FINANCIAL INFORMATION Abridged Income Statements_part2 docx

Macquarie Generation ____________________________________________________________________________ 40 _________________________________________ Auditor-General’s Report to Parliament 2009 Volume Three OTHER INFORMATION Coal Supply Coal prices have increased significantly in recent years with the continued demand for Australia’s coal for export. This has resulted in increased risks for securing adequate supplies of coal and managing the cost of these supplies. Macquarie Generation has locked in a significant proportion of its coal supply contracts for the next ten years and it is examining options to manage future supply. The three New South Wales State owned generators including Macquarie Generation have undertaken a joint venture to develop a new domestic coal resource. The joint venture, Cobbora Coal, will further improve coal supply from 2014. FINANCIAL INFORMATION Abridged Income Statements Consolidated Parent Year ended 30 June 2009 2008 2009 2008 $’000 $’000 $’000 $’000 TOTAL REVENUE 1,217,232 1,162,402 1,217,232 1,162,402 PROFIT BEFORE BORROWING COSTS, DEPRECIATION AND TAX 332,137 814,371 332,137 814,371 Borrowing costs 51,832 62,557 51,832 62,557 Depreciation 161,305 111,663 161,305 111,663 PROFIT BEFORE TAX 119,000 640,151 119,000 640,151 Income tax equivalent expense 35,270 191,707 35,503 191,707 PROFIT AFTER TAX 82,867 448,444 82,867 448,444 Dividend provided 150,000 270,000 150,000 270,000 Profit after tax decreased by $366 million compared to the previous year mainly due to a fall in value of an electricity contract linked to the price of aluminium, which fell in 2008-09 and an increase in the electricity forward price curve. Increased depreciation charges followed a revaluation of assets at the end of 2007-08. This is trial version www.adultpdf.com ____________________________________________________________________________ Macquarie Generation Auditor-General’s Report to Parliament 2009 Volume Three _________________________________________ 41 Abridged Balance Sheets At 30 June Consolidated Parent 2009 2008 2009 2008 $’000 $’000 $’000 $’000 Current assets 524,253 750,965 522,924 750,965 Non-current assets 3,594,569 3,699,109 3,596,069 3,699,109 TOTAL ASSETS 4,118,822 4,450,074 4,188,993 4,450,074 Current liabilities 458,198 856,465 457,749 856,465 Non-current liabilities 1,775,497 1,793,764 1,775,497 1,793,764 TOTAL LIABILITIES 2,233,695 2,650,299 2,233,246 2,650,229 NET ASSETS 1,885,747 1,799,845 1,885,747 1,799,845 Current assets decreased by $228 million, largely due to the adverse movement in financial instruments valuation. CORPORATION ACTIVITIES See the ‘Electricity Industry Overview’ section earlier in this report for general industry comment. Macquarie Generation operates the Bayswater and Liddell coal-fired power stations in the Upper Hunter Valley. Macquarie Generation was constituted in March 1996 as an electricity generator under the Energy Services Corporations Act 1995 and as a statutory State owned corporation under the State Owned Corporations Act 1989. The voting shareholders are the Treasurer and the Minister for Finance. For further information on Macquarie Generation, refer to www.macgen.com.au . CONTROLLED ENTITY Midwest Development Corporation Pty Limited Period ended 30 June 2009 $’000 Revenue 1 Expenses 854 Income tax benefit 233 Loss after tax 620 Total assets 21,671 Total liabilities 22,291 Net liabilities (at 30 June) 620 This is trial version www.adultpdf.com Macquarie Generation ____________________________________________________________________________ 42 _________________________________________ Auditor-General’s Report to Parliament 2009 Volume Three Total assets are mainly comprised of $21.1 million in advances made from Midwest Development Corporation Pty Limited to the joint venture. Total liabilities include $21.6 million received from Macquarie Generation as interest free advances. Corporate Activities Midwest Development Corporation Pty Limited was incorporated on 13 August 2008 under the Corporations Act 2001 as a special purpose venture to participate in the Cobbora Project. Cobbora Joint Venture Macquarie Generation and Midwest Development Corporation Pty Limited have approval from the New South Wales Treasurer under the Public Authorities (Financial Arrangements) Act 1987 to participate in the Cobbora Joint Venture. The Cobbora Project is an Unincorporated Joint Venture between the special purpose subsidiaries of the New South Wales State Owned Electricity Generators to source, develop and operate a coal resource in New South Wales. This is trial version www.adultpdf.com Auditor-General’s Report to Parliament 2009 Volume Three _________________________________________ 43 Country Energy AUDIT OPINION The audits of Country Energy and its controlled entities’ financial reports for the year ended 30 June 2009 resulted in unqualified Independent Auditor’s Reports. Unless otherwise stated, the following commentary relates to the consolidated entity. KEY ISSUES Restructure of Electricity Industry The Government is proposing to sell Country Energy’s retail operations. See the ‘Electricity Industry Overview’ section appearing earlier in this report for details on the sale and the Government’s final policy position on its ‘Energy Reform Strategy’ announced in September 2009. PERFORMANCE INFORMATION Operational Performance Country Energy is committed to delivering a safe and reliable supply of energy to its customers. Some indicators Country Energy uses to assess its performance are: Target* Actual 2009 2009 2008 2007 2006 System average interruption duration index (SAIDI) - customer minutes without supply <332 267 225 242 301 Corporate reputation survey – service meeting and exceeding customer expectation 75 86 92 88 86 Lost time injury frequency rate (LTIFR) – lost time injuries per one million hours worked 2.0 1.7 2.8 5.8 6.7 * Targets provided by Country Energy. The increase in customer minutes without supply reflects the high levels of storm activity during the year compared to the previous year. The target for 2009 was derived from the targets mandated by New South Wales Government licence conditions imposed on distribution network service providers. Country Energy’s performance against this target reflects the effectiveness of network investment and improvement programs in recent years. Country Energy’s lost time injury frequency rate continued to decline, in line with its goal of achieving ‘zero harm’ in the work place. This is trial version www.adultpdf.com Country Energy __________________________________________________________________________________ 44 _________________________________________ Auditor-General’s Report to Parliament 2009 Volume Three Financial Performance Target Actual 2009 2009 2008 Earnings before interest and tax* ($m) 292.7 349.2 267.0 Return on equity* (%) (a) 5.2 13.4 7.1 Return on assets* (%) (b) 6.3 7.3 5.8 Interest cover** (times) 1.3 1.8 1.3 Debt to equity** (%) 328.5 350.0 272.8 Total distributions to government** ($m) 43.2 76.1 54.2 Capital expenditure* ($m) 663.2 658.4 579.2 * Targets provided by Country Energy. ** Calculated from target as agreed with shareholding Ministers. (a) Profit after tax divided by average equity. (b) Earnings before interest and tax divided by average total assets. Note: Earnings and ratios exclude the impact of fair value gains and losses on financial instruments and superannuation actuarial gains and losses. Country Energy’s earnings before interest and tax exceeded its target. Capital contributions from developers and customers were $31.7 million higher than anticipated, while operating expenditure and depreciation charges were slightly lower than budget. The higher earnings before interest and tax increased Country Energy’s return on equity. This ratio also improved because of a decline in average equity as result of unrealised losses on cash flow hedges which were recognised directly in equity. This is trial version www.adultpdf.com __________________________________________________________________________________ Country Energy Auditor-General’s Report to Parliament 2009 Volume Three _________________________________________ 45 FINANCIAL INFORMATION Abridged Income Statements Year ended 30 June Consolidated Parent 2009 2008 2009 2008 $’000 $’000 $’000 $’000 OPERATING REVENUE 2,489,877 2,313,058 2,488,291 2,310,974 OPERATING PROFIT BEFORE BORROWING COSTS, DEPRECIATION, OTHER GAINS/(LOSSES) AND TAX 547,180 420,008 537,872 410,980 Borrowing costs 201,038 176,671 201,038 176,671 Depreciation 177,998 161,029 173,488 156,701 Operating Profit before other gains and tax 168,144 82,308 163,346 77,608 Fair value (losses) on financial instruments (43,133) (32,117) (43,133) (32,117) PROFIT BEFORE TAX 125,011 50,191 120,213 45,491 Income tax equivalent benefit/(expense) (33,983) 4,512 (32,118) 6,347 PROFIT AFTER TAX 91,028 54,703 88,095 51,838 Dividend provided 29,200 49,100 29,200 49,100 Revenue includes $2.3 billion ($2.2 billion) from the sale and delivery of electricity and gas. Cost of sales was $2.1 billion ($2.0 billion). Abridged Balance Sheets At 30 June Consolidated Parent 2009 2008 2009 2008 $’000 $’000 $’000 $’000 Current assets 629,932 819,495 686,262 875,816 Non-current assets 4,344,350 3,822,658 4,271,415 3,750,374 TOTAL ASSETS 4,974,282 4,642,153 4,957,677 4,626,190 Current liabilities 1,502,013 1,259,945 1,503,403 1,259,391 Non-current liabilities 2,633,039 2,418,038 2,630,171 2,414,823 TOTAL LIABILITIES 4,135,052 3,677,983 4,133,574 3,674,214 NET ASSETS 839,230 964,170 824,103 951,976 The significant decrease in current assets was mainly due to a decrease of $183 million in the value of derivative financial instruments based on mark-to-market adjustments. This is trial version www.adultpdf.com Country Energy __________________________________________________________________________________ 46 _________________________________________ Auditor-General’s Report to Parliament 2009 Volume Three The increase in non-current assets included $658 million from the acquisition of property, plant and equipment and intangible assets during the year. Of this amount, system assets additions in 2008-09 totalled $540 million. In April 2009, the Australian Electricity Regulator approved Country Energy’s five year plan to invest almost $4.0 billion in its network. The plan includes $500 million to construct new sub-transmission lines and refurbish existing sub-transmission lines, $500 million to build new zone substations and refurbish existing zone substations, and $500 million in ongoing vegetation management. Liabilities rose primarily due to an additional $307 million of debt, increasing the balance of loans outstanding to $2.9 billion ($2.6 billion). Country Energy’s underfunded superannuation liability also increased by $89.3 million to $104 million ($14.7 million). CORPORATION ACTIVITIES See the ‘Electricity Industry Overview’ section appearing earlier in this report for general industry comment. Country Energy is a statutory State owned corporation constituted by the Energy Services Corporation Act 1995. Its principal function is to distribute electricity to the national electricity market. The voting shareholders are the Treasurer and the Minister for Finance. For more information on Country Energy, refer to www.countryenergy.com.au . CONTROLLED ENTITIES The following controlled entities have not been reported on separately as they are not considered material by their size or the nature of their operations to the consolidated entity. Entity Name Country Energy Gas Pty Limited NorthPower Energy Services Pty Limited This is trial version www.adultpdf.com Auditor-General’s Report to Parliament 2009 Volume Three _________________________________________ 47 EnergyAustralia AUDIT OPINION The audits of EnergyAustralia and its controlled entities’ financial reports for the year ended 30 June 2009 resulted in unqualified Independent Auditor’s Reports. Unless otherwise stated, the following commentary relates to the consolidated entity. KEY ISSUES Restructure of the Electricity Industry The Government has initiated Expressions of Interest for purchasing the retail operations and development site of EnergyAustralia. See the ‘Electricity Industry Overview’ section appearing earlier in this report for details on the sale and the Government’s final policy position on its ‘Energy Reform Strategy’ announced in September 2009. PERFORMANCE INFORMATION EnergyAustralia provided the following information regarding its performance. Operational Performance A prime objective of EnergyAustralia is to deliver a safe and reliable supply of energy to its customers. The following table shows its performance in relation to customer satisfaction, employee safety and customer gains and losses. Year ended 30 June Target* Actual 2009 2009 2008 2007 2006 Customer satisfaction index (%) (a) 60 45 52 51 52 Minutes customers were without supply 86-104 109 100 102 90 Lost time injury frequency – (hours per million hours worked) <4.0 3.6 3.9 2.9 3.8 Customers at year end (000’s) 1,591 1,581 1,568 1,557 Source: EnergyAustralia Annual Report 2008-09. * Target agreed with the Statement of Corporate Intent (SCI) 2008-09. (a) Extremely or very satisfied only. EnergyAustralia did not achieve its target level for customer satisfaction of ‘very satisfied’ or ‘extremely satisfied’. However, 96 per cent (97 per cent in 2008) of its customers reported they were satisfied or more than satisfied with EnergyAustralia’s service. This is trial version www.adultpdf.com EnergyAustralia __________________________________________________________________________________ 48 _________________________________________ Auditor-General’s Report to Parliament 2009 Volume Three The target for customer minutes without electricity supply was not met this year due mainly to three significant supply interruptions in the Sydney CBD in March and April. Two of the interruptions were due to damage caused to power cables during private construction activity. The third incident related to an unexpected problem during sub-station maintenance. To provide greater protection to electricity supply, the Energy Legislation Amendment (Infrastructure Protection) Act 2009 was introduced to protect vital power cables. The new legislation makes the ‘Dial-Before-You-Dig’ program compulsory. The legislation provides for increased penalties for cable damage of $440,000 for corporations, $22,000 for individuals and includes jail terms of up to five years. Environmental Performance EnergyAustralia has met its obligations under both the Commonwealth and New South Wales Government’s renewable energy schemes for 2009. In complying with the Commonwealth’s Mandatory Renewable Energy Target, EnergyAustralia surrendered certificates representing generation of 739,000 MWh of electricity from approved renewable generators. Under the New South Wales Greenhouse Gas Abatement Scheme, EnergyAustralia delivered 6.3 million tonnes of greenhouse gas savings associated with electricity use. EnergyAustralia reported that it provided GreenPower to 68,724 customers during the year. GreenPower is provided through the four customer options – PureEnergy 10, PureEnergy 25, PureEnergy 50 and PureEnergy 100. For each customer who chooses one of these products, EnergyAustralia ensures that an amount of electricity (equal to 10, 25, 50, or 100 per cent respectively of the customer’s electricity account) has been or will be delivered into the national electricity grid from GreenPower accredited generators. EnergyAustralia owns a small portfolio of renewable electricity generators including the 600kW (kilowatt) Kooragang Wind Turbine and the 407 kW Singleton Solar Farm. A new renewable energy generator was installed at Bondi Sewerage Treatment Plant during the year. The amount spent on environmental expenditure increased to $133 million ($116 million in 2008). * Sources: EnergyAustralia 2008-09 Annual Report This is trial version www.adultpdf.com . joint venture, Cobbora Coal, will further improve coal supply from 2014. FINANCIAL INFORMATION Abridged Income Statements Consolidated Parent Year ended 30 June 2009 2008 2009 2008. Parliament 2009 Volume Three _________________________________________ 45 FINANCIAL INFORMATION Abridged Income Statements Year ended 30 June Consolidated Parent 2009 2008 2009 2008. 163,346 77,608 Fair value (losses) on financial instruments (43,133) (32,117) (43,133) (32,117) PROFIT BEFORE TAX 125,011 50,191 120,213 45,491 Income tax equivalent benefit/(expense)