Annual Report

Ausgrid – Annual Report 2014/15 33
(i) Investment properties
Ausgrid leases out a portion of its
properties. These properties are in excess
of current usage requirements and are
held for future use as owner occupied
properties. Therefore these properties
fall outside the definition of investment
properties and are treated as leases of
property, plant and equipment.
Unless otherwise indicated, the
accounting policies set out below have
been applied consistently to all periods
presented in the financial statements.
f. Basis of consolidation
(i) Subsidiaries
Subsidiaries are entities controlled by
the Corporation. Control exists when
the Corporation has the power, directly
or indirectly, to govern the financial
and operating policies of an entity so
as to obtain benefits from its activities.
In assessing control, potential voting
rights that presently are exercisable or
convertible are taken into account.
The Ausgrid Group consists of the
parent entity Ausgrid and its wholly
owned subsidiary Ausgrid Pty Ltd.
Both entities are incorporated in
Australia. The financial statements
of the subsidiary are included in the
consolidated financial statements from
the date that control commences until
the date that control ceases.
For the year ended 30 June 2015, there
were no significant differences between
the parent entity and the consolidated
entity financial information. As a result,
the information presented and disclosed
in the financial statements is for both
the parent entity and the consolidated
entity. Where significant differences
exist between the parent entity and the
consolidated entity financial information,
separate information will be presented
or disclosed in the financial statements.
(ii) Joint venture
A joint venture is a joint arrangement
whereby the parties that have joint
control of the arrangement have rights
to the net assets of the arrangement.
Ausgrid, Endeavour Energy and Essential
Energy have entered into a joint venture
agreement. A legal entity Networks
NSW Pty Limited has been used as the
vehicle for this joint venture. Networks
NSW Pty Limited is incorporated in
Australia (refer to Note 21 for details).
g. Income tax
Ausgrid and its controlled entity are
exempt from federal income tax
under the Income Tax Assessment
Acts. However, they are subject to the
National Tax Equivalent Regime which
is based on the Income Tax Assessment
Acts. Tax equivalents are payable to the
Office of State Revenue.
Income tax on the profit or loss for the
year comprises current and deferred tax.
Income tax is recognised in profit and
loss except to the extent that it relates to
items recognised directly in equity.
Current tax is the expected tax payable
on the taxable income for the year,
using tax rates enacted or substantively
enacted at the statement of financial
position date, and any adjustment to tax
payable in respect of previous years.
Deferred tax is provided using the
statement of financial position liability
method, providing for temporary
differences between the carrying
amounts of assets and liabilities for
financial reporting purposes and the
amounts used for taxation purposes.
The following temporary differences
are not provided for: initial recognition
of goodwill, the initial recognition of
assets or liabilities that affect neither
accounting nor taxable profit, nor
differences relating to investments in
subsidiaries to the extent that they will
probably not reverse in the foreseeable
future. The amount of deferred tax
provided is based on the expected
manner of realisation or settlement
of the carrying amount of assets and
liabilities, using tax rates enacted or
substantively enacted at the statement
of financial position date.
A deferred tax asset is recognised only to
the extent that it is probable that future
taxable profits will be available against
which the asset can be utilised. Deferred
tax assets are reduced to the extent that
it is no longer probable that the related
tax benefit will be realised.
h. Revenue recognition
Revenue is recognised when, the amount
of revenue can be reliably measured,
and to the extent that it is probable that
the future economic benefits will flow to
the entity. Revenue for the sale of goods
is recognised when significant risks and
rewards of ownership of the goods has
passed to the buyer. Revenue is measured
at the fair value of the consideration
received or receivable. Revenue is
recognised for the major business
activities as follows:
(i) Network use of system (NUOS) revenue
Ausgrid recognises revenue involving
the rendering of electricity supply
services in profit and loss on an accrual
basis based on the consumption of
electricity. No revenue is recognised
if there are significant uncertainties
regarding recovery of the consideration
due, or if the costs incurred or to be
incurred cannot be measured reliably.
(ii) Unread meters
Unread Meters accrual is an estimate
of the network use of system charges
associated with energy consumed and
not invoiced at 30 June. The accrual
for Unread Meters includes both
meters that have been read but
not yet billed and meters that have
not been read as at balance date.
The methodology used by Ausgrid
reflects a bottom up approach where
an accrual is estimated for all active
sites within the Ausgrid distribution
area. The accrual is calculated for
each component of the Network Price
including Energy components such as
Peak, Shoulder & Off Peak, Capacity
and Network Access Charge.
(iii) Transmission revenue
Transmission revenue represents
the financial transfer from
TransGrid to Ausgrid relating to the
utilisation by TransGrid of Ausgrid’s
transmission assets.
(iv) Excess/shortfall in regulatory revenue
Network use of system revenue
comprises of the following
three components: