✨ Financial Statements Notes
TRANSPOWER NEW ZEALAND LIMITED LINES BUSINESS
NOTES TO THE FINANCIAL STATEMENTS continued
FOR THE YEAR ENDED 30 JUNE 2007
Financial Instruments
Transpower economically hedges against the vast majority of its interest rate and currency risk using derivatives. NZ IFRS requires derivative financial instruments to be recognised in the balance sheet at fair value. Transpower has also elected to fair value its net debt portfolio. Subsequent to transition, changes in fair value of both the derivatives and the net debt will flow through to the income statement. Changes in fair value will create some volatility in the income statement as market prices change.
Material foreign purchases which are economically hedged will be accounted for as hedges under NZ IAS 39 "Financial Instruments: Recognition and Measurement" where possible. The changes in hedged items will flow through the income statement but will offset to the extent that they qualify for fair value hedges in accordance with NZ IAS 39.
Taxation
Transpower currently accounts for tax using the liability method applied on a partial basis. This means that deferred tax is not recognised if the timing difference is not expected to reverse in the foreseeable future. NZ IFRS requires that all deferred tax is recognised in the balance sheet. Also, the tax basis will change from the current “income statement” approach to a “balance sheet” approach. The net effect of these changes will mean that Transpower will recognise its deferred tax liability in the balance sheet.
Revenue Deferral
New Investment Agreements are those agreements that Transpower enters into with customers in order to build certain grid connection assets. A majority of customers pay Transpower the contract amount up-front. Currently, where money is received up-front Transpower defers this evenly over the contract period. Under NZ IFRS, this revenue deferral will have to change to a yield to maturity basis separately recognising the imputed interest expense.
Audited Opening Balance Sheet Adjustments (1 July 2006)
| Financial Instruments | Taxation | Revenue Deferral | Other | Total | |
|---|---|---|---|---|---|
| $000 | $000 | $000 | $000 | $000 | |
| Assets | |||||
| - | 8,632 | - | - | 13 | 8,645 |
| Liabilities | |||||
| - | 2,769 | 160,409 | 3,213 | 1,219 | 167,609 |
| Retained Earnings | 5,863 | (160,408) | (3,213) | (1,215) | (158,973) |
| Other Equity | - | - | - | 9 | 9 |
2. OPERATING REVENUE
| | LINES BUSINESS | LINES BUSINESS |
| | 2007 | 2006 |
| | $000 | $000 |
| Transmission services revenue | 535,407 | 506,285 |
| Other revenue | 2,962 | 1,536 |
| Total operating revenue | 538,369 | 507,820 |
Transmission services revenue consists of charges for the transmission of electricity from the point of generation to the point of supply.
Electricity regulations additional disclosures:
| 2007 | 2006 | |
|---|---|---|
| Revenue provided to Lines Business from Other Transpower Businesses | 257 | 229 |
| Revenue - Electricity loss rental rebates | 45,445 | 86,650 |
| Expense - Electricity loss rental rebates | (45,448) | (86,660) |
| Electricity loss rental rebates not passed through to customers | - | 60 |
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Online Sources for this page:
VUW Te Waharoa —
NZ Gazette 2007, No 134
Gazette.govt.nz —
NZ Gazette 2007, No 134
✨ LLM interpretation of page content
🏭
Transpower New Zealand Limited Lines Business Notes to the Financial Statements
(continued from previous page)
🏭 Trade, Customs & Industry30 November 2007
Financial Instruments, Derivatives, Hedging, Accounting Policies, NZ IFRS, Financial Reporting, Taxation, Revenue Deferral, Balance Sheet Adjustments, Operating Revenue, Transmission Services, Electricity Regulations