Air New Zealand 2014 Annual Report Download - page 48

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AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 201446
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR TO AND AS AT 30 JUNE 2014
29. 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
2014
$M
COMPANY
2013
$M
Operating revenue (excluding dividend revenue)
Dividend revenue
Finance costs*
Operating expenditure
Included within Operating expenditure (“Other expenses”) are the following amounts:
Impairment of investment in subsidiaries
Reversal of impairment of investment in subsidiaries
97
200
(20)
(118)
(1)
150
89
248
(27)
(253)
-
-
* Finance costs include finance income of $4 million (30 June 2013: $3 million) and finance costs of $24 million
(30 June 2013: $30 million).
The Company has undertaken finance and operating lease arrangements with its wholly owned subsidiary, Air New Zealand Aircraft
Holdings Limited, relating to its aircraft. Lease expense of $242 million was recognised by the Company during the year
(30 June 2013: $222 million).
Related party balances have no fixed settlement dates and are unsecured. Non-current amounts owing to subsidiaries (as shown in Note
21) 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 21. Provisions for doubtful debts of $114
million were held by the Company against outstanding balances from subsidiaries (30 June 2013: $115 million).
The Company has provided guarantees of financial indebtedness to Air New Zealand Aircraft Holdings Limited of $1,582 million
(30 June 2013: $1,478 million).
As at 30 June 2014, the Company has guaranteed the obligations of Air New Zealand Aircraft Holdings Limited under aircraft
operating lease arrangements amounting to $637 million (30 June 2013: Air New Zealand Aircraft Holdings Limited and New Zealand
International Airlines Limited $844 million), and property lease obligations of subsidiaries of $4 million (30 June 2013: $9 million).
The Company guarantees aircraft end of lease obligations of Air New Zealand Aircraft Holdings Limited (30 June 2013: Air New Zealand
Aircraft Holdings Limited and New Zealand International Airlines Limited).
During the year the investment in Air New Zealand Aircraft Holdings Limited, was assessed for impairment using a value in use model.
Key assumptions include exchange rates, lease rentals, and terminal values. The discount rate applied in the value in use model was 5.6
percent (30 June 2013: 5.8 percent) and the growth rate was 2.5 percent as at 30 June 2014 (30 June 2013: 2.5 percent). The model
resulted in a reversal of an impairment loss of $150 million which had been provided for in prior years (30 June 2013: Nil).
The Group has a set-off arrangement on certain Bank of New Zealand balances, allowing the offset of overdraft 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
Associates
Transactions between Air New Zealand and its associates were as follows:
COMPANY
2014
$M
COMPANY
2013
$M
Operating revenue
Operating expenditure
3
(4)
4
(12)
During the year Air New Zealand engaged the Christchurch Engine Centre (CEC) to provide maintenance services on certain V2500
engines for $4 million (30 June 2013: $12 million). There was no amount outstanding at the end of the year (30 June 2013: Nil).
Air New Zealand receives contract services revenue and provides certain administration services to CEC. Amounts outstanding at the
end of the year, which are disclosed within Note 10 are $2 million (30 June 2013: $2 million).