Cathay Pacific 2007 Annual Report Download - page 76

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Notes to the Accounts
Balance Sheet
21. Reserves
Group Company
2007
HK$M
2006
(restated)
HK$M
2007
HK$M
2006
HK$M
Retained profit 32,771 27,993 17,538 13,228
Share premium 16,272 16,241 16,272 16,241
Investment revaluation reserve 1,068 906 876 800
Cash flow hedge reserve (677) (642) (544) (595)
Capital redemption reserve and others 327 101 21 21
49,761 44,599 34,163 29,695
Investment revaluation reserve relates to changes in the fair value of long-term investments.
Capital redemption reserve and others of the Group mainly include the capital redemption reserve of HK$21 million
(2006: HK$21 million), exchange differences arising from revaluation of foreign investments amounted to
HK$613 million (2006: HK$56 million) and share of associate’s other negative reserve of HK$331 million (2006: nil).
The cash flow hedge reserve relates to the effective portion of the cumulative net change in fair values of hedging
instruments and exchange differences on borrowings and lease obligations which are arranged in foreign currencies
such that repayments can be met by anticipated operating cash flows.
The amount transferred from the cash flow hedge reserve to the following profit and loss items was as follows:
2007
HK$M
2006
HK$M
Turnover (208) (68)
Fuel 34 132
Others (24) (2)
Finance income 22 9
(Decrease)/increase (176) 71
The cash flow hedge reserve is expected to be charged to operating profit as noted below when the hedged
transactions affect the profit and loss account.
Total
HK$M
2008 (120)
2009 17
2010 (162)
2011 (108)
2012 (92)
Beyond 2012 (212)
(677)
The actual amount ultimately recognised in operating profit will depend upon the fair values of the hedging
instruments at the time that the hedged transactions affect the profit and loss account.
Cathay Pacific Airways Limited Annual Report 2007
74