Cathay Pacific 1998 Annual Report Download - page 31

Directors’ Report
29
CATHAY PACIFIC AIRWAYS LIMITED ANNUAL REPORT 1998
At various times during the year, Peter Lee and Tony Tyler served as alternate directors.
Article 93 of the Company’s Articles of Association provides for all the Directors to retire at the
third annual general meeting following their election by ordinary resolution. In accordance therewith,
Edward Scott, Sir Adrian Swire and Christopher Langley retire this year and being eligible, offer
themselves for re-election.
James Hughes-Hallett, Raymond Yuen and Martin Cubbon having been appointed to the Board
under Article 91 since the last annual general meeting, also retire and, being eligible, offer
themselves for election.
No Director has a service contract that is not determinable by the employer within one year
without payment of compensation (other than statutory compensation).
Directors’ fees paid to the independent non-executive Directors during the year totalled
HK$100,000; they received no other emoluments from the Company or any of its subsidiaries.
Year 2000
The Year 2000 (“Y2K”) or millennium date change issue has arisen because many computer
systems and electronic devices which store date information based on a two-digit year sequence are
unable to accurately process dates for the Year 2000 and beyond. The problem affects IT and all
other systems and equipment that rely on embedded electronic chip technology. It has the potential
to impact on any business that does not take adequate steps to upgrade or replace non-compliant
systems, guard against third-party risk from critical suppliers or customers, and manage its risk-
exposure through the development of comprehensive contingency plans.
Recognising that this is first and foremost a business problem, the Cathay Pacific Group is
addressing the millennium date change issue as a matter of priority. Sponsored by the Chairman of
Swire Pacific and Cathay Pacific, and reporting to a central steering committee, the Swire Group Y2K
Programme Office is working with external consultants to monitor progress towards Y2K readiness
on a Group-wide basis. A separate Aviation Division subcommittee is co-ordinating the progress of
Y2K projects within the Cathay Pacific Group. The airline’s Y2K
project team began work on the
modification of its systems and programmes in 1996.
Cathay Pacific’s Year 2000 Programme Office has been formed as a separate department headed
by a senior manager reporting directly to the Director Corporate Development, who is the executive
sponsor of the programme. The Programme Office also has direct access to the Chief Executive
Officer who is briefed fortnightly by the Programme Manager. The role of the Year 2000 Programme
Office includes the formulation of policies on Year 2000 compliance, development of a standard
approach for the assessment of critical suppliers, Business Continuity Planning development and the
overall coordination as well as management of the project. The Programme Office currently has a
staff of 19 people and a budget in 1999 of HK$32 million.
Cathay Pacific aims to achieve Y2K readiness for its business-critical systems by March 1999 and
compliance by June 1999 with the objective that neither the performance nor function of the Group’s
key business assets will be materially affected by the date change.
Y2K readiness will have been achieved when an inventory of all relevant equipment and systems
(that is all business-critical IT systems and equipment relying on embedded chips which could be
disrupted by the series of date changes associated with the Y2K issue, and therefore could have a
material adverse effect on the business or operations of the Group) has been made; such equipment
and systems have been assessed and tested for potential Y2K problems identified by the relevant
project team and a course of action relating to any identified problems has been decided upon and
the equipment or services required to implement this have been ordered or arranged. The Cathay
Pacific Group of companies will have business contingency plans in place to apply in the event of
disruptions caused by system or equipment failure or third party non-compliance.