Cathay Pacific 2007 Annual Report Download - page 34

materials. Payment is made in cash by DHL to AHK
against invoice presented monthly within 30 days
from the date of receipt of the invoice. The term of
the DHL Services Agreement is from 17th October
2002 to 31st December 2018.
DHL is a connected person of the Company
because of its 40% attributable interest in the
Company’s subsidiary AHK. The transactions under
the DHL Services Agreement are continuing
connected transactions in respect of which
announcements dated 17th October 2002, 27th
June 2005 and 12th March 2007 were published
and circulars dated 12th July 2005 and 21st March
2007 were sent to shareholders.
The fees payable by DHL to AHK under the DHL
Services Agreement totalled HK$1,578 million for
the year ended 31st December 2007.
(b) Pursuant to the amendments made to the Cargo
Capacity (Network Block Space) Agreement
(“BSA”) and Network Cargo Joint Sales Agreement
(“JSA”) both dated 6th December 1999, the
Company provided cargo capacity for the carriage
of DHL’s air express materials between Hong Kong
and Beijing, Nagoya and Shanghai and acted as the
agent for DHL to sell reserved space surplus to
DHL’s requirements. Payment was made in cash by
DHL to the Company against an invoice presented
at the end of each two-week period within 21 days
from the date of the invoice. The term of the BSA
and JSA (as amended) was from 6th March 2000
and expired on 31st December 2007.
DHL is a connected person of the Company
because of its 40% attributable interest in the
Company’s subsidiary AHK. The transactions under
the BSA and JSA were continuing connected
transactions in respect of which announcements
dated 19th April 2005 and 28th February 2007 were
published.
The fees and commissions payable by DHL to the
Company under the BSA and JSA totalled HK$131
million for the year ended 31st December 2007.
(c) Pursuant to an agreement dated 1st December
2004 (“JSSHK Services Agreement”) with JSSHK,
JSSHK provides services to the Company and its
subsidiaries. The services comprise advice and
expertise of the directors and senior officers of the
Swire group including (but not limited to) assistance
in negotiating with regulatory and other governmental
or official bodies, full or part time services of
members of the staff of the Swire group, other
administrative and similar services and such other
services as may be agreed from time to time.
In return for these services, JSSHK receives annual
service fees calculated as 2.5% of the Company’s
consolidated profit before taxation and minority
interests after certain adjustments. The fees for
each year are payable in cash in arrears in two
instalments, an interim payment by the end of
October and a final payment by the end of April of
the following year, adjusted to take account of the
interim payment. The Company also reimburses the
Swire group for all the expenses incurred in the
provision of the services at cost.
The current term of the JSSHK Services Agreement
is from 1st January 2008 to 31st December 2010
and is renewable for successive periods of three
years thereafter unless either party to it gives to the
other notice of termination of not less than three
months expiring on any 31st December.
Swire is the holding company of Swire Pacific which
owns approximately 40% of the issued capital of the
Company and JSSHK, a wholly-owned subsidiary of
Swire, is therefore a connected person of the
Company under the Listing Rules. The transactions
under the JSSHK Services Agreement are continuing
connected transactions in respect of which
announcements dated 1st December 2004 and
1st October 2007 were published.
For the year ended 31st December 2007, the fees
payable by the Company to JSSHK under the
JSSHK Services Agreement totalled HK$182 million
and expenses of HK$108 million were reimbursed
at cost.
Directors’ Report
Cathay Pacific Airways Limited Annual Report 2007
32