The directors ("Directors") of the China Eastern Airlines Corporation Limited ("Company") are pleased to present their report together with the audited financial statements of the Company and its subsidiaries (collectively, the "Group") for the year ended 31 December 1997.
GROUP ACTIVITIES AND RESULT
The Company is one of the three largest air carriers in the People's Republic of China ("PRC") based on 1997 tonne-kilometres and number of passengers carried and is the primary air carrier serving Shanghai, the eastern gateway of the PRC. The results of the Group for the year ended 31 December 1997 and the financial position of the Group as at that date, determined under the International Accounting Standards ("IAS") and the accounting regulations of the People's Republic of China ("PRC Accounting Regulations"), are set out in the financial statements.
Details of the Company's principal subsidiaries are set out in note 13 to the financial statements prepared in accordance with IAS.
The geographical analysis of the Group's turnover is as follows:
PROPOSED PROFIT APPROPRIATION
The profit appropriation of the Company for the year ended 31 December 1997 as proposed by the Directors is as follows:
The proposed profit appropriation will be presented to shareholders for approval at the forthcoming annual general meeting of the Company ("AGM").
DIVIDENDS
As stated in the prospectus of the Company dated 28 January 1997 ("Prospectus"), the Company does not intend to distribute a dividend in respect of the year ended 31 December 1997. The Company intends to retain most of its earnings from 1997 to finance the expansion of its operations.
COMBINED OFFERING AND LISTING OF H SHARES AND A SHARES
In February 1997, the Company made a combined offering ("Combined Offering") of its overseas listed foreign invested shares ("H Shares") and American depository shares ("ADSs", each representing 100 H Shares). An aggregate of 1,566,950,000 H Shares (including the H Shares issued pursuant to the exercise of an over-allotment option granted in connection with the Combined Offering) were issued. The issue price of each H Share was HK$1.38 and the issue price of each ADS was US$18.00. The ADSs were listed on the New York Stock Exchange on 4 February 1997 and the H Shares were listed on The Stock Exchange of Hong Kong Limited ("Hong Kong Stock Exchange") on 5 February 1997.
On 24 October 1997, the Company offered 300,000,000 domestic shares ("A Shares") with a par value of RMB1.00 each at an issue price of RMB2.45 each (equivalent to approximately HK$2.29), of which 30,000,000 A Shares were placed with employees of the Company ("Employees' Shares") at the same price. 270,000,000 transferable A Shares were listed on the Shanghai Stock Exchange on 5 November 1997.
The Company's total share capital increased from RMB3,000,000,000 to RMB4,866,950,000 accordingly as at the end of the report period.
EMPLOYEES' SHARES
As mentioned above, pursuant to the approval of the China Securities Regulatory Commission, the Company issued 300,000,000 A Shares to public investors in the PRC at a price of RMB2.45 per share, of which 30,000,000 Employees' Shares were placed with employees of the Company at the same price. Such Employees' Shares were deposited at Shanghai Securities Central Clearing and Registration Co., Ltd. on 5 November 1997, and will be listed on the Shanghai Stock Exchange on 5 May 1998.
CHANGES IN SHARE CAPITAL STRUCTURE
As at 31 December 1996, the total share capital of the Company was 3,000 million shares, all of which were owned by Eastern Air Group Company ("EA Group"), the Company's holding company.
Immediately after the issue of H Shares, the total share capital of the Company increased to 4,566.95 million shares, approximately 65.69% (representing 3,000 million A Shares) of which was owned by EA Group and approximately 34.31% (representing 1,566.95 million H Shares) of which was owned by investors outside the PRC. (A shareholders' resolution was passed to increase the share capital of the Company above this level to permit the full exercise of the over-allotment option granted in connection with the Combined Offering, but such option was subsequently exercised only in a part. Pursuant to PRC legal requirements, after the Company made a request with the State Administration for Industry and Commerce ("SAIC") to amend its articles of association ("Articles"), the Company's capital was accordingly registered at this level after the Combined Offering.)
Immediately after the issue of the A Shares, the total share capital of the Company increased from RMB4,566.95 million to RMB4,866.95 million. In accordance with the PRC laws and regulations, the Company registered such increase in its share capital with the SAIC on 30 October 1997.
USE OF PROCEEDS
The net proceeds raised by the Company pursuant to the offering of 1,566,690,000 H Shares in February 1997 was approximately RMB2.1 billion. The net proceeds raised by the Company pursuant to the offering of 300,000,000 A Shares in October 1997 was approximately RMB720 million.
SHARE CAPITAL STRUCTURE
As at 31 December 1997, the share capital structure of the Company was as follows:
NUMBER OF SHAREHOLDERS
As at 31 December 1997, the total number of shareholders of the Company was 147,809, of which, 10,477 were holders of the Employees' Shares.
SUBSTANTIAL SHAREHOLDERS
As at 31 December 1997, the 10 largest shareholders of the Company and their respective shareholding are as follows:
The respective interests of EA Group and HKSCC Nominees Limited have been registered in the register of interests kept by the Company pursuant to the Securities (Disclosure of Interests) Ordinance (Chapter 396, Laws of Hong Kong) ("SDI Ordinance").
HOLDING OF STATE LEGAL PERSON SHARES
Mr. Li Zhongming is the legal representative of EA Group, which is the holding company of the Company. The business scope of EA Group principally comprises the management of operations of enterprises under EA Group and the sale of goods produced by such enterprises. The business scope of EA Group also includes the provision of catering, boarding and lodging services, courier services, transportation of passengers and goods on land, and other land transportation services, as well as the sale of food and souvenirs on aircraft. As at 31 December 1997, the shares of EA Group were not mortgaged or charged.
MERGER AND ACQUISITION
The Group's holding company, EA Group, has obtained approval from Civil Aviation Administration of China ("CAAC") to acquire China General Aviation Company ("China General Aviation"). As at the date of this report, negotiations between EA Group and China General Aviation are in progress, and EA Group intends to restructure China General Aviation and inject its civil aviation business into that of the Company.
PURCHASE, SALE AND REDEMPTION OF SHARES
During 1997, there was no purchase, sale or redemption by the Company, or any of its subsidiaries, of the Company's shares.
COMPLIANCE WITH CODE OF BEST PRACTICE
The Directors confirm that during the year ended 31 December 1997, the Company has complied with the Company's Code of Best Practice which incorporates items set out in Appendix 14 of the Rules Governing the Listing of Securities ("Hong Kong Listing Rules") on the Hong Kong Stock Exchange.
PRE-EMPTIVE RIGHTS
Under the Articles and the PRC laws, no pre-emptive right existed which require the Company to offer new shares to existing shareholders on a pro rata basis.
DIRECTORS, SUPERVISORS, AND SENIOR MANAGEMENT
Names and relevant information of the Directors, supervisors ("Supervisors") and senior management of the Company during 1997 and as of the date of this report are as follows:
1 Re-elected as Directors at the extraordinary general meeting ("EGM") held on 9 March 1998.
2 Elected as Directors at the EGM held on 9 March 1998.
3 Re-elected as Supervisors at the EGM held on 9 March 1998.
4 Elected as Supervisor at the EGM held on 9 March 1998.
5 Retired at the EGM held on 9 March 1998.
As at the date of this report, brief biography in respect of each of the Directors, Supervisors and senior management of the Company are as follows:
Mr. Fu Yunbi is currently the chairman of the Board and party secretary of the Company. Mr. Fu joined the civil aviation industry in 1958. From 1985 to 1991, Mr. Fu was party secretary of the Chinese Civil Aviation School. From 1991 to 1994, he was chief officer of the CAAC Party Committee Office. From 1994 to April 1995, Mr. Fu was party secretary and deputy general manager of China Eastern Airlines. From May 1995 to 1997, he acted as the vice chairman of the Board and party secretary of the Company, and as a vice president of EA Group. Since 1997, Mr. Fu has been the party secretary of both the Company and EA Group. Mr. Fu graduated in 1961 from the Navigation Department of the Air Force Aviation School No.16 and holds the titles of First-Class Navigator and Deputy Researcher. Mr. Fu became chairman of the Board in August 1997.
Mr. Li Zhongming is currently the vice chairman of the Board and the president of the Company. Mr. Li joined the civil aviation industry in 1961 and has been deputy head of the CAAC Shenyan Bureau from 1983 to 1985, and of the CAAC Guangdong Bureau from 1985 to 1992. From 1992 to 1996, he has been a vice president of China Southern Airlines (Group). From February 1996 to December 1996, he was deputy head of the CAAC Central-Southern Bureau. Mr. Li became a Director and president of the Company at the end of 1996. Since 1997, Mr. Li has been deputy party secretary of the Company, and a president and deputy party secretary of EA Group. Mr. Li graduated from Beijing Aviation Industry School in 1961. He graduated from the Chinese Civil Aviation School in 1966 and holds the title of First-Class Pilot. Mr. Li became the vice chairman of the Board in August 1997.
Mr. Wang Lian is deputy head of the CAAC. Mr. Wang joined the civil aviation industry in 1958 and was head of the CAAC Jiangsu Bureau from 1983 to 1985. Mr. Wang was deputy head of the CAAC Shanghai Bureau from 1985 to 1987. He was party secretary of China Eastern Airlines from 1987 to 1990 and acted as general manager of China Eastern Airlines from 1990 to 1996. He became chairman of the council of EA Group in 1993. From 1996 to 1997, he was president of EA Group and the chairman of the Board. Mr. Wang graduated from the CAAC Aviation School and holds the title of First-Class Pilot. In 1993, he was honoured with "Aviation Laurels" by the American periodical "Aviation Week and Space Technology" for his outstanding achievements, and was elected one of the "Top Ten Entrepreneurs in Shanghai" in 1994.
Mr. Zhu Tonghai is currently a Director. He joined the civil aviation industry in 1962. From 1984 to 1987, he was deputy head of the Aviation Standards Branch of the CAAC Shanghai Bureau and head of the Aviation Standards Branch of the CAAC Eastern China Bureau from 1987 to 1990. From 1990 to April 1995, Mr. Zhu was deputy party secretary of China Eastern Airlines. He became deputy party secretary of the Company in May 1995. Since 1997, Mr. Zhu has been a vice president of EA Group. Mr. Zhu graduated in 1962 from the Air Force Aviation School No.16 and holds the title of First-Class Navigator.
Mr. Xu Minzhu is currently a Director and a vice president of the Company. Mr. Xu joined the civil aviation industry in 1962 and, from 1983 to 1986, was head of the CAAC Factory No.102. He was deputy chief engineer of the CAAC Shanghai Bureau from 1986 to 1987. From 1987 to 1992, Mr. Xu acted as deputy chief engineer of China Eastern Airlines. From 1992 to April 1995, he was a vice president of China Eastern Airlines. Since May 1995, he has been a vice president of the Company. Mr. Xu holds the title of Senior Engineer. He graduated in 1962 from the Aviation Engineering Department of Harbin Industrial University.
Mr. Yan Banghong is currently a Director and a vice president of the Company. Mr. Yan joined the civil aviation industry in 1958 and was deputy head of the 5th Fleet of the CAAC from 1971 to 1985, deputy chief pilot of the CAAC Shanghai Bureau from 1985 to 1988 and head of the Company's Shanghai fleet from 1988 to 1992. He was a vice president of China Eastern Airlines from 1992 to April 1995. Since May 1995, Mr. Yan has been a vice president of the Company. Mr. Yan graduated in 1960 from the CAAC Aviation School No.14 and holds the title of First-Class Pilot.
Mr. Zhong Xiong is currently a Director and a vice president of the Company. Mr. Zhong joined the civil aviation industry in 1970. From 1986 to 1988, he was assistant manager of Transportation Services Company of the CAAC Shanghai Bureau and was manager of sales and transportation department of China Eastern Airlines from 1988 to 1992. From 1992 to April 1995, he was a vice president of China Eastern Airlines. Since May 1995, Mr. Zhong has been a vice president of the Company. He graduated in 1970 from the English Department of Liaoning Teacher's College and holds the title of Economist.
Mr. Chen Quanxin is currently a Director and chairman of the workers' union of the Company. Mr. Chen joined the civil aviation industry in 1965. From 1983 to 1987, he was deputy manager and then manager of Transportation Services Company of the CAAC Shanghai Bureau. From the end of 1987 to 1992, Mr. Chen was chief of the Company's administrative office. In 1992, Mr. Chen became chairman of the workers' union of China Eastern Airlines. Since the end of 1996, he has been chairman of the workers' union of EA Group. In 1997, Mr. Chen became chairman of the workers' union of the Company.
Mr. Wu Baiwang is currently a Director. Mr. Wu joined the civil aviation industry in 1959 and was deputy head and subsequently head of the 12th Fleet of the CAAC from 1976 to 1984. From 1984 to 1992, Mr. Wu was deputy head and subsequently became head of the CAAC Jilin Bureau. From 1992 to 1995, Mr. Wu was head and party secretary of the CAAC Northeastern Bureau. In September 1995, he became the general manager of China General Aviation. Mr. Wu graduated from Chinese Civil Aviation School in 1965 and holds the title of First Class Pilot.
Mr. Gong Haocheng is currently a non-executive Director. He is chairman of the supervisory committee of China Guo Tai Securities Co., Ltd., president of the Shanghai Institute of Securities and Futures, and a professor at the Shanghai University of Finance, Shanghai University of Communications and Eastern China College of Law and Politics. From 1984 to 1991, he was assistant branch manager and then branch manager of the Shanghai Branch of the People's Bank of China, and head of the Shanghai Bureau of the State Administration of Foreign Exchange. Mr. Gong was responsible for overseeing the establishment of the Bank of Communications, the Shanghai Stock Exchange and the Shanghai Foreign Exchange Adjustment Centre.
Mr. Hu Honggao is currently a non-executive Director. He is the vice-chancellor and professor of law at Fu Dan University Law School, and tutor of students researching on international economic law at Fu Dan University. He is also senior associate of the Shanghai Fu Dan Law Office. Mr. Hu is a member of the Legislative Consultation Committee of the Shanghai Municipal Government, an arbitrator of the Shanghai Arbitration Committee, and a member of the governing bodies of both the Shanghai Law Association and the Shanghai Notary Association.
Mr. Peter Lok is currently a non-executive Director. Mr. Lok went to the College of Air Traffic Control in England for further studies after joining the Hong Kong Civil Aviation Department in December 1956. He studied administration and management of civil aviation in England from 1968 to 1973. In 1982, he became the assistant director of the Hong Kong Civil Aviation Department. As from 1985, during his office at the air services division of the Hong Kong Civil Aviation Department, he participated in negotiations with various countries regarding air traffic rights. He became the deputy director in 1988, and subsequently the director in 1990 of the Hong Kong Civil Aviation Department. Mr. Lok retired in 1996 and he is currently a consultant at the Flight Standards Department of the CAAC. Mr. Lok is the first Chinese director of the Hong Kong Civil Aviation Department and was at one time an instructor of the College of Air Traffic Control of Hong Kong.
Mr. Xiao Liyuan is currently the chairman of the Supervisory Committee. Mr. Xiao joined the civil aviation industry in 1965. From 1978 to 1982, he was deputy head of the Department of Politics of the CAAC Shanghai Bureau. From 1983 to 1985, he was deputy head of the CAAC Shanghai Bureau. From 1985 to 1987, he was political commissar of the 5th Fleet of the CAAC, and from 1987 to 1992, he was political commissar of China Eastern Airlines' Shanghai fleet. From 1992 to 1996, he was secretary of the diciplinary committee of China Eastern Airlines. Mr. Xiao was responsible for overseeing the listing of the Company in Hong Kong and New York. Mr. Xiao graduated from the management department of the University of Telecommunication. In 1997, he graduated from the Sino-European International Business School.
Mr. Ba Shengji is currently a Supervisor. Mr. Ba joined the civil aviation industry in 1978. In 1980, Mr. Ba became an accountant at the Department of Finance of the CAAC Shanghai Bureau. In 1988, he became the section head of the Department of Finance of China Eastern Airlines. In 1993, Mr. Ba became the deputy head of the Department of Finance of China Eastern Airlines. Mr. Ba is currently the chief officer of both the auditing office of the Supervisory Committee and the auditing office of the Company. Mr. Ba graduated from the University of Telecommunication and specialises in corporate management.
Mr. Qin Yaping is currently a Supervisor. Mr. Qin joined the civil aviation industry in 1972. From 1972 to 1984, he was a weather forecast officer at the CAAC Shanghai Bureau. In 1987, Mr. Qin became head of personal affairs, and in 1992, became deputy head of the 5th Fleet of the CAAC. In April 1997, Mr. Qin became deputy secretary of the 5th Fleet of the CAAC. In November 1997, Mr. Qin became head of the disciplinary committee of the Company. Mr. Qin graduated from Shanghai Jiao Tong University in 1987.
Ms. Jin Weihua was a Supervisor. Ms. Jin joined the civil aviation industry in 1986. In 1987, Ms. Jin was an instructor of the passenger services team of the CAAC Shanghai Bureau. In 1993, she became the deputy head of the female workers' committee of the workers' union of China Eastern Airlines. In 1996, she became the deputy head of the disciplinary committee of China Eastern Airlines and is currently the deputy head of the Supervisory Committee and the deputy head of the supervisors' office of the Company. Ms. Jin graduated from the profession of political party administration.
Mr. Dai Shiwen is currently a Supervisor and the vice-chairman of the workers' union of the Company. Mr. Dai joined the civil aviation industry in 1960. From 1981 to 1985, he was deputy head, and from 1985 to 1987, he was head of supplies department of the CAAC Shanghai Bureau. From 1987 to 1990, he was head of supplies department of China Eastern Airlines. From 1990 to 1992, he was assistant to the general manager of China Eastern Airlines. Since 1992, Mr. Dai has been the vice-chairman of the workers union of China Eastern Airlines. Mr. Dai graduated with a degree in supply management from Shanghai Television University.
Mr. Feng Lei is currently a Supervisor and the deputy secretary of the communist youth league committee of the Company. He joined the civil aviation industry in 1988. From 1989 to 1993, he was secretary of the league committee of the CAAC Factory No.102. From 1993 to 1995, he was secretary of the league committee of the aircraft maintenance base of China Eastern Airlines, and since 1995, he has been deputy secretary of the league committee of China Eastern Airlines. Mr. Feng graduated from Shanghai Engineering Technology University in 1988.
Mr. Cao Jianxiong is a vice-president and the chief financial officer of the Company. Mr. Cao joined the civil aviation industry in 1982 and became the general manager of China Eastern Airlines Development Company in 1992. He became the general manager of Eastern Airlines Futures Brokers Company in 1994. At the beginning of 1996, he became assistant to the general manager of China Eastern Airlines. From 1997, he became the deputy general manager and the chief financial officer of the Company. Mr. Cao graduated from the labour economics department of the Civil Aviation Management Official College and the international financial speciality of Huadong Education University. Mr. Cao holds the title of Economist.
Mr. Ji Rensheng is the chief pilot of the Company. He joined the civil aviation industry in 1958. He was deputy head of the 5th Fleet of the CAAC from 1975 to 1978 and was the chief of the flight department of the Management Bureau of the CAAC Shanghai Bureau from 1978 to 1987. He was chief of the flight management department of China Eastern Airlines from 1987 to 1988. From 1988 to 1992, he was assistant to the general manager of China Eastern Airlines. He was chief pilot of China Eastern Airlines from 1992 to 1997. He has been the chief pilot of the Company since 1997. Mr. Ji graduated from the China Civil Aviation Flight College and holds the title of First-Class Pilot.
Mr. Luo Zhuping is the secretary of the Board and the head of the secretariat of the Board. Mr. Luo joined the civil aviation industry in 1988. He was deputy chief and then chief of the enterprise management department of China Eastern Airlines from 1992 to 1997. He was deputy head of the share system office from 1993 to 1996. In 1997, he became the secretary of the Board and the head of the secretariat of the Board. Mr. Luo graduated from the Faculty of Philosophy and the Faculty of Law of Anhui University in 1979 and 1985, respectively.
SHAREHOLDING OF DIRECTORS, SUPERVISORS, AND SENIOR MANAGEMENT
Since October 1997, except for Mr. Wu, Mr. Gong, Mr. Hu and Mr. Lok, each of the above Directors, Supervisors and senior management of the Company holds 2,800 A Shares as a result of the placement of the Employees' Shares in 1997.
INTERESTS OF DIRECTORS AND SUPERVISORS IN THE SHARE CAPITAL OF THE COMPANY
Except as disclosed in this report, none of the Directors or Supervisors had, as at 31 December 1997, any interests in any shares or debentures of the Company or any associated corporation (within the meaning of the SDI Ordinance) which are required to be notified to the Company and the Hong Kong Stock Exchange pursuant to section 28 of the SDI Ordinance (including interests which they have taken or are deemed to have under section 31 or part 1 of the schedule to the SDI Ordinance) or which are required pursuant to section 29 of the SDI Ordinance to be entered in the register referred to therein, or any interests in warrants to subscribe for shares in the Company or any associated corporation (as so defined) which are required to be notified to the Company and the Hong Kong Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies or, in the case of Supervisors, which would be required to be notified as described above if they had been Directors.
SERVICE CONTRACTS OF DIRECTORS AND SUPERVISORS
As at 31 December 1997, each of the following Directors: Mr. Fu, Mr. Li, Mr. Wang, Mr. Zhu, Mr. Xu, Mr. Yan, Mr. Zhong, Mr. Chen, Mr. Gong and Mr. Hu, and each of the following Supervisors, Mr. Xiao, Mr. Ba, Ms. Jin, Mr. Dai and Mr. Feng, has entered into a service agreement with the Company for a term of 3 years commencing January 1997. No other service contract existed or has been proposed between the Company or any of its subsidiaries with any of the above Directors or Supervisors. No Director or Supervisor has entered into any service contract with the Company which is not terminable by the Company within one year without payment other than statutory compensation.
INTERESTS OF DIRECTORS AND SUPERVISORS IN CONTRACTS
Except as disclosed in this report, none of the Directors or Supervisors had a material interest in any contract of significance to which the Company or any of its subsidiaries was a party during the year.
REMUNERATION OF DIRECTORS AND SUPERVISORS
Details of remuneration of Directors and Supervisors are set out in note 7 to the financial statements prepared in accordance with IAS.
EMPLOYEES
As at 31 December 1997, the total number of employees of the Company was 8,535, of which 3,330 employees have received higher education, representing approximately 39% of the total number of employees of the Company.
BANK LOANS AND OTHER BORROWINGS
Details of bank loans and other borrowings of the Company and the Group as at 31 December 1997 are set out in notes 20 to 21 to the financial statements prepared in accordance with IAS.
INTEREST CAPITALISED
Interest capitalised for the Group for the year ended 31 December 1997 was RMB108 million.
FIXED ASSETS
Movements of fixed assets of the Company and the Group during the year are summarised in note 11 to the financial statements prepared in accordance with IAS.
LAND VALUE APPRECIATION TAX
No land value appreciation tax was payable by the Group during the year.
RESERVES
Details of movements in reserves of the Company and the Group for the year ended 31 December 1997 are set out in note 23 to the financial statements prepared in accordance with IAS.
STATUTORY COMMON WELFARE FUND
Details in relation to the statutory common welfare fund, such as the nature, application and movements of the fund, and the basis of its calculation, including the percentage and profit figure used for calculating the amounts, are set out in note 23(b) to the financial statements prepared in accordance with IAS.
EMPLOYEES' RETIREMENT SCHEME
Details of the Company's employees' retirement scheme are set out in note 26 to the financial statements prepared in accordance with IAS.
MAJOR SUPPLIERS AND CUSTOMERS
As at 31 December 1997, the costs of aircraft and related raw materials purchased from the Group's largest and five largest suppliers accounted for approximately 30.70% and 70.30%, respectively, of the total purchases. The aggregate percentages of sales attributable to the Group's five largest customers are less than 30% and therefore no additional disclosure with regard to major customers are made.
One of the five largest suppliers is Shanghai Eastern Air Catering Co. Ltd. ("Eastern Air Catering"), which is owned as to 60% by EA Group. The costs of food and beverages purchased by the Group from Eastern Air Catering in 1997 accounted for approximately 1.83% of the Group's total purchases.
Save as disclosed above, none of the Directors, Supervisors and their associates nor any shareholder (holding 5% or more of the Company's share capital) had any interest in any of the above mentioned suppliers and customers.
MATERIAL CONTRACTS
Save as disclosed in the Prospectus, the Group has not been a party to any material contracts during 1997.
AGM, BOARD MEETINGS AND SUPERVISORY COMMITTEE'S MEETINGS
AGM
On 20 June 1997, the Company held its 1996 AGM at its Shanghai headquarters to discuss various resolutions proposed by the Board.
An ordinary resolution was passed to approve each of the following matters: the Directors' report, the Supervisory Committee's report, the financial report and the dividend distribution proposal of the Company, for the year ended 31 December 1996; the appointment of auditors; and the respective resignation of Mr. Zhang Fuchao and Ms. Wang Taoying, and the respective appointment of Mr. Ba and Ms. Jin, as Supervisors.
A special resolution was passed to authorise the Board to issue not more than 500,000,000 A Shares in 1997 and to amend articles 20, 21 and 24 of the Articles.
Board Meetings
Seven meetings were held by the Board in 1997 to discuss and pass resolutions regarding the following matters: to approve the change of names of the Company's overseas office and sales representative office; to approve the 1996 financial report prepared by the Company's international auditors and the announcement of such report to the shareholders; to approve the 6 resolutions proposed to the shareholders of the Company at its 1996 AGM and the holding of the AGM on 20 June 1997; to approve the appointments of Mr. Fu and Mr. Li as the chairman and the vice-chairman of the Board, respectively; to approve in principle the proposal presented by the Company's acquisition group to acquire the civil aviation business of China General Aviation and the reporting of such proposed acquisition to CAAC for approval; to approve the Company's 1997 interim financial report and the announcement of such report to its shareholders; and to approve the proposal presented by Mr. Li to adjust the salaries of the employees of the Company.
Supervisory Committee's Meetings
The Supervisory Committee held two meetings in 1997 to discuss and approve the 1996 Supervisory Committee's report and the 1997 working plan.
CONNECTED TRANSACTIONS
The independent Directors confirmed that all the connected transactions entered into by the Group during 1997 were entered into in its ordinary course of business, and that all transactions entered into by the Group during 1997 were on ordinary business terms or terms which are fair and reasonable to the shareholders of the Company. Details of such transactions are set out in note 25(b) to the financial statements prepared in accordance with IAS.
STAFF QUARTERS
In order to implement the state policy of providing employee housing and for the purpose of meeting the Company's actual requirements, the Company increased its expenditure on staff quarters in 1997. For the year ended 31 December 1997, the actual expenditure on staff quarters were approximately RMB93 million. To date, no such staff quarter has been sold to any of the employees of the Company.
MATERIAL LITIGATION
The Group was not involved in any material litigation or disputes in 1997.
AUDITORS
Coopers & Lybrand (certified public accountants in Hong Kong) and Shanghai Zhonghua SASS Certified Public Accountants (registered accountants in the PRC) were the Company's international and domestic auditors, respectively, in 1997. A resolution to reappoint both Coopers & Lybrand and Shanghai Zhonghua SASS Certified Public Accountants, as the Company's international and domestic auditors, respectively, for the financial year ending 31 December 1998 will be proposed at the forthcoming AGM on 15 June 1998.
On behalf of the Board
Fu Yunbi
Chairman of the Board
Shanghai, the PRC, 20 April, 1998
| © Copyright 1996-2008 irasia.com Ltd. All rights reserved. |
|
DISCLAIMER: irasia.com Ltd makes no guarantee as to the accuracy or completeness of any
information provided on this website. Under no circumstances shall irasia.com Ltd be liable
for damages resulting from the use of the information provided on this website.
TRADEMARK & COPYRIGHT: All intellectual property rights subsisting in the contents of this website belong to irasia.com Ltd or have been lawfully licensed to irasia.com Ltd for use on this website. All rights under applicable laws are hereby reserved. Reproduction of this website in whole or in part without the express written permission of irasia.com Ltd is strictly prohibited. TERMS OF USE: Please read the Terms of Use governing the use of our website. |