FINANCIALSTATEMENTS2017/18
Adopted 17 October 2018
Blacktown City Council and its subsidiary CONSOLIDATED FINANCIAL STATEMENTS for the year ended 30 June 2018
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Consolidated Financial Statements for the year ended 30 June 2018
Contents
1. Understanding Council’s Consolidated Financial Statements
2. Statement by Councillors and Management
3. Consolidated Primary Financial Statements:
– Consolidated Income Statement– Consolidated Statement of Comprehensive Income– Consolidated Statement of Financial Position– Consolidated Statement of Changes in Equity– Consolidated Statement of Cash Flows
4. Notes to the Consolidated Financial Statements
5. Independent Auditor’s Reports:
– On the Consolidated Financial Statements (Sect 417 [2])– On the Conduct of the Audit (Sect 417 [3])
Overview
of business at:
62 Flushcombe RoadBlacktown NSW 2148
Council’s guiding principles are detailed in Chapter 3 of the LGA and includes:
principles applying to the exercise of functions generally by councilprinciples to be applied when making decisionsprinciples of community participationprinciples of sound financial managementprinciples for strategic planning relating to the development of an integrated planning and reporting framework.
A description of the nature of Council’s operations and its principal activities are provided in Note 2(b).
Through the use of the internet, we have ensured that our reporting is timely, complete and available at minimumcost. All press releases, financial statements and other information are publicly available on our website:www.blacktown.nsw.gov.au.
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Blacktown City Council is constituted under the Local Government Act 1993 (NSW) and has its principal place
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Consolidated Financial Statements 2018_
Blacktown City Council and its subsidary
Consolidated Financial Statementsfor the year ended 30 June 2018
Understanding Council’s consolidated financial statements
Introduction Each year, individual local governments across New South Wales are required to present a set of audited financial statements to their council and community.
What you will find in the statements The consolidated financial statements set out the financial performance, financial position and cash flows of Council and its subsidiary for the financial year ended 30 June 2018.
The format of the financial statements is standard across all NSW Councils and complies with both the accounting and reporting requirements of Australian Accounting Standards and requirements as set down by the Office of Local Government.
About the Councillor/Management Statement The financial statements must be certified by senior staff as ‘presenting fairly’ the Council’s financial results for the year and are required to be adopted by Council – ensuring both responsibility for and ownership of the financial statements.
About the consolidated primary financial statements
The consolidated financial statements incorporate five ‘primary’ financial statements:
1. The Consolidated Income Statement
Summarises Council and its subsidiary, financial performance for the year, listing all income and expenses.
This statement also displays Council's original adopted budget to provide a comparison between what was projected and what actually occurred.
2. The Consolidated Statement of Comprehensive Income
Primarily records changes in the fair value of Council's Infrastructure, Property, Plant and Equipment.
3. The Consolidated Statement of FinancialPosition
A 30 June snapshot of Council's consolidated financial position indicating its assets, liabilities and “net wealth”.
4. The Consolidated Statement of Changes inEquity
The overall change for the year (in dollars) of Council’s “net wealth”.
5. The Consolidated Statement of Cash Flows
Indicates where Council's cash came from and where it was spent. This statement also displays Council's original adopted budget to provide a comparison between what was projected and what actually occurred.
About the Notes to the Consolidated Financial Statements
The Notes to the Consolidated Financial Statements provide greater detail and additional information on the five primary financial statements.
About the Auditor’s Reports
Council’s annual consolidated financial statements are required to be audited by the NSW Audit Office. In NSW the auditor provides 2 audit reports:
1. an opinion on whether the consolidated financialstatements present fairly the Council’s financialperformance and position, and
2. their observations on the conduct of the audit,including commentary on the Council’sconsolidated financial performance and financialposition.
Who uses the consolidated financial statements?
The consolidated financial statements are publicly available documents and must be presented at a Council meeting between seven days and five weeks after the date of the Audit Report.
The public can make submissions to Council up to seven days subsequent to the public presentation of the financial statements.
Council is required to forward an audited set of financial statements to the Office of Local Government.
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Tony Bleasdale
Consolidated Financial Statements 2018
This statement should be read in conjunction with the accompanying notes.
Blacktown City Council and its subsidiary
Consolidated Income Statement for the year ended 30 June 2018
$ ’000
Income from continuing operationsRevenue:Rates and annual chargesUser charges and feesInterest and investment revenueOther revenuesGrants and contributions provided for operating purposesGrants and contributions provided for capital purposesOther income:Net gains from the disposal of assetsFair value increment on investment propertyNet share of interests in joint ventures andassociates using the equity method
Total income from continuing operations
Expenses from continuing operationsEmployee benefits and on-costsMaterials and contractsDepreciation and amortisationOther expensesFair value decrement on investment property
Total expenses from continuing operations
Operating result from continuing operations
Net operating result for the year
Net operating result attributable to Council
Net operating result for the year before grants andcontributions provided for capital purposes
303,103
8,884 –
637,064
2,338
594,298
280,520
unaudited
–
–
75,463 78,936
10
306,879
Original
3e,f
4c
5
–
4b
36,174
16,885
3b
16
4a
3e,f
42,417
145,478
57,200
10
67,644
4d348
333,961
35,600
207,830
Notes
3a
3d3c
2018
10,817
26,706 271,972
612,801
2018
39,934 12,383 19,066
54,441
131,926 142,602
36,612
22,209
303,103
75,373 70,548
– 35,931
35,832
280,520 303,103
2017
201,572
11,105 19,274
280,520
313,778
1,414 1,274
38,422
300,765 244,688
14,638
28,816
212,477
306,879
Actual Restated budget
306,879
34,907
305,922
4
Consolidated Financial Statements 2018
This statement should be read in conjunction with the accompanying notes.
Blacktown City Council and its subsidiary
Consolidated Statement of Comprehensive Income for the year ended 30 June 2018
$ ’000
Net operating result for the year (as per Income Statement)
Other comprehensive income:
Amounts that will not be reclassified subsequently to the operating result
Gain (loss) on revaluation of IPP&ETotal items which will not be reclassified subsequentlyto the operating result
Total other comprehensive income for the year
Total comprehensive income for the year
Total comprehensive income attributable to Council
Restated2017
250,698
2018
303,103
Notes
280,520
365,820 (29,822) 9
(29,822) 365,820
668,923
365,820
250,698
(29,822)
668,923
5
Consolidated Financial Statements 2018
This Statement should be read in conjunction with the accompanying Notes.
Blacktown City Council and its subsidiary
Consolidated Statement of Financial Position as at 30 June 2018
$ ’000
ASSETSCurrent assetsCash and cash equivalentsInvestmentsReceivablesInventoriesOtherNon-current assets classified as ‘held for sale’Total current assets
Non-current assetsInvestmentsReceivablesInventoriesInfrastructure, property, plant and equipmentInvestments accounted for using the equity methodInvestment propertyIntangible assetsTotal non-current assets
TOTAL ASSETS
LIABILITIESCurrent liabilitiesPayablesIncome received in advanceProvisionsTotal current liabilities
Non-current liabilitiesProvisionsTotal non-current liabilities
TOTAL LIABILITIES
Net assets
EQUITYAccumulated surplusRevaluation reserves
Total equity
14 3,222,582 14
127,132
13 9,073 6,482
4,566,293
159,926
6,482
3,525,685 674,788 1,040,608
161,562
3,897,370 4,566,293
9,073
3,897,370
4,058,932
96,414
52,985 150,853
7889 –
514,616
31,156
1,928
9,573 16
12 6,112 13
Notes
6a6b
44,916
976
77,000
–
11,942
5,681 54,052
18,940
50,590 1,865
14,767 3,485,597
92,000
391,070
2,009
75,168 75,409
155,080
96,238 230,000
2018
165,590
Restated2017
304,000
4,699
78
8,622 3,978,754
6b
9
11
7,710 10
3,412
12 90,689
4,726,219
3,667,862 4,211,603
Restated1 July 2016
89,004 217,500
5,643
52,000
3,266,885
350,976
18,924 19,022
6,011
883
13,682
3,646,672
3,646,672
2,942,062 704,610
6,052
70,986 5,554
64,471
52,352 121,080
6,052
3,773,804
3,422,828
4,257
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Consolidated Financial Statements 2018
This statement should be read in conjunction with the accompanying notes.
Blacktown City Council and its subsidiary
Consolidated Statement of Changes in Equity for the year ended 30 June 20182018
$ ’000
Opening balanceCorrection of prior period errorsRestated opening balance
Correction of prior period errorsRestated net operating result for the year
Other comprehensive income– Gain (loss) on revaluation of IPP&E
Other comprehensive income
Total comprehensive income (c&d)
Equity – balance at end of the reporting period
Net operating result for the year prior to correction of errors and changes in accounting policies
Accumulated Accumulated
365,820
303,103
365,820
668,923
3,897,370 674,788 3,222,582
(29,822)
280,520 (29,822)
– (29,822)
250,698
– (29,822)
280,520
(29,822)
280,520 –
2,942,062 704,610 3,646,672
– 11,350 – 269,170
equity
3,615,418 31,254 – 31,254
surplus
2,910,808 704,610
reserverevaluation Total
IPP&E Restated2017
3,525,685 1,040,608 4,566,293
– 365,820
303,103 365,820
9 – 365,820
3,222,582 674,788 14 (b) – – –
2018
3,222,582 674,788 3,897,370
revaluation TotalNotes surplus reserve
IPP&E
equity
3,897,370
– 11,350 303,103 –
14 (b)303,103 – 303,103 269,170
– –
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Consolidated Financial Statements 2018
This statement should be read in conjunction with the accompanying notes.
Blacktown City Council and its subsidiary
Consolidated Statement of Cash Flows for the year ended 30 June 2018
$ ’000
Cash flows from operating activitiesReceipts:Rates and annual chargesUser charges and feesInvestment and interest revenue receivedGrants and contributionsBonds, deposits and retention amounts receivedOtherPayments:Employee benefits and on-costsMaterials and contractsOtherNet cash provided (or used in) operating activities
Cash flows from investing activitiesReceipts:Sale of investment securitiesSale of real estate assetsSale of infrastructure, property, plant and equipmentDistributions received from joint ventures and associatesPayments:Purchase of investment securitiesPurchase of investment propertyPurchase of infrastructure, property, plant and equipmentPurchase of intangible assetsPurchase of real estate assetsNet cash provided (or used in) investing activities
Cash flows from financing activitiesNil
Net increase/(decrease) in cash and cash equivalents
Plus: cash and cash equivalents – beginning of year
Cash and cash equivalents – end of the year
Additional Information:
plus: Investments on hand – end of year
Total cash, cash equivalents and investments
11,167
199,877 211,493 39,918
41,680
2018 2017Actual
–
(12,122)
17,180
2018
35,853
205,215 9,811
(27,507)
(144,903)
–
(231,232)
–
(166,653)
–
103,512
61,402
42,110 15a
Notes
207,537
Original
budget unaudited
–
– 64,579
(75,131)
–
228,055
(130,212)
10,175 172,879
(221,257) –
(89,274)
7,965 43,031
254,778
Actual
42,917
(66,260) (141,816)
(160,243) –
(25,868)
(42)
362
(547)
(527,500)
490,000
(186,264)
561,590
(379,000)
96,238
307,000
89,004
7,234
96,238
69,352
(206,287)
403,238
165,590 15a
396,000
15b 275,639
51,610 – 2,734
290,000
228,491 (83,025)
3,594 463
(589)
4,703
6b
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Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Contents of the notes accompanying the consolidated financial statements
Details
Basis of preparationCouncil functions/activities – financial informationCouncil functions/activities – component descriptionsIncome from continuing operationsExpenses from continuing operationsGains or losses from the disposal of assetsCash and cash equivalent assetsInvestmentsRestricted cash, cash equivalents and investments – detailsReceivablesInventories and other assetsInfrastructure, property, plant and equipmentInvestment propertyIntangible assetsPayables and borrowingsProvisions
Statement of cash flows – additional informationInterests in other entitiesCommitments for expenditureContingencies and other liabilities/assets not recognisedFinancial risk managementMaterial budget variationsFair value measurementRelated party transactionsStatement of developer contributionsStatement of performance measures – consolidated results
Additional council disclosures (unaudited)
Statement of performance measures – consolidated results (graphs)
24(a)23
83
24(b) 84
6(a)
4
6(c)
15
22
35
1817
Note
10
12
Page
12(a)
32(b)
6(b)
5
32
41
Accumulated surplus, revaluation reserves, changes in accounting policies, changes in accounting estimates and errors
21
13
6320
5516
19
14
50
5660
28
2930
33
1015161824
28
789
11 40
65
76
47
43
38
50
73
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Consolidated Financial Statements 2018_
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statementsfor the year ended 30 June 2018
Note 1. Basis of preparation
The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial statements are for the Council consisting of Blacktown City Council and its subsidiary.
(a) Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Australian Accounting Interpretations, the Local Government Act 1993 (NSW) and Regulations, and the Local Government Code of Accounting Practice and Financial Reporting. Council is a not for-profit entity for the purpose of preparing these financial statements.
(b) New and amended standards adopted by Council
There have been no new (or amended) accounting standards adopted by Council in this year’s financial statements which have had any material impact on reported financial position, performance or cash flows.
(c) Historical cost convention
These financial statements have been prepared under the historical cost convention, as modified by the revaluation of certain financial assets and liabilities and certain classes of infrastructure, property, plant and equipment and investment property.
(d) Significant accounting estimates and judgements
The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Council's accounting policies.
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the Council and that are believed to be reasonable under the circumstances.
(e) Critical accounting estimates and assumptions
Council makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year include:
(i) Estimated fair values of investment properties
(ii) Estimated fair values of infrastructure, property, plant and equipment,
(f) Significant judgements in applying the Council's accounting policies
Impairment of Receivables - Council makes significant judgements about the impairment of a number of its receivables in Note 7.
(g) User charges and fees
User charges and fees (including parking fees and fines) are recognised as revenue when the service has been provided or when the penalty has been applied, whichever first occurs.
(h) 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.
(i) Interest
Interest income is recognised using the effective interest rate at the date that interest is earned.
(j) Rent
Rental income is accounted for on a straight-line basis over the lease term.
(k) Dividend income
Revenue is recognised when the Council’s right to receive the payment is established, which is generally when shareholders approve the dividend.
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Consolidated Financial Statements 2018_
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statementsfor the year ended 30 June 2018
Note 1. Basis of preparation (continued)
(l) Other income
Other income is recorded when the payment is due, the value of the payment is notified, or the payment is received, whichever occurs first.
(m) Contributions under Section 94 of the Environmental Planning and Assessment Act
The Council has obligations to provide facilities from contribution revenues levied on developers under the provisions of s94 of the EPA Act 1979.
Whilst Council generally incorporates these amounts as part of a Development Consents Order, such developer contributions are only recognised as income upon their physical receipt by Council, due to the possibility that individual development consents may not be acted upon by the applicant and accordingly would not be payable to Council.
Developer contributions may only be expended for the purposes for which the contributions were required but the Council may apply contributions according to the priorities established in work schedules.
A detailed note relating to developer contributions can be found at Note 23.
The Council has obligations to provide facilities from contributions required from developers under the provisions of S94 of the Environmental Planning & Assessment Act. Contributions received each year are required to be held as restricted assets until used for the purposes designated in formal contribution plans.
Amounts may be expended only for the purposes for which the contributions were required, but the Council may, within each area of benefit, apply contributions according to the priorities established in the relevant contributions plan and accompanying works schedules.
The following contributions plans have been adopted by Council and are available for public inspection free of cost.
CP No. 1 – 1980’s Release Area Date of latest enforced Plan – 15/12/2010 Trunk Drainage Flood Mitigation Major Roads Overbridges Open Space Community Facilities CP No. 2 – Local Roadworks Date of latest enforced Plan – 04/02/2015 Roadworks CP No. 3 – Open Space in the Established Residential Areas Date of latest enforced Plan – 07/12/2016 Land Acquisitions Playgrounds Playing Fields Landscaping Amenities Buildings Fencing Car parking Lighting Picnic Facilities CP No. 4 – Mount Druitt Development Area Date of latest enforced Plan – 04/02/2015 Trunk Drainage Local Roads CP No. 5 – Parklea Release Area Date of latest enforced Plan – 04/02/2015 Trunk Drainage Tributary Trunk Drainage Major Roads Local Roads Open Space Community Facilities CP No. 15 – Metella Road Floodplain Date of latest enforced Plan – 07/03/2018 Compensatory Works to the Floodplain CP No. 17 – Quakers Hill Commercial Precinct Date of latest enforced Plan – 15/06/2016 Traffic Management Facilities CP No. 18 – Eastern Creek Stage 3 Date of latest enforced Plan – 22/06/2016 Roads Drainage
CP No. 19 – Blacktown Growth Precinct Date of latest enforced Plan – 30/09/2015 Local Road Construction Streetscape Facilities Traffic Management Facilities Open Space Community Facilities Drainage
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Consolidated Financial Statements 2018_
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statementsfor the year ended 30 June 2018
Note 1. Basis of preparation (continued)
CP No. 20 – Riverstone & Alex Avenue Precincts Date of latest enforced Plan – 09/12/2015 Roads Drainage Open Space Environmental Conservation Community Facilities CP No. 21 – Marsden Park Date of latest enforced Plan – 14/12/2016 Roads Drainage Open Space Environmental Conservation Community Facilities CP No. 22 – Rouse Hill (Land & Works) Date of latest enforced Plan – 07/03/2018 Roads Drainage Open Space Environmental Conservation Community Facilities CP No. 23 – Riverstone West Precinct Date of latest enforced Plan – 03/08/2010 Roads Drainage CP No. 24 – Schofields Precinct Date of latest enforced Plan – 27/05/2015 Roads Drainage Open Space Environmental Conservation Aquatic Centre Community Facilities
Council also holds contributions, which were obtained prior to the requirement to have contribution plans in place. These moneys must be applied only for purposes for which they were obtained.
Council has identified the need for supplementary funding to ensure all contribution plan commitments are met. To achieve this, Council has established an Infrastructure Sinking Fund to which it makes annual contributions.
(n) Principles of consolidation
(i) Subsidiary
Subsidiaries are all entities over which the Council has control. The Council controls an entity when the Council is exposed to, variable returns from its involvement with the entity and has the ability to
affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Council. They are deconsolidated from the date that control ceases.
Inter-entity transactions and balances on transactions between Council entities are eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Council.
As at 30 June 2018 and 2017, the Council only have one subsidiary, Blacktown Venue Management Ltd.
(ii) Joint arrangements
Under AASB 11 Joint Arrangements investments in joint arrangements are classified as either joint operations or joint ventures. The classification depends on the contractual rights and obligations of each investor, rather than the legal structure of the joint arrangement. On all years presented, the Council only have investment in joint ventures,
Interests in joint ventures area accounted for using the equity method, after initially being recognised at cost in the consolidated balance sheet.
(iii) The Consolidated Fund
In accordance with the provisions of Section 409(1) of the Local Government Act 1993 (NSW), all money and property received by Council is held in the Council’s consolidated fund unless it is required to be held in the Council’s trust fund.
Cash and other assets of the following entities have been included as part of the consolidated fund:
General purpose operations Civic Risk West (joint venture) Civic Risk Mutual (joint venture) Blacktown Venue Management Ltd (subsidiary)
Due to their immaterial value and nature, the following committees, entities and operations have been excluded from consolidation:
Hall Management Committees Park Management Committees
Council controls approximately ninety four (94) Park and Hall Management Committees under Section
12
Consolidated Financial Statements 2018_
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statementsfor the year ended 30 June 2018
Note 1. Basis of preparation (continued)
355 of the Local Government Act 1993. Forty (40) of these committees maintain their own funds and were instructed to provide Council with audited financial statements for the accounting year ended 31 March 2018. Of the forty (40) Committees, twenty (20) complied and provided their financial statements.
The (i) total income and expenditure from continuing operations and (ii) net assets held by these excluded committees and operations is as follows:
Total income from continuing operations $937,019.21
Total expenditure from continuing operations $572,262.94
Total net assets held (i.e. equity) $2,455,309.00
(ii) The Trust Fund
In accordance with the provisions of Section 411 of the Local Government Act 1993 (NSW) (as amended), a separate and distinct trust fund is maintained to account for all money and other assets received by the Council in trust which must be applied only for the purposes of, or in accordance with the trusts relating to those monies. Trust monies and other assets subject to Council’s control have been included in these reports.
Trust monies and property held by Council but not subject to the control of Council have been excluded from these reports. A separate statement of monies held in the trust fund is available for inspection at the Council office by any person free of charge.
(o) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to the taxation authority is included with other receivables or payables in the Statement of Financial Position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or
financing activities which that are recoverable from, or payable to the taxation authority are presented as operating cash flows.
(p) New accounting standards and interpretations issued not yet effective
Certain new accounting standards and interpretations have been published that are not mandatory for the current reporting period and which have not been applied.
As at the date of authorisation of these financial statements, Council considers that the standards and interpretations listed below will have an impact upon future published financial statements ranging from additional and / or revised disclosures to actual changes as to how certain transactions and balances are accounted for.
Effective for annual reporting periods beginning on or after 1 July 2018
AASB 9 Financial Instruments
This replaces AASB 139 Financial Instruments: Recognition and Measurement, and addresses the classification, measurement and disclosure of financial assets and liabilities.
The standard introduces a new impairment model that requires impairment provisions to be based on expected credit losses, rather than incurred credit losses.
Based on assessments to date, Council expects a small increase to impairment losses however the standard is not expected to have a material impact overall.
Effective for annual reporting periods beginning on or after 1 July 2019
AASB 15 Revenue from Contracts withCustomers, AASB 1058 Income of Not-for-ProfitEntities and AASB 2016-8 Amendments toAustralian Accounting Standards - AustralianImplementation Guidance for Not-for-ProfitEntities
AASB 15 will replace AASB 118 Revenue, AASB 111 Construction Contracts and a number of Interpretations. AASB 2016-8 provides Australian requirements and guidance for not-for-profit entities
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Consolidated Financial Statements 2018_
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statementsfor the year ended 30 June 2018
Note 1. Basis of preparation (continued)
in applying AASB 9 and AASB 15, and AASB 1058 will replace AASB 1004 Contributions.
Together they contain a comprehensive and robust framework for the recognition, measurement and disclosure of income including revenue from contracts with customers.
While Council is still reviewing the way that income is measured and recognised to identify whether there will be any material impact arising from these standards, these standards may affect the timing of the recognition of some grants and donations.
AASB 16 Leases
Council is currently a party to leases that are not recognised in the Statement of Financial Position. It is likely that some of these leases will need to be included in the Statement of Financial Position when this standard comes into effect.
A lease liability will initially be measured at the present value of the lease payments to be made over the lease term.
A corresponding right-of-use asset will also be recognised over the lease term. Council has not elected to apply any pronouncements before their operative date in these financial statements.
(q) Rounding of amounts
Unless otherwise indicated, amounts in the financial statements have been rounded off to the nearest thousand dollars.
(r) Comparative figures
To ensure comparability with the current reporting period’s figures, some comparative period line items and amounts may have been reclassified or individually reported for the first time within these financial statements and/or the notes.
(s) Disclaimer
Nothing contained within these statements may be taken to be an admission of any liability to any person under any circumstance.
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Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 2(a). Council functions/activities – financial information
Total functions and activities 594,298 333,961 637,064 4,058,932 4,726,219 303,103 313,778 44,121 280,520 37,272
159,150 145,166
1,834,140
12,807
115,663
1,537,535 17,883 27,510
191
902,132
1,049,024 196,397
17,855
68,426
1,884,888 40,543 157,722
337,114
(5,555)
93,182 (13,333)
(22,709)
2018 2017
2,171
49 129,218
947,002 1,135 1,808
7,008 (20,581) 5,692
(17,818) (24,052)
(30,600)
(13,505) 69
22 A sporting and active city
46,034 115,248
A smart and prosperous economy
A growing city supported by accessible infrastructure
88,777
4,901
79,849 A clean, sustainable and healthy environment
A vibrant and inclusive community
8,166
238,324 46,065
2,473 10,456
30,425
452,362 242,431
86,608
A leading city
22,409 45,764 23,055
12,607
42,990
58,177
32,218
80,602
15,978
Income from continuing operations
Income, expenses and assets have been directly attributed to the following functions/activities.Details of these functions/activities are provided in Note 2(b).
Expenses from continuing operations
Operating result from continuing operations
$ ’000
Total assets held (current and non-
current) Functions/activities
2017
Grants included in income from continuing
operations
201720182018 2017 2018 2018 2017
15
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 2(b). Council functions/activities – component descriptions
Details relating to the Council’s functions/activities as reported in Note 2(a) are as follows:
A vibrant and inclusive community
Includes costs relating to:Arts and cultural development Economic developmentChildrens services Emergency services supportCity events and partnerships LibrariesCity marketing and promotions Property maintenanceCommunity development Strategic planningCommunity facility construction and maintenance Transport infrastructure construction and maintenanceCommunity regulation
A clean, sustainable and healthy environment
Includes costs relating to:Blacktown International Sportspark and other key venues Open space improvements and maintenanceBuilding and development assessment Property maintenanceCity design Recreation planningCommunity development Strategic planningCommunity regulation Street cleaningDrainage, catchment and stormwater management Urban animal managementEnvironmental protection Waste managementHealth regulation
A smart and prosperous economy
Includes costs relating to:Building and development assessment Environmental protectionCity design GovernanceCity events LibrariesCity marketing Property management and developmentCommunity development Strategic planningCommunity regulation Transport infrastructure construction and maintenanceEconomic development Transport planning
Community outcome: Our local communities are welcoming, vibrant and inclusive, enabling individuals and groups to achieve their potential and the City to prosper as a centre of culture, creativity and learning.
Community outcome: Our local places and spaces are clean and healthy, turning sustainability awareness into action to halt or reverse negative impacts on our built and natural environment.
Community outcome: Strategic economic opportunities and partnerships facilitate sustainable growth of our local and regional economy, attract investment to our City and foster local business and employment.
16
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 2(b). Council functions/activities – component descriptions (continued)
Details relating to the Council’s functions/activities as reported in Note 2(a) are as follows:
A growing city supported by accessible infrastructure
Includes costs relating to:Asset management Financial managementBuilding and development assessment Open spaceCity design Property management and developmentCommunity development Strategic planningCommunity facility construction and maintenance Transport infrastructure construction and maintenanceCommunity regulation Transport planningDrainage, catchment and stormwater management
A sporting and active city
Includes costs relating to:Aquatic and leisure centres Community developmentAsset management Economic developmentBlacktown International Sportspark and other key venues Open space improvements and maintenanceCity events and partnerships Property management and developmentCity marketing and promotions Recreation planning
A leading city
Includes costs relating to:Asset management Corporate strategyBlacktown City Information Centre Financial managementBusiness technology Fleet managementCity events and partnerships Governance and corporate support servicesCity marketing and promotions Human resourcesCorporate buildings Property management and development
Community outcome: Blacktown City leads through a shared vision, engaged civic governance and excellent services and systems.
Community outcome: Our neighbourhoods are well planned and liveable with housing, transport and infrastructure that meets the diverse needs of our growing community.
Community outcome: Blacktown City is the recognised sporting capital of Western Sydney with world standard sporting venues and events and community participation in local sports supporting an active and healthy lifestyle.
17
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 3. Income from continuing operations
$ ’000
(a) Rates and annual charges
Ordinary ratesResidentialFarmlandBusinessLess: pensioner rebates (mandatory)Less: pensioner rebates (Council policy)Total ordinary rates
Annual charges (pursuant to s.496, s.496A, s.496B, s.501 & s.611)Domestic waste management servicesStormwater management servicesWaste management services (non-domestic)Section 611 chargesTotal annual charges
TOTAL RATES AND ANNUAL CHARGESCouncil has used 2016 year valuations provided by the NSW Valuer General in calculating its rates.
Accounting policy for rates and annual chargesRates, annual charges, grants and contributions (including developer contributions) are recognised as revenuewhen the Council obtains control over the assets comprising these receipts. Developer contributions may onlybe expended for the purposes for which the contributions were required, but the Council may apply contributionsaccording to the priorities established in work schedules.
Control over assets acquired from rates and annual charges is obtained at the commencement of the ratingyear as it is an enforceable debt linked to the rateable property or, where earlier, upon receipt of the rates.
(b) User charges and fees
Specific user charges (per s.502 – specific ‘actual use’ charges)Sullage and septic tank chargesTotal specific user charges
Other user charges and fees(i) Fees and charges – statutory and regulatory functions (per s.608)Building construction / compliance certificate feesEngineering construction / compliance certificate feesPlanning and building regulationRegistration feesSection 603 certificatesSection 735a certificate feesSubdivision certificate feesZoning certificatesTotal fees and charges – statutory/regulatory
474
14,061
1,016 847 887 868
135
2,848 2,279
135
1,595
1,465 6,421
831
201 49,758
5,994
48,836
207 1,152
116,072
47,275 320
158,965
2018 2017
(3,512)
110,923
46,206 631
(2,745)
151,814 (2,434) (1,957)
1,095
45,204
201,572
3,317 3,258
53,512
1,294
212,477
94 92 463
112
13,407
112
18
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 3. Income from continuing operations (continued)
$ ’000
(b) User charges and fees (continued)
(ii) Fees and charges – other (incl. general user charges (per s.608))Animal controlCemeteriesChild care / pre schoolFire and emergency services levy (FESL) implementationHall hireHealth and fitnessHealth licences and feesInspections – vehicle crossingsLaneway closure application feesLibrary – photocopier / fax chargesParking feesSwimming centresOtherTotal fees and charges – other
TOTAL USER CHARGES AND FEESAccounting policy for user charges and feesUser charges and fees are recognised as revenue when the service has been provided.
(c) Interest and investment revenue (including losses)
Interest– Overdue rates and annual charges (incl. special purpose rates)– Cash and investments
TOTAL INTEREST AND INVESTMENT REVENUE
Interest revenue is attributable to:Unrestricted investments/financial assets:Overdue rates and annual charges (general fund)General Council cash and investmentsRestricted investments/funds – external:Development contributions– Development contributions
Other externally restricted assetsRestricted investments/funds – internal:Internally restricted assetsTotal interest and investment revenue recognised
Accounting policy for interest and investment revenueInterest income is recognised using the effective interest rate at the date that interest is earned.
159
3,332
7
205
11,105
25,761
38,422
2018
176
1,186
513
845
2,603 2,279
175
108
2017
6,178
24,880 590
598 323
89 78
222
229
880
6,106 95
13,879
182
13,747
10
513
526 2,782
3,753
526 10,579
525
712
3,956 12,383
11,870
2,648
39,934
12
12,383
4,421
11,105
19
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 3. Income from continuing operations (continued)
$ ’000
(d) Other revenues
Rental income – investment propertyRental income – other council propertiesFinesLegal fees recovery – rates and charges (extra charges)Legal fees recovery – otherAnimal controlCommunity services / child careDiesel rebateEmployee contributionsInsurance claim recoveriesPark hireReinstatement of roads and footpathsSales – generalTenant licencesOtherTOTAL OTHER REVENUE
Accounting policy for other revenueCouncil recognises revenue when the amount of revenue can be reliably measured, it is probable that futureeconomic benefits will flow to the Council and specific criteria have been met for each of the Council’s activitiesas described below. Council bases its estimates on historical results, taking into consideration the type ofcustomer, the type of transaction and the specifics of each arrangement.
Parking fees and fines are recognised as revenue when the service has been provided, or when the penalty hasbeen applied, whichever occurs first.
Rental income is accounted for on a straight-line basis over the lease term.
Miscellaneous sales are recognised when physical possession has transferred to the customer which isdeemed to be the point of transfer of risks and rewards.
Other income is recorded when the payment is due, the value of the payment is notified, or the payment isreceived, whichever occurs first.
2,552
1,574 1,508
1,804
2,690
311
784
273 100 272
1,479
287
141
5,526
2,442
264
2017Notes
702
1,910
111
2018
19,274 881 752
976
5,283 1,974
19,066
655
779
324
1,537
295
154
10
20
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 3. Income from continuing operations (continued)
$ ’000
(e) Grants
General purpose (untied)Current year allocationFinancial assistancePayment in advance – future year allocationFinancial assistanceOtherPensioners’ rates subsidies – general componentTotal general purpose
Specific purposePensioners’ rates subsidies:– Domestic waste management
Better waste and recyclingBushfire and emergency servicesCommunity care servicesCommunity centresEmployment and training programsEnvironmental protectionHeritage and culturalLibraryLibrary – per capitaParks and reservesStreet lightingTransport (roads to recovery)Transport (other roads and bridges funding)OtherTotal specific purposeTotal grants
Grant revenue is attributable to:– Commonwealth funding– State funding
–
–
–
730
1,361
–
– 780
184
221
–
–
8,837
4,117
326 663
114
17,657 –
–
Capital 2017
17,511
17,511
827 827
–
–
– 219
–
32 643
2018
–
545 430
–
200
55
827
178
–
16,650
–
–
– –
–
–
– –
–
1,238
28,776
8
– 1,214
13 146
– 81
20 65
1,440
17,118
27,330 1,375
2018Capital
–
Operating Operating
–
8,561
2017
286 –
4,238
450
7,656 –
79 175
61
676
8,288 18,322
346
36,445
36,445 26,610
9,115
74
8,953 26,610
5
7,669
–
17,479
589
–
53
17,511
21
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 3. Income from continuing operations (continued)
$ ’000
(f) Contributions
Developer contributions:(s7.4 & s7.11 – EP&A Act, s64 of the LGA):Cash contributionsS 7.11 – contributions towards amenities/servicesVoluntary planning agreementsNSW local infrastructure growth schemeTotal developer contributions – cash
Non-cash contributionsS 7.11 – contributions towards amenities/servicesTotal developer contributions – non-cashTotal developer contributions
Other contributions:Cash contributionsAnimal controlCleaningContributions to outgoings – investment propertiesParks and reservesPavingRoads and bridgesRMS contributions (regional roads, block grant)Waste services NSWOtherTotal other contributions – cash
Non-cash contributionsDedicationsDrainageKerb and gutterRecreation and cultureRoads and bridgesTotal other contributions – non-cashTotal other contributionsTotal contributions
TOTAL GRANTS AND CONTRIBUTIONSAccounting policy for contributionsControl over grants and contributions is normally obtained upon their receipt (or acquittal) and is valued at thefair value of the granted or contributed asset at the date of transfer.
Where grants or contributions recognised as revenues during the financial year were obtained on condition thatthey be expended in a particular manner or used over a particular period and those conditions wereun-discharged at reporting date, the unused grant or contribution is disclosed above.
A liability is recognised in respect of revenue that is reciprocal in nature to the extent that the requisite servicehas not been provided at reporting date.
–
–
–
–
1,013
–
– –
283,254
–
– –
2,206
– –
– 4,948
–
37 95 466 225
–
268 15,816 –
112
– 370 611 –
2,206 17,996 16,433 10,794
– –
953
1,192
23
2,945
–
17,996
–
7,547
17,996
18,893
243,861
–
– –
– – 64,882 81,880
54,441
99,625
–
– 4,633
54,018 54,018
95,352 1,817
6,409 23,396
–
8,269
92,689
414 835
329
–
2,206
28,816
–
–
–
192,785
–
3,683
2018Capital
699
Notes Operating
–
Operating 2018 2017
244,688
31,312
81,315
97,169
9,154
2017Capital
151,187 – 9,154
471 – –
300,765
2,899 11,012
8,613
28,412
–
201,939
–
1,011
6,774
92,674
22
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 3. Income from continuing operations (continued)
$ ’000
(g) Unspent grants and contributions
Certain grants and contributions are obtained by Council on conditionthat they be spent in a specified manner:
Operating grantsUnexpended at the close of the previous reporting period
Add: operating grants recognised in the current period but not yet spent
Less: operating grants recognised in a previous reporting period now spent
Unexpended and held as restricted assets (operating grants)
Capital grantsUnexpended at the close of the previous reporting period
Add: capital grants recognised in the current period but not yet spent
Less: capital grants recognised in a previous reporting period now spent
Unexpended and held as restricted assets (capital grants)
ContributionsUnexpended at the close of the previous reporting period
Add: contributions recognised in the current period but not yet spent
Less: contributions recognised in a previous reporting period now spent
Unexpended and held as restricted assets (contributions)
(161,997)
5,245
(955)
(24,023)
165,717
751
5,591
9,991
609
10,030
154,453
5,245
1,058
(559)
15,659
165,717
173,261
(712)
20172018
247,502
20,345
105,808
10,030
7,703
(3,385)
23
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 4. Expenses from continuing operations
$ ’000
(a) Employee benefits and on-costs
Salaries and wagesTravel expensesEmployee leave entitlements (ELE)SuperannuationWorkers’ compensation insuranceFringe benefit tax (FBT)Training costs (other than salaries and wages)OtherTotal employee costsLess: capitalised costsTOTAL EMPLOYEE COSTS EXPENSED
Number of ‘full-time equivalent’ employees (FTE) at year end
Accounting policy for employee benefits and on-costsEmployee benefit expenses are recorded when the service has been provided by the employee.
Retirement benefit obligationsAll employees of the Council are entitled to benefits on retirement, disability or death. Council contributes tovarious defined benefit plans and defined contribution plans on behalf of its employees.
Superannuation plansContributions to defined contribution plans are recognised as an expense as they become payable. Prepaidcontributions are recognised as an asset to the extent that a cash refund or a reduction in the future paymentsis available.
Council participates in a Defined Benefit Plan under the Local Government Superannuation Scheme, however,when sufficient information to account for the plan as a defined benefit is not available and therefore Councilaccounts for its obligations to defined benefit plans on the same basis as its obligations to defined contributionplans, i.e. as an expense when it becomes payable – refer to Note 18 for more information.
16,750
108,595
146,242 178
3,351
542
2018
102,450
231
131,926 (3,640)
142,602
1,364 1,384
12,168
135,342 (3,416)
497 267
948
6,267 11,492
1,295
15,484
2017
1,069
24
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 4. Expenses from continuing operations (continued)
$ ’000
(b) Materials and contracts
Raw materials and consumablesContractor and consultancy costs– Cleaning– Computer support– Garbage and recycling– Repairs and maintenance– Waste disposal contract (reclasssifed from (d) Other expenses)
Auditors remuneration (2)
Legal expenses:– Legal expenses: planning and development– Legal expenses: other
Operating leases:– Operating lease rentals: minimum lease payments (1)
TOTAL MATERIALS AND CONTRACTS
Operating leasesLeases in which a significant portion of the risks and rewards of ownership arenot transferred to Council as lessee are classified as operating leases. Paymentsmade under operating leases (net of any incentives received from the lessor) arecharged to the income statement on a straight-line basis over the period of the lease.
1. Operating lease payments are attributable to:Motor vehiclesOther
2. Auditor remunerationDuring the year the following fees were paid or payable for services provided by theauditor of Council, related practices and non-related audit firms
Auditors of the Council – NSW Auditor-General:
Audit and other assurance servicesAudit and review of financial statementsRemuneration for audit and other assurance services
Total Auditor-General remuneration
Non NSW Auditor-General audit firms:
Audit and other assurance servicesAudit and review of financial statementsRemuneration for audit and other assurance servicesTotal remuneration of non NSW Auditor-General audit firms
Total Auditor remuneration
144
5,978 15,988
2,564 3,763
500
11,611
144
143
–
75,373
–
–
143
10
71
405
2018
153
420
14,300
741
2,821
1,203
18,653
144
420
144
2,246
1,019
21,676
10
2,281
21,278
12,971
405
361
153
143
144
334
78,936
13,594
10
59
2017
25
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 4. Expenses from continuing operations (continued)
$ ’000
(c) Depreciation, amortisation and impairment
Depreciation and amortisationPlant and equipmentOffice equipmentFurniture and fittingsLand improvements (depreciable)Infrastructure:– Buildings – non-specialised– Buildings – specialised– Other structures– Roads– Stormwater drainage
Other assets:– Library books– Other
Intangible assetsTotal depreciation and amortisation costs
TOTAL DEPRECIATION, AMORTISATION AND IMPAIRMENT /REVALUATION DECREMENT COSTS EXPENSED
Accounting policy for depreciation, amortisation and impairment expenses
Depreciation and amortisationDepreciation and amortisation are calculated using the straight line method to allocate their cost over theirestimated useful lives. Useful lives are included in Note 9 for IPPE assets and Note 11 for intangible assets.
Impairment of non-financial assetsIntangible assets that have an indefinite useful life or are not yet available for use are not subject to amortisationand are tested annually for impairment, or more frequently if events or changes in circumstances indicate thatthey might be impaired. Other assets are tested for impairment whenever events or changes in circumstancesindicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount bywhich the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of anasset’s fair value less costs to sell and value in use.
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there areseparately identifiable cash inflows that are largely independent of the cash inflows from other assets or groupsof assets (cash-generating units). Non-financial assets that suffered an impairment are reviewed for possiblereversal of the impairment at each reporting date.
Impairment losses for revalued assets are firstly offset against the amount in the revaluation surplus for theclass of asset, with only the excess to be recognised in the Income Statement.
Impairment of financial assetsCouncil assesses at the end of each reporting period whether there is objective evidence that a financial asset orgroup of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairmentlosses are incurred only if there is objective evidence of impairment as a result of one or more events thatoccurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact onthe estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.
140 37,756
983
1,403
347 908
6,525
3
6,849
8,072
5,718
2,715
68
2,715
2018
317
5,687
70,548
1,419 75,463
2017
70,548
3 736
139
Notes
39,739
11
6,539
8,512
75,463
8,718
26
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 4. Expenses from continuing operations (continued)
$ ’000
(d) Other expenses
Bad and doubtful debtsBank charges / credit card chargesContributions/levies to other levels of government– Department of planning levy– Emergency services levy (includes FRNSW, SES, and RFS levies)– Waste levy
Councillor expenses – mayoral feeCouncillor expenses – councillors’ feesCouncillors’ expenses (incl. mayor) – other (excluding fees above)Donations, contributions and assistance to other organisations (Section 356)– Hawkesbury River County Council
Election expensesElectricity and heatingFee relief advance to carersInsuranceMarketing / promotionsParking patrolPost office agency chargesPostage, courier and freightStreet lightingTelephone and communicationsValuation feesWater rates and chargesOtherTOTAL OTHER EXPENSES
Accounting policy for other expensesOther expenses are recorded on an accruals basis as the Council receives the goods or services.
453 –
233 2,829
2,988
2017
82
36,612
638 1,671
420
284
5,938
35,931 1,783
286 321
1,841
711
3,263
5,298 888
1,852
756
1,339
1,541
365 294
1,951
403
8,304
392
2018
434
3,230
238
84
301
565
–
322
165
390
3,361
2,020
653 676
172 169
1,509
2,895 8,235
Notes
27
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 5. Gains or losses from the disposal of assets
$ ’000
Plant and equipmentProceeds from disposal – plant and equipmentLess: carrying amount of plant and equipment assets sold/written offNet gain/(loss) on disposal
InfrastructureLess: carrying amount of infrastructure assets sold/written offNet gain/(loss) on disposal
Real estate assets held for saleProceeds from disposal – real estate assetsLess: carrying amount of real estate assets sold/written offNet gain/(loss) on disposal
Financial assets (1)
Proceeds from disposal/redemptions/maturities – financial assetsLess: carrying amount of financial assets sold/redeemed/maturedNet gain/(loss) on disposal
NET GAIN/(LOSS) ON DISPOSAL OF ASSETS
Accounting policy for disposal of assetsThe gain or loss on sale of an asset is determined when control of theasset has irrevocably passed to the buyer and the asset is derecognised.
Note 6(a). Cash and cash equivalent assets
Cash and cash equivalentsCash on hand and at bankCash-equivalent assets– Deposits at call– Short-term deposits
Total cash and cash equivalents
Accounting policy for cash and cash equivalentsFor Statement of Cash Flow presentation purposes, cash and cash equivalents includes cash on hand; depositsheld at call with financial institutions; other short-term, highly liquid investments with original maturities of threemonths or less that are readily convertible to known amounts of cash and which are subject to an insignificantrisk of changes in value; and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilitieson the Statement of Financial Position.
31,596
2018
35,461
3,169
– (1,710)
9
Notes
(13,490)
238
2,920
249 (2,671)
9
(2,931)
21,971
(1,710)
(15,497)
2017
–
8
290,000 (490,000)
–
6
(290,000)
–
16,099
490,000
60,000 165,590
12,548
131,000 22,042
96,238
15,487
14,638
20,751
22,209
28
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 6(b). Investments
$ ’000
Investments‘Held to maturity’Total investments
TOTAL CASH ASSETS, CASHEQUIVALENTS AND INVESTMENTS
Held to maturity investmentsLong term depositsNCD’s, FRN’s (with maturities > 3 months)Total
Accounting policy for investments
ClassificationCouncil classifies its financial assets in the following categories: financial assets at fair value through profit orloss; loans and receivables; held-to-maturity investments; and available-for-sale financial assets. Theclassification depends on the purpose for which the investments were acquired. Management determines theclassification of its investments at initial recognition and, in the case of assets classified as held-to-maturity,re-evaluates this designation at each reporting date.
Held to maturity investmentsHeld-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixedmaturities that Council’s management has the positive intention and ability to hold to maturity. Assets in thiscategory are measured at amortised cost.
Recognition and de-recognition Regular purchases and sales of financial assets are recognised on trade-date: the date on which Councilcommits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costsfor all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value throughprofit or loss are initially recognised at fair value and transaction costs are expensed in the income statement.Investments are derecognised when the rights to receive cash flows from the financial assets have expired orhave been transferred and Council has transferred substantially all the risks and rewards of ownership.
20172018Current
92,000 304,000 92,000
–
Current
230,000
469,590
Non-current
304,000 230,000
–
Non-current 20172018
304,000 92,000
304,000
230,000 77,000
77,000 326,238
230,000 62,000 15,000
92,000
30,000
77,000 77,000
62,000
29
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 6(c). Restricted cash, cash equivalents and investments – details
$ ’000
Total cash, cash equivalentsand investments
attributable to:External restrictions (refer below)Internal restrictions (refer below)Unrestricted
$ ’000
Details of restrictions
External restrictions – otherDeveloper Contributions - generalSecond Ponds Creek voluntary planning agreementVoluntary planning agreementsRMS (formerly RTA) contributionsSpecific purpose unexpened grantsDomestic waste managementStormwater managementSubdivider contributionsContribution to worksOtherExternal restrictions – otherTotal external restrictions
77,000
Non-current Current
92,000
92,000
32,000
43,928
25,630
220,792
469,590
181,071 118,826
15,275 28,048
19,798 3,254
–
1,038
3,349 17,971
2,053 732
3,095
2017Non-current
2017
77,000
209,728 103,046
1,134
204,870
Notes
2018
92,000
77,000 326,238 – –
11,739
195,826 296,870 195,826
Current
–
929 6,923 6,954
2017
26,341 469,590
2018
–
2018
296,870
326,238
30
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 6(c). Restricted cash, cash equivalents and investments – details (continued)
$ ’000
Internal restrictionsAquatics reserveAsbestos removal crisis reserveAsset renewal reserveBadgerys Creek airport reserveBlacktown leisure centre, Stanhope *Blacktown venue management Ltd reserveBusiness technology reserveChildcare centres improvementCivicRisk reserveCompanion animal reserveDeposits, retentions and bonds *Deregulated approvals reserveE-business strategy reserve'Employees' leave entitlement *Energy and water fund reserveEquipment replacement reserveFamily day careFuture election expensesHistorical buildings restorationInfrastructure sinking fundInternal s7.11 contributionsLand projects reservesMajor parks reserveNurragingy reserveNWGC voluntary stormwater treatmentOtherOther plant replacementPC replacement reservePlayground replacement reservePrinting equipment replacementRiverstone cemetery reserveSecond Ponds Creek trunk drainage and bushcareSt Bartholomew’s church restorationStreet lighting reserveTransformational Projects ReserveUrgent works reserveWoodcroft reserveWorkers compensation self insurance claimsTotal internal restrictionsTOTAL RESTRICTIONS
* Council approved the acquisition of 81-85 Flushcombe Road in February 2016 based on a funding strategy that utilised a combination ofinternal loans from both externally and internally restricted reserves. In total, $18 million was borrowed comprising, $6 million from theDomestic Waste Reserve, $5 million from the 'Employee' Leave Entitlements Reserve, $5 million from the Deposits, retentions and bondsreserve and $2 million from the Blacktown leisure centre, Stanhope Reserve. Each of these borrowings will be repaid over the next 9years from surplus rental income generated from the building.
181,071
1,027
220,792 376,897
1,641 1,350
5,128
167
8,352
1,049
–
354
3,417 1,727
761
1,968
4,586
1,440
30,776
623
4,066
223
555
23
357
4,931
24
1,727
11,728
3,159
1,000
31 2,869
895
41
33,678
211
60,365
40
652
215 2,084
1,000
15,895 2,254
725
15,605
29,786
2,137
2,250 2,250 1,686
59
6,360
2017
218
3,557
508
1,463
4,125
Notes
517,662
2018
31
1,168
1,084
38,381 625
860
263 818
11,638
832
26,211
1,898
5,094
734 11,360
3,535 1,395
598
11,264
956
31
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 7. Receivables
$ ’000
PurposeRates and annual chargesInterest and extra chargesUser charges and feesCapital debtors (being sale of assets)– Sale of land– Other asset sales
Accrued revenues– Interest on investments
Government grants and subsidiesLegal costs on outstanding ratesNet GST receivableRestorationsSection 611 chargesOther debtorsTotal
Less: provision for impairmentRates and annual chargesInterest and extra chargesOther debtorsTotal provision for impairment – receivables
TOTAL NET RECEIVABLES
Externally restricted receivablesDomestic waste managementTotal external restrictionsInternally restricted receivablesCapital – sale of landInternally restricted receivablesUnrestricted receivablesTOTAL NET RECEIVABLES
Movement in provision for impairment of receivablesBalance at the beginning of the year+ new provisions recognised during the year– amounts already provided for and written off this yearBalance at the end of the year
6,441
2017Notes
– –
96
–
(358)
(249)
2,209
–
2,303 158 443
(149)
(753)
(68)
–
(258)
561
1,242
1,865
(427)
2017
(359)
256 – 535 207 –
139 –
–
Current
5,851
Non-current
5,451 158
6,364
31,909
4,760
425 22,000 –
2,134
1,354
3,658
7,567
3,672 –
2,292
(146)
31,156
45,540
–
2,461 –
–
201 1,192
1,920
(624)
– –
1,865 –
23,096
162 227 (40)
5,851
889
1,865
2,209
– –
(58)
20181,076
–
1,886
3,114
2018
(75)
–
(452)
(377)
(217)
–
–
Current
–
– –
–
Non-current
22,000
2,009
– 5,851
1,180
21,030 31,156
2,009
2,009
44,916
22,000
–
–
44,916
1,076
– 1,886
32
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 7. Receivables (continued)
Accounting policy for receivables
Recognition and measurementLoans and receivables are non-derivative financial assets with fixed or determinable payments that are notquoted in an active market. They are included in current assets, except for those with maturities greater than12 months after the reporting date which are classified as non-current assets. Loans and receivables areincluded in other receivables (Note 8) and receivables (Note 7) in the Statement of Financial Position.Receivables are recognised initially at fair value and subsequently measured at amortised cost using theeffective interest method, less provision for impairment. Receivables are generally due for settlement within30 days.Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial.
ImpairmentFor loans and receivables the amount of the loss is measured as the difference between the asset’s carryingamount and the present value of estimated future cash flows (excluding future credit losses that have not beenincurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset isreduced and the amount of the loss is recognised in profit or loss.
Collectability of receivables is reviewed on an on-going basis. Debts that are known to be uncollectible arewritten off by reducing the carrying amount directly. An allowance account (provision for impairment ofreceivables) is used when there is objective evidence that Council will not be able to collect all amounts dueaccording to the original terms of the receivables.
Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financialreorganisation, and default or delinquency in payments (more than 30 days overdue) are considered indicatorsthat the receivable is impaired. When a receivable for which an impairment allowance had been recognisedbecomes uncollectable in a subsequent period it is written off against the allowance account. Subsequentrecoveries of amounts previously written off are credited against other expenses in the Income statement.
Note 8. Inventories and other assets
$ ’000
(a) Inventories
Inventories at costReal estate for resale (refer below)Stores and materialsTotal inventories at costTOTAL INVENTORIES
(b) Other assets
PrepaymentsLand acquisition in progressTOTAL OTHER ASSETS
Externally restricted assetsThere are no restrictions applicable to the above assets.
Non-current
14,767
11,942
2018 2017
3,232 8,710
Current
50,590 18,940
Notes
–
–
–
1,928 1,030 –
–
14,767
294 898
11,942
976 682 –
50,590
50,590
Current 2018
– – 14,767
Non-current
2,874 16,066
18,940
2017
33
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 8. Inventories and other assets (continued)
$ ’000
Other disclosures
Details for real estate developmentResidentialIndustrial/commercialOther propertiesTotal real estate for resale(Valued at the lower of cost and net realisable value)
Represented by:Acquisition costsDevelopment costsTotal costsTotal real estate for resale
Movements:Real estate assets at beginning of the year– Purchases and other costs– Transfers in from (out to) Note 9– WDV of sales (expense)– Transfers in from (out to) Note 10– Transfers in from (out to) Note 9Total real estate for resale
Accounting policy
Raw materials and stores, work in progress and finished goodsRaw materials and stores, work in progress and finished goods are stated at the lower of cost and netrealisable value. Costs are assigned to individual items of inventory on basis of weighted average costs. Costsof purchased inventory are determined after deducting rebates and discounts. Net realisable value is theestimated selling price in the ordinary course of business less the estimated costs of completion and theestimated costs necessary to make the sale.
Inventory held for distributionInventory held for distribution is held at cost, adjusted where applicable for any loss of service potential.
Land held for resale/capitalisation of borrowing costsLand held for resale is stated at the lower of cost and net realisable value. Cost is assigned by specificidentification and includes the cost of acquisition, and development and borrowing costs during development.When development is completed borrowing costs and other holding charges are expensed as incurred.
Borrowing costs included in the cost of land held for resale are those costs that would have been avoided if theexpenditure on the acquisition and development of the land had not been made. Borrowing costs incurred whileactive development is interrupted for extended periods are recognised as expenses.
– – 4,745 –
16,066
50,590
4,734 8,311
– –
50,590
27,512 1,085
–
14,767
100
14,767
7,422
Non-current
16,341
–
16,066 50,590
16,066
6,822
Non-current
16,066
14,767
2,892 –
8,710
10,490
8,644
16,066
8,710 16,066
(15,497) (13,490) 5
2017
11,810
Notes
8,710 4,615
–
3,811
Current
63 –
Current
23,781 26,809 7,945
65 –
2018
50,590
8,647 40,100
14,767
14,767
4,095
13,682
– – 5,643 8,710
2,323
34
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 9. Infrastructure, property, plant and equipment
Asset class
$ ’000
Capital work in progress 78,194 – 78,194 7,260 44,356 – – (41,362) – – – – 88,448 – 88,448 Plant and equipment 72,813 44,147 28,666 7,198 – (2,770) (5,718) – – – – – 74,781 47,405 27,376 Office equipment 23,167 18,687 4,480 737 – – (908) – – – – – 23,904 19,595 4,309 Furniture and fittings 9,091 7,592 1,499 168 – – (317) – – – – – 9,259 7,909 1,350 Land:
– Operational land 323,676 – 323,676 – 6,432 – – 4,555 (1,589) (28,264) – 421,331 726,141 – 726,141 – Community land 731,617 – 731,617 – 64,073 – – 4,348 1,589 (1,435) (36,698) – 763,494 – 763,494 – Land under roads (post 30/6/08) 67,240 – 67,240 – 8,269 – – – – (136) – – 75,373 – 75,373
Land improvements – non-depreciable 3,204 – 3,204 176 368 – – – – – – – 3,748 – 3,748 Land improvements – depreciable 177,482 60,150 117,332 2,662 5,827 – (8,718) 1,936 – – – – 183,472 64,433 119,039 Infrastructure:
– Buildings – non-specialised 140,928 51,116 89,812 660 88 – (2,715) – – – (14,275) – 115,860 42,290 73,570 – Buildings – specialised 368,680 95,505 273,175 1,869 2,325 – (6,539) 14 – – (4,538) – 341,159 74,853 266,306 – Other structures 5,437 1,955 3,482 – – – (139) – – – – – 5,437 2,094 3,343 – Roads 1,913,539 724,698 1,188,841 22,787 34,822 – (39,739) 10,943 – – – – 1,971,702 754,048 1,217,654 – Bulk earthworks (non-depreciable) 25,869 – 25,869 2,129 – – – – – – – – 27,998 – 27,998 – Stormwater drainage 721,934 212,163 509,771 2,150 10,293 – (8,512) 19,566 – – – – 753,933 220,665 533,268 – Stormwater drainage (non-depreciable) 36,168 – 36,168 – 8,770 – – – – – – – 44,938 – 44,938
Other assets:– Library books 12,555 10,010 2,545 – 728 (161) (736) – – – – – 11,656 9,280 2,376 – Other 101 75 26 – – – (3) – – – – – 101 78 23
TOTAL INFRASTRUCTURE,PROPERTY, PLANT AND EQUIP.
Renewals are defined as the replacement of existing assets (as opposed to the acquisition of new assets).
– – 47,796 (2,931) 186,351 (74,044) 4,711,695 1,226,098 3,485,597 3,978,754 (29,835) (55,511) 421,331 5,221,404 1,242,650
as at 30/6/2018
Net carrying amount
Asset movements during the reporting period
Accumulated depreciation
and impairment
Restated as at 30/6/2017Tfrs
from/(to) real estate assets
(Note 8)
WIPtransfers
Adjustmentsand transfers
Additionsnew assets
Additionsrenewals
Carrying value
of disposals
Revaluation decrements
to equity (ARR)
Revaluation increments
to equity (ARR)
Net carrying amount
Accumulated depreciation
and impairment
Gross carrying amount
Gross carrying amount
Depreciation expense
35
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 9. Infrastructure, property, plant and equipment (continued)
Asset class
$ ’000
Capital work in progress 59,727 – 59,727 14,940 42,788 (1) – (39,257) (3) – – – 78,194 – 78,194 Plant and equipment 68,879 42,119 26,760 – 10,120 (2,569) (5,687) 42 – – – – 72,813 44,147 28,666 Office equipment 22,580 17,704 4,876 – 587 – (983) – – – – – 23,167 18,687 4,480 Furniture and fittings 8,869 7,246 1,623 – 223 – (347) – – – – – 9,091 7,592 1,499 Land:
– Operational land 323,776 – 323,776 – – – – – – (100) – – 323,676 – 323,676 – Community land 642,798 – 642,798 – 128,494 – – 9,279 – – (48,954) – 731,617 – 731,617 – Land under roads (post 30/6/08) 39,495 – 39,495 – 8,613 – – – – – – 19,132 67,240 – 67,240
Land improvements – non-depreciable – – – – 3,182 – – 22 – – – – 3,204 – 3,204 Land improvements – depreciable 169,690 53,852 115,838 1,687 6,656 – (6,849) – – – – – 177,482 60,150 117,332 Infrastructure:
– Buildings – non-specialised 140,423 49,075 91,348 2,314 – (1,134) (2,715) – – – – – 141,603 51,790 89,813 – Buildings – specialised 348,860 90,504 258,356 4,154 7,335 (576) (6,525) 10,430 – – – – 370,203 97,029 273,174 – Other structures 5,437 1,815 3,622 – – – (140) – – – – – 5,437 1,955 3,482 – Roads 1,857,672 698,812 1,158,860 22,511 25,742 – (37,756) 19,484 – – – – 1,913,539 724,698 1,188,841 – Bulk earthworks (non-depreciable) 25,869 – 25,869 – – – – – – – – – 25,869 – 25,869 – Stormwater drainage 691,037 204,127 486,910 24 30,909 – (8,072) – – – – – 721,934 212,163 509,771 – Stormwater drainage (non-depreciable) 24,866 – 24,866 – 11,302 – – – – – – – 36,168 – 36,168
Other assets:
– Heritage collections 7 7 – – – – – – – – – – – – – – Library books 13,357 11,226 2,131 – 583 (101) (68) – – – – – 12,555 10,010 2,545 – Other 101 72 29 – – – (3) – – – – – 101 75 26
TOTAL INFRASTRUCTURE,PROPERTY, PLANT AND EQUIP. 3,485,597 19,132 4,713,893 1,228,296 (48,954) – (3) (100)
Netcarryingamount
4,443,443 1,176,559 3,266,884 45,630 276,534
Revaluation decrements
to equity (ARR)
Revaluation increments
to equity (ARR)
Grosscarryingamount
Accumulated depreciation
and impairment
(4,381) (69,145)
Grosscarryingamount
Accumulated depreciation
and impairment
Netcarryingamount
Tfrs from/(to) real
estate assets
(Note 8)
Restated as at 30/6/2016
Adjustmentsand transfers
Additionsrenewals
Additionsnew assets
Carrying value
of disposals
Depreciation expense
Asset movements during the reporting periodRestated as at 30/6/2017
WIPtransfers
36
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 9. Infrastructure, property, plant and equipment (continued)
Accounting policy for infrastructure, property, plant and equipment
Infrastructure, property, plant and equipment are held at fair value. Independent valuations are performed atleast every five years, however the carrying amount of assets is assessed at each reporting date to confirm that it is not materially different from current fair value.
Increases in the carrying amounts arising on revaluation are credited to the asset revaluation reserve. To theextent that the increase reverses a decrease previously recognising profit or loss relating to that asset class, theincrease is first recognised as profit or loss. Decreases that reverse previous increases of assets in the sameclass are first charged against revaluation reserves directly in equity to the extent of the remaining reserveattributable to the class; all other decreases are charged to the Income Statement.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate,only when it is probable that future economic benefits associated with the item will flow to Council and the costof the item can be measured reliably. All other repairs and maintenance are charged to the income statementduring the financial period in which they are incurred.
Land is not depreciated. Depreciation on other assets is calculated using the straight line method to allocatetheir cost, net of their residual values, over their estimated useful lives as follows:
Plant and equipment Years Other equipment YearsOffice equipment 5 to 10 Playground equipment 10 to 25 Office furniture 10 to 20 Other land improvements 10 to 100 Computer equipment 4Vehicles 5 to 8 BuildingsHeavy plant/road making equipment 5 to 10 Buildings 25 to 384 Other plant and equipment 5 to 10 Buildings: substructure - concrete Infinite
Transportation assets Other infrastructure assetsRoad: surface 10 to 50 Bulk earthworks InfiniteRoad: structure 15 to 115Bridges 15 to 100Bus shelters 10 to 30Car parking 30 to 60Drainage - Pollution Control Devices 10 to 50Footpaths 50 to 60Traffic Control Devices 10 to 50
The assets’ useful lives are reviewed, and adjusted if appropriate, at each reporting date. Gains and losses ondisposals are determined by comparing proceeds with carrying amount. These are included in the Incomestatement.
Land under roadsLand under roads is land under roadways and road reserves including land under footpaths, nature strips andmedian strips.
Council has elected not to recognise land under roads acquired before 1 July 2008 in accordance withAASB 1051 Land Under Roads.
Land under roads acquired after 1 July 2008 is recognised in accordance with AASB 116 Property, Plantand Equipment.
37
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 9. Infrastructure, property, plant and equipment (continued)
Accounting policy for infrastructure, property, plant and equipment (continued)
Crown reservesCrown Reserves under Council’s care and control are recognised as assets of the Council. While ownership ofthe reserves remains with the Crown, Council retains operational control of the reserves and is responsible fortheir maintenance and use in accordance with the specific purposes to which the reserves are dedicated.Improvements on Crown Reserves are also recorded as assets, while maintenance costs incurred by Counciland revenues relating to the reserves are recognised within Council’s Income Statement.Representations are being sought across state and local government to develop a consistent accounting treatment for Crown Reserves across both tiers of government.
Rural Fire Service assetsUnder section 119 of the Rural Fire Services Act 1997 (NSW) , “all fire fighting equipment purchased orconstructed wholly or from money to the credit of the Fund is to be vested in the council of the area for or onbehalf of which the fire fighting equipment has been purchased or constructed”.
Council recognises rural fire service assets including land, buildings, plant and vehicles.
Note 10. Investment property
$ ’000
(a) Investment property at fair value
Investment property on hand
Reconciliation of annual movement:Opening balance– Capitalised expenditure – this year– Net gain/(loss) from fair value adjustments– Transfers from/(to) inventories (Note 8)CLOSING BALANCE – INVESTMENT PROPERTY
589
75,409 75,168
(4,745) –
2017
42
2018Restated
75,168 70,987
8,884 (348)
75,409 75,168
38
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 10. Investment property (continued)
(b) Valuation basis
The basis of valuation of investment property is fair value, being the amounts for which the properties couldbe exchanged between willing parties in arms length transaction, based on current prices in an active marketfor similar properties in the same location and condition and subject to similar leases.
The 2017 revaluations were based on independent assessments made by:APV Valuers & Assets Management Pty Ltd. The 2018 revaluations are based on movements in a relevant property price index.
(c) Leasing arrangements – Council as lessor
The investment property are leased to tenants under long-term operatingleases with rentals payable monthly.
Future minimum lease payments receivable under non-cancellableinvestment property operating leases not recognised in thefinancial statements are receivable as follows:Within 1 yearLater than 1 year but less than 5 yearsLater than 5 yearsTotal minimum lease payments receivable
(d) Investment property income and expenditure – summary
Rental income from investment property:– Minimum lease payments– Other incomeDirect operating expenses on investment property:– that generated rental incomeNet revenue contribution from investment propertyplus:Fair value movement for yearTotal income attributable to investment property
Accounting policy for investment propertyInvestment property, principally comprising freehold office buildings, is held for long-term rental yields and is notoccupied by the Council. Changes in fair values are recorded in the income statement as part of other income.
Investment property is carried at fair value, which is based on active market prices, adjusted, if necessary, for any difference in the nature, location or condition of the specific asset. If this information is not available, Council uses alternative valuation methods such as recent prices in less active markets, or discounted cash flow projections. Changes in fair values are recorded in the Income Statement as part of other income.
Properties that are under construction for future use as investment property are regarded as investment property.These are also carried at fair value unless the fair value cannot yet be reliably determined. Where that is thecase, the property will be accounted for at cost until either the fair value becomes reliably determinable orconstruction is complete.
(348) 3,236
3,584
2,980
5,526
3,945
247
6,573
4,887
5,283
8,884
518
(2,023) 3,750
(2,217)
12,634
2018
271
2017
450 9,282
3,322
39
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 11. Intangible assets
$ ’000
Intangible assets represent identifiable non-monetary assets without physical substance.
Intangible assets are as follows:
Opening values:Gross book value (1/7)Accumulated amortisation (1/7)Net book value – opening balance
Movements for the year– Purchases– Amortisation charges
Closing values:Gross book value (30/6)Accumulated amortisation (30/6)
TOTAL INTANGIBLE ASSETS – NET BOOK VALUE 1
1. The net book value of intangible assets represent:
Software
Accounting policy for intangible assets
IT development and software Costs incurred in developing products or systems and costs incurred in acquiring software and licenses that willcontribute to future period financial benefits through revenue generation and/or cost reduction are capitalised tosoftware and systems. Costs capitalised include external direct costs of materials and service, direct payroll,and payroll related costs of employees’ time spent on the project. Amortisation is calculated on a straight linebasis over periods generally ranging from three to five years.
IT development costs include only those costs directly attributable to the development phase and are onlyrecognised following completion of technical feasibility, and where Council has an intention and ability to usethe asset.
5,554
(1,419)
3,412 3,412
(1,459)
3,412
4,699
(1,402) 547
4,699
4,699
7,692 (2,861)
7,560
132
(2,861)
2017
7,560
4,699
(4,280)
7,013
2018
40
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 12. Payables and borrowings
$ ’000
PayablesGoods and services – operating expenditureAccrued expenses:– Salaries and wages
Security bonds, deposits and retentionsSection 7.11 Landcom second ponds creekOtherTotal payables
Income received in advancePayments received in advanceTotal income received in advance
TOTAL PAYABLES AND BORROWINGS
(a) Payables and borrowings relating to restricted assets
Externally restricted assetsDomestic waste management
TOTAL PAYABLES AND BORROWINGS
$ ’000
(b) Current payables and borrowings not anticipated to be settled within the next twelve months
The following payables and borrowings, even though classified as current, are notexpected to be settled in the next 12 months.
Payables – security bonds, deposits and retentions
Total payables and borrowings relating to unrestricted assets
Total payables and borrowings relating to restricted assets
6,112
2017
–
102,095
21,782
–
5,681
–
6,112
3,340
Current Non-current Current
–
1,258
–
–
Non-current
5,681
– 2,701
43,381 – 1,253
Current 2018
–
32,000 –
– –
42,710
2017
–
4,958
102,095
4,958
–
Current
2017
–
–
90,689
–
96,414
97,026
10,025
–
–
–
– 38,678
–
2018
–
91,843
–
8,980
–
5,069
96,801
8,980
5,069
96,801 –
10,025
2018
Non-current Non-current
–
41
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 12. Payables and borrowings (continued)
$ ’000
(c) Financing arrangements
Unrestricted access was available at balance date to thefollowing lines of credit:
Bank overdraft facilitiesCredit cards/purchase cardsTotal financing arrangements
Drawn facilities as at balance date:– Credit cards/purchase cardsTotal drawn financing arrangements
Undrawn facilities as at balance date:– Bank overdraft facilitiesTotal undrawn financing arrangements
Accounting policy for payables and borrowings
PayablesThese amounts represent liabilities for goods and services provided to the Council prior to the end of financialyear that are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.
BorrowingsBorrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequentlymeasured at amortised cost. Any difference between the proceeds (net of transaction costs) and theredemption amount is recognised in the income statement over the period of the borrowings using the effectiveinterest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of theloan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee isdeferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of thefacility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over theperiod of the facility to which it relates.Borrowings are removed from the Statement of Financial Position when the obligation specified in the contractis discharged, cancelled or expired. The difference between the carrying amount of a financial liability that hasbeen extinguished or transferred to another party and the consideration paid, including any non-cash assetstransferred or liabilities assumed, is recognised in other income or finance cost.Borrowings are classified as current liabilities unless Council has an unconditional right to defer settlement ofthe liability for at least 12 months after the reporting date.
Finance leasesLeases of property, plant and equipment where Council, as lessee, has substantially all the risks and rewardsof ownership are classified as finance leases. Finance leases are capitalised at the lease’s inception at thefair value of the leased property or, if lower, the present value of the minimum lease payments. Thecorresponding rental obligations, net of finance charges, are included in other short-term and long-termpayables. Each lease payment is allocated between the liability and finance cost. The finance cost is chargedto the income statement over the lease period so as to produce a constant periodic rate of interest on theremaining balance of the liability for each period. The property, plant and equipment acquired under finance leases is depreciated over the asset's useful life orover the shorter of the asset’s useful life and the lease term if there is no reasonable certainty that Councilwill obtain ownership at the end of the lease term.
– –
78 98 78
78 98
–
2018
98
2017
78
–
98
42
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 13. Provisions
$ ’000
ProvisionsEmployee benefits:Annual leaveSick leaveLong service leaveSub-total – aggregate employee benefits
Other provisions:Self insurance – workers compensationOtherSub-total – other provisionsTOTAL PROVISIONS
(a) Provisions relating to restricted assetsThere are no restricted assets (external or internal) applicable to the above provisions
(b) Current provisions not anticipated to be settled within the next twelve months
The following provisions, even though classified as current, are notexpected to be settled in the next 12 months.
Provisions – employees benefits
(c) Description of and movements in provisions
At beginning of yearOther
2017At beginning of yearOther
–
53,147
– 17,138
52,220 1,380
29,551
–
– 18,518
Other employee
benefits
ELE provisions
5,531
–
2017
Non-current
97 2,408 5,300
1,182
2018
28,549
2017
54,052
Current
51,644
1,850
–
Sick leave ELE on-costs
Long service leave
29,551 52,220
29,551
36,110 36,110
36,289
17,138
5,531 –
5,531
–
4,577
51,038 1,503
–
Non-current
2018
36,289
501
30,052
– –
–
–
927 – (954)
17,138 – Total ELE provisions at end of year
Current
7,570 1,947
Total
7,570
17,138 4,577
1,182
– –
5,531 28,369 1,503
5,300
–
2018
52,985
Annual leave
18,518
68 2,340
6,482
–
9,073
–
Total ELE provisions at end of year
52,220
–
–
43
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 13. Provisions (continued)
$ ’000
(c) Description of and movements in provisions (continued)
At beginning of yearChanges to provision:Other
2017At beginning of yearChanges to provision:Additional provisionsAmounts used (payments)
Accounting policy for provisionsProvisions are recognised when Council has a present legal or constructive obligation as a result of past events,it is probable that an outflow of resources will be required to settle the obligation, and the amount has beenreliably estimated.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement isdetermined by considering the class of obligations as a whole. A provision is recognised even if the likelihoodof an outflow with respect to any one item included in the same class of obligations may be small.
Provisions are measured at the present value of management’s best estimate of the expenditure required tosettle the present obligation at the reporting date. The discount rate used to determine the present valuereflects current market assessments of the time value of money and the risks specific to the liability. Theincrease in the provision due to the passage of time is recognised as interest expense.
Total other provisions at end of year
2,760
Other Self-insurance
Other provisions
7,360
Asset remediation
9,910
Total
– – 97 7,150
2018
68
– 2,731
–
– –
435
–
– –
(3,933) 3,351 – 3,385 34
7,150 Total other provisions at end of year 97 7,247
–
(29)
(372)
–
(3,561)
7,795
– 7,247
9,978
44
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 13. Provisions (continued)
Employee benefits
Short-term obligationsLiabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leaveexpected to be wholly settled within 12 months after the end of the period in which the employees render therelated service are recognised in respect of employees' services up to the end of the reporting period and aremeasured at the amounts expected to be paid when the liabilities are settled. The liability for annual leaveand accumulating sick leave is recognised in the provision for employee benefits. All other short-termemployee benefit obligations are presented as payables.
Other long-term employee benefit obligationsThe liability for long service leave and annual leave that is not expected to be wholly settled within 12 monthsafter the end of the period in which the employees render the related service is recognised in the provision foremployee benefits and measured as the present value of expected future payments to be made in respect ofservices provided by employees up to the end of the reporting period using the projected unit credit method.
Consideration is given to expected future wage and salary levels, experience of employee departures, andperiods of service. Expected future payments are discounted using market yields at the end of the reportingperiod on national government bonds with terms to maturity and currency that match, as closely as possible,the estimated future cash outflows.
The obligations are presented as current liabilities in the Statement of Financial Position if the Council doesnot have an unconditional right to defer settlement for at least 12 months after the reporting date, regardless ofwhen the actual settlement is expected to occur.
Provisions for close-down and restoration, and environmental clean-up costs – tips and quarries
RestorationClose down and restoration costs include the dismantling and demolition of infrastructure and the removal ofresidual materials and remediation of disturbed areas. Estimated close down and restoration costs are providedfor in the accounting period when the obligation arising from the related disturbance occurs, whether this occursduring the development or during the operation phase, based on the net present value of estimated future costs.
Provisions for close down and restoration costs do not include any additional obligations which are expected toarise from future disturbance. The costs are estimated on the basis of a closure plan. The cost estimates are calculated annually during the life of the operation to reflect known developments, eg updated cost estimatesand revisions to the estimated lives of operations, and are subject to formal review at regular intervals
45
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 13. Provisions (continued)
RehabilitationWhere rehabilitation is conducted systematically over the life of the operation, rather than at the time of closure,provision is made for the estimated outstanding continuous rehabilitation work at each reporting date and thecost is charged to the Income Statement.
Provision is made for the estimated present value of the costs of environmental clean up obligations outstandingat the reporting date. These costs are charged to the Income Statement. Movements in the environmental cleanup provisions are presented as an operating cost, except for the unwinding of the discount which is shown as a borrowing cost.
Remediation procedures generally commence soon after the time the damage, remediation process and estimated remediation costs become known, but may continue for many years depending on the nature of the disturbance and the remediation techniques.
As noted above, the ultimate cost of environmental remediation is uncertain and cost estimates can vary inresponse to many factors including changes to the relevant legal requirements, the emergence of newrestoration techniques or experience at other locations. The expected timing of expenditure can also change, forexample in response to changes in quarry reserves or production rates. As a result there could be significantadjustments to the provision for close down and restoration and environmental clean up, which would affectfuture financial results.
Other movements in the provisions for close down and restoration costs, including those resulting from newdisturbance, updated cost estimates, changes to the estimated lives of operations and revisions to discountrates are capitalised within property, plant and equipment. These costs are then depreciated over the lives of theassets to which they relate.
Close down and restoration costs are a normal consequence of tip and quarry operations, and the majority ofclose down and restoration expenditure is incurred at the end of the life of the operations. Although the ultimatecost to be incurred is uncertain, Council estimates the respective costs based on feasibility and engineeringstudies using current restoration standards and techniques.
Self-insuranceCouncil has decided to self-insure for various risks, including workers compensation, public liability andprofessional indemnity. A provision for self-insurance has been made to recognise outstanding claims. Forpublic liability insurance and professional indemnity insurance, Council has an interest in the Local Governmentinsurance pool CivicRisk West & CivicRisk Mutual, which substantially mitigate Council's risk, whilst Council'srisk can also be escalated by exposure to the risks of the other pool members. Council also maintains cashand investments to meet expected future claims; refer to Note 6 (c) with further details regarding the bankguarantee at Note 18.
46
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 14. Accumulated surplus, revaluation reserves, changes in accounting policies, changes in accounting estimates and errors
(a) Nature and purpose of reserves
Infrastructure, property, plant and equipment revaluation reserveThe infrastructure, property, plant and equipment revaluation reserve is used to record increments /decrements of non-current asset values due to their revaluation.
(b) Correction of errors relating to a previous reporting period
Operational Land / Community Land
Buildings
Infrastructure
Investment propertyIt has been identified that certain investment properties were recorded as having been disposed in error totalling $9,515,308. The fair value amount of this property has been restated with a correction against retained earnings.
The errors identified above have been corrected by restating the balances at the beginning of the earliestperiod presented (1 July 2016) and taking the adjustment through to accumulated surplus at that date.Comparatives have been changed to reflect the correction of errors. The impact on each line item is shownin the tables below.
It has been identified that certain infrastructure assets that were dedicated to Council in previous financial years also had an amount totalling $4,386,127 in capital works in progress. This adjustment recognises this movement and ensures a double recognition does not occur. This error has been adjusted against retained earnings to correct the error.
As part of the revaluation of Operational Land for 2017/18 it was identified that certain properties Council owns were not previously recognised. The error amounted to a restatement of $22,301,620. This error has been adjusted against retained earnings to correct the error.Crown Land that was not previously recognised in Council's Community Land register has now been recognised. The error amounted to a restatement of $1,188,011. This error has been adjusted against retained earnings to correct the error.
As part of the revaluation of Buildings for 2017/18 it was identified that certain properties Council owns were not previously recognised. The error amounted to a restatement of $11,972,766. This error has been adjusted against retained earnings to correct the error.
47
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 14. Accumulated surplus, revaluation reserves, changes in accounting policies, changes in accounting estimates and errors (continued)
$ ’000
(b) Correction of errors relating to a previous reporting period (continued)
Changes to the opening Statement of Financial Position at 1 July 2016
Statement of Financial Position
Non-current assets classified as ‘held for sale’Investment propertyTotal Assets
Total Liabilities
Total equity
Adjustments to the comparative figures for the year ended 30 June 2017
Statement of Financial Position
Investment propertyTotal assets
Total liabilities
Total equity
Balance1 July, 2016
2,942,062
4,058,932
–
31,254
3,854,766
161,562
Balance
63,640 11,528
OriginalIncrease/
Impact Restated
3,454,521
Balance
42,604
–
75,168
3,222,582
3,646,672
(decrease) 30 June, 2017
3,897,370 3,179,978
4,016,328
31,254
161,562
Impact
31,254
3,266,885 15,158 (9,515)
Balance
9,515
3,235,631
70,986
Original
Infrastructure, property, plant and equipment5,643
127,132
31,076 3,485,597
Retained earnings
Infrastructure, property, plant and equipment
42,604
42,604
Increase/
127,132
61,471 3,742,550
3,615,418
3,773,804
30 June, 2017
Retained earnings
1 July, 2016(decrease)
2,910,808 31,254
Restated
48
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 14. Accumulated surplus, revaluation reserves, changes in accounting policies, changes in accounting estimates and errors (continued)
$ ’000
(b) Correction of errors relating to a previous reporting period (continued)
Income Statement
Fair value increment on investment propertyNet gains from the disposal of assetsTotal income from continuing operations
Total expenses from continuing operations
Net operating result for the year
Statement of Comprehensive Income
Net operating result for the year
Other comprehensive income
Total comprehensive income for the year
70,371
30 June, 2017(decrease)
582,771
280,520
Balance
5,123
BalanceOriginal
Balance Increase/
6,872 9,515 14,638
239,348
2,012
(decrease) 30 June, 2017
8,884
Increase/
70,548
Balance
Impact
11,527 594,298
30 June, 2017
Original
313,601 177 313,778
269,170
177
250,698
– (29,822)
11,350
(29,822)
280,520
Restated
30 June, 2017
Impact Restated
11,350
Depreciation and amortisation
269,170
11,350
49
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 15. Statement of cash flows – additional information
$ ’000
(a) Reconciliation of cash assets
Total cash and cash equivalent assetsBalance as per the Statement of Cash Flows
(b) Reconciliation of net operating result to cash provided from operating activities
Net operating result from Income StatementAdjust for non-cash items:Depreciation and amortisationNet losses/(gains) on disposal of assetsNon-cash capital grants and contributionsLosses/(gains) recognised on fair value re-measurements through the P&L:– investment property
Share of net (profits) or losses of associates/joint ventures
+/- Movement in operating assets and liabilities and other cash items:Decrease/(increase) in receivablesIncrease/(decrease) in provision for doubtful debtsDecrease/(increase) in inventoriesDecrease/(increase) in other assetsIncrease/(decrease) in payablesIncrease/(decrease) in other accrued expenses payableIncrease/(decrease) in other liabilitiesIncrease/(decrease) in employee leave entitlementsIncrease/(decrease) in other provisionsNet cash provided from/(used in)operating activities from the Statement of Cash Flows
(c) Non-cash investing and financing activitiesDeveloper contributions ‘in kind’Other dedicationsOther infrastructure assetsTotal non-cash investing and financing activities
Note 16. Interests in other entities
$ ’000
Joint venturesTotal
2018
104
(135,898)
8,622
(93) (6,443)
96,238
1,414
Council’s share of net assets 2018
2018
(5,542)
9,135
62,255
Council’s share of net income
8,269
(358)
(548) 1,611
(8,884) 348
70,548
927
20,928
275,639
(1,274) (1,414)
438
187
303,103 280,520
165,590
(14,638)
2017
(74,036)
5
Notes
75,463
(2,774)
2,731
(22,209)
96,238 165,590
19,625
39,372 (26,227)
228,491
56,613 135,898
54,018
1,414 9,573 1,274 1,274 9,573
20178,622 2017
(952)
9,154
6a
74,036
50
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 16. Interests in other entities (continued)
$ ’000
(a) Controlled entities (subsidiaries) – being entities and operations controlled by Council
Council’s consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with AASB 10 and the accounting policy described below.
Name of operation/entity Principal activity
Blacktown Venue Management Ltd
Blacktown International Sportspark – SydneyCnr Eastern Road & Phillip Parkway, Rooty Hill NSW 2766
Interests in SubsidiaryCouncil’s interest in Subsidiary
Blacktown Venue Management LtdIn 2001/02, Council assumed responsibility for Blacktown International Sportspark, Sydney. Council established Blacktown Venue Management Ltd (ACN 098 490 978), as a separate legal entity responsible for the operational management of the venue. Blacktown Venue Management Ltd is a public company limited by guarantee and is fully owned by Blacktown City Council. The company was issued a certificate of registration from the Australian Securities and Investments Commission on 19 October, 2001, and commenced operations from January 2002, following the appointment of a Chief Executive Officer. Funding for Blacktown Venue Management Ltd is by way of revenue generated from operations, and a subsidy from Council. For the purpose of financial reporting in accordance with the Corporations legislation, Council considers Blacktown Venue Management Ltd to be a non-reporting entity. A separate set of financial statements for Blacktown Venue Management Ltd is prepared and audited annually on this basis. For the purposes of Council’s Consolidated Financial Statements, all transactions associated with Blacktown Venue Management Ltd have been consolidated into Council’s accounts.
The nature and extent of significant restrictions relating to the SubsidiaryThere are no significant restrictions outside of meeting the requirements of the Local Government Act.
The nature of risks associated with Council’s interests in the Subsidiary
Other disclosuresCouncil holds 100% interest in Blacktown Venue Management Ltd.
Reporting dates of SubsidiaryBlacktown Venue Management Ltd prepares Special Purpose Financial Statements with a year end reporting date of 30 June Statements are prepared to ensure compliance with ASIC.
2017
The company's principal continuing activities during the year consisted of operational management and development of Key venues Blacktown International Sportspark - Sydney, located on Eastern Road, Doonside, NSW . From 1 July 2015 activities includes Blacktown aquatic centre, Blacktown leisure centre Stanhope, Emerton leisure centre, Mount Druitt and Riverstone swimming centres.
Blacktown Venue Management Ltd is a company limited by guarantee, incorporated and domiciled in Australia. Blacktown City Council is fully responsible now and for the foreseeable future for all debts of Blacktown Venue Management Ltd should Blacktown Venue Management Ltd be unable to meet these obligations. Blacktown City Council provides a contribution to enable Blacktown Venue Management Ltd to operate which represents the variance between operating revenue generated by Blacktown Venue Management Ltd and expenses less amounts released from reserves. The contribution made by Blacktown City Council for the 17/18 financial year was $7,371,954.
2017Voting rights
2018Ownership
2018100% 100% 100%100%
51
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 16. Interests in other entities (continued)
$ ’000
(a) Controlled entities (subsidiaries) – being entities and operations controlled by Council (cont'd)
Summarised financial information for the Subsidiary
Summarised statement of comprehensive incomeRevenueExpensesProfit for the periodTotal comprehensive income (1)
Summarised statement of financial positionCurrent assetsTotal assets
Current liabilitiesTotal liabilities
Net assets (2)
Summarised statement of cash flowsCash flows from operating activitiesNet increase (decrease) in cash and cash equivalents
Accounting policy for subsidiariesSubsidiaries are all entities (including structured entities) over which the Council has control. Control isestablished when the Council is exposed to, or has rights to variable returns from its involvement with the entityand has the ability to affect those returns through its power to direct the relevant activities of the entity.
These consolidated financial statements include the financial position and performance of controlled entitiesfrom the date on which control is obtained until the date that control is lost. Intragroup assets, liabilities,equity, income, expenses and cash flows relating to transactions between entities in the consolidated entityhave been eliminated in full for the purpose of these financial statements. Appropriate adjustments have beenmade to a controlled entity’s financial position, performance and cash flows where the accounting policies usedby that entity were different from those adopted by the consolidated entity. All controlled entities have a Junefinancial year end.
2018
(18,709)
475
491
1,141
762
1,533
771
(829) 1,141
2017
2018
475
966
2018
270
19,158
966
270 – –
2017
(18,888)
(829)
1,533
18,709
2017
771
52
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 16. Interests in other entities (continued)
$ ’000
(b) Joint arrangements
(i) Joint ventures
Council has incorporated the following joint ventures into its consolidated financial statements.
Civic Risk West and Civic Risk MutualBlacktown City Council’s interests in the Local Government Insurance Pools “Civic Risk West" and "CivicRisk Mutual” have been recognised as a Joint Venture in the financial statements using the EquityAccounting method. The proportionate interests in the assets, liabilities and expenses of Civic Risk Westand Civic Risk Mutual have been incorporated in the financial statements under the appropriate headings.
(a) Net carrying amounts – Council’s share
Name of entityCivicRisk West & CivicRisk MutualTotal carrying amounts – material joint ventures
(b) Details
Name of entity Principal activitySelf Insurance
(c) Relevant interests and fair values
Name of entityCivicRisk West & CivicRisk Mutual
(d) Summarised financial information for joint ventures
Statement of financial positionCurrent assetsOther current assetsNon-current assets
Current liabilitiesOther current liabilitiesNon-current liabilities
Net assets
2018
17,060
Interest in
2018
2018relationship
fair value2017
Nature of
ownership
Joint Venture
outputs2017
44,467
8,999
19%
47,729
2017
29,381
19%19%
9,820
19% 19%
8,622
2017
business
2018
Quoted Interest in
23,259
Measurement
Proportion of
2017
CivicRisk West & CivicRisk Mutual
9,573
50,230
Non-current financial liabilities (excluding trade and other payables and provisions)
9,573
Penrith NSW
Equity
voting power
method
53,323 23,402
2018
8,622
CivicRisk West & CivicRisk Mutual
19%
Place of
2017
2018
53
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 16. Interests in other entities (continued)
$ ’000
(b) Joint arrangements (continued)
(d) Summarised financial information for joint ventures (continued)
Reconciliation of the carrying amountOpening net assets (1 July)Profit/(loss) for the periodDividends paidClosing net assets
Council’s share of net assets (%)Council’s share of net assets ($)
Statement of comprehensive incomeIncomeOther expensesProfit/(loss) for periodTotal comprehensive income
Share of income – Council (%)Profit/(loss) – Council ($)Total comprehensive income – Council ($)
Dividends received by Council
(i) County Councils
Council is a member of Hawkesbury County Council.
Council is of the opinion that it does not control the above county council/s and accordingly these entities havenot been consolidated or otherwise included within these financial statements.
Accounting policy for joint arrangementsThe Council has determined that it has only joint ventures
Joint venturesInterests in joint ventures are accounted for using the equity method in accordance with AASB128Investments in Associates and Joint Ventures . Under this method, the investment is initially recognised as acost and the carrying 'amount is increased or decreased to recognise the Council’s share of the profit or lossand other comprehensive income of the joint venture after the date of acquisition.
If the Council’s share of losses of a joint venture equals or exceeds its interest in the joint venture, the Councildiscontinues recognising its share of further losses.
The Council’s share in the joint venture’s gains or losses arising from transactions between itself and its jointventure are eliminated.
Adjustments are made to the joint venture’s accounting policies where they are different from those of theCouncil for the purpose of the consolidated financial statements.
1,414
44,467
50,230
6,658
44,467 (1,673)
8,622 19.4%
9,573 19.1%
2017
CivicRisk West & CivicRisk Mutual
39,482 7,890
(11,311)
(2,127)
6,658
1,414
7,890
17.9%
7,890
463
19,708 (13,050)
1,274
19,201
362
6,658
1,274
19.1%
2018
54
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 17. Commitments for expenditure
$ ’000
(a) Capital commitments (exclusive of GST)
Capital expenditure committed for at the reporting date but notrecognised in the financial statements as liabilities:
Property, plant and equipmentBuildingsPlant and equipmentRoads, bridges and drainageOffice equipmentLand developmentLand acquisitions Library booksFurniture and fittingsInformation TechnologyLand ImprovementsOtherTotal commitments
These expenditures are payable as follows:Within the next yearTotal payable
Sources for funding of capital commitments:Unrestricted general fundsExternally restricted reservesInternally restricted reservesTotal sources of funding
(b) Operating lease commitments (non-cancellable)
a. Commitments under non-cancellable operating leases at thereporting date, but not recognised as liabilities are payable:
Within the next yearLater than one year and not later than 5 yearsTotal non-cancellable operating lease commitments
b. Non-cancellable operating leases include the following assets:Photocopiers, gym equipment and electric cars.Contingent rentals may be payable depending on the condition of items or usage during the lease term.
Conditions relating to operating leases:– All operating lease agreements are secured only against the leased asset.– No lease agreements impose any financial restrictions on Council regarding future debt etc.
966
792 – 75 810
158 270 21
70,633
2017
71,764
1,300
43,510
3,525 22
2018
351
29 33,702
–
9,757
269
420 558 289
53,616
1,489
143
19
53,616 10,198 82,988
53,616 82,988 53,616
82,988
82,988
4,891
9,514
7,894
349 1,026
101 319
55
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 18. Contingencies and other liabilities/assets not recognised
The following assets and liabilities do not qualify for recognition in the Statement of Financial Position, but their knowledge and disclosure is considered relevant to the users of Council’s financial report.
LIABILITIES NOT RECOGNISED:
1. Guarantees
(i) Defined benefit superannuation contribution plans
A liability or asset in respect of defined benefit superannuation plans would ordinarily be recognised in the Statement of Financial Position, and measured as the present value of the defined benefit obligation at the reporting date plus unrecognised actuarial gains (less unrecognised actuarial losses) less the fair value of the superannuation fund’s assets at that date and any unrecognised past service cost.
The present value of the defined benefit obligation is based on expected future payments that arise from membership of the fund to the reporting date, calculated annually by independent actuaries using the projected unit credit method.
Consideration is given to expected future wage and salary levels, experience of employee departures, and periods of service.
Council is party to an Industry Defined Benefit Plan under the Local Government Superannuation Scheme, named the ‘Local Government Superannuation Scheme – Pool B’.
Council participates in an employer-sponsored defined benefit superannuation scheme, and makes contributionsas determined by the superannuation scheme’s trustees.
Member councils bear responsibility of ensuring there are sufficient funds available to pay out the required benefitsas they fall due.
The scheme administrators have advised Council's estimated share of the deficit is $3.831 million as at 30 June2018. However, they may call Council to make an immediate payment sufficient to offset this deficit at any time.As the scheme is a mutal arrangement where assets and liabilities are pooled together for all member councils,the amount of such a payment is not able to be reliably quantified.
Future contributions made to the defined benefit scheme to rectify the net deficit position will be recognised as anexpense when they become payable – similar to the accounting for defined contributions plans.
(ii) Other guarantees
Council has provided no other guarantees other than those listed above.
56
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 18. Contingencies and other liabilities/assets not recognised (continued)
LIABILITIES NOT RECOGNISED (continued):
2. Other liabilities
(i) Third party claims
The Council is involved from time to time in various claims incidental to the ordinary course of business includingclaims for damages relating to its services.
Council believes that it is appropriately covered for all claims through its insurance coverage and does not expectany material liabilities to eventuate.
(ii) Contribution Plans
Council levies Section 7.11 contributions upon various development across the Council area through therequired Contributions Plans.
As part of these Plans, Council has received funds for which it will be required to expend the monies inaccordance with those Plans.
As well, these Plans indicate proposed future expenditure to be undertaken by Council, which willbe funded by making levies and receipting funds in future years or where a shortfall exists by the use ofCouncil's General Funds. The NSW State Government's Local Infrastructure Growth Scheme (LGIS)currently fills the gap between the maximum contribution of $40,000 per lot that councils can chargedeveloper and what is actually costs to deliver infrastructure under a contributions plan, for Plans assessed by IPART. Ant shortfall in the payment from this scheme will also need to be considered for funding from Council's General Funds.This cap increases incrementally beginning 1 July 2018 at $35,000, to 1 July 2020 at $45,000.
These future expenses do not yet qualify as liabilities as of the Reporting Date, but represent Councilsintention to spend funds in the manner and timing set out in those Plans.
(iii) Potential land acquisitions due to planning restrictions imposed by Council
Council has classified a number of privately owned land parcels as local open space or bushland.
As a result, where notified in writing by the various owners, Council will be required to purchase these land parcels.
57
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 18. Contingencies and other liabilities/assets not recognised (continued)
LIABILITIES NOT RECOGNISED (continued):
(iii) Potential land acquisitions due to planning restrictions imposed by Council (continued)
At reporting date, reliable estimates as to the value of any potential liability (and subsequent land asset) from suchpotential acquisitions has not been possible.
(iv) Workers Compensation Insurance – Bank Guarantee
Since 1 September 1991, Council has been self insured for workers compensation. A condition of being approvedto hold a self insurance licence is that Council must either lodge a security deposit with the State Insurance Regulatory Authority or provide a bank guarantee to secure total outstanding claims liabilities.
The State Insurance Regulatory Authority has determined Council's bank guarantee to be $9.08 Million for the2018/19 financial year upon reviewing the report from Council's actuary.
The bank guarantee for the 2017/18 financial year was $6.5 million.
Council has supported this bank guarantee with an internally restricted investment with a value of $2.25 Million asat 30 June 2018.
(v) Potential future remediations
Council may in the future need to undertake rehabilitation of Council's sites.
Accordingly the rehabilitation is considered as a potential contingent liability in relation to possible future remediation costs which at this stage cannot be determined.
(vi) Open Space Recreation Facilities
Depending upon the outcome of future investigations into Council's various parks and reserves, it is possiblethat future remediation may be required at some locations. Neither the scope or actual cost of such remediationworks is certain at this stage.
In relation to an area of land which Council has leased for a number of years from Sydney Water at Prospect, ithas been identified that remediation work will be required in the future.
Again neither the scope or actual cost of the works required is certain at this stage.
58
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 18. Contingencies and other liabilities/assets not recognised (continued)
ASSETS NOT RECOGNISED (continued):
(i) Land under roads
As permitted under AASB 1051, Council has elected not to bring to account land under roads that it owned orcontrolled up to and including 30/6/08.
(ii) Infringement notices/fines
Fines and Penalty income, the result of Council issuing Infringement Notices is followed up and collected bythe State Debt Recovery Office which is the fines division of the Office of State Revenue.
Council’s Revenue Recognition policy for such income is to account for it as revenue on receipt.
Accordingly, at Year End, there is a potential asset due to issued but unpaid Infringement Notices.
Due to the limited information available on the status, value and duration of outstanding Notices, Council isunable to determine the value of outstanding income.
59
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 19. Financial risk management
$ ’000
Risk management
Council’s activities expose it to a variety of financial risks including (1) price risk, (2) credit risk, (3) liquidity riskand (4) interest rate risk.
The Council’s overall risk management program focuses on the unpredictability of financial markets and seeksto minimise potential adverse effects on the financial performance of the Council.
Council does not engage in transactions expressed in foreign currencies and is therefore not subject to foreigncurrency risk.
Financial risk management is carried out by Council’s finance section under policies approved by the Council.
The fair value of Council’s financial assets and financial liabilities approximates their carrying amount.
Council’s objective is to maximise its return on cash and investments whilst maintaining an adequate level ofliquidity and preserving capital.
Council’s finance area manages the cash and Investments portfolio with the assistance of independentadvisors.
Council has an investment policy which complies with the Local Government Act 1993 and MinisterialInvestment Order 625. This policy is regularly reviewed by Council and its staff and a monthly Investment reportis provided to Council setting out the make-up and performance of the portfolio as required by LocalGovernment regulations.
The risks associated with the investments held are:
– Price risk – the risk that the capital value of Investments may fluctuate due to changes in market prices,whether there changes are caused by factors specific to individual financial instruments or their issuersor are caused by factors affecting similar instruments traded in a market.
– Interest rate risk – the risk that movements in interest rates could affect returns and income.– Credit risk – the risk that the investment counterparty will not complete their obligations particular to afinancial instrument, resulting in a financial loss to Council – be it of a capital or income nature.
Council manages these risks (amongst other measures) by diversifying its portfolio and only purchasinginvestments with high credit ratings or capital guarantees.
Council also seeks advice from independent advisers before placing any funds in cash equivalents andinvestments.
(a) Market risk – price risk and interest rate riskThe following represents a summary of the sensitivity of Council’s Income Statement and accumulated surplus(for the reporting period) due to a change in either the price of a financial asset or the interest rates applicable.
It is assumed that the change in interest rates would have been constant throughout the reporting period.
2018Possible impact of a 10% movement in market valuesPossible impact of a 1% movement in interest rates
2017Possible impact of a 10% movement in market valuesPossible impact of a 1% movement in interest rates
Equity Profit
4,032 4,032
5,616
Decrease of values/rates
56,159 56,159 56,159
4,032 40,324
Increase of values/rates
5,616
40,324
56,159
40,324
Equity
5,616 5,616
4,032
Profit
40,324
60
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 19. Financial risk management (continued)
$ ’000
(b) Credit risk
Council’s major receivables comprise (i) rates and annual charges and (ii) user charges and fees.
The major risk associated with these receivables is credit risk – the risk that debts due and payable to Councilmay not be repaid in full.
Council manages this risk by monitoring outstanding debt and employing stringent debt recovery procedures.It also encourages ratepayers to pay their rates by the due date through incentives.
Credit risk on rates and annual charges is minimised by the ability of Council to secure a charge over the landrelating to the debts – that is, the land can be sold to recover the debt. Council is also able to charge intereston overdue rates and annual charges at higher than market rates which further encourages the payment of debt.
There are no significant concentrations of credit risk, whether through exposure to individual customers,specific industry sectors and/or regions.
The level of outstanding receivables is reported to Council monthly and benchmarks are set and monitored foracceptable collection performance.
Council makes suitable provision for doubtful receivables as required and carries out credit checks on mostnon-rate debtors.
There are no material receivables that have been subjected to a re-negotiation of repayment terms.
A profile of Council’s receivables credit risk at balance date follows:
(i) Ageing of receivables – %Current (not yet overdue)Overdue
(ii) Ageing of receivables – valueRates and annual charges< 1 year overdue1 – 2 years overdue2 – 5 years overdue> 5 years overdue
Other receivablesCurrent0 – 30 days overdue31 – 60 days overdue61 – 90 days overdue> 91 days overdue
35,723
8,190
685
91
331
501
135 189
1,730 598
Other
10,420
100%8%
0%
2017
100%
20,757
13%
annual
2017
2017
charges
699
2018
1,304
87%0% 92%
347
23,781
1,014
1,214
9,345
896
38,656
100%
7,798
2018
receivables
2018
100%
receivables
100%
Other annual Rates and
100%
charges
Rates and
61
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 19. Financial risk management (continued)
$ ’000
(c) Liquidity risk
Payables and borrowings are both subject to liquidity risk – the risk that insufficient funds may be on handto meet payment obligations as and when they fall due.
Council manages this risk by monitoring its cash flow requirements and liquidity levels and maintaining anadequate cash buffer.
Payment terms can (in extenuating circumstances) also be extended and overdraft facilities utilised as required.
Borrowings are also subject to interest rate risk – the risk that movements in interest rates could adverselyaffect funding costs and debt servicing requirements. Council manages this risk by borrowing long term andfixing the interest rate on a 4-year renewal basis. The Finance Section regularly reviews interest ratemovements to determine if it would be advantageous to refinance or renegotiate part or all of the loan portfolio.
The contractual undiscounted cash outflows (ie. principal and interest) of Council’s payables and borrowingsare set out in the maturity table below:
$ ’000
Trade/other payablesTotal financial liabilities
Trade/other payablesTotal financial liabilities 38,678 96,414
38,678 96,414
–
43,381
≤ 1 Year
47,308 90,689 2018
2017
57,736
90,689 – 90,689
96,414
– –
Actualcash
1 – 5 Years
43,381
maturity
Total
–
–
payable in:
96,414
valuescarrying
> 5 Years outflows
47,308
–
to noSubject
57,736
90,689
–
62
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 20. Material budget variations
$ ’000
While the Income Statement included in this General Purpose Financial Report must disclose the originalbudget adopted by Council, the Local Government Act 1993 requires Council to review its financial budgeton a quarterly basis, so that it is able to manage the various variations between actuals versus budget thatinvariably occur throughout the year.
This note sets out the details of material variations between Council’s original budget and its actualresults for the year as per the Income Statement – even though such variations may have been adjusted forduring each quarterly budget review.
Note that for variations* of budget to actual :Material variations represent those variances that amount to 10% or more of the original budgeted figure.F = Favourable budget variation, U = Unfavourable budget variation
$ ’000
REVENUESRates and annual chargesUser charges and feesCouncil processed a large amount of development and subdivision applications, together with planning and buildingregulation applications as a result of high levels of development in the local government area. The resulting revenuerevenue received created a favourable variance to budget.Interest and investment revenueCouncil's interest and investment revenue exceeded the original budget due to higher than anticipated average investment portfolio balance during the financial year than was originally anticipated, along with the average return on investments for the financial year higher than forecast.Other revenuesThis favourable variance to budget is due to Council's review of its past fuel tax credit claims. This resulted in an additional claim of $580k which was not in Council's original budget for 2017/18.Operating grants and contributionsCapital grants and contributionsThis favourable variance to budget is due to large amount of development occuring within the region which is difficult to accurately budget for. This can be seen by the drastic increase in Section 7.11 contributions revenue compared with prior year results. This has also been impacted by the dedicated assets which have been completed and handed over to Council.Net gains from disposal of assetsActual results are unfavourable due to the George Street sale of properties that forms part of the Warrick Lane Development Strategy that was recognised in 2016/17 but had originally been budgeted in 2017/18. There have also been a number of other land related sales which have been moved from the originally budgeted sale in 2017/18 to 2018/19 financial year.Joint ventures and associates - net profitsThis is related to Council's share of profit in Civic Risk Mutual and Civic Risk West. These are separate entities set up as joint ventures with a number of other Councils for self-insurance purposes. Council is unable to reliably forecast the claims for the year or the size of the surplus/deficit and therefore, no estimate was included in the original budget for 2017/18.
12,383 14%
F
28,793
1,414
271,972
42,417 22,209
0%
300,765
–
(20,208)
26,706
Budget ---------- Variance* ----------
207,830 36,174
10,817 1,566 F
2,181
212,477 10%
11%
2018
16,885
2018
Council’s original financial budget for 17/18 was adopted by the Council on 28 June 2018 and is not required to be audited.
2018
F4,647
8%
3,760
28,816
U
2%
F13%
1,414
Actual
F
19,066
39,934
FF
2,110
(48%)
63
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 20. Material budget variations (continued)
$ ’000
EXPENSESEmployee benefits and on-costsMaterials and contractsThis unfavourable variance is largely related to the operational expenditure budget revotes and carry forwards from the prior financial year, additional expenditure approved during each review period and expenditure required for works related to increasing revenue.Depreciation and amortisationThis unfavourable variance to budget is due to an increase in the amount of depreciable assets constructed or dedicated in the North West Growth Centre during 2016/17 financial year that are being depreciated for the firsttime during 2017/18 financial year. Along with park assets that were disposed of during 2017/18 as a result of inspections conducted by the Council staff on assets held in Council's park reserves. Other expenses (1,012) (3%)36,612
U
(32%)
35,600
57,200
(17%)
145,478
2018
F(11,292)
2,876 142,602
Actual
67,644
2018Budget
78,936 2%
U
(18,263) U75,463
2018---------- Variance* ----------
64
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 21. Fair value measurement
$ ’000
The Council measures the following asset and liability classes at fair value on a recurring basis:
– Infrastructure, property, plant and equipment– Investment property
The fair value of assets and liabilities must be estimated in accordance with various accounting standards foreither recognition and measurement requirements or for disclosure purposes.The fair value of financial instruments traded in active markets is based on quoted market prices at the reporting date.The fair value of financial instruments that are not traded in an active market is determined using valuation techniques.Council uses a variety of methods and makes assumptions that are based on market conditions existing at each reporting date. Other techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining financial instruments.The nominal value less estimated credit adjustments of trade receivables and payables are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Council for similar financial instruments.
AASB 13 Fair Value Measurement requires all assets and liabilities measured at fair value to be assigned to a‘level’ in the fair value hierarchy as follows:
Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities that the entity can access at the measurement date.
Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs).
(1) The following table presents all assets and liabilities that have been measured and recognised at fair values:
2018
Recurring fair value measurements
Investment propertiesInvestment propertiesTotal investment properties 75,409 –
75,409
inputsinputsunobservable
QuotedDate Significantprices in
Significantobservableof latest
valuation active mkts
75,409 – 75,409 –
30/06/18 –
Level 3 TotalFair value measurement hierarchy
Level 1 Level 2
65
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 21. Fair value measurement (continued)
$ ’000
(1) The following table presents all assets and liabilities that have been measured and recognised at fair values: (continued)
2018
Recurring fair value measurements
Infrastructure, property, plant and equipmentPlant and equipmentOffice equipmentFurniture and fittingsOperational landCommunity landLand under roads (post 30/06/08)Land improvements – non-depreciableLand improvements – depreciableBuildings – non-specialisedBuildings – specialisedOther structuresRoads, bridges, footpathsBulk earthworks (non-depreciable)Stormwater drainageStormwater drainage (non-depreciable)Library booksOtherTotal infrastructure, property, plant and equipment
2017
Investment propertiesInvestment propertiesTotal investment properties
Infrastructure, property, plant and equipmentPlant and equipmentOffice equipmentFurniture and fittingsOperational landCommunity landLand under roads (post 30/06/08)Land improvements – non-depreciableLand improvements – depreciableBuildings – non-specialisedBuildings – specialisedOther structuresRoads, bridges, footpathsBulk earthworks (non-depreciable)Stormwater drainageStormwater drainage (non-depreciable)Library booksOtherTotal infrastructure, property, plant and equipment
75,373
266,306
–
Quoted Significant
2,545
323,676
75,168
–
36,168
–
3,407,402
– –
75,168
4,480
273,174
25,869
26
30/06/13 – 323,676 – 323,676
30/06/15
117,332 117,332 30/06/16 –
67,240
28,666 4,480
–
30/06/15 – – 3,482
–
1,188,841
731,617 30/06/14 67,240
731,617
3,482
30/06/16
30/06/17
3,204 3,204
89,812 –
–
Total
–
– – 1,499
–
– 89,812
–
– –
– 119,039
– 30/06/15
3,164,165
30/06/16
75,373
30/06/1830/06/16 – – 763,494
726,141 – 726,141
119,039
30/06/15
30/06/16 –
3,343
27,998
3,748 3,748
1,217,654
30/06/18 – – 73,570 73,570
– – – 27,998
1,217,654
266,306 30/06/15 – – 3,343
30/06/16 –
30/06/16 –
763,494
4,309
inputs
30/06/16
Significantof latest prices in
2,376
30/06/18 –
3,890,306
30/06/15 –
30/06/14 – –
–
30/06/16 1,499
726,141 23
–
27,376 27,376
valuation
– 30/06/17
–
– 273,174
2,376
4,309
–
Fair value measurement hierarchyLevel 1 Level 2 Level 3
–
1,350
44,938 44,938 533,268 –
23
533,268
–
– – – 1,350
–
– –
active mkts
– 30/06/16
Date
–
28,666
36,168
30/06/17 –
75,168
–
509,771 25,869
30/06/16
30/06/16–
30/06/15 –
2,545 30/06/16
–
30/06/15
– 26
30/06/15–
1,188,841 –
– 509,771
3,083,726
75,168
– 30/06/16 – –
–
unobservableinputs
observable
–
30/06/15
30/06/1630/06/16
–
–
66
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 21. Fair value measurement (continued)
(2) Transfers between level 1 and level 2 fair value hierarchies
During the year, there were no transfers between level 1 and level 2 fair value hierarchies for recurring fairvalue measurements.
(3) Valuation techniques used to derive level 2 and level 3 fair values
Where Council is unable to derive fair valuations using quoted market prices of identical assets (i.e. level 1 inputs), Council instead utilises a spread of both observable inputs (level 2 inputs) and unobservable inputs (level 3 inputs).
The fair valuation techniques Council has employed while utilising level 2 and level 3 inputs are as follows:
Investment properties
Investment property comprises land & buildings that are principally held for long-term rental yields, capitalgains, or both, that is not occupied by Council. Full revaluations are carried out every three years by a memberof the Australian Property Institute with an appropriate index utilised each year in between the full revaluations.A revaluation of Council’s Investment Properties by APV Valuers & Asset Management Pty Ltd was performedfor 30 June 2017.
On a triennial basis, the Council engages external, independent and qualified valuers to determine the fair value ofits investment properties. The last full revaluation of Council's Investment Properties was as at 30 June 2017 andwas determined by APV Valuers & Asset Management Pty Ltd. The value of investment property as at 30 June2017 was determined using the market approach. The 2018 revaluations are based on movements in a relevantproperty price index.
All investment property valuations are included in level 2 of the fair value hierarchy.
Infrastructure, property, plant and equipment (IPP&E)
Council’s non-current assets are continually revalued (over a 5 year period) in accordance with the fair valuation policy as mandated by the Office of Local Government.
Plant & Equipment, Office Equipment and Furniture & FittingsPlant & Equipment, Office Equipment and Furniture & Fittings assets are recognised and valued at cost.Council assumes that the carrying amount reflects the fair value of the assets due to the nature of the items.Therefore these assets are disclosed at fair value in the notes.These asset categories include:• Plant & Fleet• Major Plant Items – tractors, excavators, street sweepers, tippers, rollers, forklifts, back hoes and wood chippers• Minor Plant and Equipment Items – generators, mowers, weed harvester, trailers, chainsaws, wood chippers, power hand tools, CCTV and portable air conditioning units• Fleet Vehicles – trucks, commercial vehicles and passenger vehicles• Office Equipment – computer hardware, communications equipment, digital cameras and photocopiers• Furniture & Fittings – work stations, storage cabinets, tables and chairsThe unobservable level 3 inputs used include:• Straight line pattern of consumption• Useful life• No residual valueCouncil reviews the value of these assets based on the gross replacement cost of similar assets. There has been no change in the valuation process during the reporting period.
67
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 21. Fair value measurement (continued)
(3) Valuation techniques used to derive level 2 and level 3 fair values (continued)
Land (Operational, Community and Land under Roads)Valuations for Council’s Community Land have been based on either the Valuer General's most recent valuationfor rating purposes where available, or the average of the Community Land purchases during the 2015/16 financialyear, discounted by 50%. The 50% discount was used for community land in order to reflect fair value of land that isnot able to be sold in an active market without any restrictions as requested by Council's external auditors and torepresent half the value of operational land.The fair value assessment of Operational Land was performed by Council's Liquid Pacific and has been determined by referencing it to current prices in an active market for similar properties. Where such information is not available, current prices in an active market for properties of a different nature or recent prices of similar properties in less active markets, adjusted to reflect those differences, are considered. Appropriate adjustmentsare also made for the inherent features of the property such as fire-prone, flood zonings and usability of the land.The fair value for Land under Roads has been determined using a unit rate per square metre, derived from theValuer General’s valuation performed for rating purposes, and applying a discount of 90%. Given the nature of Land under Roads, comparable sales data is generally not available. As the Valuer General’s valuation considers land in all zoning, average unit derived from the Valuer’s General’s valuation is considered the most practicable approach to valuing Land under Roads. The 90% discounting method relates to the Englobo valuation methodology and recognises the restricted use of land under roads but using the average values of surrounding properties.Community Land was last revalued as at 30 June 2016, Operational Land was last revalued as at 30 June 2018 and Land under Roads was last revalued as at 30 June 2017.The key unobservable input to the valuation is the rate per square metre. Total assets value of Council's assets only recognised land under roads acquired after the 1 July 2008. Council originally elected not to recognise the value of land under roads acquired before the 1 July 2008, worth approximately$3 billion. Community land purchases for 2016/17 and 2017/18 have been discounted by $36.698 million and $48.954million respectively. If these amounts were included, Council's infrastructure, property, plant and equipment net carrying amount would be $7.1 billion instead of $4 billion.
Land ImprovementsThis asset class is comprised of landscaping, cycle ways, estuary protection works, paved public areas in open space, playground equipment, field lighting, irrigation and other assets generally within the Open Space areas.Council's internal engineering services performed a revaluation of Land Improvements as at 30 June 2016.The revaluation was determined by applying unit rates derived from Council's contracts, third party publications (such as Rawlinson's and Cordell's) and actual costs of recent works performed.
BuildingsFor 30 June 2018, a desktop review of Council's Buildings was undertaken by APV Valuers & Asset Management Pty Ltd , based on revaluation work by the same company commissioned in September 2017, using the cost approach.This method is based on determining the Replacement Cost of the modern equivalent (or cost of reproductionwhere relevant) and then adjusting for the level of consumed future economic benefit and impairment.In accordance with the depreciation requirements of the Property, Plant and Equipment standard, “complex assets” are componentised and depreciated separately. This may include further splitting each component into the short-life and long-life parts to differentiate between that part of the component that is renewed and that part which is recycled. As they have a different useful life they are to be depreciated separately.This asset class is categorised as level 3 as some of the inputs used in the valuation of these assets requiresignificant professional judgment and are unobservable.There has been no change in the valuation process during the reporting period.
Other StructuresThis asset class is comprised of car parking buildings, shade shelters, retaining walls, fencing, fountains, and otherstructures which did not meet the definition of a building.The cost approach has been utilised to value Other Structures. There has been no change in the valuation process during the reporting period.
68
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 21. Fair value measurement (continued)
(3) Valuation techniques used to derive level 2 and level 3 fair values (continued)
Infrastructure Assets- Roads, Bridges and FootpathsThis asset class includes kerb and gutter, car parking, path and cycleways, guard rails, mediums, bus shelters, bridges and footpaths.Council’s roads are componentised into formation, base pavement, sub-base payment, surface and kerb and gutter and further separated into segments for inspection and valuation.The formation costs of roads are recognised and valued at cost. Council assumes that the carrying amount reflects the fair value of the assets due to the nature of the items. The formation of road bulk earthworks are non-depreciable.This asset class is categorised as Level 3 as some of the above mentioned inputs used in the valuation of these assets require significant professional judgement and are therefore observable.The fair value of these assets was based on their current replacement costs.
- Stormwater DrainageThe Stormwater Drainage asset class consists of basins, pits and pipes, gross pollutant traps, open channels andculverts. This includes formation of drainage areas which include bulk earthworks that are non-depreciable.A valuation of the Infrastructure assets was performed by the Council’s internal engineering team. The gross value of the infrastructure assets is determined using rates stipulated in contracts with third party suppliers, which is a key observable input. Infrastructure assets were last valued as at 30 June 2015. The valuations also included assessment of the overall useful life of each type of asset and the subsequent determination of the remaining useful life of each asset.This asset class is categorised as Level 3 as some of the above mentioned inputs used in the valuation of these assets require significant professional judgement and are therefore observable. There has been no change in the valuation process during the reporting period.
Other Assets- Library BooksAssets included in this asset category consist of library books, Ebooks, Online, journals, magazines, CDs andDVDs which are recognised and valued at cost. Council assumes that the carrying amount reflects the fair value of the assets due to the nature of the items. There are no major variances between the fair value and carrying amount of these assets. Therefore these assets are disclosed at fair value in the notes.Whilst these assets are recognised at cost with supporting supplier invoices (observable input) the remaining significant inputs (useful life, pattern of consumption, asset condition and residual values) are unobservable andtherefore categorised as level 3.
There has been no change in the valuation process during the reporting period.
69
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 21. Fair value measurement (continued)
$ ’000
(4). Fair value measurements using significant unobservable inputs (level 3)
a. The following tables present the changes in level 3 fair value asset classes.
otal
Opening balance – 1/7/16
Purchases (GBV)Disposals (WDV)Depreciation and impairmentWip transfersAdjustments and transfersTfrs from/(to) real estate assets held for resaleRevaluation increments to equity (ARR)
Closing balance – 30/6/17
Purchases (GBV)Disposals (WDV)Depreciation and impairmentWip transfersTfrs from/(to) real estate assets held for resaleRevaluation increments to equity (ARR)
Closing balance – 30/6/18
3,207,156
–
–
–
–
–
19,132
(69,145)
–
–
–
(100)
182,531
(29,835)
(4,381)
–
– 39,257 –
– (2,931)
(74,044) –
– –
264,437
–
–
– –
– –
(48,954)
–
– –
– –
–
–
–
– –
–
365,821
–
–
–
–
IPPE
41,362
3,407,402
– – –
–
–
– –
–
– –
– –
3,890,306
70
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 21. Fair value measurement (continued)
$ ’000
(4). Fair value measurements using significant unobservable inputs (level 3) (continued)
b. Significant unobservable valuation inputs used (for level 3 asset classes) and their relationship to fair value.
The following table summarises the quantitative information relating to the significant unobservable inputs used in deriving the various level 3 asset class fair values.
IPP&E
Plant, equipment, furniture, fittings and office equipment
Community land
Land under roads
Land improvements
Buildings
Other structures
Roads, bridges & footpaths
Stormwater drainage
Library books
Other
ClassFair
value(30/6/18)
$’000
Valuationtechnique/s
Unobservableinputs
33,035 Cost approach Current replacement cost of modern equivalent asset, asset condition, useful life and residual value
763,494 Land values obtained from the NSW Valuer-General, discounted at 50% Land value, land area
75,373 Land values obtained from the NSW Valuer-General, discounted at 90%Extent and impact of use, market cost of land per square metre.The market value of land varies significantly depending on the location of the land and current market conditions.
122,788 Cost approach Current replacement cost of modern equivalent asset, asset condition, remaining lives, residual value
339,876 Cost approach Current replacement cost of modern equivalent asset, asset condition, remaining lives, residual value
1,217,654 Unit rates per m2 or length Asset condition, remaining lives
3,482 Cost approach Current replacement cost of modern equivalent asset, asset condition, remaining lives, residual value
578,206 Unit rates per m2 or length Asset condition, remaining lives
2,376 Cost approach Current replacement cost of modern equivalent asset, asset condition, remaining lives, residual value
23 Cost approach used to approximate fair value The level of appreciation of the asset, current replacement/ replication cost of equivalent asset, asset condition
71
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 21. Fair value measurement (continued)
(4). Fair value measurements using significant unobservable inputs (level 3) (continued)
c. The valuation process for level 3 fair value measurements
The valuation process for each asset class that uses level 3 fair value measurements are discussed above in section 3.
The main unobservable (level3) inputs of useful life, pattern of consumption and asset condition are based on industry averages and historical patterns, as well as physical inspections for asset condition, and we ensure that any assets that are impaired outside of these assumptions are written off and replaced as required.
The valuations for buildings and operational land have been undertaken externally, with the other valuations being performed internally.
The external valuations are reviewed by both the Asset Management team and Finance to determine if there are any concerns that need to be addressed or clarifications made.
(5). Highest and best use
All of Council’s non-financial assets are considered to being utilised for their highest and best use.
72
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 22. Related party transactions
$
a. Key management personnel
Key management personnel (KMP) of the Council are those persons having the authority and responsibility for planning, directing and controlling the activities of thecouncil, directly or indirectly.
The aggregate amount of KMP compensation included in the Income Statement is:
Compensation:Short-term benefitsPost-employment benefitsOther long-term benefitsTotal
b. Other transactions with KMP and their related parties
Council has determined that transactions at arm’s length between KMP and Council as part of Council delivering a public service objective (e.g. access to libraryor Council swimming pool by KMP) will not be disclosed.
Nature of the transaction
2018Purchase of Council land from KMP related partySalary of close family member of KMP Lease of Council property to KMPs
1. Purchase of Council land by a KMP related party. Transaction undertaken through public auction to ensure arms-length transaction.2. A close family member of a KMP was employed by Council during the financial year. This person was employed under the relevant conditions and Award.3. Council owns numerous properties held for rental and other investment purposes. There are currently two properties owned by Council which are being leased to twoKMPs. These properties are currently managed by a third party property management company.
20182,595,427
285,979 86,183
20172,411,045
271,184 170,128
2,852,357
672,000 –
2,967,589
Value of Outstanding
during year (incl. loans andcommitments)
1Actual $ Actual $
Per settlement termsRef Actual $ Actual $
outstanding recognised
3 33,000 – 30 days – –2 7,000 – Per award and conditions – –
– –
debts expense
Terms and conditions Provisions Doubtfultransactions balance for doubtful debts
73
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 22. Related party transactions (continued)
$
b. Other transactions with KMP and their related parties (continued)
Nature of the transaction
2017Sale of low value equipment from Council to KMPLease of Council property to KMP or KMP related party
Council use of food/catering service of KMP related partyCouncil functions/events using a KMP related partyCouncil purchase of event tickets from KMP related partySalary of close family members of KMPs employed by CouncilUse of KMP owned veterinary servicePurchase of property from KMP
1. Council provided an option for Councillors to purchase low value equipment at the end of the term ended 9 September 2016. This value represents the total takeup of this offer to purchase the low value equipment items from Council by KMP.
3. Council receives numerous sponsorships and donations from the community for various purposes. During the 2016/17 financial year, a KMP related party paid to Councilamounts for sponsorship/donation.4. As a part of Council operations, various functions and events occur where room hire, catering and entertainment is requried. A KMP related party of Council was engaged toundertake these operations. Engagement and award of these services followed procurement requirements.5. A close family member of a KMP was employed by Council during the financial year. This person was employed under the relevant conditions and Award.6. Veterinary services provided to Council for three distinct services from a KMP owned and operated business. Preferred supplier award with procurement guidelines followed.7. Purchase of property for development related purpose from KMP. Required processes followed with independent valuations to ensure arms length transaction.
– Per settlement terms – – 7 3,162,000
Per award and conditions – – 6 111,000 – 30 days – –
30 days – – 4 1,000 – 30 days – –
30 days – – 4 3,000 – 30 days – –
30 days – – 2 37,000 – 30 days – –
outstanding recognisedRef Actual $ Actual $ Actual $ Actual $
Terms and conditions Provisions Doubtfultransactions balance for doubtful debts
during year (incl. loans and debts expense
2. Council owns numerous properties held for rental and other investment purposes. There are currently two properties owned by Council which are being leased to a KMPor a related party of a KMP. These properties are currently managed by a third party property management company.
Value of Outstanding
commitments)
1 2,000 –
3 19,000 –
4 31,000 –
5 20,000 –
Sponsorship/donations received by Council from KMP related party
74
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 22. Related party transactions (continued)
$
c. Other related party transactions
Nature of the transaction
2018Council contribution to subsidiary Blacktown Venue Mgt LtdDistribution of equity and revenue from joint ventureInter-entity payable to Blacktown Venue Mgt Ltd
2017Council contribution to subsidiary Blacktown Venue Mgt LtdDistribution of equity and revenue from joint ventureInter-entity payable to Blacktown Venue Mgt Ltd
The inter-entity payable is due to the timing of payments made for and on behalf of the subsidiary where a cash refund did not occur prior to the closing of banking day.
Council owns and operates a subsidiary by the name of Blacktown Venue Management Ltd whereby Council provides a contribution to this subsidiary to ensure continued operations. Further details of this related entity are included at Note 16.Council is involved in a joint venture for self-insurance purposes with Civic Risk Mutual and Civic Risk West. Council received a distribution of revenue and a distribution of equity in the current financial year from this. Further details regarding this related entity are included at Note 16.
6 – 418,000 30 days – –
Ref Actual $ Actual $ Actual $ Actual $4 7,407,000 – 30 days – – 5 1,274,000 – 30 days – –
4
5
6
6 – 108,000 30 days – – 5 1,414,000 – 30 days – – 4 7,372,000 – 30 days – –
Ref Actual $ Actual $ Actual $ Actual $
during year (incl. loans and debts expensecommitments) outstanding recognised
Provisions Doubtfultransactions balance for doubtful debts
Value of Outstanding Terms and conditions
75
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 23. Statement of developer contributions
$ ’000
Under the Environmental Planning and Assessment Act 1979 , Council has significant obligations to provide Section 7.11 (contributions towards provision orimprovement of amenities or services) infrastructure in new release areas.
It is possible that the funds contributed may be less than the cost of this infrastructure, requiring Council to borrow or use general revenue to fund the difference.
SUMMARY OF CONTRIBUTIONS AND LEVIES
DrainageRoadsTraffic facilitiesParkingOpen spaceCommunity facilitiesTree plantingOverbridgesE2 conservationOther
(291) – 222 –
(32,000) – –
1,266 3,662 8 87 (23) – 5,000 11,000 964 12 – 14 – – 990 –
Cumulative internal
borrowings due/(payable)
16,100 (25,700) (1,200)
– 1,600
(1,800)
– – – –
–
(99,207) 192,314
–
3,671
1,498 6 574
– 587
30,010 –
– 9,154
Non-cash
2 9,154 4,411 102,613
Total contributions
S7.11 contributions – under a plan
PURPOSE Openingbalance
1,116
– –
45,827 81,395
Voluntary planning agreements – Second Ponds Creek 32,000 – – –
505 1 – 7
earned
528
Contributionsreceived during the year
Interest
7,441
(2)
year
–
14,691
Cash73,563
141,999
434
2 248
25,034
10 102,613
(131,708)
–
11,755
– 545
asset
(1,200)
60,847
–
in year
87,533
–
6,923
(4) –
(99,207) 4,411
(10,000)
4,421
209,285 209,285
443
–
216,651
–
–
–
24
Held as
300 529
(1,800)
12,900
16,836
Internal
3 (32,259) 1,983
1,487
Expenditureborrowing
100
restricted(to)/from
during
(7,072) 36,483 (59,578)
(500) S7.11 not under plans
6,952
Total S7.11 and S7.12 revenue under plans192,314
Voluntary planning agreements
9,154 192,785
471 –
545 (2)
(1)
76
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 23. Statement of developer contributions (continued)
$ ’000
S7.11 CONTRIBUTIONS – UNDER A PLAN
CONTRIBUTION PLAN NUMBER 1 – 1980's Release Area
DrainageRoadsOpen spaceCommunity facilitiesOverbridges
CONTRIBUTION PLAN NUMBER 2 – Local Roadworks
Roads
CONTRIBUTION PLAN NUMBER 3 – Open Space in Established Residential Areas
Open space
Cumulative internal
borrowings due/(payable)
Cumulative internal
borrowings due/(payable)
Cumulative internal
borrowings due/(payable)
– –
–
– –
– – – – –
1,106
Contributions
balancePURPOSE
Non-cash
Internalborrowing
2,211
– 14,063
(to)/from
–
earned
–
(to)/from
2,224 (1)
Opening
777
received during the year
14,063 – Total 13,778 320
Non-cash in year
(1)
Expenditure
(951) (951)
14
borrowing
70 12,892
Interest
in year
–
2,211 (2,830) –
(1) 12,161
990
yearduring
(1)
916 – 13,778 –
964 19,985
Opening
–
745
Total
PURPOSE
916
Interest
320
–
received during the year
103
PURPOSE
–
Non-cash
1,365 10,448
Cash
Expenditure
12
Total
173
Cash
Contributionsreceived during the year
4,864 –
Cash
Expenditure
103 2,053
balance year
(4,036) –
–
101
Interest
11,244
2,053
221
Opening earned
(4)
restrictedInternal
(to)/from55
balance assetearned
579
in yearborrowing
Contributions
2,211 –
restricted
Held as
asset
Held as
– 55
during
–
25,424
–
assetrestricted
–
Internal Held as
–
–
–
–
duringyear
77
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 23. Statement of developer contributions (continued)
$ ’000
S7.11 CONTRIBUTIONS – UNDER A PLAN
CONTRIBUTION PLAN NUMBER 4 – Mount Druitt Development Area
DrainageRoads
CONTRIBUTION PLAN NUMBER 5 - Parklea Release Area
DrainageRoadsOpen spaceCommunity facilities
CONTRIBUTION PLAN NUMBER 10 - Tree Planting on Nature Strips
Tree planting
3,338 –
Cumulative internal
borrowings due/(payable)
Cumulative internal
borrowings due/(payable)
Cumulative internal
borrowings due/(payable)
– –
– (14,800)
– – –
– (14,800)
–
Held as
6,434 asset
restricted
(2,255) –
1,738 8,687
–
asset
–
restricted
–
borrowing(to)/from
3,303
4,179
Held as
3,098
222 –
Held asrestricted
asset
Internal
Total
balanceOpening
–
Opening
2,783
1,240
–
PURPOSE
PURPOSE
9,701
(2,255) 6,363
–
balance
4,108
Contributions
222
Expenditure
16,826
–
Expenditure
(to)/from
151
1
(22)
–
Non-cash
Internal
Expenditure
in yearreceived during the year
(to)/fromborrowing
Interest
(4,855)
477
7
– 474
–
in year
in year
(14)
631
during
(5)
(22) year
Cash
– 4,440
Cash
Contributions
(4,796)
earned
75
earnedInterest
83 444
7
year(291)
Interest
29
–
Contributions
year
–
93
Internal
–
(291)
during borrowing
–
– 505
16,610 Total
PURPOSE
Total1
CashOpening
505
–
(40)
balance
2,886
93 –
during
– –
Non-cash
–
earnedNon-cash
received during the year
received during the year
–
78
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 23. Statement of developer contributions (continued)
$ ’000
S7.11 CONTRIBUTIONS – UNDER A PLAN
CONTRIBUTION PLAN NUMBER 15 - Metella Road Floodplain
Drainage
CONTRIBUTION PLAN NUMBER 17 - Quakers Hill Commercial Precinct
Traffic facilities
CONTRIBUTION PLAN NUMBER 18 - Eastern Creek Stage 3
DrainageRoads
Cumulative internal
borrowings due/(payable)
Cumulative internal
borrowings due/(payable)
Cumulative internal
borrowings due/(payable)
– – –
–
– –
–
668
Held as
464
Interestborrowing
10
asset
–
received during the year
(1) Cash (to)/from
duringin year
Expenditure Held as
asset464
Cash
1,935
received during the year earned
in year
(1,841)
68 (1,847)
–
285
Internal
Non-cash
PURPOSE
(to)/from
(1)
in year
–
Cash
–
Openingbalance
–
122
Contributions
1 –
received during the year
10
Internal
2,041 106
29
Total2
1,946 1,661
–
666 1,074 1,802
during
2,876
year asset
39 –
(to)/from
(6)
restricted
balanceearned
year
–
borrowing
Contributions
Non-cashearned
restricted
restricted
Interest
44
Opening
Interest
–
borrowingbalance
Expenditure
during
333
44
Opening
Total
–
Internal
43
Held as
– – 43
Expenditure
1 –
Non-cash year–
Contributions
333 Total
122
PURPOSE
PURPOSE
79
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 23. Statement of developer contributions (continued)
$ ’000
S7.11 CONTRIBUTIONS – UNDER A PLAN
CONTRIBUTION PLAN NUMBER 19 - Blacktown Growth Precinct
DrainageRoadsTraffic facilitiesParkingOpen spaceCommunity facilitiesOther
CONTRIBUTION PLAN NUMBER 20 - Riverstone & Alex Avenue Precincts
DrainageRoadsOpen spaceCommunity facilitiesE2 conservation
Cumulative internal
borrowings due/(payable)
Cumulative internal
borrowings due/(payable)
(40,000) –
11,000 (40,000)
(4,000) (1,200)
– 7,000
(1,800) – –
– (11,000)
–
22,224
Non-cash
(19) 7
3
duringExpenditure
(1,800)
2,091
897 3,222
Non-cash
306
in year
Cash
–
–
52
–
565
–
–
70
(2) –
1,455 528
in yearreceived during the year
–
26
24,991 862
3,209
2,552
62,462
–
1,904
(1,842)
balance
Contributions
4,919
2
60,560
42
borrowing
(1,200)
borrowingduring
–
– 776
2,750
(10)
62
7,058
Opening
8 –
15,062
–
545
188 –
received during the yearCash
(2)
balance
8
Interest
(9) (7,409)
Total
Total
2,387 1,538 –
PURPOSE Opening
28,623
Internal
(1,800)
24,741
545 88
(to)/from
Internal
351
year
37,091 (1,483)
(4)
asset
–
earned
46
5
(to)/from
178 7,000
– – 840
(44,376)
21 1,463 (6)
256
Held asrestricted
Expenditure
(40,000) 2,036
– (39,188)
restricted
(40,000)
asset
–
2
Held as
(3,732)
3,899
year
–
95,815 153,126 (15) –
Interest
3,324
earnedContributions
(4,000) 1,616
529
PURPOSE
827
80
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 23. Statement of developer contributions (continued)
$ ’000
S7.11 CONTRIBUTIONS – UNDER A PLAN
CONTRIBUTION PLAN NUMBER 21 - Marsden Park
DrainageRoadsOpen spaceCommunity facilitiesE2 conservation
CONTRIBUTION PLAN NUMBER 22 - Area 20 Precinct
DrainageRoadsOpen spaceCommunity facilitiesE2 conservation
Cumulative internal
borrowings due/(payable)
Cumulative internal
borrowings due/(payable)
38,100
– 16,700
15,700 600
21,800 – –
400 3,500
12,800 –
Opening
(226) 633
4,149 4,145
Total
year
(4,231)
received during the yearNon-cash
PURPOSEContributions
balance
7,760
Held as
Internal
737 36
4,420
Contributions
64
191 595 (5,099)
–
8,988
12,900
553
borrowing
(2,479)
6,684
– in year
restrictedearned borrowingInterest
(718)
14,738 195
600 1,414
56
restrictedasset
43
6,731
(38,623)
6,200 –
Internal
–
during
(13,318)
received during the year
– 6
assetduring
Expenditure
768
(to)/from
(2)
3,697
–
– 197
Cash
Held as
– 3,500
5,122
114 –
90
–
1,270 694
– –
(148)
50
30,300
Cash
–
9,700
(to)/from
–
16,800 –
(22,824)
–
Non-cash
– (2) 1,316
50
309
PURPOSEInterest
526
Total
6
year
–
earned
–
in year
481
160
(989)
312
–
Expenditure
(3,569)
–
– 243
balance
–
Opening
33 27
2,141
81
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 23. Statement of developer contributions (continued)
$ ’000
S7.11 CONTRIBUTIONS – UNDER A PLAN
CONTRIBUTION PLAN NUMBER 24 - Schofields Precinct *
DrainageRoadsOpen spaceCommunity facilitiesE2 conservation
S7.11 CONTRIBUTIONS – NOT UNDER A PLAN
Roads
Cumulative internal
borrowings due/(payable)
– –
Cumulative internal
borrowings due/(payable)
– – – – – –
in year(1) 434 –
Cash Non-cashreceived during the year
balance–
Contributions Held asrestricted
Internalborrowingduring
yearOpening earned
443 –
asset(to)/from443
10 10
–
Interest Expenditure
(1)
141
Cash
Total 434 – –
PURPOSE
5,462 (1,300) 1,049
–
7,672
2,569
Internal
–
(3)
Opening
345 – balance
643
26,383
restricted(to)/from
(328)
asset
7,911 –
17,229 –
928
Expenditure Held as
– (4) (1,296)
during
(77)
year
– (256)
– (956)
borrowing
14,131 in year
136
510 –
–
204
Contributions
711 19,497
17 493
3,709
Total
PURPOSEInterestearned
–
12
received during the yearNon-cash
–
–
82
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 24(a). Statement of performance measures – consolidated results
$ ’000
Local government industry indicators – consolidated
1. Operating performance ratioTotal continuing operating revenue (1) excluding capitalgrants and contributions less operating expensesTotal continuing operating revenue (1) excluding capitalgrants and contributions
2. Own source operating revenue ratioTotal continuing operating revenue (1)
excluding all grants and contributionsTotal continuing operating revenue (1)
3. Unrestricted current ratioCurrent assets less all external restrictions (2)
Current liabilities less specific purpose liabilities (3, 4)
4. Debt service cover ratioOperating result (1) before capital excluding interestand depreciation/impairment/amortisationPrincipal repayments (Statement of Cash Flows)plus borrowing costs (Income Statement)
5. Rates, annual charges, interest andextra charges outstanding percentage
Rates, annual and extra charges outstandingRates, annual and extra charges collectible
5a. Rates outstanding percentage (recoverable)Rates, annual and extra charges outstanding minusamounts not recoverable Gross rates, annual and extra charges collectible
6. Cash expense cover ratioCurrent year’s cash and cash equivalentsplus all term depositsMonthly payments from cash flow of operatingand financing activitiesNotes
(1) Excludes fair value adjustments and reversal of revaluation decrements, net gain/(loss) on sale of assets and the net share of interests in joint ventures and associates.
(2) Refer Notes 6-8 inclusive. Also excludes any real estate and land for resale not expected to be sold in the next 12 months.(3) Refer to Notes 12 and 13.(4) Refer to Note 12(b) and 13(b) – excludes all payables and provisions not expected to be paid in the next 12 months (incl. ELE).
< 5% metro
6,747 3.08% 3.66% 2.16%218,779
4.06%
x12
0.00x
24,258 531,590
221,630
21.91 mths
9,598
–
19.0 mths > 3 mths
47.48%
3.17x > 1.5x
0.00x > 2x
< 5% metro
0.00x
16.8 mths
3.41%
613,441
Indicator
(20,937)
283,860
Amounts
312,676
2018 20162018Benchmark
> 0.00%
4.33%
46.27%
Prior periods
100,805 307,537
54,526
2017
2.61x
46.09%
3.05x
-2.61%3.40%-6.70%
> 60.00%
83
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 24(b). Statement of performance measures – consolidated results (graphs)
Benchmark: ――― Minimum >=0.00% Ratio achieves benchmarkSource for benchmark: Code of Accounting Practice and Financial Reporting #26 Ratio is outside benchmark
Benchmark: ――― Minimum >=60.00% Ratio achieves benchmarkSource for benchmark: Code of Accounting Practice and Financial Reporting #26 Ratio is outside benchmark
Benchmark: ――― Minimum >=1.50 Ratio achieves benchmarkSource for benchmark: Code of Accounting Practice and Financial Reporting #26 Ratio is outside benchmark
To assess the adequacy of working capital and its ability to satisfy obligations in the short term for
the unrestricted activities of Council.
A ratio of 3.05x indicates that Council has a sound liquidity position, meaning there are
sufficient liquid assets to meet current liabilities as they fall due. A ratio of less than 1.5x is deemed unsatisfactory as a Council may be unable to meet its short
term financial commitments.
Purpose of own source operating
revenue ratio
Commentary on 2017/18 result
2017/18 ratio 46.27%
This ratio measures fiscal flexibility. It is
the degree of reliance on external funding
sources such as operating grants and
contributions.
This indicator is largely affected by Council's high level of development activity,
which means a significant proportion of Council's revenue is from Section 7.11 developer contributions and non-cash
contributions (works in kind). Council did not meet the target of 60% for this ratio for
2017/18
Purpose of unrestricted current
ratio
Commentary on 2017/18 result
2017/18 ratio 3.05x
Purpose of operating
performance ratio
Commentary on 2017/18 result
2017/18 ratio -6.70%
This ratio measures Council’s
achievement of containing operating expenditure within operating revenue.
Council's ratio is negative 6.7%, which has not met the benchmark of 0% or better. The
negative result is due to less operating revenue in comparison with 2016/17, of
the first year impact of the Federal Assistance grant which was received in
advance ($8.837 million received in 2016/17), Payment from UrbanGrowth
NSWS for the ongoing maintenance of the Second Ponds Trunk Drainage
corridor($15.7 million received in 2016/17) and increased depreciation of $5 million in
2017/18.
3.4%
-4.5%-2.6%
-6.7%
-8%
-6%
-4%
-2%
0%
2%
4%
2015 2016 2017 2018
Rat
io %
1. Operating performance ratio
49% 46% 47% 46%
0%10%20%30%40%50%60%70%80%90%
100%
2015 2016 2017 2018
Rat
io %
2. Own source operating revenue ratio
4.3
3.22.6
3.1
0.00.51.01.52.02.53.03.54.04.55.0
2015 2016 2017 2018
Rat
io (x
)
3. Unrestricted current ratio
84
Consolidated Financial Statements 2018
Blacktown City Council and its subsidiary
Notes to the Consolidated Financial Statements for the year ended 30 June 2018
Note 24(b). Statement of performance measures – consolidated results (graphs)
Benchmark: ――― Minimum >=2.00 Ratio achieves benchmarkSource for benchmark: Code of Accounting Practice and Financial Reporting #26 Ratio is outside benchmark
Benchmark: ――― Maximum <5.00% Ratio is within BenchmarkSource for Benchmark: Code of Accounting Practice and Financial Reporting #26 Ratio is outside Benchmark
Benchmark: ――― Minimum >=3.00 Ratio achieves benchmarkSource for benchmark: Code of Accounting Practice and Financial Reporting #26 Ratio is outside benchmark
Purpose of cash expense cover ratio
Commentary on 2017/18 result
2017/18 ratio 21.91 mths
This liquidity ratio indicates the number of months a Council can continue paying
for its immediate expenses without
additional cash inflow.
The ratio calculated by dividing a Council's Cash and Cash Equivalents as per the
Statement of Cash Flows by the net of the operational expensesless depreciation and borrowing costs,and multiplying the result
by 12. The benchmark for this ratio is greater than 3 months. For 2017/18,
Council exceeded the benchmark with a ratio of 21.91.
To assess the impact of uncollected rates and annual charges on Council’s liquidity and the adequacy of
recovery efforts.
This measure of 4.33% reflects that Council has been able to continue to
maintain this ratio well below the industry benchmark of 5%.
Purpose of debt service cover ratio
Commentary on 2017/18 result
2017/18 ratio 0.00x
This ratio measures the availability of operating cash to
service debt including interest, principal and
lease payments
Council has a Debt Service Cover Ratio of zero.
Purpose of rates and annual charges
outstanding ratio
Commentary on 2017/18 result
2017/18 ratio 4.33%
0.0 0.0 0.0 0.00.0
0.5
1.0
1.5
2.0
2.5
2015 2016 2017 2018
Rat
io (x
)
4. Debt service cover ratio
3.10% 3.41%4.06% 4.33%
0%
1%
2%
3%
4%
5%
6%
2015 2016 2017 2018
Rat
io %
5. Rates, annual charges, interest andextra charges outstanding percentage
18.6 16.819.0
21.9
0.0
5.0
10.0
15.0
20.0
25.0
2015 2016 2017 2018
Rat
io (m
ths)
6. Cash expense cover ratio
85
INDEPENDENT AUDITOR’S REPORT
Report on the general purpose financial report
Blacktown City Council
To the Councillors of Blacktown City Council
Opinion
I have audited the accompanying financial report of Blacktown City Council (the Council), which
comprise the Income Statement and Statement of Comprehensive Income for the year ended
30 June 2018, the Statement of Financial Position as at 30 June 2018, the Statement of Changes in
Equity and Statement of Cash Flows for the year then ended, notes comprising a summary of
significant accounting policies and other explanatory information, and the Statement by Councillors
and Management. The financial report includes the consolidated financial report of the Council and the
entities it controlled at the year’s end or from time to time during the year.
In my opinion,
• the Council’s accounting records have been kept in accordance with the requirements of the
Local Government Act 1993, Chapter 13, Part 3, Division 2 (the Division)
• the financial report:
- has been presented, in all material respects, in accordance with the requirements of this
Division
- is consistent with the Council’s accounting records
- presents fairly, in all material respects, the financial position of the Council as at
30 June 2018, and of its financial performance and its cash flows for the year then ended
in accordance with Australian Accounting Standards
• all information relevant to the conduct of the audit has been obtained
• no material deficiencies in the accounting records or financial report have come to light during
the audit.
My opinion should be read in conjunction with the rest of this report.
Basis for Opinion
I conducted my audit in accordance with Australian Auditing Standards. My responsibilities under the
standards are described in the ‘Auditor’s Responsibilities for the Audit of the Financial Report’ section
of my report.
I am independent of the Council in accordance with the requirements of the:
• Australian Auditing Standards
• Accounting Professional and Ethical Standards Board’s APES 110 ‘Code of Ethics for
Professional Accountants’ (APES 110).
I have fulfilled my other ethical responsibilities in accordance with APES 110.
86
Parliament promotes independence by ensuring the Auditor-General and the Audit Office of
New South Wales are not compromised in their roles by:
• providing that only Parliament, and not the executive government, can remove an
Auditor-General
• mandating the Auditor-General as auditor of councils
• precluding the Auditor-General from providing non-audit services.
I believe the audit evidence I have obtained is sufficient and appropriate to provide a basis for my
audit opinion.
Other Information
Other information comprises the information included in the Council’s annual report for the year ended
30 June 2018, other than the financial report and my Independent Auditor’s Report thereon. The
Councillors are responsible for the other information. At the date of this Independent Auditor’s Report,
the other information I have received comprise the special purpose financial statements and Special
Schedules (the Schedules).
My opinion on the financial report does not cover the other information. Accordingly, I do not express
any form of assurance conclusion on the other information. However, as required by the Local
Government Act 1993, I have separately expressed an opinion on the special purpose financial
statements and Special Schedule 2 - Permissible income for general rates.
In connection with my audit of the financial report, my responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or my knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work I have performed, I conclude there is a material misstatement of the other
information, I must report that fact.
I have nothing to report in this regard.
The Councillors’ Responsibilities for the Financial Report
The Councillors are responsible for the preparation and fair presentation of the financial report in
accordance with Australian Accounting Standards and the Local Government Act 1993, and for such
internal control as the Councillors determine is necessary to enable the preparation and fair
presentation of the financial report that is free from material misstatement, whether due to fraud or
error.
In preparing the financial report, the Councillors are responsible for assessing the Council’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting except where the Council will be dissolved or amalgamated by an
Act of Parliament, or otherwise cease operations.
Auditor’s Responsibilities for the Audit of the Financial Report
My objectives are to:
• obtain reasonable assurance about whether the financial report as a whole is free from material
misstatement, whether due to fraud or error
• issue an Independent Auditor’s Report including my opinion.
87
Reasonable assurance is a high level of assurance, but does not guarantee an audit conducted in
accordance with Australian Auditing Standards will always detect material misstatements.
Misstatements can arise from fraud or error. Misstatements are considered material if, individually or
in aggregate, they could reasonably be expected to influence the economic decisions users take
based on the financial report.
A description of my responsibilities for the audit of the financial report is located at the Auditing and
Assurance Standards Board website at: www.auasb.gov.au/auditors_responsibilities/ar3.pdf. The
description forms part of my auditor’s report.
My opinion does not provide assurance:
• that the Council carried out its activities effectively, efficiently and economically
• on the Original Budget information included in the Income Statement, Statement of Cash Flows,
and Note 20 Material budget variations
• on the Special Schedules. A separate opinion has been provided on Special Schedule 2 -
Permissible income for general rates
• about the security and controls over the electronic publication of the audited financial report on
any website where it may be presented
• about any other information which may have been hyperlinked to/from the financial report.
Renee Meimaroglou
Director, Financial Audit Services
23 October 2018
SYDNEY
88
Stephen Bali
Mayor
Blacktown City Council
62 Flushcombe Rd
BLACKTOWN NSW 2148
23 October 2018
Dear Mayor
Report on the Conduct of the Audit
for the year ended 30 June 2018
Blacktown City Council
I have audited the general purpose financial statements of Blacktown City Council (the Council) for the
year ended 30 June 2018 as required by section 415 of the Local Government Act 1993 (the Act).
I expressed an unmodified opinion on the Council’s general purpose financial statements.
This Report on the Conduct of the Audit (the Report) for the Council for the year ended 30 June 2018
is issued in accordance with section 417 of the Act. This Report should be read in conjunction with my
audit opinion on the general purpose financial statements issued under section 417(2) of the Act.
INCOME STATEMENT
Operating result
2018 2017 Variance
$m $m %
Rates and annual charges revenue
212.5 201.6
Grants and
contributions revenue 329.6 299.1
Operating result
for the year 303.1 280.5
Net operating result
before capital amounts 2.3 35.8
5.4
10.2
8.1
93.5
Contact: Renee Meimaroglou
Phone no: 02 9275 7389
Our ref: D1824852/1693
89
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Council’s operating result of $303.1 million (including the effect of depreciation and amortisation
expense of $75.5 million) was $22.6 million higher than the 2016–17 result. This is mainly due to an
increase of $30.5 million in grants and contributions, offset by a $10.7 million increase in employee
benefits and on-costs.
The net operating result before capital grants and contributions of $2.3 million was $33.5 million lower
than the 2016–17 result. This is mainly due to a decrease of $25.6 million in operating grants and
contributions and a decrease of $8.9 million in fair value increments on investment properties.
Rates and annual charges revenue was $212.5 million in 2017–2018, an increase of $10.9 million
(5.4 per cent) from the previous year. This increase is due to Council receiving a 1.5 per cent rate peg
increase and an expanding rates base resulting from development activity during the year.
Grants and contributions revenue was $329.6 million in 2017–18, increasing by $30.5 million
(10.2 per cent) since last year. This is mainly due to an increase in NSW local infrastructure growth
Scheme contributions ($92.7 million) offset by a reduction in s7.11 contributions ($44.7 million).
STATEMENT OF CASH FLOWS
The Statement of Cash Flows
illustrates the flow of cash and cash
equivalents moving in and out of
Council during the year and reveals
that cash increased from $96.2 million
to $165.6 million at 30 June 2018.
Operating activities contributed net cash inflow of $275.6 million (2017: $228.5 million). The increase
is mainly due to higher grants and contributions received in 2017–18. Net cash used in investing
activities was $206 million in 2017–18, $14.9 million lower than the previous year.
FINANCIAL POSITION
Cash and Investments
Cash and Investments 2018 2017 Commentary
$m $m
External restrictions 296.9 195.8 Cash and investments amounted to $561.6 million at
30 June 2018 (2017: $403.2 million). The increase in
external restrictions is mainly due to a $106.7 million
increase in developer contributions.
Internal restrictions 220.8 181.1
Unrestricted 43.9 26.3
Cash and investments 561.6 403.2
Externally restricted cash and investments are restricted in their use by externally imposed
requirements. These include unspent development contributions and specific purpose grants,
unexpended loans and domestic waste charges.
-300
-200
-100
0
100
200
300
400
2016 2017 2018
$ m
illi
on
Year ended 30 June
Net cash flows for the year
Operating activities Investing activitiesFinancing activities
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Internally restricted cash and investments have been restricted in their use by resolution or policy of
Council to reflect forward plans and identified programs of works. These totalled $220.8 million and
their purpose is fully disclosed in Note 6 of the financial statements.
The Council’s unrestricted cash and investments amounted to $43.9 million, which is available to
provide liquidity for day to day operations.
PERFORMANCE RATIOS
The definition of each ratio analysed below (except for the ‘building and infrastructure renewals ratio’)
is included in Note 24 of the Council’s audited general purpose financial statements. The ‘building and
infrastructure renewals ratio’ is defined in Council’s Special Schedule 7 which has not been audited.
Operating performance ratio
The ‘operating performance ratio’
measures how well council contained
operating expenditure within operating
revenue (excluding capital grants and
contributions, fair value adjustments,
and reversal of revaluation
decrements). The benchmark set by
the Office of Local Government (OLG)
is greater than zero per cent.
Council’s operating performance indicator of negative 6.7 per cent has decreased from the 2017
indicator of 3.4 per cent. The 2017 indicator included $8.8 million in 2018 Financial Assistance Grants
received in advance and fair value increments resulting from the revaluation of investment properties
of $8.9 million, which did not occur in 2017–18. These are the main drivers of the lower net operating
result before capital grants and contributions.
Own source operating revenue ratio
The ‘own source operating revenue
ratio’ measures council’s fiscal
flexibility and the degree to which it
relies on external funding sources
such as operating grants and
contributions. The benchmark set by
OLG is greater than 60 per cent.
Council’s own source operating revenue ratio was 46.3 per cent in 2017–18 (2017: 47.5 per cent),
which is below the benchmark of 60 per cent.
-8
-6
-4
-2
0
2
4
2016 2017 2018
Ratio%
Year ended 30 June
Operating performance ratio
Operating performance ratio
Industry benchmark > 0%
0
10
20
30
40
50
60
70
2016 2017 2018
Ratio%
Year ended 30 June
Own source operating revenue ratio
Own source operating revenue ratio
Industry benchmark > 60%
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The Council has a high level of development activity and therefore a significant portion of revenue is
from section 94 contributions and non-cash contributions.
Unrestricted current ratio
The ‘unrestricted current ratio’ is
specific to local government and
represents council’s ability to meet its
short-term obligations as they fall due.
The benchmark set by OLG is greater
than 1.5 times.
Council’s unrestricted current ratio increased to 3.1 as at 30 June 2018 (2017: 2.6) and exceeded the
benchmark of 1.5 times.
Debt service cover ratio
The Council has been debt free for over two decades and therefore no debt cover ratio is reported.
Rates and annual charges outstanding ratio
The ‘rates and annual charges
outstanding ratio’ assesses the impact
of uncollected rates and annual
charges on council’s liquidity and the
adequacy of debt recovery efforts.
The benchmark set by OLG is less
than 5 per cent for metro councils.
The rates and annual charges outstanding ratio was 4.3 per cent at 30 June 2018 (2017: 4.1 per cent)
and continues to be lower than the industry benchmark of 5 per cent.
0
0.5
1
1.5
2
2.5
3
3.5
2016 2017 2018
Ratiox
Year ended 30 June
Unrestricted current ratio
Unrestricted current ratio
Industry benchmark > 1.5x
0
1
2
3
4
5
6
2016 2017 2018
Ratio%
Year ended 30 June
Rates and annual charges outstanding ratio
Rates and annual charges outstanding ratio
Industry benchmark < 5%
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Cash expense cover ratio
This liquidity ratio indicates the
number of months the council can
continue paying for its immediate
expenses without additional cash
inflow. The benchmark set by OLG is
greater than three months.
Council’s cash expense cover ratio was 21.9 months at 30 June 2018 (2017: 19.0 months) and
continues to exceed the benchmark of three months.
Building and infrastructure renewals ratio (unaudited)
The ‘building and infrastructure
renewals ratio’ assesses the rate at
which these assets are being renewed
against the rate at which they are
depreciating. The benchmark set by
OLG is greater than 100 per cent.
This ratio is sourced from Council’s
Special Schedule 7 which has not
been audited.
Special Schedule No. 7 disclosed infrastructure renewals for 2018 represented 63.9 per cent (2017:
79.6 per cent) of the depreciation charges for those assets, which is lower than the benchmark of
100 per cent.
OTHER MATTERS
New accounting standards implemented
AASB 2016-2 ‘Disclosure Initiative – Amendments to AASB 107’
Effective for annual reporting periods
beginning on or after 1 January 2017
This Standard requires entities to provide disclosures that
enable users of financial statements to evaluate changes (both
cash flows and non-cash changes) in liabilities arising from
financing activities.
Council’s disclosure of the changes in their liabilities arising
from financing activities is disclosed in Note 13.
0
5
10
15
20
25
2016 2017 2018R
ati
o(m
on
ths
)Year ended 30 June
Cash expense cover ratio
Cash expense cover ratio
Industry benchmark > 3 months
0
20
40
60
80
100
120
2016 2017 2018
Ratio%
Year ended 30 June
Building and infrastructure renewals ratio
Building and infrastructure renewals ratio
Industry benchmark > 100%
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Council entities
Blacktown Venue Management Limited (BVM) is a council entity. An unqualified opinion is expected to
be issued by PwC on the BVM financial statements or the year ended 30 June 2018.
Asset revaluations
Council’s infrastructure, property, plant and equipment are required to be carried at fair value with
revaluations of each asset class to be performed at least every five years.
During the year, operational land and buildings were revalued. This resulted in a net increase of
$365.8 million recognised in the Infrastructure, Property, Plant and Equipment Reserve and disclosed
in the Statement of Changes in Equity.
Prior period errors
During the revaluation process for 2017–18, operational land parcels with a total value of
$22.3 million, and buildings with a total carrying value of $11.9 million, were identified as not being
previously recorded by Council. Infrastructure assets totalling $4.4 million were identified to be
duplicated in the financial statements. Council also identified one investment property with a cost of
$9.5 million (fair value $11.5 million) which was reported incorrectly as a disposal in previous years.
These errors have been corrected by restating the beginning balances of relevant affected line items
in the Statement of Financial Position for the earliest prior period, being 1 July 2016 and taking the
adjustment through to accumulated surplus at that date.
Comparatives have been restated to reflect the correction of the error.
Legislative compliance
My audit procedures did not identify any instances of non-compliance with legislative requirements or
a material deficiency in the Council’s accounting records or financial reports. The Council’s:
• accounting records were maintained in a manner and form to allow the general purpose
financial statements to be prepared and effectively audited
• staff provided all accounting records and information relevant to the audit.
Renee Meimaroglou
Director, Financial Audit Services
cc: Kerry Robinson, General Manager
Tim Hurst, Acting Chief Executive of the Office of Local Government
94
Blacktown City Council and its subsidiary SPECIAL PURPOSE FINANCIAL STATEMENTS for the year ended 30 June 2018
0
95
SPFS 2018
Blacktown City Council and its subsidiary
Special Purpose Financial Statements for the year ended 30 June 2018
Contents
1. Statement by Councillors and Management
2. Special Purpose Financial Statements:
Income Statement – Other Business Activities
Statement of Financial Position – Other Business Activities
3. Notes to the Special Purpose Financial Statements
4. Auditor’s Report
Background
These Special Purpose Financial Statements have been prepared for the use by both Council and the Office ofLocal Government in fulfilling their requirements under National Competition Policy.
The principle of competitive neutrality is based on the concept of a ‘level playing field’ between persons/entitiescompeting in a market place, particularly between private and public sector competitors.
Essentially, the principle is that government businesses, whether Commonwealth, state or local, should operatewithout net competitive advantages over other businesses as a result of their public ownership.
For Council, the principle of competitive neutrality and public reporting applies only to declared business activities.
These include (a) those activities classified by the Australian Bureau of Statistics as business activities beingwater supply, sewerage services, abattoirs, gas production and reticulation, and (b) those activities with a turnoverof more than $2 million that Council has formally declared as a business activity (defined as Category 1 activities).
In preparing these financial statements for Council’s self-classified Category 1 businesses and ABS-definedactivities, councils must (a) adopt a corporatisation model and (b) apply full cost attribution including tax-equivalentregime payments and debt guarantee fees (where the business benefits from Council's borrowing position bycomparison with commercial rates).
(iv)
102
100
(i)
(ii)
106
(iii)
Page
98
97
96
97
Tony Bleasdale
SPFS 2018
Blacktown City Council and its subsidiary
Income Statement of Council's Other Business Activities for the year ended 30 June 2018
$ ’000
Income from continuing operationsUser chargesProfit from the sale of assetsOther incomeTotal income from continuing operations
Expenses from continuing operationsEmployee benefits and on-costsMaterials and contractsDepreciation, amortisation and impairmentCalculated taxation equivalentsOther expensesTotal expenses from continuing operationsSurplus (deficit) from continuing operations before capital amounts
Surplus (deficit) from continuing operations after capital amounts
Surplus (deficit) from all operations before taxLess: corporate taxation equivalent (27.5%) [based on result before capital]
SURPLUS (DEFICIT) AFTER TAX
Plus opening retained profitsPlus adjustments for amounts unpaid:– Taxation equivalent payments– Corporate taxation equivalent– Dividends paid back to CouncilAdd:– Subsidy paid/contribution to operationsLess:– Dividend paidClosing retained profits
Return on capital %
Category 1 Category 1
(1,948) –
360 4,562
– –
74
2,088 1,413
158 –
1236.1%
2,772
1450.6%
1,413
6,904
n/a
1,117
56,313
810
–
(360) (307)
5,544
125,514
24,741
79,043
10,646 14,616
(5,544)
1,900 13
1,570
– 307
84 618
1,117
618
– – –
3,822
–
20,160
20,160
20,160
79,043
1,570
839
112
4,141
16,099
22,060
242
– 81 510
106
957 16
369
–
2018 2017 20172018
16,165
– 21,971
89
205
3,822
2,623 11 31
1,199
3,024
–
15,208
2,293
–
n/a
15,208
15,208 (4,562)
4,141
1,117 1,199
84
Land Developments Deregulated Approvals
1,199
2,106
63
66
74
–
98
SPFS 2018
Blacktown City Council and its subsidiary
Income Statement of Council's Other Business Activities for the year ended 30 June 2018
$ ’000
Income from continuing operationsAccess chargesUser chargesInterestOther incomeTotal income from continuing operations
Expenses from continuing operationsEmployee benefits and on-costsMaterials and contractsDepreciation, amortisation and impairmentFair valuation decrementCalculated taxation equivalentsOther expensesTotal expenses from continuing operationsSurplus (deficit) from continuing operations before capital amounts
Surplus (deficit) from continuing operations after capital amounts
Surplus (deficit) from all operations before taxLess: corporate taxation equivalent (27.5%) [based on result before capital]
SURPLUS (DEFICIT) AFTER TAX
Plus opening retained profitsPlus adjustments for amounts unpaid:– Taxation equivalent payments– Corporate taxation equivalent–Dividends paid back to CouncilLess:– Dividend paidClosing retained profits
Return on capital %Subsidy from Council
80
6
2,388
8,686
193
33,566 (253)
–
193
Category 2 Category 2
110 – –
573
–
446
(22)
6,080
40,135 (8,696) (20,165)
158
80
–
7
643
(58)
7
1,164
709
14,783 – 6,914
1,084 910 207
6
80
168
135
840
1,394 109
348 1,554
–
606
193
–
2,343
1,103
12 7,869
2017
– 8,005
2018
– –
Property Management
– 1,152
8
Commercial Waste
737 –
954
1,554
40,135
8,686 573
6,097
2017
1,095
7,432
500
(2,606) (158)
415
573 8,686
22 58
58
446
2,606
2018
– –
1,299
–
135
8,005
21.0%
669
956
21
669 1,003
50,945
– 17.1% 47.9% 1.0%
–
– 26
99
SPFS 2018
Blacktown City Council and its subsidiary
Statement of Financial Position – Council's Other Business Activities as at 30 June 2018
$ ’000
ASSETSCurrent assetsCash and cash equivalentsInvestmentsInventoriesTotal Current Assets
Non-current assetsInventoriesInfrastructure, property, plant and equipmentTotal non-current assetsTOTAL ASSETS
LIABILITIESCurrent liabilitiesPayablesProvisionsTotal current liabilities
Non-current liabilitiesProvisionsTotal non-current liabilitiesTOTAL LIABILITIESNET ASSETS
EQUITYAccumulated surplusTOTAL EQUITY 1,413
– –
2,772
–
–
–
66
1,413 2,772
8
66
1,363
20172017
79,044
4,201
125,515 125,515
–
50,590 – – 77
2,772
Land Developments
14,767
–
Category 1
–
Deregulated Approvals
Category 1
–
2018
4,124
–
79,044
1,355 56
2,798
97
–
14,767 50,590 125,515
–
–
97
2,798
77
2018
66,215 48,211
4,124
–
64,277
–
1,482 1,413
55
1,371
55
1,427
2,895
– 1,429
79,044
–
79,044 125,515
–
– 8,710 74,925
16,066 –
100
SPFS 2018
Blacktown City Council and its subsidiary
Statement of Financial Position – Council's Other Business Activities as at 30 June 2018
$ ’000
ASSETSCurrent assetsInvestmentsReceivablesTotal Current Assets
Non-current assetsInfrastructure, property, plant and equipmentInvestment propertyTotal non-current assetsTOTAL ASSETS
LIABILITIESCurrent liabilitiesPayablesProvisionsTotal current liabilities
Non-current liabilitiesNilTOTAL LIABILITIESNET ASSETS
EQUITYAccumulated surplusRevaluation reservesTOTAL EQUITY 105,104 553 133,793 815
113
643
126 815 553
179 124 133,793
100,227 33,566 446
172
–
50
23 49
126 130 103 179 124 113
928
59 22
677
54 102
468 403 133,560
Category 2
412
63,640 75,409
2018
58,151
412
41,280
310
Commercial Waste
310
2017
104,920 –
274 38
Property Management
– – 410
Category 2
236
2018 2017
468 403
460
33,223 71,881
105,104
133,972
107
105,230
101
SPFS 2018
Blacktown City Council and its subsidiary
Special Purpose Financial Statements for the year ended 30 June 2018
Contents of the notes accompanying the financial statements
Details
Summary of significant accounting policies
Note Page
1 103
102
SPFS 2018
Blacktown City Council and its subsidary
Notes to the Special Purpose Financial Statementsfor the year ended 30 June 2018
Note 1. Significant accounting policies
A statement summarising the supplemental accounting policies adopted in the preparation of the Special Purpose Financial Statements (SPFS) for National Competition Policy (NCP) reporting purposes follows.
These financial statements are SPFS prepared for use by Council and the Office of Local Government. For the purposes of these statements, the Council is a non-reporting not-for-profit entity.
The figures presented in these Special Purpose Financial Statements have been prepared in accordance with the recognition and measurement criteria of relevant Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board (AASB) and Australian Accounting Interpretations.
The disclosures in these Special Purpose Financial Statements have been prepared in accordance with the Local Government Act 1993 (NSW), the Local Government (General) Regulation, and the Local Government Code of Accounting Practice and Financial Reporting.
The statements are prepared on an accruals basis. They are based on historic costs and do not take into account changing money values or, except where specifically stated, current values of non-current assets. Certain taxes and other costs, appropriately described, have been imputed for the purposes of the National Competition Policy.
The Statement of Financial Position includes notional assets/liabilities receivable from/payable to Council's general fund. These balances reflect a notional intra-entity funding arrangement with the declared business activities.
National Competition Policy
Council has adopted the principle of ‘competitive neutrality’ in its business activities as part of the National Competition Policy which is being applied throughout Australia at all levels of government.
The framework for its application is set out in the June 1996 NSW government policy statement titled 'Application of National Competition Policy to Local Government'.
The Pricing and Costing for Council Businesses, A Guide to Competitive Neutrality issued by the Office of Local Government in July 1997 has also been adopted.
The pricing and costing guidelines outline the process for identifying and allocating costs to activities and provide a standard for disclosure requirements.
These disclosures are reflected in Council’s pricing and/or financial reporting systems and include taxation equivalents, Council subsidies, return on investments (rate of return), and dividends paid.
Declared business activities
In accordance with Pricing and Costing for Council Businesses – A Guide to Competitive Neutrality, Council has declared that the following are to be considered as business activities:
Category 1
a. Land Development
The development and marketing of residential and commercial land throughout the City
b. Deregulated ApprovalsThe provision of Contestable Development Services relating to the approval and inspection of building andengineering works
103
SPFS 20187
Blacktown City Council and its subsidary
Notes to the Special Purpose Financial Statementsfor the year ended 30 June 2018
Note 1. Significant accounting policies (continued)
Category 2
a. Commercial WasteThe provision of waste removal services to the commercial sections of the City
b. Property ManagementThe protection of Council’s commercial and residential assets and maximisation of returns from Council’slease portfolio
Monetary amounts
Amounts shown in the financial statements are in Australian currency and rounded to the nearest thousand dollars.
(i) Taxation-equivalent charges
Council is liable to pay various taxes and financial duties. Where this is the case, they are disclosed as a cost of operations just like all other costs.
However, where Council does not pay some taxes which are generally paid by private sector businesses, such as income tax, these equivalent tax payments have been applied to all Council-nominated business activities and are reflected in Special Purpose Financial Statements.
For the purposes of disclosing comparative information relevant to the private sector equivalent, the following taxation equivalents have been applied to all Council-nominated business activities (this does not include Council’s non-business activities):
Notional rate applied (%)
Corporate income tax rate – 27.5%
Land tax – the first $629,000 of combined land values attracts 0%. For the combined land values in excess of $629,001 up to $3,846,000 the rate is 1.6% + $100. For the remaining combined land value that exceeds $3,846,000 a premium marginal rate of 2.0% applies.
Payroll tax – 5.45% on the value of taxable salaries and wages in excess of $750,000.
Income tax
An income tax equivalent has been applied on the profits of the business activities.
Whilst income tax is not a specific cost for the purpose of pricing a good or service, it needs to be taken into account in terms of assessing the rate of return required on capital invested.
Accordingly, the return on capital invested is set at a pre-tax level - gain/(loss) from ordinary activities before capital amounts, as would be applied by a private sector competitor. That is, it should include a provision equivalent to the corporate income tax rate, currently 27.5%.
Income tax is only applied where a gain/ (loss) from ordinary activities before capital amounts has been achieved.
Since the taxation equivalent is notional – that is, it is payable to Council as the ‘owner’ of business operations - it represents an internal payment and has no effect on the operations of the Council. Accordingly, there is no need for disclosure of internal charges in the SPFS.
104
SPFS 20187
Blacktown City Council and its subsidary
Notes to the Special Purpose Financial Statementsfor the year ended 30 June 2018
Note 1. Significant accounting policies (continued)
The rate applied of 27.5% is/is not the equivalent company tax rate prevalent at reporting date. No adjustments have been made for variations that have occurred during the year.
Local government rates and charges
A calculation of the equivalent rates and charges payable on all category 1 businesses has been applied to all land assets owned or exclusively used by the business activity.
Loan and debt guarantee fees
The debt guarantee fee is designed to ensure that council business activities face ‘true’ commercial borrowing costs in line with private sector competitors.
In order to calculate a debt guarantee fee, Council has determined what the differential borrowing rate would have been between the commercial rate and Council’s borrowing rate for its business activities.
(ii) Subsidies
Government policy requires that subsidies provided to customers, and the funding of those subsidies, must be explicitly disclosed.
Subsidies occur when Council provides services on a less-than-cost-recovery basis. This option is exercised on a range of services in order for Council to meet its community service obligations.
Accordingly, ‘subsidies disclosed’ (in relation to National Competition Policy) represents the difference between revenue generated from ‘rate of return’ pricing and revenue generated from prices set by Council in any given financial year.
The overall effect of subsidies is contained within the Income Statement of each reported business activity.
(iii) Return on investments (rate of return)
The NCP policy statement requires that councils with Category 1 businesses ‘would be expected to generate a return on capital funds employed that is comparable to rates of return for private businesses operating in a similar field’.
Funds are subsequently available for meeting commitments or financing future investment strategies.
The actual rate of return achieved by each business activity is disclosed at the foot of each respective Income Statement.
The rate of return is calculated as follows:
Operating result before capital income + interest expense
Written down value of I,PP&E as at 30 June
As a minimum, business activities should generate a return equal to the Commonwealth 10 year bond rate which is 2.63% at 30/6/18.
(iv) Dividends
Council is not required to pay dividends to either itself (as owner of a range of businesses) or to any external entities.
105
INDEPENDENT AUDITOR’S REPORT
Report on the special purpose financial report
Blacktown City Council
To the Councillors of the Blacktown City Council
Opinion
I have audited the accompanying special purpose financial report (the financial report) of Blacktown
City Council’s (the Council) Declared Business Activities, which comprise the Income Statement of
each Declared Business Activity for the year ended 30 June 2018, the Statement of Financial Position
of each Declared Business Activity as at 30 June 2018, notes comprising a summary of Significant
accounting policies and other explanatory information for the Business Activities declared by Council,
and the Statement by Councillors and Management.
The Declared Business Activities of the Council are:
• Land Development
• Deregulated Approvals
• Commercial Waste
• Property Management
In my opinion, the financial report presents fairly, in all material respects, the financial position of the
Council’s declared Business Activities as at 30 June 2018, and its financial performance for the year
then ended, in accordance with the Australian Accounting Standards described in Note 1 and the
Local Government Code of Accounting Practice and Financial Reporting (LG Code).
My opinion should be read in conjunction with the rest of this report.
Basis for Opinion
I conducted my audit in accordance with Australian Auditing Standards. My responsibilities under the
standards are described in the ‘Auditor’s Responsibilities for the Audit of the Financial Report’ section
of my report.
I am independent of the Council in accordance with the requirements of the:
• Australian Auditing Standards
• Accounting Professional and Ethical Standards Board’s APES 110 ‘Code of Ethics for
Professional Accountants’ (APES 110).
I have fulfilled my other ethical responsibilities in accordance with APES 110.
106
Parliament promotes independence by ensuring the Auditor-General and the Audit Office of
New South Wales are not compromised in their roles by:
• providing that only Parliament, and not the executive government, can remove an
Auditor-General
• mandating the Auditor-General as the auditor of councils
• precluding the Auditor-General from providing non-audit services.
I believe the audit evidence I have obtained is sufficient and appropriate to provide a basis for my
audit opinion.
Emphasis of Matter - Basis of Accounting
Without modifying my opinion, I draw attention to Note 1 to the financial report which describes the
basis of accounting. The financial report has been prepared for the purpose of fulfilling the Council’s
financial reporting responsibilities under the LG Code. As a result, the financial report may not be
suitable for another purpose.
Other Information
Other information comprises the information included in the Council’s annual report for the year ended
30 June 2018, other than the financial report and my Independent Auditor’s Report thereon. The
Councillors are responsible for the other information. At the date of this Independent Auditor’s Report,
the other information I have received comprise the general purpose financial statements and Special
Schedules (the Schedules).
My opinion on the financial report does not cover the other information. Accordingly, I do not express
any form of assurance conclusion on the other information. However, as required by the Local
Government Act 1993, I have separately expressed an opinion on the general purpose financial
statements and Special Schedule 2 - Permissible income for general rates.
In connection with my audit of the financial report, my responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or my knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work I have performed, I conclude there is a material misstatement of the other
information, I must report that fact.
I have nothing to report in this regard.
The Councillors’ Responsibilities for the Financial Report
The Councillors are responsible for the preparation and fair presentation of the financial report and for
determining that the accounting policies, described in Note 1 to the financial report, are appropriate to
meet the requirements in the LG Code. The Councillors’ responsibility also includes such internal
control as the Councillors determine is necessary to enable the preparation and fair presentation of
the financial report that is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the Councillors are responsible for assessing the Council’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting, unless it is not appropriate to do so.
107
Auditor’s Responsibilities for the Audit of the Financial Report
My objectives are to:
• obtain reasonable assurance about whether the financial report as a whole is free from material
misstatement, whether due to fraud or error
• issue an Independent Auditor’s Report including my opinion.
Reasonable assurance is a high level of assurance, but does not guarantee an audit conducted in
accordance with Australian Auditing Standards will always detect material misstatements.
Misstatements can arise from fraud or error. Misstatements are considered material if, individually or
in aggregate, they could reasonably be expected to influence the economic decisions users take
based on the financial report.
A description of my responsibilities for the audit of the financial report is located at the Auditing and
Assurance Standards Board website at: www.auasb.gov.au/auditors_responsibilities/ar4.pdf. The
description forms part of my auditor’s report.
My opinion does not provide assurance:
• that the Council carried out its activities effectively, efficiently and economically
• about the security and controls over the electronic publication of the audited financial report on
any website where it may be presented
• about any other information which may have been hyperlinked to/from the financial report.
Renee Meimaroglou
Director, Financial Audit Services
23 October 2018
SYDNEY
108
Blacktown City Council and its subsidiary SPECIAL SCHEDULES for the year ended 30 June 2018
0
109
Special Schedules 2018
Blacktown City Council and its subsidiary
Special Schedules for the year ended 30 June 2018
Contents
Special Schedules 1
Net Cost of Services
Permissible income for general ratesIndependent Auditors Report
Report on Infrastructure Assets
1 Special Schedules are not audited (with the exception of Special Schedule 2).
Background
These Special Schedules have been designed to meet the requirements of special purpose users such as:
the NSW Grants Commissionthe Australian Bureau of Statistics (ABS)the NSW Office of Water (NOW)the Office of Local Government (OLG).
The financial data is collected for various uses including:
the allocation of Financial Assistance Grantsthe incorporation of Local Government financial figures in national statisticsthe monitoring of loan approvalsthe allocation of borrowing rights the monitoring of the financial activities of specific services.
Special Schedule 1
Special Schedule 2 113Special Schedule 2 114
Page
111
117Special Schedule 7
(ii)
(i)
110
Special Schedules 2018
Blacktown City Council and its subsidiary
Special Schedule 1 – Net Cost of Services for the year ended 30 June 2018
$’000
Governance
Administration
Public order and safety
Beach controlEnforcement of local government regulationsAnimal controlOtherTotal public order and safety
Health
EnvironmentNoxious plants and insect/vermin controlOther environmental protectionSolid waste managementStreet cleaningDrainageStormwater managementTotal environment
Community services and educationAdministration and educationSocial protection (welfare)Aged persons and disabledChildren’s servicesTotal community services and education
Housing and community amenitiesPublic cemeteriesPublic conveniencesStreet lightingTown planningOther community amenitiesTotal housing and community amenities
–
2,944 –
–
– (1,062)
(7,419)
–
(2,012) –
–
(342)
2,412
(8,478)
(7,134)
– 4,424
–
7,508 7,756
48,099
66,538 2,100
–
360
25,953
181
18 30
– –
20,123
67
Net cost.of services.
165 –
(3,138)
73,249
68,974 1,262
3,824 28 – (3,796)
(1,761) – –
(27,004)
–
1,272
–
Function or activity
–
Fire service levy, fire protection, emergency services
–
21,169
5,790 14,085
54,950
3,419
27,946
524 (2,859) (7,593)
– (40)
61
41
3,033 3,383
12,195 –
–
220
–
174
11,645
–
–
107 (181)
(3,852) (4,552)
(4,780) 30
–
61
–
–
– –
–
10,233
18,789 16,359
1,238
81,005
81,005 –
Expenses from. continuing. operations. Non-capital.
2,360
89
3,362 –
Capital.
Income fromcontinuing operations
2,525
1
13 –
51,043
4,541
54,507
1,075
111
Special Schedules 2018
Blacktown City Council and its subsidiary
Special Schedule 1 – Net Cost of Services (continued) for the year ended 30 June 2018
$’000
Recreation and culturePublic librariesMuseumsArt galleriesCommunity centres and hallsPerforming arts venuesOther performing artsOther cultural servicesSporting grounds and venuesSwimming poolsParks and gardens (lakes)Other sport and recreationTotal recreation and culture
Fuel and energy
Agriculture
Mining, manufacturing and constructionBuilding controlOther mining, manufacturing and constructionTotal mining, manufacturing and const.
Transport and communicationUrban roads (UR) – localUrban roads – regionalSealed rural roads (SRR) – localSealed rural roads (SRR) – regionalUnsealed rural roads (URR) – localUnsealed rural roads (URR) – regionalBridges on UR – localBridges on SRR – localBridges on URR – localBridges on regional roadsParking areasFootpathsAerodromesOther transport and communicationTotal transport and communication
Economic affairsCamping areas and caravan parksOther economic affairsTotal economic affairs
Totals – functionsGeneral purpose revenues (1)
NET OPERATING RESULT (2)
(1) Includes: rates and annual charges (including ex gratia, excluding water and sewer), non-capital general purpose (2) As reported in the Income Statement
grants, interest on investments (excluding externally restricted assets) and interest on overdue rates and annual charges
Share of interests – joint ventures and associates using the equity method
3,740
–
(2,125)
780
(13,667)
4,562
–
Net cost.of services.
–
780
4,460
–
63,764
5,277
–
(1,019) 57,045
183,739
10,048 –
–
(9,148) –
300,765
482 1,475 (998) (561)
303,103
1,414
117,950 7,608
–
63,487 (10,539)
7,608
–
(96)
–
–
– 223
(2,683)
– (1,819)
–
31,146
86,075 571
–
Capital.
–
7,838
–
998
782 1,461 14
7 –
– –
40,642 968
307
2,811
1,544
8,560
–
2,031
2,031
2,843 68 3,363 80
2,162
–
Non-capital.
–
Expenses from. continuing. operations.
29,601
15,261 12,961
3,509
464
1,690 –
–
–
–
29
–
–
–
–
– 12
– 93,992 78,336
1,054 6 15,490
– –
Function or activity
2,811
7,235
–
103,438
–
– –
–
–
50
– –
300,765
–
108
506
775 –
–
– 511
204
11,556 –
4,235 3,683
–
573
– –
125,677
333,961
–
64,721 2,531
5,249 5,249
336,299
12,857
– –
183,739 333,961
12,857
1,414
151,146
10,278
900
37
Income fromcontinuing operations
– – –
112
Special Schedules 2018
Blacktown City Council and its subsidiary
Special Schedule 2 – Permissible income for general rates for the year ended 30 June 2019
$’000
Notional general income calculation (1)
Last year notional general income yieldPlus or minus adjustments (2)
Notional general income
Permissible income calculation
Special variation percentage (3)
Or rate peg percentageOr crown land adjustment (incl. rate peg percentage)
Less expiring special variation amountPlus special variation amount
Or plus rate peg amountOr plus Crown land adjustment and rate peg amount
Sub-total
Plus (or minus) last year’s carry forward totalLess valuation objections claimed in the previous yearSub-total
Total permissible income
Less notional general income yieldCatch-up or (excess) result
Plus income lost due to valuation objections claimed (4)
Less unused catch-up (5)
Carry forward to next year
Notes
(1) The notional general income will not reconcile with rate income in the financial statements in the correspondingyear. The statements are reported on an accrual accounting basis which include amounts that relate to prior years’rates income.
(2) Adjustments account for changes in the number of assessments and any increase or decrease in land value occurringduring the year. The adjustments are called ‘supplementary valuations’ as defined in the Valuation of Land Act 1916 .
(3) The ‘special variation percentage’ is inclusive of the rate peg percentage and where applicable Crown land adjustment.
(4) Valuation objections are unexpected changes in land values as a result of land owners successfully objecting to theland value issued by the Valuer-General. Councils can claim the value of the income lost due to valuation objections inany single year.
(5) Unused catch-up amounts will be deducted if they are not caught up within 2 years. Usually councils will have anominal carry forward figure. These amounts can be adjusted for in setting the rates in a future year.
(6) Carry forward amounts which are in excess (an amount that exceeds the permissible income) require ministerial approval by order published in the NSW Government Gazette in accordance with section 512 of the Local Government Act 1993 . The OLG will extract these amounts from Council’s Special Schedule 2 in the financial data return (FDR) to administer this process.
3,010 4,376 156,483 163,103
153,473 158,727
0.00%0.00%1.50%2.30%0.00%0.00%
– – – –
23 13
2,347 3,751 – –
158,830 166,854
(150) (37) (127) (24)
166,831
158,727 166,837
a
13 8
Calculation Calculation2017/182018/19
– –
(24) (6)
37 14
158,703
lm
n = (l + m)
o = k + n
g
k = (c + g + h + i + j)
b
def
j = c x fi = c x e
h = d x (c – g)
c = (a + b)
pq = o – p
rs
t = q + r – s
113
INDEPENDENT AUDITOR’S REPORT
Special Schedule 2 - Permissible Income for general rates
Blacktown City Council
To the Councillors of Blacktown City Council
Opinion
I have audited the accompanying Special Schedule 2 – Permissible Income for general rates (the
Schedule) of Blacktown City Council (the Council) for the year ending 30 June 2019.
In my opinion, the Schedule of the Council for the year ending 30 June 2019 is prepared, in all
material respects in accordance with the requirements of the Local Government Code of Accounting
Practice and Financial Reporting (LG Code) issued by the Office of Local Government (OLG), and is
in accordance with the books and records of the Council.
My opinion should be read in conjunction with the rest of this report.
Basis for Opinion
I conducted my audit in accordance with Australian Auditing Standards. My responsibilities under the
standards are described in the ‘Auditor’s Responsibilities for the Audit of the Schedule’ section of my
report.
I am independent of the Council in accordance with the requirements of the:
• Australian Auditing Standards
• Accounting Professional and Ethical Standards Board’s APES 110 ‘Code of Ethics for
Professional Accountants’ (APES 110).
I have fulfilled my other ethical responsibilities in accordance with APES 110.
Parliament promotes independence by ensuring the Auditor-General and the Audit Office of
New South Wales are not compromised in their roles by:
• providing that only Parliament, and not the executive government, can remove an
Auditor-General
• mandating the Auditor-General as auditor of councils
• precluding the Auditor-General from providing non-audit services.
I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my
audit opinion.
Emphasis of Matter – Basis of Accounting
Without modifying my opinion, I draw attention to the special purpose framework used to prepare the
Schedule. The Schedule had been prepared for the purpose of fulfilling the Council’s reporting
obligations under the LG Code. As a result, the Schedule may not be suitable for another purpose.
114
Other Information
Other information comprises the information included in the Council’s annual report for the year ended
30 June 2018, other than the Schedule and my Independent Auditor’s Report thereon. The Councillors
are responsible for the other information. At the date of this Independent Auditor’s Report, the other
information I have received comprise the general purpose financial statements, special purpose
financial statements and the Special Schedules excluding Special Schedule 2 (the other Schedules).
My opinion on the Schedule does not cover the other information. Accordingly, I do not express any
form of assurance conclusion on the other information. However, as required by the Local
Government Act 1993, I have separately expressed an opinion on the general purpose financial
statements and the special purpose financial statements.
In connection with my audit of the Schedule, my responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the Schedule or my
knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work I have performed, I conclude there is a material misstatement of the other
information, I must report that fact.
I have nothing to report in this regard.
The Councillors’ Responsibilities for the Schedule
The Councillors are responsible for the preparation of the Schedule in accordance with the LG Code.
The Councillors’ responsibility also includes such internal control as the Councillors determine is
necessary to enable the preparation of the Schedule that is free from material misstatement, whether
due to fraud or error.
In preparing the Schedule, the Councillors are responsible for assessing the Council’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting, unless it is not appropriate to do so.
Auditor’s Responsibilities for the Audit of the Schedule
My objectives are to:
• obtain reasonable assurance whether the Schedule as a whole is free from material
misstatement, whether due to fraud or error
• issue an Independent Auditor’s Report including my opinion.
Reasonable assurance is a high level of assurance, but does not guarantee an audit conducted in
accordance with Australian Auditing Standards will always detect material misstatements.
Misstatements can arise from fraud or error. Misstatements are considered material if, individually or
in aggregate, they could reasonably be expected to influence the economic decisions users take
based on the Schedule.
A description of my responsibilities for the audit of the Schedule is located at the Auditing and
Assurance Standards Board website at: www.auasb.gov.au/auditors_responsibilities/ar8.pdf. The
description forms part of my auditor’s report.
115
My opinion does not provide assurance:
• that the Council carried out its activities effectively, efficiently and economically
• about the security and controls over the electronic publication of the audited Schedule on any
website where it may be presented
• about any other information which may have been hyperlinked to/from the Schedule.
Renee Meimaroglou
Director, Financial Audit Services
23 October 2018
SYDNEY
116
Special Schedules 2018
Blacktown City Council and its subsidiary
Special Schedule 7 – Report on Infrastructure Assets as at 30 June 2018
$’000
Notes:a Required maintenance is the amount identified in Council’s asset management plans.
Infrastructure asset condition assessment ‘key’
Excellent/very good No work required (normal maintenance) Condition Description here…Good Only minor maintenance work required Condition Description here…Satisfactory Maintenance work required Condition Description here…Poor Renewal required Condition Description here…Very poor Urgent renewal/upgrading required Condition Description here…
4321 6
10987
2,209,837 TOTAL – ALL ASSETS 48,795 62,992
0%1% 93%
14,494
62,724 3,366,126 26.5% 47.4% 24.8% 0.8% 0.5%
Assets in condition as a percentage of gross replacement cost
Net carryingamount
339,876
48,795
1,223 438
11%
0%3%
0%155,725 52,163
3.0%
26,855
Land Land Improvements & Parks 2,635 22,455 22,387 183,472 40% 57% 3% 0% 0%
0%
55
22,455
84%
5,170 16,015 4.0%
Stormwater drainage57.0% 0.0%3.0%2,485 0.0%3,239
40%3,239 2,485 0%0%533,268 3%drainage 753,933 Sub-total 40.0%533,268 2,296
2,296 2,296 753,933
1,217,654 43.0% 1.0%13%
41.0%
0%
Bridges
2,635 119,039
1,053,350 1,023
36,742 92,240 7,444
improvements
9%4%80%
73.0%
70%9%
25%
339,876
119,039
Unsealed roads
2,635
34,402 4 –
Buildings
21
4%
0.0%
0%
Sealed roads
Sub-total
Asset class
Buildings
to bring assetsEstimated cost
2017/18to bring to the 2017/18 Gross
standard maintenanceAsset categoryRequired Actual replacement
cost (GRC)maintenanceato satisfactory
Estimated cost
agreed level ofservice set by
Council
5,170 0.0%
53%Roads
Sub-total4%
4
2%73%457,019
53
21.0%5,170 0%16,015 16,394 21%5,170
438 4 37
2,627
1%
– 4
1,706,954 2,581
16,336 0% 6%
1%
3,521
Carpark
2,627
38,694
FootpathsPathways
Sub-total
457,019 2.0%
18%27%
57.0%2,635
16,394
– 883
1,223
20,904 38,694
72
21,837
40.0%
34,402
2,760
1,038 1%
14.0%
183,472 0.0%
39,785 17% 70% 0%1,971,702
22,387
16,997 1,038
1.0%
5
2,296 Stormwater 57%
117
Special Schedules 2018
Blacktown City Council and its subsidiary
Special Schedule 7 – Report on Infrastructure Assets (continued) for the year ended 30 June 2018
$ ’000
Infrastructure asset performance indicators * consolidated
1. Buildings and infrastructure renewals ratio (1)
Asset renewals (2)
Depreciation, amortisation and impairment
2. Infrastructure backlog ratio (1)
Estimated cost to bring assets to a satisfactory standardNet carrying amount of infrastructure assets
2a. Infrastructure backlog ratio (1)
Estimated cost to bring assets to a satisfactory standardTotal value of infrastructure and building assets
3. Asset maintenance ratioActual asset maintenanceRequired asset maintenance
4. Cost to bring assets to agreed service level
Gross replacement cost
Notes
* All asset performance indicators are calculated using the asset classes identified in the previous table.
(1) Includes Work In Progress (WIP)
(2) Asset renewals represent the replacement and/or refurbishment of existing assets to an equivalent capacity/performance as opposed to the acquisition of new assets (or the refurbishment of old assets) thatincreases capacity/performance.
48,795 1.45% 1.55% 1.67%3,366,126
1.45% 1.55% 0.00%48,795
62,724
3,366,126
Estimated cost to bring assets toan agreed service level set by Council
62,992
Amounts Prior periods
99.57% 99.30% 98.56%
2018
>= 100%
< 2.00%
> 100%
BenchmarkIndicator
63.94% 79.60% 69.73%
2018 2017 2016
36,855
48,795 2.18% 2.36% 2.53%2,241,178
57,644
118
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