New Zealand Gazette – 1997 – No. 165

Page 3919

✨ Financial Statements Notes



26 NOVEMBER NEW ZEALAND GAZETTE 3919

TRANSPOWER NEW ZEALAND LIMITED GROUP

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 1997

20. FINANCIAL INSTRUMENTS (cont.)

(b) Risk management policies

The key risk management policies are as follows:

Interest rate risk management policy

The Group’s policy is that floating rate debt is not to exceed 36.25 per cent of total debt and no more than 25 per cent of fixed rate debt is to re-price in any one financial year. This policy ensures that the Group’s cost of funds will be reasonably predictable from year to year. The Group defines floating rate debt to include debt for which the next interest rate reset is due within 12 months.

Currency risk management policy

The Group’s policy is to hedge all material foreign currency denominated purchases, arising from revenue and capital projects approved by the Board, within two days of committing to the purchase.

Foreign currency borrowings are converted into New Zealand dollars at the time of commitment to draw down by the Group. Currency risk is eliminated using foreign exchange forward contracts and cross currency interest rate swaps.

Credit risk management policy

The Group’s policy is to establish credit limits to a maximum of 15 per cent of the Group shareholder’s funds with counterparties that are either a bank or financial institution and have a minimum long term credit rating of A or above by Standard and Poors, or Moodys equivalent or a New Zealand corporate with a short term credit rating of A-1 or above. Credit limits are monitored on a daily basis.

The concentration of credit risk with respect to trade receivables is high due to the small number of customers comprising the Group’s customer base. It is the Group’s policy to perform credit evaluations on customers requiring credit and the Group may in some circumstances require collateral. No collateral is held at 30 June 1997 (1996: nil).

Liquidity risk policy

To ensure the Group has adequate funding facilities in place to support future operations the Group’s liquidity policy requires the Group to have access to committed debt facilities (i.e. guaranteed funds) that exceed the peak of the total monthly cumulative cash outflows over the next six months by 20 per cent. To smooth Group refinancing requirements in future periods, committed debt facilities maturing in any 12 month period are not to exceed 20 per cent of total debt.



Next Page →

PDF embedding disabled (Crown copyright)

View this page online at:


VUW Te Waharoa — PDF NZ Gazette 1997, No 165


NZLII — PDF NZ Gazette 1997, No 165




✨ LLM interpretation of page content

🏭 Notes to the Financial Statements (continued from previous page)

🏭 Trade, Customs & Industry
Financial Instruments, Financial Risks, Interest Rate Risk, Currency Risk, Credit Risk, Liquidity Risk, Risk Management Policies, Transpower New Zealand Limited