New Zealand Gazette – 2003 – No. 133

Page 3612

✨ Financial Statements



VECTOR Limited

Electricity Lines Business

Notes to the Financial Statements

For the year ended 31 March 2003

17. FINANCIAL INSTRUMENTS - CONTINUED

Foreign exchange risk

The VECTOR Group, of which the electricity line business is the predominant activity, has, in this reporting period, conducted transactions in foreign currencies for the purposes of protecting the NZ$ value of capital expenditure. In the year it acquired A$ floating rate medium term notes with cross currency swaps as part of its acquisition of UnitedNetworks Limited.

At balance date the VECTOR Group, of which the electricity line business is the predominant activity, has no significant exposure to foreign currency risk through its cross currency swaps.

Credit risk

In the normal course of its business, the VECTOR Group, of which the electricity line business is the predominant activity, is exposed to credit risk from energy retailers, financial institutions and trade debtors. The VECTOR Group, of which the electricity line business is the predominant activity, has a credit policy, which is used to manage this exposure to credit risk.

As part of this policy, the VECTOR Group, of which the electricity line business is the predominant activity, can only have exposures to financial institutions having at least a credit rating of A- long term and A1 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 VECTOR Group, of which the electricity line business is the predominant activity, minimises their credit risk by spreading such exposures across a range of institutions. The VECTOR Group, of which the electricity line business is the predominant activity, does not anticipate non-performance by any of these financial institutions.

The VECTOR Group, of which the electricity line business is the predominant activity, has some concentration of credit exposures with a few large energy retailers. To minimise this risk, the VECTOR Group, of which the electricity line business is the predominant activity, performs credit evaluations on all energy retailers and other electricity customers and requires a bond or other form of security where deemed necessary.

The maximum exposure to credit risk is represented by the carrying value of each financial asset in the statements of financial position.

Fair values

The estimated fair value of financial instruments at balance date is:

2003 Carrying Amount 2003 Fair Value 2002 Carrying Amount 2002 Fair Value
$000 $000 $000 $000
Bank loans 700,864 700,864 104,810 104,810
Commercial paper - - 11,484 11,484
Working capital facility 4,000 4,000 - -
Medium term notes – fixed rate NZ$ 109,792 112,330 - -
Medium term notes – floating rate A$ 314,155 283,206 - -
Capital bonds 288,010 300,970 - -
Interest rate swaps – unrecognised loss/(profit) - 16,784 - (28,500)
Cross currency swaps – unrecognised loss/(profit) - 25,286 - -


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Online Sources for this page:

VUW Te Waharoa — PDF NZ Gazette 2003, No 133


Gazette.govt.nz — PDF NZ Gazette 2003, No 133




✨ LLM interpretation of page content

🏭 Vector Limited Financial Position Statements (continued from previous page)

🏭 Trade, Customs & Industry
31 March 2003
Electricity, Financial Instruments, Foreign Exchange Risk, Credit Risk, Fair Values, Bank Loans, Commercial Paper, Working Capital Facility, Medium Term Notes, Capital Bonds, Interest Rate Swaps, Cross Currency Swaps