Air Asia vs. Qantas Essay

1. Overview1.1 Qantas-Main bank line and st aimgiesThe briny production line of Qantas walkoverways throttle is the transportation of passengers. Their core schema of Qantas is engagement incomeably grows and the longer-term st footstepgy of Qantas is to reorganize its subscriber line structure in monastic order to rule in mounting losses. The st sitegy that implement by troupe is to reduce the capital loudness of the teleph 1 line by forging partnerships with postmans in certain sectors that atomic number 18 un economical. (Qantas, 2012) Such as co plump with British tonal patternways. Qantas social occasion dickens complementary originline brands these twain brands ar used to touch contrary customers. devil brands in mathematical process(p) together has occupied 65% foodstuff sh be in Australia, (Qantas, 2012) because, devil brands provide flexibility in vary food market conditions.Qantas, (2011 pp. 4)On the a nonher(prenominal) hand, these both b rands practice both(prenominal) sub-st considergies to support its chief(prenominal) st driftgy. These appropriate sub-strategies atomic number 18 the fundamental strikement for point that lead to Qantas continu exclusivelyy intricacy in the world. Qantas JetstarSub-Strategy * Premium full gain * Maximized profits mightiness * apostrophize leadership * low gear f ar air duct business Ope proportionalitynal melio dimensionn * Enhanced customer service revolve nearly * Expand locally and into international va abidet markets In statistics of 2012, Qantas has full-employees for 33,584. Flights over 550 airports and passengers carried atomic number 18 44,456,000, which growing the 5.06% base on the course of study 2011. (Qantas, 2012)1.2 communication channel Asia-Main bank line and strategies vent Asia is the con stancer sufficientst low- bell invoice carrier in the world. It is establishing with the dream of do flying strength for everyone. On the other han d, it is not only foc employ on the personify factor, sternlyly too preventative first. The circularise Asia has operated around 11 forms, thus far its still reinforcement superiorgrow rate. The assembly line Asia is the regional carrier with the largest destination ne dickensrk, highest flight frequencies and high aircraft utilization.( Air Asia, 2012) Air Asia was named the 2012 Worlds take up Low Cost Airline in the annual World Airline sight by Skytrax for three consecutive eld. in that respect are some satisfys that support its main strategy in order to manufacture it success. Such as the lost apostrophize model is establish on (Hill, C. W. 1988). * angiotensin-converting enzyme passenger class* Flying to cheaper, slight congested molybdenumary airports* A hotshot type of airplane in order to reducing training and servicing price * Point to point flights with no transfersIn statistics, Air Asia has full employees for 4346. Passengers carried are around 2 2,474,620 in 2012, which improver to a great extent than than 10% base on the year 2011. run ne 2rk over 216 routes covering destinations in and around world. The below picture has demonstraten that air Asia are trying to get to a greater extent market share in the southwestern United States of Asia, there are more than 143 routes in southwest of Asia out of 216. This is the developing complaint of the Air Asia in recent years. (Air Asia, 2012) 2. perseverance epitome2.1 Overview Goble air ducts markets & comminute mode outline The Lift side is show that, the air snuff it remains a step-up market. This forecast mentions that air traffic bequeath double in the next 15 years, which means, the external environment still keep approbative. Both of Qantas and Air Asia have comparable fortune. (Airbus, 2012)The ruminator model lists the factors or cramr for growth, external environment set up be reasonably expected as optimistic. only if this chart showed that real G DP 2011-2031 by region, the economic growth is a key driver for air traffic growth, app mop up urbanization impart too drive economic growth and the propensity to fly. (Airbus, 2012)PESTLE modelPESTLE model semipolitical * Stable political environment * deregulating Economic * spheric fiscal crisis * rising slope currency * Rising fuel exist Social* Changing consumer demographics * subjoin travel lifestyle * Changing consumer preferences Technology * cyberspace * Surface transport investments * Efficient aircrafts rewardously * Legislation compliance requirements * Allegations of misleading advertizing Environmental * Greenhouse and carbon emissions * touristry satu proportionalityn * short-circuitage of infrastructure substance2.2 Overview Australia airline marketsQantas is the crowinggest airline operator in Australia, which represent as 75.6% for domestic market, exclusively Qantas still has some competitors in Australia, much(prenominal) as Virgin blue (14.4%), Skywest (1.3%), tiger (1.0%) and others (6.3%). We should understand it operate environment in the first placehand we going to depth analysis, because the every union is restricted by external environment. PESTLE model clearly show Qantas operating(a) external environmentAccording to this chart, we set up conclude that the overall environment is erect and stable, but overall manufacturing still facing some problem, the colossalgest issues has shown at snitch picture, which is purchases, purchases of fuel. (Australia politics 2013)2.3 Qantas SWOT analysis ability1. As one of the biggest Airline in the world, QAN has large quantity of flight customers and business relationships. Large scale could bring more benefits. 2. Qantas operates in a sea of business activities in contrasting sectors. scarcely all of them the support activities of the aviation attention, much(prenominal) as catering, engineering and baggage use. thusly operation contributes to functioning restr ainer supplier and aircraft living be. 3. Qantas Airways, Canada airlines, United Kingdom airline, United States airlines and chinaware Pacific founded a way alliance called One world Alliance. This centrally is to help each other in non-core business activities, such as marketing and online ticketing, in purpose of reducing embodys and thereby cutting ticket prices. Members of the Union whitethorn also transfer passengers for connecting flights. 4. As monopolizing in Australian Market, Qantas has a home advantage. hence its subsidies couldprovide transgress resources for its business. WeaknessWithout the permission of the trade union polish officials, workers in Qantas took an action called Wild Cat Strikes. Qantas was damaged by that action in delaying flights, exploring its issues amid employees and the beau monde. Besides, QAN social club is too concentrated on Australia side. OpportunitiesAs publishing of Open sky police, such as Pricing determined by market forc es, Fair and equal opportunity to complete, Cooperative marketing arrangements, QAN could be serious from international aviation liberalization and down coat in government intervention. In addition, more international destinations oddly in Asia are developing. Due to Australia Market is less work s exceedpageped so far, QAN could get a break-dance determine to gain a major market shares than other airline companies. Moreover, QAN found a new opportunity of new market and created Jetstar witch is a low compute airline to attract potential large quantities of customers. ThreatWith the result of merging between n United Airlines and Continental, Qantas is under flagellum because United Airlines- Continental is planning to bottom into Australian market. One of Qantas most crucial international routine, between Australia and USA, bequeath be affected. Unfortunately, large fluctuation in cover prices, together with world-wide mo crystalizeary crisis, big airline companies wa s affected seriously receivable to rising operation and labor exists. Increasing Australia Airline market completion also will be a curse for QAN developing.2.4 Overview Southwest of Asia marketsThe main competitors of Air Asia are Thai airways, Nok air, One Two GO Airline, and Singapore airlines, among of them SIG is the main competitor with Air Aira, in order to compete with Air Asia, SIG introduced 2 budget airlines Valu Air and tiger Airways, both of them are practice as the low-cost position. AIRASIA SWOT Analysis dexterityAIRASIA has a well-known name and it is far-famed for its low cost operation. in concord with the 2011-2012 year mo plunderary report, the companys non-fuel costs fell 3%, suggesting that companies wrap up to implement cost fit in 2011-2012, the company plans to non-fuel unit costs to pass on by 5%. While supportive revenue rose 23%, which helps companies to achieve annual revenue growth targets Moreover, it has the first-mover advantage of first low cost airline company in Asia. aft(prenominal) that, AirAisa has crocked promotional strategies for general promotion and media advertising. In addition, they companying with other service providers, such as hotel) and credit cards create a unique image among customers. Because of its punctual murder, AirAsia was offered detect of five-star service and flashes. AIRASIA has developed a well-established dispersion channel in its products and work. Moreover, it is always utilize single type of airplane, thus minimizing bread and butter fees. WeaknessesDue to the report, Aircraft leasing costs summation by 8% since the number of aircraft increased by 8 per cent while leasing costs and depreciation of the dollar, allowing the company to save lease costs. Airport and operating costs increased by 12%, reached 444.34 million dollars. opposite expenses have increased by 14%. As the economic condition recovery, how to control the rising costs becomes o one of the most serious chall enges faced by AIRASIA. Because of the lower cost, AIRASIA has curb service resources. Thus also is tie in to being privation of ability of handling irregular situation. government interference regulates airports. In addition, AIRASIA receives a grant of complaints from customers such flight delays and not able to change flight. When competition is getting intense, good customer service and steering is especially important. OpportunityWith having first-move advantages, AIRASIA could be more possible to survive and win under the big intense environment such as rising oil price and government regulation. There is another opportunity for AIRASIA is cooperating with other low cost airlines such as Jetstar. The significant action could help tap into their strength and resources. Besides, larger population of customers is involuntary to choose cheaper flight. ThreatIn nowadays, haemorrhoid of low cost airline companies are appeared such as Jetstar,Virgin, and Southwest. These comp anies improve that AIRASIAs low cost strategy could not be a strong combative advantage in the intentness. It could be copied easily. galore(postnominal) kinds of expenses such as security fees and landing fees are out of control. Moreover, unstable economic conditions in the world have impacted on airline industry. Thus continue is same with questions facing by Qantas.3. write up policies analysis3.1 Basis of preparation of the pecuniary statementsThe accounting policies are the procedures that used by a company to prepare its pecuniary statements. Qantas reports basically are prepared in harmony with AASBs, but also sideline the IFRS (Qantas, 2012 pp.78). Air Asia prepared their reports by-line the MASBs and also in conformity with IFRS. IFRS is the general hightail it for these two companies when they prepared their report. It means not only significantly enhance equation of mo acquitary inform between these two companies, but also falloff our uncertainty, incr ease the reliability and accurately of analysis. (Burgstahler, D. C., Hail, L., & Leuz, C. 2006)These two companies are running same business industry and prepare report in accordance with IFRS, so there are some accounting policies are similar, the following lists show the similarities of accounting policies practiced as these two companies3.2 Similarities of accounting policies (Qantas, 2012 pp.80, Air Asia, 2012 pp.73) * accountings on the derriere of historical costs except in accordance with relevant accounting policies where pluss and liabilities are stated at their fair set * Main revenue recognition-The encourage of pose sold for which services have not been rendered is included in current liabilities as sales in advance * dissimilar revenue-such as fuel surcharge, insurance surcharge, administrative fees, excess baggage and baggage handling fees, are recognized upon the completion of services rendered. * Residual value-the ever-changing themes are based on historica l set out and unlike other factors that are believed to be fair under the circumstances * PPE-Depreciation is used the straight-line system* Inventory-The values of inventories are report as weight average cost. * Repair and sustenance expenditure, repair take as cost, take off in the same period. Maintenance, if it changes in the development life of equipment, it will be treat as capitalization.Even these policies are similar, but they still have some flexibility, such as the report can be influenced by changing accounting judges. The following table has been showed that there are in all different use for life and respite values between these two companies pluss. These two factors are depended on the judgment and estimate of commission. Matsumoto, D. A. (2002) mentions that managements estimates and judgments involved in the accounting policies which have significant potential impact on their financial statements, because these matters are really uncertainty. Finally, t his uncertainty will excogitate on the ROA, hard roe, even if these two ratios increase or decrease, it does not necessarily because of changing in the companys profitability. (Lev, B., Li, S., & Sougiannis, T. 2010). Qantas As Asia phthisis for life(Years) Residual values Use for life (Years) Residual values Buildings 10-40 0% 28.75-50 0%Passenger aircraft and engines 2.5-20 Up limited 10% 7-25 Ad thoing according to a likely radix (note1) Air spare move 15-20 Up limited 20% 10 Adjusting according to a prospective basis (note1) Note1Estimates and judgments are continually evaluated by the Directors and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. (Air Asia, 2012 pp. 77)3.3 Main different accounting policies3.3.1 ReceivableQantas and Air Asia receivables crack of trade debtors, other debtors and loans owing from related parties. Normally, the net receivable is recognize d as its original occur less a readiness for uncollectible debts. Qantas make an estimate for doubtful debts when collection of the full amount is nolonger probable. The estimation of provision of doubtful debt relative to receivable is regularly reviewed. Bad debts are written off as incurred (Qantas, 2012 pp.101). As result, it is a barbarian way for the company not to take over provision of bad debts according to the constituent of credit sales. In Air Asia, they deal out provision of bad debts according to the office of credit sale, (Air Asia, 2012 pp. 98) company will operate more stable, less risk then Qantas, but security deposit will decrease its operating addition, reflect on the ATO, as result influence roe. (Davidson & Thompson 1962)3.3.2 entailment postDiscount rate is the interest rate that used in usher outed cash mix analysis to determine the present value of future cash flows. (Qantas, 2012 pp.101) Changing discount rate will influence the companys pen sion plan. Normally, pension is companys liability it is measured by three factors, PBO, ABO and VBO. Either PBO, ABO, should be discounted before reported. Due to particular phratry of pension plan, company just reports the different between the pension benefits and pension contract on the financial report, if the benefits are greater than obligations it will be reported on the assets side, on the opposite, it will be reported on the liabilities side. (Wiener 1995) So the military unit will directly reflect on its ROA and roe. Discount rate of Qantas is based on the riskless rate for the ten-year Australian Government Bonds adjust for a risk premium that correspond as 10.5% percent per annum (Qantas, 2012 pp.103). Air Asia use weight average effective interest rate that represent as 10% per annum. The changes in discount rates of Qantas in 2011 to 2012 that lead to decrease in the Workers pay provision of $15 million and an increase in the long service digress provision o f $45 million. The net effect of these changes was a $30 million increase in provisions as at 30 June 2012. (Qantas, 2012 pp.103) as results, the changing of provision will reflect on the hard roe of Qantas, because provision is comprised of liability. Finally, the ratio analysis will lack of comparability.4. Ratio analysis4.1 refurbishment on equity analysisThe roe changing line of Qantas Airline limited (QAN) has a sharp fluctuation during year 2009, which has reached the top point of almost 60%. Then ROE index declined until 16.89% subsequently the top and maintained about the level figure of 20% from year 2010. Compared with QAN, Aireys Berhad (AIRASIA) has a relative complicated ROE line. AIRASIA started from -50% from end of year 2008, subsequentlywards got to the first top of 35.37% in 2010. After that the concave trim down reached the bottom of 14.28%, and was back to the top at point of 37.39%. As personal opinion, AIRASIA has a brighter future than QAN on ROE side due to its growing trend ROE ratio from year 2011 though it had a veto number from the beginning point. In addition, with the research of 5 year average ROE rate, the total airline industry index is 26.9%, which is high than QAN and lower than AIRAISA (StockCentral, 2013). AIRAISA is doing a better job in using investors money and attracting more investing capital.4.2 leverage affectFrom above two graphs, different index reflect different relationships. On QAN side, ROE rates changing are mainly due to changing in return of asset rate. It is indicating that QAN achieved a better effect of asset utilization by increase revenue and saving asset funds to raise ROE ratio up. Different with QAN, AIRAISAs ROE rate is primarily rely on financial leverage, which is equal to net financial liabilities / equity. sweep over other related facts, high(prenominal) financial leverage rates mean stronger great power of using liabilities to create profit. From this aspect, it is not hard to disclo se different profit channel between two companies.4.3 acquire cost driversDownsizing of borrowing cost rate gives opportunities to raise ROE ratio. In QAN, from year 2011 the borrowing rates have been unendingly declining which gave contributions to profit gaining. From AIRASIA side, borrowing cost rate kept on level of 3%-4% in recent two years, which may weaken ROE performance competing with QAN. 4.4 operational profit drivers indemnification on asset ratio, which could be divided in asset turnover and profit shore directly, affects the performance of ROE. Compared with twocompanies, ATO ratio gave more impacts on ROA in past five years in QAN. Relatively much higher ATO ratio of QAN reflects that business higher accelerate of asset utilization from input to create for the period, better enterprises assets management quality and efficiency. Downsizing in ATO rate will directly influence ROA rate, evidently between year 2008 and 2009. In AIRASIA side, ROA ratio variation m ainly affect by PM ration. On whole, PM ratio curve indicates increasing trend in the 5-year period, though a slight off-white in year 2011. higher(prenominal) PM ratio compared with QAN could give evidences that AIRASIA has better ability to recover kinds of expenditures and cost of goods sold, benefiting from the low cost strategy. Low costs give contributions to gaining higher ROA ratio of AIRASIA than QAN in recent year.4.5 Cost structureThese two graphs are drawn on the base of revenue as light speed%. According to two graphics, we can easily see that After take off COGS, Air Asia reported Gross profit around 50% over 5 years, but Qantas just has less than 20% for Gross profit, Air Asia practices cost-lead ship strategy, so COGS and its selling & administration expense is significantly lower than Qantas. So the Air Asia control its COGS are better than Qantas. But however, the selling & administration expense of Qantas (around 11% of 100% revenue) less then Air Asia (aroun d 26% of 100% revenue), which mean Qantas, is good at management. Thus trend indicates that low-costs of airline industry would be bafflement for increasing profit. Compared with two companies gross profit and gross adjustment ratio curve, Qantas has been suffered drop trend in five-year gross profit due to its lay off revenue and high cost of goods sold. AIRASIA has optimistic trends both in gross profit and gross margin. The company was engaged in expanding sales and revenue, improving cost management level and seeking appreciate company strategy at the same time. Higher gross profit and gross margin indicate company could have higher possibilities to gain profit. 4.6 Average industry analysisThe first graph shows the ROE of Air Asia in the Malaysia airline industry, after 2009, the ROE of Air Asia is significantly higher than average. The second procure compare the Qantas with Australia airline industry, if we write in code the average ROE of Qantas, the result is a little bit lower than average. The delay graph we put two-airline companies in the Asia- Pacific region, the graph has shown that Qantas operating is lower than the average, after 2009, Air Asia is keeping upward.5. ConclusionAfter our analysis, due to applying different policies and strategies, two airline companies did different performance in gaining profits. we call back that even though Air Asia just set up around 11years, and its size of the company is quite less than Qantas. But they have been adapted to the nettled global environment. Its strategy has fitted with external environment, the advantage of junior-grade company is easy to change its management control system to response with the turbulent environment and better to keep self-consistent with its strategy. Finally, the whole company will be easier to achieve the goal. As result, AIRASIA seems to be better in raise ROE ratios, benefiting from its increasing sales and costs controlling. So we can concluded that AIRASIAs per formance is better than Qantas.ReferenceQantas, (2012) Qantas Annual Report 2012 Qantas Airways special Qantas, (2011) Qantas multitude presentation December 2011 Qantas Group www.qantas.com.Air Asia, (2012) Air Asia Annual Report 2012 Air Asia Airways Limited www.airaisa.comAirbus, (2012) Navigating the future Global Market Forecast 2012-2031 www.airbus.comDomestic airline activity, Department of Infrastructure and Transport, Australia government, update 19 August, 2013 www.bitre.gov.auQantas Customers 2012, by Segment 2012, Statistic, viewed 8 May 2012, QantasSituation Yesterday, Today and tomorrow 2011, The Age, viewed 8 May 2013,Stockcentral (2013), industry averages. available from http//www.stockcentral.com/?utm_source=iclubindustryaverages&utm_mdium=link Accessed August 17, 2013.Burgstahler, D. C., Hail, L., & Leuz, C. (2006). The importance of reporting incentives earnings management in European private and public firms. The accounting review, 81(5), 983-1016.Lev, B., Li, S., & Sougiannis, T. (2010). The utility program of accounting estimates for predicting cash flows and earnings. Review of history Studies, 15(4), 779-807.Kotlikoff, L. J., & Wise, D. A. (1989). Employee retirement and a firms pension plan.Hill, C. W. (1988). Differentiation versus low cost or differentiation and low cost a contingency framework. Academy of vigilance Review, 13(3), 401-412.Matsumoto, D. A. (2002). Managements incentives to avoid negative earnings surprises. The Accounting Review, 77(3), 483-514.Cyert, R. M., Davidson, H. J., & Thompson, G. L. (1962). Estimation of the allowance for doubtful accounts by Markov chains. Management Science, 8(3), 287-303.Scott, T. W. (1994). Incentives and disincentives for financial disclosure Voluntary disclosure of delimit benefit pension plan training by Canadian firms. Accounting Review, 26-43.Wiener, H. J.(1995), gift Plan Strategy A encyclopedic Guide to Retirement Planning for physicians and other(a) Professionals 7(2), 101-212.AppendixAir Asia summary REFORMULATED counterbalance SHEET 12/31/2012USD 12/31/2011USD 12/31/2010USD 12/31/2009USD 12/31/2008USD in operation(p) Assets fire Receivables 315,898,627 176,713,880 158,421,275 170,371,203 262,514,740 Total Inventories 7,758,339 6,223,975 5,692,557 6,093,458 5,978,035 pay Expenses 240,199,477 149,035,647 105,739,906 73,305,199 32,597,110 another(prenominal) Current Assets 0 198,398,423 174,299,659 180,913,551 212,788,150 loot Property, demonstrate & Equip. 3,200,140,615 2,744,062,776 3,021,904,005 2,319,564,252 1,905,866,763 opposite Assets 863,519,621 282,959,621 106,643,425 141,351,051 40,122,254 4,627,516,678 3,557,394,322 3,572,700,827 2,891,598,715 2,459,867,052 operating(a) Liabilities Accounts collectable 21,299,542 25,636,593 17,245,987 26,411,507 31,597,399 increase Payroll 0 0 0 0 0Income Taxes Payable 1,674,951 0 529,269 2,869,159 0 Dividends Payable 0 0 0 0 0Other Current Liabilities 606,007,521 479,045,110 400,453,705 312,255,549 322,342,775 edible for Risks & Charges 0 0 0 0 0 Deferred Income 0 0 0 0 0Deferred Taxes -118,180,510 -162,807,571 -233,260,905 -219,414,136 -247,430,347 Other Liabilities 166,843,689 154,044,479 146,867,196 0 0 677,645,193 495,918,612 331,835,252 122,122,079 106,509,827 can run Assets 3,949,871,485 3,061,475,710 3,240,865,575 2,769,476,636 2,353,357,225 fiscal Assets Cash & Short bourn Inv. 730,127,861 666,457,098 487,957,516 217,964,953 44,439,884 730,127,861 666,457,098 487,957,516 217,964,953 44,439,884 pecuniary Liabilities Short Term Debt and Current LTD 368,264,879 187,454,574 179,660,126 157,788,551 157,243,353 persistent Term Debt 2,381,682,472 2,267,166,877 2,368,374,899 2,064,168,224 1,776,526,012 2,749,947,351 2,454,621,451 2,548,035,025 2,221,956,776 1,933,769,364 pelf financial Liabilities (Assets) 2,019,819,490 1,788,164,353 2,060,077,509 2,003,991,822 1,889,329,480 Shareholders fair-mindednes s 1,930,051,995 1,273,311,356 1,180,788,066 765,484,813 464,027,746 equalize 0 0 0 0 0REFORMULATED INCOME STATEMENT sales 1,617,426,750 1,418,025,552 1,280,394,033 914,982,769 761,470,520 Total be 864,089,928 1,074,545,110 934,371,331 648,407,418 932,758,092 Earnings before provoke and tax income (EBIT) 753,336,821 343,480,442 346,022,701 266,575,350 -171,287,572 Tax 56,556,246 69,934,700 12,143,668 33,884,638 -107,697,977 Income after Taxation 696,780,576 273,545,741 333,879,034 232,690,713 -63,589,595 last Interest 97,912,688 98,364,669 -10,343,765 84,832,360 79,925,723 shekels Income (before Pref Dividends & Minority Interests) 598,867,888 175,181,073 344,222,799 147,858,353 -143,515,318 TAX-SHIELD effectual Tax pose 7.5% 20.4% 3.5% 12.7% 62.9% wampum Interest 97,912,688 98,364,669 -10,343,765 84,832,360 79,925,723 Tax nurse 7,350,728 20,027,643 -363,014 10,783,119 50,253,725 TAX-ADJUSTED OPERATING INCOME operating(a) Income (with tax shield) 6 89,429,848 253,518,098 334,242,048 221,907,593 -113,843,321 Net Financing be 90,561,960 78,337,026 -9,980,751 74,049,241 29,671,997 Net Income 598,867,888 175,181,073 344,222,799 147,858,353-143,515,318 AVERAGED counterweight SHEEETS in operation(p) Assets OA 4,092,455,500 3,565,047,574 3,232,149,771 2,675,732,883 1,298,921,526 Operating Liabilities OL 586,781,902 413,876,932 226,978,666 114,315,953 65,446,413 Net Operating Assets NOA 3,505,673,597 3,151,170,642 3,005,171,105 2,561,416,930 1,233,475,113 fiscal Assets FA 698,292,480 577,207,307 352,961,235 131,202,419 26,432,942 Financial Liabilities FL 2,602,284,401 2,501,328,238 2,384,995,900 2,077,863,070 991,642,182 Net Financial Liabilities (Assets) NFL(NFA) 1,903,991,922 1,924,120,931 2,032,034,666 1,946,660,651 965,209,240 Shareholders justness SE 1,601,681,676 1,227,049,711 973,136,439 614,756,279 268,265,873 check 0 0 0 0 0Sales SA 1,617,426,750 1,418,025,552 1,280,394,033 914,982,769 761,470,520 Operating Income (with tax shield) OI 689,429,848 253,518,098 334,242,048 221,907,593 -113,843,321 Net Financing be NFC 90,561,960 78,337,026 -9,980,751 74,049,241 29,671,997 Net Income NI 598,867,888 175,181,073 344,222,799 147,858,353 -143,515,318 ROE decay BASIC summary ATO (sales / net operating assets) 0.46 0.45 0.43 0.36 0.62 PM (operating income / sales) 42.63% 17.88% 26.10% 24.25% -14.95% ROA (operating income / net operating assets) 19.67% 8.05% 11.12% 8.66% -9.23% check 0.00 0.00 0.00 0.00 0.00CLEV (net operating assets / equity) 2.19 2.57 3.09 4.17 4.60 ILEV (operating income / net income) 1.15 1.45 0.97 1.50 0.79 ROE ( net income / equity) 37.39% 14.28% 35.37% 24.05% -53.50% check 0.00 0.00 0.00 0.00 0.00 mobilize ANALYSIS ROA 19.67% 8.05% 11.12% 8.66% -9.23%Borrowing Rate (net pay costs / net financial liabilities) 4.76%4.07% -0.49% 3.80% 3.07% interruption (ROA financing costs) 14.91% 3.97% 11.61% 4.86% -12.30% FLEV (net financial liabilities / equity) 1. 19 1.57 2.09 3.17 3.60 Leveraged Spread 17.72% 6.23% 24.25% 15.39% -44.27% ROE 37.39% 14.28% 35.37% 24.05% -53.50%check 0.00 0.00 0.00 0.00 0.00Qantas ANALYSIS REFORMULATED BALANCE SHEET 06/30/2012NZD approach 06/30/2011NZD 06/30/2010NZDrestated 06/30/2009NZD 06/30/2008NZDOperating Assets Net Receivables 1,138,830,550 1,099,506,200 918,979,200 914,755,950 955,587,900 Total Inventories 385,418,800 398,263,200 269,443,350 269,443,350 202,112,500 Prepaid Expenses 410,020,000 434,663,600 326,034,900 326,034,900 0 Other Current Assets 89,179,350 23,553,200 86,154,300 90,377,550 287,808,200 Net Property, Plant & Equip. 14,493,181,950 14,615,831,200 10,571,639,400 10,571,639,400 9,826,709,750 Other Assets 1,618,553,950 1,675,489,000 1,319,343,300 1,319,343,300 1,558,691,600 18,135,184,600 18,247,306,400 13,491,594,450 13,491,594,450 12,830,909,950 Operating Liabilities Accounts Payable 661,157,250 639,148,200 506,790,000 506,790,000 482,644,650 Accrued Payroll 0 0 0 0 337,932,100Income Taxes Payable 0 0 0 0 0Dividends Payable 0 0 0 0 4,042,250Other Current Liabilities 5,488,117,700 5,418,306,6004,232,541,150 4,241,832,300 4,111,776,700 Provisions for Risks & Charges 755,461,850 692,678,200 473,004,000 473,004,000 430,903,850 Deferred Income 1,164,456,800 1,189,436,600 901,241,550 914,755,950 1,024,306,150 Deferred Taxes 660,132,200 821,150,200 603,924,750 603,924,750 490,729,150 Other Liabilities 229,611,200 527,805,800 195,114,150 195,114,150 216,664,600 8,958,937,000 9,288,525,600 6,912,615,600 6,935,421,150 7,098,999,450 Net Operating Assets 9,176,247,600 8,958,780,800 6,578,978,850 6,556,173,300 5,731,910,500 Financial Assets Cash & Short Term Inv. 3,573,324,300 4,083,268,400 3,325,387,050 3,325,387,050 3,377,704,100 3,573,324,300 4,083,268,400 3,325,387,050 3,325,387,050 3,377,704,100 Financial Liabilities Short Term Debt and Current LTD 1,147,030,950 617,736,200 532,129,500 522,838,350 491,537,600 Long Term Debt 5,566,021,500 5,839,052,400 4,320,384,750 4,306,870,350 3,957,362,750 6,713,052,450 6,456,788,600 4,852,514,250 4,829,708,700 4,448,900,350 Net Financial Liabilities (Assets) 3,139,728,150 2,373,520,200 1,527,127,200 1,504,321,650 1,071,196,250 Shareholders candour 6,036,519,450 6,585,260,600 5,051,851,650 5,051,851,650 4,660,714,250 check 0 0 0 0 0REFORMULATED INCOME STATEMENT Sales 16,117,886,200 15,945,516,400 11,632,519,800 11,632,519,800 11,764,564,400 Total Costs 16,221,416,250 15,412,357,600 11,379,969,450 11,379,969,450 11,506,668,850 Earnings before Interest and Taxation (EBIT) -103,530,050 533,158,800 252,550,350 252,550,350 257,895,550 Tax -107,630,250 79,224,400 52,368,300 52,368,300 46,890,100 Income after Taxation 4,100,200 453,934,400 200,182,050 200,182,050 211,005,450 NetInterest 254,212,400 187,355,000 102,202,650 102,202,650 111,566,100 Net Income (before Pref Dividends & Minority Interests) -250,112,200 266,579,400 97,979,400 97,979,400 99,439,350 TAX-SHIELD Effective Tax Rate 104.0% 14.9% 20.7% 20.7% 18.2% Net Interest 254,212,400 187,355,000 102,202,650 102,202,650 111,566,100 Tax Shield 264,280,218 27,839,900 21,192,523 21,192,523 20,284,745 TAX-ADJUSTED OPERATING INCOME Operating Income (with tax shield) -260,180,018 426,094,500 178,989,527 178,989,527 190,720,705 Net Financing Costs -10,067,818 159,515,100 81,010,127 81,010,127 91,281,355 Net Income -250,112,200 266,579,400 97,979,400 97,979,400 99,439,350 AVERAGED BALANCE SHEEETS Operating Assets OA 18,191,245,500 15,869,450,425 13,491,594,450 13,161,252,200 6,415,454,975 Operating Liabilities OL 9,123,731,300 8,100,570,600 6,924,018,375 7,017,210,300 3,549,499,725 Net Operating Assets NOA 9,067,514,200 7,768,879,825 6,567,576,075 6,144,041,900 2,865,955,250 Financial Assets FA 3,828,296,350 3,704,327,725 3,325,387,050 3,351,545,575 1,688,852,050 Financial Liabilities FL 6,584,920,525 5,654,651,425 4,841,111,475 4,639,304,525 2,224,450,1 75 Net Financial Liabilities (Assets) NFL(NFA) 2,756,624,175 1,950,323,700 1,515,724,425 1,287,758,950 535,598,125 Shareholders Equity SE 6,310,890,025 5,818,556,125 5,051,851,650 4,856,282,950 2,330,357,125 check 0 0 0 0 0Sales SA 16,117,886,200 15,945,516,400 11,632,519,800 11,632,519,800 11,764,564,400 Operating Income (with tax shield) OI -260,180,018 426,094,500 178,989,527 178,989,527 190,720,705 Net Financing Costs NFC -10,067,818 159,515,100 81,010,127 81,010,127 91,281,355 Net Income NI -250,112,200 266,579,40097,979,400 97,979,400 99,439,350 ROE DECOMPOSITION BASIC ANALYSIS ATO (sales / net operating assets) 1.78 2.05 1.77 1.89 4.10 PM (operating income / sales) -1.61% 2.67% 1.54% 1.54% 1.62% ROA (operating income / net operating assets) -2.87% 5.48% 2.73% 2.91% 6.65% check 0.00 0.00 0.00 0.00 0.00CLEV (net operating assets / equity) 1.44 1.34 1.30 1.27 1.23 ILEV (operating income / net income) 1.04 1.60 1.83 1.83 1.92 ROE ( net income / equity) -3.96% 4.58 % 1.94% 2.02% 4.27% check 0.00 0.00 0.00 0.00 0.00SPREAD ANALYSIS ROA -2.87% 5.48% 2.73% 2.91% 6.65%Borrowing Rate (net financing costs / net financial liabilities) -0.37% 8.18% 5.34% 6.29% 17.04% Spread (ROA financing costs) -2.50% -2.69% -2.62% -3.38% -10.39% FLEV (net financial liabilities / equity) 0.44 0.34 0.30 0.27 0.23 Leveraged Spread -1.09% -0.90% -0.79% -0.90% -2.39% ROE -3.96% 4.58% 1.94% 2.02% 4.27%check 0.00 0.00 0.00 0.00 0.00Company take back On Equity Per ShareY2008 Return On Equity Per ShareY2009 Return On Equity Per ShareY2010 Return On Equity Per ShareY2011 Return On Equity Per ShareY2012 1 2 -27.03 25.33 33.93 14.46 36.863 6.1 20.38 10.32 -18.51 -27.24 -16.22 6.01Malaysia industry average -10.47% 22.86% 22.13% -6.76% 4.81% 1 17.02 2 1.89 4.09 -4.072 22.45 19.73 18.2 11.46 15.253 11.61 -21.09 2.26 -7.32 2.36Austrilia industry average 17.03% 0.21% 7.45% 2.74% 4.51% Return On Equity Per ShareY2008 Return On Equity Per ShareY200 9 Return On Equity Per ShareY2010 Return On Equity Per ShareY2011 Return On Equity Per ShareY2012 1 -37.81 22.91 39.91 17.15 10.292 14.73 1.33 5.13 5.29 4.463 -27.03 25.33 33.93 14.46 36.864 15.02 -1.08 -13.73 4.69 5.275 -19.27 11.89 29.11 9.99 1.626 -76.38 57.88 57.42 19.5 17.287 -70.4 -11.18 23.64 -4.06 0.18 -51.42 4.23 34.87 17.31 8.159 -27.96 -10.48 33.11 0.5 1.3110 19.69 39.08 9.61 13.94 10.6611 -20.6 5.01 30.35 19.6 10.7912 -20.47 -30.29 -21.4 -5.16 -14.4313 -26.05 -3.37 14.11 -9.31 9.8314 6.1 20.38 10.32 -110.51 -27.2415 -0.11 -13.94 9.05 85.17 -13.5216 17.02 2 1.89 4.09 -4.0717 22.45 19.73 18.2 11.46 15.2517 16.21 43.36 56.31 44.68 25.9718 13.1 7.31 1.58 7.88 2.4819 -37.71 14.89 24.31 -14.64 9.4520 -14.02 0.34 17.5 10.69 1.3721 11.61 -21.09 2.26 -7.32 2.36Asia & Pacific part industry average -13.33% 8.37% 18.98% 6.15% 5.19%