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 2 Statement of Significant Accounting Policies continued (i) Inventories Inventories are measured at the lower of cost and net realisable value. Costs incurred in bringing each product to its present location and condition are accounted for as follows: (i) (ii) Raw materials – purchase cost on weighted average cost basis; and Finished goods and workin-progress – cost of direct material, labour and a proportion of manufacturing overheads based on normal operating capacity. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling costs. (j) Impairment Financial assets (including receivables) A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there is objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably. Impairment for receivables is generally considered at a collective level, however where objective evidence exists that a receivable is impaired, such as when a debtor ceases trading, individual significant receivables are assessed for impairment. In assessing collective impairment an estimate is made of probable non-payment based on historical trends and an assessment of current economic and credit conditions. An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate. Losses are recognised in profit or loss. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss. Non-financial assets The carrying amounts of nonfinancial assets other than inventories and current tax receivable are reviewed at each reporting date to determine whether there is any indication of impairment, or when events or changes in circumstances indicate the carrying value may not be recoverable. If any such indication exists, then the asset’s recoverable amount is estimated. The recoverable amount of an asset or cash-generating unit (CGU) is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of asset that generates cash inflows from continuing use that are largely independent of cash inflows of other assets or groups of assets (the CGU). An impairment loss is recognised if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are recognised in profit or loss where there is no corresponding entry in the Asset Revaluation Reserve. Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. (k) Property, plant and equipment Recognition and measurement Items of property, plant and equipment are initially recognised at cost. Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, an appropriate proportion of overheads, costs directly attributable to bringing the asset to a working condition for intended use, costs of dismantling and removing the asset and restoring the site on which they were located, and capitalised borrowing costs. After recognition as an asset, items of property, plant and equipment are measured at fair value. Fair value is determined in accordance with NSW Treasury Accounting Policy TPP07-1 Valuation of Physical Non-Current Assets at Fair Value and AASB 116 Property, Plant and Equipment, and reviewed annually for impairment in accordance with AASB 136 Impairment of Assets. Revaluation increments are credited to the asset revaluation reserve included in the equity section of the Statement of Financial Position, unless the increment reverses a revaluation decrement of the same asset previously recognised in profit or loss. Any revaluation decrement is recognised in profit or loss unless it directly offsets a previous increment of the same asset in the asset revaluation reserve. When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate components of property, plant and equipment. 56
2 Statement of Significant Accounting Policies continued Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and are recognised in profit or loss. When revalued assets are sold, the amounts included in the revaluation reserve are transferred to retained earnings. System assets In accordance with NSW Treasury Accounting Policy TPP07-1 Valuation of Physical Non-Current Assets at Fair Value system assets are carried at fair value less accumulated depreciation and impairment losses. System assets are considered to be of a specialised nature, and fair value is estimated using a depreciated replacement cost method in accordance with AASB 116 Property, Plant and Equipment. A revaluation of system assets was undertaken by an independent valuer and recognised as at 30 June 2011. System assets were valued at Optimised Depreciation Replacement Cost (ODRC). The ODRC valuation was determined based on the following approach: • Establish the current replacement cost of the modern equivalent of assets in service at the valuation date. The concept of modern equivalent assets refers to assets that would be employed if the network were to be rebuilt today. • Depreciate the adjusted replacement cost to reflect the remaining effective life of the assets in service; and • Adjust the current replacement cost for over-design, overcapacity and redundant assets (optimisation). System assets are revalued at least every five years, in accordance with NSW Treasury Accounting Policy TPP07-1 Valuation of Physical Non-Current Assets at Fair Value. The frequency of valuations is considered appropriate given the nature, size and geographical spread of system assets, and annual fair value assessments. Non-system land and buildings Following initial recognition at cost, non-system land and building assets are carried at fair value less accumulated depreciation and impairment losses, in accordance with NSW Treasury Accounting Policy TPP07-1 Valuation of Physical Non- Current Assets at Fair Value. Non-system land and buildings are subject to independent valuation on a cyclical basis over a three year period. The carrying amount of non-system land and building assets is reviewed between independent valuations, to ensure the carrying amount does not differ materially from fair value. A revaluation of non-system land and buildings was undertaken by an independent valuer and recognised as at 30 June 2011. The valuations were based on market-based evidence in accordance with AASB 116 Property, Plant and Equipment. Other plant and equipment In accordance with NSW Treasury Accounting Policy TPP07-1 Valuation of Physical Non-Current Assets at Fair Value depreciated historical cost with respect to non-specialised assets is considered an acceptable surrogate for fair value, with any difference unlikely to be material. Accordingly, other plant and equipment are carried at fair value less accumulated depreciation and any impairment in value. Property, plant and equipment in the course of construction Property, plant and equipment in the course of construction are carried at cost, less any recognised impairment loss. Depreciation of these assets commences when the assets are ready for their intended use. Depreciation Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the assets. Land is not depreciated. Estimated useful lives are as follows: Years System assets 7–60 Buildings 40 Plant and equipment 4–10 Depreciation methods, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate. Capitalisation Policy Property, plant and equipment assets below $1,000 are expensed in the year of acquisition or construction. (l) Non-current assets held for sale Non-current assets and disposal groups are classified as held for sale and measured at the lower of their carrying amount and fair value less costs to sell, if their carrying amount will be recovered principally through a sale transaction as opposed to use. Once classified as held for sale, depreciation and amortisation ceases. For an asset or disposal group to be classified as held for sale, it must be available for immediate sale in its present condition and its sale must be highly probable. Endeavour Energy Annual Performance Report 2010–11 57
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 and 56: Statement of Cash Flows For the yEA
Page 57: 2 Statement of Significant Accounti
Page 61 and 62: 2 Statement of Significant Accounti
Page 63 and 64: 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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