COMMITMENTS AND CONTINGENCIES
Commitments
As at 31 December 2008, the Group had capital commitments of approximately RMB78,481 million. Of such amounts, RMB75,639 million related to the acquisition of aircraft and related flight equipment and RMB2,842 million for other projects.
As at 31 December 2008, capital commitments of a jointly controlled entity shared by the Group amounted to RMB27 million.
Contingent Liabilities
Details of contingent liabilities of the Group are set out in note 50 to the financial statements prepared under IFRS.
ANNUAL REPORT 2008 19
Report of the Directors
The Board hereby presents this Annual Report and the audited financial statements for the year ended 31 December 2008 of the Group to the shareholders of the Company.
PRINCIPAL ACTIVITIES, OPERATING RESULTS AND FINANCIAL POSITION
The Group is principally engaged in airline operations. The Group also operates certain airline related businesses, including provision of aircraft maintenance and air catering services. The Group is one of the largest airlines in China. In 2008, the Group ranked first among all Chinese airlines in terms of passengers carried, number of scheduled flights per week, number of hours flown, number of routes and size of aircraft fleet. The Group has prepared the financial statements for the year ended 31 December 2008 in accordance with the International Financial Reporting Standards (“IFRS”). Please refer to pages 43 to 138 of this Annual Report for details.
FIVE-YEAR SUMMARY
A summary of the results and the assets and liabilities of the Group prepared under IFRS for the five-year period ended 31 December 2008 are set out on pages 141 and 142 of this Annual Report.
DIVIDENDS
No interim dividend was paid during the year ended 31 December 2008 (2007: Nil).
The Board does not recommend the payment of a final dividend in respect of the year ended 31 December 2008 (2007: Nil).
BANK LOANS, SHORT TERM FINANCING BILLS AND OTHER BORROWINGS
Details of the bank loans, short term financing bills and other borrowings of the Company and the Group are set out in notes 32, 33 and 34 to the financial statements prepared under IFRS.
INTEREST CAPITALISATION
For the year ended 31 December 2008, RMB674 million (2007: RMB558 million) was capitalised as the cost of construction in progress and property, plant and equipment in the financial statements prepared under IFRS.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment of the Company and the Group and movements of property, plant and equipment during the year ended 31 December 2008 are set out in note 19 to the financial statements prepared under IFRS.
MAJOR CUSTOMERS AND SUPPLIERS
The Group’s purchases from the largest supplier for the year represented approximately 30% of the Group’s total purchases. Purchases from the five largest suppliers accounted for an aggregate of approximately 41% of the Group’s purchases in 2008. At no time during the year have the directors, their associates or any shareholder of the Company (which to the knowledge of the directors owns more than 5% of the Company’s share capital) had any interest in these five largest suppliers.
The Group’s aggregate turnover with its five largest customers did not exceed 30% of the Group’s total turnover in 2008.
20 ANNUAL REPORT 2008
Report of the Directors
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