Cathay Pacific 1999 Annual Report Download - page 24

Directors’ Report
28 CATHAY PACIFIC AIRWAYS LIMITED ANNUAL REPORT 1999
Share capital (continued)
Company’s shares on The Stock Exchange on the five trading days immediately preceding the date of grant, and the nominal
value of the shares. As at 31st December 1999, options to subscribe for a total of 67,837,097 shares were granted at a
subscription price of HK$7.47 per share. Other than in limited circumstances, the options in relation to 50% of the shares
will become exercisable on 15th March 2002, and the balance on 15th March 2004. The options will, except in limited
circumstances, be exercisable until 14th March 2009. A resolution will be proposed at an Extraordinary General Meeting of
the Company on 17th May 2000 to formally ratify certain minor amendments made to the original share option scheme
approved by shareholders at an Extraordinary General Meeting held on 10th March 1999.
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 2001 or 31st December in any subsequent year. As directors and shareholders of John Swire &
Sons Limited, Edward Scott, Sir Adrian Swire and Peter Sutch are interested in this agreement.
Significant contracts
Contracts between the Company and HAECO for the maintenance and overhaul of aircraft and related equipment
accounted for approximately 3.1% of the airline’s operating costs in 1999. 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.
Disposal of assets
In February 1999, the Group sold 0.3% of its interest in Equant N.V., a company which provides an international
communications network, for HK$322 million. A further 0.1% was sold in December 1999 for HK$160 million. The Group
retains a 0.6% holding in Equant N.V.
In March 1999, the Group sold its interests in Cathay Pacific Catering (Holdings) Pty Limited, which operated its
Australian flight kitchens, to Gate Gourmet for a consideration of HK$113 million.
Major customers and suppliers
6.0% of sales and 16.1% of purchases during the year were attributable to the Group’s five largest customers and
suppliers respectively. 1.7% of sales were made to the Group’s largest customer while 7.2% of purchases were made from the
Group’s largest supplier. HAECO is one of the Group’s largest suppliers.
Directors
With the exception of Raymond Or, all the present Directors of Cathay Pacific Airways Limited, whose names are listed
on pages 25 and 26, served throughout the year. In addition, Chris Langley resigned on 31st January 2000 and was replaced
by Raymond Or on 1st February 2000.
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 present Directors to retire at the third Annual
General Meeting following their election by ordinary resolution. In accordance therewith, Robert Adams, Ken Barley,
Philip Chen, Henry Fan, Lee Hon Chiu, Vernon Moore, Tony Tyler, David Turnbull and Carl Yung retire this year and being
eligible, offer themselves for re-election.
Raymond Or, having been appointed to the Board under Article 91 since the last Annual General Meeting, also retires
and, being eligible, offers himself 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.