ETSA Transmission Corporation (trading as ElectraNet SA) was incorporated in 1995 by regulation under the Public Corporations Act 1993 as a subsidiary of ETSA Corporation (now RESI Corporation). During 1999-2000 the name of ETSA Transmission Corporation was changed to Transmission Lessor Corporation in readiness for leasing its prescribed assets which is expected to occur in 2000-01.
Although RESI Corporation is the ultimate holding corporation in terms of the Public Corporations Act 1993, ElectraNet SA has been established as an autonomous trading entity, which in substance cannot be directed by RESI Corporation without the approval of the Treasurer (refer to prior commentary under Electricity Supply Industry - Overview).
ElectraNet SA has a subsidiary entitled Transmission Leasing Pty Ltd which is a participant in a cross border lease of transmission assets.
The charter for ElectraNet SA limits the nature and scope of its operations mainly to performing electricity transmission and system control functions.
Under the Government’s electricity businesses disposal program, Final Bids for the sale and lease of the assets and liabilities of the Government’s transmission business (ElectraNet SA) were received on 4 September 2000. As at the date of the preparation of this Report, no announcement had been made with respect to the outcome of the disposal process for ElectraNet SA.
Revenue from network charges increased by 6.5 percent to $127 million.
Operating profit before abnormal items and income tax increased by 21.1 percent to $54 million.
Dividends paid for the year were $55 million an increase of $32.5 million over those paid in 1998-99.
Property, plant and equipment had a written down book value of $708 million as at 30 June 2000.
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 Transmission Lessor Corporation (formerly ETSA Transmission Corporation).
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.
During 1999-2000 specific areas of audit attention included the testing of controls and a sample of transactions in relation to the completeness, accuracy, timeliness and recording of revenue for network charges.
Following the completion of the audit an audit management letter was forwarded to the Chief Executive Officer, with copies provided to the:
Chairman, ElectraNet SA Board Audit Committee;
Manager, Compliance, ElectraNet SA.
A satisfactory response was received to all matters raised.
Work undertaken by Audit during the course of the year indicated that ElectraNet SA had maintained a sound internal control environment. In particular there are a number of strategic initiatives which underpin this environment, including:
a Board Audit Committee which met regularly during the year and provided a forum to oversee the financial reporting, auditing and legal compliance processes in relation to ElectraNet SA. Representatives of the Auditor-General attended meetings of the Committee as observers;
an Internal Audit function which reports directly to the Board Audit Committee;
management representations to Directors of ElectraNet SA through a Directors’ Questionnaire, which provides a tool for the Directors to assess the level of internal controls. These representations included matters relating to legal compliance, and other matters supporting the integrity and fairness of presentation of information conveyed within the financial statements.
As required by subsection 36(1)(a)(iii) of the Public Finance and Audit Act 1987, the audit of Transmission Lessor Corporation (formerly ETSA Transmission Corporation) 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 Transmission Lessor Corporation (formerly ETSA Transmission Corporation) 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.
The rate of return on network assets (before interest and tax) was 10.1 percent (9.3 percent). The increase in the rate of return resulted from a three percent increase in network assets with an accompanying 12.3 percent increase in earnings before interest and income tax.
The debt to equity ratio of ElectraNet SA at 30 June2000 was 50 percent (37 percent). The increase was due mainly to an increase in capital expenditure and a reduction in retained profits as a result of an increase of $32.5 million in the dividend paid.