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89
SIA Annual Report 02/03
Notes to the Financial Statements
31 March 2003
17 Long-Term Liabilities (in $ million) (continued)
During the year, SATS and two of its wholly-owned subsidiary companies entered into a lease agreement whereby
the subsidiary companies sold and leased back certain fixed ground support equipment with net book value of
$159.7 million. The gain arising from this sale and leaseback transaction is deferred and amortized over the lease
period of 18 years commencing October 2002. Under the terms of the agreement, the subsidiary companies
prepaid an amount which is equivalent to the present value of their future lease obligations. SATS has guaranteed
the repayment of these future lease obligations, and accordingly has become the primary obligor under the lease
agreement.
Interest rates on the Company’s finance lease commitments are charged at a margin above the LIBOR. These ranged
from 1.74% to 1.84% (2001-02: 2.28% to 2.38%) per annum.
Interest on SIA Cargo’s finance lease commitment is charged at a margin above the LIBOR. This ranged from 2.00%
to 4.56% (2001-02: 2.75% to 5.78%) per annum.
Future lease payments under these finance leases are as follows:
The Group The Company
31 March 31 March
2003 2002 2003 2002
Minimum Repayment of Minimum Repayment of Minimum Repayment of Minimum Repayment of
Payments Principal Payments Principal Payments Principal Payments Principal
Within one year 28.6 13.0 63.1 42.3 8.5 (2.4) 11.5 (2.4)
After one year
but not more
than five years 715.6 646.6 630.6 527.4 620.5 586.3 523.4 468.2
More than five
years 156.4 134.8 340.0 300.0 – – 143.4 141.0
Total future lease
payments 900.6 794.4 1,033.7 869.7 629.0 583.9 678.3 606.8
Amounts
representing
interest (106.2) – (164.0) – (45.1) – (71.5) –
Principal value of
long-term
commitments
under
finance leases 794.4 794.4 869.7 869.7 583.9 583.9 606.8 606.8
Additionally, at 31 March 2003, there are lease obligations in respect of three aircraft finance lease agreements,
which expire over the next 1 to 3 years, amounting to $135.4 million (2002: $359.4 million) for the Company.
These are covered by funds amounting to $135.4 million (2002: $360.7 million) for the Company placed with
financial institutions under defeasance and other arrangements which have not been included in these financial
statements. There are no restrictions on the use of the aircraft.
The Company continues to remain the primary obligor under these lease agreements. There are contingent liabilities
(secured) amounting to $135.4 million (2002: $359.4 million) for the unpaid lease commitments at 31 March 2003.