Investor Presentaiton
QANTAS LOYALTY
Description of key accounting items
Marketing Revenue
Marketing Services
Revenue
Breakage
Revenue Received in
Advance
Redemption Revenue
Comprised of two components, Marketing Services Revenue and Breakage (see below), and is recognised at the time Qantas Points are issued to
Earn Partners
Measured as the difference between Gross Billings received and the Fair Value of Qantas Points deferred (see below)
Marketing Services Revenue is revenue earned for the service Qantas Loyalty provides its Earn Partners, which drives consumer behaviour to
purchase products offered by those Earn Partners. It is the premium paid above the Fair Value of Qantas Points for Earn Partners to be part of the
Program, and includes payment for use of the Qantas and related brands
Breakage is an estimate of the rate of Point expiry, and refers to the expectation that not all Qantas Points issued will ultimately be redeemed.
Point expiry follows a period of inactivity on a member's account for 18 months
Breakage Rate is estimated by the Directors, in conjunction with an independent actuary
Changes in Breakage expectations are accounted for prospectively as a change in accounting estimate
When Gross Billings are received from Earn Partners, an amount equal to the Fair Value of Qantas Points is deferred, creating a liability on the
Balance Sheet for Revenue Received in Advance
The Fair Value of Qantas Points deferred is equal to the retail value of Awards associated with Qantas Points expected to be redeemed in the
future
Revenue Received in Advance is classified as current or non-current based on the estimated redemption pattern of Qantas Points
Revenue Received in Advance is only recognised as earned revenue for accounting purposes at the time Qantas Points are redeemed for Awards
Redemption Revenue is recognised in the Income Statement when a member redeems their Qantas Points for Awards
Revenue Received in Advance (Balance Sheet) is simultaneously reduced by the amount of Redemption Revenue recognised.
The amount of Redemption Revenue recognised is equal to the weighted average value of Qantas Points in the Qantas Points Pool multiplied by
the number of Qantas Points redeemed
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