INFORMATION FOR DISCLOSURE
PURSUANT TO SECTION 57T OF THE COMMERCE ACT 1986
Orion New Zealand Limited
The following public disclosures are made by Orion New Zealand Limited ("Orion") in accordance with the Electricity Information Disclosure Requirements 2004 (the "Requirements").
The disclosures cover the period from 1 April 2005 to 31 March 2006 and provide comparatives for prior years as required by the Requirements.
Requirement 6 - Financial statement disclosure
Authorised for issue for and on behalf of the directors:
____________________________ ____________________________
Director Director
7 November 2006 7 November 2006
Statement of financial performance
For the year ended 31 March Notes 2006$000's 2005$000's
Operating revenues 2 168,654 154,741
Operating expenses 111,098 109,548
Operating surplus before tax 3 57,556 45,193
Taxation expense 4 23,019 20,695
Net surplus after tax 34,537 24,498
The accompanying notes form part of and are to be read in conjunction with these financial statements
Statement of movements in equity
For the year ended 31 March Notes 2006$000's 2005$000's
Equity at the start of the year 10, 11 609,386 533,108
Net surplus 34,537 24,498
Revaluation of property, plant and equipment - 82,314
Deferred tax liability adjustment - (1,000)
Total recognised revenues and expenses for the period 34,537 105,812
Cash reinvested from/(in) other businesses 1,266 (2,534)
Distributions paid or provided to shareholders during the period - ordinary dividend (27,000) (27,000)
Equity at the end of the year 10, 11 618,189 609,386
The accompanying notes form part of and are to be read in conjunction with these financial statements
Statement of financial position
As at 31 March Notes 2006$000's 2005$000's
Current assets
Bank - -
Short term deposits - -
Accounts receivable 5 9,219 8,401
Inventories 6 563 780
Intercompany balances - -
Total current assets 9,782 9,181
Non-current assets
Long term investments 840 1,050
Property, plant and equipment 7 729,142 718,380
Other tangible assets - -
729,982 719,430
Total tangible assets 739,764 728,611
Intangible assets
Goodwill - -
Other intangible assets - -
Total intangible assets - -
Total assets 739,764 728,611
Current liabilities
Bank overdraft - -
Short term borrowings - -
Accounts payable and accruals 8 23,895 27,488
Total current liabilities 23,895 27,488
Non-current liabilities
Deferred tax 57,680 51,737
Borrowings 40,000 40,000
9 97,680 91,737
Shareholders' equity 10,11 618,189 609,386
Total liabilities and equity 739,764 728,611
The accompanying notes form part of and are to be read in conjunction with these financial statements
Statement of cash flows
For the year ended 31 March Notes 2006$000's 2005$000's
Cash flows from operating activities
Cash was provided from:
Cash receipts from customers 163,632 152,321
Interest received - -
163,632 152,321
Cash was applied to:
Non-capitalised payments to suppliers and employees 85,717 71,298
Income tax paid (net of refunds) 17,296 17,506
Interest paid 2,931 2,585
105,944 91,389
Net cash inflow from operating activities 13 57,688 60,932
Cash flows from investing activities
Cash was provided from:
Sale of fixed assets 365 857
Cash was applied to:
Purchase of property, plant and equipment 32,319 32,255
Long term prepayment - -
32,319 32,255
Net cash outflow from investing activities (31,954) (31,398)
The accompanying notes form part of and are to be read in conjunction with these financial statements
Statement of cash flows continued…
For the year ended 31 March Notes 2006$000's 2005$000's
Cash flows from financing activities
Cash was provided from:
Proceeds of debt - -
Cash was applied to:
Dividends paid 27,000 27,000
27,000 27,000
Net cash outflow from financing activities (27,000) (27,000)
Cash flow summary and reconciliation
Opening bank and short term investments - -
Inflow from operating activities 57,688 60,932
Outflow from investing activities (31,954) (31,398)
Outflow from financing activities (27,000) (27,000)
Cash reinvested in other businesses 1,266 (2,534)
Closing bank and short term investments - -
Represented by:
Cash at bank and short term investments - -
Bank overdraft - -
- -
The accompanying notes form part of and are to be read in conjunction with these financial statements
Notes to the financial statements
1. Statement of accounting policies
Reporting entity
Orion New Zealand Limited ("the company") is a company registered under the Companies Act 1993. The company is a reporting entity for the purposes of the Financial Reporting Act 1993.
Special purpose financial statements
These financial statements have been prepared for the purpose of complying with the requirements of the Electricity Information Disclosure Requirements 2004 ("the Requirements"), and should be read in conjunction with the audited financial statements for the year ended 31 March 2006.
Allocations of the costs, revenues, assets and liabilities of the company have been made in accordance with the mandatory avoidable cost allocation methodology as required by the Requirements.
This approach defines the line business as the company's core business, and makes an assessment of the costs, revenues, assets and liabilities that would be avoided by the line business if all non-core businesses were to cease operation. The costs, revenues, assets and liabilities that would be avoided are allocated to those non-core businesses. Costs, revenues, assets and liabilities that would not be avoided are allocated to the line business.
Measurement base
The accounting principles recognised as appropriate for the measurement and reporting of financial performance, cash flows and financial position on an historical cost basis are followed by the company, with the exception that certain property, plant and equipment have been revalued.
Specific accounting policies
The following specific accounting policies that materially affect the measurement of financial performance, cash flows and financial position are applied:
(a) Capital contributions
Capital contributions that are refundable to customers are treated as current liabilities until refunded. Non-refundable contributions are credited to income when received.
(b) Distinction between capital and revenue expenditure
Capital expenditure is defined as all expenditure incurred in the creation of a new asset and any expenditure that results in a significant restoration or increased service potential for existing assets. Constructed assets are included in property, plant and equipment as each becomes operational and available for use. Revenue expenditure is defined as expenditure that is incurred in the maintenance and operation of the property, plant and equipment of the company.
(c) Accounts receivable
Accounts receivable are valued at their expected realisable value. All known bad debts are written off during the financial year.
(d) Inventories
Stocks and inventories are valued at the lower of cost (FIFO or weighted average) and net realisable value, with additional allowances for obsolescence where necessary. Chargeable work in progress includes direct materials and labour and an allocation of overheads that directly relate to the contract.
(e) Depreciation
Depreciation is provided on property, plant and equipment using the straight line method at rates which amortise the cost or valuation less estimated residual value over their useful lives.
The main bases are periods not exceeding:
Electricity distribution system 60 years
Building structures 70 years
Building services 30 years
Building fitout 15 years
Cars and vans 5 years
Trucks 7 years
Plant and equipment 10 years
Computer equipment and software 3 years
The depreciation methods and useful lives of property, plant and equipment are reviewed annually to ensure that they remain appropriate.
(f) Property, plant and equipment
The company's property, plant and equipment is revalued on a cyclic basis at least once every three years by independent valuers to fair value. Any subsequent additions are initially recorded at cost until the next revaluation.
(g) Income tax
The income tax expense charged to the statement of financial performance includes both the current year's provision and the income tax effect of timing differences calculated using the liability method.
Tax effect accounting is applied on a comprehensive basis to all timing differences. A debit balance in the deferred tax account, arising from timing differences or income tax benefits from income tax losses, is only recognised if there is virtual certainty of realisation.
(h) Employee entitlements
Provision is made in respect of the company's liability for annual and long service leave. The annual leave liability has been calculated on an actual entitlement basis at current rates of pay. The long service leave liability has been assessed on an actuarial basis.
(i) Derivative financial instruments
The company may enter into swaps, forward rate agreements and options transactions. Such transactions are undertaken within board approved policies and limits for the primary purpose of reducing exposure to fluctuations in interest rates and foreign exchange rates. While these financial instruments are subject to the risk that market rates may change subsequent to the acquisition of the financial instrument, such changes would generally be offset by opposite effects on the items being hedged. For the agreements, the differential to be paid or received is accrued as rates change and is recognised over the life of the agreements.
The company does not engage in speculative transactions or hold derivative financial instruments for trading purposes.
Changes in accounting policies
There have been no changes in accounting policies in the 2006 year. The company's accounting policies have been applied on bases consistent with those used in previous years.
2006$000's 2005$000's
2. Operating revenues
A summary of operating revenue is as follows:
AC rental rebates 7,181 3,189
Bad debts recovered 12 15
Capital contributions 5,079 3,379
Changes in bad debt provisions - 156
Donated/subsidised assets 4,263 2,745
Dividends - -
Interest - -
Line revenue 151,266 144,463
Profit on sale of equipment 161 366
Other 692 428
168,654 154,741
3. Operating surplus before tax
Operating surplus before tax includes the following
operating expenditure:
Payment for transmission charges (prior to loss rental rebates) 40,218 39,397
AC loss-rental rebates (distribution to retailers) expense 7,181 3,189
Transfer payments to the "other" business for:
- asset maintenance 6,818 6,642 6,642
- consumer disconnection/reconnection services - -
- meter data - - -
- consumer-based load control services - -
- royalty and patent expenses - - -
- avoided transmission charges on account of own generation - -
- other goods and services not listed - - -
Total 6,818 6,642 6,642
2006$000's 2005$000's
Expense to entities that are not related parties for:
- asset maintenance 6,566 4,779
- consumer disconnection/reconnection services - -
- meter data 3 18
- consumer-based load control services - -
- royalty and patent expenses - -
Total 6,569 4,797
Employee salaries, wages and redundancies 9,639 9,106
Consumer billing and information system expense 453 756
Depreciation on:
- buildings 158 154
- distribution system 22,926 22,371
- other 1,329 1,236
Total 24,413 23,761
Amortisation of:
- goodwill - -
- other intangibles - -
Total - -
Corporate and administration 1,318 1,455
Human resource expenses 841 908
Leasing and rental 64 70
Loss on disposal of equipment 5 165
Asset write-offs 1,198 1,983
Marketing/advertising 20 20
Merger and acquisition expenses - -
Takeover defence expenses - -
Research and development expenses - -
Consultancy and legal expenses 1,222 1,237
Donations 51 43
Directors fees 250 250
Auditors fees:
- audit fees paid to principal auditors 129 62
- audit fees paid to to other auditors - - -
- fees paid for other services provided by principal and other auditors 12 12
Total 141 77 74
2006$000's 2005$000's
Cost of offering credit:
- bad debts written off 60 37
- increase in estimated doubtful debts 12 -
Total 72 37
Local authority rates expense 1,653 2,001
Rebates to consumers due to ownership interest - -
Subvention payments 5,213 10,867
Unusual expenses - -
Other expenditure not listed 828 205
Total operating expenditure 108,167 106,963
Operating surplus before interest and income tax 60,487 47,778
Interest expense
- interest expense on borrowings 2,931 2,585
- financing charges related to finance leases - -
- other interest expense - -
Total 2,931 2,585
Operating surplus before income tax 57,556 45,193
4. Taxation expense
The taxation provisions are subject to
Inland Revenue Department assessment.
Surplus before taxation 57,556 45,193
Prima facie taxation at 33% 18,993 14,914
Taxation effect of :
Deferred tax adjustment 54 495
Permanent differences 3,978 4,820
Under/(over) provisions in prior years (6) 466
Taxation as per statement of financial performance 23,019 20,695
2006$000's 2005$000's
Comprising:
Current tax 17,076 15,251
Deferred tax 5,943 5,444
23,019 20,695
Deferred tax liability
Opening balance 51,737 45,293
Current year movement expensed 5,943 5,444
Adjustment of revaluation reserve - 1,000
Closing balance 57,680 51,737
5. Accounts receivable
A summary of accounts receivable is as follows:
Trade receivables 3,506 2,932
Tax receivable 5,022 4,802
Prepayments 816 780
Interest receivable - -
9,344 8,514
Provision for doubtful debts (125) (113)
9,219 8,401
6. Inventories
A summary of inventories is as follows:
Chargeable WIP 103 1
Maintenance items 460 779
563 780
2006$000's 2005$000's
7. Property, plant and equipment
System fixed assets (at valuation) 654,123 655,321
System fixed assets (at cost) 66,345 34,371
Work in progress 9,189 6,309
Accumulated depreciation (45,297) (22,371)
684,360 673,630
Land and buildings (at valuation) 40,326 40,460
Land and buildings (at cost) 1,140 828
Work in progress 3 -
Accumulated depreciation (308) (159)
41,161 41,129
Consumer billing and information systems (at valuation) 358 358
Consumer billing and information systems (at cost) 3,966 3,260
Work in progress - -
Accumulated depreciation (3,058) (2,317)
1,266 1,301
Office equipment (at valuation) 422 477
Office equipment (at cost) 681 553
Accumulated depreciation (702) (650)
401 380
Motor vehicles and plant (at valuation) 214 251
Motor vehicles and plant (at cost) 2,293 2,035
Accumulated depreciation (1,099) (938)
1,408 1,348
Other (at valuation) 289 290
Other (at cost) 826 749
Work in progress - -
Accumulated depreciation (569) (447)
546 592
Total property, plant and equipment 729,142 718,380
2006$000's 2005$000's
Totals for all asset classes
At valuation 695,732 697,157
At cost 75,251 41,796
Work in progress 9,192 6,309
Accumulated depreciation (51,033) (26,882)
Carrying value 729,142 718,380
System fixed assets includes substation buildings of $30,761,000 (2005: $30,677,000). Land and buildings includes network land prior to optimisation of $29,547,000 (2005: $29,275,600).
The value of system fixed assets at book value used in the calculation of Requirement 14 performance measures comprises:
System fixed assets 684,360 673,630
Less capital work in progress (9,189) (6,309)
Plus network land (optimised value) 26,619 26,348
701,790 693,669
Revaluation
The electricity distribution network and substation buildings were revalued on an optimised depreciated replacement cost basis by independent valuers PricewaterhouseCoopers as at
1 April 2004.
All the company's land and other buildings were revalued to fair value at 1 April 2004 by independent valuers Ernst & Young Corporate Finance Limited.
An impairment review of all other plant and equipment was undertaken as at 31 March 2003 by independent valuers Ernst & Young Corporate Finance Limited, who determined that as no significant impairment existed, these assets could be carried at their existing carrying values. Assets in this category were last revalued at 31 March 2000.
Depreciation has been applied to the assets for the year ended 31 March 2006 in accordance with the company's accounting policies.
8. Accounts payable and accruals
A summary of accounts payable and accruals is as follows:
Intercompany subvention payment 5,213 10,867
Trade creditors 8,494 8,319
Accruals 8,238 6,699
Employee entitlements 1,805 1,471
Dividends payable - -
Income tax payable - -
Provisions 145 132
23,895 27,488
2006$000's 2005$000's
Details of the provision follows:
Long service leave
Opening balance 132 186
Additional provision made 53 13
Amount utilised (40) (67)
Closing balance 145 132
The provision for long service leave relates to an actuarial assessment of entitlements that may become due to employees in the future. The provision is affected by a number of estimates, including the expected length of service of employees and the timing of benefits being taken. Most of the liability is expected to be discharged over the next 5 years.
9. Non-current liabilities
Non-current liabilities are as follows:
Payables and accruals - -
Borrowings 40,000 40,000
Deferred tax (see Note 4) 57,680 51,737
Other - -
97,680 91,737
Borrowings
A summary of interest bearing debt is as follows:
Current (NZD) - -
> 2 years (NZD) 40,000 40,000
40,000 40,000
All borrowings are unsecured against the company, however a deed of negative pledge and guarantee requires the company to comply with certain covenants.
Interest rates for the borrowings are floating based on bank bill rates plus a margin. At
31 March 2006 this rate was 7.47% (2005 7.07%). The company has entered into derivative contracts to hedge its exposure to interest rate fluctuations (refer Note 12).
2006$000's 2005$000's
10. Equity
Equity comprises:
Share capital 120,000 120,000
Retained earnings 67,165 57,554
Reserves 431,024 431,832
Total shareholders' equity 618,189 609,386
Minority interests - -
Total equity 618,189 609,386
Capital notes - -
Total capital funds 618,189 609,386
The 80 million ($1.50) ordinary shares were issued in April 1993 pursuant to the approved establishment plan and sale and purchase agreement. The shares are fully paid up.
11. Revaluation reserve
Opening balance 431,832 350,017
Revaluation of electricity distribution network, land & buildings - 82,314
Disposal of revalued assets (808) 501
Deferred tax liability adjustment - (1,000)
431,024 431,832
The revaluation reserve is comprised as follows:
Land and buildings 44,837 44,925
Distribution system 386,187 386,907
431,024 431,832
12. Financial instruments
The estimated fair values of the company's financial instruments are as follows:
Carryingamount2006$000's Fairvalue2006$000's Carryingamount2005$000's Fairvalue2005$000's
Cash and short term investments - - - -
Borrowings 40,000 40,000 40,000 40,000
Interest rate swap asset - 124 - 474
The company anticipates that long term borrowings will be held to maturity.
The following methods and assumptions are used to estimate the fair value of each class of financial instrument:
The carrying amounts of cash, short term investments, bank overdraft and short term debt are equivalent to their fair value.
The fair value of long term borrowings is estimated based on current market interest rates available to the company for debt of similar maturities.
The fair value of interest rate swaps is estimated based on quoted market prices of those instruments.
Off-balance sheet risk
2006$000's 2005$000's
Interest rate swaps (NZD) 55,000 35,000
Interest rate risk
Interest rate risk is the risk that the value of the company's assets and liabilities will fluctuate due to changes in market interest rates.
The company has interest bearing debt which is subject to interest rate variations in the market.
Interest rate swaps are employed to manage interest rate exposure on long term borrowings.
Contracts have been entered into with various counterparties having such credit ratings and in accordance with such dollar limits as set by the board of directors. The company does not require collateral or other security to support financial instruments with credit risk. While the company may be subject to credit losses up to the notional principal or contract amounts in the event of non performance by its counterparties, it does not expect such losses to occur.
For interest rate swaps the cash requirements are limited to interest payable or receivable which is a net receivable amount of $32,699 as at 31 March 2006 ($22,158 receivable in 2005)

2006$000's 2005$000's
13. Reconciliation of net surplus after taxation with
net cash flow from operating activities
Net surplus after tax 34,537 24,498
Non cash items:
Depreciation 24,413 23,761
Deferred tax 5,943 5,444
Asset write offs 1,198 1,983
Subsidised assets (4,263) (2,745)
Other 210 210
Movements in other working capital items:
(Increase)/decrease in debtors (598) 691
(Increase)/decrease in interest receivable - -
(Increase)/decrease in stocks 217 (779)
Increase/(decrease) in creditors (3,593) 10,325
Increase/(decrease) in interest payable - -
(Increase)/decrease in tax asset (220) (2,255)
Items classified as an investing activity:
Net profit on sale of property, plant and equipment (156) (201)
Net cash inflow from operating activities 57,688 60,932
14. Contingent assets and liabilities
There were no material contingent assets or contingent liabilities as at 31 March 2006 or as at 31 March 2005.
15. Commitments
At balance date, capital commitments were as follows:
Distribution system 6,343 3,745
Other - -
6,343 3,745
At balance date, lease commitments were as follows:
2007 52 58
2008 52 58
2009 52 58
2010 52 58
2011 and beyond 520 581
Capital commitments of $1.8m are uncertain as to timing (2005 $2.3m). Other capital commitments are expected to be met in the next financial year.
Lease commitments that extend beyond 2011 have been assessed for a maximum period of 10 years.
16. Related parties
Transactions with owners and directors
The company has been 100% owned by Orion Group Limited (the Holding Company) since
23 October 1998.
Christchurch City Holdings Limited (CCHL) is an 89.275% shareholder in the holding company. CCHL is 100% owned by the Christchurch City Council (CCC). In February 2006 the Banks Peninsula District Council (originally a 1.65% shareholder) was amalgamated with the Christchurch City Council.
Selwyn Investment Holdings Limited (SIHL) is a 10.725% shareholder in the holding company. SIHL is 100% owned by the Selwyn District Council (SDC).
The company undertakes many transactions with the shareholders and their related parties, all of which are carried out on a commercial and arms length basis.
During the year no material transactions, other than the payment of dividends, were entered into with such parties.
During the year no material transactions were entered into with any of the directors.
2006$000's 2005$000's
A summary of the related party transactions with the CCC, SDC
and BPDC is as follows:
Transactions with owners during the year
Purchases from CCC, SDC and their subsidiaries 1,974 2,142
Revenues from CCC, SDC and their subsidiaries 2,426 2,398
Dividend payments to CCHL 24,104 23,659
Dividend payments to SIHL 2,896 2,896
Dividend payments to BPDC - 445
Accounts payable to CCC, SDS and their subsidiaries as at 31 March 51 15
Accounts receivable from CCC, SDC and their subsidiaries as at 31 March 192 1,583
Transactions with "other" businesses
For the purposes of Requirement 8, transactions taking place between the line business and "other" businesses must be identified.
The company had considerable numbers of transactions with its wholly-owned contracting subsidiary, Connetics Limited, during the years ended 31 March 2006 and 2005.
A description of the intercompany transactions, revenue amounts and balances at 31 March 2006 and 2005 follows. Note that estimated data has had to be used in the determination and apportionment of costs for Connetics into the required categories.
Connetics has provided construction and maintenance services to the line business for the period 1 April 2005 to 31 March 2006, and for a number of prior years.
These services follow the awarding of a contract based on a contested lowest-price conforming tender. In virtually every case multiple parties were invited to tender for such work. In the case of emergency maintenance, a contract comprising a negotiated schedule of rates has been agreed. A contract has also been negotiated for the management of system spares.
Contract variations and adjustments have been negotiated between the parties. No debts have been written off or forgiven during the year. Amounts are due the 20th of the month following date of invoice.
2006$000's 2005$000's
Services provided by Connetics:
Asset maintenance - asset storage - emergency work - other asset maintenance 221 2,465 4,132 215 2,043 4,384
6,818 6,642
Asset construction - subtransmission assets 833 809
- zone substations 54 3,575
- distribution lines and cables 2,886 4,126
- medium voltage switchgear 2,255 752
- distribution transformers 75 -
- distribution substations 54 323
- low voltage lines and cables 4,831 3,410
- other system fixed assets 493 174
11,481 13,169
Other services provided to line business
- meter data - -
- consumer-based load control - -
- disconnection/reconnection services - -
- avoided transmission charges - -
- other goods and services - -
18,299 19,811
Balance outstanding at 31 March 2,846 3,095
The company has provided directors and some specialised administrative support to Connetics. These have been charged on a commercial arms-length basis.
No debts have been written off or forgiven during the year. Amounts were due the 20th of the month following date of invoice.
2006$000's 2005$000's
Payments received from Connetics for services 103 158
Balance outstanding at 31 March 16 10
The company has also made subvention payments to 100%-owned
subsidiaries in order to utilise the tax losses of the following companies:
Transflux Limited - 98
Orion New Zealand Ventures Limited 337 8
Orion (Whisper Tech) Limited 4,876 10,761
5,213 10,867
These amounts were paid by the company to those subsidiaries by 31 March each year.
17. Significant events after balance date
There were no significant events between the preparation and authorisation of these
accounts on 7 November 2006.
Requirement 14
Disclosure of financial and efficiency performance measures
Performance measures as defined by the Electricity Information Disclosure Requirements 2004
Financial performance measures
2006% 2005% 2004% 2003%
(a) Return on funds 11.60 10.48 11.60 14.49
(b) Return on equity 8.13 6.89 7.98 9.63
(c) Return on investment (ROI) 7.25 6.20 34.08 8.84
Refer to Orion's Requirement 15 Disclosure for the
derivation of these measures.
The 2004 ROI includes the impact of a revaluation in accordance with the ODV Handbook as at
31 March 2004. Excluding the impact of revaluations, ROIs were as follows:
7.25 6.20 7.99 8.84
Efficiency performance measures
$ $ $ $
(a) Direct line costs per kilometre: 1,317 1,184 1,198 1,153
(b) Indirect line costs per electricity customer: 66 68 62 59
Requirement 15
Derivation of financial performance measures from financial statements
Derivation Table Input and Calculations ROF ROE ROI
Operating surplus before interest and income tax from financial statements 60,487
Operating surplus before interest and income tax adjusted pursuant to req 18 (OSBIIT) 60,487
Interest on cash, bank balances, and short-term investments (ISTI) 0
OSBIIT minus ISTI 60,487 a 60,487 60,487
Net surplus after tax from financial statements 34,537
Net surplus after tax adjusted pursuant to req 18 (NSAT) 34,537 n 34,537
Amortisation of goodwill and other intangibles 0 g add 0 add 0 add 0
Subvention payment 5,213 s add 5,213 add 5,213 add 5,213
Depreciation of SFA at BV (x) 22,926
Depreciation of SFA at ODV (y) 20,112
ODV depreciation adjustment 2,814 d add 2,814 add 2,814 add 2,814
Subvention payment tax adjustment 1,720 s*t deduct 1,720 deduct 1,720
Interest tax shield 967 q deduct 967
Revaluations 0 r add 0
Income tax 23,019 p deduct 23,019
Numerator 68,514 40,844 42,808
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 PFY (FA0) 718,380
Fixed assets at end of CFY (FA1) 729,142
Adjusted net working capital at end of PFY (ANWC0) -18,288
Adjusted net working capital at end of CFY (ANWC1) -14,044
Average total funds employed (ATFE)* 707,595 c 707,595 707,595
Total equity at end of PFY (TE0) 609,386
Total equity at end of CFY (TE1) 618,189
Average total equity* 613,788 k 613,788
WUC at end of PFY (WUC0) 6,309
WUC at end of CFY (WUC1) 9,189
Average total works under construction* 7,749 e deduct 7,749 deduct 7,749 deduct 7,749
Revaluations 0 r
Half of revaluations 0 r/2 deduct 0
Intangible assets at end of PFY (IA0) 0
Intangible assets at end of CFY (IA1) 0
Average total intangible assets* 0 m deduct 0
Subvention payment at end of PFY (S0) 10,867
Subvention payment at end of CFY (S1) 5,213
Subvention payment tax adjustment at end of PFY 3,586
Subvention payment tax adjustment at end of CFY 1,720
Average subvention payment & related tax adjustment 5,387 v add 5,387
SFA at end of PFY at bv (SFAbv0) - incl land 693,669
SFA at end of CFY at bv (SFAbv1) - incl land 701,790
Average value of SFA at book value* 697,730 f deduct 697,730 deduct 697,730 deduct 697,730
SFA at year beginning at ODV (SFAodv0) - incl land 585,429
SFA at end of CFY at ODV (SFAodv1) - incl land 591,415
Average value of SFA at ODV* 588,422 h add 588,422 add 588,422 add 588,422
Denominator 590,539 502,118 590,539
ATFEADJ = c - e - f + h Ave TEADJ = k - e - m + v - f + h ATFEADJ = c - e - ½r - f + h
Financial Performance Measure: 11.602 8.134 7.249
ROF = OSBIITADJ /ATFEADJ x 100 ROE = NSATADJ /ATEADJ x 100 ROI = OSBIITADJ /ATFEADJ x 100
t = 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 * = or requirement 32 time-weighted average
ROI = return on investment PFY = previous financial year CFY = current financial year SFA = system fixed assetsRequirement 16
ODV Reconciliation Report
Year ending 2006$000's 2005$000's 2004$000's 2003$000's
System fixed assets at ODV - end of previous year 585,429 580,224 453,382 442,840
Add system fixed assets acquired during the year at ODV 27,205 27,659 26,292 27,687
Less system fixed assets disposed of during the year at ODV (1,107) (2,885) (750) (594)
Less depreciation on system fixed assets at ODV (20,112) (19,569) (19,195) (16,551)
Add revaluations of system fixed assets - - 120,495 -
Equals system fixed assets at ODV - end of the financial year 591,415 585,429 580,224 453,382
Requirement 20
Disclosure of energy delivery efficiency performance measures and statistics
2006% 2005% 2004% 2003%
1 (a) Load factor 62.5 63.2 62.4 58.0
(b) Loss ratio 4.9 4.9 4.9 4.9
(c) Capacity utilisation 36.8 36.3 36.1 39.5
2 (a) Sum of overhead and underground line
circuit lengths:
2006km 2005km 2004km 2003km
66kV 183 170 160 157
33kV 344 343 343 340
11kV 5,295 5,260 5,172 5,128
230/400V 4,174 3,856 3,733 2,902
230V outside lighting 2,701 2,632 2,589 2,527
Communications 1,051 1,043 1,031 1,029
13,748 13,304 13,028 12,083
(b) Overhead line circuit lengths:
66kV 120 107 97 95
33kV 319 318 322 318
11kV 3,230 3,251 3,206 3,208
230/400V 1,840 1,747 1,697 1,082
230V outside lighting 974 982 990 1,000
6,483 6,405 6,312 5,703
(c) Underground line (cable) circuit lengths:
66kV 63 63 63 63
33kV 25 25 22 22
11kV 2,065 2,009 1,965 1,920
230/400V 2,334 2,109 2,035 1,819
230V outside lighting 1,727 1,650 1,599 1,527
Communications 1,051 1,043 1,031 1,029
7,265 6,899 6,715 6,380
2006 2005 2004 2003
(d) Transformer capacity at year end (kVA): 1,615,178 1,588,904 1,559,062 1,525,800
(e) Maximum demand (kW): 594,710 577,366 563,124 603,396
(f) Total electricity entering the system (before losses) in kWh: 3,258,046,996 3,193,972,436 3,080,304,668 3,064,396,511
(g) Electricity conveyed on behalf of retailers/generators (kWh): Retailer A Retailer B Retailer C Retailer D Retailer E Retailer F Retailer G Retailer H Retailer I 1,944,307,455 814,895,651 206,362,467 73,358,978 58,989,435 1,933,925,621 778,615,188 189,333,405 70,956,925 64,157,551 1,933,013,267 723,972,083 184,783,647 57,443,370 29,695,326 2,049,973,994 383,277,084 363,510,762 93,192,486 23,827,095
Note that retailer ID's are not
necessarily the same in each year.
(h) Total number of consumers 180,541 177,718 174,450 171,608
Note: 1. No adjustment has been able to be made for the impact of changes in the level of unbilled units. This may affect disclosures 1(b) and 2(g) above.
Requirement 21
Disclosure of reliability performance measures
1 Total number of interruptions:
Network or generation owner Interruption class Classification of interruptions 2006 2005 2004 2003
Orion B Planned shutdowns 288 316 241 356
C Unplanned cuts 499 462 403 611
Transpower A Planned shutdowns - 2 4 0
D Unplanned cuts 5 5 8 4
792 785 656 971
Interruption classes E, F and G do not apply to the company and consequently results are all zero.
2 &
3 Interruption targets:
Network or generation owner Interruption class Classification ofinterruptions 2007 Average2007 - 2011
Orion B Planned shutdowns 385 385
C Unplanned cuts 555 555
4 Proportion of 2006's Class C interruptions not restored within:
(a) 3 hours(b) 24 hours 36.0%1.2%
5(a) Faults per 100 circuit-km of electric line:
2006 2005 2004 2003
66kV33kV11kV 2.2 2.9 9.2 1.2 3.8 8.5 0.0 2.0 7.7 4.4 3.9 11.6
All 8.6 8.0 7.1 10.9
(b) &
(c) Target number of faults per 100 circuit-km of electric line:
2007 Average2007 - 2011
66kV 2.0 2.0
33kV 4.0 4.0
11kV 12.0 12.0
All 11.2 11.2
6 Faults per 100 circuit-km of underground electric line:
2006 2005 2004 2003
66kV 1.6 1.6 0.0 3.2
33kV 4.0 4.0 4.5 0.0
11kV 2.8 3.1 3.3 2.6
All 2.7 3.1 3.2 2.6
7 Faults per 100 circuit-km of overhead electric line:
66kV 2.5 1.0 0 5.3
33kV 2.8 3.8 1.9 4.2
11kV 13.3 11.8 10.3 16.9
All 12.0 10.8 9.3 15.5
8, 11,
12, 15,
16, 19 SAIDI, SAIFI and CAIDI by interruption class and in total for 2006:
SAIDI SAIFI CAIDI
Network or generation owner Interruption class Classification of interruptions (minutes per connected consumer) (interruptions per connected consumer) (minutes per consumer interrupted)
Orion B Planned shutdowns 6.0 0.02 238
C Unplanned cuts 53.3 0.72 75
59.3 0.74 80
Transpower A Planned shutdowns 0.0 0.00 0
D Unplanned cuts 4.7 0.22 21
4.7 0.22 21
64.0 0.96 67
8, 11,
12, 15,
16, 19 SAIDI, SAIFI and CAIDI by interruption class and in total for 2005:
SAIDI SAIFI CAIDI
Network or generation owner Interruption class Classification of interruptions (minutes per connected consumer) (interruptions per connected consumer) (minutes per consumer interrupted)
Orion B Planned shutdowns 7.7 0.03 286
C Unplanned cuts 44.0 0.71 62
51.7 0.74 70
Transpower A Planned shutdowns 0.2 0.00 195
D Unplanned cuts 1.0 0.02 46
1.2 0.02 55
52.9 0.76 70
8, 11,
12, 15,
16, 19 SAIDI, SAIFI and CAIDI by interruption class and in total for 2004:
SAIDI SAIFI CAIDI
Network or generation owner Interruption class Classification of interruptions (minutes per connected consumer) (interruptions per connected consumer) (minutes per consumer interrupted)
Orion B Planned shutdowns 6.5 0.02 274
C Unplanned cuts 35.9 0.59 60
42.4 0.62 68
Transpower A Planned shutdowns 0.9 0.00 314
D Unplanned cuts 0.1 0.01 15
1.0 0.01 96
43.4 0.63 69
8, 11,
12, 15,
16, 19 SAIDI, SAIFI and CAIDI by interruption class and in total for 2003:
SAIDI SAIFI CAIDI
Network or generation owner Interruption class Classification of interruptions (minutes per connected consumer) (interruptions per connected consumer) (minutes per consumer interrupted)
Orion B Planned shutdowns 10 0.03 276
C Unplanned cuts 86 0.89 97
96 0.92 103
Transpower A Planned shutdowns 0 0.00 0
D Unplanned cuts 6 0.30 20
6 0.30 20
102 1.22 83
9, 13
& 17 SAIDI, SAIFI and CAIDI targets for the next financial year:
SAIDI SAIFI CAIDI
Network owner Interruption class Classification of interruptions Target2007 Target2007 Target2007
Orion B Planned shutdowns 8.0 0.08 105
C Unplanned cuts 55.0 0.67 82
10, 14
& 18 SAIDI, SAIFI and CAIDI targets for the next five financial years:
SAIDI SAIFI CAIDI
Network or generation owner Interruption class Classification of interruptions Averagetarget2007 - 2011 Averagetarget2007 - 2011 Averagetarget2007 - 2011
Orion B Planned shutdowns 8.0 0.08 105
C Unplanned cuts 55.0 0.67 82
Certification of financial statements, performance measures and statistics disclosed
We, Craig David Boyce and Peter Rae, directors of Orion New Zealand Limited certify that, having made all reasonable enquiry, to the best of our knowledge:
(a) The attached audited financial statements of Orion New Zealand Limited prepared for the purposes of Requirement 6 of the 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 Orion New Zealand 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.
Director Director
7 November 2006
AUDIT NEW ZEALAND
AUDIT REPORT
TO THE READERS OF THE FINANCIAL STATEMENTS OF
ORION NEW ZEALAND LIMITED
FOR THE YEAR ENDED 31 MARCH 2006
We have audited the financial statements of Orion New Zealand Limited (the company) on pages 2 to 21. The financial statements provide information about the past financial performance of the company and its financial position as at 31 March 2006. This information is stated in accordance with the accounting policies set out on pages 7 and 8.
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 the company 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 me, Julian Tan, using the staff and resources of Audit New Zealand 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:
n the significant estimates and judgements made by the Directors in the preparation of the financial statements; and
n whether the accounting policies are appropriate to the company'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. These involved issuing an audit opinion on the annual financial statements for the year ended 31 March 2006, an audit opinion pursuant to the Commerce Act (Electricity Thresholds) Notice 2004 and a payroll review report. Other than these assignments we have no relation with or interest in the company.
Unqualified opinion
We have obtained all the information and explanations we have required.
In our opinion:
n proper accounting records have been maintained by the company as far as appears from our examination of those records; and
n the financial statements of the company on pages 2 to 21:
(a) comply with generally accepted accounting practice in New Zealand; and
(b) give a true and fair view of the company'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 7 November 2006 and our unqualified opinion is expressed as at that date.
Julian Tan
Audit New Zealand
On behalf of the Auditor-General
Christchurch, New Zealand
AUDIT NEW ZEALAND
AUDIT REPORT ON THE PERFORMANCE MEASURES OF ORION NEW ZEALAND LIMITED
We have examined the information on pages 22 to 24, 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 Orion New Zealand Limited and dated 7 November 2006 for the purposes of the Commerce Commission's Electricity Information Disclosure Requirements 2004 (the Requirements).
In our opinion, having made all reasonable enquiry, and to the best of our knowledge, that information has been prepared in accordance with the Requirements.
Julian Tan
Audit New Zealand
On behalf of the Auditor-General
Christchurch, New Zealand
7 November 2006