Cathay Pacific 2010 Annual Report Download - page 37

Cathay Pacific Airways Limited Annual Report 2010
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Commitments and contingencies
The details of capital commitments and contingent
liabilities of the Group and the Company as at 31st
December 2010 are set out in note 31 to the accounts.
Agreement for services
The Company has an agreement for services with John
Swire & Sons (H.K.) Limited (“JSSHK”), the particulars of
which are set out in the section on continuing connected
transactions.
As directors and/or employees of the John Swire & Sons
Limited (“Swire”) group, Christopher Pratt, W.E. James
Barrington, James E. Hughes-Hallett, James W.J.
Hughes-Hallett, Peter Kilgour, Ian Shiu, John Slosar,
Merlin Swire and Tony Tyler are interested in the JSSHK
Services Agreement (as defined below). Philip Chen and
Robert Woods were interested as directors and/or
employees of the Swire group until their resignation with
effect from 1st July 2010 and 1st June 2010 respectively.
Merlin Swire is also interested as a shareholder of Swire.
Particulars of the fees paid and the expenses reimbursed
for the year ended 31st December 2010 are set out
below and also given in note 30 to the accounts.
Significant contracts
Contracts between the Group and HAECO and its
subsidiary TAECO for the maintenance and overhaul of
aircraft and related equipment accounted for
approximately 2% of the Group’s operating expenses in
2010. HAECO is a subsidiary of Swire Pacific; all contracts
have been concluded on normal commercial terms in the
ordinary course of the business of both parties.
Major transaction
Cathay Pacific Aircraft Services Limited (“CPAS”), a
wholly owned subsidiary of the Company, entered into an
agreement with Airbus S.A.S. on 16th September 2010
for the acquisition of 30 Airbus A350-900 aircraft. This
transaction constituted a major transaction under the
Listing Rules in respect of which an announcement dated
16th September 2010 was published and a circular dated
21st September 2010 was sent to shareholders.
Discloseable transaction
CPAS entered into an agreement with The Boeing
Company on 21st September 2010 for the acquisition of
six Boeing 777-300ER aircraft. This transaction
constituted a discloseable transaction under the Listing
Rules in respect of which an announcement dated 21st
September 2010 was published.
Connected transactions
(a) The Company and its wholly owned subsidiaries
Cathay Pacific China Cargo Holdings Limited (“Cathay
Pacific China Cargo Holdings”) and Dragonair entered
into a framework agreement with Air China Limited
(“Air China”) and its wholly owned subsidiaries Air
China Cargo Co., Ltd. (“Air China Cargo”) and Fine
Star Enterprises Corporation (“Fine Star”) on 25th
February 2010, which provided for the entry of
relevant ancillary agreements for the following
transactions (the “Joint Venture Transaction”) to take
place:
(i) Cathay Pacific China Cargo Holdings would
subscribe for a 25% equity interest in Air China
Cargo for a consideration of RMB851,621,140
(comprising RMB808,823,530 as contribution to
the registered capital and RMB42,797,610 as
premium contribution) and Fine Star would make a
further capital contribution of RMB238,453,919
(comprising RMB226,470,588 as contribution to
the registered capital and RMB11,983,331 as
premium contribution) in cash to Air China Cargo.
Following the completion of such equity
subscription and capital contribution, the equity
interests of Air China, Fine Star and Cathay Pacific
China Cargo Holdings in Air China Cargo would be
51%, 24% and 25% respectively (with premium
contribution credited as capital reserve fund of Air
China Cargo);
Directors’ Report