Airways Corporation of New Zealand Limited Annual Report 2018 2019
NOTES TO THE FINANCIAL STATEMENTS
SECTION A How the numbers are calculated
A1 BASIS OF PREPARATION These financial statements are for the consolidated Group (”Airways”), consisting of Airways Corporation of New Zealand Limited and its subsidiaries: (refer to note C1 for further details). They have been prepared in accordance with: • Generally Accepted Accounting Practice in New Zealand (as a result they comply with the New Zealand Equivalents to International Financial Reporting Standards (NZ IFRS) and other applicable New Zealand accounting standards and authoritative notices, as appropriate for for-profit tier 1 entities. They also comply with International Financial Reporting Standards); and • The requirements of the Financial Reporting Act 2013, Companies Act 1993 and the State-Owned Enterprises Act 1986. The financial statements have been prepared on a historical cost basis as modified by the revaluation of derivative financial instruments and are presented in New Zealand dollars, which is Airways’ presentation currency and the functional currency of all entities within the Group. All values are rounded to the nearest thousand dollars ($’000) unless otherwise stated. All components in the primary statements have been stated net of GST, with the exception of receivables and payables which include any GST invoiced. The following standards with an impact on Airways have been published and are mandatory for future accounting periods. Airways has not early adopted them: (i) NZIFRS 16 – Leases, issued in February 2016 (effective for periods beginning on or after 1 January 2019). Airways will adopt this standard in the 2019–20 financial year using the simplified transition approach and will not restate comparative amounts for the period prior to first adoption. On adoption, Airways estimate this standard will: Increase lease assets by approximately $15.7 million Increase lease liabilities by approximately $15.7 million
In the first quarter after adoption, Airways also expects two additional leases to come on to the balance sheet for new operational facilities in Auckland and Christchurch. These leases are expected to increase both assets and liabilities by approximately a further $45.8 million. Lease related expenses in the profit or loss will be front loaded to the earlier years of lease terms where interest bearing liabilities are higher. For the year ending 30 June 2020 Airways expects an: Increase in financing expenses and depreciation by approximately $6.7 million Decrease in lease costs of approximately $5.3 million Net impact on the P&L (before tax) of approximately $1.4 million The model developed to estimate these impacts requires management to make a number of key judgements including: • the incremental borrowing rate used to discount lease assets and liabilities • the expected lease term including potential rights of renewals • estimated lease costs for leases which have not yet been finalised on the date of adoption • determining that expired land leases where Airways is still in possession and paying rent fall out of the scope of the standard and are exempt. Current estimates for the impact on profit or loss are likely to change for the year ended 30 June 2020, as key estimates for future events are finalised, new lease contracts are entered into and changes are made to existing lease contracts.
CHAIR AND CEO’S REVIEW
INVESTING IN THE FUTURE
INTEGRATING DRONES INTO OUR AIRSPACE
AIRWAYS INTERNATIONAL
SUSTAINABILITY
AIRWAYS BOARD OF DIRECTORS
FINANCIALS
FINANCIAL PERFORMANCE
PERFORMANCE AND PROGRESS AGAINST SCI METRICS
FINANCIAL STATEMENTS
NOTE STRUCTURE
RISK GROUP STRUCTURE UNRECOGNISED ITEMS OTHER INFORMATION HOW THE NUMBERS ARE CALCULATED
AUDIT REPORT
EVA KEY PERFORMANCE INDICATORS
ADDITIONAL FINANCIAL INFORMATION
GOVERNANCE AT AIRWAYS
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