Air China Ld

Interim / Quarterly Report • Oct 31, 2019

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RNS Number : 7552R

Air China Ld

31 October 2019

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

中國國際航空股份有限公司

AIR CHINA LIMITED

(a joint stock limited company incorporated in the People's Republic of China with limited liability)

(Stock Code: 00753)

THIRD QUARTERLY REPORT 2019

This announcement is made pursuant to Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) and Rule 13.09 and Rule 13.10B of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

The board of directors (the "Board") of Air China Limited (the "Company") held a meeting of the Board on 30 October 2019 and passed the resolution approving the third quarterly report 2019 of the Company for the nine months ended 30 September 2019 (the "Reporting Period" or "Period") prepared in accordance with the PRC Accounting Standards.

I.       IMPORTANT NOTICE

1.1     The Board and the supervisory committee of the Company together with the directors, supervisors and the senior management of the Company guarantee that the contents of the quarterly report are true, accurate and complete and do not contain any false representation, misleading statement or material omission, and shall jointly and severally accept legal liability.

1.2     Particulars of absent directors

Name of absent director	Position of absent director	Reason(s) for absence	Name of proxy
Cai Jianjiang	Chairman	Business engagement	Song Zhiyong
Cao Jianxiong	Director	Business engagement	Song Zhiyong
John Robert Slosar	Director	Business engagement	Stanley Hui Hon-chung

1.3     Mr. Cai Jianjiang (legal representative and the Chairman of the Board of the Company), Mr. Xiao Feng (person in charge of accounting function and the Chief Accountant), and Mr. Zhan Zhong (person in charge of accounting department (accounting superintendent) and the general manager of finance department) hereby guarantee that the financial statements set out in this quarterly report are true, accurate and complete.

1.4     The third quarterly report of the Company is unaudited.

II.      BASIC INFORMATION OF THE COMPANY

2.1     Major financial data

Unit: RMB'000
	At the end of the Reporting Period	At the end of the previous year	Increase/decrease at the end of the Reporting Period as compared to the end of the previous year
			(%)
Total assets	289,007,619	243,716,006	18.58
Net assets attributable to shareholders of the listed company	93,849,422	93,216,239	0.68
Net cash flows from operating activities	30,103,490	24,614,813	22.30

	For the period from the beginning of the year to the end of the Reporting Period (January to September)	For the corresponding period of the  previous year (January to September)	Increase/ decrease as compared to the corresponding period of the previous year
			(%)
Revenue	103,077,172	102,880,095	0.19
Net profit attributable to shareholders of the listed company	6,762,090	6,937,408	-2.53
Net profit attributable to shareholders of the listed company after deducting non-recurring profits and losses	6,556,791	6,526,228	0.47
Weighted average return on net assets (%)	7.45	7.68	Decreased by 0.23 ppt
Basic earnings per share (RMB per share)	0.49	0.51	-3.92
Diluted earnings per share (RMB per share)	N/A	N/A	N/A

Non-recurring profits and losses

þ Applicable   ¨ Not Applicable

Unit: RMB'000
Items	Amounts for the Period (July to September)	Amounts for the period from the beginning of the year to the end of the Reporting Period (January to September)
---	---	---	---
---	---	---	---
Gains or losses on disposal of non-current assets	26,933	22,936
Government subsidies recorded in the income statement for the current period (excluding those closely related to the Company's normal business and continuously entitled to in fixed amounts or quotas in accordance with the requirements of the state policy)	127,234	219,477
Gains or losses from changes in fair value of financial assets/liabilities held for trading and derivative financial assets/liabilities and investment gains from disposal of financial assets/liabilities held for trading and derivative financial assets/liabilities and other debt investments (except for hedging activities related to the Company's normal operating business)	237	2,263
Reversal of provision for impairment of receivables and contract asset which are individually tested for impairment	28	12,832
Gains or losses arising from disposal of long-term equity investments	-415	-415
Other non-operating income and expenses not covered above	-7,994	112,723
Effect of non-controlling shareholders' interests (after taxation)	-19,252	-74,073
Effect of income tax	-35,497	-90,444
Total	91,274	205,299

2.2     Total number of shareholders, the top 10 shareholders and the top 10 holders of tradable shares (or shares not subject to selling restrictions) as at the end of the Reporting Period

	Unit: share
Total number of shareholders (account)	170,901
Particulars of the top 10 shareholders
Name of shareholder (full name)	Number of shares held as at the end of the Period	Share holding  percentage	Number of shares held subject to selling restrictions	Shares pledged or frozen		Nature of shareholder
Status	Number
		(%)
China National Aviation Holding Corporation Limited	5,952,236,697	40.98	513,478,818	Frozen	127,445,536	State-owned legal person
Cathay Pacific Airways Limited	2,633,725,455	18.13	0	Nil	0	Foreign legal person
HKSCC NOMINEES LIMITED	1,687,942,428	11.62	0	Nil	0	Foreign legal person
China National Aviation Corporation (Group) Limited	1,556,334,920	10.72	0	Frozen	36,454,464	Foreign legal person
China National Aviation Fuel Group Corporation	466,583,102	3.21	0	Nil	0	State-owned legal person
China Securities Finance Corporation Limited	311,302,365	2.14	0	Nil	0	State-owned legal person
Zhongyuan Equity Investment Management Co., Ltd.	118,455,985	0.82	0	Unknown	118,100,185	State-owned legal person
Hong Kong Securities Clearing Company Ltd.	47,135,304	0.32	0	Nil	0	Foreign legal person
China Merchants Bank Co., Ltd. - Bosera CSI Central-SOEs' Structural Reform ETF	32,733,505	0.23	0	Nil	0	Others
The Industrial and Commercial Bank of China -Dong Fang Hong China Strengthen Balanced Mix Securities Investment Fund	31,220,730	0.21	0	Nil	0	Others

Particulars of the top 10 shareholders not subject to selling restrictions
Name of shareholder	Number of tradable shares held not subject to selling restrictions	Class and number of shares
Class	Number
China National Aviation Holding Corporation Limited	5,438,757,879	RMB ordinary shares	5,438,757,879
Cathay Pacific Airways Limited	2,633,725,455	Overseas listed foreign shares	2,633,725,455
HKSCC NOMINEES LIMITED	1,687,942,428	Overseas listed foreign shares	1,687,942,428
China National Aviation Corporation (Group) Limited	1,556,334,920	RMB ordinary shares	1,332,482,920
Overseas listed foreign shares	223,852,000
China National Aviation Fuel Group Corporation	466,583,102	RMB ordinary shares	466,583,102
China Securities Finance Corporation Limited	311,302,365	RMB ordinary shares	311,302,365
Zhongyuan Equity Investment Management Co., Ltd.	118,455,985	RMB ordinary shares	118,455,985
Hong Kong Securities Clearing Company Ltd.	47,135,304	RMB ordinary shares	47,135,304
China Merchants Bank Co., Ltd. - Bosera CSI Central-SOEs' Structural Reform ETF	32,733,505	RMB ordinary shares	32,733,505
The Industrial and Commercial Bank of China -Dong Fang Hong China Strengthen Balanced Mix Securities Investment Fund	31,220,730	RMB ordinary shares	31,220,730
Explanation on connected relationship or action in concert among the above shareholders	China National Aviation Corporation (Group) Limited is a wholly-owned subsidiary of China National Aviation Holding Corporation Limited. Accordingly, China National Aviation Holding Corporation Limited is directly and indirectly interested in 51.70% of the shares of the Company.
Explanation of holders of preference shares with restored voting rights and number of shares held	Nil

1.       HKSCC NOMINEES LIMITED is a subsidiary of The Stock Exchange of Hong Kong Limited and its principal business is acting as nominee for and on behalf of other corporate shareholders or individual shareholders. The 1,687,942,428 H shares held by it in the Company do not include the 166,852,000 shares held by it as nominee of CNACG.

2.       According to the "Implementation Measures on Partial Transfer of State-owned Shares to the National Social Security Fund in the Domestic Securities Market" (Cai Qi [2009] No. 94) (《境內證券市場轉持部分國有股充實全國社會保障基金實施辦法》(財企[2009]94號)) and the Notice ([2009] No. 63) jointly issued by the Ministry of Finance, the State-owned Assets Supervision and Administration Commission of the State Council, China Securities Regulatory Commission and the National Council for Social Security Fund, 127,445,536 shares and 36,454,464 shares held by China National Aviation Holding Corporation Limited, the controlling shareholder of the Company, and China National Aviation Corporation (Group) Limited respectively are frozen at present.

2.3     Total number of holders of preference shares, the top 10 holders of preference shares and the shareholdings of the top 10 holders of preference shares not subject to selling restrictions as at the end of the Reporting Period

¨ Applicable   þ Not Applicable

III.    SIGNIFICANT EVENTS

3.1     Particulars of, and reasons for, significant changes in major items in the accounting statements and key financial indicators of the Company

þ Applicable   ¨ Not Applicable

The Group has implemented the Accounting Standards for Business Enterprises No. 21 - Lease (the "New Lease Standard") amended by the Ministry of Finance in 2018 since 1 January 2019 (the "Initial Implementation Date"), and adjusted the retained earnings as at the Initial Implementation Date and other related items in the financial statements based on the cumulative impact of the implementation of the New Lease Standard, while data related to comparable period were not adjusted. For details of the impact of the adoption of the New Lease Standard by the Group on 1 January 2019, please see Appendix 4.2.

Other than the impact of implementing the New Lease Standard described in Appendix 4.2, the changes in other accounting statement items and the reasons therefor are as follows:

Unit: RMB'000
Items in consolidated balance sheet	30 September 2019	31 December 2018	Percentage of Change	Reasons for Change
			(%)
Accounts receivable	7,210,743	5,373,972	34.18	Mainly due to the increase in revenue and the impact of differences in settlement periods.
Inventories	2,510,288	1,877,494	33.70	Mainly due to the increase in aircraft expendables and work-in-progress.
Other current assets	3,000,032	4,446,630	-32.53	Mainly due to the decrease in other financial assets held by subsidiaries of the Company.
Short-term bonds payable	8,097,564	3,467,482	133.53	Mainly due to the issuance of ultra-short-term commercial papers by the Group.
Long-term loans	1,467,852	3,185,481	-53.92	Mainly because the new borrowings were less than the repaid borrowings during the Period.
Other comprehensive income	-24,836	-962,968	97.42	Mainly due to the increase in exchange difference on translation of financial statements in foreign currency during the Period.

Items in consolidated income statement	From the beginning of the year to the end of the Reporting Period (January to September)	From the beginning of the previous year to the end of the previous reporting period (January to September)	Percentage of Change	Reasons for Change
			(%)
Impairment losses in respect of credit	-9,598	-285,129	96.63	Mainly due to the decrease in the reversal of impairment loss of credit during the Period as compared with the same period of the previous year.

Items in consolidated cash flow statement	The first three quarters of 2019 (January to September)	The first three quarters of 2018 (January to September)	Percentage of Change	Reasons for Change
			(%)
Other cash received relating to operating activities	7,687,329	5,017,851	53.20	Mainly due to the year-on-year increase in deposits received by a subsidiary of the Group during the Period.
Cash received from investment income	388,877	250,081	55.50	Mainly due to the year-on-year increase in dividends received from joint ventures and associates during the Period.
Net cash proceeds from disposal of fixed assets and intangible assets	608,842	367,240	65.79	Mainly due to the year-on-year increase in disposal of assets during the Period.
Cash received from issue of debentures	13,004,875	6,100,000	113.19	Due to the year-on-year increase in issuance of debentures during the Period.
Cash received from borrowings	12,900,489	27,706,042	-53.44	Due to the year-on-year decrease in new borrowings during the Period.
Cash paid for repayment of borrowings	20,436,792	30,496,786	-32.99	Due to the year-on-year decrease in repayment of borrowings during the Period.
Cash paid for repayment of debentures	9,405,725	5,500,000	71.01	Due to the year-on-year increase in repayment of debentures during the Period.
Cash paid for leases	10,954,543	5,791,932	89.13	Mainly due to the impact of adopting the New Lease Standard during the Period.

3.2     Analysis and explanation on the progress of significant events and their impact and resolutions

¨ Applicable   þ Not Applicable

3.3     Undertakings that were failed to fulfill as scheduled during the Reporting Period

¨ Applicable   þ Not Applicable

3.4     Warnings and explanations with regard to forecast of a probable loss in respect of the accumulative net profits from the beginning of the year to the end of the next reporting period or any significant changes as compared with that of the corresponding period of previous year

¨ Applicable   þ Not Applicable

Company name	Air China Limited
Legal representative	Mr. Cai Jianjiang
Date	30 October 2019

IV.    APPENDICES

4.1     Financial Statements

CONSOLIDATED BALANCE SHEET

30 September 2019

Prepared by Air China Limited

	Unit: RMB'000 (Unaudited)
	Items		Balance at the end of the Period		Balance at the end of the previous year
	CURRENT ASSETS:
	Cash and bank		8,253,213		7,807,572
	Provisions on payables
	Contributions made
	Financial assets held-for-trading
	Financial assets at FVTPL
	Derivative financial assets
	Bills receivable		586		403
	Accounts receivable		7,210,743		5,373,972
	Receivables financing
	Prepayments		884,996		1,188,879
	Premium receivable
	Receivables on reinsurance
	Provisions for reinsurance contracts
	Other receivables		2,769,387		3,031,157
	Including: Interest receivable
	Dividend receivable
	Purchase of financial assets resold
	Inventories		2,510,288		1,877,494
	Contract assets
	Held-for-sale assets
	Non-current assets due within a year
	Other current assets		3,000,032		4,446,630
	Total current assets		24,629,245		23,726,107
	NON-CURRENT ASSETS:
	Loans and advances
	Debt investments
	Available-for-sale financial assets
	Other debt investments		1,255,492		1,040,419
	Held-to-maturity investments
	Long-term receivables		1,163,439		1,142,235
	Long-term equity investments		16,704,978		16,540,888
	Investments in other equity instruments		216,194		270,114
	Other non-current financial assets
	Investment properties		165,442		170,942
	Fixed assets		88,390,543		160,402,819
	Construction in progress		36,690,972		32,179,581
	Biological assets for production
	Oil and gas assets
	Right-of-use assets		110,174,679
	Intangible assets		3,744,113		3,759,144
	Development expenses
	Goodwill		1,102,185		1,102,185
	Long-term deferred expenses		491,899		606,105
	Deferred tax assets		4,278,438		2,775,467
	Other non-current assets
	Total non-current assets		264,378,374		219,989,899
	Total assets		289,007,619		243,716,006
	CURRENT LIABILITIES:
	Short-term loans		13,025,394		17,561,546
	Short-term financing bonds payable		8,097,564		3,467,482
	Borrowings from central bank
	Contributions received
	Financial liabilities held-for-trading
	Financial liabilities at fair value through profit   or loss
	Derivative financial liabilities
	Bills payable
	Accounts payables		17,228,493		16,174,121
	Domestic air traffic liabilities		2,565,289		3,238,429
	International air traffic liabilities		5,696,925		5,647,845
Receipts in advance
Contract liabilities		1,598,631		1,301,518
Sale of financial assets repurchased
Deposits from clients and placements from   other banks
Brokerage payable
Underwriting fees payable
Employee compensations payable		2,710,013		2,806,901
Taxes payable		1,181,370		1,428,926
Other payables		8,818,557		7,162,819
Including: Interest payable
Dividend payable
Fees and commissions payable
Amounts payable on reinsurance
Held-for-sale liabilities
Non-current liabilities due within a year		14,458,349		13,441,489
Other current liabilities
Total current liabilities		75,380,585		72,231,076
NON-CURRENT LIABILITIES:
Reserves on insurance contracts
Long-term loans		1,467,852		3,185,481
Debentures payable		15,398,383		12,400,000
Including: Preference shares
Perpetual bonds
Lease liabilities		83,061,964
Long-term payables		4,655,925		4,208,771
Defined benefit obligations		257,136		263,862
Accrued liabilities		2,896,585		431,705
Deferred income		480,940		647,973
Deferred tax liabilities		661,123		879,372
Obligations under finance leases				45,848,095
Other non-current liabilities		3,037,580		3,062,739
Total non-current liabilities		111,917,488		70,927,998
Total liabilities		187,298,073		143,159,074
	OWNERS' EQUITY (OR SHAREHOLDERS' EQUITY)
	Paid-up capital (or share capital)		14,524,815		14,524,815
	Other equity instruments
	Including: Preference shares
	Perpetual bonds
	Capital reserve		26,270,841		26,270,841
	Less: Treasury shares
	Other comprehensive income		-24,836		-962,968
	Special reserves
	Surplus reserves		10,488,923		10,409,470
	General risk provisions		93,188		93,188
	Retained earnings		42,496,491		42,880,893
	Total owners' equity (or shareholders' equity)   attributable to equity shareholders of the   Company		93,849,422		93,216,239
	Non-controlling interests		7,860,124		7,340,693
	Total owners' equity (or shareholders'    equity)		101,709,546		100,556,932
	Total liabilities and owners' equity     (or shareholders' equity)		289,007,619		243,716,006

Legal representative: Mr. Cai Jianjiang

Person in charge of accounting function: Mr. Xiao Feng

Person in charge of accounting department: Mr. Zhan Zhong

BALANCE SHEET OF THE COMPANY

30 September 2019

Prepared by Air China Limited

	Unit: RMB'000 (Unaudited)
	Items		Balance at the end of the Period		Balance at the end of the previous year
	CURRENT ASSETS:
	Cash and bank		2,457,352		7,179,671
	Financial assets held-for-trading
	Financial assets at FVTPL
	Derivative financial assets
	Bills receivable
	Accounts receivable		6,213,330		4,399,059
	Receivables financing
	Prepayments		536,770		787,964
	Other receivables		2,144,333		1,612,383
	Including: Interest receivable
	Dividend receivable
	Inventories		97,152		90,329
	Contract assets
	Held-for-sale assets
	Non-current assets due within a year
	Other current assets		1,925,917		1,986,693
	Total current assets		13,374,854		16,056,099
	NON-CURRENT ASSETS:
	Debt investments
	Available-for-sale financial assets
	Other debt investments
	Held-to-maturity investments
	Long-term receivables		1,023,205		477,016
	Long-term equity investments		25,912,008		24,707,500
	Investments in other equity instruments		22,783		22,783
	Other non-current financial assets
	Investment properties
	Fixed assets		63,685,101		114,433,435
	Construction in progress		24,377,865		21,300,211
	Biological assets for production
	Oil and gas assets
	Right-of-use assets		77,642,496
Intangible assets		2,632,199		2,687,038
Development expenses
Goodwill
Long-term deferred expenses		283,114		294,316
Deferred tax assets		3,682,478		2,340,262
Other non-current assets
Total non-current assets		199,261,249		166,262,561
Total assets		212,636,103		182,318,660
CURRENT LIABILITIES:
Short-term loans		9,789,130		7,988,814
Financial liabilities held-for-trading
Financial liabilities at fair value through profit   or loss
Derivative financial liabilities
Bills payable
Accounts payable		13,767,720		12,793,179
Domestic air traffic liabilities		1,945,937		2,297,562
International air traffic liabilities		5,221,319		5,111,873
Receipts in advance
Contract liabilities		793,067		767,900
Employee compensations payable		815,298		1,166,450
Taxes payable		949,162		1,112,465
Other payables		8,378,880		8,310,250
Including: Interest payable
Dividend payable
Held-for-sale liabilities
Non-current liabilities due within a year		9,893,417		10,432,216
Other current liabilities
Total current liabilities		51,553,930		49,980,709
	NON-CURRENT LIABILITIES:
	Long-term loans		705,065		1,523,388
	Debentures payable		10,500,000		10,500,000
	Including: Preference shares
	Perpetual bonds
	Lease liabilities		58,884,447
	Long-term payables		2,254,822		2,175,079
	Obligations under finance leases				30,729,202
	Defined benefit obligations
	Accrued liabilities		1,931,360		88,705
	Deferred income		350,876		371,494
	Deferred tax liabilities
	Other non-current liabilities		2,752,966		2,654,793
	Total non-current liabilities		77,379,536		48,042,661
	Total liabilities		128,933,466		98,023,370
	OWNERS' EQUITY (OR SHAREHOLDERS' EQUITY)
	Paid-up capital (or share capital)		14,524,815		14,524,815
	Other equity instruments
	Including: Preference shares
	Perpetual bonds
	Capital reserve		30,618,680		30,618,680
	Less: Treasury shares
	Other comprehensive income		345,642		206,238
	Special reserves
	Surplus reserves		10,451,817		10,372,364
	Retained earnings		27,761,683		28,573,193
	Total owners' equity (or shareholders'    equity)		83,702,637		84,295,290
	Total liabilities and owners' equity     (or shareholders' equity)		212,636,103		182,318,660

Legal representative: Mr. Cai Jianjiang

Person in charge of accounting function: Mr. Xiao Feng

Person in charge of accounting department: Mr. Zhan Zhong

CONSOLIDATED INCOME STATEMENT

January to September 2019

Prepared by Air China Limited

Unit: RMB'000 (Unaudited)
Items	Amounts for the Period (July to September)	Amounts for the corresponding period of the previous year (July to September)	Amounts for the period from the beginning of the year to the end of the Reporting Period (January to September)	Amounts for the period from the beginning of the previous year to the end of the previous reporting period (January to September)
I.        Total revenue from operations	37,764,085	38,637,773	103,077,172	102,880,095
Including:      Operating income	37,764,085	38,637,773	103,077,172	102,880,095
Interest income
Premium earned
Fees and commission income
II.      Total operating cost	34,488,027	35,341,996	97,469,922	96,918,153
Including:      Operating costs	28,451,454	29,817,131	83,228,254	84,069,227
Interest expenses
Fees and commission expenses
Returned premium
Net reimbursement paid
Net amounts of provisions  on insurance obligations  drawn
Bonus paid on insurance  policy
Reinsurance premium
Taxes and other levies	53,760	53,054	186,750	163,086
Selling expenses	1,578,760	1,687,850	4,901,152	4,750,436
General and administrative  expenses	1,114,125	1,141,159	3,189,412	3,351,877
R&D expenses	48,676	20,743	135,956	61,250
Finance expenses	3,241,252	2,622,059	5,828,398	4,522,277
Including: Interest expenses	1,265,606	762,271	3,705,188	2,132,416
Interest income	40,324	52,408	103,786	112,090
Add:     Other income	854,438	607,764	2,603,680	2,287,680
Investment income (loss is  represented by "-" sign)	688,711	596,386	980,874	974,517
Including: Share of profits or       losses of       associates and       joint ventures	676,159	579,678	933,921	772,454
Derecognition gains on  financial assets measured  at amortised cost
Exchange gains (loss is  represented by "-" sign)
Gains from net exposure to  hedging (loss is represented  by "-" sign)
Gains from changes in fair  value (loss is represented  by "-" sign)		-1,735		323
Impairment loss of credit  (loss is represented by "-"  sign)	115	101,792	9,598	285,129
Impairment loss of assets  (loss is represented by "-"  sign)				-440
Gains from disposal of assets  (loss is represented by "-"  sign)	39,656	12,074	39,703	84,258
III.     Profit from operations (loss is  represented by "-" sign)	4,858,978	4,612,058	9,241,105	9,593,409
Add: Non-operating income	34,142	25,776	181,899	59,023
Less: Non-operating expenses	54,859	60,736	85,943	79,467
IV.      Total profit (total loss is represented  by "-" sign)	4,838,261	4,577,098	9,337,061	9,572,965
Less: Income tax expenses	731,050	848,305	1,734,258	1,947,312
V.       Net profit (net loss is represented by  "-" sign)	4,107,211	3,728,793	7,602,803	7,625,653
(I)   Classified by continuity of operations
1. Net profit from continuing    operations (net loss is    represented by "-" sign)	4,107,211	3,728,793	7,602,803	7,625,653
2. Net profit from discontinued    operation (net loss is    represented by "-" sign)
(II)   Classified by ownership of equity
1. Net profits attributable to    shareholders of the Company    (net loss is represented by "-"    sign)	3,622,633	3,468,889	6,762,090	6,937,408
2. Net profits attributable to    non-controlling interests (net    loss is represented by "-" sign)	484,578	259,904	840,713	688,245
VI.      Other comprehensive income  after taxation	581,548	972,599	943,205	2,066,810
Other comprehensive income after  taxation attributable to shareholders  of the Company	563,434	949,055	939,971	2,042,501
(I)   Other comprehensive income that    cannot be subsequently reclassified    to profit or loss	4,195	-6,634	122,723	-18,377
1. Changes arising on remeasurement of defined benefit plans			169	-6,022
2. Other comprehensive income    accounted for using the equity    method that cannot be    reclassified to profit or loss			135,529	-1,436
3. Change in fair value of investments    in other equity instruments	4,195	-6,634	-12,975	-10,919
4. Change in fair value of own credit risk
(II)   Other comprehensive income that    will be reclassified to profit or loss	559,239	955,689	817,248	2,060,878
1. Other comprehensive income    accounted for using the equity    method that may be reclassified    to profit or loss	2,263	20,544	183,668	956,874
2. Change in fair value of other    debt investments	1,228	2,784	357	4,791
3. Fair value gain or loss of    available-for-sale financial assets
4. Amount of financial assets    reclassified into other    comprehensive income
5. Gains or losses arising from    reclassification of held-to-    maturity investments to    available-for-sale financial assets
6. Credit impairment reserve for    other debt investment
7. Reserve for cash flow hedging    (Effective portion of profit or    loss on cash flow hedge)
8. Exchange difference on translation of financial statements in    foreign currency	555,748	932,361	633,223	1,099,213
9. Others
Other comprehensive income after  taxation attributable to non-controlling  interests	18,114	23,544	3,234	24,309
VII.    Total comprehensive income	4,688,759	4,701,392	8,546,008	9,692,463
Total comprehensive income attributable  to shareholders of the Company	4,186,067	4,417,944	7,702,061	8,979,909
Total comprehensive income attributable  to non-controlling interests	502,692	283,448	843,947	712,554
VIII.   Earnings per share:
(I)   Basic earnings per share (RMB    er share)	0.26	0.26	0.49	0.51
(II)   Diluted earnings per share (RMB    per share)	N/A	N/A	N/A	N/A

Legal representative: Mr. Cai Jianjiang

Person in charge of accounting function: Mr. Xiao Feng

Person in charge of accounting department: Mr. Zhan Zhong

INCOME STATEMENT OF THE COMPANY

January to September 2019

Prepared by Air China Limited

Unit: RMB'000 (Unaudited)
Items	Amounts for the Period (July to September)	Amounts for the corresponding period of the previous year (July to September)	Amounts for the period from the beginning of the year to the end of the Reporting Period (January to September)	Amounts for the period from the beginning of the previous year to the end of the previous reporting period (January to September)
I.        Revenue from operations	26,223,098	26,603,234	71,391,493	70,085,373
Less:    Operating costs	19,874,736	20,425,043	57,958,834	57,259,408
Taxes and other levies	19,747	18,324	89,738	56,669
Selling expenses	1,040,901	1,263,580	3,428,987	3,577,571
General and administrative  expenses	433,902	440,221	1,265,920	1,282,913
R&D expenses	36,454	11,881	100,349	36,964
Finance expenses	2,342,017	1,529,253	4,234,529	2,743,035
Including: Interest expenses	894,531	492,692	2,643,770	1,406,457
Interest income	33,626	44,282	111,339	87,474
Add:     Other income	507,739	337,060	1,703,472	1,548,136
Investment income (loss is  represented by "-" sign)	432,829	409,883	726,064	894,755
Including: Share of profits or       losses of associates       and joint ventures	431,000	373,456	462,437	707,040
Derecognition gains on financial  assets measured at mortised cost
Gains from net exposure to  hedging (loss is represented  by "-" sign)
Gains from changes in fair value  (loss is represented by "-" sign)
Impairment loss of credit (loss  is represented by "-" sign)			-1,469	-3,616
Impairment loss of assets (loss  is represented by "-" sign)
Gains from disposal of assets  (loss is represented by "-" sign)	39,580	2,928	53,024	74,962
II.      Profit from operations (loss is  represented by "-" sign)	3,455,489	3,664,803	6,794,227	7,643,050
Add:     Non-operating income	7,765	6,852	16,948	11,210
Less:    Non-operating expenses	33,541	8,691	58,488	15,691
III.     Total profit (total loss is represented  by "-" sign)	3,429,713	3,662,964	6,752,687	7,638,569
Less:    Income tax expenses	707,928	769,552	1,421,550	1,591,806
IV.      Net profit (net loss is represented  by "-" sign)	2,721,785	2,893,412	5,331,137	6,046,763
(I)   Net profit from continuing operations  (net loss is represented by "-" sign)	2,721,785	2,893,412	5,331,137	6,046,763
(II)   Net profit from discontinued  operations (net loss is represented  by "-" sign)
V.       Other comprehensive income after  taxation, net			139,404	-1,436
(I)   Other comprehensive income that  cannot be subsequently reclassified  to profit or loss			135,529	-1,436
1.  Changes arising on remeasurement  of defined benefit plans
2.  Other comprehensive income  accounted for using the equity  method that cannot be  reclassified to profit or loss			135,529	-1,436
3.  Change in fair value of  investments in other equity  instruments
4.  Change in fair value of own  credit risk
(II)   Other comprehensive income that  will be reclassified to profit or loss			3,875
1.  Other comprehensive income  accounted for using the equity  method that may be reclassified  to profit or loss			3,875
2.  Change in fair value of other  debt investments
3.  Gains or losses from changes in  fair value of available-for-sale  financial assets
4.  Amount of financial assets  reclassified into other  comprehensive income
5.  Gains or losses arising from  reclassification of held-to-  maturity investments to  available-for-sale financial  assets
6.  Credit impairment reserve for  other debt investment
7.  Reserve for cash flow hedging  (Effective portion of profit or  loss on cash flow hedge)
8.  Exchange difference on translation  of financial statements in  foreign currency
9.  Others
VI.      Total comprehensive income	2,721,785	2,893,412	5,470,541	6,045,327
VII.    Earnings per share:
(I)   Basic earnings per share (RMB  per share)
(II)   Diluted earnings per share (RMB  per share)

Legal representative: Mr. Cai Jianjiang

Person in charge of accounting function: Mr. Xiao Feng

Person in charge of accounting department: Mr. Zhan Zhong

CONSOLIDATED CASH FLOW STATEMENT

January to September 2019

Prepared by Air China Limited

Unit: RMB'000 (Unaudited)
Items	Amounts for the period from the beginning of the year to the end of the Reporting Period (January- September)	Amounts for the period from the beginning of the previous year to the end of the previous reporting period (January- September)
I.       Cash flows from operating activities:
Cash received from sales of goods and  provision of services	105,359,920	107,714,571
Net increase in deposits from clients and  placements from banks
Net increase in borrowings from central bank
Net increase in borrowings from other financial  institutions
Cash received from premiums of original  insurance contracts
Net cash receipt from reinsurance operations
Net increase in reserve of the insured and  investment
Cash received from interest, fees and commission
Net increase in contributions received
Net increase in cash from repurchase operations
Net cash receipt from securities trading as agent
Refund of taxes and levies	55,456	90,838
Other cash received relating to operating activities	7,687,329	5,017,851
Subtotal of cash inflows of operating activities	113,102,705	112,823,260
Cash paid for goods purchased and services  received	55,037,672	59,752,837
Net increase in loans and advances to clients
Net increase in deposits in central bank and  other banks
Cash paid in respect of claims under original  insurance contracts
Net increase in contributions made
Cash paid for interest, fees and commissions
Cash paid for bonus paid on insurance policy
Cash paid to or on behalf of employees	18,176,175	17,185,580
Taxes and levies paid	4,628,178	5,636,907
Other cash paid relating to operating activities	5,157,190	5,633,123
Subtotal of cash outflows from operating   activities	82,999,215	88,208,447
Net cash flows from operating activities	30,103,490	24,614,813
II.      Cash flows from investing activities:
Cash received from sale and redemption  of investments		275,897
Recovery of the secured bank deposits	188,681	7,477
Cash received from investment income	388,877	250,081
Net cash proceeds from disposal of fixed assets,  intangible assets and other long-term assets	608,842	367,240
Net cash proceeds from disposal of subsidiaries  and other business units
Other cash received relating to investing activities	162,544	150,454
Subtotal of cash inflows from investing activities	1,348,944	1,051,149
Cash paid for purchase and construction of  fixed assets, intangible assets and other  long-term assets	10,696,300	10,020,140
Cash paid for investments	204,325	178,904
Net increase in secured loans
Net cash payments for acquisition of subsidiaries  and other business units
Other cash paid relating to investing activities	1,201	177,632
Subtotal of cash outflows from investing   activities	10,901,826	10,376,676
Net cash flows from investing activities	-9,552,882	-9,325,527
III.   Cash flows from financing activities:
Cash received from capital injection	400,000
Including: Cash received from capital injection  of minority shareholders in subsidiaries	400,000
Cash received from borrowings	12,900,489	27,706,042
Cash received from issue of debentures	13,004,875	6,100,000
Other cash received relating to financing activities
Subtotal of cash inflows from financing  activities	26,305,364	33,806,042
Cash paid for repayment of borrowings	20,436,792	30,496,786
Cash paid for repayment of debentures	9,405,725	5,500,000
Cash paid for distribution of dividends, profits  or payment of interest expenses	5,307,924	4,403,925
Including: Dividends and profits paid to minority  shareholders by subsidiaries	193,058	185,043
Cash paid for leases	10,954,543	5,791,932
Other cash paid relating to financing activities
Subtotal of cash outflows from financing   activities	46,104,984	46,192,643
Net cash flows from financing activities	-19,799,620	-12,386,601
IV.   Effect of exchange rate changes on cash and cash equivalents	85,696	107,569
V.    Net increase in cash and cash equivalents	836,684	3,010,254
Add: Balance of cash and cash equivalents as    at the beginning of the period	6,763,183	5,562,907
VI.   Balance of cash and cash equivalents as at  the end of the period	7,599,867	8,573,161

Legal representative: Mr. Cai Jianjiang

Person in charge of accounting function: Mr. Xiao Feng

Person in charge of accounting department: Mr. Zhan Zhong

CASH FLOW STATEMENT OF THE COMPANY

January to September 2019

Prepared by Air China Limited

	Unit: RMB'000 (Unaudited)
	Items		Amounts for the period from the beginning of the year to the end of the Reporting Period (January- September)		Amounts for the period from the beginning of the previous year to the end of the previous reporting period (January- September)
	I.       Cash flows from operating activities:
	Cash received from sales of goods and provision  of services		71,128,721		71,119,564
	Refund of taxes and levies
	Other cash received relating to operating activities		3,316,144		3,422,622
	Subtotal of cash inflows of operating activities		74,444,865		74,542,186
	Cash paid for goods purchased and services  received		40,405,604		41,569,413
	Cash paid to or on behalf of employees		8,661,340		8,036,437
	Taxes and levies paid		2,940,642		3,187,847
	Other cash paid relating to operating activities		3,722,022		4,593,937
	Subtotal of cash outflows from operating   activities		55,729,608		57,387,634
	Net cash flows from operating activities		18,715,257		17,154,552
	II.      Cash flows from investing activities:
	Cash received from sale and redemption  of investments				1,020,000
	Cash received from investment income		413,148		328,820
	Net cash proceeds from disposal of fixed assets,  intangible assets and other long-term assets		1,159,052		1,041,554
	Net cash proceeds from disposal of subsidiaries  and other business units
	Other cash received relating to investing activities		111,339		91,128
	Subtotal of cash inflows from investing activities		1,683,539		2,481,502
Cash paid for purchase and construction of  fixed assets, intangible assets and other  long-term assets		7,557,741		7,951,473
Cash paid for investments		1,600,000
Net cash payments for acquisition of subsidiaries  and other business units
Other cash paid relating to investing activities
Subtotal of cash outflows from investing   activities		9,157,741		7,951,473
Net cash flows from investing activities		-7,474,202		-5,469,971
III.    Cash flows from financing activities:
Cash received from capital injection
Cash received from borrowings		11,153,800		21,088,936
Other cash received relating to financing  activities
Subtotal of cash inflows from financing activities		11,153,800		21,088,936
Cash paid for repayment of borrowings		11,439,989		18,558,918
Cash paid for repayment of debentures		4,000,000		3,500,000
Cash paid for distribution of dividends, profits or  payment of interest expenses		4,109,951		3,330,452
Cash paid for leases		7,585,752		4,268,662
Other cash paid relating to financing activities
Subtotal of cash outflows from financing   activities		27,135,692		29,658,032
Net cash flows from financing activities		-15,981,892		-8,569,096
IV.    Effect of exchange rate changes on cash and  cash equivalents		18,518		27,685
	V.    Net increase in cash and cash equivalents		-4,722,319		3,143,170
	Add: Balance of cash and cash equivalents  as at the beginning of the period		7,149,360		3,172,520
	VI.   Balance of cash and cash equivalents as at  the end of the period		2,427,041		6,315,690

Legal representative: Mr. Cai Jianjiang

Person in charge of accounting function: Mr. Xiao Feng

Person in charge of accounting department: Mr. Zhan Zhong

4.2     Particulars in relation to adjustments made to relevant items of the financial statements as at the beginning of the year of the initial adoption of New Financial Instruments Standard, New Revenue Standard and New Lease Standard

þ Applicable   ¨ Not Applicable

CONSOLIDATED BALANCE SHEET

Unit: RMB'000
Items	31 December 2018	1 January 2019	Adjustment
CURRENT ASSETS:
Cash and bank	7,807,572	7,807,572
Provisions on payables
Contributions made
Financial assets held-for-trading
Financial assets at FVTPL
Derivative financial assets
Bills receivable	403	403
Accounts receivable	5,373,972	5,373,972
Receivables financing
Prepayments	1,188,879	629,299	-559,580
Premium receivable
Receivables on reinsurance
Provisions for reinsurance contracts
Other receivables	3,031,157	3,031,157
Including: Interest receivable
Dividend receivable
Purchase of financial assets resold
Inventories	1,877,494	1,877,494
Contract assets
Held-for-sale assets
Non-current assets due within a year
Other current assets	4,446,630	4,446,630
Total current assets	23,726,107	23,166,527	-559,580
NON-CURRENT ASSETS:
Loans and advances
Debt investments
Available-for-sale financial assets
Other debt investments	1,040,419	1,040,419
Held-to-maturity investments
Long-term receivables	1,142,235	1,142,235
Long-term equity investments	16,540,888	15,365,265	-1,175,623
Investments in other equity   instruments	270,114	270,114
Other non-current financial assets
Investment properties	170,942	170,942
Fixed assets	160,402,819	91,114,106	-69,288,713
Construction in progress	32,179,581	32,179,581
Biological assets for production
Oil and gas assets
Right-of-use assets		106,281,400	106,281,400
Intangible assets	3,759,144	3,759,144
Development expenses
Goodwill	1,102,185	1,102,185
Long-term deferred expenses	606,105	512,111	-93,994
Deferred tax assets	2,775,467	4,328,860	1,553,393
Other non-current assets
Total non-current assets	219,989,899	257,266,362	37,276,463
Total assets	243,716,006	280,432,889	36,716,883
CURRENT LIABILITIES:
Short-term loans	17,561,546	17,561,546
Short-term bonds payable	3,467,482	3,467,482
Borrowings from central bank
Contributions received
Financial liabilities held-for-trading
Financial liabilities at fair value   through profit or loss
Derivative financial liabilities
Bills payable
Accounts payable	16,174,121	16,174,121
Domestic air traffic liabilities	3,238,429	3,238,429
International air traffic liabilities	5,647,845	5,647,845
Receipts in advance
Contract liabilities	1,301,518	1,301,518
Sale of financial assets repurchased
Deposits from clients and placements   from other banks
Brokerage payable
Underwriting fees payable
Employee compensations payable	2,806,901	2,806,901
Taxes payable	1,428,926	1,428,926
Other payables	7,162,819	7,162,819
Including: Interest payable
Dividend payable
Fees and commissions payable
Amounts payable on reinsurance
Held-for-sale liabilities
Non-current liabilities due within   a year	13,441,489	18,540,816	5,099,327
Other current liabilities
Total current liabilities	72,231,076	77,330,403	5,099,327
NON-CURRENT LIABILITIES:
Reserves on insurance contracts
Long-term loans	3,185,481	3,185,481
Debentures payable	12,400,000	12,400,000
Including: Preference shares
Perpetual bonds
Lease liabilities		81,324,048	81,324,048
Long-term payables	4,208,771	4,208,771
Obligations under finance leases	45,848,095		-45,848,095
Defined benefit obligations	263,862	263,862
Accrued liabilities	431,705	2,809,503	2,377,798
Deferred income	647,973	501,457	-146,516
Deferred tax liabilities	879,372	879,372
Other non-current liabilities	3,062,739	3,062,739
Total non-current liabilities	70,927,998	108,635,233	37,707,235
Total liabilities	143,159,074	185,965,636	42,806,562
OWNERS' EQUITY (OR  SHAREHOLDERS' EQUITY):
Paid-up capital (or share capital)	14,524,815	14,524,815
Other equity instruments
Including: Preference shares
Perpetual bonds
Capital reserve	26,270,841	26,270,841
Less: Treasury shares
Other comprehensive income	-962,968	-962,968
Special reserves
Surplus reserves	10,409,470	9,953,163	-456,307
General risk provisions	93,188	93,188
Retained earnings	42,880,893	37,776,347	-5,104,546
Total owners' equity (or   shareholders' equity) attributable   to equity shareholders of the   Company	93,216,239	87,655,386	-5,560,853
Non-controlling interests	7,340,693	6,811,867	-528,826
Total owners' equity    (or shareholders' equity)	100,556,932	94,467,253	-6,089,679
Total liabilities and owners'     equity (or shareholders'     equity)	243,716,006	280,432,889	36,716,883

Description of the adjustment of each item:

þ Applicable   ¨ Not Applicable

The above adjustments represent the impact of adopting the New Lease Standard.

BALANCE SHEET OF THE COMPANY

Unit: RMB'000
Items	31 December 2018	1 January 2019	Adjustment
CURRENT ASSETS:
Cash and bank	7,179,671	7,179,671
Financial assets held-for-trading
Financial assets at FVTPL
Derivative financial assets
Bills receivable
Accounts receivable	4,399,059	4,399,059
Receivables financing
Prepayments	787,964	405,974	-381,990
Other receivables	1,612,383	1,612,383
Including: Interest receivable
Dividend receivable
Inventories	90,329	90,329
Contract assets
Held-for-sale assets
Non-current assets due within a year
Other current assets	1,986,693	1,986,693
Total current assets	16,056,099	15,674,109	-381,990
NON-CURRENT ASSETS:
Debt investments
Available-for-sale financial assets
Other debt investments
Held-to-maturity investments
Long-term receivables	477,016	1,056,981	579,965
Long-term equity investments	24,707,500	23,859,687	-847,813
Investments in other equity   instruments	22,783	22,783
Other non-current financial assets
Investment properties
Fixed assets	114,433,435	65,907,417	-48,526,018
Construction in progress	21,300,211	21,300,211
Biological assets for production
Oil and gas assets
Right-of-use assets		74,105,033	74,105,033
Intangible assets	2,687,038	2,687,038
Development expenses
Goodwill
Long-term deferred expenses	294,316	294,316
Deferred tax assets	2,340,262	3,578,681	1,238,419
Other non-current assets
Total non-current assets	166,262,561	192,812,147	26,549,586
Total assets	182,318,660	208,486,256	26,167,596
CURRENT LIABILITIES:
Short-term loans	7,988,814	7,988,814
Financial liabilities held-for-trading
Financial liabilities at fair value   through profit or loss
Derivative financial liabilities
Bills payable
Accounts payable	12,793,179	12,793,179
Domestic air traffic liabilities	2,297,562	2,297,562
International air traffic liabilities	5,111,873	5,111,873
Receipts in advance
Contract liabilities	767,900	767,900
Employee compensations payable	1,166,450	1,166,450
Taxes payable	1,112,465	1,112,465
Other payables	8,310,250	8,310,250
Including: Interest payable
Dividend payable
Held-for-sale liabilities
Non-current liabilities due within   a year	10,432,216	14,022,349	3,590,133
Other current liabilities
Total current liabilities	49,980,709	53,570,842	3,590,133
NON-CURRENT LIABILITIES:
Long-term loans	1,523,388	1,523,388
Debentures payable	10,500,000	10,500,000
Including: Preference shares
Perpetual bonds
Lease liabilities		56,136,927	56,136,927
Long-term payables	2,175,079	2,175,079
Obligations under finance leases	30,729,202		-30,729,202
Defined benefit obligations
Accrued liabilities	88,705	1,821,514	1,732,809
Deferred income	371,494	371,494
Deferred tax liabilities
Other non-current liabilities	2,654,793	2,654,793
Total non-current liabilities	48,042,661	75,183,195	27,140,534
Total liabilities	98,023,370	128,754,037	30,730,667
OWNERS' EQUITY (OR  SHAREHOLDERS' EQUITY):
Paid-up capital (or share capital)	14,524,815	14,524,815
Other equity instruments
Including: Preference shares
Perpetual bonds
Capital reserve	30,618,680	30,618,680
Less: Treasury shares
Other comprehensive income	206,238	206,238
Special reserves
Surplus reserves	10,372,364	9,916,057	-456,307
Retained earnings	28,573,193	24,466,429	-4,106,764
Total owners' equity (or    shareholders' equity)	84,295,290	79,732,219	-4,563,071
Total liabilities and owners'     equity (or shareholders'     equity)	182,318,660	208,486,256	26,167,596

Description of the adjustment of each item:

þ Applicable   ¨ Not Applicable

The above adjustments represent the impact of adopting the New Lease Standard.

4.3     Description of the retrospective adjustment to the comparable figures for the previous period due to the initial adoption of the New Financial Instruments Standard and the New Lease Standard

¨ Applicable   þ Not Applicable

4.4     Auditor's Report

¨ Applicable   þ Not Applicable

By Order of the Board

Air China Limited

Joint Company Secretaries

Zhou Feng Tam Shuit Mui

Beijing, the PRC, 30 October 2019

As at the date of this announcement, the directors of the Company are Mr. Cai Jianjiang, Mr. Song Zhiyong, Mr. Cao Jianxiong, Mr. Xue Yasong, Mr. John Robert Slosar, Mr. Wang Xiaokang*, Mr. Liu Deheng*, Mr. Stanley Hui Hon-chung* and Mr. Li Dajin*.

* Independent non-executive director of the Company

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.

END

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