TransGrid _______________________________________________________________________________________ 58 _________________________________________ Auditor-General’s Report to Parliament 2009 Volume Three Financial Performance Year ended 30 June Target* Actual 2009 2009 2008 2007 Earnings before interest and tax ($m) 318.1 320.5 290.5 240.8 Return on equity (%) (a) 7.8 8.0 7.7 5.8 Return on assets (%) (b) 7.1 6.8 7.1 6.3 Interest cover (times) 2.3 2.4 2.4 2.3 Dividends to government ($m) 114.2 120.2 105.9 71.5 Capital expenditure 537.9 619.9 355.0 218.2 * Source: TransGrid 30 June 2009 Statement of Corporate Intent (SCI). (a) net profit after tax divided by average equity. (b) earnings before interest and tax divided by average assets. Earnings increased because TransGrid received additional regulated revenue of approximately $30.0 million in 2008-09. This resulted from a correction to one of the parameters used in the Maximum Allowance Revenue calculation for the 2004-09 regulatory period. Contributions to Government for 2008-09 were $187 million, comprising a dividend of $120 million ($106 million in 2008) and taxation of $67.1 million ($58.1 million). Capital expenditure increased significantly from 2008 and a number of major capital projects were close to completion including the Western 500kV Development Project and Wollar-Wellington 330kV Transmission Line projects. OTHER INFORMATION Maximum Allowable Revenue Every five years, the AER determines the maximum allowable revenue for TransGrid’s operations for a five year regulatory period. The revenue proposal seeks sufficient funds from the regulator to allow TransGrid to continue to deliver network reliability. A key challenge in the current regulatory period is the significant reduction in the regulated return on TransGrid’s asset base resulting from a fall in bond yields used by the AER to determine the rate of return. Consequently, TransGrid’s transmission charges will increase by 2.3 per cent, increasing the average residential customer bill by $2.80 per annum from 1 July 2009. The approved regulated capital works program will increase to $2.4 billion for the 2009-14 regulatory period from $1.5 billion for the 2004-09 period. TransGrid’s performance targets, agreed with AER for the 2009-14 regulatory period, include:  transmission circuit availability of 99.26 per cent  transformer availability of 98.55 per cent  reactive plant availability of 99.12 per cent  frequency of lost supply events greater than 0.05 minutes is four  frequency of lost supply events greater than 0.40 minutes is one  average outage duration (minutes) is 824. This is trial version www.adultpdf.com _______________________________________________________________________________________ TransGrid Auditor-General’s Report to Parliament 2009 Volume Three _________________________________________ 59 FINANCIAL INFORMATION Abridged Income Statement Year ended 30 June 2009 2008 $’000 $’000 TOTAL REVENUE 652,797 572,987 PROFIT BEFORE BORROWING COSTS, DEPRECIATION AND TAX 475,377 434,430 Borrowing costs 105,072 101,882 Depreciation 152,884 141,996 PROFIT BEFORE TAX 217,421 190,552 Income tax equivalent expense 67,130 58,165 PROFIT AFTER TAX 150,291 132,387 Dividend provided 120,233 105,910 Revenue included $603 million from the transmission of electricity ($527 million). Increases in revenue were limited to the revenue cap set by the regulator and performance incentive amounts. The revenue cap is adjusted each year by indexing for inflation. Revenue also included $18.5 million ($29.2 million) from non-cash capital contributions which predominately relates to the transfer of the transmission assets forming part of the Capital Wind Farm Substation project. Abridged Balance Sheet At 30 June 2009 2008 $’000 $’000 Current assets 163,904 127,519 Non-current assets 5,006,997 4,093,095 TOTAL ASSETS 5,170,901 4,220,614 Current liabilities 890,225 557,116 Non-current liabilities 2,293,139 1,913,280 TOTAL LIABILITIES 3,183,364 2,470,396 NET ASSETS 1,987,537 1,750,218 Non-current assets increased by $914 million largely due an upward revaluation of Network Assets and the completion of major capital projects in 2008-09. Total liabilities increased due to additional borrowings of $457 million to fund capital projects. This is trial version www.adultpdf.com TransGrid _______________________________________________________________________________________ 60 _________________________________________ Auditor-General’s Report to Parliament 2009 Volume Three CORPORATION ACTIVITIES See the ‘Electricity Industry Overview’ appearing earlier in this report for general industry comment. TransGrid principally establishes, maintains and operates facilities to transmit electricity and other forms of energy. TransGrid is a statutory State owned corporation constituted by the Energy Services Corporations Act 1995. It was corporatised under the State Owned Corporatisation Act 1989 in December 1998. For more information on TransGrid, refer to www.transgrid.com.au . This is trial version www.adultpdf.com 61 Minister for Planning Refer to Appendix 1 for: Festival Development Corporation This is trial version www.adultpdf.com This is trial version www.adultpdf.com 63 Minister for Primary Industries Refer to Appendix 1 for: State Council of Rural Lands Protection Boards Trustees of the Farrer Memorial Research Scholarship Fund This is trial version www.adultpdf.com This is trial version www.adultpdf.com 65 Minister for Sport and Recreation Refer to Appendix 1 for: Newcastle International Sports Centre Trust This is trial version www.adultpdf.com This is trial version www.adultpdf.com . to Parliament 2009 Volume Three _________________________________________ 59 FINANCIAL INFORMATION Abridged Income Statement Year ended 30 June 2009 2008 $’000 $’000 TOTAL REVENUE. Western 500kV Development Project and Wollar-Wellington 330kV Transmission Line projects. OTHER INFORMATION Maximum Allowable Revenue Every five years, the AER determines the maximum allowable. _________________________________________ Auditor-General’s Report to Parliament 2009 Volume Three Financial Performance Year ended 30 June Target* Actual 2009 2009 2008 2007 Earnings before