Air New Zealand 2014 Annual Report Download - page 23

Download and view the complete annual report

Please find page 23 of the 2014 Air New Zealand annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 80

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80

AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2014 21
11. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
GROUP
2014
$M
GROUP
2013
$M
COMPANY
2014
$M
COMPANY
2013
$M
LAND AND BUILDINGS
Cost
Accumulated depreciation
350
(133)
346
(114 )
322
(121)
317
(104)
Carrying value at the beginning of the year
Additions
Disposals
Depreciation
217
25
-
(30)
232
13
(2)
(26)
201
24
-
(28)
213
13
(2)
(23)
Carrying value at the end of the year 212 217 197 201
Represented by:
Cost
Accumulated depreciation
371
(159)
350
(133)
342
(145)
322
(121)
Carrying value at the end of the year 212 217 197 201
Land and buildings comprise:
Leasehold properties
Freehold properties
196
16
206
11
181
16
190
11
212 217 197 201
Certain aircraft and aircraft related assets with a carrying value of $2,091 million as at 30 June 2014 (30 June 2013: $1,916 million)
are pledged as security over borrowings and finance lease obligations.
The useful lives and residual values applied to property, plant and equipment are reviewed annually to ensure that they continue to be
appropriate. During the year ended 30 June 2014 the useful lives and residual values were reassessed for the Boeing 767-300 fleet
and six exiting Beech aircraft and depreciation expense was increased in the Group by $18 million.
New Zealand generally accepted accounting practice requires book values to be written down to the higher of fair value less costs
to sell or value in use. The indicative market valuations of aircraft were less than the book value as at balance date. Accordingly the
aircraft carrying values were tested for impairment based on a value in use discounted cash flow valuation. Cash flow projections
were sourced for 5 years from Board reviewed business plans and extrapolated using an average growth rate of approximately 2.0
percent (30 June 2013: 2.0 percent). Key assumptions include exchange rates, jet fuel costs, passenger load factors, route yields and
terminal values. These assumptions have been based on historical data and current market information. The cash flow projections are
particularly sensitive to fluctuations in fuel prices, exchange rates, economic demand and terminal values. The cash flow projections
are discounted using rates between 8.0 and 10.0 percent (30 June 2013: 8.0 and 10.0 percent).
The Boeing 747-400 aircraft were separately tested and no impairment was identified in the year ended 30 June 2014 (30 June
2013: $5 million). The discounted cash flows from the other aircraft confirmed that there was no impairment to the remaining aircraft
as in the opinion of the directors, the recoverable value from continued use of the aircraft as part of a network and their ultimate sale
proceeds exceeded the book value of the aircraft, based on the directors’ current assessment of the Group’s future trading prospects.
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
AS AT 30 JUNE 2014