2011-2012 Annual Report - Full Version - PDF - Palmerston North ...

Accounting policies require that loans be stated at their fair value, being the present value of expected futurecash flows, where interest rates are different to market rates. It is intended that fair value will be assessed eachyear. For Manfeild Park Trust as there are no expected cashflows in the next three years, and cashflows beyondthat are uncertain, PNCC has assessed the fair value of expected future cashflows as:CouncilActual Actual2012 2011$000 $000Loan to Manfeild Park Trust and accumulated interest 2,993 2,993less reduction to fair value of future cashflows (2,993) (2,993)Net fair value - -◊Civic Assurance is the trading name ofNew Zealand Local Government InsuranceCorporation Limited, which provides insuranceproducts and other financial services primarilyto New Zealand local government. PNCCholds a 3.73% (2011 3%) shareholding in theentity. There is no intention to dispose of thisinvestment and there has not been a businessvaluation to establish fair value. As the holdingis not material, net asset backing has been usedas a proxy to assess fair value. During the yearPNCC subscribed for additional new sharesissued with a cost of $196k.Note 14◊◊Palmerston North Airport Limited owns andoperates Palmerston North International Airport.As at 30 June 2012 PNCC owned 100% (2011100%) of the issued and paid up share capital ofthe Company.Palmerston North Airport Limited’s share capitalat 30 June 2012 comprised 9,195,000 fullypaid ordinary shares (2011 9,195,000 fully paidordinary shares). All shares carry equal votingrights and the right to any share in surplus onthe winding up of the company. None of theshares carry fixed dividend rights.Derivative financial instruments Council GroupActual Actual Actual Actual2012 2011 2012 2011$000 $000 $000 $000CURRENT ASSET PORTIONInterest rate swaps 123 - 123 -Total current asset portion 123 - 123 -NON-CURRENT ASSET PORTIONInterest rate swaps 2,215 2,557 2,215 2,557Total non-current asset portion 2,215 2,557 2,215 2,557Financial Statements Note 14CURRENT LIABILITY PORTIONInterest rate swaps - 194 - 194Total current liability portion - 194 - 194NON-CURRENT LIABILITY PORTIONInterest rate swaps 10,640 5,212 10,640 5,212Total non-current liability portion 10,640 5,212 10,640 5,212◊All derivative financial instruments arecategorised as held for trading at fair valuethrough surplus or deficit. The fair value ofinterest rate swaps have been determined usingdiscounted cash flow valuation techniques basedon quoted market prices.Outstanding interest rate swap contracts at 30 June2012 comprised the following:◊$5.0m notional value of swaps in which PNCCwill pay fixed interest of 4.9% (2011 5.7% to6.9%) and receive floating on a monthly basis(2011 $6.5m).◊◊$86m notional value of swaps in which PNCCwill pay fixed interest varying from 4.5% to 6.4%(2011 5.0% to 6.4%) and receive floating on aquarterly basis (2011 $76m).$36m notional value of swaps in which PNCC willreceive fixed interest varying from 4.9% to 8.1%(2011 4.9% to 8.1%) on a semi-annual basis andpay floating on a quarterly basis (2011 $36m).Palmerston North City Council Annual Report 2011/12157