INFORMATION FOR DISCLOSURE
PURSUANT TO SECTION 57T OF THE COMMERCE ACT 1986
PricewaterhouseCoopers
Auditors' Report
To the readers of the financial statements of WEL Networks Limited - Lines Business
We have audited the accompanying financial statements of WEL Networks Limited - Lines Business. The financial statements provide information about the past financial performance of WEL Networks Limited - Lines Business and its 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 require the Directors to prepare financial statements which give a true and fair view of the financial position of WEL Networks Limited - Lines Business as at 31 March 2006, and the results of 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; and
· whether the accounting policies are appropriate to WEL Networks Limited - Lines Business' 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 the provision of other assurance services we have no relationship with or interests in WEL Networks Limited.
PricewaterhouseCoopers
Auditors' Report
WEL Networks 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 WEL Networks Limited - Lines Business 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 WEL Networks Limited - Lines Business as at 31 March 2006 and the results of its 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 Auckland
PricewaterhouseCoopers
Auditors' Opinion of Performance Measures
WEL Networks 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 WEL Networks Limited - Lines Business and dated 17 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 Auckland
26 October 2006
Form 4
Requirement 31(1)
CERTIFICATION OF FINANCIAL STATEMENTS, PERFORMANCE
MEASURES, AND STATISTICS DISCLOSED BY DISCLOSING ENTITIES
(OTHER THAN TRANSPOWER)
We, Rodger Herbert Fisher and Brian Vincent Walsh directors of WEL Networks Limited certify that, having made all reasonable enquiry, to the best of our knowledge,-
(a) The attached audited financial statements of WEL Networks 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 WEL Networks 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
Rodger Herbert Fisher Brian Vincent Walsh
17 October 2006
WEL NETWORKS LIMITED
Statement of Financial Performance
For the year ended 31 March 2006
Line Business
Note 2006 2005
($000s) ($000s)
Operating revenue 1 51,215 46,123
Operating expenses 2 (31,474) (28,402)
Operating surplus before interest & taxation 19,741 17,721
Interest expense 3 (4,130) (3,696)
Operating surplus before taxation 15,611 14,025
Taxation expense 4 (5,273) (5,719)
Net surplus attributable to the shareholders of 10,338 8,306
the parent company
Statement of Movements in Equity
For the year ended 31 March 2006
Line Business
Note 2006 2005
($000s) ($000s)
Equity as at 1 April 154,904 176,988
Net Surplus for the year 10,338 8,306
Total Recognised Revenue and Expenses 10,338 8,306
Dividends - (30,390)
- (30,390)
Equity as at 31 March 165,242 154,904
Statement of Financial Position
As at 31 March 2006
Line Business
Note 2006 2005
($000s) ($000s)
Tangible assets
Current assets 6 23,344 25,975
Fixed assets 7 223,025 202,731
Total tangible assets 246,369 228,706
Intangible assets
Goodwill - -
Other intangible assets - -
Total intangible assets - - -
Total Assets 246,369 228,706
Liabilities
Current liabilities 8 26,821 22,641
Non current liabilities 9 54,306 51,161
Total liabilities 81,127 73,802
Equity
Capital Notes - -
Equity 5 165,242 154,904
Total capital funds 165,242 154,904
Total equity and liabilities 246,369 228,706
Statements of Cash Flows
For the year ended 31 March 2006
Line Business
Note 2006 2005
($000s) ($000s)
Cash Flows From Operating Activities
Cash received from operations
Receipts from customers 54,210 47,867
Interest received 837 1,051
Total cash received from operations 55,047 48,918
Cash disbursed on operations
Payments to employees and suppliers (25,125) (20,113)
Interest paid (4,130) (3,696)
Income tax paid (1,504) (4,756)
Total cash disbursed on operations (30,759) (28,565)
Net cash flow from operations 24,288 20,353
(refer to reconciliation below)
Cash Flows From Investing Activities
Cash received from investing activities
Sale of fixed assets - -
Investments maturing - -
Total cash from investing activities - -
Cash disbursed on investing activities
Investments made - -
Fixed asset purchases (27,984) (21,138)
Total cash disbursed on investing activities (27,984) (21,138)
Net cash flow applied to/(from) investing activities (27,984) (21,138)
Cash Flows From Financing Activities
Cash received from financing activities
Loans raised - 36,546
Total cash received from financing activities - 36,546
Cash disbursed on financing activities
Loans repaid - -
Dividend Paid - (32,549)
Total cash disbursed on financing activities - (32,549)
Net cash flow applied to/(from) financing activities - 3,997
Net increase/(decrease) in cash held (3,696) 3,212
Cash at the beginning of the year 21,727 18,515
Cash at the end of the year 6 18,031 21,727
Statements of Cash Flows (continued)
For the year ended 31 March 2006
Line Business
Note 2006 2005
($000s) ($000s)
Reconciliation of net cash flows from operating
activities with surplus after taxation.
Surplus after taxation 10,338 8,306
Non cash items
Depreciation 2 7,221 6,438
Deferred tax 4 3,145 2,217
Total non cash items 10,366 8,655
(Increase)/decrease in working capital
Trade Debtors (1,062) (208)
Other current assets (3) (19)
Trade & other creditors 3,535 4,579
Customer deposits - -
Annual and long service leave provision 21 (30)
Provision for taxation 624 (1,254)
Net decrease/(increase) in working capital 3,115 3,068
Items classified as investing activities
Net loss/(gain) on sale of fixed assets 469 324
Net cash inflow from operating activities 24,288 20,353
Statement of Accounting Policies
For the year ended 31 March 2006
These financial statements are prepared and presented in accordance with the Electricity Information
Disclosure Requirements 2004.
A. General Accounting Policies
The general accounting policies recognised as appropriate for the measurement and reporting of
results and the financial position have been followed in the preparation of these financial
statements.
The historical cost method, as modified by the revaluation of certain assets, has been followed.
The Electricity Information Disclosure Handbook 2004 has been followed in the preparation of
these financial statements.
B. Particular Accounting Policies
The particular accounting policies which have a significant effect on the financial performance and
financial position are as follows:
(a) Income Tax
The income tax expense charged to the Statement of Financial Performance includes both current
and deferred tax. Deferred tax is calculated using the liability method, and is accounted for using
the comprehensive basis, except that deferred tax is not provided on asset revaluations of the
distribution system.
(b) Trade Debtors
Trade debtors are stated at their estimated realisable value after adequate provision for doubtful
debts. Bad debts are written off in the period they are identified.
(c) Revenue Recognition
Line revenues include an accrual for charges incurred by customers but not billed at balance date.
(d) Inventories
Inventories are valued at the lower of weighted average cost and net realisable value. Work in
Progress is valued at cost comprising direct labour, materials, freight and a proportion of
production overheads based on a normal level of activity.
(e) Fixed Assets
The distribution system is revalued by independent valuers every three years based on an
optimised deprival value basis. Additions to the distribution system are stated at cost.
Land and buildings are revalued by independent valuers every three years on the basis of open
market value for existing use.
Cost for internally constructed assets comprise direct labour, materials, freight, and a proportion
of production overheads based on a normal level of activity. All other fixed assets are recorded at
cost less accumulated depreciation.
(f) Depreciation of Fixed Assets
Depreciation of the distribution system and buildings is provided for on a straight line basis over
their estimated useful lives as follows:
Buildings 3.0%
Distribution system 2.9%
Depreciation of other fixed assets is provided for on a diminishing value basis as follows:
Plant and Equipment 20 - 50%
Vehicles 25%
(g) Principles of Line Business Split
The line business forms a segment of the operations of the Group. The allocation of costs,
revenue, assets and liabilities was carried out on a basis which reflects the items attributable to
this segment of the Group.
Where possible, financial statement items were allocated directly to the line business. In those
instances where direct allocation was not possible, the avoidable cost allocation methodology
was employed, which has resulted in allocations as follows:
Corporate Overheads
Corporate overhead costs were allocated as follows:
Directors fees and associated costs Weighted fixed assets
Chief executive and associated costs Weighted fixed assets
Consultants and business analysts Weighted fixed assets
All other costs Weighted staff numbers
Items have been weighted by multiplying the value attributable to Other by 33%
Property Costs
Allocated using market based rentals.
Expenditure
Where a segment of the Group performs line activities in addition to other functions
each item of expenditure incurred by that segment has been allocated to the line business in
proportion to the total level of line business activity undertaken by the segment. This has been
achieved using the following methodologies:
Customer services/billing 10% Lines
Marketing Revenue
Bank Balances
Cash and bank balances have been allocated based on cash movements as per the cash flow
statement.
Fixed Assets
Fixed assets used by both the line and another activity have been allocated to the line
business on the following basis:
Motor vehicles Weighted staff numbers
Plant, Furniture and equipment Weighted staff numbers
Items have been weighted by multiplying the value attributable to Other by 33%
Creditors
Creditors not directly attributable to the line business have been allocated in proportion to the
expenditure allocation as noted above.
Provision for Annual and Long Service Leave
The amount of the provision attributable to employees working on both the line business and
other activities has been allocated to the line business in proportion to wages expenditure.
(h) Leased Assets
Operating Leases
Operating Lease payments are recognised as an expense in the period the amount is payable.
C. Changes in Accounting Policy
There have been no changes in accounting policies applied during the year under review.
Certain comparatives have been re-classified to ensure greater transparency and comparability
between periods.
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2006
Line Business
2006 2005
($000s) ($000s)
1 Operating Revenue
Revenue from Other - -
Line access charges 63,381 57,938
Discount (18,600) (14,100)
AC Rental Rebates 2,521 1,234
Interest 837 1,051
Revenue from other business - -
Other operating revenue 3,076 -
Total Operating Revenue 51,215 46,123
2 Operating Expenditure
Transmission charges 12,950 11,755
Transfer payments to Other business for:
Asset Maintenance 4,920 3,813
Disconnections/Reconnection services - -
Meter data - -
Consumer based load control services - -
Avoided transmission (own generation) - -
Royalty & patent expenses - -
Other goods/services - -
Total transfer payment to Other business 4,920 3,813
Expenses to entities that are not related parties for:
Asset Maintenance - -
Disconnections/Reconnection services - -
Meter data - -
Consumer based load control services - -
Royalty & patent expenses - -
Other goods/services - -
Total of specified expenses to non-related parties - -
Employee salaries, wages and redundancies 3,692 3,555
Customer billing & Information System expense
Depreciation on:
System fixed assets 6,222 5,690
Other assets 999 748
Total depreciation 7,221 6,438
Amortisation of:
Goodwill - -
Other Intangibles - -
Total amortisation of intangibles - -
Corporate & administration 642 467
Human resource expenses 318 248
Marketing/advertising 132 245
Merger and acquisition expenses - -
Takeover defence expenses - -
Research & development expenses - -
Consultancy & legal expenses 456 911
Line Business
2006 2005
($000s) ($000s)
Operating Expenditure (continued)
Donations - -
Directors' Fees 229 241
Auditors' Fees
Audit Fees to principal auditors 20 20
Audit Fees to other auditors - -
Other services provided by principal and other auditors 61 79
Total auditors' fees 81 99
Net loss on sale of fixed assets 469 324
Cost of offering credit
Bad Debts written off - -
Increase in estimated doubtful debts - -
Total cost of offering credit - -
Local Authority rates expense 212 216
AC Loss-rental rebates (distribution to retailers/customers) expense - -
Rebates to customers due to ownership interest - -
Subvention payments - -
Unusual expenses - -
Other expenditure 152 90
Total operating expenditure 31,474 28,402
3 Interest expense
Interest expense on borrowings 4,130 3,696
Finance charges relating to finance leases - -
Other interest expenses - -
Total interest expense 4,130 3,696
Line Business
2006 2005
($000s) ($000s)
4 Taxation
Profit before taxation 15,611 14,025
Tax on profit at 33% 5,152 4,628
Tax effect of permanent differences 121 1,091
Total taxation expense 5,273 5,719
Represented by:
Deferred income tax liability 3,145 2,217
Current taxation provision 2,128 3,502
5,273 5,719
Deferred income tax liability
Balance at the beginning of the year 14,615 12,393
Adjustments for prior periods (21) 5
Current year timing differences 3,166 2,217
Balance at the end of the year 17,760 14,615
The tax effect of timing differences arising from asset revaluations of the distribution system
approximating $28,036,000, which would only crystallise on disposal, have not been recognised.
5 Shareholders Funds
Issued and Paid In Capital 41,504 41,504
All ordinary shares carry equal voting rights
Asset revaluation reserve 104,612 104,612
Retained earnings 19,126 8,788
Minority interests in subsidiaries - -
Total Equity 165,242 154,904
Asset Revaluation Reserve
Balance at the beginning of the year 104,612 104,612
Asset revaluation - -
Transfer to Retained Earnings - -
Balance at the end of the year 104,612 104,612
Retained Earnings
Balance at the beginning of the year 8,788 30,872
Net surplus after tax 10,338 8,306
Dividends - (30,390)
Transfer from Revaluation Reserve
Balance at the end of the year 19,126 8,788
Line Business
2006 2005
($000s) ($000s)
479
6 Current assets
Cash and Bank 18,031 21,727
Trade debtors 5,307 4,245
Short term investments - -
Inventories - -
Other current assets 6 3
Tax recoverable - -
Total current assets 23,344 25,975
7 Fixed Assets
System Fixed assets
Distribution System At cost 37,858 14,302
At valuation 182,188 182,189
Land At cost - -
At valuation 1,276 1,276
Buildings At cost - -
At valuation 1,402 1,403
Furniture Plant & Equipment At cost - -
At valuation - -
222,724 199,170
Accumulated depreciation
Distribution System At cost (3,675) (213)
At valuation (7,921) (5,283)
Buildings At cost - -
At valuation (84) (42)
Furniture Plant & Equipment At cost - -
At valuation - -
(11,680) (5,538)
Total System Fixed Assets 211,044 193,632
Capital Spares 944 161
Vehicles
Cost 567 411
Accumulated depreciation (174) (152)
Net book value 393 259
Line Business
2006 2005
($000s) ($000s)
Fixed Assets (continued)
479
Furniture, Plant and Equipment
Cost 12,642 11,730
Accumulated depreciation (10,630) (9,829)
Net book value 2,012 1,901
Total before assets under construction 214,393 195,953
Capital assets under construction 7,954 6,060
Consumer billing & information system assets - -
Other fixed assets
Cost 1,355 1,355
Accumulated depreciation (677) (637)
Net book value 678 718
Total net book value 223,025 202,731 508
Land and Buildings were revalued on 31 March 2004 by DTZ Registered Valuers. 442
The distribution system was revalued on 31 March 2004 by Sinclair Knight Merz (NZ) Limited 45
Registered Engineers. 22
73
Other fixed assets represent the amount paid to Hamilton City Council in 1989 for the use of
substations buildings. This amount is being depreciated over a period of 33 years. 1,090
Centralised load control equipment 1,145 1,180
(included as part of the distribution system)
8 Current liabilities
Bank overdraft & short term borrowings - -
Trade creditors 24,956 21,430
Provision for annual and long service leave 199 178
Provision for dividend - -
Provision for tax 1,248 624
Other current liabilities 418 409
Total current liabilities 26,821 22,641
Line Business
2006 2005
($000s) ($000s)
479
9 Non-current Liabilities
Payables and accruals - -
Borrowings (refer note 17 ) 36,546 36,546
Deferred tax 17,760 14,615
Other non-current liabilities - -
Total non-current liabilities 54,306 51,161
10 Contingencies
There are no contingent liabilities (2005: nil).
11 Capital commitments
Capital expenditure
Capital commitments as at 31 March 2006 are estimated at $1,499,000 (2005: $4,314,000).
Operating Leases
Non-cancellable operating lease commitments:
Within one year 54 73 54
Later than one, not later than two years 43 54 43
Later than two, not later than five years 120 123
Later than five years 759 799
Total Operating Leases 976 1,049 976
-
The Group leases land and premises. Operating leases held over properties give -
the Group the right to renew the lease subject to a predetermination of the lease -
rental by the lessor. There are no options to purchase in respect of land and
premises held under operating leases.
12 Financial Instruments
(a) Risk
Nature of activities and management policies with respect to financial instruments:
(i) Concentrations of Credit Risk
In the normal course of its business, the Group incurs credit risk from trade receivables
from customers and transactions with financial institutions. A provision has been set
up for trade receivables which are unlikely to be collected.
The Group has a credit policy which is used to manage this exposure to credit risk. As
part of this policy, limits on exposures with counterparties have been set and are
monitored on a regular basis.
The Group has in excess of 90% of its trade debtors owing from the incumbent retailer.
This debt is subject to a written agreement and regular credit checks. The Group does not
require any collateral.
Financial Instruments (continued)
(b) Fair Values
The Directors estimate that the carrying amounts of financial instruments in the Statement of
Financial Position equal their fair values.
13 Related Party Transactions
The Lines Business has received services from WEL Networks Operations Division. Both
entities form part of WEL Networks. All transactions between the two parties are at arms length
and at market rates. There have been no transactions at nil or nominal value.
There are no outstanding balances between the two parties. No debts were forgiven or written off.
Details of the transactions are as follows:
Line Business
2006 2005
($000s) ($000s)
(a) Construction of subtransmission assets 7,539 5,897
(b) Construction of zone substations 1,955 260
(c) Construction of distribution lines and cables. 7,051 6,975
(d) Construction of medium voltage switchgear 475 856
(e) Construction of distribution transformers. 836 773
(f) Construction of distribution substations 398 91
(g) Construction of Low voltage lines & cables 3,640 3,007

WEL Networks was involved in connecting new consumers to its
network and the following costs were incurred:
(h) Relays for new connections 947 - 368,000
Consumer connections 3,840 4,020
(i) Maintenance of distribution system 4,920 3,813
31,601 25,692
In some cases estimates have been used to apportion costs between the categories listed above.
Line Business
2006 2005
($000s) ($000s)
14 Imputation Credit Memorandum Account
Balance at the beginning of the year 20,739 31,747
Dividends allocated - (15,988)
Taxation paid 1,717 4,980
Taxation refunds received (200) -
Balance at the end of the year 22,256 20,739
15 Adjusted net working capital (20,260) (17,607)
16 Interest tax shield 1,087 873
17 Convertible Note
On 30 June 2004 the Company paid a dividend of $37.4m to its 100% shareholder, WEL Energy
Trust. On the same day the Company issued $37.4m of convertible notes to the WEL Energy Trust.
The Notes are subordinated to all other forms of debt. They are unsecured and bear interest of
8.3% p.a, accrued monthly. The Notes are convertible into an amount of ordinary shares equal to
the face value of the Notes, divided by the assessed fair value of WEL shares at the date of
conversion. Conversion is at the discretion of the Directors provided 30 business days notice is
given.
The Line Business share of the above transaction was $36,546,000.
Statement of Performance Measures
For the year ended 31 March 2006
2006 2005 2004 2003
Financial measures
Return on Funds 9.9% 9.2% 9.9% 12.2%
Return on Equity 6.6% 5.0% 6.5% 7.6%
Return on Investment 6.6% 5.6% 18.6% 7.4%
Efficiency Measures
Direct Line cost per Kilometre $1,362 $1,054 $1,042 $1,256
Indirect line costs per Electricity Customer $57.22 $65.31 $70.51 $82.23
The latest available ODV Valuation was prepared by Sinclair Knight Merz (NZ) Limited Registered Engineers
as at 31 March 2004 and amounted to $189,495,070 (31 March 2001 $156,546,542).
Comparative numbers have not been restated to comply with the current requirements.
Schedule 1 Part 4 Energy Delivery Efficiency Performance Measures and Statistics
2006 2005 2004 2003 2002
1 a) Load factor 53.3% 61.1% 57.6% 54.0% 55.6%
b) Loss ratio 5.5% 4.9% 4.9% 4.9% 4.9%
c) Capacity utilization 39.1% 36.6% 37.6% 42.3% 39.9%
2 a) Circuit km (total)
33 kV 325.73 277.27 280.37 278.08 278.08
11 kV 2,544.82 2,547.28 2,564.77 2,591.37 2,568.08
400 V 2,100.42 2,059.44 2,030.17 1,872.93 1,845.97
TOTAL 4,970.96 4,884.00 4,875.31 4,742.38 4,692.13
b) Circuit km (overhead)
33 kV 188.70 186.98 192.26 194.85 194.85
11 kV 2,049.53 2,061.86 2,087.41 2,127.37 2,124.27
400 V 1,165.33 1,166.02 1,167.64 1,044.04 1,041.34
TOTAL 3,403.56 3,414.86 3,447.31 3,366.26 3,360.46
c) Circuit km (underground)
33 kV 137.02 90.30 88.11 83.23 83.23
11 kV 495.29 485.42 477.36 464.00 443.81
400 V 935.09 893.42 862.53 828.89 804.63
TOTAL 1,567.40 1,469.14 1,428.00 1,376.12 1,331.67
d) Transformer capacity (kVA) 570,885 546,510 538,475 502,730 495,120
e) Maximum demand (kW) 223,000 199,997 202,344 212,861 197,505
f) Total electricity entering the system 1,101,970,000 1,070,454,387 1,021,426,991 1,006,223,026 962,390,051
(before losses of electricity) in kWh
g) Total Electricity (kWh) supplied from the system
(after losses of electricity) during the financial year
on behalf of each person that is an electricity generator or an electricity retailer or both
A 35,564,540 46,086,557 47,722,117 31,642,235 21,716,095
B 790,691,252 800,354,641 765,127,446 782,777,620 766,161,536
C 94,364,260 79,677,607 60,246,415 42,087,338 40,455,072
D 69,419,933 59,069,184 64,429,904 45,763,771 31,608,348
E - - - - 3,728,698
F - - - - -
G 42,241,770 31,033,126 33,007,687 55,150,245 50,943,452
H 1,528,448 1,353,930 1,354,213 - -
J - - - - -
K - - - - -
L - - - - 1,100,934
M 162,262 62,327 - - -
1,041,700,868 1,017,637,372 971,887,782 957,421,209 915,714,135
h) Total customers 79,195 77,480 75,595 73,959 72,942
Schedule 1 Part 5 Reliability Performance Measures to be Disclosed by Line Owners Other Than
Transpower
Target Target Actual Actual Actual Actual Actual
2007 to 2011 2007 2006 2005 2004 2003 2002
1,2,3 Total Interruptions
Class A Planned - by TransPower - - - - -
Class B Planned - by WEL 30 30 18.00 14.00 22.00 30.00 74.00
Class C Unplanned - by WEL 230 234 256.00 233.00 224.00 287.00 202.00
Class D Unplanned - by TransPower - 4.00 4.00 7.00 -
Class E Unplanned - by WEL Generation - - - - -
Class F Unplanned - by other generation - - - - -
Class G Unplanned - by Another Line Owner - - - - -
Class H Planned - by Another Line Owner - - - - -
Class I Any other loss of supply - - - - -
Total 274 251 250 324 276

4 Class C interuptions not restored within 3 hours 22.3% 25.3% 19.6% 17.6% 23.3%
Class C interuptions not restored within 24 hours 0.00% 0.00% 0.00% 0.00% 0.00%
5 Faults per 100 km (Total)
33 kV 1.66 2.76 5.83 3.25 2.14 0.72 1.08
11 kV 8.51 8.75 9.55 8.79 8.50 10.88 7.75
TOTAL 7.76 8.08 9.13 8.25 7.87 9.90 7.10
6 Faults per 100 km (Overhead)
33 kV 10.07 4.81 3.12 1.03 1.54
11 kV 11.03 10.38 9.96 12.88 8.61
TOTAL 10.95 9.92 9.39 11.89 8.02
Schedule 1 Part 5 Reliability Performance Measures to be Disclosed by Line Owners Other Than
Transpower
Target Target Actual Actual Actual Actual Actual
2007 to 2011 2007 2006 2005 2004 2003 2002
7 Faults per 100 km (Underground)
33 kV - - - - -
11 kV - 2.06 2.09 1.72 3.61
TOTAL - 1.74 1.77 1.46 3.04
8,9,10, 11 SAIDI
Class A Planned - by TransPower - - - - -
Class B Planned - by WEL 3.00 3.00 2.12 1.12 1.51 1.67 4.57
Class C Unplanned - by WEL 48.00 52.00 67.51 86.53 64.53 92.11 71.64
Class D Unplanned - by TransPower - 44.78 2.44 0.15 -
Class E Unplanned - by WEL Generation - - - - -
Class F Unplanned - by other generation - - - - -
Class G Unplanned - by Another Line Owner - - - - -
Class H Planned - by Another Line Owner - - - - -
Class I Any other loss of supply - - - - -
Total 69.63 132.43 68.48 93.93 76.21
Schedule 1 Part 5 Reliability Performance Measures to be Disclosed by Line Owners Other Than
Transpower
Target Target Actual Actual Actual Actual Actual
2007 to 2011 2007 2006 2005 2004 2003 2002
12, 13, 14, 15 SAIFI
Class A Planned - by TransPower - - - - -
Class B Planned - by WEL 0.03 0.03 0.01 0.01 0.03 0.03 0.04
Class C Unplanned - by WEL 1.00 1.13 1.52 1.64 1.59 1.78 1.45
Class D Unplanned - by TransPower - 0.77 0.21 0.04 -
Class E Unplanned - by WEL Generation - - - - -
Class F Unplanned - by other generation - - - - -
Class G Unplanned - by Another Line Owner - - - - -
Class H Planned - by Another Line Owner - - - - -
Class I Any other loss of supply - - - - -
Total 1.53 2.42 1.83 1.84 1.49
16, 17, 18, 19 CAIDI
Class A Planned - by TransPower - - - - -
Class B Planned - by WEL 100.00 100.00 171.75 112.00 50.33 63.16 114.25
Class C Unplanned - by WEL 47.96 46.00 44.41 52.76 40.58 51.89 49.41
Class D Unplanned - by TransPower - 58.16 11.62 4.01 -
Class E Unplanned - by WEL Generation - - - - -
Class F Unplanned - by other generation - - - - -
Class G Unplanned - by Another Line Owner - - - - -
Class H Planned - by Another Line Owner - - - - -
Class I Any other loss of supply - - - - -
Total 45.44 54.72 37.42 51.09 51.15
ANNUAL VALUATION RECONCILIATION REPORT
$000's
Year ending 31 March 2006
System Fixed Assets at ODV (end of previous financial year) 198,114
Add system fixed assets acquired during the year at ODV 23,831
Less system fixed assets disposed of during the year at ODV (314)
Less depreciation on system fixed assets at ODV (6,221)
Add revaluations of system fixed assets
Equals system fixed assets at ODV - end of the financial year 215,410
FORM FOR DERIVATION OF FINANCIAL AND EFFICIENCY MEASURES FROM THE FINANCIAL STATEMENTS
Input & calculations Symbol in formula ROF ROE ROI
000's 000's 000's 000's
Operating surplus before interest and income tax from financial statements 19,741
Operating surplus before interest and income tax adjusted pursuant to regulation 18 (OSBIIT) 19,741
Interest on cash bank balances and short term investments (ISTI) 837
OSBIIT minus ISTI OSBIIT - ISTI a 18,904 18,904
Net surplus after tax from Financial Statements
Net surplus after tax adjusted pursuant to regulation 18 (NSAT) 10,338 n 10,338
Amortisation of goodwill and other intangibles - g - - -
Subvention Payment - s - - -
Depreciation of SFA at BV (x) 6,222
Depreciation of SFA at ODV (y) 6,222
ODV Depreciation tax adjustment = x - y d - - -
Subvention Payment tax adjustment = s*t s*t - -
Interest Tax Shield 1,087 q 1,087
Revaluations - r -
Income Tax 5,273 p 5,273
Numerator (as adjusted) 18,904 10,338 12,544
Input & calculations Symbol in formula ROF ROE ROI
Fixed Assets at end of previous financial year (FA0) 202,731
Fixed Assets at end of current financial year (FA1) 223,025
Adjusted Net Working Capital at end of previous financial year (ANWC0) (17,607)
Adjusted Net Working Capital at end of current financial year (ANWC1) (20,260)
Average total funds employed (ATFE) =(FA0+FA1+ANWC0+ANWC1)/2 c 193,944 193,944
Total Equity at end of previous financial year (TE0) 154,904
Total Equity at end of current financial year (TE1) 165,242
Average total equity =(TE0+TE1)/2 k 160,073
Works under construction at end of previous financial year (WUC0) 6,060
Works under construction at end of current financial year (WUC1) 7,954
Average total Works under construction =(WUC0+WUC1)/2 e 7,007 7,007 7,007
Revaluations - r
Half of revaluations =r/2 r/2 -
Intangible assets at end of previous financial year (IA0) -
Intangible assets at end of current financial year (IA1) -
Average Total Intangible asset =(IA0+IA1)/2 m -
Subvention payment for previous financial year (S0) -
Subvention payment current financial year (S1) -
Subvention payment tax adjustment for previous financial year =S0*t
Subvention payment tax adjustment for current financial year =S1*t
Average subvention payment & related tax adjustment =[(S0+S1)(1-t)]/2 v -
System Fixed assets at end of previous financial year at book value (SFAbv0) 193,632
System Fixed assets at end of current financial year at book value (SFAbv1) 211,044
Average value of system fixed assets at book value =(SFAbv0+SFAbv1)/2 f 202,338 202,338 202,338
System Fixed assets at end of previous financial year at ODV value (SFAodv0) 198,114
System Fixed assets at end of current financial year at ODV value (SFAodv0) 215,410
Average value of system fixed assets at ODV value =(SFAodv0+SFAodv1)/2 h 206,762 206,762 206,762
Denominator (as adjusted) 191,361 157,490 191,361
Financial Performance Measure: 9.9% 6.6% 6.6%
Key:
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