INFORMATION FOR DISCLOSURE
PURSUANT TO SECTION 57T OF THE COMMERCE ACT 1986
CERTIFICATION OF FINANCIAL STATEMENTS,
PERFORMANCE MEASURES AND STATISTICS
DISCLOSED BY LINE OWNERS OTHER THAN TRANSPOWER
We, Paul Byrnes and Michael Simm, directors of Top Energy Limited certify that, having made all reasonable enquiries, to the best of our knowledge:
a. The attached audited financial statements of Top Energy Limited prepared for the purposes of requirement 6 of the Commerce Commission's 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 Top Energy 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 2006.
P A Byrnes M W Simm
Date: 31 October 2006
IMPORTANT NOTE
Information disclosed in this 2006 Information Disclosure package issued by Top Energy Limited has been prepared solely for the purposes of the Electricity Information Disclosure Requirements 2004.
The Requirements determine that the information be disclosed in the manner it is presented.
The information should not be used for any other purpose than that intended under the requirements.
The information contained in this package may change at any time. Pricing and terms are as at the date of disclosure indicated and are not a quote or estimate of rates or terms that will apply in the future.
TOP ENERGY LIMITED-LINE BUSINESS
STATEMENT OF FINANCIAL PERFORMANCE
FOR THE YEAR ENDED 31 MARCH 2006
LINE BUSINESS
$
Notes 2006 2005
Operating revenue 1 23,747,087 21,951,828
Less expenses, excluding finance costs 2 18,284,840 17,496,313
Operating surplus before interest and taxation 5,462,247 4,455,515
Less net finance costs 3 802,118 664,892
Net profit before taxation 4,660,129 3,790,623
Less taxation 4 1,693,518 1,889,642
Net profit after taxation 2,966,611 1,900,981
This statement is to be read in conjunction with the accompanying notes, accounting policies and audit report.
The Financial Statements have been prepared solely for the purpose of complying with requirements 6(2) and 6(3)
of the Electricity Information Disclosure Requirements 2004 and are not intended for any other purpose.
TOP ENERGY LIMITED-LINE BUSINESS
STATEMENT OF MOVEMENTS IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2006
LINE BUSINESS
Notes $
2006 2005
EQUITY AS AT 1 APRIL 88,155,432 91,754,451
Profit for the period 2,966,611 1,900,981
Total recognised revenue and expenses for the period 2,966,611 1,900,981
Dividends 5 5,500,000 5,500,000
EQUITY AS AT 31 MARCH 85,622,043 88,155,432
Represented by:
RETAINED EARNINGS
Opening balance 3,794,778 8,264,017
Profit for the period 2,966,611 1,900,981
Dividend paid 5 (5,500,000) (5,500,000)
Transfer to capital contribution reserve (1,358,922) (870,220)
(97,533) 3,794,778
CAPITAL CONTRIBUTIONS RESERVE Policy 2
Opening balance 3,856,657 2,986,437
Transferred from retained earnings 1,358,922 870,220
5,215,579 3,856,657
ASSET REVALUATION RESERVE Policy 5
Opening balance 57,286,017 57,286,017
57,286,017 57,286,017
SHARE CAPITAL 6 23,217,980 23,217,980
85,622,043 88,155,432
This statement is to be read in conjunction with the accompanying notes, accounting policies and audit report.
The Financial Statements have been prepared solely for the purpose of complying with requirements 6(2) and 6(3)
of the Electricity Information Disclosure Requirements 2004 and are not intended for any other purpose.
TOP ENERGY LIMITED-LINE BUSINESS
STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2006
LINE BUSINESS
Notes $
2006 2005
SHAREHOLDERS' EQUITY 85,622,043 88,155,432
Represented by:
NON CURRENT LIABILITIES
Borrowings 8 7,285,714 7,684,932
Deferred tax 4 5,227,312 4,984,601
TOTAL NON CURRENT LIABILITIES 12,513,026 12,669,533
CURRENT LIABILITIES
Bank overdraft 11 - 3,878
Interbusiness current account 12 6,788,992 1,835,285
Payables and accruals 9 1,476,880 1,638,097
Short term borrowings 8 1,671,429 2,215,068
Provision for income tax 1,450,807 1,454,041
TOTAL CURRENT LIABILITIES 11,388,108 7,146,369
TOTAL EQUITY & LIABILITIES 109,523,177 107,971,334
FIXED ASSETS 10 107,000,933 105,852,010
CURRENT ASSETS
Cash and bank balances 11 28,339 273
Accounts receivable 13 2,493,905 2,119,051
TOTAL CURRENT ASSETS 2,522,244 2,119,324
TOTAL ASSETS 109,523,177 107,971,334
85,622,043 88,155,432
-85,622,043
This statement is to be read in conjunction with the accompanying notes, accounting policies and audit report.
The Financial Statements have been prepared solely for the purpose of complying with requirements 6(2) and 6(3)
of the Electricity Information Disclosure Requirements 2004 and are not intended for any other purpose.
TOP ENERGY LIMITED-LINE BUSINESS
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2006
LINE BUSINESS
2006 2005
$ $
CASH FLOWS FROM OPERATING ACTIVITIES
Cash was provided from:
Receipts from customers 23,372,233 21,474,458
23,372,233 21,474,458
Cash was disbursed to:
Payments to suppliers and employees 13,971,053 12,690,877
Interest paid 802,118 654,218
Taxation paid 1,454,041 1,946,000
16,227,212 15,291,095
Net cash from operating activities 7,145,021 6,183,363
CASHFLOWS FROM INVESTING ACTIVITIES
Cash was provided from:
Other businesses 4,953,707 3,484,058
Cash was applied to:
Purchase and construction of fixed assets 5,623,927 5,625,162
Net cash (used in)/from investing activities (670,220) (2,141,104)
CASHFLOWS FROM FINANCING ACTIVITIES
Cash was provided from:
Proceeds of Term Loan - 1,500,000
Cash was applied to:
Dividends paid 5,500,000 5,500,000
Repayment of loans 942,857 -
Net cash from financing activities (6,442,857) (4,000,000)
NET INCREASE/(DECREASE) IN CASH HELD 31,944 42,259
OPENING CASH (3,605) (45,864)
CLOSING CASH 28,339 (3,605)
This statement is to be read in conjunction with the accompanying notes, accounting policies and audit report.
The Financial Statements have been prepared solely for the purpose of complying with requirements 6(2) and 6(3)
of the Electricity Information Disclosure Requirements 2004 and are not intended for any other purpose.
TOP ENERGY LIMITED-LINE BUSINESS
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2006
LINE BUSINESS
2006 2005
CASH COMPRISES $ $
Cash on hand 286 273
BNZ current account 28,053 (3,878)
28,339 (3,605)
RECONCILIATION OF NET PROFIT AFTER
TAXATION TO CASHFLOW FROM
OPERATING ACTIVITIES
Reported Net Profit/(Loss) after Taxation 2,966,611 1,900,981
Add/(Less) items classified as investing
or financing activities
Net loss/(profit) on disposal of assets - 43,408
Add/(Less) other non-cash items:
Change in provisions (144,493) 231,026
Depreciation 4,475,005 4,400,987
Provision for deferred tax 242,711 435,601
4,573,222 5,067,614
Add/(Less) movement in other
working capital items
Increase/(decrease) in tax payable (3,234) (491,960)
(Increase)/decrease in accounts receivable (374,854) (531,399)
Increase/(decrease) in accounts payable (16,723) 194,719
(394,811) (828,640)
NET CASHFLOWS FROM
OPERATING ACTIVITIES 7,145,021 6,183,363
This statement is to be read in conjunction with the accompanying notes, accounting policies and audit report.
The Financial Statements have been prepared solely for the purpose of complying with requirements 6(2) and 6(3)
of the Electricity Information Disclosure Requirements 2004 and are not intended for any other purpose.
TOP ENERGY LIMITED-LINE BUSINESS
NOTES TO THE FINANCIAL STATEMENTS
STATEMENT OF ACCOUNTING POLICIES
FOR THE YEAR ENDED 31 MARCH 2006
The financial statements are those of the Line business of Top Energy Limited. Top Energy Limited is owned 100% by the Top Energy Consumer Trust and these organisations are in a "Prescribed Business Relationship" as defined by Requirement 3(1)(a)(ii) of the Electricity Information Disclosure Requirements 2004.The period reported is 1 April 2005 to 31 March 2006.These financial statements are prepared in accordance with Regulations 6(2) and 6(3) of the Electricity Information Disclosure Requirements 2004. The financial statements have not been prepared for the purpose of the Financial Reporting Act 1993, or the Energy Companies Act 1992.GENERAL ACCOUNTING POLICIESThe accounting policies recognised as appropriate for the measurement and reporting of results and financial position under the historic cost method, as modified by revaluation of the distribution system, have been followed in the preparation of these financial statements.Methodology of Separation of BusinessTop Energy Limited has followed the Electricity Information Disclosure Requirements 2004 dated 7 May 2004, as issued by the Commerce Commission. PARTICULAR ACCOUNTING POLICIESThe following particular accounting policies, which significantly affect the measurement of financial performance and financial position, have been applied.1 Revenue Revenue shown in the Statement of Financial Performance comprise the amounts received and receivable by the Company for electricity distribution services supplied to customers in the ordinary course of business. Revenues are stated exclusive of Goods and Services Tax collected from customers.2 Capital ContributionsFunds received from customers, as a contribution towards the cost of uneconomic supply facilities, are recognised in the statement of financial performance as soon as any obligations attaching to the contributions have been met.Where a customer's circumstances change such that a part or all of the contribution is to be refunded, then a separately established reserve has been set up for this purpose. Contributions may be refunded within 10 years of the original date of payment.
TOP ENERGY LIMITED-LINE BUSINESS
NOTES TO THE FINANCIAL STATEMENTS
STATEMENT OF ACCOUNTING POLICIES
FOR THE YEAR ENDED 31 MARCH 2006
3 TaxationThe taxation charged against the profit for the year is both the current year's provision and the income tax effects of timing differences calculated using the liability method. Tax effect accounting is applied on a comprehensive basis to all timing differences. Future taxation benefits attributable to timing differences or to losses carried forward are recognised in the financial statements only where there is virtual certainty that the benefit of the losses will be utilised by the Company.4 Accounts ReceivableAccounts receivable are stated at estimated realisable value after providing against debts where collection is doubtful.5 Property, Plant & EquipmentProperty, plant & equipment held by the former Bay of Islands Electric Power Board were vested in the Company, Top Energy Ltd, on 1 May 1993 under the Energy Companies Act 1992. Property, plant & equipment were vested at book value as at 1 May 1993, and represent "cost" to the Company.The cost of property, plant & equipment purchased after 1 May 1993 is the 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.The cost of self - constructed assets includes the cost of all materials used in construction, direct labour on the project, costs of obtaining Resource Management Act consents and an appropriate proportion of variable and fixed overheads. Costs cease to be capitalised as soon as the asset is ready for productive use and do not include any inefficiency cost.The Distribution system asset has been valued to depreciated replacement cost at 31 March 2004 based on a valuation conducted by Sinclair, Knight and Mertz Ltd, registered valuers. The Distribution system asset is valued on a 3 - 5 year cycle.Capital work-in-progress includes materials, and a portion of direct labour and production overhead appropriate to the stage of completion attained.Land and Buildings relating to substations are "owned" by the lines business. These have been valued to fair value at 31 March 2004 based on a valuation conducted by Telfer Young Ltd, registered valuers.
TOP ENERGY LIMITED-LINE BUSINESS
NOTES TO THE FINANCIAL STATEMENTS
STATEMENT OF ACCOUNTING POLICIES
FOR THE YEAR ENDED 31 MARCH 2006
6 DepreciationLand and work-in-progress assets are not depreciated. Other property, plant & equipment assets are depreciated on a straight line (SL) or diminishing value (DV) basis that has regard to their historical cost, estimated useful life and expected residual value:Straight line basis Years
Distribution system Lines, Transformers & Substations Switchgear SCADA Communications equipment 45 - 603515
Buildings 50
Office equipment, Plant and Furniture 10
Information systems assets 5 - 10
Chainsaws 3
Computer Software 3
Diminishing value basis Rate
Motor Vehicles 20%
7 Statement of Cash FlowsThe following is the definition of terms used in the Statement of Cash Flows: "Cash" means coins and notes, demand deposits and other highly liquid investments in which the Company has invested as part of its day-to-day cash management. Cash includes liabilities which are the negative form of the above, such as the bank overdraft. Cash does not include accounts receivable or payable, or any borrowing subject to a term facility. "Investing activities" are those activities relating to the acquisition, holding and disposal of fixed assets and of investments. Investments can include securities not falling within the definition of cash. "Financing activities" are those activities which result in changes in the size and capital structure of the Company. This includes both equity and debt not falling within the definition of cash. Dividends paid in relation to the capital structure are included in financing activities. "Operating activities" include all transactions and other events that are not investing or financing activities and includes interest and dividends received in relation to investments.
TOP ENERGY LIMITED-LINE BUSINESS
NOTES TO THE FINANCIAL STATEMENTS
STATEMENT OF ACCOUNTING POLICIES
FOR THE YEAR ENDED 31 MARCH 2006
8 Financial InstrumentsTop Energy Ltd has entered into various financial instruments with risk for the primary purpose of reducing its exposure of interest. While these financial instruments are subject to risk that market rates may change subsequent to acquisition, such changes would generally by offset by opposite effects on the items being hedged.RecognisedFinancial instruments carried on the statement of financial position include cash, bank, accounts receivable, accounts payable, and term debt. The particular recognition methods adopted are disclosed in the individual policy statements associated with each item.UnrecognisedFinancial instruments, including derivatives, that are designated as hedges of specific items are recognised on the same basis as the underlying hedged items. Derivatives that do not constitute hedges are stated at market value and any resultant gain or loss is recognised in the statement of financial performance.The net differential paid or received in interest rate swaps is recognised as a component of interest expense over the period of the swap agreement.9 Employee entitlementsEmployee entitlements to salaries and wages, annual leave and other benefits are recognized when they accrue to employees.Changes in Accounting PoliciesThere were no material changes in accounting policy during the year.
TOP ENERGY LIMITED-LINE BUSINESS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2006
LINE BUSINESS
$
2006 2005
1 REVENUE
Electricity Line revenue 21,535,008 20,391,889
AC loss rental rebate 737,272 482,697
Capital contributions 1,474,807 1,077,242
TOTAL REVENUE 23,747,087 21,951,828
2 NET PROFIT BEFORE TAXATION
The net profit before tax is stated after charging:
(Loss)/Profit on disposal of fixed assets - 43,408
Depreciation 4,475,005 4,400,987
Buildings 656 -
Distribution System 4,085,617 4,009,459
Centralised Load control equipment 21,750 21,750
Office equipment & furniture 11,288 14,093
Information system & billing assets 331,913 329,039
Vehicles 23,781 26,646
Auditors - audit services 47,969 35,333
- regulatory/ODV reporting & price control submission 34,000 30,530
Directors' fees 161,000 149,589
Bad debts - -
TOP ENERGY LIMITED-LINE BUSINESS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2006
LINE BUSINESS
$
2006 2005
3 NET FINANCE COSTS
Comprise:
Interest - term debt 627,522 658,476
Interest - other 174,595 6,416
Net finance costs 802,118 664,892
4 TAXATION
The taxation provision has been calculated as follows:
Profit for the period 4,660,129 3,790,623
Taxation for the period at 33% 1,537,842 1,250,906
Plus/(Less) tax effect of:
Non taxable income (486,686) (355,490)
Non deductible items 642,362 994,226
1,693,518 1,889,642
The taxation charge is represented by:
Taxation payable in respect of the current period 1,450,807 1,454,041
Deferred tax 242,711 435,601
1,693,518 1,889,642
DEFERRED TAX LIABILITY $ $
Balance at beginning of year 4,984,601 4,549,000
Transfer to Statement of financial performance 242,711 435,601
Balance at end of year 5,227,312 4,984,601
5 DIVIDENDS
Ordinary dividend paid (.22 cents per share) 5,500,000 5,500,000
Total dividends paid 5,500,000 5,500,000
TOP ENERGY LIMITED-LINE BUSINESS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2006
LINE BUSINESS
$
2006 2005
6 SHARE CAPITAL
23,042,500 ordinary shares issued to
the trustees of the Top Energy Consumer
Trust for a consideration of 23,217,980 23,217,980
Net assets vested in the Company 1 May 1993 23,217,980 23,217,980
7 IMPUTATION CREDIT ACCOUNT
Opening balance (2,024,537) (1,261,582)
Plus income tax paid 1,889,642 1,946,000
Imputation credits attached to dividends paid (2,708,955) (2,708,955)
Closing Balance (2,843,850) (2,024,537)
TOP ENERGY LIMITED-LINE BUSINESS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2006
LINE BUSINESS
$
Interest 2006 2005
8 BORROWINGS Rate % Repayable Fair Value
BNZ Loans **
Borrowings 20.03.06 7.53** 20.04.06 1,333,567 1,200,000
Borrowings 27.03.06 7.54** 20.04.06 333,381 300,000
Borrowings 30.03.06 7.542** 20.04.06 95,252 85,714
Borrowings 31.03.06 7.55** 20.04.06 95,265 85,714
Borrowing 18.12.03 6.85* 09.08.10 2,412,196 2,142,857
Borrowing 18.12.03 6.35* 21.03.14 1,422,058 1,285,714
Borrowing 18.12.03 6.80* 04.02.15 1,951,722 1,714,286
Borrowings 30.09.05 6.81* 07.08.12 2,424,952 2,142,857
BNZ loans 9,900,000
8,957,143 9,900,000
Less current portion 1,671,429 2,215,068
BORROWINGS 7,285,714 7,684,932
Repayable as follows:
Due after 1 but before 2 years
Due after 2 but before 5 years
Due after 5 but before 10 years 7,285,714 7,684,932
7,285,714 7,684,932
* Effective interest rate under interest rate swap agreements
** Under a Facility Agreement dated 17 December 2003.
BNZ loans are secured by deed of guarantee from group companies.
TOP ENERGY LIMITED-LINE BUSINESS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2006
LINE BUSINESS
9 PAYABLES $
2006 2005
Accounts payable and accruals 1,274,041 1,290,764
Payroll & other provisions 202,839 347,333
1,476,880 1,638,097
10 FIXED ASSETS Cost or Valuation Acc. Depreciation Net Book Value
2006 2005 2006 2005 2006 2005
Land & Buildings at valuation 1,522,342 1,522,342 (49,117) (48,461) 1,473,224 1,473,881
Distribution system 111,420,078 106,718,505 (8,138,484) (4,052,867) 103,281,594 102,665,638
- At Cost 9,160,402 4,661,184 (185,246) (40,425) 8,975,156 4,620,759
- At Valuation 102,259,676 102,057,321 (7,953,238) (4,012,442) 94,306,438 98,044,879
Centralised load control equipment 183,879 183,879 (43,500) (21,750) 140,379 162,129
Office equipment & furniture 167,997 154,521 (115,914) (103,100) 52,083 51,421
Information system & billing assets 2,155,331 1,907,758 (1,608,315) (1,352,524) 547,015 555,234
Vehicles 163,444 163,444 (70,975) (35,965) 92,468 127,479
Capital work in progress 1,414,169 816,228 1,414,169 816,228
Total fixed assets 117,027,239 111,466,677 (10,026,306) (5,614,667) 107,000,933 105,852,010
i) Land & buildings were revalued at 31 March 2004 by Telfer Young Ltd, registered valuers.
The Distribution system was revalued by independent engineering consultants, Sinclair,Knight & Mertz.
The valuation was carried out at 31 March 2004 and the report is dated 21 May 2004. Subsequent additions are at cost.
The valuation is based on depreciated replacement cost (DRC) of the distribution system asset. The Directors consider
this valuation to be fair.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2006
LINE BUSINESS
$
2006 2005
11 CASH AND BANK BALANCES
CURRENT ASSETS
Comprise:
Cash on hand 286 273
BNZ current account 28,053 -
28,339 273
CURRENT LIABILITY
Bank overdraft - (3,878)
Net Cash & Bank position 28,339 (3,605)
12 INTERBUSINESS CURRENT ACCOUNT
Represents notional net funds advanced to the Lines
business from 'Other businesses', (6,788,992) (1,835,285)
(6,788,992) (1,835,285)
13 ACCOUNTS RECEIVABLE
Comprise:
Trade debtors 2,067,121 1,932,491
Accruals and prepayments 426,784 186,560
2,493,905 2,119,051
TOP ENERGY LIMITED-LINE BUSINESS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2006
14 RELATED PARTY TRANSACTIONS There have been no material related party transactions requiring disclosure in accordance with SSAP 22 "Related Party Disclosures", apart from the following:i. Top Energy Consumer Trust: Top Energy Ltd is wholly owned by Top Energy Consumer Trust. For the period ended 31 March 2006, Top Energy Ltd paid $5.5m (31 March 2005: $5.5m) in the form of a dividend to the above Trust. This payment is reflected in the Statement of movements in Equity of Top Energy Ltd.During the period Top Energy processed transactions on an agency basis on behalf of the Trust in order to settle routine business dealings. As at 31 March 2006, a balance of $1,644 (31 March 2005: $93,277) owing by the Trust to the Company Trust has been included in the Accounts Payable in the Statement of Financial Position. All transactions with the Trust are made on normal business terms.ii. Transfer Payments between Line & 'Other' business:The following related party transactions occurred in the year between the Line & Other businesses. Note 2006(Income)/cost 2005(Income)/costcost
Transfer Payment Cost to Line:
Asset maintenance services a 3,702,582 3,629,789
Avoided transmission charges b 659,159 610,885
Property rental c 77,872 77,872
Payment for meter data Nil Nil
Consumer based load control Nil Nil
Disconnection/reconnection services Nil Nil
Asset construction d
Sub transmission assets Nil Nil
Zone substations 196,902 34,200
Distribution lines & cable 2,333,096 2,360,412
Medium voltage switchgear Nil Nil
Distribution transformers 2,452,825 1,635,801
Distribution substations Nil Nil
Low voltage lines & cables 1,286,716 1,261,173
Other system fixed assets Nil Nil
TOP ENERGY LIMITED-LINE BUSINESS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2006
14 RELATED PARTY TRANSACTIONSa. Asset maintenance services are provided by the Contracting Division in respect of the System fixed asset. Services are provided as contracted by the Line business and are charged at market rates on an arms length basis. Services were provided throughout the year. The outstanding balance at 31 March 2006 was $263,172 (2005: $279,000).b. Avoided Transmission charges are paid in respect of embedded generation provided by Ngawha Generation Limited. Charges are based on the Transpower market rate. The service was provided for the full year. The outstanding balance at 31 March 2006 was $51,515 (2005: $50,900). c. Property facilities are provided to the Line business by the Property Division. Rentals are at market rates for the specific sites. Services were provided throughout the year. The property rental includes cost recovery in respect of rates of $6,494 (2005: $14,617). d. Asset construction services are provided by the Contracting Division in respect of the System fixed asset. Services are provided as contracted by the Line business and are charged on a full cost recovery basis. Services were provided throughout the year. The outstanding balance at 31 March 2006 was $301,651 (2005: $301,800).15 FINANCIAL INSTRUMENTSa. Currency and Interest Rate RiskNature of activities and management policies with respect to financial instruments:i. Currency The Group has undertaken foreign currency transactions from time to time in connection with its activities. To manage the foreign currency risk the Group has used forward exchange contracts. There are no contracts in place at 31 March 2006 relating to the Line business.
TOP ENERGY LIMITED-LINE BUSINESS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2006
15 FINANCIAL INSTRUMENTSii. Interest Rate The Company has a $65m Facility Agreement with BNZ. An amount of $35m is a facility in relation to the possible expansion of the Ngawha geothermal project (which relates to the other business). No advance has been made at balance date. The Core business facility of $30m allows borrowings to be made over variable periods. At balance date $8.9m was advanced to the Line business and these advances will be renewed to coincide with funding requirements. The expected repayment dates are disclosed in Note 8.The principal or contract amounts of interest rate contracts outstanding at 31 March 2006 for the Line business are $7.29m (2005: $7.68m). The effective interest rates are disclosed in Note 8.The Company has not entered into forward agreements or futures transactions.b. Concentration of Credit Risk In the normal course of its business, the Company incurs credit risk from trade debtors and transactions with financial institutions. Contact Energy Ltd comprise 90% of the debtors total as of balance date but subsequent to balance date this amount has been cleared. As part of this policy, limits on exposures with counterparties have been set and approved by the Board of Directors and are monitored on a regular basis. The Company does not have any significant concentrations of credit risk. The Company does not require any collateral or security to support financial instruments as it only deposits with, or lends to, banks and other financial institutions of recognised quality. The Company does not expect the non-performance of any material obligations at balance date.c. Fair Values The following methods were used to estimate the fair values of these classes of financial instruments:i. Cash and liquid deposits, debtors and other accounts receivable including sundry debtors, creditors and other accounts payable including sundry creditors, loans payable within twelve months. The carrying value of these items is equivalent to their fair value.ii. Borrowings - see Note 8.
TOP ENERGY LIMITED-LINE BUSINESS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2006
16 SEGMENT INFORMATION The Lines business operates primarily in one industry, the electricity conveyance industry, and in one geographic location: Northland, New Zealand.17 CAPITAL EXPENDITURE COMMITMENTS Top Energy Ltd has commitments for capital expenditure of $139,436 at 31 March 2006 (31 March 2005: Nil). 18 CONTINGENT LIABILITIES The Company and it's subsidiaries provide bank guarantees, as it did in 2005. 19 EVENTS OCCURRING AFTER BALANCE DATE There are no events which have arisen after the balance sheet date that require disclosure. 20 INTERNATIONAL FINANCIAL REPORTING STANDARDSNew Zealand Equivalents to International Financial Reporting StandardsIn December 2002 the New Zealand Accounting Standards Review Board (ASRB) announced that New Zealand entities required to comply with NZ GAAP under Financial Reporting Act 1993 would be required to apply International Financial Reporting Standards (IFRS) for financial periods commencing on or after 1 January 2007 with earlier adoption permitted from 1 January 2005. The new standards that have been approved by the ASRB for application in New Zealand are referred to as New Zealand equivalents to International Financial Reporting Standards (NZ IFRS) as certain adaptations have been made to reflect New Zealand circumstances.Top Energy Limited has commenced reviewing its accounting policies and financial reporting to comply with NZ IFRS. The Company has allocated internal resources and is carrying out impact assessments to isolate key areas that will be impacted by the transition to NZ IFRS and to facilitate adoption of NZ IFRS. The Company will transition to NZ IFRS and publish its first set of annual financial statements prepared under NZ IFRS for the year ending 31 March 2008.The Company has yet to finalise its accounting policies under NZ IFRS and as a consequence is yet to quantify with any degree of certainty the adjustments that will be required in the statement of financial position on adoption of NZ IFRS and the impact on financial performance thereafter.The key differences between current NZ GAAP and NZ IFRS identified to date as potentially having significant effect on the Company's financial statements as summarized overleaf.
TOP ENERGY LIMITED-LINE BUSINESS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2006
20 INTERNATIONAL FINANCIAL REPORTING STANDARDS (continued)Financial InstrumentsAll interest rate swap and forward exchange contracts will be recorded in the statement of financial position at fair value under NZ IFRS and be adjusted against opening equity. Any movements of the fair value of the instruments from year to year will have the potential to affect the statement of financial performance and the statement of financial position, the extent to which will depend on whether hedge accounting is adopted. The financial impact of the change cannot be reliably estimated at this stage and will be dependent on the extent to which hedge accounting is adopted and is effective.Deferred TaxationThe IFRS basis of accounting for deferred tax is conceptually different to current GAAP. Under current GAAP deferred taxation is calculated using the income statement approach whereas under NZ IFRS deferred taxation will be based on a balance sheet approach. This method recognises deferred tax balances where there is a difference between the carrying value of an asset or liability and its tax base. The most significant impact for the Company is the potential recognition of a deferred tax liability in relation to the revaluation of distribution assets. Due to the uncertainty of recognition, the financial impact cannot be reliably estimated at this stage.Capital ContributionsTop Energy Limited currently recognises capital contributions as revenue in the year earned. NZ IFRS may require the Company to capitalise capital contributions to deferred income and amortise the balance over the life of the asset to the income statement. The financial impact of this change cannot be reliably estimated at this stage.This summary should not be taken as an exhaustive list of all the differences between NZ GAAP and NZ IFRS. Further, the Company has not yet quantified the effects of these differences. Accordingly there can be no assurances that the financial performance and financial position as disclosed in these financial statements would not be significantly different if determined in accordance with NZ IFRS.
Statement of Financial Position Disclosure (Schedule 1, Part 2)
para 2006 2005
$ $
1 Current assets
(a) Cash and bank balances: 28,339 273
(b) Short-term investments: 0 0
(c ) Inventories: 0 0
(d) Accounts receivable: 2,493,905 2,119,051
(e) Other current assets not listed in (a) to (d): 0 0
(f) Total current assets 2,522,244 2,119,324
2 Fixed assets
(a) System fixed assets: 104,895,197 104,301,648
(b) Consumer billing and information system assets: 547,015 555,234
(c ) Motor vehicles: 92,468 127,479
(d) Office equipment: 52,083 51,421
(e) Land and buildings (Excluding Sub-Station Land & Buildings 0 0
classified as Network System Fixed Assets)
(f) Capital works under construction: 1,414,169 816,228
(g) Other fixed assets not listed in (a) to (f): 0 0
(h) Total fixed assets 107,000,933 105,852,010
3 Other tangible assets not listed above 0 0
4 Total tangible assets 109,523,177 107,971,334
5 Intangible assets
(a) Goodwill: 0 0
(b) Other intangibles not listed in (a) above: 0 0
(c ) Total intangible assets 0 0
6 Total assets 109,523,177 107,971,334
7 Current liabilities
(a) Bank overdraft: 0 3,878
(b) Short-term borrowings: 1,671,429 2,215,068
(c ) Payables and accruals: 1,476,880 1,638,097
(d) Provision for dividends payable: 0 0
(e) Provision for income tax: 1,450,807 1,454,041
(f) Other current liabilities not listed in (a) to (e) above: 6,788,992 1,835,285
(g) Total current liabilities 11,388,108 7,146,369
8 Non-current liabilities
(a) Payables and accruals: 0 0
(b) Borrowings: 7,285,714 7,684,932
(c ) Deferred tax: 5,227,312 4,984,601
(d) Other non-current liabilities not listed in (a) to (c ) above: 0 0
(e) Total non-current liabilities 12,513,026 12,669,533
9 Equity
(a) Shareholders' equity:
(i) Share capital: 23,217,980 23,217,980
(ii) Retained earnings: -97,533 3,794,778
(iii) Reserves: 62,501,596 61,142,674
(iv) Total Shareholders' equity: 85,622,043 88,155,432
(b) Minority interests in subsidiaries: 0 0
(c ) Total equity: 85,622,043 88,155,432
(d) Capital notes: 0 0
(e) Total capital funds: 85,622,043 88,155,432
10 Total equity and liabilities 109,523,177 107,971,334
Top Energy Limited - Year ended 31 March 2006
Operating Revenue (Schedule 1, Part 2)
2006 2005
11 Operating revenue
(a) (a) Revenue from line/access charges: 21,535,008 20,391,889
(b) (b) Revenue from "Other" business for services carried out by 0 0
the line business (transfer payment):
(c) (c) Interest on cash, bank balances and short term investments: 0 0
(e) (d) AC loss-rental rebates: 737,272 482,697
(f) (e) Other revenue not listed in (a) to (d): 1,474,807 1,077,242
(g) (f) Total operating revenue 23,747,087 21,951,828
Expenditure (Schedule 1, Part 2) 2006 2005
12 Operating expenditure
(a) Payment for transmission charges 4,980,110 5,148,446
(b) Transfer payments to the "Other" business for:
(i) Asset maintenance: 3,158,069 3,356,241
(ii) Consumer disconnection/reconnection services: 0 0
(iii) Meter data: 0 0
(iv) Consumer-based load control services: 0 0
(v) Royalty and patent expenses: 0 0
(vi) Avoided transmission charges on account of own generation 659,159 610,885
(vii) Other goods and services not listed in (i) to (vi) above 0 0
(viii) Total transfer payment to the "Other" business 3,817,228 3,967,126
(c ) Expense to entities that are not related parties for:
(i) Asset maintenance: 544,513 535,113
(ii) Consumer disconnection/reconnection services 0 0
(iii) Meter data 0 0
(iv) Consumer-based load control services 0 0
(v) Royalty and patent expenses 0 0
(vi) Total of specified expenses to non-related parties (sum of (i) to (v)) 544,513 535,113
(d) Employee salaries, wages and redundancies 2,802,448 2,059,085
(e) Consumer billing and information system expense 157,046 104,963
(f) Depreciation on:
(i) System fixed assets: 4,107,367 4,009,459
(ii) Other assets not listed in (i) 367,637 391,528
(iii) Total depreciation 4,475,005 4,400,987
(g) Amortisation of:
(i) Goodwill: 0 0
(ii) Other intangibles: 0 0
(iii) Total amortisation of intangibles 0 0
Top Energy Limited - Year ended 31 March 2006
Expenditure (Schedule 1, Part 2)
2006 2005
(h) Corporate and administration: 452,637 441,122
(i) Human resource expenses: 159,145 86,554
(j) Marketing/advertising: 218,323 172,896
(k) Merger and acquisition expenses: 0 0
(l) Takeover defence expenses: 0 0
(m) Research and development expenses: 0 0
(n) Consultancy and legal expenses: 265,286 197,389
(o) Donations: 0 0
(p) Directors' fees: 161,000 155,967
(q) Auditors' fees:
(i) Audit fees paid to principal auditors: 47,969 35,333
(ii) Audit fees paid to other auditors: 0 0
(iii) Fees paid for other services provided by principal and other auditors: 34,000 30,530
(iv) Total auditors' fees: 81,969 65,863
(r ) Costs of offering credit:
(i) Bad debts written off: 0 0
(ii) Increase in estimated doubtful debts: 0 0
(iii) Total cost of offering credit: 0 0
(s) Local authority rates expense: 0 0
(t) AC loss-rentals (distribution to retailers/customers) expense: 0 0
(u) Rebates to consumers due to ownership interest: 0 0
(v) Subvention payments: 0 0
(w) Unusual expenses: 0 0
(x) Other expenditure not listed in (a) to (w). 170,130 160,803
13 Total operating expenditure 18,284,840 17,496,313
14 Operating surplus before interest and income tax 5,462,247 4,455,515
15 Interest expense
(a) Interest expense on borrowings 802,118 664,892
(b) Financing charges related to finance leases 0 0
(c) Other interest expense not listed in (a) or (b): 0 0
(d) Total interest expense 802,118 664,892
16 Operating surplus before income tax 4,660,129 3,790,623
17 Income tax 1,693,518 1,889,642
18 Net surplus/(deficit) after tax 2,966,611 1,900,981
TOP ENERGY
Schedule 1 -part 8 of the Electricity Requirements 2004
Annual Valuation Reconciliation Report
$'000
Year ending 31 March 2006
System fixed assets at ODV - 31 March 2005 98,120
Add system fixed assets acquired during the year at ODV 6,689
Less system fixed assets disposed of during the year at ODV 0
Less depreciation on system fixed assets at ODV (4,107)
Revaluations of systems fixed assets 0
Equals system fixed assets at ODV - 31 March 2006 100,702
SCHEDULE 1 - PART 7
FORM FOR THE DERIVATION OF FINANCIAL PERFORMANCE MEASURES FROM FINANCIAL STATEMENTS
Derivation Table Input and Calculations Symbol in formula ROF ROE ROI
Operating surplus before interest and income tax from financial statements
Operating surplus before interest and income tax adjusted pursuant to regulation 18 (OSBIIT) 5,462,247
Interest on cash, bank balances, and short-term investments (ISTI) 0
OSBIIT minus ISTI 5,462,247 a 5,462,247 5,462,247
Net surplus after tax from financial statements 2,966,611
Net surplus after tax adjusted pursuant to regulation 18 (NSAT) 2,966,611 n 2,966,611
Amortisation of goodwill and amortisation of other intangibles 0 g add 0 add 0 add 0
Subvention payment 0 s add 0 add 0 add 0
Depreciation of SFA at BV (x) 4,107,367
Depreciation of SFA at ODV (y) 4,107,367
ODV depreciation adjustment 0 d add 0 add 0 add 0
Subvention payment tax adjustment 0 s*t deduct 0 deduct 0
Interest tax shield 264,699 q deduct 264,699
Revaluations 0 r add 0
Income tax 1,693,518 p deduct 1,693,518
Numerator 5,462,247 2,966,611 3,504,030
OSBIITADJ = a + g + s + d NSATADJ = n + g + s - s*t + d OSBIITADJ = a + g - q + r + s + d - p - s*t
Fixed assets at end of previous financial year (FA0) 105,852,010
Fixed assets at end of current financial year (FA1) 107,000,933
Adjusted net working capital at end of previous financial year (ANWC0) 476,803
Adjusted net working capital at end of current financial year (ANWC1) 1,017,025
Average total funds employed (ATFE) 107,173,385 c 107,173,385 107,173,385
(or regulation 33 time-weighted average)
Total equity at end of previous financial year (TE0) 88,155,432
Total equity at end of current financial year (TE1) 85,622,043
Average total equity 86,888,737 k 86,888,737
(or regulation 33 time-weighted average)
WUC at end of previous financial year (WUC0) 816,228
WUC at end of current financial year (WUC1) 1,414,169
Average total works under construction 1,115,198 e deduct 1,115,198 deduct 1,115,198 deduct 1,115,198
(or regulation 33 time-weighted average)
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 m add 0
(or regulation 33 time-weighted average)
Subvention payment at end of previous financial year (S0) 0
Subvention payment at end of current financial year (S1) 0
Subvention payment tax adjustment at end of previous financial year 0
Subvention payment tax adjustment at end of current financial year 0
Average subvention payment & related tax adjustment 0 v add 0
System fixed assets at end of previous financial year at book value (SFAbv0) 104,301,648
System fixed assets at end of current financial year at book value (SFAbv1) 104,895,197
Average value of system fixed assets at book value 104,598,423 f deduct 104,598,423 deduct 104,598,423 deduct 104,598,423
(or regulation 33 time-weighted average)
System Fixed assets at year beginning at ODV value (SFAodv0) 98,120,000
System Fixed assets at end of current financial year at ODV value (SFAodv1) 100,701,989
Average value of system fixed assets at ODV value 99,410,995 h add 99,410,995 add 99,410,995 add 99,410,995
(or regulation 33 time-weighted average)
Denominator 100,870,759 80,586,111 100,870,759
ATFEADJ = c - e - f + h Ave TEADJ = k - e - m + v - f + h ATFEADJ = c - e - ½r - f + h
Financial Performance Measure: 5.4% 3.7% 3.5%
ROF = OSBIITADJ/ATFEADJ x 100 ROE = NSATADJ/ATEADJ x 100 ROI = 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
TOP ENERGY LIMITED
Performance Measures and Statistics
For the Year Ended 31 March 2006
Regulations 15 and 16
i. Financial Performance Measures
2006 2005 2004* 2003
a. Return on Funds 5.4% 4.5% 5.9% 8.60%
b. Return on Equity 3.7% 2.3% -2.4% 6.20%
c. Return on Investment 3.5% 2.4% 24.6% 6.00%
* 2004 - includes the effect of (1) revaluations and (2) providing for deferred tax for the first time.
ii. Efficiency Performance Measures 2005 2005 2004 2003
$ $ $ $
a. Direct Line Costs per kilometre 1,478 1,388 1,087 853
b. Indirect Line Costs per Electricity Customer 80 77 68 63
Optimised Deprival Valuation
The Optimised Deprival Valuation as at 31 March 2006 is $102,702,000.
Regulation 21
i. Energy Delivery Efficiency Performance Measures
2005 2005 2004 2003
% % % %
a. Load Factor 67.8 67.5 65.0 63.0
b. Loss Ratio 7.3 7.7 6.8 7.2
c. Capacity Utilisation 28.8 29.7 33.0 32.0
ii. Statistics
See table below for the following statistics:
a. System Length (kms) and breakdown by nominal line voltage.
b. Underground circuit length (kms) and breakdown by nominal line voltage.
c. Overhead circuit length (kms) and breakdown by nominal line voltage.
Kilometres
(c) (b) (a)
Overhead Circuit Underground Circuit Total System
2006 2005 2004 2003 2006 2005 2004 2003 2006 2003 2005 2004 2003
33kV 270 270 270 270 2 2 2 2 272 2003 272 272 272
11kV 2,801 2,717 2,713 2,703 136 133 116 109 2,937 2003 2,850 2,829 2,812
400V 196 307 310 310 582 441 417 400 778 2003 748 727 710
3,267 3,294 3,293 3,283 720 576 535 511 3,987 2003 3,870 3,828 3,794
2006 2005 2004 2003
d. Transformer Capacity (kVA) 205,000 198,815 181,420 187,228
e. Maximum Demand (kW) 59,000 59,000 59,000 59,000
f. Total Electricity supplied by System before losses 350,331,997 348,720,837 336,368,518 326,432,018
g. Total Elec' conveyed by System for other persons after losses 324,685,063 321,750,316 313,545,550 302,869,976
Retailer 1 216,529,181 220,374,975 216,756,107 213,985,548
Retailer 2 63,454,444 65,305,548 56,924,734 55,250,394
Retailer 3 20,600,889 17,479,397 12,872,628 19,619,233
Retailer 4 11,400,375 8,111,455 14,307,470 9,104,627
Retailer 5 9,424,281 8,009,326 6,666,071 2,458,876
Retailer 6 3,273,278 2,852,309 6,018,540 2,451,298
Retailer 7
h. Total Customers (average for year) 28,486 27,656 27,075 27,590
TOP ENERGY LIMITED
Performance Measures and Statistics
For the Year Ended 31 March 2006
Regulation 22
Reliability Performance Measures
i. Total number of interruptions and breakdowns by interruption class
Target Target
Class Type of Interruption 5yr Ave. 2007 2006 2005 2004 2003
No No No No
A Planned - Transpower 1 0 0 0
B Planned - Top Energy 122 130 159 147 169 144
C Unplanned - Top Energy 178 190 368 220 219 249
D Unplanned - Transpower 0 2 1 0
E Unplanned - Embedded Generation 0 0 0 0
F Unplanned - Other Generation 0 0 0 0
G Unplanned - Another Line owner 0 0 0 0
H Planned - Another Line owner 0 0 0 0
I Any other interruption 0 0 0 0
Total - All interruptions 528 369 389 393
Class C Interruptions not restored: % % % %
a Within 3 hours 46% 46% 42% 30%
b Within 24 hours 2% 0% 1% 0%
ii. Number of faults per 100 circuit kms
Line Voltage Total Underground Overhead
2006 2005 2004 2003 2006 2005 2004 2003 2006 2005 2004 2003
100kV
66kV
33kV 3.70 2.22 4.78 7.74 0.00 0.00 0.00 0.00 3.70 2.22 4.81 7.74
11kV 12.90 8.71 7.28 7.21 0.00 0.00 0.00 0.00 13.50 8.71 7.59 7.38
6.6kV
3.3kV
Total 12.10 8.07 7.06 7.25 0.00 0.00 0.00 0.00 12.70 8.07 7.34 7.41
Target Target Target Target Target Target
Target Faults: 5yr Ave. 2007 5yr Ave. 2007 5yr Ave. 2007
33kV 2.0 2.1 0.3 0.0 2.0 2.1
11kV 7.0 7.5 0.0 0.0 7.0 7.5
Total 7.0 7.0 0.0 0.0 7.0 7.0
iii. Breakdown of statistics by interruption class
Class Type of Interruption SAIDI SAIFI CAIDI
(Minutes) (Interruptions) (Minutes)
2006 2005 2004 2003 2006 2005 2004 2003 2006 2005 2004 2003
A Planned - Transpower 34.0 0.0 0.0 0.0 0.1 0.0 0.0 0.0 229.0 0.0 0.0 0.0
B Planned - Top Energy 22.3 39.4 39.5 37.0 0.1 0.3 0.3 0.3 154.0 154.0 113.0 136.0
C Unplanned - Top Energy 499.8 343.1 311.9 382.9 5.4 4.3 4.2 6.1 92.0 80.0 74.0 63.0
D Unplanned - Transpower 0.0 113.7 1.5 0.0 0.0 1.6 0.1 0.0 0.0 71.0 17.0 0.0
E Unplanned - Embedded Generation 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
F Unplanned - Other Generation 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
G Unplanned - Another Line owner 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
H Planned - Another Line owner 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
I Any other interruption 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Total - All interruptions 556.1 496.2 352.9 419.9 5.6 6.2 4.6 6.4 96.0 81.0 77.0 66.0
Target Target Target Target Target Target
Targets: 5yr Ave. 2007 5yr Ave. 2007 5yr Ave. 2007
B Planned - Top Energy 40 40 0.3 0.3 133 133
C Unplanned - Top Energy 260 280 4.9 4.9 53 57

PRICEWATERHOUSE COOPERS
AUDITOR-GENERAL'S OPINION ON THE PERFORMANCE MEASURES OF TOP ENERGY LIMITED - LINES BUSINESS
We have examined the information being -
(a) the derivation table in requirement 15;
(b) the annual ODV reconciliation report in requirement 16;
(c) the financial performance measures in clause 1 of Part 3 of Schedule 1; and
(d) the financial components of the efficiency performance measures in clause 2 of Part 3 of Schedule 1, -
that were prepared by Top Energy Limited and dated 31 October 2006 for the purposes of the Commerce Commission's Electricity Information Disclosure Requirements 2004.
In our opinion, having made all reasonable enquiry, and to the best of our knowledge, that information has been prepared in accordance with the Electricity Information Disclosure Requirements 2004.
Graeme Pinfold
PricewaterhouseCoopers
On behalf of the Auditor-General
Auckland, New Zealand
3 November 2006
PRICEWATERHOUSE COOPERS
REPORT OF THE AUDITOR-GENERAL
TO THE READERS OF THE FINANCIAL STATEMENTS OF TOP ENERGY LIMITED - LINES BUSINESS FOR THE YEAR ENDED 31 MARCH 2006
We have audited the financial statements of Top Energy Limited - Lines Business on pages 2 to 21. The financial statements provide information about the past financial performance of Top Energy Limited - Lines Business and its financial position as at 31 March 2006. This information is stated in accordance with the accounting policies set out on pages 7 to 10.
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 Top Energy Limited - Lines Business as at 31 March 2006, and the results of its operations and cash flows for the year ended on that date.
Auditor's Responsibilities
Section 15 of the Public Audit Act 2001 and Requirement 30 of the Electricity Information Disclosure Requirements 2004 require the Auditor-General to audit the financial statements. It is the responsibility of the Auditor-General to express an independent opinion on the financial statements and report that opinion to you.
The Auditor-General has appointed Graeme Pinfold of PricewaterhouseCoopers to undertake the audit.
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 Top Energy Limited - Lines Business's circumstances, consistently applied and adequately disclosed.
We conducted the audit in accordance with the Auditing Standards published by the Auditor-General, which incorporate the Auditing Standards issued by the Institute of Chartered Accountants of New Zealand. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to obtain 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.
In addition to the audit we have carried out audit related assignments for the Company. This involved issuing audit opinions on the 31 March 2006 statutory financial statements of Top Energy Limited and subsidiaries, the audit of the threshold compliance statement prepared pursuant to the Commerce Act (Electricity Distribution Thresholds) Notice 2004, and other engagements of an assurance nature. Other than these assignments we have no relationship with or interests in the company.
Matters Relating to the Electronic Presentation of the Audited Financial Statements
This audit report relates to the financial statements of Top Energy Limited - Lines Business for the year ended 31 March 2006 included on Top Energy Limited's web-site. The Company's governing body is responsible for the maintenance and integrity of Top Energy Limited's web site. We have not been engaged to report on the integrity of Top Energy Limited's web site.
We accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the web site. The audit report refers only to the financial statements named above. It does not provide an opinion on any other information which may have been hyperlinked to/from these financial statements. If readers of this report are concerned with the inherent risks arising from electronic data communication they should refer to the published hard copy of the 31 March 2006 disclosure accounts for Top Energy Limited - Lines Business to confirm the information included in the audited financial statements presented on this web site.
Legislation in New Zealand governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Unqualified Opinion
We have obtained all the information and explanations we have required.
In our opinion -
- proper accounting records have been maintained by Top Energy Limited - Lines Business as far as appears from our examination of those records; and
- the financial statements of Top Energy Limited - Lines Business on pages 2 to 21:
(a) comply with generally accepted accounting practice in New Zealand; and
(b) give a true and fair view of Top Energy Limited - Lines Business's financial position as at 31 March 2006 and the results of its operations and cash flows for the year ended on that date; and
(c) comply with the Electricity Information Disclosure Requirements 2004.
Our audit was completed on 3 November 2006 and our unqualified opinion is expressed as at that date.
Graeme Pinfold
PricewaterhouseCoopers
On behalf of the Auditor-General
Auckland, New Zealand