Revaluation details
Revaluations are carried out for a number of classes of property, plant and equipment as detailed in the accounting policies on page 51. Information about the significant valuations within each of the revalued classes of assets is provided below.
Land and buildings
Independent valuations of the Government's land and buildings have been performed by a number of valuers to determine their fair value. The valuations, which conform to International Valuation Standards, were determined by reference to prices for similar properties and in some cases by reference to discounted cash flows or optimised depreciated replacement cost (ODRC).
| Land | Buildings |
Actual Total |
||||
|---|---|---|---|---|---|---|
|
Breakdown of land and buildings (total valuation over $500m) |
30 June 2012 $m |
30 June 2011 $m |
30 June 2012 $m |
30 June 2011 $m |
30 June 2012 $m |
30 June 2011 $m |
| Housing stock | 8,744 | 8,423 | 6,406 | 6,579 | 15,150 | 15,002 |
| School property | 2,726 | 2,724 | 7,887 | 7,519 | 10,613 | 10,243 |
| State highway corridor land | 8,353 | 8,324 | 12 | 13 | 8,365 | 8,337 |
| Conservation estate | 5,454 | 5,691 | 46 | 88 | 5,500 | 5,779 |
| Hospitals | 616 | 616 | 3,916 | 3,506 | 4,532 | 4,122 |
| Rail network corridor land | 3,260 | 5,641 | - | - | 3,260 | 5,641 |
| Prisons and Department of Corrections office buildings | 212 | 216 | 1,769 | 1,841 | 1,981 | 2,057 |
| Defence Force land and buildings | 674 | 708 | 1,176 | 1,143 | 1,850 | 1,851 |
| Landcorp farmland and buildings | 1,032 | 1,062 | 120 | 114 | 1,152 | 1,176 |
| Ministry of Justice land and buildings | 418 | 504 | 463 | 503 | 881 | 1,007 |
| Police stations | 168 | 169 | 503 | 558 | 671 | 727 |
| Other | 1,969 | 1,944 | 2,748 | 2,675 | 4,717 | 4,619 |
| Land and buildings | 33,626 | 36,022 | 25,046 | 24,539 | 58,672 | 60,561 |
| Description | Valuer/Reviewer | Approach | Timing |
|---|---|---|---|
| Housing stock | Quotable Value NZ Limited | Valuations based on market evidence or adjusted current rating valuations. | Annual valuation with the latest completed as at 30 June 2012 |
| School property | Darroch Limited or experienced staff (reviewed by Darroch) | Valuations based on market evidence where possible, but predominantly valued using ODRC. | Annual valuation with the latest completed as at 30 June 2012 |
| State highway corridor land and held properties | Darroch Limited | Valued using opportunity cost based on adjacent use as an approximation to fair value. | Annual valuation with the latest completed as at 30 June 2012 |
| Conservation estate (national parks, forest parks, conservation areas, reserves) | Council assessments conducted in accordance with the Rating Valuation Act 1998 reviewed by Logan Sloane Limited | Valued based on rateable valuations where possible. Land not matched to a rateable valuation was assessed using a conservancy average per hectare rate. | Annual valuation with the latest completed as at 30 June 2012 |
| Hospitals | Each District Health Board uses an independent valuer | Land values were based on market evidence while buildings were valued at ODRC. The largest DHB is Auckland DHB, which was valued at $761 million (2011: $754 million) in 2012 by Telfer Young. | Annual valuation with the latest completed as at 30 June 2012 |
| KiwiRail rail corridor land | Darroch Limited | Land associated with the rail corridor was valued using an opportunity cost based on adjacent use, as an approximation to fair value. | Two-year cycle with the latest full valuation completed as at 30 June 2012 |
| Prisons and Department of Corrections office buildings | Darroch Limited | Valued based on market evidence, except for prison buildings, which were valued at ODRC. | Two-year valuation cycle with the latest full valuation completed as at 30 June 2011 |
| NZ Defence Force Land and Buildings | Darroch Limited | Valued using a market based approach unless reliable market evidence was unavailable, in which case ODRC was used to calculate fair value. | Valuations completed at least once every five years with the latest being as at 30 June 2010 |
| Landcorp's farmland and associated buildings | Darroch Limited | The valuations take into account general factors that influence farm land prices and recent farm sales in the relevant regions and specific encumbrances over the land. | Annual valuation with the latest completed as at 30 June 2012 |
| Police stations and national headquarters | Reviewed by Beca Valuations Limited | The internal valuation performed by experienced staff was based on market evidence where possible, or ODRC. | Three-year cycle with the latest full valuation completed as at 30 June 2012 |
| Ministry of Justice locations (including courtrooms) | Beca Valuations Limited | Based on market evidence where possible, or ODRC. | The valuations are performed on a rolling basis over three years |
Rail network
|
Recoverable amount $m |
ODRC $m |
Carrying value $m |
|
|---|---|---|---|
| Freight only network | 144 | 4,552 | 144 |
| Dual use network | 10 | 483 | 10 |
| Metro only network | 10 | 499 | 499 |
| Total rail infrastructure | 164 | 5,534 | 653 |
| Buildings | 142 | ||
| Capital work in progress | 61 | ||
| Rail network | 856 |
| Description | Valuer/Reviewer | Approach | Timing |
|---|---|---|---|
| Buildings, bridges, tunnels, tracks, level crossings signals and electrification. All these assets are held on freehold basis. |
Buildings - Darroch Limited Other Rail Network Assets - Ernst and Young |
Non-specialised building assets not on the rail corridor were valued based on market evidence using comparable sales. Specialised building assets and buildings on rail corridor land were valued using optimised depreciated replacement cost (ODRC). Railway infrastructure used for freight services (freight only and dual use lines) has been valued using the recoverable amount, being scrap value less costs to sell. Railway infrastructure used for metro only has been valued using ODRC reflecting the public benefit nature of these assets. |
Three-year cycle with the latest full valuation completed as at 30 June 2012 |
The rail network comprises a total of 4,192 kilometres of track and is used primarily for freight transport. In addition to freight, the network is used by KiwiRail for long distance passenger transport and access is provided to two regional authorities, Greater Wellington Regional Authority and Auckland Transport for metro passenger services. Some tracks are dual purpose (ie, used for both freight and metro), however there are a number of tracks which serve metro transport only (eg, the Johnsonville line). The rail infrastructure earns revenue from freight and long distance passenger charges. In addition, network access charges are collected from the two regional authorities in relation to the metro services.
Following the Government decision, announced on 27 June 2012, to restructure KiwiRail as a profit oriented entity, the rail network infrastructure used for freight services is measured at fair value, reflecting the amount that could be expected to be received from a third party in an orderly transaction. As a result of this decision, rail-related assets havebeen valued on a commercial basis resulting in a net devaluation of $6,293 million. Of this devaluation, $1,409 million has been recognised as an impairment loss charged to statement of financial performance, while the remaining $4,884 million resulted in a reduction to the property revaluation reserve. The metro-only asset continues to be reported in these financial statements at an optimised depreciated replacement cost basis, as the community benefits enabled by this investment do not provide a return at the whole-of-Government level.
Previously the total rail network infrastructure was measured on anoptimised depreciated replacement cost basis reflecting the previous focus on it as a non-cash generating asset. If the value of the rail network was still measured using that approach, then a notional depreciation of $223 million can be calculated, representing an estimate of the amount of “wear-and-tear” or consumption of the network asset over the year. This estimated “wear-and-tear” compares to the total maintenance and renewal expenditure of $240 million on the rail network during the year.
All valuations have been undertaken in accordance with the standards issued by the New Zealand Property Institute.
