Endeavour Energy Annual Performance Report - Parliament of New ...
Endeavour Energy Annual Performance Report - Parliament of New ...
Endeavour Energy Annual Performance Report - Parliament of New ...
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09<br />
Financial<br />
statements<br />
Notes to the Financial Statements<br />
For the year ended 30 June 2011<br />
2 Statement <strong>of</strong> Significant<br />
Accounting Policies<br />
continued<br />
(q) Derecognition <strong>of</strong><br />
financial instruments<br />
The derecognition <strong>of</strong> a financial<br />
instrument takes place when the<br />
Corporation no longer controls the<br />
contractual rights that comprise<br />
the financial instrument, which<br />
is normally the case when the<br />
instrument is sold, or all the<br />
cash flows attributable to the<br />
instrument are passed through<br />
to an independent third party.<br />
Derecognition <strong>of</strong> financial<br />
instruments relating to the sale<br />
<strong>of</strong> the Retail business<br />
Financial instruments which form<br />
part <strong>of</strong> the disposal group and<br />
relate to transferable Retail business<br />
contracts, and those that satisfy<br />
the derecognition criteria as stated<br />
in AASB 139 Financial Instruments:<br />
Recognition and Measurement,<br />
were derecognised at the sale<br />
completion date. Transferable<br />
Retail business contracts are those<br />
Retail business contracts which<br />
can be legally novated to the<br />
acquirer, or where rights can be<br />
assigned and obligations transferred<br />
to the acquirer without the<br />
counterparty’s consent.<br />
Financial instruments that have<br />
the potential to switch between an<br />
asset and a liability, such as swaps<br />
which have not been legally novated<br />
to the acquirer at balance date,<br />
do not satisfy the derecognition<br />
criteria as stated in AASB 139<br />
Financial Instruments: Recognition<br />
and Measurement and cannot be<br />
derecognised. <strong>Endeavour</strong> <strong>Energy</strong><br />
remains a legal counterparty to<br />
these contracts. However, “backto-back”<br />
assets from, and liabilities<br />
to, the acquirer are recognised<br />
for liabilities and assets relating<br />
to retained contracts when all the<br />
economic benefit <strong>of</strong>, and risk in, the<br />
retained contracts are transferred<br />
to the acquirer.<br />
(r) Loans and borrowings<br />
Borrowings are initially recognised<br />
at fair value <strong>of</strong> the consideration<br />
received, net <strong>of</strong> transaction costs.<br />
After initial recognition, borrowings<br />
are subsequently measured at<br />
amortised cost using the effective<br />
interest method. Amortised cost is<br />
calculated by taking into account<br />
any issue costs, and any discount or<br />
premium on settlement.<br />
Borrowings are classified as current<br />
liabilities unless the Corporation<br />
has an unconditional right to defer<br />
settlement <strong>of</strong> the liability for at least<br />
12 months after the reporting date.<br />
(s) Revenue<br />
Revenue is recognised when the<br />
significant risks and rewards <strong>of</strong><br />
ownership have been transferred<br />
to the buyer, recovery <strong>of</strong> the<br />
consideration is probable, and the<br />
amount <strong>of</strong> revenue can be measured<br />
reliably. The following specific<br />
recognition criteria must also be met<br />
before revenue is recognised:<br />
Revenue from operating activities<br />
Revenue from operating activities<br />
comprises revenue earned from the<br />
provision <strong>of</strong> energy products and<br />
other ancillary services to entities<br />
outside the Corporation. Revenue is<br />
recognised when energy products<br />
and services are provided to the<br />
consumer. Metered energy supply<br />
is recognised when the meters are<br />
read, and an estimate is brought to<br />
account where meters have not been<br />
read. Network use <strong>of</strong> system charges<br />
are invoiced to out-<strong>of</strong>-area retailers<br />
following the reading <strong>of</strong> meters<br />
<strong>of</strong> customers within the franchise<br />
area who are contracted to external<br />
retailers. Network use <strong>of</strong> system<br />
income is recognised on an accrual<br />
basis, as revenue is accrued for<br />
consumption which is not invoiced<br />
at month end.<br />
Interest receivable and other<br />
revenue from operating activities is<br />
brought to account as it is earned,<br />
and is recognised when goods and<br />
services are provided.<br />
Developer or customer contributions<br />
<strong>of</strong> non-current assets are recognised<br />
as revenue and an asset when<br />
<strong>Endeavour</strong> <strong>Energy</strong> gains control<br />
<strong>of</strong> such contributions. Customer<br />
contributions are considered a<br />
separately identifiable service in<br />
accordance with Interpretation 18<br />
Transfers <strong>of</strong> Assets from Customers.<br />
The amount recognised is the fair<br />
value <strong>of</strong> the contributed asset at the<br />
date on which control <strong>of</strong> such assets<br />
is gained.<br />
Other revenue, outside the provision<br />
<strong>of</strong> energy products, is recognised on<br />
an accrual basis and in accordance<br />
with the substance <strong>of</strong> the agreement<br />
covering such transactions.<br />
Other income<br />
Income arising from the sale <strong>of</strong><br />
assets is recognised when the<br />
significant risks and rewards <strong>of</strong><br />
ownership have been transferred<br />
to the buyer, recovery <strong>of</strong> the<br />
consideration is probable, and<br />
the amount <strong>of</strong> revenue can be<br />
measured reliably.<br />
(t) Unread meters<br />
At reporting date, <strong>Endeavour</strong> <strong>Energy</strong><br />
accrues an estimate <strong>of</strong> electricity<br />
consumed where the meter has<br />
not been read. The accounting<br />
estimating methodology for<br />
calculating the unbilled revenue<br />
accrual calculates unbilled revenue<br />
volume where energy imports<br />
relating to basic meters are phased<br />
over the current month and future<br />
months in order to estimate the<br />
likely billing pattern relating to<br />
consumption. This calculation is<br />
accounted for as revenue on unread<br />
meters in pr<strong>of</strong>it or loss.<br />
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