Qantas 2015 Annual Report Download - page 8

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The Financial Framework for a Stronger Qantas Group
At the 2015 Qantas Investor Day,
we outlined the financial framework
that guides the Group’s thinking
on shareholder value creation,
our optimal capital structure, and
capital allocation.
The three pillars of the financial
framework are supported by
measureable targets, aligned
with those of our shareholders.
Our overarching objective is
maintainable earnings per share
growth over the cycle, to deliver
total shareholder returns (TSR) in
the top quartile of the ASX100 and a
peer group of global listed airlines3.
Maintaining an optimal capital
structure, consistent with
investment grade-level leverage
metrics, will minimise Qantas’ cost
of capital. Delivering return on
invested capital above our weighted
average cost of capital will ensure
we can continue to reinvest in our
business for sustainable returns.
And by growing the Group’s invested
capital over time, and returning
surplus capital to shareholders, we
will continue to create long-term
value for our shareholders.
MAINTAINING AN
OPTIMAL CAPITAL
STRUCTURE
ROIC > WACC
THROUGH THE CYCLE
DISCIPLINED
ALLOCATION OF CAPITAL
Target: minimise WACC Target: ROIC > 10%1
Target: grow Invested Capital
with disciplined investment,
return surplus capital
2014/2015: >$1 billion debt
reduction, return to optimal
capital structure
2014/2015: ROIC of 16% 2014/2015: Proposed
$505 million capital return
MAINTAINABLE EPS2 GROWTH OVER THE CYCLE
TOTAL SHAREHOLER RETURNS IN THE TOP QUARTILE3
Financial Framework Aligned with Shareholder Objectives
Enhancing long-term shareholder value
12 3
1 Target of 10% ROIC allows ROIC to be greater than pre-tax WACC through the cycle.
2 Earnings Per Share.
3
Target Total Shareholder Returns with the top quartile of the ASX100 and global listed airline peer group as stated in the 2014/2015 Remuneration Report in reference
to the 2015–2017 LTIP.
07
QANTAS ANNUAL REPORT 2015