Cathay Pacific 2008 Annual Report Download - page 40

38 Cathay Pacific Airways Limited Annual Report 2008
Directors’ Report
one hand and Air China and its subsidiaries (“Air
China Group”) on the other hand arising from joint
venture arrangements for the operation of
passenger air transportation, code sharing
arrangements, interline arrangements, aircraft
leasing, frequent flyer programmes, the provision
of airline catering, ground support and engineering
services and other services agreed to be provided
and other transactions agreed to be undertaken
under the Air China Framework Agreement.
The term of the Air China Framework Agreement is
for 3 years ending on 31st December 2010 and 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 17.5% 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 an
announcement dated 26th June 2008 was
published.
For the year ended 31st December 2008 and under
the Air China Framework Agreement, the amounts
payable by the Group to Air China Group totalled
HK$388 million; and the amounts payable by Air
China Group to the Group totalled HK$245 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) either on normal commercial terms or, if there are
not sufficient comparable transactions to judge
whether they are on normal commercial terms, on
terms no less favourable to the Group than terms
available to or from (as appropriate) independent
third parties; and
(c) in accordance with the relevant agreement
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 have also reviewed these
transactions and confirmed to the Board that:
(a) they have been approved by the Board of the
Company;
(b) they are in accordance with the pricing policies of
the Group (if the transactions involve provision of
goods or services by the Group);
(c) they have been entered into in accordance with the
relevant agreements governing the transactions;
and
(d) they have not exceeded the relevant annual caps
disclosed in previous announcements.
Major customers and suppliers
6% of sales and 28% of purchases during the year
were attributable to the Group’s five largest customers
and suppliers respectively. 1% of sales were made to
the Group’s largest customer while 8% of purchases
were made from the Group’s largest supplier.
Directors
Kong Dong, Ian Shiu and James E. Hughes-Hallett
were appointed Directors with effect from 7th May
2008, 1st October 2008 and 12th March 2009
respectively. All the other present Directors of the
Company whose names are listed on pages 32 and 33
served throughout the year. Kong Dong was elected
Deputy Chairman on 7th May 2008. In addition, Li
Jiaxiang, Augustus Tang and Robert Atkinson served as
Directors until their resignation with effect from 7th
May 2008, 1st October 2008 and 12th March 2009
respectively. Leslie Chang served as Alternate Director
to Henry Fan during the year until 21st October 2008.
The Company has received from each of its
independent non-executive Directors an annual
confirmation of his independence pursuant to Listing
Rule 3.13 and the Company still considers all its
independent non-executive Directors to be
independent.