Qantas 2012 Annual Report Download - page 106
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FOR THE YEAR ENDED 30 JUNE 2012
Notes to the Financial Statements continued
NATURE AND PURPOSE OF PROVISIONS
Onerous Contracts
An onerous contract is a contract in which the unavoidable cost of meeting the obligations under the contract exceeds the economic
benefit expected to be received. The Qantas Group has raised this provision in respect of operating leases on premises.
Make Good on Leased Assets
The Qantas Group has leases that require the asset to be returned to the lessor in a certain condition. A provision has been raised
for the present value of the future expected cost at lease expiry.
Insurance, Legal and Other
The Qantas Group self-insures for risks associated with workers’ compensation. An outstanding claim is recognised when an incident
occurs that may give rise to a claim and is measured at the present value of the cost that the entity expects to incur in settling the
claim. Legal provisions include estimates of the likely penalties to be incurred in relation to investigations into alleged price fixing in
the air cargo market.
23. Capital and Reserves
Qantas Group
2012
$M
2011
$M
ISSUED CAPITAL
Issued and paid-up capital: ,,, (: ,,,) ordinary shares, fully paid , ,
Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share
at shareholders’ meetings.
In the event of wind-up, Qantas ordinary shareholders rank after all creditors and are fully entitled to any residual proceeds on liquidation.
Treasury shares consist of shares held in trust for Qantas employees in relation to equity compensation plans. As at 30 June 2012,
16,629,559 (2011: 23,861,937) shares were held in trust and classified as treasury shares.
RESERVES
Employee compensation reserve
Hedge reserve (refer to Note (B))
Foreign currency translation reserve () ()
Total reserves
NATURE AND PURPOSE OF RESERVES
Employee Compensation Reserve
The fair value of equity plans granted is recognised in the employee compensation reserve over the vesting period. This reserve
will be reversed against treasury shares when the underlying shares vest and transfer to the employee. No gain or loss is recognised
in the Consolidated Income Statement on the purchase, sale, issue or cancellation of Qantas’ own equity instruments.
Hedge Reserve
The hedge reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments
related to future forecast transactions.
Foreign Currency Translation Reserve
The foreign currency translation reserve comprises all foreign exchange differences arising from the translation of the Financial
Statements of foreign controlled entities and associates, as well as from the translation of liabilities that form part of the Qantas
Group’s net investment in a foreign controlled entity.
22. Provisions continued
QANTAS ANNUAL REPORT 2012104