Cathay Pacific 2009 Annual Report Download - page 50

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Principal Accounting Policies
1. Basis of accounting
The accounts have been prepared in accordance
with all applicable Hong Kong Financial Reporting
Standards (“HKFRS”) (which include all applicable
Hong Kong Accounting Standards (“HKAS”),
Hong Kong Financial Reporting Standards and
Interpretations) issued by the Hong Kong Institute
of Certified Public Accountants (“HKICPA”). These
accounts also comply with the requirements of the
Hong Kong Companies Ordinance and the applicable
disclosure provisions of the Rules Governing the
Listing of Securities (the “Listing Rules”) of The
Stock Exchange of Hong Kong Limited (the
“Stock Exchange”).
The measurement basis used is historical cost
modified by the use of fair value for certain financial
assets and liabilities as explained in accounting
policies 8, 9, 10 and 12 below.
The preparation of the accounts in conformity with
HKFRS requires management to make certain
estimates and assumptions which affect the amounts
of fixed assets, intangible assets, long-term
investments, retirement benefit obligations and
taxation included in the accounts. These estimates
and assumptions are continually re-evaluated and are
based on management’s expectations of future
events which are considered to be reasonable.
The following new and revised HKAS and HKFRS
issued by the HKICPA were adopted:
(a) HK (IFRIC) Interpretation 13 “Customer Loyalty
Programmes”
Prior to adopting HK (IFRIC) Interpretation 13, the
incremental cost of providing awards in exchange
for redemption of miles earned by members was
accrued as an operating cost and a liability after
allowing for miles which were not expected to be
redeemed. As members redeem their miles the
liability was reduced to reflect the reduction in
the outstanding obligation. Effective from 1st
January 2009, part of the revenue from the initial
sales transaction equal to the awards at their fair
value is deferred until the awards are redeemed,
and for redemption on the Group’s flights until
the transportation service is provided.
The effect of this change in accounting treatment
is as follows:
Group
2009
HK$M
2008
HK$M
Consolidated statement of comprehensive income
Turnover
Increase/(decrease) in passengers services 82 (82)
Increase in catering, recoveries and other services 132 67
Expenses
Decrease in landing, parking and route expenses 202 216
Increase in others (333) (301)
Increase in taxation (9) (4)
Increase/(decrease) in profit attributable to owners of Cathay Pacific 74 (104)
Increase/(decrease) in earnings per share 1.9¢ (3.5)¢
Group Company
2009
HK$M
2008
HK$M
2007
HK$M
2009
HK$M
2008
HK$M
2007
HK$M
Statements of financial position
Decrease in deferred taxation 137 146 150 137 146 150
Increase/(decrease) in trade and other
receivables 32 (11) 32 (11)
Decrease in trade and other payables 1,280 1,199 1,079 1,340 1,280 1,143
Increase in unearned transportation
revenue (2,770) (2,771) (2,538) (2,770) (2,771) (2,538)
Decrease in reserves (1,350) (1,424) (1,320) (1,290) (1,343) (1,256)
48