New Zealand Gazette – 2001 – No. 105

Page 2693

✨ Financial Statements



VECTOR Limited

Electricity Lines Business

Notes to the Financial Statements

For the year ended 31 March 2001

2001 2000
$000 $000

17. FINANCIAL INSTRUMENTS (CONTINUED)

Concentrations of credit risk

2001 2000
Bank balances 30,688 11,248
Term deposits - 22,000
Total 30,688 33,248

The line business is not exposed to any other concentrations of credit risk.

Interest rate risk

Interest rates on debt issued in the current year are generally fixed for periods of between one and three months at rates from 6.4% to 6.9% (2000: 4.1% to 7.8%). The interest rates are based on the BkBM rate plus a margin.

Interest rate swaps and forward rate agreements are used to manage the proportion of fixed rate debt to total debt. Interest rate swaps and forward rate agreements open as at 31 March 2001 have a principal of $194 million (2000: $209.8 million) with a cash benefit of $33.3 million (2000: $27.4 million). The VECTOR group, of which the line business is the predominant activity, pays a weighted average interest rate on open interest rate swaps and forward rate agreements of 7.1% (2000: 7.2%).

The VECTOR group, of which the line business is the predominant activity, values interest rate swaps by determining the net present value of future cash flows using current interest rates. The VECTOR group, of which the line business is the predominant activity, continuously monitors the credit quality of the major international institutions that are counterparties to its off-balance sheet financial instruments and does not anticipate non-performance by any of the counterparties.

Currency Risk

In 1997 the VECTOR group, of which the line business is the predominant activity, issued a bond in Swiss France. As a result of this transaction exposures to fluctuations in foreign currency exchange rates arise. The VECTOR group, of which the line business is the predominant activity, has hedged all these borrowings in foreign currency by currency swap. Currency swaps open at balance date have a principal of $104.8 million (2000: $104.8 million). The cash benefit of the currency swaps is incorporated in the interest rate swaps. The currency swap was taken with an interest rate swap as one transaction. Valuation cannot be obtained to distinguish the two components.

18. COMMITMENTS

Capital expenditure commitments
Estimated capital expenditure contracted for:

at balance date but not provided for: 2001 2000
CBD reinforcement tunnel 100 36,500
Other commitments 7,313 8,239
Total 7,413 44,739

Operating lease commitments

2001 2000
Within one year 1,445 2,792
One to two years 1,316 1,284
Two to five years 3,598 3,765
Beyond five years 180 1,256
Total 6,539 9,097

The majority of the operating lease commitments relate to premises leases. Operating leases held over properties give the VECTOR group, of which the line business is the predominant activity, the right to renew the lease.



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Online Sources for this page:

VUW Te Waharoa — PDF NZ Gazette 2001, No 105


Gazette.govt.nz — PDF NZ Gazette 2001, No 105




✨ LLM interpretation of page content

🏭 Vector Limited Notes to the Financial Statements (continued from previous page)

🏭 Trade, Customs & Industry
Financial Statements, Financial Instruments, Credit Risk, Interest Rate Risk, Currency Risk, Commitments, Capital Expenditure, Operating Lease