Bringing Power to Life
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BRINGING POWER TO LIFE UNISON NETWORKS LIMITED ANNUAL REPORT 2009 PATHWAY • • 05 UNISON NETWORKS LIMITED ANNUAL REPORT 2009 03 SPONSORSHIP OF UNISON HAWKE’S BAY RESCUE ARENA AT ENERGY EVENTS • HELICOPTER TRUST 09 CENTRE IN ROTORUA ‘UNISON - HAWKE’S BAY RUGBY’S GREATEST SUPPORTER’ SPONSORSHIP LAUNCHED •99 SPONSORSHIP CAMPAIGN LAUNCHED COMPANY NAME CHANGE FROM HAWKE’S •98 BAY POWER LIMITED TO HAWKE’S BAY ELecTRICITY INDUSTRY NETWORK LIMITED ReFORM AcT (EIRA) REQUIRING • • 92 FULL OWNERSHIP SEPARATION 05 ENERGY COMPANIES AcT 1992 BETWEEN LINES AND SUPPLY COMMENceMENT OF COMES INTO EFFECT, FACILITATING BUSINESSES •03 OVERheAD TO UNDERGROUND THE CORPORATISATION OF ESTABLISHMENT OF FACILITIES (OHUG) LINES PROGRAMME ELECTRICITY SUPPLY • MANAGEMENT SERVICE (CENTRALINES AUTHORITIES (ESAS) 93 LIMITED, WAIPUKURAU) HAWKE’S BAY ELecTRIC POWER • • 08 BOARD BecOMES HAWKE’S BAY 03 AcQUISITION OF The POWER DISTRIBUTION LIMITED AcQUISITION AND INTEGRATION OF TAUPO ROTORUA-TAUPO REGIONAL AND ROTORUA ELecTRICITY NETWORKS CONTRACTING ACTIVITIES FROM UNITED NETWORKS LIMITED FROM SIEMENS ENERGY •09 • SERVICES LIMITED 05 UNISON TAUPO LAKERS WIN TV2’S TOP TOWN LAKE SAFETY SPONSORSHIP PROGRAMME LAUNCHED AT ROTORUA AQUATIC CENTRE •97 HAWKE’S BAY POWER DISTRIBUTION LIMITED BecOMES HAWKE’S BAY POWER LIMITED •93 HAWKE’S BAY POWER •03 •09 CONSUMERS’ TRUST FORMED RE-BRANDING TO UNISON •06 ACQUISITION OF NETWORKS LIMITED, TITIOKURA-TE WAKA WINDFARM ETEL LIMITED REFLECTING THE NEW PROJECT INITIATED DIRECTION AND GROWTH OF 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 UNISON NETWORKS LIMITED ANNUAL REPORT 09 02 ABOUT US 08 ANNUAL REPORT 42 FINANCIAL statEMENTS ABOUT US UNISON NETWORKS LIMITED ANNUAL REPORT 2009 03 02 ABOUT US Rotorua District NUMBER OF ICPs: 31,923 TOTAL GWh SUPPLIED: 454 UNISON NETWORKS LIMITED (TRADING AS SYSTEM LENGTH: 2,759km UNISON) IS THE ELECTRICITY DISTRIBUTION UNDERGROUND: 27% COMPANY THAT OWNS, MANAGES AND OPERATES THE ELECTRICITY NETWORK THAT SERVES THE HAWKE’s BAY, ROTORUA AND TAUPO REGIONS. Taupo District NUMBER OF ICPs: 14,429 TOTAL GWh SUPPLIED: 233 SYSTEM LENGTH: 1,212 km UNDERGROUND: 39% Our electricity network comprises some $500 million worth of assets, is close to 10,000 km in length (approximately 37% of this is underground) and supplies over 107,000 connected customers with approximately 1,550 GWh of electricity conveyed annually, making Hawke’s Bay NUMBER OF ICPs: 60,960 Unison one of the larger electricity distribution TOTAL GWh SUPPLIED: 968 Central Hawke’s Bay* SYSTEM LENGTH: 5,539 km UNDERGROUND: 44% businesses in New Zealand. NUMBER OF ICPs: 7,936 TOTAL GWh SUPPLIED: 116 SYSTEM LENGTH: 1,769 km UNDERGROUND: 4% *Centralines Limited, under management contract UNISON IS WHOLLY OWNED BY THE HAWKE’S BAY POWER CONSUMERS’ TRUST ON BEHALF OF HAWKE’S BAY ELECTRICITY CONSUMERS. ABOUT US 04 UNISON NETWORKS LIMITED ANNUAL REPORT 2009 05 ABOUT US After a decade of government reforms designed to improve the performance and accountability of the public sector, the electricity industry has been largely transformed through the adoption of commercial structures and incentives modelled on those in the private sector. Where we’VE COme frOM DIVERSIFICATION When the Electricity Industry Reform Act (1998) forced the corporate The lines company went through a name change (Hawke’s Bay In addition to owning and operating electricity networks Unison has Unison Contracting Services Limited (UCSL), a fully owned subsidiary of separation of lines and energy businesses, the previously integrated Network Limited) before settling on the Unison Networks Limited diversified its operations in recent years to include: Unison which provides network contracting services to Unison as well electricity distributor and retailer Hawke’s Bay Power Limited divested name which accommodated and re-branded the expanded as to other network companies operating in other regions. itself of the retail energy sales division. geographic operations after the acquisition of the Taupo and ETEL Limited, a distribution transformer manufacturing and sales Rotorua networks. business in Auckland. Facility management contract services to Centralines Limited, the electricity distribution business that supplies customers in the Central Hawke’s Bay. ABOUT US 06 UNISON NETWORKS LIMITED ANNUAL REPORT 2009 07 ABOUT US The FUTUre Diversification through investmentin other compatible Unison continues to seek greater efficiencies in its core business activity through advanced information systems, automated network functions and the use of smart technology. sector businesses opens up new and exciting There are also opportunities for growth in both core business activities opportunities while contributing towards long term through network expansion, as well as contract facilities management for other distribution companies. substance and stability. UNISON ANNUAL REPORT UNISON NETWORKS LIMITED ANNUAL REPORT 2009 09 08 UNISON NETWORKS LIMITED ANNUAL REPORT The Directors are pleased to present the Annual Report including the Financial Statements of Unison Networks Limited. The Annual Report has been prepared in accordance with Section 211 of the Companies Act 1993 and is signed on behalf of the Board of Directors by: B J Martin CHAIRMAN J R Palairet DIRECTOR Dated: 19 June 2009 10 CHAIRMAN’S ANNUAL REVIEW 20 CHIEF EXECUTIVE’S ANNUAL REVIEW 30 Corporate GOVERNANCE statement 34 DIRECTOR PROFILES 36 statutorY INFORMATION 40 trustees’ statement 42 FINANCIAL statements CHAIRMAN’S ANNUAL REVIEW UNISON NETWORKS LIMITED ANNUAL REPORT 2009 11 CHAIRMAN’S 10 ANNUAL REVIEW UNISON NETWORKS LIMITED ANNUAL REPORT 2009 On behalf of the Board, I am pleased to report on a productive year which saw Unison continue to invest in network improvement while maintaining a high level of service to customers. Three aspects of the year in review are worth particular mention. AHURIRI, NAPIER, FROM BLUFF HILL LOOKOUT Firstly, Unison has continued to find further operational And finally, Unison fulfilled all of its undertakings to the efficiencies and performance gains.T hese have been Commerce Commission by meeting the performance achieved through a progressive asset improvement targets set for pricing and capital expenditure in the 2006 programme which has focused on astute capital investment, administrative settlement agreement. pro-active maintenance and smart technology. It is particularly pleasing to report that under close regulatory Secondly, Unison has continued to consolidate its long term scrutiny over the past year, the Company has performed well stability and security through business diversification and and returned another sound financial result. growth, including the acquisition of a leading New Zealand distribution transformer manufacturing company. BRIAN MARTIN CHAIRMAN CHAIRMAN’S ANNUAL REVIEW CHAIRMAN’S ANNUAL REVIEW 12 UNISON NETWORKS LIMITED ANNUAL REPORT 2009 UNISON NETWORKS LIMITED ANNUAL REPORT 2009 13 FinAnciAL PerfOrmAncE AdVAnced ASSET MANAgemenT: MAking The MOST OF whAT we HAVE Unison recorded a net profit before tax of $17.5 million for the year ended 31 March 2009 (2008 $18.4 million). Unison has continued to develop its Asset Management Plan to promote and focus on enhancing our in depth knowledge and This year’s Group results include the first two establishment months of understanding of our business assets and operations and the the new wholly owned subsidiary company, ETEL Limited’s, operations. consequent opportunities for improvement. This means direct comparisons of group revenue and costs with last year’s are of limited value. The Asset Management Plan links to our other corporate and operational plans and encourages a continual improvement feedback Although line network revenue showed continued growth, the and discipline loop between operational, tactical and governance slowdown in new subdivision and other customer driven projects decision levels within the Company. resulted in reduced income from capital contributions. This was expected in the context of the overall general slowdown in All aspects of the Company’s operations can be optimised, from the economic activity. planning, designing and analysis of distribution systems, to budget management and the trade offs (balance) between capital and Operating costs were well controlled and in line with expectations. operating expenditure. Technical accounting adjustments for income tax have made after tax comparisons of net profit meaningless. Last year’s income tax expense At an operational level, the Company has made notable advances was converted into a “credit” of $2.4 million after being offset by an in asset inspection and network maintenance, improving network accounting adjustment to reflect a lower deferred tax liability on the performance from both business and consumer points of view. Balance Sheet resulting from the reduction in the corporate tax rate Unison uses a number of models to assist with the decisions from 33% to 30%. This year, the income tax expense is a charge of to optimise the lifecycle and to prioritise the maintenance and $3.6 million. On an after tax basis, the net profit is affected to the replacement of its assets. These provide the decision support extent of $6.0 million between the two years, simply by the difference framework to help management assess and prioritise the wide range in income tax adjustments. of network investment projects considered each year. In addition, they Unison has undertaken a substantial programme of capital expenditure help align