New Zealand Gazette – 2001 – No. 104

Page 2662

✨ Financial Statements



2662 NEW ZEALAND GAZETTE No. 104

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

FINANCIAL INSTRUMENTS (continued)

Credit Risk
In the normal course of its 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 its 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 a concentration of credit exposures to 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 balance date is:

2001 2000
Carrying amount Fair value Carrying amount
($000) ($000) ($000)
Cash and bank overdraft - - -
Bank loans 719,800 719,800 879,600
Commercial paper 119,499 119,487 -
Interest rate swaps mark
to market gain / (loss) (22,493)

The following methods and assumptions were used to estimate the fair value of each class of financial instrument where it is practical to estimate that value:

Cash and short term deposits, short term loans
The carrying amount of these items is equivalent to the fair value.

Commercial paper
The carrying amount of these items is equivalent to the fair value.

Derivative instruments
The fair value of interest rate swaps, forward rate agreements, interest rate options and other derivative instruments is estimated based on the quoted market prices for these instruments.

18 SEGMENTAL REPORTING

The predominant activity of UnitedNetworks is the ownership and operation of electricity distribution networks. All operations are conducted in New Zealand.

19 CAPITAL COMMITMENTS

At balance date, estimated capital expenditure contracted for but not provided was nil (2000: $0.6 million).



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Online Sources for this page:

VUW Te Waharoa — PDF NZ Gazette 2001, No 104


Gazette.govt.nz — PDF NZ Gazette 2001, No 104




✨ LLM interpretation of page content

🏭 Notes to Financial Statements for UnitedNetworks (continued from previous page)

🏭 Trade, Customs & Industry
Financial Statements, Credit Risk, Fair Values, Financial Instruments, Interest Rate Swaps, Derivative Instruments, Segmental Reporting, Capital Commitments