Basic HTML Version
1
/ China Communications Services Corporation Limited /
Report of the Directors
Pre-emptive Rights
There are no provisions for pre-emptive rights in the Articles of Association requiring the Company to offer new
shares to the existing shareholders in proportion to their shareholdings.
Major Customers and Suppliers
For the reporting period, the sales to the five largest customers of the Group represented 65.9% of the operating
revenue of the Group; of which, the sales to the largest customer of the Group represented 42.9% of the operating
revenue of the Group. The purchases from the five largest suppliers of the Group accounted for less than 4% of the
total annual purchases of the Group.
So far as the directors are aware of the five largest customers of the Group during the reporting period, as at 31
December 2011, Mr. Liu Aili, a non-executive director of the Company, held 224,100 share purchase options in
China Mobile Limited, a subsidiary of China Mobile, one of our five largest customers, and Mr. Zhang Junan, a non-
executive director of the Company, held 460,000 share purchase options in China Unicom (Hong Kong) Limited, a
subsidiary of China Unicom, one of our five largest customers.
Other than that, no director of the Group, their associates, or any person holding more than 5% of the issued share
capital of the Company has any interests in such suppliers or customers.
Connected Transactions
On 10 April 2011, the Company, through Zhejiang Communications Services Company Limited (“Zhejiang CCS”),
a directly wholly-owned subsidiary of the Company, entered into the Equity Transfer Agreement with the Difo
Telecommunications Group Limited (“Difo Telecom”), an indirectly wholly-owned subsidiary of China Telecom
pursuant to which Zhejiang CCS agrees to sell, and the Difo Telecom agrees to acquire 100% equity interest
in Zhejiang Nantian Post and Communications Technology Company Limited (“Zhejiang Nantian”) for a total
consideration of RMB194.1115 million payable in cash. After the completion of the disposal, Zhejiang Nantian will
cease to be a subsidiary of the Company. Through internal business reorganizations, Zhejiang CCS has integrated the
businesses of Zhejiang Nantian which are in line with the Company’s principal businesses into another subsidiary.
For the businesses which are not in line with the Company’s principal businesses, Zhejiang CCS intends to dispose
of its equity interest in Zhejiang Nantian. Leveraging on the disposal, the operational efficiency and competitiveness
of Zhejiang CCS can be further enhanced and promoted. Difo Telecom is an indirectly wholly-owned subsidiary of
China Telecom which is the controlling shareholder of the Company, so Difo Telecom is a connected person of the
Company under the Listing Rules. Accordingly, the disposal constituted a connected transaction of the Company.
The Company has complied with the relevant Listing Rules requirements in respect of such connected transaction
and made corresponding announcement on 11 April 2011.