Qantas 2013 Annual Report Download - page 156

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154
35. Financial Risk Management
A nancial instrument is any contract that gives rise to both a nancial asset of one entity and a nancial liability or equity
instrument of another entity. The Qantas Group is subject to liquidity, interest rate, foreign exchange, fuel price and credit risks.
These risks are an inherent part of the operations of an international airline. The Qantas Group manages these risk exposures
using various nancial instruments, governed by a set of policies approved by the Board. Qantas Group’s policy is not to enter,
issue or hold derivative nancial instruments for speculative trading purposes.
The Qantas Group uses different methods to assess and manage different types of risk to which it is exposed. These methods
include correlations between risk types, sensitivity analysis in the case of interest rate, foreign exchange and other price risks,
and ageing analysis and sensitivity analysis for liquidity risk and credit risk.
A LIQUIDITY RISK
Liquidity risk is the risk that an entity will encounter difculty in meeting obligations associated with nancial liabilities. The Qantas
Group manages liquidity risk by targeting a minimum liquidity level, ensuring long-term commitments are managed with respect
to forecast available cash inows, maintaining access to a variety of additional funding sources including commercial paper and
standby facilities and managing maturity proles.
Qantas may from time to time seek to purchase and retire outstanding debt through cash purchases in open market transactions,
privately negotiated transactions or otherwise. Any such repurchases would depend on prevailing market conditions, liquidity
requirements and possibly other factors.
The following tables summarise the contractual timing of cash ows, including estimated interest payments, of nancial liabilities
and derivative instruments. Contractual amount assumes current interest rates and foreign exchange rates.
Qantas Group
2013
$M Less than
1 Year
1 to 5
Years
More than
5 Years Total
FINANCIAL LIABILITIES
Trade creditors 655 – – 655
Bank loans – secured1663 1,787 1,400 3,850
Bank loans – unsecured150 1,107 – 1,157
Other loans – unsecured1107 767 283 1,157
Lease and hire purchase liabilities1257 345 439 1,041
Derivatives – inows (186) (846) (27) (1,059)
Derivatives – outows 223 928 44 1,195
Net other nancial assets/liabilities – outows (127) (14) – (141)
Total nancial liabilities 1,642 4,074 2,139 7,855
1 Recognised nancial liability carrying values are shown pre-hedging.
2012
$M
FINANCIAL LIABILITIES
Trade creditors 645 – – 645
Bank loans – secured1689 2,124 1,794 4,607
Bank loans – unsecured154 957 – 1,011
Other loans – unsecured1557 742 – 1,299
Lease and hire purchase liabilities169 500 291 860
Derivatives – inows (595) (888) (89) (1,572)
Derivatives – outows 868 1,149 92 2,109
Net other nancial assets/liabilities – inows 33 24 – 57
Total nancial liabilities 2,320 4,608 2,088 9,016
1 Recognised nancial liability carrying values are shown pre-hedging.
Notes to the Financial Statements continued
FOR THE YEAR ENDED 30 JUNE 2013