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notes to the financial Statements
for the year ended 31 March 2012
Generation property, plant and equipment
The Group’s generation property, plant and equipment is recorded at cost. Annually, the Group assesses the
carrying value of the generation assets for impairment. The basis of the impairment assessment is the value-
in-use discounted cash flow analysis of the future earnings of the assets. The major inputs that are used in
the value-in-use model that required judgment include the forward price path of electricity, sales volume
forecasts, projected operational and capital expenditure profiles, discount rates and life assumptions for each
generation station. The directors consider that no reasonably possible change in any of the assumptions below
would cause the carrying value of generation assets to exceed their recoverable amounts.
Total
Base value in use $24.86m
Assumptions
Low
High
Negative
value impact
($’000)
Postive
value impact
($’000)
Price path - Energy links A
Average less $2/MWh
Energy
links - 25th
percentile less
$2/MWh
Energy
links - 75th
percentile less
$2/MWh
$1,768
$2,906
Generation volume (23,732 MWh)
-10.0%
10.0%
$2,894
$2,912
Operational costs ($305,000 pa)
-20.0%
20.0%
$948
$986
Discount rate - 7.6%
8.6%
7.0%
$3,787
$2,917
Life assumptions - Terminal value after
25 years
Nil
n/a
$6,640
$0
Income Tax
Significant judgment is required in determining the provision for income taxes. There are many transactions
and calculations for which the ultimate tax determination is uncertain. The Group recognises liabilites for
anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax
outcome of these matters is different from the amounts that were initially recorded, such differences will
impact the current and deferred income tax assets and liabilities in the period in which such determination is
made.
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