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Qantas Annual Report 2005
> Our Customers Our Brand Our Priority
Our Future Our Business
Spirit of Australiax

Table of contents

  • Page 1
    Spirit of Australiax > Our Customers Our Future Our Brand Our Business Our Priority Qantas Annual Report 2005

  • Page 2
    > Our Customers Our Future Our Brand Our Business Our Priority

  • Page 3
    ... business traveller, the leisure traveller, the regional flyer and, with Jetstar, a whole new group of customers who are first-time flyers. Our attention to customer service has paid off. This year, in the world's largest airline passenger survey, the Skytrax World Airline Awards, Qantas was named...

  • Page 4
    ... an airline. The Spirit of Australia has provided emergency support for decades - from partnering with the Royal Flying Doctor Service in the early years, to operating supply drops and evacuation flights in World War II, to providing free flight and freight assistance for stranded Australians and...

  • Page 5
    3 3 Our Customers Our Future > Our Brand Our Business Our Priority Spirit of Australiax

  • Page 6
    Spirit of Australiax Our Customers Our Future Our Brand Our Business > Our Priority 4

  • Page 7
    ... modifying our procedures to meet changing circumstances as we work closely with governments, regulators and airport authorities in Australia and overseas to ensure we remain the safest and most secure airline in the world. The safety and security of our customers, staff and aircraft, in the air and...

  • Page 8
    ... as new aircraft, the program includes inflight product, terminal developments and airport lounges that are among the best in the world for business or relaxing. Investment in technology allows Qantas to provide customers with the best possible service, whether it is Australia's most visited travel...

  • Page 9
    7 Our Priority > Our Customers Our Future Our Brand Our Business Spirit of Australiax

  • Page 10
    Spirit of Australiax > Our Customers Our Future Our Brand Our Business Our Priority 8

  • Page 11
    ... to providing the best product and service for its customers. Because growth is fundamental to our business, Qantas is looking for profitable expansion in high-yield full-service markets in Australia and internationally. At the same time, we are growing our value-based airlines, such as Jetstar, to...

  • Page 12
    ... 415.4 20.0 17.0 17.0 17.0 9 02 8 10 9 9 10 8 05 04 03 02 01 05 04 03 02 01 05 04 03 8 04 03 02 Passengers Carried (000) Sales and Operating Revenue ($M) 01 05 Net Profit Attributable to Members of Qantas ($M) Ordinary Dividends (Cents per Share) 10 01 11 9 20.0

  • Page 13
    ... Executive Officer In the decade since its privatisation, Qantas has delivered consistent returns to shareholders, employed large numbers of Australians and provided international and domestic aviation services that are regarded as being among the world's best. To our fellow shareholders Qantas...

  • Page 14
    ... 2004. Qantas also opened a new Kangaroo Route option via Hong Kong, commenced flights between Adelaide and Auckland and added capacity on routes to the USA. Qantas improved its profitability in the domestic market and added capacity on key business and longsector routes. Western Australia and...

  • Page 15
    ... works closely with government agencies and police forces on a wide range of security issues. Qantas moved quickly in support of the Australian Government's security initiatives announced in June 2005. Within a month, new measures were introduced at Sydney, Melbourne, Brisbane, Adelaide and Perth...

  • Page 16
    ... will better enable Qantas to prepare for the future. OUR PEOPLE For the second consecutive year, Qantas paid a oneoff cash bonus to all eligible non-executive employees in acknowledgment of their contribution to Qantas' success. Qantas is one of Australia's largest employers. Qantas employs more...

  • Page 17
    ... Technical Operations and Maintenance Services x Airports x Catering Associated Businesses 30 - 31 Our Community 32 - 34 Board of Directors 35 - 39 Corporate Governance Statement 40 - 43 Performance Summary 44 - 120 Financial Report x Qantas Freight x Qantas Holidays and Qantas Defence Services...

  • Page 18
    ... added for the New Zealand ski season but will become a permanent operation between Sydney and Queenstown from October 2005 to accommodate the growing interest in Queenstown as a year-round holiday destination for Australians. Adelaide-Auckland: In December 2004, Qantas began three weekly services...

  • Page 19
    ... including 12 A380s. Delivery of the first A380 aircraft is scheduled for April 2007. The A380s will initially operate on international services between Australia and the USA and on the Kangaroo Route to the UK. Qantas opened a cabin crew base in the UK in February 2005 which now employs around 400...

  • Page 20
    ... mix of product and service across Australia for business and leisure customers. This approach has enabled the Qantas Group to maintain a 65 per cent share of the total domestic market. This year, Qantas has expanded its network of destinations, increasing services to existing destinations, adding...

  • Page 21
    .... This investment in the regional fleet demonstrates Qantas' continued support for growth in regional Australia. Other highlights included: x the expansion of flying operations with increased capacity or greater frequency and more comprehensive schedules on key routes: Canberra-Sydney, Rockhampton...

  • Page 22
    ... to Melbourne, Sydney and Brisbane. Jetstar will also launch a new non-stop service between Christchurch and the Gold Coast. Jetstar will base two A320 aircraft in Christchurch, creating up to 100 jobs. From 30 October 2005, Jetstar's Australian network will increase to 18 destinations with...

  • Page 23
    ...-300s. These destinations are Bali, Cairns, Darwin, Fukuoka, the Gold Coast, Hong Kong, Melbourne, Nagoya, Osaka, Perth, Sapporo, Singapore and Sydney. Australian Airlines was established to maintain a presence in low-yielding international leisure markets where Qantas, with its higher costs, could...

  • Page 24
    ...the Qantas Group Flying Businesses operated a fleet of 200 aircraft. The foundations of Qantas' long-term fleet plan were laid in November 2000 when the airline announced that it would purchase more than 40 new aircraft, including 12 A380s. As a result of this decision and other fleet investments in...

  • Page 25
    ...300 Bombardier Dash 8 British Aerospace 146 Boeing 717-200 Airbus A320-200 Boeing 767-300ER Owned, HP and Finance Leases 16 6 6 14 27 21 11 4 7 33 Operating Leases 8 Total in Service 24 6 6 24 27 21 11 4 7 33 9 14 9 5 200 10 QantasLink Jetstar Australian Airlines Total Qantas Group Fleet 3 148...

  • Page 26
    Spirit of Australia Flying Businesses The Qantas and British Airways Joint Services Agreement has been authorised for a further five years Alliancesx In an increasingly competitive international aviation environment, relationships with other airlines remained an important part of the Qantas Group...

  • Page 27
    ... are now employed in heavy maintenance operations at Brisbane Airport and a new world-class heavy maintenance hangar became operational in July 2005. The new facility has been designed to service the Group's 767 fleet and also has the capacity to accept A330 aircraft. Throughout the year, ETOMS...

  • Page 28
    ...fly to 62 Australian airports and 25 overseas airports, including domestic airports in New Zealand. In Australia, Qantas owns or solely leases nine domestic terminals in Sydney, Melbourne, Brisbane, Perth, Gold Coast, Canberra, Adelaide, Hobart and Launceston. Key developments for Qantas Airports in...

  • Page 29
    ...operations comprise two of Australia's leading largescale flight catering businesses making Qantas one of the largest flight caterer in the southern hemisphere: x x The year was characterised by increasing competition in the domestic catering market and an increasing prevalence of the "buy on board...

  • Page 30
    ... x International Freight operates terminal facilities in Sydney, Melbourne, Brisbane, Perth and Los Angeles, providing ground handling services for the Qantas Group and other airlines. The Perth terminal was upgraded during the year and plans have been completed for building and facilities works at...

  • Page 31
    ... every year. As well as working with the Qantas Group airlines, Qantas Holidays markets travel packages for other airlines under the Viva! Holidays brand name. In addition to destination holidays, Qantas Holidays promotes packages for a number of special events within Australia. Qantas Holidays is...

  • Page 32
    ... Australia and introduces new projects and activities for other charity groups. One key initiative is the Qantas Spirit of Youth Awards (SOYA), which offers people under 25 the chance to win cash and air travel in seven categories: music, writing, visual arts, film, industrial and object design...

  • Page 33
    ... at key operational sites; incorporating energy and water efficiency initiatives and sustainability principles in the design of new facilities; participating in airport noise abatement committees in capital city and major regional ports across Australia; working closely with international agencies...

  • Page 34
    Spirit of Australia ~Board of Directors~ Margaret Jackson, AC Geoff Dixon Peter Gregg Paul Anderson Mike Codd, AC General Peter Cosgrove, AC, MC Patricia Cross Garry Hounsell Jim Kennedy, AO, CBE James Packer Dr John Schubert 32

  • Page 35
    ...Air Pacific Limited. He is on the Governing Board of IATA and is a Member of the International Marketing Institute of Australia. Mr Dixon is also on the Board of the Business Council of Australia. Peter Gregg Chief Financial Officer Peter Gregg was appointed Chief Financial Officer and to the Qantas...

  • Page 36
    ...is also Joint Chief Executive Officer of Consolidated Press Holdings Limited and a Director of Challenger Financial Services Group Limited and Hoyts Cinemas Limited. Dr John Schubert Independent Non-Executive Director John Schubert was appointed to the Qantas Board in October 2000. He is a Member of...

  • Page 37
    ...commercial experience and bring independence, accountability and judgment to the Board's deliberations to ensure maximum benefit to stakeholders, including shareholders, customers, suppliers, employees, government regulators and members of communities where Qantas operates. The Qantas Board endorses...

  • Page 38
    ... incorporated new ideas and energy. Qantas believes that the following materiality thresholds are relevant when considering the independence of Non-Executive Directors: x x x x Board appointments and performance; Directors' induction program; Committee Membership; Executive Management succession...

  • Page 39
    ... report to the Board and Audit Committee. The Policy is available to all Qantas Group employees and is also available on the Corporate Governance section of the website (http://www.qantas.com.au/ info/about/corporateGovernance). business risk management (other than the operational risk management...

  • Page 40
    ... and conduct of the auditor's report; the accounting policies adopted by Qantas in relation to the preparation of the financial statements; and the independence of the auditor in relation to the conduct of the audit. x THE BOARD RECOGNISES AND MANAGES RISK The businesses operated by Qantas are...

  • Page 41
    ...Report 2005 ~2005 Corporate Governance Statement~ SAFETY, ENVIRONMENT & SECURITY COMMITTEE In 1994, the Board established the SESC which: x The Chairman discusses performance with each Director during the year. A formal induction program is available to new Directors to ensure they have a working...

  • Page 42
    Spirit of Australia ~Performance Summary~ Qantas Group 2005 $M FINANCIAL RESULTS Sales and operating revenue Net passenger revenue Net freight revenue Tours and travel revenue Contract work revenue Other sources Sales and operating revenue Expenditure Manpower and staff related Selling and ...

  • Page 43
    ... QANTAS GROUP OPERATIONAL STATISTICS AND PERFORMANCE INDICATORS* Passengers carried Revenue passenger kilometres (RPKs) Available seat kilometres (ASKs) Revenue seat factor Passenger yield (passenger revenue per RPK) Average full-time equivalent employees Aircraft in service at balance date Return...

  • Page 44
    ... on the Rugby World Cup, Skybed, "I Still Call Australia Home" and the launch of Jetstar. Aircraft operating variable costs increased by $209.0 million or 9.4 per cent. Excluding favourable foreign exchange, costs increased by $226.6 million largely due to increased landing fees and route navigation...

  • Page 45
    ... operations decreased by 2.5 per cent to $1,950.0 million primarily due to higher tax payments in the current year (due to a refund received from the Australian Taxation Office in the prior year relating to realised foreign exchange losses on the hedging of aircraft acquisitions) and adverse working...

  • Page 46
    ...purchase commitments Operating lease and hire commitments Capital expenditure commitments Contingent liabilities Superannuation commitments Particulars in relation to controlled entities Deed of Cross Guarantee Investments accounted for using the equity method Financial instruments Employee benefits...

  • Page 47
    ... activities of the Qantas Group during the course of the financial year were the operation of international and domestic air transportation services, the sale of worldwide and domestic holiday tours and associated support activities including information technology, catering, ground handling...

  • Page 48
    Spirit of Australia ~Directors' Report~ for the year ended 30 June 2005 DIRECTORS' MEETINGS The number of Directors' Meetings held (including Meetings of Committees of Directors1) and the number of Meetings attended by each of the Directors during the financial year are as follows: Qantas Board ...

  • Page 49
    Qantas Annual Report 2005 ~Directors' Report~ for the year ended 30 June 2005 DIRECTORSHIPS OF LISTED COMPANIES HELD BY THE MEMBERS OF THE BOARD - 1 JULY 2002 TO 30 JUNE 2005 Margaret Jackson Qantas Airways Limited Australia and New Zealand Banking Group Limited Billabong International Limited ...

  • Page 50
    ... of Supreme Court of New South Wales in 2001; and seven years legal experience working in Australia. DIRECTORS' INTERESTS AND BENEFITS Particulars of Directors' interests in the share capital of Qantas at the date of this Report are as follows: Ordinary Shares Director Margaret Jackson Geoff Dixon...

  • Page 51
    Qantas Annual Report 2005 ~Directors' Report~ for the year ended 30 June 2005 DIRECTORS' INTERESTS AND BENEFITS continued 2005 Number 150,000 - 45,0002 90,000 285,000 Rights granted under: - 2002 Performance Bonus Plan - 2002 Executive Director Long-Term Incentive Plan - 2003/04 Executive Director...

  • Page 52
    ... Executive Officers of Qantas and the Qantas Group and reference to where they have been incorporated into the Qantas Annual Report is set out below: Requirement Corporations Act - Remuneration Policy - elements of remuneration for each required individual Australian Accounting Standards Board...

  • Page 53
    ...Performance Share Plan Mediumterm Performance Rights Plan Longterm Total Shareholder Return Target allocations to selected Executives Reflects industry and market practice Other benefits eg concessionary travel, discretionary and retention programs Overall, the mix of the remuneration program...

  • Page 54
    ... to a performance hurdle, being Total Shareholder Return (TSR) in comparison to a basket of listed global airlines and the largest Australian listed public companies as measured by the S&P/ASX 100 Index. The TSR will first be tested three years after the Rights are granted and re-tested at quarterly...

  • Page 55
    ...or Performance Rights Plan. For Executives appointed to Executive General Manager, fixed term contracts of up to five years are agreed on appointment as a further element of retention. A limited number of these are eligible for a payment on termination provided they have completed five years service...

  • Page 56
    ...Exec Director LTI)/Senior Manager Long-Term Incentive Plan (Sen Mgr LTI) 2002 Performance Bonus Plan (2002 Bonus) Qantas Long-Term Executive Incentive Plan (QLTEIP) Post employment End of service payments Travel entitlements - - - âœ" Description PRIMARY BENEFITS Fixed Annual Remuneration...

  • Page 57
    ... Travel Entitlements Directors and Specified Executives and their eligible beneficiaries are entitled to receive a number of international and domestic trips annually at no cost to the individual concerned. POST EMPLOYMENT BENEFITS End of Service Payments Executive Directors and Specified Executives...

  • Page 58
    ... ensure consistency. companies with ordinary shares included in the S&P/ASX 100 Index excluding NewsCorp and Qantas in relation to one-half of the Rights; and a basket of global listed airlines comprising Air France-KLM, Air New Zealand, AMR Corporation (American Airlines), British Airways, Cathay...

  • Page 59
    ...June 2005 DIRECTOR AND EXECUTIVE REMUNERATION DISCLOSURES continued Description LEGACY PLANS Senior Manager Long-Term Incentive Plan2 Certain Executives were awarded a number of shares subject to a four-year holding lock provided the Executive remains employed by the Qantas Group. These shares will...

  • Page 60
    ... and $40,000 per Committee Chairmanship. 5 Includes payments for services rendered as Chairman of Qantas Superannuation Limited until her resignation on 1 April 2005. 6 Director's fees for Roger Maynard were paid directly to British Airways Plc until his resignation on 8 September 2004. 58

  • Page 61
    Qantas Annual Report 2005 ~Directors' Report~ for the year ended 30 June 2005 DIRECTOR AND EXECUTIVE REMUNERATION DISCLOSURES continued REMUNERATION OF NON-EXECUTIVE AND EXECUTIVE DIRECTORS FOR THE YEAR ENDED 30 JUNE 2005 continued 7 Equity Benefits Year Geoff Dixon Peter Gregg Total 2005 2004 ...

  • Page 62
    ...% 100% 100% FAR & Other1 Total 1 Other Remuneration consists of travel entitlements, the annual accrual of end of service payments and other benefits. 2 In the case of Mr Dixon and Mr Gregg, this was the 2002 Executive Director Long-Term Incentive Plan. The total percentages are derived from the...

  • Page 63
    ...of a Balanced Scorecard relating to Customer, Operational, People and Financial performance (medium-term incentive plan). Total Shareholder Return (including dividends, changes in the Qantas share price and return of capital if applicable) is used for the Performance Rights Plan (long-term incentive...

  • Page 64
    ... after a change in CEO. Travel entitlements Available to the Executive and eligible beneficiaries: Each calendar year throughout contract term and post employment: x four international trips x 12 domestic trips x four international trips x 12 domestic trips Performance Cash Plan Target of 60% of...

  • Page 65
    .... The Qantas Group is committed to a high standard of environmental performance and the Board places particular focus on the environmental aspects of its operations through the SESC, which is responsible for monitoring compliance with these regulations and reporting to the Board. The Directors are...

  • Page 66
    ... non-audit services provided during the year are set out in Note 6 to the Financial Statements. LEAD AUDITOR'S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 To: the Directors of Qantas Airways Limited I declare that, to the best of my knowledge and belief, in relation to...

  • Page 67
    ... Performance~ for the year ended 30 June 2005 Notes SALES AND OPERATING REVENUE Net passenger revenue1,2 Net freight revenue1,3 Tours and travel revenue Contract work revenue Other sources3,4,5 Sales and operating revenue EXPENDITURE Manpower and staff related Selling and marketing Aircraft...

  • Page 68
    ... of Australia ~Statements of Financial Position~ as at 30 June 2005 Notes CURRENT ASSETS Cash Receivables Net receivables under hedge/swap contracts Inventories Other Total current assets NON-CURRENT ASSETS Receivables Net receivables under hedge/swap contracts Investments accounted for using the...

  • Page 69
    ...1,284.1 1 Included in the proceeds from sale and leaseback of non-current assets was $18.8 million in relation to an A320 aircraft. The rights to this aircraft were sold prior to delivery of the aircraft to a lessor and leased back via operating lease. The Statements of Cash Flows are to be read in...

  • Page 70
    ... the year of disposal. HEDGING OF FOREIGN CURRENCY COMMITMENTS Gains and losses on derivatives used to hedge the specific purchase or sale of capital equipment and goods and services are deferred in the Statements of Financial Position and included in the measurement of the related purchase or sale...

  • Page 71
    ... Statements of Financial Performance at the fair value of the consideration received net of sales discount passenger and freight interline/IATA commission and goods and services tax (GST). Tours and travel sales commissions are treated as a cost of sale. Passenger, freight and tours and travel sales...

  • Page 72
    ... stores and work in progress are valued at weighted average cost, less any applicable allowance for obsolescence. Inventories held for sale are valued at the lower of cost and net realisable value. (k) RECOVERABLE AMOUNT OF NON-CURRENT ASSETS The carrying amounts of non-current assets valued on the...

  • Page 73
    ... of Financial Position as hire purchase assets, to recognise that the financing structures impose certain obligations, commitments and/or restrictions on the Qantas Group which differentiate these aircraft from owned assets. Payments made under operating leases are expensed in the financial year in...

  • Page 74
    ... based on remuneration wage and salary rates that the Qantas Group expects to pay as at balance date including related on-costs, such as workers' compensation insurance and payroll tax. LONG SERVICE LEAVE The provision for employee benefits to long service leave represents the present value of the...

  • Page 75
    ... Group's net profit attributable to members of Qantas by the weighted average number of shares on issue during the current financial year (refer Note 35). Diluted earnings per share is calculated after taking into account the number of ordinary shares to be issued for no consideration in relation...

  • Page 76
    ... carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. 2. Revenue from ordinary activities Qantas Group 2005 2004 $M $M REVENUE FROM OPERATING ACTIVITIES Sales and operating revenue Related parties - controlled...

  • Page 77
    ... Leasehold buildings Leasehold improvements Leased plant and equipment Leased and hire purchased aircraft and engines Leased aircraft spare parts Goodwill Airport landing slots Total amortisation Net foreign currency loss Loss/(profit) on sale of aircraft, engines and spares Loss/(profit) on sale of...

  • Page 78
    ... lease benefits Imputation gross-up on dividends received Franking credits on dividends received Share of associates' and joint ventures' net profit Other non-assessable income Non-deductible expenditure Depreciation on buildings Amortisation of goodwill and other intangibles Amortisation of lease...

  • Page 79
    ... Group other than as set out below. PERFORMANCE SHARE PLAN (PSP) Details of entitlements over shares in Qantas provided as remuneration during the financial year to Executive Directors and Specified Executives are set out below. For more information on the operation of the PSP, see page 55. Number...

  • Page 80
    Spirit of Australia ~Notes to the Financial Statements~ for the year ended 30 June 2005 5. Director and Executive disclosures PERFORMANCE RIGHTS PLAN (PRP) continued Details of rights over ordinary shares and vesting criteria for each Executive Director and Specified Executive are set out below....

  • Page 81
    ...amounts have been paid or are payable by the Executives in relation to the shares. 2002 EXECUTIVE DIRECTOR LONG-TERM INCENTIVE PLAN (EXEC DIRECTOR LTI) AND 2002 PERFORMANCE BONUS PLAN (2002 BONUS) The number of Qantas Rights provided as remuneration under the Exec Director LTI and 2002 Bonus to each...

  • Page 82
    ... Ellison. Mr Donazzan performed no work for Qantas. Total legal fees paid to the Minter Ellison Group during the year were $3.5 million. During the year, the Minter Ellison Group purchased air travel of $2.7 million. Paul Meadows, husband of Qantas Director Ms Cross is a partner of Allens Arthur...

  • Page 83
    ...' remuneration Qantas Group 2005 2004 $000 $000 Audit services Auditors of Qantas - KPMG Audit and review of financial reports Other services Auditors of Qantas - KPMG Other assurance services Financial reporting assistance Due diligence Tax compliance Total other services KPMG related practices...

  • Page 84
    ....1 0.4 295.5 $M 287.7 28.5 31.0 347.2 1.2 348.4 10. Other investments $M NON-CURRENT Unlisted investments Controlled entities at net book value (refer Note 28) Associates and joint ventures at cost Other corporations at net book value $M $M $M - - 99.9 99.9 - - 110.1 110.1 439.1 295.7 11.8 746...

  • Page 85
    Qantas Annual Report 2005 ~Notes to the Financial Statements~ for the year ended 30 June 2005 12. Property, plant and equipment Qantas Group 2005 2004 $M $M NON-CURRENT Freehold land - owned At cost At valuation Leasehold land At cost Total land at cost and valuation Buildings - owned At cost Less...

  • Page 86
    ... parts - leased At cost Less: accumulated amortisation 20.8 4.7 16.1 Total aircraft spare parts At cost Less: accumulated depreciation and amortisation Total aircraft spare parts at net book value Manufacturers' deposits Progress payments at cost Total property, plant and equipment At cost Less...

  • Page 87
    .... Qantas RECONCILIATIONS Freehold land - owned Total land Buildings - owned Buildings - leased Total buildings Leasehold improvements Plant and equipment - owned Total plant and equipment Aircraft and engines - owned Aircraft and engines - hire purchased Aircraft and engines - leased Total aircraft...

  • Page 88
    ... Pty Limited. Valuations were performed after physically inspecting a sample of properties and all significant additions. The property valuations were performed using the open market or special use value to the Qantas Group. SECURED ASSETS Certain aircraft and engines act as security against related...

  • Page 89
    Qantas Annual Report 2005 ~Notes to the Financial Statements~ for the year ended 30 June 2005 14. Payables Qantas Group 2005 2004 $M $M CURRENT Trade creditors Related parties - controlled entities - associates and joint ventures - other related parties Other parties Other creditors and accruals ...

  • Page 90
    Spirit of Australia ~Notes to the Financial Statements~ for the year ended 30 June 2005 16. Provisions Qantas Group 2005 2004 $M $M CURRENT Dividends Employee benefits (refer Note 32) - annual leave - long service leave - staff redundancy Under-recovery of rentals on sub-let premises Insurance and...

  • Page 91
    ... Report 2005 ~Notes to the Financial Statements~ for the year ended 30 June 2005 17. Current tax liabilities Qantas Group 2005 2004 $M $M Income tax - Australia - overseas 82.6 3.3 85.9 25.8 4.3 30.1 Qantas 2005 $M 81.9 1.9 83.8 2004 $M 25.1 2.1 27.2 18. Contributed equity $M Issued and paid...

  • Page 92
    ... of non-current assets measured at fair value in accordance with AASB 1041 - Revaluation of Non-Current Assets in prior financial years. An amount for the Qantas Group and Qantas of $52.6 million (2004: $52.6 million) is not available for future asset writedowns as a result of using the deemed...

  • Page 93
    Qantas Annual Report 2005 ~Notes to the Financial Statements~ for the year ended 30 June 2005 21. Total equity reconciliation Qantas Group 2005 2004 $M $M Total equity at the beginning of the financial year Net profit attributable to members of Qantas Contributions of equity Dividends Acquisition ...

  • Page 94
    ...239.3 722.9 28.8 991.0 The Qantas Group leases aircraft, buildings and plant and equipment under finance and operating leases with expiry dates between one and 15 years. All finance leases contain purchase options exercisable at the end of the lease term. The Qantas Group has the right to negotiate...

  • Page 95
    ...30 June 2005, total unrealised exchange gains on hedges of net revenue designated to service long-term debt were $228.4 million (2004: $19.2 million losses). 27. Superannuation commitments The Qantas Group maintains two superannuation Plans covering Australian-based employees. The Qantas Group also...

  • Page 96
    ... valuation $M 3,636.5 7.8 3,644.3 Plan Qantas Superannuation Plan2 Australian Airlines Flight Engineers' Superannuation Plan3 Total Net market value of Plan assets as at 30 June 20031 $M 3,612.0 16.7 3,628.7 Employer Contributions Vested to Plan for benefits Excess/ year ended as at (deficit) 30...

  • Page 97
    ...Pty Ltd Jetstar Airways Pty Limited Impulse Communications Pty Limited First Brisbane Airport Proprietary Limited Second Brisbane Airport Proprietary Limited First Brisbane Airport Unit Trust Second Brisbane Airport Unit Trust TAA Aviation Pty. Ltd. Nostam Pty. Limited In Tours Airline Unit Trust No...

  • Page 98
    ... Services Pty. Limited Caterair Airport Services (Sydney) Pty Limited Airport Infrastructure Finance Pty. Limited Waruda Holdings Pty Limited Cairns Wholesale Bakery and Patisserie Pty Limited Qantas Information Technology Ltd Qantas Limited Qantas Superannuation Limited QF 738 Leasing 5 Pty Limited...

  • Page 99
    ... was deregistered. 3 AVBA Holdings Pty Limited changed its name to Jetstar Asia Holdings Pty Limited on 25 November 2004. 4 The remaining 49% interest in this company was acquired by the Qantas Group on 22 October 2004. 5 Thai Air Cargo Holdings Pty Limited was incorporated on 6 December 2004. 29...

  • Page 100
    ... Consolidated 2005 2004 $M $M STATEMENT OF FINANCIAL POSITION Current assets Cash Receivables Net receivables under hedge/swap contracts Inventories Other Total current assets Non-current assets Receivables Net receivables under hedge/swap contracts Investments accounted for using the equity method...

  • Page 101
    ... Holiday Tours and Travel Vietnam Joint Venture Company Tours and travel Jetstar Asia Airways Pte Limited Air transport Jupiter Air Oceania Limited Freight services TET Limited Tours and travel Thai Air Cargo Co., Ltd. Freight services Travel Software Solutions Pty Limited Reservations systems Total...

  • Page 102
    Spirit of Australia ~Notes to the Financial Statements~ for the year ended 30 June 2005 30. Investments accounted for using the equity method continued Qantas Group 2005 2004 $M $M RESULTS OF ASSOCIATES Share of associates' profit/(loss) from ordinary activities before related income tax expense...

  • Page 103
    ... year Share of net profit of joint ventures accounted for using the equity method Drawings from joint ventures Share of joint ventures' retained profits/(accumulated losses) at the end of the financial year MOVEMENTS IN CARRYING AMOUNT OF INVESTMENTS IN JOINT VENTURES Carrying amount of investments...

  • Page 104
    ... of another entity. The Qantas Group is subject to interest rate, foreign currency, fuel price and credit risks. The Qantas Group manages these risk exposures using various financial instruments, using a set of policies approved by the Board of Directors. Qantas Group policy is not to enter...

  • Page 105
    ... into to buy or sell unless otherwise approved by the Board of Directors. (c) FUEL PRICE RISK The Qantas Group uses options and swaps on aviation fuel and crude oil to hedge the exposure to movements in the price of aviation fuel. Hedging is conducted in accordance with Qantas Group policy. Up to...

  • Page 106
    ... market price of Air New Zealand Limited shares at balance date. UNRECOGNISED FINANCIAL INSTRUMENTS The net fair value of forward foreign exchange and fuel contracts is determined as the unrealised gain/loss at balance date by reference to market exchange rates and fuel prices. The net fair value...

  • Page 107
    ... such, the carrying value of the convertible loan notes is considered recoverable. 32. Employee benefits Qantas Group 2005 2004 $M $M Employee benefit liabilities Provisions for employee benefits - Current (refer Note 16) - Non-current (refer Note 16) Total Average FTEs (number) Qantas 2005 $M 2004...

  • Page 108
    ...Services and Associated Businesses) supported by a corporate centre is progressively being implemented to deliver a broad range of benefits to the business. Financial reporting system changes to transition Qantas to a segmented model are currently under development. Disclosure of segment information...

  • Page 109
    ....0 Qantas Annual Report 2005 for the year ended 30 June 2005 ~Notes to the Financial Statements~ 107 Net profit Depreciation and amortisation Non-cash (revenue)/ expense 1,057.3 971.8 (62.0) (19.1) Assets Segment assets Equity accounted investments 16,875.1 16,594.2 342.3 338.4 Total...

  • Page 110
    ... to do so. Qantas Group 2005 2004 $M $M ANALYSIS OF TOTAL REVENUE BY GEOGRAPHIC REGION Sales and operating revenue Passenger, freight and other services revenue Australia United Kingdom and Europe Japan South-East Asia/North-East Asia The Americas and the Pacific New Zealand Other regions Other...

  • Page 111
    ...) investments Less: share of associates' and joint ventures' net profit Add: dividends received from associates and joint ventures Add: write-off of intercompany loan Add/(less): other items Movements in operating assets and liabilities: (Increase)/decrease in receivables Decrease in inventories...

  • Page 112
    ... $M $M Qantas 2005 $M 2004 $M ENTITIES ACQUIRED DURING THE YEAR Consideration Cash acquired 14.5 0.1 14.6 Fair value of net assets of entity acquired Property, plant and equipment Deferred tax assets Cash Inventories Receivables Other assets Loans from related parties Payables Current tax...

  • Page 113
    Qantas Annual Report 2005 ~Notes to the Financial Statements~ for the year ended 30 June 2005 37. Notes to the Statements of Cash Flows FINANCING FACILITIES continued The total amount of committed financing facilities available to the Qantas Group as at balance date are detailed below: Qantas ...

  • Page 114
    ... with partly and wholly-owned controlled entities are included in the Financial Statements as follows: Qantas 2005 $M Sales and operating revenue (refer Note 2) Dividend revenue (refer Note 2) Interest revenue (refer Note 2) Borrowing costs paid/payable (refer Note 3) Current receivables (refer Note...

  • Page 115
    ... of the shares in Qantas from the Australian Government. On 9 September 2004, British Airways disposed of its then entire 18.25 per cent shareholding in Qantas and accordingly, British Airways is no longer a related party of Qantas. Qantas and British Airways continued to operate the Joint Services...

  • Page 116
    ... 2005 half-year. ASSESSMENT PHASE The A-IFRS Project Group has completed the Assessment Phase. In completing the Assessment phase, a high level overview of the impacts of A-IFRS reporting on existing accounting and reporting policies, procedures, systems, processes, business structures and staff has...

  • Page 117
    ... for Qantas is the same as for the Qantas Group unless otherwise indicated. (a) FREQUENT FLYER ACCOUNTING The Qantas Group receives revenue from the sale to third parties of rights to have Qantas award points allocated to members of the Qantas Frequent Flyer program. Under A-GAAP, this revenue is...

  • Page 118
    ... on the Statement of Financial Position. Under A-IFRS, the Qantas Group's net obligation in respect of defined benefit superannuation plans will be calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in current and...

  • Page 119
    ... the financial year ended 30 June 2005 results in a $0.4 million increase in aircraft depreciation and operating costs. Software Development Costs Under A-IFRS software development costs that meet the criteria to be recognised as internally generated intangible assets are capitalised. At the date of...

  • Page 120
    ... for foreign exchange revenue, capital expenditure, fuel and interest rate exposures. The changes in fair value of the non-intrinsic component of an option may cause periods of volatility in the Statement of Financial Performance for Qantas. AVIATION FUEL AASB 139 permits hedge accounting for...

  • Page 121
    ... the opinion of the Directors of Qantas Airways Limited (the Company): (a) the Financial Statements and Notes, set out on pages 65 to 118 and the Director and Executive Remuneration Disclosures set out on pages 54 to 63 of the Directors' Report are in accordance with the Corporations Act, including...

  • Page 122
    ...the Remuneration Report in the Directors' Report of Qantas Airways Limited are in accordance with: (a) the Corporations Act, including: i. ii. giving a true and fair view of Qantas' and Qantas Group's financial position as at 30 June 2005 and of their performance for the year ended on that date; and...

  • Page 123
    ...of shares in Qantas Airways Limited. ON-MARKET BUY-BACKS There is no current on-market buy-back. TWENTY LARGEST SHAREHOLDERS Shareholders JP Morgan Nominees Australia Ltd Westpac Custodian Nominees Ltd National Nominees Limited Citicorp Nominees Pty Limited ANZ Nominees Limited RBC Global Services...

  • Page 124
    ... Dividend payout ratio Share price - high Share price - low Share price - closing Weighted average number of ordinary shares Net tangible asset backing per share EARNINGS BEFORE INTEREST AND TAX Qantas Australian Airlines QantasLink Jetstar Total flying businesses Subsidiary businesses PERFORMANCE...

  • Page 125
    ...seat factor Jetstar Passengers carried Revenue passenger kilometres (RPKs) Available seat kilometres (ASKs) Revenue seat factor Qantas Group Passengers carried Revenue passenger kilometres (RPKs) Available seat kilometres (ASKs) Revenue seat factor Aircraft in service at balance date Passenger yield...

  • Page 126
    ... available on the Qantas website, www.qantas.com.au/info/about/investors/agms. GLOSSARY Available freight tonne kilometres (AFTKs) Total freight tonnage capacity available, multiplied by the number of kilometres flown. Available seat kilometres (ASKs) Total number of seats available for passengers...

  • Page 127
    ... OFFICE Qantas Airways Limited ABN 16 009 661 901 Qantas Centre Level 9, Building A 203 Coward Street Mascot NSW 2020 Australia Telephone Facsimile Website 61 2 9691 3636 61 2 9691 3339 www.qantas.com QANTAS SHARE REGISTRY Level 8 580 George Street Sydney NSW 2000 Australia or Locked Bag A14 Sydney...

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