Full Version - Essential Energy

Notes to the Financial Statements
for the year ended 30 June 2005
(l) Goods and Services Tax
Revenue, expenses and assets (other than receivables) are recognised net of the amount of goods and services tax (GST), except
where the amount of GST incurred is not recoverable from the Australian Taxation Office (ATO). In these circumstances the GST is
recognised as part of the cost of acquisition of the asset or as part of an item of expense.
Receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or current liability in the Statement
of Financial Position.
Cash flows are included in the Statement of Cash Flows on a gross basis. The GST component of cash flows arising from
investing and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows.
(m) Electricity Purchases
Country Energy purchases electricity in the National Electricity Market for resale to its customers. Changes in the spot market
may generate adverse financial effects. In order to minimise the risk, electricity trading positions are hedged. The gains and losses
arising from these hedging transactions are brought to account on settlement and are included as part of electricity purchases
(refer note 22(d)(i)).
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(n) Construction Contracts
Profit is recognised on fixed price construction contracts in proportion to the progress on each contract when all of the following
conditions are satisfied:
• total contract revenues to be received and the costs to complete the contract can be reliably estimated;
• the stage of contract completion can be reliably determined; and
• the costs attributable to the contract date can be clearly identified and can be compared with prior estimates.
Profit is recognised on cost plus construction contracts in proportion to the progress on each contract when all of the following
conditions are satisfied:
• the costs attributable to the contract to date can be clearly identified;
• costs to complete other than those that will be specifically reimbursable under the contract can be reliably estimated; and,
where relevant,
• the stage of contract completion can be reliably determined.
Any material losses on construction contracts are brought to account as soon as they are foreseeable.
(o) Joint Venture
Interest in joint ventures have been reported in the financial statements by including the economic entity’s share of assets
employed, and share of liabilities incurred, in their respective classification categories (refer note 30).
(p) Foreign Currency
Foreign currency transactions are converted to Australian currency at the rates of exchange applicable at the dates of the
transactions.
The treatment of foreign currencies that are hedged together with outstanding foreign currency balances, are set out in note
22(d)(ii).
(q) Rounding of Amounts
Amounts in the financial statements have been rounded to the nearest thousand dollars unless specifically stated otherwise.
(r) Exemptions
Exemptions have been granted by the Treasurer under Section 41BA of the Public Finance and Audit Act and Section 15 of the
Regulation, so that the financial reporting requirements which apply are broadly consistent with the Corporations Act reporting
requirements, given that the entity is competing in the national electricity market.
COUNTRY ENERGY ANNUAL REPORT 2004–2005