✨ Financial Statements Notes
2532 NEW ZEALAND GAZETTE No. 106
HAWKE’S BAY NETWORK LIMITED AND SUBSIDIARY
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 1999
17 FINANCIAL INSTRUMENTS
a) Price Risk (Electricity Price Hedging Instruments)
On 1 October 1998, the Electricity Retailing Business and related assets were sold as a consequence of the Electricity Industry Reform Act 1998. Prior to the passing of this Act, Energy Brokers New Zealand Ltd (EBNZ) had entered into short term hedge contracts (to September 1999) for the purchase of electricity. EBNZ had also entered into long term hedge contracts (to September 2001) as agent for the Electricity Retailing Operation. The Act had the effect of significantly reducing the expected future price path of electricity thereby creating significant negative value for these hedges. These financial instruments were not sold as part of the electricity retailing business, but the short term hedges were novated and the long term hedges transferred to the Company prior to 31 March 1999. The liability in the Statement of Financial Position represents the amount paid by EBNZ on novation of the short term hedges for the period 1 April 1999 to 30 September 1999. The significance of the price risk does not allow sufficient probability with which to value electricity hedges for inclusion in the financial statements. A weighted average valuation undertaken by Energy Link New Zealand Limited in mid June 1999 however, provided an indicative liability of approximately $4,700,000.
b) Credit Risk
Financial instruments which potentially subject the Company to credit risk principally consist of bank balances and accounts receivable. No collateral is held on these amounts other than deposits held against some electricity debtor accounts. Maximum exposure to credit risk is the amount stated in the financial statements and is net of any recognised provision for losses on these financial instruments.
c) Concentration of Credit Risk
The Company is not exposed to any concentrations of credit risk.
d) Fair Values
The methods and assumptions used are that the carrying amounts in the financial statements reflect the estimated fair value of the financial instruments including receivables, bank and investments, accounts payable and term debt.
18 SEGMENT INFORMATION
The Group operated predominantly in one industry; the distribution and retailing of electricity. The electricity retailing business was sold on 1 October 1998 as a consequence of the Electricity Industry Reform Act 1998. All operations are carried out within New Zealand.
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VUW Te Waharoa —
NZ Gazette 1999, No 106
NZLII —
NZ Gazette 1999, No 106
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Hawke's Bay Network Ltd Financial Statements Notes
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🏭 Trade, Customs & IndustryFinancial Instruments, Price Risk, Credit Risk, Electricity Hedging, Financial Statements, Segment Information