Qantas 2000 Annual Report Download - page 39

DISCUSSION AND ANALYSIS OF THE BALANCE SHEET
AS AT 30 JUNE 2000
The net assets of the Qantas Group decreased by 6.4 percent
to $2,864.4 million during the past financial year.
Major items are discussed below.
REVIEW OF ASSETS
• Current receivables reduced by 6.1 percent, largely as a
result of the prior year including US$350 million of proceeds
from the issue of unsecured notes. Trade debtors increased
in line with increased revenue.
• Net receivables/payables under hedge/swap contracts
increased by 15.3 percent to $1,306.3 million primarily
due to the movement in foreign exchange rates. Net
receivables/payables under hedge/swap contracts represents:
– cross-currency swaps used to hedge long-term foreign
currency borrowings;
– deferred gains/losses on forward foreign exchange
contracts used to hedge capital expenditure; and
– net deferred losses associated with hedges of foreign
currency revenue relating to future transportation services
designated to service long-term debt.
• Inventory levels increased by 11.5 percent due to higher
expenditure on engineering expendables and consumable
stores supporting the growth in fleet numbers.
• Property, plant and equipment increased by 6.8 percent,
reflecting capital expenditure on aircraft acquisitions and
refinancings, aircraft reconfigurations and terminal
and lounge improvements.
REVIEW OF LIABILITIES
• Accounts payable and total borrowings increased by
8.4 percent due to increased activity and commercial paper
issues offset by debt repayments made during the year.
• Provisions increased by 14.0 percent as a result of higher
dividends, higher tax payable due to increased profitability
and increases in employee entitlement provisions, reflecting
wage increases.
• Revenue received in advance reflects passenger and freight
forward sales which are taken to revenue when the tickets
are utilised or the freight uplifted. This balance increased
by 16.6 percent due to a higher level of forward sales
compared to last year, in part due to higher activity.
REVIEW OF SHAREHOLDERS’ EQUITY
• A total of 5.7 million new shares were issued during the
year under the Qantas Profitshare Scheme.
GEARING
Qantas Group gearing (including the notional capitalisation of
non-cancellable leases) on a hedged basis at 30 June 2000 was
44:56 compared to 40:60 at 31 December 1999 and 39:61 at
30 June 1999. The increase in gearing is primarily due to the
special dividend and the inclusion of all aircraft leases.
The Qantas Dividend Reinvestment Plan is to be reinstated
prior to the payment of the special dividend in December
2000. This reinstatement is to assist in providing equity to
fund future capital expenditure while maintaining gearing at
an acceptable level.
Gearing is determined by dividing the book value of the
Qantas Group’s net debt (short and long-term debt plus the
present value of non-cancellable operating leases less related
hedge receivables and cash and cash equivalents) by the same
amount plus the book value of total shareholders’ equity.
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