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ANNUAL REPORT 2014
63Notes to the Financial Statements Statement of Financial Position
10. Fixed assets (continued)
(b) Operating leased assets
Certain aircraft, buildings and other equipment are under operating leases.
Under the operating lease arrangements for aircraft, the lease rentals are partially fixed and partially floating and
subleasing is not allowed. At 31st December 2014, thirteen Airbus A330-300s (2013: fifteen), one Boeing 747-400
(2013: one), one Boeing 747-400BCF (2013: one), twenty-three Boeing 777-300ERs (2013: nineteen), ten Airbus
A320-200s (2013: ten), six Airbus A321-200s (2013: four) and one A300-600F (2013: nil) held under operating
leases, most with purchase options, were not capitalised. The estimated capitalised value of these leases being the
present value of the aggregate future lease payments is HK$21,234 million (2013: HK$18,386 million).
Operating leases for buildings and other equipment are normally set with fixed rental payments with options to
renew the leases upon expiry at new terms.
The future minimum lease payments payable under operating leases committed as at 31st December 2014 for each
of the following periods are as follows:
2014
HK$M
2013
HK$M
Aircraft and related equipment:
 – within one year 3,493 3,381
 – after one year but within two years 3,577 3,106
 – after two years but within five years 8,733 8,164
 – after five years 10,233 9,720
26,036 24,371
Buildings and other equipment:
 – within one year 787 624
 – after one year but within two years 664 331
 – after two years but within five years 1,196 534
 – after five years 456 496
3,103 1,985
29,139 26,356
(c) Advance payments are made to manufacturers for aircraft and related equipment to be delivered in future years. As
at the year end, advance payments included in owned aircraft and related equipment amounted to HK$3,842 million
(2013: HK$4,495 million) for the Group and HK$117 million (2013: HK$246 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. Further information is provided in note 15 to the
financial statements.
(e) An impairment loss amounting to HK$599 million was recognised for the year ended 31st December 2014 (2013:
HK$210 million). Impairment in value of aircraft and related equipment is considered by writing down the carrying
value to the estimated recoverable amount of HK$2,623 million (2013: HK$227 million) which is the higher of the
value in use and the fair value less costs of disposal. The recoverable amount was determined based on the fair
value less costs of disposal, using market comparison approach by reference to the estimated sales value as at
31st December 2014 and 2013. During the year, a number of aircraft have been transferred to assets held for sale.
The fair value on which the recoverable amount is based on is categorised as a Level 2 measurement.