China Southern Airlines Co Ltd 6-K, filed Dec 23, 2020
China Southern Airlines Co Ltd (CHKIF)
About this 6-K
China Southern Airlines Co Ltd filed this 6-K on December 23, 2020.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
December 23, 2020
CHINA SOUTHERN AIRLINES COMPANY LIMITED
68 Qi Xin Road
Guangzhou, 510403
People’s Republic of China
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes ☐ No ☒
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): N/A
China Southern Airlines Company Limited (the “Company”) published the announcements on December 21, 2020 on the Hong Kong Stock Exchange’s website at:
https://www1.hkexnews.hk/listedco/listconews/sehk/2020/1221/2020122101031.pdf, with respect to (i) resignation of executive director and chairman and appointment of chairman, (ii) proposed re-election and election of directors and supervisors; and (iii) proposed amendments to the articles of association.
https://www1.hkexnews.hk/listedco/listconews/sehk/2020/1221/2020122101037.pdf, with respect to the list of directors and their role and function.
https://www1.hkexnews.hk/listedco/listconews/sehk/2020/1221/2020122101150.pdf, with respect to connected transaction in relation to capital contribution in Xiamen Airlines.
https://www1.hkexnews.hk/listedco/listconews/sehk/2020/1221/2020122101158.pdf, with respect to connected transaction of asset leases.
The announcements in English are included as exhibits to this Form 6-K.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| CHINA SOUTHERN AIRLINES COMPANY LIMITED | ||
| By: | /s/ Xie Bing | |
| Name: | Xie Bing | |
| Title: | Company Secretary | |
Date: December 23, 2020
Exhibit 99.1
Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.
(a joint stock limited company incorporated in the People’s Republic of China with limited liability)
(Stock Code: 1055)
(1) RESIGNATION OF EXECUTIVE DIRECTOR AND CHAIRMAN AND APPOINTMENT OF CHAIRMAN;
(2) PROPOSED RE-ELECTION AND ELECTION OF DIRECTORS AND SUPERVISORS;
AND
(3) PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION
Resignation of Executive Director and Chairman and Appointment of Chairman
The Board announced in the 15th meeting of the 8th session of the Board convened on 21 December 2020 that Mr. Wang Chang Shun has tendered his resignation as the executive director of the Company, the Chairman of the Board, the chairman of the Strategic and Investment Committee of the Board and the member of the Nomination Committee of the Board with effect from 21 December 2020 due to his retirement. The Board also announced that it has approved the appointment of Mr. Ma Xu Lun as the Chairman of 8th session of the Board.
Proposed Re-election and Election of Directors
The Board announced that it has approved the proposed re-election and election of Mr. Ma Xu Lun and Mr. Han Wen Sheng as executive Directors of the 9th session of the Board for a term of three years, and Mr. Liu Chang Le, Mr. Gu Hui Zhong, Mr. Guo Wei and Mr. Yan Yan as independent non-executive Directors of the 9th session of the Board for a term of three years in the 15th meeting of the 8th session of the Board convened on 21 December 2020.
Proposed Re-election and Election of Supervisors
The Supervisory Committee announced that it has approved the proposed re-election of Mr. Li Jia Shi and Mr. Lin Xiao Chun as the shareholder representative Supervisors of the 9th session of the Supervisory Committee for a term of three years. The joint meeting of employees’ representatives meeting of the Company will be held for election of employees’ representative Supervisor for the 9th session of the Supervisory Committee for a term of three years.
Proposed Amendments to the Articles of Association of the Company
To meet the needs of business operation, the Company proposed to expand the scope of business of the Company to include aviation medical examination service. Accordingly, the articles of association of the Company has to be amended to reflect such change to the scope of business.
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On 21 December 2020, the Company convened the 15th meeting of the 8th session of the Board, which considered and approved, among other matters, the resolution in relation to the proposed amendments to the relevant clauses of the articles of association of the Company.
General Information
A circular containing, inter alia, further details of the proposed re-election and election of Directors and Supervisors and the proposed amendments to the relevant clauses of the articles of association of the Company together with the notice convening the EGM will be dispatched to the Shareholders in due course.
RESIGNATION OF EXECUTIVE DIRECTOR AND CHAIRMAN AND APPOINTMENT OF CHAIRMAN
The board of directors (the “Board”) of China Southern Airlines Company Limited (the “Company”) announced in the 15th meeting of the 8th session of the Board convened on 21 December 2020 that Mr. Wang Chang Shun (“Mr. Wang”) has tendered his resignation as the executive director of the Company (the “Director”), the chairman of the Board (the “Chairman”), the chairman of the Strategic and Investment Committee of the Board and the member of the Nomination Committee of the Board with effect from 21 December 2020 due to his retirement.
Mr. Wang confirmed that he has no disagreement with the Board and there are no other matters in relation to his resignation that need to be brought to the attention of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) and the shareholders of the Company (the “Shareholders”).
Mr. Wang has played an important role in leading the Board and formulating the strategy of the Company. The Board would like to express its sincere gratitude to Mr. Wang for his valuable contributions to the Company during his tenure of office.
The Board also announced that it has approved the appointment of Mr. Ma Xu Lun as the Chairman of the 8th session of the Board in the same Board meeting.
PROPOSED RE-ELECTION AND ELECTION OF DIRECTORS
As the original term of appointment of each Director of the 8th session of the Board of the Company had expired on 20 December 2020, according to the consideration opinion and recommendations of the nomination committee of the Company, the Board proposed to re-elect and elect Mr. Ma Xu Lun and Mr. Han Wen Sheng as executive Directors of the 9th session of the Board for a term of three years and to re-elect and elect Mr. Liu Chang Le, Mr. Gu Hui Zhong, Mr. Guo Wei and Mr. Yan Yan as independent non-executive Directors of the 9th session of the Board for a term of three years in the 15th meeting of the 8th session of the Board convened on 21 December 2020. The appointment of Directors for the 9th session of the Board shall become effective upon the approval from the Shareholders at the forthcoming 2021 first extraordinary general meeting (the “EGM”) to be held in 2021.
Mr. Zheng Fan, Mr. Tan Jin Song and Mr. Jiao Shu Ge will not stand for re-election as Directors of the 9th session of the Board due to personal work arrangement. The term of office of retiring Directors shall expire upon the conclusion of the EGM and they will also resign as the chairmen and members of the relevant Board committees of the Company upon the conclusion of the EGM (if applicable). The retiring Directors confirm that there is no disagreement between them and the Company and there is no matter in relation to their retirement that need to be brought to the attention of the Shareholders. The Company would like to thank Mr. Zheng Fan, Mr. Tan Jin Song and Mr. Jiao Shu Ge for their contribution to the Company.
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The details of each of the nominated Directors are set out in the Appendix I of this announcement.
PROPOSED RE-ELECTION AND ELECTION OF SUPERVISORS
Due to the original term of appointment of each supervisor (the “Supervisors”) of the 8th session of the supervisory committee (the “Supervisory Committee”) had expired on 20 December 2020, according to the recommendation of China Southern Air Holding Company Limited (“CSAH”), it is approved to nominate Mr. Li Jia Shi and Mr. Lin Xiao Chun as the shareholder representative Supervisors of the 9th session of the Supervisory Committee for a term of three years. The appointment of Supervisors for the 9th session of the Supervisory Committee shall become effective upon the approval from the Shareholders at the EGM.
The joint meeting of employees’ representatives meeting of the Company will be held before the EGM for election of employees’ representative Supervisor for the 9th session of the Supervisory Committee for a term of three years. The appointment of employees’ representative Supervisor shall become effective upon the conclusion of the EGM. The Company will make further announcement on the appointment of employees’ representative Supervisor of the 9th session of the Supervisory Committee.
The details of each of the nominated Supervisors are set out in the Appendix II of this announcement.
All members of the 8th session of the Board and the Supervisory Committee as well as all the senior management will continue to fulfill their respective duties of care and diligence and responsibilities in accordance with the laws, administrative rules, and the articles of association of the Company until the work for re-election and appointment of members of the Board and the Supervisory Committee is completed. The postponed re-election of the members of the Board and the Supervisory Committee will not affect the normal operation of the Company.
PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION
To meet the needs of business operation, the Company proposed to expand the scope of business of the Company to include aviation medical examination service. Accordingly, the articles of association of the Company has to be amended to reflect such change to the scope of business.
On 21 December 2020, the Company convened the 15th meeting of the 8th session of the Board, which considered and approved, among other matters, the resolution in relation to the proposed amendments to the relevant clauses of the articles of association of the Company (the “Proposed Amendments”).
The details of the Proposed Amendments are as follows:
The original article 19 of the articles of association of the Company:
“Article 19
The business activities of the Company shall fall within the scope of operation approved by relevant competent authorities.
The scope of business of the Company covers: (1) provision of scheduled and non-scheduled domestic, regional and international air transportation services for passengers, cargo, mail and luggage; (2) undertaking general aviation services; (3) provision of aircraft repair and maintenance services; (4) acting as agent for other domestic and international airlines; (5) provision of air catering services; (6) engaging in other airline or airline-related business, (limited to insurance agency business personal accident insurance); (7) provision of airline ground services; (8) aviation training; (9) asset leasing services; (10) project management and technical consultancy services; (11) sales of aviation equipment; (12) travel agency business; (13) merchandise retail and wholesale; all subject to approval by company registration authorities.”
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amended as:
“Article 19
The business activities of the Company shall fall within the scope of operation approved by relevant competent authorities.
The scope of business of the Company covers: (1) provision of scheduled and non-scheduled domestic, regional and international air transportation services for passengers, cargo, mail and luggage; (2) undertaking general aviation services; (3) provision of aircraft repair and maintenance services; (4) acting as agent for other domestic and international airlines; (5) provision of air catering services; (6) engaging in other airline or airline-related business (limited to insurance agency business personal accident insurance); (7) provision of airline ground services; (8) aviation training; (9) asset leasing services; (10) project management and technical consultancy services; (11) sales of aviation equipment; (12) travel agency business; (13) merchandise retail and wholesale; (14) health and medical examination services; all subject to approval by company registration authorities.”
Save for article 19 as stated above, other articles in the articles of association of the Company remain unchanged.
The Proposed Amendments are subject to the approval of the Shareholders by way of a special resolution at the EGM, and the completion of relevant filings or registrations (as applicable) with the relevant government authorities in the People’s Republic of China.
GENERAL INFORMATION
A circular containing, inter alia, further details of the proposed re-election and election of Directors and Supervisors and the Proposed Amendments together with the notice convening the EGM will be dispatched to the Shareholders in due course.
| By order of the Board |
| China Southern Airlines Company Limited |
| Xie Bing |
| Company Secretary |
Guangzhou, the People’s Republic of China
21 December 2020
As at the date of this announcement, the Directors include Ma Xu Lun and Han Wen Sheng as executive Directors; and Zheng Fan, Gu Hui Zhong, Tan Jin Song and Jiao Shu Ge as independent non-executive Directors.
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APPENDIX I
Biographical details of the candidates proposed to be re-elected and elected as Directors at the EGM are set out below:
Mr. Ma Xu Lun, male, born in July 1964 (aged 56), he graduated from the School of Mechanical Science & Engineering of Huazhong University of Science & Technology, majoring in industrial engineering. He has a Master’s degree of engineering and is a certified public accountant. He started his career in August 1984, and joined the Chinese Communist Party in October 1990. He has been the Vice President of China National Materials Storage and Transportation Corporation, the Deputy Director General of the Finance Department of the Civil Aviation Administration of China, the Vice President and Standing Member of Party Committee of Air China Corporation Limited. He was appointed as the Vice President of general affairs and the Deputy Party Secretary of Air China Corporation Limited in October 2002; and served as a director, the President and the Deputy Party Secretary of Air China Limited in September 2004. He served as a Party Member of China National Aviation Holding Company and a Director, the President and the Deputy Party Secretary of Air China Limited in December 2004, and the Vice President and a Party Member of China National Aviation Holding Company from February 2007. In December 2008, he was appointed as the Deputy Party Secretary of China Eastern Air Holding Company and the President and the Deputy Party Secretary of China Eastern Airlines Corporation Limited. He served as the Secretary to the Party Committee and the Vice President of China Eastern Air Holding Company and the President of China Eastern Airlines Corporation Limited in October 2011. In November 2016, he served as a Director, the President and the Deputy Party Secretary of China Eastern Air Holding Company, and the Vice Chairman, the President and the Deputy Party Secretary of China Eastern Airlines Corporation Limited in December 2016. In February 2019, he served as the Director, the President and the Deputy Party Secretary of CSAH. In March 2019, he acted as the President of the Company. In May 2019, he acted as the Vice Chairman of the Company. In December 2020, he served as the President and Party Secretary of CSAH and Vice Chairman and President of the Company.
Mr. Han Wen Sheng, male, born in January 1967 (aged 53), graduated from the Management Department of Tianjin University, majoring in engineering management, with qualification of a Master’s degree. He obtained a Master’s Degree of Engineering and is an economist. He began his career in August 1987 and jointed in the Chinese Communist Party in May 1985. He served as the Deputy Director General of Cadre Training Center of the Company, the Director of The Research Bureau of the Company, the General Manager of the Labour Department and the Secretary of the CPC General Committee of the Company, the Deputy Director General and a member of Party Committee of the Commercial Steering Committee, the General Manager as well as the Deputy Party Secretary of the Sales and Marketing Department of the Company, and the General Manager and Deputy Party Secretary of Shanghai base. He acted as the Deputy Party Secretary and the Deputy Director General of the Commercial Steering Committee of the Company since December 2009 and the Party Secretary and the Deputy Director General of the Commercial Steering Committee of the Company since October 2011. He served as the Vice President and the Party Member of CSAH from October 2016. From November 2017, he served as the Vice President and the Party Member of CSAH and the Vice President and Party Member of the Company. He was appointed as a Director and the Deputy Party Secretary of CSAH and the Vice President of the Company in November 2018. From December 2018, he served as the Deputy Party Secretary of the Company. In January 2019, he served as a Director and Deputy Party Secretary of CSAH. In May 2019, he served as a Director of the Company. Currently, he also acts as the Vice Chairman of Sichuan Airlines Corporation Limited, a director of TravelSky Technology Limited and the Vice Director General of China Air Transport Association.
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Mr. Liu Chang Le, male, born in November 1951 (aged 69), graduated from the Communication University of China with an Bachelor’s degree. He was conferred an honorary doctoral degree in literature by the City University of Hong Kong and an honorary doctoral degree in management sciences by the University of South China. Mr. Liu founded Phoenix Satellite Television in 1996. He has been the Executive Director, Chairman and Chief Executive Officer of Phoenix Media Investment (Holdings) Limited. Mr. Liu is currently a member of the Thirteenth National Committee of the Chinese People’s Political Consultative Conference (the “PCC”) and was a member of the Tenth and Eleventh National Committee of the PCC. He served as the Vice Chairman of the Subcommittee on Education, Science, Culture, Health and Sport of the Eleventh National Committee of the Chinese People’s Political Consultative Conference, and served as a member of Standing Committee of the Twelfth National Committee of the PCC. Mr. Liu was an Independent Non-executive Director of the Company from December 2011 to December 2017.
Mr. Gu Hui Zhong, male, born in November 1956 (aged 64), graduated from Zhengzhou University of Aeronautics and holds a Master’s degree. He graduated with a Master’s degree from Beihang University majoring in International Finance and is a senior accountant at a professor level. Mr. Gu is a Chinese Communist Party member and began his career in 1974. He served as the Deputy Chief and Chief of the General Office of Financial Division of Aviation Industry Department, the Director of International Affairs Financial Division of Aviation Industry Corporation of China, the General Manager of Zhongzhen Accounting Consultative Corporation, the Vice Director-General of Financial Department of Aviation Industry Corporation of China and the Deputy Director-General of Financial Department of State Commission of Science, Technology and Industry for National Defence. From June 1999 to February 2005, he acted as a member of Party Leadership Group and the Vice President of Aviation Industry Corporation of China I. From February 2005 to August 2008, he acted as a member of the Party Leadership Group, the Vice President and the Chief Accountant of Aviation Industry Corporation of China I. From August 2008 to January 2017, he acted as a member of Party Leadership Group, the Vice President and the Chief Accountant of Aviation Industry Corporation of China. He acted as the Chairman of AVIC I International Leasing Co., Ltd., the Chairman of AVIC I Financial Co., Ltd., the Chairman of CATIC International Holdings Limited, the Chairman of AVIC Capital Co., Ltd. and the Chairman of AVIC International Vanke Company Limited. Currently, he is serving as an external director of Ansteel Group Co., Ltd. and the Vice Chairman of the Accounting Society of China. He has been serving as an Independent Non-executive Director of the Company since December 2017.
Mr. Guo Wei, male, born in February 1963 (aged 57), holds a Master’s degree. He graduated from the University of Science and Technology of China. Mr. Guo is a senior engineer and a Chinese Communist Party member. He began his career in 1988. Mr. Guo served as Executive Director and the Senior Vice President of the Lenovo Group. Currently, he is the Executive Director, Chairman of the Board of Directors and Chief Executive Officer of Digital China Holdings Limited, the Chairman of Digital China Group Co., Ltd and the Chairman of Digital China Information Service Co., Ltd. In addition, Mr. Guo also served in a number of positions, such as a member of the Eleventh and Twelfth National Committee of the PCC, a member of the Fourth Committee of the Advisory Committee for State Informatization, the first President of China Strategic Alliance of Smart City Industrial and Technology Innovation, the Vice President of Digital China Industry Alliance and the Vice President of the Society of Management Science of China. Mr. Guo was an Independent Non-executive Director of the Company from June 2015 to December 2017.
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Mr. Yan Yan, male, born in September 1957 (aged 63), holds a Master’s degree. He graduated from Princeton University in International Political Economy. From February 1982 to October 1984, he served as the Chief Engineer of Jianghuai Airplane Corp. He studied in Peking University from 1984 to 1986. He studied in Princeton University from 1986 to 1989. From June 1989 to February 1990, he served as an Economist in the World Bank. From March 1991 to January 1993, he served as a Research Fellow in the Hudson Institute. From January 1993 to February 1994, he served as the Director of Asia Business Development of US Sprint Corporation. From March 1994 to September 2001, he served as the Managing Director and Head of Hong Kong office of Emerging Markets Partnership, the management company of AIG Asian Infrastructure Funds. Since October 2001, he has been serving as the Founding Managing Partner of SAIF Partners. Currently, Mr. Yan is an Independent Non-executive Director of China Resources Land Limited; an Independent Director of TCL Corporation and Blue Focus Communication Group and 360 Finance Inc.; and a Director of ATA Creativity Global, Qingdao Haier Co., Ltd and Shanghai Welltech Automation Co., Ltd. In addition, Mr. Yan was a Non-executive Director of China Huiyuan Juice Group Limited, eSun Holdings Limited and Guodian Technology & Environment Group Corporation Limited and an Independent Non-executive Director of China Petroleum & Chemical Corporation in the last three years.
If the above candidates are appointed as Directors, each of them will enter into a service contract with the Company and shall hold their office until the expiry of the term of the 9th Session of the Board.
Pursuant to the “Administrative Measures on Directors’ Remuneration of China Southern Airlines Company Limited”, the annual basic emolument of a Director is determined with reference to the responsibilities, risk and contributions of his/her position.
Mr. Ma Xu Lun and Mr. Han Wen Sheng will not receive any director’s fee. The annual basic emolument of an independent non-executive Director of the 9th session of the Board is either RMB200,000 (before taxation) for each independent non-executive Director or be determined according to relevant national policies. The emolument of an independent non-executive Director of the 9th session of the Board is subject to the approval from the Shareholders at the EGM.
As at the date of this announcement, save as disclosed, the above Director candidates (i) had not held any directorships in other publicly listed companies in the last three years; (ii) had not had any relationship with any Directors, Supervisors, senior management, substantial or controlling shareholders of the Company; and (iii) had not had any interests in shares of the Company within the meaning of Part XV of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong).
Each of the candidates for independent non-executive Directors has met the independence requirements as set out in rule 3.13 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”).
There is no other matter relating to the proposed appointment of Directors that needs to be brought to the attention of the Shareholders, nor is there any other information to be disclosed pursuant to any of the requirements of rule 13.51(2)(h) to (v) of the Listing Rules.
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APPENDIX II
Biographical details of the candidates proposed to be re-elected as Supervisors at the EGM are set out below:
Mr. Li Jia Shi, male, born in May 1961 (aged 59), graduated from Party School of the Communist Party of China majoring in Economics Management and has a Bachelor’s degree. He has an Executive Master of Business Administration (EMBA) degree from Tsinghua University and is a qualified expert of political science. Mr. Li began his career in August 1976 and joined the Chinese Communist Party in June 1986. In February 1998, he served as the Party Secretary of Guangzhou Nanland Air Catering Company Limited and the Deputy Head (work as chair) of the Organization Division of the Party Committee of the CSAH in April 1999. Mr. Li served as the Head of the Organization Division of the Party Committee of CSAH in December 1999 and served as the Deputy Secretary of the Disciplinary Committee and the Director of the Disciplinary Committee Office of the Company in December 2003. Mr. Li served as the Secretary of the Disciplinary Committee, Standing Member of the Party Committee and the Director of the Disciplinary Committee Office of the Company in December 2007. Mr. Li has been a Supervisor of the Company since June 2009. He has been the Deputy Team Leader of the Discipline Inspection Commission of CSAH, member of Secretary of the Disciplinary Committee, the Director of the Disciplinary Committee Office and the Standing Member of the Party Committee of the Company in February 2012. He has acted as the Chairman of the Labour Union and the Standing Member of Party Committee of the Company in November 2017. He has acted as the Chairman of the Labour Union of CSAH and the Chairman of the Labour Union and the Standing Member of Party Committee of the Company from January 2018. He has served as the Chairman of the Labour Union of CSAH and the Chairman of the Labour Union of the Company since July 2018. He has served as the Chairman of the Supervisory Committee of the Company since May 2019 and the employees’ representative director of CSAH since August 2019.
Mr. Lin Xiao Chun, male, born in May 1971 (aged 49), graduated from the Peking University Law School with a Bachelor’s degree of laws, majoring in international law. He obtained his Master of Business Administration from the Beijing University of Technology and the City University of the United States and his Executive Master of Business Administration (EMBA) from the Tsinghua University School of Economics and Management. He obtained qualifications as an Enterprise Legal Adviser and a corporate lawyer. He started his career in July 1995, and joined the Chinese Communist Party in June 1995. He served as the Deputy Director of the legal department of the Company in October 2006, the Deputy General Manager of the legal department of the Company in January 2009, the Deputy Director of the legal department of CSAH and the Deputy General Manager of the legal department of the Company in December 2009, the Director of the legal department of CSAH in May 2013, and the General Manager of the Laws & Standards Division of CSAH and the General Manager of the Laws & Standards Division of the Company in April 2017. He has served as a Supervisor of the Company since May 2019.
If the above candidates are appointed as Supervisors, each of them will enter into a service contract with the Company and shall hold their office until the expiry of the term of the 9th Session of the Supervisory Committee.
Pursuant to the “Administrative Measures on Supervisors’ Remuneration of China Southern Airlines Company Limited”, the emolument of a Supervisor is determined with reference to the responsibilities, risk and contributions of his/her position.
Mr. Li Jia Shi will not receive any Supervisor’s fee. Mr. Lin Xiao Chun will not receive any Supervisor’s fee but will receive salary based on his position in the Company, the exact amount of which is determined by the working salary system of the Company.
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As at the date of this announcement, save as disclosed, the above supervisor candidates (i) had not held any directorships in other publicly listed companies in the last three years; (ii) had not had any relationship with any Directors, Supervisors, senior management, substantial or controlling shareholders of the Company; and (iii) had not had any interests in shares of the Company within the meaning of Part XV of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong).
There is no other matter relating to the proposed appointment of Supervisors that needs to be brought to the attention of the Shareholders, nor is there any other information to be disclosed pursuant to any of the requirements of rule 13.51(2)(h) to (v) of the Listing Rules.
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Exhibit 99.2
List of Directors and their Role and Function
The members of the board of Directors (“Board”) of China Southern Airlines Company Limited are set out below.
Executive Directors
Ma Xu Lun (Chairman and President)
Han Wen Sheng
Independent Non-Executive Directors
Zheng Fan
Gu Hui Zhong
Tan Jin Song
Jiao Shu Ge
There are five Board committees. The table below provides membership information of these committees on which each Board member serves.
| Board Committee Director |
Audit and Risk Management Committee |
Remuneration and Assessment Committee |
Nomination Committee |
Strategic and Investment Committee |
Aviation Safety Committee |
|||||||||||||||
| Ma Xu Lun |
C | |||||||||||||||||||
| Han Wen Sheng |
M | |||||||||||||||||||
| Zheng Fan |
M | C | M | |||||||||||||||||
| Gu Hui Zhong |
M | C | M | |||||||||||||||||
| Tan Jin Song |
C | M | ||||||||||||||||||
| Jiao Shu Ge |
M | M | M | |||||||||||||||||
Notes:
| C | Chairman of the relevant Board committee |
| M | Member of the relevant Board committee |
Guangzhou, the People’s Republic of China
21 December 2020
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Exhibit 99.3
Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.
(a joint stock limited company incorporated in the People’s Republic of China with limited liability)
(Stock Code: 1055)
CONNECTED TRANSACTION
CAPITAL CONTRIBUTION IN XIAMEN AIRLINES
THE CAPITAL CONTRIBUTION
On 21 December 2020 (after trading hours), the Company, Xiamen C&D and Fujian Investment agreed to make the Capital Contribution, pursuant to which the registered capital of Xiamen Airlines will be increased from RMB10 billion to RMB14 billion through the capital contribution to be made by the Company, Xiamen C&D and Fujian Investment.
IMPLICATIONS UNDER THE LISTING RULES
As Xiamen C&D and Fujian Investment each owns 34% and 11% of equity interest in Xiamen Airlines respectively as at the date of this announcement, Xiamen C&D and Fujian Investment are each a connected person of the Company at the subsidiary level by way of being a substantial shareholder (as defined under the Listing Rules) of Xiamen Airlines. The transactions contemplated under the Capital Contribution with Xiamen C&D and Fujian Investment constitute connected transactions of the Company under Chapter 14A of the Listing Rules. As the Company shall make a portion of its shares of Capital Contribution with a part of its aircraft assets, which shall constitute a disposal of assets of the Company. As all the applicable percentage ratios under rule 14.07 of the Listing Rules in respect of such disposal are below 5%, it does not constitute a notifiable transaction of the Company under Chapter 14 of the Listing Rules.
As one or more of the applicable percentage ratios for the transactions contemplated under the Capital Contribution is more than 0.1% and less than 5%, the transactions contemplated under the Capital Contribution are subject to the reporting and announcement requirements but are exempt from the independent shareholders’ approval requirement under the Listing Rules.
THE CAPITAL CONTRIBUTION Date
Date
21 December 2020
Parties
| (1) | The Company |
1
| (2) | Xiamen C&D |
| (3) | Fujian Investment |
Registered Capital of Xiamen Airlines and Capital Commitment in Xiamen Airlines
The parties agreed that the Capital Contribution shall be made in the following manners:
The Company
The Company will contribute the amount of RMB2.2 billion.
Xiamen C&D
Xiamen C&D will contribute the amount of RMB1.36 billion.
Fujian Investment
Fujian Investment will contribute the amount of RMB440 million.
Each of Xiamen C&D and Fujian Investment shall pay its share of the Capital Contribution in Xiamen Airlines in cash. The Company shall pay its share of the Capital Contribution in Xiamen Airlines in cash and with aircraft assets according to the subsequent circumstances. Upon completion of the Capital Contribution, the registered capital of Xiamen Airlines will be increased from RMB10 billion to RMB14 billion. After the completion of the Capital Contribution, the funds and the assets will be used by Xiamen Airlines to ease its cashflow pressure and to meet the development needs of its fleet.
The above amounts of capital contribution to Xiamen Airlines were determined after arm’s length negotiations among the parties based on the actual capital needs of Xiamen Airlines on the premise that the parties agree to make capital contribution in an amount proportional to their respective equity interest in Xiamen Airlines.
As at the date of this announcement and prior to completion of the Capital Contribution, Xiamen Airlines is a non wholly-owned subsidiary of the Company owned as to approximately 55%, 34% and 11% by the Company, Xiamen C&D and Fujian Investment, respectively. After completion of the Capital Contribution, the ownership of Xiamen Airlines will remain unchanged and will continue to be owned as to approximately 55%, 34% and 11% by the Company, Xiamen C&D and Fujian Investment, respectively. Xiamen Airlines will remain as a non wholly-owned subsidiary of the Company.
Payment and Transfer of equity interests in Xiamen Airlines
The Company, Xiamen C&D and Fujian Investment shall pay RMB990 million, RMB612 million and RMB198 million of their respective shares of the Capital Contribution as the first instalment.
The Company, Xiamen C&D and Fujian Investment shall pay their respective shares of the remaining Capital Contribution of RMB2.2 billion. Xiamen C&D and Fujian Investment shall pay in cash while the Company shall make a portion of its payment with a part of its aircraft assets in accordance with the subsequent circumstances and the remaining portion of its payment in cash. The specific payment schedule will be negotiated by the parties and not later than 30 June 2023.
2
Composition of the Board of Directors
After the completion of the Capital Contribution, the composition of the board of directors will remain unchanged and will continue to comprise 11 directors, with six directors appointed by the Company, four directors appointed by Xiamen C&D and one director appointed by Fujian Investment.
Restrictions on Transfer of Equity Interest in Xiamen Airlines
After the completion of the Capital Contribution, the restrictions on transfer of equity interest in Xiamen Airlines will remain unchanged.
REASONS FOR AND BENEFITS OF THE CAPITAL CONTRIBUTION
The Capital Contribution aims to supplement the funds required for Xiamen Airlines’ operations and support the development of Xiamen Airlines’ principal business of air transportation. At the same time, it will not harm the interests of the Company, have a material effect on the financial positions or the operating results of the Company and affect the independence of the Company.
As no Director has a material interest in the transactions contemplated under the Capital Contribution, none of the Directors has abstained from voting on the board resolution approving the Capital Contribution. All Directors who were entitled to vote unanimously approved the Capital Contribution. The format and procedure for passing the resolutions were in compliance with the Company Law of the PRC and the articles of association of the Company.
The Directors (including the independent non-executive Directors) consider that, although the transactions contemplated under the Capital Contribution are not in the ordinary and usual course of business of the Group, the Capital Contribution was entered into after an arm’s length negotiation among the Company, Xiamen C&D and Fujian Investment and the terms in the Capital Contributionare fair and reasonable and in the interests of the Shareholders as a whole. Additionally, the Directors (including the independent non-executive Directors) consider that the transactions contemplated under the Capital Contributionare on normal commercial terms or better and are beneficial to the operation and long-term development of the Group and in the interests of the Company and the Shareholders as a whole.
INFORMATION OF THE PARTIES
THE COMPANY
The principal business activity of the Company is that of civil aviation.
XIAMEN AIRLINES
Xiamen Airlines is a subsidiary of the Company, which is established in August 1984. Its principal business is aviation transportation.
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The following table contains certain financial information of Xiamen Airlines which is prepared in accordance with the PRC Accounting Standards:
| For the 11 months (unaudited) |
For the year ended 31 December 2019 (audited) RMB (million) |
For the year ended 31 December 2018 (audited) RMB (million) |
||||||||||
| Total assets |
52,358 | 56,780 | 47,176 | |||||||||
| Net assets |
16,993 | 19,060 | 19,109 | |||||||||
| Revenue |
18,695 | 32,612 | 30,225 | |||||||||
| Net profit before tax |
-828 | 1,102 | 1,253 | |||||||||
| Net profit after tax |
-572 | 785 | 923 | |||||||||
XIAMEN C&D
Xiamen C&D was established in February 1980, whose principal business scope includes supply chain operation, real estate development, tourism and hotels, conventions and exhibitions, medical and health, urban public services, investment and other fields. The ultimate beneficial shareholder of this company is the State-owned Assets Supervision and Administration Commission of the Xiamen People’s Government (廈門市人民政府國有資產監督管理委員會).
FUJIAN INVESTMENT
Fujian Investment was established in April 2009, whose principal business is (i) the investment and development in industries or projects in relation to the production and supply of electricity, gas, and water and railway transportation, (ii) investment in banks, securities, trusts, guarantees, venture capital, and key industries in the province as determined by the provincial government, (iii) investment in agriculture and forestry, (iv) investment in the hotel industry, (v) investment in the mining industry, (vi) real estate development and (vii) asset management. The ultimate beneficial shareholder of this company is the State-owned Assets Supervision and Administration Commission of the Fujian People’s Government (福建省人民政府國有資產監督管理委員會).
IMPLICATIONS UNDER THE LISTING RULES
As Xiamen C&D and Fujian Investment each owns 34% and 11% of equity interest in Xiamen Airlines respectively as at the date of this announcement, Xiamen C&D and Fujian Investment are each a connected person of the Company at the subsidiary level by way of being a substantial shareholder (as defined under the Listing Rules) of Xiamen Airlines. The transactions contemplated under the Capital Contribution with Xiamen C&D and Fujian Investment constitute connected transactions of the Company under Chapter 14A of the Listing Rules. As the Company shall make a portion of its shares of Capital Contribution with a part of its aircraft assets, which shall constitute a disposal of assets of the Company. As all the applicable percentage ratios under rule 14.07 of the Listing Rules in respect of such disposal are below 5%, it does not constitute a notifiable transaction of the Company under Chapter 14 of the Listing Rules.
As one or more of the applicable percentage ratios for the transactions contemplated under the Capital Contribution is more than 0.1% and less than 5%, the transactions contemplated under the Capital Contribution are subject to the reporting and announcement requirements but are exempt from the independent shareholders’ approval requirement under the Listing Rules.
4
DEFINITIONS
In this announcement, the following expressions have the meanings set out below unless the context requires otherwise:
| “Board” | the board of Directors; | |
| “Capital Contribution” | the proposed capital contribution in Xiamen Airlines by the Company, Xiamen C&D and Fujian Investment; | |
| “Company” | China Southern Airlines Company Limited, a joint stock limited company incorporated under the laws of the PRC whose H Shares, A Shares and American depositary receipts are listed on the Stock Exchange, the Shanghai Stock Exchange and the New York Stock Exchange, Inc., respectively; | |
| “connected person(s)” | has the meaning ascribed to it under the Listing Rules; | |
| “Directors” | the directors of the Company; | |
| “Fujian Investment” | Fujian Province Investment and Development Group Co., Ltd.* (福建省投資 開發集團有限責任公司), a company established and validly existing under the laws of PRC; | |
| “Group” | the Company and its subsidiaries; | |
| “Listing Rules” | the Rules Governing the Listing of Securities on the Stock Exchange; | |
| “PRC” | the People’s Republic of China, for the purpose of this announcement, exclusively refer to Mainland China and excludes Hong Kong, Macau and Taiwan; | |
| “RMB” | Renminbi, the lawful currency of the PRC; | |
| “Share(s)” | share of RMB1.00 each in the capital of the Company; | |
| “Shareholder(s)” | the holder(s) of the Shares; | |
| “Stock Exchange” | The Stock Exchange of Hong Kong Limited; | |
| “Xiamen Airlines” | Xiamen Airlines Co., Ltd* (廈門航空有限公司), a company established and validly existing under the laws of PRC and a non wholly-owned subsidiary of the Company; and | |
| “Xiamen C&D” | Xiamen C&D Corporation Limited* (廈門建發集團有限公司), a company established and validly existing under the laws of PRC. | |
| By order of the Board |
| China Southern Airlines Company Limited |
| Xie Bing |
| Company Secretary |
Guangzhou, the People’s Republic of China
21 December 2020
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As at the date of this announcement, the Directors include Ma Xu Lun and Han Wen Sheng as executive Directors; and Zheng Fan, Gu Hui Zhong, Tan Jin Song and Jiao Shu Ge as independent non-executive Directors.
| * | For identification purposes only |
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Exhibit 99.4
Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.
(a joint stock limited company incorporated in the People’s Republic of China with limited liability)
(Stock Code: 1055)
CONNECTED TRANSACTIONS
ASSET LEASES
In order to comply with the various requirements under Chapter 14A of the Listing Rules in respect of connected transactions of the Company, on 21 December 2020 (after trading hours), the Company renewed the transactions contemplated under the Existing Asset Lease Framework Agreement and the CSA Building Asset Lease Agreement by entering into the Asset Lease Framework Agreement with CSAH for a term of three years commencing from 1 January 2021 to 31 December 2023.
As the applicable percentage ratios (other than the profits ratio) for the Value of the Right-of-use Asset in respect of the transactions contemplated under the Asset Lease Framework Agreement (after aggregation with the 2019 Northern PRC Property and Land Lease Framework Agreement) are on an annual basis exceeding 0.1% and less than 5%, the transactions contemplated under the Asset Lease Framework Agreement are only subject to the reporting, announcement and annual review requirements and are exempt from the shareholders’ approval requirement under the Listing Rules.
In order to comply with the various requirements under Chapter 14A of the Listing Rules in respect of connected transactions of the Company, on 21 December 2020 (after trading hours), the Company renewed the transactions contemplated under the Existing Asset Lease Framework Agreement and the CSA Building Asset Lease Agreement by entering into the Asset Lease Framework Agreement with CSAH for a term of three years commencing from 1 January 2021 to 31 December 2023.
ASSET LEASE FRAMEWORK AGREEMENT
Reference is made to the announcements of the Company dated 26 January 2018 and 19 January 2018 in relation to the Existing Asset Lease Framework Agreement and the CSA Building Asset Lease Agreement, respectively.
As the Existing Asset Lease Framework Agreement shall soon expire by the end of 2020 and the CSA Building Asset Lease Agreement shall soon expire by 18 January 2021 and the transactions contemplated under the Existing Asset Lease Framework Agreement and the CSA Building Asset Lease Agreement shall continue to be entered into, the Company and CSAH have entered into the new Asset Lease Framework Agreement on 21 December 2020 (after trading hours) relating to the renewal of the transactions contemplated under the Existing Asset Lease Framework Agreement and the CSA Building Asset Lease Agreement to enter into the asset leases transactions contemplated thereunder for the lease term from 1 January 2021 to 31 December 2023.
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Subject Matter
Pursuant to the Asset Lease Framework Agreement, CSAH agreed to (i) lease certain properties located in various cities such as Nanyang, Wuhan, Changsha, Beijing, Urumqi, Guangzhou and Zhanjiang, parking lots and equipment assets such as machinery equipment, transportation equipment and electronic equipment held by CSAH or its subsidiaries to the Company for the purposes of civil aviation and related businesses of the Company; and (ii) lease certain lands located in Nanyang, Wuhan, Guangzhou and Zhanjiang by leasing the land use rights of such lands to the Company for the purposes of civil aviation and related businesses of the Company. The details of which are set out in the tables below:
(i) Properties and equipment assets leased by CSAH or its subsidiaries (excluding the Company) to the Company
| Location/Type |
Quantity |
Use |
Aggregate floor area (square meter) |
Aggregate annual rental (RMB ’0,000) | ||||
| Properties | ||||||||
| Nanyang |
51 | Warehouse, training tower, office, dormitory, garage, boiler room, manufacturing, guard room, pump room, duty room, residential, engine room, equipment room, fire brigade and sewage station | 33,651.67 | 683.27 | ||||
| Wuhan |
15 | Industrial, office, commercial and service and airport support | 17,476.84 | 388.43 | ||||
| Changsha |
6 | Residential and airport support | 8,513.87 | 120.14 | ||||
| Beijing |
1 | Office and hotel | 10,016.62 | 1,937.34 | ||||
| Urumqi |
1 | Hotel | 42,320.48 | 1,783.51 | ||||
| Guangzhou |
6 | Office and hotel | 122,855.44 | 18,913.13 | ||||
| Zhanjiang |
10 | Office, dormitory, warehouse and hangar | 3,601.82 | 36.2 | ||||
|
|
| |||||||
| Total |
90 | — | 238,436.74 | 23,862.02 | ||||
|
|
| |||||||
| Facilities and other infrastructure | ||||||||
| Nanyang |
16 | Drainage ditch, flight area road surface engineering, drainage engineering, etc. | — | 1,492.91 | ||||
| Wuhan |
1 | Extinguisher pool | — | 4.17 | ||||
|
|
| |||||||
| Total |
17 | — | — | 1,497.08 | ||||
|
|
| |||||||
2
| Parking lots | ||||||||
| Guangzhou |
550 | Parking lots |
— | 772.8 | ||||
| Equipment assets | ||||||||
| Machinery equipment |
404 | Equipment (e.g. centralised air conditioners, venue lighting, communication and navigation equipment, high and low voltage power distribution equipment, maintenance equipment, fire-fighting equipment, security inspection equipment, elevators, water pump, sets of electricity generator, luggage cart trailer and others) | — | 439.40 | ||||
| Transportation equipment |
16 | Vehicles (e.g. commercial vehicle, aircraft tractors, power supply vehicles, fuel vehicles, catering vehicles, luggage transfer vehicles, shuttle vehicles, inspection vehicles, maintenance vehicles and others) | — | 52.41 | ||||
| Electronic equipment |
157 | Equipment (e.g. computers, UPS power supplies, servers, switches, storage equipment, canteen kitchen utensils and others) | — | 82.46 | ||||
|
|
| |||||||
| Total |
577 | — | — | 574.27 | ||||
|
|
| |||||||
3
(ii) Lands which land use rights are being leased by CSAH or its subsidiaries (excluding the Company) to the Company
| Location |
Quantity | Use |
Aggregate site area (square meter) |
Aggregate annual rental (RMB ‘0,000) |
||||||||
| Nanyang |
9 | Civil aviation. airport and commercial | 1,855,906.99 | 5,005.31 | ||||||||
| Wuhan |
2 | Commercial, service and urban mixed residential | 38,082.28 | 1,446.89 | ||||||||
| Guangzhou |
7 | Transportation, logistics and airport support | 102,676.3 | 1,418.35 | ||||||||
| Zhanjiang |
1 | Transportation, logistics and airport | 18,139.19 | 52.33 | ||||||||
|
|
|
|
|
|||||||||
| Total |
19 | — | 2,014,804.76 | 7,922.88 | ||||||||
|
|
|
|
|
|||||||||
Annual Rental
The annual aggregate amount of rent payable by the Company to CSAH under the Asset Lease Framework Agreement for each of the three years ending 31 December 2021, 2022 and 2023 is RMB346.2905 million, which was determined with reference to the Rental Assessment Results.
In respect of the annual rental for the property, equipment assets and land of which land use rights is to be leased pursuant to the Asset Lease Framework Agreement stated in the tables above (except for the office floors in the CSA Building and the parking lots in the CSA Building), CSAH has engaged China Enterprise Appraisals Real Estate Appraisals Co., Ltd. (北京中企華資產評估有限責任公司) to conduct rental assessments of the list of properties, equipment assets and lands contemplated under the Asset Lease Framework Agreement (except for the office floors in the CSA Building and the parking lots in the CSA Building) and to provide the Rental Assessment Results. The annual rental is determined after arm’s length negotiation between the parties, based on the fair market rental of the relevant properties, equipment assets and lands and adjusted with reference to the Rental Assessment Results. In addition, CSAH agreed that the annual rental shall not be higher than the average prevailing market rental of properties, equipment assets and lands located at similar locations. The annual rental will be payable on a quarterly basis and will be funded by the internal resources of the Company. In addition, after the Company has taken stock of the properties, equipment assets and lands of which land use rights is to be leased, the list and scope of the properties, equipment assets and lands contemplated under the Asset Lease Framework Agreement have been reviewed and adjusted by the Company based on the actual leasing requirement.
The assets involved in the assessment can be divided into three categories: the first category is the properties and structures, which are mainly properties and structures (excluding the land they are built on), a small number of hotel properties (of which the property itself and the land it is built on are integrated) and a small number of office properties and rooms that serve a supporting role (of which the property or room itself and the land it is built on are integrated); the second category is equipment assets, which are mainly machinery equipment, transportation equipment and electronic equipment; and the third category is plots of land which main uses are transportation and logistics, commercial and residential or are used as civil airports.
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An income approach was applied to the majority of the properties in the first category, which are properties and structures (excluding the land they are built on) and hotel properties (of which the property or room itself and the land it is built on are integrated), since there is no referential rental transaction in the area where those properties and structures are situated. A market approach was applied to the rest of the properties in the first category, which are office properties and rooms that serve a supporting role (of which the property or room itself and the land it is built on are integrated) since there are referential rental transactions in the area where these properties and rooms are located in. An income approach was applied to equipment assets in the second category since economic income or potential economic income can be yielded from those equipment. An income approach was applied the land use rights of the plots of land to be leased in the third category since economic income and potential economic income can be yielded from those land use rights. The above standard for determining the rental is based on the assessment of the appraiser of the nature and market condition of the categories of assets and normal commercial terms determined in accordance with market rules and after arm’s length negotiation; the parties consider that the pricing is reasonable and the agreement conforms to fair market conditions.
The annual rental for the office floors in the CSA Building and the parking lots in the CSA Building is determined after arm’s length negotiation by the parties with reference to the annual rental for the offices and parking lots of the surrounding areas. The comparables used are set out in the table below:
The comparable office buildings:
| Property |
Hongding Yunjinghui (宏 鼎雲璟匯) |
Baiyun Greenland Center (白雲綠地中心) | ||
| Use | Office | Office | ||
| Location | 559 - 571 Yuncheng East Road, Baiyun District, Guangzhou |
888 Yuncheng West Road, Baiyun District, Guangzhou | ||
| Rental (RMB/square meter (construction floor area) /month)/ Floor/ Decoration | 140-150/ Middle/ Roughcast | 150-160/Middle-Upper/ Decorated | ||
| Years Used (year) | approximately 5 | approximately 6 | ||
| Valuation Date | November 2020 | November 2020 | ||
The comparable office buildings with parking lots:
| Property |
Baiyun Greenland Center (白雲綠地中心) |
Hongding Yunjinghui (宏鼎 雲璟匯) | ||
| Charges | RMB800/month | RMB800 - RMB1,200/month | ||
| Time for Commissioning | Year 2013 | Year 2019 | ||
Historical Figures and Value of the Right-of-use Asset
As disclosed in the announcement of the Company dated 26 January 2018, the maximum annual aggregate amount of rent payable by the Company to CSAH under the Existing Asset Lease Framework Agreement for each of the three years ending 31 December 2020 is RMB116.198 million. As disclosed in the announcement of the Company dated 19 January 2018, the maximum annual aggregate amount of rent payable by the Company to GSAC under the CSA Building Asset Lease Agreement for each of the three years ending 18 January 2021 is RMB164.6328 million.
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The previous annual rental paid to CSAH and GSAC by the Company under the Existing Asset Lease Framework Agreement and the CSA Building Asset Lease Agreement, respectively, for the two years ended 31 December 2019 and the 11 months ended 30 November 2020 are as follows:
| Historical Annual | For the 11 months ended 30 |
|||||||||||
| Rental for | For the year ended 31 December | November | ||||||||||
| 2018 (audited) | 2019 (audited) | 2020 (unaudited) | ||||||||||
| The Existing Property and Land Lease Framework Agreement |
RMB | 89,583,200 | RMB | 89,583,200 | RMB | 82,117,900 | ||||||
| The CSA Building Asset Lease Agreement |
RMB | 105,680,800 | RMB | 164,632,800 | RMB | 150,913,400 | ||||||
The Group adopted IFRS 16 - “Leases” as at 1 January 2019, which forms part of the financial reporting standards applicable to the Group. Based on IFRS 16, which is the latest applicable financial reporting standard, each of the Proposed Transactions should be classified as a one-off connected transaction of the Company. According to IFRS 16, the Group, as the lessee, shall recognise a lease as a right-of-use asset and a lease liability in the consolidated statement of financial position of the Group. As such, each of the Proposed Transactions should be regarded as an acquisition of asset under the definition of transaction set out in rule 14.04(1)(a) of the Listing Rules. The aggregate value of the right-of-use asset recognised under the Proposed Transactions is RMB934,921,570.17 (the “Value of the Right-of-use Asset”). The aggregate amount of lease liability recognised under the Proposed Transactions shall be the same as the Value of the Right-of-use Asset recognised. The Value of the Right-of-use Asset will be amortised over the lease period.
Reasons for and the Benefits of Entering into the Asset Lease Framework Agreement
The Company has expanded its civil aviation business to locations where the lands and buildings, facilities and other infrastructure under the Asset Lease Framework Agreement are situated at since November 2004. The purchase and/or transfer of such properties, equipment assets and the land use rights will involve the more time-consuming and costly process of transferring to the Company the relevant titles, ownership or land use rights relating thereto; whereas the renewal of the Asset Lease Framework Agreement allows the Company to continue to use those properties, equipment assets and lands to operate its expanded civil aviation business at rents not higher than the prevailing market rates for similar properties, equipment assets and lands at similar locations. As these properties, equipment assets and lands are necessary for the daily business operation of the Company, it is necessary for the Company to enter into the Asset Lease Framework Agreement so that the Company can continue its long-term cooperation with CSAH and that the Company can enjoy the convenience of accessing these properties, equipment assets and lands.
LISTING RULES IMPLICATIONS
CSAH is the controlling shareholder of the Company, directly and indirectly holding approximately 60.42% of the issued share capital in the Company as of the date hereof, and is therefore a connected person of the Company under the Listing Rules. Therefore, the transactions contemplated under the Asset Lease Framework Agreement constitute connected transactions for the Company under the Listing Rules.
6
The Board (including the independent non-executive Directors) considers that the terms of and transactions contemplated under the Asset Lease Framework Agreement as well as the annual cap in respect thereof are fair and reasonable and are entered into on normal commercial terms or better, in the ordinary and usual course of business of the Company and in the interests of the Group and its Shareholders as a whole.
As previously announced on 30 December 2019, the Company and CSAH entered into the 2019 Northern PRC Property and Land Lease Framework Agreement, pursuant to which CSAH agreed to lease (i) certain properties, facilities and other infrastructure located in various cities such as Beijing, Shenyang, Chaoyang, Dalian, Changchun, Harbin, Jilin, Urumqi and overseas locations held by CSAH or its subsidiaries to the Company for office use related to the civil aviation business development; and (ii) lease certain lands located in various cities such as Shenyang, Chaoyang, Dalian, Changchun, Harbin and Urumqi by leasing the land use rights of such lands to the Company for the purposes of civil aviation and related businesses of the Company for a term of three years commencing from 1 January 2020 to 31 December 2022.
Pursuant to rule 14A.81 of the Listing Rules, the relevant applicable percentage ratio for the transactions contemplated under the Asset Lease Framework Agreement will be aggregated with the lease transactions contemplated under the 2019 Northern PRC Property and Land Lease Framework Agreement.
As the applicable percentage ratios (other than the profits ratio) for the Value of the Right-of-use Asset in respect of the transactions contemplated under the Asset Lease Framework Agreement (after aggregation with the 2019 Northern PRC Property and Land Lease Framework Agreement) are on an annual basis exceeding 0.1% and less than 5%, the transactions contemplated under the Asset Lease Framework Agreement are only subject to the reporting, announcement and annual review requirements and are exempt from the shareholders’ approval requirement under the Listing Rules.
Among the six Directors, two connected Directors, Mr. Ma Xu Lun and Mr. Han Wen Sheng, were required to abstain from voting in the Board meeting in respect of the resolutions to approve the Asset Lease Framework Agreement and the transactions contemplated thereunder. All the remaining four Directors who were entitled to vote unanimously approved the above resolutions. The format and procedure for passing the resolutions were in compliance with the Company Law of the PRC and the articles of association of the Company.
GENERAL INFORMATION
The principal business activity of the Company is that of civil aviation.
CSAH is a state-owned enterprise established in the PRC. The principal business activity of CSAH are (i) operating the Group and other enterprises which the Group invested in and which constitutes wholly state-owned assets and state-owned equity formed through the state’s investments; (ii) engaging in operations in air transportation, as well as other relevant industries, such as financing, construction and development and media and advertising, through CSAH’s subsidiaries.
DEFINITIONS
In this announcement, the following expressions have the following meanings, unless the context requires otherwise:
| “2019 Northern PRC Property and the Land Lease Framework Agreement” | the property and land lease framework agreement in relation to the leases of certain properties, facilities, other infrastructure and lands by CSAH to the Company dated 30 December 2019 entered into between the Company and CSAH for a term of three years from 1 January 2020 to 31 December 2022; |
7
| “Asset Lease Framework Agreement” | the asset lease framework agreement dated 21 December 2020 entered into between the Company and CSAH for a term of three years from 1 January 2020 to 31 December 2023; | |
| “Board” | the board of Directors; | |
| “Company” | China Southern Airlines Company Limited, a joint stock company incorporated in the PRC with limited liability; | |
| “CSA Building” | China Southern Air Building (中國南方航空大廈) located at No. 68 Qixin Road, Baiyun District, Guangzhou, Guangdong Province, the PRC, developed by GSAC; | |
| “CSA Building Asset Lease Agreement” | the CSA Building asset lease agreement dated 19 January 2018 entered into between the Company and GSAC for a term of three years from 19 January 2018 to 18 January 2021; | |
| “CSAH” | China Southern Air Holding Company Limited (中國南方航空集 團有限公司), a state-owned enterprise established under the laws of the PRC and the controlling shareholder of the Company; | |
| “Directors” | directors of the Company; | |
| “Existing Asset Lease Framework Agreement” | the asset lease framework agreement dated 26 January 2018 entered into between the Company and CSAH for a term of three years commencing from 1 January 2018 to 31 December 2020; | |
| “Group” | the Company and its subsidiaries; | |
| “GSAC” | Guangzhou Southern Airlines Construction Company Limited, a wholly-owned subsidiary of CSAH; | |
| “IFRS 16” | the International Financial Reporting Standard 16 issued by the International Accounting Standards Board, which sets out the principles for the recognition, measurement, presentation and disclosure of leases; | |
| “Listing Rules” | the Rules Governing the Listing of Securities on the Stock Exchange; | |
| “PRC” or “China” | the People’s Republic of China (other than, for the purpose of this announcement only, Hong Kong, Macau and Taiwan); | |
| “Proposed Transactions” | the proposed lease transactions contemplated under the Asset Lease Framework Agreement whereby the Company would (i) lease certain properties located in various cities such as Nanyang, Wuhan, Changsha, Beijing, Urumqi, Guangzhou and Zhanjiang, parking lots and equipment assets such as machinery equipment, transportation equipment and electronic equipment held by CSAH or its subsidiaries to the Company for the purposes of civil aviation and related businesses of the Company; and (ii) lease certain lands located in Nanyang, Wuhan, Guangzhou and Zhanjiang by leasing the land use rights of such lands to the Company for the purposes of civil aviation and related businesses of the Company; | |
8
| “Rental Assessment Results” | the results of the rental assessment of the list of properties, equipment assets and lands contemplated under the Asset Lease Framework Agreement conducted by China Enterprise Appraisals Real Estate Appraisals Co., Ltd. (北京中企華資產評估有限責任 公司) dated 21 September 2020; | |
| “RMB” | Renminbi, the lawful currency of the PRC; and | |
| “Stock Exchange” | The Stock Exchange of Hong Kong Limited. | |
| By order of the Board of |
| China Southern Airlines Company Limited |
| Xie Bing |
| Company Secretary |
Guangzhou, the People’s Republic of China
21 December 2020
As at the date of this announcement, the Directors include Ma Xu Lun and Han Wen Sheng as executive Directors; and Zheng Fan, Gu Hui Zhong, Tan Jin Song and Jiao Shu Ge as independent non-executive Directors.
9