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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
FOR THE YEAR ENDED 30 JUNE 2015
74
QANTAS ANNUAL REPORT 2015
26. DERIVATIVES AND HEDGING INSTRUMENTS CONTINUED
B FF NG OTHER FINANCIAL ASSETS AND LIABILITIES
The Group enters into contractual arrangements such as the International Swaps and Derivatives Association (ISDA) Master
Agreement where, upon the occurrence of a credit event (such as default) a termination value is calculated and only a single net
amount is payable in settlement of all transactions that are capable of offset under the contractual terms.
The ISDA agreements do not meet the criteria for offsetting in the Consolidated Balance Sheet. This is because the Group does
not have any current legal enforceable right to offset recognised amounts, because the right to offset is enforceable only on the
occurrence of future events.
The following table sets out the carrying amounts of recognised financial assets and liabilities that are subject to the above agreements.
2015 2014
Qantas Group $M
Amounts
Presented in the
Consolidated
Balance Sheet
Amounts Subject
to Netting Net Amount
Amounts
Presented in the
Consolidated
Balance Sheet
Amounts Subject
to Netting Net Amount
Financial assets
Other financial assets 662 (374) 288 206 (114) 92
Financial liabilities
Other financial liabilities (484) 374 (110) (248) 114 (134)
Total 178 –178 (42) –(42)
(C) HEDGE RESERVE
At 30 June 2015, the Qantas Group held various types of derivative financial instruments that were designated as cash flow hedges of
future forecast transactions. These were hedging of:
–Future AUD fuel costs and foreign currency operational payments by exchange derivative contracts (forwards, swaps or options)
including aviation fuel purchases by crude, gasoil and jet kerosene derivative contracts (forwards, swaps or options)
–Future interest payments by interest rate derivative contracts (forwards, swaps or options)
–Future capital expenditure payments by foreign exchange derivative contracts (forwards or options)
The effective portion of the cumulative net change in the fair value of derivative financial instruments designated as a cash flow
hedge and the cumulative change in fair value arising from the time value of options are included in the hedge reserve. These options
relate entirely to transaction related hedged items. For further information on accounting for derivative financial instruments as cash
flow hedges, refer to Note 37(C). The periods in which the related cash flows are expected to occur are summarised below:
Qantas Group
2015
$M
Less than
1 Year 1 to 5 Years
More than
5 Years Total
Contracts to hedge
Future AUD fuel costs (124) 3 – (121)
Future interest payments (7) (27) (2) (36)
Future capital expenditure payments 35 – – 35
Total net gain/(loss) included within hedge reserve (96) (24) (2) (122)
2014
$M
Contracts to hedge
Future AUD fuel costs (33) (1) –(34)
Future interest payments (8) (20) (4) (32)
Future capital expenditure payments (6) – – (6)
Total net gain/(loss) included within hedge reserve (47) (21) (4) (72)