✨ Financial Statements
NEW ZEALAND GAZETTE
No. 126
BAY OF PLENTY ELECTRICITY LIMITED
Financial Statements for the purposes of Electricity (Information Disclosure) Regulations 1994
Notes to the Financial Statements
for the 12 months ended 31 March 1997
25 Financial Instruments
(a) The nature of activities and management policies with respect to financial instruments is described as follows:
(i) Interest Rates
The interest rate risk is limited to the effective interest rate described in Note 13. The Company generally uses fixed rate loans to manage interest rate risk. The total level of fixed rate funding at 31 March was $22,500,000, having a fair value of $22,303,326.
The Company has entered into an interest rate collar agreement to limit the Company's exposure to movements in interest rates. At balance date the Company held the following instruments:
| Interest Rate Options: | Rate | Term | Commencement Date | Group 1997 $000 | Group 1996 $000 |
|---|---|---|---|---|---|
| Cap | 8.7% | One Year | 3 March 1997 | 13,000 | - |
| Floor | 8.0% | One Year | 3 March 1997 | 13,000 | - |
(ii) Credit
In the normal course of its business the Company incurs credit risk from trade debtors and financial institutions. There are no significant concentrations of credit risk. The Company has a credit policy which is used to manage this exposure to credit risk. As part of this policy, limits on exposures have been set and are monitored on a regular basis. The bank risk is reduced by institutions spreading short term investments over high credit quality financial institutions.
(iii) Foreign Exchange
The Company has, in this reporting period, conducted transactions in foreign currencies for the purpose of capital expenditure. The Company policy is to fully hedge out foreign currency exposure by using Forward Rate Agreements (FRA) and currency options during this period.
Any gains or losses associated with hedging instruments are offset by the underlying exposure.
| Group 1997 $000 | Group 1996 $000 | |
|---|---|---|
| The contract amounts of foreign instruments outstanding at balance date are as follows: | ||
| Forward Rate Agreements | - | 752 |
| Currency Options | - | 429 |
(b) Fair Values
Financial instruments in the current section of the balance sheet, with the exception of the current portion of term loans, are shown at values equivalent to their fair values. The fair value of term loans is disclosed in section (a)(i) above. Investments are shown at cost which is not significantly different from their fair values.
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VUW Te Waharoa —
NZ Gazette 1997, No 126
NZLII —
NZ Gazette 1997, No 126
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Financial Statements for Bay of Plenty Electricity Limited
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