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30. Commitments and contingencies
(a) Outstanding commitments for capital expenditure authorised at the year end but not provided for in the accounts:
Group Company
2008
HK$M
2007
HK$M
2008
HK$M
2007
HK$M
Authorised and contracted for 43,000 48,782 1,528 2,835
Authorised but not contracted for 4,255 5,676 512 5,670
47,255 54,458 2,040 8,505
Operating lease commitments are shown in note 11 to the accounts.
(b) Guarantees in respect of lease obligations, bank loans and other liabilities outstanding at the year end:
Group Company
2008
HK$M
2007
HK$M
2008
HK$M
2007
HK$M
Subsidiaries ––3,608 3,123
Associates 70 19 70 19
Staff 200 200 200 200
270 219 3,878 3,342
(c) The Company has under certain circumstances undertaken to maintain specified rates of return within the
Group’s leasing arrangements. The Directors do not consider that an estimate of the potential financial effect of
these contingencies can practically be made.
(d) The Company operates in many jurisdictions and in certain of these there are disputes with the tax authorities.
Provisions have been made to cover the expected outcome of the disputes to the extent that outcomes are
likely and reliable estimates can be made. However, the final outcomes are subject to uncertainties and
resulting liabilities may exceed provisions.
(e) The Company is the subject of investigations and proceedings in respect of its air cargo operations by the
competition authorities of various jurisdictions, including the European Union, Canada, Australia, Switzerland,
Korea and New Zealand. The Company has been cooperating with the authorities in their investigations and,
where applicable, vigorously defending itself. The investigations and proceedings are focused on issues relating
to pricing and competition. The Company is represented by legal counsel in connection with these matters.
As noted in the Company’s press release on 24th December 2007, the Company received a Statement of
Objections from the European Commission with regard to the Company’s air cargo operations and has
responded to it.
On 15th December 2008, the Company received a Statement of Claim from the New Zealand Commerce
Commission with regard to the Company’s air cargo operations. The Company, with the assistance of counsel,
is evaluating the allegations and will respond to it.
The Company has been named as a defendant in a number of civil class action complaints in the United States,
Canada and Australia alleging violations of applicable competition laws arising from the Company’s conduct
relating to its air cargo operations. In addition, civil class action claims have been filed in the United States
alleging violations of applicable competition laws arising from the Company’s conduct relating to certain of its
passenger operations. The Company is represented by legal counsel in the actions filed in the United States,
Canada and Australia and is defending those actions.
The investigations, proceedings and civil actions are ongoing and the outcomes are subject to uncertainties.
The Company is not in a position at the present time to make a sufficiently reliable estimate of the amount of
any potential liability. Accordingly no provision has been made in the accounts. The information usually required
by HKAS 37 “Provisions, Contingent Liabilities and Contingent Assets” is not disclosed on the grounds that it
can be expected to prejudice seriously the outcomes.
Notes to the Accounts SUPPLEMENTARY INFORMATION
Cathay Pacific Airways Limited Annual Report 2008
84