Cathay Pacific 2011 Annual Report Download - page 85

31. 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:
2011 2010
Associates
HK$M
Other related
parties
HK$M
Associates
HK$M
Other related
parties
HK$M
Turnover 287 23 219 8
Aircraft maintenance costs 2 2,287 666 1,152
Route operating costs 584 – 540 –
Dividends received (417) – (132) –
Fixed assets purchase – 1 1 –
(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 2011, service fees of HK$136 million (2010: HK$293 million) were paid and
expenses of HK$146 million (2010: HK$139 million) were reimbursed at cost; in addition, HK$55 million
(2010: HK$57 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 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 2011 were HK$2,287 million (2010: HK$1,818 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 2011 totalled
HK$356 million (2010: HK$403 million). The amounts receivable from Air China group for the year ended
31st December 2011 totalled HK$287 million (2010: HK$219 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 2011 are disclosed in
notes 21 and 24 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 2011 are
disclosed in note 32(b) 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 29 to the accounts.
Notes to the Accounts RELATED PARTY TRANSACTIONS
Cathay Pacific Airways Limited Annual Report 2011 83