3548

NEW ZEALAND GAZETTE

No. 149

Counties Power Limited – Line Business
NOTES TO AND FORMING PART OF THE
FINANCIAL STATEMENTS
For the Year Ended 31 March 1999

1. STATEMENT OF ACCOUNTING POLICIES

These financial statements are presented in accordance with Regulation 6 of the Electricity (Information Disclosure) Regulations 1999.

REPORTING ENTITY

Counties Power’s electricity business for the year ended 31 March 1999 consisted of line business activities and electricity retailing. To provide the best service to customers these activities were undertaken as a single operation. Accordingly statutory financial reporting and management reporting do not distinguish between line business and electricity retailing activities. For the purposes of these financial statements the reporting entity has been established using the prescribed allocation methodology to provide accounting separation.

GENERAL ACCOUNTING POLICIES

The general accounting policies recognised as appropriate for the measurement and reporting of results, cash flows and the financial position based on historical cost, have been followed. Accrual accounting is used to match expenses and revenues.

Reliance is placed on the fact that the Company is a going concern.

PARTICULAR ACCOUNTING POLICIES

The following particular accounting policies which materially affect the measurement of financial performance and financial position are consistently applied:

Sales

Sales shown in the statement of financial performance comprise the amounts received and receivable by the company for goods supplied to customers in the ordinary course of business. The sales are shown exclusive of Goods and Services Tax collected from customers.

Accounts Receivable

Accounts receivable are stated at expected net realisable value after providing against debts where collection is doubtful.

Statement of Cash Flows

The following are the definitions of the terms used in the statement of cash flows:

a) Cash is considered to be cash on hand, current accounts in banks net of bank overdrafts and short term deposits with banks.

b) Investing activities are those activities relating to the acquisition, holding and disposal of fixed assets and investments. Investments include securities not falling within the definition of cash.

c) Financing activities are those activities which result in changes in the size and composition of the equity and debt structure of the Company. Dividends paid in relation to the capital structure are included in financing activities.

d) Operating activities include all transactions and other events that are not investing or financing activities.

Fixed Assets

Fixed assets are stated at cost less accumulated depreciation, less any amount written off for permanent impairment in value.

The cost of fixed assets created or enhanced by the Company (self-constructed assets) is direct expenses incurred and an appropriate proportion of indirect expenses.

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.

Depreciation

Fixed assets have been depreciated, so as to write off cost less estimated residual value over their estimated useful lives, on the following basis:

Distribution System

4% straight line
22% DV for system automation equipment

Buildings

2% straight line for majority of buildings (some at 1% straight line)

Plant & Equipment

40% DV for computer hardware and software
20% and 25% DV for other items

Motor Vehicles

20% and 25% DV for majority of vehicles

Taxation

The statements of financial performance and movements in equity include taxation expense on operating results.

The income tax expense charged to earnings includes both the income tax payable on assessable income in the period and the income tax effects of timing differences calculated using the liability method.

Tax effect accounting is applied on a comprehensive basis to all timing differences. A debit balance in the deferred tax account, arising from timing differences or income tax benefits from income tax losses, is only recognised if there is virtual certainty of realisation.

CHANGES IN ACCOUNTING POLICY

During the period there have been no changes in accounting policies.

COMPARATIVE FIGURES

As required by the Electricity Information Disclosure Handbook comparative amounts have not been prepared where information disclosures are made for the first time, and previously published comparative amounts have not been recalculated using the methodologies applied for the 31 March 1999 financial year.

2. REVENUE

Disclosure of revenue pursuant to Part 2 of Schedule 1 of the Electricity (Information Disclosure) Regulations 1999:

Revenue:

1999
$000

Revenue from line/access charges invoiced to consumers by electricity retailers who are not in a prescribed business relationship with the line owner

63

Revenue from line/access charges invoiced to consumers by the line owner

20,699

Revenue from "Other" Business for services carried out by the line business

-

Interest income from short term investments

-

AC loss-rental rebates

482

Other revenue

989

Total Revenue

22,233

3. EARNINGS BEFORE INTEREST AND TAXATION

1999
$000

1998
$000

Resulting earnings/(deficit) before taxation is stated

6,073

3,528

After charging:

Directors Remuneration

83

95

Audit Fees

26

29

Other Fees Paid or Due to Auditors

5

26

Depreciation

2,717

2,804

Rent

-

-

Interest Paid

448

294

Bad Debts Written Off

64

89

Customer Discounts

2,534

2,367

Loss on Disposal of Fixed Assets

13

27

After crediting:

Interest and Sundrys

-

-

Gain on Disposal of Fixed Assets

1

4

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