SHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
山东航空股份有限公司
SHANDONG AIRLINES CO., LTD
2009 SEMI-ANNUAL REPORT
August, 2009
Jinan, P.R.C.SHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
2
Important Notes:
The Board of Directors and the Supervisory Committee of Shandong Airlines Co., Ltd. (hereinafter
referred to as the Company) and its directors, supervisors and senior executives hereby confirm that there
are no any fictitious statements，misleading information or important omissions carried in this report,
and shall take all responsibilities, individual and/or joint, for the reality, accuracy and completion of the
whole contents.
Director Ms. Wang Jieming was absent from the Board meeting and authorized Mr. Kou Zunqian to vote
on his behalf.
Chairman of the Board Mr. Zhang Xingfu, General Manager Mr. Zeng Guoqiang, and Chief Accountant
Mr. Xiao Feng of the Company hereby confirm that the Financial Report of the Semi-annual Report 2009
is true and complete.
The Financial Report and accounting data cited in this Semi-annual Report has not been audited.
Contents
SECTION I. COMPANY PROFILE------------------------------------------------------------------------------------------------3
SECTION II. CHANGES IN SHARE CAPITAL AND PARTICULARS ABOUT SHARES HELD BY MAIN
SHAREHOLDERS---------------------------------------------------------------------------------------------------------------------5
SECTION III. PARTICULARS ABOUT DIRECTORS, SUPERVISORS AND SENIOR EXECUTIVES----------7
SECTION IV. REPORT OF THE BOARD OF DIRECTORS-----------------------------------------------------------------8
SECTION V. SIGNIFICANT EVENTS--------------------------------------------------------------------------------------------13
SECTION VI. FINANCIAL REPORT---------------------------------------------------------------------------------------------17
SECTION VII. DOCUMENTS AVAILABLE FOR REFERENCE----------------------------------------------------------79
Paraphrases:
The Company: Shandong Airlines Co., Ltd.
SDA: Shandong Aviation Group; the 1st largest shareholder of the Company
Air China: Air China Limited, the actual controller of the CompanySHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
3
Section I. Company Profile
I.Company Profile
1. Legal Chinese Name of the Company: 山东航空股份有限公司
Legal English Name of the Company: SHANDONG AIRLINES CO., LTD.
2. Stock Exchange Listed with: Shenzhen Stock Exchange
Short Form of the Stock: SHANHANG B
Stock Code: 200152
3. Registered Address: Yaoqiang International Airport, Jinan, Shandong
Office Address: SDA Bldg., No. 5746, Er Huan East Road, Jinan, Shandong
Post Code: 250014
Company’s Web Site: http://www.shandongair.com.cn
E-mail: zqb@shandongair.com.cn
4. Legal Representative: Zhang Xingfu
5. Secretary of Board of Directors of the Company: Dong Qiantang
Contact Address: 12/F, SDA Bldg., No. 5746, Er Huan East Road, Jinan, Shandong
E-mail: dongqt@shandongair.com.cn
Tel.: (86)531－85698229
Authorized Representative: Fan Peng
E-mail: fanp@shandongair.com.cn
Tel.: (86) 531-85698678
Fax: (86) 531-85698679
6. Newspapers for Disclosing the Information Designated by the Company:
Domestic: China Securities Jourrnal and Securities Times
Overseas: Hong Kong Wen Wei Po
Internet Web Site for Publishing the Semi-annual Report: http://www.cninfo.com.cn
The Place Where the Semi-Annual Report is Prepared and Placed: Office of the Board of the Company
Liaison Tel: (86) 531-85698678
7. Other Relevant Information of the Company
Registered number for enterprise corporation business license: 370000400002351
Registered number for taxation: Local Tax Zi 370112720721201
Registration date after latest change: Dec. 29, 2008SHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
4
Registration address: Industrial and Commercial Administration Bureau of Shandong Province
II. Major financial data and indexes
(I) Major accounting data and financial indexes
Unit: RMB
At the end of this report
period
At the period-end of last
year
Increase/decrease at
the end of this report
period compared with
that in period-end of
last year (%)
Total assets (RMB) 7,900,175,750.55 7,844,104,901.47 0.71
Owners’ equiy ( or Shareholders’ equity) (RMB) 662,522,152.84 550,012,296.30 20.46
Net assets per share attributable to shareholders of
the listed company (RMB)
1.66 1.38 20.46
This report period
(Jan. to Jun.)
The same period of last
year
Increase/decrease in
this report period yearon-
year (%)
Operating profit 36,485,643.44 84,332,253.18 -56.74
Total profit 150,074,661.90 78,568,391.09 91.01
Net profit to shareholders of the listed company 112,509,856.54 58,639,158.40 91.87
Net profit after deducting non-recurring gains and
losses to shareholders of the listed company
(RMB)
30,381,048.36 62,962,054.97 -51.75
Basic earnings per share (RMB) 0.28 0.15 91.87
Diluted earnings per share (RMB) 0.28 0.15 91.87
Return on equity (%) 16.98 11.83
Increased 5.15
percentage points
Net cash flow arising from operating activities
(RMB)
566,738,602.82 446,099,849.83 27.04
Net cash flow arising from operating activities per
share (RMB)
1.42 1.12 27.04SHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
5
(II) Items of non-recurring gains and losses and the relevant amount:
Unit: RMB
Items of non-recurring gains and losses Amount
Gains and losses from the disposal of non-current asset -2,084,968.43
Governmental subsidy calculated into current gains and losses 114,651,145.51
Held transaction financial asset, gains/loses of changes of fair values from
transaction financial liabilities, and investment gains from disposal of
transaction financial asset, transaction financial liabilities and financial asset
available for sales, exclude the effective hedging business relevant to normal
operations of the Company
-4,056,192.64
Other non-operating income and expense excluded the aforementioned items 1,022,841.38
Reversal of provisions for asset impairment of account receivable which is
made singly impairment test
-27,748.25
Subtotal 109,505,077.57
Impact on income tax -27,376,269.39
Total 82,128,808.18
Section II. Changes in Share Capital and Particulars about Shares Held by Main
Shareholders
I. Particulars about the share structure
In the report period, the Company’s total shares and its structure remained unchanged.
II. Ended as June 30, 2009, particulars about shares held by the top ten shareholders and top ten
circulating shareholders:
Total shareholders at the end of the report period 19,942
Particulars about shares held by the top ten shareholders
Full name of Shareholder
Increase /
decrease
in the
report
period
Number of shares
held at the
period-end
(share)
Proporti
on (%)
Type of shares
Number of
shares
pledged or
frozen
Nature of
shareholdersSHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
6
SHANDONG AVIATION
GROUP
0 168004000 42
Uncirculated
share
0
State-owned
shareholder
AIR CHINA LIMITED 0 91200000 22.8
Uncirculated
share
0
State-owned
shareholder
GUOTAI JUNAN
SECURITIES
(HONGKONG) LIMITED
-99900 1719100 0.43 Circulated Unknown
Foreign
shareholder
CHEN CHUN PENG -14800 1530000 0.38 Circulated Unknown
Foreign
shareholder
CHEN JING JIAN 0 1304200 0.33 Circulated Unknown
Foreign
shareholder
WU HAO YUAN 0 1062700 0.27 Circulated Unknown
Foreign
shareholder
LIU LI YA -63600 951616 0.24 Circulated Unknown
Foreign
shareholder
HE BIN 50000 879407 0.22 Circulated Unknown
Foreign
shareholder
JOHN POSS 0 756000 0.19 Circulated Unknown
Foreign
shareholder
DENG HONG WEI 0 650609 0.16 Circulated Unknown
Foreign
shareholder
Particulars about shares held by the top ten shareholders of circulation share
Shareholder’s name
Circulation share held at the periodend
Type
GUOTAI JUNAN SECURITIES(HONGKONG)
LIMITED
1719100 B-share
CHEN CHUN PENG 1530000 B-share
CHEN JING JIAN 1304200 B-share
WU HAO YUAN 1062700 B-share
LIU LI YA 951616 B-share
HE BIN 879407 B-share
JOHN POSS 756000 B-share
DENG HONG WEI 650609 B-share
CHEN ZI XIANG 610700 B-share
XU ZHAO HUAN 608000 B-share
Explanation on the associated relationship or consistent Air China Limited is the first largest shareholder of ShandongSHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
7
action among the top ten shareholders Aviation Group; there exists no associated relationship
between SDA and Air China and the other top ten
shareholders; the Company is not aware of their associated
relationship among the other shareholders of circulation
share.
III. Change of controlling shareholder and actual controller
The controlling shareholder and actual controller of the Company did not change in the report period.
Section III. Particulars about Directors, Supervisors and Senior Executives
I. In the report period, directors, supervisors and senior executives of the Company did not hold the
Company’s shares; the holding amount in the report period remained unchanged.
II. In the report period, The Company accomplished the election and engagement of new office term of
directors, supervisors and senior executives.
On June 26, 2009, the Company’s 2008 Annual Shareholders’ General Meeting elected Mr. Zhang
Xingfu, Mr. Feng Gang, Mr. Zeng Guoqiang, Mr. Su Zhongmin, Mr. Kou Zunqian, Ms. Wang Jieming,
Mr. Xiao Feng and Mr. Wang Mingyuan as the directors for the 4th Board of Directors of the Company;
elected Mr. Wei Jincai, Mr. Li Chun, Mr. Qu Wenzhou as the independent directors for the 4th Board of
Directors of the Company; elected Mr. Wang Fuzhu, Mr. Xue Ruitao and Mr. Zhang Kai as the
supervisors for the 4th Supervisory Committee who constituted the 4th Session of Supervisory Committee
of the Company with two employee representative supervisors Mr. Miao Liubin and Ms. Zhou Qiaoyan
elected in Employee Representative Conference of the Company.
In the same day, the 1st meeting of the 4th board of the Company elected Mr, Zhang Xingfu as the
Chairman of the Company and Mr. Feng Gang as the Vice-chairman of the Company; Mr. Zeng
Guoqiang was engaged as the General Manager of the Company, Mr. Su Zhongmin was engaged as the
Standing Deputy General Manager; Mr. Yu Haitian, Ms. Song Yuxia, Mr. Li Qing’en, Mr. Xiao Feng and
Mr. Qiu Feng were engaged as Deputy General Managers; Mr. Zhang Qingshe was engaged as Chief
Pilot; Mr. Xiao Feng was engaged as Chief Accountant(concurrently); and Mr. Dong Qiantang was
engaged as Secretary of the Board.
In the same day, the 1st meeting of the 4th Supervisory Committee of the Company elected Mr. Wang
Fuzhu as the Chairman of the Supervisory Committee of the CompanySHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
8
Section IV. Report of Board of Directors
I. Main operations in the report period
(I) Scope of main operations and operation status
The Company is the civil air transportation enterprise, which mainly operates business of international
and domestic air transportation of both travelers and goods, and also operates hotels (only branch
institution), maintenance of aircraft, agent business among the Airlines Companies, and ground services
relevant to main operations.
1. Facing serious economy crisis, the Company deeply studied and practiced the View of Science
Development, comprehensively promoted and implemented Overwinter strategy, actively dealt with
challenge, held together and worked resolutely, and reached a good operation achievement: safe
production stably developed; profit level kept ahead, organization innovation was steadily promoted;
service quality was constantly improved; party building and ideological and political work made new
progress, and settled a new basis for realizing science development.
In the report period, the Company realized flying for 69,976.7 hours and 40,568 on-and-off flights,
increased by 16.0% and 12.1% year-on-year respectively; passengers were transported amounting to
3,514,000 persons, increased by 13.5% year-on-year; the volume of cargo and mail transported
amounting to 37,000 tons, decreased by 3% year-on-year; the transportation turnover volume totaling 440
million ton-kms, increased by 15.9% year-on-year.
In the report period, the Company realized the income from main operations amounting to RMB 2.342
billion, decreased by 3.58% year-on-year, of which the income from air passenger transportation
amounted to RMB 2.229 billion, taking up 95.17% of the total income; the income from air cargo and
mail transportation amounted to RMB 76 million, taking up 3.25% of the total income; and the other
income amounted to RMB 37 million, taking up 1.58% of the total income.
(1) Formation classified according to industries and products
Industries Operating income Operating cost
Gross
profit
ratio (%)
Increase/d
ecrease in
operating
income
over the
last year
(%)
Increase/d
ecrease in
operating
cost over
the last
year (%)
Increase/d
ecrease in
gross
profit
ratio over
the last
year (%)
Aviation 2,305,193,594.13 1,845,474,482.25 19.94% -2.77% -5.52% 2.33%SHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
9
transportation
service
Logistics
transportation
service 3,377,523.46 969,854.35 71.29% -7.16% 44.68% -10.29%
Hotel and food
service 12,033,696.77 8,778,465.46 27.05% 4.10% 34.34% -16.42%
Other 21,023,352.07 439,084.54 97.91% 42.15% -76.51% 10.55%
Total 2,341,628,166.43 1,855,661,886.60 20.75% -3.58% -6.86% 2.79%
(2) Particulars about different areas for main operation
Areas Operating income
Increase/decrease compared with
that in last period %
Domestic 2,289,871,920.27 -2.81%
International 51,756,246.16 -28.67%
Total 2,341,628,166.43 -3.58%
(3) Particulars about main asset and analysis to financial index in the report period
Item Jun.30, 2009 Dec.31, 2008 Increase/decrease %
Monetary fund 137,460,538.87 71,872,933.88 91.25%
Other account receivable 201,061,709.72 144,978,136.24 38.68%
Notes payable 96,000,000.00 10,000,000.00 860.00%
Tax payable 159,552,985.31 111,337,241.37 43.31%
Wages payable 54,468,944.55 91,119,967.07 -40.22%
Item Jan.-Jun., 2009 Jan.-Jun., 2008 Increase/decrease %
Non-operating income 115,765,523.38 722,266.53 15928.09%
Income tax 37,393,723.46 19,484,114.18 91.92%
Net profit 112,680,938.44 59,084,276.91 90.71%
Reasons for changes of increase/decreaseSHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
10
Item Explanation
Monetary fund Mainly because of newly increased deposit of commercial acceptance bill.
Other account receivable Mainly because of return of civil air fund receivable.
Notes payable Mainly because of newly increased commercial acceptance bill.
Tax payable Mainly because of increase of enterprise income tax in this period.
Wages payable Mainly because of payment of 2008 annual bonus in this period.
Non-operating income Mainly because of subsidy from government.
Income tax Mainly because of increase of profit in this period.
Net profit Mainly because of increase of profit in this period.
2. In the report period, the management team of the Company continued to improve the management
reform, and phase progress was made in the various works.
(1) In the report period, the Company continued to step up efforts to promote the construction of safety
information management system, improved the level-by-level responsibility system of safety liability,
began on safety performance evaluation reform, the Company continued to maintain overall stable safety
situation and no unsafe event occurred above man-made air accident.
(2) Optimized the production organization which made new breakthrough in realizing the beneficial
objective. The Company adjusted the orientation of transport capacity in time, reduced international
flights, increased input of domestic transport capacity and made seasonal adjustment for transport
capacity among bases, intensified the efforts on the work of oil saving management and rationally
controlled the maintenance cost.
(3) Encouraged innovation in service management to promote the service quality,intensified development
of service quality management system and promoted management and control ability of service quality;
encouraged innovation in service management taking customer experience as the guidance; perfected the
management system of brand establishment taking the chance of guaranteeing the National Games.
(4) Steadily carried out organization innovation and orderly advanced management construction.
(5) Party building and ideological and political work made new progress.
(II) In the report period, the breakdown of the profit, the main operations and their structure have no
significant changes.SHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
11
(III) There were no other operating activities that would exert significant influence upon the profit in the
report period.
(IV) There was no investment yield from a single shareholding company that had influenced over 10% of
the net profit of the Company in the report period.
(V)There were no significant changes of the operation environment and policies of the Company in the
report period.
(VI) Problems and difficulties in operation
Seeing from the economy environment, each policy and measure the state took for dealing with global
financial crisis achieved initial success, economy operation actively changed, and the overall situation
went better. However, it also should be known that, the economy of our country was still in the key phase
of stable rise, and the rise trend of economy was unsteady, unconsolidated and imbalanced. The whole
recovery of global aviation industry could not be forecasted, and the international price of raw oil
presented a trend of gradual rise, which could further increase the cost pressure of aviation companies.
II. Investments of the Company
(I) In the report period, the Company neither used any raised proceeds nor used any proceeds that were
raised in previous periods lasting to the report period.
(II) Actual development and yield-gaining status of the important projects invested with non-raised
proceeds
1. Qingdao International Aviation Logistic Center Co., Ltd., a company controlled by the Company,
made an income from main operations from Jan. to Jun., 2009 amounting to RMB 3,377,520, and its total
profit amounted to RMB 652,700.
2. Sichuan Airlines Co., Ltd., a company with shares held by the Company, made an income from main
operations from Jan. to Jun., 2009 amounting to RMB 2,927,487,000, and its total profit amounted to
RMB -142,981,000.
3. Shandong Airlines Rainbow Jet Co., Ltd., a company with shares held by the Company, made an
income from main operations from Jan. to Jun., 2009 amounting to RMB 4,955,440, and its total profit
amounted to RMB 1,701,700.SHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
12
4. The business data of the upper half year of Jinan International Airport Co., Ltd., a company with shares
held by the Company, are not available now.
5. TravelSky Technology Limited, a company with shares held by the Company, has not publicized its
business data of the upper half year.
III. Forecast of operation performance in the past three quarters in 2009
Section V. Significant Events
I. Corporate governance
In the report period, the Company strictly obeyed the requirments in Company Law, Security Law and
Code of Corporate Governance for Listed Companies in China, made delicate decisions on significant
issues, such as periodical reports, business programs, airplane import, governance structure, internal
control system and self-inspection rectification etc. and disclosed relevant information accurately, timely
and completely. The Company gave full play to the fuction of decision, audition and evaluation of special
committees of the Board of Directors, guaranteed the independent directors, special committees and
supervisory committee to fulfill the responsibilities, practically provided necessary and convenient
conditions for the supervision, made elaborate efforts to amplify and improve the internal control system
Forecast of operation performance Increased greatly year-on-year
From the year-begin to the
next period-end
The same period
of last year
Increase/decrease %
Forecasted accumulated net profit
(RMB ’0000)
24000-26000 4105.35 485%-533%
Basic income per share (RMB/share) 0.6-0.65 0.10 500%-550%
Explanation on peromance forecast
1. Industry supporting policy of government department increased the Company’s
income;
2. with the influence of international oil price fluctuation, the average fuel cost of
the Company had some decrease compared with that of last year;
3. The marketing sales were better than expectation, and the Company actively
explored the potential and further started activities of reducing cost and improving
effectiveness. The various measures on improving operation performance had
obvious effects.SHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
13
and management in accordance with basic norms and specific regulations on internal control in enterprise
issued by related departments.
II. Implementation of the profit distribution plan for the year 2008
The Company did not distribute profits nor convert public reserve into share capital in 2008.
III. Profit distribution plan in the Semi-annual of 2009
The Company would neither distribute any profit nor convert any public reserves into share capital in the
Semi-annual of 2009.
IV. The Company had no significant lawsuits or arbitrations in the report period, nor did it have any
lawsuits or arbitrations that happened in previous periods and lasted into the report period.
V. The Company had no significant purchases, sales or reorganization of assets, nor did it have any such
kind of events that occurred in previous periods and lasted into the report period.
VI. Important related transactions
(I) Significant related transactions on commodity purchase or service offer
1. In the report period, the aircraft maintenance charges that happened between Taikoo (Shandong)
Aircraft Engineering Co., Ltd and the Company amounted to RMB 42,506,000, taking up 19.23% of the
amount of the same kind of transactions. For this transaction, the Company has paid in cash according to
the market price.
2. The Company continued to strengthen the cooperations with the actual controller Air China in markets
and branch routes. In the report period, the settlement that occurred between the two parties amounted to
RMB 325,745,000.
3. Implementation of routine related transactions in the report period
Transaction type Related party
Amount of
the
transaction
(RMB’000)
Proportion taking
up the same kind
of transactions
Taikoo (Shandong) Aircraft Engineering Maintenance of Co., Ltd 42,506 19.23%
aircrafts and parts Shandong Xiangyu Aero-Technology Service Co., Ltd 9,543 4.32%SHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
14
Shandong International Aviation Training Co., Ltd 3,624 19.90%
Training expense Qingdao Feisheng International Aero-Technology Training
Co., Ltd
2,610 14.33%
Shandong Rent for office land Aviation Group (rent for office land) 4,480 37.22%
and daily boarding Shandong Aviation Group (daily boarding) 601 3.70%
Air China Limited (airplane lease) 307,987 99.98%
Air China Limited (affiliated operations with South Korea
route)
13,018 100%
Airplanes lease and
market cooperation
Air China Limited(labor force supports) 5,100 77.54%
(II) Other important related transactions
The Company had no other significant related transactions.
VII. Important contracts and their implementation
(I) The Company has not newly entrusted, contracted or leased any assets in the report period.
(II) The Company had no external guarantees in the report period.
(III) The Company has not entrusted any assets management in the report period.
(IV) Other important contracts
By the end of the report period, the long-term and the short-term loans of the Company amounted to
RMB 4,502,642,810.
There are no other significant contracts that have not been disclosed by the Company.
VIII. Neither the Company nor any shareholder holding over 5% (including 5%) shares of the Company
has made any commitments that might exert significant influence upon the operation achievements or
financial status of the Company in the report period, nor did them have any such commitments that were
made in previous periods and lasted into the report period.
IX. Neither the Company nor any of its directors, supervisors or senior executives has been punished in
any way by the regulatory institutes.SHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
15
X. Other significant matters and its influences, and explanations on the analysis to the solutions
(1) The company holds 8,697,000 shares of Chinese Information Network Incorporation of Civil Aviation
which is listed in Hong Kong Exchanges and Clearing Limited. The nature of these shares is noncirculated
domestic shares.
The Company did not hold the equities of financial enterprises such as holding the equities of other listed
company, shareholding commercial bank, securities company, insurances company, trust company and
future company.
(2)Special explanation and independent opinion on capital occupation of the Company by the controlling
shareholder and other related parties and external guarantee of the Company happened in the report
period or lasting till the report period presented by independent directors
Ended as June 30, 2009, the Company had no situations such as capital occupation of the Company by
the controlling shareholder and other related parties happened in the report period or happened in
previous period but lasting till the report period.
In the report period, the Company had no external guarantee.
XI. Establishement of inner control systment and implementations of social responsibilities
Taking the opportunity of special corporate governance activities, the Company strengthened internal
control and perfected governance structure. In the report period, the Company continued to perfect the
setting organization of the special committees of the Board. During the preparing period of 2008 Annual
Report, independent directors and the Audit Committee actively made negotiation and communication
with the audit accountants, made inspection on the financial statements of the Company which advanced
the standardization of work for preparing annual report and assured reality and accuracy of financial data
according to the requirements of relevant laws and regulations. In the report period, the internal control
system of the Company has already covered every operation level and tache of the Company. The
Company strictly and effectively executed the internal control system, which met the demands required
by CSRC and Shenzhen Stock Exchange for listed companies in work of internal control.
During the report period, the Company fulfilled its social responsibility under the requirement of Guiding
for Social Responsibility of Listed Company. The Company perfected its governance structure, did well
in information disclosure and protected benefit of its shareholders, especially its medium and small
shareholders.SHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
16
During the outbreaks of H1N1 flu, the Company tightly deployed with the prevention of H1N1 flu, made
perfect specific rules, operation criteria and preplan on prevention and control, and correctly handled ten
particular cases of passengers with a fever on planes.
As the only partner for the 11th National Games in air transportation, the Company orderly promoted
preparatory work of service support for the National Games, satisfactorily fulfilled the torch
transportation for the National Games, succeeded in performance of service guarantee for several trial
contests and realized no errors and no complaints.
XII. Registration form for receiving research, communication and interview in the report period.
In the report period, the Company received specific persons(organization investors and individual
investors) with receiving and answering individual investors’ calls for communications, there did not
happen such situations as selectively or privately disclose, reveal or leak significant information which is
not yet published publicly to specific objects(organization investors and fund).
Date Place Way The received parties
Contents discussed and materials
supplied
Jan.-June, 2009 Jinan
Telephone
communications
Individual investor
Operations of the Company; material
was not supplied.
June 26, 2009 Jinan
Had
conversation
face to face
Securities media, legal
person’s
Shareholder and private
investor
Operations of the Company; Annual
Report of the Company was supplied.SHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
17
Section VI. Financial Report
Consolidated Balance Sheet
June 30st, 2009
Name of the company ： Shandong Airlines Co., Ltd Monetary unit : ( RMB)
Yuan
Asset Note 30-Jun-09 31-Dec-08
Liabilities
and
Shareholders'
equities
Note 30-Jun-09 31-Dec-08
Current
assets: Current
liability:
Monetary
funds VIII(1) 137,460,538.87 71,872,933.88 Short-term
loan VIII(15) 770,000,000.00 1,006,887,514.55
Tradable
financial
assets
VIII(2) 19,404,619.47 23,460,812.11
Tradable
financial
liabilities
Note
receivable Notes payable VIII(16) 96,000,000.00 10,000,000.00
Accounts
receivable VIII(3) 155,348,376.24 126,118,032.09 Accounts
payable VIII(17) 926,489,149.08 875,319,060.11
Advance to
suppliers VIII(4) 33,569,286.58 29,124,244.97 Advance from
customers VIII(18) 111,346,467.06 87,735,493.54
Interests
receivable Payroll
payable VIII(19) 54,468,944.55 91,119,967.07
Dividend
receivable 1,617,642.00 Tax payable VIII(20) 159,552,985.31 111,337,241.37
Other
accounts
receivables
VIII(5) 201,061,709.72 144,978,136.24 Interests
payable VIII(21) 6,088,936.83 9,634,990.00
Inventories VIII(6) 65,969,246.06 74,347,529.57 Dividend
payable 11,940.00 11,940.00
Non-current
assets due
within one
year
Other
accounts
payable
VIII(22) 153,930,087.38 161,736,748.70
Other current
assets
Non-current
liabilities due
within one
year
VIII(23) 423,523,639.73 615,589,677.22
Total
current
assets
614,431,418.94 469,901,688.86 Other current
liabilities
Non-current
assets: Total current
liabilities 2,701,412,149.94 2,969,372,632.56
Availablefor-
sale
financial
assets
Non-current
liabilities:
Held-tomaturity
investment
Long-term
borrowings VIII(24) 3,414,047,061.31 3,159,333,277.39
Long-term
accounts
receivable
Bonds payable
Long-term
equity
investment
VIII(7) 88,352,100.00 88,352,100.00
Long-term
accounts
payable
VIII(25) 1,072,332,374.98 1,114,459,905.38
Investment
property Deferred
income VIII(26) 18,898,771.94 18,319,557.83
Fixed assets VIII(8) 6,150,606,598.57 5,684,074,945.46 Accrued
liabilties
Construction
in process VIII(9) 676,523,186.09 1,277,744,153.32
Deferred
income tax
liabilities
VIII(27) 18,001,502.09 19,816,576.46
Construction
materials Other noncurrentSHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
18
liabilities
Liquidation
of fixed
assets
Total noncurrent
liabilities
4,523,279,710.32 4,311,929,317.06
Production
biology
assets
Total
liabilities 7,224,691,860.26 7,281,301,949.62
Oil and gas
assets Shareholders'
equity:
Intangible
assets VIII(10) 46,574,486.66 46,945,074.17 Share capital VIII(28) 400,000,000.00 400,000,000.00
Development
expenses Capital
reserve VIII(29) 84,050,162.84 84,050,162.84
Goodwill
Less:
inventory
shares
Long-term
deferred
assets
VIII(11) 228,450,845.38 208,312,781.55 Surplus
reserve VIII(30) 29,490,727.77 29,490,727.77
Deferred
income tax
assets
VIII(12) 95,237,114.91 68,774,158.11 Retained
earnings VIII(31) 148,981,262.23 36,471,405.69
Other noncurrent
assets
Exchange
difference of
foreign
currency
financial
statements
translation
Total noncurrent
assets
7,285,744,331.61 7,374,203,212.61
Shareholders'
equity
attributable
to parent
company:
662,522,152.84 550,012,296.30
Minority
interests 12,961,737.45 12,790,655.55
Total
shareholders’
equities
675,483,890.29 562,802,951.85
Total assets 7,900,175,750.55 7,844,104,901.47
Total
liabilities and
shareholders’
equities
7,900,175,750.55 7,844,104,901.47
Consolidated Income Statement
June 30st, 2009
Name of the company ： Shandong Airlines Co., Ltd Monetary unit : ( RMB) Yuan
Item Note 30-Jun-09 30-Jun-08
1. Total operating income VIII(32) 2,341,628,166.43 2,428,664,238.87
Minus: operating cost VIII(32) 1,855,661,886.60 1,992,303,001.82
Business taxes and surtax VIII(33) 69,042,767.26 70,308,687.96
Selling expense 143,786,115.87 98,975,491.57
Administration expense 105,357,851.54 93,298,161.82SHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
19
Financial expenses VIII(34) 131,687,423.69 89,574,593.25
Impairment loss of assets VIII(35) 380,135.04 1,002,659.27
Add: profits from the fair value changes (The loss
is listed beginning with “-“) VIII(36) -4,056,192.64
Investment income (The loss is listed beginning
with “-“) VIII(37) 4,829,849.65 1,130,610.00
Including: the investment income from associated
and joint ventures enterprises
II. Operating profit 36,485,643.44 84,332,253.18
Add: non-operating income VIII(38) 115,765,523.38 722,266.53
Less: non-operating expense VIII(39) 2,176,504.92 6,486,128.62
Including: loss from disposal of non-current assets 2,169,256.17 6,367,094.29
III. Total profits (The loss is listed beginning
with “-“) 150,074,661.90 78,568,391.09
Less: income tax expense VIII(40) 37,393,723.46 19,484,114.18
IV. Net profits (the net loss is listed beginning
with “-”) 112,680,938.44 59,084,276.91
Net profits attributable to parent company 112,509,856.54 58,639,158.40
Minority interests 171,081.90 445,118.51
V. Earnings per share
1.Basic earnings per share 0.28 0.15
2.Diluted earnings per share 0.28 0.15
VI. Other comprehensive income
VII.Total amount of comprehensive income 112,680,938.44 59,084,276.91
Total amount of comprehensive income
attributable to parent company 112,509,856.54 58,639,158.40
Total amount of comprehensive income
attributable to Minority shareholders 171,081.90 445,118.51
Consolidated Cash Flow Statement
June 30st, 2009
Name of the company ： Shandong Airlines Co., Ltd Monetary unit : ( RMB) Yuan
Item Note 30-Jun-09 30-Jun-08
I. Cash flows from operating activities
Cash received from sales of goods or rendering of services 2,336,429,221.15 2,405,107,325.08
Tax refund - -
Cash received related to other operating activities VIII(42) 93,215,476.76 17,089,563.80
Subtotal of cash inflow from operating activities 2,429,644,697.91 2,422,196,888.88SHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
20
Cash received from sales of goods or rendering of services 1,338,317,681.18 1,446,382,639.72
Cash paid to and on behalf of employees 299,050,769.59 275,772,293.44
Tax payments 158,632,335.13 126,406,124.30
Other cashes paid to operating activities VIII(43) 66,905,309.19 127,535,981.59
Subtotal of Cash outflow from operating activities 1,862,906,095.09 1,976,097,039.05
Net cash flow from operating activities 566,738,602.82 446,099,849.83
II. Cash flow from investment activities:
Cash received from investments -
Cash dividents received from investment 3,212,207.65 1,130,610.00
Net cash received from disposal of fixed assets, intangible assets and
other long-term assets 317,139,020.01 16,595.00
Net cash amount received from the disposal of subsidiaries an other
business units -
Cash received related to other investment activities
Subtotal of cash inflow from the investment activities 320,351,227.66 1,147,205.00
Cash paid to acquire and construct fixed assets, intangible assets and
other long-term assets 456,905,808.57 467,976,097.79
Cash paid to acquire investments -
Net cash amount paid to acquire the subsidiaries and other business units -
Cash paid related to other investment activities 25,800,000.00
Subtotal of Cash outflow from investment activities 482,705,808.57 467,976,097.79
Net cash flow from investment activities -162,354,580.91 -466,828,892.79
III. Cash flow from financing activities:
Cash received from investors
Cash received from loans 1,118,132,976.67 1,168,713,800.00
Cash received related to other financing activities 5,009,602.50
Subtotal of cash inflow from the financing activities 1,118,132,976.67 1,173,723,402.50
repayment of loans 1,268,237,935.34 828,019,960.57
Cash dividends, profits and interests paid 109,218,730.63 128,790,723.46
Cash payments related to other financing activities VIII(44) 105,176,772.22 148,960,663.62
Sub-total of cash outflow from the financing activities 1,482,633,438.19 1,105,771,347.65
Net cash flow from finacing activities -364,500,461.52 67,952,054.85
IV. Effect of Foreign Exchange Rate Changes on Cash and cash
equivalents -95,955.40 -614,021.22
V. Net increase in cash and cash equivalents 39,787,604.99 46,608,990.67
Add: beginning balance of cash and cash equivalents 44,937,058.88 42,131,848.82
VI ending balance of cash and cash equivalents 84,724,663.87 88,740,839.49SHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
Consolidated statement of changes in the shareholders' equity
June 30st, 2009
Name of the company ： Shandong Airlines Co., Ltd Monetary unit : ( RMB) Yuan
30-Jun-09
shareholders' equity belongs to parent company
Item
Share capital Capital reserve
minus:
Shares
at
stock
Capital surplus Undistributed Profit Others
Minority interest Toatl of shareholder's equity
I. Balance at the end of previous year 400,000,000.00 84,050,162.84 29,490,727.77 36,471,405.69 12,790,655.55 562,802,951.85
plus(I): changes of accounting policies
(II)Correction of errors in previous years
II. Balance at the beginning of this
year 400,000,000.00 84,050,162.84 29,490,727.77 36,471,405.69 12,790,655.55 562,802,951.85
III. Increase or decrease of change
amount in this year(the decrease is
listed beginning with “-”)
- 112,509,856.54 171,081.90 112,680,938.44
(I)Net profits in the year 112,509,856.54 171,081.90 112,680,938.44
(II)Profit and loss directly accrued to
owners’ equities
1．Net amount of fair value changes of
saleable financial assets
2．Net amount about the change of fair
values of cash flow arbitrage tools
3． Income tax effect related to the
projects accrued to owner's euity
4. Others
Subtotal of (I)and (II) 112,509,856.54 171,081.90 112,680,938.44
(III) Capitals invested by the owners
1.Capital investment by owners in
current periodSHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
22
2. Repurchase of shares at stock in the
year
3.others
(IV)Profit distribution in the yea - -
Withdrawal of surplus reserve -
2．Withdrawal of general risk
preparation
3. Distribution to shareholders
4．Others
(V) Internal settlement and transfer of
owners’equity
1. Transfer of capital reserve to capital
2. Transfer of surplus reserve to capital
3. Surplus reserve makes up for the loss
4. others
IV. Balance at the end of this period 400,000,000.00 84,050,162.84 29,490,727.77 148,981,262.23 12,961,737.45 675,483,890.29
4
Consolidated statement of changes in the shareholders' equity
June 30st, 2009
Name of the company ： Shandong Airlines Co., Ltd Monetary unit : ( RMB) Yuan
31-Dec-08
shareholders' equity belongs to parent company
Item
Share capital Capital reserve
minus:
Shares
at
stock
Capital surplus Undistributed Profit Others
Minority interest Toatl of shareholder's equity
I. Balance at the end of previous year 400,000,000.00 84,050,162.84 24,919,586.71 -39,938,895.93 12,133,486.03 481,164,339.65
plus(I): changes of accounting policiesSHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
23
(II)Correction of errors in previous years -
II. Balance at the beginning of this
year 400,000,000.00 84,050,162.84 24,919,586.71 -39,938,895.93 12,133,486.03 481,164,339.65
III. Increase or decrease of change
amount in this year(the decrease is
listed beginning with “-”)
4,571,141.06 76,410,301.62 657,169.52 81,638,612.20
(I)Net profits in the year 80,981,442.68 657,169.52 81,638,612.20
(II)Profit and loss directly accrued to
owners’ equities - -
1．Net amount of fair value changes of
saleable financial assets
2．Net amount about the change of fair
values of cash flow arbitrage tools
3． Income tax effect related to the
projects accrued to owner's euity
4. Others -
Subtotal of (I)and (II) 80,981,442.68 657,169.52 81,638,612.20
(III) Capitals invested by the owners
1.Capital investment by owners in
current period
2. Repurchase of shares at stock in the
year
3.others
(IV)Profit distribution in the yea 4,571,141.06 -4,571,141.06
Withdrawal of surplus reserve 4,571,141.06 -4,571,141.06
2．Withdrawal of general risk
preparation
3. Distribution to shareholders
4．Others
(V) Internal settlement and transfer of
owners’equity - - -SHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
24
1. Transfer of capital reserve to capital
2. Transfer of surplus reserve to capital
3. Surplus reserve makes up for the loss
4. others -
IV. Balance at the end of this period 400,000,000.00 84,050,162.84 29,490,727.77 36,471,405.69 12,790,655.55 562,802,951.85SHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
Balance Sheet
June 30st, 2009
Name of the company ： Shandong Airlines Co., Ltd Monetary
unit : ( RMB) Yuan
Asset Note 30-Jun-09 31-Dec-08 Liabilities and
Shareholders' equities Note 30-Jun-09 31-Dec-08
Current assets: Current liability:
Monetary funds
122,756,155.64
57,648,117.02 Short-term loan
770,000,000.00
1,006,887,514.55
Tradable financial assets
19,404,619.47
23,460,812.11
Tradable financial
liabilities
Note receivable Notes payable
96,000,000.00
10,000,000.00
Accounts receivable IX.(1)
153,905,658.26
125,105,495.35 Accounts payable
924,064,652.85
873,297,361.73
Advance to suppliers
33,538,990.42
28,986,600.63 Advance from customers
110,691,218.28
86,115,566.69
Interests receivable
- Payroll payable
54,463,056.57
91,114,079.09
Dividend receivable
1,617,642.00 Tax payable
159,244,727.56
111,270,281.82
Other accounts
receivables IX.(2)
201,005,845.80
145,198,107.29 Interests payable
6,088,936.83
9,634,990.00
Inventories
65,968,163.56
74,347,529.57 Dividend payable
11,940.00
11,940.00
Non-current assets due
within one year Other accounts payable
153,821,320.51
161,909,084.49
Other current assets Non-current liabilities
due within one year
423,523,639.73
615,589,677.22
Total current assets
598,197,075.15
454,746,661.97 Other current liabilities
Non-current assets: Total current liabilities
2,697,909,492.33
2,965,830,495.59
Available-for-sale
financial assets Non-current liabilities:
Held-to-maturity
investment Long-term borrowings
3,414,047,061.31
3,159,333,277.39
Long-term accounts
receivable Bonds payable
Long-term equity
investment IX.(3)
112,165,305.97
112,165,305.97
Long-term accounts
payable
1,072,332,374.98
1,114,459,905.38
Investment property Deferred income
18,898,771.94
18,319,557.83
Fixed assets
6,137,725,809.20
5,670,839,727.85 Accrued liabilties
Construction in process
676,523,186.09
1,277,744,153.32
Deferred income tax
liabilities
18,001,502.09
19,816,576.46
Construction materials Other non-current
liabilities
Liquidation of fixed
assets Total non-current
liabilities
4,523,279,710.32
4,311,929,317.06
Production biology assets Total liabilities
7,221,189,202.65
7,277,759,812.65
Oil and gas assets Shareholders' equity:
Intangible assets
31,675,647.73
32,028,907.27 Share capital
400,000,000.00
400,000,000.00
Development expenses Capital reserve
84,050,162.84
84,050,162.84
Goodwill Less: inventory shares
Long-term deferred assets
228,450,845.38
208,312,781.55 Surplus reserve
28,830,023.24
28,830,023.24
Deferred income tax
assets
95,230,113.53
68,767,156.73 Retained earnings
145,898,594.32
33,964,695.93
Other non-current assets Total shareholders’
equities
658,778,780.40
546,844,882.01
Total non-current assets
7,281,770,907.90
7,369,858,032.69SHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
26
Total assets
7,879,967,983.05
7,824,604,694.66
Total liabilities and
shareholders’ equities
7,879,967,983.05
7,824,604,694.66
Income Statement
June 30st, 2009
Name of the company ： Shandong Airlines Co., Ltd Monetary unit : ( RMB) Yuan
Item Note 30-Jun-09 30-Jun-08
1. Total operating income IX(4) 2,338,250,642.97 2,425,026,349.26
Minus: operating cost IX(4) 1,854,692,032.25 1,991,632,679.42
Business taxes and surtax 68,873,891.08 70,115,993.48
Selling expense 143,786,115.87 98,975,491.57
Administration expense 103,808,136.48 92,253,341.29
Financial expenses 131,827,809.88 89,726,012.02
Impairment loss of assets 380,135.04 1,002,659.27
Add: profits from the fair value changes (The
loss is listed beginning with “-“) -4,056,192.64
Investment income (The loss is listed beginning
with “-“) IX(5) 4,829,849.65 1,130,610.00
Including: the investment income from
associated and joint ventures enterprises
II. Operating profit 35,656,179.38 82,450,782.21
Add: non-operating income 115,765,523.38 722,066.53
Less: non-operating expense 2,176,504.92 6,486,128.62
Including: loss from disposal of non-current
assets 2,169,256.17 6,367,094.29
III. Total profits (The loss is listed beginning
with “-“) 149,245,197.84 76,686,720.12
Less: income tax expense 37,311,299.45 19,262,938.67
IV. Net profits (the net loss is listed beginning
with “-”) 111,933,898.39 57,423,781.45
V. Earnings per share 57,423,781.45
1.Basic earnings per share
2.Diluted earnings per shareSHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
27
VI. Other comprehensive income
VII.Total amount of comprehensive income 111,933,898.39 57,423,781.45
Total amount of comprehensive income
attributable to parent company
Total amount of comprehensive income
attributable to Minority shareholders
Cash Flow Statement
June 30st, 2009
Name of the company ： Shandong Airlines Co., Ltd Monetary unit : ( RMB) Yuan
Item Note 30-Jun-09 30-Jun-08
I. Cash flows from operating activities
Cash received from sales of goods or rendering of services 2,334,446,557.00 2,402,737,213.92
Tax refund - -
Cash received related to other operating activities 93,075,090.57 16,936,040.23
Subtotal of cash inflow from operating activities 2,427,521,647.57 2,419,673,254.15
Cash received from sales of goods or rendering of services 1,338,332,467.49 1,444,699,080.41
Cash paid to and on behalf of employees 297,851,797.47 275,239,360.70
Tax payments 158,622,333.14 125,451,226.92
Other cashes paid to operating activities 66,514,013.02 127,510,793.09
Subtotal of Cash outflow from operating activities 1,861,320,611.12 1,972,900,461.12
Net cash flow from operating activities 566,201,036.45 446,772,793.03
II. Cash flow from investment activities:
Cash received from investments
Cash dividents received from investment 3,212,207.65 1,130,610.00
Net cash received from disposal of fixed assets, intangible assets and
other long-term assets 317,139,020.01 16,595.00
Net cash amount received from the disposal of subsidiaries an other
business units
Cash received related to other investment activities
Subtotal of cash inflow from the investment activities 320,351,227.66 1,147,205.00
Cash paid to acquire and construct fixed assets, intangible assets and
other long-term assets 456,847,808.57 467,853,657.79
Cash paid to acquire investments
Net cash amount paid to acquire the subsidiaries and other business
units
Cash paid related to other investment activities 25,800,000.00
Subtotal of Cash outflow from investment activities 482,647,808.57 467,853,657.79
Net cash flow from investment activities -162,296,580.91 -466,706,452.79
III. Cash flow from financing activities:
Cash received from investorsSHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
28
Cash received from loans 1,118,132,976.67 1,168,713,800.00
Cash received related to other financing activities 5,009,602.50
Subtotal of cash inflow from the financing activities 1,118,132,976.67 1,173,723,402.50
repayment of loans 1,268,237,935.34 828,019,960.57
Cash dividends, profits and interests paid 109,218,730.63 128,790,723.46
Cash payments related to other financing activities 105,176,772.22 148,960,663.62
Sub-total of cash outflow from the financing activities 1,482,633,438.19 1,105,771,347.65
Net cash flow from finacing activities -364,500,461.52 67,952,054.85
IV. Effect of Foreign Exchange Rate Changes on Cash and cash
equivalents -95,955.40 -613,652.92
V. Net increase in cash and cash equivalents 39,308,038.62 47,404,742.17
Add: beginning balance of cash and cash equivalents 30,712,242.02 30,096,953.79
VI ending balance of cash and cash equivalents 70,020,280.64 77,501,695.96SHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
Statement of changes in the shareholders' equity
June 30st, 2009
Name of the company ： Shandong Airlines Co., Ltd Monetary unit : ( RMB)
Yuan
30-Jun-09
Item Note
Share capital Capital reserve Minus;share
at stock Capital surplus Undistributed profit Toatl of shareholder's
equity
I. Balance at the end of previous year
400,000,000.00 84,050,162.84 28,830,023.24 33,964,695.93 546,844,882.01
plus(I): changes of accounting policies
(II)Correction of errors in previous years
II. Balance at the beginning of this year
400,000,000.00 84,050,162.84 28,830,023.24 33,964,695.93 546,844,882.01
III. Increase or decrease of change amount in this
year(the decrease is listed beginning with “-”) - 111,933,898.39 111,933,898.39
(I)Net profits in the year 111,933,898.39 111,933,898.39
(II)Profit and loss directly accrued to owners’ equities
1．Net amount of fair value changes of saleable financial
assets
2．Net amount about the change of fair values of cash flow
arbitrage tools
3． Income tax effect related to the projects accrued to
owner's euity
4. Others
Subtotal of (I)and (II) 111,933,898.39 111,933,898.39
(III) Capitals invested by the owners
1.Capital investment by owners in current period
2. Repurchase of shares at stock in the year
3.others
(IV)Profit distribution in the yea - -SHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
30
1.Withdrawal of surplus reserve -
2. Distribution to shareholders
3．Others
(V) Internal settlement and transfer of owners’equity
1. Transfer of capital reserve to capital
2. Transfer of surplus reserve to capital
3. Surplus reserve makes up for the loss
4. others
IV. Balance at the end of this period
400,000,000.00 84,050,162.84 28,830,023.24 145,898,594.32 658,778,780.40
Statement of changes in the shareholders' equity
June 30st, 2009
Name of the company ： Shandong Airlines Co., Ltd Monetary unit : ( RMB)
Yuan
31-Dec-08
Item Note
Share capital Capital reserve Minus;share
at stock Capital surplus Undistributed profit Toatl of shareholder's
equity
I. Balance at the end of previous year
400,000,000.00 84,050,162.84 24,442,948.14 -41,199,838.89 467,293,272.09
plus(I): changes of accounting policies
(II)Correction of errors in previous years -
II. Balance at the beginning of this year
400,000,000.00 84,050,162.84 24,442,948.14 -41,199,838.89 467,293,272.09
III. Increase or decrease of change amount in this
year(the decrease is listed beginning with “-”) 4,387,075.10 75,164,534.82 79,551,609.92
(I)Net profits in the year 79,551,609.92 79,551,609.92
(II)Profit and loss directly accrued to owners’ equities - -
1．Net amount of fair value changes of saleable financial
assets
2．Net amount about the change of fair values of cash flow
arbitrage toolsSHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
31
3． Income tax effect related to the projects accrued to
owner's euity
4. Others -
Subtotal of (I)and (II) 79,551,609.92 79,551,609.92
(III) Capitals invested by the owners
1.Capital investment by owners in current period
2. Repurchase of shares at stock in the year
3.others
(IV)Profit distribution in the yea 4,387,075.10 -4,387,075.10
1.Withdrawal of surplus reserve 4,387,075.10 -4,387,075.10
2. Distribution to shareholders
3．Others
(V) Internal settlement and transfer of owners’equity
1. Transfer of capital reserve to capital
2. Transfer of surplus reserve to capital
3. Surplus reserve makes up for the loss
4. others
IV. Balance at the end of this period
400,000,000.00 84,050,162.84 28,830,023.24 33,964,695.93 546,844,882.01SHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
Shandong Airlines Co., Ltd
Notes to Financial Statements
For the period ended June 30,2009
（All amounts are expressed in RMB Yuan unless otherwise stated）
I. General
Shandong Airlines Co., Ltd. (the "Company") was established in the People's Republic of China ("PRC") on JULY 29,
1999, and is responsible for its own operation, subject to the supervision and regulation of the Civil Aviation Administration
of China (“CAAC”), a regulatory authority of the civil aviation industry in the PRC. Its B shares are listed on the Shenzhen
Stock Exchange (“the Stock Exchange”) with effect from September 12, 2000. Its holding company is Shandong Aviation
Group 山东航空集团有限公司 (formerly Shandong Airlines Limited 山东航空集团有限公司), a company also established
in the PRC..
The company is engaged in the provision of domestic passenger and cargo air transportation services. The principle
activities of subsidiaries and associates are set out in notes VII (1) and (2).
The Company and its subsidiaries are hereinafter collectively referred to as “the Group”.
II. Basis for Preparation
The financial statements of the company are prepared on the assumption of going concern and actual transactions and
items ,in accordance with the Enterprise Accounting Standards issued by the Ministry of Finance in February 2006 and
accounting policy ,accounting estimation which presented in the Part four of the accounting Notes.
III. Declaration of Compliance with the Enterprise Accounting Standards
The Company’s financial statements prepared meet the requirements of the Enterprise Accounting Standards, fairly and
completely presents the financial position, operation result and cash flow, and other relevant information of the company.
IV. Main Accounting Policies and Accounting Estimates and Methods of Consolidation
(1) Accounting Year
The company employs the period of the calendar days from the January 1 to December 31 each year as the accounting
year.
(2) Reporting Currency
The Company’s reporting currency is Renminbi (“RMB”).
(3) Measurement Characters
The Company commonly measures accounting factors by historical cost method; if the determined accounting factor
amount can be obtained or reliably measured, the replacement cost, net realizable value, net value and fair value method may be
employed.
Within the reporting period，financial assets and liabilities measured at fair value through profit and loss, available for
sale financial assets and financial derivative instrument are measured at fair value; for the payment terms of purchasedSHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
33
inventory and fixed assets are more than more than normal credit terms, these inventory and fixed assets are measured at their
purchase price; if impairment Loss occurs on inventory, the inventory is measured at net realizable value; if impairment Loss
occurs on other assets ,they are measured at recoverable value; Asset inventory surplus are measured at replacement cost, other
items of financial statement are measured at historical cost.
(4) Standard of Cash Equivalents
In preparing cash flow statement, cash equivalents of the company include the investments with short term (it usually
expires within three months from the purchase date), highly liquidity, easy to convert into known amount of cash, and lowrisk
of changes in value. Equity investments shall not deem as cash equivalents.
(5) Foreign Currency Transactions
Foreign currency (currency other than the reporting currency) transactions are translated into reporting currency at spot
exchange rates prevailing on the day in which the transactions take place.
Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are restated into the reporting
currency using the spot exchange rates at that date. The exchange gains or loses are dealt with in the income statement for the
year. The exchange gains or loses arising from foreign currency borrowings in relation to the acquisition or construction of
fixed assets are accounted for according to the requirements of capitalization of borrowing costs.
Conversion of Financial Statement in Foreign Currency
Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are converted into the
reporting currency using the spot exchange rates at that date. Among shareholders’ equity items, all items except
“undistributed profits” are converted into reporting currency at the spot exchange rate on the occurrence date. Income and
expense items in Income Statement are converted into reporting currency at spot exchange rate on the occurrence date.
(6) Financial Assets and Financial Liabilities
(1) The Recognition of the Financial Instruments:
The company should recognize a financial asset or a financial liability on its balance sheet when, and only when the
entity becomes a party to the contractual provision of the instrument.
(2) Classification of Financial Assets and Financial Liabilities:
Financial assets and liabilities include financial assets and liabilities held for trading, and financial asset or financial
liability at fair value through profit or loss; held-to-maturity investments; loans and accounts receivable; available-for-sale
financial assets; and other financial liabilities.
1. Financial asset or financial liabilities at fair value through profit or loss which including tradable financial
assets or liability and designated financial asset or financial liability at fair value through profit or loss.
The tradable financial asset or liability is financial assets or liability meets one of the following criteria:
a. The purpose of the obtaining the financial asset or liability is for sale or repurchase in the near future.
b. Forming a part of the identifiable combination of financial instruments which are managed in a centralized way
and for which there are objective evidences proving that the enterprise may manage the combination by way of short
term profit making in the near future;
c. Being a derivative instrument, excluding the designated derivative instrument which are effective hedging
instruments, or derivative instruments to financial guarantee contracts, and the derivative instruments which are
connected with the equity instrument investments for which there is no quoted price in the active market, whose fairSHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
34
value cannot be reliably measured, and which shall be settled by delivering the said equity instruments.
The financial assets or financial liabilities meeting any of the following requirements can be designated, when they are
initially recognized, as financial assets or financial liabilities as measured at its fair value and of which the variation is
included in the current profits and losses:
(1) The designation is able to eliminate or obviously reduce the discrepancies in the recognition or measurement of
relevant gains or losses arisen from the different basis of measurement of the financial assets or financial liabilities;
(2) The official written documents on risk management or investment strategies of the enterprise concerned have
recorded that the combination of said financial assets, the combination of said financial liabilities, or the combination of said
financial assets and financial liabilities will be managed and evaluated on the basis of their fair values and be reported to the
key management personnel.
2. held-to-maturity investment" refers to a non-derivative financial asset with a fixed date of maturity, a fixed or
determinable amount of reportable price and which the enterprise holds for a definite purpose or the enterprise is able to
hold until its maturity.
3. Loans and accounts receivable" refers to the non-derivative financial assets for which there is no quoted price
in the active market and of which the repo amount is fixed or determinable.
4. The "sellable financial assets" refers to the non-derivative financial assets which are designated as sellable
when they are initially recognized as well as the financial assets other than those as described below:
(1) Loans and accounts receivables;
(2) Investments held until their maturity; and
(3) Financial assets measured at their fair values and of which the variation is recorded into the profits and losses of the
current period.
5. Other financial liability refers to financial liability are not measured at fair value through profit and loss.
(3) Measurement of Financial Instruments
The financial assets and financial liabilities initially recognized by an enterprise shall be measured at their fair values.
For the financial assets and liabilities measured at their fair values and of which the variation is recorded into the profits and
losses of the current period, the transaction expenses thereof shall be directly recorded into the profits and losses of the
current period.
The subsequent measurement of the financial assets and financial liability:
1. The financial asset and liability at fair value through profit and loss are subsequently measured at fair value, the
profit and loss caused by changes in the fair value and de-recognition of the financial asset and liability should be
recorded in the profit and loss accounts.
2. The investments held until their maturity, are measured on the basis of the post-amortization costs by adopting
the actual interest rate method; the profit and loss caused by de-recognition, impairment or amortization are recorded in
the profit and loss account of the current period.
3. The accounts receivable are measured on the basis of the post-amortization costs by adopting the actual interestSHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
35
rate method; the profit and losses caused by de-recognition, impairment or amortization is recorded in the profit and
loss account of the current period.
4. Available for sale financial asset, subsequently measured at fair value, the profit and losses caused by changes
in fair value are recorded in the Capital reserve. The differences between purchase value and book value as disposal of
available for sale financial asset should be recognized in the profit and loss on investments. At the same time, roll out
the amount of the disposal part corresponding with the cumulative amount of the changes in the fair value recognized in
the owner’s equity into the Capital reserve. The interest and cash dividend received during hold for available for sale
financial asset, are recognized in the profit and loss on investments.
5. Other financial liability , the derivative instruments which are connected with the equity instrument
investments for which there is no quoted price in the active market, whose fair value cannot be reliably measured, and
which shall be settled by delivering the said equity instruments
For the financial guarantee contracts which are not designated as a financial liability measured at its fair value and the
variation thereof is recorded into the profits and losses of the current period, and for the commitments to grant loans which
are not designated to be measured at the fair value and of which the variation is recorded into the profits and losses of the
current period and which will enjoy an interest rate lower than that of the market, a subsequent measurement shall be made
after they are initially recognized according to the higher one of the following:
i. the amount as determined according to the Accounting Standards for
Enterprises No. 13 - Contingencies; or
ii. The surplus after accumulative amortization as determined according to the principles of the Accounting Standards for
Enterprises No. 14 - Revenues is subtracted from the initial recognized amount
Other financial liabilities are measured on the basis of the post-amortization costs by adopting the actual interest rate
method; the profit and losses caused by de-recognition, impairment or amortizations are recorded in the profit and loss
account of the current period.
6. The "fair value" refers to the amount, at which both parties to a transaction who are familiar with the condition
exchange their assets or clear off their debts under fair conditions. In a fair transaction, both parties to it shall be
enterprises in continuous operation, and do not plan or do not need to carry out any liquidation, significantly reduce
their operational scale or carry out transactions notwithstanding the unfavorable conditions they face.
7. Amortized cost
Preferred term for the apportionment (charging or writing off) of the cost of an intangible asset as an operational cost
over the asset's estimated useful life. It is identical to depreciation, the preferred term for tangible assets. The purpose of both
terms is to (1) reflect reduction in the book value of the asset due to usage and/or obsolescence, (2) spread a large expenditure
proportionately over a fixed period, and thereby (3) reduce the taxable income (not the actual or cash income) of a firm. In
effect, it is a process by which invested capital of a firm is recovered by gradual sale of the firm's asset(s) to its customers
over the years.
8. Effective interest methods refers to a financial Asset (including a group of financial assets) or financial liability
(including a group of financial liabilities), means a method of— calculating the amortized cost of the asset or liability, as
the case may be; and allocating the interest income and interest expense of the asset or the interest income and interest
expense of the liability, as the case may be, over the expected life of the asset or liability, as the case may be.
(4) Termination of Recognition of Financial AssetsSHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
36
1. Where a financial asset satisfies any of the following requirements the recognition of it shall be terminated:
a. Where the contractual rights for collecting the cash flow of the said financial asset are terminated;
b. Where the said financial asset has been transferred and meets the conditions for recognizing the termination of financial
assets as provided for in Accounting Standards for Enterprises No. 23 - Transfer of Financial Assets
2. When conditions of entire transferred assets de-recognition has been satisfied, the differences between the
amount of following two items shall be accounted for profits and losses of current period.
a. The book value of transferred financial assets;
b. The sum of consideration received from the transfer, and the accumulative amount of the changes of the fair
value originally recorded in the shareholders’ equities (in the event that the financial asset involved in the transfer is a
financial asset available-for-sale)
3. If the transfer of partial financial assets satisfies the conditions of de-recognition, the entire book value of the
transferred financial asset shall, between the portion whose de-recognition and the recognized portion (under such
circumstance, the service asset retained shall be deemed as a portion of financial asset whose de-recognition), be
apportioned according to their respective relative fair value, and the difference between the amounts of the following two
items shall be accounted for the profits and losses of the current period .
a. The book value of the portion whose de-recognition.
b. The sum of consideration of the portion whose de-recognition and the portion of accumulative amount of the
changes in the fair value originally recorded in the shareholders’ equity which is corresponding to the portion whose
derecognized ( in the event that the financial assets involved in the transfer is a financial assets available-for-sale).
4. If the Company fails to satisfy the conditions of de-recognition for transferred financial assets, it shall continue to
recognize the entire financial assets to be transferred and shall recognize the consideration it receives as a financial
liability.
5. Impairment of financial assets
The Company assesses the financial assets that carry at fair value, and those financial assets which changes of fair
value are recognized in profit and loss accounts at the balance sheet date. If there is objective evidence that the one or
several financial assets are impaired, the Company shall determine the amount of any impairment loss.
a. Accounts Receivable
At the end of the period, if there is objective evidence that the accounts receivable have been impaired, the
impairment loss shall be recognized based on the difference between book values and expected cash inflow values.
At the end of the period, impairment test shall be made on individual accounts receivable with significant amounts. If
there is objective evidence that they have been impaired, bad debt loss shall be recognized and provision for bad debts shall
be made based on the difference between the expected cash inflow values and book values.
For those individual accounts receivable with not significant amounts at the end of the period, along with those accounts
receivable that have been tested individually but not impaired, the Company classifies them in line with similar credit risk
characteristics into several groups, and make 5% of bad debts provision on the accounts receivable balances at balance sheet
date. This percentage reflects the actual impairment loss, that is, the amount of which book values of each group are over
their expected inflow values.SHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
37
On the basis of the actual loss rate of receivable accounts, with same or similar credit risk characteristics of accounts
receivable package in previous year, the Company also considers current situation and determine the percentage of bad debt
provision.
No bad debts provision has been made for security deposits for the operating lease aircrafts and aircraft machineries.
b. Held-to-maturity Investment
The measurement of impairment loss of held-to-maturity investment, please refer to impairment loss treatment of
accounts receivable.
c. Available-for-sale Financial Assets
If there is objective evidence that available-for-sale financial assets have significant depreciated, or after considering
various relevant factors, this downward tendency is deemed as not temporary, the impairment loss shall be recognized based
on the difference between the expected cash inflow values and book values.
In case of impairment loss of available-for-sale financial assets recognized, it can not be written back.
(7) Inventory
1. Inventories category: aircraft consumable parts, low-value consumable supplies for airplanes.
2. Inventories stock taking system: perpetual inventory method.
3. Valuation of methods of inventories：Inventories are calculated at actual costs when acquire, and issuance of
inventories is determined on first in first out basis.
4. low-value consumable products amortization method
The low–value consumable supplies are amortized at one time.
5. Impairment loss of inventories
For inventories at balance sheet date, the evaluation criteria should base on the lower value between costs and net values
that can be converted into cash. When net values that can be converted into cash are lower than costs, provision for
impairment loss of inventories shall be made. For large quantity and low-unit-price inventories, provision for impairment loss
of inventories shall be made based on the category of inventories; for those inventories that relate to product series which
production and sale are in same areas, have same or similar final usages or purposes, and are hard to separate calculation from
other items, their impairment loss provision shall be consolidated.
The net value that can be converted into cash is referred to the value after estimated the selling price subtracts the
estimated finished cost and estimated sales expenses and related tax and fees in normal operating process.
（8）Recognition and Measurement of Long-term Equity Investment
1. Initial Measurement
Long-term Equity Investment Including the company's investment that was able to exercise control, joint control or
equity investment which may have significant influence on the invested company or the Company’s investment does not have
control, joint control or significant influence on the invested company, and there is no active market quotation, the fair value
can not be reliably measured.
a. For the merger of enterprises under the same control, if the consideration of the merging enterprise is that it makes
payment in cash, transfers non-cash assets or bear its debts, it shall, on the date of merger, regard the share of the book value
of the owner's equity of the merged enterprise as the initial cost of the long-term equity investment. The difference between
the initial cost of the long-term equity investment and the payment in cash, non-cash assets transferred as well as the bookSHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
38
value of the debts borne by the merging party shall offset against the capital reserve. If the capital reserve is insufficient to
dilute, the retained earnings shall be adjusted. If the consideration of the merging enterprise is that it issues equity securities,
it shall, on the date of merger, regard the share of the book value of the owner's equity of the merged enterprise as the initial
cost of the long-term equity investment. The total face value of the stocks issued shall be regarded as the capital stock, while
the difference between the initial cost of the long-term equity investment and total face value of the shares issued shall offset
against the capital reserve. If the capital reserve is insufficient to dilute, the retained earnings shall be adjusted.
For obtaining subsidiary not under common control, the cost of long-term equity investment is fair value of assets paid
or liabilities undertaken by the Company. Where the cost of a business combination exceeds the acquirer’s interest in the fair
value of the acquiree’s identifiable net assets, the difference shall be recognized as goodwill, goodwill shall be measured at
cost less accumulated impairment losses. Where the cost of combination is less than the acquirer’s interest in the fair value of
the acquiree’s identifiable net assets, after reassessment, the difference shall be recognized in profit or loss for the current
period.
other types of long-term equity investment
Besides the long-term equity investments formed by the merger of
Enterprises, the initial cost of a long-term equity investment obtained by other means shall be ascertained in accordance
with the provisions as follows:
(1) The initial cost of a long-term equity investment obtained by making payment in cash shall be the purchase cost
which is actually paid. The initial cost consists of the expenses directly relevant to the obtainment of the long term equity
investment, taxes and other necessary expenses.
(2) The initial cost of a long-term equity investment obtained on the basis of issuing equity securities shall be the fair
value of the equity securities issued.
(3) The initial cost of a long-term equity investment of an investor shall be the value stipulated in the investment contract
or agreement except the unfair value stipulated in the contract or agreement.
(4) The initial cost of a long-term investment obtained by the exchange of nonmonetary assets shall be ascertained in
accordance with the Accounting Standards for Enterprises No.7 – Exchange of Non-monetary Assets.
(5) The initial cost of a long-term equity investment obtained by recombination of liabilities shall be ascertained in
accordance with Accounting Standards for Enterprises No. 12 – Debt Restructuring.
2. Subsequent Measurement
The cost method is employed to calculate the long-term equity investment of subsidiaries and will be adjusted in
accordance with the equity method in the preparation of the consolidated financial statements.
The Company uses cost method for the following conditions: a long-term equity investment where the investing
enterprise can exercise control over the investee, or the investing enterprise does not have joint control or significant
influence over the investee, the investment is not quoted in an active market and its fair value can’t be reliably measured.
When an investing enterprise can exercise joint control or significant influence over the investee, a long-term equity
investment shall be treated as a recovery of initial investment cost.
a. When using cost method, cash dividends or profit distributions declared by the investee shall be recognized as
investment income in the current period. Declaration made by the invested units or payment of cash dividends of profits, in
addition to the actual investment made to pay the price or prices have been contained but has not yet issued a declaration ofSHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
39
cash dividends or profits, It will invest in units in accordance with the enjoyment of being paid cash dividends declared or
profits recognized current investment income.
b. When using equity method, after the investing enterprise has acquired a long-term equity investment, it shall
recognize its share of net profits or losses made by the investee as investment income or losses, and adjust the carrying
amount of the investment accordingly. The carrying amount of the investment shall be reduced by the portion of any profit
distributions or cash dividends declared by the investee that is attributed to the investing enterprise.
The impairment of a long-term equity investment which is measured by employing the cost method as prescribed in
these Standards, for which there is no offer in the active market and of which the fair value cannot be reliably measured, its
impairment shall be disposed in accordance with the Accounting Standards for Enterprises No. 22 – Recognition and
Measurement of Financial Instruments. The impairment of any other long-term equity investment measured in accordance
with these Standards shall be disposed in accordance with the Accounting Standards for Enterprises No. 8 – Asset
Impairment.
（9）Recognition and Measurement of Fixed Asset
1. Fixed assets refer to simultaneously have the following characteristics of tangible assets: for the production of
merchandise, and providing labor services, lease or operation and management of holdings; life of more than one fiscal year.
2. Fixed assets are tangible assets that are held for use in production or supply of goods or services, for rental to others,
or for administrative purpose, and have useful lives more than one accounting year. Fixed assets shall be recognized if they
meet the following conditions:
(a) The economic benefits related to fixed asset probably flows to the enterprise;
(b) The cost of fixed asset may be reliably measured.
3. Fixed assets are measured in accordance with initial cost, the value of the financing leased fixed assets are measured
at the lower of the fair value of the start date of the leasing and the present value of minimum lease payments, depreciation
policy is in accordance with its own policy
4. The depreciation method of fixed assets: straight-line method is in used to calculate the depreciation of fixed assets
(including finance leased fixed assets). The estimated useful lives, expected residual value and annual depreciation rate of
various types fixed assets are listed as follows:
Category Estimated useful lives (years) Residual value (%) Annual depreciation rate
Buildings and structures 27-33 5.00 2.88-3.52
LLP and APU 15-20 5.00 4.75-6.33
Aircraft frame replaceable parts 6-8 0.00 12.5-16.67
Engine replaceable parts 3-5 0.00 20-33.33
Machineries, Electronics and equipments 4-10 0-5.00 9.5-23.75
High price rotables 15-18 0.00 5.56-6.67
Vehicles 5-10 5.00 9.5-19
5. The fixed asset would be recognized as idle fixed assets if the fixed asset be unused in 6months (except for seasonal
disable), the deprecation method of idle fixed assets is in line with other types of fixed assets.SHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
40
6. The high price rotables were classified into fixed assets according to the Ministry of Finance CAIKUAIHAN [2004]
No. 54 Ministry of Finance regarding the reply for the expansion of scope for civil aviation capitalization flow management
7. At balance sheet date, if there is evidence indicates that the fixed asset has been impaired, the provision for the
impairment is prepared in accordance with methods described in14, note 4.
（10）Construction in Progress
Construction in progress shall be calculated based on the classification of proposed projects.
Construction in progress is measured at actual cost. Construction in progress is transferred to fixed assets when the
project is substantially ready for its intended use. Borrowing costs relating to construction in progress are measured according
to borrowing costs measurement method.
At the end of period, the company makes judgment if any provision of impairment loss is necessary. If the project has
been stopped for a long time and will not be constructed within three years, the impairment loss for such construction in
progress shall be made based on the differences between recoverable amount and book values. Once impairment loss is made,
it can not be written back.
(11) Intangible Assets
1. The intangible assets shall be initially measured according to its cost
2. As for the intangible assets with limited service life, the enterprise shall estimate the years of its service life, or the
amount of the output or any other similar measurement unit, which constitutes its service life. If it is unable to forecast the
period when the intangible asset can bring economic benefits to the enterprise, it shall be regarded as an intangible asset with
uncertain service life
3. To determine the useful life for the intangible assets with limited useful life, the following factors would be
considered: a. the life cycle of the product which produced by the intangible assets. b. present technical, technological, and
the trend of future development c. market demand for the products or services that produced by that asset. d. what action the
Present or potential competitors will take in the future e. estimated maintenance expenditures for the maintenance of that
asset as well as the company ‘s ability to pay for the expenditure. f. the relevant laws and regulations or similar constraints for
the duration of that asset. g .the connection with other relevant asset’s useful life which hold by the company.
4. With regard to intangible assets with limited service life, its amortization amount shall be amortized within its service
life systematically and reasonably. An enterprise shall amortize intangible assets from the time when it is available for use to
the time when it is not confirmed as the intangible assets any more. The method chosen by an enterprise for the amortization
of intangible assets shall reflect the expected realization pattern of the economic benefits which relevant to the intangible
assets. If it is unable to determine the expected realization pattern reliably, intangible assets shall be amortized by the straightline
method
The useful lives of intangible assets:
Intangible assets Estimated useful lives (years)
Land-use rights 50
(12) Maintenance ExpensesSHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
41
The maintenance expenses for aircraft and leased aircraft are both treated as current expenditure when they occur. Since
January 1, 2007, the occurrence of the maintenance expenses will be capitalized if the maintenance expenses satisfy the
conditions for capitalization, confirm as resetting the costs of fixed assets and depreciate in the reasonable terms．For aircraft
under operating lease, maintenance are required before return the aircraft to the lessor, the expenses for maintenance is
estimated based on straight line method or flight hours.
(13) Long-term Deferred Assets
The Company’s long-term deferred assets refer to expense which has been paid out and the benefiting period is over one
year, such as expenses for pilots’ initial trainings and subsequent trainings. Those expenses are amortized at 20 years
according to their benefit period respectively.
(14)Impairment of Assets
1. No matter whether there is any sign of possible assets impairment, the goodwill formed by the merger of enterprises
and intangible assets with uncertain service lives shall be subject to impairment test every year. Fixed assets, construction in
progress, intangible assets, the investment properties measured by cost method and long-term equity investments, if there is
any indication for impairment at balance sheet date then impairment test need to be taken
Where any evidence shows that there is possible assets impairment, the recoverable amount of the assets shall be
estimated. The recoverable amount shall be determined in light of the higher one of the net amount of the fair value of the
assets minus the disposal expenses and the current value of the expected future cash flow of the assets. The disposal expenses
shall include the relevant legal expenses, relevant taxes, truck age as well as the direct expenses for bringing the assets into a
marketable state. Where there is any evidence indicating a possible impairment of assets, the enterprise shall, on the basis of
single item assets, estimate the recoverable amount. Where it is difficult to do so, it shall determine the recoverable amount of
the group assets on the basis of the asset group to which the asset belongs.
2. The recognition of the impairment
a. The current market price of assets falls, and its decrease is obviously higher than the expected drop over time or
due to the normal use;
b. The economic, technological or legal environment in which the enterprise operates, or the market where the
assets is situated will have any significant change in the current period or in the near future, which will cause adverse
impact on the enterprise;
c. The market interest rate or any other market investment return rate has risen in the current period, and thus the
discount rate of the enterprise for calculating the expected future cash flow of the assets will be affected, which will
result in great decline of the recoverable amount of the assets;
d. Any evidence shows that the assets have become obsolete or have been damaged substantially;
e. The assets have been or will be left unused, or terminated for use, or disposed ahead of schedule;
f. Any evidence in the internal report of the enterprise shows that the economic performance of the assets have
been or will be lower than the expected performance, for example, the net cash flow created by assets or the operating
profit (or loss) realized is lower (higher) than the excepted amount, etc.; and Other evidence indicates that the
impairment of assets has probably occurred.
3. The recognition of an asset group shall base on whether the main cash inflow generated by the asset group isSHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
42
independent of those generated by other assets or other group assets. Simultaneously, when recognizing an asset group,
the enterprise shall take into consideration how its managers manage the production and business activities (for example,
according to the production lines, business varieties or according to the regions or areas), and the ways of decisionmaking
for the continuous use or disposal of the assets, etc
Where there is an active market for the products manufactured by (or other outputs of) a combination of several assets,
even if some or all of these products (or other outputs) are provided for the internal use, the enterprise shall also recognize
this combination of assets as an asset group on the condition that the provisions of the preceding paragraph are accorded with
Where the cash inflow of the asset group is affected by the internal transfer price, the future cash flow of the asset group
shall be determined on the basis of the best available estimate made by the managers of the enterprise for the future price in
the fair transaction.
Once an asset group is recognized, it shall be kept consistent during different accounting periods, and not be changed at
will.
(15) Measurement and Recognition of Employee Compensation
1. Employee Compensation
Employee compensation refers to all kinds of payments and other relevant expenditures given by enterprises in exchange
of the services offered by the employees. The employee compensation shall include:
a. Wages, bonuses, allowances and subsidies for the employees;
b. Welfare expenses for the employees;
c. Medical insurance, endowment insurance, unemployment insurance, work injury insurance, maternity insurance and
other social insurances;
d. Housing accumulation fund;
e. Labor union expenditure and employee education expenses;
f. Non-monetary welfare;
g. Compensations for the cancellation of the labor relationship with the employees; and
h. Other relevant expenditures of services offered by the employees
2. If an enterprise cancels the labor relationship with any employee prior to the expiration of the relevant labor contract
or brings forward any compensation proposal for the purpose of encouraging the employee to accept a layoff, and the
following conditions are met concurrently, the enterprise shall recognize the expected liabilities incurred due to the
compensation for the cancellation of the labor relationship with the employee, and shall simultaneously record them into the
profit or loss for the current period:
a. Where the enterprise has formulated a formal plan on the cancellation of labor relationship or has brought forward
a proposal on voluntary layoff and will execute it soon. This plan or proposal shall include the department at which the
employee to be laid off works, the post of the employee and the number of the employees to be laid off, the amount of
compensation for the cancellation of labor relationship or for layoff as determined on the basis of the job category or
post according to the relevant provisions, and the planned time for the cancellation of labor relationship or layoff.
b. The enterprise is unable to unilaterally withdraw the plan on the cancellation of labor relationship or the layoff
proposal.SHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
43
(16) Principle of Accrued Liabilities
1. Principle of accrued liabilities
The obligations related to some items that meet the following conditions at the same time will be confirmed as the
liabilities:
a. This obligation is the current obligation of the company;
b. The performance of this obligation will probably cause the economic benefits to flow out of the company;
c. The amount of this obligation can be reliably calculated.
2. The measurement of accrued liabilities
The accrued liabilities are initially measured in accordance with the best estimated outflow of economic benefits to
fulfill the current obligation as well as related risks regarding the contingencies, uncertainties and time value of money.
Significant impact on the time value of money the best estimation is determined through the related discounted future cash
outflows. The increase of book value of accrued liability caused due to the passage of time is recognized as interest.
3. Optimum evaluation of accrued liabilities
If the necessary payments have scopes, the optimum evaluation shall be determined based on the average amount
between the upper and lower limit amount of scope ; if the necessary payments do not have such scopes, the optimum
evaluation shall be determined in the following method:
(a) If the contingent event is involved in an individual project, the optimum evaluation amount will be determined based
on the possible amount;
(b) If the contingent event is involved in some projects, the optimum evaluation amount shall be determined based on
possible amount and occurrence probability. In case of all or part of payments about the confirmed liquidation liabilities are
expected to be compensated by the third parties or other parties, and the compensation amounts are surely received, then such
amounts shall be separately recognized. The confirmed compensation amounts shall not exceed book values of confirmed
liabilities.
(17) Revenue Recognition
1. Offering labor
a. The Company recognizes revenue based on passenger transport services provided or not based on the use of expired
ticketed through, rather than as the basis to ticket through sales. The unused tickets will expiry in one year after sale. In
addition, the company and other airlines signed code-sharing agreement; under the code-sharing agreements one party's
carrier's flight No. classes can use designated code of the other air carrier. The revenue generated from code-sharing is
allocated between parties in accordance with ode-sharing agreements; the revenue is confirmed as the provision of passenger
transport services.
b. In the provision of other aviation services, revenue is confirmed as at the completion of
service
2. The company ascertains the amount of revenues from the alienating of right to use assets based on the following
circumstances, respectively:SHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
44
(1) The amount of interest revenue should be measured and confirmed in accordance with the length of time for which
the company's cash is used by others and the actual interest rate; or
(2) The amount of royalty revenue should be measured and confirmed in accordance with the period and method of
charging as stipulated in the relevant contract or agreement.
(18) Government Subsidies
1. No government subsidy may be recognized unless the following conditions are met simultaneously as follows:
a. The enterprise can meet the conditions for the government subsidies; and
b. The enterprise can obtain the government subsidies.
2. a. If a government subsidy is a monetary asset, it shall be measured in the light of the received or receivable amount.
If a government subsidy is a non-monetary asset, it shall be measured at its fair value. If its fair value cannot be obtained in a
reliable way, it shall be measured at its nominal amount.
b. The government subsidies pertinent to assets shall be recognized as deferred income, equally distributed within the
useful lives of the relevant assets, and included in the current profits and losses. But the government subsidies measured at
their nominal amounts shall be directly included in the current profits and losses.
The government subsidies pertinent to incomes shall be treated respectively in accordance with the circumstances as
follows:
(1) Those subsidies used for compensating the related future expenses or losses of the enterprise shall be recognized as
deferred income and shall included in the current profits and losses during the period when the relevant expenses are
recognized; or
(2) Those subsidies used for compensating the related expenses or losses incurred to the enterprise shall be directly
included in the current profits and losses.
3. If it is necessary to refund any government subsidy which has been recognized, it shall be treated respectively in
accordance with the circumstances as follows:
a. If there is the deferred income concerned, the book balance of the deferred income shall be offset against, but the
excessive part shall be included in the current profits and losses; and
b. If there is no deferred income concerned to the government subsidy, it shall be directly included in the current profits
and losses.
(19) Measurement and Recognition of Borrowing Cost
1. Principle of capitalization of borrowing cost
Borrowing costs may be attributable to the construction and productions of assets and complied with the capitalization
conditions, they shall be capitalized and accounted for as cost of assets; other borrowing costs shall be recognized as expenses
when incurred and accounted for current profit and loss account. The assets complying with the capitalization conditions
mean assets such as fixed assets, investment properties and inventories etc, that require a long time of construction and
production activities before being intended for use or for sales.
The capitalization of borrowing costs shall satisfy the following conditions:
(a) The expenditure of assets has been incurred;SHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
45
(b) The borrowing costs have been incurred;
(c) Activities relating to acquisition, construction or production that are necessary to the assets being intended for
use or sales have been launched.
Capitalization of borrowing costs shall be suspended during periods in which acquisition, construction or production of
assets is interrupted abnormally, and is interrupted for a continuous period of three months.
2. Capitalization period
Capitalization of borrowing costs shall be suspended during periods in which acquisition, construction or production of
assets is interrupted abnormally, and is interrupted for a continuous period of three months.
Capitalization of borrowing costs also shall be suspended when the acquisition, construction or production of assets are
prepared being intended for use or sales.
Borrowing costs which are incurred by the acquisition, construction or production of assets, and are satisfied with the
aforesaid capitalization conditions, are recognized as cost of assets before those assets are intended for use or sales. Any
borrowing costs incurred after those assets are intended for use or sales, are recognized as financial costs.
3. Where a general borrowing is used for the acquisition and construction or production of assets eligible for
capitalization, the enterprise shall calculate and determine the to-be-capitalized amount of interests on the general borrowing
by multiplying the weighted average asset disbursement of the part of the accumulative asset disbursements minus the general
borrowing by the capitalization rate of the general borrowing used. The capitalization rate shall be calculated and determined
in light of the weighted average interest rate of the general borrowing. The capitalization period shall refer to the period from
the commencement to the cessation of capitalization of the borrowing costs, excluding the period of suspension of
capitalization of the borrowing costs. During the period of capitalization, the amount of interest capitalized during each
accounting period shall not exceed the amount of interest actually incurred to the relevant borrowings in the current period.
During the period of capitalization, the exchange balance on foreign currency borrowings shall be capitalized, and shall be
recorded into the cost of assets eligible for capitalization. For the ancillary expense incurred to a specifically borrowed loan,
those incurred before a qualified asset under acquisition, construction or production is ready for the intended use or sale shall
be capitalized at the incurred amount when they are incurred, and shall be recorded into the costs of the asset eligible for
capitalization; those incurred after a qualified asset under acquisition and construction or production is ready for the intended
use or sale shall be recognized as expenses on the basis of the incurred amount when they are incurred, and shall be recorded
into the profits and losses of the current period. The ancillary expenses arising from a general borrowing shall be recognized
as expenses at their incurred amount when they are incurred, and shall be recorded into the profits and losses of the current
period.
(20) Measurement and Recognition of Income Taxes
1.The company uses deferred income tax liability method in calculation of income taxes
2. Where the company obtains assets or liabilities, it shall determine its tax base. Where there is difference between the
carrying amount of the assets or liabilities and its tax base, the deferred income tax assets or the deferred income tax liabilities
shall be determined.
3. The recognition of the deferred income tax assetsSHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
46
a. The company should recognize the deferred income tax liabilities arising from a deductible temporary difference to
the extent of the amount of the taxable income which it is most likely to obtain and which can be deducted from the
deductible temporary difference. However, the deferred income tax assets, which are arising from the initial recognition of
assets or liabilities during a transaction which is simultaneously featured by the following, shall not be recognized:
(a) The transaction is not business combination;
(b) At the time of transaction, the accounting profits will not be affected, nor will the taxable amount (or the deductible
loss) be affected
b. Where the deductible temporary difference related to the investments of the subsidiary companies, associated
enterprises and joint enterprises can meet the following requirements simultaneously, the enterprise shall recognize the
corresponding deferred income tax assets:
(a) The temporary differences are likely to be reversed in the expected future; and
(b) It is likely to acquire any amount of taxable income tax that may be used for making up the deductible temporary
differences.
c. As for any deductible loss or tax deduction that can be carried forward to the next year, the corresponding deferred
income tax assets shall be determined to the extent that the amount of future taxable income to be offset by the deductible loss
or tax deduction to be likely obtained
4. Deferred income tax liabilities
Deferred tax liabilities shall be recognized for all taxable temporary differences, except to the extent that the deferred tax
liabilities arise from:
a. the initial recognition of good will;
b. the initial recognition of assets or liabilities arising from the following transactions which are simultaneously featured
by the following:
(1) The transaction is not business combination;
(2) At the time of transaction, the accounting profits will not be affected, nor will the taxable amount (or the deductible
loss) be affected.
c. The taxable temporary differences related to the investments of subsidiary companies, associated enterprises and joint
enterprises shall recognize corresponding deferred income tax liabilities. However, those that can simultaneously meet the
following conditions shall be excluded:
(1) The investing enterprise can control the time of the reverse of temporary differences; and
(2) The temporary differences are unlikely to be reversed in the excepted future.
5.The carrying amount of deferred income tax assets shall be reexamined on balance sheet day. If it is unlikely to
obtain sufficient taxable income taxes to offset the benefit of the deferred income tax assets, the carrying amount of the
deferred income tax assets shall be written down.
When it is probable to obtain sufficient taxable income taxes, such write down amount shall be subsequently reversed.
(21) Basis of Consolidation
1. The recognition scope of the consolidation
The consolidated financial statements prepared are in accordance with the No. 33 Enterprise Accounting Standards –
Consolidated Financial Statement issued in February, 2006. The recognition of the scope of the consolidated financialSHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
47
statement based on control bases the consolidation including the company, subsidiaries directly or indirectly controlled by the
company and special-purpose financial statements of the entity. Control refers to the Company has the right to decide
financial and operating policies of the invested company, and to obtain benefits from the business activities.
Company is not included in the scope of consolidation if there is evidence shows that the parent company can not
exercise control over it.
2. Purchase or sale of subsidiary share holding
The purchase and sale date will be confirmed with the time that major related risks and rewards of equity ownership
have been transferred. For the acquisition or sale of a subsidiary under the different control of the consolidation, the operating
results and cash flows have been properly included in the consolidated Income Statement and Consolidated Statements of
Cash Flows before the sales day and after the purchase day. For the acquisition or sale of a subsidiary under the same control
of the consolidation the operating results and cash flows have been properly included in the consolidated Income Statement
and Consolidated Statements of Cash Flows and shown separately. The corresponding adjustments have been made for
Comparative figures of the consolidated financial statements
3. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies
used into line with those used by other members of the group.
If the accounting policy and accounting period of the subsidiary are inconsistent with the Company, financial statements
of subsidiaries have been adjusted accordingly in accordance with the Company's accounting policies as preparation
consolidated financial statements, for the subsidiary acquired under different control consolidation, financial statements of
subsidiaries have been adjusted accordingly in accordance with fair value of subsidiary's identifiable assets, liabilities and
contingent liabilities at purchase day.
4. The method of consolidation
All significant intercompany transaction and balances between group enterprises are eliminated on consolidation. The
part of net assets of consolidated subsidiaries belongs to the part of minority interests should be reported separately in equity
of consolidated financial statements.
V.Taxation
1、Company applies to the following major types of taxes and tax rates：
Types of tax Tax basis Tax rate
Business tax Passenger, cargo transportation business or commissions, lease business 3%or5%
Income tax Taxable income 25%
Note: According to CAISHUI [2008] NO.178 Document, from 1/1/2008 to 31/12/2010 fuel surcharge are exempted from
sales tax for airline company.
2、Civil aviation basic construction fund
According to Causing [2004] No. 38 the notice of temporary administration method for civil aviation basic construction
fund issued by the Ministry of Finance, civil aviation fund is calculated based on classification of airline, maximum take off
weight, airline mileage etc. and related regulation.
VI. Corporate Consolidate and the Scope of Consolidated Financial StatementsSHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
48
1、Subsidiaries Were not ObtainedThrough Combination
Company Name Registered Address Business nature Business scope
Qingdao Int'l Aviation Logistics Center Co., Ltd Qingdao Transportation and warehousing
Aviation cargo warehousing, ground allocation; Electronic
commerce and so on
Subsidiaries were not obtained through combination（continued）
Company Name Registered capital
Actual investment at year
end
Proportion of shares held
by the company
Proportion of voting rights
Whether consolidated or
not
Qingdao Int'l Aviation Logistics Center Co., Ltd. 3,000.00 2,381.00 70.00% 70.00% Yes
2. Minority Interest of Subsidiaries
Company Name
Minority shareholder
interests at 31/12/2008
Net profits of
subsidiaries
The proportion of
shares held by
minority
shareholders
Profit and loss
attribute to minority
shareholders
The excess losses by
Minority shareholders that
parent company has to
beared
Minority shareholder
interests at 30/6/2009
Qingdao Int'l Aviation
Logistics Center Co., Ltd.
12,790,655.55 570,273.00 30.00% 171,081.90 0.00 12,961,737.45
VII. Joint Venture and Associated Enterprises
List of joint ventures and key financial information：
Company Name Registered Address Business nature
Registered
capital(Million)
Holding
Proportion
Proportion of voting
rights
Shandong Airlines Rainbow Jet Co., Ltd. Jinan General aviation transportation 50.00 45% 45%
List of joint ventures and key financial information(continued)：
Company Name
Total assts at the end of
balance date
Total liabilities at the end of
balance date
Total net assets at the end of
balance date
Total income Net profits
Shandong Airlines Rainbow Jet Co., Ltd. 86,923,529.64 203,906,353.72 -116,982,824.08 4,955,435.17 1,701,696.50
VIII. Main Items of Consolidated Financial Statements
1. Monetary Funds
Items 30 Jun. 2009 31 Dec 2008
Cash on hand 924,840.03 220,541.02
Bank deposit 83,799,823.84 44,716,517.86
Other monetary fund 52,735,875.00 26,935,875.00
Total 137,460,538.87 71,872,933.88SHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
49
30 Jun. 2009 31 Dec 2008
Items Original
currency
Exchange
rate
Equivalent to
RMB
Original
currency
Exchange
rate
Equivalent to
RMB
Cash on hand
RMB 901,628.64 1.00 901,628.64 168,989.78 1.00 168,989.78
HKD 1,559.60 0.8815 1,374.79 1,559.60 0.8819 1,375.43
USD 25.92 6.8319 177.08 1,520.92 6.8346 10,394.89
GBP 352.80 11.3379 4,000.01 82.80 9.8798 818.04
CAD 10.00 5.9140 59.14 10.00 5.6146 56.15
JPY 135,000.00 0.0711 9,598.50 135,000.00 0.0757 10,219.50
EUR 830.00 9.6408 8,001.87 2,970.00 9.6590 28,687.23
Sub total 924,840.03 220,541.02
Bank deposit
RMB 81,678,288.17 1.00 81,678,288.17 44,483,350.50 1.00 44,483,350.50
USD 310,533.77 6.8319 2,121,535.67 34,115.73 6.8346 233,167.36
Sub total 83,799,823.84 44,716,517.86
Other monetary fund
RMB 52,735,875.00 1.00 52,735,875.00 26,935,875.00 1.00 26,935,875.00
USD 0.00 0.00 0.00 0.00 0.00 0.00
Sub total 52,735,875.00 26,935,875.00
Total 137,460,538.87 71,872,933.88
Note：Up to 30/6/2009, Other monetary funds increased 25,800,000.00yuan in comparison with the opening balance, this is
mainly caused by commercial acceptance bill.
2. Tradable Financial Assets
Items 30 Jun. 2009 31 Dec 2008
Derivative financial Assets 19,404,619.47 23,460,812.11
Total 19,404,619.47 23,460,812.11
Note：Up to 30/6/2009, the total amount of immature interest rate swaps of the company is 205,364,200.90 U.S. dollars, of
which redeemable interest rate swaps is 4,420,800.11 U.S. dollars。The bank has confirmed the fair value of the interest rate swaps
of the company is 19,404,619.47Yuan (2,840,296.18 U.S. dollars)。
3. Accounts Receivable
(1) Composition of Accounts ReceivableSHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
50
30 Jun. 2009 31 Dec 2008
Items
Balance Proportion
Bad debt
provision
Book value Balance Proportion
Bad debt
provision
Book value
Individual transaction
with significant amount 152,979,454.19 98.41% 0.00 152,979,454.19 115,826,770.70 91.46% 0.00 115,826,770.70
Credit risk portfolio 0.00 0.00% 0.00 0.00 0.00 0.00% 0.00 0.00
Other transaction with no
significant amount 2,470,228.73 1.59% 101,306.68 2,368,922.05 10,812,993.42 8.54% 521,732.03 10,291,261.39
Total 155,449,682.92 100.00% 101,306.68 155,348,376.24 126,639,764.12 100.00% 521,732.03 126,118,032.09
(2) Individual accounts receivable with significant amount
Items Amount Bad debt provision reason
BSP 56,972,285.35 0.00
balance due to the settlement method, all amount after period
are received
Netting shall 25,519,116.65 0.00
balance due to the settlement method, all amount after period
are received
Air China Limited 70,488,052.19 0.00
balance due to the settlement method, all amount after period
are received
Total 152,979,454.19 0.00
(3) Age analysis of accounts receivable
30.Jun 2009 31 Dec 2008
Age
Balance proportion Bad debt provision Net value Balance proportion Bad debt provision Net value
Within 1 year 155,411,910.74 99.98% 99,418.07 155,312,492.67 125,431,572.82 99.05% 445,258.73 124,986,314.09
1 to 2 years 12,751.26 0.01% 637.56 12,113.70 1,157,864.08 0.91% 75,222.25 1,082,641.83
2 to 3 years 1,218.50 0.00% 60.93 1,157.57 26,524.80 0.02% 60.93 26,463.87
3 to 4 years 23,802.42 0.01% 1,190.12 22,612.30 23,802.42 0.02% 1,190.12 22,612.30
4 to 5 years 0.00 0.00% 0.00 0.00 0.00 0.00% 0.00 0.00
Total 155,449,682.92 100.00% 101,306.68 155,348,376.24 126,639,764.12 100.00% 521,732.03 126,118,032.09
(4) the first five accounts of account receivable
30.Jun 2009 31 Dec 2008
Items
Amounts proportion Amounts proportion
Total amounts of the first five accounts of account receivable 133,697,448.52 86.01% 117,636,799.77 92.89%SHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
51
(5) As at June 30, 2009, the outstanding amounts of the shareholders who hold over 5% voting rights (including 5%) see "Note
10, Related Party Relationships and transactions.
4. Advance Payable
(1) Age analysis of advance payable
Age 30.Jun 2009 Proportion 31 Dec 2008 Proportion
Within 1 year 32,410,412.91 96.55% 28,449,390.88 97.68%
1-2years 1,158,873.67 3.45% 674,854.09 2.32%
Total 33,569,286.58 100.00% 29,124,244.97 100.00%
(2) Up to 30 Jun 2009, the account balance did not contain any debt owned by major shareholders who owns 5% or over 5%
of voting shares
5. Other Account Receivable
(1)Composition of other account receivable
30.Jun 2009 31 Dec 2008
Items
Balance Proportion
Bad debt
provision
Book value Balance Proportion
Bad debt
provision
Book value
Individual transaction
with significant
amount 262,519,821.97 83.91% 109,079,465.90
153,440,356.07 203,908,540.13 79.66% 109,051,717.65 94,856,822.48
Other transaction with
no significant amount 50,338,423.93 16.09% 2,717,070.28 47,621,353.65 52,065,571.90 20.34% 1,944,258.14 50,121,313.76
Total 312,858,245.90 100.00% 111,796,536.18 201,061,709.72 255,974,112.03 100.00% 110,995,975.79 144,978,136.24
(2)Other individual account receivable with significant amount
Debtor Balance bad debts provision Reason
Shandong Airlines Rainbow-Jet Co. ,Ltd (SARJ)
109,079,465.90 109,079,465.90
Long-term accounts receivable, the company could not
repay debts due to its financial difficulty
Deposit of aircraft engine 94,837,363.58 0.00
Deposit for engine maintenance and purchase of aircraft, all
amounts is receivable in the future.
The return of civil aviation basic construction fund
58,602,992.49 0.00
The return of t civil aviation basic construction fund
Total 262,519,821.97 109,079,465.90SHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
52
(3)Age analysis of other account receivable
30.Jun 2009 31 Dec 2008
Age Balance Proportion Bad debt provision Net value Balance Proportion Bad debt provision Net value
Within 1 year 109,334,118.01 34.95% 2,839,102.68 106,495,015.33 42,992,690.15 16.80% 2,038,542.29 40,954,147.86
1 to 2 years 20,157,238.10 6.44% 669,245.45 19,487,992.65 31,169,427.89 12.18% 669,245.45 30,500,182.44
2 to 3 years 18,462,733.74 5.90% 10,698,669.47 7,764,064.27 17,263,584.49 6.74% 10,698,669.47 6,564,915.02
3 to 4 years 133,486,044.22 42.67% 80,329,246.11 53,156,798.11 133,052,336.46 51.98% 80,329,246.11 52,723,090.35
4 to 5 years 23,343,821.23 7.46% 17,195,422.39 6,148,398.84 23,398,644.42 9.14% 17,195,422.39 6,203,222.03
Above 5 years 8,074,290.60 2.58% 64,850.08 8,009,440.52 8,097,428.62 3.16% 64,850.08 8,032,578.54
Total 312,858,245.90 100.00% 111,796,536.18 201,061,709.72 255,974,112.03 100.00% 110,995,975.79 144,978,136.24
(4)List of significant debtors
Name of debtors Balance Nature or content Age Proportion
SARJ 109,079,465.90 Disbursement fee 1-5years 34.87%
Civil Aviation Administration of China 58,602,992.49 The return of the Civil Aviation Fund Within 1 year 18.73%
GuoYin finance lease company 41,354,563.28 Deposit of aircraft 3-4years 13.22%
Singapore Aircraft Leasing Enterprise 19,129,320.00 Deposit of aircraft 2-4years 6.11%
Rainier Aircraft Leasing (Ireland) Limited 16,757,921.85 Deposit of aircraft 3-6years 5.36%
Total 244,924,263.52 78.29%
(5) The closing balance of the advanced payments has been increased 38.68% in comparison with the opening balance,
this mainly caused by the return of the Civil Aviation Fund.
(6) As at June 30, 2009, the outstanding amounts of the shareholders who hold over 5% voting rights (including 5%) see
"Note 10, Related Party Relationships and transactions.
6. Inventory
(1) Details of inventories
30.Jun 2009 31 Dec 2008
Items
Balance
Impairment loss
provision
Net value
Balance Impairment loss
provision
Net value
Aviation consumable material 64,349,257.14 353,539.79 63,995,717.35 73,263,438.33 353,539.79 72,909,898.54
Low value consumable 1,235,992.88 0.00 1,235,992.88 762,731.56 0.00 762,731.56
Material 737,535.83 0.00 737,535.83 605,146.87 0.00 605,146.87
Others 0.00 0.00 0.000 69,752.60 0.00 69,752.60
Total 66,322,785.85 353,539.79 65,969,246.06 74,701,069.36 353,539.79 74,347,529.57
(2) Inventories impairment loss provisionSHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
53
Items 31 Dec 2008
Impairment loss
provision
Reversal Write off 30.Jun 2009
Proportion of current reversal to
inventories closing balance
Aviation consumable material 353,539.79 0.00 0.00 0.00 353,539.79 0.00
Total 353,539.79 0.00 0.00 0.00 353,539.79 0.00
(3) Up to 30 Jun 2009, the company did not use any inventories for guarantee.
7. Long-term Equity Investment
(1) Long-term equity investment and impairment loss provision
30.Jun 2009 31 Dec 2008
Items
Balance
Impairment loss
provision
Book value Balance
Impairment loss
provision
Book value
Long-term Equity Investment 110,852 ,100.00 22,500,000.00 88,352,100.00 110,852 ,100.00 22,500,000.00 88,352,100.00
Include: Investment in Subsidiary 0.00 0.00 0.00 0.00 0.00 0.00
Joint Venture 22,500,000.00 22,500,000.00 0.00 22,500,000.00 22,500,000.00 0.00
Investment in Other Companies 88,352,100.00 0.00 88,352,100.00 88,352,100.00 0.00 88,352,100.00
（2）Long-term equity investments measured with cost method
Investee Initial investment cost 31 Dec 2008 Increment Decrement 30.Jun 2009
China Civil aviation information network Co., Ltd 6,690,000.00 6,690,000.00 0.00 0.00 6,690,000.00
SiChuan airlines Co. Ltd 35,000,000.00 35,000,000.00 0.00 0.00 35,000,000.00
JiNan International Airport Co. Ltd 46,662,100.00 46,662,100.00 0.00 0.00 46,662,100.00
Total 88,352,100.00 88,352,100.00 0.00 0.00 88,352,100.00
(3) Long-term equity investments measured with equity method
Investee
Initial investment
cost
31 Dec 2008 Increment Decrement
Cash
dividend
Other decrement 30.Jun 2009
Accumulate Cash
dividend
SARJ 22,500,000.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total 22,500,000.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
(4) Long-term equity investments impairment loss provision
Investee 31 Dec 2008 Increment Decrement 30.Jun 2009
SARJ 22,500,000.00 0.00 0.00 22,500,000.00
Total 22,500,000.00 0.00 0.00 22,500,000.00
Note: Due to the insolvency of SARJ, the company decided to set up an impairment provision for this long-term
investment of SARJ.
8. Fixed Assets and Accumulated Depreciation
（1） Classify Details
Item 31 Dec 2008 Increment Decrement 30.Jun 2009SHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
54
1.Fixed asset original price total 7,472,780,209.13 720,792,174.51 40,642,848.35 8,152,929,535.29
Building 141,400,628.79 4,101,234.51 0.00 145,501,863.30
Aircraft and engine 6,801,818,456.15 694,774,511.73 35,950,000.00 7,460,642.967.88
High price rotables 401,057,334.04 9,427,336.84 1,854,219.35 408,630,451.53
Vehiclest 34,555,729.63 5,699,129.61 1,870,210.11 38,384,649.13
Machinery and equipment and other office equipment 93,948,060.52 6,789,961.82 968,418.89 99,769,603.45
2.Accumulated depreciation total 1,788,705,263.67 251,990,542.17 38,372,869.12 2,002,322,936.72
Building 22,393,646.58 2,462,822.29 0.00 24,856,468.87
Aircraft and engine 1,584,732,713.81 232,207,884.66 35,485,525.44 1,781,455,073.03
High price rotables 119,773,454.99 11,468,044.82 401,042.34 130,840,457.47
Delivery equipment 18,294,678.86 1,753,578.97 1,742,585.06 18,305,672.77
Machinery and equipment and other office equipment 43,510,769.43 4,098,211.43 743,716.28 46,865,264.58
3. Fixed asset net book value total 5,684,074,945.46 0.00 0.00 6,150,606,598.57
Building 119,006,982.21 0.00 0.00 120,645,394.43
Aircraft and engine 5,217,085,742.34 0.00 0.00 5,679,187,894.85
High price rotables 281,283,879.05 0.00 0.00 277,789,994.06
Delivery equipment 16,261,050.77 0.00 0.00 20,078,976.36
Machinery and equipment and other office equipment 50,437,291.09 0.00 0.00 52,904,338.87
（2） Current year completed construction in progress transferred to fixed asset is 640,686,121.15 Yuan.
（3） Finance leases
Items Book value Accumulated depreciation Impairment provision Net book value
Aircraft and engine 2,505,052,608.99 833,975,747.57 0.00 1,671,076,861.42
Total 2,505,052,608.99 833,975,747.57 0.00 1,671,076,861.42
（4）up toJune 30, 2009, there is nothing indicates that fixed assets have been impaired therefore no impairment
provision is provided.
9. Construction in Progress
(1) Construction in progress
Title 31 Dec 2008 Increment Transferred into fixed asset Decrement 30.Jun 2009
B737-800 (2008) 174,410,921.37 150,402,794.18 324,813,715.55 0.00 0.00
B737-800 (2009) 900,570,911.87 187,941,188.26 312,940,263.65 317,139,020.01 458,432,816.47
B737-800 (2012) 99,982,561.49 1,268,664.66 0.00 0.00 101,251,226.15
ARJ700 60,778,195.00 0.00 0.00 0.00 60,778,195.00
B737NG 6,750,305.12 0.00 0.00 6,750,305.12
Other construction 42,001,563.59 11,456,095.11 2,932,141.95 1,214,873.40 49,310,643.35
Total 1,277,744,153.32 357,819,047.33 640,686,121.15 318,353,893.41 676,523,186.09SHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
55
(2) Capitalization of borrowing for construction in progress to 30 Jun 2009
Title 31 Dec 2008 Increment Transferred into fixed asset Other decrease 30.Jun 2009
B737-800 10,435,598.27 15,202,862.64 16,426,198.99 1,159,928.54 8,052,333.38
ARJ21-700 487,587.70 0.00 0.00 0.00 487,587.70
Total 10,923,185.97 15,202,862.64 16,426,198.99 1,159,928.54 8,539,921.08
(3) Up to 30. June 2009, there is nothing indicates that construction in progress have been impaired therefore no
impairment provision is provided.
10. Intangible Assets and Accumulated Amortization
(1) Intangible assets
Items 31 Dec 2008 Increment Decrement 30.Jun 2009
1、Total original value 49,044,696.49 0.00 0.00 49,044,696.49
land Use right 49,044,696.49 0.00 0.00 49,044,696.49
2.Totalaccumulated amortization 2,099,622.32 370,587.51 0.00 2,470,209.83
land Use right 2,099,622.32 370,587.51 0.00 2,470,209.83
3. Total accumulated impairment loss provision for
intangible assets 0.00 0.00 0.00 0.00
land Use right 0.00 0.00 0.00 0.00
4.Total book value of intangible assets 46,945,074.17 0.00 0.00 46,574,486.66
land Use right 46,945,074.17 0.00 0.00 46,574,486.66
(2) Up to June 30, 2009, there is nothing indicates that Intangible assets have been impaired therefore no impairment
provision is provided.
11. Long-term Deferred Expenses
Items Original value 31 Dec 2008 Increment Decrement transfer out
accumulated
amortization
30.Jun 2009
Expenses of recruitment
and training for pilots 284,348,225.82 208,312,781.55 27,835,107.84 7,697,044.01 0.00 83,732,488.28 228,450,845.38
Total 284,348,225.82 208,312,781.55 27,835,107.84 7,697,044.01 0.00 83,732,488.28 228,450,845.38
The amortization period for expenses of recruitment and training for pilots is 20 years, The remaining period is16-19
years。
12. Deferred Income Tax Assets
Recognized deferred income tax assets
deductible temporary differences deferred income tax assets
Items
30.Jun 2009 31 Dec 2008 30.Jun 2009 31 Dec 2008
deductible temporary differences arising from Provision 111,841,831.84 111,461,696.80 27,960,457.97 27,865,424.20SHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
56
for impairment of assets
Inventory impairment provision 353,539.79 353,539.79 88,384.95 88,384.95
Withholding costs for assets repairing 261,400,539.42 156,828,874.32 65,350,134.86 39,207,218.58
Employee wage payable 7,324,543.00 6,424,516.00 1,831,135.75 1,606,129.00
Deductible difference resulting from loss remedy 0.00 0.00 0.00 0.00
Launch fee amortization 28,005.52 28,005.52 7,001.38 7,001.38
Total 380,948,459.57 275,096,632.43 95,237,114.91 68,774,158.11
Note: According to the history of sales and Prediction of future market of the company, deferred income tax assets
recognized in each period can be written back in the following period
13. Provision for Asset Impairment
Decrement
Items 31 Dec 2008 Increment
written back Written off
30.Jun 2009
(1) Accounts receivable bad debt provision 521,732.03 0.00 420,425.35 0.00 101,306.68
(2) Other account receivable bad debt provision 110,995,975.79 800,560.39 0.00 0.00 111,796,536.18
(3) Provision of inventory impairment loss 353,539.79 0.00 0.00 0.00 353,539.79
(4) impairment provision of the long term equity
investment 22,500,000.00 0.00 0.00 0.00 22,500,000.00
Total 134,371,247.61 800,560.39 420,425.35 0.00 134,751,382.65
14. Restricted Assets
(1) Restricted assets
Item 30.Jun 2009 31 Dec 2008
Net worth of pledged assets 4,046,450,476.43 5,217,085,742.34
Self owned aircraft 2,681,452,085.81 3,458,371,814.05
Finance leased aircraft 1,364,998,390.62 1,758,713,928.29
The asset of ownership restrictions
caused by other reasons 52,735,875.00 26,935,875.00
Other monetary fund 52,735,875.00 26,935,875.00
Total 4,099,186,351.43 5,244,021,617.34
(2) The obtaining of bank loans and finance leasing aircraft cause the accessing of the above assets to be restricted.
15. Short-term LoansSHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
57
（1）Types of short-term loan
Types 30.Jun 2009 31 Dec 2008
Credit bank loan 0.00 70,503,800.00
Pledged bank loan 0.00 126,383,714.55
Guaranteed bank loan 770,000,000.00 810,000,000.00
Total 770,000,000.00 1,006,887,514.55
（2）Details of short-term loan
Types Amount(RMB) Start Date Maturity Date Remarks
Guaranteed bank loan：
China Construction Bank 40,000,000.00 2008.12.18 2009.12.17 Shandong airline co. ltd as guarantor
Agriculture bank of China, 20,000,000.00 2008.11.5 2009.11.4 Shandong airline co. ltd as guarantor
Agriculture bank of China, 50,000,000.00 2008.11.12 2009.11.11 Shandong airline co. ltd as guarantor
Agriculture bank of China, 60,000,000.00 2009.1.7 2010.1.6 Shandong airline co. ltd as guarantor
Agriculture bank of China, 60,000,000.00 2009.1.14 2010.1.13 Shandong airline co. ltd as guarantor
Agriculture bank of China, 60,000,000.00 2009.1.21 2010.1.20 Shandong airline co. ltd as guarantor
Agriculture bank of China, 40,000,000.00 2009.3.11 2010.3.10 Shandong airline co. ltd as guarantor
Agriculture bank of China, 40,000,000.00 2009.3.17 2010.3.16 Shandong airline co. ltd as guarantor
Bank of China 80,000,000.00 2008.12.31 2009.12.30 Shandong airline co. ltd as guarantor
Bank of China 50,000,000.00 2009.2.12 2010.2.11 Shandong airline co. ltd as guarantor
China Merchants Bank 80,000,000.00 2009.1.13 2009.12.15 Shandong airline co. ltd as guarantor
China Merchants Bank. 90,000,000.00 2009.4.15 2009.12.10 Shandong airline co. ltd as guarantor
CNAC Finance Companies 100,000,000.00 2009.6.29 2010.6.28 Shandong airline co. ltd as guarantor
Total 770,000,000.00
(3) As of June 30, 2009 there are no overdue outstanding loans.
16. Notes Payable
Details
Items 30.Jun 2009 31 Dec 2008
bank acceptance 96,000,000.00 10,000,000.00
Total 96,000,000.00 10,000,000.00
（2）The closing balance of the notes payable has increased 860.00% in comparison with the opening balance, this
is mainly caused by the addition made to the maturity bank acceptance.
17. Accounts Payable
(1). Age
Age 30.Jun 2009 31 Dec 2008
Within 1 year 921,805,467.83 866,216,091.36
Above I year 4,683,681.25 9,102,968.75SHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
58
Total 926,489,149.08 875,319,060.11
(2) Up to 30 June 2009, there are no payables due from shareholders who own 5% or over 5% of voting rights
18. Advanced fromCustomers
(1). Age
Age 30.Jun 2009 31 Dec 2008
Within 1 year 111,342,067.06 87,709,493.54
Above 1 year 4,400.00 26,000.00
Total 111,346,467.06 87,735,493.54
(2) Up to 30 Jun 2009, there are no advanced payments received from shareholders who own 5% or over 5% of voting
rights
19. Payroll Payable
Items 31 Dec 2008 Increment Decrement 30.Jun 2009
1、Salary, bonus and allowance 84,396,042.97 180,192,586.08 220,330,805.03 44,257,824.02
2、Employee benefit 0.00 11,128,418.51 11,128,418.51 0.00
3、Social insurance fee 251.24 30,664,506.40 30,664,506.40 251.24
Include：(1). medical insurance 0.00 29,876.00 29,876.00 0.00
(2).Basic retirement insurance 251.24 18,755,145.68 18,755,145.68 251.24
(3).Annuity fee 0.00 8,834,139.09 8,834,139.09 0.00
(4).Unemployment fee 0.00 1,956,544.82 1,956,544.82 0.00
(5).Injury insurance 0.00 418,769.56 418,769.56 0.00
(6).Procreation insurance premium 0.00 670,031.26 670,031.26 0.00
4、Housing accumulation fund 3,042.24 36,116,546.54 36,115,836.54 3,752.24
5、Labor union fee and employee education fee 6,720,630.62 4,894,408.96 1,407,922.53 10,207,117.05
6. Non-monetary benefit 0.00 0.00 000 0.00
7、Redemption of termination of labor contract 0.00 0.00 0.00 0.00
8、Others 0.00 1,020,421.78 1,020,421.78 0.00
Include：share payment by cash 0.00 0.00 0.00 0.00
Total 91,119,967.07 262,996,466.49 299,647,489.01 54,468,944.55
Note：The payroll payable has decreased 40.22% in comparison with the opening balance, this mainly caused by the
payment to annual bonus in 2008.
20. Tax Payable
Types 30.Jun 2009 31 Dec 2008
VAT & Custom tax 29,000,611.18 42,093,679.29
Sales tax 10,672,249.18 4,783,260.78SHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
59
City maintenance construction fee 0.00 1,017.73
Enterprise Income tax 56,643,540.75 7,878,180.11
Property tax 1,158,103.80 1,174,020.58
Tenure tax 225,842.99 3,468.00
Personal income tax 3,737,709.34 1,846,373.79
Stamp duty 1,299,227.26 3,099,249.32
Civil aviation infrastructure construction fund 9,533,423.09 9,223,996.01
Civil aviation airport administration fee 30,934,775.13 26,114,804.00
Income tax in advance 16,347,502.59 15,119,191.76
Total 159,552,985.31 111,337,241.37
Note：The closing balance of the tax payable has increased 43.31% in comparison with the opening balance; this
mainly caused by the company has not carried out the Final Settlement and Payment of Enterprise Income Taxes.
21. Interest Payable
Items 30.Jun 2009 31 Dec 2008
interest on short and long-term borrowings 6,088,936.83 9,634,990.00
Total 6,088,936.83 9,634,990.00
22. Other Accounts Payable
(1). Age
Age 30.Jun 2009 31 Dec 2008
Within 1 year 122,616,517.88 117,844,706.36
Above 1 year 31,313,569.50 43,892,042.34
Total 153,930,087.38 161,736,748.70
(2).Details of significant Other accounts payable with age more than one year
Name Amount owed age The reasons for arrears
Air China Ltd. 20,000,000.00 1-2years
Air China prepaid 20 million Yuan for aircraft wet renting on December 10, 2007. Both
parties agreed that the settlement should base on the actual operation of these aircrafts
and shall settle the payment in the last month before the contract terminated.
（3）The total amount of the top five of other account payable is 72,698,048.31 Yuan which is taken 47.23% of the total
amount of other account payable.
（4）Up to 30 June 2009, amounts due to shareholders who own 5% or over 5% of voting rights see “Note 10, Related
parties and transactions”.
23. Non-current Liabilities Due Within One Year
(1). TypesSHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
60
Items 30.Jun 2009 31 Dec 2008
Long-term borrowing within 1 year 318,595,751.97 487,168,908.19
Long-term account payable within 1 year 209,622,019.70 227,593,094.74
Total 528,217,771.67 714,762,002.93
Less: Unrecognized financing liabilities 104,694,131.94 99,172,325.71
Total 423,523,639.73 615,589,677.22
(2). List of creditors
30.Jun 2009
Items
Currency Original currency Equivalent to RMB
Interest rate Remark
Commerz bank, New York branch USD 3,151,596.51 21,531,392.21 6.0100%-6.0150% pledge
Guoyin Financial lease company RMB 83,396,495.55 83,396,495.55 8.1500% pledge
Industry and commercial bank Jinan
Dongjiao branch RMB 120,000,000.00 120,000,000.00 5.5080% pledge
Bank of Communication Co.,Ltd,JiNan
Tianqiao branch RMB 57,160,950.00 57,160,950.00 5.3460%-6.4800% Guarantee
Bank of China, Jinan branch USD 11,200,000.00 76,517,280.00 3.0638% pledge
China Minsheng Bank Jinan branch RMB 50,000,000.00 50,000,000.00 5.9400% pledge
Bank of Communication Co.,Ltd,JiNan
Tianqiao branch USD 2,183,510.00 14,917,521.97 2.2900%-3.3213% Guarantee
Total 423,523,639.73
(3) As of June 30, 2009 there are no overdue outstanding loans.
24. Long-term Borrowing
(1) Types
Types 30.Jun 2009 31 Dec 2008
Pledge bank loan 1,970,508,341.86 1,157,489,900.59
Guaranteed bank loan 1,443,538,719.45 2,001,843,376.80
Total 3,414,047,061.31 3,159,333,277.39
(2)List of creditors
Creditor Original currency Equivalent to RMB Start date Maturity date Interest rate Remark
Construction Bank of China 27,600,000.00 27,600,000.00 2007-12-3 2022-3-28 5.5080% Shandong airline co. ltd as guarantorSHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
61
Construction Bank of China 83,000,000.00 83,000,000.00 2008-1-2 2022-3-28 5.3460% Shandong airline co. ltd as guarantor
Construction Bank of China 54,000,000.00 54,000,000.00 2008-3-3 2022-3-28 5.3460% Shandong airline co. ltd as guarantor
Construction Bank of China 53,000,000.00 53,000,000.00 2008-4-1 2022-3-28 5.3460% Shandong airline co. ltd as guarantor
Construction Bank of China 26,500,000.00 26,500,000.00 2008-4-29 2022-3-28 5.3460% Shandong airline co. ltd as guarantor
Construction Bank of China 52,300,000.00 52,300,000.00 2008-6-2 2022-3-28 7.0470% Shandong airline co. ltd as guarantor
Construction Bank of China 51,500,000.00 51,500,000.00 2008-7-1 2022-3-28 7.0470% Shandong airline co. ltd as guarantor
Construction Bank of China 120,000,000.00 120,000,000.00 2008-7-15 2022-3-28 7.0470% Shandong airline co. ltd as guarantor
construction bank of china 114,000,000.00 114,000,000.00 2009-4-21 2022-3-28 5.0220% Shandong airline co. ltd as guarantor
Construction Bank of China 8,539,000.00 58,337,594.10 2007-3-29 2022-3-28 4.7750% Shandong airline co. ltd as guarantor
Construction Bank of China 1,250,000.00 8,539,875.00 2007-4-30 2022-3-28 2.3750% Shandong airline co. ltd as guarantor
Construction Bank of China 6,765,620.00 46,222,039.28 2007-5-31 2022-3-28 3.3675% Shandong airline co. ltd as guarantor
Construction Bank of China 17,954,820.00 122,665,534.76 2007-7-2 2022-3-28 2.5750% Shandong airline co. ltd as guarantor
Construction Bank of China 3,749,800.00 25,618,258.62 2007-8-1 2022-3-28 2.4338% Shandong airline co. ltd as guarantor
Construction Bank of China 12,000,000.00 81,982,800.00 2007-8-29 2010-8-28 2.5600% Aircraft as pledge
Construction bank of china J 1,300,000.00 8,881,470.00 2007-9-10 2010-8-28 2.6000% Aircraft as pledge
Construction Bank of China 700,000.00 4,782,330.00 2007-9-21 2010-8-28 2.5413% Aircraft as pledge
Construction Bank of China 14,908,900.00 101,856,113.91 2007-9-28 2022-3-28 2.5944% Aircraft
Industrial and commercial bank 100,000,000.00 100,000,000.00 2006-12-18 2018-12-17 5.3460% Aircraft
Industrial and Commercial Bank 2,200,000.00 2,200,000.00 2008-6-5 2018-12-17 5.5080% Aircraft
Industrial and Commercial Bank 2,100,000.00 2,100,000.00 2008-6-18 2018-12-17 5.5080% Aircraft
Industrial and Commercial Bank 123,000,000.00 123,000,000.00 2008-6-19 2018-12-17 5.5080% Aircraft
Industrial and Commercial Bank 13,500,000.00 13,500,000.00 2008-7-1 2018-12-17 6.9660% Aircraft
Industrial and Commercial Bank 30,000,000.00 30,000,000.00 2008-8-19 2018-12-17 5.8320% Aircraft
Industrial and Commercial Bank 3,671,400.00 25,082,637.66 2007-5-31 2018.12.17 3.6750% Aircraft
Industrial and Commercial Bank 3,671,400.00 25,082,637.66 2007-9-4 2018.12.17 2.6038% Aircraft
Industrial and Commercial Bank 3,671,400.00 25,082,637.66 2007-12-3 2018.12.17 3.4063% Aircraft
Industrial and Commercial Bank 38,491,654.64 262,971,135.34 2009-6-30 2023-3-20 2.5170% Aircraft
Bank of Communication Co.,Ltd 123,900,000.00 123,900,000.00 2006-5-30 2016-12-30 5.7510% Shandong airline co. ltd as guarantor
Bank of Communication Co.,Ltd 94,926,650.00 94,926,650.00 2007-11-12 2016-12-30 6.4800% Shandong airline co. ltd as guarantor
Bank of Communication Co.,Ltd 95,200,000.00 95,200,000.00 2007-12-3 2016-12-30 5.5080% Shandong airline co. ltd as guarantor
Bank of Communication Co.,Ltd 79,950,000.00 79,950,000.00 2008-1-14 2016-12-30 5.3460% Shandong airline co. ltd as guarantor
Bank of Communication Co.,Ltd 2,562,980.00 17,510,023.06 2006-10-31 2016-12-30 2.2750% Shandong airline co. ltd as guarantor
Bank of Communication Co.,Ltd 2,570,505.00 17,561,433.11 2006-11-30 2016-12-30 3.3213% Shandong airline co. ltd as guarantor
Bank of Communication Co.,Ltd 2,562,980.00 17,510,023.06 2007-1-31 2016-12-30 2.3175% Shandong airline co. ltd as guarantor
Bank of Communication Co.,Ltd 2,531,830.00 17,297,209.38 2007-2-15 2016-12-30 2.4725% Shandong airline co. ltd as guarantor
Bank of Communication Co.,Ltd 2,524,445.00 17,246,755.80 2007-4-29 2016-12-30 2.2900% Shandong airline co. ltd as guarantor
Bank of Communication Co.,Ltd 2,531,830.00 17,297,209.38 2007-5-31 2016-12-30 3.3213%
Shandong airline co. ltd as guarantor
Bank of China 24,795,533.60 169,400,606.00 2005-7-15 2019-4-28 3.0638% Aircraft as pledgeSHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
62
Bank of China 26,071,798.00 178,119,916.76 2005-10-19 2019-4-28 3.0638% Aircraft as pledge
Bank of China 26,213,260.00 179,086,370.99 2005-12-21 2019-4-28 3.0638% Aircraft as pledge
Bank of China 923,467.00 6,309,034.20 2005-12-23 2019-4-28 3.0638% Aircraft as pledge
Bank of China 525,000.00 3,586,747.50 2006-4-27 2019-4-28 3.0638% Aircraft as pledge
China Minsheng Bank Jinan branch 227,000,000.00 227,000,000.00 2004-6-29 2014-6-29 5.9400% Aircraft as pledge
China Minsheng Bank Jinan branch 23,000,000.00 23,000,000.00 2004-11-2 2014-6-29 5.9400% Aircraft as pledge
Shanghai Pudong Development Bank 40,000,000.00 40,000,000.00 2007-1-9 2009-12-13 4.8600% Aircraft as pledge
China Development Bank 3,735,500.00 25,520,562.45 2008-7-1 2023-6-30 2.5913% Transfer the rights of Purchase
China Development Bank 18,292,500.00 124,972,530.75 2008-7-11 2023-6-30 2.5913% Transfer the rights of Purchase
China Development Bank 7,481,350.00 51,111,835.07 2008-9-2 2023-6-30 2.5913% Transfer the rights of Purchase
China Development Bank 3,735,500.00 25,520,562.46 2008-9-26 2023-6-30 2.5913% Transfer the rights of Purchase
Total 3,414,047,061.31
Note：As of June 30, 2009there are no overdue outstanding loans.
25. Long-term Account Payable
(1) Details
Balance due within following dates 30.Jun 2009 31 Dec 2008
First year after balance sheet date 209,622,019.70 227,593,094.76
Second year after balance sheet date 188,324,383.31 227,593,094.76
Third year after balance sheet date 166,792,991.11 184,513,291.73
Over there years 1,049,985,888.91 1,217,418,343.07
Total minimum lease payment 1,614,725,283.03 1,857,117,824.32
Less: unrecognized financing fee 437,465,020.29 614,237,149.91
Finance lease payable 1,177,260,262.74 1,242,880,674.41
Include: finance lease payable within 1 year 104,927,887.76 128,420,769.03
Total 1,072,332,374.98 1,114,459,905.38
(2) List of long-term payable
30.Jun 2009
Item
Currency Original currency Equivalent to RMB
Loan condition Interest rate maturity date
Commerzbank, New
York Branch USD 6,003,231.88 40,779,722.86 Finance lease 6.010%-6.015% 2010.7.15
Guoyin finance lease
company RMB 1,031,552,652.12 1,031,552,652.12 Finance lease 8.1500% 2020.6.15
Total 1,072,332,374.98
26. Deferred IncomeSHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
63
Items Original value 31 Dec 2008 Increment Amortization
Accumulative
amortization 30.Jun 2009
CRJ leaseback profit 9,741,746.00 3,479,150.11 0.00 695,844.00 6,958,439.89 2,783,306.11
Bonus earnings 9,840,407.72 9,840,407.72 7,625,986.33 6,272,636.56 6,272,636.56 11,193,757.49
Special funds of subsidies for
post-disaster reconstruction 5,000,000.00 5,000,000.00 0.00
78,291.66 78,291.66 4,921,708.34
Total 24,582,153.72 18,319,557.83 7,625,986.33
7,046,772.22 13,309,368.11 18,898,771.94
Note: Bonus earning arises from the application of the frequent customer bonus plan; members’ customers of the
company can accumulate mileage points as they take the flight of the Company or flight of the China airline
27. Deferred Income Tax Liabilities
Recognized deferred income tax liabilities
taxable temporary differences deferred income tax liabilities
Items
30.Jun 2009 31 Dec 2008 30.Jun 2009 31 Dec 2008
changes in fair value of tradable financial assets 19,404,619.47 23,460,812.12 4,851,154.87 5,865,203.03
Unrealized exchange gain 52,601,388.87 55,805,493.72 13,150,347.22 13,951,373.43
Total 72,006,008.34 79,266,305.84 18,001,502.09 19,816,576.46
28. Share Capital
Increase/Decrease （+、－） Unit: shares
Items 31 Dec 2008 Issuance of
new shares
Bonus shares Capitalization of
public reserve
Others Sub-total 30.Jun 2009
(1) Shares subject to trading moratorium
①founder's shares 260,000,000.00 0.00 0.00 0.00 0.00 0.00 260,000,000.00
Including：
Shares held by the state 259,801,000.00 0.00 0.00 0.00 0.00 0.00 259,801,000.00
Shares held by state-owned legal persons 199,000.00 0.00 0.00 0.00 0.00 0.00 199,000.00
Shares held by overseas legal persons 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Others 0.00 0.00 0.00 0.00 0.00 0.00 0.00
② Raised legal person’s shares 0.00 0.00 0.00 0.00 0.00 0.00 0.00
③ Inner employees’ shares 0.00 0.00 0.00 0.00 0.00 0.00 0.00
④ Preference shares or other 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Include: transferred/allotted shares 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total unlisted shares 260,000,000.00 0.00 0.00 0.00 0.00 0.00 260,000,000.00
(2)Listed shares
①RMB ordinary shares 0.00 0.00 0.00 0.00 0.00 0.00 0.00SHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
64
Increase/Decrease （+、－） Unit: shares
Items 31 Dec 2008 Issuance of
new shares
Bonus shares Capitalization of
public reserve
Others Sub-total 30.Jun 2009
Including：Shares hold by management 0.00 0.00 0.00 0.00 0.00 0.00 0.00
②Domestically listed foreign shares 140,000,000.00 0.00 0.00 0.00 0.00 0.00 140,000,000.00
Total listed shares 140,000,000.00 0.00 0.00 0.00 0.00 0.00 140,000,000.00
(3)sell limited shares 0.00 0.00 0.00 0.00 0.00 0.00 0.00
(4) Total shares 400,000,000.00 0.00 0.00 0.00 0.00 0.00 400,000,000.00
1、The aforesaid listed shares are listed on B shares at RMB1 each。
2、The aforesaid share capital has been examined by Shangdong Yantai Qianju Certified Public Accountants and issued
a Capital Verification Report with Yanqianzi［2000］NO.27.
29. Capital Reserve
Items 31 Dec 2008 Increment Decrement 30.Jun 2009
Premium on share capital 76,258,081.68 0.00 0.00 76,258,081.68
Other capital reserve 7,792,081.16 0.00 0.00 7,792,081.16
Total 84,050,162.84 0.00 0.00 84,050,162.84
30. Surplus Reserve
Items 31 Dec 2008 Increment Decrement 30.Jun 2009
Statutory surplus reserve 29,490,727.77 0.00 0.00 29,490,727.77
Total 29,490,727.77 0.00 0.00 29,490,727.77
31. Retained Earnings
Items 1.Jan-30.Jun 2009 1.Jan-30.Jun 2008
Balance at the beginning of the year 36,471,405.69 -72,004,872.16
Add：Consolidated net profit 112,509,856.54 58,639,158.40
Other transfer-in 0.00 44,969.10
Less：Withdrawal of statuary surplus reserve 0.00 0.00
Withdrawal of employee incentive and welfare fund 0.00 0.00
Withdrawal of reserve fund 0.00 0.00
Withdrawal reserve for business expansion 0.00 0.00
Profits capitalized on return of investment 0.00 0.00
Less：Preference dividends payable 0.00 0.00
Withdrawal of Unspecified surplus reserve 0.00 0.00
Ordinary dividends payable 0.00 0.00
Ordinary share dividend transfer to capital(or share) 0.00 0.00
Undistributed profits at end of year 148,981,262.23 -13,320,744.66SHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
65
32. Operating Revenue and Operating Cost
(1) Operating Revenue
Items 1.Jan-30.Jun 2009 1.Jan-30.Jun 2008
Main operating revenue 2,320,604,814.36 2,388,001,951.00
Other operating Revenue 21,023,352.07 40,662,287.87
Total 2,341,628,166.43 2,428,664,238.87
(2) Operating Cost
Items 1.Jan-30.Jun 2009 1.Jan-30.Jun 2008
Main operating cost 1,855,222,802.06 1,962,375,090.19
Other operating cost 439,084.54 29,927,911.63
Total 1,855,661,886.60 1,992,303,001.82
(3) Main operation income, main operation cost and gross profit of segment
1.Jan-30.Jun 2009 1.Jan-30.Jun 2008
Segment
Operating Income Operating Cost Gross profit Operating Income Operating Cost Gross profit
Aviation transportation service 2,305,193,594.13 1,845,474,482.25 459,719,111.88 2,370,796,635.36 1,953,303,410.58 417,493,324.78
Logistic transportation service 3,377,523.46 969,854.35 2,407,669.11 3,637,889.61 670,322.40 2,967,567.21
Hospitality and Catering service 12,033,696.77 8,778,465.46 3,255,231.31 11,559,801.46 6,534,727.72 5,025,073.74
Lease service 0.00 0.00 0.00 27,880,401.93 29,925,361.63 -2,044,959.70
Others 21,023,352.07 439,084.54 20,584,267.53 14,789,510.51 1,869,179.49 12,920,331.02
Total 2,341,628,166.43 1,855,661,886.60 485,966,279.83 2,428,664,238.87 1,992,303,001.82 436,361,237.05
33. Business Tax and Surtax
Item Applicable tax rate 1.Jan-30.Jun 2009 1.Jan-30.Jun 2008
Business tax 3%、5% 69,042,767.26 70,308,687.96
Total 69,042,767.26 70,308,687.96
34. Financial Expenses
Items 1.Jan-30.Jun 2009 1.Jan-30.Jun 2008
Interest expenses 130,028,226.50 163,406,611.24
Less: Interest income 412,863.03 7,922,478.80
Exchange gains -417,127.63 -68,124,245.23
Others 2,489,187.85 2,214,706.04
Total 131,687,423.69 89,574,593.25
35. Impairment Loss of AssetsSHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
66
Items 1.Jan-30.Jun 2009. 1.Jan-30.Jun 2008
Bad debts provision 380,135.04 1,002,659.27
Total 380,135.04 1,002,659.27
36.Earnings from Changes in Fair Value
Sources of Earnings from changes in fair value 1.Jan-30.Jun 2009 1.Jan-30.Jun 2008
Tradable financial assets -4,056,192.64 0.00
Total -4,056,192.64 0.00
Note：Earnings from changes in fair value is -4,056,192.64 Yuan, this is losses result in the changes in fair value of the
Interest rate swaps.
37. Investment Income
The origin of the investment income 1.Jan-30.Jun 2009 1.Jan-30.Jun 2008
Realized profit from Financial assets trading 3,212,207.65 0.00
Increase income by equity method 0.00 0.00
Income from equity investment 1,617,642.00 1,130,610.00
Total 4,829,849.65 1,130,610.00
38. Non-operating Income
（1）Non-operating income
Items 1.Jan-30.Jun 2009 1.Jan-30.Jun 2008
Government Grant 115,134,743.17 43,995.00
Disposal Proceeds of Fixed Assets 84,287.74 0.00
Other 546,492.47 678,271.53
Total 115,765,523.38 722,266.53
(2) Government Grant
Items 1.Jan-30.Jun 2009 Approval documents Approval authority
The return of civil aviation
infrastructure fund
114,651,145.51 Civil Aviation Authority Ministry of Finance[2009]4
Ministry of Finance in People's Republic of China,
Civil Aviation Authority
Others 483,597.66
Total 115,134,743.17
39.Non-operating Expenses
Items 1.Jan-30.Jun 2009 1.Jan-30.Jun 2008
Loss on disposal of non-current assets 2,169,256.17 6,367,094.29
Include: Loss on disposal of fixed assets 2,169,256.17 6,367,094.29
Donation 0.00
Extra-ordinary loss 0.00
Others 7,248.75 119,034.33SHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
67
Total 2,176,504.92 6,486,128.62
40. Income Taxes Expense
Items 1.Jan-30.Jun 2009 1.Jan-30.Jun 2008
Income tax for current period 65,671,754.63 24,339,471.08
Deferred income tax -28,278,031.17 -4,855,356.90
Total 37,393,723.46 19,484,114.18
41. Net Profit after Deduction of Non-recurring Gains and Losses
Items 1.Jan-30.Jun 2009 1.Jan-30.Jun 2008
Net profit 112,509,856.54 58,639,158.40
Minus： (1) Minus: Profit and loss in disposal of non-circulation assets -2,084,968.43 -6,367,094.29
(2) Governmental allowance accrued to the current profit and loss Gain or loss from combination 114,651,145.51 43,995.00
(3) gains and losses arising from changes in fair value of tradable financial assets and tradable financial
liabilities and financial liabilities and investment income arising form disposal of tradable financial
assets ,tradable financial liabilities and available for sale financial assets -4,056,192.64 0.00
(4) transferred back of individually impairment tested receivables 0.00 0.00
(5) Non-operating income and expenses other than above items 1,022,841.38 559,237.20
(6) Separate Impairment Test Provision for Receivables Impairment -27,748.25 0.00
(7) other Non-recurring gains and losses 0.00 0.00
Subtotal 109,905,077.57 -5,763,862.09
less：Amount influenced due to income tax -27,376,269.39 1,440,965.52
Net profit after deduction of non-recurring gain/loss 30,381,048.36 62,962,054.97
less：non-recurring gain/loss attributable to minority shareholders 0.00 0.00
Net profit after deduction of non-recurring gain/loss attributable to shareholders of parent company 30,381,048.36 62,962,054.97
42.Cash Received Relating to Other Operating Activities
Items 1.Jan-30.Jun 2009 1.Jan-30.Jun 2008
Government grant 56,453,459.02 5,043,995.00
Interest incomes 412,863.03 2,913,076.30
Cash received from non-operating activities 67,810.00 117,088.36
Cash received from payable and receivable 36,281,344.71 9,015,404.14
Total 93,215,476.76 17,089,563.80
43. Cash Paid Relating to Other Operating Activities
Items 1.Jan-30.Jun 2009 1.Jan-30.Jun 2008
Bank commission charge 2,489,187.85 2,206,337.91
Cash Paid for non-operating activities 7,248.75 470,338.54
Cash paid for current fund 22,738,140.16 28,482,927.27SHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
68
Marketing cost, administration cost and cash paid for
operating activities
41,670,732.43 96,376,377.87
Total 66,905,309.19 127,535,981.59
44. Cash Paid Relating to Other Financing Activities
Item 1.Jan-30.Jun 2009 1.Jan-30.Jun 2008
Interest expenses for leased aircrafts 105,176,772.22 148,960,663.62
Total 105,176,772.22 148,960,663.62
45. Adjusting Net Profit to Cash Flow from Operating Activities
1.Adusting net profit to cash flow from operating activities： 1.Jan-30.Jun 2009 1.Jan-30.Jun 2008
Net profit 112,680,938.44 59,084,276.91
Add: Impairment loss provision of assets 380,135.04 1,002,659.27
Depreciation of fixed assets、oil and gas assets and consumable biological assets 251,990,542.17 203,694,724.50
Amortization of intangible assets 370,587.51 318,464.49
Amortization of Long-term deferred and prepaid expenses 7,697,044.01 6,254,098.97
Loss on disposal of fixed assets、intangible assets and other long-term deferred assets
（Loss/Gain +/－） 2,084,968.43 0.00
Loss from written off assets（Loss/Gain +/－） 0.00 6,367,094.29
Loss of fair value fluctuation on assets（Loss/Gain +/－） 4,056,192.64 0.00
Financial cost（Loss/Gain +/－） 129,557,207.07 85,618,581.74
Loss on investment（Loss/Gain +/－） -4,829,849.65 1,130,610.00
Decrease of deferred income tax assets（Loss/Gain +/－） -26,462,956.80 21,563,406.95
Decrease of deferred income tax liabilities（Loss/Gain +/－） -1,815,074.37 16,708,050.05
Decrease of inventories（Loss/Gain +/－） 8,378,283.51 31,687,404.83
Decrease of operating receivables（Loss/Gain +/－） -90,139,094.29 11,731,370.64
Increase of operating payables（Loss/Gain +/－） 172,789,679.09 133,164,692.03
Others 0.00 0.00
Net cash flows arising from operating activities 566,738,602.82 446,099,849.83
2.Significant investment and financing activities that without cash flows
Liability transfer to capital 0.00 0.00
Convertible corporate bond due within 1 year 0.00 0.00
Finance lease-fixed assets 0.00 0.00
3.Net increase (decrease) of cash and cash equivalents
Ending balance of cash 84,724,663.87 88,740,839.49SHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
69
Less: Beginning balance of cash 44,937,058.88 42,131,848.82
Add : Ending balance of cash equivalents 0.00 0.00
Less: Beginning balance of cash equivalents 0.00 0.00
Net increase of cash and cash equivalents 39,787,604.99 46,608,990.67
46. Cash and Cash Equivalents
Items 1.Jan-30.Jun 2009 1.Jan-30.Jun 2008
1.Cash 84,724,663.87 88,740,839.49
Including: Cash on hand 924,840.03 1,561,768.44
Non restricted bank deposit 83,799,823.84 87,179,071.05
Non restricted other monetary fund 0.00 0.00
2.Cash equivalents 0.00 0.00
Including: Bond investment within three month 0.00 0.00
3.Ending balance of cash and cash equivalents 84,724,663.87 88,740,839.49
Inculding: restricted cash and cash equivalents for parent or group ubsidiaries 0.00 0.00
IX. Notes to Financial Statement for Parent Company
1. Accounts Receivable
(1) Details of accounts receivable
30.Jun 2009 31.Dec 2008
Item
Balance
Proportion Provision for bad
debts Net book value Balance
Proportion Provision for bad
debts Net book value
Individual transaction
with significant
amount 152,979,454.19 99.37% 0.00 152,979,454.19 115,826,770.70 92.24% 0.00 115,826,770.70
portfolio credit risk 0.00 0.00% 0.00 0.00 0.00 0.00% 0.00 0.00
Other transaction with
no significant amount 974,951.65 0.63% 48,747.58 926,204.07 9,747,897.58 7.76% 469,172.93 9,278,724.65
Total 153,954,405.84 100.00% 48,747.58 153,905,658.26 125,574,668.28 100.00% 469,172.93 125,105,495.35
(2) Individual significant accounts receivable
Name Amount Provision for bad debts Reason
BSP 56,972,285.35 0.00 Settlement difference, all are received in subsequent date
Netting shall 25,519,116.65 0.00 Settlement difference, all are received in subsequent date
Air China Limited 70,488,052.19 0.00 Settlement difference, all are received in subsequent dateSHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
70
Total 152,979,454.19 0.00
（3）Age
30.Jun 2009 31.Dec 2008
Age
Balance % Bad debt provision Net Value Balance % Bad debt provision Net Value
Within one year 153,916,633.66 99.98% 46,858.97 153,869,774.69 124,366,476.98 99.04% 392,699.63 123,973,777.35
1-2 years 12,751.26 0.01% 637.56 12,113.70 1,157,864.08 0.92% 75,222.25 1,082,641.83
2-3 years 1,218.50 0.00% 60.93 1,157.57 26,524.80 0.02% 60.93 26,463.87
3-4 years 23,802.42 0.01% 1,190.12 22,612.30 23,802.42 0.02% 1,190.12 22,612.30
4-5 years 0.00 0.00% 0.00 0.00 0.00 0.00% 0.00 0.00
Total 153,954,405.84 100% 48,747.58 153,905,658.26 125,574,668.28 100% 469,172.93 125,105,495.35
（4）Details of top five debtors for accounts receivable
30.Jun 2009 31.Dec 2008
Items
Balance Percentage Balance Percentage
Total amounts for top five debtors 133,697,448.52 86.84% 117,636,799.77 93.68%
(5) Up to 30 Jun 2009, amounts due to shareholders who own 5% or over 5% of voting rights see “Note 10, related parties
and transactions”
2. Other Accounts Receivable
(1) Details of other accounts receivable
30.Jun 2009 31.Dec 2008
Items Balance % Bad debt
provision
Net Value Balance % Bad debt
provision
Net Value
Individual
transaction with
significant amount
262,519,821.97 83.93% 109,079,465.90 153,440,356.07 203,908,540.13 79.59% 109,051,717.65 94,856,822.48
Other transaction
with no significant
amount 50,279,108.12 16.07% 2,713,618.38 47,565,489.73 52,282,091.05 20.41% 1,940,806.24 50,341,284.81
Total 312,798,930.09 100.00% 111,793,084.28 201,005,845.80 256,190,631.18 100.00% 110,992,523.89 145,198,107.29
(2) Bad debt provision for individual accounts receivable with significant amount.
Debtor Balance bad debts provision Reason
Shandong Airline Rainbow Jet Co., Ltd 109,079,465.90 109,079,465.90
the company could not repay debts due to its financial
difficultySHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
71
Security deposit for airplane engine 94,837,363.58 0.00
Deposit for engine maintenance and purchase of
aircraft, all amounts is receivable in the future
The return of civil aviation infrastructure
fund
58,602,992.49 0.00 The return of the Civil Aviation Fund
Total 262,519,821.97 109.079,465.90
(3) Age
30.Jun 2009 31.Dec 2008
Ages
Balance % Bad debt provision Net Value Balance % Bad debt provision Net Value
Within one year 109,274,802.19 34.95% 2,835,650.78 106,439,151.41 43,209,209.30 16.87% 2,035,090.39 41,174,118.91
1-2 years 20,157,238.10 6.44% 669,245.45 19,487,992.65 31,169,427.89 12.17% 669,245.45 30,500,182.44
2-3 years 18,462,733.74 5.90% 10,698,669.47 7,764,064.27 17,263,584.49 6.74% 10,698,669.47 6,564,915.02
3-4 years 133,486,044.22 42.67% 80,329,246.11 53,156,798.11 133,052,336.46 51.93% 80,329,246.11 52,723,090.35
4-5 years 23,343,821.23 7.46% 17,195,422.39 6,148,398.84 23,398,644.42 9.13% 17,195,422.39 6,203,222.03
Above 5 years 8,074,290.60 2.58% 64,850.08 8,009,440.52 8,097,428.62 3.16% 64,850.08 8,032,578.54
Total 312,798,930.08 100.00% 111,793,084.28 201,005,845.80 256,190,631.18 100.00% 110,992,523.89 145,198,107.29
(4) Details of top five debtors for other accounts receivable
Name of debtors Balance Nature or content Age
Proporti
on
SARJ 109,079,465.90 Disbursement fee 1-5years 34.87%
Civil Aviation Administration of China 58,602,992.49 The return of the Civil Aviation Fund Within 1 year 18.74%
GuoYin finance lease company 41,354,563.28 Deposit of aircraft 3-4years 13.22%
Singapore Aircraft Leasing Enterprise 19,129,320.00 Deposit of aircraft 2-4years 6.12%
Rainier Aircraft Leasing (Ireland) Limited 16,757,921.85 Deposit of aircraft 3-6years 5.36%
Total 244,924,263.52 78.31%
(5) Up to 30 Jun 2009, amounts due to shareholders who own 5% or over 5% of voting rights see “Note 10, related parties
and transactions.
3. Long-term Equity Investment
(1). Long-term equity investment and provision for impairment loss
30.Jun 2009 31.Dec 2008
Items
Balance Provision for impairment loss Book value Balance Provision for impairment loss Book value
Long-term equity investment 134,665,305.97 22,500,000.00 112,165,305.97 134,665,305.97 22,500,000.00 112,165,305.97
Include: Investment in Subsidiary 23,813,205.97 0.00 23,813,205.97 23,813,205.97 0.00 23,813,205.97SHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
72
Joint-venture investment 22,500,000.00 22,500,000.00 0.00 22,500,000.00 22,500,000.00 0.00
Investment in Other Companies 88,352,100.00 0.00 88,352,100.00 88,352,100.00 0.00 88,352,100.00
(2) Long-term equity investment measured by cost method
Compay The initial amount 31.Dec 2008 Increment Decrement 30.Jun 2009
①Subsidiaries:
Qingdao International Aviation Logistic center Co., Ltd 23,813,205.97 23,813,205.97 0.00 0.00 23,813,205.97
Sub-total 23,813,205.97 23,813,205.97 0.00 0.00 23,813,205.97
②Other long-term equity investment
China Civil aviation information network Co., Ltd 6,690,000.00 6,690,000.00 0.00 0.00 6,690,000.00
Sichuan airlines Co. Ltd 35,000,000.00 35,000,000.00 0.00 0.00 35,000,000.00
JiNan International Airport Co. Ltd 46,662,100.00 46,662,100.00 0.00 0.00 46,662,100.00
Sub-total 88,352,100.00 88,352,100.00 0.00 0.00 88,352,100.00
Total 112,165,305.97 112,165,305.97 0.00 0.00 112,165,305.97
(3) Long-term equity investment measured by equity method
Company Initial investment
Opening balance Increment Adjustment for current
year profit and loss
Cash dividend Other
decrement
The closing
balances
Accumulate Cash
dividend
SARJ 25,000,000.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total 25,000,000.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
(4) Impairment loss provision of long-term investment
Investee 31.Dec 2008 Increment Decrement 30.Jun 2009
SARJ 22,500,000.00 0.00 0.00 22,500,000.00
Total 22,500,000.00 0.00 0.00 22,500,000.00
Note: Due to the insolvency of SARJ, the company decided to set up an impairment provision for this long-term
investment of SARJ.
4. Operating Income and Operating Cost
(1) Operating income
Items 1.Jan-30.Jun 2009 1.Jan-30.Jun 2008
Main business income 2,317,227,290.90 2,384,364,061.39
Other business income 21,023,352.07 40,662,287.87
Total 2,338,250,642.97 2,425,026,349.26
(2) Operating cost
Items 1.Jan-30.Jun 2009 1.Jan-30.Jun 2008SHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
73
Main business cost 1,854,252,947.71 1,961,704,767.79
Other business cost 439,084.54 29,927,911.63
Total 1,854,692,032.25 1,991,632,679.42
（3）The main businesses are listed as per product or category.
1.Jan-30.Jun 2009 1.Jan-30.Jun 2008
Product or category
Operating income Operating cost Gross profit Operating income Operating cost Gross profit
Aviation shipping service 2,305,193,594.13 1,845,474,482.25 459,719,111.88 2,370,796,635.36 1,953,303,410.58 417,493,224.78
Logistic service 0.00 0.00 0.00 0.00 0.00 0.00
Catering service 12,033,696.77 8,778,465.46 3,255,231.31 11,559,801.46 6,534,727.72 5,025,073.74
Leasing service 0.00 0.00 0.00 27,880,401.93 29,925,361.63 -2,044,959.70
Others 21,023,352.07 439,084.54 20,584,267.53 14,789,510.51 1,869,179.49 12,920,331.02
Total 2,338,250,642.97 1,854,692,032.25 483,558,610.72 2,425,026,349.26 1,991,632,679.42 433,393,669.84
5. Investment Income
The origin of the investment income 1.Jan-30.Jun 2009 1.Jan-30.Jun 2008
Realized profit from Financial assets trading 3,212,207.65 0.00
Profit distributed by the disposal of shareholder’s right 0.00 0.00
Profit distributed by shareholding company 1,617,642.00 1,130,610.00
Total 4,829,849.65 1,130,610.00
X. Related Party and Related Party Transactions
1. Confirmation Standard of Related Part
The other party which is controlled, jointly controlled or substantially influenced by the company, or controls, jointly
controls or substantially influences the company, or is under the same control, joint control or substantial influence of the same
parties as the company will be deemed as the associated party of the company.
2、The Relationship of Related Rarties
(1) The Relationship of Related Parties
①related party with controllable relationship
Business name
Registered
ADD
Main business
Relationship
Business nature
Legal
representative
Air China Limited Beijing
air passenger transport, freight transport and
related service etc
Controlled party Corp. Dongkong
Shandong Aviation Group
Co. Ltd.
Jinan
Aircraft and ground equipment repair and
maintenance, air passenger transport, freight
transport and related service etc
Controlled
shareholder
Limited liability
company
Gang feng
The registered capital and changes the related parties with controllable relationshipSHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
74
Business name 31.Dec 2008 Increment Decrement 30.Jun 2009
Air China Limited 11,072,210,909.00 0.00 0.00 11,072,210,909.00
Shandong Aviation Group Co. Ltd. 580,000,000.00 0.00 0.00 580,000,000.00
Changes in share capital and particular about related party with controllable relationship
Business name 31.Dec 2008 Proportion Increment Decrement 30.Jun 2009 Proportion
Air China Limited 91,200,000.00 22.80% 0.00 0.00 91,200,000.00 22.80%
Shandong Aviation Group Co. Ltd. 168,004,000.00 42.00% 0.00 0.00 168,004,000.00 42.00%
② Subsidiaries of the company
The information about Subsidiaries of the company, see Note 6.1
（2）The related party with uncontrollable relationship
①The joint ventures and associates of the company
The information about joint ventures and associates of the company, see Note7
②The related party with uncontrollable relationship
Name The relationship with company
Shandong Taeco Aircraft Engineering Co., Ltd Subsidiary which under the same control of holding company
Aviation building management limited company Subsidiary which under the same control of holding company
Shandong xiaoyu technology service ltd Subsidiary which under the same control of holding company
Qingdao Feisheng international Aviation Training Co., Ltd Subsidiary which under the same control of holding company
Shandong International Aviation Training Co., Ltd. Subsidiary which under the same control of holding company
SARJ associate
3、 Related Party Transactions
（1） The pricing principle of the transaction between the company and related party: the price of the related party transaction
will be settled at the market price as the similar product or service。
（2） Related party transactions
① Offering service
1.Jan-30.Jun 2009 1.Jan-30.Jun 2008
Related party Pricing principle Transaction detail
Amount Amount
Air China Limited Protocol Price Payment for service 5,100,000.00 2,550,000.00
Total 5,100,000.00 2,550,000.00
② Acceptance serviceSHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
75
1.Jan-30.Jun 2009 1.Jan-30.Jun 2008
Related party
Pricing
principle
Transaction detail
Amount Amount
Shandong Taeco Aircraft
Engineering Co., Ltd Marketing price Expenditure for aircraft maintenance 42,505,687.11 32,626,477.86
Shandong Aviation Group Co. Ltd. Marketing price
Rental charges in respect of
land and buildings 4,479,836.75 3,303,398.94
Shandong Aviation Group Co. Ltd. Marketing price Room and restaurant service charges 600,836.20 616,297.63
Qingdao Feisheng international
Aviation Training Co., Ltd Marketing price Training fee 2,609,828.00 1,589,636.65
Shandong International Aviation
Training Co., Ltd. Marketing price Training fee 3,624,260.00 5,178,349.36
Shandong xiaoyu technology
service ltd Marketing price Repairs and maintenance charges 9,542,930.41 2,300,070.00
Total 63,363,378.47 45,614,230.44
③ Other transaction
1.Jan-30.Jun 2009 1.Jan-30.Jun 2008
Related party
Pricing
principle
Transaction detail
Amount Amount
SARJ Settlement of debt 27,748.25 22,604.23
Air China Limited Protocol Price Leasing of aircraft and engine 307,987,065.37 277,037,963.00
Air China Limited Protocol Price Joint venture route 13,017,976.72 48,713,665.00
Total 321,032,790.34 325,774,232.23
④ Guarantee
Shandong Aviation Group Co. Ltd. Provides guarantee for the company as following:
Types of borrowing Creditors currency Amount Start date Maturity date Interest rate
China Construction Bank RMB 40,000,000.00 2008-12-18 2009-12-17 5.0220%
Agricultural Bank of China RMB 20,000,000.00 2008-11-5 2009-11-4 5.9940%
Agricultural Bank of China RMB 50,000,000.00 2008-11-12 2009-11-11 5.9940%
Agricultural Bank of China RMB 60,000,000.00 2009-1-7 2010-1-6 4.7790%
Agricultural Bank of China RMB 60,000,000.00 2009-1-14 2010-1-13 4.7790%
Agricultural Bank of China RMB 60,000,000.00 2009-1-21 2010-1-20 4.7790%
Agricultural Bank of China RMB 40,000,000.00 2009-3-11 2010-3-10 4.7790%
Agricultural Bank of China RMB 40,000,000.00 2009-3-17 2010-3-16 4.7790%
Short-term loans
Bank of China RMB 80,000,000.00 2008-12-31 2009-12-30 4.7790%SHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
76
Bank of China RMB 50,000,000.00 2009-2-12 2010-2-11 4.7790%
China Merchants Bank RMB 80,000,000.00 2009-1-13 2009-12-15 4.7790%
China Merchants Bank RMB 90,000,000.00 2009-4-15 2009-12-10 4.7790%
CNAC finance companies RMB 100,000,000.00 2009-6-29 2010-6-28 4.7790%
China Construction Bank RMB 27,600,000.00 2007-12-3 2022-3-28 5.5080%
China Construction Bank RMB 83,000,000.00 2008-1-2 2022-3-28 5.3460%
China Construction Bank RMB 54,000,000.00 2008-3-3 2022-3-28 5.3460%
China Construction Bank RMB 53,000,000.00 2008-4-1 2022-3-28 5.3460%
China Construction Bank RMB 26,500,000.00 2008-4-29 2022-3-28 5.3460%
China Construction Bank RMB 52,300,000.00 2008-6-2 2022-3-28 7.0470%
China Construction Bank RMB 51,500,000.00 2008-7-1 2022-3-28 7.0470%
China Construction Bank RMB 120,000,000.00 2008-7-15 2022-3-28 7.0470%
China Construction Bank RMB 114,000,000.00 2009-4-21 2022-3-28 5.0220%
China Construction Bank USD $8,539,000.00 2007-3-29 2022-3-28 4.7750%
China Construction Bank USD $1,250,000.00 2007-4-30 2022-3-28 2.3750%
China Construction Bank UED $6,765,620.00 2007-5-31 2022-3-28 3.3675%
China Construction Bank USD $17,954,820.00 2007-7-2 2022-3-28 2.5750%
China Construction Bank USD $3,749,800.00 2007-8-1 2022-3-28 2.4338%
China Construction Bank USD $14,908,900.00 2007-9-28 2022-3-28 2.5944%
Bank of communications RMB 141,600,000.00 2006-5-30 2016-12-30 5.7510%
Bank of communications RMB 108,487,600.00 2007-11-12 2016-12-30 6.4800%
Bank of communications RMB 108,800,000.00 2007-12-3 2016-12-30 5.5080%
Bank of communications RMB 92,250,000.00 2008-1-14 2016-12-30 5.3460%
Bank of communications USD $2,929,120.00 2006-10-31 2016-12-30 2.2750%
Bank of communications USD $2,937,720.00 2006-11-30 2016-12-30 3.3213%
Bank of communications USD $2,929,120.00 2007-1-31 2016-12-30 2.3175%
Bank of communications USD $2,893,520.00 2007-2-15 2016-12-30 2.4725%
Bank of communications USD $2,885,080.00 2007-4-29 2016-12-30 2.2900%
Long-term borrowing
Bank of communications USD $2,893,520.00 2007-5-31 2016-12-30 3.3213%
（3）The balance of payables and receivables for related party.SHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
77
30 Dec 2008 30.Jun 2009
Business name
Amounts proportion Amounts proportion
Trade receivables ：
Air China Limited 55,089,147.43 43.50% 70,488,052.19 45.34%
Total 55,089,147.43 43.50% 70,488,052.19 45.34%
Other receivables ：
Air China Limited 1,100.00 0.00% 5,112,800.00 1.63%
Shandong International Aviation Training Co., Ltd. 780,969.77 0.31% 0.00 0.00%
Qingdao Feisheng international Aviation Training Co., Ltd 0.00 0.00 0.00 0.00%
Shandong xiaoyu technology service ltd 706,431.65 0.28% 1,386,809.51 0.44%
SARJ 109,051,717.70 42.60% 109,079,465.90 34.87%
Total . 110,540,219.12 43.19% 115,579,075.41 36.94%
Trade payables：
Shandong Taeco Aircraft Engineering Co., Ltd 717,414.49 0.08% 8,211,085.97 0.89%
Total 717,414.49 0.08% 8,211,085.97 0.89%
Other payables：
Air China Limited 20,000,000.00 12.37% 20,000,000.00 12.99%
Shangdong Aviation Group Co. Ltd. 5,551,323.91 3.43% 4,503,041.28 2.93%
Qingdao Feisheng international Aviation Training Co., Ltd 3,827,607.16 2.37% 6,154,435.65 4.00%
Shandong Taeco Aircraft Engineering Co., Ltd 24,756,728.86 15.31% 717,414.49 0.47%
Shandong International Aviation Training Co., Ltd. 0.00 0.00% 2,431,299.08 1.58%
Total 54,135,659.93 33.48% 33,806,190.50 21.97%
XI、Financial Instruments and Risk Management
The financial instruments of the company include financial derivative instrument and bank borrowings, finance lease liabilities,
monetary funds, etc. The main purposes of these financial instruments are in order to finance the operation of the Company which
directly arise from the operation activities of the company, such as accounts receivable and accounts payable, etc.
The derivative instrument of the company is interest rate swaps; the purpose of interest rate swaps is to avoid the risk of
interest rate volatility, these interest rate swaps contract are matched with contract of airplane finance leasing and long-term
borrowing contract, therefore the risks arise from interest payment of the financing can be avoided, and to prevent the losses in
financing costs in the fluctuation of interest rates.SHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
78
In order to strengthen the Company's financial derivative transaction management and control the risk, the control procedures
of the financial derivative instruments has been approved by the board.
XII、Contingency
The pledged assets are listed as in the Note 8 of the 15, 23, and 24 of the financial statements; there is no other significant
contingency that needs to be disclosed.
XIII、Commitment
Up to 30/6/2009, the uncompleted commitments are as following:
30.Jun 2009
Item
Within one year 1-2years 2-3years Above 3 years Total
Lease commitments 333,194.61 305,784.21 274,734.59 908,491.87 1,822,205.28
Capital Commitments 752,509.48 878,672.52 1,981,838.13 1,829,081.79 5,442,101.92
Total 1,085,704.09 1,184,456.73 2,256,572.72 2,737,573.66 7,264,307.21
XIV. Non-adjusting Events Occurring after the Balance Sheet Date
By 30/6/2009 the company has no non-adjusting events occurring after the balance sheet date that need to be disclosed.
XV.Supplementary Information
Return on equity and earnings per share
Return on equity（%） earnings per share（Yuan/Share）
Profit in the report period
Full dilution
Weighted
average
Basic profit
per share
Profit per share
after dilution
Net profit attributable to ordinary
shareholders 112,509,856.54 16.98 18.56 0.28 0.28
Net profit attributable to the ordinary
shareholders after deduction of non-recurring 30,381,048.36 4.59 5.01 0.08 0.08
Calculation of earning per share: ：
（1）Basic earning per share:
1.Jan-30.Jun 2009 1.Jan-30.Jun 2008
Items calculation
Amount
after deduction of
non-recurring
Amount
after deduction of
non-recurring
Net profit attributable to ordinary shareholder of the Company (1) 112,509,856.54 30,381,048.36 58,639,158.40 62,962,054.97
The number of shares issued to the public at the beginning of the period (2) 400,000,000.00 400,000,000.00 400,000,000.00 400,000,000.00
The number of shares newly issued in the current period (3) 0.00 0.00 0.00 0.00
The number of shares repurchase in the current period (4) 0.00 0.00 0.00 0.00
The weighted average number of ordinary shares issued to the public (5)=(2)+(3)-(4) 400,000,000.00 400,000,000.00 400,000,000.00 400,000,000.00SHANDONG AIRLINES CO., LTD 2009 SEMI-ANNUAL REPORT
79
Basic earning per share (6)=(1)÷(5) 0.28 0.08 0.15 0.16
（2）Diluted earning per share:
1.Jan-30.Jun 2009 1.Jan-30.Jun 2008
Items calculation
Amount
after deduction of
non-recurring
Amount
after deduction of
non-recurring
Net profit attributable to ordinary shareholder of the
Company
(1)
112,509,856.54 30,381,048.36 58,639,158.40 62,962,054.97
The interest of the potential diluted ordinary shares
determined to be expenses in the current period
(2)
0.00 0.00 0.00 0.00
The gains or expenses to be resulted from conversion of
diluted ordinary shares
(3)
0.00 0.00 0.00 0.00
Income tax rate (4) 0.25 0.25 0.33 0.33
The adjustment of the net profit attributable to ordinary
shareholder of the Company
(5)=(1)+[(2)-(3)]×[1-(4)]
112,509,856.54 30,381,048.36 58,639,158.40 62,962,054.97
Total number of ordinary shares (6) 400,000,000.00 400,000,000.00 400,000,000.00 400,000,000.00
Assumed that the dilution of potential ordinary shares
converted into ordinary shares in issue increased the
weighted average number of ordinary shares
(7)
0.00 0.00 0.00 0.00
Total number of diluted ordinary shares (8)=(6)+(7) 400,000,000.00 400,000,000.00 400,000,000.00 400,000,000.00
Diluted earning per share (9)=(5)÷(8) 0.28 0.08 0.15 0.16
XVI. Approval of Financial Statements
This financial statement is approved and authorized for issuance by the Board of Directors on August
21, 2009.
Section VII. Documents Available for Reference
1. Financial Statements with the signatures and seals of the Chairman of the Board, the Chief Accountant
and the Person in Charge of Finance;
2. Texts of all documents and manuscripts of public notices disclosed in the newspapers designated by
CSRC in the report period.
The Company shall provide these documents in time at the requirements of the CSRC or the Stock
Exchange, or at the requests by shareholders according to the regulations or the Articles of Association.
Chairman of the Board: Zhang Xingfu
Board of the Directors of
Shandong Airlines Co., Ltd.
August 21, 2009
