INFORMATION FOR DISCLOSURE
PURSUANT TO SECTION 57T OF THE COMMERCE ACT 1986
NETWORK TASMAN LIMITED
INFORMATION DISCLOSURE
Information Disclosure Disclaimer
The information disclosed has been prepared in accordance with and for the specific use intended in the Commerce Commission's Electricity Information Disclosure Requirements 2004. No responsibility will be accepted for any third party that may use or rely on this report or any part thereof without the express written permission of Network Tasman Limited.
Except as allowed for by the Commerce Act 1986 and information disclosure requirements promulgated by the Act, neither the whole or any part of the information disclosed or any reference thereto may be included in any published document, circular or statement or published in any way without Network Tasman's written approval of the form and context in which it may appear.
The information disclosed is for the line business as described in the Electricity Information Disclosure Requirements 2004. There are also additional activities of the company that are not required to be reported under the Requirements.
NETWORK TASMAN
IN ACCORDANCE WITH THE ELECTRICITY INFORMATION DISCLOSURE REQUIREMENTS 2004
Requirement 31 (1)
CERTIFICATION OF FINANCIAL STATEMENTS, PERFORMANCE MEASURES, AND STATISTICS DISCLOSED BY DISCLOSING ENTITIES (OTHER THAN TRANSPOWER).
We, Ian Francis Kearney and Christopher Ian Menzies Turner, directors of Network Tasman Limited certify that, having made all reasonable enquiry, to the best of our knowledge,
(a) The attached audited financial statements of Network Tasman 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 Network Tasman 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.
SIGNATURES OF DIRECTORS:
I.F. Kearney C.I.M Turner
Dated: 15 November 2006
Network Tasman Limited
Line Business Financial Statements
Statement of financial performance
For the year ended 31 March 2006
Note 2006 2005
$000 $000
Total operating revenue 2 26,814 27,279
Total operating expenses 3 (19,818) (19,207)
Operating surplus before interest expense and income tax 6,996 8,072
Interest expense 0 (6)
Operating surplus before income tax 6,996 8,066
Income tax 4 (2,387) (2,157)
Operating surplus 4,609 5,909
Operating surplus comprises:
Operating surplus from continuing activities 4,609 5,909
Operating surplus from discontinued activities 0 0
4,609 5,909
The accompanying notes and accounting policies form part of and are to be read in conjunction with this statement.
Network Tasman Limited
Line Business Financial Statements
Statement of movements in equity
For the year ended 31 March 2006
Note 2006 2005
$000 $000
Total equity at beginning of year 6 134,975 131,261
Total recognised revenues and expenses
Operating surplus 4,609 5,909
Movement in property, plant & equipment revaluation reserve 0 0
Total recognised revenues and expenses for the year 4,609 5,909
Other movements
Distributions to owners during the year 5 (2,000) (1,704)
Transfer of property, plant & equipment from/(to) "Other" business 0 (491)
(2,000) (2,195)
Total equity at end of year 6 137,584 134,975
The accompanying notes and accounting policies form part of and are to be read in conjunction with this statement.
Network Tasman Limited
Line Business Financial Statements
Statement of financial position
As at 31 March 2006
Note 2006 2005
$000 $000
Current assets
Cash and short term deposits 6,975 8,166
Receivables 8 2,913 3,013
Total current assets 9,888 11,179
Non-current assets
Property, plant and equipment 9 130,160 126,326
Deferred taxation 10 85 64
Total non-current assets 130,245 126,390
Total assets 140,133 137,569
Current liabilities
Payables and accruals 11 2,234 2,231
Provisions 12 134 189
Total current liabilities 2,368 2,420
Non-current liabilities
Provisions 12 181 174
Total non-current liabilities 181 174
Equity
Attributable to shareholders of the company 6 137,584 134,975
Total equity 137,584 134,975
Total liabilities and equity 140,133 137,569
For and on behalf of the Board of Directors:
IF Kearney CIM Turner
Chairman Director
15-Nov-06 15-Nov-06
The accompanying notes and accounting policies form part of and are to be read in conjunction with this statement.
Network Tasman Limited
Line Business Financial Statements
Statement of cash flows
For the year ended 31 March 2006
Note 2006 2005
$000 $000
Cash flows from operating activities
Cash was provided from:
Receipts from customers 23,049 22,510
Interest income received 582 670
Capital contributions from consumers 0 0
23,631 23,180
Cash was applied to:
Payments to suppliers and employees 12,950 13,779
Interest expense paid 0 0
Income tax paid 2,324 2,157
15,274 15,936
Net cash flows from operating activities 13 8,357 7,244
Cash flows from investing activities
Cash was provided from:
Proceeds from sale of property, plant and equipment 11 13
11 13
Cash was applied to:
Purchase of property, plant and equipment 7,559 6,174
7,559 6,174
Net cash flows from investing activities (7,548) (6,161)
Cash flows from financing activities
Cash was applied to:
Dividends paid 2,000 1,704
Repayment of term loans 0 0
2,000 1,704
Net cash flows from financing activities (2,000) (1,704)
Net increase (decrease) in cash balances (1,191) (621)
Cash balances at beginning of year 8,166 8,787
Cash balances at end of year 6,975 8,166
The accompanying notes and accounting policies form part of and are to be read in conjunction with this statement.
Network Tasman Limited
Line Business Financial Statements
Notes to and forming part of the financial statements
For the year ended 31 March 2006
1. Statement of accounting policies
Reporting entity
The reporting entity is Network Tasman Limited.
Statutory base
Network Tasman Limited is a company registered under the Companies Act 1993.
The financial statements have been prepared in accordance with, and for the purposes of, complying with the requirements of the Electricity Information Disclosure Requirements 2004.
Measurement base
The financial statements have been prepared on the basis of historical cost with the exception of distribution system assets, which are stated at valuation.
The financial statements comprise statements of financial performance, movements in equity, financial position, cash flows and notes to these statements.
Accounting policies
The financial statements have been prepared in accordance with generally accepted accounting practice in New Zealand. The accounting policies that materially affect the measurement of financial performance, financial position and cash flows are set out below:
(a) Revenue
Line revenue
Retailer-owned electricity meters are read on the basis of constant cycles each year. Line revenues include an estimated amount for accrued sales as at 31 March 2005.
Customer contributions
Distribution system assets vested from consumers to the company are credited to the statement of financial performance at fair value.
(b) Property, plant and equipment
Recognition of property, plant and equipment
The company has the following classes of property, plant and equipment:
Distribution system assets
· Primary distribution assets
· Secondary distribution assets
· Substation assets
· Load control plant
· Streetlights
· Consumer connection assets
· Communication assets
Non-distribution system assets
· Plant and equipment
· Computer equipment
· Motor vehicles
Initial recording
All owned items of property, plant and equipment are initially recorded at cost. The cost of an item of property, plant and equipment comprises its purchase price plus any other costs directly attributable to bringing the item to working condition for its intended use. Donated assets are recorded at fair value.
Distribution system assets are stated at valuation as determined every three years by an independent registered valuer. Plant and equipment, computer equipment and motor vehicles are recorded at cost.
Asset components
When the components of an item of property, plant and equipment have different useful lives, the cost of the item is allocated to its components and each component is accounted for separately in accordance with the company's Asset Management Plan (AMP).
Subsequent expenditure
Subsequent expenditure relating to an item of property, plant and equipment is capitalised when it is probable that the expenditure increases the economic benefits over the total life of the item beyond those most recently assessed in determining the basis of the item's carrying amount.
Revaluations
Distribution system assets are revalued every three years to fair value, or more regularly if necessary to ensure that no individual item of property, plant and equipment within a class is included at a valuation that is materially different from its fair value. Fair value is determined using optimised depreciated replacement cost.
Distribution system assets were last revalued as at 31 March 2004 to optimised depreciated replacement cost (ODRC) as assessed by independent valuers PricewaterhouseCoopers.
Any revaluation increment or decrement is recognised in the statement of movements in equity. If the revaluation results in a revaluation deficit, the revaluation deficit is recognised in the statement of financial performance. To the extent that a revaluation reverses a previous revaluation deficit that was recognised in the statement of financial performance, such revaluation increment is recognised in the statement of financial performance.
Disposal of property, plant and equipment
Where an item of property, plant and equipment is disposed of, the difference between net disposal proceeds and the carrying amount is recognised in the statement of financial performance.
Depreciation
Depreciation of property, plant and equipment is calculated so as to expense the cost or revalued amount of the assets, less any residual value, over the assets useful lives.
The depreciation methods and depreciation rates used are as follows:
Asset class Depreciation method Depreciation rates
Primary distribution assets Straight line 1.33% - 6.16%
Secondary distribution assets Straight line 1.33% - 9.20%
Substation assets Straight line 1.43% - 13.31%
Load control plant Straight line 1.82% - 17.33%
Streetlights Straight line 1.67% - 33.33%
Consumer connection assets Straight line 2.22% - 33.33%
Communication assets Straight line 4.00% - 5.00%
Plant and equipment Diminishing value 20%
Motor vehicles Diminishing value 20%
Computer equipment Diminishing value 48%
The depreciation rates on distribution system assets in existence at the time of the previous revaluation (31 March 2004) are based on the assessed residual lives as determined in the calculation of the Optimised Depreciated Replacement Cost (ODRC).
New assets (as from 1 April 2004) were assessed based on the standard useful lives as contained in the Handbook for Optimised Deprival Valuation of System Fixed Assets of Electricity Line Businesses as issued by the Commerce Commission and dated 30 August 2004.
Pole structures, which have a physical life well in excess of the standard useful lives, were assessed by the company's qualified engineers.
(c) Income tax
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 involves recognising the tax effect of all timing differences between accounting and taxable income as a deferred tax asset or liability on the statement of financial position.
A deferred tax asset is recognised only where there is virtual certainty that the benefit will be utilised.
(d) Receivables
Receivables are carried at estimated net realisable value after providing for debts where collection is in doubt.
(e) Impairment
Where the estimated recoverable amount of an asset is less than the carrying amount, the asset is written down. The impairment loss is recognised in the statement of financial performance.
(f) Cash and cash equivalents
For the purpose of the statement of cash flows, cash includes cash on hand, deposits held at call with banks and investments in money market instruments.
(g) Employee entitlements
A provision for employee entitlements is recognised as a liability in respect of benefits earned by employees but not yet received at balance date. Employee benefits include annual leave and long service leave. The provision is the estimated amount expected to be paid out by the company.
(h) Operating leases
Payments made under operating leases are recognised in the statement of financial performance on a basis representative of the pattern of benefits expected to be derived from the leased asset.
(i) Changes In accounting policies
There have been no changes in accounting policies. All policies have been applied on bases consistent with those used in the prior year.
Network Tasman Limited
Line Business Financial Statements
Notes to and forming part of the financial statements
For the year ended 31 March 2006
2006 2005
$000 $000
2. Operating revenue
Continuing activities
Trading revenue
Line revenue (net of discounts) 23,086 22,447
Customer contributions 1,641 3,291
Gain on sale of assets (194) 20
Other revenue 1,699 851
Non-recurring income 0 0
Investment revenue
Interest income 582 670
Total operating revenue from continuing activities 26,814 27,279
3. Operating expenses
Operating expenses include:
Depreciation of property, plant & equipment
Primary distribution assets 211 190
Secondary distribution assets 3,398 3,291
Substation assets 300 285
Load control plant 69 58
Streetlights 43 43
Consumer connections 278 277
Communications 19 84
Plant and equipment 102 129
Computer equipment 219 145
Motor vehicles 34 34
Total depreciation of property, plant & equipment 4,673 4,536
Auditors' fees
Audit fees 28 27
Other remuneration paid to auditor 4 4
Costs of offering credit
Bad debts written off 4 15
Change in provision for doubtful debts (0) (1)
Governance expenses
Directors' fees 150 129
Donations 2 2
Interest expense 0 6
Impairment loss to property, plant & equipment 0 0
Rental and operating lease costs 253 253
Network Tasman Limited
Line Business Financial Statements
Notes to and forming part of the financial statements
For the year ended 31 March 2006
2006 2005
$000 $000
4. Income tax
Operating surplus before income tax 6,996 8,066
Permanent differences:
Non-taxable customer contributions (1,641) (3,291)
Depreciation 1,840 1,756
Other permanent differences 38 6
237 (1,529)
Taxable income 7,233 6,537
Tax expense @ 33% 2,387 2,157
Income tax (over) under provided in prior year 0 0
Income tax expense recognised in statement of financial performance 2,387 2,157
Comprising:
Current period tax assessment 2,408 2,162
Deferred income tax liability (21) (5)
2,387 2,157
5. Dividends
Dividends during the year:
Dividends paid 2,000 1,704
Total dividends paid 2,000 1,704
6. Equity
Ordinary shares fully paid 14,280 14,280
Property, plant & equipment revaluation reserve 84,874 84,874
Share premium reserve 1,938 1,938
Retained earnings 7 36,492 33,883
Total equity 137,584 134,975
7. Retained earnings
Retained earnings at beginning of year 33,883 30,169
Operating surplus 4,609 5,909
Total available for appropriation 38,492 36,078
Dividends paid 5 (2,000) (1,704)
Transfer of property, plant & equipment from/(to) "Other" business 0 (491)
Retained earnings at end of year 36,492 33,883
Network Tasman Limited
Line Business Financial Statements
Notes to and forming part of the financial statements
For the year ended 31 March 2006
2,006 2,005
$000 $000
8. Receivables
Current receivables
Trade receivables 2,676 2,625
Less doubtful debts 3 3
2,673 2,622
Interest accrued 63 100
Tax refund due 0 121
Prepayments 177 170
Total current receivables 2,913 3,013
9. Property, plant & equipment
At cost At valuation Accum. Carrying
depreciation Amount
Property, plant & equipment - March 2006
Primary distribution assets 1,866 6,867 400 8,333
Secondary distribution assets 10,118 96,002 6,689 99,431
Substation assets 2,699 7,817 585 9,931
Building NI 1,952 0 44 1,908
Load control plant 364 617 127 854
Streetlights 8 278 87 199
Consumer connections 38 6,242 555 5,725
Communications 1,465 0 0 1,465
Plant and equipment 931 0 407 524
Computer equipment 1,140 0 821 319
Motor vehicles 269 0 133 136
Assets under construction 1,335 0 0 1,335
Total 22,185 117,823 9,848 130,160
Network Tasman Limited
Line Business Financial Statements
Notes to and forming part of the financial statements
For the year ended 31 March 2006
At cost At valuation Accum. Carrying
depreciation Amount
Property, plant & equipment - March 2005
Primary distribution assets 1,174 6,867 190 7,851
Secondary distribution assets 5,539 96,002 3,291 98,250
Substation assets 741 7,817 285 8,273
Load control plant 312 617 58 871
Streetlights 3 278 43 238
Consumer connections 38 6,242 277 6,003
Communications 86 2,044 84 2,046
Plant and equipment 1,739 0 1,202 537
Computer equipment 2,250 0 1,981 269
Motor vehicles 268 0 123 145
Assets under construction 1,843 0 0 1,843
Total 13,991 119,867 7,534 126,326
Valuation information
The distribution system assets were last revalued as at 31 March 2004 to a net current value of $120.4 million.
The valuation to optimised depreciated replacement cost (ODRC) was carried out by independent valuers,
PricewaterhouseCoopers.
2006 2005
$000 $000
Review of useful lives of property, plant and equipment
Estimate of increase in depreciation charge following a review of useful lives 1,312 1,312
10. Deferred taxation
Balance at beginning of year 64 59
Deferred tax on timing differences 21 5
Balance at end of year 85 64
11. Payables and accruals
Current
Trade payables and accruals 2,234 2,231
Total current payables and accruals 2,234 2,231
Network Tasman Limited
Line Business Financial Statements
Notes to and forming part of the financial statements
For the year ended 31 March 2006
2006 2005
$000 $000
12. Provisions
Current
Employee entitlements 134 126
Sundry provisions 0 63
Total current provisions 134 189
Non-current
Employee entitlements 181 174
Sundry provisions 0 0
Total non-current provisions 181 174
Provision for employee entitlements
Balance at beginning of year 300 270
Additional provisions made 166 110
Amount utilised (150) (80)
Provision reversed 0 0
Balance at end of year 316 300
The provision for employee entitlements relates to employee benefits such as accrued annual leave and long service
leave.
Sundry provisions
Balance at beginning of year 63 85
Additional provisions made 63
Amount utilised 0 0
Provision reversed (63) (85)
Balance at end of year 0 63
Sundry provisions relate to contractor bonuses.
Network Tasman Limited
Line Business Financial Statements
Notes to and forming part of the financial statements
For the year ended 31 March 2006
2006 2005
$000 $000
13. Reconciliation of operating surplus after income tax with net cash flows from operating activities
Operating surplus after tax 4,609 5,909
Add (less) non-cash items and non-operating items:
Depreciation 4,673 4,536
Movement in deferred taxation (21) (5)
Customer contributions (1,641) (3,291)
Bad debts written-off 4 15
Change in provision for doubtful debts (0) (1)
Impairment loss to property, plant & equipment 0 0
Movement in capital expenditure in creditors 678 (103)
3,693 1,151
Movement in working capital:
Increase (decrease) in payables and provisions (45) 525
(Increase) decrease in receivables (21) (352)
Increase (decrease) in taxation payable 121 11
55 184
Net cash flows from operating activities 8,357 7,244
14. Related parties
There were no related party transactions in relation to the following (2005: nil):
Construction of subtransmission assets
Construction of zone substations
Construction of distribution lines and cables
Construction of medium voltage switchgear
Construction of distribution transformers
Construction of distribution substations
Construction of low voltage reticulation
Construction of other system fixed assets
Maintenance of assets
Consumer connections and disconnections
Parent entity
The holding entity of the company is the Network Tasman Trust which holds 100% (2005: 100%) of the company's shares.
Refer to Note 5 for dividends paid to the holding entity.
Associate company
Network Tasman Limited has a 50% shareholding in Nelson Electricity Limited. Nelson Electricity Limited owns
and operates the electricity distribution network in Nelson city.
Transmission costs charged by national grid operator Transpower NZ Limited for connection by Nelson Electricity
Limited to the national grid are on-charged, at cost, by Network Tasman Limited to Nelson Electricity Limited.
Network Tasman Limited
Line Business Financial Statements
Notes to and forming part of the financial statements
For the year ended 31 March 2006
2006 2005
$000 $000
Net transmission costs on-charged (1 April 2005 to 31 March 2006) 1,492 1,666
Balance due from Nelson Electricity Limited as at 31 March 2006 133 154
Mr C Turner - Nelson Pine Industries Limited
Nelson Pine Industries Limited, a company in which Mr C Turner (a director of Network Tasman Limited) is General
Manager, contracts directly on an arms length basis with Network Tasman Limited, for distribution services. The
services amount to 4.7 percent of total gross sales (2005: 5.2%).
As at 31 March 2006, the balance owing by Nelson Pine Industries Limited was $88,984 (2005: $110,317).
No related party debts have been written off or forgiven during the year (2005: nil).
15. Financial Instruments
The company estimates that in respect of the reported financial instruments, being cash, short-term investments
and debtors, fair value is equivalent to the carrying amount as stated in the statement of financial position.
Credit risk
The company places short-term investments with registered banks only. The company has a credit policy which
is used to manage this exposure to credit risk. As part of this policy, limits on the amount of surplus funds placed
with any one banking institution have been set and approved by the Board of Directors.
Concentrations of credit risk
The company's customers are electricity retailers. The credit risk is not considered to be high. The company
does not have any other significant concentrations of credit risk.
Interest rate risk
Short-term investments mature within the range of on-call to 67 days. The interest rates on these investments
range from 7.25% to 7.61% (2005: 6.68% to 6.97%).
16. Segmental Information
For reporting purposes the company operates predominantly in one industry - the distribution of electricity. The operations of the
company are carried out in New Zealand and are therefore within one geographical segment for reporting purposes.
17. Commitments
Capital commitments
Capital commitments as at 31 March 2006 were $2,837,935 (2005: $4,846,682).
Network Tasman Limited
Line Business Financial Statements
Notes to and forming part of the financial statements
For the year ended 31 March 2006
Operating lease commitments
Lease commitments under non-cancellable operating leases are payable as follows:
Less than one year 247 253
Between one and two years 247 253
Between two and five years 741 758
Greater than five years 1,107 1,383
Total operating lease commitments 2,342 2,647
18. Contingencies
As at 31 March 2006 there were no material contingent liabilities or contingent assets (2005: nil).
19. Events occurring after balance date
The directors of Network Tasman Limited are not aware of any significant event occurring subsequent to
balance date which, if known at balance date, would have resulted in a different assessment within the
financial statements.
20. Mandatory specific disclosures
Items required to be separately listed in the financial statements as required under the Electricity
Information Disclosure Requirements 2004:
2006 2005
$000 $000
1. Current assets
(a) Cash & bank balances 141 312
(b) Short-term investments 6,833 7,854
(c) Inventories 0 0
(d) Accounts receivable 2,736 2,722
(e) Other receivables 0 0
(f) Prepayments 177 170
(g) Other current assets not listed in (a) to (f) 0 121
(h) Total current assets 9,887 11,179
2. Fixed assets
(a) System fixed assets 125,938 123,532
(b) Consumer billing and information system assets 319 269
(c) Motor vehicles 137 145
(d) Office equipment 99 84
(e) Land and buildings 1,908 0
(f) Capital works under construction 1,335 1,843
(g) Other fixed assets not listed in (a) to (f) 425 453
(h) Total fixed assets 130,160 126,326
3. Other tangible assets not listed above 85 64
4. Total tangible assets 140,133 137,569
Network Tasman Limited
Line Business Financial Statements
Notes to and forming part of the financial statements
For the year ended 31 March 2006
2006 2005
$000 $000
5. Intangible assets
(a) Goodwill 0 0
(b) Other intangibles not listed in (a) above 0 0
(c) Total intangible assets 0 0
6. Total assets 140,133 137,569
7. Current liabilities
(a) Bank overdraft 0 0
(b) Short-term borrowings 0 0
(c) Payables & accruals 2,234 2,231
(d) Accrued payroll 134 126
(e) Provision for dividend payable 0 0
(f) Provision for income tax 0 0
(g) Other current liabilities not listed in (a) to (f) 0 63
(h) Total current liabilities 2,368 2,420
8. Non-current Liabilities
(a) Payables & accruals 181 174
(b) Borrowings 0 0
(c) Deferred tax 0 0
(d) Other non-current liabilities not listed in (a) to (c) above 0 0
(e) Total non-current liabilities 181 174
9. Equity
(a) Shareholders' equity
(i) Share capital 14,280 14,280
(ii) Retained earnings 36,492 33,883
(iii) Reserves 86,812 86,812
(iv) Total shareholders equity 137,584 134,975
(b) Minority interests in subsidiaries 0 0
(c) Total equity 137,584 134,975
(d) Capital notes 0 0
(e) Total capital funds 137,584 134,975
10. Total equity and liabilities 140,133 137,569
11. Operating revenue
(a) Revenue from line/access charges 28,218 27,120
(b) Line charge discounts to consumers (5,132) (4,673)
(c) Revenue from "other" business for services carried out by the line business 0 0
(d) Interest on cash, bank balances and short-term investments 582 670
(e) AC loss rental rebates 1,449 654
(f) Other revenue not listed in (a) to (e) 1,697 3,508
(g) Total operating revenue 26,814 27,279
Network Tasman Limited
Line Business Financial Statements
Notes to and forming part of the financial statements
For the year ended 31 March 2005
2006 2005
$000 $000
12. Operating expenditure
(a) Payment for transmission charges 8,536 8,500
(b) Transfer payments to the "other" business for:
(i) Asset maintenance 0 0
(ii) Consumer disconnections/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 92 63
(viii) Total transfer payment to the "Other" business 92 63
(c) Expense to entities that are not related parties for:
(i) Asset maintenance 2,860 2,928
(ii) Consumer disconnections/reconnection services 0 0
(iii) Meter data 0 0
(iv) Consumer-based load control services 0 0
(v) Royalty and patent expenses 0 0
(vi) Total of specified expenses to non-related parties 2,860 2,928
(d) Employee salaries, wages and redundancies 1,607 1,566
(e) Consumer billing and information system expense 229 205
(f) Depreciation on:
(i) System fixed assets 4,318 4,228
(ii) Other assets not listed in (i) 390 308
(iii) Total depreciation 4,708 4,536
(g) Amortisation of:
(i) Goodwill 0 0
(ii) Other intangibles 0 0
(iii) Total amortisation of intangibles 0 0
(h) Corporate and administration 486 383
(i) Human resource expenses 49 54
(j) Marketing/advertising 84 73
(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 146 164
(o) Donations 2 2
(p) Directors' fees 150 129
(q) Auditors' fees:
(i) Audit fees paid to principal auditors 28 27
(ii) Audit fees paid to other auditors 0 0
(iii) Fees paid for other services provided by principal and other auditors 4 4
(iv) Total auditors' fees 32 31
(r) Costs of offering credit:
(i) Bad debts written off 4 15
(ii) Increase in estimated doubtful debts (0) (1)
(iii) Total cost of offering credit 4 14
(s) Local authority rates expense 14 11
(t) AC loss-rentals rebates expense 566 264
(u) Rebates to consumers due to ownership interest 0 0
(v) Subvention payments 0 0
(w) Unusual expenses 0 0
(x) Other expenditure not listed in (a) to (w) 253 284
13. Total operating expenditure 19,818 19,207
Network Tasman Limited
Line Business Financial Statements
Notes to and forming part of the financial statements
For the year ended 31 March 2006
2006 2005
$000 $000
14. Operating surplus before interest and income tax 6,996 8,072
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 6
(d) Total interest expense 0 6
16. Operating surplus before income tax 6,996 8,066
17. Income tax 2,387 2,157
18. Net surplus after tax 4,609 5,909
19. Annual valuation reconciliation report
System fixed assets at ODV - end of the previous financial year 113,136 108,091
Add system fixed assets acquired during the year at ODV 7,351 9,487
Less system fixed assets disposed of during the year at ODV 0 0
Less depreciation on system fixed assets at ODV (4,521) (4,442)
Add revaluations of system fixed assets 0 0
System fixed assets at ODV - end of the financial year 115,966 113,136
Network Tasman Limited
Line Business Performance Measures
Performance Measures and Statistics
For the year ended 31 March 2005
2006 2005 2004 2003
Financial performance measures
(a) Return on Funds 5.31% 6.41% 8.88% 10.27%
(b) Return on Equity 3.54% 4.72% 6.06% 6.96%
(c) Return on Investment 3.43% 4.68% 42.93% 7.33%
Return on Investment - as restated (excludes revaluation) 6.30%
Efficiency performance measures
(a) Direct Line Costs per Kilometre $1,308 $1,318 $1,258 $1,232
(b) Indirect Line Costs per Consumer $50 $48 $43 $42
Energy delivery efficiency performance measures and statistics
1. Energy delivery efficiency performance measures
(a) Load Factor 63.20% 65.10% 64.39% 66.12%
(b) Loss Ratio 4.20% 4.40% 3.88% 4.25%
(c) Capacity Utilisation 41.90% 42.80% 42.50% 43.24%
2. Statistics
(a) System Length
33 kV system 135.86 136.35 133.73 126.78
22 kV system 58.66 29.92 0.00 0.00
11 kV system 1992.08 2012.2 2060.85 2001.64
6.6 kV system 34.37 34.37 34.37 34.37
400 V system 1044.12 1034.01 1015.33 998.00
Total Kilometres 3265.09 3246.85 3244.28 3160.79
(b) System Length - Overhead
33 kV system 123.95 124.04 121.83 121.12
22 kV system 46.96 18.22 0.00 0.00
11 kV system 1831.07 1858.61 1908.09 1873.27
6.6 kV system 33.03 33.03 33.03 33.03
400 V system 565.49 575.63 581.08 589.69
Total Kilometres 2600.5 2609.53 2644.03 2617.11
(c) System Length - Underground
33 kV system 11.91 12.31 11.90 5.66
22 kV system 11.70 11.70 0.00 0.00
11 kV system 161.01 153.59 152.76 128.37
6.6 kV system 1.34 1.34 1.34 1.34
400 V system 478.63 458.38 434.25 408.31
Total Kilometres 664.59 637.32 600.25 543.68
(d) Transformer Capacity (kVA) 331,138 315,001 304,205 291,626
(e) Maximum Demand (kW) 138,746 134,977 129,290 126,103
(f) Total electricity entering the system (before losses) (kWh) 768,208,898 770,267,682 729,267,287 730,401,537
(g) Total amount of electricity supplied from the system (after losses of electricity) on behalf of each person (kWh)
Retailer A 460,754,459 469,201,721 412,727,633 304,463,864
Retailer B 79,888,137 63,899,825 102,072,527 9,507,894
Retailer C 183,794,923 186,074,455 174,954,119 1,042,196
Retailer D 1,622,126 1,581,408 673,561 191,883,213
Retailer E 9,817,540 15,330,318 10,574,262 192,477,170
Retailer F 345,497
Retailer G
Generator 1 728,664 1,822,725 1,835,341 1,631,325
Generator 2 1,333,715 887,434 894,009 85,647
Generator 3 1,691,823 3,769,506
Total 742,567,392 703,731,452 701,091,309
(h) Total Consumers 34,400 33,830 33,335 32,205
Reliability performance measures to be disclosed by line owners
1. Total number of Interruptions
Class A Transpower Planned 3.00 4.00 3.00 4.00
Class B Line Owner Planned 138.00 110.00 76.00 66.00
Class C Line Owner Unplanned 97.00 126.00 101.00 118.00
Class D Transpower Unplanned 5.00 3.00 3.00 1.00
Total 243.00 243.00 183.00 189.00
2. Interruption Targets (next year) 2006/07 2005/06 2004/05 2003/04
(a) Planned Interruptions by Line Owner (Class B) 100.00 100.00 100.00 100.00
(b) Unplanned Interruptions by Line Owner (Class C) 130.00 130.00 130.00 130.00
3. Average Interruption Targets (5 years) 2007/11 2006/10 2005/09 2004/08
(a) Planned Interruptions by Line Owner (Class B) 100.00 100.00 100.00 100.00
(b) Unplanned Interruptions by Line Owner (Class C) 130.00 130.00 130.00 130.00
4. Fault Restoration Times (Class C) not restored within
(a) 3 hours 19% 22% 23% 17%
(b) 24 hours 0% 0% 0% 0%
5. Number of faults per 100km of prescribed voltage line
(a) Total number of faults 4.37 5.69 4.53 5.45
2006/07 2005/06 2004/05 2003/04
(b) Number of faults targeted (next year) 6.00 6.00 6.00 6.00
2007/11 2006/10 2005/09 2004/08
(c) Average number of faults targeted (5 years) 6.00 6.00 6.00 6.00
(d) Number of faults per nominal line voltages
Total number of faults
33 kV system 2.21 2.21 2.24 1.58
22kV system 0.00 0.00 0.00 0.00
11 kV system 4.71 6.06 4.76 5.70
6.6 kV system 0.00 2.91 0.00 5.82
Number of faults targeted (next year) 2006/07 2005/06 2004/05 2003/04
33 kV system 1.50 1.50 1.50 1.50
22kV system 0.00 0.00 0.00 0.00
11 kV system 6.40 6.40 6.40 6.30
6.6 kV system 0.00 0.00 0.00 0.00
Average number of faults targeted (5 years) 2007/11 2006/10 2005/09 2004/08
33 kV system 1.50 1.50 1.50 1.50
22 kV system 0.00 0.00 0.00 0.00
11 kV system 6.40 6.40 6.40 6.30
6.6 kV system 0.00 0.00 0.00 0.00
6. Number of faults per 100km of prescribed voltage underground line
33 kV system 0.00 0.00 0.00 0.00
22 kV system 0.00 0.00 0.00 0.00
11 kV system 3.10 4.56 6.54 4.67
6.6 kV system 0.00 0.00 0.00 0.00
Total 2.69 3.91 6.02 4.43
7. Number of faults per 100km of prescribed voltage overhead line
33 kV system 2.42 2.42 2.46 1.65
22 kV system 0.00 0.00 0.00 0.00
11 kV system 4.86 6.21 4.61 5.87
6.6 kV system 0.00 3.03 0.00 6.06
Total 4.52 5.85 4.41 5.52
8. SAIDI for the total number of interruptions 224.66 210.15 164.10 151.23
9. SAIDI targets (next year) 2006/07 2005/06 2004/05 2003/04
(a) Planned Interruptions by Line Owner (Class B) 25.00 25.00 25.00 25.00
(b) Unplanned Interruptions by Line Owner (Class C) 85.00 59.00 60.00 60.00
10. Average SAIDI targets (5 years) 2007/11 2006/10 2005/09 2004/08
(a) Planned Interruptions by Line Owner (Class B) 25.00 25.00 25.00 25.00
(b) Unplanned Interruptions by Line Owner (Class C) 81.00 57.00 57.00 58.00
11. Classification of SAIDI interruptions by Class
Class A Transpower Planned 33.47 55.25 35.73 43.29
Class B Line Owner Planned 24.89 28.04 25.92 16.77
Class C Line Owner Unplanned 96.56 118.30 95.26 90.96
Class D Transpower Unplanned 69.74 8.56 7.19 0.20
Total 224.66 210.15 164.10 151.22
12. SAIFI for the total number of interruptions 2.53 2.47 1.73 1.86
13. SAIFI targets (next year) 2006/07 2005/06 2004/05 2003/04
(a) Planned Interruptions 0.18 0.18 0.18 0.18
(b) Unplanned Interruptions 1.22 0.98 1.00 1.00
14. Average SAIFI targets (5 years) 2007/11 2006/10 2005/09 2004/08
(a) Planned Interruptions by Line Owner (Class B) 0.18 0.18 0.18 0.18
(b) Unplanned Interruptions by Line Owner (Class C) 1.16 0.95 0.95 0.97
15. Classification of SAIFI interruptions by Class
Class A Transpower Planned 0.15 0.23 0.14 0.17
Class B Line Owner Planned 0.13 0.23 0.15 0.19
Class C Line Owner Unplanned 0.92 1.48 1.07 1.30
Class D Transpower Unplanned 1.33 0.53 0.37 0.20
Total 2.53 2.47 1.73 1.86
16. CAIDI for the total number of interruptions 88.80 85.08 94.30 81.25
17. CAIDI Targets (next year) 2006/07 2005/06 2004/05 2003/04
(a) Planned Interruptions 140.00 140.00 140.00 139.00
(b) Unplanned Interruptions 60.00 60.00 60.00 60.00
18. Average CAIDI targets (5 years) 2007/11 2006/10 2005/09 2004/08
(a) Planned Interruptions by Line Owner (Class B) 140.00 140.00 140.00 139.00
(b) Unplanned Interruptions by Line Owner (Class C) 60.00 60.00 60.00 60.00
19. Classification of CAIDI interruptions by Class
Class A Transpower Planned 233.13 240.22 246.86 258.11
Class B Line Owner Planned 191.46 121.91 169.23 86.47
Class C Line Owner Unplanned 104.95 79.93 88.97 69.84
Class D Transpower Unplanned 52.44 16.15 19.35 1.00
Schedule 1 - Part 7
Form for the Derivation of Financial Performance Measures from Financial Statements
Derivation Table Input and Calculations Symbol in formula ROF ROE ROI
Operating surplus before interest and income tax from financial statements 6,996,174
Operating surplus before interest and income tax adjusted pursuant to regulation 18 (OSBIIT) 6,996,174
Interest on cash, bank balances, and short-term investments (ISTI) 582,000
OSBIIT minus ISTI 6,414,174 a 6,414,174 6,414,174
Net surplus after tax from financial statements 4,609,174
Net surplus after tax adjusted pursuant to regulation 18 (NSAT) 4,609,174 n 4,609,174
Amortisation of goodwill and amortisation of other intangibles 0 g add 0 add 0 add 0
Subvention payment 0 s add 0 add 0 add 0
Depreciation of SFA at BV (x) 4,318,000
Depreciation of SFA at ODV (y) 4,520,366
ODV depreciation adjustment -202,366 d add -202,366 add -202,366 add -202,366
Subvention payment tax adjustment 0 s*t deduct 0 deduct 0
Interest tax shield -192,060 q deduct -192,060
Revaluations 0 r add 0
Income tax 2,387,000 p deduct 2,387,000
Numerator 6,211,808 4,406,808 4,016,868
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) 126,326,446
Fixed assets at end of current financial year (FA1) 130,160,302
Adjusted net working capital at end of previous financial year (ANWC0) 492,390
Adjusted net working capital at end of current financial year (ANWC1) 482,000
Average total funds employed (ATFE) 128,730,569 c 128,730,569 128,730,569
(or regulation 33 time-weighted average)
Total equity at end of previous financial year (TE0) 134,974,714
Total equity at end of current financial year (TE1) 137,584,174
Average total equity 136,279,444 k 136,279,444
(or regulation 33 time-weighted average)
WUC at end of previous financial year (WUC0) 1,842,532
WUC at end of current financial year (WUC1) 1,335,000
Average total works under construction 1,588,766 e deduct 1,588,766 deduct 1,588,766 deduct 1,588,766
(or regulation 33 time-weighted average)
Revaluations 0 r
Half of revaluations 0 r/2 deduct 0
Intangible assets at end of previous financial year (IA0) 0
Intangible assets at end of current financial year (IA1) 0
Average total intangible asset 0 m add 0
(or regulation 33 time-weighted average)
Subvention payment at end of previous financial year (S0) 0
Subvention payment at end of current financial year (S1) 0
Subvention payment tax adjustment at end of previous financial year 0
Subvention payment tax adjustment at end of current financial year 0
Average subvention payment & related tax adjustment 0 v add 0
System fixed assets at end of previous financial year at book value (SFAbv0) 123,532,468
System fixed assets at end of current financial year at book value (SFAbv1) 125,938,000
Average value of system fixed assets at book value 124,735,234 f deduct 124,735,234 deduct 124,735,234 deduct 124,735,234
(or regulation 33 time-weighted average)
System Fixed assets at year beginning at ODV value (SFAodv0) 113,135,728
System Fixed assets at end of current financial year at ODV value (SFAodv1) 115,966,046
Average value of system fixed assets at ODV value 114,550,887 h add 114,550,887 add 114,550,887 add 114,550,887
(or regulation 33 time-weighted average)
Denominator 116,957,456 124,506,331 116,957,456
ATFEADJ = c - e - f + h Ave TEADJ = k - e - m + v - f + h ATFEADJ = c - e - ½r - f + h
Financial Performance Measures: 5.31 3.54 3.43
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
AUDIT NEW ZEALAND
REPORT OF THE AUDITOR-GENERAL
TO THE READERS OF THE FINANCIAL STATEMENTS OF NETWORK TASMAN LIMITED FOR THE YEAR ENDED 31 MARCH 2006
We have audited the financial statements of Network Tasman Limited on pages 1 to 19. The financial statements provide information about the past financial performance of Network Tasman 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 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 Network Tasman Limited as at 31 March 2005, 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 S M Tobin 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:
s the significant estimates and judgements made by the Directors in the preparation of the financial statements; and
s whether the accounting policies are appropriate to Network Tasman 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.
Other than in our capacity as auditor acting on behalf of the Auditor-General, we have no relationship with or interests in Network Tasman Limited.
Unqualified opinion
We have obtained all the information and explanations we have required.
In our opinion:
s proper accounting records have been maintained by Network Tasman Limited as far as appears from our examination of those records; and
s the financial statements of Network Tasman Limited on pages 1 to 19:
(a) comply with generally accepted accounting practice in New Zealand; and
(b) give a true and fair view of Network Tasman 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.
S M Tobin
Audit New Zealand
On behalf of the Auditor-General
Christchurch, New Zealand
AUDIT NEW ZEALAND
AUDITOR-GENERAL'S OPINION ON THE PERFORMANCE MEASURES OF NETWORK TASMAN LIMITED
We have examined the information on pages 19, 20, 23 and 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 Network Tasman Limited and dated 15 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.
S M Tobin
Audit New Zealand
On behalf of the Auditor-General
Christchurch, New Zealand
22 November 2006