22. Retirement benefits The Group operates various retirement benefit schemes providing resignation and retirement benefits to staff upon their cessation of service with the Group. Most schemes for staff employed on expatriate terms are contributory whilst most schemes for locally engaged employees are non-contributory. The assets of the schemes are administrated by independent trustees and maintained independent of the Group's finances. The majority of the schemes are of the defined benefit type and contributions to such schemes are made in accordance with the recommendations of the independent actuary of the relevant scheme. The schemes are assessed annually by qualified independent actuaries. Details of the principal Group schemes as at the latest valuation date are listed below:
All employees engaged outside Hong Kong are covered by appropriate local arrangements.
The total retirement benefit costs charged to the profit and loss account in 1997 were HK$98 million (1996: HK$420 million).
There are agreements for services, in respect of which John Swire & Sons Limited provides services to various companies in the Group and under which costs are reimbursed and fees are payable. Management services fees calculated as 2.5% of the relevant company's consolidated profit before tax, extraordinary items and minority interests, disregarding any profits and losses on sale of fixed assets and from associated companies, for the year ended 31st December 1997 amounted to HK$190 million and expenses of HK$163 million were reimbursed at cost.
The following is a summary of other significant transactions between the Group and related parties, in addition to those disclosed elsewhere in the accounts, which were carried out in the normal course of the Group's business in 1997:
Notes:
(a) Sales and purchases of goods and rendering of services to and from related parties were conducted in the normal course of business at prices and terms no less than those charged to/by and contracted with other third party customers/suppliers of the Group.
(b) The Swire Properties group has, in the normal course of its business, entered into lease agreements with related parties to lease premises for varying periods up to six years. The leases were entered into on normal commercial terms.
(c) Loans advanced to associated companies and loans due to associated companies at 31st December 1997 are disclosed in note 13. Quasi-equity loans are non-interest bearing whilst other loans bear interest at market rates. These loans have no fixed settlement dates.
(d) Amounts due to and due from the ultimate holding company, intermediate holding company and fellow subsidiaries at 31st December 1997 are disclosed in note 15. These balances arise from the normal course of business, are non-interest bearing and have no fixed settlement dates.
The ultimate holding company is John Swire and Sons Limited, a company incorporated in the United Kingdom. Certain comparative amounts have been reclassified to conform with the current year's presentation.
The principal assumption used by the actuaries was that the long-term average return on investments would be 1% per annum higher than the average increase in salaries. The differences between the market values of the schemes' assets and the present value of the past service liabilities on an on-going basis at the date of the actuarial valuation are taken into consideration when determining future funding rates in order to ensure that the schemes will be able to meet these liabilities as they become due. The current funding rates are those recommended by the actuaries to ensure that the schemes will be able to meet their future liabilities.
23. Related party transactions
25. Ultimate Holding Company
26. Comparative amounts
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