Air New Zealand 2015 Annual Report Download - page 18

Download and view the complete annual report

Please find page 18 of the 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

AIR NEW ZEALAND GROUP
Notes to the Financial Statements (continued)
As at 30 June 2015
16
9. Property, Plant and Equipment (continued)
AIRCRAFT,
SPARE
ENGINES AND
SIMULATORS
$M
SPARES
$M
PLANT AND
EQUIPMENT
$M
LAND AND
BUILDINGS
$M
CAPITAL WORK
IN PROGRESS
$M
TOTAL
$M
2014
Cost
Accumulated depreciation
Provision for impairment
4,083
(1,439)
(5)
263
(147)
-
363
(251)
-
350
(133)
-
43
-
-
5,102
(1,970)
(5)
Carrying value as at 1 July 2013
Additions
Disposals
Depreciation
Transfers
Transfer to assets held for resale
Foreign exchange differences (refer note 23)
2,639
472
(7)
(335)
26
(5)
(12)
116
24
(16)
(18)
-
(5)
-
112
3
-
(28)
25
-
-
217
1
-
(30)
24
-
-
43
108
-
-
(75)
-
-
3,127
608
(23)
(411)
-
(10)
(12)
Carrying value as at 30 June 2014
Represented by:
Cost
Accumulated depreciation
Provision for impairment
2,778
4,481
(1,698)
(5)
101
236
(135)
-
112
382
(270)
-
212
371
(159)
-
76
76
-
-
3,279
5,546
(2,262)
(5)
Carrying value as at 30 June 2014 2,778 101 112 212 76 3,279
2015
$M
2014
$M
Aircraft, spare engines and simulators comprise:
Finance leased aircraft and spare engines
Owned aircraft, spare engines and simulators
Progress payments
1,982
1,049
525
1,819
750
209
3,556 2,778
Land and buildings comprise:
Leasehold properties
Freehold properties
175
17
196
16
192 212
Certain aircraft and aircraft related assets with a carrying value of $2,600 million as at 30 June 2015 (30 June 2014: $2,091 million) are
pledged as security over secured borrowings and finance lease obligations.
Impairment
During the year ended 30 June 2015 the land and building assets of the Air New Zealand Gas Turbines (ANZGT) business were
assessed for impairment based on a value in use discounted cash flow valuation. ANZGT provides overhaul services to aero
derivative engines that are applied to energy production and marine industries. Over recent years a down turn in the market has
resulted in a decline in activity and profitability of the business. Cashflow projections were sourced from the 2016 financial year
plan and extrapolated into the future using a 2% growth rate. Key assumptions include exchange rates, customer demand, market
supply 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 exchange rates and economic demand. The cashflow
projections are discounted using a 9% discount rate. The result of this impairment test was an impairment loss of $17 million
(30 June 2014: Nil) which has been recognised in ‘Other expenses’ in the Statement of Financial Performance.
Residual Values
Estimates and judgements are applied by management to determine the expected useful life of aircraft related assets. The useful
lives are determined based on the expected service potential of the asset and lease term. The residual value, at the expected
date of disposal, is estimated by reference to external projected values. Residual values and useful lives are reviewed each year
to ensure they remain appropriate. During the year ended 30 June 2015 the residual values of the aircraft were reassessed and
depreciation expense was reduced by $10 million.