Cathay Pacific 2002 Annual Report Download - page 26

Cathay Pacific Airways Limited Annual Report 2002 23
SHARE CAPITAL (continued)
The Company adopted a share option scheme on 10th March 1999. During the year, 6,190,000 shares were issued
under the scheme. Details of the scheme can be found in note 21 to the accounts.
COMMITMENTS AND CONTINGENCIES
The details of capital commitments and contingent liabilities of the Group as at 31st December 2002 are set out in
note 29 to the accounts.
AGREEMENT FOR SERVICES
There is an agreement for services, in respect of which the John Swire & Sons Limited group provides services to
the Company and under which costs are reimbursed and fees payable. The counterparty was John Swire & Sons
Limited (“JS&S”) until 30th June 2002 and has been John Swire & Sons (H.K.) Limited (“JS&SHK”), a wholly owned
subsidiary of JS&S, since 1st July 2002. The agreement can be terminated by either party giving not less than 12
months’ notice of termination expiring on 31st December 2004 or any subsequent 31st December. Sir Adrian Swire,
as a director and shareholder of JS&S, is interested in this agreement and Edward Scott was similarly interested.
Philip Chen, Martin Cubbon, James Hughes-Hallett, David Turnbull, Sir Adrian Swire, Tony Tyler and Raymond Yuen are
directors of JS&SHK and therefore have an interest in the agreement with JS&SHK.
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 2002. 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 TRANSACTIONS
The Company has entered into the following transactions with connected persons for the purpose of the Listing
Rules (Main Board) (the “Listing Rules”) of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”).
On 25th February 2002, Maplebeck Limited, a wholly owned subsidiary of the Company, acquired from Stabilo
Limited, a subsidiary of Shun Tak Holdings Limited (“Shun Tak”), their 25% interest in AHK for an aggregate
consideration of HK$194 million. After the transaction, AHK became a wholly owned subsidiary of the Company.
In order to facilitate cash management, interest free loans were made by AHK to its shareholders, being the Company
(75%) and Stabilo Limited (25%), amounting to HK$60 million and HK$20 million respectively on 16th October 2000.
HK$40 million of the loans were repaid proportionally by AHK’s shareholders on 24th September 2001 with the
balance being fully repaid on 8th February 2002.
Shun Tak was a connected person of the Company as it had a 25% interest in the Company’s subsidiary AHK. Stanley
Ho and Andrew Tse, who were directors and shareholders of Shun Tak and Stabilo Limited, were connected persons
of the Company because they were directors of AHK.
On 17th October 2002, AHK entered into an agreement (the “Services Agreement”) with DHL under which AHK
would provide to DHL services in respect of the sale of space on certain cargo services operated by AHK in the Asian
region for the carriage of DHL’s door to door air express materials. On the same date, the Company and AHK entered
into another agreement (the “Agency Agreement”) with DHL under which, for the space not taken up by DHL, the
Company would act as AHK’s worldwide exclusive sales agent for general cargo sales and for arranging and marketing
AHK’s commercial activities. The transactions contemplated under the Services Agreement and the Agency Agreement
(the “Transactions”) are to take place on a continuing basis. Under the Listing Rules, such transactions will constitute
continuing connected transactions of the Company because of DHL’s 30% interest in AHK.
Directors’ Report