✨ Financial Statements Notes
NEW ZEALAND GAZETTE
No. 162
TRANSPOWER NEW ZEALAND LIMITED LINES BUSINESS
NOTES TO THE FINANCIAL STATEMENTS continued
FOR THE YEAR ENDED 30 JUNE 2003
18. CONTINGENT LIABILITIES continued
Transpower has a secondary obligation of up to $100,000,000 if a financial institution does not provide adequate capital and a financial institution does not honour its obligations on the loan note. Transpower considers that the likelihood of being required to satisfy this secondary obligation is remote.
(vi) Provision for Industry Related Costs
Directors have provided for certain industry related costs. Directors believe that further disclosure of the details of these costs could adversely influence Transpower’s position in its negotiations with third parties. As a result, disclosure is limited in accordance with section 11.13 of FRS-15. There are no other material contingent liabilities for Transpower or the Transpower Group as at balance date.
19. SEGMENTAL INFORMATION
The Transpower Lines Business operates predominantly in one industry, the transmission of high voltage electricity. Transpower’s operations are carried out in New Zealand and are therefore within one geographical segment for reporting purposes.
20. FINANCIAL INSTRUMENTS
(a) Financial risks
The Transpower Group is subject to a number of financial risks which arise as a result of having a debt portfolio which is denominated in both New Zealand dollars and foreign currency, making purchases from foreign suppliers and having contractual agreements with customers. These financial risks comprise:
Interest rate risk
Interest rate risk is the risk of adverse impact on the present and future finance costs of the Company arising from the interaction of interest rate movements with Transpower’s debt portfolio.
Currency risk
Currency risk is the risk of adverse impact of exchange rate movements, which determine the New Zealand dollar cost of foreign denominated expenditures and the New Zealand dollar value of debt issued in foreign currencies.
Credit risk
Credit risk is the risk of adverse impact on Transpower through the failure of a third party bank, financial institution or customer to meet its financial obligations. Financial instruments which subject Transpower to credit risk include bank balances, receivables, investments, interest rate swaps, cross currency interest rate swaps, interest rate options, forward rate agreements, foreign exchange and forward contracts.
Liquidity risk
Liquidity risk is the risk of adverse impact on Transpower arising from the Company’s inability to meet its monetary obligations in an orderly manner. This might result from the Company not maintaining adequate funding facilities or being unable to renew or replace existing facilities when they mature.
To manage and limit the effect of these financial risks the Transpower Board of Directors has approved policy guidelines and authorised the use of various financial instruments. The policy adopted by the Board prohibits the use of financial instruments for speculative purposes. All off balance sheet financial instruments must be directly related to underlying physical debt or firm capital commitments on Board approved projects.
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Online Sources for this page:
VUW Te Waharoa —
NZ Gazette 2003, No 162
Gazette.govt.nz —
NZ Gazette 2003, No 162
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Transpower New Zealand Limited Lines Business Notes to the Financial Statements
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🏭 Trade, Customs & IndustryFinancial statements, Contingent liabilities, Guarantees, Debt, Claims, Economic Gain (Loss) Account, Debt Defeasance