✨ Financial Statements Notes
NGC HOLDINGS LIMITED
GAS WHOLESALING ACTIVITIES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2008
11. INTANGIBLE ASSETS
| COST / VALUATION | ACCUMULATED AMORTISATION | CARRYING AMOUNT | |
|---|---|---|---|
| 2008 | $000 | $000 | $000 |
| Software | 1,035 | (755) | 280 |
| Total | 1,035 | (755) | 280 |
| COST / VALUATION | ACCUMULATED AMORTISATION | CARRYING AMOUNT | |
|---|---|---|---|
| 2007 | $000 | $000 | $000 |
| Software | 551 | (411) | 140 |
| Total | 551 | (411) | 140 |
12. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
A comprehensive treasury policy approved by the board of directors is used to manage the risks of financial instruments. The policy outlines the objectives and approach that will be adopted in the treasury management processes. The policy covers, among other things, management of credit risk, interest rate risk, funding risk, liquidity risk, currency risk and operational risk.
INTEREST RATE RISK
The interest rate exposure is actively managed in accordance with treasury policy. In this respect, at least forty percent of all debt must be at fixed interest rates or effectively fixed using interest rate swaps, forward rate agreements, options and other derivative instruments. The main objectives are to minimise the cost of total debt, control variations in the interest expense of the debt portfolio from year to year and to match where practicable the interest rate risk profile of debt with the risk profile of the assets. The treasury policy sets parameters for managing the interest rate maturity profile. The parameters depend upon the Standard and Poor's credit rating and the Reserve Bank of New Zealand continuing to implement monetary policy through adjustments to the official cash rate.
FOREIGN EXCHANGE RISK
Transactions are conducted in foreign currencies for the purpose of protecting the NZD value of capital expenditure. The outstanding forward exchange contracts are used to hedge forecasted foreign currency exposure arising out of the capital expenditure program. Hence at balance date no significant exposure to foreign currency risk exists.
CREDIT RISK
In the normal course of business, there is exposure to credit risks from energy retailers, financial institutions and customers. Credit policies are in place, 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 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. Non-performance by any of these financial institutions is not anticipated.
There exists some concentration of credit exposures with a few large energy retailers and large energy customers. To minimise this risk, credit evaluations are performed on large energy customers and requirement of a bond or other form of security where deemed necessary is made. Cash deposits with a small number of banking institutions are placed. There are limits to the amount deposited with each institution. The maximum exposure to credit risk is represented by the fair value of each financial instrument.
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NZ Gazette 2008, No 185
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Notes to the Financial Statements for NGC Holdings Limited Gas Wholesaling Activities
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🏭 Trade, Customs & Industry28 November 2008
Financial statements, Intangible assets, Financial instruments, Risk management, NGC Holdings Limited