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109
Singapore Airlines Annual Report 05/06
17 Long-Term Liabilities (in $ million) (continued)
Finance leases
The Company has fi nance leases for two B747-400s, which were subsequently sub-leased to Singapore Airlines Cargo Pte Ltd
(“SIA Cargo”) in 2001-02, as part of Cargo Division’s corporatisation. Both fi nance leases mature in 2007 without any options
for renewal. The leases have options for the Company to purchase the aircraft at the end of the lease period of 12.5 years.
One of the B747-400 leases has an additional purchase option exercisable in the 10.5th year. The Company intends to hold the
fi nance leases until maturity. Sub-leasing is allowed under the lease agreements.
SIA Cargo paid the entire outstanding lease liabilities by issuing ordinary shares at par for cash to the Company. The sub-lease
terms and conditions are identical to those under the fi nance leases held by the Company.
SIA Cargo holds three B747-400 freighters under fi nance leases, which mature between 2015 and 2026, without any options
for renewal. Two leases have options for SIA Cargo to purchase the aircraft at the end of the lease period of 12 years. The other
lease has an option for SIA Cargo to purchase the aircraft at the end of the 12th or 15th year of the lease period. Sub-leasing is
allowed under the lease agreements.
The SIAEC Group has a lease agreement for a building for a lease term of 30 years from August 2005. The initial down
payment of 20% for the building of $2.4 million is payable by instalment over a period of 24 months, at an interest rate of
2% per annum.
Interest rates on the Company’s fi nance lease commitments are charged at a margin above the LIBOR. These ranged from 3.19%
to 5.18% (2004-05: 1.56% to 2.31%) per annum.
Interest rates on SIA Cargo’s fi nance lease commitments are charged at a margin above the LIBOR. These ranged from 2.88% to
4.74% (2004-05: 1.15% to 2.65%) per annum.
Future lease payments under these fi nance leases are as follows:
The Group The Company
31 March 31 March
2006 2005 2006 2005
Minimum Repayment Minimum Repayment Minimum Repayment Minimum Repayment
Payments of Principal Payments of Principal Payments of Principal Payments of Principal
Within one year 512.4 464.6 80.8 44.1 441.7 419.5 13.1 (2.8)
After one year but not
more than fi ve years 417.0 331.3 864.3 752.8 122.3 122.3 570.5 552.3
More than fi ve years 304.5 269.0 387.6 338.3 – – – –
Total future lease payments 1,233.9 1,064.9 1,332.7 1,135.2 564.0 541.8 583.6 549.5
Amounts representing interest (169.0) – (197.5) – (22.2) – (34.1) –
Principal value of long-term
commitments under
fi nance leases 1,064.9 1,064.9 1,135.2 1,135.2 541.8 541.8 549.5 549.5
NOTES TO THE FINANCIAL STATEMENTS
31 March 2006