Qantas 2008 Annual Report Download - page 88

86 Qantas Annual Report 2008
Notes to the Financial Statements
for the year ended 30 June 2008
1. Statement of Significant Accounting Policies continued
(U) Earnings per Share
Basic earnings per share is determined by dividing the Qantas Group’s
net profi t attributable to members of Qantas by the weighted average
number of shares on issue during the current year (refer Note 8).
Diluted earnings per share is calculated after taking into account the
number of ordinary shares to be issued for no consideration in relation
to dilutive potential ordinary shares (refer Note 8).
(V) Cash and Cash Equivalents
Cash and cash equivalents includes cash at bank and on hand, cash at
call and short-term money market securities and term deposits that are
readily convertible to a known amount of cash and are subject to an
insignifi cant risk of change in value.
(W) Net Finance Costs
Net fi nance costs comprise interest payable on borrowings calculated
using the effective interest method, interest receivable on funds
invested, gains and losses on fair value hedges and foreign exchange
gains and losses. Finance income is recognised in the Income Statement
as it accrues, using the effective interest method. Where interest costs
relate to qualifying assets, they are capitalised to the cost of the assets.
Qualifying assets are assets that necessarily take a substantial period
of time to be made ready for intended use. Where funds are borrowed
generally, borrowing costs are capitalised using the average interest rate
applicable to the Qantas Group’s debt facilities being 7.9 per cent
(2007: 7.4 per cent). During the year, borrowing costs totalling
$100.7 million (2007: $83.3 million) were capitalised into the cost
of qualifying assets.
(X) Interest-bearing Liabilities
Interest-bearing liabilities are recognised initially at fair value less
attributable transaction costs. Subsequent to initial recognition,
interest-bearing liabilities are stated at amortised cost with any
difference between cost and redemption value being recognised in
the Income Statement over the period of the borrowings on an effective
interest basis. Interest-bearing liabilities that are designated as hedged
items are subject to measurement under the hedge accounting
requirements.
(Y) Assets Classified as Held for Sale
Immediately before classifi cation as held for sale, the measurement
of the assets is brought up-to-date in accordance with applicable
Accounting Standards. Then, on initial classifi cation as held for sale,
assets are recognised at the lower of carrying amount and fair value
less costs to sell.
Impairment losses on initial classifi cation as held for sale are included
in the Income Statement, even when there is a revaluation. The same
applies to gains and losses on subsequent remeasurement.
(Z) Share Capital
Ordinary Shares
Incremental costs directly attributable to issue of ordinary shares
are recognised as a deduction from equity, net of any related income
tax benefi t.
Repurchase of Share Capital
When share capital recognised as equity is repurchased, the amount of
the consideration paid, including directly attributable costs, is recognised
as a deduction from equity.
In Qantas’ Financial Report, the transactions of the Qantas sponsored
employee share plan trust are treated as being executed directly by
Qantas (as the trust acts as Qantas’ agent). Accordingly, repurchased
shares held by the trust are recognised as treasury shares and deducted
from equity.
(AA) Comparatives
Various comparative balances have been reclassifi ed to align with current
year presentation. These amendments have no material impact on the
Financial Statements.
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