INFORMATION FOR DISCLOSURE
PURSUANT TO SECTION 57T OF THE COMMERCE ACT 1986
ELECTRICITY INVERCARGILL LIMITED LINE BUSINESS
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2006
Prepared for the Purposes of the Electricity Information Disclosure Requirements 2004.
INFORMATION DISCLOSURE DISCLAIMER
The information disclosed in this 2006 Information Disclosure package issued by Electricity Invercargill Limited has been prepared solely for the purposes of the Electricity Information Disclosure Requirements 2004.
The Requirements require the information to be disclosed in the manner it is presented.
The information should not be used for any other purposes than that intended under the Requirements.
The financial information presented is for the line business as described within the Electricity Information Disclosure Requirements 2004. There are also additional activities of the Company that are not required to be reported under the Requirements.
APPROVAL BY DIRECTORS
The Directors have approved for issue the Financial Statements of Electricity Invercargill Limited Line Business for the period ended 31 March 2006 on pages 2 to 21.
______________________________ _____________________________
Neil Boniface Philip Mulvey
Chairman Director
For and on behalf of the
Board of Directors
20 November 2006
ELECTRICITY INVERCARGILL LIMITED LINE BUSINESS
STATEMENT OF FINANCIAL PERFORMANCE
FOR THE YEAR ENDED 31 MARCH 2006
Group Parent
Note 2006$000 2005$000 2006$000 2005$000
Operating Revenue (2) 13,857 13,298 7,997 8,000
Operating Expenses (3) (8,076) (7,374) (2,411) (2,176)
Net Surplus Before Taxation 5,781 5,924 5,586 5,824
Taxation Expense (1,940) (1,874) (1,889) (1,855)
Net Surplus After Taxation 3,841 4,050 3,697 3,969
The accompanying notes on pages 6 to 13 form part of and should be read in conjunction with these financial statements.
ELECTRICITY INVERCARGILL LIMITED LINE BUSINESS
STATEMENT OF MOVEMENTS IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2006
Group Parent
Note 2006$000 2005$000 2006$000 2005$000
Total Recognised Revenues and Expenses
Net Surplus for the Year 3,841 4,050 3,697 3,969
Revaluation of Assets - 111 - 111
3,841 4,161 3,697 4,080
Contributions from Shareholders
- Capital Introduced - - - -
- - - -
Distributions to Shareholders
- Dividend Declared and Paid (3,300) (3,100) (3,300) (3,100)
(3,300) (3,100) (3,300) (3,100)
Movements in Equity for the Year 541 1,061 397 980
Equity at Beginning of Year 46,313 45,252 45,666 44,686
Equity at End of Year (4) 46,854 46,313 46,063 45,666
The accompanying notes on pages 6 to 13 form part of and should be read in conjunction with these financial statements.
ELECTRICITY INVERCARGILL LIMITED LINE BUSINESS
STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2006
Group Parent
Note 2006$000 2005$000 2006$000 2005$000
Equity (4) 46,854 46,313 46,063 45,666
Represented By:
Current Assets
Cash and Short Term Deposits (5) 2,378 3,235 410 998
Receivables and Prepayments (6) 1,321 1,129 774 1,169
Inventories 25 24 - -
Total Current Assets 3,724 4,388 1,184 2,167
Non-Current Assets
Intercompany Advance - - 1,162 946
Property, Plant and Equipment (7) 46,134 45,793 45,632 45,274
Capital Work in Progress 892 727 878 721
Total Non-Current Assets 47,026 46,520 47,672 46,941
Total Assets 50,750 50,908 48,856 49,108
Current Liabilities
Bank Overdraft - - 104 -
Accounts Payable and Provisions (8) 1,596 1,495 389 342
Provision for Dividend 2,300 3,100 2,300 3,100
Total Current Liabilities 3,896 4,595 2,793 3,442
Total Liabilities 3,896 4,595 2,793 3,442
Net Assets 46,854 46,313 46,063 45,666
The accompanying notes on pages 6 to 13 form part of and should be read in conjunction with these financial statements.
ELECTRICITY INVERCARGILL LIMITED LINE BUSINESS
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 MARCH 2006
Group Parent
Note 2006$000 2005$000 2006$000 2005$000
CASH FLOWS FROM OPERATING ACTIVITIES
Cash Was Provided From:
Receipts from Customers 13,356 13,038 8,091 7,136
Interest Received 262 140 227 146
Sundry Income 59 120 30 79
13,677 13,298 8,348 7,361
Cash Was Applied To:
Payments to Suppliers 5,860 5,076 591 650
Payments to Employees 407 420 - -
Income Tax Paid 1,861 1,887 1,888 1,854
8,128 7,383 2,479 2,504
Net Cash Flows From Operating Activities (10) 5,549 5,915 5,869 4,857
CASH FLOWS FROM INVESTING ACTIVITIES
Cash Was Provided From:
Sale of Property, Plant and Equipment 17 18 16 17
17 18 16 17
Cash Was Applied To:
Purchase of Property, Plant and Equipment 2,323 1,914 2,260 1,830
Intercompany Advance - - 217 7
2,323 1,914 2,477 1,837
Net Cash Flows Used in Investing Activities (2,306) (1,896) (2,461) (1,820)
CASH FLOWS FROM FINANCING ACTIVITIES
Cash Was Applied To:
Dividend 4,100 2,600 4,100 2,600
4,100 2,600 4,100 2,600
Net Cash Flows Used in Financing Activities (4,100) (2,600) (4,100) (2,600)
Net Increase/(Decrease) in Cash Held (857) 1,419 (692) 437
Add Opening Cash Brought Forward 3,235 1,816 998 561
Closing Cash Carried Forward 2,378 3,235 306 998
The accompanying notes on pages 6 to 13 form part of and should be read in conjunction with these financial statements.
ELECTRICITY INVERCARGILL LIMITED LINE BUSINESS
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2006
1. STATEMENT OF ACCOUNTING POLICIES
Reporting Entity
Electricity Invercargill Limited is a company registered under the Companies Act 1993. The Company is a wholly-owned subsidiary of Invercargill City Holdings Limited.
The Parent Entity consists of the network assets of Electricity Invercargill Limited.
The Group consists of the Lines Business network assets of Electricity Invercargill Limited, along with the joint venture interests in PowerNet Limited, held by Electricity Invercargill Limited's wholly owned subsidiary Pylon Limited.
Purpose of the Financial Statements
These financial statements have been prepared for the purpose of complying with the Electricity Information Disclosure Requirements 2004 and relate to the Group's Line Business incorporating the conveyance of electricity, ownership of works for conveyance of electricity and provision of line function services in accordance with Requirement 6 of the Requirements.
The activities of the Parent have been separately disclosed in these Financial Statements as that is a requirement of generally accepted accounting practice. The Parent activities are not required under the Electricity Information Disclosure Requirements 2004.
Measurement Base
The measurement base adopted is that of historical cost except for the revaluation of certain items of property, plant and equipment as stated. Reliance is placed on the fact that Electricity Invercargill Limited is a going concern.
Specific Accounting Policies
a) Principles of Consolidation
The Group interest in PowerNet Limited has been accounted for on a line by line consolidation of revenue and expenses after the elimination of all significant inter-company transactions.
b) Revenue
Network Charges
Revenue comprises the amounts received and receivable for goods and services supplied to customers in the ordinary course of business.
Investment Income
Interest and dividend income are accounted for as earned.
Customer Contributions
Contributions from customers in relation to the construction of new lines for the network are accounted for as income in the year in which they are received.
c) Avoidable Cost Allocation Methodology
The Avoidable Cost Allocation Methodology as described in the Electricity Information Disclosure Handbook has been used to separate "Other" activities from Electricity Invercargill Limited and PowerNet Limited. Other activities or non Line Business activity has been excluded from these accounts.
d) Receivables
Receivables are stated at their estimated realisable value. All known losses are written off in the period in which it becomes apparent the debts are not collectable.
e) Inventories
Inventories are stated at the lower of cost at weighted average cost price and net realisable value.
f) Property, Plant and Equipment
All property, plant and equipment is initially recorded at cost less accumulated depreciation. The cost of purchased property, plant and equipment is the fair value of the consideration given to acquire the assets and the value of other directly attributable costs which have been incurred in bringing the assets to the location and condition necessary for their intended service.
Revaluation
The Electricity Invercargill Limited network assets were revalued as at 31 March 2004 to Depreciated Replacement Cost (DRC) as assessed by independent valuers PricewaterhouseCoopers. Previously these assets were recorded at cost less accumulated depreciation
Network assets are revalued on a cyclical basis with no asset being recognised at a valuation undertaken more than five years previously.
Revaluation increments are transferred to the Asset Revaluation Reserve.
g) Depreciation
Property, plant and equipment is depreciated on the basis of valuation cost price less estimated residual value over the period of their estimated useful life.
The depreciation rates that reflect the economic life of the various classes of assets are:
Buildings 1.0%-10.0% Straight line/diminishing value
Plant and Equipment 5.0%-48% Straight line/diminishing value
Motor Vehicles 18.0%-31.2% Diminishing value
Office Furniture and EDP Equipment 5.0%-60.0% Straight line/diminishing value
Network Assets 1.4%-15.0% Straight line
h) Impairment
If the estimated recoverable amount of an asset is less than its carrying amount, the asset is written down to its estimated recoverable amount and an impairment loss is recognised in the Statement of Financial Performance.
i) Income Tax
The income tax expense charged against the profit for the year is the estimated liability calculated at 33 cents in the dollar in respect of that profit.
j) Goods and Services Tax
All amounts in the financial statements have been shown exclusive of goods and services tax, with the exception of accounts receivable and accounts payable, which are shown inclusive of goods and services tax.
k) Work in Progress
The cost of work in progress includes the cost of direct material and direct labour used in putting replacement and new systems in their present location and condition.
l) Financial Instruments
The Line Business is party to financial instrument arrangements as part of its everyday operations. Revenues and expenses in relation to all financial instruments are recognised in the Statement of Financial Performance on an accrual basis.
The Line Business has no off-balance sheet exposures. The Line Business values all financial instruments at fair value in the Statement of Financial Position.
m) Operating Leases
Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased items are classified as operating leases. Payments under these leases are recognised as expenses in the periods in which they are incurred.
n) Employee Entitlements
Provision is made in respect of the Company's liability for annual and long service leave. Leave has been calculated on an actual entitlement basis at current rates of pay.
CHANGES IN ACCOUNTING POLICIES
There have been no changes in accounting policies during the year ended 31 March 2006.
ELECTRICITY INVERCARGILL LIMITED LINE BUSINESS
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2006
Group Parent
2006$000 2005$000 2006$000 2005$000
2. Operating Revenue
Operating Revenue Comprises:
Network Charges 12,980 12,779 7,740 7,775
AC Loss-Rental Rebates 556 258 - -
Interest on Investments 262 140 227 145
Other Revenue 59 121 30 80
Total Operating Revenue 13,857 13,298 7,997 8,000
3. Operating Expenses
Operating Expenses Include:
Auditors Remuneration:- Statutory Audit 41 38 27 30
- Other 24 27 25 27
Bad Debts Written Off 3 1 - -
Depreciation:
- Buildings 3 6 - -
- Office Equipment & EDP Equipment 49 55 - -
- Plant and Equipment 20 26 - -
- Network Assets 1,707 1,676 1,707 1,676
Directors' Fees 118 102 68 60
Lease Costs 30 33 - -
Loss on Disposal of Fixed Assets 22 21 21 20
4. Equity
Paid in Capital 13,007 13,007 13,000 13,000
General Reserve 547 547 547 547
Revaluation Reserve 20,529 20,529 20,529 20,529
Retained Earnings 12,771 12,230 11,987 11,590
Total Equity 46,854 46,313 46,063 45,666
5. Cash and Short Term Deposits
Current Account 1,968 2,295 - 58
Short Term Deposits 410 940 410 940
Total Cash and Short Term Deposits 2,378 3,235 410 998
6. Receivables and Prepayments
Trade Debtors 1,260 1,079 758 1,168
Prepayments 61 50 16 1
Total Receivables and Prepayments 1,321 1,129 774 1,169
Group Parent
2006$000 2005$000 2006$000 2005$000
7. Property, Plant and Equipment
Land (At Cost) 23 24 - -
Buildings (At Cost) 155 166 - -
Accumulated Depreciation (84) (86) - -
71 80 - -
Customer Billing & Information System Assets (At Cost) 766 745 - -
Accumulated Depreciation (519) (507) - -
247 238 - -
Plant and Equipment (At Cost) 530 515 - -
Accumulated Depreciation (415) (381) - -
115 134 - -
Office Equipment (At Cost) 204 185 - -
Accumulated Depreciation (158) (142) - -
46 43 - -
Network Assets (At Cost and Valuation) 49,021 46,949 49,021 46,949
Accumulated Depreciation (3,389) (1,675) (3,389) (1,675)
45,632 45,274 45,632 45,274
Total Property, Plant and Equipment 46,134 45,793 45,632 45,274
8. Accounts Payable and Provisions
Trade Creditors and Accruals 1,401 1,338 377 268
GST Payable 59 93 12 74
Provision for Employee Entitlements 86 93 - -
Provision for Taxation 50 (29) - -
Total Accounts Payable and Provisions 1,596 1,495 389 342
9. Commitments
Operating Lease Commitments
Operating Lease Commitments are payable as follows:
- No later than one year 20 15 - -
- Later than one year and not later than two years 10 8 - -
- Later than two years and not later than five years 8 8 - -
- Later than five years - - - -
Total Operating Lease Commitments 38 31 - -
Group Parent
2006$000 2005$000 2006$000 2005$000
10. Reconciliation of Net Surplus After Taxation with Net Operating Cash Flows
Net Surplus After Taxation 3,841 4,050 3,697 3,969
Plus/(Less) Non Cash Items:
Depreciation 1,779 1,762 1,707 1,676
1,779 1,762 1,707 1,676
Plus/(Less) Items Classified as Investing Activities
Loss on Sale of Property, Plant and Equipment 22 21 21 20
Gain on Sale of Property, Plant and Equipment - - - -
22 21 21 20
Plus/(Less) Movements in Working Capital Items:
(Increase)/Decrease in Receivables (192) (25) 395 (637)
(Increase)/Decrease in Inventories (2) 2 - -
(Decrease)/Increase in Accounts Payable 101 105 49 (171)
(93) 82 444 (808)
Net Cash Flows from Operating Activities 5,549 5,915 5,869 4,857
11. Contingent Liabilities
There are no contingent liabilities as at 31 March 2006 (2005: Nil).
12. Financial Instruments
Off Balance Sheet Financial Instruments -
The Line Business does not have any off balance sheet financial instruments.
Credit Risk
Credit risk is the risk that a third party will default on its obligation to the Line Business, causing the Line Business to incur a loss.
Financial instruments which potentially subject the Line Business to credit risk principally consist of cash, short-term deposits and accounts receivable. Bank deposits are placed with high credit quality financial institutions. The Line Business performs credit evaluations on all customers requiring credit and generally does not require collateral.
Maximum exposures to credit risk at balance date are:
Current Account 1,968 2,295 - 58
Short Term Deposits 410 940 410 940
Receivables 1,321 1,129 774 1,169
3,699 4,364 1,184 2,167
The above exposures are net of any recognised provision for losses on these financial instruments.
Concentrations of Credit Risk
The Line Business is exposed to a Concentration of Credit Risk by one significant energy retailer. This entity is considered to be a high quality entity.
Foreign Exchange Risk
The Line Business is not exposed to any foreign exchange risk.
Interest Rate Risk
Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. The Line Business is exposed to normal fluctuations in market interest rates.
Fair Values
The estimated fair value of the Line Business' financial instruments are represented by the carrying values.
13. Related Parties
Electricity Invercargill Limited "Line Business" consists of line activities conducted in Electricity Invercargill Limited and its joint venture company PowerNet Limited. Electricity Invercargill Limited "Other Business" consists of other or non-line activities conducted in Electricity Invercargill Limited and its joint venture company PowerNet Limited.
All related party transactions between Electricity Invercargill Limited Line Business and PowerNet Limited Line Business have been eliminated in the preparation of the financial statements.
During the year related party transactions took place between Electricity Invercargill Limited Line Business and Electricity Invercargill Limited Other Business. All related party transactions have been conducted on a commercial and arms length basis.
The Line Business purchased goods and services at cost, including overheads where applicable, from the Other Business. The value of the transactions, parties involved, and description of goods or services purchased were as follows:
Electricity Invercargill Limited Line Business purchased from PowerNet Limited Other Business:
31 March 2006$000 31 March 2005$000
Construction of:
Ø Subtransmission assets - -
Ø Zone substations 133 213
Ø Distribution lines and cables 954 297
Ø Medium Voltage switchgear 239 143
Ø Distribution transformers 322 349
Ø Distribution substations 33 66
Ø Low voltage reticulation 551 649
Ø Other system fixed assets - -
These amounts represent the capital works programme undertaken by PowerNet Limited on behalf of Electricity Invercargill Limited.
Maintenance of assets - -
Customer connections and disconnections - -
The value of transactions owing at balance date were as follows:
q Electricity Invercargill Limited Line Business owes PowerNet Limited Other Business $594,000 (2005: $492,000).
No related party debts have been written off or forgiven during 2006 or 2005.
14. Annual Valuation Reconciliation Report 31 March 2006$000 31 March 2005$000
System fixed assets at ODV - end of previous financial year 45,316 45,708
Add system fixed assets acquired during year at ODV 967 1,323
Less system fixed assets disposed of during year at ODV (80) (37)
Less depreciation on system fixed assets at ODV (1,709) (1,678)
Add revaluations of system fixed assets - -
System fixed assets at ODV - end of the financial year 44,494 45,316
ELECTRICITY INVERCARGILL LIMITED LINE BUSINESS
DISCLOSURE OF INFORMATION
Pursuant to Requirement 6(2) of the Electricity Information Disclosure Requirements 2004, Schedule 1
Part 2.
31 March 2006$000 31 March 2005$000
Current Assets
(a) Cash and bank balances 1,968 2,295
(b) Short-term investments 410 940
(c) Inventories 25 24
(d) Accounts receivable 1,321 1,129
(e) Other current assets not listed in (a) to (d) - -
Total Current Assets 3,724 4,388
Fixed Assets
(a) System fixed assets 45,632 45,274
(b) Consumer billing and information system assets 247 238
(c) Motor vehicles - -
(d) Office equipment 46 43
(e) Land and buildings 93 104
(f) Capital works under construction 892 727
(g) Other fixed assets not listed in (a) to (f) 116 134
Total Fixed Assets 47,026 46,520
Other tangible assets not listed above - -
Total Tangible Assets 50,750 50,908
Intangible Assets
(a) Goodwill - -
(b) Other intangibles not listed in (a) above - -
Total Intangible Assets - -
TOTAL ASSETS 50,750 50,908
Current Liabilities
(a) Bank overdraft - -
(b) Short-term borrowings - -
(c) Payables and accruals 1,546 1,524
(d) Provision for dividends payable 2,300 3,100
(e) Provision for income tax 50 (29)
(f) Other current liabilities not listed in (a) to (e) above - -
Total Current Liabilities 3,896 4,595
Non-Current Liabilities
(a) Payables and accruals - -
(b) Borrowings - -
(c) Deferred tax - -
(d) Other non-current liabilities not listed in (a)-(c) above - -
Total Non-Current Liabilities - -
Equity
(a) Shareholders' equity:
(i) Share capital 13,007 13,007
(ii) Retained earnings 12,771 12,230
(iii) Reserves 21,076 21,076
Total Shareholders' equity 46,854 46,313
(b) Minority interests in subsidiaries - -
Total Equity 46,854 46,313
(c) Capital notes - -
Total Capital Funds 46,854 46,313
TOTAL EQUITY AND LIABILITIES 50,750 50,908
31 March 2006$000 31 March 2005$000
Operating Revenue
(a) Revenue from line/access charges. 12,980 12,779
(b) Revenue from "Other" business for services carried out by the line business (transfer payment) - -
(c) Interest on cash, bank balances and short-term investments 262 140
(d) AC loss-rental rebates 556 258
(e) Other revenue not listed in (a) to (d) 59 121
Total Operating Revenue 13,857 13,298
Operating Expenditure
(a) Payment for transmission charges 3,258 3,182
(b) Transfer payments to the "Other" business for:
(i) Asset maintenance - -
(ii) Consumer disconnection/reconnection services - -
(iii) Meter data - -
(iv) Consumer-based load control services - -
(v) Royalty and patent expenses - -
(vi) Avoided transmission charges on account of own generation - -
(vii) Other goods and services not listed in (i) to (vi) above - -
Total transfer payment to the "Other" business - -
(c) Expense to entities that are not related parties for:
(i) Asset maintenance 791 785
(ii) Consumer disconnection/reconnection services - -
(iii) Meter data - -
(iv) Consumer-based load control services - -
(v) Royalty and patent expenses - -
Total of specified expenses to non-related parties 791 785
(d) Employee salaries, wages and redundancies 406 420
(e) Consumer billing and information system expense 53 47
(f) Depreciation on:
(i) System fixed assets: 1,707 1,676
(ii) Other assets not listed in (i) 72 87
Total depreciation 1,779 1,763
(g) Amortisation of:
(i) Goodwill: - -
(ii) Other intangibles: - -
Total Amortisation of Intangibles - -
(h) Corporate and administration: 571 408
(i) Human resource expenses: 56 36
(j) Marketing/advertising: 65 62
(k) Merger and acquisition expenses: - -
(l) Takeover defence expenses: - -
(m) Research and development expenses: - -
31 March 2006$000 31 March 2005$000
(n) Consultancy and legal expenses: 44 79
(o) Donations: - -
(p) Directors' fees: 118 102
(q) Auditors' fees:
(i) Audit fees paid to principal auditors: 41 38
(ii) Audit fees paid to other auditors: 24 27
(iii) Fees paid for other services provided by principal and other auditors: - -
Total Auditors' fees: 65 65
(r) Costs of offering credit:
(i) Bad debts written off: 3 1
(ii) Increase in estimated doubtful debts: - -
Total cost of offering credit: 3 1
(s) Local authority rates expense: 57 53
(t) AC loss-rentals (distribution to retailers/customers) expense: 556 258
(u) Rebates to consumers due to ownership interest: - -
(v) Subvention payments: 167 32
(w) Unusual expenses: - -
(x) Other expenditure not listed in (a) to (w) 87 81
Total operating expenditure 8,076 7,374
Operating surplus before interest and income tax 5,781 5,924
Interest expense
(a) Interest expense on borrowings - -
(b) Financing charges related to finance leases - -
(c) Other interest expense - -
Total interest expense - -
Operating surplus before income tax 5,781 5,924
Income tax 1,940 1,874
Net surplus after tax 3,841 4,050
ELECTRICITY INVERCARGILL LIMITED LINE BUSINESS
FINANCIAL AND EFFICIENCY PERFORMANCE MEASURES
PURSUANT TO REQUIREMENT 14 OF THE ELECTRICITY INFORMATION DISCLOSURE REQUIREMENTS 2004, SCHEDULE 1 PART 3
FINANCIAL PERFORMANCE MEASURES
2006 2005 2004 2003
Return on Funds 12.59% 12.72% 12.92% 14.57%
Return on Equity 8.72% 8.95% 8.61% 9.56%
Return on Investment 8.36% 8.95% 20.83% 9.68%
Return on Investment (excluding revaluation) 8.50%
EFFICIENCY PERFORMANCE MEASURES
1996 1995 2006 2005 2004 2003
Direct Line Costs per Kilometre $2,078 $1,482 $1,779 $1,600
Indirect Line Costs per Electricity Customer $56 $67 $58 $50
FORM FOR THE DERIVATION OF FINANCIAL PERFORMANCE MEASURES FROM FINANCIAL STATEMENTS
SCHEDULE 1 - PART 7
DERIVATION TABLE INPUT AND CALCULATIONS SYMBOL IN FORMULA ROF ROE ROI
Operating surplus before interest and income tax from financial statements 5,780,810
Operating surplus before interest and income tax adjusted pursuant to regulation 18 (OSBIIT) 5,780,810
Interest on cash, bank balances, and short-term investments (ISTI) 262,312
OSBIIT minus ISTI 5,518,498 a 5,518,498 5,518,498
Net surplus after tax from financial statements 3,840,773
Net surplus after tax adjusted pursuant to requirement 18 (NSAT) 3,840,773 n 3,840,773
Amortisation of goodwill and amortisation of other intangibles 0 g add 0 add 0 add 0
Subvention payment 166,708 s add 166,708 add 166,708 add 166,708
Depreciation of SFA at BV (x) 1,706,994
Depreciation of SFA at ODV (y) 1,709,000
ODV depreciation adjustment -2,006 d add -2,006 add -2,006 add -2,006
Subvention payment tax adjustment 55,014 s*t deduct 55,014 deduct 55,014
Interest tax shield -86,563 q deduct -86,563
Revaluations 0 r add 0
Income tax 1,940,037 p deduct 1,940,037
Numerator 5,683,200OSBIITADJ = a + g + s + d 3,950,461NSATADJ = n + g + s - s*t + d 3,774,712OSBIITADJ = a + g - q + r + s + d - p - s*t
Fixed assets at end of previous financial year (FA0) 46,520,192
Fixed assets at end of current financial year (FA1) 47,025,888
Adjusted net working capital at end of previous financial year (ANWC0) -370,794
Adjusted net working capital at end of current financial year (ANWC1) -200,152
Average total funds employed (ATFE) 46,487,567 c 46,487,567 46,487,567
(or requirement 32 time-weighted average)
Total equity at end of previous financial year (TE0) 46,313,876
Total equity at end of current financial year (TE1) 46,854,127
Average total equity 46,584,001 k 46,584,001
(or requirement 32 time-weighted average)
WUC at end of previous financial year (WUC0) 727,049
WUC at end of current financial year (WUC1) 891,824
Average total works under construction 809,437 e deduct 809,437 deduct 809,437 deduct 809,437
(or requirement 32 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 requirement 32 time-weighted average)
Subvention payment at end of previous financial year (S0) 32,249
Subvention payment at end of current financial year (S1) 166,708
Subvention payment tax adjustment at end of previous financial year 10,642
Subvention payment tax adjustment at end of current financial year 55,014
Average subvention payment & related tax adjustment 66,651 v add 66,651
System fixed assets at end of previous financial year at book value (SFAbv0) 45,273,551
System fixed assets at end of current financial year at book value (SFAbv1) 45,632,093
Average value of system fixed assets at book value 45,452,822 f deduct 45,452,822 deduct 45,452,822 deduct 45,452,822
(or requirement 32 time-weighted average)
System Fixed assets at year beginning at ODV value (SFAodv0) 45,316,000
System Fixed assets at end of current financial year at ODV value (SFAodv1) 44,494,000
Average value of system fixed assets at ODV value 44,905,000 h add 44,905,000 add 44,905,000 add 44,905,000
(or requirement 32 time-weighted average)
Denominator 45,130,309 45,293,394 45,130,309
ATFEADJ = c - e - f + h Ave TEADJ = k - e - m + v - f + h ATFEADJ = c - e - ½r - f + h
Financial Performance Measure: 12.59 8.72 8.36
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
ELECTRICITY INVERCARGILL LIMITED LINE BUSINESS
ENERGY EFFICIENCY PERFORMANCE MEASURES
PURSUANT TO REQUIREMENT 20 OF THE ELECTRICITY INFORMATION DISCLOSURE
REQUIREMENTS 2004, SCHEDULE 1 PART 4
Energy Delivery Efficiency Performance Measures Years Ending 31 March 2003, 2004, 2005 and 2006
2006 2005 2004 2003
Load Factor (Percentage of electrical energy entering the transmission system over maximum demand times hours per year.) 54.7% 53.4% 52.6% 54.4%
Loss Ratio (Transmission losses over energy entering the system) 6.3% 7.4% 8.3% 9.7%
Capacity Utilisation (Maximum demand over total transformer capacity) 40.2% 42.0% 42.3% 42.1%
The loss ratio is derived from electricity supplied information provided by other parties. Electricity Invercargill Limited is unable to audit this information and is not confident with its accuracy and estimates the losses at 4.0%.
Statistics
66kV 33kV 22kV 11kV 6.6kV 400V Total
System Length(km's) 2002/03 - 23 - 181 - 489 694
2003/04 - 25 - 199 - 452 676
2004/05 - 26 - 199 - 454 679
2005/06 - 26 - 197 - 458 681
Overhead Lines (km's) 2002/03 - 1.0 - 39 - 67 107
2003/04 - 1.0 - 36 - 55 92
2004/05 - 1.4 - 35 - 52 88
2005/06 - 1.5 - 35 - 52 89
Underground Cables (km's) 2002/03 - 22 - 143 - 422 587
2003/04 - 24 - 163 - 397 584
2004/05 - 25 - 164 - 402 591
2005/06 - 25 - 162 - 406 593
TX Capacity Maximum Demand Electricity Supplied Electricity Conveyed Total Customers
2002/03 141,915 59,686 284,541,935 257,047,355 16,961
2003/04 142,125 60,070 276,531,554 253,538,024 16,922
2004/05 144,415 60,611 283,589,781 262,530,504 16,842
2005/06 143,965 57,859 277,102,120 259,605,081 16,889
Electricity Conveyed for Retailers and The Power Company Limited
2006kWh 2005kWh 2004kWh 2003kWh
Retailer A 198,128,442 200,772,249 191,835,995 186,623,868
Retailer B 3,932,034 3,458,864 3,744,172 7,964,609
Retailer C 37,574,979 38,832,367 39,099,074 34,605,351
Retailer D 1,284,272 1,031,124 1,066,856 1,597,380
The Power Company Limited OCB46 6,408,904 6,559,573 6,196,189 6,464,423
Retailer E - - - -
Retailer F 12,276,451 11,876,327 11,595,738 19,791,724
TOTAL 259,605,081 262,530,504 253,538,024 257,047,355
The Electricity Conveyed details are provided by other parties. Electricity Invercargill Limited is unable to audit this information and is not confident with its accuracy.
ELECTRICITY INVERCARGILL LIMITED LINE BUSINESS
RELIABILITY PERFORMANCE MEASURES
PURSUANT TO REQUIREMENT 21 OF THE ELECTRICITY INFORMATION DISCLOSURE REQUIREMENTS 2004, SCHEDULE 1 PART 5
Reliability Statistics For Years Ending 31 March 2003, 2004, 2005 and 2006
Class A B C D E F G H I TOTAL
Interruptions 2002/03 - 6 15 - - - - - - 21
2003/04 - 9 19 - - - - - - 28
2004/05 - 5 15 - - - - - - 20
2005/06 - 3 20 - - - 1 - - 24
Predicted 2006/2007 - 8 20 - - - - - - -
5-Year Average Target - 8 20 - - - - - - -
SAIDI 2002/03 - 2.0 19.4 - - - - - - 21.4
2003/04 - 4.5 45.1 - - - - - - 49.6
2004/05 - 2.1 13.3 - - - - - - 15.4
2005/06 - 0.2 18.9 - - - 0.7 - - 19.8
Predicted 2006/2007 - 4.0 31.0 - - - - - - -
5-Year Average Target - 4.0 31.0 - - - - - - -
SAIFI 2002/03 - 0.01 0.69 - - - - - - 0.70
2003/04 - 0.03 1.25 - - - - - - 1.28
2004/05 - 0.03 0.25 - - - - - - 0.28
2005/06 - 0.00 0.54 - - - 0.01 - - 0.55
Predicted 2006/2007 - 0.04 0.96 - - - - - - -
5-Year Average Target - 0.03 0.92 - - - - - - -
CAIDI 2002/03 - 180.9 28.2 - - - - - - 30.6
2003/04 - 161.1 36.1 - - - - - - 38.9
2004/05 - 81.4 53.8 - - - - - - 56.4
2005/06 - 106.5 35.1 - - - 65.5 - - 35.9
Predicted 2006/2007 - 106.7 32.3 - - - - - - -
5-Year Average Target - 140.4 33.6 - - - - - - -
Faults by Voltage 66kV 33kV 11kV Total
OH per 100km 2002/03 - - 33.40 32.29
2003/04 - - 42.40 41.51
2004/05 - - 22.90 22.02
2005/06 - - 34.33 33.02
UG per 100km 2002/03 - - 0.70 0.61
2003/04 - - 0.70 0.60
2004/05 - - 4.27 3.71
2005/06 - - 3.70 3.21
Total per 100km 2002/03 - - 7.73 6.84
2003/04 - - 9.37 8.78
2004/05 - - 7.55 6.67
2005/06 - - 9.14 8.07
Predicted 2006/2007 - - 8.63 7.62
5-Year Average Target - - 8.63 7.62
Class C Interruptions Not Restored in 3 hours 10%
Class C Interruptions Not Restored in 24 hours Nil
ELECTRICITY INVERCARGILL LIMITED
CERTIFICATION OF FINANCIAL STATEMENTS
PERFORMANCE MEASURES AND STATISTICS DISCLOSED BY DISCLOSING ENTITIES
(OTHER THAN TRANSPOWER)
We, Neil Douglas Boniface and Philip James Mulvey, Directors of Electricity Invercargill Limited certify that, having made all reasonable enquiry, to the best of our knowledge:
a) The attached audited financial statements of Electricity Invercargill Limited, prepared for the purposes of requirement 6 of the Commerce Commission's Electricity Information Disclosure Requirements 2004 comply with those Requirements; and
b) The attached information being the derivation table, financial performance measures, efficiency performance measures, energy delivery efficiency performance measures, statistics and reliability performance measures in relation to Electricity Invercargill Limited, and having been prepared for the purposes of requirements 14, 15, 20 and 21 of the Electricity Information Disclosure Requirements 2004, comply with those Requirements.
The valuations on which those financial performance measures are based are as at 31 March 2004.
Signed: Neil Boniface........................................................ Philip Mulvey.........................................................
[Director] [Director]
Dated: 20 November 2006
AUDIT NEW ZEALAND
REPORT OF THE AUDITOR-GENERAL
TO THE READERS OF THE FINANCIAL STATEMENTS OF ELECTRICITY INVERCARGILL LIMITED FOR THE YEAR ENDED 31 MARCH 2006
We have audited the financial statements of Electricity Invercargill Limited on pages 2 to 13. The financial statements provide information about the past financial performance of Electricity Invercargill Limited and its financial position as at 31 March 2006. This information is stated in accordance with the accounting policies set out on pages 6 to 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 Electricity Invercargill Limited 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 Tony Uttley 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:
§ the significant estimates and judgements made by the Directors in the preparation of the financial statements; and
§ whether the accounting policies are appropriate to Electricity Invercargill Limited 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.
Other than in our capacity as auditor acting on behalf of the Auditor-General, we have no relationship with or interests in Electricity Invercargill Limited 1 .
Unqualified Opinion
We have obtained all the information and explanations we have required.
In our opinion -
§ proper accounting records have been maintained by Electricity Invercargill Limited as far as appears from our examination of those records; and
§ the financial statements of Electricity Invercargill Limited on pages 2 to 13:
(a) comply with generally accepted accounting practice in New Zealand; and
(b) give a true and fair view of Electricity Invercargill Limited'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 20 November 2006 and our unqualified opinion is expressed as at that date.
Tony Uttley
Audit New Zealand
On behalf of the Auditor-General
Dunedin, New Zealand
1 In addition to issuing audit certificates pursuant to the Electricity Information Disclosure Requirements 2004 we have carried out other audit assignments for Electricity Invercargill Limited. This involved issuing an audit opinion on the annual financial statements for the year ended 31 March 2006. These assignments are compatible with those independence requirements. Other than this assignment we have no relationship with or interest in Electricity Invercargill Limited.
AUDIT NEW ZEALAND
AUDITOR-GENERAL'S OPINION ON THE PERFORMANCE MEASURES OF ELECTRICITY INVERCARGILL LIMITED
We have examined the information on pages 14 to 19, 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 Electricity Invercargill Limited and dated 20 November 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 those Electricity Information Disclosure Requirements 2004.
Tony Uttley
Audit New Zealand
On behalf of the Auditor-General
Dunedin, New Zealand
20 November 2006