✨ Financial Statements
Vector Limited
Electricity Lines Business
Statement of Accounting Policies (continued)
For the year ended 31 March 2005
m) Foreign currencies
Transactions in foreign currencies are translated at the New Zealand rate of exchange ruling at the date of the transaction. At balance date foreign monetary assets and liabilities not hedged by foreign currency derivative instruments are translated at the closing rate, and exchange variations arising from these translations are included in the statements of financial performance as operating items.
Monetary assets and liabilities in foreign currencies at balance date hedged by foreign currency derivative instruments are translated at contract rates.
n) Statement of cash flows
The following are the definitions of the terms used in the statement of cash flows:
- Operating activities include all transactions that are not investing or financing activities.
- Investing activities are those activities relating to the acquisition, holding and disposal of property, plant and equipment and of investments.
Investments can include securities not falling within the definition of cash. - Financing activities are those that result in changes in the size and composition of the capital structure. This includes both equity and debt not falling within the definition of cash. Dividends paid in relation to the capital structure are included in financing activities.
Cash is considered to be cash on hand and current accounts in banks, net of bank overdrafts.
Changes in accounting policy
With effect from 1 July 2004, the board of directors elected to change the accounting policy applied to fees and other costs incurred in raising debt finance directly attributable to the acquisition of subsidiary companies. As allowed by NZ GAAP, such fees and other costs are now recognised as part of the cost of acquisition within goodwill at the date of acquisition of the subsidiary and amortised over a period up to a maximum of 20 years. This change is necessary to give a true and fair view of the period over which benefits are expected to be derived from these debt raising costs which may exceed the term of the debt facilities themselves.
The effect of this change in accounting policy for the nine months ended 31 March 2005 has been to increase intangible assets by $8.1 million and decrease capitalised finance costs by $3.6 million in the statement of financial position, and to decrease net interest expense by $4.8 million and increase amortisation of goodwill by $0.3 million in the statement of financial performance.
The cumulative impact, after adjusting for the consequent increase in tax expense of $1.5 million, is a $3.0 million increase in net surplus for the period.
With the exception of the above, all policies have been applied on a basis consistent with those used in the prior year.
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Online Sources for this page:
VUW Te Waharoa —
NZ Gazette 2005, No 147
Gazette.govt.nz —
NZ Gazette 2005, No 147
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Vector Limited's Financial Position
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