Annual Financial Results | 2012
General informationGeneral Statements Financial Statement Directors’ *This document, in conjunction with the Air New Zealand Annual Shareholder Review 2012, constitutes the 2012 Annual Report to shareholders of Air New Zealand Limited. Zealand New Air of shareholders to Report 2012 the Annual 2012, constitutes Review Shareholder Annual Zealand New Air the with conjunction in document, *This by: Board ofthe behalf on signed is Report Annual This statements. financial ofthe reliability and integrity the to as assurance reasonable a provide to sufficient be to considered also are procedures control Internal irregularities. other and fraud detect and prevent to and Group, ofthe assets the safeguard to steps adequate taken have they that consider directors The Act 1993. Reporting Financial the with statements financial the of compliance facilitate and Group the of position financial ofthe determination the accuracy, reasonable with enable which kept been have records accounting proper that believe directors The followed. been have standards accounting and reporting financial relevant all that and estimates and judgements reasonable by supported and applied consistently been have which policies accounting using prepared been have Group the of statements financial the consider directors The date. that on ended year the for flows cash and operations Group’s the of 2012 results June 30 the at as and Group the of position financial ofthe view fair and atrue give which practice, accounting accepted generally and law Zealand New with accordance in statements financial presenting for responsible are directors The 2012. June 30 to year the for “Group”) the (together entities controlled its and Zealand New Air for statements financial and Report* Annual the shareholders to present to pleased are Limited Zealand New ofAir directors The Directors’ Profiles Securities Zealand New Air in Interests Directors’ Zealand New Air at Governance Corporate Statement of Financial Performance Directors’ Remuneration Directors’ Interests Statement of Comprehensive Income
Indemnities and Insurance Flows ofCash Statement Position ofFinancial Statement Equity in ofChanges Statement 30 August 2012 August 30 DIRECTOR CHAIRMAN Palmer John
Roger France
60 62 62 59 56 61 2 3 6 5 4
Employee Remuneration Companies Subsidiary Shareholder Statistics Policies ofAccounting Statement General Information Statistics Fleet Operating Shareholder Directory Statements Financial the to Notes Review Year Statistical Five Independent Audit Report
65 63 68 49 73 70 71 16 51 7
1 AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2012 Statement of Financial Performance For the year to 30 June 2012
GROUP GROUP COMPANY COMPANY 2012 2 011 2012 2 011 NOTES $M $M $M $M
Operating Revenue Passenger revenue 3,634 3,525 3,069 2,986 Cargo 298 278 293 273 Contract services 316 329 233 248 Other revenue 235 209 432 442 1 4,483 4,341 4,027 3,949 Operating Expenditure Labour (1,050) (1,034) (898) (881) Fuel (1,219) (1,084) (1,120) (993) Maintenance (303) ( 311) (230) (252) Aircraft operations (390) (381) (309) (305) Passenger services (233) (242) (223) (232) Sales and marketing (270) (274) (252) (256) Foreign exchange losses 2 (68) (118) (70) (104) Other expenses (235) (234) (84) (216) (3,768) (3,678) (3,186) (3,239) Earnings Before Finance Costs, Depreciation, Amortisation, Rental Expenses and Taxation 715 663 841 710 Depreciation and amortisation (348) (316) (231) (189) Rental and lease expenses 2 (209) (238) (289) (321) Earnings Before Finance Costs and Taxation 158 109 321 200 Finance income 31 36 36 44 Finance costs (95) (72) (89) (65) Profit Before Taxation 2 94 73 268 179 Taxation (expense)/credit 3 (23) 8 19 44 Net Profit Attributable to Shareholders of Parent Company 71 81 287 223
Per Share Information: Basic and diluted earnings per share (cents) 4 6.5 7.5 Interim and final dividend declared per share (cents) 20 5.5 5.5 Net tangible assets per share (cents) 148 133
GROUP GROUP 2012 2 011 NOTE $M $M Supplementary Information Earnings before Taxation (per NZ IFRS above) 94 73 Reverse net (gains)/losses on derivatives that hedge exposures in other financial periods: Fuel derivatives (11) 7 Foreign exchange derivatives 8 (5)
2012 Normalised Earnings before Taxation 2 91 75 Normalised Earnings after Taxation 69 82 Per Share Information: Basic normalised earnings per share (cents) 6.3 7.6
Normalised Earnings represents Earnings stated in compliance with NZ IFRS after excluding net gains and losses on derivatives that hedge exposures in other financial periods. The adjustments align the timing of recognition of derivative gains or losses with the underlying hedged transaction. AIR NEW ZEALAND RESULTS FINANCIAL ANNUAL
The accompanying accounting policies and notes form part of these financial statements.
2 For the year to 30 June 2012 June 30 to year the For Statement ofComprehensive Income for the YearTotal Attributable Income/(Loss) to Comprehensive Other Comprehensive Income/(Loss) for the Year, Income/(Loss) Comprehensive Other of Net Tax Taxation on above movements reserve Net translation gain on investment in foreign operation Changes in fair value of investment in quoted equity instruments equity quoted in ofinvestment value fair in Changes Transfers to asset carrying value from cash flow hedge reserve hedge flow cash from value carrying asset to Transfers reserve hedge flow cash from profit net to Transfers hedges flow ofcash value fair in Changes Income/(Loss): Comprehensive Other The accompanying accounting policies and notes form part of these financial statements. financial these of part form notes and policies accounting accompanying The the for Year Profit Net Shareholders of the Parent Company Parent the of Shareholders NOTE 12 GROUP 2012 218 218 147 147 (42) (42) 63 63 40 40 75 75 10 10 71 71 $M 1
GROUP (185) 2 011 011 2 (85) (81) 121 $M (4) (4) 64 81 - COMPANY 398 398 287 287 2012 (44) (44) 111 111 67 67 78 78 10 10 $M - -
COMPANY (204) 011 2 209 223 (14) 121 $M 66 3 - -
3 AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2012 Statement of Changes In Equity For the year to 30 June 2012
GROUP GROUP COMPANY COMPANY 2012 2 011 2012 2 011 Notes $M $M $M $M
Issued Capital Balance at the beginning of the year 2,269 2,252 2,277 2,260 Shares issued 22 8 14 8 14 Equity-settled share-based payments 22 5 3 5 3 Balance at the end of the year 2,282 2,269 2,290 2,277
Cash Flow Hedge Reserve Balance at the beginning of the year (20) (18) (30) (16) Changes in fair value of cash flow hedges 63 (185) 67 (204) Transfers to net profit ("Fuel") 14 (63) 14 (63) Transfers to net profit ("Foreign exchange losses") 61 127 64 129 Transfers to asset carrying value 10 121 10 121 Taxation on above reserve movements (42) (2) (44) 3 Balance at the end of the year 18 86 (20) 81 (30)
Investment Revaluation Reserve Balance at the beginning of the year (81) - - - Changes in fair value of investment in quoted equity instruments 12 40 (81) - - Balance at the end of the year (41) (81) - -
Foreign Currency Translation Reserve Balance at the beginning of the year (10) (8) - - Net translation gain on investment in foreign operation 1 - - - Taxation on above reserve movements - (2) - - Balance at the end of the year (9) (10) - -
Retained Deficit Balance at the beginning of the year (654) (660) (1,701) (1,849) Net profit for the year 71 81 287 223 Dividends on Ordinary Shares 20 (49) (75) (49) (75) Balance at the end of the year (632) (654) (1,463) (1,701) Total Equity attributable to Shareholders of the Parent Company 1,686 1,504 908 546
Non-controlling Interests Balance at the beginning of the year - - - - Acquired through business combinations 13 2 - - - Total Equity attributable to Non-controlling Interest 2 - - - Total Equity at the End of the Year 1,688 1,504 908 546
2012 Total Equity Balance at the beginning of the year 1,504 1,566 546 395 Shares issued 22 8 14 8 14 Equity-settled share-based payments 22 5 3 5 3 Acquired through business combinations 13 2 - - - Dividends on Ordinary Shares 20 (49) (75) (49) (75) Total comprehensive income/(loss) for the year, net of tax 218 (4) 398 209 Balance at the End of the Year 1,688 1,504 908 546 AIR NEW ZEALAND RESULTS FINANCIAL ANNUAL
The accompanying accounting policies and notes form part of these financial statements.
4 For the year to 30 June 2012 June 30 to year the For Statement of Changes In Equity As at 30 June 2012 June 30 at As Position Financial 0f Statement Total Equity interests Non-controlling interests Parent Interest-bearing liabilities Provisions Reserves Issued capital Equity Total Liabilities Derivative financial liabilities financial Derivative advance in Revenue Liabilities Non-Current Total Current Liabilities Total Liabilities Non-Current Deferred taxation liabilities Other Net Assets Other liabilities Other Trade and other payables Provisions Derivative financial liabilities financial Derivative Interest-bearing liabilities advance in Revenue Bank overdraft term borrowings and short Liabilities Current Total Assets Total Total Non-Current Assets assets Other Derivative financialassets Investments in other entities Derivative financialassets Inventories receivables other Trade and The accompanying accounting policies and notes form part of these financial statements. financial these of part form notes and policies accounting accompanying The Investment in quoted equity instruments assets Intangible equipment and plant Property, receivables other Trade and Non-Current Assets Assets Total Current assets Other Income taxation deposits term short and Bank Assets Current Assets held for resale for held Assets CHAIRMAN Palmer John For and on behalf of the Board, 30 August 2012 August 30 Board, of the behalf on and For DIRECTOR NOTES 22 21 19 19 18 16 10 18 16 18 18 15 13 15 13 12 14 14 11 5 9 7 6 6 9 5 8 Roger France GROUP 3,092 3,092 2,088 2,088 5,459 5,459 2,282 2,282 1,688 1,688 1,683 1,683 1,688 1,688 1,686 1,686 1,537 1,537 1,029 1,029 3,759 3,759 3,771 3,771 1,700 1,700 (596) (596) 902 902 203 203 297 297 292 292 373 373 2012 135 135 155 155 374 374 170 170 176 176 60 60 63 63 48 48 40 40 58 58 20 20 94 94 25 25 61 61 14 14 $M 2 2 1 9 -
GROUP 3,398 3,398 4,902 4,902 2,269 2,269 3,427 3,427 1,504 1,504 1,504 1,504 1,504 1,504 1,582 1,582 1,475 1,475 1,816 1,816 1,103 1,103 2,714 2,714 (765) (765) 888 430 430 860 860 369 369 377 231 231 166 166 162 162 167 167 122 122 120 120 152 152 2 011 011 2 88 88 54 54 56 56 79 79 52 52 31 31 13 13 14 14 41 41 $M 7 1 3 - - COMPANY (1,382) (1,382) 2,290 2,290 2,963 2,963 3,826 3,826 1,968 1,968 1,039 4,734 4,734 1,575 2,251 2,251 1,021 1,021 1,771 1,771 908 908 908 908 908 908 408 408 893 893 862 862 335 335 332 332 525 525 190 190 2012 134 134 176 176 141 141 117 117 60 60 83 83 49 49 94 94 54 54 15 15 41 41 $M 1 6 1 8 7 - -
COMPANY (1,731) (1,731) 3,543 4,089 2,285 2,285 2,277 2,277 1,804 1,804 1,033 2,531 2,531 1,012 1,012 1,519 1,519 868 868 546 546 546 546 546 546 555 285 285 326 326 852 852 168 168 331 331 105 105 133 133 122 122 136 136 011 2 419 419 417 417 88 88 53 53 49 49 56 56 77 77 13 13 14 14 $M 9 1 2 1 - -
5 AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2012 Statement of Cash Flows For the year to 30 June 2012
GROUP GROUP COMPANY COMPANY 2012 2 011 2012 2 011 NOTES $M $M $M $M
Cash Flows from Operating Activities Receipts from customers 4,515 4,375 3,826 3,760 Dividends received from subsidiaries - - 198 256 Payments to suppliers and employees (3,997) (3,909) (3,543) (3,514) Income tax (paid)/received (5) 3 (5) 5 Interest paid (87) (64) (90) (63) Interest received 29 41 34 48 455 446 420 492 Rollover of foreign exchange contracts * 17 20 17 20 Net Cash Flow from Operating Activities 5 472 466 437 512 Cash Flows from Investing Activities Disposal of property, plant and equipment and intangibles 8 102 4 125 Acquisition of property, plant and equipment and intangibles (610) (797) (553) (759) Acquisition of quoted equity instruments 12 (30) (201) - - Capital and equity loan repayment from related entities - - - 1 Rollover of foreign exchange contracts * - 83 - 83 Other assets (13) - (13) - Interest-bearing assets (10) (33) (10) (33) Acquisition of subsidiaries and joint ventures 13 1 - - - Net Cash Flow from Investing Activities (654) (846) (572) (583) Cash Flows from Financing Activities Shares issued 2 6 2 6 Interest-bearing liabilities drawdowns 574 458 574 431 Net decrease in related party funding - - (152) (425) Interest-bearing liabilities payments (165) (175) (63) (35) Rollover of foreign exchange contracts * (19) (47) (19) (47) Dividend on Ordinary Shares 20 (43) (69) (43) (69) Net Cash Flow from Financing Activities 349 173 299 (139) Increase/(Decrease) in Cash and Cash Equivalents 167 (207) 164 (210) Cash and cash equivalents at the beginning of the year 860 1,067 851 1,061 Cash and Cash Equivalents at End of the Year 5 1,027 860 1,015 851
* Relates to gains/losses on rollover of foreign exchange contracts that hedge exposures in other financial periods. 2012 AIR NEW ZEALAND RESULTS FINANCIAL ANNUAL
The accompanying accounting policies and notes form part of these financial statements.
6 For the year to 30 June 2012 June 30 to year the For Statement Flows ofCash (d) (c) (b) (a) For the year to 30 June 2012 June 30 to year the For Statement of Accounting Policies S E Basis of measurement B U Air New Zealand’s primary business is the transportation of passengers and cargo on scheduled airline services. services. airline scheduled on cargo and ofpassengers transportation the is business primary Zealand’s New Air affected. similarly are Company and Group the where used are Zealand” “Air New to References Group). (the associates and ventures joint subsidiaries, its and Company) (the Limited Zealand New Air of those are presented statements financial The The financial statements were approved by the Board of Directors on 30 August 2012. August 30 on Directors of Board the by approved were statements financial The entity. aprofit-oriented is Zealand New Air (“IFRS”). Standards Reporting Financial International other and IFRS”) (“NZ asstandardsappropriate financial applicable reporting to profit-oriented These statements Standards financial entities. complywith NZ IFRS and Reporting Financial International to equivalents Zealand ofNew consists GAAP NZ GAAP”). (“NZ Practice Accounting Accepted Generally Zealand New with accordance in statements financial its prepares Zealand New Air 1993. Act Reporting Financial the under issuer an is Company The Exchanges. Stock Australian and Zealand New the on listed 1993 and Act Companies the under registered Zealand, New in domiciled acompany is Limited Zealand New Air accounting policies below and are presented in New Zealand Dollars which is the Company’s functional currency. functional Company’s the is which Dollars Zealand New in presented are and below policies accounting specific in identified as items certain of exception the with basis, cost historical the on prepared been have statements financial The statements financial the to significant are estimates and assumptions where areas or complexity, or ofjudgement degree ahigher involving Areas assumptions and on an ongoing basis. estimates the reviews Group The circumstances. particular the to appropriate as factors, other and are experience historical on based are assumptions associated and Estimates policies. accounting Group’s the ofapplying process the in judgement their to exercise directors the requires also It estimates. accounting critical certain of use the requires statements offinancial preparation The disclosed below: ntities tat asis judgements and estimates accounting of se
“Property, plant and equipment” and Note 10 Property, Plant and Equipment. and Plant 10 Note Property, and equipment” and plant “Property, under policies accounting the in provided is information Further values. projected external to reference by estimated is of disposal, date expected the at value, residual The term. lease and asset ofthe potential service expected the on based determined are lives useful The assets. related ofaircraft life useful expected the determine to management by applied are judgements and Estimates assets related ofaircraft lives useful and values Residual Parties. Related 27 Note and Entities Other in Investments 13 Note Assets, 11 Note Intangible Equipment, and Plant 10 Note Property, and “Impairment” under policies accounting the in provided are details Further flows. cash future derive to applied be to assumptions and estimates require and assets of the value carrying the support to prepared are models use in Value annually. impairment for tested is Goodwill recoverable. be not may amount carrying the that indicators any are there whether determine to date reporting each at reviewed are entities) in other investments and resale for held assets assets, intangible equipment, and plant property, (including assets Non-financial assets ofnon-financial impairment Estimated 16 Note Provisions. within and costs” “Maintenance under policies accounting the in disclosed is information Further maintenance. of cost and timing ofthe respect in made be to required are Estimates overhauls. engine and inspections airframe ofmajor costs future estimated ofthe value present the determining in obligations contractual appropriate, where and, advice manufacturers’ experience, historical upon based is provision The agreements. lease those within specified obligations return lease the for term lease the during made is aprovision arrangements, lease operating under held aircraft maintain to acommitment is there Where Maintenance “Loyalty and revenue” “Airline under policies accounting the in disclosed is information Further Airpoints. their redeemed has member the as time such until expiry, ofestimated net provisions deferred, is programmes ofloyalty respect in received ofconsideration value fair The trends. historical and ticket ofthe conditions and terms the on based recognition and timing the regarding estimates using revenue in programmes”. recognised are tickets Unused programmes. loyalty and advance in sales transportation includes advance in Revenue Revenue in advance u
tory of
reportin
preparation
base g
7 AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2012 8 AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2012 (f) (e) For the year to 30 June 2012 June 30 to year the For Statement of Accounting Policies S recognised through other comprehensive income. been have would million of$27 losses actuarial 2012, June 30 at as unrecognised applied been had amendments 2013. these If 1 January after or on commencing periods for is date effective The required. be also will disclosures Additional income. comprehensive other through aremeasurement as recognition immediate requiring instead losses, or gains actuarial recognising for method corridor the of use the prohibit amendments The early. adopted been not have Benefits 19 IAS NZ -Employee to amendments The July 2012. 1 after or on commencing periods for is date effective The reclassified. be not will that those from loss or profit to reclassified be subsequently will that ofitems presentation separate require amendments The early. adopted been not have Income Comprehensive ofOther ofitems presentation the concerning Statements ofFinancial 1-Presentation IAS NZ to amendments The disclosures. additional than other statements financial the on impact asignificant have to expected not 2013, is 1January after or on commencing periods annual for effective becomes which standard, The requirements. disclosure out sets and value fair measuring for framework a establishes value, fair defines It ofguidance. source asingle with IFRSs individual in contained guidance measurement value fair the 13 IFRS NZ replaces early. adopted been not has 13 Measurement Value IFRS NZ -Fair statements. financial the on impact asignificant have to 2013, expected not is 1 January after or on commencing periods annual for which effective standard, becomes The entities. structured unconsolidated and associates arrangements, joint subsidiaries, in interests have that entities for requirements disclosure 12 out IFRS NZ sets adopted. early been not has Entities Other in ofInterests 12 IFRS NZ -Disclosure statements. financial the on impact any have to 2013, expected not is 1January after or on commencing periods annual for effective becomes which standard, The ventures. joint for ofaccounting method equity the requires and form, legal the to opposed as arrangements ofjoint obligations and 11 rights IFRS the NZ on early. focuses adopted been not has 11 IFRS NZ Arrangements -Joint statements. financial the on impact any have to 2013, expected not is 1January after or on commencing periods annual for effective becomes which standard, The company. parent the of statements financial consolidated the in included be should entity an whether in factor determining the as ofcontrol concept the identifying by principles existing on 10 IFRS NZ builds early. adopted been not has Statements Financial 10 IFRS NZ -Consolidated quantified. been yet not has statements financial the on standard ofthis application ofthe 2015. impact The 1January after or on commencing periods annual for applicable is (2009). 9 standard IFRS This NZ to liabilities financial and assets financial of derecognition and liabilities, financial of measurement and classification the to related requirements adds standard This early. adopted been not has Instruments 9(2010) -Financial IFRS NZ Revised statements. financial the on impact amaterial have not did adoption early The below. 2012, noted June 30 as at as except Board Standards Accounting Zealand New the by issued been had that Interpretations and IFRSs NZ other all adopt early to elected has Zealand New Air ofdisclosure. level the in reduction minor ina resulted have and presented statements financial the on impact 2011. asignificant had not 1July on have adopted adoptions was The Standards Accounting Australian and Standards Reporting Financial International with Harmonise to Standards Reporting Financial International to Equivalents Zealand New to 2011)(June 2011. 1July on Amendments adopted were addition, In Disclosures Additional Zealand -New 44 2011) FRS to (April Amendments and Disclosures Additional Zealand -New 44 FRS Comparative information has been reclassified to achieveconsistency in disclosure withthe currentperiod. consistently applied to all periods presented,been unless otherwise stated. have policies These below. out set are statements financial ofthese preparation the in applied policies accounting principal The ig
Taxation nificant Liabilities. 25 Contingent Note within disclosed is information Further parties. external and internal both from advice and event the surrounding circumstances and facts ofthe areview on based made are These obligation. an settle to required be will resources of outflow an that probability the determining to applied are estimates and Judgements Contingent Taxation. 21Note Deferred and Expense 3Taxation Note “Taxation”, under policies accounting the in provided is information Further Performance. of Financial Statement the to charge or credit acorresponding in liabilities resulting adjustment, require may liabilities and assets tax deferred recognised of amounts carrying ofthe all or some circumstances, such In recognised. yet not differences temporary and losses tax other of amount the and Position ofFinancial Statement the in recognised liabilities tax deferred and assets tax ofdeferred amount the impact may which expectations, alter will circumstances in changes that apossibility is there hence uncertainty, and risk to subject are assumptions and judgements These legislation. tax ofincome application the about required also are Judgements Group. the by payable tax of amount the impact ultimately may items These result. final its reporting Group the to prior or date balance at known not are that items about estimates make to management requires statements financial ofthe preparation The acco u
ntin g policies (Continued) For the year to 30 June 2012 June 30 to year the For Statement of Accounting Policies (Continued) For the year to 30 June 2012 June 30 to year the For Statement of Accounting Policies F impairment. for provision any less acquisition of cost their at statements financial the in recognised are subsidiaries in Investments B Airline revenue Airline R G balances and Transactions currency Functional interest in the joint ventures and associates. and ventures joint the in interest Group’s ofthe extent the to eliminated are associates its and ventures joint Group, the between transactions on gains Unrealised transferred. asset ofthe impairment ofan evidence provides transaction the unless eliminated also are losses Unrealised consolidation. on eliminated are companies group between transactions on gains unrealised and balances transactions, intercompany material All interest. controlling a not but asignificant holds indirectly, or directly either Group, the which in entities those are Associates agreement. acontractual by established been have and Group the by controlled jointly Subsidiaries are entities that are controlled either directly or indirectly, by the Company. Joint ventures are entities whose are activities method. equity the using for accounted ventures, joint and associates ofits results the and method, purchase the using for accounted subsidiaries, its and Company the of those include statements financial consolidated The statements. financial the on impact asignificant have to 2013, expected not are 1January after or on commencing periods annual for effective become which amendments, The Operations. Discontinued and Sale for Held Assets 5 -Non-Current IFRS NZ of scope the within is sale for held as classified be to criteria the meets that venture joint or associate an in investment (2011) 28 an IAS that NZ early. clarifies adopted been not has Ventures Joint and (2011) 28 Associates IAS in NZ -Investments statements. financial the on impact asignificant have to 2013, expected not are 1January after or on commencing periods annual for effective become accounting and disclosure requirements for separatewith statements financial somewhich The amendments, minor clarifications. existing the (2011) 27 IAS NZ forward early. carries adopted been not has Statements (2011) 27 IAS NZ Financial -Separate performs theperforms or carriage otherwise fulfilsall relevant contractual commitments. Group the when recognised is arrangements these under Revenue arrangements. alliance and share code various operates Group The trends. historical and ticket ofthe conditions and terms the on based of recognition timing the regarding estimates using revenue as recognised are tickets Unused performed. is carriage actual the when Performance ofFinancial Statement the in revenue to transferred are Amounts received. consideration ofthe value fair the at advance in revenue in recognised is revenue sales cargo and Passenger and translated at the closing rate. entity foreign ofthe liabilities and assets as treated are entity ofaforeign acquisition the on arising adjustments value fair and Goodwill equity. to taken are investments, of such hedges as designated instruments currency other and ofborrowings and entities, foreign in investment net ofthe translation the from arising differences exchange consolidation, On follows: as currency presentation the into translated are currency presentation the from different currency functional a have that entities group all of position financial and results The hedges. investment net qualifying and hedges flow cash qualifying as equity in deferred when except Performance, ofFinancial Statement the in recognised are losses or gains exchange Foreign transaction. ofthe date the at rate exchange the using translated are currency aforeign in cost ofhistorical terms in measured are that liabilities and assets Non-monetary date. that at ruling rate the at translated are date sheet balance the at currencies foreign in denominated liabilities and assets Monetary date. transaction at ruling those approximating rates exchange using currency functional relevant the into converted are transactions currency Foreign environment in which the operates currency”). entity (the “functional economic primary the of currency the using measured are entities Group’s the of each of statements financial the in included Items orei asis e roup companies (c) (b) (a) ven
all resulting exchange differences are recognised as a separate component of equity and in Other Comprehensive Income. Comprehensive Other in and ofequity component aseparate as recognised are differences exchange resulting all Position; ofFinancial Statement ofthat date the at rate closing the at translated are presented Position ofFinancial Statement each for liabilities and assets at transaction date; and at date; transaction income and expenses for each Statement of are Financial Performance translated at exchange rates approximating those ruling of g u n e c consolidation reco u rrency g nition translation (Continued) 9 AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2012 10 AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2012 For the year to 30 June 2012 June 30 to year the For Statement of Accounting Policies Cash revenue Investment programmes Loyalty revenueOther revenue Contract B L Non-derivative financialNon-derivative instruments F Maintenance leases Finance leases Operating Interest revenue from investments and fixed deposits is recognised as it accrues, using the effective interest method where appropriate. where method interest effective the using accrues, it as recognised is deposits fixed and investments from revenue Interest established. is payment receive to right the when recognised is revenue Dividend Position. ofFinancial Statement the in advance in revenue within recorded is revenue Airpoints Deferred transaction. sales initial ofthe time the at revenue passenger net in recognised is and experience historical upon based is ofexpiry estimate The points. their redeemed has member Airpoints the as time such until expiry, ofestimated net deferred, is parties third to Dollars ofAirpoints ofsales respect in received value fair of consideration The points. their redeemed has member Airpoints the until Dollars), Airpoints (non-redeemed expiry ofestimated net deferred, is transaction sales initial ofthe part as members Airpoints to Dollars ofAirpoints award the with associated ofrevenues value fair The provided. is service the time the at recognised is revenue Other contract. ofthe completion on recognised is revenue related contract Other date. balance at contract ofthe ofcompletion stage the to reference by recognised is revenue measured, reliably be can contract ofthe of completion stage and costs related ofrevenue, amount the and period, agreed acontractually over performed are services related contract Where Tax. Services and Goods of net Flows Cash of Statement the in included are flows Cash Performance in the period in which they are incurred. are they which in period the in Performance ofFinancial Statement the in recognised are costs borrowing other All use. intended their for ready get to oftime period substantial a take necessarily which assets are assets Qualifying sale. or use intended their for ready substantially are assets until the as time assets such ofthose cost the to added are aircraft, as such assets, ofqualifying acquisition the to attributable directly costs Borrowing liabilities, trade and other payables and amounts owing to related parties. These are recognised initially at fair value plus any directly Subsequent transaction to costs. initialattributable recognition, non-derivative financial instrumentsare directly any recognisedas below. described plus value fair at initially recognised are These parties. related to owing amounts and payables other and trade liabilities, owing from related interest-bearing parties, assets, non interest-bearing assets, investment in quoted equity instruments, interest-bearing Non-derivative financial instruments includecashtradeand cash equivalents, and other (excludingreceivables prepayments),amounts incurred. as expensed are costs maintenance other All year. the during operated cycles or ofhours number the to reference by inspections and engine of major airframe overhauls by making costs appropriate charges to the Statement future calculated of Financial Performance, estimated ofthe value present the determining in obligations contractual appropriate, where and, advice manufacturers’ experience, historical upon based is provision The agreements. lease those within specified obligations return lease the for term lease the during made is aprovision arrangements, lease operating under held aircraft maintain to acommitment is there Where inspection or overhaul. expected next the to period the over depreciated and capitalised is Group the by owned aircraft for overhauls engine ofmajor cost The liability. ofthe balance remaining the on interest of rate periodic constant a produce to as so term lease the during period each to allocated is expense The finance liability. outstanding the of reduction the and expense finance the between apportioned are leases finance under made Payments lease. ofthe term the over basis astraight-line on Performance Financial of Statement the in expense an as recognised are received) incentives ofany (net leases operating under made Payments leases. operating as classified are lessor the by retained are ownership of rewards and risks the of proportion asignificant which under Leases ease inancial orro flo pay w in w instr m g costs s ents costs um ents (Continued) For the year to 30 June 2012 June 30 to year the For Statement of Accounting Policies (Continued) For the year to 30 June 2012 June 30 to year the For Statement of Accounting Policies D Amounts owing to subsidiaries, joint ventures or associates payables other Trade and Finance leases Borrowings and Bonds Interest-bearing liabilities Liabilities Financial provision. the against when collectionis considered to be When doubtful. an amount owing from is a considered related established it is uncollectible, party is written-off impairment for Aprovision impairment. for provision any less cost at recognised are parties related from owing Amounts associates and ventures joint subsidiaries, from owing Amounts instruments equity quoted in Investment Non interest-bearing assets Interest-bearing assets Trade and other receivables equivalents cash and Cash Assets Financial and transaction costs are expensed immediately. Subsequent to initial recognition, derivative financial instruments are recognised as described below: recognised are instruments financial derivative recognition, initial to Subsequent immediately. expensed are costs transaction and value fair at initially recognised are instruments financial Derivative Limited. Holdings Australia Virgin in of shares purchase of a further event the in protection price provide to used were derivatives Equity activities. investment and financing operational, from arising risks rate interest and price, fuel exchange, foreign to exposure its manage to instruments financial derivative uses Zealand New Air cost. at stated are parties related to owing Amounts cost. at stated are payables other Trade and at cost. amortised stated subsequently are obligations The incurred. costs oftransaction net value, fair at stated initially are obligations lease Finance date. sheet balance the 12 after than months more for liability ofthe settlement defer to right unconditional an has the Group unless liabilities current as classified are Bonds and Borrowings appropriate. where method, rate interest effective the using cost amortised at stated subsequently are They incurred. costs oftransaction net value, fair at recognised initially are Bonds and Borrowings although they may be transferred within equity. otherwise, or derecognition on loss or profit to transferred not are income comprehensive other in held losses or gains cumulative The established. been has payment receive to right the when loss or profit in recognised are investments such from Dividends trading. for held those from distinct as investments strategic oflong-term, representation appropriate the ensure to order in made is recognised through other comprehensive income where an are irrevocable has election been made at inception to do so. This component, election exchange foreign related any including instruments, equity quoted in ofinvestments value fair the in Changes impairment. any less cost, amortised at measured are assets interest-bearing Non impairment. any less method, interest effective the using cost amortised at measured are assets Interest-bearing collection is considered to be When doubtful. a trade receivable is considered it against uncollectible, is the written-off provision. when established is impairment for Aprovision impairment. for provision any less cost at recognised are receivables other Trade and in value. changes of risk insignificant an to subject are which and ofcash amounts known to convertible readily are that investments liquid highly short-term other and ofoverdrafts net banks in accounts current deposits, demand hand, on cash include equivalents cash and Cash v eri ativ e financial
instr um ents (Continued) 11 AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2012 12 AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2012 For the year to 30 June 2012 June 30 to year the For Statement of Accounting Policies P Fair value estimation Net investment hedge Cash flowinstruments financial accounted Hedge hedges loss or profit through value fair at instruments financial Derivative M assets Leased Owned assets future principal and interest cash flows, discounted at the market rate of interest for similar liabilities at reporting date. reporting at liabilities similar for interest of rate market the at discounted flows, cash interest and principal future of value present the on based calculated is purposes disclosure for liabilities ofinterest-bearing value fair The hierarchy). value fair 2” of the (“Level date balance at liabilities or assets similar for prices market published on based is instruments financial ofderivative value fair The Disclosures”. Instruments: Financial IFRS 7: NZ to “Amendments within defined hierarchy value 1” fair ofthe “Level to equates This market. active an in prices market quoted to reference by determined is instruments equity quoted in ofinvestments value fair The in the Statement of Financial Performance. immediately recognised is hedge ofthe portion ineffective the to relating loss or gain The equity. within reserve translation currency foreign the in accumulated and income comprehensive other in recognised is hedge ofthe portion effective the to relating instrument hedging the on loss or gain Any hedges. flow cash to similarly for accounted are operations foreign in investments of net Hedges recognised. is it when asset ofthe amount carrying the to transferred is reserve hedge flow cash the in recognised amount the asset, anon-financial is item hedged the or, when Performance, Financial of Statement the in recorded is item hedged the that period same the in Performance ofFinancial Statement the to transferred is reserve hedge flow cash the in recognised amount the term, designated its throughout continues relationship hedge the Where Performance. ofFinancial Statement the in immediately recognised is instrument hedging the to respect with reserve hedge flow cash the in recognised loss or gain unrealised cumulative, the occur, to expected no is longer transaction hedged underlying the If occurs. transaction forecast the until there remains reserve hedge flow cash the in recognised previously loss or gain cumulative The discontinued. is accounting hedge then changed, or revoked is relationship hedge of the designation the or exercised, or terminated sold, is or expires accounting, hedge for criteria the meets longer no instrument ahedging If Statement of Financial Performance. the in recognised are value fair in changes accounting, for ineffective are hedges the that To extent the Measurement. and Recognition Instruments: Financial 39: IAS NZ with accordance in effective deemed are hedges the that extent the to equity within accumulated and Income Comprehensive Other within recognised are hedges flow cash as designated instruments ofhedging value fair the in Changes below. detailed as relationship, hedging ofthe nature the on depends loss or gain resultant ofany recognition and Measurement, Recognition Instruments: Financial 39: IAS NZ with accordance in accounting hedge for qualify instruments financial Where Performance. ofFinancial Statement the in immediately recognised is value fair to remeasurement on loss value. or fair gain at The stated are category this in instruments financial derivative recognition, initial to Subsequent trading. for held as are classified below), (refer hedge flow cash qualifying in a instruments hedging as designated those than other instruments, financial Derivative of the related lease as deferred credits. deferred as lease related of the period the over basis astraight-line on rentals lease operating the from deducted and deferred are amounts the leases, operating under held are aircraft the When expense. operating associated the against offset or engines, and aircraft related ofthe cost the to reduction a as recorded either are contributions other and credits the received, are amounts the which for reason the on Depending engines. and aircraft ofcertain acquisition the with connection in manufacturers from contributions other and credits receives Group The asset. that to applicable policy accounting the with accordance in for accounted is asset the recognition, initial to Subsequent established. also is liability Acorresponding lease. ofthe inception at payments lease minimum ofthe value present the and value fair their of lower the to equal amounts at measured are leases finance under held assets recognition, initial Upon leases. operating as classified are leases other All leases. finance as classified are ofownership rewards and risks the all substantially assumes Group the which under Leases asset. ofthe life remaining the or overhaul, event, inspection major next the to period ofthe shorter the over and depreciated is engines) its of condition maintenance the (reflecting potential service its to attributed is aircraft acquired ofan cost ofthe A portion separately. for accounted are they lives, useful different have equipment and plant property, of item an of parts significant Where equipment. and plant ofproperty, purchases currency of foreign hedges flow cash qualifying on losses or gains ofany equity from transfers include also may Cost use. intended its for condition working and location the to asset the bringing in and item ofthe acquisition the to attributable directly is that expenditure includes Cost losses. impairment accumulated and depreciation accumulated less cost deemed or cost at stated are equipment and plant ofproperty, Items roperty anufacturers’ credits anufacturers’ e and , plant qu ip m ent (Continued) For the year to 30 June 2012 June 30 to year the For Statement of Accounting Policies (Continued) For the year to 30 June 2012 June 30 to year the For Statement of Accounting Policies I Non-aircraft Aircraft D Impairment of non-financial assets non-financial of Impairment cost amortised at assets financial of Impairment Impairment costs Development licences and software Computer G Financial Performance. of Statement the in included are These amounts. carrying with proceeds comparing by determined are disposal on losses and Gains Non-aircraft specificleaseholdimprovements,plant,equipment,furnitureandvehicles Aircraft specificplantandequipment Buildings lives: economic estimated following the using basis line astraight on depreciated are assets Non-aircraft values. projected external to reference by annually reviewed are ofaircraft values residual The overhauls Engine Engines Airframe follows: as basis line astraight on depreciated being are spares and simulators engines, related and aircraft The lives. economic their over value residual estimated an to basis line straight on a assets these of cost the down write to calculated is fleet aircraft ofthe Depreciation assessment of the Group’s future trading prospects and the assets’ ultimate net sale proceeds and have been discounted to their net net their to discounted been have and proceeds sale net ultimate assets’ the and prospects trading future Group’s of the assessment current directors’ the on based are amounts recoverable determining in used flows cash net Estimated assets. infrastructural related of inclusive unit, cash-generating one as impairment for assessed are and network asingle as airline the by operated are Aircraft separately identifiablecashflows (cash-generating units). are there which for level lowest the at grouped are assets impairment, ofassessing purposes the For amount. recoverable its exceeds amount carrying asset’s the which by amount the for Performance ofFinancial Statement the in recognised is loss impairment An asset. the to specific risks the and money of value time the of assessments market current reflects that rate adiscount using value present their to discounted are flows cash future estimated the use, in value assessing In use. in value and sell to costs less value fair asset’s ofan higher the is amount recoverable The estimated. is amount recoverable asset’s the exist, indicators such any If recoverable. be not may amount carrying the that indicators any are there whether determine to date reporting each at reviewed are assets Non-financial Performance. ofFinancial Statement the in recognised is appropriate, where rate, interest effective original asset’s financial the at discounted flows, cash future ofestimated value present the and amount carrying asset’s the between difference ofimpairment, the evidence objective is there If impairment. for date reporting each assessed are cost amortised at carried assets Financial incurred. as Performance ofFinancial Statement the in recognised are costs development other All benefits. expected ofthe period the over basis line astraight on amortised are assets The cost. at stated and asset an as recognised is services and products customer external to applied is which costs development to related Expenditure incurred. is it which in period the in expense an as recognised is activities research on Expenditure years. six to three of lives useful estimated their over basis straight-line on a amortised are and life afinite have assets These software. specific the use to bring and acquire to incurred the costs on ofthe basis capitalised are licences software Acquired software. that from benefits economic future obtain to ability the and software the use to right alegal has Group the where assets intangible as recognised also are software computer developing in internally incurred costs The asset. intangible an as recognised is item, hardware ofarelated part integral an not is which acquired, software Computer sold. entity the to relating goodwill of amount carrying the include entity ofan disposal the on losses and Gains losses. impairment accumulated less cost at carried and impairment for annually tested is Goodwill venture. joint or associate that in investment ofthe value carrying the in included is venture or joint of associate an on acquisition arising Goodwill assets. in intangible is included of a subsidiary on acquisition arising Goodwill acquired. assets identifiable net ofthe share Group’s ofthe value fair the above and over acquisition ofan cost the represents Goodwill ntang epreciation oodwill ible assets 3 10 –20years 50 –100years overhaul next to period years 5 –22 10 years –22 – 10years (Continued) 13 AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2012 14 AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2012 For the year to 30 June 2012 June 30 to year the For Statement of Accounting Policies Ta F reserve revaluation Investment Foreign currency translation reserve reserve hedge flow Cash R S I Wor A be available against which to utilise those temporary differences and losses. and differences temporary those utilise to which against available be will amounts taxable future that probable is it that extent the to recognised only are losses tax unused and assets tax income Deferred settled. is liability tax income deferred the or realised is asset tax income deferred related the when apply to expected are and date sheet balance the by enacted substantively or enacted been have that tax laws) using (and rates determined is tax income Deferred statements. financial the in amounts carrying their and liabilities and ofassets bases the tax between arising differences temporary on method, liability sheet balance the using full, in provided is taxation income Deferred in equity. recognised is it case which in equity, in directly recognised items to relates it where except Performance ofFinancial Statement the in expense recognised is taxation Income liabilities. and assets taxation deferred in changes by adjusted is This date. reporting at enacted substantively or enacted rates tax at income taxable period’s current the on payable taxation the is period the for expense taxation income The such. as them for accounts and contracts) Insurance 4- IFRS NZ by defined (as contracts insurance be to these considers Company the Group, the within companies other of indebtedness the guarantee to contracts guarantee financial into enters Company the Where instruments. equity quoted in investment ofthe value fair the in changes comprises reserve revaluation investment The operations. foreign those in investments ofnet ahedge as designated borrowings currency offoreign translation the with The foreign currency translation comprises reserve foreign exchange differences arising on consolidation of foreign operations together occurred. yet not have that transactions hedged to related instruments hedging flow cash of value fair the in change net cumulative the of portion effective the comprises reserve hedge flow cash The of. disposed otherwise or reissued are they until method, stock treasury the under equity from deducted is paid consideration the capital, share Company’s the purchases Group ofthe amember Where proceeds. the from oftaxation, net adeduction, as equity in shown are options or shares new of issue the to attributable directly costs Incremental equity. as classified are shares Ordinary expenses. selling variable applicable less ofbusiness, course ordinary the in price selling estimated the is value realisable Net method. cost (FIFO) first-out first-in, the using determined is Cost value. realisable net and ofcost lower the at measured are Inventories overheads. production direct and labour services, ofmaterials, cost the includes progress in work Capital overhead expenses incurred. production direct of allocation an and contracts specific to related directly expenses all includes Cost customers. to invoiced amounts any less method, completion of percentage the using date, to recognised profit the plus cost at stated is progress in work Contract sell. to costs less value fair its and amount carrying previous asset’s the of lower the at measured are resale for held as classified assets Non-current ofclassification. date the from year one within sale acompleted as recognition for qualify to expected be should which sale, the to committed be must Management condition. present its in sale immediate for available asset the and probable highly be must sale The use. continuing through than rather transaction sale a through recovered be will amount carrying their if resale for held as classified are assets Non-current years. prior in recognised been loss impairment no had determined been have would that amount carrying the exceed not does amount carrying increased the that so but amount, recoverable ofits estimate revised the to increased is unit cash-generating or asset ofthe amount carrying the reverses, subsequently loss impairment an Where basis. on individual an for impairment assessed are fleet operating the into reintroduced ofbeing intention no have and service from withdrawn been have which Aircraft value. present n inancial hare eser resale for held ssets ventories x ation pro k in v capital es gu g arantee ress contracts (Continued) For the year to 30 June 2012 June 30 to year the For Statement of Accounting Policies (Continued) For the year to 30 June 2012 June 30 to year the For Statement of Accounting Policies P Termination costs Share based compensation Pension obligations Em to a formal detailed plan to terminate employment before the normal retirement date. retirement normal the before employment terminate to plan detailed aformal to ofwithdrawal, possibility realistic without committed, demonstrably is Group the when expense an as recognised are costs Termination vest. ultimately will that options ofshare number ofthe estimate best management’s and expired has period vesting the which to extent the reflect to date reporting each at adjusted is expense an as recognised amount The Capital. Issued to entry a corresponding with options, ofthe period vesting the over Performance, ofFinancial Statement the within expense, an as recognised is employees to granted options of date) grant (at value fair The statements. financial the to notes the in disclosed are options equity All lives. working remaining average expected members’ the over method corridor the under amortised are losses or gains actuarial Any plan. the to contributions future in reductions or plan the from refunds future ofany value present the and cost, service past and losses actuarial net unrecognised ofany value the aggregate in exceed cannot recognised asset ofthe value the Zealand, New Air to abenefit in results calculation the When obligations. Zealand’s New ofAir terms the approximating dates maturity have that bonds government on yield the reflects rate discount The costs. service past unrecognised and losses or gains actuarial unrecognised any for adjusted assets, plan’s ofthe value fair the less members the to obligations future ofthe value present the being as actuary, independent an by plan each for separately calculated is plans pension benefit ofdefined respect in obligation net Zealand’s New Air accounting. benefit defined use to available not is information sufficient where schemes contribution defined to payments as way same the in treated are schemes benefit retirement multi-employer to made Payments due. fall they as an expense as charged are plans retirement contribution defined to Payments outflow of economic benefits will be required to settle the obligation, and the provision can be reliably measured. reliably be can provision the and obligation, the settle to required be will benefits economic of outflow an that probable is it event, ofapast aresult as obligation constructive or legal apresent has Group the when recognised is A provision ro ployee v isions benefits (Continued) 15 AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2012 16 AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2012 For the year to 30 June 2012 June 30 to year the For Notes to the Financial Statements 2. PROFIT BEFORE TA G 1. SE (30 June 2011: losses of $7 million) and $8 million of losses on foreign exchange derivatives (30 June 2011: June million). (30 of$5 gains derivatives exchange foreign on oflosses million $8 and 2011: June million) (30 of$7 losses derivatives are fuel $11for gains of periods million financial other in exposures hedge which derivatives on (gains)/losses to relation in Performance ofFinancial Statement the in recognised amounts The 18). Note (refer purposes accounting for ineffective as be to recognised required amounts comprise movements Such transaction. hedged underlying the with losses or gains ofderivative recognition of timing the align adjustments The periods. financial other in exposures hedge that derivatives on movements excluding after earnings shows Performance, ofFinancial Statement ofthe foot the at information supplementary as disclosed earnings, Normalised non-hedge and accounted foreign currency ineffective derivatives. and currencies foreign in denominated liabilities and assets ofmonetary translation the derivatives, hedge operating from gains/(losses) realised comprise Performance ofFinancial Statement the in disclosed as losses” exchange “Foreign Income. of Comprehensive Statement the and Equity in ofChanges Statement the both in disclosed is item hedged occurrence the upon underlying of the earnings to reserve hedge flow cash the from relationships hedge ofqualifying portion effective ofthe transfer The *** return lease provisions within aircraft “Foreign exchange and losses” as noted below. liabilities interest-bearing denominated States United on gains/losses exchange foreign by offset Largely ** prospectus). ofabond review and controls process business to (relating services assurance other and work compliance tax 2011: for June paid (30 were of$63k $38k) fees * Other Total rentalandlease expenses Buildings Aircraft Rental andleaseexpenses Total earningsimpact of derivativefinancialinstruments*** Non-hedge accountedderivatives** Components ofderivativesexcluded fromhedgedesignations Accounting ineffectiveness oncashflowhedges Derivative financialinstruments(referNote18) Dividend incomefromrelatedparties Reversal ofimpairmentoninvestmentsinsubsidiaries Impairment lossesongoodwill Impairment lossesonassetsheldforresale Gain ondisposalofassetsheldforresale Loss ondisposalofproperty, plantandequipmentintangibleassets Net foreignexchange (loss)/gainonworkingcapitalbalances Bad anddoubtfuldebts(includedwithin“Otherexpenses”) Termination costs Audit andreviewoffinancialstatements* segments. geographical to assets the allocating for basis reasonable no is there Accordingly, network. worldwide the across employed and Zealand New in registered is which fleet aircraft the is Group ofthe asset non-current principal The revenue Total operating America North Asia Europe and Kingdom United An analysis of operating revenue by geographical region of original sale is provided below. below. provided is sale oforiginal region geographical by revenue ofoperating analysis An result. financial Group’s consolidated the optimise are to made network the across decisions allocation Resource Zealand. New within and from to, services airline ofscheduled network an on cargo integrated and ofpassengers transportation the being business primary its segment, one in predominantly operates Zealand New Air Share oftheprofitassociates Total operatingrevenue,includingfinanceincome (debiting)/crediting thefollowing: Profit beforetaxationhasbeendeterminedafter Australia and Pacific Islands New Zealand sale original of region geographical by revenue of Analysis eographical GM ENTAL INFOR M X ATION ATION GROUP 4,514 (209) (209) (161) 2012 (48) (48) (24) (11) 21 12 $M (2) (3) (7) (8) (1) (1) 9 1 6 - -
GROUP 4,377 (238) (238) (190) (190) (136) (136) (105) 2 011 011 2 (48) (48) (28) (10) $M (3) (1) (1) (3) (1) 2 9 3 - - - COMPANY GROUP 4,483 4,483 2,593 2,593 4,063 4,063 (289) (289) 363 363 363 487 487 (250) 677 677 2012 198 198 2012 (39) (39) (24) (11) 129 $M 21 12 $M (1) (4) (8) (1) (1) 9 1 - -
COMPANY GROUP 2,496 4,341 3,993 3,993 (136) (136) (321) (281) (105) 2 011 011 2 463 397 256 374 611 011 2 (40) (40) (28) $M $M (3) (8) (1) (1) (1) 2 - - - - -
For the year to 30 June 2012 June 30 to year the For Notes to the Financial Statements For the year to 30 June 2012 June 30 to year the For Notes to the Financial Statements 4. EARNIN 4.
The Group and Company have nil imputation credits as at 30 June 2012 (30 June 2011: $3 million debit Group and Company). and 2012 Group 2011: June 30 June at debit as (30 million credits $3 imputation nil have Company and Group The 1999. May to prior into entered leases certain to applying only legislation tax ofhistorical application and circumstances particular the given position this with agreed has Department Revenue Inland The year. income 2009 747-400 the in Boeing oftwo aircraft sale the from derived income non-taxable to 2011 June 30 relates ended largely year the in periods” prior in provided of“Over balance * The Taxation (expense)/credit Other Over provided in prior periods * W Non-taxable income Non-taxable loss tax Unused differences oftemporary reversal and Origination expense taxation Deferred Current year Current expense taxation Current 3. TA - Share options -Share shares: ordinary ofdilutive Effect share per earnings basic for Shares ofOrdinary number average Weighted W (cents) share per earnings diluted and Basic Company the of holders equity to attributable share per Earnings Non-deductible expensesNon-deductible Adjustments 2011: June (30 28% at 30%) Taxation taxation before Profit rate tax effective of Reconciliation earnings in recognised (expense)/credit Total taxation Adjustment for prior periods Net Profit Attributable to Shareholders of the Parent Company Parent the of Shareholders to Attributable Profit Net share: per earnings diluted and basic of purpose the for Earnings eighted average number of Ordinary Shares for diluted earnings per share per earnings diluted for Shares Ordinary of number average eighted eighted average number of shares (in millions of shares) of millions (in shares of number average eighted X ATION E G S PER SHARE S PER XPENSE GROUP 2012 (29) (23) (26) (23) (42) $M (4) 94 13 2 5 6 4 2 -
GROUP (Continued) 2 011 011 2 (22) (25) (25) $M (5) 33 35 28 73 8 5 8 - - - COMPANY GROUP 1,099 1,099 1,096 1,096 2012 2012 (32) (75) 268 (19) 6.5 6.5 $M 71 71 $M (3) 96 38 34 19 19 (1) 13 3 2 4
COMPANY GROUP 1,085 1,085 1,084 011 2 2 011 011 2 (29) (29) (54) 179 7.5 7.5 $M 81 81 $M 69 44 44 77 73 (1) 18 1 4 4 -
17 AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2012 18 AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2012 For the year to 30 June 2012 June 30 to year the For Notes to the Financial Statements Composition of closing cash and cash equivalents cash and cash closing of Composition STATE THE TO NOTES 5. Reconciliation of Net Profit Attributable to Shareholders to Net Cash Flows from Operating Activities: Operating from Flows Cash Net to Shareholders to Attributable Profit Net of Reconciliation Deferred foreign exchange losses exchange foreign Deferred advance in Revenue Assets movements: capital working Net items non-cash Other Foreign exchange (gains)/losses derivative equity on Gain Unrealised (gains)/losseson fuel derivatives Liabilities Financial Position as follows: follows: as Position Financial of Statement the in balances related the to reconciled are Flows, ofCash Statement the in stated as equivalents, cash and Cash Cash balances Share of profit of joint ventures and associates associates and ventures joint of ofprofit Share subsidiaries in investments on ofimpairment Reversal Net profit attributable to shareholders to attributable profit Net Net cash flow from operating activities operating from flow cash Net Total cash and cash equivalents cash and Total cash Bank overdraft term borrowings and short deposits term short and Bank bills term short and deposits term short Other assets held for resale for held assets and assets intangible equipment, and plant property, on Impairment Depreciation and amortisation items: non-cash Plus/(less) assets held for resale for held assets and assets intangible equipment, and plant of property, disposal on Loss M ENT OF CASH FLO CASH OF ENT W S
GROUP 1,029 1,029 1,027 1,027 983 983 348 348 2012 414 (13) (13) 472 58 46 46 27 27 71 71 13 13 17 17 14 14 $M (6) (6) (6) (6) (2) (2) (4) (4) - 5 6 -
GROUP (Continued) 860 860 860 833 833 108 108 2 011 011 2 316 316 (53) (53) (33) (33) 466 424 20 20 27 27 81 81 11 11 $M (3) (3) 42 42 1 9 - - 1 8
- COMPANY 1,021 1,021 1,015 1,015 (129) 984 984 287 287 231 231 2012 437 373 (10) (10) (13) (13) (13) (13) 64 20 20 37 37 17 17 $M (6) (6) (6) (6) 6 - 7 3
COMPANY 832 832 223 223 852 852 105 105 189 189 851 851 011 2 (33) (33) 418 512 (11) (11) 20 20 20 20 11 11 $M 94 94 (1) (1) 2 - - - 6 - -
For the year to 30 June 2012 June 30 to year the For Notes to the Financial Statements (Continued)
As at 30 June 2012 June 30 at As Notes to the Financial Statements 7. IN 6. TRADE AND OTHER RECEI OTHER AND TRADE 6. Allowance for doubtful debts Prepayments debts doubtful for allowance Less: Balance at the end of the year the of end the at Balance in provision Net increase year ofthe beginning the at Balance M sell to costs less value fair at Held Prepayments Held at cost at Held Consumable stores Engineering expendables days 90 than greater due Past 1- due days 90 Past Current by: represented is receivables other Trade and receivables Other Non-current receivables Other Trade receivables Current ovement in the provision for inventory obsolescence inventory for provision the in ovement VENTORIES V ABLES GROUP GROUP 308 308 281 281 2012 2012 150 150 374 374 142 142 310 310 310 170 170 170 170 (26) (26) (27) (27) 48 48 48 64 64 20 20 23 23 28 28 $M $M (2) (2) (2) (1) (1) 8 4 -
GROUP GROUP (Continued) 280 280 307 307 377 167 167 167 167 139 149 149 310 310 2 011 011 2 2 011 011 2 311 311 (26) (26) (23) 30 30 67 67 28 28 52 52 18 18 51 51 $M $M (3) (3) (2) (2) (2) 3 5 1 COMPANY COMPANY 290 290 268 268 292 292 292 335 335 2012 2012 120 120 141 141 141 141 118 118 (26) (26) (23) 43 43 23 23 21 21 19 19 $M $M (3) (3) (2) (2) (2) 7 7 4 7 -
COMPANY COMPANY 326 326 259 259 279 279 278 278 276 276 109 109 136 136 136 136 011 2 011 2 (20) (20) 118 118 (23) 48 48 20 20 27 27 18 18 13 13 12 12 $M $M (3) (3) (2) (2) (2) 2 4 1
19 AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2012 20 AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2012 As at 30 June 2012 June 30 at As Notes to the Financial Statements 9. OTHER ASSETS OTHER 9. 8. ASSETS HELD FOR RESALE FOR HELD ASSETS 8. card obligations incurred by Air New Zealand. The RTD’s bear floating rate interest, and mature after seven years. seven after mature and interest, rate floating bear RTD’s The Zealand. New Air by incurred obligations credit over card security as provided been have that (RTDs) deposit of certificates transferable registered include assets Interest-bearing September 2012. in mature which Limited Holdings Australia Virgin in held forwards prepaid derivative equity include assets interest-bearing Non Interest-bearing assets Non interest-bearing assets Aircraft relatedAircraft assets Current Other assets Other enginesProgress payments and simulators on aircraft, Amounts owing from subsidiaries progress in work Capital Non-current (including assets Other definedbenefitassets) associates from owing Amounts Amounts owing from subsidiaries progress in work Contract Current GROUP GROUP 292 292 180 180 2012 2012 30 30 58 58 27 27 13 13 14 14 74 74 11 11 $M $M 1 - - 9 9
GROUP GROUP (Continued) 430 430 193 193 2 011 011 2 011 2 170 170 56 56 31 31 41 41 11 11 $M $M 2 8 - - - 3 3 COMPANY COMPANY 245 245 525 525 180 180 2012 2012 135 135 176 176 20 20 13 13 13 13 14 14 74 74 $M $M 1 6 8 8
COMPANY COMPANY 392 392 193 193 011 2 011 2 170 170 419 419 417 417 48 48 17 17 $M $M 2 6 8 - - 1 1
As at 30 June 2012 June 30 at As Notes to the Financial Statements (Continued) As at 30 June 2012 June 30 at As Notes to the Financial Statements 10. PROPERTY, PLANT AND E AND PLANT PROPERTY, 10. Carrying value at the end of the year the of end the at value Carrying Accumulated depreciation Cost by: Represented year ofthe end the at value Carrying Transfer to assets held for resale for held assets to Transfer Depreciation Disposals Additions Carrying value at the beginning of the year ofthe beginning the at value Carrying Accumulated depreciation Cost SPARES Accumulated depreciation Owned aircraft, spare engines and aircraft, simulatorsOwned Finance and aircraft leased spare engines spare engines andAircraft, simulators comprise: Transfer to assets held for resale for held assets to Transfer Carrying value at the end of the year the of end the at value Carrying Cost by: Represented Carrying value at the end of the year ofthe end the at value Carrying Depreciation Disposals Additions Carrying value at the beginning of the year ofthe beginning the at value Carrying Accumulated depreciation Cost Land and buildingsLand AIRCRAFT, SPARE EN Plant and equipment Spares Aircraft, spare engines andAircraft, simulators comprises: equipment and plant Property, G INES ANDINES SI QU IP M MU ENT LATORS GROUP (1,216) (1,216) (1,100) (1,100) 3,822 3,822 2,606 2,606 2,606 2,606 2,606 2,606 3,092 3,092 2,606 2,606 3,328 3,328 2,228 2,228 1,769 1,769 (270) (270) (136) (136) (129) (129) 665 665 264 264 265 265 837 837 232 232 136 136 2012 128 128 128 126 126 128 128 (15) (15) (11) (11) 14 14 $M (6) (6) (6) (6) (1) (1)
GROUP (1,100) (1,100) 3,328 3,328 2,228 2,228 2,228 2,228 2,228 2,228 2,228 2,228 1,307 1,307 1,759 1,759 2,740 2,740 2,714 2,714 (242) (242) (Continued) (981) (981) (129) (129) (123) (123) 265 265 228 228 256 256 921 921 133 133 136 136 136 136 136 122 122 2 011 011 2 714 714 (14) (14) 25 25 $M (8) (8) (3) (3) - - COMPANY 1,968 1,968 1,543 1,543 1,543 1,543 1,543 1,543 1,608 1,608 1,543 1,543 1,322 1,322 1,091 1,091 2,112 2,112 (569) (162) (162) (517) (517) (110 ) ) (110 (115 ) ) (115 222 622 622 221 221 104 104 104 108 108 104 104 2012 219 219 213 213 112 112 (13) (13) 10 10 $M (8) (8) (4) (4) (1) (1) -
COMPANY 1,608 1,608 1,053 1,091 1,091 1,091 1,091 1,091 1,091 1,091 1,091 1,519 1,519 (498) (498) (106) (106) (126) (126) (517) (517) (110 ) ) (110 830 830 662 662 222 555 109 109 261 261 104 104 215 215 011 2 212 212 112 112 112 112 112 (12) (12) 22 22 $M (7) (7) - - -
21 AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2012 22 AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2012 As at 30 June 2012 June 30 at As Notes to the Financial Statements 10. PROPERTY, PLANT AND E AND PLANT PROPERTY, 10. Carrying value at the end of the year ofthe end the at value Carrying Depreciation Cost by: Represented Disposals Additions year ofthe beginning the at value Carrying Carrying value at the end of the year the of end the at value Carrying Accumulated depreciation Accumulated depreciation Cost LAND AND B AND LAND Freehold properties Leasehold properties comprise: buildings and Land Carrying value at the end of the year the of end the at value Carrying Accumulated depreciation assets required. assets aircraft the to impairment no was there that confirmed valuation The 2011: June (30 10.0 percent). and 10.0 percent 8.0 and of 8.0 rates using discounted are projections flow cash The 2011: June (30 percent). percent 2.0 2.0 ofapproximately rate growth average an projections sensitive are particularly to fluctuations in fuel exchange prices, flow ratesand economic demand cash and are The usingextrapolated information. market current and data historical on based been have assumptions These yields. route and factors load passenger costs, fuel jet rates, exchange include Key assumptions plans. business reviewed Board using 5years for prepared were projections flow Cash valuation. flow cash discounted use in avalue on based impairment for tested were values carrying aircraft The prospects. trading future Group’s ofthe assessment current directors’ the on based aircraft, the of value book the exceeded proceeds sale ultimate their and ofanetwork part as aircraft ofthe use continued from value recoverable the directors, ofthe opinion the In value. book the than less were ofaircraft valuations market indicative The use. in value or sell to costs less value offair higher the to down written be to values book requires practice accounting accepted generally Zealand New borrowings and financelease obligations. over security as 2012 2011: June 30 June at as pledged (30 are of$1,923 million $1,539 million) assets related aircraft and Aircraft depreciation expense was reduced by $13 million. and 747-400reassessed Boeing were ofthe fleet values residual 2011 and June 30 lives ended useful the year the During appropriate. be to continue they that ensure to annually reviewed are equipment and plant property, to applied values residual and lives useful The Cost by: Represented Carrying value at the end of the year ofthe end the at value Carrying Depreciation Disposals Acquisitions from business combinations Additions year ofthe beginning the at value Carrying Accumulated depreciation Cost E AND PLANT U QU ILDIN IP M G ENT S QU IP M ENT (CONTIN ENT U ED) GROUP (253) (253) (242) (242) (114 ) ) (114 368 368 346 346 228 228 232 232 232 232 232 232 326 326 375 375 2012 126 126 122 122 126 126 219 219 (98) (98) (20) (20) (27) (27) 24 24 31 31 13 13 $M (2) (2) 2 -
GROUP (253) (253) (267) (267) (Continued) 227 227 228 228 228 228 228 228 326 326 375 375 378 378 122 122 122 122 213 213 2 011 011 2 315 315 (88) (88) (98) (98) (26) (26) 111 111 (15) (15) 38 38 18 18 15 15 $M (2) (2) (1) (1) - COMPANY (222) (235) (104) (104) 200 200 330 339 339 302 302 108 108 108 108 104 104 2012 213 213 213 213 213 213 212 212 317 317 (90) (23) (18) (18) 28 28 19 19 13 13 $M (1) (1) - -
COMPANY (235) (252) (252) 298 298 339 339 302 302 346 346 198 198 104 104 104 104 011 2 212 212 212 212 212 212 217 217 (90) (22) (81) (81) (13) (13) 33 33 94 94 14 14 $M
(1) (1) (1) (1) 9 -
As at 30 June 2012 June 30 at As Notes to the Financial Statements (Continued)
As at 30 June 2012 June 30 at As Notes to the Financial Statements in Note 18, which was recognised in the Statement of Financial Performance (30 June 2011: A$145 million or 44 cents per share). 2011: share). June per (30 cents 44 or A$145 million Performance ofFinancial Statement the in recognised was 18, which Note in to referred derivatives equity the from gain financial the for allowing after share per cents 30 or million 2012 June 30 A$23 was ended year the for acquisition of the cost The market. Australasian the to exposure its widen to strategy Group’s ofthe part is investment The Dollars. Australian in denominated is 2012. June investment 30 The ended year the in acquired was interest 3.5% A further Australia). (Virgin Limited Holdings Australia Virgin in interest 2011, a14.99% June 30 ended acquired year Group the the During 11. INTANG 12. IN 12. 2012. June 30 ended year the during impaired fully was Limited Pty VCubed in goodwill The million. of$2 goodwill in resulted which Limited Pty VCubed 2012 acquired June 30 Group the ended year the During 2011. June 30 ended year the in ofadditions million $2 There were services. and products customer external to applied be will and activities engineering Group’s the from arise costs Development year the of end the at value Carrying Provision forProvision impairment Accumulated amortisation Cost by: Represented year ofthe end the at value Carrying Amortisation Acquisitions from business combinations year ofthe beginning the at value Carrying E year the of end the at value Carrying Additions forProvision impairment Accumulated amortisation Cost Accumulated amortisation Cost by: Represented year ofthe end the at value Carrying Amortisation Additions year ofthe beginning the at value Carrying Balance at the end of the year the of end the at Balance Accumulated amortisation Cost INTERNALLY DE Transaction costs Goodwill Fair value changes recognised in other comprehensive income Acquisitions Development costs software purchased Externally Internally developed software Intangible comprise: assets Balance at the beginning of the year ofthe beginning the at Balance V in Investment X TERNALLY P TERNALLY V EST IBLE ASSETS M ENT IN QU IN ENT irgin Australia Holdings Limited Holdings Australia irgin U VELOPED SOFT RCHASED SOFT RCHASED OTED E OTED QU W W ITY INSTR ITY ARE ARE UM ENTS GROUP GROUP (160) (160) (165) (165) (101) (101) 203 203 180 180 150 150 2012 2012 134 134 120 120 173 173 (94) (94) (12) (12) 63 63 43 43 40 40 40 40 49 49 49 49 49 49 21 21 13 13 11 11 11 11 11 11 $M $M (2) (2) (2) (2) (4) (4) 1 1 1 2 -
GROUP GROUP (Continued) (165) (165) (172) (172) 200 200 180 180 186 186 134 134 120 120 125 125 2 011 011 2 2 011 011 2 (94) (94) (95) (95) (81) (81) (13) (13) 40 40 40 40 40 40 30 30 23 23 56 56 13 13 13 13 12 12 13 13 $M $M (6) (6) (2) (2) (2) (2) 7 1 1 2 - - COMPANY COMPANY (155) (155) (161) (161) 165 165 143 143 2012 2012 127 127 173 173 (90) (99) (99) (11) (11) 44 44 44 44 44 44 54 54 37 10 10 10 10 18 18 10 10 12 12 $M $M (4) (4) 2 ------
COMPANY COMPANY (169) (169) (161) (161) 180 180 120 120 127 127 173 173 011 2 011 2 (90) (93) (93) (11) (11) 49 49 27 27 37 37 37 21 21 12 12 12 12 12 12 11 11 $M $M (5) (5) 6 - - - - -
- - - - -
23 AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2012 24 AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2012 As at 30 June 2012 June 30 at As Notes to the Financial Statements Significant subsidiaries comprise: subsidiaries Significant SU details. further for 27 Note 2and Note to Refer 2011: June (30 nil). subsidiaries in losses $129 ofimpairment million reversed 2012, June 30 Company the ended year the During Significant associates comprise: Significantassociates ASSOCIATES 13. IN 13. Share of profit after taxation of associates of taxation after profit of Share Taxation expense Christchurch Engine Centre (CEC) Investments in other entities Share of profit before taxation before ofprofit Share Results of associates Profittaxation after Revenue Liabilities Assets - 100%: associates of information financial Summarised section). Acquisitions the to (refer 70% to 26% from Limited Pty VCubed in shareholding 2011. June the 30 2011 ended increased year 6October the Group On in the associate an as held was Limited Pty VCubed cost method. the using for accounted are Subsidiaries owned. 100 percent are and June of30 date abalance have above entities subsidiary All Valetport Limited Limited Pty TAE Aviation Limited Pty Turbines TAE Gas Limited Air Safe Limited Airline Mount Cook Limited Airways Eagle Altitude Aerospace Interiors Limited Limited Pacific Tasman Zealand New Air Limited Companies Associated Zealand New Air Limited Holdings Aircraft Zealand New Air Limited Nelson Air Investments in associates subsidiaries in Investments VCubed Pty Limited Pty VCubed Christchurch Engine Centre amount Carrying M NA M NA BSIDIARIES E E V EST M ENTS IN OTHER ENTITIES OTHER IN ENTS 49 % O W NED Car parking services Aviation engineering services Engineering services Engineering Aviation Aviation Aviation design engineering Aviation crew resourcing Investment leasingAircraft and financing Aviation PRINCIPAL ACTI V Engineering services Engineering PRINCIPAL ACTIV ITY ITY INCORPORATION CO New Zealand GROUP 2012 U 60 60 59 59 $M NTRY OF OF NTRY 1 - New Zealand Australia Australia New Zealand New Zealand New Zealand New Zealand New Zealand New Zealand New Zealand New Zealand CO
U NTRY OF INCORPORATION GROUP (Continued) 2 011 011 2 54 54 54 54 $M - - COMPANY GROUP BALANCE DATE BALANCE 31 December 408 408 407 407 289 289 2012 2012 151 151 39 39 59 59 59 59 12 12 $M $M 6 1 6 - - -
COMPANY GROUP 353 353 285 285 285 285 175 175 011 2 2 011 011 2 54 54 77 77 51 51 $M $M 3 3 5 3 - - -
As at 30 June 2012 June 30 at As Notes to the Financial Statements (Continued) As at 30 June 2012 June 30 at As Notes to the Financial Statements AC Significant joint ventures comprise: joint ventures Significant JOINT V 13. IN 13. The following entities were acquired or incorporated during the year: the during incorporated or acquired were entities following The Expenses Revenue Current liabilities Non-current assets Non-current ANZGT LLC Field Services Pacific LeisurePacific GroupLimited tax of million. $71 after profit net $4,515and been million have would Group the for income) finance (including 2011) revenue operating total year July (1 financial ofthe start the at effected been had acquisitions the If of acquisition. date the from Performance ofFinancial Statement the in entities these of respect in recognised was of $1,020k tax after loss net and $4,847k of income) finance (including revenue Operating acquisition. of date the at as assets net identified ofthe value fair the in interest, a49% on based LLC Services Field ANZGT in and interest, a30% on based Limited Pty VCubed in determined was interests ofnon-controlling value The Net Cash Flow Cash Net acquired equivalents cash and Cash ConsiderationCash Paid net inassets acquired interest Non-controlling on acquisition arising Goodwill Transferred Investment from: in other entities (associates) Net Assets and Liabilities Acquired Liabilities and Assets Net liabilities Other assets Intangible plant and equipment Property, deposits term short and Bank Pacific LeisurePacific GroupLimited NA assets Current of joint ventures information financial Summarised M NA VCubed Pty Limited Pty VCubed The acquisitions had the following impact on the Group’s assets and liabilities at the date ofpurchase: date the at liabilities and assets Group’s the on impact following the had acquisitions The impaired. fully subsequently was goodwill The recognised. was million of$2 goodwill Group Zealand New Air the into Limited Pty ofVCubed consolidation Upon ofA$800k. cost a at issue rights apro-rata under Company the in Shares 2,225,313 Ordinary additional an for subscribed Group the conversion, the following Immediately notes. convertible of3million conversion ofthe aresult as Limited Pty VCubed in shareholding the increased 2011, 6October On Group the interest. a26% holding Group the with associate an as held previously was Limited Pty VCubed revenue strategybycombiningitsoperationswithAustralia’slargestdomesticwholesalerofAustraliantravelproductsandservices. The Groupinvestedinthecompanytoexpand theAirNewZealandHoliday’swholesaletravelbusinessto supportgrowthoftheancillary Pacific Leisure GroupLimitedwasincorporatedon20October2011andcommencedtradingasajointventure on25November2011. ofAmerica. States United the in incorporated is company The business. engine industrial and marine its enhance and support to LLC Services 2011. Field ANZGT in July 29 on LLC invested Group The Services a51% Field ofANZGT acquired share Group The QU M E OF ENTITY E OF E V ISITIONS EST ENT M U (CONTIN UED) ENTITIES OTHER IN ENTS RES PRINCIPAL ACTIV Engineering services Engineering 50 % O Wholesale travelWholesale distributor Online booking exchange booking Online W NED ITY PRINCIPAL ACTI V Wholesale travelWholesale distributor - 100%: - DATE AC 29 July 2011 July 29 20 October 2011 October 20 6 October 20116 October QU ISITION ITY INCORPORATION CO New Zealand U RI V % OF 51 50 70 NTRY OF OF NTRY G HTS OTIN (Continued) G GROUP 2012 RELATIONSHIP BALANCE DATE BALANCE Subsidiary Joint Venture 30 June 30 Subsidiary 12 12 12 $M Consolidated on value fair 9 1 9
acquisition GROUP 2 011 011 2 $M (3) (2) (2) (1) (1)
2 1 2 3 - - - - - 1 3 2 5
25 AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2012 26 AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2012 As at 30 June 2012 June 30 at As Notes to the Financial Statements 15. INTEREST-BEARING date of 15 November 2016 and an interest rate of 6.90% payable semi-annually. semi-annually. payable of6.90% rate 2016 interest of15 an date and November maturity a have bonds The bonds. rate fixed unsubordinated $150 ofunsecured, 2011 issued million Zealand September New 28 On Air parties. related with are liabilities lease finance Company’s The leases. finance ofthe termination early on agreement, lease the under applicable or, if expiry on available are options Purchase 2012 in 2011: 5.1 to June 5.1 to percent (30 percent). percent 2.4 percent from 2.5 ranged rates interest Fixed rates. interest floating and fixed both to subject are and aircraft over secured are liabilities lease Finance rates. interest floating to subject are and assets related aircraft or aircraft over secured are borrowings All At fair value fair At At amortised cost amortised At Other Floating rate Loyalty programme Loyalty Non-current Other Finance lease liabilities lease Finance Fixed rate Interest rates: liabilities lease Finance Unsecured bonds borrowings Secured Non-current Loyalty programme Loyalty advance in sales Transportation Current RE 14. Secured borrowings Secured Current Later than 5years than Later 5years than later not and 1year than Later 1year than later Not Repayable as follows: liabilities lease Finance Later than 5years than Later 5years than later not and 1year than Later 1year than later Not Repayable as follows: rentals future of value Present costs finance future Less V EN U E IN AD E IN V ANCE LIABILITIES GROUP GROUP GROUP 1,605 1,605 1,304 1,304 1,692 1,692 1,634 1,634 1,445 1,445 1,537 1,537 1,445 1,445 (189) (189) 902 902 629 629 930 930 739 739 675 675 779 779 762 762 103 103 150 150 2012 2012 2012 135 135 155 155 724 724 131 131 171 171 141 141 141 141 83 83 20 14 14 $M $M $M 4
GROUP GROUP GROUP 1,009 1,009 1,067 1,067 1,255 1,255 1,276 1,276 1,246 1,246 1,103 1,103 1,101 1,101 1,101 1,101 (Continued) (145) (145) 888 539 539 538 538 594 594 767 767 106 106 188 188 122 122 122 122 152 152 471 471 2 011 011 2 011 2 2 011 011 2 113 113 60 60 92 92 94 94 92 92 15 15 $M $M $M - - COMPANY COMPANY COMPANY 1,099 1,099 1,039 1,053 1,122 1,122 (127) (127) 889 563 563 444 893 893 549 549 559 559 972 972 972 972 375 375 106 106 776 776 103 103 2012 2012 2012 150 150 134 134 131 131 514 514 83 83 83 83 83 83 14 14 $M $M $M 3 - -
COMPANY COMPANY COMPANY 608 608 608 608 608 608 868 868 608 608 555 555 332 332 679 679 758 758 243 243 281 281 107 107 122 122 122 122 011 2 011 2 011 2 614 614 312 312 (71) (71) 66 66 53 53 53 53 53 53 $M $M $M 3 - - - - -
As at 30 June 2012 June 30 at As Notes to the Financial Statements (Continued) As at 30 June 2012 June 30 at As Notes to the Financial Statements 16. PRO shorter of the period to the next inspection or overhaul or the end of the lease. lease. ofthe end the or overhaul or inspection next the to period ofthe shorter the over utilised be to expected is provision The year. the during operated cycles or ofhours number the to reference by calculated of inspections andcosts engine major airframe overhaulsfuture by making appropriate charges to the Statementestimated of Financial Performance, the of value present the on based is provision The agreements. lease those within specified obligations return lease the for term lease the during made is aprovision arrangements, lease operating under held aircraft maintain to exists acommitment Where Non-current Current Represented by: Balance at the end of the year the of end the at Balance Amount utilised Amount Foreign exchange differences Amount provided Balance at the beginning of the year ofthe beginning the at Balance costs return lease Aircraft serviced aircraft. There were no additions during the year ended 30 June 2012 2011: June 30 June (30 ended year the $1 million). during additions no were There aircraft. serviced ofthe ofdelivery date the 12 from than months less is period warranty usual The performed. services engineering work ofpast respect in rectification future for liability ofpotential estimate an represent provisions Warranty experience. claim historical on based months 12 within utilised be to expected are provisions Insurance warranties. and insurance to relating amounts include provisions Other for. provided not are activities ongoing to relating Costs exists. expectation avalid and developed is plan formal adetailed where created is provision A restructuring Non-current Current Represented by: Current Represented by: Other Balance at the end of the year the of end the at Balance utilised Amount Restructuring Amount raised Amount Aircraft lease return costs return lease Aircraft Provisions Balance at the beginning of the year ofthe beginning the at Balance Restructuring V ISIONS GROUP GROUP 166 166 150 150 150 150 2012 2012 155 155 150 150 155 155 (83) (83) 60 60 56 56 94 94 94 94 61 61 11 11 $M $M (7) (7) 7 4 4 1 4 4 -
GROUP GROUP (Continued) 202 202 166 166 166 166 166 166 167 167 167 167 2 011 011 2 2 011 011 2 (64) (64) (32) (32) 88 88 60 60 88 88 79 79 78 78 $M $M (3) (3) 1 3 - - - - - COMPANY COMPANY 165 165 150 150 150 150 2012 2012 154 154 150 150 154 154 (82) (82) 60 60 60 60 56 56 94 94 94 94 11 11 $M $M (7) (7) 7 4 4 4 4 - -
COMPANY COMPANY 202 202 165 165 165 165 165 165 165 165 165 165 011 2 011 2 (64) (64) (32) (32) 88 88 88 88 59 59 77 77 77 77 $M $M (1) (1) 1 ------
27 AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2012 28 AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2012 As at 30 June 2012 June 30 at As Notes to the Financial Statements foreign currencies. relevant the in denominated borrowings through primarily managed is operations foreign Group’s ofthe assets net the on arising exposure Currency risk. translation currency foreign to exposed are assets net whose operations, foreign in investments certain has Group The obligations. lease finance and borrowings States United unhedged remaining the on exposure exchange foreign the offset to required cover derivative of level the reduce strategies These revenues. Yen Japanese forecast probable highly of hedges flow cash qualifying in instrument hedging the as designated are obligations lease finance Yen denominated Japanese year. the during values residual aircraft to borrowings remains unhedged to providedenominated a natural offset to foreignStates currency movementsUnited of within depreciation expense, resulting from revisionsproportion made further A assets. ofnon-financial sales currency foreign forecast probable of highly hedges flow cash qualifying in instrument hedging the as designated is borrowings denominated Dollar States ofUnited A proportion asset. ofthat life economic useful the over depreciated is asset hedged underlying the as earnings affect will and 2011 June course 30 at as their run have transactions capital accounted hedge remaining The parameters. approved Board within arose, they as risks these hedge to elect to policy Group’s the was it sales, and commitments capital and borrowings currency foreign as such certain, were exposures Where 24 months. following the over 2011, June occur 30 to at place in expected were hedges flow cash currency offoreign respect in transactions expenditure and revenue forecast underlying the policy, this with accordance In years. to2 out months subsequent in hedged percentages in reductions progressive with months, 6 first the for flows cash operating net offorecast 95% to 75% between hedge to was policy management 2011,risk 1July to Prior treasury Group’s the oftime. period ashort over transactions capital offorecast alarge is volume there if undertaken only are transactions capital currency offoreign Hedges risk. price fuel and currency foreign for terms hedge the align parameters The next months. the 12 over occur to expected are date, reporting at place in hedges flow cash currency of foreign respect in transactions expenditure and revenue forecast underlying the policy, this with accordance In months. six next the over hedged percentages in reductions progressive with months, 6 first the for flows cash operating net offorecast 90% and 70% between hedge to is policy management risk treasury Group’s the rate), exchange apegged has (which Renminbi Chinese the Excluding Dollars. States United in denominated primarily are outflows currency Foreign Dollars. States United and Pounds Kingdom United Renminbi, Chinese Yen, Japanese Euro, Community European Dollars, Australian in denominated primarily are inflows cash operating currency Foreign being hedged. item the on gain or loss arelated by offset is contracts these on losses or gains to exposure Any liabilities. denominated currency foreign tocontracts manage economic exposure to fluctuations in foreign exchange rates impactingcapital expenditure operatingcash flows, and exchange foreign into enter to ofDirectors) Board the by (approved policy management exchange foreign aformal has Zealand New Air sales. and commitments capital currency foreign and borrowings currency foreign activities, trading normal from arising currencies, foreign in denominated oftransactions aresult as risk exchange foreign to exposure has Zealand New Air rates. in exchange fluctuations adverse from arising Zealand New Air to ofloss risk the is risk currency Foreign Foreign risk currency Mar ofmembers. review credit own its undertakes which mechanism (IATA) clearing Association Travel Aviation International the through settled are receivables of proportion Asignificant risk. credit with financial instruments support to security other or collateral require not does Zealand New Air derivatives. and assets other receivables, within risk ofcredit concentrations any to exposed not is Zealand New Air credit. direct requiring customers all on performed are evaluations Credit institution. financial one any to exposure the on placed are Limits ofA. rating a credit having Poors and Standard minimum counterparties, quality credit good with instruments financial derivative and deposits term short cash, places Zealand New Air assets. offinancial value carrying the by represented is risk credit to exposure maximum The ofbusiness. course normal instruments the in financial other and transactions receivable oftrade respect in risk credit incurs Zealand New Air transaction. ofthe settlement on or transaction ofthe term the during acounterparty by ofdefault event the in atransaction from loss potential the is risk Credit C for speculative purposes. instruments financial hold or issue enter, to not is policy Group programme. audit internal ofthe part as included is and Board the to monthly reported and reviewed is policies these with Compliance Directors. of Board the by approved policies of set a using instruments, financial various with managed are risks These risks. price equity and fuel rate, interest currency, foreign credit, to subject is Zealand New Air 17. FINANCIAL RIS 17. FINANCIAL redit k et ris k ris k K M ANA G E M ENT (Continued)
As at 30 June 2012 June 30 at As Notes to the Financial Statements (Continued) As at 30 June 2012 June 30 at As Notes to the Financial Statements summarised as follows: as is summarised date reporting at outstanding instruments financial on arising risk exchange foreign to exposure Zealand’s New Air fluctuations, currency foreign to immaterial are together which balances, capital working denominated currency offoreign exception the With 17. FINANCIAL RIS 17. FINANCIAL Interest-bearing assets financialNon-derivative instruments Foreign risk currency Non interest-bearing assets financialNon-derivative instruments Foreign risk currency Investment in quoted equity instruments NZ$ In Interest-bearing assets NZ$ In Investment in quoted equity instruments Interest-bearing liabilities Not later than 1year than later Not follows: as occur to expected are hedges flow cash currency foreign of respect in flows Cash accounted Non-hedge Interest-bearing liabilities Later than 1 year and not later than 2years than later not and 1year than Later Netposition financial exposurebefore hedging activities Cash flow hedges Notional principal (NZ$ derivatives Foreign currency Netposition financial exposurebefore hedging activities Cash flow hedges Notional principal (NZ$ derivatives Foreign currency Non-hedge accounted Non-hedge Not later than 1year than later Not follows: as occur to expected are hedges flow cash currency foreign of respect in flows Cash Later than 1 year and not later than 2years than later not and 1year than Later M M K M ANA M M ) ) G E M ENT ( ENT contin u ed ) (1,855) (1,855) (1,781) (1,781) (660) (660) (530) (530) (607) (607) (567) (567) (678) (678) (496) (496) (496) (496) (758) (758) (758) (758) (457) (457) (681) (681) (747) (747) NZD NZD 130 130 140 140 (39) (39) (77) (77) - - - 1,057 1,057 1,381 1,381 1,551 1,551 1,551 1,551 1,516 1,516 1,125 1,125 1,125 1,125 1,101 1,101 (595) (595) (595) (595) (751) (751) (751) (751) 560 560 727 727 USD USD 170 170 68 68 - - - - - (339) (339) (393) (393) (393) (393) (268) (268) (265) (265) (277) (277) (277) (277) 203 203 AUD AUD 256 256 160 160 120 120 (56) (56) (54) (54) (35) (35) (77) (77) (12) (12) 40 40 40 40 13 13 - - A A s at J 30 s at J 30 EUR EUR (86) (86) (86) (86) (58) (58) (58) (58) (85) (85) (55) (55) (55) (55) (77) (77) (9) (9) (3) (3) 1 3 GROUP GROUP ------2012une 2011une (259) (259) (133) (133) (133) (133) (133) (133) (128) (128) (194) (194) (194) (194) (63)
(65) (65) (65) (65) JPY JPY (5) (5) (2) (2) (Continued) ------(164) (164) (179) (179) (181) (181) (181) (181) (119 ) ) (119 (119 ) ) (119 (113 ) ) (113 (113 ) ) (113 GBP GBP (17) (17) (6) (6) 2 6 ------OTHER OTHER (126) (126) (128) (128) (128) (128) (114 ) ) (114 (90) (95) (95) (92) (92) (95) (95) (14) (14) (5) (5) 2 3 ------(1,296) (1,692) (1,692) (1,255) (1,255) (1,276) (1,130) (1,130) TOTAL TOTAL (965) (965) (128) (128) (128) (128) (122) 203 203 180 180 120 120 170 170 (37) (37) 13 13 15 15 15 15 14 14 (6) (6) 1 5 29 AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2012 30 AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2012 As at 30 June 2012 June 30 at As Notes to the Financial Statements 17. FINANCIAL RIS 17. FINANCIAL Non interest-bearingassets Non-derivative financialinstruments Foreign currencyrisk Interest-bearing assets financialNon-derivative instruments Foreign risk currency M In NZ$ In NZ$ In Amounts owing from subsidiaries* Interest-bearing assets Interest-bearing liabilities Non-hedge accounted Non-hedge Netposition financial exposurebefore hedging activities Amounts owingfromsubsidiaries* Cash flow hedges Notional principal (NZ$ derivatives Foreign currency Not later than 1year than later Not follows: as occur to expected were hedges flow cash currency foreign of respect in flows Cash Interest-bearing liabilities foreign currency fluctuations. dollar denominated intercompany receivable from that Zealand subsidiary. aNew foreign Other with currency with balances are related immaterial parties to arrangement ofaset-off part forms asubsidiary to payable denominated dollar States AUnited loans. and deposits currency foreign party related through Group the within level entity alegal at managed is exposure currency Foreign subsidiary). owned awholly by held (primarily liabilities interest-bearing denominated dollar States United on losses or gains of translation level Group Zealand New Air an at offset an provide to used are company Parent the through executed derivatives currency * Foreign 2years than later not and 1year than Later Net financialposition exposure beforehedgingactivities Cash flowhedges M) Notional principal(NZ$ Foreign currencyderivatives Non-hedge accounted Not laterthan1year hedges areexpected tooccurasfollows: Cash flowsinrespectofforeigncurrencycashflow Later than1yearandnotlater2years foreign currency fluctuations. dollar denominated intercompany receivable from that Zealand subsidiary. aNew foreign Other with currency with balances are related immaterial parties to arrangement ofaset-off part forms asubsidiary to payable denominated dollar States AUnited loans. and deposits currency foreign party related through Group the within level entity alegal at managed is exposure currency Foreign subsidiary). owned awholly by held (primarily liabilities interest-bearing denominated dollar States United on losses or gains of translation level Group Zealand New Air an at offset an provide to used are company Parent the through executed derivatives currency * Foreign M K M ANA M ) G E M ENT ( ENT contin u ed ) (684) (684) (567) (567) (539) (539) (429) (429) (770) (770) (770) (770) (924) (924) (503) (916) (459) (503) (678) NZD 140 140 664 664 265 NZD 130 130 712 712 413 413 (86) (86) (44) - 1,383 1,383 1,592 1,592 1,131 1,058 1,131 1,561 1,561 1,561 1,561 1,175 (350) (350) (529) (529) (389) (389) (683) (683) (294) (179) (179) 560 560 USD USD 727 178 178 73 73 - - - (339) (339) (393) (393) (393) (393) (359) (359) (265) (277) (271) (277) AUD AUD (35) (35) (54) (54) (56) (12) 69 69 40 40 29 29 40 40 13 62 9 - - A A s at J 30 s at J 30 EUR EUR (86) (86) (86) (86) (85) (85) (77) (77) (58) (55) (55) (58) COMPANY COMPANY (9) (9) (3) 1 3 ------2012une 2011une (194) (193) (258) (133) (133) (133) (133) (128) (128) (132) (132) JPY (65) (63) (65) JPY (5) (5)
(2) (Continued) 1 1 1 ------(119) (113) (113) (119) (164) (164) (179) (179) (181) (181) (181) (181) GBP GBP (17) (17) (6) 2 6 ------OTHER OTHER (126) (126) (128) (128) (128) (128) (114 ) ) (114 (90) (90) (95) (92) (95) (14) (14) (5) 2 3 ------(1,122) TOTAL TOTAL (608) (608) (549) (549) (530) (530) (213) (213) (130) (130) (130) (130) (123) (123) 380 392 392 180 180 170 170 (46) (46) (37) (37) 13 14 13 14 (7) (7) 5 1 As at 30 June 2012 June 30 at As Notes to the Financial Statements (Continued) As at 30 June 2012 June 30 at As Notes to the Financial Statements S 17. FINANCIAL RIS 17. FINANCIAL This analysis does not include future forecast hedged operating or capital transactions. capital or operating hedged forecast future include not does analysis This constant. held are variables other All Dollar. Zealand New the against change above the applying then and Dollars States United to first converting by evaluated are currencies Other Dollar. Zealand New the against Dollar States United the in appreciation/depreciation possible reasonably to a date reporting at instruments financial above ofthe sensitivity the demonstrates table following The instruments financial on sensitivity currency Foreign contracts. these on earnings of future indicative considered be not should disclosed as values fair estimated The actions. management strategic through possible as far as counteracted be will circumstances or events specific to sensitivities Furthermore, sensitivities. the counteract or magnify may which another, in changes to contribute may factor one in changes reality, In assumption. another in change ofany independently calculated is assumption aparticular in ofavariation effect the analyses, below ofthe purposes the for addition, In linear. be not may value fair in change to assumption in ofchange relationship the because extrapolated be not generally can value fair in Changes hedging. are derivatives the of many which transactions forecast future on impact offsetting the ignore sensitivities the instruments are financial on only sensitivities the As transactions. hedged forecast future the include not do and non-derivative) and (derivative instruments financial include only They performance. offuture predictive considered be not should and hypothetical are follow which analyses sensitivity The
equity) (within reserve hedge flow cash On equity) (within reserve hedge flow cash On equity) (within reserve hedge flow cash On
taxation before profit On NZ$ In taxation before profit On NZ$ In On cashflowhedgereserve(withinequity) On profitbeforetaxation M In NZ$ taxation before profit On NZ$ In ensiti 5 cents depreciation 5 cents depreciation 5 cents appreciation 5 cents depreciation 5 cents appreciation 5 cents appreciation 5 cents depreciation 5 cents depreciation 5 cents depreciation 5 centsdepreciation 5 centsappreciation 5 centsdepreciation 5 centsappreciation 5 cents appreciation 5 cents appreciation 5 cents appreciation M M M v ity analyses K M ANA G E M ENT ( ENT contin u ed ) USD USD USD 102 102 (61) (90) (68) (68) (83) (83) USD 70 70 95 95 77 77 (5) (3) (3) (2) (2) (4) (4) 6 2 3 5 AUD AUD AUD (26) (26) AUD (19) (19) (18) (18) 23 23 16 16 17 17 (5) (2) (2) 5 2 ------A A A A s at J 30 s at J 30 s at J 30 s at J 30 EUR EUR EUR EUR (4) company company (6) (6) (6) (6) (4) (4) 3 5 5 3 - - GROUP GROUP ------(Continued) 2012une 2012une 2011une 2011une
(18) JPY JPY JPY (18) (18)
JPY 15 15 15 (9) (9) (9) (9) 8 8 ------GBP GBP GBP GBP (12) (12) (12) (12) 10 10 10 10 (8) (8) (8) 7 7 ------OTHER OTHER OTHER OTHER (6) (8) (8) (8) (8) (6) (6) 6 7 7 6 ------31 AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2012 32 AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2012 * As at 30 June 2012 June 30 at As Notes to the Financial Statements Fuel price sensitivity on financial instruments financial on sensitivity price Fuel risk price Fuel SI 17. FINANCIAL RIS 17. FINANCIAL Interest rate sensitivity on financial instruments financial on sensitivity rate Interest Interest rate risk situation in Europe. economic the and markets fuel with volatility the reflect to year current the in barrel per USD35 to changed been has sensitivity The include not does the analysis future forecast This hedged fuel transactions. independently. vary would elements these practice, In hedges. of effective/ineffective proportion well as the as date reporting at options the of value intrinsic/time of proportion the by dictated are equity and taxation before profit on impacts respective the and constant remain margin, refining the including variables, other all that assumes analysis This below. shown is oil ofcrude barrel per price the in change possible areasonably to date reporting at as derivatives ofthese value fair ofthe sensitivity The 1year. to out months subsequent in hedged percentages in reductions progressive with months, 3 first the for costs fuel ofestimated 95% to 75% between 2011,hedge to 1July was to Prior policy Group’s the 2011: 1year). June (30 6months within mature agreements The 2011: June (30 million). million $6 of$3 value afair with 2011:June barrels) million 4.5 (30 barrels million 2.2 hedged 2012, had June 30 Group at As the derivatives. outright short-dated any are as earnings, through market to marked are components other All hedge. flow acash as designated is derivatives fuel ofthese component value intrinsic The month. seventh the in zero to falling volume the with 50% around hedged is months three first the in Uplift ofDirectors. Board the by approved policy with accordance in costs fuel on changes ofprice impact the reduce to agreements option and swap fuel into entered has Zealand New Air United States Dollar United Kingdom Pound Interest rate change: change: rate Interest barrel: per movement Price Company Group taxation before profit On is below: out set constant, held variables other all with rates interest in change possible areasonably to sensitivity Their swaps. rate ofinterest value fair the and obligations lease finance and borrowings of element rate floating the on rates interest in changes to sensitive are Earnings 2011: June (30 Nil). earnings on impact any nor place, in derivatives rate interest 2012, no were June 30 to there year the In insufficient. is leases operating rate fixed or loans rate fixed of volume the if exposure rate floating and fixed of mix appropriate an achieve to used are swaps rate Interest next months. the 12 in leases, operating interest fixed including rates, interest to exposure its of to70% 100% between fix to is policy Group’s The borrowings. long-term rate floating net its on rates interest in ofchanges impact the minimise to maintained is exposure rate interest the ensure to policy Group’s the is It activities. ongoing fund to used are which activities borrowing long-term ofthe aresult as risk rate interest to exposure has Zealand New Air rates. interest in fluctuations adverse from arising Zealand New Air to ofloss risk the is risk rate Interest On cashflowhedgereserve(withinequity) On profitbeforetaxation Japanese Yen Euro Community European Dollar Australian floating rate mix will fluctuate over the year and interest rates will change continually. change will rates interest and year the over fluctuate will mix rate floating fixed/ the reality, In year. ofthe beginning the from effective is rates interest in change the that and date, reporting at place in that from unchanged remains obligations, lease finance including debt, rate floating and offixed mix and amount the that assumes above The bp = basis points =basis bp G NIFICANT FOREI NIFICANT K M G N E ANA X G CHAN E M ENT ( ENT G E RATES U E RATES contin u SED AT BALANCE DATE FOR ONE NE ONE DATE FOR AT BALANCE SED ed ) + USD 35 + USD +50 bp +50 2012 2012 32 32 $M $M (3) (3) (5) (5) - *
ZEALAND DOLLAR ARE: DOLLAR W ZEALAND GROUP AND COMPANY - USD 35 - USD -50 bp -50 (Continued) 2012 2012 $M $M (7) 3 5 - *
+ USD 20 + USD 0.5080 0.6330 0.7840 +50 bp +50 0.7875 62.60 2012 011 2 011 2 61 61 12 12 $M $M (3) (3) (5) (5) *
- USD 20 - USD 0.8240 0.7720 0.5130 0.5710 -50 bp -50 66.60 011 2 011 2 011 2 (53) (53) (19) (19) $M $M 5 3 *
As at 30 June 2012 June 30 at As Notes to the Financial Statements (Continued) As at 30 June 2012 June 30 at As Notes to the Financial Statements constant, is set out below. out set is constant, held variables other all with derivative or investment equity ofan price quoted the in changes possible reasonably to sensitivity The instruments financial on sensitivity risk price investment Equity Equity price risk 17. FINANCIAL RIS 17. FINANCIAL The following table sets out the contractual, undiscounted cash flows for non-derivative financial liabilities: financial non-derivative for flows cash undiscounted contractual, the out sets table following The L Limited. This investment is held for strategic rather than trading purposes. The Group does not hedge this risk. this hedge not does Group The purposes. trading than rather strategic for held is investment This Limited. Holdings Australia Virgin in held derivative and investment equity the on arising risk price equity to exposure has Zealand New Air derivative. equity or investment equity an of price the in fluctuations adverse from arising Zealand New Air to ofloss risk the is risk price Equity Trade and other payables Bank overdraft and short-term borrowings sustain operations in the event of unanticipated external factors or event. or factors external ofunanticipated event the in operations sustain to and due fall they as liabilities its meet to it enable to reserves cash significant holds Zealand New Air profiles. maturity managing and inflow cash available forecast to respect with managed are commitments term long ensuring level, liquidity aminimum targeting by risk the manages Zealand New Air due. fall they as obligations its meet to unable be will Group the that risk the is risk Liquidity Group On investmentrevaluationreserve(withinequity) Company Group On profitbeforetaxation change: price investment Equity Amounts owing to associates obligations lease Finance borrowings Secured Trade and other payables Total liabilities non-derivative borrowings Secured Amounts owing to associates obligations lease Finance Unsecured bonds Total liabilities non-derivative i qu ris idity k K M ANA G E M ENT ( ENT contin OF FINANCIAL OF FINANCIAL u STATEMENT STATEMENT STATEMENT STATEMENT ed POSITION POSITION 2,073 2,073 1,445 1,445 1,626 1,626 1,101 1,101 ) 369 369 373 373 154 154 150 150 97 97 $M $M 2 2 6 CONTRACTUAL CONTRACTUAL cash cash flows flows 1,634 1,634 1,246 1,246 1,780 1,780 2,316 2,316 369 369 373 373 163 163 104 104 197 197 $M $M 2 2 6
< 1year < 1year A A s at J 30 s at J 30 369 369 546 546 373 373 578 578 171 171 113 113 + 25% 62 62 10 10 16 16 $M $M 2012 2 2 6 GROUP GROUP $M 51 51 4 4
2012une 2011une
1-2 years 1-2 years
188 188 162 162 131 131 147 147 - 25% (Continued) 10 10 16 16 16 16 2012 $M $M (51) (51) - - - - - $M (4) (4)
2-5 years 2-5 years + 25% 408 408 563 563 795 795 470 470 177 177 011 2 62 62 55 55 30 30 $M $M $M ------
5+ years 5+ years - 25% 594 594 738 738 755 755 011 2 617 617 (30) (30) 23 23 17 17 $M $M $M ------
33 AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2012 34 AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2012 As at 30 June 2012 June 30 at As Notes to the Financial Statements 17. FINANCIAL RIS 17. FINANCIAL The following tables set out the contractual, undiscounted cash flows for derivative financial instruments: financial derivative for flows cash undiscounted contractual, the out set tables following The Fuel derivatives - Outflow - Inflow Foreign exchange derivatives: - Inflow Foreign exchange derivatives: Bank overdraft and short-term borrowings Bank overdraft and short-term borrowings - Outflow Fuel derivatives Trade and other payables Trade and other payables Amounts owing to subsidiaries to owing Amounts obligations lease Finance subsidiaries to owing Amounts obligations lease Finance Unsecured bonds Equity derivatives Equity Amounts owing to associates Amounts owing to associates Total liabilities non-derivative Total liabilities non-derivative K M ANA G E M ENT ( ENT contin OF FINANCIAL OF FINANCIAL OF FINANCIAL OF FINANCIAL u STATEMENT STATEMENT STATEMENT STATEMENT STATEMENT STATEMENT STATEMENT ed POSITION POSITION POSITION POSITION 2,269 2,269 1,914 1,914 ) (165) (165) (159) (159) 608 608 803 803 332 332 972 972 972 331 331 150 150 20 20 27 27 $M $M $M $M 6 1 6 3 4 2 6 CONTRACTUAL CONTRACTUAL CONTRACTUAL CONTRACTUAL cash cash cash cash (2,468) (2,468) (2,064) (2,064) 2,083 2,083 2,409 2,409 2,443 2,443 flows flows flows flows 1,985 1,985 1,099 1,099 803 803 332 332 679 679 972 972 331 331 197 197 (59) (59) (49) (49) 10 10 19 19 19 19 $M $M $M $M 1 6 2 6 - -
< 1year < 1year < 1year < 1year A A A A (2,276) (1,995) (1,995) 2,009 2,009 2,225 2,225 1,290 1,290 s at J 30 s at J 30 s at J 30 s at J 30 1,166 1,166 889 332 332 706 706 106 106 331 331 (51) (51) (41) (41) 67 67 10 10 10 10 14 14 14 14 COMPANY COMPANY $M $M $M $M 1 6 2 6 GROUP GROUP - - 2012 une 2012une 2011une 2011une 1-2 years 1-2 years 1-2 years 1-2 years
(192) (192) 108 108 184 184 (69) (69) 118 118 (Continued) 67 67 67 67 10 10 74 74 (8) (8) (8) (8) $M $M $M $M 5 5 ------
2-5 years 2-5 years 2-5 years 2-5 years 336 336 177 177 214 214 214 214 513 513 $M $M $M $M ------
5+ years 5+ years 5+ years 5+ years 646 646 549 549 331 331 414 414 83 83 97 97 $M $M $M $M ------
As at 30 June 2012 June 30 at As Notes to the Financial Statements (Continued) As at 30 June 2012 June 30 at As Notes to the Financial Statements assets. Capital comprises all components of equity. These ratios and their calculation are disclosed in the Five Year Statistical Review. Year Statistical Five the in disclosed are calculation their and ratios These ofequity. components all comprises Capital assets. interest-bearing and assets interest-bearing non equivalents, cash and cash less instruments) these on derivatives open net (including obligations lease finance and bonds borrowings, total as calculated is debt Net equity. plus debt net over leases) operating capitalised excluding and including (both debt net as calculated are ratios These ratios. of gearing basis the on capital monitors Group The ofDirectors. Board the by reviewed regularly are policies guidelines and management capital The debt. reduce to assets selling or shares new issuing shareholders, to capital returning opportunities, reinvestment dividend initiating shareholders, to paid dividends of amount the adjusting by modified be may structure capital Group’s The assets. underlying ofthe characteristics risk the and conditions ofeconomic light the in managed is structure capital Group’s The requirements. capital imposed externally any to subject not is Group The ofrisk. level the with commensurately services our pricing and costs reducing complexity, to generate shareholder value and benefits for andother stakeholders, to providean continue acceptable return to and for shareholders by removing concern agoing as continue to ability company’s the safeguard to are capital managing when objectives Group’s The Capital risk management - Outflow - Inflow Foreign exchange derivatives: Fuel derivatives Equity derivatives Equity 17. FINANCIAL RIS 17. FINANCIAL - Inflow Foreign exchange derivatives: Fuel derivatives - Outflow K M ANA G E M ENT ( ENT contin OF FINANCIAL OF FINANCIAL STATEMENT STATEMENT u STATEMENT STATEMENT POSITION ed POSITION ) (167) (167) (161) (161) 26 26 19 19 $M 3 4 $M 6 CONTRACTUAL cash CONTRACTUAL cash (2,091) (2,091) flows (2,499) (2,499) 2,107 2,107 2,438 2,438 flows 16 16 16 16 (61) (61) (51) (51) $M 10 10 - - $M
< 1year A (2,016) (2,016) < 1year 2,028 2,028 A (2,289) (2,289) s at J 30 2,237 2,237 s at J 30 12 12 12 12 (52) (52) (42) (42) COMPANY $M 10 10 COMPANY - - $M 2012une 2011une 1-2 years 1-2 years
(210) (210) (75) (75) (Continued) 201 201 79 79 $M 4 4 (9) (9) (9) (9) - - $M -
2-5 years 2-5 years $M ------$M - - - - -
5+ years 5+ years $M $M ------
35 AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2012 36 AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2012 As at 30 June 2012 June 30 at As Notes to the Financial Statements cash flow hedge reserve, together with the nature of the hedged risk exposure is as follows: as is exposure risk hedged the of nature the with together reserve, hedge flow cash the in included were that amounts the of summary a effective, highly as assessed were hedges flow cash qualifying that To extent the earnings. through market to marked accordingly, and, accounted hedge not are components These transactions. expenditure and revenue operating currency foreign forecast account hedge which derivatives currency offoreign respect in designation hedge the from excluded are currencies) between rates interest in differential (the points forward Similarly, earnings. through market to marked being value) time (mainly value option ofthe components other all with options fuel ofthe value intrinsic the include only derivatives fuel of respect in hedges flow Cash risk. designated the from excluded are derivatives accounted ofhedge components Some volatility through earnings. some causing occurs, item hedged the when than other periods in earnings through recorded being ineffectiveness and time to time from criteria effectiveness hedge accounting the failing transactions some in result will this that expected is it Consequently, outcome. accounting aparticular achieve to designed being than rather basis, economic an on determined are practices management Risk test. effectiveness hedge accounting the fail to derivatives fuel of respect in hedges flow cash cause may markets fuel of volatility high the and fuel, jet for aproxy as derivatives oil ofcrude use the particular, In purposes. accounting for ineffective deemed being transactions hedging appropriate economically in result may ofeffectiveness measure This -125%. of80% arange within risk underlying the of value the in changes in offsetting be effective to proven and documented be must risks identified hedge to used transaction derivative Each parameters. strict within purposes accounting for determined be to effectiveness hedge requires 39 IAS NZ Measurement. and Recognition Instruments: Financial 39: IAS ofNZ requirements the to subject exposures, hedged underlying the on arising losses or gains ofthe that with aligned be to instrument hedging the on losses or gains of recognition the of timing the allows hedges flow cash of use The hedges. flow cash qualifying within designated ofderivatives use the through transactions fuel and currency foreign future probable highly to exposure its manages Zealand New Air hedges flow cash as designated Derivatives Derivative financial instruments recognised on the Statement of Financial Position are as follows: as are Position Financial of Statement the on recognised instruments financial Derivative earnings. through recognised is ineffectiveness accounting Any effective. are they that extent the to reserve, hedge flow cash the through recognised are relationship hedge flow ofacash part as designated successfully been have which derivatives ofthose value fair the in Changes earnings. through recognised being value fair in changes subsequent with value, market fair their at Position ofFinancial Statement the in recognised be to required are Derivatives 17. Note in detailed is instruments financial ofderivative purpose and nature The Performance. ofFinancial Statement and Income ofComprehensive Statement Equity, in Changes of Statement Position, Financial of Statement the on instruments financial ofderivative impact the summarises note This 18.V DERI Net derivative financial instruments financial derivative Net Non-hedge accounted Designated ascashflowhedges Of which: Net derivative financial instruments financial derivative Net Term derivativefinancialliabilities Cash flow hedge reserve hedge flow Cash Current derivativefinancialliabilities Tax effect Term derivativefinancialassets Future fuelexpenditure Future foreigncurrencycapitalexpenditure Current derivativefinancialassets Future foreigncurrency salesofnon-financialassets Future foreigncurrencyoperatingrevenueandexpenditure ATIV E INSTR FINANCIAL UM ENTS
GROUP GROUP 122 2012 2012 (36) (36) (14) (14) 86 86 40 40 27 22 27 41 29 87 87 $M $M 5 1 6 - -
GROUP GROUP (166) (166) (159) (122) (159) (Continued) (173) 2 011 011 2 2 011 011 2 (99) (99) (37) (20) (26) 14 10 13 12 51 $M $M (7) 6 1 COMPANY COMPANY 115 2012 2012 (16) (15) (34) 26 21 26 81 42 41 28 87 87 $M $M (1) 5 1 - -
COMPANY COMPANY (168) (168) (161) (124) (161) (101) (177) 011 2 011 2 (30) (30) (40) (40) (37) 10 16 10 14 51 $M $M (9) 2 -
As at 30 June 2012 June 30 at As Notes to the Financial Statements (Continued) As at 30 June 2012 June 30 at As Notes to the Financial Statements NON-HED loss). million $2 2011: June (30 “Fuel” within 2012 June recognised 30 to was of$12 year gain the in million arising ineffectiveness Accounting 2012 2011: June 30 June to loss). (30 year million the in $5 “Fuel” within recognised million $5 of gains with earnings, through market to marked are value) time (mainly components other All hedge. flow acash as designated is derivatives ofthese component value intrinsic the fuel, jet in risk price hedge to options collar or options oil crude uses Group the Where hedges Fuel hedge relationships. these on arises ineffectiveness accounting No obligations. lease and borrowings currency foreign on arising risk currency foreign the to offset required cover derivative of level the reduces This assets. ofnon-financial sales currency foreign future probable of highly hedges flow cash qualifying in instrument hedging the as designated are borrowings denominated Dollar States ofUnited A proportion transactions). capital on loss $1 million 2011: transactions; June (30 operating on nil transactions capital and operating both on nil was hedges flow 2012 cash June 30 to these on year the in arising ineffectiveness Accounting 2012 2011: June 30 June to ofcosts). (30 year million the in $23 costs” “Finance through market to marked were derivatives ofthese respect in million of$29 costs point Forward earnings. through market to marked are and transactions expenditure and revenue ofoperating respect in designation hedge the from excluded are points Forward expenditure transactions. capital and expense operating revenue, operating currency foreign future on arising risk currency foreign the accounts hedge Group The hedges Foreign currency “Other expenses”“Other in the Statement of in Financial Performance. 2and Note in line derivatives” accounted “Non-hedge the in included is derivatives equity ofthese respect in gain/(loss) The Australia. Virgin in of14.99% position share aphysical taking Zealand New Air to prior protection price provided but shares buy to right any provide not did which swaps equity of valuation market to marked ofthe 2011, respect in June 30 to year recognised of$12 was again comparative million the During 19.99%. to increase to potential with 18.49% is Australia Virgin in interest 2012. total June Group’s 30 to The year the during recognised of$10 being gain anet to million lead costs option by offset derivatives remaining ofthe respect in recognised gains unrealised with together This, a$13 gain. million yielded which year the during interest 3.5% the over derivatives the exercised Zealand New Air interest. of5% exposure additional amaximum to up and Australia) (Virgin Limited Holdings Australia Virgin in interest of 3.5% exposure additional aminimum guaranteed was Group the whereby derivative equity an into entered Zealand New Air year the During swaps Equity 2011: June (30 “Fuel” $19 gain). within million 2012, June recognised 30 to was nil year the In earnings. through market to marked are and instruments, ofthese nature term short the to due accounted hedge not are derivatives fuel Short-dated Fuel derivatives 2011:June $17 ofcosts). million 2012 June 30 to (30 year the in costs” “Finance through market to marked were derivatives ofthese of$19 respect in million costs point Forward exposures. underlying the on movements 2011: June exchange by (30 offset was $119 which derivatives loss), million currency foreign accounted non-hedge above ofthe respect in recognised was million 2012, June of$30 30 to again year the During losses”. exchange “Foreign within recognised also are and movements, exchange foreign these to offset anatural provide derivatives currency foreign accounted non-hedge on losses or gains market to Marked losses”. exchange “Foreign within Performance ofFinancial Statement the in recognised are liabilities interest-bearing denominated Dollar States United accounted non-hedge and provisions return lease on losses or gains translation currency Foreign line within the Statement of Financial Performance. same the through recognised are instrument hedging the and item hedged ofthe value in changes the Both applied. not is accounting hedge earnings, impacts it as item hedged underlying the to offset anatural provide ofaderivative value fair the in changes Where Foreign currency derivatives DERI 18. V ATI G E ACCO V E FINANCIAL INSTR E FINANCIAL U NTED NTED DERI V ATI UM V ENTS ( ENTS ES contin u ed ) (Continued) 37 AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2012 38 AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2012 As at 30 June 2012 June 30 at As Notes to the Financial Statements 20. DISTRIB 20. The dividend reinvestment plan is currently suspended. Ordinary Shares, at $1.0818 of2,965,084 issue the by per settled Ordinary were Share. million of$3 payable dividends plan, reinvestment dividend the Under attached. were credits 2011. September on paid 21 was imputation No Share Ordinary per cents 2.5 2011 of the year of respect in financial dividend A final per Ordinary Share. $0.8483 at Shares, Ordinary of3,341,345 issue the by settled were million of$3 payable dividends interim plan, reinvestment dividend the Under attached. were credits 2012. 21 on March imputation paid No was Share Ordinary per cents of2.0 dividend interim An statements. 2012 June the in financial recognised been not has dividend This attached. be will credits imputation No payable on 26 September 2012 to registered shareholders at 14 September 2012.Share, Ordinary The total dividendper payable will million. be $38 cents 3.5 of year 2012 the for financial dividend afinal declared ofDirectors 2012, Board August 29 the On 19. OTHER LIABILITIES OTHER 19. Amounts owingtosubsidiaries Other liabilities Employee entitlements Non-current Other liabilities(includingdefinedbenefitliabilities) Interim dividendonOrdinaryShares Deferred creditswithsubsidiaries Final dividendonOrdinaryShares Distributions paid Interim dividendonOrdinaryShares Amounts owingtoassociates Amounts owingtosubsidiaries Employee entitlements Current Final dividendonOrdinaryShares Distributions recognised U TIONS TO O TO TIONS W NERS GROUP GROUP 157 2012 2012 176 49 49 25 11 14 43 13 19 24 22 27 $M $M 6 - - -
GROUP GROUP (Continued) 162 147 2 011 011 2 2 011 011 2 69 69 30 30 39 39 31 19 12 13 32 43 75 75 $M $M 2 - - - COMPANY COMPANY 862 862 139 139 117 706 706 2012 2012 49 49 13 43 11 19 24 22 27 97 97 $M $M 7 6 -
COMPANY COMPANY 1,033
889 130 130 105 011 2 011 2 69 69 30 30 39 39 83 10 12 11 32 43 75 75 $M $M 1 2
As at 30 June 2012 June 30 at As Notes to the Financial Statements (Continued) As at 30 June 2012 June 30 at As Notes to the Financial Statements Deferred tax assets and liabilities are attributable to the following: the to attributable are liabilities and assets tax Deferred 21. DEFERRED TA 22. ISS 22. As at 1 July 2010 1July at As G Paid in capital in Paid by: Represented share-based payments Equity-settled issued Shares year ofthe beginning the at Balance Shares Ordinary Capital in Paid Fully and Issued Authorised, 2010 1July at As COM 2012 June 30 at As in earnings recognised Amounts in equity recognised Amounts 2011 June 30 at As in earnings recognised Amounts in equity recognised Amounts Balance at the end of the year the of end the at Balance options Plan Term Incentive ofLong Exercise shares issuedMandatory under Long Term Incentive Plan year ofthe beginning the at Balance issue on Shares Ordinary of Number 2012 June 30 at As in earnings recognised Amounts in equity recognised Amounts 2011 June 30 at As in earnings recognised Amounts in equity recognised Amounts profits. taxable future against forward carry 2011: to June (30 available are million nil) of$48 losses tax Unused authority. same taxation the within entities to relate they where Position ofFinancial Statement ofthe face the on offset are liabilities and assets tax Deferred 2012 year. ofthe income commencement the at 28% to 30% from reduced rate tax income corporate Zealand New * The Equity-settled share-based payments Equity-settled year the of end the at Balance Dividend reinvestment plan RO U PANY P U ED CAPITAL ED X ATION aircraft assets Non 30 30 23 23 27 27 25 25 21 21 24 24 (3) (3) (5) (5) $M 3 1 - - - - -
Aircraft related 346 346 323 323 225 225 244 244 301 301 198 198 23 23 22 22 27 27 19 19 $M 1,090,833,451 - - - - 1,099,707,174 1,099,707,174
6,306,429 2,103,905 2,103,905 P 463,389 463,389 accruals rovisions GROUP 2012 (80) (80) (79) (79) (72) (72) (81) (81) (81) (81) (71) (71) and $M 1 8 9 - - - - -
instruments 1,090,833,451 1,076,747,302 1,076,747,302 Derivative financial GROUP 6,902,848 2,269 2,269 2,267 2,267 2,282 2,282 2,282 2,282 6,726,977 456,324 456,324 2012 (33) (33) (29) (29) (29) (29) (26) (26) 38 38 37 15 15 11 11 $M GROUP $M 9 5 8 4 3 - - - -
011 2
UNUSED TAX GROUP 2,269 2,269 2,269 2,269 2,259 2,259 2,252 2,252 LOSSES 1,090,833,451 1,099,707,174 1,099,707,174 2 011 011 2 (13) (13) (13) (13) (Continued) 10 10 14 14 $M $M 3 6,306,429 2,103,905 2,103,905 ------COMPANY 463,389 463,389
COMPANY 2012 Tax change 2,290 2,290 2,290 2,290 2,277 2,277 2,275 2,275 2012 rate (15) (15) (15) (15) 15 15 15 15 $M (8) (8) (8) $M 8 8 5 1,090,833,451 ------1,076,747,302 1,076,747,302 *
6,902,848 6,726,977 COMPANY COMPANY 456,324 456,324 2,260 2,260 2,267 2,267 2,277 2,277 2,277 2,277 T 297 297 235 235 190 190 231 231 133 133 137 137 011 2 011 2 (33) (33) (29) (29) otal 29 29 29 29 38 38 37 25 25 19 19 10 10 14 14 $M $M 3
39 AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2012 40 AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2012 As at 30 June 2012 June 30 at As Notes to the Financial Statements $5 million (30 June 2011: June (30 million). million $3 $5 was transactions payment share-based ofequity-settled 2012 June 30 respect in ended year the in recognised expense total The Shares). 2011: June (30 Ordinary Shares million 55.7 Ordinary million 80.2 approximately to 2012 June 30 at convert may options outstanding The objectives. performance of predetermined attainment on executives ofsenior anumber to granted are options Share Shares Ordinary over Options E holding any from shares in the Company without the Kiwi Shareholder’s consent. prior written restricted is business airline an operates or owns that person any addition, In obtained. is Shareholder Kiwi ofthe consent written prior the unless shares ofvoting more or 10 in percent interest an having or holding from restricted are nationals Zealand New Non Ordinary6,902,848 Shares). 2011: June (30 plan reinvestment dividend the under issued were Shares Ordinary 2012, June 30 6,306,429 ended year the During Share). Ordinary per (17 2010: $0.965 Rules Plan September Term Incentive Long ofthe terms the under shares the of transfer the on placed restrictions reflecting valuation, independent ofan basis the on determined price discounted a represented Share Ordinary per of$0.83 price issue The Shares). Ordinary (17 2010: 456,324 Plan September Term Incentive Long ofthe section Shareholding Mandatory the under executives to issued were Shares 2011, Ordinary 16On September 463,389 2011: June (30 issue 2012, 1,099,707,174 on were June 1,090,833,451). At 30 there Shares Ordinary paid fully Shares Ordinary ISS SHARE 22. ISS share issues, share offers or share structure changes is value neutral as between participants and shareholders. and participants between as neutral value is changes structure share or offers share issues, share of impact the that ensure to necessary, if terms, option adjust will Board ofthe Committee Diversity and Remuneration People * The (years) maturity contractual to period remaining average Weighted ($) ofexercise date the at price share average Weighted ($) year the during Weighted average exercise price for those options exercised Forfeited during the year the during Forfeited year the during Exercised year the during Granted year ofthe beginning the at Outstanding outstanding options of Number ($) year ofthe end the at as Weighted average exercise price for those options exercisable year ofthe end the at as exercisable ofoptions Number year* the of end the at Outstanding year the during Lapsed QU ITY-SETTLED SHARE-BASED PAY UED CAPITAL ( U E DETAILS AND RI AND E DETAILS continued G HTS ) M ENTS
60,679,081 19,991,539 19,991,539 Long 17,913,588 42,791,447 (2,103,905) (2,103,905) I ncentive T Plan 2.69 2.69 0.91 0.91 1.08 0.75 0.75 2012 erm - -
19,569,917 12,861,842 6,708,075 6,708,075 GROUP AND COMPANY OPTION PLAN 2.21 2.21 2012 CEO CEO ------
(Continued) 40,722,469 11,884,690 (2,823,829) (2,823,829) Long (6,726,977) 42,791,447 6,243,048 6,243,048 I (264,906) ncentive T Plan 3.24 3.24 1.22 1.22 1.07 1.07 0.74 0.74 011 2 erm
12,861,842 8,794,045 8,794,045 4,067,797 4,067,797 OPTION Plan 3.55 011 2 CEO CEO ------
As at 30 June 2012 June 30 at As Notes to the Financial Statements (Continued) As at 30 June 2012 June 30 at As Notes to the Financial Statements All Gross Index and the Dow Jones World Airline Total Return Index in 50:50 proportions. 50:50 in Index Total Return Airline World Jones Dow the and Index Gross All NZSX the for return shareholder total the comprises index specified The period. same the over Company the by made distributions any by decreased and (2011: year the over years), two index aspecified in movement percentage the by decreased or increased date issue the at price share Company the on based be will and issue), (2011: issue after years after two year one set be will price exercise The circumstances. specified certain in Group the leaves participant the if lapse may but scheme), ofthe rules the and restrictions trading insider with compliance to (subject Plan Option CEO the for issue) of date the (2011: after ofissue years date four the to two after years three to one between time any at exercised be may options The 2011: June (30 million $1.3 million). $0.5 is date) grant at (measured options Plan Option CEO ofoutstanding value fair 2011: 19,569,917 June are (30 Plan unamortised The 12,861,842). Option CEO the under outstanding Total options of$1.0 million). value afair with (17 2010: 4,067,797 options Plan Option September CEO the under Officer Executive Chief the to of$1.1 issued value 2011, were afair 16 with million On September options 6,708,075 Plan Option CEO corporates. large similar in programmes incentive term long in of staff behaviour exercise early and rates attrition ofthe analysis by determined was ofoptions value the calculating in used life expected The government bonds. for yields term medium to short from implied yield bond coupon zero year five the on based was rate free risk The years. five to three preceding the over data historical using parameters these measuring from derived were estimates correlation and volatility The assumptions rate free risk and yield dividend correlation, volatility, the using variable, astochastic as modelled been has price exercise The detailed above. simulation approach. The key inputs to this model for options granted in that year were as follows: as were year that in granted options for model this to key inputs The approach. simulation Carlo aMonte using options these value to used been have model pricing option Scholes Black the underlying principles general The proportions. 50:50 in Index Total Return Airline World Jones Dow the and Index Gross All NZSX the for return shareholder total the comprises index specified The period. same the over Company the by made distributions any by decreased and years, three the over index aspecified in movement percentage the by decreased or increased date issue the at price share Company the on based be will and issue, after years three set be will price exercise The circumstances. specified certain in Group the leave participants the if lapse may but scheme), ofthe rules the and restrictions trading insider with compliance to (subject issue of date the after years five and three between time any at exercised be may options The 2011: June million). (30 million $3.3 $4.2 is date) grant at (measured LTIP options ofoutstanding value fair unamortised The 2011: June (30 60,679,081 LTIP 42,791,447). are the under outstanding Total options million). of$2.8 value afair with 11,884,690 options LTIP (17 the 2010: under September executives to issued were million of$3.8 2011, value 16 afair On September with 19,991,539 options (LTIP) Plan Term Incentive Long 22. ISS Expected dividend yield Expected (%) rate free Risk (years) life Contractual indices ofvolatility Correlation index volatilitybenchmark of performance (%) Expected (%) price ofshare volatility Expected Discount to reflect negotiability restrictions (%) restrictions negotiability reflect to Discount Weighted average share price (cents) UED CAPITAL ( continued
) 4.09 2012 0.45 111 5.0 5.0 35 25 17 0.45 011 2 4.72 129 5.0 5.4 37 25 17 GROUP AND COMPANY 2010 5.50 0.50 124 5.2 5.0 40 25 17 (Continued) 2009 5.90 0.45 114 5.0 7.5 37 25 15 2008 0.45 6.42 216 5.0 3.7 35 15 13 41 AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2012 42 AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2012 As at 30 June 2012 June 30 at As Notes to the Financial Statements simulation approach. The key inputs to this model for options granted in that year were as follows: as were year that in granted options for model this to key inputs The approach. simulation Carlo aMonte using options these value to used been have model pricing option Scholes Black the underlying principles general The 22. ISS 2014 calendar year to October 2017. October to year 2014 the of calendar quarter second the between delivered be to expected are aircraft firm The aircraft. eight afurther acquire to options The has Group aircraft. ten to order on total the bringing orders, firm into options existing converting by aircraft, two additional an acquire will Group the agreement the Under delays. the to relation in Boeing with agreement an reached 2012, Zealand New Air February 23 On delayed. been have deliveries 2011 March and aircraft the that 2009 February in Boeing from notification received 2013. Group The September 2010 to December period the between delivery for scheduled originally were commitments firm to subject were that B787-9 aircraft The spares. and engines associated and 787-9(B787-9)aircraft Boeing eight purchase to commitment a firm into entered Group The 2016. 2012 January and October between delivery for scheduled are commitments firm to subject aircraft The five. another acquire to rights the as well as aircraft five afurther on options purchase has also Group The aircraft. firm ATR72-600 seven for agreement purchase and asale 2011 into entered November 30 Group On the aircraft. eleven additional an to up purchase to right the secured Group the agreement the 2016. Under 2013 June September and between delivered be will aircraft The engines. associated and aircraft A320 Airbus ten acquire to commitment acontractual has Group The rate. exchange end year the at converted and for contracted and committed purchases asset those for are shown Commitments 23. CAPITAL CO up. wind on rights distribution equal and dividends to rights equal carry Shares Ordinary All share. paid fully each for vote one has Shares ofOrdinary holder each apoll, On vote. one has Shares ofOrdinary holder each of voices, avote by or ofhands ashow On V the Constitution. in specified as Company ofthe actions prescribed certain for required is holder as Crown ofthe consent the Rights, Voting general any carry not does Share Kiwi the While Crown. the by held is Share) Kiwi (the share convertible rights special paid fully One K 2011: 2012 June June (30 30 at 93 as was 93). shares ofunallocated number The consolidation. on capital Share Ordinary from deducted and method, Stock Treasury the under for accounted are Schemes Share Staff Zealand New Air ofthe shares Unallocated method stock treasury of Application corporates. large similar in programmes incentive term long in of staff behaviour exercise early and rates attrition ofthe analysis by determined was ofoptions value the calculating in used life expected The coupon bond yield) implied from to short medium term yields for government bonds. (2011: yield zero bond year four coupon zero year three the on based was rate free risk The (2011: years years). four three to to two one preceding the over data historical using parameters these measuring from derived were estimates correlation and volatility The assumptions detailed above. rate free risk and yield dividend correlation, volatility, the using variable, astochastic as modelled been has price exercise The Expected volatility of share price (%) price ofshare volatility Expected Weighted average share price (cents) Aircraft andAircraft engines Expected volatility of performance benchmark index volatilitybenchmark of performance (%) Expected Other property, plant and equipment and intangible assets intangible and equipment and plant property, Other Contractual life (years) life Contractual indices ofvolatility Correlation Risk free rate (%) rate free Risk Discount to reflect negotiability restrictions (%) restrictions negotiability reflect to Discount dividend yield Expected oting rights iwi Share iwi UED CAPITAL ( MM ITM continued ENTS ) GROUP 2,326 2,326 2,324 2,324 3.54 2012 2012 0.40 12.5 111 3.0 5.0 $M 30 17 2
GROUP AND COMPANY GROUP 2,022 2,028 2,028 0.45 4.46 011 2 2 011 011 2 129 4.0 5.4 $M 20 37 17 6 (Continued) COMPANY 2,272 2,272 2,274 2,274 2010 5.50 2012 0.50 124 5.2 5.0 $M 40 25 17 2
COMPANY 2,022 2,018 2,018 2009 5.90 0.45 011 2 114 6.0 7.5 $M 37 25 15 4
As at 30 June 2012 June 30 at As Notes to the Financial Statements (Continued) As at 30 June 2012 June 30 at As Notes to the Financial Statements 24. OPERATIN 24. 25. CONTIN lease. the renew to right the Group the give leases operating aircraft certain negotiation, to Subject Limited. Holdings Aircraft Zealand New Air subsidiary, owned wholly its from ofaircraft anumber leases Company The reverse in the short to medium term. medium to short the in reverse to expected is it arose difference temporary this event unlikely the In million. of$65 region the in be to estimated liability tax current and asset tax adeferred to rise giving difference atemporary be may impact potential the adopted, not was approach this If legislation. ofthe intent the clarify to released recently document adiscussion in Treasury Zealand New the and Department Revenue Inland the by proposed jointly approach the with consistent is statements financial annual the in adopted treatment The aircraft. purchase to contracts Group’s the on movements exchange foreign with associated outcomes tax the regarding uncertainty some is There date. balance at outstanding are claims liability contingent significant other No jurisdictions. relevant ofthe laws the under damages party third to and penalties pecuniary for liability potential have would Company the laws, relevant breached had Zealand New Air that aregulator, with agreed was it or determined, acourt that event the In proceedings. remaining these defending are airlines, other certain with together 1974. Zealand, New Air Act Practices Trade (Australian) the of breaches alleging proceedings filed Commission Consumer and Competition 2010 Australian the May In Act 1986. Commerce the of breaches alleging Zealand New Air including airlines 13 against proceedings filed Commission Commerce Zealand New the 2008 December In business. cargo air the to relation in proceedings continuing are Two regulators investigations. ofJustice Department US or Commission European the to relation in penalty any incurred nor fine no paid has Zealand New Air investigation”. jury grand ongoing ofthe target or asubject longer no is 2011Zealand New July that in “Air aletter by confirming concluded was ofJustice Department US the by investigation intensive an Similarly, Zealand. New Air to relation in file its 2010 closed had it that November in advised Commission European the investigation, formal adetailed, Following regulators. by ofproceedings subject the also are business cargo air the to relation in made allegations The defended. being are actions class All remote. considered is Canada) in other the and Australia in (one actions class two remaining the on liability any of likelihood The routes. Pacific trans- on surcharges and offares respect in conspired airlines other many with together Zealand New Air that alleges States) United the (in action class one and business cargo air the in pricing to relation in conduct competitive ofanti airlines, 30 than more against allegations make States) United the in other the and Australia in (one Two actions. class five in named been has Zealand New Air effect. financial the estimate to practicable is it which for liabilities contingent no are There statements. financial the in for provided been have estimated reliably be can that loss probable involving disputes legal significant All Not later than 1year than later Not payable leases Property 5years than Later 5years than later not and 1year than Later 1year than later Not payable leases Aircraft Uncalled capital ofsubsidiaries capital Uncalled Later than 5years than Later 5years than later not and 1year than Later Guarantee of subsidiary operating lease commitments lease operating ofsubsidiary Guarantee Guarantee of indebtedness subsidiary and performance Letters of credit and performance bonds performance and ofcredit Letters G ENT LIABILITIES LEASE CO G LEASE MM IT M ENTS GROUP GROUP 467 467 770 770 164 164 139 139 2012 2012 218 218 96 96 35 35 26 26 26 87 87 $M $M - - -
GROUP GROUP 253 253 881 881 103 103 476 476 247 247 152 152 101 101 2 011 011 2 2 011 011 2 43 43 34 34 34 $M $M - - - (Continued) COMPANY COMPANY 2,357 2,357 1,548 1,548 205 205 238 238 777 2012 2012 142 142 90 90 84 84 20 20 54 54 42 42 31 31 12 12 $M $M
COMPANY COMPANY 1,262 1,262 2,178 2,178 229 229 876 876 149 149 011 2 011 2 313 313 38 38 98 98 93 93 28 28 73 73 91 91 12 12 $M $M
43 AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2012 44 AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2012 As at 30 June 2012 June 30 at As Notes to the Financial Statements for 30 June 2012. June 30 for provided were valuations actuarial recent most The cost. service current related the and obligation benefit defined ofthe value present the calculate to Method Credit Unit Projected the using undertaken is calculation actuarial an year Each salary. average final and membership of length employee’s the upon based resignation or retirement on abenefit provide plans The members. new to closed now is plan Zealand New The overseas. and Zealand New in employees qualifying for plans benefit defined two operates Group The plansbenefit Defined 26. RETIRE Limited. Airlines International Zealand New and Limited Holdings Aircraft Zealand New ofAir obligations oflease end aircraft guarantees Company The guarantee. the under apayment make to required be will Company the that probable becomes it as time such until liability acontingent as contract guarantee the treats Zealand New Air Group. the within companies other of indebtedness the guarantee to contracts guarantee financial into enters Company The 2011:June (30 million). million $77 $39 are CEC ofthe Total liabilities parties. two the between exists liability several and joint agreement, ofthe nature the By 13). (Note interest percent a49 holds it which in CEC the to relation in Whitney and Pratt with agreement apartnership has Group The 25. CONTIN Defined benefit obligation at the beginning of the year the of beginning the at obligation benefit Defined obligation: benefit defined the of value present the in Changes assets plan on return Actual "Labour" in Total included assets plan on return Expected Interest cost Current cost service Performance: Financial of Statement the in recognised Expense Position Financial of Statement in Included losses actuarial Unrecognised assets ofplan value Fair Defined benefit obligation at the end of the year the of end the at obligation benefit Defined Settlements paid Benefits (losses)/gains Actuarial Contributions by plan participants Interest cost Current cost service Present value of funded obligations Position: Financial of Statement the in recognised Amounts M G ENT BENEFIT OBLI ENT LIABILITIES ( continued G ATIONS ) GROUP AND COMPANY (Continued) (130) (130) (130) (116 ) ) (116 2012 113 113 (14) (14) (17) (17) 27 27 10 10 $M (3) (3) (3) (3) (2) (2) (2) (2) (2) 2 1 6 1 6 (116 ) ) (116 ) (116 (112 ) ) (112 011 2 110 110 10 10 $M (6) (6) (2) (2) (2) (2) (2) (4) (4) (4) (4) (1) (1) 4 6 5 3 1 - As at 30 June 2012 June 30 at As Notes to the Financial Statements (Continued) The Group expects to contribute approximately $8 million to its defined benefit plans in in 2013.plans benefit defined its to million $8 approximately contribute to expects Group The As at 30 June 2012 June 30 at As Notes to the Financial Statements value of projected benefit obligations for the Group’s plans: Group’s the for obligations benefit ofprojected value The following provides table the weighted average assumptions used to develop the net periodic pension cost and the present actuarial used Assumptions Company. the by used assets other or by occupied property nor instruments, financial own Company’s the to relate above ofthe None 26. RETIRE 2011 as the actuarial valuation for the scheme was not available at the time of preparing these financial statements. financial these ofpreparing time the at available not was scheme the for valuation 2011 actuarial the as for disclosed that of2012 as same the is respect in 2011: information June The (30 10.2%). contributions annual total plan’s of the 11.3% approximately contributing plan, the in participant adominant not is Group The basis. ameaningful on participants all across plan the allocate to available is information insufficient as plan contribution adefined as for accounted been has This employees. own their of respect in contribute employers other which to plan, retirement Contributors Plan Benefit Defined NPF the to contributes Group The members. for benefits other provide or contributions future company’s the fund expenses, meet to plan the by used be may plan and the in retained are contributions forfeited the contributions, the in fully vesting to prior service leave employees Where membership. based upon the employee’s accumulated contributions plus aof proportion the company’s contributions depending upon their periodresignation, of upon or retirement on abenefit receive Employees oftrustees. control the under funds in invested and Group ofthe those from separately held are plan the of assets The employees. qualifying for plans retirement contribution defined operates Group The contributionplans Defined portfolio. investment plan’s the in balance anticipated the with accordance in rates individual the weighting by calculated is ofreturn rate expected overall The Exchange. Stock Zealand New the by published indices relevant to reference with actuaries independent by determined are assets ofplan categories individual on ofreturn rates expected The Fair value of plan assets at the end of the year the of end the at assets plan of value Fair Settlements Other assets Other fund Commodities unit fund equity Overseas fund unit equity Zealand New unit fund Property Benefits paid Benefits (losses)/gains Actuarial Contributions by participants Contributions by employer assets plan on return Expected Gross discount rate (year 1) (year rate discount Gross fund unit interest Fixed M year ofthe beginning the at assets ofplan value Fair Future base salary increases salary base Future assets plan on return Expected term) (long rate discount Gross ajor categories of plan assets: plan of categories ajor M ENT BENEFIT OBLI G ATIONS ( continued ) GROUP AND COMPANY GROUP AND COMPANY GROUP AND COMPANY AND GROUP (Continued) 100% 3.9% 5.2% 2.2% 2.5% 2012 110 110 113 113 54% 25% 2012 2012 $M (6) (6) (3) (3) 8% 3% 3% 7% (1) (1) $M 2 5 6
100% 100 100 011 2 110 110 5.0% 2.5% 2.5% 5.1% 55% 24% 011 2 011 2 $M (3) (3) 8% 3% 3% 7% 1 2 5 5 $M - 45 AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2012 46 AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2012 As at 30 June 2012 June 30 at As Notes to the Financial Statements Compensation of key management personnel (including directors) was as follows: K associates and ventures joint subsidiaries, the includes This Company. ofthe parties related be to considered are Group ofthe members All term. year afive for initially awarded been identifiedGovernment as sole agencies, preferred supplier for all domestic travel and a preferred supplier for international travel. The contract has Zealand New all to services travel air supply to a contract awarded was Group the 2011, process, December atender In following ofbusiness. course normal the in into entered are transactions All basis. length arm’s an in Air New Zealand enters into numerous transactions with Crown Government Agencies Departments, and State OwnedEnterprises on public. the by owned is balance The 2011: June (30 Company 74 ofthe percent). capital issued ofthe 73 percent owns Company, ofthe shareholder major the Crown, The Note Crown PARTIES 27.13. RELATED 2011: June (30 million). year $33 the during plans contribution defined Company to made were million of $33 Contributions 2011: June (30 million). year $39 the during plans contribution defined Group to made were million of$39 Contributions deficit. ofthat share its fund to obliged be would Group the scheme, the up ofwinding time the at deficit in be fund the Should members. the of lifetime working future the over deficit any fund to seek requirements contribution agreed The actuary. the of advice the on act who trustee the by specified rates at contribute to obliged contractually are employers Participating methodology. valuation age attained the using year each valued actuarially is plan ofthe surplus service past The 26. RETIRE Tourism to enter into an Australian Joint Venture Marketing Campaign. Campaign. Marketing Venture Joint Australian an into enter Tourism to &Canterbury $115,000 2011 provided Christchurch June to 30 Zealand ended New year Air the During channels. own its offer the through promoted also and Christchurch to airfare domestic any off’ ‘$50 aspecial customers offering by campaign the to contributed Zealand New Air itself. by funded campaign amarketing through Market Relatives and Friends Visiting the to Christchurch promoted Marketing &Canterbury Christchurch initiative. promotional recovery earthquake ofan part as Christchurch to travel domestic promote to Zealand New Air with agreement promotional ajoint into entered Marketing &Canterbury Christchurch year the During Tourism). &Canterbury Christchurch as (trading Limited Marketing &Canterbury ofChristchurch aDirector also is (Director), Bingham Paul terms. commercial standard on conducted are Interiors Hawkins and Limited Construction Hawkins Zealand, New Air between transactions All 2011: June 2011 24 (30 to outstanding). up August amount no settled period were the for amounts All services. related 2011: construction June for (30 $1 million) million $3 Interiors Hawkins and Limited Construction Hawkins to paid Zealand New Air 2011 1July 2011 period 24 the to August During Limited. Construction ofHawkins CEO was directorship Freeman’s ofJane time the 2010 at 1July 2011. 24 to August period (Husband) the Hunter during Chris Limited Zealand New ofAir aDirector was Freeman Jane terms. commercial standard on ofbusiness, course normal the in services related aircraft provides Zealand New Air which to directorships) non-executive (including ofcompanies anumber in interests relevant have directors) (including personnel key management Certain Past service surplus service Past assets ofplan value Fair Present value of definedbenefit obligation employers: all of respect in plan the of position Overall Short-term employee costs Directors' fees Share-based payments Share-based ey management personnel personnel management ey M ENT BENEFIT OBLI G ATIONS ( continued )
GROUP 2012 11 11 $M 5 1 5
GROUP 2 011 011 2 10 10 $M 6 1 3 GROUP AND COMPANY (Continued) (229) (229) 267 267 2012 COMPANY 38 38 $M
2012 11 11 $M 5 1 5
COMPANY (229) (229) 267 267 011 2 011 2 38 38 10 10 $M $M 6 1 3
As at 30 June 2012 June 30 at As Notes to the Financial Statements (Continued) As at 30 June 2012 June 30 at As Notes to the Financial Statements is not allocated to subsidiary companies. The following entities are included in the set-off arrangement: set-off the in included are entities following The companies. subsidiary to allocated not is interest This Group. the across position net the on based Limited Zealand New Air by accrued) (or earned is Interest amounts. in-fund against amounts ofoverdraft offset the allowing balances, Zealand ofNew Bank certain on arrangement aset-off has Group The Limited. Pty ADP in interest ofa65% 2012, disposed Group the February 26 On 2012. June 30 at as percent 2.5 was rate growth the and percent 6.3 was model use in value the in applied rate discount The years. prior in for of$114 provided losses been had which ofimpairment million areversal in resulted model The model. use in a value using impairment for assessed was Limited, Holdings Aircraft Zealand New Air in 2012, June 30 investment the ended year the During Limited. Airlines International Zealand New and Limited Holdings Aircraft Zealand New ofAir obligations oflease end aircraft guarantees Company The 2011: June (30 million of$7 $10 million). ofsubsidiaries obligations lease property and 2011: June million), (30 $770million to $866 amounting arrangements lease operating aircraft under Limited Airlines International Zealand New and Limited Holdings Aircraft Zealand New ofAir obligations the guaranteed has 2012, June 30 Company at As the 2011: June (30 $1,255 million). of $1,542million Limited Holdings Aircraft Zealand New Air to indebtedness offinancial guarantees provided has Company The 2011: June (30 $106 million). subsidiaries from balances outstanding against Company the by held were of $106 million debts doubtful for and Provisions 9 19. Notes to refer end year at outstanding balances For rates. floating current at interest to subject are remainder the and interest-bearing non are balances Certain investments. capital of respect in held deposits 19) reflect Note in shown (as subsidiaries to owing amounts Non-current unsecured. are and dates settlement fixed no have balances party Related million). $264 2011: June (30 year the during Company the by recognised was million of$237 expense Lease aircraft. its to relating Limited, Holdings Aircraft Zealand New Air subsidiary, owned wholly its with arrangements lease operating and finance undertaken has Company The million). $25 June 2011:(30 million $33 of costs finance 2011: and June (30 million) $8 million $5 of income finance include costs * Finance During the year there have been transactions between the Company and its subsidiaries as follows: follows: as subsidiaries its and Company the between transactions been have there year the During subsidiaries its and Company the between Transactions 22. Note in detailed are plans option share Executive Executive share option plans 2011: June (30 Shares shares). 93 Ordinary unallocated 93 held 2012, June 2001. 30 Scheme at As the September in expired which period, restrictive year athree during Trustees the by held were shares The 12 1998. being August date, allotment ashare with Schemes the in participate to invited were employees part-time regular and time full All 1998. in Group the by established were Schemes Purchase Share BStaff Aand Zealand New Air The schemes purchase share Staff ( PARTIES 27. RELATED Reversal of impairment of investment in subsidiaries in ofinvestment ofimpairment Reversal Included within Operating expenditure expenses") ("Other are the following amounts: Operating expenditure * costs Finance Dividend revenue Operating revenue (excluding dividend revenue) Safe Air Limited Air Safe Limited Airlines Cook Mount Limited Airways Eagle Limited Zealand New Air Limited Holidays Zealand New Air Limited Nelson Air contin u ed ) (Continued) COMPANY (132) (132) 198 198 129 129 2012 (28) (28) 76 76 $M
COMPANY (290) (290) 256 256 011 2 (17) (17) 66 66 $M -
47 AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2012 48 AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2012 As at 30 June 2012 June 30 at As Notes to the Financial Statements Transactions between Air New Zealand and its associates were as follows: as were associates its and Zealand New Air between Transactions Associates ventures joint and associates its and Zealand New Air between Transactions ( PARTIES 27. RELATED course of business on standard commercial terms. There have been no related party debts forgiven during the year. the during forgiven debts party related no been have There terms. commercial standard on ofbusiness course normal the in into entered are and Zealand New Air to material considered not are parties related with transactions and balances Other disclosures party related Other 2011. November on 25 venture joint as a 2011trading October commenced 20 on and incorporated was Limited Group Leisure Pacific venture Joint applied. being of30% rate adiscount with model use in avalue using calculated was impairment The Limited. Pty VCubed in investment associate the against recognised was million of$3 provision impairment 2011, June 30 ended year the an During Group. the into consolidated and a subsidiary as recognised was Limited Pty VCubed conversion, the Following notes. convertible of3million conversion ofthe aresult as Limited Pty VCubed in shareholding the increased 2011, 6October On Group the interest. a26% holding Group the with associate an as held previously was Limited Pty VCubed Note 19. within disclosed are year ofthe end the at outstanding Amounts CEC. to services administration certain provides Group the addition In engines. V2500 certain on services maintenance provide to (CEC) Centre Engine Christchurch the engaged Group the period the During Operating revenue Operating expenditure Provision for impairment in for investment Provision impairment following amounts: Included within expenses”)are Operating the expenditure (“Other contin u ed ) GROUP 2012 (16) (16) $M 5 -
GROUP 2 011 011 2 (25) (25) $M 5 1 (Continued) COMPANY 2012 $M - - -
COMPANY 011 2 $M - - -
As at 30 June 2012 June 30 at As Notes to the Financial Statements (Continued) Independent AuditReport Independent In our opinion the financial statements of the Company and Group on pages 2 to 48: to 2 pages on Group and Company the of statements financial the opinion our In statements financial the on Opinion andpolicies other information. explanatory accounting include that statements financial the to notes the and date that on ended year the for Flows ofCash Statement and Equity in ofChanges Statement Income, ofComprehensive Statement Performance, ofFinancial 2012, June 30 Statement at as the Position Financial of Statement the comprise that 48, to 2 pages on Group and Company the of statements financial the audited We have 2012. June 30 ended year the for behalf, her on Group and Company the of statements financial ofthe audit the out carry to ofDeloitte, resources and staff the using Dick, Andrew me, appointed has Auditor-General The Group. and Company) (the Limited Zealand New ofAir auditor the is Auditor-General The NE AIR OF SHAREHOLDERS THE TO The Board of Directors’ responsibilities arise from the Financial Reporting Act 1993. Act Reporting Financial the from arise responsibilities ofDirectors’ Board The statements that are free from material whether misstatement, due to fraud offinancial or error. preparation the enable to necessary is determines it as control internal such for responsible also is ofDirectors Board The that: statements financial preparing for responsible is ofDirectors Board The Directors of Board the of Responsibilities opinion. audit our for basis a provide to evidence audit appropriate and sufficient obtained have we We believe required. have we explanations and information the all obtained have we that report we 1993, Act Reporting Financial the with accordance In statements. financial ofthe accuracy complete guarantee we do nor transaction, every examine not We did evaluating: involves also audit An control. internal Group’s and Company ofthe effectiveness the on opinion an ofexpressing purpose the for not but circumstances the in appropriate are that procedures audit design to order in control internal consider We relate. they which to matters the of view fair and true a give that statements financial Group’s and Company ofthe preparation the to relevant control internal consider we assessments, risk those making In error. or fraud to due whether statements financial ofthe misstatement ofmaterial ofrisks assessment our including judgement, our on depend selected The procedures statements. financial the in disclosures and amounts the about evidence audit obtain to procedures out carrying involves audit An opinion. our in them to referred have would we corrected, not were that misstatements material found had we If statements. financial the of understanding overall areader’s affect would that disclosures and ofamounts omissions or differences are misstatements Material reasonable assurance about whether the obtain financialstatementsare to free from audit material our misstatement. out carry and plan and requirements ethical with comply we that require standards Those Zealand). (New Auditing on Standards International the incorporate which Standards, Auditing Auditor-General’s the with accordance in audit our out We carried Basis of opinion and we explain our independence. responsibilities, our and ofDirectors Board ofthe responsibilities the outline we addition, In below. explained is opinion ofour basis The expressed. is opinion our which at 2012. date the is August 30 This on completed was audit Our records. ofthose examination an from appears as far as Group and Company the by kept been have records accounting proper opinion, our in that, 1993 report we Act Reporting Financial the with accordance In Opinion on legal other requirements Group’s: and Company ofthe view fair and atrue give • and Standards; Reporting Financial International with comply • Zealand; New in practice accounting accepted generally with comply • flows. cash and performance financial position, financial Group’s and Company ofthe view fair and atrue give • and Zealand; New in practice accounting accepted generally with comply • statements. financial ofthe presentation overall the • and statements; financial the in disclosures ofall adequacy the • ofDirectors; Board the by made judgements and estimates accounting significant ofthe reasonableness the • applied; consistently been have they whether and used policies ofaccounting appropriateness the • - - financial performance and cash flows for the year ended on that date. that on ended year the for flows cash and performance financial 2012; June 30 and at as position financial ZEALAND LI W ZEALAND M ITED FOR THE YEAR ENDED 30 J 30 ENDED YEAR THE FOR ITED U NE 2012 NE 49 AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2012 50 AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2012 Independent Audit Report AuditReport Independent Auckland, NewAuckland, Zealand Auditor-General ofthe behalf On DELOITTE Andrew Dick assignments and arm’s length transactions, we have no relationship with or interests in the Company, or any of its subsidiaries. ofits any or Company, the in interests or with relationship no have we transactions, length arm’s and assignments these and audit the than Other Group. and Company ofthe activities oftrading course ordinary the within terms length arm’s on Group and Company the with deal firm ofour employees and principals assignments, these to addition In requirements. independence those with compatible are which services assurance other and oftaxation areas the in assignments out carried have we audit the to addition In Accountants. ofChartered Institute Zealand New ofthe requirements out we the audit, followedWhen carrying the independence requirements of the Auditor-General, which incorporate the independence Independence 2001. Act Audit 15 Public ofthe section from arises responsibility Our audit. our on based you to opinion that reporting and statements financial the on opinion independent an expressing for responsible We are ofResponsibilities the Auditor Legislation in New Zealand governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. other in legislation from differ may statements financial of dissemination and preparation the governing Zealand New in Legislation statements financial audited the in included information the 2012 the confirm to to August refer 30 onpresented thisshould dated website. they report audit communication related data and electronic statements from arising financial risks audited the of inherent the copy hard with published concerned are been report have may this of which readers If information other any on statements. opinion an financial provide these not does It to/from above. hyperlinked named initially statements were they since financial the to only statements refers report financial the to audit The occurred have website. may the on that changes presented any for on report to responsibility no engaged We accept been not We have website. website. Limited Limited Zealand New Zealand Air New the of Air the of integrity the integrity and maintenance Limited’s the for Zealand New Air on responsible is 2012 included June 30 Directors of ended Board year the for Company’s Group The and Company) website. (the Limited Zealand New Air of statements financial the to relates report audit This M atters Relating to the Electronic Presentation of the Audited Financial Statements Financial Audited the of Presentation Electronic the to Relating atters (Continued) Independent Audit Report AuditReport Independent (Continued) For the year to 30 June 30 to year the For Review YearFive Statistical Historical of Financial Summary Performance by the Group’s external auditors. Refer to page 2 of the Group’s Financial Statements for a reconciliation to IFRS earnings. IFRS to areconciliation for Statements Financial Group’s 2ofthe page to Refer auditors. external Group’s the by review to subject is measure The transaction. hedged underlying the with losses or gains ofderivative of recognition timing the aligns that measure performance financial non-IFRS is a Earnings Normalised periods. financial other in exposures hedge that derivatives on losses and gains net excluding after IFRS Zealand New with compliance in stated Earnings represents Earnings * Normalised year. with current the consistency ensure to purposes, comparative for reclassified been have review statistical year five the within comparatives Certain Profit Before Profit Taxation Finance costs Finance income Taxation and Costs Finance Before Earnings Rental and lease expenses lease and Rental Depreciation and amortisation Taxation and Expenses Rental Amortisation, Depreciation, Costs, Finance Before Earnings Taxation (expense)/credit Normalised Earnings Before Taxation* Before Earnings Normalised Normalised Earnings After Taxation* After Earnings Normalised Company Parent of Shareholders to Attributable Profit Net Other expensesOther Foreign exchange (losses)/gains Maintenance Fuel Cargo Sales and marketingSales Passenger services operationsAircraft revenueOther Passenger revenue Revenue Operating Labour Expenditure Operating Contract services (1,219) (1,219) (3,768) (1,050) (1,050) (348) (348) (233) (233) (235) (270) (270) 3,634 3,634 4,483 (390) (390) (209) (303) (303) 2012 (68) (68) (95) (23) 298 235 158 158 316 715 715 $M 69 94 94 31 91 91 71
(3,678) (1,084) (1,034) (234) (242) (242) (316) (316) (274) (274) 3,525 4,341 (238) (381) (381) ( 311) 311) ( (118) (118) 011 2 (72) 663 663 209 329 278 109 109 $M 36 36 82 73 73 75 75 81 8
(3,338) (939) (939) (233) (233) (294) (294) (240) (240) (261) (261) 3,305 4,046 (369) (369) (263) (326) (326) (976) 2010 164 164 322 255 708 708 (71) 123 123 137 137 (41) (41) 151 151 $M 43 43 92 92 82 82 6
(3,921) (3,921) (1,687) (1,687) (1,019) (1,019) (295) (295) (276) (276) (275) (261) (261) 4,609 3,734 (334) (327) (327) (423) (423) (169) 2009 170 170 688 688 366 331 145 145 374 118 118 $M 98 98 78 78 21 21 14 7
(1,122) (3,720) (3,720) (254) (254) (318) (318) 3,808 4,667 (966) (330) (270) (261) (247) (247) (128) (128) (172) (412) (412) 2008 (86) 304 304 359 359 287 947 947 197 197 156 146 146 218 218 416 117 117 $M
51 AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2012 52 AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2012 For the year to 30 June 30 to year the For Historical of Cash Summary Flows 1. Net debt is comprised of bank overdraft, borrowings, bonds and finance lease liabilities. lease finance and bonds borrowings, overdraft, ofbank comprised is 1. debt Net Net debt Net Liabilities Current Assets Total Total Non-Current Assets Other non-currentOther assets plant and equipment Property, Non-Current Assets Net debt Net Liabilities Non-Current Total Current Assets Total Current assets current Other Total Current Liabilities liabilities current Other Total Liabilities Total Liabilities Non-Current non-currentOther liabilities Cash flow from operating activities operating from flow Cash Bank and short term deposits term short and Bank Assets Current Total Equity Net Assets Total cash and cash equivalents cash and Total cash in holding cash Increase/(decrease) activities financing from flow Cash activities investing from flow Cash As at 30 June 30 at As Review YearFive Statistical Historical of Financial Summary Position 1 1 3,092 3,092 2,088 2,088 5,459 5,459 1,683 1,683 1,688 1,688 1,688 1,029 1,029 1,537 1,537 1,027 1,027 3,759 3,759 1,526 1,526 3,771 3,771 1,700 (654) (654) 667 667 349 349 167 167 2012 2012 671 671 472 472 551 551 157 157 $M $M
4,902 4,902 3,398 3,398 3,427 3,427 1,664 1,664 1,504 1,504 1,504 1,582 1,582 1,475 1,475 1,816 1,816 1,103 1,103 2,714 2,714 (846) (846) (207) (207) 860 860 860 860 466 466 479 479 152 152 173 173 615 615 011 2 011 2 713 713 $M $M
2,909 2,230 2,230 4,597 4,597 1,688 1,688 1,566 1,566 1,566 1,607 1,607 3,031 1,067 1,067 1,067 1,067 1,432 1,432 1,424 1,424 (390) (390) (506) (506) (450) (450) 900 900 334 334 679 679 621 621 2010 2010 524 524 175 175 $M $M
5,045 5,045 3,440 3,440 2,337 2,337 2,275 2,275 1,605 1,605 1,605 1,587 1,587 1,681 1,681 2,770 2,770 1,573 1,573 1,573 1,573 1,759 1,759 1,107 1,107 (216) (216) 2009 2009 433 433 486 486 284 284 702 702 172 172 574 574 14 14 $M $M
3,446 3,446 5,023 5,023 2,534 2,534 1,289 1,289 1,289 1,289 1,549 1,549 1,577 1,577 1,577 1,739 1,739 1,707 1,707 2, 911 911 2, 1,167 1,167 2,112 2,112 (290) (290) (221) (221) 2008 2008 823 823 232 232 377 572 572 158 158 743 743 $M $M
As at 30 June 30 at As Review YearFive Statistical Historical of Financial Summary Position Five Year Statistical Review YearFive Statistical Ratios Financial
BALANCE SHEET EBITDRA/Revenue
EBIT/Revenue PROFITABILITY
LI
V SHAREHOLDER
QU 8. 7. 6. 5. 4. 3. 2. Assets 1. EBIT/Total Gearing (incl.operating aircraft net leases) capitalised Equity on Return Gearing (excl. operating aircraft net leases) capitalised Return on Assets on Return Operating Cash Flow Per Share Per Flow Cash Operating Net Tangible Assets Per Share Per Assets Tangible Net Basic Earnings Per Ordinary Share Passenger Revenue/RPK Total Shareholder Return Weighted Average Number of Ordinary Shares ofOrdinary Number Average Weighted June 30 Price Share Closing Debt to Equity Ratio Equity to Debt Cover Fixed Working Ratio Capital Total Market Capitalisation Shares ofOrdinary Total Number
Current Assets/(Current Assets plus Current Liabilities) Current plus Assets Assets/(Current Current Total Liabilities/Total Equity Equity Total Liabilities/Total Net Debt (including capitalised operating leases)/Net Debt plus Equity plus Debt leases)/Net operating capitalised (including Debt Net Net Debt (excluding capitalised operating leases)/Net Debt plus Equity plus Debt leases)/Net operating capitalised (excluding Debt Net Per-share measures based upon Ordinary Shares Ordinary upon based measures Per-share EBITDRA/(Rental and Lease Expenses and Net Finance Costs) Costs) Finance Net and Expenses Lease and EBITDRA/(Rental Net Profit After Tax/Total Equity Tax/Total After Profit Net IDITY 3 AL 2 1 U 7 E 8
4 4 6 5 times cps cps $m % % % % % % % % % m m $ $ c 223.4 223.4 1,096 1,096 1,100 1,100 (23.2) (23.2) 0.86 0.86 50.3 50.3 15.9 15.9 13.5 1.48 1.48 43.1 43.1 46.1 46.1 21.7 21.7 946 946 2012 6.5 6.5 3.5 4.2 4.2 2.9 2.9 2.6 2.6 225.9 225.9 1,222 1,084 1,091 1,091 44.8 44.8 43.0 43.0 46.7 46.7 1.33 1.33 15.3 15.3 14.4 14.4 13.1 13.1 1.12 1.12 011 2 2.5 2.5 2.2 2.2 5.4 5.4 2.4 2.4 4.7 4.7 7.5 7.5 193.6 193.6 1,077 1,077 1,073 1,073 1,152 1,152 18.9 18.9 1.07 1.07 12.8 12.8 47.3 47.3 51.2 51.2 1.41 1.41 17.5 17.5 31.1 31.1 2010 (9.1) (9.1) 3.3 3.3 5.2 5.2 2.4 2.4 3.7 3.7 7.6 7.6 1,065 1,065 1,061 1,061 214.3 214.3 (25.3) (17.4) (17.4) 45.8 45.8 0.90 0.90 45.0 45.0 56.4 56.4 13.8 13.8 14.9 14.9 1.47 1.47 2009 959 959 2.0 2.0 1.3 1.3 1.5 1.5 1.7 1.7 1.7 1.7 1,055 1,055 1,057 1,057 218.5 218.5 (58.7) (58.7) 1,152 1,152 45.3 45.3 20.3 20.3 55.3 55.3 70.5 70.5 20.7 20.7 1.09 1.09 13.8 13.8 1.45 1.45 13.0 13.0 2008 (7.2) (7.2) 2.9 2.9 7.7 7.7 7.1 7.1 53 AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2012 54 AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2012 For the year to 30 June 30 to year the For Review YearFive Statistical Statistics Operating Key International
Domestic
G Group Total Group Total International Domestic Total A Group Total New Australiaand Zealand, andAmerica Pacific Europe Islands North represent represent haulAsia, long short operations. haul operations. Total RE Total Total International
International Domestic PASSEN Group Total Domestic PASSENG
V RO AILABLE SEAT K SEAT AILABLE V Australia and Pacific Islands Asia and Europe and Asia Asia and Europe and Asia North America and Europe America North Australia and Pacific Islands North America and Europe America North North America and Europe America North Europe and Asia Australia and Pacific Islands North America and Europe America North Australia and Pacific Islands Asia and Europe and Asia EN U P E U G E PASSENG M ER LOAD FACTOR (%) FACTOR LOAD ER ERS CARRIED (000) PLOYEE N PLOYEE ILO ER K UM M ETRES (m) ETRES Equivalents) Time (Full BERS ILO M ETRES (m) 22,963 22,963 10,453 10,453 27,649 27,649 10,876 10,876 32,618 32,618 27,013 27,013 13,122 13,122 8,500 8,500 4,969 4,969 3,020 3,020 4,050 4,050 4,622 4,622 5,979 5,979 9,278 9,278 7,495 7,495 9,189 9,189 7,795 7,795 84.5 84.5 84.0 84.0 82.8 82.8 79.8 79.8 83.1 83.1 81.5 81.5 950 950 652 652 2012 26,996 26,996 32,353 32,353 22,975 22,975 10,861 10,861 27,449 27,449 11, 0 5 5 5 5 0 11, 13,103 13,103 8,962 8,962 8,530 8,530 4,904 4,904 6,077 6,077 4,573 4,573 4,021 4,021 9,428 9,428 7,432 7,432 2,919 2,919 7,470 7,470 83.3 83.3 85.3 85.3 83.4 83.4 82.0 82.0 83.7 83.7 81.8 81.8 662 662 992 992 011 2 26,854 26,854 22,096 22,096 25,829 25,829 10,499 10,499 10,873 10,873 12,324 12,324 31,578 31,578 4,306 4,306 6,095 6,095 2,656 2,656 9,225 3,733 3,733 8,424 8,424 6,776 6,776 8,018 8,018 7,557 7,557 4,724 4,724 84.8 84.8 80.6 80.6 80.4 80.4 82.3 82.3 79.0 79.0 81.8 81.8 668 668 982 982 2010 29,533 23,526 12,368 12,368 34,316 34,316 10,726 10,726 11, 370 370 11, 2 7,112 7,112 2 3,586 3,586 9,383 9,383 4,553 4,553 8,780 8,780 4,783 4,783 7,094 7,094 2,781 2,781 9,416 9,416 7,815 7,815 7,016 7,016 82.8 82.8 79.9 79.9 75.0 75.0 79.0 79.0 75.6 75.6 79.7 79.7 2009 994 994 778 778 29,349 29,349 32,004 32,004 25,627 25,627 36,991 36,991 10,304 10,304 12,495 13,176 13,176 11,111 11,111 8,206 8,206 3,005 3,005 4,987 4,987 4,970 4,970 3,722 3,722 9,748 9,748 9,761 9,761 1,100 1,100 7,612 7,612 7,711 7,711 82.5 82.5 79.3 79.3 78.0 78.0 80.1 80.1 74.6 74.6 79.1 79.1 2008 865 865 For the year to 30 June 30 to year the For Review YearFive Statistical Statistics Operating Key As at 30 June 30 at As Review YearFive Statistical Historical of Debt Summary Bank overdraft term borrowings and short NET DEBT (INCL DEBT NET Finance lease liabilities lease Finance Unsecured bonds borrowings Secured DEBT NET DEBT NET assets) Other within (included deposit interest-bearing Non 2. Net aircraft operating lease commitments for the next twelve months, multiplied by a factor ofseven. afactor by multiplied months, twelve next the for commitments lease operating aircraft Net 2. 1. Unrealised on gains/losses open debt derivatives. Bank and short term deposits term short and Bank Net operating aircraft lease commitments assets) Other within (included deposit secured Interest-bearing Net open derivatives held in relation to interest-bearing liabilities U DIN OFF BALANCE SHEET) BALANCE G OFF 2
1 1,694 1,694 1,029 1,029 1,445 1,445 1,441 1,441 468 468 973 973 180 180 2012 150 150 97 97 13 13 $M 2 4
1,064 1,064 1,255 1,255 1,317 1,317 1,101 1,101 860 860 253 253 154 154 011 2 170 170 (28) (28) $M - - -
1,533 1,067 1,067 1,403 1,403 1,075 1,075 (130) (130) 263 263 2010 137 137 812 812 $M 1 - - -
1,638 1,638 1,279 1,279 1,573 1,573 1,314 1,314 (324) (324) (100) (100) 2009 888 391 391 130 130 $M - - -
1,307 1,307 1,289 1,289 1,325 1,325 1,413 1,413 (106) (106) 2008 880 880 445 445 130 130 12 12 $M - - -
55 AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2012 Corporate Governance at Air New Zealand
This section of the Annual Report provides an overview of Air New Zealand’s main corporate governance policies, practices and processes adopted and followed by the Board. More information is available to view at www.airnzinvestor.com, including policies referred to in this section.
ETHICAL STANDARDS Air New Zealand expects its directors and employees to act legally, ethically and with integrity in a manner consistent with Air New Zealand’s policies, guiding principles and values. The following measures have been put in place to assist with achieving this expectation: • Guide to Business Conduct This guide has been developed by the Group summarising the basic principles of legal and ethical conduct expected of everyone at Air New Zealand. • Open Communication and Just Culture The Group has a policy on Open Communication and Just Culture to encourage open and honest communication by staff about any current or potential problem, complaint, suggestion, concern or question. • Avoiding Conflicts of Interest To maintain integrity in decision making each director must advise the Board of any potential conflict of interest. If a significant conflict of interest exists the director concerned will have no involvement in the decision making process relating to that matter. • Trading in Air New Zealand 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 to reflect recent legislative changes. • Gifts, Entertainment and Inducements Air New Zealand has a gifts, entertainment and inducements policy governing the acceptance and reporting of benefits given to staff by third parties. • Donations The Air New Zealand Group has made donations totalling $117,416 in the financial year to 30 June 2012, including donations to Air New Zealand Environmental Trust and NZCE Trustees Limited. No donations were made to any political party. It is Air New Zealand’s policy not to make donations, in cash or in kind, or to provide free of charge travel to political parties. • Interests Register In accordance with the Companies Act 1993 and the Securities Markets (Disclosure of Relevant Interests by Directors and Officers) Regulations 2003, Air New Zealand maintains an interests register in which relevant transactions and matters involving the directors are recorded.
BOARD COMPOSITION Air New Zealand’s Constitution provides that the Board may have between five and eight directors plus a Managing Director, if one has been appointed. At least three directors must be ordinarily resident in New Zealand and a majority of the Board (including the Managing Director and the Chairman) must be New Zealand citizens. Air New Zealand currently has seven non-executive directors (including the Chairman), six of whom are New Zealand citizens and one an Australian citizen.
BOARD ROLE AND RESPONSIBILITIES The Board has responsibility for taking appropriate steps to protect and enhance the value of the assets of Air New Zealand in the best interests of its shareholders. The Board has adopted a formal Board Charter detailing its authority, responsibilities, membership and operation which is published on Air New Zealand’s website.
MANAGEMENT DELEGATION
2012 The business and affairs of Air New Zealand are managed under the direction of the Board. The Board is responsible for guiding the corporate strategy and direction of Air New Zealand and has overall responsibility for decision making. The Board delegates to the Chief Executive Officer responsibility for implementing the Board’s strategy and for managing the operations of Air New Zealand. The Chief Executive Officer has Board approved levels of authority and he, in turn, sub-delegates authority to the Chief Financial Officer, the Executive management team and senior management. These authorisation levels are subject to internal and external audit.
Chairman Mr John Palmer has been Chairman of Air New Zealand since 2001. Mr Roger France was appointed Deputy Chairman in 2002. The chairman’s role includes managing the Board; ensuring the Board is well informed and effective; acting as the link between the Board and the Chief Executive Officer; and ensuring effective communication with shareholders. AIR NEW ZEALAND RESULTS FINANCIAL ANNUAL
56 Corporate Governance at Air New Zealand (Continued)
Director Independence The Board’s standards for determining the independence of a director including the requirements of the NZSX Listing Rules and the ASX Recommendations are set out in full in the Board’s Charter. All seven of Air New Zealand’s directors, including the Chairman, are independent directors under those criteria. Directors are required to inform the Board of all relevant information which may affect their independence.
BOARD COMMITTEES The Board has delegated certain of its responsibilities to the Audit Committee, the Safety Committee and the People Remuneration and Diversity Committee. The committees play the following roles: • The Audit Committee assists the Board in discharging its responsibilities in relation to the financial reporting, compliance and risk management practices of Air New Zealand. • The People Remuneration and Diversity Committee (formerly the People Development and Remuneration Committee) monitors issues related to management structure, diversity and remuneration of the Chief Executive Officer and other senior executives. • The Safety Committee ensures that, at all times, Air New Zealand has workable systems and processes in place to provide the best practicable safety, security and environmental performance.
DIVERSITY Air New Zealand is focusing Diversity Initiatives across the business. We recognise that a diverse workforce will stimulate breadth of thought, innovation and customer insights to enable us to better service our broad customer base, and ultimately to deliver enhanced business performance. The People Development and Remuneration Committee (PDRC) has updated its name and charter to the People Remuneration and Diversity Committee (PRDC) to confirm its focus and emphasis on the governance of Diversity. Diversity issues will focus initially on gender and ethnicity. Key diversity achievements at Air New Zealand for the 2012 financial year include updating the diversity policy, commencement of programmes to mentor high potential women, the roll-out of a Leaders’ Toolkit for middle management addressing diversity with a specific emphasis on unconscious-bias, and providing seminars for women to network and address the challenges returning from parental leave. The proportion of women within the Air New Zealand workforce is set out in the graph below.
Female Percentage of Workforce
40%
35%
30%
25%
20%
15%
10%
5% 2012 0
BOARD Direct Reports to CEO SENIOR MANAGEMENT OTHER
The key measurable objectives for enhancing diversity at Air New Zealand for the 2013 financial year are: • Diversity Project Delivery Team which will prioritise and implement key initiatives, check action plans, review reporting and monitor progress; • Reviewing programmes, processes and systems to ensure that we support a diverse and inclusive workforce; • Introducing greater variation to our individual employment contracts to attract and retain a more diverse workforce; • Targeted recruitment initiatives to increase diversity in Engineering; and • Building a database on ethnic diversity in the workforce. AIR NEW ZEALAND RESULTS FINANCIAL ANNUAL
57 Corporate Governance at Air New Zealand (Continued)
REPORTING AND DISCLOSURE Air New Zealand has written policies and procedures in place to keep investors and staff informed of all material information about Air New Zealand and to ensure compliance with disclosure requirements under legislation and stock exchange listing rules. Board and Committee charters and policies of public relevance are published on Air New Zealand’s web site at www.airnzinvestor.com.
REMUNERATION AND PERFORMANCE EVALUATION
Executives Air New Zealand’s performance management system applies to the executive management 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 New Zealand’s remuneration policies and practices are linked directly to the performance and development processes so that executive managers’ achievement of Air New Zealand’s goals is appropriately recognised and rewarded.
Non-executive Directors Air New Zealand’s non-executive directors do not participate in any executive remuneration scheme or employee share schemes; nor do they receive options, bonus payments or any incentive-based remuneration. Directors are entitled to be reimbursed by Air New Zealand for reasonable travelling, accommodation and other expenses they may incur whilst travelling to or from meetings of the directors or committees.
Board Evaluation The Board has included in its Charter a requirement to conduct an annual performance review of the Board as a whole after the financial year end. Individual director views and the views of members of the senior management team are sought on Board process, efficiency, and effectiveness, and are discussed by the Board as a whole. In conjunction with this process, those directors retiring annually by rotation who are standing for re-election have their performance evaluated by their fellow directors in a process co-ordinated by the Chairman, with individual feedback to each director as their evaluation is completed.
Differences in practice to NZX Code and ASX Recommendations Under the NZSX and ASX Listing Rules, Air New Zealand is required to disclose in this annual report the extent to which its corporate governance practices materially differ from the principles set out in the NZX Code and the ASX Recommendations. A summary of Air New Zealand’s corporate governance practices have been provided above. Any divergence from the NZX Code and the ASX Recommendations is explained in the table below.
ASX Corporate Governance Principles NZX Corporate Governance Best Reason for not following and Recommendations Practice Code
2.4 The board should establish a nomination 2.2 Unless constrained by size, an The Board believes that a nomination committee. Issuer should establish a nomination committee is not required for committee as recommended below in Air New Zealand, as its whole Board paragraph 3.10. should be (and is) involved in the 3.10 – 3.12 Composition, charter and selection and appointment process review of nomination committee. of any new Board members. 2012 AIR NEW ZEALAND RESULTS FINANCIAL ANNUAL
58 Directors’ Profiles
John Palmer ONZM, B.AGR.SC, FNZID Chairman Appointed 29 November 2001 Mr Palmer has considerable experience as a director and chairman of companies in the agricultural and finance sectors. Mr Palmer is Chairman of Solid Energy New Zealand Limited and Rabobank NZ Limited serves as a Director of AMP Limited, AMP Life Limited and Rabobank Australia Limited. Since 2001 he has led the board through a successful period of rebuilding Air New Zealand, and was named as Company Chairman of the Year in 2007 and 2009.
Roger France BCOM, FCA Deputy Chairman Appointed 1 October 2001 Mr France is the Chancellor of the University of Auckland, a Director of Fisher & Paykel Healthcare Corporation Limited and Chairman of Tappenden Holdings Limited. He was a partner at PricewaterhouseCoopers and one of its predecessor firms, Coopers & Lybrand, for over 15 years and was the Chief Financial Officer of two listed companies for 10 years. He was the Managing Partner of Coopers & Lybrand in Auckland for five years. Following the merger with PricewaterhouseCoopers, he led the firm’s Corporate Value consulting practice in the Asia Pacific region and served as a member of its New Zealand Governance Board. As Deputy Chairman, Mr France brings strong financial analysis and business strategy skills to the Board and to his role as Chairman of the Audit Committee.
Paul Bingham Appointed 1 July 2008 Mr Bingham is Managing Director of Black Cat Cruises Limited, an award winning cruise operator based at Banks Peninsula, near Christchurch. He is Chair of Christchurch and Canterbury Marketing Limited. Prior to his current position, he had a number of senior marketing roles at Tourism Holdings Limited and Air New Zealand Limited. He was a winner of the PATA Young Tourism Professional Award in 2003 and under his leadership Black Cat Group has won numerous accolades, including the Supreme Award at the New Zealand Tourism Awards in 2003 and the SKAL International Eco-tourism Award in 2004.
Antony (Tony) Carter BE (HONS), ME, MPHIL Appointed 1 December 2010 Mr Carter was born and raised in Christchurch, New Zealand and attended the University of Canterbury where he studied chemical engineering, graduating with a Bachelor in Engineering with honours and a Masters in Engineering in 1980. He then went on to study at Loughborough University of Technology in the United Kingdom and graduated in 1982 with a Master of Philosophy degree. After leaving University, Mr Carter worked for the family company, Carter Group Limited, in Christchurch until 1986 when he purchased a Mitre 10 hardware store in Christchurch. He then developed another Mitre 10 store, also serving as a Director of Mitre 10 New Zealand Limited and becoming Chairman of Mitre 10 New Zealand Limited in 1993. In 1994 Mr Carter was appointed General Manager and Chief Executive designate of Foodstuffs (South Island) Limited, sold his interests in the Mitre 10 stores and resigned from the Mitre 10 Board. In 1995 he was appointed Chief Executive of Foodstuffs (South Island) Limited and served in that role until 2001 when he was then appointed Managing Director of Foodstuffs (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 and the second largest commercial organisation by revenue in New Zealand, with annual sales in excess of NZ$8 billion, employing 30,000 staff. Mr Carter is a Director of a number of New Zealand companies; Fletcher Building Limited, Fisher and Paykel Healthcare Corporation Limited, ANZ National Bank Limited and Co-Chairman of The New Zealand Initiative Limited.
Janice (Jan) Dawson BCOM, FCA
Appointed 1 April 2011 2012 Ms Dawson is Deputy Chair of Counties-Manukau District Health Board, a Director of Westpac New Zealand Limited, a member of the University of Auckland Council, the Capital Investment Committee of the National Health Board and a Trustee of the National Maritime Museum. Ms Dawson has been President of Yachting New Zealand since 2007 and was appointed Chair of the Audit Committee of the International Sailing Federation in 2009. Ms Dawson was a partner of KPMG for 30 years, specialising in audit and risk advisory, and the Chair and Chief Executive of KPMG New Zealand from 2006 until 30 June 2011. She has been a Board Member for KPMG Asia-Pacific Region, a Board Member for KPMG Australia, KPMG ASPAC and Councillor of KPMG International. Ms Dawson holds a Bachelor of Commerce from the University of Auckland. She is a Fellow of the New Zealand Institute of Chartered Accountants, a Member of the Institute of Directors in New Zealand, a Fellow of FINSIA, a Paul Harris Fellow and a North Shore Business Hall of Fame Laureate (2010). Ms Dawson was named Chartered Accountant of the Year in 2011 by the New Zealand Institute of Chartered Accountants. AIR NEW ZEALAND RESULTS FINANCIAL ANNUAL
59 Directors’ Profiles (Continued)
Dr James (Jim) Fox BE, M.ENG.SCI, PHD. Appointed 21 November 2006 Dr Fox has more than 25 years experience as a public company director across a range of internationally based businesses. His particular track record is in the building of innovative, technology based companies in competitive international markets. After eight years working around the world with a large international management consulting company, he started his own technology based product and service company in 1987. Following the merger of Dr Fox’s company with the then listed Vision Systems Limited in 1993, he took over as the CEO of the combined group. In December 2006, Dr Fox retired as the CEO of Vision Systems Limited following a heavily competed takeover of the company by a large USA based corporate which resulted in significant returns (close to $1 billion) to shareholders. Dr Fox is also a Director of TTP Group (UK) Plc, Multiple Sclerosis Research Australia Limited, Genmark Diagnostics Inc (USA) and BIOTA Holdings Limited.
Warren Larsen CNZM, BBS, CA, CMA, M.AG.SC (HONS), FNZIM, AF INST. D, DSC (HONS) Appointed 27 February 2002 Mr Larsen is a director of a wide range of companies including Chairman of Centreport Limited, Deputy Chairman of Landcorp Farming, Director of Alpine Energy Limited and he maintains an active interest in aviation matters. Mr Larsen brings significant international business and marketing experience to the Board. He was formerly Chief Executive Officer of the New Zealand Dairy Board for nine years and Bay Milk Products for 10 years prior to that. Mr Larsen is Chairman of the Safety Committee. He is a graduate of Massey University where he qualified as a Master of Agricultural Science (First Class Honours) and a Bachelor of Business Studies. Mr Larsen holds professional accounting qualifications and is an alumni of the Insead Business School.
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 are summarised in the table below:
NAME BENEFICIAL SHARES / SHARES / DATE OF COST NON- INTEREST At BONDs BONDS TRANSACTION BENEFICIAL 30 JUNE 2012 SOLD PURCHASED INTEREST
John Palmer Shares 259,216 75,000 19 Dec 2011 $65,138 2,747 1 21 Sep 2011 $2,972 4,0301 21 Mar 2012 $3,419
Roger France2 Shares 27,0612 933
Paul Bingham Shares 5,000 Bonds 50,000 50,000 28 Sep 2011 $50,000
Tony Carter Shares 97,1894 46,000 2 Sep 2011 $51,874 1,4581 21 Sep 2011 $1,578 1,5121 21 Mar 2012 $1,282 Bonds 30,0004 30,000 28 Sep 2011 $30,000 2012 Jan Dawson Shares 20,0005 20,000 12 & 13 Oct 2011 $21,600 Bonds 50,0005 50,000 28 Sep 2011 $50,000
Jim Fox Shares 36,500
Warren Larsen Shares 15,311 2291 21 Sep 2011 $248 2381 21 Mar 2012 $202
1. Pursuant to the terms of the Dividend Reinvestment Plan. 2. All shares are owned by the France Family Trusts of which Mr France is a discretionary beneficiary.
AIR NEW ZEALAND RESULTS FINANCIAL ANNUAL 3. Mr France is a trustee of the Staff Share Purchase Scheme. 4. In custody by First NZ Capital for Loughborough Investments Limited. 5. The shares and bonds are owned by Jan Dawson and Jeremy Dillon as Trustees of the Kinross Trust. 60 Directors’ Profiles (Continued) Directors’ Interests
The following are particulars of general disclosures of interest by Directors of Air New Zealand Limited holding office at 30 June 2012, pursuant to section 140(2) of the Companies Act 1993. Where applicable, the disclosures also include directorships of subsidiaries of the relevant companies.
John Palmer
AMP Life Limited Director AMP Limited Director Rabobank Australia Limited Director Rabobank New Zealand Limited Chairman (appointed 27 March 2012) Solid Energy New Zealand Limited Chairman The Fresh Fruit Company of Nelson Limited Director (appointed 25 August 2011)
Roger France
Blue Star Group Holdings Limited Director (resigned 1 August 2012) Fisher & Paykel Healthcare Corporation Limited Director Tappenden Holdings Limited Chairman Tappenden Management Limited Director University of Auckland Chancellor
Paul Bingham
Akaroa Harbour Cruises Limited Director Black Cat Group 2007 Limited Managing Director Black Cat Trust Trustee Christchurch & Canterbury Convention Bureau Limited Director Christchurch & Canterbury Marketing Limited Chairman Dolphin Experience Limited Director Lyttelton Harbour Cruises Limited Director Pajo Trust Trustee
Tony Carter
ANZ National Bank Limited Director (appointed 26 August 2011) Fisher & Paykel Healthcare Corporation Limited Chairman Fletcher Building Limited Director Foodstuffs Auckland Protection Trust Trustee Maurice Carter Charitable Trust Trustee The New Zealand Initiative Limited Co-Chairman (appointed 30 March 2012)
Jan Dawson
Counties-Manukau District Health Board Deputy Chair 2012 Disciplinary Tribunal of the New Zealand Institute of Chartered Accountants Member Erua Limited Director Jan Dawson Limited Director (appointed 15 August 2011) National Health Board Capital Investment Committee Member University of Auckland Councillor (appointed 7 September 2011) Voyager New Zealand Maritime Museum Trustee (appointed 1 May 2012) Westpac New Zealand Limited Director (appointed 19 July 2011) Yachting New Zealand President AIR NEW ZEALAND RESULTS FINANCIAL ANNUAL
61 Directors’ Interests (Continued)
Dr Jim Fox
BIOTA Holdings Limited Chairman Genmark Diagnostics Inc (USA) Director Multiple Sclerosis Research Australia Limited Director TTP Group (UK) Plc Director
Warren Larsen
Accreditation Board – Institute of Directors Member Alpine Energy Limited Director Centreport Limited Chairman Landcorp Farming Limited Deputy Chairman Larsen Consultancy Services Limited Director / Shareholder Netcon Limited Director New Zealand Animal Evaluation Limited Chairman Directors’ Remuneration The directors’ remuneration is paid in the form of directors’ fees. Additional fees are paid to the Chairman and Deputy Chairman and in respect of work carried out by individual directors on various Board Committees to reflect the additional responsibilities of these positions. The total of fees to be paid to directors is subject to shareholder approval. Air New Zealand meets directors’ reasonable travel and other costs associated with Air New Zealand business. Directors received the following fees and remuneration from Air New Zealand Limited in the year to 30 June 20121:
DIRECTORS’ Committee Total Value of Travel Name Fees Fees Remuneration Entitlement 2 John Palmer (Chairman) 249,948 - 249,948 26,594 Roger France (Deputy Chairman) 94,767 47,384 142,151 43,245 Paul Bingham 82,921 16,584 99,505 20,600 Tony Carter4 82,684 28,430 111,114 10,056 Jan Dawson 82,921 18,953 101,874 13,171 Jane Freeman3, 4 14,623 3,342 17,965 - Jim Fox 81,974 40,276 122,250 - Warren Larsen 82,447 33,168 115,615 50,924 Total 772,285 188,137 960,422 164,590
1. No employee of the Group received or retains any remuneration or other benefits as a director of any subsidiary company. 2. Includes value of travel benefits for related parties and benefits accrued in prior years availed in current year. 3. Retired during the year. 4. GST exclusive.
2012 Indemnities and Insurance Pursuant to section 162 of the Companies Act 1993 and the Constitution, Air New Zealand has entered into deeds of access, insurance and indemnity with the directors of the Group to indemnify them to the maximum extent permitted by law, against all liabilities which they may incur in the performance of their duties as directors of any company within the Group. Insurance cover extends to directors and officers for the costs and expenses of successfully defending legal proceedings. Specifically excluded are penalties and fines which may be imposed for breaches of law and criminal actions. In accordance with 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 RESULTS FINANCIAL ANNUAL
62 Directors’ Interests (Continued) Subsidiary Companies
The following people were directors of Air New Zealand’s subsidiary and joint venture companies in the financial year to 30 June 2012. No director of any subsidiary received beneficially any director’s fees or other benefits except as an employee.
New Zealand Companies Directors
ADP (New Zealand) Limited JHB/MAS/SWW2/BP1
Air Nelson Limited DWM/JGM/BP/GCK
Air New Zealand Aircraft Holdings Limited JHB/RSM/DWM
Air New Zealand Associated Companies Limited JHB/NJT/RSM
Air New Zealand Associated Companies (Australia) Limited JHB/NJT/RSM
Air New Zealand Consulting Limited JHB/RSM/MJF2
Air New Zealand Holidays Limited DWM/NJT2/LKL/BP/DBS1
Air New Zealand Express Limited JHB/NJT/RSM
Air New Zealand International Limited JHB/NJT/RSM
Air New Zealand Tasman Pacific Limited DWM/BP/GRS
Air New Zealand Travel Business Limited JHB/NJT/RSM
Altitude Aerospace Interiors Limited NJT/RSM/JCF/VCMS
ANEX Holdings Limited - amalgamated with Air New Zealand Associated Companies Limited on 29 May 2012 JHB/NJT/RSM
ANNZES Engines Christchurch Limited JHB/RSM
Ansett Australia & Air New Zealand Engineering Services Limited JHB/RSM
C.I. Air Services Limited JHB/NJT/TT
Eagle Air Maintenance Limited DWM/JGM/BP
Eagle Airways Limited DWM/JGM/BP/CLH
Eagle Aviation Limited JHB/NJT/RSM
Freedom Air Limited JHB/NJT/RSM
Jetaffair Holidays Limited - amalgamated with Air New Zealand Associated Companies Limited on 29 May 2012 JHB/NJT/RSM
Mount Cook Airline Limited DWM/JGM/BP/SW
National Airlines Company Limited JHB/NJT/RSM
New Zealand International Airlines Limited JHB/RSM/DWM
New Zealand Tourist Promotion Company Limited JHB/NJT/RSM
Pacific Leisure Group Limited3 JGM1/DBS1/AJB1/DBF1
Safe Air Limited TNH/CET/VCMS 2012
Tasman Empire Airways 1965 Limited JHB/NJT/RSM
Tasman Express Limited JHB/NJT/RSM
Teal Insurance Limited JHB/RSM/HJBR
The Mount Cook Group Limited JHB/NJT/RSM
Tourism New Zealand Limited JHB/NJT/RSM
TXNZ Limited NJT/SLW/SFJ/DBS
ValetPort Limited DWM/BP/LKL
Zeal 320 Limited JHB/NJT/RSM AIR NEW ZEALAND RESULTS FINANCIAL ANNUAL
63 Subsidiary Companies (Continued)
Australian Companies Directors
ADP Pty Ltd4 JHB2/BP2/TNH2/SWW/MAS2
Air New Zealand (Australia) Pty Limited JHB/CPW
Masling Industries Pty Limited AMS/TNH/RSM/VCMS
Safe Air Australia Pty Limited JHB/DLMK/VCMS
TAE Aviation Pty Limited AMS/TNH/RSM/VCMS
TAE Gas Turbines Pty Ltd AMS/TNH/RSM/VCMS
TAE Pty Limited AMS/TNH/RSM/VCMS
VCubed Pty Ltd DBS/DWM/SFJ/SLW/SRC
Non-Australasian Companies Directors
Air New Zealand Travel Services Limited DWM/ESAS2/EJO/CML1 ANZGT Field Services LLC RI1/TNH1
Mount Cook Tours Limited (USA)5 JHB/PW
DIRECTORS
AJB Andrew J Burns JGM Jeffrey G McDowall
AMS Andrew M Sanderson JHB John H Blair
ASC Alan S Carr LKL Leeanne K Langridge
BP Bruce Parton MAS Mark A Siladi
CET Craig E Tolley MJF Michael J Flanagan
CLH Carrie L Hurihanganui NJT Norman J Thompson
CM Chris Myers PW Peter Walsh
CML Christopher M Luxon RI Richard Ison
CPW Cameron P Wallace RSM Robert S McDonald
DBF Desmond B Fielding SFJ Stephen Jones
DBS David B Simmons SLW Stephen L Wells
DLMK Douglas L M Keesing SRC Shane R Crockett
DWM David W Mackrell SW Sarah Williamson 2012 ESAS Ed S A Sims SWW Steve W Watts
EJO Edward J Overy TNH Trevor N Hughes
GCK Grant C Kerr TT Tamari’I Tutangata
GRS Glen R Sowry VCMS Vanessa Stoddart
HJBR Hannah J Ringland WJW William J Whittaker
JCF James C Fox
1. Appointed during the financial year. 2. Resigned during the financial year. AIR NEW ZEALAND RESULTS FINANCIAL ANNUAL
3. The company is a joint venture. 4. Sold February 2012. 5. Disestablished August 2011. 64 Subsidiary Companies (Continued) Employee Remuneration
Remuneration earned in FY12 including Remuneration earned in FY11 including Remuneration paid in FY12 including base for FY12, base, incentive payments and options base, incentive payments and options but incentive payments including options issued issued under the LTI Scheme relating to issued under the LTI scheme relating to under the LTI scheme that relate to FY11 performance FY12 performance FY11 performance but paid in FY12
Aircrew, Tech Staff, NZ Mgmt & Exec NZ Mgmt & Exec NZ Mgmt & Exec Overseas & Others
100,000-110,000 127 124 137 363 110,000-120,000 85 66 83 297 120,000-130,000 53 66 52 265 130,000-140,000 56 49 51 191 140,000-150,000 63 45 54 122 150,000-160,000 31 34 32 134 160,000-170,000 27 34 31 92 170,000-180,000 29 23 37 53 180,000-190,000 22 14 12 31 190,000-200,000 10 7 13 28 200,000-210,000 7 9 7 43 210,000-220,000 8 6 7 73 220,000-230,000 9 8 9 51 230,000-240,000 8 5 12 23 240,000-250,000 5 8 4 41 250,000-260,000 7 1 6 26 260,000-270,000 3 3 4 30 270,000-280,000 2 1 1 15 280,000-290,000 1 3 16 290,000-300,000 2 2 2 21 300,000-310,000 2 2 1 13 310,000-320,000 1 2 17 320,000-330,000 1 24 330,000-340,000 1 1 25 340,000-350,000 1 24 350,000-360,000 2 1 8 360,000-370,000 1 8 370,000-380,000 1 2 2 7 380,000-390,000 1 1 6 390,000-400,000 1 2 7 400,000-410,000 1 1 7 410,000-420,000 1 9 420,000-430,000 1 6 430,000-440,000 1 1 440,000-450,000 1 1 450,000-460,000 1 2 460,000-470,000 1 1 480,000-490,000 1 1 2 4 490,000-500,000 1 500,000-510,000 1 510,000-520,000 1 1 520,000-530,000 1 1 530,000-540,000 1 1 1 550,000-560,000 1 1 560,000-570,000 1 590,000-600,000 1 600,000-610,000 1 640,000-650,000 1 660,000-670,000 1 690,000-700,000 1 700,000-710,000 1 720,000-730,000 1 1 740,000-750,000 1 760,000-770,000 1
770,000-780,000 1 2012 980,000-990,000 1 1 1,000,000-1,010,000 1 1 1,010,000-1,020,000 1 1,040,000-1,050,000 1 1 1,050,000-1,060,000 1 1,060,000-1,070,000 1 1,100,000-1,110,000 1 1,110,000-1,120,000 1 1,120,000-1,130,000 1 1,230,000-1,240,000 1 1,330,000-1,340,000 1 2,660,000-2,670,000 1 2,710,000-2,720,000 1 2,730,000-2,740,000 1 AIR NEW ZEALAND RESULTS FINANCIAL ANNUAL Grand Total 580 532 582 2,086
Forty-eight employees included in the table above were made redundant during the period, resulting in redundancy and other termination payments exceeding their normal levels of remuneration. Please refer to pages 66 and 67 for a more detailed breakdown of CEO remuneration. 65 Employee Remuneration (Continued)
REMUNERATION PHILOSOPHY In order to attract and retain talented individuals, Air New Zealand’s performance and reward strategy is aligned with both the recruitment philosophy – to source inspiring people, and our capability development agenda – to nurture future leaders and provide succession pipelines into key roles. The key objectives of the strategy are attracting high performing individuals, providing rich developmental opportunities and recognising achievement through targeted performance and reward initiatives. Air New Zealand’s remuneration strategy is underpinned by a pay for performance philosophy and accordingly positions base pay for competent performance below the market median for all Individual Employee Agreements including the Chief Executive Officer (CEO), and uses annual performance incentives to create opportunities for everyone to achieve market competitive remuneration levels and in the case of superior performance, total remuneration in excess of market. The overall remuneration strategy is designed to provide remuneration based on performance against agreed targets, align actions with shareholder interests and balance competitiveness with affordability. The CEO and executive remuneration packages are made up of three components: • Fixed base salary; • Annual performance incentive; and • Long term incentives.
FIXED BASE SALARY Air New Zealand’s philosophy is to set fixed base salaries at 90 percent of the market median for executives who are fully competent in their role.
ANNUAL PERFORMANCE INCENTIVE The annual performance incentive component is delivered through the Air New Zealand Short Term Incentive Scheme (STI). The measures used in determining the quantum of the STI are set annually. Targets relate to both Company financial performance and individual targets. For the CEO the STI weighting is based 70% on Company financial performance and 30% on individual performance against specific targets. For all other employees the weighting is 50% Company financial performance and 50% individual performance. The main factors for assessment are: • Financial performance falling within an executive’s specific responsibilities; • Business performance; • Strategy development and implementation; and • People, culture and leadership performance. At the beginning of each financial year the Board confirms a financial target for the Company for incentive payments which is set 10% above the average Normalised Earnings before Taxation achieved by the Company over the previous five year period.
LONG TERM INCENTIVE The Air New Zealand Long Term Incentive Plan (LTIP) is designed to align the interests of senior executives with those of our shareholders and to incentivise participants in the plan to enhance long term shareholder value. There are two main elements to the plan:
Mandatory Shareholding Participants are required to commit to investing a specified amount to purchase shares in the Company, which lies in the range of 25% to 66% of their base salary, according to seniority. Until the minimum shareholding level is attained, one third of the CEO or executives’ after-tax annual performance incentive payment is retained to purchase shares in the Company up to the point where this mandatory shareholding level is achieved. The holding must be maintained to enable the CEO or executive to exercise any options.
Options
2012 LTIP participants must achieve a performance rating of on target or better against individual STI targets to be eligible to receive a grant of options. Any grant of options is at the discretion of the People Remuneration and Diversity Committee (PRDC) of the Board of Directors but, in the normal course of events, is expected to equate to a value of 2½ times the STI earned on individual targets for the CEO, or 1½ times the STI earned on individual targets for all other scheme participants (the factor for the CEO being higher to reflect the lower proportion of STI based on individual performance (30% versus 50%)). The number of options to be allocated will be determined by an independent valuation of the options carried out each year at the time of issue. AIR NEW ZEALAND RESULTS FINANCIAL ANNUAL
66 Employee Remuneration (Continued) Employee Remuneration (Continued)
The exercise price of the options is set three years from issue date, and is calculated by multiplying the share price of the Company’s shares at the date of issue by the movement in an index over the three years to exercise date, decreased by any distributions made by Air New Zealand over the same period. The index comprises the Total Shareholder Return (TSR) for the NZSX All Gross Index and the TSR for the Dow Jones World Airline Total Return Index in equal proportions. The share price at the date of issue is measured as the average daily closing price of ordinary shares over the ten business days starting on the third business day following the announcement of the Company’s annual results. Options may be exercised at any time after the third anniversary and before the fifth anniversary of the date of issue assuming any conditions outlined and any additional conditions set by the PRDC have been met. Unless Air New Zealand’s share price outperforms the index as outlined above, no value will accrue to the participating executive.
CEO REMUNERATION
Fixed Base Salary Over the course of the 2012 financial year, the CEO, Rob Fyfe, earned a base salary of $1,431,000 (2011 financial year: $1,350,000) paid in cash.
Annual Performance Incentive The annual value of the STI scheme for the CEO is set at 55% of base salary if all performance targets are achieved. If a performance rating below 90 is achieved, no STI is payable. Up to 110% of base salary is payable for outstanding performance. For the 2012 financial year, Rob Fyfe earned a total STI payment to the value of $338,809 (2011 financial year: $349,718). This payment will be made in the 2013 financial year.
Long Term Incentive Rob Fyfe has access to two long term incentives schemes: • the Air New Zealand Long Term Incentive Plan (LTIP); and • the CEO Long Term Incentive Plan (CLTIP).
LTIP The mandatory shareholding commitment for the CEO is 66% of his fixed cash amount. For the 2012 financial year the value is $944,460. This holding must be maintained to enable the CEO to exercise any options. Rob Fyfe owns or has a beneficial interest in 1,192,321 shares of which 892,061 are held as part of the mandatory shareholding. Rob Fyfe earned 4,553,613 options under the LTIP for the 2011 financial year valued independently at $0.192 each, for a total value of $874,294 (which were issued in September 2011).
CLTIP The CEO Long Term Incentive Plan is solely an option based scheme and has a five year time horizon. It was established as a further incentive to retain the services of the current CEO for an extended period. The CEO option scheme commenced in the 2008 financial year and the issue of options will cease in the 2012 financial year. Each year, at the absolute discretion of the Board, options can be issued to the CEO based on 80% of the CEO’s fixed cash remuneration. Options issued under this scheme are not earned nor do they vest unless the CEO remains employed by Air New Zealand through to September 2012. If this condition is met the options may be exercised within two years after this date. The exercise price and valuation methodology of the options under the CLTIP mirror the LTIP scheme. So unless Air New Zealand’s share price outperforms the index, no value will accrue to the CEO.
Under the CLTIP, Rob Fyfe received a grant of 6,708,075 options for the 2011 financial year valued at $0.161 each, for a total value of 2012 $1,080,000 (which were issued in September 2011).
SUPERANNUATION The CEO is a member of Air New Zealand’s group superannuation scheme, KoruSaver. As a member of the scheme Rob Fyfe is eligible to contribute and receive a matching Company contribution up to 4% of gross taxable earnings (including STI). For the 2012 financial year the Company contribution was $71,229 (2011 financial year $71,536). AIR NEW ZEALAND RESULTS FINANCIAL ANNUAL
67 Shareholder Statistics
Top Twenty Shareholders – 1 August 2012
Number of % of Ordinary Ordinary Shares Shares Her Majesty the Queen in right of New Zealand acting by and through her Minister of Finance 804,191,058 73.13 HSBC Nominees (New Zealand) Limited 31,212,246 2.84 Accident Compensation Corporation 25,383,819 2.31 Citibank Nominees (NZ) Limited 20,264,297 1.84 J P Morgan Nominees Australia Limited 19,262,428 1.75 National Nominees Limited 18,538,125 1.69 JP Morgan Chase Bank 17,024,728 1.55 Citicorp Nominees Pty Limited 16,862,763 1.53 HSBC Custody Nominees (Australia) Limited 14,132,490 1.29 AMP Investment Strategic Equity Growth Trust Fund 9,795,503 0.89 National Nominees New Zealand Limited 8,510,565 0.77 HSBC Nominees (New Zealand) Limited 7,526,576 0.68 New Zealand Superannuation Fund Nominees Limited 7,157,372 0.65 NZGT Nominees Limited AIF Equity Fund 5,013,680 0.46 Garth Barfoot 1,942,241 0.18 New Zealand Depository Nominee Limited 1,554,816 0.14 Cogent Nominees Limited 1,346,121 0.12 TEA Custodians Limited 1,221,436 0 .11 Robert Ian Fyfe 1,192,321 0.10 FNZ Custodians Limited 1,079,629 0.10 TOTAL 1,013,212,214 92.13
Substantial Security Holders The following information is provided in compliance with Section 35F of the Securities Markets Act 1988 and records Substantial Security Holder Notices received in the period up to 10 August 2012. The total number of listed voting securities of Air New Zealand Limited at that date was 1,099,707,174 ordinary shares.
Substantial Security Holder Voting securities in the company in which a relevant interest is held
Her Majesty the Queen in right of New Zealand. 810,877,863 ordinary shares*
Orbis Investment Management (Australia) Pty Ltd and its related bodies corporate as 54,605,617 ordinary shares investment manager for various funds or investment mandates. 2012
In 1989 the Crown issued a Notice that arises through its holding of a special rights Convertible Share, the “Kiwi Share” and the power of the Kiwi Shareholder under the Constitution. Full details of the rights pertaining to the Kiwi Share are set out in the Company’s Constitution. The Kiwi Share does not confer any right on its holder to vote at a shareholders’ meeting unless the Kiwi Share has been converted into an Ordinary Share by its holder. The Kiwi Share is not listed on any stock exchange. *Relevant interests held as follows: Her Majesty the Queen in right of New Zealand acting by and through her Minister of Finance (804,191,058 ordinary shares) and New Zealand Superannuation Fund Nominees Limited (6,686,805 ordinary shares) as nominee for the New Zealand Superannuation Fund being property of Her Majesty the Queen in right of New Zealand and managed by the Guardians of New Zealand Superannuation. AIR NEW ZEALAND RESULTS FINANCIAL ANNUAL
68 Shareholder Statistics Shareholder Statistics (Continued)
Shareholder Statistics – 1 August 2012
Size of Shareholding Shareholders Shares Ordinary Shares Number % Number %
1 to 1,000 16,251 62.99 6,469,084 0.59
1,001 to 5,000 6,773 26.25 15,506,734 1.41
5,001 to 10,000 1,348 5.23 10,054,065 0.91
10,001 to 100,000 1,327 5.14 33,461,761 3.04
100,001 and Over 99 0.39 1,034,215,530 94.05
TOTAL 25,798 100.00 1,099,707,174 100.00
Current On-Market Share Buybacks The Company is not, at the date of this Annual Report, undertaking any on-market share buy-backs.
Non-Marketable Parcels of Shares As at 1 August 2012, 9,880 shareholders held Ordinary Shares of less than a marketable parcel (as defined by the NZSX Listing Rules). 2012 AIR NEW ZEALAND RESULTS FINANCIAL ANNUAL
69 Operating Fleet Statistics As at 30 June 2012
Boeing 747-400 Number: 2 Average Age: 17.4 years Maximum Passengers: 379 Cruising Speed: 920 km/hr Av. Daily Utilisation: 6:54 hrs
Boeing 777-300ER Number: 5 Average Age: 1.1 years Maximum Passengers: 332 Cruising Speed: 910 km/hr Av. Daily Utilisation: 15:00 hrs
Boeing 777-200ER Number: 8 Average Age: 6.2 years Maximum Passengers: 304 Cruising Speed: 910 km/hr Av. Daily Utilisation: 13:36 hrs
Boeing 767-300ER Number: 5 Average Age: 16.8 years Maximum Passengers: 230 Cruising Speed: 870 km/hr Av. Daily Utilisation: 12:00 hrs
Airbus A320-200 Number: 17 Average Age: 6.3 years Maximum Passengers: 168 Shorthaul or 171 Domestic Cruising Speed: 850 km/hr Av. Daily Utilisation: 8:00 hrs Shorthaul or 10.18 hrs Domestic
Boeing 737-300 Number: 13 Average Age: 14.4 years Maximum Passengers:133 Cruising Speed: 790 km/hr Av. Daily Utilisation: 6:24 hrs
ATR 72-500 Number: 11 Average Age: 11.5 years Maximum Passengers: 68 Cruising Speed: 518 km/hr Av. Daily Utilisation: 7:06 hrs 2012
Bombardier Q300 Number: 23 Average Age: 5.4 years Maximum Passengers: 50 Cruising Speed: 520 km/hr Av. Daily Utilisation: 7:12 hrs
Beech 1900D Number: 18 Average Age: 10.5 years Maximum Passengers:19 Cruising Speed: 510 km/hr AIR NEW ZEALAND RESULTS FINANCIAL ANNUAL Av. Daily Utilisation: 6:00 hrs
70 Operating Fleet Statistics General Information As at 30 June 2012
Stock Exchange Listings Air New Zealand’s Ordinary Shares are listed on:
NZSX Australian Stock Market Exchange
Ticker: AIR AIZ Date of full listing: 24 October 1989 1 July 2002
Place of Incorporation
New Zealand In New Zealand, the Company’s Ordinary Shares are listed with a “non-standard” (NS) designation. This is due to particular provisions of the Company’s Constitution, including the rights attaching to the Kiwi Share1 held by the Crown and requirements regulating ownership and transfer of Ordinary Shares. Neither the New Zealand Stock Exchange nor the Australian Stock Exchange has taken any disciplinary action against the Company during the financial year ended 30 June 2012.
New Zealand STOCK Exchange
General: An ongoing waiver granted to all companies dual listed on the NZX and the ASX from Listing Rules 11.1.1 and 11.1.4 to enable dual listed issuers to comply with the ASX Listing Rules relating to the restrictions on transfer of restricted (vendor) securities during an escrow period. The following waivers from the NZSX Listing Rules were granted to the Company or relied upon by the Company during the 12 month period ending on the date two months before the publication of the annual report: 1. A waiver from NZSX Listing Rule 8.1.7(b) to enable the issue of Long Term Incentive Scheme Options to be adjusted following a capital restructure such as a rights issue, in accordance with an approach suggested by PricewaterhouseCoopers. The decision by NZXR of 3 December 2007 noted that an independent expert’s opinion had confirmed that the approach suggested by PricewaterhouseCoopers would create economic neutrality for the option holders and all other Air New Zealand shareholders. 2. A waiver from NZSX Listing Rule 8.1.3 to allow Air New Zealand to issue options under the Executive Officer Option Incentive Plan to the Chief Executive Officer of Air New Zealand with an exercise price which may be less than 90% of the Average Market Price of Air New Zealand’s ordinary shares at the date of issue of the shares. The decision by NZXR of 31 October 2007 noted that Air New Zealand did not expect the percentage of shares to be issued under the Plan to be more than 1.1% of total shares on issue and that dilution of voting rights would be negligible. 3. A waiver from NZX Listing Rule 9.1.1 and 10.5.5(f) on July 23 2009 to allow Air New Zealand exemption from seeking shareholder approval for a transaction to acquire up to 14 narrow body A320 aircraft having a total market value of up to US$750 million, which amounts to an acquisition (either through purchase or lease) of assets with a relatively high value when measured against Air New Zealand’s Average Market Capitalisation. 4. In December 2011 Air New Zealand and Her Majesty the Queen in Right of New Zealand acting by and through the Chief Executive of the Ministry of Economic Development (the Crown) entered into an agreement for the provision by Air New Zealand of air travel services (the Agreement). The initial term of the Agreement is five years, with the potential for two rights of renewal for one year each. Under the Agreement Air New Zealand is appointed the sole preferred supplier of domestic New Zealand air travel services and a non-exclusive supplier of air travel services on Trans Tasman and international routes to all participating New Zealand Government Agencies. Air New Zealand was granted a waiver by NZX Market Supervision (NZXMS) from NZSX Listing Rule 9.2.1 so that it was not 2012 required to obtain shareholder approval by ordinary resolution for the entry into the Agreement (the Transaction). That waiver was granted on the following conditions: (a) two independent directors of Air New Zealand certify in writing to NZX that the Transaction has been negotiated on arms’ length commercial terms, entry into the Transaction is in the best interests of Air New Zealand shareholders (other than the Crown) and the Crown as the majority shareholder in Air New Zealand has not influenced the Board’s decision to enter into the Agreement; (b) when the initial term of the Transaction ends and if Air New Zealand and the Crown decide to renew the Transaction for a further term, at the time of such renewal two directors of Air New Zealand will make the certifications described above; and (c) the key terms of the Transaction (other than those which are commercially sensitive), the waiver, its condition and its effect are disclosed in the half year and annual reports for the year in which the Transaction takes place. AIR NEW ZEALAND RESULTS FINANCIAL ANNUAL
1 In 1989, the Crown issued a Notice that arises through its holding of special rights Convertible Share, the “Kiwi Share” and the power of the Kiwi Shareholder under the Constitution. Full details of the rights pertaining to these shares are set out in the Company’s Constitution. The Kiwi Share does not confer any right on its holder to vote at a shareholders’ meeting unless the Kiwi Share has been converted into an Ordinary Share by its holder. The Kiwi Share is not listed on any stock exchange. 71 General Information (Continued)
5. In connection with Air New Zealand’s offer of unsecured, unsubordinated fixed rate bonds (Bonds) by way of a simplified disclosure prospectus dated 25 August 2011, NZXMS granted Air New Zealand a waiver from NZDX Listing Rule 11.1.1 to enable Air New Zealand to decline to accept or register a transfer of Bonds if the transfer is not of an amount that is a multiple of $1,000 or the transfer would result in the transferor or transferee holding Bonds of an aggregate Principal Amount of less than $5,000.
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 limitations on the acquisition of securities imposed by the Company’s Constitution are summarised below (capitalised terms are defined either in the Constitution or the Takeovers Code2): 1. Under clause 3.3 of the Constitution any person that owns or operates an airline business and any of its Associated Persons may not hold or have an Interest in any Equity Security unless the prior written consent of the Kiwi Shareholder has been obtained. 2. Under clause 3.4 of the Constitution any non-New Zealand National must obtain the prior written consent of the Kiwi Shareholder to hold or have an interest in 10 percent or more of the total Voting Rights in the Company. 3. The Board must decline to register a transfer of Equity Securities if it is aware that the Equity Securities have been transferred in contravention of the provisions referred to in (1) or (2) above. 4. The Board has other powers to decline to register a transfer of Shares, including in cases where the Board is of the opinion that the Shares would become, or be capable of being treated as, Affected Equity Securities. 5. Section 10 of the Company’s Constitution confers powers on the Board (and the Kiwi Shareholder) to treat Equity Securities as Affected Equity Securities in certain circumstances. In general terms those powers arise if the Board considers that it is necessary to treat any Equity Securities as Affected Equity Securities to protect the Company’s international airline operating rights. Where Equity Securities are treated as Affected Equity Securities the Voting Rights attaching to them may be suspended and the registered holder may be required to dispose of them.
The Takeovers Code The powers of the Board outlined above in relation to limiting acquisitions of its securities are in addition to the requirements of the New Zealand Takeovers Code. The Takeovers Code contains the following rules regulating acquisitions of substantial holdings. The Takeovers Code creates a general rule under which the acquisition of 20 percent or more of the voting rights in the Company or the increase of an existing holding of 20 percent or more of the voting rights in the Company can only occur in certain permitted ways. These include a full takeover offer in accordance with the Takeovers Code, a partial takeover offer in accordance with the Takeovers Code, an acquisition approved by an ordinary resolution, an allotment approved by an ordinary resolution, a creeping acquisition (in certain circumstances) or compulsory acquisition if a shareholder holds 90% or more of the voting rights in the Company.
Corporations Act 2001 (Australia) The Company is not subject to Chapters 6, 6A, 6B and 6C of the Corporations Act dealing with the acquisition of shares (such as substantial holdings and takeovers). 2012 AIR NEW ZEALAND RESULTS FINANCIAL ANNUAL
2 The Takeovers Code approved by the Takeovers Code Approval Order 2000 (SR2000/210).
72 General Information (Continued) Shareholder Directory
Share Registrar Registered Office
New Zealand New Zealand Link Market Services Limited Air New Zealand Limited Level 16, Brookfields House Air New Zealand House 19 Victoria Street West, Auckland 1010 185 Fanshawe Street PO Box 91976, Auckland 1142 Auckland 1010 New Zealand Postal: Private Bag 92007 Investor Enquiries Auckland 1142, New Zealand Phone: (64 9) 375 5998 (New Zealand) Phone: (64 9) 336 2400 (61 2) 8280 7111 (Australia) Fax: (64 9) 336 2401 Fax: (649) 375 5990 AK/104799 Email: [email protected] Australia Australia Level 11, 151 Clarence Street, Sydney Link Market Services Limited Postal: GPO 3923 Level 12, 680 George Street Sydney NSW 2001 Sydney 2000, Australia Australia Locked Bag A14, Sydney South NSW 1235 Phone: (61 2) 8235 9999 Investor Enquires Fax: (61 2) 8235 9946 Phone: (61 2) 8280 7111 ABN 70 000 312 685 Fax: (61 2) 9287 0303 Board of Directors Investor Relations John Palmer, Chairman Investor Relations Office Roger France, Deputy Chairman Private Bag 92007, Auckland 1142 Paul Bingham New Zealand Antony (Tony) Carter Phone: (64 9) 336 2287 Janice (Jan) Dawson Fax: (64 9) 336 2664 James (Jim) Fox Email: [email protected] Warren Larsen Web site: www.airnzinvestor.com Chief Executive Officer Annual Meeting Rob Fyfe Date: 28 September 2012 CEO Designate Time: 2.00 pm Christopher Luxon Venue: Wigram Airforce Museum, 45 Harvard Avenue, Christchurch. Chief Financial Officer Rob McDonald Current Credit Rating Moody’s rate Air New Zealand Baa3 General Counsel and Company Secretary John Blair Auditor Deloitte (on behalf of the Auditor-General) Deloitte Centre 2012 80 Queen Street, Auckland Central PO Box 115033, Shortland Street Auckland 1140, New Zealand AIR NEW ZEALAND RESULTS FINANCIAL ANNUAL
The report was printed on Alpine Laser. Alpine Laser contains pulp from tree farms and is Chain of Custody certified. Manufactured in an Elemental Chlorine Free (ECF) process the mill is ISO 14001 certified. 73