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1Solomon ISlandS ElEctrIcIty authorItyannual report 2018

Annual Report

2018energising our nation

2 Solomon ISlandS ElEctrIcIty authorItyannual report 2018

Table of ContentsLetter to the Ministers 12018 Highlights 2Plans for 2019 3About Solomon Islands Electricity Authority 5Members of the Board 6Senior Management 7Chairman’s Letter 9Chief Executive Officer’s Letter 10Engineering Highlights 11Capital Works & Planning Division 17Customer Services Division 19Finance Division 22Corporate Services Division 23Corporate Governance Practices 26Financial Statements 28Glossary 73

Our Vision:Energising our nation.

Our Mission:To provide a safe, reliable, affordable and accessible supply of electricity to the Solomon Islands.

Our Values:• Respectforourcustomersandourpeople• Improvementthroughchangeandinnovation• Meetingourservicequalitycommitments• Carefortheenvironment• Individualresponsibilityforouractions• HonestyandTrust• Teamwork


Letter to the Ministers

27thMarch2019

The Honourable Bradley Tovosia MPCaretakerMinisterofMines,EnergyandRuralElectrificationP O Box G37, Honiara,Solomon Islands

&

The Honourable Manasseh Sogavare MPCaretakerDeputyPrimeMinister&MinisterofFinanceandTreasuryPO Box G26,Honiara,Solomon Islands

DearHonourableMinisters,

SOLOMON ISLANDS ELECTRICITY AUTHORITY (Trading as Solomon Power) ANNUAL REPORT 2018

OnbehalfoftheBoardofDirectorsofSolomonPower,IhavethehonourtosubmittoyouboththeAuthority’sAnnualReport,inaccordancewithsection25(I)oftheElectricityAct,Cap128,andsection14(1)(a)(b)oftheStateOwnedEnterprisesAct2007.

ThereportincorporatesauditedStatementofAccountsandthemajordevelopments,activitiesandachievementsoftheAuthorityforthefinancialperiod.

OnbehalfofSolomonPower,Ithankyoubothforyouron-goingunderstandingandcooperationandlookforwardtoyourcontinuingsupport.

Yours faithfully,

David K.C. Quan MBEChairman


• SignedthePowerPurchaseAgreement(PPA)forTinaRiverHydropowerProject

• Commenced the Solomon Islands Electricity Access and RenewableEnergyExpansionProject(SIEAREEP)throughWorldBank

• Improvedthereliabilityofelectricitysupply

• G-1operationinHoniarasustained

• Theproject tore-locate feeder12toEastHoniaraSubstationhasbeencompletedandtheupgradeworksatRanadiSubstationareessentiallycomplete

•Works for the new substation at Kola’a Ridge have substantiallyprogressed

• Livenedupconnectionto1160customersundertheOutputBasedAidprogramme

• UndertheWorldBankfundedSISEPprocuredthethird11/33kVpowertransformerforLunggaPowerStation

• Installedandcommissioned600SmartMetersatHoniara

• Commissioned11kVand415Vnetworkextensionsat10locationsinHoniara

• ProgressedtheupgradeworksatHoniaraPowerStation

• StreetlightsinHoniararepairedandreplaced

• The design and construct contract for the conversion of the existingdieselgenerationsystemsatKirakira,Lata,Malu’u,MundaandTulagitohybridgenerationsystemswasexecutedandtheworkshaveprogressed

• Evaluation of tenders for solar hybrid systems at Hauhui, Namugha,SasamungaandVonunuprogressed

• TheBoardapprovedthefollowing:

- Extensiontothe1MWsolarfarmatHendersonbyanother2MW

- Installationofa220kWsolar systemon theroofofourbuildingatRanadi

- SolarHybridsystemsatTingoaandVisale

• CommissionedanewMeterTestBenchcapableoftestingtheaccuracyoften revenue meters simultaneously

• 41personnelfromvariousorganisationsacquiredthegradeAlicensedelectriciancertification,ofwhich25arefromSolomonPower

• Implementedanoperationsandmaintenanceplanforallournetworkand generation assets

• AmajorityofthelogofclaimshavebeennegotiatedsuccessfullywiththeStaffAssociationandapproved.

• Continuedourfocusonsafety,nurturingandmentoringofstaff

• Continuedinternalsafety,linemanandoperatortrainingprogrammes

• Trainingofmetertechnicians,cablejointers,projectmanagerscontinued

• CustomerSurvey2018completed- improvements inmanymetrics incomparisonwith2015Survey

2018 HigHligHTs



• Achieve the conditions precedent under the PPA for Tina RiverHydropowerProject

• FurtherimprovementinthereliabilityofelectricitysupplyinHoniaraand at the Outstations

• SustainG-1operationinHoniara

• ContinuetheimplementationoftheOutputBasedAid(OBA)programme

• CompletetheRanadiSubstationupgrade,newKola’aRidgeSubstationandtheLunggaPowerStationthirdpowertransformerprojects

• ImplementthedesignandconstructcontractforthehybridgenerationsystemsatKirakira,Lata,Malu’u,MundaandTulagi

• Complete15morenetworkextensionsinHoniaraandattheOutstations

• Progressworkstoupgradethe33kVand11kVswitchboardsatLunggaPowerStation

• ImplementthedesignandconstructcontractatAfio

• ProgressthefollowingunderSIEAREEP

- Extensiontothe1MWsolarfarmatHendersonbyanother2MW

- Installationofa220kWsolar systemon theroofofourbuildingatRanadi

- SolarHybridsystemsatTingoaandVisale

• Executedesignandconstructcontracts for thenewhybridgenerationsystemsatHauhui,Namugha,SasamungaandVonunu

• Progresswithstage1of theSupervisoryControlandDataAcquisition(SCADA)project

• ExecuteadesignandconstructcontractforthehybridgenerationsystematAmbu,Auki

• ProcurelandatTanagaifora1.5MWgridconnectsolarandcommencetender process

• Progressthe“GreenVillage”projectatEastHoniara

• Implementthe24/7CustomerCallCentreproject

• DevelopmorenewnetworkextensionsinHoniaraandattheOutstations

• FurtherdeveloptheprojectfortheinstallationofmoreHybridGenerationSystems

• Developaprojectforbatteryenergystoragesystems(BESS)

• CommencethereviewoftheElectricityTariff2016

• Continueimplementationofthevegetationmanagementplan

• Continueourfocusonsafety,training,nurturingandmentoring

• ContinuewiththeApprenticeshipprogramme

• CommencetheLineMechanicTrainingprogramme

• ConductcampusinterviewsinuniversitiesinHoniara,FijiandPNGtorecruit graduates

• Continue with the Talent Development programme and successionplanning

Plans fOr 2019


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Who we are SolomonIslandsElectricityAuthority(SIEA)tradingasSolomonPower(SP)isaStateOwnedEnterprise.

Our objectives UnderSection4oftheStateOwnedEnterprisesAct,theprincipalobjectiveoftheCompanyis‘operateasasuccessfulbusiness’,andtothisend,be:

• AsprofitableandefficientascomparablebusinessesthatarenotownedbytheCrown.

• Agoodemployer.

• Anorganisationthatexhibitsasenseofsocialresponsibility by having regard to the interests of thecommunityinwhichitoperates.

Tomeettheseobjectives,SPstrivestoBe as profitable and efficient as comparable businesses by:

• WithintheElectricityandStateOwnedEnterprisesActs,installing,operatingandmaintainingelectricity supply systems that meet the needs of connected customers.

• Developingandimplementingcapitalinvestmentplans, to improve electricity system performance andincreasethenetworkcoverageofagreedareas.

• Seekingtorecoverefficientcostsoftheserviceprovision.

• Improvingtheefficiencyofservices,whilstimproving asset reliability and availability.

Be a good employer by:

• Maintainingawell-qualifiedandmotivatedstaff.

• AdoptingHRpoliciesthattreatemployeesfairlyandproperly in all aspects of recruitment, retention and employment.

• Promotingahighlevelofsafetythroughouttheorganisation.

Act in a socially responsible manner by:

• Buildingeffectiverelationshipswithlandowners,customer groups and interest groups that are affected by our activities.

• Improvingenvironmentalreportingandperformance on issues that are caused by our electricity supply activities.

• Incorporatingsustainabilityintoourbusinessactivities,andworkingtoimprovesustainableoutcomes in terms of resource management.

Nature and scope of our activities SP’sprincipalcommercialactivities,asdefinedundertheElectricityAct,arethe:

• Generationanddistributionofelectricalsupplytoconnected customers in approved areas,

• Operation,maintenanceanddevelopmentofassetsthat are necessary to achieve these outcomes on a long term, sustainable basis,

• Approvedexpansionofservicestoincreasedareasof operation.

Other regulatory functions TheCompanyisalsomandatedbytheElectricityActtoperformthefollowingregulatoryfunctions:

• BeresponsiblefortheregistrationofElectricalContractors.

• EnsurethatindustriesandcontractorscomplywiththeElectricityActandtheAS/NZSWiringStandards, by inspecting all electrical installations before connecting to SP mains.

• Beresponsibleforthelicensingofstandbygenerators,IndependentPowerProducers(IPPs)andCogenerationofpower.

About Solomon Islands Electricity Authority(trading as Solomon Power)


Members of the Board

David K.C. QuanChairman

John Bosco HouanihauDirector

James ApaniaiDirector

Yolanda YatesDirector

Muriel Ha’apue-DakamaeDirector

Henry KapuDirector

Harry ZolevekeDirector

Sebastian IlalaDirector

Rovaly SikeDirector


Senior Management

Pradip VermaChiefExecutive

Officer

Martin SamChiefEngineer

Jose PoothokarenChiefFinancial

Officer

Arieta CamaGeneralManagerCorporateServices

Jan SangaGeneralManagerCustomerServices

Hemant KumarGeneralManagerCapitalWorks

MathewKorinihona

ManagerDistribution

Atkinson TalvatManagerGeneration

& Outstations

Janendra PrasadManagerElectrical

Engineering

KitioneMalugulevu

RegulatoryManager

Dalton MaesiaManagerLands&

Buildings

Apollos Inasimae

ManagerFinance

Sarah NihoparaManagerBusiness

Performance

Natalie KairiBoard Secretary

Gavin GorazuManagerIT

Levan RespiohManagerHuman

Resources&Administration

DroumandRupert

SeniorHumanResources

Business Partner

Robin SimpsonManagerHealth&

Safety, Security and Environment

8 Solomon ISlandS ElEctrIcIty authorItyannual report 20188 Solomon ISlandS ElEctrIcIty authorItyannual report 2018


Chairman’s Letter2018hasbeenacontinuationofthestrongperformancethatSolomonPowerhasdemonstratedduringtheprevioussevenyears.ItiseightyearsinarowthatSolomonPowerhasmadeaprofit.Furthermore,thelastsevenyear’sstatutoryaccountshaveallbeenunqualified,andsignedoffbytheAuditorGeneralbeforethemandateddateof31stMarcheachyear.

ItispleasingtonotethatSolomonPowerisgoing“Green”.WesignedthePowerPurchaseAgreementfortheTinaRiverHydropowerProject.OnbehalfoftheBoardofSolomonPowerIwouldliketothankourShareholdingMinistersfortheguidanceandsupporttheyprovidedtotheBoardandManagementinthenegotiationsinfinalisingthePowerPurchaseAgreementwithTinaHydropowerLimited.

SolomonPowerinvested$30milliononSIGDomesticDevelopmentbonds.IwouldliketothanktheShareholdersforprovidingthisinvestmentopportunityforSolomonPower.

Thetotalgenerationexperiencedamodestincreaseof2.13%incomparisonwith2017.However,duetoreducedlosseswehaveincreasedoursalesinkWhby3.6%.

ThetenderforthenextlotofHybridsstationsatHauhui,Namugha,SasamungaandVonunuclosedinOctober2018andweanticipateplacingcontractsfortheirdesign,installationandcommissioningbyMarch2019.

ItispleasingtonotetheprogressmadeduringtheyearontheOutputBasedAidprogrammewiththesupportoftheWorldBank.Byyearendwehadlivenedupconnectionto1160customers.Thisprogrammeenvisagesgridconnectionto2500newcustomersandaugurswellforSolomonPowerandisanotherenablertomeetourlongtermobjectiveofdoublingourcustomernumbers.

ThecontinuedsupportoftheWorldBank,AsianDevelopmentBank,JapanInternationalCooperationAgency,NewZealandGovernmentandUnitedArabEmiratesGovernmentandotherdonorstoexploreopportunitiesinrenewableenergy and to drive commercialisation in our operations, is very much appreciated.

IwouldliketothanktheoutgoingDirectorsoftheBoard,Mr.SebastianIlala,Mr.HenryKapu,Ms.YolandeYatesandMr.HarryZoleveke,fortheirexemplarycontributionasBoardmembersofSolomonPower.IalsotakethisopportunitytowelcomeMurielHa’apue-DakamaeandJamesApaniaitotheBoardofSolomonPower.IamconfidentbothMurielandJameswillprovidestronggovernanceandstrategicdirectiontoSolomonPowerthroughthenextphaseofdevelopment.

IalsotakethisopportunitytothanktheShareholdersandmycolleaguesontheBoardandtheManagementTeamforthecontinuedsupportrenderedthroughout2018.

David K.C. Quan MBEChairman

Solomon ISlandS ElEctrIcIty authorItyannual report 2018


The year in perspective has been another successful oneforSolomonPower(SP)financiallyandoperationally.Wehaveachievedareasonablegrowthingenerationandenergysales.Thenon-technicallosseshavealsobeensteadyat6%.Since2012ithasseenadeclinefrom12%to6%.

DespitesomesystemoutagesinlateNovemberandearlyDecemberthereliabilityinHoniarahasbeengood.TherewasnorotationalsheddinginHoniaraand at the Outstations during the year.

During2018wehavesustainedourfocusoninfrastructureinvestmentswithanannualinjectionof$140million.

Theprogrammetoextendthe11kVand415VnetworksinHoniaraandattheOutstationsmadevery good progress during the year and also the implementationoftheOutputBasedAidprogrammeto subsidise the electricity connection to the grid for thelowincomecustomerssustainedmomentum.TheseprojectsarecomplementaryandareinlinewithourlongtermobjectivetodoubleourcustomernumbersanddriveeconomicgrowthinSolomonIslands.

Thesectionofthe11kVundergroundcablenearthedumpingsiteatNorowhichwaslaidveryshallowandas a result experienced a number of faults over the yearswasbypassedby7spansofoverheadline.ThishasimprovedthereliabilityofpowersupplytoNoroandMunda.

During2018,ourinvestmentinnewequipmentand testing facilities is already bearing fruits. The newequipmentpurchasedin2017wassuccessfullyutilisedonthenetworktopre-locateandpinpoint

faultsonpowercables.TheMeterTestBenchisbeingusedandhasdetectedmanyrevenuemeterswithpoor accuracy.

Theprojecttoinstallandcommission1100SmartRevenueMetersforallCommercialandIndustrialcustomersinHoniarawithremoteconnectivitytoourheadofficeatRanadiisessentiallycomplete.Wearenowabletoremotelymonitor,interrogatethesemetersandalsoabletodisconnectandre-connecttheassociatedcustomers.Theprojecttore-locatefeeder12toEastHoniaraSubstationhasbeencompletedandtheupgradeworksatRanadiSubstationaresubstantiallycomplete.TheconstructionoftheKola’aRidgeSubstationhasprogressedwellwithanticipatedcompletioninMarch2019.

SP is increasingly becoming an employer of choice, attractingnewgraduatesandprofessionalpersonnelalike.DuringtheyearwecementedandfurtherstrengthenedtheexcellentrelationshipbetweentheManagementandtheStaffAssociation.Amajorityofthe log of claims have been negotiated successfully and approved.

Theframeworkforlicensingisnowpayingreturns.Duringtheyear41SolomonIslandersattained“GradeALicensedElectricians”certification.Ofthese25arefrom SP.

Itisalsopleasingtoseethemobiletop-upsreachmorethan1000dailytransactionsonanaverage.During2018weextendedthefacilitytocustomerswithe-walletthroughPanOceanicBankandarenowhavingdiscussionswithotherserviceproviderstoextend the mobile top up arrangement through their different payment platforms.

IwishtothanktheBoardfortheexcellentsupporttheyhaveprovidedtomeandtheSPTeamduring2018.

IthasbeenanotherfruitfulyearandIwouldliketoacknowledgethecontributions-bigandsmall,thateverymemberofTeamSPhasmadeduring2018.CongratulationsTeamSPandallourstakeholdersforeverythingweachievedtogetherin2018.

Pradip VermaChiefExecutiveOfficer

Chief Executive Officer’s Letter


Engineering Highlights

Overview:

OveralltherewasaslightdropinthereliabilityofthepowersupplyinHoniara,comparedtothatin2017.However,thereliabilityduringtheperiod2012to2018hasshownatrendingimprovementinHoniara.AttheOutstationshowever,therewasimprovementonthereliabilityofpowersupplyin2018.OutagerecordstotheendofDecember2018shows24.8millionCustomerMinutesLost(CML)comparedwith20.0millionCMLin2017.TheOutagefigurescomprisesofbothplannedandunplannedsystemoutages.DuringthemonthsofNovemberandDecembertherewasanincreaseinplannedoutagesrequiredforthetestingandcommissioningworksontheupgradedRanadiandnewKola’aRidge33/11kVsubstations.Therewasalsoahighnumberofunplannedoutagesinmid-Decemberduetosystemsprotectionissuesandafaultintheunderground33kVcablethatlinkstheRanadiandHoniaraSubstations.

ThenetworkperformanceindicatorSAIDIhasshownaslightdropinthenetworkperformancein2018with184.40minutesincomparisonwith158minutesin2017.However,therehasbeenaslightimprovementinSAIFIwhichhasreducedfrom1.8timesin2017to1.45timesin2018.

HoniaraMaximumDemandwentupto15.82MWtowardstheendoftheyear.AttheOutstationsAuki,GizoandNorohavealsorecordedincreaseofpower

demand.Theincreaseinpowerdemandwasasaresultofanincreaseinthenumberofnewcustomersconnected and also increase in consumption by large commercialcustomers.InHoniara,theincreaseinthedemandwasalsoasaresultofKingSolomonHotelandpartoftheHeritageParkHotelloadsbeingreconnected on to the grid.

MajorachievementsbytheGenerationandElectricalteamsatLunggawassuccessfulcompletionofthescheduledmajoroverhaulsofthe4xMANDieselsGenerators,L8WartsilaandtheL9Mitsubishigenerators.

AttheOutstationstheteamcompletedthescheduledoverhaulsofGeneratorsK3atKirakiraandLT3atLata.Witholdergeneratorscontinuedtobeoperated,keepingthelightsonhasbeenachallengeatMalu’u,LataandKirakiraStations.

In addition, the team also carried out the planned and unplanned repairs and maintenance of the generation systems.

GenerationofpowerinHoniarawasmainlyfromthefournewMANDieselsgenerators,whicharemorefuelefficient,whilstthebalanceofpowerrequirementwasfromtheoldgeneratorsatLunggaandHoniarapowerstations.TheHoniaragridwasalsosupportedbytheHenderson1.0MWandtheRanadi50kWsolarinstallations during daylight hours.


TheappointmentofanewSwitchingCoordinatorunder the Technical Section of the Transmission and DistributionDepartment,hasgreatlyimprovedtheefficientandsafeswitchingofthenetworkforprojectsandoperationalrequirements.

TheDistributionteamalsoprovidedUGL,theContractor,terminationandjointingservicesforthe high voltage cables and the coordination of the networkswitchingduringtheconstructionandcommissioningphasesoftheRanadi&Kola’aRidgeSubstationsandtheFeeder12relocationproject.

Particulareffortswerealsoontheimprovingandmaintainingofthereliabilityofthenetworkbyfocusing on vegetation management, upgrading of under rated conductors, transformers, replacing of defectiveequipmentinthenetworkandthetimelyimplementation of planned maintenance.

Despiteofitsoperationalcommitmentsandlimitedresources,theDistributionteamwasabletoprovideboth technical and implementation support to the networkextensionprojects,inparticularthenewlineatKilusakwaloatAuki,theextensionofthenetworkatNgalimeraandLungga,eastofHoniara.

Besides the normal inspections of electrical installationsanditsRegulatoryfunctions,theRegulatoryDepartmentmadeverygoodprogressinthe area of licensing of electricians. By the year end a totalof41electricianswereawardedwithGrade“A”Electrician’slicense.

Generation:

PowergenerationinHoniarawasmainlyfromtheLunggaPowerStationandinparticularfromthe

new10MWplantusingthe4x2.5MWMANDieselsgenerators.ThebalanceofpowerrequirementwasfromtheoldgeneratorsatLunggaandHoniaraPowerStations.

ScheduledmajoroverhaulsonallfourMANDieselsgeneratorswerecompletedtowardstheendoftheyear.Thesewerethefirst20,000houroverhaulsonthemachinesandaftertheirwarrantyperiodhasexpired.OthermajoroverhaulswerecarriedoutonL8WartsilaandL9Mitsubishi4.2MWgenerators.

Other activities carried out by the Generation team includedmonitoringofthepowerplants,attendingtofaultsandbreakdownsbothonthemechanicalandelectricalsystems;andthescheduled1,000hours’service on all generators.

HastingsDeering,alocallybasedCaterpillaragentwasengagedtoprovideweeklymonitoring,scheduledmaintenanceandattendingtofaultsandissuesonH1andH2Caterpillar1.5MWgeneratorsattheHoniaraPowerStation.

Distribution:

TheDistributionDepartmentundertookanumberofmajoractivitiesinHoniaraandattheOutstations.

InHoniara,11kVand415VlineextensionswerecarriedoutatNgalimera,Henderson&LunggaareaandatKombivatu.TheteamwasalsooverseeingallelectricalworkscarriedoutasaresultoftheKukumHighwayProject.Thisincludedtherelocationofstreetlights,transformers,RingMainUnits,Pillarboxesandlayingofanewsectionof300sq.mm33kVundergroundcableandinstallingofnewconduitsfortheproposed33kVundergroundcableworks.


An11kVundergroundcablewasinstalledbetweenKGVIandBurnsCreekSchooleastofHoniaratoprovidealinkbetweenLunggaFeederfromtheHoniaraEastSubstationandtheRanadiIndustrialFeedertoprovideanalternativefeedfromeitherdirection.

TheDistributionteamalsoprovidedtechnicalandswitchingsupporttoUGLduringtheconstructionandcommissioningstagesofFeeder12relocation,theRanadiandKola’aRidgeSubstations.TheworkscarriedoutrelatedtotheseprojectsweretheterminationoftheHVcablesontotheexistingnetworkandontonewtransformersandswitchgear.

AttheOutstations,therelocationofthe11kVlinefromthedumpsiteatNorowascompleted.Anew200kVAtransformerwasalsoinstalledintheNoronetworktoimprovethesystemvoltagetoaccountforincreased demand.

OtherLowVoltage(LV)lineupgradeswerealsocarriedoutinHoniara,Auki,GizoandNoroduringtheyear.

AnumberoftransformerupgradeswerecarriedoutinHoniaraandoneatMunda.Anew500kVAtransformerwasinstalledandcommissionedattheSolomonIslandsNationalUniversity(SINU)compound to support the existing and future load growth.

Furthermore,theDepartmentmaintaineditseffortsinimprovingthereliabilityofthenetworkbycontinuingonwiththevegetationmanagementprogrammeinHoniaraandattheOutstations.

OtheractivitiesweretheconstructionofminorLVextensions,newserviceconnections,inspectionandconditionmonitoringofthenetwork,implementationof planned maintenance activities and attending to networkfaults.

Outstations:

PowergenerationattheOutstationswasreliablethroughouttheyearwithnototaloutagesexperienced.

Buala,Kirakira,LataandMalu’ucontinuedtogeneratepowerfromgeneratorsthatwereinstalledpriorto2013,exceptforthehydroplantatBuala,whichwasre-commissionedin2016.

Thenewhybridmini-gridsatSegheandTarohavealso been operating normally throughout the year withnomajorissues.Tarooperationwasabout80%renewableand20%dieselwhilsttheSegheplantwas100%renewable.

MajoroverhaulswerecarriedoutongeneratorsB3,K3andLT3atBuala,KirakiraandLatarespectively,whilstrebuildingoftheex-Aukigeneratorwasstillinprogress by the year end.

Regulatory:

TheRegulatoryDepartmentcontinuedtocarryoutitsroleasaRegulatorintheElectricityindustryby ensuring the electrical installations are in compliancewiththeAS/NZ3000WiringStandards.TheDepartmentalsoprovidedsupporttoLicensedElectricalContractorsbyprovidingregularupdateson the rules and regulations and also by carrying outprogressiveandfinalinspectionstowiringinstallations.

Anewandmodernmetertestbenchwascommissioned early in the year. The test bench is capableoftestingten(10)energymetersatthesametime.TheequipmenthasenabledSPtotestallnewenergy meters before installing them and also old metersweretestedfortheiraccuraciestoensurethatcustomers are billed correctly and also as a means to minimisenon-technicallossesinthesystem.

Atotalof1,655installationswereinspectedin2018comparedwith1,537in2017.Ofthetotalnumberinspected,909werenormalcustomersand746werecustomersundertheOutputBasedAid(OBA)programme. The total number of customers that werepassedandenergisedwas1,599(855normalcustomersand744OBAcustomers).

Electrical:

The Electrical team continued to provide technical supporttotheHoniaraandOutstationsoperationsandtheCapitalWorksProjectsinparticularduringthetestingandcommissioningstagesofthenewRanadiandKola’aRidge33/11kVSubstations.

Majoractivitiescarriedoutbythedepartmentincludedmaintenanceworksonallelectricalauxiliaries,mainalternatorsandotherelectricalequipmentduringthemajoroverhaulsofallfourMANDiesels,L8WartsilaandtheL9Mitsubishigenerators.

Otheractivitiesweretheplannedpreventivemaintenance on all generators and attending to electricalfaultsinHoniaraandattheOutstations.

Besidesitsnormaloperationalworks,theElectricalDepartmenttooktheleadtoassistwiththedesignandinstallationofthenewAutomaticTransferSwitchforHeritageParkHotelinordertoconnectpartofitsloadbackontothegrid.


ThedepartmentwasalsoresponsibleforcollatingnetworkoutagereportstodeterminetherootcausesandalsotheCustomersMinutesLost(CML)duringthe outages.

Renewable Energy:

Negotiationsonthe15MWTinaRiverHydropowerProjectinGuadalcanalProvincewerefinallyconcludedinNovember2018andthePowerPurchaseAgreement(PPA)betweenTinaHydropowerLimited,theProjectCompanyandweastheOfftaker,wasexecutedon6thDecember2018.

TheFiuRiverHydroprojectinMalaitaProvincewascancelledlate2017duetoanunresolvedlanddisputeandADBagreedtotransferthefundsforittoaproposed1.44MWSolarFarmatKwainamoronearAukiinMalaita.Unfortunately,thishadtobedroppedaswellduetothedeadlockinthecommercialnegotiationbetweenSolomonPowerandthelandownersatKwainamoro.

AcontractwassignedwithCBSPowerSolution(Fiji)LimitedfortheconstructionoftheADBfunded2MWsolarprojecttoconverttheexistingdieseloperatedoutstationsatKirakira,Lata,Malu’u,MundaandTulagitohybridgenerationsystems.Landacquisitions

forthesesiteshaveprogressedwell.

TheSPfundedhybridmini-gridprojectsatSegheandTaroweresuccessfullyimplementedandcommissionedmid-2017.Bothstationshavebeenoperatingwithnomajorissues.TaroStationisoperatingatapproximately80%solarand20%diesel,whilstSegheisoperatingat100%renewable.

Thefinancialopeningfromthreebiddersforthefour(4)NewZealandGovernmentfundedhybridsitesatHauhui,Namugha,SasamungaandVonunuwasconductedendDecember2018.LandacquisitionsforthesiteswereprogressedandlandtitlesforHauhuihasbeenobtainedwhilstthoseforNamugha,andSasamungaareintheprocess.Vonunulandhoweveris under dispute and is yet to be progressed.

NegotiationsforlandatTanagaiforaproposedsolarfarmarewelladvancedwithimminentprocurementinthefirstquarterof2019.

TheBoardapprovedcapitalfundsforthenewhybridsystemsatTingoainRennellandBellonaProvinceandVisaleinGuadalcanalProvince.Additionally,theBoard also approved capital funds for the design and constructionofa2MWsolarfarmatHendersonand220kWsolarinstallationontheroofofourRanadioffices.

New Zealand Grant signed with Solomon Power.


Power System Reliability:

SolomonPower’sSystemReliabilityinHoniarais measured using the internationally accepted performanceindicatorsasfollows:

The System Average Interruption Duration Index (SAIDI)

SAIDIdefinestheaverageinterruptiondurationpercustomer served per year.

SAIDI=(SumofCustomerInterruptionDurations/Totalnumberofcustomersserved)

ForHoniara,thiswasmeasuredtobe184.4minutes,comparedto155.9minutesin2017.Thisisanincreaseby28.5minutesoverthe2017figure.

The System Average Interruption Frequency Index (SAIFI)

SAIFIdefinestheaveragenumberoftimesacustomer’sservice is interrupted during a year for longer than 2seconds.Acustomerinterruptionisdefinedasoneinterruption to a customer.

SAIFI=(Totalnumberofcustomerinterruptions/Totalnumberofcustomersserved)

ForHoniarathiswasmeasuredtobe1.45timescomparedto1.8timesin2017,adecreaseby0.35times.

The Customer Average Interruption Duration Index (CAIDI)

Thisisameasureoftheaveragetime(minutes)thatacustomeriswithoutpowerperinterruption.

ForHoniarathiswasmeasuredtobe137.45minutesperinterruptioncomparedto90.6minutesin2017,anincreaseby46.85minutes.

Reliability and Efficiency:

PowergenerationinHoniarawasmainlyfromthemorefuelefficientMANDieselsgenerators(4x2.5MW)commissionedin2016.ThebalanceofpowergenerationwasfromtheoldgeneratorsatLunggaandHoniaraPowerStations.Improvedcoolingsystemsand timely maintenances on the old generators have also improved their outputs.

Thede-commissioningofthe1.5MWMirrlees(L5)generator has reduced the available generation capacityfrom29.8to29.0MW,againstapeakdemandof15.82MW.

TheimplementationoftheG-1operationcriteria,theunderfrequencyloadsheddingschemeonthe11kVHoniarafeedersandthereviseddelayedtimesettingon the existing under voltage system protection on the

33kVfeedersatHoniarahasreducedwidernetworkoutageduetofaultsinthe11kVfeeders.However,asaresultoftheoutagesexperiencedtowardstheendofthe year it is proposed to conduct a thorough study to reviewtheexistinggenerationandnetworkprotectionsettings in order to properly coordinate the protection systemstoimprovethesystemreliabilityinHoniara.

Energy Produced:

Energyproducedin2018isshowninthetablebelow.LunggaandHoniaraoperationsproducedatotalof96.285GWh(78.7%)whilsttheOutstations,theRanadiandtheHendersonsolarplantsproduced14.535GWh(21.3%).

GWh GWhStation (2017) (2018)

Lungga 80.73 81.75Honiara 1.65 2.46Outstations 9.73 11.17HendersonSolar(1MW) 1.19 0.89RanadiSolar(50KW) 0.042 0.015IndependentPowerProducer(IPP) 0.94 0Total 94.28 96.285

Maximum Demand:

ThedemandforelectricityinHoniarain2018peakedat15,820kilowattscomparedwithafigureof14,934kilowattsin2017,anincreaseof886kilowatts.


Generation Statistics:

EnergyProducedbyallStationsin2016to2018.

Energy (kWh) Produced by all Stations: 2016 to 2018

JAN FEB MAR JULAPR AUGMAY SEP NOVJUN OCT DEC

10,000,000

2016

all CaiDi all saiDi all saifi

2017 2018

6,000,000

2,000,000

8,000,000

4,000,000

0

Honiara Peak Demand growth from 2001 to 2018

Peak Demand (kW)

1 2 6 10 144 8 12 163 7 11 155 9 13 17 18

20,000

15,000

10,000

5,000

0

System Performance Indicators for Honiara from 2012 to 2018 are in the histogram below.

Annual System Performance Indicators: 2012 to 2017

0

200.0

400.0

600.0

800.0

2012 2013 2014 2015 2016 2017 2018


Capital Works and Planning Division

Capital Works:

During2018,therewere26activecapitalinfrastructureprojectsunderwayand6additionalprojectsintheplanningphasetothevalueof$974million.Ofthesethefollowingwerecompletedandcommissioned during the year.

• Feeder12relocationfromLunggaPowerStationtotheHoniaraEastSubstation.

• EnergisationofthenewRanadiSubstation.

• Ten11kV/415Vlineextensions.

• Phase–2oftheKukumHighwayUpgradeworks.

• TheinstallationofSmartMeters.

Keyprojectswhichhavestartedduring2018andwillbeprogressedtocompletionin2019andbeyondinclude:

• TinaRiverHydroProject–66kVtransmissionlineandterminationequipmentatLungga.

• NewKola’aRidgeZoneSubstation.

• TheinstallationofasecondtransformeratLunggaPowerStation.

• OldLunggaElectricalupgradeproject.

• TheHoniaraPowerStationRedevelopment.

• Fourteen11kV/415VlineextensionsinHoniaraandin the Provinces.

• HousingUpgradeworksinHoniara,NoroandGizo

• DetaildesignandconstructionofGreenVillageatHenderson

• Designandinstallationof5hybridreplacementgeneration systems for the existing Outstations at Kirakira,Lata,Malu’u,MundaandTulagi.

• SolarHybridGenerationSystemProjectatHauhui,Namugha,SasamungaandVonunu.

• SolarHybridgenerationsystematTingoa,Visale,Lambi,SantaAnaandUlawa

• SCADADevelopmentProject(stage1).

• Henderson2MWgridconnectedsolarfarm.

• RanadiRooftopsolarpanels

• OBA(OutputbasedAid)Project.

New Kola’s Ridge Zone Substation.

The team structure for combined Planning and CapitalWorksteamisnowcompleteandhasbeenimplemented.Therecruitmentofkeypositionswithinthereorganisedstructurehasmostlybeenfilled.FourActingManagerpositionswereofferedto experienced local engineers to develop into roles withinthenewstructure.Theserolesarebeingshadowedbyexpatriatesforthequickdevelopmentoflocalresources.This,togetherwiththecontinueddevelopmentofallstaffintheteamwillseethenewteam resourced to appropriate level to manage the planninganddeliveryofover$1billioncaptialworksoverthenext4years.


OBA Energised Customers Todate - Dec 2018

MONTHS

No

. of E

ner

gise

d C

ust

om

ers

1600

800

1200

400

1400

600

1000

200

0Oct-17

36

240

240331

375 394

427

535

648688

762

853898

937

10661116

1160

312368 390

480

570

657727

786837

897

1017

1145

1260

1360

72 5119 33

108 11340 74 91

45 38

12950 44

Feb-18 Jun-18Dec-17 Apr-18 Aug-18 Nov-18Nov-17 Mar-18 Jul-18 Oct-18Jan-18 May-18 Sep-18 Dec-18

No. of OBA Connections per monthCommulative No. of OBA ConnectionsTargeted Energised OBA Connections

Planning:

Twelve(12)solarhybridhighlevelcommunityconsultationswerecompletedin2018.OfthesesevenareinBina,Dala,Fo’ondo,Kiu,Maoro,RohinariandTalakali,allinMalaitaProvince.TheotherfiveareinIsabelProvincelocatedinBiluro,Kaevanga,Kamaosi,KiaandTatamba.

Eighteen(18)detailedsurveys,mappingandengineeringwerealsocompleted.Ofthesetwoarefortheproposed2MWextensiontothe1MWSolarFarmatFighter1,Hendersonandtheotheroneforthe220kWrooftopsolarinstallationatourRanadiOffices.Tenareforplannednetworkextensionsforatotalof1747potentialcustomers,oneeachatBarana,Aekafo,Okwala,Feraladoa,SopaperaallinHoniara;RaubabateinMalu’u,BuriniasiandKunuinAukiandTitianain

Gizo.Thebalancesix(6)arefortheproposedhybridsystemslocatedatBina,Maoro,Fo’ondo,Dala,KiuandRohinarialllocatedinMalaitaProvinceandtheseintotalhave2848potentialcustomers.

During2018theBoardapprovedcapitalfundingofapproximately$160millionforinfrastructuredevelopmentinHoniaraandtheProvinces.Theseincluded funding for grid connect solar farms, hybrid solarsystems,networkextensions,housingupgradesandotherupgradeworks.

ComputerisedMaintenanceManagementSystem(CMMS)calledCARLisnowbeenusedbyHoniara-basedengineeringteamswiththeintentionofexpanding this to outstations for maintenance management in future.

Capital Works and Planning Team.

TheOutputBasedAid(OBA)programmehasbeenmakingsteadyprogressin2018.Itisdesignedtoprovideaone-offsubsidytoeligiblelow-incomehouseholdstocoveraportion of the upfront cost of electricity serviceconnectionsintheHoniaragrid and the named Outstations of Auki,Seghe,Taro,NoroandMunda.With672connectionstocomefromtheoutstations,theprojectisaimedtoenergiseacombinedtotalof2,488households.Asoff31December,SolomonPowerhasbeenabletoenergiseatotalof1,160connections.ThisprojectisduetobecompletedbyMarch2020.


Customer Services DivisionWithatotalnumberof51permanentstaff,theCustomerServicesDivisionisresponsibleforallcustomerissues,fromcommunityawarenessthroughitsPublicRelationsSection,toreceiving,processingandregistrationofcustomerapplicationsfornewcustomerconnections,customerenquiries,cashiering,administering billing and customer accounts, protection of revenue meters and revenue collection; allcontributingtoSP’svisiontomakeelectricityaffordableandaccessibletoSolomonIslanderswhichisinlinewiththenationalobjectivetoenergiseournationbyyear2050.

Bytheendof2018,SolomonPowerhadregisteredatotalof18,781customersasconnectedtoitsHoniaraandOutstation’snetwork,ascomparedto17,190inDecember2017.16,565(88%)customersareonprepaywhouseCashpowermeterand2,216(12%)areonpost-paywhichareonthenormalkWmeter.

KILOWATT CASHPOWER TOTAL

Honiara 1,586 12,587 14,173Auki 201 1,114 1,315Gizo 109 727 836Noro 87 490 577Munda 36 347 383Tulagi 40 237 277Kirakira 38 235 273Buala 40 211 251Lata 36 224 260Malu’u 24 128 152Taro 16 181 197Seghe 3 84 87TOTAL 2,216 16,565 18,781

TOTAL KWT /CASHPOWER COUNT BY LOCATION -DECEMBER 2018

82%ofcustomersareonthedomesticratewhile18%are on commercial and industrial rates.

Customer by Tariff Category December 2018

Domestic 15,383 82%Commercial 3,370 18%Industrial 28 0%Total 18,781

InadditiontoHoniara,thecapitalcitysituatedontheislandofGuadalcanal,11Outstationsexistontheother island provinces outside of Guadalcanal, namely Gizo,NoroandAukibeingthebiggeroutstations,withthesmallerstationsbeingMunda,Buala,Malu’u,Tulagi,Kirakira,Lata,SegheandTaro.SolomonPowerprovidescustomerservicesfromthese12locationsviaboththepost-paid(kilowatt)andprepaidsystems(Cashpower).

Kilowattcustomersareregisteredonthepost-paybillingsystemcalledUtilityStarPlatinum,asystemputinplaceinJune2014.TheCashpowercustomershoweverareregisteredonthenewlyupgradedSuprimaVersion5.

Theelectricitytariffappliedduring2018isthegazettedElectricityTariff(BaseTariffandTariffAdjustments)Regulation2016whichrepealedTheElectricity(Tariff)(AutomaticBaseTariffandFuelPriceAdjustment)Regulation2005.

TheElectricityTariff(BaseTariffandTariffAdjustments)Regulations2016isavailableonourwebsitewww.solomonpower.com.sb.UtilityStarPlatinumandSuprimaVersion5havebothsuccessfullyintegratedthemajorchangesinthetariffsince1January2017.

SP has progressed its programme to extend the electricitynetworkinHoniaraandattheOutstationsin2018.Networkextensionplansgohandinhandwithcommunityawareness,customerapplicationsandcustomerconnectivity.ApartfromthenormalSPconnections and the connection to the approved sites fornetworkextensions,theWorldBankassistancethroughtheOutputBasedAid(OBA)Programmehasfurtherprogressednewconnectionundertakingsin2018,resultingintheincreaseincustomernumbers.Theincreasefrom5amperesto10amperesconsumptionin2018hadalsoresultedinanincreaseinmonthlysalesonCashpower.TheOBAprogrammeconnectselectricitytolowerincomehouseholds,including community services and microenterprises upto10amperesperinstallation,withthreelightbulbs,twopowerpoints,internalwiring,onepowerpole,upto80metresofservicelineandoneCashpowermetersubstantiallysubsidised.Bytheendof2018,1160installationswereconnectedontoourgridundertheOBAprogramme.


Networkextensionsandincreasingcustomernumbersalsorequiresimprovedreliabilityandbillingconnectivity in terms of system access by the remote Outstationteams.TheongoingeffortsoftheV-SATproject,withSATSOLandgovernmentsupporthasseen our remote Outstations access to both Suprima andUtilityStarsystemsfordailypaymentinputsforpost-paidandpre-paidaccounts.

The above also called for additional recruitments andin-housetrainingtobecarriedoutin2018.AllOutstations’revenuestaffweretrainedonboththeSuprimaCashpowerlivesystemandtheUtilityStarbillingsystem,exceptforLataandMalu’uwhichexperiencedpoorconnectivitywhicharenowplannedforimprovementin2019.Duetotheimprovedrealtimeconnectivityourteamsatthe9OutstationshaveaccesstoboththebillingsystemsandarenowabletoissueCashpowertokenstoourcustomersattheOutstationswithouttheneedtorefertoHoniara.

In terms of recruitments and appointments, the divisionispleasedtoseethreeofitsfemaleofficerspromotedtohigherpositionsofMeterTechnicianTeamLeader,ManagerCustomerServicesandManagerBillingandRevenue.Sevenothernewofficerswererecruitedintothedivisionin2018.

SevenCustomerServicesMeterTechnicianssuccessfullypassedtheirGrade‘A’LicenseHoldersexams for Electricians in Solomon Islands, an excellent achievement. This brings a good number of GradeAelectriciansinSolomonIslands.

Inordertoassistwithcustomerapplicationsfornewservice,frontlinersweretakenthroughaGeographicalInformationSystems(GIS)trainingbythe GIS team.

AspartoftheWakaMereinitiative,twofemalemembers of the team attended a 2 days training on DomesticViolenceandtheWorkplace.ThesetwoarenowhandlingthedomesticviolenceissueswithinthedivisionandassistingtheHumanResourcesSectiondevelop the policy.

Apartfromtraining,thedivision’spoliciesandprocesseswerecontinuallydevelopedandupdated,toensurethatourqualitycommitmentstoourvaluedcustomers are met.

To ensure the accuracy of meters and a reduction ofnon-technicallosses,andcontinuationfromreplacementofcurrenttransformer(CT)meters,thedeploymentofSmartMeterswascompletedforHoniarain2018.TheSmartMetershavebeensuccessfullysetup


inmultidriveandarenowinterfacingwithUtilityStarbillingsystem.ForSmartMeters,reading,disconnectionandreconnectioncannowbedoneremotelyfromourofficesatRanadi.Thishasseenadecreaseincustomercomplaints of meter reading errors.

InadditiontotheSmartMeterproject,3singlephasemetersinHoniaraandattheOutstationswerereplacedwithsingle3phasemeters.Toensurerevenue protection, inspection of meters continued on an annual basis to eradicate illegal bypasses.

In order to gauge our level of customer satisfaction, acustomersatisfactionsurveywascarriedoutin2012and2015,withafollowupstudydonein2018whichprovidedameasureofchangesinperceptionsofSolomonPowerovertime,fromthepreviousbaselinesurveystothepresentday.TheCashpowerDrive-ThroughandWalk-Throughwindows,extendedCashieropeninghoursto8.30pmMondaystoFridaysandthe24hoursCashpowermobiletop-upservicefeaturedwellinthesurvey.Overalltheresultsfrom

the2018surveyhaveshownimprovementonalargenumberofmetricsincomparisonwith2012and2015.

In terms of top up services, a contract for the CashpowermobiletopupwassignedwithPOB,bringingthenumberofbankstotwo.Discussionsareongoingwithotherserviceprovidersincludingbanksto extend the mobile top up arrangement through their different payment platforms.

SPsharedcostswiththeBSPBankforadvertisingtheCashpowermobiletopupduringtheSoccerWorldCupbroadcastin2018.

ThedevelopmentoftheCallCentreprojectcontinuedin2018andwillprogressfurtherinto2019.

2018alsosawthreeofourcommercialcustomers,GizoHotel,KingSolomonHotelandHeritagePark(partly)backonthegrid.

Aspartofcarryingoutoursocialresponsibility,weconductedawarenesssessionsin13communitiesaroundthenationin2018.


Finance DivisionThefiscalpositionofSPcontinuestobestrongandhasshowngrowthinRevenueby6.7%comparedto2017.Thestrongpositionisduetogoodfinancialmanagementandgovernance.Duringtheyear:

• SPpaid$4mfor2017dividendandwillalsodeclareandpaydividendof$4mfor2018oncetheaccountingbookshavebeenaudited.

• NetProfitfortheyearwas$80.1m.

• Returnonequityandreturnonassetshasbeen7.0%and6.2%respectively.

• GenerationcostsperkWhis$2.04(US$0.26perkWh).

• Fuelcost,being48.5%ofourcosts,hasincreasedincomparisonwith2017.

• MonthlykWhsalesreachedtheirhighestever.

• CapitalInfrastructureisbeingfundedusingretainedearnings(Taro&SegheOutstations,Outstations’GenerationUpgrade,networkextensions,etc.).

• SPhasnowcommenceditsWorldBankIDALoanRepaymentstoSIG.

Information, Communications and Technology

TheInformation,CommunicationsandTechnology(ICT)departmentofFinancehasbeenworkingtoupgradesystemsandcommunicationlinksacrossthenetwork.

WehaveimprovedthesecurityandreliabilityoftheOutstationlinks.ThecommunicationstoOutstationshave been upgraded and expanded to facilitate linkstoourbillingsystemsandwehavecompletedconnectionsto7oftheremaining9outstationsforCashpower,kWandworkflow.TheOutstationsofLataandMalu’uwillbeconnectedinthefirsthalfof2019,withLataplannedtobeconnectedinFebruaryandMalu’uinMarch.Furtherimprovementsintheconnectivity of Outstations and the deployment of equipmentupgradesisongoing.

AtRanadiOfficeswehaveupgradedthecablingfromCat5toCat6whichwillalsoallowustocompletetheIPTelephonyrolloutandreconfigureourinternal

networkandserverconnectivityforafaster,morereliable,morerobustbusinessoperationonaday-to-daybasis.Theinternalre-cablingeffortsalsoincludedaddingHDMI,videoandsoundlinksforourBoardRoom,TrainingRoomandMeetingroomontheMezzanineleveltoallowmoreflexibilityinconnections for these spaces as needed.

DuringtheyeartheServerroomhasbeenupgradedwithoverheadcabletrays,improvedpowerandGPOoutlets,additionalrackspace,reinforcedflooringandanupgradedUPSconnection,toallowforthehousingofequipmentinUPSprotectedracksprovidinguswithstablecomputingpowerandapplications.RelocationofexistingequipmentintotheupgradedfacilityisongoingandplannedtobecompletedbyFebruary2019.

AprinterauditwasconductedinNovemberandaproposalfromasupplierwasprovidedinDecember,itisbeingrefinedandcostedtoupgradeandstandardizeourin-houseprinterfleetonaproposedleasingarrangementandthiswillbeconsideredinthefirstquarterof2019.

AfibreupgradeandrolloutplanconnectingfurtherSPsitesandpartnersacrossHoniarahasbeendevelopedandwillbescheduledwithCapitalWorksforimplementationin2019-2020.

AnITStrategyforthenextthreetofiveyearshasbeenestablished and is currently being implemented. SP has recruited an Information Technology Specialist toworkonrefiningtherecommendationsintheITStrategy and commence scoping and construction planningfortheDataCentrespaceatLunggaPowerStation.

Additionalworkisbeingdonetostandardizeour documentation and to propose a document management system to handle future SP online documentstorage,archivalandmanagement.TheICTServicesAgreementwithourexternalsuppliersisalsobeing revised to ensure SP obtains the correct levels of service and support to maintain the environment into the future.


Corporate Services Division

TheCorporateServicesDivisionprovidessupportservices to other divisions through its human resources and administration, training and development, occupational health and safety, securityandcompliance,businessperformance,fleetmanagement and lands and buildings teams.

2017

Executive Planning generation Distribution Outstations regulatory financeCapitalWorks

Customer services

Corporateservices

in service Training

2018 DIVISIONS

Employees by Division

Em

plo

yee

Nu

mb

ers

0

10 69

41

36

25

7 8

50

18

28

95

10

44

38

31

7 6

49

25

37

3

20

30

40

50

60

Thegraphbelow(Figure2)showsthenumberofpermanentemployeesbylocationattheendof2018,comparedtotheendof2017.

Figure 1: Employee Numbers by divisions.

Figure 2: Employee numbers by location.

2017 2018

LOCATIONS

Em

plo

yee

Nu

mb

ers

144

38

4 4 2 2 2 2 29 9

162

82

164

41

4 4 2 2 2 2 329

27

16 4

180

120

40

80

0

160

100

20

140

60

ranadi auki Malu’u Kirakira seghelungga Buala gizo Munda TaroHoniara lata Tulagi noro in service Training

HyundaiMall

Human Resources

Attheendof2018,SPhadatotalnumberof255permanent employees, compared to 237 at the end of 2017.Thisisanincreaseof7%.

Thegraphbelow(Figure1)showsthenumberofpermanentemployeesbydivisionsattheendof2018,comparedtotheendof2017.

Employees by Location


Highlightsin2018included:

• WiththesupportoftheBoardtheManagementandtheStaffAssociationhavecementedaverystrong and positive relationship. The log of claims wasnegotiatedandapprovedandhavebeenimplementedeffectiveNovember;

• Recruitmentforseveralkeyroles,includingthatfortheChiefFinancialOfficer,GeneralManagerCorporateServices,ManagerGenerationandOutstations,ManagerProjects,ManagerManagementAccountingandRegulatoryManager;

• CommencementoftheApprenticeshipprogramme.Underthisprogrammewehaverecruited10apprenticesinMaywhowillundergoonthejobandoffthejobtrainingoveraperiodof4years;

• ApprovaltostartaLineMechanicTrainingprogrammewithaninitialintakeof10traineelinemechanics;

• ContinuationoftheGraduateProgramme;and

• CompletionoftheJobEvaluationExerciseinNovember,implementationoftherecommendationswillcommencein2019.

Training and Development

Tocontinuallydevelopandupdatetheknowledge,skillsandcompetenciesofitsemployees,SPhasinvested extensively in training and development.

Long term training:Threeemployeescontinuedwiththeirlongtermstudyprogrammein2018.TwowereatUSPstudyingtowardsBachelorofCommerceinAccountingandManagementprogramme,whiletheotheronewasatSINU,doingaBachelorofAccountingStudies.

Short term training: Some highlights of short term trainingundertakenin2018:

- 5dayMBA:CertifiedHumanResourcesManager:6officersattendedthetraining

- DirectorsCourse:1officerattendedthetraining

- CableJointerTraining:8officersattendedthetrainingwithEnergexinBrisbane

- Metering:8officersattendedthetrainingwithEnergex in Brisbane

Occupational Health and Safety

SP is committed to the safe supply of electricity to the NationwithitseffectiveandrobustOHSmanagementframework,aimedatprovidingasafeenvironmentforemployees, contractors, customers and the community at large.

OneLostTimeInjurywasrecordedin2018whichincurredseventeen(17)LostDays.TheLostTimeInjuryFrequencyratefor2018closedat1.91.

Anincidentreporting,investigationandactionverificationframeworkwasdevelopedtomanageallSP incidents.


Highlightsin2018include:

• ContinuationofFirstAidTrainingandFireTrainingforemergencywardensandFirstAiders;

• Continuationofelectricpowerlinemantraining;

• OHSawarenesstrainingforstaffandelectricalsafetyawarenessforschoolsandcommunitiesinSPlocations;

• DefensiveDriverandHandsonWheelstrainingwasconductedwithnewlyauthoriseddriverswithrefresher training carried out for other drivers;

• PoleTopRescueandCPRtrainingforlinemen;and

• TheinspectionandtestingoftheFireHydrantSystematLunggaPowerStationwascarriedouttogetherwithtrainingforpowerstationoperatorsandthelocalfirebrigade.

Fleet of vehicles

TotalnumberoffleetasofDecember2018was87.Thisisareductionfrom91in2017.Sevenvehicleaccidentsoccurredin2018atarepaircostof$138,843.Thevehicletrackingsystemcontinuestobeutilisedtoimprovefleetefficienciesandproactivelymanagespeeding and unauthorised use of vehicle.

Land and buildings

Land

SPcontinuedwithitsprogrammeoflandacquisitionsandproperregistrationofitsproperties.NegotiationforlandacquisitionsinAuki,Tanagai,Lata,Kirakira,

Afio,Malu’u,Namugha,Sasamunga,Hauhui,VisaleandTingoawereprogressedduring2018.

Buildings

ApartfromourcommercialpropertiesatRanadi,Lungga,HoniaraandattheOutstations,SPprovidedhousing for employees.

Atotalofthirteen(13)SolomonPowerhouseswereearmarkedforrepairandmaintenancein2018.ByDecember2018,workoneight(8)houseswascompleted,three(3)wereinprogressandexpectedtobecompletedinthefirstquarterof2019,andone(1)hasbeenrescheduledtobeaspartofthe2019HousingRepairandMaintenanceProgramme.

Bypass customers

SPcontinuedwithitsconcertedefforttorecovermoniesowedtoSPby“bypass”anddefaultingcustomers,theeffortswerechallengingyetresultedinprogressofprosecutingof“Bypass”customersandrecoveryfromdefaultingcustomerswithanumberofgoodoutcomesin2018.

Workmen’s compensation

Onecaseofworkmancompensationwasreportedandsettled.

Trade Dispute Panel

Therewerethreecasesthatwereon-goingin2018,andwillcontinueinto2019.


Corporate Governance Practices

Role of the Board

AsrequiredbySection6(4)oftheStateOwnedEnterprisesAct2007,theBoardisresponsibleforchartingtheCompany’sstrategicdirection,forthesettingofobjectives,policyguidelines,goalsmanagement,andformonitoring the achievement of these matters.

TheBoardisalsoresponsibleforreviewingtheBusinessPlan,CorporatePlanandStatementofCorporateObjectives,andapprovestheOperatingandCapitalBudgetseachyear.TheBoardalsoreviewsmattersofamajororunusualnature,whicharenotintheordinarycourseofbusiness.

Composition of the Board

InDecember2018somechangeshavebeenmadebyourShareholderstothecompositionoftheBoard.TheBoardDirectors,appointedundertheStateOwnedEnterprisesRegulation2010,(Part2,PrescribedProcessofAppointmentofDirectors)areasfollows:

Name Position Appointment Term

Mr.DavidK.C.Quan Chairman February2016 3yearsMr.HenryKapu Director 30/6/2012–1/12/2018 RetiredMr.HarryZoleveke Director 30/6/2012–1/12/2018 RetiredMr.SebastianIlala Director 30/6/2012–1/12/2018 RetiredMs.YolandeYates Director 5/9/2014–1/12/2018 RetiredMr.RovalySike Director 5September2014 2yearsMr.JohnBoscoHouanihau Director 5September2014 3years

Name Position Appointment Term

Mr.DavidK.C.Quan Chairman 19February2019 3yearsMs.MurielHa’apueDakamae Director 17December2018 3yearsMr.JamesApaniai Director 17December2018 3yearsMr.RovalySike Director 17December2018 2yearsMr.JohnBoscoHouanihau Director 17December2018 2years

As at 30 November 2018

As at 31st December 2018

Directors’ Duties

TheroleanddutiesoftheDirectorsaredefinedinregulations17to27oftheSOERegulations,2010.AkeyresponsibilityoftheDirectorsistoachievetheprincipalobjectiveoftheAuthority,asstatedinSection5oftheSOEAct:

TheprincipalobjectiveofeveryStateOwnedEnterpriseshall be to operate as a successful business and to this end, to be

(a) AsprofitableandefficientascomparablebusinessesthatarenotownedbytheCrownorestablishedasstatutorybodiesbyanActofParliament,

(b)Agoodemployer,and

(c) Anorganisationthatexhibitsasenseofsocialresponsibility by having regard to the interests of thecommunityinwhichitoperates.

Statutory Duties of the Board

Inadditiontotheaboveduties,theBoardofDirectorsof SP collectively and individually have agreed on the fulfilmentofthefollowingdutiestowardthecompany:

• Whenexercisingpowersorperformingduties,DirectorsmustactingoodfaithandinwhattheDirectorbelievestothebestinterestsoftheStateOwnedEnterprise.


meetings. The regular business of the Board covers corporategovernance,financialperformanceandriskmanagement,businessinvestmentandstrategicmatters.

TherewasalsoaShareholders’meetingonTinaRiverHydropowerProjecton26thNovember2018.

Board Committees

TherearethreeBoardSub-Committees:Audit,Finance,RiskandGovernance;Technical;andHumanResources,that are responsible for deliberating detailed issues and makingsuitablerecommendationstotheBoard.TheSub-Committeesmeetasandwhenrequired.

Board Secretary

MrsNatalieKairi

Audit, Finance, Risk & Governance Sub-Committee

Membership:

1. HenryKapu-Chairman2. DavidK.C.Quan-Member3. SebastianIlala–Member4. YolandeYates–Member

Numberofmeetings:3

HR Sub-Committee

Membership:

1. JohnBoscoHouanihau-Chairman2. DavidK.C.Quan-Member3. YolandeYates-Member

Numberofmeetings:3

Technical Sub-Committee

Membership:

1. RovalySike-Chairman2. DavidK.C.Quan-Member3. HenryKapu-Member4. HarryZoleveke-Member

Numberofmeetings:3

• ADirectorofaStateOwnedEnterprise,whenexercisingapowerasDirector,mustexercisethatpowerforaproperpurpose.

• ADirectorofaSOEmustnot:

(a) AgreetothebusinessoftheSOEbeingcarriedoutonorinamannerlikelytocreateasubstantialriskofseriouslosstotheSOEcreditors or,

(b)CauseorallowthebusinessofaSOEtobecarriedoutonorinamannerlikelytocreatesubstantialriskoflosstotheSOEcreditors.

• ADirectormustnotagreetotheSOEincurringanobligationunlesstheDirectorbelievesatthetime,onreasonablegrounds,thattheSOEwillbeabletoperformtheobligationwhenitisrequiredtodoso.

• ADirectorofaSOE,whenexercisingpowersorperforming duties, must exercise the care, diligence, andskillsthatareasonableDirectorwouldexercisein the same circumstances.

• AnothercontrollingmeasureimposedonDirectorsistherequirementtoenteranyconflictofinterestinaninterests’register.

Fiduciary Duties of Directors

TheDirectorsofSPalsoowethefollowingdutiestothecompany.ThesefiduciarydutiesformthecodeofethicsofSP.AfiduciaryrelationimposesanobligationofutmostgoodfaithonDirectorsbyputtingtheinterestsoftheCompanyfirst,andtheSPDirectorshavepledgedtoupholdthisprincipleatalltimes.TheFiduciaryDutiesoftheDirectorsincludethefollowing:

• Toactingoodfaithinthebestinterestofthecompany,

• Toexercisepowersforaproperpurpose,

• Toretaindiscretion

• Toavoidconflictsofinterest.

Board Meetings

TheBoardheld17meetingsduringthefinancialyear,whichended31stDecember2018.Ofthese6werescheduledmeetingsand11extra-ordinary


FinancialStatementsfor the year ended 31 December 2018

ContentsDirectors’Report 29-30

IndependentAuditors’Report 31-32

StatementofComprehensiveIncome 33

StatementofFinancialPosition 34

StatementofChangesinEquity 35

StatementofCashFlows 36

NotestotheFinancialStatements 37-69

Solomon Islands Electricity Authoritytrading as SOLOMON POWER


InaccordancewitharesolutionoftheBoardofDirectors,theDirectorsherewithsubmitthestatementoffinancialpositionofSolomonIslandsElectricityAuthority(“SIEA”or“theAuthority”),tradingasSolomonPower,asat31December2018andtherelatedstatementofcomprehensiveincome,statementofchangesinequityandstatementofcashflowsfortheyearendedonthatdateandreportasfollows:

Directors

TheDirectorswhowereinofficeatthedateofthisreportandatanytimeduringthefinancialyearandupuntilthedatethefinancialstatementswereauthorisedforissuewereasfollows:

Name

DavidK.C.Quan–chairman(reappointedDecember2018)HarryZoleveke-(retiredon1December2018)HenryKapu-(retiredon1December2018)JamesApaniai-(appointedon17December2018)JohnBHouanihau-(reappointedDecember2018)MurielHa’apue-Dakamae-(appointedon17December2018)RovalySike-(reappointedDecember2018)SebastianIlala-(retiredon1December2018)YolandeYates-(retiredon1December2018)

State of affairs

IncomplyingwiththeElectricityAct(Cap128)andtheStateOwnedEnterprisesActof2007,theDirectorsherebysubmitthe financial statements of SIEA consisting of the statement of financial position as at 31 December 2018, statement ofcomprehensiveincome,statementofchangesinequityandstatementofcashflowsofSIEAfortheyearthenended.

Principal activity

TheprincipalactivityofSIEAduringtheyearwasthegeneration,distributionandsaleofelectricityintheSolomonIslandsasgovernedbytheElectricityAct(Cap128).

Results

ThetotalcomprehensiveincomefortheyearwasSBD80,080,065(2017restated:SBD77,648,682).

Dividends

TheDirectorshavenotdeclaredadividendforthecurrentyear(2017:SBD4,000,000).

Going concern

TheDirectorsbelievethattheAuthoritywillbeabletocontinuetooperateforatleast12monthsfromthedateofthisreport.

Assets

TheDirectorstookreasonablestepsbeforetheAuthority’sfinancialstatementsweremadeouttoascertainthattheassetsoftheAuthoritywereshownintheaccountingrecordsatavalueequaltoorbelowthevaluethatwouldbeexpectedtoberealisedin the ordinary course of business.

Atthedateofthisreport,theDirectorswerenotawareofanycircumstanceswhichwouldrenderthevaluesattributabletotheassetsinthefinancialstatementsmisleading.

Bad and doubtful debts

TheDirectorstookreasonablestepsbeforetheAuthority’sfinancialstatementsweremadeouttoascertainthatallknownbaddebtswerewrittenoffandadequateprovisionwasmadefordoubtfuldebts.

Atthedateofthisreport,theBoardmembersarenotawareofanycircumstanceswhichwouldrendertheamountwrittenoffforbaddebts,ortheamountoftheprovisionfordoubtfuldebts,inadequatetoanysubstantialextent.

Directors’ Report



Directors’ benefits

NodirectoroftheAuthorityhas,sincethelastfinancialyear,receivedorbecomeentitledtoreceiveanybenefit(otherthanbenefitsincludedintheamountofconsultancyfeesanddirectorsfeesandexpensesorshowninthefinancialstatementsunderrelatedpartynote)byreasonofacontractmadewiththeAuthorityorarelatedcorporationwiththedirectororwithafirmofwhichhe/sheisamemberorwithacompanyinwhichadirectorhasasubstantialfinancialinterest.

Unusual transactions

TheresultsoftheAuthority’soperationsduringthefinancialperiodhavenot,intheopinionofthedirectorsbeensubstantiallyaffected by any item, transaction or event of amaterial and unusual nature other than those disclosed in the financialstatements.

Other circumstances

Atthedateofthisreport,theDirectorsarenotawareofanycircumstancesnototherwisedealtwithinthisreportorfinancialstatementswhichrenderamountsstatedinthefinancialstatementsmisleading.

Significant events

Therehasnotarisenintheintervalbetweentheendoftheyearandthedateofthisreportanyotheritem,transactionoreventofamaterialandunusualnaturethatislikely,intheopinionoftheDirectors,tosignificantlyaffecttheoperationsofSIEA,theresultsofthoseoperationsorthestateofaffairsofSIEAinsubsequentfinancialyears.

Datedat_________________this________dayof__________________2019.

SignedinaccordancewitharesolutionoftheDirectors.

_________________________________ _________________________________

Director Director

Directors’ Report (Continued)



Independent Auditor’s Report


INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SOLOMON ISLANDS ELECTRICITY AUTHORITY TRADING AS SOLOMON POWER

Report on the Audit of the Financial Statements

Opinion

I have in joint consultation with the Board of the Solomon Islands Electricity Authority (“the Authority”) pursuant toElectricityAct [Cap.128]contractedKPMGFijiwhich ispartof theKPMGInternationalnetwork toassistme toaudit theaccompanyingfinancialstatementsoftheSolomonIslandsElectricityAuthority,whichcomprisethestatementoffinancialpositionasat31December2018,andthestatementsofprofitorlossandothercomprehensiveincome,changesinequityandcashflowstatementsfortheyearthenended,andnotes1to29comprisingofasummaryofsignificantaccountingpoliciesand information.

Inmyopinion,theaccompanyingfinancialstatementsgiveatrueandfairviewofthefinancialpositionoftheAuthorityasat31December2018,andofitsfinancialperformance,itschangesinequityanditscashflowsfortheyearthenendedinaccordancewithInternationalFinancialReportingStandards(IFRS).

Basis for Opinion

I conducted my audit in accordance with International Standards on Auditing (ISAs). My responsibilities under thosestandards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of my report. I amindependentoftheAuthorityinaccordancewithInternationalEthicsStandardsBoardforAccountantsCodeofEthicsforProfessionalAccountants(IESBACode)andtheethicalrequirementsthatarerelevanttomyauditofthefinancialstatementsandIhavefulfilledmyotherethicalresponsibilitiesinaccordancewiththeserequirements.IbelievethattheauditevidenceIhaveobtainedissufficientandappropriatetoprovideabasisformyopinion.

Responsibilities of Management and Directors for the Financial Statement

Management are responsible for the preparation and fair presentation of the financial statements in accordance withInternational FinancialReportingStandards and for such internal control as themanagementdetermines isnecessary toenablethepreparationoffinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.

Inpreparingthefinancialstatements,themanagementareresponsibleforassessingtheAuthority’sabilitytocontinueasagoing concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors andmanagement either intend to liquidate theAuthority or to cease operations, or has no realisticalternative but to do so.

TheDirectorsareresponsibleforoverseeingtheAuthority’sfinancialreportingprocess.

Auditor’s Responsibilities/or the Audit of the Financial Statements

Myobjective is toobtain reasonableassuranceaboutwhether thefinancial statementsasawholeare free frommaterialmisstatement,whetherduetofraudorerror,andtoissueanauditors’reportthatincludesmyopinion.Reasonableassuranceisahighlevelofassurance,butisnotaguaranteethatanauditconductedinaccordancewithInternationalStandardsonAuditing(ISAs)willalwaysdetectamaterialmisstatementwhenitexists.Misstatementscanarisefromfraudorerrorandareconsideredmaterialif,individuallyorintheaggregate,theycouldreasonablybeexpectedtoinfluencetheeconomicdecisionsofuserstakenonthebasisofthesefinancialstatements.


Independent Auditor’s Report (Continued)


AspartofanauditinaccordancewithISAs,Iexerciseprofessionaljudgmentandmaintainprofessionalskepticismthroughouttheaudit.Ialso:

• Identifyandassesstherisksofmaterialmisstatementofthefinancialstatements,whetherduetofraudorerror,designandperformauditproceduresresponsivetothoserisks,andobtainauditevidencethatissufficientandappropriatetoprovideabasisformyopinion.Theriskofnotdetectingamaterialmisstatementresultingfromfraudishigherthanforoneresultingfrom error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtainanunderstandingofinternalcontrolrelevanttotheauditinordertodesignauditproceduresthatareappropriateinthecircumstances,butnotforthepurposeofexpressinganopinionontheeffectivenessoftheAuthority’sinternalcontrol.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and relateddisclosures made by management.

• Concludeontheappropriatenessofmanagement’suseofthegoingconcernbasisofaccountingand,basedontheauditevidenceobtained,whetheramaterialuncertaintyexistsrelatedtoeventsorconditionsthatmaycastsignificantdoubtontheAuthority’sabilitytocontinueasagoingconcern.IfIconcludethatamaterialuncertaintyexists,Iamrequiredtodrawattentioninmyauditors’reporttotherelateddisclosuresinthefinancialstatementsor,ifsuchdisclosuresareinadequate,tomodifymyopinion.Myconclusionsarebasedontheauditevidenceobtaineduptothedateofmyauditors’report.However,futureeventsorconditionsmaycausetheAuthoritytoceasetocontinueasagoingconcern.

• Evaluatetheoverallpresentation,structureandcontentofthefinancialstatements,includingthedisclosures,andwhetherthefinancialstatementsrepresenttheunderlyingtransactionsandeventsinamannerthatachievesfairpresentation.

Icommunicatewiththosechargedwithgovernanceregarding,amongothermatters,theplannedscopeandtimingoftheauditandsignificantauditfindings,includinganysignificantdeficienciesininternalcontrolthatIidentifiedduringmyaudit.

Report on Other Legal and Regulatory Requirements

Ihaveobtainedalltheinformationandexplanationswhich,tothebestofmyknowledgeandbelief,arenecessaryforthepurposes of my audit.

Inmyopinion:

i) properbooksofaccounthavebeenkeptbytheAuthority,sufficienttoenablefinancialstatementstobeprepared,sofarasitappearsfrommyexaminationofthosebooks;and

ii)tothebestofmyknowledgeandaccordingtotheinformationandexplanationsgiventousthefinancialstatementsgivetheinformationrequiredbyElectricityAct(Cap.128),inthemannersorequired

PeterLokay OfficeoftheAuditor-GeneralAuditor-General Honiara,SolomonIslands

Date:


Statement of Comprehensive Income

Restated Note 2018 2017 SBD SBD

Operating incomeElectricitysales 457,156,336 428,039,827Amortisationofdeferredincome 6,395,050 10,393,400Otheroperatingincome 9 5,486,818 2,545,325

Total operating income 469,038,204 440,978,551

ExpensesGenerationanddistribution 10 224,175,081 207,601,960Administration 11 81,605,507 59,683,883Operating 12 22,830,031 31,148,030Depreciationandamortisation 15 56,672,749 53,679,089Allowanceforuncollectability 18 3,714,358 11,396,373Interestexpense 30,434 389,387Inventory&assetwrite-off 92,140 (145,261)

Total expenses 389,120,299 363,753,461

Gain from operations 79,917,905 77,225,091Foreignexchangegain 162,160 423,591

Net profit for the year 80,080,065 77,648,682

Other comprehensive income

Total comprehensive income for the year 80,080,065 77,648,682

For the year ended 31 December 2018

The notes disclosed on pages 37 to 69 are an integral part of the financial statements.



Statement of Financial Position


Restated Note 2018 2017 SBD SBD

AssetsCurrent assets

Cashandcashequivalents 16 303,524,441 221,808,007Heldtomaturityinvestment - 45,542,195Inventories 17 22,451,241 20,910,019Receivables 18 61,766,690 50,142,206Prepayments 13,755,419 3,042,350

Total current assets 401,497,791 341,444,777

Non-current assetsProperty,plantandequipment 15 859,782,324 793,197,801Receivables 18 798,672 1,660,609Governmentbonds 19 30,000,000 -

Total non-current assets 890,580,996 794,858,410

Total assets 1,292,078,787 1,136,303,187

LiabilitiesCurrent liabilities

Deferredincome 21 6,392,961 6,392,961Tradeandotherpayables 22 40,844,195 32,007,084SolomonIslandsBorrowings 23 3,599,000 2,924,999Employeebenefits 24 6,778,721 193,818

Total current liabilities 57,614,877 41,518,861

Non-current liabilitiesDeferredincome 21 74,065,116 50,801,158SolomonIslandsBorrowings 23 10,928,257 -Employeebenefits 24 10,401,161 -

Total non-current liabilities 95,394,534 50,801,158

Total liabilities 153,009,411 92,320,019

EquityContributedcapital 20 246,933,170 246,933,170Assetrevaluationreserve 384,889,703 384,889,703Accumulatedprofit 507,246,503 412,160,294

Total equity 1,139,069,376 1,043,983,168

Total equity and liabilities 1,292,078,787 1,136,303,187

SignedforandonbehalfoftheBoardofDirectors

_________________________________ _________________________________

Director Director

As at 31 December 2018



Statement of Changes in Equity



Note Contributed Asset Accumulated Total capital revaluation retained reserves earnings SBD SBD SBD SBD

Balance at 1 January 2017 246,933,170 384,889,703 338,511,612 970,334,486

Total comprehensive loss for the yearNetprofitfortheyear-restated 14 - - 77,648,682 77,648,682

Transaction with owners of SIEA directlyrecognised in equity

Dividenddeclaredduringtheyear - - (4,000,000) (4,000,000)

Balance at 31 December 2017 - restated 246,933,170 384,889,703 412,160,294 1,043,983,168

Balance at 1 January 2018 - restated 246,933,170 384,889,703 412,160,294 1,043,983,168Impactofchangeinaccountingpolicy 6(b)(iii) - - 15,006,144 15,006,144

Adjusted balance at 1 January 2018 246,933,170 384,889,703 427,166,438 1,058,989,312

Total comprehensive income for the yearNetprofitfortheyear - - 80,080,065 80,080,065

Balance at 31 December 2018 246,933,170 384,889,703 507,246,503 1,139,069,376



Statement of Cash Flows



Note 2018 2017 SBD SBD

Operating ActivitiesCashreceiptsfromcustomers 463,137,780 420,124,487Cashpaymentstosuppliersandemployees (311,164,705) (319,714,724)

Net cash provided by Operating Activities 151,973,075 100,409,763

Investing ActivitiesNetredemptionofdebtsecurities 15,542,195 47,305,214Netpaymentsforproperty,plantandequipment (123,060,103) (132,866,048)

Net cash used in Investing Activities (107,517,908) (85,560,834)

Financing ActivitiesDividendpaid (4,000,000) -NetmovementinSIGBorrowings 11,602,259 -Cashreceiptsfromdonorgrants 29,659,008 5,771,599

Net cash provided by Financing Activities 37,261,267 5,771,599

Net increase in cash and cash equivalents 81,716,434 20,620,528Cashandcashequivalentsat1January 221,808,007 201,187,479

Cash and cash equivalents at 31 December 16 303,524,441 221,808,007



Notes to the Financial Statements



1 Reporting entity

SolomonIslandsElectricityAuthority(SIEAorAuthority)isastateownedenterpriseestablishedundertheElectricityAct (Cap128)1969. SIEA’s registeredofficeandprincipalplaceofbusiness is at theRanadiComplex,EastHoniara,Solomon Islands.

There are no subsidiary companies.

2 Nature of operations

TheprincipalactivityofSIEAisthegeneration,distributionandsaleofelectricityintheSolomonIslands.SIEAistheownerandoperatoroftheSolomonIslands’Governmentownedelectricitysupplysystems.

3 Basis of preparation

ThefinancialstatementshavebeenpresentedinaccordancewiththeState-OwnedEnterpriseAct2007,andinaccordancewithacceptedreportingprinciples.ThefinancialstatementscomplywithInternationalFinancialReportingStandards(IFRS)andotherapplicableFinancialReportingStandards.

This is the first set of the Authority’s annual financial statements in which IFRS 15 Revenue from Contracts withCustomersandIFRS9FinancialInstrumentshavebeenapplied.ChangestosignificantaccountingpoliciesaredescribedinNote6.

a) Presentation of currency

ThefinancialstatementsarepresentedinSolomonIslandDollars(“SBD”),whichisSIEA’sfunctionalandpresentationcurrency.Allfinancial information ispresented inSolomonIslandDollarsandhasbeenroundedto thenearestdollar,exceptwhenotherwiseindicated.

4 Measurement basis

Themeasurementbasisadoptedinthepreparationofthesefinancialstatementsishistoricalcostexceptasmodifiedforcertainnon-currentassetsandfinancialinstrumentsasidentifiedinspecificaccountingpoliciesbelow.

5 Use of estimates and judgments

ThepreparationofthefinancialstatementsinconformitywithIFRSrequiresmanagementtomakejudgements,estimatesand assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income andexpenses.Actualresultsmaydifferfromtheseestimates.

Estimatesandunderlyingassumptionsarereviewedonanongoingbasis.Revisiontoaccountingestimatesarerecognisedintheperiodinwhichtheestimatesarerevisedandinanyfutureperiodsaffected.

Information about critical judgments in applying accounting policies that have the most significant effect on theamountsrecognisedinthefinancialstatementsisincludedinthefollowingnotes:

•Note7(c)–Impairmentoffinancialassets •Note7(e)(iii)–Revaluationofnon-currentassets •Note7(e)(iv)–Impairmentofnon-currentassets •Note7(g)–Employeebenefits


Notes to the Financial Statements (Continued)



6 New Standards, amendments, annual improvements and interpretations which have been issued but not adopted as at 31 December 2018

ApartfromtheadoptionofIFRS9FinancialInstrumentsandIFRS15RevenuefromContractswithCustomersandIFRS16Leases,anumberofnewstandards,amendmentstostandardsandinterpretationsareeffectiveforannualperiodsbeginningonorafter1January2019,andhavenotbeenappliedinpreparingthesefinancialstatements.NoneofthenewstandardsisexpectedtohaveasignificanteffectonthefinancialstatementsofSIEAexceptforIFRS16“Leases”.

IFRS16‘Leases’,removestheclassificationofleasesaseitheroperatingleasesorfinanceleases–forthelessee–effectivelytreatingall leasesasfinance leases.Short-term leases (less than12months)and leasesof low-valueassets (suchaspersonalcomputers)areexemptfromtheleaseaccountingrequirements.Therearealsochangesinaccountingoverthelifeofthelease.Inparticular,companieswillnowrecogniseafront-loadedpatternofexpenseformostleases,evenwhentheypayconstantannualrentals.Lessoraccountingremainssimilartocurrentpractice–i.e.lessorscontinuetoclassifyleasesasfinanceandoperatingleases.Thestandardiseffectiveforannualreportingperiodsbeginningonorafter1January2019,withearlyadoptionpermitted.TheimpactofthisstandardonthefinancialstatementsoftheAuthorityhas not yet been fully determined.

Change in accounting policies

Exceptforthechangesbelow,theAuthorityhasconsistentlyappliedtheaccountingpoliciestoallperiodspresentedinthesefinancialstatements.

a) IFRS 15 Revenue from Contracts with Customers

SIEAhasadoptedIFRS15RevenuefromContractswithCustomerswithadateofinitialapplicationof1January2018.Asaresult,theAuthorityhaschangeditsaccountingpolicyforrevenuerecognitionasdetailedbelow.

TheAuthorityhasappliedIFRS15usingthecumulativeeffectmethod–i.e.byrecognisingthecumulativeeffectofinitiallyapplyingIFRS15asanadjustmenttotheopeningbalanceofequityat1January2018.Therefore,thecomparativeinformationhasnotbeenrestatedandcontinuestobereportedunderIAS18andIAS11.

Revenue from distribution and sale of electricity

Previously,theAuthorityrecognisedrevenuefromthegeneration,transmission,distributionandsaleofelectricityto domestic, commercial and industrial customers including unbilled revenue from the last billing date to the end of yearandotherelectricityrelatedrevenueupondeliveryofelectricitytothecustomer(point-in-time).Thecustomeraccepted theserviceand therelatedrisksandrewards fromtheserviceat thispoint in time.Revenuewas thusrecognised at this point provided that the revenue could be measured reliably and the recovery of the consideration wasprobable.

UnderIFRS15,revenueisrecognisedbytheAuthoritywhenorasitsatisfiesaperformanceobligationbytransferringaservicetoacustomer,eitheratapointintime(when)orovertime(as).Forthegeneration,distributionandsalesofelectricity,thecustomersimultaneouslyreceivesandconsumesthebenefitsprovidedastheAuthorityrenderstheservice.ThishasresultedinrevenuefromsaleofelectricitybeingrecognisedovertimewhichwaspreviouslyrecognisedatapointintimeunderIAS18.

Thereishowever,noimpactasat1January2018asaresultofchangesinaccountingforelectricityrevenue.Thisisbecauseasat1January2018,therewerenocontractsthatweredeterminedtobenotcomplete.





6 New Standards, amendments, annual improvements and interpretations which have been issued but not adopted as at 31 December 2018 continued

b) IFRS 9 - Financial Instruments

SIEAhasadoptedIFRS9FinancialInstrumentsissuedinJuly2014withadateofinitialapplicationof1January2018.TherequirementsofIFRS9representasignificantchangefromIAS39FinancialInstruments:RecognitionandMeasurement.

ThenatureandeffectsofthekeychangestotheAuthority’saccountingpoliciesresultingfromitsadoptionofIFRS9aresummarisedbelow.

As a result of the adoptionof IFRS9, theAuthority adopted consequential amendments to IAS1 “Presentationof Financial Statements”which requires impairment of financial assets to be presented in a separate line iteminthestatementofcomprehensiveincome.TheAuthority’sapproachwastopresentimpairmentlossesontradereceivablesas“allowanceforuncollectability”.NochangeisrequiredforthisapproachunderIFRS9.Impairmentlossesrelatingtootherfinancialassetsarepresentedunder‘financecosts’,similartothepresentationunderIAS39,and not presented separately in the statement of comprehensive income due to materiality considerations.

Additionally,theAuthorityadoptedconsequentialamendmentstoIFRS7FinancialInstruments:Disclosuresthatareappliedtodisclosuresabout2018butgenerallyhavenotbeenappliedtocomparativeinformation.

i. Classification of financial assets and financial liabilities

IFRS9containsthreeprincipalclassificationcategoriesforfinancialassets:measuredatamortisedcost,fairvaluethroughothercomprehensiveincome(FVOCI)andfairvaluethroughprofitorloss(FVTPL).TheclassificationoffinancialassetsunderIFRS9isgenerallybasedonthebusinessmodelinwhichafinancialassetismanagedanditscontractualcashflowcharacteristics.IFRS9eliminatesthepreviousIAS39categoriesofheldtomaturity,loans and receivables and available for sale.

ForanexplanationofhowtheAuthorityclassifiesandmeasuresfinancialassetsandaccountsforrelatedgainsandlossesunderIFRS9,seeNote7(b).

ii. Impairment of financial assets

IFRS 9 replaces the ‘incurred loss’ model in IAS 39 with an ‘expected credit loss’ (ECL) model. The newimpairmentmodelappliestofinancialassetsmeasuredatamortisedcost,contractassetsanddebtinvestmentsatFVOCI,butnottoinvestmentsinequityinstruments.

iii. Transition

ChangesinaccountingpoliciesresultingfromtheadoptionofIFRS9havebeenappliedretrospectively,exceptasdescribedbelow.

- Comparativeperiodshavenotbeen restated.Differences in the carrying amountsoffinancial assets andfinancialliabilitiesresultingfromtheadoptionofIFRS9arerecognisedinretainedearningsasat1January2018.Accordingly,theinformationpresentedfor2017doesnotgenerallyreflecttherequirementsofIFRS9andthereforeisnotcomparabletotheinformationpresentedfor2018underIFRS9.

- Thefollowingassessmentshavebeenmadeonthebasisofthefactsandcircumstancesthatexistedatthedate of initial application.

• Thedeterminationofthebusinessmodelwithinwhichafinancialassetisheld;and

• ThedesignationandrevocationofpreviousdesignationsofcertainfinancialassetsandfinancialliabilitiesasmeasuredatFVTPL.

- IfaninvestmentinadebtsecurityhadlowcreditriskatthedateofinitialapplicationofIFRS9,thentheCompanyassumedthatthecreditriskontheassethadnotincreasedsignificantlysinceitsinitialrecognition.






Impact of adopting IFRS 9 on opening balance SBD $000 Retained earnings ClosingbalanceunderIAS39(31December2017) 412,160 ImpactofexpectedcreditlossesunderIFRS9 15,006 OpeningbalanceunderIFRS9(1January2018) 427,166

iv) ClassificationoffinancialassetsandfinancialliabilitiesonthedateofinitialapplicationofIFRS9.

ThefollowingtableandtheaccompanyingnotesbelowexplaintheoriginalmeasurementcategoriesunderIAS39andthenewmeasurementcategoriesunderIFRS9foreachclassoftheAuthority’sfinancialassetsandfinancialliabilitiesasat1January2018.

31-Dec-17 1-Jan-18 Original New carrying Original New carrying amount amount under classification classification under IAS 39 IFRS 9 on under IAS 39 under IFRS 9 31-Dec-17 1-Jan-18 $000 $000

Financial assetsCashandcashequivalents Loansand receivables Amortisedcost 221,808 221,808Receivables Loansand receivables Amortisedcost 51,803 66,809Termdepositinvestments Held-to- Amortisedcost 45,542 45,542Total financial assets 319,153 334,159

Financial liabilitiesTradeandotherpayables Otherfinancial Otherfinancial liabilities liabilities 32,007 32,007Borrowings Otherfinancial Otherfinancial liabilities liabilities 2,925 2,925Total financial liabilities 34,932 34,932 SIEA’s accounting policies on the classification of financial instruments under IFRS 9 are set out inNote 7(b). Theapplicationofthesepoliciesresultedinthereclassificationssetoutinthetableaboveandfurtherexplainedbelow.

1. Debtandinvestmentsecuritiesthatwerepreviouslyclassifiedasheld-to-maturityarenowclassifiedatamortisedcost.TheAuthorityintendstoholdtheassetstomaturitytocollectcontractualcashflowsandthesecashflowsconsist solely of payments of principal and interest on the principal amount outstanding. No allowance forimpairmentwasrecognisedinopeningretainedearningsat1January2018ontransitiontoIFRS9.

2. TradeandotherreceivablesthatwereclassifiedasloansandreceivablesunderIAS39arenowclassifiedatamortisedcost.Adecreaseof$15,006,144intheallowanceforimpairmentwasrecognisedinopeningretainedearningsat1January2018ontransitiontoIFRS9.






3. CashandcashequivalentsthatwereclassifiedasloansandreceivablesunderIAS39arenowclassifiedatamortisedcost.Noallowanceforimpairmentwasrecognisedinopeningretainedearningsat1January2018ontransitiontoIFRS9.

ThefollowingtablereconcilesthecarryingamountsoffinancialassetsunderIAS39tothecarryingamountsunderIFRS9ontransitiontoIFRS9on1January2018.

carrying IFRS 9 amount at 31 carrying December Re-measurement amount at 1 2017 January 2018 $000 $000 $000

Financial assetsAmortised costCashandcashequivalents:

Broughtforward:Loansandreceivables 221,808Carriedforward:Amortisedcost 221,808

Tradeandotherreceivables:Broughtforward:Loansandreceivables 51,803Re-measurement 15,006Carriedforward:Amortisedcost 66,809

Debtsecurities:Broughtforward:Loansandreceivables 45,542Carriedforward:Amortisedcost 45,542

7 Summary of significant accounting policies

a) Revenue

Revenueismeasuredbasedontheconsiderationspecified inacontractwithacustomerandexcludesamountscollectedonbehalfofthirdparties.SIEArecognisesrevenuewhenittransferscontroloveraproductorservicetoacustomer.

Nature and timing of satisfaction of performance obligations and significant payment terms

ThereisanimpliedcontractbetweenacustomerandtheAuthorityforthepurchase,delivery,andsaleofelectricity.This represents a promise to transfer a series of distinct goods that are substantially the same and that have the samepatternoftransfertothecustomer.Thecustomerobtainscontrolofthegood(electricity)whendeliveredandconsumed by them over time.

Invoicesareissuedmonthlyandareusuallypayablewithin14daysthusthereisnosignificantfinancingcomponent.Additionally,discountisprovidedtosomecustomersagainsttheapprovedtariffrates.

Contractwith customers permit quantities of electricity consumed to be estimated based on previousmonths’averageconsumptionintheeventtheAuthoritycouldnotconductthemonthlymeterreadings.





7 Summary of significant accounting policies continued

Revenue recognition under IFRS 15 applicable from 1 January 2018

RevenueincludingupfrontfeesisrecognisednetofGSTanddiscountovertimeandtheprogressisdeterminedbasedonkilowatts(units)consumed.ThisprovideafaithfuldepictionofthetransferofthegoodasthecustomersimultaneouslyreceivesandconsumesthebenefitsprovidedbytheAuthority’sperformanceoftheelectricityrevenuecontract.

Thetransactionprice isdeterminedbasedontariffsapprovedbyMinistryofMines,EnergyandRuralElectrificationatthetimetheservicehadbeenrenderedandunitsofkilowattsconsumedbythecustomers.Thetransactionpriceisconsideredtobevariableduetothefollowing:

-Tiered-pricingforcustomers;and -Estimateofunbilledelectricitysuppliedtocustomers.

The variable consideration is included in the transaction price only to the extent that it is ‘highly probable’ that asignificantreversal intheamountofcumulativerevenuerecognisedwillnotoccurwhentheuncertaintyassociatedwiththevariableconsiderationisresolved.Inrespecttotheconsiderationsfrom:

a) Readmetercustomers,thesearenotconstrainedbecauseitiscalculatedbasedonactualunitsconsumedduringtheperiod,thusvariabilityduetotiered-pricingonconsiderationfortheperiodisknown.

b) Unreadmetercustomers, theunbilledelectricity suppliedatperiodend isestimatedbasedonpreviousperiods’averageconsumption(expectedvalue).Similarly,themonthlybilledconsiderationisestimatedaswell.Managementconsider this to be best estimate of the transaction pricewithout incurring undue cost and time and thus notnecessaryforSIEAtoquantifyallpossibleoutcomesusingcomplexmodelsandtechniques.Additionally,thefulltransactionpricenotconsideredconstrainedasthelikelihoodandpotentialmagnitudeoftherevenuereversalisnotconsideredbymanagementtobesignificant.

SIEAhadappliedthepracticalexpedientinparagraph121ofIFRS15anddidnotdiscloseinformationaboutremainingperformance obligations that have an original expected duration of one year or less.

Revenue recognition under IAS 18 and IAS 11 applicable before 1 January 2018

SIEA recognises revenue as it provides services or delivers products to customers and the consideration becomesrecoverable.Revenueismeasuredatthefairvalueoftheconsiderationreceivedorreceivable.

b) Financial instruments

i) Recognition and initial measurement

Tradereceivablesanddebtsecuritiesissuedareinitiallyrecognisedwhentheyareoriginated.AllotherfinancialassetsandfinancialliabilitiesareinitiallyrecognisedwhentheAuthoritybecomesapartytothecontractualprovisions of the instrument.

Afinancialasset(unlessitisatradereceivablewithoutasignificantfinancingcomponent)orfinancialliabilityisinitiallymeasuredatfairvalueplus,foranitemnotatFVTPL,transactioncoststhataredirectlyattributabletoitsacquisitionorissue.Atradereceivablewithoutasignificantfinancingcomponentisinitiallymeasuredatthe transaction price.






ii) Classification and subsequent measurement

Financial assets – policy applicable from 1 January 2018

Oninitialrecognition,afinancialassetisclassifiedasmeasuredat:amortisedcost;FVOCI–debtinvestment;FVOCI–equityinvestment;orFVTPL.

FinancialassetsarenotreclassifiedsubsequenttotheirinitialrecognitionunlesstheAuthoritychangesitsbusinessmodelformanagingfinancialassetsinwhichcaseallaffectedfinancialassetsarereclassifiedonthefirstdayofthefirstreportingperiodfollowingthechangeinthebusinessmodel.

AfinancialassetismeasuredatamortisedcostifitmeetsbothofthefollowingconditionsandisnotdesignatedasatFVTPL:

− itisheldwithinabusinessmodelwhoseobjectiveistoholdassetstocollectcontractualcashflows;and

− itscontractualtermsgiveriseonspecifieddatestocashflowsthataresolelypaymentsofprincipalandintereston the principal amount outstanding.

AdebtinvestmentismeasuredatFVOCIif itmeetsbothofthefollowingconditionsandisnotdesignatedasatFVTPL:

− itisheldwithinabusinessmodelwhoseobjectiveisachievedbybothcollectingcontractualcashflowsandsellingfinancialassets;and

− itscontractualtermsgiveriseonspecifieddatestocashflowsthataresolelypaymentsofprincipalandintereston the principal amount outstanding.

Oninitialrecognitionofanequityinvestmentthatisnotheldfortrading,theAuthoritymayirrevocablyelecttopresentsubsequentchangesintheinvestment’sfairvalueinothercomprehensiveincome(OCI).Thiselectionismade on an investment by investment basis.

All financial assets not classified asmeasured at amortised cost or FVOCI as described above aremeasured atFVTPL.Oninitialrecognition,theAuthoritymayirrevocablydesignateafinancialassetthatotherwisemeetstherequirementstobemeasuredatamortisedcostoratFVOCIasatFVTPLifdoingsoeliminatesorsignificantlyreducesanaccountingmismatchthatwouldotherwisearise.

Financial assets: Business model assessment – Policy applicable from 1 January 2018

TheAuthoritymakesanassessmentoftheobjectiveofthebusinessmodelinwhichafinancialassetisheldataportfoliolevelbecausethisbestreflectsthewaythebusinessismanagedandinformationisprovidedtomanagement.Theinformationconsideredincludes:

− thestatedpoliciesandobjectivesfortheportfolioandtheoperationofthosepoliciesinpractice.Theseincludewhethermanagement’s strategy focuses on earning contractual interest income,maintaining a particularinterestrateprofile,matchingthedurationofthefinancialassetstothedurationofanyrelatedliabilitiesorexpectedcashoutflowsorrealisingcashflowsthroughthesaleoftheassets;

− howtheperformanceoftheportfolioisevaluatedandreportedtotheAuthority’smanagement;

− therisksthataffecttheperformanceofthebusinessmodel(andthefinancialassetsheldwithinthatbusinessmodel)andhowthoserisksaremanaged;

− howmanagersofthebusinessarecompensated–e.g.whethercompensationisbasedonthefairvalueoftheassetsmanagedorthecontractualcashflowscollected;and,

− thefrequency,volumeandtimingofsalesoffinancialassetsinpriorperiods,thereasonsforsuchsalesandexpectations about future sales activity.






Transfersoffinancialassetstothirdpartiesintransactionsthatdonotqualifyforde-recognitionarenotconsideredsalesforthispurpose,consistentwiththeAuthorityrecognitionoftheassets.

FinancialassetsthatareheldfortradingoraremanagedandwhoseperformanceisevaluatedonafairvaluebasisaremeasuredatFVTPL.

Financial assets: Assessment whether contractual cash flows are solely payments of principal and interest – Policy applicable from 1 January 2018

Forthepurposesofthisassessment,‘principal’isdefinedasthefairvalueofthefinancialassetoninitialrecognition.‘Interest’isdefinedasconsiderationforthetimevalueofmoneyandforthecreditriskassociatedwiththeprincipalamountoutstandingduringaparticularperiodoftimeandforotherbasiclendingrisksandcosts(e.g.liquidityriskandadministrativecosts),aswellasaprofitmargin.

Inassessingwhetherthecontractualcashflowsaresolelypaymentsofprincipalandinterest,theAuthorityconsidersthecontractualtermsoftheinstrument.Thisincludesassessingwhetherthefinancialassetcontainsacontractualtermthatcouldchangethetimingoramountofcontractualcashflowssuchthatitwouldnotmeetthiscondition.Inmakingthisassessment,theAuthorityconsiders:

− contingenteventsthatwouldchangetheamountortimingofcashflows;

− termsthatmayadjustthecontractualcouponrate,includingvariableratefeatures;

− prepayment and extension features; and,

− termsthatlimittheAuthority’sclaimtocashflowsfromspecifiedassets(e.g.nonrecoursefeatures).

A prepayment feature is consistent with the solely payments of principal and interest criterion if the prepaymentamountsubstantiallyrepresentsunpaidamountsofprincipalandinterestontheprincipalamountoutstanding,whichmayincludereasonableadditionalcompensationforearlyterminationofthecontract.Additionally,forafinancialassetacquiredatasignificantdiscountorpremiumtoitscontractualparamount,afeaturethatpermitsorrequiresprepaymentatanamountthatsubstantiallyrepresentsthecontractualparamountplusaccrued(butunpaid)contractualinterest(whichmayalsoincludereasonableadditionalcompensationforearlytermination)istreatedasconsistentwiththiscriterionifthefairvalueoftheprepaymentfeatureisinsignificantatinitialrecognition.

Financial assets: Subsequent measurement and gains and losses – Policy applicable from 1 January 2018

Financial assets at FVTPL Theseassetsaresubsequentlymeasuredatfairvalue.Netgainsandlosses,includinganyinterestordividendincome,arerecognisedinprofitorloss.

Financial assets at amortised cost Theseassetsaresubsequentlymeasuredatamortisedcostusingtheeffectiveinterest method. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognisedinprofitorloss.Anygainorlossonde-recognitionisrecognisedinprofitorloss.

Debt investments at FVOCI These assets are subsequently measured at fair value. Interest incomecalculated using the effective interest method, foreign exchange gains and losses and impairment are recognised in profit or loss. Other net gainsand losses are recognised in OCI. On de-recognition, gains and lossesaccumulated inOCI are reclassified to profit or loss. These include shortterminvestments(termdeposits).






Equity investments at FVOCI These assets are subsequently measured at fair value. Dividends arerecognisedasincomeinprofitorlossunlessthedividendclearlyrepresentsa recovery of part of the cost of the investment. Other net gains and losses are recognised in OCI and are never reclassified to profit or loss. TheAuthority’sequityinvestmentsrelates(ifany)wouldrelatetoinvestmentsin listed securities.

Financial instruments – policy applicable before 1 January 2018

i) Non-derivative financial assets

SIEAinitiallyrecognisesloansandreceivablesonthedatethattheyareoriginated.Allotherfinancialassetsarerecognisedinitiallyonthetradedate,whichisthedatethatSIEAbecomesapartytothecontractualprovisionsofthe instruments.

SIEAderecognisesafinancialassetwhenthecontractualrightstothecashflowsfromtheassetexpire,orittransferstherightstoreceivethecontractualcashflowsonthefinancialassetinatransactioninwhichsubstantiallyalltherisksandrewardsofownershipofthefinancialassetaretransferred.AnyinterestintransferredfinancialassetsthatiscreatedorretainedbySIEAisrecognisedasaseparateassetorliability.

Financialassetsandliabilitiesareoffsetandthenetamountpresentedinthestatementoffinancialpositionwhen,andonlywhen,SIEAhasalegalrighttooffsettheamountsandintendseithertosettleonanetbasisorrealisetheasset and settle the liability simultaneously.

SIEAclassifiesnon-derivativefinancialassetsintoloansandreceivables.

Loans and receivables

Loansandreceivablesarefinancialassetswithfixedordeterminablepaymentsthatarenotquotedinanactivemarket.Suchassetsarerecognisedinitiallyatfairvalueplusanydirectlyattributabletransactioncosts.Subsequentto initial recognition, loans and receivables are measured at amortised cost using the effective interest method, less any impairment losses.

Cash and cash equivalents

Cashandcashequivalentscomprisecashonhandandcashatbankbalance.

Accounts receivables

Accounts receivable are recorded initially at fair value and subsequentlymeasured at amortised costusing theeffective interest rate method, less any provision for doubtful debts.

Subsequently, appropriate allowances for estimated irrecoverable amounts are recognised in the statement ofcomprehensiveincomewhenthereisobjectiveevidencethattheassetisimpaired.






Other financial assets at fair value through statement of comprehensive income

SIEAhasnootherfinancialassetssuchasderivativesorhedginginstruments.Thesemaybedevelopedinthefuturetoprovidebettermanagementofelectricitypricefluctuations.Iftheyareusedinthefuture,therealisedandunrealisedgainsandlossesarisingfromchangesinthefairvalueswillbeincludedinthestatementofcomprehensiveincomeintheperiodinwhichtheyarise.

Held-to-maturity investments

SIEAhas“heldtomaturity”investmentsthataremeasuredinitiallyatfairvalue.TheseinvestmentsareheldtoprovidesecurityforLetterofCreditgiventosuppliersforvariouscapitalprojectsbeingconstructedforSIEA.Thelengthoftimetomaturityismatchedtothekeymilestonesofthesecapitalprojectsandareusuallylessthanayear.Anominalinterestrateof0.5%perannumisearnedontheseinvestments.

Subsequenttoinitialrecognition,theyaremeasuredatamortisedcostusingtheeffectiveinterestmethod.

ii) Non-derivative financial liabilities

Allfinancialliabilitiesarerecognisedinitiallyonthetradedate,whichisthedatethatSIEAbecomesapartytothecontractualprovisionsoftheinstrument.SIEAderecognisesafinancialliabilitywhenitscontractualobligationsaredischarged, cancelled or expire.

Financialassetsandliabilitiesareoffsetandthenetamountpresentedinthestatementoffinancialpositionwhen,andonlywhen,SIEAhasalegalrighttooffsettheamountsandintendseithertosettleonanetbasisortorealisethe asset and settle the liability simultaneously.

SIEAclassifiesnon-derivativefinancialliabilitiesintotheotherfinancialliabilitiescategory.Suchfinancialliabilitiesarerecognisedinitiallyatfairvalueplusanydirectlyattributabletransactioncosts.Subsequenttoinitialrecognition,thesefinancialliabilitiesaremeasuredatamortisedcostusingtheeffectiveinterestmethod.

Otherfinancial liabilities comprise tradeandotherpayables, andSolomon IslandsGovernment loanwhicharecarried at amortised cost.

iii) Contributed capital

ContributedcapitalrepresentsfundscontributedbytheGovernmenttoestablishSIEAasastatutoryenterpriseandanyothersubsequentcontributionsbyGovernment.






c) Impairment

i) Non-derivative financial assets

Policy applicable from 1 January 2018

Financial instruments:

SIEArecogniseslossallowancesforexpectedcreditlosses(ECL)onfinancialassetsmeasuredatamortisedcost.

SIEAmeasureslossallowancesatanamountequaltolifetimeECL,exceptforthefollowing,whicharemeasuredas12monthECL:

− debtsecuritiesthataredeterminedtohavelowcreditriskatthereportingdate;and

− otherdebtsecuritiesandcashatbankbalancesforwhichcreditrisk(i.e.theriskofdefaultoccurringovertheexpectedlifeofthefinancialinstrument)hasnotincreasedsignificantlysinceinitialrecognition.

Lossallowances for trade receivables isalwaysmeasuredatanamountequal to lifetimeECLas itdoesnotincludesignificantfinancingcomponent.

WhendeterminingwhetherthecreditriskofafinancialassethasincreasedsignificantlysinceinitialrecognitionandwhenestimatingECL,theAuthorityconsidersreasonableandsupportableinformationthatisrelevantandavailablewithoutunduecostoreffort.Thisincludesbothquantitativeandqualitativeinformationandanalysis,basedontheAuthority’shistoricalexperienceandinformedcreditassessmentandincludingforward-lookinginformation.

SIEAassumesthatthecreditriskonafinancialassethasincreasedsignificantlyifitismorethan30dayspastdue.

SIEAconsidersafinancialassettobeindefaultwhen:

− theborrowerisunlikelytopayitscreditobligationstoSIEAinfull,withoutrecoursebytheAuthoritytoactionssuchasrealisingsecurity(ifanyisheld);or

− thefinancialassetismorethan90dayspastdue.

SIEAconsidersadebtsecuritytohavelowcreditriskwhenitscreditriskratingisequivalenttothegloballyunderstooddefinitionof‘investmentgrade’.TheAuthorityconsidersthistobeBaa3orhigherperratingagencyMoody’sorBBB-orhigherperratingagencyStandards&Poor’s.

LifetimeECLs are the ECLs that result from all possible default events over the expected life of a financialinstrument.

12-monthECLsaretheportionofECLsthatresultfromdefaulteventsthatarepossiblewithinthe12monthsafterthereportingdate(orashorterperiodiftheexpectedlifeoftheinstrumentislessthan12months).

ThemaximumperiodconsideredwhenestimatingECLsisthemaximumcontractualperiodoverwhichSIEAisexposedtocreditrisk.

MeasurementofECLs:

Trade receivables

SIEAusesaprovisionmatrixtodeterminethelifetimeexpectedcreditlosses.ItisbasedontheSIEA’shistoricalobserveddefaultrates,andisadjustedbyaforward-lookingestimatethatincludestheprobabilityofaworseningeconomicenvironmentwithinthenextyear.Ateachreportingdate,theAuthorityupdatestheobserveddefaulthistoryandforward-lookingestimates.






Debt securities including cash at bank and term deposit investments

ECLsareaprobability-weightedestimateofcreditlosses.Creditlossesaremeasuredasthepresentvalueofallcashshortfalls(i.e.thedifferencebetweenthecashflowsduetotheentityinaccordancewiththecontractandthecashflowsthatSIEAexpectstoreceive).

ECLsarediscountedattheeffectiveinterestrateofthefinancialasset.

Credit-impaired financial assets:

At each reportingdate, theAuthority assesseswhetherfinancial assets carried at amortised cost are credit-impaired.Afinancialassetis‘credit-impaired’whenoneormoreeventsthathaveadetrimentalimpactontheestimatedfuturecashflowsofthefinancialassethaveoccurred.

Evidencethatafinancialassetiscredit-impairedincludesthefollowingobservabledata:

− significantfinancialdifficultyoftheborrowerorissuer;

− abreachofcontractsuchasadefaultorbeingmorethan90dayspastdue;

− itisprobablethattheborrowerwillenterbankruptcyorotherfinancialreorganisation;or

− thedisappearanceofanactivemarketforasecuritybecauseoffinancialdifficulties.

Presentation of allowance for ECL in the statement of financial position:

Lossallowancesforfinancialassetsmeasuredatamortisedcostaredeductedfromthegrosscarryingamountofthe assets.

Write-off:

Thegrosscarryingamountofafinancialassetiswrittenoff(eitherpartiallyorinfull)totheextentthatthereisnorealisticprospectofrecovery.ThisisgenerallythecasewhenSIEAdeterminesthatthedebtordoesnothaveassetsorsourcesof incomeoradequatecustomerdeposits thatcouldgeneratesufficientcashflows torepaytheamountssubjecttothewrite-off.However,financialassetsthatarewrittenoffcouldstillbesubjecttoenforcementactivitiesinordertocomplywiththeAuthority’sproceduresforrecoveryofamountsdue.

Policy applicable before 1 January 2018

Afinancialassetnotcarriedatfairvaluethroughprofitorlossisassessedateachreportingdatetodeterminewhether there is objective evidence that it is impaired. A financial asset is impaired if objective evidenceindicates that a loss event has occurred after the initial recognition of the asset, and that the loss event has a negativeeffectontheestimatedfuturecashflowsofthatassetthatcanbeestimatedreliably.

Objectiveevidencethatfinancialassetsareimpairedcanincludedefaultordelinquencybyadebtor,restructuringofanamountduetoSIEAontermsthatSIEAwillnotconsiderotherwise,indicationsthatadebtororissuerwillenterbankruptcy,adversechangesinthepaymentstatusofborrowers,economicconditionsthatcorrelatewithdefaultsorthedisappearanceofanactivemarketforasecurity.

ii) Loans and receivables

SIEAconsidersevidenceofimpairmentforloansandreceivablesatbothaspecificassetandcollectivelevel.Allindividuallysignificantreceivablesareassessedforspecificimpairment.Allindividuallysignificantloansandreceivablesfoundnottobespecificallyimpairedarethencollectivelyassessedforanyimpairmentthathasbeenincurredbutnotyetidentified.






In assessing collective impairment SIEA uses historical trends of the probability of default, the timingof recoveries and the amount of loss incurred, adjusted formanagement’s judgment as towhether currenteconomicconditionsandcreditconditionsaresuchthattheactuallossesarelikelytobegreaterorlessthansuggested by historical trends.

Animpairment loss inrespectofafinancialassetmeasuredatamortisedcost iscalculatedas thedifferencebetweenitscarryingamountandthepresentvalueoftheestimatedfuturecashflowsdiscountedattheasset’soriginaleffectiveinterestrate.Lossesarerecognisedinstatementofcomprehensiveincomeandreflectedinanallowanceaccountagainstloansandreceivables.Whenasubsequenteventcausestheamountofimpairmentloss to decrease, the decrease is reversed through statement of comprehensive income.

d) Inventories

Inventoryisrecordedatthelowerofcostandnetrealisablevalueafterdueconsiderationforexcessandobsoleteitems.Thecostofinventoriesisbasedonaweightedaveragebasisandincludesexpenditureincurredinacquiringthe inventories and other costs incurred in bringing them to their existing location and condition.

e) Property, plant and equipment

Property,plantandequipmentareinitiallyrecognisedatcostlessaccumulateddepreciationandimpairmentlosses.Costisdeterminedbyincludingallcostsdirectlyassociatedwithbringingtheassetstotheirlocationandconditionfortheirintendeduse.Therecognitionthresholdis$5,000.

Purchaseditemsincludingsoftwarethatisintegraltothefunctionalityoftherelatedequipmentiscapitalisedaspartofthatequipment.Whenpartsofanitemofproperty,plantandequipmenthavemateriallydifferentusefullives,theyareaccountedforasseparateitems(majorcomponents)ofproperty,plantandequipment.

Thegainsandlossesondisposalofanitemofproperty,plantandequipmentaredeterminedbycomparingtheproceedsfromdisposalwiththecarryingamountofproperty,plantandequipmentandisrecognisednetwithinotherincome/otherexpensesinstatementofcomprehensiveincome.Whenrevaluedassetsaresold,anyrelatedamount included in the asset revaluation reserve is transferred to retained earnings.

i) Subsequent expenditure

Thecostofreplacingpartofanitemofproperty,plantandequipmentisrecognisedinthecarryingamountoftheitemifitisprobablethatthefutureeconomicbenefitsembodiedwithinthecomponentwillflowtoSIEAanditscostcanbemeasuredreliably.Thecostsoftheday-to-dayservicingandmaintenanceofproperty,plantandequipmentarerecognisedinprofitorlossasincurred.

ii) Depreciation

Depreciation is based on either the cost or revalued amount of an asset less its residual value. Significantcomponents of individual assets are assessed and if a component has a useful life that is different from the remainder of that asset, that component is depreciated separately.

Depreciationofproperty,plantandequipmentiscalculatedusingthestraightlinemethodtowritedownthecostorrevaluedamountofproperty,plantandequipmentto itsestimatedresidualvalueover itsestimateduseful life.






ThestandardestimatedusefullivesanddepreciationratesforSIEAassetclassesareasfollows:

Land-Freehold-unlimited Land-Leasehold-50or75yearsaspertheleaseagreements Buildings-Operationalincludingpowerstations-20to30years Buildings-Non-operational-15to50years Generators-10to40years Plant&equipment-10to25years Distributionnetwork-20to60years Furniture&equipment-5years Furniture&equipment-Informationtechnology-3to5years Motorvehicles-5years Tools-3to5years

Theusefullivesandresidualvaluesarereviewedateachreportingdateandadjustedifappropriate.

iii) Revaluation of property, plant and equipment

Land, property, plant and buildings are shown at fair value, based on valuations by external independentvaluers,lesssubsequentdepreciationofassets.ThefairvaluesarerecognisedinthefinancialstatementsofSIEA,andarereviewedattheendofeachreportingperiodtoensurethatthecarryingvalueofassetsisnotmateriallydifferent to their fair values.

The primary valuation methodologies used in valuing land and buildings are the direct comparison and incomecapitalisationapproachescrosscheckedwithcostapproach.Thesemethodologiesusemarketderivedassumptions, including rents, capitalisation and terminal rates, and discount rates obtained from analysed transactions. The adopted methodologies are considered to provide the best estimate of value.

TheDirectorsproposetohavesuchassetrevaluationseverythreeorfiveyears.

Electricity infrastructureassets arevaluedonanoptimiseddepreciated replacement cost (ODRC)approach.TheODRCvaluationofelectricityassetsisgenerallyconsideredtorepresenttheminimumcostofreplacingorreplicatingtheservicepotentialembodiedinthenetworkwithmodernequivalentassetsinthemostefficientwaypossible fromanengineeringperspective,giventheservicerequirements, theageandconditionof theexisting assets and replacement in the normal course of business.

Anyrevaluationincreasearisingontherevaluationofassetsiscreditedtotheassetrevaluationreserve,exceptto the extent that it reverses a revaluation decrease for the same asset previously recognised as an expense in profitorloss,inwhichcasetheincreaseiscreditedtotheprofitorlosstotheextentofthedecreasepreviouslycharged.Adecreaseincarryingamountarisingontherevaluationofassetsischargedasanexpenseinstatementof comprehensive income to the extent that it exceeds the balance, if any, held in the asset revaluation reserve relating to a previous revaluation of that asset.

Depreciationonrevaluedassetsischargedtoprofitorloss.Onthesubsequentsaleorretirementofarevaluedasset, the attributable revaluation surplus remaining in the asset revaluation reserve, is transferred directly to retained earnings.






e) Property, plant and equipment continued

iv) Impairment of non-financial assets

Ateachreportingdate,SIEAreviewsthecarryingamountsofitstangibleandintangibleassetstodeterminewhetherthereisanyindicationthatthoseassetshavesufferedanimpairmentloss.Ifanysuchindicationexists,therecoverableamountoftheasset isestimatedinordertodeterminetheextentoftheimpairmentloss(ifany).Wheretheassetdoesnotgeneratecashflowsthatarelargelyindependentfromotherassets,thecompanyestimatestherecoverableamountofthecashgeneratingunittowhichtheassetbelongs.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested forimpairmentannuallyandwheneverthereisanindicationthattheassetmaybeimpaired.

Recoverableamountisthehigheroffairvaluelesscoststosellandvalueinuse.Inassessingvalueinuse,theestimated future cashflowsarediscounted to theirpresentvalueusingapre-taxdiscount rate that reflectscurrentmarketassessmentsofthetimevalueofmoneyandtherisksspecifictotheassetforwhichtheestimatesoffuturecashflowshavenotbeenadjusted.

Iftherecoverableamountofanasset(orcashgeneratingunit)isestimatedtobelessthanitscarryingamount,thecarryingamountoftheasset(orcashgeneratingunit)isreducedtoitsrecoverableamount.Animpairmentlossisrecognisedinprofitorlossimmediately,unlesstherelevantassetiscarriedatfairvalue,inwhichcasetheimpairment loss is treated as a revaluation decrease.

Whereanimpairmentlosssubsequentlyreverses,thecarryingamountoftheasset(orcashgeneratingunit)isincreased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amountdoesnotexceedthecarryingamountthatwouldhavebeendeterminedhadnoimpairmentlossbeenrecognisedfortheasset(orcashgeneratingunit)inprioryears.Areversalofanimpairmentlossisrecognisedinprofitorlossimmediately,unlesstherelevantassetiscarriedatfairvalue,inwhichcasethereversaloftheimpairmentlossistreatedasarevaluationincreasethroughOCI.

v) Intangible assets

Thecostofacquiringanintangibleassetisamortisedfromthedatetheunderlyingassetisheldreadyforuseonastraightlinebasisovertheperiodofitsexpectedbenefit,whichisasfollows:

Software-3to7years Easements-indefinite

Easementsaredeemedtohaveanindefiniteusefullife,asthecontractsdonothaveamaturitydateandSIEAexpects to use the easements indefinitely. Therefore, easements are not amortised. Their value is assessedannually for impairment, and their carrying value iswritten down if found impaired. SIEA capitalises thedirectcostsassociatedwithputtingtheeasementsinplace.Thesecostsincluderegistrationandassociatedlegalcostsandalsoanyinjuriousaffectionpayments.WhereSIEAbuyslandandthenestablishesaneasement,avaluationisobtainedfortheeasement.Thisvaluationisusedasdeemedeasementcostandcapitalised,withacorresponding reduction in the land valuation.

CertaineasementsmayhavebeendonatedbytheCrown.Thesearerecognisedatcost($nil)plusanydirectcostassociatedwithputtingtheeasementinplace.

Forintangibleswithafinitelife,wheretheperiodsofexpectedbenefitorrecoverablevalueshavediminishedduetotechnologicalchangeormarketconditions,amortisationisacceleratedorthecarryingvalueiswrittendown.






f) Capital work in progress

Capital work in progress is recorded at cost. Cost is determined by including all costs directly associatedwithbringingtheassetstotheirlocationandcondition.Financecostsincurredduringtheperiodoftimethatisrequiredtocompleteandpreparetheasset for its intendedusearecapitalisedaspartof thetotalcost forcapitalworkinprogress.Thefinancecostscapitalisedarebasedonthecompany’sweightedaveragecostofborrowing.Assetsaretransferredfromcapitalworkinprogresstoproperty,plantandequipmentastheybecomeoperationalandavailableforit’sintendeduse.

g) Employee benefits

Provisionismadeforbenefitsaccruingtoemployeeswhenitisprobablethatsettlementwillberequiredandtheyare capable of being measured reliably.

Short-term benefits

Short-termbenefits comprisesof accrued salaries andwages,bonus, annual leave, andentitlement toSolomonIslandsNationalProvidentFundareexpensesastherelatedserviceisprovided.

Provisionsmadeinrespectofemployeebenefitsexpectedtobesettledwithin12months,aremeasuredat theirnominal values using the rate expected to apply at the time of settlement.

Long-term benefits

Aearlyretirementschemeisalong-termbenefitprovidedbySIEAtoitsemployees.

Provisionsmadeinrespectofemployeebenefitsthatarenotexpectedtobesettledwithin12monthsaremeasuredatthepresentvalueoftheestimatedcashflowstobemadebySIEAinrespectoffuturebenefitsthatemployeeshaveearned in return for their services in the current and prior periods.

h) Taxation

UndertheElectricityAct,SIEAisexemptfromincometax.

i) Foreign currency transactions

Transactions denominated in a foreign currency that are not hedged are converted at the Solomon Islands exchange rate at the date of the transaction. Foreign currency receivables and payables at balance date are translated atexchange rates prevailing at balance sheet date. Exchange differences arising on the translation or settlement of accounts payable and receivable in foreign currencies are recognised in the statement of comprehensive income.

j) Cash flow statement

For thepurposes of the cashflow statement, cash is considered tobe cashheld inbankaccounts (net of bankoverdrafts)plushighlyliquidinvestmentsthatarereadilyconvertibletoknownamountsofcash,whicharesubjecttoaninsignificantriskofchangesinvalue.Cashflowsfromcertainitemsaredisclosednet,duetotheshorttermmaturities and volume of transactions involved.






k) Grants

Anunconditionalgrantrelatedtoanassetisrecognisedinstatementofcomprehensiveincomeasotherincomewhenthegrantbecomesreceivable.

OthergrantsarerecognisedinitiallyasdeferredincomeatfairvaluewhenthereisreasonableassurancethattheywillbereceivedandSIEAwillcomplywiththeconditionsassociatedwiththegrantandarethenrecognisedinstatement of comprehensive income as other income on a systematic basis over the useful life of the asset. Grants thatcompensateSIEAforexpensesincurredarerecognisedinstatementofcomprehensiveincomeasotheroperatingincomeinthesameperiodsinwhichtheexpensesarerecognised.

l) Provisions

SIEArecognisesprovisionswhenthereisapresentobligation,thefuturesacrificeofeconomicbenefitsisprobable,and the amount of the provision of the provision can be measured reliably. The amount recognised is the best estimateof theconsideration required to settle thepresentobligationat reportingdate, taking intoaccount therisksanduncertaintiessurroundingtheobligationatreportingdate.Whereaprovisionismeasuringthecashflowsestimatedtosettlethepresentobligation,itscarryingamountisthepresentvalueofthesecashflows.

8 Financial risk management

Overview

SIEAhasexposuretothefollowingrisksfromitsuseoffinancialinstruments:

i)Creditrisk ii)Liquidityrisk iii)Marketrisk iv)Interestraterisk

This note presents information about SIEA’s exposure to each of the above risks and SIEA’s objectives, policies andprocessesformeasuringandmanagingrisk.Furtherquantitativedisclosuresareincludedthroughoutthesefinancialstatements.

Risk management framework

TheBoardofDirectorshasoverallresponsibilityfortheestablishmentandoversightofSIEA’sriskmanagementframework.SIEA’sriskmanagementpoliciesareestablishedtoidentifyandanalysetherisksfacedbySIEA,tosetappropriaterisklimitsandcontrols,andtomonitorrisksandadherencetolimits.Riskmanagementpoliciesandsystemsarereviewedregularly to reflect changes inmarket conditions and SIEA’s activities. SIEA, through its training andmanagementstandardsandprocedures,aimstodevelopadisciplinedandconstructivecontrolenvironmentinwhichallemployeesunderstand their roles and obligations.

SIEA’sBoardoverseeshowmanagementmonitorscompliancewithSIEA’sriskmanagementpoliciesandproceduresandreviewstheadequacyoftheriskmanagementframeworkinrelationtotherisksfacedbySIEA.TheBoardisassistedintheiroversightrolebyinternalaudit.Internalauditundertakesbothregularandad-hocreviewsofriskmanagementcontrolsandprocesses,theresultofwhichisreportedtotheBoard.

TheaboverisksarelimitedbySIEA’sfinancialmanagementpoliciesandproceduresasdescribedbelow:





8 Financial risk management continued

i) Credit risk

CreditriskistheriskoffinanciallosstoSIEAifacustomerorcounterpartytoafinancialinstrumentfailstomeetitscontractualobligationsandarisesprincipallyfromSIEA’sreceivablesfromcustomers,investmentindebtsecurities, and cash and call deposits.

SIEA’sexposuretocreditriskisinfluencedmainlybytheindividualcharacteristicsofeachcustomer.However,managementalsoconsidersthedemographicsofSIEA’scustomerbase,includingthedefaultriskoftheindustryasthesefactorsmayhaveaninfluenceoncreditrisk.

Thecarryingamountoffinancialassetsrepresentsthemaximumcreditexposure.

Expected credit loss assessment for trade and other receivables as at 1 January 2018 and 31 December 2018

SIEAusesanallowancematrixtomeasuretheECLsofTradereceivablesfromindividualcustomers,whichcomprise a large number of balances.

Lossratesarecalculatedusinga‘rollrate’methodbasedontheprobabilityofareceivableprogressingthroughsuccessivestagesofdelinquencytowrite-off.

ThefollowingtableprovidesinformationabouttheexposuretocreditriskandECLsfortradereceivablesandcontractassetsfromindividualcustomerscategorisedintokwhdebtorsandcashpowerdebtorsasat:

Kwh debtors: Gross Weighted carrying Loss average loss amount allowance Credit rates SBD SBD impaired

1-Jan-18 Current-30dayspastdue 11.96% 19,826,714 2,370,857 No 30-59dayspastdue 23.53% 14,237,418 3,350,258 No 60-89dayspastdue 45.15% 7,073,262 3,193,918 No 90ormoredaysinpastdue 61.39% 12,110,651 7,435,110 Yes 53,248,045 16,350,144

31-Dec-18 Current-30dayspastdue 12.19% 25,748,106 3,138,423 No 30-59dayspastdue 23.99% 12,297,105 2,949,588 No 60-89dayspastdue 46.03% 7,665,957 3,528,433 No 90ormoredaysinpastdue 62.58% 11,477,661 7,182,651 Yes 57,188,829 16,799,096





8 Financial risk management continued Gross Loss Weighted carrying allowance Credit average loss SBD SBD impaired

Cash power debtors: 1-Jan-18 Current-30dayspastdue 5.13% 31,571 1,620 No 30-59dayspastdue 6.25% 46,944 2,934 No 60-89dayspastdue 6.54% 5,071,352 331,485 No 90ormoredaysinpastdue 6.93% 7,891,869 547,013 Yes 13,041,735 883,051

31-Dec-18 Current-30dayspastdue 9.70% 111,682 10,832 No 30-59dayspastdue 11.81% 51,469 6,081 No 60-89dayspastdue 12.36% 65,630 8,109 No 90ormoredaysinpastdue 13.10% 10,280,322 1,346,999 Yes 10,509,105 1,372,022

Lossratesarebasedonactualcreditlossexperiencedoverthepasttwoyears.factorstoreflectdifferencesbetweeneconomicconditionsduringtheperiodoverwhichthehistoricdatahasbeencollected,currentconditionsandtheAuthority’sviewofeconomicconditionsovertheexpectedlivesofthereceivables.ScalarfactorsarebasedonactualandforecastGDPgrowthratesorinflationrates.

Themovementintheallowanceforimpairmentinrespectoftradereceivablesandotherreceivablesduringtheyearisdisclosedinnote18.Comparativeamountsfor2018representtheallowanceaccountforimpairmentlossesunderIAS39.

ImpairmentonotherreceivablesfromSolomonIslandsGovernmentandstate-ownedentitieshasbeenmeasuredonthe12monthexpected lossbasis,andtheresulted impairment losseswasand isnotconsideredmaterialbymanagementondateofinitialapplicationofIFRS9andreportingdaterespectively.

Cash and cash equivalents

SIEAheldcashatbankof$221,808,007at31December2018(2017:$201,187,479).Thecashisheldwithdifferentbanks,whoseratingsrangedfromAa3toCaa1basedonMoody’screditratings.

Impairmentoncashandcashequivalentshasbeenmeasuredonthe12monthexpectedlossbasisandreflectstheshort maturities of the exposures.

SIEAusesasimilarapproachforassessmentofECLsforcashandcashequivalentstothoseusedfordebtsecurities.

Accordingly,duetoshortmaturitiesoninitialapplicationofIFRS9,theAuthoritydidnotrecogniseanimpairmentallowanceagainstcashandcashequivalentsasat1January2018.Theamountoftheallowancedidnotchangeduring2018.






Debt investment securities

SIEAhelddebtinvestmentsecuritiesof$75,872,816at31December2018(2017:$45,542,195).Thedebtinvestmentsecurities are heldwith institutionswhich are rated Aa3 to B3 based onMoody’s credit ratings. In relation todebtinvestmentsecuritiesheldwiththeseinstitutions,theAuthoritymonitorschangesincreditriskbytrackingpublishedexternalcredit ratingsbutwhenexternalcredit ratingsarenotavailableorpublished,SIEAmonitorschangesincreditriskbyreviewingavailablepressandregulatoryinformation.

ImpairmentondebtinvestmentsecuritiesheldwithbanksandSolomonIslandsGovernmenthasbeenmeasuredonthe12monthexpectedlossbasis.

OninitialapplicationofIFRS9,theAuthoritydidnotrecogniseanimpairmentallowanceagainstdebtinvestmentsecuritiesasat1January2018.Theamountoftheallowancedidnotchangeduring2018.

Credit risk under IAS 39

SIEAestablishesanallowanceforimpairmentthatrepresentsitsestimateofincurredlossesinrespectoftradeandother receivables. Themain components of this allowance are a specific loss component established for groupsofsimilarassetsinrespectoflossesthathavebeenincurredbutnotyetidentified,andacollectivecomponentinrespectofestimatedlossesincurredbutnotyetidentified.

SIEA’smaximumexposuretocreditriskisasfollows:

2017 SBD

Cashatbank 221,765,007 Termdepositinvestments 45,542,195 Receivables-currentReceivables 82,420,732 -non-current 1,660,609 351,388,543 Receivablesaredeterminedimpairedasfollows:

Trade and other receivables Grossreceivables 82,420,732 Provisionforimpairment (32,278,526) 50,142,206

ii) Liquidity risk

LiquidityriskistheriskthatSIEAwillencounterdifficultyinmeetingtheobligationsassociatedwithitsfinancialliabilitiesthataresettledbydeliveringcashoranotherfinancialasset.SIEA’sapproachtomanagingliquidityistoensure,asfaraspossible,thatitwillalwayshavesufficientliquiditytomeetitsliabilitieswhendue,underbothnormalandstressedconditions,withoutincurringunacceptablelossesorriskingdamagetoSIEA’sreputation.

SIEAensuresthatishassufficientcashonhandtomeetoperationalexpensesincludingtheservicingoffinancialobligations but this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters.






Thefollowingarethecontractualmaturitiesoffinancialliabilities:

31 December 2018

Carrying 6 months 6-12 Greater amount or less months than 1 year Total SBD SBD SBD SBD SBD Financial liabilities

Tradeandotherpayables 38,661,806 38,661,806 - - 38,661,806 SolomonIslandsGovernmentloan 14,527,257 2,090,045 2,054,055 11,702,423 15,846,523 53,189,063 40,751,851 2,054,055 54,508,329

31 December 2017

Carrying 6 months 6-12 Greater amount or less months than 1 year Total SBD SBD SBD SBD SBD Financial liabilities Tradeandotherpayables 32,007,084 32,007,084 - - 32,007,084

SolomonIslandsGovernmentloan 2,924,999 3,087,019 - - 3,087,019 34,932,083 35,094,103 - 35,094,103

iii) Market risk

Marketriskistheriskthatchangesinmarketprices,suchasfuelprices,foreignexchangeratesandinterestrateswillaffectSIEA’sincomeorthevalueofitsholdingsoffinancialinstruments.Theobjectiveofmarketriskmanagementistomanageandcontrolmarketriskexposureswithinacceptableparameters,whileoptimisingthereturn.

Fuel price risk

SIEA is subject to a monthly tariff review. The tariff is based on The Electricity Tariff (Base Tariff and TariffAdjustments)Regulation2016which isadjustedeverymonth for theHoniaraConsumerPrice Index(CPI), theProducersPriceIndex(PPI,USA),theexchangeratebetweentheUS$andSBDandthefuelpricemovements.Fuelcostsof$180,667,381(2017:$137,645,095)comprises47%oftheexpenditureofSIEA,somovementsinfuelpricesarecriticaltotheprofitabilityofSIEA.Fortunately,themonthlytariffreviewconsidersthefuelpricemovements,theCPI,PPIandexchangeratechanges,thereforethereisanaturalhedgeagainstmarketmovements.

Achangeof100basispoints(bp)ininterestratesatthereportingdatewouldhaveincreased/(decreased)profitorlossbyamountsshownbelow.Thisanalysisassumesthatallothervariables,inparticularforeigncurrencyrates,remain constant.

Profit or loss 100bp 100bp increase $000 $000 Revenue 447,900 490,300 Expenditure 370,928 407,128

NetProfit 76,972 83,172






iv) Interest rate risk

Interestrateriskistheriskthatachangeininterestrateswillimpactnetinterestcostsandborrowings.

SIEAhas investedindebtsecuritiesandhas interest-bearingborrowingfromtheSolomonIslandsGovernment.Theseareatafixedinterestrateduringthetermoftheinstruments.

Giventhefixednatureofinterestratesdescribedabove,theAuthorityhasahighlevelofcertaintyovertheimpactoncashflowsarisingfrominterestincomeandinterestexpenses.Accordingly,SIEAdoesnotrequiresimulationstobeperformedoverimpactonnetprofitsarisingfromchangesininterestrates.

Furthermore, for thosefinancialassetsandfinancial liabilitieswhicharenotcarriedat fairvalue, theircarryingamount is considered a reasonable approximation of fair value.

v) Currency risk

TheAuthorityisexposedtocurrencyrisktotheextentthatthereisamismatchbetweenthecurrenciesinwhichpurchases,andborrowingsaredenominatedandtherespectivefunctionalcurrencies.TheAuthoritydoesnothavesignificantexposuretocurrencyrisk.


9 Other operating income Communityserviceobligation 1,500,000 - Other 1,926,230 2,540,795 Reconnections 3,200 4,530 Gainondisposaloffixedassets 196,773 - Unconditionalgrantincome 1,860,615 - 5,486,818 2,545,325

10 Generation and distribution Boughtinelectricity - 3,561,954 Fuel 180,667,381 137,645,095 Lubricatingoil 3,888,180 4,590,875 Other 4,010,500 4,460,864 Personnel 13 23,828,353 25,407,717 Repairsandmaintenance 11,780,667 31,935,454 224,175,081 207,601,960






11 Administration

Advertising 1,682,314 2,430,499 Bankfees 257,000 319,713 Computerbureaucharges 1,659,243 1,865,089 Consultancyfees 11,273,094 18,089,604 Directorsfeesandexpenses 451,588 627,570 Electricity 2,969,773 2,949,745 Electricityrebate 5,080,129 4,632,483 Freight 505,717 205,032 Insurance 2,558,392 2,338,014 Personnel 13 39,187,093 10,202,013 Printingandstationery 1,829,337 2,146,769 Professionalfees 1,504,846 1,080,046 Propertyexpenses 4,895,004 4,628,537 Telecommunications 3,631,425 3,372,687 Travelandaccommodation 4,120,552 4,796,083 81,605,507 59,683,883

12 Operating expenses

Customshandlingcharges 4,948,308 5,945,648 Personnel 13 12,030,377 17,866,359 Repairsandmaintenance 1,909,207 3,882,631 Vehiclecosts 3,942,139 3,453,391 22,830,031 31,148,030

13 Personnel expenses

Salariesandwages 45,429,198 41,573,283 Superannuation 3,046,477 2,749,261 Retirementbenefitexpense 15,833,287 - Others 10,736,861 9,153,545 75,045,823 53,476,089

Personnelexpensesclassedbyfunctionisasfollows:

Generationanddistribution 23,828,353 25,407,717 Administration 39,187,093 10,202,013 Operatingexpenses 12,030,377 17,866,359 75,045,823 53,476,089





14 Prior period adjustments

DuringthefinancialyearitwasidentifiedthattheleaseholdlandrevaluedinDecember2016andincludedinproperty,plantandequipmenthadbeenerroneouslydepreciatedbasedonitscostandnotontherevaluedamount.

Statement of financial position

Impact of restatement Previously Adjustment Restated reported As at 31 December 2018 2017 2017 2017

Property,plantandequipment 795,429,205 (2,231,404) 793,197,801 Totalnon-currentassets 797,089,814 (2,231,404) 794,858,410 Totalassets 1,138,534,591 (2,231,404) 1,136,303,187 Retainedearnings 414,391,698 (2,231,404) 412,160,294 Totalequity 1,046,214,572 (2,231,404) 1,043,983,168 Totalequityandliabilities 1,138,534,591 (2,231,404) 1,136,303,187

Statement of comprehensive income

Impact of restatement Previously Adjustment Restated reported As at 31 December 2018 2017 2017 2017

Depreciationandamortisation 51,447,685 2,231,404 53,679,089 Totalexpenses 361,667,318 2,231,404 363,898,722 Operatingprofits 79,456,495 (2,231,404) 77,225,091 Netprofit 79,880,086 (2,231,404) 77,648,682 Totalcomprehensiveincomefortheyear 79,880,086 (2,231,404) 77,648,682





15 P

rope

rty,

plan

t and

equ

ipm

ent

Land

Bu

ildin

gs

Gene

rato

rs

Plan

t and

D

istr

ibut

ion

Furn

iture

&

Mot

or

Tool

s W

ork

in

Tota

l

equi

pmen

t ne

twor

k eq

uipm

ent

vehi

cles

prog

ress

SBD

SB

D

SBD

SB

D

SBD

SB

D

SBD

SB

D

SBD

SB

D

Cost

/ Re

valu

atio

n

Bala

nce

as 1

Janu

ary

2017

53

,831

,179

15

7,54

8,12

0 19

0,16

6,76

9 49

,998

,834

20

0,31

0,57

1 21

,120

,828

24

,395

,595

6,

487,

235

76,8

78,8

24

780,

737,

955

Ad

ditio

ns

4,112

--

-668,067

--

-132,193,868

132,866,048

Disposals

--

(1,843,635)

--

(280,347)

--

-(2,123,982)

Workinprogressc

apita

lised

1,296,071

9,791,803

52,781,356

10,006,546

22,784,409

3,739,609

722,680

1,485,646

(102,60

8,119)

-

Ba

lanc

e at

31

Dec

embe

r 201

7 55

,131

,363

16

7,33

9,92

2 24

1,10

4,49

0 60

,005

,380

22

3,76

3,04

8 24

,580

,090

25

,118

,275

7,

972,

881

106,

464,

573

911,

480,

021

Ad

ditio

ns

--

--

-

-

123,570,342

123,570,342

Disposals

(4,112)

--

-(227,976)

-(958,867)

(53,449)

-(1,244,404)

Workinprogressc

apita

lised

1,039,783

16,812,269

23,720,404

15,426,561

70,118,198

7,054,773

3,307,460

2,835,278

(140,314,726)

-

Ba

lanc

e at

31

Dec

embe

r 201

8 56

,167

,034

18

4,15

2,19

1 26

4,82

4,89

4 75

,431

,941

29

3,65

3,26

9 31

,634

,863

27

,466

,868

10

,754

,710

89

,720

,189

1,0

33,8

05,9

59

Br

eakd

own

of co

st/r

eval

uatio

n

2011Valua

tion

--

--

--

1,172,968

249,941

-1,422,910

2013Valua

tion

564,117

6,658,552

171,550

17,130,540

25,668,207

--

--

50,192,966

2016Valua

tion

49,751,225

61,916,918

93,373,939

30,899,771

168,190,283

--

-

404,132,137

Co

st5,851,691

115,576,721

171,279,404

27,401,631

99,794,780

31,634,863

26,293,899

10,504,769

89,720,189

578,057,947

Ba

lanc

e at

31

Dec

embe

r 201

8 56

,167

,034

18

4,15

2,19

1 26

4,82

4,89

4 75

,431

,941

29

3,65

3,26

9 31

,634

,863

27

,466

,868

10

,754

,710

89

,720

,189

1,0

33,8

05,9

59

Dep

reci

atio

n an

d im

pair

men

t los

s

Bala

nce

as 1

Janu

ary

2017

3,

703,

995

1,03

7,08

9 17

,107

,540

5,

511,

731

8,52

0,16

9 11

,031

,057

15

,605

,099

4,

183,

305

- 66

,699

,983

De

preciatio

n-

8,169,065

21,566,588

1,579,051

8,859,808

4,139,523

4,255,485

1,643,499

-50,213,020

Am

ortisationofleaseholdlan

d-restated

3,466,069

--

--

--

--

3,466,069

De

preciatio

non

disp

osedas

sets

--

(1,843,635)

--

(253,218)

--

-(2,096,853)

Ba

lanc

e at

31

Dec

embe

r 201

7 - r

esta

ted

7,17

0,06

4 9,

206,

154

36,8

30,4

93

7,09

0,78

2 17

,379

,977

14

,917

,362

19

,860

,583

5,

826,

804

- 11

8,28

2,22

0

Depreciatio

n-

8,954,942

20,280,128

5,327,358

10,542,195

3,410,849

3,096,065

1,564,988

-53,176,524

Am

ortisationofleaseh

oldland

3,496,225

--

--

--

--

3,496,225

De

preciatio

non

disp

osedas

sets

--

--

(2,850)

-(927,320)

(1,164)

-(931,334)

Ba

lanc

e at

31

Dec

embe

r 201

8 10

,666

,289

18

,161

,096

57

,110

,621

12

,418

,140

27

,919

,322

18

,328

,211

22

,029

,328

7,

390,

629

- 17

4,02

3,63

5

Carr

ying

am

ount

s

At31De

cember2

016

50,127,184

156,511,031

173,059,229

44,487,104

191,790,402

10,089,772

8,790,496

2,303,930

76,878,824

714,037,972

At31De

cember2

017-restated

47,961,298

158,133,768

204,273,996

52,914,598

206,383,071

9,662,728

5,257,691

2,146,077

106,464,573

793,197,801

At

31

Dec

embe

r 201

8 45

,500

,745

16

5,99

1,09

5 20

7,71

4,27

3 63

,013

,802

26

5,73

3,94

7 13

,306

,652

5,

437,

540

3,36

4,08

2 89

,720

,189

85

9,78

2,32

4





15 Property, plant and equipment continued

SIEAhasapolicytorevalueinfrastructureandpropertyassetsevery3or5years.Thelastsuchrevaluationwascompletedin2016.SIEAisoftheopinionthattherehasbeennomaterialchangeinthecarryingvalueoftheseassetssincethatrevaluation.

In2016SIEAengagedSinclairKnightsMerz(SKM)tocarryoutanindependentvaluationofthefollowingclassesofassets:

Generators

Distributionnetwork

Plantandequipment

ThevaluationmethodologyutilisedbySKMwastheoptimiseddepreciatedreplacementcost(ODRC)approachwhichisgenerallyconsideredtorepresenttheminimumcostofreplacingtheservicepotentialembodiedinthenetworkwithmodernequivalentassetsinthemostefficientmannerfromanengineeringperspectivegiventheservicerequirements,the age and condition of the existing assets.

In 2016 SIEA also engagedValue SolutionsAppraisal (VSA) to carry out an independent valuation of all land andbuildings. Theywere valued at fair value, basedonmarket based evidenceusingDiscountedCash Flowsupon theappraisalofaprofessionallyqualifiedvaluer.

ThesevaluationswerecompletedinJanuaryandDecember2016bySKMandVSArespectivelyandbookedintotheaccountsfromthosedatesandareaccordinglyreflectedinthefinancialstatementsasat31December2016.

In2016thecombinedresultsofthisvaluationprocesswasanincreaseinfixedassetsandtheassetrevaluationreserveof$85,414,971.However,thisincreaseinvaluewaspartiallyoffsetbyanimpairmentlossof$158,334whichwasexpensedin the statement of comprehensive income.

SIEAholdsbothPerpetualEstateLandandLeaseholdLand.In2014,itwasagreedwiththeAuditorGeneralthatleaseholdlandshouldbeamortised,asshownbelow.

2018 2017 SBD SBD

PerpetualEstateLand 11,506,500 3,194,989 LeaseholdLand 44,660,534 51,936,373 AmortisationofLeaseholdLand (10,666,289) (7,170,064) 45,500,745 47,961,29816 Cash and cash equivalents Short-termdeposits 45,749,190 - Cashonhand 45,030 43,000 Cashatbank 257,730,221 221,765,007 303,524,441 221,808,007

Theshort-termdepositsamounting$45,731,711werere-investedwithANZBankingGroupLimited-SolomonIslandsBranch at the rate of 0.5%. The short-term deposits have amaturity term of amonth from the date of inception.Accordingly, these short- term deposits have been considered as cash and cash equivalents for the purpose of thestatementofcashflow.

17 Inventories Electricalandmechanical 22,451,241 20,910,019 22,451,241 20,910,019

Fuelandlubricantsarepaidforonconsumptionfromsuppliesheldonsiteonconsignmentbasisfromthesupplier,SouthPacificOilLtd,throughacontractsignedin2012.Therefore,nofuelandlubricantsarenotrecordedinSIEA’sinventory.





2018 2017 SBD SBD

18 Receivables

Current Tradereceivables-kilowatt(Kwh) 57,188,829 53,221,567 Allowanceforimpairment-kilowatt(Kwh) (16,799,096) (19,276,118) Tradereceivables-CashPower 10,509,105 13,041,735 Allowanceforimpairment-CashPower (1,372,022) (12,963,221) Relatedparty-SolomonIslandsWaterAuthority 937,500 937,500 Relatedparty-SolomonIslandsBroadcastingCorporation 353,131 891,426 Staffadvances 248,589 312,409 Allowanceforimpairment-staffadvances (25,033) (39,187) Unreadmeters 10,025,866 13,847,290 Otherdebtors 699,821 168,804

61,766,690 50,142,206 Non-current

Relatedparty-SolomonIslandsWaterAuthority 937,500 1,875,000 Deferredincome-SolomonIslandsWaterAuthority (138,828) (273,049) Relatedparty-SolomonIslandsBroadcastingCorporation - 61,705 Deferredincome-SolomonIslandsBroadcastingCorporation - (3,047)

798,672 1,660,609

Total receivables 62,565,362 51,802,815

On31May2012anagreementwassignedbetweentheSolomonIslandsGovernment(SIG),SolomonIslandsWaterAuthority(SIWA)andSIEAwherebythedebtowedbySIWAof$7,500,000wasconvertedintoaloanwitha0%interestrateforatermof8yearscommencingon1January2013.Thedeferredincomerelatestothenotionalinterestexpenseonthisdebtusingtheeffectiveinterestmethodandisbasedupondiscountedfuturecashflows.

On8May2013 an agreementwas signedbetween theSolomon IslandsBroadcastingCorporation (SIBC) andSIEAwherebythedebtowedbySIBCof$3,661,381wasconvertedintoa loanwith0%interestrate foratermof5yearscommencing on 31May 2013. The deferred income relates to the notional interest expense on this debt using theeffectiveinterestmethodandisbasedupondiscountedfuturecashflows.

Allowance for impairment Balanceatthebeginningoftheyear 32,278,526 29,342,815 TransitionadjustmentontheinitialapplicationofIFRS9 (15,006,144) - Balanceat1January2018 17,272,382 29,342,815 Impairmentrecognised 3,714,358 11,396,373 Baddebtswrittenoffduringtheyear (2,790,589) (8,460,662) Balanceat31December 18,196,151 32,278,526





2018 2017 SBD SBD

19 Government bonds

Governmentbonds 30,000,000 - On1December2018SIEApurchaseddomesticdevelopmentbondswithafacevalueofSBD$30MfromtheSolomon

IslandsGovernment.Thebondshaveaninterestrateof5%perannumwhichistobepaidsemi-annually.Thebondshaveamaturitydateof1December2028andthereisa3yeargraceperiodbeforeprincipalrepaymentscommence.

20 Contributed capital

Contributedcapital 246,933,170 246,933,170

CapitalrepresentstheGovernment’scontributiontotheestablishmentofSIEA.Thisisnotintheformofshares.

21 Deferred income

Balanceat1January 57,194,119 61,815,920 Additionaldeferredincome 29,659,008 1,771,160 Deferredincomerecognisedduringtheyear (6,395,050) (6,392,961) Balanceat31December 80,458,077 57,194,119

Thedeferredincomeisshownonthestatementoffinancialpositionasfollows:-

Current 6,392,961 6,392,961 Non-current 74,065,116 50,801,158 80,458,077 57,194,119

In2007,theGovernmentofJapanenteredintoanagreementwithSolomonIslandsGovernmenttofundtheconstructionoftheLunggaGeneratorandPowerStationonbehalfofSIEA.Thefundingofthesecapitalworksisanon-reciprocalgrant.Thevalueof thecapitalworkswasapproximately$48millionandhasbeenaccountedforbySIEAasanon-currentassetwithacorrespondingamounttakentodeferredincome.Thedeferredincomeisbeingamortisedtothestatementofcomprehensiveincomeoverthelifeofthepowerstation.

In2014,agrantofapproximately$3.2millionwasreceivedfromtheJapaneseInternationalCorporationAgency(JICA)tofunda50KWsolargridattheRanadiHeadquartersinHoniara.ThevalueofthecapitalworkshasbeenaccountedforbySIEAasanon-currentassetwithacorrespondingamounttakentodeferredincome.Thedeferredincomeisbeingamortised to the statement of comprehensive income over the life of the solar grid.

In2013,agrantofapproximately$3,058,000wasreceivedfromtheWorldBankthroughtheSolomonIslandsSustainableEnergyProject(SISEP)tofundtheinstallationofa33kvcableinHoniara.ThisprojectwascompletedinMay2015andthevalueofthecapitalworkshasbeenaccountedforbySIEAasanon-currentassetwithacorrespondingamounttakento deferred income. The deferred income is being amortised to the statement of comprehensive income over the life of the cabling.

In2013,agrantofapproximately$1,493,000wasreceivedfromtheWorldBankthroughtheSolomonIslandsSustainableEnergyProject(SISEP)tofundtheinstallationof11kvswitchgearinHoniara.ThisprojectwascompletedinJanuary2015andthevalueofthecapitalworkshasbeenaccountedforbySIEAasanon-currentassetwithacorrespondingamounttakentodeferredincome.Thedeferredincomeisbeingamortisedtothestatementofcomprehensiveincomeoverthelifeoftheequipment.





21 Deferred income continued

In2013,agrantofapproximately$839,000wasreceivedfromtheWorldBankthroughtheSolomonIslandsSustainableEnergy Project (SISEP) to fund the installation of cooling radiators at the Lungga Power Station. This project wascompleted in June2015and thevalueof the capitalworkshasbeenaccounted forbySIEAas anon-current assetwithacorrespondingamounttakentodeferredincome.Thedeferredincomeisbeingamortisedtothestatementofcomprehensive income over the life of the radiators.

In2015,agrantofapproximately$765,000wasreceivedfromtheAsianDevelopmentBanktofundtheconstructionofaCoconutOilConditioningUnitonAuki.ThevalueofthecapitalworkshasbeenaccountedforbySIEAasanon-currentassetwithacorrespondingamounttakentodeferredincome.Thedeferredincomeisbeingamortisedtothestatementof comprehensive income over the life of the unit.

In2015,agrantofapproximately$1,015,000wasreceivedfromtheAsianDevelopmentBanktofundtheprocurementof aGenerator Set onAuki. The value of the capitalworkshas been accounted for by SIEA as anon-current assetwithacorrespondingamounttakentodeferredincome.Thedeferredincomeisbeingamortisedtothestatementofcomprehensive income over the life of the generator.

In2015,agrantofapproximately$867,000wasreceivedfromtheAsianDevelopmentBanktofundtheprocurementof11kVand415vDistributionEquipmentfortheAukiPowerGenerationandDistributionPilotProject.Thevalueofthecapitalworkshasbeenaccounted forbySIEAas anon-current assetwitha correspondingamount taken todeferredincome.Thedeferredincomeisbeingamortisedtothestatementofcomprehensiveincomeoverthelifeoftheequipment.

In2016,agrantofapproximately$32,500,000wasreceivedfromtheUnitedArabEmiratesPacificPartnershipFundtofunda50KWsolargridatHendersoninHoniara.ThevalueofthecapitalworkshasbeenaccountedforbySIEAasanon-currentassetwithacorrespondingamounttakentodeferredincome.Thedeferredincomeisbeingamortisedtothestatement of comprehensive income over the life of the solar grid.

In2016,agrantofapproximately$1,627,000wasreceivedfromtheItalianMinistryfortheEnvironment,LandandSeatofundsimulationsoftwaretoenableSIEAtocarryoutelectricitynetworkplanningtogetherwiththenecessarytrainingandconsultingservices.ThedeferredincomewillbeamortisedtostatementofcomprehensiveincomeoverthelifeoftheprojectoncethefullamountofthegranthasbeenutilisedandcapitalisedtotheFixedAssetregister.

In2017,($1,465,000)and2018($3,888,000)initialgrantswerereceivedfromtheGlobalPartnershiponOutput-BasedAidtosubsidisethecostofprovidingelectricitytolowincomehouseholds.Thedeferredincomewillbeamortisedtothestatementofcomprehensiveincomeoverthelifeoftheprojectoncethefullamountofthegrant(approximately$17,000,000)hasbeenutilisedandtheassetcapitalisedtotheFixedAssetregister.

In2017,($306,000)and2018($5,476,000)initialgrantswerereceivedfromtheAsianDevelopmentBank(ADB)tofundtheconstructionoffivegridconnectedsolarpowerplantsinanefforttoincreasethesupplyofreliable,cleanelectricity.Thedeferredincomewillbeamortisedtothestatementofcomprehensiveincomeoverthelifeoftheprojectoncethefullamountofthegrant(approximately$17,000,000)hasbeenutilisedandtheassetcapitalisedtotheFixedAssetregister.

In2018,agrantofapproximately$9,778,000wasreceivedfromtheNewZealandMinistryofForeignAffairsandTradeto expand the access to affordable, reliable and clean energy in rural areas of the Solomon Islands. The deferred income willbeamortisedtostatementofcomprehensiveincomeoverthelifeoftheprojectoncethefullamountofthegranthasbeenutilisedandcapitalisedtotheFixedAssetregister.

In2018,grants totallingapproximately$10,516,000were received fromtheWorldBank through theSolomon IslandsSustainableEnergyProject(SISEP)tofundconstructionofpowersubstationsandtheinstallationoftransformersatRanadi,KolaRidgeandLungga.TheprojectshavebeenpartiallycompletedandwhereapplicablethevalueofthecapitalworkshasbeenaccountedforbySIEAasanon-currentassetwithacorrespondingamounttakentodeferredincome.Thedeferredincome is being amortised to the statement of comprehensive income over the life of the substations and transformers.





2018 2017 SBD SBD

22 Trade and other payables

Current Tradecreditors 1,222,550 1,722,699 Otherpayablesandaccruals 32,931,424 26,388,552 Contractualliabilities 2,182,389 - Consumerdeposits 4,507,832 3,895,832 40,844,195 32,007,084

23 Solomon Islands Government loan agreement

UnderanagreementsignedwiththeSolomonIslandsGovernmentinJune2014,SIEAhasbeengrantedaloanfacilityofupto$81,883,440toassistinthefinancingoftheSolomonIslandsSustainableEnergyProject(SISEP),ataninterestrateof4%perannum.UnderthetermsoftheagreementthefundswillbemadeavailablebytheGovernmentinatimelymannertofacilitatetheimplementationofSISEPandwillberepaidbySIEAover28semi-annualpaymentsofprincipalandinterestwhichcommencedfromDecember2015.Todatethefollowingprincipalamountshavebeenborrowedandrepaid under this loan agreement.

Balanceat1January 2,924,998 4,252,283 Borrowings 15,201,259 13,294,758 PrincipalRepayments (3,599,000) (14,622,043) Balanceat31December 14,527,257 2,924,998

Analysis of borrowings expected to be settled within one year and more than one year:

Current 3,599,000 2,924,999 Non-current 10,928,257 - 14,527,257 2,924,99924 Employee entitlements Current 6,778,721 193,818 Non-current 10,401,161 - 17,179,881 193,818 Movementismadeupofthefollowing: Openingbalance 193,818 391,109 Provisionsmadeduringtheyear 18,493,772 611,811 Provisionsutilisedduringtheyear (1,507,709) (809,102) Closingbalance 17,179,881 193,818

25 Related parties

a) Directors TheDirectorsinofficeduringthefinancialyearwereasfollows:

Name DavidK.C.Quan–chairman(reappointedDecember2018) HarryZoleveke-(retiredon1December2018) HenryKapu-(retiredon1December2018) JamesApaniai-(appointedin17December2018) JohnBHouanihau-(reappointedDecember2018) MurielHa’apue-Dakamae-(appointedon17December2018) RovalySike-(reappointedDecember2018) SebastianIlala-(retiredon1December2018) YolandeYates-(retiredon1December2018)

Directors’feesandexpensesaredisclosedinNote11.

SIEA’stransactionswithDirectorswereatarmslength.





25 Related parties continued

b) Identity of related parties

SIEAbeingastate-ownedentityisthesoleproviderofelectricityinSolomonIslands.Asaresult,GovernmentofSolomonIslandsandothergovernment-relatedentitiesareitsrelatedparties.OtherrelatedpartiesincludedirectorsandkeymanagementpersonnelofSIEA.

c) Amounts receivable from related parties

Includedintradereceivablesarethefollowingamountsreceivablefromrelatedentities:

2018 2017 SBD SBD

CentralBankofSolomonIslands 350,507 168,464 CentralProvincialGovernment 47,940 16,920 ChoiseulProvincialGovernment 43,981 - CommodityExportMarketingAuthority 20,079 -

HomeFinanceCorporation 38,408 38,354 HoniaraCityCouncil 871,766 818,911 Makira/UlawaProvincialGovernment 28,439 26,250 MalaitaProvincialGovernment 134,915 82,443 MinistryofFisheriesandMarineResources - 2,686,345

ProvincialHospital 1,053,182 61,132 SolomonAirlinesLimited 210,225 218,035 SolomonIslandsBroadcastingCorporation 681,621 1,114,805 SolomonIslandsGovernment 17,816,845 16,174,509 SolomonIslandsNationalUniversity 1,190,823 576,469 SolomonIslandsPortsAuthority 449,711 392,944 SolomonIslandsPostalCorporation 79,825 143,966 SolomonIslandsTouristAuthority 23,968 - SolomonIslandsWaterAuthority 4,816,982 3,355,717 TemotuProvincialGovernment 71,649 8,691 WesternProvincialGovernment 90,151 307,712 IsabelProvincialGovernment 41,365 117,724 28,062,383 26,309,390

ReceivablesforSolomonIslandsWaterAuthorityandSolomonIslandsBroadcastingCorporationincludestheTradeReceivables-kilowattthatrelatestoeachoftheseorganisations.

d) Transactions with key management personnel

Keymanagement personnel comprises of theChief ExecutiveOfficer, Chief FinancialOfficer, GeneralManagerCapitalWorks,ChiefEngineer,GeneralManagerCorporateServices,ManagerCustomerServices,ManagerElectricalEngineering,ManagerFinance,RegulatoryManager,ManagerLand&Buildings,ManagerHumanResourcesandAdministration,ManagerGenerationandOutstations,ManagerDistribution,ManagerGeneration,ManagerProjects,ManagerHealthSafetyandEnvironment,InformationTechnologySpecialist,ProjectEngineerandthedirectorsaslistedinnote21(a).

Inaddition to their salaries,SIEAalsoprovidesnon-cashbenefits tokeymanagementpersonneland their totalcompensationcomprisedofthefollowing:

Short-termemployeebenefits 15,527,096 13,064,624 15,527,096 13,064,624

Transactionswithkeymanagementpersonnelarenomore favourable than thoseavailable,orwhichmightbereasonably be expected to be available on similar transactions to third parties at arms length.





26 Commitments and contingencies

Capital commitments

SIEAundertakes capitalworks and purchases assets according to an approved budgetwhenmanagement considerthat sufficient funds are available.Capital commitments as at 31December2018amounted to$710,000,000 (2017:$863,000,000).Thesecommitmentsareinrelationtoproperty,plantandequipment.

2018 2017 SBD SBD

LessThan1Year 287,000,000 208,000,000 Between1yearand5years 850,000,000 655,000,000 1,137,000,000 863,000,000

Contingent liabilities

Apartfromlegalworkundertakeninthenormalcourseofbusiness,SIEAwaspartytotwolegalclaims,bothofwhichhave been fully provided for and in the opinion of the directorswill not have amaterial effect on SIEA’s financialposition.Theseclaimsareasfollows:

a) Aclaimbyaformeremployeeforunfairdismissalwhichisintheprocessofbeingsettledforapproximately$33,000;and

b) Aclaimbyamemberofthepublicarisingfromanincidentwherebyachildwaselectrocutedandburnt.Compensationof$1.3millionhasbeendemanded,butthelegaladviceprovidedtoSIEAhasestimatedthatifliabilityisproven,damagesofupto$125,000maybeawarded.

27 World Bank Financing

a) Financial Support Received

SIEAhas receivedfinancial support fromtheWorldBank’s InternationalDevelopmentAssociation(IDA)on theSolomon Islands Sustainable Energy Project (SISEP) since July 2008 to improve operational efficiency, systemreliabilityandfinancialsustainabilityofSIEA.Further,theWorldBank,throughamultidonortrustfund,hasalsoextendedfinancialsupportontheOutput-BasedAid(OBA)programmesinceAugust2016,forincreasingaccessto electricity services in low-income areas of Solomon Islands. In addition to the SISEP andOBAprogrammes,theWorldBankthroughtheIDAhasprovidedfurthersupportundertheSolomonIslandsElectricityAccessandRenewableEnergyExpansionProject(SIEAREEP)sinceOctober2018.SIEAREEP’sobjectiveistoincreaseaccesstogridsuppliedelectricityandincreaserenewableenergygenerationintheSolomonIslands.

b) Grants

SIEAhasreceivedtotalgrantsofUSD6,782,961fromtheseprogrammessincetheircommencement(2017:USD4,886,242).The2017balanceconsistsofthefollowingfunds,IDAH9130–USD550,371,IDAH4150–USD4,146,973andTFA2923-USD188,898.

c) Credit Funds

Thecreditfundsareinterest-bearingloansthatarerequiredtoberepaidandareshowninthecurrentandnon-currentliabilitiesastheyaredrawndown.





27 World Bank Financing continued

d) Use of the Proceeds

TheproceedsoftheWorldBankgrantsandcreditshavebeenutilisedinaccordancewiththeirintendedpurposeasspecifiedintheirrespectiveagreements.

Asummaryofthetransactionsthattookplaceduringtheyearisasfollows:

2018 2017 USD USD

Designated Account Balanceat1January 43,661 24,747 Receipts 279,862 195,075 Expenditures 247,905 176,162

75,618 43,661

Grants IDAH4150 - 14,222 IDAH9130 1,403,891 302,249 TFA2923 492,828 188,898

1,896,719 505,369 Credit Funds IDA 53790

Balanceat1January 366,210 551,383 Borrowings 2,078,572 1,748,897 PrincipalRepayments 435,479 1,934,071 Balanceat31December 2,009,303 366,210

28 Capital management

SIEA’spolicyistomaintainastrongcapitalbasesoastomaintaininvestor,creditorandmarketconfidenceandtosustainfuturedevelopmentofthebusiness.TheBoardseekstomaintainabalancebetweenthehigherreturnsthatmightbepossiblewithhigherlevelsofborrowingsandtheadvantagesandsecurityaffordedbyasoundcapitalposition.

Inorder tomaintainoradjust thecapital structure,SIEAmayadjust theamountofdividendspaid toshareholders,returncapitaltoshareholders,issuenewsharesorsellassetstoreducedebt.

29 Subsequent events

Therehasnotarisenintheintervalbetweentheendoftheyearandthedateofthisreportanyotheritem,transactionoreventofamaterialandunusualnaturethatislikely,intheopinionoftheDirectors,tosignificantlyaffecttheoperationsofSIEA,theresultsofthoseoperationsorthestateofaffairsofSIEAinsubsequentfinancialyears.


GLOSSARYkV - KilovoltHV - High VoltagekW - KilowattsMW - Megawatt (= 1000 kW)Gwh - Gigawatt-hour (= 1 million kWh)



Solomon Islands Electricity AuthorityPostal Address: P.O. Box 6, Honiara

Email: [email protected]

Website: www.siea.com.sb

2018AnnuAl RepoRt

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