Vector AR’19 ― notes to the financial statements (continued)
6. Operating expenses
2019 $M
2018 $M
NOTE
209.6 179.2
Electricity transmission
4 4 4 4
220.6 187.1
Gas purchases and production
68.3 88.7 55.0 89.2 26.0 13.0 16.0
Technology cost of sales
78.5 87.7 59.0 88.5 20.0 15.0 15.0 15.4
Network and asset maintenance
Other direct expenses
Employee benefit expenses Administration expenses
4
Professional fees
IT expenses
8.5
Other indirect expenses
Total
753.5
786.8
Fees paid to auditors
Fees were paid to KPMG as follows: —— audit or review of financial statements: $597,000 (2018: $506,000);
—— regulatory assurance: $392,185 (2018; $366,000); —— other assurance fees: $74,485 (2018: $50,000); —— non-audit fees: $174,000 (2018: $nil).
Other assurance fees include fees for the audit of guaranteeing group financial statements, bond registers, and agreed upon procedures required by certain contractual arrangements. Non-audit fees include fees for IT forensics and other forensic services.
7. Interest costs (net)
2019 $M
2018 $M
NOTE
125.9
Interest expense Amortisation costs Capitalised interest Interest income Interest on leases
131.6
6.5
5.1
(5.4) (1.1)
(4.4) (2.2)
2.0 2.0 3.4
15.3
–
Decommissioning costs
17
1.8
Other Total
(1.2)
133.3
130.7
Policies
Interest costs (net) include interest expense on borrowings and interest income on funds invested which are recognised using the effective interest rate method.
Capitalised interest
Vector has capitalised interest to PPE and software intangibles while under construction at an average rate of 5.3% per annum (2018: 5.8%).
8. Fair value change on financial instruments
2019 $M
2018 $M
54.7
Fair value movement on hedging instruments
32.2
(57.2)
Fair value movement on hedged items
(29.1)
Total gains/(losses)
(2.5)
3.1
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