Annual Report 2009 - Alibaba

DIRECTORS’ REPORT
6. Disclosure of details pursuant to the conditions of the waivers
The aggregate amount of transactions that took place pursuant to each framework agreement, as compared against the
applicable single highest amount or aggregate amount under the relevant waiver (i.e. the annual cap), for the year ended
December 31, 2009 is as follows:
84 Alibaba.com Limited Annual Report 2009
Applicable single
Aggregate highest amount or
amount of aggregate amount
transactions under the relevant
that took place waiver
RMB (million) RMB (million)
1 Technology Services Framework Agreement 14.8 15
2 Cooperation Framework Agreement 8.5 24
3 Cross-selling Services Framework Agreement 2.7 151
4 Technology and Intellectual Property Framework License Agreement 73.5 110
The above continuing connected transactions have been reviewed by the independent non-executive directors of our Company.
Our independent non-executive directors confirmed that these connected transactions were entered into (i) in our ordinary and
usual course of business of the Group; (ii) either on normal commercial terms or on terms no less favorable to us than terms
available to or from independent third parties; (iii) in accordance with the relevant agreements governing them on terms that were
fair and reasonable and in the interests of the shareholders of our Company as a whole.
In accordance with rule 14A.38 of the Listing Rules, our board engaged the auditors of our Company to perform certain standard
procedures on the above continuing connected transaction on a sample basis in accordance with International Standard on
Related Services 4400 “Engagements to Perform Agreed-Upon Procedures Regarding Financial Information” issued by the Hong
Kong Institute of Certified Public Accountants. The auditors have reported their factual findings on the selected samples based
on the agreed-upon procedures to our board as follows:
(a) The above continuing connected transactions were approved by our board;
(b) The above continuing connected transactions were entered into in accordance with the relevant agreements; and
(c) The value of above continuing connected transactions had not exceeded the applicable caps under the waivers granted by
the Stock Exchange and as previously disclosed by our Company.
The auditors also reported that, pursuant to rule 14A.38(2) of the Listing Rules, if the continuing connected transactions involve
provision of goods or services by a listed issuer, they shall confirm that the continuing connected transactions are in accordance
with the pricing policies of the listed issuer. The continuing connected transactions under the Technology Services Framework
Agreement and the Cross-selling Services Framework Agreement are rather unique in its service nature, and our Company has
not rendered similar services to other independent third parties. In addition, these framework agreements only set out certain
pricing ranges rather than quantifying the exact pricing policy because the scope of services and actual circumstances will vary in
different scenarios. Accordingly, the auditors considered that they could only confirm whether pricing of the aforesaid continuing
connected transactions fell within the pricing ranges set out in the respective framework agreements. The auditors have sampled
on the accounting records and compared the pricing of the technology services provided under Technology Services Framework
Agreement against the pricing range set out in that agreement, and found that the pricing was based on actual cost plus a
margin of 15%, being the ceiling of the stipulated pricing range. The auditors have also sampled on the accounting records and
compared the commission and revenue share under the Cross-selling Services Framework Agreement against the pricing ranges
set out in that framework agreement, and found that the commission was calculated according to a rate between 50% and 70%,
which was within the stipulated 20% to 80% pricing range;
Save as disclosed above, details of the significant related party transactions undertaken by us during the year in our ordinary
course of business are set out in note 35 to our consolidated financial statements on pages 144 to 146 of this Annual Report.