✨ Financial Instruments and Related Party Transactions
2388 NEW ZEALAND GAZETTE No. 95
9 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 2000 comprise 81.46% of total accounts receivable. These accounts are subject to a Board Prudential Supervision Policy. Cash deposits are only made with registered banks.
( ii ) Interest Rate Risk
Interest rate risk is the risk that interest rates will change, increasing or decreasing the cost of borrowing or lending. The company’s short-term borrowings are on a floating daily interest rate. Long-term debt is funded via Powerco’s Commercial Paper program based on 90 day Bank Bills. Powerco has entered into interest rate swap agreements to reduce the impact of the changes in interest rates on its Commercial Paper program. At 31 March 2000 the company had interest rate swap agreements outstanding with commercial banks. The total notional principal amount of these arrangements totalled $61 million with the last of these agreements maturing within 5 years. The weighted average of these swap agreements produce an interest rate of 7.22%.
10 RELATED PARTY TRANSACTIONS
A total sum of $462,266 was paid to Horsley Christie, Solicitors, of Wanganui as legal fees where Mr. Brown is a Partner. Legal fees paid were mainly in respect of merger and acquisition strategies undertaken by the Company during the year under review.
A sum of $29,150 was paid to Upson Associates Limited for consulting services provided, where Mr Upson is a director and a further sum of $101,400 was also paid to the said company for services provided by Mr. Upson as Acting Chief Executive of Powerco for an approximate period of six months.
A sum of $10,846 was paid to Auld Brewer Mazengarb & McEwen, Solicitors, of New Plymouth for consulting services provided where Mr Auld is a partner.
Powerco is also deemed to have a related party relationship with New Plymouth District Council. The New Plymouth District Council holds a material interest in Pukeariki Holdings Limited, who hold a 50.41% shareholding in Powerco Limited. Powerco paid $337,252 rent to the New Plymouth District Council at market rates. Powerco also supplied energy to the New Plymouth District Council under normal terms and conditions, sales being 0.51% of total sales. Rates have been paid to New Plymouth District Council to the value of $36,752. Other arms length transactions with the New Plymouth District Council amounted to $87,614.
Powerco has a current account arrangement with Taranaki Energy Limited, a wholly owned subsidiary. Powerco pays interest and other costs on behalf of Taranaki Energy Limited and on-charges these through the current account.
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Online Sources for this page:
VUW Te Waharoa —
NZ Gazette 2000, No 95
Gazette.govt.nz —
NZ Gazette 2000, No 95
✨ LLM interpretation of page content
💰 Credit Risk and Interest Rate Risk
💰 Finance & RevenueCredit Risk, Interest Rate Risk, Bank Balances, Accounts Receivable, Interest Rate Swaps
💰 Related Party Transactions
💰 Finance & RevenueRelated Party Transactions, Legal Fees, Consulting Services, Rent, Energy Supply
- Brown (Mr), Partner at Horsley Christie, Solicitors
- Upson (Mr), Director and Acting Chief Executive of Powerco
- Auld (Mr), Partner at Auld Brewer Mazengarb & McEwen, Solicitors