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Notes to the Financial Statements
for the year ended 30 June 2005
(iv) The assets of EMMLINK Pty Limited
The 30 June 2001 carrying values of the subsidiary’s system assets were independently valued by KPMG Corporate Finance (Aust)
Pty Ltd. The valuations were adopted by the Directors at 30 June 2001 and became part of the Country Energy Consolidated
Group at fair value on 1 July 2001. The assets are recorded at balance date at fair value.
(v) The assets of Country Energy Gas Pty Limited
The subsidiary’s gas system assets were valued during 2004 by Deloitte Corporate Finance Pty Ltd using a DCF methodology.
The 30 June 2004 carrying values of the assets were supported by the valuation.
The carrying values of the assets at balance date are comprised of the carrying values at 30 June 2004, plus additions less
depreciation. During the period to 30 June 2005 there has been no material change to the expected carrying values of the assets
or assumptions used in the DCF valuation.
The carrying values of the gas system assets at balance date are supported by the independent valuation.
(vi) Asset acquisition
The value of assets acquired during the year includes the cost of acquisition, the cost of materials, labour and an appropriate
proportion of overheads.
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Assets that are contributed by customers are recorded at fair value (refer note 1(f)(v)).
(vii) Fair Value
Assets are recorded at fair value at balance date. These assets are cash generating assets. They are of a specialised nature and
there is no evidence available to support a market price. The fair value of the assets has been determined by the present value of
future net cash inflows.
(viii) Depreciation
The carrying value of property, plant and equipment is net of depreciation where applicable.
Depreciation is calculated for all items of property plant and equipment, except freehold land, based on the estimated useful
remaining life of the asset. The straight line or reducing balance methods are used.
Depreciation expense is recognised in the Statement of Financial Performance. Accumulated depreciation is written back against
the asset when the asset is revalued.
The estimated remaining lives to the entity for each class of asset are as follows:
Buildings
Leasehold improvements
System assets
Other assets
40 years
Term of lease
5 – 60 years
1 – 10 years
(i) Valuation of Other Non-Current Assets
(i) Investments
Shares held by the corporation in its subsidiaries are eliminated in the consolidated financial statements.
Cash investments are recorded at fair value. Changes to the market value of cash investments are recorded in the Statement of
Financial Performance or the asset revaluation reserve in accordance with Australian Accounting Standard AASB 1041 ‘Revaluation
of Non-Current Assets’.
(ii) Intangible assets
The largest components of intangible assets are Natural Gas Business Licences. These were acquired when the former Great
Southern Energy purchased the Natural Gas Business from the Council of the City of Wagga Wagga.
The difference between the cost of the Natural Gas Business and the value of the total assets is the value of the intangible asset,
being Distribution and Retail licences (refer note 13).
These licences entitle Country Energy to distribute and retail Natural Gas within the Wagga Wagga region, as well as to other
contestable markets. The licences have been brought to account having regard to the expected net cash flows derived from
holding the licences, and are based on an independent valuation, at the time of acquisition, as part of the allocation of the
purchase price of the assets acquired. Amortisation is over a ten year period on a straight line basis. Nothing has occurred to
suggest the terms and conditions of the issuance of the licences have not been complied with to support the carrying value
of the asset. The values of these licences are reviewed annually.
COUNTRY ENERGY ANNUAL REPORT 2004–2005