ETSA Power Pty Ltd (ETSA Power) was incorporated under the Corporations Law in June 1998 as a subsidiary of ETSA Capital Pty Ltd. In July 1999 the shares in ETSA Power were transferred, as a result of a Ministerial Transfer Order issued pursuant to the Electricity Corporations Act 1994, to ETSA Capital (No.2) Pty Ltd, a subsidiary of the Treasurer.
On 3 February 2000 the name of ETSA Power was changed to RESI Power Pty Ltd (RESI Power).
During the year ETSA Power's primary function was to retail electricity.
On 12th December 1999, the South Australian Treasurer signed an agreement with Cheung Kong Infrastructure Holdings (CKI) and Hong Kong Electric International Limited (HEI) for the sale of non-prescribed retail assets (net of liabilities) of ETSA Power. Although settlement of the transaction did not occur until 28th January 2000, the benefits and risks associated with the business were transferred as at the date of the agreement, ie 12 December 1999.
These non-prescribed assets and liabilities of ETSA Power were subsequently on-sold by CKI and HEI to Australian Gas Light (AGL) Pty Ltd in January 2000, which resulted in an additional payment being made to the Treasurer as provided for under the Electricity Retail Business Sale Agreement.
Total proceeds received from the sale of non-prescribed assets (net of liabilities) was $161.7 million.
Accounting profit on sale of ETSA Power's non-prescribed assets (net of liabilities) was $167.4 million.
Final dividend paid for the year was $188 million.
In accordance with section 31 of the Public Finance and Audit Act 1987 and subclause 13(3) of the Schedule to the Public Corporations Act 1993 the Auditor-General may at any time, and must in respect of each financial year, audit the accounts and financial statements of RESI Power Pty Ltd (formerly ETSA Power Pty Ltd).
The audit program covered all major financial systems and was directed primarily towards obtaining sufficient evidence to enable an audit opinion to be formed with respect to the financial statements and internal control. This was particularly the case for the early part of the financial year when ETSA Power operated as an electricity retail business.
During 1999-2000 a specific area of audit attention was the accounting for the restructure and disposal of the assets and liabilities of ETSA Power.
Following the completion of the audit a management letter was addressed to the Chief Executive Officer of ETSA Power, with copies provided to the:
Chairman, ETSA Power Board Audit Committee;
Manager, Internal Audit, ETSA Power.
A satisfactory response was received for all matters raised.
As required by subsection 36(1)(a)(iii) of the Public Finance and Audit Act 1987, the audit of RESI Power Pty Ltd (formerly ETSA Power Pty Ltd) included an assessment of the controls exercised in relation to the receipt, expenditure and investment of money, the acquisition and disposal of property and the incurring of liabilities.
Audit formed the opinion that the controls exercised by RESI Power Pty Ltd (formerly ETSA Power Pty Ltd) in relation to the receipt, expenditure and investment of money; the acquisition and disposal of property; and the incurring of liabilities, were sufficient to provide reasonable assurance that the financial transactions of the organisation were conducted properly and in accordance with the law.
During the year assets (net of liabilities) of ETSA Power were sold to CKI and HEI. The assets (net of liabilities) sold reflected their values as at 12 December 1999, and were as follows:
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|
|
2000 |
|
|
|
|
$’000 |
$’000 |
Assets: |
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|
|
|
Cash and deposits |
|
|
1 035 |
|
Receivables |
|
|
231 358 |
|
Property, plant and equipment |
|
|
6 545 |
|
Other |
|
|
13 897 |
|
|
|
|
|
252 835 |
Liabilities: |
|
|
|
|
Creditors and accounts |
|
|
222 222 |
|
Provisions |
|
|
36 339 |
|
|
|
|
|
258 561 |
Net Assets (Liabilities) |
|
|
|
(5 726) |
Proceeds from disposal |
|
|
|
161 679 |
Profit on disposal of non-prescribed distribution assets |
|
|
|
167 405 |
In addition, the following payments were made by the State to the new owners as a result of conditions in the sale agreements:
Outage Compensation ($5.6 million) as a result of market events that occurred prior to the transfer of the business to the new owners.
Vesting Compensation Deed payments ($8.4 million) relating to differences between forecast and actual electricity demands for a period following the sale of the electricity retail business.
The result of operations for the year ended 30 June 2000 for RESI Power (formerly ETSA Power) is set out below. The result reflects both the period during which ETSA Power operated the electricity retail business, together with the impact of the sale of assets (net of liabilities).
Profit and Loss Statement for the year ended 30 June 2000
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|
2000 |
|
|
|
|
$’000 |
REVENUES |
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|
|
476 078 |
EXPENSES |
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|
|
471 091 |
EARNINGS BEFORE INTEREST AND TAX |
|
|
|
4 987 |
Net financing charges |
|
|
|
667 |
OPERATING PROFIT BEFORE ABNORMAL ITEMS AND INCOME TAX |
|
|
|
4 320 |
Abnormal items |
|
|
|
(923) |
OPERATING PROFIT BEFORE INCOME TAX |
|
|
|
3 397 |
Income tax |
|
|
|
1 953 |
OPERATING PROFIT AFTER INCOME TAX |
|
|
|
1 444 |
Extraordinary items |
|
|
|
167 405 |
OPERATING PROFIT AND EXTRAORDINARY ITEMS AFTER INCOME TAX |
|
|
|
168 849 |
Retained profits at 1 July |
|
|
|
18 660 |
TOTAL AVAILABLE FOR APPROPRIATION |
|
|
|
187 509 |
Dividends paid or provided for |
|
|
|
187 509 |
RETAINED PROFITS AT 30 JUNE |
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- |
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|
|
The company did not have any assets or liabilities as at 30 June 2000.