Endeavour Energy Annual Performance Report - Parliament of New ...

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09 Financial statements Notes to the Financial Statements For the year ended 30 June 2011 1 Corporate Information Endeavour Energy’s financial statements for the year ended 30 June 2011 were authorised for issue in accordance with a resolution of the Directors on 7 September 2011. Endeavour Energy (formerly Integral Energy) is a state-owned energy Corporation, incorporated in New South Wales under the Energy Services Corporations Act 1995. Endeavour Energy’s registered office is 51 Huntingwood Drive, Huntingwood NSW 2148. The nature of the operations and principal activities of the Corporation are described in the Directors’ Report. 2 Statement of Significant Accounting Policies (a) Basis of preparation The financial statements are generalpurpose financial statements which have been prepared in accordance with the requirements of applicable Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board, the State Owned Corporations Act 1989, the Public Finance and Audit Act 1983 and the Regulation 2010. The financial statements have been prepared on a going concern basis which assumes that Endeavour Energy will be able to pay its debts as and when they fall due, and continue operation without any intention or necessity to liquidate or otherwise wind up its operation. The Corporation is classified as a forprofit entity for the purposes of the application of Australian Accounting Standards and after consideration of all factors contained in New South Wales Treasury Policy TPP 05-4 Distinguishing For-Profit from Not- For-Profit Entities. The financial statements have been prepared on a historical cost basis with the exception of property, plant and equipment, derivative financial instruments, emission rights and provisions which have been measured at fair value and, except where stated, does not take into account changing money values. Amounts in the financial statements have been rounded to the nearest thousand dollars. The financial statements are presented in Australian dollars. (b) Comparative Figures When the presentation or classification of items in the financial statements are amended, comparative amounts are reclassified unless the reclassification is impracticable. Comparative amounts in the Statement of Comprehensive Income have been reclassified into continuing and discontinued operations as required by AASB 5 Non Current Assets Held for Sale and Discontinued Operations. No other material amounts have been reclassified during the current or prior year. (c) New Accounting Standards and Interpretations (i) Changes in accounting policy and disclosures: The accounting policies adopted are consistent with those of the previous year with the exception of those noted below. Endeavour Energy has adopted the following new and amended Australian Accounting Standards and AASB Interpretations as and when they became applicable during the year: AASB 2010-1 Amendments to Australian Accounting Standards - Limited Exemption from Comparative AASB 7 Disclosures for First Time Adopters – Effective 1 July 2010 AASB 2010-3 Amendments to Australian Accounting Standards arising from the Annual Improvements Projects (AASB 3, AASB 7, AASB 121, AASB 128, AASB 131, AASB 132 & AASB 139) – Effective 1 July 2010 Interpretation 19 Extinguishing Financial Liabilities with Equity Instruments – Effective 1 July 2010 (ii) Accounting Standards and Interpretations issued but not yet effective: Australian Accounting Standards and Interpretations that have been recently issued or amended but are not yet effective, and not adopted by the Corporation for the annual reporting period ending 30 June 2011, are outlined below: AASB 9 Financial Instruments – Effective 1 January 2013 AASB 124 (Revised) Related Party Disclosures – Effective 1 January 2011 AASB 1053 Application of Tiers of Australian Accounting Standards – Effective 1 July 2013 AASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9 (AASBs 1, 3, 4, 5, 7, 101, 102, 108, 112, 118, 121, 127, 128, 131, 132, 136, 1023 & 1038 and Interpretations 10 & 12) – Effective 1 January 2013 AASB 2009-12 Amendments to Australian Accounting Standards (AASBs 5, 8, 108, 110, 112, 119, 133, 137, 139, 1023 & 1031 and Interpretations 2, 4, 16, 1039 & 1052) – Effective 1 January 2011 AASB 2009-14 Amendments to Australian Interpretation – Prepayments of a Minimum Funding Requirement – Effective 1 January 2011 AASB 2010-2 Amendments to Australian Accounting Standards arising from reduced disclosure requirements – Effective 1 July 2013 AASB 2010-4 Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project (AASBs 1, 7, 101 & 134 and Interpretation 13) – Effective 1 January 2011 AASB 2010-5 Amendments to Australian Accounting Standards (AASBs 1, 3, 4, 5, 101, 107, 112, 118, 119, 121, 132, 133, 134, 137, 139, 140, 1023 & 1038 and Interpretations 112, 115, 127, 132 & 1042) – Effective 1 January 2011 54
2 Statement of Significant Accounting Policies continued AASB 2010-6 Amendments to Australian Accounting Standards – Disclosures on Transfers of Financial Assets – Effective 1 July 2011 AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 (Dec 2010) – Effective 1 January 2013 AASB 2010-8 Amendments to Australian Accounting Standards – Deferred Tax: Recovery of Underlying Assets – Effective 1 January 2012 These Standards and associated amendments are not expected to have a material impact on the financial statements, except for changes associated with AASB 1053 and AASB 2010-2 which are expected to significantly reduce disclosure requirements when adopted. (d) Use of estimates and judgements The preparation of financial statements in conformity with AASBs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. Information about critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements, and information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year, is included in the following notes: Note 2(t) – Unread Meters Note 12 – Property, Plant and Equipment – Revaluations Note 14(h) – Employee Benefits Superannuation – Valuation Method and Principal Economic Assumptions Note 18 – Provisions Note 21 – Financial Instruments Note 22(b) – Contingent Liabilities (e) Contributed equity The State Owned Corporations Act 1989 (as amended) requires Endeavour Energy to have two voting shareholders. Current shareholders are the New South Wales Treasurer and the Minister for Finance who hold the shares on behalf of the NSW Government. Each shareholder holds one $1 share, with each share being of the same class with equal rights. (f) Foreign currency translation Both the functional and presentation currency of Endeavour Energy is Australian dollars (A$). Transactions in foreign currencies are initially recorded in the functional currency at the exchange rates at the date of the transaction. At each balance sheet date, monetary items denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Any foreign currency income or expense items are translated at exchange rates as at the date of the transaction, with resulting exchange differences recognised as income or expense in profit or loss. Any foreign currency assets or liabilities are translated at exchange rates prevailing on the balance sheet date, with resulting exchange differences classified as equity and transferred to the foreign currency translation reserve. (g) Cash and cash equivalents Cash and cash equivalents in the Statement of Financial Position comprise cash at bank and in hand, short-term deposits readily convertible to cash, investments for a fixed term where the maturity date is three months or less from year end balance date, and readily tradeable investments which are likely to be converted to cash within three months of year end balance date even though the maturity date may be greater than three months from year end balance date. (h) Trade and other receivables Trade and other receivables are financial assets recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition receivables are measured at amortised cost using the effective interest rate method, less any impairment losses. Collectibility of trade receivables is reviewed on an ongoing basis. Individual debts that are known to be uncollectible are written off when identified. An impairment provision is recognised when there is objective evidence that the entity will not be able to collect the receivable. Financial difficulties of the debtor, default payments or debts more than 120 days overdue are considered objective evidence of impairment. The amount of the impairment loss is the receivable carrying amount compared to the present value of estimated future cash flows, discounted at the original effective interest rate. Endeavour Energy Annual Performance Report 2010–11 55
Page 1 and 2:
ANNUAL PERFORMANCE REPORT 2010-11 I
Page 3 and 4:
Contents LETTER TO SHAREHOLDING MIN
Page 5 and 6: YeAR at a Glance Items 2009-10 2010
Page 7 and 8: To that end, we pursued our second
Page 9 and 10: Endeavour Energy’s six strategic
Page 11 and 12: Performance indicator: lost time in
Page 13 and 14: Performance indicator: Capital expe
Page 15 and 16: Efficiency reviews to reduce costs
Page 17 and 18: Each year we investigate bushfire r
Page 19 and 20: STRATEGIC OBJECTIVE 6 - DELIVER PER
Page 21 and 22: Network Strategy Network business o
Page 23 and 24: Major works in progress 2010-11 con
Page 25 and 26: Major works in progress 2010-11 con
Page 27 and 28: The NSW Code of Practice - Demand M
Page 29 and 30: Network-related calls increased fro
Page 31 and 32: New apprentices vital to our workfo
Page 33 and 34: Equal employment opportunity As par
Page 35 and 36: Multicultural policies and services
Page 37 and 38: 06 8 % reduction in greenhouse emis
Page 39 and 40: Environmental management system Our
Page 41 and 42: ENDEAvoUR ENERGY’S GoveRNANCE AND
Page 43 and 44: EXECUTIve LEADERshIP TEAM Vince Gra
Page 45 and 46: 08 $ 245 m operating profit after t
Page 47 and 48: Debt Balance sheet debt increased b
Page 49 and 50: Directors’ Report For the yEAR en
Page 51 and 52: Statement of Comprehensive Income F
Page 53 and 54: Statement of Changes in Equity For
Page 55: Statement of Cash Flows For the yEA
Page 59 and 60: 2 Statement of Significant Accounti
Page 65 and 66: 4 Expenses 2011 $’000 2010 $’00
Page 67 and 68: 5 Gain/(loss) on sale of Retail bus
Page 69 and 70: 7 Deferred Tax (Assets)/Liabilities
Page 71 and 72: 8 Cash Flow Information continued (
Page 73 and 74: 9 Trade and Other Receivables conti
Page 75 and 76: 12 property Plant and Equipment con
Page 77 and 78: 13 Intangible Assets Software $’0
Page 79 and 80: 14 Employee Benefits - Superannuati
Page 81 and 82: 16 Other Current Liabilities 2011 $
Page 83 and 84: 21 Financial Instruments continued
Page 91 and 92: 23 Expenditure Commitments continue
Page 93 and 94: 27 prudential Requirements An unsec
Page 95 and 96: Appendices Contents Five-year stati
Page 97 and 98: Australian Financial Services Licen
Page 99 and 100: Executive Remuneration General prin
Page 101 and 102: Table A: Number of applications by
Page 103 and 104: Implementation of Price Determinati
Page 105 and 106: GLossARY The Australian Consumer La
Page 107:
Ausgrid LOCATIONS and contacts Kand
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