Cathay Pacific 2007 Annual Report Download - page 89

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Notes to the Accounts
Supplementary Information
28. Financial risk management (continued)
(e) Fair values
The fair values of the following financial instruments differ from their carrying amounts shown in the balance
sheet:
Carrying
amount
2007
HK$M
Fair
value
2007
HK$M
Carrying
amount
2006
HK$M
Fair
value
2006
HK$M
Group
Long-term loans (16,963) (17,315) (14,459) (14,717)
Obligations under finance leases (28,148) (28,608) (27,000) (27,740)
Pledged security deposits 8,743 9,496 9,516 10,108
Carrying
amount
2007
HK$M
Fair
value
2007
HK$M
Carrying
amount
2006
HK$M
Fair
value
2006
HK$M
Company
Long-term loans (12,908) (13,174) (10,550) (10,706)
Obligations under finance leases (25,841) (28,320) (23,940) (26,781)
Pledged security deposits 2,501 2,935 3,374 3,774
The carrying amounts of other financial assets and liabilities are considered to be reasonable approximations to
their fair values.
29. Capital risk management
The Group’s objectives when managing capital are to ensure a sufficient level of liquid funds and to establish an
optimal capital structure which maximises shareholders’ value.
The Group regards the net debt/equity ratio as the key measurement of capital risk management. The definition of
net debt/equity ratio is shown on page 95 and a ten year history is included on pages 90 and 91 of the annual report.
30. Impact of further new accounting standards
HKICPA has issued new and revised HKFRS which become effective for accounting periods beginning on or after 1st
January 2008 and which are not adopted in the accounts. Hong Kong (IFRIC) Interpretation 13 “Customer Loyalty
Programmes” is relevant to the Group and becomes effective for accounting periods beginning on or after 1st July
2008. The interpretation requires that revenue from the initial sales transaction is allocated to free or discounted
goods or services offered as awards at their fair value and that this is deferred until the awards are redeemed. The
Group is in the process of assessing the impact of this interpretation on both the results and the financial position of
the Group. The interpretation will be adopted on 1st January 2009.
Cathay Pacific Airways Limited Annual Report 2007 87