Annual Report 2010 - Christchurch City Council

Goodwill Financial statements Annual Report
Christchurch Otautahi
2010
p201.
Notes to financial statements
26. Goodwill
Parent
Group
30 Jun 10 30 Jun 09 30 Jun 10 30 Jun 09
Actual Actual Actual Actual
$000s $000s $000s $000s
Gross carrying amount
Balance at beginning of financial year - - 16,714 11,686
Additional amounts recognised from business combinations - - 4,129 5,028
Balance at end of financial year - - 20,843 16,714
Accumulated impairment losses
Balance at beginning of financial year - - (1,458) (1,458)
Balance at end of financial year - - (1,458) (1,458)
Carrying amount
At beginning of financial year - - 15,256 10,228
At end of financial year - - 19,385 15,256
The carrying amount of goodwill allocated to Christchurch City
Holdings Ltd which is considered a cash-generating unit for the
purposes of goodwill impairment testing is as follows:
Parent
Group
30 Jun 10 30 Jun 09 30 Jun 10 30 Jun 09
Actual Actual Actual Actual
$000s $000s $000s $000s
Christchurch City Holdings Ltd - - 15,256 15,256
CCC Two Ltd - - 4,129 -
- - 19,385 15,256
During the year, the CCHL group assessed the recoverable amount
of goodwill which arises from consolidation of the group’s results
and position, and determined that there had been no impairment of
goodwill for the following reasons:
• The investment in City Care Ltd was revalued by independent
valuers Ernst & Young as at 30 June 2009. The company has
continued to be profitable since then, and forecasts indicate this
trend will continue.
• A report was commissioned from independent valuers, Ernst &
Young, revaluing CCHL’s investment in Orion as at 30 June 2010.
While there was a downward movement in the valuation, the
fundamentals of Orion’s business remain in place, the company
remains profitable.
• The investment in Lyttelton Port Company Ltd was revalued at
30 June 2010 on the basis of its quoted NZX price. The market
capitalisation of this company significantly exceeds its original
acquisition value.
On 4 August 2009 CCC Two Ltd purchased certain assets and
liabilities of Meta processing Limited, including goodwill of $4.1
million. A report was commissioned from independent valuers
Ernst and Young to test the goodwill for impairment. Their report
found there were no indicators of impairment as at 30 June 2010.