Qantas Moves to A-IFRS
Sydney, 24 June 2005
Qantas said today it would adopt Australian Equivalents to International Financial Reporting Standards (A-IFRS) from 1 July 2005 as required by Corporations Law.
The financial report for the half-year to 31 December 2005 will be the airline's first report under the new standards.
Comparative financial information will be presented applying A-IFRS for transition adjustments to the opening balance sheet at 1 July 2004 and to restate 2004/05 comparative earnings. This will not include the impact of AASB 139 "Financial Instruments" as this is not required at this stage.
The Chief Financial Officer of Qantas, Mr Peter Gregg, said that A-IFRS would not affect cash flows, credit ratings, dividend policy or the economic management of the airline and that Qantas did not expect any significant impact on future earnings.
"First-time adoption of A-IFRS results in a reduction in retained earnings of $826 million and therefore an increase in gearing ratios. Despite this, we do not anticipate any change to Qantas' capital management policies or profitability.
"The most significant adoption adjustments will include the deferred recognition of frequent flyer revenue, recognition of a funding deficit for the defined benefit portion of the Qantas Superannuation Plan and the reclassification of some non-cancellable aircraft operating leases as finance leases," he said.
Mr Gregg emphasised that the changes resulted from mandated changes in accounting standards which had no affect on cash flows and therefore no affect on the economic value of the company.
He said Qantas would provide additional information as required to explain the impacts of A-IFRS on reported financial information in future periods.
"As many of the international standards introduce new accounting concepts, we expect that interpretation of the standards will continue to evolve for some time to come."
Issued by Qantas Corporate Communication (Q3288)