Original source · versioned page text
2015-10-14 Audit & Risk Committee Meeting - Draft Annual Financial Statements
Text sections have not been matched to the original PDF pages. Use the original document to check page numbers.
AUDIT & RISK COMMITTEE MEETING REPORT 14 OCTOBER 2015
2014/15 ANNUAL FINANCIAL STATEMENTS
DOCUMENT INFORM AT ION
Author Manager Financial Services, Wayne Jensen
Corporate Services Department
Index 22.02 Financial Management / Audits
Attachments 1. 2014/15 Annual Financial Statements
EXECUTIVE SUMMARY
Draft financial statements were presented to the Audit & Risk Committee at the meeting held on
21 August 2015 prior to forwarding to Queensland Audit Office (QAO) for their audit process. QAO
have provided email advice that the Statements, as provided at Attachment 1 have Audit clearance
and no further changes are required.
RECOMMENDATION
That Council note the report by the Manager Financial Services to the Audit & Risk Committee and
approve the 2014/15 Annual Financial Statements (provided at Attachment 1 to the report) for
signature by the Mayor and Chief Executive Officer.
REPORT
Changes made to the final statements from the draft statements previously considered by the Audit
& Risk Committee at its meeting on 21 August 2015 are summarised below:
Statement of Comprehensive Income
1. Change in the recognition of Council’s Investment in Associate (Unitywater) from a Council
position to a Consolidated position. This involved the elimination of dividend income and the
recognition of our equity share of profit through participation rights, which resulted in a reduction
in operating revenue, but an overall net increase in total revenue of $3,194,976.
2. Recalculation of Long Service Leave Provision – the base reporting data used to calculate the
provision balance was configured incorrectly and overstated hourly rates by 13.1% which
resulted in overstatement of the long service leave provision. Subsequent recalculation using
corrected hourly rates arrived at a net decrease in operating expenditure of $593K.
Statement of Financial Position
3. Property Plant and Equipment total reduced by $341k to account for the change in disclosure
of WIP for Intangible Assets. Now disclosed under Intangible Assets.
4. Intangible Assets increased by $341k to account for above mentioned change in disclosure.
5. Changes reflected to Equity Investments to account for disclosure change from Council only to
Consolidated. Net increase of $3,194,976.
Notes to the Statements
6. Note 1 – Significant Accounting Policies – multiple changes as endorsed by Audit & Risk
Committee on 21 August 2015, with the exception of Annual Leave and Trust notes being re-
instated.
7. Note 9 – Cash assets and cash equivalents – detail has been added to identify externally and
internally restricted cash (reserves).
8. Note 20 – Commitments for expenditure – detail has been added to the Contractual
Commitments section.
Page 1 of 2
See the original
The page text is free to read. Viewing or downloading an original file needs an account.
Log in to see the originalSearchable page text hides email addresses. Original files are unchanged and may show email addresses.
Full text of the other 41 sections
Section 2
AUDIT & RISK COMMITTEE MEETING REPORT 14 OCTOBER 2015
It is noted that all of the changes were made in close consultation with the QAO Audit team.
The final net operating result excluding capital income and expenditure is $6,734,645 as compared
to the original draft position of $8,059,179. This variation is partly as a result of the change in
reporting treatment for Council’s investment in Unitywater (point 1 above), and partly as a result of
the change to the calculation of leave provisions (point 2).
As a consequence of changes made to both the operating result and to leave provisions, the
financial sustainability ratios have also changed.
Previous Committee Consideration
Draft financial statements were presented to the 21 August 2015 Audit & Risk Committee meeting
for consideration.
Finance & Risk
Nil.
Consultation
External Consultation - Community & Stakeholder
There has been extensive consultation with QAO in the preparation and review of the financial
statements to ensure compliance with the relevant legislation and accounting standards.
Internal Consultation
Nil.
Departments/Sections Consulted:
Chief Executive Officer Community Services X Corporate Services
Executive Officer to the Mayor & CEO Community Facilities x Financial Services
Executive Support Community Development ICT
Libraries & Galleries Procurement & Fleet
Local Laws Property & Facilities
Waste & Environmental Health Revenue Services
Executive Office Planning & Infrastructure
Community Engagement Building & Plumbing Services
Customer Service Civil Operations
Economic Development Infrastructure Planning & Design
Governance Planning & Environment
Human Resources Strategic Land Use Planning
Sustainability
Page 2 of 2
Section 3
NOOSA SHIRE COUNCIL
Financial Statements
For the year ended 30 June 2015
Table of contents
Note
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the financial statements
1 Significant accounting policies
2 Analysis of results by function
3 Revenue analysis
4 Grants, subsidies, contributions and donations
5 Gain on restructure of local government
6 Employee benefits
7 Materials and services
8 Depreciation and amortisation
9 Cash assets and cash equivalents
10 Trade and other receivables
11 Equity investments
12 Investment properties
13 Property, plant and equipment
14 Fair value measurements
15 Intangible assets
16 Trade and other payables
17 Provisions
18 Borrowings
19 Asset revaluation surplus
20 Commitments for expenditure
21 Events after balance date
22 Contingent liabilities
23 Superannuation
24 Trust funds
25 Reconciliation of net result for the year to net cash inflow (outflow) from operating activities
26 Operating lease income
27 Correction of prior period adjustments
28 Financial Instruments
29 National competition policy
Management Certificate
Independent Audit Report
Other financial statements
Current-year Financial Sustainability Statement
Long-Term Financial Sustainability Statement
Page 1
Section 4
NOOSA SHIRE COUNCIL
Statement of Comprehensive Income
For the year ended 30 June 2015
2014
2015 (6 months)
Note $ $
Income
Revenue
Recurrent revenue
Rates and charges 3 (a) 59,388,212 30,470,848
Sale of goods and major services 3 (b) 7,237,712 3,267,009
Fees and charges 3 (c) 4,942,952 2,162,005
Rental and levies 1,130,479 481,667
Interest received 3 (d) 5,006,206 2,520,125
Sales of contract and recoverable works 155,170 76,857
Other recurrent income 3 (e) 2,106,355 598,920
Grants, subsidies, contributions and donations 4 (i) 5,068,440 1,890,879
Total recurrent revenue 85,035,526 41,468,310
Capital revenue
Grants, subsidies, contributions and donations 4 (ii) 6,278,627 2,358,968
6,278,627 2,358,968
Total revenue 91,314,153 43,827,278
Capital income 604,515 7,228
91,918,668 43,834,506
Net gain on restructure of local government 5 - 972,198,129
Equity share of profit (loss) in investment in associate through participation rights 11 5,112,835 1,942,760
Total income 97,031,503 1,017,975,395
Expenses
Recurrent expenses
Employee benefits 6 (26,125,135) (18,264,226)
Materials and services 7 (33,729,424) (16,755,448)
Finance costs (2,526,815) (1,359,476)
Depreciation and amortisation 8 (15,919,507) (7,779,655)
Total recurrent expenses (78,300,881) (44,158,806)
Capital expenses
Other capital expenses (900,880) (315,945)
Total expenses (79,201,761) (44,474,751)
Net result 17,829,742 973,500,645
Other comprehensive income
Items that will not be reclassified to net result
Increase in asset revaluation surplus 19 14,334,107 -
Total other comprehensive income 14,334,107 -
Total comprehensive income for the period 32,163,849 973,500,645
The above statement should be read in conjunction with the accompanying notes and Summary of Significant Accounting Policies.
Page 2
Section 5
NOOSA SHIRE COUNCIL
Statement of Financial Position
As at 30 June 2015
2014
2015 (6 months)
Note $ $
Current Assets
Cash assets and cash equivalents 9 50,891,174 28,893,012
Trade and other receivables 10 (a) 8,526,896 18,806,279
Inventories 104,038 103,425
59,522,108 47,802,716
Non-current Assets
Trade and other receivables 10 (b) 49,217,517 49,217,517
Equity investments 11 65,211,946 62,016,970
Investment properties 12 3,831,234 -
Property, plant and equipment 13 887,078,567 873,447,519
Intangible assets 15 2,701,457 2,268,600
1,008,040,721 986,950,606
TOTAL ASSETS 1,067,562,829 1,034,753,322
Current Liabilities
Trade and other payables 16 7,736,143 6,669,789
Provisions 17 4,114,389 4,358,384
Borrowings 18 2,633,065 2,600,397
Other 1,082,497 831,140
15,566,094 14,459,710
Non-current Liabilities
Provisions 17 8,194,924 8,216,341
Borrowings 18 36,747,480 38,576,628
44,942,404 46,792,969
TOTAL LIABILITIES 60,508,498 61,252,679
NET COMMUNITY ASSETS 1,007,054,331 973,500,643
Community Equity
Asset revaluation surplus 19 14,334,107 -
Retained surplus (deficiency) 992,720,224 973,500,643
TOTAL COMMUNITY EQUITY 1,007,054,331 973,500,643
The above statement should be read in conjunction with the accompanying notes and Summary of Significant Accounting Policies.
Page 3
Section 6
NOOSA SHIRE COUNCIL
Statement of Changes in Equity
For the year ended 30 June 2015
Total Retained surplus Asset revaluation surplus
(deficit) surplus
Note Note 19
2014 2014 2014
2015 (6 months) 2015 (6 months) 2015 (6 months)
$ $ $ $ $ $
Balance at beginning of period 973,500,643 - 973,500,643 - - -
Corrections to opening balances 1,389,839 - 1,389,839 - - -
Restated opening balances 974,890,482 - 974,890,482 - -
Net result 17,829,742 973,500,643 17,829,742 973,500,643
Other comprehensive income for the period
Revaluations:
Property, plant & equipment 13 14,334,107 - - - 14,334,107 -
Total comprehensive income 32,163,849 973,500,643 17,829,742 973,500,643 14,334,107 -
Balance at end of period 1,007,054,331 973,500,643 992,720,224 973,500,643 14,334,107 -
The above statement should be read in conjunction with the accompanying notes and Summary of Significant Accounting Policies.
Page 4
Section 7
NOOSA SHIRE COUNCIL
Statement of Cash Flows
For the year ended 30 June 2015
2014
2015 (6 months)
Note $ $
Cash flows from operating activities :
Receipts
Receipts from customers 78,631,623 36,376,779
Operating grants, subsidies and contributions 5,082,742 1,890,879
Income tax equivalent received 973,222 494,614
Interest received 5,006,206 2,520,125
Income from equity investments 1,917,859 904,015
Payments
Payments to suppliers and employees (64,099,113) (37,024,927)
Interest expense (27,892) (130,469)
Net cash inflow (outflow) from operating activities 25 27,484,647 5,031,016
Cash flows from investing activities:
Commonwealth government grants 553,610 -
State Government subsidies & grants 1,679,628 1,058,819
Capital contributions 1,607,275 1,300,149
Inter-entity balance with Sunshine Coast Regional Council (SCRC) 1,021,691 (1,021,691)
Payments for property, plant and equipment (15,339,301) (2,740,657)
Payments for intangible assets (683,722) (2,171,862)
Proceeds from sale of property plant and equipment 359,247 10,155
Net cash inflow (outflow) from investing activities (10,801,572) (3,565,087)
Cash flows from financing activities:
Cash collected under an service level agreements (101,517) 101,517
Proceeds from borrowings 18 794,000 2,300,000
Repayment of borrowings 18 (4,856,932) (2,308,977)
Net cash inflow (outflow) from financing activities (4,164,449) 92,540
Net increase (decrease) in cash and cash equivalents held 12,518,626 1,558,469
Cash and cash equivalents at beginning of the financial year 28,893,012 -
Cash and cash equivalents transferred on de-amalgamation from SCRC 9,479,536 27,334,544
Cash and cash equivalents at end of the financial year 9 50,891,174 28,893,012
The above statement should be read in conjunction with the accompanying notes and Summary of Significant Accounting Policies.
Page 5
Section 8
NOOSA SHIRE COUNCIL
Notes to the Financial Statements
For the year ended 30 June 2015
1 Significant accounting policies
1. 1 Basis of preparation
These general purpose financial statements are for the period 1 July 2014 to 30 June 2015 and
have been prepared in compliance with the requirements of the Local Government Act 2009 and
the Local Government Regulation 2012 . Consequently, these financial statements have been
prepared in accordance with all Australian Accounting Standards, Australian Accounting
Interpretations and other authoritative pronouncements issued by the Australian Accounting
Standards Board.
Comparatives reflect a 6 month reporting period from the 1 January to 30 June 2014.
These financial statements have been prepared under the historical cost convention except for
the revaluation of certain non-current assets.
Council is constituted under the Queensland Local Government Act 2009 and is domiciled in
Australia.
Council uses the Australian dollar as its functional currency and its presentation currency and
amounts have been rounded to the nearest $1.
1. 2 Statement of compliance
These general purpose financial statements comply with all accounting standards and
interpretations issued by the Australian Accounting Standards Board (AASB) that are relevant to
Council's operations and effective for the current reporting period. Because the Council is a not-
for-profit entity and the Australian Accounting Standards include requirements for not-for-profit
entities which are inconsistent with International Financial Reporting Standards (IFRS), to the
extent these inconsistencies are applied, these financial statements do not comply with IFRS.
The main impacts are the offsetting of revaluation and impairment gains and losses within a class
of assets, and the timing of the recognition of non-reciprocal grant revenue.
Council had an interest in one (1) associate during the year being Unitywater and is included in
note 1.11
1. 3 Date of authorisation
The financial statements are authorised for issue on the date it was submitted to the Auditor-
General for final signature. This is the date the management certificate is signed.
1. 4 Adoption of new and revised Accounting Standards
In the current year, Council adopted all of the new and revised Standards and Interpretations
issued by the Australian Accounting Standards Board (AASB) that are relevant to its operations
and effective for the current reporting period. The adoption of the new suite of consolidation
standards resulted in some material changes to Council's accounting policies. These standards
comprised AASB 10 Consolidated Financial Statements, AASB 11 Joint Arrangements, AASB 12
Disclosure of Interests in Other Entities, AASB 127 (revised 2011) Separate Financial
Statements and AASB 128 (revised 2011) Investments in Associates and Joint Ventures .
1. 5 Critical accounting judgements and key sources of estimation uncertainty
In the application of Council's accounting policies, management is required to make judgements,
estimates and assumptions about carrying values of assets and liabilities that are not readily
apparent from other sources. The estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant. Actual results may differ from
these estimates. The estimates and ongoing assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the estimate is revised
and in future periods as relevant.
Judgements, estimates and assumptions that have a potential significant effect are outlined in the
following financial statement notes:
Page 6
Section 9
NOOSA SHIRE COUNCIL
Notes to the Financial Statements
For the year ended 30 June 2015
Investment Property - note 1.12 and note 12
Valuation and depreciation of property, plant and equipment - note 1.13 and note 14 Fair value
measurements
Provisions - note 1.18 and note 17
Contingent liabilities - note 22
1. 6 Revenue
Rates, levies, grants and other revenue are recognised as revenue on receipt of funds or earlier
upon unconditional entitlement to the funds.
1. 6 (a) Rates and levies
Where rate monies are received prior to the commencement of the rating/levying period, the
amount is recognised as revenue in the period in which they are received, otherwise rates are
recognised at the commencement of rating period.
1. 6 (b) Grants and subsidies
Grants, subsidies and contributions that are non-reciprocal in nature are recognised as revenue
in the year in which Council obtains control over them.
1. 6 (c) Cash contributions
Council receives cash contributions from property developers to construct assets such as roads
and footpaths. Where agreements between Council and the developers relating to these
contributions are determined to fall within the scope of AASB Interpretation 18 Transfers of
Assets from Customers these contributions are recognised as revenue when the related service
obligations are fulfilled.
1. 6 (d) Interest and dividends
Interest received from term deposits is accrued over the term of the investment. Dividends are
recognised once they are formally declared by the directors of the associated entity.
1. 6 (e) Fees and Charges
Fees and charges are recognised upon unconditional entitlement to the funds. Generally this is
upon lodgement of the relevant applications or documents, issuing of the infringement notice or
when the service is provided.
1. 7 Financial assets and liabilities
Council recognises a financial asset or a financial liability in its Statement of Financial Position
when, and only when, Council becomes a party to the contractual provisions of the instrument.
Noosa Shire Council has categorised and measured the financial assets and financial liabilities
held at balance date as follows:
Financial assets
Cash and cash equivalents (note 1.8)
Receivables - measured at amortised cost (note 1.9)
Financial liabilities
Payables - measured at amortised cost (note 1.15)
Borrowings - measured at amortised cost (note 1.17)
Financial assets and financial liabilities are presented separately from each other and offsetting
has not been applied. All other disclosures relating to the measurement and financial risk
management of financial instruments are included in note 28.
1. 8 Cash and cash equivalents
Cash and cash equivalents includes cash on hand, all cash and cheques receipted but not
banked at the year end, deposits held at call with financial institutions, other short-term, highly
liquid investments with original maturities of three months or less that are readily convertible to
known amounts of cash and which are subject to an insignificant risk of changes in value, and
bank overdrafts.
Page 7
Section 10
NOOSA SHIRE COUNCIL
Notes to the Financial Statements
For the year ended 30 June 2015
1. 9 Receivables
Trade receivables are recognised at the amounts due at the time of sale or service delivery i.e.
the agreed purchase price / contract price. Settlement of these amounts is required within 30
days from invoice date.
The collectability of receivables is assessed periodically and if there is objective evidence that
Council will not be able to collect all amounts due, the carrying amount is reduced for impairment.
The loss is recognised in finance costs. The amount of the impairment is the difference between
the asset’s carrying amount and the present value of the estimated cash flows discounted at the
effective interest rate.
All known bad debts were written-off at 30 June. Subsequent recoveries of amounts previously
written off in the same period are recognised as finance costs in the Statement of
Comprehensive Income. If an amount is recovered in a subsequent period it is recognised as
revenue.
Because Council is empowered under the provisions of the Local Government Act 2009 to sell
an owner's property to recover outstanding rate debts, Council does not impair any rate
receivables.
1. 10 Investments
Term deposits in excess of three months are reported as investments, with deposits of less than
three months being reported as cash equivalents.
1. 11 Investment in associate
As at 1 July 2010 a water distribution and retail business called Unitywater was established in
accordance with the South-East Queensland Water (Distribution and Retail Restructuring) Act
2009 to deliver water and waste water services to customers within the local government areas
of Moreton Bay Regional Council, Sunshine Coast Regional Council and the now de-
amalgamated Noosa Shire Council.
Under the Act, governannce arrangements for Unitywater were established in a Participation
Agreement which commenced from 1 July 2010. The agreement provides for participation rights
to be held by the participating Councils. The participating Councils are Noosa Shire Council,
Moreton Bay Regional Council and the Sunshine Coast Regional Council. The Participation
Rights effectively represent an investment in an associate by Noosa Shire Council and are
disclosed in note 11.
Associates are entities over which Noosa Shire Council exerts significant influence. Significant
influence is the power to particpate in the financial and operating policy decisions but is not
control or joint control. Council has determined that Unitywater is an associate for accounting
disclosure purposes.
1. 12 Investment Property
Investment property is property held for the primary purpose of earning rentals and/or capital
appreciation.
Investment property is measured using the fair value model. This means all investment property
is initially recognised as cost (including transaction costs) and then subsequently revaluled
annually at the reporting date by a registered valuer. Where investment property is acquired at no
or nominal cost it is recognised at fair value.
Gains or losses arising from changes in the fair value of investment property are recognised as
incomes or expenses respectively for the period in which they arise. Investment property is not
depreciated and is not tested for impairment.
Page 8
Section 11
NOOSA SHIRE COUNCIL
Notes to the Financial Statements
For the year ended 30 June 2015
1. 13 Property, plant and equipment
Each class of property, plant and equipment is carried at cost or fair value less, where applicable,
any accumulated depreciation and accumulated impairment losses. Items of property, plant and
equipment with a total value of less than $5,000, except for land and network assets (which have
a recognition threshold of $1), are treated as an expense in the year of acquisition. All other items
of property, plant and equipment are capitalised.
The classes of property plant and equipment recognised by the council are reported in note 13.
1. 13 (a) Acquisition of assets
Acquisitions of assets are initially recorded at cost. Cost is determined as the fair value of the
assets given as consideration plus costs incidental to the acquisition, including freight in,
architect's fees and engineering design fees and all other establishment costs.
Property, plant and equipment received in the form of contributions, are recognised as assets and
revenues at fair value by Council valuation where that value exceeds the recognition thresholds
for the respective asset class. Fair value is the price that would be received to sell the asset in an
orderly transaction between market participants at the measurement date.
1. 13 (b) Capital and operating expenditure
Direct labour and materials and an appropriate proportion of overheads incurred in the acquisition
or construction of assets are treated as capital expenditure. Assets under construction are not
depreciated until they are completed and commissioned, at which time they are reclassified from
work in progress to the appropriate property, plant and equipment class.
Routine operating maintenance, repair costs and minor renewals to maintain the operational
capacity and useful life of the non-current asset is expensed as incurred, while expenditure that
relates to replacement of a major component of an asset to maintain its service potential is
capitalised.
1. 13 (c) Valuation
Land, buildings, infrastructure and heritage and cultural assets are measured on the revaluation
basis, at fair value, in accordance with AASB116 Property, Plant and Equipment and AASB 13
Fair Value Measurement . Fair value means the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction between market participants at the
measurement date.
Non-current physical assets measured at fair value are revalued, where required, so that the
carrying amount of each class of asset does not materially differ from its fair value at the reporting
date. This will be achieved by engaging independent, professionally qualified valuers to
determine the fair value for each class of property, plant and equipment assets at least once
every 3 years. This process involves the valuer physically sighting a representative sample of
Council assets across all asset classes and making their own assessments of the condition of the
assets at the date of inspection.
Council uses internal engineers to assess the condition and cost assumptions associated with all
infrastructure assets, the results of which are considered in combination with the relevant indices
independently published for the Sunshine Coast Region. Together these are used to form the
basis of a management valuation for infrastructure asset classes in each of the intervening years.
With respect to the valuation of the land and improvements, and buildings classes in the
intervening years, management engage independent, professionally qualified valuers to perform
a "desktop" valuation. A desktop valuation involves management providing updated information
to the valuer regarding additions, deletions and changes in assumptions such as useful life,
residual value and condition rating. The valuer then determines suitable indices which are applied
to each of these asset classes.
On revaluation, accumulated depreciation is restated proportionately with the change in the
carrying amount of the asset and any change in the estimate of remaining useful life.
Page 9
Section 12
NOOSA SHIRE COUNCIL
Notes to the Financial Statements
For the year ended 30 June 2015
Separately identified components of assets are measured on the same basis as the assets to
which they relate.
1. 13 (d) Capital work in progress
The cost of property, plant and equipment being constructed by the Council includes the cost of
purchased services, materials, direct labour and an appropriate proportion of labour overheads.
1. 14 Depreciation
Land is not depreciated as it has an unlimited useful life. Depreciation on other property, plant
and equipment assets is calculated on a straight-line basis so as to write-off the net cost or
revalued amount of each depreciable asset, less its estimated residual value, progressively over
its estimated useful life to the Council. Management believe that the straight-line basis
appropriately reflects the pattern of consumption of all Council assets.
Assets are depreciated from the date of acquisition or, in respect of internally constructed assets,
from the time an asset is completed and commissioned ready for use.
Where assets have separately identifiable components that are subject to regular replacement,
these components are assigned useful lives distinct from the asset to which they relate. Any
expenditure that increases the originally assessed capacity or service potential of an asset is
capitalised and the new depreciable amount is depreciated over the remaining useful life of the
asset to the Council.
Major spares purchased specifically for particular assets that are above the asset recognition
threshold are capitalised and depreciated on the same basis as the asset to which they relate.
The depreciable amount of improvements to or on leasehold land is allocated progressively over
the estimated useful lives of the improvements to the Council or the unexpired period of the
lease, whichever is the shorter.
Depreciation methods, estimated useful lives and residual values of property, plant and
equipment assets are reviewed at the end of each reporting period and adjusted where
necessary to reflect any changes in the pattern of consumption, physical wear and tear, technical
or commercial obsolescence, or management intentions. The condition assessments performed
as part of the annual valuation process for assets measured at depreciated current replacement
cost are used to estimate the useful lives of these assets at each reporting date.
Details of the range of estimated useful lives for each class of asset are shown in note 13.
1. 15 Payables
Trade creditors are recognised upon receipt of the goods or services ordered and are measured
at the agreed purchase/contract price net of applicable discounts other than contingent discounts.
Amounts owing are unsecured and are generally settled on 30 day terms.
1. 16 Liabilities - employee benefits
Liabilities are recognised for employee benefits such as wages and salaries, annual leave and
long service leave in respect of services provided by the employees up to the reporting date.
Liabilities for employee benefits are assessed at each reporting date.
1. 16 (a) Salaries and wages
A liability for salaries and wages is recognised and measured as the amount unpaid at the
reporting date at current pay rates in respect of employees' services up to that date. This liability
represents an accrued expense and is included in note 16 as a payable.
Page 10
Section 13
NOOSA SHIRE COUNCIL
Notes to the Financial Statements
For the year ended 30 June 2015
1. 16 (b) Long service leave
A liability for long service leave is measured as the present value of the estimated future cash
outflows to be made in respect of services provided by employees up to the reporting date. The
value of the liability is calculated using current pay rates and projected future increases in those
rates and includes related employee on-costs. The estimates are adjusted for the probability of
the employee remaining in the Council's employment or other associated employment which
would result in the Council being required to meet the liability. Adjustments are then made to
allow for the proportion of the benefit earned to date, and the result is discounted to present
value. The interest rates attaching to Commonwealth Government guaranteed securities at the
reporting date are used to discount the estimated future cash outflows to their present value.
Where employees have met the prerequisite length of service and council does not have an
unconditional right to defer this liability beyond 12 months long service leave is classified as a
current liability. Otherwise it is classified as non-current.
This liability is reported in note 17 as a provision.
1. 16 (c) Annual leave
A liability for annual leave is recognised. As Council does not have an unconditional right to defer
settlement of the annual leave beyond the 12 months after the reporting date, annual leave is
classified as current, and calculated based on projected future wage and salary levels and related
employee on-costs, and discounted to present values.
This liability represents an accrued expense and is reported in note 16 as a payable.
1. 17 Borrowings
Loans payable are measured at amortised cost using the effective interest rate method. The
effective interest rate is the rate that exactly discounts estimated future cash payments or receipts
through the expected life of the financial instrument. Borrowing costs, which includes interest
calculated using the effective interest method and administration fees, are expensed in the period
in which they arise. Costs that are not settled in the period in which they arise are added to the
carrying amount of the borrowing.
In accordance with the Local Government Regulation 2012 Council adopts an annual debt policy
that sets out Council's planned borrowings for the next nine years. Council's current policy is to
only borrow for capital projects and for a term no longer than the expected life of the asset.
Council also aims to comply with the Queensland Treasury Corporation's borrowing guidelines
and ensure that sustainability indicators remain within acceptable levels at all times.
All borrowing costs are expensed in the period in which they are incurred. No borrowing costs
are capitalised on qualifying assets.
Borrowings are classified as current liabilities unless Council has an unconditional right to defer
settlement of the liability for at least 12 months after the balance date.
1. 18 Restoration provision
A provision is made for the cost of rehabiliation of assets and other future restoration costs where
it is probable the Council will be liable, or required, to incur such a cost on the cessation of use of
the facility. This liability is provided in respect of Quarries and Landfill sites.
The provision is measured at the expected cost of the work required discounted to current day
values using an appropriate rate. The current capital market yield bond rate is considered an
appropriate rate with a maturity date corresponding to the anticipated date of restoration.
Council has the following restoration provisions:
Page 11
Section 14
NOOSA SHIRE COUNCIL
Notes to the Financial Statements
For the year ended 30 June 2015
1. 18 (a) Landfill sites
The provision represents the present value of the anticipated future costs associated with the
closure of the Eumundi Rd landfill sites, decontamination and monitoring of historical residues
and leaching on the site.
The calculation of this provision requires assumptions such as application of environmental
legislation, site closure dates, available technologies and engineering cost estimates. These
uncertainties may result in future actual expenditure differing from amounts currently provided.
Because of the long-term nature of the liability, the most significant uncertainty in estimating the
provision is the costs that will be incurred.
The provision recognised for the Eumundi Rd landfill sites is reviewed at least annually and
updated based on the facts and circumstances available at the time. Management estimates that
the site will fully close in 2054 and that site restoration will occur progressively over the
subsequent thirty years.
1. 18 (b) Quarry sites
The provision represents the present value of the anticipated future costs associated with the
closure of the Ringtail Creek quarry sites, reclamation and rehabilitation of the site.
The calculation of this provision requires assumptions such as application of environmental
legislation, site closure dates, available technologies and engineering cost estimates. These
uncertainties may result in future actual expenditure differing from amounts currently provided.
Because of the long-term nature of the liability, the most significant uncertainty in estimating the
provision is the costs that will be incurred. The provision recognised for quarry sites rehabilitation
is reviewed at least annually and updated based on the facts and circumstances available at the
time.
1. 19 National competition policy
The Council has reviewed its activities and has identified 2 activities that are business activities.
Details of these activities can be found in note 29.
1. 20 Taxation
Income of local authorities and public authorities is exempt from Commonwealth taxation except
for Fringe Benefits Tax and Goods and Services Tax (‘GST’). The net amount of GST
recoverable from the Australian Taxation Office (ATO) or payable to the ATO is shown as an
asset or liability respectively.
Unitywater pays Council an income tax equivalent in accordance with the requirements of the
Local Government Act 2009 . Where the activity of such an entity is subject to the tax equivalents
regime, the income tax expense is calculated on the operating surplus adjusted for permanent
differences between taxable and accounting income.
Page 12
Section 15
NOOSA SHIRE COUNCIL
Notes to the financial statements
For the year ended 30 June 2015
2 (a) Components of council functions
The activities relating to the Council's components reported on in Note 2 (a) are as follows :
CEO
The goal of the Chief Executive Officer is to provide leadership to the organisation to ensure it meets its strategic
and operational objectives, as well as to provide executive support to Councillors, the Chief Executive Officer (CEO)
and Council leadership team. Service areas include the CEO’s office and internal audit.
Community Services
Community Services goals are to provide facilities and opportunities for residents and visitors to participate in
community, cultural and recreational activities across the shire; protect the health and safety of the Noosa
community; and assist community groups and organisations through the provision of advice and community grants.
Service areas include Cemeteries, Community Development, Cooroy and Noosaville Libraries, Environmental
Health, Local Laws, Noosa Aquatic Centre, Noosa Community Support, Noosa Leisure Centre, Noosa Regional
Gallery, Pest and Vector Control, the J, and Waste Management
Planning and Infrastructure
The goals of the Planning and Infrastructure department are to provide efficient planning and asset management
services including infrastructure planning and development assessment. The department operates and maintains
infrastructure including roads and bridges, buildings, canals, parks, stormwater drainage, waterways, beaches and
bushland in the Noosa shire in accordance with established service levels. Service areas include Building and
Plumbing Services, Civil Works, Infrastructure Planning and Design, Parks and Gardens, Planning and
Environment, Disaster Management and Strategic Land Use Planning.
Executive Office
The goal of the Executive office is to provide effective governance oversight of the organisation, human resource
management support to the organisation, support economic development, support sustainability initiatives, and
ensure Council’s customer focus including communication and community engagement processes. Service areas
include the Community Engagement, Customer Service, Executive Office, Economic Development, Sustainability,
Governance and Human Resources.
Corporate Services
The goal of the Corporate Services department is to provide effective support to the organisation to ensure that
Council services are provided in accordance with agreed service levels that ensure Council’s ongoing sustainability.
Service areas include Financial Services, Information Communication Technology, Procurement and Fleet, Property
and Facilities and Revenue Services
Page 13
Section 16
NOOSA SHIRE COUNCIL
Notes to the financial statements
For the year ended 30 June 2015
2 Analysis of results by function
(b) Revenue, expenses and assets have been attributed to the following functions :
Functions Income Total Total Net Assets
Grants Other income expenses result
for period
2015 2015 2015 2015 2015 2015
$ $ $ $ $ $
CEO - - - 536,083 (536,083) -
Community Services 2,908,539 17,667,588 20,576,127 27,649,967 (7,073,840) 594,249
Planning and Infrastructure 2,238,035 8,481,346 10,719,380 38,015,343 (27,295,963) 34,363
Executive Office 1,500 4,380,084 4,381,584 7,223,463 (2,841,879) (8,417)
Corporate Services 2,120,771 67,600,440 69,721,211 17,338,680 52,382,530 1,062,708,913
Total Council 7,268,844 98,129,457 105,398,302 90,763,536 14,634,766 1,063,329,108
Controlled entity net of eliminations 3,194,976 3,194,976 - 3,194,976 4,233,721
Total 7,268,844 101,324,433 108,593,278 90,763,536 17,829,742 1,067,562,829
Functions Income Total Total Net Assets
Grants Other income expenses result
- for period
2014 2014 2014 2014 2014 2014
(6 months) (6 months) (6 months) (6 months) (6 months) (6 months)
$ $ $ $ $ $
CEO - 12,000 12,000 293,008 (281,008) -
Community Services 1,301,192 8,024,065 9,325,257 11,303,403 (1,978,146) 518,280
Planning and Infrastructure 1,038,819 2,748,611 3,787,430 16,272,444 (12,485,014) 75,016
Executive Office - 2,194,964 2,194,964 2,864,360 (669,396) 10,436
Corporate Services 589,024 28,829,846 29,418,870 13,741,535 15,677,335 1,033,110,845
Total Council 2,929,035 41,809,486 44,738,521 44,474,750 263,771 1,033,714,576
Controlled entity net of eliminations - 1,038,745 1,038,745 1,038,745 1,038,745
Total 2,929,035 42,848,231 45,777,266 44,474,750 1,302,516 1,034,753,321
Page 14
Section 17
NOOSA SHIRE COUNCIL
Notes to the financial statements
For the year ended 30 June 2015
2014
2015 (6 months)
Note $ $
3 Revenue analysis
(a) Rates and charges 1.6(a)
General rates 44,865,172 23,340,488
Separate rates 5,044,577 2,527,651
Special rates 1,397,948 839,351
Waste utility charges 10,617,388 5,015,495
Rates and utility charge revenue 61,925,085 31,722,985
Less: Discounts (1,793,041) (889,269)
Less: Pensioner remissions (743,832) (362,869)
Net rates and utility charges 59,388,212 30,470,848
(b) Sale of goods and major services
Sale of recyclables 482,992 283,825
Refuse tips and transfer station charges 1,694,792 836,367
Venue hire 390,428 191,774
Retail shop sales 475,090 64,115
Holiday parks fees and charges 2,859,041 1,315,057
Learn to swim 642,894 250,150
Admission fees 692,475 325,722
7,237,712 3,267,009
(c) Fees and charges
Building and development fees 2,288,735 924,707
Permits and licences 753,830 96,365
Fines and penalties 56,591 46,289
Registration fees 168,437 11,331
Parking penalties 547,917 215,726
Other statutory fees 458,153 205,896
User fees and charges 669,289 661,691
4,942,952 2,162,005
(d) Interest received
Investments 1,834,868 958,097
Loan to Unitywater 2,692,198 1,323,951
Over due rates and utility charges 479,140 238,077
5,006,206 2,520,125
(e) Other recurrent income
Unitywater income tax equivalent received 973,222 494,614
Other income 1,133,133 104,306
2,106,355 598,920
4 Grants, subsidies, contributions and donations 1.6(b)
(i) Recurrent - grants, subsidies, contributions
and donations are analysed as follows:
General purpose grants 2,120,771 585,331
Commomwealth subsidies and grants 1,864,477 899,430
State Government subsidies & grants 1,019,746 385,455
Other Non-Government Subsidies 30,612 -
Donations 32,834 20,663
Total recurrent revenue 5,068,440 1,890,879
Page 15
Section 18
NOOSA SHIRE COUNCIL
Notes to the financial statements
For the year ended 30 June 2015
2014
2015 (6 months)
Note $ $
4 (ii) Capital - grants, subsidies, and contributions
are analysed as follows:
(a) Monetary revenue designated for capital funding purposes:
Commonwealth government grants 553,610 -
State Government subsidies & grants 1,679,628 251,000
NDRRA flood grants - 807,819
Contributions 1,607,275 1,300,149
3,840,513 2,358,968
(b) Non-monetary revenue received is analysed as follows: 1.6(c)
Developer assets contributed by developers at fair value 2,438,114 -
2,438,114 -
Total capital revenue 6,278,627 2,358,968
5 Gain on restructure of local government
(a) Net result attributable to Council before net assets transferred from abolished Councils
Net result attributable to Council - 972,461,900
Less:
Assets and liabilities transferred from abolished councils 13 - 869,620,179
Accounting policy adjustments 5 (b) - 102,577,950
Net gain on restructure of local government - 972,198,129
Net result before gain on restructure of local government - 263,771
(b) Adjustments due to accounting policy alignment
Property, Plant and Equipment - 102,577,950
- 102,577,950
Page 16
Section 19
NOOSA SHIRE COUNCIL
Notes to the financial statements
For the year ended 30 June 2015
2014
2015 (6 months)
Note $ $
6 Employee benefits
Total staff wages and salaries 20,050,773 15,114,705
Councillors' remuneration 504,974 239,088
Annual, sick and long service leave entitlements 3,222,457 1,722,269
Superannuation 23 2,707,406 1,305,459
26,485,610 18,381,522
Other employee related expenses 1,140,450 344,416
27,626,060 18,725,937
Less : Capitalised employee expenses (1,500,925) (461,711)
26,125,135 18,264,226
Councillor remuneration represents salary, and other allowances paid in respect
of carrying out their duties.
2014
Total Council employees at June 2015: 2015 (6 months)
Elected members 7 7
Administration staff 247 234
Depot and outdoors staff 97 95
Total full time equivalent employees 351 336
7 Materials and services
Audit services 111,600 90,000
Administration Supplies and Consumables 830,683 378,821
Legal expenses 1,055,194 744,335
Insurance 508,181 29,635
Communications and IT 575,781 336,586
Consultancy Services 403,320 201,954
Contract Services 17,291,190 9,060,491
Donations and Prizes 2,901,606 1,291,063
Electricity 1,859,559 884,462
Grants Paid to Community Organisations 780,780 34,340
Software and Maintenance 474,164 306,483
Commission Paid 465,604 246,839
Water and Sewerage Costs 930,991 341,748
Fleet Operating Costs 1,290,781 734,411
Other Materials and Services 3,637,683 1,600,489
Rentals - Operating leases 809,094 518,509
Less Capitalised Internal Expenses (196,787) (44,719)
33,729,424 16,755,448
8 Depreciation and amortisation 1.14
(a) Depreciation of non-current assets
Buildings 1,457,212 749,306
Plant and Equipment 622,843 244,723
Road and Bridge Network 9,128,475 4,462,163
Storm Water 1,861,015 911,182
Other Infrastructure Assets 2,599,097 1,390,772
15,668,642 7,758,146
(b) Amortisation of other intangible assets
Computer Software 250,865 21,509
250,865 21,509
Total depreciation and amortisation 15,919,507 7,779,655
Page 17
Section 20
NOOSA SHIRE COUNCIL
Notes to the financial statements
For the year ended 30 June 2015
2014
2015 (6 months)
Note $ $
9 Cash assets and cash equivalents 1.8
Cash at bank and on hand 175,276 77,994
Deposits at call 34,715,898 31,045,060
Term deposits 16,000,000 -
Less QTC working capital loan facility - (2,230,042)
Total cash and cash equivalents per cash flow statement 50,891,174 28,893,012
Externally imposed expenditure restrictions at the reporting date relate to the following assets:
Unspent levy funds 6,247,670 4,202,197
Unspent developer contributions 3,222,716 2,356,092
Unspent government grants and subsidies 116,220 38,926
Unspent carbon tax 635,000 223,000
Unspent loan monies - 128,138
Internally imposed expenditure restrictions at the reporting date relate to the following assets:
Natural Disaster Rehabilitation 2,249,000 3,776,581
Plant Replacement - -
Future asset replacement 5,335,180 5,335,180
Waste Management 3,466,035 2,594,694
Specific purpose recurrent 2,202,431 1,978,395
Total unspent restricted cash held in reserves 23,474,251 20,633,203
Cash and deposits at call are held in the Commonwealth Bank in a normal
business cheque account. On call accounts are also held with QTC.
Deposits at call earned fixed interest over varying terms at interest rates of
between 2.8% and 3.19%.
10 Trade and other receivables 1.9
(a) Current
Rateable revenue and utility charges 4,165,668 4,159,585
Fees and charges 806,010 1,016,774
GST recoverable 457,957 339,407
Other debtors - -
Inter-entity balance with SCRC - 10,501,227
5,429,635 16,016,992
Prepayments 646,006 411,901
Accrued Revenue 2,451,255 2,377,385
8,526,896 18,806,279
(b) Non-current
Loans and advances to associates 1.11 49,217,517 49,217,517
49,217,517 49,217,517
Interest is charged on outstanding rates at a rate of 11% per annum. No interest
is charged on other debtors. There is no concentration of credit risk for rates and
utility charges, fees and other debtors receivable.
A new loan agreement for the subordinated debt was executed on the 21 June
2013. The new interest only loan structure terminates on the 30 June 2033 with
the interest rate set by QTC annually. Applicable interest rate for 2015 was
5.47% (2014 5.38%).
11 Equity investments
Details of the associate is as follow.
Name of Associate - Unitywater
Principal Activity - Water and sewerage services
Place of Operations - Moreton Bay, Sunshine Coast & Noosa Regions
Proportion of participation - 4.25%
Page 18
Section 21
NOOSA SHIRE COUNCIL
Notes to the financial statements
For the year ended 30 June 2015
2014
2015 (6 months)
Note $ $
Summarised financial information in respect of the associate is set out below.
Total assets 3,342,905,329 3,268,129,579
Total liabilities (1,755,520,456) (1,755,920,879)
Net assets 1,587,384,873 1,512,208,700
Share of net assets of associate 67,463,857 64,268,870
Total revenue 624,672,829 550,492,752
Total expenses (460,434,453) (431,764,972)
Profit before income tax equivalent 164,238,376 118,727,780
Income tax equivalent expense (43,936,099) (34,261,756)
Profit for year 120,302,277 84,466,024
Share of profit of associate 5,112,835 1,942,760
Investment in associate through participation rights 65,211,946 62,016,970
65,211,946 62,016,970
Details of movements in participation rights
Equity investment in associate - Unity Water 62,016,970 60,997,643
Recognition of equity share of profit (loss) in the result for the period 5,112,835 1,942,760
Less distributions paid/payable to Council (1,917,859) (904,015)
Accounting adjustment on de-amalgamation - (19,418)
Fair value at end of financial year 65,211,946 62,016,970
Retained Earnings
Balance of beginning of financial year 77,426,926 41,234,855
Net result for the period 120,302,277 84,466,024
Less distribution paid (45,126,105) (48,273,953)
Balance at the end of the financial year 152,603,098 77,426,926
12 Investment properties
Property held for rental income and capital growth 3,831,234 -
Fair value at end of financial year 3,831,234 -
Movement in assets during the reporting period:
Property held for rental income and capital growth
- -
Fair value of assets transferred from other asset category 3,226,719 -
Revaluation adjustment to income statement 604,515 -
Fair value at end of financial year 3,831,234 -
All investment property was valued at fair value by AEC Group Limited, an
independent professionally qualified valuation firm, as at 30 June 2015.
Operating expenses in respect of investment property are shown in note 7.
Page 19
Section 22
NOOSA SHIRE COUNCIL
Notes to the financial statements
For the year ended 30 June 2015
13 Property, plant and equipment
Note Land Buildings Plant and Road and Bridge Storm Water Other Works in Total
Equipment Network Infrastructure progress
Assets
Basis of measurement Valuation Valuation Cost Valuation Valuation Valuation Cost
2015 2015 2015 2015 2015 2015 2015 2015
Asset Values $ $ $ $ $ $ $ $
Opening gross value as at 1 July 2014 120,945,066 74,545,960 7,478,085 615,371,792 147,835,968 77,379,795 1,522,733 1,045,079,399
Minor correction to opening balance 27 174,067 - 1,500,947 - - - 1,675,014
Additions at cost 789,083 62,352 1,374,301 3,944,045 15,010 3,215,079 5,939,431 15,339,301
Contributed assets at valuation - - 1,251,001 1,187,113 - - 2,438,114
Internal transfers from work in progress - - - - 66,306 (66,306) -
Disposals - (498,802) - - - - (498,802)
Write-offs (75,484) - (941,142) - (217,767) - (1,234,393)
Revaluation adjust to other comprehensive
19
income. (ARS*) 5,527,092 - - 12,930,121 - - 18,457,213
Internal transfers to other asset classes (2,479,014) - - - 2,479,014 - -
Transfer to investment properties (2,220,000) (1,769,877) - - - - (3,989,877)
Closing gross value as at 30 June 2015 119,514,149 75,985,096 8,353,584 621,126,643 161,968,212 82,922,427 7,395,858 1,077,265,969
Accumulated depreciation and impairment
Opening balance as at 1 July 2014 15,186,063 243,102 89,680,808 43,498,670 23,023,238 171,631,881
Depreciation provided in period 8 1,457,212 622,843 9,128,475 1,861,015 2,599,097 15,668,642
Depreciation on disposals - (31,009) - - - (31,009)
Depreciation on write-offs (25,077) - (283,032) - (133,950) (442,059)
Revaluation adjust to other comprehensive
19
income. (ARS*) (111,363) - - 4,234,469 - 4,123,106
Internal transfers to other asset classes (141,546) - - - 141,546 -
Transfer to investment properties (763,158) - - - - (763,158)
Accumulated depreciation as at 30 June 2015 - 15,602,131 834,936 98,526,251 49,594,154 25,629,931 190,187,403
- - - - - -
Consolidated written down value 30 June 2015 119,514,149 60,382,965 7,518,648 522,600,392 112,374,058 57,292,496 7,395,858 887,078,567
Range of estimated useful life in years Not depreciated 3 - 72 1 - 50 0 - 150 17-100 0 - 100
Addition of renewal assets 62,352 1,337,893 3,920,786 10,507 602,281 4,267,188 10,201,007
Addition of other assets 789,083 - 36,408 1,274,260 1,191,616 2,612,798 1,672,243 7,576,408
Total additions in period 789,083 62,352 1,374,301 5,195,046 1,202,123 3,215,079 5,939,431 17,777,415
Page 20
Section 23
NOOSA SHIRE COUNCIL
Notes to the financial statements
For the year ended 30 June 2015
13 Property, plant and equipment - prior year
Note Land Buildings Plant and Road and Bridge Storm Water Other Works in Total
Equipment Network Infrastructure progress
Assets
Basis of measurement Valuation Valuation Cost Valuation Valuation Valuation Cost
2014 2014 2014 2014 2014 2014 2014 2014
(6months) (6months) (6months) (6months) (6months) (6months) (6months) (6months)
Asset Values $ $ $ $ $ $ $ $
Opening gross value as at 1 July 2013 159,859,939 60,480,551 7,397,557 550,252,152 104,064,222 54,709,289 3,454,924 940,218,634
Valuation adjustment on de-amalgamation 5 (38,979,941) 14,015,208 - 64,818,298 43,680,543 21,284,899 (2,241,057) 102,577,950
Additions at cost 59,389 50,201 83,376 587,305 72,083 1,503,739 384,564 2,740,657
Internal transfers from work in progress 5,679 - 8,121 14,973 46,924 - (75,698) -
Disposals - (3,003) - - - (3,003)
Write-offs - (7,966) (300,937) (27,804) (118,131) - (454,838)
Closing gross value as at 30 June 2014 120,945,066 74,545,960 7,478,085 615,371,792 147,835,968 77,379,795 1,522,733 1,045,079,399
Accumulated depreciation and impairment
Opening balance as at 1 July 2013 - - - - - -
Valuation adjustment on de-amalgamation 5 14,436,757 - 85,310,488 42,599,233 21,666,226 164,012,705
Depreciation provided in period 8 749,306 244,723 4,462,163 911,182 1,390,772 7,758,146
Depreciation on disposals - (76) - - - (76)
Depreciation on write-offs - (1,545) (91,843) (11,745) (33,761) (138,894)
- - - - -
Accumulated depreciation as at 30 June 2014 15,186,063 243,102 89,680,808 43,498,670 23,023,238 171,631,881
Total written down value as at 30 June 2014 120,945,066 59,359,897 7,234,983 525,690,984 104,337,298 54,356,557 1,522,733 873,447,519
Range of estimated useful life in years Not depreciated 30 - 100 3 - 20 10 - 120 80 12 - 100
Addition of renewal assets - - - 489,322 72,083 1,499,919 409,810 2,471,134
Addition of other assets 59,389 50,201 83,376 97,983 - 3,820 1,188,621 1,483,390
Total additions in period 59,389 50,201 83,376 587,305 72,083 1,503,739 1,598,431 3,954,524
* ARS denotes - Asset Revaluation Surplus
Page 21
Section 24
NOOSA SHIRE COUNCIL
Notes to the financial statements
For the year ended 30 June 2015
14 Fair value measurements
(i) Recognised fair value measurements
Council measures and recognises the following assets at fair value on a recurring basis:
Property, plant and equipment
- Land
- Buildings
- Road and Bridge Network
- Storm Water
- Other Infrastructure Assets
Council does not measure any liabilities at fair value on a recurring basis.
Council has assets and liabilities which are not measured at fair value, but for which fair values are disclosed in
the other notes.
Council borrowings are measured at amortised cost with interest recognised in profit or loss when incurred.
The fair value of borrowings disclosed in note 18 is provided by the Queensland Treasury Corporation (QTC)
and represents the market value to extinguish the debt at balance date. Liquidity risk information on Council's
borrowings is also disclosed in note 28. This information was provided by QTC and represents the contractual
undiscounted cash flows at balance date.
The carrying amounts of trade receivables and trade payables are assumed to approximate their fair values
due to their short-term nature (Level 2).
In accordance with AASB 13 Fair Value Measurements are categorised on the following basis:
- Fair value based on quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1)
- Fair value based on inputs that are directly or indirectly observable for the asset or liability (Level 2)
- Fair value based on unobservable inputs for the asset and liability (Level 3)
The fair values of the assets are determined using valuation techniques which maximise the use of observable
data, where it is available, and minimise the use of entity specific estimates. If all significant inputs required to
fair value an asset are observable, the asset is included in level 2. If one or more of the significant inputs is not
based on observable market data, the asset is included in level 3. This is the case for Council infrastructure
assets, which are of a specialist nature for which there is no active market for similar or identical assets.
These assets are valued using a combination of observable and unobservable inputs.
The table below presents all items that are measured and recognised within the Statement of Financial Position
at fair value. In accordance with AASB 13, all fair value measurements are recurrent and categorised as either
Level 2 or Level 3 fair value measurements. Council does not have any assets or liabilities measured at fair
value which meet the criteria for categorisation as Level 1.
Level 2 Level 3
(significant (significant
other unobservable
Total
observable inputs)
As at 30 June 2015 inputs)
Property, plant and equipment
- Land 63,883,083 55,631,066 119,514,149
- Buildings 60,382,965 60,382,965
- Road and Bridge Network 522,600,392 522,600,392
- Storm Water 112,374,058 112,374,058
- Other Infrastructure Assets 57,292,496 57,292,496
63,883,083 808,280,977
Page 22
Section 25
NOOSA SHIRE COUNCIL
Notes to the financial statements
For the year ended 30 June 2015
14 Fair value measurements continued
Level 2 Level 3
(significant (significant
other unobservable
Total
observable inputs)
As at 30 June 2014 inputs)
Property, plant and equipment
- Land 65,314,000 55,631,066 120,945,066
- Buildings 59,359,897 59,359,897
- Road and Bridge Network 525,690,984 525,690,984
- Storm Water 104,337,298 104,337,298
- Other Infrastructure Assets 54,356,557 54,356,557
65,314,000 799,375,802
There were no transfers between level 2 and 3 during the financial year.
Council's policy is to recognise transfers in and out of the fair value hierarchy levels as at the end of the
reporting period.
(ii) Valuation techniques used to value Council assets comprise:
Land (level 2 and 3)
Land fair values were determined by independent valuer, AssetVal Pty Ltd effective 1 January 2014.
Fair values have been derived based on a combination of market approach and direct comparison
by analysing land sales occurring over the past year within the Noosa Shire Council area.
Where there was an active and liquid market as evidenced by sales transactions of similar property types,
a market approach by way of direct comparison or income methods can be utilised, and are accepted
valuation methodologies under AASB 13. If a market approach is adopted, the valuation is deemed to be
a Level 2 input.
The direct comparison method which is considered a Level 2 input on the fair value hierarchy, involves the
analysis of sales evidence and comparisons with the subject land taking into account matters such as
area, location and other general site characteristics. Direct Comparison approach was utilised in the
assessment for all Council land assets, however, the fair value measurement has been either a Level 2
or 3, depending on the assumptions as to:
- Whether the land is subject to restrictions as to use and/or sale;
- Whether there is no active market.
If the above assumptions applied to the land as per Queensland Treasury NCAP 3, fair value has been
assessed as a Level 3. However if an active market was established and there are no unreasonable
restrictions as to use and/or sale, measurement was deemed to be a Level 2.
Land that is utilised for footpath or access restriction purposes, land that is a volumetric title, or due to
its general characteristics land that has no observable active market have been assessed as a Level 3.
Buildings (level 3)
For the majority of Council's buildings, there is no active market due to the specialised nature of the assets
and the services they provide. The fair value of buildings were independently valued by registered valuers
Australia Pacific Valuers, effective 30 June 2015.
Page 23
Section 26
NOOSA SHIRE COUNCIL
Notes to the financial statements
For the year ended 30 June 2015
14 Fair value measurements continued
Due to the predominately specialised nature of local government buildings, the valuations have been
undertaken using a cost approach. This is deemed to be a level 3 input.
Under this approach the cost to replace the asset is calculated and then adjusted to take account of
accumulated depreciation. The valuer disaggregated the building into different components and for
each component determined a value based on the interrelationship between a range of factors. These
include asset condition, legal and commercial obsolescence and the determination of key depreciation
related assumptions such as pattern of consumption and future economic benefit.
Inputs to the valuation include the design and construction, average cost of construction, condition and
consumption score for each component. As these are supported by observable evidence obtained via
inspection and market evidence they have been classified as a Level 2 inputs. The unobservable
inputs (such as estimates pattern of consumption and (based on the asset consumption score) its
relationship to the assessed level of remaining service potential of the depreciable amount, required
extensive professional judgement and impacted significantly on the final determination of fair value.
As such these assets were classified as having been valued using level 3 valuation inputs.
The consumption rating scales were based initially on the past experience of the valuation firm and industry
guides and were then updated to take into account the experience and understanding of Noosa Shire
Council’s own engineers, asset management and finance staff. The results of the valuation were further
evaluated by confirmation against Noosa Shire Council's own understanding of the assets and the level
of remaining service potential.
The following table provides a summary of the unobservable inputs and an assessment of the sensitivity
of these to the fair value measurement.
Unobservable Sensitivity to Unobservable
Asset
Inputs Market Inputs Amount of Potential Impact
Lower Upper Lower Upper
Buildings (Cost Approach)
Relationship
between asset
consumption
Specialised Buildings rating scale and
the level of
consumed
service potential. -2.50% 2.50% -$ 1,489,286.00 $ 1,489,286.00
Other Infrastructure Assets (level 3)
Other infrastructure was last comprehensively valued as at 30 June 2012 using the cost approach by
Aurecon Australia Pty Ltd. This approach involved componentising the assets into significant parts
with different useful lives.
Asset values for the period ended 30 June 2015 have been reviewed with reference to relevant cost indices.
This review indicated that there was no evidence to suggest any material changes to fair value had
occurred. As a result of this, no indexation has been applied to this class.
A comprehensive valuation of this class will be undertaken in 2016. The valuation of other infrastructure has
been determined as a Level 3.
Accumulated Depreciation
In determining the level of accumulated depreciation, assets are disaggregated into significant components
which exhibit different useful lives. Useful lives are an estimate of the total service capacity in years for that
type of asset.
Page 24
Section 27
NOOSA SHIRE COUNCIL
Notes to the financial statements
For the year ended 30 June 2015
14 Fair value measurements continued
Infrastructure Assets (level 3)
Due to the specialised nature of Council's infrastructure assets and the services they provide, there is
no active measurable market. The fair value of all infrastructure assets is determined on the basis of
replacement of a new asset or modern equivalent.
Current Replacement Cost (CRC) is measured by reference to the lowest cost at which the gross economic
benefits of the asset could be obtained in the normal course of business. Where existing assets were
over designed, had excess capacity or where redundant an adjustment was made so that the resulting
valuation reflected the cost of replacing the existing economic benefits based on an efficient set of
modern equivalent assets to achieve the required level of service output within the Councils planning horizon.
Infrastructure assets are comprehensively revalued every three to five years, based on component unit
rates developed in line with asset renewal methods.
Specific valuation techniques used to value Council infrastructure assets comprise:
Road and Bridge Network - current replacement cost
Roads
Road and bridge infrastructure was comprehensively valued by independent valuer Aurecon Australia Pty Ltd
as at 30 June 2014.
The valuation technique used to determine fair value is essentially based on price modelling of the fair
value through ‘Level 3’ unobservable inputs. These include a variety of sources to obtain the best information
available for each asset type, including actual contract prices or supply quotes for similar assets.
The unit rates were predominantly developed from first principles by estimating the plant, material and labour
required for asset replacement. The base rates were sourced from local suppliers estimates and quotes,
contract schedules for work recently completed and council records. Where costs have not been readily
available then rates were obtained from Aurecon's cost database or the Rawlinson 2014 edition of the
Australian Construction Handbook.
Council uses 3 distinct location factors categorising its road infrastructure into urban, rural and commercial/
industrial. Roads are further categorised as sealed or unsealed and managed in segments. All road
segments are then further componentised into the sub classes of assets that make up each segment, i.e.
Road Surface, Road pavement - base, Road pavement - sub-base, Road shoulder, Formation, Kerbs, footpaths
etc. Each asset unit rate is determined on cost to construct, material type and useful life to facilitate valuation
and depreciation.
A review of market data obtained from the Australian Bureau of Statistics, Queensland Roads and Bridges
Index rates for the period 30 June 2014 to 30 June 2015 shows no significant material changes and therefore
the values are considered still at fair value. As a result of this, no indexation has been applied to this class.
Accumulated Depreciation
In determining the level of accumulated depreciation, roads are disaggregated into significant components
which exhibit different useful lives. Useful lives are an estimate of the total service capacity in years for that
type of asset.
Bridges
A full valuation of bridges assets was undertaken by independent valuers, Aurecon Australia Pty Ltd
effective 1 January 2014. All bridges, with exception to 3 major bridges, were valued based on unit rates
developed according to varying material types used for construction, the deck area, size and length.
Construction estimates were determined on a similar basis to roads. Significant bridge structures were
individually assessed by Aurecon Australia Pty Ltd.
A review of market data obtained from the Australian Bureau of Statistics, Queensland Roads and Bridges
Index rates for the period 30 June 2014 to 30 June 2015 shows no significant material changes and therefore
the values are considered still at fair value. As a result of this, no indexation has been applied.
Page 25
Section 28
NOOSA SHIRE COUNCIL
Notes to the financial statements
For the year ended 30 June 2015
14 Fair value measurements continued
Accumulated Depreciation
In determining the level of accumulated depreciation, bridges are disaggregated into significant components
which exhibit different useful lives. Useful lives are an estimate of the total service capacity in years for that
type of asset.
Stormwater
A comprehensive valuation of stormwater infrastructure was undertaken by independent valuers Aurecon
Australia Pty Ltd effective 30 June 2015.
As there is a significant level of professional judgement used in determining the valuation due to the level
of unobservable data, the valuation of drainage assets has been determined as Level 3.
The fair value unit rates were determined using the prevailing market costs for supply and installation
of similar assets or their modern equivalent. The methodology for calculation of unit rates from first
principles consists of breaking down each asset into its cost components such as demolition,
reinstatement, excavation, construction, delivery and installation. The models used to determine the
unit rates included internal selection of variables for asset size, depth, location and soil type.
.
Accumulated Depreciation
In determining the level of accumulated depreciation, stormwater assets are disaggregated into significant
components which exhibit different useful lives. Useful lives are an estimate of the total service capacity
in years for that type of asset.
Sensitivity Analysis - Roads, Bridge and Stormwater Network
As detailed above Council's road, bridge and stormwater network has been valued using written down current
replacement cost. This method utilises a number of inputs that require judgement and are therefore classed as
unobservable. While these judgements are made with the greatest care, and based upon years of experience,
different judgements could result in a different valuation. The table below summarises the effect that changes
in the most significant unobservable inputs would have on the valuation:
Significant Relationship of unobservable
Range of inputs
unobservable input inputs to fair value
Number of Labour hours 5-100hrs/linear The higher the labour hours, the
metre or sqm higher the fair value
Standard material usage Varies depending The higher the usage quantities,
quantities upon the type of the higher the fair value
material
Condition rating (useful As specified The higher the condition rating,
life) above – 0H/0M the lower the fair value.
(lowest) to 6H/6M
(highest)
Remaining useful life 5-100 years The longer the remaining useful
life, the higher the fair value.
Page 26
Section 29
NOOSA SHIRE COUNCIL
Notes to the financial statements
For the year ended 30 June 2015
2014
2015 (6 months)
Note $ $
15 Intangible assets
Net carrying value at period end:
Computer Software 2,701,457 2,268,600
2,701,457 2,268,600
Computer Software
Opening gross carrying value 2,290,109 -
Acquired at cost 342,232 2,171,862
Assest transferred from de-amalgamated Council - 118,247
2,632,341 2,290,109
Accumulated amortisation
Opening balance 21,509 -
Amortisation in the period 250,865 21,509
272,374 21,509
Net carrying value 2,359,967 2,268,600
Work in progress 341,490 -
Total carrying value at end of the financial year 2,701,457 2,268,600
Straight line amortisation has been used with no residual value.
Software has a useful life estimated at ten years.
16 Trade and other payables
Current
Accruals 3,497,696 2,054,226
Creditors 1,074,460 1,185,975
Employee related accruals 766,541 835,081
Annual leave 1.16 (c) 2,301,569 2,484,788
Other entitlements 95,877 109,720
7,736,143 6,669,789
Employee benefit expenses are calculated at current pay levels and
adjusted for inflation and likely future changes in salary level.
The non-current portion of annual leave and long service leave is then
discounted to the present value. Further details on employee
entitlements are reported in Note 1.16
17 Provisions
Current
Long service leave 1.16(b) 4,114,389 4,358,384
4,114,389 4,358,384
Non-Current
Long service leave 1.16(b) 347,535 447,272
Property restoration:
(i) Landfill sites 7,797,389 7,719,069
(ii) Quarry sites 50,000 50,000
8,194,924 8,216,341
Details of movements in provisions:
Long service leave
Balance at the beginning of financial year 4,805,656 -
Transferred from de-amalgamated council - 5,751,090
Amount provided for in the period 318,483 258,040
Amount paid in the period (662,215) (1,203,475)
Balance at end of the financial year 4,461,924 4,805,656
(i) Landfill sites
Balance at the beginning of financial year 7,719,069 -
Transferred from de-amalgamated council - 4,598,150
Increase in provision - due to change in time 78,320 -
Accounting adjustment on de-amalgamation - 3,120,919
Balance at end of the financial year 7,797,389 7,719,069
Page 27
Section 30
NOOSA SHIRE COUNCIL
Notes to the financial statements
For the year ended 30 June 2015
2014
2015 (6 months)
Note $ $
Current portion - -
Non-current portion 7,797,389 7,719,069
7,797,389 7,719,069
This is the present value of the estimated future cost of restoring the
Noosa landfill under the State Government environmental regulations
at the end of its useful life.
Cash funds committed to meet this liability at the reporting date are:
6,078,320 -
(ii) Quarry sites
Balance at the beginning of financial year 50,000 -
Transferred from de-amalgamated council - 50,000
Balance at end of the financial year 50,000 50,000
Current portion - -
Non-current portion 50,000 50,000
50,000 50,000
This is the present value of the estimated future cost of restoring the
quarry sites under the State Government environmental regulations at
the end of its useful life.
18 Borrowings 1.17
Unsecured borrowings
Unsecured borrowings are provided by the Queensland Treasury
Corporation.
All borrowings are in AUD denominated amounts and carried at amortised
cost, interest being expensed as it accrues. No interest has been
capitalised during the current or comparative reporting period. Expected
final repayment dates vary from 19 November 2025 to 4 December 2026.
There have been no defaults or breaches of the loan agreement during
the period.
Principal and interest repayments are made quarterly in arrears.
Details of borrowings at balance date are:
Current
Queensland Treasury Corporation 2,633,065 2,600,397
Non Current
Queensland Treasury Corporation 36,747,480 38,576,628
Details of movements in borrowings:
Queensland Treasury Corporation
Balance at the beginning of financial year 41,177,025 -
Loans raised 794,000 2,300,000
Loans recognised on the de-amalgamation from SCRC - 40,048,048
Loan interest capitalised in period 2,266,452 1,137,954
Principal repayments (4,856,932) (2,308,977)
Balance at end of the financial year 39,380,545 41,177,025
Classified as :
Current 2,633,065 2,600,397
Non-current 36,747,480 38,576,628
39,380,545 41,177,025
Page 28
Section 31
NOOSA SHIRE COUNCIL
Notes to the financial statements
For the year ended 30 June 2015
2014
2015 (6 months)
Note $ $
The QTC loan market value at the reporting date was $44,938,354.70
This represents the value of the debt if Council repaid it at that date.
As it is the intention of Council to hold the debt for its term, no
provision is required to be made in these accounts.
No assets have been pledged as security by the council for any
liabilities.
Borrowings are all in $A and are underwritten by the Queensland State
Government.
19 (i) Asset revaluation surplus
Balance at the beginning of financial year - -
Buildings 5,638,455 -
Storm Water 8,695,652 -
Balance at end of the financial year 14,334,107 -
20 Commitments for expenditure
Operating leases
Minimum lease payments in relation to non-cancellable operating
leases are as follows:
Within one year 330,919 658,948
Later than 1 year but not later than 5 years 33,726 333,285
Later than 5 years - -
364,645 992,233
Operating leases are entered into for motor vehicles and IT equipment.
Lease payments are generally fixed, but with inflation clauses on
which future rentals are determined.
Contractual Commitments
Contractual commitments at balance date but not recognised
in the financial statements are as follows:
Within one year 13,496,071 5,162,500
One to five years 13,192,800 1,671,416
Later than five years - -
26,688,871 6,833,916
Capital Commitments
Commitment for the construction of the following assets
contracted for at the reporting date but not recognised as liabilities
are as follows:
Roads, Bridges and Stormwater 6,395,227 510,800
Pathways 217,581 514,500
Other 6,612,808 238,700
8,059,208 1,264,000
These expenditures are payable :
Within one year 8,059,208 1,264,000
Later than 1 year but not later than 5 years - -
Later than 5 years - -
8,059,208 1,264,000
21 Events after balance date
There were no material financial adjusting events after balance date.
Page 29
Section 32
NOOSA SHIRE COUNCIL
Notes to the financial statements
For the year ended 30 June 2015
2014
2015 (6 months)
Note $ $
22 Contingent liabilities
Details and estimates of maximum amounts of contingent liabilities are as follows:
Local Government Workcare
Noosa Shire Council is a member of the Queensland local government
workers compensation self-insurance scheme, Local Government
Workcare. Under this scheme the Council has provided a bank guarantee
to cover bad debts which may remain should the self insurance licence
be cancelled and there was insufficient funds available to cover outstanding
liabilities. Only the Queensland Government's workers compensation authority
may call on any part of the guarantee should the above circumstances arise.
The Council's maximum exposure to the bank guarantee is: 290,070 290,070
Local Government Mutual
Noosa Shire Council is a member of the local government mutual liability self-insurance
pool, LGM Queensland. In the event of the pool being wound up or it is unable
to meet its debts as they fall due, the trust deed and rules provide that any
accumulated deficit will be met by the individual pool members in the same
proportion as their contribution is to the total pool contributions in respect to
any year that a deficit arises.
As at 30 June 2015 the financial statements reported an accumulated surplus and
it is not anticipated any liability will arise.
23 Superannuation
The Council contributes to the Local Government Superannuation
Scheme (Qld) (the scheme). The scheme is a Multi-employer Plan as
defined in the Australian Accounting Standard AASB119 Employee
Benefits.
The Queensland Local Government Superannuation Board, the
trustee of the scheme, advised that the local government
superannuation scheme was a complying superannuation scheme for
the purpose of the Commonwealth Superannuation Industry
(Supervision) legislation.
The scheme has three elements referred to as:
The City Defined Benefits Fund (CDBF) which covers former
members of the City Super Defined Benefits Fund
The Regional Defined Benefits Fund (Regional DBF) which covers
defined benefit fund members working for regional local governments;
and
The Accumulation Benefits Fund (ABF)
The ABF is a defined contribution scheme as defined in AASB 119.
Council has no liability to or interest in the ABF other than the payment
of the statutory contributions as required by the Local Government Act
2009.
Council does not have any employees who are members of the CDBF
and, therefore, is not exposed to the obligations, assets or costs
associated with this fund.
The Regional DBF is a defined benefit plan as defined in AASB119.
The Council is not able to account for the Regional DBF as a defined
benefit plan in accordance with AASB119 because the scheme is
unable to account to the Council for its proportionate share of the
defined benefit obligation, plan assets and costs. The funding policy
adopted in respect of the Regional DBF is directed at ensuring that the
benefits accruing to members and beneficiaries are fully funded as
they fall due.
Page 30
Section 33
NOOSA SHIRE COUNCIL
Notes to the financial statements
For the year ended 30 June 2015
2014
2015 (6 months)
Note $ $
To ensure the ongoing solvency of the Regional DBF, the scheme's
trustee can vary the rate of contributions from relevant local
government employers subject to advice from the scheme's actuary.
As at the reporting date, no changes had been made to prescribed
employer contributions which remain at 12% of employee assets and
there are no known requirements to change the rate of contributions.
Any amount by which the fund is over or under funded would only
affect future benefits and contributions to the Regional DBF, and is not
an asset or liability of the Council. Accordingly there is no recognition
in the financial statements of any over or under funding of the scheme.
As at the reporting date, the assets of the scheme are sufficient to
meet the vested benefits.
The most recent actuarial assessment of the scheme was undertaken
as at 1 July 2012. The actuary indicated that “the Regional DBF is
currently in a satisfactory but modest financial position and remains
vulnerable to adverse short and medium term experience."
Following the previous actuarial assessment in 2009, councils were
advised by the trustee of the scheme, following advice from the
scheme’s actuary, that additional contributions may be imposed in the
future at a level necessary to protect the entitlements of Regional DBF
members. In the 2012 actuarial report the actuary has recommended
no change to the employer contribution levels at this time.
Under the Local Government Act 2009 the trustee of the scheme has
the power to levy additional contributions on councils which have
employees in the Regional DBF when the actuary advises such
additional contributions are payable - normally when the assets of the
DBF are insufficient to meet members' benefits.
There are currently 71 councils contributing to the Regional DBF plan
and any changes in contribution rates would apply equally to all 71
councils. Noosa Shire Council made less than 4% of the total
contributions to the plan in the 2014-15 financial year.
The next actuarial investigation will be conducted as at 1 July 2015.
The amount of superannuation contributions paid by Noosa Shire Council
to the scheme in this period for the benefit of employees was: 2,707,406 1,305,459
24 Trust funds
Trust funds held for outside parties:
Monies collected or held on behalf of other entities yet
to be paid out to or on behalf of those entities 2,465,751 2,640,702
- -
- -
2,465,751 2,640,702
The Noosa Shire Council performs only a custodial role in respect of
these monies, and because the monies cannot be used for Council
purposes, they are not brought to account in these financial
statements.
Page 31
Section 34
NOOSA SHIRE COUNCIL
Notes to the financial statements
For the year ended 30 June 2015
2014
2015 (6 months)
Note $ $
25 Reconciliation of net result for the year to net cash
inflow (outflow) from operating activities
Net result 17,829,742 973,500,645
Non-cash operating items:
Impairment of receivables and bad debts written off 6,340 909
Depreciation and amortisation 8 15,919,507 7,779,655
Change in restoration provisions expensed to finance costs 78,320 -
Interest expense capitalised in QTC loans 2,266,452 1,137,954
18,270,619 8,918,518
Investing and development activities:
Capital grants, subsidies and contributions 4 (6,278,627) (2,358,968)
Capital income (604,515) (7,228)
Capital expenses 900,880 315,945
Net equity income from investments (3,194,976) (1,038,745)
Net gain on restructure of local govenrment - (972,198,129)
(9,177,238) (975,287,126)
Changes in operating assets and liabilities :
(Increase) decrease in receivables (191,082) (2,124,994)
(Increase) decrease in inventories (excluding land) (613) (103,425)
Increase (decrease) in payables 758,379 3,969,228
Increase (decrease) in provisions (343,732) (3,926,236)
Increase (decrease) in other liabilities 338,572 84,406
561,524 (2,101,021)
Net cash inflow from operating activities 27,484,647 5,031,016
26 Operating lease income
The council has leased properties to various tenants under commercial
lease arrangements.
The expected future income is as follows:
Within One Year 338,264 300,614
Within One to Five Years 788,825 503,190
Greater Than Five Years - -
Total 1,127,089 803,804
27 Correction of prior period adjustments
(a) Assets not previously recognised
During the financial year Council became aware of some assets in
property plant and equipment that were not previously recognised.
Consequently the assets have been recognised retrospectively and
certain comparative figures have been restated, as disclosed in this
note.
Summary details of assets not previously recognised are as follows:
Road and Bridge Network 1,500,947
Buildings 13 174,067 -
Gain from assets not previously recognised 1,675,014 -
(b) Commitments for expenditure - operating leases
During 2013/14 an error was identified with the prior year calulation of
contractual commitments for IT operating leases.
The rental charge was calculated as being a monthly expense as
opposed to quarterly charge and resulted in an overstatement of
operating lease commitments of $511,516.
Consequently, comparative figures have been restated in note 20.
Page 32
Section 35
NOOSA SHIRE COUNCIL
Notes to the financial statements
For the year ended 30 June 2015
28 Financial Instruments
Noosa Shire Council has exposure to the following risks arising from financial instruments:
- credit risk
- liquidity risk
- market risk
This note provides information (both qualitative and quantitative) to assist statement users evaluate the significance of financial
instruments on the Council's financial position and financial performance, including the nature and extent of risks and how
the Council manages these exposures.
Financial risk management
Noosa Shire Council is responsible for the establishment and oversight of the risk management framework, together
with developing and monitoring risk management policies.
Council's management approves policies for overall risk management, as well as specifically for managing credit,
liquidity and market risk.
The Council's risk management policies are established to identify and analyse the risks faced, to set appropriate limits
and controls and to monitor these risks and adherence against limits. The Council aims to manage volatility to minimise
potential adverse effects on the financial performance of the Council. Noosa Shire Council does not enter into derivatives.
Credit Risk
Credit risk is the risk of financial loss if a counterparty to a financial instrument fails to meet its contractual obligations.
These obligations arise principally from the Council's investments and receivables from customers.
Exposure to credit risk is managed through regular analysis of credit counterparty ability to meet payment obligations.
The carrying amount of financial assets represents the maximum credit exposure.
Investments in financial instruments are required to be made with Queensland Treasury Corporation (QTC) or similar state
/commonwealth bodies or financial institutions in Australia, in line with the requirements of the Statutory Bodies Financial
Arrangements Act 1982.
No collateral is held as security relating to the financial assets held by Noosa Shire Council.
The following table represents the maximum exposure to credit risk based on the carrying amounts of financial assets at
the end of the reporting period:
Note 2015 2014
Financial Assets $ $
Cash and cash equivalents - Bank 9 175,276 77,994
Cash investments held with - QTC 9 27,742,381 25,118,125
Cash investments held with other
approved deposit taking institutions 9 22,973,517 5,926,935
Equity investments 11 65,211,946 60,978,225
Receivables - rates 10 4,165,668 4,159,585
Receivables - other 10 50,481,484 61,074,924
Other credit exposure
Guarantee 22 290,070 290,070
Total 171,040,342 157,625,858
Cash and cash equivalents
The Council may be exposed to credit risk through its investments in the QTC Cash Fund and QTC Working Capital Facility.
The QTC Cash Fund is an asset management portfolio that invests with a wide range of high credit rated counterparties.
Deposits with the QTC Cash Fund are capital guaranteed. Working Capital Facility deposits have a duration of one day and
all investments are required to have a minimum credit rating of "A-", therefore the likelihood of the counterparty having
capacity to meet its financial commitments is strong.
Page 33
Section 36
NOOSA SHIRE COUNCIL
Notes to the financial statements
For the year ended 30 June 2015
28 Financial instruments - continued
Other financial assets
Other investments are held with financial institutions, which are rated AAA to AA- based on rating Standard and Poor's
agency ratings, and whilst not capital guaranteed, the likelihood of a credit failure is assessed as remote.
Trade and other receivables
In the case of rate receivables, Council has the power to sell the property to recover any defaulted amounts. In effect this
power protects the Council against credit risk in the case of defaults.
In other cases, Council assesses the credit risk before providing goods or services and applies normal business credit
protection procedures to minimise the risk.
By the nature of the Councils operations, there is a geographical concentration of risk in the Council's area.
Ageing of past due receivables and the amount of any impairment is disclosed in the following table:
Not past due Past due Less Total
31 to 60 61 to 90 Over 90 Impaired
days days days
$ $ $ $ $ $
Receivables: 937,636 61,330 25,296 4,411,620 (6,247) 5,429,635
Loans to Unitywater - - - 49,217,517 - 49,217,517
2015 937,636 61,330 25,296 53,629,137 (6,247) 54,647,152
Receivables 10,371,206 138,236 79,163 5,428,387 - 16,016,992
Loans to Unitywater - - - 49,217,517 - 49,217,517
2014 10,371,206 138,236 79,163 54,645,904 - 65,234,509
Liquidity risk
Liquidity risk is the risk that the Council will encounter difficulty in meeting the obligations associated with its financial
liabilities that are settled by delivering cash or another financial asset.
Noosa Shire Council is exposed to liquidity risk through its normal course of business and through its borrowings
with QTC and other financial institutions.
The Council manages its exposure to liquidity risk by maintaining sufficient cash deposits and undrawn facilities,
both short and long term, to cater for unexpected volatility in cash flows.
These facilities are disclosed in note 18.
The following table sets out the liquidity risk in relation to financial liabilities held by the Council. It represents the
remaining contractual cashflows (principal and interest) of financial liabilities at the end of the reporting period,
excluding the impact of netting agreements:
Consolidated 0 to 1 year 1 to 5 years Over 5 years Total contractual Carrying
cash flows amount
2015 $ $ $ $ $
Trade and other payables 5,338,697 - - 5,338,697 5,338,697
QTC Loans 4,941,800 19,754,559 28,458,148 53,154,507 39,380,545
10,280,497 19,754,559 28,458,148 58,493,204 44,719,242
2014
Trade and other payables 4,075,282 - - 4,075,282 4,075,282
QTC Loans 7,113,778 19,436,191 32,049,878 58,599,846 41,177,025
11,189,060 19,436,191 32,049,878 62,675,128 45,252,307
The outflows in the above table are not expected to occur significantly earlier than outlined and are not expected to
be materially different amounts than indicated in the table.
Page 34
Section 37
NOOSA SHIRE COUNCIL
Notes to the financial statements
For the year ended 30 June 2015
28 Financial instruments - continued
Market risk
Market risk is the risk that changes in market prices, such as interest rates, will affect the Council's income or the value
of its holdings of financial instruments.
Interest rate risk
Noosa Shire Council is exposed to interest rate risk through investments with QTC and other financial institutions.
The Council has access to a mix of variable and fixed rate funding options through QTC so that interest rate risk
exposure can be minimised.
Sensitivity
Sensitivity to interest rate movements is shown for variable financial assets and liabilities based on the carrying amount
at reporting date.
The following interest rate sensitivity analysis depicts what effect a reasonably possible change in interest rates (assumed
to be 1%) would have on the profit and equity, based on the carrying values at the end of the reporting period. The
calculation assumes that the change in interest rates would be held constant over the period.
Consolidated
2015
Net carrying Change in profit & (loss) from Change in equity from
Financial assets and liabilities that are amount 1% increase 1% decrease 1% increase 1% decrease
held at variable interest rates total: $ $ $ $ $
QTC cash funds 27,742,381 277,424 (277,424) 277,424 (277,424)
Other investments 6,973,517 69,735 (69,735) 69,735 (69,735)
Loans - QTC (39,380,545) (393,805) 393,805 (393,805) 393,805
Net total (4,664,647) (46,646) 46,646 (46,646) 46,646
2014
QTC cash funds 25,118,125 251,181 (251,181) 251,181 (251,181)
Other investments 5,926,935 59,269 (59,269) 59,269 (59,269)
Loans - QTC (41,177,025) (411,770) 411,770 (411,770) 411,770
Net total (10,131,965) (101,320) 101,320 (101,320) 101,320
In relation to the QTC loans held by the Council, the following has been applied:
*QTC Generic Debt Pool - the generic debt pool products approximate a fixed rate loan. There is a negligible impact
on the interest sensitivity from changes in interest rates for generic debt pool borrowings.
The sensitivity analysis provided by QTC is currently based on a 1% change but this is subject to change.
Fair Value
The fair value of trade and other receivables and payables is assumed to approximate the value of the original transaction,
less any allowance for impairment.
The fair value of borrowings with QTC is based on the market value of debt outstanding. The market value of a debt
obligation is the discounted value of future cash flows based on prevailing market rates and represents the amount required
to be repaid if this was to occur at balance date. The market value of debt is provided by QTC and is discussed below and
disclosed in note 18.
QTC applies a book rate approach in the management of debt and interest rate risk, to limit the impact of market value
movements to clients' cost of funding. The book value represents the carrying value based on amortised cost using the
effective interest method.
Page 35
Section 38
NOOSA SHIRE COUNCIL
Notes to the financial statements
For the year ended 30 June 2015
29 National Competition Policy
(a) Business activities to which the code of competitive conduct is applied
This requires the application of full cost pricing, identifying the cost of community service obligations (CSO)
and eliminating the advantages and disadvantages of public ownership within that activity.
The CSO value is determined by Council, and represents an activities cost(s) which would not be incurred if
the primary objective of the activities was to make a profit. The Council provides funding from general revenue
to the business activity to cover the cost of providing non-commercial community services or costs deemed to
be CSO's by the Council.
Council applies full cost pricing to the following business activities:
Waste Management
Holiday Parks
(b) The following activity statements are for activities subject to full cost pricing:
Waste Waste Holiday Parks Holiday Parks
Management Management
2015 2014 2015 2014
(6 months) (6 months)
$ $ $ $
Revenue for services provided to the Council 207,383 91,616
Revenue for services provided to external clients 12,840,616 6,125,809 2,899,448 1,336,427
* Community service obligations 71,578 9,906
13,119,577 6,227,331 2,899,448 1,336,427
Less : Expenditure 8,915,451 4,833,436 1,802,458 747,415
Surplus (deficiency) 4,204,126 1,393,895 1,096,990 589,012
(c) Description of CSO's provided to business activities during the reporting period.
Activities CSO description
Waste Management Waste collection and disposal charges for charitable organisations.
Page 36
Section 39
NOOSA SHIRE COUNCIL
FINANCIAL STATEMENTS
For the year ended 30 June 2015
MANAGEMENT CERTIFICATE
For the year ended 30 June 2015
These general purpose financial statements have been prepared pursuant to sections 176 and 177 of the
Local Government Regulation 2012 (the Regulation) and other prescribed requirements.
In accordance with section 212(5) of the Regulation we certify that:
(i) the prescribed requirements of the Local Government Act 2009 and Local Government Regulation 2012
for the establishment and keeping of accounts have been complied with in all material respects; and
(ii) the general purpose financial statements, as set out on pages 1 to 36, present a true and fair view, in
accordance with Australian Accounting Standards, of the Council’s transactions for the financial year
and financial position at the end of the year.
_____________________________________ ______________________________________
Mayor Chief Executive Officer
Name:.............................................................. Name: ................................................................
Date: ______/______/______ Date:______/______/_______
Page 37
Section 40
NOOSA SHIRE COUNCIL
For the year ended 30 June 2015
Current Year Financial Sustainability Statement
Certificate of Accuracy - for the Current Year Financial Sustainability Statement
Independent Auditor's Report (Current Year Financial Sustainability Statement)
Page 38
Section 41
NOOSA SHIRE COUNCIL
Current-year Financial Sustainability Statement
For the year ended 30 June 2015
Measures of Financial Sustainability
(i) Operating surplus ratio
Operating surplus (Net result excluding all capital items) divided by total operating revenue (excludes capital revenue)
(ii) Asset sustainability ratio
Capital expenditure on the replacement of assets (renewals) divided by depreciation expense.
(iii) Net financial liabilities ratio
Total liabilities less current assets divided by total operating revenue
Council's performance at 30 June 2015 against key financial ratios:
Operating surplus Asset Net financial
ratio sustainability liabilities ratio
ratio
between 0% and greater than not greater
Target
10% 90% than 60%
Actual 7.92% 65.10% 1.16%
Note 1 - Basis of Preparation
The current year financial sustainability statement is a special purpose statement prepared in accordance with the requirements of
the Local Government Regulation 2012 and the Financial Management (Sustainability) Guideline 2013 . The amounts used to
calculate the three reported measures are prepared on an accrual basis and are drawn from the Council's audited general purpose
financial statements for the year ended 30 June 2015.
Certificate of Accuracy
For the year ended 30 June 2015
This current-year financial sustainability statement has been prepared pursuant to Section 178 of the Local Government
Regulation 2012 (the regulation).
In accordance with Section 212(5) of the Regulation we certify that this current-year financial sustainability statement
has been accurately calculated.
_____________________________________ ___________________________________
Mayor Chief Executive Officer
Name: .............................................................. Name: ............................................................
Date: ______/______/______ Date:______/______/_______
Section 42
NOOSA SHIRE COUNCIL
Long-Term Financial Sustainability Statement
Prepared as at 30 June 2015
Measures of Financial Sustainability
(i) Operating surplus ratio
Operating surplus (Net result excluding all capital items) divided by total operating revenue (excludes capital revenue)
(ii) Asset sustainability ratio
Capital expenditure on the replacement of assets (renewals) divided by depreciation expense.
(iii) Net financial liabilities ratio
Total liabilities less current assets divided by total operating revenue
Council's performance at 30 June 2015 against key financial ratios:
Operating Asset Net financial
surplus ratio sustainability liabilities
ratio ratio
Target between 0% greater than not greater
and 10% 90% than 60%
Actuals at 30 June 2015 7.92% 65.10% 1.16%
Projected for 30 June 2016 1.30% 129.50% 12.30%
30 June 2017 1.50% 99.00% 11.40%
30 June 2018 1.90% 100.10% 10.20%
30 June 2019 2.30% 100.60% 8.60%
30 June 2020 2.60% 100.10% 4.20%
30 June 2021 1.90% 97.80% 0.70%
30 June 2022 2.00% 97.10% -3.20%
30 June 2023 1.90% 96.20% -7.00%
30 June 2024 2.00% 100.00% -9.90%
Financial Management Strategy
Council measures revenue and expenditure trends over time as a guide to future requirements and to make decisions about the efficient
allocation of resources to ensure the most effective provision of services. Council ensures that its financial management strategy is
prudent and that its long-term financial forecast shows a sound financial position whilst also being able to meet the community’s current
and future needs.
Certificate of Accuracy
For the long-term financial sustainability statement prepared as at 30 June 2015
This long-term financial sustainability statement has been prepared pursuant to Section 178 of the Local Government
Regulation 2012 (the regulation).
In accordance with Section 212(5) of the Regulation we certify that this long-term financial sustainability statement
has been accurately calculated.
_____________________________________ ___________________________________
Mayor Chief Executive Officer
Name: .............................................................. Name: ...........................................................
Date: ______/______/______ Date:______/______/_______