INFORMATION FOR DISCLOSURE
PURSUANT TO SECTION 57T OF THE COMMERCE ACT 1986
AUDIT NEW ZEALAND
AUDITOR-GENERAL'S OPINION ON THE PERFORMANCE MEASURES OF SCANPOWER LIMITED
We have examined the information on pages 18 and 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 Scanpower Limited and dated 22 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.
L H Desborough
Audit New Zealand
On behalf of the Auditor-General
Palmerston North, New Zealand
22 November 2006
AUDIT NEW ZEALAND
REPORT OF THE AUDITOR-GENERAL
TO THE READERS OF THE FINANCIAL STATEMENTS OF SCANPOWER LIMITED FOR THE YEAR ENDED 31 MARCH 2006
We have audited the financial statements of Scanpower Limited on pages 2 to 17. The financial statements provide information about the past financial performance of Scanpower Limited and its financial position as at 31 March 2006. This information is stated in accordance with the accounting policies set out on pages 5 to 7.
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 Scanpower 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 L H Desborough 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 Scanpower Limited'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 issuing audit certificates pursuant to the Electricity Information Disclosure Requirements 2004 we have carried out another audit assignment for Scanpower Limited. This involved issuing an audit opinion on the annual financial statements for the year ended 31 March 2006. This assignment is compatible with those independence requirements. Other than this assignment we have no relationship with or interest in Scanpower Limited.
Unqualified opinion
We have obtained all the information and explanations we have required.
In our opinion:
n proper accounting records have been maintained by Scanpower Limited as far as appears from our examination of those records; and
n the financial statements of Scanpower Limited on pages 2 to 17:
(a) comply with generally accepted accounting practice in New Zealand; and
(b) give a true and fair view of Scanpower 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 22 November 2006 and our unqualified opinion is expressed as at that date.
L H Desborough
Audit New Zealand
On behalf of the Auditor-General
Palmerston North, New Zealand
Scanpower Limited
Statement of Financial Performance
For the Year Ended 31 March 2006
Notes 2006 2005
$'000 $'000
Revenue 1 6,436 6,134
Expense 1 (5,216) (5,906)
Surplus before income tax 1,220 228
Less income tax expense 2 418 75
Net surplus after income tax 802 153
Scanpower Limited
Statement of Movements in Equity
For the Year Ended 31 March 2006
Notes 2006 2005
$'000 $'000
EQUITY AT BEGINNING OF THE YEAR 19,422 19,299
SURPLUS AND REVALUATIONS
Net surplus for the year 802 153
Revaluation of property, plant and equipment 0 0
Total recognised revenues and expenses for the year 802 153
OTHER MOVEMENTS
Distribution to owners 3 75 30
EQUITY AT THE END OF THE YEAR 20,149 19,422
The accompanying notes and policies form an integral part of these Financial Statements
Scanpower Limited
Statement of Financial Position
As at 31 March 2006
Notes 2006 2005
$'000 $'000
EQUITY
7,500,000 Ordinary shares of $1 fully paid 7,500 7,500
Retained earnings 3 (1,112) (1,929)
Reserves 3 13,761 13,851
Shareholders' Equity 20,149 19,422
REPRESENTED BY:
CURRENT ASSETS
Cash and bank balances 169 374
Short term deposits 6 0 376
Receivables and prepayments 4 565 647
Tax provision 0 6
Inventories 5 143 131
Total Current Assets 877 1,534
NON CURRENT ASSETS
Capital works in progress 938 304
Property, plant and equipment 7 21,389 20,003
Total Non-Current Assets 22,327 20,307
TOTAL ASSETS 23,204 21,841
CURRENT LIABILITIES
Accounts payable 8 810 730
Employee entitlements 31 19
Tax provision 320 0
Total Current Liabilities 1,161 749
NON CURRENT LIABILITIES
Deferred taxation 2 1,894 1,670
Total Non - Current Liabilities 1,894 1,670
TOTAL LIABILITIES 3,055 2,419
NET ASSETS 20,149 19,422
For and on behalf of the Board as at 22 November 2006
DIRECTOR: DIRECTOR:
Allan Benbow Christine DonaldCERTIFICATION OF VALUATION REPORT OF
SCANPOWER LIMITED
We, Allan Benbow and Christine Donald, Directors of Scanpower Limited certify that, having made all reasonable enquiry, to the best of our knowledge-
(a) the attached valuation report of Scanpower Limited, prepared for the purposes of requirement 19 of the Commerce Commission's Electricity Information Disclosure Requirements 2004 complies with those Requirements; and
(b) the replacement cost of the line business system fixed assets of Scanpower Limited is $40,581,674; and
(c) the depreciated replacement cost of the line business system fixed assets of Scanpower Limited is $19,557,084; and
(d) the optimised depreciated replacement cost of the line business system fixed assets of Scanpower Limited is $19,540,725; and
(e) the optimised deprival valuation of the line business system fixed assets of Scanpower Limited is $19,540,725; and
(f) the values in paragraphs (b) through to (e) have been prepared in accordance with the ODV Handbook (as defined in the Electricity Information Disclosure Requirements 2004). These valuations are as at 31 March 2004.
Allan Benbow Christine Donald
22 November 2006 22 November 2006
CERTIFICATION OF FINANCIAL STATEMENTS, PERFORMANCE MEASURES, AND STATISTICS DISCLOSED BY
SCANPOWER LIMITED
We, Allan Benbow and Christine Donald, Directors of Scanpower Limited certify that, having made all reasonable enquiry, to the best of our knowledge,-
(a) The attached audited financial statements of Scanpower Limited prepared for 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 Scanpower 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
31 March 2004.
Allan Benbow Christine Donald
22 November 2006 22 November 2006
The accompanying notes and policies form an integral part of these Financial Statements
Scanpower Limited
Statement of Cash Flows
For the Year Ended 31 March 2006
Notes 2006 2005
CASH FLOWS FROM OPERATING ACTIVITIES $'000 $'000
Cash was provided from:
Receipts from customers 6,071 5,883
Interest received 184 204
Taxes received 0 0
6,255 6,087
Cash was applied to:
Payments to employees and suppliers 4,088 5,151
Taxes paid 75 135
Interest paid 0 0
4,163 5,286
Net cash inflows from operating activities 9 2,092 801
CASH FLOWS FROM INVESTING ACTIVITIES
Cash was provided from:
Proceeds from disposal of property, plant and equipment 0 0
0 0
Cash was applied to:
Purchase and construction of property, plant and equipment 2,598 1,136
2,598 1,136
Net cash outflows from investment activities (2,598) (1,136)
CASH FLOWS FROM FINANCING ACTIVITIES
Cash was applied to:
Loans repaid 0 0
Dividends paid 75 30
Net cash outflows from financing activities (75) (30)
NET INCREASE / (DECREASE) IN CASH HELD (581) (365)
Opening Cash Brought Forward 750 1,115
CASH AT END OF THE YEAR 169 750
REPRESENTED BY:
Cash and bank balances 169 374
Short term deposits 0 376
169 750
The accompanying notes and policies form an integral part of these Financial Statements
Scanpower Limited
Statement of Significant Accounting Policies
For the Year Ended 31 March 2006
Basis of Preparation
Scanpower Limited (Scanpower) is a public company registered under the Companies Act 1993. These financial statements have been prepared for the purposes of complying with the requirements of the Electricity Information Disclosure Requirements 2004.
The financial statements comprise separate a Statement of Financial Performance, Statement of Movements in Equity, Statement of Financial Position, and a Statement of Cash Flows for the Scanpower electricity distribution business. This business operates in the Southern Hawkes Bay area.
For general accounting purposes, the historic cost basis has been recognised as appropriate for the measurement and reporting of earnings and financial position, with the exception that certain fixed assets have been revalued.
The financial statements have been prepared in accordance with New Zealand generally accepted accounting practice. The policies that materially affect the measurement of financial performance, position and cash flows are set out below.
Operating Revenue
Revenue comprises amounts earned for the sale of the company's products and services net of returns, trade allowances and taxes paid. Interest income is accounted for as earned.
Taxation
The income tax expense is recognised on the operating surplus before taxation, adjusted for permanent differences between taxable and accounting income. Deferred tax is calculated using the comprehensive basis under the liability method. This method involves recognising the tax effect of all timing differences between accounting and taxable income as a deferred tax asset or liability in the Statement of Financial Position. The future tax benefit or provision for deferred tax is stated at the income tax rates prevailing at the balance date. Future tax benefits are not recognised unless realisation of the asset is virtually certain.
Goods and Services Tax
The Statement of Financial Performance and Statement of Cash Flows have been prepared so that all components are stated exclusive of GST. All items in the Statement of Financial Position are stated net of GST, with the exception of receivables and payables which include GST invoiced.
Receivables
Receivables are carried at anticipated realisable value after providing for doubtful receivables based on a review of all outstanding amounts at year end. Bad debts are written off in the year in which they are identified.
Inventories
Inventories are valued at the lower of weighted average cost and net realisable value.
Scanpower Limited
Statement of Significant Accounting Policies (Continued)
For the Year Ended 31 March 2006
Property, Plant and Equipment
Owned Assets
Property, Plant and Equipment is initially stated at cost and depreciated as outlined below. Initial cost includes the purchase consideration, and those costs directly attributable to bringing the asset to the location and condition necessary for its intended use. These costs include, where appropriate, site preparation costs, installation costs, borrowing costs and the cost of obtaining initial resource consents. Costs cease to be capitalised when substantially all the activities necessary to bring an asset to the location and condition for its intended use are complete.
Leased Assets
Leases in which the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. Assets acquired by way of finance lease are stated initially at an amount equal to the future minimum lease payments, and are depreciated as described below.
Revaluations
The Network Distribution assets were revalued as at 31 March 2004 on the basis of the Commerce Commission's "Handbook for Optimised Deprival Valuation of System Fixed Assets of Electricity Lines Businesses" issued 30 August 2004. The valuation was prepared by Mr J R Collins B Eng.(Elec.) MBA of Scanpower Limited and was reviewed by PricewaterhouseCoopers and Eddie Graham B.E.(Elec.) FIPENZ. The valuation is expressed on an optimised depreciated replacement cost (ODRC)/optimised deprival value (ODV) basis.
Land and Buildings are revalued to fair value with regard to highest and best use. Fixed assets within these classes are revalued on a cyclical basis with no asset being recognised at a valuation undertaken more than five years previously. The most recent Land and Building valuation was conducted by an independent registered valuer, Mr. I.R. Mollison ANZIV, of the firm Ian Mollison & Associates, Dannevirke, on 31 March 2002.
Depreciation
Depreciation of Property, Plant and Equipment, other than Freehold Land, is calculated on a straight line basis so as to expense the cost of the assets, or the revalued amounts, to their residual values over their useful lives. The useful economic lives used for depreciation purposes are as follows:
Distribution Assets
Lines - wood 45
Lines - concrete 60
Lines - underground 45
Transformers 55
Substations 55
Switchgear 45
Air break switches 35
Customer connections 45
Scanpower Limited
Statement of Significant Accounting Policies (Continued)
For the Year Ended 31 March 2006
Circuit breakers 40
Sectionalisers 40
Ring main units 40
Voltage regulators 40 to 55
Non standard assets 15 to 60
Buildings and Fixtures 10 to 50
Motor Vehicles 3 to 10
Computer Equipment 3 to 5
Employee Entitlements
Employee Entitlements to salaries and wages, annual leave, long service leave and other benefits are accrued on an actual entitlement basis.
Financial Instruments
Financial Instruments carried on the Statement of Financial Position include cash and bank balances, receivables, and trade creditors. These financial assets and liabilities are, generally, carried at their estimated fair values except for loans and investments, which are recorded at cost. Where appropriate, particular recognition methods adopted are disclosed in the individual policy statements associated with them.
Statement of Cash Flows
The following are the definitions of the terms used in the Statement of Cash Flows:
(a) Operating activities include all transactions and other events that are not investing or financing activities.
(b) Investing activities are those activities relating to the acquisition, holding and disposal of property, plant and equipment, and of investments.
(c) Financing activities are those activities that result in changes in the size and composition of the capital structure. 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.
(d) Cash is considered to be cash on hand and current accounts in banks, and short term deposits, net of bank overdrafts.
Changes in Accounting Policies
There has been no changes in accounting policies and all policies have been applied on a basis consistent with those used in the previous year.
Scanpower Limited
Notes to the Financial Statements
For the Year Ended 31 March 2006
Note 1. (i) Operating Revenue
2006 2005
$'000 $'000
OPERATING REVENUE
Network line rentals 5,856 5,832
AC loss-rental rebates 146 98
Interest income 184 204
Newly identified assets 250 0
Total revenue 6,436 6,134
Note 1. (ii) Operating Expenses
Audit fees 44 37
Auditors fees for other services 7 5
Fees paid to other auditors 14 38
Bad debts written off 0 0
Depreciation:
Distribution assets:
Lines 452 472
Transformers 83 82
Substations 19 19
Switchgear 41 71
Air break switches 7 17
Customer connections 55 55
Circuit breakers 14 17
Sectionalisers 6 3
Ring main unit 1 1
Voltage regulators 2 3
Non standard assets 34 34
Freehold buildings & fixtures 1 1
Motor vehicles 28 11
Computer equipment 2 4
Total Depreciation 745 790
Directors remuneration & expenses 80 84
Change in provision for doubtful debts 0 0
Interest paid 0 0
Loss on sale of assets 83 55
Network discounts 1,878 2,181
Cost of sales & operating expenses 2,365 2,716
5,216 5,906
Scanpower Limited
Notes to the Financial Statements (Continued)
For the Year Ended 31 March 2006
Note 2. Taxation
2006 2005
$'000 $'000
Taxation Reconciliation
Accounting net operating surplus before taxation 1,220 228
Taxation at 33% 402 75
Plus tax effect of:
Permanent differences (83) 0
Prior year adjustment 0 0
Deferred tax adjustment 99 0
Tax expense / (Benefit) 418 75
Income tax charge for the year comprises:
Current taxation (liability) 319 107
Deferred taxation 99 (32)
418 75
Deferred Tax Asset / (Liability):
Opening balance (1,670) (1,702)
Prior period adjustment:
Underground deferred tax adjustment 0 0
Current year movement (224) 32
Closing balance (1,894) (1,670)
Imputation Credit Account:
Opening balance 618 529
Tax paid during the year 75 104
Tax refunds during the year 0 0
Resident withholding tax paid 0 0
Credits attached to dividends paid (37) (15)
Closing balance at end of the year 656 618
Note 3. Retained Earnings and Reserves
Retained Earnings
Balance at beginning of the year (1,929) (2,121)
Net surplus for the year 802 153
Dividends paid and proposed (75) (30)
Movement in revaluation reserve 90 69
Balance at end of the year (1,112) (1,929)
Reserves
Asset revaluation reserves:
Freehold land 14 14
Freehold buildings & fixtures 32 32
Distribution assets 13,715 13,805
Balance at end of the year 13,761 13,851
Scanpower Limited
Notes to the Financial Statements (Continued)
For the Year Ended 31 March 2006
Note 4. Receivables and Prepayments
2006 2005
$'000 $'000
Trading debtors 501 489
Estimated doubtful receivables 0 0
GST clearing account 64 145
Miscellaneous prepayments 0 13
Accruals 0 0
565 647
Note 5. Inventories
Network stocks 143 131
143 131
Note 6. (i) Current Investments
Short term deposits held with registered banks 0 376
0 376
Market fluctuations in interest rates affect the earnings on these investments and the company policy of placing deposits with high credit quality institutions minimises potential credit risk.
Note 6. (ii) Interest Rates
The range of interest rates obtained on investments was as follows:
Short term bank investments 6.7 - 7.4% 5.25 - 6.7%
Scanpower Limited
Notes to the Financial Statements (Continued)
For the Year Ended 31 March 2006
Note 7. Property, Plant and Equipment
2006 2005
$'000 $'000
Distribution assets
At Valuation - 31 March 2004 19,451 19,541
At cost 3,311 1,093
Accumulated depreciation (1,488) (774)
Total carrying amount of distribution assets 21,274 19,860
Freehold land
At valuation - 31 March 2002 26 26
Total carrying amount of freehold land 26 26
Freehold buildings & fixtures
At valuation - 31 March 2002 64 64
At cost 0 0
Accumulated depreciation (5) (4)
Total carrying amount of freehold buildings 59 60
Motor vehicles
At cost 69 69
Accumulated depreciation (46) (18)
Total carrying amount of motor vehicles 23 51
Computer equipment
At cost 18 15
Accumulated depreciation (11) (9)
Total carrying amount of computer equipment 7 6
Total property, plant and equipment
At valuation 19,541 19,631
At cost 3,398 1,177
Accumulated depreciation (1,550) (805)
Total carrying amount of property, plant and equipment 21,389 20,003
Note 8. Accounts Payable
Trade creditors 307 631
Other creditors & accruals 503 99
810 730
Scanpower Limited
Notes to the Financial Statements (Continued)
For the Year Ended 31 March 2006
Note 9. Reconciliation of Cash Flow with Operating Surplus
2006 2005
$'000 $'000
Reported surplus after taxation 802 153
Add Non Cash Items
Depreciation 745 790
Change in deferred tax provision 224 (32)
Newly identified assets (250) 0
Changes in Working Capital
Increase/(decrease) in accounts payable & accruals 80 231
(Increase)/decrease in accounts receivable 82 (200)
(Increase)/decrease in inventories (12) (168)
Increase/(decrease) in employee entitlements 12 0
Increase/(decrease) in provision for taxation 326 (28)
Items Classified as Investing Activities
Net (surplus)/loss on disposal of property, plant & equipment 83 55
Net Cashflow from Operating Activities 2,092 801
Note 10. Analysis of Non-Cancelable Operating Lease Commitments
Payable not later than one year 9 9
Payable later than one year, not later than two years 5 5
Payable later than two years, not later than five years 0 5
Payable later than five years 0 0
14 19
Note 11. Environmental Policy
Scanpower endeavours to adhere to a sustainable usage policy with a minimum of environmental disturbance. To date, Scanpower is unaware of any of its projects or operations that would not meet the above policy.
Note 12. Capital Commitments and Contingent Liabilities
As at 31 March 2006 the company had a capital commitment of $295,000 for the purchase of the Ruahine Club (2005 : Nil). There were no contingent liabilities (2005: Nil).
Note 13. Segment Information
Scanpower operates primarily in the electricity distribution industry - the ownership, management and operation of the electricity network in the Dannevirke region.
Scanpower Limited
Notes to the Financial Statements (Continued)
For the Year Ended 31 March 2006
Note 14. Related Party Information
Scanpower Limited Customer Trust owns, through its nominees, all of the issued capital of Scanpower Limited.
Directors' transactions with the company were made under normal terms and conditions of supply and sale available to members of staff.
All transactions with other related parties were also made under normal terms and conditions of supply and sale. No related party debts were forgiven or written off during the year.
Contestable contracting services in asset construction and maintenance were provided by Scanpower's contracting division at cost, including overheads, and as detailed respectively here and in Note 16 12(b)(i) below.
2006 2005
$'000 $'000
Construction of subtransmission assets 0 0
Construction of zone substations 0 0
Construction of distribution lines and cables 647 285
Construction of medium voltage switchgear 691 303
Construction of distribution transformers 219 314
Construction of distribution substations 25 48
Construction of low voltage reticulation 269 167
Construction of other system fixed assets 366 19
Maintenance of assets 604 462
Consumer connections and disconnections 0 0
An imputed rental of $16,766 (2005 - $16,600) is included in Note 16 12(b)(vii) as being paid to the "other" business.
Note 15. Financial Instruments
Scanpower has no off balance sheet financing, other than those disclosed in these notes, nor any foreign exchange exposure. The fair value of financial instruments is approximated by the carrying amount disclosed in the Statement of Financial Position.
Concentrations of credit risk with respect to receivables in the Company's core activity are managed by adequate safeguards in the use of system agreements entered into with energy retailers. The large customer base of the other activities ensures little concentration of risk. No other form of security or collateral is required to support financial instruments with credit risk.
The interest rates on the company's deposits are presented in Note 6.
Scanpower Limited
Notes to the Financial Statements (Continued)
For the Year Ended 31 March 2006
Note 16. Electricity Information Disclosure Requirements 2006 (Part 2, Requirements 5 and 6)
2006 2005
$'000 $'000
1 Current Assets
a Cash and bank balances 169 374
b Short-term investments 0 376
c Inventories 143 131
d Accounts receivable 565 634
e Other current assets not listed in (a) to (d) 0 19
f Total current assets 877 1,534
2 Fixed Assets
a System fixed assets 21,274 19,860
b Consumer billing and information system assets 7 6
c Motor vehicles 24 51
d Office equipment 0 0
e Land and buildings 84 86
f Capital works under construction 938 304
g Other fixed assets not listed in (a) to (f) 0 0
h Total fixed assets 22,327 20,307
3 Other tangible assets not listed above 0 0
4 Total tangible assets 23,204 21,841
5 Intangibles
a Goodwill 0 0
b Other intangibles not listed in (a) above 0 0
c Total intangibles 0 0
6 Total assets 23,204 21,841
7 Current liabilities
a Bank overdraft 0 0
b Short-term borrowings 0 0
c Payables and accruals 810 730
d Provision for dividends payable 0 0
e Provision for income tax 320 0
f Other current liabilities not listed in (a) to (e) above 31 19
g Total current liabilities 1,161 749
8 Non-current liabilities
a Payables and accruals 0 0
b Borrowings 0 0
c Deferred tax 1,894 1,670
d Other non-current liabilities not listed in (a) to (c) above 0 0
e Total non-current liabilities 1,894 1,670
Scanpower Limited
Notes to the Financial Statements (Continued)
For the Year Ended 31 March 2006
2006 2005
$'000 $'000
9 Equity
a Shareholders' equity
(i) Share capital 7,500 7,500
(ii) Retained earnings (1,112) (1,929)
(iii) Reserves 13,761 13,851
(iv) Total shareholders' equity 20,149 19,422
b Minority interests in subsidiaries 0 0
c Total equity 20,149 19,422
d Capital notes 0 0
e Total capital funds 20,149 19,422
10 Total equity and liabilities 23,204 21,841
11 Operating revenue
a Revenue from line/access charges 5,856 5,832
b Revenue from "Other" business for services carried out by
the line business (transfer payment) 0 0
c Interest on cash, bank balances and short term investments: 184 204
d AC loss-rental rebates 146 98
e Other revenue not listed in (a) to (d) 250 0
f Total operating revenue 6,436 6,134
12 Operating expenditure
a Payment for transmission charges 1,206 1,762
b Transfer payments to the "Other" business for:
(i) Asset maintenance 604 462
(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 0 0
(vii) Other goods and services not listed in (i) to (vi) above 17 17
(viii) Total transfer payment to the "Other" business 621 479
c Expense to entities that are not related parties for
(i) Asset maintenance 0 0
(ii) Consumer disconnection/reconnection services 0 0
(iii) Meter data 7 7
(iv) Consumer-based load control services 0 0
(v) Royalty and patent expenses 0 0
Scanpower Limited
Notes to the Financial Statements (Continued)
For the Year Ended 31 March 2006
2006 2005
$'000 $'000
(vi) Total of specified expenses to non-related parties (sum of (i) to (v)) 7 7
d Employee salaries, wages and redundancies 280 268
e Consumer billing and information system expense 12 12
f Depreciation on:
(i) System fixed assets 714 774
(ii) Other assets not listed in (i) 31 16
(iii) Total depreciation 745 790
g Amortisation of:
(i) Goodwill 0 0
(ii) Other intangibles 0 0
(iii) Total amortisation of intangibles 0 0
h Corporate and administration 127 113
i Human resource expenses 3 0
j Marketing/advertising 29 39
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 74 30
o Donations 0 0
p Directors' fees 80 84
q Auditors' fees
(i) Audit fees paid to principal auditors 44 37
(ii) Audit fees paid to other auditors 14 38
(iii) Fees paid for other services provided by principal and other auditors 7 5
(iv) Total auditors' fees 65 80
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 6 6
t AC loss-rentals (distribution to retailers/customers) expense 146 98
u Rebates to consumers due to ownership interest 1,732 2,083
v Subvention payments 0 0
w Unusual expenses 0 0
x Other expenditure not listed in (a) to (w) 83 55
13 Total operating expenditure 5,216 5,906
Scanpower Limited
Notes to the Financial Statements (Continued)
For the Year Ended 31 March 2006
2006 2005
$'000 $'000
14 Operating surplus before interest and income tax 1,220 228
15 Interest expense
a Interest expense on borrowings 0 0
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 0 0

16 Operating surplus before income tax 1,220 228
17 Income tax 418 75
18 Net surplus after tax 802 153
Scanpower Limited
Performance Measures
For the Year Ended 31 March 2006
Part 3. Requirement 14 (Financial and Efficiency Performance Measures)
Ref Description 2006 2005 2004 2003 2002
1 a Return on Funds 4.61% 0.16% 0.12% -1.10% -0.60%
b Return on Equity 3.62% 0.83% -0.10% -1.20% -1.46%
c Return on Investments 2.87% 0.12% 21.63% -1.56% -1.79%
2 a Direct Line Cost per Kilometre $1,063 $890 $887 $938 $1,057
b Indirect Line Cost per Consumer $56 $52 $47 $75 $65
Part 4. Requirement 20 (Energy Efficiency Performance Measures and Statistics)
Ref Description 2006 2005 2004 2003 2002
1 a Load Factor 67.30% 67.88% 69.80% 70.43% 67.80%
1 b Loss Ratio 6.77% 6.76% 7.14% 6.96% 6.80%
1 c Capacity Utilisation 26.95% 27.98% 26.00% 26.65% 26.80%
2 a System Length
11KV 749 746 747 758 758
400V 116 115 114 115 114
Total 865 861 861 873 872
2 b Circuit Length of Overhead System
11KV 744 741 743 755 758
400V 69 70 71 73 74
Total 813 811 814 828 832
2 c Circuit Length of Underground System
11KV 5 5 4 3 0
400V 47 45 43 42 40
Total 52 50 47 45 40
2 d Transformer Capacity 60,666 58,871 58,553 56,632 55,627
2 e Maximum Demand (kW) 16,352 16,470 15,226 15,092 14,902
2 f Total Electricity Supplied Into Systems (Before Losses) kWh 96,405,629 97,938,093 93,351,418 93,107,850 88,472,013
2 g Electricity Carried on Behalf of Other Entities (After Losses) kWh
Retailer 1 50,595,855 61,496,766 62,018,549 63,646,375 67,938,098
Retailer 2 26,309,510 15,177,246 15,723,792 16,386,678 7,889,162
Retailer 3 7,599,901 7,456,947 6,130,911 6,037,242 4,156,761
Retailer 4 4,888,241 6,771,118 2,448,434 474,096 1,964,022
Retailer 5 482,259 417,907 364,441 80,859 418,294
Scanpower Limited
Performance Measures Continued
For the Year Ended 31 March 2006
Ref Description 2006 2005 2004 2003 2002
Retailer 6 0 0 0 0 90,095
Retailer 7 0 0 0 0 0
Total 89,875,766 91,319,985 86,686,126 86,625,250 82,456,432
2 h Total Consumers (Average for the Year) 6,694 6,753 6,719 6,638 6,615
Part 5. Requirement 21 (Reliability Performance Measures)
Sub Requirement 1. Total Number of Interruptions by Class
Year A B C D E F G TOTAL
Total Interruptions 2006 0.00 67.00 52.00 0.00 0.00 0.00 0.00 119.00
Total Interruptions 2005 0.00 86.00 60.00 0.00 0.00 0.00 0.00 146.00
Total Interruptions 2004 0.00 97.00 129.00 0.00 0.00 0.00 0.00 226.00
Total Interruptions 2003 1.00 82.00 65.00 0.00 0.00 0.00 0.00 148.00
Total Interruptions 2002 1.00 102.00 65.00 1.00 0.00 0.00 0.00 169.00
Sub Requirement 2. (a) & (b) Interruption Targets for the Following Year
Target Description 2007 2006 2005 2004 2003
Planned Interruption Target (Class B) 80 80 100 90 100
Unplanned Interruption Target (Class C) 60 60 62 70 100
Sub Requirement 3. Average Interruption Targets for the Following and Subsequent 4 years
Target Description 2007/2011 2006/2010 2005/2009 2004/2008 2003/2007
Planned Interruption Target (Class B) 80 80 100 90 100
Unplanned Interruption Target (Class C) 60 60 62 70 100
Sub Requirement 4. (a) & (b) Percentage Proportion of Total Number of Class C Interruptions by Time
Restoration Time 2006 2005 2004 2003 2002
3 Hours 5.8% 6.7% 32.6% 18.5% 4.6%
24 Hours 0.0% 0.0% 3.9% 0.0% 0.0%
Sub Requirement 5. (a) (b) (c) & (d) Faults per 100 Circuit Kilometres (Actual and Target)
Line Voltage 2006 2005 2004 2003 2002
11kV 6.94 8.04 17.27 8.58 8.58
Scanpower Limited
Performance Measures Continued
For the Year Ended 31 March 2006
Line Voltage / Target 2007 2007/2011
11kV 8.00 8.00
Sub Requirement 6. Faults per 100 Circuit Kilometres (Underground)
Line Voltage 2006 2005 2004 2003 2002
11kV Underground 0 0 0 0 0
Sub Requirement 7. Faults per 100 Circuit Kilometres (Overhead)
Line Voltage 2006 2005 2004 2003 2002
11kV Overhead 6.94 8.04 17.27 5.59 8.58
Sub Requirement 8. 9. 10. 11. SAIDI Results by Class and Targets
Class A B C D E F G TOTAL
2006 SAIDI 0.00 32.31 36.28 0.00 0.00 0.00 0.00 68.59
2005 SAIDI 0.00 38.82 32.49 0.00 0.00 0.00 0.00 71.31
2004 SAIDI 0.00 33.96 151.24 0.00 0.00 0.00 0.00 185.20
2003 SAIDI 28.44 24.80 57.23 0.00 0.00 0.00 0.00 110.47
2002 SAIDI 56.12 60.03 32.21 17.00 0.00 0.00 0.00 165.36
Class / Target 2007 2007/2011
SAIDI Class B 30.00 30.00
SAIDI Class C 45.00 45.00
Sub Requirement 12. 13. 14. 15. SAIFI Results by Class and Targets
Class A B C D E F G TOTAL
2006 SAIFI 0.00 0.29 0.69 0.00 0.00 0.00 0.00 0.98
2005 SAIFI 0.00 0.29 0.54 0.00 0.00 0.00 0.00 0.83
2004 SAIFI 0.00 0.26 1.41 0.00 0.00 0.00 0.00 1.67
2003 SAIFI 0.24 0.18 0.56 0.00 0.00 0.00 0.00 0.98
2002 SAIFI 0.23 0.46 0.67 0.57 0.00 0.00 0.00 1.93
Class / Target 2007 2007/2011
SAIFI Class B 0.25 0.25
SAIFI Class C 0.60 0.60
Scanpower Limited
Performance Measures Continued
For the Year Ended 31 March 2006
Sub Requirement 16. 17. 18.19. CAIDI Results by Class and Targets
Class A B C D E F G TOTAL
2006 CAIDI 0.00 111.41 52.58 0.00 0.00 0.00 0.00 69.99
2005 CAIDI 0.00 133.86 60.17 0.00 0.00 0.00 0.00 85.92
2004 CAIDI 0.00 130.62 107.26 0.00 0.00 0.00 0.00 110.90
2003 CAIDI 118.50 137.77 102.20 0.00 0.00 0.00 0.00 112.72
2002 CAIDI 239.83 131.07 48.15 29.82 0.00 0.00 0.00 85.63
Class / Target 2007 2007/2011
CAIDI Class B 120.00 120.00
CAIDI Class C 75.00 75.00
Scanpower Limited
Performance Measures Continued
For the Year Ended 31 March 2006
Part 7. Requirement 15 (Form for the Derivation of Financial Performance Measures)
Description Input Symbol ROF ROE ROI
Operating surplus before interest and income tax from financial statements 1,220
Operating surplus before interest and income tax adjusted pursuant to regulation 18 (OSBIIT) 1,220
Interest on cash, bank balances, and short-term investments (ISTI) 184
OSBIIT minus ISTI 1,036 a 1,036 1,036
Net surplus after tax from financial statements 802
Net surplus after tax adjusted pursuant to regulation 18 (NSAT) 802 n 802
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) 714
Depreciation of SFA at ODV (y) 806
ODV depreciation adjustment (92) d Add (92) add (92) add (92)
Subvention payment tax adjustment 0 s*t deduct 0 deduct 0
Interest tax shield (61) q deduct (61)
Revaluations 0 r add 0
Income tax 418 p deduct 418
Numerator 944 710 587
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) 20,003
Fixed assets at end of current financial year (FA1) 21,389
Adjusted net working capital at end of previous financial year (ANWC0) 35
Adjusted net working capital at end of current financial year (ANWC1) (133)
Description Input Symbol ROF ROE ROI
Average total funds employed (ATFE) 20,647 c 20,647 20,647
Total equity at end of previous financial year (TE0) 19,422
Total equity at end of current financial year (TE1) 20,149
Average total equity 19,786 k 19,786
WUC at end of previous financial year (WUC0) 304
WUC at end of current financial year (WUC1) 938
Average total works under construction 621 e Deduct 621 deduct 621 deduct 621
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
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) 19,860
System fixed assets at end of current financial year at book value (SFAbv1) 21,274
Average value of system fixed assets at book value 20,567 f Deduct 20,567 deduct 20,567 deduct 20,567
System Fixed assets at year beginning at ODV value (SFAodv0) 20,352
System Fixed assets at end of current financial year at ODV value (SFAodv1) 21,680
Average value of system fixed assets at ODV value 21,016 h Add 21,016 add 21,016 add 21,016
Denominator 20,475 19,614 20,475
ATFEADJ = c - e - f + h Ave TEADJ = k - e - m + v - f + h ATFEADJ = c - e - ½r - f + h
Financial Performance Measure: 4.61 3.62 2.87
ROF = OSBIITADJ/ATFEADJ x 100 ROE = NSATADJ/ATEADJ x 100 ROI = OSBIITADJ/ATFEADJ x 100
Scanpower Limited
Performance Measures Continued
For the Year Ended 31 March 2006
Part 8. Requirement 16 (Annual Valuation Reconciliation Report)
2006 2005
$000 $000
System fixed assets at ODV at end of previous financial year 20,352 19,541
ADD system fixed assets acquired during the year at ODV 1 2,212 1,632
LESS system fixed assets disposed of during the year at ODV 78 55
LESS depreciation on system fixed assets at ODV 806 766
ADD revaluation of system fixed assets 0 0
EQUALS system fixed assets at ODV at end of the financial year 21,680 20,352
Note 1: The value of system fixed assets acquired during the year includes capitalised expenditure on replacement and refurbishment of system fixed assets.
PRICEWATERHOUSECOOPERS
CERTIFICATION BY AUTIDOR IN RELATION TO VALUATION
We have examined the valuation report of Scanpower Limited and dated 2 December 2004, which report contains valuations of system fixed assets as at 31 March 2004.
In our opinion, having made all reasonable enquiry, to the best of our knowledge, the valuations contained in the report, including the total valuation of system fixed assets of $19,540,725, have been made in accordance with the ODV Handbook (as defined in the Commerce Commission's Electricity Information Disclosure Requirements 2004).
PricewaterhouseCoopers
Chartered Accountants
Auckland
2 December 2004