2019 INTERIM RESULTS ANNOUNCEMENT - Csair
Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited takeno responsibility for the contents of this announcement, make no representation as to its accuracy orcompleteness and expressly disclaim any liability whatsoever for any loss howsoever arising from orin reliance upon the whole or any part of the contents of this announcement.(a joint stock limited company incorporated in the People’s Republic of China with limited liability)(Stock Code: 1055)2019 INTERIM RESULTS ANNOUNCEMENTThe Board of Directors (the “Board”) of China Southern Airlines Company Limited (the “Company”)hereby announces the unaudited results of the Company and its subsidiaries (the “Group”) for the sixmonths ended 30 June 2019. This announcement, containing the full text of the 2019 Interim Report ofthe Company, complies with the relevant requirements of the Rules Governing the Listing of Securitieson The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) in relation to informationto accompany preliminary announcement of interim results. Printed version of the Company’s 2019Interim Report will be delivered to the registered holders of H shares of the Company and availablefor viewing on the websites of the Stock Exchange at www.hkexnews.hk and of the Company at www.csair.com on or before 19 September 2019.By order of the BoardChina Southern Airlines Company LimitedXie BingCompany SecretaryGuangzhou, the People’s Republic of China27 August 2019As at the date of this announcement, the Directors include Wang Chang Shun, Ma Xu Lun and HanWen Sheng as executive Directors; and Zheng Fan, Gu Hui Zhong, Tan Jin Song and Jiao Shu Ge asindependent non-executive Directors.-1-
Corporate Mission: connecting around the world for a prosperous lifeCorporate Vision: building a world-class air transport enterprise with global competitivenessCore Value: CSAIR (Customer first, Salute talents, Achieve excellence, Innovate continuously, Return with kindness)
CONTENTSABOUT US4Important Information5Definitions8Company InformationOPERATING RESULTS12 Principal Accounting Information andFinancial IndicatorsCORPORATE GOVERNANCE4455Important MattersChanges in the Share Capital, Shareholders’Profile and Disclosure of Interests60 Directors, Supervisors, Senior Managementand Employees62Corporate BondFINANCIAL REPORT15Summary of Operating Data19Summary of Fleet Data72Independent Auditor’s Report20Report of Directors73Interim Financial Report29Management Discussion and Analysis
ABOUT US
INTERIM REPORT 2019IMPORTANTINFORMATIONI.The board of directors (the “Board”) and the supervisory committee (the “Supervisory Committee”)of the Company and its directors (the “Directors”), supervisors (the “Supervisors”) and seniormanagement warrant the truthfulness, accuracy and completeness of the content containedin this interim report, and the report does not contain inaccurate or misleading statements orhave any material omission, and jointly and severally accept full legal responsibility.II.This report was considered and approved at the ninth meeting of the eighth session of theBoard on 27 August 2019. 7 Directors were required to attend the meeting and 6 of themattended in person. Chairman Mr. Wang Chang Shun did not attend the meeting becauseof business reason, and authorised vice chairman Mr. Ma Xu Lun to attend and vote on hisbehalf.III.The unaudited financial statements contained in this interim report of the Company have beenprepared in accordance with the applicable disclosure provisions of the Listing Rules, includingcompliance with International Accounting Standard 34, Interim financial reporting, issued bythe International Accounting Standards Board.IV.Mr. Wang Chang Shun (Chairman and the responsible person of the Company), Mr. Ma XuLun (the responsible person of accounting, Vice Chairman and President of the Company),Mr. Xiao Li Xin (the responsible person of the accounting department, Vice President, ChiefAccountant and Chief Financial Officer of the Company) warrant the truthfulness, accuracy andcompleteness of the financial statements contained in this interim report.V.Forward-looking statements included in this report, including future plans and developmentstrategies, do not constitute a guarantee of the Company to investors. Investors shall beaware of the risks of investment.VI.During the reporting period, neither the controlling shareholder of the Company, nor any of itsconnected persons has utilised the non-operating funds of the Company.VII.During the reporting period, the Company did not provide external guarantees in violation ofany specified decision-making procedures.VIII. During the reporting period, the Company did not have any major risks. The Company hasstated in details the possible risks in this report. Investors are advised to refer to the sectionheaded “Management Discussion and Analysis – IX. Risk Factors Analysis”.4
DEFINITIONSUnless the context otherwise requires, the following terms should have the following meanings in this report:Company, CSA, China SouthernAirlinesChina Southern Airlines Company LimitedGroupChina Southern Airlines Company Limited and its subsidiariesCSAHChina Southern Air Holding Limited CompanyXiamen AirlinesXiamen Airlines Company LimitedGuizhou AirlinesGuizhou Airlines Company LimitedZhuhai AirlinesZhuhai Airlines Company LimitedShantou AirlinesShantou Airlines Company LimitedChongqing AirlinesChongqing Airlines Company LimitedHenan AirlinesChina Southern Airlines Henan Airlines Company LimitedXiongan AirlinesChina Southern Airlines Xiongan Airlines Company LimitedMTUMTU Maintenance Zhuhai Co., Ltd.Hebei AirlinesHebei Airlines Company LimitedJiangxi AirlinesJiangxi Airlines Company LimitedFinance CompanyChina Southern Airlines Group Finance Company LimitedNan LungNan Lung Holding Limited5About UsChina Southern Airlines Company Limited
INTERIM REPORT 2019DEFINITIONSSACMSouthern Airlines Culture and Media Co., Ltd.SPVSpecial Purpose Vehicles exclusively set up by China Southern Airlines and itssubsidiaries for leased aircraftAmerican AirlinesAmerican Airlines, Inc.Sichuan AirlinesSichuan Airlines Corporation LimitedPRCThe People’s Republic of ChinaCSRCChina Securities Regulatory CommissionNDRCNational Development and Reform CommissionSASACState-owned Assets Supervision and Administration Commission of the StateCouncilCAACCivil Aviation Administration of ChinaDaxing AirportBeijing Daxing International AirportSSEShanghai Stock ExchangeStock ExchangeThe Stock Exchange of Hong Kong LimitedArticles of AssociationArticles of Association of China Southern Airlines Company LimitedListing RulesThe Rules Governing the Listing of Securities on The Stock Exchange of HongKong LimitedModel CodeThe Model Code for Securities Transactions by Directors of Listed Issuers asset out in Appendix 10 to the Rules Governing the Listing of Securities on TheStock Exchange of Hong Kong Limited6
About UsChina Southern Airlines Company LimitedCorporate Governance CodeCorporate Governance Code as set out in Appendix 14 to the Rules Governingthe Listing of Securities on The Stock Exchange of Hong Kong LimitedSFOSecurities and Futures Ordinance (Chapter 571 of the laws of Hong Kong)Available Seat Kilometers or “ASK”the number of seats made available for sale multiplied by the kilometers flownAvailable Tonne Kilometers or “ATK”the tonnes of capacity available for the transportation multiplied by thekilometers flownAvailable Tonne Kilometers –passengerthe tonnes of capacity available for passenger multiplied by the kilometersflownAvailable Tonne Kilometers – cargothe tonnes of capacity available for cargo and mails multiplied by the kilometersflownRevenue Passenger Kilometers or“RPK”i.e. passengers traffic volume, the number of passengers carried multiplied bythe kilometers flownRevenue Tonne Kilometers or “RTK”i.e. total traffic volume, the load (passengers and cargo) in tonnes multiplied bythe kilometers flownRevenue Tonne Kilometers – cargo or i.e. cargo and mail traffic volume, the load for cargo and mail in tonnes“RFTK”multiplied by the kilometers flownRevenue Tonne Kilometers –passengerthe load for passenger in tonnes multiplied by the kilometers flownPassenger Load FactorRPK expressed as a percentage of ASKOverall Load FactorRTK expressed as a percentage of ATKYield per RPKrevenue from passenger operations divided by RPKYield per RFTKrevenue from cargo operations divided by RFTKYield per RTKrevenue divided by RTKOperating expenses per ATKtotal operating expenses divided by ATK7
INTERIM REPORT 2019COMPANYINFORMATIONChinese Name:APP:中國南方航空股份有限公司China Southern AirlinesChinese Short Name:WeChat Official Account:南方航空China Southern AirlinesEnglish Name:WeChat QR Code:China Southern Airlines Company LimitedEnglish Short Name:CSNLegal Representative:Wang Chang ShunBoard and Company Secretary:Sina Weibo:Xie Binghttp://weibo.com/csairSecurities Affairs Representative:Place of Business:Xu YangChina Southern Air Building, 68 Qixin Road, Baiyun District,Guangzhou, Guangdong Province, PRCShareholder Enquiry:Place of Business in Hong Kong:Company Secretary BureauUnit B1, 9th Floor, United Centre, 95 Queensway,Hong KongTelephone: 86-20-86112480Website of the Company:www.csair.comFax: 86-20-86659040Authorised Representative under the Listing Rules:Ma Xu Lun (appointed on 8 May 2019)Xie BingZhang Zi Fang (resigned on 8 May 2019)E-mail:ir@csair.comAddress:Controlling Shareholder:China Southern Air Building, 68 Qixin Road, Baiyun District,Guangzhou, Guangdong Province, PRCChina Southern Air Holding Limited CompanyRegistered Address:Unit 301, 3/F, Office Tower Guanhao Science Park Phase I,12 Yuyan Street Huangpu District, Guangzhou, GuangdongProvince, PRC8
About UsChina Southern Airlines Company LimitedPrincipal Bankers:H Share Registrar:China Development BankAgricultural Bank of ChinaBank of ChinaExport-Import Bank of ChinaChina Construction BankHong Kong Registrars Limited17M Floor, Hopewell Centre, 183 Queen’s Road East,Wanchai, Hong KongDesignated Newspapers for Information Disclosure(A Shares):New York Stock ExchangePlace of Listing of N Shares:Short Name of N Shares:China Securities Journal, Shanghai Securities News,Securities TimesChina Southern AirStock Code of N Shares:Designated Website for Information Disclosure(A Shares):ZNHwww.sse.com.cnN Share Registrar:Designated Website for Information Disclosure(H Shares):www.hkexnews.hkBNY Mellon Shareowner ServicesP.O.Box 505000, College Station,Louisville KY40233-5000, U.S.AInterim Report Available for Inspection:Domestic Legal Adviser:Company Secretary BureauDentons Law Offices, LLP (Guangzhou)Place of Listing of A Shares:Overseas Legal Adviser:Shanghai Stock ExchangeDLA Piper Hong KongShort Name of A Shares:Domestic Auditors:南方航空KPMG Huazhen LLPStock Code of A Shares:Address of Domestic Auditors:6000298th Floor, KPMG TowerOriental Plaza1 East Chang An AvenueBeijing, ChinaA Share Registrar:China Securities Depository and Clearing CorporationLimited Shanghai BranchFloor 36, China Insurance Building, 166 Lu Jia ZuiEast Road, Shanghai, PRCOverseas Auditors:KPMGPlace of Listing of H Shares:Address of Domestic Auditors:The Stock Exchange of Hong Kong Limited8th Floor, Prince’s Building10 Chater RoadCentral, Hong KongShort Name of H Shares:CHINA SOUTH AIRStock Code of H Shares:010559
OPERATINGRESULTS
INTERIM REPORT 2019PRINCIPAL ACCOUNTING INFORMATIONAND FINANCIAL INDICATORSI. PRINCIPAL ACCOUNTING INFORMATION AND FINANCIAL INDICATORS OF THEGROUP AS AT THE END OF THE REPORTING PERIOD(I) Principal Accounting InformationUnit: RMB millionJanuary toJune 2019January toJune 2018Increase/(decrease) %72,93967,5208.03Profit attributable to equity shareholders of the Company1,6822,095(19.71)Net cash flow generated from operating activities9,9947,36335.7330 June201931 December2018Increase/(decrease) %63,19565,257(3.16)300,456246,94921.67January toJune 2019January toJune 2018Increase/(decrease) %Basic earnings per share (RMB/share)0.140.21(33.33)Diluted earnings per share (RMB/share)0.140.21(33.33)Principal Accounting InformationOperating revenuePrincipal Accounting FiguresTotal equity attributable to equity shareholders of the CompanyTotal assets(II) Principal Financial InformationPrincipal Financial Data12
II. DIFFERENCE ON THE ACCOUNTING INFORMATION BETWEEN THE PRCACCOUNTING STANDARDS FOR BUSINESS ENTERPRISE (“PRC GAAP”) ANDINTERNATIONAL FINANCIAL REPORTING STANDARDS (“IFRSs”)(I) Difference in Net Profit and Equity Attributable to Equity Shareholders of the Company underConsolidated Financial Information in Financial Statements between PRC GAAP and IFRSsUnit: RMB millionNet profit attributable to equityshareholders of the CompanyEquity attributable to equityshareholders of the CompanyJanuary toJune 2019January toJune 201830 June201931 rnment grants (b)––(7)(7)Adjustment arising from the Company’s businesscombination under common control (c)––237237Tax impact of the above adjustments314(13)(16)Effect of the above adjustments on noncontrolling interests–2(32)(32)1,6822,09563,19565,257Amounts under PRC GAAPAdjustments:Capitalisation of exchange difference of specificloans (a)Amounts under IFRSs13Operating ResultsChina Southern Airlines Company Limited
INTERIM REPORT 2019PRINCIPAL ACCOUNTING INFORMATIONAND FINANCIAL INDICATORS(II) Explanation on the differences between PRC GAAP and IFRSs:(a). In accordance with the PRC GAAP, exchange difference arising on translation of specific loans and relatedinterest denominated in a foreign currency is capitalised as part of the cost of qualifying assets. Under IFRSs,such exchange difference should be recognised in income statement unless the exchange difference representsan adjustment to interest.(b). In accordance with the PRC GAAP, assets related government grants (other than special funds) are deductedfrom the cost of the related assets. Special funds granted by the government and clearly defined in the approvaldocuments as part of “capital reserve” are accounted for as increase in capital reserve. Under IFRSs, assetsrelated government grants are deducted to the cost of the related assets. The difference is resulted fromgovernment grants received in previous years and are recognised in capital reserve under PRC GAAP.(c). In accordance with the PRC GAAP, the Company accounts for the business combination under commoncontrol by applying the pooling-of-interest method. Under the pooling-of-interest method, the differencebetween the historical carrying amount of the acquiree and the consideration paid is accounted for as an equitytransaction. Business combinations under common control are accounted for as if the acquisition had occurredat the beginning of the earliest comparative year presented or, if later, at the date that common control wasestablished; for this purpose, relevant comparative figures are restated under PRC GAAP. Under IFRSs, theCompany adopts the purchase accounting method for acquisition of business under common control.III. MAJOR CHARGES ON ASSETS, COMMITMENTS AND CONTINGENT LIABILITIESAs at 30 June 2019, certain aircraft of the Group with an aggregate carrying value of approximately RMB353 million (as at31 December 2018: RMB373 million) were mortgaged under certain loans agreements.As at 30 June 2019, the Group had capital commitments (exclusive of investment commitments) of approximatelyRMB89,345 million (as at 31 December 2018: RMB103,485 million). Of such amounts, RMB72,977 million related to theacquisition of aircraft and related flight equipment and RMB16,368 million for other property, plant and equipment.Details of contingent liabilities of the Group are set out in Note 24 to the interim financial report prepared underInternational Accounting Standard 34.14
China Southern Airlines Company LimitedFor the six months ended 30 June20192018Increase/(decrease) 1357,407.617.27Hong Kong, Macau and 719.5312.6972,772.5567,352.268.05TrafficRevenue passenger kilometers (RPK) (million)DomesticHong Kong, Macau and TaiwanInternationalTotal:Revenue tonne kilometers (RTK) (million)DomesticHong Kong, Macau and TaiwanInternationalTotal:RTK – Passenger (million)DomesticHong Kong, Macau and TaiwanInternationalTotal:RTK – Cargo (million)DomesticHong Kong, Macau and TaiwanPassengers carried (thousand)DomesticTotal:15Operating ResultsSUMMARY OFOPERATING DATA
INTERIM REPORT 2019SUMMARY OFOPERATING DATAFor the six months ended 30 JuneIncrease/(decrease) 24.434,449.406.18Total:7,436.426,964.416.78Cargo and mail carried (thousand tonnes)DomesticHong Kong, Macau and TaiwanCapacityAvailable seat kilometres (ASK) (million)DomesticHong Kong, Macau and TaiwanInternationalTotal:Available tonne kilometres (ATK) (million)DomesticHong Kong, Macau and TaiwanInternationalTotal:ATK – Passenger Traffic (million)DomesticHong Kong, Macau and TaiwanInternationalTotal:ATK – Cargo (million)DomesticHong Kong, Macau and Taiwan16
For the six months ended 30 June2019Increase/(decrease)2018 percentage pointDomestic82.5882.70(0.12)Hong Kong, Macau and rage:82.6582.450.20Domestic70.2970.99(0.70)Hong Kong, Macau and verage:69.9870.75(0.77)Load factorPassenger load factor (RPK/ASK) (%)Total load factor (RTK/ATK) (%)Increase/(decrease) %YieldYield per RPK (RMB)Domestic0.5180.526(1.52)Hong Kong, Macau and verage:0.4780.486(1.65)Domestic1.1891.1652.06Hong Kong, Macau and g Kong, Macau and rage:4.4724.4670.11Yield per RFTK (RMB)Yield per RTK (RMB)17Operating ResultsChina Southern Airlines Company Limited
INTERIM REPORT 2019SUMMARY OFOPERATING DATAFor the six months ended 30 JuneIncrease/(decrease) 1,345.106.86467.82448.414.33Hong Kong, Macau and 70519.704.62CostOperating expenses per ATK (RMB)Flight VolumeKilometers flown (million)Hours flown (thousand)DomesticHong Kong, Macau and TaiwanInternationalTotal:Number of flights (thousand)DomesticTotal:Note:Discrepancies between the column sum are due to rounding of percentage numbers.18
China Southern Airlines Company LimitedAs at 30 June 2019, the scale and structure of fleet, the age of aircraft and the delivery and disposal of aircraft of theGroup were as follows:Unit: number of aircraftModelsNumberof aircraftunderoperatingleaseNumberof aircraftunderfinanceleaseNumberof aircraftpurchasedAge ofaircraftDeliveryduring thereportingperiodDisposalduring thereportingperiodTotalnumberof aircraftat the endof thereportingperiodPassenger AircraftAirbusA380 Series0237.1005A350 Series0100.0101A330 Series830106.40248A320 Series12888947.7209310B787 Series72343.04034B777 Series01113.52012B757 Series0000.0040B737 35B747 Series00216.9002B777 Series0576.8001
6 INTERI EPOR 2019 DEFINITIONS SACM Southern Airlines Culture and Media Co., Ltd. SPV Special Purpose Vehicles exclusively set up by China Southern Airlines and its subsidiaries for leased aircraft American Airlines American Airlines, Inc. Sichuan Airlines Sichuan Airlines Corporation Limited PRC The People’s Republic of China CSRC China Securities Regulatory Commission
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