(ii)  
Pursuant to a staff housing benefit scheme effective September 2002, the Group agreed to pay lump sum housing allowances to certain employees who have not received quarters from CSAHC or the Group according to the relevant PRC housing reform policy, for subsidising their purchases of houses. An employee who quits prior to the end of the vesting benefit period is required to pay back a portion of the lump sum housing benefits determined on a pro-rata basis of the vesting benefit period. The Group has the right to effect a charge on the employee’s house and to enforce repayment through selling the house in the event of default in repayment. Any shortfall in repayment would be charged against income.

(iii)  The Group also pays cash housing subsidies on a monthly basis to eligible employees. The monthly cash housing
subsidies are charged to the income statement as incurred.

The Group operates principally as a single business segment for the provision of air transportation services. The analysis of turnover and operating profit/(loss) by geographical segment is based on the following criteria:
(i)  
Traffic revenue from domestic services within the PRC (excluding Hong Kong, Macau and Taiwan) is attributed to the domestic operation. Traffic revenue from inbound/outbound services between the PRC and Hong Kong/ Macau/Taiwan, and the PRC and overseas destinations is attributed to the Hong Kong, Macau and Taiwan operation and international operation respectively.

(ii)  
Other revenue from ticket selling, general aviation services, ground services, air catering and other miscellaneous
services is attributed on the basis of where the services are performed.

ANNUAL REPORT 2008

Notes to the Financial Statements
(Prepared in accordance with International Financial Reporting Standards) (Expressed in Renminbi)
47 SUPPLEMENTARY INFORMATION TO THE CONSOLIDATED CASH FLOW STATEMENT
(a) Non cash transactions – acquisition of aircraft
During the year ended 31 December 2008, aircraft acquired under finance leases amounted to RMB281 million (2007: RMB4,330 million).
(b) Effect of the acquisition of Nan Lung Freight and Air Catering
The Company acquired a 51% equity interest in Nan Lung Freight and a 100% equity interest in Air Catering on 31 August 2007. Details are as follows:
RMB million
250
Trade payables 30 Accrued expenses 10 Other liabilities 18
58 Net identifiable assets before minority interests 192 Less: Minority interest (80)
Net identifiable assets after minority interest 112

Assets acquired: 
Property, plant and equipment, net  77 
Inventories  6 
Trade receivables  106 
Other receivables  7 
Cash and cash equivalents  54 

Cash 112
Analysis of the net outflow of cash and cash equivalents in respect of the acquisition:
Cash consideration paid (112)
Cash and cash equivalents acquired 54

Net outflow of cash and cash equivalents in respect of the acquisition (58) In the four months to 31 December 2007, these subsidiaries contributed profit of RMB3 million.

ANNUAL REPORT 2008
125

Notes to the Financial Statements
(Prepared in accordance with International Financial Reporting Standards) (Expressed in Renminbi)

Notes to the Financial Statements
(Prepared in accordance with International Financial Reporting Standards) (Expressed in Renminbi)

Exposure to liquidity, interest rate, currency, jet fuel price risk and credit risks arises in the normal course of the Group’s business. The Group’s exposure to these risks and the financial risk management policies and practices used by the Group to manage these risks are described below.
　
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