EVA KEY PERFORMANCE I ND I CATORS (All figures shown in tables are in $NZ thousands unless otherwise stated)
PARENT Dec 2018
PARENT Dec 2017
FOR THE PERIOD ENDED 31 DECEMBER
DEBT AND EQUITY EMPLOYED Debt employed
87,742
74,985
Equity employed
143,637
140,539
CHIEF EXECUTIVE’S REPORT
TOTAL DEBT AND EQUITY EMPLOYED
231,379
215,524
Charge on operating capital
7,415
6,938
FINANCIAL STATEMENTS
Economic Value Added
3,555
3,491
SUMMARY OF PARAMETERS FOR COST OF CAPITAL Risk free rate – three-year Government Stock
EVA KEY PERFORMANCE INDICATOR
1.82% 2.07%
Market risk premium
7.0%
7.0%
Company tax rate
28.0%
28.0%
CORPORATE DIRECTORY
Business risk factor (asset beta)
0.60
0.60
Cost of capital
6.59%
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. 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/ Consistent with the previous year, Airways’ parent company EVA result of $3.6 million for the six months to December 2018 is expected to reduce in the second half of the financial year. Air traffic volumes have a seasonal weighting to the first six months, while capital expenditure and associated interest and depreciation costs are weighted to the second half of the year. The cost of capital of 6.59% for the period ending December 2018 compares to a cost of capital of 6.90% used for determining 2017–19 air navigation services pricing. The movement in the cost of capital is due to changes in the risk free rate.
RECONC I L I AT I ON OF EVA TO NET OPERAT I NG PROF I T AFTER TAX
PARENT Dec 2018
PARENT Dec 2017
FOR THE PERIOD ENDED 31 DECEMBER
NOPAT
9,784
14,658
Deduct: Charge on operating capital
(7,415)
(6,938)
Deduct: Queenstown land sale
0
(4,263)
Deduct: non-cash employee costs
960
(136)
Deduct: movement in deferred taxation
(157)
(106)
Add back: interest costs Economic Value Added
383
276
3,555
3,491
Airways Interim Report 2018 2019
11
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