Qantas 2008 Annual Report Download - page 55

53 Qantas Annual Report 2008
Discussion and Analysis of the Income Statement continued
Tours and travel costs decreased by $33.3 million to $608.4 million,
which is in line with the decline in revenue.
Capacity hire costs decreased by $33.4 million or 11.0 per cent largely
due to favourable foreign exchange (FX) movements and the
reduction of code-share costs on withdrawn routes.
Other expenditure increased by $202.3 million or 31.4 per cent.
This included $109.3 million of additional cost due to FX hedging
losses. Freight cartel costs and the operating costs of DPEX offset
lower consulting costs due to the APA takeover bid in the prior year.
Depreciation and amortisation costs increased by $106.6 million
or 7.8 per cent, largely due to accelerated depreciation and asset
write downs of $164.5 million.
Non-cancellable operating lease charges decreased by $15.4 million
or 3.7 per cent as a result of favourable FX gains.
The share of net profi t in associates and jointly controlled entities
decreased by $18.9 million to $27.6 million. Higher earnings from
Air Pacifi c were more than offset by lower earnings from Star Track
Express, Fiji Resorts and Australian air Express and losses on the
Jetstar Pacifi c investment.
Review of Other Income Statement Items
The requirement to mark-to-market open derivative positions under
AASB 139 resulted in ineffective derivative losses of $12.3 million
in the current year compared to $54.1 million last year.
Net fi nance costs decreased by $56.4 million, primarily due to
a higher average cash balance and a higher cash rate. Higher
capitalised interest reduced interest expense by $17.4 million.
The favourable net impact of foreign exchange rate movements
on overall PBT was $239.5 million.
The effective tax rate increased from 30.3 per cent to 31.1 per cent.
Basic earnings per share increased by 16.2 cents to 50.2 cents per
share. This refl ected the increased profi t after tax for the year.
Discussion and Analysis of the Balance Sheet
The net assets of the Qantas Group increased by $95.1 million
to $5,734.9 million during the year. The major movements are
discussed below.
Review of Total Assets
Cash and cash equivalents have decreased by $763.9 million,
predominantly due to payments under the now suspended share
buy-back.
Total receivables increased by $217.2 million mainly due to an increase
in liquidated damages receivable.
Property, plant and equipment increased by $32.7 million. This
refl ected capital expenditure on new aircraft, modifi cations and
related equipment, including the purchase of two B737-800 aircraft,
three A330-200 aircraft and two Dash 8 Q400 aircraft, and progress
payments on A380, B787, B737-800, A330 and A320 aircraft.
The increase also refl ects capitalised interest, offset by depreciation
and amortisation charges.
•
•
•
•
•
•
•
•
•
•
•
•
•
Review of Total Liabilities
Total liabilities increased by 0.8 per cent to $13,965.2 million largely
due to higher payables, higher revenue received in advance offset
by debt repayments.
Total of Equity
Issued capital decreased by $505.7 million refl ecting the share
buy-back undertaken during the year. Reserves increased due
to the movements in the fair value of fuel and foreign exchange
derivatives during the year.
Gearing
Qantas Group gearing (including off Balance Sheet debt) at 30 June
2008 was 43:57 compared to 41:59 at 30 June 2007. The gearing
ratio has increased due to the share buy-back during the year
resulting in lower cash balances at year end compared to last year.
Discussion and Analysis of the Cash Flow Statement
Review of Cash Flows from Operating Activities
Cash fl ows provided from the operating activities decreased
by $295.7 million to $2,128.4 million mainly due to the non-cash
liquidated damages recognised during the year, higher tax payments
on higher profi ts and sale proceeds of $188.1 million on aircraft spare
parts which were included in last year’s cash fl ows.
Review of Cash Flows from Investing Activities
Cash fl ows used in investing activities increased by 4.4 per cent
or $56.2 million to $1,322.6 million.
Capital expenditure increased by $141.9 million to $1,424.0 million,
refl ecting aircraft deliveries, higher aircraft progress and delivery
payments combined with higher reconfi guration costs, engine
modifi cations and spares.
Proceeds from the disposal of investments represented the sale
of the investment in Air New Zealand which were received in the
2007/08 year while the profi t on the sale was recorded in the 2006/07
year.
Net payments for investments of $48.5 million included the
acquisition of Pacifi c Airlines and an increase in the ownership of the
DPEX Transport Group and Kilda Express.
Review of Cash Flows from Financing Activities
Cash fl ows used in fi nancing activities increased by $872.9 million
to a total of $1,569.7 million. Dividends, the share buy-back and
repayment of borrowings all contributed to the outfl ow.
The Qantas Group held cash of $2,599.0 million as at 30 June 2008
and had access to additional funding of $500.0 million in stand-by facilities.
•
•
•
•
•
•
•
•
Discussion and Analysis of Performance Summary
for the year ended 30 June 2008
For personal use only