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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 30 JUNE 2015
72
QANTAS ANNUAL REPORT 2015
24. IMPAIRMENT TESTING OF CASH GENERATING UNITS
Identification of an asset’s Cash Generating Unit (CGU) involves judgement based on how Management monitors the Qantas Group’s
operations and how decisions to acquire and dispose of the Qantas Group’s assets and operations are made. Management has
identified the lowest identifiable group of assets that generates largely independent cash inflows being Qantas International, Qantas
Domestic, Qantas Freight, Qantas Loyalty and the Jetstar Group CGUs.
The value in use was determined by discounting the future cash flows forecast to be generated from the continuing use of the units
and were based on the following assumptions:
ssumption How determined
Cash Flows Cash flows were projected based on the approved Financial Plan. Cash flows to determine a terminal value were
extrapolated using a constant growth rate of 2.5 per cent per annum, which does not exceed the long-term average
growth rate for the industry.
Cash outflows include capital expenditure for the purchase of aircraft and other property, plant and equipment.
These do not include capital expenditure that enhances the current performance of assets and related cash flows
have been treated consistently.
Discount Rate A pre-tax discount rate of 10 per cent per annum has been used in discounting the projected cash flows of the CGUs,
reflecting a market estimate of the weighted average cost of capital of the Qantas Group (2014: 10.5 per cent per
annum). The discount rate is based on the risk-free rate for 10 year Australian Government Bonds adjusted for a risk
premium to reflect both the increased risk of investing in equities and the risk of the specific CGU.
The following CGUs have goodwill and other intangible assets with indefinite useful lives as follows:
Qantas Group
2015
$M
2014
$M
Goodwill
Qantas Domestic 10 10
Qantas Loyalty 13 5
Qantas Freight 49 49
Jetstar Group 134 131
206 195
Other intangible assets with indefinite useful lives
Qantas International 35 35
Jetstar Group 25 22
60 57
No impairment was recognised for the identified CGUs during the year ended 30 June 2015 (2014: $2,560 million).
25. SHARE-BASED PAYMENTS
Equity benefits to Executives made after 1 July 2010 are governed by the Employee Share Plan (ESP) Trust Deed, the Short Term
Incentive Plan (STIP) Terms and Conditions and the Long Term Incentive Plan (LTIP) Terms and Conditions, which were approved by
the Qantas Remuneration Committee Chairman under Board Delegation on 12 August 2010.
Further details regarding the operation of equity plans for Executives are outlined in the Directors’ Report from pages 24 to 47.
The total equity settled share-based payment expense for the year was $29 million (2014: $12 million). The total cash settled share-
based payment expense for the year was $6 million (2014: nil).
(A) LONG TERM INCENTIVE PLAN (LTIP)
Generally, participation in the LTIP is limited to Senior Executives of the Qantas Group in key roles or other participants who have
been identified as high potential Executives. All Rights are redeemable on a one-for-one basis for Qantas shares, subject to the
achievement of performance hurdles. Dividends are not payable on the Rights. For more information on the operation of the LTIP,
seepages 36 to 37.
Number of Rights
Performance Rights reconciliation 2015 2014
Rights outstanding as at 1 July 33,579,432 28,174,047
Rights granted 64,317,000 13,790,000
Rights forfeited (1,914,000) (4,571,000)
Rights lapsed (15,614,000) (3,755,000)
Rights exercised (58,844) (58,615)
Rights outstanding as at 30 June 80,309,588 33,579,432
Rights exercisable as at 30 June 157,588 216,432