Qantas 2011 Annual Report Download - page 103
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101 ANNUAL REPORT 2011
for the year ended 30 June 2011
Notes to the Financial Statements continued
Qantas Group
Prot before tax Equity (Before tax)
$M
$M
$M
$M
bps increase in interest rates
Variable rate interest-bearing instruments (net of cash) () () – –
Derivatives designated in a cash ow hedge relationship – –
Derivatives and xed rate debt in a fair value hedge relationship – –
bps decrease in interest rates
Variable rate interest-bearing instruments (net of cash) – –
Derivatives designated in a cash ow hedge – – ()
Derivatives and xed rate debt in a fair value hedge relationship () () – –
% movement in foreign currency pairs
% (: %) USD depreciation () () ()
% (: %) USD appreciation ()
% movement in fuel indices
% (: %) increase per barrel in fuel indices
% (: %) decrease per barrel in fuel indices () () () ()
C CREDIT RISK
Credit risk is the potential loss from a transaction in the event of default by the counterparty during the term of the transaction or on settlement
of the transaction. Credit exposure is measured as the cost to replace existing transactions should a counterparty default.
The Qantas Group conducts transactions with the following major types of counterparties:
i. Trade debtor counterparties – the credit risk is the recognised amount, net of any impairment losses. As at June trade debtor
amounted to $ million (: $ million). The Qantas Group has credit risk associated with travel agents, industry settlement
organisations and credit provided to direct customers. The Qantas Group minimises this credit risk through the application of stringent
credit policies and accreditation of travel agents through industry programs
ii. Some other trade debtor counterparties are required to post cash collateral to support their transactions with the Qantas Group.
As at June , $ million (: $ million) was held as collateral by the Qantas Group
iii. Other nancial asset counterparties – the Qantas Group restricts its dealings to counterparties that have acceptable credit ratings.
Should the rating of a counterparty fall below certain levels, internal policy dictates that approval by the Board is required to maintain
the level of the counterparty exposure
The table below sets out the maximum exposure to credit risk as at June :
Qantas Group
Notes
$M
$M
On Consolidated Balance Sheet
Cash and cash equivalents , ,
Trade debtors
Sundry debtors
Other loans
Other nancial assets
Off Consolidated Balance Sheet
Operating leases as lessor
Total , ,
The Qantas Group minimises the concentration of credit risk by undertaking transactions with a large number of customers and counterparties
in various countries in accordance with Board approved policy. As at June the credit risk of the Qantas Group to counterparties
in relation to other nancial assets, cash and cash equivalents, and other nancial liabilities where a right of offset exists, amounted to
$, million (: $, million) and was spread over a number of regions, including Australia, Asia, Europe and the United States.
Excluding associated entities, the Qantas Group’s credit exposure is with counterparties that have a minimum credit rating of A-/A, unless
individually approved by the Board.
34. Financial Risk Management continued