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56 Cathay Pacific Airways Limited Annual Report 2005
3. Net finance charges
2005 2004
HK$M HK$M
Net interest charges comprise:
– Obligations under finance leases 1,436 1,522
– Interest income on related security deposits, notes and bonds (726) (837)
710 685
– Bank loans and overdrafts 117 92
– Other loans wholly repayable within five years 39 8
– Other loans not wholly repayable within five years – 6
866 791
Income from liquid funds:
– Funds with investment managers and other liquid investments (259) (122)
– Bank deposits and other receivables (169) (86)
(428) (208)
Financial derivatives:
– Interest income (7) –
– Interest expenses 13 –
6 –
444 583
Finance income and charges relating to defeasance arrangements have been netted off in the above figures.
4. Taxation
2005 2004
HK$M HK$M
Current tax expenses
– Hong Kong profits tax 61 55
– Overseas tax 327 276
– (Over)/under provisions for prior years (72) 24
Deferred tax
– Origination and reversal of temporary differences 184 91
500 446
Hong Kong profits tax is calculated at 17.5% (2004: 17.5%) on the estimated assessable profits for the year.
Overseas tax is calculated at rates of tax applicable in countries to which the Group is assessable for tax. Tax
provisions are reviewed regularly to take into account changes in legislation, practice and status of negotiations.
Notes to the Accounts Profit and Loss Account