New Zealand Gazette – 1998 – No. 161

Page 3879

✨ Financial Report



28 SEPTEMBER NEW ZEALAND GAZETTE 3879

Horowhenua Energy Limited Line and Energy Businesses - Annual Report 1998

a) Fixed assets

The company has five classes of fixed assets:

  1. Freehold land and buildings
  2. Network assets
  3. Plant and equipment
  4. Vehicles
  5. Capital work in progress

The Company uses Optimised Deprival Value (“ODV”) methodology in valuing network assets. This methodology recognises the economic value of network assets based on the earnings of segments of the network to the Company. The ODV of network assets is updated every two years to reflect network extensions and the earnings derived. The ODV was updated at 31 March, 1997 and the result reflected in these financial statements.

All fixed assets, excluding land and infrastructure assets, are recorded at cost or valuation less accumulated depreciation.

Freehold land is stated at market valuation (refer note 5).

b) Infrastructure asset

Infrastructure assets consist of the individual asset components which form the Company’s electricity network, excluding zone substations.

The Company uses infrastructure accounting methods which recognise that well planned maintenance of the network assets preserves the service potential of the infrastructure asset for the foreseeable future. Accordingly no depreciation is charged on the infrastructure.

The level of maintenance required to preserve the service potential of the infrastructure asset is determined by a detailed asset management plan.

c) Depreciation

Depreciation is provided on non infrastructure assets using either a diminishing value (DV), or straight line (SL) basis on all tangible fixed assets other than freehold land, at rates calculated to allocate the assets’ cost or valuation less estimated residual value, over their estimated useful lives.

Leased assets are depreciated over the shorter of the un-expired period of the lease and the estimated useful life of the asset.

Depreciation rates are:

  • Substation assets: 4% straight line
  • Freehold buildings: 1% - 2.5% straight line
  • Plant and equipment: 10% - 25% diminishing value
  • Computer equipment: 25% straight line
  • Vehicles: 20% - 25% diminishing value

d) Receivables

Receivables are stated at their estimated realisable value.

e) Leases

The Company leases certain land and buildings.

Operating lease payments, where the lessors effectively retain substantially all the risks and benefits of ownership of the leased items, are included in the determination of the operating profit in equal installments over the lease term.



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🏭 Horowhenua Energy Limited Line and Energy Businesses - Annual Report 1998 (continued from previous page)

🏭 Trade, Customs & Industry
29 May 1998
Financial Performance, Annual Report, Horowhenua Energy Limited, Line Business, Energy Business, Financial Statements, Balance Sheet, Fixed Assets, Infrastructure Asset, Depreciation, Receivables, Leases