✨ Financial Instrument Designation
NEW ZEALAND GAZETTE, No. 172
27 NOVEMBER 2009
TRANSPOWER NEW ZEALAND LIMITED LINES BUSINESS
9. Financial instrument designation
| Fair value through profit or loss (accounting mismatch) | Fair value through profit or loss (held for trading) | Hedge accounting (fair value method) | Available for sale | Loans and Receivables | Other Liabilities | |
|---|---|---|---|---|---|---|
| Current assets | ||||||
| Cash and cash equivalents | ||||||
| Trade and other receivables | 6 | 91 | ||||
| Investments | ||||||
| Hedge commitments | 9 | |||||
| Intercompany investment | ||||||
| Non-current assets | ||||||
| Investment in subsidiaries | n/a | n/a | n/a | n/a | n/a | |
| Other financial assets (Fonterra shares) | ||||||
| Current liabilities | ||||||
| Trade and other payables | 81 | |||||
| Current debt | ||||||
| Intercompany debt | H 39 | 36 | ||||
| Current portion of non-current debt | 80 | 90, 91 | 81 | |||
| Non-current liabilities | ||||||
| Bonds | 21 | |||||
| Euro Medium Term Notes | 8 | |||||
| US Private Placement | 3 | |||||
| Derivatives | ||||||
| Interest rate swaps | 1 | Interest rate options | ||||
| Basis swaps | 1 | |||||
| Cross currency interest rate swaps | 1 | |||||
| Forward exchange contracts - net hedge accounted | R1 | 79 | ||||
| Forward exchange contracts - not hedge accounted | New |
Fair Value Through Profit or Loss (Accounting Mismatch)
The Lines Business uses the provisions in NZ IAS 39 that allow for the use of fair value through profit or loss on the basis of preventing an accounting mismatch or recognition inconsistency. The Lines Business has applied those provisions only as net debt and derivatives are managed as one integrated portfolio.
Hedge Commitments
The Lines Business hedges against foreign currency fluctuations on certain foreign purchases through the use of forward exchange contracts. The “hedge commitment” represents the non-derivative fair value movement on the commitment to buy the asset. Before the “goods or service” are received, the fair value of the forward exchange contract is recognised as a hedge commitment. Once the forward exchange contracts are used for reducing currency exposure on foreign purchases, not all forward exchange contracts are hedge accounted.
Fonterra Shares
The Lines Business holds these shares as a result of acquiring land for the construction of new transmission lines. When dairy farms are purchased, Fonterra shares are often purchased to enable the continued operation of the dairy farm. These shares are classified as available for sale because they do not fall into the other three categories of financial instruments, i.e. they have no maturity date, they are not traded on an active market, there are no fixed payments associated with holding the shares and they are not here for short term profit making.
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NZ Gazette 2009, No 172
✨ LLM interpretation of page content
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Transpower New Zealand Limited Financial Instrument Designation
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💰 Finance & RevenueFinancial instruments, Fair value, Hedge accounting, Loans and Receivables, Trade and other receivables, Trade and other payables, Intercompany debt, Bonds, Euro Medium Term Notes, US Private Placement, Derivatives, Interest rate swaps, Basis swaps, Cross currency interest rate swaps, Forward exchange contracts, Hedge commitments, Fonterra shares