Air New Zealand 2012 Annual Report Download - page 17

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AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2012
15
EMPLOYEE BENEFITS
Pension obligations
Payments to defined contribution retirement plans are charged as an expense as they fall due. Payments made to multi-employer
retirement benefit schemes are treated in the same way as payments to defined contribution schemes where sufficient information is
not available to use defined benefit accounting.
Air New Zealand’s net obligation in respect of defined benefit pension plans is calculated separately for each plan by an independent
actuary, as being the present value of the future obligations to the members less the fair value of the plan’s assets, adjusted for any
unrecognised actuarial gains or losses and unrecognised past service costs. The discount rate reflects the yield on government bonds
that have maturity dates approximating the terms of Air New Zealand’s obligations. When the calculation results in a benefit to Air New
Zealand, the value of the asset recognised cannot exceed in aggregate the value of any unrecognised net actuarial losses and past
service cost, and the present value of any future refunds from the plan or reductions in future contributions to the plan.
Any actuarial gains or losses are amortised under the corridor method over the members’ expected average remaining working lives.
Share based compensation
All equity options are disclosed in the notes to the financial statements. The fair value (at grant date) of options granted to employees is
recognised as an expense, within the Statement of Financial Performance, over the vesting period of the options, with a corresponding
entry to Issued Capital. The amount recognised as an expense is adjusted at each reporting date to reflect the extent to which the
vesting period has expired and management’s best estimate of the number of share options that will ultimately vest.
Termination costs
Termination costs are recognised as an expense when the Group is demonstrably committed, without realistic possibility of withdrawal,
to a formal detailed plan to terminate employment before the normal retirement date.
PROVISIONS
A provision is recognised when the Group has a present legal or constructive obligation as a result of a past event, it is probable that an
outflow of economic benefits will be required to settle the obligation, and the provision can be reliably measured.
Statement of Accounting Policies (Continued)
For the year to 30 June 2012