New Zealand Gazette – 1999 – No. 125

Page 3006

✨ Financial Statements Notes



3006 NEW ZEALAND GAZETTE No. 125

2.5 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS (continued)

For the year ended 31 March 1999

At balance date, the weighted average interest rates for swaps and forward rate agreements are 6.51% and 4.89% respectively. The weighted average strike rate for interest rate swaptions is 7.30%.

  • Credit Risk
    In the normal course of business the company incurs credit risk from energy retailers, financial institutions and trade debtors. The company has a credit policy which is used to manage this exposure to credit risk. As part of this policy, the company can only have exposures to financial institutions having at least a credit rating of A- long term and A- short term from Standard & Poors (or equivalent rating). In addition, limits on exposures to financial institutions have been set by the Board of Directors and are monitored on a regular basis. In this respect, the company minimises their credit risk by spreading such exposures across a range of institutions. The company does not anticipate non-performance by any of these financial institutions. The company has concentration of credit exposures with a few large energy retailers. To minimise this risk, the company performs credit evaluations on all energy retailers and other electricity customers and requires a bond or other form of security where deemed necessary.

  • Fair values
    The estimated fair value of financial instruments at 31 March is:

    1999 1998
    Carrying amount ($000) Fair value ($000)
    Cash and Liquid 38,510 38,510
    Deposits
    Loans 1,026,000 1,026,000
    Interest Rate Swap - (17,930)
    Interest Rate - (820)
    Swaptions

  • Cash and Short Term Deposits, Short Term Loans
    The carrying amount of these items is equivalent to their fair value.

  1. Capital Commitments
    At balance date, estimated capital expenditure contracted for but not provided was $1.6 million (1998: $3.6 million).

  2. Contingent Liabilities
    The group has provided guarantee in respect of Pacific Energy Limited liabilities to:

    • BNZ for letters of credit required by Electricity Market Company Limited; and
    • BNZ for cash advance facility provided; and
    • Electricity Corporation for entering into hedging contracts

    The total guarantees are for a maximum amount of $21.9 million (1998: $4.2 million). Subsequent to year-end these have been reduced to $2.1 million.

    The group also has other contingent liabilities totalling $3.1 million (1998: $0.1 million) consisting of:

    • Performance bonds to ensure completion of contract works; and
    • Letters of credit to satisfy New Zealand Stock Exchange listing requirements; and
    • Letters of credit to guarantee other payments.

    Contingent liabilities exist in relation to on-going disputes which are being defended.



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✨ LLM interpretation of page content

💰 Notes to Financial Statements for the year ended 31 March 1999 (continued from previous page)

💰 Finance & Revenue
Financial Statements, Interest Rates, Credit Risk, Fair Values, Capital Commitments, Contingent Liabilities