Cathay Pacific 1998 Annual Report Download - page 30

Directors’ Report
28 CATHAY PACIFIC AIRWAYS LIMITED ANNUAL REPORT 1998
Share capital
During the year under review, the Company made the following purchases of its shares on the
Hong Kong Stock Exchange. These purchases were made as a result of a fall in the price of the
shares. All the shares purchased were cancelled.
Month Number Purchased Highest Price Paid Lowest Price Paid Total Paid
HK$ HK$ HK$
January 3,600,000 5.50 4.98 19,350,631
Agreement for services
Under an agreement between the two parties, the Company reimburses costs and pays fees to
John Swire & Sons Limited in exchange for services provided. This agreement can be terminated by
either party giving not less than 12 months’ notice to take effect on 31st December 2000 or 31st
December in any subsequent year. As directors and shareholders of John Swire & Sons Limited,
Edward Scott and Sir Adrian Swire are interested in this agreement. Duncan Bluck was also
interested in this agreement as a director and shareholder of John Swire & Sons Limited.
Significant contracts
Contracts between the Company and HAECO for the maintenance and overhaul of aircraft and
related equipment accounted for approximately 3.4% of the airline’s operating costs in 1998. Like the
Company, HAECO is an associated company of Swire Pacific Limited; all contracts have been
concluded on normal commercial terms in the ordinary course of the business of both parties.
Connected transaction
On 5th March 1999, the Company acquired from Furama Hotel Enterprises Limited (“Furama”)
their 35% interest in Vogue Laundry Service Limited (“Vogue”) for an aggregate consideration of
HK$31,986,500. Vogue operates a laundry and drycleaning plant providing services mainly to large
institutions. After the transaction, Vogue became a wholly-owned subsidiary of the Company.
The Directors of the Company, including the independent non-executive Directors, confirmed that
the consideration and the terms of the Agreement were fair and reasonable and were of the best
interests for the Shareholders.
The above was a connected transaction under the Listing Rules of The Stock Exchange of Hong
Kong Limited because of Furama’s 35% interest in Vogue.
Major customers and suppliers
5.8% of sales and 17.2% of purchases during the year were attributable to the Group’s five largest
customers and suppliers respectively. 1.9% of sales were made to the Group’s largest customer while
5.5% of purchases were made from the Group’s largest supplier. HAECO is one of the Group’s largest
suppliers.
Directors
All the present Directors of Cathay Pacific Airways Limited whose names are listed on pages 25
and 26 served throughout the year with the exception of:
Zhu Youjun (resigned 14th January 1998)
Roland Fairfield (resigned 17th April 1998)
Derek Cridland (appointed 18th April 1998)
Patrick Tsai (resigned 30th June 1998)
Duncan Bluck (resigned 30th June 1998)
James Hughes-Hallett (appointed 1st July 1998)
Raymond Yuen (appointed 1st September 1998)
Peter Johansen (resigned 16th September 1998)
Martin Cubbon (appointed 16th September 1998)