Notes on the Projections
Accounting Policies
The main accounting policies that have been incorporated
into the projections are set out below:
(a) Scheme of Control -
The financial operations of the company and its
associated company, Peninsula Electric Power Co.,
Ltd. are governed by a Scheme of Control, the
main feature of which have been summarised in paras. 2 av 3 of the paper..
(b) Depreciation of Fixed Assets
Depreciation of fixed assets has been based on a
straight-line basis not the reducing balance
method currently authorised under the Scheme of
Control and the rates applied are as follows:
Buildings, Cables, Overhead wires etc.
4%
Generation Equipment
50%
Transmission & Distribution,
Switchgear etc.
5%
Office Equipment, Computers,
Tools etc.
10%
Motor Vehicles
25%
For purpose of these projections the net book
value of any existing assets were written off
over the anticipated remaining life of the
asset in accordance with the above rates.
(c) Tax Equalisation Reserve
Because the depreciation rates will now differ
considerably from the tax allowance it was
considered prudent to introduce a Tax
Equalisation Reserve.
(d) Capitalisation of Interest
All interest on borrowings has been capitalised.
This may not necessarily be the final policy
but it is considered appropriate enough for the
purposes of these projections.