3172

NEW ZEALAND GAZETTE

No. 121

MARLBOROUGH LINES LTD - LINES BUSINESS
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended 31 March 2001

1. STATEMENT OF ACCOUNTING POLICIES
   These financial statements have been prepared in accordance with, and for the sole purpose of, the requirements of regulation 6 of Electricity (Information Disclosure) Regulations 1999 and amendments to those regulations. Accordingly these financial statements are for the Line Business Activities of Marlborough Lines Limited. Contracting, investments, etc, with their associated revenue and costs, have been removed from these Financial Statements in accordance with the Regulations. These accounts are not comparable and should not be used to assess the actual performance of the Company as they are prepared for the sole purpose of meeting the requirements of the regulations. The contracting and other business activities which are removed from these accounts are required to function separately and produce commercial rates of return but will continue to be a core part of Marlborough Lines activities.
   The financial statements have been prepared on the basis of historical cost with the exception of certain items for which specific accounting policies are identified.

1.1 Goods And Services Tax (GST)
The statements of financial performance and of cash flows have been prepared so that all components are stated exclusive of GST. All items in the statement of financial position are stated net of GST with the exception of receivables and payables which include GST.

1.2 Income Tax
Income tax expense recognises the current obligations and all amounts arising from differences between the accounting results and assessable income for the period. This is the liability method applied on a comprehensive basis.

1.3 Receivables
Receivables are stated at the amount they are expected to realise. An estimate for doubtful debts is made and bad debts are written off during the year in which they are identified.

1.4 Inventories
Inventories are valued on the basis of the lower of cost and net realisable value. Cost is determined on the basis of weighted average of purchase costs. Due allowance is made for damaged and obsolete inventory. Work in progress comprises the cost of direct materials and labour together with chargeable overheads.

1.5 Fixed Assets And Depreciation
All fixed assets are recorded at cost. The cost of assets constructed by the company includes all materials used in construction, direct labour and direct overheads. Capital contributions are credited against the cost of the reticulation assets. Where commitments arise offshore for capital purchases the exchange rates are fixed forward to minimise foreign currency risk. All costs and exchange variations are included in the capitalised cost of the asset.
Depreciation rates used are in accord with the determinations issued from time to time by the Inland Revenue Department. These rates are as follows:

Buildings (concrete)                          1 % on cost price
Buildings (wooden)                           2 - 3.6 % on cost price
Reticulation system (global)                 5 % on cost price
Reticulation system (from 1.4.87)            5 - 18 % on diminishing value
Substation equipment                       7.5 - 39.6 % on diminishing value
Plant                                    10 - 62.5 % on diminishing value
Motor vehicles, office, communications      20 - 25 % on diminishing value