Cathay Pacific 1998 Annual Report Download - page 32

Directors’ Report
30 CATHAY PACIFIC AIRWAYS LIMITED ANNUAL REPORT 1998
Year 2000 (continued)
Having achieved readiness, Cathay Pacific aims to achieve Y2K compliance by June 1999. By this
we mean, in relation to our own relevant equipment and systems, the modification or replacement
of all such equipment and systems that fail our Y2K compliance test and, in respect of suppliers of
such equipment and systems, we mean that all critical suppliers will have passed our Y2K
compliance audit, or have been replaced where possible by those that have.
Cathay Pacific began to address Y2K issues at a relatively early stage. As part of regular and
budgeted enhancements to its business systems, the Company has worked closely with vendors on
systematic upgrade programmes to deal with the Y2K problem.
Cathay Pacific’s transfer in July to the new Hong Kong International Airport, has also seen the
planned upgrade of a number of potentially Y2K-sensitive systems and equipment, including the
introduction of a new IT infrastructure as part of its investment in its new headquarters at Chek Lap
Kok. The Company has spent HK$303 million in replacing systems, with upgraded versions the
vendors of which have represented as being Y2K compliant, and as a consequence has avoided
expensive remedial work. The cost of these new assets has been capitalised in the accounts. The
aggregate of the costs to achieve Y2K compliance has not yet been ascertained. Costs of the Y2K
programme are expensed in the accounts as and when incurred. As at 31st December 1998 a total of
HK$144 million has been contracted for of which HK$90 million has been provided for in the
accounts for the year ended 31st December 1998.
Cathay Pacific is supporting International Air Transport Association’s (“IATA”) initiative to monitor
and assist Y2K readiness among airports and other industry suppliers. IATA has launched a global
programme to audit international airports and air traffic control systems for Y2K readiness and plans
to provide a report to its members by mid-1999.
Cathay Pacific believes that it has taken, or has identified and will take, all reasonable steps
necessary to ensure that its internal systems and equipment will enable it to be Y2K compliant in a
timely manner. In addition, Cathay Pacific believes that it has taken, or has identified and will take, all
reasonable steps necessary to identify and mitigate the material adverse effects which might result
from any third parties on which Cathay Pacific is or will be reliant, failing to be Y2K compliant.
However, there can be no assurance that equipment or services used by third parties on which
Cathay Pacific does or will rely, will be Y2K compliant in a timely manner. The failure of the systems
or equipment or services used by third parties and on which Cathay Pacific does or will rely, could
have a material adverse effect on its business.
Cathay Pacific is presently taking all reasonable steps to identify Y2K related system disruptions
which may impact on part or all of our operations, and will have business continuity plans
established to reduce the potential impact of any such disruptions.
Corporate governance
The Company has complied throughout the year with the Code of Best Practice as set out in the
Listing Rules of The Stock Exchange of Hong Kong Limited.
In compliance with the additional requirement of The Stock Exchange of Hong Kong Limited to its
Code of Best Practice, the Company has on 30th October 1998 established an Audit Committee with
written terms of reference.
Directors’ interests
At 31st December 1998, the register maintained under Section 29 of the Securities (Disclosures of
Interests) Ordinance (“SDI”) showed that Directors held the following beneficial interests in the
shares of Cathay Pacific Airways Limited:
Shares
Personal Family Other Total
Philip Chen 9,000 – – 9,000
Lee Hon Chiu 10,000 – – 10,000
Peter Sutch 20,000 – – 20,000
Tony Tyler 5,000 – – 5,000