Cathay Pacific 2004 Annual Report Download - page 66

62 Cathay Pacific Airways Limited 2004 Annual Report
26. RELATED PARTY TRANSACTIONS
(a) 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:
2004 2003
Associated Other related Associated Other related
companies parties companies parties
HK$M HK$M HK$M HK$M
Turnover 92 – 70 –
Aircraft maintenance costs 886 – 782 –
Route operating costs 227 – 164 –
Dividends received (122 ) – (187 ) –
Fixed assets purchase 31 – 22 –
(b) Other transactions with related parties
(i) The Company had an agreement for services (“Old Agreement”) with JSSHK. Under the Old 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 associated companies, minority interests, and any profits and losses on disposal of fixed assets were
paid annually. The Old Agreement was terminated on 31st December 2004 and was replaced by the New Agreement which
took effect from 1st January 2005. Service fees paid for the year ended 31st December 2004 were HK$124 million (2003:
HK$42 million) and expenses of HK$115 million (2003: HK$105 million) were reimbursed at cost; in addition, HK$51 million
(2003: HK$50 million) in respect of shared administrative services were reimbursed.
Transactions under the Old Agreement are 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 23.
(ii) 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$180 million was received from Dragonair for
these transactions in 2004 (2003: HK$202 million). Dragonair is also a partner of the Asia Miles frequent-flyer programme.
(c) Amounts due to and due from associated companies and other related companies at 31st December 2004 are disclosed in
notes 17 and 19 to the accounts. These balances arising in the normal course of business are non-interest bearing and have
no fixed repayment terms.
(d) Guarantees given by the Company in respect of bank loan facilities held by an associated company at 31st December 2004 are
disclosed in note 28 to the accounts.
(e) There were no material transactions with Directors and Executive Officers except for those relating to shareholdings (Directors’
Report and Corporate Governance). Remuneration of Directors and Executive Officers is disclosed in note 24 to the accounts.
27. WAIVER FROM COMPLIANCE WITH LISTING RULES
The Stock Exchange has granted to the Company a waiver from full compliance with the provisions of Chapter 14 of the Listing
Rules, which relates to notifiable transactions, in relation to the acquisition or disposal of aircraft. As a result of the waiver,
instead of the normal tests under Chapter 14, the test for the Company will be made by reference to Available Tonne Kilometres
(“ATKs”). The test will be a calculation based on ATKs for aircraft being acquired or disposed of compared to the aggregate fleet
ATKs. ATKs are calculated for each sector by multiplying the capacity, measured in tonnes available for the carriage of passengers,
excess baggage, cargo and mail on that sector, by the sector distance.
2004 2003
Fleet ATKs (in million tonne kilometres) 15,794 13,355
Notes to the Accounts – Related Party Transactions / Supplementary Information