Cathay Pacific 2010 Annual Report Download - page 85

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Cathay Pacific Airways Limited Annual Report 2010
83
30. 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:
2010 2009
Associates
HK$M
Other related
parties
HK$M
Associates
HK$M
Other related
parties
HK$M
Turnover 219 8 161 –
Aircraft maintenance costs 666 1,152 1,891 –
Route operating costs 540 – 463 –
Dividends received (132) – (174) –
Fixed assets purchase 1 – 2 –
On 7th June 2010 the Company entered into a sale and purchase agreement to sell its entire 15% shareholding in
HAECO to Swire Pacific and HAECO has since become a subsidiary of Swire Pacific. HAECO, which was an
associate of the Company before completion of the transaction on 14th June 2010, has since been classified as an
“other related party”.
(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, non-controlling interests,
and any profits and losses on disposal of fixed assets are paid annually. For the year ended 31st December
2010, service fees paid for the year ended 31st December 2010 totalled HK$293 million (2009: HK$95 million)
and expenses of HK$139 million (2009: HK$161 million) were reimbursed at cost; in addition, HK$57 million
(2009: HK$60 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 page 37.
(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 2010 were HK$1,818 million (2009: HK$1,891 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 2010 totalled HK$403 million
(2009: HK$305 million). The amounts receivable from Air China group for the year ended 31st December 2010
totalled HK$219 million (2009: HK$164 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 pages 38 and 39.
(c) Amounts due from and due to associates and other related companies at 31st December 2010 are disclosed in
notes 21 and 23 to the accounts. These balances arising in the normal course of business are non-interest bearing
and have no fixed repayment terms.
(d) Guarantees given by the Company in respect of bank loan facilities of an associate at 31st December 2010 are
disclosed in note 31 to the accounts.
(e) There were no material transactions with Directors and Executive Officers except for those relating to
shareholdings (Directors’ Report and Corporate Governance). Remuneration of Directors and Executive
Officers is disclosed in note 28 to the accounts.
Notes to the Accounts RELATED PARTY TRANSACTIONS