Annual Report 2010 - Christchurch City Council

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Provisions (continued) Financial statements Annual Report Christchurch Otautahi 2010 p209. Notes to financial statements 31. Provisions (continued) Weathertight Homes The Council through its insurers is processing a number of weathertight home claims. Provision has been made within the accounts for the estimated cost of known claims currently outstanding. The Council has no reliable means of estimating what claims may be lodged prior to the cut-off date in 2015. In 2009 RiskPool made a call on the Council for $0.2 million being its share of a deficit in RiskPool’s funds for the years 2002-03 and 2003-04 and a further call was made in 2010 of $1.1 million covering the exposure through to June 2013. The $1.1 million was treated as a prepayment. Provision has been made for the estimated cost of known claims based on the average actual settlement costs. Landfill aftercare Parent Weathertight homes $000s $000s Balance at 1 July 2008 800 13,997 Additional provisions made 2,217 4,922 Amounts used - (1,371) Balance at 30 June 2009 3,017 17,548 Additional provisions made 242 1,645 Amounts used - (944) Balance at 30 June 2010 3,259 18,249
p210. Annual Report Christchurch Otautahi 2010 Financial statements Other liabilities Notes to financial statements 32. Other liabilities (a) Other current liabilities Parent Group 30 Jun 10 30 Jun 09 30 Jun 10 30 Jun 09 Actual Actual Actual Actual $000s $000s $000s $000s Deferred income - - 867 - Hire purchase agreement - - 86 - Income in advance 210 - 210 - Service concession agreement 736 735 - 735 Other - - - 1,034 946 735 1,163 1,769 (b) Other non-current liabilities Parent Group 30 Jun 10 30 Jun 09 30 Jun 10 30 Jun 09 Actual Actual Actual Actual $000s $000s $000s $000s Deferred income - - 5,370 6,237 Income in advance - - 3,234 600 Service concession agreement 9,259 9,995 - 9,995 Other 3,390 3,600 36 1,388 12,649 13,595 8,640 18,220 Total other liabilities 13,595 14,330 9,803 19,989 Deferred income On 11 September 2002, Lyttelton Port Company Ltd entered into a 15-year coal handling agreement with Solid Energy New Zealand Limited which provided for the company to receive a $13 million prepayment of agreement charges. Should Lyttelton Port Company Ltd fail to meet its material obligations in respect of the agreement and Solid Energy exercises its right of termination then the company would be required to repay to Solid Energy a proportion of the value of its agreement charge prepayment up to a maximum of $13 million. Deferred lease income received is recognised through profit and loss on a straight line basis over the 15 year term of the agreement. Service concession arrangement On 16 May 2008, Council entered into an arrangement with Meta Processing Limited to construct the Material Recovery Facility located at 21 Parkhouse Road. The arrangement required Meta to build, own and operate the facility for a period of 15 years. After 15 years, the ownership of the facility will be transferred to Council at zero cost. The facility began operations in February 2009. This arrangement is governed by NZ IFRIC 12, Service Concession Arrangements. The IFRIC requires Council to recognise the facility as an asset and depreciate the asset over its useful life. This asset is recognised as additions in note 23. Council is also required to recognise the Service Concession Liability, which represents the deferred benefit that the arrangement provides to the Council. This consideration is released as a credit to the profit and loss over the 15 year life of the arrangement. At balance date, $0.7 million (2009: $0.7 million) was recognised as a current liability. In August 2009 Council’s subsidiary company CCC Two Limited purchased certain assets and liabilities of Meta New Zealand Limited, Meta Processing Limited, Meta Transport Limited, and Reworks Limited (the ‘Meta Group’). As CCC Two Ltd is part of the Council group for the year ended 30 June 2010, the accounting impact of the service concession agreement has been eliminated on consolidation. For more details on the purchase see note 43 Business Combinations.
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Annual Report 2010 - Christchurch City Council

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