INFORMATION FOR DISCLOSURE
PURSUANT TO SECTION 57T OF THE COMMERCE ACT 1986
THE POWER COMPANY LIMITED LINE BUSINESS
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2006
Prepared for the Purposes of the Electricity Information Disclosure Requirements 2004.
INFORMATION DISCLOSURE DISCLAIMER
The information disclosed in this 2006 Information Disclosure package issued by The Power Company Limited has been prepared solely for the purposes of the Electricity Information Disclosure Requirements 2004.
The Requirements require the information to be disclosed in the manner it is presented.
The information should not be used for any other purposes than that intended under the Requirements.
The financial information presented is for the line business as described within the Electricity Information Disclosure Requirements 2004. There are also additional activities of the Company that are not required to be reported under the Requirements.
APPROVAL BY DIRECTORS
The Directors have approved the Consolidated Financial Statements of The Power Company Limited Line Business for the period ended 31 March 2006 on pages 2 to 21.
_______________________________ ______________________________
Alan Harper Maryann Macpherson
Director Director
For and on behalf of the
Board of Directors
26 October 2006
THE POWER COMPANY LIMITED LINE BUSINESS
STATEMENT OF FINANCIAL PERFORMANCE
FOR THE YEAR ENDED 31 MARCH 2006
Group Parent
Note 2006$000 2005$000 2006$000 2005$000
Operating Revenue (2) 29,390 28,000 14,095 13,012
Operating Expenses (3) (25,946) (25,234) (10,765) (10,597)
Net Surplus Before Taxation 3,444 2,766 3,330 2,415
Taxation Expense (2,115) (2,064) (2,044) (2,190)
Net Surplus After Taxation 1,329 702 1,286 225
The accompanying notes on pages 6 to 13 form part of and should be read in conjunction with these financial statements.
THE POWER COMPANY LIMITED LINE BUSINESS
STATEMENT OF MOVEMENTS IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2006
Group Parent
Note 2006$000 2005$000 2006$000 2005$000
Total Recognised Revenues and Expenses:
Net Surplus for the Year 1,329 702 1,286 225
Movement in Revaluation Reserve - 159 - 159
1,329 861 1,286 384
Add Contributions from Owners During the Year:
- Funds Released from Other Business - - - -
Deduct Distributions to Owners During the Year:
- Dividend (143) (130) (143) (130)
(143) (130) (143) (130)
Movements in Equity for the Year 1,186 731 1,143 254
Equity at Beginning of Year 208,737 208,006 207,753 207,499
Equity at End of Year (4) 209,923 208,737 208,896 207,753
The accompanying notes on pages 6 to 13 form part of and should be read in conjunction with these financial statements.
THE POWER COMPANY LIMITED LINE BUSINESS
STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2006
Group Parent
Note 2006$000 2005$000 2006$000 2005$000
Equity (4) 209,923 208,737 208,896 207,753
Represented By:
Current Assets
Receivables and Prepayments (5) 3,199 2,669 1,301 606
Inventories 51 47 - -
Total Current Assets 3,250 2,716 1,301 606
Non Current Assets
Shareholder Advance - - 2,325 1,891
Property, Plant and Equipment (6) 207,084 209,840 206,079 208,799
Capital Work in Progress 6,871 2,709 6,843 2,697
Total Non Current Assets 213,955 212,549 215,247 213,387
Total Assets 217,205 215,265 216,548 213,993
Current Liabilities
Bank Overdraft 2,538 2,818 5,352 5,077
Accounts Payable and Provisions (7) 4,601 3,580 2,157 1,033
Provision for Taxation - - - -
Provision for Dividend 143 130 143 130
Total Current Liabilities 7,282 6,528 7,652 6,240
Total Liabilities 7,282 6,528 7,652 6,240
Net Assets 209,923 208,737 208,896 207,753
The accompanying notes on pages 6 to 13 form part of and should be read in conjunction with these financial
THE POWER COMPANY LIMITED LINE BUSINESS
STATEMENT OF CASHFLOWS
FOR THE YEAR ENDED 31 MARCH 2006
Group Parent
Note 2006$000 2005$000 2006$000 2005$000
CASHFLOWS FROM OPERATING ACTIVITIES
Cash was Provided From:
Receipts from Customers 25,954 26,185 11,606 12,091
Sundry Income 2,915 1,748 1,579 1,071
Interest Received - 9 215 191
28,869 27,942 13,400 13,353
Cash was Applied To:
Payments to Suppliers 14,809 13,030 912 416
Payments to Employees 1,086 1,132 - -
Taxes Paid 2,115 2,302 2,044 2,190
Interest Paid 52 22 - -
18,062 16,486 2,956 2,606
Net Cash From Operating Activities (8) 10,807 11,456 10,444 10,747
CASHFLOWS FROM INVESTING ACTIVITIES
Cash was Provided From:
Sale of Property, Plant and Equipment 20 1 18 -
20 1 18 -
Cash was Applied To:
Purchase of Property, Plant and Equipment 10,417 7,402 10,173 7,086
Intercompany Advance - - 434 15
10,417 7,402 10,607 7,101
Net Cash Used in Investing Activities (10,397) (7,401) (10,589) (7,101)
CASHFLOWS FROM FINANCING ACTIVITIES
Cash was Applied To:
Payment of Dividends 130 - 130 -
130 - 130 -
Net Cash Used in Financing Activities (130) - (130) -
Net Increase/(Decrease) In Cash Held 280 4,055 (275) 3,646
Add Opening Cash Brought Forward (2,818) (6,873) (5,077) (8,723)
Closing Cash Carried Forward (2,538) (2,818) (5,352) (5,077)
The accompanying notes on pages 6 to 13 form part of and should be read in conjunction with these financial statements.
THE POWER COMPANY LIMITED LINE BUSINESS
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2006
1. STATEMENT OF ACCOUNTING POLICIES
Reporting Entity
The Power Company Limited is wholly owned by a Consumer Trust and is registered under the Companies Act 1993.
The Parent Entity consists of the network assets of The Power Company Limited.
The Group consists of the Line Business network assets of The Power Company Limited, along with the joint venture interests in PowerNet Limited, held by The Power Company Limited's wholly owned subsidiary Last Tango Limited.
Purpose of the Financial Statements
These financial statements have been prepared for the purpose of complying with the Electricity Information Disclosure Requirements 2004 and relate to the Group's Line Business incorporating the conveyance of electricity, ownership of works for conveyance of electricity and provision of line function services in accordance with Requirement 6 of the Requirements.
The activities of the Parent have been separately disclosed in these Financial Statements as that is a requirement of generally accepted accounting practice. The Parent activities are not required under the Requirements.
Measurement Base
The accounting principles recognised as appropriate for the measurement and reporting of earnings and financial position on an historical cost basis are followed by the Group with the exception that certain property, plant and equipment have been revalued.
Specific Accounting Policies
a) Principles of Consolidation
The interest in PowerNet Limited has been accounted for at the Group level on a line by line consolidation of revenue and expenses after the elimination of all significant inter-company transactions.
b) Revenue
Network Charges
Revenue comprises the amounts received and receivable for goods and services supplied to customers in the ordinary course of business.
Investment Income
Interest and dividend income are accounted for as earned.
Customer Contributions
Contributions from customers in relation to the construction of new lines for the network are accounted for as income in the year in which they are received.
c) Avoidable Cost Allocation Methodology
The Avoidable Cost Allocation Methodology as described in the Electricity Information Disclosure Handbook has been used to separate "Other" activities from The Power Company Limited and PowerNet Limited. Other activities or non Line Business activity has been excluded from these accounts.
d) Receivables
Receivables are stated in their estimated realisable value. All known losses are written off in the period in which it becomes apparent the debts are not collectable.
e) Inventories
Inventories are stated at the lower of cost of weighted average cost price and net realisable value.
f) Property, Plant and Equipment
All property, plant and equipment is initially recorded at cost less accumulated depreciation. The cost of purchased property, plant and equipment is the fair value of the consideration given to acquire the assets and the value of other directly attributable costs which have been incurred in bringing the assets to the location and condition necessary for their intended service.
Revaluation
The network system assets were revalued as at 31 March 2004 to Depreciated Replacement Cost (DRC) as assessed by independent valuers MWH New Zealand Limited. Previously these assets were recorded at cost less accumulated depreciation.
Network assets are revalued on a cyclical basis to fair value using a Depreciated Replacement Cost methodology with no asset being recognised at a valuation undertaken more than five years previously.
Revaluation increments are transferred to the Asset Revaluation Reserve.
All other assets are recorded at cost less accumulated depreciation.
g) Depreciation
Property, Plant and Equipment is depreciated on the basis of valuation cost price less estimated residual value over the period of their estimated useful life.
Rates used are:
Buildings 2.50% - 15.00% Straight Line/Diminishing Value
Office Equipment & EDP Equipment 9.00% - 60.00% Diminishing Value
Motor Vehicles 26.00% - 31.20% Diminishing Value
Network Assets 1.82% - 16.67% Straight Line/Diminishing Value
h) Asset Impairment
Where the estimated recoverable amount of an asset is less than its carrying value, the asset is written down to its estimated recoverable amount and an impairment loss is recognised in the Statement of Financial Performance.
i) Income Tax
The income tax expense charged against the profit for the year is the estimated liability calculated at 33 cents in the dollar in respect of that profit.
j) Capital Work In Progress
Capital Work In Progress is stated at cost and is not depreciated.
k) Goods And Services Tax
These accounts have been prepared on a GST exclusive basis with the exception of accounts receivable and accounts payable which are GST inclusive.
l) Financial Instruments
The Line Business is party to financial instrument arrangements as part of its everyday operations. Revenues and expenses in relation to all financial instruments are recognised in the Statement of Financial Performance on an accrual basis.
The Line Business has no off-balance sheet exposures. The Line Business values all financial instruments at fair value in the Statement of Financial Position.
m) Operating Leases
Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased items are classified as operating leases. Payments under these leases are recognised as expenses in the periods in which they are incurred.
n) Foreign Currency
Transactions covered by short-term forward exchange contracts are translated at the exchange rates specified in those contracts. Other foreign currency transactions are translated to New Zealand currency at the exchange rates ruling at the dates of the transactions. There are no assets or liabilities in foreign currencies at balance date.
o) Employee Entitlements
Provision is made in respect of the Company's liability for annual and long service leave. Leave has been calculated on an actual entitlement basis at current rates of pay.
Changes in Accounting Policies
There have been no changes in accounting policies during the year ended 31 March 2006.
THE POWER COMPANY LIMITED LINE BUSINESS
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2006
2. Operating Revenue
Group Parent
2006$000 2005$000 2006$000 2005$000
Operating Revenue Comprises:
Network Charges 26,474 26,242 12,302 11,750
AC Loss Rental Rebates 1,191 553 - -
Interest on Investments - 9 215 191
Other Revenue 1,725 1,196 1,578 1,071
Total Operating Revenue 29,390 28,000 14,095 13,012
3. Operating Expenses
Operating Expenses Include:
Auditors Remuneration:
- Statutory Audit 31 28 17 20
- Other 29 17 29 17
Bad Debts Written Off 5 4 - -
Depreciation:
- Office Equipment 167 202 1 9
- Network 9,484 9,379 9,484 9,379
- Buildings 8 16 - -
- Plant & Equipment 86 110 - -
Directors' Fees 132 112 82 70
Interest Expense 53 22 - -
Loss on Disposal of Fixed Assets 239 242 238 238
4. Equity
Capital Reserve 28,847 28,847 28,847 28,847
Asset Revaluation Reserve (see below) 161,093 161,093 161,093 161,093
Retained Earnings 19,983 18,797 18,956 17,813
Total Equity 209,923 208,737 208,896 207,753
Asset Revaluation Reserve
Opening Balance 161,093 160,934 161,093 160,934
Revaluation in the Year - 159 - 159
Closing Balance 161,093 161,093 161,093 161,093
5. Receivables and Prepayments
Trade Debtors 3,050 2,529 1,243 563
Prepayments 149 140 58 43
Total Receivables and Prepayments 3,199 2,669 1,301 606
6. Property, Plant and Equipment
Group Parent
2006$000 2005$000 2006$000 2005$000
Land 45 49 - -
Buildings (At Cost) 310 333 -
Accumulated Depreciation (168) (173) -
142 160 -
Customer Billing & Information System Assets (At Cost) 2,757 2,757 2,757 2,757
Accumulated Depreciation (2,757) (2,757) (2,757) (2,757)
Plant and Equipment (At Cost) 1,070 1,039 8 8
Accumulated Depreciation (835) (766) (4) (4)
235 273 4 4
Office Equipment (At Cost) 1,951 1,879 8 16
Accumulated Depreciation (1,362) (1,313) (6) (13)
589 566 2 3
Network Assets (At Valuation) 224,885 218,145 224,885 218,145
Accumulated Depreciation (18,812) (9,353) (18,812) (9,353)
206,073 208,792 206,073 208,792
Total Property, Plant & Equipment 207,084 209,840 206,079 208,799
Directors consider book value to be an indication of the fair value of Land and Buildings.
7. Accounts Payable and Provisions
Accounts Payable and Accruals 4,429 3,395 2,157 1,033
Provision for Employee Entitlements 172 185 - -
Total Accounts Payable and Provisions 4,601 3,580 2,157 1,033
8. Reconciliation of Net Surplus After Taxation with Cashflow from Operating Activities
Group Parent
2006$000 2005$000 2006$000 2005$000
Net Surplus After Tax 1,329 702 1,286 225
Add Non Cash Items
Depreciation 9,745 9,706 9,485 9,379
Loss on Sale 239 242 238 238
11,313 10,650 11,009 9,842
Plus/(Less) Movement in Working Capital Items:
(Increase)/Decrease in Accounts Receivable (520) (58) (679) 425
(Increase)/Decrease in Prepayments (9) (93) (16) (41)
(Increase)/Decrease in Stock (4) 5 - -
Increase/(Decrease) in Provision for Tax - (238) - -
Increase/(Decrease) in Accounts Payable and Provisions 27 1,190 130 521
Net Cash From Operating Activities 10,807 11,456 10,444 10,747
9. Commitments
Operating Lease Commitments:
Operating Lease Commitments are payable as follows:
Ø Not Later than one year 59 43 - -
Ø Later than one year and not later than two years 29 26 - -
Ø Later than two years and no later than five years 24 25 - -
Ø Later than five years - - - -
10. Financial Instruments
Off Balance Sheet Financial Instruments
The Line Business does not have any off balance sheet financial instruments.
Credit Risk
Financial instruments which potentially subject the Line Business to credit use principally consist of bank balances and accounts receivable. Bank deposits are placed with high credit - quality financial institutions. The Line Business performs credit evaluations on all customers requiring credit and generally does not require collateral.
Maximum exposures to credit risk at balance date are:
Trade Debtors 3,050 2,529 1,243 563
3,050 2,529 1,243 563
The above exposures are net of any recognised provision for losses on these financial instruments.
No collateral is held on the above amounts.
Concentrations of Credit Risk
The Line Business is exposed to a Concentration of Credit Risk by one significant energy retailer. This entity is considered to be a high credit quality entity.
Foreign Exchange Risk
The Line Business is not exposed to any foreign exchange risk.
Interest Rate Risk
Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. The Line Business is exposed to normal fluctuations in market interest rates.
Fair Values
The estimated fair value of the Line Business' financial instruments are represented by the carrying values.
11. Related Parties
The Power Company Limited "Line Business" consists of line activities conducted in The Power Company Limited and its joint venture company PowerNet Limited. The Power Company Limited "Other Business" consists of other or non-line activities conducted in The Power Company Limited and its joint venture company PowerNet Limited.
All related party transactions between The Power Company Limited Line Business and PowerNet Limited Line Business have been eliminated in the preparation of the financial statements.
During the year related party transactions took place between The Power Company Limited Line Business and The Power Company Limited Other Business. All related party transactions have been conducted on a commercial and arms length basis.
The Line Business purchased goods and services at cost, including overheads where applicable, from the Other Business. The value of the transactions, parties involved, and description of goods or services purchased were as follows:
The Power Company Limited Line Business purchased from PowerNet Limited Other Business:
31 March 2006 $000 31 March 2005 $000
Construction of:
Ø Subtransmission assets 2,167 205
Ø Zone substations 2,180 1,481
Ø Distribution lines and cables 3,309 2,256
Ø Medium voltage switchgear 340 175
Ø Distribution transformers 1,172 1,119
Ø Distribution substations 862 942
Ø Low voltage lines and cables 124 91
The above amounts represent the capital works programme undertaken by PowerNet Limited on behalf of The Power Company Limited.
PowerNet Limited's Line Business purchased from The Power Company Limited Other Business:
Rent 21 19
The value of transactions owing at balance date were as follows:
The Power Company Limited Line Business owes PowerNet Limited Other Business $2,501,000 (2005: $2,170,000).
PowerNet Limited's Line Business owes The Power Company Limited Other Business $3,000 (2005: $2,000).
The Southland Electric Power Supply Consumer Trust, which owns 100% of the shares in The Power Company Limited, is a related party. During the year expenses are paid out on behalf of the Trust, at 31 March 2006 these totalled $143,000 (2005: $130,000). The Trust has an outstanding debt to The Power Company Limited at balance date of $143,000 (2005: $130,000) for which a dividend has been provided for in the current year by The Power Company Limited.
No related party debts have been written off or forgiven during 2006 or 2005.
12. Annual Valuation Reconciliation Report
31 March 2006 $000 31 March 2005 $000
System fixed assets at ODV - end of the previous financial year 213,780 217,278
Add system fixed assets acquired during the year at ODV 5,911 6,264
Less system fixed assets disposed of during the year at ODV (871) (224)
Less depreciation on system fixed assets at ODV (9,711) (9,538)
System fixed assets at ODV - end of the financial year 209,109 213,780
THE POWER COMPANY LIMITED LINE BUSINESS
DISCLOSURE OF INFORMATION
Pursuant to Requirement 6(2) of the Electricity Information Disclosure Requirements 2004, Schedule 1 Part 2.
31 March 2006$000 31 March 2005$000
Current Assets
(a) Cash and bank balances - -
(b) Short-term investments - -
(c) Inventories 51 47
(d) Accounts receivable 3,050 2,529
(e) Other current assets not listed in (a) to (d) 149 140
Total Current Assets 3,250 2,716
Fixed Assets
(a) System fixed assets 206,073 208,792
(b) Consumer billing and information system assets - -
(c) Motor vehicles - -
(d) Office equipment 589 566
(e) Land and buildings 187 209
(f) Capital works under construction 6,871 2,709
(g) Other fixed assets not listed in (a) to (g) 235 273
Total Fixed Assets 213,955 212,549
Other tangible assets not listed above - -
Total Tangible Assets 217,205 215,265
Intangible Assets
(a) Goodwill - -
(b) Other intangibles not listed in (a) above - -
Total Intangible Assets - -
TOTAL ASSETS 217,205 215,265
Current Liabilities
(a) Bank overdraft 2,538 2,818
(b) Short-term borrowings - -
(c) Payables and accruals 4,601 3,580
(d) Provision for dividends payable 143 130
(e) Provision for income tax - -
(f) Other current liabilities not listed in (a) to (e) above - -
Total Current Liabilities 7,282 6,528
Non-Current Liabilities
(a) Payables and accruals - -
(b) Borrowings - -
(c) Deferred tax - -
(d) Other non-current liabilities not listed in (a)-(c) above - -
Total Non-Current Liabilities - -
Equity
(a) Shareholders' equity:
(i) Share capital 28,847 28,847
(ii) Retained earnings 19,983 18,797
(iii) Reserves 161,093 161,093
Total Shareholders' equity 209,923 208,737
(b) Minority interests in subsidiaries - -
Total Equity 209,923 208,737
(c) Capital notes - -
Total Capital Funds 209,923 208,737
TOTAL EQUITY AND LIABILITIES 217,205 215,265
31 March 2006$000 31 March 2005$000
Operating Revenue
(a) Revenue from line/access charges 29,409 26,242
(b) Revenue from "Other" business for services carried out by the line business (transfer payment) - -
(c) Interest on cash, bank balances and short-term investments - 9
(d) AC loss-rental rebates 1,191 553
(e) Other revenue not listed in (a) to (d) 1,725 1,196
(f) Line charge discount to consumers (2,935) -
Total Operating Revenue 29,390 28,000
Operating Expenditure
(a) Payment for transmission charges 7,115 7,423
(b) Transfer payments to the "Other" business for:
(i) Asset maintenance - -
(ii) Consumer disconnection/reconnection services - -
(iii) Meter data - -
(iv) Consumer-based load control services - -
(v) Royalty and patent expenses - -
(vi) Avoided transmission charges on account of own generation - -
(vii) Other goods and services not listed in (i) to (vi) above 20 19
Total transfer payment to the "Other" business 20 19
(c) Expense to entities that are not related parties for:
(i) Asset maintenance 4,020 4,092
(ii) Consumer disconnection/reconnection services - -
(iii) Meter data - -
(iv) Consumer-based load control services - -
(v) Royalty and patent expenses - -
Total of specified expenses to non-related parties (sum of (i) to (v) 4,020 4,092
(d) Employee salaries, wages and redundancies 1,086 1,132
(e) Consumer billing and information system expense 156 140
(f) Depreciation on:
(i) System fixed assets 9,484 9,379
(ii) Other assets not listed in (i) 261 327
Total depreciation 9,745 9,706
(g) Amortisation of:
(i) Goodwill - -
(ii) Other intangibles - -
Total Amortisation of intangibles - -
(h) Corporate and administration 1,425 1,042
(i) Human resource expenses 151 97
(j) Marketing/advertising 93 78
(k) Merger and acquisition expenses - -
(l) Takeover defence expenses - -
(m) Research and development expenses - -
31 March 2006$000 31 March 2005$000
(n) Consultancy and legal expenses 94 178
(o) Donations - -
(p) Directors' fees 132 112
(q) Auditors' fees:
(i) Audit fees paid to principal auditors 31 28
(ii) Audit fees paid to other auditors - -
(iii) Fees paid for other services provided by principal and other auditors 29 17
Total Auditors' fees 60 45
(r) Costs of offering credit:
(i) Bad debts written off 5 4
(ii) Increase in estimated doubtful debts - -
Total cost of offering credit 5 4
(s) Local authority rates expense 143 146
(t) AC loss-rentals (distribution to retailers/customers) expense 1,191 553
(u) Rebates to consumers due to ownership interest - -
(v) Subvention payments 19 19
(w) Unusual expenses - -
(x) Other expenditure not listed in (a) to (w) 438 426
Total operating expenditure 25,893 25,212
Operating surplus before interest and income tax 3,497 2,788
Interest expense
(a) Interest expense on borrowings 53 22
(b) Financing charges related to finance leases - -
(c) Other interest expense - -
Total interest expense 53 22
Operating surplus before income tax 3,444 2,766
Income tax (2,115) (2,064)
Net surplus after tax 1,329 702
THE POWER COMPANY LIMITED LINE BUSINESS
FINANCIAL AND EFFICIENCY
PERFORMANCE MEASURES
PURSUANT TO REQUIREMENT 14 OF THE ELECTRICITY INFORMATION DISCLOSURE REQUIREMENTS 2004, SCHEDULE 1 PART 3
FINANCIAL PERFORMANCE MEASURES
2006 2005 2004 2003
Return on Funds 1.56% 1.22% 3.75% 1.32%
Return on Funds (excluding discount) 2.94% 1.22% 4.88% 3.19%
Return on Equity 0.53% 0.26% 2.65% 0.34%
Return on Equity (excluding discount) 1.48% 0.26% 3.44% 1.66%
Return on Investment 0.54% 0.33% 34.52% 0.58%
Return on Investment (excluding revaluation and discount) 1.47% 0.33% 3.32% 1.83%
EFFICIENCY PERFORMANCE MEASURES
2006 2005 2004 2003
Direct Line Costs per Kilometre $714 $682 $638 $763
Indirect Line Costs per Electricity Customer $60 $54 $44 $34
FORM FOR THE DERIVATION OF FINANCIAL PERFORMANCE MEASURES FROM FINANCIAL STATEMENTS
SCHEDULE 1 - PART 7
DERIVATION TABLE INPUT AND CALCULATIONS SYMBOL IN FORMULA ROF ROE ROI
Operating surplus before interest and income tax from financial statements 3,496,654
Operating surplus before interest and income tax adjusted pursuant to regulation 18 (OSBIIT) 3,496,654
Interest on cash, bank balances, and short-term investments (ISTI) 0
OSBIIT minus ISTI 3,496,654 a 3,496,654 3,496,654
Net surplus after tax from financial statements 1,329,165
Net surplus after tax adjusted pursuant to regulation 18 (NSAT) 1,329,165 n 1,329,165
Amortisation of goodwill and amortisation of other intangibles 0 g add 0 add 0 add 0
Subvention payment 19,273 s add 19,273 add 19,273 add 19,273
Depreciation of SFA at BV (x) 9,484,218
Depreciation of SFA at ODV (y) 9,711,000
ODV depreciation adjustment -226,782 d add -226,782 add -226,782 add -226,782
Subvention payment tax adjustment 6,360 s*t deduct 6,360 deduct 6,360
Interest tax shield 17,433 q deduct 17,433
Revaluations 0 r add 0
Income tax 2,114,662 p deduct 2,114,662
Numerator 3,289,145OSBIITADJ = a + g + s + d 1,115,296NSATADJ = n + g + s - s*t + d 1,150,690OSBIITADJ = a + g - q + r + s + d - p - s*t
Fixed assets at end of previous financial year (FA0) 212,548,508
Fixed assets at end of current financial year (FA1) 213,954,936
Adjusted net working capital at end of previous financial year (ANWC0) -863,763
Adjusted net working capital at end of current financial year (ANWC1) -1,350,886
Average total funds employed (ATFE) 212,144,398(or regulation 33 time-weighted average) c 212,144,398 212,144,398
Total equity at end of previous financial year (TE0) 208,737,112
Total equity at end of current financial year (TE1) 209,923,510
Average total equity 209,330,311(or regulation 33 time-weighted average) k 209,330,311
WUC at end of previous financial year (WUC0) 2,708,617
WUC at end of current financial year (WUC1) 6,870,958
Average total works under construction 4,789,788(or regulation 33 time-weighted average) e deduct 4,789,788 deduct 4,789,788 deduct 4,789,788
Revaluations 0 r
Half of revaluations 0 r/2 deduct 0
Intangible assets at end of previous financial year (IA0) 0
Intangible assets at end of current financial year (IA1) 0
Average total intangible asset 0(or regulation 33 time-weighted average) m add 0
Subvention payment at end of previous financial year (S0) 18,570
Subvention payment at end of current financial year (S1) 19,273
Subvention payment tax adjustment at end of previous financial year 6,128
Subvention payment tax adjustment at end of current financial year 6,360
Average subvention payment & related tax adjustment 12,677 v add 12,677
System fixed assets at end of previous financial year at book value (SFAbv0) 208,792,364
System fixed assets at end of current financial year at book value (SFAbv1) 206,072,617
Average value of system fixed assets at book value 207,432,490(or regulation 33 time-weighted average) f deduct 207,432,490 deduct 207,432,490 deduct 207,432,490
System Fixed assets at year beginning at ODV value (SFAodv0) 213,780,000
System Fixed assets at end of current financial year at ODV value (SFAodv1) 209,109,000
Average value of system fixed assets at ODV value 211,444,500(or regulation 33 time-weighted average) h add 211,444,500 add 211,444,500 add 211,444,500
Denominator 211,366,620ATFEADJ = c - e - f + h 208,565,211Ave TEADJ = k - e - m + v - f + h 211,366,620ATFEADJ = c - e - ½r - f + h
Financial Performance Measure: 1.56ROF = OSBIITADJ/ATFEADJ x 100 0.53ROE = NSATADJ/ATEADJ x 100 0.54ROI = OSBIITADJ/ATFEADJ x 100
t = maximum statutory income tax rate applying to corporate entities
BV = book value
ave = average
odv = optimised deprival valuation
subscript '0' = end of the previous financial year
subscript '1' = end of the current financial year
ROF = return on funds
ROE = return on equity
ROI = return on investment
THE POWER COMPANY LIMITED LINE BUSINESS
ENERGY EFFICIENCY PERFORMANCE MEASURES
AND STATISTICS
PURSUANT TO REQUIREMENT 20 OF THE ELECTRICITY INFORMATION DISCLOSURE REQUIREMENTS 2004, SCHEDULE 1 PART 4
ENERGY DELIVERY EFFICIENCY PERFORMANCE MEASURES YEARS ENDING 31 MARCH 2003, 2004, 2005 AND 2006
2006 2005 2004 2003
Load Factor (Percentage of electrical energy entering the transmission system over maximum demand times hours per year.) 67.5% 68.3% 67.9% 68.2%
Loss Ratio (Transmission losses over energy entering the system) 7.8% 8.3% 8.4% 9.1%
Capacity Utilisation (Maximum demand over total transformer capacity) 34.0% 33.7% 34.5% 35.9%
The loss ratio is derived from electricity supplied information provided by other parties. The Power Company Limited is unable to audit this information and is not confident with its accuracy.
STATISTICS
66kV 33kV 11kV 400V Total
System Length(km's) 2002/03 349 489 5,724 1,005 7,567
2003/04 357 476 6,654 985 8,472
2004/05 357 462 6,688 991 8,498
2005/06 357 463 6,701 1,019 8,540
Overhead Lines (km's) 2002/03 349 486 5,669 876 7,379
2003/04 357 472 6,569 865 8,263
2004/05 357 459 6,598 864 8,278
2005/06 357 459 6,606 862 8,284
Underground Cables (km's) 2002/03 - 3 55 129 187
2003/04 - 4 85 120 209
2004/05 - 3 90 127 220
2005/06 - 4 95 158 257
TX Capacity Maximum Demand Electricity Supplied Electricity Conveyed Total Customers
2002/03 308,761 110,963 662,476,687 602,095,219 31,944
2003/04 320,740 110,520 657,269,620 601,929,800 31,875
2004/05 332,875 112,173 671,083,840 615,162,069 31,967
2005/06 335,489 114,010 673,940,046 621,158,633 32,243
Retailer kWh(2005/06) kWh(2004/05) kWh(2003/04) kWh(2002/03)
Retailer A - - -
Retailer B 16,369,056 14,749,281 12,742,402 21,740,841
Retailer C 414,451,245 390,352,970 341,002,613 337,448,503
Retailer D 127,129,121 146,791,042 188,904,810 166,448,292
Retailer E 17,688,033 15,463,788 13,139,523 24,589,531
Retailer F 23,867,866 24,100,091 21,482,377 26,999,250
Retailer G 13,891 - - -
Electricity Invercargill Limited 21,639,421 23,704,897 24,658,075 24,868,802
Total 621,158,633 615,162,069 601,929,800 602,095,219
The Electricity Conveyed details are provided by other parties. The Power Company Limited is unable to audit this information and is not confident with its accuracy.
THE POWER COMPANY LIMITED LINE BUSINESS
RELIABILITY PERFORMANCE MEASURES
PURSUANT TO REQUIREMENT 21 OF THE ELECTRICITY INFORMATION DISCLOSURE REQUIREMENTS 2004, SCHEDULE 1 PART 5
RELIABILITY STATISTICS FOR YEARS ENDING 31 MARCH 2003, 2004, 2005 AND 2006
Class A B C D E F G H I TOTAL
Interruptions 2002/03 - 149 388 - - 3 - - - 540
2003/04 - 85 391 3 - - - - - 479
2004/05 - 63 354 - - - - - - 417
2005/06 - 152 416 1 - 1 - - - 570
Predicted 2006/2007 151 392
5-Year Average Target 157.6 384
SAIDI 2002/03 - 18.9 147.8 - - 0.3 - - - 167.0
2003/04 - 11.1 140.8 5.4 - - - - - 157.3
2004/05 - 7.7 117.8 - - - - - - 125.5
2005/06 - 14.8 143.5 2.79 - 0.08 - - - 161.2
Predicted 2006/2007 16.8 129.5
5-Year Average Target 14.6 128.8
SAIFI 2002/03 - 0.11 3.22 - - 0.01 - - - 3.33
2003/04 - 0.10 3.42 0.61 - - - - - 4.13
2004/05 - 0.04 2.96 - - - - - - 3.00
2005/06 - 0.08 2.91 0.08 - - - - - 3.07
Predicted 2006/2007 0.110 3.16
5-Year Average Target 0.105 3.10
CAIDI 2002/03 - 174.4 45.9 - - 40.3 - - - 50.1
2003/04 - 111.3 41.2 8.9 - - - - - 38.1
2004/05 - 188.3 39.8 - - - - - - 41.9
2005/06 - 197.0 49.3 33.21 - 26.67 - - - 52.5
Predicted 2006/2007 152.9 41.0
5-Year Average Target 138.3 41.5
Faults by Voltage 66kV 33kV 11kV Total
OH per 100km 2002/03 1.14 2.27 6.65 6.03
2003/04 1.68 3.37 6.03 5.62
2004/05 1.40 2.18 5.06 4.71
2005/06 0.28 1.74 5.65 5.15
UG per 100km 2002/03 - - 3.65 3.47
2003/04 - - - -
2004/05 - 29.07 2.22 3.20
2005/06 - 52.63 6.30 8.08
Total per 100km 2002/03 1.14 2.25 6.62 6.00
2003/04 1.68 3.34 5.96 5.56
2004/05 1.40 2.38 5.02 4.69
2005/06 0.28 2.16 5.66 5.19
Predicted 2006/2007 0.95 2.43 5.84 5.40
5-Year Average Target 0.93 2.39 5.73 5.29
Class C Interruptions Not Restored in 3 hours 15.63%
Class C Interruptions Not Restored in 24 hours 0.48%
THE POWER COMPANY LIMITED
CERTIFICATION OF FINANCIAL STATEMENTS
PERFORMANCE MEASURES AND STATISTICS DISCLOSED BY DISCLOSING ENTITIES
(OTHER THAN TRANSPOWER)
We, Alan Bertram Harper and Maryann Louise Macpherson, Directors of The Power Company Limited certify that, having made all reasonable enquiry, to the best of our knowledge:
a) The attached audited financial statements of The Power Company Limited, prepared for the purposes of requirement 6 of the Commerce Commission's Electricity Information Disclosure Requirements 2004 comply with those Requirements; and
b) The attached information being the derivation table, financial performance measures, efficiency performance measures, energy delivery efficiency performance measures, statistics and reliability performance measures in relation to The Power Company Limited, and having been prepared for the purposes of requirements 14, 15, 20 and 21 of the Electricity Information Disclosure Requirements 2004, comply with those Requirements.
The valuations on which those financial performance measures are based are as at 31 March 2004.
Signed: Alan Harper Maryann Macpherson.
[Director] [Director]
Dated: 26 October 2006
Auditors' Report
To the readers of the financial statements of
The Power Company Limited - Lines Business
We have audited the accompanying financial statements of The Power Company Limited - Lines Business. The financial statements provide information about the past financial performance and cash flows of The Power Company Limited - Lines Business and Group, and their financial position as at 31 March 2006. This information is stated in accordance with the accounting policies set out in the Statement of Accounting Policies.
Directors' Responsibilities
The Commerce Commission's Electricity Information Disclosure Requirements 2004 made under section 57T of the Commerce Act 1986 requires the Directors to prepare financial statements which give a true and fair view of the financial position of The Power Company Limited - Lines Business and Group as at 31 March 2006, and the results of their operations and cash flows for the year then ended.
Auditors' Responsibilities
It is our responsibility to express an independent opinion on the financial statements presented by the Directors and report our opinion to you.
Basis of Opinion
An audit includes examining, on a test basis, evidence relevant to the amounts and disclosures in the financial statements. It also includes assessing:
· the significant estimates and judgements made by the Directors in the preparation of the financial statements
· whether the accounting policies are appropriate to The Power Company Limited - Lines Business and Groups' circumstances, consistently applied and adequately disclosed.
We conducted our audit in accordance with generally accepted auditing standards in New Zealand. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary. We obtained sufficient evidence to give reasonable assurance that the financial statements are free from material misstatements, whether caused by fraud or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements.
Other than in our capacities as auditors and providers of other professional services we have no relationship with or interests in The Power Company Limited.
Auditors' Report
The Power Company Limited - Lines Business
Unqualified Opinion
We have obtained all the information and explanations we have required.
In our opinion:
(a) proper accounting records have been maintained by The Power Company Limited as far as appears from our examination of those records; and
(b) the financial statements referred to above:
(i) comply with generally accepted accounting practice
(ii) give a true and fair view of the financial position of The Power Company Limited - Lines Business and Group as at 31 March 2006 and the results of their operations and cash flows for the year then ended; and
(iii) comply with the Electricity Information Disclosure Requirements 2004.
Our audit was completed on 26 October 2006 and our unqualified opinion is expressed as at that date.
Chartered Accountants Dunedin
Auditors' Opinion of Performance Measures
The Power Company Limited - Lines Business
We have examined the attached information, being:-
(a) a derivation table; and
(b) an annual ODV reconciliation report; and
(c) financial performance measures; and
(d) financial components of the efficiency performance measures
that were prepared by The Power Company Limited - Lines Business and Group, dated 26 October 2006, for the purposes of the Commerce Commission's Electricity Information Disclosure Requirements 2004.
In our opinion, having made all reasonable enquiry, to the best of our knowledge, that information has been prepared in accordance with those Electricity Information Disclosure Requirements 2004.
PricewaterhouseCoopers Dunedin
26 October 2006