4570
NEW ZEALAND GAZETTE
No. 140

Electricity Corporation of New Zealand Limited
FINANCIAL STATEMENTS

STATEMENT OF ACCOUNTING POLICIES

Reporting Entity

These financial statements have been prepared and presented in accordance with Generally Accepted Accounting Practice in New Zealand, the Companies Act 1955, as amended, and the Financial Reporting Act 1993. The financial statements are for the Electricity Corporation of New Zealand Limited (the “Corporation”), as defined in Regulation 4 of the Electricity (Information Disclosure) Regulations 1994 (the “Regulations”).

Constitution, Ownership and Activities

ECNZ was incorporated under the Companies Act 1955 on 26 February 1987, pursuant to the State-Owned Enterprises Act 1986, and commenced business on 1 April 1987. With effect from 1 April 1987 ECNZ acquired under a sale and purchase agreement with the Crown the electricity generation business of the Electricity Division of the Ministry of Energy. The assets and liabilities acquired by ECNZ with effect from 1 April 1987 were recorded in the opening statement of financial position at values stated within the sale and purchase agreement.

ECNZ is wholly-owned by the Crown. ECNZ’s business is primarily the generation and wholesale marketing of electricity.

Generation and Supply of Electricity Activities

To comply with the Regulations the Corporation has consolidated the following entities involved in the generation and supply of electricity: ECNZ Parent (excluding Brightspot and Appliance Wholesale divisions), Rutherford House Limited and ECNZ Insurance Limited.

Entities which are not involved in the generation and supply of electricity have not been consolidated and are accounted for using the cost method. These subsidiaries are referred to as non-core business activities. The activities and balances that relate to non-core business activities have been separately identified in these financial statements and consist of:

Dividends from non-core business activities
Interest from non-core business activities
Investments in non-core business activities
Advances to non-core business activities

General Accounting Policies

The general accounting policies recognised as appropriate for the measurement and reporting of results and the financial position have been followed in the preparation of these financial statements. No statement of cashflow is required by the Regulations.

Measurement System

The historical cost method, as modified by the revaluation of certain assets, has been followed.

Specific Accounting Policies

The following accounting policies, which significantly affect the measurement of financial performance and of financial position, have been consistently applied:

Revenues

Sales shown in the statement of financial performance comprise the amounts received and receivable by ECNZ for electricity and related electricity services supplied to customers and gains on disposals in the ordinary course of business. Sales are stated exclusive of Goods and Services Tax collected from customers.

Foreign Currencies

Assets and liabilities denominated in a foreign currency are translated at the rates of exchange ruling at balance date. Exchange differences on translation are taken to the statement of financial performance. Hedged assets and liabilities are translated at the rate of exchange determined by the underlying hedge contract.

Foreign currency transactions in the statement of financial performance are translated at the average monthly exchange rate ruling for that month. The financial statements of foreign operations are translated at the average monthly exchange rate ruling for the year.