MetService - Annual Report 2011 - Crown Ownership Monitoring Unit

Financial statements
Notes to the financial statements for the year ended 30 June 2011 (cont.)
Group 2011 Group 2010 Parent 2011 Parent 2010
9. Employee benefits $000s $000s $000s $000s
Annual Leave Entitlement 1,166 1,323 1,113 1,269
Termination Leave 219 212 219 212
TOTAL Employee Benefits 1,385 1,535 1,332 1,481
Termination Leave
Opening Balance as at 1 July 212 255 212 255
Additional Amounts Recognised – – – –
Reductions Arising from Payments / Other Sacrifices
of Future Economic Benefits 7 (43) 7 (43)
Closing BALANCE as at 30 June 219 212 219 212
The liability for employee benefits represents annual leave and termination leave entitlements accrued. The termination leave accrual is an actuarial
assessment of the accrued termination leave liabilities for current employees of the Parent. Only those employees with 10 years’ service when the
scheme closed are eligible for the benefit.
Termination leave has been calculated by the actuarial firm Aon NZ Ltd and has been calculated based on inter alia: Contractual Employee
Entitlements, Projected Employee Salary Increases, Expected Resignation and Retirement Rates, Forecasted Market Discount Rates.
Group 2011 Group 2010 Parent 2011 Parent 2010
10. Provisions $000s $000s $000s $000s
Non Current
Restoration Provision 619 610 619 610
TOTAL Non Current Provisions 619 610 619 610
Restoration provision
Opening Balance as at 1 July 610 631 610 631
Additional Provisions Recognised – – – –
Change for Passage of Time 9 (21) 9 (21)
Closing Balance as at 30 June 619 610 619 610
TOTAL Provisions 619 610 619 610
Restoration provision
The Parent has a number of sites leased around the country for the purpose of housing weather stations or related equipment. A restoration
provision has been calculated for those sites that contractually require the site to be restored to its original state on expiry of the licence to occupy.
The Restoration provision is an estimate of the cost (in today’s dollars) of restoring current leased sites to their original state on termination of the
lease agreement assuming no renewal of the lease. This provision includes estimation for restoring Campbell Island. The Parent has used the ten
year government bond rate (5.23%) as the discount rate and assumed a 2% CPI increase on costs.
Contingent liability
Several lease agreements are held that do not mention the requirement to restore the site on termination of the lease. Because the Company is not
contractually obligated to remove the equipment and restore the site, it is not certain that a liability would arise therefore the estimated cost of
restoring these sites has been excluded from the provision. 2011: $335,157 (2010: $122,243).
36 Meteorological Service of New Zealand Ltd Annual Report 2011