UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549  

______________________________

 

FORM 6-K

 

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16

under the Securities Exchange Act of 1934

 

For the month of April 2016

 

Commission File Number: 001-14550

 

China Eastern Airlines Corporation Limited

______________________________

 

(Translation of Registrant’s name into English)

 

Board Secretariat’s Office

Kong Gang San Lu, Number 88

Shanghai, China 200335

______________________________

 

(Address of principal executive offices)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of     x   Form 20-F     ¨   Form 40-F

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):   ¨

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):   ¨

 

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:     ¨   Yes     x   No

 

If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):     n/a  

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  China Eastern Airlines Corporation Limited
  (Registrant)
   
   
Date:   April 28, 2016 By:   /s/ Wang Jian
   

Name:  Wang Jian

Title:  Joint Company Secretary

 

 

 

 

Certain statements contained in this announcement may be regarded as "forward-looking statements" within the meaning of the U.S. Securities Exchange Act of 1934, as amended. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual performance, financial condition or results of operations of the Company to be materially different from any future performance, financial condition or results of operations implied by such forward-looking statements. Further information regarding these risks, uncertainties and other factors is included in the Company's filings with the U.S. Securities and Exchange Commission. The forward-looking statements included in this announcement represent the Company's views as of the date of this announcement. While the Company anticipates that subsequent events and developments may cause the Company's views to change, the Company specifically disclaims any obligation to update these forward-looking statements, unless required by applicable laws. These forward-looking statements should not be relied upon as representing the Company's views as of any date subsequent to the date of this announcement.

 

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.

 

  

 

On 28 April 2016, CEA Research Center, a wholly-owned subsidiary of the Company entered into the Services Framework Agreement with Eastern Air Industrial Investment, pursuant to which Eastern Air Industrial Investment and its subsidiaries will provide the property management services, accommodation and catering services and ground transportation services to CEA Research Center.

 

Since the applicable percentage ratios for the highest proposed cap for the eight months ending 31 December 2016 and the nine months ending 30 September 2017 for the continuing connected transactions under the Services Framework Agreement are more than 0.1% but less than 5%, in accordance with Chapter 14A of the Listing Rules, the continuing connected transactions under the Services Framework Agreement are only subject to the reporting and announcement requirements under Chapter 14A of the Listing Rules and are exempted from the independent shareholders’ approval requirement.

   

THE SERVICES FRAMEWORK AGREEMENT

 

On 28 April 2016, CEA Research Center, a wholly-owned subsidiary of the Company entered into the Services Framework Agreement with Eastern Air Industrial Investment, pursuant to which Eastern Air Industrial Investment and its subsidiaries will provide the property management services, accommodation and catering services and ground transportation services to CEA Research Center.

 

Term

 

The term of the Services Framework Agreement will commence from 1 May 2016 to 30 September 2017. The parties to the Services Framework Agreement may extend the term of the Services Framework Agreement upon mutual agreement in writing.

 

- 1 - 

 

 

Services

 

Property management services: Eastern Air Industrial Investment will provide the property management services to CEA Research Center for the properties with a gross floor area of approximately 184,900 square meters. The services include the integrated management service, public facilities maintenance service, public order maintenance service, public environment maintenance service and customized service. The property management services adopt the 24 hours operation management system, whole life cycle of equipment and facilities management and emergency management.

 

Accommodation and catering services: a wholly-owned subsidiary of Eastern Air Industrial Investment will provide accommodation and catering services to CEA Research Center including (i) 688 guest rooms with an aggregated gross floor area of 24,480 square metres; (ii) a dining hall with a gross floor area of 2,000 square metres and a designed capacity of 2,000 people which is able to accommodate 1,000 people to have foods simultaneously, and a kitchen with a gross floor area of 2,000 square metres. The accommodation services include reception service and guest room management service for checked-in customers. The reception service includes reservation, guest receiving, inquiry and baggage storage. The guest room management service includes room service and the cleaning of guest room as well as the public areas of the apartment. The catering services include provision of optional meals, buffet, western-style food and Chinese food for breakfast, lunch and dinner and provision of customized catering service according to proprietor’s requirement.

 

Ground transportation services: Eastern Air Industrial Investment and its subsidiaries will provide ground transportation services (including airport shuttle, airport ferry and transfer service) to students, management personnel, business personnel and staff of the CEA Research Centre for their airport pick-up and commuting assurance.

 

Pricing policy

 

The services fees to be charged by Eastern Air Industrial Investment and its subsidiaries to CEA Research Center will be determined by the parties based on the quotation for the same type of services available from independent third parties with reference to relevant factors as mentioned below. A department or an officer designated by two parties will be responsible for verifying the quotation and terms for the same type of services from independent third parties (in general, inquires on quotation and terms will be made to at least two independent third parties by e-mail, facsimile or telephone). The services fees will be determined by two parties after comparing and taking into consideration certain factors including quotation, quality, scope, area, type and seasonality of services, and specific needs of the parties. The services fees to be charged by Eastern Air Industrial Investment to CEA Research Center should not be higher than the fees of the same type of services provided by Eastern Air Industrial Investment to independent third parties.

 

The service fees are payable monthly in arrears.

 

- 2 - 

 

 

PROPOSED CAPS

 

Having considered (i) property management services plan, implementation plan, services standard and full function open use of CEA Research Center for the property management services; (ii) the labor costs and management fees of staff allocated based on the industry standard and the needs of accommodation and catering services of CEA Research Center for the accommodation and catering services; and (iii) the number of trainings in 2015 and the expected increase of 20% in the number of flights of the Company during 13th Five Year Plan for the ground transportation services, the Directors propose to set the proposed caps for the eight months ending 31 December 2016 and the nine months ending 30 September 2017 for the continuing connected transactions under the Services Framework Agreement as follows:

 

    Proposed caps for  
    the relevant period  
    Eight months     Nine months  
    ending 31     ending 30  
    December     September  
    2016     2017  
    (from     (from  
    1 May     1 January  
    2016 to     2017 to  
    31 December     30 September  
    2016)     2017)  
    (RMB)     (RMB)  

Maximum services fee payable by CEA Research Center for
      the property management services

    12,800,000       24,200,000  

Maximum services fee payable by CEA Research Center for
      the accommodation and catering services

    9,000,000       22,000,000  

Maximum services fee payable by CEA Research Center for
      the ground transportation services

    4,300,000       12,700,000  
Total     26,100,000       58,900,000  
                 
REASONS FOR AND BENEFITS OF TRANSACTIONS                

 

Eastern Air Industrial Investment has rich experience in providing relevant long-term services to civil aviation corporations and possesses the relevant qualifications for operating such businesses. It also has professional aviation knowledge and fully understands the nature, content and major concerns of the businesses of aviation corporations. It provided high-quality, high-efficient and cost-effectiveness services in relation to property management, accommodation and catering and ground transportation to other subsidiaries of the Company during their previous cooperation. The transactions entered into between CEA Research Center and Eastern Air Industrial Investment is beneficial towards ensuring ordinary operation of CEA Research Center and facilitating the business development of CEA Research Center.

 

In light of the above factors, the Board (including the independent non-executive Directors) considers that the transactions under the Services Framework Agreement are conducted on normal commercial terms or on terms no less favourable to the Company than those available to independent third parties, and are entered into on a continuing or recurring basis in the ordinary course of business of the Company, and are fair and reasonable and in the interests of the Company and its shareholders as a whole.

 

- 3 - 

 

 

The Board (including the independent non-executive Directors) further considers that the proposed caps for the transactions under the Services Framework Agreement for the eight months ending 31 December 2016 and nine months ending 30 September 2017 are fair and reasonable.

 

IMPLICATIONS UNDER THE LISTING RULES

 

Eastern Air Industrial Investment is a wholly-owned subsidiary of CEA Holding, the controlling shareholder of the Company, Eastern Air Industrial Investment is a connected person of the Company under the Listing Rules. Therefore, the transactions contemplated under the Services Framework Agreement entered into between CEA Research Center and Eastern Air Industrial Investment constitute continuing connected transactions of the Company under the Listing Rules.

 

Since the applicable percentage ratios for the highest proposed cap for the eight months ending 31 December 2016 and the nine months ending 30 September 2017 for the continuing connected transactions under the Services Framework Agreement are more than 0.1% but less than 5%, in accordance with Chapter 14A of the Listing Rules, the continuing connected transactions under the Services Framework Agreement are only subject to the reporting and announcement requirements under Chapter 14A of the Listing Rules and are exempted from the independent shareholders’ approval requirement.

 

Mr. Liu Shaoyong (a Director and chairman of the Company), Mr. Xu Zhao (a Director) and Mr. Gu Jiadan (a Director) are members of senior management of CEA Holding, which may be regarded as having a material interest in the continuing connected transactions under the Services Framework Agreement and therefore they have abstained from voting at the meeting of the Board convened for the purpose of approving the continuing connected transactions. Save as disclosed above, none of the other Directors has a material interest in the continuing connected transactions.

 

GENERAL

 

The Company The Company is principally engaged in the business of civil aviation;
   
CEA Research Center CEA Research Center is principally engaged in technological research and development in the field of aviation and provision of employee training within the Group and conference services, a wholly-owned subsidiary of the Company;
   
Eastern Air Industrial Investment Eastern Air Industrial Investment is principally engaged in the businesses in relation to construction materials, general equipment, electrical appliances, groceries, maintenance of ground equipment, labour service (excluding intermediary labour service), communication network equipment engineering, hotel management, property management and leasing, a wholly-owned subsidiary of CEA Holding.

 

- 4 - 

 

 

DEFINITIONS

 

In this announcement, unless the context otherwise requires, the following terms shall have the following meanings:

 

“Board” means the board of Directors;
   
“CEA Holding” means 中國東方航空集團公司 (China Eastern Air Holding Company), a wholly PRC state-owned enterprise and the controlling shareholder of the Company directly or indirectly holding approximately 62.07% of its issued share capital as at the date of this announcement;
   
“CEA Research Center” means 東航技術應用研發中心有限公司 (China Eastern Airlines Technology Application Research Center Co., Ltd.), a limited liability company incorporated in the PRC;
   
“Company” means 中國東方航空股份有限公司 (China Eastern Airlines Corporation Limited), a joint stock limited company incorporated in the PRC with limited liability, whose H shares, A shares and American depositary shares are listed on the Stock Exchange, the Shanghai Stock Exchange and the New York Stock Exchange, Inc., respectively;
   
“connected person” has the same meaning ascribed to this term under the Listing Rules;
   
“Directors” means the directors of the Company;
   
“Eastern Air Industrial Investment” means 東航實業集團有限公司 (Eastern Air Investment Group Co., Ltd.), a limited liability company incorporated in the PRC;
   
“Listing Rules” means the Rules Governing the Listing of Securities on the Stock Exchange;
   
“PRC” means the People’s Republic of China;
   
“RMB” means renminbi, the lawful currency of the PRC;

 

 

- 5 - 

 

 

“Services Framework Agreement” means the property management and accommodation and catering and ground transportation services framework agreement dated 28 April 2016 entered into between CEA Research Center and Eastern Air Industrial Investment;
   
“Stock Exchange” means The Stock Exchange of Hong Kong Limited;
   
“%” percentage.

 

  By order of the Board
  CHINA EASTERN AIRLINES CORPORATION LIMITED
  Wang Jian
  Joint Company Secretary
  Shanghai, the PRC
  28 April 2016

  

As at the date of this announcement, the Directors include Liu Shaoyong (Chairman), Ma Xulun (Vice Chairman, President), Xu Zhao (Director), Gu Jiadan (Director), Li Yangmin (Director, Vice President), Tang Bing (Director, Vice President), Tian Liuwen (Director, Vice President), Ji Weidong (Independent non-executive Director), Li Ruoshan (Independent non-executive Director), Ma Weihua (Independent non-executive Director) and Shao Ruiqing (Independent non-executive Director).

  

- 6 - 

 

 

Certain statements contained in this announcement may be regarded as "forward-looking statements" within the meaning of the U.S. Securities Exchange Act of 1934, as amended. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual performance, financial condition or results of operations of the Company to be materially different from any future performance, financial condition or results of operations implied by such forward-looking statements. Further information regarding these risks, uncertainties and other factors is included in the Company's filings with the U.S. Securities and Exchange Commission. The forward-looking statements included in this announcement represent the Company's views as of the date of this announcement. While the Company anticipates that subsequent events and developments may cause the Company's views to change, the Company specifically disclaims any obligation to update these forward-looking statements, unless required by applicable laws. These forward-looking statements should not be relied upon as representing the Company's views as of any date subsequent to the date of this announcement.

 

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.

 

 

 

2016 FIRST QUARTERLY REPORT

 

This announcement is made by the Company pursuant to the requirements under Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) and the disclosure requirements under Rule 13.09(2)(a) and Rule 13.10B of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.
 
The financial statements of the Company for the first quarter of 2016 were not audited, and were prepared in accordance with the PRC Accounting Standards.

 

1. IMPORTANT NOTICE

 

This announcement is made by China Eastern Airlines Corporation Limited (the “ Company ”) pursuant to the disclosure requirement under Rule 13.10B of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “ Listing Rules ”) (which requires any issuer listed on The Stock Exchange of Hong Kong Limited (the “ Stock Exchange ”) whose securities are also listed on other stock exchange(s) to simultaneously inform the Stock Exchange of any information released to any of such other exchange(s) and to ensure that such information is released to the market in Hong Kong at the same time as it is released to the other market(s)). At the request of the Shanghai Stock Exchange, a similar announcement of the even date is being made by the Company in Shanghai pursuant to the relevant provisions of the Shanghai listing rules and regulations.

 

This quarterly report was prepared in accordance with the regulations as prescribed by the China Securities Regulatory Commission (the “ CSRC ”) in relation to disclosure of information in quarterly reports for listed companies, and is published on the same day in Shanghai and Hong Kong. The financial statements of the Company for the first quarter of 2016 were not audited, and were prepared in accordance with the PRC Accounting Standards.

 

The board of directors (the “ Board ”) and the supervisory committee of the Company, and its directors, supervisors and senior management hereby confirm the truthfulness, accuracy and completeness of the information set out in this quarterly report and that it does not contain false information, misleading statement or material omission, and accept joint and several responsibility.

 

  – 1 –  
 

 

All directors of the Company attended the meeting of the Board to review the quarterly report.

 

Liu Shaoyong, the person-in-charge of the Company, Ma Xulun, the officer-in-charge of accounting of the Company, and Wu Yongliang, the officer-in-charge of the accounting department (accounting officer) of the Company hereby confirm that the financial statements forming part of this quarterly report are true, accurate and complete.

 

The 2016 first quarterly report of the Company is unaudited.

 

2. MAIN FINANCIAL DATA AND CHANGES IN SHAREHOLDERS OF THE COMPANY

 

2.1 Main financial data

 

  Unit: million Currency: RMB

 

    As at
the end of the
reporting period 		    As at the end
of last year 		    Increase/decrease
as at the end of
the reporting
period compared
with the end
of last year
                (%)  
                   
Total assets     189,648       195,709       –3.10  
Net assets attributable to the shareholders of listed company     37,557       35,137       6.89  

 

    From the
beginning of
the year to
the end of the
reporting period 		    From the
beginning of
last year to
the end of
the reporting
period last year 		    Increase/decrease
compared with
the same
period last year 		 
                (%)  
                   
Net cash flows from operating activities     5,832       2,556       128.17  

 

  – 2 –  
 

 

    From the
beginning of
the year to
the end of the
reporting period 		    From the
beginning of
last year to
the end of
the reporting
period last year 		    Increase/decrease
compared with
the same
period last year 		 
                (%)  
                   
Revenue     23,534       22,393       5.10  
Net profit attributable to shareholders of listed company     2,602       1,564       66.37  
Net profit attributable to shareholders of listed company after deducting non-recurring profit and loss     2,468       1,477       67.10  
Weighted average return on net assets (%)     7.12       5.49       Increased by 1.63 pts  
Basic earnings per share (RMB per share)     0.1980       0.1234       60.45  
Diluted earnings per share (RMB per share)     0.1980       0.1234       60.45  

 

Non-recurring profit and loss and relevant amounts

 

  Unit: million Currency: RMB

 

Item   Amount for
the period 		 
       
Gains or losses from disposal of non-current assets     –3  
Non-operating income and expenses other than the above     194  
Effect on minority interests (net of tax)     –25  
Effect on income tax     –32  
         
Total     134  

 

  – 3 –  
 

 

2.2 The total number of the Company’s shareholders and the shareholding of the 10 largest shareholders and the shareholding of the 10 largest holders of listed shares (or holders of shares without trading moratorium) as at the end of the reporting period

 

Unit: Shares

 

Total number of shareholders     319,274  

 

Shareholding of the 10 largest shareholders
                Number of
shares with 		               
    Shareholdings           trading     Pledged or locked-up    
Name of shareholders (in full)   as at the end
of the period 		    Proportion     moratorium
held 		    Status of
shares 		  Number of
shares 		    Nature of
shareholders
          (%)                      
                                 
China Eastern Air Holding Company (中國東方航空集團公司)     5,072,922,927       38.61 %     241,547,927     Nil     0     State-owned legal person
HKSCC Nominees Limited     4,182,647,289       31.83 %     698,865,000     Unknown     Unknown     Overseas legal person

Delta Air Lines, Inc.

   

465,910,000

      3.55 %     0     Nil     0    

State-owned legal person

CES Finance Holding Co., Ltd (東航金控有限責任公司)     457,317,073       3.48 %     457,317,073     Nil     0     State-owned legal person
China Securities Finance Corporation Limited (中國證券金融股份有限公司)     348,493,857       2.65 %     0     Unknown     Unknown     State-owned legal person
China National Aviation Fuel Holding Company (中國航空油料集團公司)     120,461,743       0.92 %     0     Unknown     Unknown     State-owned legal person
Sinotrans Air Transportation Development Co., Ltd. (中外運空運發展股份 有限公司)     72,750,000       0.55 %     0     Unknown     Unknown     State-owned legal person
Central Huijin Asset Management Ltd. (中央匯金資產管理 有限責任公司)     70,984,100       0.54 %     0     Unknown     Unknown     State-owned legal person
Shanghai Alliance Investment Limited (上海聯和投資 有限公司)     65,615,429       0.50 %     0     Unknown     Unknown     State-owned legal person
Industrial and Commercial Bank of China Limited – Harvest New Opportunity Flexible Allocation Mixed Launched Fund (中國工商銀行股份有限公司- 嘉實新機遇靈活配置混合型發起式證券投資基金)     38,114,895       0.29 %     0     Unknown     Unknown     Unknown

 

  – 4 –  
 

 

Shareholding of the 10 largest holders of shares without trading moratorium
    Number of listed
shares without
trading 		     
Name of shareholder   moratorium held     Class and number of shares
          Class   Number  
                 
China Eastern Air Holding Company (中國東方航空集團公司)     4,831,375,000     RMB ordinary shares     4,831,375,000  
HKSCC Nominees Limited     3,483,782,289     Overseas listed foreign shares     3,483,782,289  
Delta Air Lines, Inc.     465,910,000     Overseas listed foreign shares     465,910,000  
China Securities Finance Corporation Limited (中國證券金融股份有限公司)     348,493,857     RMB ordinary shares     348,493,857  
China National Aviation Fuel Holding Company (中國航空油料集團公司)     120,461,743     RMB ordinary shares     120,461,743  
Sinotrans Air Transportation Development Co., Ltd. (中外運空運發展股份有限公司)     72,750,000     RMB ordinary shares     72,750,000  
Central Huijin Asset Management Ltd. (中央匯金資產管理有限責任公司)     70,984,100     RMB ordinary shares     70,984,100  
Shanghai Alliance Investment Limited (上海聯和投資有限公司)     65,615,429     RMB ordinary shares     65,615,429  
Industrial and Commercial Bank of China Limited – Harvest New Opportunity Flexible Allocation Mixed Launched Fund (中國工商銀行股份有限公司 - 嘉實新機 遇靈活配置混合型發起式證券投資基金)     38,114,895     RMB ordinary shares     38,114,895  
Bank of China – E Fund Stable Income Bond Securities Investment Fund (中國銀行 - 易方達穩健收益債券型 證券投資基金)     28,911,482     RMB ordinary shares     28,911,482  

 

Description of connected relationship or activities in concert among the above shareholders   Among the 4,182,647,289  shares held by HKSCC Nominees  Limited, 2,626,240,000 shares are held by CES Global Holdings (Hong Kong) Limited (“ CES Global ”) in the capacity of beneficial owner; China Eastern Air Holding Company (“ CEA Holding ”) owns 100% equity interests in CES Finance Holding Co., Ltd (“ CES Finance ”); CES Finance owns 100% equity interests in CES Global; thus, CEA Holding indirectly owns 100% equity interests in CES Global. The Company is not aware of any other connected relationship or activities in concert among the 10 largest holders of shares without trading moratorium.
     
Description of preference shareholders with voting rights restored and the number of shares held   Not applicable

 

2.3 The total number of the Company’s preference shareholders and the shareholding of the 10 largest preference shareholders and the shareholding of the 10 largest preference holders of shares without trading moratorium as at the end of the reporting period

 

Not applicable

 

  – 5 –  
 

 

3. IMPORTANT MATTERS

 

3.1 Details of and reasons for the substantial changes in main items of financial statements and financial indicators of the Company

  

    Change
compared
with the
same period 		     
Item   last year     Reason for the Change
           
Business tax     40.91 %   Primarily due to an increase in the value- added tax surcharge paid by the majority- controlled subsidiaries of the Company during the reporting period
Finance costs     –20.93 %   Primarily due to the exchange gains arising from the appreciation of the exchange rate of RMB to USD during the reporting period, while exchange losses were recorded during the corresponding period of last year
Total profits     61.77 %   Primarily due to an increase in operating revenues as compared to the corresponding period of last year given the continuous enhancement of the operational capability of the Company and robust market demand during the reporting period. Meanwhile, the international crude oil price was low, thereby reducing the aviation fuel costs
Income tax expenses     68.20 %   Primarily due to the significant increase in total profits of the Company during the reporting period, resulting in an increase in taxable income and, in turn, the income tax expenses
Cash proceeds from borrowings     136.86 %   Primarily due to an increase in the amount of short-term borrowings obtained and super short-term commercial papers issued by the Company during the reporting period as compared to  the corresponding period of last year
Cash paid for repayment of indebtedness     280.38 %   Primarily due to an increase in repayments of due debts during the reporting period as compared to the corresponding period of last year
Other cash paid for financing activities     110.77 %   Primarily due to an increase in repayments of finance leases during the reporting period as compared to the corresponding period of last year

 

  – 6 –  
 

 

    Change
compared
with the
end of 		     
Item   last year     Reason for the Change
             
Monetary capital     –85.74 %   Primarily due to the repayment of foreign currency-denominated borrowings with the Company’s monetary capital during the reporting period
Short-term borrowings     211.54 %   Primarily due to the adjustment of foreign currency denominated debt structure of the Company through short-term borrowings during the reporting period
Notes payable     –37.50 %   Primarily due to the reduction in the use of notes payable for settlement during the reporting period
Staff remuneration payable     –33.04 %   Primarily due to the payment of year-end bonuses for year 2015 during the reporting period
Non-current liabilities due within one year     –49.62 %   Primarily due to the repayment of long-term borrowings and long-term payables due within one year during the reporting period
Long-term borrowings     –67.27 %   Primarily due to the repayment of foreign currency-denominated long-term borrowings during the reporting period
Undistributed profits     53.96 %   Primarily due to the profits realized by the Company during the reporting period and the significant increase in total profits as compared with that of the corresponding period of last year

 

  – 7 –  
 

   

3.2 Analysis of the progress of significant events and their effects and proposed solutions

 

(1) In January 2016, the Company received the “Approval for the Non-Public Issuance of A Shares by China Eastern Airlines Corporation Limited” (Zheng Jian Xu Ke [2016] No. 8) issued by China Securities Regulatory Commission, pursuant to which the Company was approved to issue not more than 2,329,192,546 A Shares by way of non-public issuance. For details, please refer to the announcement published by the Company in China Securities Journal and Shanghai Securities News and on the website of Shanghai Stock Exchange on 9 January 2016;

 

(2) On 18 March 2016, the Company made interest payment on the Corporate Bonds for 2012 (First Tranche) for the term between 18 March 2015 and 17 March 2016. For details, please refer to the announcement published by the Company in China Securities Journal and Shanghai Securities News and on the website of Shanghai Stock Exchange on 12 March 2016;

 

(3) On 18 April 2016, the trading moratorium on the 241,547,927 A shares and 457,317,073 A shares of the Company held by each of CEA Holding and CES Finance was lifted. On the same date, CEA Holding undertook that it, together with CES Finance, will not dispose of such unlocked A shares of the Company within 24 months from 18 April 2016. For details, please refer to the announcements published by the Company in China Securities Journal and Shanghai Securities News and on the website of Shanghai Stock Exchange on 12 April and 19 April 2016;

 

(4) On 21 April 2016, trading in the shares of the Company was suspended temporarily for a day due to the contemplated entry by the controlling shareholder of the Company, CEA Holding, into a cooperation agreement with a third party relating to the principal business and equity etc. of the Company. On the same date, CEA Holding entered into the Strategic Cooperation Framework Agreement with Ctrip Computer Technology (Shanghai) Co., Ltd. The shares of the Company resumed trading on 22 April 2016. For details, please refer to the announcements published by the Company in China Securities Journal and Shanghai Securities News and on the website of Shanghai Stock Exchange on 21 April and 22 April 2016.

 

  – 8 –  
 

  

3.3 The status of implementation of the matters undertaken by the Company and shareholders holding more than 5% interests

 

                        Whether the
                        undertaking
                        has been
                    Whether there   strictly
Background                   is an   implemented
of   Type of   Undertaking       Time and term of   implementation   in a timely
undertaking   undertaking   party   Content of undertaking   undertaking   period   manner
                         
Undertaking in relation to refinancing   Trading moratorium of shares   CEA Holding/ CES Finance   Pursuant to the “Report on non-public issuance of A shares”  published by the Company on 17 April 2013, the Company issued 241,547,927  A shares of the Company and 457,317,073 A shares of the Company to CEA Holding and CES Finance respectively, on a non-public basis in April 2013. CEA Holding and CES Finance undertook that: they shall not transfer the A shares of the Company purchased under the aforesaid issuance within 36 months from the date of completion of the issuance of A shares.  

Time of undertaking: April 2013;

 

Term of undertaking: from 16 April 2013 to 16 April 2016

  Yes   Completed
                         
    Trading moratorium of shares   CES Global   The Company issued 698,865,000 additional H shares to CES Global in June 2013. According to the resolution passed at the 18th ordinary meeting of the sixth session of the Board held on 11 September 2012 and the resolution passed at the 2012 first extraordinary general meeting of the Company held on 9 November 2012, CES Global undertook that: it shall not transfer the H shares of the Company purchased under the aforesaid issuance within 36 months from the date of completion of the issuance of H shares.  

Time of undertaking: November 2012;

 

Term of undertaking: from 21 June 2013 to 21 June 2016

  Yes   Yes
                         
    To resolve defects in land and other property ownership   CEA Holding   Due to historical reasons, some of the land and properties injected by CEA Holding into the Company had not yet been transferred to the name of the Company. With regard to 17 properties which are located in Guangzhou and Shenzhen (with an aggregate GFA of approximately 1,996.51 square meters), CEA Holding undertook that it shall, resolve defects in building ownership by completing procedures for transferring property ownership to the Company, or transferring the relevant gains to the Company upon external disposal within 3 years; and CEA Holding shall bear the corresponding obligations in relation to the losses caused to the Company as a result of the failure of CEA Holding in completing the relevant procedures for transferring the relevant property ownership in a timely manner.  

Time of undertaking: June 2014;

 

Term of undertaking: from 27 June 2014 to 30 June 2017

  Yes   Yes

 

  – 9 –  
 

  

                        Whether
                        undertaking
                        has been
                    Whether   strictly
Background                 there is an   implemented
of   Type of   Undertaking       Time and term of   implementation   in a timely
undertaking   undertaking   party   Content of undertaking   undertaking   period   manner
                         
    To resolve defects in land and other property ownership   CEA Holding   Due to historical reasons, some of the land and properties injected by CEA Holding into the Company had not yet been transferred to the name of the Company. With regard to 76 properties which are located in the Eastern District of Shanghai Hongqiao Airport (the relevant land ownership of which has been transferred to the Company) (with an aggregate GFA of approximately 146,700 square meters), relevant construction procedures were not completed for the buildings due to historical reasons, and therefore it is currently difficult to carry out ownership transfer. As a result,  CEA Holding undertook  that it shall strive for opportunity to develop in the Eastern District of Shanghai Hongqiao Airport, and resolve defects in relevant building ownership by completing relevant procedures for transferring building ownership to the Company in batches upon fulfillment of conditions or through land replacement, the expected final completion time of which is approximately 10 to 12 years. The progress of resolving the above defects in property ownership and its results are subject to the overall development policy of the Eastern District of Shanghai Hongqiao Airport and its progress of implementation. CEA Holding shall bear the corresponding obligations in relation to the losses caused to the Company as a result of the failure of CEA Holding in completing the relevant procedures for transferring the relevant property ownership in a timely manner.  

Time of undertaking: June 2014;

 

Term of undertaking: from 27 June 2014 to 30 June 2026

  Yes   Yes
                         
Other undertakings   Others   CEA Holding   CEA Holding undertook that it would propose the resolution on amendments to the terms of profit distribution under Article 157(D) of the Articles of Association of the Company before the forthcoming general meeting of the Company and vote for such resolution at the general meeting. For details, please refer to the announcement published by the Company in China Securities Journal and Shanghai Securities News and on the website of Shanghai Stock Exchange on 22 September 2015.  

Time of undertaking: 21 September 2015;

 

Term of undertaking: from 21 September 2015 to the date of convening the forthcoming general meeting of the Company

  Yes   Yes

 

  – 10 –  
 

  

                        Whether the
                        undertaking
                        has been
                    Whether   strictly
Background                   there is an   implemented
of   Type of   Undertaking       Time and term of   implementation   in a timely
undertaking   undertaking   party   Content of undertaking   undertaking   period   manner
                         
    Trading moratorium of shares   CEA Holding/ CES Finance   CEA Holding and CES Finance undertook that they will not dispose of the 241,547,927 A shares and 457,317,073 by each of them within 24 months from the lifting of the trading moratorium on 18 April 2016.  

Time of undertaking: April 2016;

 

A shares held Term of undertaking: from 18 April 2016 to 17 April 2018

  Yes   Yes

 

Description about the Performance of Undertakings:

 

(1) On 17 April 2013, the Company issued 241,547,927 A shares and 457,317,073 A shares to each of CEA Holding and CES Finance through non- public issuance. CEA Holding and CES Finance undertook that they would not transfer the A shares of the Company which they subscribed for a period of 36 months from the completion date of the A share issuance. As at 17 April 2016, CEA Holding and CES Finance strictly adhered to such undertaking. On 18 April 2016, the above lock-up shares held by CEA Holding and CES Finance became available for trading;

 

(2) CEA Holding and CES Finance undertook that they will not dispose of such unlocked A shares within 24 months from 18 April 2016.

 

For details, please refer to the announcements published by the Company in China Securities Journal and Shanghai Securities News and on the website of Shanghai Stock Exchange on 12 April and 19 April 2016.

 

3.4 Warning of and reasons for any expected accumulated losses from the beginning of the year to the end of the following reporting period or substantial changes in profitability compared to the same period last year

 

Not applicable

 

  By order of the Board
  CHINA EASTERN AIRLINES CORPORATION LIMITED
  Wang Jian
  Joint Company Secretary
  Shanghai, the People’s Republic of China
  28 April 2016

 

As at the date of this announcement, the directors of the Company include Liu Shaoyong (Chairman), Ma Xulun (Vice Chairman, President), Xu Zhao (Director), Gu Jiadan (Director), Li Yangmin (Director, Vice President), Tang Bing (Director, Vice President), Tian Liuwen (Director, Vice President), Ji Weidong (Independent non-executive Director), Li Ruoshan (Independent non-executive Director), Ma Weihua (Independent non-executive Director) and Shao Ruiqing (Independent non-executive Director).

 

  – 11 –  
 

  

4. APPENDIX

 

4.1 Financial Statements

 

China Eastern Airlines Corporation Limited

Consolidated and Company’s Balance Sheet as at 31 March 2016

(RMB million)

 

    31 March     31 December     31 March     31 December  
    2016     2015     2016     2015  
    Consolidated     Consolidated     Company     Company  
Assets                                
                                 
Current assets                                
Monetary capital     1,300       9,115       759       8,042  
Trade receivables     2,395       2,867       6,530       6,725  
Prepayments     928       753       137       123  
Dividends receivable     22       22       22       22  
Other receivables     3,839       4,881       9,802       9,784  
Inventory     2,079       2,056       42       38  
Non-current assets held for sale     594       594       –       –  
Non-current assets due within one year     87       150       66       66  
Other current assets     3,156       2,640       3,214       2,768  
                                 
Total current assets     14,400       23,078       20,572       27,568  
                                 
Non-current assets                                
Hedge instruments     45       45       45       45  
Financial assets available for sale     449       452       385       388  
Long-term equity investment     2,089       2,061       16,652       16,627  
Investment properties     294       294       –       –  
Fixed assets     132,445       131,430       83,540       83,155  
Construction in progress     24,323       22,978       23,261       22,223  
Intangible assets     2,379       2,346       1,418       1,391  
Goodwill     9,028       9,028       9,028       9,028  
Long-term deferred expenses     2,033       1,904       1,339       1,155  
Deferred income tax assets     243       243       137       137  
Other non-current assets     1,920       1,850       1,804       1,780  
                                 
Total non-current assets     175,248       172,631       137,609       135,929  
                                 
Total assets     189,648       195,709       158,181       163,497  

 

  – 12 –  
 

  

4.1 Financial Statements (Cont’d)

 

China Eastern Airlines Corporation Limited

Consolidated and Company’s Balance Sheet as at 31 March 2016 (Cont’d)

(RMB million)

 

    31 March     31 December     31 March     31 December  
Liabilities and shareholders’   2016     2015     2016     2015  
equity   Consolidated     Consolidated     Company     Company  
                         
Current liabilities                                
Short-term borrowings     23,481       7,537       24,988       5,287  
Hedge instruments     4       4       4       4  
Notes payable     500       800       500       800  
Trade payables     10,852       9,810       11,706       12,014  
Account collected in advance     1,232       1,059       804       749  
Settlement of vouchers     4,006       5,841       3,757       5,535  
Staff remuneration payable     2,677       3,998       1,185       1,856  
Tax payable     2,096       1,694       848       851  
Interest payable     596       758       361       496  
Other payables     5,107       4,065       13,321       16,772  
Non-current liabilities due within one year     11,748       23,318       5,414       16,716  
Other current liabilities     20,000       15,500       20,000       15,500  
                                 
Total current liabilities     82,299       74,384       82,888       76,580  
                                 
Non-current liabilities                                
Long-term borrowings     6,679       20,408       4,618       15,942  
Hedge instruments     253       97       253       97  
Bonds payable     8,092       8,090       4,793       4,792  
Long-term payables     46,975       50,036       27,892       29,400  
Long-term staff remuneration payable     2,800       2,790       2,041       2,064  
Special items payable     143       143       122       122  
Deferred income tax liabilities     8       8       16       16  
Other non-current liabilities     2,099       2,102       1,147       1,155  
                                 
Total non-current liabilities     67,049       83,674       40,882       53,588  
                                 
Total liabilities     149,348       158,058       123,770       130,168  

 

  – 13 –  
 

  

4.1 Financial Statements (Cont’d)

 

China Eastern Airlines Corporation Limited

Consolidated and Company’s Balance Sheet as at 31 March 2016 (Cont’d)
(RMB million)

 

    31 March     31 December     31 March     31 December  
Liabilities and shareholders’   2016     2015     2016     2015  
equity   Consolidated     Consolidated     Company     Company  
                         
Owners’ equity                                
Share capital     13,140       13,140       13,140       13,140  
Capital reserves     19,547       19,547       20,257       20,257  
Other comprehensive income     (2,738 )     (2,556 )     (2,109 )     (1,932 )
Retained profits     184       184       184       184  
Undistributed profits     7,424       4,822       2,939       1,680  
                                 
Total equity attributable to owners of parent company     37,557       35,137       -       -  
                                 
Minority interests     2,743       2,514       -       -  
                                 
Total shareholders’ equity     40,300       37,651       34,411       33,329  
                                 
Total liabilities and shareholders’ equity     189,648       195,709       158,181       163,497  

 

Financial statements signed by:

Person-in-charge of the Company: Liu Shaoyong

Officer-in-charge of accounting: Ma Xulun

Officer-in-charge of the accounting department: Wu Yongliang

 

  – 14 –  
 

 

4.1 Financial Statements (Cont ’ d)

 

China Eastern Airlines Corporation Limited

Consolidated and Company ’ s Income Statement for the Period from January to March 2016

(RMB million)

 

    Jan to Mar     Jan to Mar     Jan to Mar     Jan to Mar  
    2016     2015     2016     2015  
    Consolidated     Consolidated     Company     Company  
                         
Revenue     23,534       22,393       13,083       11,884  
Less: Operating costs     18,528       18,396       10,333       9,769  
Business taxes and surcharges     31       22       4       4  
Selling expenses     1,303       1,362       900       922  
Administrative expenses     613       637       344       353  
Finance expenses     631       798       557       561  
Assets impairment loss     –       –1       –       –  
Add: Gains arising from changes in fair value     2       1       2       1  
Investment gains     31       36       32       44  
                                 
Operating profit     2,461       1,216       979       320  
Add: Non-operating income     923       876       407       354  
Less: Non-operating expenses     3       2       1       1  
                                 
Total profits     3,381       2,090       1,385       673  
Less: Income tax expenses     550       327       125       118  
                                 
Net profit     2,831       1,763       1,260       555  
                                 
– Net profit attributable to shareholders of the parent company     2,602       1,564                  
                                 
– Minority interests     229       199                  
                                 
Earnings per share                                
Basic earnings per share (RMB)     0.20       0.12                  
                                 
Diluted earnings per share (RMB)     0.20       0.12                  

 

  – 15 –  
 

  

4.1 Financial Statements (Cont ’ d)

 

China Eastern Airlines Corporation Limited

Consolidated and Company ’ s Income Statement for the Period from January to March 2016 (Cont ’ d)

(RMB million)

 

    Jan to Mar     Jan to Mar     Jan to Mar     Jan to Mar  
    2016     2015     2016     2015  
    Consolidated     Consolidated     Company     Company  
                         
Other comprehensive income, net of tax                                
Other comprehensive income that cannot be reclassified into profit or loss in subsequent accounting periods:                                
Changes arising from re-measuring net liabilities or net assets of defined benefit plan     (16 )     –       (11 )     –  
                                 
Other comprehensive income that will be reclassified into profit or loss in subsequent accounting periods:                                
Share of other comprehensive income of investees to be reclassified into profit and loss in subsequent accounting periods under the equity method when meeting the prescribed conditions     (5 )     –       (5 )     –  
Changes in fair value of available-for-sale financial assets     (3 )     12       (3 )     12  
Effective portion of gains or losses from cash flow hedge instruments     (158 )     (74 )     (158 )     (74 )
                                 
Other comprehensive income, net of tax     (182 )     (62 )     (177 )     (62 )
                                 
Of which:                                
Other comprehensive income, net of tax, attributable to shareholders of the parent company     (182 )     (62 )                

 

  – 16 –  
 

   

4.1 Financial Statements (Cont ’ d)

 

China Eastern Airlines Corporation Limited

Consolidated and Company ’ s Income Statement for the Period from January to March 2016 (Cont ’ d)

(RMB million)

 

    Jan to Mar     Jan to Mar     Jan to Mar     Jan to Mar  
    2016     2015     2016     2015  
    Consolidated     Consolidated     Company     Company  
                         
Other comprehensive income, net of tax, attributable to minority interests     –       –                  
                                 
Total comprehensive income     2,649       1,701       1,083       493  
                                 
Of which:                                
Total comprehensive income attributable to shareholders of the parent company     2,420       1,502                  
                                 
Total comprehensive income attributable to minority interests     229       199                  

 

Financial statements signed by:

Person-in-charge of the Company: Liu Shaoyong

Officer-in-charge of accounting: Ma Xulun

Officer-in-charge of the accounting department: Wu Yongliang

 

  – 17 –  
 

   

4.1 Financial Statements (Cont ’ d)

 

China Eastern Airlines Corporation Limited

Consolidated and Company ’ s Cash Flow Statement as at 31 March 2016

(RMB million)

 

        Jan to Mar     Jan to Mar     Jan to Mar     Jan to Mar  
        2016     2015     2016     2015  
        Consolidated     Consolidated     Company     Company  
                             
1.   Cash flow from operating activities                        
    Cash received from sales of goods and provision of labour services     24,257       20,800       12,568       11,825  
    Other cash received from operating activities     3,189       2,087       2,448       1,820  
                                     
    Sub-total of cash inflow from operating activities     27,446       22,887       15,016       13,645  
                                     
    Cash paid for purchase of goods and receiving of labour services     (14,361 )     (14,115 )     (9,194 )     (8,431 )
    Cash paid to and for employees     (4,587 )     (3,129 )     (2,557 )     (1,575 )
    Taxes paid     (738 )     (359 )     (395 )     (219 )
    Other cash paid for operating activities     (1,928 )     (2,728 )     (1,390 )     (1,912 )
                                     
    Sub-total of cash outflow from operating activities     (21,614 )     (20,331 )     (13,536 )     (12,137 )
                                     
    Net cash flows from operating activities     5,832       2,556       1,480       1,508  

 

  – 18 –  
 

   

4.1 Financial Statements (Cont ’ d)

 

China Eastern Airlines Corporation Limited

Consolidated and Company ’ s Cash Flow Statement as at 31 March 2016 (Cont’d)

(RMB million)

 

        Jan to Mar     Jan to Mar     Jan to Mar     Jan to Mar  
        2016     2015     2016     2015  
        Consolidated     Consolidated     Company     Company  
                             
2.   Cash flow from investing activities                      
    Cash received from disposal of investment     –       –       –       –  
    Investment income in cash     1       –       1       –  
    Net cash recovered from disposals of fixed assets, intangible assets and other long-term assets     35       112       32       80  
    Other cash received from investing activities     10       15       9       15  
                                     
    Sub-total of cash inflow from investing activities     46       127       42       95  
                                     
    Amount paid in cash in relation to purchases of fixed assets, intangible assets and other long-term assets     (5,635 )     (4,922 )     (3,294 )     (4,409 )
    Investments paid in cash     –       (413 )     –       (413 )
    Other cash paid for investing activities     –       –       –       –  
                                     
    Sub-total of cash outflow from investing activities     (5,635 )     (5,335 )     (3,294 )     (4,822 )
                                     
    Net cash flow from investing activities     (5,589 )     (5,208 )     (3,252 )     (4,727 )

 

  – 19 –  
 

   

4.1 Financial Statements (Cont ’ d)

 

China Eastern Airlines Corporation Limited

Consolidated and Company ’ s Cash Flow Statement as at 31 March 2016 (Cont’d)

(RMB million)

 

        Jan to Mar     Jan to Mar     Jan to Mar     Jan to Mar  
        2016     2015     2016     2015  
        Consolidated     Consolidated     Company     Company  
                             
3.   Cash flow from financing activities                                
    Proceeds received in cash from investments     –       –       –       –  
    Cash received from borrowings     38,857       16,405       37,357       15,384  
    Proceeds received in cash from bonds issuance     –       –       –       –  
    Other cash received from financing activities     441       –       –       –  
                                     
    Sub-total of cash inflow from financing activities     39,298       16,405       37,357       15,384  
                                     
    Cash paid for repayment of indebtedness     (43,420 )     (11,415 )     (39,922 )     (10,466 )
    Cash payments for distribution of dividends and profits     (803 )     (615 )     (577 )     (527 )
    Other cash paid for financing activities     (3,151 )     (1,495 )     (2,380 )     (776 )
                                     
    Sub-total of cash outflow from financing activities     (47,374 )     (13,525 )     (42,879 )     (11,769 )
                                     
    Net cash flow from financing activities     (8,076 )     2,880       (5,522 )     3,615  
                                     
4.   Effect of changes in exchange rate on cash and cash equivalents     18       (13 )     11       (11 )

 

  – 20 –  
 

   

4.1 Financial Statements (Cont ’ d)

 

China Eastern Airlines Corporation Limited

Consolidated and Company ’ s Cash Flow Statement as at 31 March 2016 (Cont’d)

(RMB million)

 

        Jan to Mar     Jan to Mar     Jan to Mar     Jan to Mar  
        2016     2015     2016     2015  
        Consolidated     Consolidated     Company     Company  
                             
5.   Net increase in cash and cash equivalents     (7,815 )     215       (7,283 )     385  
    Add: Balance of cash and cash equivalents at the beginning of the year     9,115       1,355       8,042       866  
                                     
6.   Balance of cash and cash equivalents at the end of the year     1,300       1,570       759       1,251  

 

Financial statements signed by:

Person-in-charge of the Company: Liu Shaoyong

Officer-in-charge of accounting: Ma Xulun

Officer-in-charge of the accounting department: Wu Yongliang

 

  – 21 –  

 

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