✨ Financial Disclosures
2778 NEW ZEALAND GAZETTE No. 108
10 CONTINGENT LIABILITIES AND COMMITMENTS
Contingencies
As Powerco is an integrated business, this disclosure relates to the business as a whole.
The company has been named as a Second Defendant in a claim issued by Todd Energy Limited and Kiwi Co-operative Dairies Limited against Transpower Limited. Kiwi Cogeneration Limited has applied to the Court to be substituted as a Plaintiff in place of Kiwi Co-operative Dairies Limited. The Plaintiffs allege various breaches of the Commerce Act 1986 and claim various declarations and injunctions together with damages totalling $19.9 million. The claim is being defended by Powerco, which contends that it is not in breach of any of its obligations. No provision for the claim has been included in the financial statements.
11 FINANCIAL INSTRUMENTS
(i) Credit Risk
As Powerco is an integrated business, this disclosure relates to the business as a whole. Financial instruments which potentially subject the Company to credit risk principally consist of bank balances and account receivable. The five largest accounts receivable balances as at 31 March 2001 comprise 78.76% 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 by the Fixed Coupon Bonds and 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 and has converted the fixed interest rates on Bonds into floating by a reverse swap agreement, and re-fixed interest rates via additional swap agreements. As at 31 March 2001 the Company had interest rate swap agreements with registered banks. The last of these agreements maturing within 10 years. The weighted average of these swap agreements produce an interest rate of 7.408% p.a.
(iii) Fair Value
All assets and liabilities are considered to be at their fair value with the exception of the following items;
| Notional Values Current 31 March 2001 $000 | Notional Values Forward rate 31 March 2001 $000 | Mark to Market Adjustment 31 March 2001 $000 | |
|---|---|---|---|
| Interest rate swaps | 27,962 | - | (642) |
| Forward rate swaps | - | 22,099 | (423) |
| Swaps (Fixed to floating for Bonds) | (16,056) | - | 673 |
| Total Bonds Debt (Fixed payments to Bond Holders) | 15,876 | - | - |
| (392) |
12 RELATED PARTY TRANSACTIONS
Powerco paid consulting fees amounting to $3,608 to Upson Associates Ltd, a company in which Mr B R Upson, a director has an interest, for work done on behalf of the predecessor companies for the amalgamation. This amount was paid in September 2000.
Powerco is also deemed to have a related party relationship with New Plymouth District Council. The New Plymouth District Council holds a 47.61% material interest in Powerco Limited. Powerco paid $9,832 rent to the New Plymouth District Council at market rates. Rates have been paid to New Plymouth District Council to the value of $1,633. Other arms length transactions with the New Plymouth District Council amounted to $1,674.
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Online Sources for this page:
VUW Te Waharoa —
NZ Gazette 2001, No 108
Gazette.govt.nz —
NZ Gazette 2001, No 108
✨ LLM interpretation of page content
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Powerco Limited Gas Information Disclosure
(continued from previous page)
🏭 Trade, Customs & IndustryFinancial Statements, Contingent Liabilities, Financial Instruments, Related Party Transactions, Powerco Limited, Commerce Act 1986, Credit Risk, Interest Rate Risk, Fair Value
- B R Upson (Director), Consulting fees paid to Upson Associates Ltd