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Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 1
Annual Report 2014-2015 Part Three of Three
Financial Report for the Year Ended 30 June 2015
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 2
BANYULE CITY COUNCIL Financial Report for the year ended 30 June 2015
Table of Contents Page
FINANCIAL REPORT
Financial Statements
Comprehensive Income Statement 4
Balance Sheet 5
Statement of Changes in Equity 6
Statement of Cash Flows 7
Statement of Capital Works 8
Notes to the Financial Statements
Introduction 10
Note 1 Significant accounting policies 10
Note 2 Budget comparison 21
Note 3 Rates and charges 26
Note 4 Grants 27
Note 5 Statutory fees and fines 31
Note 6 User fees and charges 31
Note 7 Interest income 31
Note 8 Rental income 31
Note 9 Contributions income 31
Note 10 Net gain/(loss) on disposal of infrastructure, property, plant and
equipment
32
Note 11 Other income 32
Note 12 Share of net profits/(losses) of Associates 32
Note 13 Employee costs 32
Note 14 Materials, contracts and services 33
Note 15 Utility charges 33
Note 16 Depreciation and amortization 33
Note 17 Donations expenditure 34
Note 18 Borrowing costs 34
Note 19 Contributions expense 34
Note 20 Other expenses 34
Note 21 Auditors’ remuneration 34
Note 22 Bad and doubtful debts 34
Note 23 Cash and cash equivalents 35
Note 24 Other financial assets 35
Note 25 Trade and other receivables 36
Note 26 Inventories 37
Note 27 Non-current assets classified as held for sale 37
Note 28 Other assets 37
Note 29 Investments 38
Note 30 Infrastructure, property, plant and equipment 40
Note 31 Intangible assets 46
Note 32 Trade and other payables 46
Note 33 Provisions 47
Note 34 Trust funds and deposits 48
Note 35 Interest bearing loans and borrowings 49
Note 36 Reserves 50
Note 37 Reconciliation of cash flows from operating activities to surplus/(deficit) 55
Note 38 Reconciliation of cash and cash equivalents 55
Note 39 Financing arrangements 55
Note 40 Superannuation 56
Note 41 Contractual commitments 57
Note 42 Operating leases 58
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 3
BANYULE CITY COUNCIL Financial Report for the year ended 30 June 2015
Contents (cont) Page
Note 43 Contingent liabilities 59
Note 44 Financial instruments 62
Note 45 Related party transactions 65
Note 46 Events occurring after balance date 66
Certification of the Financial Statements 67
Independent Auditor’s Report 68
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 4
BANYULE CITY COUNCIL Financial Report 2015
Comprehensive Income Statement for the year ended 30 June 2015
Note 2015
$‘000
%
2014
$‘000
%
INCOME
Rates and charges 3 86,287 60.2 79,794 66.8
Grants - operating 4 14,008 9.8 10,037 8.4
Grants - capital 4 2,015 1.4 1,438 1.2
Statutory fees and fines 5 6,977 4.9 6,338 5.3
User fees and charges 6 14,557 10.1 14,698 12.3
Interest income 7 2,390 1.7 2,068 1.8
Rental income 8 1,916 1.3 1,942 1.6
Contributions income 9 3,044 2.1 2,729 2.3
Net gain on disposal of infrastructure, property,
plant and equipment
10
11,771
8.2
-
-
Other income 11 114 0.1 176 0.1 Share of net profits/(losses) of associates 12 336 0.2 274 0.2
Total Income 143,415 100.0 119,494 100.0
EXPENSES
Employee costs 13 54,653 42.8 51,511 43.8
Materials, contracts and services 14 38,405 30.1 33,020 28.1
Utility charges 15 4,136 3.2 4,446 3.8
Depreciation and amortization 1(xiii),16 18,572 14.5 15,911 13.5
Donations expenditure 17 708 0.6 669 0.6
Borrowing costs 18 3,795 3.0 3,477 3.0
Contributions expense 19 5,799 4.5 5,652 4.8
Net loss on disposal of infrastructure, property,
plant and equipment
10
-
-
1,306
1.1
Other expenses 20 1,662 1.3 1,531 1.3
Total Expenses 127,730 100.0 117,523 100.0
Surplus/(Deficit) for the year 15,685 1,971
OTHER COMPREHENSIVE INCOME
Items that will not be reclassified to surplus
or deficit in future periods:
Net asset revaluation increment/(decrement) 30(i) - 50,314
Impairment loss 27 (2,582) -
Total Comprehensive Result 13,103 52,285
The above Comprehensive Income Statement should be read in conjunction with the accompanying notes.
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 5
BANYULE CITY COUNCIL Financial Report 2015
Balance Sheet as at 30 June 2015
Note 2015
$‘000
2014
$‘000
ASSETS
Current Assets
Cash and cash equivalents 23 64,795 56,835
Other financial assets 24 21,330 2,083
Trade and other receivables 25 6,801 6,924
Inventories 26 32 41
Non-current assets classified as held for sale 27 22,385 35,200
Other assets 28 946 814
Total current assets 116,289 101,897
Non-Current Assets
Trade and other receivables 25 517 615
Investments 29 3,068 2,732
Infrastructure, property, plant and equipment 30 1,247,674 1,247,902
Intangible assets 31 1,643 1,064
Total non-current assets 1,252,902 1,252,313
Total Assets 1,369,191 1,354,210
LIABILITIES
Current Liabilities
Trade and other payables 32 12,544 9,357
Provisions 33 13,432 12,343
Trust funds and deposits 34 677 931
Interest bearing loans and borrowings 35 2,647 2,267
Total current liabilities 29,300 24,898
Non-Current Liabilities
Provisions 33 404 326
Trust funds and deposits 34 478 434
Interest bearing loans and borrowings 35 55,366 58,012
Total non-current liabilities 56,248 58,772
Total Liabilities 85,548 83,670
Net Assets 1,283,643 1,270,540
EQUITY
Accumulated surplus 412,565 422,018
Reserves 36(ii) 871,078 848,522
Total Equity 1,283,643 1,270,540
The above Balance Sheet should be read in conjunction with the accompanying notes.
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 6
BANYULE CITY COUNCIL Financial Report 2015
Statement of Changes in Equity for the year ended 30 June 2015
2015
Total
$‘000
Accumulated
Surplus
$‘000
Asset
Revaluation
Reserve
$‘000
Asset
Replacement
Reserves
$‘000
Balance at beginning of the financial year 1,270,540 422,018 833,409 15,113
Surplus for the year 15,685 15,685 - -
Impairment Loss on revalued assets (2,582) - (2,582) -
Transfers from asset revaluation reserve - 1,743 (1,743) -
Transfers to other reserves - (34,855) - 34,855
Transfers from other reserves - 7,974 - (7,974)
Balance at end of the financial year 1,283,643 412,565 829,084 41,994
(a) (a)
2014
Total
$‘000
Accumulated
Surplus
$‘000
Asset
Revaluation
Reserve
$‘000
Asset
Replacement
Reserves
$‘000
Balance at beginning of the financial year 1,218,255 419,655 785,374 13,226
Surplus for the year 1,971 1,971 - -
Net asset revaluation increment 50,314 - 50,314 -
Transfers from revaluation reserve - 2,279 (2,279) -
Transfers to other reserves - (35,381) - 35,381
Transfers from other reserves - 33,494 - (33,494)
Balance at end of the financial year 1,270,540 422,018 833,409 15,113
(a) (a)
(a) Refer to Note 36 for more information on reserves
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 7
BANYULE CITY COUNCIL Financial Report 2015
Statement of Cash Flows for the year ended 30 June 2015
Note 2015
Inflows/
(Outflows)
$‘000
2014
Inflows/
(Outflows)
$‘000
Cash Flows from Operating Activities
Receipts:
Rates and charges 85,344 79,608
Grants - operating 14,010 11,521
Grants - capital 1,964 -
Statutory fees and fines 6,846 6,178
User fees and charges 13,081 14,744
Contributions - monetary 4,203 1,247
Interest received 2,311 2,033
Rent 2,026 1,804
Other receipts 1,824 49
Payments:
Employee costs (54,395) (50,448)
Materials, contracts and services (35,320) (33,801)
Trust funds and deposits net refunded 34 (210) (236)
Other payments (12,050) (12,571)
Net cash provided by operating activities 37 29,634 20,128
Cash Flows from Investing Activities
Payments for property, plant and equipment (17,056) (34,036)
Payments for infrastructure assets (4,270) (5,101)
Payments for intangible assets (374) (912)
Proceeds from sale of property, plant and equipment 10 25,413 3,421
Net (purchases)/redemption of financial assets (19,247) 4,295
Net cash (used in) investing activities (15,534) (32,333)
Cash Flows from Financing Activities
Borrowing costs - interest (3,874) (3,519)
Repayment of borrowings (2,266) (1,457)
Proceeds from borrowings - 30,000
Net cash provided by/(used in) financing activities (6,140) 25,024
Net increase/(decrease) in cash and cash equivalents 7,960 12,819
Cash and cash equivalents at the beginning of the financial
year
56,835
44,016
Cash and cash equivalents at the
end of the financial year
23,38
64,795
56,835
Financing arrangements
39
Restrictions on cash assets 23
The above Statement of Cash Flows should be read in conjunction with the accompanying notes.
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 8
BANYULE CITY COUNCIL Financial Report 2015
Statement of Capital Works for the year ended 30 June 2015
Note 2015
$‘000
2014
$‘000
Capital Works
Infrastructure:
Roads, streets and bridges 30(i) 2,608 2,387
Drainage 30(i) 225 46
Parks and gardens 30(i) 1,429 2,623
Playgrounds 30(i) 378 251
Total infrastructure 4,640 5,307
Property:
Freehold land 30(i) 296 25,811
Freehold buildings 30(i) 10,130 1,792
Total property 10,426 27,603
Plant and equipment:
Motor vehicles 30(i) 4,215 4,513
Plant and equipment 30(i) 871 1,390
Furniture and fittings 30(i) 153 165
Total plant and equipment 5,239 6,068
Work in progress:
Work in progress 30(i) 1,642 1,444
Total work in progress 1,642 1,444
Intangible Assets:
Intangible Assets 31(i) 374 549
Total intangible assets 374 549
Non-current assets classified as held for sale:
Non-current assets classified as held for sale 27 11 -
Total non-current assets classified as held for sale 11 -
Total capital works expenditure 22,332 40,971
Represented by:
New assets (a) 2,975 27,096
Asset renewal (b) 16,365 10,731
Asset upgrade (c) 1,466 2,423
Asset expansion (d) 1,141 172
New intangible assets 374 549
New non-current assets classified as held for sale 11 -
Total capital works expenditure 22,332 40,971
The above Statement of Capital Works should be read in conjunction with the accompanying notes.
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 9
BANYULE CITY COUNCIL Financial Report 2015
Statement of Capital Works for the year ended 30 June 2015
Definition of asset categories
(a) New
New capital expenditure does not have any element of renewal, expansion or upgrade of existing assets.
New capital expenditure may or may not result in additional revenue for Council and will result in an
additional burden for future operation, maintenance and capital renewal.
(b) Renewal
Expenditure on an existing asset which returns the service potential or the life of the asset up to that
which it had originally. It periodically requires expenditure, relatively large (material) in value compared
with the value of the components or sub-components of the asset being renewed. As it reinstates
existing service potential, it has no impact on revenue, but may reduce future operating and maintenance
expenditure if completed at the optimum time.
(c) Upgrade
Expenditure which enhances an existing asset to provide a higher level of service or expenditure that will
increase the life of the asset beyond that which it had originally. Upgrade expenditure is discretional and
often does not result in additional revenue unless direct user charges apply. It will increase operating and
maintenance expenditure in the future because of the increase in the Council’s asset base.
(d) Expansion
Expenditure which extends an existing asset, at the same standard as is currently enjoyed by residents, to
a new group of users. It is discretional expenditure which increases future operating and maintenance
costs, because it increases Council’s asset base, but may be associated with additional revenue from the
new user group.
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 10
BANYULE CITY COUNCIL Financial Report 2015
Notes to and Forming Part of the Financial Statements for the year ended 30 June 2015
INTRODUCTION
Banyule City Council was established by an Order of the Governor in Council on 14 December 1994 and is a
Body Corporate.
Council has three Service Centres located at:
Ivanhoe – 275 Upper Heidelberg Road
Rosanna – 44 Turnham Avenue
Greensborough – 9-13 Flintoff Street
Council’s website address is : www.banyule.vic.gov.au
STATEMENT OF COMPLIANCE
These Financial Statements are a general purpose Financial Report that consists of a Comprehensive Income
Statement, Balance Sheet, Statement of Changes in Equity, Statement of Cash Flows, Statement of Capital Works
and notes accompanying these Financial Statements. The general purpose Financial Report complies with
Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards
Board, the Local Government Act 1989, and the Local Government (Planning and Reporting) Regulations 2014.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant policies which have been adopted in the preparation of these Financial Statements are:
(i) Basis of Accounting
The accrual basis of accounting has been used in the preparation of these Financial Statements, whereby
assets, liabilities, equity, income and expenses are recognised in the reporting period to which they relate,
regardless of when cash is received or paid.
The Financial Statements have been prepared on the accrual and going concern basis under the historical
cost conventions except where specifically stated in:
Note 1 - (xii): Recognition and measurement of assets
Note 1 - (xiii): Valuation of assets
Note 1 - (xvi): Impairment of assets
Note 1 - (xxxii): Accounting for investments in associates
Note 1 - (x): Non-current assets classified as held for sale
Note 1 - (xvii): Investment property
Note 1 - (xxv): Financial guarantees
Judgements, estimates and assumptions are required to be made about the carrying values of assets and
liabilities that are not readily apparent from other sources. The estimates and associated judgements are
based on professional judgement derived from historical experience and various other factors that are
believed to be reasonable under the circumstances. Actual results may differ from these estimates.
Revisions to accounting estimates are recognised in the period in which the estimate is revised and also in
future periods that are affected by the revision. Judgements and assumptions made by management in the
application of AASs that have significant effects on the Financial Statements and estimates relate to:
the fair value of land, buildings, infrastructure, plant and equipment (refer to Note 1 (xii))
the determination of depreciation for buildings, infrastructure, plant and equipment (refer to Note 1
(xiii))
the determination of employee provisions (refer to Note 1 (v))
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 11
BANYULE CITY COUNCIL Financial Report 2015
Notes to and Forming Part of the Financial Statements for the year ended 30 June 2015
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont)
(i) Basis of Accounting (cont)
Unless otherwise stated, the accounting policies adopted for the reporting period are consistent with those
in the prior year. Where appropriate, comparative figures have been amended to accord with current
presentation, and disclosure has been made of any material changes to comparatives.
The figures presented in all the Financial Statements and the notes to the Financial Statements are
expressed as thousands of dollars when indicated by “$‘000”. Otherwise, the figures are exact to the
nearest one dollar.
(ii) Changes in Accounting Policies
There have been no changes in accounting policies from the previous period.
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 12
BANYULE CITY COUNCIL Financial Report 2015
Notes to and Forming Part of the Financial Statements for the year ended 30 June 2015
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont)
(iii) Principles of Consolidation
There are no other entities controlled by Council, material or otherwise, which are required to be included
in the Financial Statements.
(iv) Revenue Recognition
Income is recognised when Council obtains control of the income or the right to receive the income, it is
probable that the economic benefits comprising the income will flow to the Council and the amount of the
income can be measured reliably.
Rates and Charges
Annual rates and charges are recognised as revenues when Council issues annual rates notices, as a result
of the adoption by Council of its annual budget and fulfilling the statutory process. Supplementary rates are
recognised when a valuation and reassessment is completed and a supplementary rates notice issued, as a
result of the adoption by Council of its annual budget and fulfilling the statutory process.
A provision for doubtful debts on rates has not been established as unpaid rates represent a charge against
the rateable property that will be recovered when the property is next sold.
Special Rates and Charges
Income from construction special rates and special charges is recognised at the commencement of each
scheme. Income from shopping centre special rates and charges schemes is recognised on a yearly basis,
for the length of each scheme, as the schemes run on a year by year basis.
Statutory Fees and Fines
Statutory fees and fines (including parking fees and fines) are recognised as revenue when the service has
been provided, the payment is received, or when the penalty has been applied, whichever first occurs.
User Fees and Charges
User fees and charges are recognised as revenue when the service has been provided or the payment is
received, whichever first occurs.
Grants
Grant income is recognised when Council obtains control of the grant. This is normally obtained upon
their receipt (or acquittal) or upon earlier notification that a grant has been secured and are valued at their
fair value at the date of transfer.
Where grants recognised as revenues during the financial year were obtained on the condition that they be
expended in a particular manner or used over a particular period and those conditions were undischarged
at balance date, the unused grant is disclosed in Note 4. That note also discloses the amount of unused
grant, recognised as revenue, in prior years that was expended on Council’s operations during the current
year.
Contributions
Monetary and non-monetary contributions are recognised as revenue when Council obtains control over
the income and/or contributed asset.
Unreceived contributions over which the Council has control are recognised as receivables.
Donations
Donations are recognised as revenue when the Council obtains control over the assets comprising the
receipts.
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 13
BANYULE CITY COUNCIL Financial Report 2015
Notes to and Forming Part of the Financial Statements for the year ended 30 June 2015
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont)
(iv) Revenue Recognition (cont)
Sale of Infrastructure, Property, Plant and Equipment
The profit or loss on sale of an asset is determined when control of the asset has irrevocably passed to the
buyer.
Interest and Rent
Interest and rent are recognised as they are earned.
Dividends
Dividend revenue is recognised when the Council’s right to receive payment is established.
Other Income
Other income is measured at the fair value of the consideration received or receivable and is recognised
when Council gains control over the right to receive the income.
(v) Employee Costs and Benefits
The calculation of employee costs and benefits includes all relevant on-costs and are calculated as follows at
reporting date:
Wages and salaries and annual leave
Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be wholly
settled within 12 months of the reporting date are recognised in the provision for employee benefits in
respect of employee services up to the reporting date, classified as current liabilities and measured at their
nominal values.
Liabilities that are not expected to be wholly settled within 12 months of the reporting date are recognised
in the provision for employee benefits as current liabilities, measured at present value of the amounts
expected to be paid when the liabilities are settled using the remuneration rate expected to apply at the
time of settlement.
Long service leave
Liability for long service leave is recognised in the provision for employee benefits.
Current liability – unconditional long service leave is disclosed as a current liability even when Council does
not expect to settle the liability within 12 months because it will not have the unconditional right to defer
settlement of the entitlement should an employee take leave within 12 months.
The components of this current liability are measured at:
Present value – component that is not expected to be wholly settled within 12 months.
Nominal value – component that is expected to be wholly settled within 12 months.
Classification of employee costs
Non-current liability – conditional long service leave that has been accrued, where an employee is yet to
reach a qualifying term of employment, is disclosed as a non-current liability. There is an unconditional right
to defer settlement of the entitlement until the employee has completed the requisite years of service.
This non-current long service leave liability is measured at present value.
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 14
BANYULE CITY COUNCIL Financial Report 2015
Notes to and Forming Part of the Financial Statements for the year ended 30 June 2015
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont)
(vi) Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, deposits at call and other highly liquid investments with
original maturities of 90 days or less, net of outstanding bank overdrafts.
(vii) Trade and Other Receivables
Receivables are carried at amortised cost using the effective interest rate method. A provision for doubtful
debts is recognised when there is objective evidence that an impairment has occurred.
(viii) Other Financial Assets
Other financial assets are valued at fair value, being market value, at balance date. Term deposits are
measured at amortised cost. Any unrealised gains and losses on holdings at balance date are recognised as
either a revenue or expense.
(ix) Inventories
Inventories held for distribution are measured at cost or weighted average cost adjusted, when applicable,
for any loss of service potential. Inventories are measured at the lower of cost and net realisable value.
All other inventories, including land held for sale, are measured at the lower of cost and net realisable value.
Where inventories are acquired for no cost or nominal consideration, they are measured at current
replacement cost at the date of acquisition.
(x) Non-Current Assets Classified as Held for Sale
A non-current asset classified as held for sale (including disposal groups) is measured at the lower of its
carrying amount and fair value less costs to sell and are not subject to depreciation. Non-current assets,
disposal groups and related liabilities and assets are treated as current and classified as held for sale if their
carrying amount will be recovered through a sale transaction rather than through continuing use. This
condition is regarded as met only when the sale is highly probable and the asset’s sale (or disposal group
sale) is expected to be completed within 12-months from the date of classification.
(xi) Fair Value Measurement
Council measures certain assets and liabilities at fair value where required or permitted by Australian
Accounting Standards. AASB 13 Fair Value Measurement, aims to improve consistency and reduce
complexity by providing a definition of fair value and a single source of fair value measurement and
disclosure requirements for use across Australian Accounting Standards.
AASB 13 defines fair value as the price that would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants at the measurement date. Fair value under AASB 13
is an exit price regardless of whether that price is directly observable or estimated using another valuation
technique.
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 15
BANYULE CITY COUNCIL Financial Report 2015
Notes to and Forming Part of the Financial Statements for the year ended 30 June 2015
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont)
(xi) Fair Value Measurement (cont)
All assets and liabilities for which fair value is measured or disclosed in the Financial Statements are
categorised within a fair value hierarchy, described as follows, based on the lowest level input that is
significant to the fair value measurement as a whole:
Level 1: Quoted (unadjusted) market prices in active markets for identical assets or liabilities;
Level 2: Valuation techniques for which the lowest level input that is significant to the fair value
measurement is directly or indirectly observable; and
Level 3: Valuation techniques for which the lowest level input that is significant to the fair value
measurement is unobservable.
For the purpose of fair value disclosures, Council has determined classes of assets and liabilities on the basis
of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as
explained above.
In addition, Council determines whether transfers have occurred between levels in the hierarchy by re-
assessing categorisation (based on the lowest level input that is significant to the fair value measurement as
a whole) at the end of each reporting period.
(xii) Recognition and Measurement of Infrastructure, Property, Plant and Equipment, and
Intangibles
Acquisition
The purchase method of accounting is used for all acquisitions of assets, being the fair value of assets
provided as consideration at the date of acquisition plus any incidental costs attributable to the acquisition.
Fair value is the amount for which the asset could be exchanged between knowledgeable willing parties in
an arm’s length transaction.
Where assets are constructed by Council, cost includes all materials used in construction, direct labour,
borrowing costs incurred during construction and an appropriate share of directly attributable variable and
fixed overheads.
In accordance with Council’s Policy, the threshold limits detailed in Note 1(xiii) have applied when
recognising assets within an applicable asset class and unless otherwise stated are consistent with the prior
year.
Roads, drainage and building assets have been brought to account in the Balance Sheet of Council at cost in
the year of acquisition or construction and are subject to depreciation on a straight line basis over their
useful lives from the financial year following acquisition. These assets were revalued at 30 June 2014 at
their current replacement cost less accumulated depreciation (calculated on a straight line basis).
Land assets have been brought to account in the Balance Sheet of Council at cost in the year of acquisition.
These assets were revalued at 30 June 2014 at their current replacement cost. Land is not subject to
depreciation.
Parks and gardens assets, playgrounds, motor vehicles, plant and equipment, furniture and fittings, art
collection assets, waste management big bins and intangible assets have been brought to account in the
Balance Sheet of Council at cost in the year of acquisition or construction and are valued at cost.
Council does not recognise land under roads that it controlled prior to 30 June 2008. Land under roads
acquired after 30 June 2008, if material, will be brought to account using the cost basis.
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 16
BANYULE CITY COUNCIL Financial Report 2015
Notes to and Forming Part of the Financial Statements for the year ended 30 June 2015
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont)
(xii) Recognition and Measurement of Infrastructure, Property, Plant and Equipment, and
Intangibles (cont)
Revaluation
Subsequent to the initial recognition of assets, non-current physical assets, other than plant and equipment,
are measured at their fair value, being the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date. At balance date,
the Council reviewed the carrying value of the individual classes of assets measured at fair value to ensure
that each asset materially approximated its fair value. Where the carrying value materially differed from the
fair value at balance date, the class of asset was revalued.
Fair value valuations are determined in accordance with a valuation hierarchy. Changes to the valuation
hierarchy will only occur if an external change in the restrictions or limitations of use of an asset result in
changes to the permissible or practical highest and best use of the asset. Further details regarding the fair
value hierarchy are disclosed at Note 30, Infrastructure, Property, Plant and Equipment.
Where the assets are revalued, the revaluation increments are credited directly to the asset revaluation
reserve except to the extent that an increment reverses a prior year decrement for that class of asset that
had been recognised as an expense in which case the increment is recognised as revenue up to the amount
of the expense. Revaluation decrements are recognised as an expense except where prior increments are
included in the asset revaluation reserve for that class of asset in which case the decrement is taken to the
reserve to the extent of the remaining increments. Within the same class of assets, revaluation increments
and decrements within the year are offset.
The Financial Statements for the Year Ended 30 June 2015 reflect the revaluation of assets that occurred on
30 June 2014. The next revaluation is due to be reflected in the Financial Statements for year ending 30
June 2016.
Council’s Valuer’s valuation, in the case of land and buildings is determined in accordance with the Valuation
of Land Act 1960. The valuation is calculated using market value, as a fair value, based on existing use.
For drainage, roads, streets and bridges assets, the valuation represents an estimate of written down
current replacement costs determined by reference to engineering construction plans and Melbourne
Water base maps after taking into account construction costs written down for the current condition of
the assets and the impact of any economic or technical obsolescence.
Other class of assets are not revalued.
(xiii) Depreciation and Amortisation of Infrastructure, Property, Plant and Equipment and
Intangibles
Infrastructure assets, buildings, land improvements, plant and equipment, and other assets having limited
useful lives are systematically depreciated over their useful lives to Council in a manner which reflects
consumption of the service potential embodied in those assets. Estimates of remaining useful lives and
residual values are made on a regular basis with major asset classes reassessed annually. Depreciation rates
and methods are reviewed annually. Depreciation for roads and drainage assets are depreciated from the
financial year following acquisition or construction.
Where assets have separate identifiable components that are subject to regular replacement, these
components are assigned distinct useful lives and residual values and a separate depreciation rate is
determined for each component.
Straight line depreciation is charged based on the residual useful life as determined each year. Depreciation
periods used are listed below and are consistent with the prior year unless otherwise stated.
Land is not a depreciable asset. Council’s art collection assets are not considered depreciable.
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 17
BANYULE CITY COUNCIL Financial Report 2015
Notes to and Forming Part of the Financial Statements for the year ended 30 June 2015
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont)
(xiii) Depreciation and Amortisation of Infrastructure, Property, Plant and Equipment and
Intangibles (cont)
Depreciation of all assets is provided using the straight line basis with rates that are reviewed each
reporting period. The 2015 depreciation rates have changed for the asset categories listed in the 2014
table below. The new depreciation rates are incorporated in the 2015 table along with the unchanged asset
categories. The changes occurred on 1 July 2014. Council conducted a review of the useful lives of assets,
with assistance from a consultant, to reflect the usage of the assets in the current environment.
The threshold limit for capitalisation remains unchanged for all asset classes.
2015
Asset Category
Depreciation
Rate %
Useful Life
Years
Threshold
Limit $
Roads, streets and bridges
Roads – seals 4 25 All
Roads – sub-structure 1 100 All
Bridges, medians & local area traffic management 1 100 10,000
Footpaths 1.67 60 All
Kerb, channel and medians 1.18 – 1.42 85 – 70 All
Drainage 1 100 5,000
Parks and gardens 4 – 20 25 – 5 1,000
Playgrounds 5.55 18 1,000
Freehold buildings 1.25 80 5,000
Freehold land - - All
Motor vehicles 15 6.60 All
Plant and equipment 4 – 33.33 25 – 3 1,000
Furniture and fittings 5 – 10 20 – 10 5,000
Waste management big bins 10 10 10,000
Works of art All
2014
Asset Category
Depreciation
Rate %
Useful Life
Years
Threshold
Limit $
Roads, streets and bridges
Roads – seals 2.50 40 All
Roads – sub-structure .66 150 All
Bridges, medians & local area traffic management .66 150 10,000
Footpaths 1.33 75 All
Playgrounds 4 25 1,000
Freehold buildings 1 100 5,000
The depreciation rates for asset categories not shown in the 2014 Asset Category Table have not changed.
In 2015, the impact on depreciation expenses across the asset classes due to the changes in depreciation
rates is shown in the following table:
Asset Class Depreciation
Rates 2015 %
Useful Life
2015 Years
Depreciation
Rates 2014
%
Useful Life
2014
Years
Increase/
(decrease)
Depreciation
Expense $
Roads – seals 4 25 2.5 40 980,104
Roads – sub-structure 1 100 100 0.66 150 326,950
Roads – bridges 1 100 0.66 150 7,825
Roads – footpaths 1.67 60 1.33 75 400,260
Buildings 1.25 80 1 100 604,930
Playgrounds 5.55 18 4 25 100,770
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 18
BANYULE CITY COUNCIL Financial Report 2015
Notes to and Forming Part of the Financial Statements for the year ended 30 June 2015
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont)
(xiv) Work in Progress
Any work in progress at the end of a financial year is identified and recorded as a non-current asset in the
Balance Sheet. Upon completion of each project, the value of work in progress will be transferred to the
appropriate non-current depreciable asset class within infrastructure, property plant and equipment of the
Balance Sheet and will be subject to appropriate depreciation charges thereafter.
(xv) Repairs and Maintenance
Routine maintenance, repair costs and minor renewal costs are expensed as incurred. Where the repair
relates to the replacement of a component of an asset and the cost exceeds the capitalisation threshold, the
cost is capitalised and depreciated. The carrying value of the replaced asset is expensed.
(xvi) Impairment of Assets
At each reporting date, the Council reviews the carrying value of its assets to determine whether there is
any indication that these assets have been impaired. If such an indication exists, the recoverable amount of
the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the
assets carrying value. Any excess of the assets’ carrying value over its recoverable amount is expensed to
the comprehensive income statement, unless the asset is carried at the revalued amount in which case, the
impairment loss is recognised directly against the revaluation surplus in respect of the same class of asset to
the extent that the impairment loss does not exceed the amount in the revaluation surplus for that same
class of asset.
(xvii) Investment Property
Investment property, if any, is held to generate long-term rental yields. Investment property is measured
initially at cost, including transaction costs. Costs incurred subsequent to initial acquisition are capitalised
when it is probable that future economic benefit in excess of the originally assessed performance of the
asset will flow to Council. Subsequent to initial recognition at cost, investment property is carried at fair
value, determined annually by a valuer. Changes to fair value are recorded in the Comprehensive Income
Statement in the period that they arise. Rental income from the leasing of investment properties is
recognised in the Comprehensive Income Statement, when invoiced, on a straight line basis over the lease
term.
(xviii) Accounting for Investments in Associates
Associates are all entities over which Council has significant influence, but not control or joint control.
Investments in associates are accounted for using the equity method of accounting. The investment was
initially recorded at cost and adjusted thereafter for post-acquisition changes in the Council’s share of the
net assets of the entities. Council’s share of the financial result of the entities is recognised in the
Comprehensive Income Statement.
Council has an equity interest share in the following associate:
42.40% (42.86% in 2014) in the Yarra Plenty Regional Library;
Council’s share is based on the total of contributions paid by Council, since the inception of the Library, as
a percentage of the total contributions paid by the three Councils.
The Yarra Plenty Regional Library is an independent legal entity with an Executive Management Team,
which is responsible for the day-to-day operations of the organisation. Banyule is one of three Councils
with a stake in the Library and each of the three Councils has put forward two members which make up
the six-person Regional Library Board.
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 19
BANYULE CITY COUNCIL Financial Report 2015
Notes to and Forming Part of the Financial Statements for the year ended 30 June 2015
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont)
(xix) Investments
Investments other than investments in associates are measured at cost.
Regional Kitchen Pty Ltd and RFK Pty Ltd (trading as Community Chef) are related but separate entities
involved in the production of delivered meals. Regional Kitchen Pty Ltd owns its land, buildings and the
production facilities where the meals are made. Regional Kitchen Pty Ltd leases the building and facilities to
RFK Pty Ltd who are responsible for the operation of the facility including the production of the meals and
their delivery to the Council members.
(xx) Trust Funds and Deposits
Amounts received as deposits and retention amounts controlled by Council are recognised as trust funds
until they are returned, transferred in accordance with the purpose of the receipt, or forfeited (refer to
Note 34).
(xxi) Borrowings
Borrowings are initially measured at fair value, being the cost of the interest bearing liabilities, net of
transaction costs. The measurement basis subsequent to initial recognition depends on whether the
Council has categorised its interest bearing liabilities as either financial liabilities designated at fair value
through the profit and loss, or financial liabilities at amortised cost. Any difference between the initial
recognised amount and the redemption value is recognised in net result over the period of the borrowing
using the effective interest method. The classification depends on the nature and purpose of the interest
bearing liabilities. The Council determines the classification of its interest bearing liabilities at initial
recognition.
(xxii) Borrowing Costs
Borrowing costs are recognised as an expense in the period in which they are incurred, except where they
are capitalised as part of a qualifying asset constructed by Council. Except where specific borrowings are
obtained for the purpose of specific asset acquisition, the weighted average interest rate applicable to
borrowings at balance date is used to determine the borrowing costs to be capitalised.
Borrowing costs include interest on bank overdrafts, interest on borrowings and finance lease charges (if
any).
(xxiii) Allocation between Current and Non-Current
In the determination of whether an asset or liability is current or non-current, consideration is given to the
time when each asset or liability is expected to be settled. The asset or liability is classified as current if it is
expected to be settled within the next 12 months, being the Council’s operational cycle, or if Council does
not have an unconditional right to defer settlement of a liability for at least 12 months after the reporting
date.
(xxiv) Contingent Assets and Contingent Liabilities and Commitments
Contingent assets (if any) and contingent liabilities are not recognised in the Balance Sheet, but are
disclosed by way of a Note (Note 43) and, if quantifiable, are measured at nominal value. Contingent assets
and liabilities are presented inclusive of GST receivable or payable respectively.
Commitments are not recognised in the Balance Sheet. Commitments are disclosed at their nominal value
and inclusive of the GST payable (Notes 41 and 42).
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 20
BANYULE CITY COUNCIL Financial Report 2015
Notes to and Forming Part of the Financial Statements for the year ended 30 June 2015
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont)
(xxv) Financial Guarantees
Financial guarantee contracts are not recognised as a liability in the balance sheet unless the lender has
exercised their right to call on the guarantee or Council has other reasons to believe that it is probable
that, that right will be exercised. Details of guarantees that Council has provided, that are not recognised
in the balance sheet are disclosed at Note 43 Contingent Liabilities and Contingent Assets.
(xxvi)Operating Leases
Lease payments for operating leases are required by the accounting standard to be recognised on a straight
line basis, rather than expensed in the years in which they are incurred.
(xxvii)Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST
incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised
as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables
in the balance sheet are shown inclusive of GST.
Cash flows are presented in the cash flow statement on a gross basis, except for the GST component of
investing and financing activities, which are disclosed as operating cash flows.
(xxviii)Pending Accounting Standards
Certain new Australian Accounting Standards have been issued that are not mandatory for the 30 June
2015 reporting period. Council has assessed these pending standards and has identified that no material
impact will flow from the application of these standards in future reporting periods.
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 21
BANYULE CITY COUNCIL Financial Report 2015
Notes to and Forming Part of the Financial Statements for the year ended 30 June 2015
2. BUDGET COMPARISON
The budget comparison notes compare Council’s financial plan, expressed through its annual budget, with actual
performance. The Local Government (Planning and Reporting) Regulations 2014 requires explanation by any material
variances. Council has adopted a materiality threshold of the lower of $1.0million or 20% (if over $500,000)
where further explanation is warranted. Explanations have not been provided for variations below the materiality
threshold unless the variance is considered to be material because of its nature.
The budget figures detailed below are those adopted by Council on 23 June 2014. The Budget was based on
assumptions that were relevant at the time of adoption of the Budget. Council sets guidelines and parameters for
the revenue and expense targets in this budget in order to meet Council’s planning and financial performance
targets for both the short and long-term.
These notes are prepared to meet the requirements of the Local Government Act 1989 and the Local Government
(Planning and Reporting) Regulations 2014.
(a) Income and Expenditure
Note
Budget
2015
$‘000
Actual
2015
$‘000
Variance
2015
$‘000
INCOME
Rates and charges 85,912 86,287 375
Grants – operating 1 12,724 14,008 1,284
Grants – capital 1 1,001 2,015 1,014
Statutory fees and fines 6,787 6,977 190
User fees and charges 14,585 14,557 (28)
Interest income 2 1,431 2,390 959
Rental income 1,910 1,916 6
Contributions – income 3 2,124 3,044 920
Net gain on disposal of infrastructure,
property, plant and equipment
4
1,588
11,771
10,183
Other income 99 114 15
Share of net profits/(losses) of associates - 336 336
Total income 128,161 143,415 15,254
EXPENSES
Employee costs 5 56,715 54,653 2,062
Materials, contracts and services 6 42,013 38,405 3,608
Utility charges 3,802 4,136 (334)
Depreciation and amortization 18,991 18,572 419
Donations expenditure 928 708 220
Borrowing costs 3,874 3,795 79
Contributions expense 5,712 5,799 (87)
Other expenses 7 2,195 1,662 533
Total expenses 134,230 127,730 6,500
Surplus/(deficit) for the year (6,069) 15,685 21,754
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 22
BANYULE CITY COUNCIL Financial Report 2015
Notes to and Forming Part of the Financial Statements
for the year ended 30 June 2015
2. BUDGET COMPARISON (cont)
(a) Income and Expenditure (cont)
Explanation of Material Variations – Income and Expenditure
Note
Item Explanation
1
Grants – operating
and capital
Council received 50% ($1.83M) (operating) and $454K (capital) of next
year’s Victoria Grants Commission funding paid in advance.
Subsidies for the operation of St Hellier and Joyce Avenue Child Care
Centres were $347K more than budgeted. These subsidies allow the
Centres to care for more children with a lower cost to parents in the form
of fees.
2
Interest income Interest income received was $785K above budget, as Council had
additional cash holdings from the sale of a former school site.
Interest on General Rates is $177K above budget. Additional interest was
earned due to change in instalments and more frequent interest calculations.
3
Contributions
income
Council received income that was not budgeted for as part of a profit
sharing agreement in relation to the operation of WaterMarc Banyule.
Due to a greater amount of subdivision/building activity during the year than
originally anticipated, Public Open Space contributions exceeded budget by
$427K.
4
Net gain on
disposal of
infrastructure,
property, plant and
equipment
Council sold one former school site during the year and made a net gain of
$10.18M on the sale. At the time the budget was set, this sale was expected
to occur during the 2016 financial year.
5
Employee costs The yearly costs of workcover for Council staff came in $211K under budget
as a result of Council maintaining a safe work environment with less claims.
Across Council there were savings related to the Enterprise Agreement
increase being slightly less than budgeted, as well as overtime and training
savings within the Leisure Department due to the new Enterprise
Agreement provisions.
There were savings within the Corporate Services department due to the
merging of two managerial roles as well as a number of staff retirements and
vacancies that were not immediately back-filled.
6 Materials, contracts
and services
The energy efficient public lighting project was $1.74M under budget, with
$1.66M in savings for the project and a small balance to be carried forward
to finalise the works.
The expenditure cost for the West Heidelberg Community Hub project is
$400K under budget as the works will be capitalised as leasehold
improvements instead of expensed.
The operational costs for running Council’s plant/fleet came in $685K under
budget. Any savings are put towards the Plant Reserve.
Waste Disposal costs for Council had savings of $824K which relate to the
repeal of the carbon tax, a reduction in general waste disposal and a
reduced need for green waste collection, due to a dry year.
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 23
BANYULE CITY COUNCIL Financial Report 2015
Notes to and Forming Part of the Financial Statements
for the year ended 30 June 2015
2. BUDGET COMPARISON (cont)
(a) Income and Expenditure (cont)
Explanation of Material Variations – Income and Expenditure (cont)
Note
Item Explanation
7 Other expenses $97K worth of past expenses/liabilities have been reversed and reclassified
as transfers to reserves. These transactions relate to putting aside a portion
of the building department’s profit for future investment within the building
department.
There were $44K worth of savings made for internal communications, as
better prices were achieved from contractors and the amount of physically
published material was reduced.
Council received $115K in reimbursements for out of pocket costs
associated with Workcover. Due to the unpredictable nature of this item, it
was not budgeted.
There was $272K worth of internal waste disposal costs, which were
budgeted as other expenses, but have since been reclassified as materials,
contracts and services.
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 24
BANYULE CITY COUNCIL Financial Report 2015
Statement of Capital Works for the year ended 30 June 2015
2. BUDGET COMPARISON (cont)
(b) Capital Works
Note
Budget
2015
$‘000
Actual
2015
$‘000
Variance
2015
$‘000
Capital Works
Roads, streets and bridges 1 3,609 2,608 1,001
Drainage 466 225 241
Parks and gardens 2 2,253 1,429 824
Playgrounds 404 378 26
Freehold land - 296 (296)
Freehold buildings 3 12,715 10,130 2,585
Motor vehicles 4 7,282 4,215 3,067
Plant and equipment 4 3,010 871 2,139
Furniture and fittings - 153 (153)
Art collection 15 - 15
Intangible assets 736 374 362
Non-current assets classifieds held for sale - 11 (11)
Work in progress 5 - 1,642 (1,642)
Total capital works expenditure 30,490 22,332 8,158
Represented by:
Assets acquired as per Note 30(i)
New assets 946 2,975 (2,029)
Asset renewal 22,714 16,365 6,349
Asset upgrade 5,248 1,466 3,782
Asset expansion 846 1,141 (295)
Total assets acquired as per Note 30(i) 29,754 21,947 7,807
Assets acquired as per Note 31
New intangible assets 736 374 362
Total assets acquired as per Note 31 736 374 362
Assets acquired as per Note 27
New non-current assets classified as held for sale - 11 (11)
Total assets acquired as per Note 27 - 11 (11)
Total capital works expenditure 30,490 22,332 8,158
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 25
BANYULE CITY COUNCIL Financial Report 2015
Notes to and Forming Part of the Financial Statements
for the year ended 30 June 2015
2. BUDGET COMPARISON (cont)
(b) Capital Works (cont)
Explanation of Material Variations – Capital Works
Note
Item Explanation
1
Roads, streets and
bridges
The maintenance work on road patching, footpaths and bridges was initially
budgeted as capital works projects, however, it has been reclassified as
maintenance in the Income Statement after re-assessing the nature of the
works.
2
Parks and gardens Two sections of the Plenty river trail have delayed completion due to
unexpected weather. $469K of unspent budget has been carried forward to
the next financial year.
Macleod Tennis Club four court renewal is still work in progress at year end
due to some minor repairs.
3
Freehold buildings Banksia College basketball stadium concept design has been completed. The
$2.72M development budget has been rescheduled to the next financial year
after revising the construction phase.
4
Motor vehicles and
plant and
equipment
The motor vehicles and heavy plant budgets incorporated the unspent carry
forward budgets from previous financial years. As a result of this, the
budgets exceeded the Depot’s operational requirements significantly. The
budget process for future years have been reassessed and unspent carry
forward budgets are no longer being taken into account.
A number of trucks have been ordered, but delayed in delivery. These
trucks are now expected to be delivered in the first quarter of next financial
year.
5
Work in progress A number of projects, including the Greensborough office accommodation,
are still in the work in progress stage of their construction or development.
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 26
BANYULE CITY COUNCIL Financial Report 2015
Notes to and Forming Part of the Financial Statements for the year ended 30 June 2015
Note 2015
$‘000
2014
$‘000
3. RATES AND CHARGES
For the basis of rates calculation, Council uses Capital Improved Value as the basis of valuation of all properties
within the municipality. The Capital Improved Value of a property is the value of the land, dwellings and all its
improvements.
The valuation base used to calculate general rates for 2014/2015 was $31,294,019,100 ($29,751,433,300 for
2013/2014).
A revaluation of land for rating purposes within the Municipality was done on 1 January 2014 and the valuation was
first applied in the rating period commencing on 1 July 2014.
These valuations were used in the calculation of rates in the current financial year.
Residential 70,554 64,824
Commercial 5,840 5,565
Industrial 2,032 1,917
Cultural and Recreational 68 64
Total general rates 78,494 43,357 72,370
General Rates 78,494 72,370
Supplementary Rates 585 274
Municipal Charge 6,627 6,580
Total general rates and charges 85,706 79,224
Special Rates and Charges – Shopping Centres 581 570
Total rates and charges 86,287 79,794
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 27
BANYULE CITY COUNCIL Financial Report 2015
Notes to and Forming Part of the Financial Statements for the year ended 30 June 2015
Note 2015
$‘000
2014
$‘000
4. GRANTS
Grants were received in respect of the following:
Summary of Grants
Recurrent operating grants 13,679 9,886
Recurrent capital grants 1,813 943
Non-recurrent operating grants 329 151
Non-recurrent capital grants 202 495
Total grants 16,023 11,475
Summary of Grants
Recurrent 15,492 10,829
Non-recurrent 531 646
Total grants 16,023 11,475
Summary of Grants
State Government funded grants 14,408 9,966
Federal Government funded grants 1,578 1,458
Other grants 37 51
Total grants 16,023 11,475
Summary of Grants
Operating grants 14,008 10,037
Capital grants 2,015 1,438
Total grants 16,023 11,475
Operating Grants
Recurrent - State Government
Access all abilities - 6
Children’s services 47 86
Delivered meals 248 307
HACC assessment and care management 792 782
Home care 1,709 1,657
Immunisation 147 118
Maternal and child health centres 725 698
Maternal and child health outreach worker 122 109
Metro access program 122 117
PAG (inc carer support) 671 704
Personal care 733 719
Pre-schools and child day care 449 522
Respite care 538 507
School crossing supervisors 185 183
Vic Roads maintenance and traffic management 86 82
Victoria Grants Commission – general purpose 5,503 1,842
Youth services 351 313
Other grants 188 186
Total State Government 12,616 8,938
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 28
BANYULE CITY COUNCIL Financial Report 2015
Notes to and Forming Part of the Financial Statements for the year ended 30 June 2015
Note 2015
$‘000
2014
$‘000
4. GRANTS (cont)
Operating Grants (cont)
Recurrent – Commonwealth Government
Child day care 1,008 863
Other grants 32 58
Total Commonwealth Government 1,040 921
Recurrent – Other Sources
Other grants 23 27
Total other sources 23 27
Total recurrent operating grants 13,679 9,886
Non-Recurrent – State Government
Engineering 59 9
HACC assessment and care management 64 -
Youth and community development 59 80
Other grants 38 18
Total State Government 220 107
Non-Recurrent – Commonwealth Government
Child Care Centres 64 -
Other grants 31 20
Total Commonwealth Government 95 20
Non-Recurrent – Other Sources
Other grants 14 24
Total other sources 14 24
Total non-recurrent operating grants 329 151
Total operating grants 14,008 10,037
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 29
BANYULE CITY COUNCIL Financial Report 2015
Notes to and Forming Part of the Financial Statements for the year ended 30 June 2015
Note 2015
$‘000
2014
$‘000
4. GRANTS (cont)
Capital Grants
Recurrent - State Government
Victoria Grants Commission – local roads 1,370 466
Total State Government 1,370 466
Recurrent - Commonwealth Government
Roads to recovery 443 477
Total Commonwealth Government 443 477
Total recurrent capital grants 1,813 943
Non-Recurrent – State Government
A safer mall 51 138
Anthony Beale Regional Play space 90 -
Sports grounds and pavilions 61 166
Watsonia Library development - 125
Other grants - 26
Total State Government 202 455
Non-Recurrent – Commonwealth Government
Other grants - 40
Total Commonwealth Government - 40
Total non-recurrent capital grants 202 495
Total capital grants 2,015 1,438
Total grants 16,023 11,475
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 30
BANYULE CITY COUNCIL Financial Report 2015
Notes to and Forming Part of the Financial Statements for the year ended 30 June 2015
Note 2015
$‘000
2014
$‘000
4. GRANTS (cont)
Conditions on Grants:
Grants which were recognised as revenue in prior
year/years and were expended during the current year in
the manner specified by the grantor were:
2,553
3,189
Prior year grants expended during the current
year
2,553
3,189
Grants recognised as revenue during the year that were
obtained on condition that they be expended in a specified
manner that had not occurred at balance date were:
2,782
624
Current year grants not yet expended 2,782 624
Net increase/(decrease) in restricted assets
resulting from grant revenues for the year.
229
(2,565)
Grants which were recognised as revenue in prior
financial years and have not been expended during the
current year in the manner specified by the grantor were:
550
2,479
Unspent grants from prior years 550 2,479
Summary of Unexpended Grants
Grants received in current year, but remain unspent 2,782 624
Grants received in prior years which remain unspent 550 2,479
Total unspent grants 23 3,332 3,103
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 31
BANYULE CITY COUNCIL Financial Report 2015
Notes to and Forming Part of the Financial Statements for the year ended 30 June 2015
Note 2015
$‘000
2014
$‘000
5. STATUTORY FEES AND FINES
Building and Planning permits and fees 3,299 3,126
Food Act and Health registrations 514 494
Local laws infringements and fines 2,465 2,271
Property valuations 361 -
Road and footpath reinstatement 130 218
Others fees and fines 208 229
Total statutory fees and fines 6,977 6,338
6. USER FEES AND CHARGES
Aquatic Centre fees and charges 5,049 5,251
Building and Planning permits and fees 139 120
Child Day Care charges 1,340 1,290
Community buses, halls and events 285 292
Delivered meals charges 428 451
Engineering services’ fees 111 78
Functions Centre charges 244 380
Home care charges 419 400
Local laws fees 590 349
Planned Activity Group fees and charges 105 102
Sports ground rentals income 197 202
Transfer station tipping fees 4,890 4,986
Other fees and charges 760 797
Total user fees and charges 14,557 14,698
7. INTEREST INCOME
Interest on investments 2,149 1,954
Interest from sporting clubs 25 31
Other interest 8 8
Interest on rates 198 121
Interest on special rates and charges (a) 10 (46)
Total interest income 2,390 2,068
(a) Previously charged interest on special rates and charges was written off during the 2014 year.
8. RENTAL INCOME
Recreational facilities rental 19 145
Residential/commercial rental 1,252 1,171
Recycling centre rental 645 626
Total rental income 1,916 1,942
9. CONTRIBUTIONS INCOME
Monetary contributions:
Public Open Space – contributions 1,452 1,310
Contributions for capital works projects 653 1,208
Contributions from sporting clubs 238 77
Other contributions 701 97
Non-monetary contributions:
Land - 37
Total contributions income 3,044 2,729
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 32
BANYULE CITY COUNCIL Financial Report 2015
Notes to and Forming Part of the Financial Statements for the year ended 30 June 2015
Note 2015
$‘000
2014
$‘000
10. NET GAIN/(LOSS) ON DISPOSAL OF INFRASTRUCTURE,
PROPERTY, PLANT AND EQUIPMENT
Non-current assets classified as held for sale
Proceeds from sale of assets (a) 24,437 815
Less: Written down value of assets sold (12,832) (499)
Total net gain on sale of assets classified as
held for sale
11,605
316
Fixed assets
Proceeds from sale of assets (a) 976 2,606
Less: Written down value of assets disposed 30(i) (810) (4,228)
Total net gain/(loss) on sale of fixed assets 166 (1,622)
Total net gain/(loss) on disposal of
infrastructure, property, plant and equipment
11,771
(1,306)
(a) Proceeds for sale of land and motor vehicles.
11. OTHER INCOME
Insurance claims 28 64
Sale of right-of-ways 9 48
Sale of drainage reserves 30 -
Sponsorship 31 35
Other revenue 16 29
Total other income 114 176
12. SHARE OF NET PROFITS/(LOSSES) OF ASSOCIATES
Yarra Plenty Regional Library Corporation 29 336 274
Total share net profits/(losses) of associates 336 274
13. EMPLOYEE COSTS
Salaries and wages 43,767 41,566
Annual leave and loading 4,145 3,726
Long service leave 1,240 1,312
Superannuation 4,353 4,036
Workcover 1,088 1,015
Other oncosts 769 690
Less: Capitalised labour (567) (667)
Less: Capitalised oncosts (142) (167)
Total employee costs 54,653 51,511
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 33
BANYULE CITY COUNCIL Financial Report 2015
Notes to and Forming Part of the Financial Statements for the year ended 30 June 2015
Note 2015
$‘000
2014
$‘000
14. MATERIALS, CONTRACTS AND SERVICES
Advertising 213 281
Auditing services 21 206 237
Building and Planning charges and government fees 409 465
Child care expenses 100 102
Community program costs 1,156 1,078
Contractor costs 19,797 14,256
General materials and supplies 3,565 3,448
Insurances 1,076 946
Plant and motor vehicle operating 2,635 2,832
Printing, stationery and external communications 762 829
Staff training and equipment 699 653
Sundry expenses 342 354
Waste disposal general 5,972 6,302
Other 1,473 1,237
Total materials, contract and services 38,405 33,020
15. UTILITY CHARGES
Gas and electricity 2,150 2,505
Telephone 250 292
Water 994 758
Public street lighting 742 891
Total utility charges 4,136 4,446
16. DEPRECIATION AND AMORTIZATION
Depreciation
Infrastructure
- Roads, streets and bridges 6,884 5,548
- Drainage 1,837 1,615
- Parks and gardens 1,126 1,028
- Playgrounds 367 247
Property
- Freehold buildings 2,899 2,276
Plant and equipment
- Motor vehicles 2,314 2,019
- Plant and equipment 2,641 2,550
- Furniture and fittings 336 322
- Waste management 8 235
Total depreciation (a) 18,412 15,840
Amortization
Intangible asset
-Software 160 71
Total amortization 160 71
Total depreciation and amortization 18,572 15,911
(a) Refer also to Note 1(xiii)
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 34
BANYULE CITY COUNCIL Financial Report 2015
Notes to and Forming Part of the Financial Statements for the year ended 30 June 2015
Note 2015
$‘000
2014
$‘000
17. DONATIONS EXPENDITURE
Banyule Housing Support group 97 92
Banyule Support and Information 68 67
Community Services grants 192 132
Volunteers of Banyule Resources Centre 110 107
Other donations 241 271
Total donations expenditure 708 669
18. BORROWING COSTS
Interest on borrowings – total 3,880 3,505
Less: Capitalised borrowing costs on qualifying assets (a) (85) (28)
Total finance costs 3,795 3,477
(a) (a) Rate used to capitalise borrowing costs 4.48% (2014 4.48%)
19. CONTRIBUTIONS EXPENSE
Yarra Plenty Regional Library 4,195 4,073
Contributions to shopping centres 1,132 1,086
YMCA contributions 100 100
Other contributions 372 393
Total contributions expense 5,799 5,652
20. OTHER EXPENSES
Bad and doubtful debts 22 359 154
Operating lease rental 374 423
Councillor allowances and reimbursements 248 254
Fire Service Property Levy on Council properties 144 126
Other 537 574
Total other expenses 1,662 1,531
21. AUDITORS’ REMUNERATION
Audit fee to conduct external audit – Victorian Auditor
General
53
59
Internal audit fee 150 176
Fees for minor audits – other external auditors 3 2
Total auditors’ remuneration 14 206 237
22. BAD AND DOUBTFUL DEBTS
Parking fines debtors 318 84
Animal fines debtors 28 21
Other debtors 13 49
Total bad and doubtful debts 20 359 154
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 35
BANYULE CITY COUNCIL Financial Report 2015
Notes to and Forming Part of the Financial Statements for the year ended 30 June 2015
Note 2015
$‘000
2014
$‘000
23. CASH AND CASH EQUIVALENTS
Cash on hand 10 9
Cash at bank 4,290 2,059
Money market call account 8,010 3,448
Short term deposits 52,485 51,319
Total cash and cash equivalents 38 64,795 56,835
Council has cash and cash equivalents that are subject to external restrictions that limit amounts
available for discretionary use. These include:
Public open space reserve 36(ii)b 1,702 1,706
Off-street parking reserve 36(ii)b 252 252
Trust funds 34 625 671
Deposits held 34 531 694
Total restricted funds 3,110 3,323
Total unrestricted cash and cash equivalents 61,685 53,512
Intended allocations
Although not externally restricted, the following amounts have been allocated for specific future
purposes by Council:
Long service leave 33 9,190 8,586
Unexpended grants 4 3,332 3,103
Unexpended contributions 52 11
Cash held to fund carried forward capital works 3,303 13,791
Total funds subject to intended allocations 15,877 25,491
Unrestricted cash and cash equivalents adjusted
for intended allocations
45,808
28,021
24. OTHER FINANCIAL ASSETS
Current Term deposits (a) 21,330 2,083
Total other financial assets 21,330 2,083
(a) The term deposits have a maturity date of more than three months.
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 36
BANYULE CITY COUNCIL Financial Report 2015
Notes to and Forming Part of the Financial Statements for the year ended 30 June 2015
Note 2015
$‘000
2014
$‘000
25. TRADE AND OTHER RECEIVABLES
Current
Rates debtors 2,348 1,497
Special rates and charges debtors 41 47
Parking infringement debtors 1,326 2,006
Provision for doubtful debts – parking infringements (760) (1,419)
Other by-laws debtors 172 220
Provision for doubtful debts – other by-laws (70) (152)
Club contribution debtors (a) 74 73
Other debtors (a) 3,731 4,724
Provision for doubtful debts – other debtors (61) (72)
Total current 6,801 6,924
Non-Current
Rates debtors 24 19
Special rates and charges debtors 81 108
Club contribution debtors (a) 342 417
Other debtors (a) 70 71
Total non-current 517 615
Total trade and other receivables 7,318 7,539
(a) Ageing of Receivables
At balance date other debtors representing financial assets were past due, but not impaired. These
amounts relate to a number of independent customers for whom there is no recent history of default.
The ageing of Council’s Trade and Other Receivables (excluding statutory receivables) was:
Current – not yet due 3,521 4,665
Past due – by up to 30 days 144 284
Past due – between 31 and 60 days 108 60
Past due – between 61 and 90 days 45 26
Past due – more than 91 days 399 250
Total trade and other receivables (a) 4,217 5,285
Note: Rates debtors, special rates and charges debtors and by-laws debtors, which include parking and
animal infringements, among others, are not considered financial instruments as they are considered to
be statutory receivables. Also, provision for doubtful debts are excluded.
(b) Movement in Provisions for Doubtful Debts
Balance at beginning of the year 72 53
Amounts provided for but recovered during the year (11) (1)
New provisions recognised during the year 3 23
Amounts already provided for and written off as
uncollectable
(3)
(3)
Balance at end of the year 61 72
(c) Ageing of individually impaired receivables
At balance date, other debtors representing financial assets with a nominal value of $61,000 (2014
$72,000) were impaired. The amount of the provision raised against these debtors was $61,000 (2014
$72,000). The individually impaired debtors related to general and sundry debtor and have been
impaired as a result of their doubtful collection. Many of the long outstanding past due amounts have
been lodged with Council’s debt collectors or are on payment arrangements.
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 37
BANYULE CITY COUNCIL Financial Report 2015
Notes to and Forming Part of the Financial Statements for the year ended 30 June 2015
Note 2015
$‘000
2014
$‘000
26. INVENTORIES
Inventories held for distribution 32 41
Total inventories 32 41
27. NON-CURRENT ASSETS CLASSIFIED AS HELD FOR SALE
Opening balance on Council’s valuation 35,200 9,003
Capitalised development cost (a) 11 -
Transfer from infrastructure, property, plant and
equipment
2,588
26,696
Less: Impairment loss (b) (2,582) -
Less: Written down value of assets sold (12,832) (499)
Total non-current assets classified as held for sale (c) 22,385 35,200
(a) Refer to Statement of Capital Works
(b) The impairment loss refers to two lots of land and two buildings, held for sale.
(c) Fair Value Hierarchy
Fair value assessments have been performed at 30 June 2015 for assets held for sale. Details of the
Council’s assets held for sale and information about the fair value hierarchy as at 30 June 2015 are
as follows:
Level 1
$‘000
Level 2
$‘000
Level 3
$‘000
Assets held for sale–land (non-specialised) (d) - 15,851 -
Assets held for sale–buildings (non-specialised)(d) - 6,534 -
Total - 22,385 -
No transfers between levels occurred during the year.
(d) Classified in accordance with fair value hierarchy – see Note 1(xi) and Note 30.
Note 2015
$‘000
2014
$‘000
28. OTHER ASSETS
Current
Prepayments 946 814
Total other assets 946 814
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 38
BANYULE CITY COUNCIL Financial Report 2015
Notes to and Forming Part of the Financial Statements for the year ended 30 June 2015
Note 2015
$‘000
2014
$‘000
29. INVESTMENTS
Investments include the following:
Investments – unlisted shares 239 239
Investments in associates 2,829 2,493
Total investments 3,068 2,732
(i) Investments – unlisted shares
Non-Current
MAPS Group Ltd – at cost 9 9
Regional Kitchen Pty Ltd – at cost 230 230
Total investments – unlisted shares 239 239
(ii) Investments in associates
Non-Current
Share of Yarra Plenty Regional Library Corporation –
at Officer’s valuation
(a),12
2,829
2,493
The Investment in Associates accounted for by the equity method is:
Yarra Plenty Regional Library Corporation
(a) Council takes up its share of the net surplus/(deficit) of the associate, 42.40% in 2015 (2014 42.86%).
Refer also to Policy Note 1(xviii) – ‘Accounting for Investments in Associates’.
The valuation is made as at 30 June each year. The 2015 valuation is based on draft Financial Statements
(2014 was based on audited Financial Statements).
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 39
BANYULE CITY COUNCIL Financial Report 2015
Notes to and Forming Part of the Financial Statements for the year ended 30 June 2015
Note 2015
$‘000
2014
$‘000
29. INVESTMENTS (cont)
(a) Investments in Associates
Council’s share of accumulated surplus/(deficit):
Council’s share of accumulated surplus/(deficit) at start of year 2,493 2,165
Reported surplus/(deficit) for year 336 328
Distributions for the year - -
Council’s share of accumulated surplus/(deficit) at end
of year
2,829
2,493
Movement of carrying value of specific investment:
Carrying value of investment at start of year 2,493 2,219
Share of surplus/(deficit) for year 336 274
Share of asset revaluation - -
Distributions received - -
Carrying value of investment at end of year 2,829 2,493
Council’s share of expenditure commitments:
Operating lease commitments 239 394
Operating commitments 511 -
Capital commitments 71 77
Council’s share of expenditure commitments 821 471
Council’s share of contingent liabilities and contingent assets:
The Yarra Plenty Regional Library Service has no known contingent liabilities as at 30 June 2015 nor as at
30 June 2014.
Significant restrictions:
Yarra Plenty Regional Library does not pay any dividends to Council. No loans or monetary advances
are made between Council and the Library.
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 40
BANYULE CITY COUNCIL Financial Report 2015
Notes to and Forming Part of the Financial Statements for the year ended 30 June 2015
Note 2015
$‘000
2014
$‘000
30. INFRASTRUCTURE, PROPERTY, PLANT AND EQUIPMENT
Summary of Infrastructure, Property, Plant and Equipment - by Cost/Valuation
at cost 116,612 100,972
less accumulated depreciation (54,324) (50,814)
62,288 50,158
at Council’s valuation at 30 June 2014 1,469,493 1,472,246
less accumulated depreciation (284,107) (274,502)
1,185,386 1,197,744
Total infrastructure, property, plant and equipment 1,247,674 1,247,902
Summary of Infrastructure, Property, Plant and Equipment - by Section
infrastructure 356,684 362,245
property 863,923 857,752
plant and equipment 23,984 24,852
other assets 3,083 3,053
Total infrastructure, property, plant and equipment 1,247,674 1,247,902
INFRASTRUCTURE:
Roads, Streets and Bridges
works at cost 2,608 -
less accumulated depreciation - -
2,608 -
at Council’s valuation at 30 June 2014 (a) 372,293 372,293
less accumulated depreciation (144,032) (137,148)
228,261 235,145
Total roads, streets and bridges 230,869 235,145
Drainage
works at cost 240 -
less accumulated depreciation - -
240 -
at Council’s valuation at 30 June 2014 (a) 183,619 183,619
less accumulated depreciation (80,610) (78,772)
103,009 104,847
Total drainage 103,249 104,847
(a) See Note 30, sub-heading ‘Valuation of Infrastructure’.
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 41
BANYULE CITY COUNCIL Financial Report 2015
Notes to and Forming Part of the Financial Statements for the year ended 30 June 2015
Note 2015
$‘000
2014
$‘000
30. INFRASTRUCTURE, PROPERTY, PLANT AND EQUIPMENT (cont)
Parks and Gardens
works at cost 41,412 39,982
less accumulated depreciation (23,450) (22,324)
Total parks and gardens 17,962 17,658
Playgrounds
works at cost 8,159 7,928
less accumulated depreciation (3,555) (3,333)
Total playgrounds 4,604 4,595
PROPERTY:
Freehold Land
at cost 296 -
at Council’s valuation of market value at 30 June 2014 (b) 690,663 686,958
Total freehold land 690,959 686,958
Freehold Buildings
at cost 11,362 -
less accumulated depreciation (31) -
11,331 -
at Council’s valuation of market value at 30 June 2014 (b) 221,098 229,376
less accumulated depreciation (59,465) (58,582)
161,633 170,794
Total freehold buildings 172,964 170,794
(b) See Note 30, sub-heading ‘Valuation of Land and Buildings’.
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 42
BANYULE CITY COUNCIL Financial Report 2015
Notes to and Forming Part of the Financial Statements for the year ended 30 June 2015
Note 2015
$‘000
2014
$‘000
30. INFRASTRUCTURE, PROPERTY, PLANT AND EQUIPMENT (cont)
Plant and Equipment:
Motor Vehicles
at cost 19,206 18,809
less accumulated depreciation (9,498) (10,195)
Total motor vehicles 9,708 8,614
Plant and Equipment
at cost 21,397 20,683
less accumulated depreciation (9,853) (7,368)
Total plant and equipment 11,544 13,315
Furniture and Fittings
at cost 5,695 5,543
less accumulated depreciation (2,963) (2,628)
Total furniture and fittings 2,732 2,915
Waste Management
at cost 4,974 4,974
less accumulated depreciation (4,974) (4,966)
Total waste management - 8
Other Assets:
Art collection
at cost 1,225 1,225
Total art collection 1,225 1,225
Work in Progress – at cost
roads 16 -
drainage - 14
parks and gardens 407 9
playgrounds 30 30
freehold land 34 34
freehold buildings 1,192 1,340
plant and equipment 77 -
furniture and fittings 36 36
intangible assets - 365
leasehold improvements 66 -
Total work in progress 1,858 1,828
Total infrastructure, property, plant and equipment 1,247,674 1,247,902
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 43
BANYULE CITY COUNCIL Financial Report 2015
Notes to and Forming Part of the Financial Statements for the year ended 30 June 2015
30. INFRASTRUCTURE, PROPERTY, PLANT AND EQUIPMENT (cont)
Valuation of Land and Buildings
At 30 June 2014, Council’s land and buildings were restated to Council’s valuation of fair value based on existing
use. The valuations were carried out by Council’s Valuer, Mr P Kemm, A.A.P.I. in accordance with the basis of
valuation referred to in Note 1(xi).
The valuation of land and buildings is at fair value, being market value based on highest and best use permitted
by relevant land planning provisions. Where land use is restricted through existing planning provisions, the
valuation is reduced to reflect this limitation. This adjustment is an unobservable input in the valuation. The
adjustment has no impact on the comprehensive Income Statement.
Specialised land is valued at fair value using site values adjusted for englobo (undeveloped and/or unserviced)
characteristics, access rights and private interests of other parties and entitlements or infrastructure assets and
services. This adjustment is an unobservable input in the valuation. The adjustment has no impact on the
comprehensive Income Statement.
Any significant movements in the unobservable inputs for land and land under roads (if any) will have a
significant impact on the fair value of these assets.
Details of Council’s land and buildings and information about the fair value hierarchy as at 30 June 2015 are as
follows:
Level 1
$‘000
Level 2
$‘000
Level 3
$‘000
Freehold land – (specialised) - - 690,959
Freehold buildings – (specialised) - - 172,964
Total - - 863,923
No transfers between levels occurred during the year.
Valuation of Infrastructure
As at 30 June 2014, valuation of Council’s bridges, median and drainage assets has been determined by the
valuation undertaken by Ms Claudia Oqueli, Council’s Asset Engineer – Asset Management. The valuation is at
fair value based on replacement cost, less accumulated depreciation in accordance with the basis of valuation
referred to in Note 1(xi).
As at 30 June 2014, Council’s road assets (excluding bridges and medians) were restated to Council’s valuation
of current replacement cost. The valuation of these assets was carried out by Peter Batson, Manager – Asset
System Victoria, SMEC Australia Pty Ltd, in accordance with the basis of valuation referred to in Note 1(xi).
SMEC Pavement Management system software was used to assist with this process. A small portion of the
road asset valuations was conducted by Ms Claudia Oqueli, Council’s Asset engineer, using the same basis of
valuation as SMEC, to complement the area variances caused by the limitation of SMEC’s software.
The valuation is at fair value based on replacement cost less accumulated depreciation as at the date of
valuation.
Details of Council’s infrastructure and information about the fair value hierarchy as at 30 June 2015 are as
follows:
Level 1
$‘000
Level 2
$‘000
Level 3
$‘000
Roads, streets and bridges - - 230,869
Drainage - - 103,249
Total - - 334,118
No transfers between levels occurred during the year.
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 44
BANYULE CITY COUNCIL Financial Report 2015
Notes to and Forming Part of the Financial Statements for the year ended 30 June 2015
30. INFRASTRUCTURE, PROPERTY, PLANT AND EQUIPMENT (cont)
Description of Significant Unobservable Inputs into Level 3 Valuations
Specialised land is valued using a market based direct comparison technique. Significant unobservable inputs
include the extent and impact of restriction of use and the market cost of land per square metre. The extent and
impact of restrictions on use varies and results in a reduction to surrounding land value between 0% and 90%. The
market value of land varies significantly depending on the location of the land and the current market conditions.
Currently land values range between $25 and $2,500 per square metre.
Specialised buildings are valued using a depreciated replacement cost technique. Significant unobservable inputs
include the current replacement cost and remaining useful lives of buildings. Current replacement costs is
calculated on a square metre basis and ranges from $265 to $3,820 per square metre. The useful lives of buildings
are 100 years. Replacement cost is sensitive to changes in market conditions, with any increase or decrease in
cost flowing through to the valuation. Useful lives of buildings may be subject to variation due to changes in
expectations or requirements that could either shorten or extend the useful lives of buildings.
Infrastructure assets are valued based on the depreciated replacement cost. Significant unobservable inputs
include the current replacement cost and remaining useful lives of infrastructure. The useful lives of infrastructure
vary from 25 years to 100 years. Replacement cost is sensitive to changes in market conditions, with any increase
or decrease in cost flowing through to the valuation. Useful lives of infrastructure may be subject to variation due
to changes in use, expectations or requirements that could either shorten or extend the useful lives of
infrastructure assets.
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 45
BANYULE CITY COUNCIL Financial Report 2015
Notes to and Forming Part of the Financial Statements for the year ended 30 June 2015
30. INFRASTRUCTURE, PROPERTY, PLANT AND EQUIPMENT (cont)
(i) Reconciliation
Reconciliations of the carrying amounts of each class of infrastructure, property, plant and equipment at the
beginning and end of the current financial year are set out below:
2015
Carrying Amount at
2014
$‘000
Transfer Between
Classes
$‘000
Plus Change in Valuations
$‘000
Plus
Additions
$‘000
Less WDV of
Disposals
$‘000
Less
Depreciation
$‘000
Carrying Amount at
2015
$‘000
Infrastructure Roads, streets and bridges 235,145 - - 2,608 - (6,884) 230,869 Drainage 104,847 14 - 225 - (1,837) 103,249 Parks and gardens 17,658 1 - 1,429 - (1,126) 17,962 Playgrounds 4,595 - - 378 (2) (367) 4,604 Total infrastructure 362,245 15 - 4,640 (2) (10,214) 356,684 Property Freehold land 686,958 3,705 - 296 - - 690,959 Freehold buildings 170,794 (5,061) - 10,130 - (2,899) 172,964 Total property 857,752 (1,356) - 10,426 - (2,899) 863,923 Plant and Equipment Motor vehicles 8,614 - - 4,215 (807) (2,314) 9,708 Plant and equipment 13,315 - - 871 (1) (2,641) 11,544 Furniture and fittings 2,915 - - 153 - (336) 2,732 Waste management 8 - - - - (8) - Total plant and
equipment
24,852
-
-
5,239
(808)
(5,299)
23,984 Other Assets Art collection 1,225 - - - - - 1,225 Work in progress 1,828 (1,612) - 1,642 - - 1,858 Total other assets 3,053 (1,612) - 1,642 - - 3,083 TOTAL 1,247,902 (2,953) - 21,947 (810) (18,412) 1,247,674
(a)
(a) $(13,888,400) of land and buildings was transferred to non-current assets classified as held for sale (refer Note 27).
$11,300,000 of non-current assets classified as held for sale was transferred back to land (refer Note 27).
$(364,617) of work in progress was transferred to intangible assets.
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 46
BANYULE CITY COUNCIL Financial Report 2015
Notes to and Forming Part of the Financial Statements for the year ended 30 June 2015
Note 2015
$‘000
2014
$‘000
31. INTANGIBLE ASSETS
IT Software
at cost 1,874 1,135
Less accumulated amortization (231) (71)
Total IT Software 1,643 1,064
Total intangible assets 1,643 1,064
(i) Reconciliation
Reconciliation of the carrying amount of the intangible assets at the beginning and end of the current financial
year.
2015
Carrying Amount at
2014 $‘000
Transfer Between
Classes $‘000
Plus
Additions $‘000
Less WDV of
Disposals $‘000
Less
Amortization $‘000
Carrying Amount at
2015 $‘000
IT Software 1,064 365 374 - (160) 1,643
TOTAL 1,064 365 374 - (160) 1,643
2014
Carrying
Amount at 2013 $‘000
Transfer
Between Classes
$‘000
Plus Additions
$‘000
Less WDV of Disposals
$‘000
Less Amortization
$‘000
Carrying
Amount at 2014 $‘000
IT Software - 586 549 - (71) 1,064
TOTAL - 586 549 - (71) 1,064
Note 2015
$‘000
2014
$‘000
32. TRADE AND OTHER PAYABLES
Current
Trade creditors 9,163 6,591
Accrued expenses 3,381 2,766
Total trade and other payables 12,544 9,357
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 47
BANYULE CITY COUNCIL Financial Report 2015
Notes to and Forming Part of the Financial Statements for the year ended 30 June 2015
Annual
Leave
$‘000
Long Service
Leave
$‘000
Total
$‘000
33. PROVISIONS
2015
Balance at beginning of the financial year 4,083 8,586 12,669
Additional provisions 4,104 418 4,522
Amounts used (3,622) (721) (4,343)
Increase in the discounted amount arising
because of time and the effect of any change
in the discount rate
81
907
988
Balance at the end of the financial year
4,646
9,190
13,836
2014
Balance at beginning of the financial year 3,872 8,321 12,193
Additional provisions 3,697 449 4,146
Amounts used (3,554) (1,101) (4,655)
Increase in the discounted amount arising
because of time and the effect of any change
in the discount rate
68
917
985
Balance at the end of the financial year
4,083
8,586
12,669
Note 2015
$‘000
2014
$‘000
Employee Provisions:
Current
Current provisions expected to be wholly settled within 12 months:
Annual Leave 4,002 3,543
Long Service Leave 807 862
4,809 4,405
Current provisions expected to be wholly settled after 12 months:
Annual Leave 644 540
Long Service Leave 7,979 7,398
8,623 7,938
Total current provisions 13,432 12,343
Non-current
Long Service Leave 404 326
Total non-current provisions 404 326
Total provisions 1(v) 13,836 12,669
Provisions Summary:
Current 13,432 12,343
Non-current 404 326
Total aggregate carrying amount of employee
provisions
13,836
12,669
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 48
BANYULE CITY COUNCIL Financial Report 2015
Notes to and Forming Part of the Financial Statements for the year ended 30 June 2015
Note 2015
$‘000
2014
$‘000
33. PROVISIONS (cont)
The following assumptions were used in measuring the present value of employee provisions:
Weighted average increase in employee costs 3.35% (3.50% in 2014)
Discount rates from 1 year to 16 years within the range of 1.93% to 3.14 % (2.46% to 3.67% in 2014)
Settlement period from 1 year to 16 years.
34. TRUST FUNDS AND DEPOSITS
Summary
Current 677 931
Non-current 478 434
Total trust funds and deposits 1,155 1,365
Summary
Trust funds 625 671
Deposits held 530 694
Total trust funds and deposits 1,155 1,365
Current
Trust Funds
Subdivision street trees - 50
Streeton Views community facilities 1 47
Eagle Views Estate 93 50
Parking Planning Contributions - 25
Other trust funds 53 65
Deposits held
Tender contracts 163 163
Function deposits - 97
Sub-divisions 24 24
Road opening permits 104 68
Sundry 190 292
Other deposits 49 50
Total current 677 931
Non-current
Trust Funds
Subdivision street trees 117 158
Eagle Views Estate - 43
Parking Planning Contributions 296 167
Other trust funds 65 66
Total non-current 478 434
Total trust funds and deposits 1,155 1,365
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 49
BANYULE CITY COUNCIL Financial Report 2015
Notes to and Forming Part of the Financial Statements for the year ended 30 June 2015
Note 2015
$‘000
2014
$‘000
34. TRUST FUNDS AND DEPOSITS (cont)
Purpose and nature of items
Refundable Deposits – Deposits are taken by Council as a form of surety in a number of
circumstances, including in relation to building works, tender deposits, contract deposits and the use
of civic facilities.
Retention Amounts – Council has a contractual right to retain certain amounts until a contractor has
met certain requirements or a related warrant or defect period has elapsed. Subject to the
satisfactory completion of the contractual obligations, or the elapsing of time, these amounts will be
paid to the relevant contractor in line with Council’s contractual obligations.
Trust Funds – Funds are received by Council and they are to be spent for a specific purpose.
35. INTEREST BEARING LOANS AND BORROWINGS
Current
Borrowings – secured (a) 2,647 2,267
Total current 2,647 2,267
Non-Current
Borrowings – secured (a) 55,366 58,012
Total non-current 55,366 58,012
Total interest bearing loans and borrowings 58,013 60,279
(a) The interest bearing loans are secured by a deed of charge over Council rates
The maturity profile of Council’s borrowings is:
Not later than one year 2,647 2,267
Later than one year, but not later than five years 16,258 15,241
Later than five years 39,108 42,771
Total interest bearing loans and borrowings 58,013 60,279
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 50
BANYULE CITY COUNCIL Financial Report 2015
Notes to and Forming Part of the Financial Statements for the year ended 30 June 2015
36. RESERVES
(i) Summary of Reserve Types
Balance as at
30/6/15 $‘000
Balance as at
30/6/14 $‘000
Asset Revaluation Reserve 829,084 833,409
Asset Replacement Reserves 41,994 15,113
Total Reserves 871,078 848,522
(ii) Reserve Movements
The following transfers to and from Council’s reserves occurred during the reporting period:
(a) Asset Revaluation Reserve
2015
Balance as at
30/6/14 $‘000
Increment
(Decrement) $‘000
Balance as at
30/6/15 $‘000
Infrastructure
Roads and streets 133,569 - 133,569
Bridges, medians and local area traffic management 1,744 - 1,744
Drainage 70,825 - 70,825
206,138 - 206,138
Property
Freehold land 541,531 (2,528) 539,003
Freehold buildings 76,247 (2,748) 73,499
617,778 (5,276) 612,502
Other assets
Heritage and culture – including art collection 283 - 283
Parks and gardens 471 - 471
754 - 754
Non-current assets Classified as Held for Sale
Freehold land 8,157 530 8,687
Freehold buildings 582 421 1,003
8,739 951 9,690
Total asset revaluation reserve
833,409
(4,325)
829,084
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 51
BANYULE CITY COUNCIL Financial Report 2015
Notes to and Forming Part of the Financial Statements for the year ended 30 June 2015
36. RESERVES (cont)
(ii) Reserve Movements (cont)
The following transfers to and from Council’s reserves occurred during the reporting period (cont):
(a) Asset Revaluation Reserve (cont)
2014
Balance as at
30/6/13 $‘000
Increment
(Decrement) $‘000
Balance as at
30/6/14 $‘000
Infrastructure
Roads and streets 127,780 5,789 133,569
Bridges, medians and local area traffic management 2,072 (328) 1,744
Drainage 56,840 13,985 70,825
186,692 19,446 206,138
Property
Freehold land 528,240 13,291 541,531
Freehold buildings 67,841 8,406 76,247
596,081 21,697 617,778
Other assets
Heritage and culture – including art collection 283 - 283
Parks and gardens 471 - 471
754 - 754
Assets Held for Sale
Freehold land 174 7,983 8,157
Freehold buildings 1,673 (1,091) 582
1,847 6,892 8,739
Total asset revaluation reserve
785,374
48,035
833,409
The asset revaluation reserve is used to record the increased (net) value of Council’s assets over time.
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 52
BANYULE CITY COUNCIL Financial Report 2015
Notes to and Forming Part of the Financial Statements for the year ended 30 June 2015
36. RESERVES (cont)
(ii) Reserve Movements (cont)
The following transfers to and from Council’s reserves occurred during the reporting period (cont):
(a) Asset Revaluation Reserve (cont)
Details of movements.
Note 2015
$‘000
2014
$‘000
ASSET REVALUATION RESERVE
Balance at beginning of the financial year 833,409 785,374
Amount transferred as a result of revaluing assets:
Infrastructure
- Roads and streets - 5,789
- Bridges, medians and local area traffic management - (328)
- Drainage - 13,985
Property
- Freehold land - 23,474
- Freehold buildings - 7,394
Amount transferred as a result of selling assets:
Property
- Freehold land - (2,200)
- Freehold buildings - (79)
- Assets held for sale – freehold land (1,743) -
Amount transferred as a result of transferring from assets
held for sale to property assets:
- Assets held for sale – freehold land (3,789) (174)
- Assets held for sale – freehold buildings - (1,673)
- Freehold land 3,789 174
- Freehold buildings - 1,673
Amount transferred as a result of transferring from property
assets to assets held for sale:
- Assets held for sale – freehold land 6,318 8,157
- Assets held for sale – freehold buildings 2,748 582
- Freehold land (6,318) (8,157)
- Freehold buildings (2,748) (582)
Amount transferred as a result of impairment loss:
- Asset held for sale – freehold land (255) -
- Asset held for sale – freehold buildings (2,327) -
Balance at end of the financial year 829,084 833,409
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 53
BANYULE CITY COUNCIL Financial Report 2015
Notes to and Forming Part of the Financial Statements for the year ended 30 June 2015
36. RESERVES (cont)
(ii) Reserve Movements (cont)
The following transfers to and from Council’s reserves occurred during the reporting period (cont):
(b) Asset Replacement Reserves
2015
Balance as
at 30/06/14
$‘000
Transfers
Between
$‘000
Transfers
To
$‘000
Transfers
From
$‘000
Balance as
at 30/06/15
$‘000
Statutory Reserves
Public Open Space 1,706 - 1,452 (1,456) 1,702
Off-Street Car Parking 252 - - - 252
Discretionary Reserves
General 2,541 - 733 (975) 2,299
Plant and Equipment 6,150 - 5,936 (3,759) 8,327
Strategic Properties 4,229 - 25,050 (1,705) 27,574
Asset Renewal 124 - 880 - 1,004
Car Parking Meters 111 - 274 (79) 306
BPI Investment - - 130 - 130
WaterMarc renewal - - 400 - 400
Asset replacement reserves 15,113 - 34,855 (7,974) 41,994
2014
Balance as
at 30/06/13
$‘000
Transfers
Between
$‘000
Transfers
To
$‘000
Transfers
From
$‘000
Balance as
at 30/06/14
$‘000
Statutory Reserves
Public Open Space 1,478 (336) 1,310 (746) 1,706
Off-Street Car Parking 252 - - - 252
Discretionary Reserves
General 1,196 - 1,434 (89) 2,541
Greensborough Project - RALC 155 - - (155) -
Plant and Equipment 6,216 - 4,824 (4,890) 6,150
Strategic Properties 3,791 336 27,680 (27,578) 4,229
Asset Renewal 124 - - - 124
Car Parking Meters 14 - 133 (36) 111
Asset replacement reserves 13,226 - 35,381 (33,494) 15,113
The above tables generally indicate usage of funds for budgeted capital works and recovery of capital from
previous expenditures and investment projects in the ordinary course of business. These amounts are determined
in accordance with the approved budget and subsequent Council reports.
The Public Open Space Reserve is a statutory reserve where developers contribute income to the reserve by law.
The funds are spent on ‘public open spaces’, for example playgrounds.
The Off-Street Car Parking Reserve is no longer operational due to a change in legislation. Developers did
contribute income to the reserve. Funds were used to provide additional car parking spaces in the area where the
funds were generated from.
The General Reserve is maintained to have money set aside for future projects.
The Plant and Equipment Reserve is used to fund the purchase of vehicles (all types) and some items of plant and
equipment.
The Strategic Properties Reserve is maintained to fund the purchasing, development and selling of properties with
a view to add income to Council.
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 54
BANYULE CITY COUNCIL Financial Report 2015
Notes to and Forming Part of the Financial Statements for the year ended 30 June 2015
36. RESERVES (cont)
(ii) Reserve Movements (cont)
The following transfers to and from Council’s reserves occurred during the reporting period (cont):
(b) Asset Replacement Reserves (cont)
The Asset Renewal Reserve is used to fund the renewal of assets in the future.
The Car Parking Meters Reserve receives all the income collected from parking meters. The Reserve will be used
to purchase new parking meters and fund the maintenance of existing parking meters.
The Bpi Investment Reserve receives a portion of the BPI department’s profit each year. The Reserve is used to
fund equipment and software to enhance their competitiveness with external businesses.
The WaterMarc Renewal Reserve accumulates fund to replace or repair assets, at the WaterMarc Aquatic Centre,
as required.
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 55
BANYULE CITY COUNCIL Financial Report 2015
Notes to and Forming Part of the Financial Statements for the year ended 30 June 2015
Note 2015
$‘000
2014
$‘000
37. RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES
TO SURPLUS/(DEFICIT)
Surplus for the year 15,685 1,971
(Profit)/loss on disposal of infrastructure, property, plant
and equipment
10
(11,771)
1,306
Depreciation and amortization 16 18,572 15,911
Finance costs - interest 18 3,880 3,504
Capitalised interest in assets held for sale 18 (85) (28)
Share of profit of associate 12 (336) (274)
Non-monetary contribution of land 30(i) - (37)
Change in assets and liabilities, excluding investing
activities:-
Decrease/(increase) in receivables 221 (1,571)
Decrease/(increase) in inventories 9 (10)
(Increase)/decrease in prepayments (132) 80
Increase/(decrease) in payables 2,634 (964)
Increase in employee provisions 1,167 476
Increase/(decrease) in trust funds and deposits (210) (236)
Net cash provided by operating activities 29,634 20,128
38. RECONCILIATION OF CASH AND CASH EQUIVALENTS
For purposes of the Cash Flow Statement, cash and cash equivalents include cash on hand, deposits at call
and other highly liquid investments with original maturities of three months or less, net of outstanding
bank overdrafts. Cash at the end of the period as shown in the Cash Flow Statement is reconciled to the
related items in the Balance Sheet.
Cash and cash equivalents 23 64,795 56,835
39. FINANCING ARRANGEMENTS
Overdraft facilities 700 700
Unused facilities 700 700
Used facilities - -
Total overdraft facilities 700 700
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 56
BANYULE CITY COUNCIL Financial Report 2015
Notes to and Forming Part of the Financial Statements for the year ended 30 June 2015
40. SUPERANNUATION
Banyule City Council makes the majority of its employer superannuation contributions in respect to its employees
to the Local Authorities Superannuation Fund – Vision Super (the Fund). This Fund has two categories of
membership, accumulation and defined benefit, each of which is funded differently.
Obligations for contributions to the Fund are recognised as an expense in the Comprehensive Income Statement
when they are made or due.
Accumulation Fund
The Fund’s accumulation categories, Vision MySuper/Vision Super Saver, receives both employer and optional
employee contributions on a progressive basis. Employer contributions are normally based on a fixed percentage
of employee earnings (for the year ended 30 June 2015, this was 9.50% required under Superannuation Guarantee
legislation) (for 2013/2014, this was 9.25%).
Defined Benefit Plan
Banyule City Council does not use defined benefit accounting for its defined benefit obligations under the Fund’s
Defined Benefit category. This is because the Fund’s Defined Benefit category is a pooled multi-employer
sponsored plan.
There is no proportional split of the defined benefit liabilities, assets or costs between the participating employers
as the defined benefit obligation is a floating obligation between the participating employers and the only time that
the aggregate obligation is allocated to specific employers is when a call is made. As a result, the level of
participation of Banyule City Council in the Fund cannot be measured as a percentage compared with other
participating employers. Therefore, the Actuary is unable to allocate benefit liabilities, assets and costs between
employers for the purposes of AASB 119.
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 57
BANYULE CITY COUNCIL Financial Report 2015
Notes to and Forming Part of the Financial Statements for the year ended 30 June 2015
Note 2015
$‘000
2014
$‘000
41. CONTRACTUAL COMMITMENTS
Council has entered into the following commitments:
(i) Capital expenditure
Contractual commitments at balance date were for:
WaterMarc Project 158 218
Ivanhoe Aquatic Centre Redevelopment - 4,635
Sports grounds and facilities 7 639
Streetscape works 163 -
Electronic Document and Records Management System 5 -
Pre-school capital works 84 769
Greensborough office accommodation 88 666
Olympic Village Learning Hub 31 -
Parking Meter Installation 268 -
Storage area network 238 -
Bike paths/trails 297 27
Total contractual capital commitments 1,339 6,954
(ii) Capital expenditure commitments
Not later than one year 1,339 6,668
Later than one year, and not later than two years - 286
Total contractual capital commitments 1,339 6,954
(iii) Operating expenditure
Contractual commitments at balance date were for:
Cleaning services 590 164
Internal audit fee 238 322
Tree maintenance 188 668
Cemetery landscaping 290 -
Leisure facilities – management and operations 197 1,357
Mail distribution 105 158
Streetlight replacement - Greenpower 106 -
Total contractual operating commitments 1,714 2,669
(iv) Operating expenditure commitments
Not later than one year 900 2,104
Later than one year, and not later than two years 336 406
Later than two years, and not later than five years 478 159
Total contractual operating commitments 1,714 2,669
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 58
BANYULE CITY COUNCIL Financial Report 2015
Notes to and Forming Part of the Financial Statements for the year ended 30 June 2015
Note 2015
$‘000
2014
$‘000
42. OPERATING LEASES
(i) Operating Lease Commitments
At the reporting date, Council had the following obligations under non-cancellable operating leases for
the lease of equipment, land and/or buildings, for use within Council’s activities (these obligations are not
recognised as liabilities):
Not later than one year 200 374
Later than one year and not later than two years 139 161
Later than two years and not later than five-years 61 59
Total operating lease commitments 400 594
(ii) Operating Lease Receivables
At the reporting date, Council has entered into commercial property leases on some of its properties.
These properties held under operating leases have remaining non-cancellable lease terms of between 1
and 13-years. Some leases include a CPI based revision of the rental charge annually.
Future minimum rental income under non-cancellable operating leases is as follows:
Not later than one year 1,741 1,930
Later than one year and not later than five years 2,571 2,382
Later than five years 435 656
Total operating lease receivables 4,747 4,968
The income for the period is shown in the Comprehensive Income Statement, under revenue as rental income.
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 59
BANYULE CITY COUNCIL Financial Report 2015
Notes to and Forming Part of the Financial Statements for the year ended 30 June 2015
Note 2015
$‘000
2014
$‘000
43. CONTINGENT LIABILITIES
(i) Guarantees
The Banyule City Council has undertaken to act as bank
guarantor for:
- various local organisations’ outstanding loans (a) 48 91
- Council’s corporate business card facilities (b) 165 155
Total guarantees 213 246
(a) Council is currently acting as guarantor for loans taken out by four Sporting Clubs to be used for significant
capital improvements to the Council’s sporting facilities that are on Council land. At balance date, the total
outstanding balance on these loans is $48,476 ($91,112 in 2014). At balance date we have received
assurances from the Clubs that they are continuing to meet repayments in accordance with the
requirements of their individual loan agreements.
The amount disclosed for financial guarantee in this note is the nominal amount of the underlying loan that
is guaranteed by Council, not the fair value of the financial guarantee.
(b) Business card facility limit $200,000 ($200,000 in 2014).
(ii) Contingent Liabilities arising from Public/Products Liabilities
As a local authority with ownership of numerous parks, reserves, roads and other land holdings, the
Council is regularly met with claims and demands allegedly arising from incidents which occur on land
belonging to Council. There are a number of outstanding claims against Council in this regard. Council
carries $400 million of public/products liability insurance however the maximum liability of Council in any
single claim is the extent of its excess. The primary insurer is MAV Insurance – Liability Mutual Insurance.
There are no claims of which Council is aware which would fall outside the terms of Council’s policy.
(iii) Contingent Liability arising from Professional Indemnity
As a local authority with statutory regulatory responsibilities, including the responsibility of issuing permits
and approvals, Council is met with claims and demands for damages allegedly arising from actions of Council
or its Officers. Council carries $300 million of professional indemnity insurance however the maximum
liability of Council in any single claim is the extent of its excess. The primary insurer is MAV Insurance –
Liability Mutual Insurance. There are no instances or claims of which Council is aware which would fall
outside the terms of Council’s policy.
(iv) Flood Damage
There may be some unquantified costs, to be borne by Council, relating to a potential flood damage claim
against Council.
(v) Superannuation Contributions
Banyule City Council has obligations under a defined benefit superannuation scheme that may result in the
need to make additional contributions to the scheme to ensure that the liabilities of the Fund are covered
by the assets of the Fund. As a result of the volatility in financial markets the likelihood of making such
contributions in future periods exists. At this point in time it is not known if additional contributions will be
required, their timing or potential amount.
Funding arrangements
Council makes employer contributions to the defined benefit category of the Fund at rates determined by
the Trustee, on the advice of the Fund’s Actuary. The Fund’s latest actuarial investigation was held as at 30
June 2014 and it was determined that the Vested Benefit Indexed (VBI) of the defined benefit category of
which Banyule City Council is a contributing employer was 103.4%.
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 60
BANYULE CITY COUNCIL Financial Report 2015
Notes to and Forming Part of the Financial Statements for the year ended 30 June 2015
Note 2015
$‘000
2014
$‘000
43. CONTINGENT LIABILITIES (cont)
(v) Superannuation Contributions (cont)
To determine the VBI, the Fund Actuary used the following long-term assumptions:
Net investment returns 7.50%pa
Salary information 4.25%pa
Price inflation (CPI) 2.75%pa
Vision Super has advised that the estimated VBI as at 30 June 2015 was 105.8%.
The VBI is to be used as the primary funding indicator. Because the VBI was above 100%, the actuarial
investigation determined the defined benefit category was in a satisfactory financial position and that no
change was necessary to the defined benefit category’s funding arrangements from prior years.
Employer Contributions
Regular Contributions
On the basis of the results of the most recent full actuarial investigation conducted by the Fund’s
Actuary as at 30 June 2014, Council makes employer contributions to the Fund’s Defined Benefit
category at rates determined by the Fund’s Trustee. For the year ended 30 June 2015, this rate was
9.50% of members’ salaries. This rate will increase in line with any increase to the Superannuation
Guarantee contribution rate.
In addition, Council reimburses the Fund to cover the excess of the benefits paid as a consequence of
retrenchment above the funded resignation or retirement benefit.
Funding Calls
If the Defined Benefit category is in an unsatisfactory financial position at actuarial investigation or the
Defined Benefit category’s VBI is below its shortfall limit at any time other than the date of the actuarial
investigation, the Defined Benefit category has a shortfall for the purposes of SPS 160 and the Fund is
required to put a plan in place so that the shortfall is fully funded within three years of the shortfall
occurring. The Fund monitors its VBI on a quarterly basis and the Fund has set its shortfall limit at 97%.
In the event that the Fund Actuary determines that there is a shortfall based on the above requirement,
the Fund’s participating employers (including Banyule City Council) are required to make an employer
contribution to cover the shortfall.
Using the agreed methodology, the shortfall amount is apportioned between the participating employers
based on the pre-1 July 1993 and post-30 June 1993 service liabilities of the Fund’s Defined Benefit
category, together with the employer’s payroll at 30 June 1993 and at the date the shortfall has been
calculated.
Due to the nature of the contractual obligations between the participating employers and the Fund, and
that the Fund includes lifetime pensioners and their reversionary beneficiaries, it is unlikely that the Fund
will be wound up.
If there is a surplus in the Fund, the surplus cannot be returned to the participating employers.
In the event that a participating employer is wound-up, the Defined Benefit obligations of that employer
will be transferred to that employer’s successor.
Latest actuarial investigation surplus amounts
The Fund’s latest actuarial investigation as at 30 June 2014 identified the following in the defined benefit
category of which Banyule City Council is a contributing employer.
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 61
BANYULE CITY COUNCIL Financial Report 2015
Notes to and Forming Part of the Financial Statements for the year ended 30 June 2015
Note 2015
$‘000
2014
$‘000
43. CONTINGENT LIABILITIES (cont)
(v) Superannuation Contributions (cont)
A VBI surplus of $77.1 million; and
A total service liability surplus of $236 million.
The VBI surplus means that the market value of the Fund’s assets supporting the defined benefit
obligations exceed the vested benefits that the defined benefit members would have been entitled to if
they had all exited on 30 June 2014.
The total service liability surplus means that the current value of the assets in the Fund’s defined benefit
category plus expected future contributions exceeds the value of expected future benefits and expenses.
Council was notified of the results of the actuarial investigation during January 2015.
Superannuation Contributions
Contributions by Banyule City Council (excluding any unfunded liability payments) to the above superannuation
plans for the financial year ended 30 June 2015 are as follows:
Scheme
Type of Scheme
Rate
2015
$‘000
2014
$‘000
Vision Super Defined benefits 9.50%/9.25% 539 565
Vision Super Accumulation 9.50%/9.25% 3,855 3,491
Employee’s Personal
Accumulation N/A 2 21
Council’s employer contributions outstanding at reporting date were:
Defined Benefits Fund - 24
Accumulation Funds (Vision) - 129
Accumulation Funds (Personal) - 2
- 155
There were no loans issued from or to the above schemes as at 30 June 2015.
The expected contributions to be paid to the defined category of Vision Super for the year ending 30 June 2016 is
$562,200.
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 62
BANYULE CITY COUNCIL Financial Report 2015
Notes to and Forming Part of the Financial Statements for the year ended 30 June 2015
44. FINANCIAL INSTRUMENTS
(i) Objectives and Policies
Council’s principal financial instruments comprise cash assets, term deposits, receivables (excluding
statutory receivables), payables (excluding statutory payables) and bank borrowings. Details of the
significant accounting policies and methods adopted, including the criteria for recognition, the basis of
measurement and the basis on which income and expenses are recognised, in respect of each class of
financial asset, financial liability and equity instrument is disclosed in Note 1 of the Financial Statements.
Risk management is carried out by senior management under policies approved by Council. These policies
include identification and analysis of the risk exposure to Council and appropriate procedures, controls and
risk minimisation.
(ii) Market Risk
Market risk is the risk that the fair value or future cash flows of our financial instruments will fluctuate
because of changes in market prices. The Council’s exposures to market risk are primarily through interest
rate risk with only insignificant exposure to other price risks and no exposure to foreign currency risk.
(iii) Interest Rate Risk
Interest rate risk refers to the risk that the value of a financial instrument or cash flows associated with the
instrument will fluctuate due to changes in market interest rates. Interest rate liability risk arises primarily
from long term loans and borrowings at fixed rates which exposes Council to fair value interest rate risk.
Council does not hold any interest bearing financial instruments that are measured at fair value, and
therefore has no exposure to fair value interest rate risk. Cash flow interest rate risk is the risk that the
future cash flows of a financial instrument will fluctuate because of changes in market interest rates.
Council has minimal exposure to cash flow interest rate risk through its cash and deposits that are at
floating rates.
Investment of surplus funds is made with approved financial institutions under the Local Government Act
1989. Council manages interest rate risk by adopting an investment policy that ensures:
Diversification of investment product;
Monitoring of return on investments; and
Benchmarking of returns and comparison with budget.
There has been no significant change in Council’s exposure, or its objectives, policies and processes for
managing interest rate risk or the methods used to measure this risk from the previous reporting year.
Interest rate movements have not been sufficiently significant during the year to have an impact on
Council’s year end result.
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 63
BANYULE CITY COUNCIL Financial Report 2015
Notes to and Forming Part of the Financial Statements for the year ended 30 June 2015
44. FINANCIAL INSTRUMENTS (cont)
(iv) Credit Risk
Credit risk is the risk that a contracting entity will not complete its obligations under a financial instrument
and cause Council to make a financial loss. Council has exposure to credit risk on some financial assets
included in Council’s Balance Sheet. To help manage this risk Council:
has a policy for establishing credit limits for the entities Council deals with
may require collateral where appropriate
will only invest surplus funds with financial institutions which have a recognised credit rating specified in
our investment policy.
Trade and other receivables consist of a large number of customers, spread across the ratepayer, business
and government sectors. Credit risk associated with the Council’s financial assets is minimal because the
main debtor is secured by a charge over the rateable property.
There are no material assets which are individually determined to be impaired.
Council may also be subject to credit risk for transactions which are not included in the Balance Sheet, such
as when a guarantee is provided for another party. Details of Council’s contingent liabilities are disclosed in
Note 43.
The maximum exposure to credit risk on recognised financial assets at the reporting date is the carrying
amount, net of any provisions for impairment of those assets, as disclosed in the Balance Sheet and notes to
the Financial Statements. Council does not hold any collateral.
(v) Liquidity Risk
Liquidity risk includes the risk that, as a result of our operational liquidity requirements, Council:
will not have sufficient funds to settle a transaction when required,
will be forced to sell a financial asset at below value, or
may be unable to settle or recover a financial asset.
To help reduce these risks Council:
has a liquidity policy which targets a minimum and average level of cash and cash equivalents to be
maintained
has readily accessible standby facilities and other funding arrangements in place
has a liquidity portfolio structure that requires surplus funds to be invested within various bands of
liquid instruments
monitors budget to actual performance on a regular basis
set limits on borrowings relating to the percentage of loans to rate revenue and percentage of loan
principal repayments to rate revenue.
The Council’s maximum exposure to liquidity risk is the carrying amounts of financial liabilities as disclosed
in the face of the Balance Sheet and the amounts related to financial guarantees disclosed in Note 43 and is
deemed insignificant based on prior periods data and current assessment of risk.
There has been no significant change in Council’s exposure, or its objectives, policies and processes for
managing liquidity risk or the methods used to measure this risk from the previous reporting year.
With the exception of borrowings, all financial liabilities are expected to be settled within normal terms of
trade. Details of the maturity profile for borrowings are disclosed at Note 35.
Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value.
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 64
BANYULE CITY COUNCIL Financial Report 2015
Notes to and Forming Part of the Financial Statements for the year ended 30 June 2015
44. FINANCIAL INSTRUMENTS (cont)
(vi) Sensitivity Disclosure Analysis
Taking into account past performance, future expectations, economic forecasts and management’s
knowledge and experience of the financial markets, Council believes the following movements are
‘reasonably possible’ over the next 12 months:
- A parallel shift of +0.5% and -0.5% in market interest rates (AUD) from year end rates of 2.76%.
These movements will not have a material impact on the valuation of Council’s financial assets and liabilities,
nor will they have a material impact on the results of Council’s operations.
(vii) Fair Value
Unless otherwise stated, the carrying amount of financial instruments reflect their fair value.
Fair Value Hierarchy
Council’s financial assets and liabilities are not valued in accordance with the fair value hierarchy. Council’s
financial assets and liabilities are measured at amortised cost.
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 65
BANYULE CITY COUNCIL Financial Report 2015
Notes to and Forming Part of the Financial Statements for the year ended 30 June 2015
45. RELATED PARTY TRANSACTIONS
(i) Responsible Persons
Names of persons holding the position of a Responsible Person at Banyule City Council at any time during
the reporting period are:
2015
Councillors
Rick Garotti
Wayne Phillips
Jenny Mulholland
Mark Di Pasquale
Steven Briffa
Tom Melican
Craig Langdon (Mayor)
Council elections were last held on 27/10/2012.
Chief Executive Officer
Simon McMillan
Acting Chief Executive Officer
Scott Walker
Allison Beckwith
(ii) Remuneration of Responsible Persons
The numbers of Responsible Officers whose total remuneration from Council and any related entities,
excluding retirement benefits, fall within the following bands:
2015
No.
2014
No.
Income range:
$1 - $9,999 2 -
$20,000 - $29,999 6 5
$40,000 - $49,999 - 1
$70,000 - $79,999 - 1
$90,000 - $99,000 1 -
$300,000 - $309,999 - 1
$320,000 - $329,999 1 -
Total 10 8
$‘000 $‘000
Total Remuneration for the reporting period for
Responsible Persons included above, amounted to:
581
568
(iii) Responsible Persons Retirement Benefits
The aggregate amount paid during the reporting period by Council in connection with the retirement of
responsible persons was $Nil (2014: $Nil).
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 66
BANYULE CITY COUNCIL Financial Report 2015
Notes to and Forming Part of the Financial Statements for the year ended 30 June 2015
45. RELATED PARTY TRANSACTIONS (cont)
(iv) Loans to Responsible Persons
The aggregate amount of loans in existence at balance date that have been made, guaranteed or secured by
Council to a responsible person of the Council, or a related party of a responsible person is $Nil (2014:
$Nil).
(v) Transactions with Responsible Persons
Other related party transactions requiring disclosure have been considered and there are no matters to
report for this reporting year or the prior reporting year.
No transactions other than remuneration payments or the reimbursement of approved expenses were
entered into by Council with Responsible Persons or Related Parties of such Responsible Persons during
the reporting year. (2014: $Nil).
(vi) Senior Officers’ Remuneration
A Senior Officer other than a Responsible Person, is an Officer of Council:
who has management responsibilities and reports directly to the Chief Executive Officer; or
whose total annual remuneration exceeds $136,000 (2014 exceeds $133,000).
The numbers of Senior Officers, other than the Responsible Persons, are shown below in their relevant
income bands:
2015
No.
2014
No.
Income range:
$136,000 - $139,999 - 1
$140,000 - $149,999 1 -
$150,000 - $159,999 3 2
$160,000 - $169,999 7 12
$170,000 - $179,999 3 1
$180,000 - $189,999 1 -
$200,000 - $219,999 - 1
$230,000 - $239,999 - 2
$240,000 - $249,999 4 1
Total 19 20
$‘000
$‘000
Total Remuneration for the reporting year for
Senior Officers included above, amounted to:
3,481
3,523
46. EVENTS OCCURING AFTER BALANCE DATE
No matters have occurred after balance date that require disclosure in the Financial Report.
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 67
BANYULE CITY COUNCIL Financial Report 2015
Certification of Financial Statements for the year ended 30 June 2015
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 68
Victorian Auditor General Independent Audit Report
Banyule City Council Annual Report 2014-2015 Part Three – Financial Report Page 69
Victorian Auditor General Independent Audit Report (cont)