Eastland Network Limited – Electricity Lines Business

Notes to the financial statements (continued)

For the year ended 31 March 2007

13 Net Cash Flow from Operating Activities

The following is a reconciliation between the surplus after taxation shown in the statement of financial performance and the net cash flow from operating activities.

| | 2007
| | $'000 |
|------------------------------|-------|
| Surplus after taxation | 3,218 |
| Add/(less) items classified as investing/financing Activities | |
| Loss/(gain) on sale of other non current assets | (33) |
| | |
| Add/(less) non-cash items | |
| Depreciation | 3,638 |
| Increase in deferred taxation | 1,056 |
| | 4,694 |
| | |
| Add/(less) movement in working capital | |
| Decrease/(increase) in receivables and prepayments | 48 |
| Decrease/(increase) in inventories | - |
| (Decrease)/increase in payables and accruals | (13) |
| | 35 |
| | |
| Net cash flow from operating activities | 7,914 |

| | 2006
| | $'000 |
|------------------------------|-------|
| Surplus after taxation | 4,817 |
| Add/(less) items classified as investing/financing Activities | |
| Loss/(gain) on sale of other non current assets | (95) |
| | |
| Add/(less) non-cash items | |
| Depreciation | 3,486 |
| Increase in deferred taxation | 1,000 |
| | 4,486 |
| | |
| Add/(less) movement in working capital | |
| Decrease/(increase) in receivables and prepayments | (113) |
| Decrease/(increase) in inventories | 2 |
| (Decrease)/increase in payables and accruals | 1,039 |
| | 928 |
| | |
| Net cash flow from operating activities | 10,136|

14 Contingent Liabilities

At 31 March 2007, the Electricity Lines Business has a contingent liability of $64,799 (2006 $64,799) in respect to subdivision developers' rebates on sections that are reticulated but undeveloped. The individual liabilities will be brought to charge as each section is developed and line charges become payable.

15 Commitments

At 31 March 2007 the Electricity Lines Business had capital commitments of $404,000 in respect of Gladstone Road cable laying as part of the 2007/08 capital works programme. The figure for 2006 was nil.

16 Financial instruments

Credit risk

Financial assets which potentially subject the Electricity Lines Business to credit risk principally consist of bank balances and accounts receivable. The maximum credit risk is the book value of these financial instruments. However, the risk of non recovery of these amounts is considered to be minimal.

Currency risk

The Electricity Lines Business had no material exposure to currency risk at 31 March 2007.