Cathay Pacific 2004 Annual Report Download - page 28

Download and view the complete annual report

Please find page 28 of the 2004 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 77

  • 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

DISCLOSEABLE TRANSACTION
The Company acquired a 10% shareholding in
Air China Limited on 15th December 2004 for an
aggregate cash consideration of HK$2,811 million,
of which HK$2,697 million was paid in December
2004 and HK$114 million in January 2005. This
transaction constituted a discloseable transaction
under the Listing Rules in respect of which an
announcement has been published on 16th
December 2004 and a circular sent to shareholders
on 30th December 2004.
CONTINUING CONNECTED TRANSACTIONS
Pursuant to an agreement dated 17th October
2002 (the “DHL Services Agreement”) with DHL
International GmbH (formerly DHL International
Limited) (“DHL”), AHK Air Hong Kong Limited
(“AHK”) has provided to DHL services in respect of
the sale of space on certain cargo services operated
by AHK in the Asian region for the carriage of DHL’s
door to door air express materials.
AHK, owned 60% by the Company and 40% by
DHL via their respective wholly owned subsidiaries,
is a subsidiary of the Company. DHL is therefore a
connected person of the Company for the purpose
of the Listing Rules and these transactions are
continuing connected transactions in respect of
which an announcement dated 17th October 2002
was published.
The fees payable by DHL to AHK under the DHL
Services Agreement totalled HK$715 million for
the year ended 31st December 2004.
The Stock Exchange has granted the Company
a waiver from strict compliance with the
disclosure requirements under the Listing Rules
in relation to the agreements with DHL subject
to certain conditions.
In accordance with these conditions, the
independent non-executive Directors have reviewed
the transactions and confirmed that they have been
(i) entered into by the Company and AHK in the
usual and ordinary course of the Company’s
business;
(ii) conducted either on normal commercial terms
or, where there are no sufficient comparables,
on terms no more favourable to DHL than terms
available to independent third parties; and
(iii) entered into on terms that are fair and
reasonable insofar as the shareholders of
the Company are concerned.
Furthermore, the Auditors of the Company have
also reviewed these transactions and confirmed
to the Board that:
(i) they have been approved by the Board of
the Company;
(ii) they have been entered into in accordance
with the terms of the DHL Services Agreement,
as subsequently amended; and
(iii) the limit of 3% of the net tangible assets of
the Group has not been exceeded.
MAJOR CUSTOMERS AND SUPPLIERS
7.3% of sales and 30.6% of purchases during the
year were attributable to the Group’s five largest
customers and suppliers respectively. 1.6% of sales
were made to the Group’s largest customer while
8.1% of purchases were made from the Group’s
largest supplier.
Directors’ Report
24 Cathay Pacific Airways Limited 2004 Annual Report