✨ Financial Statements Notes
NEW ZEALAND GAZETTE
30 NOVEMBER
3973
TRANSPOWER NEW ZEALAND LIMITED LINES BUSINESS
NOTES TO THE FINANCIAL STATEMENTS continued
FOR THE YEAR ENDED 30 JUNE 2001
(m) Financial Instruments
Derivative financial instruments including foreign exchange contracts, forward rate agreements, foreign exchange options, cross currency interest rate swaps, interest rate swaps and interest rate options which are entered into for the purpose of reducing exposure to fluctuations in interest rates and foreign exchange rates. While these financial instruments are subject to the risk that market rates will change subsequent to acquisition, such changes would generally be offset by an opposite effect on the items being hedged.
For interest rate swaps, the differential to be paid or received is accrued as interest rates change and is recognised as a component of interest and expensed over the life of the swaps. Premiums paid on interest rate options are amortised over the period to maturity. The settlement cash flows on the maturity of forward rate agreements are amortised over the period of the underlying asset or liability that the financial instrument is hedging.
Foreign exchange contracts and cross currency interest rate swaps entered into as hedges of foreign currency assets and liabilities are valued at exchange rates prevailing at balance date. Any unrealised gains and losses are offset against foreign currency gains or losses on the related asset or liability.
Additional information about financial instruments to which the Transpower Lines Business is a party is provided in Note 21.
(n) Reclassifications
Certain reclassifications of prior year balances have been made to conform with current year classifications.
Changes in Accounting Policies
Except for recognition of dividend provisions, there have been no changes in accounting policies with all policies having been applied on a basis consistent with those used in the previous year. Dividends declared by the directors after balance date have previously been treated as a liability at balance date. The recently released Financial Reporting Standard Statement After Balance Date (FRS-8) does not permit provisions for distributions declared after balance date. FRS-8 is mandatory for accounting periods ending on or after 30 June 2001. The dividend declared by directors on 9 August 2001 for the Transpower Group is disclosed as a post balance date event in note 16. Calculating the Transpower Lines Business dividend on the same basis, this would amount to $8,054,000.
The implementation of this change has had the impact of increasing equity and decreasing current liabilities by $8,954,000.
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Online Sources for this page:
VUW Te Waharoa —
NZ Gazette 2001, No 163
Gazette.govt.nz —
NZ Gazette 2001, No 163
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Transpower New Zealand Limited Lines Business Financial Position
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