Report of the Directors
(B)
Continuing Connected Transactions between the Company and CSAHC (or their respective subsidiaries)
(1)
Southern Airlines (Group) Import and Export Trading Company (“SAIETC”), a wholly-owned subsidiary of
CSAHC
On 10 January 2008, the Company entered into an Import and Export Agency Framework Agreement with SAIETC, pursuant to which the parties shall cooperate on the following business domains: import and export, customs clearance, customs declaration and inspection, tendering and agency, etc.. The agreement is valid from 1 January 2008 to 31 December 2010, and the annual cap for the commission should not exceed RMB90,000,000.
For the year ended 31 December 2008, the expense incurred by the Group to SAIETC in respect of the import and export services was RMB49,867,000.
(2) Southern Airlines Culture and Media Co., Ltd. (“SACM”), which is 50% owned by the Company and
50%
owned by CSAHC
On 12 April 2007, the Company and SACM entered into an Advertising Agency Framework Agreement for a term of three years commencing from the date of the agreement. Under the agreement, SACM will produce advertisement script, graphic and music for the Company with the copyrights of such products belonging to the Company, subject to compliance with the relevant provisions of the Listing Rules. The parties have determined the various rates for providing advertising services after negotiations on a fair and equitable basis, and SACM has promised that the advertising fees for which they charged the Company were all based on the prevailing market prices for similar business which were accepted by the Company. As set forth in the agreement, the transaction cap for 2007, 2008 and 2009 were RMB16,000,000, RMB20,500,000 and RMB25,500,000, respectively.
For the year ended 31 December 2008, payments made by the Group to SACM for advertising services amounted to RMB19,706,000.
(3) China Southern Airlines Group Finance Company Limited (“SA Finance”), which is 66% controlled by
CSAHC,
21% owned by the Company and 13% owned in aggregate by four subsidiaries of the Company
On 15 November 2007, the Company renewed the Financial Services Framework Agreement with SA Finance, and presented the relevant resolution at the First Extraordinary General Meeting for the Year 2008 held on 18 January 2008 for review and approval of the Company’s shareholders pursuant to the requirements of Rule14A.35 and Rule 14A.48 of the Listing Rules.
Under such agreement, SA Finance agrees to provide to the Company deposit and loan services. According to the agreement, SA Finance shall pay interests to the Company regularly at a rate not lower than the current deposit rates set by the People’s Bank of China. The Group’s deposits placed with SA Finance were re-deposited in a number of banks. SA Finance has agreed that the loans it provided to CSAHC and its subsidiaries other than the Group should not exceed the aggregate of share capital, reserves and total deposits of other companies (excluding the Group). The rates should be determined on arm’s length basis and based on fair market rate, and should not be higher than those available from independent third parties. The parties hereby agreed that the balance of the Group’s deposits placed with SA Finance (including accrued interests) should not at any time exceed RMB2.6 billion, nor should the balance of loans borrowed from SA Finance at any time exceed the above-mentioned level. The annual cap of fees payable to SA Finance for the other financial services should not exceed RMB5 million. The agreement is valid from 1 January 2008 to 31 December 2010.
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本文鏈接地址：CHINA SOUTHERN AIRLINES COMPANY LIMITED ANNUAL REPORT 2008(16)
