3718 NEW ZEALAND GAZETTE No. 156

BAY OF PLENTY ELECTRICITY LIMITED
Financial Statements for the purposes of
Electricity (Information Disclosure) Regulations 1994

Notes to the Financial Statements
for the 12 months ended 31 March 1998

1 Statement of Accounting Policies
The financial statements have been prepared for the purpose of complying with the requirements of the Electricity (Information Disclosure) Regulations 1994 and are intended for no other purpose.

A General Accounting Policies
The general accounting policies recognised as appropriate for the measurement and reporting of financial performance and financial position have been followed in the preparation of these financial statements. The historical cost method, as modified by the revaluation of certain assets, has been followed. Reliance has been placed on the fact that the business and undertakings of Bay of Plenty Electricity Limited are a going concern.

B Particular Accounting Policies
The following particular accounting policies, which significantly affect the measurement of financial performance and/or financial position have been applied:

i) Revenue
Revenue shown in the statement of financial performance comprises amounts received and receivable for goods and services supplied to customers in the ordinary course of business. Electricity revenue is based on actual and assessed readings plus an allowance for unread meters at balance date. Revenue is stated exclusive of Goods and Services Tax collected from customers.

ii) Principles of Consolidation
The consolidated financial statements are prepared from the financial statements of the Parent Company and its subsidiaries as at 31 March 1998 using the purchase method. The consolidated statement of financial performance includes the Group’s share of the tax-paid surpluses of associate entities.

The equity method has been used for those associate entities in which the Group has a significant, but not a controlling interest.

All significant transactions between Group companies are eliminated on consolidation.

iii) Depreciation
Depreciation is charged to write off the cost of fixed assets to their estimated residual value over their expected useful lives.

iv) Investments
Investments in associate entities are stated at the fair value of the net tangible assets at acquisition plus the share of post-acquisition increases in reserves.

Investments in subsidiaries are stated at cost.

Dividend income is accounted for on a cash basis.

Other investments are stated at the lower of cost or net realisable value.

v) Joint Venture
The Group’s method of accounting for an interest in a joint venture is to recognise in the respective classification categories the amount of:
(a) the Group’s share in each of the assets employed in the joint venture; and
(b) liabilities incurred in relation to the joint venture including the Group’s share of liabilities for which it is severally liable; and
(c) the Group’s share of net expenses incurred and revenues earned in relation to the joint venture.

vi) Fixed Assets
The cost of purchased fixed assets is the value of the consideration given to acquire the assets and the value of other directly attributable costs which have been incurred in bringing the assets to the location and condition necessary for their intended service.

The cost of assets constructed by the Company includes the cost of all materials used in construction, direct labour on the project, and financing costs that are directly attributable to the project. Costs cease to be capitalised as soon as the asset is ready for productive use and do not include any inefficiency costs.

Generation and Distribution Assets are valued using modified historical cost. These assets are revalued on a cyclical basis at least every three years, by independent valuers.

vii) Inventories
Inventories are stated at the lower of average cost and net realisable value, with obsolete stock written off.

viii) Accounts Receivable
Accounts receivable are stated at estimated realisable value after providing for debts where collection is considered doubtful.

ix) Taxation
The liability method of accounting for deferred taxation has been applied.