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103
Qantas Annual Report 2005
~Notes to the Financial Statements~
for the year ended 30 June 2005
31. Financial instruments continued
2004 Notes
Weighted
Average
Interest
Rate
(% pa)
Floating
Rate
$M
Fixed Rate Maturing in:
Non-
Interest-
Bearing
$M
Total
$M
Less
than
1 Year
$M
1 to 5
Years
$M
More
than
5 Years
$M
RECOGNISED FINANCIAL ASSETS
Cash 75.06335.9––––335.9
Trade debtors 8–––––1,010.31,010.3
Short-term money market securities
and term deposits
85.50–1,029.4–––1,029.4
Aircraft security deposits 8 4.83 58.0 0.5 58.8 14.3 3.3 134.9
Sundry debtors 8–––––102.7102.7
Loans receivable 87.96––15.4128.2–143.6
Net receivables under hedge/swap
contracts1
– 373.9 (51.1) 71.0 503.7 – 897.5
Other investments 10–––––20.420.4
Convertible loan notes 10–––––89.789.7
767.8 978.8 145.2 646.2 1,226.4 3,764.4
RECOGNISED FINANCIAL LIABILITIES
Trade creditors 14–––––1,697.81,697.8
Other creditors and accruals 14 – – – – – 218.1 218.1
Bank loans – secured 15 3.83 1,855.2 65.9 309.8 524.0 – 2,754.9
Bank loans – unsecured 15 5.17 186.8 310.6 – – – 497.4
Other loans – unsecured 15 6.97 956.8 250.0 509.0 – – 1,715.8
Finance lease and hire purchase liabilities 15 6.97 425.9 11.5 401.9 96.3 – 935.6
3,424.7 638.0 1,220.7 620.3 1,915.9 7,819.6
Net financial assets/(liabilities) (2,656.9) 340.8 (1,075.5) 25.9 (689.5) (4,055.2)
UNRECOGNISED FINANCIAL
LIABILITIES
Interest rate swaps2224.6(247.0)(38.8)61.2––
1 Notional principal amounts. Interest receivable/payable has been included in the calculation of the effective interest rate of the underlying financial asset
or liability. Excludes unrealised amounts on revenue back-to-back hedges. As at 30 June 2004, the amount of deferred or unrecognised losses on hedges
of net revenue designated to service long-term debt is $19.2 million.
2 Notional principal amounts.
(b) FOREIGN EXCHANGE RISK
Cross-currency swaps are used to convert long-term foreign currency borrowings to currencies in which the Qantas Group has forecast
sufficient surplus net revenue to meet the principal and interest obligations under the swaps. These foreign currency borrowings have a
maturity of between one and 12 years. Where this has occurred, back-to-back forward foreign exchange contracts have been used to
hedge the cash flows arising under the borrowings with the expected revenue surpluses used to hedge the borrowings. To the extent
a gain or loss is incurred, this is deferred until the net revenue is realised. Forward foreign exchange contracts and currency options are
used to hedge a portion of remaining net foreign currency revenue or expenditure in accordance with Qantas Group policy. Net foreign
currency revenue and expenditure out to five years may be hedged within specific parameters, with any hedging outside these parameters
requiring approval by the Board of Directors. Purchases and sales of property, plant and equipment denominated in a foreign currency are
hedged using a combination of forward foreign exchange contracts and currency options at the date a firm commitment is entered 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 100 per cent of estimated fuel costs out to 12 months may be
hedged and up to 50 per cent in the subsequent 12 months, with any hedging outside these parameters requiring approval by the Board
of Directors. During the year, the net gain from fuel hedging was $403.5 million (2004: $118.0 million).