Air New Zealand 2015 Annual Report Download

Download and view the complete annual report

Please find the complete 2015 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 68

  • 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

2015
RESULTS
ANNUAL
FINANCIAL

Table of contents

  • Page 1
    ANNUAL FINANCIAL RESULTS 2015

  • Page 2

  • Page 3
    ... with New Zealand law and generally accepted accounting practice, which give a true and fair view of the financial position of the Group as at 30 June 2015 and the results of the Group's operations and cash ï¬,ows for the year ended on that date. The directors consider the financial statements of...

  • Page 4
    AIR NEW ZEALAND GROUP Statement of Financial Performance For the year to 30 June 2015 2015 $M 2014 $M NOTES Operating Revenue Passenger revenue Cargo Contract services Other revenue 1 Operating Expenditure Labour Fuel Maintenance Aircraft operations Passenger services Sales and marketing Foreign ...

  • Page 5
    ... June 2015 2015 $M 2014 $M NOTE Net Profit for the Year Other Comprehensive Income: Items that will not be reclassified to profit or loss: Changes in fair value of investment in quoted equity instruments Actuarial gains on defined benefit plans Taxation on above reserve movements Total items...

  • Page 6
    AIR NEW ZEALAND GROUP Statement of Changes in Equity For the year to 30 June 2015 INVESTMENT REVALUATION RESERVE $M FOREIGN CURRENCY TRANSLATION RESERVE $M NOTES SHARE CAPITAL $M HEDGE RESERVES $M GENERAL RESERVES $M TOTAL EQUITY $M Balance as at 1 July 2014 Net profit for the year Other ...

  • Page 7
    ... 2,682 4,810 1,965 18 19 2,286 (321) 1,965 2,282 (410) 1,872 Tony Carter Chairman For and on behalf of the Board, 26 August 2015 Jan Dawson Deputy Chairman The accompanying accounting policies and notes form part of these financial statements. Air New Zealand Annual Financial Results 2015 5

  • Page 8
    AIR NEW ZEALAND GROUP Statement of Cash Flows For the year to 30 June 2015 2015 $M 2014 $M NOTES Cash Flows from Operating Activities Receipts from customers Payments to suppliers and employees Income tax paid Interest paid Interest received Rollover of foreign exchange contracts* Net Cash Flow ...

  • Page 9
    ... Board of Directors on 26 August 2015. Basis of measurement The financial statements have been prepared on the historical cost basis, with the exception of certain items as identified in specific accounting policies and are presented in New Zealand Dollars which is the Group's functional currency...

  • Page 10
    AIR NEW ZEALAND GROUP Statement of Accounting Policies (continued) For the year to 30 June 2015 NZ IFRS 15 - Revenue from Contracts with Customers has not been adopted early. This standard has an objective of a single revenue recognition model that applies to revenue from contracts with customers ...

  • Page 11
    ... the service is provided. Dividend revenue is recognised when the right to receive payment is established. Finance income Interest revenue from investments and fixed deposits is recognised as it accrues, using the effective interest method where appropriate. Segmental information Air New Zealand...

  • Page 12
    ... the Statement of Financial Performance is as follows: 2015 $M 2014 $M Superannuation expense Audit and review of financial statements* 46 1 46 1 *Other fees were paid for tax compliance work of $17k (30 June 2014: $19k), business roadmapping services of $190k, employee speak-up line service of...

  • Page 13
    ... ordinary shares: - Share options and performance rights Weighted average number of Ordinary Shares for diluted earnings per share Basic earnings per share Diluted earnings per share 327 263 1,118 6 1,124 29.2 29.1 1,101 11 1,112 23.9 23.6 Air New Zealand Annual Financial Results 2015 11

  • Page 14
    ... of Goods and Services Tax. Cash and cash equivalents, as stated in the Statement of Cash Flows, are reconciled to the Bank and short term deposits balance in the Statement of Financial Position as follows: 2015 $M 2014 $M Cash balances Other short term deposits and short term bills Total cash and...

  • Page 15
    ... that amount and deducting the fair value of the plan's assets. The discount rate reï¬,ects the yield on government bonds that have maturity dates approximating the terms of Air New Zealand's obligations When the calculation results in an asset, the value of the asset is limited to the present value...

  • Page 16
    ... previous carrying value at the date of transfer or external market assessments of the fair value, less costs to sell. No impairment expense was recognised during the year (30 June 2014: $3 million). The Group operates two defined benefit plans for qualifying employees in New Zealand and overseas...

  • Page 17
    ...years 50 - 100 years 2 - 10 years AIRCRAFT, SPARE ENGINES AND SIMULATORS $M SPARES $M PLANT AND EQUIPMENT $M LAND AND BUILDINGS $M CAPITAL WORK IN PROGRESS $M TOTAL $M 2015 Carrying value as at 1 July 2014 Additions Disposals Disposal of subsidiaries Depreciation Impairment Transfers Transfer...

  • Page 18
    AIR NEW ZEALAND GROUP Notes to the Financial Statements (continued) As at 30 June 2015 9. Property, Plant and Equipment (continued) AIRCRAFT, SPARE ENGINES AND SIMULATORS $M PLANT AND EQUIPMENT $M LAND AND BUILDINGS $M CAPITAL WORK IN PROGRESS $M SPARES $M TOTAL $M 2014 Cost Accumulated ...

  • Page 19
    ... lives of three to six years. INTERNALLY DEVELOPED SOFTWARE $M EXTERNALLY PURCHASED SOFTWARE $M CAPITAL WORK IN PROGRESS $M OTHER $M TOTAL $M 2015 Carrying value as at 1 July 2014 Additions Disposal of subsidiaries Amortisation Transfers Carrying value as at 30 June 2015 Represented by: Cost...

  • Page 20
    ...end of the year 422 (5) (417) - 261 179 (18) 422 On 4 July 2014, the Group gained representation on the Board of Directors of Virgin Australia Holdings Limited ('Virgin Australia'). Until that date, Air New Zealand continued to treat the investment as an investment in quoted equity instruments as...

  • Page 21
    ...which included the transfer of foreign currency translation reserve losses of $5 million. On 29 June 2015, the Group had entered into an unconditional agreement to dispose of its 100 percent interest in Safe Air Limited and its wholly owned subsidiary ('Safe Air Group'). Air New Zealand has effected...

  • Page 22
    ... Dollarsâ„¢), in respect of which the Airpointsâ„¢ member has not yet redeemed their points. Other revenue in advance includes membership subscriptions and contract related services revenue which relate to future periods. 2015 $M 2014 $M Current Transportation sales in advance Loyalty programme...

  • Page 23
    ..., discounted at the market rate of interest for similar liabilities at reporting date. All secured borrowings are secured over aircraft or aircraft related assets and are subject to ï¬,oating interest rates. The unsecured, unsubordinated fixed rate bonds have a maturity date of 15 November 2016 and...

  • Page 24
    ... RETURN COSTS $M RESTRUCTURING $M OTHER $M TOTAL $M Balance as at 1 July 2014 Amount provided Amount utilised and released Foreign exchange differences Balance as at 30 June 2015 Represented by: Current Non-current Balance as at 30 June 2015 Nature and purpose of provisions Aircraft lease return...

  • Page 25
    ... Term Incentive Plan Exercise of share options Balance at the end of the year* *Includes treasury stock of 34,183 shares (30 June 2014: 2,515,463 shares). 2015 2014 1,114,424,283 7,425,666 1,121,849,949 1,103,924,560 877,055 9,622,668 1,114,424,283 Air New Zealand Annual Financial Results 2015...

  • Page 26
    ... the Air New Zealand Staff Share Schemes are accounted for under the Treasury Stock method, and deducted from Ordinary Share capital on consolidation. The number of unallocated shares as at 30 June 2015 was 93 (30 June 2014: 93). Equity-Settled Share-Based Payments The fair value (at grant date) of...

  • Page 27
    ... INDICES CONTRACTUAL LIFE (YEARS) RISK FREE RATE (%) EXPECTED DIVIDEND YIELD (%) Performance share rights 2015 205 26 14 0.34 3.5 4.00 5.3 1. The CEO Option Plan was part of the former Chief Executive Officer's total remuneration. Air New Zealand Annual Financial Results 2015 25

  • Page 28
    ... Total Return Index (adjusted for dividends) in 50:50 proportions. CEO Option Plan1 Options issued in the 2013 financial year were exercisable immediately. The exercise price was determined using a Black Scholes option pricing model based on Air New Zealand's share price over the 10 business days...

  • Page 29
    ... assets and liabilities and the Group's share of equity accounted associates' reserves. 20. Operating Leases Leases under which a significant proportion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net...

  • Page 30
    ... 23. Financial Risk Management Air New Zealand is subject to credit, foreign currency, interest rate and fuel price risks. These risks are managed with various financial instruments, using a set of policies approved by the Board of Directors. Compliance with these policies is reviewed and reported...

  • Page 31
    ... the exception of foreign currency denominated working capital balances, which together are immaterial to foreign currency ï¬,uctuations, Air New Zealand's exposure to foreign exchange risk arising on items recognised in the Statement of Financial Position at reporting date is summarised over the...

  • Page 32
    AIR NEW ZEALAND GROUP Notes to the Financial Statements (continued) As at 30 June 2015 23. Financial Risk Management (continued) Foreign currency exposure of items recognised at reporting date, before hedging NZD $M USD $M AUD $M JPY $M TOTAL $M As at 30 June 2015 Investments in other entities ...

  • Page 33
    ... Statement of Financial Position as at reporting date and were designated as the hedging instrument in qualifying cash ï¬,ow hedges of highly probable forecast operating revenue and expenditure transactions. All derivatives mature within 12 months (30 June 2014: $1 million within 13 months). 2015 NZ...

  • Page 34
    ... risk management objective for hedging capital expenditure. The accumulated net gains have been released to the carrying value of the aircraft as the related payments were made. The weighted average contract rates of hedge accounted foreign currency derivatives outstanding as at reporting date are...

  • Page 35
    ... on aircraft designated in a fair value hedge are included within 'Property, plant and equipment' on the Statement of Financial Position. The hedging instrument is included within 'Interest-bearing liabilities'. 2015 NZ$M 2014 NZ$M Underlying United States Dollar aircraft fair values Hedged by...

  • Page 36
    ...balance date for one New Zealand Dollar are: USD AUD EUR JPY GBP FUEL PRICE RISK Fuel price risk is the risk of loss to Air New Zealand arising from adverse ï¬,uctuations in fuel prices. 0.6850 0.8920 0.6100 83.90 0.4350 0.8775 0.9315 0.6430 89.00 0.5150 NZ IFRS 9 permits hedge accounting of risk...

  • Page 37
    ... on the Statement of Financial Position as at reporting date and were designated as the hedging instrument in qualifying cash ï¬,ow hedges. Statement of financial position Derivative financial (liabilities)/assets 2015 NZ$M 2014 NZ$M (22) 25 The effective portion of changes in the fair value of...

  • Page 38
    ... points In the year ended 30 June 2015, the impact on equity as shown above would be offset by the hedged ï¬,oating interest rate exposure as it occurs. 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...

  • Page 39
    ... of dividends paid to shareholders, initiating dividend reinvestment opportunities, returning capital to shareholders, issuing new shares or selling assets to reduce debt. The capital management policies and guidelines are regularly reviewed by the Board of Directors. The Group monitors capital on...

  • Page 40
    ... amounts prior to offset. STATEMENT OF FINANCIAL POSITION 2015 $M GROSS AMOUNTS BEFORE OFFSET 2015 $M STATEMENT OF FINANCIAL POSITION 2014 $M GROSS AMOUNTS BEFORE OFFSET 2014 $M AMOUNTS OFFSET 2015 $M AMOUNTS OFFSET 2014 $M Financial assets Bank and short term deposits Trade and other receivables...

  • Page 41
    ... 2014 $M Short-term employee costs Directors' fees Share-based payments 13 1 2 16 12 1 2 15 Certain key management personnel (including directors) have relevant interests in a number of companies (including non-executive directorships) to which Air New Zealand provides aircraft related services...

  • Page 42
    ...in Equity and Statement of Cash Flows for the year ended on that date and the notes to the financial statements that include accounting policies and other explanatory information. In our opinion the financial statements of the Group comply with generally accepted accounting practice in New Zealand...

  • Page 43
    ... of the Audited Financial Statements This audit report relates to the financial statements of the Air New Zealand Group (consisting of Air New Zealand Limited and its subsidiaries) for the year ended 30 June 2015 included on Air New Zealand Limited's website. The Company's Board of Directors is...

  • Page 44
    AIR NEW ZEALAND GROUP Historical Summary of Financial Performance Five Year Statistical Review For the year to 30 June 2015 $M 2014 $M 2013 $M 2012 $M 2011 $M Passenger revenue Cargo Contract services Other revenue 4,113 317 258 237 4,925 3,851 287 277 237 4,652 3,765 301 310 239 4,615 3,634 ...

  • Page 45
    ... year statistical review have been reclassified for comparative purposes, to ensure consistency with the current year. The Group adopted NZ IFRS 9 (2010) - Financial Instruments and NZ IFRS 9 (2013) - Hedge Accounting and amendments to NZ IFRS 9, NZ IFRS 7 and NZ IAS 39 on 1 July 2014. Comparatives...

  • Page 46
    AIR NEW ZEALAND GROUP Financial Ratios Five Year Statistical Review 2015 2014 2013 2012 2011 Profitability EBIT/Revenue EBITDRA/Revenue Return on Assets1 Return on Equity2 Ordinary Dividends Declared Basic Earnings Per Ordinary Share Fixed Cover3 Passenger Revenue/RPK Liquidity Operating Cash ...

  • Page 47
    ... represent short-haul operations. Asia, North America and Europe represent long-haul operations Certain comparatives within the key operating statistics have been reclassified for comparative purposes, to ensure consistency with the current year. Air New Zealand Annual Financial Results 2015 45

  • Page 48
    ...Securities฀ Directors and employees of Air New Zealand are subject to limitations on their ability to buy or sell Air New Zealand shares in accordance with Air New Zealand's Securities Trading Policy, the NZSX and ASX Listing Rules and the Securities Markets Act 1988. This policy has been updated...

  • Page 49
    ...reports. The members of the Executive Team are defined as Officers of the Company. Senior฀Leadership฀Team฀(SLT): Direct reports to Executive Team and other selected senior managers. Senior฀Executives: Executive Team and Senior Leadership Team. Air New Zealand Annual Financial Results 2015...

  • Page 50
    ...key terms and conditions of their appointment. Air New Zealand's performance management system applies to the Senior Executive group. The focus is on establishing goals, measures and targets linked directly to the business plan and to the leadership behaviours needed to achieve business success. Air...

  • Page 51
    ... retirement. 2013 2014 2015 Number฀ of฀ Directors฀ (female/male) Number฀ of฀ Executive฀ Team฀ (female/male) Number฀of฀Senior฀Leadership฀Team฀ (female/male) 1/6 1/7 15/52 2/6 1/7 18/51 2/5 1/7 26/54 The full Air New Zealand Diversity and Inclusion Policy can be found at...

  • Page 52
    ...(Auckland) Limited and Managing Director of Foodstuffs (New Zealand) Limited, until he retired in December 2010. The Foodstuffs Group is New Zealand's largest retail organisation. Janice฀(Jan)฀Dawson BCOM, FCA Deputy฀Chairman Appointed 1 April 2011 Ms Dawson is a director of AIG Insurance New...

  • Page 53
    ...Zealand฀ and฀ the฀ US.฀ He฀ is฀ currently฀ a฀ director฀ of฀ Vector฀ Limited฀ and฀ Zespri Group Limited and also serves as an Adjunct Professor of Management at the University of Auckland, specialising in international finance. Air New Zealand Annual Financial Results 2015...

  • Page 54
    ...฀ Corporation฀ Limited฀ Fletcher Building Limited Foodstuffs Auckland Protection Trust Maurice Carter Charitable Trust Jan฀Dawson AIG Insurance New Zealand Limited Beca Group Limited Goodman Fielder Limited Jan Dawson Limited Meridian Energy Limited National฀ Health฀ Board฀ Capital...

  • Page 55
    ... commercial practice, the insurance contract prohibits further disclosure of the terms of the policy. All directors who voted in favour of authorising the insurance certified that in their opinion, the cost of the insurance is fair to the Company. Air New Zealand Annual Financial Results 2015 53

  • Page 56
    ... travel benefits for related parties and benefits accrued in prior years availed in current year. 3. GST exclusive. 4. Resigned 31 August 2014. Directors' Interests in Air New Zealand Securities The relevant interests of directors in Air New Zealand's securities at the date of this Annual Report...

  • Page 57
    ...2014) Air New Zealand Regional Maintenance Limited Air New Zealand Travel Business Limited Altitude Aerospace Interiors Limited (Sold 29 September 2014) ANNZES Engines Christchurch Limited Ansett Australia & Air New Zealand Engineering Services Limited C.I. Air Services Limited Eagle Air Maintenance...

  • Page 58
    AIR NEW ZEALAND GROUP Subsidiary and Joint Venture Companies (continued) Australian฀Companies Directors Air New Zealand (Australia) Pty Limited Masling Industries Pty Ltd (Sold 30 March 2015) Safe Air Australia Pty Ltd TAE Aviation Pty Limited (Sold 30 March 2015) TAE Gas Turbines Pty Ltd (Sold ...

  • Page 59
    ... paid in the 2015 financial year including base for the 2015 financial year, and incentive payments including performance rights issued under the LTI scheme that relate to the 2014 financial year performance and paid in the 2015 financial year. Air New Zealand Annual Financial Results 2015...

  • Page 60
    ... available to executives was the Air New Zealand Long Term Incentive Performance Rights Plan (LTIP). This scheme replaced the scheme available in 2014, which was the Air New Zealand Long Term Incentive Options Plan. Participation in any year is by annual invitation at the discretion of the Company...

  • Page 61
    ...year, the CEO earned a total STI payment to the value of $1,540,000 (2014 financial year: $1,457,000). This payment will be made in the 2016 financial year. Long฀ Term฀ Incentive The CEO participated in the Air New Zealand Long Term Incentive Performance Rights Plan (LTIP). The CEO was granted...

  • Page 62
    AIR NEW ZEALAND GROUP Employee Remuneration (continued) Summary The remuneration paid to the CEO is summarised below: Remuneration฀Element 2014฀Financial฀Year 2015฀Financial฀Year Base Salary Short-Term Incentive Long-Term Incentive* Superannuation *Long-Term Incentives remain at risk. ...

  • Page 63
    ... The following information is provided in compliance with Section 293 of the Financial Markets Conduct Act 2013 and is stated as at 30 June 2015. The total number of listed ordinary shares of Air New Zealand Limited at that date was 1,121,849,949. Substantial฀Product฀Holder฀ Quoted฀voting...

  • Page 64
    AIR NEW ZEALAND GROUP Operating Fleet Statistics (as at 30 June 2015) Boeing฀777-300ER Number: 7 Average Age: 3.2 years Maximum Passengers: 332 Cruising Speed: 910 km/hr Average Daily Utilisation: 15:00 Boeing฀777-200ER Number: 8 Average Age: 9.2 years Maximum Passengers: 312 Cruising Speed: ...

  • Page 65
    ... ownership and transfer of Ordinary Shares. Neither NZX nor ASX has taken any disciplinary action against the Company during the financial year ended 30 June 2015. New฀Zealand฀Exchange฀ General: An ongoing waiver granted to all companies dual listed on the NZX and the ASX from Listing Rules...

  • Page 66
    AIR NEW ZEALAND GROUP General Information (continued) Australian฀ Stock฀ Exchange When Air New Zealand fully listed on the ASX in July 2002, it undertook to include the following information in its Annual Report. Limitations฀ on฀ the฀ Acquisition฀ of฀ Securities Constitution The ...

  • Page 67
    ... Email: [email protected] Registered฀ Office New฀ Zealand Air New Zealand Limited Air฀New฀Zealand฀House 185 Fanshawe Street Auckland 1010 Postal: Private Bag 92007 Auckland 1142, New Zealand Phone: (64 9) 336 2400 Fax: (64 9) 336 2401 NZBN 9429040402543 Australia Level...

  • Page 68