Cathay Pacific 2014 Annual Report Download - page 91

Download and view the complete annual report

Please find page 91 of the 2014 Cathay Pacific annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 112

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112

ANNUAL REPORT 2014
89Notes to the Financial Statements Supplementary Information
31. Financial risk management (continued)
(ii) Interest rate risk
The Group’s cash flow exposure to interest rate risk arises primarily from long-term borrowings at floating rates.
Interest rate swaps are used to manage the interest rate profile of interest-bearing financial liabilities on a
currency by currency basis to maintain an appropriate fixed rate and floating rate ratio. Interest rate risk is
measured by using sensitivity analysis on variable rate instruments.
At the reporting date the interest rate profile of the interest-bearing financial instruments was as below:
Group Company
2014
HK$M
2013
HK$M
2014
HK$M
2013
HK$M
Fixed rate instruments
Net amounts due from subsidiaries ––178 147
Loans receivable 601 663 601 663
Long-term loans (3,411) (3,502) (3,166) (3,502)
Obligations under finance leases (8,592) (10,486) (7,520) (12,437)
Interest rate and currency swaps (24,057) (24,351) (23,301) (23,958)
Net exposure (35,459) (37,676) (33,208) (39,087)
Group Company
2014
HK$M
2013
HK$M
2014
HK$M
2013
HK$M
Variable rate instruments
Loans due from associates 1,356 –130 –
Net amounts due from subsidiaries ––7,084 7,245
Liquid funds 21,098 27,736 11,357 17,272
Long-term loans (30,286) (27,286) (12,759) (15,500)
Obligations under finance leases (22,807) (25,778) (38,598) (35,242)
Interest rate and currency swaps 25,201 25,680 24,456 25,331
Net exposure (5,438) 352 (8,330) (894)
Sensitivity analysis for interest rate exposure
An increase of 25 basis points in interest rates at the reporting date would have decreased profit or loss and
increased other equity components for the year by the amounts shown below. These amounts represent the
fair value change of interest rate swaps and financial liabilities designated as at fair value through profit or loss
at the reporting date and the increase in net finance charges. This analysis assumes that all other variables,
in particular foreign currency rates, remain constant. The analysis has been performed on the same basis as
for 2013.
2014 2013
Profit
or loss
HK$M
Other equity
components
HK$M
Profit
or loss
HK$M
Other equity
components
HK$M
Variable rate instruments (91) 190 (111) 236