Annual Report 2011 - Watercare

Watercare Services Limited
2011 ANNUAL REPORT
Notes to the financial statements (continued)
for the year ended 30 June 2011
9. Deferred Tax Liability
group and Company Company
2011 2010
$000 $000
Balance at I July 2010 402,049 420,666
Deferred tax arising on integration recorded in capital reserve 301,613 -
Deferred tax recognised in other comprehensive income – resulting from the revaluation of property, plant and equipment 140,728 (167)
Deferred tax recognised in other comprehensive income, resulting from transfer
to retained earnings relating to disposal of property, plant and equipment 1,520 394
Deferred tax recognised in other comprehensive income, resulting from transfer
from revaluation reserve relating to disposal of property, plant and equipment (1,520) (394)
Deferred tax recognised in the deficit for the year (2,558) (3,949)
Tax depreciation on buildings acquired on integration being non-deductible from 1 July 2011 6,064 -
Tax depreciation on buildings being non-deductible from 1 July 2011 recognised in the deficit for the year - 14,037
Deferred tax on property, plant and equipment due to asset revaluation as a result of the reduction of the corporate
tax rate from 30% to 28% from 1 July 2011 recognised in other comprehensive income - (29,761)
Deferred tax on tax losses and property, plant and equipment as a result of the reduction of the corporate
tax rate from 30% to 28% from 1 July 2011 recognised in the deficit for the year 932 1,223
Balance at 30 June 2011 848,828 402,049
The balance relates to:
Depreciation temporary differences 967,457 423,395
Provisions and accrued expenses temporary differences (15,652) (12,405)
Tax losses (102,977) (8,941)
Total deferred tax liability 848,828 402,049
The group’s subsidiary, Metrowater Community Trust, is exempt from tax, and the group’s other subsidiary Auckland City Water Limited
is a non-trading company.
The depreciation temporary differences for property, plant and equipment arise because the carrying value of property, plant and equipment
is higher for accounting purposes than for taxation purposes, for example due to:
• The revaluation of certain assets; and
• The group’s depreciation rates being lower than those permitted by tax legislation.
The provisions and accrued expenses temporary differences principally relate to the mark-to-market revaluation of financial instruments.
These expenses have been recognised for accounting purposes but cannot be deducted for tax purposes until the amounts become payable.
Under Section 83 of the Local Government (Auckland Transitional Provisions) Act 2010 the company integrated the closing tax position of
Metrowater Limited and Manukau Water Limited. Additionally, the closing accounting book value for all assets inherited from the Councils was
legislated to be the opening tax book value of the company at 1 November 2010.
10. Issued Capital
The total number of authorised and issued shares is 260,693,164 (2010: 260,693,164) ordinary shares of $1 each. All ordinary issued shares
are fully paid and carry equal voting rights to:
• one vote on a poll at a meeting of the company on any resolution; and
• an equal share in the distribution of the surplus assets of the company.
Under Section 57(1)(b) of the Local Government (Auckland Council) Act 2009 the company must not pay any dividend or distribute any surplus
in any way, directly or indirectly to its shareholder.
The capital management policy of the group is detailed in note 21, page 102.
PAGE 85
2011 Financial Report
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