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 October, 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.
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(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
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(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 October 30, 2003
published in local newspapers in Hong Kong an announcement in Chinese and
English, respectively, concerning the Company's third quarterly report of 2003.
A copy of the English announcement is included in this Form 6-K of the Company.
The Stock Exchange of Hong Kong takes no responsibility for the content 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 content of this announcement.
(a joint stock limited company incorporated in the
People's Republic of China with limited liability)
THIRD QUARTERLY REPORT OF 2003
SUMMARY
The unaudited financial statements of the Company for the third quarter of
2003 were prepared in accordance with the PRC GAAP.
This announcement is made by the Company pursuant to paragraph 2(2) of the
Listing Agreement entered into between the Company and the Stock Exchange.
1. IMPORTANT NOTICE
This announcement is made by China Southern Airlines Company Limited (the
"Company") pursuant to paragraph 2(2) of the Listing Agreement entered into
between the Company and The Stock Exchange of Hong Kong Limited (the "Stock
Exchange").
The Directors of the Company collectively and individually warrant that the
information set out in this report does not contain any misrepresentation,
misleading statement or material omission; and jointly and severally
accepts full responsibility as to the truthfulness, accuracy and
completeness of the content herein.
The third quarterly report of the Company for the year 2003 (the "Third
Quarterly Report") was prepared in accordance with the relevant rules and
regulations of the China Securities Regulatory Commission.
The unaudited financial statements of the Company for the third quarter of
2003 were prepared in accordance with the PRC GAAP.
Mr. Yan Zhi Qing (Chairman), Mr. Wang Chang Shun (President), Mr. Xu Jie Bo
(Chief Financial Officer) and Mr. Xiao Li Xin (General Manager of Finance
Department) of the Company, warrant that the Third Quarterly Report is true
and complete.
2. BASIC PARTICULARS OF THE COMPANY
2.1 BASIC INFORMATION OF THE COMPANY
Company Secretary: Su Liang
Securities Representative: Lei Bin
Correspondence Address: Baiyun International Airport, Guangzhou,
the People's Republic of China
Telephone: 020-86124737
Facsimile: 020-86659040
e-mail address: ir.cz@cs-air.com
2.2 FINANCIAL INFORMATION
2.2.1 Major Accounting Data and Financial Indices
AS AT AS AT
30 SEPTEMBER 31 DECEMBER
2003 2003 CHANGE
------------ ----------- ------
(%)
Total assets (RMB'000) 38,895,562 37,470,113 3.8
Shareholders' equity (excluding
minority interests) (RMB'000) 10,752,425 8,894,594 20.9
Net assets per share (RMB) 2.46 2.64 -6.8
Adjusted net assets per share (RMB) 2.41 2.58 -6.6
FOR THE
PERIOD FROM FOR THE
1 JULY 2003 TO PERIOD ENDED
30 SEPTEMBER 30 SEPTEMBER
2003 2003
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Net cash inflow from operating
activities (RMB'000) 1,497,399 3,017,964
Earnings per share (RMB) 0.09 -0.18
Return on net assets 3.55% -7.28%
Return on net assets after
extraordinary gains and losses 3.59% -7.08%
EXTRAORDINARY GAINS AND LOSSES AMOUNT
---------
(RMB'000)
Non-operating income
Net gain on disposal of fixed assets 1,020
Others 5,798
Non-operating expenses
Net loss on disposal of fixed assets -20,994
Others -17,681
Taxation effect of non-operating income -2,250
Taxation effect of non-operating expenses 12,763
Total -21,344
2.2.2 Profit and Loss Account
CONSOLIDATED THE COMPANY
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JULY- JANUARY- JULY- JANUARY-
SEPTEMBER, SEPTEMBER, SEPTEMBER, SEPTEMBER,
2003 2003 2003 2003
---------- ---------- ---------- ----------
RMB'000 RMB'000 RMB'000 RMB'000
REVENUE FROM PRINCIPAL OPERATIONS 4,992,022 11,965,102 3,367,037 8,213,798
Less: Transfer to CAAC Infrastructure
Development Fund - 250,788 - 167,942
NET REVENUE FROM PRINCIPAL OPERATIONS 4,992,022 11,714,314 3,367,037 8,045,856
Less: Operating costs of
principal operations 3,427,771 10,208,129 2,305,797 7,267,705
Business taxes and surcharges 14,216 203,518 12,578 140,178
PROFIT FROM PRINCIPAL OPERATIONS 1,550,035 1,302,667 1,048,662 637,973
Add: Profit from other operations 132,566 220,509 98,060 205,285
Less: Selling expenses 436,369 1,081,544 332,261 802,825
General and administration
expenses 210,222 710,386 171,359 475,730
Financial expenses 360,072 814,153 338,400 746,003
OPERATING PROFIT 675,938 -1,082,907 304,702 -1,181,300
Add: Investment income 52,145 40,343 291,381 65,232
Non-operating income 2,141 6,818 1,949 4,559
Less: Non-operating expense 8,442 38,675 5,668 7,459
PROFIT BEFORE INCOME TAX 721,782 -1,074,421 592,364 -1,118,968
Less: Income tax 222,731 -321,758 210,548 -336,027
PROFIT AFTER INCOME TAX 499,051 -752,633 381,816 -782,941
Minority interests 117,235 30,278 - -
NET PROFIT 381,816 -782,941 381,816 -782,941
Note: This is the first quarterly report announced by the Company. Therefore
no comparative figures for the corresponding period of last year are
available.
2.3 As at the end of the reporting period, the Company had a total number
of 216,914 shareholders, of whom 214,162 were holders of A shares and
2,752 were holders of H shares.
3. MANAGEMENT DISCUSSION AND ANALYSIS
3.1 BRIEF ANALYSIS OF THE COMPANY'S OVERALL OPERATIONAL ACTIVITIES DURING
THE REPORTING PERIOD
For the third quarter of 2003, the Company's total traffic volume was
1,008.2 million tonne kilometers, representing a growth of 8.1% over
the corresponding period last year. Passenger carried was 6,183,500
million, representing an increase of 11.6% from the same period last
year. Cargo and mail traffic amounted to 121,000 tonnes, which
represents a fall of 5% over the same period last year. The revenue
from principal operations of the Company for the third quarter was
RMB4,992 million, and the profit from principal operations and net
profit were RMB1,550 million and RMB382 million respectively. During
the first three quarters of 2003, the Company accumulated a total
traffic volume of 2,432.22 million tonne kilometers, representing a
fall of 6.7%. Passenger carried was 13.92 million, which represents a
fall of 12.6% compared with the same period last year. Cargo and mail
traffic amounted to 320,000 tonnes, down 6.3% compared with the same
period last year. The accumulated revenue from principal operations
was RMB11,965 million, resulting in a profit from principal operations
and net loss of RMB1,303 million and RMB783 million respectively. The
airline industry of the People's Republic of China (the "PRC") has
experienced resurgence, primarily attributable to the continued growth
of the PRC's national economy and the subsiding impact of the outbreak
of the severe acute respiratory syndrome ("SARS"). As a consequence,
the profitability of the Company's principal operations has gradually
returned to normal. Yet, the accumulated operational results of the
Company for the first three quarters of 2003 suffered decrease of
different degrees compared with the same periods last year, as a
result of the negative impact of the outbreak of SARS during the first
half of 2003. Accordingly, the Company recorded a net loss for the
period.
3.1.1 Principal operations or products representing more than 10% of
the income or profit from the Company's principal operations
OPERATING
REVENUE FROM COSTS OF GROSS
PRINCIPLE OPERATION PRINCIPAL PRINCIPAL PROFIT
(BY BUSINESS OR PRODUCT) OPERATIONS OPERATIONS MARGIN
------------ ---------- ------
(%)
Income from transportation
(RMB'000) 11,965,102 10,208,129 17.21
Including: connected transactions
(RMB'000) - 358,149 -
3.1.2 Analysis of material changes in the profitability (gross profit
margin) of the Company's principal operations for the reporting
period as compared with that for the previous reporting period
During the first half of 2003, the outbreak of SARS led to a
significant shrinkage in the passenger transportation operation
of the Company. As such, the profitability of the Company's
principal operations has dropped relatively substantially as
compared to that of the previous years. In the third quarter of
2003, the PRC's airline industry experienced resurgence as a
result of the continued growth of the PRC's national economy and
the subsiding impact of the outbreak of SARS. As a consequence,
the profitability of the Company's principal operations has
returned to normal.
3.2 ANALYSIS OF SIGNIFICANT EVENTS AND THEIR IMPACT AND SOLUTIONS
1. Issue and listing of A shares
Pursuant to the approval of the China Securities Regulatory
Commission, the Company issued 1,000,000,000 A shares at an issue
price of RMB2.7 per share from 10 to 17 July 2003, raising an
aggregate sum of RMB2.7 billion. The issued A shares were listed
on the Shanghai Stock Exchange on 25 July 2003. As approved by
the Company's shareholders during the relevant shareholders'
meeting, the proceeds from the A shares issue will be used to
acquire Boeing B737-800 aircraft to replace certain aircraft of
which the operating leases are due to expire. Details of the
issue and listing of A shares were disclosed by the Company in
two press announcements of the Company dated 4 July 2003 and 18
July 2003.
2. Acquisition of Airbus A330 aircraft
On 29 September 2003, the Company entered into the Aircraft
Acquisition Agreement with Airbus G.I.E., an independent third
party, for the acquisition of four A330 aircraft from Airbus
G.I.E. Pursuant to the Aircraft Acquisition Agreement, Airbus
G.I.E. will deliver all the four A330 aircraft to the Company by
2005. Details of the acquisition of aircraft transaction were
disclosed by the Company in its press announcement dated 8
October 2003.
3. US dollars loans
On 29 September 2003, the Directors of the Company approved two
United States ("US") dollars loan agreements entered into between
the Company and the Guangdong Branch of Bank of China ("Bank of
China"), for an eight-year medium to long term swap loan of
US$138,566,854 and a three-year short term foreign currency loan
of US$117,127,725.27 respectively. Pursuant to the loan
agreements, the Company agreed to pledge three Boeing B737-800
aircraft, numbered B2695, B2696 and B2697 respectively, as
security for the medium to long term swap US dollars loan and
signed the undertakings for such pledge and for transfer of the
relevant insurance rights. Details of the above transaction were
disclosed by the Company in its press announcement dated 29
September 2003.
4. Ground service joint venture with Beijing Airport
In order to enhance the quality and competitiveness of the
services provided by the Company in Beijing Airport, the Company
and Beijing Aviation Ground Services Co., Ltd. have established a
joint venture company called China Southern Airlines Capital
Airport Services Co. Ltd.. The joint venture company is primarily
engaged in providing ground services for the passenger
transportation businesses of the Company and its business
partners in Termination One of Beijing Airport.
3.3 FORECAST OF AN ACCUMULATED NET LOSS FOR THE PERIOD FROM THE BEGINNING
OF THE YEAR TO THE END OF THE NEXT REPORTING PERIOD OR SIGNIFICANT
CHANGES IN PROFITABILITY FOR THE SAID PERIOD AS COMPARED WITH THE
CORRESPONDING PERIOD IN THE PREVIOUS YEAR - PROFIT WARNING AND
ANALYSIS
The outbreak of SARS in the first half of 2003 had a significant
impact on the PRC airline industry. This negative impact, together
with the surge in oil prices due to the Iraq war and the relatively
substantial increase in operating costs such as airport levies,
contributed to a relatively enlarged loss of the Company for the first
half of the year. Investors should be aware that although the
operation of the Company has returned to normal level as the adverse
effect of SARS subsides, given the relatively substantial loss in the
first half of 2003, it is estimated that the accumulated annual net
profit of the Company, prepared in accordance with the PRC GAAP, would
be at least 50% lower than that for the previous year.
By order of the Board
CHINA SOUTHERN AIRLINE COMPANY LIMITED
YAN ZHI QING
Chairman
Guangzhou, the People's Republic of China
29 October 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
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Name: Su Liang
Title: Company Secretary
Date: October 30, 2003