Notice Type
General Section
Notice Title

THE LINES COMPANY LIMITED

INFORMATION FOR DISCLOSURE
PURSUANT TO SECTION 57T OF THE COMMERCE ACT 1986
Deloitte
REPORT OF THE AUDITOR-GENERAL
TO THE READERS OF THE FINANCIAL STATEMENTS OF THE LINES COMPANY LIMITED FOR THE YEAR ENDED 31 MARCH 2006
We have audited the financial statements of The Lines Company Limited on pages 1 to 12. The financial statements provide information about the past financial performance of The Lines Company Limited and its financial position as at 31 March 2006. This information is stated in accordance with the accounting policies set out on pages 4 to 6.
Directors' responsibilities
The Commerce Commission's Electricity Information Disclosure Requirements 2004 made under section 57T of the Commerce Act 1986 require the Directors to prepare financial statements which give a true and fair view of the financial position of The Lines Company 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 Graham Naylor of Deloitte 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 The Lines Company 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.
The financial statements have been prepared using historical New Zealand Generally Accepted Accounting Practice and do not include any adjustments necessary to comply with the New Zealand equivalents of International Financial Reporting Standards.
Other than in our capacity as auditor acting on behalf of the Auditor-General, we have no relationship with or interests in The Lines Company Limited.
In addition to issuing audit certificates pursuant to the Electricity Information Disclosure requirements 2004 we have carried out an another audit assignment for Centralines 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 Centralines Limited.
Unqualified opinion
We have obtained all the information and explanations we have required.
In our opinion:
§ proper accounting records have been maintained by The Lines Company Limited as far as appears from our examination of those records;
§ the financial statements of Centralines Limited on pages 1 to 16:
(a) comply with generally accepted accounting practice in New Zealand; and
(b) give a true and fair view of The Lines Company 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.
Graham Naylor
Deloitte
On behalf of the Auditor-General
Hamilton, New Zealand
Deloitte
AUDITOR-GENERAL'S OPINION ON THE PERFORMANCE MEASURES OF THE LINES COMPANY LIMITED
We have examined the information on pages 13 to 17, 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 The Lines Company Limited and dated 31 March 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.
Graham Naylor
Deloitte
On behalf of the Auditor-General
Hamilton, New Zealand
22 November 2006
CERTIFICATION OF FINANCIAL STATEMENTS, PERFORMANCE MEASURES AND STATISTICS DISCLOSED BY LINE OWNERS OTHER THAN TRANSPOWER
We, Angus Malcolm Don and John Carleton Lindsay, Directors of The Lines Company Limited, certify that, having made all reasonable inquiries, to the best of our knowledge, that;
a) The attached audited financial statements of The Lines Company Limited - Lines Business Activity, prepared for the purposes of Regulation 6 of the Electricity (Information Disclosure) Regulations 2004, comply with the requirements of those regulations, 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 The Lines Company Limited - Lines Business Activity and having been prepared for the purposes of regulations 15, 16, 21 and 22 of the Electricity (Information Disclosure) Regulations 2004, comply with the requirements of those regulations.
The valuations on which those financial performance measures are based are as at 31 March 2004.
(Angus Malcolm Don)
(John Carleton Lindsay )
Date 22/11/06
THE LINES COMPANY LIMITED - LINES BUSINESS ACTIVITY
Statement of Financial Performance
For the Year Ended 31 March 2006
Note 2006 2005
$000's $000's
Operating Revenue 2 21,376 20,452
Operating Expenses 3 15,900 15,441
Operating Surplus before Discount & Taxation 5,477 5,011
Customer Discount 4,088 3,800
Surplus Before Taxation 1,389 1,211
Taxation Expense 4 458 400
Surplus after Taxation 931 811
THE LINES COMPANY LIMITED - LINES BUSINESS ACTIVITY
Statement of Movement of Equity
For the Year Ended 31 March 2006
2006 2005
$000's $000's
Equity at Beginning of Year 59,507 53,261
Surplus retained for the Year 931 811
Revaluation of fixed assets 314 -
Deferred tax adjustment on line asset revaluations - 5,436
Total Recognised Revenue and Expenses 1,245 6,247
Dividends 263 -
Total Distribution to Owners 263 -
Equity at Year End 60,488 59,507
THE LINES COMPANY LIMITED - LINES BUSINESS ACTIVITY
Statement of Financial Position
As at the 31 March 2006
Note 2006 2005
$000's $000's
Equity
Share Capital 6,021 6,021
Retained Earnings 11,983 11,316
Revaluation Reserve 42,484 42,170
Total Equity 60,488 59,507
Fixed Assets
Fixed Assets 5 100,217 98,403
Total Fixed Assets 100,217 98,403
Current Assets
Cash 343 404
Receivables & prepayments 448 3,081
Work in Progress 63 190
Inventory 329 713
Total Current Assets 1,183 4,388
Total Assets 101,401 102,791
Non-current Liabilities
Loans 6 28,570 28,754
Deferred Tax 7 7,504 7,046
Total Non-current Liabilities 36,074 35,800
Current Liabilities
Accounts Payable 2,177 4,440
Provisions 158 81
Customer Discount Provision 2,503 2,963
Total Current Liabilities 4,838 7,484
Total Liabilities 40,912 43,284
Net Assets Employed 60,488 59,507
Director: Director:
Date: 22/11/06 Date: 22/11/06
THE LINES COMPANY LIMITED - LINES BUSINESS ACTIVITY
Statement of Cashflows
For the Year Ended 31 March 2006
Note 2006 2005
$000's $000's
CASH FLOWS FROM OPERATING ACTIVITIES
Cash was provided from:
Receipts from customers 24,009 20,341
Less special discounts (4,548) (3,628)
19,462 16,713
Cash was distributed to:
Payment to suppliers & employees (11,497) (9,815)
Taxes paid - -
Interest paid (2,033) (2,019)
(13,530) (11,834)
CASH FLOWS FROM OPERATING ACTIVITIES 10 5,931 4,879
CASHFLOWS FROM INVESTING ACTIVITIES
Cash was provided from:
Proceeds from sale of fixed assets - -
Cash was applied to:
Fixed asset purchase (5,676) (4,879)
(5,676) (4,879)
NET CASHFLOWS TO INVESTING ACTIVITIES (5,676) (4,879)
CASHFLOWS FROM FINANCING ACTIVITIES
Cash was provided from:
Loans Raised 1,700 573
1,700 573
Cash was provided for:
Loans Repaid (1,884) -
Dividend (132) (131)
(2,016) (131)
NET CASHFLOWS TO FINANCING ACTIVITIES (316) 442
Net cashflow from operating 5,931 4,879
Net cashflow to investing (5,676) (4,879)
Net cashflow to financing (316) 442
Net increase in cash held (61) 442
Cash Brought Forward 404 (38)
Total Cash 343 404
THE LINE COMPANY LIMITED
Lines Business Activity
Notes to the Financial Statements
For the Year Ended 31 March 2006
NOTE 1: STATEMENT OF ACCOUNTING POLICIES
REPORTING ENTITY
The Lines Company Limited is owned by Waitomo Energy Services Customer Trust (75%) and King Country Electric Power Trust (25%) and is incorporated under the Companies Act 1993. The principal activity of the entity is the provision of electricity distribution services.
BASIS FOR PREPARATION
The financial statements of The Lines Company Limited - Lines Business Activities have been prepared in accordance with the requirements of the Electricity (Information Disclosure) Regulations 2004 as amended by the Electricity (Information Disclosure) Amendment Regulations 2000 and the Electricity Information Disclosure Handbook (2004) issued by the Commerce Commission.
These financial statements are prepared in accordance with old New Zealand GAAP and have not been restated in accordance with New Zealand equivalents to International Financial Reporting Standards.
MEASUREMENT BASE
The financial statements have been prepared on the historical cost basis modified to include the revaluation of land and buildings and network assets. The network assets have been revalued to 31 March 2004 ODV less two year's depreciation.
The reporting currency is New Zealand dollars.
SPECIFIC ACCOUNTING POLICIES
The specific accounting policies used in the preparation of the financial statements are as follows:
a. Receivables
Receivables are stated at their estimated realisable value.
b. Property, Plant and Equipment
Initial Recording
All items of property, plant and equipment are initially recognised at cost in the statement of financial position. Cost includes the value of consideration exchanged, or fair value in the case of donated or subsidised assets, and those costs directly attributable to bringing the item to working condition for its intended use.
Revaluation
Land and buildings are revalued to fair value. Valuations are obtained from an independent registered valuer every three years. Valuations may be obtained on a more frequent basis if there is an indication that the fair values have changed materially from the latest valuation. Land and buildings acquired since the last revaluation are recorded at historical cost.
THE LINE COMPANY LIMITED
Lines Business Activity
Notes to the Financial Statements
For the Year Ended 31 March 2006
The distribution system is revalued to fair value based upon Optimised Deprival Value (ODV) and is revalued every three years.
Revaluation surpluses are taken directly to the revaluation reserve. Decreases in value are debited directly to the revaluation reserve to the extent that they reverse previous surpluses within the class of asset concerned and are otherwise recognised as an expense in the statement of financial performance.
Impairment
All items of property, plant and equipment are assessed for impairment at each reporting date.
Where the carrying amount is assessed to be greater than its recoverable amount, the item is written down. The writedown is recognised in the statement of financial performance.
Depreciation
All items of property, plant and equipment, other than land, are depreciated either on a straight line or diminishing value basis, at rates which will write off their cost or revalued amount less estimated residual value, over their expected useful lives.
Assets purchased post 1 April 1999 have been depreciated on a straight-line basis.
Major depreciation rates and methods:
Buildings 40-100 years Straight Line
Motor Vehicles, plant & equipment 10% to 50% Diminishing Value or Straight Line
Network plant & equipment 20 - 50 years Straight Line
Network Lines 1.9% to 10.3% Straight Line
Land Is not depreciated
c. Provisions
All provisions are recorded at the best estimate of the expenditure required to settle the obligation at balance date. Where the effect is material, the expected expenditures are discounted to their present value using pre-tax discount rates.
Staff Leave and Gratuity Payments
Provisions for employee entitlements includes accrued wages, bonuses, accrued holiday pay, long service leave, sick leave, trainee bonds and gratuities. Where settlement is greater than one year, the item(s) is discounted using the group's weighted average cost of capital.
d. Dividends
Dividends are recognised in the financial year in which they are authorised and approved by the Board of Directors.
e. Discount
As the company has committed itself to crediting a discount to customers before the end of the financial year, and each individual's entitlement has been conveyed to that individual, the full liability for the discount payment is recognised.
f. Inventory
Inventories are valued at the lower of cost, determined on an average cost basis, or net realisable value.
THE LINE COMPANY LIMITED
Lines Business Activity
Notes to the Financial Statements
For the Year Ended 31 March 2006
g. Goods & Services Tax
All amounts in the financial statements have been shown exclusive of Goods and Services Tax, with the exception of Accounts Payable and Accounts Receivable which are shown inclusive of Goods and Services Tax.
h. Taxation
The income tax expense recognised for the year is based on the operating surplus before taxation adjusted for permanent differences between accounting and taxable income.
Deferred tax, which is calculated on the comprehensive basis using the liability method, arises from amounts of income or expense recognised for tax purposes in years different from those in which they are dealt with in the financial statements. A debit balance in the deferred taxation account is only carried forward to the extent that there is virtual certainty of its recovery.
Income tax benefits arising from income tax losses are recognised only to the extent of accumulated net credits from timing differences in the deferred taxation account unless there is virtual certainty of their realisation.
i. Statement of Cash Flows
The statement of cash flows is prepared exclusive of Goods and Services Tax, which is consistent with the method used in the statement of financial performance. Definitions of the terms used in the statement of cash flows:
Cash includes coins and notes, demand deposits and other highly liquid investments readily convertible into cash and includes at call borrowings such as bank overdrafts, used by the company and the group as part of their day-to-day cash management.
Operating activities include all transactions and other events that are not investing or financing activities.
Investing activities are those activities relating to the acquisition and disposal of current and non-current investments and any other non-current assets.
Financing activities are those activities relating to changes in the equity and debt capital structure of the company and those activities relating to the cost of servicing the company's equity capital.
j. Comparative Figures
Comparative information has not been reclassified, to achieve consistency in disclosure with the current year, which is in accordance with Information Disclosure requirements.
k. Changes in Accounting Policies
Accounting policies have been applied on a consistent basis with those of the previous year.
THE LINES COMPANY LIMITED - LINES BUSINESS ACTIVITY
Disclosure of information to be disclosed in Financial Statements under regulation 6 of the Electricity (Information
Disclosure) Regulations 2004 Schedule 1 Part 2 as amended by the Electricity (Information Disclosure) Amendment
Regulations 2000.
Statement of Financial Position Disclosure (Schedule 1, Part 2)
2006 2005
$000's $000's
1 Current assets
(a) Cash and bank balances 343 404
(b) Short term investments - -
(c) Inventories 329 713
(d) Accounts receivable 448 3,081
(e) Other current assets not listed in (a) to (d) 63 190
(f) Total current assets 1,183 4,388
2 Fixed assets
(a) System fixed assets 98,940 97,389
(b) Consumer billing and information systems 26 40
(c) Motor vehicles 250 225
(d) Office equipment 29 62
(e) Land and buildings 850 545
(f) Capital works under construction - -
(g) Other fixed assets not listed in (a) to (f) 123 143
(h) Total fixed assets 100,217 98,403
3 Other tangible assets not listed above - -
4 Total tangible assets 101,401 102,791
5 Intangible assets
(a) Goodwill - -
(b) Other intangibles not listed in (a) - -
(c) Total intangible assets - -
6 Total assets 101,401 102,791
7 Current liabilities
(a) Bank overdraft - -
(b) Short-term borrowings - -
(c) Payables and accruals 2,203 4,521
(d) Provision for dividend payable 132 -
(e) Provision for income tax -
(f) Other current liabilities not listed in (a) to (e) 2,503 2,963
(g) Total current liabilities 4,838 7,484
8 Non-current liabilities
(a) Payables and accruals -
(b) Borrowings 28,570 28,754
(c) Deferred tax 7,504 7,046
(d) Other non-current liabilities not listed in (a) to (c) - -
(e) Total non-current liabilities 36,074 35,800
2006 2005
THE LINES COMPANY LIMITED - LINES BUSINESS ACTIVITY
9 Equity $000's $000's
(a) Shareholders' equity
(i) Share capital 6,021 6,021
(ii) Retained earnings 11,983 11,316
(iii) Reserves 42,484 42,170
(iv) Total shareholders' equity 60,488 59,507
(b) Minority interests in subsidiaries - -
(c) Total equity 60,488 59,507
(d) Capital notes - -
(e) Total capital funds 60,488 59,507
10 Total equity and liabilities 101,401 102,791
Statement of Financial Performance Disclosure (Schedule 1, Part 2)
NOTE 2 : OPERATING REVENUE
11 Operating Revenue
(a) Revenue from line/access charges 20,846 20,214
(b) Revenue from 'Other' business (transfer payment) - -
(c) Income from Interest on bank & short term investments 20 16
(d) AC loss-rental Rebates 510 222
(e) Other operating revenue not listed in (a) to (d) - -
(f) Total operating revenue 21,376 20,452
NOTE 3 : OPERATING EXPENDITURE
12 Operating Expenditure
(a) Transmission costs 4,083 4,160
(b) Transfer payments to the "Other" business for:
(i) Asset Maintenance Services 1,492 1,460
(ii) Disconnection/Reconnection Services 24 17
(iii) Meter Data - -
(iv) Consumer Based Load control 2 2
(v) Royalty and patent expenses - -
(vi) Avoided Transmission Charges - -
(vii) Other - 75
(viii) Total transfer payments to the "Other" business 1,517 1,554
(c) Expenses to entities that are non-related parties for:
(i) Asset Maintenance Services 1,105 1,203
(ii) Disconnection/Reconnection Services -
(iii) Meter Data -
(iv) Consumer Based Load control 33 14
(v) Avoided Transmission Charges -
(vi) Royalty and patent expenses -
(vii) Total of specified expenses to non-related entities 1,139 1,217
(d) Employee salaries/redundances 1,584 1,377
(e) Consumer Billing and Information System 81 97
(f) Depreciation on:
(i) System Fixed Assets 4,011 3,793
(ii) Other assets not listed in (i) 165 291
(iii) Total Depreciation 4,176 4,084
2006 2005
$000's $000's
THE LINES COMPANY LIMITED - LINES BUSINESS ACTIVITY
(g) Amortisation of:
(i) Goodwill - -
(ii) Other Intangibles - -
(iii) Total amortisation of intangibles - -
(h) Corporate & Adminstration 143 141
(i) Human Resource 18 23
(j) Marketing & Advertising 43 21
(k) Merger and acquisition expenses - -
(l) Takeover defence expenses - -
(m) Research and development expenses - -
(n) Consultancy & legal expenses 6 6
(o) Donations - -
(p) Directors' fees 141 148
(q) Auditors' fees
(i) Audit fees paid to principal auditors 48 37
(ii) Audit fees paid to other auditors - -
(iii) Fees paid for other services provided by auditors - -
(iv) Total auditors' fees 48 37
(r) Cost of offering credit
(i) Bad Debts written off - -
(ii) Increase in estimated doubtful debts 98 10
(iii) Total cost of offering credit 98 10
(s) Local Authority rates expense 98 96
(t) AC loss-rentals (distribution to customers) expense 474 198
(u) Rebate to consumers due to ownership interest - -
(v) Subvention payments - -
(w) Unusual expenses - -
(x) Other 216 253
13 Total operating expenditure 13,866 13,422
14 Operating surplus before interest and income tax 7,510 7,030
15 Interest expense
(a) Interest Expense on Borrowings 1,106 1,012
(b) Financing Charges relating to Finance Leases - -
(c) Other Interest Expense 927 1,007
(d) Total Interest Expense 2,033 2,019
16 Operating surplus before income tax 5,477 5,011
17 Income tax 458 400
18 Net surplus after tax 5,019 4,611
19 Less Discount 4,088 3,800
20 Net Surplus After Discount 931 811
THE LINES COMPANY LIMITED - LINES BUSINESS ACTIVITY
2006 2005
$'000' $'000'
NOTE 4 : TAXATION EXPENSE
Nominal Operating Surplus Before Tax 5,477 5,011
Nominal Discount Paid to Customers (4,088) (3,800)
Prima Facie Taxation on Operating Surplus 1,807 1,654
Prima facie Taxation on Nominal Discount (1,349) (1,254)
Net Taxation Expense 458 400
NOTE 5 : FIXED ASSETS 2005
at cost at valuation accumulated carrying
depreciation value
Land and Buildings - 562 17 545
Reticulation System - 101,182 3,793 97,389
Customer billing and Information system 77 - 38 40
Motor Vehicles 375 - 150 225
Office Equipment 463 - 402 62
Other Plant & Equipment 182 - 39 143
1,097 101,744 4,438 98,403
FIXED ASSETS 2006
at cost at valuation accumulated carrying
depreciation value
Land and Buildings - 850 - 850
Reticulation System - 106,744 7,804 98,940
Customer billing and Information system 84 - 58 26
Motor Vehicles 467 - 217 250
Office Equipment 468 - 439 29
Other Plant & Equipment 192 - 69 123
1,211 107,594 8,588 100,217
Land and buildings were valued by Doyle Valuations Ltd (ANZI, SNZPI) and independent valuer with local experience, on 31 March 2006. Summation and income approaches were used for the valuation.
The Reticulation System has been valued based on Optimised Deprival Value (ODV) by our electrical engineer and verified by PricewaterhouseCoopers as at 31 March 2004. The valuation method used is depreciated cost, using the assumptions about replacement cost, useful lives and residual values as set in the "Handbook for Optimised Deprival Valuation of System Fixed Assets of Electricity Lines Businesses" issued by the Commerce Commission on the 30 August 2004.
NOTE 6 : LOANS
"Other" (The Lines Company Activities) 12,770 14,654
Perpetual 3,000 3,000
Bank of New Zealand Loan 12,800 11,100
28,570 28,754
Bank loans are at floating rates and expose the Group to cashflow interest rate risk. Secuity held by the bank is a Negative Pledge Deed, where an undertaking has been given that certin actions will not be undertaken and key financial ratios will be maintained.
Perpetual loans are subordinated debentures which are unsecured.
The "Other" loan is an internal debt between the Electricity Lines Business and the other business activities, both within the Lines Company Limited (the disclosing entity). This represents the internal funding required by the Electricity Lines Business from the other businesses in order to continue its operations.
THE LINES COMPANY LIMITED - LINES BUSINESS ACTIVITY
2006 2005
$'000' $'000'
NOTE 6 CONTINUED : LOANS
The following interest rates applied at balance date
"Other" (The Lines Company Activities) 7.00% 7.00%
Perpetual - $1,000,000 loan 7.42% 6.75%
Perpetual - $2,000,000 loan 5.00% 0.00%
Bank of New Zealand Loan (effective interest rate) 9.26% 9.08%
NOTE 7 : DEFERRED TAX
Fixed Assets 7,717 7,259
Accruals & Provisions (213) (213)
7,504 7,046
NOTE 8 : SEGMENTAL INFORMATION
The Lines Company Limited operates predominantly in one geographical segment. It is located in
the mid-central North Island in the King Country. The head office is located in Te Kuiti.
NOTE 9 : CAPITAL COMMITMENTS AND CONTINGENT LIABILITIES
At balance date the company had no capital commitments or contingent liabilities (2005:Nil).
NOTE 10 : CASHFLOW RECONCILIATION WITH NET PROFIT
Net Profit after Tax and Customer Discount 931 811
Add: Non cash items
Depreciation 4,176 4,084
5,107 4,895
Add/Less: Movements in Working Capital
(Increase)/Decrease in Receivables 2,633 (111)
(Increase)/Decrease in Inventory 384 100
(Increase)/Decrease in Work in Progress 127 (122)
Increase/(Decrease) in Accounts Payable (2,394) (352)
Increase/(Decrease) in Provision for Discount (460) 172
Increase/(Decrease) in Other 535 297
825 (16)
Net cashflows from operating activities 5,931 4,879
NOTE 11 : EVENTS AFTER BALANCE DATE
No events have occurred after balance date that could materially affect these financial statements.
NOTE 12 : FINANCIAL INSTRUMENTS
The fair values of financial instruments are considered to be not materially different from the carrying values shown in the Financial Statements.
principally consist of bank deposits and accounts receivable.
Credit risk in respect of debtors is limited as the major debtors either have high credit rating by recognised international rating agencies or have their debt secured by way of bank guarantee. Other Accounts Receivable are subject to credit control and are unsecured.
Borrowing Facilities from the Bank of New Zealand
The Company has a Multi Option facility of $16 million with the Bank of New Zealand. Against this facility the Company drew down a loan of $13.5 million for the purchase of King Country Energy's lines.
Part of the loan ($5 million) is covered by interest rate swaps (pay fixed, receive floating) that hedge servicing costs for the next three years. The swap cover diminishes by $1 million per year.
THE LINES COMPANY LIMITED - LINES BUSINESS ACTIVITY
2006 2005
$000's $000's
NOTE 13 : RELATED PARTY TRANSACTIONS
The period covered in these statements are 1st April 2005 to 31st March 2006.
There are no outstanding balances and no related party debts have been written off.
There are two related parties to the Electricity Lines Buisness of The Lines Company Limted, being the Contracting Division and the Revenue Collection Division. Details of transactions are given below.
Contracting division of The Lines Company Limited
Maintenance work is recorded on the basis of material at cost plus 15% and labour & plant at $45 per hour.
Capital expenditure is recorded at ODV values.
Construction of the following types of assets were undertaken for the lines business.
Construction of Subtransmission Assets - 523
Construction of Zone Substations 332 200
Construction of Distribution Lines and Cables 3,628 2,198
Construction of Medium Voltage Switchgear 596 537
Construction of Distribution Substations 823 557
Construction of Low Voltage Reticulation 86 22
Construction of Other Assets 97 354
Consumer connections & disconnections 24 97
Maintenance of distribution system 1,492 1,460
7,077 5,947
Revenue Collection Division of The Lines Company Limited
From the 1 October 2005, billing and revenue collection is carried out for the ELB by the Revenue Collection Division within The Lines Company Limited. Prior to this date revenue was collected on The Line Company behalf by energy retailers, who operated on the network.
For this function a flat monthly fee of $30,000 is charged to the ELB. This quantum of fee is based on commercial arms length basis, as evidenced by a tendering process for this function, which occurred prior to commencement of direct customer billing.
Billing and Collection Charges 180 -
180 -
Interest and dividends paid to Waitomo Energy Services Customer Trust
During the year company paid interest (on subordinated debt) and dividends, of the following amounts to it's controlling entity, the Waitomo Energy Sevices Customer Trust.
Interest Paid 68 61
Dividends paid 197
266 61
THE LINES COMPANY LIMITED - LINES BUSINESS ACTIVITY
2006 2005
$'000' $'000'
NOTE 14 : ODV RECONCILIATION
97,389 96,400
- -
97,389 96,400
5,562 4,782
- -
(4,011) (3,793)
- -
98,940 97,389
As at 31st March 2004 the ODV Valuation of the lines business as certified by PricewaterhouseCoopers
was $97,003,343. Included in that valuation was a Generator Truck with DRC of $132,322 and Strategic Stores of
$470,910, which been accounted for as Inventory and Plant at their financial value in these accounts.
THE LINES COMPANY LIMITED - LINES BUSINESS ACTIVITY
Form for the derivation of Financial Performance Measures fron Financial Statements-Schedule 1, Part 7
Derivation Table Input and Symbol
Calculat. in form. ROF ROE ROI
Operating surplus before interest and tax (OSBIIT) 3,422
Interest on cash,bank & short term investments (ISTI) 20
OSBIIT minus ISTI 3,402 a 3,402 3,402
Net surplus after tax from financial statements 931 n 931
Amortised Goodwill - g - - -
Subvention Payment - s - - -
Depreciation of SFA at BV (x) 4,011
Depreciation of SFA at ODV (y) 4,011
ODV Depreciation adjustment - d - - -
Subvention Payment tax adjustment - s*t - -
Interest Tax Shield 664 q 664
Revaluations 314 r 314
Income Tax 458 p 458
Numerator 3,402 931 2,594
Fixed Assets at Start of Year 98,403
Fixed Assets at Year End 100,217
Net Working Capital at end of previous financial year (3,096)
Net Working Capital at end of current financial year (3,655)
Average Total Funds Employed (ATFE) 95,935 c 95,935 95,935
Total Equity at end of previous financial year 59,507
Total Equity at end of current financial year 60,488
Average Total Equity 59,998 k 59,998
Works Under Construction at end of previous year -
Works Under Construction at end of current year -
Average Total Works Under Construction - e - - -
Revaluations 314 r
Half of revaluations 157 r/2 157
Intangible assets at end of previous financial year -
Intangible assets at end of current financial year -
Average total intangible asset - m -
Subvention Payment at end of previous financial year -
Subvention Payment at end of current financial year -
Subvention Payment Tax Adjustment previous year -
Subvention Payment Tax Adjustment current year -
Average Subvention payment and tax adjustment - v -
System Fixed Assets at end of previous year at BV 97,389
System Fixed Assets at end of current year at BV 98,940
Average value of system fixed assets at BV 98,165 f 98,165 98,165 98,165
System Fixed Assets at year beginning at ODV 97,389
System Fixed Assets at end of current year at ODV 98,940
Average value of system fixed assets at ODV 98,165 h 98,165 98,165 98,165
Denominator 95,935 59,998 95,778
Financial Performance Measure 3.55% 1.55% 2.71%
THE LINES COMPANY LIMITED - LINES BUSINESS ACTIVITY
THE LINES COMPANY LIMITED-LINE BUSINESS ACTIVITY
Disclosure of financial performance measures and efficiency performance measures under regulation 15 of the
Electricity (Information Disclosure) Regulations 2004 as amended by the Electricity (Information Disclosure)
Amendment Regulations 2000 and 2001.
2006 2005 2004 2003
1 Financial performance measures
(a) Accounting return on funds 3.55% 3.54% 3.20% 2.76%
(b) Accounting return on equity 1.55% 1.44% 1.20% 1.97%
(c) Accounting return on investment 2.71% 2.23% 25.14% 7.72%
2 Efficiency performance measures
(a) Direct line costs per kilometer $832 $818 $582 $629
(b) Indirect line costs per electricity customer. $45 $45 $42 $42
Disclosure of energy delivery efficiency performance measures under regulation 21 of the Electricity (Information
Disclosure) Regulations 2004 as amended by the Electricity (Information Disclosure) Amendment Regulations 2000
and 2001.
1 (a) Load Factor 65.09% 64.61% 59.77% 51.92%
(b) Loss Ratio 7.18% 7.35% 7.34% 6.77%
(c) Capacity Utilisation 27.28% 27.60% 29.55% 33.96%
2 (a) System lengths (kms)
- 33kV 501.0 460.5 500.5 465.5
- 11kV 3279.3 3292.2 3,631.7 3,674.3
- LV 628.9 623.3 636.0 690.8
- Total 4,409.2 4,376.0 4,768.2 4,830.6
(b) Circuit length (overhead) (kms)
- 33kV 500.6 460.08 500.2 465.1
- 11kV 3201.0 3215.0 3,552.7 3,588.0
- LV 460.0 458.2 471.3 519.6
- Total 4,161.6 4,133.3 4,524.2 4,572.7
(c) Circuit length (underground) (kms)
- 33 kV 0.3 0.5 0.3 0.4
- 11 kV 78.3 77.2 79.0 86.3
- LV 168.9 165.1 164.7 171.2
- Total 247.6 242.8 244.0 257.9
(d) Transformer capacity (kVA) 204,208 201,408 193,974 192,122
(e) Maximum demand (kW) 55,700 55,580 57,320 65,240
(f) Total electricity supplied (kWH)(000's) 317,610 314,591 300,100 296,727
(g) Total electricity conveyed on behalf of other persons.
Retailer A 23,954 36,139 16,031 -
Retailer B 6,813 3,718 3,002 4,717
Retailer C 455 815 717 1,847
Retailer D 10,955 14,862 13,947 10,052
Retailer E 3,589
Retailer F 20,781 19,973 11,953 11,456
Retailer G 19,168 12,017 11,876 11,015
Retailer H 1,475 1,769 2,171 1,349
Retailer I 207,613 202,160 218,381 236,204
294,803 291,453 278,078 276,640
(h) Total customer 26,181 25,535 25,197 25,045
THE LINES COMPANY LIMITED - LINES BUSINESS ACTIVITY
THE LINES COMPANY LIMITED-LINE BUSINESS ACTIVITY
Reliability Performance Measures (Regulation 22)
1 Total number of Interruptions according to class
2006 2005 2004 2003 2002
Planned (Transpower) 0 1 3 3 3
Planned (TLC) 257 279 334 659 546
Unplanned (TLC) 395 397 497 587 375
Unplanned (Transpower) 0 8 4 2 9
Generation (Others) 0 0 0 0 0
Other (Private Lines) 38 44 24 0 0
Total 690 729 862 1251 933
2 Interruption targets for the following year
3 and for the subsequent four financial years Average
2007 2008 2009 2010 2011 2007/11
Planned (TLC) 450 450 450 450 450 450
Unplanned (TLC) 373 360 348 336 324 348
4 Percentage of total number for faults not restored in 3 or 24 hours
Unplanned (TLC) faults for 2005/06 Number % of Outages
Not Restored in 3 hours 204 52%
Not Restored in 24 hours 1 0%
5a Total number of faults per 100km of lines for : 2006 2005 2004 2003
Faults per 100km 33kV 9.6 10.5 14.6 15.7
11kV 10.7 9.7 11.7 14.0
Total 10.5 9.8 12.0 14.2
5b Target for the following year
5c and the subsequent 4 financial years Average
Faults per 100km 2007 2008 2009 2010 2011 2007/11
33kV 9.0 8.6 8.2 7.8 7.4 8.2
11kV 10.0 9.7 9.4 9.1 8.8 9.4
Total 9.9 9.5 9.2 8.9 8.6 9.2
6a Total number of faults per 100km of undergound lines for : 2006 2005 2004 2003
Faults per 100km 33kV 0.0 0.0 0.0 0.0
11kV 6.5 6.5 6.9 6.9
Total 6.4 6.4 6.9 6.9
6b Target for the following year
6c and the subsequent 4 financial years Average
Faults per 100km 2007 2008 2009 2010 2011 2007/11
33kV 0.0 0.0 0.0 0.0 0.0 0.0
11kV 3.8 2.6 2.6 2.6 2.6 2.8
Total 3.8 2.5 2.5 2.5 2.5 2.8
7a Total number of faults per 100km of overhead lines for : 2006 2005 2004 2003
Faults per 100km 33kV 9.6 11.1 14.6 15.7
11kV 10.8 11.1 11.8 14.2
Total 10.6 10.7 12.1 14.3
7b Target for the following year
7c and the subsequent 4 financial years Average
Faults per 100km 2007 2008 2009 2010 2011 2007/11
33kV 9.0 8.6 8.2 7.8 7.4 8.2
11kV 10.2 9.8 9.5 9.2 8.9 9.5
Total 10.0 9.7 9.4 9.0 8.7 9.3
THE LINES COMPANY LIMITED - LINES BUSINESS ACTIVITY
THE LINES COMPANY LIMITED-LINE BUSINESS ACTIVITY
8 SAIDI for total of interruptions during :
2006 2005 2004 2003
SAIDI 284.9 305.6 400.2 729.0
9 SAIDI targets for the following year
10 and for the subsequent four financial years Average
2007 2008 2009 2010 2011 2007/11
Planned (TLC) 105.6 96.8 96.8 96.8 96.8 98.6
Unplanned (TLC) 221.4 203.2 203.2 203.2 203.2 206.8
11 SAIDI according to class
2006 2005 2004 2003
Planned (Transpower) 0.0 38.5 7.9 48.9
Planned (TLC) 97.5 79.5 78.2 226.2
Unplanned (TLC) 180.0 146.1 264.4 450.4
Unplanned (Transpower) 0.0 30.0 36.5 3.5
Generation (Others) 0.0 0.0 0.0 0.0
Other (Private Lines) 7.4 11.6 13.2 0.0
12 SAIFI for total of interruptions during :
2006 2005 2004 2003
SAIFI 3.84 4.02 4.96 7.15
13 SAIFI targets for the following year
14 and for the subsequent four financial years Average
2007 2008 2009 2010 2011 2007/11
Planned (TLC) 0.5 0.5 0.5 0.5 0.5 0.5
Unplanned (TLC) 3.5 3.4 3.4 3.4 3.4 3.4
15 SAIFI according to class
2006 2005 2004 2003
Planned (Transpower) 0.00 0.11 0.38 0.16
Planned (TLC) 0.60 0.43 0.46 1.12
Unplanned (TLC) 3.16 2.52 3.48 5.71
Unplanned (Transpower) 0.00 0.84 0.45 0.15
Generation (Others) 0.00 0.00 0.00 0.00
Other (Private Lines) 0.08 0.12 0.18 0.00
16 CAIDI for total of interruptions during :
2006 2005 2004 2003
CAIDI 74.2 76.1 80.7 102.0
17 CAIDI targets for the following year
18 and for the subsequent four financial years Average
2007 2008 2009 2010 2011 2007/11
Planned (TLC) 195.6 184.4 184.4 184.4 184.4 186.6
Unplanned (TLC) 63.4 60.2 60.2 60.2 60.2 60.9
19 CAIDI according to class
2006 2005 2004 2003
Planned (Transpower) 0.0 357.0 20.6 300.3
Planned (TLC) 162.5 185.1 169.4 202.5
Unplanned (TLC) 57.0 58.0 76.0 78.8
Unplanned (Transpower) 0.0 35.6 80.5 22.6
Generation (Others) 0.0 0.0 0.0 0.0
Other (Private Lines) 91.9 100.3 72.2 0.0