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Financial statements - Launceston City Council

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Financial statements - Launceston City Council Powered By Docstoc
					                                              1.	 Statement	of	Comprehensive	Income	   58
                                              2.	 Statement	of	Financial	Position	     59
                                              3.	 Statement	of	Changes	in	Equity	      60
                                              4.	 Cash	Flow	Statement	                 61
                                              5.	 Notes	to	the	Financial	Statements	   62
                                              6.	 Statement	by	the	General	Manager	    95
                                              7.	 Audit	Report	                        96




    section FouR
launceston city council
         Financial statements
                          year ended 30 June 2011
58   Launceston city counciL   AnnuAl RepoRt 2010/11




     statement oF comPReHensiVe income
     Year ended 30 June 2011

                                                                                                         2011                      2010
                                                                             Notes                          $                         $
      ReVenues
         Rates                                                                      2            50,228,222                47,012,725
         Fees and charges                                                                        16,959,386                17,494,938
         Revenue grants and contributions                                                          6,484,360                 7,079,522
         Interest                                                                                  3,953,955                 3,638,774
         Investment revenue (Ben Lomond Water)                                                     2,106,983                             -
         Other                                                                                     2,325,653                 2,408,510
                                                                                                 82,058,559                77,634,469


      eXPenses
         Maintenance of facilities and provision of services                        4            59,521,459                54,708,582
         Borrowing costs                                                            4              1,077,746                    899,104
         Depreciation and amortisation                                              7            16,253,931                15,854,560
         State Government Fire Service Levy                                                        5,712,302                 5,193,002
         Rate remissions and abatements                                                                74,756                   104,458
                                                                                                 82,640,194                 76,759,706


      oPeRatinG suRPlus (DeFicit)                                                                  (581,635)                    874,763


         Capital grants                                                                            8,332,903               27,281,840
         Infrastructure take up adjustments                                         5              1,022,566               (1,950,126)
         Museum take up adjustment                                                31                           -          231,913,156


      net suRPlus BeFoRe otHeR comPReHensiVe income                                                8,773,834              258,119,633


         Investment write down                                                    23           (16,580,000)             (132,648,498)
         Investment revaluation increase                                          23               2,730,000                             -
         Actuarial gains (losses)                                                                  (715,010)                 2,307,428
         Infrastructure assets revaluation increase (decrease)                   21e            142,808,477                              -


      comPReHensiVe Result                                                                      137,017,301               127,778,563




                                                                 The accompanying notes form an integral part of these financial statements.
                                                            S E C T IO N f O u r   financial statements                 59




statement oF Financial Position
aS aT 30 June 2011

                                                                                   2011                     2010
                                                      Notes                           $                        $
 eQuity
    Capital reserves                                         8           136,413,132               128,086,782
    Revenue reserves                                         8           858,983,645               875,930,788
    Asset revaluation reserves                               8           419,034,037               273,495,560
    Trusts and bequests                                      8              1,504,251                 1,404,634
 total eQuity                                                         1,415,935,065             1,278,917,764


    Represented by:-


 cuRRent assets
    Cash at bank and on hand                                 9                734,366                 1,625,080
    Rate and sundry receivables                            10               5,120,186                 5,106,308
    Short term investments                                 11             59,660,261                 66,120,692
    Inventories                                                               611,069                    615,173
                                                                          66,125,882                73,467,253
 non-cuRRent assets
    Deferred receivables                                   19                 257,556                    257,556
    Investment (Ben Lomond Water)                          11            255,800,000               269,650,000
    Intangible assets                                      21               4,045,547                 2,330,371
    Infrastructure and other assets                        21            923,521,823               764,340,327
    Museum collection                                      31            231,913,206               231,913,206
                                                                      1,415,538,132             1,268,491,460
 total assets                                                         1,481,664,014             1,341,958,713


 cuRRent liaBilities
    Deposits and prepayments                               11               6,703,998                 2,128,326
    Employee provisions                                    13               5,636,058                 5,408,102
    Interest bearing liabilities                           15               2,335,882                 1,754,020
    Sundry payables and accruals                           18             23,031,477                26,670,842
                                                                          37,707,415                 35,961,290
 non-cuRRent liaBilities
    Employee provisions                                    13                 781,954                    734,983
    Superannuation obligation                              14               3,623,027                 2,666,955
    Interest bearing liabilities                           15             13,041,553                 13,326,721
    Other provisions                                       20             10,575,000                 10,351,000
                                                                          28,021,534                 27,079,659
 total liaBilities                                                        65,728,949                63,040,949
 net assets                                                           1,415,935,065             1,278,917,764


    Commitments for capital expenditure                    17               5,066,892                12,005,598
    Contingent liabilities                                 30                           -                         -




                                          The accompanying notes form an integral part of these financial statements.
                                                                                                                                                                                                             60


statement oF cHanGes in eQuity
Year ended 30 June 2011

                                                                                                      Asset ReVALUAtIoN
                                       CAPItAL ReseRVes                 ReVeNUe ReseRVes                       ReseRVes        tRUsts AND BeQUests                                   totAL eQUItY

                                      2011             2010             2011           2010           2011           2010          2011                 2010                 2011                2010
                                         $                $                $              $              $              $             $                    $                    $                   $
                                                                                                                                                                                                              Launceston city counciL




Balance 1 July                 128,086,782      100,816,187     875,930,788      640,558,226    273,495,560   408,597,817     1,404,634           1,166,971 1,278,917,764 1,151,139,201
   Net surplus                   8,326,350       27,270,595          347,867     230,611,375                                     99,617             237,663            8,773,834        258,119,633
                                                                                                                                                                                                       -
Asset revaluations                                                                                                                                                                                     -
   Infrastructure assets                                                                        142,808,477                                                        142,808,477                         -

   BLW write down
   (Note 23)                                                    (16,580,000)    (132,648,498)     2,730,000                                                         (13,850,000)       (132,648,498)
Actuarial gains (losses)                                            (715,010)      2,307,428                                                                           (715,010)           2,307,428
                                                                                                                                                                                                             AnnuAl RepoRt 2010/11




Water and sewer assets                                                           135,102,257                  (135,102,257)                                                                            -
Balance 30 June                136,413,132     128,086,782      858,983,645      875,930,788    419,034,037   273,495,560     1,504,251           1,404,634 1,415,935,065 1,278,917,764

Note – For further information regarding changes in reserves refer to Note 8.




                                                                                                                               The accompanying notes form an integral part of these financial statements.
                                                                        S E C T IO N f O u r   financial statements                 61




casH Flow statement
Year ended 30 June 2011

                                                                                           2011                      2010
                                                                                              $                         $
                                                                                       INfLows                   INfLows
                                                                  Notes             (oUtfLows)                (oUtfLows)
casH Flows FRom oPeRatinG actiVities
    Payments
    Provision of goods and services (including GST)                                  (60,732,773)              (60,485,055)
    Interest paid                                                                        (870,772)                 (627,890)
    State Government Fire Levy                                                        (5,712,302)                (5,193,002)
    Receipts
    Rates                                                                             50,184,987                48,149,914
    Fees and charges                                                                  16,731,597                 16,961,710
    Grants and contributions – Capital                                                13,502,902                  5,861,840
    Grants and contributions – Revenue                                                  6,484,368                 7,079,531
    Interest received                                                                   3,637,898                 3,638,774
    Other (including GST)                                                               6,127,539                 4,974,785
    net cash from operating activities                                 22             29,353,444                 20,360,607



casH Flows useD in inVestinG actiVities
    Payments
    Capital works                                                                    (39,787,542)              (28,032,856)
    Receipts
    Sale of assets                                                                        679,276                    537,346
    Distributions from investments                                                      2,106,983                    709,218
    net cash used in investing activities                                            (37,001,283)              (26,786,292)


casH Flows useD in FinancinG actiVities
    Payments
    Loan repayments                                                                   (1,779,306)                (1,532,275)
    Receipts
    Loan proceeds                                                                       2,076,000                 6,000,000
    net cash from financing activities                                                    296,694                 4,467,725


    Net increase (decrease) in cash held                                              (7,351,145)                (1,957,960)
    Cash transferred to Ben Lomond Water                               23                           -            (1,168,688)
    Cash and cash equivalents at 1 July                                                67,745,773               70,872,421
    cash and cash equivalents at 30 June                               22             60,394,628                67,745,773




                                                      The accompanying notes form an integral part of these financial statements.
62   Launceston city counciL    AnnuAl RepoRt 2010/11




     notes to tHe Financial statements
     Year ended 30 June 2011




     contents
     1. Statement of Accounting Policies                      63   10. Rate and sundry receivables                    74
        a) Reporting entity                                   63   11. Investments                                    75
        b) Statement of Compliance                            63
                                                                   12. Conditions over contributions                  75
        c) Adoption of new and revised accounting standards   63
        d) Accounting estimates                               63   13. Employee provisions and statistics             76
        e) Changes in accounting policies                     63   14. Superannuation                                 76
        f ) Financial instruments                             63
                                                                   15. Interest bearing liabilities (secured loans)   80
        g) Grants and donations                               63
        h) Investments                                        63   16. Lease commitments                              80
        i) Inventories                                        64   17. Commitments for capital expenditure            81
        j) Recognition of non-current assets                  64   18. Sundry payables and accruals                   81
        k) Impairment                                         64
                                                                   19. Deferred receivables                           81
        l) Depreciation and write off of non-current assets   64
        m) Intangible assets                                  64   20. Other provisions                               81
        n) Provision for rehabilitation                       64   21. Infrastructure assets                          82
        o) Taxation                                           65
                                                                   22. Cash flow                                      86
        p) Employee benefits                                  65
        q) Competition Policy Compliance                      65   23. Investment                                     87
        r) Component functions or programs                    66   24. Financial instruments                          88
     2. Valuation and rating                                  67   25. Authorities                                    92
     3. Municipal programs                                    68   26. Special committees                             92
     4. Expenditure included in the                                27. Related party transactions                     93
        determination of operating surplus                    70   28. Annual remuneration of senior officers         93
     5. Infrastructure take up adjustments                    71   29. Subsequent events                              93
     6. Profit/(loss) on disposal of fixed assets             71   30. Contingent liabilities                         93
     7. Depreciation and amortisation expense                 71   31. Museum collection                              93
     8. Movements in equity                                   72   32. Early adoption of accounting standards         94
     9. Cash at bank and on hand                              74
                                                                                       S E C T IO N f O u r   financial statements      63




notes to tHe Financial statements
Year ended 30 June 2011


1 statement oF accountinG Policies                                   d) accounting estimates
                                                                        In the application of Australian Accounting Standards,
a) Reporting entity
                                                                        the Council is required to make judgements, estimates
   This Report is a general purpose financial report. All entities      and assumptions about carrying values of some assets
   through which the Council controls resources to carry out            and liabilities.
   its functions (including the special committees detailed in
                                                                        Judgements made by the Council that have significant effects
   Note 26) have been included in these financial statements.
                                                                        on the Financial Reports are disclosed in the relevant notes.
   Inter-entity balances and transactions have been eliminated.
                                                                        An estimate may need revision if changes occur in the
b) statement of compliance                                              circumstances on which the estimate was based. The effect
   This Financial Report has been prepared to comply with               of any changes in estimates are brought to account in the
   Australian Accounting Standards, other pronouncements                reporting period the changes are made.
   of the Australian Accounting Standards Board (AASB)                  At the reporting date there were no material changes in the
   and the Local Government Act 1993 (as amended). It has               accounting estimates used in the preparation of the Report.
   been prepared on an accrual and going concern basis
   under the convention of historical cost accounting, with          e) changes in accounting policies
   the exception that certain non-current assets (other than            The Council’s accounting policies have been consistently
   deferred debtors), are included at valuation (refer to               applied to all the years reported, unless otherwise stated.
   Notes 1(f ), 21, 23 and 24). Except as disclosed below the
                                                                        Unless otherwise stated, there have also been no changes
   accounting policies adopted are consistent with those of
                                                                        in accounting policies when compared with previous
   the previous year.
                                                                        financial statements.
c) adoption of new and revised accounting standards
                                                                     f ) Financial instruments
   In the current year the Council has adopted all of the new
                                                                        Rate debtors - All rates levied during the reporting
   and revised Standards and Interpretations issued by the
                                                                        period are recognised as revenues. Uncollected rates are
   Australian Accounting Standards Board (AASB) that are
                                                                        recognised as receivables (refer to Notes 2 and 10).
   relevant to its operations and effective for the current
   annual reporting period.                                             other debtors - Receivables are carried at nominal amounts
                                                                        due less any allowance for impaired debts. The Council
   The adoption of these new and revised standards has had
                                                                        provides in respect of any amount for which collection is
   no material effect on the Council’s accounting policies.
                                                                        considered doubtful.
   At the reporting date updates to the following standards
                                                                        sundry creditors - Sundry creditors represent liabilities for
   were available for early adoption, relevant to the Council’s
                                                                        goods and services provided prior to the end of the financial
   operations and adopted by the Council.
                                                                        year and which are unpaid. The amounts are unsecured and
   aasB 101 Presentation of Financial statements                        are paid within normal credit terms.
   Amendments to this standard relate to the inclusion of               Deposits - The Council holds deposits lodged by other
   Australian specific reporting requirements.                          organisations and security deposits lodged by individuals
                                                                        and entities performing work which may adversely affect
   aasB 124 Related Party Disclosures                                   Council assets. The deposits are repayable on demand or
   Amendments to this standard simplify the definition of a             where certain conditions have been met. They are recorded
   related party.                                                       at nominal value.
   At the reporting date updates to a number of accounting              managed funds - Investments in managed funds (if held)
   standards were available for early adoption and relevant to          are valued at the redemption price at balance date as
   the Council’s operations but were not applied by the Council.        advised by the investment managers and are based on the
                                                                        market value of the underlying investments. Movements in
   These are listed at Note 32.                                         redemption values are recognised as revenue or expense in
   At the reporting date AASB 9 Financial Instruments                   the period to which they relate. Net income for the year is
   was issued to replace AASB 139 Financial Instruments                 included as “Interest income”.
   Recognition and Measurement.
                                                                     g) Grants and donations
   This standard was not available for early adoption at the
   reporting date.                                                      All grants and donations are recognised as revenue when
                                                                        received or when the Council obtains control over the assets
                                                                        comprising the contributions. Grants held where the Council
                                                                        has not gained full control of the funds are held as deposits
                                                                        (refer to Notes 11 and 12).
64   Launceston city counciL   AnnuAl RepoRt 2010/11




     notes to tHe Financial statements
     Year ended 30 June 2011


     1 statement oF accountinG Policies (cont’d)                       k) impairment
                                                                          At each reporting date the Council reviews the carrying
     h) investments
                                                                          amount of its tangible and intangible assets to determine
        Ben Lomond Water                                                  whether there is any indication that those assets have
        AASB 127 requires a reporting entity to prepare                   suffered an impairment loss.
        consolidated financial reports to include the assets and          Non commercial assets are reviewed using the Australian
        liabilities of subsidiaries under their control.                  paragraphs to AASB 136 where future economic benefits
        At the reporting date the Council owned more than 50%             are measured on future net cash inflows and whether, if
        of Tasmanian Water and Sewerage Corporation (Northern             deprived of the asset, the Council would replace its future
        Region) Pty Limited, trading as Ben Lomond Water (BLW).           economic benefit. At the reporting date no assets were
        However, under the provisions of the Water and Sewer              identified as being materially impaired.
        Corporations Act 2008, the Council does not have the power
        to govern the financial and operating policies of BLW.         l) Depreciation and write-off of non-current assets
        The investment in BLW is recorded at the fair value of the        Depreciation has been charged in recognition of the
        Council’s share of the underlying assets (refer to Note 23).      diminution in value of non-current assets through use. No
                                                                          depreciation is charged in relation to land, nor for non-
        The Council will receive returns from this investment in the      current assets that are maintained such that their future
        form of dividends, guarantee fees, income tax equivalents         useful life remains constant (for example sports fields and
        and distributions. All returns will be taken up as income in      garden beds).
        the year in which received.
                                                                          Museum collection
     i) inventories                                                       The museum collection assets have been assessed to
        Stores and materials are valued at average cost or net            have indefinite lives. These heritage and cultural assets
        realisable value whichever is the lower. Issues are at            are stored, managed, displayed, repaired and restored in
        average cost.                                                     ways that will maintain their cultural or heritage value over
                                                                          time. Where conservation, restoration and preservation
     j) Recognition of non-current assets                                 activities demonstrate that an asset will be maintained
        The Council has completed its recognition of assets with the      for an indefinite period, these items are considered to
        exception of street furniture. The Queen Victoria Museum          have indefinite useful lives and therefore not subject to
        and Art Gallery collection was valued as at 30 June 2010          depreciation. Revaluations will be made with sufficient
        (Refer to Note 31).                                               regularity to maintain the collection at fair value.
        In accordance with AASB 1051 the Council elected not to           Where depreciation is charged, it is on the straight line
        recognise as an asset, land under roads acquired before 1         basis using rates that recognise the useful life of the asset.
        July 2009. Land acquired from 1 July 2009 is capitalised.                                   BAsIs of
        While the process of infrastructure asset recognition is                                    DePReCIAtIoN        UsefUL LIfe
        largely complete, the Council does find it necessary on
                                                                        Freehold land               Not depreciated     Unlimited
        occasion to take up assets as they are identified. This
        relates particularly to underground assets and to newly         Leased land                 Not depreciated     Lease term
        constructed assets where value on completion is compared        Museum collection           Not depreciated     Unlimited
        to cost. Any adjustment arising from this process is treated
        as an “infrastructure take-up adjustment” (Refer to Note 5).    Freehold buildings          Straight line       100 - 250 years
        Plant and equipment assets acquired are recorded at the         Leasehold buildings         Straight line/      60 - 100 years
        cost of acquisition.                                                                        lease
                                                                        Light vehicles              Straight line       3 - 4 years
                                                                        Major plant                 Straight line       5 - 15 years
                                                                        Minor plant                 Straight line       2 - 20 years
                                                                        Computer equipment          Straight line       3 - 5 years
                                                                        Furniture and equipment     Straight line       4 - 50 years
                                                                        INfRAstRUCtURe
                                                                        Road pavement               Straight line       100 - 150 years
                                                                        Road sealed surfaces        Straight line       15 - 25 years
                                                                        Road kerb and channel       Straight line       100 years
                                                                        Road footpaths              Straight line       50 years
                                                                        Bridges                     Straight line       20 - 100 years
                                                                        Parks and recreation        Straight line       10 - 150 years
                                                                        Stock sales market          Straight line       10 - 50 years
                                                                        Refuse disposal area        Straight line       30 - 50 years
                                                                       Where buildings are demolished to permit new construction,
                                                                       the written down value of the building at the point of
                                                                       demolition is written off in the year of demolition.
                                                                                        S E C T IO N f O u r   financial statements       65




notes to tHe Financial statements
Year ended 30 June 2011


1 statement oF accountinG Policies (cont’d)                          p) employee benefits
                                                                        annual and long service leave - Provision is made in
m) intangible assets
                                                                        respect of the liability for annual leave and long service
   Data systems - Costs incurred in developing data systems,            leave at 30 June 2011. The remuneration rate expected
   acquiring software and software licenses are capitalised.            to apply at the time of settlement has been used in
   Amortisation is calculated on a straight line basis over the         calculation of the entitlements. In the case of long service
   expected useful life or licence duration, currently five years.      leave the provision has been established at balance date
   municipal revaluation - The Valuer General conducts                  having regard to the present value of estimated future
   periodic revaluations of the municipality for rating                 cash outflows. Commonwealth bond rates are used for
   purposes. Costs associated with revaluation are capitalised.         discounting future cash flows.
   Amortisation is calculated on a straight line basis over the         sick leave - No provision is made for sick leave as the
   expected period to the next revaluation, currently six years.        entitlement is non-vesting and it is probable that the sick
                                                                        leave expected to be taken in future periods will not exceed
n) Provision for rehabilitation                                         the entitlements expected to accrue in those future periods.
   The Council operates a refuse disposal area (Launceston              Defined benefit fund - The Council contributes to defined
   Waste Facility) which imposes obligations for rehabilitation         benefit plans on behalf of its employees. An asset or
   in the future. Provision is made for rehabilitation costs to         liability is recognised in respect of the difference between
   be incurred in future years by estimating the future costs           plan assets and the obligations for entitlements as detailed
   based on current legislative requirements. This future               in Note 14.
   cost is discounted back to present value at balance date.
   At each balance date the discounting is unwound with              q) competition Policy compliance
   the movement in the liability charged to the Statement of
                                                                        Section 84(2)(da) of the Local Government Act 1993
   Comprehensive Income as part of “borrowing costs”.
                                                                        requires the Council’s financial statements to contain
o) taxation                                                             a statement of the “operating, capital and competitive
                                                                        neutrality costs” in respect of each significant business
   The Council is exempt from all forms of income taxation. The         activity. The Council has chosen to disclose these costs in
   major taxation expenses for the Council are Fringe Benefits          respect of all functions. This disclosure has been included
   Tax, Payroll Tax, Land Tax and the Goods and Services Tax.           in Note 3.
   Fringe Benefits tax - Fringe Benefits Tax is expensed as an          The following items have been disclosed:
   expense in the year it is incurred.
                                                                        Full cost attribution - Service costs applied to all Council
   Payroll tax - Payroll Tax is expensed in the year it is              operations in respect of internal services provided (e.g.
   incurred. Accrued employee liabilities are recognised                accounting and computer support).
   inclusive of Payroll Tax.
                                                                        competitive neutrality costs - Notional charges for
   Goods and services tax - Revenue, expenses and assets                expenses not normally incurred by councils (e.g. council
   are recognised net of Goods and Services Tax (GST)                   rates). As these costs are not actually incurred, the Council’s
   except for the case of receivables and payables which are           “General Public Services” function has been credited with
   recognised inclusive of GST. Cash flows are included in the          collection of these notional items.
   Cash Flow Statement on a gross basis. The GST component
   of cash flows arising from investing and financing activities        capital costs - Depreciation has been allocated to
   is classified as operating cash flows.                               functional areas within the operating statement.
66   Launceston city counciL    AnnuAl RepoRt 2010/11




     notes to tHe Financial statements
     Year ended 30 June 2011


     1 statement oF accountinG Policies (cont’d)
     r) component functions or programs
        The Council categorises its programs into eight categories
        for the purpose of the operating summary in Note 3.
        Categories are as follows:
        General Public service - Management of the administrative
        and financial operation of the Council organisation
        including elected representatives.
        Public order and safety - Supervision of various by-laws,
        animal control and public nuisances. The collection of the
        fire levy on behalf of the State Fire Commission.
        Health - Administration of health legislation on behalf of
        the State Government including food handling control and
        public health issues. Provision of immunisation services.
        welfare - Maintenance of properties used for childcare and
        kindergarten.
        Housing and community amenities - Provision of building
        and development approvals services including planning
        schemes. Solid waste services including garbage collection
        and disposal. Funding for the provision of street lighting.
        Maintenance of a range of public buildings and facilities
        including cemeteries. Maintenance of the stormwater
        drainage network including flood mitigation works.
        Provision of street cleaning services.
        Recreation and culture - Maintenance of parks and
        reserves, sports grounds, playgrounds, swimming
        pools, halls and related recreational facilities. Funding
        of the Queen Victoria Museum and Art Gallery and the
        Princess Theatre.
        Roads and traffic - Construction and maintenance of roads,
        footpaths and bridges. Operation of parking facilities
        including off street car parks and on street metered spaces.
        other - A range of services and facilities including the
        provision of economic development and promotional
        services and a livestock sale yard.
                                                                                       S E C T IO N f O u r   financial statements           67




notes to tHe Financial statements
Year ended 30 June 2011


2 Valuation anD RatinG
                                                                                                               2011                  2010
                                                                                                                  $                     $
     Gross Assessed Annual Value of the City                                                       447,369,788                 444,808,477

    Rates                                                                                         cents/$aaV               cents/$aaV
     General rate                                                                                             8.7235               8.2923
     General rate (CBD variation)                                                                        10.2083                   9.7037

    service rates
     Fire protection - Urban                                                                                  1.5023               1.3907
     Fire protection - Rural                                                                                  0.3436               0.3054
     Fire protection - Lilydale District                                                                      0.4452               0.3738



                                                                                                                  $                     $
     General charge (fixed amount)                                                                            115.00               110.00

     Minimum rates apply:-
     Fire Levy                                                                                                 34.00                 33.00


                                                                    2011                                           2010
    seRVICe ChARges                                               $ Range                                        $ Range
     Waste management - on bin size                              95.00      -     200.00                       90.00       -        190.00
     Onsite disposal system                                     570.00      -     640.00                      570.00       -       640.00

The Assessed Annual Value of the City is as determined by the Valuer-General and for the year ended 30 June, 2011 rates were based
on valuations effective from 1 July, 2005, and indexed at 1 July 2010.
The rate to be raised from an individual property is calculated by applying the rate in the $AAV upon the Assessed Annual Value of
the property and adding other applicable charges. The rates raised are also subject to minimum amounts.


                                                                                                               2011                  2010
                                                                                                                  $                     $
 Revenue from rating
     General                                                                                         40,550,138                 38,071,745
     CBD (variation amount)                                                                              442,757                  426,936
     Fire Services Levy                                                                                5,759,766                 5,250,321
     Waste Management Charge                                                                           3,475,561                 3,263,723
    Total rating revenue                                                                             50,228,222                 47,012,725
                                                                                                                                                                                       68


notes to tHe Financial statements
Year ended 30 June 2011


3 municiPal PRoGRams
   (a) Revenues and expenses have been directly attributed to the following municipal programs.

                                            geNeRAL      PUBLIC                                hoUsINg &
                                             PUBLIC     oRDeR &                               CoMMUNItY         ReCReAtIoN       RoADs &                         2011       BUDget
                                                                                                                                                                                        Launceston city counciL




                                           seRVICes      sAfetY       heALth     weLfARe       AMeNItIes         & CULtURe        tRAffIC        otheR          totAL    (unaudited)
                                                  $           $            $           $               $                 $              $            $              $              $
 ReVenues
 Rates                                    40,550,138    5,759,766           -            -         3,475,561              -              -       442,757    50,228,222   49,546,222
 Fees and charges                            695,015      231,273     225,659        8,826         5,830,621      3,100,983      5,871,793       995,216    16,959,386   17,124,128
 Revenue grants                            1,311,024        1,500       1,500      150,169           512,877      1,277,188      2,955,446       274,656     6,484,360    5,882,390
 Interest                                  3,080,437       12,012           -            -           409,611        451,895              -             -     3,953,955    1,848,000
 Investment revenue (Ben Lomond Water)     2,106,983            -           -            -                 -              -              -             -     2,106,983    1,000,000
 Other                                       329,726          110         954        2,902           323,820      1,476,946         14,526       176,669     2,325,653    2,063,786
                                          48,073,323    6,004,661     228,113      161,897        10,552,490      6,307,012      8,841,765     1,889,298    82,058,559   77,464,526
                                                                                                                                                                                       AnnuAl RepoRt 2010/11




 eXPenses
Provision of services                     10,682,175      493,810     873,848      951,097        14,630,116     19,662,975      8,234,876     3,992,562    59,521,459   58,337,376
Borrowing costs                              853,746            -           -            -           224,000              -              -             -     1,077,746    1,459,415
Depreciation and amortisation                964,251       11,809         598            -         3,834,927      3,733,498      6,634,204     1,074,644    16,253,931   15,717,981
Government levy                                     -   5,712,302           -            -                 -              -              -             -     5,712,302    5,712,302
Remissions and abatements                     72,676           38           -            -             2,042              -              -             -        74,756       87,500
Full cost attribution (Note 1q)           (1,836,009)      70,461     124,277       60,456         (180,842)        909,086        502,257       350,314             -            -
Competitive neutrality (Note 1q)            (242,641)           -           -            -            51,515        102,252         73,566        15,308             -            -
                                          10,494,198    6,288,420     998,723    1,011,553        18,561,758     24,407,811     15,444,903     5,432,828    82,640,194   81,314,574
 operating surplus (deficit)              37,579,125    (283,759)    (770,610)    (849,656)       (8,009,268)   (18,100,799)    (6,603,138)   (3,543,530)    (581,635)   (3,850,048)
Non-operating items
Capital grants and contributions              89,016            -            -            -          317,000      6,704,579      1,222,308             -     8,332,903    8,542,339
Adjustments                                        -            -            -            -        2,202,406        (81,691)    (1,098,149)            -     1,022,566            -
 net surplus (deficit) before
 other comprehensive income               37,668,141    (283,759)    (770,610)    (849,656)       (5,489,862)   (11,477,911)    (6,478,979)   (3,543,530)    8,773,834    4,692,291

infrastructure assets                     41,918,041    1,085,725            -   1,363,352    209,969,047       256,407,111    351,381,056     1,955,129   864,079,461
work in progress                             953,795            -            -           -     43,442,370        16,592,427      2,565,778             -    63,554,370
other assets                             322,116,977            -            -           -              -       231,913,206              -             -   554,030,183
total assets                             364,988,813    1,085,725            -   1,363,352    253,411,417       504,912,744    353,946,834     1,955,129 1,481,664,014
notes to tHe Financial statements
Year ended 30 June 2011


3 municiPal PRoGRams (cont’d)
   (b) comparative figures for the year ended 30 June 2010.

                                          geNeRAL        PUBLIC                              hoUsINg &
                                            PUBLIC      oRDeR &                             CoMMUNItY      ReCReAtIoN       RoADs &                          2010       BUDget
                                          seRVICes       sAfetY      heALth     weLfARe      AMeNItIes      & CULtURe        tRAffIC         otheR          totAL    (unaudited)
                                                 $            $           $           $              $              $              $             $              $              $
ReVenues
Rates                                    38,071,745    5,250,321           -           -      3,263,723              -              -       426,936     47,012,725       46,446,002
Fees and charges                          1,896,770      239,209     247,778           -      5,618,605      2,720,295      5,728,264     1,044,017     17,494,938       18,146,196
Revenue grants                            1,590,026        2,500      10,580     348,926        437,890      1,249,300      3,208,867       231,433      7,079,522        6,579,030
Interest                                  2,499,303       11,122           -           -        775,289        353,060              -             -      3,638,774        1,928,000
Other                                       384,730          284         727         123        283,002      1,597,222         10,065       132,357      2,408,510        1,857,075
                                         44,442,574    5,503,436     259,085     349,049     10,378,509      5,919,877      8,947,196     1,834,743     77,634,469       74,956,303
eXPenses
Provision of services                    10,693,280      434,418     731,466     828,976     12,478,115     18,157,319      7,696,219     3,688,789     54,708,582   54,292,324
Borrowing costs                              679,104            -           -           -        220,000              -              -             -       899,104     1,297,498
Depreciation and amortisation                780,020      11,285         826            -     3,735,231      3,651,327      6,652,070     1,023,801     15,854,560   16,153,253
Government levy                                    -   5,193,002            -           -              -              -              -             -     5,193,002     5,193,002
Remissions and abatements                    101,357         766            -           -          2,335              -              -             -       104,458       785,000
Full cost attribution (Note 1q)          (1,197,922)      56,962     130,405      59,663       (353,088)       740,886        403,781       159,313              -             -
Competitive neutrality (Note 1q)           (242,641)            -           -           -         51,515       102,252         73,566        15,308              -             -
                                         10,813,198    5,696,433     862,697     888,639     16,134,108     22,651,784     14,825,636     4,887,210     76,759,706   77,721,077
operating surplus (deficit)              33,629,376     (192,997)   (603,612)   (539,590)    (5,755,599)   (16,731,907)    (5,878,440)   (3,052,466)       874,763   (2,764,774)
Non-operating Items
Capital grants and contributions             36,495            -            -           -    20,000,000      5,592,949      1,652,396              -    27,281,840       27,656,127
Adjustments                             231,913,590            -            -           -     (506,375)               -   (1,444,185)              -   229,963,030   -
net surplus (deficit) before
                                                                                                                                                                                       S E C T IO N f O u r




other comprehensive income              265,579,461    (192,997)    (603,612)   (539,590)    13,738,026    (11,138,958)   (5,670,229)    (3,052,466)   258,119,633       24,891,353

infrastructure assets                    36,338,659      965,596            -   1,119,708   190,940,608    217,060,185    265,790,307     1,891,122   714,106,185
work in progress                          1,103,924            -            -           -    45,086,939      5,221,025      1,073,027        79,596    52,564,511
other assets                            343,374,811            -            -           -             -    231,913,206              -             -   575,288,017
total assets                            380,817,394      965,596            -   1,119,708   236,027,547    454,194,416    266,863,334     1,970,718 1,341,958,713
                                                                                                                                                                                      financial statements
                                                                                                                                                                                      69
70   Launceston city counciL     AnnuAl RepoRt 2010/11




     notes to tHe Financial statements
     Year ended 30 June 2011


     4 eXPenDituRe incluDeD in DeteRmination oF oPeRatinG suRPlus
                                                                                                     2011         2010
                                                                                                        $            $
      (a) maintenance of facilities and provision of services
      Labour costs                                                                              28,502,228   26,128,268
      Materials and services                                                                    31,019,231   28,580,314
                                                                                                59,521,459   54,708,582
      labour costs
      Wages and salaries                                                                        21,204,150   19,462,393
      Superannuation and retiring allowance                                                      3,629,250    2,773,314
      Employee leave entitlements                                                                3,349,966    3,176,498
      Payroll tax                                                                                1,739,042    1,624,333
      Workers Compensation Insurance                                                              278,505      311,945
      Other costs                                                                                 322,677      343,129
                                                                                                30,523,590   27,691,612
      Less amounts capitalised                                                                   2,021,362    1,563,344
                                                                                                28,502,228   26,128,268
      expenditure items included in materials and contracts
      Street lighting                                                                            1,448,975    1,302,254
      Garbage collection                                                                         2,506,034    2,395,217
      Loss on disposal of fixed assets (Note 6)                                                    51,242      375,885
      Aldermanic and Mayoral allowances                                                           445,275      426,558
      Community Assistance Grants                                                                  64,822       59,811
      External auditor’s remuneration:
      - Auditing financial statements                                                              53,181       38,900
      Internal auditor’s remuneration                                                              23,980       23,452
      Impaired debts                                                                               37,915      114,509
      Land Tax                                                                                    354,925      597,890
      Provision of services                                                                     26,032,882   23,245,838
                                                                                                31,019,231   28,580,314


      (b) Borrowing costs
      Interest on borrowings                                                                      853,746      679,104
      Unwinding of discount on provision for rehabilitation of refuse disposal site (Note 20)     224,000      220,000
                                                                                                 1,077,746     899,104
                                                  S E C T IO N f O u r   financial statements     71




notes to tHe Financial statements
Year ended 30 June 2011


5 inFRastRuctuRe taKe uP aDJustments
                                                                          2011           2010
                                                                             $              $
Adjustments to Infrastructure Assets (Note 1j):
Assets recognised (derecognised):
            Gross value                                           4,614,195          (154,750)
            Accumulated depreciation                              (173,464)           122,867
Completed works:
            Accumulated depreciation adjustment                   2,085,731          1,511,795
            Expenditure not capitalised                         (5,503,896)         (3,430,037)
                                                                  1,022,566         (1,950,125)

6 PRoFit/(loss) on DisPosal oF FiXeD assets
                                                                          2011           2010
                                                                             $              $
Proceeds from disposal                                              679,276           537,314
Less carrying amounts                                               730,518           913,231
Profit / (loss)                                                     (51,242)         (375,917)


7 DePReciation anD amoRtisation eXPense
                                                                          2011           2010
                                                                             $              $
Buildings                                                         1,499,636          1,485,166
Plant and equipment                                               2,685,807          2,473,074
Roads and bridges                                                 6,362,514          6,385,253
Drainage systems                                                  2,575,538          2,562,544
Flood protection systems                                            459,261           385,985
Recreation facilities                                             1,947,953          1,921,621
Stock sales market                                                       31,089         31,089
Refuse disposal area                                                383,146           375,547
Data systems                                                        308,987           234,281
Total depreciation                                              16,253,931         15,854,560
    72   Launceston city counciL    AnnuAl RepoRt 2010/11




         notes to tHe Financial statements
         Year ended 30 June 2011


         8 moVements in eQuity
                                                     BALANCe     Net sURPLUs CoMPReheNsIVe                      BALANCe
                                                  JULY 1, 2010      foR YeAR       INCoMe     tRANsfeRs     JUNe 30, 2011
                                                             $             $             $            $                 $
          (a) capital reserves
             Government grants                   122,933,091      7,355,140                                 130,288,231
             Other contributions                   5,153,691       971,210                                    6,124,901
                                                 128,086,782      8,326,350              -                  136,413,132
          (b) Revenue reserves
             General                             876,310,690       439,372     (16,580,000)                 860,170,062
             CBD                                       8,144         1,757                                         9,901
             Special committees                      134,189       (17,278)                                     116,911
             Public open space                        29,240         6,552                                        35,792
             Self insurance                        2,115,480       158,527                                    2,274,007
             Employee benefits                    (2,666,955)     (241,063)       (715,010)                  (3,623,028)
                                                 875,930,788       347,867     (17,295,010)           -     858,983,645
          (c) asset revaluation reserves
             General                             273,495,560                   142,808,477                  416,304,037
             Investment Ben Lomond Water                                         2,730,000                    2,730,000
                                                 273,495,560              -    145,538,477            -     419,034,037
          (d) trusts and bequests
             Cliff Grounds                             4,855                                                       4,855
             John Hart                                20,000                                                      20,000
             John Hart (interest)                      6,016         1,176                                         7,192
             Mary Nichols Bequest                      2,000                                                       2,000
             Mary Nichols (interest)                   6,065           118                                         6,183
             Plomley Foundation - Capital          1,154,433                                     90,000       1,244,433
             Plomley Foundation - Management           6,493        91,547                      (90,000)           8,040
             Museum - Thomas Knowles                   2,123           125                                         2,248
             Museum - Bessant Bequest                202,599         6,651                                      209,250
             Museum - Library                              50                                                         50
                                                   1,404,634        99,617               -            -       1,504,251
                                                1,278,917,764     8,773,834    128,243,467            -    1,415,935,065




2
                                                                         S E C T IO N f O u r   financial statements         73




notes to tHe Financial statements
Year ended 30 June 2011


8 moVements in eQuity (comparative figures for the year ended 30 June 2010)
                                           BALANCe      Net sURPLUs CoMPReheNsIVe                                BALANCe
                                        JULY 1, 2009       foR YeAR       INCoMe           tRANsfeRs         JUNe 30, 2010
                                                   $              $             $                  $                     $
(a) capital reserves
OTHER CONTRIBUTIONS
    General                              4,166,560        519,199                                467,932       5,153,691
    Sewerage                               303,690                                              (303,690)                -
    Water                                  164,242                                              (164,242)                -
GOVERNMENT GRANTS
    General                             73,674,674      26,751,396                        22,507,021         122,933,091
    Sewerage                            22,489,859                                       (22,489,859)                    -
    Water                                   17,162                                               (17,162)                -
                                       100,816,187      27,270,595                 -                    -    128,086,782
(b) Revenue reserves
RATING
    General                            399,619,904     230,035,626   (132,648,498)       379,303,658         876,310,690
    Sewerage                           173,375,180                                     (173,375,180)                     -
    Water                               72,153,364                                       (72,153,364)                    -
    CBD                                      1,203           6,941                                                  8,144
OTHER REVENUE
    Special committees                     134,211            (22)                                               134,189
    Public open space                       17,995         11,245                                                 29,240
    Self insurance                       1,971,303        144,177                                              2,115,480
    Employee benefits                   (6,714,932)       413,405       2,307,428           1,327,144         (2,666,955)
                                       640,558,228     230,611,373   (130,341,070)       135,102,257         875,930,788
(c) asset revaluation reserves
    General                            273,495,560                                                           273,495,560
    Sewerage                            62,414,649                                       (62,414,649)                    -
    Water                               72,687,608                                       (72,687,608)                    -
                                       408,597,817               -                 -   (135,102,257)         273,495,560
(d) trusts and bequests
    Cliff Grounds                            4,855                                                                  4,855
    John Hart                               20,000                                                                 20,000
    John Hart (interest)                     5,076            940                                                   6,016
    Mary Nichols Bequest                     2,000                                                                  2,000
    Mary Nichols (interest)                  5,971             94                                                   6,065
    Plomley Foundation - Capital         1,124,433                                                30,000       1,154,433
    Plomley Foundation - Management          2,558         33,935                                (30,000)           6,493
    Museum - Thomas Knowles                  2,028             95                                                   2,123
    Museum - Bessant Bequest                              202,599                                                202,599
    Museum - Library                             50                                                                    50
                                         1,166,971        237,663                  -                    -      1,404,634
                                      1,151,139,203    258,119,631   (130,341,070)                      -   1,278,917,764
74   Launceston city counciL    AnnuAl RepoRt 2010/11




     notes to tHe Financial statements
     Year ended 30 June 2011


     9 casH at BanK anD on HanD
                                                             2011          2010
                                                                $             $
         Cash on hand                                       14,785        15,185
         Cash at bank                                     602,670      1,475,706
         Special committees                               116,911       134,189
                                                          734,366      1,625,080

     10 Rate anD sunDRy ReceiVaBles
                                                             2011          2010
                                                                $             $
      (a) current receivables
         Rate debtors                                     910,840       626,304
         Accrued revenue                                  274,351       532,566
         Sundry debtors                                  3,226,691     2,938,128
         Prepayments                                      134,353       469,988
         Parking infringement debtors                    2,617,229     2,546,705
                                                         7,163,764     7,113,691
         Impairment of debtors
         Sundry debtors                                  (182,239)     (155,880)
         Parking infringement debtors                   (1,861,039)   (1,851,503)
                                                        (2,043,278)   (2,007,383)
                                                         5,120,186     5,106,308


      Movement in impaired debts                            35,895     (310,835)


      (b) collection performance – rate receivables
         Rate revenue                                   50,228,222    47,012,725
         Interest on rates                                316,057       288,178
                                                        50,544,279    47,300,903


      Percentage rate debtors outstanding                   1.80%         1.32%
                                                                                       S E C T IO N f O u r   financial statements    75




notes to tHe Financial statements
Year ended 30 June 2011


11 inVestments
                                                                                                               2011           2010
                                                                                                                  $              $
current
    Bank Guaranteed Bills and Deposits                                                               59,660,261          66,120,692
    Managed investments at valuation (Note 1(f ))                                                                  -              -
                                                                                                     59,660,261          66,120,692


    Restricted assets and deposits


    Restricted assets
    a) Included in the above and invested on behalf of:-
       i)   Trusts and bequests                                                                        1,504,251          1,404,633
       ii) Grants and contributions (Note 12)                                                                  3,190        11,141
       iii) River dredging and flood protection contributions                                            922,603           520,073
    b) Provision for retiring allowance                                                                  152,532           142,888
                                                                                                       2,582,576          2,078,735


    Grant funds brought to account as income but not fully expended and held in
    specific bank deposits at year end                                                                 6,740,675         17,944,780
    Total restricted assets                                                                            9,323,251         20,023,515


    Deposits
    Grant funds not yet recorded as income and shown
    as a deposit liability at balance date (Note 1(f ))                                                5,750,000                  -
    Other deposits                                                                                       953,998          2,128,326
    Total deposits                                                                                     6,703,998          2,128,326
    Total restricted assets and deposits                                                             16,027,249          22,151,841


non-current
    Ben Lomond Water (Note 23)                                                                     255,800,000          269,650,000


12 conDitions oVeR contRiButions
                                                                                                               2011           2010
                                                                                                                  $              $
Museum project grants received conditionally and recognised as revenue where that
condition has not been met at balance date                                                                     3,190        11,141
Museum project grants recognised as revenue in previous years and expended during
the current year                                                                                              11,141        28,895


Net increase (decrease) in restricted assets resulting from grants and contributions                          (7,951)      (17,754)
76   Launceston city counciL     AnnuAl RepoRt 2010/11




     notes to tHe Financial statements
     Year ended 30 June 2011


     13 emPloyee PRoVisions anD statistics
                                                                                                               2011                 2010
      Full Time Equivalent employee numbers at year end                                                         429                  407


                                                                                                                  $                       $
      Current provisions
          Accrued time                                                                                     131,559              136,270
          Annual leave                                                                                   2,375,693            2,406,072
          Long service leave                                                                             3,128,806            2,865,760
                                                                                                         5,636,058            5,408,102
      Non-current provisions
          Long service leave                                                                               629,422              592,095
          Retiring allowance                                                                               152,532              142,888
                                                                                                           781,954              734,983




     14 suPeRannuation
     The Council contributes, in respect of its employees, to two defined benefit superannuation funds. One was established for
     employees of the Council and now includes some employees transferred to water corporations. The other was established in
     respect of employees of all local government authorities in the State, some of whom are employees of this Council.
     In accordance with statutory requirements the Council contributes, to both funds, amounts determined by the actuaries. As such,
     assets accumulate in the funds to meet member’s benefits as they accrue. If the assets of the funds were insufficient to satisfy
     benefits payable to its beneficiaries the Council would be required to meet its share of the deficiency.
     The details of the two funds’ actuarial reviews are:


     Quadrant Defined Benefit Superannuation Scheme
     The Council makes superannuation contributions for a number of its employees to the Quadrant Defined Benefits Fund, which is a
     sub-fund of the Quadrant Superannuation Scheme. The Defined Benefits Fund has been classified as a multi-employer sponsored
     plan. As the Fund’s assets and liabilities are pooled and are not allocated by employer, the Actuary is unable to allocate benefit
     liabilities, assets and costs between employers. As provided under paragraph 32(b) of AASB 119, the Council does not use defined
     benefit accounting for these contributions, and accordingly no asset or liability is recognised in these accounts in respect of the
     scheme.
     Details of the overall fund status as extracted from the actuarial assessments by Bendzulla Actuarial Pty Ltd as at 30th June 2008
     are as follows:

                                                                    $
          Accrued benefits                                  81,397,960
          Net market value                                  84,786,241
          Less vested benefits                              77,078,401
          Net market value less vested benefits
          surplus/(deficit)                                  7,707,840
     (Note – The Quadrant Superannuation Scheme includes contributions by other organisations and the benefits noted above include
     benefits due to the employees of those organisations).
                                                                                        S E C T IO N f O u r   financial statements     77




notes to tHe Financial statements
Year ended 30 June 2011


14 suPeRannuation (cont’d)
City of Launceston Employees Superannuation Fund
With effect from 1 July 2006, the assets and members of the City of Launceston fund transferred to a sub-fund of the Quadrant
Superannuation Scheme on a “successor fund” basis.
In accordance with Note 1(p) the Council has taken up a liability of $3,623,027 (2010 $2,666,955) in respect of the excess of benefit
liabilities over assets in the Fund. The Council does not have any immediate requirement to fund the shortfall and continues to fund
at the level of contributions assessed by the Scheme’s actuary as being required to meet the long term requirements of the Fund.
The calculation of the liability is based on an actuarial review for the purpose of AASB 119 performed by David B Quinn Watson
F.I.A.A. on behalf of DeeDeeRa Actuaries Pty Ltd, as at 30 June 2011.
The amount taken up as an employee benefit obligation is made up as follows:

                                                                                                               2011            2010
                                                                                                                  $               $
 Balance sheet asset calculation
 Fair value of plan assets                                                                            38,445,940          35,929,787
 Less present value of defined benefit obligation                                                     42,068,967          38,596,742
 Employee benefit asset (obligation)                                                                  (3,623,027)         (2,666,955)


 Reconciliation of obligation
 Present value of defined benefit obligation at start of year                                         38,596,742          45,514,932
 Current service cost                                                                                   2,644,850          1,828,857
 Interest cost                                                                                          1,575,173          2,001,343
 Member contributions and transfers from other funds                                                    3,264,881          2,796,827
 Actuarial (gains)/losses                                                                                (437,206)         7,686,697
 Benefits and tax paid                                                                                (3,575,473)        (11,755,000)
 Past service cost                                                                                                -                -
 Curtailments                                                                                                     -       (9,476,914)
 Settlements                                                                                                      -                -
 Exchange rate changes                                                                                            -                -
 Present value of defined benefit obligation at end of year                                           42,068,967          38,596,742


 Reconciliation of assets
 Reconciliation of the fair value of plan assets
 Fair value of plan assets at start of year                                                           35,929,787          38,800,000
 Expected return on plan assets                                                                         2,199,843          2,141,782
 Actuarial gains/(losses)                                                                             (1,152,216)         10,515,403
 Employer contributions                                                                                 1,779,118          1,580,545
 Member contributions and transfers from other funds                                                    3,264,881          2,796,827
 Benefits and tax paid                                                                                (3,575,473)        (11,755,000)
 Settlements and curtailments                                                                                     -       (8,149,770)
 Business combinations                                                                                            -                -
 Exchange rate changes                                                                                            -                -
 Fair value of plan assets at end of year                                                             38,445,940          35,929,787
78   Launceston city counciL      AnnuAl RepoRt 2010/11




     notes to tHe Financial statements
     Year ended 30 June 2011


     14 suPeRannuation (cont’d)
                                                                                                                  2011                 2010
                                                                                                                     $                    $
      amounts recognised in comprehensive income
      The total expense recognised in comprehensive income as
      maintenance of facilities and provision of services includes:


      expense recognised in operating surplus
      Current service cost                                                                                2,644,850                1,828,857
      Interest cost                                                                                       1,575,173                2,001,343
      Expected return on plan assets                                                                     (2,199,843)              (2,141,782)
      Actuarial (gains) losses                                                                                       -                     -
      Past service cost                                                                                              -                     -
      Curtailment and settlement costs                                                                               -             (521,278)
      superannuation expense                                                                              2,020,180                1,167,140


      The total expense recognised in other comprehensive income
      as actuarial gains (losses) is as follows.


      expense recognised in other comprehensive income
      Actuarial (gains) losses                                                                              715,010               (2,307,428)



     General plan information                                             Revenue reserves – Gain recognised
     Members of the Fund are entitled to receive lump sum
                                                                                                                     2011              2010
     benefits on leaving service due to retirement, death, total
                                                                                                                        $                 $
     and permanent disablement and resignation. The most recent
     actuarial investigation into the Fund in accordance with the          Actuarial gains (losses)            (715,010)           2,307,428
     Superannuation Industry (Supervision) Act was carried out as at                                           (715,010)           2,307,428
     1 July 2008 by Geoff Morley BSc BComm FIAA FIA of Bendzulla
     Actuarial Pty Ltd. The investigation showed the following figures
     determined in accordance with AAS 25 Financial Reporting by          asset allocation
     Superannuation Plans:                                                The table below shows the benchmark (target) asset allocation
                                                                          of the Fund assets as at 30 June 2011 together with the actual
                                                                      $   allocation for the current and prior year.
      Present Value of Defined Benefits                  35,562,112
                                                                                                  BeNChMARk    As At 30  As At 30
      Accumulation Benefits                              10,983,255        stRAtegIC Asset        ALLoCAtIoN JUNe 2011 JUNe 2010
      Value of Accrued Benefits                          46,545,367        ALLoCAtIoN                      %         %         %
      Vested Benefits                                    41,964,971        Australian shares              32.5            30.8          30.0
                                                                           International shares           28.0            27.3          25.6
     Principal actuarial assumptions and recommendations                   Unlisted property              10.0            12.2          10.5
     The actuary recommended that the Employer contribute at               Growth alternatives              7.0             2.8          1.6
     the rate of 7% of salaries until 31 January 2009 and then
     9% of salaries thereafter. The funding method used to                 Fixed interest                 16.0            12.9           0.9
     make the contribution recommendation was the “entry age               Defensive
     normal method”. The economic assumptions used in the                  alternatives                     3.0             4.8          5.7
     investigation were:
                                                                           Cash                             3.5             9.1         25.7
     Rate of investment return:            Negative 17.0% to
                                           30 June 2009                    total                         100.0           100.0        100.0
                                           and then 7.0% pa
                                           thereafter                     method of determining expected return on plan assets
     Rate of inflationary salary increases: 4.00% pa                      The expected return on assets assumption is determined by
                                                                          weighting the expected long-term return for each asset class by
                                                                          the expected long-term allocation of assets to each asset class.
                                                                          Returns are net of investment tax and investment fees.
                                                                                 S E C T IO N f O u r   financial statements       79




notes to tHe Financial statements
Year ended 30 June 2011


14 suPeRannuation (cont’d)
                                                                                       2011                 2010          2009
                                                                                          $                    $             $
actual return on plan assets
Present value of defined benefit obligation at end of year                      42,068,967          38,596,742       45,514,932
Fair value of plan assets at end of year                                       (38,445,940)        (35,929,787)     (38,800,000)
(Surplus)/deficit in plan                                                        3,623,027              2,666,955     6,714,932


Experience adjustments - plan liabilities                                          494,075              2,930,473     2,268,085
Experience adjustments - plan assets                                            (1,152,216)             2,365,633    (8,418,549)
Actual return on Fund assets                                                     1,047,627              4,507,415    (5,589,944)


                                                                                       2011                 2010
Principal assumptions
Discount rate p.a. (net of allowance for tax)                                         4.30%                4.30%
Return on investments                                                                 7.00%                6.00%
                                                                                                      3.50% in
                                                                                                    2010/2011
                                                                                                           and
                                                                                                    4.00% p.a.
Salary increases p.a.                                                                 4.00%          thereafter


                                                                                       2012
                                                                                          $
expected contributions
Based on the data provided to us and the recommended contributions, we
calculate that the expected contributions to the Fund for the year ending 30
June 2012 are as follows:
Expected employer contributions (for defined benefits only)                      1,905,354
Expected member contributions (incl. deemed member contributions)                1,269,487
80   Launceston city counciL    AnnuAl RepoRt 2010/11




     notes to tHe Financial statements
     Year ended 30 June 2011


     15 inteRest – BeaRinG liaBilities (secuReD loans)

        (a) currency of loans
                                                                                                           2011                  2010
                                                                                                              $                     $
         Current                                                                                      2,335,882              1,754,020
         Non-current                                                                                 13,041,553             13,326,721
                                                                                                     15,377,435             15,080,741



        (b) movement in loans

                                                                BALANCe             LoAN                   New            BALANCe
                                                             JULY 1, 2010     RePAYMeNts                 LoANs        JUNe 30, 2011
                                                                        $              $                     $                    $
         General                                              15,080,741          1,779,306           2,076,000             15,377,435
                                                              15,080,741          1,779,306           2,076,000             15,377,435

        comparative figures for the year ended 30 June 2010

                                                                BALANCe             LoAN                   New            BALANCe
                                                             JULY 1, 2009     RePAYMeNts                 LoANs        JUNe 30, 2010
                                                                        $              $                     $                    $
         General                                              10,613,016          1,532,275           6,000,000             15,080,741
         Sewerage                                              6,088,353          6,088,353                    -                     -
                                                              16,701,369          7,620,628           6,000,000             15,080,741


     The loans are secured over the future revenue of the Council.


     Public Bodies Assistance Act (PBAA) loan balances are net of subsidies due from the State Government as noted below.

                                                                                                           2011                  2010
                                                                                                              $                     $
         Gross PBAA loans due                                                                           199,213               247,894
         Less subsidy                                                                                   199,213               247,894
         Year end net balance                                                                                  -                     -


     16 lease commitments
        At the reporting date, the Council had no obligations under leases.
                                                                                        S E C T IO N f O u r   financial statements    81




notes to tHe Financial statements
Year ended 30 June 2011


17 commitments FoR caPital eXPenDituRe
                                                                                                                2011            2010
                                                                                                                   $               $
 At the reporting date, the Council had entered
 into contracts for the following capital expenditures:
    Plant and equipment                                                                                   413,077           289,492
    Refuse infrastructure                                                                                      39,282          3,975
    Roads infrastructure                                                                                1,442,786           143,959
    Parks and recreation infrastructure                                                                   213,549           459,512
    Drainage infrastructure                                                                               192,318           695,134
    Flood protection infrastructure                                                                     1,903,297         3,536,033
    Buildings                                                                                             862,583         6,877,493
                                                                                                        5,066,892        12,005,598
 These expenditures are due for payment:
    Not later than one year                                                                             5,066,892        12,005,598

18 sunDRy PayaBles anD accRuals
                                                                                                                2011            2010
                                                                                                                   $               $
    Accrued expenses                                                                                  22,016,692         26,129,967
    Unearned income                                                                                       824,985           445,944
    Contract retentions                                                                                             -         16,465
    Sundry creditors                                                                                      189,800             78,466
                                                                                                      23,031,477         26,670,842

19 DeFeRReD ReceiVaBles
                                                                                                                2011            2010
                                                                                                                   $               $
    Loans - Australia Pacific Airports (Launceston) Pty Ltd                                               257,556           257,556
                                                                                                          257,556           257,556

20 otHeR PRoVisions
                                                                                                                2011            2010
                                                                                                                   $               $
 Provision for rehabilitation
    Balance at 1 July                                                                                 10,351,000         10,131,000
    Unwinding of discount - expensed to borrowing costs (Note 1n)                                         224,000           220,000
    Balance at 30 June                                                                                10,575,000         10,351,000


The Council operates a refuse disposal area which is recognised as an asset. Operation of a disposal area carries legal obligations
for rehabilitation of the area at the conclusion of the site’s useful life. The provision represents the net present value of future
obligations already incurred (Note 1n).
82   Launceston city counciL    AnnuAl RepoRt 2010/11




     notes to tHe Financial statements
     Year ended 30 June 2011


     21 inFRastRuctuRe assets
                                                                 2011           2010
                                                                    $               $
      Intangible assets at written down value               4,045,547       2,330,371
      Tangible assets at written down value               923,521,823     764,340,327
      Written down value 30 June                          927,567,370     766,670,698

      (a) capital expenditure
          Completed works                                  23,126,679      16,605,424
          Change in work in progress                       10,923,398       6,239,898
                                                           34,050,077      22,845,322
      (b) movement in asset values
          Written down value 1 July                       766,670,698    1,094,365,236
          Capital expenditure                              34,050,077       22,845,322
          Depreciation and amortisation                   (16,253,931)     (15,854,560)
          Disposals at written down value                    (730,518)        (913,231)
          Asset recognition adjustment                      1,022,566       (1,950,125)
          Asset revaluation increment (decrement)         142,808,478                 -
          Transfer to Ben Lomond Water (Note 23)                     -    (331,821,944)
          Written down value 30 June                      927,567,370      766,670,698

      (c) total infrastructure carrying amount
          Infrastructure and other assets at cost           46,538,125      42,246,194
          Infrastructure and other assets at valuation   1,273,590,963   1,069,460,544
                                                         1,320,129,088   1,111,706,738
         Less accumulated depreciation                     456,049,627     397,600,552
                                                           864,079,461     714,106,187
         Work in progress at cost                          63,487,909      52,564,511
         Written down value 30 June                       927,567,370     766,670,698

      (d) infrastructure by function
          General public services
          Freehold land at valuation                        2,720,000       1,832,000
          Buildings at valuation                           20,156,466      17,712,185
          Plant and equipment at cost                      40,376,732      36,889,018
          Intangibles at cost                               6,161,393       5,357,176
                                                           69,414,591      61,790,379
         Less accumulated depreciation                     27,496,548      25,451,720
                                                           41,918,043      36,338,659
         Public order and safety
         Freehold buildings at valuation                    1,326,640        1,165,765
         Less accumulated depreciation                        240,915          200,169
                                                            1,085,725          965,596
         Roads and traffic
         Freehold land at valuation                        13,923,000       8,362,649
         Freehold buildings at valuation                   11,567,096      10,164,407
         Roads infrastructure at valuation                544,524,821     434,078,226
                                                          570,014,917     452,605,282
         Less accumulated depreciation                    217,838,765     186,814,975
                                                          352,176,152     265,790,307
                                                                                        S E C T IO N f O u r   financial statements     83




notes to tHe Financial statements
Year ended 30 June 2011


21 inFRastRuctuRe assets (cont’d)
                                                                                                               2011           2010
                                                                                                                  $              $
    Housing and community amenities
    Freehold land at valuation                                                                        9,911,000           6,132,000
    Leasehold land at valuation                                                                         270,000             176,000
    Freehold buildings at valuation                                                                  11,281,266          10,479,940
    Leasehold buildings at valuation                                                                          -              41,899
    Stormwater infrastructure at valuation                                                          252,124,812         230,012,612
    Flood protection infrastructure at valuation                                                     41,229,732          37,358,320
    Cemetery and crematoria infrastructure at valuation                                               2,384,747           2,384,747
    Refuse disposal infrastructure at valuation                                                      19,455,144          14,763,897
                                                                                                    336,656,701         301,349,415
    Less accumulated depreciation                                                                   126,687,654         110,408,806
                                                                                                    209,969,047         190,940,609
    welfare
    Freehold land at valuation                                                                            435,000           293,000
    Freehold buildings at valuation                                                                     1,372,883         1,206,400
    Leasehold buildings at valuation                                                                      345,861           303,920
                                                                                                        2,153,744         1,803,320
    Less accumulated depreciation                                                                         790,392           683,612
                                                                                                        1,363,352         1,119,708
    Recreation and culture
    Freehold land at valuation                                                                       78,962,500          50,664,973
    Leasehold land at valuation                                                                       1,776,000           6,074,000
    Freehold buildings at valuation                                                                 153,113,077         130,237,401
    Leasehold buildings at valuation                                                                          -           2,913,613
    Parks and recreation infrastructure
    - Swim centres at valuation                                                                      26,103,187          26,103,187
    - Parks at valuation                                                                             76,694,266          70,658,417
    - Leased land at valuation                                                                                -           2,553,266
                                                                                                    336,649,030         289,204,857
    Less accumulated depreciation                                                                    81,037,015          72,144,672
                                                                                                    255,612,015         217,060,185
    other economic affairs
    Freehold land at valuation                                                                            380,000           335,000
    Freehold buildings at valuation                                                                       374,375           328,976
    Leasehold buildings at valuation                                                                      291,474           256,128
    Stock sales market infrastructure at valuation                                                      2,867,616         2,867,616
                                                                                                        3,913,465         3,787,720
    Less accumulated depreciation                                                                       1,958,336         1,896,598
                                                                                                        1,955,129         1,891,122
    summary of assets at written down value
    General public services                                                                          41,918,043          36,338,659
    Public order and safety                                                                           1,085,725             965,596
    Roads and traffic                                                                               352,176,152         265,790,307
    Housing and community amenities                                                                 209,969,047         190,940,609
    Welfare                                                                                           1,363,352           1,119,708
    Recreation and culture                                                                          255,612,015         217,060,185
    Other economic affairs                                                                            1,955,129           1,891,122
                                                                                                    864,079,463         714,106,186
The Council has adopted either the cost basis or fair value basis for the valuation of property, plant and equipment depending upon
asset class. This is in accordance with Accounting Standard AASB 116. Assets listed as being at cost include some assets disclosed
at valuation prior to 30 June 2001 but deemed to be at cost as at that date.
Where assets are recorded at valuation, the valuation has been performed by Council officers with the exception of land which has
been valued using values supplied by the State Valuer-General as at July 2010. Infrastructure assets at valuation are at written down
replacement cost. Replacement cost is the current cost of a new asset that could provide the same service as the existing asset.
Accumulated depreciation or amortisation recognises the amount of the replacement cost that is pro-rata to the proportion of the
asset’s useful life that has expired.
Infrastructure valuations are based on component replacement values dated as 30 June 2011.
                                                                                                                                                      84


notes to tHe Financial statements
Year ended 30 June 2011


21 inFRastRuctuRe assets (cont’d)
   (e) infrastructure movements in carrying amounts

                                                                            PLANt &        RoADs &
                                                 LAND     BUILDINgs      eQUIPMeNt         BRIDges       DRAINAge                             2011
                                                                                                                                                       Launceston city counciL




                                                    $             $               $              $              $           otheR                $
opening Balance
At cost                                                                   42,246,194                                                    42,246,194
At valuation                                73,869,622    174,810,634                    434,078,226    230,012,611    156,689,450    1,069,460,544
Accumulated depreciation                                  (64,019,004)   (16,887,924)   (184,245,141)   (84,856,769)   (47,591,701)   (397,600,540)


additions                                       42,614      2,022,077      7,029,612         243,619       818,417       7,466,444      17,622,783
                                                                                                                                                      AnnuAl RepoRt 2010/11




adjustments
Gross                                                                                      1,936,333      2,789,756      (111,894)       4,614,195
Accumulated depreciation                                                                   2,055,528      (173,464)         30,203       1,912,267


transfers
Gross
Accumulated depreciation                                                                                         (9)                            (9)


Revaluations
Gross                                       34,605,264     23,210,795                    108,266,642     18,760,776      4,545,000     189,388,476
Depreciation                                               (8,694,608)                   (26,738,667)    (7,207,645)    (3,939,078)    (46,579,998)


Disposals
Gross                                         (140,000)     (214,368)     (2,737,681)                                    (111,057)      (3,203,106)
Accumulated depreciation                                     145,333       2,249,540                                        77,714       2,472,588


Depreciation expense                                       (1,499,636)    (2,994,794)     (6,362,514)    (2,575,538)    (2,821,449)    (16,253,931)
total                                     108,377,500     125,761,223     28,904,948     329,234,026    157,568,134    114,233,632     864,079,463
notes to tHe Financial statements
Year ended 30 June 2011


21 inFRastRuctuRe assets (cont’d)
   (e) infrastructure movements in carrying amounts - comparative figures for the year ended 30 June 2010

                                                                                 PLANt &           RoADs &                         seweR &
                                               LAND         BUILDINgs         eQUIPMeNt            BRIDges            wAteR          DRAIN           otheR             2010
                                                  $                 $                  $                 $                $              $               $                $
opening Balance
At Cost                                                                        44,894,778                                                                        44,894,778
At valuation                              77,716,000       174,216,285                          430,954,979      225,467,224     596,836,197    153,347,590    1,658,538,275
Accumulated depreciation                                   (62,622,268)       (18,465,057)     (179,439,440)     (95,518,130)   (254,312,534)   (45,035,052)   (655,392,481)


additions                                    381,622          1,159,282         3,710,847          3,226,533                       1,571,933      3,125,213      13,175,430


adjustments
Gross                                     (4,228,000)         (564,933)        (3,190,289)                      (225,467,224)   (367,948,469)       305,797    (601,093,118)
Accumulated depreciation                                         88,430         1,737,761          1,511,361      95,518,130     171,895,419                    270,751,100


transfers
Gross                                                                                                                               (447,049)      447,049
Accumulated depreciation                                                                                                             122,891      (122,891)


Revaluations
Gross
Depreciation


Disposals
                                                                                                                                                                                S E C T IO N f O u r




Gross                                                                          (3,169,143)         (103,287)                                      (536,199)      (3,808,628)
Accumulated depreciation                                                        2,546,727             91,367                                       257,304        2,895,398


Depreciation expense                                        (1,485,166)        (2,707,354)        (6,408,430)                     (2,562,544)    (2,691,062)    (15,854,556)
total                                     73,869,622       110,791,630         25,358,270       249,833,083                -     145,155,842    109,097,749     714,106,198
                                                                                                                                                                               financial statements
                                                                                                                                                                               85
86   Launceston city counciL     AnnuAl RepoRt 2010/11




     notes to tHe Financial statements
     Year ended 30 June 2011


     22 casH Flow

        (a) Reconciliation of net cash from operating activities to net surplus

                                                                                                           2011                2010
                                                                                                              $                   $
          Net surplus                                                                                 8,773,834         258,119,633

          non-cash charges
          Depreciation                                                                               16,253,931          15,854,560
          Employee provisions                                                                           515,989          (3,300,865)
          Provision for rehabilitation discount unwound                                                 224,000             220,000
          Allowance for impaired debts                                                                   35,895            (310,836)
          Loss (profit) on sale of non-current assets                                                    51,242             375,885


          changes in assets and liabilities
          Rate and sundry receivables                                                                   (49,773)        (20,237,446)
          Inventories                                                                                     4,104             299,155
          Sundry creditors                                                                            2,098,099            (799,616)
          Deposits                                                                                    4,575,672                    -

          non-cash income
          Esk Water equity accounting income                                                                   -            802,424
          Infrastructure take-up adjustments                                                         (1,022,566)          1,250,869
          Museum take up (Note 31)                                                                             -      (231,913,156)


          investing activities
          Distributions from investments                                                             (2,106,983)                   -

          Net cash from operating activities                                                        29,353,444           20,360,607


        (b) Reconciliation of cash and cash equivalents
        For the purposes of the Cash Flow Statement, the Council considers cash to include cash on hand and in banks and investments
        in money market instruments. Cash at the end of the reporting period as shown in the Cash Flow Statement is reconciled to the
        related items in the Statment of Financial Position as follows:

                                                                                                           2011                2010
                                                                                                              $                   $
          Cash                                                                                          734,366           1,625,080
          Short-term investments                                                                     59,660,262          66,120,692
                                                                                                    60,394,627           67,745,772


     As at the balance date the following credit standby arrangement was accessible:
     Bank overdraft facility $250,000 limit.
     The total amount available was unused at balance date.
     There were no loan facilities available at balance date.
                                                                                       S E C T IO N f O u r   financial statements       87




notes to tHe Financial statements
Year ended 30 June 2011


23 inVestment – Ben lomonD wateR
   Formation of Ben lomond water
   In February of 2008 State and Local Government reached agreement to establish three local government owned, vertically
   integrated businesses providing bulk, distribution and retail water and sewerage services, and a common service provider
   subsidiary company. The Water and Sewerage Corporations Act 2008 (Corporations Act) was subsequently enacted and received
   Royal Assent on 13 June 2009. As a result of the operation of that Act the water and sewerage assets of the Council (including
   certain funds held for capital works) vested in Ben Lomond Water as at 1 July 2009. On that date the Council became a part
   owner of that authority with an ownership share calculated in accordance with the asset value transferred and determined by an
   Allocation Order from the State Treasurer.
   The Council’s share of Ben Lomond Water was initially assessed in the Treasurer’s 2009 Draft Treasurer’s Allocation Order as
   being 55.3%. This was the ownership share used in the 2010 Council financial statements. In February 2011 the Treasurer
   issued a revised Allocation Order which altered the Council’s ownership share to 51.9% of Ben Lomond Water.

   initial recognition of investment in Ben lomond water
   Subsequent to the transfer, Ben Lomond Water adopted a different asset valuation basis for the assets acquired from the
   councils. This change was a result of the accounting standards applying to Ben Lomond Water being different to those applying
   to the councils.
   The result of this change and the application to those values of the Council’s ownership percentage was to reduce the value of
   the Council’s investment.

   Valuation of the council’s investment in Ben lomond water
   In addition to the initial write down of the valuation of the investment which occurred in the 2010 financial statements, the
   Council recorded an additional write down of $13,850,000 in the 2011 financial year due to the need to adjust the Council’s
   ownership percentage based on the Treasurer’s Revised Allocation Order.


                                                                                                               2011            2010
                                                                                                                  $               $
    Ben Lomond Water net equity                                                                    492,954,000          487,614,000
    Year end report used for determining net assets                                                30 June 2011        30 June 2010
    Launceston City Council ownership percentage                                                              51.9%          55.3%


    Fair value of the Council’s share of Ben Lomond Water                                          255,800,000          269,650,000
    Previously assessed value - taken up 1 July 2009                                                           n/a      402,298,498
    Previously assessed value - year end 30 June 2010                                              269,650,000                     n/a
    Net Increase (decrease) in fair value                                                          (13,850,000)        (132,648,498)
88   Launceston city counciL        AnnuAl RepoRt 2010/11




     notes to tHe Financial statements
     Year ended 30 June 2011


     24 Financial instRuments
     Risk management
     The Council holds cash and cash equivalent assets and liabilities for current and future capital and operational requirements.
     These assets are exposed to a variety of financial risks including:
     (i) market risk
     (ii) credit risk
     (iii) liquidity risk
     (iv) interest rate risk
     The Council’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential
     adverse effects on the financial performance of the Council.
     The Council does not engage in significant transactions expressed in foreign currencies and is therefore not subject to foreign
     currency risk.
     Financial risk management is carried out internally under policies approved by the Council.
     A comparison by category of the carrying amounts and fair values of the Council’s Financial Assets and Financial Liabilities
     recognised in the financial statements is presented below.


                                                                             CARRYINg VALUe                                   fAIR VALUe
                                                                      2011                2010                 2011                    2010
                                                                         $                   $                    $                       $

      Financial assets
      Cash and cash equivalents                                 60,394,627          67,745,772           60,394,627           67,745,772
      Fair value through profit or loss
           Interest in Ben Lomond Water                       255,800,000         269,650,000           255,800,000          269,650,000
      Current receivables                                        5,120,186           5,106,308            5,120,186            5,106,308
      Deferred receivables                                         257,556             257,556              257,556                 257,556
      total financial assets                                  321,572,369         342,759,636           321,572,369          342,759,636


      Financial liabilities
      At amortised cost                                         45,112,910          43,879,909           45,112,910           43,879,909
      total financial liabilities                               45,112,910          43,879,909           45,112,910           43,879,909
      net total                                               276,459,459         298,879,727           276,459,459          298,879,727


     Fair Value is determined as follows:
     cash and cash equivalents, receivables, payables are estimated to be the carrying value which approximates market value.
     Held-to-maturity investments are based upon their face value plus any accrued earnings.
     Borrowings are based upon their current discharge value.
     Financial Assets classified
         (i) “at fair value through profit and loss” or
         (ii) “available-for-sale”
     are based upon quoted market prices at the reporting date or independent valuation.
                                                                                             S E C T IO N f O u r   financial statements      89




notes to tHe Financial statements
Year ended 30 June 2011


24 Financial instRuments (cont’d)
(a) cash and cash equivalents, financial assets “at fair value through the Profit and loss”, “available-for-sale” financial assets
    and “Held-to-maturity” investments
The Council’s objective is to optimise its return on cash and investments within the restraints of its investment policy and risk
profile, whilst maintaining an adequate level of liquidity and preserving capital.
The Council’s Corporate Services Directorate manages its Cash and Investments Portfolio.
The Council has an Investment Policy that sets minimum investment ratings and maximum exposure levels to ratings, fund,
and institution.
This Policy is regularly reviewed by the Council and its staff and an Investment Report is prepared on a monthly basis setting out the
portfolio breakup and its performance.
The major risk associated with fair value at profit and loss investments is price risk - the risk that the capital value of investments
may fluctuate due to changes in market prices, whether these changes are caused by factors specific to individual financial
instruments or their issuers or are caused by factors affecting similar instruments traded in a market.
Cash and Investments are also subject to interest rate risk - the risk that movements in interest rates could affect returns and income.
A further risk associated with Cash and Investments is credit risk - the risk that the counterparty (to an investment) will not
complete their obligations particular to a financial instrument, resulting in a financial loss to the Council – be it of a capital or
income nature.
The Council manages these risks (amongst other measures) by diversifying its portfolio and only purchasing investments with high
investment ratings.
The following represents a summary of the sensitivity of the Council’s Statement of Comprehensive Income and Accumulated
Surplus (during the reporting period) due to a change in either the price of a financial asset or the interest rates applicable.
It is assumed that the change in interest rates would have been constant throughout the reporting period.


                                                                INCReAse of VALUes/RAtes                      DeCReAse of VALUes/RAtes
                                                                 PRofIt                eQUItY                   PRofIt             eQUItY
                                                                      $                     $                        $                  $
 2011
 Impact of a 10% movement in Market Values                              -                     -                        -                  -
 Impact of a 1% movement in Interest Rates                      450,172               450,172                 (450,172)          (450,172)
 2010
 Impact of a 10% movement in Market Values                              -                     -                        -                  -
 Impact of a 1% movement in Interest Rates                      526,650               526,650                 (526,650)          (526,650)
90   Launceston city counciL     AnnuAl RepoRt 2010/11




     notes to tHe Financial statements
     Year ended 30 June 2011


     24 Financial instRuments (cont’d)
     (b) Receivables
         Council’s major receivables comprise
         (i) Rates and Annual Charges and
         (ii) User Charges and Fees.
         The major risk associated with these receivables is credit risk - the risk that debts due and payable to the Council may not be
         repaid in full. The Council manages this risk by monitoring outstanding debt and employing stringent debt recovery procedures.
         Credit risk on rates and annual charges is minimised by the ability of the Council to secure a charge over property relating to the
         debts. i.e., the property can be sold to recover the debt. The Council is also able to charge interest on overdue rates and annual
         charges which further encourages the payment of debt.
         Infringement debtors are determined by the incidence of infringement rather than the Council decision. Since 2009 the Council
         has given the Monetary Penalties Enforcement Service of the Department of Justice responsibility to collect outstanding
         infringement debtors. The Council has a policy of booking extensive impairment for loss on infringement debtors.
         The level of outstanding receivables is reported monthly and monitored for acceptable collection performance. The Council
         makes provision for doubtful receivables as required and carries out credit checks on most non-rate debtors excluding
         infringements. There are no material receivables that have been subjected to a re-negotiation of repayment terms.
         A profile of the Council’s receivables credit risk at balance date follows:

     Receivables credit risk
     (i) ageing of receivables

                                                                            2011                                        2010
                                                                   CURReNt               oVeRDUe               CURReNt               oVeRDUe
                                                                         $                     $                     $                     $
      Rate debtors                                                   423,050               487,789               229,481               396,823
      Accrued revenue                                                274,351                       -             532,566                       -
      Sundry debtors                                               2,808,282               418,409             1,749,656             1,188,472
      Prepayments                                                    134,353                       -             469,987                       -
      Parking infringement debtors                                    52,295             2,564,934                47,125             2,499,581
                                                                   3,692,331             3,471,132             3,028,815             4,084,876


     (ii) movement in provision for impairment of receivables

                                                                                                                    2011                  2010
                                                                                                                       $                     $
      Balance at the beginning of the year                                                                   (2,007,384)           (2,318,218)
      Add new provisions recognised during the year                                                              (37,997)              (29,173)
      Less amounts already provided for and written back this year                                                 2,103               340,007
      Balance at the end of the year                                                                         (2,043,278)           (2,007,384)


     (c) Fair value hierarchy
     The table below analyses financial instruments carried at fair value by valuation method:
     Level 1 Quoted prices (unadjusted) in active markets for identical assets/liabilities
     Level 2 Inputs other than quoted prices included in Level 1 that are observable for the asset or liability either directly (i.e. prices) or
             indirectly (i.e. derived from prices)
     Level 3 Inputs for the asset or liability that are not based on observable market data.

                                                                                                                    2011                  2010
                                                                                                                       $                     $
      Level 3 - Ben Lomond Water                                                                            255,800,000           269,650,000
                                                                                             S E C T IO N f O u r   financial statements        91




notes to tHe Financial statements
Year ended 30 June 2011


24 Financial instRuments (cont’d)
(d) Payables and borrowings
   Payables and borrowings are both subject to liquidity risk – the risk that insufficient funds may be on hand to meet payment
   obligations as and when they fall due.
   The Council manages this risk by cash forecasting to maintain adequate liquidity levels and cash holdings. The Council also has
   an unused overdraft facility.
   The contractual undiscounted cash outflows (i.e. Principal only) of the Council’s payables and borrowings are set out in the
   Liquidity Table below:

                                                      fIxeD RAte MAtURItY
                                                                                                                   totAL              ACtUAL
                                     VARIABLe      Less thAN 1                                   NoN                CAsh            CARRYINg
                                     INteRest             YeAR      1 to 5 YeARs             INteRest          oUtfLows              AMoUNt
 LIQUIDItY tABLe                            $                $                 $                    $                  $                   $
 2011
 Deposits                                      -                -                 -          6,703,998              6,703,998       6,703,998
 Sundry creditors                  15,179,000                   -                 -          7,852,477          23,031,477         23,031,477
 Secured loans                                 -      2,335,882        13,041,553                       -       15,377,435         15,377,435
 total financial liabilities       15,179,000         2,335,882        13,041,553       14,556,475              45,112,910         45,112,910
 2010
 Deposits                                      -                -                 -          1,369,875              1,369,875       1,369,875
 Sundry creditors                  20,900,000                   -                 -          6,529,293          27,429,293         27,429,293
 Secured loans                                 -      1,754,020        13,326,721                       -       15,080,741         15,080,741
 total financial liabilities       20,900,000         1,754,020        13,326,721            7,899,168          43,879,909         43,879,909


Borrowings are also subject to interest rate risk - the risk that movements in interest rates could adversely affect funding costs and
debt servicing requirements. The Council manages this risk by monitoring the lending market and taking opportunities to fix rates at
below market in rising markets and taking short term borrowing in high interest markets.
The following interest rates were applicable to the Council’s Liabilities at balance date:

                                                                     2011                                               2010
                                                                                 AVeRAge                                             AVeRAge
                                                    CARRYINg VALUe          INteRest RAte          CARRYINg VALUe               INteRest RAte
                                                                 $                     %                        $                          %
 Bank overdraft                                                       -               10.74%                             -            10.49%
 Trade/other payables                                      15,179,000                 5.14%                 20,900,000                 5.30%
 Secured loans                                             15,377,435                  6.13%                15,080,741                 5.89%
                                                           30,556,435                                       35,980,741
92   Launceston city counciL      AnnuAl RepoRt 2010/11




     notes to tHe Financial statements
     Year ended 30 June 2011


     25 autHoRities
     During the financial year the Council had two authorities set up under the Local Government Act. The income and expenditure of
     these authorities is included in the Council’s financial statements.

     york Park and inveresk Precinct authority (controlling authority)
     The principal objective of the Authority is to “help develop the Inveresk Precinct as an international centre for art, education,
     tourism and recreation.”

     launceston Flood authority (single authority)
     This authority was formed by the Council resolution on 1 September 2008 and was established by gazettal on 10 September 2008.
     The authority was established to “…perform all tasks necessary for the construction and maintenance of flood levees, to initiate and
     manage effective emergency management procedures and to take all necessary measures, so as to address the flood risk to the
     ‘flood risk area’ …..”

                                                                                                                 2011                    2010
      ReVeNUe AND exPeNses                                                                                          $                       $
      York Park and Inveresk Precinct Authority
          - Revenues                                                                                        1,258,349             1,274,898
          - Expenses                                                                                       (2,603,537)           (2,530,654)
      Launceston Flood Authority
          - Revenues                                                                                          729,515             1,135,611
          - Expenses                                                                                         (309,659)           (1,094,371)



     26 sPecial committees
                                                        BALANCe           ADD           Less      Net
                                                          1 JULY      ReCeIPts      exPeNses MoVeMeNt                    2011            2010
                                                               $             $             $        $                       $               $
      committee name
      Dilston Hall                                            533            890            640            250            783             533
      Karoola Hall and Recreation Ground                    4,734          1,466            905            561           5,295           4,734
      Lebrina Progress Association                          4,611            100               -           100           4,711           4,611
      Lilydale District Swimming Pool                      20,666          4,823          2,246          2,577        23,243         20,666
      Lilydale Memorial Hall Committee                      7,911          2,759          3,165          (406)           7,505           7,911
      Lilydale Recreational Ground                          3,719          3,535          3,188            347           4,066           3,719
      Myrtle Park Hall and Recreational Ground             60,905        22,400         39,148        (16,748)        44,157         60,905
      North Esk Memorial Hall and
      Recreational Ground                                  10,111          1,370            791            579        10,690         10,111
      Nunamara Hall                                         2,931            525            998          (473)           2,458           2,931
      Ravenswood Memorial Hall                             17,538          3,574          7,109        (3,535)        14,003         17,538
      White Hills Memorial Hall                               530            177            707          (530)               -            530
                                                         134,189          41,619        58,897        (17,278)       116,911        134,189


     The White Hills Memorial Hall Committee closed in June 2011.
                                                                                       S E C T IO N f O u r   financial statements      93




notes to tHe Financial statements
Year ended 30 June 2011


27 RelateD PaRty tRansactions
   The Council has dealings from time to time with its Aldermen in both their private and business capacities. Transactions
   between the Council and its related parties are on normal commercial terms and conditions no more favourable than those
   available to other parties.
   Aldermen are required to disclose pecuniary interests in matters which come before the Council. In addition, under Section
   84(2) of the Local Government Act 1993, the Council is required to “specify any interests as notified to the General Manager of
   any Councillor in respect of any body or organisation with which the Council has major financial dealings.”
   Relevant matters notified are:
   Alderman A M Van Zetten (Mayor)           No relevant disclosures
   Alderman F R Nott (Deputy)                No relevant disclosures
   Alderman R L Armitage                     No relevant disclosures
   Alderman J D Ball                         No relevant disclosures
   Alderman I N Dean                         No relevant disclosures
   Alderman R L McKendrick                   No relevant disclosures
   Alderman I S Norton                       No relevant disclosures
   Alderman A C Peck                         No relevant disclosures
   Alderman R J Sands                        No relevant disclosures
   Alderman R W Shipp                        No relevant disclosures
   Alderman R I Soward                       No relevant disclosures
   Alderman A L Waddle                       No relevant disclosures

28 annual RemuneRation oF senioR oFFiceRs
   Under Section 72(1)(cd) of the Local Government Act 1993, the Council is required to report the total annual remuneration
   paid to employees who hold positions designated by the Council as senior positions. The Council has determined that senior
   positions comprise Director and General Manager positions. Accordingly, the following information is provided in respect of the
   year ended 30 June 2011.

    ReMUNeRAtIoN BAND                             NUMBeR of eMPLoYees
    $140,001 - $160,000                           2
    $160,001 - $180,000                           3
     $240,001 - $260,000                          1
Remuneration is defined in the Act as including salary payable, employer contributions to superannuation, the value of the use of
any motor vehicle provided to the employee, and the value of any other allowances or benefits paid or payable to, or provided for
the benefit of the employee. So as to represent the normal remuneration which applies to the six senior positions, the amounts
have been annualised where necessary. The report excludes officers no longer employed at year end.

29 suBseQuent eVents
   There were no events occurring after the reporting date that would materially affect any of the amounts or disclosures in
   these accounts.

30 continGent liaBilites
   At the reporting date of 30 June 2011 the Council had no contingent liabilities that would materially affect any of the amounts or
   disclosures in these accounts.

31 museum collection
   The independent valuation of the Queen Victoria Museum and Art Gallery by Simon Storey FAVAA of Simon Storey Valuations
   was completed during the financial year to 30 June 2010.
   The collection is valued at $231,913,206. This amount has been disclosed as a separate asset class in the Statement of
   Financial Position. The Council’s financial statements showed an equivalent amount as non operating income in the Statement
   of Comprehensive Income for the year ended 30 June 2010.
94   Launceston city counciL   AnnuAl RepoRt 2010/11




     notes to tHe Financial statements
     Year ended 30 June 2011


     32 eaRly aDoPtion oF accountinG stanDaRDs                           aasB 2010-6
        At the reporting date updates the following standards were       Amendments to Australian Accounting Standards –
        available for early adoption and relevant to the Council’s       Disclosures on Transfers of Financial Assets [AASB 1 &
        operations but were not applied by the Council.                  AASB 7]
        AAsB 1054                                                        This standard relates to amendments to AASB 7 Financial
                                                                         Instrument Disclosures as a result of the implementation of
        Australian Additional Disclosures                                ED 177 Derecognition.
        AAsB 2011-1                                                      AAsB 2010-3
        Amendments to Australian Accounting Standards arising            Amendments to Australian Accounting Standards arising
        from the Trans-Tasman Convergence Project [aaSB 1, aaSB          from the Annual Improvements Project [aaSB 3, aaSB 7,
        5, aaSB 101, aaSB 107, aaSB 108, aaSB 121, aaSB 128,             aaSB 121, aaSB 128, aaSB 131, aaSB 132 & aaSB 139]
        aaSB 132 & aaSB 134 and Interpretations 2, 112 & 113]
                                                                         AAsB 2010-4
        AAsB 2011-2
                                                                         Further Amendments to Australian Accounting Standards
        Amendments to Australian Accounting Standards arising            arising from the Annual Improvements Project [aaSB 1,
        from the Trans-Tasman Convergence Project – Reduced              aaSB 7, aaSB 101 & aaSB 134 and Interpretation 13]
        Disclosure Requirements [AASB 101 & AASB 1054]
                                                                         These standards relate to the introduction of non urgent but
        These standards relate to the harmonisation of Australian        necessary amendments to the standards.
        and New Zealand accounting standards.
                                                                         AAsB 2009-12
        AAsB 2010-07
                                                                         Amendments to Australian Accounting Standards [aaSBs
        Amendments to Australian Accounting Standards arising            5, 8, 108, 110, 112, 119, 133, 137, 139, 1023 & 1031 and
        from AASB 9 (December 2010) [AASB 1, 3, 4, 5, 7, 101, 102,       Interpretations 2, 4, 16, 1039 & 1052]
        108, 112, 118, 120, 121, 127, 128, 131, 132, 136, 137, 139,
        1023 & 1038 and Interpretations 2, 5, 10, 12, 19 & 127]          This standard makes amendments to a number of standards
                                                                         as a result of changes to aaSB 8 Operating Segments
        This standard relates to amendments relating to the
        introduction of AASB 9 which is applicable for reporting         AAsB 2010-5
        periods starting after 1 January 2013 and is not available for   Amendments to Australian Accounting Standards [aaSB 1,
        early adoption.                                                  3, 4, 5, 101, 107, 112, 118, 119, 121, 132, 133, 134, 137,
        AAsB 2010-2                                                      139, 140, 1023 & 1038 and Interpretations 112, 115, 127,
                                                                         132 & 1042]
        Amendments to Australian Accounting Standards arising
        from Reduced Disclosure Requirements [AASB 1, 2, 3, 5, 7,        This standard amends the listed standards resulting from
        8, 101, 102, 107, 108, 110, 111, 112, 116, 117, 119, 121,        editorial corrections made by the International Accounting
        123, 124, 127, 128, 131, 133, 134, 136, 137, 138, 140,           Standards Board (IASB) to its Standards and Interpretations
        141, 1050 & 1052 and Interpretations 2, 4, 5, 15, 17, 127,       (IFRSs) and by the AASB to its pronouncements.
        129 & 1052]                                                      No material effects are expected as a result of the adoption
        This standards relates to amendments to AASB 1053                of these standards
        Reduced Disclosure Requirements.
                                                                                   S E C T IO N f O u r   financial statements    95




statement By tHe GeneRal manaGeR


The accompanying financial statements of the Launceston City Council set out on pages 58 to 94 has been drawn up in accordance
with the requirements of the Local Government Act 1993 and Australian Accounting Standards and to the best of our knowledge and
belief fairly represents –
   a) the financial position of the Council
   b) the results of the Council’s operations
   c) the cash flow of the Council.




   Date 15/08/2011          Robert Dobrzynski
                            (General Manager)
96   Launceston city counciL   AnnuAl RepoRt 2010/11
S E C T IO N f O u r   financial statements   97
This report is printed on paper made from 100% post consumer recycled waste and made with 100% certified renewable energy.




                                                                                                                                       Town Hall, St John Street
                                                                                                                             PO Box 396 LAUNCESTON TAS 7250
                                                                                                                                t 03 6323 3000 F 03 6323 3001
                                                                                                                                            tty 03 6323 3003
                                                                                                                               e council@launceston.tas.gov.au
                                                                                                                                    www.launceston.tas.gov.au

				
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