Cathay Pacific 2015 Annual Report Download - page 35

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Annual Report 2015
33
The current term of the Air China Framework Agreement
is for three years ending on 31st December 2016 and it is
renewable for successive periods of three years
thereafter unless either party to it gives to the other
notice of termination of not less than three months
expiring on any 31st December.
Air China, by virtue of its 29.99% shareholding in Cathay
Pacific, is a substantial shareholder and therefore a
connected person of Cathay Pacific under the Listing
Rules. The transactions under the Air China Framework
Agreement are continuing connected transactions in
respect of which announcements dated 26th June 2008,
10th September 2010 and 26th September 2013
were published.
For the year ended 31st December 2015 and under the
Air China Framework Agreement, the amounts payable
by the Group to the Air China group totalled HK$415
million; and the amounts payable by the Air China group
to the Group totalled HK$232 million.
The Independent Non-Executive Directors, who are not
interested in any connected transactions with the Group,
have reviewed and confirmed that the continuing
connected transactions as set out above have been
entered into by the Group:
(a) in the ordinary and usual course of business of
the Group;
(b) on normal commercial terms or better; and
(c) according to the agreements governing them on terms
that are fair and reasonable and in the interests of the
shareholders of the Company as a whole.
The Auditors of the Company were engaged to report on
the Group’s continuing connected transactions in
accordance with the Hong Kong Standard on Assurance
Engagements 3000 (Revised) “Assurance Engagements
Other Than Audits or Reviews of Historical Financial
Information” and with reference to Practice Note 740
“Auditor’s Letter on Continuing Connected Transactions
under the Hong Kong Listing Rules” issued by the Hong
Kong Institute of Certified Public Accountants. The Auditors
have issued their unqualified letter containing their findings
and conclusions in respect of the continuing connected
transactions disclosed by the Group in accordance with
Chapter 14A of the Listing Rules, which states that:
(a) nothing has come to their attention that causes them to
believe that the disclosed continuing connected
transactions have not been approved by the Board of
the Company;
(b) nothing has come to their attention that causes them to
believe that the transactions were not, in all material
respects, in accordance with the pricing policies of the
Group if the transactions involve provision of goods or
services by the Group;
(c) nothing has come to their attention that causes them to
believe that the transactions were not entered into, in all
material respects, in accordance with the relevant
agreements governing such transactions; and
(d) nothing has come to their attention that causes them to
believe that the disclosed continuing connected
transactions have exceeded the relevant annual caps.
A copy of the Auditors’ letter has been provided by the
Company to the Stock Exchange.
Major customers and suppliers
7% of sales and 26% of purchases during the year were
attributable to the Group’s five largest customers and
suppliers respectively. 2% of sales were made to the
Group’s largest customer and 10% of purchases were made
from the Group’s largest supplier.
No Director, any of their close associates or any shareholder
who, to the knowledge of the Directors, owns more than 5%
of the number of issued shares of the Company has an
interest in the Group’s five largest suppliers.
Directors
John Harrison and Andrew Tung were appointed as
Directors with effect from the conclusion of the 2015
Annual General Meeting held on 20th May 2015. Algernon
Yau was appointed as a Director with effect from
7th September 2015. All the other present Directors of the
Company whose names are listed on pages 28 and 29
served throughout the year. Jack So and Tung Chee Chen
retired as Directors at the conclusion of the annual general
meeting held on 20th May 2015. W.E. James Barrington
resigned as a Director with effect from 7th September 2015.
Directors’ Report