As Auckland’s population continues its strong growth trajectory, the Ports of Auckland has had to keep pace in order to provide the goods a growing city requires. There is not only the domestic demand for cars, food, consumables, etc. to satisfy, but also NZ’s export industry and burgeoning cruise ship tourism.
At 30 June 2014 Ports of Auckland had approximately $180 million of debt, a portion of which was hedged using interest rate swaps. The company has irregular FX exposure through imported capital expenditure and is also required to adjust its derivative valuations for credit to comply with IFRS 13 (CVA/DVA).
Ports of Auckland is one of Hedgebook’s oldest clients having been a Hedgebook user for a number of years. Historically, Ports of Auckland relied on excel spreadsheets, bank valuations and treasury advisors to stay on top of its derivative exposures. Hedgebook does not replace the treasury advisor (entirely) but it does replace the spreadsheets and bank valuations.
Ports of Auckland specifically uses Hedgebook for year-end compliance and ongoing debt management.
Palmerston North City Council (PNCC) is fairly typical of a NZ local authority in that Council is a sophisticated borrower with autonomy around the management of its interest rate risk exposure. Councils can access funding through a number of sources such as traditional bank funding, private placements and, in more recent years, the Local Government Funding Agency (LGFA). As at 30 June 2014 PNCC had debt of $117 million and $104 million of pay fixed swaps to provide certainty of interest costs. PNCC has a Treasury Policy which prescribes that no more than 45% of the total borrowings should have a floating rate profile. Pay fixed interest rate swaps are entered into to hedge the fair value interest rate risk. PNCC has been a Hedgebook client for a number of years graduating from one-off valuations for 30 June Financial Reporting requirements, to an on-going subscription client using Hedgebook’s Treasury Management System, HedgebookPro. Says PNCC’s Strategy Manager – Finance Steve Paterson, “It is important that Council manages ratepayers’ money in a transparent and prudential manner. Using HedgebookPro provides an appropriate level of comfort that the risks arising from financial instruments are adequately captured and monitored. Additionally, the reporting functionality helps the Finance team to operate efficiently.”
The majority of NZ’s local authorities are borrowers and many are using derivatives to manage the interest rate risk. Several NZ councils are using Hedgebook’s Treasury Management System including Kapiti Coast District Council, Nelson City Council, Selwyn District Council, South Taranaki District Council, Western Bay of Plenty District Council, Greater Wellington Regional Council, Masterton District Council and Thames-Coromandel District Council.
We are pleased to announce that Tru-Test Limited has recently subscribed to HedgebookPro.
Tru-Test Limited is a public unlisted company based in Auckland and is the world’s leading manufacturer of livestock weigh scale indicators and milk metering equipment. Almost four out of every five livestock weigh scales and milk meters sold in the world today bear the name Tru-Test.
Tru-Test is exposed to foreign exchange movements, with Australia, the Americas, Asia and Europe being its main markets and so having a system that can record, report and value these hedges is important for Tru-Test in managing its risks.
Tru-Test’s Chief Financial Officer Ian Hadwin said “as we have continued our growth we recognized that spreadsheets were no longer an appropriate way of managing our foreign exchange and interest rate risks. With The new IFRS 13 requirements to calculate CVA and DVA Hedgebook has made this easy.”
We welcome Ian and Tru-Test as new HedgebookPro users.
We are pleased to announce that EBOS Group Limited has recently taken HedgebookPro.
EBOS Group is a publicly listed company on the New Zealand Stock Exchange and has over 2,200 staff headquartered in New Zealand with over 40 offices located throughout Australasia. EBOS Group is one of the largest suppliers of international healthcare brands in the Australasian region.
EBOS Group has multiple entities with various interest rate and foreign exchange derivatives. To effectively manage the financial reporting requirements of these multiple entities EBOS knew they needed a system. Independent derivative valuations, IFRS 7 and IFRS 9 compliance is made easy with HedgebookPro. Hedgebook’s solution fitted the bill with its simple but intuitive approach to a complex area. Cost was also an issue as EBOS Group, whilst being a large company, does not have overly complex hedges and so needed a system which did the basics well.
EBOS Group’s Group Accountant Tonia Johnson said “the key requirements for us were around complying with the accounting standards, specifically doing hedge accounting under IFRS9. Hedgebook covers this off, as well as being easy to use and cost-effective.”
We welcome Tonia and EBOS Group as new HedgebookPro users.
We are pleased to announce that Rakon Ltd has chosen HedgebookPro and Hedgebook’s market data service, Infoscan, to assist in managing their financial market exposures.
Rakon is a publicly listed technology company based in New Zealand with offices around the world. Rakon designs and manufactures world leading advanced frequency control and timing solutions with the main application being in telecommunications (base stations, fibre optics, small cells and network timing). Rakon was one of New Zealand’s first tech companies, being established in 1967.
Rakon required a cost effective treasury system to capture its foreign exchange and interest rate hedges whilst continuing to comply with hedge accounting. Furthermore, Rakon required oversight of the foreign exchange and interest rate markets in terms of live data, which they now access through Infoscan’s MarketFeed product. MarketFeed keeps key decision makers abreast with the fast moving global money markets.
Hedgebook was chosen for its simplicity and ease of use. Rakon’s Group Financial Controller Anand Rambhai said, “HedgebookPro ticked all the boxes for us in terms of achieving a robust framework to manage our financial instruments, including hedge accounting and CVA.”
We are delighted to welcome Anand and Rakon as new HedgebookPro users.