Airways Annual Report 2019

EVA key performance indicators

(All figures shown in tables are in $NZ millions unless otherwise stated)

Parent 2019

Parent 2018

For the year ended 30 June

DEBT AND EQUITY EMPLOYED Debt employed

95.8

81.2

Equity employed

141.8

137.6

Total debt & equity employed

237.6

218.8

Charge on operating capital

14.8

14.0

Economic Value Added

1.6

1.4

SUMMARY OF PARAMETERS FOR COST OF CAPITAL Risk free rate – 3-year Government Stock

1.64% 2.04%

Market risk premium

7.00%

7.00%

Company tax rate

28%

28%

Business risk factor (asset beta)

0.6

0.6

Cost of capital 6.74% EVA measures the extent to which a business is performing above or below expectations. A positive EVA means the business is adding value after allowing for a normal reward to the providers of capital. 6.48% The EVA reporting framework applied by Airways can be found at the following website: https://www.airways.co.nz/about/financial-operational-and-safety-performance-reports/ The cost of capital of 6.48% for the year ended June 2019 compares to a cost of capital of 6.90% used for determining 2017–19 air navigation pricing. The positive EVA for the current year has been driven by higher than forecast traffic volumes. Reconciliation of EVA to Net Operating Profit after Tax

Parent 2019

Parent 2018

For the year ended 30 June

NOPAT

15.6

20.7

Deduct: Charge on operating capital

(14.8)

(14.0)

Add back: interest costs

0.6

0.5

Deduct: non-cash tax charges

(2.5)

(0.5)

Deduct: non-cash employee costs

2.7

(1.0)

Deduct: gain on sale of surplus land not included in EVA result

(4.3)

Economic value added

1.6

1.4

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