Cathay Pacific 2015 Annual Report Download - page 90

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Cathay Pacific Airways Limited
88
29. Financial risk management (continued)
(b) Liquidity risk
The Group’s policy is to monitor liquidity and compliance with lending covenants, so as to ensure sufficient liquid
funds and funding lines from financial institutions are available to meet liquidity requirements in both the short and
long term. The analysis has been performed on the same basis as for 2014. The undiscounted payment profile of
financial liabilities is outlined as follows:
2015
Within
one year
HK$M
After one
year but
within two
years
HK$M
After two
years but
within five
years
HK$M
After five
years
HK$M
Total
HK$M
Group
Bank and other loans (9,806) (7,148) (11,559) (10,945) (39,458)
Obligations under finance leases (4,470) (4,302) (10,917) (10,535) (30,224)
Other long-term payables – (312) (1,091) (987) (2,390)
Trade and other payables (13,569) – – – (13,569)
Derivative financial liabilities, net (9,331) (7,553) (4,917) 2 (21,799)
Total (37,176) (19,315) (28,484) (22,465) (107,440)
2014
Within
one year
HK$M
After one
year but
within two
years
HK$M
After two
years but
within five
years
HK$M
After
five years
HK$M
Total
HK$M
Group
Bank and other loans (6,526) (9,125) (12,107) (9,386) (37,144)
Obligations under finance leases (4,122) (4,615) (12,582) (13,690) (35,009)
Other long-term payables – (319) (800) (984) (2,103)
Trade and other payables (15,167) – – – (15,167)
Derivative financial liabilities, net (7,147) (3,779) (3,979) 16 (14,889)
Total (32,962) (17,838) (29,468) (24,044) (104,312)
(c) Market risk
(i) Foreign currency risk
The Group’s revenue streams are denominated in a number of foreign currencies resulting in exposure to
foreign exchange rate fluctuations. In this respect, it is assumed that the pegged rate between Hong Kong
dollars and United States dollars would be materially unaffected by any changes in movement in value of United
States dollars against other currencies. The currencies giving rise to this risk in 2015 are primarily United States
dollars,Euros,Australiandollars,Singaporedollars,RenminbiandJapaneseyen(2014:UnitedStatesdollars,
Euros,NewTaiwandollars,Singaporedollars,RenminbiandJapaneseyen).Foreigncurrencyriskismeasured
by employing sensitivity analysis, taking into account current and anticipated exposures. To manage this
exposure, assets are, where possible, financed in those foreign currencies in which net operating surpluses are
anticipated, thus establishing a natural hedge. In addition, the Group uses currency derivatives to reduce
anticipated foreign currency surpluses. The use of foreign currency borrowings and currency derivatives to
hedge future operating revenues is a key component of the financial risk management process, as exchange
differences realised on the repayment of financial commitments are effectively matched by the change in value
of the foreign currency earnings used to make those repayments.
Notes to the Financial Statements Supplementary Information