Shandong Airlines Co., Ltd. Summary of Annual Report 2017
Shandong Airlines Co., Ltd.
Summary of Annual Report 2017
I. Important Notice
The summary is abstract from full-text of annual report, for more details of operating results, financial condition and future
development plan of the Company; investors should found in the full-text of annual report that published on media appointed by
CSRC.
Other directors attending the Meeting for annual report deliberation except for the followed
Name of director absent Title for absent director Reasons for absent Attorney
Jiang Chengda Director Work causes Miao Liubin
Wang Mingyuan Director Work causes Xu Chuanyu
The profit distribution plan that deliberated and approved by the Board is: based on total stock issued 400,000,000 shares, distributed
2.50Yuan (tax included) bonus in cash for every 10-share hold by all shareholders, 0 shares bonus issued (tax included) and no
capitalizing of common reserves carried out.
II. Basic information of the company
1. Company profile
Short form of the stock Shanhang-B Stock code 200152
Stock exchange for listing Shenzhen Stock Exchange
Person/Way to contact Secretary of the Board Rep. of security affairs
Name Dong Qiantang Fan Peng
1/F, Tiangong Office Building, North of 3/F, Tiangong Office Building, North of
Red-crowed cranes Hotel, Yaoqiang Red-crowed cranes Hotel, Yaoqiang
Office add.
International Airlines, Licheng District, International Airlines, Licheng District,
Jinan, Shandong Jinan, Shandong
Fax. 0531-85698767 ext.8679 0531-85698767 ext.8679
Tel. 0531-82085939 0531-82085586
E-mail dongqt@shandongair.com.cn fanp@shandongair.com.cn
2. Main business or product introduction in the reporting period
The Company is mainly engaged in international and domestic air passenger and cargo transportation business; hotel catering; aircraft
maintenance; civil aviation personnel training; insurance agency; airline agency business; ground services related to main business;
sales of aviation materials, general merchandise, food, health foods, handicrafts, souvenirs, etc., and retail sales of tobacco; leasing of
aviation materials; leasing of premises, rental of houses; business services; hotel accommodation agents and ticket agents; conference
services; transport agency services, air cargo storage; and labor services. Among them, international and domestic air passenger and
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Shandong Airlines Co., Ltd. Summary of Annual Report 2017
cargo transportation business is the Company's main business.
For more than 20 years, 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 the end of 2017, the company has 113 airplanes of Boeing B737 series, and enters
into the ranks of large airlines. At present, the company bases its headquarters in Jinan and has branch offices and flight bases in
Qingdao, Yantai, Xiamen, Chongqing, Beijing, Urumqi and Guiyang. The company operates more than 200 domestic, international
and regional air routes, every week more than 3,700 flights fly to more than 80 large and medium-sized cities across the country, as
well as the regional routes to Hong Kong and Taiwan, and the international routes to South Korea, Japan, Thailand, Cambodia and
India.
3. Main accounting data and financial indexes
(1) Main accounting data and financial indexes for recently three years
In RMB
2017 2016 Changes over last year 2015
Operating income 16,484,713,152.23 13,742,365,545.56 19.96% 12,108,963,139.11
Net profit attributable to
490,353,408.15 532,834,567.17 -7.97% 532,260,993.04
shareholders of the listed company
Net profit attributable to
shareholders of the listed company
388,452,214.55 409,577,360.28 -5.16% 387,733,814.57
after deducting non-recurring gains
and losses
Net cash flow arising from
1,854,418,122.23 2,427,055,988.42 -23.59% 2,424,457,843.01
operating activities
Basic earnings per share
1.23 1.33 -7.52% 1.33
(RMB/Share)
Diluted earnings per share
1.23 1.33 -7.52% 1.33
(RMB/Share)
2.69 percentage points
Weighted average ROE 12.19% 14.88% 17.22%
down
Changes over end of
End of 2017 End of 2016 End of 2015
last year
Total assets 13,351,422,839.91 12,741,974,788.53 4.78% 12,748,902,597.96
Net assets attributable to
4,253,141,013.93 3,836,172,828.06 10.87% 3,365,013,204.57
shareholder of listed company
(2) Quarterly main financial index
In RMB
First quarter Second quarter Third quarter Fourth quarter
Operating income 3,858,202,194.45 3,692,592,547.47 5,011,301,663.17 3,922,616,747.14
Net profit attributable to
138,708,221.70 -48,615,130.87 662,161,220.43 -261,900,903.11
shareholders of the listed company
Net profit attributable to
shareholders of the listed company
110,366,318.98 -79,158,792.98 629,139,503.98 -271,894,815.43
after deducting non-recurring gains
and losses
Net cash flow arising from
36,510,056.32 612,643,788.64 1,538,074,574.27 -332,810,297.00
operating activities
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Shandong Airlines Co., Ltd. Summary of Annual Report 2017
4. Shares and shareholders
(1) Particulars about common stock shareholders, preference shareholders with voting rights recovered
and top ten shareholders
In Share
Total preference
Total common Total common stock Total preference shareholders with
shareholders with
stock shareholders shareholders at end of last voting rights recovered at end of last
15,396 15,481 voting rights 0 0
in reporting month before annual report month before annual report
recovered at end of
period-end disclosed disclosed
reporting period
Top ten shareholders
Amount of Amount of restricted Number of shares
Nature of Proportion of pledged/frozen
Full name of Shareholders
shareholder shares held shares held shares held
State of share Amount
State-owned
Shandong Aviation Group 42.00% 168,004,000 168,004,000
legal person
State-owned
Air China Limited 22.80% 91,200,000 91,200,000
legal person
Foreign legal
NORGES BANK 0.87% 3,498,479 0
person
VANGUARD EMERGING
Foreign legal
MARKETS STOCK 0.74% 2,960,917 0
person
INDEX FUND
WANXIANG
INTERNATIONAL Foreign legal
0.64% 2,549,500 0
INVESTMENT person
CORPORATION
VANGUARD TOTAL
Foreign legal
INTERNATIONAL STOCK 0.43% 1,735,020 0
person
INDEX FUND
Domestic
Hou Chunhu 0.42% 1,693,945 0
nature person
Domestic
Chen Jingjian 0.39% 1,554,400 0
nature person
ISHARES CORE MSCI
Foreign legal
EMERGING MARKETS 0.37% 1,463,824 0
person
ETF
Domestic
Wang Jingqing 0.31% 1,249,953 0
nature 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.
(2) Total preferred stock shareholders of the Company and shares held by top ten shareholders with
preferred stock held
The Company had no shareholders with preferred stock held in the reporting.
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Shandong Airlines Co., Ltd. Summary of Annual Report 2017
(3) Property right and controlling relationships between the actual controllers of the Company and the
Company is as follows:
Shandong Aviation Group
42%
Shandong Airlines Co., Ltd.
5. Corporate bonds
Whether or not the Company public offering corporation bonds in stock exchange, which undue or without payment in full at
maturity on the approval date for annual report disclosed
No
III. Discussion and analysis of business
1. Introduction of operation in the reporting period
In 2017, the company maintained a healthy development trend with steady progress, overall completed the intended objectives of
various tasks of production and management, achieved a total of 3 million hours of safe flight, and won the “Three Stars Award” for
safe flight of civil aviation; completed the annual benefit target, successfully established the Beijing Branch Office, made a major
breakthrough in entering the hub market; and won the “China Quality Award”.
- The security situation remained stable. The transportation business totally guaranteed about 401,600 hours of safe flight and
193,900 flights, an increase of 13.8% and 14.0% respectively on a year-on-year basis. No company-caused aviation accidents or the
above unsafe incidents occurred. The safety quality evaluation index was 10.54. A total of 194,935 flights were guaranteed, the average
flight punctuality rate was 70.16%, a decrease of 9.92% on a year-on-year basis; successfully guaranteed 45 flights for important
missions and dedicated class III or above, and the flight punctuality rate was 87%.
- Successfully completed the benefit goals. Completed a total transport turnover of 3,230 million ton kilometers, passenger transport
volume of 23,474,000 person-time, and cargo and mail transport volume of 165,000 tons (including wet lease), an increase of 21.1%,
22.2%, and 6.1% respectively on a year-on-year basis; achieved operating income of 16484.71 million Yuan, and total profit of
650.92 million Yuan; passenger load factor was 83.2%, an increase of 5.3% over the same period of last year, and the cargo and mail
load factor was 40.8%, a decrease of 0.2% on a year-on-year basis.
- The quality of service had a steady rise. The CSS (Customer Satisfaction Survey) overall achieved a score of 96.37, an increase of
0.04 over the same period of last year. The effective customer complaint rate was 0.13 pieces per ten thousand person-times, a decrease
of 0.03 pieces per ten thousand person-times on a year-on-year basis; the annual effective complaint rate has maintained the lowest
among the major airlines for the fourth consecutive year according to the publication of Civil Aviation Administration.
The civil aviation authority media service ranked No. 4, and won the “Best Airline for Civil Aviation Service” award. The company
has been awarded as China Top 500 Most Valuable Brand for ten consecutive years with the brand value of 34.645 billion Yuan, an
increase of 6.117 billion Yuan over the previous year, ranking No. 100.
The company mainly carried out the following work:
(i) Continue to carry out security improvement and rectification to consolidate the security foundation
The first is to implement the concept of safety development and pay close attention to the implementation of safety responsibilities.
Conscientiously implement the spirit of General Secretary Xi Jinping on the important instructions for safety work; properly handle the
relationship between safety and development, safety and efficiency, speed and scale, speed and quality. The second is to further
improve the security system and continue to increase the management and control efforts to grass-roots security. The third is to further
promote the construction of “three bases” and ensure the security assurance capabilities. The fourth is to maintain zero tolerance for
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Shandong Airlines Co., Ltd. Summary of Annual Report 2017
potential safety risks and continuously improve the risk prevention and control capabilities. Strengthen the prevention management,
normalize the safety inspections, and focus on the style development, process improvement and organization optimization for
problems so as to cure the hidden dangers at the source. Successfully complete the air transportation for major events such as the 19th
National Congress of the Party and the BRICS Summit. Maintain a stable production trend in public safety, fire safety, internal security,
vehicle safety, etc.
(ii) Actively respond to changes in the operating environment, and the order of flight production is basically stable
The first is to focus on the source and process management, and strengthen the control of the normality of flights. Strengthen the control
of important flights and focus on improving the regularity and accuracy of the first flight. The second is to make use of the advantages
of information systems and new technologies to improve the performance of operational control. Continue to advance the HUD (Head
Up Display) technology applications, achieve RVR (Runway Visual Range) 150 meters to take off for the first time in the industry. The
third is to strengthen the construction of emergency response system and improve its disposal ability.
(iii) Strive to increase income in peak season and reduce losses in off season, and realize the overall benefit targets
The first is to accomplish the resource allocation and capacity distribution, and optimize the air route network structure. Actively fight
for resources at all times and strengthen the main base; the successful establishment of Beijing Branch Office has created conditions
for increasing investment in Beijing market; Optimize the fleet structure and complete the disposal of two CRJ-700 flights. The second
is to improve the revenue control and promote the core competitiveness. Strengthen the application of revenue management
informatization tools and achieve the closed-loop management of the entire sales process. Classify the management and control to air
routes from multiple perspectives such as market sources, competitors, etc., and strengthen the overall optimization on the
disadvantaged routes, loss-making routes, and inefficient routes; achieve the seat-kilometer income of 0.3852 Yuan, an increase of
0.0183 Yuan on a year-on-year basis through series of revenue-increasing measures, which reversed the decline of seat-kilometer
income in successive years. The third is to improve the resource allocation level and achieve the efficient and orderly production
organization. Under the premise of meeting the requirements of the bureau, scientifically reduce the air route and station-crossing time,
strengthen the integrated management of crew resources and the refine the management of maintenance plans so as to improve the
availability of aircraft, the execution rate of flights, and the attendance rate of crews. The fourth is to strengthen the cost management
and control which has achieved good results. Scientifically formulate the cost control measures and establish the regular scheduling
work mechanisms. Monitor the production costs for major projects, actively promote the energy-saving and emission reduction, and
vigorously reduce the administrative costs. The fifth is to adhere to the open and shared development and achieve better collaborations
and benefits. Take advantage of Air China's collaborative advantages and continuously deepen the collaborations in marketing, safe
operation, aircraft maintenance, service management, IT support, strategic collaboration, resource sharing, and so on.
(iv) Continue to strengthen service management and control, and service brand building has achieved initial success
The first is to strengthen system design and focus on process management. Refine and precipitate the “Honest and Kind Shandong
Airlines Service Quality Management Model”, and launch the “Service Evaluation Index”. The second is to carry out the special
actions for service standardization and promotion, and continue to improve the key links. The third is to do a good job in brand building
and dissemination, and enrich the connotation of “Honest and Kind Shandong Airlines”. Formulate and implement the air and ground
kindness cultural reflection program, establish the “Air Confucius School”, and carry out a series of special service activities. Widely
spread the brand building of honest and kind through media promotion conferences, industry service summits and other channels so as
to constantly promote the brand influence of “Honest and Kind Shandong Airlines”.
2. Whether the main business had major change in the reporting period
□ Yes √ No
3. About the industries, products, or regions accounting for over 10% of the company’s operating income
or operating profit
In RMB
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Shandong Airlines Co., Ltd. Summary of Annual Report 2017
Increase/decrease Increase/decrease Increase/decrease
Gross profit
Name Operating revenue Operating cost of operating of operating cost of gross profit
ratio
revenue y-o-y y-o-y ratio y-o-y
Air transport 3.12 percentage
15,987,913,698.16 1,294,211,135.63 8.09% 20.19% -3.11%
service points down
4. Whether the characteristics of management seasonal or cyclical need special attention
□ Yes √ No
5. In the reporting period, note of major changes in operating income, operating cost, total net profit
attributable to common stock shareholders of listed company or composing the previous reporting period
□ Applicable √ Not applicable
6. Particular about suspended and delisting
□ Applicable √ Not applicable
7. Relevant items involving financial report
(1) Particulars about the changes in aspect of accounting policy, estimates and calculation method
compared with the financial report of last year
On August 29, 2017, the company convened the 3rd temporary meeting of the sixth board of directors, which reviewed and passed the
Proposal on Changes in Accounting Policies. According to the requirements of the “Accounting Standards for Business Enterprises No.
16 - Government Subsidies (Revision 2017) revised by the Ministry of Finance, the company revised the presentation of the financial
statements, adjusted the government subsidies relate to daily activities and revenue occurred after January 1, 2017 from the
“non-operating income” item in the income statement to the “other income” item in the income statement, the change has no significant
impact on the company's financial situation, operating results and cash flow.
(2) Major accounting errors within reporting period that needs retrospective restatement
No major accounting errors within reporting period that needs retrospective restatement for the Company in the period.
(3) Compare with last year’s financial report; explain changes in consolidation statement’s scope
①Shandong Jinping Air Foods Co., Ltd., is the wholly-owned subsidiary of the Company, mainly operates air food supply and
catering service. The enterprise included in consolidate scope of the Company since 9th October 2017
②Shandong Airlines Qingdao Food Co., Ltd., is the wholly-owned subsidiary of the Company, mainly operates production and
processing of the air food and delivery service. The enterprise included in consolidate scope of the Company since 9th October 2017
Board of Director of Shandong Airlines Co., Ltd.
24 March 2018
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