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

Note 23BorrowingsCouncilGroupActual Actual Actual Actual2012 2011 2012 2011$000 $000 $000 $000CURRENTBank overdraft - - - -Secured loans 23,058 41,661 24,258 42,961Finance lease liabilities - 1 - 1Total current borrowings 23,058 41,662 24,258 42,962NON-CURRENTSecured loans 116,857 98,010 121,057 102,310Total non-current borrowings 116,857 98,010 121,057 102,310Totl borrowings 139,915 139,672 145,315 145,272Secured Loans◊◊◊PNCC has a total bank overdraft facility of $0.5m(2011 $0.5m) with interest being charged at thebank’s prime lending rate.PNCC has bank loans drawn under multi-optioncredit lines totalling $80 million. Of the $41.9million drawn at 30 June 2012, $30 million isreset monthly at the bank rate plus 1.10%, withthe remainder, $11.9 million, drawn at call atthe bank rate plus 0.83%. Interest is payable inarrears.The interest rate on PNCC’s fixed rate debenturestock is payable semi-annually in arrears.◊ Although effective interest rates are 6.77% (20117.04%) PNCC manages interest rate risk by use ofinterest rate swaps.◊◊◊There are no conditions or covenants which, ifcontravened, would significantly alter the termsof the borrowing instruments or arrangements.Interest accrued on the forestry encouragementloans is added to the outstanding principal eachyear. During 2011/12 all of the loan terms weremet.PNCC manages its borrowings in accordancewith its funding and financial policies, whichincludes a Treasury Policy. These policies havebeen adopted as part of the PNCC’s Long TermPlan.Security◊ All of PNCC’s secured loans plus the overdraftare secured under the terms of the DebentureTrust Deed between the PNCC and PerpetualTrust, as Trustee. Security is by a charge overthe Council’s ability to levy rates in favour ofthe Trustee. Pursuant to the Debenture TrustDeed PNCC has issued to its bankers securitycertificates totalling $98m to secure the variousbank loan facilities, bank overdraft, guaranteesissued on behalf of PNCC and other generalbanking facilities.◊◊◊In 2010 and 2011 PNCC received a total of$480,000 as part of a housing improvementscheme operated by Housing New Zealand. Thisloan has been utilised in improving communityhousing, is interest free and secured againstthose housing units. The loan is suspensoryproviding PNCC continues to own the units for20 years, as is intended. PNCC has treated this asa grant and included this in revenue for capitalexpenditure as it intends to own these unitsindefinitely.PNAL’s borrowing is secured by a registeredfirst debenture and mortgage over the assetsand property of the Company. The balanceoutstanding is $5.4m (2011 $5.6m).Lease liabilities are effectively secured as therights to the leased asset revert to the lessor inthe event of default.Financial Statements Note 23Palmerston North City Council Annual Report 2011/12169