– 1 – 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. (a joint stock limited company incorporated in the People’s Republic of China with limited liability) (Stock Code: 1055) 2024 ANNUAL RESULTS The board (the “Board”) of directors (the “Directors”) of China Southern Airlines Company Limited (the “Company”) hereby announces the annual results of the Company and its subsidiaries (the “Group”) for the year ended 31 December 2024 together with the comparative figures for 2023, which have been derived from the Group’s audited consolidated financial statements for the year ended 31 December 2024. FINANCIAL RESULTS A. PREPARED IN ACCORDANCE WITH IFRS ACCOUNTING STANDARDS CONSOLIDATED INCOME STATEMENTS For the year ended 31 December 2024 2024 2023 Note RMB million RMB million Operating revenue Traffic revenue 165,145 151,445 Other operating revenue 9,079 8,484 Total operating revenue 4 174,224 159,929 Operating expenses Flight operation expenses 5 83,046 76,799 Maintenance expenses 14,853 14,390 Aircraft and transportation service expenses 31,006 26,487 Promotion and selling expenses 6,831 6,349 General and administrative expenses 4,435 4,150 Depreciation and amortisation 6 28,341 27,165 Reversal of impairment losses on property, plant and equipment and right-of-use assets (302) (123) Others 3,596 3,835 – 2 – 2024 2023 Note RMB million RMB million Total operating expenses 171,806 159,052 Other net income 7 5,909 4,680 Operating profit 8,327 5,557 Interest income 215 361 Interest expense 8 (5,758) (5,928) Exchange loss, net 19 (912) (687) Share of associates’ results (1,244) (2,244) Share of joint ventures’ results 628 546 Changes in fair value of financial assets/ liabilities 195 874 Profit/(loss) before income tax 1,451 (1,521) Income tax expense 9 (1,426) (1,436) Net profit/(loss) for the year 25 (2,957) Net profit/(loss) attributable to: Equity shareholders of the Company (1,769) (4,140) Non-controlling interests 1,794 1,183 Net profit/(loss) for the year 25 (2,957) Loss per share Basic and diluted (expressed in RMB per share) 10 (0.10) (0.23) – 3 – CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME For the year ended 31 December 2024 2024 2023 RMB million RMB million Net profit/(loss) for the year 25 (2,957) Other comprehensive income: Items that will not be reclassified to profit or loss – Eq uity investments at fair value through other comprehensive income – net movement in fair value reserve (non-recycling) (114) (112) – Income tax effect of the above items 29 28 Items that are or may be reclassified subsequently to profit or loss – Di fferences resulting from the translation of foreign currency financial statements – 1 Other comprehensive income for the year (85) (83) Total comprehensive income for the year (60) (3,040) Total comprehensive income attributable to: Equity shareholders of the Company (1,816) (4,185) Non-controlling interests 1,756 1,145 Total comprehensive income for the year (60) (3,040) – 4 – CONSOLIDATED STATEMENT OF FINANCIAL POSITION At 31 December 2024 31 December 2024 31 December 2023 Note RMB million RMB million (restated) Non-current assets Property, plant and equipment, net 101,217 93,575 Construction in progress 12 34,562 34,177 Right-of-use assets 128,872 127,634 Goodwill 237 237 Interests in associates 2,835 2,714 Interests in joint ventures 4,334 4,005 Aircraft lease deposits 420 386 Other equity instrument investments 431 547 Other non-current financial assets 13 3,017 3,419 Derivative financial assets 18 – Amounts due from related companies 171 262 Deferred tax assets 14 12,873 12,279 Other assets 3,229 2,422 292,216 281,657 Current assets Inventories 2,002 1,565 Trade receivables 15 3,306 3,161 Other receivables 16 15,378 9,167 Cash and cash equivalents 12,984 9,531 Assets held for sale 118 198 Restricted bank deposits 139 137 Prepaid expenses and other current assets 818 695 Other financial assets 13 2,695 3,157 Derivative financial assets – 4 Amounts due from related companies 323 324 37,763 27,939 – 5 – 31 December 2024 31 December 2023 Note RMB million RMB million (restated) Current liabilities Derivative financial liabilities 17 908 907 Borrowings 18 73,954 71,192 Lease liabilities 19 18,378 19,261 Trade and bills payables 20 3,577 2,004 Contract liabilities 1,749 1,509 Sales in advance of carriage 9,295 7,179 Current income tax 584 346 Amounts due to related companies 525 594 Accrued expenses 21,074 23,142 Other liabilities 8,358 8,800 138,402 134,934 Net current liabilities (100,639) (106,995) Total assets less current liabilities 191,577 174,662 Non-current liabilities Borrowings 18 56,870 45,024 Lease liabilities 19 74,154 69,232 Other non-current liabilities 1,662 1,497 Amounts due to related companies 6 36 Provision for major overhauls 5,322 5,731 Deferred benefits and gains 720 752 Deferred tax liabilities 7 23 138,741 122,295 Net assets 52,836 52,367 Capital and reserves Share capital 18,121 18,121 Reserves 16,822 18,950 Total equity attributable to equity shareholders of the Company 34,943 37,071 Non-controlling interests 17,893 15,296 Total equity 52,836 52,367 – 6 – CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the year ended 31 December 2024 Attributable to equity shareholders of the Company Share capital Share premium Fair value reserve (non– recycling) Other reserves Accumulated losses Total Non– controlling interests Total equity RMB million RMB million RMB million RMB million RMB million RMB million RMB million RMB million Balance at 1 January 2023 18,121 52,251 257 3,406 (32,760) 41,275 14,084 55,359 Changes in equity for 2023: Net profit/(loss) for the year – – – – (4,140) (4,140) 1,183 (2,957) Other comprehensive income – – (46) 1 – (45) (38) (83) Total comprehensive income – – (46) 1 (4,140) (4,185) 1,145 (3,040) Distributions to non-controlling interests – – – – – – (909) (909) Acquisition of non-controlling interests in a subsidiary – – – (19) – (19) (11) (30) Capital injection from non– controlling interests – – – – – – 1,017 1,017 Decrease in non-controlling interests as a result of liquidation of subsidiaries – – – – – – (30) (30) Balance at 31 December 2023 18,121 52,251 211 3,388 (36,900) 37,071 15,296 52,367 – 7 – Attributable to equity shareholders of the Company Share capital Share premium Fair value reserve (non– recycling) Other reserves Accumulated losses Total Non– controlling interests Total equity RMB million RMB million RMB million RMB million RMB million RMB million RMB million RMB million Changes in equity for 2024: Net profit/(loss) for the year – – – – (1,769) (1,769) 1,794 25 Other comprehensive income – – (47) – – (47) (38) (85) Total comprehensive income – – (47) – (1,769) (1,816) 1,756 (60) Distributions to non-controlling interests – – – – – – (12) (12) Acquisition of non-controlling interests in a subsidiary – – – (312) – (312) 246 (66) Capital injection from non– controlling interests – – – – – – 607 607 Balance at 31 December 2024 18,121 52,251 164 3,076 (38,669) 34,943 17,893 52,836 – 8 – Notes to the financial information prepared in accordance with IFRS Accounting Standards: 1 CORPORATE INFORMATION China Southern Airlines Company Limited (the “Company”), a joint stock limited company, was incorporated in the People’s Republic of China (the “PRC”) on 25 March 1995. The address of the Company’s registered office is Unit 301, 3/F, Office Tower, Guanhao Science Park Phase I, 12 Yuyan Street, Huangpu District, Guangzhou, Guangdong Province, the PRC. The Company and its subsidiaries (the “Group”) are principally engaged in the operation of civil aviation, including the provision of passenger, cargo, mail delivery and other extended transportation services. The Company’s majority interest is owned by China Southern Air Holding Company Limited (“CSAH”), a state-owned enterprise incorporated in the PRC. The Company’s shares are traded on the Shanghai Stock Exchange and The Stock Exchange of Hong Kong Limited. 2 BASIS OF PREPARATION The financial information is extracted from the audited consolidated financial statements prepared under IFRS Accounting Standards. The consolidated financial statements have been prepared in accordance with all applicable IFRS Accounting Standards, which collective term includes all applicable individual IFRS Accounting Standards, International Accounting Standards (“IASs”) and Interpretations issued by the International Accounting Standards Board (the “IASB”). The consolidated financial statements also comply with the applicable disclosure requirements of the Hong Kong Companies Ordinance and the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited. The IASB has issued certain amendments to IFRS Accounting Standards that are first effective or available for early adoption for the current accounting period of the Group. Note 3 provides information on any changes in accounting policies resulting from initial application of these developments to the extent that they are relevant to the Group for the current accounting period reflected in these consolidated financial statements. – 9 – The consolidated financial statements for the year ended 31 December 2024 comprise the Group and the Group’s interests in associates and joint ventures. The measurement basis used in the preparation of the consolidated financial statements is the historical cost basis except that the following assets and liabilities are stated at their fair value: – other equity instrument investments; – other financial assets and other non-current financial assets (fair value through profit or loss (“FVPL”)); and – derivative financial assets/liabilities. Non-current assets (or disposal groups) held for sale are stated at the lower of carrying amount and fair value less costs to sell. 3 CHANGES IN ACCOUNTING POLICIES (i) New and amended IFRS Accounting Standards The Group has applied the following new and amended IFRS Accounting Standards issued by the IASB to these financial statements for the current accounting period: • Amendments to IAS 1, Presentation of financial statements: Classification of liabilities as current or non-current (“2020 amendments”) and amendments to IAS 1, Presentation of financial statements: Non-current liabilities with covenants (“2022 amendments”) • Amendments to IFRS 16, Leases: Lease liability in a sale and leaseback • Amendments to IAS 7, Statement of cash flows and IFRS 7, Financial instruments: Disclosures – Supplier finance arrangements – 10 – The Group has not applied any new standard or interpretation that is not yet effective for the current accounting period. Impacts of the adoption of the amended IFRS Accounting Standards are discussed below: Amendments to IAS 1, Presentation of financial statements (“2020 and 2022 amendments”, or collectively the “IAS 1 amendments”) The IAS 1 amendments impact the classification of a liability as current or non-current, and are applied retrospectively as a package. The 2020 amendments primarily clarify the classification of a liability that can be settled in its own equity instruments. If the terms of a liability could, at the option of the counterparty, result in its settlement by the transfer of the entity’s own equity instruments and that conversion option is accounted for as an equity instrument, these terms do not affect the classification of the liability as current or non-current. Otherwise, the transfer of equity instruments would constitute settlement of the liability and impact classification. The 2022 amendments specify that conditions with which an entity must comply after the reporting date do not affect the classification of a liability as current or non-current. However, the entity is required to disclose information about non-current liabilities subject to such conditions. Upon the adoption of the amendments, the Group has reassessed the classification of its liabilities as current or non-current. The Group has made the following reclassifications to conform to the revised policy: Reclassifying the non-derivative liabilities arising from convertible bonds with a maturity date of 14 October 2026 from non-current to current, as the related conversion features of those bonds do not meet the definition of an equity instrument and are exercisable at any time at the noteholders’ option. – 11 – The following table summarises the impact of the adoption of the IAS 1 amendments on the comparatives presented in the Group’s consolidated statement of financial position: As previously reported Effect of adopting the IAS 1 amendments As restated RMB million RMB million RMB million Consolidated statement of financial position as at 31 December 2023: Borrowings 65,694 5,498 71,192 Total current liabilities 129,436 5,498 134,934 Net current liabilities 101,497 5,498 106,995 Total assets less current liabilities 180,160 (5,498) 174,662 Borrowings 50,522 (5,498) 45,024 Total non-current liabilities 127,793 (5,498) 122,295 Company-level statement of financial position as at 31 December 2023: Borrowings 57,781 5,498 63,279 Total current liabilities 110,935 5,498 116,433 Net current liabilities 86,336 5,498 91,834 Total assets less current liabilities 140,381 (5,498) 134,883 Borrowings 45,072 (5,498) 39,574 Total non-current liabilities 113,938 (5,498) 108,440 – 12 – The following table illustrates the amounts that would have been in the Group’s consolidated statement of financial position as at 31 December 2024 if the IAS 1 amendments had not been adopted: As reported Backing out effect of adopting the IAS 1 amendments If accounting policy had not been changed RMB million RMB million RMB million Consolidated statement of financial position as at 31 December 2024: Borrowings 73,954 (5,755) 68,199 Total current liabilities 138,402 (5,755) 132,647 Net current liabilities 100,639 (5,755) 94,884 Total assets less current liabilities 191,577 5,755 197,332 Borrowings 56,870 5,755 62,625 Total non-current liabilities 138,741 5,755 144,496 Company-level statement of financial position as at 31 December 2024: Borrowings 64,521 (5,755) 58,766 Total current liabilities 117,396 (5,755) 111,641 Net current liabilities 88,981 (5,755) 83,226 Total assets less current liabilities 142,179 5,755 147,934 Borrowings 54,046 5,755 59,801 Total non-current liabilities 118,789 5,755 124,544 The amendments have no effect on the Group’s consolidated statement of profit or loss, cash flows and loss per share. – 13 – Amendments to IFRS 16, Leases: Lease liability in a sale and leaseback The amendments clarify how an entity accounts for a sale and leaseback after the date of the transaction. The amendments require the seller-lessee to apply the general requirements for subsequent accounting of the lease liability in such a way that it does not recognise any gain or loss relating to the right-of-use it retains. A seller-lessee is required to apply the amendments retrospectively to sale and leaseback transactions entered into after the date of initial application. The amendments do not have material amended impact on these financial statements of the Group. Amendments to IAS 7, Statement of cash flows and IFRS 7, Financial instruments: Disclosures – Supplier finance arrangements The amendments introduce new disclosure requirements to enhance transparency of supplier finance arrangements and their effects on an entity’s liabilities, cash flows and exposure to liquidity risk. Since those disclosures are not required for any period presented within the annual reporting period in which the amendments are initially applied, the Group has not made additional disclosures in this financial report. – 14 – 4 REVENUE AND SEGMENT INFORMATION (a) Operating revenue The Group is principally engaged in the operation of civil aviation, including the provision of passenger, cargo, mail delivery, and other extended transportation services. (i) Disaggregation of revenue Disaggregation of revenue from contracts with customers by major service lines is as follows: 2024 2023 RMB million RMB million Revenue from contracts with customers within the scope of IFRS 15: Disaggregated by service lines – Traffic revenue – Passenger 146,450 136,170 – Cargo and mail 18,695 15,275 – Commission income 3,261 3,164 – Cargo handling income 992 820 – Hotel and tour operation income 832 750 – Ground services income 805 473 – Air catering service income 535 458 – Others 2,268 2,456 173,838 159,566 Revenue from other sources: – Rental income – Le ase payments that are fixed or depend on an index or a rate 302 303 – Va riable lease payments that do not depend on an index or a rate 84 60 386 363 174,224 159,929 Disaggregation of revenue from contracts with customers by geographic markets is disclosed in Note 4(c). – 15 – (ii) Revenue expected to be recognised in the future arising from contracts with customers in existence at the reporting date As at 31 December 2024, the aggregated amount of the transaction price allocated to the remaining performance obligation, which is the unredeemed credits under the frequent flyer award programmes, amounted to RMB3,043 million (31 December 2023: RMB2,893 million). This amount represents revenue expected to be recognised in the future when the customers obtain control of the goods or services. (b) Business segments The Group has two reportable operating segments “airline transportation operations” and “other segments”, according to internal organisation structure, managerial needs and internal reporting system. “Airline transportation operations” comprises the Group’s passenger and cargo and mail operations. “Other segments” includes cargo handling, hotel and tour operation, ground services, air catering services and other miscellaneous services. For the purposes of assessing segment performance and allocating resources between segments, the Group’s chief operating decision maker (“CODM”) monitors the results, assets and liabilities attributable to each reportable segment based on financial results prepared under the People’s Republic of China Accounting Standards for Business Enterprises (“PRC GAAP”). As such, the amount of each material reconciling item from the Group’s reportable segment loss before taxation, assets and liabilities, which arises from different accounting policies, are set out in Note 4(d). Inter-segment sales and transfers are transacted with reference to the selling prices used for sales made to third parties at the then prevailing market prices. Information regarding the Group’s reportable segments as provided to the Group’s CODM for the purposes of resource allocation and assessment of segment performance is set out below. – 16 – The segment results of the Group for the year ended 31 December 2024 are as follows: Airline transportation operations Other segments Elimination Unallocated* Total RMB million RMB million RMB million RMB million RMB million Revenue from external customers 171,829 2,395 – – 174,224 Inter-segment sales 595 6,009 (6,604) – – Reportable segment revenue 172,424 8,404 (6,604) – 174,224 Reportable segment profit/(loss) before taxation 1,129 867 (12) (403) 1,581 Reportable segment profit/(loss) after taxation (115) 736 (15) (452) 154 Other segment information Income tax expense 1,244 131 3 49 1,427 Interest income 204 24 (13) – 215 Interest expense 5,754 56 (52) – 5,758 Depreciation and amortisation 28,163 211 – – 28,374 Impairment losses 5 – – – 5 Credit losses 4 1 – – 5 Share of associates and joint ventures’ results – – – (616) (616) Changes in fair value of financial assets/ liabilities – – – 195 195 Non-current assets additions during the year # 40,498 658 (368) – 40,788 – 17 – The segment results of the Group for the year ended 31 December 2023 are as follows: Airline transportation operations Other segments Elimination Unallocated* Total RMB million RMB million RMB million RMB million RMB million Revenue from external customers 157,542 2,387 – – 159,929 Inter-segment sales 573 5,098 (5,671) – – Reportable segment revenue 158,115 7,485 (5,671) – 159,929 Reportable segment (loss)/profit before taxation (1,410) 613 (34) (814) (1,645) Reportable segment (loss)/profit after taxation (2,496) 474 (28) (1,032) (3,082) Other segment information Income tax expense 1,086 139 (6) 218 1,437 Interest income 352 20 (11) – 361 Interest expense 5,926 71 (69) – 5,928 Depreciation and amortisation 26,947 233 – – 27,180 Impairment losses 10 1 – – 11 Credit losses 10 (1) – – 9 Share of associates and joint ventures’ results – – – (1,698) (1,698) Changes in fair value of financial assets/ liabilities – – – 874 874 Non-current assets additions during the year # 27,981 745 (627) – 28,099 – 18 – The segment assets and liabilities of the Group as at 31 December 2024 and 31 December 2023 are as follows: Airline transportation operations Other segments Elimination Unallocated* Total RMB million RMB million RMB million RMB million RMB million As at 31 December 2024 Reportable segment assets 313,651 9,068 (6,101) 13,120 329,738 Reportable segment liabilities 277,523 4,791 (6,079) 908 277,143 As at 31 December 2023 Reportable segment assets 291,170 7,654 (3,146) 13,548 309,226 Reportable segment liabilities 255,347 4,090 (3,115) 907 257,229 * Unallocated assets primarily include interests in associates and joint ventures, other equity instrument investments, other financial assets, other non-current financial assets (FVPL) and derivative financial assets. Unallocated liabilities primarily include derivative financial liabilities. Unallocated results primarily include the share of results of associates and joint ventures, the fair value movement of financial instruments recognised through profit or loss, dividend income from equity securities. # The additions of non-current assets do not include interests in associates and joint ventures, other equity instrument investments, other non-current financial assets (FVPL), long-term receivables (including amounts due from related companies), derivative financial assets and deferred tax assets. – 19 – (c) Geographical information The Group’s business segments operate in three main geographical areas, even though they are managed on a worldwide basis. The Group’s revenue by geographical segment are analysed based on the following criteria: (1) Traffic revenue from services of both origin and destination within Chinese Mainland (excluding Hong Kong Special Administrative Region, Macau Special Administrative Region and Taiwan (“Hong Kong, Macau and Taiwan”)), is classified as domestic revenue. Traffic revenue with origin and destination among Chinese Mainland, Hong Kong, Macau and Taiwan is classified as Hong Kong, Macau and Taiwan revenue; while that with origin from or destination to other overseas markets is classified as international revenue. (2) Revenue from commission income, cargo handling, hotel and tour operation, ground services, air catering services and other miscellaneous services are classified on the basis of where the services are performed. 2024 2023 RMB million RMB million Domestic 122,121 122,933 International 50,025 35,223 Hong Kong, Macau and Taiwan 2,078 1,773 174,224 159,929 The major revenue earning assets of the Group are its aircraft fleet which is registered in Chinese Mainland and is deployed across its worldwide route network. Majority of the Group’s other assets are located in Chinese Mainland. CODM considers that there is no suitable basis for allocating such assets and related liabilities to geographical locations. Accordingly, geographical segment assets and liabilities are not disclosed. – 20 – (d) Reconciliation of reportable segment loss before income tax, assets and liabilities to the consolidated figures as reported in the consolidated financial statements 2024 2023 RMB million RMB million Profit/(loss) before income tax Reportable segment profit/(loss) before taxation 1,581 (1,645) Capitalisation of exchange difference of specific loans (5) (3) Government grants 1 1 (Provision)/reversal of impairment losses on property, plant and equipment (126) 126 Consolidated profit/(loss) before income tax 1,451 (1,521) 31 December 2024 31 December 2023 RMB million RMB million Assets Reportable segment assets 329,738 309,226 Capitalisation of exchange difference of specific loans 6 11 Government grants (2) (3) Adjustments arising from business combinations under common control 237 237 Reversal of impairment losses on property, plant and equipment – 126 Others – (1) Consolidated total assets 329,979 309,596 Liabilities As at 31 December 2024 and 2023, there is no difference between the amount of reportable segment liabilities and consolidated total liabilities. – 21 – 5 FLIGHT OPERATION EXPENSES 2024 2023 RMB million RMB million Jet fuel costs 54,989 52,050 Flight personnel payroll and welfare 12,542 12,428 Air catering expenses 4,406 2,563 Civil Aviation Development Fund 1,367 1,305 Aircraft operating lease charges 1,613 1,110 Training expenses 751 885 Others 7,378 6,458 83,046 76,799 6 DEPRECIATION AND AMORTISATION 2024 2023 RMB million RMB million Depreciation of long-term assets 27,692 26,630 Other amortisation 649 535 28,341 27,165 7 OTHER NET INCOME 2024 2023 RMB million RMB million Government subsidies 3,301 3,785 Gains on disposal of property, plant and equipment, right-of-use assets and assets held for sale – Aircraft and spare engines 55 220 – Other property, plant and equipment and right-of-use assets 210 140 Others 2,343 535 5,909 4,680 – 22 – 8 INTEREST EXPENSE 2024 2023 RMB million RMB million Interest on borrowings 3,218 3,000 Interest relating to lease liabilities 3,222 3,600 Total interest expense on financial liabilities not at fair value through profit or loss 6,440 6,600 Less: interest expense capitalised (Note) (682) (672) 5,758 5,928 Note: The weighted average interest rate used for interest capitalisation was 2.59% per annum in 2024 (2023: 2.56%). 9 INCOME TAX (a) Income tax expense in the consolidated income statement 2024 2023 RMB million RMB million Current tax – Provision for the year 2,044 1,203 – (Over)/under-provision in prior year (37) 14 2,007 1,217 Deferred tax Origination and reversal of temporary differences (581) 219 Income tax expense 1,426 1,436 In respect of majority of the Group’s airlines operation outside Chinese mainland, there was no material overseas income tax for the year of 2024, as the Group has obtained exemptions from overseas taxation pursuant to the bilateral aviation agreements between the overseas governments and the Chinese government. – 23 – For the year of 2024, the Company and its branches and subsidiaries in Chinese Mainland are subject to income tax rates ranging from 15% to 25% (2023: 15% to 25%), and certain subsidiaries of the Company in Hong Kong are subject to income tax at 16.5% (2023: 16.5%). (b) Reconciliation between actual income tax expense and calculated tax based on accounting loss at applicable income tax rates 2024 2023 RMB million RMB million Profit/(loss) before income tax 1,451 (1,521) Notional tax on loss before taxation, calculated at the rates applicable to loss in the tax jurisdictions concerned 374 (362) Adjustments for tax effect of: Non-deductible expenses 140 109 Share of results of associates and joint ventures and other non-taxable income 151 427 Unrecognized tax losses and temporary differences 854 1,282 (Over)/under-provision in prior year (37) 14 Super deduction of research and development expenses (56) (34) Income tax expense 1,426 1,436 – 24 – 10 LOSS PER SHARE The calculation of basic loss per share for the year ended 31 December 2024 is based on the net loss attributable to equity shareholders of the Company of RMB1,769 million (2023: RMB4,140 million) and the weighted average of 18,120,907,985 shares in issue during the year (2023: 18,120,900,578 shares). 2024 2023 RMB million RMB million Issued ordinary shares at 1 January 18,121 18,121 Weighted average number of ordinary shares at 31 December 18,121 18,121 The amount of diluted loss per share is the same as basic loss per share as the effect of convertible bonds is anti-dilutive for the year ended 31 December 2024 and for the year ended 31 December 2023. 11 DIVIDENDS The directors did not propose any final dividend in respect of the years ended 31 December 2024 and 2023. 12 CONSTRUCTION IN PROGRESS 2024 2023 RMB million RMB million Advance payment for aircraft and flight equipment 30,809 32,270 Others 3,753 1,907 34,562 34,177 – 25 – 13 OTHER NON-CURRENT FINANCIAL ASSETS AND OTHER FINANCIAL ASSETS 2024 2023 RMB million RMB million Other non-current financial assets (FVPL) – Listed shares – 26 – Non-listed shares 33 31 – Certificates of deposit 2,774 3,065 Other non-current financial assets (amortised cost) – Long-term receivables 210 297 3,017 3,419 Other financial assets (FVPL) – Certificates of deposit 2,695 3,157 2,695 3,157 As at 31 December 2024, the fair value of the negotiable certificates of deposit was RMB5,469 million. The Group expected to sell the certificates of deposit rather than held-to-maturity, and based on the Group’s working capital forecast, approximately RMB2,695 million and approximately RMB2,774 million were recorded in other financial assets and non-current financial assets, respectively. 14 DEFERRED TAX ASSETS Deferred tax assets arise from deductible temporary differences and unused tax losses are recognised to the extent that it is probable that future taxable profits will be available against which the related tax benefit can be utilised. The Group’s tax losses in Chinese Mainland are available for carrying forward to set off future assessable income for a maximum period of five or eight years (According to the Notice of the Ministry of Finance on the Taxation Policy for supporting the prevention of pandemic of Covid-19 (No. 8, 2020), the carry over period for tax losses of enterprises in certain difficult industries suffering from the epidemic in 2020 will be extended from 5 years to 8 years). Therefore, the tax losses of the Company and aviation subsidiaries occurred in 2020 can be carried forward for 8 years, and the tax losses occurred in other years can be carried forward for 5 years. – 26 – 15 TRADE RECEIVABLES Credit terms granted by the Group to sales agents and other customers generally range from one to three months. Ageing analysis of trade receivables based on transaction date is set out below: 2024 2023 RMB million RMB million Within 1 month 2,506 2,259 More than 1 month but less than 3 months 358 517 More than 3 months but less than 12 months 322 315 More than 1 year 210 134 3,396 3,225 Less: loss allowance (90) (64) 3,306 3,161 16 OTHER RECEIVABLES 2024 2023 RMB million RMB million VAT recoverable 9,344 7,062 Government subsidies 1,170 826 Rebate receivables 1,578 329 Other deposits 130 186 Others 3,267 898 15,489 9,301 Less: loss allowance (111) (134) 15,378 9,167 – 27 – 17 DERIVATIVE FINANCIAL LIABILITIES In October 2020, the Group issued a total of 160,000,000 A share convertible bonds with par value of RMB100 each at par. The convertible bonds have a term of six years from the date of the issuance and the convertible bonds bear interest at the annual rate of 0.2% in the first year, 0.4% in the second year, 0.6% in the third year, 0.8% in the fourth year, 1.5% in the fifth year and 2.0% in the sixth year. Interest is paid once a year. Conversion rights are exercisable from 21 April 2021 to 14 October 2026 at an initial conversion price of RMB6.24 per share, subject to clauses of adjustment and downward revision of conversion price, redemption and sell-back. Convertible bonds, which conversion rights have not been exercised in five transaction days after maturity, will be redeemed at 106.5% of par value (including the interest for the sixth year). Any excess of proceeds over the fair value amount initially recognised as the derivative component is recognised as the host liability component. Transaction costs related to the issuance of the convertible bonds are allocated to the host liability and are recognised initially as part of the liability. The derivative component is subsequently remeasured at fair value while the host liability component is subsequently carried at amortised cost using the effective interest method. For the year ended 31 December 2024, 290 convertible bonds were converted to A shares at the conversion price of RMB6.17 per share (for the year ended 31 December 2023, 870 convertible bonds were converted to A shares at the conversion price of RMB6.17 per share). As at 31 December 2024, the carrying amount of liability component of the remaining 58,962,850 A share convertible bonds was RMB5,775 million (31 December 2023: 58,963,140 A share convertible bonds with a carrying amount of RMB5,510 million), and the fair value of the derivative component of the remaining 58,962,850 A share convertible bonds was RMB908 million (31 December 2023: 58,963,140 A share convertible bonds with fair value of RMB907 million). For the year ended 31 December 2024, the loss on the changes in fair value of the derivative component amounted to RMB1 million was recognised (31 December 2023: gain on the changes in fair value amounted to RMB801 million). – 28 – 18 BORROWINGS Borrowings are analysed as follows: 2024 2023 RMB million RMB million (restated) Non-current Long-term borrowings 35,985 38,130 Medium-term notes 20,885 6,894 56,870 45,024 Current Current portion of long-term borrowings 11,823 5,153 Short-term borrowings 40,440 51,362 Ultra-short-term financing bills 10,744 – Current portion of corporate bonds and medium-term notes 5,172 9,167 Convertible bonds 5,775 5,510 73,954 71,192 Total borrowings 130,824 116,216 The borrowings are repayable: Within one year 73,954 71,192 In the second year 34,020 16,334 In the third to fifth year 19,908 26,308 After the fifth year 2,942 2,382 Total borrowings 130,824 116,216 – 29 – 19 LEASE LIABILITIES At 31 December 2024, the lease liabilities were payable as follows: 2024 2023 RMB million RMB million Within 1 year 18,378 19,261 After 1 year but within 2 years 15,887 15,994 After 2 years but within 5 years 35,344 34,623 After 5 years 22,923 18,615 92,532 88,493 The Group has significant lease liabilities which are denominated in USD as at 31 December 2024. The net exchange loss of RMB912 million for the year ended 31 December 2024 (2023: RMB687 million) was mainly attributable to the translation of balances of lease liabilities which are denominated in USD. 20 TRADE AND BILLS PAYABLES Ageing analysis of trade and bills payables based on transaction date is set out below: 2024 2023 RMB million RMB million Within 1 month 1,182 756 More than 1 month but less than 3 months 1,720 674 More than 3 months but less than 6 months 245 271 More than 6 months but less than 1 year 224 109 More than 1 year 206 194 3,577 2,004 – 30 – B. PREPARED IN ACCORDANCE WITH THE PRC GAAP CONSOLIDATED INCOME STATEMENT For the year ended 31 December 2024 2024 2023 RMB million RMB million Revenue 174,224 159,929 Less: Operating costs 159,571 147,582 Taxes and surcharges 608 531 Selling and distribution expenses 7,122 6,629 General and administrative expenses 4,113 3,779 Research and development expenses 544 511 Finance expenses 6,628 6,393 Including: interest expense 5,758 5,928 interest income 215 361 Add: Other income 3,298 3,779 Investment loss (599) (1,688) Including: lo ss from investment in associates and joint ventures (616) (1,698) Changes in fair value of financial assets/ liabilities 195 874 Provision of credit losses (5) (9) Impairment losses (5) (11) Gain on assets disposals 731 409 Operating loss (747) (2,142) Add: Non-operating income 2,434 581 Less: Non-operating expenses 106 84 Profit/(loss) before income tax 1,581 (1,645) Less: Income tax expense 1,427 1,437 Net profit/(loss) for the year 154 (3,082) (1) Ne t profit/(loss) classified by continuity of operations: 1. Net profit/(loss) from continuing operations 154 (3,082) (2) Net profit/(loss) classified by ownership: 1. Shareholders of the Company (1,696) (4,209) 2. Non-controlling interests 1,850 1,127 – 31 – CONSOLIDATED STATEMENT OF FINANCIAL POSITION At 31 December 2024 31 December 31 December 2024 2023 RMB million RMB million (restated) Assets Current assets Cash at bank and on hand 15,994 9,924 Other financial assets 2,695 3,157 Derivative financial instruments – 4 Bills receivables – 2 Account receivables 3,463 3,322 Prepayments 819 695 Other receivables 3,095 1,640 Inventories 2,002 1,565 Non-current assets due within one year 178 180 Other current assets 9,397 7,252 Total current assets 37,643 27,741 Non-current assets Long-term equity investments 7,168 6,718 Other equity instrument investment 431 547 Other non-current financial assets 2,807 3,122 Derivative financial instruments 18 – Investment properties 564 524 Fixed assets 100,691 93,076 Construction in progress 34,584 34,199 Right-of-use assets 123,023 122,131 Intangible assets 7,341 6,629 Long-term receivables 381 559 Aircraft lease deposits 420 386 Long-term deferred expenses 462 517 Deferred tax assets 12,873 12,280 Other non-current assets 1,332 797 Total non-current assets 292,095 281,485 Total assets 329,738 309,226 – 32 – 31 December 31 December 2024 2023 RMB million RMB million (restated) Liabilities and shareholders’ equity Current liabilities Short-term bank borrowings 40,440 51,362 Derivative financial liabilities 908 907 Bills payables 1,089 236 Account payables 18,490 19,722 Contract liabilities 1,749 1,509 Sales in advance of carriage 9,295 7,179 Employee benefits payable 4,716 4,968 Taxes payable 1,095 802 Other payables 8,644 8,969 Non-current liabilities due within one year 35,457 33,770 Other current liabilities 16,519 5,510 Total current liabilities 138,402 134,934 Non-current liabilities Long-term bank borrowings 35,985 38,130 Bonds payable 20,885 6,894 Lease liabilities 74,154 69,232 Long-term payable 7 100 Provision for major overhauls 5,322 5,731 Deferred benefits and gains 720 752 Deferred tax liabilities 7 23 Other non-current liabilities 1,661 1,433 Total non-current liabilities 138,741 122,295 Total liabilities 277,143 257,229 – 33 – 31 December 31 December 2024 2023 RMB million RMB million (restated) Shareholders’ equity Share capital 18,121 18,121 Capital reserve 52,444 52,756 Other comprehensive income 169 216 Surplus reserve 2,579 2,579 Accumulated losses (38,584) (36,888) Total equity attributable to equity shareholders of the Company 34,729 36,784 Non-controlling interests 17,866 15,213 Total equity 52,595 51,997 Total liabilities and equity 329,738 309,226 – 34 – C. RECONCILIATION OF DIFFERENCES IN FINANCIAL STATEMENTS PREPARED UNDER PRC GAAP AND IFRS ACCOUNTING STANDARDS Difference in loss and equity attributable to equity shareholders of the Company under consolidated financial information in financial statements between IFRS Accounting Standards and PRC GAAP Net loss attributable to equity shareholders of the Company Equity attributable to equity shareholders of the Company 2024 2023 31 December 2024 31 December 2023 RMB million RMB million RMB million RMB million Amounts under PRC GAAP (1,696) (4,209) 34,729 36,784 Adjustments: Capitalisation of exchange difference of specific loans (5) (3) 6 11 Government grants 1 1 (2) (3) Adjustment arising from the Company’s business combination under common control – – 237 237 Reversal of impairment losses on property, plant and equipment (126) 126 – 126 Income tax effect of the above adjustments 1 1 – (1) Effect of the above adjustments on non-controlling interests 56 (56) (27) (83) Amounts under IFRS Accounting Standards (1,769) (4,140) 34,943 37,071 – 35 – BUSINESS REVIEW In 2024, the global economy continued to recover, with an overall rise in trade demand. According to the report of World Economic Outlook published by International Monetary Fund (IMF), the global economic growth rate in 2024 was 3.2%. China’s economy achieved an overall stable operation with steady progress, and high-quality development was advancing solidly, with an annual GDP of RMB134.9 trillion, representing a year-on-year increase of 5.0%. In 2024, the scale of the transportation and production of China’s civil aviation industry continued to grow, with the total annual transportation turnover volume, annual passenger transportation volume and annual cargo and mail transportation volume amounting to 148.52 billion tonne kilometres, 730 million passengers and 8.982 million tonnes, representing a year-on-year increase of 25.0%, 17.9% and 22.1%, respectively. The Group comprehensively coordinated its safety production and operation and actively promoted the implementation of major strategies and key reform tasks. During the reporting period, the Group recorded 3.148 million safe flight hours and carried 165 million passengers and 1.83 million tonnes of cargo and mail. The Group was awarded the “Three-Star Diamond Award for Flight Safety”, the top award for flight safety from the CAAC, and has been honoured as the “Best Airline of the Year” by Civil Aviation Passenger Service Evaluation (CAPSE) for seven consecutive years and as the First Brand in Aviation Service Industry in China Brand Power Index for fourteen consecutive years. 1. Safety Management During the reporting period, the Group launched a three-year initiative to address the root causes of production safety issues, continuously improving safety and quality. We implemented a comprehensive examination of the seven safety systems, standardised the operating procedures for flight crews, promoted the standardisation of aircraft maintenance, and established an operation guarantee system for domestic aircraft; comprehensively promoted the refresher training mechanism for random grouping and route cross-checking of the flight system; promoted the coordination between the dual prevention mechanism and routine work, developed a special program for the management and control of the runway incursion risks and the compliance risks during the rest period for aircrew, as well as a special program for the systematic response to extreme weather, and carried out special remediation and supervision and inspection of major production safety hazards in a deep-going way. During the reporting period, the Group achieved 3.148 million hours of safe flight, maintaining its leading position in China’s civil aviation industry in safety on an ongoing basis. – 36 – 2. Operation Management During the reporting period, the Group focused on enhancing the core market competitiveness to facilitate quality and efficiency improvement in operation with all-out efforts. We implemented the strategies of “two matching and two enhancing (i.e. matching capacity with the market, matching volume with rates, enhancing seat control, and enhancing customer base) and maximising the total marginal contribution” to seize opportunities for market recovery; deepened the construction of the customer management system, strengthened the operation of customer segmentation and classification, and adopted various measures to enhance the effect of reach and conversion; deepened the construction of the cost management responsibility system and optimised the management mechanism of strategic, structural and open-source costs; steadily improved the operation capacity of freighter, tabbed into emerging markets such as the Middle East and Central and Eastern Europe, enhanced cooperation with leading express enterprises in China, and was the first enterprise in China to realise the normalised transportation of battery-powered cargo of cross-border e-commerce. During the reporting period, the Company’s passenger transportation volume recorded a year-on-year increase of 15.8%, and the cargo and mail transportation volume recorded a year-on-year increase of 15.7%. 3. Operation Service During the reporting period, the Group overcame the challenges of frequent incidences of severe weather and steadily improved its operation quality, with the continuous improvement of the service brand. We deepened the construction of the mega operation system, optimised the AOC management system and operation decision-making process, and strictly controlled the temporary cancellation of flights; successfully completed the transfer flights, proving flights and commercial operation of domestically produced COMAC C919 aircraft; comprehensively enhanced its “humanized, digitalised, refined, personalised, and convenient” services, built a one-stop full-process service platform, implemented flexible ticket refund and changing rules, adjusted downward 127 charges, optimised the carriage standards for passengers with special needs, optimised the allocation of catering resources, and enhanced the efficiency of guarantee for transportation of transit passengers and baggage. During the reporting period, the Company has been honoured as the “Best Airline of the Year” by CAPSE for seven consecutive years and as the First Brand in Aviation Service Industry in China Brand Power Index for fourteen consecutive years. – 37 – 4. Implementation of Strategies During the reporting period, the Group actively served national strategies and continuously explored room for development. We further promoted the adjustment and optimisation of the five major structures, and vigorously revitalised our existing real estate; established a platform of “jointly building Guangzhou hub” with seven parties including the Guangzhou Municipal Government and promoted the integration of the four aspects of the Greater Bay Area, namely, market, network, products and services. We were dedicated to improving the quality of the Beijing hub, with the number of domestic high-frequency routes increased; efficiently promoted the strategic synergies among airline subsidiaries, and significantly increased the number of associated flight segments; constructed an ecosystem traffic entrance with the CSA Mall as the core, steadily progressed the digital transformation, and obtained the Data Security Maturity Level 3 certificate. 5. Reform and Development During the reporting period, the Group further fulfilled reform tasks to constantly enhance the momentum and vitality. We formulated incentives for technological innovation and the development of strategic and emerging industries, set up major scientific and technological breakthrough projects, and popularised the application of the “Tian Tong (天瞳)” aircraft health monitoring system and the “Tian Ji (天 極)” operation control system; deepened the reform of corporate governance on an ongoing basis, optimised the institutional system of decision-making meetings, and promoted the reform of the supervisory committees of our subsidiaries; promoted the expansion of the tenure system and contractual management, and constructed a mechanism for determining the total amount of remuneration based on “coordinated business performance, regulatory efficiency and managed level”; put 29 business platforms into operation, and built a private cloud platform and computing power centre. During the reporting period, the Company was awarded the “Best Practice of the Board of Directors” by China Association for Public Companies. – 38 – 6. Social Responsibility During the reporting period, the Group proactively fulfilled its social responsibilities and promoted sustainable development and rural revitalisation assistance. We took the lead in compiling the first plastic-restricted group standard for civil aviation in China, carried out a pilot project on the application of sustainable aviation fuels, explored the green and cyclic utilisation of aviation materials, received an AA rating from China Reform ESG Rating for its efforts made in sustainable development, and was awarded the “Sky Choice • Travel Awards 2024 – Corporate Sustainability Brand of the Year” by CAAC; promoted the seven assistance models with the characteristics of CSA, set up an assistance industrial park, and made great efforts to promote investment attraction. During the reporting period, the fuel consumption per tonne kilometre of the Company was reduced to 2.572 tonnes/10,000-tonne-kilometres. OPERATING DATA SUMMARY The following table sets forth operating data by geographic regions: For the year ended 31 December Increase/ (decrease) 2024 2023 % Traffic Revenue passenger kilometers (RPK) (million) Domestic 231,264.49 207,816.73 11.28 Hong Kong, Macau and Taiwan 2,539.48 1,809.23 40.36 International 72,161.96 37,321.27 93.35 Total: 305,965.93 246,947.23 23.90 – 39 – For the year ended 31 December Increase/ (decrease) 2024 2023 % Revenue tonne kilometers (RTK) (million) Domestic 21,878.49 19,654.63 11.31 Hong Kong, Macau and Taiwan 251.43 183.60 36.95 International 14,077.87 9,952.88 41.45 Total: 36,207.79 29,791.11 21.54 RTK – passenger (million) Domestic 20,237.75 18,229.18 11.02 Hong Kong, Macau and Taiwan 222.02 157.48 40.99 International 6,333.06 3,277.65 93.22 Total: 26,792.84 21,664.31 23.67 RTK – cargo (million) Domestic 1,640.74 1,425.45 15.10 Hong Kong, Macau and Taiwan 29.41 26.12 12.60 International 7,744.80 6,675.24 16.02 Total: 9,414.96 8,126.80 15.85 Passengers carried (thousand) Domestic 145,171.02 131,571.96 10.34 Hong Kong, Macau and Taiwan 1,911.60 1,535.76 24.47 International 17,649.44 9,093.37 94.09 Total: 164,732.05 142,201.09 15.84 Cargo and mail carried (thousand tonnes) Domestic 945.93 840.80 12.50 Hong Kong, Macau and Taiwan 26.86 23.03 16.61 International 861.12 721.09 19.42 Total: 1,833.91 1,584.92 15.71 – 40 – For the year ended 31 December Increase/ (decrease) 2024 2023 % Capacity Available seat kilometres (ASK) (million) Domestic 272,957.34 266,515.67 2.42 Hong Kong, Macau and Taiwan 3,254.27 2,441.55 33.29 International 86,397.43 47,260.23 82.81 Total: 362,609.04 316,217.46 14.67 Available tonne kilometres (ATK) (million) Domestic 30,646.01 30,348.36 0.98 Hong Kong, Macau and Taiwan 378.79 316.95 19.51 International 19,821.71 14,233.28 39.26 Total: 50,846.51 44,898.59 13.25 Available tonne kilometres (ATK) – passenger (million) Domestic 24,566.16 23,986.41 2.42 Hong Kong, Macau and Taiwan 292.88 219.74 33.29 International 7,775.77 4,253.42 82.81 Total: 32,634.81 28,459.57 14.67 Available tonne kilometres (ATK) – cargo (million) Domestic 6,079.85 6,361.95 (4.43) Hong Kong, Macau and Taiwan 85.91 97.21 (11.63) International 12,045.94 9,979.86 20.70 Total: 18,211.70 16,439.02 10.78 – 41 – For the year ended 31 December Increase/ (decrease) 2024 2023 percentage points Load Factor Passenger load factor (RPK/ASK) (%) Domestic 84.73 77.98 6.75 Hong Kong, Macau and Taiwan 78.04 74.10 3.93 International 83.52 78.97 4.55 Average: 84.38 78.09 6.28 Overall load factor (RTK/ATK) (%) Domestic 71.39 64.76 6.63 Hong Kong, Macau and Taiwan 66.38 57.93 8.45 International 71.02 69.93 1.10 Average: 71.21 66.35 4.86 For the year ended 31 December Increase/ (decrease) 2024 2023 % Yield Yield per RPK (RMB) Domestic 0.48 0.54 (11.11) Hong Kong, Macau and Taiwan 0.73 0.89 (17.98) International 0.46 0.58 (20.69) Average: 0.48 0.55 (12.73) Yield per RFTK (RMB) Domestic 0.88 1.06 (16.98) Hong Kong, Macau and Taiwan 7.58 6.31 20.13 International 2.20 2.04 7.84 Average: 1.99 1.88 5.85 – 42 – For the year ended 31 December Increase/ (decrease) 2024 2023 % Yield per RTK (RMB) Domestic 5.17 5.82 (11.17) Hong Kong, Macau and Taiwan 8.26 9.66 (14.49) International 3.55 3.54 0.28 Average: 4.56 5.08 (10.24) Cost Main business cost per ATK (RMB) 3.07 3.20 (4.06) Flight Volume Kilometers flown (million) 1,991.76 1,772.78 12.35 Hours flown (thousand) Domestic 2,524.86 2,465.30 2.42 Hong Kong, Macau and Taiwan 28.49 20.52 38.82 International 594.17 356.29 66.77 Total: 3,147.52 2,842.11 10.75 Number of flights (thousand) Domestic 1,007.30 1,000.31 0.70 Hong Kong, Macau and Taiwan 12.78 10.42 22.68 International 115.02 65.22 76.35 Total: 1,135.10 1,075.95 5.50 Note: Operating data are retained to two decimal places, discrepancies between the column and the total sum are due to rounding of numbers. – 43 – MANAGEMENT DISCUSSION AND ANALYSIS I. FINANCIAL PERFORMANCE Part of the financial information presented in this section below is derived from the Group’s audited consolidated financial statements that have been prepared in accordance with IFRS Accounting Standards. The net loss attributable to equity shareholders of the Company of RMB1,769 million was recorded in 2024 as compared to the net loss attributable to equity shareholders of the Company of RMB4,140 million in 2023. The Group’s total operating revenue increased by RMB14,295 million or 8.94% from RMB159,929 million in 2023 to RMB174,224 million in 2024. Passenger load factor increased by 6.28 percentage points from 78.09% in 2023 to 84.38% in 2024. Yield per RPK decreased by 12.73% from RMB0.55 in 2023 to RMB0.48 in 2024. Yield per RTK decreased by 10.24% from RMB5.08 in 2023 to RMB4.56 in 2024. Operating expenses increased by RMB12,754 million or 8.02% from RMB159,052 million in 2023 to RMB171,806 million in 2024. Operating profit increased by RMB2,770 million from RMB5,557 million in 2023 to RMB8,327 million in 2024. II. OPERATING REVENUE 2024 2023 Operating revenue Percentage Operating revenue Percentage Changes in revenue RMB million % RMB million % % Traffic revenue 165,145 94.79 151,445 94.70 9.05 Including: Passenger revenue 146,450 136,170 7.55 – Domestic 111,601 112,946 (1.19) – Ho ng Kong, Macau and Taiwan 1,855 1,608 15.36 – International 32,994 21,616 52.64 Cargo and mail revenue 18,695 15,275 22.39 – 44 – 2024 2023 Operating revenue Percentage Operating revenue Percentage Changes in revenue RMB million % RMB million % % Other operating revenue 9,079 5.21 8,484 5.30 7.01 Mainly including: Commission income 3,261 3,164 3.07 Gargo handling income 992 820 20.98 Hotel and tour operation income 832 750 10.93 Ground services income 805 473 70.19 Total operating revenue 174,224 100.00 159,929 100.00 8.94 Less: fuel surcharge income (12,987) (12,143) 6.95 Total operating revenue excluding fuel surcharge 161,237 147,786 9.10 Substantially all of the Group’s operating revenue is attributable to airlines transport operations. Traffic revenue accounted for 94.70% and 94.79% of the total operating revenue in 2023 and 2024, respectively. Passenger revenue and cargo and mail revenue accounted for 88.68% and 11.32%, respectively, of the total traffic revenue in 2024. During the reporting period, the Group’s total traffic revenue was RMB165,145 million, representing an increase of RMB13,700 million or 9.05% as compared to the same period last year, mainly because of the increase in passenger transport revenue and freight transport revenue. The increase in operating revenue was primarily due to the increase in revenue generated from passenger transportation from RMB136,170 million in 2023 to RMB146,450 million in 2024, representing an increase of 7.55%. The total number of passengers carried increased by 15.84% to 164.73 million passengers in 2024. RPKs increased by 23.90% from 246,947 million in 2023 to 305,966 million in 2024, mainly due to the increase in production volume. – 45 – Domestic passenger revenue, which accounted for 76.20% of the total passenger revenue in 2024, decreased by 1.19% from RMB112,946 million in 2023 to RMB111,601 million in 2024. Domestic passenger traffic in RPKs increased by 11.28%, while passenger capacity in ASKs increased by 2.42%, resulting in an increase in passenger load factor by 6.75 percentage points from 77.98% in 2023 to 84.73% in 2024. Yield per RPK decreased by 11.11% from RMB0.54 in 2023 to RMB0.48 in 2024. Hong Kong, Macau and Taiwan passenger revenue, which accounted for 1.27% of total passenger revenue, increased by 15.36% from RMB1,608 million in 2023 to RMB1,855 million in 2024. For Hong Kong, Macau and Taiwan flights, passenger traffic in RPKs increased by 40.36%, while passenger capacity in ASKs increased by 33.29%, resulting in an increase in passenger load factor by 3.93 percentage points from 74.10% in 2023 to 78.04% in 2024. Passenger yield per RPK decreased from RMB0.89 in 2023 to RMB0.73 in 2024. International passenger revenue, which accounted for 22.53% of total passenger revenue, increased by 52.64% from RMB21,616 million in 2023 to RMB32,994 million in 2024. For international flights, passenger traffic in RPKs increased by 93.35%, while passenger capacity in ASKs increased by 82.81%, resulting in an increase in passenger load factor by 4.55 percentage points from 78.97% in 2023 to 83.52% in 2024. Passenger yield per RPK decreased from RMB0.58 in 2023 to RMB0.46 in 2024. Cargo and mail revenue, which accounted for 11.32% of the Group’s total traffic revenue and 10.73% of total operating revenue, increased by 22.39% from RMB15,275 million in 2023 to RMB18,695 million in 2024, mainly due to the rise in demand for international cargo transportation. Other operating revenue increased by 7.01% from RMB8,484 million in 2023 to RMB9,079 million in 2024, mainly due to the increase of ground service income. – 46 – III. OPERATING EXPENSES Total operating expenses in 2024 amounted to RMB171,806 million, representing an increase of RMB12,754 million or 8.02% comparing to that of 2023. Total operating expenses as a percentage of total operating revenue decreased from 99.45% in 2023 to 98.61% in 2024. 2024 2023 Operating expenses RMB million Percentage (%) RMB million Percentage (%) Flight operation expenses 83,046 48.34 76,799 48.29 Mainly including: Jet fuel costs 54,989 52,050 Aircraft operating lease charges 1,613 1,110 Flight personnel payroll and welfare 12,542 12,428 Maintenance expenses 14,853 8.65 14,390 9.05 Aircraft and transportation service expenses 31,006 18.05 26,487 16.65 Promotion and selling expenses 6,831 3.98 6,349 3.99 General and administrative expenses 4,435 2.58 4,150 2.61 Depreciation and amortisation 28,341 16.49 27,165 17.08 Reversal of impairment losses on property, plant and equipment and right-of-use assets (302) (0.18) (123) (0.08) Hotel and tour operation expense 827 0.48 656 0.41 External air catering service expense 477 0.28 432 0.27 Financial institution charges 173 0.10 139 0.09 Cargo handling expense 519 0.30 552 0.35 Others 1,600 0.93 2,056 1.29 Total operating expenses 171,806 100.00 159,052 100.00 Flight operation expenses, which accounted for 48.34% of total operating expenses, increased by 8.13% from RMB76,799 million in 2023 to RMB83,046 million in 2024, mainly due to the increase of jet fuel costs as a result of the increased flight volume. Maintenance expenses, which accounted for 8.65% of total operating expenses, increased by 3.22% from RMB14,390 million in 2023 to RMB14,853 million in 2024, mainly due to the increase in aircraft utilization rate with the recovery of the industry. – 47 – Aircraft and transportation service expenses, which accounted for 18.05% of total operating expenses, increased by17.06% from RMB26,487 million in 2023 to RMB31,006 million in 2024. The increase was primarily due to the increase in landing and navigation fee as a result of the increase in the amounts of take-off and landing. Promotion and selling expenses, which accounted for 3.98% of total operating expenses, increased by 7.59% from RMB6,349 million in 2023 to RMB6,831 million in 2024, mainly due to the increase in sales commissions and computer reservation services expenses as a result of the increased flight volume. General and administrative expenses, which accounted for 2.58% of the total operating expenses, increased by 6.87% from RMB4,150 million in 2023 to RMB4,435 million in 2024, mainly due to the increase in general corporate expenses. Depreciation and amortisation, which accounted for 16.49% of the total operating expenses, increased by 4.33% from RMB27,165 million in 2023 to RMB28,341 million in 2024, mainly due to the increase in depreciation and amortisation of aircraft and engines as a result of the increased number of aircraft and flight hours, respectively. Reversal of impairment losses on property, plant and equipment and right-of-use assets of RMB302 million was recorded in 2024 （2023: RMB123 million). IV. OPERATING PROFIT Operating profit of RMB8,327 million was recorded in 2024 (2023: operating profit of RMB5,557 million). The increase of the operating profit is mainly due to the increase in production volume. V. OTHER NET INCOME Other net income increased by RMB1,229 million from RMB4,680 million in 2023 to RMB5,909 million in 2024, mainly due to the aircraft operation compensation obtained by the Group. VI. INCOME TAX Income tax expense decreased by RMB10 million from RMB1,436 million in 2023 to RMB1,426 million in 2024. – 48 – VII. LIQUIDITY, FINANCIAL RESOURCES AND CAPITAL STRUCTURE As at 31 December 2024, the Group’s net current liabilities amounted to RMB100,639 million. For the year ended 31 December 2024, the Group recorded a net cash inflow from operating activities of RMB25,764 million, a net cash outflow from investing activities of RMB16,728 million and a net cash outflow from financing activities of RMB5,589 million, which in total resulted in a net increase in cash and cash equivalents of RMB3,447 million. The Group is dependent on its ability to maintain adequate cash inflow from operations, its ability to maintain existing external financing, and its ability to obtain new external financing to meet its debt obligations as they fall due and to meet its committed future capital expenditures. The Group’s policy is to regularly monitor its liquidity requirements and its compliance with lending covenants, to ensure that it maintains sufficient reserves of cash and adequate committed lines of funding from major financial institutions to meet its liquidity requirements in the short and longer term. As at 31 December 2024, the Group has obtained credit facilities of RMB342,109 million in aggregate granted by several banks and other financial institute, among which approximately RMB199,641 million was unutilised. The Directors of the Company believe that sufficient financing will be available to the Group when and where needed. The analyses of the Group’s total interest-bearing liabilities are as follows: Composition of interest-bearing liabilities 31 December 2024 31 December 2023 RMB million RMB million Lease liabilities 92,532 88,493 Borrowings 130,824 116,216 Long-term payables 91 289 Fixed rate interest-bearing liabilities 168,681 148,417 Floating rate interest-bearing liabilities 54,766 56,581 – 49 – Analysis of interest-bearing liabilities by currency 31 December 2024 31 December 2023 RMB million RMB million USD 39,542 43,742 RMB 182,399 159,084 Others 1,506 2,172 Total 223,447 204,998 Maturity analysis of interest-bearing liabilities 31 December 2024 31 December 2023 RMB million RMB million (restated) Within 1 year 92,416 90,642 1 year but within 2 years 49,914 32,421 2 years but within 5 years 55,252 60,938 5 years and afterwards 25,865 20,997 Total 223,447 204,998 Interest expense and net exchange loss Interest expense decreased slightly by RMB170 million from RMB5,928 million in 2023 to RMB5,758 million in 2024. Net exchange loss increased by RMB225 million from RMB687 million in 2023 to RMB912 million in 2024, mainly due to the increased depreciation of the RMB against the US dollar. – 50 – The Group’s capital structure at the end of the year is as follows: 31 December 2024 31 December 2023 Change RMB million RMB million Total liabilities 277,143 257,229 7.74% Total assets 329,979 309,596 6.58% Debt ratio 83.99% 83.09% 0.90% The Group monitors capital on the basis of debt ratio, which is calculated as total liabilities divided by total assets. The debt ratio as at 31 December 2024 remained stable as compared to that as at 31 December 2023. VIII. MAJOR CHARGE ON ASSETS As at 31 December 2024, the Group’s certain aircraft with an aggregate net book value of approximately RMB2,033 million (31 December 2023: nil) were pledged to secure certain bank loans of the Group. IX. COMMITMENTS AND CONTINGENCIES Commitments As at 31 December 2024, the Group had capital commitments (excluding investment commitment) of RMB143,387 million (31 December 2023: RMB112,358 million), of which, RMB128,640 million was related to the acquisition of aircraft, engines and related flight equipment (31 December 2023: RMB102,883 million) and RMB14,747 million was related to other projects of the Group (31 December 2023: RMB9,475 million). – 51 – The Group had investment commitments as follows: 31 December 2024 31 December 2023 RMB million RMB million Authorised and contracted for: Share of capital commitments of a joint venture 8 19 Capital contributions for acquisition of interest in an associate 1,027 2,431 1,035 2,450 Authorised but not contracted for: Share of capital commitments of a joint venture 15 46 1,050 2,496 Contingent liabilities (a) The Group leased certain properties and buildings from CSAH which were located in Guangzhou, Wuhan, Haikou, etc. Although such properties and buildings were used by CSAH before being leased to the Group, as known to the Group, such properties and buildings lack adequate documentation evidencing CSAH’s rights thereto. Pursuant to the indemnification agreement dated 22 May 1997 entered into between the Group and CSAH, CSAH has agreed to indemnify the Group against any loss or damage arising from any challenge of the Group’s right to use the aforementioned properties and buildings. (b) The Group entered into certain agreements with CSAH in prior years to acquire certain land use right and buildings from CSAH. The change of business registration of such land use right and buildings are still in progress. CSAH issued letters of commitment to the Company, committing to indemnify the Group against any claims from third parties to the Group, or any loss or damage in the Group’s operation activities due to lack adequate documentation of the certain properties and buildings, without recourse to the Group. – 52 – (c) The Company issued an undertaking to China Southern Airlines General Aviation Limited (“General Aviation Limited”) in prior years that the Company has injected the relevant assets and liabilities into General Aviation Limited on 1 July 2016 and General Aviation Limited has received all the assets and actually owned, controlled and used. In the event that any third party claims rights against General Aviation Limited due to defective land use rights and property rights or General Aviation Limited suffers losses due to defective land use rights and property rights affecting the normal business operations of General Aviation Limited, such losses shall be borne by the Company and the contributed assets may be replaced in an appropriate manner if necessary. (d) The Company and its subsidiary, Xiamen Airlines, entered into agreements with certain pilot trainees and certain banks to provide guarantees on personal bank loans amounting to RMB696 million (31 December 2023: RMB696 million) that can be drawn by the pilot trainees to finance their respective flight training expenses. As at 31 December 2024, total personal bank loans of RMB64 million (31 December 2023: RMB102 million), under these guarantees, were drawn down from the banks. During the year, RMB0.1 million has been made by the Group due to the default of payments of certain pilot trainees (2023: RMB0.1 million). SUBSEQUENT EVENTS Since the end of the reporting period to the date of publication of this results announcement, no subsequent event has occurred which had a material impact on the Group. – 53 – CHANGES IN SHARE CAPITAL STRUCTURE Unit: Share Increase/ (decrease) in 2024 31 December 2023 31 December 2024 Number of Shares Percentage (%) Number of Shares Number of Shares Percentage (%) I. subject to restrictions on sales 1. RMB ordinary shares 803,571,428 4.43 0 803,571,428 4.43 Total 803,571,428 4.43 0 803,571,428 4.43 II. Sh ares not subject to restrictions on sales 1. RMB ordinary shares 12,673,338,070 69.94 4,698 12,673,342,768 69.94 2. Foreign listed shares 4,643,997,308 25.63 0 4,643,997,308 25.63 Total 17,317,335,378 95.57 4,698 17,317,340,076 95.57 III. Total number of shares 18,120,906,806 100.00 4,698 18,120,911,504 100.00 PURCHASE, SALE OR REDEMPTION OF SHARES Neither the Company nor any of its subsidiaries purchased, sold or redeemed any shares of the Company during the year ended 31 December 2024. PRE-EMPTIVE RIGHTS There is no specific provision under the articles of association of the Company regarding pre-emptive rights, which does not require the Company to offer new shares to existing shareholders in proportion to their existing shareholdings when there is issuance of shares. AUDIT AND RISK MANAGEMENT COMMITTEE The Audit and Risk Management Committee of the Company has reviewed the audited consolidated financial statements of the Group for the year ended 31 December 2024. – 54 – COMPLIANCE WITH THE MODEL CODE Having made specific enquiries, all Directors and Supervisors of the Company confirmed that they had complied with the Model Code for Securities Transactions by Directors of Listed Issuers (the “Model Code”) as set out in Appendix C3 to the Rules (the “Listing Rules”) Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) for the year ended 31 December 2024. The code of conduct adopted by the Company regarding securities transactions by the Directors and Supervisors is no less stringent than the Model Code. COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE The Board considers that the Group has complied with the code provisions of the Corporate Governance Code as set out in Part 2 of Appendix C1 to the Listing Rules for the year ended 31 December 2024. DIVIDENDS Considering that the Company does not meet the conditions for profit distribution as required under the Articles of Association of the Company, the Board did not recommend any payment of cash dividend or conversion of capital reserve into share capital or other profit distribution of the Company for the year of 2024. The proposal in relation to the profit distribution plan is still subject to the consideration and approval of the shareholders’ general meeting of the Company. 2025 OUTLOOK Looking ahead to 2025, as global inflation continues to decline and the uncertainty in various countries’ economic policy rises, global economic growth will be unstable due to several factors. Global economic growth rate in 2025 is projected to be 3.3%, according to the IMF. In 2025, the supporting conditions and basic trend of China’s economy with a stable foundation, multiple advantages, strong resilience, great potential and long-term positive outlook remain unchanged. China will adhere to the general principle of seeking progress while maintaining stability, implement more proactive and promising macropolicies, expand domestic demand, stabilise expectations, and stimulate vitality, so as to promote a sustained economic upturn. – 55 – In the face of more complex and severe domestic and international situations, the Group will continue to enhance its core competitiveness, implement the overarching approach for quality development to ensure sustainable and high-quality safety, enhance and improve operational standards, continuously improve the quality of operation and service, accelerate the implementation of major strategies, deepen and improve reform, and constantly stride forward towards the goal of building the Group into a world-class aviation transportation enterprise. 1. Firmly guarding the safety bottom line and continuously improving safety and quality The Group will deepen the construction of the seven safety systems and promote the integration of the seven systems into the entire chain of safety management. We will continue to make efforts in the qualification and capability building for key positions, strengthen the management of the entire career cycle of professional teams, and comprehensively improve the qualifications and capabilities of key personnel; implement the standards for determining major safety hazards, and form a closed-loop risk prevention and control system of identifying, evaluating, implementing and verifying risks, so as to guard against the risks of extreme weather; create a technology-supported and data-driven safety management mode, speed up the iterative upgrading and popularisation of the “Tian Tong (天瞳)” and “Tian Ji (天極)” systems, and empower safety management through scientific and technological means. In 2025, the Group will continue to maintain the stable trend of safety operation. 2. Enhancing market operation capability and consolidating and improving operation standard The Group will actively explore the market and carry out lean cost control. We will focus on improving the daily utilisation rate of aircraft, strengthening capacity allocation, and enhancing the flight scheduling optimisation capability; strengthening the matching of capacity with market, volume and rates, conducting market analysis, and implementing the refined management of rates for the whole market and all routes; further enhancing the cargo operation capability, and vigorously developing cross-border e-commerce platform customers and high-end manufacturing customers; strengthening the integrated application of digital intelligence technology in multiple scenarios of aviation logistics, and enhancing digital intelligence capabilities such as network booking and whole-process cargo tracking; enhancing the efficiency of cost control, and carrying out the full life-cycle management of cost management projects. – 56 – 3. Continuously improving the operation quality to create a top service brand The Group will improve its operation and management capabilities, strengthen the construction of service capabilities, and improve the brand management system. We will improve the flight scheduling process and rules, and deepen the capacity building of operational risk prevention and control, operational resource management, etc.; improve the operation decision-making model to promote operational intelligence; optimise the whole chain of service experience from the perspective of passengers, and improve the stability and consistency of our services; enhance the level of service management and control, and solve the sore points and difficulties that are of concern to passengers; and improve the characteristic brand management system of CSA to continuously enhance our international influence. 4. Accelerating the implementation of strategies and continuously expanding the development space The Group will further promote high-quality development and endeavour to enhance quality and efficiency. We will vigorously promote hub construction, strengthen hub design, optimise the flight wave structure of Guangzhou hub, and construct Beijing hub and Urumqi hub with high quality; solidly pushing forward the adjustment and optimisation of the five major structures; vigorously develop strategic and emerging industries highly relevant to civil aviation, optimise the industrial layout, and enhance the specialisation and marketisation level of strategic and emerging industries; push forward the digital transformation with all our strength, strengthen the application of decision-making models in key business areas, and, and enhance the ability to accurately grasp the market and quickly respond with digital means. 5. Promoting reform and deepening improvement and continuing to strengthen the foundation of development The Group will endeavour to carry out the functional and mission-oriented reform and the reform of systems and mechanisms. We will strengthen the research of key technologies and promote the output of practical results from major scientific and technological research projects; further promote the development of strategic and emerging industries in accordance with the overarching approach of “professional competence, market-oriented development, high-end transformation and modern governance”; complete the reform of the supervisory committee, and improve the operation of the boards of directors of the subsidiaries and the management system of the directors; enhance the quality of tenure system and contractual management, and improve the remuneration incentive mechanism based on market-oriented operation; scientifically prepare the “Fifteenth Five-Year Plan”, and strengthen the four-tier strategic planning system; carry out optimisation of flight efficiency, ground energy saving and carbon reduction, energy green transformation and other activities in a deep-going way, and strengthen carbon asset management. – 57 – PUBLICATION OF ANNUAL REPORT ON THE WEBSITES OF THE STOCK EXCHANGE AND THE COMPANY The 2024 annual report of the Company, which contains consolidated financial statements for the year ended 31 December 2024, with an unmodified auditor’s report, and all other information required under Appendix D2 to the Listing Rules will be despatched to the shareholders of the Company and published on the websites of the Stock Exchange (www.hkexnews.hk) and the Company (www.csair.com) in due course. By order of the Board China Southern Airlines Company Limited Chen Wei Hua and Liu Wei Joint Company Secretaries Guangzhou, the People’s Republic of China 26 March 2025 As at the date of this announcement, the Directors include Ma Xu Lun and Han Wen Sheng as executive Directors; and Pansy Catilina Chiu King Ho, Guo Wei and Zhang Jun Sheng as independent non-executive Directors.