Qantas 2006 Annual Report Download - page 120

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118
Notes to the Financial Statements
for the year ended 30 June 2006
29. Financial Instruments
A financial instrument is any contract that gives rise to both a financial asset of one entity and a financial liability or equity instrument 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. Qantas Group policy is not to enter, issue or hold derivative financial instruments for speculative
trading purposes.
Qantas has taken the exemption available under AASB 1 First-time Adoption of Australian Equivalents to International Financial Reporting Standards to apply
AASB 132 and AASB 139 from 1 July 2005. Qantas has applied previous GAAP for comparative information on financial instruments within the scope of AASB
132 and AASB 139. For further information, see Note 1(F).
(A) INTEREST RATE RISK
The Qantas Group manages interest rate risk by reference to a duration target, being a measure of the sensitivity of the borrowing portfolio to changes in
interest rates. The relative mix of fixed and floating interest rate funding is managed by using interest rate swaps, forward rate agreements and options. The
Qantas Group’s exposure to interest rate risk and the effective weighted average interest rate for classes of financial assets and liabilities exposed to interest
rates are set out below.
For the year ended 30 June 2006, Other financial assets and liabilities included financial instruments hedging debt totalling $453.7 million (asset). These
financial instruments are recognised at fair value or amortised cost in accordance with AASB 139. Interest rate financial instruments are shown net of
impairment losses of $22.4 million recognised in the current year (2005 under previous GAAP: $20.0 million).
Weighted
Average
Interest
Rate
% pa
Floating
Rate
$M
Fixed Rate Maturing in:
Non-
Interest-
Bearing
$M
Total
$M
2006
Less
than
1 Year
$M
1 to 5
Years
$M
More
than
5 Years
$M
INTEREST EARNING FINANCIAL ASSETS Notes
Cash and cash equivalents 6 5.89 302.2 2,599.8 – – – 2,902.0
Aircraft security deposits 7 6.22 44.8 0.7 81.1 – 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 2,380.6 79.6 885.5 3.0 3,627.4
INTEREST-BEARING FINANCIAL LIABILITIES
Bank loans – secured 16 3.48 858.4 134.5 624.1 685.3 – 2,302.3
Bank loans – unsecured 16 6.27 627.0 – – – – 627.0
Other loans – unsecured 16 7.33 600.3 41.6 461.4 499.8 – 1,603.1
Lease liabilities 16 7.90 368.5 73.4 609.0 192.3 – 1,243.2
2,454.2 249.5 1,694.5 1,377.4 – 5,775.6
Net fi nancial (liabilities)/assets (2,175.5) 2,131.1 (1,614.9) (491.9) 3.0 (2,148.2)
1 Interest receivable/payable has been included in the calculation of the effective interest rate of the underlying financial asset or liability.