✨ Financial Statements and Notes
1414 NEW ZEALAND GAZETTE No. 54
2.3 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS (con't)
13 Financial instruments (con't)
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 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 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.
The maximum exposure to credit risk is represented by the carrying value of each financial asset in the statement of financial position.
Fair values
The estimated fair value of financial instruments as applicable to the gas lines at 31 December is:
| 2002 | 2001 | |||
|---|---|---|---|---|
| Carrying Amount | Fair Value | Carrying Amount | Fair Value | |
| ($000) | ($000) | ($000) | ($000) | |
| Cash and bank | (105) | (105) | 1,158 | 1,158 |
| Bank loans | - | - | 68,373 | 68,373 |
| Commercial paper | - | - | 143,155 | 143,155 |
| Medium term notes – | ||||
| fixed rate NZ$ | 81,239 | 82,537 | 84,840 | 83,381 |
| Medium term notes – | ||||
| floating rate A$ | 232,537 | 202,866 | 243,158 | 243,128 |
| Interest rate swaps | - | (6,955) | - | (6,464) |
| Cross currency swaps | - | (30,968) | - | 345 |
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. Bank overdrafts are set off against cash balances pursuant to right of set off.
Commercial paper
The carrying amount of these items is equivalent to their fair value
Medium term notes
The fair value of NZ$ notes is based on quoted market prices. The fair value of A$ notes is based on the face value converted at the exchange rate prevailing at year end.
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Online Sources for this page:
VUW Te Waharoa —
NZ Gazette 2003, No 54
Gazette.govt.nz —
NZ Gazette 2003, No 54
✨ LLM interpretation of page content
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UnitedNetworks Limited Gas Information Disclosure
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🏭 Trade, Customs & Industry14 May 2003
Financial Statements, Credit Risk, Fair Values, Financial Instruments, Energy Retailers, Bank Loans, Commercial Paper, Medium Term Notes, Interest Rate Swaps, Cross Currency Swaps