SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the month of July, 2003
CHINA SOUTHERN AIRLINES COMPANY LIMITED
(Translation of registrant's name into English)
Baiyun International Airport
Guangzhou, People's Republic of China
(Address of principal executive offices)
(Indicate by check mark whether the registrant files or will file
annual reports under cover Form 20-F or Form 40-F.)
Form 20-F. X Form 40-F.
---------- ----------
(Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the information to
the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.)
Yes. No. X
----------- -------------
(If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82-________.)
China Southern Airlines Company Limited (the "Company") on July 7, 2003
published in two local newspapers in Hong Kong an announcement in Chinese and
English regarding the Company received the approval of the CSRC for the A Share
Issue on July 4, 2003. A copy of the English announcement is included in this
Form 6-K of the Company.
The Stock Exchange of Hong Kong Limited takes no responsibility for the contents
of this announcement, makes no representation as to its accuracy or completeness
and expressly disclaims any liability whatsoever for any loss howsoever arising
from or in reliance upon the whole or any part of the contents of this
announcement.
(COMPANY LOGO)
CHINA SOUTHERN AIRLINES COMPANY LIMITED
(a joint stock limited company incorporated in the People's Republic of China
with limited liability)
PROPOSED ISSUE OF 1,000,000,000 A SHARES IN THE PRC
The Board is pleased to announce that the Company received the approval of the
CSRC for the A Share Issue on July 4, 2003. The Prospectus will be published on
the website of the Shanghai Stock Exchange, and a summary of the Prospectus will
be published in newspapers in the PRC on July 7, 2003. An application will be
made to the Shanghai Stock Exchange for the listing of the A Shares. The
Prospectus includes the Group's audited financial information for each of the
three years ended December 31, 2002 and the Group's unaudited financial
information for the period from January 1, 2003 to April 30, 2003 prepared in
accordance with PRC GAAP.
Reference is made to the announcements published by the Company on January 29,
2002, March 26, 2002 and May 21, 2002, May 13, 2003 and July 3, 2003 regarding,
among others, the proposed A Share Issue and the shareholders' resolutions
passed at the First Extraordinary General Meeting of the Company on March 26,
2002 and at the Class Meeting for holders of domestic shares, Class Meeting for
holders of H shares and the Second Extraordinary General Meeting of the Company
on May 21, 2002, and at the annual general meeting of the Company on May 13,
2003, which approved, among others, the application and implementation of the A
Share Issue and the proposed listing of such A Shares on the Shanghai Stock
Exchange.
The Board is pleased to announce that the Company received the approval of the
CSRC for the A Share Issue on July 4, 2003. The Prospectus will be published on
the website of the Shanghai Stock Exchange at www.sse.com.cn, and a summary of
the Prospectus will be published in the PRC newspapers on July 7, 2003. An
application will be made to the Shanghai Stock Exchange for the listing of the A
Shares. The Prospectus includes the Group's audited financial information for
each of the three years ended December 31, 2002 and the Group's unaudited
financial information for the period from January 1, 2003
to April 30, 2003 prepared in accordance with PRC GAAP. The PRC auditors
of the Group are KPMG Huazhen, a firm of certified public accountants in the
PRC.
STRUCTURE OF THE A SHARE ISSUE
A summary of the A Share Issue is set out below:
Mode of offer: By way of placing at a fixed price to investors in the secondary
market through the trading systems of the Shanghai Stock Exchange and the
Shenzhen Stock Exchange
Number of A Shares to be issued: 1,000,000,000 domestically listed ordinary A
Shares of par value RMB1.00 each, representing approximately 22.9% of the total
share capital of the Company after the A Share Issue
Issue price: RMB2.70 per A Share
Target subscribers: Secondary market investors who are independent of the
Company and its subsidiaries and their promoters, directors, supervisors, chief
executive, substantial shareholders and their respective associates and who have
RMB denominated ordinary A shares listed on the Shanghai Stock Exchange or the
Shenzhen Stock Exchange with a market value of RMB10,000 or above as at the time
of closing of trading on July 7, 2003
Application time: On July 10, 2003, during normal trading hours of the Shanghai
Stock Exchange and the Shenzhen Stock Exchange (from 9:30 a.m. to 11:30 a.m.,
and from 1:00 p.m. to 3:00 p.m.)
Stock Exchange for the proposed Shanghai Stock Exchange listing of the A Shares:
Net asset value per Share as of RMB2.64
December 31, 2002 (based on
financial statements prepared
under PRC GAAP):
Estimated net asset value per Share RMB2.64
as of December 31, 2003
(based on financial statements
prepared under PRC GAAP,
taking into account the
A Share Issue):
Method of underwriting: the 1,000,000,000 A Shares will be fully underwritten by
China Galaxy Securities Company Limited as lead manager, an independent third
party unconnected with the promoters, directors, supervisors, chief executive or
substantial shareholder of the Company or any of its subsidiaries or an
associate of any of them
Target net proceeds: RMB2,640,670,000
REASONS FOR THE A SHARE ISSUE
The Board believes that the A Share Issue will allow the Company to access
another funding channel, provide additional currency for the acquisition of PRC
assets, and enhance the shareholders' base. The net proceeds from the A Share
Issue are intended primarily to raise capital for the Company to purchase
aircraft to replace certain of its existing aircraft, the operating leases of
which are due to expire. See "Use of Proceeds" below.
EFFECTS OF THE A SHARE ISSUE ON THE COMPANY'S CAPITAL STRUCTURE
A summary of the changes in shareholdings (by percentage) in the Company prior
to and immediately after the completion of the A Share Issue, based on the
assumption that 1,000,000,000 A Shares will be issued, is set out below:
Immediately after
Prior to the A Shareholding completion of the Shareholding
Share Issue percentage (%) A Share Issue percentage (%)
Types of shares (Shares) (Approximate) (Shares) (Approximate)
--------------- ------------- ------------- ----------------- -------------
1. Non-listed Shares
State-owned Shares 2,200,000,000 65.2 2,200,000,000 50.3
2. Listed Shares
H Shares 1,174,178,000 34.8 1,174,178,000 26.8
A Shares -- -- 1,000,000,000 22.9
------------- ---- ------------- ----
Total 3,374,178,000 100 4,374,178,000 100
============= ==== ============= ====
SUMMARY OF THE AUDITED PRC GAAP FINANCIAL INFORMATION OF THE GROUP
Condensed Consolidated Financial Statements (prepared under PRC GAAP)
(a) Condensed Consolidated Balance Sheet (Assets) (prepared under PRC GAAP)
December 31, December 31, December 31,
2002 2001 2000
------------ ------------ ------------
RMB'000 RMB'000 RMB'000
Current assets:
Cash and cash equivalents 4,145,300 2,958,161 4,221,944
Accounts receivable 742,962 581,673 832,622
Other receivables 404,279 209,485 237,562
Purchase payments 14,237 27,614 38,238
Inventories 653,011 573,846 556,481
Prepaid expenses 165,754 139,519 125,206
---------- ---------- ----------
Total current assets 6,125,543 4,490,298 6,012,053
---------- ---------- ----------
Long-term investments:
Long term equity investment 559,981 418,011 272,368
Fixed assets:
Cost 37,080,309 30,850,235 30,174,413
Less: Accumulated depreciation 9,514,246 8,014,482 6,413,396
Net book value 27,566,063 22,835,753 23,761,017
Construction work in progress 1,006,964 442,337 385,445
Construction materials 1,485 1,437 1,650
Total fixed assets 28,574,512 23,279,527 24,148,112
---------- ---------- ----------
Intangible assets and other assets:
Lease and equipment deposits 2,147,038 2,395,003 438,207
Long-term deferred expenses 34,136 52,256 61,701
Long-term receivables 28,903 27,960 27,615
---------- ---------- ----------
Total intangible assets and other assets 2,210,077 2,475,219 527,523
---------- ---------- ----------
Total assets 37,470,113 30,663,055 30,960,056
December 31, December 31, December 31,
2002 2001 2000
------------ ------------ ------------
RMB'000 RMB'000 RMB'000
Current liabilities:
Short-term borrowings 4,443,426 1,431,728 129,755
Bills payable 1,299,680 - -
Accounts payable 900,926 749,480 843,896
Sales in advance of carriage 390,531 370,546 339,510
Accrued payroll 73,702 67,059 65,292
Staff welfare payable 179,984 179,020 159,499
Dividends payable -- 67,484 --
Taxes payable 122,657 222,567 208,176
CAAC Infrastructure Development
Fund payable 280,706 525,607 498,813
Other payables 2,897 5,260 2,953
Other creditors 692,246 554,132 532,469
Accrued expenses 2,286,136 2,295,322 2,271,502
Long-term liabilities due within one year 2,384,498 2,198,340 2,429,516
---------- ---------- ----------
Total current liabilities 13,057,389 8,666,545 7,481,381
---------- ---------- ----------
Long-term liabilities:
Long-term borrowings 5,911,590 3,627,594 3,788,698
Obligations under finance leases 6,631,751 7,691,634 9,416,285
Provision for major overhauls 141,887 125,661 166,083
Deferred credits 249,411 67,742 15,167
Deferred taxation 1,043,303 761,724 468,154
Total long term liabilities 13,977,942 12,274,355 13,854,387
---------- ---------- ----------
Total liabilities 27,035,331 20,940,900 21,335,768
Minority interests 1,540,188 1,340,906 1,266,169
Shareholders' equity:
Share capital 3,374,178 3,374,178 3,374,178
Capital reserve 4,160,578 4,160,578 4,160,578
Surplus reserve 585,372 501,634 433,062
Retained profits 774,466 344,859 390,301
Total shareholders' equity 8,894,594 8,381,249 8,358,119
---------- ---------- ----------
Total liabilities and shareholders' equity 37,470,113 30,663,055 30,960,056
========== ========== ==========
(b) Consolidated Statements of Income and Profit Appropriations (prepared under
PRC GAAP)
2002 2001 2000
---------- ---------- ----------
RMB'000 RMB'000 RMB'000
Revenue from principal operations 18,805,510 17,761,764 15,858,927
Less: Transfer to CAAC Infrastructure
Development Fund 798,386 759,385 666,982
Net revenue from principal operations 18,007,124 17,002,379 15,191,945
Less: Costs of principal operations 13,118,104 12,797,032 11,588,537
Business taxes and surcharges 525,250 540,847 485,786
Profit from principal operations 4,363,770 3,664,500 3,117,622
Add: Profit from other operations 325,327 248,861 307,853
Less: Operating expenses 1,527,255 1,561,442 1,395,421
General and administration expenses 1,013,506 850,297 757,720
Financial expenses 1,095,219 587,062 665,451
2002 2001 2000
--------- --------- --------
RMB'000 RMB'000 RMB'000
Operating profit 1,053,117 914,560 606,883
Add: Investment income 10,473 5,181 8,884
Non-operating income 8,627 1,931 387,745
Less: Non-operating expenses 40,531 8,513 17,578
Profit before income tax 1,031,686 913,159 985,934
Less: Income tax 353,230 331,925 359,726
Profit after income tax 678,456 581,234 626,208
Less: Minority interests 165,111 164,186 90,552
Net profit for the year 513,345 417,048 535,656
Add: Retained profits/(accumulated losses)
at beginning of the year 344,859 390,301 (20,587)
Less: Adjustment to retained profits -- 326,434 38,725
Profits available for distribution 858,204 480,915 476,344
Less: Transfer to statutory surplus reserve fund 51,335 41,705 53,565
Transfer to statutory public welfare fund 25,667 20,852 26,783
Transfer to discretionary surplus reserve 6,736 6,015 5,695
Profits available for distribution to shareholders 774,466 412,343 390,301
Less: Dividends payable -- 67,484 --
Retained profits carried forward 774,466 344,859 390,301
(c) Condensed Consolidated Cash Flow Statement
2002
RMB'000
----------
Net cash inflow from operating activities 4,774,778
Net cash outflow from investment activities (5,855,264)
Net cash inflow from financing activities 2,267,625
Net increase in cash and cash equivalents 1,187,139
PROSPECTUS
A summary of the Prospectus will be published in the China Securities News,
Shanghai Securities News and Securities Times on July 7, 2003 and the Prospectus
will be published on the website of the Shanghai Stock Exchange at
www.sse.com.cn.
USE OF PROCEEDS
The net proceeds from the A Share Issue, after deducting expenses, will be used
to purchase B737-800 aircraft and related onboard fittings and equipment, in
replacement of 20 existing B737-300 and B737-500 aircraft, the operating leases
of which are expiring. Details of the purchase of aircraft were disclosed
previously in the Company's press announcement dated October 3, 2001 and the
Company's circular to shareholders dated October 26, 2001. If the net proceeds
of the A Share Issue exceed the sums required for the foregoing purposes, the
surplus will be used to repay the Company's long-term debt due for repayment
within one year and to supplement the Company's working capital; if the net
proceeds of the A Share Issue are insufficient for the foregoing purposes, the
shortfall will be raised through commercial borrowings. According to the terms
of the contract between the Company and the Boeing Company for the purchase of
20 B737-800 aircraft, the delivery of the 20 aircraft will take place between
August 2002 and March 2005. Upon receipt of the proceeds of the A Share Issue,
the Company will make the advance payments and payment of the outstanding
balance in accordance with the payment schedule.
Details as to the use of proceeds from the A Share Issue will be disclosed in
the subsequent annual report(s) of the Company.
PROFIT FORECAST
The Prospectus includes a Profit Forecast.
The Profit Forecast has been prepared on the basis of the assumptions made by
the Directors and in accordance with PRC GAAP and accounting policies consistent
with the financial and accounting information of the Company set out in the
Prospectus. The preparation of the Profit Forecast is solely the responsibility
of the Board. The compilation and calculation of the Profit Forecast have been
reviewed by the Company's PRC auditors, KPMG Huazhen, a firm of certified public
accountants in the PRC. The Company wishes to caution investors that the
forward-looking statements set forth in the Profit Forecast below have not been
prepared with a view toward compliance with published guidelines of the Hong
Kong Society of Accountants or the American Institute of Certified Public
Accountants regarding forecasts. The Profit Forecast may be subject to
adjustments if it were to be prepared in accordance with IFRS. The Profit
Forecast has not been reviewed by any independent financial advisers or
certified public accountants in Hong Kong. Investors are drawn to the attention
of the fact that owing to the uncertainty of the assumptions on which the Profit
Forecast is based, investors should read the Profit Forecast with caution and
should not rely unduly on the Profit Forecast in making investment decisions.
Statement of Profit Forecast (prepared under PRC GAAP)
January-April May-December
------------------------- -------------------------
2003 2003 2003 2002
Unaudited Forecast Forecast Audited Change
--------- ---------- ---------- ---------- ------
RMB'000 RMB'000 RMB'000 RMB'000 (%)
Revenue from principal operations 5,935,941 11,121,274 17,057,215 18,805,510 (9)
Less: Transfer to CAAC Infrastructure
Development Fund 250,788 145,015 395,803 798,386 (50)
Net revenue from principal operations 5,685,153 10,976,259 16,661,412 18,007,124 (7)
Less: Costs of principal operations 4,790,782 8,053,934 12,844,716 13,118,104 (2)
Business taxes and surcharges 165,970 93,058 259,028 525,250 (51)
Profit from principal operations 728,401 2,829,267 3,557,668 4,363,770 (18)
Add: Profit from other operations 68,463 127,195 195,658 325,327 (40)
Less: Operating expenses 469,843 908,282 1,378,125 1,527,255 (10)
General and administration expenses 318,854 617,749 936,603 1,013,506 (8)
Financial expenses 319,054 720,971 1,040,025 1,095,219 (5)
Operating (loss)/profit (310,887) 709,460 398,573 1,053,117 (62)
Add: Investment income 4,745 4,386 9,131 10,473 (13)
Non-operating income 4,325 2,577 6,902 8,627 (20)
Less: Non-operating expenses 8,296 1,026 9,322 40,531 (77)
(Loss)/profit before income tax (310,113) 715,397 405,284 1,031,686 (61)
Less: Income tax (101,695) 223,280 121,585 353,230 (66)
(Loss)/profit after income tax (208,418) 492,117 283,699 678,456 (58)
Less: Minority interests 10,241 70,816 81,057 165,111 (51)
Net (loss)/profit (218,659) 421,301 202,642 513,345 (61)
Principal Assumptions for Profit Forecast
1. Below are the principal assumptions on which the Profit Forecast has been
prepared.
2. There will be no material change in the politics, laws and regulations,
financial and economic condition of all countries and regions that the Group's
businesses operate in.
3. The Group will continue to be granted authorization to operate existing
routes and flights and new routes proposed to be launched in 2003. The Group
operated 350 domestic and international routes with 4,300 flights per week as at
the end of March 2003. As a result of the outbreak of Severe Acute Respiratory
Syndrome ("SARS"), the Group reduced its flights to 1,433 per week in early June
2003 and suspended around 12 routes. The Group anticipates that the number of
flights is expected to return to a normal level and its suspended routes are
expected to be re-opened gradually in late June 2003. Besides, the Group
launched five new routes during the first six months of 2003 (with an average of
12 flights per week). Currently the Group has no plans to launch new routes in
the second half year of 2003.
4. The Group will continue to obtain renewals from the CAAC of all licences
necessary for the operation of its aviation business.
5. All airline companies are exempted from payments for the CAAC Infrastructure
Development Fund, business taxes and relevant surcharges from May 1, 2003 to
September 30, 2003, as a result of the Chinese Government's efforts to reduce
financial pressure on China's civil aviation industry resulting from the
outbreak of SARS. Except for this, there will be no material change in the tax
base or tax rate of all countries and regions that the Group's businesses
operate in.
6. The Group will continue to be supplied by domestic aviation fuel suppliers,
including China Aviation Oil Supply Co., Ltd., Lan Tian Aviation Oil Supply Co.,
Ltd., East China Aviation Oil Supply Co., Ltd. and North China Aviation Oil
Supply Co., Ltd., with sufficient aviation fuel necessary for all flights on the
terms and conditions set forth by the State.
7. The Chinese Government will continue to provide the insurance guarantee
necessary for all aircraft of the Group.
8. The Group will purchase new aircraft and put them into service according to
existing plans. The Group will have available sufficient financing to purchase
new aircraft and obtain guarantees from banks to support financing arrangements
when necessary. As of the end of May 2003, the Group had already purchased three
new B737-800 aircraft from Boeing Company as planned and received long-term
loans from Bank of China in a total amount of about RMB1,140 million to purchase
aircraft according to its financing arrangements. The Group will, as scheduled,
purchase another four new B737-800 aircraft from July to November this year and
the Group has obtained the agreement of Bank of China and the Industrial and
Commercial Bank of China to provide long-term bank loans in a total amount of
about RMB1,520 million to purchase the aircraft. The depreciation of these new
aircraft purchased this year is around RMB50 million. The Group would face heavy
penalties and damage to its reputation if the purchase of these aircraft cannot
be completed as scheduled.
9. The Group's business will not be adversely affected by labour shortages,
labour disputes or any factor beyond the management's control. The Group will be
able to recruit enough employees to satisfy such service requirements as
contemplated in its Profit Forecast.
10. There will be no acute price competition in China's civil aviation industry
in 2003 and the average airfare will be no lower than for the same period last
year. There will be no material change in published airfares for domestic routes
in 2003. Domestic routes charge passengers airfare based on the published
airfare set forth by the CAAC plus a fuel surcharge and minus a preferential
discount. There has been no adjustment in the published airfare from the
beginning of 2002 to the date of the Prospectus. The price discount ratio given
by the Group to our passengers is determined according to the stipulations of
the CAAC and taking into consideration competition on various routes. There will
be no material change in such price discount ratio.
Oil surcharge is charged to passengers of domestic routes according to CAAC's
approval documents as follows:
From January 1, 2002 to September 30, 2002 No more than 8% of published
airfare for every passenger
From October 1, 2002 to June 22, 2003 No more than 14% of published
airfare for every passenger
From June 23, 2003 onwards No more than 8% of published
airfare for every passenger
The Group's passenger yield (calculated by passenger revenue per kilometre) was
RMB0.596 from January to April this year, a 3% increase from RMB0.577 for the
same period last year and an approximately 2% rise from the annual average
RMB0.584 for 2002, mainly resulting from an increase in domestic fuel surcharge
charging rate in October last year. However, with a drop of charging rate of
domestic fuel surcharge this June, the Group foresees a similar average charging
rate of fuel surcharge this year compared to that of last year. According to
current domestic airfare and discount level, the Group forecasts that the
passenger yield for 2003 will be similar to that of last year, i.e., RMB0.584.
The passenger yield during May to December 2003 is expected to be RMB0.575, a 2%
drop from RMB0.587 for the same period last year.
11. Currently, the outbreak of SARS is contained to a certain degree in China.
The World Health Organization ("WHO") announced on June 13, 2003 in Geneva the
lifting
of its recommendation that people should postpone all but essential travel to
Tianjin, Hebei, Shanxi and Inner Mongolia in China. In addition, WHO removed
Tianjin, Hebei, Shanxi, Inner Mongolia, Jilin, Jiangsu, Hubei and Guangdong from
the list of areas with recent local transmission on the same date. Shigeru Omi,
the WHO's Western Pacific regional director announced in Beijing on June 24,
2003 that the travel warning to Beijing had been lifted and Beijing was now off
the SARS-affected list. At this time, all provinces in China previously subject
to the WHO travel warning or in the list of areas with recent local transmission
are no longer categorized as such. There is an indication of recovery in China's
civil aviation transportation industry in June. However, SARS is an independent,
occasional and unexpected event with no similar occurrence in the world for
comparison. Therefore, no forecast of the recovery and development of the
passenger transportation business in respect of China's civil aviation industry
for the period from June to December 2003 can be made directly based on
historical data. As a result, assuming there is no recurrence of SARS, an
assumption as to the passenger transportation business of China's civil aviation
industry from June to December 2003 is made as follows:
(1) In June 2003, China civil aviation transportation industry will achieve a
passenger volume of 35% of that of the same period in 2002.
(2) In July 2003, China civil aviation transportation industry will achieve a
passenger volume of 80% of that of the same period in 2002.
(3) In August 2003, China civil aviation transportation industry will achieve a
passenger volume of 100% of that of the same period in 2002.
(4) In September 2003, China civil aviation transportation industry will achieve
a passenger volume of 108% of that of the same period in 2002.
(5) During October to December 2003, China civil aviation transportation
industry will return to a normal level, achieving a passenger volume of 114% of
that of the same period in 2002.
12. There will be no material changes in exchange rates and interest rates.
13. There will be no unforeseeable factors or force majeure that will materially
and adversely affect the Group's forecast performance for the year 2003.
SUPPLEMENTARY INFORMATION FOR HOLDERS OF H SHARES AND AMERICAN DEPOSITARY SHARES
There are differences on the results of the financial statement prepared under
PRC GAAP and those prepared under IFRS. The effects on net profit for the year
of significant differences between PRC GAAP and IFRS are summarized as follows:
2002 2001 2000
------- ------- -------
RMB'000 RMB'000 RMB'000
Net profit under PRC GAAP 513,345 417,048 535,656
Adjustments:
Sale and leaseback accounting 188,886 74,058 23,065
Loss on disposal of staff quarters (95,833) (151,434) (85,000)
Revaluation of land use rights 3,645 -- --
Effect of the above adjustments on taxation (34,282) 553 28,050
------- ------- -------
Net profit under IFRS 575,761 340,225 501,771
======= ======= =======
The effects on shareholders' equity of significant differences between PRC GAAP
and IFRS are summarized as follows:
December 31, December 31, December 31,
2002 2001 2000
------------ ------------ ------------
RMB'000 RMB'000 RMB'000
Shareholder's equity under PRC GAAP 8,894,594 8,381,249 8,358,119
Adjustments:
Sale and leaseback accounting 244,556 55,670 (18,388)
Loss on disposal of staff quarters 419,167 515,000 340,000
Revaluation of land use rights (169,292) -- --
Dividends payable -- 67,484 --
Effect of the above adjustments on taxation 224,182 202,260 201,707
--------- --------- ---------
Shareholders' equity under IFRS 9,613,207 9,221,663 8,881,438
========= ========= =========
CERTAIN RISK FACTORS DISCLOSED IN THE PROSPECTUS
The following is an extract of selected risk factors from the Prospectus:
1. Although the Group currently has a healthy operating cash flow, there is no
assurance that sufficient cash flows will continue to be available for the Group
to meet its major funding requirements for anticipated development. Accordingly,
the continued ability of the Group to raise sufficient funds is a factor that
could have an impact on the Group's operations and further development.
2. Although the B737-800 aircraft that the Company intends to purchase are
superior to the existing B737-300 and B737-500 aircraft in terms of performance,
operational reliability and comfort, there is uncertainty as to the ability of
the Company to increase its market share in line with the capacity of the new
aircraft.
3. The PRC has joined the WTO. The PRC market for aircraft maintenance and
repair and computer ticketing systems will accordingly be opened to foreign
providers. As such, increased competition from foreign companies may have an
adverse effect on the operating results of the Group.
4. In the event that the insurance coverage for third party war liability of
claim for more than US$50 million per incident, under war liability insurance
provided to the Group by the PRC Government is withdrawn, or premiums for war
liability insurance are increased, insurance premium expenditures of the Group
will increase.
Definitions
"A Shares" domestic RMB-denominated ordinary shares of the Company with a
nominal value of RMB1.00 each
"A Share Issue" the proposed issue of A Shares to investors who have RMB
denominated ordinary A shares listed on the Shanghai Stock Exchange or the
Shenzhen Stock Exchange of a market value of RMB10,000 or above as at the time
of closing of trading on July 7, 2003, which are proposed to be listed and
traded on the Shanghai Stock Exchange
"associate" has the same meaning as defined in the Rules Governing the Listing
of Securities on The Stock Exchange of Hong Kong Limited
"Board" the board of Directors
"CAAC" Civil Aviation Administration of China
"Company" China Southern Airlines Company Limited
"CSRC" China Securities Regulatory Commission
"Directors" the directors of the Company
"Group" the Company and its subsidiaries
"H Shares" the overseas listed foreign shares of the Company, with a nominal
value of RMB1.00 each and listed on The Stock Exchange of Hong Kong Limited
"IFRS" International Financial Reporting Standards
"PRC" the People's Republic of China excluding, for the purposes of this
announcement, the Hong Kong Special Administrative Region of the PRC, the Macau
Special Administrative Region of the PRC and Taiwan
"PRC GAAP" the PRC Accounting Rules and Regulations
"Profit Forecast" the profit forecast of the Company for the year ending
December 31, 2003 prepared under PRC GAAP and in accordance with assumptions
made by the Directors
"Prospectus" the prospectus of the Company in respect of the A Share Issue
"RMB" Renminbi, the lawful currency of the PRC
"Shares" Stated-owned share(s), H Share(s) in issue and A Share(s) to be issued
in the Company
"Shanghai Stock Exchange" Shanghai Stock Exchange of the PRC
"Shenzhen Stock Exchange" Shenzhen Stock Exchange of the PRC
"WTO" World Trade Organisation
By order of the Board
Su Liang
Company Secretary
Guangzhou, the People's Republic of China
July 4, 2003
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CHINA SOUTHERN AIRLINES COMPANY LIMITED
By /s/ Su Liang
-------------------------------------
Name: Su Liang
Title: Company Secretary
Date: July 7, 2003