Air New Zealand 2016 Annual Report Download - page 16

Notes to the Financial Statements (continued)
As at 30 June 2016
14
AIR NEW ZEAL AND ANNUAL FINANCIAL RESULTS 2016
2016
$M
2015
$M
Current
Amounts owing from associates
Contract work in progress
Interest-bearing assets
Assets held for resale
Defined pension assets
Other assets
1
16
137
18
3
2
24
19
-
12
12
2
177 69
Non-current
Interest-bearing assets
Assets held for resale
Other assets
151
1
8
141
2
8
160 151
Current interest-bearing assets reflect an unsecured loan facility provided to Virgin Australia Holdings Limited. The loan was fully repaid on
4 August 2016.
The Group is disposing of five Beech aircraft which are expected to be sold within 12 months. With the current fleet replenishment
programme, spares are also being marketed for sale and it is expected that proceeds will be received over the next three years. The carrying
value of the assets held for resale reflects the lower of their previous carrying value at the date of transfer or external market assessments of
the fair value, less costs to sell.
The Group operates two defined benefit plans for qualifying employees in New Zealand and overseas. A net asset of $3 million (30 June
2015: $12 million) was recognised in respect of the New Zealand plan, which is now closed to new members. A net liability was recognised
in respect of the overseas plan of $1 million (30 June 2015: $1 million), which is included within Note 17 Other Liabilities. The plans provide
a benefit on retirement or resignation based upon the employee’s length of membership and final average salary. Each year an actuarial
calculation is undertaken using the Projected Unit Credit Method to calculate the present value of the defined benefit obligation and the
related current service cost. The current service cost recognised through earnings was $2 million (30 June 2015: $2 million).
Non-current Interest-bearing assets include registered transferable certificates of deposit (RTDs) that have been provided as security over
credit card obligations incurred by Air New Zealand. The RTD’s bear a three month fixed interest rate and mature in December 2018. These
are subject to potential offsetting under master netting arrangements.
10. Other Assets
Amounts owing from joint ventures and associates
Amounts owing from related parties are recognised at cost less any provision for impairment.
Contract work in progress
Contract work in progress is stated at cost plus the profit recognised to date, using the percentage of completion method, less
any amounts invoiced to customers. Cost includes all expenses directly related to specific contracts and an allocation of direct
production overhead expenses incurred.
Interest-bearing assets
Interest-bearing assets are measured at amortised cost using the effective interest method, less any impairment.
Assets held for resale
Non-current assets are classified as held for resale if their carrying amount will be recovered through a sale transaction rather
than through continuing use. The sale must be highly probable and the asset available for immediate sale in its present condition.
Non-current assets held for resale are measured at the lower of the asset’s previous carrying amount and its fair value less
costs to sell.
Defined pension assets
Air New Zealand’s net obligation in respect of defined benefit pension plans is calculated by an independent actuary, by estimating
the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting
the fair value of the plan’s assets. The discount rate reflects 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 of economic benefits available in the
form of any future refunds from the plan or reductions in future contributions from the plan.