mid-year financial report 2015/16 - the creeks ...creekspipelineco.com.au/news_106_2792883596.pdfthe...

C .

P .

C THE CREEKS PIPELINE COMPANY LIMITED

Established 2009

P O Box 99, Langhorne Creek SA 5255

Emergency: 0427 778080 - Office: 08-85 373 266 - Fax: 08-85 373 061

ACN: 133 867 197

MID-YEAR FINANCIAL REPORT – 2015/16

Overview

The Creeks Pipeline Company Limited (CPC) pipeline has been effectively fully operational since 1 July 2015. The system has performed well during this period with no significant interruptions recorded.

During the first six months of the 2015/16 Irrigation season, the pipeline has delivered 6,987 ML (5,916 ML last year) to irrigators throughout the Langhorne Creek and Currency Creek regions.

With respect to the first half-year of operations, the Company recorded an after tax profit of $118,594 ($62,181 last year). The level of profit is in line with the F16 budget.

The one and one third flow and volume in use for the past four irrigations seasons has allowed irrigators access to higher flows and volumes in periods of high water demand. These flexible water access conditions have proved very helpful particularly in periods of extreme heat.

These expanded access conditions are reviewed on an annual basis and their approval for future seasons beyond 2015/16 cannot be guaranteed. The possible continuation of this scheme will be reviewed during CPC annual water delivery and pricing strategies.

The company will in the coming months be reviewing its water delivery and pricing strategies to ensure we continue to provide a cost effective service and maintain our high level operational performance.

However, Irrigators should be aware that CPC’s recently entered into a new power supply contract on 1 January 2016. The new contract has been impacted by higher power pricing as seen across South Australia generally and will have an impact on delivery costs for the coming year.

CPC will endeavour to keep this impact to the bare minimum possible, but ultimately these costs will need to be passed on and as such the new water delivery rate will reflect the additional cost.

Please contact me directly on 08 8537 3266 with any queries regarding the interim financial statements or any other CPC operational matters.

Mike Reynolds General Manager 4 March 2016

The Creeks Pipeline Company Limited (ACN 133 867 197)

31 December 2015

Interim Financial Report

The Creeks Pipeline Company Limited

2

Contents

Page

Director’s Report 3‐4

Condensed interim statement of financial position 5

Condensed interim statement of profit or loss and other comprehensive income 6

Condensed interim statement of changes in equity 7‐8

Condensed interim statement of cash flows 9

Notes to the condensed interim financial statements 10‐15

Director’s declaration 16

Lead auditor’s independence declaration 17

Review report 18‐19


3

Directors’ Report The directors present their report together with the half‐year financial report for the six months ended 31 December 2015 and the review report thereon.

Directors The directors of the Company at any time during or since the end of the interim period are:

Name Period of directorship

Non‐executive Mr Ian Mortimer Martens (Chairperson) Director since 14 December 2008 Mrs Dianne Margaret Davidson Director since 24 October 2008 Mr John Leslie Kerr Director since 1 January 2010 Mr John Philip Pargeter Director since 24 October 2008 Mr David James Watkins Director since 24 October 2008 Mr Craig Hamilton Willson Director since 24 October 2008

Review of operations The Company continued providing water delivery services during the period. Water deliveries for the half year totalled 6,987 megalitres (previous half year: 5,915 megalitres). Revenue of $1,121,607 was received for the six months (previous half year: $1,038,155). The net profit for the half year ended 31 December 2015 amounted to $118,594 (previous half year: $62,181). During the period, the Company received interim grant monies under the South Australian River Murray Sustainability Irrigation Industry Improvement Program. The Company expects to receive the balance of the grant monies by 30 June 2016 as the associated capital projects are completed. Whilst the future volume of water deliveries will be determined by weather and lake conditions, the Company’s net financial position will be largely unaffected given fixed costs are recovered through the charging of non‐take fees to all customers.

Lead auditor’s independence declaration The lead auditor’s independence declaration is set out on page 17 and forms part of the directors’ report for the six months ended 31 December 2015.


5

Condensed Interim Statement of Financial Position As at 31 December 2015

Note 31 Dec 2015 30 Jun 2015

AUD$ AUD$

Assets

Current assets

Cash and cash equivalents 13 651,390 721,850

Trade and other receivables 12 661,996 692,112

Inventories 229,618 241,846

Prepayments 78,952 48,975

Investments 14 2,376,915 2,296,664

Other assets 15 581,981 77,766

Total current assets 4,580,852 4,079,213

Non‐current assets

Property, plant and equipment 9 8,985,139 8,572,623

Intangibles 10 ‐ 334,000

Deferred tax asset 11 1,635,677 1,717,493

Total non‐current assets 10,620,816 10,624,116

Total assets 15,201,668 14,703,329

Liabilities

Current liabilities

Trade and other payables 16 605,931 207,181

Employee benefits 18 11,086 10,491

Total current liabilities 617,017 217,672

Non‐current liabilities

Deferred tax l iabil ity 19 2,440,737 2,471,728

Employee benefits 18 26,799 25,408

Total non‐current liabilities 2,467,536 2,497,136

Total liabilities 3,084,553 2,714,808

Net assets 12,117,115 11,988,521

Equity

Issued capital 10,257,000 10,247,000

Reserves 1,730,000 1,730,000

Retained earnings 130,115 11,521

Total equity 12,117,115 11,988,521 The condensed notes on page 10 to 15 are an integral part of these condensed interim financial statements.


6

Condensed Interim Statement of Profit or Loss and Other Comprehensive Income For the six months ended 31 December 2015

Note 31 Dec 2015 31 Dec 2014

AUD$ AUD$

Continuing Operations

Revenue 1,121,607 1,038,155

Cost of sales (463,250) (404,233)

Gross profit 658,357 633,922

Other income 428,835 34,270

Operating and administrative expenses (956,648) (626,626)

Results from operating activities 130,544 41,566

Finance income 38,876 47,265

Net finance income 38,876 47,265

Profit before income tax 169,420 88,831

Income tax expense 8 (50,826) (26,649)

Profit from continuing operations 118,594 62,181

Profit for the period 118,594 62,181

Total comprehensive income for the period 118,594 62,181 The condensed notes on page 10 to 15 are an integral part of these condensed interim financial statements.


7

Condensed Interim Statement of Changes in Equity For the six months ended 31 December 2014

Share Capital

Retained

Earnings /

(Accumulated

Losses)

Infrastructure

Replacement

Reserve Total Equity

$ $ $ $

Balance at 1 July 2014 10,247,000 1,422 1,480,000 11,728,422

Total comprehensive income for the period

Profit ‐ 62,181 ‐ 62,181

Total comprehensive income for the period ‐ 62,181 ‐ 62,181

Transactions with owners, recorded directly in equity

Contributions by and distributions to owners

Issue of ordinary shares ‐ ‐ ‐ ‐

Ordinary shares subscribed but not issued ‐ ‐ ‐ ‐

Total contributions by and distributions to owners ‐ ‐ ‐ ‐

Total transactions with owners ‐ ‐ ‐ ‐

Balance at 31 December 2014 10,247,000 63,603 1,480,000 11,790,603 The condensed notes on page 10 to 15 are an integral part of these condensed interim financial statements.


8

Condensed Interim Statement of Changes in Equity (continued) For the six months ended 31 December 2015

Share Capital

Retained

Earnings /

(Accumulated

Losses)

Infrastructure

Replacement

Reserve Total Equity

$ $ $ $

Balance at 1 July 2015 10,247,000 11,521 1,730,000 11,988,521

Total comprehensive income for the period

Profit ‐ 118,594 ‐ 118,594

Total comprehensive income for the period ‐ 118,594 ‐ 118,594

Transactions with owners, recorded directly in equity

Contributions by and distributions to owners

Issue of ordinary shares 10,000 ‐ ‐ 10,000

Ordinary shares subscribed but not issued ‐ ‐ ‐ ‐

Total contributions by and distributions to owners 10,000 ‐ ‐ 10,000

Total transactions with owners 10,000 ‐ ‐ 10,000

Balance at 31 December 2015 10,257,000 130,115 1,730,000 12,117,115 The condensed notes on page 10 to 15 are an integral part of these condensed interim financial statements.


9

Condensed Interim Statement of Cash Flows For the six months ended 31 December 2015

Note 31 Dec 2015 31 Dec 2014AUD$ AUD$

Cash flows from operating activitiesProfit before income tax for the period 169,420 88,831 Adjustments for:Depreciation 147,098 121,221 Accounting profit on sale of non‐current assets (39,582) ‐ Income tax expense 8 (50,826) (26,649)

226,110 183,403

Increase in trade and other receivables 30,116 594,594 Increase in prepayments (44,977) (41,258) Increase in inventories and other assets (491,987) (240,575) Increase in trade and other payables 398,750 (99,950) Increase in the provision for employee benefits 1,986 23,659 Change in deferred income tax 50,825 26,649

170,823 446,522 Income taxes paid ‐ ‐

Net cash provided by operating activities 170,823 446,522

Cash flows from investing activitiesAcquisition of property, plant and equipment 9 (559,614) ‐ Acquisition of intangibles 10 ‐ (334,000) Purchase of term deposits (80,251) 69,180

Net cash used in investing activities (639,865) (264,820)

Cash flows from financing activitiesProceeds from the issue of share capital 10,000 ‐ Proceeds from payment of restricted water agreements ‐ 9,000 Proceeds from state government grants 388,582 ‐

Net cash from financing activities 398,582 9,000

Net decrease in cash and cash equivalents (70,460) 190,702 Cash and cash equivalents at 1 July 721,850 149,310

Cash and cash equivalents at 31 December 13 651,390 340,012

Change in assets and liabilities (attributable to the operating

activities of the company)

The condensed notes on page 10 to 15 are an integral part of these condensed interim financial statements.


10

Notes to the Condensed Interim Financial Statements

1. Reporting entity The Creeks Pipeline Company Limited (the “Company”) is a company domiciled in Australia. The financial report of the Company for the year ended 30 June 2015 is available upon request from the Company’s registered office at 1507 Langhorne Creek Road Langhorne Creek SA 5255.

2. Statement of compliance This general purpose condensed financial report for the half‐year ended 31 December 2015 has been prepared in accordance with AASB 134 Interim Financial Reporting and the Corporations Act 2001. The half‐year financial report does not include all notes of the type normally included within the annual financial report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the entity as the full financial report. It is recommended that the half‐year financial report be read in conjunction with the annual report for the year ended 30 June 2015. This general purpose condensed financial report for the half‐year ended 31 December was approved by the Board of Directors on 23 February 2016.

3. Significant accounting policies The accounting policies applied by the Company in the half‐year financial report are the same as those applied by the Company in its financial report for the year ended 30 June 2015.

4. Estimates The preparation of the half‐year financial report requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. In preparing the half‐year financial report, the significant judgements made by management in applying the Company’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the financial statements for the year ended 30 June 2015.

5. Financial risk management The Company’s financial risk management objectives and policies are consistent with that disclosed in the financial report for the year ended 30 June 2015.

6. Segment reporting The single individual business segment in which the Company operates is the management of a pipeline network to supply irrigation water delivery services in the Langhorne Creek and Currency Creek regions.


11

Notes to the Condensed Interim Financial Statements (continued)

7. Seasonality of operations In a normal irrigation season the majority of the water taken by customers occurs in the November to March period.

8. Income tax expense

Note 31 Dec 2015 31 Dec 2014

Current tax expense

Current period ‐ ‐

Adjustments for prior periods ‐ ‐

‐ ‐

Deferred tax expense

Origination and reversal of temporary differences (32,421) (30,357)

Current year tax profit/(losses) 83,247 57,006

Total income tax expense 50,826 26,649

Profit for the period 118,594 62,181

Total income tax expense 50,826 26,649

Profit excluding income tax 169,420 88,830

Income tax using a tax rate of 30 percent 50,826 26,649

Non‐deductible expenses ‐ ‐

Movement in unrecognised temporary differences ‐ ‐

Tax expense 50,826 26,649

9. Property, plant and equipment Acquisitions and disposals During the six months ended 31 December 2015 the Company acquired assets with a cost of $559,614. There were no disposals during the period and there are no capital commitments at the interim balance sheet.

10. Intangibles

Note 31 Dec 2015 30 Jun 2015

Water rights ‐ 334,000

‐ 334,000

During the period, the Company transferred 167ML of River Murray water rights to the Minister for the Department for the Environment, Water and Natural Resources in accordance with the terms of the South Australian River Murray Sustainability Irrigation Industry Improvement Program.


12


11. Deferred tax asset Deferred tax asset comprises temporary differences attributable to the following:

Note 31 Dec 2015 30 Jun 2015

Provision for annual leave 11,086 10,491

Provision for long service leave 26,799 25,408

Superannuation payable 12,969 12,138

Accrued chairman's and directors' fees and super 29,140 27,189

Unutilised tax losses 5,372,261 5,649,750

5,452,255 5,724,976

Temporary difference at 30% 1,635,677 1,717,493

12. Trade and other receivables

Note 31 Dec 2015 30 Jun 2015

Trade receivables due from related parties 81,130 78,597

Other trade receivables 580,865 613,515

661,996 692,112

Current 661,996 692,112

Non‐current ‐ ‐

661,996 692,112

Days Outstanding

0‐30 days 618,602 667,736

31‐60 days 17,737 11,462

61‐90 days 147 5,799

90+ days 25,510 7,115

661,996 692,112

13. Cash and cash equivalents

Note 31 Dec 2015 30 Jun 2015

National Australia Bank ‐ Business Cheque Account 339,312 212,718

National Australia Bank ‐ Business Cash Maximiser 311,886 508,940

Cash on hand 192 192

651,390 721,850


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14. Investments

Note 31 Dec 2015 30 Jun 2015

National Australia Bank ‐ Term Deposit 1,083,346 1,044,692

National Australia Bank ‐ Term Deposit 1,080,098 1,041,560

National Australia Bank ‐ Term Deposit 213,471 210,412

2,376,915 2,296,664

15. Other assets

Note 31 Dec 2015 30 Jun 2015

Project costs 5,000 5,000

Accrued income 576,981 71,766

Deposits paid ‐ 1,000

581,981 77,766

16. Trade and other payables

Note 31 Dec 2015 30 Jun 2015

Trade payables due to related parties 51 ‐

Other trade payables 153,812 99,668

Non‐trade payables and accrued expenses 91,887 107,513

Unearned revenue 360,181 ‐

605,931 207,181


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17. Related parties Transactions with key management personnel Key management personnel receive compensation in the form of short‐term employee benefits. Key management personnel received total compensation of $64,393 for the six months ended 31 December 2015. Other related party transactions

Directors

Transaction

Value

Balance

Outstanding

Non‐executive 31 Dec 2015 31 Dec 2015

Dianne Margaret Davidson

Kirklinton Pty Ltd

‐ Water Delivery Service ‐ ‐

John Leslie Kerr

Capital Strategies Pty Ltd

‐ Accountancy Fees 6,281 51

John Phillip Pargeter

Angas Vineyards Joint Venture

‐ Water Delivery Service 43,645 26,461

David James Watkins

Rankins Estates Pty Ltd as trustee for Rankins Estate Unit Trust

Warrendi Pty Ltd and Giles Street Pty Ltd


‐ Settlement of Water Penalties 10,908 ‐

Craig Hamilton Willson

Langhorne Creek Water Company (shared pipeline)


TOTAL 151,916 81,181 All outstanding balances with these related parties are to be settled in cash within 7 days of the date of issue of the tax invoices. None of the balances are secured.


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18. Employee benefits

Note 31 Dec 2015 30 Jun 2015

Current

Annual leave 11,086 10,491

11,086 10,491

Non‐current

Long service leave 26,799 25,408

26,799 25,408

Total 37,885 35,899

Movement

Opening balance 35,899 10,601

Arising during the period 12,402 48,409

Util ised (10,416) (23,111)

Closing balance 37,885 35,899

19. Deferred tax liability

Deferred tax liability comprises temporary differences attributable to:‐

Note 31 Dec 2015 30 Jun 2015

Property, plant and equipment 8,135,791 8,239,093

8,135,791 8,239,093

Deferred tax l iabil ity 2,440,737 2,471,728

20. Subsequent events There are no subsequent events requiring disclosure.

21. Changes in commitments and contingencies

Under the project agreement with the State Government which facilitated the project’s funding and construction, the Company has a contingent liability, specifically:‐ Liability to pay additional amounts under the Project Agreement. In the event the Company raises additional share capital and allots new or increased peak delivery entitlement to that shareholder, then the capital raised (net of costs) is to be paid to the State Government. This liability will cease when total payments by the Company under the agreement total $11.50 million. At 31 December 2015, the Company had paid $9.35 million.

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