Cathay Pacific 2008 Annual Report Download - page 89

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Notes to the Accounts SUPPLEMENTARY INFORMATION
31. Financial risk management (continued)
2007
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$M
Company
Bank and other loans (1,556) (1,293) (9,833) (1,965) (14,647)
Obligations under finance leases (3,978) (3,798) (12,379) (14,564) (34,719)
Trade and other payables (10,237) – – – (10,237)
Derivative financial liabilities (1,663) (123) (160) (32) (1,978)
Total (17,434) (5,214) (22,372) (16,561) (61,581)
(c) Market risk
(i) Foreign currency risk
The Group’s revenue streams are denominated in a number of foreign currencies resulting in exposure to
foreign exchange rate fluctuations. The currencies giving rise to this risk are primarily US dollars, Euros, New
Taiwan dollars, Singapore dollars, Renminbi and Japanese yen. Foreign currency risk is measured by
employing sensitivity analysis, taking into account current and anticipated exposures. To manage this
exposure assets are, where possible, financed in those foreign currencies in which net operating surpluses
are anticipated, thus establishing a natural hedge. In addition, the Group uses currency derivatives to reduce
anticipated foreign currency surpluses. The use of foreign currency borrowings and currency derivatives to
hedge future operating revenues is a key component of the financial risk management process, as exchange
differences realised on the repayment of financial commitments are effectively matched by the change in
value of the foreign currency earnings used to make those repayments.
At the reporting date, the financial position exposure to foreign currency risk was as follows:
2008
USD
HK$M
EUR
HK$M
TWD
HK$M
SGD
HK$M
RMB
HK$M
JPY
HK$M
Group
Trade and other receivables 7,091 606 299 25 148 448
Liquid funds 7,323 286 26 922 2,485 176
Long-term loans (5,729) (393) – (3,367) – (1,530)
Obligations under finance leases (17,417) (4,395) – – – –
Trade and other payables (14,241) (243) (81) (51) (390) (161)
Currency derivatives at
notional value 6,768 1,152 (1,786) 1,148 (3,580) (1,286)
Net exposure (16,205) (2,987) (1,542) (1,323) (1,337) (2,353)
Cathay Pacific Airways Limited Annual Report 2008 87