3550

NEW ZEALAND GAZETTE

No. 149

Capital Works Under Construction comprised:

(i) Subtransmission assets 2,084 225 1,859
(ii) Zone Substations 3,380 445 2,935
(iii) Distribution lines & cables 1,283 91 1,192
(iv) Medium Voltage switchgear - - -
(v) Distribution transformers - - -
(vi) Distribution substations - - -
(vii) Low voltage lines & cables - - -
(viii) Other system fixed assets 625 79 546
7,372 840 6,532

Distribution System 52,861 17,047 35,814
Vehicles 1,179 646 533
Land 869 - 869
Buildings 2,291 500 1,791
Plant & Equipment 3,705 2,503 1,202
60,905 20,696 40,209

The major property holding of the company was valued as at February 1996 as follows:

Land & Buildings $000
(Main Depot complex at Glasgow Road/Nelson Street, Pukekohe) 2,055

The valuers used by Counties Power were Marsh & Irwin Limited who are Associates of the New Zealand Institute of Valuers. The accounting book value in the Financial Statements in respect of this property as at 31 March 1999 was $1,900,000.

Other properties with a total accounting book value amounting to $732,000 were not included in the above valuation.

Depreciation charged in total amounted to:

    1999        1998
    $000        $000

Distribution System 2,135 2,103
Buildings 59 59
Plant & Equipment 386 469
Motor Vehicles 137 173
2,717 2,804

10. PROVISION FOR REPLACEMENT OF UNECONOMIC LINES
    Section 62 of the Electricity Act 1992 requires Counties Power to maintain line services for the next 14 years. A provision of $1,392,000 for the replacement of some uneconomic lines was created at the 31 March 1993 year-end. $322,000 has been utilised during the current year resulting in the provision being fully utilised. The basis of charging the provision was the cost of actual work carried out during the year.

    1999        1998
    $000        $000

    Balance remaining – current - 322

    • 322

11. RECONCILIATION OF NET PROFIT AFTER TAXATION WITH CASH INFLOW FROM OPERATING ACTIVITIES

        1999

    Reported surplus after taxation 4,574
    Add non-cash items:
    Depreciation 2,717
    Movement in deferred tax 534
    3,251

Add item classified as investing activity:
Net (gain)/loss on disposal 12
12

Movement in working capital:
Increase in accounts payable 408
(Increase)/Decrease in taxation receivable (353)
Decrease in accounts receivable 2,547
(Decrease) in provision for replacement of uneconomic lines (322)
2,280

Net cash inflow/(outflow) from operating activities 10,117

12. OPERATING LEASE COMMITMENT
    Counties Power Limited Line Business had no operating lease commitments (1998 Nil).

13. CAPITAL COMMITMENTS AND CONTINGENT LIABILITIES
    Counties Power Limited Line Business had commitments for future capital expenditure at 31 March 1999 totalling $75,000 (1998: Nil).

There were no material contingent liabilities at 31 March 1999.

14. EVENTS OCCURRING AFTER BALANCE DATE
    Two legal claims against Counties Power Line Business which were lodged in the prior year remained outstanding at 31 March 1999, but were resolved by negotiation shortly afterward. Provision for costs related to settlement of these claims has been made in the financial statements of the Line Business.

Subsequent to balance date an agreement was entered into with certain property owners to relocate some electricity lines. This agreement related to obtaining the consent of these property owners to construction and enlivenment of a new 110kV line.

15. FINANCIAL INSTRUMENTS
    (A) Nature of activities and management policies with respect to financial instruments.

(i) In the normal course of its business the company incurs credit risk from trade debtors and financial institutions.

The company has a credit policy which is used to manage this exposure to credit risk. As part of this policy limits on exposures have been set, and are monitored on a regular basis.

Prior to the sale of its electricity energy retail business the company did not have any significant concentrations of credit risk. From 1 April 1999 a significant concentration of risk to major electricity energy retail customers exists. The company has a programme to manage this risk concentration, including adhering to specific credit policy requirements, insurance arrangements and having the contractual ability to require security to be provided by these customers under certain circumstances.

The company does not generally require collateral or security to support financial instruments other than as outlined above, due to the quality of the financial institutions dealt with.

(ii) Provision for uneconomic lines (refer note 10).

(iii) The company does not generally undertake any transactions denominated in foreign currencies apart from the purchase of distribution system equipment and does not hold any long term borrowings.

(B) Fair Values

Cash and Liquid Deposits, Short and Long Term Loans, Accounts Payable and Receivable, Provision for Uneconomic Lines and Investments. The carrying value of these items is equivalent to their fair value.