Cathay Pacific 1999 Annual Report Download - page 55

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Notes to the Accounts – Related Party Transactions
59CATHAY PACIFIC AIRWAYS LIMITED ANNUAL REPORT 1999
31. Related party transactions
Material transactions between the Group and associated companies and other related parties which were
carried out in the normal course of business on commercial terms are summarised below:
1999 1998
Associated Other Associated Other
Companies Related Parties Companies Related Parties
HK$M HK$M HK$M HK$M
Turnover 62 – 27 –
Aircraft maintenance costs 758 914 854 361
Route operating costs 194 632 224 623
Dividends received (48) – (89) (22)
Fixed assets purchase –47 ––
(a) Other transactions with related parties
(i) Under an agreement between the two parties, the Company pays fees and reimburses costs to
John Swire & Sons Limited in exchange for services provided. Management services fees, calculated at
2.5% of the Group’s profit before tax, results of associated companies, minority interests, and any
profits and losses on disposal of fixed assets will be paid annually. Management fee paid for the year
ended 31st December 1999 was HK$62 million (1998: nil) and expenses of HK$155 million
(1998: HK$185 million) were reimbursed at cost.
(ii) An additional loan of HK$26 million was made to Hong Kong Air Cargo Terminals Limited during
the year. It is unsecured and interest bearing. The total outstanding amount at the end of the year was
HK$305 million (1998: HK$279 million).
(iii) The Company received agency commission and services fees from Hong Kong Dragon Airlines
Limited (“Dragonair”). The services 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$142 million was
received from Dragonair for these transactions in 1999 (1998: HK$110 million). In September 1999,
Dragonair joined the Asia Miles frequent-flyer programme.
(b) Amounts due to and due from associated companies and other related companies at 31st December 1999
are disclosed in note 18 and note 20. These balances arise in the normal course of business, are non-
interest bearing and have no fixed repayment terms.
(c) At 31st December 1999, the Company has given guarantees relating to long-term loan facilities of
HK$684 million (1998: HK$691 million) held by associated and other related companies.
(d) There were no material transactions with Directors, except for those relating to remuneration (note 27)
and shareholdings (Directors’ Report).