Annual Report 2011 - Watercare

Watercare Services Limited
2011 ANNUAL REPORT
Notes to the financial statements (continued)
for the year ended 30 June 2011
11. Integration of Retail Business (continued)
Adjustments for accounting policy differences:
The net assets of the integrated companies were transferred into the financial statements of the company at net book value and subsequently
adjusted for differences in accounting policies as explained below. See accounting policy 3 on integration of retail business.
The company’s policy is to capitalise finance costs incurred during the course of construction that are attributable to a project using the finance
rate applicable to the funding. To achieve consistency between the company’s policy and the integrated businesses, finance costs attributable
to the integrated property, plant and equipment were estimated using the depreciated replacement cost method and capitalised as at
1 November 2010. This resulted in an increase of $8.8 million to property, plant and equipment with an increase to deferred tax liability
of $2.5 million and a net increase of $6.3 million to capital reserve as shown under adjustments above.
There were no other adjustments made to achieve consistency in accounting policies.
Summary of assets and liabilities acquired
The group acquired two subsidiaries, Metrowater Community Trust and Auckland City Water Limited (non-trading company) under the Local
Government (Tamaki Makaurau Reorganisation) Act 2009, the Local Government (Auckland Council) Act 2009 and the Local Government
(Auckland Transitional Provisions) Act 2010. The net assets acquired from the subsidiaries as at 1 November 2010 are as below:
Metrowater Auckland City
community Trust Water Limited total
$’000 $’000 $’000
Subsidiaries acquired
Current assets
Cash and bank balances 51 - 51
Trade and other receivables 90 - 90
Current Liabilities
Trade and other payables (10) - (10)
Net assets acquired 131 - 131
The group disclosures in these financial statements represent the consolidated numbers of Watercare Services Limited (company) and its
subsidiary Metrowater Community Trust. The net assets of Metrowater Community Trust at balance date are immaterial to the consolidated
financial position of the group and comprise of a cash balance of $32,084 and accrued expenses of $15,206.
PAGE 87
2011 Financial Report
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