✨ Financial Statements Notes
Notes to and Forming Part of the Financial Statements
For the Year Ended 31 March 1997
24 SUBSEQUENT EVENTS
In August 1997 Powerco Limited purchased 35,050,000 (100% shareholding) shares in Egmont Electricity Limited of Hawera from the South Taranaki District Council, the sole owner, for a consideration of $89 million.
25 FINANCIAL INSTRUMENTS
(i) Credit risk
Financial instruments which potentially subject the Company to credit risk principally consist of bank balances and accounts receivable. The five largest accounts receivable balances as at 31 March 1997 comprise 8.05% of total accounts receivable. Cash deposits are only made with registered banks. No specific concerns regarding credit risk exist.
The Company performs credit evaluations on customers where possible. New customers with known high credit risk are required to pay a bond before energy is supplied to them.
(ii) Wholesale electricity purchases
The Company has exposure to wholesale electricity price fluctuations in respect of the purchase of electricity, in respect of commercial sales commitments at fixed prices over periods of one to two years through its associate company, and domestic sales at prices which may be changed by the Company within commercial limits. The price fluctuation risks are minimised by entering into back to back electricity hedge contracts through its associate company, which are fixed forward supply agreements to ensure the supply of electricity at predetermined prices.
The balance of off Statement of Financial Position financial instruments of the company are as follows:
| 1997 | 1996 | ||
|---|---|---|---|
| Contract Amount | Fair Value | Contract Amount | Fair Value |
| $000 | $000 | $000 | $000 |
| 9,000 | 9,000 | - | - |
Electricity Purchase Contracts
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VUW Te Waharoa —
NZ Gazette 1997, No 180
NZLII —
NZ Gazette 1997, No 180
✨ LLM interpretation of page content
🏭 Notes to Financial Statements for Powerco Limited
🏭 Trade, Customs & IndustryFinancial Statements, Credit Risk, Electricity Purchases, Financial Instruments