✨ Financial Statements Notes
NEW ZEALAND GAZETTE
No. 165
TRANSPOWER NEW ZEALAND LIMITED GROUP
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 1997
(l) Foreign Currencies
Transactions denominated in a foreign currency are converted at the exchange rate at the date of the transaction. Monetary assets and liabilities at balance date are translated at exchange rates current at balance date. Where transactions are hedged they are translated at the hedge rate.
Gains and losses due to currency fluctuations on foreign currency receivables and payables are included in the Statements of Financial Performance. Gains or losses from exchange rate fluctuations do not arise in respect of hedged foreign currency borrowings.
Exchange differences and associated costs on hedging transactions undertaken to establish the price of a particular purchase, are deferred and are included in the measurement of the purchase transaction as at the transaction date.
(m) Financial Instruments
Derivative financial instruments including foreign exchange contracts, forward rate agreements, foreign exchange options, cross currency interest rate swaps, interest rate swaps and interest rate options are entered into for the purpose of reducing exposure to fluctuations in interest rates and foreign exchange rates. While these financial instruments are subject to the risk that market rates will change subsequent to acquisition, such changes would generally be offset by an opposite effect on the items being hedged.
For interest rate swaps, the differential to be paid or received is accrued as interest rates change and is recognised as a component of interest or expense over the life of the swap. Premiums paid on interest rate options are amortised over the period to maturity. The settlement cash flows on the maturity of forward rate agreements are amortised over the period of the underlying asset or liability that the financial instrument is hedging.
Foreign exchange contracts and cross currency interest rate swaps entered into as hedges of foreign currency assets and liabilities are valued at exchange rates prevailing at balance date. Any unrealised gains and losses are offset against foreign currency gains or losses on the related asset or liability.
Pursuant to the introduction of the wholesale electricity market the Group has offered certain transmission hedge contracts for the period 1 November 1996 to 30 September 1997. Under these contracts, customers can fix the nodal energy price at certain locations relative to the price at specific North Island and South Island reference points.
Additional information about financial instruments to which the Group is a party is provided in Note 20.
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VUW Te Waharoa —
NZ Gazette 1997, No 165
NZLII —
NZ Gazette 1997, No 165
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