Full Version - Essential Energy

Notes to the Financial Statements
for the year ended 30 June 2005
Goodwill, representing the excess of the cost of acquisition over the fair value of the identifiable net assets acquired is amortised
on a straight line basis over a period of 10 years.
The carrying values of Country Energy’s Gas business’s intangible assets are supported by the Deloitte Corporate Finance Pty Ltd
DCF valuation as disclosed in note (h)(v).
Franchise and alliance fees, relating to business undertakings with external parties are amortised on a straight line basis over a
period of 10 years.
(iii) Leased assets
Country Energy has not entered into any finance leases. Operating leases are not capitalised and rental payments are charged
against operating profit in the period in which they are incurred (refer note 23).
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(j) Liabilities
(i) Payables
Payables are recognised when the corporation is obliged to make a future payment for the purchase of goods or services.
Payables are recorded at fair value.
(ii) Interest bearing liabilities
Interest bearing liabilities are disclosed at their capital value.
(iii) Discount and premiums on loans
Discounts and premiums on loans are netted against the appropriate interest bearing liabilities.
(iv) Loans to subsidiaries
Country Energy has lent $57.5 million to EMMLINK Pty Limited and $56.5 million to Country Energy Gas Pty Limited.
Due to a resolution taken by the Board of Country Energy, these loans will not place in jeopardy the solvency of the subsidiaries
(refer note 11).
(v) Employee benefits
The provision for employee benefits to wages, annual leave, sick leave and long service leave represents the amount which
Country Energy has a present obligation to pay resulting from employees’ services provided up to balance date.
The amounts provided have been apportioned between current and non-current provisions, the current provision being
that portion which is expected to be paid within the ensuing twelve months (refer note 17).
In calculating wages and annual leave, nominal amounts have been used based on current wages and salaries, including related
on costs.
The amounts recognised for sick leave and long service leave are calculated in accordance with Australian Accounting Standard
AASB 1028: Employee Benefits. Sick leave and long service leave were calculated by an independent actuary, Cumpston Sarjeant
Pty Ltd. The non-current portion of the long service leave liability has been discounted using rates attaching to Commonwealth
government securities at balance date.
(k) Income Tax
The economic entity operates within the National Tax Equivalent Regime (NTER) administered by the Australian Taxation Office
on behalf of the NSW Government.
Tax effect accounting principles are applied to the financial statements. Timing differences which arise from items of income
and expense, being brought to account in different periods for income tax and accounting purposes are carried forward in the
Statement of Financial Position as a future income tax benefit or a provision for deferred income tax.
Future income tax benefits relating to tax losses are only brought to account when their realisation is virtually certain. All other
future benefits are brought to account only when realisation of the asset is beyond reasonable doubt.
The Country Energy group has elected to consolidate for NTER purposes as part of a tax sharing arrangement which provides
for the allocation of income tax expense and liabilities across the wholly owned subsidiaries and a tax funding agreement which
provides intercompany funding to cover current and deferred tax balances contributed by the individual subsidiaries to the head
entity.
COUNTRY ENERGY ANNUAL REPORT 2004–2005