✨ Financial Statements Notes
NGC HOLDINGS LIMITED
GAS RETAILING ACTIVITIES
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 30 JUNE 2007
10. FINANCIAL INSTRUMENTS (CONTINUED)
CREDIT RISK
In the normal course of business, there is exposure to credit risks from energy retailers, financial institutions and trade debtors. There are credit policies, which are used to manage the exposure to credit risks.
As part of these policies, exposures are limited to financial institutions having at least a credit rating of A+ long term from Standard & Poor's (or equivalent rating). In addition, limits on exposures to financial institutions have been set by the Vector board of directors and are monitored on a regular basis. In this respect, credit risk is minimised by spreading such exposures across a range of institutions. There is no anticipation of non-performance by any of these financial institutions.
There are some concentration of credit exposures with a few large energy retailers and large energy customers. To minimise this risk, credit evaluations of all energy retailers and large energy customers are undertaken and a requirement for a bond or other form of security where deemed necessary is placed.
Cash deposits with a small number of banking institutions are placed and limits are set for the amount deposited with each institution.
The maximum exposure to credit risk is represented by the carrying value of each financial asset.
| 2007 CARRYING AMOUNT $'000 | 2006 CARRYING AMOUNT $'000 | |
|---|---|---|
| Cash | - | 1,554 |
| Trade receivables | 36,472 | 23,322 |
LIQUIDITY RISK
Liquidity risk is the risk of encountering difficulty in raising funds at short notice to meet financial commitments as they fall due. In order to reduce the exposure to liquidity risk, access to un-drawn committed lines of credit has been established.
11. CONTINGENT LIABILITIES
The directors are aware of claims against entities within the Vector group and, where appropriate, have recognised provisions for these within the financial statements. No material contingencies requiring disclosure have been identified (30 June 2006: nil).
12. RELATED PARTY BORROWINGS
Borrowings are a notional apportionment of the Vector group debt facilities including bank loans, a working capital facility, medium term notes - floating rate A$, capital bonds, fixed interest rate bonds, private placement senior notes and NZ floating rate notes. All borrowings are unsecured with all bank loans and medium term notes being subject to negative pledge arrangements.
Interest cost on the borrowings has been calculated using a weighted average interest rate of 7.47% applicable to the Vector Group.
Borrowings are classified between current and non-current dependent on expected repayment dates. Borrowings are subject to various lending covenants. These have all been met for the years ended 30 June 2007 and 30 June 2006.
A detailed disclosure of Vector group's borrowings is available under Note 29 of the Vector Group's annual report for the year ended 30 June 2007.
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Online Sources for this page:
VUW Te Waharoa —
NZ Gazette 2007, No 132
Gazette.govt.nz —
NZ Gazette 2007, No 132
✨ LLM interpretation of page content
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Notes to the Financial Statements for NGC Holdings Limited
(continued from previous page)
💰 Finance & RevenueFinancial statements, Financial Instruments, Credit Risk, Liquidity Risk, Contingent Liabilities, Related Party Borrowings