Qantas 2007 Annual Report Download - page 124

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122 Qantas |Annual Report 2007
(A) Interest rate risk continued
Fixed Rate Maturing in:
2006
Interest earning financial assets Notes
Weighted
Average
Interest
Rate
% pa
Floating
Rate
$M
Less
than
1 Year
$M
1 to 5
Years
$M
More
than
5 Years
$M
Non-
Interest-
Bearing
$M
Total
$M
Cash and cash equivalents 6 5.89 302.2 2,599.8 – – – 2,902.0
Aircraft security deposits 7 6.22 44.8 3.7 78.1 – 3.0 129.6
Loans receivable 7 7.96 – – 13.9 128.2 – 142.1
Financial Instruments relating to debt1 (68.3) (219.9) (15.4) 757.3 – 453.7
278.7 2,383.6 76.6 885.5 3.0 3,627.4
Interest-bearing financial liabilities
Bank loans – secured215 3.48 2,302.3 – – – – 2,302.3
Bank loans – unsecured215 6.27 627.0 – – – – 627.0
Other loans – unsecured215 7. 33 3.1 97. 5 6 4 5. 8 8 56 .7 – 1,6 0 3.1
Lease and hire purchase liabilities215 7.90 – 133.4 748.2 361.6 – 1,243.2
2,932.4 230.9 1,394.0 1,218.3 – 5,775.6
Net financial (liabilities)/assets (2,653.7) 2,152.7 (1,317.4) (332.8) 3.0 (2,148.2)
Interest receivable/payable has been included in the calculation of the effective interest rate of the underlying financial asset or liability.
Recognised financial liability carry values are shown pre-hedging.
(B) Foreign currency 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. To the extent a foreign exchange gain or loss is incurred, and the cash flow hedge is deemed effective, 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. Purchases and disposals 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.
Unrealised gains/losses – back-to-back hedges
Where long-term borrowings are held in foreign currencies in which Qantas derives surplus net revenue, offsetting forward foreign exchange
contracts have been used to match 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, and the cash flow hedge is deemed effective, this is deferred in the hedge reserve until the net revenue is realised.
As at 30 June 2007, total unrealised exchange gains on hedges of net revenue designated to service long-term debt were $410.7 million
(2006: $184.8 million gain).
For the year ended 30 June 2007, Other financial assets and liabilities includes derivative financial instruments used to hedge foreign currency, including
hedging of future capital and expenditure payments totalling $331.9 million (net liability) (2006: $51.8 million (net asset)). These are recognised at fair
value in accordance with AASB 139.
1
2
28. Financial Instruments continued
Notes to the Financial Statements
for the year ended 30 June 2007