✨ Financial Statements Notes
2798 NEW ZEALAND GAZETTE No. 111
2.5 UnitedNetworks Limited
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
(continued)
For the year ended 31 March 2000
10 Financial Instruments
Interest Rate Risk
The group has long term borrowings, which are used to fund ongoing activities. The group actively manages interest rate exposures in accordance with treasury policy. In this respect, at least 60% of all term debt must be fixed using interest rate swaps, forward rate agreements, options and similar derivative instruments. The notional face values of outstanding derivative instruments at balance date are:
| 2000 ($000) | 1999 ($000) | |
|---|---|---|
| Interest rate swaps | 860,000 | 907,500 |
| Forward rate agreements | - | 25,000 |
| Interest rate options | - | - |
| Interest rate swaptions | - | 20,000 |
At balance date, the weighted average interest rate for swaps is 6.68% (1999: 6.51%)
Foreign Exchange Risk
The group has, in this reporting period, conducted transactions in foreign currencies for the purposes of protecting the New Zealand dollar value of capital expenditure.
At balance date the group has no significant exposure to foreign currency risk.
Credit Risk
In the normal course of its business, the group incurs credit risk from energy retailers, financial institutions and trade debtors. The group has a credit policy, which is used to manage this exposure to credit risk. As part of this policy, the group 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 group minimises their credit risk by spreading such exposures across a range of institutions. The group does not anticipate non-performance by any of these financial institutions. The group has some concentration of credit exposures with a few large energy retailers. To minimise this risk, the group performs credit evaluations on all energy retailers and other electricity customers and requires a bond or other form of security where deemed necessary.
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Online Sources for this page:
VUW Te Waharoa —
NZ Gazette 2000, No 111
Gazette.govt.nz —
NZ Gazette 2000, No 111
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Notes to Financial Statements of UnitedNetworks Limited
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