2001 Qantas Financial Report

Notes to the FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2001
(c)
CHANGE IN ACCOUNTING POLICY (continued)
CAPITALISATION OF SOFTWARE DEVELOPMENT COSTS (continued)
The change in accounting policy has resulted in an increase of $32.2 million in the Qantas Group net profit for the year ended
30 June 2001. This profit increase comprises the following:
Year Ended Year Ended Prior
30 June 2001 30 June 2000 Years Total
$M $M $M $M
Impact of change in accounting policy
on profit before tax:
Software costs capitalised 31.8 16.8 26.3 74.9
Associated depreciation (15.0) (8.6) (5.3) (28.9)
Increase in profit before tax 16.8 8.2 21.0 46.0
Tax impact (5.0) (2.5) (6.3) (13.8)
Increase in net profit 11.8 5.7 14.7 32.2
(d) PRINCIPLES OF CONSOLIDATION
The Qantas Group financial statements comprise the financial statements of Qantas and the Qantas Group. Results of controlled
entities which were acquired or disposed of during the year are included in the Statement of Financial Performance from the date
control commenced or up to the date control ceased. The consolidation process eliminates inter-entity balances and transactions.
Outside interests in the equity and results of controlled entities are shown as a separate item in the Qantas Group financial statements.
(e) FOREIGN CURRENCY TRANSACTIONS
Foreign currency transactions, except those subject to specific hedging arrangements, are translated to Australian currency at the
rates of exchange ruling at the date of each transaction. At balance date, amounts receivable and payable in foreign currencies are
translated at the rates of exchange ruling at that date. Resulting exchange differences are brought to account as exchange gains or
losses in the Statement of Financial Performance in the financial year in which the exchange rates change.
TRANSLATION OF CONTROLLED FOREIGN ENTITIES
All controlled entities incorporated overseas are self-sustaining foreign operations and as such, their assets and liabilities are
translated at the rates of exchange ruling at balance date. The Statements of Financial Performance are translated at the average
exchange rate for the year. Exchange differences arising on translation are recorded in the foreign currency translation reserve.
The balance of foreign currency translation reserve relating to a controlled entity that is disposed of is transferred to retained profits
in the year of disposal.
HEDGING OF FOREIGN CURRENCY COMMITMENTS
Gains and losses on derivatives used to hedge the purchase or sale of capital equipment and goods and services are deferred in
the Statement of Financial Position and included in the measurement of the related purchase or sale. Net deferred losses associated
with hedges of foreign currency revenue relating to future transportation services are included in the Statement of Financial Position
as receivables. These losses will be included in the measurement of the relevant future foreign currency revenue at the time the
transportation services are provided. As at 30 June 2001, net deferred losses were $329.6 million (2000: loss $374.7 million).
Revenues and expenses from cross-currency swap transactions and amounts owing to/from swap counterparties are set-off
and disclosed on a net basis where the requirements of Accounting Standard AASB 1014 Set-off and Extinguishment of Debt
are satisfied.
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6 QANTAS ANNUAL REPORT 2001