✨ Financial Risks Analysis
28 NOVEMBER 2008
NEW ZEALAND GAZETTE, No. 186
4897
TRANSPOWER NEW ZEALAND LIMITED LINES BUSINESS
LINES BUSINESS 2007
| Within one year $000 | One to two years $000 | Two to five years $000 | Greater than five years $000 | |
|---|---|---|---|---|
| Non derivative financial liabilities | ||||
| Borrowings (Principal) | (765,024) | (126,497) | (306,091) | (279,963) |
| Interest payments on borrowings | (35,806) | (36,206) | (87,415) | (133,535) |
| Derivative financial liabilities |
| Derivative contracts - receipts| 99,314 | 226,126 | 617,814 | 702,912 |
| Derivative contracts - payments| (121,668) | (286,328) | (657,552) | (699,102) |
| | (823,184) | (223,505) | (433,244) | (409,688) |
(h) Sensitivity Analysis
Currency risk
Lines Business policy (section b) is to hedge all foreign denominated debt and committed foreign purchases greater than $1 million (New Zealand dollar equivalent)
Interest rate risk
The Lines Business policy is to hedge between 80% and 100% of debt in year 1 and reducing amounts out to 15 years.
Fair value movement risk
The Lines Business's net debt is designated at fair value through profit or loss. As such, the Lines Business is subject to fair value gains or losses. The extent of the gains or losses is based on the Lines Business's cash flow profile compared to the corresponding movement in the yield curve.
A parallel shift in the yield curve by 1% would create the following fair value movements based on net debt held at 30 June 2008.
- 1% parallel upward shift - fair value gain of $77.7 million.
- 1% parallel downward shift - fair value loss of $84.1 million.
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NZ Gazette 2008, No 186
✨ LLM interpretation of page content
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Financial Instruments and Risks for Transpower Lines Business
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🏭 Trade, Customs & IndustryFinancial Risks, Interest Rate Risk, Currency Risk, Credit Risk, Liquidity Risk, Financial Instruments