Cathay Pacific 2014 Annual Report Download - page 39

ANNUAL REPORT 2014
37Directors’ Report
RMB172,219,700 in order to subscribe for an additional
amount of registered capital of RMB1,020,000,000 in Air
China Cargo; and
(b) Cathay Pacific China Cargo Holdings and Fine Star
agreed to subscribe in cash for additional amounts of
registered capital of RMB500,000,000 and
RMB480,000,000 respectively in Air China Cargo (the
“Capital Increase”).
Separately, the shareholders in Air China Cargo had made
shareholder loans to Air China Cargo of RMB2,000,000,000
in proportion to their shareholdings in Air China Cargo.
These shareholder loans were exempt from the reporting,
announcement and independent shareholders’ approval
requirements under Rule 14A.65(3) of the Listing Rules. The
shareholder loans made by Cathay Pacific China Cargo
Holdings and Fine Star aggregated RMB980,000,000.
Upon completion of the transactions described in (a) and (b)
above, the registered capital of Air China Cargo increased
from RMB3,235,294,118 to RMB5,235,294,118. The
shareholdings of Air China, Cathay Pacific China Cargo
Holdings and Fine Star in the enlarged registered capital of
Air China Cargo remained unchanged at 51%, 25% and 24%,
respectively.
Cathay Pacific China Cargo Holdings Limited is a wholly
owned subsidiary of the Company. As Air China is a
substantial shareholder of the Company and Air China Cargo
is a subsidiary of Air China, they are connected persons of
the Company under the Listing Rules. Accordingly, the
Capital Increase constituted a connected transaction under
the Listing Rules in respect of which an announcement
dated 26th June 2014 was published.
Major customers and suppliers
7% of sales and 39% of purchases during the year were
attributable to the Group’s five largest customers and
suppliers respectively. 2% of sales were made to the Group’s
largest customer and 15% of purchases were made from the
Group’s largest supplier.
No Director, any of their close associates or any shareholder
who, to the knowledge of the Directors, owns more than 5%
of the Company’s issued share capital has an interest in the
Group’s five largest suppliers.
Directors
Rupert Hogg and Song Zhiyong were appointed as Directors
with effect from 14th March 2014. Martin Cubbon and
Samuel Swire were appointed as Directors with effect from
1st January 2015. All the other present Directors of the
Company whose names are listed on pages 32 and 33
served throughout the year. Wang Changshun resigned as
Deputy Chairman and a Director with effect from 27th
January 2014. John Slosar and Cai Jianjiang were elected
Chairman and Deputy Chairman respectively with effect
from 14th March 2014. Christopher Pratt retired as
Chairman and a Director with effect from 14th March 2014.
James W.J. Hughes-Hallett and Peter Kilgour resigned as
Directors with effect from 1st January 2015. Jack So and
Tung Chee Chen will retire as Directors at the conclusion of
the annual general meeting on 20th May 2015.
The Company has received from each of its Independent
Non-Executive Directors an annual confirmation of his/her
independence pursuant to Listing Rule 3.13 and the
Company still considers all its Independent Non-Executive
Directors to be independent.
The Company has been granted by the Stock Exchange a
waiver from strict compliance with Rule 3.10A of the Listing
Rules, which requires that an issuer must appoint
Independent Non-Executive Directors representing at least
one-third of the Board.
Article 93 of the Company’s Articles of Association provides
for all the Directors to retire at the third annual general
meeting following their election by ordinary resolution. In
accordance therewith, Martin Murray, Ian Shiu and Zhao
Xiaohang retire this year and, being eligible, offer themselves
for re-election. Jack So and Tung Chee Chen will also retire
this year but do not offer themselves for re-election. Martin
Cubbon and Samuel Swire, having been appointed as
Directors of the Company under Article 91 since the last
annual general meeting, also retire and, being eligible, offer
themselves for election.
Each of the Directors has entered into a letter of
appointment, which constitutes a service contract, with the
Company for a term of up to three years until his/her
retirement under Article 91 or Article 93 of the Articles of
Association of the Company, which will be renewed for a
term of three years upon each election/re-election. None of
the Directors has any existing or proposed service contract
with any member of the Group which is not expiring or
terminable by the Group 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$3.1 million; they
received no other emoluments from the Company or any of
its subsidiaries.