Semi-Annual Report 2017
August 2017
Content
Section I Important Notice and Paraphrase .................................................................................... 1
Section II Company Profile and Main Finanical Indexes .............................................................. 3
Section III Summary of Company Business .................................................................................... 6
Section IV Discussion and Analysis of Operation ........................................................................... 7
Section V Important Events ............................................................................................................ 16
Section VI Changes in shares and particular about shareholders............................................... 22
Section VII Preferred Stock ............................................................................................................ 26
Section VIII Particulars about Directors, Supervisors and Senior Executives .......................... 27
Section IX Corporate Bond ............................................................................................................. 28
Section X Financial Report ............................................................................................................. 29
Section XI Documents available for reference ............................................................................ 139
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Section I. Important Notice and Paraphrase
Board of Directors, Supervisory Committee, all directors, supervisors and senior
executives of Shandong Airlines Co., Ltd. (hereinafter referred to as the
Company) hereby confirm that there are no any fictitious statements, misleading
statements, or important omissions carried in this report, and shall take all
responsibilities, individual and/or joint, for the reality, accuracy and completion
of the whole contents.
Sun Xiujiang , person in charge of the Company, Xu Guojian, person in charge
of accounting works as well as person in charge of accounting institution
(accounting officer) Zhou Shoubin hereby confirm the accuracy, truthfulness
and completeness of the Financial Report in the Semi-annual Report 2017.
All directors have attended the Board Meeting for Report Deliberation.
China Securities Journal, Securities Times, Hong Kong Commercial Daily and
Juchao Website (www.cninfo.com.cn) are the media for information disclosure
appointed by the Company, all information under the name of the Company
disclosed on the above said media shall prevail, and Investors are advised to
exercise caution of investment risks.
The Company has no plans of cash dividend distributed, no bonus shares and
has no share converted from capital reserve either.
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Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Paraphrases
Item Refers to Content
The Company, Company Refers to Shandong Airlines Co., Ltd.
Shandong Aviation Group, the first largest shareholder and controlling
SDA Refers to
shareholder of the Company,
Air China Refers to Air China Limited, the second largest shareholder of the Company
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Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Section II Company Profile and Main Finanical Indexes
I. Company profile
Short form of the stock SHANHANG B Stock code 200152
Listing stock exchange Shenzhen Stock Exchange
Legal Chinese name of the
山东航空股份有限公司
Company
Abbr. of legal Chinese name
山东航空
of the Company (if applicable)
Legal English Name of the
SHANDONG AIRLINES CO.,LTD.
Company (if applicable)
Abbr. of legal English name of
SDA
the Company (if applicable)
Legal Representative Sun Xiujiang
II. Way/person to contact
Secretary of the Board Rep. of security affairs
Name Dong Qiantang Fan Peng
1/F Office Building, SDA, Yaoqiang 3/F Office Building, SDA, Yaoqiang
Contact adds.
International Airport Licheng District Jinan International Airport Licheng District Jinan
Tel. 0531-82085939 0531-82085586
Fax. 0531-85698034 0531-85698034
E-mail dongqt@shandongair.com.cn fanp@shandongair.com.cn
III. Others
1. Way to contact the Company
Register address, office address and code, Company website as well as the email of the Company have no changed in reporting
period, more details please found in the Annual Report of 2016.
2. Information disclosure and preparation place
Newspaper appointed for information disclosure, website for annual report publish appointed by CSRC and preparation place for
semi-annual report have no change in reporting period, more details please found in the Annual Report of 2016.
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Shandong Airlines Co., Ltd. Semi-Annual Report 2017
IV. Main accounting data and financial indexes
Whether it has retroactive adjustment or re-statement on previous accounting data or not
□Yes √ No
Increase/decrease over same
Current Period Same period of last year
period of last year
Operating revenue (RMB) 7,550,794,741.92 6,309,749,290.22 19.67%
Net profit attributable to shareholders of
90,093,090.83 283,689,488.65 -68.24%
the listed company (RMB)
Net profit attributable to shareholders of
the listed company after deducting 31,207,526.00 202,463,168.92 -84.59%
non-recurring gains and losses (RMB)
Net cash flow arising from operating
649,153,844.96 1,024,495,732.22 -36.64%
activities (RMB)
Basic earnings per share (RMB/Share) 0.23 0.71 -67.61%
Diluted earnings per share (RMB/Share) 0.23 0.71 -67.61%
5.77 percentage points
Weighted average ROE (%) 2.32% 8.09%
decrease
Increase/decrease over same
End of current Period End of period of last year
period-end of last year
Total assets (RMB) 13,054,887,048.33 12,741,974,788.53 2.46%
Net assets attributable to shareholder of
3,858,916,125.15 3,836,172,828.06 0.59%
listed company (RMB)
V. Difference of the accounting data under accounting rules in and out of China
1. Difference of the net profit and net assets disclosed in financial report, under both IAS (International
Accounting Standards) and Chinese GAAP (Generally Accepted Accounting Principles)
The Company has no condition of difference of the net profit and net assets disclosed in financial report, under both IAS
(International Accounting Standards) and Chinese GAAP (Generally Accepted Accounting Principles) in the reporting period.
2. Difference of the net profit and net assets disclosed in financial report, under both foreign accounting
rules and Chinese GAAP (Generally Accepted Accounting Principles)
The Company has no condition of difference of the net profit and net assets disclosed in financial report, under both foreign
accounting rules and Chinese GAAP (Generally Accepted Accounting Principles) in the reporting period.
VI. Items and amounts of extraordinary profit (gains)/loss
√ Applicable □ Not applicable
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Shandong Airlines Co., Ltd. Semi-Annual Report 2017
In RMB
Item Amount Note
Gains/losses from the disposal of non-current asset (including the
-812,548.20
write-off parts that accrued for impairment of assets)
Governmental subsidy reckoned into current gains/losses (not
including the subsidy enjoyed in quota or ration according to
60,164,960.18
national standards, which are closely relevant to enterprise’s
business)
Losses/gains from changes of fair values occurred in holding
transaction financial assets and transaction financial liabilities,
and investment income obtaining from the disposal of transaction
-1,076,318.24
financial assets and transaction financial liabilities and financial
assets available for sales, excluded effective hedging business
relevant with normal operations of the Company
Other non-operating income and expenditure except for the
20,268,766.06
aforementioned items
Less: Impact on income tax 19,659,294.97
Total 58,885,564.83 --
In reporting period, the Company has no particular about items defined as recurring profit (gain)/loss according to the lists of
extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their Securities to
the Public --- Extraordinary Profit/loss
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Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Section III Summary of Company Business
I. Main businesses of the Company in the reporting period
Our Company and its subsidiaries are mainly engaged in provision of airline transportation service. The details of our operation
scope are set out in the notes to financial statements.
For more than two decades, the Company has always been giving first priority to "ensure safety, pay close attention to efficiency, and
strive to punctuality and quality service". As of June 2017, the company has 109 airplanes like Boeing B737 series, and has set up
branches and flight bases in Jinan, Qingdao, Yantai, Xiamen, Chongqing, Beijing, Urumqi, Guiyang, and other places, built the
triangle airline network among Shandong, Xiamen, and Chongqing; and opened Taiwan air route and the international routes to
South Korea, Japan, Thailand, Cambodia, India and so on. The company elaborately created the "honest and kind" brand
characteristics, which was increasingly blending in the enterprise blood along with the growth of fleet size and airline network.
II. Major changes in main assets
1. Major changes in main assets
Major assets Note of major changes
Monetary fund Ending balance of monetary fund declined because the debt due are paid in the period
The receivable wet leases amount are not settled in the period and receivable notes
Accounts receivable
increased
Dividend receivable The bonus for year of 2016 received from Sichuan Airline are recognized in the period
Other current assets The input tax to be certified are increase sharply in the period
2. Main overseas assets
□ Applicable √ Not applicable
III. Core Competitiveness Analysis
The core competitiveness of the Company has no change in the reporting period.
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Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Section IV Discussion and Analysis of the Operation
I. Introduction
In the first half of 2017, the company has basically completed the intended targets in various works of production
and management.
- The security situation remained stable. Ensured security flight of total 191,100 hours and 91,000 vehicles, a
respective increase of 14.26% and 13.95% on a year-on-year basis; no transporting aviation incidents and above
insecurity incidents occurred due to the company.
- The flight ran normally. The transportation main business totally organized and ensured the flights of 91808
flights, the flight punctuality rate was 70.44%, a decrease of 10.12% on a year-on-year basis;
- Maintained profitability. The total turnover of transportation reached 1.519 billion ton-kilometers, passenger
traffic volume reached 10,878,700 person-time, cargo and mail transport volume reached 79,100 tons, an increase
of 23.15%, 23.95% and 7.35% on a year-on-year basis; achieved operating income of 7.55 billion Yuan, the total
profit of 109.14 million Yuan; passenger load factor of 82.28%, an increase of 6.04% on a year-on-year basis,
cargo and mail load factor of 39.11%, a decrease of 0.36% on a year-on-year basis.
- Quality of service was stable. Passenger satisfaction achieved 96.46 scores, risen by 0.64 score on a
year-on-year basis. Effective complaint rate reached 0.152 piece/ thousands of person-time, a decrease of 0.014
piece/ thousands of person-time on a year-on-year basis, and the civil aviation media service ranked number four.
The company has been awarded as China Top 500 Most Valuable Brand for ten consecutive years, ranking No.
100 with the brand value of 34.645 billion Yuan.
The Company mainly carried out the following work:
(i) Continue to reinforce the quality foundation of safe operation
First is to feasibly practice the safe development concept. Adhere to the concept of “safety first”, and plan the
reform, development, efficiency, stability and other works. Second is to improve the safety management
mechanism. Establish and issue the Control Program for Annual Security Work, define the key links and key
factors, and implement the precision control. Third is to strengthen the risk prevention and control of operation.
Establish the safety performance indicators monitoring system, and implement the special control to key
indicators; strengthen the prevention and management according to the safe production situation in stages to
enhance the systematicness and pertinence of risk control. Fourth is to deeply promote the qualification
construction of key teams, implement the construction requirements of “three basics” (basic level, basis, basic
skill) of Civil Aviation Authority, and reinforce the foundation of safety quality.
(ii) Vigorously promote the work of increasing revenue and reducing expenditure
First is to actively seek the time resources. Increase the transport capacity investment in main bases to continue to
consolidate the control of main base; increase the transport capacity investment in the western markets, and
constantly optimize the network structure. Second is to strengthen the revenue control. Take use of the revenue
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Shandong Airlines Co., Ltd. Semi-Annual Report 2017
management system to improve the market research and judgment and the refinement level of freight space
control; actively develop the additional income products, enrich the contents of class upgrading products, promote
the experience, and the sales of “Cixiang” product greatly increase. Third is to enhance the efficiency of resource
allocation and production organization. In the premise of meeting the requirements of the council, scientifically
compress the air routes and the station-crossing time; continue to improve the coordination linkage mechanism of
production, marketing, flight control and finance departments. Fourth is to vigorously implement the cost control.
Establish the efficiency management points and cost control measures, establish the regular traffic control
mechanism; actively promote the energy conservation and emission reduction work, monitor the insurance costs
of major production, and vigorously reduce the administrative costs. Five is to actively seek the synergies. Pay
attention to give play to the synergetic advantages of Air China, and achieve the synergy income through the
aircraft wet lease, frequent traveler cooperation, code sharing, and maintenance support and so on.
(iii) Continue to enhance the service control level
First is to optimize the service control mechanism. Carry out the application for national quality award, and
promote the further optimization of service processes, standards and contents. Second is to actively implement the
service innovation. Actively promote the function development and process optimization of “Lu Yan
housekeeper” platform, carry out the first-class lounge sales, passenger paying for meal selection and other
businesses; vigorously promote the self-service businesses, and actively develop the self-service baggage check-in,
and self-help ticket changing business and so on. Third is to promote the “honest and kind” service culture to take
root. Vigorously carry out the internal propaganda and implementation of “honest and kind” service, center on the
flight supplies, first-class lounge and other service terminals, develop the embodiment scheme of “honest and
kind” service and promote the implementation; cooperate with China Confucius Foundation and establish the first
“Air Confucius School”, which further enrich the service culture connotation.
(iv) Smoothly promote the basic management work
The first is that the organizational structure and fleet structure adjustments are progressing smoothly. The
organizational structure, job responsibilities and post preparation of flight department, engineering technology
company, marketing commission and other departments are optimized and adjusted, the regional control functions
are further intensified and the management power is strengthened by straightening out the management
responsibility and shortening the management chain. The second is that the base construction is steadily
implemented. Actively promote the Shandong Air Base construction at Qingdao new airport, define the
organizational structure and manning quotas of project headquarters, and straighten out the job responsibilities;
focus on the base layout optimization, and actively promote the Urumqi base construction work.
Operation data summary:
Index Jan.-Jun.2017 Jan.-Jun.2016 Changes
Total t-km load rate (10 thousand t-km) 15.19 12.33 23.15%
Volume of passenger traffic (10 1087.87 877.67 23.95%
thousand passengers)
Cargo & mail traffic volume (10 7.91 7.36
7.35%
thousand tons)
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Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Flying km (one million km) 114.74 100.24 14.47%
Flying hours(10 thousand hours) 19.11 16.73 14.26%
Number of flight (10 thousand times) 9.10 7.99 13.95%
PLF(passenger load factor) 82.28% 76.24% 6.04 percentage points
increase
Cargo&Mail OLF (overall load factor) 39.11% 39.47% 0.36 percentage points
decrease
In the Period, totally ten B737-800 aircrafts are introduced by the Company and five B737-300 aircrafts are out of services. Up to 30
June 2017, the Company operates 109 aircrafts in total and the fleet distribution below:
Model Numbers Average service age (Year)
737-700 3
737-800 104 4.7-year
CRJ-700 2
II. Main business analysis
Summary
Item of balance sheet 2017.6.30 2016.12.31 +,- Reasons
Monetary funds The balance of monetary funds at period-end
-43.97% declined due to the repayments in the Period for
443,328,925.09 791,255,686.65
loans due
Account receivable The receivable wet leases amount are not settled
52.52%
492,297,472.32 322,774,169.85 in the period and receivable notes increased
Dividend receivable The bonus for year of 2016 received from Sichuan
19,278,420.00 - Airline are recognized in the period
Other current assets The input tax to be certified are increase sharply
39.83%
83,459,901.34 59,685,735.09 in the period
Short-term loans New short-term debt of honor increased in the
400,000,000.00 - period
Financial liability Change of the fair value of interest rate swap
measured by fair value held in the period
and with variation 51.67%
1,753,048.20 1,155,815.80
reckoned into current
gains/losses
Dividend payable 1005025 Bonus for shareholders of 2016 are payable in the
120,011,940.00 11,940.00 .13% period
Deferred tax liability Soaring fair value of the financial assets available
38.25% for sale at period-end makes the correspondingly
63,430,089.33 45,880,020.58
recognized deferred income liability increased
Other comprehensive Soaring fair value of the financial assets available
39.92%
income 184,530,268.02 131,880,061.76 for sale at period-end makes the correspondingly
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Shandong Airlines Co., Ltd. Semi-Annual Report 2017
recognized other comprehensive income increased
Profit statement Jan.- June. 2017 Jan.- June. 2016 +,- Reasons
Taxes and surcharges Impact by the replacing business tax with VAT
-54.47%
11,049,353.32 24,266,018.24 expanding circumference in May 2016
Financial expenses Exchange income arising by RMB appreciated
-91.83% against the U.S. dollar, while there was an
9,333,133.79 114,208,514.18
exchange loss at same period of last year
Assets impairment loss Accrual bad debt provision in line with the bad
410.89%
2,258,019.93 441,974.60 debt policy of the Company
Income from changes in Change of the fair value of interest rate swap
84.79%
fair value -597,232.40 -3,926,637.22 held in the period
Investment income 2376.90 The bonus for year of 2016 from Sichuan Airline
19,365,345.43 -850,513.68 % are recognized in the Period
Other income Impact on financial statement for accounting
60,164,960.18 - policy change
Non-operating revenue Impact on financial statement for accounting
-82.36%
20,407,892.43 115,697,616.85 policy change
Non-operating The net loss of fixed assets disposal recognized in
-63.11%
expenditure 951,674.57 2,579,552.24 the period decreased
Cash flow statement Jan.- June. 2017 Jan.- June. 2016 +,- Reasons
Cash received with other The route subsidy in the period are decreased over
operation activities -41.75% same period of last year
93,832,179.82 161,074,121.88
concerned
Correspondingly operation costs increased for the
Cash paid for purchasing
growth of production scale and volume, and costs
commodities and 4,217,304,381.8 33.84%
5,644,642,190.50 as price of aviation fuel and landing fee standards
receiving labor service 4
rapidly raised
Cash received from The bonus received from invested unit decreased
-87.08%
investment income 566,011.27 4,381,903.47 over that of last period
Other cash paid The delivery expenditure of tradable financial
concerning investing -49.11% assets held in the period decreased from last
214,526.52 421,533.02
activities period
Cash received from loans The loans received from financing activities
35.14%
400,000,000.00 296,000,000.00 increased in the Period
Cash received concerning The price of original purchasing right (transfer as
other financing activities 119.97% leasing aircraft) received in the period increased
430,793,362.96 195,845,614.80
over that of last period
The loans paid to the bank decreased over that of
Cash paid for settling
1,183,487,265.4 -46.87% last period
debts 628,730,526.71
6
Impact on cash and cash -141.55 Changes of the RMB against foreign currencies
equivalent from foreign -5,305,321.08 12,768,432.70 %
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Shandong Airlines Co., Ltd. Semi-Annual Report 2017
exchange rate change
Y-o-y changes of main financial data
In RMB
Current period Same period of last year Y-o-y increase/decrease Reasons for changes
Operating revenue 7,550,794,741.92 6,309,749,290.22 19.67%
Operating cost 7,010,777,442.45 5,423,567,853.72 29.27%
Sale expenses 344,504,290.18 329,309,482.29 4.61%
Management expenses 162,126,382.55 148,238,372.25 9.37%
Exchange income arising
by RMB appreciated
against the U.S. dollar,
Financial expenses 9,333,133.79 114,208,514.18 -91.83%
while there was an
exchange loss at same
period of last year
Income tax expenses 19,042,319.94 94,368,500.00 -79.82%
Net cash flow arising
649,153,844.96 1,024,495,732.22 -36.64%
from operating activities
Net cash flow arising
from investment -1,059,136,288.83 -1,026,531,557.25 3.18%
activities
Net cash flows arising
67,361,003.39 -833,776,740.29 108.08%
from financing activities
Net increase of cash and
-347,926,761.56 -823,044,132.62 -57.73%
cash equivalent
No major changes on profit composition or profit resources in reporting period.
Constitution of main business
In RMB
Increase/decrease
Increase/decrease Increase/decrease
of operating
Operating of operating cost of gross profit
Operating cost Gross profit revenue over
revenue over same period over same period
same period the
the year before the year before
year before
According to industries
Aviation
transportation 7,325,032,164.28 6,984,554,599.42 4.65% 19.62% 29.65% -7.37
service
Logistics
transportation 14,834,024.73 9,081,016.88 38.78% -19.50% -23.92% 3.56
service
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Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Hotel and food
13,717,691.70 11,338,647.59 17.34% -35.55% -39.11% 4.84
service
Training Services 8,071,728.36 4,800,314.79 40.53% -26.78% -3.51% -14.34
According to region
Domestic 6,668,878,390.41 6,185,933,319.96 7.24% 19.69% 29.81% -7.23
Overseas 598,540,470.72 737,968,311.80 -23.29% 21.65% 29.12% -7.13
Region 94,236,747.94 85,872,946.92 8.88% -14.66% 0.07% -13.41
III. Analysis of the non-main business
□ Applicable √ Not applicable
IV. Assets and liability
1. Major changes of assets composition
In RMB
End of same period of last
End of the Period
year Ratio
Notes of major changes
Ratio in total Ratio in total changes
Amount Amount
assets assets
Ending balance of monetary fund
443,328,925.0
Monetary fund 3.40% 791,255,686.65 6.21% -2.81% declined because the debt due are paid
9
in the period
The receivable wet leases amount are
Account 492,297,472.3
3.77% 322,774,169.85 2.53% 1.24% not settled in the period and receivable
receivable 2
notes increased
111,796,414.6
Inventory 0.86% 120,965,243.56 0.95% -0.09%
9
6,828,691,206. 7,093,233,151.
Fix assets 52.31% 55.67% -3.36%
33 79
Construction in 2,703,359,625. 2,250,500,462.
20.71% 17.66% 3.05%
process 93 35
400,000,000.0 New short-term debt of honor
Short-term loans 3.06% 0.00% 3.06%
0 increased in the period
1,342,589,872. 1,799,601,767. Part of the long-term loan’s principal
Long-term loans 10.28% 14.12% -3.84%
59 54 are paid in the period
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Shandong Airlines Co., Ltd. Semi-Annual Report 2017
2. Assets and liability measured by fair value
√Applicable □Not applicable
In RMB
Accumulative
Gains/losses of Impairment Amount
Opening changes in fair Closing
Item changes in fair accrual in this purchased in Sale amount
amount value reckoned amount
value period this period
into equity
Financial assets
3.Available-for
-sale financial 190,210,082.34 70,200,275.01 253,720,357.35 260,410,357.35
assets
Subtotal of
190,210,082.34 70,200,275.01 253,720,357.35 260,410,357.35
financial assets
The above total 190,210,082.34 70,200,275.01 253,720,357.35 260,410,357.35
Financial
1,155,815.80 597,232.40 1,753,048.20
liability
Whether there have major changes on measurement attributes for main assets of the Company in report period or not
□ Yes √No
3. Assets rights restricted till end of the period
Nil
V. Investment
1. Overall situation
□ Applicable √ Not applicable
2. The major equity investment obtained in the reporting period
□ Applicable √ Not applicable
3. The major non-equity investment doing in the reporting period
□ Applicable √ Not applicable
4. Financial assets investment
(1) Securities investment
The Company had no securities investment in the reporting period.
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Shandong Airlines Co., Ltd. Semi-Annual Report 2017
(2) Derivative investment
The Company has no derivatives investment in the reporting period.
VI. Sales of major assets and equity
1. Sales of major assets
The Company has no sales of major assets in the reporting period.
2. Sales of major equity
□ Applicable √ Not applicable
VII. Analysis of main holding company and stock-jointly companies
Main subsidiary and stock-jointly enterprise with over 10% influence on net profit of the Company
In RMB
Company Register Total Operating Operating
Type Main business Industries Net Assets Net profit
name capital assets revenue profit
Agency service of
Transportati
Shandong land service for the air
on,
Airlines Subsid cargo station, storage 30,000,000. 128,270,2 58,164,35 24,449,08 4,126,242. 3,106,636
warehouse
Logistic Co., iary of goods and ground 00 23.94 2.27 1.15 05 .39
and mail
Ltd. distribution service
business
etc.
Qingdao
Feisheng
International Pilot training and
Aviation Subsid relevant business and 51,545,500. 71,868,54 69,817,34 2,199,777. -958,849.1 -712,390.
Education
Technology iary consulting services 00 9.58 6.55 38 0 98
Development etc.
Training Co.,
Ltd.
Shandong Transportati
Stock- Offshore oil services,
Rainbow on,
jointly medical assistance, 50,000,000. 1,844,824. -165,920,9
Corporate warehouse -1,813.17 -1,813.17
compa aerial prospecting and 00 50 88.83
Aircraft Co., and mail
ny business flying etc.
Ltd. business
Particular about subsidiaries obtained or disposed in report period
□ Applicable √ Not applicable
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Shandong Airlines Co., Ltd. Semi-Annual Report 2017
VIII. Structured entity controlled by the Company
□ Applicable √ Not applicable
IX. Prediction of business performance from January – September 2017
Estimation on accumulative net profit from the beginning of the year to the end of next report period to be loss probably or the
warning of its material change compared with the corresponding period of the last year and explanation on reason
□ Applicable √ Not applicable
X. Risks and countermeasures
Risks: The first is that the fluctuations of oil prices and exchange rate become the important factors affecting the
effectiveness of the company. The second is that the future development of high-speed rail will involve more
areas and build more intensive high-speed rail networks, the highly overlap of airline network mainly covering the
East China with high-speed rail network brings greater pressure of alternative competition to the company. The
third is that the regional imbalance of China's economic development leads to higher concentration of air transport
market, the concentration of passengers causes the scarcity of hub market, hot spots and other high-quality
resources, which further increases the difficulties to obtain the high-quality resources.
Countermeasures: The company should adhere to taking the development concept of “innovation, coordination,
green, open, sharing” as the guideline, properly handle the dialectical relationship between development scale and
speed, size and benefit, speed and quality, safety and benefit, actively implement innovation-driven, structural
optimization, quality and efficiency improving and collaboration, create the relatively competitive advantages, and
achieve sustainable and healthy development of enterprises. To focus on grasping the following key issues: first is
to firmly establish the bottom line awareness of “safety first”, and consolidate the development of new
foundations; second is to spare no effort to increase revenue and improve quality and efficiency, create new
advantages of development; third is to scientifically optimize the control mechanisms and stimulate new vitality
for development; fourth is to deeply explore customer value and expand new space for development.
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Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Section V Important Events
I. In the report period, the Company held annual shareholders’ general meeting and
extraordinary shareholders’ general meeting
1. Shareholders’ General Meeting in the report period
Ratio of investor
Session of meeting Type Date Date of disclosure Index of disclosure
participation
Annual General
AGM 67.18% 2017-06-15 2017-06-16 2017-09
Meeting of 2016
2. Request for extraordinary general meeting by preferred stockholders whose voting rights restore
□ Applicable √ Not applicable
II. Profit distribution plan and capitalizing of common reserves plan for the Period
The Company has no plans of cash dividend distributed, no bonus shares and has no share converted from capital reserve either for
the semi-annual year.
III. Commitments that actual controller, shareholder, related parties, buyer and committed
party as the Company etc. have fulfilled during the reporting period and have not yet fulfilled
by the end of reporting period
Type of Commitmen Commitmen Implementa
Commitments Promise Content of commitments
commitments t date t term tion
Commitments for share
merger reform
In February 2004, China National
Aviation Holding Company
(CNAHC) entered into a equity
Commitment of transfer agreement with SDA ,
horizontal that is promise “to avoiding
Commitments in report Strictly
competition, horizontal competition with the Long-term
of acquisition or Air China 2004-12-06 implement
related transaction Company through reasonable effective
equity change timely
and capital business arrangement”; in
occupying December, being approved, the
equity assignee was replaced by
Air China, and all rights and
obligations under the agreement
16
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
was transfer to Air China as the
party who implemented the
commitments
Commitments for
reorganization of assets
Commitment of Controlling shareholder—SDA
horizontal provide a commitment letter of
Commitments make in Strictly
competition, avoiding horizontal competition to Long-term
initial public offering or SDA 2000-09-12 implement
related transaction the Company in year of 2000 effective
re-financing timely
and capital when the Company initial public
occupying offering shares
Equity incentive
commitment
Other commitments for
medium and small
shareholders
Completed on time
Y
(Y/N)
IV. Appointment and non-reappointment (dismissal) of CPA
Semi-annual report of the Company has not been audited.
V. Explanation from Board of Directors and Supervisory Committee for “Qualified Opinion”
that issued by CPA
□ Applicable √ Not applicable
VI. Explanation from the Board for “Qualified Opinion” of last year’s
□ Applicable √ Not applicable
VII. Bankruptcy reorganization
No bankruptcy reorganization for the Company in the reporting period.
VIII. Lawsuits
During the reporting period, the company has no major litigation or arbitration matter.
IX. Penalty and rectification
No penalty or rectification for the Company in the reporting period.
17
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
X. Integrity of the Company and its controlling shareholders and actual controllers
□ Applicable √ Not applicable
XI. Implementation of the Company’s stock incentive plan, employee stock ownership plan or
other employee incentives
The Company has no equity incentive plan, employee stock ownership plans or other employee incentives in the reporting period.
XII. Major related transaction
1. Related transaction with routine operation concerned
Approve
Proporti Whether Market
d
Trading on in the to price of
Related Related Related transacti Means Index
Related Pricing amount amount exceed similar Date of
transacti transacti transacti Dealing on of of
relations principl (in 10 of the the transacti disclosu
on on on price amount payment disclos
hip e thousan same approve on re
parties type content (in 10 s ure
d Yuan) transacti d availabl
thousan
on amount e
d Yuan)
2nd Ground
Labor Cash
largest service Market 7,888,33 7,888,33 2017-03 2017-0
service 788.83 0.78% 4,020 No settleme
sharehol expense price 6.36 6.36 -29 5
received nt
der s
Purchasi
2nd ng/leasi
Labor Cash
largest ng air Market 186,711. 186,711. 2017-03 2017-0
service 18.67 37.00% 21 No settleme
sharehol material price 99 99 -29 5
received nt
der expendit
Air ure
China 2nd Agency
Labor Cash
largest commis Market 5,458,59 5,458,59 2017-03 2017-0
service 545.86 62.64% 1,600 No settleme
sharehol sion price 6.51 6.51 -29 5
received nt
der revenue
Irregular
2nd flight
Labor Cash
largest and Market 4,647,52 4,647,52 2017-03 2017-0
service 464.75 24.91% 2,000 No settleme
sharehol group price 8.32 8.32 -29 5
received nt
der expendit
ure
18
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
2nd
Provide Ground Cash
largest Market 939,820. 939,820. 2017-03 2017-0
labor services 93.98 76.00% 398.9 No settleme
sharehol price 29 29 -29 5
service revenue nt
der
Simulat
or
2nd
Provide mainten Cash
largest Market 2,242,71 100.00 4,485,42 2017-03 2017-0
labor ance/ho 224.27 514.57 No settleme
sharehol price 4.29 % 8.57 -29 5
service use nt
der
leasing
revenue
Sales/le
2nd
Air Provide ase of Cash
largest Market 12,906.8 12,906.8 2017-03 2017-0
China labor air 1.29 0.36% 77 No settleme
sharehol price 4 4 -29 5
service material nt
der
revenue
Non-rou
2nd tine
Provide Cash
largest mainten Market 37,220.0 37,220.0 2017-03 2017-0
labor 3.72 18.00% 21.7 No settleme
sharehol ance price 0 0 -29 5
service nt
der service
revenue
2nd Agency
Provide Cash
largest commis Market 2,425,29 2,425,29 2017-03 2017-0
labor 242.53 53.17% 890 No settleme
sharehol sion price 7.00 7.00 -29 5
service nt
der revenue
2nd Other
Cash
largest related Wet Agreem 93,266,1 100.00 93,266,1 2017-03 2017-0
9,326.62 20,000 No settleme
sharehol transacti lease ent price 77.00 % 77.00 -29 5
nt
der on
Air Frequen
China 2nd Other t
Cash
largest related passeng Agreem 36,000,0 100.00 36,000,0 2017-03 2017-0
3,600 7,000 No settleme
sharehol transacti er ent price 00.00 % 00.00 -29 5
nt
der on cooperat
ion
15310.5 36543.1
Total -- -- -- -- -- -- -- --
2 7
Details of return of sales in
N/A
significant amount
19
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Report the actual implementation of
the normal related transactions which
Implemented by the agreement, no amount exceed the budget approved in shareholders’
were projected about their total
general meeting
amount by types during the reporting
period (if any)
Reasons for major difference
between trading price and market N/A
reference price (if applicable)
2. Related transactions of assets/equity acquisition and sold
No related transactions of assets/equity acquisition and sold for the Company in the reporting period.
3. Main related transactions of mutual investment outside
No main related transactions of mutual investment outside for the Company in the reporting period.
4. Contact of related credit and debt
There are no related credits or liabilities occurred in the reporting period.
5. Other related transactions
The Company has no other major related transaction in the reporting period.
XIII. Non-business capital occupying by controlling shareholders and its related parties
No non-business capital occupied by controlling shareholders and its related parties in the reporting period.
XIV. Significant contract and implementations
1. Trusteeship, contract and leasing
(1) Trusteeship
No trusteeship for the Company in the reporting period.
(2) Contract
No contract for the Company in the reporting period.
(3) Leasing
No leasing for the Company in the reporting period.
20
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
2. Major guarantees
No guarantees for the Company in the reporting period.
3. Other material contracts
No other material contracts for the Company in the reporting period.
XV. Social responsibility
1. Fulfill the social responsibility of target poverty alleviation
The Company has no target poverty alleviation temporary in the year and no subsequent program either.
2. Major environmental protection
The listed Company and its subsidiary whether belongs to the key sewage units released from environmental protection department
No
XVI. Other major events
No other major events of the Company that need to be explained in the reporting period.
XVII. Major event of the subsidiaries
□ Applicable √ Not applicable
21
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Section VI. Changes in Shares and Particulars about Shareholders
I. Changes in Share Capital
1. Changes in Share Capital
In Share
Before changes (+,-) After changes
Capitalizat
ion of Subtot
Amount Ratio New issue Bonus Other Amount Ratio
public al
reserve
I. Unlisted shares 260,000,000 65.00% 260,000,000 65.00%
1. Sponsor shares 168,601,000 42.15% 168,601,000 42.15%
Including: State-owned
168,402,000 42.10% 168,402,000 42.10%
shares
Domestic corporate
199,000 0.05% 199,000 0.05%
shares
4. Preferred stock or other 91,399,000 22.85% 91,399,000 22.85%
II. Listed shares 140,000,000 35.00% 140,000,000 35.00%
2. Domestically listed
140,000,000 35.00% 140,000,000 35.00%
foreign shares
III. Total shares 400,000,000 100.00% 400,000,000 100.00%
Reasons for share changed
□ Applicable √ Not applicable
Approval of share changed
□ Applicable √ Not applicable
Ownership transfer of share changes
□ Applicable √ Not applicable
Influence on the basic EPS and diluted EPS as well as other financial indexes of net assets per share attributable to common
shareholders of Company in latest year and period
□ Applicable √ Not applicable
Other information necessary to disclose or need to disclosed under requirement from security regulators
□ Applicable √ Not applicable
22
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
2. Changes of restricted shares
□ Applicable √ Not applicable
II. Securities issuance and listing
□ Applicable √ Not applicable
III. Number of shares and shares held
In Share
Total preference shareholders
Total common stock
with voting rights recovered at
shareholders in reporting 15,887 0
end of reporting period (if
period-end
applicable) (found in note8)
Particulars about shares held above 5% by shareholders or top ten shareholders
Total Number of shares
Amount of Amount of
common Changes pledged/frozen
Proportion un-listed listed
Nature of
Shareholders of shares shares hold at in report
shareholder common common
held State of
the end of period Amount
shares held shares held share
report period
State-owned
Shandong Aviation Group 42.00% 168,004,000 0 168,004,000 0
legal person
State-owned
Air China Limited 22.80% 91,200,000 0 91,200,000 0
legal person
Foreign
NORGES BANK 0.87% 3,498,479 977679.00 0 3,498,479
legal person
BBH A/C VANGUARD
Foreign
EMERGING MARKETS 0.74% 2,960,917 0 0 2,960,917
legal person
STOCK INDEX FUND
WANXIANG
INTERNATIONAL Foreign
0.62% 2,490,000 0 0 2,490,000
INVESTMENT legal person
CORPORATION
VANGUARD TOTAL
Foreign
INTERNATIONAL STOCK 0.43% 1,735,020 152300.00 0 1,735,020
legal person
INDEX FUND
Domestic
Hou Chunhu 0.41% 1,651,345 0 0 1,651,345
nature
23
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
person
Domestic
Chen Jingjian nature 0.38% 1,519,400 0 0 1,519,400
person
ISHARES CORE MSCI
Foreign
EMERGING MARKETS 0.36% 1,420,300 622000.00 0 1,420,300
legal person
ETF
Domestic
Yao Ming nature 0.31% 1,248,003 -51997.00 0 1,248,003
person
1. Shandong Aviation Group(SDA) is the first largest shareholder of the Company, who
holds the shares of the Company on behalf of the State with unlisted shares;
2. Air China Limited is the second largest shareholder of the Company, who holds the
Explanation on related relationship or shares of the Company on behalf of the State with unlisted shares;
concerted action among the 3. Among the above top ten shareholders, Air China Limited is the first largest
abovementioned shareholders shareholder of the SDA, and there exists no associated relationship between SDA and
Air China and the other shareholders, and they don’t belong to the consistent actionist
regulated by the Management Regulation of Information Disclosure on Change of
Shareholding for Listed Companies with the other shareholders.
Shareholding of top 10 circulated shareholders
Amount of listed shares held at end of the Type of shares
Shareholders
Period Type Amount
Domestically
NORGES BANK 3,498,479 listed foreign 3,498,479
shares
Domestically
BBH A/C VANGUARD EMERGING
2,960,917 listed foreign 2,960,917
MARKETS STOCK INDEX FUND
shares
Domestically
WANXIANG INTERNATIONAL
2,490,000 listed foreign 2,490,000
INVESTMENT CORPORATION
shares
Domestically
VANGUARD TOTAL INTERNATIONAL
1,735,020 listed foreign 1,735,020
STOCK INDEX FUND
shares
Domestically
Hou Chunhu 1,651,345 listed foreign 1,651,345
shares
Domestically
Chen Jingjian 1,519,400 listed foreign 1,519,400
shares
24
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Domestically
ISHARES CORE MSCI EMERGING
1,420,300 listed foreign 1,420,300
MARKETS ETF
shares
Domestically
Yao Ming 1,248,003 listed foreign 1,248,003
shares
Domestically
GUOTAI JUNAN SECURITIES(HONGKONG)
1,199,155 listed foreign 1,199,155
LIMITED
shares
Domestically
Ye Qufa 1,180,169 listed foreign 1,180,169
shares
The Company is not aware of their associated relationship among the top ten
Expiation on associated relationship or consistent
shareholders of circulation share, and is unknown whether other circulation
actors within the top 10 un-restrict shareholders
shareholders belong to the consistent actionist regulated by the Management
and between top 10 un-restrict shareholders and
Regulation of Information Disclosure on Change of Shareholding for Listed
top 10 common stock shareholders
Companies.
Top ten common shareholders or top ten common shareholders with un-restrict shares not held have a buy-back agreement dealing in
reporting period.
IV. Changes of controlling shareholders or actual controller
The controlling shareholder of the Company has no changed in reporting period.
The actual controller of the Company has no changed in reporting period.
25
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Section VII Preferred Stock
The Company had no preferred stock in the reporting.
26
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Section VIII Directors, Supervisors and Senior Executives
I. Changes of shares held by directors, supervisors and senior executives
Shares held by directors, supervisors and senior executives have no changes in reporting period, found more details in Annual Report
2016.
II. Resignation and dismissal of directors, supervisors and senior executives
Name Title Type Date Reason
Liu Zhaolei Chief engineer Appointment 2017-03-28 Work accommodation
Independent
Wu Chaopeng Leave the office 2017-06-15 Personal work reasons
director
Independent
Xu Xiangyi Election 2017-06-15
director
Independent
Hu Yuanmu Election 2017-06-15
director
27
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Section IX Corporate Bonds
Whether the Company has corporate bonds that issuance publicly and listed on stock exchange and without due on the date when
semi-annual report approved for released or fail to cash in full on due
No
28
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Section X. Financial Report
I. Audit report
The semi-annual financial report has not been audited.
II. Financial Statement
Statement in Financial Notes are carried in RMB/CNY
1. Consolidated Balance Sheet
Prepared by Shandong Airlines Co., Ltd
2017-06-30
In RMB
Item Closing balance Opening balance
Current assets:
Monetary funds 443,328,925.09 791,255,686.65
Settlement provisions
Capital lent
Financial assets measured by fair
value and with variation reckoned into
current gains/losses
Derivative financial liability
Notes receivable 123,974.00
Accounts receivable 492,297,472.32 322,774,169.85
Accounts paid in advance 310,136,319.12 249,136,244.95
Insurance receivable
Reinsurance receivables
Contract reserve of reinsurance
receivable
Interest receivable
Dividend receivable 19,278,420.00
Other receivables 400,802,651.37 351,000,324.78
Purchase restituted finance asset
Inventories 111,796,414.69 120,965,243.56
Divided into assets held for sale
29
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Non-current asset due within one
year
Other current assets 83,459,901.34 59,685,735.09
Total current assets 1,861,224,077.93 1,894,817,404.88
Non-current assets:
Loans and payments on behalf
Finance asset available for sales 342,072,457.35 271,872,182.34
Held-to-maturity investment
Long-term account receivable
Long-term equity investment
Investment property
Fixed assets 6,828,691,206.33 7,093,233,151.79
Construction in progress 2,703,359,625.93 2,250,500,462.35
Engineering material
Disposal of fixed asset
Productive biological asset
Oil and gas asset
Intangible assets 117,640,196.61 114,203,753.20
Expense on Research and
Development
Goodwill
Long-term expenses to be
464,743,301.05 475,562,660.08
apportioned
Deferred income tax asset 737,156,183.13 641,785,173.89
Other non-current asset
Total non-current asset 11,193,662,970.40 10,847,157,383.65
Total assets 13,054,887,048.33 12,741,974,788.53
Current liabilities:
Short-term loans 400,000,000.00
Loan from central bank
Absorbing deposit and interbank
deposit
Capital borrowed
Financial liability measured by fair
value and with variation reckoned into 1,753,048.20 1,155,815.80
current gains/losses
Derivative financial liability
Notes payable
30
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Accounts payable 2,187,147,851.44 1,688,094,861.09
Accounts received in advance 548,336,285.84 699,319,553.05
Selling financial asset of
repurchase
Commission charge and
commission payable
Wage payable 319,557,453.50 454,375,029.19
Taxes payable 167,930,652.95 138,661,805.16
Interest payable 2,404,528.96 2,430,456.90
Dividend payable 120,011,940.00 11,940.00
Other accounts payable 421,568,704.08 401,854,436.21
Reinsurance payables
Insurance contract reserve
Security trading of agency
Security sales of agency
Divided into liability held for sale
Non-current liabilities due within 1
770,976,124.33 987,644,012.02
year
Other current liabilities
Total current liabilities 4,939,686,589.30 4,373,547,909.42
Non-current liabilities:
Long-term loans 1,342,589,872.59 1,799,601,767.54
Bonds payable
Including: preferred stock
Perpetual capital
securities
Long-term account payable 2,683,579,549.89 2,534,202,090.26
Long-term wages payable 92,166,751.43 94,130,651.51
Special accounts payable
Projected liabilities
Deferred income 74,518,070.64 58,439,521.16
Deferred income tax liabilities 63,430,089.33 45,880,020.58
Other non-current liabilities
Total non-current liabilities 4,256,284,333.88 4,532,254,051.05
Total liabilities 9,195,970,923.18 8,905,801,960.47
Owner’s equity:
Share capital 400,000,000.00 400,000,000.00
31
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Other equity instrument
Including: preferred stock
Perpetual capital
securities
Capital public reserve 75,410,363.70 75,410,363.70
Less: Inventory shares
Other comprehensive income 184,530,268.02 131,880,061.76
Reasonable reserve
Surplus public reserve 423,424,327.64 423,424,327.64
Provision of general risk
Retained profit 2,775,551,165.79 2,805,458,074.96
Total owner’s equity attributable to
3,858,916,125.15 3,836,172,828.06
parent company
Minority interests
Total owner’s equity 3,858,916,125.15 3,836,172,828.06
Total liabilities and owner’s equity 13,054,887,048.33 12,741,974,788.53
Legal Representative: Sun Xiujiang Person in charge of Accounting Works: Xu Guojian
Person in charge of Accounting Institution: Zhou Shoubin
2. Balance Sheet of Parent Company
In RMB
Item Closing balance Opening balance
Current assets:
Monetary funds 426,574,300.69 761,645,065.66
Financial assets measured by fair
value and with variation reckoned into
current gains/losses
Derivative financial liability
Notes receivable
Accounts receivable 490,564,582.95 322,884,254.40
Account paid in advance 309,503,265.74 248,747,945.46
Interest receivable
Dividends receivable 19,278,420.00
Other receivables 446,331,461.99 394,481,947.14
Inventories 111,796,414.69 120,965,243.56
32
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Divided into assets held for sale
Non-current assets maturing within
one year
Other current assets 83,201,194.72 59,685,735.09
Total current assets 1,887,249,640.78 1,908,410,191.31
Non-current assets:
Available-for-sale financial assets 342,072,457.35 271,872,182.34
Held-to-maturity investments
Long-term receivables
Long-term equity investments 106,000,685.43 106,000,685.43
Investment property
Fixed assets 6,740,329,988.24 7,000,694,540.06
Construction in progress 2,703,283,625.93 2,250,424,462.35
Project materials
Disposal of fixed assets
Productive biological assets
Oil and natural gas assets
Intangible assets 103,891,799.36 100,261,260.93
Research and development costs
Goodwill
Long-term deferred expenses 464,743,301.05 475,562,660.08
Deferred income tax assets 736,409,722.40 641,017,982.18
Other non-current assets
Total non-current assets 11,196,731,579.76 10,845,833,773.37
Total assets 13,083,981,220.54 12,754,243,964.68
Current liabilities:
Short-term borrowings 400,000,000.00
Financial liability measured by fair
value and with variation reckoned into 1,753,048.20 1,155,815.80
current gains/losses
Derivative financial liability
Notes payable
Accounts payable 2,209,149,062.81 1,702,743,063.11
Accounts received in advance 544,728,969.44 693,918,823.76
Wage payable 317,495,495.44 450,079,741.59
33
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Taxes payable 166,590,454.75 137,221,799.65
Interest payable 2,404,528.96 2,430,456.90
Dividend payable 120,011,940.00 11,940.00
Other accounts payable 453,817,718.01 425,862,312.50
Divided into liability held for sale
Non-current liabilities due within 1
770,976,124.33 987,644,012.02
year
Other current liabilities
Total current liabilities 4,986,927,341.94 4,401,067,965.33
Non-current liabilities:
Long-term loans 1,342,589,872.59 1,799,601,767.54
Bonds payable
Including: preferred stock
Perpetual capital
securities
Long-term account payable 2,683,579,549.89 2,534,202,090.26
Long-term wages payable 92,166,751.43 94,130,651.51
Special accounts payable
Projected liabilities
Deferred income 74,518,070.64 58,439,521.16
Deferred income tax liabilities
Other non-current liabilities 63,430,089.33 45,880,020.58
Total non-current liabilities 4,256,284,333.88 4,532,254,051.05
Total liabilities 9,243,211,675.82 8,933,322,016.38
Owners’ equity:
Share capita 400,000,000.00 400,000,000.00
Other equity instrument
Including: preferred stock
Perpetual capital
securities
Capital public reserve 86,911,168.71 86,911,168.71
Less: Inventory shares
Other comprehensive income 184,530,268.02 131,880,061.76
Reasonable reserve
Surplus reserve 422,763,623.11 422,763,623.11
34
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Retained profit 2,746,564,484.88 2,779,367,094.72
Total owner’s equity 3,840,769,544.72 3,820,921,948.30
Total liabilities and owner’s equity 13,083,981,220.54 12,754,243,964.68
Legal Representative: Sun Xiujiang Person in charge of Accounting Works: Xu Guojian
Person in charge of Accounting Institution: Zhou Shoubin
3. Consolidated Profit Statement
In RMB
Item Current Period Last Period
I. Total operating income 7,550,794,741.92 6,309,749,290.22
Including: Operating income 7,550,794,741.92 6,309,749,290.22
Interest income
Insurance gained
Commission charge and commission
income
II. Total operating cost 7,540,048,622.22 6,040,032,215.28
Including: Operating cost 7,010,777,442.45 5,423,567,853.72
Interest expense
Commission charge and commission
expense
Cash surrender value
Net amount of expense of
compensation
Net amount of withdrawal of
insurance contract reserve
Bonus expense of guarantee slip
Reinsurance expense
Operating tax and extras 11,049,353.32 24,266,018.24
Sales expenses 344,504,290.18 329,309,482.29
Administration expenses 162,126,382.55 148,238,372.25
Financial expenses 9,333,133.79 114,208,514.18
Losses of devaluation of asset 2,258,019.93 441,974.60
Add: Changing income of fair
-597,232.40 -3,926,637.22
value(Loss is listed with “-”)
Investment income (Loss is listed 19,365,345.43 -850,513.68
35
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
with “-”)
Including: Investment income on
affiliated company and joint venture
Exchange income (Loss is listed
with “-”)
Other income 60,164,960.18
III. Operating profit (Loss is listed with
89,679,192.91 264,939,924.04
“-”)
Add: Non-operating income 20,407,892.43 115,697,616.85
Including: Disposal gains of
24,408.34 38,150.95
non-current asset
Less: Non-operating expense 951,674.57 2,579,552.24
Including: Disposal loss of
836,956.54 1,994,829.83
non-current asset
IV. Total Profit (Loss is listed with “-”) 109,135,410.77 378,057,988.65
Less: Income tax expense 19,042,319.94 94,368,500.00
V. Net profit (Net loss is listed with “-”) 90,093,090.83 283,689,488.65
Net profit attributable to owner’s of
90,093,090.83 283,689,488.65
parent company
Minority shareholders’ gains and
losses
VI. Net after-tax of other comprehensive
52,650,206.26 20,005,619.95
income
Net after-tax of other comprehensive
income attributable to owners of parent 52,650,206.26 20,005,619.95
company
(I) Other comprehensive income
items which will not be reclassified
subsequently to profit of loss
1. Changes as a result of
re-measurement of net defined benefit
plan liability or asset
2. Share of the other
comprehensive income of the investee
accounted for using equity method which
will not be reclassified subsequently to
profit and loss
(II) Other comprehensive income
52,650,206.26 20,005,619.95
items which will be reclassified
36
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
subsequently to profit or loss
1. Share of the other
comprehensive income of the investee
accounted for using equity method which
will be reclassified subsequently to profit
or loss
2. Gains or losses arising
from changes in fair value of 52,650,206.26 20,005,619.95
available-for-sale financial assets
3. Gains or losses arising
from reclassification of held-to-maturity
investment as available-for-sale financial
assets
4. The effect hedging portion
of gains or losses arising from cash flow
hedging instruments
5. Translation differences
arising on translation of foreign currency
financial statements
6. Other
Net after-tax of other comprehensive
income attributable to minority
shareholders
VII. Total comprehensive income 142,743,297.09 303,695,108.60
Total comprehensive income
142,743,297.09 303,695,108.60
attributable to owners of parent Company
Total comprehensive income
attributable to minority shareholders
VIII. Earnings per share:
(i) Basic earnings per share 0.23 0.71
(ii) Diluted earnings per share 0.23 0.71
Legal Representative: Sun Xiujiang Person in charge of Accounting Works: Xu Guojian
Person in charge of Accounting Institution: Zhou Shoubin
4. Profit Statement of Parent Company
In RMB
Item Current Period Last Period
I. Operating income 7,540,226,678.64 6,293,688,379.45
37
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Less: Operating cost 7,008,945,672.14 5,418,293,516.30
Operating tax and extras 10,105,304.57 24,123,637.71
Sales expenses 344,504,290.18 329,309,482.29
Administration expenses 157,885,828.66 143,672,314.98
Financial expenses 9,367,754.57 114,199,663.35
Losses of devaluation of asset 2,340,943.85 773,252.30
Add: Changing income of fair
-597,232.40 -3,926,637.22
value(Loss is listed with “-”)
Investment income (Loss is
19,365,345.43 -850,513.68
listed with “-”)
Including: Investment income
on affiliated company and joint venture
Other income
II. Operating profit (Loss is listed
25,844,997.70 258,539,361.62
with “-”)
Add: Non-operating income 80,572,767.61 115,693,629.15
Including: Disposal gains of
non-current asset
Less: Non-operating expense 951,674.57 2,575,514.24
Including: Disposal loss of
836,956.54 1,990,791.83
non-current asset
III. Total Profit (Loss is listed with
105,466,090.74 371,657,476.53
“-”)
Less: Income tax expense 18,268,700.58 92,885,355.21
IV. Net profit (Net loss is listed with
87,197,390.16 278,772,121.32
“-”)
V. Net after-tax of other comprehensive
52,650,206.26 20,005,619.95
income
(I) Other comprehensive income
items which will not be reclassified
subsequently to profit of loss
1. Changes as a result of
re-measurement of net defined benefit
plan liability or asset
2. Share of the other
comprehensive income of the investee
accounted for using equity method
which will not be reclassified
38
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
subsequently to profit and loss
(II) Other comprehensive income
items which will be reclassified 52,650,206.26 20,005,619.95
subsequently to profit or loss
1. Share of the other
comprehensive income of the investee
accounted for using equity method
which will be reclassified subsequently
to profit or loss
2. Gains or losses arising
from changes in fair value of 52,650,206.26 20,005,619.95
available-for-sale financial assets
3. Gains or losses arising
from reclassification of held-to-maturity
investment as available-for-sale
financial assets
4. The effect hedging
portion of gains or losses arising from
cash flow hedging instruments
5. Translation differences
arising on translation of foreign
currency financial statements
6. Other
VI. Total comprehensive income 139,847,596.42 298,777,741.27
VII. Earnings per share:
(i) Basic earnings per share
(ii) Diluted earnings per share
Legal Representative: Sun Xiujiang Person in charge of Accounting Works: Xu Guojian
Person in charge of Accounting Institution: Zhou Shoubin
5. Consolidated Cash Flow Statement
In RMB
Item Current Period Last Period
I. Cash flows arising from operating
activities:
Cash received from selling
commodities and providing labor 7,972,457,319.63 6,717,200,924.09
services
Net increase of customer deposit
39
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
and interbank deposit
Net increase of loan from central
bank
Net increase of capital borrowed
from other financial institution
Cash received from original
insurance contract fee
Net cash received from reinsurance
business
Net increase of insured savings and
investment
Net increase of amount from
disposal financial assets that measured
by fair value and with variation
reckoned into current gains/losses
Cash received from interest,
commission charge and commission
Net increase of capital borrowed
Net increase of returned business
capital
Write-back of tax received
Other cash received concerning
93,832,179.82 161,074,121.88
operating activities
Subtotal of cash inflow arising from
8,066,289,499.45 6,878,275,045.97
operating activities
Cash paid for purchasing
commodities and receiving labor 5,644,642,190.50 4,217,304,381.84
service
Net increase of customer loans and
advances
Net increase of deposits in central
bank and interbank
Cash paid for original insurance
contract compensation
Cash paid for interest, commission
charge and commission
Cash paid for bonus of guarantee
slip
Cash paid to/for staff and workers 1,436,820,991.02 1,215,874,548.17
40
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Taxes paid 244,682,396.26 341,409,771.76
Other cash paid concerning
90,990,076.71 79,190,611.98
operating activities
Subtotal of cash outflow arising from
7,417,135,654.49 5,853,779,313.75
operating activities
Net cash flows arising from operating
649,153,844.96 1,024,495,732.22
activities
II. Cash flows arising from investing
activities:
Cash received from recovering
investment
Cash received from investment
566,011.27 4,381,903.47
income
Net cash received from disposal of
fixed, intangible and other long-term
assets
Net cash received from disposal of
subsidiaries and other units
Other cash received concerning
investing activities
Subtotal of cash inflow from investing
566,011.27 4,381,903.47
activities
Cash paid for purchasing fixed,
1,059,487,773.58 1,030,491,927.70
intangible and other long-term assets
Cash paid for investment
Net increase of mortgaged loans
Net cash received from
subsidiaries and other units obtained
Other cash paid concerning
214,526.52 421,533.02
investing activities
Subtotal of cash outflow from investing
1,059,702,300.10 1,030,913,460.72
activities
Net cash flows arising from investing
-1,059,136,288.83 -1,026,531,557.25
activities
III. Cash flows arising from financing
activities
Cash received from absorbing
investment
41
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Including: Cash received from
absorbing minority shareholders’
investment by subsidiaries
Cash received from loans 400,000,000.00 296,000,000.00
Cash received from issuing bonds
Other cash received concerning
430,793,362.96 195,845,614.80
financing activities
Subtotal of cash inflow from financing
830,793,362.96 491,845,614.80
activities
Cash paid for settling debts 628,730,526.71 1,183,487,265.46
Cash paid for dividend and profit
41,066,887.26 56,263,754.65
distributing or interest paying
Including: Dividend and profit of
minority shareholder paid by
subsidiaries
Other cash paid concerning
93,634,945.60 85,871,334.98
financing activities
Subtotal of cash outflow from financing
763,432,359.57 1,325,622,355.09
activities
Net cash flows arising from financing
67,361,003.39 -833,776,740.29
activities
IV. Influence on cash and cash
equivalents due to fluctuation in -5,305,321.08 12,768,432.70
exchange rate
V. Net increase of cash and cash
-347,926,761.56 -823,044,132.62
equivalents
Add: Balance of cash and cash
791,255,686.65 1,415,399,630.60
equivalents at the period -begin
VI. Balance of cash and cash
443,328,925.09 592,355,497.98
equivalents at the period -end
Legal Representative: Sun Xiujiang Person in charge of Accounting Works: Xu Guojian
Person in charge of Accounting Institution: Zhou Shoubin
6. Cash Flow Statement of Parent Company
In RMB
Item Current Period Last Period
I. Cash flows arising from operating
42
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
activities:
Cash received from selling
commodities and providing labor 7,965,655,251.76 6,704,250,463.84
services
Write-back of tax received
Other cash received concerning
93,792,156.77 161,050,542.56
operating activities
Subtotal of cash inflow arising from
8,059,447,408.53 6,865,301,006.40
operating activities
Cash paid for purchasing
commodities and receiving labor 5,638,597,494.55 4,216,655,959.09
service
Cash paid to/for staff and workers 1,423,542,158.40 1,204,469,134.52
Taxes paid 242,626,945.20 338,480,357.99
Other cash paid concerning
92,973,776.76 85,634,144.49
operating activities
Subtotal of cash outflow arising from
7,397,740,374.91 5,845,239,596.09
operating activities
Net cash flows arising from operating
661,707,033.62 1,020,061,410.31
activities
II. Cash flows arising from investing
activities:
Cash received from recovering
investment
Cash received from investment
566,011.27 4,381,903.47
income
Net cash received from disposal of
fixed, intangible and other long-term
assets
Net cash received from disposal of
subsidiaries and other units
Other cash received concerning
investing activities
Subtotal of cash inflow from investing
566,011.27 4,381,903.47
activities
Cash paid for purchasing fixed,
1,059,184,965.65 1,030,388,040.86
intangible and other long-term assets
Cash paid for investment
43
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Net cash received from
subsidiaries and other units
Other cash paid concerning
214,526.52 421,533.02
investing activities
Subtotal of cash outflow from investing
1,059,399,492.17 1,030,809,573.88
activities
Net cash flows arising from investing
-1,058,833,480.90 -1,026,427,670.41
activities
III. Cash flows arising from financing
activities
Cash received from absorbing
investment
Cash received from loans 400,000,000.00 296,000,000.00
Cash received from issuing bonds
Other cash received concerning
430,793,362.96 195,845,614.80
financing activities
Subtotal of cash inflow from financing
830,793,362.96 491,845,614.80
activities
Cash paid for settling debts 628,730,526.71 1,183,487,265.46
Cash paid for dividend and profit
41,066,887.26 56,263,754.65
distributing or interest paying
Other cash paid concerning
93,634,945.60 85,871,334.98
financing activities
Subtotal of cash outflow from financing
763,432,359.57 1,325,622,355.09
activities
Net cash flows arising from financing
67,361,003.39 -833,776,740.29
activities
IV. Influence on cash and cash
equivalents due to fluctuation in -5,305,321.08 12,768,432.70
exchange rate
V. Net increase of cash and cash
-335,070,764.97 -827,374,567.69
equivalents
Add: Balance of cash and cash
761,645,065.66 1,401,853,786.39
equivalents at the period -begin
VI. Balance of cash and cash
426,574,300.69 574,479,218.70
equivalents at the period -end
Legal Representative: Sun Xiujiang Person in charge of Accounting Works: Xu Guojian
Person in charge of Accounting Institution: Zhou Shoubin
44
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
7. Statement of Changes in Owners’ Equity (Consolidated)
This Period
In RMB
This Period
Owners’ equity attributable to parent company
Other
equity instrument
Item Less: Other Provisio Minorit Total
Perpet Reason
Share Capital Invento compre Surplus n of Retaine y owners’
ual able
capital Prefer reserve ry hensive reserve general d profit interests equity
capita reserve
red Other shares income risk
l
stock
securi
ties
400,00 2,805,4 3,836,1
I. Balance at the 75,410, 131,880 423,424
0,000. 58,074. 72,828.
end of the last year 363.70 ,061.76 ,327.64
00 96 06
Add:
Changes of
accounting policy
Error
correction of the
last period
Enterprise
combine under
the same control
Other
II. Balance at the 400,00 75,410, 131,880 423,424
2,805,4 3,836,1
beginning of this 0,000. 58,074. 72,828.
363.70 ,061.76 ,327.64
year 00 96 06
III. Increase/
Decrease in this 52,650, -29,906, 22,743,
year (Decrease is 206.26 909.17 297.09
listed with “-”)
(i) Total 52,650, 90,093, 142,743
comprehensive
206.26 090.83 ,297.09
income
(ii) Owners’
devoted and
decreased capital
1.Common shares
invested by
shareholders
2. Capital invested
by holders of other
equity instruments
45
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
3. Amount
reckoned into
owners equity with
share-based
payment
4. Other
-120,00 -120,00
(III) Profit
0,000.0 0,000.0
distribution
0 0
1. Withdrawal of
surplus reserves
2. Withdrawal of
general risk
provisions
3. Distribution for -120,00 -120,00
owners (or 0,000.0 0,000.0
shareholders) 0 0
4. Other
(IV) Carrying
forward internal
owners’ equity
1. Capital reserves
conversed to
capital (share
capital)
2. Surplus reserves
conversed to
capital (share
capital)
3. Remedying loss
with surplus
reserve
4. Other
(V) Reasonable
reserve
1. Withdrawal in
the report period
2. Usage in the
report period
(VI)Others
IV. Balance at the 400,00 75,410, 184,530 423,424
2,775,5 3,858,9
end of the report 0,000. 51,165. 16,125.
363.70 ,268.02 ,327.64
period 00 79 15
Last Period
In RMB
46
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Last Period
Owners’ equity attributable to the parent Company
Other
equity instrument Minorit
Item Less: Other Provisio Total
Perpet Reason y
Share Capital Invento compre Surplus n of Retaine interest owners’
ual able
capital Prefer capita reserve ry hensive reserve general d profit equity
reserve s
red Other shares income risk
l
stock
securi
ties
400,00 2,425,0 3,365,0
I. Balance at the 75,410, 93,555, 370,981
0,000. 66,740. 13,204.
end of the last year 363.70 005.44 ,095.40
00 03 57
Add:
Changes of
accounting policy
Error
correction of the
last period
Enterprise
combine under the
same control
Other
II. Balance at the 400,00 75,410, 93,555, 370,981
2,425,0 3,365,0
beginning of this 0,000. 66,740. 13,204.
363.70 005.44 ,095.40
year 00 03 57
III. Increase/
Decrease in this 38,325, 52,443, 380,391 471,159
year (Decrease is 056.32 232.24 ,334.93 ,623.49
listed with “-”)
(i) Total 38,325, 532,834 571,159
comprehensive
056.32 ,567.17 ,623.49
income
(ii) Owners’
devoted and
decreased capital
1.Common shares
invested by
shareholders
2. Capital invested
by holders of other
equity instruments
3. Amount
reckoned into
owners equity with
share-based
payment
47
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
4 Other
-152,44 -100,00
(III) Profit 52,443,
3,232.2 0,000.0
distribution 232.24
4 0
1. Withdrawal of 52,443, -52,443,
surplus reserves 232.24 232.24
2. Withdrawal of
general risk
provisions
3. Distribution for -100,00 -100,00
owners (or 0,000.0 0,000.0
shareholders) 0 0
4. Other
(IV) Carrying
forward internal
owners’ equity
1. Capital reserves
conversed to
capital (share
capital)
2. Surplus reserves
conversed to
capital (share
capital)
3. Remedying loss
with surplus
reserve
4. Other
(V) Reasonable
reserve
1. Withdrawal in
the report period
2. Usage in the
report period
(VI)Others
IV. Balance at the 400,00 75,410, 131,880 423,424
2,805,4 3,836,1
end of the report 0,000. 58,074. 72,828.
363.70 ,061.76 ,327.64
period 00 96 06
Legal Representative: Sun Xiujiang Person in charge of Accounting Works: Xu Guojian
Person in charge of Accounting Institution: Zhou Shoubin
48
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
8. Statement of Changes in Owners’ Equity (Parent Company)
This Period
In RMB
This Period
Other
equity instrument
Other Total
Item Share Perpetu Less: Retaine
Capital comprehe Reasonab Surplus
al Inventory owners’
capital Preferre reserve nsive le reserve reserve d profit
capital Other shares equity
d stock income
securiti
es
2,779,3
I. Balance at the 400,000, 86,911,16 131,880,0 422,763,6 3,820,921
67,094.
end of the last year 000.00 8.71 61.76 23.11 ,948.30
72
Add: Changes
of accounting
policy
Error
correction of the
last period
Other
II. Balance at the 400,000, 2,779,3
86,911,16 131,880,0 422,763,6 3,820,921
beginning of this 67,094.
000.00 8.71 61.76 23.11 ,948.30
year 72
III. Increase/
Decrease in this 52,650,20 -32,802, 19,847,59
year (Decrease is 6.26 609.84 6.42
listed with “-”)
(i) Total 52,650,20 87,197, 139,847,5
comprehensive
6.26 390.16 96.42
income
(ii) Owners’
devoted and
decreased capital
1.Common shares
invested by
shareholders
2. Capital invested
by holders of other
equity instruments
3. Amount
reckoned into
owners equity with
share-based
payment
4. Other
49
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
-120,00
(III) Profit -120,000,
0,000.0
distribution 000.00
0
1. Withdrawal of
surplus reserves
2. Distribution for -120,00
-120,000,
owners (or 0,000.0
000.00
shareholders) 0
3. Other
(IV) Carrying
forward internal
owners’ equity
1. Capital reserves
conversed to
capital (share
capital)
2. Surplus reserves
conversed to
capital (share
capital)
3. Remedying loss
with surplus
reserve
4. Other
(V) Reasonable
reserve
1. Withdrawal in
the report period
2. Usage in the
report period
(VI)Others
IV. Balance at the 400,000, 2,746,5
86,911,16 184,530,2 422,763,6 3,840,769
end of the report 64,484.
000.00 8.71 68.02 23.11 ,544.72
period 88
Last period
In RMB
Last period
Other
equity instrument
Other Total
Item Share Perpetu Less: Retaine
Capital comprehe Reasonab Surplus
al Inventory owners’
capital Preferre reserve nsive le reserve reserve d profit
capital Other shares equity
d stock income
securiti
es
50
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
2,407,3
I. Balance at the 400,000, 86,911,16 93,555,00 370,320,3 3,358,164
78,004.
end of the last year 000.00 8.71 5.44 90.87 ,569.53
51
Add: Changes
of accounting
policy
Error
correction of the
last period
Other
II. Balance at the 400,000, 2,407,3
86,911,16 93,555,00 370,320,3 3,358,164
beginning of this 78,004.
000.00 8.71 5.44 90.87 ,569.53
year 51
III. Increase/
Decrease in this 38,325,05 52,443,23 371,989 462,757,3
year (Decrease is 6.32 2.24 ,090.21 78.77
listed with “-”)
(i) Total 38,325,05 524,432 562,757,3
comprehensive
6.32 ,322.45 78.77
income
(ii) Owners’
devoted and
decreased capital
1.Common shares
invested by
shareholders
2. Capital invested
by holders of other
equity instruments
3. Amount
reckoned into
owners equity with
share-based
payment
4. Other
-152,44
(III) Profit 52,443,23 -100,000,
3,232.2
distribution 2.24 000.00
4
1. Withdrawal of 52,443,23 -52,443,
surplus reserves 2.24 232.24
2. Distribution for -100,00
-100,000,
owners (or 0,000.0
000.00
shareholders) 0
3. Other
(IV) Carrying
forward internal
51
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
owners’ equity
1. Capital reserves
conversed to
capital (share
capital)
2. Surplus reserves
conversed to
capital (share
capital)
3. Remedying loss
with surplus
reserve
4. Other
(V) Reasonable
reserve
1. Withdrawal in
the report period
2. Usage in the
report period
(VI)Others
IV. Balance at the 400,000, 2,779,3
86,911,16 131,880,0 422,763,6 3,820,921
end of the report 67,094.
000.00 8.71 61.76 23.11 ,948.30
period 72
Legal Representative: Sun Xiujiang Person in charge of Accounting Works: Xu Guojian
Person in charge of Accounting Institution: Zhou Shoubin
52
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Shandong Airlines Co., Ltd.
Notes to the Financial Statements
As at 30th June 2017
(All amounts are expressed in CNY unless otherwise stated)
Note 1 Corporation profile
Shandong Airlines Co., Ltd. (hereafter, the Company) is a foreign-invested limited liability company incorporated in the People’s Republic of China.
The Company was incorporated through the restructuring project jointly initiated by Shandong Airlines Group Co., Ltd. (hereafter, SDA Group),
Inspur Co., Ltd. (previously known as Inspur Electronic Information Industry Group Company (浪潮电子信息产业集团公司), Shandong Hualu
Group Co., Ltd, Shandong Group Corp. of Fisheries Enterprises and Luyin Investment Group (鲁银投资集团股份有限公司) following the
approval (LuTiGaiQiZi(1999)No.88 (鲁体改企字(1999)第 88 号)) granted by the Economic Reform Commission of Shandong Province (山东省
经济体制改革委员会) on July 29th, 1999.
Shandong Airlines Group Co., Ltd. acquired 259,204,000 state-owned corporate shares (国有法人股), with CNY 1.00 at par, of the Company by
transferring its air transportation operation and the related assets and liabilities to the Company on November 25th, 1999. Inspur Co., Ltd.,
Shandong Hualu Group Co., Ltd. and Shandong Group Corp. of Fisheries Enterprises each acquired 199,000 state-owned corporate shares, with
CNY 1.00 at par, by cash investment of CNY 200,000.00 each on November 26th, 1999. Luyin Investment Group acquired 199,000 domestic
corporate shares (国内法人股), with CNY 1.00 at par, by cash investment of CNY 200,000.00 on November 26th, 1999.
The Company issued 140,000,000 domestically listed shares denominated in foreign currency (境内上市外资股) (hereafter, B share(s)), with par
value at CNY 1.00 each and issue price at HKD 1.58 each, on August 28 th, 2000 upon the approval (ZhengJianFaXingZi[2000]No.116 (证监发行
字[2000]116 号)) granted by the China Securities Regulatory Commission on August 22nd, 2000; and, the Company was listed on the Shenzhen
Stock Exchange on September 12th, 2000. Immediately after the issuance of the B shares, the capital of the Company increased to CNY
400,000,000.00.
The Agreement of Share Transfer (《股份转让协议》) signed by SDA Group and China National Aviation Holding Company (hereafter, China
Aviation Group) on February 28th, 2004 authorised the transfer of 91,200,000 shares of the Company, equal to 22.8% shareholding, from SDA
Group to China Aviation Group. Immediately after the share transfer, SDA Group’s shareholding in the Company was 42.00%. In November 2004,
the Board of Directors of the Company, in accordance with the approval (GuoZiChanQuan[2004]No.956 (国资产权[2004]956 号：《关于中国航
空集团公司将受让山东航空股份有限公司国有股的合同实施转让有关问题的批复》)) issued by the State-owned Assets Supervision
and Administration Commission of the State Council, authorised China Aviation Group to transfer the state-owned corporate shares received from
SDA Group to Air China Co., Ltd. (hereafter, Air China). As so provided in GuoZiChanQuan[2004]No.956, the rights and obligation attributable to
China Aviation Group as specified in the Agreement of Share Transfer shall be afforded by Air China. The change of share ownership was
registered at the China Securities Depository and Clearing Corporation Limited Shenzhen Office by SDA Group and Air China on December 3rd,
2004; And, 91,200,000 shares of the Company then became held by Air China.
Legal representative of the Company: SUN, Xiujiang
53
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Place of registration: Shandong Jinan Yaoqiang International Airport
Address of headquarter: Shandong Airlines Centre, 5746 – East 2nd Ring Road, Jinan, Shandong
The Company is permitted to undertake international and domestic passenger and cargo transportation, hotel and beverage related operation
(limited to operation through branch); provision of aircraft maintenance, training of civil aviation pilots and air crew, insurance brokerage; inter-airline
agenting, and principal operation related ground services; sales of airborne material and equipments, grocery, food, health food, art work, souvenir,
etc.; retailing of tobacco products (limited to Qingdao Red-Crowned Crane Hotel); lease of airborne material and equipments; venue rental, private
house rental, business services, hotel accommodation agents and ticket agents; conference services; transportation agency; air cargo storage; and
aviation pilot provision (for other domestic airlines). (The operating activities listed herein does not involve operation related to commodity that are
subject to State Administered Trading (国营贸易管理),but involve operation related to commodity that are subject to quotas , licence
requirements, which are restricted to obtain permission before the operation)(the project that subjects to the approval in accordance with the law,
can carry out business activities only after the approval of the relevant departments to carry out business activities).
No change of scope of consolidation from last year.
The Company operates in the industry of transportation.
Note 2 Basis for preparation of the financial statements
The financial statements of company have been prepared on basis of going concern in conformity with Chinese Accounting Standards for Business
Enterprises and the Accounting Systems for Business Enterprises issued by the Ministry of Finance of People’s Republic of China (Ministry of
Finance issued order No.33, the Ministry of Finance revised order No.76) on15 February 2006, and revised Accounting Standards (order 41 of the
Ministry of Finance) and Compilation Rules for Information Disclosure by Companies Offering Securities to the Public No.15 – General Provisions
on Financial Reports (2014 Revision) issued by the China Securities Regulatory Commission (CSRC).
According to the relevant accounting regulations in Chinese Accounting Standards for Business Enterprises, the company has adopted the accrual
basis of accounting. Held-for-sale non-current assets are measured at the lower of its book value at its classification date and fair value minus
expected disposal costs. Where assets are impaired, provisions for asset impairment are made in accordance with relevant requirements.
Note 3 Statement of Compliance with Enterprise Accounting Standards
The financial statements of the company are recognized and measured in accordance with the regulations in the Chinese Accounting Standards for
Business Enterprises and they give a true and fair view of the financial position, business result and cash flow of the Company as at 30 June 2017.
In addition, the financial statements of the company comply, in all material respects, with the revised disclosing requirements for financial
statements and the Compilation Rules for Information Disclosure by Companies Offering Securities to the Public No.15—General Provisions on
Financial Reports (2014 Revision) issued by China Securities Regulatory Commission (CSRC) in 2014.
Note 4 Important Accounting Principles and Accounting Estimates
The Company and subsidiaries are principally engaged in air transportation. The Company and subsidiaries in accordance with the actual
production and management features, according to the relevant provisions of Accounting Standards, to make a number of specific accounting
policies and accounting estimates for other transactions and events of revenue recognition, see Note 4.21 “Revenue” for the description. For
description of significant accounting judgments and estimates made by management, see Note 4.28 “Significant accounting judgments and
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estimates”.
4.1 Accounting period
The accounting period of the Company is classified as interim period and annual period. Interim period refers to the reporting period shorter than a
complete annual period. The accounting period of the Company is the calendar year from January 1 to December 31.
4.2 Operating cycle
Normal business cycle is realized by the Company in cash or cash equivalents from the purchase of assets for processing until. The company has
a 12 -month operating cycle, and its assets and liabilities as liquidity criteria for the classification.
4.3 Monetary Unit
Yuan (CNY) is the currency of the primary economic environment in which the Company and its domestic subsidiaries operate. Therefore, the
Company and its domestic subsidiaries choose CNY as their functional currency. The Company adopts CNY to prepare its functional statements.
4.4 Business combination
A business combination is a transaction or event that brings together two or more separate entities into one reporting entity. Business combinations
are classified into business combinations involving enterprises under common control and business combinations not involving enterprises under
common control.
4.4.1 Business combination involving entities under common control
A business combination involving enterprises under common control is a business combination in which all of the combining enterprises are
ultimately controlled by the same party or parties both before and after the combination, and that control is not transitory.
For a business combination involving enterprises under common control, the party that, on the combination date, obtains control of another
enterprise participating in the combination is the absorbing party, while that other enterprise participating in the combination is a party being
absorbed. Combination date is the date on which the absorbing party effectively obtains control of the party being absorbed.
The assets and liabilities obtained are measured at the carrying amounts as recorded by the enterprise being combined at the combination date.
The difference between the carrying amount of the net assets obtained and the carrying amount of consideration paid for the combination (or the
total face value of shares issued) is adjusted to the capital premium (or share premium) in the capital reserve. If the balance of the capital premium
(or share premium) is insufficient, any excess is adjusted to retained earnings.
The cost of a combination incurred by the absorbing party includes any costs directly attributable to the combination shall be recognized as an
expense through profit or loss for the current period when incurred.
4.4.2 Business combination involving entities not under common control
A business combination involving enterprises not under common control is a business combination in which all of the combining enterprises are not
ultimately controlled by the same party or parties both before and after the business combination.
For a business combination not involving enterprises under common control, the party that, on the acquisition date, obtains control of another
enterprise participating in the combination is the acquirer, while that other enterprise participating in the combination is the acquiree. Acquisition
date is the date on which the acquirer effectively obtains control of the acquiree.
For a business combination not involving enterprise under common control, the combination cost including the sum of fair value, at the acquisition
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date, of the assets given, liabilities incurred or assumed, and equity securities issued by the acquirer. The intermediary expenses incurred by the
acquirer in respect of auditing, legal services, valuation and consultancy services etc and other associated administrative expenses attributable to
the business combination are recognized in profit or loss when they are incurred.
The transaction cost arose from issuing of equity securities or liability securities shall be initially recognized as equity securities or liability securities.
The contingent consideration related to the combination shall be booked as combination cost at the fair value at the acquisition date. If, within the
12 months after acquisition, additional information can prove the existence of related information at acquisition date and the contingent
consideration need to be adjusted, goodwill can be adjusted.
Combination cost of the acquirer’s interest and identifiable net assets of the acquirer acquired through the business combination shall be measured
by the fair value at the acquisition date. Where the cost of combination exceeds the acquirer’s interest in the fair value of the acquiree’s identifiable
net assets, the difference shall be recognized as goodwill. Where the cost of combination is less than the acquirer’s interest in the fair value of the
acquiree’s identifiable net assets, the difference shall be accounted for according to the following requirements: (i) the acquirer shall reassess the
measurement of the fair values of the acquiree’s identifiable assets, liabilities and contingent liabilities and measurement of the cost of combination;
(ii) if after that reassessment, the cost of combination is still less than the acquirer’s interest in the fair values of the acquiree’s identifiable net
assets, the acquirer shall recognize the remaining difference immediately in profit or loss for the current period.
Where the temporary difference obtained by the acquirer was not recognized due to inconformity with the conditions applied for recognition of
deferred income tax, if, within the 12 months after acquisition, additional information can prove the existence of related information at acquisition
date and the expected economic benefits on the acquisition date arose from deductible temporary difference by the acquiree can be achieved,
relevant income tax assets can be recognized, and goodwill offset. If the goodwill is not sufficient, the difference shall be recognized as profit of the
current period.
Apart from above, the differences shall be taken into profit or loss of the current period if the recognition of deferred income tax assets is related to
the combination.
For a business combination not involving enterprise under common control, which achieved in stages that involves multiple exchange transactions,
according to “The notice of the Ministry of Finance on the issuance of Accounting Standards Interpretation No. 5” (CaiKuai [2012] No. 19) and
Article55 of “Accounting Standards for Business Enterprises No.33 - Consolidated Financial Statements” on the “package deal” criterion (see Note
4.5.2), to judge the multiple exchange transations whether they are the"package deal". If it belong to the “package deal” in reference to the
preceding paragraphs of this section and the Notes described in 4.13 “long-term investment” accounting treatment, if it does not belong to the
“package deal” to distinguish the individual financial statements and the consolidated financial statements related to the accounting treatment:
In the individual financial statements, the total value of the book valueoftheacquiree's equity investment before the acquisition date and the cost of
new investment at the acquisition date, as the initial cost of the investment, the acquiree's equity investment before the acquisition date involved in
other comprehensive income, in the disposal of the investment will be in other comprehensive income associated with the use of infrastructure and
the acquiree directly related to the disposal of assets or liabilities of the same accounting treatment (that is, except in accordance with the equity
method of accounting in the defined benefit plan acquiree is remeasured net changes in net assets or liabilities other than in the corresponding
share of the lead, and the rest into the current investment income).
In the combination financial statements, the equity interest in the acquiree previously held before the acquisition date re-assessed at the fair value
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at the acquisition date, with any difference between its fair value and its carrying amount is recorded as investment income.The previously-held
equity interest in the acquiree involved in other comprehensive income and other comprehensive income associated with the purchase of the
foundation should be used party directly related to the disposal of assets or liabilities of the same accounting treatment (that is, except in
accordance with the equity method of accounting in the acquiree is remeasured defined benefit plans other than changes in net liabilities or net
assets due to a corresponding share of the rest of the acquisition date into current investment income).
4.5 Preparation of the consolidated financial statements
4.5.1 The scope of consolidation
The scope of consolidation for the consolidated financial statements is determined on the basis of control. Control is the power to govern the
financial and operating policies of an enterprise so as to obtain benefits from its operating activities. The scope of consolidation includes the
Company and all of the subsidiaries. Subsidiary is an enterprise or entity under the control of the Company.
Once the change in the relevant facts and circumstances leading to the definition of the relevant elements involved in the control of the change, the
company will be re-evaluated.
4.5.2 Preparation of the consolidated financial statements
The subsidiary of the Company is included in the consolidated financial statements from the date when the control over the net assets and business
decisions of the subsidiary is effectively obtained, and excluded from the date when the control ceases.
For a subsidiary disposed of by the Company, the operating results and cash flows before the date of disposal (the date when control is lost) are
included in the consolidated income statement and consolidated statement of cash flows, as appropriate. For a subsidiary disposed during the
period, no adjustment is made to the opening balance of the consolidated financial statements.
For a subsidiary acquired through a business combination not under common control, the operating results and cash flows from the acquisition (the
date when the control is obtained) are included in the consolidated income statement and consolidated statement of cash flows, as appropriated; no
adjustment is made to the opening balance and comparative figures in the consolidated financial statements.
Where a subsidiary and a party being absorbed in a merger by absorption was acquired during the reporting period, through a business
combination involving enterprises under common control, the financial statements of the subsidiary are included in the consolidated financial
statements. The results of operations and cash flow are included in the consolidated balance sheet and the consolidated income statement,
respectively, based on their carrying amounts, from the date that common control was established, and the opening balances and the comparative
figures of the consolidated financial statements are restated.
When the accounting period or accounting policies of a subsidiary are different from those of the Company, the Company makes necessary
adjustments to the financial statements of the subsidiary based on the Company’s own accounting period or accounting policies. Where a
subsidiary was acquired during the reporting period through a business combination not under common control, the financial statements was
reconciliated on the basis of the fair value of identifiable net assets at the date of acquisition. Intra-Group balances and transactions, and any
unrealized profit or loss arising from intra-Group transactions, are eliminated in preparing the consolidated financial statements.
Minority interest and the portion in the net profit or loss not attributable to the Company are presented separately in the consolidated balance sheet
within shareholders’/ owners’ equity and net profit. Net profit or loss attributable to minority shareholders in the subsidiaries is presented separately
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as minority interest in the consolidated income statement below the net profit line item.
When the amount of loss for the current period attributable to the minority shareholders of a subsidiary exceeds the minority shareholders’ portion
of the opening balance of shareholders’/equity of the subsidiary, the excess is allocated against the minority interests.
When the Company loses control of a subsidiary due to the disposal of a portion of an equity investment or other reasons, the remaining equity
investment is re-measured at its fair value at the date when control is lost. The difference between 1) the total amount of consideration received
from the transaction that resulted in the loss of control and the fair value of the remaining equity investment and 2) the carrying amounts of the
interest in the former subsidiary’s net assets immediately before the loss of the control is recognized as investment income for the current period
when control is lost. Other comprehensive income related to the former subsidiary's equity investment, using the foundation and the acquiree
directly related to the disposal of the same assets or liabilities are accounted when the control is lost(ie, in addition to the former subsidiary is
remeasured at the net defined benefit plan or changes in net assets and liabilities resulting from, the rest are transferred to the current investment
income). The retained interest is subsequently measured according to the rules stipulated in the - “Chinese Accounting Standards for Business
Enterprises No.2 - Long-term equity investment” or “Chinese Accounting Standards for Business Enterprises No.22 - Determination and
measurement of financial instruments”. See Note 4.13 Long-term equity investments and Note 4.9 Financial instruments for details.
The company through multiple transactions step deal with disposal of the subsidiary's equity investment until the loss of control, need to distinguish
between equity until the disposal of a subsidiary's loss of control over whether the transaction is package deal. Terms of the transaction disposition
of equity investment in a subsidiary, subject to the following conditions and the economic impact of one or more of cases, usually indicates that
several transactions should be accounted for as a package deal:①these transactions are considered simultaneously, or in the case of mutual
influence made, ②these transactions as a whole in order to achieve a complete business results; ③the occurrence of a transaction depends on
occurs at least one other transaction; ④a transaction look alone is not economical, but when considered together with other transaction is
economical. If they does not belong to the package deal, each of them separately, as the case of a transaction in accordance with “without losing
control over the disposal of a subsidiary part of a long-term equity investments“ (see Note 4.10.2, 4)) and “due to the disposal of certain equity
investments or other reasons lost control of a subsidiary of the original” (see previous paragraph) principles applicable accounting treatment. Until
the disposal of the equity investment loss of control of a subsidiary of the transactions belonging to the package deal, the transaction will be used
as a disposal of a subsidiary and the loss of control of the transaction. However, before losing control of the price of each disposal entitled to share
in the net assets of the subsidiary 's investment corresponding to the difference between the disposal, recognized in the consolidated financial
statements as other comprehensive income, loss of control over the transferred together with the loss of control or loss in the period.
4.6 Joint arrangement
A joint arrangement is an arrangement of which two or more partieshave joint control.A joint arrangement is either a joint operation or a joint venture,
depending of the rights and obligation of the Company in the joint arrangement. A joint operation is a joint arrangement whereby the Company has
rights to the assets, andobligations for the liabilities, relating to the arrangement. A joint venture is a joint arrangement whereby the Company has
rights to the net assets of thearrangement.
The Company accounts for joint ventures using the equity method, see Note 4.13.2.2 for details.
The company, a joint operator, recognises in relation to its interest in a jointoperation:(a)its assets, including its share of any assets held jointly;(b)its
liabilities, including its share of any liabilities incurred jointly;(c)its revenue from the sale of its share of the output arising from thejoint
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operation;(d)its share of the revenue from the sale of the output by the jointoperation; and (e)its expenses, including its share of any expenses
incurred jointly.
When the Company enters into a transaction with a joint operation in which it is ajoint operator, such as a sale or contribution of assets, the
Company, prior to disposal of the assets to a third party by the joint operation,recognises gains and losses resulting from such a transaction onlyto
the extent of the other parties's interests in the joint operation.When there is evidence of a reduction in the net realisablevalue of the assets to be
sold or contributed to the joint operation, or of animpairment loss of those assets which is in line with provision stipulated by CAS 8, those losses
arerecognised fully by the Company.When there is evidence of a reduction in the net realisablevalue of the assets to be purchased or of an
impairment loss of those assets, the Company shall recognise its share of those losses.
4.7 Cash equivalent
Cash and cash equivalents of the Company include cash on hand, ready usable deposits and investments having short holding term (normally will
be due within three months from the day of purchase), with strong liquidity and easy to be exchanged into certain amount of cash that can be
measured reliably and have low risks of change.
4.8 Foreign exchange
4.8.1 Translation in foreign exchange transactions
The foreign currency transactions are recorded, on initial recognition in the functional currency, by applying [the spot exchange
rate on the date of the transaction / an exchange rate that approximates the actual spot exchange rate on the date of
transaction]. The exchange of foreign currency and transactions related to the foreign exchange are translated at the spot
exchange rate.
4.8.2 Translation of monetary foreign currency and non-monetary foreign currency
At the balance sheet date, foreign currency monetary items are translated using the spot exchange rate at the balance sheet
date. All the exchange differences thus resulted are taken to profit or loss, except for ①those relating to foreign currency
borrowings specifically for construction and acquisition of qualifying assets, which are capitalized in accordance with the
principle of capitalization of borrowing costs, ②hedging accounting, the exchange difference related to hedging instruments
for the purpose of net oversea operating investment is recorded in the comprehensive income till the date of disposal and
recognized in profit or loss of the period; exchange difference from changes of other account balance of foreign currency
monetary items, ③available-for-trade is recorded into profit or loss except for amortized cost.
Non-monetary foreign currency items measured at historical cost shall still be translated at the spot exchange rate prevailing
on the transaction date, and the amount denominated in the functional currency is not changed. Non-monetary foreign
currency items measured at fair value are translated at the spot exchange rate prevailing at the date when the fair values are
determined. The exchange difference thus resulted are recognized in profit or loss for the current period or as capital reserve.
4.8.3 The translation of financial statement in foreign currency
When the consolidated financial statements include foreign operation(s), if there is a foreign currency monetary item
constituting a net investment in a foreign operation, exchange difference arising from changes in exchange rates are
recognized as “exchange differences arising on translation of financial statements denominated in foreign currencies” in
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owner’s equity, and in profit or loss for the period upon disposal of the foreign operation.
The Group translates the financial statements of its foreign operations into CNY by following rules. Assets and liabilities
in the balance sheet are translated at the spot exchange rate prevailing at the balance sheet date; all equity items except for
retained earnings are translated at the spot exchange rates at the dates on which such items occur; income and expenses in
income statement are translated at the spot exchange rates at the date of transaction; the opening retained earnings is the
closing retained earnings of the last period after translation; the closing balance of retained earnings is calculates and
presented in the basis of each translated income statements and profit distribution item; the difference arising between the
assets and liabilities and shareholders’ equity shall be booked as translation difference of foreign currency statements, and
shall be presented as a separate component of equity in the balance sheet. On a loss of control over Group’s oversea
operation due to disposal, the Company transfers the accumulated or proportionate share of the accumulated exchange
difference arising on translation of financial statements of this oversea operation attributable to the owners’ equity of the
Company and presented under shareholders’ equity, to profit or loss in the period in which the disposal occurs.
Foreign currency cash flows and cash flow of oversea subsidiaries are translated at the spot exchange rates on the date of
cash flows.The effect of exchange rate changes on cash is separately presented as an adjustment item in the cash flow
statement.
The opening and actual amount of last year are presented in the financial statement after translation
At the disposal of all of the company's ownership interest in a foreign operation, or due to the disposal of part of the equity
investment or other reasons, the loss of control over a foreign operation, the project owner's equity in the balance sheet listed
under the relevant overseas operations attributable to statements of the parent company 's shareholders' equity of foreign
currency translation differences, all transferred to the disposal of the income statement.
At the disposal of part of the equity investment or other causes lower hold percentage overseas business interests, but does
not lose control over a foreign operation, and disposal of the foreign operation section related to foreign currency translation
differences attributable to minority interests, is not transferred to the income statement. At the disposal of a foreign operation
as part of the equity joint venture or joint ventures, foreign currency financial statements of the foreign operation and the
associated translation difference in proportion to dispose of the foreign operation into the disposal of the income statement.
4.9 Financial instruments
4.9.1 Determination of financial assets and liabilities’ fair value
Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in
an arm’s length transaction. For a financial instrument which has an active market, the Company uses quoted price in the
active market to establish its fair value. The quoted price in the active market refers to the price that can be regularly obtained
from exchange market, agencies, industry associations, pricing authorities; it represents the fair market trading price in the
actual transaction.
For a financial instrument which does not have an active market, the Company establishes fair value by using a valuation
technique. Valuation techniques include using recent arm’s length market transactions between knowledgeable, willing parties,
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reference to the current fair value of another instrument that is substantially the same, discounted cash flow analysis and
option pricing models.
The Company measures initially and subsequently the fair value of an interest rate swap at the value of a competitor’s interest
rate swap quoted by a recognised financial institution as at the Company’s balance sheet date in accordance with the principle
of consistency.
4.9.2 Classification, recognition and measurement of financial assets
All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis. On initial
recognition, the Company’s financial assets are classified into one of the four categories, including financial assets at fair value
though profit or loss, held-to maturity investments, loans and receivables and available-for-trade financial assets. A financial
asset is recognized initially at fair value. In the case of financial assets at fair value through profit or loss, relevant transaction
costs are immediately charged to the profit and loss of the current period; transaction costs relating to financial assets of other
categories are included in the amount initially recognized.
1) Financial assets at fair value through profit or loss:
Including financial assets held-for-trade and financial assets designated at fair value through profit or loss.
Financial asset held-for-trade is the financial asset that meets one of the following conditions:
A. the financial asset is acquired for the purpose of selling it in a short term;
B. the financial asset is a part of a portfolio of identifiable financial instruments that are collectively managed, and there is
objective evidence indicating that the enterprise recently manages this portfolio for the purpose of short-term profits;
C. the financial asset is a derivative, except for a derivative that is designated and effective hedging instrument, or a financial
guarantee contract, or a derivative that is linked to and must be settled by delivery of an unquoted equity instrument (without a
quoted price from an active market) whose fair value cannot be reliably measured. For such kind of financial assets, fair
values are adopted for subsequent measurement.
Financial asset is designated on initial recognition as at fair value through profit or loss only when it meets one of the following
conditions:
A. the designation eliminates or significantly reduces the inconsistency in the measurement or recognition of relevant gains or
losses that would otherwise arise from measuring the financial instruments on different bases.
B. a Group of financial instruments is managed and its performance is evaluated on a fair value basis, and is reported to the
enterprise’s key management personnels. Formal documentation regarding risk management or investment strategy has
prepared.
Financial assets at fair value through profit or loss are subsequently measured at the fair value. Any gains or losses
arising from changes in the fair value and any dividends or interest income earned on the financial assets are recognized in
the profit or loss.
2) Investment held-to maturity
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity that an
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entity has the positive intention and ability to hold to maturity. Such kind of financial assets are subsequently measured at
amortized cost using the effective interest method. Gains or losses arising from derecognition, impairment or amortization are
recognized in profit or loss for the current period.
Effective interest rate is the rate that exactly discounted estimated future cash flows through the expected life of the financial
asset or financial liability or, where appropriate, a shorter period to the net carrying amount of the financial asset or financial
liability.
When calculating the effective interest rate, the Company shall estimate future cash flow considering all contractual terms of
the financial asset or financial liability without considering future credit losses, and also consider all fees paid or received
between the parties to the contract giving rise to the financial asset and financial liability that are an integral part of the
effective interest rate, transaction costs, and premiums or discounts, etc.
3) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed determinable payment that are not quoted in an active
market. Financial assets classified as loans and receivables by the Company include note receivables, account receivables,
interest receivable dividends receivable and other receivables.
Loans and receivables are subsequently measured at amortized cost using the effective interest method. Gain or loss arising
from derecognition, impairment or amortization is recognized in profit or loss.
4) Financial assets available-for-trade
Financial assets available-for-trade include non-derivative financial assets that are designated on initial recognition as
available for trade, and financial assets that are not classified as financial assets at fair value through profit or loss, loans and
receivables or investment held-to-maturity.
Financial assets available-for-trade are subsequently measured at fair value, and gains or losses arising from changes in the
fair value are recognized as other comprehensive income and included in the capital reserve, except that impairment losses
and exchange differences related to amortized cost of monetary financial assets denominated in foreign currencies are
recognized in profit or loss, until the financial assets are derecognized, at which time the gains or losses are released and
recognized in profit or loss.
Interests obtained and dividends declared by the investee during the period in which the financial assets available-for-trade
are held, are recognized in investment gains.
4.9.3 Impairment of financial assets
The Group assesses at the balance sheet date the carrying amount of every financial asset except for the financial assets that
measured by the fair value. If there is objective evidence indicating a financial asset may be impaired, a provision is provided
for the impairment.
1) Impairment on held-to maturity investment, loans and receivables
The financial assets measured by cost or amortized cost write down their carrying value by the estimated present value of
future cash flow. The difference is recorded as impairment loss. If there is objective evidence to indicate the recovery of value
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of financial assets after impairment, and it is related with subsequent event after recognition of loss, the impairment loss
recorded originally can be reversed. The carrying value of financial assets after impairment loss reversed shall not exceed the
amortized cost of the financial assets without provisions of impairment loss on the reserving date.
2) Impairment loss on available-for-trade financial assets
Where the fair value of the equity instrument investment drops significantly or not contemporarily according to the integrated
relevant factors, an available-for-trade financial asset is impaired.
When an available-for-trade financial asset is impaired, the cumulative loss arising from declining in fair value that had been
recognized in capital reserve shall be removed and recognized in profit or loss. The amount of the cumulative loss that is
removed shall be difference between the acquisition cost with deduction of recoverable amount less amortized cost, current
fair value and any impairment loss on that financial asset previously recognized in profit or loss.
If, after an impairment loss has been recognized, there is objective evidence that the value of the financial asset is recovered,
and it is objectively related to an event occurring after the impairment loss was recognized, the initial impairment loss can be
reversed and the reserved impairment loss on available-for-trade equity instrument is recorded in the profit or loss, the
reserved impairment loss on available-for-trade debt instrument is recorded in the current profit or loss.
The equity instrument where there is no quoted price in an active market, and whose fair value cannot be reliably measured,
or impairment loss on a derivative asset that is linked to and must be settled by delivery of such an unquoted equity instrument
shall not be reversed.
4.9.4 Recognition and measurement of financial assets transfer
The Group derecognizes a financial asset when one of the following conditions is met:
1) the rights to receive cash flows from the asset have expired;
2) the enterprise has transferred its rights to receive cash flows from the asset to a third party under a pass-through
arrangement; or
3) the enterprise has transferred its rights to receive cash flows from the asset and either (a) has transferred substantially all
the risks and rewards of the asset, or (b) has neither transferred norretained substantially all the risks and rewards of the asset,
but has transferred control of the asset.
If the enterprise has neither retained all the risks and rewards from the financial asset nor control over the asset, the asset is
recognized according to the extent it exists as financial asset, and correspondent liability is recognized. The extent of
existence refers the level of risk by the financial asset changes the enterprise is facing.
For a transfer of a financial asset in its entirety that satisfies the derecognition criteria, (a). the carrying amount of the financial
asset transferred; and (b) the sum of the consideration received from the transfer and any cumulative gain or loss that had
been recognized in other comprehensive income, is recognized in profit or loss.
If a part of the transferred financial asset qualifies for derecognition, the carrying amount of the transferred financial asset is
allocated between the part that continues to be recognized and the part that is derecognized, based on the relative fair value
of those parts. The difference between (a) the carrying amount allocated to the part derecognized; and (b) the sum of the
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consideration received for the part derecognized and any cumulative gain or loss allocated to the part derecognized which has
been previously recognized in other comprehensive income, is recognized in profit or loss.
4.9.5 Classification and measurement of financial liabilities
The Group’s financial liabilities are, on initial recognition, classified into financial liabilities at fair value through profit or loss and
other financial liabilities. For financial liabilities at fair value through profit or loss, relevant transaction costs are immediately
recognized in profit or loss for the current period, and transaction costs relating to other financial liabilities are included in the
initial recognition amounts.
1) Financial liabilities measured by the fair value and the changes recorded in profit or loss
The classification by which financial liabilities held-for-trade and financial liabilities designed at the initial recognition to be
measured by the fair value follows the same criteria as the classification by which financial assets held-for-trade and financial
assets designed at the initial recognition to be measured by the fair value and their changes are recorded in the current profit
or loss.
For the financial liabilities measured by the fair value and changes recorded in the profit or loss, fair values are adopted for
subsequent measurement. All the gains or losses on the change of fair value and the expenses on dividends or interests
related to these financial liabilities are recognized in profit or loss for the current period.
2) Other financial liabilities
Derivative financial liabilities that linked with equity instruments, which do not have a quoted price in an active market and their
fair value cannot be measured reliably, is subsequently measured by cost Other financial liabilities are subsequently measured
at amortized cost using the effective interest method. Gains or losses arising from derecognition or amortization is recognized
in profit or loss for the current period.
3) Financial guarantee contracts
For financial guarantee contracts that are not designated as at fair value through profit or loss,they are, after initial recognition,
subsequently measured at the higher of: (i) the amount determined according to the principles of Accounting Standards for
Business Enterprises No. 13 - Contingencies, and (ii) the amount initially recognized less the accumulated amortization
determined according to the principles of Accounting Standards for Business Enterprises No. 14 - Revenue.
4.9.6 Derecognition of financial liabilities
The Group derecognizes a financial liability (or part of it) when the underlying present obligation (or part of it) is discharged or
cancelled or has expired. An agreement between the Company (an existing borrower) and existing lender to replace original
financial liability with a new financial liability with substantially different terms is accounted for as an extinguishment of the
original financial liability and the recognition of a new liability.
When the Company derecognizes a financial liability or a part of it, it recognizes the difference between the carrying amount of
the financial liability (or part of the financial liability) derecognized the consideration paid (including any non-cash assets
transferred or new financial liabilities assumed) in profit or loss.
4.9.7 Derivatives and embedded derivatives
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Derivative financial instruments include derivatives are initially measured at fair value at the date when the derivative contracts are entered into and
are substantially re-measured at fair value. The resulting gain and loss is recognized in profit or loss.
An embedded derivative is separated from the hybrid instrument, where the hybrid instrument is not designated as a financial asset or financial
liability at fair value though profit or loss, and the treated as a standalone derivative if (a) the economic characteristics and risks of the embedded
derivative are not closely related to the economic characteristics and risks of the host contract; and (b) a separate instrument with the same terms
as the embedded derivative would meet the definition of a derivative. If the Company is unable to measure the embedded derivative separately
either at acquisition or at a subsequent balance sheet date, it designates the entire hybrid instrument as a financial asset or financial liability at fair
value through profit or loss.
4.9.8 Offsetting financial assets and financial liabilities
When the Company has a legal right that is currently enforceable to set off the recognized financial assets and financial
liabilities, and intends either to settle on a net basis, or to realize the financial asset and settle the financial liability
simultaneously, a financial asset and a financial liability shall be offset and the net amount is presented in the balance sheet.
Except for the above circumstances, financial assets and financial liabilities shall be presented separately in the balance sheet
and shall not be offset.
4.9.9 Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its
liabilities. The consideration received from issuing equity instruments, net of transaction costs, are added to shareholders’
equity. All types of distribution (excluding stock dividends) made by the Company to holders of equity instruments are
deducted from shareholders’ equity. The Group does not recognize any changes in the fair value of equity instruments.
4.10 Receivables
The receivables by the Company include account receivables, and other receivables.
4.10.1 Criteria for recognition of bad debts:
The Company carries out an inspection on the balance sheet date. Where there is any objective evidence proving that the receivables have been
impaired, an impairment provision shall be made:
1) A serious financial difficulty occurs to the issuer or debtor;
2) The debtor breaches any of the contractual stipulations, for example, fails to pay or delays the payment of interests or the principal, etc.;
3) The debtor will probably become bankrupt or carry out other financial reorganizations;
4) Other objective evidences showing the impairment of the receivables.
4.10.2 Method for bad debts provision
1) Provisions of bad debts in account receivables that is individually significant.
Individual receivables equal to or higher than 5% of total receivables are classified as receivables of individual significance.
For an account receivable that is individually significant, the asset is individually assessed for impairment, the impairment loss is recognized at the
difference between the present value of future cash flow less the carrying amount, and provision is made accordingly.
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2) Provisions of bad debts in account receivables that individually insignificant items with similar credit risk characteristics that have significant risk:
A.Evidence of credit risk characteristics
Whether the financial asset is individually significant or not individually significant, it is included in a group of financial assets with similar credit risk
characteristics and collectively assessed for impairment. Such credit risk reflects the repayment of all due amount under the contract, and is related
to the estimation of future cash flow expected to be derived from the assets.
Evidence of portfolios:
Item Basis
Receivables not individually assessed for impairment are categorised on the basis
of credit risk. Provision for bad debts for each category of receivables is
Categorisation by nature of receivables recognised at the actual rate of loss for the previous year of the same or similar
category bearing similar credit risk characteristics after adjustment for the current
period circumstances.
B.Provision by credit risk characteristics
During the Company impairment test, the amount of bad debts provisions is determined by the assessed result from the experience of historical
loss and current economic status and the existing loss in the estimated account receivables according to the set of account receivables and credit
risk characteristic.
Provisions for difference portfolios:
Item Provision
Categorisation by nature of receivables Percentage of carrying amount
Portfolio 1 by Aging analysis
Percentage of carrying amount for recognition of Percentage of carrying amount for
Category allowance for bad debt applicable to accounts recognition of allowance for bad debt
receivable applicable to other receivables
Categorisation by nature of receivables 5% 5%
3) Provisions of bad debts that is individually insignificant.
For the account receivables not individually significant, the Company assesses the account receivables individually for impairment when are of
following characteristics: if there is objective evidence indicating the impairment, the impairment loss is recognized at the difference between the
present value of future cash flow less the carrying amount, and provision is made accordingly. For examples: receivables of individual insignificance
bears differing credit risk characteristics to other receivables of individual insignificance account receivables with related parties; account
receivables under litigations or arbitrations, or account receivables with obvious indication that debtor cannot fulfill the obligation of repayment.
4.10.3 The reversal of bad debts provision
If there is objective evidence of recovery in value of account receivables, and the recovery can be related to an event occurring after the impairment
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was recognized, the previously recognized impairment loss is reversed and recognized in profit or loss. However, the reversal shall not result in a
carrying amount that exceeds what the amortized cost would have been had the impairment loss not been recognized at the date the impairment is
reversed.
4.11 Inventories
4.11.1 Classification of inventory
The Company’s inventory mainly include air materials and low-value consumables.。
4.11.2 Valuation method of inventories upon delivery
Inventories are initially carried at the actual cost. The actual cost of inventories transferred out is assigned by using first-in, first out (FIFO) method.
4.11.3 Basis for determining net realizable value of inventories and provision methods for decline in value of inventories
Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion, the estimated costs
necessary to make the sale and relevant taxes. Net realizable value is determined on the basis of clear evidence obtained, and takes into
consideration the purpose of holding inventories and effect of post balance sheet events.
At the balance sheet date, inventories are measured at the lower of the cost and net realizable value. If the net realizable value is below the cost of
inventories, a provision for decline in value of inventories is made. The provision for inventories decline in value is determined normally by the
difference of the cost of individual item less its realizable value. For large quantity and low value items of inventories, provision for decline in value
is made based on categories of inventories. For items of inventories relating to a product line that are produced and marketed in the same
geographical area, have the same or similar end users or purposes, and cannot be practicably evaluated separately from other items in that product
line provision for decline in value is determined on an aggregate basis.
After the provision for decline in value of inventories is made, if the circumstances that previously caused inventories to be written down below cost
no longer exist so that the net realizable value of inventories is higher than their cost, the original provision for decline in value is reversed and the
reversal is included in profit or loss for the period.
4.11.4 The perpetual inventory system is maintained for stock system.
4.11.5 Amortization method for low cost and short-lived consumable items and packaging materials.
Low cost and short-lived consumable items are amortized using immediate write-off method; packaging materials are amortized using immediate
write-off method.
4.12 Held-for-sale assets
If the company takes back its book value mainly by selling (including the non-montery assets exchange with commercial substance, the same as
below) rather than noncontinuous use of a non-current asset or disposal group, it shall be divided into the held-for-sale category. The specific
criteria are to meet the following conditions: a certain non-current asset or disposal group can be sold immediately under the current conditions
based on the practice of selling such assets or disposal groups in similar transactions; the Company has made resolutions on the sale plan and has
obtained decided purchase commitments; the sale is expected to be completed within one year. Thereinto, the disposal group refers to a set of
assets that are disposed along with all the others as a whole by sale or other methods in a transaction and the liabilities that are directly related to
those assets transferred in the transaction. The group of assets or asset groups to which the disposal group belongs share the goodwill achieved in
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the business combination in accordance with the Accounting Standards for Business Enterprises No.8 – Impairment of Assets, the disposal group
should include the goodwill assigned to the disposal group.
When the initial measurement or the remeasurement at the balance sheet date of the Company is divided into the non-current asset and disposal
group held for sale, if the book value is higher than the net amount after subtracting the selling fees from the fair value, write down the book value to
the net amount after subtracting the selling fees from the fair value, the write-down amount is recognized as asset impairment losses and is
included in the current profits and losses, meanwhile making provisions for impairment of assets held for sale. For the disposal group, the
recognized assets impairment losses firstly offset the book value of goodwill in the disposal group, then offset the book value of various non-current
assets specified by the measurement applicable for Accounting Standards for Business Enterprises No. 42- Non-current Assets, Disposal Group,
and Discontinued Operation Held for Sale (Hereinafter referred to as the Guidelines Held for Sale ) in the disposal group. If the net amount after
subtracting the selling fees from the fair value of the disposal group at the subsequent balance sheet date has an increase, the amount of the
previous write-down should be restored and transferred back in the amount of assets impairment loss recognized by non-current assets and
applicable for held-for-sale standards after being classified as the held-for-sale, the transferred amount should be included in the current profits and
losses, and increase its book value in proportion according to the proportion of book value of various non-current assets applicable for the
measurement and specification of held-for-sale standards in the disposal group except for the goodwill; the book value of which the goodwill has
been offset and the assets impairment losses confirmed before the non-current assets applicable for the measurement and specification of
held-for-sale standards being classified as available-for-sale assets cannot be transferred back.
The non-current assets held for sale or the non-current assets in the disposal group shall not be accrued for depreciation or amortization, continue
to confirm the indebted interest and other expenses in the disposal group held for sale.
When the non-current assets or disposal groups no longer meet the requirements of held-for-sale categories, the Company shall not continue to
classify them as the held-for-sale categories or remove the non-current assets from the held-for-sale disposal group, and measure according to the
lower one of the following:(1) For the book value before being classified as held-for-sale category, the amount of the depreciation, amortization or
impairment that should be confirmed when not being classified as held-for-sale category according to the assumption after being adjusted; (2)
Recoverable amount.
4.13 Long-term equity investments
Long-term equity investments referred to in this section refer to the Company invested entity has control, joint control or significant influence over
the long-term equity investments. The Company invested does not have control, joint control or significant influence over the long-term equity
investments as financial assets available for sale or at fair value and the changes included financial assets through profit or loss, which refer to the
accounting policies in Note 4. 9 “financial Instruments”.
Joint control is the Company control over an arrangement in accordance with the relevant stipulations are common, related activities and the
arrangement must be after sharing control participants agreed to the decision-making. Significant influence is the Company s financial and
operating policies of the entity has the right to participate in decision-making, but can not control or with other parties joint control over those
policies.
4.13.1 Determination of Investment cost
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The cost of a long-term equity investment acquired through business combination under common control is measured at the acquirer's share of the
combination date book value of the acquiree's net equity in the ultimate controller's consolidated financial statements. The difference between the
cost and book value of cash paid, non-monetary assets transferred and liabilities assumed is adjusted to capital reserves, and to retained earnings
if capital reserves is insufficient. If the consideration is transferred by way of issuing equity instruments, the face value of the equity instruments
issued is recognised in share capital and the difference between the cost of the face value of the equity instruments issued is adjusted to capital
reserves, and to retained earnings if capital reserves is insufficient.
The cost of a long-term equity investment acquired through business combination not under common control is the fair value of the assets
transferred, liabilities incurred or assumed and equity instruments issued.
All expenses incurred directly associated with the acquisition by the acquirer, including expenditure of audit, legal services, valuation and
consultancy and other administrative expenses, are recognised in profit or loss for the period during which the acquisition occurs.
Long-term equity investments acquired not through business combination are measured at cost on initial recognition. Depending on the way of
acquisition, the cost of acquisition can be the total cash paid, the fair value of equity instrument issued, the contract price, the fair value or book
value of the assets given away in the case of non-monetary asset exchange, or the fair value of the relevant long-term equity investments. The cost
of acquisition of a long-term equity investment acquired not through business combination also includes all directly associated expenses, applicable
taxes and fees, and other necessary expenses.
4.13.2 Subsequent Measurement
To be invested joint control ( except constitute common operator ) or long-term equity investments significant influence are accounted for using the
equity method. In addition, the Company's financial statements using the cost method of accounting for long-term equity can exercise control over
the investee.
1) Cost method of accounting for long-term equity investments
Under the cost method, a long-term equity investment is measured at initial investment cost. Except for cash dividends or profits declared but not
yet paid that are included in the price or consideration actually paid upon acquisition of the long-term equity investment, investment income is
recognized in the period in accordance with the attributable share of cash dividends or profit distributions declared by the investee.
2) Equity method of accounting for long-term equity investments
Where the initial investment cost of a long-term equity investment exceeds the investing enterprise’s interest in the fair values of the investee’s
identifiable net assets at the time of acquisition, no adjustment shall be made to the initial investment cost.
The carrying amount of an long-term equity investment measured using the equity method is adjusted by the Company's share of the investee's net
profit and other comprehensive income, which is recognised as investment income and other comprehensive income respectively. The carrying
amount of an long-term equity investment measured using the equity method is reduced by profit distribution or cash dividends announced by the
investee. The carrying amount of an long-term equity investment measured using the equity method is also adjusted by the investee's equity
movement other than net profit, other comprehensive income and profit distribution, which is adjusted to capital reserves. The net profit of the
investee is adjusted by the fair value of the investee's identifiable assets as at acquistion. The financial statements and hence the net profit and
other comprehensive income of an investee which does not adopt accounting policies or accounting period uniform with the Company is adjusted
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by the Company's accounting policies and accounting period. The Company's share of unrealised profit or loss arising from related party
transactions between the Company and an associate or joint venture is deducted from investment income. Unrealised loss arising from related
party transactions between the Company and an associate or joint venture which is associated with asset impairment is not adjusted. Where assets
transferred to an associate or joint venture which form part of the Company's investment in the investee but which does not enable the Company
obtain control over the investee, the cost of the additional investment acquired is measured at the fair value of assets transferred and the difference
between the cost of the additional investment and the book value of the assets transferred is recognised in profit or loss. Where assets transferred
to an associate or joint venture form an operation, the difference between the consideration received and the book value of the assets transferred in
recognised in profit or loss. Where assets transferred from an associate or joint venture form an operation, the transaction is accounted for in
accordance with CAS 20 - Business Combination, any gain or loss is reocgnised in profit or loss.
The Company's share of an investee's net loss is limited by the sum of the book value of the long-term equity investment and other net long-term
investments in the investees. Where the Company has obligation to share additional net loss of the investee, the estimated share of loss
recognised as accrued liabilities and investment loss. Where the Company has unrecognised share of loss of the investee when the investee
generates net profit, the Company's unrecognised share of loss is reduced by the Company's share of net profit and when the Company's
unrecognised share or loss is eliminated in full, the Company's share of net profit, if any, is recognised as investment income.
For long-term equity investments in associates and joint ventures which had been held by the Company before its first time adoption of Accounting
Standards for Business Enterprises as of Jan 1 2007, where the initial investment cost of a long-term equity investment exceeds the Company’s
interest in the investee’s net assets at the time of acquisition, the excess is amortized and is recognized in profit or loss on a straight line basis over
the original remaining life.
3) Acquisition of minority interest
The difference between newly increased equity investment due to acquisition of minority interests and portion of net asset cumulatively calculated
from the acquisition date is adjusted as capital reserve. If the capital reserve is not sufficient to absorb the difference, the excess are adjusted
against returned earnings.
4) Disposal of long-term equity investment
Where the parent company disposes long-term investment in a subsidiary without a change in control, the difference in the net asset between the
amount of disposed long-term investment and the amount of the consideration paid or received is adjusted to the owner’s equity. If the disposal of
long-term investment in a subsidiary involves loss of control over the subsidiary, the related accounting policies in Note 4.5.2 applies. For disposal
of long-term equity investments in any situation other than the fore-mentioned situation, the difference between the book value of the investment
disposed and the consideration received is recognised in profit or loss.
Where a long-term equity investment is measured by the equity method both before and after part disposal of the investment, cumulative other
comprehensive income relevant to the investment recognised prior to the acquistion is treated in the same manner that the investee disposes the
relevant assets or liabilities proportionate to the disposal. The investee's equity movement other than net profit, other comprehensive income and
profit distribution is reocgnised in profit or loss proportionate to the disposal.
Where a long-term equity investment is measured at cost both before and after part disposal of the investment, cumulative other comprehensive
income relevant to the investment recognised, as a result of accounting by equity method or recognition and measurement principles applicable to
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financial instruments, prior to the Company's acquisition of control over the investee is treated in the same manner that the investee disposes the
relevant assets or liabilities and recognised in profit or loss proportionate to the disposal. The investee's equity movement other than net profit,
other comprehensive income and profit distribution, as a result of accounting by equity method, is reocgnised in profit or loss proportionate to the
disposal.
Where the Company's control over an investee is lost due to partial disposal of investment in the investee and the Company continues to have
significant influence over the investee after the partial disposal, the investment in measured by the equity method in the Company's separate
financial statements; where the Company's control over an investee is lost due to partial disposal of investment in the investee and the Company
ceases to have significant influence over the investee after the partial disposal, the investment in measured in accordance with the recognition and
measurement principles applicable to financial instruments in the Company's separate financial statements and the difference between the fair
value and the book value of the remaining investment at the date of loss of control is recognised in profit or loss. Cumulative other comprehensive
income relevant to the investment recognised, as a result of accounting by equity method or recognition and measurement principles applicable to
financial instruments, prior to the Company's acquisition of control over the investee is treated in the same manner that the investee disposes the
relevant assets or liabilities on the date of loss of control. The investee's equity movement other than net profit, other comprehensive income and
profit distribution, as a result of accounting by equity method, is reocgnised in profit or loss when control is lost. Where the remaining investment is
measured by equity method, the fore-mentioned other comprehensive income and other equity movement are recognised in profit or loss
proportionate to the disposal; Where the remaining investment is measured in accordance with the recognition and measurement principles
applicable to financial instruments, the fore-mentioned other comprehensive income and other equity movement are recognised in profit or loss in
full.
Where the Company's joint control or significant influence over an investee is lost due to partial disposal of investment in the investee, the
remaining investment in the investee is measured in accordance with the recognition and measurement principles applicable to financial
instruments, the difference between the fair value and the book value of the remaining investment at the date of loss of joint control or significant
influence is recognised in profit or loss.Cumulative other comprehensive income relevant to the investment recognised, as a result of accounting by
equity method, prior to the partial disposal is treated in the same manner that the investee disposes the relevant assets or liabilities on the date of
loss of joint control or significant influence. The investee's equity movement other than net profit, other comprehensive income and profit distribution
is reocgnised in profit or loss when joint control or significant influence is lost.
Where the Company's control over an investee is lost through multiple disposals and the multiple disposals shall be viewed as one single
transaction, the multiple disposals is accounted for one single transaction which result in the Company's loss of control over the investee. Each
difference between the consideration received and the book value of the investment disposed is recognised in other comprehensive income and
reclassified in full to profit or loss at the time when control over the investee is lost.
4.14 Fixed assets
4.14.1 The conditions of recognition
Fixed assets refers to the tangible assets that are held for the sake of producing commodities, rendering labor service, renting or business
management and their useful life is in excess of one fiscal year.
4.14.2 The method for depreciation
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Fixed assets are stated at cost and consider the impact of expected costs of abandoning the initial measurement. From the following month of state
of intended use, depreciation method of the straight-line method is used for different categories of fixed assets to take depreciation. The recognition
of the classification, useful life and estimated residual rate are as follows:
Category Expected useful life Estimated residual value(%) Depreciation(%)
Houses and building 27-33 5.00 2.88-3.52
Key components and power supports of aircraft
15-20 5.00 4.75-6.33
engine
Replacement parts of engine 3-5 0.00 20-33.33
Equipments, electronic devices and furniture 4-10 5.00 9.5-23.75
High value rotables 15-18 0.00 5.56-6.67
Transportation vehicles 5-10 5.00 9.5-19.00
Expected net residual value of fixed assets is the balance of the Company currently obtained from the disposal of the asset less the estimated costs
of disposal amount, assuming the asset is out of useful life and state the expected service life in the end.
4.14.3 Measurement and recognition of fixed assets
Impairment and provisions of fixed assets are disclosed on Note 4.16.
4.14.4 Fixed Assets under finance leases
A finance lease is a lease that transfers in substance all the risks and rewards incident to ownership of an asset. Title may or may not eventually be
transferred.
Fixed assets that are held under finance leases shall be depreciated by applying the same policy as that for the fixed assets owned by the
Company. If it can be reasonably determined that the ownership of the leased assets can be obtained at the end of the lease period, the leased
assets are depreciated over their useful lives; otherwise, the leased assets are depreciated over the shorter of the lease terms and the useful lives
of the leased assets.
4.14.5 Others
A fixed asset is recognized only when the economic benefits associated with the asset will probably flow to the Company and the cost of the asset
can be measured reliably. Subsequent expenditure incurred for a fixed asset that meet the recognition criteria shall be included in the cost of the
fixed asset, and the carrying amount of the component of the fixed asset that is replaced shall be derecognized. Otherwise, such expenditure shall
be recognized in profit or loss in the period in which they are incurred.
The revenue from selling or transferring, or disposing a fixed asset is booked into profit and loss after deduction of carrying value and related tax.
The Company conducts a review of useful life, expected net realizable value and depreciation methods of the fixed asset at least on an annual
base. Any change is regarded as change in accounting estimates.
4.15 Construction in progress
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Construction in progress is measured at its actual cost. The actual costs include various construction expenditures during the construction period,
borrowing costs capitalized before it is ready for intended use and other relevant costs. Construction in progress is transferred to a fixed asset when
it is ready for intended use.
Testing method for provision impairment of construction in progress and accrued method for provision impairment please refer to Note 4.19.
4.16 Borrowing costs
Borrowing costs include interest, amortization of discounts or premiums related to borrowings, ancillary costs incurred in connection with the
arrangement of borrowings, and exchange differences arising from foreign currency borrowings.
The borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized. The amounts of
other borrowing costs incurred are recognized as an expense in the period in which they are incurred. Qualifying assets are asset (fixed assets,
investment property and inventories, etc.) that necessarily take a substantial period of time for acquisition, construction or production to get ready
for their intended use or sale.
Where funds are borrowed for a specific-purpose, the amount of interest to be capitalized is the actual interest expense incurred on that borrowing
for the period less any bank interest earned from depositing the borrowed funds before being used on the asset or any investment income on the
temporary investment of those funds.
Where funds are borrowed for a general-purpose, the amount of interest to be capitalized on such borrowings is determined by applying a weighted
average interest rate to the weighted average of the excess amounts of accumulated expenditure on the asset over and above the amounts of
specific-purpose borrowings
During the capitalization period, exchange differences related to a specific-purpose borrowing denominating in foreign currency are all capitalized.
Exchange differences in connection with general-purpose borrowings are recognized in profit or loss in the period in which they are incurred.
Assets qualified for capitalization are the fixed assets, investment properties or inventories which need a long time of construction or production
activities before ready for intended used or sale.
Capitalization of borrowing costs is suspended during periods in which the acquisition, construction or production of a qualifying asset is interrupted
by activities other than those necessary to prepare the asset for its intended use or sale, when the interruption is for a continuous period of more
than 3 months. Borrowing costs incurred during these periods recognized as an expense for the current period until the acquisition, construction or
production is resumed.
4.17 Intangible assets
4.17.1 Intangible asset
The term “intangible asset” refers to the identifiable non-monetary assets without physical shape, possessed or controlled by enterprises.
The intangible assets are initially measured by its cost. Expenses related to intangible assets, if the economic benefits related to intangible assets
are likely to flow into the enterprise and the cost of intangible assets can be measured reliably, shall be recorded as cost of intangible assets. The
expenses other than this shall be booked in the profit or loss when they occur.
Land use rights that are purchased by the Company are accounted for as intangible assets. Buildings, such as plants that are developed and
constructed by the Company, and relevant land use rights and buildings, are accounted for as intangible assets and fixed assets, respectively.
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Payments for the land and buildings purchased are allocated between the land use rights and the buildings; if they cannot be reasonably allocated,
all of the land use rights and buildings are accounted for as fixed assets.
When an intangible asset with a definite useful life is available for use, its original cost less net residual value and any accumulate impairment
losses is amortized over its estimated useful life using the straight-line method . An intangible asset with an indefinite useful life is not amortized.
For an intangible asset with a definite useful life, the Company reviews the useful life and amortization method at the end of the period, and
makes adjustment when necessary.. An additional review is also carried out for useful life of the intangible assets with indefinite useful life. If there
is evidence showing the foreseeable limit period of economic benefits generated to the enterprise by the intangible assets, then estimate its useful
life and amortize according to the policy of intangible assets with definite useful life.
4.17.2 the expenditure of research and development
The expenditures for its internal research and development projects of the Company shall be classified
into research expenditures and developmentexpenditures.
The research expenditures shall be recorded into the profits and losses of the current period when they are incurred.
Development expenditures in internal research and development projects shall be recognized as intangible assets where they satisfy all of the
following conditions:
①Technical feasibility of completing the intangible asset so that it will be available for use or sale;
②Intention to complete the intangible asset and use or sell it;
③How the intangible asset will generate economic benefits, including the ability to demonstrate the existence of a market for the output of the
intangible asset or the intangible asset itself or, if it is to be used internally, the usefulness of the intangible asset;
④Availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset;
⑤Ability to measure reliably the expenditure that is attributable to the intangible asset during its development.
The expenses which can not be distinguished between research and development stage, shall be recorded into the profit or loss for the
current period.
4.17.3 Impairment testing methods and recognition of impairment provision of intangible assets
Impairment and provisions of intangible assets are disclosed on Note 4.19.
4.18 Deferred charges
Deferred charges represent expenses incurred that should be borne and amortized over the current and subsequent period (together of more than
one year). Deferred charges are amortized by using straight line method. Such as expenses for pilots’ initial trainings, those expenses are
amortized at 10 years according to their benefit period respectively.
4.19 Impairment of long-term assets
Non-financial assets with non-current nature include fixed assets, construction in progress, intangible assets with definite useful lives, investment
properties measured by cost methods and long-term equity investment on subsidiaries, jointly operations. The Company assesses whether there
are any indicators of impairment for all non-financial assets at the balance sheet date, and impairment test is carried out and recoverable value is
estimated if such an indicator exits. Goodwill and intangible assets with indefinite useful lives, as well as intangible assets not ready for use, are
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tested for impairment annually regardless of indicators of impairment.
Impairment of loss is calculated and provisions taken by the difference if the recoverable value of the assets is lower than the book value. The
recoverable value is the higher of estimated present value of the future expected cash flows from the asset and net fair value of the asset less
disposed cost. The fair value of asset is determined by the sales agreement price within an arm’s length transaction. In case there is no sales
agreement, but there is active market of assets, the fair value can be determined by the selling price. If there is neither sales agreement nor active
market, the fair value of the asset can be estimated based on the best information obtained.
Disposal expenses include expenses related to the legislation, taxes, transportations and the direct expense for the asset to be ready for sale.
When calculating the present value of expected future cash flows from an asset or asset Group, the management shall estimate the expected
future cash flows from the asset or asset Group and choose a suitable discount rate in order to calculate the present value of those cash flows.
Provision for asset impairment is calculated and determined on the individual basis. If the recoverable of individual asset is hard to estimate, the
recoverable amount can be determined by the asset Group where subject asset belongs. Asset Group is the smallest set of assets that can have
cash flow in independently.
The Company determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the present value of the future
expected cash flows from the asset Groups or sets of asset Groups to which the goodwill is allocated. Estimating the present value requires the
Company to make an estimate of the expected future cash flows from the asset Groups or sets of asset Groups and also choose a suitable
discount rate in order to calculate the present value of those cash flows. Once the loss from above asset impairment is recognized, the recoverable
part cannot be reserved in the subsequent periods.
4.20 Employee Benefits
The employee benefits of the company include short-term employee benefits, post-employment benefits, termination benefits and other long-term
employee benefits:
Short-term employee benefits includes wages, bonuses, allowances and subsidies, welfare, health insurance , maternity insurance, work injury
insurance, housing funds, labor union funds, employee education funds, non-monetary benefits and etc. Short-term employee benefits are
recognised as liabilities and profit or loss account or the costs associated with the asset during the accounting period when employees actually
provide services,. The non -monetary benefits are measured at fair value.
Post-employment benefits include defined contribution plans and defined benefit plans. Defined contribution plan which includes the basic pension,
unemployment insurance and annuities shall be recognised as cost of related assets or profit or loss. Projected unit credit cost method (“PUC”) was
used by independent actuaries engaged by the Company to determine the present value of the defined benefit obligations with unbiased and
consistent actuarial assumptions regarding population variables and financial variables. Defined benefit obligation was presented with the present
value and the related current service cost was accounted into current profit or loss.
When the Company terminates the labor relationship with employees prior to the employment contracts, or encourages employees to accept
voluntary redundancy compensation proposals in this company, a provision shall be recognised for the compensation arising from the termination of
employment relationship with employees at the time when the Company can not unilaterally withdraw layoff proposal termination benefits provided
due to termination of employment, or the company ensures the costs related to the payment for termination benefits related to the restructuring,
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Shandong Airlines Co., Ltd. Semi-Annual Report 2017
which one is early to confirm employee benefits liabilities, and recorded as profit or loss. However, if termination benefits can not be fully paid aftert
welve months of the reporting date,, the liability shall be processed in accordance with other long-term employee benefits.
Retirement plan adopts the same principles as the termination benefits . The salaries and insurance to be paid from the date when employees stop
providing services to the date of normal retirementshall be recognised in profit or loss (termination benefits) when satisfying the requirements of a
provision..
Other long-term employee benefits provided by the company to employees that is in line with defined contribution plans shall adopt the accounting
treatment in accordance with defined contribution plans, otherwise the accounting treatment of defined benefit plans..
4.21 Revenue
4.21.1 Revenue from rendering of service
① The Company recognise revenue from rendering of air service for carriage of passengers when the service is rendered or when an unused
ticket expires. The sale of a ticket does not constitute revenue. An unused ticket expires on the annual anniversary of its sale. Tickets sold but of
which the service is not yet rendered are recognised in current liabilities as Advances from customers. If service is rendered through code sharing,
revenue arising from the service provision is apportioned amongst parties to the code sharing agreement. The revenue arising from code sharing is
also recognised when the service is rendered.
② The Company company recognise air cargo revenue from rendering of air service for carriage of cargo when the service is rendered
③ Revenue arising from other air service rendering is recognised when the service rendering is completed.
4.21.2 Royalty Revenue
According to the contract or agreement, the revenue is recognized on an accrual basis.
4.21.3 Interest Income
The amount of interest revenue should be measured and confirmed in accordance with the length of time for which the enterprise's cash is used by
others and the actual interest rate.
4.22 Government Grants
Government grants are transfer of monetary assets and non-monetary assets from the government to the Company at no consideration, excluding
the capital invested by the government as equity owner. Government grant can be classified as grant related to the assets and grants related to the
income. Government grants obtained by the Company which are relevant to construction or acquisition of long-term assets are classified as
asset-related government grants; all other government grants are classified as revenue-related government grants. For government grants without
speficied beneficiary, the Company performs classification in accordance with the following criteria.
4.22.1 Where a grant is obtained for a specified project, the grant is spitted into asset-related and revenue related portions proportionate to the
project's investment to expense ratio; the classification is reviewed on each balance sheet date and revised if necessary.
4.22.2 Where a grant is obtained for general purpose, the grant as a whole is classified as a revenue-related government grant.
If a government grant is in the form of a transfer of a monetary asset, it is measured at the amount received or receivable. If a government grant is
in the form of a non-monetary asset, it is measured at fair value. If the fair value cannot be reliably determined, it is measured at a nominal amount.
A government grant measured at a nominal amount is recognized immediately in profit or loss for the period.
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A government grant related to an asset is recognized as deferred income, and evenly amortized to profit or loss over the useful life of the related
asset. For a government grant related to income, if the grant is a compensation for related expenses or losses to be incurred in subsequent period,
the grant is recognized as deferred income, and recognized in profit or loss over the periods in which the related costs are recognized. If the grant
is a compensation for related expenses or losses already incurred, the grant is recognized immediately in profit or loss for the period.
For the government subsidy containing both asset-related parts and income-related parts at the same time, distinguish the different parts and make
the accounting treatment, classify the parts which are difficult to be distinguished as the income-related government subsidy.
Then government subsidy related to the Company’s daily activities is included in other incomes or offsets related costs in accordance with the
essence of economic business; while the government subsidy unrelated to the Company’s daily activities is included in non-operating income and
expenditure.
When the recognized government subsidy needs to be refunded or has balance of related deferred income, offset the book balance of related
deferred income, and include the excess parts in the current profits and losses; directly include these belong to other situations in the current profits
and losses.
4.23 Deferred tax assets and deferred tax liabilities
4.23.1 Income tax for the current period
At the balance sheet date, deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset
is realized or the liability is settled, according to the requirements of tax laws. The measurement of deferred tax assets and deferred tax liabilities
reflects the tax consequences that would follow from the manner in which the Company expects at the balance sheet date, to recover the assets or
settle the liabilities.
At the balance sheet date, current income tax liabilities or assets for the current and prior periods, are measured at the amount expected to be paid
(or recovered) according to the requirements of tax laws. The calculation for income tax expenses in the current period is based on the taxable
income according to the related tax laws after adjustment to the accounting profit of the reporting period.
4.23.2 Deferred income tax assets and liabilities
For temporary differences between the carrying amount of certain assets or liabilities and their tax base, or between the nil carrying amount of
those items that are not recognized as assets or liabilities and their tax base that can be determined according to tax laws, deferred tax assets and
liabilities are recognized using the balance sheet liability method.
For temporary differences associated with the initial recognition of goodwill and the initial recognition of an asset or liability arising from a
transaction (not a business combination) that affects neither the accounting profit nor taxable profits (or deductible losses) at the time of transaction,
no deferred tax asset or liability is recognized.
For taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint ventures, no deferred income
tax liability related is recognized except where the Company is able to control the timing of reversal of the temporary difference and it is probable
that the temporary difference will not reverse in the foreseeable future.
All deferred income tax liabilities arising from taxable temporary differences except the ones mentioned above are recognized.
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For temporary deductible differences associated with the initial recognition of an asset or liability arising from a transaction (not a business
combination) that affects neither the accounting profit nor taxable profits (or deductible losses) at the time of transaction, no deferred tax asset is
recognized.
For taxable temporary deductible differences associated with investments in subsidiaries and associates, and interests in joint ventures, no
deferred income tax asset related is recognized if it is impossible to reversal the temporary difference in the foreseeable future, or it is not probable
to obtain taxable income which can be used for the deduction of the temporary difference in the future.
Except mentioned above, the Company recognizes other deferred income tax assets that can deduct temporary differences to the extent that it is
probable that taxable profits will be available against which the deductible temporary differences can be utilized.
For the deductible losses and tax credit that can be carried forward, deferred tax assets for deductible temporary differences are recognized to the
extent that it is probable that taxable profits will be available against which the deductible temporary differences can be utilized.
At the balance sheet date, deferred tax assets and liabilities are measured at the tax rates according to tax laws, that are expected to apply in the
period in which the asset is realized or the liability is settled.
At the balance sheet date, the Company reviews the carrying amount of deferred tax assets. If it is no longer probable that sufficient taxable profit
will be available in future periods to allow the benefits of the deferred tax assets to be used, the Company reduces the carrying amount of deferred
tax assets. The amount of such reduction is reversed when it becomes probable that sufficient taxable profit will be available
4.23.3 Income tax expenses
Income tax expenses consist of current income tax and deferred income tax.
The expenses from income tax and deferred income tax, as well as the revenue, shall be recorded into profit or loss in current accounting period,
except expense for income tax of the current period and deferred income tax that booked into other income or equity and adjusted carrying value of
deferred income tax goodwill arose from business combination.
4.23.4 Income tax offset
When we have the legal right, and have intended to, to make settlement with net amount, or through the asset acquisition and liability fulfillment
simultaneously, the Company shall present the net value from the offset between current income tax asset and current income tax liability in the
financial statement.
When the Company has the legal right to make a settlement with the current income tax asset and current income tax liability, and the deferred
income tax asset and deferred income tax liability are related to the same taxable subject under the same tax payer, or related to different taxable
subject, but the intension of net value settlement in regard of the current income tax asset and current income tax liability, the Company shall
present net value after the offset of deferred income tax asset and deferred income tax liability.
4.24 Leases
A finance lease is a lease that transfers in substance all the risks and rewards incident to ownership of an asset. Title may or may not eventually be
transferred. An operating lease is a lease other than a finance lease.
4.24.1 The Company as Lessee under operating Lease
Lease payments under an operating lease are recognized by a lessee on a straight-line basis over the lease term, and either included in the cost of
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the related asset or charged to profit or loss for the current period. The contingent rents shall be recorded in the profit or loss of the period in which
they actually arise.
4.24.2 The Company as Leasor under operating Lease
Lease income from operating leases shall be recognized by the leasor in profit or loss on a straight-line basis over the lease term. Initial direct cost
of significance in amount shall be capitalized when incurred. If another basis is more systematic and rational, that basis may be used. Contingent
rents are credited to profit or loss in the period in which they actually arise.
4.24.3 The Company as Lessee under financing Lease
For an asset that is held under a finance lease, at the lease commencement, the leased asset is recorded at the lower of its fair value at the lease
commencement and the present value of the minimum lease payments, and the minimum lease payment is recorded as the carrying amount of the
long-term payables; the difference between the recorded amount of the leased asset and the recorded amount of the payable is accounted for as
unrecognized finance charge, Initial direct costs incurred by the lessee during the process of negotiating and securing the lease agreement shall be
added to the amount recognized for the leased asset.
The net amount of minimum lease payment deducted by the unrecognized finance shall be separated into long-term liabilities and long-term liability
within one year for presentation.
Unrecognized finance charge shall be computed by the effective interest method during the lease term. Contingent rent shall be booked into profit
or loss when actually incurred.
4.24.4 In the case of the leasor of a financing lease
For an asset that is leased out under a finance lease, the aggregate of the minimum lease receipts at the inception of the lease and the initial direct
costs is recorded as a finance lease receivable, and unguaranteed residual value is recorded at the same time; the difference between the
aggregate of the minimum lease receipt, initial direct costs, and unguaranteed residual value, and the aggregate of their present values, is
recognized as unearned finance income, which is amortized using the effective interest rate method over each period during the lease term.
Finance lease receivable less unearned finance income shall be separated into long-term liabilities and long-term liability within one year for
presentation.
Unearned finance income shall be computed by the effective interest method during the lease term. Contingent rent shall be credited into profit or
loss in which actually incurred.
4.25 Regular repair and substantial repair
Regular repair expenditure of own aircrafts and aircrafts acquired under a financial lease is accounted for through profit or loss for the period in
which it is incurred. Substantial repair expenditure eligible for capitalisation is capitalised when incurred and recognised as replacement cost of
non-current assets and depreciated over a reasonable length of time. Substantial repair expenditure of aircrafts under an operating lease incurred
before the lease expiry date is amortised on the basis of air hours over the lease period.
4.26 Changes in major accounting policies and accounting estimates
4.26.1 change of accounting policies
Changes in accounting policies caused by the implementation of new Accounting Standards for Business Enterprises.
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Shandong Airlines Co., Ltd. Semi-Annual Report 2017
On April 28, 2017, the Ministry of Finance issues the Accounting Standards for Business Enterprises No. 42- Non-current Assets, Disposal Group,
and Discontinued Operation Held for Sale, which has been implemented in all enterprises that carry out the Accounting Standards for Business
Enterprises from May 28, 2017. On May 10, 2017, the Ministry of Finance revised the Accounting Standards for Business Enterprises No. 16 –
Government Subsidy, which has been implemented in all enterprises that carry out the Accounting Standards for Business Enterprises from June
12, 2017.
Approved by the resolution of the 3th interim meeting of the 6th Board of Directors on August 29th 2017, the Company has commenced the
implementation of the aforesaid two accounting standards in accordance with the requirements of the Ministry of Finance and has adjusted financial
data in accordance with the guidelines convergence requirements. The impact on the current and previous presentations of the financial statements
and amounts is as follows:
Impact on the relevant financial statements for
the period from January to June 2017
Accounting The amount
Changes in accounting policy and its impact on the Company
standards affected
Account Name
Increase + /
decrease -
In accordance with the Accounting Standards for Business
Accounting Other income
60,164,960.18
Enterprises No. 16 - Government Subsidy (Revised 2017),
Standards for
government subsidy related to the Company’s daily activities
Business
is included in other incomes ; while the government subsidy
Enterprises No. 16
unrelated to the Company’s daily activities is included in
- Government Non-operating income
non-operating income and expenditure. The Company adopts
Subsidy (revised in
the future applicable method to carry out accounting
2017)
treatment of this accounting policy change. -60,164,960.18
4.26.2 change of accounting estimates
There is no significant change of accountingestimates for the company during the reporting period.
4.27 Correction of prior period errors
There is no significant change of previous accounting errors for the Company during the reporting period.
4.28 Significant account judgment and estimates
The Company is required to make judgments, estimates and assumptions about the carrying amounts of items in the financial statements that
cannot be measured accurately, due to the internal uncertainties of operation activities. These judgments, estimates and assumptions are based on
historical experiences of the Company’s management as well as other factors that are considered to be relevant. These judgments, estimates and
assumptions may affect value of the financial statements in revenue, expenses, assets and liabilities and the disclosure of contingency at the
balance sheet date. However, the result derived from those uncertainties in estimates may lead significant adjustments to the carrying amounts of
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Shandong Airlines Co., Ltd. Semi-Annual Report 2017
the assets or liabilities affected in the future.
The Company has reviewed the judgments, estimates and assumptions regularly on the basis of going concern. Where the changes in accounting
estimates only affect the period when changes occurred, and they are recognized within the same period. Where the changes in accounting
estimates affect both current period and future period, the changes are recognized within the period of change and future period.
At balance sheet date, the followings are the significant areas where the Company needs to make judgment, estimates and assumptions over the
value of items in the financial statements:
4.28.1 Classification of lease
The Company classifies leases as operating lease and financing lease according to the rule stipulated in the Accounting Standard for Business
Enterprises No. 21--Leasing-. The management shall make analysis and judgment on whether the risks and rewards related to the title of leased
assets has been transferred to the leaser, or whether the Company has substantially held the risks and rewards related to the ownership of leased
assets.
4.28.2 Allowance for bad debt
According to the relevant accounting policies of the Company in receivables, allowance method is used for bad debt’s calculation. The impairment
of receivables is calculated based on the assessment of recoverable of receivables. Assurance of receivable impairment needs judgments and
estimations from the management. The difference between actual results and original estimates shall have impact on the carrying amount of
receivables and receivable bad debt provisions or the reverse during the change of estimation.
4.28.3 Impairment of inventories
The Company measures inventories by the lower of cost and realizable net value according to the accounting policies in regard of inventories and
provisions for decline in value of inventories is made if the cost is higher than their net realizable value, and obsolete and slow-movement
inventories. Inventories decline in value to net realizable value is the estimated selling price in the ordinary course of business. Net realizable value
is determined on the basis of clear evidence obtained, and takes into consideration the purposes of holding inventories and effect of post balance
sheet events. The difference between the actual result and the original estimates shall have impact on reverse of the carrying amount of the
inventories and their decline in value or provisions during the period of change.
4.28.4 The fair value of financial instruments
For a financial instrument which has no active market, the Company establishes fair value by using various valuation methods, including of
discounted cash flow analysis model. The Company needs to estimate future cash flow, credit risk, volatility and relationship during the valuation
and choose appropriate discount rate. Such assumptions have uncertainties and their changes shall have impact on the fair value of financial
instruments.
4.28.5 Impairment of non-financial, non-current assets
The Company assesses whether there are any indicators of impairment for all non-current assets other than financial assets at the balance sheet
date. For an intangible asset that has indefinite useful life, impairment test is made in addition to the annual impairment test if there is any indication
of impairment. For non-current assets other than financial assets, impairment test is made when there is any indication that its account balance
cannot be recovered.
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Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Impairment exists when the recoverable amount of an asset is the higher of its fair value less cost of disposal and present value of the future cash
flows expected to be derived from the asset.
Net value between the difference of fair value and disposal cost is determined by reference of the price of similar product in a sale agreement in an
arm’s length transaction or an observable market price less the additional cost directly attributable to the disposal of the asset.
When estimating the present value of future cash flow, significant judgments are made over the asset’s production, selling price and relevant
operating expenses, and discount rate used to calculate present value. All available materials that are considered to be relevant shall be used in the
estimation of recoverable value. These materials include estimations of production, selling price and operating expenses based on reasonable and
supportable assumptions.
The Company makes an impairment test for goodwill at least at each year end. This requires an estimation of present value of future cash flow of
the assets or assets group where goodwill has been allocated. The Company shall makes estimation on the future cash flow derived from assets or
assets group and determine an appropriate discount rate for the present value of future cash flow when the estimation of present value of future
cash flow is made.
4.28.6 Depreciation and amortization
Investment property, fixed assets and intangible assets are depreciated and amortized using the straight-line method over their useful lives after
taking into account residual value. The useful lives are regularly reviewed to determine the depreciation and amortization costs charged in each
reporting period. The useful lives are determined based on historical experience of similar assets and the estimated technical changes. If there is
an indication that there has been a change in the factor used to determine the depreciation or amortization, the rate of depreciation or amortization
is revised.
4.28.7 Deferred tax assets
The Company shall recognize all unused tax losses as deferred tax assets to the extent that it is probable that future taxable profit will be available
against which the unused tax losses and unused tax credits can be utilized. This requires the management of the Company make a lot of
judgments over the estimation of time period, value and tax planning strategies when future taxable profit incurs so that the value of deferred tax
assets can be determined.
4.28.8 Income tax
There are some transactions where ultimate tax treatments and calculations have uncertainties in the Company’s everyday operation. Whether it is
possible for some items to make expenditure before tax needs approval from competent tax authorities. If there is any difference between finalized
determination value and their initial estimations value, the difference shall have the impact on the income tax and deferred income tax of the current
period during the final determination.
4.28.9 Aircraft operating lease and engine overhaul expenses
Aircraft operating lease and engine overhaul expenses are accrued and charged to profit or loss in accordance with the expected maintenance
cycle, based on flight hours, flight cycles overhaul period and the amount of the cost of repairs which may occur. These estimates are largely based
on past historical data about the same or similar types of aircraft and engines repairance. The withholding amount and overhaul costs may be
affected by different judgments and estimates and affect current profit or loss.
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4.28.10 Defined benefit plan
The defined benefit plan implemented and maintained by the Company includes post-employment benefits plan. The provided welfare costs under
the above defined benefit plan was calculated by expected cumulative unit credit method according to various actuarial assumptions, and were
recognized during the employee service providing period. Actuarial Assumptions include but not limited to discount rate, mortality rate, and etc.. The
discount rate is on the basis of management's review of national debt, and mortality rate depends on the mortality rate adopted by the China life
insurance industry. Supplemental information of defined benefit plan see
Note 6.28.
Note 5 Taxation
5.1 Major taxes and tax rate
Tax Tax rate (%)
Enterprise income tax Business tax is calculated according to the taxable income(note1)
The VAT is calculated as the difference between output tax and deductible input tax for the period.
Value added tax The output tax is calculated using the sales of goods and taxable services income (including
transportation and ground services revenue).
Property tax is calculated by the nature of house property and is collected by ad valorem or
Property tax
specific duties according to the tax rules .
Urban maintenance and construction tax Urban maintenance and construction tax is calculated at 7% of business tax and VAT.
Education surcharge Education surcharge is calculated at 3% of business tax and VAT.
Local education Surcharge Local education Surcharge is calculated at 2% of business tax and VAT.
Civil aviation development fund shall be calculated using the collection standard of the relevant
category of flight routes, maximum departure weight and flight distance adopted by the civil
Civil aviation development Fund
aviation industry. According to “Interim measures for the administration of the administration of civil
aviation development fund” 《民航发展基金征收使用管理暂行办法》.
Note 1: According to the provision of National Development and Reform Commission ([2014]15), the branch membership of
our company in Western China can get a reduced rate of 15% to pay corporate income tax, when its international and
domestic air passenger and cargo transport projects are in line with the " Catalogue of Encouraged Industries in Western
Region”(《西部地区鼓励类产业目录》). All companies in mainland China are subject to a corporate income tax rate of
25%.
Note 2: Prior to 1 August 2013, revenue arising from air transportation was taxable for business tax at the rate of 3%. As from
1 August 2013, revenue arising from air transportation become VAT taxable per the Notice of Pilot Conversion of
Sales-tax-to-VAT for the Transportation Sector and Certain Contemporary Service Sectors by the Ministry of Finance and
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Shandong Airlines Co., Ltd. Semi-Annual Report 2017
State Administration of Taxation (Caishui[2013]37).（《财政部、国家税务总局关于在全国开展交通运输业和部分现
代服务业营业税改征增值税试点税收政策的通知》（财税[2013]37 号））.
Note 3: From January to April 2016, the taxable income tax of business tax which is calculated according to the tax law shall
be taxed at 3%-5%. According to relevant provisions of "the notice on the full implementation of pilot for replacing the business
tax by VAT " (caishui[2016]36)（《关于全面推开营业税改征增值税试点的通知》 （财税[2016]36 号））, issued by
the Ministry of Finance and the State Administration of Taxation, vat is levied replacing the business tax since May 1, 2016.
5.2 Tax incentives
5.2.1. Zero VAT rate applies to entities and individuals within the Chinese territory that provide international transportation services, research
and development services and designing services provided to foreign entities, roundtrip transportation services between Hongkong, Marcau,and
Taiwan, as well as transportion services provided in Hongkong, Marcau, and Taiwan per the Notice of Pilot Conversion of Sales-tax-to-VAT for the
Transportation Sector and Certain Contemporary Service Sectors by the Ministry of Finance and State Administration of Taxation
(Caishui[2013]No.37)(财税[2013]37号《财政部、国家税务总局关于在全国开展交通运输业和部分现代服务业营业税改征增值税
试点税收政策的通知》)..
5.2.2. Per the Notice of Continuous Implementation of Transitional Business Tax Exemption Policy for Cross-boarder Lease Contracts of Equipment
and Machinery(CaiShui[2011]No.48) (财税[2011]48号《关于跨境设备租赁合同继续实行过渡性营业税免税政策的通知》 jointly issued
by the Ministry of Finance and the State Adnimistration of Taxation on June 30, 2011 and approved by the State Council, the transitional operating
tax exemption applicable to revenue received by overseas leasor(s) to lease contracts (applicable to both financing lease and operating lease) of
machinery and equipment import leasing involving domestic leasee(s) and overseas leasor(s) entered into prior to and remaining in force as at
December 31, 2008 continues to apply from January 1, 2010 to the expiry date of the relevant contract. The Ministry of Finance and the State
Adnimistration of Taxation, "the notice on the full implementation of pilot for replacing the business tax by VAT " (caishui[2016]36)（《关于全面推
开营业税改征增值税试点的通知》（财税[2016]36 号）） “(Appendix 3)The provision of Transitional Policy of pilot for replacing the business
tax by VAT”.（附件3《营业税改征增值税试点过渡政策的规定》）6. The VAT preferential policies will be implemented during the pilot, expect
the projects which have established deadlines and the fifth provision. If the pilot taxpayers have enjoyed the tax preferential policy of business tax
before the day replacing business tax with VAT, during the remaining preferential tax policy term, they should enjoy the relevant vat preferential
according to this provision.
Note 6 Notes to significant elements of the consolidated financial statements
Unless otherwise stated, the meaning of "B/f", "C/f", "Current period", "Prior period" in the following notes (incl. Notes to elements of the separate
financial statements) is "1st January 2017", "30th June 2017", "the date ended June 30th 2017", and "the date ended June 30th 2016" respectively.
6.1 Monetary funds
Item C/f B/f
Cash at hand: 495,385.69 182,606.18
Bank deposit: 442,833,539.40 791,073,080.47
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Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Item C/f B/f
Other monetary funds:
Total 443,328,925.09 791,255,686.65
Including: the total amount of deposit abroad 1,797,236.77 1,604,517.22
6.2 Accounts receivables
6.2.1 Disclosure by category
C/f
Category Carrying amount Allowance for bad debt
Book value
Amount % Amount %
Accounts receivable of individual significance and
311,885,320.15 60.92 311,885,320.15
subject to individual impairment assessment
Accounts receivable subject to impairment assessment
176,917,861.12 34.56 8,845,893.06 5.00 168,071,968.06
by credit risk characteristics of a portfolio
Accounts receivable of individual insignificance but
23,163,302.01 4.52 10,823,117.90 46.73 12,340,184.11
subject to individual impairment assessment
Total 511,966,483.28 100.00 19,669,010.96 3.84 492,297,472.32
(Continued)
C/f
Category Carrying amount Allowance for bad debt
Book value
Amount % Amount %
Accounts receivable of individual significance and
228,116,251.34 67.45 228,116,251.34
subject to individual impairment assessment
Accounts receivable subject to impairment assessment
92,078,562.91 27.23 4,603,928.14 5.00 87,474,634.77
by credit risk characteristics of a portfolio
Accounts receivable of individual insignificance but
18,006,401.64 5.32 10,823,117.90 60.11 7,183,283.74
subject to individual impairment assessment
Total 338,201,215.89 100.00 15,427,046.04 4.70 322,774,169.85
① Accounts receivable of individual significance and subject to individual impairment assessment
Debtor C/f
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Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Allowance for Rate of allowance
Carrying amount Reason for allowance
bad debt (%)
No indication of impairment upon
Air China 167,803,828.21
individual assessment
No indication of impairment upon
BSP-CHINA 79,126,159.53
individual assessment
No indication of impairment upon
Accounting Center of China Aviation 64,955,332.41
individual assessment
Total 311,885,320.15
② Accounts receivable subject to impairment assessment by portfolio
C/f
Portfolio
Carrying amount Allowance for bad debt Rate of allowance(%)
Portfolio by nature 176,917,861.12 8,845,893.06 5.00
Total 176,917,861.12 8,845,893.06 5.00
③ Accounts receivable of individual insignificance but subject to individual impairment assessment
C/f
Debtor Allowance for
Carrying amount Rate of allowance (%) Reason for allowance
bad debt
impairment upon individual
Debtor #1 8,057,209.85 8,057,209.85 100.00
assessment
No indication of impairment upon
BSP-others 8,476,009.77
individual assessment
No indication of impairment upon
UATP 3,622,367.78
individual assessment
impairment upon individual
Kun Peng Airlines Co., Ltd. 1,849,400.00 1,849,400.00 100.00
assessment
impairment upon individual
CR Airways 916,508.05 916,508.05 100.00
assessment
ARC 241,806.56 No indication of impairment upon
86
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
C/f
Debtor Allowance for
Carrying amount Rate of allowance (%) Reason for allowance
bad debt
individual assessment
Total 23,163,302.01 10,823,117.90 46.73
Note: BSP-others mainly for BSP accounts receivable of other countries or regions.
6.2.2 Recognisation, recovery or reversal of allowance for bad debt
The amount of allowance for bad debts recognised during the year is CNY4,241,964.92.
6.2.3 Top five accounts receivables by debtors
The total amount of top five accounts receivables summarised by debtors as at the end of current period is CNY 377,401,526.80, accounting for
73.72% of the total accounts receivable as at the end of current period, the total corresponding allowance for bad debts is CNY3,275,810.33.
6.3 Prepayments
6.3.1 Disclosure by age
C/f B/f
Age
Amount % Amount %
Within 1 year 308,841,751.01 99.59 248,363,327.89 99.69
1 to 2 years 572,513.45 0.18 50,862.40 0.02
2 to 3 years 228,761.96 0.07 231,761.96 0.09
Over 3 years 493,292.70 0.16 490,292.70 0.20
Total 310,136,319.12 100.00 249,136,244.95 100.00
6.3.2 Details of top five prepayments
The total amount of top five prepayments as at the end of current period is CNY 123,853,023.17, accounting for 39.94% of the total advance to
suppliers.
6.4 Dividends receivable
6.4.1 Disclosure by item
Item C/f B/f
Sichuan Airlines 19,278,420.00
Total 19,278,420.00
6.5 Other receivables
6.5.1 Disclosure by category
87
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
C/f
Category Carrying amount Allowance for bad debt
Book value
Amount % Amount %
Other receivables of individual
significance and subject to individual 369,416,024.66 72.36 104,933,519.66 28.41 264,482,505.00
impairment assessment
Other receivables subject to subject
to impairment assessment by credit 96,106,144.27 18.82 4,805,307.21 5.00 91,300,837.06
risk characteristics of a portfolio
Other receivables of individual
insignificance but subject to 45,019,309.31 8.82 45,019,309.31
individual impairment assessment
Total 510,541,478.24 100.00 109,738,826.87 21.49 400,802,651.37
(Continued)
B/f
Category Carrying amount Allowance for bad debt
Book value
Amount % Amount %
Other receivables of individual
significance and subject to individual 353,220,633.95 76.34 108,431,670.15 30.70 244,788,963.80
impairment assessment
Other receivables subject to subject to
impairment assessment by credit risk 65,822,034.03 14.22 3,291,101.71 5.00 62,530,932.32
characteristics of a portfolio
Other receivables of individual
insignificance but subject to individual 43,680,428.66 9.44 43,680,428.66
impairment assessment
Total 462,723,096.64 100.00 111,722,771.86 24.14 351,000,324.78
① Other receivables of individual significance and subject to individual impairment assessment
C/f
Debtor Allowance for bad Rate of
Carrying amount Reason for allowance
debt allowance (%)
88
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
C/f
Debtor Allowance for bad Rate of
Carrying amount Reason for allowance
debt allowance (%)
No indication of impairment upon
Debtor #1 200,228,266.83
individual assessment
impairment upon individual
Shandong Rainbow Commercial Jet Co., Ltd. 101,551,717.65 101,551,717.65 100.00
assessment
impairment assessment by
Debtor #2 38,447,080.54 1,922,354.03 5.00
portfolio
impairment assessment by
Debtor #3 29,188,959.64 1,459,447.98 5.00
portfolio
Total 369,416,024.66 104,933,519.66 28.41
② Other receivables subject to impairment assessment by portfolio
C/f
Portfolio
Carrying amount Allowance for bad debt Rate of allowance(%)
Portfolio by nature 96,106,144.27 4,805,307.21 5.00
Total 96,106,144.27 4,805,307.21 5.00
③ Other receivables of individual insignificance but subject to individual impairment assessment
C/f
Debtor Allowance for bad Rate of allowance
Carrying amount Reason for allowance
debt (%)
No indication of impairment upon
Debtor #1 17,300,360.00
individual assessment
No indication of impairment upon
Debtor #2 4,238,588.20
individual assessment
No indication of impairment upon
Debtor #3 2,067,420.00
individual assessment
No indication of impairment upon
Debtor #4 2,062,200.00
individual assessment
89
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
C/f
Debtor Allowance for bad Rate of allowance
Carrying amount Reason for allowance
debt (%)
No indication of impairment upon
Debtor #5 4,457,873.01
individual assessment
No indication of impairment upon
Debtor #6 773,050.73
individual assessment
No indication of impairment upon
Debtor #7 895,684.40
individual assessment
No indication of impairment upon
Air China 5,615,980.16
individual assessment
No indication of impairment upon
Shandong Air New Media Co., Ltd. 7,127,044.28
individual assessment
No indication of impairment upon
Shenzhen Airlines Co., Ltd. 58,736.75
individual assessment
Taikoo (Shandong) Aircraft No indication of impairment upon
72,746.00
Engineering Company Limited individual assessment
No indication of impairment upon
Shandong XiangYu Air Technology Co., Ltd. 349,625.78
individual assessment
Total 45,019,309.31
6.5.2 Recognisation, recovery or reversal of allowance for bad debt
The amount of allowance for bad debts recognised during the current period is CNY -1,983,944.99.
6.5.3 Disclosure by nature
Category C/f B/f
Deposits 232,027,493.17 151,888,719.29
Others 278,513,985.07 310,834,377.35
Total 510,541,478.24 462,723,096.64
6.5.4 Top five other receivables
Allowance for bad
Debtor Nature C/f Aging %
debt
90
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Allowance for bad
Debtor Nature C/f Aging %
debt
Debtor #1 Deposits 200,228,266.83 Within 1 year 39.22
Shandong Rainbow Commercial Jet Co., Ltd. Others 101,551,717.65 Over 4 years 19.89 101,551,717.65
Debtor #2 Others 38,447,080.54 Within 2 years 7.53 1,922,354.03
Debtor #3 Others 29,188,959.64 Within 3 years 5.72 1,459,447.98
Debtor #4 Others 17,517,616.25 Within 1 year 3.43 875,880.81
Total 386,933,640.91 75.79 105,809,400.47
6.6 Inventories
C/f
Type
Gross carrying amount Impairment allowance Net carrying amount
Consumable air quipements 107,521,997.55 107,521,997.55
Low-value consumables 3,241,190.16 3,241,190.16
Materials 1,033,226.98 1,033,226.98
Total 111,796,414.69 111,796,414.69
(Continued)
B/f
Type
Gross carrying amount Impairment allowance Net carrying amount
Consumable air quipements 115,711,019.94 115,711,019.94
Low-value consumables 3,930,799.75 3,930,799.75
Materials 1,323,423.87 1,323,423.87
Total 120,965,243.56 120,965,243.56
6.7 Other current assets
Type C/f B/f
VAT deductible 83,459,901.34 59,685,735.09
Total 83,459,901.34 59,685,735.09
6.8 Financial assets available for sale
6.8.1 General information
91
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
C/f B/f
Category Net carrying Net carrying
Carrying amount Impairment Carrying amount Impairment
amount amount
Available for sale equity instruments
Including: measured by fair value 260,410,357.35 260,410,357.35 190,210,082.34 190,210,082.34
measured by cost 81,662,100.00 81,662,100.00 81,662,100.00 81,662,100.00
Total 342,072,457.35 342,072,457.35 271,872,182.34 271,872,182.34
6.8.2 Financial assets available for sale measured by fair value at the end of current period
Available for sale equity
Category Total
instruments
Cost of equity instruments 6,690,000.00 6,690,000.00
Fair value 260,410,357.35 260,410,357.35
Accumulated changes in the fair value recognised into
other comprehensive income 253,720,357.35 253,720,357.35
Impairment amount
6.8.3 Financial assets available for sale measured by cost at the end of current period
Carrying amounts as at 30/06/2017 Impairment
Cash
Increase Decrease Increase Decrease Shareholding in Dividend
Investee
B/f in current in current C/f B/f in current in current C/f investee(%) for current
period period period period year
Sichuan Airlines 35,000,000.00 35,000,000.00 10.00 19,278,420.00
Jinan International
Airport 46,662,100.00 46,662,100.00 2.53 566,011.27
Total 81,662,100.00 81,662,100.00 19,844,431.27
6.9 Long-term equity investments
Category B/f Allowance b/f Currency year movement (+, -)
92
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Investment gains
and losses Other comprehensive Other
Additional Investment
recognised under income changes
investment reduction
the equity adjustment in equity
method
Associates
Shandong
Rainbow
22,500,000.00 22,500,000.00
Commercial
Jet Co., Ltd.
Total 22,500,000.00 22,500,000.00
(Continued)
Currency year movement (+, -)
Category Declared cash dividends or Allowance C/f Allowance c/f
Others
profits recognised
Investment in associates
Shandong Rainbow Commercial
Jet Co., Ltd. 22,500,000.00 22,500,000.00
Total 22,500,000.00 22,500,000.00
6.10 Fixed assets
6.10.1 General information
Houses and Transportation
Items Aircrafts and engines High-value rotables Others Total
buildings vehicles
1. Cost:
1.1 Balance as at 31/12/2016 359,270,176.86 10,490,391,354.44 718,326,376.78 68,932,416.61 190,971,693.13 11,827,892,017.82
1.2 Increased in current period 106,306,575.52 42,369,764.41 838,088.81 10,707,237.35 160,221,666.09
(1) Purchase 106,306,575.52 42,369,764.41 838,088.81 10,707,237.35 160,221,666.09
(2) Transferred from
construction in-progress
93
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Houses and Transportation
Items Aircrafts and engines High-value rotables Others Total
buildings vehicles
(3) Transferred from merger
and acquisitions
(4) Others
1.3 Decreased in
56,230,000.00 83,703,150.46 1,901,676.63 8,040,296.18 149,875,123.27
current period
(1) Disposal or scrap 56,230,000.00 83,703,150.46 1,901,676.63 8,040,296.18 149,875,123.27
(2) Others
1.4 Balance as at 30/06/2017 359,270,176.86 10,540,467,929.96 676,992,990.73 67,868,828.79 193,638,634.30 11,838,238,560.64
2. Accumulated Depreciation
2.1 Balance as at 31/12/2016 81,895,705.86 4,216,709,384.42 282,875,021.63 38,349,151.75 102,004,728.85 4,721,833,992.51
2.2 Increased in current period 5,829,448.98 368,943,705.30 19,667,430.65 2,471,744.81 9,736,455.25 406,648,784.99
(1) Accrual 5,829,448.98 368,943,705.30 19,667,430.65 2,471,744.81 9,736,455.25 406,648,784.99
2.3 Decreased in current period 56,230,000.00 56,652,653.37 1,441,552.57 7,180,299.10 121,504,505.04
(1) Disposal or scrap 56,230,000.00 56,652,653.37 1,441,552.57 7,180,299.10 121,504,505.04
(2) Others
2.4. Balance as at 30/06/2017 87,725,154.84 4,529,423,089.72 245,889,798.91 39,379,343.99 104,560,885.00 5,006,978,272.46
3. Impairment allowance
3.1 Balance as at 31/12/2016 12,824,873.52 12,824,873.52
3.2 Increased in current period
(1) Accrual
3.3 Decreased in current period 10,255,791.67 10,255,791.67
(1) Disposal or scrap 10,255,791.67 10,255,791.67
(2) Others
3.4 Balance as at 30/06/2017 2,569,081.85 2,569,081.85
94
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Houses and Transportation
Items Aircrafts and engines High-value rotables Others Total
buildings vehicles
4. Carrying amount
4.1 Carrying amount as at 30/06/2017 271,545,022.02 6,011,044,840.24 428,534,109.97 28,489,484.80 89,077,749.30 6,828,691,206.33
4.2 Carrying amount as at 31/12/2016 277,374,471.00 6,273,681,970.02 422,626,481.63 30,583,264.86 88,966,964.28 7,093,233,151.79
6.10.2 Fixed assets acquired under financial leases
Category Cost Accumulated Depreciation Impairment allowance Carrying amount
Aircrafts and engines 2,135,798,272.75 1,066,081,208.64 1,069,717,064.11
Total 2,135,798,272.75 1,066,081,208.64 1,069,717,064.11
6.10.3 Fixed assets pending ownership registration
Item Carrying amount Reason for pending
Operational support building of Yantai Chaoshui International
59,038,005.78 Ownership registration in process
Airport
Land rented from Jinan Air Control, not eligible for
Jinan cargo arrival and departure warehouses 12,622,668.74
ownership registration
Impairment allowance of fixed assets is CNY 2,569,081.85 as at 30/06/2017, with no additional amount of allowance for fixed assets impairment
recognised during the period.
6.11 Construction in progress
6.11.1 General information
C/f B/f
Items Impairment Impairment
Carrying amount Net carrying amount Carrying amount Net carrying amount
allowance allowance
Factory building
149,257,517.66 149,257,517.66 137,792,677.66 137,792,677.66
project
Prepayment
2,552,509,147.46 2,552,509,147.46 2,110,159,957.73 2,110,159,957.73
for aircrafts
Construction of
1,592,960.81 1,592,960.81 2,547,826.96 2,547,826.96
information system
Total 2,703,359,625.93 2,703,359,625.93 2,250,500,462.35 2,250,500,462.35
95
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
6.11.2 Significant projects
Transferred to
Current period
Project Budget B/f fixed assets in Other decrease C/f
increase
current period
Administrative office
195,000,000.00 136,606,996.49 11,464,840.00 148,071,836.49
of Xiamen branch
Aircraft asset
15,004,922,602.00 2,110,159,957.73 861,035,587.26 418,686,397.53 2,552,509,147.46
introduction project
Total 15,199,922,602.00 2,246,766,954.22 872,500,427.26 418,686,397.53 2,700,580,983.95
(Continued)
Weight of Including:
Including:Transferred
cost to Stage of Cumulative Including:Transferred interests Capitalisation rate
into leaseback assets Source of
Items date in completion interests into fixed assets during capitalized applicable to the
during the current finance
budgeted capitalised the current period during the current period
period
cost current period
Administrative
Not current
office of 75.93%
completed assets
Xiamen branch
Loans from
Aircraft asset Finance
Not
introduction 17.01% 58,795,066.01 18,871,410.16 320,814.88 3.4177-3.5260 Institutions
applicable
project and current
assets
Total 58,795,066.01 18,871,410.16 320,814.88
Note: The cumulative amount of interests capitalized as at 31/12/2016 is 77,345,661.29, the amount of current period is 320,814.88, including 0
transferred into fixed assets and 18,871,410.16 transferred into leaseback assets during the current period, the cumulative amount of interests
capitalized as at 30/06/2017 is 58,795,066.01.
6.11.3 Recognization of impairment allowance for construction in progress
No sign of construction in progress impairment occurred as at 30/06/2017, no impairment provision shall be recognised.
6.12 Intangible assets
6.12.1 General information
96
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Items Land rights Software Total
1. Cost:
1.1 Balance as at 31/12/2016 108,347,341.13 28,857,996.52 137,205,337.65
1.2 Increased in current period 6,527,535.90 6,527,535.90
(1) Purchase
(2) Diversion of construction 6,527,535.90 6,527,535.90
(3) Increased from business combination
1.3 Decreased in current period
(1) Disposal
1.4 Balance as at 30/06/2017 108,347,341.13 35,385,532.42 143,732,873.55
2. Accumulated amortization
2.1 Balance as at 31/12/2016 13,584,809.57 9,416,774.88 23,001,584.45
2.2 Increased in current period 1,201,791.44 1,889,301.05 3,091,092.49
(1) Accrual 1,201,791.44 1,889,301.05 3,091,092.49
2.3 Decreased in current period
(1) Disposal
2.4 Balance as at 30/06/2017 14,786,601.01 11,306,075.93 26,092,676.94
3. Impairment allowance
3.1 Balance as at 31/12/2016
3.2 Increased in current period
(1) Accrual
3.3 Decreased in current period
(1) Disposal
3.4 Balance as at 30/06/2017
4. Carrying amount
4.1 Carrying amount as at 30/06/2017 93,560,740.12 24,079,456.49 117,640,196.61
4.2 Carrying amount as at 31/12/2016 94,762,531.56 19,441,221.64 114,203,753.20
6.12.2 Land rights with pending ownership registration
97
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
No case of land rights with pending ownership registration was identified as at 30/06/2017.
6.13 Goodwill
6.13.1 General information
Current period Current period
increase decrease
Investee B/f C/f
From business
Disposal
combination
Qingdao Feisheng 10,220,816.22 10,220,816.22
Total 10,220,816.22 10,220,816.22
6.13.2 Impairment allowance
Current period Current period
Investee B/f increase decrease C/f
Accrual Disposal
Qingdao Feisheng 10,220,816.22 10,220,816.22
Total 10,220,816.22 10,220,816.22
6.14 Deferred charges
Current period Current period
Item B/f Other decrease C/f
increase amortization
Pilot training 459,390,584.88 31,372,829.61 39,214,140.43 451,549,274.06
Decoration expenditure 12,727,205.54 2,774,472.25 9,952,733.29
Modification costs for aircraft
3,444,869.66 203,575.96 3,241,293.70
leasing
Total 475,562,660.08 31,372,829.61 42,192,188.64 464,743,301.05
6.15 Deferred tax assets and deferred tax liabilities
6.15.1 Deferred tax assets
C/f B/f
Item Deductible temporary Deductible temporary
Deferred tax assets Deferred tax assets
difference difference
Allowance for bad debt 129,407,837.83 32,351,959.46 127,149,817.90 31,787,454.48
98
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Impairment allowance for fixed
assets 2,569,081.85 642,270.46 12,824,873.52 3,206,218.38
Fair value movement of financial
liabilities held for trading 1,753,048.20 438,262.05 1,155,815.80 288,953.95
Provisions 2,766,225,312.75 691,556,328.19 2,398,351,341.80 599,587,835.45
Employment benefits payable 35,087,927.95 8,771,981.99 13,339,322.51 3,334,830.63
Deferred income 13,581,523.92 3,395,380.98 14,319,523.98 3,579,881.00
Total 2,948,624,732.50 737,156,183.13 2,567,140,695.51 641,785,173.89
6.15.2 Deferred tax liabilities
C/f B/f
Item Deductible temporary Deferred tax Deductible temporary
Deferred tax liabilities
difference liabilities difference
Changes in fair value of financial
253,720,357.35 63,430,089.33 183,520,082.34 45,880,020.58
assets available for sale
Total 253,720,357.35 63,430,089.33 183,520,082.34 45,880,020.58
6.16 Short-term borrowings
Type C/f B/f
Credit loans 400,000,000.00
Total 400,000,000.00
6.17 Financial liabilities measured by fair value with changes in fair value recognised in profit or loss
Item Fair value c/f Fair value b/f
Interest rate swaps 1,753,048.20 1,155,815.80
Total 1,753,048.20 1,155,815.80
The immature interest rate swaps held by the Company had a principal amount of USD 55,962,278.40 as at 30/06/2017; bankers confirmed that the
reporting date fair value of these interest rate swaps is CNY-1,753,048.20.
6.18 Accounts payable
6.18.1 General information
Item C/f B/f
Aircraft maintenance costs 562,966,441.98 463,956,451.17
99
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Item C/f B/f
Fuel cost 319,440,237.62 197,231,462.72
Landing fee 427,815,841.70 333,773,372.93
Aircraft service cost 388,213,258.16 345,104,581.50
Flight catering 120,248,460.13 82,266,721.74
Computer booking fee 71,471,899.53 35,600,521.61
Lease rental 11,447,814.56 7,978,905.87
Others 285,543,897.76 222,182,843.55
Total 2,187,147,851.44 1,688,094,861.09
6.18.2 No significant account payable due for more than 1 year as at the reporting date.
6.19 Advance from customers
Item C/f B/f
535,922,697.17
Ticket clearing 671,930,813.96
6,300,535.78
Advanced payment for tickets 4,811,444.78
6,113,052.89
Others 22,577,294.31
548,336,285.84
Total 699,319,553.05
6.20 Employee benefits payable
6.20.1 Disclosure by classification
Current period Current period
Item B/f C/f
increase decrease
1. Short-term employee benefits 454,375,029.19 1,191,501,026.57 1,326,318,602.26 319,557,453.50
2. Post-employment benefits 106,556,787.04 106,556,787.04
3. Termination benefits
4. Other long-term employee benefits within
one year
Total 454,375,029.19 1,298,057,813.61 1,432,875,389.30 319,557,453.50
6.20.2 Disclosure by classification of short-term employee benefits
Current period Current period
Item B/f C/f
increase decrease
100
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Current period Current period
Item B/f C/f
increase decrease
1. Wages, salaries and subsidies 413,228,272.68 1,067,988,356.98 1,211,714,104.89 269,502,524.77
2. Employee welfare 5,598,657.30 5,598,657.30
3. Social insurance: 37,731,054.43 37,731,054.43
Including: Medical insurance 31,643,641.26 31,643,641.26
Employment injury insurance 2,541,251.07 2,541,251.07
Maternity insurance 3,546,162.11 3,546,162.11
Disabled security payments
4.Housing provident fund 147,434.00 33,451,830.80 33,575,120.80 24,144.00
5.Labour union fee and employee
education fee 13,339,322.51 31,731,127.06 10,039,664.84 35,030,784.73
6. Short-term paid absences 27,660,000.00 15,000,000.00 27,660,000.00 15,000,000.00
7. Short-term profit-sharing plan
Total 454,375,029.19 1,191,501,026.57 1,326,318,602.26 319,557,453.50
6.20.3 Disclosure by defined contribution plan
Item B/f Current period increase Current period decrease C/f
1. Basic pension 66,459,048.96 66,459,048.96
2.Unemployment insurance 2,724,338.00 2,724,338.00
3. Annuity payment 37,373,400.08 37,373,400.08
Total 106,556,787.04 106,556,787.04
The company participated in basic pension and unemployment insurance in accordance with the regulations. Based on the insurance program, a
percentage of total wages of employees were paid to the account separately. Except for the fee paid, enterprise annuity was deposited to annuity
management institution by a percentage of monthly payment base, which was determined by seniority pay and post salary.
6.21 Taxes and fees payable
Tax (Fee) C/f B/f
VAT 799,271.10 775,322.54
Urban construction and maintenance tax 817,694.42 171,124.16
101
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Tax (Fee) C/f B/f
Education surcharge 585,025.59 123,863.13
Enterprise income tax 29,084,460.23 4,877,426.27
Property tax 170,078.07 170,078.07
Land tax 246,269.42 221,139.00
Personal income tax 11,137,061.06 22,838,989.34
stamp duty 2,553,371.69
Civil aviation development fund 124,960,374.23 106,835,140.08
Others 130,418.83 95,350.88
Total 167,930,652.95 138,661,805.16
6.22 Interests payable
Item C/f B/f
Interest on long-term borrowings with repayment by installments 2,404,528.96 2,430,456.90
Total 2,404,528.96 2,430,456.90
6.23 Other payables
6.23.1 Disclosure by nature
Item C/f B/f
Payable for construction projects 31,100,786.10 30,515,708.94
Payable for down payments 117,631,288.49 91,264,426.66
Payables associated with aircraft purchase 11,382,401.11 3,949,505.02
Taxes deducted at source 86,608,192.77 80,231,680.37
Others 174,846,035.61 195,893,115.22
Total 421,568,704.08 401,854,436.21
6.23.2 Significant other payables due for more than 1 year
Creditor Amount Reason for pending settlement
Air China 20,000,000.00 Margin deposit to be settled upon expiry of immature wet lease
Total 20,000,000.00
6.24 Non-current liabilities due within one year
102
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Category C/f B/f
Long-term borrowings due within one year (Note 6.25) 617,888,896.00 836,269,451.50
Bonds payable due within one year
Long-term payables due within one year (Note 6.26) 146,349,115.65 144,580,142.52
Long-term employee benefits payable due within one
6,738,112.68 6,794,418.00
year (Note 6.27)
Total 770,976,124.33 987,644,012.02
6.25 Long-term borrowings
Category C/f B/f
Mortgage loan
Secured loans 1,690,180,208.59 2,027,940,287.04
Guaranteed loans
Credit loans 270,298,560.00 607,930,932.00
Less: Long-term borrowings due within one year (Note 6.24) 617,888,896.00 836,269,451.50
Total 1,342,589,872.59 1,799,601,767.54
Note: ① Class and amount of mortgage assets see Note 6.50 assets with imposed restriction on ownership.
② Interest rates as at 30/06/2017 of the above-mentioned long-term borrowings range from 2.1177%-4.4100%.
6.26 Long-term payables
Category C/f B/f
Financial lease rental payables 838,611,112.16 921,300,803.04
Maintenance payables for aircrafts and engines held under operating lease 2,549,546,659.38 2,217,672,688.43
Less: Financial lease rental payables due within one year (Note 6.24) 146,349,115.65 144,580,142.52
Less: Maintenance payables for aircrafts and engines held under
operating lease due within one 558,229,106.00 460,191,258.69
year (Note 1)
Total 2,683,579,549.89 2,534,202,090.26
Note : Maintenance payables for aircrafts and engines held under operating lease due within one year had been included in accounts payable.
6.27 Long-term employee benefits payable
6.27.1 General information
103
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Item C/f B/f
Post-employment benefits-net defined benefit liability 98,904,864.11 100,925,069.51
Less: long-term staff remuneration payable due within one year (Note 6.24) 6,738,112.68 6,794,418.00
Total 92,166,751.43 94,130,651.51
6.27.2 Movements
① Defined benefit obligation
Item Current period Prior period
(1) Net Defined Benefit Asset/(Liability) at End of Prior Period 100,925,069.51 90,145,000.00
(2) Defined benefit costs recognised
1,584,500.00 1,308,000.00
into current profit or loss
1. Current Service Cost
2. Past Service Cost
3. Settlement (Gain)/Loss
4. Net Interest/(Income) on Net Defined Benefit Liability/(Asset) 1,584,500.00 1,308,000.00
(3) Defined benefit costs recognised
into other comprehensive income
1. Actuarial gains/(losses)
(4) Other movements 3,604,705.40 3,415,116.37
1. Settlement payment
2. Benefits Paid Directly by Employer 3,604,705.40 3,415,116.37
(5) Net defined benefit asset/(liability) at end of current period 98,904,864.11 88,037,883.63
② Actuarial Assumptions
Item 31st December, 2016 30th June,2017
Discount Rate 3.00% 3.25%
China Life Insurance Mortality Rate 2000-2003
Mortality Rate
(Annuity)
Cost of Living Adjustments for Retired Cadres and
0.00%
Retirees
Cost of Living Adjustments for Internal Retirees 0.00%
104
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Item 31st December, 2016 30th June,2017
Cost of Living Adjustments for Dependants 0.00%
28. Government Subsidy
6.28.1 General information of government subsidy initially recognized in this period
Related to the assets Related to the income
offset the book
whether it
balance of offset the
subsidy project amount deferred deferred non operating is actually
related other income cost and
income income income received
book value of as expense
set
Airline subsidies 59,238,280.87 59,238,280.87 Yes
Energy-saving reward
from ministry of 188,679.25 188,679.25 Yes
finance
Total
59,426,960.12 59,426,960.12
6.28.2 General information of government subsidy included in the current profits and losses
related to the assets/ included in other included in
subsidy project offset the cost and expense
related to the income income non-operating income
Airline subsidies related to the income 59,238,280.87
Energy-saving reward from
ministry of related to the income 188,679.25
finance
Designated subsidy for snow
related to the assets 249,750.00
disaster
Designated subsidy for civil
aviation related to the assets 488,250.06
energy-saving program
Total
60,164,960.18
6.29 Deferred income
105
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Current period Current period
Item B/f C/f
increase decrease
Unrealized gains and losses of operating lease
44,119,997.18 25,550,859.37 8,734,309.83 60,936,546.72
from aircraft leaseback
Designated subsidy for snow disaster 1,490,458.34 249,750.00 1,240,708.34
Designated subsidy for civil aviation
12,829,065.64 488,250.06 12,340,815.58
energy-saving program
Total 58,439,521.16 25,550,859.37 9,472,309.89 74,518,070.64
Details of government grants:
Current period decrease
related to the
Current
assets/
offset
Item B/f period C/f
included in
included in the cost Other related to the
increase
non-operating
other income and decrease income
income
expense
Designated subsidy for related to the
1,490,458.34 249,750.00 1,240,708.34 assets
snow disaster
Designated subsidy for civil
related to the
aviation energy-saving
12,829,065.64 488,250.06 12,340,815.58 assets
program
Total
14,319,523.98 738,000.06 13,581,523.92
6.30 Share capital
B/f Currency period movement (+, -) C/f
Coversion
Category Share Bonus
Amount % from Others Subtotal Amount %
issue issue
reserves
1. Shares with
restriction on
disposal
1.1 State-held shares
106
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
B/f Currency period movement (+, -) C/f
Coversion
Category Share Bonus
Amount % from Others Subtotal Amount %
issue issue
reserves
1.2 Shares held by
259,801,000.00 64.95 259,801,000.00 64.95
state-owned entities
1.3 Shares held by
199,000.00 0.05 199,000.00 0.05
other domestic investors
Including: Held by
199,000.00 0.05 199,000.00 0.05
institutional investors
Held by non-institutional
investors
1.4 Shares held by foreign
investors
Including: Held by
institutional investors
Held by
non-institutional investors
Subtotal of shares with
260,000,000.00 65.00 260,000,000.00 65.00
restriction on disposal
2. Floating shares
2.1 Ordianry shares issued
in CNY
2.2 Shares issued in
domestic stock market in 140,000,000.00 35.00 140,000,000.00 35.00
foreign currency
2.3 Shares issued in foreign
market in foreign currency
2.4 Others
Subtotal of floating shares 140,000,000.00 35.00 140,000,000.00 35.00
Total 400,000,000.00 100.00 400,000,000.00 100.00
6.31 Capital reserves
107
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Current period Current period
Category B/f C/f
increase decrease
Share premium 67,618,282.54 67,618,282.54
Other capital reserves 7,792,081.16 7,792,081.16
Total 75,410,363.70 75,410,363.70
6.32 Other comprehensive income
Total amount in current period
Less: previously
recognised in
After tax After tax
Amount for other
Item B/f Less: Income attributable to attributable to C/f
the period comprehensive
tax expense the parent minority
before tax income
company shareholders
transferred into
profit or loss
1.Other
comprehensive
income will be
reclassified into
income or loss in
the future -5,760,000.00 -5,760,000.00
Including:
remeasurement
of net assets or
net liabilities of
defined benefit
plans -5,760,000.00 -5,760,000.00
2.Other
comprehensive
income
reclassifiable to
profit or loss in
subsequent
periods 137,640,061.76 70,200,275.01 17,550,068.75 52,650,206.26 190,290,268.02
108
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Total amount in current period
Less: previously
recognised in
After tax After tax
Amount for other
Item B/f Less: Income attributable to attributable to C/f
the period comprehensive
tax expense the parent minority
before tax income
company shareholders
transferred into
profit or loss
Gains and losses
from changes in
fair value of
financial assets
available for sale 137,640,061.76 70,200,275.01 17,550,068.75 52,650,206.26 190,290,268.02
Total of other
comprehensive
income 131,880,061.76 70,200,275.01 17,550,068.75 52,650,206.26 184,530,268.02
6.33 Surplus reserves
Current period Current period
Category B/f C/f
increase decrease
Statutory surplus reserve 423,424,327.64 423,424,327.64
Total 423,424,327.64 423,424,327.64
Notes: according to the Company Law and the Articles of Association, 10% of net profit was transferred to statutory surplus reserve.
The company may make allocations to the discretionary surplus reserve from the after-tax profits after making allocations to the statutory surplus
reserve from the after-tax profits. Approved surplus reserves can be released to recover losses or for conversion into share capital.
6.34 Retained earnings
Items Current period Prior year
Pre-adjustment balance brought forward 2,805,458,074.96 2,425,066,740.03
Total adjustment to retained earnings b/f (+, -)
Retained earnings b/f after adjustment 2,805,458,074.96 2,425,066,740.03
Add: Net profit attributable to shareholders of the parent 90,093,090.83 532,834,567.17
Other transfer
109
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Items Current period Prior year
Pre-adjustment balance brought forward 2,805,458,074.96 2,425,066,740.03
Less: Appropriation to statutory surplus reserve 52,443,232.24
Appropriation to discretionary surplus reserve
General reserve
Ordinary dividends declared 120,000,000.00 100,000,000.00
Bonus issue
Balance carrying forward 2,775,551,165.79 2,805,458,074.96
6.35 Operating revenues and costs
Current period Prior period
Category
Operating revenues Operating costs Operating revenues Operating costs
Principal business 7,361,655,609.07 7,009,774,578.68 6,174,403,762.33 5,422,888,318.50
Other business 189,139,132.85 1,002,863.77 135,345,527.89 679,535.22
Total 7,550,794,741.92 7,010,777,442.45 6,309,749,290.22 5,423,567,853.72
6.36 Tax and surcharges
Item Current period Prior period
Business tax 4,626,340.00
Urban maintenance and construction tax 7,470,575.03 19,639,678.24
Property tax 1,208,730.14
Land tax 977,402.06
Vehicle and vessel tax 34,222.58
stamp duty 1,358,423.51
Total 11,049,353.32 24,266,018.24
Notes: Applicable rates for business tax and surcharges see Note 5 Taxation.
6.37 Sales expenses
Category Current period Prior period
Agency fees 112,513,566.00 142,524,924.99
Employment benefits 104,260,383.02 87,674,449.74
110
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Category Current period Prior period
Computer booking 58,863,913.92 48,542,318.85
Online payment 15,910,504.99 18,243,015.91
Sales expense of annual tickets 328,077.20 569,258.24
Lease rental 8,067,710.47 5,386,640.36
Advertisement fees 6,751,819.61 5,933,117.54
Administrative office expenses 1,476,762.08 2,328,914.03
Travel expenses 2,867,765.21 2,768,481.58
System and network 17,687,307.23 1,315,330.83
BSP data processing 2,373,896.01 1,509,044.75
Depreiciation 733,987.92 804,033.70
Others 12,668,596.52 11,709,951.77
Total 344,504,290.18 329,309,482.29
6.38 General and administrative expenses
Category Current period Prior period
Employment benefits 83,476,149.47 75,981,194.22
Lease rental 11,249,615.81 10,303,991.66
Business entertainment costs 2,657,241.98 2,073,800.42
Depreiciation 7,334,279.71 7,473,243.21
Taxes and fees 5,486,165.66
Technology development costs 3,181,341.72 1,722,759.24
Amortisation of intangibles 3,091,092.49 2,577,170.71
Water, electricity charges 5,009,064.83 5,911,247.24
Outsourcing fee 5,237,232.81 8,035,371.48
Others 40,890,363.73 28,673,428.41
Total 162,126,382.55 148,238,372.25
6.39 Financial costs
Category Current period Prior period
111
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Interest expenses 59,926,303.54 67,649,152.92
Less: Interest income 3,834,523.99 7,344,162.51
Exchange difference -47,560,156.02 50,594,145.29
Bank charges and others 801,510.26 3,309,378.48
Total 9,333,133.79 114,208,514.18
6.40 Loss on asset impairment
Category Current period Prior period
Allowance for bad debt 2,258,019.93 441,974.60
Total 2,258,019.93 441,974.60
6.41 Gain from changes in fair value
Source Current period Prior period
Interest rate swaps -597,232.40 -3,926,637.22
Total -597,232.40 -3,926,637.22
6.42 Investment income
Category Current period Prior period
Income from holding of financial assets available for sale 19,844,431.27 3.47
Income from long-term equity investment income of equity method
Income from financial assets measured by fair value with changes in
-479,085.84 -850,517.15
fair value recognised in profit or loss
Total 19,365,345.43 -850,513.68
6.43 Other income
Item Current period Prior period
Airline subsidies 59,238,280.87
Energy-saving reward from ministry of
188,679.25
finance
Designated subsidy for snow disaster 249,750.00
Designated subsidy for civil aviation
488,250.06
energy-saving program
112
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Total 60,164,960.18
6.44 Non-operating income
Included in current period
Category Current period Prior period non-recurring profit and
loss
Gain on non-current asset disposals 24,408.34 38,150.95 24,408.34
Including: Gain on fixed asset disposals 24,408.34 38,150.95 24,408.34
Government grants (See details of government
108,958,388.62
grants below)
Others 20,383,484.09 6,701,077.28 20,383,484.09
Total 20,407,892.43 115,697,616.85 20,407,892.43
Details of government grants:
related to the assets/
Government assitance Current period Prior period
related to the income
Airline subsidies 86,623,850.00
Energy-saving reward from ministry of
19,420,000.00
finance
249,750.00
Designated subsidy for snow disaster
488,250.06
Designated subsidy for civil aviation
energy-saving program
Others 2,176,538.56
Total 108,958,388.62
6.45 Non-operating expenses
Included in current period
Category Current period Prior period
non-recurring profit and loss
Loss on non-current asset disposals 836,956.54 1,994,829.83 836,956.54
Including: Loss on fixed asset disposals 836,956.54 1,994,829.83 836,956.54
Others 114,718.03 584,722.41 114,718.03
Total 951,674.57 2,579,552.24 951,674.57
113
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
6.46 Income tax expenses
6.46.1 Income tax expenses
Items Current period Prior period
Current income tax expense 114,413,329.18 258,215,995.70
Deferred tax -95,371,009.24 -163,847,495.70
Total 19,042,319.94 94,368,500.00
6.46.2 Reconciliation of account profit and income tax expenses
Items Current period
Profit before tax 109,135,410.78
Income tax computed in accordance with the applicable tax rate 27,283,852.70
Income tax computed in accordance with the applicable tax rate -3,648,015.88
Impact of non-taxable income -4,961,107.82
Impact of non-deductible costs, expenses and losses 367,590.94
Income tax expenses 19,042,319.94
6.47 Other comprehensive income
Please see Note 6. 32 for detail.
6.48 Notes to the consolidated statement of cash flows
6.48.1 Other cash receipts relating to operating activities
Category Current period Prior period
Government grants 59,426,960.12 108,220,388.56
Interest income on bank deposit 3,834,523.99 7,344,162.51
Cash receiptes from non-operating income 20,383,484.09 6,701,077.28
Cash receiptes from operating balance 10,187,211.62 38,808,493.53
Total 93,832,179.82 161,074,121.88
6.48.2 Other cash payments relating to operating activities
Category Current period Prior period
Bank charges 801,510.26 3,310,024.48
Cash payments for non-operating expenses 114,718.03 584,722.41
114
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Category Current period Prior period
Cash payments for operating balance 62,159,661.28 52,354,485.57
Cash payments for sales and general and administrative expenses 27,914,187.14 22,941,379.52
Total 90,990,076.71 79,190,611.98
6.48.3 Other cash payments relating to investing activities
Category Current period Prior period
Cash payments of settlement of interest rate swaps 214,526.52 421,533.02
Total 214,526.52 421,533.02
6.48.4 Other cash receipts relating to financing activities
Category Current period Prior period
Cash receipts for disposal of purchase rights on aircrafts
430,793,362.96 195,845,614.80
(which became acquired under operating lease instead of purchase)
Total 430,793,362.96 195,845,614.80
6.48.5 Other cash payments relating to financing activities
Category Current period Prior period
Cash payments for aircraft financial lease rental 93,634,945.60 85,871,334.98
Total 93,634,945.60 85,871,334.98
6.49 Supplementary information to the consolidated statement of cash flows
6.49.1 Supplementary information to the statement of cash flows
Items Current period Prior period
① Reconciliation of cash flows from operating activities to net profit:
Net profit 90,093,090.83 283,689,488.65
Add: Loss on asset impairment 2,258,019.93 441,974.60
Depreciation of fixed assets, oil and gas assets, biological assets held for production 406,648,784.99 390,723,606.22
Amortisation of intangible assets 3,091,092.49 2,577,170.71
Amortisation of Long-term deferred expenditure 42,192,188.64 40,967,578.75
Loss on non-current assets disposal (gain presented by "-" prefix) 812,548.20
1,956,678.88
115
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Items Current period Prior period
Loss on scrap of fixed assets (gain presented by "-" prefix)
Loss on fair value changes (gain presented by "-" prefix) 597,232.40 3,926,637.22
Financial costs (gain presented by "-" prefix) 5,645,105.18 131,315,878.01
Investment loss (gain presented by "-" prefix) -19,365,345.43 850,513.68
Decrease of deferred tax assets (increase presented by "-" prefix) -95,371,009.24 -163,847,495.70
Increase of deferred tax liabilities (increase presented by "-" prefix)
Decrease of inventories (increase presented by "-" prefix) 9,168,828.87 -11,498,790.06
Decrease of operating receivables (increase presented by "-" prefix) -282,707,697.16 -176,385,529.52
Increase of operating payables (decrease presented by "-" prefix) 489,695,710.66 523,193,137.15
Others -3,604,705.40
-3,415,116.37
Net cash flows generated from operating activities 649,153,844.96 1,024,495,732.22
②Significant investing and financing activities involve no cash:
Debt-to-capital conversion
Convertible loan due within one year
Fixed assets acquired under financial lease
③ Movement of cash and cash equivalents:
Cash as at 30/06/2017 443,328,925.09 592,355,497.98
Less: Cash as at 31/12/2016 791,255,686.65 1,415,399,630.60
Add: Cash equivalents as at 30/06/2017
Less: Cash equivalents as at 31/12/2016
Net increase of cash and cash equivalents -347,926,761.56 -823,044,132.62
6.49.2 Composition of cash and cash equivalents
Items Current period Prior period
①Cash 443,328,925.09 791,255,686.65
Including: Cash at hand 495,385.69 182,606.18
Demand bank deposit 442,833,539.40 791,073,080.47
116
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Items Current period Prior period
Demand other monetary funds
Demand deposit in the Central Bank
Deposit in peer firms
Loan to peer firms
②Cash equivalents
Including: Debt instrument matured within three months
……
④ Cash and cash equivalents as at 30/06/2017 443,328,925.09 791,255,686.65
Including: restricted cash and cash equivalents in parent company or subsidiary
Note: Cash and cash equivalents excluding restricted cash and cash equivalents in parent company or subsidiary.
6.50 Assets with imposed restriction on ownership
Category C/f Reason of restriction
Assets pledged as security 3,515,126,638.81
Aircrafts and engines 3,515,126,638.81 Pledge as security for borrowings
Other form of restriction: 1,069,717,064.11
Aircrafts and engines 1,069,717,064.11 Assets acquired under financial lease
Total 4,584,843,702.92
6.51 Foreign currency monetary items
Original amount as at Translated amount as at
Item Foreign exchange rate
30/06/2017 30/06/2017
Monetary funds
Including: -USD
41,441,618.06 6.7744 280,742,097.39
-CAD 10.00 5.2144 52.14
-KRW 25,444,230.00 0.0059 150,120.96
-TWD 7,016,794.00 0.2228 1,563,341.70
-THB 690,473.50 0.1996 137,818.51
117
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Original amount as at Translated amount as at
Item Foreign exchange rate
30/06/2017 30/06/2017
Prepayments
Including: -USD 34,575,749.93 6.7744 234,229,960.33
Other receivables
Including: -USD 14,809,814.44 6.7744 100,327,606.94
Accounts payable
Including: -USD 4,792,054.86 6.7744 32,463,296.44
-EUR 18,525.71 7.7496 143,566.84
-GBP 8,348,421.00 0.0605 505,079.47
Other payables
Including: -USD 20,861,098.53 6.7744 141,321,425.88
Non-current liabilities due within one year
Including: -USD 94,511,856.87 6.7744 640,261,123.18
Long-term borrowings
Including: -USD 160,278,382.23 6.7744 1,085,789,872.57
Long-term payables
Including: -USD 61,477,802.26 6.7744 416,475,223.63
Note 7: Change of scope of consolidation
No change of scope of consolidation from last year.
Note 8: The equity in other main entities
8.1 The equity in subsidiaries
118
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
8.1.1 The construction of the group
Place of Place Nature Holding proportion %
Subsidiaries Acquired method
operation of registration of business Directly Indirectly
Shandong aviation Logistics Ltd Qingdao, Qingdao, Logistics and
100.00 acquired through investment
(hereafter, Qingdao Logistics) Shandong Shandong storage
Qingdao Feisheng International
Acquired through business
Aviation Training Technology Qingdao, Qingdao,
Pilot training 100.00 combination not under common
Development Co., Ltd Shandong Shandong
control
(hereafter, Qingdao Feisheng)
8.2 The equity in associates
8.2.1 Significant associates
Holding proportion % The accounting
Place of Place Nature treatment of
Associates
operation of registration of business Directly Indirectly investments in
associates
Shandong Rainbow Commercial Jet Jinan, Jinan, Aero
45.00 Equity method
Co., Ltd. Shandong Shandong transportation
8.2.2 Key financial information of significant associate- Shandong Rainbow Commercial Jet Co., Ltd.
Item Jun 30th,2017/Current period Dec 31th,2016/Prior period
Current assets 1,819,652.14 1,820,781.43
Non-current assets 25,172.36 25,856.24
Total assets 1,844,824.50 1,846,637.67
Current liabilities 167,765,813.33 167,765,813.33
Non-current liabilities
Total liabilities 167,765,813.33 167,765,813.33
Minority interests
Equity attributable to shareholders of the parent -165,920,988.83 -165,919,175.66
119
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Item Jun 30th,2017/Current period Dec 31th,2016/Prior period
Pro rata share of the net assets calculated
Adjusting events
- Goodwill
-Unrealized profits from internal transaction
-Others
Book value of equity investments in associates
Fair value of publicly quoted equity investments in associates
Operating income
Net profit
-1,813.17 -952.04
Net profit from discontinued operations
Other comprehensive income
Total comprehensive income
Dividends received from associates during the year
8.2.3 Excess loss occurred by associates
Unrecognized losses of current
Cumulative unrecognized Cumulative unrecognized
Associates period (Share of net profit of
losses of Prior period losses of current period
current period)
Shandong Rainbow Commercial Jet Co., Ltd. -74,663,608.80 -815.93 -74,664,424.73
Note 9 The risk associated with financial instruments
The main financial instruments of the Company including equity investments, loans, accounts receivable, accounts payable etc., please see Note 6
for detail of related items. The risk associated with financial instruments, and risk management policies which the company use to reduce these
risks are described below. The management of the Company manages and supervises the risks to ensure that the risks can be controlled within a
limited range.
Sensitivity analysis techniques are adopted by the Company to analyse the impact of reaonsable and possible changes of risk variables on the
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profit and loss or shareholders' equity for the current period. While risk variables seldomly change in isolation, and the correlation among variables
will have a significant effect on the ultimate impact of the change of one risk variable. Therefore, the following content is based on the assumption
that changes in each variable is independent.
9.1 The targets and policies of risks management
The target of risks management is to obtain the proper balance between the risks and benefits, to reduce the negative impact that caused by the
risk of the Company to the lowest level, and to maximize the benefits of shareholders and other equity investors. Based on the targets of risk
management, the basic strategy of the Company’s risk management is to identify and analyse the risks which are faced by the Company, establish
suitable risk tolerance baseline and proceed the risk management, and supervise a variety of risks timely and reliably, and control the risk within a
limited range.
9.1.1 Market Risk
(1) Foreign exchange risk
Foreign exchange risk refers to the risk of loss due to exchange rate fluctuations generally. The company bears the foreign exchange risk primarily
concerned with USD, and uses USD for pricing or settlement in the field of main financing business, operating leases, financing leasing. On 30
June 2017, except the following assets or liabilities in Note 6.50 are recorded in foreign currency, the others are recorded in CNY. Foreign exchange
risk of the assets and liabilities in foreign currencies may have an impact on the Company's performance of operation.
(2) Interest rate risk - the risk of changes in cash flow
The risk of changes in cash flows of a financial instrument due to interest rate is mainly concerned with the floating rate of bank borrowings (see
Note 6.25,6.26). The company's policy is to maintain a floating interest rate on the borrowings.
(3) Other price risk
Financial assets available for sale and financial assets held-for-trade held by the company should be measured at fair value on the balance sheet
date. For the reason that, the company bears the risk of changes in the stock market.
9.1.2. Credit Risk
As at the statement date, the maximum risk that could cause the Company’s financial losses mainly comes from default of the other party of the
contract, which includes:
The carrying amount of financial assets recognised in the Consolidated statement of financial position; for financial instruments measured by fair
value, the book value reflects its risk exposure but not the maximum risk exposure, which will vary with changes in the fair value in the future.
In order to reduce credit risk, the Company set up a team responsible for determination of credit limits, credit approvals and other monitoring
procedures to ensure that the necessary measures be taken to recover overdue debts. In addition, the Company reviews the recoverable amount of
each individual trade debt at each balance sheet date to ensure fully provision for bad debts recognised for the money that cannot be recovered.
Therefore the Company's management believes the Company’s credit risk has been greatly reduced.
The Company's circulating funds were deposited in banks with high credit ratings, so that the credit risk of circulating funds was low.
9.1.3 Liquidity risk
When managing liquidity risk,the Company’s management believes maintaining adequate cash and cash equivalents, and monitoring that at same
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time, in order to meet the needs of operation of the Company, and to reduce the impact of fluctuations in cash flows.The management of the
Company monitors the use of bank borrowings and ensure to abide by loan agreements.
Note 10 Disclosure of the fair value
10.1 The fair value at the end of current period of assets and liabilities which are measured by fair value
The fair value at the end of current period
The first level The third level
Item The second level
measured by fair measured by fair Total
measured by fair value
value value
1. Continuous measurement by fair value
1.1 financial assets available for sale 260,410,357.35 260,410,357.35
(1) Equity instruments investment 260,410,357.35 260,410,357.35
Total amount of assets continuous
260,410,357.35 260,410,357.35
measurement by fair value
2. Financial liabilities measured at fair value with
1,753,048.20 1,753,048.20
changes in fair value recognised in profit or loss
1,753,048.20 1,753,048.20
Interest rate swaps
Total amount of liabilities continuous
1,753,048.20 1,753,048.20
measurement by fair value
10.2 Determined on the basis of continuous and noncontinuous first level for fair value measurement of the market of project
Financial assets available for sale of continuous measurement by fair value is the investment in TravelSky Technology Limited, whose fair value
was determined based on the closing price for the stock market in Hong Kong Stock Exchange on balance sheet date.
10.3 Determined on the basis of continuous and noncontinuous second level for fair value measurement of the market of project
Fair value measurement basis of interest rate swaps which was continuously measured by fair value is quotes from counterparty banks on the fair
value of interest rate swaps.
Note 11 Related parties and related party transaction
11.1 Major investors
Shareholding in the Voting right in the
Place of
Investor Nature of operation Registered capital Company Company
registration
(%) (%)
Investment and
SDA Group Jinan 580,000,000.00 42.00 42.00
management of aero
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Shareholding in the Voting right in the
Place of
Investor Nature of operation Registered capital Company Company
registration
(%) (%)
transportation
Air China Beijing Aero transportation 13,084,751,004.00 22.80 22.80
Note: SDA Group and Air China is the first and second largest shareholder of the Company respectively. Air China is the largest shareholder of SDA
Group; Air China’s shareholding and voting right in SDA Group is 49.406% and 49.406% respectively.
11.2 Subsidiaries
See Note 8.1 for subsidiaries.
11.3 Associates
See Note 8.2 for associates.
11.4 Other related parties
Other related party Relationship to the Company
Taikoo (Shandong) Aircraft Engineering Company Limited Controlled by major investors
Shandong XiangYu Air Technology Co., Ltd. Controlled by major investors
Shandong Rainbow Commercial Jet Co., Ltd. Controlled by major investors
Shandong Air New Media Co., Ltd. Controlled by major investors
Air China Import & Export Co., Ltd. Controlled by major investors
Zhejiang Aviation Service Co., Ltd. Controlled by major investors
Air China Shanghai Aviation Service Co., Ltd. Controlled by major investors
Beijing Golden Phoenix Human Resources Service Co., Ltd. Controlled by major investors
CATIC Industrial Co., Ltd. Controlled by major investors
Air Macau Controlled by major investors
Air China Offshore Holding Company Controlled by major investors
Air China Hongkong Development Limited Controlled by major investors
Beijing Airlines Co., Ltd. Controlled by major investors
China International Aviation Shantou Industrial Development Corporation Controlled by major investors
Chengdu Fukai Aircraft Engineering Services Limited Controlled by major investors
Beijing Aircraft Maintenance and Engineering Corporation Controlled by major investors
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Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Other related party Relationship to the Company
Air China Cargo Co., Ltd. Controlled by major investors
China Aviation Group Finance Co., Ltd. Controlled by major investors
Shenzhen Airlines Co., Ltd. Controlled by major investors
Dalian Airlines Co., Ltd. Controlled by major investors
China International Airlines Inner Mongolia Co., Ltd. Controlled by major investors
Kunming Airlines Ltd Controlled by major investors
Sichuan international aero engine maintenance Co., Ltd. jointly operated by major investors
SkyWorks Capital Asia Ltd. jointly operated by major investors
ACT Cargo (USA), Inc. jointly operated by major investors
Shanghai Pudong International Airport West Public Cargo Terminal Co., Ltd. jointly operated by major investors
Ji'an Beijing Aviation Asset Management Co., Ltd. jointly operated by major investors
Shanghai International Airport Ground Service Co., Ltd. jointly operated by major investors
11.5 Related party transactions
11.5.1 Purchase of goods and services
Related party Transaction Current period Prior period
SDA Group Office lease rental and catering 13,739,607.74 15,513,331.65
Taikoo (Shandong) Aircraft Engineering
Aircraft maintenance 50,826,981.46 28,803,053.19
Company Limited
Shandong XiangYu Air Technology Co., Ltd. Repairment 38,996,267.68 29,668,696.78
Shandong XiangYu Air Technology Co., Ltd. Purchase / lease of aircraft materials 13,705.00
Air China Ground service 7,888,336.36 6,169,564.28
Air China Repairment 724,929.11
Air China Purchase / lease of aircraft materials 186,711.99 152,804.77
Air China Agency service 5,458,596.51 6,168,028.80
Air China Irregular flight expenditure 4,647,528.32 7,283,337.46
Shenzhen Airlines Co., Ltd. Agency service 1,355,884.53 382,425.92
Shenzhen Airlines Co., Ltd. Purchase / lease of aircraft materials 77,366.20
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Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Related party Transaction Current period Prior period
Shenzhen Airlines Co., Ltd. Catering 821,436.08 533,732.80
Shenzhen Airlines Co., Ltd. Ground service 82,320.00
Air China Cargo Co., Ltd. Ground service 1,375,854.32 1,551,773.69
Beijing Aircraft Maintenance and
Repairment 25,863,897.05 22,363,336.17
Engineering Corporation
Beijing Aircraft Maintenance and
Purchase / lease of aircraft materials 294,133.10 87,545.01
Engineering Corporation
Beijing Aircraft Maintenance and
Ground service 14,791,642.54 15,553,050.00
Engineering Corporation
Sichuan International Aero Engine
Repairment 3,485,554.10 202,356,167.14
Maintenance Co., Ltd.
Chengfu FuKai Aircraft Engineering Co., Ltd. Repairment 1,831,830.31 2,636,992.53
Shandong Air New Media Co., Ltd. Aircraft offerings and advertising fees 3,494,970.00
Beijing Golden Phoenix Human Resources
Ground service 979,920.00 875,178.00
Service Co., Ltd.
Air China Import & Export Co., Ltd. Taxes of aircraft materials 4,786.52
Total 176,212,543.29 340,828,733.82
11.5.2 Sales of goods and vendering of services
Related party Transaction Current period Prior period
Air China Ground service 939,820.29 2,323,611.71
Simulator maintenance / House rental
Air China 2,242,714.29 2,242,714.29
income
Air China Sale /rent of aircraft materials 12,906.84 4,710.21
Air China Irregular flight expenditure 37,220.00 4,570.00
Air China Agency service 2,425,297.00 1,657,266.61
Air China Cargo Co., Ltd. Cargo income 2,117,233.31 889,454.73
Beijing Aircraft Maintenance and
Sale /rent of aircraft materials 343,536.05 169,173.21
Engineering Corporation
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Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Related party Transaction Current period Prior period
Shenzhen Airlines Co., Ltd. Agency service 740,562.00 162,976.46
Shenzhen Airlines Co., Ltd. Ground service 51,200.00 172,600.00
Shenzhen Airlines Co., Ltd. Sale /rent of aircraft materials 57,676.75
Shenzhen Airlines Co., Ltd. Irregular flight expenditure 560.00
Shenzhen Airlines Co., Ltd. Cargo income 26,337.00 100.00
Dalian Airlines Co., Ltd. Ground service 63,737.09 42,231.70
Dalian Airlines Co., Ltd. Irregular flight expenditure 20,780.00 59,520.00
Taikoo (Shandong) Aircraft Engineering
Sale of aircraft materials 114,470.12 79,511.75
Company Limited
Shandong XiangYu Air Technology Co., Ltd. Sale of aircraft materials 338,955.30 39,302.57
Shandong Air New Media Co., Ltd. Media resource fee 6,050,000.00
Total 15,583,006.04 7,847,743.24
11.5.3 Related Party borrowing funds demolition
Related Party Borrowing money Beginning date Due date Description
borrowing：
Balance as at
China National Aviation Finance Co., Ltd. 296,000,000.00 2016-6-20 2026-6-20 30/06/2017 CNY
266,400,000.00
11.5.4 Remuneration to key management personel
Item Current period Prior period
Remuneration to key management personel CNY 5.8623 million CNY 4.5343 million
11.5.5 Other related party transactions
Related party Transaction Current period Prior period
Air China Wet lease 93,266,177.00 183,404,273.00
Air China Code sharing -247,032.01
Air China Frequent flyer cooperation 36,000,000.00 36,000,000.00
Air China Cargo Co., Ltd. Code sharing for cargo 2,216,952.30 -2,479,852.47
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Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Total 131,483,129.30 216,677,388.52
11.6 Related party balances
11.6.1 Receivables
C/f B/f
Related party Allowance for bad Allowance for bad
Carrying amount Carrying amount
debt debt
Accounts receivable
Air China 167,803,828.21 111,220,493.07
Total 167,803,828.21 111,220,493.07
Other receivables
Air China
5,615,980.16 6,250,133.00
Shenzhen Airlines Co., Ltd.
58,736.75 468,173.37
Shandong Rainbow Commercial Jet Co., Ltd.
101,551,717.65 101,551,717.65 101,551,717.65 101,551,717.65
Shandong XiangYu Air Technology Co., Ltd. 15,444.48
349,625.78
Taikoo (Shandong) Aircraft Engineering Company
198,526.00
Limited 72,746.00
Shandong Air New Media Co., Ltd. 1,027,044.28
7,127,044.28
Total 114,775,850.62 101,551,717.65 109,511,038.78 101,551,717.65
11.6.2 Payables
Related party C/f B/f
Accounts payable
Shandong XiangYu Air Technology Co., Ltd. 4,107,384.61 2,451,618.94
Taikoo (Shandong) Aircraft Engineering Company Limited 5,014,595.72 1,279,779.59
Air China 230,144,770.75 190,287,022.82
Air China Cargo Co., Ltd. 1,048,153.98 260,935.50
Beijing Golden Phoenix Human Resources Service Co., Ltd. 159,354.00 161,838.00
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Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Related party C/f B/f
Shenzhen Airlines Co., Ltd. 467,678.58 208,826.20
Aircraft Maintenance and Engineering Corporation (Ameco Beijing) 17,024,265.48 10,860,743.99
Sichuan International Aero Engine Maintenance Co., Ltd. 2,808,000.00 64,482,126.00
Total 260,774,203.12 269,992,891.04
Other payables
SDA Group 7,919,618.11 6,041,798.09
Air China 20,000,000.00 20,000,000.00
Taikoo (Shandong) Aircraft Engineering Company Limited 245,400.00 245,400.00
Total 28,165,018.11 26,287,198.09
Note 12 Commitments
12.1 Signifcant commitments
12.1.1 Capital commitment
Item C/f B/f
Firm contracts not recognized in the financial statements
- Commitment to acquire non-current assets 15,839,411,117.62 18,276,050,022.59
- large outsourcing contract
- External investment commitments
Total 15,839,411,117.62 18,276,050,022.59
12.1.2 Operating lease
Information of irrevocable operating lease contracts as at the reporting date:
Item C/f B/f
Minimum lease rental for irrevocable operating lease contracts
Within one year from the reporting date 2,529,499,561.85 2,290,232,032.00
Within two years from the reporting date 2,464,330,497.74 2,155,144,647.15
Within three years from the reporting date 2,328,174,416.06 2,125,539,777.15
Subsequent years 12,388,577,021.15 11,553,366,310.20
Total 19,710,581,496.80 18,124,282,766.50
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Shandong Airlines Co., Ltd. Semi-Annual Report 2017
12.1.3 Other commitment
No other significant commitments of the Company need to be disclosed as at 30/06/2017.
Note 13 Post balance sheet date events
No Post reporting date events is subject to disclosure as at the reporting date.
Note 14 Other significant events
14.1 Pension Plan
No significant change of the annuity program occurred for current period, see note 6.20, 6.27.
Note 15 Notes to elements of the separate financial statements
15.1 Accounts receivable
15.1.1 Disclosure by category
C/f
Category Carrying amount Allowance for bad debt
Book value
Amount % Amount %
Accounts receivable of individual
significance and subject to individual 311,716,022.15 61.45 311,716,022.15
impairment assessment
Accounts receivable subject to
impairment assessment by credit risk 172,896,955.78 34.08 8,644,847.79 5.00 164,252,107.99
characteristics of a portfolio
Accounts receivable of individual
insignificance but subject to individual 22,653,662.66 4.47 8,057,209.85 35.57 14,596,452.81
impairment assessment
Total 507,266,640.59 100.00 16,702,057.64 3.29 490,564,582.95
(Continued)
B/f
Category Carrying amount Allowance for bad debt
Book value
Amount % Amount %
Accounts receivable of individual significance and subject to 228,079,021.34 68.01 228,079,021.34
individual
impairment assessment
Accounts receivable subject to 88,170,349.23 26.29 4,408,517.46 5.00 83,761,831.77
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Shandong Airlines Co., Ltd. Semi-Annual Report 2017
B/f
Category Carrying amount Allowance for bad debt
Book value
Amount % Amount %
impairment assessment by credit risk
characteristics of a portfolio
Accounts receivable of individual 19,100,611.14 5.70 8,057,209.85 42.18 11,043,401.29
insignificance but subject to individual
impairment assessment
Total 335,349,981.71 100.00 12,465,727.31 3.83 322,884,254.40
① Accounts receivable of individual significance and subject to individual impairment assessment
C/f
Debtor Allowance for bad Rate of
Carrying amount Reason for allowance
debt allowance (%)
No indication of impairment upon
Air China 167,634,530.21
individual assessment
No indication of impairment upon
BSP-CHINA 79,126,159.53
individual assessment
No indication of impairment upon
Accounting Center of China Aviation 64,955,332.41
individual assessment
Total 311,716,022.15
② Accounts receivable subject to impairment assessment by portfolio
C/f
Portfolio
Carrying amount Allowance for bad debt Rate of allowance (%)
Portfolio by nature 172,896,955.78 8,644,847.79 5.00
Total 172,896,955.78 8,644,847.79 5.00
③ Accounts receivable of individual insignificance but subject to individual impairment assessment
C/f
Rate of
Debtor Allowance for bad
Carrying amount allowance Reason for allowance
debt
(%)
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Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Impairment upon individual
Debtor #1 8,057,209.85 8,057,209.85 100.00
assessment
No indication of impairment upon
BSP-others 8,476,009.77
individual assessment
No indication of impairment upon
UATP 3,622,367.78
individual assessment
No indication of impairment upon
Shandong aviation Logistics Ltd 2,256,268.70
individual assessment
No indication of impairment upon
ARC 241,806.56
individual assessment
Total 22,653,662.66 8,057,209.85 35.57
15.1.2 Recognisation, recovery or reversal of allowance for bad debt
The amount of allowance for bad debts recognised during the year is CNY4,236,330.33.
15.1.3 Top five accounts receivables by debtors
The total amount of top five accounts receivables summarized by debtors as at the end of current period is CNY 377,232,228.80, accounting for
74.37% of the total accounts receivable as at the end of current period, the total corresponding allowance for bad debts is CNY3,275,810.33.
15.2 Other receivables
15.2.1 Disclosure by category
C/f
Category Carrying amount Allowance for bad debt
Book value
Amount % Amount %
Other receivables of individual
significance and subject to individual 415,303,737.60 74.69 104,933,519.66 27.37 310,370,217.94
impairment assessment
Other receivables subject to subject to
impairment assessment by credit risk 95,728,352.36 17.22 4,786,417.62 5.00 90,941,934.74
characteristics of a portfolio
Other receivables of individual
insignificance but subject to individual 45,019,309.31 8.10 45,019,309.31
impairment assessment
Total 556,051,399.27 100.00 109,719,937.28 19.73 446,331,461.99
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(Continued)
B/f
Category Carrying amount Allowance for bad debt
Book value
Amount % Amount %
Other receivables of individual
significance and subject to individual 398,743,770.11 78.79 108,431,670.15 27.19 290,312,099.96
impairment assessment
Other receivables subject to subject to
impairment assessment by credit risk 63,673,072.13 12.58 3,183,653.61 5.00 60,489,418.52
characteristics of a portfolio
Other receivables of individual
insignificance but subject to individual 43,680,428.66 8.63 43,680,428.66
impairment assessment
Total 506,097,270.90 100.00 111,615,323.76 22.05 394,481,947.14
① Other receivables of individual significance and subject to individual impairment assessment
C/f
Rate of
Debtor Carrying
Allowance for bad debt allowance Reason for allowance
amount
(%)
No indication of impairment upon
Debtor #1 200,228,266.83
individual assessment
impairment upon individual
Shandong Rainbow Commercial Jet Co., Ltd. 101,551,717.65 101,551,717.65 100.00
assessment
No indication of impairment upon
Shandong Air Logistics Co., Ltd. 45,887,712.94
individual assessment
impairment assessment by
Debtor #2 38,447,080.54 1,922,354.03 5.00
portfolio
impairment assessment by
Debtor #3 29,188,959.64 1,459,447.98 5.00
portfolio
Total 415,303,737.60 104,933,519.66 25.27
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Shandong Airlines Co., Ltd. Semi-Annual Report 2017
② Other receivables subject to impairment assessment by portfolio
C/f
Portfolio
Carrying amount Allowance for bad debt Rate of allowance (%)
Portfolio by nature 95,728,352.36 4,786,417.62 5.00
Total 95,728,352.36 4,786,417.62 5.00
③ Other receivables of individual insignificance but subject to individual impairment assessment
C/f
Debtor Allowance for bad Rate of allowance
Carrying amount Reason for allowance
debt (%)
No indication of impairment upon
Debtor #1 17,300,360.00
individual assessment
No indication of impairment upon
Debtor #2 4,238,588.20
individual assessment
No indication of impairment upon
Debtor #3 2,067,420.00
individual assessment
No indication of impairment upon
Debtor #4 2,062,200.00
individual assessment
No indication of impairment upon
Debtor #5 4,457,873.01
individual assessment
No indication of impairment upon
Debtor #6 773,050.73
individual assessment
No indication of impairment upon
Debtor #7 895,684.40
individual assessment
No indication of impairment upon
Air China 5,615,980.16
individual assessment
No indication of impairment upon
Shandong Air New Media Co., Ltd. 7,127,044.28
individual assessment
No indication of impairment upon
Shenzhen Airlines Co., Ltd. 58,736.75
individual assessment
Taikoo (Shandong) Aircraft Engineering 72,746.00 No indication of impairment upon
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Shandong Airlines Co., Ltd. Semi-Annual Report 2017
C/f
Debtor Allowance for bad Rate of allowance
Carrying amount Reason for allowance
debt (%)
Company Limited individual assessment
No indication of impairment upon
Shandong XiangYu Air Technology Co., Ltd. 349,625.78
individual assessment
Total 45,019,309.31
15.2.2 Recognisation, recovery or reversal of allowance for bad debt
The amount of allowance for bad debts recognised during the current period is CNY -1,895,386.48.
15.2.3 Disclosure by nature
Category C/f B/f
Deposits 232,023,443.17 149,790,973.93
Others 324,027,956.10 356,306,296.97
Total 556,051,399.27 506,097,270.90
15.2.4 Top five other receivables
Allowance for bad
Debtor Nature C/f Aging %
debt
Debtor #1 Deposits 200,228,266.83 Within 1 year
36.01
Shandong Rainbow Commercial Jet Co.,
Others 101,551,717.65 Over 4 years 18.26 101,551,717.65
Ltd.
Shandong aviation Logistics Ltd Others 45,887,712.94 Over 5 years 8.25
Debtor #2 Others 38,447,080.54 Within 2 years 6.91 1,922,354.03
Debtor #3 Others 29,188,959.64 Within 3 years 5.25 1,459,447.98
Total 415,303,737.60 74.68 104,933,519.66
15.3 Long-term equity investments
15.3.1 Disclosure by category
Item C/f B/f
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Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Impairment Net carrying Impairment
Carrying amount Carrying amount Net carrying amount
allowance amount allowance
Investments in
subsidiaries 106,000,685.43 106,000,685.43 106,000,685.43 106,000,685.43
Investments in
associates 22,500,000.00 22,500,000.00 22,500,000.00 22,500,000.00
Total 128,500,685.43 22,500,000.00 106,000,685.43 128,500,685.43 22,500,000.00 106,000,685.43
15.3.2 Investments in subsidiaries
Current
Current period Allowance Year-end
Investee B/f period C/f
decrease recognized allowance
increase
Shandong aviation
Logistics Ltd 48,323,205.97 48,323,205.97
Qingdao Feisheng
International Aviation
Training Technology
Development Co., Ltd 57,677,479.46 57,677,479.46
Total 106,000,685.43 106,000,685.43
15.3.3 Investments in associates
Currency year movement (+, -)
Investment gains
Impairment
Investee B/f Additional Investment and losses Other comprehensive Other changes
allowance
investment reduction recognized under income adjustment in equity
the equity method
Associates
Shandong
Rainbow
22,500,000.00 22,500,000.00
Commercial Jet
Co., Ltd.
Total 22,500,000.00 22,500,000.00
(Continued)
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Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Currency year movement (+, -)
Investee Declared cash C/f Year-end allowance
Allowance recognized Others
dividends or profits
Associates
Shandong Rainbow
22,500,000.00 22,500,000.00
Commercial Jet Co., Ltd.
Total 22,500,000.00 22,500,000.00
15.4 Operating revenues and costs
Current period Prior period
Category
Operating revenues Operating costs Operating revenues Operating costs
Principal business 7,351,087,545.79 7,007,942,808.37 6,158,342,851.56 5,417,613,981.08
Other business 189,139,132.85 1,002,863.77 135,345,527.89 679,535.22
Total 7,540,226,678.64 7,008,945,672.14 6,293,688,379.45 5,418,293,516.30
15.5 Investment income
Category Current period Prior period
Income from long-term equity investments measured at cost 19,844,431.27 3.47
Income from long-term equity investment income of equity method
Income from long-term equity investment income of equity method -479,085.84 -850,517.15
Total 19,365,345.43 -850,513.68
Note 16 Supplementary information
16.1 Non-recurring profit and loss
Category Current period Description
Gains from disposals of non-current assets after expending impairment provisions -812,548.20
Exceeded-authority approved, non-official approved or accidental tax repayment and relief
Government grants recognised through profit or loss for the current reporting period, excluding grants
which are closely related to the Company’s operating activities and of which the quota or approval is eligible 60,164,960.18
for automatic renewal in accordance with relevant regulations
Financial resource usage fees charged on non-financial institution recognised through profit or loss for
the current reporting period
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Category Current period Description
Gains arising from bargain purchase in business combination and investments in associates and joint
ventures
Non-monetary asset exchange
Consigned investment and asset management
Impairment provision resulting from force majeure, eg. natural desasters
Reorganisation
Reorganisation expenditure
Unfair transactions
Net profits or losses achieved by an acquired under-common-control entity during the period from the
start of the period to the acquisition date
Gains or losses arising from contingent events unconnected with the Company’s daily operating
activities
Fair value changes of tradable financial assets and tradable financial liabilities held and gains or losses
-1,076,318.24
arising from disposals of tradable financial assets, tradable financial liabilities and available-for-sale financial
assets, excluding hedging contracts relevant to the Company’s daily operating activities
Reversal of impairment provision for accounts receivables eligible for individual impairment assessment
Gains or losses arising from consigned borrowings
Fair value changes of property investments subsequently measured at fair value
One-off adjustment of profit or loss for the current reporting period in accordance with tax and
accounting laws and regulations
Consignment income arising from consigned operations
Income and expenses other than items listed above 20,268,766.06
Other gains or losses satisfying the definition of extraordinary gains or losses
Subtotal 78,544,859.80
Less: Impact of income tax 19,659,294.97
Less: Impact on non-controlling interest
Total 58,885,564.83
Note: Positive amounts and negative amounts in non-recurring categories mean income and expense or loss respectively.
137
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
The Company recognised non-recurring categories of activities in accodance with the Explanatory Announcement regarding Information Disclosure
by Publicly Listed Company No. 1 - Non-recurring Profit and Loss (Zhengjianhui Gonggao [2008] No.43).
16.2 Rate of return on net assets and earnings per share
Earnings per share (CNY/share)
Profit catetory Weighted average rate of RONA
Basic EPS Diluted EPS
Net profit attributable to ordinary shareholders 2.32 0.23 0.23
Recurring profit or loss attributable to ordinary shareholders 0.80 0.08 0.08
138
Shandong Airlines Co., Ltd. Semi-Annual Report 2017
Section XI. Documents available for Reference
1. Financial statements carrying the personal signatures and seals of Chairman of the Board, Chief Accountant and Person in Charge
of Accounting Department.
2. Originals of all documents and notices publicly disclosed on newspapers and websites designated by CSRC in the reporting period.
3. The Company will offer above documents for reference timely provided that CSRC or Stock Exchange demands or shareholders
requires according to the regulations and Articles of Association.
BOD
Shandong Airlines Co., Ltd.
30 August 2017
139
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