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AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2012
33
17. FINANCIAL RISK MANAGEMENT (CONTINUED)
Equity price risk
Equity price risk is the risk of loss to Air New Zealand arising from adverse fluctuations in the price of an equity investment or
equity derivative.
Air New Zealand has exposure to equity price risk arising on the equity investment and derivative held in Virgin Australia Holdings
Limited. This investment is held for strategic rather than trading purposes. The Group does not hedge this risk.
Equity investment price risk sensitivity on financial instruments
The sensitivity to reasonably possible changes in the quoted price of an equity investment or derivative with all other variables held
constant, is set out below.
Equity investment price change:
2012
$M
+ 25%
2012
$M
- 25%
2 011
$M
+ 25%
2 011
$M
- 25%
On profit before taxation
Group 4(4) - -
Company 4(4) - -
On investment revaluation reserve (within equity)
Group 51 (51) 30 (30)
LIQUIDITY RISK
Liquidity risk is the risk that the Group will be unable to meet its obligations as they fall due. Air New Zealand manages the risk by
targeting a minimum liquidity level, ensuring long term commitments are managed with respect to forecast available cash inflow and
managing maturity profiles. Air New Zealand holds significant cash reserves to enable it to meet its liabilities as they fall due and to
sustain operations in the event of unanticipated external factors or event.
The following table sets out the contractual, undiscounted cash flows for non-derivative financial liabilities:
GROUP
AS AT 30 JUNE 2012
STATEMENT
OF FINANCIAL
POSITION
$M
CONTRACTUAL
CASH FLOWS
$M
< 1 YEAR
$M
1-2 YEARS
$M
2-5 YEARS
$M
5+ YEARS
$M
Bank overdraft and short-term borrowings 2 2 2 - - -
Trade and other payables 373 373 373 - - -
Secured borrowings 97 104 16 16 55 17
Unsecured bonds 150 197 10 10 177 -
Finance lease obligations 1,445 1,634 171 162 563 738
Amounts owing to associates 6 6 6 - - -
Total non-derivative liabilities 2,073 2,316 578 188 795 755
GROUP
AS AT 30 JUNE 2011
STATEMENT
OF FINANCIAL
POSITION
$M
CONTRACTUAL
CASH FLOWS
$M
< 1 YEAR
$M
1-2 YEARS
$M
2-5 YEARS
$M
5+ YEARS
$M
Trade and other payables 369 369 369 - - -
Secured borrowings 154 163 62 16 62 23
Finance lease obligations 1,101 1,246 113 131 408 594
Amounts owing to associates 2 2 2 - - -
Total non-derivative liabilities 1,626 1,780 546 147 470 617
Notes to the Financial Statements (Continued)
As at 30 June 2012