Reversion of Subsidiary's Provision for Bad Debts
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.
AIR CHINA LIMITED
(a joint stock limited company incorporated in the People's Republic of China with limited liability)
(Stock Code: 00753)
OVERSEAS REGULATORY ANNOUNCEMENT
This announcement is published pursuant to Rule 13.09(2) of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.
The attachment to this announcement is the following announcement of
Air China Limited published on the Shanghai Stock Exchange:
Announcement on Reversion of Part of A Subsidiary's Provision for Bad Debts
By order of the Board
Air China Limited
Rao Xinyu Tam Shuit Mui
Joint Company Secretaries
Beijing, the PRC, 3 January 2013
As at the date of this announcement, the directors of the Company are Mr. Wang Changshun, Ms. Wang Yinxiang, Mr. Cao Jianxiong, Mr. Sun Yude, Mr. Christopher Dale Pratt, Mr. Ian Sai Cheung Shiu, Mr. Cai Jianjiang, Mr. Fan Cheng, Mr. Fu Yang*, Mr. Li Shuang*, Mr. Han Fangming* and Mr. Yang Yuzhong*.
* Independent non-executive Director of the Company
Stock Code: 601111 Stock Short Name: Air China No.: Lin 2013-002
Air China Limited
Announcement on Reversion of Part of
A Subsidiary's Provision for Bad Debts
|
The Company and all members of the board of directors hereby warrant the truthfulness, accuracy and completeness of the contents of this announcement and jointly and severally accept full responsibility for any false representations or misleading statements contained in, or material omission from, this announcement. |
As at 30 December 2012, Shenzhen Airlines Co., Ltd. ("Shenzhen Airlines"), a subsidiary of Air China Limited (the "Company") has made bad debt provision for the full amount of the account receivables due from Shenzhen Huirun Investment Co., Ltd. ("Huirun"). At the same time, Shenzhen Airlines has had account payables in respect of certain capital increase fund of a carrying amount of RMB500 million (the "Capital Increase Amount") owed to Huirun, which was recorded by recognition of the Capital Increase Amount previously injected by Huirun to Shenzhen Airlines pursuant to the resolution of its board of directors dated September 2008 (which revoked its previous resolution on capital increase). As the controlling shareholder of Huirun was held under investigation by the police authority in November 2009 due to alleged involvement of economic crime, there remained significant uncertainty as to whether the Capital Increase Amount is attributable to Huirun, and Shenzhen Airlines has temporarily treated it as other payables in its account.
On 24 January 2011, Huirun was adjudicated by the court to enter bankruptcy proceedings. The bankruptcy administrator of Huirun (the "Administrator") sent a letter to Shenzhen Airlines asking it to either repay the Capital Increase Amount together with the accrued interest or confirm that it will exercise the right of offset. Shenzhen Airlines raised an objection to the Administrator due to the uncertainty as to whether the Capital Increase Amount is attributable to Huirun. In 2012, the Administrator together with Shenzhen Airlines have made great efforts to investigate the case with the relevant parties and now confirm that the Capital Increase Amount can be attributable to Huirun. Shenzhen Airlines decided to propose the exercise of the right of offset to the Administrator.
In view of the foregoing, at the 32nd meeting of the third session of the board of directors of the Company held on December 31, 2012, it was resolved that Shenzhen Airlines conduct the accounting treatment of offsetting the Capital Increase Amount with the debt owed by Huirun to Shenzhen Airlines in the year 2012 and the corresponding reversion of the provision for bad debts in accordance with the requirements of applicable accounting principles. Such accounting treatment will result in an increase of RMB500 million in the profits of the Company for the year 2012 and an increase of RMB255 million in the net profit attributable to the shareholders of the Company.
By order of the Board
Rao Xinyu
Board Secretary
Beijing, the PRC, 31 December 2012
This information is provided by RNS
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