Port Nelson Annual Report 2007 (pdf)

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N O T E S T O T H E A C C O U N T S N O T E 1 3 : F I N A N C I A L I N S T R U M E N T S Financial Risk Management Objectives Port Nelson does not enter into or trade financial instruments, including derivative financial instruments for speculative purposes. Treasury functions are governed by a Treasury Policy approved by the Board of Directors. Approved instruments include: • Forward rate agreements • Interest rate swaps • Options on a swap • Interest rate options • Interest rate collars • Spot and forward foreign exchange Fixed rate hedging parameters are as follows: Term Minimum Fixed Rate Amount Maximum Fixed Rate Amount Less than 1 year 0% 100% 1 year to 4 years 30% 70% 5 years to 10 years 0% 50% Maximum Credit Risk Exposure Port Nelson is exposed to credit risk from the possibility of counter parties failing to perform their obligations. Credit risk exposure on financial assets other than cash at bank and at call has been recognised in the balance sheet net of any provision for doubtful debts. Principally any risk is in respect of cash and bank, and accounts receivable. The major components of debtor exposure are to shipping companies and forestry exporters. Terms of trade are either payment on the 20 th of the month following or 7 working days. The majority of debtors are major international companies with extensive histories of payment. There are no major concentrations of credit risk with respect to accounts receivable and any single debtor. Maximum exposures to credit risk at balance date are: 2007 2006 $000 $000 Bank 269 585 Short Term Deposits @ 7.25% 1,901 1,899 Receivables 3,518 3,011 The above maximum exposures are net of any recognised provision for losses on these financial instruments. No collateral is held on the above accounts. The Directors do not consider there is any significant exposure to interest rate risk on its investments. Interest Rate Risk Under interest rate swap contracts, Port Nelson agrees to exchange the difference between fixed and floating rate interest amounts calculated on agreed, notional principal amounts thus allowing Port Nelson to mitigate the risk of changing interest rates on debt held. Swaps expiring within 12 months are treated as core debt and will be replaced with another approved instrument. The following table details the notional principle amounts and remaining terms of interest rate swap contracts outstanding as at reporting date. Notional Amount Fair Value Interest 0 to 1 1 to 2 2 to 3 3 to 4 9 to 10 ($000’s) gain/(loss) rate %* year years years years years 2 0 0 7 ( A T B A L A N C E D A T E ) $12,000 Swap 96 7.49 12,000 - - - - $3,000 Swap 70 6.98 - 3,000 - - - $4,000 Swap 178 6.75 - - - 4,000 - $5,000 Swap 256 6.55 - - - 5,000 - $3,000 Swap 367 6.49 - - - - 3,000 $27,000 967 - 12,000 3,000 - 9,000 3,000 2 0 0 7 ( P O S T B A L A N C E D A T E ) $7,000 Swap 17 7.91 - 7,000 - - - $9,000 Swap 306 6.19 - - - - 9,000 $16,000 323 - - 7,000 - - 9,000 2 0 0 7 T O T A L 1,290 - 12,000 10,000 - 9,000 12,000 2 0 0 6 T O T A L 78 - 6,000 - - 4,000 5,000 3 4 *Interest rate is exclusive of margin and line of credit fee.
N O T E S T O T H E A C C O U N T S All interest rate options and interest swap options are on 90 day roll-over terms. The following table summarises the Port Nelson exposure to interest rate risk as at 30 June 2007. 2 0 0 7 (000’s) Weighted Fixed Maturity Dates Average Non Financial Effective Floating 0 to 1 1 to 2 3 to 4 9 to 10 Interest Instruments Interest Rate Interest Year Years Years Years Bearing Total A S S E T S Cash 7.94 % 2,170 - - - - - 2,170 Receivables - - - - - - 3,518 3,518 T O T A L - 2,170 - - - - 3,518 5,688 L I A B I L I T I E S Borrowings 7.87 % 15,000 12,000 3,000 9,000 3,000 - 42,000 Payables - - - - - - 1,721 1,721 T O T A L - 15,000 12,000 3,000 9,000 3,000 1,721 43,721 2 0 0 6 (000’s) Weighted Fixed Maturity Dates Average Non Financial Effective Floating 0 to 1 1 to 2 3 to 4 9 to 10 Interest Instruments Interest Rate Interest Year Years Years Years Bearing Total A S S E T S Cash 7.0 % 2,484 - - - - - 2,484 Receivables - - - - - - 3,011 3,011 T O T A L - 2,484 - - - - 3,011 5,495 L I A B I L I T I E S Borrowings 7.37 % 4,000 6,000 - - 4,000 5,000 - 19,000 Payables - - - - - - 1,453 1,453 T O T A L - 4,000 6,000 - - 4,000 5,000 1,453 20,453 Fair Values Cash at bank and at call are valued as the amount of the deposit or the purchase of the underlying security. Receivables are carried at the nominal amount due, less any provision for doubtful debts which represents the assessed credit risk. Liability to trade creditors is recognised on receipt of goods and services at nominal value. Payment would normally occur within 30 days. The following table details the fair value comparison of the long term borrowings as at 30 June 2007. F I N A N C I A L L I A B I L I T I E S Carrying Value Fair Value 2007 2006 2007 2006 $000 $000 $000 $000 Term Debt 42,000 19,000 42,000 19,000 Fair Value Movement (1,290) (129) T O T A L F I N A N C I A L L I A B I L I T I E S 42,000 19,000 40,710 18,871 Currency Risk Port Nelson has no currency risk. (2006 Port Nelson had no currency risk). N O T E 1 4 : T E R M L O A N The Company has financing arrangements with Westpac Banking Corporation. The total facility is $57,000,000 for a term of 5 years. (2006: $31,000,000 for a term of 5 years) Security for the multi option credit facility is by a first and exclusive debenture charge over the assets and undertakings of the Company. 3 5
Page 1 and 2: 2 0 0 7 A N N U A L R E P O R T
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Page 9 and 10: Port Nelson’s support of the Nels
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Page 13 and 14: “When the topic of Environmental
Page 15 and 16: “I’m proud to work for a compan
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Page 43 and 44: Board of Directors A.O. Patterson C

Port Nelson Annual Report 2007 (pdf)

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