EXHIBIT 1: CATHAY PACIFIC AIRWAYS BALANCE SHEETS FOR 31 DECEMBER 2003 A

ASSETS AND LIABILITIES

Non-current assets:
Fixed assets
Intangible assets
Investment in associated companies
Other long term receivables and investment

2004

2003

51,808
348
1,743
4,076
57,975

51,357
405
1,661
1,263
54,686

524
5,311
11,474
17,309
75,284

398
4,753
15,200
20,351
75,037

-27698
10036
-17662
-102
-7280
-25044

-33022
11604
-21418
-181
-7762
-29361

-7096
2127
-4969
-7163
-3622
-1497
-17251
-42295

-6754
1875
-4879
-5543
-2839
-1259
-14520
-43881

Total assets less current and non current liab 32,989

31,156

Current assets:
Stock
Trade and other receivable
Liquid funds
Total assets
Non-current liabilities:
Long term liabilities
Related pledged security deposits
Net long-term liabilities
Retirement benefits obligations
Deffered taxation
Current liabilities:
Current portion of long term liabilities
Related pledged security deposits
Net current portion of long term liabilities
Trade and other payables
Unearned transportation revenue
Taxation
Total Liabilities

FINANCED BY:
Share capital
Reserves
Minority interest

674
32,181
134
32989

669
30,383
104
31156

FOR 31 DECEMBER 2003 AND 2004(HK$ MILLION)

Year
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Jan-16
Average
Beta of Cathay Pacific Airway (Jan 2006)
Market Risk Premium = rm-rf
Corporate Tax Rate
Cost of Debt (After Tax)
Cost of equity (CAPM) =rf +beta(rm-rf)
Sum of equity and liability
Equity's weightage
Liability's weightage
WACC

1 Year Hong Kong Exchange Fund10

billYear Hong Kong Exchange Fund Note
5.51%
N/A
5.00%
7.27%
9.41%
9.22%
5.72%
6.36%
5.82%
7.74%
5.38%
6.46%
2.22%
6.22%
1.39%
4.39%
0.26%
4.37%
0.58%
3.63%
3.90%
4.18%
3.74%
4.18%
4.11%
5.98%

eta of Cathay Pacific Airway (Jan 2006)

arket Risk Premium = rm-rf
orporate Tax Rate
ost of Debt (After Tax)
ost of equity (CAPM) =rf +beta(rm-rf)
um of equity and liability
quity's weightage
ability's weightage
WACC

0.78
5%
17.50%
4.7108%
7.84%
55486.00
59.21%
40.79%
6.56%

Hang Seng Index Annual Return

Best Lending Rate
23.0%
8.75%
33.5%
8.50%
-20.3%
9.50%
-6.3%
9.00%
68.8%
8.50%
-11.0%
9.50%
-24.5%
5.13%
-18.2%
5.00%
34.9%
5.00%
13.2%
5.00%
4.5%
7.75%
7.42%
8.9%

Total Assets
Total Liabilities
Total Equity
WACC

2004
75,284
-54356
32989
0.5548

2005 WACC=
75,037 W Equity
-57179 W Debt
31156 K Equity
0.6155 K Debt
t

(W
:
:
:
:
:

WACC= (WEquity*KEquity)+(WDebt*KDebt)(1-t)
W Equity : Percentage financing that is equity
W Debt : Percentage financing that is debt
Equity
: Cost of Equity
Debt
: Cost of Debt
: Tax Rate