Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
Shandong Airlines Co., Ltd.
2018 Semi-Annual 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
2018-06-30
In RMB
Item Closing balance Opening balance
Current assets:
Monetary funds 672,036,931.05 543,584,920.30
Settlement provisions
Capital lent
Financial assets measured by fair
value and with variation reckoned into
current gains/losses
Derivative financial liability
Notes receivable 115,000.00
Accounts receivable 641,129,923.63 550,905,199.28
Accounts paid in advance 236,592,762.21 222,688,283.66
Insurance receivable
Reinsurance receivables
Contract reserve of reinsurance
receivable
Interest receivable
Dividend receivable 17,208,111.50
Other receivables 651,564,759.72 349,352,881.41
Purchase restituted finance asset
Inventories 81,968,958.72 83,924,185.64
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Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
Divided into assets held for sale
Non-current asset due within one
year
Other current assets 264,198,444.46 185,809,122.83
Total current assets 2,564,699,891.29 1,936,379,593.12
Non-current assets:
Loans and payments on behalf
Finance asset available for sales 332,981,504.99 337,378,099.40
Held-to-maturity investment
Long-term account receivable
Long-term equity investment
Investment property
Fixed assets 7,001,253,832.76 6,904,643,268.14
Construction in progress 3,497,145,353.47 2,737,166,681.62
Engineering material
Disposal of fixed asset
Productive biological asset
Oil and gas asset
Intangible assets 117,621,953.52 116,334,615.84
Expense on Research and
Development
Goodwill 454,020.13 454,020.13
Long-term expenses to be
538,403,362.56 535,865,271.69
apportioned
Deferred income tax asset 890,198,377.33 783,201,289.97
Other non-current asset
Total non-current asset 12,378,058,404.76 11,415,043,246.79
Total assets 14,942,758,296.05 13,351,422,839.91
Current liabilities:
Short-term loans 150,000,000.00
Loan from central bank
Absorbing deposit and interbank
deposit
Capital borrowed
Financial liability measured by fair
value and with variation reckoned into 96,821.21 3,607,390.15
current gains/losses
Derivative financial liability
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Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
Notes payable
Accounts payable 1,960,730,177.84 1,931,374,087.78
Accounts received in advance 590,162,026.58 614,319,419.67
Selling financial asset of
repurchase
Commission charge and
commission payable
Wage payable 395,442,387.27 567,105,882.00
Taxes payable 206,419,757.95 164,566,790.91
Interest payable 5,925,279.84 1,324,391.18
Dividend payable 100,602,306.96 602,306.96
Other accounts payable 378,769,837.39 411,682,128.67
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
681,373,509.81 622,127,224.77
year
Other current liabilities
Total current liabilities 4,469,522,104.85 4,316,709,622.09
Non-current liabilities:
Long-term loans 1,855,359,679.13 1,217,610,831.16
Bonds payable
Including: preferred stock
Perpetual capital
securities
Long-term account payable 3,967,922,600.82 3,277,812,491.65
Long-term wages payable 108,028,304.02 110,950,000.00
Special accounts payable
Projected liabilities
Deferred income 125,955,108.71 111,638,302.81
Deferred income tax liabilities 62,396,225.75 63,560,578.27
Other non-current liabilities
Total non-current liabilities 6,119,661,918.43 4,781,572,203.89
Total liabilities 10,589,184,023.28 9,098,281,825.98
Owner’s equity:
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Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
Share capital 400,000,000.00 400,000,000.00
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 175,197,393.67 178,494,839.48
Reasonable reserve
Surplus public reserve 471,457,259.99 471,457,259.99
Provision of general risk
Retained profit 3,231,509,255.41 3,127,778,550.76
Total owner’s equity attributable to
4,353,574,272.77 4,253,141,013.93
parent Company
Minority interests
Total owner’s equity 4,353,574,272.77 4,253,141,013.93
Total liabilities and owner’s equity 14,942,758,296.05 13,351,422,839.91
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 642,770,446.00 516,216,370.03
Financial assets measured by fair
value and with variation reckoned into
current gains/losses
Derivative financial liability
Notes receivable
Accounts receivable 638,339,070.11 547,677,560.06
Account paid in advance 235,882,201.68 222,501,155.94
Interest receivable
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Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
Dividends receivable 17,208,111.50
Other receivables 670,943,197.12 399,100,432.09
Inventories 80,295,861.88 82,225,339.01
Divided into assets held for sale
Non-current assets maturing within
one year
Other current assets 264,178,122.06 185,778,982.56
Total current assets 2,549,617,010.35 1,953,499,839.69
Non-current assets:
Available-for-sale financial assets 332,981,504.99 337,378,099.40
Held-to-maturity investments
Long-term receivables
Long-term equity investments 144,101,285.43 144,101,285.43
Investment property
Fixed assets 6,902,589,386.97 6,802,699,864.94
Construction in progress 3,497,145,353.47 2,737,166,681.62
Project materials
Disposal of fixed assets
Productive biological assets
Oil and natural gas assets
Intangible assets 104,261,746.31 102,780,313.61
Research and development costs
Goodwill
Long-term deferred expenses 537,416,884.10 534,617,772.35
Deferred income tax assets 889,443,893.59 782,457,009.29
Other non-current assets
Total non-current assets 12,407,940,054.86 11,441,201,026.64
Total assets 14,957,557,065.21 13,394,700,866.33
Current liabilities:
Short-term borrowings 150,000,000.00
Financial liability measured by fair
value and with variation reckoned into 96,821.21 3,607,390.15
current gains/losses
Derivative financial liability
Notes payable
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Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
Accounts payable 1,991,750,987.62 1,979,178,746.67
Accounts received in advance 588,512,595.59 611,805,531.91
Wage payable 392,011,568.79 558,628,059.49
Taxes payable 202,459,324.28 160,844,683.77
Interest payable 5,925,279.84 1,324,391.18
Dividend payable 100,011,940.00 11,940.00
Other accounts payable 410,503,291.43 449,038,723.36
Divided into liability held for sale
Non-current liabilities due within 1
681,373,509.81 622,127,224.77
year
Other current liabilities
Total current liabilities 4,522,645,318.57 4,386,566,691.30
Non-current liabilities:
Long-term loans 1,855,359,679.13 1,217,610,831.16
Bonds payable
Including: preferred stock
Perpetual capital
securities
Long-term account payable 3,967,922,600.82 3,277,812,491.65
Long-term wages payable 108,028,304.02 110,950,000.00
Special accounts payable
Projected liabilities
Deferred income 125,955,108.71 111,638,302.81
Deferred income tax liabilities 61,157,351.25 62,256,499.85
Other non-current liabilities
Total non-current liabilities 6,118,423,043.93 4,780,268,125.47
Total liabilities 10,641,068,362.50 9,166,834,816.77
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
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Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
Other comprehensive income 175,197,393.67 178,494,839.48
Reasonable reserve
Surplus reserve 470,796,555.46 470,796,555.46
Retained profit 3,183,583,584.87 3,091,663,485.91
Total owner’s equity 4,316,488,702.71 4,227,866,049.56
Total liabilities and owner’s equity 14,957,557,065.21 13,394,700,866.33
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 8,729,278,564.65 7,550,794,741.92
Including: Operating income 8,729,278,564.65 7,550,794,741.92
Interest income
Insurance gained
Commission charge and commission
income
II. Total operating cost 8,674,494,336.67 7,540,048,622.22
Including: Operating cost 8,021,020,129.22 7,010,777,442.45
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 7,022,422.74 11,049,353.32
Sales expenses 393,527,536.39 344,504,290.18
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Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
Administration expenses 203,693,684.83 162,126,382.55
Financial expenses 44,959,465.21 9,333,133.79
Losses of devaluation of asset 4,271,098.28 2,258,019.93
Add: Changing income of fair
3,510,568.94 -597,232.40
value(Loss is listed with “-”)
Investment income (Loss is listed
17,185,078.32 19,365,345.43
with “-”)
Including: Investment income on
affiliated Company and joint venture
Exchange income (Loss is listed
with “-”)
Income from assets disposal
26,470,970.71 24,408.34
(Loss is listed with “-”)
Other income 130,079,158.92 60,164,960.18
III. Operating profit (Loss is listed with
232,030,004.87 89,703,601.25
“-”)
Add: Non-operating income 29,889,108.67 20,383,484.09
Less: Non-operating expense 822,099.62 951,674.57
IV. Total Profit (Loss is listed with “-”) 261,097,013.92 109,135,410.77
Less: Income tax expense 57,366,309.27 19,042,319.94
V. Net profit (Net loss is listed with “-”) 203,730,704.65 90,093,090.83
(i) Net profit of continuous
203,730,704.65 90,093,090.83
operating (Net loss is listed with “-”)
(ii) Net profit of business
termination (Net loss is listed with “-”)
Net profit attributable to owner’s of
203,730,704.65 90,093,090.83
parent Company
Minority shareholders’ gains and
losses
VI. Net after-tax of other comprehensive
-3,297,445.81 52,650,206.26
income
Net after-tax of other comprehensive
income attributable to owners of parent -3,297,445.81 52,650,206.26
Company
(I) Other comprehensive income
items which will not be reclassified
subsequently to profit of loss
1. Changes as a result of
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Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
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
items which will be reclassified -3,297,445.81 52,650,206.26
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 -3,297,445.81 52,650,206.26
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 200,433,258.84 142,743,297.09
Total comprehensive income
200,433,258.84 142,743,297.09
attributable to owners of parent Company
Total comprehensive income
attributable to minority shareholders
VIII. Earnings per share:
(i) Basic earnings per share 0.51 0.23
(ii) Diluted earnings per share 0.51 0.23
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Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
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 8,705,788,696.40 7,540,226,678.64
Less: Operating cost 8,024,729,324.52 7,008,945,672.14
Operating tax and extras 5,698,254.63 10,105,304.57
Sales expenses 390,855,000.75 344,504,290.18
Administration expenses 195,317,233.32 157,885,828.66
Financial expenses 44,994,192.39 9,367,754.57
Losses of devaluation of asset 4,230,286.05 2,340,943.85
Add: Changing income of fair
3,510,568.94 -597,232.40
value(Loss is listed with “-”)
Investment income (Loss is
17,185,078.32 19,365,345.43
listed with “-”)
Including: Investment income
on affiliated Company and joint venture
Income from assets disposal
26,470,970.71 24,323.34
(Loss is listed with “-”)
Other income 130,079,158.92 60,164,960.18
II. Operating profit (Loss is listed
217,210,181.63 86,034,281.22
with “-”)
Add: Non-operating income 29,108,715.16 20,383,484.09
Less: Non-operating expense 814,599.62 951,674.57
III. Total Profit (Loss is listed with
245,504,297.17 105,466,090.74
“-”)
Less: Income tax expense 53,584,198.21 18,268,700.58
IV. Net profit (Net loss is listed with
191,920,098.96 87,197,390.16
“-”)
(i) Net profit of continuous
191,920,098.96 87,197,390.16
operating (Net loss is listed with “-”)
(ii) Net profit of business
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Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
termination (Net loss is listed with “-”)
V. Net after-tax of other comprehensive
-3,297,445.81 52,650,206.26
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
subsequently to profit and loss
(II) Other comprehensive income
items which will be reclassified -3,297,445.81 52,650,206.26
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 -3,297,445.81 52,650,206.26
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 188,622,653.15 139,847,596.42
VII. Earnings per share:
(i) Basic earnings per share
(ii) Diluted earnings per share
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Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
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 9,450,627,576.50 7,972,457,319.63
services
Net increase of customer deposit
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 83,390,509.60
Other cash received concerning
320,117,399.23 93,832,179.82
operating activities
Subtotal of cash inflow arising from 9,854,135,485.33 8,066,289,499.45
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Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
operating activities
Cash paid for purchasing
commodities and receiving labor 6,982,082,806.31 5,644,642,190.50
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 1,703,025,818.36 1,436,820,991.02
Taxes paid 236,740,986.35 244,682,396.26
Other cash paid concerning
73,387,711.43 90,990,076.71
operating activities
Subtotal of cash outflow arising from
8,995,237,322.45 7,417,135,654.49
operating activities
Net cash flows arising from operating
858,898,162.88 649,153,844.96
activities
II. Cash flows arising from investing
activities:
Cash received from recovering
investment
Cash received from investment
566,011.27
income
Net cash received from disposal of
fixed, intangible and other long-term 60,179,426.82
assets
Net cash received from disposal of
subsidiaries and other units
Other cash received concerning
investing activities
Subtotal of cash inflow from investing
60,179,426.82 566,011.27
activities
Cash paid for purchasing fixed,
1,861,780,571.74 1,059,487,773.58
intangible and other long-term assets
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Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
Cash paid for investment
Net increase of mortgaged loans
Net cash received from
308,439.57
subsidiaries and other units obtained
Other cash paid concerning
23,033.18 214,526.52
investing activities
Subtotal of cash outflow from investing
1,862,112,044.49 1,059,702,300.10
activities
Net cash flows arising from investing
-1,801,932,617.67 -1,059,136,288.83
activities
III. Cash flows arising from financing
activities
Cash received from absorbing
investment
Including: Cash received from
absorbing minority shareholders’
investment by subsidiaries
Cash received from loans 1,068,235,943.70 400,000,000.00
Cash received from issuing bonds
Other cash received concerning
424,203,461.76 430,793,362.96
financing activities
Subtotal of cash inflow from financing
1,492,439,405.46 830,793,362.96
activities
Cash paid for settling debts 296,942,824.00 628,730,526.71
Cash paid for dividend and profit
28,011,548.45 41,066,887.26
distributing or interest paying
Including: Dividend and profit of
minority shareholder paid by
subsidiaries
Other cash paid concerning
112,793,486.52 93,634,945.60
financing activities
Subtotal of cash outflow from financing
437,747,858.97 763,432,359.57
activities
Net cash flows arising from financing
1,054,691,546.49 67,361,003.39
activities
IV. Influence on cash and cash
equivalents due to fluctuation in 16,694,919.05 -5,305,321.08
exchange rate
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Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
V. Net increase of cash and cash
128,352,010.75 -347,926,761.56
equivalents
Add: Balance of cash and cash
543,584,920.30 791,255,686.65
equivalents at the period -begin
VI. Balance of cash and cash
671,936,931.05 443,328,925.09
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
activities:
Cash received from selling
commodities and providing labor 9,421,086,850.96 7,965,655,251.76
services
Write-back of tax received 83,390,509.60
Other cash received concerning
349,582,900.65 93,792,156.77
operating activities
Subtotal of cash inflow arising from
9,854,060,261.21 8,059,447,408.53
operating activities
Cash paid for purchasing
commodities and receiving labor 7,022,673,608.38 5,638,597,494.55
service
Cash paid to/for staff and workers 1,673,930,736.16 1,423,542,158.40
Taxes paid 228,550,946.55 242,626,945.20
Other cash paid concerning
73,047,402.40 92,973,776.76
operating activities
Subtotal of cash outflow arising from
8,998,202,693.49 7,397,740,374.91
operating activities
Net cash flows arising from operating
855,857,567.72 661,707,033.62
activities
II. Cash flows arising from investing
activities:
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Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
Cash received from recovering
investment
Cash received from investment
566,011.27
income
Net cash received from disposal of
fixed, intangible and other long-term 60,179,426.82
assets
Net cash received from disposal of
subsidiaries and other units
Other cash received concerning
investing activities
Subtotal of cash inflow from investing
60,179,426.82 566,011.27
activities
Cash paid for purchasing fixed,
1,860,537,911.36 1,059,184,965.65
intangible and other long-term assets
Cash paid for investment
Net cash received from
308,439.57
subsidiaries and other units
Other cash paid concerning
23,033.18 214,526.52
investing activities
Subtotal of cash outflow from investing
1,860,869,384.11 1,059,399,492.17
activities
Net cash flows arising from investing
-1,800,689,957.29 -1,058,833,480.90
activities
III. Cash flows arising from financing
activities
Cash received from absorbing
investment
Cash received from loans 1,068,235,943.70 400,000,000.00
Cash received from issuing bonds
Other cash received concerning
424,203,461.76 430,793,362.96
financing activities
Subtotal of cash inflow from financing
1,492,439,405.46 830,793,362.96
activities
Cash paid for settling debts 296,942,824.00 628,730,526.71
Cash paid for dividend and profit
28,011,548.45 41,066,887.26
distributing or interest paying
Other cash paid concerning 112,793,486.52 93,634,945.60
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Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
financing activities
Subtotal of cash outflow from financing
437,747,858.97 763,432,359.57
activities
Net cash flows arising from financing
1,054,691,546.49 67,361,003.39
activities
IV. Influence on cash and cash
equivalents due to fluctuation in 16,694,919.05 -5,305,321.08
exchange rate
V. Net increase of cash and cash
126,554,075.97 -335,070,764.97
equivalents
Add: Balance of cash and cash
516,216,370.03 761,645,065.66
equivalents at the period -begin
VI. Balance of cash and cash
642,770,446.00 426,574,300.69
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
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 capita reserve ry hensive reserve general d profit interests equity
red Other reserve
l shares income risk
stock
securi
ties
400,00 3,127,7 4,253,1
I. Balance at the 75,410, 178,494 471,457
0,000. 78,550. 41,013.
end of the last year 363.70 ,839.48 ,259.99
00 76 93
Add:
Changes of
accounting policy
Error
correction of the
17
Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
last period
Enterprise
combine under
the same control
Other
II. Balance at the 400,00 75,410, 178,494 471,457
3,127,7 4,253,1
beginning of this 0,000. 78,550. 41,013.
363.70 ,839.48 ,259.99
year 00 76 93
III. Increase/
Decrease in this -3,297,4 103,730 100,433
year (Decrease is 45.81 ,704.65 ,258.84
listed with “-”)
(i) Total -3,297,4 203,730 200,433
comprehensive
45.81 ,704.65 ,258.84
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
-100,00 -100,00
(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 -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
18
Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
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 3,231,5 4,353,5
75,410, 175,197 471,457
end of the report 0,000. 09,255. 74,272.
363.70 ,393.67 ,259.99
period 00 41 77
Last Period
In RMB
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 reserve ry hensive reserve general d profit equity
capita reserve s
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
19
Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
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 46,614, 48,032, 322,320 416,968
year (Decrease is 777.72 932.35 ,475.80 ,185.87
listed with “-”)
(i) Total 46,614, 490,353 536,968
comprehensive
777.72 ,408.15 ,185.87
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
-168,03 -120,00
(III) Profit 48,032,
2,932.3 0,000.0
distribution 932.35
5 0
1. Withdrawal of 48,032, -48,032,
surplus reserves 932.35 932.35
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
20
Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
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 3,127,7 4,253,1
75,410, 178,494 471,457
end of the report 0,000. 78,550. 41,013.
363.70 ,839.48 ,259.99
period 00 76 93
Legal Representative: Sun Xiujiang
Person in charge of Accounting Works: Xu Guojian
Person in charge of Accounting Institution: Zhou Shoubin
8. Statement of Changes in Owners’ Equity (Parent Company)
This Period
In RMB
This Period
Other
equity instrument
Other Total
Item Perpetu Less:
Share Capital comprehe Reasonab Surplus Retaine
al Inventory owners’
capital Preferre reserve nsive le reserve reserve d profit
capital Other shares equity
d stock income
securiti
es
3,091,6
I. Balance at the 400,000, 86,911,16 178,494,8 470,796,5 4,227,866
63,485.
end of the last year 000.00 8.71 39.48 55.46 ,049.56
91
Add: Changes
of accounting
policy
Error
correction of the
last period
21
Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
Other
II. Balance at the 400,000, 3,091,6
86,911,16 178,494,8 470,796,5 4,227,866
beginning of this 63,485.
000.00 8.71 39.48 55.46 ,049.56
year 91
III. Increase/
Decrease in this -3,297,44 91,920, 88,622,65
year (Decrease is 5.81 098.96 3.15
listed with “-”)
(i) Total -3,297,44 191,920 188,622,6
comprehensive
5.81 ,098.96 53.15
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
-100,00
(III) Profit -100,000,
0,000.0
distribution 000.00
0
1. Withdrawal of
surplus reserves
2. Distribution for -100,00
-100,000,
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
22
Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
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, 3,183,5
86,911,16 175,197,3 470,796,5 4,316,488
end of the report 83,584.
000.00 8.71 93.67 55.46 ,702.71
period 87
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
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 46,614,77 48,032,93 312,296 406,944,1
year (Decrease is 7.72 2.35 ,391.19 01.26
listed with “-”)
(i) Total 46,614,77 480,329 526,944,1
comprehensive
7.72 ,323.54 01.26
income
(ii) Owners’
devoted and
23
Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
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
-168,03
(III) Profit 48,032,93 -120,000,
2,932.3
distribution 2.35 000.00
5
1. Withdrawal of 48,032,93 -48,032,
surplus reserves 2.35 932.35
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, 86,911,16 178,494,8 470,796,5 3,091,6 4,227,866
end of the report 000.00 8.71 39.48 55.46 63,485. ,049.56
24
Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
period 91
Legal Representative: Sun Xiujiang
Person in charge of Accounting Works: Xu Guojian
Person in charge of Accounting Institution: Zhou Shoubin
25
Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
Shandong Airlines Co., Ltd.
Notes to the Financial Statements
As at 30th June 2018
(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
Place of registration: Shandong Jinan Yaoqiang International Airport
26
Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
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 and the subsidiaries mainly operate in the industry of air transportation.
Note 2 Basis for preparation of the financial statements
1. Bacis for preparation
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 42 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 2018.
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 formulate a number of specific
27
Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
accounting policies and accounting estimates for the revenue recognition and other transactions in accordance with the actual features of
production and management, and the relevant provisions of the Accounting Standards. 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
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
28
Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
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
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 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
29
Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
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
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 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
30
Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
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
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.
31
Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
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
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 realizable value 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
arerecognized fully by the Company.When there is evidence of a reduction in the net realizable value 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.
In the preparation of consolidated financial statements involving overseas operations, if there is a monetary item in foreign currency which
essentially constitutes a net investment in overseas operation, the exchange difference arising from exchange rate fluctuation will be included in
other comprehensive income. When disposal of overseas operations, it will be transferred to the current profit or loss.
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.
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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 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, reference to the current fair value of
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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 recognized 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 personnel. 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 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.
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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 measured by amortization pricing method, which is that the beginning recognized amount minus the already
paid principal, plus or minus the accumulated amortization which is the amortization amount from the difference between the beginning recognized
amount and maturity amount using the actual interest rate method, and deduct the impairment losses. It’s ending cost of the period is its initial
acquisition cost.
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 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
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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 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
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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
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
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(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.
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
Categories by nature of receivables recognized 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.
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Provisions for difference portfolios:
Item Provision
Categories by nature of receivables Percentage of carrying amount
a. 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
Categories 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
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
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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 Assets and disposal groups held for sale
The company classify an asset or disposal group as held for sale if its carrying amount will be recovered principally through a sale transaction
rather than through continuing use. Specific standards are as follows, which should be satisfied at the same time: the asset is immediately sellable
at its current condition according to the practice; the company has completed official decision to dispose the asset and has acquired firm
purchasing commitments; and the sales will be completed within one year. The disposal group refers to a group of assets that are sold as a whole
or disposed of in a transaction as a whole, and the liabilities directly related to those assets transferred in the transaction at the same time. If the
assets group or asset group combination of the disposal group share the goodwill obtained in the business combination according to CAS 8 - Asset
Impairment, and the disposal group shall include the goodwill allocated to the disposal group.
Non-current assets held for sale and disposal group,which the company's initial measurement or remeasurement on the date of the balance sheet
divided into, if the book value is higher than the fair value deducting the sale cost, it’s book value will be witten down to the fair value deducting the
sale cost , in addition the reduced amount is recognized as impairment loss included in the current profits and losses, while accruing the provision
for impairment of assets held for sale. For the disposal group, confirmed asset impairment losses, will reduce the book value of the goodwill of a
disposal group first, then reduce the book value of the non-current assets proportionally applying to CAS 42 - Non-Current Assets Held For Sale,
the Disposal group and Discontinued Operations (hereinafter referred to as the "held for sale rule") . With the fair value deducting the sale cost of
the disposal assets held for sale increasing on the date of the balance sheet, the deducted amount shoud be recovered accordingly Within the
relevant scope. The recovering amount is included in the profits and losses of the current period, and the book value is increased proportionally
according to the proportion of the book value of the non-current assets stipulated in the rules for sale in addition to the goodwill in the disposal
group. The deductible book value of goodwill and the asset impairment losses that are applied to the standards of assets for sale shall not be
recovered before they are classified as holding assets for sale.
Depreciation or amortization of non- current assets held for sale or disposal group are not raised. The interest of liabilities and other expenses in
the disposal group held for sale will continue to be confirmed. When the non- current assets or disposal groups no longer meet the
conditions of assets held for sale categories, the company will no longer divide that into assets held for sale categories or will remove that from the
disposal of non- current assets held for sale, and measured by the lower amount: (1) the book value before being classified as held for sale
category, and adjusted of the depreciation, amortization or impairment according to the assumption not being classified as held for sale. (2)
recoverable amount.
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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
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 recognized 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. Where a business combination under common control is achieved by multiple
acquisition of the acquiree's shareholding, the multiple acquisitions shall be assessed to determine whether the multiple acquistions shall be viewed
as "a package deal". If the multiple acquistions shall be viewed as "a package deal", the multiple acquistions shall be accounted for as one single
transaction accordingly. If the multiple acquisitions shall not be viewed as "a package deal", the difference between the cost of combination and the
sum of the book value of the investment in the acquiree immediately before the combination and the book value of the consideration transferred to
acquire additional shareholding is adjusted to capital reserves, and retained earnings if capital reserves is insufficient. Cumulative other
comprehensive income associated with the investment recognized as a result of the treatment of equity method or available-for-sale financial
assets prior to the combination is not affected by the combination.
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.
Through multiple transactions to obtain the shares of the merged party step by step, and ultimately the enterprise merger under the different control
is formed, which should be dealt with differently whether it belongs to "a package deal". If it belongs to "a package deal", all transactions should be
dealt as a transaction of acquiring the control. If not, the initial investment cost of the long-term equity investment which is changeably measured by
the cost method is calculated according to the sum of the book value of the original investor's equity plus the new investment cost. The original
ownership is measured by equity method, and the other comprehensive income is not carried on an accountancy processing. The difference
between the fair value and the book value of the original holding equity investment which is financial assets held for the sale, as well as the
accumulated change of the fair value which is entered into the other comprehensive income before, will be transferred into the current profit and
loss.
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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 recognized 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. For the implementation of major influence or common control but failng to reach control through
additional investment over the invested entity, the cost of the long-term equity investment is the sum of fair value of the original equity investment in
accordance with "the accounting standards for Enterprises No. 22 - recognition and measurement of financial instruments" and the new investment
cost.
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 recognized 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
by the Company's accounting policies and accounting period. The Company's share of unrealized profit or loss arising from related party
transactions between the Company and an associate or joint venture is deducted from investment income. Unrealized 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 recognized in profit or loss. Where assets transferred
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to an associate or joint venture form an operation, the difference between the consideration received and the book value of the assets transferred in
recognized 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
recognized as accrued liabilities and investment loss. Where the Company has unrecognized share of loss of the investee when the investee
generates net profit, the Company's unrecognized share of loss is reduced by the Company's share of net profit and when the Company's
unrecognized share or loss is eliminated in full, the Company's share of net profit, if any, is recognized as investment income.
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 recognized 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 recognized 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 recognized, 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 and recognized 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 recognized in profit or loss. Cumulative other comprehensive
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income relevant to the investment recognized, 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 recognized 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 recognized 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 recognized in profit or loss.Cumulative other comprehensive income relevant to the investment recognized, 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 recognized 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. Fixed assets are only confirmed when the related economic benefits are likely to
flow into the company and its cost can be reliably measured. The initial measurement is carried out on the basis of the cost of fixed assets and the
effect of the expected discarded cost.
4.14.2 The method for depreciation
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 20-33 5.00 2.88-4.75
Key components and power supports of aircraft
15-20 5.00 4.75-6.33
engine
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Category Expected useful life Estimated residual value(%) Depreciation(%)
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
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..19 “Impairment of long-term assets”.
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
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
“Impairment of long-term assets”.
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.
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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.
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
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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 development expenditures.
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 cannot 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 “Impairment of long-term assets”.
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
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.
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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
recognized 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 recognized 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 recognized 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,
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 recognized 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..
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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 recognized 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 recognized 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 recognized 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
specified 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.
The company's government subsidies are usually confirmed and measured by the actual amount when they are received. However for the end of
the period, if there are conclusive evidence that the relevant conditions can be meet of the financial support policy and financial support funds are
expected to receive, it should be measured according to the amount receivable. The following conditions should be meet at the same time if the
subsidies are measured by the amount receivable: (1) the amount of subsidy receivable has been confirmed by the document inssued by the
government departments, or could be reasonably estimated in accordance with the relevant provisions of its own official release of financial
resources management approach, and the expected amount of a material uncertainty which does not exist; (2)it is based on the financial support
project and financial management measures which is released officially by the local finance department with active publicity according to the
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provisions of the "Regulations on open government information". And the management measures should be inclusive (any enterprises complying
with the conditions may apply for that ), rather than specifically for specific enterprises; (3) The relevant subsidy has a clear commitment to the
allocation period, and guaranteed by corresponding financial budget, which can be received within the prescribed time limit with reasonable
guarantee; (4) other relevant conditions (if any) should be met in accordance with the specific circumstances of the company and the grant.
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 according to a systematic and reasonable method. 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.
Government subsidies including both assets-related parts and income-related parts should be treated separately. If it is difficult to separate, the
government subsidies as a whole will be classified as income-related government grants.
The government subsidies related to daily activities of the company are included inother income and gain and expenses in accordance with the
essence of economic business; if it is not related to daily activities, it will be included in non-operating income and expense.
For repayment of a government grant already recognized, if there is a related deferred income, the repayment is offset against the carrying amount
of the deferred income, and any excess is recognized in profit or loss for the period. If there are other situations, the repayment is recognized
immediately in profit or loss for the period.
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
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Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
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.
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 intoother income and gainor 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.
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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
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 recognized 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
52
Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
4.26.1 Change of accounting policies
There is no significant change of accounting policies for the company during the reporting period.
4.26.2 change of accounting estimates
There is no significant change of accounting estimates 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 actual result derived from those uncertainties in estimates may be different from the Management estimates,
which may lead significant adjustments to the carrying amounts of 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
53
Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
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.
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
54
Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
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.
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 (11% of the taxable revenue) and
deductible input tax for the period, and the tax rates are 6%, 10% or 16%. The output tax is
Value added tax
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 turnover tax.
Education surcharge Education surcharge is calculated at 3% of turnover tax.
Local education Surcharge Local education Surcharge is calculated at 2% of turnover tax.
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Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
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 (11% of the taxable revenue) and
deductible input tax for the period, and the tax rates are 6%, 10% or 16%. The output tax is
Value added tax
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 turnover tax.
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) and Announcement of the State Administration of
Taxation on the enterprise income tax on the in-depth implementation of the development strategy of the western region of China"(《国家税务总
局关于深入实施西部大开发战略有关企业所得税问题的公告》 (State Administration of Taxation [2012]12), the Chongqing branch of the
company 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%.
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. According to the Announcement of the State Administration of Taxation on the enterprise income tax on the in-depth implementation of the
development strategy of the western region of China"(《国家税务总局关于深入实施西部大开发战略有关企业所得税问题的公告》)
(State Administration of Taxation [2012]12), the Chongqing branch of the company Conforming to the conditions for the development and relief of
the western development, can get a reduced rate of 15% to pay corporate income tax.
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Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
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 2018", "30th June 2018", "the date ended June 30th 2018", and "the date ended June 30th 2017" respectively.
6.1 Monetary funds
Item C/f B/f
Cash at hand: 336,602.84 372,046.44
Bank deposit: 671,600,328.21 543,212,873.86
其他货币资金 100,000.00
Total 672,036,931.05 543,584,920.30
Including: the total amount of deposit abroad 11,410,755.02 2,495,063.57
6.2 Notes receivables
Item C/f B/f
Bank acceptance 115,000.00
Total 115,000.00
6.3 Accounts receivables
6.3.1 Disclosure by category
C/f
Category Carrying amount Allowance for bad debt
Book value
Amount % Amount %
Accounts receivable of individual significance and
378,671,308.11 57.04 378,671,308.11
subject to individual impairment assessment
Accounts receivable subject to impairment assessment
237,694,669.81 35.81 11,884,733.49 5.00 225,809,936.32
by credit risk characteristics of a portfolio
Accounts receivable of individual insignificance but
47,471,797.10 7.15 10,823,117.90 22.80 36,648,679.20
subject to individual impairment assessment
Total 663,837,775.02 100.00 22,707,851.39 3.42 641,129,923.63
(Continued)
B/f
Category Carrying amount Allowance for bad debt
Book value
Amount % Amount %
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Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
B/f
Category Carrying amount Allowance for bad debt
Book value
Amount % Amount %
Accounts receivable of individual significance and
354,888,680.81 62.18 354,888,680.81
subject to individual impairment assessment
Accounts receivable subject to impairment assessment
180,164,301.95 31.57 9,008,215.10 5.00 171,156,086.85
by credit risk characteristics of a portfolio
Accounts receivable of individual insignificance but
35,683,549.52 6.25 10,823,117.90 30.33 24,860,431.62
subject to individual impairment assessment
Total 570,736,532.28 100.00 19,831,333.00 3.47 550,905,199.28
① Accounts receivable of individual significance and subject to individual impairment assessment
C/f
Debtor Allowance for Rate of allowance
Carrying amount Reason for allowance
bad debt (%)
No indication of impairment upon
Air China
231,465,246.54 individual assessment
No indication of impairment upon
Accounting Center of China Aviation
77,275,990.63 individual assessment
No indication of impairment upon
BSP-CHINA
69,930,070.94 individual assessment
Total
378,671,308.11
② Accounts receivable subject to impairment assessment by portfolio
C/f
Portfolio
Carrying amount Allowance for bad debt Rate of allowance(%)
Portfolio by nature 237,694,669.81 11,884,733.49 5.00
Total 237,694,669.81 11,884,733.49 5.00
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Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
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
No indication of impairment upon
BSP-Other areas(notes) 27,809,258.84
individual assessment
impairment upon individual
Debtor #1 8,057,209.85 8,057,209.85 100.00
assessment
No indication of impairment upon
UATP 5,826,578.74
individual assessment
No indication of impairment upon
ARC 2,993,941.62
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
Taikoo (Shandong) Aircraft No indication of impairment upon
18,900.00
Engineering Company Limited individual assessment
Total 47,471,797.10 10,823,117.90 22.80
Notes: BSP-Other areas(notes) includes TAIWAN、KOREA、JAPAN、Hong Kong、Australia、Russia、Canada、THAILAND、GERMANY、
CAMBODIA、Vietnam、Singapore、Indonesia、Philippines etc.
6.3.2 Recognisation, recovery or reversal of allowance for bad debt
The amount of allowance for bad debts recognized during the year is CNY2,876,518.39. No recovery or return to bad debts during the year.
6.3.3 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 450,460,380.12, accounting for
67.86% of the total accounts receivable as at the end of current period, the total corresponding allowance for bad debts is CNY3,589,453.60.
6.4 Prepayments
6.4.1 Disclosure by age
C/f B/f
Age
Amount % Amount %
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Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
Within 1 year 235,777,815.29 99.29 221,571,912.67 99.50
1 to 2 years 75,011.61 0.03 343,453.93 0.15
2 to 3 years 50,862.40 0.02
Over 3 years 739,935.31 0.68 722,054.66 0.33
Total 236,592,762.21 100.00 222,688,283.66 100.00
6.4.2 Details of top five prepayments
The total amount of top five prepayments as at the end of current period is CNY 71,572,756.75, accounting for 30.25% of the total advance to
suppliers.
6.5 Dividends receivable
Item C/f B/f
TravelSky Technology Limited 3,300,511.50
Sichuan Airlines 13,907,600.00
Total 17,208,111.50
6.6 Other receivables
6.6.1 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 632,496,131.45 83.13 104,092,637.05 16.46 528,403,494.40
impairment assessment
Other receivables subject to subject
to impairment assessment by credit 102,455,267.77 13.47 5,122,763.39 5.00 97,332,504.38
risk characteristics of a portfolio
Other receivables of individual
insignificance but subject to 25,828,760.94 3.40 25,828,760.94
individual impairment assessment
Total 760,780,160.16 100.00 109,215,400.44 14.36 651,564,759.72
(Continued)
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Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
B/f
Category Carrying amount Allowance for bad debt
Book value
Amount % Amount %
Other receivables of individual
significance and subject to individual 397,069,459.88 86.85 106,076,302.93 26.71 290,993,156.95
impairment assessment
Other receivables subject to subject to
impairment assessment by credit risk 34,890,352.33 7.63 1,744,517.62 5.00 33,145,834.71
characteristics of a portfolio
Other receivables of individual
insignificance but subject to individual 25,213,889.75 5.52 25,213,889.75
impairment assessment
Total 457,173,701.96 100.00 107,820,820.55 23.58 349,352,881.41
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 (%)
No indication of impairment upon
Debtor #1 240,408,217.55
individual assessment
No indication of impairment upon
Debtor #2 188,458,587.08
individual assessment
impairment assessment by
Shandong Rainbow Commercial Jet Co., Ltd. 101,551,717.65 101,551,717.65 100.00
portfolio
No indication of impairment upon
Debtor #3 51,259,221.25
individual assessment
impairment assessment by
Debtor #4 50,818,387.92 2,540,919.40 5.00
portfolio
Total 632,496,131.45 104,092,637.05 16.46
② Other receivables subject to impairment assessment by portfolio
Portfolio C/f
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Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
Carrying amount Allowance for bad debt Rate of allowance(%)
Portfolio by nature 102,455,267.77 5,122,763.39 5.00
Total 102,455,267.77 5,122,763.39 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
Shandong Air New Media Co., Ltd. 8,592,004.83
individual assessment
No indication of impairment upon
Air China 5,351,637.31
individual assessment
No indication of impairment upon
Debtor #1 4,238,588.20
individual assessment
No indication of impairment upon
Debtor #2 2,231,370.88
individual assessment
No indication of impairment upon
Debtor #3 2,062,200.00
individual assessment
Shandong Airlines Rainbow Auto Service No indication of impairment upon
1,067,569.83
Co., Ltd. individual assessment
No indication of impairment upon
Debtor #4 756,396.92
individual assessment
No indication of impairment upon
Debtor #5 603,748.64
individual assessment
No indication of impairment upon
Debtor #6 553,166.41
individual assessment
No indication of impairment upon
Shandong XiangYu Air Technology Co., Ltd. 154,996.52
individual assessment
No indication of impairment upon
Kunming Airlines Ltd 98,760.00
individual assessment
Aircraft Maintenance and Engineering 66,290.58 No indication of impairment upon
62
Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
C/f
Debtor Allowance for bad Rate of allowance
Carrying amount Reason for allowance
debt (%)
Corporation (Ameco Beijing) individual assessment
No indication of impairment upon
Dalian airlines limited liability company 45,302.00
individual assessment
Taikoo (Shandong) Aircraft Engineering No indication of impairment upon
6,728.82
Company Limited individual assessment
Total 25,828,760.94
6.6.2 Recognization, recovery or reversal of allowance for bad debt
The amount of allowance for bad debts recognized during the year is CNY1,394,579.89. No recovery or return to bad debts during the year.
6.6.3 Disclosure by nature
Category C/f B/f
Deposits 61,704,692.30 220,843,044.40
Others 699,075,467.86 236,330,657.56
Total 760,780,160.16 457,173,701.96
6.6.4 Top five other receivables
Allowance for bad
Debtor Nature C/f Aging %
debt
Debtor #1 Others 240,408,217.55 Within 1 year 31.59
Debtor #2 Others 188,458,587.08 Within 1 year
24.77
Shandong Rainbow Commercial Jet Co., Ltd. Others 101,551,717.65 Over 5 years 13.35 101,551,717.65
Debtor #3 Deposits 51,259,221.25 Within 1 year
6.74
Debtor #4 Others 50,818,387.92 Within 2 years 2,540,919.40
6.68
Total 632,496,131.45 83.13 104,092,637.05
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Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
6.7 Inventories
C/f
Type
Gross carrying amount Impairment allowance Net carrying amount
Consumable air quipements 76,403,101.86 76,403,101.86
Low-value consumables 3,574,786.75 3,574,786.75
Materials 1,991,070.11 1,991,070.11
Total 81,968,958.72 81,968,958.72
(Continued)
B/f
Type
Gross carrying amount Impairment allowance Net carrying amount
Consumable air quipements 78,296,670.06 78,296,670.06
Low-value consumables 2,644,918.01 2,644,918.01
Materials 2,982,597.57 2,982,597.57
Total 83,924,185.64 83,924,185.64
6.8 Other current assets
Type C/f B/f
VAT deductible 264,198,444.46 185,809,122.83
Total 264,198,444.46 185,809,122.83
6.9 Financial assets available for sale
6.9.1 General information
C/f B/f
Category
Carrying amount Impairment Net carrying amount Carrying amount Impairment Net carrying amount
Available for sale equity instruments 332,981,504.99 332,981,504.99 337,378,099.40 337,378,099.40
Including: measured by fair value 251,319,404.99 251,319,404.99 255,715,999.40 255,715,999.40
measured by cost 81,662,100.00 81,662,100.00 81,662,100.00 81,662,100.00
Total 332,981,504.99 332,981,504.99 337,378,099.40 337,378,099.40
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Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
6.9.2 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 251,319,404.99 251,319,404.99
Accumulated changes in the fair value recognized into
244,629,404.99 244,629,404.99
other comprehensive income
Impairment amount
6.9.3 Financial assets available for sale measured by cost at the end of current period
Carrying amounts as at 30/06/2018 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 13,907,600.00
Jinan International
46,662,100.00 46,662,100.00 1.94
Airport
Total 81,662,100.00 81,662,100.00 13,907,600.00
6.10 Long-term equity investments
Currency year movement (+, -)
Investment gains
and losses Other comprehensive Other
Category B/f Allowance b/f Additional Investment
recognized 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.
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Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
Currency year movement (+, -)
Investment gains
and losses Other comprehensive Other
Category B/f Allowance b/f Additional Investment
recognized under income changes
investment reduction
the equity adjustment in equity
method
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 recognized
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
6.11 Fixed assets
6.11.1 General information
Houses and Aircrafts and High-value Transportation
Items Others Total
buildings engines rotables vehicles
1. Cost:
377,594,811.74 10,922,824,621.03 691,140,145.86 75,980,815.47 207,236,294.61 12,274,776,688.71
1.1 Balance as at 31/12/2017
486,190,433.12 53,134,909.55 2,334,174.22 8,116,954.56 549,776,471.45
1.2 Increased in current period
435,469,324.55 53,134,909.55 2,334,174.22 8,116,954.56 499,055,362.88
(1) Purchase
(2) Transferred from
50,721,108.57
50,721,108.57
construction in-progress
(3) Transferred from merger
and acquisitions
(4) Others
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Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
Houses and Aircrafts and High-value Transportation
Items Others Total
buildings engines rotables vehicles
1.3 Decreased in
159,326,254.40 79,419,771.61 1,524,390.79 2,156,801.94 242,427,218.74
current period
159,326,254.40 79,419,771.61 1,524,390.79 2,156,801.94 242,427,218.74
(1) Disposal or scrap
(2) Others
377,594,811.74 11,249,688,799.75 664,855,283.80 76,790,598.90 213,196,447.23 12,582,125,941.42
1.4 Balance as at 30/06/2018
2. Accumulated Depreciation
100,929,753.95 4,842,737,027.50 260,938,213.01 45,330,057.88 117,972,021.16 5,367,907,073.50
2.1 Balance as at 31/12/2017
6,198,434.94 363,627,509.55 18,347,615.33 3,044,317.15 8,335,283.88 399,553,160.85
2.2 Increased in current period
6,198,434.94 363,627,509.55 18,347,615.33 3,044,317.15 8,335,283.88 399,553,160.85
(1) Accrual
128,816,921.52 56,460,337.70 1,315,470.88 1,990,016.91 188,582,747.01
2.3 Decreased in current period
128,816,921.52 56,460,337.70 1,315,470.88 1,990,016.91 188,582,747.01
(1) Disposal or scrap
(2) Others
2.4. Balance as at 30/06/2018 107,128,188.89 5,077,547,615.53 222,825,490.64 47,058,904.15 124,317,288.13 5,578,877,487.34
3. Impairment allowance
3.1 Balance as at 31/12/2017 2,226,347.07 2,226,347.07
3.2 Increased in current period
(1) Accrual
3.3 Decreased in current period 231,725.75 231,725.75
(1) Disposal or scrap 231,725.75 231,725.75
(2) Others
3.4 Balance as at 30/06/2018 1,994,621.32 1,994,621.32
4. Carrying amount
4.1 Carrying amount as at 30/06/2018 270,466,622.85 6,172,141,184.22 440,035,171.84 29,731,694.75 88,879,159.10 7,001,253,832.76
4.2 Carrying amount as at 31/12/2017 276,665,057.79 6,080,087,593.53 427,975,585.78 30,650,757.59 89,264,273.45 6,904,643,268.14
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Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
6.11.2 Fixed assets acquired under financial leases
Category Cost Accumulated Depreciation Impairment allowance Carrying amount
Aircrafts and engines 2,878,568,663.33 1,188,694,371.18 1,689,874,292.15
Total 2,878,568,663.33 1,188,694,371.18 1,689,874,292.15
6.11.3 Fixed assets pending ownership registration
Item Carrying amount Reason for pending
Land rented from Jinan Air Control, not eligible for
Jinan cargo arrival and departure warehouses
12,158,943.16 ownership registration
Land use rights belonging to Shandong SDA Group, not
Buildings of Jinping Food Co., Ltd.
13,481,633.99 eligible for ownership registration
Impairment allowance of fixed assets is CNY 1,994,621.32 as at 30/06/2018, with no additional amount of allowance for fixed assets impairment
recognized during the year.
6.12 Construction in progress
6.12.1 General information
C/f B/f
Items Impairment Impairment
Carrying amount Net carrying amount Carrying amount Net carrying amount
allowance allowance
Factory building
146,118,195.00 146,118,195.00
180,857,577.48 180,857,577.48
project
Prepayment
2,587,447,978.67 2,587,447,978.67
3,314,613,719.40 3,314,613,719.40
for aircrafts
Construction of
3,600,507.95 3,600,507.95
1,674,056.59 1,674,056.59
information system
Total 3,497,145,353.47 3,497,145,353.47 2,737,166,681.62 2,737,166,681.62
6.12.2 Significant projects
Transferred to
Current period
Project Budget B/f fixed assets in Other decrease C/f
increase
current period
Administrative office 195,000,000.00 146,118,195.00 27,941,617.59 174,059,812.59
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Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
Transferred to
Current period
Project Budget B/f fixed assets in Other decrease C/f
increase
current period
of Xiamen branch
Aircraft asset
15,004,922,602.00 2,587,447,978.67 1,628,823,289.66 50,721,108.57 850,936,440.36 3,314,613,719.40
introduction project
Total 15,199,922,602.00 2,733,566,173.67 1,656,764,907.25 50,721,108.57 850,936,440.36 3,488,673,531.99
(Continued)
Weight of Including:
Including:Transferred Capitalisation
cost to Stage of Cumulative Including:Transferred interests
into leaseback assets rate applicable to Source of
Items date in completion interests into fixed assets during capitalized
during the current the current finance
budgeted capitalised the current period during the
period period
cost current period
Administrative
Not yet Circulating
office of 89.26
completed funds
Xiamen branch
Aircraft asset Loans from
Not
introduction 22.09 61,944,472.98 1,816,480.65 665,053.68 36,131,338.41 3.3738-3.8040 financial
Applicable
project institution
Total 61,944,472.98 1,816,480.65 665,053.68 36,131,338.41
Note: The cumulative amount of interests capitalized as at 31/12/2017 is CNY28,294,668.90, the amount of current period is CNY 36,131,338.41,
including CNY 665,053.68 transferred into fixed assets and CNY 1,816,480.65 transferred into leaseback assets during the current period, the
cumulative amount of interests capitalized as at 30/06/2018 is CNY 61,944,472.98.
6.13 Intangible assets
6.13.1 General information
Items Land rights Software Total
1. Cost:
1.1 Balance as at 31/12/2017 108,347,341.13 38,034,419.63 146,381,760.76
1.2 Increased in current period 5,365,342.86 5,365,342.86
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Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
Items Land rights Software Total
(1) Purchase 243,589.74 243,589.74
(2) Diversion of construction 5,121,753.12 5,121,753.12
1.3 Decreased in current period
(1) Disposal
1.4 Balance as at 30/06/2018 108,347,341.13 43,399,762.49 151,747,103.62
2. Accumulated amortization
2.1 Balance as at 31/12/2017 15,988,392.43 14,058,752.49 30,047,144.92
2.2 Increased in current period 1,201,791.44 2,876,213.74 4,078,005.18
(1) Accrual 1,201,791.44 2,876,213.74 4,078,005.18
2.3 Decreased in current period
(1) Disposal
2.4 Balance as at 30/06/2018 17,190,183.87 16,934,966.23 34,125,150.10
3. Impairment allowance
3.1 Balance as at 31/12/2017
3.2 Increased in current period
(1) Accrual
3.3 Decreased in current period
(1) Disposal
3.4 Balance as at 30/06/2018
4. Carrying amount
4.1 Carrying amount as at 30/06/2018 91,157,157.26 26,464,796.26 117,621,953.52
4.2 Carrying amount as at 31/12/2017 92,358,948.70 23,975,667.14 116,334,615.84
6.13.2 Land rights with pending ownership registration
No case of land rights with pending ownership registration was identified as of 30/06/2018.
6.14 Goodwill
6.14.1 General information
Investee B/f Current period Current period C/f
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Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
increase decrease
From business
Disposal
combination
Qingdao Feisheng 10,220,816.22 10,220,816.22
Shandong Jinping Food Co., Ltd. 454,020.13 454,020.13
Total 10,674,836.35 10,674,836.35
6.14.2 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
6.15 Deferred charges
Current period Current period
Item B/f Other decrease C/f
increase amortization
Pilot training 523,766,897.35 48,422,179.28 44,133,903.97 528,055,172.66
Decoration expenditure 9,060,656.59 1,546,608.48 7,514,048.11
Modification costs for aircraft
3,037,717.75 203,575.96 2,834,141.79
leasing
Total 535,865,271.69 48,422,179.28 45,884,088.41 538,403,362.56
6.16 Deferred tax assets and deferred tax liabilities
6.16.1 Deferred tax assets
C/f B/f
Item Deductible temporary Deductible temporary
Deferred tax assets Deferred tax assets
difference difference
Allowance for bad debt 131,923,251.83 32,980,812.97 127,652,153.55 31,913,038.39
Impairment allowance for fixed
1,994,621.32 498,655.33 2,226,347.07 556,586.77
assets
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Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
Fair value movement of financial
96,821.21 24,205.30 3,607,390.15 901,847.54
liabilities held for trading
Provisions 3,359,294,432.68 839,823,608.17 2,951,741,214.11 737,935,303.53
Employment benefits payable 41,013,089.87 10,253,272.47 19,525,941.56 4,881,485.39
Deferred income 26,471,292.37 6,617,823.09 28,052,113.39 7,013,028.35
Total 3,560,793,509.28 890,198,377.33 3,132,805,159.83 783,201,289.97
6.16.2 Deferred tax liabilities
C/f B/f
Item Deferred tax
Taxable temporary differences Taxable temporary differences Deferred tax liabilities
liabilities
asset evaluation increment from
Enterprise merger under the 4,955,497.99 1,238,874.50 5,216,313.67 1,304,078.422
different control
Changes in fair value of financial 244,629,404.99 61,157,351.25 249,025,999.40 62,256,499.85
assets available for sale
Total 249,584,902.98 62,396,225.75 254,242,313.07 63,560,578.27
6.17 Short-term borrowings
Type C/f B/f
Credit loans 150,000,000.00
Total 150,000,000.00
6.18 Financial liabilities measured by fair value with changes in fair value recognized in profit or loss
Item Fair value c/f Fair value b/f
Interest rate swaps 96,821.21 3,607,390.15
Total 96,821.21 3,607,390.15
The immature interest rate swaps held by the Company had a principal amount of USD 31,094,356.40 as at 30/06/2018; Bankers confirmed that
the reporting date fair value of these interest rate swaps is CNY-96,821.21.
6.19 Accounts payable
6.19.1 General information
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Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
Item C/f B/f
Aircraft maintenance costs 193,171,970.94 337,904,448.20
Fuel cost 439,054,774.36 261,755,113.61
Landing fee 472,705,205.82 465,414,727.22
Aircraft service cost 351,943,203.75 441,075,851.00
Flight catering 116,984,690.63 102,114,633.18
Computer booking fee 62,376,073.18 43,775,358.00
Lease rental 9,780,808.47 5,192,061.57
Others 314,713,450.69 274,141,895.00
Total 1,960,730,177.84 1,931,374,087.78
6.19.2 No significant account payable due for more than 1 year as at the reporting date.
6.20Advance from customers
Item C/f B/f
574,249,772.91
Ticket clearing 596,872,012.37
4,538,778.97
Advanced payment for tickets 4,622,618.61
11,373,474.70
Others 12,824,788.69
590,162,026.58
Total 614,319,419.67
6.21 Employee benefits payable
6.21.1 Disclosure by classification
Current period Current period
Item B/f C/f
increase decrease
1. Short-term employee benefits 567,105,882.00 1,403,245,772.68 1,574,909,267.41 395,442,387.27
2. Post-employment benefits 122,283,708.71 122,283,708.71
3. Termination benefits 210,178.05 210,178.05
4. Other long-term employee benefits within
one year
Total 567,105,882.00 1,525,739,659.44 1,697,403,154.17 395,442,387.27
6.21.2 Disclosure by classification of short-term employee benefits
Current period Current period
Item B/f C/f
increase decrease
73
Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
Current period Current period
Item B/f C/f
increase decrease
1. Wages, salaries and subsidies 516,052,100.09 1,245,911,007.65 1,423,395,698.33 338,567,409.41
2. Employee welfare 4,418,168.30 4,418,168.30
3. Social insurance: 52,256,732.37 52,256,732.37
Including: Medical insurance 45,056,129.47 45,056,129.47
Employment injury insurance 2,931,224.38 2,931,224.38
Maternity insurance 4,269,378.52 4,269,378.52
Disabled security payments
4.Housing provident fund 12,748.00 47,954,709.36 47,954,709.36 12,748.00
5.Labour union fee and employee
19,583,856.91
36,971,555.00 15,426,782.05 41,128,629.86
education fee
6. Short-term paid absences 31,457,177.00 15,733,600.00 31,457,177.00 15,733,600.00
7. Short-term profit-sharing plan 0.00
Total 567,105,882.00 1,403,245,772.68 1,574,909,267.41 395,442,387.27
6.21.3 Disclosure by defined contribution plan
Item B/f Current period increase Current period decrease C/f
1. Basic pension 76,878,410.23 76,878,410.23
2.Unemployment insurance 3,029,891.28 3,029,891.28
3. Annuity payment 42,375,407.20 42,375,407.20
Total 122,283,708.71 122,283,708.71
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.
6.22 Taxes and fees payable
Tax (Fee) C/f B/f
VAT 1,405,298.20 1,400,888.26
Urban construction and maintenance tax 259,528.41 223,615.34
Education surcharge 185,624.93 159,477.76
74
Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
Tax (Fee) C/f B/f
Enterprise income tax 55,753,568.36 15,769,670.61
Property tax 175,228.07 181,408.07
Land tax 193,616.52 205,460.75
Personal income tax 12,330,443.32 14,673,780.29
stamp duty 1,502,997.32 799,542.22
Civil aviation development fund 134,590,755.81 130,966,878.62
Others 22,697.01 186,068.99
Total 206,419,757.95 164,566,790.91
6.23 Interests payable
Item C/f B/f
Interest on long-term borrowings with repayment by installments 5,925,279.84 1,324,391.18
Total 5,925,279.84 1,324,391.18
6.24 Other payables
6.24.1 Disclosure by nature
Item C/f B/f
Payable for construction projects 17,664,684.93 18,457,305.62
Payable for down payments 128,388,867.75 127,273,552.52
Payables associated with aircraft purchase 3,824,549.42 3,973,086.10
Taxes deducted at source 91,940,463.54 83,689,966.95
Others 136,951,271.75 178,288,217.48
Total 378,769,837.39 411,682,128.67
6.24.2 Significant other payables due for more than 1 year
Creditor Amount Reason for pending settlement
Air China 20,000,000.00 Security deposit has not been settled yet.
Total 20,000,000.00
6.25 Non-current liabilities due within one year
Category C/f B/f
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Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
Long-term borrowings due within one year (Note 6.26) 452,665,404.00 433,674,928.00
Long-term payables due within one year (Note 6.27) 220,281,760.41 180,371,296.77
Long-term employee benefits payable due within one
8,426,345.40 8,081,000.00
year (Note 6.28)
Total 681,373,509.81 622,127,224.77
6.26 Long-term borrowings
Category C/f B/f
Secured loans 1,400,005,447.17 1,553,926,179.16
Credit loans 908,019,635.96 97,359,580.00
Less: Long-term borrowings due within one year (Note 6.25) 452,665,404.00 433,674,928.00
Total 1,855,359,679.13 1,217,610,831.16
Note: ① Class and amount of mortgage assets see Note 6.52 assets with imposed restriction on ownership.
② Interest rates as at 30/06/2018 of the above-mentioned long-term borrowings range from 2.5249%-4.4249%.
6.27 Long-term payables
Category C/f B/f
Financial lease rental payables 1,300,051,674.66 1,065,062,917.10
Maintenance payables for aircrafts and engines held under operating lease 3,074,615,779.31 2,717,062,560.74
Less: Financial lease rental payables due within one year (Note 6.25) 220,281,760.41 180,371,296.77
Less: Maintenance payables for aircrafts and engines held under
operating lease due within one 323,941,689.42
186,463,092.74
year (Note 1)
Total 3,967,922,600.82 3,277,812,491.65
Note : Maintenance payables for aircrafts and engines held under operating lease due within one year had been included in accounts payable.
6.28 Long-term employee benefits payable
6.28.1 General information
Item C/f B/f
Post-employment benefits-net defined benefit liability 116,454,649.42 119,031,000.00
8,426,345.40 8,081,000.00
Less: long-term staff remuneration payable due within one year (Note 6.25)
76
Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
Item C/f B/f
Total 108,028,304.02 110,950,000.00
6.28.2 Movements
① Defined benefit obligation
Item Current period Prior period
(1) Net Defined Benefit Asset/(Liability) at End of Prior Period 119,031,000.00 100,925,069.51
(2) Defined benefit costs recognized
into current profit or loss 1,584,500.00 1,584,500.00
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 1,584,500.00
(3) Defined benefit costs recognized
into other comprehensive income
1. Actuarial gains/(losses)
(4) Other movements 4,160,850.58 3,604,705.40
1. Settlement payment
2. Benefits Paid Directly by Employer 4,160,850.58 3,604,705.40
(5) Net defined benefit asset/(liability) at end of current period 116,454,649.42 98,904,864.11
② Actuarial Assumptions
Item 31st December, 2017 30th June, 2018
Discount Rate 4.00% 4.00%
China Life Insurance Mortality Rate 2010-2013
Mortality Rate
(Annuity)
Cost of Living Adjustments for Retired Cadres and
0.00%
Retirees
Cost of Living Adjustments for Internal Retirees 0.00%
Cost of Living Adjustments for Dependants 0.00%
6.29 Government subsidiess
77
Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
6.29.1The basic situation of the initial recognition of the government subsidies in 2018
Assets Related Income Related
Reducing Whether or
Reducing
Item Amount the book Deferred Other income and Non-operating not actually
Deferred income cost and
value of income gain income received
expense
assets
Airline subsidy 118,358,337.90 118,358,337.90 Yes
Other items 10,140,000.00 10,140,000.00 Yes
Total 128,498,337.90 128,498,337.90
6.29.2 the government subsidies Included in current period profit and loss
Reducing cost and
Item Assets/Income Related Other income and gain Non-operating income
expense
Airline subsidy Income related 118,358,337.90
Designated subsidy for HUD and
Assets related
repackage project 842,820.96
Designated subsidy for civil
Assets related
aviation energy-saving program 488,250.06
Designated subsidy for snow
Assets related
disaster 249,750.00
Other items Income related 10,140,000.00
Total 130,079,158.92
6.30 Deferred income
Current period Current period
Item B/f C/f Causes
increase decrease
The aircraft
Unrealized gains and
sale-leaseback
losses of operating lease
disposal profits and
from aircraft leaseback
83,586,189.42 19,013,112.91 3,115,485.99 99,483,816.34 losses
Designated subsidy for Asset related
990,958.34 249,750.00 741,208.34
snow disaster subsidies
78
Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
Current period Current period
Item B/f C/f Causes
increase decrease
Designated subsidy for
Asset related
civil aviation
subsidies
11,852,565.52 488,250.06 11,364,315.46
energy-saving program
Designated subsidy for
Asset related
HUD and repackage
subsidies
15,208,589.53 842,820.96 14,365,768.57
project
Total 111,638,302.81 19,013,112.91 4,696,307.01 125,955,108.71
Details of government grants:
Current period Current period decrease Asset /Income
Item B/f C/f
Related
increase (Other benefits)
Designated subsidy for snow
Asset related subsidies
disaster 990,958.34 249,750.00 741,208.34
Designated subsidy for civil
aviation energy-saving Asset related subsidies
11,852,565.52 488,250.06 11,364,315.46
program
Designated subsidy for HUD
Asset related subsidies
and repackage project 15,208,589.53 842,820.96 14,365,768.57
Total
28,052,113.39 1,580,821.02 26,471,292.37
6.31 Share capital
B/f Currency year movement (+, -) C/f
Coversion
Category Share Bonus
Amount % from Others Subtotal Amount %
issue issue
reserves
1. Shares with
restriction on
disposal
79
Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
B/f Currency year movement (+, -) C/f
Coversion
Category Share Bonus
Amount % from Others Subtotal Amount %
issue issue
reserves
1.1 State-held shares
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
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Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
B/f Currency year movement (+, -) C/f
Coversion
Category Share Bonus
Amount % from Others Subtotal Amount %
issue issue
reserves
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
6.32 Capital reserves
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
6.33 Other comprehensive income
Total amount in current period
Less: previously
After tax
recognized in other After tax
Item B/f Amount for the Less: Income tax attributable to C/f
comprehensive attributable to the
year before tax expense minority
income transferred parent company
shareholders
into profit or loss
1.Other
comprehensive
income will be
-8,274,660.07 -8,274,660.07
reclassified into
income or loss in the
future
Including:
remeasurement of
net assets or net -8,274,660.07 -8,274,660.07
liabilities of defined
benefit plans
2.Other
comprehensive 186,769,499.55 -4,396,594.41 -1,099,148.60 -3,297,445.81 183,472,053.74
income
81
Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
Total amount in current period
Less: previously
After tax
recognized in other After tax
Item B/f Amount for the Less: Income tax attributable to C/f
comprehensive attributable to the
year before tax expense minority
income transferred parent company
shareholders
into profit or loss
reclassifiable to
profit or loss in
subsequent periods
Gains and losses
from changes in fair
value of financial 186,769,499.55 -4,396,594.41 -1,099,148.60 -3,297,445.81 183,472,053.74
assets available for
sale
Total of other
comprehensive 178,494,839.48 -4,396,594.41 -1,099,148.60 -3,297,445.81 175,197,393.67
income
6.34 Surplus reserves
Current period Current period
Category B/f C/f
increase decrease
Statutory surplus reserve 471,457,259.99 471,457,259.99
Total 471,457,259.99 471,457,259.99
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.
6.35 Retained earnings
Items Current period Prior period
Pre-adjustment balance brought forward 3,127,778,550.76 2,805,458,074.96
Total adjustment to retained earnings b/f (+, -)
Retained earnings b/f after adjustment 3,127,778,550.76 2,805,458,074.96
Add: Net profit attributable to shareholders of the parent 203,730,704.65 490,353,408.15
Less: Appropriation to statutory surplus reserve 48,032,932.35
82
Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
Items Current period Prior period
Pre-adjustment balance brought forward 3,127,778,550.76 2,805,458,074.96
Appropriation to discretionary surplus reserve
General reserve
Ordinary dividends declared 100,000,000.00 120,000,000.00
Bonus issue
Balance carrying forward 3,231,509,255.41 3,127,778,550.76
6.36 Operating revenues and costs
Current period Prior period
Category
Operating revenues Operating costs Operating revenues Operating costs
Principal business 8,458,681,796.83 8,019,627,238.03 7,361,655,609.07 7,009,774,578.68
Other business 270,596,767.82 1,392,891.19 189,139,132.85 1,002,863.77
Total 8,729,278,564.65 8,021,020,129.22 7,550,794,741.92 7,010,777,442.45
6.37 Tax and surcharges
Item Current period Prior period
Urban maintenance and construction tax 1,667,845.17 5,132,027.13
Education surcharge and others 5,354,577.57 5,917,326.19
Total 7,022,422.74 11,049,353.32
Notes: Applicable rates for business tax and surcharges see Note 5 Taxation.
6.38 Sales expenses
Category Current period Prior period
Agency fees 126,855,350.48 112,513,566.00
Employment benefits 120,529,476.85 104,260,383.02
Computer booking 77,540,018.08 58,863,913.92
Online payment 18,331,136.28 15,910,504.99
System and network 6,797,220.84 17,687,307.23
Lease rental 8,031,295.30 8,067,710.47
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Category Current period Prior period
Advertisement fees 8,602,671.37 6,751,819.61
Travel expenses 2,273,329.64 2,867,765.21
BSP data processing 4,734,359.24 2,373,896.01
Administrative office expenses 2,042,889.71 1,476,762.08
Depreiciation 730,459.96 733,987.92
Sales expense of annual tickets 778,232.75 328,077.20
Others 16,281,095.89 12,668,596.52
Total 393,527,536.39 344,504,290.18
6.39 General and administrative expenses
Category Current period Prior period
Employment benefits 113,470,633.04 83,476,149.47
Lease rental 8,596,970.11 11,249,615.81
Outsourcing fee 6,840,371.69 5,237,232.81
Depreiciation 7,873,115.99 7,334,279.71
Water, electricity charges 6,359,946.07 5,009,064.83
Amortisation of intangibles 4,078,005.18 3,091,092.49
Business entertainment costs 2,261,491.60 2,657,241.98
Administrative office expenses 4,189,367.23 4,435,635.50
Technology development costs 1,456,524.25 3,181,341.72
Others 48,567,259.67 36,454,728.23
Total 203,693,684.83 162,126,382.55
6.40 Financial costs
Category Current period Prior period
Interest expenses 52,548,207.24 59,926,303.54
Less: Interest income 4,577,884.98 3,834,523.99
Exchange difference -3,892,927.19 -47,560,156.02
Bank charges and others 882,070.14 801,510.26
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Total 44,959,465.21 9,333,133.79
6.41 Loss on asset impairment
Category Current period Prior period
Allowance for bad debt 4,271,098.28 2,258,019.93
Total 4,271,098.28 2,258,019.93
6.42 Gain from changes in fair value
Source Current period Prior period
Interest rate swaps 3,510,568.94 -597,232.40
Total 3,510,568.94 -597,232.40
6.43 Investment income
Category Current period Prior period
Income from financial assets measured by fair value with changes in
fair value recognized in profit or loss -23,033.18 -479,085.84
Income from holding of financial assets available for sale 17,208,111.50 19,844,431.27
Total 17,185,078.32 19,365,345.43
6.44 Gain on disposal of non-current assets
Included in current period non-recurring
Item Current period Prior period
profit and loss
Disposal of fixed assets 26,470,970.71 24,408.34 26,470,970.71
Total 26,470,970.71 24,408.34 26,470,970.71
6.45 Other income and gain
Included in current period non-recurring
Item Current period Prior period
profit and loss
Airline subsidy 118,358,337.90 59,238,280.87 118,358,337.90
Designated subsidy for HUD and
repackage project 842,820.96 842,820.96
Energy-saving reward from
ministry of finance 188,679.25
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Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
Included in current period non-recurring
Item Current period Prior period
profit and loss
Designated subsidy for snow
disaster 249,750.00 249,750.00 249,750.00
Designated subsidy for civil
aviation energy-saving program 488,250.06 488,250.06 488,250.06
Other items 10,140,000.00 10,140,000.00
Total 130,079,158.92 60,164,960.18 130,079,158.92
6.46 Non-operating income
Included in current period
Category Current period Prior period
non-recurring profit and loss
Gain on non-current asset disposals
Government grants (notes)
Others 29,889,108.67 20,383,484.09 29,889,108.67
Total 29,889,108.67 20,383,484.09 29,889,108.67
Note: Government grants are mainly referred to subsidy income received from government departments, which was used to support the
development of aviation business. As a result of the implementation of the new guidelines, the relevant government subsidies are reported in other
income and gain, as detailed in Note 6. 45.
6.47 Non-operating expenses
Included in current period
Category Current period Prior period
non-recurring profit and loss
Loss on non-current asset disposals 531,113.22 836,956.54 531,113.22
Others 290,986.40 114,718.03 290,986.40
Total 822,099.62 951,674.57 822,099.62
6.48 Income tax expenses
6.48.1 Income tax expenses
Items Current period Prior period
Current income tax expense 164,428,600.55 114,413,329.18
Deferred tax -107,062,291.28 -95,371,009.24
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Items Current period Prior period
Total 57,366,309.27 19,042,319.94
6.48.2 Reconciliation of account profit and income tax expenses
Items Current period
Profit before tax 261,097,013.92
Income tax computed in accordance with the applicable tax rate 65,274,253.48
Impact of adjustment for prior period tax expenses -4,113,721.66
Impact of non-taxable income -4,302,027.88
Impact of non-deductible costs, expenses and losses 507,805.33
Income tax expenses 57,366,309.27
6.49 Other comprehensive income
Please see Note 6. 33 for detail.
6.50 Notes to the consolidated statement of cash flows
6.50.1 Other cash receipts relating to operating activities
Category Current period Prior period
Government grants
128,498,337.90 59,426,960.12
Interest income on bank deposit
4,577,884.98 3,834,523.99
Cash receiptes from non-operating income
29,889,108.67 20,383,484.09
Cash receiptes from operating balance
157,152,067.68 10,187,211.62
Total
320,117,399.23 93,832,179.82
6.50.2 Other cash payments relating to operating activities
Category Current period Prior period
Bank charges
882,070.14 801,510.26
Cash payments for non-operating expenses
290,986.40 114,718.03
Cash payments for operating balance
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Category Current period Prior period
44,365,617.32 62,159,661.28
Cash payments for sales and general and administrative expenses
27,849,037.57 27,914,187.14
Total
73,387,711.43 90,990,076.71
6.50.3 Other cash payments relating to investing activities
Category Current period Prior period
Cash payments of settlement of interest rate swaps
23,033.18 214,526.52
Total
23,033.18 214,526.52
6.50.4 Other cash receipts relating to financing activities
Category Current period Prior period
Cash receipts for disposal of purchase rights on aircrafts
424,203,461.76 430,793,362.96
(which became acquired under operating lease instead of purchase)
Total
424,203,461.76 430,793,362.96
6.50.5 Other cash payments relating to financing activities
Category Current period Prior period
Cash payments for aircraft financial lease rental
112,793,486.52 93,634,945.60
Total
112,793,486.52 93,634,945.60
6.51 Supplementary information to the consolidated statement of cash flows
6.51.1 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 203,730,704.65 90,093,090.83
Add: Loss on asset impairment 4,271,098.28 2,258,019.93
406,648,784.99
Depreciation of fixed assets, oil and gas assets, biological assets held for production 399,553,160.85
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Items Current period Prior period
Amortisation of intangible assets 4,078,005.18 3,091,092.49
Amortisation of Long-term deferred expenditure 45,884,088.41 42,192,188.64
Loss on non-current assets disposal (gain presented by "-" prefix) -26,470,970.71 812,548.20
Loss on scrap of fixed assets (gain presented by "-" prefix) 531,113.22
Loss on fair value changes (gain presented by "-" prefix) -3,510,568.94 597,232.40
Financial costs (gain presented by "-" prefix) 44,313,606.32 5,645,105.18
Investment loss (gain presented by "-" prefix) -17,185,078.32 -19,365,345.43
Decrease of deferred tax assets (increase presented by "-" prefix) -106,997,087.36 -95,371,009.24
Increase of deferred tax liabilities (increase presented by "-" prefix) -65,203.92
Decrease of inventories (increase presented by "-" prefix) 1,955,226.92 9,168,828.87
Decrease of operating receivables (increase presented by "-" prefix) 18,269,625.14 -282,707,697.16
Increase of operating payables (decrease presented by "-" prefix) 294,701,293.74 489,695,710.66
Others -4,160,850.58 -3,604,705.40
Net cash flows generated from operating activities 858,898,162.88 649,153,844.96
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 30/06/2018 671,936,931.05 443,328,925.09
Less: Cash as at 31/12/2017 543,584,920.30 791,255,686.65
Add: Cash equivalents as at 30/06/2018
Less: Cash equivalents as at 31/12/2017
Net increase of cash and cash equivalents 128,352,010.75 -347,926,761.56
6.51.2 Composition of cash and cash equivalents
Items C/f B/f
①Cash 671,936,931.05 543,584,920.30
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Items C/f B/f
Including: Cash at hand 336,602.84 372,046.44
Demand bank deposit 671,600,328.21 543,212,873.86
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 30/06/2018 671,936,931.05 543,584,920.30
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.
6.52 Assets with imposed restriction on ownership
Item C/f Reason of restriction
Assets pledged as security 3,175,128,806.40
Aircrafts and engines 3,175,128,806.40 Pledge as security for borrowings
Other form of restriction: 1,689,874,292.15
Aircrafts and engines 1,689,874,292.15 Assets acquired under financial lease
Total 4,865,003,098.55
6.53 Foreign currency monetary items
Translated amount as at
Item Original amount as at 30/06/2018 Foreign exchange rate
30/06/2018
Monetary funds
Including: -USD
69,235,665.79 6.6166 458,104,706.27
-CAD
10.00 4.9947 49.95
-Hwan
502,372,470.00 0.0059 2,963,997.57
-TWD
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Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
Translated amount as at
Item Original amount as at 30/06/2018 Foreign exchange rate
30/06/2018
19,603,514.27 0.2166 4,246,121.19
-HKD
8,000.00 0.8431 6,744.80
-JPY
26,793,545.00 0.0599 1,605,308.46
-THB
12,989,628.64 0.1998 2,595,327.80
Prepayments
Including: -USD
35,288,736.46 6.6166 233,491,453.64
Other receivables
Including: -USD
13,303,419.03 6.6166 88,023,402.35
Accounts payable
Including: -USD
9,115,352.72 6.6166 60,312,642.81
-EUR
5,607.31 7.6515 42,904.33
-GBP
3,082.00 8.6551 26,675.02
-JPY
10,728,642.00 0.0599 642,795.86
Other payables
Including: -USD
4,089,805.84 6.6166 27,060,609.31
Non-current liabilities due within one year
Including: -USD
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Translated amount as at
Item Original amount as at 30/06/2018 Foreign exchange rate
30/06/2018
71,795,987.45 6.6166 475,045,330.58
Long-term borrowings
Including: -USD
246,071,952.23 6.6166 1,628,159,679.13
Long-term payables
Including: -USD
53,403,347.97 6.6166 353,348,592.16
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
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)
Acquired through business
Jinnan, Jinnan, Aeronautical
Jinping food 100.00 combination not under common
Shandong Shandong food processing
control
Qingdao, Qingdao, Aeronautical Acquired through business
Qingdao food 49.70 50.30
Shandong Shandong food processing combination not under common
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Place of Place Nature Holding proportion %
Subsidiaries Acquired method
operation of registration of business Directly Indirectly
control
8.2 The equity in joint ventures and associates
8.2.1 Significant joint ventures and associates
Holding proportion % The accounting
treatment of
Place of Place Nature
joint ventures and associates investments in joint
operation of registration of business Directly Indirectly
ventures and
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, 2018/Current period Dec 31th, 2017/Prior period
Current assets 1,818,788.27 1,819,652.14
Non-current assets 23,804.60 24,172.36
Total assets 1,842,592.87 1,843,824.5
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 -165,923,220.46 -165,921,988.83
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
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Item Jun 30th, 2018/Current period Dec 31th, 2017/Prior period
Operating income
Net profit -1,503.88 -1,813.17
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 joint ventures and associates
Unrecognized losses of current
Cumulative unrecognized Cumulative unrecognized
joint ventures and associates period (Share of net profit of
losses of prior period losses of current period
current period)
Shandong Rainbow Commercial Jet Co., Ltd. -74,664,874.73 -676.75 -74,665,551.48
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 analyze the impact of reasonable and possible changes of risk variables on the
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 analyze 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
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Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
concerned with USD, and uses USD for pricing or settlement in the field of main financing business, operating leases, financing leasing. On 30
June 2018, except the following assets or liabilities in Note 6.53 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 6.26,6.27). 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 recognized 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 recognized 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
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 251,319,404.99 251,319,404.99
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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) Equity instruments investment 251,319,404.99 251,319,404.99
Total amount of assets continuous
251,319,404.99
measurement by fair value 251,319,404.99
2. Financial liabilities measured at fair value with
96,821.21 96,821.21
changes in fair value recognized in profit or loss
Interest rate swaps 96,821.21 96,821.21
Total amount of liabilities continuous
96,821.21 96,821.21
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 Continuous and noncontinuous second level for fair value measurement of the market of project, the qualitative and quantitative
information of the valuation techniques and important parameters
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 parent companies
Shareholding in the Voting right in the
Place of
parent companies Nature of operation Registered capital Company Company
registration
(%) (%)
Investment and
SDA Group Jinan management of aero 580,000,000.00 42.00 42.00
transportation
Air China Beijing Aero transportation 14,524,815,185.00 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.
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11.2 Subsidiaries
See Note 8.1 for subsidiaries.
11.3 joint ventures and associates
See Note 8.2 for joint ventures and 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
Shandong Airlines Rainbow Auto Service 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
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
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Other related party Relationship to the Company
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
Chongqing golden phoenix aviation service Co., Ltd. Controlled by major investors
Shenzhen Airport Catering Company Limited Controlled by major investors
11.5 Related party transactions
11.5.1 Purchase of goods and services
Related party Transaction Current period Prior period
Beijing Aircraft Maintenance and
Repairment 23,790,721.47 25,863,897.05
Engineering Corporation
Beijing Aircraft Maintenance and
Purchase / lease of aircraft materials 132,352.80 294,133.10
Engineering Corporation
Beijing Aircraft Maintenance and
Ground service 8,861,602.53 14,791,642.54
Engineering Corporation
Beijing Golden Phoenix Human Resources
Ground service 948,497.85 979,920.00
Service Co., Ltd.
Chengdu Fukai Aircraft Engineering
Repairment 3,191,715.93 1,831,830.31
Services Limited
Shandong Air New Media Co., Ltd. Aircraft offerings and advertising fees 6,609,748.39 3,494,970.00
Shandong Airlines Rainbow Auto Service
Irregular flight expenditure 311,460.00
Co., Ltd.
Shandong Airlines Rainbow Auto Service
Shuttle bus fee 37,473,015.00
Co., Ltd.
Taikoo (Shandong) Aircraft Engineering Aircraft maintenance 63,241,646.33 50,826,981.46
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Shandong Airlines Co., Ltd. 2018 Semi-Annual Financial Report
Related party Transaction Current period Prior period
Company Limited
Taikoo (Shandong) Aircraft Engineering Measurement fee for measuring
119,155.29
Company Limited instruments
Shandong XiangYu Air Technology Co., Ltd. Repairment 26,495,726.50 38,996,267.68
Shandong XiangYu Air Technology Co., Ltd. Purchase / lease of aircraft materials 16,035.36 13,705.00
SDA Group Office lease rental and catering 15,563,685.19 13,739,607.74
SDA Group Irregular flight expenditure 32,740.00
SDA Group Group fee 6,850,000.00
Shenzhen Airlines Co., Ltd. Agency service 1,569,683.70 1,355,884.53
Shenzhen Airlines Co., Ltd. Purchase / lease of aircraft materials 77,366.20
Shenzhen Airlines Co., Ltd. Catering 778,267.42 821,436.08
Shenzhen Airlines Co., Ltd. Ground service 105,800.00 82,320.00
Sichuan International Aero Engine
Repairment 69,304,693.34 3,485,554.10
Maintenance Co., Ltd.
Air China Ground service 7,704,204.49 7,888,336.36
Air China Purchase / lease of aircraft materials 2,295,962.83 186,711.99
Air China Agency service 15,013,495.74 5,458,596.51
Air China Irregular flight expenditure 11,648,333.78 4,647,528.32
Air China Cargo Co., Ltd. Ground service 3,693,595.62 1,375,854.32
Kunming Airlines Co., Ltd Agency service 7,349.43
Total 305,759,488.99 176,212,543.29
11.5.2 Sales of goods and vendering of services
Related party Transaction Current period Prior period
Beijing Aircraft Maintenance and
Sale /rent of aircraft materials 89,192.04 343,536.05
Engineering Corporation
Dalian Airlines Co., Ltd. Ground service 492,068.00 63,737.09
Dalian Airlines Co., Ltd. Irregular flight expenditure 19,060.73 20,780.00
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Related party Transaction Current period Prior period
Kunming Airlines Co., Ltd Ground service 37,500.00
Kunming Airlines Co., Ltd Locomotive service income 22,773.59
Kunming Airlines Co., Ltd Agency service 8,930.09
Shandong Air New Media Co., Ltd. Media resource fee 5,640,000.00 6,050,000.00
Taikoo (Shandong) Aircraft Engineering
Sale of aircraft materials 127,361.16 114,470.12
Company Limited
Shandong XiangYu Air Technology Co., Ltd. Sale of aircraft materials 136,343.25 338,955.30
Shenzhen Airlines Co., Ltd. Agency service 683,627.58 740,562.00
Shenzhen Airlines Co., Ltd. Ground service 84,900.00 51,200.00
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 44,696.19 26,337.00
Air China Ground service 2,519,550.67 939,820.29
Simulator maintenance / House rental
Air China 1,719,132.11 2,242,714.29
income
Air China Sale /rent of aircraft materials 28,337.05 12,906.84
Air China Irregular flight expenditure 37,220.00
Air China Agency service 1,428,144.75 2,425,297.00
Air China Catering 39,379.30
Air China Cargo Co., Ltd. Cargo income 606,293.84 2,117,233.31
Air China Cargo Co., Ltd. Warehouse rent income 2,641.51
Total 13,729,931.86 15,583,006.04
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 30/06/2018 CNY
236,800,000.00
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11.5.4 Remuneration to key management personel
Item Current period Prior period
Remuneration to key management personel CNY 6.7757 million CNY 5.8623 million
11.5.5 Other related party transactions
Related party Transaction Current period Prior period
Air China Wet lease 93,266,177.00
Air China Code sharing 2,548,476.84
Air China Frequent flyer cooperation 50,000,000.00 36,000,000.00
Air China Cargo Co., Ltd. Code sharing for cargo 2,968,207.05 2,216,952.30
Total 55,516,683.89 131,483,129.30
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 231,465,246.54 226,488,421.70
Taikoo (Shandong) Aircraft Engineering Company
18,900.00 18,400.00
Limited
Total 231,484,146.54 226,506,821.70
Other receivables
Air China 5,351,637.31 5,799,073.26
Shenzhen Airlines Co., Ltd. 100,100.00
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. 154,996.52 402.45
Taikoo (Shandong) Aircraft Engineering Company
6,728.82 188,945.11
Limited
Shandong Air New Media Co., Ltd. 8,592,004.83 2,952,004.83
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C/f B/f
Related party Allowance for bad Allowance for bad
Carrying amount Carrying amount
debt debt
Beijing Aircraft Maintenance and
66,290.58 7,745.32
Engineering Corporation
Dalian Airlines Co., Ltd. 45,302.00 97,611.00
Kunming Airlines Co., Ltd 98,760.00 92,410.00
Shandong Airlines Rainbow Auto Service Co., Ltd. 1,067,569.83 157,830.09
Total 116,935,007.54 101,551,717.65 110,947,839.71 101,551,717.65
11.6.2 Payables
Related party C/f B/f
Accounts payable
Shandong XiangYu Air Technology Co., Ltd. 21,713,271.00 3,448,051.17
Taikoo (Shandong) Aircraft Engineering Company Limited 50,607,762.23 27,753,155.69
Air China 298,824,486.21 259,659,603.16
Air China Cargo Co., Ltd. 1,354,707.86 1,306,550.93
Beijing Golden Phoenix Human Resources Service Co., Ltd. 478,035.59 346,206.28
Shenzhen Airlines Co., Ltd. 568,965.50 659,964.90
Aircraft Maintenance and Engineering Corporation (Ameco Beijing) 16,099,430.91 15,130,561.55
Sichuan International Aero Engine Maintenance Co., Ltd. 4,100,197.34 7,091,848.70
Shandong Air New Media Co., Ltd. 3,051,195.00 1,339,801.63
Shandong Airlines Rainbow Auto Service Co., Ltd. 6,205,260.00 4,538,560.00
Total 403,003,311.64 321,274,304.01
Other payables
Air China 20,000,000.00 20,000,000.00
SDA Group 11,221,300.49 5,888,565.00
Taikoo (Shandong) Aircraft Engineering Company Limited 484,291.74 484,291.74
Shandong Air New Media Co., Ltd. 2,317,803.39
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Related party C/f B/f
Total 34,023,395.62 26,372,856.74
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 12,432,897,382.52 17,159,340,532.55
- large outsourcing contract
- External investment commitments
Total 12,432,897,382.52 17,159,340,532.55
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 2,799,707,654.36 2,566,886,865.79
Within two years from the reporting date 2,791,141,385.17 2,539,998,632.79
Within three years from the reporting date 2,596,854,455.20 2,464,366,482.24
Subsequent years 11,434,116,814.65 11,109,059,067.92
Total 19,621,820,309.38 18,680,311,048.74
12.1.3 Other commitment
No other significant commitments of the Company need to be disclosed as at 30/06/2018.
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
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No significant change of the annuity program occurred for current period, see note 6.21, 6.28.
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 378,671,308.11 57.55 378,671,308.11
impairment assessment
Accounts receivable subject to
impairment assessment by credit risk 233,047,712.95 35.41 11,652,385.65 5.00 221,395,327.30
characteristics of a portfolio
Accounts receivable of individual
insignificance but subject to individual 46,329,644.55 7.04 8,057,209.85 17.39 38,272,434.70
impairment assessment
Total 658,048,665.61 100.00 19,709,595.50 3.00 638,339,070.11
(Continued)
B/f
Category Carrying amount Allowance for bad debt
Book value
Amount % Amount %
Accounts receivable of individual significance and subject to
individual 354,831,772.34 62.85 354,831,772.34
impairment assessment
Accounts receivable subject to
impairment assessment by credit risk 176,321,122.59 31.23 8,816,056.13 5.00 167,505,066.46
characteristics of a portfolio
Accounts receivable of individual
33,397,931.11 5.92 8,057,209.85 24.12 25,340,721.26
insignificance but subject to individual
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B/f
Category Carrying amount Allowance for bad debt
Book value
Amount % Amount %
impairment assessment
Total 564,550,826.04 100.00 16,873,265.98 2.99 547,677,560.06
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 231,465,246.54
individual assessment
No indication of impairment upon
Accounting Center of China Aviation 77,275,990.63
individual assessment
No indication of impairment upon
BSP-CHINA 69,930,070.94
individual assessment
Total 378,671,308.11
② Accounts receivable subject to impairment assessment by portfolio
C/f
Portfolio
Carrying amount Allowance for bad debt Rate of allowance (%)
Portfolio by nature 233,047,712.95 11,652,385.65 5.00
Total 233,047,712.95 11,652,385.65 5.00
C/f
Debtor
Carrying amount Allowance for bad debt Rate of allowance (%) Reason for allowance
No indication of
BSP-other areas 27,809,258.84 impairment upon
individual assessment
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impairment upon
Debtor #1 8,057,209.85 8,057,209.85 100.00
individual assessment
No indication of
UATP 5,826,578.74 impairment upon
individual assessment
No indication of
ARC 2,993,941.62 impairment upon
individual assessment
No indication of
Shandong Air Logistics Co., Ltd. 1,623,755.50 impairment upon
individual assessment
No indication of
Taikoo (Shandong) Aircraft Engineering
18,900.00 impairment upon
Company Limited individual assessment
Total 46,329,644.55 8,057,209.85 17.39
③ Accounts receivable of individual insignificance but subject to individual impairment assessment
15.1.2 Recognition, recovery or reversal of allowance for bad debt
The amount of allowance for bad debts recognized during the year is CNY2,836,329.52. No recovery or return
to bad debts during the year.
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 450,460,380.12, accounting for
68.45% of the total accounts receivable as at the end of current period, the total corresponding allowance for bad debts is CNY3,589,453.60.
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 632,496,131.45 81.07 104,092,637.05 16.46 528,403,494.40
impairment assessment
Other receivables subject to subject to
impairment assessment by credit risk 102,061,686.61 13.08 5,103,084.33 5.00 96,958,602.28
characteristics of a portfolio
Other receivables of individual 45,581,100.44 5.85 45,581,100.44
106
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C/f
Category Carrying amount Allowance for bad debt
Book value
Amount % Amount %
insignificance but subject to individual
impairment assessment
Total 780,138,918.50 100.00 109,195,721.38 14.00 670,943,197.12
(Continued)
B/f
Category Carrying amount Allowance for bad debt
Book value
Amount % Amount %
Other receivables of individual
significance and subject to individual 447,153,532.78 88.21 106,076,302.93 23.72 341,077,229.85
impairment assessment
Other receivables subject to subject to
impairment assessment by credit risk 34,509,238.33 6.81 1,725,461.92 5.00 32,783,776.41
characteristics of a portfolio
Other receivables of individual
insignificance but subject to individual 25,239,425.83 4.98 25,239,425.83
impairment assessment
Total 506,902,196.94 100.00 107,801,764.85 21.27 399,100,432.09
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 #1 240,408,217.55
individual assessment
No indication of impairment upon
Debtor #2 188,458,587.08
individual assessment
Shandong Rainbow Commercial Jet Co., Ltd. 101,551,717.65 101,551,717.65 100.00 impairment assessment by
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C/f
Rate of
Debtor Carrying
Allowance for bad debt allowance Reason for allowance
amount
(%)
portfolio
No indication of impairment upon
Debtor #3 51,259,221.25
individual assessment
impairment assessment by
Debtor #4 50,818,387.92 2,540,919.40 5.00
portfolio
Total 632,496,131.45 104,092,637.05 16.46
② Other receivables subject to impairment assessment by portfolio
C/f
Portfolio
Carrying amount Allowance for bad debt Rate of allowance (%)
Portfolio by nature 102,061,686.61 5,103,084.33 5.00
Total 102,061,686.61 5,103,084.33 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
Shandong Air Logistics Co., Ltd. 19,720,733.84
individual assessment
No indication of impairment upon
Shandong Air New Media Co., Ltd. 8,592,004.83
individual assessment
No indication of impairment upon
Air China 5,351,637.31
individual assessment
No indication of impairment upon
Debtor #1 4,238,588.20
individual assessment
No indication of impairment upon
Debtor #2 2,231,370.88
individual assessment
Debtor #3 2,062,200.00 No indication of impairment upon
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C/f
Debtor Allowance for bad Rate of allowance
Carrying amount Reason for allowance
debt (%)
individual assessment
No indication of impairment upon
Shandong Airlines Rainbow Auto Service Co., Ltd. 1,067,569.83
individual assessment
No indication of impairment upon
Debtor #4 756,396.92
individual assessment
No indication of impairment upon
Debtor #5 603,748.64
individual assessment
No indication of impairment upon
Debtor #6 553,166.41
individual assessment
No indication of impairment upon
Shandong XiangYu Air Technology Co., Ltd. 154,996.52
individual assessment
No indication of impairment upon
Kunming Airlines Ltd 98,760.00
individual assessment
Aircraft Maintenance and Engineering Corporation No indication of impairment upon
66,290.58
(Ameco Beijing) individual assessment
No indication of impairment upon
Dalian airlines limited liability company 45,302.00
individual assessment
No indication of impairment upon
Shandong Airlines Qingdao Food Co., Ltd. 30,855.60
individual assessment
Taikoo (Shandong) Aircraft Engineering No indication of impairment upon
6,728.82
Company Limited individual assessment
No indication of impairment upon
Shandong Jinping aviation food Co., Ltd. 750.06
individual assessment
Total 45,581,100.44
15.2.2 Recognisation, recovery or reversal of allowance for bad debt
The amount of allowance for bad debts recognized during the year is CNY1,393,956.53. No recovery or return to bad debts during the year.
15.2.3 Disclosure by nature
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Category C/f B/f
Deposits 61,704,692.30 220,843,044.40
Others 718,434,226.20 286,059,152.54
Total 780,138,918.50 506,902,196.94
15.2.4 Top five other receivables
Allowance for bad
Debtor Nature C/f Aging %
debt
Debtor #1 Others 240,408,217.55 Within 1 year
30.82
Debtor #2 Others 188,458,587.08 Within 1 year
24.16
Shandong Rainbow Commercial Jet Co.,
Others 101,551,717.65 Over 5 years 101,551,717.65
13.02
Ltd.
Debtor #3 Deposits 51,259,221.25 Within 1 year
6.57
Debtor #4 Others 50,818,387.92 Within 2 years 2,540,919.40
6.51
Total 632,496,131.45 104,092,637.05
81.07
15.3 Long-term equity investments
15.3.1 Disclosure by category
C/f B/f
Item Impairment Net carrying Impairment
Carrying amount Carrying amount Net carrying amount
allowance amount allowance
Investments in
144,101,285.43 144,101,285.43 144,101,285.43 144,101,285.43
subsidiaries
Investments in
22,500,000.00 22,500,000.00 22,500,000.00 22,500,000.00
associates
Total 166,601,285.43 22,500,000.00 144,101,285.43 166,601,285.43 22,500,000.00 144,101,285.43
15.3.2 Investments in subsidiaries
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Current
Current period Allowance Year-end
Investee B/f period C/f
increase recognized allowance
decrease
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
Shandong Jinping
30,310,200.00 30,310,200.00
aviation food Co., Ltd.
Shandong Airlines
7,790,400.00 7,790,400.00
Qingdao Food Co., Ltd.
Total 144,101,285.43 144,101,285.43
15.3.3 Investments in joint ventures and 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
Commercial Jet
Co., Ltd. 22,500,000.00 22,500,000.00
Total 22,500,000.00 22,500,000.00
(Continued)
Currency year movement (+, -)
Investee Declared cash C/f Year-end allowance
Allowance recognized Others
dividends or profits
Associates
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Currency year movement (+, -)
Investee Declared cash C/f Year-end allowance
Allowance recognized Others
dividends or profits
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 8,437,476,769.18 8,023,468,231.34 7,351,087,545.79 7,007,942,808.37
Other business 268,311,927.22 1,261,093.18 189,139,132.85 1,002,863.77
Total 8,705,788,696.40 8,024,729,324.52 7,540,226,678.64 7,008,945,672.14
15.5 Investment income
Category Current period Prior period
Income from financial assets measured by fair value with changes in
-23,033.18 -479,085.84
fair value recognized in profit or loss
Income from holding of financial assets available for sale 17,208,111.50 19,844,431.27
Total 17,185,078.32 19,365,345.43
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 25,939,857.49
Exceeded-authority approved, non-official approved or accidental tax repayment and relief
Government grants recognized 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 130,079,158.92
for automatic renewal in accordance with relevant regulations
Financial resource usage fees charged on non-financial institution recognized 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 disasters
Reorganization
Reorganization 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
arising from disposals of tradable financial assets, tradable financial liabilities and available-for-sale financial 3,487,535.76
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 29,598,122.27
Other gains or losses satisfying the definition of extraordinary gains or losses
Subtotal 189,104,674.44
Less: Impact of income tax 47,283,282.36
Less: Impact on non-controlling interest
Total 141,821,392.08
Note: Positive amounts and negative amounts in non-recurring categories mean income and expense or loss respectively.
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The Company recognized 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 catagory Weighted average rate of RONA
Basic EPS Diluted EPS
Net profit attributable to ordinary shareholders 4.68 0.51 0.51
Recurring profit or loss attributable to ordinary shareholders 1.42 0.15 0.15
114
