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Cathay Pacific Airways Limited Annual Report 2006
66
10. Subsidiaries
Company
2006
HK$M
2005
HK$M
Unlisted shares at cost 216 214
Other investments at cost 12,899 15,220
Net amounts due (to)/from subsidiaries
– Loan accounts (1,147) (4,327)
– Current accounts 8,322 253
20,290 11,360
On 8th June 2006, the Company, Air China, CNAC, CITIC Pacific and Swire Pacific entered into a Restructuring
Agreement in respect of which a joint announcement dated 8th June 2006 was published and a circular dated
6th July 2006 was sent to shareholders. The transactions contemplated under this agreement were approved
at an Extraordinary General Meeting held on 22nd August 2006 and were completed on 28th September 2006.
Under this agreement, the Company increased its shareholding in Dragonair from 17.8% to 100% by acquiring
82.2% of Dragonair’s issued shares for a total consideration of HK$8,221 million satisfied by a combination of the
issue of 548,045,724 new shares of the Company (“new Cathay Shares”) at an issue price of HK$13.50 per share
and HK$822 million in cash. The issue price of the new Cathay Shares was determined following arm’s length
negotiation between the parties, in particular with reference to the current and recent average trading price of the
shares of the Company as of 8th June 2006. Upon completion of the Restructuring Agreement on 28th September
2006, Dragonair became a wholly owned subsidiary of the Company. For definition of terms, please refer to
Directors’ Report on page 30.
The valuation of Dragonair was determined following arm’s length negotiation between the parties, based on the
underlying value of Dragonair, as reflected in the prevailing market price of CNAC, and having regard to the trading
multiples of comparable airlines. The goodwill arising on the acquisition of Dragonair is principally attributable to
the benefits to the Company of full ownership of Dragonair and potential synergies arising from a combination of
the businesses.
Included in the profit attributable to Cathay Pacific shareholders for the year, HK$28 million was Dragonair’s profit
shared by the Group since the acquisition date.
The Group’s turnover and profit attributable to Cathay Pacific shareholders for the year would be HK$68,896 million
and HK$4,225 million respectively if the acquisition was effected at the beginning of the year.
Principal subsidiaries are listed on pages 88 and 89.
Notes to the Accounts Balance Sheet