2013 2014

Rat

io (

mth

s)

6. Cash Expense Cover Ratio


page 54



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

$ '000

Local Government Industry Indicators - by Fund

1. Operating Performance RatioTotal continuing operating revenue (1)

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

(excl. Capital Grants & Contributions)

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

(less ALL Grants & Contributions)

Total continuing operating revenue (1)

3. Unrestricted Current RatioCurrent Assets less all External Restrictions (2)

Current Liabilities less Specific Purpose Liabilities (3, 4)

4. Debt Service Cover RatioOperating Result (1) before capital excluding interestand depreciation / impairment / amortisation (EBITDA)

Principal Repayments (from the Statement of Cash Flows)

+ Borrowing Interest Costs (from the Income Statement)

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

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

Notes

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

-16.09%

prior period: -12.12% 10.39%

86.34% 66.82%

prior period: 57.91% 87.35% 54.02%

9.62

2.23

7.01%

0.00

-7.84%

1.05%54.94% 4.40%

3.49

1.29%

0.00 5.86

21.23%0.00%

prior period:

-4.86

10.78%

-12.64 : 1148.58 : 1

0.91

2014

0.00

1.77 4.63

2014

prior period: 7.82

2014

x12

General 5

prior period:

5.89

70.41 : 1

0.96

Water

prior period:

Sewer

92.27%

0.00


page 55



Note 14. Investment Properties

$ '000

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

Note 15. Financial Risk Management

Risk Management

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

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

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

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

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

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

Financial LiabilitiesPayablesLoans / AdvancesTotal Financial Liabilities

Fair Value is determined as follows:

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

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

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

Refer to Note 27 - Fair Value Measurement for information regarding the fair value of financial assets & liabilities

Fair Value Carrying Value

4,551 17,961

26,749 26,749 24,866

20,812

2014Actual

Notes 2013

5,320

Actual

4,127

21,473 21,473 22,088

2,833

2013

17,961

3,104 3,934 3,934

15,162

20142014

4,127

20,812

16,922

15,612

2013

2,833 5,460

22,088

3,104 24,556

4,551 16,922


page 56



Note 15. Financial Risk Management (continued)

$ '000

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

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

Council's Finance area manages the Cash & Investments portfolio with the assistance of independent advisors.

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

The risks associated with the investments held are:

- Price Risk - the risk that the capital value of Investments may fluctuate due to changes in market prices, whether there changes are caused by factors specific to individual financial instruments or their issuers or are caused by factors affecting similar instruments traded in a market.

- Interest Rate Risk - the risk that movements in interest rates could affect returns and income.

- Credit Risk - the risk that the investment counterparty) will not complete their obligations particular to a financial instrument, resulting in a financial loss to Council - be it of a capital or income nature.

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

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

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

2014Possible impact of a 1% movement in Interest Rates

2013Possible impact of a 1% movement in Interest Rates

Equity Profit Equity

18

Decrease of Values/Rates

(7) (7)

18

7 7

Increase of Values/Rates

18 18

Profit


page 57




$ '000

(b) Receivables

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

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

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

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

There are no significant concentrations of credit risk, whether through exposure to individual customers,specific industry sectors and/or regions.

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

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

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

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

(i) Ageing of Receivables - %Current (not yet overdue)Overdue

(ii) Ageing of Receivables - valueCurrent (not yet overdue)Past due by more than 90 days

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

Receivables Charges Charges

100%

1,240

11 -

828

100%

58%

2013

2,459

19

20142014

Other

478

Annual

100%

37 1,780 1,961

2,025

Rates &

1,203

11

3% 58%42%

Receivables

2013Rates &

42%

Other

97%3%

Annual

97%100%

64 350

11

4,239

8

20132014


page 58




$ '000

(c) Payables & Borrowings

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

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

Payment terms can (in extenuating circumstances) also be extended & overdraft facilities utilised as required.

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

$ '000

Trade/Other PayablesLoans & AdvancesTotal Financial Liabilities

Trade/Other PayablesLoans & AdvancesTotal Financial Liabilities

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

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

Trade/Other PayablesLoans & Advances - Fixed Interest Rate

Loan Agreement breachesNo breaches to loan agreements have occurred during the reporting year

4,275

-

10.0%

Interest Rate

2,080

Interest RateCarrying

-

8,417

Average

16,922

2,021 -

22,088

701

701 5,447

2,308

- 3,426

2,080

2,127

2,111

2,058

2,121

5,902

22,088

Average

8,417

18,707

4,127

4,127 16,922 21,473

5.7% 17,961 5.6%

Value

2013Carrying

22,834

-

2,082 2,018

2,111 2,018

4,551 0.0%

Value

-

2,058

Subjectto no

≤ 1 Year

4,127

Values

2,121

681

681

2014

17,961

29,242

4,551

2,082

18,380

-

2,127

21,473 2,226

-

2,226

33,517

3,594

payable in:3-4 Yrs

ActualTotal

maturity > 5 Yrs2-3 Yrs 4-5 YrsCarrying

2013

2014-

18,380

Cash

-

- -

Outflows1-2 Yrs


page 59



Note 16. Material Budget Variations

$ '000

Council's Original Financial Budget for 13/14 was adopted by the Council on dd/mm/yy.

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

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

Note that for Variations* of Budget to Actual :Material Variations represent those variances that amount to 10% or more of the original budgeted figure.F = Favourable Budget Variation, U = Unfavourable Budget Variation

$ '000

REVENUESRates & Annual Charges

User Charges & Fees

Interest & Investment Revenue

Other RevenuesSale of Lithgow Visitors Book $38k not in original budgetMayoral Ball $15k not in original budget

Operating Grants & ContributionsCouncil did not receive the advance payment of the Financial Assistance grant. The original budget as adopted, expected to receive four quarters worth of income, The effect of not receiving thispayment was $2,257k

Capital Grants & ContributionsExtra Flood Mitigation grant compared to original budget $1,258kExtra Capital contribution for work on Wolgan Rd to original budget $1,260kRMS Contribution Sodwalls Rd $307k and Pearsons Lookout $60k not in original budgetClarence Transfer Scheme grant $368k not in original budget

Net Gains from Disposal of AssetsThe monetary impact from disposing of assets is difficult to predict. As such, although Council fully expectedto dispose of some assets, net gains or losses were not budgetted for

2014Budget

837

22,800

918

2% F

2014---------- Variance* ----------

(73)

2014

U22,873

6,144 6,256

Actual

(0%)

112

F

(81) (9%)

491 646

U

155

F1,606

-

7,448

129

226%5,240

4,996

32%

F

U

129 0%

(2,452) (33%)

3,634


page 60



Note 16. Material Budget Variations (continued)

$ '000

EXPENSESEmployee Benefits & On-Costs

Borrowing CostsNew loans included in original budget for South Bowenfels sewerage scheme and Clarence Transfer schemethat were not drawn down during the year

Materials & ContractsMaintenance expenses on plant was 100k under the original budget figures.

Depreciation & Amortisation

Other ExpensesLegal Expenses $96k less than original budget. Contribution to RFS $53k less than original budgetTelephone Expenses $28k less than original budgetStreet Lighting costs $60k less than original budgetOffice Expenses $79k less than original budget

Budget Variations relating to Council's Cash Flow Statement include:Cash Flows from Operating ActivitiesSee budget variations from Operating Statement detailed above

Cash Flows from Investing Activities

Cash Flows from Financing Activities

U

(5%)(473)

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

(3%)

513 F30%

10%9,832

1,726

Budget

14,007

2014

4,688 F

1,028

(434) 14,441

Actual

8,804

9,216 U9,689

F

1,213

2014 2014

0.0%

0.0%

(1,187)

- (14,759)

958

9,227 10,296

U-

U(14,759)

(1,187)

3,730

1,069 F11.6%

20%



Note 17. Statement of Developer Contributions

$ '000

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

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

SUMMARY OF CONTRIBUTIONS & LEVIES

RoadsBushfire

Exp

still

InternalOver or

outstandingBorrowings(under)

-

1,121

Funding

-

-

CumulativeProjections

- 122 - - 999

due/(payable)

Future

-

income

- Asset

Borrowing

-

- 1,121

1,553

-

- 1,553 - - 1,121

- S94 Contributions - under a Plan

Total S94 Revenue Under Plans

Total Contributions

S94A Levies - under a Plan

- 1,347

-

432

- 248

- 248

Held as

-

Internal

999

Restricted(to)/from

122

432 -

- -

(42)

(42)

in Year

122 (42)

(42) -

-

-

1,347

PURPOSE OpeningBalance

- -

Contributionsreceived during the Year

Interest Expenditureearned during

-

- 915

Cash

248 -

-

793

248 -

- -

Non Cash Year

-

page 61

Financial Statem

ents 2014



Note 17. Statement of Developer Contributions (continued)

$ '000

S94 CONTRIBUTIONS - UNDER A PLAN

RoadsBushfire

S94A LEVIES - UNDER A PLAN

Other Sec 94A Plan 12/13Other (Prev Yrs)

Borrowings

-

Exp

- - -

-

outstandingAsset(to)/from

- - 1,121

- 999 due/(payable)

Internal

Future

Held as

999 income

Over or

Projections

still

- Funding

122

Borrowings

Cumulative

(under)

- -

1,121

Interest

in YearNon Cash

-

PURPOSEBalance

915

- Cash

Total - -

248

793 122

Opening

248

Contributions

Over or

Cumulative

due/(payable)

Internal

Funding

- -

246

(to)/from

- - income

(under)

Internal

- -

Exp

stilloutstanding

Restrictedduringearned BorrowingExpenditureInterest

432

Projections

FutureAsset

Held as

received during the Year

122

RestrictedduringExpenditure Internal

Borrowing

- (42) -

(42) Year

-

earned

page 62

Total

Balance

- - -

PURPOSE OpeningYear

received during the YearNon Cash in Year

Contributions

Cash

-

- 246 - - - -

- -

- -

- 186

-

Financial Statem

ents 2014

432

186

-


page 63



Note 18. Contingencies & Other Assets/Liabilities Not Recognised

$ '000

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

Government.

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

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

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

Council participates in an employer sponsored The future realisation and finalisation of claimsDefined Benefit Superannuation Scheme, and makes incurred but not reported to 30/6 this year may resultcontributions as determined by the Superannuation in future liabilities or benefits as a result of pastScheme's Trustees. events that Council will be required to fund or share

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

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

Council has a contingent liability to contribute furtherThe Local Government Superannuation Scheme equity in the event of the erosion of the Company'showever is unable to provide Council with an accurate capital base as a result of the company's pastestimate of its share of the net deficit and accordingly performance and/or claims experience or as a resultCouncil has not recorded any net liability from it's of any increased prudential requirements from APRA.Defined Benefit Scheme obligations in accordancewith AASB 119. These future equity contributions would be required

to maintain the company’s minimum level of NetFuture contributions made to the defined benefit Assets in accordance with its Licence Requirements.scheme to rectify the net deficit position will berecognised as an expense when they become (iv) Other Guaranteespayable - similar to the accounting for DefinedContributions Plans. Council has provided no other Guarantees other than

those listed above.


page 64



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

$ '000

LIABILITIES NOT RECOGNISED (continued):

2. Other Liabilities (iii) Potential Land Acquisitions due to Planning Restrictions imposed by Council

(i) Third Party ClaimsCouncil has classified a number of privately owned

The Council is involved from time to time in various land parcels as Local Open Space or Bushland.claims incidental to the ordinary course of businessincluding claims for damages relating to its services. As a result, where notified in writing by the various

owners, Council will be required to purchase theseCouncil believes that it is appropriately covered land parcels.for all claims through its Insurance Coverage anddoes not expect any material liabilities to eventuate. At reporting date, reliable estimates as to the value

of any potential liability (& subsequent land asset)(ii) S94 Plans from such potential acquisitions has not been

possible.Council levies Section 94/94A Contributions uponvarious development across the Council area throughthe required Contributions Plans. ASSETS NOT RECOGNISED:

As part of these Plans, Council has received funds (i) Land Under Roadsfor which it will be required to expend the monies inaccordance with those Plans. As permitted under AASB 1051, Council has elected

not to bring to account Land Under Roads that itAs well, these Plans indicate proposed future owned or controlled up to & including 30/6/08.expenditure to be undertaken by Council, which willbe funded by making levies and receipting funds in (ii) Infringement Notices/Finesfuture years or where a shortfall exists by the use ofCouncil's General Funds. Fines & Penalty Income, the result of Council issuing

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

Accordingly, at Year End, there is a potential assetdue to Council representing issued but unpaidInfringement Notices.

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


page 65



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

$ '000

Grant Funds due Office of Water Lithgow &Wallerawang STPs:

Following the completion of the upgrade to the Lithgow& Wallerawang STP, the final payments are due fromthe NSW Office of Water following the completion ofthe following reports:

- Water & Sewerage Strategic Plans - Residential Water Supply Best Practice Tariff - Water Supply & Sewerage Development Servicing Plans - Demand Management Plan - Drought Management Plan - Integrated Water Cycle Management Plan

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

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


page 66



Note 20. Equity - Retained Earnings and Revaluation Reserves

$ '000

(a) Retained Earnings

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

a. Correction of Prior Period Errorsb. Net Operating Result for the YearBalance at End of the Reporting Period

(b) Reserves

(i) Reserves are represented by:

- Infrastructure, Property, Plant & Equipment Revaluation Reserve- "Available for Sale" Financial Investments Revaluation Reserve- Other Reserves (Specify)Total

(ii) Reconciliation of movements in Reserves:

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

"Available for Sale" Financial Investments Revaluation Reserve- Opening Balance- Balance at End of Year

Other Reserves- Opening Balance- Balance at End of Year

TOTAL VALUE OF RESERVES

(iii) Nature & Purpose of Reserves

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

"Available for Sale" Financial Investments Revaluation Reserve- The "Available for Sale" Financial Investments Revaluation Reserve is used to account for the Fair Value movements in all financial assets so classified that remain on hand at year end.

Upon sale, amounts in Reserves are recognised in the Income Statement (in full) by way of transfer from the Reserve.

116,369 121,401

(269)

117,138

(269) (269) (269)

(500) (500) (500)

17,033 5,032

(269)

247,864 10,696

2013

236,541

9(a)

(500)

117,138

100,105

122,170

Actual Notes

20 (c)

244,837

(500) (269)

(2,400) 3,027

-

Actual 2014

122,170

116,369

244,837

(500)

121,401

117,138


page 67



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

$ '000

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

Correction of errors as disclosed in last year's financial statements:

- Building Asset Class - decrease to accumulated depreciation

- Tip Remediation Asset Class (increase) to accumluated depreciation due to discount rate adjustment

In accordance with AASB 108 - Accounting Policies, Changes inAccounting Estimates and Errors, the above Prior Period Errorshave been recognised retrospectively.

These amounted to the following Equity Adjustments:

- Adjustments to Opening Equity - 1/7/12 (relating to adjustments for the 30/6/12 reporting year end and prior periods)

- Adjustments to Closing Equity - 30/6/13 (relating to adjustments for the 30/6/13 year end)

Total Prior Period Adjustments - Prior Period Errors

(d) Voluntary Changes in Accounting Policies

Council made no voluntary changes in any accounting policies during the year.

Actual Actual

2,112

Notes

-

2014

(4,512)

(2,400)

2013

(2,400)

-

-

-


page 68



Note 21. Financial Result & Financial Position by Fund

Income Statement by Fund$ '000

Continuing OperationsIncome from Continuing OperationsRates & Annual ChargesUser Charges & FeesInterest & Investment RevenueOther RevenuesGrants & Contributions provided for Operating PurposesGrants & Contributions provided for Capital PurposesOther IncomeNet Gains from Disposal of AssetsTotal Income from Continuing Operations

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

Net Operating Result for the year before Grantsand Contributions provided for Capital Purposes

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

2014

1,212

129

3,927

646 -

Water

Actual 2014

Actual 20142014

5,101

- 4,700

-

6,137

Actual

680 802

General1Sewer

35

203 93

15,451

Actual

874

-

1,317

3,665

26,130

751

757

1,271

439

6,880

340

5,989

-

-

-

2,918

1,206 116

1,695 -

2,221

757

6,263 1,631 505

(3,422)

-

-

7,667

11,918

2,035

7,894

475

891 25,625

452


page 69


Notes to the Financial Statements as at 30 June 2014

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

Statement of Financial Position by Fund$ '000

ASSETSCurrent AssetsCash & Cash EquivalentsInvestmentsReceivablesInventoriesOtherTotal Current Assets

Non-Current AssetsInventoriesInfrastructure, Property, Plant & EquipmentTotal Non-Current AssetsTOTAL ASSETS

LIABILITIESCurrent LiabilitiesPayablesBorrowingsProvisionsTotal Current Liabilities

Non-Current LiabilitiesBorrowingsProvisionsTotal Non-Current LiabilitiesTOTAL LIABILITIESNet Assets

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

2014

60,934

1,237

289,397

2014

288,659

2,648

-

General1

10,518

12,754

3,091

50,707

13,184

-

20142014

-

32,280

-

4,641

17

3,007

-

63,891 -

104

1,594

488

- 384

29,721

-

Actual

Sewer

17,345 14,935

286,278 50,707

26,972

3,934

48

209,194

286,278

- 204

77,084

60,934 -

Actual

0

23,735

1,337

12,033 12,754

29,721

2,082

1,509 -

Actual

Water

32,280 -

8,727

307,038

4,399

- 1,594

34,362

2,957

125

Actual

337

20,760 -

10,696

738

1,637

1,303

-

-

382 430

17,641 -

-


page 70



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

$ '000

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

Note 23. Events occurring after the Reporting Date

Events that occur between the end of the reporting period (ending 30 June 2014) and the date when thefinancial statements are "authorised for issue" have been taken into account in preparing these statements.

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

Accordingly, the "authorised for issue" date is 31/10/14.

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

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

These financial statements (and the figures therein) incorporate all "adjusting events" that provided evidenceof conditions that existed at 30 June 2014.

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

These financial statements (& figures therein) do not incorporate any "non-adjusting events" that haveoccurred after 30 June 2014 and which are only indicative of conditions that arose after 30 June 2014.

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

Note 24. Discontinued Operations

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

Note 25. Intangible Assets

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

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

Actual Actual

Actual Actual


page 71



Note 26. Reinstatement, Rehabilitation & Restoration Liabilities

$ '000

Council has legal/public obligations to make restore, rehabilitate and reinstate the following assets/operations:

Asset/Operation

Tip OperationsBalance at End of the Reporting Period

Under AASB 116 - Property, Plant & Equipment, where the use of an asset results in the obligation to dismantleor remove the asset and restore the site on which the asset stands, an estimate of such costs is required to beincluded in the cost of the asset.

An equivalent liability must be recognised under AASB 137 - Provisions, Contingent Liabilities and ContingentAssets.

The provision has been calculated by determining the present value of the future expenditures expected to beincurred. The discount rate used is the risk free borrowing rate applicable to Council.

Reconciliation of movement in Provision for year:

Balance at beginning of yearAmounts capitalised to new or existing assets:New DisturbancesEffect of a change in discount rates used in PV calculationsAmortisation of discount (expensed to borrowing costs)Total - Reinstatement, rehabilitation and restoration provision

year of NPV of Provision

Various

10,696 11,125

11,125

(1,283) - 298 -

11,125

2014

Estimated

2013restoration

854

10(a) 10,696 10,696

11,125 10,827

-


page 72



Note 27. Fair Value Measurement

$ '000

The Council measures the following asset and liability classes at fair value on a recurring basis:

- Infrastructure, Property, Plant and Equipment- Investment Property- Financial Assets & Liabilities

The fair value of assets and liabilities must be estimated in accordance with various Accounting Standards foreither recognition and measurement requirements or for disclosure purposes.

AASB 13 Fair Value Measurement requires all assets and liabilities measured at fair value to be assigned to a"level" in the fair value hierarchy as follows:

Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities that the entity can access at the measurement date.

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

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

2014

Recurring Fair Value Measurements

Financial AssetsInvestments- "Held to Maturity"Cash and Cash EquivalentsTotal Financial Assets

Financial LiabilitiesPayablesLoans / AdvancesBonds and Security DepositsAccrued InterestTax LiabilitiesTotal Financial Liabilities

Infrastructure, Property, Plant & EquipmentOperational LandCommunity LandPlant & EquipmentOffice EquipmentFurniture & FittingsBuildingsOther StructuresRoads

(continued on the next page)

- - 16,922 30/06/14 3,093 - - 3,093

30/06/14 15,162 - - 15,162

30/06/14 - 28 28 30/06/13 - 14,470 14,470 30/06/13 - 4,881 4,881 30/06/10 - 137,301 137,301

30/06/14 - 512 512

30/06/14 - 1,003 - 1,003 30/06/14 16,922

20,194 1,003 - 21,197

30/06/14 49 - - 49 30/06/14 130 - - 130

19,096 - - 19,096

Valuation active mkts inputs inputs

30/06/14 3,934 - - 3,934

Fair Value Measurement HierarchyLevel 1 Level 2 Level 3 Total

Date Quoted Significant Significantof latest prices in observable unobservable

30/06/13 - 7,634 - 7,634 30/06/11 - 14,031 14,031 30/06/14 - 3,262 3,262


page 73



Note 27. Fair Value Measurement (continued)

$ '000

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

2014

Recurring Fair Value Measurements (cont'd)

Infrastructure, Property, Plant & Equipment cont'dBridgesFootpathsBulk EarthworksStormwater DrainageWater SupplySewerage NetworkSwimming PoolsLibrary BooksTip Asset RehabiliationTotal Infrastructure, Property, Plant & Equipment

(2) Transfers between Level 1 & Level 2 Fair Value Hierarchies

During the year, there were no transfers between Level 1 and Level 2 Fair Value hierarchies for recurring fairvalue measurements.

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

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

Opening Balance 1/7/2013Purchases (GBV)Disposals (WDV)FV Gains - Other Comprehensive Income

Closing Balance - 30/6/14

Further details for each asset class are available in Note 9a

- - - 650,840 650,840

5,031 5,031

15,305 15,305 (1,782) (1,782)

632,286 632,286

Equipment Total

Property Plant and

2,316 2,316 30/06/11 - 185 185 30/06/13 -

- 7,634 333,965 341,599

Fair Value Measurement HierarchyLevel 1 Level 2 Level 3

Valuation active mkts inputs inputs

30/06/10 - 9,850 9,850

30/06/10 - 16,040 16,040

30/06/10 - 7,765 7,765

30/06/10 - 31,853 31,853

30/06/12 - 29,721 29,721

N/A -

TotalDate Quoted Significant Significant

of latest prices in observable unobservable

816 816 30/06/12 - 60,934 60,934


page 74




$ '000

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

b. Significant unobservable valuation inputs used (for Level 3 asset classes) and their relationship to fair value.

The following table summarises the quantitative information relating to the significant unobservable inputs used inderiving the various Level 3 Asset Class fair values.

I,PP&E

Specialised Buildings

Road Infrastructure

Bulk Earthworks

Footpaths

Bridges

Stormwater Drainage

Water Supply Network

Sewerage Network

Other Structures

Depreciated Replacement Cost

Cost per Sq metre, dimensions and specifications, pattern of consumption components, useful lives, asset conditions

107,043 Depreciated Replacement Cost

Cost per sq metre, consumption rate, condition, useful life

VariousSignificant increase / decrease in cost per sq metre or useful life


Cost per sq metres dimensiions and specification, pattern of consumption components useful life residual value asset condition

VariousIncrease / decrease in materials cost labour rates and worker efficiency

9,813

34,662

87,493

102,485

12,884

ClassFair

Value(30/6/14)

$'000

ValuationTechnique/s

UnobservableInputs

Rangeof Inputs

(incl. probable)

Relationship of unobservableinputs to Fair Value

Depreciated Replacement Cost Cost per unit/ per metre Various

Increase/Decrease in materials cost, labour rates and worker


Unit rates, pattern of consumption, components, iuseful life, residual value, asset condition

Refer reference rate

manual

Valued in accordance with NSW Office of Water Reference Rates Manual



Refer reference rate

manual

Valued in accordance with NSW Office of Water Reference Rates Manual



Various

Increase/Decrease in materials cost, labour rates and worker efficiency

Increase/Decrease in materials cost, labour rates and worker efficiency

Various


Cost per sq metre pattern of consumption components useful lives asset conditions

variousIncrease / decrease in materials cost labour rates and worker efficiency

31,853 Current Replacement Cost Cost per Sq metre various

Increase / decrease in materials cost labour rates and worker efficiency


page 75




$ '000

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

b. Significant unobservable valuation inputs used (for Level 3 asset classes) and their relationship to fair value.

The following table summarises the quantitative information relating to the significant unobservable inputs used inderiving the various Level 3 Asset Class fair values.

I,PP&E

Library Books

Tip Assets

Swimming Pools

c. The Valuation Process for Level 3 Fair Value Measurements

Water and Sewer assets are dubject to a full revaluation process by a registered valuer each 5 years.During the interim years water and sewer assets are incrementally revalued via and index published bythe NSW Office of Water. For the 2014 financial year this index was 2.8%

Tip Assets shown in the balance sheet represent the taking up of, and restatement of the provision for tip remediation. In this regard the Tip Asset represents the net present value of the future expenditure on tip remediation and then depreciated over the life of the tip.

3,568

2,093

846 Depreciated Replacement Cost Unit Costs Various Increase / decrease in

materials cost

Depreciated Replacement Cost Unit Costs Various Increase / decrease in

materials cost

Depreciated Replacement Cost Cost per unit Various Increase / decrease in

materials cost

ClassFair

Value(30/6/14)

$'000

ValuationTechnique/s

UnobservableInputs

Rangeof Inputs

(incl. probable)

Relationship of unobservableinputs to Fair Value


page 76



Note 28. Council Information & Contact Details

Principal Place of Business:180 Mort St LITHGOW NSW 2790

Contact DetailsMailing Address: Opening Hours:PO Box 19 Monday to Friday LITHGOW NSW 2790 8:15am to 4:30pm

Telephone: 02 6354 9999 Internet:Facsimile: 02 6351 4259 Email:

Officers Elected MembersGENERAL MANAGER MAYORRoger Bailey Maree Statham

RESPONSIBLE ACCOUNTING OFFICER COUNCILLORSJuli-Ann Brozek Mr R Thompson

Mr P Pilbeam Mr C HunterMr W McAndrewMr J McGiness

AUDITORS Mr M TicehurstCrowe Horwath Auswild Mr R Higglett157 George Street Bathurst Mr F Inzitari

Other InformationABN: 59 986 092 492

[email protected]@lithgow.nsw.gov.au

http://[email protected]/

mailto:[email protected]

LG Solutions - John

Rectangle

Report on the Conduct of the Audit Lithgow City Council

Year Ended 30 June 2014

page 79

1

31 October 2014 Mr Roger Bailey General Manager Lithgow City Council P.O. Box 19 LITGHOW NSW 2790

Dear Roger,

Having completed an audit examination of the books of account and associated records of the

Lithgow City Council for the twelve months period ended 30th June 2014 we have pleasure in

submitting our report on the conduct of the audit in accordance with Section 417 (3) of the Local

Government Act 1993.

BACKGROUND

Council is required to prepare two sets of financial statements for audit each year, these being:

General Purpose Financial Statements

These financial statements present the actual financial position and performance of the Council.

Council has prepared the general purpose financial statements in accordance with:

� Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board,

� the Local Government Act 1993 and Regulations and

� the Local Government Code of Accounting Practice and Financial Reporting (the Code).

For the purpose of preparing these financial statements Council has been deemed to be a not-for-

profit entity.

These financial statements have been prepared in much the same manner as those of the previous

year.

page 80

LG Solutions - John

Rectangle

2

Special Purpose Financial Statements

These financial statements have been prepared in accordance with the requirements of the National

Competition Policy which requires separate financial statements for each declared business activity.

Council’s declared business activities for the 2014 financial year were:

� Water Supplies � Sewerage Service

The principle differences between the general purpose financial statements and the special purpose

financial statements are that:

� certain taxes and other costs that would apply if these business activities were operating in the commercial sector have been imputed in the special purpose financial statements (ie income tax and land tax),

� the special purpose financial statements contain additional disclosures such as council subsidies, return on investments and dividends paid.

These financial statements have been prepared in much the same manner as those of the previous

year.

Auditor’s Responsibility

As part of our role as auditor of Council, Section 415 (3) of the Local Government Act 1993 and the

Local Government (General) Regulation requires us to consider and provide comment on the

material items affecting the general purpose financial statements and other matters pertinent to the

audit. The following section of this report provides an understanding of Council’s financial position

as at 30 June 2014, its performance for the year then ended its cash flows and other material

financial matters.

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FINANCIAL RESULTS

The net operating result for the year before grants and contributions provided for capital purposes is a $2,213,000 deficit (2013: $1,753,000 deficit).The significant variance in Council’s reported financial results for the current year has been due to a number of major factors including:

• The Financial Assistance Grant for 2013/2014 reflects a one off reduction due to the fact that this grant is no longer being paid in advance by up to 50% as has occurred in previous years – it does not represent a loss of income but is instead a timing difference.

Excluding capital grants & contributions operating revenues for the year ($35,664,000) have increased

approximately 1.2% on those of the previous year ($35,235,000) whilst during the same period

operating expenses have also increased approximately 2.4% to $37,877,000.

A breakdown of Council’s operating revenues and expenses for the year are as follows:

Operating Revenues

Operating Expenditure

In addition to operating revenues, Council received capital grants and contributions amounting to

$5,240,000 (2013: $12,449,000). In the twelve months period to 30 June 2014 Council’s operating

result from continuing operations’ (including capital grants and contributions) was a surplus of

$3,027,000 compared with a surplus of $10,696,000 in the previous year.

64%

18%

2%

14% 2% 0%

Rates & Annual Charges

User Charges & Fees

Interest

Grants & Contributions (Operating)

Other Revenues

Net Gains from Asset Disposals

38%

3%23%

26%

10%

Employee

Borrowing

Materials & Contracts

Depreciation

Other

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BUDGET COMPARISON

The net operating surplus for the year of $3,027,000 was significantly higher than the original budget

expectations which anticipated a surplus of $11,000.

Details of material variations between the original budget and actual results are detailed in Note 16 to the General Purpose Financial Statements. In essence, the variations from the expected result have been attributed to:

Favourable Variances

• Gain on disposal of assets was not included in the original budget due to the unpredictability of

assets disposals. • Borrowing costs are lower than the expected amount as the new loans for South Bowenfels

sewerage scheme and Clarence Transfer scheme were not drawn down during the year.

• Materials & Contracts are lower than the budget due to maintenance expenses on plant being $100,000 under the original budget figures.

Unfavourable Variances

• Reduced financial assistance grant following cessation of the advance payments. • Employee Benefits & On-Costs expense is over the budgeted figure as Council has more

employees at 30 June 2014 compared to 2013 year.

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DETAILED AUDIT OBSERVATIONS

OPERATING INCOME

Rates and Annual Charges

Revenue from rates and annual charges (excluding Council owned properties) amounted to

$22,800,000 (2013: $21,523,000).

In setting the ordinary rates for the year Council resolved to adopt the approved maximum increase

available of 3.40%. This action has resulted in revenues from ordinary rates increasing from

$10,508,000 in 2012/2013 to $10,970,000 in the current year.

Council’s ordinary rating base remained fairly static in the current year with 11,134 assessments

subject to ordinary rates at years end.

Council further resolved that other charges be adjusted as follows:

• Water availability charges increased 8% to $135 per residential property.

• Domestic waste management access charges increased 7% to $387 per residential property.

• Sewerage Rates increased 9% to $836.

It was noted that the sewerage charges remained unchanged for both residential and business properties from 2013 to 2014 year.

Such increases have resulted in revenues as follows:

Annual Charges

2014

$

2013

$

Domestic Waste Management 3,746,000 3,516,000

Water Supply Services 1,176,000 1,122,000

Sewerage Services 347,000 339,000

Interest and extra charges on overdue rates for the year was $116,000 and outstanding rates were

subject to interest at the rate of 9.00% pa (2013: 10.00%).

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User Charges and Fees

Council derived $5,006,000 from specific user charges (2013: $4,222,000) and a further $1,250,000

from fees (2013: $1,120,000) imposed during the twelve months period ended 30 June 2014.

Impacting significantly on user charges and fees revenues for the year were:

Water Consumption Charges (increased $700,000)

Water usage charges were increased by 5% in the current year as follows:

2014

$

2013

$

Usage charge < 250kl $2.84 per kl $2.70 per kl

Usage charge > 250kl $4.26 per kl $4.05 per kl

Revenue from domestic water consumption charges amounted to $4,782,000 (2013: $4,082,000).

We understood that in 2010/11 the Council had adopted a water charges structure that moves toward

compliance with the State Government’s Best Practice Guidelines, and that requires an access charge

based on capacity (water meter size) and a two-step pricing system for water consumption for resident

customers. Under the Best Practice Guidelines, Council must receive no less than 75% of its water

charges from residential customers via usage charges. Therefore high volume water consumers will

pay more than those who consume a lower volume of water.

Other major revenues received from user charges and fees included:

2014

$

2013

$

Planning and Building Regulation 718,000 729,000

Private works – Section 67 262,000 151,000

Council Vehicles Leaseback Fees 145,000 148,000

Interest

Interest and investment revenues decreased during the twelve months period as a result of reduction in

interest rates and funds available for investment with income being earned as follows:

2014

$

2013

$

Overdue Rates and Charges 116,000 111,000

General Council Investments 721,000 816,000

Development Contributions - 42,000

837,000 969,000

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7

Interest on investments for the year represented approximately 7.6% (2013: 9.2%) of ordinary rating

income.

Other Revenues

Other revenue income in the current year ($646,000) is slightly higher than previous year ($588,000).

The difference was due to the sales of Tourism which doubled in the current year, due to the sale of

Lithgow Visitors Book $38,000 and Mayoral Ball $15,000. These were not included in the Council’s

budget for the 2013/14 year.

Grants, Subsidies and Contributions

Operating Grants and Contributions

Operating grants and contributions amounting to $4,996,000 were received in 2013/2014 compared with $6,715,000 received in the previous year.

Council had been receiving advance instalments of the untied Financial Assistance Grant (FAG) which

was being brought to account as Council income in the year of receipt. Whilst such accounting

treatment was in accordance with the accounting standards this practice has nevertheless significantly

improved Council’s past operating results. In the current year, the Australian Government has acted to

realign the FAG instalments to the years to which they relate and consequently instalments amounting

to only $2,257,000 were received compared with instalments amounting to $4,446,000 in the previous

year.

Other major specific purpose operating grants and contributions were received for, Roads to Recovery

($561,000), Fire Contribution ($458,000) and RMS contributions ($460,000).

Capital Grants and Contributions

Total capital grants and contributions received for the year amounted to $5,240,000 compared with

$12,449,000 received in the previous year. This decrease is primarily due to the Clarence Transfer

system Grant of $320,000 (2013: $3,076,000); Roads & Bridges Grant $2,211,000 (2013: 4,215,000)

and nil contributions received in current year for the University of Western Sydney Hoskin Memorial

Institute Building (2013: $2,940,000). There was also capital contribution recognition of $1,338,000 in

relation to the Old water and sewerage augmentation schemes in 2013 year, which did not happen in

the 2013/14 year. Other significant capital grants received are funding for flood restoration $1,408,000

(2013: $120,000) and Sewerage Services funding $843,000 (2013: $226,000).

In accordance with the Code of Accounting Practice all grant and contribution monies received in

2013/2014 (both expended and unexpended) have been brought to account as income. Grants and

contributions recognised as revenues in the current reporting period but not yet expended in accordance

with the conditions attaching thereto, amounted to $2,406,000. At year end Council held unexpended

grants and contributions amounting to $3,724,000 (2013 - $4,780,000) and such funds have been

identified as an externally restricted asset.

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OPERATING EXPENDITURE

Expenses from continuing operations ($37,877,000) were lower than both budget expectations

($39,469,000) but higher than those of the previous year ($36,988,000).

Impacting significantly on operating expenses for the year were:

Employee Costs

Total employee costs ($14,441,000) in the twelve months period to 30 June 2014 remained fairly

consistent against 2013 year. However we note the following movements:

• Capitalised employee costs decreased $345,000 from Council ($1,176,000) in 2013 to

($831,000) in 2014.

• Salaries and wages increase due to the 3.25% award increase.

• Employee leave entitlements decreased by $786,000, and that is related to the $671,000

travelling expense in 2013 year being grouped in the employee leave entitlements costs.

• Increase in the Superannuation Contribution Guarantee to 9.25% for the 2013/14 year.

At year end Council’s full time equivalent employees numbered 187 (2013: 180).

Materials and Contracts

Materials and contracts expenditure ($8,804,000) have slightly increased in the current year mainly

due to the 2% increase in raw materials and consumables expense ($8,644,000).

Depreciation Expenses

Depreciation expenses ($9,689,000) have increased by $1,603,000 from the previous year

($8,086,000) mainly due to the increased depreciation expense for specialised buildings and the

absence of capitalised costs in 2014. This was due to the buildings revaluation in 2012/13 year where

there was an increment in buildings fair value, therefore leading to increased depreciation expense in

the current year.

Depreciation expenses account for approximately 25.6% of Council’s total expenses which is comparable with most Councils with whom we are associated.

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ASSETS

Cash & Investments

At balance date Council controlled cash and investments totalling $19,096,000 (2013: $23,645,000).

Council utilises its investments to cover both externally and internally imposed requirements and

comprises of developer contributions - general ($1,553,000), RMS contributions ($12,000), specific

purpose unexpended grants ($2,159,000), domestic waste management ($2,077,000), water supplies

($3,007,000), Sewerage supplies ($1,637,000), Employee Leave Entitlements ($1,155,000) and monies

for future works.

Externally restricted investments (including Water, Sewerage and Domestic Waste Management)

amounted to $10,445,000 whilst internally restricted investments amounted to $7,913,000.

Council’s cash and investments were held as follows:

2014

$

2013

$

Cash on Hand 3,547,000 90,000

Deposit at Call 914,000 1,711,000

Short Term Deposits 10,701,000 19,011,000

Long Term Deposits 3,934,000 2,833,000

19,096,000 23,645,000

Debtors

Rates and Annual Charges

At balance date outstanding rates and annual charges and interest amounted to $1,525,000 (2013:

$1,047,000) which represented 6.33% of total receivable (2013: 4.63%).

We encourage Council to implement and enforce stringent recovery action against ratepayers with

arrears in an endeavour to lowering the percentage arrears to less than 5.00%.

Outstanding rates and annual charges have been subject to interest at the rate of 9.00% (2013 10%)

and we report that Council has maintained a provision for doubtful debts of $8,000..

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Property, Plant & Equipment

During the reporting period Council expended / acquired assets with the value of $15,306,000 (2013:

$14,622,000).

The principal items being:

2014

$

2013

$

Plant & Equipment 868,000 1,232,000

Roads, Bridges, Footpaths 5,617,000 3,635,000

Water and Sewerage Assets 5,609,000 2,758,000

Specialised buildings 612,000 5,269,000

Additionally, we note that Council sold assets with a written down value of $340,000. The sale of these

assets has resulted in a gain of $129,000 being brought to account (2013: 98,000).

Further, we report that in accordance with the requirements of the Code of Accounting Practice,

Council’s water and sewerage assets were indexed upwards in accordance with the latest indices

provided by the NSW Office of Water.

These revaluations have resulted in Council’s assets being adjusted as follows:

Water Supply Network increased $2,324,000 to $29,721,000

Sewerage Network increased $2,697,000 to $60,934,000

The combined action of asset movements and revaluations has resulted in the written down value of

property, plant and equipment increasing from $370,290,000 in 2012/2013 to $379,314,000 as at 30

June 2014.

Major acquisitions during the year were again funded from grants, contributions, loans and cash &

investments.

Provisions

At 30 June 2014 the Provision for Employee Accrued Entitlements totalled $3,857,000.

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11

The components of the liability are:

2014

$

2013

$

Annual Leave 1,485,000 1,353,000

Long Service Leave 2,372,000 2,700,000

3,857,000 4,053,000

The average leave entitlement per full time employee as at 30 June 2014 was $20,625 (2013: $22,517).

At year end Council had set aside funds amounting to $1,155,000 or 29.94% of the employees leave

entitlement liability. Such funds have been identified as an internally restricted asset.

Council’s provision for asset remediation/restoration reduced by $429,000 in the current year and

amounted to $10,696,000 at year end. This was due to a number of the Council tip sites needing to be

remediated in 5 years or less, hence the discount rate selected for the 2013/14 year provision is the 5yr

Government Bond rate.

Loans and Debt Servicing

During the year there were no new loans raised. Council repaid borrowings of $1,187,000 and at year

end Council’s borrowings amounted to $16,922,000..

The loan liability is apportioned as follows:

2014

$

General 2,574,000

Water 1,594,000

Sewerage 12,754,000

Total 16,922,000

Council required $2,252,000 (comprising Principal $1,187,000 and interest $1,065,000) to service its

loan commitments in 2013/2014, which has given Council a favourable debt service ratio of 3.49 against

benchmark of 2.

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SUMMARY

In analysing Council’s financial results for the year, particular attention must be given to the following:

� Operating Result

� Cash Flow

� Reserves (internally restricted and unrestricted assets)

� Performance Ratios

Operating Result

Council reported an operating deficit before capital amounts of $2,213,000 for the twelve months period

to 30 June 2014. This deficit result has been reported after allowing for depreciation expenses of

$9,689,000. The Council budgeted for an operating deficit of $1,595,000 but the actual result is below

the budget expectations and also an increase on the operating deficit of $1,753,000 reported in

2012/2013.

As earlier explained the operating result in the current year was significantly impacted by the timing

adjustment relating to the payment of the financial assistance grant instalments. As previously reported,

the Australian Government ceased the payment of advance instalments in the current year and Lithgow

City Council’s untied FAG was approximately $2,189,000 below that of the previous year.

Operating Surplus/(Deficit) before Capital Amounts

-3500000

-3000000

-2500000

-2000000

-1500000

-1000000

-500000

0

500000

1000000

1500000

2000000

2010 2011 2012 2013 2014

Operating Results

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Cash Flow

Council achieved a cash surplus of $10,296,000 (2013: $16,731,000 from its general operating

activities which was principally utilised to purchase assets and repay loans.

These actions together with the proceeds from the sale of assets have resulted in Council having a net

decrease in cash and investments of $4,549,000 for the year (2013: $4,800,000 increase).

Cash Flow Surplus/Deficit (movement)

For comparative purposes, we note the following factors that have impacted on the cash flow deficit in

2013/2014.

• Advance instalments of the financial assistance grant ceased in 2013/2014. Total grants and contributions received amounted to $10,302,000 compared to $15,629,000 in 2012/13.

• Receivables increased $2,364,000 in the current year.

• Additional purchases of Infrastructure, Property, Plant and Equipment $2,861,000

-8000000

-6000000

-4000000

-2000000

0

2000000

4000000

6000000

2010 2012 2013 2014

Cash Flow Surplus / Deficit

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14

Upon analysis the cash flow surplus can be identified as follows:

Activity Surplus/(Deficit)

2014

$

2013

$

Externally Restricted (925,000) 4,369,000

Internally Restricted & Unrestricted (3,624,000) 431,000

Reserves (Internally Restricted and Unrestricted Assets)

As noted previously, Council’s internal and unrestricted funds have decreased by $3,624,000 during

the twelve months period and at year end Council held internally restricted investments amounting to

$7,913,000 (2013: $11,194,000) whilst a further $738,000 was maintained as unrestricted investments

(2013 - $1,081,000).

Internal and Unrestricted Reserve Funds

As illustrated, Council’s reserve funds have remained in the range of $8m to $12m over the past 5 years. We consider that current reserve funds remain well below the appropriate level (when considering Council’s infrastructure and associated accumulated depreciation) and consequently we encourage Council to focus on strengthening these reserves in order that Council is able to responsibly meet its obligations to maintain and improve infrastructure and services.

.

0

2000000

4000000

6000000

8000000

10000000

12000000

14000000

2010 2011 2012 2013 2014

Internally Restricted and Unrestricted

Assets

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Performance Ratios

Council’s relatively sound financial position is again reflected in its performance ratios. In particular,

we note the unrestricted current ratio (which is a measurement of Council’s ability to meet its financial

obligations) of 1.90. Although this ratio has decreased from the last financial year (2013: 3.49%), it

still remains favourable with the industry generally. As earlier reported the rates outstanding

percentage (6.33%) however remains slightly high and Council should focus on reducing this

percentage to less than 5.00%. We note this has increased by 1.7% from 2013 year.

We note that the debt service ratio is 3.57% which is favourable with the industry benchmark of 2. We

note that 6.3% of income is required by Council to service debt in 2014 which is considered within the

acceptable range.

OTHER MATTERS

Several performance improvement observations were noted during our year end audit visits. A final

management letter will be issued to management. There were no major control deficiencies noted in

Council’s systems.

Independence

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

ethical pronouncements.

Reliance on the Report

The report on the conduct of the audit has been prepared for distribution to Council. We disclaim any

assumption of responsibility for any reliance on this report to any person other than Council or for any

purpose other than that for which it was prepared.

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Contact Us

Crowe Horwath Auswild

ABN 73 139 862 923

Member Crowe Horwath International

Dubbo

2 Commercial Avenue

Dubbo NSW 2830 Australia

Bathurst

157 George Street

Bathurst NSW 2795 Australia

Canberra

Suite 3

10 Thesiger Court

Deakin ACT 2600 Australia

Tel + 61 2 6883 5600

Fax + 61 2 6884 2242

Tel + 61 2 6330 2200

Fax + 61 2 6330 2299

Tel + 61 2 6260 4545

Fax + 61 2 6260 4646

www.crowehorwath.com.au

A Crowe Horwath Australasia Limited Firm

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Lithgow City Council SPECIAL PURPOSE FINANCIAL STATEMENTS for the year ended 30 June 2014


SPFS 2014

page 1


Special Purpose Financial Statements for the financial year ended 30 June 2014

Contents

1. Statement by Councillors & Management

2. Special Purpose Financial Statements:

Income Statement - Water Supply Business ActivityIncome Statement - Sewerage Business ActivityIncome Statement - Other Business Activities

Statement of Financial Position - Water Supply Business ActivityStatement of Financial Position - Sewerage Business ActivityStatement of Financial Position - Other Business Activities

3. Notes to the Special Purpose Financial Statements

4. Auditor's Report

Background

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

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

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

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

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

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

6

Page

34

n/a

2

(iv)

9

n/a7

(i)

(ii)

16

(iii)

SPFS 2014

page 3


Income Statement of Council's Water Supply Business Activity for the financial year ended 30 June 2014

$ '000

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

Expenses from continuing operationsEmployee benefits and on-costsBorrowing costsMaterials and contractsDepreciation and impairmentWater purchase chargesLoss on sale of assetsCalculated taxation equivalentsDebt guarantee fee (if applicable)Other expensesTotal expenses from continuing operationsSurplus (deficit) from Continuing Operations before capital amounts

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

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

SURPLUS (DEFICIT) AFTER TAX

plus Opening Retained Profitsplus/less: Prior Period Adjustmentsplus Adjustments for amounts unpaid:- Taxation equivalent payments- Debt guarantee fees- Corporate taxation equivalentless:- Tax Equivalent Dividend paid- Surplus dividend paidClosing Retained Profits

Return on Capital %Subsidy from Council

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

452

439 891

- 891

(136)

316 158

Actual 2014

136

- -

14,976

1.9%490

755

14,085 -

755 (439)

Actual 2013

1,212 5,062

39 35 93

- -

6,441

1,206 116

2,221 751

1,507 - - -

188 5,989

- -

-

- -

14,085

-2.2%1,543

3,249 (3,933)

- -

- 398

6,327 (684)

3,933 3,249

- 3,249

-

3,249

10,836 -

- -

1,122 4,265

59 99 98

- -

5,643

1,306 121

2,108 1,058 1,336

- -

SPFS 2014

page 4


Income Statement of Council's Sewerage Business Activity for the financial year ended 30 June 2014

$ '000

Income from continuing operationsAccess chargesUser chargesLiquid Trade Waste chargesFeesInterestGrants and contributions provided for non capital purposesProfit from the sale of assetsOther incomeTotal income from continuing operations

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

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

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

SURPLUS (DEFICIT) AFTER TAX

plus Opening Retained Profitsplus/less: Prior Period Adjustmentsplus Adjustments for amounts unpaid:- Taxation equivalent payments- Debt guarantee fees- Corporate taxation equivalentless:- Tax Equivalent Dividend paid- Surplus dividend paidClosing Retained Profits

Return on Capital %Subsidy from Council

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

- 196

- -

6,137 429 201 50

-

- 1,278 5,631

653

745 1,398

2.5%704

- 1,398 (196)

1,202

18,416 -

19,814

5,611 339

Actual 2013

116

Actual 2014

56 18

144 203 - -

7,020

- -

920 756

1,657 1,020

-

1,202 (745) 457 229

1,317 757

2,918 1,271

- -

874 1,631

-

- -

227

-

- 1,631 (227)

1,404

19,814

265

6,284

-

-

- 21,445

2.5%655

1,404 (874) 530

- -

6,263 757

SPFS 2014

page 5


Statement of Financial Position - Council's Water Supply Business Activity as at 30 June 2014

$ '000

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

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

LIABILITIESCurrent LiabilitiesBank OverdraftPayablesInterest bearing liabilitiesProvisionsTotal Current Liabilities

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

EQUITYRetained earningsRevaluation reservesCouncil equity interestNon-controlling equity interestTOTAL EQUITY

31,227

104

-

- -

- 384 384

544 488

83

2,082

1,594 -

29,064 2,163

Actual 2013

Actual 2014

34,362

77

- 25,994

1,619

1,594

14,935

1,619

-

3,007 4,162

- - 129 125

- -

29,721 - -

25,994

-

29,721

- - 1,509 942

4,641

-

- - 5,233

- - -

-

29,064

29,064

17,345

32,280

32,280 -

32,280

15,020 14,044

-

- -

SPFS 2014

page 6


Statement of Financial Position - Council's Sewerage Business Activity as at 30 June 2014

$ '000

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

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

LIABILITIESCurrent LiabilitiesBank OverdraftPayablesInterest bearing liabilitiesProvisionsTotal Current Liabilities

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

EQUITYRetained earningsRevaluation reservesCouncil equity interestNon-controlling equity interestTOTAL EQUITY

-

-

48

57,356

382

46,376

- -

60,934 56,053 - -

-

- -

17 - -

1,303 295 -

2013

1,637

2014

-

Actual Actual

989

19

-

-

13,184

- 1,053

-

382 430 1,435

-

2,957 1,303

- -

63,891

-

23,735

-

9,545 -

26,972 24,272 50,707

12,754

46,376

46,376

-

10,980 12,754 9,545

22,104

50,707

50,707

- -

- -

60,934 56,053

SPFS 2014

page 7


Special Purpose Financial Statements for the financial year ended 30 June 2014

Contents of the Notes accompanying the Financial Statements

Details

Summary of Significant Accounting Policies

Water Supply Business Best Practice Management disclosure requirements

Sewerage Business Best Practice Management disclosure requirements 133

Note Page

1

2

8

11

SPFS 2014_

Lithgow City Council Notes to the Special Purpose Financial Statements for the financial year ended 30 June 2014 Note 1. Significant Accounting Policies

page 8

These financial statements are a Special Purpose Financial Statements (SPFS) prepared for use by Council and the Office of Local Government. For the purposes of these statements, the Council is not a reporting not-for-profit entity. The figures presented in these special purpose financial statements, unless otherwise stated, have been prepared in accordance with: the recognition and measurement criteria of

relevant Australian Accounting Standards,

other authoritative pronouncements of the Australian Accounting Standards Board (AASB) &

Australian Accounting Interpretations.

The disclosures in these special purpose financial statements have been prepared in accordance with: the Local Government Act and Regulation, and the Local Government Code of Accounting

Practice and Financial Reporting. The statements are also prepared on an accruals basis, based on historic costs and do not take into account changing money values nor current values of non-current assets (except where specifically stated). Certain taxes and other costs (appropriately described) have been imputed for the purposes of the National Competition Policy. National Competition Policy Council has adopted the principle of ‘competitive neutrality’ to its business activities as part of the national competition policy which is being applied throughout Australia at all levels of government. The framework for its application is set out in the June 1996 Government Policy statement on the “Application of National Competition Policy to Local Government”. The “Pricing & Costing for Council Businesses A Guide to Competitive Neutrality” issued by the Office of Local Government in July 1997 has also been adopted.

The pricing & costing guidelines outline the process for identifying and allocating costs to activities and provide a standard of disclosure requirements. These disclosures are reflected in Council’s pricing and/or financial reporting systems and include taxation equivalents; council subsidies; return on investments (rate of return); and dividends paid. Declared Business Activities In accordance with Pricing & Costing for Council Businesses - A Guide to Competitive Neutrality, Council has declared that the following are to be considered as business activities: Category 1 (where gross operating turnover is over $2 million) a. Water Supply Service

Comprising the whole of the water supply operations and net assets servicing the Lithgow area.

b. Sewerage (Waste Water) Service

Comprising the whole of the sewerage reticulation & treatment operations and net assets servicing the Lithgow area.

Category 2

Council has not declared any category 2 business units Monetary Amounts Amounts shown in the financial statements are in Australian currency and rounded to the nearest one thousand dollars, with the exception of some figures disclosed in Note 2 (Water Supply Best Practice Management Disclosures) and Note 3 (Sewerage Best Practice Management Disclosures). As required by the NSW Office of Water (Department of Primary Industries) the amounts shown in Notes 2 and Note 3 are disclosed in whole dollars. (i) Taxation Equivalent Charges Council is liable to pay various taxes and financial duties in undertaking its business activities. Where this is the case, they are disclosed in these

SPFS 2014_


page 9

statements as a cost of operations just like all other costs. However, where Council is exempt from paying taxes which are generally paid by private sector businesses (such as income tax), equivalent tax payments have been applied to all Council nominated business activities and are reflected in these financial statements. For the purposes of disclosing comparative information relevant to the private sector equivalent, the following taxation equivalents have been applied to all council nominated business activities (this does not include council’s non-business activities): Notional Rate Applied % Corporate Income Tax Rate – 30% Land Tax – The first $412,000 of combined land values attracts 0%. From $412,001 to $2,519,000 the rate is 1.6% + $100. For the remaining combined land value that exceeds $2,519,000, a premium marginal rate of 2.0% applies. Payroll Tax – 5.45% on the value of taxable salaries and wages in excess of $750,000. In accordance with the guidelines for Best Practice Management of Water Supply and Sewerage, a payment for the amount calculated as the annual tax equivalent charges (excluding income tax) must be paid from Water Supply and Sewerage Business activities. The payment of taxation equivalent charges, referred in the Best Practice Management of Water Supply and Sewerage Guides to as a “Dividend for Taxation equivalent”, may be applied for any purpose allowed under the Local Government Act, 1993. Achievement of substantial compliance against the guidelines for Best Practice Management of Water Supply and Sewerage is not a prerequisite for the payment of the tax equivalent charges, however the payment must not exceed $3 per assessment. Income Tax An income tax equivalent has been applied on the profits of each reported Business Activity.

Whilst income tax is not a specific cost for the purpose of pricing a good or service, it needs to be taken into account of in terms of assessing the rate of return required on capital invested. Accordingly, the return on capital invested is set at a pre-tax level (gain/(loss) from ordinary activities before capital amounts) as would be applied by a private sector competitor – that is, it should include a provision equivalent to the corporate income tax rate, currently 30%. Income Tax is only applied where a positive gain/(loss) from ordinary activities before capital amounts has been achieved. Since this taxation equivalent is notional - that is, it is payable to the “Council” as the owner of business operations, it represents an internal payment and has no effect on the operations of the council. Accordingly, there is no need for disclosure of internal charges in Council's General Purpose Financial Statements. The rate applied of 30% is the equivalent company tax rate prevalent as at balance date. No adjustments have been made for variations that have occurred during the year. Local Government Rates & Charges A calculation of the equivalent rates and charges payable on all Category 1 businesses has been applied to all land assets owned or exclusively used by the Business Activity. Loan & Debt Guarantee Fees The debt guarantee fee is designed to ensure that council business activities face “true” commercial borrowing costs in line with private sector competitors. In order to calculate a debt guarantee fee, council has determined what the differential borrowing rate would have been between the commercial rate and the council’s borrowing rate for its business activities. (ii) Subsidies Government policy requires that subsidies provided to customers and the funding of those subsidies must be explicitly disclosed.

SPFS 2014_


page 10

Subsidies occur where council provides services on a less than cost recovery basis. This option is exercised on a range of services in order for council to meet its community service obligations. Accordingly, Subsidies disclosed (in relation to National Competition Policy) represents the difference between revenue generated from ‘rate of return’ pricing and revenue generated from prices set by the council in any given financial year. The overall effect of subsidies is contained within the Income Statement of each reported Business Activity. (iii) Return on Investments (Rate of Return) The Policy statement requires that councils with Category 1 businesses “would be expected to generate a return on capital funds employed that is comparable to rates of return for private businesses operating in a similar field”. Such funds are subsequently available for meeting commitments or financing future investment strategies. The Rate of Return on Capital is calculated as follows: Operating Result before Capital Income + Interest Expense

Written Down Value of I,PP&E as at 30 June As a minimum, business activities should generate a return equal to the Commonwealth 10 year bond rate which is 3.56% at 30/6/14. The actual rate of return achieved by each Business Activity is disclosed at the foot of each respective Income Statement. (iv) Dividends Council is not required to pay dividends to either itself (as owner of a range of businesses) or to any external entities.

Local Government Water Supply and Sewerage Businesses are permitted to pay an annual dividend from its water supply or sewerage business surplus. The dividend, calculated and approved in accordance with the Best Practice Management Guidelines, must not exceed either: (i) 50% of this surplus in any one year, or (ii) the number of water supply or sewerage

assessments at 30 June 2014 multiplied by $30 (less the payment for tax equivalent charges, not exceeding $3 per assessment).

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

SPFS 2014

page 11


Notes to the Special Purpose Financial Statements for the financial year ended 30 June 2014

Note 2. Water Supply Business Best Practice Management disclosure requirements

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

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

Calculated Tax Equivalents

No of assessments multiplied by $3/assessment

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

Amounts actually paid for Tax Equivalents

2. Dividend from Surplus50% of Surplus before Dividends[Calculated in accordance with Best Practice Management for Water Supply and Sewerage Guidelines]

No. of assessments multiplied by $30/assessment, less tax equivalentcharges/assessment

Cumulative surplus before Dividends for the 3 years to 30 June 2014, less thecumulative dividends paid for the 2 years to 30 June 2013 & 30 June 2012

2014 Surplus 2013 Surplus 2012 Surplus2013 Dividend 2012 Dividend

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

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

3. Required outcomes for 6 Criteria[To be eligible for the payment of a "Dividend from Surplus", ALL the Criteria below need a "YES"]

Completion of Strategic Business Plan (including Financial Plan)

Full Cost Recovery, without significant cross subsidies[Refer Item 2(a) in Table 1 on page 22 of the Best Practice Guidelines]

- Complying charges [Item 2(b) in Table 1]

- DSP with Commercial Developer Charges [Item 2(e) in Table 1]

- If Dual Water Supplies, Complying Charges [Item 2(g) in Table 1]

Sound Water Conservation and Demand Management implemented

Sound Drought Management implemented

Complete Performance Reporting Form (by 15 September each year)

a. Integrated Water Cycle Management Evaluation

b. Complete and implement Integrated Water Cycle Management Strategy

(iv)

(iii)

(i)

(iv)

(iii)

(iii)

(i)

(ii)

(ii)

(v)

(i)

- 316,237 (684,000)

- (445,000)

(iv)

(ii)

-

-

n/a

2014

-

158,118

-

(812,763)

-

-

(v)

(vi)

SPFS 2014

page 12



Note 2. Water Supply Business Best Practice Management disclosure requirements (continued)


National Water Initiative (NWI) Financial Performance Indicators

Total Revenue (Water)Total Income (w13) - Grants for the Acquisition of Assets (w11a) - Interest Income (w9)- Aboriginal Communities W&S Program Income (w10a)

Revenue from Residential Usage Charges (Water)Income from Residential Usage Charges (w6b) x 100 divided by the sum of[Income from Residential Usage Charges (w6a) + Income from ResidentialAccess Charges (w6b)]

Written Down Replacement Cost of Fixed Assets (Water)Written down current cost of system assets (w47)

Operating Cost (OMA) (Water)Management Expenses (w1) + Operational & Maintenance Expenses (w2)

Capital Expenditure (Water)Acquisition of fixed assets (w16)

Economic Real Rate of Return (Water)[Total Income (w13) - Interest Income (w9) - Grants for acquisition of assets (w11a) -Operating Costs (NWI F11) - Current Cost Depreciation (w3)] x 100 divided by[Written Down Current Cost of System Assets (w47) + Plant & Equipment (w33b)]

Capital Works Grants (Water)Grants for the Acquisition of Assets (w11a)

Notes: 1. References to w (eg. w12) refer to item numbers within Special Schedules No. 3 & 4 ofCouncil's Annual Financial Statements.

2. The NWI Performance Indicators are based upon the National Performance FrameworkHandbook for Urban Performance Reporting Indicators & Definitions.

$'000NWI F9

2014

6,464

NWI F4 %

-

$'000

80.70%

NWI F1

NWI F26 417 $'000

NWI F11

NWI F17 %

NWI F14 $'000

3.89%

2,154

4,556 $'000

SPFS 2014

page 13



Note 3. Sewerage Business Best Practice Management disclosure requirements


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

Calculated Tax Equivalents

No of assessments multiplied by $3/assessment

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

Amounts actually paid for Tax Equivalents

2. Dividend from Surplus

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

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

Cumulative surplus before dividends for the 3 years to 30 June 2014, less thecumulative dividends paid for the 2 years to 30 June 2013 & 30 June 2012

2014 Surplus 2013 Surplus 2012 Surplus2013 Dividend 2012 Dividend

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

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

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

Completion of Strategic Business Plan (including Financial Plan)

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

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

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

Complete Performance Reporting Form (by 15 September each year)

a. Integrated Water Cycle Management Evaluation

b. Complete and implement Integrated Water Cycle Management Strategy

457,100 -

(v)

(iii)

(i)

(ii)

(a)(b)

(iv)

-

(i)

(iv)

(iii)

(ii)

(iii)

529,847

(i)

(ii) -

(486,000)

(iv)

(c)

2014

-

-

-

-

500,947

-

-

264,923

SPFS 2014

page 14



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


National Water Initiative (NWI) Financial Performance Indicators

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

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

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

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

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

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

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

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

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

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

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

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

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

NWI F16 $'000

NWI F27

NWI F18

NWI F15 $'000

%

$'000

NWI F2

NWI F10

NWI F12

$'000

$'000

3.49%

5,609

%

- $'000

0.00%

NWI F19

NWI F21

NWI F20

%

NWI F3 $'000 13,506

NWI F8 % 1.34%

2014

$'000

853

-

7,042

3.30%

3,759

3,455

SPFS 2014

page 15



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


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

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

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

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

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

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

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

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

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

11.69%

2014

181

3

1,257

1,022

$'000

3,167

NWI F25 $'000

NWI F24

NWI F23

NWI F22 %

LG Solutions - John

Rectangle

Lithgow City Council SPECIAL SCHEDULES for the year ended 30 June 2014


Special Schedules 2014

page 1


Special Schedules for the financial year ended 30 June 2014

Contents

Special Schedules1

Net Cost of Services

Statement of Long Term Debt (all purposes)

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

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

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

- Notes to Special Schedules No. 3 & 5

Report on Infrastructure Assets (as at 30 June 2014)

Financial Projections

Permissible Income Calculation

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

Background

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

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

The financial data is collected for various uses including;

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

- Special Schedule No. 5 10

Page

2

4

5

- Special Schedule No. 1

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


- Special Schedule No. 2(b)


16- Special Schedule No. 7

15

14

(ii)


(i)

- Special Schedule No. 9 22


21



Special Schedule No. 1 - Net Cost of Services for the financial year ended 30 June 2014

$'000

Governance

Administration

Public Order and Safety

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

Health

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

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

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

Water Supplies

Sewerage Services

Expenses from. Continuing. Operations. Non Capital.

190

-

3,803 -

Capital.

Income fromcontinuing operations

-

215

- -

-

458

3,803

-

- -

1,970

-

-

590 1,823

-

-

96 -

7,583

-

7,021 9,290 874

-

(985)

(248) (288)

- -

-

-

-

590

6,440

641

722

540

458 458 (454)

- (362)

-

577

- -

912

Function or Activity

-

Fire Service Levy, Fire Protection, Emergency Services

-

-

- -

Net Cost.of Services.

(190) -

(722)

(128)

250 1,068

161 3 - (158)

- - -

1,869

-

-

165

-

1,231

288

- -

439

248 248

2,359

248

525 128

-

3,553 2,735

-

-

-

- -

- 20

-

96

(704)

(1,521)

(1,115)

- 1,231

-

20

-

(1,395)

(1,115)

(165)

- -

-

- -

(525)

-

page 2



Special Schedule No. 1 - Net Cost of Services (continued) for the financial year ended 30 June 2014

$'000

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

Fuel & Energy

Agriculture

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

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

Economic AffairsCamping Areas & Caravan ParksOther Economic AffairsTotal Economic Affairs

Totals – FunctionsGeneral Purpose Revenues (2)

NET OPERATING RESULT (1)

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

Income fromcontinuing operations

- - 6

114

96

-

37,877

-

4,808 1,248

1,483 1,483

35,664

571

- -

14,368 37,877

571

-

21,296

- -

5,240

-

-

-

- -

4

- 1,248

-

1,412 -

852 -

-

1,307

- -

-

Function or Activity

-

-

-

-

-

- -

-

-

-

-

-

11

1,689

-

-

-

-

- -

-

1,689 5,279 2,650 95

311

- -

-

-

-

600 - 86 -

-

-

Non Capital.

-

Expenses from. Continuing. Operations.

560

- 592

-

-

- -

- -

- -

- -

510

-

-

-

(852)

(478)

- -

-

(3,279)

- -

-

Capital.

-

-

-

26

- - -

5,240

(510) -

(26) (1,307)

3,027

-

(11,341) (912)

-

(3,560) (164)

(912)

(4)

-

-

-

-

14,368

1,463 14

-

(1,367) (8)

-

-

-

-

-

-

-

Net Cost.of Services.

(11)

-

(600)

-

-

(86)

-

(866) (560)

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

page 3


Special Schedule No. 2(a) - Statement of Long Term Debt (all purpose) for the financial year ended 30 June 2014

$'000

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

Loans (by Source)Commonwealth Government

Current

- - - - - - -

Principal outstanding New Loans raised during

the year

at beginning of the year

Classification of DebtCurrent Non

Current Total

-

- - -

- - -

Debt redemption during the year

From Revenue

Sinking Funds

-

1,236 - -

864 -

864 -

15,538 -

489

-

-

-

Special S

chedules 2014

Transfers to Sinking

Funds

Principal outstandingInterest

applicable for Year TotalNon

Current

at the end of the year

-

-

1,484 - -

-

- - - -

16,774

1,973 -

747 14,054 14,801 -

- - - Other State Government 489 1,973 2,462

- - -

- - - -

Treasury Corporation489

-

- -

Public Subscription - -

- - - - -

-

Financial Institutions 499 15,000 15,499 - -

- -

-

-

- 1,187 - - -

698

988 16,973 Total Loans-

17,961 Other

- - - Other Long Term DebtRatepayers Advances - - -

- Government Advances - Finance Leases -

- - - - -

- -

- - - -

- - -

1,236

- - -

16,774

- - -

15,538

-

864 -

-

-

- Deferred Payments

- -

988

-

16,973

- - - -

page 4

Total Long Term Debt - -

Total Debt

-

17,961

-

- 1,187


page 5


Special Schedule No. 3 - Water Supply Income Statement Includes ALL INTERNAL TRANSACTIONS, ie. prepared on a Gross Basis. for the financial year ended 30 June 2014

$'000

A Expenses and IncomeExpenses

1. Management expensesa. Administrationb. Engineering and Supervision

2. Operation and Maintenance expenses- Dams & Weirsa. Operation expensesb. Maintenance expenses

- Mainsc. Operation expensesd. Maintenance expenses

- Reservoirse. Operation expensesf. Maintenance expenses

- Pumping Stationsg. Operation expenses (excluding energy costs)h. Energy costsi. Maintenance expenses

- Treatmentj. Operation expenses (excluding chemical costs)k. Chemical costsl. Maintenance expenses

- Otherm. Operation expensesn. Maintenance expenseso. Purchase of water

3. Depreciation expensesa. System assetsb. Plant and equipment

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

5. Total expenses

- - 566

- -

-

- 751 1,058

910 -

116 -

121

-

-

96 112

1,336

- -

1,507 41 -

105

-

21

- - 31

26

693

31

616

-

1,072 992

67

- -

- -

- -

625 296 240

- -

2014

-

887

Actuals 2013

-

5,989 6,327

Actuals


page 6


Special Schedule No. 3 - Water Supply Income Statement (continued) Includes ALL INTERNAL TRANSACTIONS, ie. prepared on a Gross Basis. for the financial year ended 30 June 2014

$'000

Income

6. Residential chargesa. Access (including rates)b. Usage charges

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

8. Extra charges

9. Interest income

10. Other income10a. Aboriginal Communities Water and Sewerage Program

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

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

13. Total income

14. Gain (or loss) on disposal of assets

15. Operating Result

15a. Operating Result (less grants for acquisition of assets)

- 67

-

3,248

20 -

59

3,913 93 98

-

417

-

1,122

326

3,938

2014 Actuals

-

- -

Actuals

475

-

40

892

-

22

6,881

-

(665)

35

5,063 1,211

32

-

2013

9,575

-

-


page 7


Special Schedule No. 3 - Water Supply Income Statement (continued) Includes ALL INTERNAL TRANSACTIONS, ie. prepared on a Gross Basis. for the financial year ended 30 June 2014

$'000

B Capital transactionsNon-operating expenditures

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

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

18. Transfer to sinking fund

19. Totals

Non-operating funds employed

20. Proceeds from disposal of assets

21. Borrowing utiliseda. Loansb. Advancesc. Finance leases

22. Transfer from sinking fund

23. Totals

C Rates and charges

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

25. Number of ETs for which developer charges were received

26. Total amount of pensioner rebates (actual dollars)

- -

2013

-

2014

-

- -

684 - 7,047

2,154

Actuals

-

-

-

-

-

- -

-

-

101

-

1,777

-

2,262

-

-

-

- -

-

-

Actuals

108

1,676 -

440 58

- -

- ET- ET

165,956$ -$


page 8


Special Schedule No. 3 - Water Supply Cross Subsidies for the financial year ended 30 June 2014

$'000

D Best practice annual charges and developer charges*

27. Annual chargesa. Does Council have best-practice water supply annual charges and usage charges*?

If Yes, go to 28a.If No, please report if council has removed land value from accesscharges (ie rates)?

NB. Such charges for both residential customers and non-residentialcustomers comply with section 3.2 of Water Supply, Sewerage andTrade Waste Pricing Guidelines, NSW Office of Water, December,2002. Such charges do not involve significant cross subsidies.

b. Cross-subsidy from residential customers using less than allowance (page 25 of Guidelines)

c. Cross-subsidy to non-residential customers (page 24 of Guidelines)

d. Cross-subsidy to large connections in unmetered supplies (page 26 of Guidelines)

28. Developer chargesa. Has council completed a water supply Development Servicing** Plan?

b. Total cross-subsidy in water supply developer charges for 2012/13 (page 47 of Guidelines)

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

29. Disclosure of cross-subsidiesTotal of cross-subsidies (27b +27c + 27d + 28b)

* Councils which have not yet implemented best practice water supply pricing should disclose cross-subsidies in items 27b, 27c and 27d above.

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

-

No

AmountNo

Yes

Yes


page 9


Special Schedule No. 4 - Water Supply Statement of Financial Position Includes INTERNAL TRANSACTIONS, ie. prepared on a Gross Basis. as at 30 June 2014

$'000

ASSETS30. Cash and investments

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

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

32. Inventories

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

34. Other assets

35. Total assets

LIABILITIES36. Bank overdraft37. Creditors38. Borrowings

a. Loansb. Advancesc. Finance leases

39. Provisionsa. Tax equivalentsb. Dividendc. Other

40. Total liabilities

41. NET ASSETS COMMITTED

EQUITY42. Accumulated surplus43 Asset revaluation reserve

44. TOTAL EQUITY

Note to system assets:45. Current replacement cost of system assets46. Accumulated current cost depreciation of system assets47. Written down current cost of system assets

-

(1,594) 33,874

488 1,594

384

- -

-

-

14,935

-

- -

17,345

32,280

32,280

2,082

384

- -

-

-

- -

1,509

-

- - - -

- 1,594 1,594 -

104

-

-

125

- 29,721

-

34,362

-

-

125

- 104

-

-

-

3,007 - - -

-

Non Current

-

- - - -

-

Actuals Current

- -

Actuals

- -

1,509

- -

-

Actuals Total

-

- -

-

3,007

- -

34,362

- 29,721

-


page 10


Special Schedule No. 5 - Sewerage Service Income Statement Includes ALL INTERNAL TRANSACTIONS, ie. prepared on a Gross Basis. for the financial year ended 30 June 2014

$'000

A Expenses and IncomeExpenses

1. Management expensesa. Administrationb. Engineering and Supervision

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

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

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

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

- Otherl. Operation expensesm. Maintenance expenses

3. Depreciation expensesa. System assetsb. Plant and equipment

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

5. Total expenses

Actuals 2014

Actuals 2013

-

1,272

610 446 203 178

-

474 - -

-

327

6,259 5,631

361 - -

- -

-

322

906 947

- -

-

-

- - -

- -

- 1,391 1,425

4

186

- 68

276

1,021 -

507

179 328

-

-

41

-

419


page 11


Special Schedule No. 5 - Sewerage Income Statement (continued) Includes ALL INTERNAL TRANSACTIONS, ie. prepared on a Gross Basis. for the financial year ended 30 June 2014

$'000

Income

6. Residential charges (including rates)

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

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

9. Extra charges

10. Interest income

11. Other income11a. Aboriginal Communities Water & Sewerage Program

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

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

14. Total income

15. Gain (or loss) on disposal of assets

16. Operating Result

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

- 18

50 57

- -

- - - -

-

-

-

1,636 1,398

783

- -

88 88 853 727

7,895 7,029

-

671

21 18

- - - -

116 56

115

429 - 286

201

407

5,257

Actuals

6,137

Actuals 2013 2014


page 12


Special Schedule No. 5 - Sewerage Income Statement (continued) Includes ALL INTERNAL TRANSACTIONS, ie. prepared on a Gross Basis. for the financial year ended 30 June 2014

$'000

B Capital transactionsNon-operating expenditures

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

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

19. Transfer to sinking fund

20. Totals

Non-operating funds employed

21. Proceeds from disposal of assets

22. Borrowing utiliseda. Loansb. Advancesc. Finance leases

23. Transfer from sinking fund

24. Totals

C Rates and charges

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

26. Number of ETs for which developer charges were received

27. Total amount of pensioner rebates (actual dollars)

- 3,455 1,082

-

-

-

531 -

1,613 5,611

37

- ET

159,694$

-

-

-

-

- 2,156

- -

Actuals Actuals 2014 2013

-

- -

504 426

-

-

6,659

-

- -

-

159,778$

-

-

-

-

-

-

- ET

-


page 13


Special Schedule No. 5 - Sewerage Cross Subsidies for the financial year ended 30 June 2014

$'000

D Best practice annual charges and developer charges*

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

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

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

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

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

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

b. Total cross-subsidy in sewerage developer charges for 2012/13 (page 47 of Guidelines)

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

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

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

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

-

Amount

No

Yes

Yes No


page 14


Special Schedule No. 6 - Sewerage Service Statement of Financial Position Includes INTERNAL TRANSACTIONS, ie. prepared on a Gross Basis. as at 30 June 2014

$'000

ASSETS31. Cash and investments

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

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

33. Inventories

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

35. Other assets

36. Total Assets

LIABILITIES37. Bank overdraft38. Creditors39. Borrowings

a. Loansb. Advancesc. Finance leases

40. Provisionsa. Tax equivalentsb. Dividendc. Other

41. Total Liabilities

42. NET ASSETS COMMITTED

EQUITY42. Accumulated surplus44. Asset revaluation reserve

45. TOTAL EQUITY

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

- 60,934 -

17

-

-

- - -

1,637

1,303

Actuals Actuals

- - -

- -

Non Current Current

1,637 - -

-

- -

Total

-

17

Actuals

-

- - - -

- -

-

1,303

12,754

-

63,891

-

- -

23,735

-

- -

26,972

50,707

(12,754)

60,934

-

48

-

63,891

-

-

-

- -

12,754

-

-

-

63,461

-

48

-

- -

- -

-

430 12,754

382

- -

50,707

13,184

382 - -

-

-


page 15


Notes to Special Schedule No.'s 3 & 5 for the financial year ended 30 June 2014

Administration (1) Engineering and supervision (1)

(item 1a of Special Schedules 3 and 5) comprises the following: (item 1b of Special Schedules 3 and 5) comprises the following:

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

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

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

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

Operational expenses (item 2 of Special Schedules 3 and 5) comprise the day to day operational expensesexcluding maintenance expenses.

Maintenance expenses (item 2 of Special Schedules 3 and 5) comprise the day to day repair and maintenanceexpenses. (Refer to Section 5 of the Local Government Asset Accounting Manual regarding capitalisationprinciples and the distinction between capital and maintenance expenditure).

Other expenses (item 4c of Special Schedules 3 and 5) includes all expenses not recorded elsewhere.

Revaluation decrements (item 4b of Special Schedules 3 and 5) is to be used when I,PP&E decreases in FV.

Impairment Losses (item 4d & 4e of Special Schedules 3 and 5) are to be used when the carrying amount ofan asset exceeds its recoverable amount (refer to page D-31).

Aboriginal Communities Water and Sewerage Program (item 4f of Special Schedules 3 and 5) is to beused when operation and maintenance work has been undertaken on behalf of the Aboriginal CommunitiesWater and Sewerage Program. Similarly, income for item 11a of Special Schedule 3 and item 12a of SpecialSchedule 5 are for services provided to the Aboriginal Communities Water and Sewerage Program and is notpart of Council’s water supply and sewerage revenue.

Residential charges

(2) (items 6a, 6b and item 6 of Special Schedules 3 and 5 respectively) include all incomefrom residential charges. Item 6 of Schedule 3 should be separated into 6a Access Charges (including rates ifapplicable) and 6b Usage Charges.

Non-residential charges

(2) (items 7a, 7b of Special Schedules 3 and 5) include all income from non-residentialcharges separated into 7a Access Charges (including rates if applicable) and 7b Usage Charges.

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

Other income (items 10 and 11 of Special Schedules 3 and 5 respectively) include all income not recordedelsewhere.

Other contributions (items 12c and 13c of Special Schedules 3 and 5 respectively) incl. capital contributionsfor water supply or sewerage services received by Council under Section 565 of the Local Government Act.

Notes:(1) Administration and engineering costs for the development of capital works projects should be reported as part of the capital cost of the project and not as part of the recurrent expenditure (ie. in item 16 for water supply and item 17 for sewerage, and not in items 1a and 1b).

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


Special Schedule No. 7 - Report on Infrastructure Assets as at 30 June 2014

$'000

Data not assessed yet

Special S

chedules 2014

0%7,765

page 16

60,934

0%

0.0%

0.0%

10%10%

3,331

Assets in Condition as a % of WDV (4), (5)

0.0% 80.0%10.0% 0.0%10.0%2,601 sub total 2,601 17,500

3,217 3,217

2,601 17,500 60,934 2,601

0%29,721 80%

10%

10% 10%

80%80% 10%

10%9,850

80.0% 10.0%10.0%

Buildings

Road NetworkRoads

Other Structuressub total

Other Structures

sub total

0.0%

4,881 0.0%4,881

- -

155

7,756 180

Council Offices /Administration Centres

to bring up to a Estimated cost

Actual (3)--Required (2)- Written

standard (1)_ 2013/14

1,539

184 130 17,050

111

101

0%75%

157

10%10%

Asset Category

927

Asset Class

15%

Housing and Community

Recreation

4Annual Maintenance Down Value

(WDV) (4)-Maintenance satisfactory

21

143

10%0%0%

0%

0%100% 0%100% 0%

75%

5

0%

Transport

Economic

LibraryPublic

3

Community

0%

80%

0.0%

75%0%0%

15%

0%

0.0%

100%

66.1%

Bridges

21.5%

3,890 0%

0%0%2,312

723

0%0%

80%100%

0%100%

388 10%137,301 3,291

165

Health

2,378 1,085

sub totalFootpaths

10%

0.0%

Infrastructure3,217 6,600

3,217

3,936

100.0%

73

-

92 0%

10%0%0%

141 185

3,600

51,794 12.5%3,813

10%12%75%13%

- 0%3,011 2,988

331 346 0%15%20,598

0%120

0%

0%3,806 0%453

-

-

3,852 8,299

80%

3,521

-

72 66 154,916

10%

0.0%

10.0%10.0% 0.0%80.0%0.0%29,721

0%Infrastructure

sub totalWater Supply 6,600

Sewerage


Special Schedule No. 7 - Report on Infrastructure Assets (continued) as at 30 June 2014

$'000

Data not assessed as yet

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

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

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

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

(5). Infrastructure Asset Condition Assessment "Key"

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

TOTAL - ALL ASSETS 36,551 13,787 13,333 319,102 0.0% 11.7% 76.1% 10.5% 1.8%

10

6

100%

15%821 181 75%

789

Assets in Condition as a % of WDV (4), (5)

4

Special S

chedules 2014

Assets sub total - - - 816 0.0% 0.0% 0.0% 0.0% 100.0%

4

21

0%0.0%181

Actual (3)--Estimated cost

standard (1)_ Maintenance 52013/14 Maintenance Down Value

Required (2)-to bring up to a

21 3(WDV) (4)-

10.0% 15.0%75.0%181

Asset Category

Annual satisfactory

Swimming Pools 816 Recreational Other

DrainageStormwater

16,040 sub total 0.0%

3

Open Space/

10%16,040 Other 181

Written

page 17

Asset Class

5

821



Special Schedule No. 7 - Report on Infrastructure Assets (continued) for the financial year ended 30 June 2014

$ '000

Infrastructure Asset Performance IndicatorsConsolidated

1. Building and Infrastructure Renewals RatioAsset Renewals (Building and Infrastructure) (1)

Depreciation, Amortisation & Impairment

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

3. Asset Maintenance RatioActual Asset MaintenanceRequired Asset Maintenance

4. Capital Expenditure RatioAnnual Capital ExpenditureAnnual Depreciation

Notes

(1) Asset Renewals represent the replacement &/or refurbishment of existing assets to an equivalent capacity/performance

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

Asset Renewals include building and infrastructure assets only.

(2) Written down value

Amounts Indicator Prior Periods

36,551 0.11 0.12 0.22319,102

2014 2014 2013 2012

11,449 142.79% 188.40% 140.82%8,018

13,684 1.41 1.77 1.429,689

13,333 0.97 0.85 0.9513,787

page 18




―― Minimum 100.00%Source for Benchmark: TCorp Sustainability Review of NSW Local Govt. (2013)

―― Maximum .02Source for Benchmark: TCorp Sustainability Review of NSW Local Govt. (2013)

―― Minimum 1.00Source for Benchmark: TCorp Sustainability Review of NSW Local Govt. (2013)

―― Minimum 1.10Source for Benchmark: TCorp Sustainability Review of NSW Local Govt. (2013)

Compares actual vs. required annual asset maintenance. A ratio above 1.0 indicates Council is investing

enough funds to stop the Infrastructure Backlog growing.

An asset maintenance ratio of 0.97 shows that Council's is investing very close to

enough on maintaining the asset base to stop the infrastructure backlog from

deteriorating further. The challenge will now be to address the historical backlog

Purpose of Asset Renewals Ratio


2013/14 Ratio 142.79%

To assess the rate at which these assets are being renewed

relative to the rate at which they are depreciating.

2014 saw a strong performance with Buildings and Infrastructure renewals. The challenge for Council will be as larger asset

classes are revalued to maintain a renewals figure of greater than 1:1

Purpose of Infrastructure Backlog Ratio


2013/14 Ratio 0.11 x

This ratio showswhat proportion the backlog is against

the total valueof a Council’s infrastructure.

This ratio highlights that historically Council still has an infrastructure backlog that it is

dealt with. Combined with the asset maintenance ratio below it shows that

Council is holding steady on infrastructure backlog. Major improvement in the ratio from 2012 to 2013 was driven through a revaluation in Councils buildings assets

Purpose of Asset Maintenance Ratio


2013/14 Ratio 0.97 x

Purpose of Capital Expenditure Ratio


2013/14 Ratio 1.41 x

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

base thru capital expenditure on both new assets and the

replacement and renewal of existing

assets.

2014 saw Council expand it's asset base through a large capital works program. As the chart indicates this has been a trend repeated over a number of years. is no

comparative figures.

0.950.85

0.97

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

2012 2013 2014

Rat

io (

x)

3. Asset Maintenance Ratio

140.82%

188.40%

142.79%

0%25%50%75%

100%125%150%175%200%225%250%

2012 2013 2014

Rat

io %

1. Building and Infrastructure Renewals Ratio

0.22

0.12 0.11

0.000.030.060.090.120.150.180.210.240.270.30

2012 2013 2014

Rat

io (

x)

2. Infrastructure Backlog Ratio

1.42

1.77

1.41

0.000.200.400.600.801.001.201.401.601.802.00

2012 2013 2014

Rat

io (

x)

4. Capital Expenditure Ratio

page 19


page 20



$ '000

Infrastructure Asset Performance IndicatorsBy Fund

1. Building and Infrastructure Renewals RatioAsset Renewals (Building and Infrastructure) (1)

Depreciation, Amortisation & Impairment

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

3. Asset Maintenance RatioActual Asset MaintenanceRequired Asset Maintenance

4. Capital Expenditure RatioAnnual Capital ExpenditureAnnual Depreciation

Notes

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

(2) Asset Renewals represent the replacement &/or refurbishment of existing assets to an equivalent capacity/performance

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

Asset Renewals include building and infrastructure assets only.

(3) Written down value

2.87 2.72 1.05

prior period: 1.58 1.06 -0.46

0.22 0.29 0.05

prior period: 0.00 0.00 0.00

1.00 1.00 0.94

prior period: 0.00 0.00 0.00

Water Sewer General(1)

2014 2014 2014

0.00% 0.00% 0.00%

prior period: 0.00% 0.00% 0.00%


Special Schedule No. 8 - Financial Projections as at 30 June 2014

$'000

(i) OPERATING BUDGETIncome from continuing operationsExpenses from continuing operations


(ii) CAPITAL BUDGETNew Capital Works (2)

Replacement/Refurbishment of Existing AssetsTotal Capital Budget

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

Notes:(1) From 13/14 Income Statement.(2) New Capital Works are major non-recurrent projects, eg new Leisure Centre, new Library, new Swimming pool etc.(3) Financial projections should be in accordance with Council’s Integrated Planning and Reporting framework.

17/18 Forecast(3)Forecast(3)

16/17

40,150 50,530 41,540

13/14 Forecast(3)

15/16 14/15 Forecast(3) Actual(1)

14,849 19,611

37,877 38,627

3,027 10,333

40,904 42,423 40,197

3,796 (625)

42,165

(947)

41,097

- 14,849 19,611

4,600 345

1,000 337

6,660

363 354

7,014 7,518

1,600

7,518

-

7,014 8,850 8,850

7,518 - 14,849 19,611 7,014

5,555 18,266 9,912

1,600

8,850

Forecast(3)

19/20

43,302 44,325

(1,023)

8,563 8,563

- 381

7,197 985

8,563

Forecast(3)

18/19

42,599 43,270

(671)

20/21

44,397 45,339

(942)

8,094 8,094

8,476 8,476

Forecast(3)

23/24

47,912 48,578

(666)

8,738 8,738

-

7,197 506

Forecast(3)

- - 391

Forecast(3)

21/22

45,524 46,387

(863)

8,437

- 411

7,197 829

401

7,197 878

Forecast(3)

Special S

chedules 2014

page 21

22/23

46,697 47,463

(766)

8,437

8,437 8,476 8,094

421

7,197 1,120

8,738

372

6,878


page 22


Special Schedule No. 9 - Permissible Income Calculation for the financial year ended 30 June 2015

$'000

Notional General Income Calculation (1)

Last Year Notional General Income YieldPlus or minus Adjustments (2)

Notional General Income

Permissible Income Calculation

Special variation percentage (3)

or Rate peg percentageor Crown land adjustment incl. rate peg percentage

less expiring Special variation amountplus Special variation amount

or plus Rate peg amountor plus Crown land adjustment and rate peg amount

sub-total

plus (or minus) last year's Carry Forward Totalless Valuation Objections claimed in the previous yearsub-total

Total Permissible income

less Notional General Income YieldCatch-up or (excess) result

plus Income lost due to valuation objections claimed (4)

less Unused catch-up (5)

Carry forward to next year

Notes1 The Notional General Income will not reconcile with rate income in the financial statements in the

corresponding year. The statements are reported on an accrual accounting basis which include amountsthat relate to prior years' rates income.

2 Adjustments account for changes in the number of assessments and any increase or decrease in landvalue occurring during the year. The adjustments are called "supplementary valuations" as defined in theValuation of Land Act 1916.

3 The Special Variation Percentage is inclusive of the Rate Peg percentage and where applicable crown landadjustment.

4 Valuation objections are unexpected changes in land values as a result of land owners successfullyobjecting to the land value issued by the Valuer-General. Councils can claim the value of the income lostdue to valuation objections in any single year.

5 Unused catch-up amounts will be deducted if they are not caught up within 2 years. Usually councils willhave a nominal carry forward figure. These amounts can be adjusted for in setting the rates in a future year.

17 30 11,429 11,916

11,412 11,886

3.40% 2.30%

- - - -

62 (5)

389 274 - -

11,818 12,190

- (1) 62 (6)

12,184

11,886 12,193

a

(5) (7)

Calculation Calculation2013/14 2014/15

- -

(6) (9)

1 2

11,880

l

m

n = (l + m)

o = k + n

g

b

d

e

f

k = (c+g+h+i+j)

j = c x f

i = c x e

h = c x d

c

p

q = o - p

r

st = q + r - s

lithgow city councilarchive.lithgow.nsw.gov.au/gipa/financialreport1314.pdf · 2014. 11. 28. ·...

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