Cathay Pacific 2003 Annual Report Download - page 49

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47Cathay Pacific Airways Limited Annual Report 2003
Notes to the Accounts – Balance Sheet
9. FIXED ASSETS
(continued)
(a) Finance leased assets
Certain aircraft are subject to leases with purchase options to be exercised at the end of the respective
leases. The remaining lease terms range from 1 to 14 years. Some of the rent payments are on a floating
basis which are generally linked to market rates of interest. All leases permit subleasing rights subject to
appropriate consent from lessors. Early repayment penalties would be payable on some of the leases should
they be terminated prior to their specified expiry dates.
(b) Operating leased assets
Certain aircraft, properties and other equipment are under operating leases.
Under the operating lease arrangements for aircraft, the lease rentals are fixed and subleasing is not allowed.
At 31st December 2003, the two B747-400s (2002: two), four A340-300s (2002: four) and three A340-600s
(2002: two), all with purchase options, delivered and held under operating leases were not capitalised. The
estimated capitalised value of these leases being the present value of the aggregate future lease payments is
HK$1,585 million (2002: HK$2,106 million).
Operating leases for properties and other equipment are normally set with fixed rental payments with options
to renew the leases upon expiry at new terms.
The future minimum lease payments payable under operating leases committed as at 31st December 2003
for each of the following periods are as follows:
2003 2002
HK$M HK$M
Aircraft and related equipment:
-
within one year 740 636
-
after one year but within five years 1,460 2,052
-
after five years
-
41
2,200 2,729
Properties and other equipment:
-
within one year 255 289
-
after one year but within five years 470 427
-
after five years 204 232
929 948
3,129 3,677
(c) Advance payments are made to manufacturers for aircraft and related equipment to be delivered in
future years. Advance payments included in owned aircraft and related equipment amount to HK$1,813 million
(2002: HK$1,672 million) for the Group and HK$136 million (2002: HK$2 million) for the Company. No
depreciation is provided on these advance payments.
(d) Security, including charges over the assets concerned and relevant insurance policies, is provided to the
leasing companies or other parties that provide the underlying finance.
(e) Properties held at 31st December 2003 include land held under medium-term leases in Hong Kong with a
net book value of HK$1,586 million (2002: HK$1,622 million).