✨ Financial Instruments Notes
3922 NEW ZEALAND GAZETTE No. 165
TRANSPOWER NEW ZEALAND LIMITED GROUP
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 1997
20. FINANCIAL INSTRUMENTS (cont.)
The notional contract amounts of interest rate options outstanding at balance date are:
| 1997 | 1996 | |
|---|---|---|
| $'000 | $'000 | |
| Interest rate options | 115,000 | - |
Foreign exchange forward contracts
The Group uses foreign exchange forward contracts to fix the New Zealand dollar cost of foreign denominated capital equipment and stock purchases and to eliminate foreign currency risk on debt issued in foreign currency.
The contract amount of forward foreign exchange contracts outstanding at balance date are:
| 1997 | 1996 | |
|---|---|---|
| $'000 | $'000 | |
| Forward foreign exchange contracts | 254,114 | 257,011 |
Foreign currency options
The Group enters into foreign currency options to manage the effect of exchange rate fluctuations on foreign currency purchases. The Group purchases foreign currency options to reduce the impact of unfavorable movements in exchange rates during the period between commitment to purchase capital equipment, stock items and the contracted payment date.
The notional contract amounts for foreign currency options outstanding at balance date are:
| 1997 | 1996 | |
|---|---|---|
| $'000 | $'000 | |
| Foreign currency options | 823 | - |
(d) Financial instruments to facilitate the operation of the wholesale electricity market
Transmission hedge contracts
The Group has offered certain transmission hedge contracts for the period from 1 November 1996 to 30 September 1997. Under these contracts, customers fix their nodal energy price at certain locations relative to the price at specific North Island and South Island reference points. Under these contracts any difference that arises is settled between parties. The differences arise when the actual ratio of the nodal energy price at the location to the nodal energy price at the reference point is different to the strike ratio established under the transmission hedge contract.
The maximum possible loss to which the Group is subject for the remaining period of the transmission hedge contract from 1 August 1997 to 30 September 1997 is NZ$10,347,008. This calculation is based on the Group settling the transmission hedge contracts at a maximum payout level set in the contract. Based on forecasted energy generation patterns and known transmission constraints, it is extremely unlikely the maximum loss will be realised. No transmission hedge loss occurred during July 1997.
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VUW Te Waharoa —
NZ Gazette 1997, No 165
NZLII —
NZ Gazette 1997, No 165
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Notes to the Financial Statements
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🏭 Trade, Customs & IndustryFinancial Instruments, Interest Rate Options, Foreign Exchange Forward Contracts, Foreign Currency Options, Transmission Hedge Contracts