✨ Financial Statements Notes
1208 NEW ZEALAND GAZETTE No. 53
2.3 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS (con’t)
14 Financial instruments (con’t)
Foreign exchange risk
The company has, in this reporting period, conducted transactions in foreign currencies for the purposes of protecting the NZ $ value of capital expenditure.
At balance date the group has no significant exposure to foreign currency risk.
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 their 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 some 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 31 December is:
| Carrying Amount ($000) | Fair Value ($000) | |
|---|---|---|
| Cash and bank | 3,368 | 3,368 |
| Bank loans | 537,420 | 537,420 |
| Commercial paper | - | - |
| Interest rate swaps mark to market gain / (loss) | - | (5,332) |
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.
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.
15 Segmental reporting
The predominant activity of UnitedNetworks is the ownership and operation of distribution networks. All operations are conducted in New Zealand.
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Online Sources for this page:
VUW Te Waharoa —
NZ Gazette 2001, No 53
Gazette.govt.nz —
NZ Gazette 2001, No 53
✨ LLM interpretation of page content
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Notes to Financial Statements for 9 months ended 31 December 2000
(continued from previous page)
🏭 Trade, Customs & IndustryFinancial Statements, Foreign Exchange Risk, Credit Risk, Fair Values, Segmental Reporting