Air New Zealand 2013 Annual Report Download - page 50

Air New Zealand Annual Financial Results 
48
. RELATED PARTIES CONTINUED
Transactions between the Company and its subsidiaries, associated companies and joint ventures
Subsidiaries
During the year there have been transactions between the Company and its subsidiaries as follows:
COMPANY

M
COMPANY

M
Operating revenue (excluding dividend revenue) 89 76
Dividend revenue 248 198
Finance costs * (27) (28)
Operating expenditure (253) (132)
Included within Operating expenditure (“Other expenses") are the following amounts:
Reversal of impairment of investment in subsidiaries - 129
* Finance costs include finance income of $3 million (30 June 2012: $5 million) and finance costs of $30 million (30 June 2012: $33 million).
The Company has undertaken finance and operating lease arrangements with its wholly owned subsidiary, Air New Zealand Aircra Holdings
Limited, relating to its aircra. Lease expense of $222 million was recognised by the Company during the year (30 June 2012: $237 million).
Related party balances have no fixed selement dates and are unsecured. Non-current amounts owing to subsidiaries (as shown in Note
20) reflect deposits held in respect of capital investments. Certain balances are non interest-bearing and the remainder are subject to
interest at current floating rates. For balances outstanding at year end refer to Notes 10 and 20. Provisions for doubtful debts of $106
million were held by the Company against outstanding balances from subsidiaries (30 June 2012: $106 million).
The Company has provided guarantees of financial indebtedness to Air New Zealand Aircra Holdings Limited of $1,478 million (30 June
2012: $1,542 million).
As at 30 June 2013, the Company has guaranteed the obligations of Air New Zealand Aircra Holdings Limited and New Zealand
International Airlines Limited under aircra operating lease arrangements amounting to $844 million (30 June 2012: $770 million), and
property lease obligations of subsidiaries of $9 million (30 June 2012: $7 million).
The Company guarantees aircra end of lease obligations of Air New Zealand Aircra Holdings Limited and New Zealand International
Airlines Limited.
During the year the investment in Air New Zealand Aircra Holdings Limited, was assessed for impairment using a value in use model.
The value in use model supported the carrying value as at 30 June 2013. In the year ended 30 June 2012 the model resulted in a reversal of
an impairment loss of $114 million which had been provided for in prior years. The discount rate applied in the value in use model was 5.8
percent (30 June 2012: 6.3 percent) and the growth rate was 2.5 percent as at 30 June 2013 (30 June 2013: 2.5 percent).
On 26 February 2012, the Group disposed of a 65% interest in ADP Pty Limited.
On 31 October 2012, the Group disposed of its interest in VCubed Pty Limited for $1 million. VCubed Pty Limited held an investment in a
wholly owned subsidiary, TXNZ Limited. The impact on the Group was a reduction in net assets of $1 million.
The Group has a set-off arrangement on certain Bank of New Zealand balances, allowing the offset of overdra amounts against in-fund
amounts. Interest is earned (or accrued) by Air New Zealand Limited based on the net position across the Group. This interest is not
allocated to subsidiary companies. The following entities are included in the set-off arrangement:
Air Nelson Limited
Air New Zealand Limited
Eagle Airways Limited
Mount Cook Airlines Limited
Safe Air Limited
Notes to the Financial Statements (Continued)
For the year to and as at 30 June 2013