Cathay Pacific 2014 Annual Report Download - page 97

Download and view the complete annual report

Please find page 97 of the 2014 Cathay Pacific annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 112

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112

ANNUAL REPORT 2014
95Notes to the Financial Statements Supplementary Information
31. Financial risk management (continued)
2013
Gross amounts
of recognised
financial assets/
liabilities
HK$M
Gross amounts of
recognised
financial assets/
liabilities offset in
the statement of
financial position
HK$M
Net amounts of
financial
assets/liabilities
presented in the
statement of
financial position
HK$M
Financial
instruments
not offset in
the statement
of financial
position
HK$M
Net amount
HK$M
Company
Derivative financial
 assets 5,228 – 5,228 (944) 4,284
Related pledged
 security deposits 872 (872) – – –
Obligations under
 finance leases (872) 872 – – –
Derivative financial
 liabilities (989) – (989) 944 (45)
4,239 – 4,239 – 4,239
The Group enters into derivative transactions under International Swaps and Derivatives Association (ISDA) master
agreements, providing offsetting in the event of default. The ISDA agreements do not meet the criteria for offsetting
in the statement of financial position. This is because the Group does not have any currently legally enforceable
right to offset recognised amounts, because the right to offset is enforceable only on the occurrence of future
events such as default on the bank loans or other credit events.
32. 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 107 and a ten year history is included on pages 102 and 103 of the annual report.
33. Impact of further new accounting standards
HKICPA has issued new and revised standards which become effective for accounting periods beginning on or after 1st
January 2015 and which are not adopted in the financial statements.
HKFRS 9 “Financial Instruments” is relevant to the Group and becomes effective for accounting periods beginning on
or after 1st January 2018. The standard requires financial assets to be classified into two measurement categories:
those measured at fair value and those measured at amortised cost. The Group has yet to access the full impact of the
new standard.