Vector Annual Report 2019

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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