Annual Report 2011 - Watercare

More documents

Recommendations

Info

Watercare Services Limited 2011 ANNUAL REPORT STATEMENT OF ACCOUNTING POLICIES FOR THE YEAR ENDED 30 JUNE 2011 Reporting Entity The financial statements are for Watercare Services Limited, a council organisation wholly owned by Auckland Council, as defined in the Local Government Act 2002 incorporated and domiciled in New Zealand. The consolidated financial statements of the group are for the economic entity of Watercare Services Limited and, from 1 November 2010, Metrowater Community Trust (100% owned) and Auckland City Water Limited (100% owned non-trading company). The Metrowater Community Trust was formed in February 2001 to assist low income families and individuals who cannot afford to pay their water and wastewater bills and individuals who have special needs in relation to water use. Separate financial statements of the parent are not presented in these financial statements as the subsidiary financial statements are immaterial to the consolidated group, as detailed in note 11, page 87. As the consolidated group commenced on 1 November 2010 there are no group comparatives. On 1 November 2010, as the result of the Auckland Council reorganisation, Watercare Services Limited integrated the water and wastewater businesses of Metrowater Limited, Manukau Water Limited, North Shore City Council, Waitakere City Council, Rodney District Council, Papakura District Council and Franklin District Council, in accordance with the Local Government (Tamaki Makaurau Reorganisation) Act 2009, the Local Government (Auckland Council) Act 2009 and the Local Government (Auckland Transitional Provisions) Act 2010. Under this new structure Watercare Services Limited provides total water and wastewater services to the Auckland region (except Papakura) and as a result, the assets, liabilities, revenues and costs of the group have increased significantly. The group’s registered office and principal place of business is at 2 Nuffield Street, Newmarket, Auckland 1023. Statement of Compliance Watercare Services Limited is a public benefit entity (PBE) as defined under the New Zealand Equivalents to International Financial Reporting Standards (NZ IFRS). The financial statements and accounting policies comply with the specific recognition, measurement and disclosure requirements of NZ IFRS in relation to PBEs and New Zealand Generally Accepted Accounting Practice (NZGAAP). Statutory Base Watercare Services Limited is a group registered under the Companies Act 1993 and is a reporting entity as defined by the Financial Reporting Act 1993. The financial statements have been prepared in accordance with the requirements of the Financial Reporting Act 1993, the Local Government Acts 1974 and 2002, Local Government (Auckland Transitional Provisions) Act 2010 and the Companies Act 1993. Measurement Base The financial statements have been prepared on the historical cost basis, modified by the revaluation of land and buildings, certain infrastructural assets and derivative instruments as described in specific accounting policies below. Functional and Presentation Currency The financial statements are prepared in New Zealand dollars and all values are rounded to the nearest thousand, unless otherwise stated. Key Management Decisions The key areas where management has exercised its judgment in the preparation of these financial statements are as explained below: There are a number of assumptions and estimates used when performing depreciated replacement cost valuations of infrastructure assets. For example, estimates are made by determining the remaining useful life over which an asset will be depreciated, replacement costs for assets and capitalised interest. In respect of estimated useful lives, if the estimated useful lives are not accurate this would lead to the annual depreciation charge being either higher or lower in the statement of comprehensive income. To minimise the estimation risk of asset useful lives the group continually assesses the condition of infrastructural assets and their remaining useful lives. Physical inspections and condition assessments are used by the group to ensure that the condition of major assets is understood and the carrying value of an asset reflects its actual condition. See note 13, page 89 for additional information. Significant Accounting Policies The following specific accounting policies that materially affect the measurement of comprehensive income, financial position and cash flows have been applied consistently to all periods presented in these financial statements. 2011 Financial Report 1. Business Unit Reporting Business unit comprehensive income, financial position and cash flows are presented in the financial statements for water and wastewater services, reflecting the group’s legislative requirements. Revenues and expenses are apportioned to each unit on a direct basis plus an allocation of non-specific and overhead costs proportional to each unit’s staffing levels. All operations are carried out within New Zealand. There are no material transactions between the two business units. 2. Basis of Consolidation The purchase method is used to prepare the consolidated financial statements, which involves adding together like items of assets, liabilities, equity, income and expenses on a line-by-line basis. All significant intragroup balances, transactions, revenues and expenses are eliminated on consolidation. The Metrowater Community Trust and Auckland City Water Limited are consolidated from the acquisition date, 1 November 2010. PAGE 74 Return to Contents page
Watercare Services Limited 2011 ANNUAL REPORT STATEMENT OF ACCOUNTING POLICIES (continued) FOR THE YEAR ENDED 30 JUNE 2011 3. Integration of Retail Business The group has adopted the public benefit entity exemption from NZ IFRS 3 available for local authority reorganisations where no consideration has been transferred. The group therefore, is not required to measure assets and liabilities at their fair value at acquisition date and no consideration was paid for the net assets acquired. At 1 November 2010 the net assets acquired were recorded at the accounting book value of the previous local network operators (deemed cost) in the company’s financial statements and where necessary, adjustments were made to the carrying value of the assets and liabilities being recognised in the company’s opening balance sheet to achieve consistency in the accounting policies. The contribution value of the net assets has been recorded separately in the capital reserve. See note 11, page 86 for additional information. 4. Goods and Services Tax (GST) The statement of comprehensive income and the statement of financial position are stated excluding GST, with the exception of receivables and payables, which include GST. The net amount of GST recoverable from or payable to the Inland Revenue Department is included as part of receivables or payables in the statement of financial position. 5. Operating Revenue The group measures revenue at the fair value of the amounts received or receivable, net of returns, trade allowances, duties and taxes paid. It accounts for revenue for the major activities as follows: Water and wastewater revenue Water revenue comprises the amounts received and receivable, including estimated amounts of unread meters at balance date for water supplied to customers in the ordinary course of business. Wastewater revenue is a combination of fixed charge and a percentage of water used. Both are shown net of prompt payment discounts and leak remissions. Provision of services Sales of services are recognised at fair value of the amounts received or receivable as the services are rendered or to reflect the percentage completion of the related services where rendered over time. Interest income Interest income is recognised using the effective interest method. Dividend income Dividend income is recognised on the date when the group’s right to receive payment is established. Development contributions, financial contributions and infrastructure growth charge Development contributions, financial contributions and infrastructure growth charges received towards the construction of property, plant and equipment are recognised at the time an application is approved and invoiced. 6. Grant Expenditure The company provides funding to its subsidiary (Metrowater Community Trust) in the form of grants, which is treated as expenditure in the company’s books and as income in the Trust’s books. On consolidation this expenditure is offset by the income in the Trust’s books whilst the actual expenditure is recognised in the group accounts when the Trust incurs the expenditure. 7. Finance Costs Finance costs directly attributable to the acquisition, construction or production of a qualifying asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of that asset. All other finance costs are expensed in the period they occur. Finance costs consist of interest and other costs that are incurred in connection with the borrowing of funds. 8. Business Integration Costs Costs associated with planning the integration of the water and the wastewater businesses in the Auckland region are expensed in the period in which they are incurred, except for related capital projects. 9. Leases The group leases certain property, plant and equipment where the lessor effectively retains substantially all the risks and benefits of ownership. Amounts payable under the terms of these leases are recognised as an expense spread evenly over the term of the lease. 10. Research and Development Research costs are expensed as incurred. Development expenditure on individual projects is capitalised and recognised as an asset when it meets the definition and criteria for capitalisation as an asset and it is probable that the group will receive future economic benefits from the asset. Assets which have finite lives are stated at cost less accumulated amortisation and are amortised on a straight-line basis over their useful lives. PAGE 75 2011 Financial Report Return to Contents page
Page 1 and 2:
Annual Report 2011 ANNUAL REPORT 20
Page 3 and 4:
Watercare Services Limited 2011 ANN
Page 5 and 6:
Page 7 and 8:
Page 9 and 10:
Page 11 and 12:
Page 13 and 14:
Page 15 and 16:
Page 17 and 18:
Page 19 and 20:
Page 21 and 22:
Page 23 and 24:
Page 25 and 26: Watercare Services Limited 2011 ANN
Page 61 and 62: financial report 2011 Fletcher Cons
Page 75: Watercare Services Limited 2011 ANN
show all

Annual Report 2011 - Watercare

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?