✨ Financial Statements
MercuryEnergy
Mercury Energy Limited and Subsidiaries
Notes to and forming part of the financial statements for the year ended 31 March 1997 continued
1. STATEMENT OF ACCOUNTING POLICIES continued
i) Foreign Currencies
Transactions in foreign currencies are converted at the New Zealand rate of exchange ruling at the date of the transaction.
Short-term transactions covered by forward exchange contracts are measured and reported at the forward rates specified in those contracts.
At balance date foreign monetary assets and liabilities are translated to NZ dollars at the balance date exchange rate and exchange variations arising from these translations are included in the statement of financial performance.
The exchange differences on hedging transactions undertaken to establish the price of particular sales or purchases, together with any costs associated with the hedge transactions, are deferred and included in the measurement of the purchase or sale of the transaction.
j) Financial Instruments
The group is party to financial instruments with off balance sheet risk to meet financing needs and to reduce exposure to fluctuations in foreign currency exchange rates. These financial instruments include foreign exchange forward contracts, forward rate agreements and swaps.
The group is also party to financial instruments with off-balance sheet risk for the primary purpose of reducing its exposure to electricity spot market prices. While all of these financial instruments are subject to the risk that market rates may change subsequent to acquisition, such changes will generally be offset by opposite effects on the items being hedged.
The group enters into foreign currency forward exchange contracts to hedge foreign currency transactions. Any exposure to gains or losses on these forward contracts is generally offset by a loss or gain on the item being hedged. Gains and losses on contracts which hedge specific short-term foreign currency denominated commitments are recognised as a component of the related transaction in the period in which the transaction is completed. The group is not involved in foreign exchange speculating.
The group has entered into electricity price hedging contracts in order to minimise the risk of price fluctuations on electricity spot market. Assets, liabilities, and any unrealised revenues and expenses associated with these instruments as at balance date are not recognised in the financial statements. Realised revenues and expenses are recognised in the statement of financial performance on maturity of the hedging contracts and are incorporated as part of the cost of wholesale electricity.
NEW ZEALAND GAZETTE
No. 117
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VUW Te Waharoa —
NZ Gazette 1997, No 117
NZLII —
NZ Gazette 1997, No 117
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Mercury Energy Limited Statement of financial position
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🏭 Trade, Customs & IndustryFinancial Statements, Equity, Electricity, Mercury Energy Limited, 1997, 1996, Foreign Currencies, Financial Instruments, Hedging