Cathay Pacific 2005 Annual Report Download - page 78

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76 Cathay Pacific Airways Limited Annual Report 2005
25. Related party transactions
(a) Material transactions between the Group and associates and other related parties which were carried out in the
normal course of business on commercial terms are summarised below:
2005 2004
Other related Other related
Associates parties Associates parties
HK$M HK$M HK$M HK$M
Turnover 103 – 92 –
Aircraft maintenance costs 967 – 886 –
Route operating costs 183 – 227 –
Dividends received (170) – (122) –
Fixed assets purchase 5 – 31 –
(b) Other transactions with related parties
(i) The Company had an agreement for services (“JSSHK Services Agreement”) with JSSHK. Under the JSSHK
Services Agreement, the Company paid fees and reimbursed costs to JSSHK in exchange for services
provided. Service fees calculated at 2.5% of the Group’s profit before tax, results of associates, minority
interests, and any profits and losses on disposal of fixed assets were paid annually. Service fees paid for the
year ended 31st December 2005 were HK$101 million (2004: HK$124 million) and expenses of HK$106
million (2004: HK$115 million) were reimbursed at cost; in addition, HK$47 million (2004: HK$51 million) in
respect of shared administrative services were reimbursed.
Transactions under the JSSHK Services Agreement are continuing connected transactions, in respect of
which the Company has complied with the disclosure requirements in accordance with Chapter 14A of the
Listing Rules. For definition of terms, please refer to Directors’ Report on page 26.
(ii) The Company had certain agreements for maintenance services (“Old Agreements”) with HAECO. Under
the Old Agreements, the Company paid fees to HAECO in exchange for maintenance services provided to
the Company’s aircraft fleet. The Old Agreements were terminated on 31st December 2005 and were
replaced by the New Agreements which took effect from 1st January 2006. Service fees paid to HAECO for
the year ended 31st December 2005 were HK$949 million (2004: HK$869 million).
Transactions under the Old Agreements were not connected transactions or continuing connected
transactions which gave rise to any disclosure or other obligations under Chapter 14A of the Listing Rules.
For definition of terms, please refer to Directors’ Report on page 27.
(iii) The Company received agency commission and service fees from Dragonair. Service fees were received
in respect of computer support, engineering, station and ground services provided to Dragonair. All these
transactions were conducted in the ordinary course of business and on normal commercial terms. A total
of HK$215 million was received from Dragonair for these transactions in 2005 (2004: HK$180 million).
Dragonair is also a partner of the Asia Miles frequent-flyer programme.
Notes to the Accounts Related Party Transactions