Qantas 2016 Annual Report Download - page 101

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Notes to the Financial Statements continued
For the year ended 30 June 2016
29 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
ii. Repurchase of Share Capital
When share capital recognised as equity is repurchased, the amount of the consideration paid, including directly attributable costs
isrecognised as a deduction from equity.
iii. Treasury Shares
Shares held by the Qantas sponsored Employee Share Plan Trust are recognised as treasury shares and deducted from equity.
iv. 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.
v. Hedge Reserve
The hedge reserve is comprised of the effective portion of the cumulative net change in the fair value of cash flow hedging
instruments and the cumulative change in fair value arising from the time value of options related to future forecast transactions.
vi. 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 investments accounted for under the equity method.
vii. Defined Benefit Reserve
The defined benefit reserve comprises the remeasurements of the net defined benefit asset/(liability) which are recognised in other
comprehensive income in accordance with AASB 119 Employee Benefits (2011).
(P) COMPARATIVES
Where applicable, various comparative balances have been reclassified to align with current period presentation.
(Q) SEGMENT REPORTING
Underlying EBIT of the Qantas Group’s operating segments is prepared and presented on the basis that it reflects the revenue earned
and the expenses incurred by each operating segment. The significant accounting policies applied in implementing this basis of
preparation are set out below. These accounting policies have been consistently applied to all periods presented in the Consolidated
Financial Statements.
Segment Performance Measure Basis of Preparation
External segment
revenue
External segment revenue is reported by operating segments as follows:
− Net passenger revenue is reported by the operating segment which operated the relevant flight or
provided the relevant service. For Qantas Airlines, where a multi-sector ticket covering international
and domestic travel is sold, the revenue is reported by Qantas Domestic and Qantas International on
a pro-rata basis using an industry standard allocation process
− Other revenue is reported by the operating segment that earned the revenue
Inter-segment revenue Inter-segment revenue for Qantas Domestic, Qantas International and Jetstar Group operating segments
primarily represents:
− Net passenger revenue arising from the redemption of Frequent Flyer points for Qantas Group flights
by Qantas Loyalty
− Net freight revenue from the utilisation of Qantas Domestic, Qantas International and Jetstar Group’s
aircraft bellyspace by Qantas Freight
Inter-segment revenue for Qantas Loyalty primarily represents marketing revenue arising from the
issuance of Frequent Flyer points to Qantas Domestic, Qantas International and Jetstar Group.
Inter-segment revenue transactions, which are eliminated on consolidation, occur in the ordinary course
of business at prices that approximate market prices.
Qantas Loyalty does not derive net profit from inter-segment transactions relating to Frequent Flyer
point issuances and redemptions.
99
QANTAS ANNUAL REPORT 2016