Air New Zealand 2016 Annual Report Download - page 40

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AIR NEW ZEAL AND ANNUAL FINANCIAL RESULTS 2016
Notes to the Financial Statements (continued)
As at 30 June 2016
38
AIR NEW ZEAL AND ANNUAL FINANCIAL RESULTS 2016
24. Financial Risk Management (continued)
Capital risk management
The Group’s objectives when managing capital are to safeguard the company’s ability to continue as a going concern and to continue to generate
shareholder value and benefits for other stakeholders, and to provide an acceptable return for shareholders by removing complexity, reducing costs
and pricing our services commensurately with the level of risk. The Group is not subject to any externally imposed capital requirements.
The Group’s capital structure is managed in the light of economic conditions, future capital expenditure profiles and the risk characteristics of the
underlying assets. The Group’s capital structure may be modified by adjusting the amount 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 the basis of gearing ratios. These ratios are calculated as net debt including capitalised operating leases over
net debt plus equity. Net debt is calculated as total borrowings, bonds and finance lease obligations (including net open derivatives on these
instruments) less cash and cash equivalents, non interest-bearing assets and interest-bearing assets. Capital comprises all components of equity.
These ratios and their calculation are disclosed in the Five Year Statistical Review.
25. Offsetting Financial Assets and Financial Liabilities
Financial assets and financial liabilities are offset and the net amount reported in the Statement of Financial Position when there is
a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and
settle the liability simultaneously.
Amounts subject to potential offset
For financial instruments subject to enforceable master netting arrangements, each agreement allows the parties to elect net settlement of the
relevant financial assets and liabilities. In the absence of such election, settlement occurs on a gross basis, however each party will have the option
to settle on a net basis in the event of default of the other party.
The following table shows the gross amounts of financial assets and financial liabilities which are subject to enforceable master netting arrangements
and similar agreements, as recognised in the Statement of Financial Position. It also shows the potential net amounts if offset were to occur.
STATEMENT
OF FINANCIAL
POSITION
2016
$M
AMOUNTS
NOT OFFSET
2016
$M
NET
AMOUNTS
IF OFFSET
2016
$M
STATEMENT
OF FINANCIAL
POSITION
2015
$M
AMOUNTS
NOT OFFSET
2015
$M
NET
AMOUNTS
IF OFFSET
2015
$M
Financial assets
Bank and short-term deposits
Derivative financial assets
1,594
70
(59)
(10)
1,535
60
1,321
106
(23)
(18)
1,298
88
Financial liabilities
Derivative financial liabilities (69) 69 - (41) 41 -
Letters of credit and performance bonds are also subject to master netting arrangements. The amounts are disclosed in Note 23
Contingent Liabilities.