✨ Financial Statements Notes
29 NOVEMBER 2004
NEW ZEALAND GAZETTE, No. 155
3833
2.4 NOTES TO THE FINANCIAL STATEMENTS
13 Financial instruments continued
Credit risk
In the normal course of its business, the company is exposed to credit risk from energy retailers, financial institutions and trade debtors. The company has credit policies, which are used to manage this exposure to credit risk.
As part of these policies, the company can only have exposures to financial institutions having at least a credit rating of A- long 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 its 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 large 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 other than for the interest rate swaps where there is no exposure.
Fair values
The estimated fair value of financial instruments as applicable to the gas lines at 30 June 2004 are as follows:
| 30 June 2004 | 30 June 2003 | |||
|---|---|---|---|---|
| Carrying Amount | Fair Value | Carrying Amount | Fair Value | |
| ($000) | ($000) | ($000) | ($000) | |
| Cash and bank | 195 | 195 | (57) | (57) |
| Trade receivables | 958 | 958 | 804 | 804 |
| Trade payables and | ||||
| other creditors | 6,482 | 6,482 | 3,286 | 3,286 |
| Working capital loan | 11,239 | 11,239 | - | - |
| Medium term notes: | ||||
| Fixed rate NZ$ | - | - | 80,963 | 84,383 |
| Floating rate A$ | 234,714 | 209,451 | 231,582 | 219,403 |
| Interest rate swaps (loss) | 3,098 | (2,044) | - | (11,358) |
| Cross currency swaps (loss) | (1,470) | (22,426) | - | (10,402) |
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.
Trade receivables and payables, cash and short-term deposits, loans and working capital
The carrying amount of these items is equivalent to their fair value and includes the principal and interest accrued. Bank overdrafts are set off against cash balances pursuant to right of set off.
Trade receivables are net of doubtful debts provided.
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Online Sources for this page:
VUW Te Waharoa —
NZ Gazette 2004, No 155
Gazette.govt.nz —
NZ Gazette 2004, No 155
✨ LLM interpretation of page content
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Vector Limited Gas Information Disclosure
(continued from previous page)
🏭 Trade, Customs & Industry17 November 2004
Financial Instruments, Credit Risk, Fair Values, Trade Receivables, Loans