Annual Report 2021–2022, Power and Water Corporation
Tabled Paper 708
Tabled Papers for 14th Assembly 2020 -; Tabled Papers; ParliamentNT
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Legislative Assembly of the Northern Territory
Legislative Assembly of the Northern Territory
94 Financial Statements for the year ended 30 June 2022 Page 43 of 60 Power and Water Corporation Notes to the financial statements for the year ended 30 June 2022 11 Investment in subsidiaries (Cont'd) FFiinnaanncciiaall ssuuppppoorrtt June 2022 June 2021 June 2022 June 2021 $'000 $'000 $'000 $'000 12 Loans to subsidiaries Financial assets measured at amortised cost: Non-current - - 25,000 25,000 Expected Credit Loss (7,079) - - 25,000 17,921 CorporationConsolidated The Corporation will provide financial support to IES Pty Ltd to ensure that it has sufficient funds to meet its financial obligations to pay its debts as and when they become due and payable. The Corporation has also undertaken that it will not take any action which may result in IES Pty Ltd being unable to perform those financial obligations, including the Corporation not calling upon any loans owed by IES Pty Ltd unless there are sufficient excess funds available to do so. The financial statements for IES Pty Ltd have been prepared on a going concern basis, which contemplates continuity of normal business activities and the realisation of assets and the settlement of liabilities in the ordinary course of business. IES Pty Ltd has incurred a net loss of $0.7 million for the year ended 30 June 2022 and $23.5 million for the year ended 30 June 2021. IES Pty Ltds net working capital was a surplus of $6.4 million at 30 June 2022 and a deficit of $1.4 million at 30 June 2021. Current liabilities, excluding unearned revenue and lease liabilities at 30 June 2022 and 2021 include $24.7 million and $19.9 million of trade and other payables respectively. Assets are fundamental to the essential services provided by IES Pty Ltd. Accordingly, IES Pty Ltd is economically dependent on the Northern Territory Government (NTG) to fund its future capital expenditure as well as a significant portion of its operating expenses. IES Pty Ltds cash balances as at 30 June 2022 increased by $1.3 million from $66.7 million to $68.0 million due to cash outflows for grants received in the prior year to construct property, plant and equipment. The funding agreement with NTG has been extended to 30 June 2023, a continuation of a series of agreements over an extended period of time. The loans were provided to IES Pty Ltd as capital assistance towards the Arena Solar Project where IES Pty Ltd built a solar farm to reduce the cost of electricity production in the communities it services. The total loans provided to IES Pty Ltd remains at $25.0 million as at 30 June 2022. In determining the expected credit losses for the loans to subsidiaries, the consolidated entity has taken into account the historical default experience, the financial position of the counterparties, as well as the future prospects of the industries, as appropriate, in estimating the probability of default of the loans to subsidiaries occurring within their respective loss assessment time horizon, as well as the loss upon default in each case. There has been no change in the estimation techniques or significant assumptions made during the current reporting period in assessing the loss allowance for the loans to subsidiaries. The expected credit losses on the loans to subsidiaries have been assessed as nil as at 30 June 2022 (2021: $7.1 million) on the basis of the long-term cash surplus, from the third party funding provider, of the subsidiary from distillate cost savings arising from the solar project. The two loans provided are interest only fixed term loans for five years ending 17 March 2024 and 29 June 2026. Interest is charged on the outstanding balances at 3.88% on the loan provided during 2018-19 and 2.88% for the loan provided in 2020-21. The subsidiary expects that a reduced risk profile on the principal repayments would be the result of these negotiations. The Corporation will reassess the expected credit losses on the loans to subsidiaries at the completion of any such negotiations.
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