✨ Financial Statements
4954
NEW ZEALAND GAZETTE, No. 197
28 NOVEMBER 2005
Vector Limited & Subsidiaries
Gas Distribution Activities
Notes to the Financial Statements
For the year ended 30 June 2005
| 12. GOODWILL | Note | 2005 $000 | 2004 $000 |
|---|---|---|---|
| Balance at beginning of the year | 140,443 | 148,392 | |
| Arising on acquisition of NGC gas distribution business | 13 | 73,909 | - |
| Arising on change of accounting policy | 1,291 | - | |
| Amortisation in the financial year | (11,486) | (7,949) | |
| Balance at end of the year | 204,157 | 140,443 |
Goodwill is amortised over a period up to 20 years in accordance with the Vector group’s accounting policy.
With effect from 1 July 2004 the board of directors elected to change the accounting policy with respect to capitalised debt raising costs where the debt raised is directly attributable to the acquisition of a subsidiary. Such fees and other costs are now recognised as part of the cost of the acquisition within goodwill as allowed by NZ GAAP.
Consequently $1.3 million of capitalised finance costs were reclassified to intangible assets on 1 July 2004.
13. ACQUISITION OF SUBSIDIARY
On 14 December 2004 Vector Limited acquired a controlling 66.05% interest in NGC Holdings Limited, a company providing utility services (including gas distribution) in New Zealand. At 30 June, Vector Limited owned a 67.21% interest in NGC Holdings Limited.
The acquisition of NGC’s gas distribution business has been accounted for using the purchase method with the resulting goodwill amortised in accordance with the Vector group’s accounting policy. In compliance with the provisions of the Gas (Information Disclosure) Regulations 1997, the accounts have been prepared on the basis that the acquisition of NGC Holdings Limited’s gas business occurred at the beginning of the financial year (1 July 2004).
Assets and liabilities have been accounted for at their value on that date. The consideration disclosed is allocated based on the gas distribution portion of the actual consideration paid in December 2004 and has not been adjusted to estimate the consideration that would have been paid at 1 July 2004. Goodwill arising on acquisition of the gas distribution business of NGC Holdings Limited has therefore been calculated as the difference between the allocated actual purchase price and the fair values at 1 July 2004.
The acquisition had the following effect on the consolidated statement of financial position at 1 July 2004.
| Fair value of assets and liabilities acquired | 2005 $000 |
|---|---|
| Cash and short term deposits | 12 |
| Receivables | 2,058 |
| Inventories | 207 |
| Income tax | 146 |
| Property, plant & equipment | 122,310 |
| Payables and accruals | (5,129) |
| Borrowings | (60,300) |
| Deferred tax liability | (20,286) |
| Net assets acquired | 39,018 |
| Minority interest arising on acquisition | (12,794) |
| Goodwill arising on acquisition | 73,909 |
| Cash consideration paid | 100,133 |
| Consisting of: | |
| Cash paid for shares acquired | 97,976 |
| Professional fees incurred | 1,231 |
| Debt raising costs incurred | 926 |
| 100,133 |
Professional fees incurred during the acquisition of NGC Holdings Limited’s gas distribution business include $9k paid to the Vector group’s principal auditors, KPMG and $10k paid to other auditors, PwC.
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Online Sources for this page:
VUW Te Waharoa —
NZ Gazette 2005, No 197
Gazette.govt.nz —
NZ Gazette 2005, No 197
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Vector Limited & Subsidiaries Gas Distribution Activities Financial Position
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