Cathay Pacific 2006 Annual Report Download - page 33

The fees payable by DHL to AHK under the DHL
Services Agreement totalled HK$1,369 million for
the year ended 31st December 2006.
(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
provides cargo capacity for the carriage of DHL’s
air express materials between Hong Kong and
Beijing, Nagoya and Shanghai and acts as the
agent for DHL to sell reserved space surplus to
DHL’s requirements. Payment is 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) is from 6th March 2000 until
on or before 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 are 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$385
million for the year ended 31st December 2006.
(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 term of the JSSHK Services Agreement is
from 1st January 2005 to 31st December 2007
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 an announcement
dated 1st December 2004 was published.
For the year ended 31st December 2006, the
fees payable by the Company to JSSHK under
the JSSHK Services Agreement totalled HK$125
million and expenses of HK$124 million were
reimbursed at cost.
(d) Pursuant to an agreement dated 31st May 2005
(“PCCW Services Agreement”) between Cathay
Pacific Loyalty Programmes Limited (“CPLP”)
with PCCW Teleservices (Hong Kong) Limited
(“Teleservices”), Teleservices provides services
to CPLP. The services comprise the provision of a
service centre and handling of customer calls and
related administration for the Company’s frequent
flyer and customer loyalty programmes. In return
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Cathay Pacific Airways Limited Annual Report 2006
Directors’ Report