09:06 AIR CHINA<00753> - Results Announcement (3) Profit appropriations --------------------- Set out below are the details of distributions made by the Company for the two years ended 31 December 2004: Group 2004 2003 RMB'000 RMB'000 Carved-out of net assets (note (c)) 39,136 316,153 Dividends paid (note (c)) 29,074 26,690 Distribution to CNAHC (note (a)) 377,550 - Distribution to CNAHC (note (b)) 2,025,105 - Distribution to CNACG (note (b)) 118,680 - ---------- --------- Total 2,589,545 342,843 ========== ========= (a) As mentioned in note (a) under the heading "Dilution gains on investments" above, immediately after the completion of BACL Agreement, SWACL Agreement and HKSACL Agreement, the Group's effective shareholding interests in BACL and SWACL were diluted from 60% and 75% to approximately 41% and 41%, respectively. As a result of this matter, the Group made a payment of approximately RMB 378 million to CNAHC, representing the total consideration payable by CNAC and HKSACL for the acquisitions of the entire shareholding interests held by the Group in BACL and SWACL pursuant to the Restructuring as set out in the aforesaid note relating to the basis of presentation. This payment has been made to CNAHC and accounted for as a special distribution to CNAHC by the Company. (b) In accordance with the "Provisional Regulations Relating to Corporate Reorganisation of Enterprises and Related Management of State- owned Capital and Financial Treatment" notice issued by the Ministry of Finance (the English title is a direct translation of the Chinese title of the notice), which became effective from 27 August 2002, and pursuant to the Restructuring, after the Company's incorporation, the Company is required to make a distribution to CNAHC, which represents an amount equal to the net profit attributable to shareholders, as determined based on the audited accounts prepared in accordance with the accounting principles and the financial regulations applicable in the PRC ("PRC GAAP"), generated during the period from 1 January 2004 to 30 September 2004 (the date of incorporation of the Company) by the businesses and operations (excluding those of CNAC) contributed to the Group by CNAHC after giving effect to relevant necessary adjustments. The net profit attributable to shareholders mentioned above for the said period is calculated after deducting the amount of income tax payable to CNAHC of approximately RMB 191,721,000 which in turn will settle the tax liability on profit arisen during that period with the relevant tax bureau. (b) In addition, in accordance with "Provisional Regulations Relating to Corporate Reorganisation of Enterprises and Related Management of State-owned Capital and Financial Treatment" notice issued by the Ministry of Finance and pursuant to the Restructuring, after the Company's incorporation, the Company is required to make a distribution to CNACG, which represents an amount equal to the net profit attributable to shareholders, as determined based on audited accounts prepared in accordance with the PRC GAAP, generated during the period from 1 January 2004 to 30 September 2004 (the date of incorporation of the Company) by the businesses and operations (excluding those directly contributed by CNAHC) contributed to the Group by the CNAC group, less the 2003 final dividend and 2004 interim dividend amounts already paid by CNAC to CNACG. (c) The profit distributions made prior to the incorporation of the Company represent the net assets which have been carved-out and treated as deemed distributions pursuant to the aforesaid Restructuring and dividends paid during that period.