THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

Transcription

1 THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION If you are in any doubt as to any aspect of this circular, you should consult a stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser. If you have sold or transferred all your shares of Air China Limited, you should at once hand this circular to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser or the transferee. Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, 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 circular. (a joint stock limited company incorporated in the People s Republic of China with limited liability) (Stock Code: 00753) (I) GENERAL MANDATE TO ISSUE SHARES (II) GENERAL MANDATE TO ISSUE DEBT FINANCING INSTRUMENTS (III) PROPOSED PAYMENT OF FINAL DIVIDENDS (IV) PROPOSED APPOINTMENT OF DIRECTOR AND NOTICE OF ANNUAL GENERAL MEETING A letter from the Board is set out on pages 3 to 10 of this circular. A notice convening the annual general meeting of the Company to be held at 2:00 p.m. on Friday, 22 May 2015 at The Conference Room One, 29/F, Air China Building, 36 Xiaoyun Road, Chaoyang District, Beijing, PRC, is set out on pages IV-1 to IV-4 of this circular. Whether or not you are able to attend the AGM, you are requested to complete and return the accompanying form of proxy in accordance with the instructions printed thereon as soon as possible but in any event not less than 24 hours before the time appointed for convening the AGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the AGM or any adjournment should you so wish. 2 April 2015

2 CONTENTS Page Definitions Letter from the Board Appendix I 2014 Work Report of the Board of Directors I-1 Appendix II 2014 Work Report of the Supervisory Committee II-1 Appendix III 2014 Duty Report of The Independent Non-Executive Directors Appendix IV Notice of Annual General Meeting III-1 IV-1 - i -

3 DEFINITIONS In this circular, the following expressions have the following meanings, unless the context requires otherwise: A Shares ordinary shares in the share capital of the Company with a nominal value of RMB1.00 each, which are subscribed for and traded in RMB on the Shanghai Stock Exchange AGM the 2014 annual general meeting of the Company to be held at 2:00 p.m. on Friday, 22 May 2015 at The Conference Room One, 29/F, Air China Building, 36 Xiaoyun Road, Chaoyang District, Beijing, PRC for the Shareholders to consider and approve the resolutions set out in the notice of the annual general meeting Articles of Association Board Cathay Pacific Company CSRC Debt Financing Instruments Director(s) Group the articles of association of the Company the board of directors of the Company Cathay Pacific Airways Limited Air China Limited, a company incorporated in the PRC, whose H Shares are listed on the Stock Exchange as its primary listing venue and on the Official List of the UK Listing Authority as its secondary listing venue, and whose A Shares are listed on the Shanghai Stock Exchange China Securities Regulatory Commission of the PRC the debt financing instruments denominated in RMB or foreign currencies to be issued by the Company and/or its controlled or wholly-owned subsidiary in one or multiple tranches, including but not limited to corporate bonds, ultra-short-term commercial paper, short-term commercial paper, mid-term notes, domestic non-public targeted debt financing instruments, overseas non-public targeted debt financing instruments and overseas bonds/notes the director(s) of the Company the Company and its subsidiaries H Shares overseas listed foreign shares of RMB1.00 each in the share capital of the Company Hong Kong or HKSAR Hong Kong Special Administrative Region of the PRC - 1 -

4 DEFINITIONS Latest Practicable Date Listing Rules PRC Shareholder(s) Stock Exchange Supervisory Committee means 30 March 2015, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited the People s Republic of China, excluding, for the purpose of this circular only, Hong Kong, Macau and Taiwan registered holder(s) of the shares of the Company The Stock Exchange of Hong Kong Limited the supervisory committee of the Company - 2 -

5 LETTER FROM THE BOARD (a joint stock limited company incorporated in the People s Republic of China with limited liability) (Stock Code: 00753) Directors: Non-Executive Directors: Cai Jianjiang (Chairman) Wang Yinxiang Cao Jianxiong Feng Gang John Robert Slosar Sai Cheung Shiu, Ian Executive Directors: Song Zhiyong (President) Fan Cheng Independent Non-Executive Directors: Fu Yang Yang Yuzhong Pan Xiaojiang To Chi Keung, Simon Registered Address: Blue Sky Mansion 28 Tianzhu Road Airport Industrial Zone Shunyi District Beijing, PRC Principal Place of Business in Hong Kong: 5th Floor, CNAC House 12 Tung Fai Road Hong Kong International Airport Hong Kong 2 April 2015 To the Shareholders Dear Sir or Madam, (I) GENERAL MANDATE TO ISSUE SHARES (II) GENERAL MANDATE TO ISSUE DEBT FINANCING INSTRUMENTS (III) PROPOSED PAYMENT OF FINAL DIVIDENDS (IV) PROPOSED APPOINTMENT OF DIRECTOR AND NOTICE OF ANNUAL GENERAL MEETING - 3 -

6 LETTER FROM THE BOARD I. INTRODUCTION It is proposed that at the annual general meeting of the Company to be held on Friday, 22 May 2015, the notice of which is set out on pages IV-1 to IV-4 of this circular, resolutions will be proposed to, among others, (i) give general mandates to the Directors to issue shares and increase the registered capital of the Company; (ii) give a general mandate to the Directors to issue debt financing instruments; (iii) approve the proposed payment of final dividends for the year ended 31 December 2014; and (iv) appoint a new independent non-executive Director. II. GENERAL MANDATE TO ISSUE SHARES In order to ensure flexibility and to give discretion to the Directors in the event that it becomes desirable to issue any shares, a special resolution will be proposed at the AGM to give an unconditional general mandate to the Directors during the Relevant Period (as defined in the accompanying notice of the AGM), to separately or concurrently, allot, issue, and deal with additional A Shares and/or H Shares of the Company and to make or grant offers, agreements or options in respect thereof, with an aggregate nominal value of not exceeding 20% of the aggregate nominal amount of each of the existing A Shares and H Shares of the Company in issue as at the date of the relevant resolution to be proposed and passed at the AGM (the Share Issue Mandate ). The Share Issue Mandate will lapse at the conclusion of the Relevant Period. The Company shall obtain the approval of the CSRC and other relevant authorities for any issue of new shares under the Share Issue Mandate. The special resolution will also propose to give a conditional general mandate to the Directors to increase the registered capital of the Company to reflect the issuance of shares authorised under the Share Issue Mandate, and to make such appropriate and necessary amendments to the Articles of Association as they think fit to reflect such increase in the registered capital of the Company and to take any other action and complete any formality required to effect such increase of the registered capital of the Company. III. GENERAL MANDATE TO ISSUE DEBT FINANCING INSTRUMENTS 1. Background Given the general mandate to issue debt financing instruments granted by Shareholders at the last annual general meeting will lapse at the conclusion of the AGM, a special resolution will be proposed at the AGM to grant a general mandate to the Directors to issue the Debt Financing Instruments (the Debt Financing Instrument Issue Mandate )

7 LETTER FROM THE BOARD 2. Particulars of Debt Financing Instruments Particulars regarding the proposed issuance of the Debt Financing Instruments are as follows: (i) Issuer: the Company and/or its wholly-owned or controlled subsidiary (ii) Placing arrangement: no preferential placement to the Shareholders (iii) Issue size: (iv) Term and type: the total balance of the Debt Financing Instruments outstanding will fall within the requirements under relevant laws and regulations as well as those specified by regulatory authorities not more than 15 years for one single-term instrument or a portfolio of instruments with various terms (v) Use of proceeds: the proceeds to be raised from the issuance are intended to be used towards meeting the demand of the Company s operations, adjusting its debt structure, replenishing its working capital and/or funding its capital investments, among others (vi) Term of validity of the resolution: from the date of the passing of the resolution at the AGM to the date of the annual general meeting of the Company for the year ending 31 December 2015 If the Board and/or its authorised person have resolved to issue the Debt Financing Instruments within the term of the Debt Financing Instrument Issue Mandate and the Company has obtained the approval, permission or registration for the issuance from the relevant regulatory authorities within the same period, the Company may complete the issuance within the validity period of such approval, permission or registration. 3. Authorisation to the Board 3.1 It is proposed to the Shareholders at the AGM to authorise the Board, generally and unconditionally, to deal with the following in accordance with the specific needs of the Company and market conditions: (i) to determine the issuer, issue size, type, specific instruments, detailed terms, conditions and other matters relating to the issuance (including, but not limited to, the issue size, principle amount, currency, issue price, interest rate or mechanism for determining the interest rate, issue place, issue timing, term, whether or not to issue in multiple tranches and number of tranches, whether or not to set repurchase or redemption terms, credit rating, guarantee, repayment - 5 -

8 LETTER FROM THE BOARD term, specific fund-raising arrangements within the scope approved at a general meeting, detailed placing arrangements, underwriting arrangements and all other matters relating to the issuance); (ii) to carry out all necessary and ancillary actions and procedures (including, but not limited to, select and engage intermediary institutions, handle all approval, registration and filing procedures with the relevant regulatory authorities in connection with the issuance on behalf of the Company, execute all necessary documents, select bonds trustee manager for the issuance, formulate rules for the bondholders meeting and handle any other matters relating to the issuance and trading); (iii) to approve, confirm and ratify any action or procedure relating to the issuance as mentioned above already taken by the Company; (iv) to make adjustments to the specific proposals for the issuance in accordance with the comments from the relevant regulatory authorities or the market conditions within the authority granted at a general meeting, in the case of any change in policies of regulatory bodies in relation to the issuance, or any change of market conditions, except where voting at a general meeting is required by any relevant laws and regulations and the articles of association of the Company; (v) to determine and handle all relevant matters relating to the listing of the Debt Financing Instruments upon the completion of the issuance; (vi) in the case of issuance of corporate bonds, to determine not to distribute dividends to the Shareholders to safeguard repayment of debts as required under the relevant laws and regulations in the event that the Company expects to, or does fail to pay the principal and/or coupon interests of such bonds as they fall due; and (vii) to approve, execute and dispatch any announcements or circulars relating to the issuance and make any related disclosure in accordance with the listing rules of the relevant jurisdictions where the shares of the Company are listed. 3.2 Upon the approval of paragraph 3.1 above at the AGM, it is proposed that the Shareholders shall authorise the Board to delegate the authorisations set forth in items (i) to (vi) of paragraph 3.1 above to the president and/or the general accountant of the Company. 3.3 Upon the approval of paragraph 3.1 above at the AGM, it is proposed that the Shareholders shall authorise the Board to delegate the authorisation set forth in item (vii) of paragraph 3.1 above to the secretary of the Board

9 LETTER FROM THE BOARD IV. PROPOSED PAYMENT OF FINAL DIVIDENDS Reference is made to the results announcement of the Company dated 26 March 2015 in respect of the recommended payment of a final dividend of RMB (including tax) per ten shares for the year ended 31 December Based on the 2014 profit distribution proposal of the Company, the Company will appropriate 10% of the balance of the net profit of the Company of the year 2014 as set out in the financial statements prepared under the PRC Accounting Standards into the discretionary surplus reserve and distribute a cash dividend of RMB683 million, or RMB (including tax) per ten shares based on the total number of 13,084,751,004 shares of the Company as at the Latest Practicable Date, for the year The proposed payment of the 2014 final dividends is subject to shareholders approval at the AGM. The 2014 final dividends will be paid to shareholders whose names appear on the register of members of the Company at the close of business on Friday, 29 May Dividends payable to the Shareholders shall be denominated and declared in Renminbi. Dividends payable to the holders of A shares shall be paid in Renminbi while dividends payable to the holders of H shares shall be paid in Hong Kong dollars. The amount of Hong Kong dollars payable shall be calculated on the basis of the average of the middle rate of Renminbi to Hong Kong dollars as announced by the People s Bank of China for the calendar week prior to the declaration of the 2014 final dividends (if approved) at the AGM. In accordance with the Enterprise Income Tax Law of the People s Republic of China ( 中 華 人 民 共 和 國 企 業 所 得 稅 法 ) and the Rules for the Implementation of the Enterprise Income Tax Law of the People s Republic of China ( 中 華 人 民 共 和 國 企 業 所 得 稅 法 實 施 條 例 ), both implemented on 1 January 2008 and the Notice of the State Administration of Taxation on Issues Relevant to the Withholding of Enterprise Income Tax on Dividends Paid by PRC Enterprises to Offshore Non-resident Enterprise Holders of H Shares (Guo Shui Han[2008] No. 897) ( 關 於 中 國 居 民 企 業 向 境 外 H 股 非 居 民 企 業 股 東 派 發 股 息 代 扣 代 繳 企 業 所 得 稅 有 關 問 題 的 通 知 ( 國 稅 函 [2008]897 號 )) promulgated on 6 November 2008, the Company is obliged to withhold and pay PRC enterprise income tax on behalf of non-resident enterprise shareholders at a tax rate of 10% from 2008 onwards when the Company distributes any dividends to nonresident enterprise shareholders whose names appear on the register of members of H Shares of the Company. As such, any H shares of the Company which are not registered in the name(s) of individual(s) (which, for this purpose, includes shares registered in the name of HKSCC Nominees Limited, other nominees, trustees, or other organisations or groups) shall be deemed to be H shares held by non-resident enterprise shareholder(s), and the PRC enterprise income tax shall be withheld from any dividends payable thereon. Non-resident enterprise shareholders may wish to apply for a tax refund (if any) in accordance with the relevant requirements, such as tax agreements (arrangements), upon receipt of any dividends. In accordance with the Circular on Certain Issues Concerning the Policies of Individual Income Tax (Cai Shui Zi [1994] No. 020) ( 關 於 個 人 所 得 稅 若 干 政 策 問 題 的 通 知 ( 財 稅 字 [1994]020 號 )) promulgated by the Ministry of Finance and the State Administration of Taxation on 13 May 1994, overseas individuals are, as an interim measure, exempted from the PRC individual income tax for dividends or bonuses received from foreign-invested enterprises. As the Company is a foreign-invested enterprise, the Company will not withhold and pay the individual income tax on behalf of individual shareholders when the Company distributes the 2014 final dividends to individual shareholders whose names appear on the register of members of H shares of the Company

10 LETTER FROM THE BOARD Shareholders are recommended to consult their tax advisors regarding the ownership and disposal of H shares of the Company in the PRC and in Hong Kong and other tax effects. V. PROPOSED APPOINTMENT OF DIRECTOR On 26 March 2015, the Board resolved to propose that Mr. Stanley Hui Hon-chung be appointed as an independent non-executive Director. Mr. Hui has confirmed that he has fulfilled the independence requirements as set out in Rule 3.13 of the Listing Rules. The Company considered Mr. Hui to be independent pursuant to the independence guidelines under the Listing Rules. An ordinary resolution to consider and approve the appointment of Mr. Stanley Hui Hon-chung as an independent non-executive Director will be proposed at the AGM. Mr. Stanley Hui Hon-chung, aged 65, holds a Bachelor Degree of Science from the Chinese University of Hong Kong. He joined Cathay Pacific in 1975 and held a range of management positions in Hong Kong and overseas. From 1990 to 1992, he served as General Manager of Planning and International Affairs of Hong Kong Dragon Airlines Limited. In 1992, he became Chief Representative of John Swire & Sons (China) in Beijing. From 1994 to 1997, he worked as the President of AHK Air Hong Kong Limited. From 1997 to 2006, he joined Hong Kong Dragon Airlines Limited as Chief Executive Officer. From February 2007 to July 2014, he served as Chief Executive Officer of Airport Authority Hong Kong. Mr. Hui was appointed as member of the Greater Pearl River Delta Business Council twice by the Chief Executive of the HKSAR, and held civic duties including member of the Commission on Strategic Development of the HKSAR Government, member of the Hong Kong Government s Aviation Development Advisory Committee and member of the Hong Kong Tourism Board. Mr. Hui is currently the member of the 12th National Committee of Chinese People s Political Consultative Conference and the General Committee of the Hong Kong General Chamber of Commerce. In July 2006, Mr. Hui was appointed as a Justice of the Peace by the Chief Executive of the HKSAR. Save as disclosed above, Mr. Hui has not held any directorship in public companies the securities of which are listed on any securities market in Hong Kong or overseas or taken up a position in any affiliated companies of the Company over the past three years, nor does Mr. Hui have any relationship with any other Directors, senior management, substantial or controlling shareholders of the Company. As at the date of this announcement, Mr. Hui does not have any interest in shares of the Company within the meaning of Part XV of the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong). Mr. Hui will enter into a service contract with the Company and will receive an annual emolument of RMB150,000 (before taxation) from the Company as the independent non-executive Director during his tenure. The term of Mr. Hui s office shall commence on the date of approval by the Shareholders of his appointment and shall end on the expiry of the term of the current session of the Board. Save as disclosed above, there is no information to be disclosed on items (h) to (v) in Rule 13.51(2) of the Listing Rules, and there are no other matters in respect of the proposed appointment of Mr. Hui that need to be brought to the attention of the Shareholders

11 LETTER FROM THE BOARD VI WORK REPORT OF THE BOARD OF DIRECTORS An ordinary resolution will be proposed at the AGM to approve the 2014 work report of the Board, the full text of which is set out in Appendix I to this circular. VII WORK REPORT OF THE SUPERVISORY COMMITTEE An ordinary resolution will be proposed at the AGM to approve the 2014 work report of the Supervisory Committee, the full text of which is set out in Appendix II to this circular. VIII. RECOMMENDATION The Directors consider that the proposed resolutions set out in the notice of the AGM are in the best interests of the Company and the Shareholders as a whole and accordingly recommend the Shareholders to vote in favour of all the resolutions at the AGM. IX. DUTY REPORT OF THE INDEPENDENT NON-EXECUTIVE DIRECTORS At the AGM, the Shareholders will be presented with the 2014 duty report of the independent nonexecutive Directors of the Company, the full text of which is set out in Appendix III to this circular. X. AGM The Company will convene the AGM at The Conference Room One, 29/F, Air China Building, 36 Xiaoyun Road, Chaoyang District, Beijing, PRC at 2:00 p.m. on Friday, 22 May A notice of AGM, a form of proxy and an attendance notice will be dispatched to the Shareholders in accordance with the Listing Rules on Thursday, 2 April The notice of AGM is reproduced on pages IV-1 to IV-4 of this circular. Whether or not you intend to attend the AGM, you are requested to complete and return the form of proxy in accordance with the instruction printed thereon. If you intend to attend the AGM, you are required to complete and return the notice of attendance to the Company s H share registrar, Computershare Hong Kong Investor Services Limited on or before Saturday, 2 May Completion and return of the form(s) of proxy will not preclude you from attending and voting in person at the meetings or at any adjournment should you so wish and completion and return of the notice of attendance do not affect the right of a shareholder to attend the respective meeting. XI. GENERAL INFORMATION The Company will close its register of members and suspend the registration of transfer of shares from Wednesday, 22 April 2015 to Friday, 22 May 2015 (both days inclusive) in order to determine the shareholders list of the Company who will be entitled to attend and vote at the AGM

12 LETTER FROM THE BOARD Shareholders of the Company whose names appear on the register of members of the Company on the close of business of Tuesday, 21 April 2015 may attend the AGM after completing the registration procedures. In order to qualify for attendance at the AGM, instruments of transfer accompanied by share certificates and other appropriate documents must be lodged with the Company s H share registrar, Computershare Hong Kong Investor Services Limited, by 4:30 p.m. on Tuesday, 21 April Shareholders who intend to attend the AGM have to deliver the notice of attendance to the Company s H share registrar, Computershare Hong Kong Investor Services Limited in person or by post or fax on or before Saturday, 2 May By order of the Board Cai Jianjiang Chairman Beijing, the PRC

13 APPENDIX I 2014 WORK REPORT OF THE BOARD OF DIRECTORS The civil aviation industry witnessed a slowdown in its growth in 2014, against the backdrop of slow recovery of the global economy and China s ongoing structural adjustments with stabilised economic growth. In such a sophisticated operating environment, the Board of Directors of the Company made wellgrounded judgments on the situation, led the management to cope with challenges through reforms and innovations, and maintained stable progress and achieved satisfactory results in various aspects, such as safety, efficiency, service and management. With regard to corporate governance, the Board of Directors earnestly performed the duties conferred upon it by the Company Law of the PRC and other laws and regulations as well as the Articles of Association, the Rules of Procedures for the Shareholders General Meeting and the Rules of Procedures for Meetings of the Board of Directors, and constantly enhanced its decision-making expertise in the interests of the Shareholders and the Company as a whole. The Board of Directors hereby presents the work report for the year 2014 as follows: I. CONVENING THE GENERAL MEETINGS TO EFFECTIVELY PROTECT THE INTERESTS OF OUR SHAREHOLDERS. Upon proposal and request of the Board of Directors, the Company held a total of one annual general meeting and two extraordinary general meetings in 2014, which were organised and convened legally and in strict accordance with the relevant procedures. The meetings produced 12 resolutions, including those approving the work report of the Board of Directors, the work report of the Supervisory Committee, the financial statements of the Company, the 2013 profit distribution plan, the reappointment of our auditors, the increase of remunerations of independent Directors, the election of Directors, the general mandate to issue shares and debt financing instruments, and the renewal of trademark licensing framework agreement for with China National Aviation Holding Company, and authorised the Board of Directors and/or the relevant authorities to deal with the specific issues. The Board of Directors has carefully implemented the resolutions of the general meetings, including but not limited to distribution of the final dividends for 2013 within the time frame set forth in the Articles of Association, adjustment to remunerations of independent Directors, appointment of three Directors nominated to the general meeting, and performance of the renewed trademark licensing framework agreement with China National Aviation Holding Company. As at 31 December 2014, all resolutions passed at the general meetings had been implemented. To establish effective communication channels with our shareholders, especially the minority shareholders, the Board of Directors actively created opportunities for the minority Shareholders to meet face-to-face with the Board members during the general meetings. At the general meetings, the Directors and members of the senior management of the Company also answered the questions of the Shareholders common interest and listened to their opinions and suggestions. Meanwhile, the Board of Directors took initiatives to promote online voting during the general meetings and further reviewed and standardised the online vote counting procedures, leading to the improvement in quality and efficiency of meetings. As a result, we ensured that all our shareholders enjoy equal opportunities in their exercise of rights of timely knowledge, participation and voting on the significant events of the Company, which has effectively safeguarded the interests of all our shareholders. - I-1 -

14 APPENDIX I 2014 WORK REPORT OF THE BOARD OF DIRECTORS II. ORGANISING AND ATTENDING THE BOARD MEETINGS, DULY PERFORMING ITS DECISION-MAKING DUTIES. The Board of Directors performed its decision-making duties mainly by organising and attending the Board meetings. In 2014, the Board of Directors held 12 meetings and considered and approved a total of 43 motions, including but not limited to the annual financial plans, the capital expenditure plans, the fuel hedging strategies, regular reports, profit distribution scheme, the election of Chairman of the Board of Directors, the nomination of director candidates, the adjustment to the composition of the special committees of the Board of Directors, the appointment of senior management members, the capital injection into Air China Cargo Co., Ltd. together with Cathay Pacific Airways Limited, the provision of guarantee to our subsidiary Total Transform Group Ltd., the introduction of 60 aircraft of the B737 series, the capital increase in China National Aviation Finance Co., Ltd., and the approval of the Management Measures on Internal Control Evaluation of Air China Limited. The meetings were all prepared and convened in strict accordance with the provisions of the Articles of Association and the Rules of Procedure for Meetings of the Board of Directors of the Company, and the procedures and agenda of the meeting were reasonable and efficient. In order to ensure quality and efficiency of decision-making, the Directors would go through and study the proposals carefully before the meetings, and would communicate with the management or the relevant departments when necessary, or hold a pre-meeting meeting to discuss the matter thoroughly. The Directors tried their best to be present, or attend the meeting via electronic means. In each meeting, the Directors would discuss the proposals thoroughly and actively participate in decision-making. While performing their duties in a diligent manner, the Directors also attached great importance to the tracking and monitoring of implementation of their resolutions. The Board of Directors would regularly review the report on implementation of Board resolutions submitted by the management, so as to catch up with the progress of resolution implementation, address the problems arising therefrom, and come up with requirements on the following steps. From the feedback of implementation of the resolutions in 2014, we believed that most of them have been properly implemented. III. THE SPECIAL COMMITTEES PERFORMING THEIR DUTIES DILIGENTLY IN ASSISTING THE BOARD OF DIRECTORS IN DECISION-MAKING. The special committees under the Board of Directors are supporting bodies whose duties are to ensure effective decision-making by the Board, mainly by holding committee meetings, attending important meetings at the corporate level and carrying out targeted inspections and investigations. The Audit and Risk Management Committee held 6 meetings in 2014, reviewed and approved a total of 21 motions, in which it had made recommendations to the Board of Directors, including but not limited to regular reporting on financial accounts, financial planning, fuel hedging strategy, re-appointment of our auditors, internal control evaluation, external guarantees and connected transactions. To obtain a better knowledge of the Company down to the bottom, the Audit and Risk Management Committee carried out an inspection of the Company s Australian segment in 2014, focusing on production and management, marketing, profitability and internal control of its overseas operations, and came up with specific comments and recommendations, which provided valuable support to the management in its development, adjustment and improvement of the relevant management and marketing strategies. - I-2 -

15 APPENDIX I 2014 WORK REPORT OF THE BOARD OF DIRECTORS The Nomination and Remuneration Committee held 7 meetings in 2014, nominated to the Board of Directors 1 candidate of Chairman, 3 candidates of Directors, 6 candidates of senior management, reviewed the proposal on adjustment to remuneration of independent Directors and made recommendation to the Board of Directors. The Strategy and Investment Committee held 3 meetings in 2014, mainly considering the annual capital expenditure plans, annual fuel hedging strategy, the capital injection into Air China Cargo Co., Ltd. together with Cathay Pacific Airways Limited, the introduction of 60 aircraft of the B737 series, and the capital increase in China National Aviation Finance Co., Ltd. In 2014, Mr. Feng Gang was elected as new chairman of the Aviation Safety Committee. In addition, the special committees actively attended the semi-annual and annual meetings of the Company to hear the report of the management on corporate strategy implementation, production, operation and profitability management, so as to catch up with the Company s development and better assist the Board of Directors in their performing of duties. IV. CONSTANTLY OPTIMISING OUR CORPORATE GOVERNANCE SYSTEM, AND CONSOLIDATING THE FOUNDATION FOR CORPORATE GOVERNANCE. In accordance with the requirements of the Listing Rules of The Stock Exchange of Hong Kong Limited, the Company held for the first time a meeting of Chairman and non-executive Directors in the absence of the management in October The participating non-executive Directors, especially independent Directors, offered their valuable opinions and suggestions on external environment, business development, corporate governance and work of the management, and undertook that they would duly fulfil the responsibilities and obligations of independent Directors to contribute to the healthy development and better corporate governance of the Company. The meeting achieved a positive outcome. To ensure the integrity of corporate governance structure, in 2014, the Board of Directors re-elected a Chairman, appointed a new President, nominated candidates that were elected by the general meeting as one executive Director and two executive Directors and appointed one Vice President, one Chief Accountant, one Chief Economist, one Chief Pilot and two assistants to President, laying a foundation for the Company s production, operation and compliance. V. CONSTANTLY IMPROVING THE QUALITY OF OUR INFORMATION DISCLOSURE WITH PROPER COMPLIANCE TRANSPARENCY. In 2014, the Board of Directors completed four high-quality periodic reports as scheduled, namely the 2013 annual report, the first and third quarterly reports in 2014 and the 2014 interim report. The 2013 annual report and the 2014 interim report adopted format and contents consistent for disclosure to A-share and H-share markets, thus further enhancing the fairness of information disclosure. Based on in-depth analysis of market interests, the reports gave a full view of the Company s strengths and uniqueness to facilitate better understanding of the Company among the market. In addition, the Company further improved the workflows for quarterly reports, hence reinforcing the foundation for preparing regular reports. In 2014, the Board of Directors published 43 domestic extraordinary announcements, 74 overseas extraordinary announcements and 2 circulars in relation to, among others, change of Chairman and President, appointment of Directors, annual fuel hedging strategy, capital injection into Air China Cargo Co., Ltd., approval of the management measures on internal control evaluation, honouring of medium-term notes - I-3 -

16 APPENDIX I 2014 WORK REPORT OF THE BOARD OF DIRECTORS upon maturity, payment of dividends, provision of credit guarantee to subsidiaries, appointment of senior management members and connected transactions. These announcements were prepared and published in accordance with the Listing Rules and relevant requirements, allowing investors on the market to keep informed of the Company s updates. In a review in 2014 by the Shanghai Stock Exchange on information disclosure of listed companies, the Company was rated A, the highest level, which consolidated its good reputation of compliance and integrity in the market. VI. IMPROVING INVESTOR RELATIONS MANAGEMENT TO EFFECTIVELY MAINTAIN MARKET CAPITALISATION. The Board of Directors attaches much importance to investor relations management. Given the grim supply and demand in the industry and complicated capital market environment in the context of slow recovery of the global economy, the Company continued to improve and strengthen its investor relations activities in Based on regular results briefings and roadshows, the Company staged reverse roadshows, an investor conference for 10th anniversary of listing and other activities, to proactively cement the liaisons with institutional investors, publicise the Company s business updates and assist investors in establishing a positive recognition of the Company s solid fundamentals. We also exchanged views with investors on outlook of the industry and the Company, analysed and discussed the industry challenges and opportunities to advise investors on our initiatives to address market changes and stay competitive, while collecting valuable insights from investors for decision-making by the management. Moreover, the Company maintained frequent interaction with its investors, so as to identify the market trends and hotspots. Through multiple channels such as official website for investor relations, hotline, , conference calls, company visits and participation in investor conference, we made timely delivery of our corporate information and strengthened the relationship with investors, which effectively enhanced the Company s image in capital market. VII. PROMOTING THE CONSTRUCTION OF INTERNAL CONTROL SYSTEM. In 2014, the Board of Directors supervised and guided the Company to, based on risk control and cost management under the laws and regulations and in a holistic approach, make rational plans on and carry forward the construction of an internal control system. Firstly, we strictly implemented the Management Measures on Internal Control Evaluation of the Company (Trial) and met the requirements on internal control self-evaluation of listed companies specified in the Basic Rules on Internal Control of Enterprises and the Guidelines on Internal Control Evaluation of Enterprises, thus standardising the Company s internal control evaluation activities. Secondly, we issued the Provisional Requirements on Management of Rules and Regulations of the Company, aiming to standardise the formulation, implementation, amendment and repeal of the Company s rules and regulations, improve the management system for rules and regulations and ensure the compliance practices in operation. Thirdly, we amended and issued a series of management systems at business level to further improve the Company s rules and regulations and strengthen internal control, in order to achieve the management objectives of consisting rights and responsibilities, integrated management and control. Fourthly, we formulated and issued the Implementation Measures on Accountability of Party Conduct and Integrity and Supervisory Responsibilities (Trial), to push forward the prevention of integrity risk and effectively bolster the integrity management system. - I-4 -

17 APPENDIX I 2014 WORK REPORT OF THE BOARD OF DIRECTORS VIII. CONTINUING TO FULFIL CORPORATE SOCIAL RESPONSIBILITY. Responding to the new characteristics and responsibilities in the new normal, the Directors are always committed to fulfilling social responsibility and developing together in harmony on an informed, conscientious and due diligence basis. In 2014, while staying ahead among peers in terms of profitability, the Company refined its safety management system and strengthened risk management in a bid to improve service quality. Our Golden Phoenix crew was honoured as the Role Models of the Times by the Propaganda Department of the Central Committee of the CPC. We continued to improve energy utilisation efficiency through refining management to minimise the environmental impact of development. We set up a staff service centre to convey our respect and cares to the staff. Through targeted poverty alleviation and charitable activities, we aimed to contribute more to society. We accomplished important transportation tasks, highlighting our mission as a national flag carrier and the image of a good corporate citizen. In 2014, the Board of Directors performed its duties in a diligent and pragmatic manner, fulfilling all its responsibilities and effectively enhancing the level of our corporate governance. In 2015, the Board of Directors will concentrate its efforts on enhancing its rational decision-making capacity, carefully organise the general meetings and Board meetings, adequately and effectively perform all its functions, and continue to search for well-developed corporate governance practices, so as to further improve its operational efficiency, enhance the level of our corporate governance and create greater value for our shareholders. By order of the Board Air China Limited 26 March I-5 -

18 APPENDIX II 2014 WORK REPORT OF THE SUPERVISORY COMMITTEE In 2014, with the concerted efforts of all supervisors, the Supervisory Committee of the Company diligently performed its duties stipulated in the PRC Company Law and applicable laws and regulations, the Company s Articles of Association and the Rules of Procedures for the Supervisory Committee. To safeguard the best interests of all Shareholders, the Supervisory Committee of the Company also convened and attended relevant meetings and conducted special inspections, researches and investigations. Through these and other means, the Committee managed to understand the major decisions made by the Company and supervised the legal compliance of the Company s operations and the performance of duties by the Board of Directors and its members as well as the senior management. The work performed by the Supervisory Committee in 2014 is presented as follows: I. MEETINGS OF THE SUPERVISORY COMMITTEE In 2014, in accordance with relevant laws and regulations, the Supervisory Committee convened six meetings as of 31 December 2014, at which it studied and deliberated various important matters and approved 16 proposals, thereby diligently performing its supervision duties and contributing to the completion of production targets and the implementation of strategies of the Company. The details of the meetings are as follows: The 2nd meeting of the fourth session of the Supervisory Committee held on 20 February 2014 considered and approved the Company s 2014 financial plan (including the cash flow and fund-raising plan), capital expenditure plan, fuel hedging strategies and the scheme of capital injection into Air China Cargo Co., Ltd., a subsidiary of the Company, with Cathay Pacific Airways Limited. The 3rd meeting of the fourth session of the Supervisory Committee held on 24 March 2014 considered and approved the 2013 work report of the Supervisory Committee, the work report of the Board of Directors, the 2013 annual report (including the financial statements), the statement of the implementation of connected transactions for 2013, the special explanation on the receivables from controlling shareholders and related parties for 2013, 2013 profit distribution proposal, the special report on the proceeds from the issue of A shares and its actual use for 2013 and 2013 internal control evaluation report and internal control audit report. The 4th meeting of the fourth session of the Supervisory Committee held on 28 April 2014 considered and approved the Company s first quarterly report of 2014 (including the financial statements). The 5th meeting of the fourth session of the Supervisory Committee held on 25 August 2014 considered and approved the Company s 2014 interim report (including the financial statements) and the resolution on the grant of credit guarantee to Total Transform Group Ltd., a subsidiary of the Company. The 6th meeting of the fourth session of the Supervisory Committee held on 27 October 2014 considered and approved the Company s third quarterly report of 2014 (including the financial statements), the implementation of certain new accounting standards and the resolution on entering into the new trademark licensing framework agreement for with China National Aviation Holding Company. - II-1 -

19 APPENDIX II 2014 WORK REPORT OF THE SUPERVISORY COMMITTEE The 7th meeting of the fourth session of the Supervisory Committee held on 24 December 2014 considered and approved the resolution relating to the acquisition of the equity interests in China National Aviation Finance Co., Ltd. by the Company. In addition, members of the Supervisory Committee attended three general meetings and sat in on 12 board meetings, thereby effectively performing supervision of the procedures for convening general meetings and board meetings as well as the topics for discussion and the procedures for voting at the meetings. During the year, members of the Supervisory Committee reinforced the performance of its duty to supervise the Company s management by attending the Company s interim and annual work meetings and hearing the report of the Company s management on production operations and financial benefits. II. EXAMINATIONS, INVESTIGATIONS AND STUDIES OF THE SUPERVISORY COMMITTEE In line with the 2014 strategic objectives and focus of the Company, the Supervisory Committee conducted on-site inspections and studies on the domestic departments in Guangxi region and overseas departments in Madrid and St. Paul throughout the year. All supervisors attained a deep understanding of the operations, management, business developments and problems and difficulties of domestic and overseas business departments through debriefs, discussions and visits. They prepared an investigation report to provide concrete opinions and suggestions and reported to the Board of Directors and management. The management attached great importance to the investigation report and pressed for the commerce commissions of related departments to conduct research and rectification in respect of the opinions and suggestions in the report. After the item-by-item review on the suggestions proposed by the supervisors, the commerce commissions provided feedback on the research and rectification to the Supervisory Committee, establishing a good supervision and rectification mechanism. The investigation and research conducted by the supervisors offered better supervision for the sustainable and healthy development of the Company. III. ATTENDING TRAINING BY THE SUPERVISORY COMMITTEE To continuously improve the executing ability of supervisors and strengthen their capabilities, the Supervisory Committee attaches great importance to the continuous learning and training as well as keeping abreast of regulation dynamics and focus in a timely manner. In this year, Mr. Shen Zhen, a supervisor of the Company, participated in the special training courses for directors and supervisors held by Beijing Securities Regulatory Bureau and the training records have been recorded in the executive integrity system of Beijing Securities Regulatory Bureau, which further enhanced the performance ability of supervisors. IV. EVALUATION OF DIRECTORS PERFORMANCE BY THE SUPERVISORY COMMITTEE In 2014, on the basis of daily supervision, the Supervisory Committee conducted evaluation of directors performance on an annual basis. Members of the Supervisory Committee carefully reviewed the 2013 work report of the Board of Directors and organised an assessment of performance of directors. The Supervisory Committee considered that members of the Board of Directors were able to consciously abide by the laws, regulations and the Articles of Association, were honest and trustworthy, faithfully performed their duties, consciously accepted supervision, and actively safeguarded the interests of the Company, Shareholders, employees and other stakeholders. Members of the Board of Directors exercised their rights - II-2 -

20 APPENDIX II 2014 WORK REPORT OF THE SUPERVISORY COMMITTEE within the scope of their functions and powers, giving full play to their own expertise, and expressing opinions independently and objectively. The evaluation result is good. The monitoring and evaluation of the performance of directors by the Supervisory Committee has played a positive role in driving the Board of Directors to efficiently perform their duties in accordance with laws and improving the Company s corporate governance mechanism. V. SPECIAL OPINIONS OF THE SUPERVISORY COMMITTEE (i) Independent opinions on the operation of the Company in accordance with laws In this year, the Supervisory Committee conducted supervision on the compliance of decisionmaking procedures of the Company s general meeting and the Board of Directors in accordance with the relevant laws, regulations and the Articles of Association, and reviewed the implementation of the resolutions adopted at the shareholders general meeting and the performance of members of the Board of Directors and management of the Company. The Supervisory Committee deemed that the Company has complied with the relevant laws and regulations, with legitimate decision-making procedures and complete internal control system; the Company has formed the restriction, linkage and counterbalance among the authority organ, decision-making mechanism, execution organ and supervisory authority. The Company s directors and senior management were found to be under no violation of laws, regulations and Articles of Association in performing their duties, nor were they found to have committed any acts harmful to the interests of the Company and Shareholders. The information disclosed by the Company was true, accurate and complete, prompt and fair, and there was no misleading and false information. (ii) Independent opinions on the inspection of the financial condition of the Company In 2014, the Supervisory Committee believed that the standard unqualified annual auditor s report issued by the accounting firms gave a true view of the financial position and operating results of the Company after they focused on considering the first and third quarterly and interim financial reports for 2014 and annual financial report for (iii) Independent opinions on the connected transactions of the Company During the year, the capital injection into Air China Cargo Co., Ltd., a controlled subsidiary of the Company, with Cathay Pacific Airways Limited, the entering into the new trademark licensing framework agreement for with China National Aviation Holding Company and the acquisition of the equity interests in China National Aviation Finance Co., Ltd. constituted the connected transactions of the Company. After considering the connected transactions mentioned above and the implementation of the connected transactions of the Company in the year of 2013, the Supervisory Committee believed that the connected transactions between the Company and the connected persons were conducted in the ordinary course of business of the Company and on normal commercial terms. The rights and obligations of all relevant parties were determined by agreements on an arm s length basis, and the transaction prices were fair and reasonable and the relevant - II-3 -