Meridian Annual Report - Meridian Energy

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70 Meridian Energy Limited — Notes to the Financial Statements (continued) During 2008 Meridian’s strategy, which was unchanged from 2007, was to maintain the gearing ratio below 35% and a BBB+ credit rating. The gearing ratios at 30 June 2008 and 30 June 2007 were as follows: 2008 $’000 group 2007 $’000 Borrowings – NZD Equivalent Net of Foreign Exchange Hedging 1,004,649 754,649 Less: Cash and Cash Equivalents 64,645 44,755 Net Debt 940,004 709,894 Equity Attributable to Shareholders of the Parent 4,201,295 4,390,180 Adjust for Net Effect of Fair Value of Financial Instruments 3,472 (18,762) Adjusted Shareholders’ Equity 4,204,767 4,371,418 Total Capital 5,144,771 5,081,312 Gearing Ratio 18.27% 13.97% All externally imposed capital requirements have been complied with. 23. Derivative Financial Instruments Assets Held for Trading CfD’s 58,069 164 58,069 164 Interest Rate Swaps 13,096 26,927 13,096 26,927 Foreign Exchange Contracts 111 - 111 - 2008 $’000 Group 2007 $’000 2008 $’000 Parent 2007 $’000 Cash Flow Hedges CfD’s 42,217 13,831 42,217 13,831 Foreign Exchange Contracts 25,649 21 25,567 21 Total 139,142 40,943 139,060 40,943 Disclosed as: Current 37,500 1,055 37,426 1,055 Non-current 101,642 39,888 101,634 39,888 Liabilities Held for Trading CfD’s 12,837 239 12,837 239 Interest Rate Swaps 489 - 489 - Foreign Exchange Contracts - 79 - 79 Cash Flow Hedges CfD’s 101,617 2,794 101,617 2,794 Foreign Exchange Contracts 1,344 6,691 1,344 6,691 Cross Currency Interest Rate Swaps (margin) (292) 1,106 (292) 1,106 Fair Value Hedges Cross Currency Interest Rate Swaps 54,907 116,793 54,907 116,793 Total 170,902 127,702 170,902 127,702 Disclosed as: Current 46,068 3,583 46,068 3,583 Non-current 124,834 124,119 124,834 124,119 Meridian considers that the carrying amount of derivative instruments, accounts receivable and available for sale investments approximates their fair values.
71< Meridian Energy Limited — Notes to the Financial Statements (continued) 23. Derivative Financial Instruments (continued) The table below shows the changes in the fair value of financial instruments recognised in the income statement. Group Parent 2008 $’000 2007 $’000 2008 $’000 2007 $’000 Cross Currency Interest Rate Swaps 61,885 (131,751) 61,885 (131,751) Borrowings (61,904) 131,910 (61,904) 131,910 (19) 159 (191) 159 Interest Rate Swaps (14,321) 23,750 (14,321) 23,750 Cross Currency Interest Rate Swaps (margin) 8 (21) 8 (21) Unrealised Net (Loss) Gain on Financial Instruments Included in Other Finance Related Expenses (14,332) 23,888 (14,332) 23,888 Foreign Exchange Contracts 191 33 191 33 CfD’s 45,306 625 45,306 625 Unrealised Net (Loss) Gain on Financial Instruments Included in Operating Profit 45,497 658 45,497 658 Total Unrealised Net (Loss) Gain on Financial Instruments 31,165 24,546 31,165 24,546 Total amount of change in fair values of financial instruments valued with reference to non-observable data recognised in the income statement 51,930 - 51,930 - Cash Flow Hedges – CfD’s Meridian currently sells and purchases electricity at spot prices from the market exposing it to changes in the price of electricity. As described in Note 22, it is Group policy to manage this risk on a net basis by entering into CfD’s which swap receipt (payment) of spot electricity prices based on a specified volume of electricity with fixed electricity payments (receipts) for an equivalent volume. Cash settlements are made on these instruments on a monthly basis and impact income on an accrual basis. Cash Flow Hedges – Foreign Exchange Contracts Meridian hedges highly probable forecast capital expenditures through a combination of forward exchange contracts and foreign currency options. The cash flows associated with these contracts are timed to mature when payment for the capital expenditure is made. The contracts range in maturity from 0 to 36 months. When the cash flows occur, the Group adjusts the carrying value of the asset acquired. Cash Flow Hedges – Cross Currency Interest Rate Swaps Meridian hedges its foreign currency exposure on foreign currency denominated debt using CCIRS in a combination of cash flow and fair value hedges. The cash flow hedge component represents the expected foreign currency cash flows on the debt relating to the credit margin paid by Meridian on the borrowings. Cash flows relating to the debt and the CCIRS are settled quarterly for the NZ cash flows and semi-annually for the foreign currency (U.S. and Australian dollars). Income is affected by these settlements on an accrual basis.
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Meridian Annual Report for the year
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1< Innovation We launched Right Hou
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2 A time of challenge and opportuni
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4 Chairman’s and Chief Executive
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6 Our Operations Meridian is New Ze
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8 Our Operations cont Under Constru
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10 Generation The winter of 2008 wa
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12 Retail Transforming our customer
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Our Year in Review >14
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16 Our Year in Review cont Our Peop
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18 Our Year in Review cont Meridian
Page 24 and 25: 20 Our Year in Review cont In addit
Page 26 and 27: 22 Our Year in Review cont Meridian
Page 28 and 29: 24 Our Year in Review cont In the M
Page 30 and 31: Our Subsidiaries >26
Page 32 and 33: 28 Board of Directors Wayne Boyd (C
Page 34 and 35: 30 Tim Lusk (Chief Executive) Prior
Page 36 and 37: Financials >32
Page 38 and 39: 34 Economic Overview and 2007/08 Fi
Page 40 and 41: 36 Meridian Energy Limited — Stat
Page 42 and 43: 38 Meridian Energy Limited — Inco
Page 44 and 45: 40 Meridian Energy Limited — Bala
Page 46 and 47: 42 Meridian Energy Limited — Note
Page 88 and 89: 84 Report from the Audit Office Aud
Page 90 and 91: 86 Statutory Information Group Dire
Page 92 and 93: 88 Statutory Information (continued
Page 94 and 95: 90 Meridian Energy Management’s i
Page 96 and 97: 92 Tonnes of CO2 Meridian Energy Ag
Page 98 and 99: 94 Notes on tables Notes on electri
Page 100 and 101: 96 GRI Sustainability Reporting Ind
Page 102: 98 DIRECTORY Registered Office Leve
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Meridian Annual Report - Meridian Energy

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