Do you know your neighbour? ANNUAL REPORT

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1 Do you know your neighbour? ANNUAL REPORT

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3 Do you know your neighbour? This Chinese saying means that a good and close neighbour is better than a relative staying far away from you. Thus, fostering good neighbourliness helps to bring people closer and they look out for each other. But in today s high octane society, can we still find such neighbourly spirit in our estate? All it takes is a few seconds to smile and greet your neighbour. You would be surprise that it is that easy to know your neighbour. We all wish to have a good neighbour, and we can look out for one another in times of emergency. Better to make a friend than an enemy. Here are several ways to create a good neighbourliness environment: 1. Look out for your neighbour when they are away over an extended period of time. 2. Keep their newspapers till they return, and remove junk mail from their gates. 3. Have their contact numbers for emergencies. 4. Invite your neighbours to celebrate festivities. 5. Organise potluck / block parties to socialise and build rapport. So let us embrace this kampung spirit with our neighbours. It is time to re-discover good neighbourly spirit. Contents Bishan-Toa Payoh Town Council 3 Sixth Term of Office Corporate Information 6 Chairman s Review 7 Financial Statements 10 1

4 Our mission is to provide a clean, green, well maintained and healthy environment for the residents, through close co-operation with the residents, grassroots organisations and related government agencies. 2

5 Sixth Term Of Office ( ) Advisors Mr Wong Kan Seng Deputy Prime Minister & Minister for Home Affairs MP for Bishan-Toa Payoh GRC Advisor to Bishan-Toa Payoh Town Council Advisor to Bishan East Grassroots Organisations Dr Ng Eng Hen Minister for Education and Second Minister for Defence MP for Bishan-Toa Payoh GRC Elected of Bishan- Toa Payoh Town Council Advisor to Toa Payoh Central Grassroots Organisations Mr Zainudin Nordin Mayor for Central Singapore District MP for Bishan-Toa Payoh GRC Chairman of Bishan- Toa Payoh Town Council Advisor to Bishan-Toa Payoh North Grassroots Organisations Mrs Josephine Teo MP for Bishan-Toa Payoh GRC Vice-Chairman of Bishan- Toa Payoh Town Council Advisor to Toa Payoh East Grassroots Organisations Mr Hri Kumar Nair MP for Bishan-Toa Payoh GRC Vice-Chairman of Bishan- Toa Payoh Town Council Advisor to Thomson Grassroots Organisations Establishment Committee Advisor: Mr Zainudin Nordin Mr Teh Hee Seang Chairman Mr Cheng Wai Keung Vice-Chairman Mr Er Kwong Wah Mr Gregory Tang Wee Thiang Mr Yee Fook Hong Mr Ling Ming Chuan CEO/Secretary 3

6 Finance & Administration Committee Advisor: Dr Ng Eng Hen Mr Yee Fook Hong Chairman Mr Poh Puay Eng Vice-Chairman Mr Roy Cheng Siew Cherng Mr Chia Pen Chuen Mr Larry Lau Hooi See Mr Leong Fook Wing Co-Opted Helen Wee Lian Ngoh Jennifer Wong Kwai Fong Abdul Rahman Mohamed AmarSingh s/o Soun Singh Vincent Tan Tee Huat Texas Loh Kia How Fabian Yeo Mr Lim Joo Lye Ms Lim Siew Hoon Mr S U Nathan Mr Benny Soh Chee Ling Mr Tan Kee Khoon Mr Yeo Hiang Meng Tenders & Contracts Committee Advisor: Mrs Josephine Teo Mr Sitoh Yih Pin 2nd Advisor Mr Gregory Tang Wee Thiang Chairman Mr Roger Chia Ah Sah Vice-Chairman Ms Chua Geok Lan Ms Catherine Lee Ms Lee Ker Hwa Mr Ling Tuck Mun Co-Opted Ahmad Alif Lim Doris Chan Wong Thian Hock Patricia Ng Choon Chwee Mohamed Farook Poo Chee Kuen Sim Hock Soon Mr Mohd Yusof Bin Abdullah Mr Henry Ng Boon Hwee Mr Tan Kia Seng Ms Tay Mok Lan Ms Patricia Toh Bee Lan Mr RT Xavier Samy 4

7 Environment & Development Committee Advisor: Mr Hri Kumar Nair Mr Cheng Wai Keung Chairman Mr Lai Kah Seng Vice-Chairman Mr Azman Bin Yahaya Ms Doris Chan Gek Hia Mr David Choo Yong Kee Mr Leong Chong Meng Co-Opted Paul Subratnam Mazlan Bin Jalil Lau Juay Hor Chong Ngee Chia Han Heng Frankie Tong Kit Rong Christina Kwek Mr Jason Leong Wai Hoong Mr Lawrence Lim Tau Jeow Ms Paridah Bte Yusop Ms Frances Tang Po Tim Mr Yeo Suay Tee Community Relations Committee Advisor: Mr Zainudin Nordin Mr Er Kwong Wah Chairman Mr Cheong Chee Onn Vice-Chairman Mr Chow Tak Neo Mr Victor Chu Mr Khoo Kay Chai Mr Anthony Kiong Beng Hoe Co-Opted Winston Chua Seng Chye Siti Rohanah Bte Mohd Koid Wong Tian Hock Roger Anbukkarasi d/o Sakedevan Naidu Poon Wai Mun V Balakrishnan Fiona Lim Mr Joseph Lau Pub Taai Mr Mr Andy Lim Yi Dr Premarani Kannusamy Ms Sophia Su Mr Raymond Teoh 5

8 Corporate Information Bishan-Toa Payoh Town Council Logo Our logo depicts both the distinctive architecture of Bishan s Housing Development Board (HDB) flats and the Viewing Tower of Toa Payoh Garden. The blue and green colours represent a fresh, clean and healthy environment within the community. HDB Blocks Managed by Town Council Number of Units in Bishan-Toa Payoh Town 52,711* Number of Blocks in Bishan-Toa Payoh Town 526* Number of Residents in Bishan-Toa Payoh Town 210,000** (average 4 persons per household) * As at September 2008 ** Figures are approximated Contact / Operating Hours Toa Payoh Office Block 125A # Lorong 2 Toa Payoh Singapore Tel: Fax: Bishan Office Block 197 # Bishan Street 13 Singapore Tel: Fax: Website prm@btptc.org.sg Operating Hours 8.00am pm (Monday to Friday) 8.00am - 12 noon (Saturday) 6

9 Chairman s Review The year is best described as a time when we delivered on our commitment to enhance the living environment for all our residents. Many new infrastructural projects were either completed or launched which would further reinforce Bishan-Toa Payoh GRC s transformation into a model HDB housing estate. We have launched four Town Council-Lift Upgrading Programmes (TC-LUP) which are now in progress even as I write this report. We introduced six covered linkways, six children play grounds, and two elderly fitness corners; upgraded one soccer and woodball court; repainted 19 blocks, rewired 26 blocks, re-roofed 13 blocks and changed pumps in 113 blocks. We invested approximately $13.5 million to roll out these projects for our residents. Topping the list of the new projects is the $1.8 million Bishan Active sports facility in Bishan North Street 23. In addition, we are currently undertaking other on-going projects to build covered linkways, children playgrounds, and carry out repairs and redecorations and the Harmony Park. This Park will be another iconic project located at the junction of Bishan Road and Braddell Road and when completed it will have facilities such as fitness stations, BBQ pits, pavilions, inline skating court, skateboard court, skating bowl, multi-purpose court and a garden maze. 7

10 Collectively these projects will do more than just beautifying our estates. They will create a more congenial living environment for our residents and enhance their quality of life. A good example is the Bishan Active sports hub which will provide more opportunities for our residents to get together and interact in an informal and relaxed setting. We believe through our fostering of neighbourliness we will be able to encourage our residents to embrace the qualities of a gracious community, whereby caring for others, courtesy, good social behaviour and civic mindedness are among the common traits that they will display in their interactions with one another. In time, our Town Council can take satisfaction in knowing that our efforts have contributed in some way towards the grooming of a gracious community in Singapore. During the year under review, we have also successfully implemented Barrier Free Access (BFA) throughout the neighbourhoods, so that the elderly and the infirmed can enjoy greater mobility from their homes to the various amenities. For the safety of our residents, shoppers and shop occupiers, we implemented the rules for the Outdoor Display Area (ODA) in the neighbourhood malls. We are grateful to the shop owners for their cooperation and support in ensuring that the fire safety rules were observed. Our Town Council worked with other government agencies to ensure that we maintain a high standard in the upkeep of our estates in the interest of public health by destroying breeding grounds for mosquitoes and other pests. Our officers conducted several sweeps along the multi-storey corridors of HDB flats and other open areas and advised residents to be mindful of their responsibility to prevent mosquitoes from breeding. 8

11 One of the challenges facing the Town Council is keeping operating costs at a manageable level against the backdrop of high inflation and rising oil prices impacting on the cost of electricity. Various steps were taken to streamline operations and ensure an efficient deployment of manpower while adopting energy saving measures to cut down on electricity consumption. We installed energy saving devices in 25 blocks and this would give us 25% energy savings. In addition we installed T5 lamps under the rewiring contract in 31 blocks and expect to enjoy 30% savings in energy consumption. A total of 4000 outdoor lights will be replaced with Amalgam Lamps in the next two years and this should result in 55% energy savings to outdoor lighting. As Chairman, I am pleased to report a set of good figures for the fiscal year. We were able to turn in an operating surplus of $2.9 million and our total funds stood at $147.7 million as of 31 March Our total expenditure on infrastructural projects amounted to $15.1 million, while $18.6 million went to the up-keeping of our estates. The strong performance is certainly a reflection of the good work put in by the management and staff of our Town Council. Their commitment and support have made it much easier for me to carry out my responsibilities. I also wish to thank my fellow Councillors for their ideas, feedback and contributions which have brought us to where we are today. Zainudin Nordin Mayor for Central Singapore District and Chairman of Bishan-Toa Payoh Town Council 9

12 FINANCIAL STATEMENTS Bishan-Toa Payoh Town Council Established under the Town Councils Act, Cap. 329A Audited Financial Statements for the Financial Year Ended 31 March 2008 Contents Independent Auditor s report 11 Balance sheet 12 Income and expenditure statement 13 Statement of changes in funds 14 Cash flow statement 15 Notes to the financial statements 16 10

13 We have audited the accompanying financial statements of Bishan-Toa Payoh Town Council, which comprise the balance sheet as at 31 March 2008, and the statement of income and expenditure, the statement of changes in funds and the cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory notes. Town Council s Responsibility for the Financial Statements The Town Council s management is responsible for the preparation and fair presentation of these financial statements in accordance with the provisions of the Town Councils Act, Cap. 329A ( the Act ) and Singapore Financial Reporting Standards. This responsibility includes: (a) devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair income and expenditure statements and balance sheets and to maintain accountability of assets; (b) selecting and applying appropriate accounting policies; and (c) making accounting estimates that are reasonable in the circumstances. Independent Auditor s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Town Council s management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, (a) the accompanying financial statements are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Town Council as at 31 March 2008 and the results, changes in funds and cash flows of the Town Council for the financial year ended on that date; and (b) the accounting and other records required by the Act to be kept by the Town Council have been properly kept in accordance with the provisions of the Act. During the course of our audit, nothing came to our notice that caused us to believe that the receipt, expenditure and investment of monies, and the acquisition and disposal of assets by the Town Council during the financial year have not been made in accordance with the provisions of the Act. RSM Chio Lim Public Accountants and Certified Public Accountants Singapore 23 June

14 Balance Sheet as at 31 March 2008 Notes 2008 $ Non-current assets Plant and equipment 3 587, , , ,317 Current assets Investments in financial assets 4 107,917, ,287,745 Conservancy and service debtors 5 1,197,121 1,374,859 Other receivables 675, ,188 Interest receivable 269, ,095 Grants receivable 922,222 1,070,048 Fixed deposits with financial institutions 6 37,724,241 42,349,345 Bank and cash balances 6 2,286,838 7,591, ,992, ,598,547 Current liabilities Grants received in advance 1,272 8,818 Conservancy and service fees received in advance 441, ,179 Payables and accrued expenses 7 2,485,626 5,742,198 Current tax liability 943, ,492 3,871,610 7,087,687 Net current assets 147,121, ,510, ,708, ,272,177 Town Council Funds Residential property funds Accumulated surplus 8 3,724,822 2,860,057 Sinking fund 9 112,861, ,018,146 Town improvement and project fund 10 4,180,266 4,249, ,766, ,127,725 Commercial property funds Accumulated surplus 8 1,812,188 1,081,646 Sinking fund 9 24,415,323 23,929,609 Town improvement and project fund 10 1,055,229 1,052,360 27,282,740 26,063,615 Carpark fund Accumulated deficit 8 (350,360) (140,264) Interim upgrading programme fund 11 (55,221) 156,435 Estate upgrading programme fund 12 64,915 64, ,708, ,272, $ Zainudin Nordin Chairman 23 June 2008 Ling Ming Chuan Secretary 12 The accounting policies and explanatory notes on pages 16 to 35 form an integral part of the financial statements.

15 Income and Expenditure Statement for the year ended 31 March 2008 Notes 2008 $ Operating income Conservancy and service fees 8 30,617,016 30,543,818 Less: Operating transfer to sinking funds 8 (10,264,588) (10,236,433) 20,352,428 20,307,385 Agency fees 1,670,705 1,642,718 Other income 1,528,400 1,290,534 23,551,533 23,240,637 Less: Operating expenditure Cleaning works 5,461,605 5,172,260 Lift maintenance 2,866,589 2,883,652 Other works and maintenance 3,321,602 4,226,536 Water and electricity 6,949,947 7,096,625 General and administrative expenditure 16 6,775,171 6,210,409 25,374,914 25,589,482 Operating deficit (1,823,381) (2,348,845) Add: Interest income 135, ,199 Deficit before taxation and government grants (1,687,696) (2,024,646) Taxation 14 (268,221) Deficit before government grants (1,955,917) (2,024,646) Government grants 8, 13 7,527,353 7,925,740 Less: Transfer to - sinking fund (2,226,834) (2,008,505) - town improvement and project fund (1,521,179) (1,917,070) Add: GST subvention 8, 13 1,061, ,454 4,841,128 4,397,619 Surplus for the financial year 2,885,211 2,372,973 Add: Accumulated surplus at beginning of financial year 8 3,801,439 6,657,114 Less: Transfer to sinking fund 9 (3,728,648) 6,686,650 5,301,439 Less: Appropriation to town improvement and project fund 8 (1,500,000) (1,500,000) Accumulated surplus at end of financial year 8 5,186,650 3,801, $ Zainudin Nordin Chairman 23 June 2008 Ling Ming Chuan Secretary The accounting policies and explanatory notes on pages 16 to 35 form an integral part of the financial statements. 13

16 Statement of Changes in Funds for the year ended 31 March 2008 Residential property funds $ Commercial property funds $ Car park fund $ Interim upgrading project fund $ Estate upgrading project fund $ Total $ Balance at 31 March ,000,787 23,860, , ,967 (24,928) 139,289,486 Surplus/(deficit) for the financial year* 7,126,938 2,203,382 (649,691) (787,532 ) 89,594 7,982,691 Balance at 31 March ,127,725 26,063,615 (140,264) 156,435 64, ,272,177 Surplus/(deficit) for the financial year* (361,324) 1,219,125 (210,096) (211,656) ,298 Balance at 31 March ,766,401 27,282,740 (350,360) (55,221) 64, ,708,475 Notes $ $ * Accumulated surplus 8 2,885,211 2,372,973 Sinking fund 9 (671,119) 7,847,284 Town improvement and project fund 10 (1,566,387) (1,539,628) Interim upgrading programme fund 11 (211,656) (787,532) Estate upgrading programme fund , ,298 7,982, The accounting policies and explanatory notes on pages 16 to 35 form an integral part of the financial statements.

17 Cash Flow Statement for the year ended 31 March 2008 Notes 2008 $ Cash flows from operating activities Deficit before taxation and government grants 8 (1,687,696) (2,024,646) Adjustments for: Depreciation of plant and equipment 3 298,301 61,692 Interest income (135,685) (324,199) Operating deficit before working capital changes (1,525,080) (2,287,153) Increase in receivables (6,643,198) (9,112,547) (Decrease)/increase in payables (3,256,572) 1,096,279 Cash used in operations (11,424,850) (10,303,421) Income tax paid (633,167) (525,473) Decrease in sinking fund (1,681,761) (4,188,263) Decrease in town improvement and project fund (3,195,736) (3,581,924) Payment of expenses for interim upgrading projects 11 (212,552) (1,966,928) Payment of expenses for estate upgrading projects 12 (3,306) Net cash used in operating activities (17,148,066) (20,569,315) Cash flows from investing activities Purchase of plant and equipment 3 (124,188) (777,664) Placement of funds with fund managers 4 (32,000,000) Proceeds from maturity of investments 22,576,880 Investment and interest income received 8,036,420 11,003,731 Net cash (used in) / provided by investing activities (1,510,888) 10,226,067 Cash flows from financing activities Government funds received for interim upgrading projects 11 1,179,396 Government funds received for estate upgrading projects 12 92,900 Government grants received 13 7,943,044 7,377,314 GST subvention received , ,454 Net cash flow provided by financing activities 8,729,421 9,047, $ Net decrease in cash and cash equivalents (9,929,533) (1,296,184) Cash and cash equivalents at beginning of financial year 6 49,940,612 51,236,796 Cash and cash equivalents at end of financial year 6 40,011,079 49,940,612 The accounting policies and explanatory notes on pages 16 to 35 form an integral part of the financial statements. 15

18 Notes to the Financial Statements 31 March General Bishan-Toa Payoh Town Council was formed on 13 January 1997 under the Town Councils Act (Chapter 329A). The functions of the Town Council are to control, manage, maintain and improve the common property of residential and other commercial property in the housing estates of the Housing and Development Board ( HDB ) within the Town. The Town consists of the Bishan-Toa Payoh Group Representation Constituency. The Town Council commenced its functions on 13 January 1997 and its head office is situated at: Blk 125A Lorong 2 Toa Payoh # Singapore As at 31 March 2008, the Town Council had 76 (2007 : 72) employees. 2 Summary of significant accounting policies (a) Accounting convention The financial statements have been prepared in accordance with the provisions of the Town Councils Act and Singapore Financial Reporting Standards ( FRS ). The financial statements are prepared on a going concern basis under the historical cost convention, except where an FRS requires an alternative treatment (such as fair values) as disclosed where appropriate in these financial statements. (b) Basis of preparation The preparation of financial statements in conformity with generally accepted accounting principles requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The estimates and assumptions are reviewed on an ongoing basis. Apart from those involving estimations, management has made judgements in the process of applying the entity s accounting policies. The areas requiring management s most difficult, subjective or complex judgements, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 2(s), where applicable. (c) Funds Town Council Funds In accordance with Section 33(1) of the Town Councils Act, separate funds were established to account for the management of the various types of properties. The types of properties under the management of the Town Council are as follows: Residential property Commercial property 16

19 Notes to the Financial Statements 31 March 2008 Carparks are managed by the Town Council for the HDB on an agency basis. These funds together with the Sinking Funds, Town Improvement and Project Funds, Interim Upgrading Fund and Estate Upgrading Fund form the Town Council Funds. All monies received by the Town Council are paid into and related expenditures are met out of the appropriate funds set up for each property type managed. Assets and liabilities of the various funds of the Town Council are pooled in the Balance Sheet. Sinking Funds In accordance with Section 33(4) of the Town Councils Act, separate Sinking Funds are established for the improvement to, management and maintenance of residential property and commercial property. These Sinking Funds are maintained as part of the Town Council Funds. Under the Town Councils Act, the Minister for National Development may, from time to time, prescribe the minimum amounts of conservancy and service fees and grants-in-aid to be paid into the Sinking Funds. The minimum amounts that are paid into the Sinking Funds are as follows: (i) 1-room to 3-room 30% of conservancy and service fees and grants-in-aid (ii) 4-room 35% of conservancy and service fees and grants-in-aid (iii) 5-room, Executive, HUDC and Multi-generation 35% of conservancy and service fees (iv) Shop with living accommodation 35% of conservancy and service fees (v) Commercial property 35% of conservancy and service fees These minimum contributions are treated as operating transfers and are deducted from the conservancy and service fees and government grants in the Income and Expenditure Statement. The Sinking Funds are utilised for cyclical major repainting, renewal or replacement of roofing systems, water tanks, pumps and water supply systems, lightning protection systems and lifts, major repairs and maintenance of the common area and contributions to the HDB in respect of general upgrading works carried out on the common property under the Housing and Development Act. Town Improvement and Project Funds Town Improvement and Project Funds are established and maintained as part of the Town Council Funds. These funds are utilised for improvement and development works in the Town. The funds are set up by transfer from the Accumulated Surplus to fund specific projects to be carried out. In addition, the Town Council receives funds through the Citizens Consultative Committee for approved projects. 17

20 Notes to the Financial Statements 31 March 2008 Interim Upgrading Programme Fund The Interim Upgrading Programme ( IUP ) is an estate improvement programme to upgrade the common areas and physical environment of qualifying properties. This upgrading scheme was entered into between the Town Council, HDB and the Ministry for National Development. Miscellaneous IUP expenditure is pegged at 8.11% of the IUP fund and the Town Council may transfer the difference between the actual and the pegged expenditure to its Income and Expenditure Statement. Estate Upgrading Programme Fund The Estate Upgrading Programme ( EUP ) fund is utilised for enhancement works carried out on the public land and the facilities within the estates. The EUP is fully funded by the Government and the grant provided is computed with reference to the number of residential units in the estate. Miscellaneous EUP expenditure is pegged at 11.11% of the EUP fund and the Town Council may transfer the difference between the actual and the pegged expenditure to its Income and Expenditure Statement. (d) Allocation of general overheads Expenditure not relating specifically to any property type managed, for example, administrative overheads, tree planting, pruning etc are allocated to the various property types using equivalent dwelling units as follows: Property Type Equivalent Dwelling Unit(s) 1 Residential Property Unit 1 1 Commercial Property Unit 2 6 Car Lots or 36 Motor Cycle Lots or 4 Lorry Lots 1 No overheads are allocated to the Sinking Funds and Town Improvement and Project Funds. (e) Government grants The Town Council receives three types of grants from the government, namely, service and conservancy charge grant, payments from citizens consultative committees and GST subvention grant. Government grants are accounted for on an accrual basis. Service and conservancy charge grants to meet the current year s operating expenditure are taken to the Income and Expenditure Statement. The GST subvention is given as a grants-in-aid and is granted to Town Councils to assist them to absorb the GST increases in service and conservancy charge for HDB residential flats. 18

21 Notes to the Financial Statements 31 March 2008 (f) Plant and equipment Plant and equipment are carried at cost less any accumulated depreciation and any accumulated impairment losses. The gain or loss arising from the derecognition of an item of plant and equipment is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item and is recognised in the income and expenditure statement. The residual value and the useful life of an asset is reviewed at least at each financial year-end and, if expectations differ from previous estimates, the charges are accounted for as a change in an accounting estimate, and the depreciation charge for the current and future periods are adjusted. Cost also includes acquisition cost, any cost directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Subsequent cost are recognised as an asset only when it is probable that future economic benefits associated with the item will flow to the entity and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income and expenditure statement when they are incurred. Depreciation is provided on a straight-line basis to allocate the gross carrying amounts less their residual values over their estimated useful lives of each part of an item of plant and equipment. The annual rates of depreciation are as follows: Furniture, fixtures and fittings Office equipment Data processing equipment/software - 5 years - 3 years - 3 years An asset is depreciated when it is available for use until it is derecognised even if during that period the item is idle. Fully depreciated assets still in use are retained in the financial statements. (g) Investments in financial assets Investment in financial assets relates to funds placed with fund managers which comprise mainly of bonds, equities, unit trusts and cash and fixed bank deposits. The funds represent the cost of the portfolio of assets at the beginning of each management term plus gains/losses on a portfolio basis, net of management fees payable during the management term. (h) Conservancy and service debtors After initial recognition at fair value, conservancy and service debtors are measured at amortised cost using the effective interest method but short-duration receivables with no stated interest rate are normally measured at original invoice amount unless the effect of imputing interest would be significant. Conservancy and service debtors are stated after provision for impairment. A conservancy and service debtor amount is regarded as impaired if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition and that the loss event has an impact on the estimated future cash flows of the financial asset 19

22 Notes to the Financial Statements 31 March 2008 that can be reliably estimated. The carrying amounts of conservancy and service debtors approximates their fair value. The amount of the provision is recognised in the Income and Expenditure Statement. No interest is charged on conservancy and service debtors in normal circumstances. (i) Impairment of non-financial assets The carrying amount of such assets (other than (i) intangible assets not yet available for use, (ii) goodwill and other indefinite life intangible assets) is reviewed at each reporting date for indications of impairment and where impairment is found, the asset is written down through the income statement to its estimated recoverable amount. Irrespective of whether there is any indication of impairment, an annual impairment test is performed at the same time every year on an intangible asset with an indefinite useful life or an intangible asset not yet available for use. The impairment loss is the excess of the carrying amount over the recoverable amount and is recognised in the income statement. The recoverable amount of an asset or a cash-generating unit is the higher of its fair value less costs to sell and its value in use. In assessing the value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). At each reporting date non-financial assets other than goodwill with impairment loss recognised in prior periods are assessed for possible reversal of the impairment. An impairment loss is reversed only to the extent that the asset s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. (j) Financial assets Initial recognition and measurement: A financial asset is recognised on the balance sheet when, and only when, the entity becomes a party to the contractual provisions of the instrument. Financial assets are initially recognised at fair value which is normally represented by the transaction price. The transaction price for financial asset not classified at fair value through income statement includes the transaction costs that are directly attributable to the acquisition or issue of the financial asset. Transaction costs incurred on the acquisition or issue of financial assets classified at fair value through income and expenditure statement are expensed off immediately. The transactions are recorded using the trade date method. Subsequent measurement based on the classification of financial assets of four respective categories under FRS 39 is as follows: 1. Financial assets at fair value through income and expenditure statement: Assets are classified in this category when they are principally incurred for the purpose of selling or repurchasing in the near term (trading assets) or are derivatives (except for a derivative that is a designated and effective hedging instrument) or have been classified in this category because the conditions 20

23 Notes to the Financial Statements 31 March 2008 are met to use the fair value option and it is used. These assets are carried at fair value by reference to the transaction price or current bid prices in an active market. All changes in fair value are recognised directly in the income and expenditure statement. They are classified as non-current assets unless management intends to dispose of the investment within 12 months from the balance sheet date. Short term investments in equities and bonds are classified under this category. 2. Loans and receivables: Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Assets that are for sale immediately or in the near term are not classified in this category. These assets are carried at amortised costs using the effective interest method (except that short-duration receivables with no stated interest rate are normally measured at original invoice amount unless the effect of imputing interest would be significant) minus any reduction (directly or through the use of an allowance account) for impairment or uncollectibility. Impairment charges are provided only when there is objective evidence that an impairment loss has been incurred as a result of one or more events that occurred after the initial recognition of the asset (a loss event ) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. Losses expected as a result of future events, no matter how likely, are not recognised. For impairment, the carrying amount of the asset is reduced through use of an allowance account. The amount of the loss is recognised in the income and expenditure statement. 3. Held-to-maturity financial assets: As at year-end date there were no financial assets classified in this category. 4. Available-for-sale financial assets: As at year-end date there were no financial assets classified in this category. Derecognition of financial assets: Irrespective of the legal form of the transactions performed, financial assets are derecognised when they pass the substance over form based derecognition test prescribed by FRS 39 relating to the transfer of risks and rewards of ownership and the transfer of control. Cash and cash equivalents: Cash and cash equivalents include bank and cash balances, on demand deposits and any highly liquid debt instruments readily convertible to known amounts of cash and subject to an insignificant risk of change in value, less cash subject to restriction and bank overdrafts payable on demand. (k) Hedging The Town Council is exposed to interest rate risks, arising from changes in interest rates for financial instruments. No hedging arrangement through derivatives and hedging instruments is required, but interests are managed using a mixture of variable rate deposits. 21

24 Notes to the Financial Statements 31 March 2008 (l) Financial liabilities Initial recognition and measurement: A financial liability is recognised on the balance sheet when, and only when, the entity becomes a party to the contractual provisions of the instrument. Financial liabilities are initially recognised at fair value which is normally represented by the transaction price. The transaction price for financial liability not classified at fair value through income statement includes the transaction costs that are directly attributable to the acquisition or issue of the financial liability. Transaction costs incurred on the acquisition or issue of financial liability classified at fair value through income and expenditure statement are expensed off immediately. The transactions are recorded at the trade date. Subsequent measurement: Subsequent measurement based on the classification of the financial liabilities in one of the following two categories under FRS 39 is as follows: 1. Liabilities at fair value through income and expenditure statement: As at year-end date, there were no financial liabilities classified in this category. 2. Other financial liabilities: All liabilities, which have not been classified as in the previous category fall into this residual category. These liabilities are carried at amortised cost using the effective interest method. Payables and borrowing are classified in this category. Items classified within current liabilities and other payables are not usually re-measured, as the obligation is usually known with a high degree of certainty and settlement is short-term. (m) Fair value of financial instruments The carrying values of current financial assets and financial liabilities including cash, receivables and payables approximate their fair values due to the short-term maturity of these instruments. Disclosures of fair value are not made when the carrying amount is a reasonable approximation of fair value. The fair values of non-current financial instruments may not be disclosed unless they are significant to the financial statements and in the event the fair values are disclosed in the relevant notes to the financial statements. The maximum exposure to credit risk is the fair value of the financial instruments at the balance sheet date. The fair value of a financial instrument is derived from an active market. The appropriate quoted market price for an asset held or liability to be issued is usually the current bid price without any deduction for transaction costs that may be incurred on sale or other disposal. The appropriate quoted market price for an asset to be acquired or liability held is usually the current asking price. 22

25 Notes to the Financial Statements 31 March 2008 (n) Provisions A liability or provision is recognised when there is a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are made using best estimates of the amount required in settlement and where the effect of the time value of money is material, the amount recognised is the present value of the expenditure expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense. Changes in estimates are reflected in the income and expenditure statement in the period they occur. (o) Lease as a lessee Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased assets are classified as operating leases. For operating leases, lease payments are recognised as an expense in the income and expenditure statement on a straight-line basis over the term of the relevant lease unless another systematic basis is representative of the time pattern of the user s benefit, even if the payments are not on that basis. Lease incentives received are recognised in the income and expenditure statement as an integral part of the total lease expense. (p) Taxation Tax is provided on the following income: (i) Income derived from investments; (ii) Fees, rent and other charges received from non-residents or non-owners of properties in the Town for maintenance of carpark where the Town Council opts to manage and maintain them; (iii) Donations from non-residents or non-owners of properties in the Town; and (iv) Agency fees derived from acting as agents for other town councils. Income tax is accounted using the asset and liability method that requires the recognition of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequence of events that have been recognised in the financial statements or tax returns. The measurements of current and deferred tax liabilities and assets are based on provisions of the enacted or substantially enacted tax laws, and the effects of future changes in tax laws or rates are not anticipated. Income tax expense represents the sum of the tax currently payable and deferred tax. Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same income tax authority. The carrying amount of deferred tax assets is reviewed at each balance sheet date and is reduced, if necessary, by the amount of any tax benefits that, based on available evidence, are not expected to be realised. Deferred taxes are recognised for all temporary differences. 23

26 Notes to the Financial Statements 31 March 2008 (q) Revenue recognition The revenue amount is the fair value of the consideration received or receivable from the gross inflow of economic benefits during the year arising from the course of the ordinary activities of the Town Council and it is shown net of related tax, estimated returns, discounts and volume rebates. Conservancy and service fees are recognised when due. Agency fees are fees received for routine maintenance of HDB s carparks and are recognised when due. Interest income from fixed deposits is recognised as the interest accrues (taking into account the effective yield on the asset) unless collectibility is in doubt. Income from funds placed with fund managers is recognised when realised or upon the expiry of the fund management term. (r) Employee benefits Contributions to defined contribution retirement benefit plans are recorded as an expense as they fall due. The Town Council s legal or constructive obligation is limited to the amount that it agrees to contribute to an independently administered fund. This includes the government managed retirement benefit plan such as the Central Provident Fund in Singapore. For employee leave entitlement, the expected cost of short-term employee benefits in the form of compensated absences is recognised in the case of accumulating compensated absences; when employees render service that increases their entitlement to future compensated absences, and in the case of non-accumulating compensated absences, when the absences occur. (s) Critical judgements, assumptions and estimation uncertainties There were no critical judgements made in the process of applying the Town Council s accounting policies that have significant impact on the amounts recognised in the financial statements. There were no key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year. 24

27 Notes to the Financial Statements 31 March Plant and equipment Furniture, fixtures and fittings $ Office equipment $ Data processing equipment/ software $ Cost At 1 April ,088, ,667 2,246,156 3,597,206 Additions 32,099 7, , ,664 At 31 March ,120, ,717 2,984,671 4,374,870 Additions 20, , ,188 Disposals (66,124) (66,124) At 31 March ,141, ,717 3,022,109 4,432,934 Total $ Accumulated depreciation At 1 April ,068, ,834 2,222,132 3,551,861 Depreciation charge 11,118 3,028 47,546 61,692 At 31 March ,080, ,862 2,269,678 3,613,553 Depreciation charge 17,016 2, , ,301 Disposals (66,124) (66,124) At 31 March ,097, ,576 2,482,125 3,845,730 Net book value At 31 March ,488 1,833 24,024 45,345 At 31 March ,469 5, , ,317 At 31 March ,079 3, , ,204 4 Investments in financial assets Investments in financial assets represent funds and related investment income placed with professional fund managers. The Town Council appoints several fund managers to manage its available investment funds, based on terms and conditions stipulated in the respective Investment Agreements entered in with these fund managers for a fixed period of time. (i) As at 31 March 2008, the Town Council has arrangements with the fund managers to guarantee in aggregate the principal amount of $94,500,000 (2007 : $80,500,000) at the end of the management term. (ii) The fund managers charge annual base administration fees. Performance fees are charged for the excess, before income tax, of the market value of the fund over the specified performance benchmark at the end of the management term or termination date if earlier. 25

28 Notes to the Financial Statements 31 March 2008 (iii) The funds are invested in accordance with the Town Councils Act and the Trustees Act. (iv) The funds are classified as financial assets at fair value. All fair value gains / (losses) on the funds are included in the sinking funds $ $ Balance at beginning of financial year 100,287,745 90,692,696 New placement of funds 32,000,000 Proceeds on maturity (22,576,880) Accrued income for the financial year 6,565,349 3,827,362 Increase/(decrease) in fair value during the year (8,358,494) 5,767,687 Fair value at end of the financial year 107,917, ,287,745 As at the balance sheet date, the funds invested with fund managers comprise the following: $ $ At fair value At fair value Equities 11,347,810 28,877,600 Bonds 44,894,611 30,628,390 Unit trusts 24,654,375 39,135,506 Cash and fixed deposits 27,020,924 1,646,249 Total 107,917, ,287,745 5 Conservancy and service debtors $ $ Conservancy and service debtors 1,197,121 1,374,859 Conservancy and service debtors are stated after allowance for impairment of $281,626 (2007 : $245,948). The movement in allowance for impairment is as follows: Balance at beginning of financial year 245, ,079 Charge to income and expenditure statement 35,678 28,869 Balance at end of financial year 281, ,948 26

29 Notes to the Financial Statements 31 March Cash and cash equivalents Cash and cash equivalents included in the cash flow statement comprise the following balance sheet amounts: $ $ Fixed deposits with financial institutions 37,724,241 42,349,345 Bank and cash balances 2,286,838 7,591,267 40,011,079 49,940,612 Fixed deposits with financial institutions bear maturities ranging from 1 month to 12 months at interest rates ranging from 1.00% to 2.63% per annum (2007 : 1 month to 12 months at interest rates ranging from 2.75% to 3.50% per annum). These interest rates approximate the weighted effective interest rate. 7 Payables and accrued expenses $ $ Sundry deposits 181, ,931 Accrued operating expenses 165, ,872 Outside parties 2,138,638 5,336,395 2,485,626 5,742,198 The carrying amounts of payables and accrued expenses approximate their fair values. 27

30 Notes to the Financial Statements 31 March Accumulated surplus The surplus for the financial year attributable to the various activities is carried forward as accumulated surplus in the respective funds as follows: Residential Property Commercial Property Carpark Total Notes $ $ $ $ $ $ $ $ Operating income Conservancy and service fees 27,345,341 27,312,011 3,271,675 3,231,807 30,617,016 30,543,818 Less: Operating transfer to sinking funds (9,119,501) (9,105,299) (1,145,087) (1,131,134) (10,264,588) (10,236,433) 18,225,840 18,206,712 2,126,588 2,100,673 20,352,428 20,307,385 Agency fees and other income 838, , , ,062 1,765,659 1,723,617 3,199,105 2,933,252 19,064,638 18,823,285 2,721,236 2,693,735 1,765,659 1,723,617 23,551,533 23,240,637 Less: Operating expenditure (21,520,862) (21,569,345) (1,879,668) (1,949,585) (1,974,384) (2,070,552) (25,374,914) (25,589,482) Operating surplus/(deficit) (2,456,224) (2,746,060) 841, ,150 (208,725) (346,935) (1,823,381) (2,348,845) Add: Non-operating income 115, ,433 8,332 24,766 11,467 29, , ,199 Surplus/(deficit) before taxation and government grants (2,340,338) (2,475,627) 849, ,916 (197,258) (317,935) (1,687,696) (2,024,646) Less: Taxation 14 (236,199) (19,184) (12,838) (268,221) Surplus/(deficit) before government grants (2,576,537) (2,475,627) 830, ,916 (210,096) (317,935) (1,955,917) (2,024,646) Add: Government grants 13 7,480,334 7,724,702 47, ,038 7,527,353 7,925,740 Add: GST subvention 13 1,061, ,454 1,061, ,454 Less: Transfer to sinking funds 9, 13 (2,226,834) (2,008,505) (2,226,834) (2,008,505) Less: Transfer to town improvement and project funds 10, 13 (1,474,160) (1,716,032) (47,019) (201,038) (1,521,179) (1,917,070) 4,841,128 4,397,619 4,841,128 4,397,619 Surplus/(deficit) for the financial year 2,264,591 1,921, , ,916 (210,096) (317,935) 2,885,211 2,372,973 Accumulated surplus/(deficit) at beginning of financial year 2,860,057 4,564,869 1,081,646 1,582,818 (140,264) 509,427 3,801,439 6,657,114 Add: Transfer from carpark to residential 331,756 (331,756) Less: Transfer to sinking funds 9 (2,584,404) (1,144,244) (3,728,648) 5,124,648 4,234,213 1,912,362 1,207,490 (350,360) (140,264) 6,686,650 5,301,439 Less: Appropriation to town improvement and project funds 10 (1,399,826) (1,374,156) (100,174) (125,844) (1,500,000) (1,500,000) Accumulated surplus/(deficit) at end of financial year 3,724,822 2,860,057 1,812,188 1,081,646 (350,360) (140,264) 5,186,650 3,801,439 28