✨ Financial Statements Notes
NEW ZEALAND GAZETTE
TRANS POWER NEW ZEALAND LIMITED GROUP
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 1996
No. 173
4568
21. FINANCIAL INSTRUMENTS (cont.)
The Group's short term investments are at fixed interest rates and mature within one year.
Currency Rate Risk
The Group raises debt and purchases items of capital equipment offshore which gives rise to foreign currency exchange rate risk. Foreign exchange forward contracts and cross currency interest rate swaps are entered into to manage the exposure to fluctuations in foreign currency exchange rates. The Group's policy is that all material foreign currency risks are hedged.
The principal or contract amounts of off balance sheet financial instruments
The principal or contract amounts are indicative of the relative significance of off balance sheet financial instruments but not necessarily the extent of any potential gain or loss.
| 30 June 1996 | 30 June 1995 | |
|---|---|---|
| $000 | $000 | |
| Foreign exchange forward contracts | 257,011 | 196,715 |
| Cross currency interest rate swaps | ||
| - receive | 570,669 | - |
| - pay | 610,540 | - |
| Interest rate swaps | 668,230 | 725,000 |
| Forward rate agreements | 845,000 | 460,000 |
| Interest rate options | - | 110,000 |
The maximum credit risk exposure for foreign currency forward contracts and cross currency interest rate swaps, approximates the principal or contract amount of the off balance sheet financial instruments. This provides a direct measure of the cash settlement amount at balance date.
For interest rate swaps, forward rate agreements and interest rate options the best indication of the maximum credit risk exposure at balance date is the cash settlement amount. The cash settlement amount of interest rate swaps is the net interest payable of $226,000 (1995: net interest payable of $28,000). The cash settlement amount of forward rate agreements and interest rate options is best approximated by the current market value. For forward rate agreements the current market value is a receivable of $1,686,000 (1995: payable of $833,000). The current market value of interest rate options held at balance date is nil (1995: payable of $29,000).
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VUW Te Waharoa —
NZ Gazette 1996, No 173
NZLII —
NZ Gazette 1996, No 173
✨ LLM interpretation of page content
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Notes to the Financial Statements for Trans Power New Zealand Limited
(continued from previous page)
🏭 Trade, Customs & Industry5 November 1996
Financial Instruments, Currency Rate Risk, Off Balance Sheet, Credit Risk, Foreign Exchange, Interest Rate Swaps