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75
QANTAS ANNUAL REPORT 2015
(D) HEDGE ACCOUNTING
As at 30 June 2015
Nominal
amount of
hedging
instrument
and hedged
item Hedge Rates
Carrying amount
of the hedging
instrument
(AUD)1
Change in
value of the
hedging
instrument
used for
calculating
hedge
ineffective-
ness for 2015
Change in
value of the
hedged item
used for
calculating
hedge
ineffective-
ness for 2015
Change in
the value of
the hedging
instrument
recognised in
other compre-
hensive
income
Hedge
ineffective-
ness
recognised in
profit or loss2
Amount
reclassified
from the cash
flow hedge
reserve to
profit or loss3
Assets Liabilities
M$M $M $M $M $M $M $M $M
CASH FLOW HEDGES
AUD fuel costs
(up to 2 years) barrels 33
AUD/barrel
70–135 539 (419) (131) 118 (118) (13) (170)
Revenue
(up to 2 years) AUD $38
AUD/JPY
81 –(38) (2) 2(2) –40
Capital Expenditure
(up to 2 years) AUD $472
AUD/USD
0.90–0.78 66 (12) 64 (64) 64 – –
Interest
(up to 6 years) AUD $828
Fixed
4.40%–
5.99% 56 (53) (6) 6(6) – –
FAIR VALUE HEDGES
Interest
(up to 5 years) AUD $20
Floating
n/a 2–––n/a –n/a
1 Hedging instruments are located within the Other Financial Assets and Other Financial Liabilities caption on the Consolidated Balance Sheet and includes costs of hedging.
2 Hedge ineffectiveness is recognised in the Other caption in the Consolidated Income Statement.
3 Amounts reclassified from the cash flow hedge reserve to the Fuel caption in the Consolidated Income Statement.
Carrying amount of the hedged item equals the nominal amount of the hedging instrument.
(E) DERIVATIVE INEFFECTIVENESS AND NON-DESIGNATED DERIVATIVES IN THE CONSOLIDATED INCOME STATEMENT
For the year ended 30 June 2015, the time value component of options accounted for under AASB 9 (2013) requires the change in fair
value arising from the time value of options be recognised in other comprehensive income to the extent that it relates to a hedged
item. The Qantas Group early adopted AASB 9 (2013) with a date of initial application of 1 July 2014.
For the year ended 30 June 2014, the amounts recognised in the Consolidated Income Statement reflect hedge ineffectiveness on changes
i
n the fair value of any derivative instrument in a cash flow hedge, or part of a derivative instrument that does not qualify for hedge
accounting. The time value component of options accounted for under AASB 139 does not form part of the designated hedge
relationship and therefore changes in fair value of the time value component are recognised immediately in the Consolidated
Income Statement.
Qantas Group
2015
$M
2014
$M
INEFFECTIVE AND NON-DESIGNATED DERIVATIVES
Ineffective portion of cash flow hedges –110
Components of derivatives not hedge accounted (including time value of options) –(102)
Hedge ineffectiveness on transition to AASB 9 13 –
Ineffective and non-designated derivatives expense 13 8