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 (q) Derecognition of financial instruments The derecognition of a financial instrument takes place when the Corporation no longer controls the contractual rights that comprise the financial instrument, which is normally the case when the instrument is sold, or all the cash flows attributable to the instrument are passed through to an independent third party. Derecognition of financial instruments relating to the sale of the Retail business Financial instruments which form part of the disposal group and relate to transferable Retail business contracts, and those that satisfy the derecognition criteria as stated in AASB 139 Financial Instruments: Recognition and Measurement, were derecognised at the sale completion date. Transferable Retail business contracts are those Retail business contracts which can be legally novated to the acquirer, or where rights can be assigned and obligations transferred to the acquirer without the counterparty’s consent. Financial instruments that have the potential to switch between an asset and a liability, such as swaps which have not been legally novated to the acquirer at balance date, do not satisfy the derecognition criteria as stated in AASB 139 Financial Instruments: Recognition and Measurement and cannot be derecognised. Endeavour Energy remains a legal counterparty to these contracts. However, “backto-back” assets from, and liabilities to, the acquirer are recognised for liabilities and assets relating to retained contracts when all the economic benefit of, and risk in, the retained contracts are transferred to the acquirer. (r) Loans and borrowings Borrowings are initially recognised at fair value of the consideration received, net of transaction costs. After initial recognition, borrowings are subsequently measured at amortised cost using the effective interest method. Amortised cost is calculated by taking into account any issue costs, and any discount or premium on settlement. Borrowings are classified as current liabilities unless the Corporation has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. (s) Revenue Revenue is recognised when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, and the amount of revenue can be measured reliably. The following specific recognition criteria must also be met before revenue is recognised: Revenue from operating activities Revenue from operating activities comprises revenue earned from the provision of energy products and other ancillary services to entities outside the Corporation. Revenue is recognised when energy products and services are provided to the consumer. Metered energy supply is recognised when the meters are read, and an estimate is brought to account where meters have not been read. Network use of system charges are invoiced to out-of-area retailers following the reading of meters of customers within the franchise area who are contracted to external retailers. Network use of system income is recognised on an accrual basis, as revenue is accrued for consumption which is not invoiced at month end. Interest receivable and other revenue from operating activities is brought to account as it is earned, and is recognised when goods and services are provided. Developer or customer contributions of non-current assets are recognised as revenue and an asset when Endeavour Energy gains control of such contributions. Customer contributions are considered a separately identifiable service in accordance with Interpretation 18 Transfers of Assets from Customers. The amount recognised is the fair value of the contributed asset at the date on which control of such assets is gained. Other revenue, outside the provision of energy products, is recognised on an accrual basis and in accordance with the substance of the agreement covering such transactions. Other income Income arising from the sale of assets is recognised when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, and the amount of revenue can be measured reliably. (t) Unread meters At reporting date, Endeavour Energy accrues an estimate of electricity consumed where the meter has not been read. The accounting estimating methodology for calculating the unbilled revenue accrual calculates unbilled revenue volume where energy imports relating to basic meters are phased over the current month and future months in order to estimate the likely billing pattern relating to consumption. This calculation is accounted for as revenue on unread meters in profit or loss. 60
2 Statement of Significant Accounting Policies continued (u) Leases Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases. Operating lease payments are recognised as an expense in the Statement of Comprehensive Income on a straight line basis over the lease term, except where another systematic basis is more representative of the time pattern in which the economic benefits from lease assets are consumed. (v) Finance costs Borrowing costs include interest, amortisation of discounts or premiums relating to borrowings, amortisation of ancillary costs incurred in connection with arrangement of borrowings and Government guarantee fee costs. The amount excludes borrowing costs relating to qualifying assets that have been capitalised in accordance with AASB 123 Borrowing Costs. Borrowing costs are recognised in profit or loss in the period in which they are incurred. (w) Income tax Income tax expense comprises current and deferred tax. Current and deferred tax are recognised in profit or loss except to the extent that it relates to a business combination, or items recognised directly in equity or in other comprehensive income. Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities have been offset as there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity. A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised. Endeavour Energy is subject to the National Taxation Equivalent Regime (NTER) based on the Income Tax Assessment Act 1936 and the Income Tax Assessment Act 1997. Tax equivalents are payable to the Office of State Revenue. (x) Other taxes FBT, payroll tax and land tax are recognised in accordance with relevant legislation. In relation to GST, revenues, expenses and assets are recognised net of the amount of GST except: • where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and • receivables and payables are stated with the amount of GSt included. Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash flows. Contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority. A detailed assessment of greenhouse gas emissions indicates Endeavour Energy will not be liable under the proposed carbon tax, as the Corporation’s direct emissions do not currently exceed the defined threshold. (y) Workers compensation insurance Endeavour Energy is a self-insurer through its insurance provision for workers compensation and meets all liabilities under the Workers Compensation Act 1987. An external actuary is engaged to provide an annual investigation of Endeavour Energy’s estimated liability for workers compensation as at the reporting date. The liability is measured as the present value of expected future payments at the reporting date. (z) Dividend Ordinary dividend is calculated in accordance with TPP 09-6 Financial Distribution Policy for Government Businesses based on a base payout ratio of 70% applied to post-tax profit adjusted for non-cash fair value movements on financial instruments classified or designated “at fair value through profit or loss” under AASB 139 Financial Instruments: Recognition and Measurement, and other adjustments as agreed with NSW Treasury. Dividend payable for the 2010/11 financial year is $156.8m (2010: $142.6m). Endeavour Energy Annual Performance Report 2010–11 61
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 and 58: 2 Statement of Significant Accounti
Page 59 and 60: 2 Statement of Significant Accounti
Page 61: 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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