China Southern Airlines Announces 2003 Annual Results.Business/Travel Editors HONG n. 1. A mercantile establishment or factory for foreign trade in China, as formerly at Canton; a succession of offices connected by a common passage and used for business or storage. KONG--(BUSINESS WIRE)--April 26, 2004 China Southern Airlines China Southern Airlines (中国南方航空公司) (SEHK: 1055, NYSE: ZNH) is an airline based in Guangzhou in the Guangdong province of the People's Republic of China. Company Limited ("China Southern Airlines" or the "Company")(NYSE NYSE See: New York Stock Exchange :ZNH ZNH Zora Neale Hurston (author and anthropologist, 1891-1960) )(HKSE HKSE Hong Kong Stock Exchange :1055) together with its subsidiaries (collectively, the "Group") announced the audited consolidated results of the Group for the year ended 31 December December: see month. 2003 (the "Year"), prepared in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with the PRC Accounting Rules and Regulations ("PRC GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ") and International Financial Reporting Standards International Financial Reporting Standards (IFRS) are standards and interpretations adopted by the International Accounting Standards Board (IASB). Many of the standards forming part of IFRS are known by the older name of International Accounting Standards (IAS). ("IFRS IFRS International Financial Reporting Standard(s) IFRS Inter Frame Relay Service IFRS Indiana Facilities Registry System "). In accordance with PRC GAAP, the Group's revenue from principal operations was approximately RMB RMB Right Mouse Button RMB Regional Management Board (USACE) RMB Rolf Maier Bode (musician, band) RMB Ren Min Bi (currency of People's Republic of China) 17,351 million; net profit was approximately RMB14.488 million. In accordance with IFRS, the Group's total operating revenue operating revenue Revenue from any regular source. Revenue from sales is adjusted for discounts and returns when calculating operating revenue. Compare other revenue. was approximately RMB17,470 million; loss attributable to shareholders was approximately RMB358 million. Basic loss per share was RMB0.09 (2002 basic earnings per share: RMB0.17). The Board of Directors of the Company did not recommend any final dividend for the year 2003. Mr. Yan Zhi zhi (dzē), n 1. one of the five spirits, zhi is housed by the kidney and corresponds to will, determination, and drive; long-term memory; and information storage. 2. Qing, the Company's Chairman, said, "In 2003, the Group encountered unprecedented challenges and difficulties. The outbreak of Severe Acute Respiratory Syndrome Severe Acute Respiratory Syndrome (SARS) Definition Severe acute respiratory syndrome (SARS) is the first emergent and highly transmissible viral disease to appear during the twenty-first century. ("SARS") caused a drop in the Group's passenger volume and passenger load factor, resulting in decreases in revenue passenger kilometres ("RPK RPK Republican Party of Kentucky RpK Rocketplane Kistler (Oklahoma City, OK aerospace company) RPK Revenue Passenger Kilometre RPK Random Player Killing (gaming) ") for April, May and June June: see month. of 2003 by 40%, 83.5% and 61.5%, respectively, as compared to corresponding periods last year. In order to minimize the negative impact brought by SARS, the Group has implemented various measures to adjust its operating capacity, including reducing the number of flights and suspending certain routes to cope with reduced air traffic demand caused by SARS." In order to alleviate Alleviate To make something easier to be endured. Mentioned in: Kinesiology, Applied the financial pressure suffered by the PRC civil aviation industry as a result of the SARS epidemic epidemic, outbreak of disease that affects a much greater number of people than is usual for the locality or that spreads to regions where it is ordinarily not present. , the PRC government waived the levies of the CAAC CAAC Civil Aviation Administration of China CAAC Civilian Agency Acquisition Council CAAC Capital Area Activities Conference (Lansing, Michigan, USA) CAAC Clean Air Action Corporation CAAC Citizens' Action Against Crime Infrastructure Development Fund, sales tax sales tax, levy on the sale of goods or services, generally calculated as a percentage of the selling price, and sometimes called a purchase tax. It is usually collected in the form of an extra charge by the retailer, who remits the tax to the government. and related supplementary taxes on passenger revenue payable by the airline companies during the period from 1 May 2003 to 31 December 2003. Although the SARS epidemic has caused decreases in the Group's total passenger revenue, total number of passengers carried and RPKs, the Group's passenger yield increased by 5.6% to RMB0.57 for the Year. In addition, cargo and mail revenue recorded an increase of 9.5% to RMB1,955 million in 2003 with the opening of two international cargo routes in 2002. The Group successfully issued 1,000,000,000 A shares in the PRC domestic market and listed on the Shanghai Stock Exchange Shanghai Stock Exchange One of two major securities markets in China. in July 2003, raising aggregate proceeds of RMB2,700 million. Such proceeds have been applied to acquire the new model of Boeing 737 series and related flight equipment. The successful fund raising exercise has provided the Group with additional capital resources for future development which has in turn improved the Group's assets quality and strengthened its operating capacity. Dealing with the challenges encountered during the Year, the Group continued to enhance the standards of its safety and services. As a result, the Group once again received the Golden Roc Cup, the highest award for flight safety in the civil aviation industry, and won the Five-star Diamond Award for flight services in 2003. Looking ahead, Mr. Yan Zhi Qing said, "With the implementation of the 'Pricing Reform Plan for the Domestic Civil Aviation Industry' on 20 April 2004, China's airlines are able to determine their own airfares within the price ranges set by the government pricing authorities based on the changes in supply and demand of the market, and will adopt more flexible sales policies with an objective of maximizing economic benefits. We believe that our business will achieve further growth through fair and positive competition in a gradually regulated and orderly market Orderly Market Any market in which the supply and demand are reasonably equal. Notes: Orderly markets usually don't have volatile price swings and prices are competitive, reflecting the true value of the good or service. ." Mr. Yan concluded, "With the implementation of the Closer Economic Partnership Arrangement Closer Economic Partnership Arrangement (CEPA, Traditional Chinese: 更緊密經貿關係 between mainland China, Hong Kong Hong Kong (hŏng kŏng), Mandarin Xianggang, special administrative region of China, formerly a British crown colony (2005 est. pop. 6,899,000), land area 422 sq mi (1,092 sq km), adjacent to Guangdong prov. and Macau, and the State's policies on the overall development of the Western region and revitalization re·vi·tal·ize tr.v. re·vi·tal·ized, re·vi·tal·iz·ing, re·vi·tal·iz·es To impart new life or vigor to: plans to revitalize inner-city neighborhoods; tried to revitalize a flagging economy. of the old industrial base of Northeast China Northeast China (Simplified Chinese: 中国东北; Traditional Chinese: 中國東北; Pinyin: , we believe that there will be a perfect opportunity for the Group to grow its business." The Group is one of the largest airlines in the PRC in terms of volume of passenger traffic, number of scheduled flights scheduled flight schedule n → vol régulier scheduled flight schedule n → Linienflug m per week, number of hours flown, route networks and size of aircraft fleet. The Group operates the most extensive route network among all PRC airlines. As at 31 December 2003, the Group operated a total of 334 routes, of which 274 were domestic, 18 were Hong Kong regional and 42 were international. For the year ended 31 December 2003, the Group operated an average of 4,118 scheduled flights per week, serving 94 destinations. As at 31 December 2003, the Group operated a fleet of 132 aircraft, of which 108 were Boeing aircraft and 24 were Airbus aircraft.
Encl.
1. Audited Consolidated Income Statement (Prepared in accordance with
PRC GAAP)
2. Audited Consolidated Profit and Loss Account (Prepared in
accordance with IFRS)
3. Difference between financial results prepared under IFRS and PRC
GAAP
China Southern Airlines Company Limited
Audited Consolidated Income Statement
For the Year ended 31 December 2003
(in accordance with the PRC Accounting Rules and Regulations)
2003 2002
(RMB'000) (RMB'000)
Revenue from principal operations 17,351,006 18,805,510
Less: Transfer to CAAC Infrastructure
Development Fund 250,802 798,386
----------- -----------
Net revenue from principal operations 17,100,204 18,007,124
Less: Costs of principal operations 14,221,965 13,118,104
Business taxes and surcharges 190,682 525,250
----------- -----------
Profit from principal operations 2,687,557 4,363,770
Add: Profit from other operations 325,949 325,327
Less: Selling expenses 1,519,416 1,527,255
General and administration expenses 893,343 1,013,506
Financial expenses 995,550 1,095,219
----------- -----------
Operating (loss)/profit (394,803) 1,053,117
Add: Investment income 61,676 10,473
Non-operating income 43,083 8,627
Less: Non-operating expenses 71,480 40,531
----------- -----------
(Loss)/profit before income tax (361,524) 1,031,686
Less: Income tax (604,727) 353,230
Minority interests 228,715 165,111
----------- -----------
Net profit 14,488 513,345
=========== ===========
China Southern Airlines Company Limited
Audited Consolidated Profit and Loss Account
For the Year ended 31 December 2003
(in accordance with International Financial Reporting Standards)
2003
vs 2002
2003 2002 2003 2003 Increase/
RMB'000 RMB'000 HK$'000 US$'000 (decrease)%
Operating revenue:
Passenger 15,009,885 15,695,622 14,084,531 1,813,511 (4.4)
Cargo and Mail 1,954,915 1,786,270 1,834,395 236,195 9.4
-------------------------------------------
16,964,800 17,481,892 15,918,926 2,049,706 (3.0)
Other operating
revenue 505,323 536,728 474,170 61,053 (5.9)
-------------------------------------------
Total operating
revenue 17,470,123 18,018,620 16,393,096 2,110,759 (3.0)
-------------------------------------------
Operating expenses:
Flight operations 7,070,031 6,732,543 6,634,166 854,209 5.0
Maintenance 2,588,613 2,333,419 2,429,026 312,759 10.9
Aircraft and
traffic
servicing 2,767,488 2,511,284 2,596,874 334,371 10.2
Promotion and
sales 1,480,168 1,499,587 1,388,916 178,836 (1.3)
General and
administrative 1,053,319 1,060,010 988,383 127,263 (0.6)
Depreciation and
amortization 2,037,971 1,839,871 1,912,331 246,230 10.8
Other 16,804 15,829 15,767 2,029 6.2
-------------------------------------------
Total operating
expenses 17,014,394 15,992,543 15,965,463 2,055,697 6.4
-------------------------------------------
Operating profit 455,729 2,026,077 427,633 55,062 (77.5)
-------------------------------------------
Non-operating income/
(expenses):
Share of
associated
companies'
results 47,798 36,988 44,851 5,775 29.2
Share of jointly
controlled
entities'
results (39,495) (3,352) (37,060) (4,772) 1,078.3
(Loss)/gain on
sale of fixed
assets (22,217) 170,740 (20,848) (2,684) (113.0)
Interest income 13,061 52,618 12,256 1,578 (75.2)
Interest expense (823,725) (959,193) (772,943) (99,523) (14.1)
Exchange loss, net(164,443) (175,451) (154,304) (19,868) (6.3)
Other, net 21,682 (9,328) 20,345 2,619 (332.4)
-------------------------------------------
Total net non-
operating expenses (967,339) (886,978) (907,703) (116,875) 9.1
-------------------------------------------
(Loss)/profit before
taxation and
minority interests (511,610) 1,139,099 (480,070) (61,813) (144.9)
Taxation credit/
(expense) 324,277 (398,227) 304,286 39,179 (181.4)
-------------------------------------------
(Loss)/profit before
minority interests (187,333) 740,872 (175,784) (22,634) (125.3)
Minority interests (170,934) (165,111) (160,396) (20,652) 3.5
-------------------------------------------
(Loss)/profit
attributable to
shareholders (358,267) 575,761 (336,180) (43,286) (162.2)
===========================================
Basic (loss)/
earnings per share RMB(0.09) RMB0.17 HK$(0.08) US$(0.01) (162.2)
===========================================
China Southern Airlines Company Limited
Audited Financial Results
Difference between financial results prepared under IFRS and PRC GAAP
2003 2002
(RMB'000) (RMB'000)
Consolidated net profit under PRC GAAP 14,488 513,345
Adjustments:
Sale and leaseback accounting (30,710) 188,886
Staff housing charges (111,000) (95,833)
Revaluation of land use rights 3,872 3,645
Deferred tax effect (234,917) (34,282)
--------- --------
Consolidated net (loss)/profit under IFRS (358,267) 575,761
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