✨ Financial Instruments Report
POWERSON
GAS DIVISION
Interest rate swap contracts
Unless interest rate swap contracts, the Division prepares to exchange the difference between fixed and floating principal amounts calculated on agreed notional principal amounts. Such contracts expose the Division to interest rate movements on debt maturing in future years. The interest rate swaps are valued using the yield curve at the reporting date. The contracts are based on the following balances at the end of the financial year. The interest rates referred to are on a net basis.
The following tables detail the notional principal amounts and remaining terms of interest rate swap contracts outstanding as at reporting dates.
30 June 2010
| Fair Value | Nominal Principal Amount | Average Contracted Fixed Interest Rate | |
|---|---|---|---|
| NZD (thousands) | NZD 24,000 | ||
| Less than one year | NZD (209) | 6.32% | |
| One to five years | NZD 1,017 | 6.35% | |
| Total fair value interest rate swaps | NZD 808 |
30 June 2011
| Fair Value | Nominal Principal Amount | Average Contracted Fixed Interest Rate | |
|---|---|---|---|
| NZD (thousands) | NZD 23,000 | ||
| Less than one year | NZD 735 | 6.44% | |
| One to five years | NZD 21,244 | 6.32% | |
| More than five years | NZD 1,068 | 8.59% | |
| Total fair value interest rate swaps | NZD 23,047 |
Foreign currency exchange contracts:
The Division enters into forward currency swap and interest rate risk arising from the US private placement notes.
30 June 2010
| Contract Value NZD (000) | Fair Value NZD (000) | Due (NZD/USD) | Notional Amount USD (000) | Average Exchange Rate |
|---|---|---|---|---|
| NZD | 0.7106 | |||
| NZD (410) | 2010 | USD 380 |
30 June 2011
| Contract Value NZD (000) | Fair Value NZD (000) | Due (NZD/USD) | Notional Amount USD (000) | Average Exchange Rate |
|---|---|---|---|---|
| NZD | USD 23,218 | |||
| NZD 1,989 | 2011 | 0.7596 | ||
| NZD (4,501) |
30 June 2010
| Fair Value | |
|---|---|
| NZD (thousands) | NZD 25,600 |
| Less than one year | (6,989) |
| One to five years | 25,675 |
| Five years+ | (17,234) |
30 June 2011
| Fair Value | |
|---|---|
| NZD (thousands) | NZD 23,000 |
| Less than one year | (7,093) |
| One to five years | 15,558 |
| Five years+ | 17,245 |
Notes:
a) Interest rate swap contracts:
Unless otherwise stated, the Division enters into interest rate swaps contracts to manage the interest rate risk on borrowings. The fair value of interest rate swaps is determined by discounting the contractual fixed and floating principal amounts using the yield curve at the reporting date.
b) The average contracted interest rates noted in the table are effective rates on a net basis.
c) Foreign currency exchange contracts:
The Division enters into forward currency swap to hedge the exchange rate and interest rate risk arising from the US private placement notes.
d) Foreign exchange rates:
The exchange rates noted represent the average exchange rate over the term of the contract.
e) Hedging movements recognised in the profit or loss component of the Statement of Comprehensive Income:
Gains arising on an adjustment for hedge ineffectiveness.
Net gains have been recognised as measured at cost or amortised cost during the period.
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NZ Gazette 2012, No 25
✨ LLM interpretation of page content
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Powerco Gas Division Financial Statements
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💰 Finance & RevenueFinancial Instruments, Interest Rate Swaps, Foreign Exchange Contracts, Hedge Accounting, Treasury Policy