Balance Sheet of VBA

Consolidated 
2010  2009  2008
$m  $m  $m 
Current assets 
Cash and cash equivalents  814.70 475.90 603.90
Trade and other receivables  141.10 122.30 108.50
Inventories 0.00 0.00 0.60
Derivative financial instruments  36.90 11.90 126.80
Current tax assets  0.00 1.70 23.50
Total current assets  992.70 611.80 863.30
Non-current assets 
Receivables  0.30 0.00 0.00
Investments accounted for using the equity method  7.30 6.70 6.30
Other financial assets  58.40 49.00 24.00
Derivative financial instruments  0.00 1.90 60.90
Property, plant and equipment  2753.90 2645.70 2336.00
Intangible assets  53.30 51.10 46.70
Deferred tax assets  6.00 0.70 0.70
Total non-current assets  2879.20 2755.10 2474.60
Total assets  3871.90 3366.90 3337.90
Current liabilities 
Trade and other payables  323.80 268.70 224.40
Interest-bearing liabilities  251.50 233.30 303.70
Provisions  82.40 75.10 43.40
Derivative financial instruments  34.90 88.60 72.30
Current Tax Liabilities 0.00 0.00 0.00
Unearned revenue  616.30 493.20 408.20
Total current liabilities  1308.90 1158.90 1052.00
Non-current liabilities 
Payables  0.00 0.10 0.30
Interest-bearing liabilities  1536.30 1546.10 1182.50
Provisions  49.90 42.50 47.00
Derivative financial instruments  8.30 36.10 3.70
Deferred tax liabilities  34.60 5.00 125.30
Unearned revenue  0.60 1.10 1.80
Total non-current liabilities  1629.70 1630.90 1360.60
Total liabilities  2938.60 2789.80 2412.60
Net assets  933.30 577.10 925.30
Equity 
Share capital  632.50 407.70 406.20
Reserves  (3.80) (113.90) 75.80
Retained profits  304.60 283.30 443.30
Total equity  933.30 577.10 925.30
21.3 75.2948808
21.3 75.2948808
224.80 224.8
110.10 110.1
21.30 75.3

0.0
nsolidated 
2007 2006
$m  $m 

704.00 573.00
74.30 63.20
0.40 0.40
26.40 6.50
0.00 4.70
805.10 647.80

0.00 0.00
2.80 0.40
24.80 7.90
0.00 0.00
1425.00 1206.30
47.30 52.80
0.70 0.60
1500.60 1268.00
2305.70 1915.80

163.30 154.90
86.70 107.30
44.00 33.90
105.00 0.00
0.10 0.00
332.70 246.70
731.80 542.80

0.50 0.80
759.70 697.60
38.00 39.00
0.00 0.00
29.90 26.40
2.30 3.00
830.40 766.80
1562.20 1309.60
743.50 606.20

405.30 400.90
(49.10) 12.90
387.30 192.40
743.50 606.20 1915.80
215.8 250.6 250.613
194.90 229.7 34.81 0.00
4.40 4.4
(62.00) -62
194.90 229.7 34.81

193.08
Balance Sheet of VBA

Consolidated 
2010  2009  2008
$m  $m  $m 
Current assets 
Cash and cash equivalents  1134.43 742.13 1031.82
Trade and other receivables - Current 141.10 122.30 108.50
Inventories 0.00 0.00 0.60
Derivative financial instruments - Current 26.10 11.90 3.60
Current tax assets  0.00 1.70 23.50
Total current assets  1301.63 878.03 1168.02
Non-current assets 
Receivables  0.30 0.00 0.00
Investments accounted for using the equity method  7.30 6.70 6.30
Other financial assets  58.40 49.00 24.00
Derivative financial instruments - Non Current 0.00 1.90 22.90
Property, plant and equipment  3852.29 3815.42 3096.28
Intangible assets  53.30 51.10 46.70
Deferred tax assets  59.45 43.53 48.02
Total non-current assets  4031.04 3967.65 3244.21
Total assets  5332.67 4845.68 4412.23
Current liabilities 
Trade and other payables  323.80 268.70 224.40
Interest-bearing liabilities - Current 392.25 386.46 439.18
Provisions - Current 82.40 75.10 43.40
Derivative financial instruments  - Current 3.20 12.30 72.30
Current Tax Liabilities 0.00 0.00 0.00
Unearned revenue - Current 616.30 493.20 408.20
Total current liabilities  1417.95 1235.76 1187.48
Non-current liabilities 
Payables  0.00 0.10 0.30
Interest-bearing liabilities - Non Current 2594.35 2708.34 1848.42
Provisions - Non Current 49.90 42.50 47.00
Derivative financial instruments - Non Current 8.30 36.10 3.70
Deferred tax liabilities  34.60 5.00 125.30
Unearned revenue - Non Current 0.60 1.10 1.80
Total non-current liabilities  2687.75 2793.14 2026.52
Total liabilities  4105.70 4028.90 3214.00
Net assets  1226.97 816.78 1198.23
Equity 
Share capital  632.50 407.70 406.20
Reserves  (3.80) (113.90) 75.80
Retained profits  598.27 522.98 716.23
Total equity  1226.97 816.78 1198.23
nsolidated 
2007 2006
$m  $m 

853.39 573.00 788.07

74.30 63.20 65.90
0.40 0.40 0.30
14.70 6.50 1.45
0.00 4.70 17.19
942.79 647.80 872.91

0.00 0.00 0.00

2.80 0.40 0.00
24.80 7.90 7.90
0.00 0.00
2263.02 2038.27
47.30 52.80
37.81 92.78
2375.73 2192.16
3318.52 2839.96

163.30 154.90
220.55 249.06
44.00 33.90
0.00 0.00
0.10 0.00
332.70 246.70
760.65 684.56

0.50 0.80
1550.58 1321.72
38.00 39.00
0.00 0.00
29.90 26.40
2.30 3.00
1621.28 1390.92
2381.93 2075.48
936.58 764.47

405.30 400.90 400.35

(49.10) 12.90
580.38 350.67 239.68 -1.90 75.81 24.03
936.58 764.47 293.67 50.54 -1.90 75.81 24.03
0.00

229.71 75.29
194.9
34.81
242.69 -100.95
242.69 -97.50
 VBA

2010 2009
Net Operating Assets (NOA)
Operating Assets
Trade and other receivables - Current ### ###
Receivables  0.30 -
Inventories - -
Current tax assets  - 1.70
7.30
Investments accounted for using the equity method  6.70
Property, plant and equipment  ### ###
Intangible assets  53.30 51.10
Deferred tax assets  59.45 43.53
Total Operating Assets 4,113.74 4,040.75

Operating Liabilities
Trade and other payables  ### ###
Provisions - Current 82.40 75.10
Current Tax Liabilities - -
Unearned revenue - Current ### ###
Payables  - 0.10
` Provisions - Non Current 49.90 42.50
Deferred tax liabilities  34.60 5.00
Unearned revenue - Non Current 0.60 1.10
Total Operating Liabilities 1,107.60 885.70
Net Operating Assets (NOA) 3,006.14 3,155.05

Net Debt
Financial Assets
Cash and cash equivalents  ### ###
Derivative financial instruments - Current 26.10 11.90
Other financial assets  58.40 49.00
Derivative financial instruments - Non Current - 1.90
Total Financial Assets 1,218.93 804.93
Financial Liabilities
Interest-bearing liabilities - Current ### ###
Interest-bearing liabilities - Non Current ### ###
Derivative financial instruments  - Current 3.20 12.30
Derivative financial instruments - Non Current 8.30 36.10
Total Financial Liabilities 2,998.10 3,143.20
Net Debt 1,779.17 2,338.27

Equity
Share capital  ### ###
Reserves  (3.80) ###
Retained profits  ### ###
 Total Equity 1,226.97 816.78

1,226.97 816.78
59% 74%
- -
Opening CSE 816.78 ###
Clean Surplus Profit 185.39 ###
Net Payments to Shareholders (d) ### (1.50)
Closing CSE ### 816.78

Clean surplus profit 185.39 ###

check csp - -
issue shares
dividend paid - -
contributed eq ### (1.50)

CSP & d Calculation 2010 2009

Dividend Payment - -
Movement in Contributed Equity (224.80) (1.50)
Total d (224.80) (1.50)

Movement in reserves 110.10 (189.70)

Net Profit (Loss) 75.29 (193.25)
CSP 185.39 (382.95)

Check OEt =
Year 2010 1,226.97
Year 2009 816.78
Year 2008 1,198.23
Year 2007 936.58
2008 2007 2006

### 74.30 63.20

- - -
0.60 0.40 0.40
23.50 - 4.70
6.30 2.80 0.40
### ### ###
46.70 47.30 52.80
48.02 37.81 92.78
3,329.91 2,425.63 2,252.56 5,333 4,846 4,412 3,319

### 163.30 ###

43.40 44.00 33.90
- 0.10 -
### 332.70 ###
0.30 0.50 0.80
47.00 38.00 39.00
### 29.90 26.40
1.80 2.30 3.00
850.40 610.80 504.70 4,106 4,029 3,214 2,382
2,479.51 1,814.83 1,747.86 0.956 0.825 0.974 1.214

### 853.39 ###

3.60 14.70 6.50
24.00 24.80 7.90
22.90 - -
1,082.32 892.89 587.40

### 220.55 ###

### ### ###
72.30 - -
3.70 - -
2,363.60 1,771.13 1,570.78
1,281.28 878.24 983.38

### 405.30 ###

75.80 (49.10) 12.90
### 580.38 ###
1,198.23 936.58 764.47

1,198.23 936.58 764.47

52% 48% 56%
- -
936.58 764.47
302.45 188.61
40.80 16.50
### 936.58

302.45 188.61
- -

41.70 20.90 259.80

(0.90) (4.40) (0.55)

2008 2007 2006

41.70 20.90 259.80
(0.90) (4.40) (0.55)
40.80 16.50 259.25

124.90 (62.00) 9.21

177.55 250.61 327.19
302.45 188.61 336.40

Oet-1 + CSP - d
816.78 185.39 (224.80)
1,198.23 (382.95) (1.50)
936.58 302.45 40.80
764.47 188.61 16.50
 Net Operating Assets (NOA)
Operating Assets
Trade and other receivables - Current
Receivables 
Inventories
Current tax assets 
Investments accounted for using the equity method 
Property, plant and equipment 
Intangible assets 
Deferred tax assets 
2,840 Total Operating Assets

Operating Liabilities
Trade and other payables 
Provisions - Current
Current Tax Liabilities
Unearned revenue - Current
Payables 
Provisions - Non Current
Deferred tax liabilities 
Unearned revenue - Non Current
2,075 Total Operating Liabilities
0.936 Net Operating Assets (NOA)

Net Debt
Financial Assets
Cash and cash equivalents 
Derivative financial instruments - Current
Other financial assets 
Derivative financial instruments - Non Current
Total Financial Assets
Financial Liabilities
Interest-bearing liabilities - Current
Interest-bearing liabilities - Non Current
Derivative financial instruments  - Current
Derivative financial instruments - Non Current
Total Financial Liabilities
Net Debt

Equity
Share capital 
Reserves 
Retained profits 
Total Equity
2010 2009 2008 2007 2006

4.69% 3.88% 4.38% 4.09% 3.62%

0.01% 0.00% 0.00% 0.00% 0.00%
0.00% 0.00% 0.02% 0.02% 0.02%
0.00% 0.05% 0.95% 0.00% 0.27%
0.24% 0.21% 0.25% 0.15% 0.02%
128.15% 120.93% 124.88% 124.70% 116.62%
1.77% 1.62% 1.88% 2.61% 3.02%
1.98% 1.38% 1.94% 2.08% 5.31%
136.84% 128.07% 134.30% 133.66% 128.88%

10.77% 8.52% 9.05% 9.00% 8.86%

2.74% 2.38% 1.75% 2.42% 1.94%
0.00% 0.00% 0.00% 0.01% 0.00%
20.50% 15.63% 16.46% 18.33% 14.11%
0.00% 0.00% 0.01% 0.03% 0.05%
1.66% 1.35% 1.90% 2.09% 2.23%
1.15% 0.16% 5.05% 1.65% 1.51%
0.02% 0.03% 0.07% 0.13% 0.17%
36.84% 28.07% 34.30% 33.66% 28.88%
100.00% 100.00% 100.00% 100.00% 100.00%

63.76% 31.74% 80.53% 97.17% 58.27%

1.47% 0.51% 0.28% 1.67% 0.66%
3.28% 2.10% 1.87% 2.82% 0.80%
0.00% 0.08% 1.79% 0.00% 0.00%
68.51% 34.42% 84.47% 101.67% 59.73%

22.05% 16.53% 34.28% 25.11% 25.33%

145.82% 115.83% 144.26% 176.55% 134.41%
0.18% 0.53% 5.64% 0.00% 0.00%
0.47% 1.54% 0.29% 0.00% 0.00%
168.51% 134.42% 184.47% 201.67% 159.73%
100.00% 100.00% 100.00% 100.00% 100.00%

51.55% 49.92% 33.90% 43.27% 52.44%

-0.31% -13.95% 6.33% -5.24% 1.69%
48.76% 64.03% 59.77% 61.97% 45.87%
100.00% 100.00% 100.00% 100.00% 100.00%
Income Statement of VBA

C
2010 
$m 
Revenue and income 
Revenue  2,976.1
Other income  5.1
Share of net profits of associate accounted for using the equity method  0.60
2,981.80
Operating expenditure 
Aircraft operating costs  188.8
Airport charges, navigation and station operations  591.2
Contract and other maintenance costs  135.4
Commissions and other marketing and reservations costs  195.3
Fuel and oil  782.1
Labour and staff related costs  639.8
Other expenses from ordinary activities  145.9
Depreciation and amortisation  203.8
Foreign exchange losses  21.60
Total operating expenses  2,903.90
Profit / (loss) before tax expense, finance costs, ineffective cash flow hedges and 
non-designated derivatives  77.90
Ineffective cash flow hedges and non-designated derivatives  12.60
Profit / (loss) before related income tax expense and net finance costs  90.50
Finance costs  (83.90)
Finance income  27.70
Net financing costs  (56.20)
Profit / (loss) before income tax expense  34.30
Income tax expense / (benefit)  13.00
Net profit / (loss) attributable to the members of Virgin Blue Holdings Limited  21.30

0.38
Other comprehensive income 
Exchange differences on translation of foreign operations  26.9 
Effective portion of changes in fair value of cash flow hedges  (20.2) 
Net change in fair value of cash flow hedges transferred to profit or loss  111.9 
Income tax on other comprehensive income  (10.5) 
Other comprehensive income for the period net of income tax  108.1 
Total comprehensive income for the period attributable to equity holders of 
Virgin Blue Holdings Limited  129.4 
 Consolidated 
2009 2008 2007 2006
$m  $m  $m  $m 

2,600.3 2,321.7 2,161.4 1,389.2

34.7 3.5 5.3 2.9
0.40 9.60 2.40 0.40
2,635.40 2,334.80 2,169.10 1,392.50

141.1 141.7 137.7 112.0

535.3 457.9 387.0 266.8
140.0 109.0 107.0 77.7
182.8 130.1 111.8 81.5
748.9 589.3 488.9 330.5
595.2 536.1 428.1 284.3
112.4 96.1 84.1 43.4
183.7 123.7 100.2 63.8
25.10 0.00 0.00 0.00
2,664.50 2,183.90 1,844.80 1,260.00

(29.10) 150.90 324.30 132.50

(133.20) 16.80 0.00 0.00
(162.30) 167.70 324.30 132.50
(90.50) (69.20) (57.70) (36.60)
26.60 41.90 41.90 26.90
(63.90) (27.30) (15.80) (9.70)
(226.20) 140.40 308.50 122.80
(66.20) 42.70 92.70 38.30
(160.00) 97.70 215.80 84.50

0.29 0.30 0.30 0.31

(12.8)  (2.3) 
(259.5)  181.5 
29.8  (59.6) 
53.8 
(188.7) 

(348.7)  217.3 
Income Statement of VBA

2010 
$m 
Revenue and income 
Revenue  2,819.0
Other income  5.1
Share of net profits of associate accounted for using the equity method  0.60
Net adjusted income from capitalised lease 50.54
2,875.28
Operating expenditure 
Aircraft operating costs  188.8
Airport charges, navigation and station operations  591.2
Contract and other maintenance costs  135.4
Commissions and other marketing and reservations costs  195.3
Fuel and oil  621.6
Labour and staff related costs  639.8
Other expenses from ordinary activities  145.9
Depreciation and amortisation  203.8
Foreign exchange losses  21.60
Total operating expenses  2,743.39
Profit / (loss) before tax expense, finance costs, ineffective cash flow hedges and 
non-designated derivatives  131.89
Ineffective cash flow hedges and non-designated derivatives  12.60
Profit / (loss) before related income tax expense and net finance costs  144.49
Finance costs  (83.90)
Finance income  27.70
Net financing costs  (56.20)
Profit / (loss) before income tax expense  88.29
Income tax expense / (benefit)  13.00
Net profit / (loss) attributable to the members of Virgin Blue Holdings Limited  75.29

Other comprehensive income 

Exchange differences on translation of foreign operations  26.9 
Effective portion of changes in fair value of cash flow hedges  (20.2) 
Net change in fair value of cash flow hedges transferred to profit or loss  111.9 
Income tax on other comprehensive income  (10.5) 
Other comprehensive income for the period net of income tax  108.1 
Total comprehensive income for the period attributable to equity holders of 
Virgin Blue Holdings Limited  129.4 
 Consolidated 
2009 2008 2007 2006
$m  $m  $m  $m 

2,568.9 2,325.7 2,172.2 1,389.2

34.7 3.5 5.3 2.9
0.40 9.60 2.40 0.40
-1.90 75.81 24.03 242.69
2,602.15 2,414.65 2,203.91 1,635.19

141.1 141.7 137.7 112.0

535.3 457.9 387.0 266.8
140.0 109.0 107.0 77.7
182.8 130.1 111.8 81.5
748.9 589.3 488.9 330.5
595.2 536.1 428.1 284.3
112.4 96.1 84.1 43.4
183.7 123.7 100.2 63.8
25.10 0.00 0.00 0.00
2,664.50 2,183.90 1,844.80 1,260.00

(62.35) 230.75 359.11 375.19

(133.20) 16.80 0.00 0.00
(195.55) 247.55 359.11 375.19
(90.50) (69.20) (57.70) (36.60)
26.60 41.90 41.90 26.90
(63.90) (27.30) (15.80) (9.70)
(259.45) 220.25 343.31 365.49
(66.20) 42.70 92.70 38.30
(193.25) 177.55 250.61 327.19

(12.8)  (2.3) 
(259.5)  181.5 
29.8  (59.6) 
53.8 
(188.7) 

(348.7)  217.3 
 2010 2009 2008 2007 2006
lease payment 172.1 126 112.3 119.3 97.134
maintenance reserve 52.9 44.2 34.2 38.5 31.113
other 67.1 58 53 37.7 29.021
292.1 228.2 199.5 195.5 157.268
VBA

Operating Revenues
Revenue 
Other income 
Share of net profits of associate accounted for using the equity
method 
Net adjusted income from capitalised lease
Total Revenue
Operating Expenses
Aircraft operating costs 
Airport charges, navigation and station operations 
Contract and other maintenance costs 
Commissions and other marketing and reservations costs 
Fuel and oil 
Labour and staff related costs 
Depreciation and amortisation 
Other expenses from ordinary activities 
Foreign exchange losses 
Total Operating Expenses
Net Operating Profit/ (Loss) from ordinary activities
Other Operating Income/Expenses
Ineffective cash flow hedges and non-designated derivatives 
Net Operating Income/(Loss) before Tax
Tax on operating profit
Clean Surplus Adjustment
Net Operating Profit/ (Loss) After Tax
Net Financial Expenses
Finance costs 
Finance income 
NFE
Tax effect at 30%
Net Interest Expense After Tax

Comprehensive Income (csp)

Operating Revenues
 Revenue 
Other income 
Share of net profits of associate accounted for using the equity
method 
Net adjusted income from capitalised lease
Total Revenue
Operating Expenses
Aircraft operating costs 
Airport charges, navigation and station operations 
Contract and other maintenance costs 
Commissions and other marketing and reservations costs 
Fuel and oil 
Labour and staff related costs 
Depreciation and amortisation 
Other expenses from ordinary activities 
Foreign exchange losses 
Total Operating Expenses
Net Operating Profit/ (Loss) from ordinary activities
Other Operating Income/Expenses
Ineffective cash flow hedges and non-designated derivatives 
Net Operating Income/(Loss) before Tax
Tax on operating profit
Clean Surplus Adjustment
Net Operating Profit/ (Loss) After Tax
Net Financial Expenses
Finance costs 
Finance income 
NFE
Tax effect at 30%
Net Interest Expense After Tax

Comprehensive Income (csp)

2010 2009 2008 2007 2006

2,819.04 2,568.95 2,325.74 2,172.18 1,389.20

5.10 34.70 3.50 5.30 2.90

0.60 0.40 9.60 2.40 0.40

50.54 (1.90) 75.81 24.03 242.69
2,875.28 2,602.15 2,414.65 2,203.91 1,635.19

188.80 141.10 141.70 137.70 112.00

591.20 535.30 457.90 387.00 266.80
135.40 140.00 109.00 107.00 77.70
195.30 182.80 130.10 111.80 81.50
621.59 748.90 589.30 488.90 330.50
639.80 595.20 536.10 428.10 284.30
203.80 183.70 123.70 100.20 63.80
145.90 112.40 96.10 84.10 43.40
21.60 25.10 0.00 0.00 0.00
2,743.39 2,664.50 2,183.90 1,844.80 1,260.00
131.89 (62.35) 230.75 359.11 375.19

12.60 (133.20) 16.80 0.00 0.00

144.49 (195.55) 247.55 359.11 375.19
29.86 (47.03) 50.89 97.44 41.21
110.10 (189.70) 124.90 (62.00) 9.21
224.73 (338.22) 321.56 199.67 343.19

(83.90) (90.50) (69.20) (57.70) (36.60)

27.70 26.60 41.90 41.90 26.90
(56.20) (63.90) (27.30) (15.80) (9.70)
(16.86) (19.17) (8.19) (4.74) (2.91)
(39.34) (44.73) (19.11) (11.06) (6.79)

185.39 (382.95) 302.45 188.61 336.40

2010 2009 2008 2007 2006

 98.04% 98.72% 96.32% 98.56% 84.96%
0.18% 1.33% 0.14% 0.24% 0.18%
0.02% 0.02% 0.40% 0.11% 0.02%

1.76% -0.07% 3.14% 1.09% 14.84%

100% 100% 100% 100% 100%

6.57% 5.42% 5.87% 6.25% 6.85%

20.56% 20.57% 18.96% 17.56% 16.32%
4.71% 5.38% 4.51% 4.86% 4.75%
6.79% 7.02% 5.39% 5.07% 4.98%
21.62% 28.78% 24.41% 22.18% 20.21%
22.25% 22.87% 22.20% 19.42% 17.39%
7.09% 7.06% 5.12% 4.55% 3.90%
5.07% 4.32% 3.98% 3.82% 2.65%
0.75% 0.96% 0.00% 0.00% 0.00%
95.41% 102.40% 90.44% 83.71% 77.06%
4.59% -2.40% 9.56% 16.29% 22.94%

0.44% -5.12% 0.70% 0.00% 0.00%

5.03% -7.52% 10.25% 16.29% 22.94%
1.04% -1.81% 2.11% 4.42% 2.52%
3.83% -7.29% 5.17% -2.81% 0.56%
7.82% -13.00% 13.32% 9.06% 20.99%
0.00% 0.00% 0.00% 0.00% 0.00%
-2.92% -3.48% -2.87% -2.62% -2.24%
0.96% 1.02% 1.74% 1.90% 1.65%
-1.95% -2.46% -1.13% -0.72% -0.59%
-0.59% -0.74% -0.34% -0.22% -0.18%
-1.37% -1.72% -0.79% -0.50% -0.42%

6.45% -14.72% 12.53% 8.56% 20.57%

 0

8%

(0.028) (0.029) (0.029) (0.033) (0.023) (0.028)

225

185.39
(39)
185
1. Forecast sales 2009 2010 2011 2012
Actual Actual Forecast Forecast
Sales growth rate - estimated 8% 8% 8%
Sales 2,635.40 2,981.80 3,220.34 3,477.97

2. Forecast ATO and calculate NOA

Forecast ATO 0.92 0.97 0.97 0.97
Calculate NOA (NOA=Sales/ATO) 2,865 3,006 3,320 3,586

3. Revise sales forecasts

4. Forecast PM and calculate NOPAT

Forecast PM (after tax) 10% 10% 10%
Calculate NOPAT (NOPAT = Sales x PM) 225 322 348

5. Forecast other operating income

- -

6.Calculate free cash flow (NOPAT – change in NOA)

change in NOA 142 314 266
calculate FCF 83 8 82

7. Forecast net dividend payout

estimated as a % of NOPAT 0% 4% 4%
- 13 14
8. Calculate net payments to debt holders
payments = FCF - dividend 83 (5) 68

9. Forecast cost of debt and debt balance

Forecast cost of debt after tax 5% 5% 5%
Opening debt balance 2,338 1,779 1,873
Calculate cost of debt (net financing after tax) 117 89 94
Calculate closing debt (opening + interest - repayment) 1,779 1,873 1,898
check leverage (debt/noa ratio) - 59.18% 56.41% 52.94%

10.Calculate comprehensive income

NOPAT - NFEAT - 108 233 254

11.Calculate equity (and check it works using both equations)

equity = assets - liabilities - 1,227 1,447 1,687
closing equity = opening equity + income - dividend - 1,227 1,447 1,687
Check - - -

ROE 17.6% 17.4% 16.2%

OROA 7.7% 10.2% 10.1%
Dividend Payout as percentage of CSP 0.0% 5.5% 5.5%
Sustainable Growth Rate 17.6% 16.5% 15.3%

1 1 2
Discount Dividend Valuation - - 13 14
Dividend Growth 8.0%

Cost of Capital 12.40%

TV Growth Rate 3.6%
TV
Discount Factor 1.12 1.12 1.26
PV dividends 0 11 11
PV of TV

Total PV 194.57

Number of Shares 2,209

Share Price 0.09

1 1 2
Discount Free Cash Flow - 83 8 82
FCF Growth -90.1% 898.5%

Cost of Capital 7.25%

TV Growth Rate 4.5%
TV
Discount Factor 1.12 1.07 1.15
PV FCF 0 8 71
PV of TV

Total PV 3,632.94
Less Debt 1,779.17
PV equity 1,853.77

Number of Shares 2,209

Share Price 0.84

1 1 2
Discount Abnormal Earnings
CSP - 108 233 254
BE 0 1,227 1,447 1,687
AE - 81 75
AE Growth -8%

Cost of Capital 12.40%

TV Growth Rate 3.6%
TV
Discount Factor 1.12 1.12 1.26
PV AE 0 72 59
PV of TV

Total PV 363.75
Plus BV 1,226.97
PV equity 1,590.72

Number of Shares 2,209

Share Price 0.720

 1 2 3 4
Discount Free Cash Flow #REF! #REF! #REF! #REF!
FCF Growth #REF! #REF! #REF!

Cost of Capital 13%

TV Growth Rate 7.2%
TV
Discount Factor 1.12 1.26 1.42 1.60
PV FCF #REF! #REF! #REF! #REF!
PV of TV

Total PV #REF!
Less Debt -
PV equity #REF!

Number of Shares 53,703

Share Price #REF!

1 2 3 4
Discount Abnormal Earnings
CSP #REF! #REF! #REF! #REF!
BE 0 #REF! #REF! #REF! #REF!
AE #REF! #REF! #REF! #REF!
AE Growth #REF! #REF! #REF!
Cost of Capital 13%
TV Growth Rate 6.4%
TV
Discount Factor 1.12 1.26 1.42 1.60
PV AE #REF! #REF! #REF! #REF!
PV of TV

Total PV #REF!
Plus BV -
PV equity #REF!

Number of Shares 53,703

Share Price #REF!

 2013 2014 2015 2016 2017 2018 2019 2020 2021
Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast
8% 8% 8% 8% 8% 8% 8% 8% 8%
3,756.21 4,056.71 4,381.24 4,731.74 5,110.28 5,519.10 5,960.63 6,437.48 6,952.48

0.97 0.97 0.97 0.97 0.97 0.97 0.97 0.97 0.97

3,872 4,182 4,517 4,878 5,268 5,690 6,145 6,637 7,168

10% 10% 10% 10% 10% 10% 10% 10% 10%

376 406 438 473 511 552 596 644 695

- - - - - - - - -

287 310 335 361 390 421 455 492 531

89 96 104 112 121 130 141 152 164

4% 4% 4% 4% 4% 4% 4% 4% 4%
15 16 18 19 20 22 24 26 28

74 80 86 93 100 108 117 126 137

 5% 5% 5% 5% 5% 5% 5% 5% 5%
1,898 1,919 1,936 1,946 1,951 1,948 1,937 1,917 1,886
95 96 97 97 98 97 97 96 94
1,919 1,936 1,946 1,951 1,948 1,937 1,917 1,886 1,844
49.56% 46.28% 43.09% 39.99% 36.97% 34.04% 31.19% 28.42% 25.73%
2.77%

281 310 341 376 413 455 499 548 601

1,953 2,247 2,570 2,927 3,320 3,753 4,228 4,750 5,323

1,953 2,247 2,570 2,927 3,320 3,753 4,228 4,750 5,323
- - - - - - - - -

15.4% 14.7% 14.2% 13.7% 13.2% 12.9% 12.5% 12.2% 11.9%

10.1% 10.1% 10.1% 10.1% 10.1% 10.1% 10.1% 10.1% 10.1%
5.4% 5.2% 5.1% 5.0% 4.9% 4.9% 4.8% 4.7% 4.6%
14.6% 14.0% 13.4% 13.0% 12.6% 12.2% 11.9% 11.6% 11.4%

3 4 5 6 7 8 9 10 11
15 16 18 19 20 22 24 26 28
8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0%

316
1.42 1.60 1.79 2.02 2.27 2.55 2.86 3.22
 11 10 10 9 9 9 8 8
98.18700832

3 4 5 6 7 8 9 10
89 96 104 112 121 130 141 152 164
8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0%

5,969.58
1.23 1.32 1.42 1.52 1.63 1.75 1.88 2.01
72 72 73 73 74 75 75 76
2,963.90
 3 4 5 6 7 8 9 10

281 310 341 376 413 455 499 548 601

1,953 2,247 2,570 2,927 3,320 3,753 4,228 4,750 5,323
71 68 63 57 51 43 34 24 12
-4% -6% -7% -9% -12% -15% -21% -30%

135.1520942
1.42 1.60 1.79 2.02 2.27 2.55 2.86 3.22
50 42 35 28 22 17 12 7
- 18.42176168
 5 6
#REF! #REF!
#REF! #REF!

#REF!
1.79 2.02
#REF!
#REF!

5 6

#REF! #REF!
#REF! #REF!
#REF! #REF!
#REF! #REF!
#REF!
1.79 2.02
#REF!
#REF!
3.47% 3.38% 3.28% 3.19% 3.10% 3.02% 2.93% 2.85% 2.77% 2.69% 25.73% 0.00% 0.00%
0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Cost of Capital (equity) Computation Cost of Capital (WACC) Computation
2009 2010 2009 2010 Cost of Capital 2009
Beta 1.48 Debt 1,810 2,059 Debt/Asset 58.7% 66.8% 5% 2.94%
Risk Free Rate 5.00% Equity 1,022 1,022 Equity/Asset 33.2% 33.2% 12.4% 4.11%
Risk Premium 5% Assets 3,081 3,081 WACC 7.05%
Leverage 1.77 2.01
CAPM 12.4% Mid-Point
 tax rate 0.3
debt 1,779.17 0.59
equity 1,226.97 2.45
2010
3.34% beta company 1.48
4.11% beta equity 2.98
7.45%

7.25%
Qantas Airways Ltd
Valuations

2004 2005 2006 2007

Residual Income Models (Abnormal earnings model)

Net Profit 336.4 188.6

Shareholders Funds 764.5 936.6

Residual Income
Forecast 336.40 131.62
(0.61)

Valuation
Cost of Capital 7%
Terminal Growth Rate 0%
Book Value
Residual Income Forecast
Terminal

Market Value 960.97

Shares 2,209.13

Share Price 0.435

2004 2005 2006 2007

Dividend Valuation

Dividend 314.6 337.6 355.0

Shares 2,209.1 2,209.1 2,209.1 2,209.1

DPS 0.142 0.153 0.161

Valuation
Cost of Capital 7%
Terminal Growth Rate 1.5%
Dividend Forecast $0.52
Terminal Value 2.12

Share Price 2.64

2004 2005 2006 2007

Residual Operating income model

NOPAT 388.79 713.42012418527 754.14413082165 797.31157785622

NOA 10,666.8 10,944.3 11,573.1 12,239.5

Residual Operating Income

Forecast 20.08 42.76 45.06

Valuation
Cost of Capital (firm) 6.5%
Terminal Growth Rate 2%
 NOA 10,666.8
Residual Operating Income Forecast 130.8
Terminal 778.6

Firm value 11,576.2

Book value of debt 5,404.7

Equity value 6,171.51

Shares 2,209.1

Share Price 2.79

2002 2004 2005 2006 2007

Discounted cash flow model

NOPAT 388.79 713.42012418527 754.14413082165 797.31157785622

NOA 7146.3 10,666.8 10,944.3 11,573.1 12,239.5
change NOA 3,520.5 277.5 628.7 666.5
fcf: (3,131.7) 435.9 125.4 130.8

Free cash flow

Forecast 435.91 125.40 130.85

Valuation
Cost of Capital (firm) 6.5%
Terminal Growth Rate 1.5%

FCF Forecast 734.4

Terminal 2,219.0

Firm value 2,953.3

Book value of debt 5,404.7

Equity value - 2,451.36

Shares 2,209.1

Share Price (1.11)

 2008 2009

302.4 (383.0)

1,198.2 816.8

232.63 (472.28)
0.77 (3.03)

2008 2009

373.4 392.9

2,209.1 2,209.1

0.169 0.178

2008 2009

843.06907171286 891.5720152009

12,946.0 13,694.8

47.50 50.08
 2008 2009

843.06907171286 891.5720152009
12,946.0 13,694.8
706.5 748.8
136.6 142.7

136.61 142.73