Cathay Pacific 1998 Annual Report Download - page 24

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Financial Review
22 CATHAY PACIFIC AIRWAYS LIMITED ANNUAL REPORT 1998
Net debt and equity
HK$ million Times
Shareholders’ funds Net borrowings
Net debt equity ratio
9897969594
0
5,000
10,000
15,000
20,000
25,000
30,000
0.1
0.2
0.3
0.4
0.5
0.6
0.7
Taxation
•The taxation charge decreased by HK$395 million to a credit of HK$104 million as a result of the
loss this year and the write-back of overseas provisions.
Dividends
•Total amount paid and proposed for 1998 is
HK$339 million.
Financial position
•Total assets as at 31st December 1998
amounted to HK$68,114 million.
•Additions to fixed assets amounted to
HK$10,042 million, comprising HK$7,452 million
for aircraft purchases including advance
payments, HK$1,902 million for expenditure at
the Hong Kong International Airport, and
HK$688 million for properties and other
equipment.
•Funds with investment managers comprise
government and corporate bonds, other fixed
and floating rate instruments and bank
balances.
•During the year a decision was taken to mark-to-market the securities previously classified as
other liquid investments and recorded at amortised cost. As a result, other liquid funds have been
reclassified as current assets. Any gain or loss arising from the revaluation of these securities is
taken to the profit and loss account.
•Gross borrowings increased by 17.5% to HK$27,284 million but net borrowings increased by
70.1% to HK$14,958 million.
•The Group’s shareholders’ funds decreased by 3.6% to HK$24,696 million.
•Net debt equity ratio increased to 0.61 times.
Financial Risk Management Policy
•In the normal course of business, the Group is exposed to fluctuations in foreign currencies,
interest rates and jet fuel prices.
•These exposures are managed, sometimes with the use of derivative financial instruments, by the
Treasury Department of Cathay Pacific in accordance with the Group’s approved policies and
parameters.
•Derivative financial instruments are used solely for financial risk management purposes and the
Group does not hold or issue derivative financial instruments for trading purposes.