✨ Financial Statements Notes
Notes to and Forming Part of the Financial Statements
For the Year Ending 31 March 2002
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 accounts receivable. There are no significant concentrations of credit risk. The five largest accounts receivable balances as at 31 March 2002 comprise 11.49% (2001: 73.76%) of total accounts receivable. These accounts are subject to a Board Prudential Supervision Policy which is used to manage the exposure to credit risk. As part of this policy, limits on exposures have been set and are monitored on a regular basis. 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. Non-current debt is funded by the Redeemable Fixed Coupon Bonds and Powerco's Commercial Paper programme 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 borrowings. As at 31 March 2002 the Company had interest rate swap agreements with registered banks. The maturities of these agreements are shown in Note 10 (iii). The weighted average of the interest rate swap agreements (excluding the reverse swap agreements) produce an interest rate of 7.13% p.a.
(iii) Fair Value as at 31 March 2002
Financial assets and liabilities (excluding Bonds referred to in Note 3 above) are considered to be at their fair value with the exception of the following items:
| Maturities | Notional Values Current 31 March 2002 $000 | Notional Values Forward rate 31 March 2002 $000 | Mark to Market Adjustment 31 March 2002 $000 |
|---|---|---|---|
| Interest rate swaps | |||
| (Powerco pays fixed/receives floating) | 2002-2010 | 420,000 | - |
| Forward rate swaps | |||
| (Powerco pays fixed/receives floating) | 2005-2011 | - | 305,000 |
| Swaps (Fixed to floating for Bonds) | |||
| (Powerco receives fixed/pays floating margin) | 2006-2008 | 178,000 | - |
| Total | (147) |
(iv) Fair Value as at 31 March 2001
Financial assets and liabilities (excluding Bonds referred to in Note 3 above) are considered to be at their fair value with the exception of the following items:
| Maturities | 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 | |||
| (Powerco pays fixed/receives floating) | 2002-2010 | 310,000 | - |
| Forward rate swaps | |||
| (Powerco pays fixed/receives floating) | 2005-2011 | - | 245,000 |
| Swaps (Fixed to floating for Bonds) | |||
| (Powerco receives fixed/pays floating margin) | 2006-2008 | 178,000 | - |
| Total | (4,547) |
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Online Sources for this page:
VUW Te Waharoa —
NZ Gazette 2002, No 129
Gazette.govt.nz —
NZ Gazette 2002, No 129
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Powerco Limited Notes to the Financial Statements
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🏭 Trade, Customs & IndustryElectricity, Gas, Financial Statements, Credit Risk, Interest Rate Risk, Fair Value