NEW ZEALAND GAZETTE

No. 106

HAWKE’S BAY NETWORK LIMITED AND SUBSIDIARY

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 1999

1 ENTITY STATEMENT

These financial statements have been derived from the consolidated financial statements of Hawke’s Bay Network Limited and Subsidiary as required by Regulation 6 of the Electricity (Information Disclosure) Regulations 1999. The statements reflect the financial performance and financial position of the lines and other businesses as defined and required by the Regulations for the year ended 31 March 1999.

The company was previously named Hawke’s Bay Power Distribution Limited and the subsidiary named Hawke’s Bay Power Limited. Due to the sale of the brand “Hawke’s Bay Power” along with the electricity retailing business on 1 October 1998, changes to the names of both companies were required. The companies are now respectively named Hawke’s Bay Network Limited and Service Company (Hawke’s Bay) Limited.

Hawke’s Bay Network Limited is registered as a company under the Companies Act 1993 and is an Energy Company in terms of the Energy Companies Act 1992.

These financial statements have been prepared in accordance with the Electricity Disclosures Guidelines as issued by the Ministry of Commerce dated 29 March 1999 and are presented solely for the purpose of complying with regulations 6(2) and 6(3) of the Electricity (Information Disclosure) Regulations 1999. They have not been prepared for the purpose of the Financial Reporting Act 1993, or the Energy Companies Act 1992.

2 STATEMENT OF ACCOUNTING POLICIES

Measurement System

The general accounting principles recognised as appropriate for the measurement and reporting of earnings and financial position on an historical cost basis are followed by the Company, with the exception that certain fixed assets have been revalued.

Particular Accounting Policies

The following particular accounting policies which materially affect the measurement of profit and the financial position have been applied.

a) Other Investments
Other investments are stated at cost.

b) Fixed Assets
Network Assets are valued at Optimised Deprival Value (ODV) which is the lower of Optimised Depreciated Replacement Cost (ODRC) or Economic Value as determined by appropriately qualified valuers. These valuations were completed as at 31 March 1997 and have been adjusted for additions at cost and depreciation at appropriate rates to 31 March 1999. Land and Buildings not included in Network Assets are stated at valuation as determined by an independent registered valuer. The basis of valuation is market value on an existing use basis. All other fixed assets are initially stated at cost and depreciated as outlined below.

No asset valuations exceed estimated recoverable amounts.

c) Depreciation
Depreciation is provided on a straight line basis on all tangible fixed assets other than freehold land, at rates calculated to allocate the asset's cost or valuation less any residual value, over their estimated useful lives.

Useful lives are:

• Network Assets 10 - 70 years
• Transformers 40 - 60 years
• Freehold Buildings 60-100 years
• Motor Vehicles 5-10 years
• Plant and Equipment 5-10 years
• Office Furniture and Equipment 4-20 years

These rates were revised as at 31 March 1999 in conjunction with the revaluation of some fixed assets at that date. The revised rates will be applicable from 1 April 1999.

d) Receivables
Receivables are stated at their estimated realisable value.

e) Inventories