(ii) the net profit determined in accordance with IFRSs. As at 31 December 2008, the Company did not have any distributable reserves (2007: Nil).

(c)  
The Company acquired certain equity interest in a subsidiary from CSAHC (Note 44(c)(xiv)). The balance represents the difference of the consideration paid and the share of net assets of the subsidiary.

(d)  
Pursuant to the “Notice of approval for funds to be used specifically for the reconstruction after the snowstorm disaster” issued by the Civil Aviation Administration of China, national funds amounting to RMB121 million were contributed during the year by the PRC government to the Company and its two subsidiaries through CSAHC. Such funds are to be used specifically for the reconstruction after the snowstorm disaster occurred in January 2008 in the PRC.

In addition, national funds amounting to RMB35 million were contributed during the year by the PRC government to the Company through CSAHC, which are to be used specifically for the reconstruction of Urumqi airport parking apron and other projects.
Pursuant to the requirements of the relevant notice, the national funds were designated as capital contribution and vested solely by the PRC government. They can be converted to share capital of the entities receiving the funds upon approval by their shareholders and completion of other procedures.
ANNUAL REPORT 2008

116 ANNUAL REPORT 2008

ANNUAL REPORT 2008

118 ANNUAL REPORT 2008

(Prepared in accordance with International Financial Reporting Standards) (Expressed in Renminbi)

Notes to the Financial Statements
118 ANNUAL REPORT 2008

controlled entities of the Group (cont’d)
(i)  
The Group acquires aircraft, flight equipment and other airline-related facilities through Southern Airlines (Group) Import and Export Trading Company (“SAIETC”), a wholly-owned subsidiary of CSAHC and pays handling charges to SAIETC.

(ii)  
The Group purchases certain inflight meals and related services from Shenzhen Air Catering Company Limited and Southern Airlines (Group) Catering Co., Ltd (“Air Catering”), which are an associate and a wholly-owned subsidiary of CSAHC respectively. Air Catering was acquired by the Company on 14 August 2007 (Note 44(c) (xi)).

(iii)  Commission is earned by certain subsidiaries of CSAHC in connection with the air tickets sold by them on behalf of the Group. Commission is calculated based on the rates stipulated by the CAAC and International Air Transportation Association.
(iv)  
Certain sundry aviation supplies are purchased from Southern Airlines (Group) Economic Development Company (“SAGEDC”), a subsidiary of CSAHC. No sundry aviation supplies were purchased from SAGEDC during the year.

(v)  
The Group leases certain land and buildings in the PRC from CSAHC. Rental payments for land and buildings were paid or payable to CSAHC.

(vi)  
Guangzhou China Southern Airlines Property Management Co., Ltd, a subsidiary of CSAHC, provides property management services to the Group.

(vii)  Beijing Ground Service Co., Ltd., a jointly controlled entity of the Group, provides airport ground service to the Group.
(viii)  Guangzhou Aircraft Maintenance Engineering Company Limited and MTU Maintenance Zhuhai Co., Ltd, both are jointly controlled entities of the Group, provide comprehensive maintenance services to the Group.
(ix)  
Zhuhai Xiang Yi Aviation Technology Company Limited (“Zhuhai Xiang Yi”), a jointly controlled entity of the Group, provides flight simulation services to the Group. In addition, the Group entered into operating lease agreements to lease certain flight training facilities and buildings to Zhuhai Xiang Yi.

(x)  
China Southern Airlines Culture and Media Co., a jointly controlled entity of the Group and CSAHC, provides advertising service to the Group.
　
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