SHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
山东航空股份有限公司
2010 年半年度报告
SHANDONG AIRLINES CO., LTD
2010 INTERIM REPORT
August,2010
Jinan, P.R.C.SHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
1
Contents
SECTION I. COMPANY PROFILE----------------------------------------------------------------------------------2
SECTION II. CHANGES IN SHARE CAPITAL AND SHAREHOLDING BY MAJOR
SHARHOLDERS--------------------------------------------------------------------------------------------------------4
SECTION III. DIRECTORS, SUPERVISORS AND SENIOR EXECUTIVES------------------------------- 5
SECTION IV. REPORT OF BOARD OF DIRECTORS-------------------------------------------------------- 5
SECTION V. SIGNIFICANT EVENTS----------------------------------------------------------------------------- 9
SECTION VI. FINANCIAL REPORT------------------------------------------------------------------------------12
SECTION VII. DOCUMENTS FOR REFERENCE--------------------------------------------------------------80
Important Notes:
The Board of Directors and the Supervisory Committee of Shandong Airlines Co., Ltd. (hereinafter
referred to as the Company) together with its directors, supervisors and senior executives hereby confirm
that there are no any fictitious statements，misleading statements or material omissions carried in this
report, and may take responsibilities, individually and/or jointly, for the reality, accuracy and completion
of the whole contents.
Director Mr. Wang Mingyuan was absent to vote in the Board Meeting and authorized Director Director
Mr. Xu Guojian as her representative. Other Directors attended the Meeting.
Chairman of the Board Mr. Zhang Xingfu, General Manager Mr. Zeng Guoqiang, and Chief Accountant
Mr. Xu Guojian hereby confirm that the Financial Report of the Interim Report 2010 is true and complete.
The Financial Report and accounting data illustrated in the Report has not been audited yet.
Paraphrases:
The Company, 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 2010 INTERIM REPORT
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Section I. Company Profile
I.Company Profile
(I) 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.
(II) Stock Exchange for Company’s stock listing: Shenzhen Stock Exchange
Shortened Form of the Stock: SHANHANG B
Stock Code: 200152
(III) Registered Address: Yaoqiang International Airport, Jinan, Shandong
Office Address: SDA Building, No. 5746, Er Huan East Road, Jinan, Shandong
Post Code: 250014
Internet Web Site: http://www.shandongair.com.cn
E-mail: zqb@shandongair.com.cn
(IV) Legal Representative: Zhang Xingfu
(V) Secretary of Board of Directors of Company: Dong Qiantang
Contact Address: SDA Building, 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) 0531-85698678
Fax: (86) 0531-85698679
(VI) Newspaper designated for informationa disclosure:
Domestic: China Securities Jourrnal and Securities Times
Overseas: Hongkong Commercial Daily
Internet Web Site for Publishing Semi-annual Report: http://www.cninfo.com.cn
Place for reserving Semi-Annual Report: Office of Board (Room 1920, SDA Building)
Tel: (86) 0531-85698678
(VII)Other Relevant Information
Registered number of corporate business license: 370000400002351
Registered number for taxation: 370112720721201
Date of latest change in registration: 16 September 2009
Registry: Administration of Industry and Commerce of Shandong Province
II. Major financial data and indicators
(I) Major accounting data and financial indicators
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 ofSHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
3
last year (%)
Total assets (RMB) 8,514,625,733.52 8,096,403,730.75 5.17%
Owners’ equiy ( or Shareholders’ equity)
(RMB) 977,865,345.31 852,294,621.98 14.73%
Net assets per share attributable to shareholders
of listed company (RMB) 2.44 2.13 14.55%
This report period
The same period of last
year
Increase/decrease in
this report period
year-on-year (%)
Operation profit (RMB) 270,675,793.11 36,485,643.45 641.87%
Total profit (RMB) 274,130,932.38 150,074,661.90 82.66%
Net profit attributable to shareholders of listed
company (RMB) 205,570,723.33 112,509,856.54 82.71%
Net profit attributable to shareholders of listed
company after deducting non-recurring gains
and losses (RMB)
203,190,509.86 30,381,048.36 568.81%
Basic earnings per share (RMB) 0.51 0.28 82.14%
Diluted earnings per share (RMB) 0.51 0.28 82.14%
Return on equity (%) 21.02% 16.98%
Up 4.04 percentage
point
Net cash flow from operation activities (RMB) 481,613,574.90 566,738,602.82 -15.02%
Net cash flow per share from operation
activities (RMB) 1.20 1.42 -15.02%
(II) Items of non-recurring gains and losses and the relevant amount:
Unit: RMB
Items of non-recurring gains and losses Amount
Loss/gain from disposal of non-current assets -2,840,057.86
Governmental subsidy reckoned into current loss/gain 5,805,916.00
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
-281,521.31
Other non-operating income and expense excluded the aforementioned
items 489,281.13
Subtotal 3,173,617.96
Impact on income tax -793,404.49
Total 2,380,213.47
(III) There is no difference between the CAS and the IAS.SHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
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Section II. Changes in Share Capital and Shareholding by Major
Shareholders
I. Particulars about Share structure
In the report period, the Company’s total shares and its structure remained unchanged.
II. Ending at 30 June 2010, particulars about shares held by the top ten shareholders and top ten
circulating shareholders:
Total shareholders at Period-end 19743
Particulars about shares held by the top ten shareholders
Full name of Shareholder
Increase /
decrease
in Period
Number of shares
held at the
period-end
(Share)
Proporti
on (%) Type of shares
Number of
share
frozen or
pledged
Nature of
shareholder
SHANDONG AVIATION
GROUP 0 168,004,000 42 Uncirculated
share 0 State-owned
shareholder
AIR CHINA LIMITED 0 91,200,000 22.8 Uncirculated
share 0 State-owned
shareholder
CHEN TIAN MING 207,000 1,976,072 0.49% Circulated Unknown Foreign
shareholder
CHEN CHUN PENG -40,000 1,390,000 0.35% Circulated Unknown Foreign
shareholder
CHEN JING JIAN 48,000 1,352,200 0.34% Circulated Unknown Foreign
shareholder
WU HAO YUAN 0 1,062,700 0.27% Circulated Unknown Foreign
shareholder
LIU LI YA 0 904,217 0.23% Circulated Unknown Foreign
shareholder
JOHN POSS 25,400 725,400 0.18% Circulated Unknown Foreign
shareholder
THE BOEING COMPANY
EMPLOYEES
RETIREMENT PLAN
MASTER TRUST
697,248 697,248 0.17% Circulated Unknown Foreign
shareholder
DENG HONG WEI 0 650,609 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
period-end Type
CHEN TIAN MING 1,976,072 B-share
CHEN CHUN PENG 1,390,000 B-share
CHEN JING JIAN 1,352,200 B-share
WU HAO YUAN 1,062,700 B-share
LIU LI YA 904,217 B-share
JOHN POSS 725,400 B-share
THE BOEING COMPANY EMPLOYEES
RETIREMENT PLAN MASTER TRUST 697,248 B-share
DENG HONG WEI 650,609 B-share
XU ZHAO HUAN 623,400 B-share
CHEN ZI XIANG 610,700 B-share
Explanation on the associated relationship or consistent
action among the top ten shareholders
Air China Limited is the first largest shareholder of Shandong
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 associatedSHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
5
relationship among the other shareholders of circulation
share.
III. Change of controlling shareholder and actual controller
There is no change in the controlling shareholders and actual controllers of the Company in the
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. Changes in Directors, supervisors and senior executives in Period
1. On 26 January 2010, Mr. Xiao Feng presented his resignation from the Deputy General Manager
and General Accountant; and on 29 January 2010, Mr. Xu Guojian was appointed as the Deputy
General Manager and General Accountant by the Board.
2. On12 April 2010, Mr. Feng Gang presented his resignation from the Director and Deputy
Chairman of the Board; and on 22 April 2010, Mr. Ma Chongxian was elected as the Director by the
2009 Annual General Shareholders’ Meeting, and meanwhile as the Deputy Chairman by 3rd
Temporary Meeting of 4th Board of Directors 2010.
Section IV. Report of Board of Directors
I. Main operations in Period
(I) Scope and operation status of main business
The Company is the civil air transportation enterprise, which mainly operates business of domestic
and international passenger & freight air transportation, and also operates hotels (only by branches),
maintenance of aircraft, civil aviation staff training, agent business among the airlines company, and
ground services relevant to main operations.
1. The Year 2010 witnessed the Company’s important starting period into the historical transition.
The whole body of staff continuously implements deeply the scientific development view, sticks to
the development concept of safety, innovation, harmony, and people-oriented, work down-to-earth,
promotes actively the Year-beginning work plan, maintains a sound development trend in all work
as safety, efficiency, serviceable, and comprehensive management, and obtains an excellent
operation performance.
In the Period, the Company accomplished 80041.5 hours flying time – a 14.4% year-on-year
increase and 44173 on-and-off flights – a 8.9% year-on-year increase; transport of passenger of
4.15 million man-time – a 18.2% year-on-year increase; the freight and mail volume of 45700 tons
– a 24.7% year-on-year decrease; total transportation turnover of 527 million tons/km – a 19.7%
year-on-year increase.
In the first half year, the operation income accomplished RMB 3.13 billion – a 33.82% year-on-year
decrease, among that, the passenger aviation income RMB 2.99 billion– accounting for 95.28% of
the total income; income of aviation freight and mail transportation of RMB 99 million– accounting
for 3.16% of the total income; and other income of RMB 49 million, accounting for 1.56% of the
total income.
2. Constitution of main business
(1) Main business in different industriesSHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
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Unit: RMB
Industries Operation income Operation cost
Year-on-year
increase/decre
ase in
operation
income (%)
Year-on-year
increase/decr
ease in
operation
cost (%)
Aviation transportation service 3,084,521,679.18 2,395,348,014.45 33.81% 29.80%
Logistics transportation
service 3,341,785.85 1,238,224.39 -1.06% 27.67%
Hotel and food service 12,991,318.48 10,397,011.21 7.96% 18.44%
Training service 436,900.00 171,317.92 - -
Other 32,371,411.07 429,620.32 53.98% -2.16%
(2) Main business in different areas
Unit: RMB
Domestic International
Industries Operation income Year-on-year
increase/decrease Operation income Year-on-year
increase/decrease
Aviation
transportation
service
2,965,657,235.79 31.61% 118,864,443.39 129.66%
Logistics
transportation
service
3,341,785.85 -1.06% - -
Hotel and food
service 12,991,318.48 7.96% - -
Training service 436,900.00 - - -
Other 32,371,411.07 53.98% - -
(3) Particulars about main asset and analysis to financial index in the report period
Item 30 June 2010 31 December 2009 Increase/decrease (%)
Note payable 33,226,885.33 182,124,331.32 -81.76%
Account paid in advance 38,722,913.95 22,504,262.48 72.07%
Item Jan.-Jun. 2010 Jan.-Jun. 2009 Increase/decrease (%)
Sales expense 208,998,341.78 143,786,115.87 45.35%
Investment income 645,329.07 4,829,849.65 -86.64%
Non-operating income 6,438,539.47 115,765,523.38 -94.44%
Income tax expense 68,488,541.33 37,393,723.46 83.16%
Reasons for changes of increase/decreaseSHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
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Item Explanation
Note payable Mainly due to the bank acceptance bill paid at maturity
Account paid in advance
Mainly due to the expansion of fleet scale results in the greatly
account of air materials paid in advance in this period
Sales expense
Mainly due to the increase of personnel, the expansion of fleet and
marketing network, the soaring charge of computer reservation and
agent commission
Investment income
Mainly due to the decrease of investment income of actually delivery
in the period of holding transactional financial assts
Non-operating income
Mainly due to the construction fund of civil aviation at same period of
last year have been returned
Income tax expense Mainly due to the increase of total profit in this period
2. In Period, the management continuously promotes the management reform, with phase progress
in all constructions.
(1) In the Period, there is no unsafe incidence above the symptom of corporation-caused
transportation accidence, with continuous 0-accidence in air defense and surface safety. The
construction in safety management system has been of the phase result, and is awarded the standard
safety management system to become the first aviation corporation of the standard SMS operation,
which marks a new step in safety management level.
(2) Severely enforce the regular flights work, make efforts to improve control and management
level of operation, continuously launch the specific renovation in the flight regularity, strengthen the
AOC construction and the application of the new technology, and improve the control and
management level of operation.
(3) Aggressively seize the market opportunity, strengthen the organization in operation, realise
surplus profit, take the maximum contribution margin as the goal, improve the resources efficiency
and match ability, strengthen the airline network planning, and improve the airline network value
wholly.
(4) Promote the construction of full-flow service system, continuously upgrade the service quality.
Take the customer experience as the orientation, promote the construction of full-flow service
system, strengthen the spot management, improve the service support capability, strengthen the
quality supervision of the service system, and perfect the alarm mechanism of the service risk.
(5)Promote orderly the organization innovation; carry out the control and management system
stably. Optimize the control and management system, solidify refining management basis, and
promote the preparation and the basic construction of the “Twelfth-five” Planning.
(6) Strengthen the Party construction and the political and ideological work, and enforce the inside
control and the construction of a clean and honest government.
(II) There is no material change in the constitution of profit, main business or its constitution in the
Period.
(III) There are no other operating activities of the significant influence upon the profit in the Period.SHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
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(IV) There is no investment return from a single controlling company or joint company, of 10%
above influence on the net profit in the Period.
(V)There is no material change in the operation and production environment and policies in the
Period.
(VI) Problems and difficulties in operation
Concering the external environment presently, the favorable and positive factors are dominant but
the rather stronger instability still exists. The indication to the economy warming is evident; the
domestic economy is also in the upward period of the recovering growth; and the increase in the
aviation transportation demand is continual; all the above trends are in the hope of continuity.
However, the basis of the global economy warming is still fragile; the trend of the domestic macro
economy may be repetitious; to some extent, the fluctuation of the aviation oil price is to impact the
operation cost; the replacing of the mid-short transportation by the express railway is gradually
evident; all the above effect larger pressure upon the Company’s future production and operation.
II. Investments of the Company
(I) There is no appropriation of the raised funds in the Period or previous appropriation continual
into the Period.
(II) Actual progress and investment of substantive projects of non-raised funds.
1. Qingdao International Aviation Logistic Center Co., Ltd., the controlling corporation,
accomplished the operation income of RMB 3.34 million, total profit of RMB0.32million, from Jan.
to Jun. 2010.
2. Sichuan Airlines Co., Ltd., a joint-share corporation, accomplished the operation income of RMB
4.17 billion total profit of RMB52.29 million, from Jan. to Jun. 2010.
3. Shandong Airlines Rainbow Public Affair Jet Co., Ltd., a joint-share corporation, accomplished
the operation income of RMB5.14 million total profit of RMB1.73 million, from Jan. to Jun. 2010.
4. The operation data of Jinan International Airport Co., Ltd., a joint-share corporation, in the first
half, are not available now.
5. The operation data of TravelSky Technology Limited, a joint-share corporation, in the first half,
has not been released.
III. Forecast of operation performance in the past three quarters in 2010
Performance
estimation
Greatly soaring in same direction
Item This period Same period of last
year
Change of increase
/decrease (%)
2010.1.1.—
2010.9.30
2010.7.1.—
2010.9.30
2009.1.1-
2009.9.30
2009.7.1-
2009.9.30
First three
quarters 3rd quarter
Net profit
(Hundred million) 4.8—5.7 2.7—3.6 2.7 1.6
Increase78%
-111%
Increase69
%-125%
Basic earnings per
share(RMB/Share) 1.2-1.4 0.68-0.9 0.68 0.4
Increase78%
-111%
Increase69
%-125%
Explanation on
performance
estimation
1. Domestic economy have a steady rebound and gradually recover, the demand
for domestically air transportation shows a rapidly growth.
2. Marketing sale has a good condition, the Company actively dealing with the
market situation which has becoming moderate at the same time. AppropriatedSHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
9
adjusting focus of investment, realized a steady upgrade on business performance.
Section V. Significant Events
I. Corporate governance
In the Period, the Company strictly obeyed the requirments in Company Law, Security Law and
Code of Corporate Governance for Listed Companies in China, stuck to the standard operation, and
continually perfected the governance structure and management level. The Company worked out
and strictly implemented the management rule of information disclosure, identified the person
responsible for the information disclosure, made out the procedures of report, handover, check, and
disclosure, of the significant incidence, which can make sure the true, accurate, completely, timely,
and fair disclosure of information; the Company gave full play to the role of all special committees
of the Board, in decision-making, auditory and assessment, ensure the fulfillment to provide
necessary and convenient requirements for the supervision; as the Company made elaborate efforts
to perfect the internal control system and improve the internal management, accouding to basic
norms and specific regulations on corporate internal control issued by related departments, the
Company’s governance structure and operation mechanism are gradually perfect, and the
shareholders’ equity is fully proceted.
II. Implementation of 2009 annual profit distribution plan
The Company’s 2009 annual dividend distribution plan was approved by the 2009 Annual General
Shareholders’ Meeting on 22 April 2010, which took the existing total share capital of 400 million
shares as the basic and distribute to all shareholders RMB 2.00 (tax included) in cash per 10 shares;
the total dividend was RMB 80 million and the distribution was accomplished on 18 June 2010.
III. Profit distribution plan in middle of 2010
There was neither profit distribution nor transfer of reserves to shares in the middle of 2010.
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. There was substantive acquisition, sale or restructuring of assets in the Period, or previous
one continual into the Period.
SDA Group sold its 100% shareholding in Qingdao Feisheng International Aviation Technology
Development and Training Co., Ltd. (hereafter referred as “Qingdao Feisheng”) in Shanghai United
Assets and Equity Exchange on 21 December 2009, with the listing price of RMB 50,740,053. The
Company presented the transfer application to Shanghai United Assets and Equity Exchange on 13
January 2010, for the biding for the 100% shareholding in Qingdao Feisheng. On 2 February 2010,
the Company received the confirmation document of qualification of the transfer intention party
that the Company was qualified for the biding and became the final transfer party, with the transfer
price of RMB 50,740,053. On 1 March 2010, the Company signed the Assets and Equity
Transaction Contract with SAD Group, which was approved by Shanghai United Assets and Equity
Exchange on 3 November 2010.
VI. Substantive related transaction
(I) Substantive related transaction for commodity purchase or labor supply
1. In the Period, there were aircraft maintenance expenses of RMB 33.01million between TaikooSHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
10
(Shandong) Aircraft Engineering Co., Ltd. and the Company, accounting for 14.88％of the total in
the same transaction. The Company has paid in cash for the transaction at the market price.
2. The Company continuously strengthened the cooperations with the actual controller Air China in
markets and airlines, with, the settlement sum of RMB 11.99 million between the two parties in the
Period.
3. Implementation of daily related transaction in Period
Type of related transaction Related party
Amount of
transaction
(RMB’0000)
Proportion in
same
transaction
Taikoo (Shandong) Aircraft Engineering Co., Ltd
1. Maintenance of aircrafts 3,301 14.88%
and parts Shandong Hnayu Aviation Technology Service Co.,
Ltd. 1,618 7.29%
2. Rent for office land and
daily boarding
SDA Group Co., Ltd.( Rent for office land and daily
boarding ) 585 30.13%
3.Traning business
Qingdao Feisheng International Aviation
Technology Development Training Co., Ltd.
212 4.00%
China International Aviation Co., Ltd. (Airplane
lease) 31,047 100%
China International Aviation Co., Ltd. (Airline
affiliation) 1,199 100%
4. Airplane lease and
market cooperation
China International Aviation Co., Ltd. (Labor
service) 510 48.35%
(II) Other substantive related transactions
There were no other significant related transactions.
VII. Substantivet contracts and their implementation
(I) There was no new trust, contract or lease of assets in the Period.
(II) There was no external guarantee in the Period.
(III) There was no trust financing in the Period.
(IV) Other substantive contracts
As ending at the Period-end, the total of the long-term/short-term borrowing is RMB 4.48 billion.
There were no other substantive contracts un-disclosed.
VIII. Commitment in Period or previous one continual into Period by corporation or
shareholders, of 5% (including 5%) above shareholding, of significant influence upon the
Company’s operation achievements or financial status
As the Company bided100% shareholding in Qingdao Feisheng, SDA Group commited for
compensation for the profit eatimation according to Appraisal Report and envisioned the net profit
of RMB 4.8049 million of Qingdao Feisheng in 2010. If Qingdao Feisheng does not accomplish
the estimative profit in operation performance on the continual appraisal basis, which causes the
Company’s profit loss, SDA Group committed for the cash compensation for the difference. The
commitment needs comparison upon the auditory of the 2010 annual profit of Qingdao Feisheng.
IX. There is no punishment from the regulatory department on the Company or its directors,
supervisors or senior management in the Period
X. Analysis and explanation on other significant events, their influences, and solutions
(I) The Company holds 8,697,000 shares of Chinese Information Network Incorporation of CivilSHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
11
Aviation which is listed in Hong Kong Exchanges and Clearing Limited. The nature of these shares
is non-tradable domestic shares.
There was no shareholding in the financial corporation as the other listed company, joint
commercial bank, Securities Corporation, Insurance Corporation, Trust Corporation and Futures
Corporation.
(II) Specific explanation and independent opinion of independent directors on capital appropriation
by controlling shareholders or other related parties and external guarantee, in Period or previous one
continual into Period
As ending at 30 June 2010, there is no capital appropriation by controlling shareholders or other
related parties in the Period or previous one continual into the Period.
In the Period, there ws no external guarantee.
XI. Internal control and fulfillment of social responsibilities
Taking the opportunity of special corporate governance activities, the Company strengthened
internal control and perfected governance structure. In the Period, the Company continued to
perfect the setting organization of the special committees of the Board. During the preparation of
2009 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.
Moreover, the Company further perfected the safeguard system, established the systems of
corporate training and control over the safeguard quality, did well the safeguard for Shanghai
Exposition, and secured the “Exposition” Flight 660. The Company urgently allocated the
transportation capacity, accomplished the materials transportation for for the earthquake relieve in
Yushu, and drought relief in Southwest, with the total of 12 flights for the safeguard and disaster
relieve, disaster relieve epuipment and matrials of 38.5 tonnage, and a futher check on the urgent
disaster relief capability .
XII. Reception of study & investigation, communication and interview in Period
In the Period, there were activities of reception of specific objects (institutional and individual
investors) by answering and replying to investors’ call and is no incidence of the selective or
privatel disclosure, reveal, or leak of non-pulic significant information to specific objects
(institutional investor or fund).
Date Place Way The received parties Contents discussed and materials
supplied
Jan.-June 2010 Jinan Telephone
communication Individual investor Operations of the Company; material
not supplied.
22 April 2010 Jinan Face-to-face
interview
Securities media,
institutional shareholder,
private investor
Operations of the Company; Annual
Report of the Company supplied.
XIII. Other significant events
All significant events and announcements were published in China Securities Journal, Securities
Times, Hongkong Commercial Daily (Hongkong) and the Juchao Zixun website (http:
//www.cninfo.com.cn). Details may be refered to in the above relevant media.SHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
12
Section VI. Financial Report
Balance Sheet
Prepared by Shandong Airlines Co., Ltd. June 30, 2010 Unit: RMB
Items ConsolAidmatoiounn t at pePriaorde-netn Cd ompany ConsolAidmatoiounn t at yePara-rbeengt iCn ompany
Current assets:
Monetary funds 243,229,056.16 230,016,518.61 194,065,742.69 179,813,989.83
Settlement provisions
Capital lent
Transaction finance
asset 11,580,394.10 11,580,394.10 11,341,846.48 11,341,846.48
Notes receivable
Accounts receivable 207,884,032.55 203,256,597.56 142,545,895.96 140,731,572.47
Accounts paid in
advance 38,722,913.95 38,602,033.58 22,504,262.48 22,370,882.70
Insurance receivable
Reinsurance receivables
Contract reserve of
reinsurance receivable
Interest receivable
Dividend receivable 1,165,398.00 1,165,398.00 1,617,642.00 1,617,642.00
Other receivables 205,870,710.36 205,725,322.87 160,552,013.99 160,483,475.47
Purchase restituted
finance asset
Inventories 69,431,800.28 69,431,800.28 65,267,781.10 65,267,781.10
Non-current asset due
within one year
Other current assets
Total current assets 777,884,305.40 759,778,065.00 597,895,184.70 581,627,190.05
Non-current assets:
Granted loans and
advances
Finance asset available
for sales
Held-to-maturity
investment
Long-term account
receivable
Long-term equity
investment 88,352,100.00 112,165,305.97 88,352,100.00 112,165,305.97
Investment property
Fixed assets 6,703,637,530.35 6,691,540,601.63 6,631,600,764.96 6,619,089,545.44
Construction in progress 565,082,653.78 565,082,653.78 422,277,445.58 422,277,445.58
Engineering material
Disposal of fixed asset
Productive biological
asset
Oil and gas asset
Intangible assets 47,502,621.28 32,638,438.30 47,895,073.21 33,013,562.26
Expense on Research
and Development
Goodwill
Long-term expenses to
be apportioned 214,355,808.42 214,126,123.12 216,546,250.96 216,370,254.46SHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
13
Deferred income tax
asset 117,810,714.29 117,785,939.79 91,836,911.34 91,812,136.84
Other non-current asset
Total non-current asset 7,736,741,428.12 7,733,339,062.59 7,498,508,546.05 7,494,728,250.55
Total assets 8,514,625,733.52 8,493,117,127.59 8,096,403,730.75 8,076,355,440.60
Current liabilities:
Short-term loans 1,012,102,017.03 1,012,102,017.03 739,819,020.88 739,819,020.88
Loan from central bank
Absorbing deposit and
interbank deposit
Capital borrowed
Transaction financial
liabilities
Notes payable 33,226,885.33 33,226,885.33 182,124,331.32 182,124,331.32
Accounts payable 965,875,874.52 963,219,547.33 812,032,950.07 810,639,584.15
Accounts received in
advance 152,563,822.72 152,563,822.72 117,956,240.43 117,467,352.04
Selling financial asset of
repurchase
Commission charge and
commission payable
Wage payable 102,768,188.10 102,732,617.26 135,033,537.40 135,018,545.42
Taxes payable 169,330,267.85 169,064,286.44 177,564,425.49 177,319,512.46
Interest payable 4,077,760.66 4,077,760.66 4,001,134.66 4,001,134.66
Dividend payable 11,940.00 11,940.00 11,940.00 11,940.00
Other accounts payable 142,313,994.69 142,026,787.36 124,930,463.59 124,872,192.44
Reinsurance payables
Insurance contract
reserve
Security trading of
agency
Security sales of agency
Non-current liabilities
due within 1 year 515,410,729.46 515,410,729.46 535,108,457.71 535,108,457.71
Other current liabilities
Total current liabilities 3,097,681,480.36 3,094,436,393.59 2,828,582,501.55 2,826,382,071.08
Non-current liabilities:
Long-term loans 3,471,793,648.36 3,471,793,648.36 3,402,752,588.39 3,402,752,588.39
Bonds payable
Long-term account
payable 917,226,481.96 917,226,481.96 968,968,451.94 968,968,451.94
Special accounts
payable
Projected liabilities
Deferred income tax
liabilities 2,895,098.53 2,895,098.53 2,835,461.62 2,835,461.62
Other non-current
liabilities 33,840,479.00 33,840,479.00 27,718,573.00 27,718,573.00
Total non-current liabilities 4,425,755,707.85 4,425,755,707.85 4,402,275,074.95 4,402,275,074.95
Total liabilities 7,523,437,188.21 7,520,192,101.44 7,230,857,576.50 7,228,657,146.03
Owner’s equity (or
shareholders’ equity):
Paid-in capital (or share
capital) 400,000,000.00 400,000,000.00 400,000,000.00 400,000,000.00
Capital public reserve 84,050,162.84 84,050,162.84 84,050,162.84 84,050,162.84
Less: Inventory sharesSHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
14
Reasonable reserve
Surplus public reserve 59,576,069.03 58,915,364.50 59,576,069.03 58,915,364.50
Provision of general risk
Retained profit 434,239,113.44 429,959,498.81 308,668,390.11 304,732,767.23
Balance difference of
foreign currency translation
Total owner’s equity
attributable to parent
company
977,865,345.31 852,294,621.98
Minority interests 13,323,200.00 13,251,532.27
Total owner’s equity 991,188,545.31 972,925,026.15 865,546,154.25 847,698,294.57
Total liabilities and owner’s
equity 8,514,625,733.52 8,493,117,127.59 8,096,403,730.75 8,076,355,440.60
Profit Statement
Prepared by Shandong Airlines Co., Ltd. January-June, 2010 Unit: RMB
Amount in this period Amount in last period
Items Consolidation Parent
Company Consolidation Parent
Company
I. Total operating income 3,133,663,094.58 3,130,557,084.43 2,341,628,166.43 2,338,250,642.97
Including: Operating income 3,133,663,094.58 3,130,557,084.43 2,341,628,166.43 2,338,250,642.97
Interest income
Insurance gained
Commission charge and
commission income
II. Total operating cost 2,863,871,178.16 2,861,260,458.31 2,305,916,180.00 2,303,368,120.60
Including: Operating cost 2,407,584,188.29 2,406,587,181.10 1,855,661,886.60 1,854,692,032.25
Interest expense
Commission charge and
commission expense
Cash surrender value
Net amount of expense
of compensation
Net amount of
withdrawal of insurance
contract reserve
Bonus expense of
guarantee slip
Reinsurance expense
Operating tax and extras 87,411,121.39 87,244,032.10 69,042,767.26 68,873,891.08
Sales expenses 208,998,341.78 208,998,341.78 143,786,115.87 143,786,115.87
Administration
expenses 61,598,497.67 59,897,863.18 105,357,851.54 103,808,136.48
Financial expenses 97,703,103.83 97,957,114.95 131,687,423.69 131,827,809.88
Losses of devaluation of
asset 575,925.20 575,925.20 380,135.04 380,135.04
Add: Changing income
of fair value(Loss is listed
with “-”)
238,547.62 238,547.62 -4,056,192.64 -4,056,192.64
Investment income
(Loss is listed with “-”) 645,329.07 645,329.07 4,829,849.65 4,829,849.65
Including: Investment
income on affiliated
company and joint venture
Exchange income (LossSHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
15
is listed with “-”)
III. Operating profit (Loss
is listed with “-”) 270,675,793.11 270,180,502.81 36,485,643.44 35,656,179.39
Add: Non-operating
income 6,438,539.47 6,438,539.47 115,765,523.38 115,765,523.38
Less: Non-operating
expense 2,983,400.20 2,983,400.20 2,176,504.92 2,176,504.92
Including: Disposal loss
of non-current asset 2,860,149.01 2,860,149.01 2,169,256.17 2,169,256.17
IV. Total Profit (Loss is
listed with “-”) 274,130,932.38 273,635,642.08 150,074,661.90 149,245,197.85
Less: Income tax
expense 68,488,541.33 68,408,910.51 37,393,723.46 37,311,299.45
V. Net profit (Net loss is
listed with “-”) 205,642,391.05 205,226,731.58 112,680,938.44 111,933,898.40
Net profit attributable to
owner’s of parent company 205,570,723.33 112,509,856.54
Minority shareholders’
gains and losses 71,667.72 171,081.90
VI. Earnings per share
i. Basic earnings per share 0.51 0.28
ii. Diluted earnings per share 0.51 0.28
VII. Other comprehensive
income
VIII. Total consolidated
income 205,642,391.05 205,226,731.58 112,680,938.44 111,933,898.40
Total consolidated income
attributable to owners of
parent company
205,570,723.33 112,509,856.54
Total consolidated income
attributable to minority
shareholders
71,667.72 171,081.90
Cash Flow Statement
Prepared by Shandong Airlines Co., Ltd. January-June, 2010 Unit: RMB
Amount i Items Consolidation n thiPsa preenrito Cd ompany ConsolAidmatoiounn t in lasPta preenrito Cd o mpany
I. Cash flows arising from
operating activities:
Cash received from
selling commodities and
providing labor services
3,103,986,764.56 3,102,782,754.30 2,336,429,221.15 2,334,446,557.00
Net increase of
customer deposit and
interbank deposit
Net increase of loan
from central bank
Net increase of capital
borrowed from other
financial institution
Cash received from
original insurance contract
fee
Net cash received from
reinsurance business
Net increase of insuredSHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
16
savings and investment
Net increase of disposal
of transaction financial asset
Cash received from
interest, commission charge
and commission
Net increase of capital
borrowed
Net increase of returned
business capital
Write-back of tax
received
Other cash received
concerning operating
activities
12,474,129.71 12,219,005.89 93,215,476.76 93,075,090.57
Subtotal of cash inflow
arising from operating
activities
3,116,460,894.27 3,115,001,760.19 2,429,644,697.91 2,427,521,647.57
Cash paid for
purchasing commodities and
receiving labor service
1,976,453,214.03 1,976,441,336.34 1,338,317,681.18 1,338,332,467.49
Net increase of
customer loans and advances
Net increase of deposits
in central bank and interbank
Cash paid for original
insurance contract
compensation
Cash paid for interest,
commission charge and
commission
Cash paid for bonus of
guarantee slip
Cash paid to/for staff
and workers 353,667,841.00 352,019,777.48 299,050,769.59 297,851,797.47
Taxes paid 250,766,690.79 250,270,593.38 158,632,335.13 158,622,333.14
Other cash paid
concerning operating
activities
53,959,573.55 53,713,743.78 66,905,309.19 66,514,013.02
Subtotal of cash outflow
arising from operating
activities
2,634,847,319.37 2,632,445,450.98 1,862,906,095.09 1,861,320,611.12
Net cash flows arising
from operating activities 481,613,574.90 482,556,309.21 566,738,602.82 566,201,036.45
II. Cash flows arising from
investing activities:
Cash received from
recovering investment
Cash received from
investment income 1,097,573.07 1,097,573.07 3,212,207.65 3,212,207.65
Net cash received from
disposal of fixed, intangible
and other long-term assets
9,380.00 9,380.00 317,139,020.01 317,139,020.01
Net cash received from
disposal of subsidiaries and
other unitsSHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
17
Other cash received
concerning investing
activities
Subtotal of cash inflow
from investing activities 1,106,953.07 1,106,953.07 320,351,227.66 320,351,227.66
Cash paid for
purchasing fixed, intangible
and other long-term assets
465,535,817.20 465,439,336.20 456,905,808.57 456,847,808.57
Cash paid for
investment
Net increase of
mortgaged loans
Net cash received from
subsidiaries and other units
Other cash paid
concerning investing
activities
25,800,000.00 25,800,000.00
Subtotal of cash outflow
from investing activities 465,535,817.20 465,439,336.20 482,705,808.57 482,647,808.57
Net cash flows arising
from investing activities -464,428,864.13 -464,332,383.13 -162,354,580.91 -162,296,580.91
III. Cash flows arising from
financing activities
Cash received from
absorbing investment
Including: Cash
received from absorbing
minority shareholders’
investment by subsidiaries
Cash received from
loans 859,816,241.77 859,816,241.77 1,118,132,976.67 1,118,132,976.67
Cash received from
issuing bonds
Other cash received
concerning financing
activities
Subtotal of cash inflow
from financing activities 859,816,241.77 859,816,241.77 1,118,132,976.67 1,118,132,976.67
Cash paid for settling
debts 568,804,717.16 568,804,717.16 1,268,237,935.34 1,268,237,935.34
Cash paid for dividend
and profit distributing or
interest paying
154,943,882.25 154,943,882.25 109,218,730.63 109,218,730.63
Including: Dividend and
profit of minority
shareholder paid by
subsidiaries
Other cash paid
concerning financing
activities
108,107,155.39 108,107,155.39 105,176,772.22 105,176,772.22
Subtotal of cash outflow
from financing activities 831,855,754.80 831,855,754.80 1,482,633,438.19 1,482,633,438.19
Net cash flows arising
from financing activities 27,960,486.97 27,960,486.97 -364,500,461.52 -364,500,461.52
IV. Influence on cash and
cash equivalents due to -30,532.87 -30,532.87 -95,955.40 -95,955.40SHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
18
fluctuation in exchange rate
V. Net increase of cash and
cash equivalents 45,114,664.87 46,153,880.18 39,787,604.99 39,308,038.62
Add: Balance of cash
and cash equivalents at the
period -begin
49,333,429.81 35,081,676.95 44,937,058.88 30,712,242.02
VI. Balance of cash and cash
equivalents at the period -end 94,448,094.68 81,235,557.13 84,724,663.87 70,020,280.64SHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
19
Consolidated Statement on Changes of Owners’ Equity
Prepared by Shandong Airlines Co., Ltd. Semi-Annual of 2010 Unit: RMB
Amount in this report period Amount in last year
Owners' equity attributable to the parent company Owners' equity attributable to the parent company
Items
Paid-up
capital
(Share
capital)
Capital
reserve
s
Less:
Treasur
y Stock
Reaso
nable
reserv
e
Surplu
s
reserv
es
Gener
al risk
provis
ion
Retain
ed
profit
Others
Minor
ity’s
equity
Total
owner
s’
equity
Paid-up
capital
(Share
capital)
Capital
reserve
s
Less:
Treasur
y Stock
Reaso
nable
reserv
e
Surplu
s
reserv
es
Gener
al risk
provis
ion
Retain
ed
profit
Others
Minor
ity’s
equity
Total
owner
s’
equity
I. Balance at the end of last
year
400,0
00,00
0.00
84,05
0,162.
84
59,57
6,069.
03
308,6
68,39
0.11
13,25
1,532.
27
865,5
46,15
4.25
400,0
00,00
0.00
84,05
0,162.
84
29,49
0,727.
77
36,47
1,405.
69
12,79
0,655.
55
562,8
02,95
1.85
Add: Changes of accounting
policy
Error correction of the last
period
Others
II. Balance at the beginning
of this year
400,0
00,00
0.00
84,05
0,162.
84
59,57
6,069.
03
308,6
68,39
0.11
13,25
1,532.
27
865,5
46,15
4.25
400,0
00,00
0.00
84,05
0,162.
84
29,49
0,727.
77
36,47
1,405.
69
12,79
0,655.
55
562,8
02,95
1.85
III. Increase/ Decrease in
this year (Decrease is
listed with "-")
125,5
70,72
3.33
71,66
7.72
125,6
42,39
1.05
30,08
5,341.
26
272,1
96,98
4.42
460,8
76.72
302,7
43,20
2.40
(I) Net profit
205,5
70,72
3.33
71,66
7.72
205,6
42,39
1.05
302,2
82,32
5.68
460,8
76.72
302,7
43,20
2.40
(II) Other consolidated
income
Subtotal of (I) and (II) 205,5 71,66 205,6 302,2 460,8 302,7SHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
20
70,72
3.33
7.72 42,39
1.05
82,32
5.68
76.72 43,20
2.40
(III) Owners' devoted and
decreased capital
1. Owners' devoted capital
2. Amount calculated into
owners' equity paid in shares
3. Others
(IV) Profit distribution
-80,00
0,000.
00
30,08
5,341.
26
-30,08
5,341.
26
1. Withdrawal of surplus
reserves
30,08
5,341.
26
-30,08
5,341.
26
2. Withdrawal of general risk
provisions
3. Distribution for owners
(shareholders)
-80,00
0,000.
00
4. Others
(V) Carrying forward internal
owners' equity
1. Capital reserves conversed
to capital (share capital)
2. Surplus reserves conversed
to capital (share capital)
3. Remedying loss with
surplus reserveSHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
21
4. Others
(VI) Reasonable
reserve
1. Withdraw in this
period
2. Usage in this period
IV. Balance at the end of
the report period
400,0
00,00
0.00
84,05
0,162.
84
59,57
6,069.
03
434,2
39,11
3.44
13,32
3,200.
00
991,1
88,54
5.30
400,0
00,00
0.00
84,05
0,162.
84
59,57
6,069.
03
308,6
68,39
0.11
13,25
1,532.
27
865,5
46,15
4.25
Statement on Changes of Owners' Equity of Parent Company
Prepared by Shandong Airlines Co., Ltd. Semi-Annual of 2010 Unit: RMB
Amount in this report period Amount in last year
Item
Paid-up
capital
(Share
capital)
Capital
reserves
Less:
Treasury
Stock
Reasona
ble
reserve
Surplus
reserves
General
risk
reserve
Retaine
d profit
Total
owners’
equity
Paid-up
capital
(Share
capital)
Capital
reserves
Less:
Treasury
Stock
Reasona
ble
reserve
Surplus
reserves
General
risk
reserve
Retaine
d profit
Total
owners’
equity
I. Balance at the end of last
year
400,000
,000.00
84,050,
162.84
58,915,
364.50
304,732
,767.23
847,698
,294.57
400,000
,000.00
84,050,
162.84
28,830,
023.24
33,964,
695.93
546,844
,882.01
Add: Changes of accounting
policy
Error correction of the last
period
Others
II. Balance at the beginning
of this year
400,000
,000.00
84,050,
162.84
58,915,
364.50
304,732
,767.23
847,698
,294.57
400,000
,000.00
84,050,
162.84
28,830,
023.24
33,964,
695.93
546,844
,882.01
III. Increase/ Decrease in
this year (Decrease is
125,226
,731.58
125,226
,731.58
30,085,
341.26
270,768
,071.30
300,853
,412.56SHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
22
listed with "-")
(I) Net profit
205,226
,731.58
205,226
,731.58
300,853
,412.56
300,853
,412.56
(II) Other consolidated
income
Subtotal of (I) and (II)
205,226
,731.58
205,226
,731.58
300,853
,412.56
300,853
,412.56
(III) Owners' devoted and
decreased capital
1. Owners' devoted capital
2. Amount calculated into
owners' equity paid in shares
3. Others
(IV) Profit distribution
-80,000,
000.00
30,085,
341.26
-30,085,
341.26
1. Withdrawal of surplus
reserves
30,085,
341.26
-30,085,
341.26
2. Withdrawal of general risk
provisions
3. Distribution for owners
(shareholders)
-80,000,
000.00
4. Others
(V) Carrying forward internal
owners' equity
1. Capital reserves conversed
to capital (share capital)
2. Surplus reserves conversed
to capital (share capital)SHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
23
3. Remedying loss with
surplus reserve
4. Others
(VI) Reasonable reserve
1. Withdraw in this
period
2. Usage in this period
IV. Balance at the end of
the report period
400,000
,000.00
84,050,
162.84
58,915,
364.50
429,959
,498.81
972,925
,026.15
400,000
,000.00
84,050,
162.84
58,915,
364.50
304,732
,767.23
847,698
,294.57SHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
2 4
Shandong Airlines Co., Ltd.
Notes to the financial statements
As at 30st June 2010
（All amounts are expressed in RMB Yuan unless otherwise stated）
Ⅰ General
Shandong Airlines Co., Ltd. (hereafter, the Company) is a foreign investment limited liability company
incorporated in the People’s Republic of China (hereafter, the PRC) on 29th July 1999 as part of the
reorganization of Shandong Airlines Group Co., Ltd., the holding company of the Company. The operation
of the Company is subject to the supervision and regulation of the Civil Aviation Administration of China
(hereafter, the CAAC), a regulatory body of the civil aviation industry in the PRC.
The 140,000,000 B-shares of the Company have been listed the Shenzhen Stock Exchange (hereafter,
the Stock Exchange) since 12th September 2000.
The approved operating scope of the Company is the operation of international、domestic air services
for the carriage of passengers and freight; hotel restaurants (Just limited to branch); aircraft repair and
maintenance; civil aviation aircrew training; the agency business between airlines; ground services that
relevant to the Company’s main business.
Ⅱ Summary of significant accounting policies and estimates, and correction of errors
1. Bases for preparation of the financial statements
The (consolidated) financial statements of the Company (and the Group) have been prepared on the
going concern basis with reference to the actual occurrence of transactions and events and in accordance
with the China Enterprise Accounting Standards (CAS) issued by the Ministry of Finance on 15th February
2006 and the significant accounting policies and estimates as set out in
Part Ⅱ.
2. Declaration of Compliance with the Enterprise Accounting Standards
The (consolidated) financial statements of the Company (and the Group) have been prepared in
accordance with the Enterprise Accounting Standards to present truly and completely the financial position,
result of operation and cash flow and the relevant information of the Company (and the Group).
3. Accounting year
The Company adopts the accounting year ending 31st December.
4. Presentation (functional) currency
The presentation (functional) currency of the Company is Renminbi (hereafter, CNY).
5. Business acquisitions
(1) Acquiring business under common control
The Company measures the identifiable assets acquired and liabilities assumed at their acquisition-date
book values in the accounts of the acquiree. The excess of the consideration transferred in the form of book
value or shares issued over the acquisition-date book values in the acquiree’s accounts of the identifiable netSHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
2 5
assets acquired is debited to Capital reserves, and to Undistributed profits where the total value of Capital
reserves is insufficient.
(2) Acquiring business not under common control
The Company measures the identifiable assets acquired and the liabilities assumed at their
acquisition-date fair values. Goodwill as of the acquisition date measured as the excess of the amount of the
total consideration paid for the acquisition measured in accordance with s11, Ch. 3, CAS 20 over the net of
the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed measured in
accordance with s14, Ch.3, CAS 20 is recognised by the Company, if the later exceeds the former (ie.
negative excess), the Company recognises the resulting gain in profit or loss on the acquisition date after
reviewing their fair values and confirming the negative excess.
6. Consolidated financial statements
(1) Scope of consolidated financial statements
Consolidated financial statements are prepared on the basis of control existence in accordance with
CAS 33 issued by the Ministry of Finance in February 2006. The consolidated financial statements of the
Company include all subsidiaries and the entities, which are established for specified purposes, either
directly or indirectly controlled by the Company and the Company itself. The Company has control over an
entity where the Company has the power to govern the financial and operating policies of the entity under a
statute or an agreement and is able to obtain economic benefit from the entity’s operation by virtue of that
power. Where it is clearly demonstrated that the Company’s investment in an entity does not constitute
control over the entity, the Company excludes the entity from consolidation.
(2) Purchase and sales of ordinary shares of subsidiaries
The Company determines the date of purchase and sales of the ordinary shares of subsidiaries on the
basis of the actual occurance of transfer of the risks attached to and proceeds associated with the shares
respectively. The respective post- or pre-transaction-date operation results and cash flows of the subsidiary
acquired or disposed in the course of the combination of businesses not under common control are accounted
for in the consolidated income statement and cash flow statement. The operation results and cash flows of
the subsidiary, which occur after the start date of the accounting period in which the subsidiary is acquired
and prior to the disposal date, acquired in the course of the combination of businesses under common control
are accounted for and separately presented in the consolidated income statement and cash flow statement
with comparables adjusted accordingly.
The excess of the value of a long-term equity investment, recognised and measured in accordance with
CAS 2, in a subsidiary arising from the purchase of small amount of the ordinary shares of the subsidiary
over the Company’s share of the net fair value of the subsidiary’s identifiable assets and liabilities as from
the purchase date is debited to Capital reserves, and to Undistributed profits where the total value of Capital
reserves is insufficient.
(3) Uniform accounting policies
If a subsidiary uses accounting policies other than those adopted in the consolidated financial
statements for like transactions and events in similar circumstances, appropriate adjustments are made to itsSHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
2 6
financial statements in preparing the consolidated financial statements; the adjustments are conducted also
with reference to the acquisition-date fair values of the identifiable assets acquired and the liabilities
assumed from the subsidiary measured in accordance with s14, Ch.3, CAS 20 where the subsidiary is
acquired in the course of the combination of businesses not under common control.
(4) Consolidation procedures
Intragroup balances and transactions are eliminated in full in the preparation of consolidated financial
statements. Non-controlling interests in the net assets of consolidated subsidiaries are identified separately
from the Company’s ownership interests in them. Non-controlling interests are debited by the excess, if any,
of the loss attributable to non-controlling shareholders over their share of the net fair value of the
subsidiary’s identifiable assets and liabilities where they are able and obliged to contribute to the excess; the
excess is otherwise attributable to the Company.
7. Cash equivalents
Cash equivalents are short-term (usually with a maturity date within three months from the date of
acquisition), highly liquid investments that are readily convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value.
8. Foreign currency transactions and foreign currency translation
(1) Foreign currency transactions
The Company’s foreign currency transactions are recorded, on initial recognition in the reporting
(functional) currency, by applying to the foreign currency amount the middle exchange rate quoted by the
People’s Bank of China (hereafter, the (spot) exchange rate) between the reporting (functional) currency and
the foreign currency at the date of the transaction.
Foreign currency monetary items as at the balance sheet date are translated using the balance-sheet-date
spot exchange rate; non-monetary items as at the balance sheet date that are measured in terms of historical
cost in foreign currencies are translated using the transaction-date exchange rates with no adjustment made
to the recorded amounts on initial recognition in the reporting (functional) currency; non-monetary items as
at the balance sheet date that are measured at fair value in foreign currencies are translated using the
exchange rates at the dates when the fair values were determined. Exchange differences arising on
translating monetary or non-monetary items at rates different from those at which they were translated on
initial recognition during the period or in previous financial statements are recognised directly or as fair
value adjustments in profit or loss in the period in which they arise except for monetary items that satisfy the
criteria for borrowing costs capitalisation.
(2) Foreign currency translation
① Assets, liabilities and all Shareholders’ equity items as at the balance sheet date except
Undistributed profits are translated using the balance-sheet-date spot exchange rates.
② Income and expenses are translated using the transaction-date exchange rates.
Exchange differences arising from the translation methods specified in paragraph 8(2)① and ② are
separately presented in Shareholders’ equity.
③ The cash flows of a foreign subsidiary are translated at the exchange rates at the dates of the cashSHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
2 7
flows. The effect of exchange rate changes on cash and cash equivalents held or due in foreign currencies is
reported in the cash flow statement by presenting separately the amount of the unrealised exchange
differences arising from changes in foreign currency exchange rates
9. Financial instruments
(1) Categorisation of financial assets and financial liabilities
The Company categorises its financial assets and financial liabilities, with reference to their objectives
of investments and economic nature, as financial assets or financial liabilities at fair value through profit or
loss, held-to-maturity investments, loans and receivables, available-for-sale financial assets, and other
financial liabilities.
① Financial assets or financial liabilities at fair value through profit or loss include the financial
assets or financial liabilities classified as held for trading and the financial assets or financial liabilities
designated by the Company as at fair value through profit or loss on their initial recognition.
A financial asset or financial liability is classified as held for trading if it meets either of the
following conditions:
a. it is acquired or incurred principally for the purpose of selling or repurchasing it in the near
term;
b. on initial recognition it is part of a portfolio of identified financial instruments that are
managed together and for which there is evidence of a recent actual pattern of short-term
profit-taking; or
c. it is a derivative (except for a derivative that is a designated and effective hedging instrument,
a financial guarantee contract, or linked to and only settled by delivery of an equity instrument that
does not have a quoted market price in an active market and whose fair value cannot be reliably
measured).
A financial asset or financial liability is designated by the Company as at fair value through profit
or loss if it meets either of the following conditions:
a. the designation eliminates or significantly reduces a measurement or recognition
inconsistency that would otherwise arise from measuring assets or liabilities or recognising the
gains and losses on them on different bases; or
b. a group of financial assets, financial liabilities or both is managed and its performance is
evaluated on a fair value basis, in accordance with an officially documented risk management or
investment strategy, and information about the group is provided internally on that basis to the
Company’s key management personnel.
② Held-to-maturity investments are non-derivative financial assets with fixed or determinable
payments and fixed maturity that the Company has the positive intention and ability to hold to maturity,
which include principally fixed-rate treasury bonds and floating-rate corporate bonds that the Company has
the positive intention and ability to hold to maturity.
③ Receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market, which include principally accounts receivables arising from sales of products and
provisions of services by the Company and other receivables.
④ Available-for-sale financial assets are those non-derivative financial assets that are designated asSHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
2 8
available for sale on their initial recognition or are not categorised as either loans and receivables,
held-to-maturity investments or financial assets at fair value through profit or loss.
⑤ Other financial liabilities are financial liabilities that are not categorised as financial liabilities at
fair value through profit or loss.
(2) Measurement of financial assets and financial liabilities
When a financial asset or financial liability is recognised initially, the Company measures it at its fair
value plus, in the case of a financial asset or financial liability not at fair value through profit or loss,
transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial
liability; transaction costs attributable to the acquisition or issue of the financial asset or financial liability at
fair value through profit or loss are accounted for through profit or loss for the current period.
The Company subsequently measures financial assets and financial liabilities according to the
following procedures:
① Financial assets or financial liabilities are subsequently measured at fair value through profit or
loss at their fair value, with gains or losses arising from changes in fair value or de-recognistion
accounted for through profit or loss for the current period.
② Held-to-maturity investments are subsequently measured at amortised cost using the effective
interest method, with gains or losses arising from de-recognistion, impairment or amortisation
accounted for through profit or loss for the current period.
③ Receivables are subsequently measured at amortised cost using the effective interest method, with
gains or losses arising from de-recognistion, impairment or amortisation accounted for through profit or
loss for the current period.
④ Available-for-sale financial assets are subsequently measured at their fair value, with gains or
losses arising from changes in fair value recognised in Capital reserves. The difference between the
disposal proceeds and carrying value of an available-for-sale financial asset on its disposal is recognised
as investment gain or loss, with the cumulative gains or losses recognised in Capital reserves
de-recognised from Capital reserves and re-recognised as investment gains or losses. Impairment losses
and exchange differences of available-for-sale financial assets, if any, are accounted for through profit
or loss for the current period. Interests and dividends arising from the possession of available-for-sale
financial assets, if any, are recognised as investment gains.
⑤ Other financial liabilities and a instrument that is linked to and only settled by delivery of an equity
instrument that does not have a quoted market price in an active market and whose fair value cannot be
reliably measured are subsequently measured at cost.
A financial guarantee contract or a loan that bears an off-market interest rate, which are not
designated by the Company as at fair value through profit or loss, are subsequently measured at the
higher of:
a. the value specified by CAS 13 Contingencies; and
b. the residual value after deducting the cumulative amortisation determined in accordance with
CAS 14 Revenue from the value recognised on its initial recognition.
Other financial liabilities are subsequently measured at amortised cost using the effective interest
method, with gains or losses arising from de-recognistion, impairment or amortisation accounted forSHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
2 9
through profit or loss for the current period.
⑥ Fair value is the amount for which an asset could be exchanged or a liability settled between
knowledgeable, willing parties in an arm’s length transaction. The parties to an arm’s length transaction
shall be going concerns, not subject to or intended to enter the procedures of liquidation or significant
reduction in operating capacity, or forced to enter the transaction. The fair value of a financial asset or
financial liability for which there is an active market shall be measured at the quoted market price in the
active market; the fair value of a financial asset or financial liability for which there is not an active
market shall be established by the Company using a valuation technique.
The Company measures initially and subsequently the fair value of an interest rate swap at the
value of a competitor’s interest rate swap quoted by a recognised financial institution as at the
Company’s balance sheet date in accordance with the principle of consistency.
⑦ The residual cost of a financial asset is the residual value after deducting the sum of impairment
losses and the principal amount that has been repaid from the sum of its value measured on its initial
recognition and the cumulative amortisation of the difference between its value measured on its initial
recognition and its value on its maturity determined using the effective interest method. The residual
cost of a financial liability is the residual value after deducting the sum of the principal amount that has
been repaid and the cumulative amortisation of the difference between its value measured on its initial
recognition and its value on its maturity determined using the effective interest method from its value
measured on its initial recognition.
⑧ The effective interest rate method is a valuation method for determining the residual value and
interest income or/and expense of a financial instrument (or a group of financial instruments) using the
effective interest rate. An effective interest rate is the interest rate used to discount the cash flows of a
financial instrument (or a group of financial instruments) over its expected life, or a shorter period if it
is relevant, to determine its current carrying value. The effective interest rate applicable to a financial
intrument (or a group of financial instruments) shall be determined with reference to its future cash
flows estimated by taking into account the whole of its contract terms (including but not limited to early
repayment rights, call options and option equivalents, but excluding future credit losses).
(3) Transfer and de-recognition of financial assets
① The Company de-recognises a financial asset if it meets either of the following conditions:
a. the contractual rights to the cash flows from the financial asset expire;
b. the financial asset has been transferred and all the risks and rewards of ownership of the
financial asset have been substantially transferred to the transferee; or
c. the financial asset has been transferred and the Company has neither transferred nor retained
substantially all the risks and rewards of ownership of the financial asset and not retained control
of the financial asset.
② Where the transfer of the whole of a financial asset satisfies the conditions for de-recognition set
out in paragraph 9(3)①, the Company recognises through profit or loss for the current period the
difference between:
a. the carrying value of the financial asset; and
b. the sum of the proceeds from the transfer and the cumulative gains or losses recognised inSHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
3 0
Shareholders’ equity.
③ Where the transfer of a part of a financial asset satisfies the conditions for de-recognition set out in
paragraph 9(3)①, the fair value of the whole of the financial asset is apportioned accordingly to the
transferred part and the part not transferred; and, the Company recognizes through profit or loss for the
current period the difference between:
a. the carrying value of the transferred part of the financial asset; and
b. the sum of the proceeds from the transfer and the cumulative gains or losses attributable to
the transferred part of the financial asset recognised in Shareholders’ equity.
④ If a transfer of a financial asset does not satisfy the conditions for de-recognition set out in
paragraph 9(3)①, the Company continues to recognise the transferred asset in its entirety and
recognises a financial liability for the consideration received. Where the Company is in continuing
involvement in a transferred financial asset, the Company continues to recognise the financial asset to
the extent of its continuing involvement, and recognises an associated financial liability.
(4) Impairment assessment and impairment allowance
① The company recognises impairment of a financial asset if either of the following is objectively
evidential:
a. significant financial difficulty of the issuer or obligor;
b. a breach of contract, such as a default or delinquency in interest or principal payments, by the
obligor;
c. the lender, for economic or legal reasons relating to the obligor’s financial difficulty, granting
to the obligor a concession that the lender would not otherwise consider;
d. it becoming probable that the obligor will enter bankruptcy or other financial reorganization;
e. the disappearance of an active market for that financial asset because of significant financial
difficulty of the issuer;
f. observable data indicating that there is a measurable decrease in the estimated future cash
flows from a group of financial assets since the initial recognition of those assets, although the
decrease cannot yet be identified with the individual financial assets in the group;
g. significant changes with an adverse effect that have taken place in the technological, market,
economic or legal environment in which the obligor operates, and indicates that the cost of the
investment in the equity instrument may not be recovered;
h. a significant or prolonged decline in the fair value of an investment in an equity instrument;
or
i. other events of impairment.
② The Company assesses the occurrence of impairment of different categories of financial assets and
recognises and measures impairment on the balance sheet date using different criteria.
a. If there is objective evidence that an impairment loss on a held-to-maturity investments has
been incurred as at the balance sheet date, the amount of the loss is measured as the difference
between the asset’s carrying amount and the present value of its estimated future cash flows.
b. If there is objective evidence that the fair value of an available-for-sale financial asset has
experienced a significant decline and the decline is not temporary after considering all relevantSHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
3 1
information as at the balance sheet date, impairment loss on the available-for-sale financial asset is
recognised and the cumulative loss recognised in Shareholders’ equity is reclassified from equity
to profit or loss as impairment loss.
10. Account receivables
(1) Method of provision for bad debts for individual accounts receivable with significant amounts:
The Company classifies receivables, other than intragroup receivables, of which the carrying values are
individually not less than 5 per cent of the carrying value of total receivables as at the balance sheet date as
receivables of individual significance. Receivables of individual significance are individually assessed for
impairment loss. If there is objective evidence that a receivable of individual significance has been impaired
as at the balance sheet date, the excess of the present value of its estimated future cash flows over its
carrying value as at the balance sheet date is recognised as impairment loss through profit or loss for the
current period and in Bad and doubtful debts.
(2) Method of provision for bad debts for individual accounts receivable with non- significant
amounts, but in according to the characteristics of credit risk portfolio, the risk of the portfolio is
high:
The Company classifies receivables of individual insignificance and non-impaired receivables of
individual significance of which the ages are individually over three years as a group of receivables of
significant credit risk.
The Company recognises as bad and doubtful debt expense through profit or loss for the current period
and in Bad and doubtful debts the higher of the following:
① 5 per cent of the carrying value of total receivables as at the balance sheet date; and
② the excess of the carrying value of receivables of individual insignificance over the amount
estimated by analyses of age and the financial positions and cash flows of the obligors.
(3) For other account receivable (including Notes receivable、Advances to suppliers、Interest
receivables etc), the provision for bad debts recognized based on the difference of the book values
higher than the present value of future cash flows.
11. Inventories
(1) Categorisation of inventories
The Company’s inventories include materials or supplies to be consumed by the Company in the rendering
of services during the Company’s ordinary operating activities. The Company categorises its inventories as
air materials and low-value consumables.
(2) Cost of inventories
The cost of inventories at their acquisition is measured at their actual cost of purchase. The cost of
inventories at their issue is determined using the first-in, first-out (FIFO) cost formula.
(3) Net realisable value and impairment of inventories
① Determination of net realisable value of inventories
The net realisable value of finished goods, products and sellable materials is measured as the
residual value after deducting the estimated sales expense and related taxes and fees from the estimatedSHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
3 2
selling price. The net realisable value of an item of inventories subject to further processing is measured
as the residual value after deducting the sum of the estimated costs of completion, sales expense and
related taxes and fees from the estimated selling price of the sellable item. The net realisable value of
the quantity of inventories held to satisfy firm sales or service contracts is based on the contract price. If
the sales contracts are for less than the inventory quantities held, the net realisable value of the excess is
based on general selling prices.
② Impairment of inventories
The Company measures inventories at the lower of historical costs and net realisable values as at
the balance sheet date. If the net realisable value is lower than the historical cost of an item of
inventories as at the balance sheet date, an impairment allowance is recognised. An impairment
allowance, if any, is generally individually recognised for each type of inventories except:
a. an individual impairment allowance, if any, is recognised for the whole category of
inventories of low value and large quantities; and
b. an individual impairment allowance, if any, is recognised for a group of inventories, which
are held for the production and sales of products of a single territory and for identical or similar
usages or purposes, and which are indistinguishable from other types of inventories within the
group.
When the circumstances that previously caused inventories to be written down below cost no
longer exist, the amount of the write-down is reversed and the associated impairment allowance
de-recognised and re-recognised through profit or loss for the period in which the reversal occurs.
(4) Stocktaking
The Company adopts the perpetual stocktaking system.
(5) Amortisation of low-value consumables and packaging materials
The Company amortises consumables in full when they are issued for use.
12. Long-term equity investments
The Company’s long-term equity investments include the Company’s equity investments in an investee
which constitute the Company’s control, joint control or significant influence over the investee and the
Company’s equity investments in an investee which do not constitute the Company’s control, joint control or
significant influence over the investee and of which the fair value is not quoted in an active market.
(1) Initial measurement of long-term equity investments
① Initial measurement of long-term equity investments acquired through business combination
a. The cost of a business under common control acquired by the Company by payment in cash,
non-monetary asset transfer, or assuming the acquiree’s liabilities is initially measured at the
carrying value of the equity instruments acquired as at the acquisition date, with the excess of the
(carrying) value of cash paid, assets transferred, or liabilities assumed over the initially measured
cost debited to Capital reserves, and to Undistributed profits where the total value of Capital
reserves is insufficient. The cost of a business under common control acquired by the Company by
share issues is initially measured at the carrying value of the equity instruments acquired as at the
acquisition date, with the excess of the total value at par of shares issued over the initiallySHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
3 3
measured cost debited to Capital reserves, and to Undistributed profits where the total value of
Capital reserves is insufficient. Expenses incurred directly for the acquisition, including but not
limited to audit fees, valuation fees and legal fees, are recognised through profit or loss for the
period in which the expenses are incurred.
b. The cost of a business not under common control acquired by the Company is initially
measured at the fair value of assets transferred, liabilities incurred or assumed, or shares issued for
the acquisition as at the transaction date. The excess of the initially measured cost over the net of
the carrying values of the identifiable assets acquired and the liabilities assumed as at the
acquisition date is recognised as goodwill. The excess of the net of the carrying values of the
identifiable assets acquired and the liabilities assumed as at the acquisition date over the initially
measured cost is recognised through profit or loss for the current period in Non-operating revenue.
Expenses incurred directly for the acquisition (excluding the expenses for bond issues and share
issues) are recognised as part of the acquisition cost.
② Initial measurement of long-term equity investments acquired not through business combination
a. The cost of a long-term equity investment acquired by the Company by payments in cash is
initially measured at the sum of the consideration transferred and the fees, taxes and necessary
expenses directly attributable to the acquisition, with the value of declared-but-unpaid cash
dividends included in the consideration separately recognised as receivables.
b. The cost of a long-term equity investment acquired by the Company by share issues is
initially measured at the fair value of shares issued for the acquisition as at the issuance date.
c. The cost of a long-term equity investment acquired by the Company by direct shareholder
contribution is initially measured at the value agreed upon the investment contract or agreement,
excluding a contract value or agreement value that is inconsistent with the definition of fair value.
d. The cost of a long-term equity investment acquired by the Company by non-monetary asset
transfer is initially measured at the sum of the fair values of the assets transferred to the transferee
and the taxes directly attributable to the asset transfer, with the difference between the fair values
of the assets transferred to the transferee and their carrying values as at the transaction date
recognised through profit or loss for the current period, where the exchange of non-monetary
assets for equity instruments is transacted on a commercial basis and the fair values of the assets
transferred and equity instruments acquired can be reliably measured; or, at the sum of the carrying
values of the assets transferred to the transferee and the taxes directly attributable to the asset
transfer, where the exchange of non-monetary assets for equity is not on a commercial basis or the
fair values of the assets transferred or equity instruments acquired can not be reliably measured.
e. The cost of a long-term equity investment acquired by the Company through the investee’s
debt restructuring is initially measured at the fair values of the equity instruments acquired, with
the difference between the initially measured cost and the carrying value of the original loans to
the investee as at the restructuring date recognised through profit or loss for the current period.
(2) Subsequent measurement and recognition and measurement of gains or losses
Long-term equity investments in subsidiaries are subsequently measured at cost. In preparing consolidated
financial statements, the long-term equity investments in subsidiaries are adjusted using the equity method.SHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
3 4
Long-term equity investments which do not constitute the Company’s joint control or significant influence
over the investee, of which the fair value of equity instruments is not quoted in an active market and can not
be measured reliably, are subsequently measured at cost.
Long-term equity investments which constitute the Company’s joint control or significant influence over the
investee are subsequently measured by the equity method.
a. If a long-term equity investment is subsequently measured at cost, further acquisition or disposal of the
investment increases or reduces the cost of the investment accordingly; dividends or share of profits, except
those included in the consideration which has been declared but not received, are recognised through profit
or loss for the current period.
b. If a long-term equity investment is subsequently measured by the equity method, its carrying value is
adjusted by the share of the investee’s net profit or loss.
Gain or loss for the current period is measured at the share of the net profit or loss of the investee for
the current period. When determining the net profit or loss of the investee, where the investee adopts
different accounting policies, the net profit or loss reported by the investee is adjusted by the depreciation or
amortisation calculated on the basis of the fair value of the investee’s fixed assets or intangible assets as at
acquisition and the impairment provisions determined on the basis of the fair value of the relevant assets of
the investee as at acquisition; transactions between the Company and associates or joint ventures are also
eliminated. The losses arising from transactions between the Company and associates or joint ventures are
wholly recognised as asset impairment if the losses meet the conditions set by CAS 9 – Asset Impairment.
Losses of a long-term equity investment reduce the carrying value of the investment to zero as the
furthest. If the cumulative value of subsequent profits of the investee becomes higher than the cumulative
value of unrecognised losses, the excess of the cumulative profits over the cumulative unrecognised losses is
recognised in the carrying value of the investment.
Where a long-term equity investment existed prior to the first adoption of CAS, the excess of
consideration over acquired net assets of the investee as at the adoption date, if any, is amortised over the
remaining life determined at the acquisition using the straight line method; the amortisation is recognised
through profit or loss for the current period.
(3) Joint control and significant influence
① The Company has joint control over an investee if the investment meets one of the following
conditions:
a. neither of the investors can individually influence the operation of the investee;
b. decisions of the investee’s must be approved by the general consensus of the investors; or
c. an individual investor is authorised by an agreement of contract signed by each investor to manage the
investee’s operation in accordance with the accounting and operation policies agreed by each investor.
Investors may lose joint controls over an investee where the investee is in the procedures of legal
administration or bankruptcy, or where the investee’s ability to transfer economic resource to investors is
severely limited for a substantial length of time; however, if it is objectively evidential that the joint control
exists, the investors shall continue to recognise and measure the investment using the equity method.
② The Company has significant influence over an investee if:
a. the Company has delegates in the investee’s Board of Directors or similar body;SHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
3 5
b. the Company participates in the investee’s policy making process, including the policy making process
for declaration of dividends;
c. the Company has significant transactions with the investee;
d. the Company has delegated personnel to the investee’s management; or
e. the Company has provided key technology to the investee.
(4) Impairment of long-term equity investments
The Company assesses the operation policies, legal environment, market and industry conditions, and
profitability each long-term equity investment individually on the balance sheet date to determine whether an
investment is subject to impairment. If the net recoverable value of an investment is lower than its carrying
value as at the balance sheet date, an impairment provision is recognised at the excess of its carrying value
over te net recoverable value as at the balance sheet date. A recognised impairment loss of an investment is
not recoverable in subsequent periods.
13. Fixed Assets
(1) Recognition
A fixed asset is a tangible asset the Company holds for the purpose of production, service rendering,
leasing and operation, of which the useful life is longer than one year and which has a relatively higher value.
A fixed asset is measured at the cost of acquisition if it meets both of the following conditions:
① it is probable that the economic benefits associated with the asset will flow to the Company; and
② the cost of the asset can be measured reliably.
Subsequent expense associated with the asset, which meets the above conditions, is recognised as parts
of its cost; otherwise, through profit or loss for the period in which the expense is accrued.
(2) Depreciation
Fixed assets are depreciated using the straight line method. The useful life, residual value percentage
and annual depreciation are listed below.
Types Residual value
percentage(%)
Expected
useful life(years)
Annual
depreciation rate(%)
Houses and building 5.00 27-33 2.88-3.52
Key components and power
supports of aircraft engine 5.00 15-20 4.75-6.33
Replacement parts of aircraft body 0.00 6-8 12.5-16.67
Replacement parts of engine 0.00 3-5 20-33.33
Equipments, electronic
devices and furniture 0-5.00 4-10 9.5-23.75
High value rotables 0.00 15-18 5.56-6.67
Transportation vehicles 5.00 5-10 9.5-19.00
(3) Impairment
The Company assesses each non-current asset for impairment on the balance sheet date. If it is
objectively evidential that the net recoverable value of a non-current asset is lower than its carrying value as
at the balance sheet date, its carrying value is reduced to the net recoverable value and the reduction
accounted for through profit for the current period and recognised as impairment provision. A recognisedSHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
3 6
impairment loss of a non-current asset is not recoverable in subsequent periods. A non-current asset is
impaired if one of the following is evidential:
① its fair value decreased significantly during the current period with a decrease rate significantly higher
than the rate estimated on the basis of time or normal usage;
② the economic, technological or legal environment, in which the Company operates or in which the asset
is located, changed during the current period or is going to change in the near future; and, e the change
caused or is going to cause significant disadvantage to the Company;
③ the rate for discounting future cash flows, which has been affected by the increased interest rate or
investment return rate, has led to a significant decrease of the asset’s recoverable value;
④ the asset is either obsolete or physically damaged;
⑤ the asset has been or is going to be retired, terminated for usage or disposed prior to the end of its use
life;
⑥ the Company recognised internally that the asset’s associated economic benefit has been or is going to
be below expectation, eg. the net cash flows or net profit or loss significantly lower than the expected value;
or
⑦ there is other evidence which suggests the asset has been impaired.
(4) Leased fixed assets
If the Company acquired substantially the risks attached to and the economic benefits associated with a
leased non-current asset, the asset is recognised. The asset is measured at the lower of the asset’s fair value
as at the lease-commence date and the net present value of the minimum lease payment. The depreciation
policies for owned non-current assets are applicable to leased non-current assets. The expected useful life of
a leased asset, of which the ownership is reasonably transferrable to the Company after the expiry of the
lease, is the asset’s own expected useful life; the expected useful life of a leased asset, of which the
ownership is not reasonably transferrable to the Company, is the shorter of the lease life and the asset’s own
expected useful life.
14. Construction-in-progress
(1) Categorisation
The Company categorises construction-in-progress on the basis of project approval.
(2) Conversion of construction -in-progress to fixed assets
A construction-in-progress is recognised as a fixed asset when it satisfied the predetermined usable state.
A converted construction-in-progress is initially measured at its full construction cost. A converted
construction-in-progress of which the construction cost is not fully recognised is initially measured at a
reasonable estimate; and, the initial measured cost is adjusted to its full construction cost when the
construction is fully recognised; but, its recognised depreciation as at the full recognition is not adjusted.
(3) Impairment
The Company assesses each construction-in-progress for impairment on the balance sheet date. If it is
objectively evidential that the net recoverable value of a construction-in-progress is lower than its carrying
value as at the balance sheet date, its carrying value is reduced to the net recoverable value and the reductionSHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
3 7
accounted for through profit for the current period and recognised as impairment provision. A recognised
impairment loss of a construction-in-progress is not recoverable in subsequent periods. A
construction-in-progress is impaired if one or more of the following are evidential:
① the project has been suspended for a substantially long period of time and of which the construction is
not to be re-activated within three years;
② either the capability or the technology of the project is obsolete and the economic benefit associated
with the project is highly indeterminable; or
③ there is other evidence which suggests the project has been impaired.
15. Borrowing costs
(1) Capitalisation of borrowing costs
The borrowing costs directly attributable to asset construction or production are capitalised into cost of
asset when they meet the following conditions:
① the asset construction or production expense has been incurred;
② the borrowing costs have been incurred; and
③ the construction or production which directly contributes to the usable state of the asset has been
activated.
Other borrowing costs, discounts, premiums and exchange differences are accounted for through profit
or loss of the period in which they are incurred.
If the construction or production of an asset eligible for capitalisation has suspended not in accordance
with schedule, where the suspension has lasted continuously for a period longer than three months, the
capitalisation of relevant borrowing costs is suspended.
The capitalisation of relevant borrowing costs is terminated when a constructed or produced asset
reaches its usable or sellable state. Any subsequent borrowing cost associated with the asset is accounted for
through profit or loss for the period in which it is incurred.
(2) Measurement of capitalised borrowing costs
The capitalised borrowing costs of a finance specifically raised for an asset construction or production
are measured at the excess of the borrowing costs over the interests arising from the deposit of the unused
part of the finance or the gains arising from the investment using the unused part of the finance for the
relevant period.
Where the value of an asset construction or product is higher than the finance specifically raised for the
construction or production, the capitalised borrowing costs of the part of general finance used by the
construction or production are measured by multiplying the weighted average of the excess of the asset value
over the specific-raised finance with the capitalisation rate of general finance.
16. Intangible assets
(1) Measurement
Intangible assets are initially measured at cost.
(2) Useful life and amortization
The period during which an intangible asset is reasonably capable of generating economic benefits forSHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
3 8
the Company with reference to its contractual rights and other legal rights, industry practice, historical
experience, and professional evidence is determined as the asset’s useful life. If a period during which an
intangible asset is reasonably capable of generating economic benefits for the Company is not determinable,
the asset is categorised as with undeterminable useful life.
① The useful life of an intangible asset with useful life is determined on the basis of:
a. the general useful life of products produced by the asset and the obtainable information in relation to
the useful life of a similar asset;
b. the current condition and estimated future trends of technology and techniques;
c. the market demand for products produced or service rendered by the asset;
d. the expected reaction of existing and potential competitors;
e. the estimated maintenance expense for the continuance of the asset’s ability in generating economic
benefits and the Company's estimated ability in maintaining the expense;
f. the relevant law and regulation which regulate the ownership period of the asset, eg. chartered usage
rights and lease rights; and
g. the connection between the useful life of the asset and the useful life of the Company’s other assets.
② An intangible asset with undeterminable useful life is amortised using a reasonable method determined
by the realisation process of the asset’s expected economic benefit. Where a reasonable amortisation method
is undeterminable, the asset is amortised using the straight line method.
(3) Impairment of intangible assets with undeterminable useful life
① The Company assesses the useful life of each intangible asset with undeterminable useful life on the
balance sheet date. If the useful life of an asset remains undeterminable, the asset is assessed for impairment
on the balance sheet date. If it is objectively evidential that the net recoverable value of an intangible asset
with undeterminable useful life is lower than its carrying value as at the balance sheet date, its carrying value
is reduced to the net recoverable value and the reduction accounted for through profit for the current period
and recognised as impairment provision. A recognised impairment loss of an intangible asset with
undeterminable useful life is not recoverable in subsequent periods. An intangible asset with undeterminable
useful life is assessed for impairment if one or more of the following are evidential:
a. the asset has been replaced by another new technology which renders its ability to generate economic
benefit for the Company being significantly devastated;
b. the asset’s fair value has decreased significantly during the period and it may not increase during the
remaining life of the asset; or
c. there is there is other evidence which suggests the asset has been impaired.
(4) Research and development
Research expenses associated with an internal development project are accounted for through profit or
loss for the period in which they are incurred. Development expenses associated with an internal
development project are recognised as intangible assets if the project meets all of the following:
① assets arising from the project are either for sale or for internal use and it is technically viable to
complete the project;
② the Company has clear intention to complete the intangible asset and to use or sell the asset;
③ it is objectively evidential that products produced by the intangible or the intangible asset itself areSHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
3 9
marketable or that the intangible asset is employable if used internally;
④ it is practical, in terms of technology, finance and other resources, to complete the development of the
intangible asset and to use or sell the intangible asset; and
⑤ development expenses of the development of the intangible asset can be measured reliably.
17. Regular repair and substantial repair
Regular repair expenditure of own aircrafts and aircrafts acquired under a financial lease is accounted
for through profit or loss for the period in which it is incurred. Substantial repair expenditure eligible for
capitalisation is capitalised when incurred and recognised as replacement cost of non-current assets and
depreciated over a reasonable length of time. Substantial repair expenditure of aircrafts under an operating
lease incurred before the lease expiry date is amortised using the straight line method or on the basis of air
hours over the lease period.
18. Long-term deferred assets
The Company’s long-term deferred assets refer to expense which has been incurred but which generates
economic benefit for the Company for a period of longer than one year, such as expenses for pilots’ initial
trainings. Those expenses are amortized at 10 years according to their benefit period respectively. When a
pilot is transferred from the Company, the cost of transfer is the unamortized part of the original expenditure.
19. Accrued liabilities
(1) Recognition of accrued liabilities
The obligations related to some items that meet the following conditions at the same time will be
confirmed as the liabilities:
①This obligation is the current obligation of the company;
②The performance of this obligation will probably cause the economic benefits to flow out of the
company;
③The amount of this obligation can be reliably calculated.
The Company should recognize accrued liabilities, when the Company’s loss contract and restructuring
liabilities undertaken satisfied above conditions.
(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;SHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
4 0
(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
20. Revenue
(1) Service rendering
① The Company recognise revenue from rendering of air service for carriage of passengers when the
service is rendered or when an unused ticket expires. The sale of a ticket does not constitute revenue. An
unused ticket expires on the annual anniversary of its sale. Tickets sold but of which the service is not yet
rendered are recognised in current liabilities as Advances from customers. If service is rendered through
code sharing, revenue arising from the service provision is apportioned amongst parties to the code sharing
agreement. The revenue arising from code sharing is also recognised when the service is rendered.
② If the service is rendered in conjunction with reward points, the amount arising from ticket sales and of
receivables shall be apportioned between revenue and reward points. The amount apportioned to reward
points is initially recognised as deferred income and subsequently accounted for through profit or loss for the
period in which the reward points expire or are exchanged.
③ Revenue arising from other air service rendering is recognised when the service rendering is completed.
(2) Transfer of asset use rights
Revenue is recognised when the inflow of the economic benefit associated with the transfer is probable and
when the amount of the inflow can be measured reliably. Revenue arising from transfer of asset use rights is
recognised according to the income category:
① interest income is recognised on the basis of the length of time for which the Company’s monetary asset
is used by other parties using the effective interest rates;
② use right income is recognised in accordance with the payment schedules and means agreed in the
relevant contracts or agreements.
21. Government grants
(1) Recognition
The Company meets the conditions attached to the grant; and
the Company is probable to receive the grant.
(2) Types of government grants and accounting for government grants
① A grant associated with an asset is recognised as deferred income when the grant is received. The grant
is subsequently averaged over the useful life of the asset and the average is accounted for through profit or
loss for subsequent periods during the asset’s useful life after the asset reaches its usable state. If the asset is
disposed, transferred, scrapped or damaged prior to the end of its useful life, the whole of the remaining
deferred income is accounted for through profit or loss for the period in which the asset is disposed,
transferred, scrapped or damaged.
② A grant compensating expenditure or loss in subsequent periods is initially recognised as deferredSHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
4 1
income and subsequently accounted for through profit or loss for the period in which the relevant
expenditure of loss is incurred. A grant compensating expenditure or loss already incurred is accounted for
through profit or loss for the period in which the grant is received.
(3) Measurement
A grant that is in the form of monetary asset is measured at the amount of actual receipt or actual
receivable. A grant that is in the form of non-monetary asset is measured at fair value, or at notional value if
fair value can not be obtained.
(4) Repayment of government grants
① If there is deferred income associated with the grant, the carrying value of the deferred income is
reduced by the repayment. The excess of the repayment over the carrying value of the deferred income is
accounted for through profit or loss for the period in which the repayment is incurred.
② If there is not deferred income associated with the grant, the repayment is accounted for through profit
or loss for the period in which the repayment is incurred.
22. Deferred income tax assets and deferred income tax liabilities
The Company accounts for income taxes by the balance sheet approach.
The Company calculates the value of a deferred income tax asset or deferred income tax liability on the
basis of the difference between the carrying value of an asset or liability and its tax base and the income tax
rates applicable to the period through which the asset or liability is recovered or settled.
(1) Recognition of deferred income tax assets
① A deferred income tax asset is recognised for all deductible temporary differences to the extent that it is
probable that taxable profit will be available against which the deductible temporary difference can be
utilised, unless the deferred income tax asset arises from the initial recognition of an asset or liability in a
transaction that:
a. is not a business combination; and
b. at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss).
② A deferred income tax asset is recognised for all deductible temporary differences arising from
investments in subsidiaries, branches and associates, and interests in joint ventures, to the extent that, and
only to the extent that, it is probable that:
a. the temporary difference will reverse in the foreseeable future; and
b. taxable profit will be available against which the temporary difference can be utilised.
③ A deferred income tax asset is recognised for all tax losses and tax credits eligible for being carried
forward to the extent that it is probable that taxable profit will be available against which the tax losses and
tax credits can be utilised.
(2) Recognition of deferred income tax liabilities
A deferred income tax liability is recognised for all taxable temporary differences, except to the extent that
the deferred income tax liability arises from:
① the initial recognition of goodwill; or
② the initial recognition of an asset or liability in a transaction which:SHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
4 2
a. is not a business combination; and
b. at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss).
③ A deferred income tax liability is recognised for all taxable temporary differences associated with
investments in subsidiaries, branches and associates, and interests in joint ventures, except to the extent that
both of the following conditions are satisfied:
a. the parent, investor or venturer is able to control the timing of the reversal of the temporary difference;
and
b. it is probable that the temporary difference will not reverse in the foreseeable future.
(3) The carrying value of a deferred income tax asset is assessed on the balance sheet date. It is probable
that there is not enough taxable profit in the future against which the deferred income tax asset can be
utilised, the carrying value of the deferred income tax asset is written off; when it becomes probable again
that there is enough taxable profit in the future against which the deferred income tax asset can be utilised,
the write-off is reversed.
23. Financial leases and operating leases
(1) Operating leases
① When the Company is the leasee to a operating lease, the total lease expenditure is apportioned over the
lease life using the straight line method or on the basis of the leased asset usage. The apportioned amount is
recognised through profit or loss for the relevant period. Initial expenditure directly attributable to the
acquisition of the lease is recognised in administrative expenses for the period in which the expenditure is
incurred or recognised through profit of loss for the period in which the first lease payment is incurred. If a
rent holiday is offered by the leasor, the total expenditure is apportioned over the whole life of the lease
using the straight line method or on a reasonable basis; the lease expense during the rent holiday is
accounted for through profit or loss for the relevant period and recognised as a liability on the balance sheet.
If a part of the total lease expenditure is compensated by the leasor, the residual amount after deducting the
compensation from the total lease expenditure is apportioned over the lease life.
② When the Company is the leasor to a operating lease, the total lease revenue is apportioned over the
lease life. The apportioned amount is recognised through profit or loss for each year of the lease life. Initial
expenditure directly attributable to the grant of the lease is recognised through profit or loss for the period in
which it is incurred. If the initial expenditure is of significant value, it is capitalised and apportioned over the
lease life using the same method adopted for the apportionment of lease revenue; the apportioned amount is
recognised through profit or loss for each year of the lease life. The initial expenditure of significant value is
recognised in full through profit or loss for the period in which the first lease income is accrued if the
recognition is so provided by an agreement. If a rent holiday is offered, the total lease revenue is apportioned
over the whole life of the lease using the straight line method or on a reasonable basis. The apportioned
amount is recognised as lease income for each year of the lease life, including the years within the rent
holiday. If a part the total lease expenditure is compensated by the leasor, the residual amount after
deducting the compensation from the total lease revenue is apportioned over the lease life.
(2) Financial leases
① When the Company is the leasee to a financial lease, the Company recognises on the lease start date the
leased asset at the lower of its fair value as at the lease start date and the minimum total lease payments; theSHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
4 3
minimum total lease payments is recognised as long-term payables; and, the excess of the minimum total
lease payments over the leased asset’s fair value as at the lease start date is accounted for as unrecognised
financing cost and amortised over the life of the lease using the effective interest rate method with the
amortised amount recognised in financial costs for the relevant period. Initial expenditure directly
attributable to the acquisition of the lease is recognised as a part of the leased asset’s carrying value.
The depreciation policies for owned depreciatable assets are applicable to an asset leased under a
financial lease. The expected useful life of a leased asset, of which the ownership is reasonably transferrable
to the Company after the expiry of the lease, is the asset’s own expected useful life; the expected useful life
of a leased asset, of which the ownership is not reasonably transferrable to the Company, is the shorter of the
lease life and the asset’s own expected useful life.
② When the Company the leasor to a financial lease, the Company recognises on the lease start date the
sum of initial expenditure directly attributable to the grant of the lease and the minimum total lease revenue
as long-term receivables; and, the unguaranteed residual value is recorded. The excess of the sum of the
minimum total lease revenue, initial expenditure directly attributable to the grant of the lease and
unguaranteed residual value over the leased asset’s fair value as at the least start date is accounted for as
unrealised financing income and amortised over the lease life using the effective interest rate method with
the amortised amount recognised as rental income for the relevant period.
Ⅲ Taxation
1. Major taxes and tax rates
The major taxes and tax rates applicable to the Company are listed below:
Tax Tax base Tax rate
Operating tax Revenue from air service for carriage of goods and passengers and from commission or rental service 3% / 5%
Enterprise income tax Taxable profit 25%
Other taxes applicable to the Company are calculated in accordance with the relevant law and
regulation.
2. Infrastructure fund for civil aviation
Infrastructure fund for civil aviation is calculated in accordance with the guidelines set out in the
document (CaiZong[2004] No.38) issued by the Ministry of Finance.
3. Tax incentives
As authorised by the document (CaiShui[2008] No.178) jointly issued by the Ministry of Finance and
State Administration of Taxation, fuel surcharges collected by air companies during the period from 1st
January 2008 to 31st December 2010 are exempted from operating tax.
Ⅳ Business combination and consolidated financial statements
Subsidiaries acquired through incorporation or investment
Subsidiary name Qingdao International Air Logistics Centre Co., Ltd
Type of subsidiary Holding subsidiary
Place of registration Qingdao
Nature of business Transportation warehousingSHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
4 4
Subsidiary name Qingdao International Air Logistics Centre Co., Ltd
Registered capital CNY 30,000,000.00
Business scope Warehousing and distribution of air cargo, E-commerce, etc
Actual investment value as at December 31,2009 CNY 23,813,205.97
Ending balances of projects constituting net investment in the subsidiary CNY 0.00
Shareholding 70%
Voting right 70%
Financial statement consolidation Yes
Minority interest CNY 13,323,200.00
Value of minority interest that utilized to write off the profits or losses attributed to
minority shareholders
CNY 0.00
The balance of parent company’s equity, that is equal to the parent shareholders’
equity less the subsidiary’s current loss undertaken by the minority shareholders
according their share quotient at the beginning of the period
CNY 0.00
Ⅴ Main items of the consolidated financial statements
1. Monetary fund
30 Jun. 2010 31 Dec. 2009
Currency Exchange Presentation Exchange Presentation
Original
currency rate currency
Original
currency rate currency
Cash on hand
CNY 882,739.86 1.00 882,739.86 262,286.69 1.00 262,286.69
HKD 4,386.60 0.8724 3,826.87 386.60 0.8805 340.40
USD 27,525.19 6.7909 186,920.81 1,057.92 6.8282 7,223.69
GBP 1,737.80 10.2135 17,749.02 362.80 10.978 3,982.82
CAD 10.00 6.4310 64.31 10.00 6.5171 65.17
JPY 582,000.00 0.0767 44,639.40 0.00 0.0738 0.00
EUR 45,990.00 8.2710 380,383.29 6,870.00 9.7971 67,306.08
Subtotal 1,516,323.56 341,204.85
Bank
CNY 86,229,452.76 1.00 86,229,452.76 47,952,878.72 1.00 47,952,878.72
USD 955,083.08 6.7909 6,485,873.69 126,124.43 6.8282 861,202.83
KRW 38,160,202.31 0.005672 216,444.67 30,317,123.00 0.005876 178,143.41
Subtotal 92,931,771.12 48,992,224.96
Other monetary funds
CNY 148,780,961.48 1.00 148,780,961.48 144,732,312.88 1.00 144,732,312.88
Subtotal 148,780,961.48 144,732,312.88
Total 243,229,056.16 194,065,742.69
Note:The other limited monetary funds of CNY 148,780,961.48 as at 30st June 2010 is guarantee for letters
of guarantee for aircrafts and aircraft engines, for bank draft acceptance and for short-term borrowings.
2. Held for trading financial assets
Item Fair value as at 10.06.30 (CNY) Fair value as at 09.12.31(CNY)
Derivative financial assets 11,580,394.10 11,341,846.48
Total 11,580,394.10 11,341,846.48
Note:The immature interest swaps held by the Company as at 30st June 2010 have a fair value as at
acquisition of USD 183,849,061.20, of which the fair value as at 30st June 2010 quoted by banks is CNY
11,580,394.10 (USD 1,705,281.20).
3. Accounts receivablesSHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
4 5
(1) Disclosure by classification
30 Jun. 2010 31 Dec.2009
Types ABmoooukn tvalue Provision for bad debts Book value Provision for bad debts
(CNY)
Proportion
(%)
Amount
(CNY)
Proportion
(%)
Amount
(CNY)
Proportion
(%)
Amount
(CNY)
Proportion
(%)
Individual
significant
amounts
180,392,305.29
86.37 0.00 0.00 130,379,296.86 91.06 0.00 0.00
Non-significant
in amount but
in accordance
with the
characteristics
of credit risk
portfolio, the
risk of the
portfolio is high
13,860.97
0.01 0.00 0.00 9,502.08 0.01 60.93 0.01
Other
non-significant
receivables 28,463,989.38 13.62 986,123.09 100.00 12,797,444.39 8.93 640,286.44 99.99
Total 208,870,155.64 100.00 986,123.09 100.00 143,186,243.33 100.00 640,347.37 100.00
Note: See paragraph Ⅱ10 for criteria for categorising individual significance and individual insignificance
but significant portfolio credit risk.
(2) Bad and doubtful debt provisions for account receivables that classified as individual significance
amount or non-significant in amount but in accordance with the characteristics of credit risk
portfolio, the risk of the portfolio is high:
Details Book value
(CNY)
Bad and doubtful debt
(CNY)
Proportion
(%)
Comment
BSP 93,130,426.78 0.00 0.00 Amount not due received prior to the statement date.
China Civil Aviation
Clearing Centre
30,533,575.86 0.00 0.00 Amount not due received prior to the statement date.
Air China Co., Ltd. 56,728,302.65 0.00 0.00 Amount not due received prior to the statement date.
Total 180,392,305.29 0.00 0.00 Amount not due received prior to the statement date.
(3) Aging analysis
30 Jun. 2010 31.Dec.2009
Book value Provision for bad
debts Book value Provision for bad
Age debts
Amount
(CNY) Proportion (%) Amount
(CNY)
Amount
(CNY) Proportion (%) Amount
(CNY)
Within 1 year 207,066,607.41 99.14 913,862.09 142,119,187.40 99.25 593,424.08
1 – 2 years 1,205,326.54 0.58 49,293.41 754,989.67 0.53 32,009.09
2 – 3 years 584,360.72 0.28 22,873.76 302,564.18 0.21 14,853.27
3 – 4 years 13,860.97 0.00 93.83 9,502.08 0.01 60.93
4 – 5 years 0.00 0.00 0.00 0.00 0.00 0.00
Over 5 years 0.00 0.00 0.00 0.00 0.00 0.00
Total 208,870,155.64 100.00 986,123.09 143,186,243.33 100.00 640,347.37
(4) Accounts receivables owed by shareholders with 5% or more voting right during the reporting
period
30 Jun. 2010 31.Dec.2009
Shareholder Amount
(CNY)
Provision for bad debts
(CNY)
Amount
(CNY)
Provision for bad debts
(CNY)
Air China Co., Ltd. 56,728,302.65 0.00 53,828,640.46 0.00
Total 56,728,302.65 0.00 53,828,640.46 0.00
(5) The top five account receivablesSHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
4 6
Name of company Relationship with the
Company
Amount
(CNY) Age % of total accounts
receivables
BSP Non-related parties 93,130,426.78 Within 1 year 44.59
Air China Co., Ltd. Related parties 56,728,302.65 Within 1 year 27.16
China Civil Aviation Clearing Centre Non-related parties 30,533,575.86 Within 1 year 14.62
Personal e-ticket Non-related parties 5,651,838.44 Within 1 year 2.71
Jinan Post Office Non-related parties 1,620,315.66 Within 1 year 0.78
Total
187,664,459.39
89.86
(6) Accounts receivables owed by related parties
Name Relationship with the Company Amount (CNY) % of total accounts receivables
Air China Co., Ltd. Parent 56,728,302.65 27.16
Total 56,728,302.65 27.16
4. Advances to suppliers
(1) Presentation by age
Age Amount (C3N0 YJu)n. 2010 Proportion (%) Amount (C3N1.YD)e c.2009 Proportion (%)
Within 1 year 38,657,419.95 99.83 21,184,884.28 94.13
1 – 2 years 55,494.00 0.14 1,304,378.20 5.80
2 – 3 years 10,000.00 0.03 15,000.00 0.07
Total 38,722,913.95 100.00 22,504,262.48 100.00
(2) List the top five balance of advance to supplier
Name of company Relationship with
the Company
Balance carried
forward (CNY) Age Reasons for unsettlement
China Airlines Non-related parties 4,859,094.40 Within 1 year Outstanding payments
Beijing FuLaiTe Technology Development Co., Ltd. Non-related parties 4,382,512.27 Within 1 year Deposit for clearing
Asiana Airlines, Inc Non-related parties 2,802,799.43 Within 1 year Outstanding payments
Japan Airlines International
Non-related parties 1.146.164.26 Within 1 year Outstanding payments
Shandong Boolean Technology Co., Ltd. Non-related parties 1,145,000.00 Within 1 year Advanced rental
Total 14,335,570.36
(3) The closing balance of the advanced payments has been increased 72.07% in comparison with the
opening balance,this mainly caused by significant increasing in prepaid payment of the aviation materials for
added aircrafts..
(4) There is no Advance to supplier balance due from shareholders who own five or over five percent
voting rights as at June 30, 2010.
5. Dividend receivables
Item
Balance brought
forward
(CNY)
Increase r
(CNY)
Decrease
(CNY)
Balance carried
forward
(CNY)
Collection after
balance sheet date Impairment
Dividends receivable within 1 year
China TravelSky Co.,
Ltd. 1,617,642.00 1,165,398.00 1,617,642.00 1,165,398.00 NoSHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
4 7
Total 1,617,642.00 1,165,398.00 1,617,642.00 1,165,398.00
6. Other accounts receivables
(1) Disclosure by classification
30 Jun. 2010 31.Dec.2009
Types AmBoooukn tvalue Provision for bad debts Book value Provision for bad debts
(CNY)
Proportion
(%)
Amount
(CNY)
Proportion
(%)
Amount
(CNY)
Proportion
(%)
Amount
(CNY)
Proportion
(%)
Individual
significant
amounts 199,827,336.19
62.99
109,051,717.65 97.94 209,239,407.19
77.02
109,051,717.65
98.14
Non-significant
in amount but in
accordance with
the
characteristics
of credit risk
portfolio, the
risk of the
portfolio is high
0.00
0.00 0.00
0.00 0.00 0.00 0.00 0.00
Other
non-significant
receivables
117,390,333.25
37.01
2,295,241.43 2.06 62,429,416.40
22.98
2,065,091.95 1.86
Total
317,217,669.44
100.00
111,346,959.08 100.00 271,668,823.59 100.00 111,116,809.60 100.00
Note: See paragraph Ⅱ10 for criteria for categorising individual significance and individual insignificance
but significant portfolio credit risk.
(2) Provision for bad debts of other account receivables that belong to individual significant amounts
on the balance sheet date:
Accounts receivables Book value
(CNY)
Bad and doubtful debt
(CNY)
Proportion
(%) Comment
Shandong Rainbow
Commercial Jet Co., Ltd. 109,051,717.65 109,051,717.65 100.00 Significantly overdue debt resulting from
deteriorated financial condition.
CDB Leasing Co., Ltd. 41,354,563.28 0.00 0.00 In accordance with accounting policies for
bad and doubtful debt provision.
Air China Co., Ltd. 30,406,535.26 0.00 0.00 In accordance with accounting policies for
bad and doubtful debt provision.
Singapore Aircraft Leasing
Enterprise 19,014,520.00 0.00 0.00 In accordance with accounting policies for
bad and doubtful debt provision.
Total 199,827,336.19 109,051,717.65
(3) Aging analysis
30 Jun. 2010 31.Dec.2009
Book value Proportion Provision for bad
debts Book value Proportion Provision for bad
Age debts
Amount
(CNY) %
Amount
(CNY)
Amount
(CNY)
%
Amount
(CNY)
Within 1 year
96,748,951.29 30.50
1,270,294.72 51,941,469.78 19.12 1,142,919.16
1 – 2 years
23,868,336.86 7.52
905,135.06 14,220,621.28 5.23 842,507.38
2 – 3 years
19,862,512.46 6.26
905,282.15 25,446,259.18 9.37 872,347.11
3 – 4 years
17,487,633.50 5.51
10,674,088.76 16,492,449.22 6.07 10,674,554.07
4 – 5 years
129,507,678.60 40.83
80,329,951.06 133,038,338.06 48.97 80,329,246.11
Over 5 years
29,742,556.73 9.38
17,262,207.32 30,529,686.07 11.24 17,255,235.77
Total 317,217,669.44 100.00% 111,346,959.08 271,668,823.59 100.00 111,116,809.60
(4) Other accounts receivables owed by shareholders with 5% or more voting right during the
reporting period
30 Jun. 2010 31 Dec. 2009
Shareholder Amount
(CNY)
Provision for bad debts
(CNY)
Amount
(CNY)
Provision for bad debts
(CNY)SHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
4 8
Air China Co., Ltd. 30,406,535.26 0.00 23,382,955.26 0.00
Total 30,406,535.26 0.00 23,382,955.26 0.00
(5) List the amount of top five other accounts receivable
Name of company Relationship with the
Company
Amount
(CNY) Age % of total accounts
receivables
Shandong Rainbow Commercial
Jet Co., Ltd. Related parties 109,051,717.65 2 – 7 years 34.38
CDB Leasing Co., Ltd. Non-related parties 41,354,563.28 4 – 5 years 13.04
Air China Co., Ltd Related parties 30,406,535.26 Within 1 year 9.59
Singapore Aircraft Leasing
Enterprise Non-related parties 19,014,520.00 2 – 4 years 5.99
Shanghai United Assets and
Equity Exchange
Non-related parties 15,222,000.00 Within 1 year 4.80
Total 215,049,336.19 67.80
(6) Other accounts receivables owed by related parties
Name of company Relationship with the Company Amount
(CNY)
% of total accounts
receivables
Air China Co., Ltd. Parent company 30,406,535.26 9.59
Shandong XiangYu Air Technology Co.,
Ltd. Under common control 9,543.24 0.00
Qingdao FeiSheng International Air
Training Co., Ltd. Under common control 462,041.30 0.15
Shandong Rainbow Commercial Jet Co.,
Ltd. Under common control 109,051,717.65 34.38
Total 139,929,837.45 44.12
7. Inventories
(1) Classification
30 Jun. 2010 31 Dec 2009
Types Cost
(CNY)
Impairment
provision
(CNY)
Carrying value
(CNY)
Cost
(CNY)
Impairment
provision
(CNY)
Carrying value
(CNY)
Consumable air equipments 66,057,237.53 353,539.79 65,703,697.74 63,025,085.14 353,539.79 62,671,545.35
Low-value consumables 2,969,423.28 - 2,969,423.28 1,814,143.03 - 1,814,143.03
Materials 417,299.78 - 417,299.78 270,642.83 - 270,642.83
Others 341,379.48 - 341,379.48 511,449.89 - 511,449.89
Total 69,785,340.07 353,539.79 69,431,800.28 65,621,320.89 353,539.79 65,267,781.10
(2) Impairment
Decrease
Type
31 Dec 2009
(CNY)
Provision
(CNY)
Reversal
(CNY)
Write off
(CNY)
30 Jun. 2010 (CNY)
Consumable air
equipments
353,539.79 0.00 0.00 0.00 353,539.79
Total 353,539.79 0.00 0.00 0.00 353,539.79
8. Investment in associates
Associate Shandong Rainbow Commercial Jet Co., Ltd.
Type of registration Limited liability company
Place of registration Jinan, Shandong
Legal representative ZHAO, HongSHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
4 9
Associate Shandong Rainbow Commercial Jet Co., Ltd.
Nature of business Air transportation
Register capital CNY 50,000,000.00
Shareholding 45.00%
Voting right 45.00%
Total assets carried forward CNY 86,252,725.51
Total liabilities carried forward CNY 202,622,810.65
Net assets carried forward CNY -116,370,085.14
Total operating income for the reporting period CNY5,142,776.25
Net profits for the reporting period CNY 1,729,451.74
9. Long-term equity investments
(1) Disclosure
Name of investee 31 Dec 2009
(CNY)
Changes
(CNY)
30 Jun. 2010 (CNY)
Accumulated
impairment
provision
(CNY)
Impairment
provision
in year
(CNY)
Ⅰ. Long-term equity investments measured at
cost method
China TravelSky Co., Ltd. 6,690,000.00 0.00 6,690,000.00 0.00 0.00
Sichuan Airlines Co., Ltd. 35,000,000.00 0.00 35,000,000.00 0.00 0.00
Jinan Yaoqiang International Airport Co., Ltd 46,662,100.00 0.00 46,662,100.00 0.00 0.00
Subtotal 88,352,100.00 0.00 88,352,100.00 0.00 0.00
Ⅱ. Long-term equity investments measured by
the equity method
Shandong Rainbow Commercial Jet Co., Ltd 22,500,000.00 0.00 22,500,000.00 22,500,000.00 0.00
Subtotal 22,500,000.00 0.00 22,500,000.00 22,500,000.00 0.00
Total 110,852,100.00 0.00 110,852,100.00 22,500,000.00 0.00
Continued:
Name of investee
Initial investment
cost
(CNY)
Shareholding
Voting
right
Reasons for
discrepancy
between
shareholding
and
voting right
Cash
dividends
(CNY)
Ⅰ. Long-term equity investments measured at
cost method 6,690,000.00 0.45% 0.45% n/a 1,165,398.00
Sichuan Airlines Co., Ltd. 35,000,000.00 10.00% 10.00% n/a 0.00
Jinan Yaoqiang International Airport Co., Ltd 46,662,100.00 14.00% 14.00% n/a 0.00
Subtotal 88,352,100.00 1,165,398.00
Ⅱ. Long-term equity investments measured by
the equity methodSHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
5 0
Shandong Rainbow Commercial Jet Co., Ltd 22,500,000.00 45.00% 45.00% n/a 0.00
Subtotal 22,500,000.00 0.00
Total 110,852,100.00
(2) Long-term equity investments held as at 30st June 2010 have no limitation on disposal imposed.
10. Fixed assets and accumulated depreciation
(1) Classification
Types
31 Dec.2009
(CNY)
Increased
(CNY)
Decreased
(CNY)
30 Jun 2010
(CNY)
① Total historical cost 8,884,896,758.01 351,807,751.31 15,161,507.57 9,221,543,001.75
Houses and buildings 223,592,323.30 223,592,323.30
Aircrafts and aircraft engine 8,090,415,052.13 327,335,658.10 9,720,000.00 8,408,030,710.23
High-value rotables 431,124,374.06 17,750,164.80 3,691,180.42 445,183,358.44
Transportation vehicles 38,197,107.13 672,073.24 486,500.00 38,382,680.37
Machinery, equipments and others 101,567,901.39 6,049,855.17 1,263,827.15 106,353,929.41
② Total accumulated depreciation 2,253,295,993.05 276,910,836.91 12,301,358.56 2,517,905,471.40
Houses and buildings 26,694,789.94 2,967,407.61 29,662,197.55
Aircrafts and aircraft engine 2,014,255,500.72 254,659,061.05 9,720,000.00 2,259,194,561.77
High-value rotables 143,082,492.05 13,207,400.85 1,010,199.88 155,279,693.02
Transportation vehicles 18,673,551.96 1,071,931.44 - 19,745,483.40
Machinery, equipments and others 50,589,658.38 5,005,035.96 1,571,158.68 54,023,535.66
③ Total carrying value 6,631,600,764.96 - - 6,703,637,530.35
Houses and buildings 196,897,533.36 193,930,125.75
Aircrafts and aircraft engine 6,076,159,551.41 6,148,836,148.46
High-value rotables 288,041,882.01 289,903,665.42
Transportation vehicles 19,523,555.17 18,637,196.97
Machinery, equipments and others 50,978,243.01 52,330,393.75
Note: ①Depreciation increase in year totals CNY 276,910,836.91. The total value of construction projects
completed and recognised as non-current assets in year is CNY 319,373,205.68. ②Total value of
non-current assets pledged as security for borrowings and leased aircraft engines with limitation imposed is
CNY 4,284,037,179.46
(2) Leased fixed assets under financial leases
Type
Historical cost
(CNY)
Accumulated depreciation
(CNY)
Impairment
(CNY)
Balance
(CNY)
Aircrafts and aircraft engines 2,325,787,591.46 825,377,182.73 0.00 1,500,410,408.73
Replacement parts for aircraft fuselage 26,250,000.00 20,157,595.11 0.00 6,092,404.89
replacement parts for engines 164,384,362.66 116,959,511.95 0.00 47,424,850.71
Total 2,516,421,954.12 962,494,289.79 0.00 1,553,927,664.33
(3) No impairment provision was provided as at 30st June 2010 as no evidence suggests assets has impaired.
11. Construction in progress
(1) Details of construction in progress
Types 30 Jun 2010 31 Dec 2009SHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
5 1
Book value
(CNY)
Impairment
provision
(CNY)
Carrying value
(CNY)
Book value
(CNY)
Impairment
provision
(CNY)
Carrying value
(CNY)
B737-800 aircrafts 446,235,614.32 0.00 446,235,614.32 340,589,155.31 0.00 340,589,155.31
ARJ21-700 aircrafts 60,778,195.00 0.00 60,778,195.00 60,778,195.00 0.00 60,778,195.00
B737NG simulated aircrafts 56,549,280.48 0.00 56,549,280.48 19,435,867.69 0.00 19,435,867.69
Maintenance workshops,
terminal buildings
and arrival and departure
warehouses
0.00 0.00 0.00 0.00 0.00 0.00
Other construction projects 1,519,563.98 0.00 1,519,563.98 1,474,227.58 0.00 1,474,227.58
Total 565,082,653.78 0.00 565,082,653.78 422,277,445.58 0.00 422,277,445.58
(2) Changes of significant construction in progress
Types
31 Dec 2009
(CNY)
Increase
(CNY)
Transferred
to
fixed assets
(CNY)
Other decreased
(CNY)
30 Jun 2010
(CNY)
B737-800 aircrafts
340,589,155.31
424,804,064.52
319,157,605.51
446,235,614.32
ARJ21-700 aircrafts
60,778,195.00
0.00
0.00
60,778,195.00
B737NG simulated
aircrafts
19,435,867.69
37,113,412.79
0.00
56,549,280.48
Maintenance workshops,
terminal buildings and
arrival and departure
warehouses
- -
Other construction projects
1,474,227.58 260,936.57 215,600.17 1,519,563.98
Total
422,277,445.58
462,178,413.88
319,373,205.68
565,082,653.78
(3) Capitalisation of construction progress
Projects 31 Dec 2009
(CNY)
Increase
(CNY)
Transferred to
fixed assets
(CNY)
Other decrease
(CNY)
30 Jun 2010
(CNY)
Source of finance
B737-800
aircrafts 4,857,721.01
2,893,146.62 5,484,932.73
2,265,934.90
Loans from financial
institutions
ARJ21-700
aircrafts
487,587.70
487,587.70
Total 5,345,308.71
2,893,146.62 5,484,932.73 -
2,753,522.60
(4) Assets pledged as security
The corresponding carrying value of aircraft purchase rights pledged as security for borrowings in
construction in progress as at 30st June 2010 is 446,235,614.32.
(5) Impairment
No impairment provision is provided as at 30st June 2010 as no evidence suggests construction project
impairment.
12. Intangible assets
(1) Details of intangible assets
Types
31 Dec 2009
(CNY)
Increase in year
(CNY)
Decrease in year
(CNY)
30 Jun 2010
(CNY)
A. Total historical cost 50,808,133.13 0.00 0.00 50,808,133.13SHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
5 2
Types
31 Dec 2009
(CNY)
Increase in year
(CNY)
Decrease in year
(CNY)
30 Jun 2010
(CNY)
Land use rights 50,808,133.13 0.00 0.00 50,808,133.13
B. Total accumulated
amortization
2,913,059.92 392,451.93 0.00 3,305,511.85
Land use rights 2,913,059.92 392,451.93 0.00 3,305,511.85
C. Total net value 47,895,073.21 0.00 0.00 47,502,621.28
Land use rights 47,895,073.21 0.00 0.00 47,502,621.28
D. Total accumulated
impairment loss
0.00 0.00 0.00 0.00
Land use rights 0.00 0.00 0.00 0.00
E. Total carrying value 47,895,073.21 0.00 0.00 47,502,621.28
Land use rights 47,895,073.21 0.00 0.00 47,502,621.28
(2) Impairment
No impairment provision was provided as at 30st Juner 2010 as no evidence suggests intangible asset
has impaired.
13. Long-term deferred assets
Type
31 Dec 2009
(CNY)
Increase
(CNY)
Amortisation
(CNY)
Other decreased
(CNY)
30 Jun 2010
(CNY)
Pilot recruitment
and training
expenditure
216,546,250.96 19,577,915.97 21,768,358.51 0.00 214,355,808.42
Total 216,546,250.96 19,577,915.97 21,768,358.51 0.00 214,355,808.42
14. Deferred income tax assets and deferred income tax liabilities
(1) Recognised deferred income tax assets and deferred income tax liabilities
Types
30 Jun 2010
(CNY)
31 Dec 2009
(CNY)
Deferred income tax assets
Deductable temporary difference resulting from impairment provision 28,083,270.55 27,939,289.24
Impairment provision for inventories 88,384.95 88,384.95
Provision for asset substantial repair 84,952,488.32 60,683,229.57
Provision for wages and salaries due 4,686,570.47 3,126,007.58
Amortisation of pre-incorporation expenses 0.00 0.00
Total 117,810,714.29 91,836,911.34
Deferred income tax liabilities
Fair value changes of tradable financial assets 2,895,098.53 2,835,461.62
Unrealised exchange surplus 0.00 0.00
Total 2,895,098.53 2,835,461.62
(2) Corresponding temporary differences to assets and liabilities causing temporary differences
Types Temporary difference balance carried forward( CNY)
Corresponding temporary differences to assets causing temporary differences
Deductable temporary difference resulting from impairment provision 112,333,082.20
Impairment provision for inventories 353,539.80
Provision for substantial asset repair 339,809,953.28
Provision for wages and salaries due 18,746,281.88
Total 471,242,857.16
Corresponding temporary differences to liabilities causing temporary differences
Fair value changes of tradable financial assets 11,580,394.10
Total 11,580,394.10SHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
5 3
15. Impairment provisions
Decrease in year
Types
31 Dec 2009
(CNY)
Increase
(CNY)
Reversal
(CNY)
Write off
(CNY)
30 Jun 2010
(CNY)
(1) Impairment provision for accounts
receivables
640,347.37
345,775.72 -
986,123.09
(2) Impairment provision for other accounts
receivables
111,116,809.60
230,149.48 -
111,346,959.08
(3) Impairment provision for inventories
353.539.79
353,539.79
(4) Impairment provision for long-term
equity investments
22,500,000.00 -
22,500,000.00
Total
134,610,696.76
575,925.20
-
-
135,186,621.96
16. Short-term loans
Types
30 Jun 2010
(CNY)
31 Dec 2009
(CNY)
Hypothecated loans 84,042,612.11 71,537,020.88
Credits 100,000,000.00 0.00
Collaterals 0.00 0.00
Guaranteed loans 828,059,404.92 668,282,000.00
Total 1,012,102,017.03 739,819,020.88
17. Notes payables
(1) Details of notes payables
Types
30 Jun 2010
(CNY)
31 Dec 2009
(CNY)
Trade acceptances 0.00 0.00
Bank acceptances 33,226,885.33 182,124,331.32
Total 33,226,885.33 182,124,331.32
(2) The closing balance of the notes payable has decreased 81.76% in comparison with the opening
balannce,this mainly caused by the payment to the maturity bank acceptance.
18. Accounts payable
(1) Aging analysis
Age
30 Jun 2010
(CNY)
31 Dec 2009
(CNY)
Within 1 year 953,742,424.80 804,837,986.14
Over 1 year 12,133,449.72 7,194,963.93
Total 965,875,874.52 812,032,950.07SHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
5 4
(2) Accounts payables owed to shareholders or related parties with 5% or more voting right as at 30
June 2010
Companies Nature of liability
30 Jun 2010
(CNY)
31 Dec 2009
(CNY)
Shandong International Air
Training Co., Ltd.
Taining fees 5,281,973.82 5,281,973.82
Qingdao FeiSheng International
air training Co., Ltd.
Taining fees 5,869,505.00 3,750,453.00
Air China Co., Ltd.
Ground services, delay and claim for lossed
baggage
2,465,659.11 3,962,987.26
Shandong TaiGu Aircraft
Projecting Co., Ltd.
Maintenance expense and air route
subscription
21,773,893.20 13,641,513.24
Total 35,391,031.13 26,636,927.32
(3) There is no accounts payable of significant value of which the age is over 1 year.
19. Advances from customers
(1) Aging analysis
Type
30 Jun 2010
(CNY)
31 Dec 2009
(CNY)
Within 1 year 152,563,822.72 117,859,114.71
Over 1 year 0.00 97,125.72
Total 152,563,822.72 117,956,240.43
(2) Up to30 June 2010,there are no advanced payments received from shareholders who own 5% or over
5%of voting rights.
20. Payroll payables
Types
31 Dec 2009
(CNY)
Increase
(CNY)
Payments
(CNY)
30 Jun 2010
(CNY)
(1) Wages and salaries, bonuses, subsidies and
allowances
122,517,360.85 224,132,251.54 262,531,979.10 84,117,633.29
(2) Employee benefits 0.00 12,175,243.72 12,175,243.72 0.00
(3) Social insurance fee 0.00 35,560,887.32 35,560,887.32 0.00
Within: ① Medical insurance 0.00 83,508.15 83,508.15 0.00
②Basic retirement insurance 0.00 22,307,595.02 22,307,595.02 0.00
③Annuity fee 0.00 10,274,680.11 10,274,680.11 0.00
④Unemployment fee 0.00 1,461,796.99 1,461,796.99
0.00SHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
5 5
Types
31 Dec 2009
(CNY)
Increase
(CNY)
Payments
(CNY)
30 Jun 2010
(CNY)
⑤ Work injury insurance 0.00 736,792.59 736,792.59 0.00
⑥Pregnancy insurance 0.00 696,514.46 696,514.46 0.00
(4) Housing accumulation fund 12,146.24 40,399,633.80 40,396,505.80 15,274.24
(5) Labor union fee and employee education fee 12,504,030.31 9,134,475.32 3,003,225.06 18,635,280.57
(6) Non-monetary benefits 0.00 0.00 0.00 0.00
(7) Redemption of termination of labor contract 0.00 0.00 0.00 0.00
(8) Others 0.00 0.00 0.00 0.00
Within: Share-based payments settled by cash 0.00 0.00 0.00 0.00
Total 135,033,537.40 321,402,491.70 353,667,841.00 102,768,188.10
Note: There is no payroll in arrears within payroll payables.
21. Tax payables
Types of Tax
30 Jun 2010
(CNY)
31 Dec 2009
(CNY)
VAT and customs 1,240.39 0.00
Business Tax 15,322,002.90 13,493,990.29
Enterprise income tax 64,243,479.62 102,676,537.26
Property tax 1,082,338.37 1,818,917.29
Tenure tax 114,656.28 114,655.77
Personal income tax 10,236,745.95 1,594,343.92
Stamp duty 3,567,551.64 3,567,551.64
Infrastructure fund for civil aviation 12,023,255.77 11,478,774.38
Construction fund for civil airports 39,670,742.00 34,178,042.00
Withholding income tax 16,943,914.33 8,641,320.63
Withholding business Tax 6,113,377.21 0.00
Others 10,963.39 292.31
Total 169,330,267.85 177,564,425.49
22. Interest payablesSHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
5 6
Type
30 Jun 2010
(CNY)
31 Dec 2009
(CNY)
Interest on borrowings 4,077,760.66 4,001,134.66
Total 4,077,760.66 4,001,134.66
23. Other accounts payable
(1) Aging analysis
Age
30 Jun 2010
(CNY)
31 Dec 2009
(CNY)
Within 1 year 100,912,898.42 78,664,291.44
Over 1 year 41,401,096.27 46,266,172.15
Total 142,313,994.69 124,930,463.59
(2) Other accounts payables owed to shareholders or related parties with 5% or more voting right as
at 31st December 2009
Companies Nature of liability
30 Jun 2010
(CNY)
31 Dec 2009
(CNY)
Shandong Airlines Group Co., Ltd. Account balance 6,715,484.83 4,051,799.74
Air China Co., Ltd. Quality margin 20,000,000.00 20,000,000.00
Shandong TaiGu Aircraft Projecting Co., Ltd. Account balance 245,400.00 0.00
Total 26,960,884.83 24,051,799.74
(3) Other accounts payables of significant value due for more than one year
Company Balance (CNY) Age Reasons for unsettlement
Air China Co., Ltd. 20,000,000.00 2 – 3 years Wet lease not yet expired, guarantee unsettled
Total 20,000,000.00
24. Non-current liabilities due within one year
(1) Types
Types
30 Jun 2010
(CNY)
31 Dec 2009
(CNY)
Long-term borrowings due within 1 year 392,266,768.06 393,832,752.98
Long-term accounts payables due with 1 year 186,408,288.91 209,832,453.69
Subtotal 578,675,056.97 603,665,206.67
Less: Unrecognised financial lease expenditure 63,264,327.51 68,556,748.96
Total 515,410,729.46 535,108,457.71
(2) Long-term borrowings due within one year
① TypesSHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
5 7
Types
30 Jun 2010
(CNY)
31 Dec 2009
(CNY)
Collaterals 392,266,768.06 393,832,752.98
Guaranteed loans 0.00 0.00
Total 392,266,768.06 393,832,752.98
② Details of the top five balances of long-term borrowings due within one year
30 Jun 2010
(CNY)
31 Dec 2009
(CNY)
Companies Start date Due date Currency
Amount
in foreign currency
Amount
in reporting currency
(CNY)
Amount
in foreign
currency
Amount
in reporting
currency
(CNY)
USD account, Jinan
ShiZhong Branch
China Construction
Bank
2007-8-29
Installment
repayment
USD $12,000,000.00 81,490,800.00 $12,000,000.00 81,938,400.00
USD account,
Shandong Branch
China Development
Bank
2008-7-1
Installment
repayment
USD $10,600,000.00 71,983,540.00 $7,481,350.00 51,084,154.07
CNY account, Jinan
Branch
China Minsheng
Banking Corp., Ltd.
2004-6-29
Installment
repayment
CNY 50,000,000.00 50,000,000.00 50,000,000.00 50,000,000.00
USD account, Jinan
Branch
Bank of China
2005-7-15
Installment
repayment
USD $11,200,000.00 76,058,080.00 $6,461,066.40 44,117,453.59
USD account,
DongJiao Branch
Industrial and
Commercial Bank of
China
2009-6-30
Installment
repayment USD $4,000,000.00 27,163,600.00 $4,000,000.00 27,312,800.00
Total 306,696,020.00 254,452,807.66
Note: The interest rates applicable to the above long-term borrowings as at 30st June 2010 are between
1.7825% and 5.9400%.
(3) Borrowings remained unsettled after the due dates
There is no borrowing remained unsettled after the due date as at 30st June 2010.
(4) Long-term accounts payables due within one year
Companies Credit term
Original amount
(CNY)
Interest rate
(%)
Interest accrued
(CNY)
30 Jun 2010
(CNY)
Conditions of
borrowing
New York Branch,
Commerzbank
Twelve
months
21,368,454.66 6.01%-6.025% 627,005.84 20,741,448.82 Financial lease for
aircraft
CDB Leasing Co., Ltd.
Twelve
months
165,039,834.25
6.2964%
62,637,321.66
102,402,512.59
Financial lease for
aircraft
25. Long-term borrowings
(1) TypesSHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
5 8
Type
30 Jun 2010
(CNY)
31 Dec 2009
(CNY)
Hypothecated loans 439,843,740.82 162,717,904.24
Collaterals 1,878,990,385.61 2,024,291,990.60
Guaranteed loans 1,152,959,521.93 1,215,742,693.55
Total 3,471,793,648.36 3,402,752,588.39
(2) Details of the top five balances of long-term borrowings
30 Jun 2010
(CNY)
31 Dec 2009
(CNY)
Company Start date Due date Currency
Amount in foreign
currency
Amount in reporting
currency
(CNY)
Amount in foreign
currency
Amount in reporting
currency
(CNY)
CNY account,
Jinan Branch
China Minsheng
Banking Corp.,
Ltd.
2004-6-29
Installment
repayment
CNY ￥200,000,000.00 200,000,000.00 ￥227,000,000.00 227,000,000.00
USD account,
DongJiao Branch
Industrial and
Commercial Bank
of China
2009-6-30
Installment
repayment
USD $32,491,654.64 220,647,577.49 $34,491,654.64 235,515,916.21
USD account,
Jinan Branch
Bank of China
2005-12-21
Installment
repayment
USD $26,213,260.00 178,011,627.33 $26,213,260.00 178,989,381.93
USD account,
Jinan Branch
Bank of China
2005-10-19
Installment
repayment
USD $26,071,798.00 177,050,973.04 $26,071,798.00 178,023,451.10
USD account,
Shandong Branch
China
Development
Bank
2009-8-18
Installment
repayment
USD $20,000,000.00 135,818,000.00 0.00 0.00
Total 911,528,177.86 819,528,749.24
Note: The interest rates applicable to the above long-term borrowings as at 30st June 2010 are between
1.7825% and 5.9400%.
26. Long-term accounts payables
(1) The top five balances of long-term accounts payables
Company Credit term
Original amount
(CNY)
Interest rate
(%)
Interest accrued
(CNY)
30 Jun 2010
(CNY)
Conditions of
borrowing
CDB Leasing Co., Ltd. 108 months 1,213,072,532.59 6.2964% 295,846,050.63 917,226,481.96 Financial lease
Total 108 months 1,213,072,532.59 295,846,050.63 917,226,481.96
(2) Details of financial lease payables within long-term accounts payables
Companies
30 Jun 2010
(CNY)
31 Dec 2009
(CNY)SHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
5 9
Amount in
original currency
Currency
Amount in
reporting currency
(CNY)
Amount in original
currency
Currency
Amount in
reporting currency
(CNY)
CDB Leasing Co., Ltd
917,226,481.96 RMB
917,226,481.96
968,968,451.94 CNY
968,968,451.94
New York Branch,
Commerzbank
0.00 USD 0.00 0.00 USD 0.00
Total 917,226,481.96 968,968,451.94
27. Other non-current liabilities
Items
30 Jun 2010
(CNY)
31 Dec 2009
(CNY)
Gains from CRJ post-sale buy-back 1,391,618.11 2,087,462.11
Gains from reward points 26,891,652.55 19,891,652.55
Subsidy exclusively for post-disaster rehabitation 4,557,208.34 4,739,458.34
SMS fund 1,000,000.00 1,000,000.00
Total 33,840,479.00 27,718,573.00
(1) Asset-connected government grants
Items
31 Dec 2009
(CNY)
Increase in year
(CNY)
Decrease in year
(CNY)
30 Jun 2010
(CNY
Subsidy exclusively for post-disaster rehabitation 4,739,458.34 0.00 182,250.00 4,557,208.34
SMS fund 1,000,000.00 0
0 1,000,000.00
Total 5,739,458.34 0.00
182,250.00 5,557,208.34
28. Share capital
Change of number of shares in year (+/–)
Items
31 Dec 2009
(Unit:Shares) Share
allotment
Bonus issue
Shares converted from
accumulated fund
Others Subtotal
30 Jun 2010
(Unit:Shares)
(1) Unlisted floating shares
① Promoter’s shares 260,000,000.00 0.00 0.00 0.00 0.00 0.00 260,000,000.00
Including:
State-owned shares 259,801,000.00 0.00 0.00 0.00 0.00 0.00 259,801,000.00
Shares held by domestic legal persons 199,000.00 0.00 0.00 0.00 0.00 0.00 199,000.00
Shares held by foreign 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 Private placement of legal person’s
shares
0.00 0.00 0.00 0.00 0.00 0.00 0.00SHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
6 0
Change of number of shares in year (+/–)
Items
31 Dec 2009
(Unit:Shares) Share
allotment
Bonus issue
Shares converted from
accumulated fund
Others Subtotal
30 Jun 2010
(Unit:Shares)
③ Staff shares 0.00 0.00 0.00 0.00 0.00 0.00 0.00
④ Preferred shares 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Within: Transferred allotted shares 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total unlisted floating shares 260,000,000.00 0.00 0.00 0.00 0.00 0.00 260,000,000.00
(2) Listed floating shares 0.00 0.00 0.00 0.00 0.00 0.00 0.00
① Domestic shares 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Within: shares held by the
management
0.00 0.00 0.00 0.00 0.00 0.00 0.00
② Domestic shares in foreign
currency
140,000,000.00 0.00 0.00 0.00 0.00 0.00 140,000,000.00
Total listed floating shares 140,000,000.00 0.00 0.00 0.00 0.00 0.00 140,000,000.00
(3) Floating shares with imposed
limitation on sales
0.00 0.00 0.00 0.00 0.00 0.00 0.00
(4) Total 400,000,000.00 0.00 0.00 0.00 0.00 0.00 400,000,000.00
Note: ① The par value of the above shares is CNY 1.00. ② The above shares have been verified by the
Report on the Verification of Capital (YanQianZi[2000]NO.27) issued by Shandong Yantai QianJu Certified
Public Accountants Co., Ltd.
29. Capital reserve
Type
31 Dec 2009
(CNY)
Increase in year
(CNY)
Decrease in year
(CNY)
30 Jun 2010
(CNY)
Share premium 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
Type
31 Dec 2009
(CNY)
Increase in year
(CNY)
Decrease in year
(CNY)
30 Jun 2010
(CNY)
Statutory surplus reserve 59,576,069.03 0.00 0.00 59,576,069.03
Total 59,576,069.03 0.00 0.00 59,576,069.03
31. Undistributed profits
Type
1.Jan-30.Jun2010.
(CNY)
1.Jan-30.Jun2009
(CNY)
Balance brought forward
308,668,390.11 36,471,405.69
Add: Profits for the year
205,570,723.33 112,509,856.54SHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
6 1
Type
1.Jan-30.Jun2010.
(CNY)
1.Jan-30.Jun2009
(CNY)
Add: Other transfers
0.00 0.00
Less: Statutory surplus reserve
0.00 0.00
Less: Employee bonus and benefit fund
0.00 0.00
Less: Reserve fund
0.00 0.00
Less: Enterprise development fund
0.00 0.00
Less: Repaid investments
0.00 0.00
Less: Preferred dividends
0.00 0.00
Less: Discretionary surplus reserve
0.00 0.00
Less: Ordinary dividends
80,000,000.00 0.00
Less: Ordinary dividends converted to capital
0.00 0.00
Balance carried forward
434,239,113.44 148,981,262.23
32. Operating income and operating costs
(1) Operating income and operating costs
Items
1.Jan-30.Jun2010.
(CNY)
1.Jan-30.Jun2009.
(CNY)
Income from principal activities 3,101,291,683.51 2,320,604,814.36
Income from other activities 32,371,411.07 21,023,352.07
Total operating income 3,133,663,094.58 2,341,628,166.43
Principal activity costs 2,407,154,567.97 1,855,222,802.06
Other activity costs 429,620.32 439,084.54
Total operating costs 2,407,584,188.29 1,855,661,886.60
(2) Operating income and operating costs by segment
1.Jan-30.Jun2010..
(CNY)
1.Jan-30.Jun2009.
(CNY)
Segment
Operating income
(CNY)
Operating costs
(CNY)
Operating income
(CNY)
Operating costs
(CNY)
Air transportation 3,084,521,679.18 2,395,348,014.45
2,305,193,594.13 1,845,474,482.25
Cargos and logistics 3,341,785.85 1,238,224.39
3,377,523.46 969,854.35
Hospitality 12,991,318.48 10,397,011.21
12,033,696.77 8,778,465.46
Rental services 0.00 0.00 0.00 0.00SHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
6 2
1.Jan-30.Jun2010..
(CNY)
1.Jan-30.Jun2009.
(CNY)
Segment
Operating income
(CNY)
Operating costs
(CNY)
Operating income
(CNY)
Operating costs
(CNY)
Training Services 436,900.00 171,317.92 0.00 0.00
Others 32,371,411.07 429,620.32 21,023,352.07 439,084.54
Total 3,133,663,094.58 2,407,584,188.29 2,341,628,166.43 1,855,661,886.60
(3) Details of operating revenues from top five clients
Clients Operating income(CNY) % of total operating income
Air China Co., Ltd. 322,459,956.03 10.29
Shenzhen Karen Way Logistics Co., Ltd. 2,383,750.00 0.08
SHARP.INC 1,172,676.60 0.04
Ningbo Haishu new loop-through Cargo Co., Ltd. 1,089,585.00 0.03
Guangzhou ultimate Transport Co., Ltd. 903,400.00 0.03
Total 328,009,367.63 10.47
33. Business tax and surtax
Item
1.Jan-30.Jun2010.
(CNY)
1.Jan-30.Jun2009.
(CNY)
Rate
Business tax 87,411,121.39 69,042,767.26 3%、5%
Total 87,411,121.39 69,042,767.26
34. Selling expense
The increase of 45.35% from the previous reporting period to current reporting period mainly due to
increased the scale of the Company’s aircraft team and sales, as well as increased the computer ticket
reservation fees and agency fees.
35. Financial costs
Items
1.Jan-30.Jun2010.
(CNY)
1.Jan-30.Jun2009.
(CNY)
Interest expenses 106,432,475.70 130,028,226.50
Less: Interest income 1,259,265.11 412,863.03
Exchange differences -10,569,658.99 -417,127.63
Bank charges and others 3,099,552.23 2,489,187.85
Total 97,703,103.83 131,687,423.69
36. Impairment loss
Item
1.Jan-30.Jun2010.
(CNY)
1.Jan-30.Jun2009.
(CNY)
Bad and doubtful debt expenses 575,925.20 380,135.04
Total 575,925.20 380,135.04
37. Gains from fair value changesSHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
6 3
Source of fair value changes
1.Jan-30.Jun2010.
(CNY)
1.Jan-30.Jun2009.
(CNY)
Tradable financial assets 238,547.62 -4,056,192.64
Total 238,547.62 -4,056,192.64
38. Investment income
(1) Details of investment income
Items
1.Jan-30.Jun2010.
(CNY)
1.Jan-30.Jun2009.
(CNY)
Income from long-term equity investments measured at cost 1,165,398.00 1,617,642.00
Income from long-term equity investments measured by the equity method 0.00 0.00
Gains from disposals of long-term equity investments 0.00 0.00
Gains from possession of tradable financial assets -520,068.93 3,212,207.65
Others 00.00 0.00
Total 645,329.07 4,829,849.65
(2) Income from long-term equity investments measured at cost
Investee
1.Jan-30.Jun2010.
(CNY)
1.Jan-30.Jun2009.
(CNY)
Reasons for change
China TravelSky Co., Ltd. 1,165,398.00 1,617,642.00 Decrease in cash dividends
Total 1,165,398.00 1,617,642.00
(3) As at 30st June 2010, there is no investment of which income remittance is imposed with limitation.
(4) The 86.64% decrease of investment income from last reporting period principally results from the
decreased gains from settlement of tradable financial assets.
39. Non-operating income
(1) Details of non-operating income
Items
1.Jan-30.Jun2010.
(CNY)
1.Jan-30.Jun2009.
(CNY)
Gains from disposals of non-current assets 20,091.15 84,287.74
Including: Gains from disposals of non-current assets 20,091.15 84,287.74
Government grants 5,805,916.00 115,134,743.17
Others 612,532.32 546,492.47
Total 6,438,539.47 115,765,523.38
(2) Government grants
Items
1.Jan-30.Jun2010.
(CNY)
1.Jan-30.Jun2009.
(CNY)
CommentSHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
6 4
Repayment of infrastructure fund for civil aviation 0.00 114,651,145.51 CaiJian[2009]No.4 issued by
Others 5,805,916.00 483,597.66 Air route subsidies granted by local
governments
Total 5,805,916.00 115,134,743.17
(3) The 94.44% decrease of non-operating income from last reporting period principally results from the
increased gains from repayment of infrastructure fund for civil aviation for the same period last year.
40. Non-operating expenses
Items
1.Jan-30.Jun2010.
(CNY)
1.Jan-30.Jun2009.
(CNY)
Total losses from disposals of non-current assets 2,860,149.01 2,169,256.17
Within: Losses from disposals of non-current assets 2,860,149.01 2,169,256.17
Others 123,251.19 7,248.75
Total 2,983,400.20 2,176,504.92
41. Income tax expenses
Items
1.Jan-30.Jun2010.
(CNY)
1.Jan-30.Jun2009.
(CNY)
Income tax for current period computed in accordance with tax laws
and regulations
94,402,707.39 65,671,754.63
Adjustments of deferred income tax -25,914,166.04 -28,278,031.17
Total 68,488,541.33 37,393,723.46
Note: The 83.16% increase of income tax expenses from last reporting period principally results from the
increased total profits.
42. Computation of basic earnings per share and diluted earnings per share
1.Jan-30.Jun2010.
(CNY)
1.Jan-30.Jun2009.
(CNY)
Profits for the reporting period
Basic earnings
per share
Diluted earnings
per share
Basic earnings
per share
Diluted earnings
per share
Net profits attributable to ordinary shareholders 0.51 0.51 0.28 0.28
Net profits attributable to ordinary shareholders after
deducting extraordinary gains or losses
0.51 0.51 0.08 0.08
Basic earnings per share = P0 ÷ S
S = S0 + S1 + Si × Mi ÷ M0 － Sj × Mj ÷ M0 － Sk
P0: net profits attributable to ordinary shareholders or net profits attributable to ordinary shareholders
after deducting extraordinary gains or losses
S: weighted average of number of listed ordinary shares
S0: number of ordinary shares brought forward
S1: number of shares increased in the reporting period resulting from conversion of accumulated fund
or dividends
Si: number of shares increased in the reporting period resulting from share issues or convertible bond
issuesSHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
6 5
Sj: number of shares decreased in the reporting period resulting from share buy-backs
Sk: number of shares decreased in the reporting period resulting from share contraction
M0: number of months in the reporting period
Mi: cumulative number of months from the second month of the share number increase month to the
last month of the reporting period
Mj: cumulative number of months from the second month of the share number decrease month to the
last month of the reporting period
Diluted earnings per share = P1 / (S0 + S1 + Si × Mi ÷ M0 － Sj × Mj ÷ M0 － Sk + the
weighted average of number of ordinary shares increased by share warrants, share options and
convertible bonds)
P1: net profits attributable to ordinary shareholders or net profits attributable to ordinary shareholders
after deducting extraordinary gains or losses adjusted for dilutive impact in accordance with CAS
and relevant regulations
43. Notes to the consolidated cash flow statement
(1) Cash received related to other operating activities
Items
1.Jan-30.Jun2010.
(CNY)
1.Jan-30.Jun2009.
(CNY)
Government grants 5,805,916.00 56,453,459.02
Interest income from bank deposits 1,259,265.11 412,863.03
Cash received from non-operating activities 612,532.32 67,810.00
Cash received from accounts balances 4,796,416.28 36,281,344.71
Total 12,474,129.71 93,215,476.76
(2) Cash paid related to other operating activities
Items
1.Jan-30.Jun2010.
(CNY)
1.Jan-30.Jun2009.
(CNY)
Bank charges 4,489,465.26 2,489,187.85
Cash paid from non-operating activities 123,251.19 7,248.75
Cash paid from accounts balances 35,481,268.53 22,738,140.16
Cash paid from selling expenses and administrative expenses 13,865,588.57 41,670,732.43
Total 53,959,573.55 66,905,309.19
(3) Cash paid related to other financing activities
Items
1.Jan-30.Jun2010.
(CNY)
1.Jan-30.Jun2009.
(CNY)
Cash paid to guarantee bank acceptance 4,048,648.60 0.00
Cash paid for financial leases of aircrafts 104,058,506.79 105,176,772.22SHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
6 6
Total 108,107,155.39 105,176,772.22
44. Supplements to the consolidated cash flow statement
(1) Supplements to the consolidated cash flow statement
(1) Cash flows adjusted from net profits
1.Jan-30.Jun2010.
(CNY)
1.Jan-30.Jun2009.
(CNY)
Net profits 205,642,391.05 112,680,938.44
Add: Impairment losses 575,925.20 380,135.04
Add: Depreciation of non-current assets and productive biological assets and losses of fuel 276,910,836.91 251,990,542.17
Add: Amortisation of intangible assets 392,451.93 370,587.51
Add: Amortisation of long-term deferred assets 21,768,358.51 7,697,044.01
Add: Losses on disposals of non-current assets, intangible assets and long-term assets (minus
sign representing gains)
2,840,057.86 2,084,968.43
Add: Losses arising from scrapping non-current assets (minus sign representing gains) 0.00 0.00
Add: Losses arising from fair value changes (minus sign representing gains) -238,547.62 4,056,192.64
Add: Financial costs (minus sign representing income) 94,116,034.06 129,557,207.07
Add: Investment losses (minus sign representing income) -645,329.07 -4,829,849.65
Add: Decrease of deferred income tax assets (minus sign representing increase) -25,973,802.95 -26,462,956.80
Add: Increase of deferred income tax liabilities (minus sign representing decrease) 59,636.90 -1,815,074.37
Add: Decrease of inventories (minus sign representing increase) -4,164,019.18 8,378,283.51
Add: Decrease of operating accounts receivables (minus sign representing increase) -112,229,409.63 -90,139,094.28
Add: Increase of operating accounts payables (minus sign representing decrease) 22,558,990.93 172,789,679.10
Add: Others 0.00 0.00
Net cash flows from operating activities 481,613,574.90 566,738,602.82
(2) Non-cash-flow related significant investing and financing activities
Conversion of debt to equity 0.00 0.00
Conversion debt instruction of maturity less than 1 year 0.00 0.00
Non-current assets under financial leases 0.00 0.00
(3) Net change of cash and cash equivalents
Cash carried forward 94,448,094.68 84,724,663.87
Less: Cash brought forward 49,333,429.81 44,937,058.88
Add: Cash equivalents carried forward 0.00 0.00SHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
6 7
(1) Cash flows adjusted from net profits
1.Jan-30.Jun2010.
(CNY)
1.Jan-30.Jun2009.
(CNY)
Less: Cash equivalents brought forward 0.00 0.00
Net increase of cash and cash equivalents 45,114,664.87 39,787,604.99
(2) Composition of cash and cash equivalents
Items
1.Jan-30.Jun2010.
(CNY)
1.Jan-30.Jun2009.
(CNY)
Ⅰ. Cash 94,448,094.68 84,724,663.87
Including: Cash on hand 1,516,323.56 924,840.03
Bank deposit capable of immediate payments 92,931,771.12 83,799,823.84
Other monetary assets capable of immediate payments 0.00 0.00
Ⅱ. Cash equivalents 0.00 0.00
Including: Debt instruments matured with three months 0.00 0.00
Ⅲ. Balance of cash and cash equivalents 94,448,094.68 84,724,663.87
Including: Cash and cash equivalents with imposed usage limitation 0.00 0.00
Ⅵ Related party relationships and transactions
1. Details of the Company’s parent company
Name Shandong Airlines Group Co., Ltd.
Relationship Parent
Type of registration State-owned company
Place of registration Jinan, Shandong
Legal representative Machongxian
Nature of business Air transportation
Registered capital CNY 580,000,000.00
Shareholding in the Company 42.00%
Voting right in the Company 42.00%
Ultimate parent of the Company Air China Co., Ltd.
Institution code 61407164-7
2. Details of the Company’s subsidiaries
Name Qingdao International Air Logistics Centre Co., Ltd.
Relationship Subsidiary
Type of registration Sino-foreign joint venture
Place of registration Qingdao, Shandong
Legal representative SU, Zhongmin
Nature of business Transportation warehousing
Registered capital CNY 30,000,000.00
Shareholding 70.00%SHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
6 8
Voting right 70.00%
Institution code 73349654-1
3. Details of the company’s associated companies
Name Shandong Rainbow Commercial Jet Co., Ltd
Type of registration Limited liability company
Place of registration Jinan, Shandong
Legal representative ZHAO, Hong
Nature of business Air transportation
Registered capital CNY 50,000,000.00
Shareholding 45.00%
Voting right 45.00%
Total assets carried forward CNY86,252,725.51
Total liabilities carried forward CNY 202,622,810.65
Net assets carried forward CNY -116,370,085.14
Total operating income for the reporting period CNY 5,142,776.25
Net profits for the reporting period CNY 1,729,451.74
Relationship Associate
Institution code 72497146
4. Other related parties
Name of company Relationships Institution code
Shandong TaiGu Aircraft Projecting Co., Ltd. Under common control 70588297-1
Shandong Airlines House Management Co., Ltd. Under common control 77741596-9
Shandong XiangYu Air Technology Co., Ltd. Under common control 720736454
Qingdao FeiSheng International Air Training Co., Ltd. Under common control 72557262-0
Shandong Rainbow Commercial Jet Co., Ltd. Associate 72497146
5. Transactions with related parties
(1) Acceptance of goods and service
1.Jan-30.Jun2010.
(CNY)
1.Jan-30.Jun2009.
(CNY)
Related parties
Type of
transaction
Transaction
description
Pricing
and
decision making
process
Amount
(CNY)
% of transaction
within
Same type
Amount
(CNY)
% of transaction
within
same type
Shandong TaiGu
Aircraft Projecting
Co., Ltd.
Receipt of
service
Aircraft
maintenance fees
Market price 33,011,989.96 14.88 42,505,687.11 19.23
Shandong Airlines
Group Co., Ltd.
Receipt of
service
Rental fees and food
and accommodation
fees
Market price 5,848,250.05 30.13 5,080,672.95 29.53
Qingdao FeiSheng
International Air
Training Co., Ltd.
Receipt of
service
Training fees Market price 2,119,052.00 4.00 2,609,828.00 5.67
Shandong
International Air
Training Co., Ltd.
Receipt of
service
Training fees Market price 0.00 0.00 3,624,260.00 7.87
Shandong XiangYu
Air Technology Co.,
Ltd.
Receipt of
service
Repair expenditure Market price 16,179,314.44 7.29 9,542,930.41 4.32SHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
6 9
1.Jan-30.Jun2010.
(CNY)
1.Jan-30.Jun2009.
(CNY)
Related parties
Type of
transaction
Transaction
description
Pricing
and
decision making
process
Amount
(CNY)
% of transaction
within
Same type
Amount
(CNY)
% of transaction
within
same type
Total 57,158,606.45 63,363,378.47
(2) Supply of goods and service
1.Jan-30.Jun2010.
(CNY)
1.Jan-30.Jun2009.
(CNY)
Related parties
Type
of transaction
Transaction
description
Pricing
and
decision making
process
Amount
(CNY)
% of transaction
within same type
Amount
(CNY)
% of transaction
Within same type
Air China Co., Ltd. Supply of service Service fees Agreed price 5,100,000.00 48.35 5,100,000.00 77.31
Total 5,100,000.00 48.35 5,100,000.00 77.31
(3) Guarantee
Name of Guarantor Secured party
Secured amount
(CNY)
Start date Expiry date
Completion of
guarantee
Shandong Airlines Group Co., Ltd. Shandong Airlines Co., Ltd. 40,000,000.00 2009-7-7
2010-7-6 No
Shandong Airlines Group Co., Ltd. Shandong Airlines Co., Ltd 40,000,000.00 2009-7-14
2010-7-13 No
Shandong Airlines Group Co., Ltd. Shandong Airlines Co., Ltd 40,000,000.00 2009-7-22
2010-7-21 No
Shandong Airlines Group Co., Ltd. Shandong Airlines Co., Ltd 40,000,000.00 2009-7-27
2010-7-26 No
Shandong Airlines Group Co., Ltd. Shandong Airlines Co., Ltd 80,000,000.00 2010-1-21
2011-1-20 No
Shandong Airlines Group Co., Ltd. Shandong Airlines Co., Ltd 120,000,000.00 2010-1-27
2011-7-26 No
Shandong Airlines Group Co., Ltd. Shandong Airlines Co., Ltd 40,000,000.00 2010-2-22
2010-8-20 No
Shandong Airlines Group Co., Ltd. Shandong Airlines Co., Ltd 40,000,000.00 2009-11-2
2010-11-1 No
Shandong Airlines Group Co., Ltd. Shandong Airlines Co., Ltd 40,000,000.00 2009-11-10
2010-11-9 No
Shandong Airlines Group Co., Ltd. Shandong Airlines Co., Ltd 40,000,000.00 2009-11-17
2010-11-16 No
Shandong Airlines Group Co., Ltd. Shandong Airlines Co., Ltd 50,000,000.00 2009-11-24
2010-11-23 No
Shandong Airlines Group Co., Ltd. Shandong Airlines Co., Ltd 50,000,000.00 2010-6-21
2010-6-20 No
Shandong Airlines Group Co., Ltd. Shandong Airlines Co., Ltd 50,000,000.00 2010-6-28
2011-6-27 No
Shandong Airlines Group Co., Ltd. Shandong Airlines Co., Ltd 6,790,900.00 2009-9-1
2010-8-31 No
Shandong Airlines Group Co., Ltd. Shandong Airlines Co., Ltd 8,149,080.00 2009-9-8
2010-8-31 No
Shandong Airlines Group Co., Ltd. Shandong Airlines Co., Ltd 27,163,600.00 2009-9-22
2010-8-31 No
Shandong Airlines Group Co., Ltd. Shandong Airlines Co., Ltd 25,805,420.00 2009-10-12
2010-8-31 No
Shandong Airlines Group Co., Ltd. Shandong Airlines Co., Ltd 27,661,033.43 2009-11-2
2010-11-1 NoSHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
7 0
Name of Guarantor Secured party
Secured amount
(CNY)
Start date Expiry date
Completion of
guarantee
Shandong Airlines Group Co., Ltd. Shandong Airlines Co., Ltd 12,615,711.63 2010-1-28
2011-1-27 No
Shandong Airlines Group Co., Ltd. Shandong Airlines Co., Ltd 49,873,659.87 2010-6-1
2011-5-31 No
Shandong Airlines Group Co., Ltd. Shandong Airlines Co., Ltd 27,600,000.00 2007-12-3
2022-3-28 No
Shandong Airlines Group Co., Ltd. Shandong Airlines Co., Ltd 83,000,000.00 2008-1-2
2022-3-28 No
Shandong Airlines Group Co., Ltd. Shandong Airlines Co., Ltd 54,000,000.00 2008-3-3
2022-3-28 No
Shandong Airlines Group Co., Ltd. Shandong Airlines Co., Ltd 53,000,000.00 2008-4-1
2022-3-28 No
Shandong Airlines Group Co., Ltd. Shandong Airlines Co., Ltd 52,300,000.00 2008-6-2
2022-3-28 No
Shandong Airlines Group Co., Ltd. Shandong Airlines Co., Ltd 17,200,000.00 2008-7-1
2022-3-28 No
Shandong Airlines Group Co., Ltd. Shandong Airlines Co., Ltd 120,000,000.00 2008-7-15
2022-3-28 No
Shandong Airlines Group Co., Ltd. Shandong Airlines Co., Ltd 114,000,000.00 2009-4-21
2022-3-28 No
Shandong Airlines Group Co., Ltd. Shandong Airlines Co., Ltd 100,000,000.00 2006-12-18
2018-12-17 No
Shandong Airlines Group Co., Ltd. Shandong Airlines Co., Ltd 2,200,000.00 2008-6-5
2018-12-17 No
Shandong Airlines Group Co., Ltd. Shandong Airlines Co., Ltd 2,100,000.00 2008-6-18
2018-12-17 No
Shandong Airlines Group Co., Ltd. Shandong Airlines Co., Ltd 123,000,000.00 2008-6-19
2018-12-17 No
Shandong Airlines Group Co., Ltd. Shandong Airlines Co., Ltd 13,500,000.00 2008-7-1
2018-12-17 No
Shandong Airlines Group Co., Ltd. Shandong Airlines Co., Ltd 30,000,000.00 2008-8-19
2018-12-17 No
Shandong Airlines Group Co., Ltd. Shandong Airlines Co., Ltd 57,987,495.10 2007-3-29
2022-3-28 No
Shandong Airlines Group Co., Ltd. Shandong Airlines Co., Ltd 8,488,625.00 2007-4-30
2022-3-28 No
Shandong Airlines Group Co., Ltd. Shandong Airlines Co., Ltd 45,944,648.86 2007-5-31
2022-3-28 No
Shandong Airlines Group Co., Ltd. Shandong Airlines Co., Ltd 121,929,387.14 2007-7-2
2022-3-28 No
Shandong Airlines Group Co., Ltd. Shandong Airlines Co., Ltd 25,464,516.82 2007-8-1
2022-3-28 No
Shandong Airlines Group Co., Ltd. Shandong Airlines Co., Ltd 101,244,849.01 2007-9-28
2022-3-28 No
Total 1,981,018,926.85
(4) Other transactions with related parties
1.Jan-30.Jun2010.
(CNY)
1.Jan-30.Jun2009.
(CNY)
Related parties
Transaction
description
Pricing policy
Amount
(CNY)
% of transaction
within same
type
Amount
(CNY)
% of transaction
within
same type
Air China Co., Ltd. Wet lease Agreed price 310,474,477.00 100.00 307,987,065.37 100SHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
7 1
Shandong Rainbow Commercial Jet
Co., Ltd
Debt
compensation
115,769.84 0.00 27,748.25 0.00
Air China Co., Ltd. Route sharing Agreed price 11,985,479.03 100.00 13,017,976.72 100.00
Total 322,575,725.87 321,032,790.34
6. The balance of accounts payables and receivables among related parties:
Items Related party 30 Jun. 2010 31.Dec.2009
Accounts receivable
Air China Co., Ltd. 56,728,302.65 53,828,640.46
Total 56,728,302.65 53,828,640.46
Other accounts receivable
Air China Co., Ltd. 30,406,535.26 23,382,955.26
Qingdao FeiSheng International Air Training
Co., Ltd.
462,041.30 1,405,287.30
Shandong XiangYu Air Technology Co., Ltd. 9,543.24 2,966,545.86
Shandong Rainbow Commercial Jet Co., Ltd 109,051,717.65 109,051,717.65
Total 139,929,837.45 136,806,506.07
Accounts payable
Shandong International Air Training Co., Ltd. 5,281,973.82 5,281,973.82
Qingdao FeiSheng International Air Training
Co., Ltd.
5,869,505.00 3,750,453.00
Air China Co., Ltd. 2,465,659.11 3,962,987.26
Shandong TaiGu Aircraft Projecting Co., Ltd. 21,773,893.20 13,641,513.24
Total 35,391,031.13 26,636,927.32
Other accounts payable
Air China Co., Ltd. 20,000,000.00 20,000,000.00
Shandong Airlines Group Co., Ltd. 6,715,484.83 4,051,799.74
Shandong TaiGu Aircraft Projecting Co., Ltd. 245,400.00 0.00
Total 26,960,884.83 24,051,799.74
Ⅶ Contingencies
1. Contingent liabilities resulting from unsettled litigation and arbitration and their financial impact
No contingent liabilities resulting from unsettled litigation and arbitration as at the balance sheet date.
2. Contingent liabilities resulting from guarantee provision and their financial impact
No contingent liabilities resulting from guarantee provision as at the balance sheet date.
3. Other contingent liabilities and their financial impact
No other contingent liabilities as at the balance sheet date.
Ⅷ Commitment
Signed commitments of which the performance was in process as at 30st June 2010 are listed below:
Carrying value carried forward
Items
Within 1 year
(CNY)
1 – 2 years
(CNY)
2 – 3 years
(CNY)
Over 3 years
(CNY)
Total
(CNY)
Operating lease 578,401.08 574,245.38 522,163.94 2,697,356.02 4,372,166.42SHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
7 2
Capital 877,621.53 1,907,691.89 1,169,268.03 578,773.89 4,533,355.34
Total 1,456,022.61 2,481,937.27 1,691,431.97 3,276,129.91 8,905,521.76
Ⅸ Post balance sheet date events
No post balance sheet date events as at the report date.
Ⅹ Other significant events
No other significant events as at the balance sheet date.
Ⅺ Main notes to financial statements of parent company
1. Accounts receivables
(1) Disclosure by classification
30 Jun 2010 31 Dec 2009
Types Book value Provision for bad debts Book value Provision for bad debts
Amount
(CNY)
Proportion
(%)
Amount
(CNY)
Proportion (%)
Amount
(CNY)
Proportion
(%)
Amount
(CNY)
Proporti
on (%)
Individual significant
amounts
180,392,305.29 88.36
0.00
0.00
130,379,296.86
92.29 0.00 0.00
Non-significant in
amount but in
accordance with the
characteristics of credit
risk portfolio, the risk of
the portfolio is high
13,860.97 0.01 0.00 0.00 9,502.08 0.01 60.93 0.01
Other non-significant
receivables
23,741,063.68 11.63
890,632.38
100.00
10,887,630.19
7.70 544,795.73 99.99
Total
204,147,229.94 100.00
890,632.38 100.00
141,276,429.13
100.00 544,856.66 100.00
Note: See paragraph Ⅱ10 for criteria for categorising individual significance and individual insignificance
but significant portfolio credit risk.
(2) Provision for bad debts of account receivables which classified as individual significant amount or
non-significant in amount but execute impairment loss test individually
Items
Book value
(CNY)
Bad and doubtful debt
(CNY)
Proportion
(%)
Comment
BSP 93,130,426.78 0.00 0.00 Amount not due received prior to the statement date.
China Civil Aviation
Clearing Centre
30,533,575.86 0.00 0.00 Amount not due received prior to the statement date.
Air China Co., Ltd. 56,728,302.65 0.00 0.00 Amount not due received prior to the statement date.
Total 180,392,305.29 0.00 0.00 Amount not due received prior to the statement date.
(3) Aging analysis
30 Jun 2010 31 Dec 2009
Book value Proportion
Provision for bad
debts
Book value Proportion
Provision for bad
debts
Age
Amount
(CNY) %
Amount
(CNY)
Amount
(CNY)
%
Amount
(CNY)SHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
7 3
30 Jun 2010 31 Dec 2009
Book value Proportion
Provision for bad
debts
Book value Proportion
Provision for bad
debts
Age
Amount
(CNY) %
Amount
(CNY)
Amount
(CNY)
%
Amount
(CNY)
Within 1 year
203,058,415.11 99.47
856,669.49 140,732,293.60
99.61 524,079.39
1 – 2 years
490,593.14 0.24
9,583.88 232,069.27
0.16 5,863.07
2 – 3 years
584,360.72 0.29
24,279.42 302,564.18
0.22 14,853.27
3 – 4 years
13,860.97 0.00
99.60 9,502.08
0.01 60.93
4 – 5 years
0.00 0.00
0.00
0.00 0.00
0.00
Over 5 years 0.00 0.00 0.00
0.00 0.00
0.00
Total 204,147,229.94 100.00 890,632.38 141,276,429.13 100.00 544,856.66
(3) Accounts receivable owed by shareholders with 5% or more voting right during the reporting
period
30 Jun 2010 31 Dec 2009
Shareholder
Amount
(CNY)
Provision for bad debts
(CNY)
Amount
(CNY)
Provision for bad debts
(CNY)
Air China Co., Ltd.
56,728,302.65 0.00
53,828,640.46 0.00
Total
56,728,302.65 0.00
53,828,640.46 0.00
(5) The balance of top five accounts receivable
Name of company
Relationship with the
Company
Amount
(CNY)
Age
Nature
of accounts receivable
% of total accounts
receivables
BSP Non-related parties 93,130,426.78 Within 1 year Air ticket 45.62
Air China Co., Ltd. Related parties 56,728,302.65 Within 1 year Settlement of wet lease 27.79
China Civil Aviation
Clearing Centre Non-related parties 30,533,575.86 Within 1 year Air ticket 14.96
Personal e-ticket Non-related parties 5,651,838.44 Within 1 year Air ticket 2.77
Jinan Post Office Non-related parties 1,620,315.66 Within 1 year Aircraft charter fees 0.79
Total 187,664,459.39 91.93
(6) Accounts receivables owed by related parties
Name Relationship with the Company Amount (CNY) % of total accounts receivables
Air China Co., Ltd. Parent 56,728,302.65 27.79
Total 56,728,302.65 27.79
2. Other accounts receivablesSHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
7 4
(1) Disclosure by classification
30 Jun 2010 31 Dec 2009
Book value Provision for bad debts Book value Provision for bad debts
Types
Amount
(CNY)
Proportion
(%)
Amount
(CNY)
Proportion
(%)
Amount
(CNY)
Proportion
(%)
Amount
(CNY)
Proportion
(%)
Individual
significant
amounts
199,827,336.19
63.02
109,051,717.65 97.94 209,239,407.19
77.04
109,051,717.65 98.14
Non-significant in
amount but in
accordance with
the characteristics
of credit risk
portfolio, the risk
of the portfolio is
high
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other
non-significant
receivables
117,241,338.47
36.98
2,291,634.14 2.06 62,357,270.59
22.96
2,061,484.66 1.86
Total
317,068,674.66
100.00
111,343,351.79 100.00 271,596,677.78
100.00
111,113,202.31 100.00
Note: See paragraph Ⅱ10 for Criteria for categorising individual significance and individual insignificance
but significant portfolio credit risk.
(2) Provision for bad debts of other account receivables which classified as individual significant
amount or non-significant in amount but execute impairment loss test individually
Accounts receivables
Book value
(CNY)
Bad and doubtful debt
(CNY)
Proportion
(%)
Comment
Shandong Rainbow Commercial Jet Co.,
Ltd. 109,051,717.65 109,051,717.65 100.00 Significantly overdue debt resulting
from deteriorated financial condition.
CDB Leasing Co., Ltd. 41,354,563.28 0.00 0.00 In accordance with accounting policies
for bad and doubtful debt provision.
Air China Co., Ltd. 30,406,535.26 0.00 0.00 In accordance with accounting policies
for bad and doubtful debt provision.
Singapore Aircraft Leasing Enterprise 19,014,520.00 0.00 0.00 In accordance with accounting policies
for bad and doubtful debt provision.
Total 199,827,336.19 109,051,717.65
(3) Aging analysis
30 Jun 2010 31 Dec 2009
Age Book value Proportion Provision for bad debts Book value Proportion Provision for bad debts
Amount
(CNY)
%
Amount
(CNY)
Amount
(CNY)
%
Amount
(CNY)
Within 1 year
96,668,763.32
30.49
1,267,042.44 51,876,423.97
19.11 1,139,666.87
1 – 2 years
23,799,530.05
7.51 904,780.06 14,213,521.28
5.23 842,152.38
2 – 3 years
19,862,512.46
6.26 905,282.15 25,446,259.18
9.37 872,347.11
3 – 4 years
17,487,633.50
5.52 10,674,088.76 16,492,449.22
6.07 10,674,554.07
4 – 5 years
129,507,678.60
40.85 80,329,951.06 133,038,338.06
48.98 80,329,246.11SHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
7 5
30 Jun 2010 31 Dec 2009
Age Book value Proportion Provision for bad debts Book value Proportion Provision for bad debts
Amount
(CNY)
%
Amount
(CNY)
Amount
(CNY)
%
Amount
(CNY)
Over 5 years
29,742,556.73
9.38 17,262,207.32 30,529,686.07
11.24 17,255,235.77
Total
317,068,674.66
100.00
111,343,351.79 271,596,677.78
100.00 111,113,202.31
(4) Other accounts receivables owed by shareholders with 5% or more voting right during the
reporting period
30 Jun 2010 31 Dec 2009
Shareholder
Amount
(CNY)
Bad and doubtful debt provision
(CNY)
Amount
(CNY)
Bad and doubtful debt provision
(CNY)
Air China Co., Ltd.
30,406,535.26 0.00
23,382,955.26 0.00
Total
30,406,535.26 0.00
23,382,955.26 0.00
(5) List the top five balance of other accounts receivables
Name of company
Relationship with
the Company
Amount
(CNY)
Nature of
other accounts
receivable
Age
% of total
accounts
receivables
Shandong Rainbow Commercial Jet Co., Ltd. Related parties 109,051,717.65 Account balance 2 –7 years 34.39
CDB Leasing Co., Ltd. Non-related parties 41,354,563.28 Guarantee 4 – 5 years 13.04
Air China Co., Ltd Related parties 30,406,535.26 Guarantee Within 1 year 9.59
Singapore Aircraft Leasing Enterprise Non-related parties 19,014,520.00 Guarantee 2 – 4 years 6.00
Shanghai United Assets and Equity Exchange Non-related parties 15,222,000.00 Within 1 year 4.80
Total 215,049,336.19 67.82
(6) Other accounts receivables owed by related parties
Name of company Relationship with the
Company
Amount
(CNY)
% of total accounts
receivables
Air China Co., Ltd. Parent company 30,406,535.26 9.59
Shandong XiangYu Air Technology Co., Ltd. Under common control 9,543.24 0.00
Qingdao FeiSheng International Air Training Co., Ltd. Under common control 462,041.30 0.15
Shandong Rainbow Commercial Jet Co., Ltd. Under common control 109,051,717.65 34.39
Total 139,929,837.45 44.13
3. Long-term equity investments
Name of investee
Balance
brought
forward
(CNY)
Changes
in year
(CNY)
Balance
carried
forward
(CNY)
Accumulated
impairment
provision
(CNY)
Impairment
provision
in year
(CNY)SHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
7 6
Long-term equity investments measured at cost:
Qingdao International
Air Logistics Co., Ltd.
23,813,205.97 0.00 23,813,205.97 0.00 0.00
China TravelSky Co., Ltd. 6,690,000.00 0.00 6,690,000.00 0.00 0.00
Sichuan Airlines Co., Ltd. 35,000,000.00 0.00 35,000,000.00 0.00 0.00
Jinan Yaoqiang
International Airport Co., Ltd
46,662,100.00 0.00 46,662,100.00 0.00 0.00
Subtotal 112,165,305.97 0.00 112,165,305.97 0.00 0.00
Long-term equity investments measured by the equity method:
Shandong Rainbow
Commercial Jet Co., Ltd
22,500,000.00 0.00 22,500,000.00 22,500,000.00 0.00
Subtotal 22,500,000.00 0.00 22,500,000.00 22,500,000.00 0.00
Total 134,665,305.97 0.00 134,665,305.97 22,500,000.00 0.00
Continued：
Name of investee
Initial investment
cost
(CNY)
Shareholding
(%)
Voting
right
(%)
Reasons for
discrepancy
between
shareholding
and
voting right
Cash
dividends
in year
(CNY)
Long-term equity investments measured at cost:
Qingdao International
Air Logistics Co., Ltd.
23,813,205.97 70.00 70.00 n/a 0.00
China TravelSky Co., Ltd.
6,690,000.00
0.45 0.45 n/a 1,165,398.00
Sichuan Airlines Co., Ltd.
35,000,000.00
10.00 10.00 n/a 0.00
Jinan Yaoqiang
International Airport Co., Ltd 46,662,100.00
14.00 14.00 n/a 0.00
Subtotal 112,165,305.97 1,165,398.00
Long-term equity investments measured by the equity method:
Shandong Rainbow
Commercial Jet Co., Ltd
22,500,000.00 45.00 45.00 n/a 0.00
Subtotal 22,500,000.00 0.00
Total 134,665,305.97 1,165,398.00
4. Operating income and operating costs
(1) Operating income and operating costs
Items
1.Jan-30.Jun2010.
(CNY)
1.Jan-30.Jun2009.
(CNY)
Income from principal activities 3,098,191,114.86 2,317,227,290.90
Income from other activities 32,365,969.57 21,023,352.07
Total operating income 3,130,557,084.43 2,338,250,642.97
Principal activity costs 2,406,157,560.78 1,854,252,947.71SHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
7 7
Other activity costs 429,620.32 439,084.54
Total operating costs 2,406,587,181.10 1,854,692,032.25
(2) Operating income and operating costs by segment
1.Jan-30.Jun2010.
(CNY)
1.Jan-30.Jun2009.
(CNY)
Segment
Operating income
(CNY)
Operating costs
(CNY)
Operating income
(CNY)
Operating costs
(CNY)
Air transportation 3,084,762,896.38 2,395,589,231.65
2,305,193,594.13 1,845,474,482.25
Hospitality 12,991,318.48 10,397,011.21
12,033,696.77 8,778,465.46
Rental services 0.00 0.00 0.00 0.00
Training Services 436,900.00 171,317.92
0.00 0.00
Others 32,365,969.57 429,620.32 21,023,352.07 439,084.54
Total 3,130,557,084.43 2,406,587,181.10 2,338,250,642.97 1,854,692,032.25
(3) Details of operating revenues from top five clients
Clients Operating income (CNY) % of total operating income
Air China Co., Ltd. 322,459,956.03 10.30
Shenzhen Karen Way Logistics Co., Ltd. 2,383,750.00 0.08
SHARP.INC 1,172,676.60 0.04
Ningbo Haishu new loop-through Cargo Co., Ltd. 1,089,585.00 0.03
Guangzhou ultimate Transport Co., Ltd. 903,400.00 0.03
Total 328,009,367.63 10.48
5. Investment income
(1) Details of investment income
Items
1.Jan-30.Jun2010.
(CNY)
1.Jan-30.Jun2009.
(CNY)
Income from long-term equity investments measured at cost 1,165,398.00 1,617,642.00
Gains from disposals of long-term equity investments 0.00 0.00
Gains from possession of tradable financial assets -520,068.93 3,212,207.65
Total 645,329.07 4,829,849.65
(2) Income from long-term equity investments measured at cost
Investee
1.Jan-30.Jun2010.
(CNY)
1.Jan-30.Jun2009.
(CNY)
Reasons for change
China TravelSky Co., Ltd. 1,165,398.00 1,617,642.00 Decrease in cash dividends
(3) As at 30st June 2010, there is no investment of which income remittance is imposed with limitation.SHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
7 8
Ⅻ Supplemental information
1. Details of extraordinary gains and losses for the current reporting period
Items Amount (CNY) Comment
Gains from disposals of non-current assets after expending impairment provisions -2,840,057.86
Disposals of non-current assets and
so on
Exceeded-authority approved, non-official approved or accidental tax repayment and
relief
0.00
Government grants recognised through profit or loss for the current reporting period,
excluding grants which are closely related to the Company’s operating activities and
of which the quota or approval is eligible for automatic renewal in accordance with
relevant regulations
5,805,916.00 subsidies
Financial resource usage fees charged on non-financial institution recognised
through profit or loss for the current reporting period
0.00
Gains arising from bargain purchase in business combination and investments in
associates and joint ventures
0.00
Non-monetary asset exchange 0.00
Consigned investment and asset management 0.00
Impairment provision resulting from force majeure, eg. natural desasters 0.00
Reorganisation 0.00
Reorganisation expenditure 0.00
Unfair transactions 0.00
Net profits or losses achieved by an acquired under-common-control entity during
the period from the start of the period to the acquisition date
0.00
Gains or losses arising from contingent events unconnected with the Company’s
daily operating activities
0.00
Fair value changes of tradable financial assets and tradable financial liabilities held
and gains or losses arising from disposals of tradable financial assets, tradable
financial liabilities and available-for-sale financial assets, excluding hedging
contracts relevant to the Company’s daily operating activities
-281,521.31
Gains or losses arising from
settlement of interest
swaps and fair value changes
Reversal of impairment provision for accounts receivables eligible for individual
impairment assessment
0.00
Gains or losses arising from consigned borrowings 0.00
Fair value changes of property investments subsequently measured at fair value 0.00
One-off adjustment of profit or loss for the current reporting period in accordance
with tax and accounting laws and regulations
0.00
Consignment income arising from consigned operations 0.00
Income and expenses other than items listed above 489,281.13
Other gains or losses satisfying the definition of extraordinary gains or losses 0.00
Subtotal 3,173,617.96
Less: Impact of income tax 793,404.49
Less: Impact on non-controling interest 0.00SHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
7 9
Items Amount (CNY) Comment
Total 2,380,213.47
2. Yield rate of net assets and earnings per share
Earnings per share
Net profits for the current reporting period
Weighted average
of returns on equity (%)
Basic earnings per share (%) Diluted earnings per share (%)
Net profits attributable to ordinary shareholders 22.14 0.51 0.51
Net profits attributable to ordinary shareholders
after deducting extraordinary gains or losses
21.92 0.51 0.51
Computation of earnings per share:
(1) Basic earnings per share
Current reporting period Last reporting period
Items Computation
Amount
After deducting
extraordinary
gains or losses
Amount
After deducting
extraordinary
gains or losses
Net profits attributable to
ordinary shareholders
(1) CNY 205,570,723.33 CNY 203,190,509.86 CNY 112,509,856.54 CNY 30,381,048.36
Number of listed ordinary
shares brought forward
(2) 400,000,000.00 400,000,000.00 400,000,000.00 400,000,000.00
Number of listed ordinary share
equivalents increased in year
(3) 0.00 0.00 0.00 0.00
Number of listed ordinary share
equivalents decreased in year
(4) 0.00 0.00 0.00 0.00
Weighted average of listed
ordinary shares
(5)=(2)+(3)-(4) 400,000,000.00 400,000,000.00 400,000,000.00 400,000,000.00
Basic earnings per share (6)=(1)÷(5) CNY 0.51 CNY 0.51 CNY 0.28 CNY 0.08
(2) Diluted earnings per share
Current reporting period Last reporting period
Items Computation
Amount
After deducting
extraordinary
gains or losses
Amount
After deducting
extraordinary
gains or losses
Net profits attributable to ordinary
shareholders
(1) CNY 205,570,723.33 CNY203,190,509.86 CNY 112,509,856.54 CNY 30,381,048.36
Potential dilutive ordinary dividends
recognised as expenses
(2) 0.00 0.00 0.00 0.00
Potential dilutive ordinary share
conversion expenses
(3) 0.00 0.00 0.00 0.00
Income tax rate (4) 25.00% 25.00% 25.00% 25.00%SHANDONG AIRLINES CO., LTD 2010 INTERIM REPORT
8 0
Current reporting period Last reporting period
Items Computation
Amount
After deducting
extraordinary
gains or losses
Amount
After deducting
extraordinary
gains or losses
Net profits attributable to ordinary
shareholders after adjustment
(5)=(1)+[(2)-(3)]
×[1-(4)]
CNY 205,570,723.33 CNY 203,190,509.86 CNY 112,509,856.54 CNY 30,381,048.36
Weighted average of ordinary shares
for basic earnings per share
computation
(6) 400,000,000.00 400,000,000.00 400,000,000.00 400,000,000.00
Weighted average of dilutive ordinary
share conversion
(7) 0.00 0.00 0.00 0.00
Weighted average of ordinary shares
for diluted earnings per share
(8)=(6)+(7) 400,000,000.00 400,000,000.00 400,000,000.00 400,000,000.00
Diluted earnings per share (9)=(5)÷(8) CNY 0.51 CNY 0.51 CNY 0.28 CNY 0.08
ⅩⅢ Approval of financial statements
This financial statement is approved and authorized for issuance by the Board of Directors on August 28,
2010.
Section VII. Documents 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 originals 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 Board: Zhang Xingfu
Board of the Directors of
Shandong Airlines Co., Ltd.
August 28, 2010
