✨ Financial Derivatives Report
10. Derivatives and hedge commitment
This note shows the short term (ST) and long term (LT) breakdown of the derivatives and hedge commitment.
| 2011 | LINES BUSINESS |
|---|---|
| ST asset $M | |
| Debt related derivatives | |
| Cross currency interest rate swaps | 6.3 |
| Interest rate swaps | 10.2 |
| Basis swaps | - |
| 16.5 |
| Purchasing related derivatives and hedge commitment |
| Foreign exchange forward contracts | 0.2 | - | (35.7) | (6.1) | (41.6) |
| Commitment on fair value hedges | 35.7 | 6.1 | - | - | 41.8 |
| Total derivatives and hedge commitment | 52.4 | 167.7 | (130.7) | (214.3) | (124.9) |
| Commitment on fair value hedges (above) | 35.7 | 6.1 | - | - | 41.8 |
| Total derivatives | 16.7 | 161.6 | (130.7) | (214.3) | (166.7) |
| 2010 | LINES BUSINESS |
|---|---|
| ST asset $M | |
| Debt related derivatives | |
| Cross currency interest rate swaps | - |
| Interest rate swaps | - |
| Interest rate options | - |
| - |
| Purchasing related derivatives and hedge commitment |
| Foreign exchange forward contracts | 29.5 | - | (30.7) | - | (1.2) |
| Commitment on fair value hedges | - | - | - | - | - |
| Total derivatives and hedge commitment | 29.5 | 107.1 | (76.8) | (59.6) | (0.8) |
| Commitment on fair value hedges (above) | 29.5 | - | - | - | 29.5 |
| Total derivatives | - | 107.1 | (76.8) | (59.6) | (29.3) |
Derivatives are used to manage financial risk. The gain or loss on derivatives represents the unrealised gain or loss at balance date. The Transpower Lines Business anticipates that the derivatives will be held until maturity, and it is unlikely that settlement at the reported fair values will occur.
Debt and purchasing related derivatives
The nature of the debt and purchasing related derivatives is discussed in Note 17 Debt, financial instruments and risk management.
Commitment on fair value hedges
The Transpower Lines Business hedges against foreign currency fluctuations on certain foreign purchases through the use of hedges of foreign exchange forward contracts (FEC’s). The hedge commitment represents the non derivative fair value movement on the commitment to buy the goods, i.e. before the goods or an invoice are received. The fair value of the derivative (FEC) is shown separately (in the same note). Note that, although all FEC’s are used for economically hedging foreign purchases, not all FEC’s are hedge accounted.
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NZ Gazette 2011, No 184
✨ LLM interpretation of page content
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Financial instrument categorisation for Transpower New Zealand Limited
(continued from previous page)
💰 Finance & RevenueFinancial Statements, Transpower, Lines Business, Financial Instruments, Categorisation, Derivatives, Hedge Commitment, Debt Related Derivatives, Purchasing Related Derivatives