Cathay Pacific 2009 Annual Report Download - page 86

29. Related party transactions
(a) Material transactions between the Group and associates and other related parties which were carried out in the
normal course of business on commercial terms are summarised below:
2009 2008
Associates
HK$M
Other related
parties
HK$M
Associates
HK$M
Other related
parties
HK$M
Turnover 161 – 229 –
Aircraft maintenance costs 1,891 – 2,069 –
Route operating costs 463 – 546 –
Dividends received (174) – (383) –
Fixed assets purchase 2 – 2 –
(b) Other transactions with related parties
(i) The Company had an agreement for services with JSSHK (“JSSHK Services Agreement”). Under the JSSHK
Services 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 associates, minority
interests, and any profits and losses on disposal of fixed assets are paid annually. For the year ended 31st
December 2009, JSSHK waived its entitlement to fees under the JSSHK Services Agreement in respect of
that part of the Group’s adjusted consolidated profit before taxation and minority interests which was
referable to the sale by the Company to Swire Pacific of 20,700,958 shares in HAECO. After taking account
of that waiver, service fees paid for the year ended 31st December 2009 were HK$95 million (2008: nil) and
expenses of HK$161 million (2008: HK$138 million) were reimbursed at cost; in addition, HK$60 million
(2008: HK$70 million) in respect of shared administrative services were reimbursed.
Transactions under the JSSHK Services Agreement are continuing connected transactions, in respect of
which the Company has complied with the disclosure requirements in accordance with Chapter 14A of the
Listing Rules. For definition of terms, please refer to Directors’ Report on pages 37 and 38.
(ii) Under the HAECO Framework Agreement with HAECO, the Group paid fees to HAECO group in exchange
for maintenance services provided to the Group’s aircraft fleets. Service fees paid to HAECO group for the
year ended 31st December 2009 were HK$1,891 million (2008: HK$2,069 million).
Transactions under the HAECO Framework Agreement are continuing connected transactions, in respect of
which the Company has complied with the disclosure and shareholders’ approval requirements in accordance
with Chapter 14A of the Listing Rules. For definition of terms, please refer to Directors’ Report on page 38.
(iii) Under the Air China Framework Agreement with Air China dated 26th June 2008, the Group paid fees to, and
received fees from, Air China group in respect of transactions between the Group on the one hand and Air
China group on the other hand arising from joint venture arrangements for the operation of passenger air
transportation, code sharing arrangements, interline arrangements, aircraft leasing, frequent flyer
programmes, the provision of airline catering, ground support and engineering services and other services
agreed to be provided and other transactions agreed to be undertaken under the Air China Framework
Agreement. The amounts payable to Air China group for the year ended 31st December 2009 totalled
HK$305 million (2008: HK$388 million). The amounts receivable from Air China group for the year ended
31st December 2009 totalled HK$164 million (2008: HK$245 million).
Transactions under the Air China Framework Agreement are continuing connected transactions, in respect of
which the Company has complied with the disclosure requirements in accordance with Chapter 14A of the
Listing Rules. For definition of terms, please refer to Directors’ Report on page 39.
(c) Amounts due from and due to associates and other related companies at 31st December 2009 are disclosed in
notes 19 and 21 to the accounts. These balances arising in the normal course of business are non-interest
bearing and have no fixed repayment terms.
Notes to the Accounts RELATED PARTY TRANSACTIONS
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