SHANDONG AIRLINES CO., LTD.
SEMI-ANNUAL REPORT 2013
山东航空股份有限公司
2013年半年度报告
August 2013
Jinan China
Contents
Section I. Important Notice and Paraphrase................................................................................... 1
Section II. Company profile...............................................................................................................3
Section III. Accounting data and summary of financial indexes....................................................5
Section IV. Report of the Board of Directors................................................................................... 8
Section V. Iimportant Events........................................................................................................... 16
Section VI. Changes in Shares and Particulars about Shareholders........................................... 23
Section VII. Directors, Supervisors and Senior Executives.......................................................... 26
Section VIII. Financial Report........................................................................................................ 27
Section IX. Documents available for Reference...........................................................................131
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
Section I. Important Notice and Paraphrase
Board of Directors, Supervisory Committee, all directors, supervisors and senior executives of
Shandong Airlines Co., Ltd. (hereinafter referred to as the Company) hereby confirm that there are
no any fictitious statements, misleading statements, or important omissions carried in this report,
and shall take all responsibilities, individual and/or joint, for the reality, accuracy and completion of
the whole contents.
All directors are present the meeting of the Board for deliberating the semi-annual report of the
Company.
The Company has no plans of cash dividend distributed, no bonus shares and has no share
converted from capital reserve either for first half year of 2013.
Zhang Xingfu, person in charge of the Company, Xu Guojian, person in charge of accounting works
as well as person in charge of accounting institution (accounting officer)Wang Wuping hereby
confirm the accuracy, truthfulness and completeness of the Financial Report in the Semi-annual
Report 2013.
Concerning the forward-looking statements of future situation prediction and business planning
involved in the Report, they do not constitute a substantial commitment for investors. Investors are
advised to exercise caution of investment risks.
1
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
Paraphrases
Item Refers to Content
The Company, Company Refers to Shandong Airlines Co., Ltd.
Shandong Aviation Group, the first largest shareholder and
SDA Refers to
controlling shareholder of the Company,
Air China Limited, the second largest shareholder of the
Air China Refers to
Company
2
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
Section II. Company profile
I. Company profile
Short form of the stock SHANHANG B Stock code 200152
Listing stock exchange Shenzhen Stock Exchange
Legal Chinese Name of
山东航空股份有限公司
the Company
Abbr. of legal Chinese
name of the Company (if 山东航空
applicable)
Legal English Name of
the Company (if SHANDONG AIRLINES CO.,LTD.
applicable)
Abbr. of legal English
name of the Company(if SDA
applicable)
Legal Representative Zhang Xingfu
II. Way to contact
Secretary of the Board Rep. of security affairs
Name Dong Qiantang Fan Peng
19/F, SDA Bldg., No. 5746, Er Huan 8/F, SDA Bldg., No. 5746, Er Huan
Contact adds.
East Road, Jinan, Shandong East Road, Jinan, Shandong
Tel. 0531－85698229 0531－85698678
Fax. 0531－85698767 ext. 8679 0531－85698767ext. 8679
E-mail dongqt@shandongair.com.cn fanp@shandongair.com.cn
III. Others
1. Way to contact the Company
Register address, office address and code, Company website as well as the email of the Company have no
changed in reporting period, more details please found in the Annual Report of 2012
2. Information disclosure and preparation place
Newspaper appointed for information disclosure, website for annual report publish appointed by CSRC and
preparation place for semi-annual report have no change in reporting period, more details please found in the
Annual Report of 2012
3
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
3. Registration changes of the Company
Registration information in aspect of registration date/place, registration number for enterprise legal license,
numbers of taxation registration and organization code etc. have no change in reporting period, more details
please found in the Annual Report of 2012
4. Other relevant information
Other relevant information has no changes in reporting period.
4
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
Section III. Accounting data and summary of financial indexes
I. Main accounting data and financial indexes
Whether it has retroactive adjustment or re-statement on previous accounting data for accounting policy changed
and accounting error correction or not
□Yes √ No
Increase/decrease over
Current Period Same period of last year same period of last year
(%)
Operating revenue (RMB) 5,524,710,931.04 5,072,407,702.98 8.92%
Net profit attributable to shareholders of
82,366,027.52 191,022,381.16 -56.88%
the listed company(RMB)
Net profit attributable to shareholders of
the listed company after deducting 17,509,015.92 172,303,947.91 -89.84%
non-recurring gains and losses(RMB)
Net cash flow arising from operating
369,369,632.79 641,489,981.41 -42.42%
activities(RMB)
Basic earnings per share
0.21 0.48 -56.25%
(RMB/Share)
Diluted earnings per share
0.21 0.48 -56.25%
(RMB/Share)
Weighted average ROE (%) 3.3% 9.13% -5.83%
Increase/decrease over
End of period of last
End of current Period same period-end of last
year
year (%)
Total assets (RMB) 11,577,464,161.34 11,261,341,430.03 2.81%
Net assets attributable to shareholder
2,401,421,879.80 2,479,055,852.28 -3.13%
of listed company (RMB)
II. Difference of the accounting data under accounting rules in and out of China
1. Difference of the net profit and net assets disclosed in financial report, under both IAS (International
Accounting Standards) and Chinese GAAP (Generally Accepted Accounting Principles)
In RMB
Net profit attributable to shareholders of Net assets attributable to shareholders of
listed company listed company
Amount at Amount at
Current amount Amount of last period
period-end period-begin
Chinese GAAP 82,366,027.52 191,022,381.16 2,401,421,879.80 2,479,055,852.28
5
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
Items and amount adjusted by IAS
2. Difference of the net profit and net assets disclosed in financial report, under both foreign accounting
rules and Chinese GAAP (Generally Accepted Accounting Principles)
In RMB
Net profit attributable to shareholders of Net assets attributable to shareholders of
listed company listed company
Amount at Amount at
Current amount Amount of last period
period-end period-begin
Chinese GAAP 82,366,027.52 191,022,381.16 2,401,421,879.80 2,479,055,852.28
Items and amount adjusted by foreign accounting rules
III. Items and amounts of extraordinary profit (gains)/loss
In RMB
Item Amount Note
Gains/losses from the disposal of non-current asset (including the
write-off parts that accrued for impairment of assets) -1,801,637.88
Tax refund or exemption out of authorization, with absence of official
approval document or accidentally
Governmental subsidy reckoned into current gains/losses (not Government
including the subsidy enjoyed in quota or ration according to national route subsidies
38,624,958.06
standards, which are closely relevant to enterprise’s business) etc.
Fund occupation expenses received from non-financial enterprises that
reckon into current gains/losses
Income occurred when investment cost paid by enterprise for obtaining
subsidiaries, associates and joint ventures are lower than its share in
fair value of net realizable assets of invested units
Gains and losses from exchange of non-monetary assets
Gains and losses from entrusted investment or management assets
Various asset impairment reserve provided for force majeure, such as
natural disaster
Gains/losses from debt reorganization
Reorganization expenses, such as expenditure for allocation of
employees and integration fee
Gains and losses from excess of transaction which are conducted on a
non-fair-valued basis over its fair value
Current net gains and losses of subsidiaries occurred from combination
under the same control commencing from period-begin to combination
date
Gains and losses from contingent events which has no relation with
normal business of the Company
6
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
Losses/gains from changes of fair values occurred in holding
transaction financial assets and transaction financial liabilities, and
investment income obtaining from the disposal of transaction financial
assets and transaction financial liabilities and financial assets available 6,086,393.67
for sales, excluded effective hedging business relevant with normal
operations of the Company
Reversal of impairment reserve for account receivable with separate
impairment testing
gains/ losses from external entrustment loans
Gains and losses arising from change of fair value of investment
properties whose follow-up measurement are at fair value
Affect upon current gains/losses arising from the one-off adjustment in
subject to requirement of laws and rules in relation to taxation and
accounting
Income from entrusted custody operation
Other
Other non-operating income and expenditure except for the non-operating
aforementioned items 44,684,274.94 income and
expenditure
Other item that satisfied the definition of non-recurring gains and
losses
Less: Impact on income tax
22,736,977.19
Impact on minority shareholders’ equity (post-tax)
Total --
64,857,011.60
Concerning the extraordinary profit (gain)/loss defined by Q&A Announcement No.1 on Information Disclosure
for Companies Offering Their Securities to the Public --- Extraordinary Profit/loss, and the items defined as
recurring profit (gain)/loss according to the lists of extraordinary profit (gain)/loss in Q&A Announcement No.1 on
Information Disclosure for Companies Offering Their Securities to the Public --- Extraordinary Profit/loss,
explain reasons
□ Applicable √ Not applicable
7
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
Section IV. Report of the Board of Directors
I. Introduction
(I) Continues to strenghen the improvement and rectification, security consition for transportation and
production keeps stable
In first half year of 2013, transportation business guaranteed safe flight of 120,200 hours and 63,800 sorties,
respectively increased by 10.3 percent, and 10.2 percent, on year-on-year basis, no unsafe incident caused by the
Company occurred; insist on implementation of SMS elements, optimize the control in safety process, and pass
the 4th review of IOSA successfully; reinforce key controlling, improved safety quality, made solid progress in
“safety production month” and activity of safty inspection, actively carry out activity of hidden danger
identification and safety education on department basis; standardized qualification management, reinforce safe
training, total normalized the qualification management for all employees, definite control for the safety manager,
optimize training control and controlling weekly and scheduling monthly; put more effort on safety governance in
aspect of air defence and ground, promoted SeMS constuction, carried out constuction of security rules and
regulations as well as quality controlling; 11 ground safety overhaul was ecercised, 32 potential safety hazard as
fire safety, security defense and electric power etc. were cleaned up and 3 fire drill was organized.
(II) Enhance the constuction of transpor control system, upgrade operation support capability
The Company introduce 8 planes in total in first half year of 2013 and one plane was retired. Till end of June 2013,
fleet of the Company up to 69 planes, including 53 B737-800 aircraft, 3 B737-700 aircraft, 6 B737-300 aircraft, 5
CRJ-200 aircraft and 2 CRJ-700 aircraft.
Along with complex and severe condition from outside operation enviornment, actively integrate internal
organization structure, strenghen information collection and command and corordinateion; average on time
performance of the Company was 76.72 percent, in first half year of 2013, ranked number 2 in civil aviation;
advancing constuction of opeation and control mechanism as well as application of new technology, organized a
new operation adn control center, straighten out manaegment architecuture and support process further, satisfy
multistatic and mass running needs; improve the flight normal evaluation system, put more efforts on collection
and deep analysis for those abnormal events in way of operation, totally controlling the objective and subjective
factors; modificate and improved the “emergency management manual”, carry out standardized management on
solution pre-arranged plan for flight delay in a wide range, no passenger mass disturbances occurred.
(III) Actively respond to shrinking benefit, spare no efforts to revenue-enhancing and expenditure control
In first half year of 2013, the Company totally completed transportation turnover volume of 824 million ton
kilometers, volume of passenger traffic was 6.495m and 61,200 tons in terms of total mail volume with 9.2
percent, 10.5 percent, and 8.3 percent, up respectively on a year-on-year basis; the Company have recorded 5.5
billion in recenue, up 8.92% percent on a year-on-year basis while total profit of 122 million, a 51.97 percent
down year-on-year; in line with the principle of “maximum transportation arrangement and optimum route
matching”, centering on market, reninforce the controlling ability of market, optimizing the schedule, organizing
production, ensuring utilization rates up to 10.38 hours for listed planes through scientific scheduling; intensify
rigid of the budget costs, maintain a strict standard for expenses offbudget, controlling the cost thorugh effective
action in terms of finacnial expenses, maintenance cost, sales expenses, procurement cost, labor cost, fuel prudent
and operating efficiency.
(IV) Consolidating 4-star service standards, service quality is rising steadily
8
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
In first half year of 2013, overall score of CSS (Castomer Satififation Survey) comes to 89.59 points, up 0.67
points on a y-o-y basis; strengthen the revision and implementation for 11 service regulations, further cement
results of 4-star service; implemented project management mode, well-defined goals and carry out respondibility
against the five service short boards of in-flight meals qualifty, in-flight enterrainment, luggage transport,
irregular flight informing and agent control; the Company honor the title of the “China 500 Most Valuable
Barands” the sixth year in a row with brand value up to 15,286 million Yuan, 4711 million Yuan higher than the
year before, stands NO. 121 with 15 ranking up.
(V) Strengthening strategy control, role of strategy leading incrasing
Put more efforts to promote the implementation of strategy manaegment, strengthen the scheduling and moving
ahead on implementation by strictly in line with the milestone plan, the coindence rate of schedule for the strategy
management up to 82 percent; the operation regulation for Chongqing Branch was issued and authorized and
officially established, which marks the base structure establishemen of “Trine” in Shandong, Xiamen and
Chongqing, national strategy layout is intitially formed, the route network structure was optimized further.
(VI) Strengthen and improve Party Building, strongly push forward the central works
Adjust and perfect the power of gross-root organization, bring forth new ideas for the check-up system of
Party-buildig’s performance, and focus on strenthening Party Building for the primary level; carry out corporate
culture’s great discussion theme as “Integrity, Responsibility and Loyalty” as well as activity of “Youth Language
Plan”, “Keynote Speech of Professionalism” and young volunteer activity, break a new ground of youth work;
actively carry out the party spirti and honest government education, create files management of clean-fingered for
cadre, and establishe honesty education system and honest conversation system, take positive steps to implement
the “Eight Rules”, effectively change the style in working.
II. Main business analysis
Introduction
In RMB
Item of balance
2013.6.30 2012.12.31 +,- Reasons
sheet
Balance of monetary funds only reflects
the capital stock on a point of time, the
155,417,742.9 changes related with the amount of cash
Monetary funds 578,483,812.88 7 272.21% inflow/outflow and time etc.
Account 186,090,177.1 The netting notes have not been settled
receivable 262,687,822.70 7 41.16% due to the time difference
Account paid in The rent paid in advance increased due to
advance 87,345,525.06 56,927,205.61 53.43% the growth of planes for rent in the Period
Short-term 321,378,829.2 Borrowings received from financing
borrowing 800,000,000.00 8 148.93% activity increased in Period
Transaction Changes of the fair value of interest rate
financial liability - 7,198,783.59 -100.00% swap contracts held in the Period
Note payable -100.00% The bill mature for paid in the Period
9
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
- 100,000.00
343,703,794.7 The year-end bonus for year of 2012 was
Wages payable 228,272,993.88 1 -33.58% paid in the Period
The final settlement of enterprise income
tax for year of 2012 was completed in the
Period, relevant enterprise income tax
was paid, meanwhile, the taxable income
tax decreased over same period of last
229,684,478.0 year, the corresponding enterprise income
Taxes payable 89,613,209.19 3 -60.98% tax payable decreased
The interest of MTN was paid in the
Interest payable 6,715,747.31 16,466,095.25 -59.21% Period
Other Corresponding obligations of bonus point
non-current 186,135,800.2 for frequent passenger was transfer in the
liability 24,195,066.05 8 -87.00% Period
Item of profit Jan.-June
+,- Reasons
statement Jan.-June 2013 2012
Financial More exchange earnings gained in the
130,250,004.7
expenses Period over same period of last year
70,267,029.24 6 -46.05%
Fixed assets impairment losses of 5
Assets 97412.04 B737-300 aircraft was recognized in the
impairment loss 79,934,308.49 81,973.79 % Period
Gains/losses
form changes of Changes of the fair value of interest rate
fair value 7,328,944.15 -4,237,979.04 272.93% swap contracts held in the Period
Investment The dividend from invested company
income 492,501.02 14,378,505.19 -96.57% decreased in the Period
Non-operating The route subsidy confirmed in the Period
revenue 87,133,004.04 39,354,859.38 121.40% was more than same period of last year
Non-operating The losses from disposal of non-current
expenses 5,625,408.92 9,242,074.53 -39.13% assets in the Period decreased
Taxable income tax decreased compare
with same period of last year,
Income tax corresponding enterprise income tax
expenses 39,815,150.31 63,361,751.94 -37.16% payable decreased
Item of cash Jan.-June
+,- Reasons
flow statement Jan.-June 2013 2012
Other cash
received
concerning
operating The route subsidy received in the Period
activities 137,068,823.37 73,675,623.65 86.04% increased
10
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
Cash paid for
purchasing fixed, The plane schedule was paid in the Period
intangible and and capitalization of engine repair charge
other long-term 832,707,582.7 decreased compare with same period of
assets 532,078,980.45 8 -36.10% last year
Other cash paid
concerning
investing The actual delivery losses of interest rate
activities 1,242,550.48 916,894.81 35.52% swap contracts increased
Cash received 500,000,000.0 RMB 500 million MTN was offered in
from bond issued - 0 -100.00% the year of 2012
Cash received
from loans 1,006,012,798.0 414,290,000.0 The borrowings from bank increased
obtained 0 0 142.83% compare with same period of last year
Other cash
received
concerning
financing The margin of bank acceptance which
activities 30,000.00 7,500,000.00 -99.60% was taken back in the Period decreased
Cash paid for 281,339,544.4 Repayment of bank loans increased
settling debts 465,348,332.99 4 65.40% compare with same period of last year
Cash paid for
dividend and
profit
distributing or 239,464,255.8 Dividend for B-share RMB 160 million
interest paying 106,322,123.02 8 -55.60% was paid at same period of last year
Y-o-y changes of main financial data
In RMB
Same period of last
Current Period y-o-y changed (%) Reasons
year
Operating revenue 5,524,710,931.04 5,072,407,702.98 8.92%
Operating cost 4,692,981,248.20 4,094,937,039.01 14.6%
Sale expenses 356,183,689.42 353,472,948.60 0.77%
Management expenses 111,060,399.83 111,021,150.38 0.04%
Financial expenses 70,267,029.24 130,250,004.76 -46.05%
Income tax expenses 39,815,150.31 63,361,751.94 -37.16%
Net cash flow arising from
369,369,632.79 641,489,981.41 -42.42%
operating activities
Net cash flow arising from
-533,002,623.43 -833,585,601.14 -36.06%
investment activities
Net cash flows arising from 332,683,209.31 296,659,524.82 12.14%
11
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
financing activities
Net increase of cash and cash
168,825,854.82 105,665,699.49 59.77%
equivalent
No major changes on profit composition or profit resources in reporting period
No future development and planning extended to reporting period that published in disclosure documents as
prospectus, private placing memorandum and recapitalize statement
Review on the previous business plan and its progress during reporting period
Nil
III. Main business composition
In RMB
Increase/decrea Increase/decrea
Increase/decrea
se of operating se of gross
se of operating
Operating Gross profit revenue over profit over
Operating cost cost over same
revenue (%) same period same period
period the year
the year before the year before
before (%)
(%) (%)
According to industries
Aviation
5,434,206,939. 4,676,304,819.
transportation 13.95% 8.75% 14.61% -4.4%
71 71
service
Hotel and food
9,904,972.35 10,523,876.28 -6.25% 26.79% 54.1% -18.83%
service
Training
10,182,728.01 2,574,004.54 74.72% 43.73% 6.22% 8.92%
Services
Logistics
transportation 5,305,512.30 1,725,467.74 67.48% 22.14% 16.25% 1.65%
service
5,459,600,152. 4,691,128,168.
Total 14%
37 27
According to products
Aviation
5,434,206,939. 4,676,304,819.
transportation 13.95% 8.75% 14.61% -4.4%
71 71
service
Hotel and food
9,904,972.35 10,523,876.28 -6.25% 26.79% 54.1% -18.83%
service
Training
10,182,728.01 2,574,004.54 74.72% 43.73% 6.22% 8.92%
Services
Logistics
transportation 5,305,512.30 1,725,467.74 67.48% 22.14% 16.25% 1.65%
service
Total 5,459,600,152. 4,691,128,168. 14%
12
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
37 27
According to region
5,296,847,556. 4,575,530,285.
Domestic 13.62% 9.03% 14.18% -3.9%
82 73
Hong Kong,
Macao and 57,964,218.99 37,083,503.39 36.02% -8.45% 24.47% -16.92%
Taiwan
104,788,376.5
Overseas 78,514,379.15 25.07% 10.97% 45.75% -17.89%
6
5,459,600,152. 4,691,128,168.
Total 14%
37 27
IV. Core Competitiveness Analysis
In first half year of 2013, in the face of complex business environment inside and outside, the Company, adhere to
“Optimization and Promotion” as a main line, steady make progress in the implementation of eight strategy
management, respond actively on the severe security situation and complicated benefit situation; being overcome
the difficult and united for hardworking, main business of transportation maintain a relatively steady in safety
production, service quality and brand value continues to climbing, national strategy layout is formed initially, and
the Company achieved a relatively good performance within the industry.
V. Investment analysis
1. External equity investment
(1) External investment
Invested company
Proportion of equity in invested
Name Main business
company for listed company (%)
Qingdao Feisheng International Logistics Air cargo warehousing,
100%
Center Co., Ltd. ground delivery
Qingdao Feisheng International Aviation
Pilot training 100%
Technology Development Training Co., Ltd.
Shandong Rainbow Corporate Aircraft Co.,
Air transport 45%
ltd.
Civil aviation information
China Travelsky Holding Company 0.45%
technology service
Sichuan Airlines Co., Ltd. Air transport 10%
Jinan International Airport Co., Ltd. Civil airport 2.53%
13
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
2. Raised fund utilization
(1) General utilization of the fund raised
In reporting period, there are no raised fund utilization or previous funds utilize last to this period.
3. Main subsidiaries and stock-jointly companies
Particular about main subsidiaries and stock-jointly companies
In RMB
Main
Company Register Total Operating Operating
Type Industries products Net Assets Net profit
name capital assets revenue profit
or service
Qingdao
Air cargo
Feisheng Transporta
warehousi
Internatio tion and
Subsidi ng, ground 30,000,000.
nal warehousi 102,485,0 42,415,23 5,305,512.3 -691,650.2 -528,218.3
ary delivery; 00
Logistics ng 38.77 5.18 0 1 1
E-business
Center industry
etc.
Co., Ltd.
Qingdao
Feisheng
Internatio
nal
Aviation
Subsidi Pilot Pilot 51,545,500.
Technolog 70,088,75 68,441,90 4,232,078.0 803,663.8 513,970.6
ary training training 00
y 1.19 3.02 0 9 1
Developm
ent
Training
Co., Ltd.
Shandong
Joint-st
Rainbow Air
ock Air 50,000,000.
Corporate transport 11,775,21 -163,489, 0.00
compan transport 00 1,063.12 1,063.12
Aircraft industry 3.88 940.64
y
Co., ltd.
VI. Prediction of business performance from January – September 2013
Estimation on accumulative net profit from the beginning of the year to the end of next report period to be loss
probably or the warning of its material change compared with the corresponding period of the last year and
explanation on reason
□Applicable √Not applicable
VII. Explanation on “Qualified Opinion” from the Certified Public Accountants in the report
14
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
period by the Board and Supervisory Committee
Nil
VIII. Explanation on “Qualified Opinion” of last year
Nil
IX. Implementation of profit distribution in Period
Implementation or adjustment on profit distribution plan in reporting period, cash bonus scheme and transfer of
public reserve to common shares in particular
The equity allocation plan for year of 2012 was approved in the Annual Shareholders General Meeting 2012 dated
8 May 2013, that is distributed 4 Yuan (tax included) in cash for every 10 shares held to all shareholders on basis
of total share capital of the Company 400,000,000 shares, the distribution was completed on 5 July 2013.
X. Profit distribution plan and transfer of public reserve to common shares in the Period
The Company has no profit distribution plan for first half year of 2013
XI. In the report period, reception of research, communication and interview
Contents discussed and
Time Place Way Type Reception
material provided
Telephone
Individu Operation of the Company
Jan. –June 2013 Jinan communicat Individual investor
al and no material required
ion
News media, legal person’s Operation of the Company
2013-03-05 Jinan Other Other
shareholders and no material required
News media, legal person’s
Operation of the Company
2013-05-08 Jinan Other Other shareholders and individual
and annual report required
investor
15
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
Section V. Iimportant Events
I. Corporate governance
Actual corporate governance of the Company shows no difference with the Company Law and relevant
regulations of CSRC
II. Significant lawsuits and arbitrations of the Company
No significant lawsuits and arbitration in reporting period
III. Question from media
No universal questioned by media in reporting period
IV. Bankruptcy reorganization
No bankruptcy reorganization occurred in reporting period
V. Assets transaction
1. Assets acquisition
No assets acquired in reporting period
2. Assets sales
The Company entered into an agreement with China Post Airlines with 5 B737-300 aircrafts, property owned by
the Company, transfer to China Post as a plan. The transaction should be approved and deliberated in the Board
Meeting without approval in Shareholders’ General Meeting required. (More details found in Notice No.: 2013-35
“Notice of Disposal of 5 B737-300 aircrafts”)
3. Enterprise combination
No enterprise merged in reporting period
VI. Implementation and its influence of equity incentive plan
No implementation of equity incentive plan carried out in reporting period
16
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
VII. Material related transactions
1. Related transaction with daily operation concerned
Market
Amount
Proporti price
of
Content on in of
Type of
of Pricing Dealing related amount
Settleme
similar Disclosu
Index of
Related Relation related
related principl transacti nt disclosu
party ship transacti price of same transacti re date
transacti es on (10 method re
on
on transacti on
thousan
ons (%) receivab
d Yuan)
le
Labor
nd
Income
2 service
from Cash Notice
Air largest provide Negotiat 2013-03
flight 360.55 99.5% settleme No.:
China sharehol d to ed price -19
service nt 2013-19
der affiliate
support
d person
Labor
nd
2 service Income
Cash Notice
Air largest provide from Market 2013-03
77.1 37.12% settleme No.:
China sharehol d to ground price -19
nt 2013-19
der affiliate service
d person
Labor
Income
2nd service
from Cash Notice
Air largest provide Market 2013-03
agent 31.96 15.38% settleme No.:
China sharehol d to price -19
commis nt 2013-19
der affiliate
sion
d person
Labor
Shenzhe Subsidia
service Income
n ry of 2nd Cash Notice
provide from Market 2013-03
Airlines largest 22.09 28.7% settleme No.:
d to ground price -19
Co., sharehol nt 2013-19
affiliate service
Ltd. der
d person
Shandon Subsidia Labor
g Taikoo ry of service
Income Cash Notice
Aircraft controlli provide Negotiat 2013-03
from 7.64 9.92% settleme No.:
Enginee ng d to ed price -19
training nt 2013-19
ring Co., sharehol affiliate
Ltd. der d person
Shandon Subsidia Accepti Airplane Market Cash 2013-03 Notice
4,024.19 14.65%
g Taikoo ry of ng labor mainten price settleme -19 No.:
17
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
Aircraft controlli service ance nt 2013-19
Enginee ng from charge
ring Co., sharehol affiliate
Ltd. der d person
Accepti Office
Controll ng labor rental
Cash Notice
ing service and Market 2013-03
SDA 1,602.74 40.87% settleme No.:
sharehol from room price -19
nt 2013-19
der affiliate and
d person board
Shandon
g Subsidia Accepti
Xiangyu ry of ng labor
Mainten Cash Notice
Air controlli service Market 2013-03
ance 1,531.4 5.04% settleme No.:
Technol ng from price -19
charge nt 2013-19
ogy sharehol affiliate
Service der d person
Co., Ltd
Beijing Accepti
Subsidia
Aircraft ng labor
ry of 2nd Mainten Cash Notice
Mainten service Market 2013-03
largest ance 572.58 1.88% settleme No.:
ance from price -19
sharehol charge nt 2013-19
Engine affiliate
der
Co., Ltd d person
Beijing Subsidia Accepti
Aircraft ry of ng labor Ground
Cash Notice
Mainten 2nd service service Market 2013-03
1,283.75 2.46% settleme No.:
ance largest from expense price -19
nt 2013-19
Engine sharehol affiliate s
Co., Ltd der d person
Accepti
nd
2 ng labor Ground
Cash Notice
Air largest service service Market 2013-03
738.93 1.42% settleme No.:
China sharehol from expense price -19
nt 2013-19
der affiliate s
d person
Accepti
nd
2 ng labor
Mainten Cash Notice
Air largest service Market 2013-03
ance 1,678.32 5.52% settleme No.:
China sharehol from price -19
charge nt 2013-19
der affiliate
d person
Air 2nd Accepti Agent Market Cash 2013-03 Notice
336.59 72.32%
China largest ng labor commis price settleme -19 No.:
18
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
sharehol service sion nt 2013-19
der from expense
affiliate s
d person
Subsidia Accepti
Shenzhe Agent
ry of ng labor
n commis Cash Notice
2nd service Market 2013-03
Airlines sion 31.09 6.68% settleme No.:
largest from price -19
Co., expense nt 2013-19
sharehol affiliate
Ltd. s
der d person
Subsidia Accepti
Air ry of ng labor Ground
Cash Notice
China 2nd service service Market 2013-03
125.28 0.24% settleme No.:
Cargo largest from expense price -19
nt 2013-19
Co., Ltd sharehol affiliate s
der d person
Sichuan
Internati Subsidia Accepti
onal Air ry of ng labor
Mainten Cash Notice
Engine 2nd service Market 2013-03
ance 9,398.58 30.93% settleme No.:
Mainten largest from price -19
charge nt 2013-19
ance sharehol affiliate
Co., der d person
Ltd.
Chengd Subsidia Accepti
u Fukai ry of ng labor
Mainten Cash Notice
Aircraft 2nd service Market 2013-03
ance 167.22 0.55% settleme No.:
Engine largest from price -19
charge nt 2013-19
Service sharehol affiliate
Co., Ltd der d person
2nd Engine
Confere Cash Notice
Air largest Related leasing 2013-03
nce 704.19 settleme No.:
China sharehol leasing expense -19
pricing nt 2013-19
der s
Lease of
nd
2 flight
Confere Cash Notice
Air largest Related simulato 2013-03
nce 25.45 settleme No.:
China sharehol leasing r -19
pricing nt 2013-19
der expense
s
2nd Other
Cash Notice
Air largest related Wet Negotiat 32,077.1 2013-03
100% settleme No.:
China sharehol transacti lease ed price 5 -19
nt 2013-19
der on
19
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
2nd Other
Route Cash Notice
Air largest related Negotiat 2013-03
affiliatio -13.07 100% settleme No.:
China sharehol transacti ed price -19
n nt 2013-19
der on
Subsidia
Air ry of Other
Cargo Cash Notice
China 2nd related Negotiat 2013-03
affiliatio 30 100% settleme No.:
Cargo largest transacti ed price -19
n nt 2013-19
Co., Ltd sharehol on
der
54,813.7
Total -- -- -- -- -- -- --
3
Details of return of sales in
N/A
significant amount
Actual implementation for those
daily related transaction with
Implemented by the agreement, no amount exceed the budget approved in
total amount estimated by types,
shareholders’ general meeting
which is going to happen in this
Period (if applicable)
Reasons for major difference
between trading price and market N/A
reference price (if applicable)
2. Other material related transaction
The “Proposal of Transfer Corresponding Obligations of Bonus Point for Frequent Passenger to Air China from
Shandong Airline Co., Ltd.” was deliberated and approved in the 3rd extraordinary meeting of 5th session of the
Board for year of 2013, the corresponding obligations of bonus point for frequent passenger, effective till end of
2012, was agreed to transfer to Air China with dealing price of 93.86 million Yuan. Scale expansion and service
upgrading of the frequent passenger plan of “Phoenix Miles” benefit a lot from this transaction, the contents in the
agreement, on the whole, are benefit to the long-term interest of the two parties. (More details found in Notice No.:
2013-31 “Related Transaction of Transfer of Corresponding Obligations of Bonus Point for Frequent Passenger”)
VIII. Major contract and implementation
1. Trusteeship, contract and leasing
(1) Trusteeship
No trusteeship occurred in reporting period
Items generated over 10% gains/losses in total profit in reporting period for the Company
□ Applicable √ Not applicable
20
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
(2) Contract
No contract occurred in reporting period
Items generated over 10% gains/losses in total profit in reporting period for the Company
□ Applicable √ Not applicable
(3) Leasing
No lease occurred in reporting period
Items generated over 10% gains/losses in total profit in reporting period for the Company
□ Applicable √ Not applicable
2. Guarantee
No external guarantee occurred in reporting period
3. Other material contracts
No other material contracts in reporting period
4. Other major transaction
No other major transaction in reporting period
IX. Appointment and non-reappointment (dismissal) of CPA
Whether financial report of this Semi-annual report is audited or not
□ Yes √No
X. Penalty and rectification
No penalty and rectification in reporting period
XI. Explanation on other significant events
Shareholders of the Company are in the preparation of material events with Company concerned, stock of the Company (stock ID
“Shanhang B”, stock code: 200152) suspended since opening up dated 29 October 2012 in prupose of voilding abnormal fluctuation
in stocks fo the Company and guarantee interest of majority investors.
Being confirmed from SDA, the controlling shareholder of the Company, with purpose of offering better platform
and condition for a long-term sustainable development of the Company, and create returns for shareholders
preferably, SDA is in process of negotiation with relevant parties for solution in terms of the specific plan for
material events of leftover probles from B-share. Currently, common view on the plan was agreed by competent
administrative department of the enterprise. Party of the shareholders are actively promote relevant works, taking
vary shareholders’ interest into acount, under the premise of guarantee minority interest of the Company, lose no
21
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
time in formulating specific plan to rapid up relevant procedures implementation, on basis of abide by the laws
and regulations in China and supervision requirement.
22
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
Section VI. Changes in Shares and Particulars about Shareholders
I. Changes in shares
Before changed Increase/decrease in this time (+ , - ) After changed
Capitaliz
Ratio New Bonus ation of Ratio
Amount Other Subtotal Amount
(%) issue share public (%)
reserve
260,000, 260,000,
I. Unlisted shares 65% 65%
000 000
168,601, 168,601,
1. Sponsor’s shares 42.15% 42.15%
000 000
Including: State-owned 168,402, 168,402,
42.1% 42.1%
shares 000 000
Domestic legal
199,000 0.05% 199,000 0.05%
person’s shares
4. Preference shares or 91,399,0 91,399,0
22.85% 22.85%
other 00 00
140,000, 140,000,
II. Listed shares 35% 35%
000 000
2.Domestically listed 140,000, 140,000,
35% 35%
foreign shares 000 000
400,000, 400,000,
III. Total shares 100% 100%
000 000
Reasons for share changed
□ Applicable √ Not applicable
Approval of share changed
□ Applicable √ Not applicable
Ownership transfer for shares changed
□ Applicable √ Not applicable
Influence on the basic EPS and diluted EPS as well as other financial indexes of net assets per share attributable to
common shareholders of Company in latest year and period
□ Applicable √ Not applicable
Other information necessary to disclose for the Company or need to disclosed under requirement from security
regulators
□ Applicable √ Not applicable
Changes of total shares and shareholders structure as well as explanation on changes of assets and liability
structure
□ Applicable √ Not applicable
II. Number of shareholders of the Company and share-holding
In Share
23
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
Total shareholders at
17,689
period-end
Shareholding with over 5% shares held
Total Amount of Number of shares
Proportio Changes Amount of
Nature of n of shareholders at listed pledged/frozen
Shareholders in report un-listed
shareholder shares the end of report shares State of
held (%) period shares held Amount
period held share
Shandong
State-owned
Aviation 42% 168,004,000 168,004,000 0
corporate
Group
Air China State-owned
22.8% 91,200,000 91,200,000 0
Limited corporate
GUOTAI
JUNAN
Overseas
SECURITIES( 0.85% 3,394,728 0 3,394,728
corporate
HONGKONG)
LIMITED
Domestic
Yao Ming nature 0.46% 1,835,679 0 1,835,679
person
WANXIANG
INTERNATIO
NAL
Overseas
INVESTMEN 0.45% 1,805,525 0 1,805,525
corporate
T
CORPORATI
ON
Domestic
Chen Jingjian nature 0.35% 1,380,800 0 1,380,800
person
Domestic
Ou Yanping nature 0.24% 945,043 0 945,043
person
Overseas
HUANG LIU
nature 0.23% 918,917 0 918,917
LIA
person
Domestic
Ye Qufa nature 0.2% 810,000 0 810,000
person
Domestic
Bao Xiuzhen nature 0.2% 800,000 0 800,000
person
Explanation on related 1. Shandong Aviation Group is the first largest shareholder of the Company, who holds the
shares of the Company on behalf of the State with unlisted shares;
relationship or concerted
24
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
action among the 2. Air China Limited is the second largest shareholder of the Company, who holds the shares of
the Company on behalf of the State with unlisted shares;
abovementioned
3. Among the above top ten shareholders, Air China Limited is the first largest shareholder of
shareholders the SDA, and there exists no associated relationship between SDA and Air China and the other
shareholders, and they don’t belong to the consistent actionist regulated by the Management
Regulation of Information Disclosure on Change of Shareholding for Listed Companies with the
other shareholders.
Shareholding of top 10 circulated shares held
Amount of listed shares Type of shares
Shareholders
held at period-end Type Amount
GUOTAI JUNAN Domestically listed
3,394,728 3,394,728
SECURITIES(HONGKONG) LIMITED foreign shares
Domestically listed
Yao Ming 1,835,679 1,835,679
foreign shares
WANXIANG INTERNATIONAL Domestically listed
1,805,525 1,805,525
INVESTMENT CORPORATION foreign shares
Domestically listed
Chen Jingjian 1,380,800 1,380,800
foreign shares
Domestically listed
Ou Yanping 945,043 945,043
foreign shares
Domestically listed
HUANG LIU LIA 918,917 918,917
foreign shares
Domestically listed
Ye Qufa 810,000 810,000
foreign shares
Domestically listed
Bao Xiuzhen 800,000 800,000
foreign shares
Domestically listed
Zhu Guanhong 795,293 795,293
foreign shares
Domestically listed
JOHN POSS 793,400 793,400
foreign shares
Explanation on related relationship or
concerted action among the top ten The Company is not aware of their associated relationship among the top ten
shareholders with un-restricted shares held shareholders of circulation share, and is unknown whether other circulation
shareholders belong to the consistent actionist regulated by the Management
and between the top ten shareholders with Regulation of Information Disclosure on Change of Shareholding for Listed
un-restricted shares held and top ten Companies.
shareholders
Whether the shareholders exercise agree on repurchase or not in reporting period
□ Ye √No
III. Changes of controlling shareholder or actual controller
The controlling shareholder of the Company has no changed in reporting period
The actual controller of the Company has no changed in reporting period
25
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
Section VII. Directors, Supervisors and Senior Executives
I. Changes of shares held by directors, supervisors and senior executives
Shares held by directors, supervisors and senior executives have no changes in reporting period, more details
found in Annual Report of 2012
II. Post-leaving and dismissals for directors, supervisors and senior executives
No directors, supervisors and senior executives leaving the post and dismissed in reporting period
26
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
Section VIII. Financial Report
I. Audit report
The semi-annual report has not been audited
II. Financial Statement
Statement in Financial Notes are carried in RMB/CNY
1. Consolidated Balance Sheet
Prepared by Shandong Airlines Co., Ltd
In RMB
Item Closing balance Opening balance
Current assets:
Monetary funds 578,483,812.88 155,417,742.97
Settlement provisions
Capital lent
Transaction finance asset 130,160.56
Notes receivable
Accounts receivable 262,687,822.70 186,090,177.17
Accounts paid in advance 87,345,525.06 56,927,205.61
Insurance receivable
Reinsurance receivables
Contract reserve of
reinsurance receivable
Interest receivable
Dividend receivable 1,735,051.50
Other receivables 239,154,833.77 252,147,802.11
Purchase restituted finance
asset
Inventories 119,020,522.94 116,944,913.89
Non-current asset due within
one year
Other current assets
Total current assets 1,288,557,729.41 767,527,841.75
Non-current assets:
Granted loans and advances
Finance asset available for
sales
Held-to-maturity investment
Long-term account
receivable
27
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
Long-term equity investment 88,352,100.00 88,352,100.00
Investment real estate
Fixed assets 7,893,458,863.69 8,132,786,866.22
Construction in progress 1,478,206,537.08 1,430,885,814.11
Engineering material
Disposal of fixed asset
Productive biological asset
Oil and gas asset
Intangible assets 78,101,136.37 78,814,771.55
Expense on Research and
Development
Goodwill 10,220,816.22 10,220,816.22
Long-term expenses to be
304,705,449.74 301,867,908.75
apportioned
Deferred income tax asset 435,861,528.83 450,885,311.43
Other non-current asset
Total non-current asset 10,288,906,431.93 10,493,813,588.28
Total assets 11,577,464,161.34 11,261,341,430.03
Current liabilities:
Short-term loans 800,000,000.00 321,378,829.28
Loan from central bank
Absorbing deposit and
interbank deposit
Capital borrowed
Transaction financial
7,198,783.59
liabilities
Notes payable 100,000.00
Accounts payable 1,112,019,033.62 950,968,778.60
Accounts received in
206,873,518.22 215,107,573.13
advance
Financial asset sold for
repurchase
Commission charge and
commission payable
Wage payable 228,272,993.88 343,703,794.71
Taxes payable 89,613,209.19 229,684,478.03
Interest payable 6,715,747.31 16,466,095.25
Dividend payable 160,011,940.00 11,940.00
Other accounts payable 218,828,745.34 210,075,013.94
Reinsurance payables
Insurance contract reserve
Security trading of agency
Security sales of agency
28
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
Non-current liabilities due
504,933,411.57 392,573,521.87
within 1 year
Other current liabilities
Total current liabilities 3,327,268,599.13 2,687,268,808.40
Non-current liabilities:
Long-term loans 3,723,113,084.92 3,854,676,638.03
Bonds payable 500,000,000.00 500,000,000.00
Long-term account payable 1,601,432,991.30 1,554,204,331.04
Special accounts payable
Accrual liabilities
Deferred income tax
32,540.14
liabilities
Other non-current liabilities 24,195,066.05 186,135,800.28
Total non-current liabilities 5,848,773,682.41 6,095,016,769.35
Total liabilities 9,176,042,281.54 8,782,285,577.75
Owner’s equity (or shareholders’
equity):
Paid-in capital (or share
400,000,000.00 400,000,000.00
capital)
Capital reserve 75,410,363.70 75,410,363.70
Less: Inventory shares
Reasonable reserve
Surplus reserve 257,642,799.31 257,642,799.31
Provision of general risk
Retained profit 1,668,368,716.79 1,746,002,689.27
Balance difference of foreign
currency translation
Total owner’s equity attributable
2,401,421,879.80 2,479,055,852.28
to parent company
Minority interests
Total owner’s equity ( or
2,401,421,879.80 2,479,055,852.28
shareholders’ equity)
Total liabilities and owner’s
11,577,464,161.34 11,261,341,430.03
equity( or shareholders’ equity)
Legal Representative: Zhang Xingfu
Person in charge of Accounting Works: Xu Guojian
Person in charge of Accounting Institution: Wang Wuping
2. Balance Sheet of parent company
Prepared by Shandong Airlines Co., Ltd
In RMB
Item Closing balance Opening balance
Current assets:
29
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
Monetary funds 562,859,522.77 143,242,750.59
Transaction finance asset 130,160.56
Notes receivable
Accounts receivable 252,399,662.76 178,623,467.86
Accounts paid in advance 87,130,249.08 56,697,404.55
Interest receivable
Dividend receivable 1,735,051.50
Other receivables 281,201,941.26 287,010,996.18
Inventories 119,020,522.94 116,944,913.89
Non-current asset due within
one year
Other current assets
Total current assets 1,304,477,110.87 782,519,533.07
Non-current assets:
Finance asset available for
sales
Held-to-maturity investment
Long-term account
receivable
Long-term equity investment 194,352,785.43 194,352,785.43
Investment real estate
Fixed assets 7,780,426,696.76 8,016,147,993.09
Construction in progress 1,477,914,037.08 1,430,885,814.11
Engineering material
Disposal of fixed asset
Productive biological asset
Oil and gas asset
Intangible assets 63,340,920.93 64,037,228.25
Expense on Research and
Development
Goodwill
Long-term expenses to be
304,659,221.78 301,798,566.81
apportioned
Deferred income tax asset 435,869,722.46 450,970,591.69
Other non-current asset
Total non-current asset 10,256,563,384.44 10,458,192,979.38
Total assets 11,561,040,495.31 11,240,712,512.45
Current liabilities:
Short-term loans 800,000,000.00 321,378,829.28
Transaction financial
7,198,783.59
liabilities
Notes payable 100,000.00
Accounts payable 1,108,774,737.03 947,683,544.83
30
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
Accounts received in
202,972,878.25 211,382,526.62
advance
Wage payable 227,833,842.88 343,449,526.33
Taxes payable 89,081,237.65 229,290,824.09
Interest payable 6,715,747.31 16,466,095.25
Dividend payable 160,011,940.00 11,940.00
Other accounts payable 219,245,149.56 204,933,548.07
Non-current liabilities due
504,933,411.57 392,573,521.87
within 1 year
Other current liabilities
Total current liabilities 3,319,568,944.25 2,674,469,139.93
Non-current liabilities:
Long-term loans 3,723,113,084.92 3,854,676,638.03
Bonds payable 500,000,000.00 500,000,000.00
Long-term account payable 1,601,432,991.30 1,554,204,331.04
Special accounts payable
Accrual liabilities
Deferred income tax
32,540.14
liabilities
Other non-current liabilities 24,195,066.05 186,135,800.28
Total non-current liabilities 5,848,773,682.41 6,095,016,769.35
Total liabilities 9,168,342,626.66 8,769,485,909.28
Owner’s equity (or shareholders’
equity):
Paid-in capital (or share
400,000,000.00 400,000,000.00
capital)
Capital reserve 86,911,168.71 86,911,168.71
Less: Inventory shares
Reasonable reserve
Surplus reserve 256,982,094.78 256,982,094.78
Provision of general risk
Retained profit 1,648,804,605.16 1,727,333,339.68
Balance difference of foreign
currency translation
Total owner’s equity ( or
2,392,697,868.65 2,471,226,603.17
shareholders’ equity)
Total liabilities and owner’s
11,561,040,495.31 11,240,712,512.45
equity( or shareholders’ equity)
Legal Representative: Zhang Xingfu
Person in charge of Accounting Works: Xu Guojian
Person in charge of Accounting Institution: Wang Wuping
3. Consolidated Profit Statement
Prepared by Shandong Airlines Co., Ltd
31
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
In RMB
Item Current amount Amount at last period
I. Total operating revenue 5,524,710,931.04 5,072,407,702.98
Including: Operating revenue 5,524,710,931.04 5,072,407,702.98
Interest income
Insurance gained
Commission charge
and commission income
II. Total operating cost 5,491,858,793.50 4,858,276,880.88
Including: Operating cost 4,692,981,248.20 4,094,937,039.01
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 181,432,118.32 168,513,764.34
Sales expenses 356,183,689.42 353,472,948.60
Management expenses 111,060,399.83 111,021,150.38
Financial expenses 70,267,029.24 130,250,004.76
Assets impairment
79,934,308.49 81,973.79
loss
Add: Changing income of fair
7,328,944.15 -4,237,979.04
value(Loss is listed with “-”)
Investment income (Loss is listed
492,501.02 14,378,505.19
with “-”)
Including: Investment income on
affiliated company and joint
venture
Exchange income (Loss is listed
with “-”)
III. Operating profit (Loss is
40,673,582.71 224,271,348.25
listed with “-”)
Add: Non-operating revenue 87,133,004.04 39,354,859.38
Less: Non-operating expense 5,625,408.92 9,242,074.53
Including: Disposal loss of
2,116,060.38 9,188,914.83
non-current asset
IV. Total Profit (Loss is listed
122,181,177.83 254,384,133.10
with “-”)
Less: Income tax expense 39,815,150.31 63,361,751.94
V. Net profit (Net loss is listed
82,366,027.52 191,022,381.16
with “-”)
Including: net profit realized
before consolidation by mergered
party
32
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
Net profit attributable to owner’s
82,366,027.52 191,022,381.16
of parent company
Minority shareholders’ gains and
losses
VI. Earnings per share
i. Basic earnings per share 0.21 0.48
ii. Diluted earnings per share 0.21 0.48
VII. Other consolidated income
VIII. Total comprehensive income 82,366,027.52 191,022,381.16
Total consolidated income
attributable to owners of parent 82,366,027.52 191,022,381.16
company
Total consolidated income
attributable to minority
shareholders
Legal Representative: Zhang Xingfu
Person in charge of Accounting Works: Xu Guojian
Person in charge of Accounting Institution: Wang Wuping
4. Profit Statement of parent company
Prepared by Shandong Airlines Co., Ltd
In RMB
Item Current amount Amount at last period
I. Operating revenue 5,517,047,510.74 5,063,634,065.62
Less: operating cost 4,690,340,878.33 4,092,363,922.98
Operating tax and extras 180,992,811.81 168,057,847.51
Sales expenses 356,183,689.42 353,472,948.60
Management expenses 107,322,337.57 108,914,492.24
Financial expenses 70,290,083.63 130,258,347.24
Assets impairment loss 80,163,911.80 431,688.81
Add: Changing income of fair
7,328,944.15 -4,237,979.04
value(Loss is listed with “-”)
Investment income (Loss is listed
492,501.02 14,378,505.19
with “-”)
Including: Investment income on
affiliated company and joint
venture
II. Operating profit (Loss is
39,575,243.35 220,275,344.39
listed with “-”)
Add: Non-operating income 87,129,319.04 39,354,859.38
Less: Non-operating expense 5,609,083.05 9,234,739.82
Including: Disposal loss of
2,099,734.51 9,188,914.83
non-current asset
III. Total Profit (Loss is listed
121,095,479.34 250,395,463.95
with “-”)
Less: Income tax expense 39,624,213.86 62,524,959.43
IV. Net profit (Net loss is listed
81,471,265.48 187,870,504.52
with “-”)
V. Earnings per share
i. Basic earnings per share
33
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
ii. Diluted earnings per share
VI. Other consolidated income
VII. Total comprehensive income 81,471,265.48 187,870,504.52
Legal Representative: Zhang Xingfu
Person in charge of Accounting Works: Xu Guojian
Person in charge of Accounting Institution: Wang Wuping
5. Consolidated Cash Flow Statement
Prepared by Shandong Airlines Co., Ltd
In RMB
Item Current amount Amount at last period
I. Cash flows arising from
operating activities:
Cash received from selling
commodities and providing labor 5,275,165,815.93 5,013,983,191.91
services
Net increase of customer
deposit and interbank deposit
Net increase of loan from
central bank
Net increase of capital borrowed
from other financial institution
Cash received from original
insurance contract fee
Net cash received from
reinsurance business
Net increase of insured
savings and investment
Net increase of 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
137,068,823.37 73,675,623.65
operating activities
Subtotal of cash inflow arising
5,412,234,639.30 5,087,658,815.56
from operating activities
Cash paid for purchasing
commodities and receiving labor 3,753,267,933.36 3,256,402,426.30
service
Net increase of customer loans
and advances
Net increase of deposits in
central bank and interbank
Cash paid for original insurance
contract compensation
34
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
Cash paid for interest,
commission charge and
commission
Cash paid for bonus of
guarantee slip
Cash paid to/for staff and workers 820,878,727.48 694,935,471.25
Taxes paid 392,409,961.97 431,877,854.10
Other cash paid concerning
76,308,383.70 62,953,082.50
operating activities
Subtotal of cash outflow arising
5,042,865,006.51 4,446,168,834.15
from operating activities
Net cash flows arising from
369,369,632.79 641,489,981.41
operating activities
II. Cash flows arising from
investing activities:
Cash received from recovering
investment
Cash received from investment
income
Net cash received from
disposal of fixed, intangible and 318,907.50 38,876.45
other long-term assets
Net cash received from
disposal of subsidiaries and other
units
Other cash received concerning
investing activities
Subtotal of cash inflow from
318,907.50 38,876.45
investing activities
Cash paid for purchasing fixed,
intangible and other long-term 532,078,980.45 832,707,582.78
assets
Cash paid for investment
Net increase of mortgaged loans
Net cash received from
subsidiaries and other units
Other cash paid concerning
1,242,550.48 916,894.81
investing activities
Subtotal of cash outflow from
533,321,530.93 833,624,477.59
investing activities
Net cash flows arising from
-533,002,623.43 -833,585,601.14
investing activities
III. Cash flows arising from
financing activities
Cash received from absorbing
investment
Including: Cash received from
absorbing minority shareholders’
investment by subsidiaries
Cash received from loans 1,006,012,798.00 414,290,000.00
Cash received from issuing bonds 500,000,000.00
35
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
Other cash received
30,000.00 7,500,000.00
concerning financing activities
Subtotal of cash inflow from
1,006,042,798.00 921,790,000.00
financing activities
Cash paid for settling debts 465,348,332.99 281,339,544.44
Cash paid for dividend and
profit distributing or interest 106,322,123.02 239,464,255.88
paying
Including: Dividend and
profit of minority shareholder
paid by subsidiaries
Other cash paid concerning
101,689,132.68 104,326,674.86
financing activities
Subtotal of cash outflow from
673,359,588.69 625,130,475.18
financing activities
Net cash flows arising from
332,683,209.31 296,659,524.82
financing activities
IV. Influence on cash and cash
equivalents due to fluctuation in -224,363.85 1,101,794.40
exchange rate
V. Net increase of cash and cash
168,825,854.82 105,665,699.49
equivalents
Add: Balance of cash and cash
155,387,742.97 240,185,747.48
equivalents at the period -begin
VI. Balance of cash and cash
324,213,597.79 345,851,446.97
equivalents at the period -end
Legal Representative: Zhang Xingfu
Person in charge of Accounting Works: Xu Guojian
Person in charge of Accounting Institution: Wang Wuping
6. Cash Flow Statement of parent company
Prepared by Shandong Airlines Co., Ltd
In RMB
Item Current amount Amount at last period
I. Cash flows arising from
operating activities:
Cash received from selling
commodities and providing labor 5,268,796,750.21 5,004,954,866.01
services
Write-back of tax received
Other cash received
142,602,663.01 68,845,352.66
concerning operating activities
Subtotal of cash inflow arising
5,411,399,413.22 5,073,800,218.67
from operating activities
Cash paid for purchasing
commodities and receiving labor 3,752,672,221.27 3,254,153,891.27
service
36
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
Cash paid to/for staff and
818,126,338.98 692,604,225.40
workers
Taxes paid 391,223,132.73 429,588,910.03
Other cash paid concerning
83,789,952.17 70,269,944.30
operating activities
Subtotal of cash outflow arising
5,045,811,645.15 4,446,616,971.00
from operating activities
Net cash flows arising from
365,587,768.07 627,183,247.67
operating activities
II. Cash flows arising from
investing activities:
Cash received from recovering
investment
Cash received from investment
income
Net cash received from
disposal of fixed, intangible and 310,737.50 38,876.45
other long-term assets
Net cash received from
disposal of subsidiaries and other
units
Other cash received
concerning investing activities
Subtotal of cash inflow from
310,737.50 38,876.45
investing activities
Cash paid for purchasing
fixed, intangible and other 531,738,243.46 821,092,157.42
long-term assets
Cash paid for investment
Net cash received from
subsidiaries and other units
Other cash paid concerning
1,242,550.48 916,894.81
investing activities
Subtotal of cash outflow from
532,980,793.94 822,009,052.23
investing activities
Net cash flows arising from
-532,670,056.44 -821,970,175.78
investing activities
III. Cash flows arising from
financing activities
Cash received from
absorbing investment
Cash received from loans 1,006,012,798.00 414,290,000.00
Cash received from issuing
500,000,000.00
bonds
37
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
Other cash received
30,000.00 7,500,000.00
concerning financing activities
Subtotal of cash inflow from
1,006,042,798.00 921,790,000.00
financing activities
Cash paid for settling debts 465,348,332.99 281,339,544.44
Cash paid for dividend and
profit distributing or interest 106,322,123.02 239,464,255.88
paying
Other cash paid concerning
101,689,132.68 104,326,674.86
financing activities
Subtotal of cash outflow from
673,359,588.69 625,130,475.18
financing activities
Net cash flows arising from
332,683,209.31 296,659,524.82
financing activities
IV. Influence on cash and cash
equivalents due to fluctuation in -224,363.85 1,101,794.40
exchange rate
V. Net increase of cash and cash
165,376,557.09 102,974,391.11
equivalents
Add: Balance of cash and
cash equivalents at the period 143,212,750.59 235,921,301.34
-begin
VI. Balance of cash and cash
308,589,307.68 338,895,692.45
equivalents at the period -end
Legal Representative: Zhang Xingfu
Person in charge of Accounting Works: Xu Guojian
Person in charge of Accounting Institution: Wang Wuping
7. Consolidated Statement on Changes of Owners' Equity
Prepared by Shandong Airlines Co., Ltd
Current amount
In RMB
Current amount
Owners' equity attributable to the parent company
Paid-in
capital Less: Provisi Total
Item Surplu Retain Minority
(or Capital Invent Reason on of owners’
s ed Others interests
share reserve ory able general equity
reserve profit
capital shares reserve risk
)
400,00 257,64 1,746,0
I. Balance at the end of last 75,410, 2,479,05
0,000. 2,799. 02,689.
year 363.70 5,852.28
00 31 27
Add: Changes of accounting
policy
38
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
Error correction of the last
period
Others
400,00 257,64 1,746,0
II. Balance at the beginning of 75,410, 2,479,05
this year
0,000. 2,799. 02,689.
363.70 5,852.28
00 31 27
III. Increase/ Decrease in -77,63
-77,633,9
this year (Decrease is listed 3,972.4
with'"-") 72.48
8
82,366, 82,366,0
(i) Net profit
027.52 27.52
(ii) Other consolidated
income
82,366, 82,366,0
Subtotal of (i)and (ii)
027.52 27.52
(III) Owners' devoted and
decreased capital
1. Owners' devoted capital
2. Amount calculated into
owners' equity paid in shares
3. Others
-160,0
-160,000,
(IV)Profit distribution 00,000.
000.00
00
1. Withdrawal of surplus
reserves
2. Withdrawal of general risk
provisions
-160,0
3. Distribution for owners -160,000,
(shareholders)
00,000.
000.00
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 reserve
4. Others
(VI)Reasonable reserve
1. Withdrawal in this
period
2. Usage in this period
(VII) Other
400,00 257,64 1,668,3
IV. Balance at the end of 75,410, 2,401,42
0,000. 2,799. 68,716.
the report period 363.70 1,879.80
00 31 79
Amount at last year
39
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
In RMB
Amount at last year
Owners’ equity attributable to the parent company
Paid-in
capital Less: Provisi Total
Item Surplu Retain Minority
(or Capital Invent Reason on of owners’
s ed Others interests
share reserve ory able general equity
reserve profit
capital shares reserve risk
)
400,00 199,41 1,374,4
I. Balance at the end of last 75,410, 2,049,24
0,000. 4,021. 20,534.
year 363.70 4,919.81
00 75 36
Add: retroactive
adjustment arising from
enterprise consolidation
under the same control
Add: Changes of accounting
policy
Error correction of the last
period
Others
400,00 199,41 1,374,4
II. Balance at the beginning of 75,410, 2,049,24
this year
0,000. 4,021. 20,534.
363.70 4,919.81
00 75 36
III. Increase/ Decrease in 58,228 371,58
429,810,
this year (Decrease is listed ,777.5 2,154.9
with'"-") 932.47
6 1
589,81
589,810,
(i) Net profit 0,932.4
932.47
7
(ii) Other consolidated
income
589,81
589,810,
Subtotal of (i)and (ii) 0,932.4
932.47
7
(III) Owners' devoted and
decreased capital
1. Owners' devoted capital
2. Amount calculated into
owners' equity paid in shares
3. Others
58,228 -218,2
-160,000,
(IV)Profit distribution ,777.5 28,777.
000.00
6 56
58,228 -58,22
1. Withdrawal of surplus
reserves
,777.5 8,777.5
6 6
2. Withdrawal of general risk
40
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
provisions
-160,0
3. Distribution for owners -160,000,
(shareholders)
00,000.
000.00
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 reserve
4. Others
(VI) Reasonable reserve
1.Withdrawal in this period
2.Usage in this period
(VII) Other
400,00 257,64 1,746,0
IV. Balance at the end of 75,410, 2,479,05
0,000. 2,799. 02,689.
the report period 363.70 5,852.28
00 31 27
Legal Representative: Zhang Xingfu
Person in charge of Accounting Works: Xu Guojian
Person in charge of Accounting Institution: Wang Wuping
8. Statement on Changes of Owners' Equity of Parent Company
Prepared by Shandong Airlines Co., Ltd
Current amount
In RMB
Current amount
Paid-in Provision
Less: Total
Item capital Capital Surplus of Retained
Inventory Reasonab owners’
(or share reserve reserve general profit
shares le reserve equity
capital) risk
I. Balance at the end of last 400,000, 86,911,1 256,982, 1,727,33 2,471,22
year 000.00 68.71 094.78 3,339.68 6,603.17
Add: Changes of accounting
policy
Error correction of the last period
Others
II. Balance at the beginning of 400,000, 86,911,1 256,982, 1,727,33 2,471,22
this year 000.00 68.71 094.78 3,339.68 6,603.17
III. Increase/ Decrease in -78,528,7 -78,528,7
this year (Decrease is listed
with'"-") 34.52 34.52
81,471,2 81,471,2
(i) Net profit
65.48 65.48
(ii) Other consolidated
income
41
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
81,471,2 81,471,2
Subtotal of (i)and (ii)
65.48 65.48
(III) Owners' devoted and
decreased capital
1. Owners' devoted capital
2. Amount calculated into
owners' equity paid in shares
3. Others
-160,000, -160,000,
(IV) Profit distribution
000.00 000.00
1. Withdrawal of surplus
reserves
2. Withdrawal of general
risk reserve
3. Distribution for owners -160,000, -160,000,
(shareholders) 000.00 000.00
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
reserves
4. Others
(VI) Reasonable reserve
1. Withdrawal in this period
2. Usage in this period
(VII) Other
IV. Balance at the end of the 400,000, 86,911,1 256,982, 1,648,80 2,392,69
report period 000.00 68.71 094.78 4,605.16 7,868.65
Amount at last year
In RMB
Amount at last year
Paid-in Provision
Less: Total
Item capital Capital Surplus of Retained
Inventory Reasonab owners’
(or share reserve reserve general profit
shares le reserve equity
capital) risk
I. Balance at the end of last 400,000, 86,911,1 198,753, 1,363,27 2,048,93
year 000.00 68.71 317.22 4,341.67 8,827.60
Add: Changes of accounting
policy
Error correction of the last period
Others
II. Balance at the beginning of 400,000, 86,911,1 198,753, 1,363,27 2,048,93
this year 000.00 68.71 317.22 4,341.67 8,827.60
III. Increase/ Decrease in 58,228,7 364,058, 422,287,
this year (Decrease is listed
with'"-") 77.56 998.01 775.57
42
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
582,287, 582,287,
(i) Net profit
775.57 775.57
(ii) Other consolidated
income
582,287, 582,287,
Subtotal of (i)and (ii)
775.57 775.57
(III) Owners' devoted and
decreased capital
1. Owners' devoted capital
2. Amount calculated into
owners' equity paid in shares
3. Others
58,228,7 -218,228, -160,000,
(IV) Profit distribution
77.56 777.56 000.00
58,228,7 -58,228,7
1. Withdrawal of surplus reserves
77.56 77.56
3. Withdrawal of general
risk reserve
3. Distribution for owners -160,000, -160,000,
(shareholders) 000.00 000.00
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
reserves
4. Others
(VI) Reasonable reserve
1. Withdrawal in this period
2. Usage in this period
(VII) Other
IV. Balance at the end of the 400,000, 86,911,1 256,982, 1,727,33 2,471,22
report period 000.00 68.71 094.78 3,339.68 6,603.17
Legal Representative: Zhang Xingfu
Person in charge of Accounting Works: Xu Guojian
Person in charge of Accounting Institution: Wang Wuping
43
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
Shandong Airlines Co., Ltd.
Notes to the Financial Statements
As at 30thJune 2013
(All amounts are expressed in CNY unless otherwise stated)
Note 1 Corporation profile
1.1 Company’s history
Shandong Airlines Co., Ltd. (hereafter, the Company) is a foreign-invested limited liability company
incorporated in the People’s Republic of China. The Company was incorporated through the restructuring
project jointly initiated by Shandong Airlines Group Co., Ltd. (hereafter, SDA Group), Inspur Co., Ltd.
(previously known as Inspur Electronic Information Industry Group Company (浪潮电子信息产业集团公
司), Shandong Hualu Group Co., Ltd, Shandong Group Corp. of Fisheries Enterprises and Luyin Investment
Group (鲁银投资集团股份有限公司) following the approval (LuTiGaiQiZi(1999)No.88 (鲁体改企字
(1999)第 88 号)) granted by the Economic Reform Commission of Shandong Province (山东省经济体制改
革委员会) on July 29th, 1999.
Shandong Airlines Group Co., Ltd. acquired 259,204,000 state-owned corporate shares (国有法人股), with
CNY 1.00 at par, of the Company by transferring its air transportation operation and the related assets and
liabilities to the Company on November 25th, 1999. Inspur Co., Ltd., Shandong Hualu Group Co., Ltd. and
Shandong Group Corp. of Fisheries Enterprises each acquired 199,000 state-owned corporate shares, with
CNY 1.00 at par, by cash investment of CNY 200,000.00 each on November 26th, 1999. Luyin Investment
Group acquired 199,000 domestic corporate shares (国内法人股), with CNY 1.00 at par, by cash investment
of CNY 200,000.00 on November 26th, 1999.
The Company issued 140,000,000 domestically listed shares denominated in foreign currency (境内上市外
资股) (hereafter, B share(s)), with par value at CNY 1.00 each and issue price at HKD 1.58 each, on August
28th, 2000 upon the approval (ZhengJianFaXingZi[2000]No.116 (证监发行字[2000]116 号)) granted by the
China Securities Regulatory Commission on August 22nd, 2000; and, the Company was listed on the
Shenzhen Stock Exchange on September 12th, 2000. Immediately after the issuance of the B shares, the
capital of the Company increased to CNY 400,000,000.00.
The Agreement of Share Transfer (《股份转让协议》) signed by SDA Group and China National Aviation
Holding Company (hereafter, China Aviation Group) on February 28th, 2004 authorised the transfer of
91,200,000 shares of the Company, equal to 22.8% shareholding, from SDA Group to China Aviation Group.
Immediately after the share transfer, SDA Group’s shareholding in the Company was 42.00%. In November
2004, the Board of Directors of the Company, in accordance with the approval (GuoZiChanQuan[2004]No.956
(国资产权[2004]956 号：《关于中国航空集团公司将受让山东航空股份有限公司国有股的合同
实 施 转 让 有 关 问 题 的 批 复 》 )) issued by the State-owned Assets Supervision and Administration
Commission of the State Council, authorised China Aviation Group to transfer the state-owned corporate
shares received from SDA Group to Air China Co., Ltd. (hereafter, Air China). As so provided in
44
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
GuoZiChanQuan[2004]No.956, the rights and obligation attributable to China Aviation Group as specified in
the Agreement of Share Transfer shall be afforded by Air China. The change of share ownership was
registered at the China Securities Depository and Clearing Corporation Limited Shenzhen Office by SDA
Group and Air China on December 3rd, 2004; And, 91,200,000 shares of the Company then became held by
Air China.
Legal representative of the Company: ZHANG, Xingfu
Place of registration: Shandong Jinan Yaoqiang International Airport
Address of headquarter: Shandong Airlines Centre, 5746 – East 2nd Ring Road, Jinan, Shandong
1.2 Industry of operation
The Company operates in the industry of transportation.
1.3 Operating capacity
The Company is permitted to undertake international and domestic passenger and cargo transportation, hotel
and beverage related operation (limited to operation through branch); provision of aircraft maintenance,
training of civil aviation pilots and air crew, insurance brokerage (limited to air accident insurance, with period
of operation valid until September 3rd, 2015); inter-airline agenting, and principal operation related ground
services; sales of airborne material and equipments, non-food grocery, art work, souvenir, etc.; retailing of
tobacco products (limited to Qingdao Red-Crowned Crane Hotel); lease of airborne material and equipments;
business services; conference services; transportation agency; air cargo storage; and aviation pilot provision
(for other domestic airlines). The operating activities listed herein does not involve operation related to
commodity that are subject to State Administered Trading (国营贸易管理),but involve operation related to
commodity that are subject to quotas , licence requirements, which are restricted to obtain permission before
the operation.
1.4 Principal products (and/or services)
The principal service supplied by the Company is domestic air transportation.
Note 2 Basis of Preparation
The financial statements of the Company have been prepared on the basis of going concern in conformity with
Chinese Accounting Standards for Business Enterprises and the Accounting Systems for Business Enterprises
issued by the Ministry of Finance of People’s Republic of China in February 2006, and Accounting Standards
(order No.38 of the Ministry of Finance) and Compilation Rules for Information Disclosure by Companies
Offering Securities to the Public No.15—General Provisions on Financial Reports (2010 Revision) issued by
the China Securities Regulatory Commission (CSRC).
According to the relevant accounting regulations in Chinese Accounting Standards for Business Enterprises,
the Company has adopted the accrual basis of accounting. Except for certain financial instruments which are
measured by at fair value, the Company adopts the historical cost as the principle of measurement in the
financial statements. Where assets are impaired, provisions for asset impairment are made in accordance with
relevant requirements.
Note 3 Statement of Compliance with Enterprise Accounting Standards
45
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
The financial statements of the company are recognized and measured in accordance with the regulations in
the Chinese Accounting Standards for Business Enterprises and they give a true and fair view of the financial
position, business result and cash flow of the Company as of 31 December 2012 .In addition, the financial
statements of the company comply, in all material respects, with the revised disclosing requirements for
financial statements and the notes ” Compilation Rules for Information Disclosure by Companies Offering
Securities to the Public No.15—General Provisions on Financial Reports (2010 Revision) issued by China
Securities Regulatory Commission (CSRC) in 2010.
Note 4 Important Accounting Principles and Accounting Estimates
4.1 Accounting period
The accounting period of the Company is classified as interim period and annual period. Interim period refers
to the reporting period shorter than a complete annual period. The accounting period of the Company is the
calendar year from January 1 to December 31.
4.2 Monetary Unit
Yuan (CNY) is the currency of the primary economic environment in which the Company and its domestic
subsidiaries operate. Therefore, the Company and its domestic subsidiaries choose CNY as their functional
currency. The Company adopts CNY to prepare its functional statements.
4.3 Business combination
A business combination is a transaction or event that brings together two or more separate entities into one
reporting entity. Business combinations are classified into business combinations involving enterprises under
common control and business combinations not involving enterprises under common control.
(1) Business combination involving entities under common control
A business combination involving enterprises under common control is a business combination in which all of
the combining enterprises are ultimately controlled by the same party or parties both before and after the
combination, and that control is not transitory.
For a business combination involving enterprises under common control, the party that, on the combination
date, obtains control of another enterprise participating in the combination is the absorbing party, while that
other enterprise participating in the combination is a party being absorbed. Combination date is the date on
which the absorbing party effectively obtains control of the party being absorbed.
The assets and liabilities obtained are measured at the carrying amounts as recorded by the enterprise being
combined at the combination date. The difference between the carrying amount of the net assets obtained and
the carrying amount of consideration paid for the combination (or the total face value of shares issued) is
adjusted to the capital premium (or share premium) in the capital reserve. If the balance of the capital premium
(or share premium) is insufficient, any excess is adjusted to retained earnings.
The cost of a combination incurred by the absorbing party includes any costs directly attributable to the
combination shall be recognized as an expense through profit or loss for the current period when incurred.
(2) Business combination involving entities not under common control
A business combination involving enterprises not under common control is a business combination in which all
of the combining enterprises are not ultimately controlled by the same party or parties both before and after
46
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
the business combination.
For a business combination not involving enterprises under common control, the party that, on the acquisition
date, obtains control of another enterprise participating in the combination is the acquirer, while that other
enterprise participating in the combination is the acquiree. Acquisition date is the date on which the acquirer
effectively obtains control of the acquiree.
For a business combination not involving enterprise under common control, the combination cost including the
sum of fair value, at the acquisition date, of the assets given, liabilities incurred or assumed, and equity
securities issued by the acquirer. The intermediary expenses incurred by the acquirer in respect of auditing,
legal services, valuation and consultancy services etc and other associated administrative expenses
attributable to the business combination are recognized in profit or loss when they are incurred.
The transaction cost arose from issuing of equity securities or liability securities shall be initially recognized as
equity securities or liability securities.
The contingent consideration related to the combination shall be booked as combination cost at the fair value
at the acquisition date. If, within the 12 months after acquisition, additional information can prove the existence
of related information at acquisition date and the contingent consideration need to be adjusted, goodwill can
be offset.
For a business combination achieved in stages that involves multiple exchange transactions, the equity
interest in the acquiree previously held before the acquisition date re-assessed at the fair value at the
acquisition date, with any difference between its fair value and its carrying amount is recorded as investment
income. The other comprehensive income of the acquiree before the acquisition date relating to the previously
held interest in the acquiree is transferred to investment income.
Combination cost is the aggregate of the carrying amount of the equity interest held in the acquiree prior to the
acquisition date and the fair value of the cost of the additional investment at the acquisition date.
Combination cost of the acquirer’s interest and identifiable net assets of the acquirer acquired through the
business combination shall be measured by the fair value at the acquisition date. Where the cost of
combination exceeds the acquirer’s interest in the fair value of the acquiree’s identifiable net assets, the
difference shall be recognized as goodwill. Where the cost of combination is less than the acquirer’s interest in
the fair value of the acquiree’s identifiable net assets, the difference shall be accounted for according to the
following requirements: (i) the acquirer shall reassess the measurement of the fair values of the acquiree’s
identifiable assets, liabilities and contingent liabilities and measurement of the cost of combination; (ii) if after
that reassessment, the cost of combination is still less than the acquirer’s interest in the fair values of the
acquiree’s identifiable net assets, the acquirer shall recognize the remaining difference immediately in profit or
loss for the current period.
Where the temporary difference obtained by the acquirer was not recognized due to inconformity with the
conditions applied for recognition of deferred income tax, if, within the 12 months after acquisition, additional
information can prove the existence of related information at acquisition date and the expected economic
benefits on the acquisition date arose from deductible temporary difference by the acquiree can be achieved,
relevant income tax assets can be recognized, and goodwill offset. If the goodwill is not sufficient, the
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difference shall be recognized as profit of the current period.
Apart from above, the differences shall be taken into profit or loss of the current period if the recognition of
deferred income tax assets is related to the combination
4.4 Preparation of the consolidated financial statements
(1) The scope of consolidation
The scope of consolidation for the consolidated financial statements is determined on the basis of control.
Control is the power to govern the financial and operating policies of an enterprise so as to obtain benefits
from its operating activities. The scope of consolidation includes the Company and all of the subsidiaries.
Subsidiary is an enterprise or entity under the control of the Company.
(2) Preparation of the consolidated financial statements
The subsidiary of the Company is included in the consolidated financial statements from the date when the
control over the net assets and business decisions of the subsidiary is effectively obtained, and excluded from
the date when the control ceases.
For a subsidiary disposed of by the Company, the operating results and cash flows before the date of disposal
(the date when control is lost) are included in the consolidated income statement and consolidated statement
of cash flows, as appropriate. For a subsidiary disposed during the period, no adjustment is made to the
opening balance of the consolidated financial statements.
For a subsidiary acquired through a business combination not under common control, the operating results
and cash flows from the acquisition (the date when the control is obtained) are included in the consolidated
income statement and consolidated statement of cash flows, as appropriated; no adjustment is made to the
opening balance and comparative figures in the consolidated financial statements.
Where a subsidiary was acquired during the reporting period, through a business combination involving
enterprises under common control, the financial statements of the subsidiary are included in the consolidated
financial statements. The results of operations and cash flow are included in the consolidated balance sheet
and the consolidated income statement, respectively, based on their carrying amounts, from the date that
common control was established, and the opening balances and the comparative figures of the consolidated
financial statements are restated.
When the accounting period or accounting policies of a subsidiary are different from those of the Company, the
Company makes necessary adjustments to the financial statements of the subsidiary based on the Company’s
own accounting period or accounting policies. Where a subsidiary was acquired during the reporting period
through a business combination not under common control, the financial statements was reconciliated on the
basis of the fair value of identifiable net assets at the date of acquisition. Intra-Group balances and
transactions, and any unrealized profit or loss arising from intra-Group transactions, are eliminated in
preparing the consolidated financial statements.
Minority interest and the portion in the net profit or loss not attributable to the Company are presented
separately in the consolidated balance sheet within shareholders’/ owners’ equity and net profit. Net profit or
loss attributable to minority shareholders in the subsidiaries is presented separately as minority interest in the
consolidated income statement below the net profit line item.
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When the amount of loss for the current period attributable to the minority shareholders of a subsidiary
exceeds the minority shareholders’ portion of the opening balance of [shareholders’] [owners’] equity of the
subsidiary, the excess is allocated against the minority interests.
When the Company loses control of a subsidiary due to the disposal of a portion of an equity investment or
other reasons, the remaining equity investment is re-measured at its fair value at the date when control is lost.
The difference between 1) the total amount of consideration received from the transaction that resulted in the
loss of control and the fair value of the remaining equity investment and 2) the carrying amounts of the interest
in the former subsidiary’s net assets immediately before the loss of the control is recognized as investment
income for the current period when control is lost. The amount recognized in other comprehensive income in
relation to the former subsidiary’s equity investment is reclassified as investment income for the current period
when control is lost. The retained interest is subsequently measured according to the rules stipulated in the
“Chinese Accounting Standards for Business Enterprises No.2—Long-term equity investment” or “Chinese
Accounting Standards for Business Enterprises No.22—Determination and measurement of financial
instruments” . See Note 4.10 Long-term equity investments and Note 4.7 Financial instruments for details.
4.5 Cash equivalent
Cash and cash equivalents of the Company include cash on hand, ready usable deposits and investments
having short holding term (normally will be due within three months from the day of purchase), with strong
liquidity and easy to be exchanged into certain amount of cash that can be measured reliably and have low
risks of change.
4.6 Foreign exchange
(1) Translation in foreign exchange transactions
The foreign currency transactions are recorded, on initial recognition in the functional currency, by applying
[the spot exchange rate on the date of the transaction / an exchange rate that approximates the actual spot
exchange rate on the date of transaction]. The exchange of foreign currency and transactions related to the
foreign exchange are translated at the spot exchange rate.
(2) Translation of monetary foreign currency and non-monetary foreign currency
At the balance sheet date, foreign currency monetary items are translated using the spot exchange rate at the
balance sheet date. All the exchange differences thus resulted are taken to profit or loss, except for those
relating to foreign currency borrowings specifically for construction and acquisition of qualifying assets, which
are capitalized in accordance with the principle of capitalization of borrowing costs; ② hedging accounting, the
exchange difference related to hedging instruments for the purpose of net oversea operating investment is
recorded in the comprehensive income till the date of disposal and recognized in profit or loss of the period;
exchange difference from changes of other account balance of foreign currency monetary items
available-for-trade is recorded into profit or loss except for amortized cost.
Non-monetary foreign currency items measured at historical cost shall still be translated at the spot exchange
rate prevailing on the transaction date, and the amount denominated in the functional currency is not changed.
Non-monetary foreign currency items measured at fair value are translated at the spot exchange rate
prevailing at the date when the fair values are determined. The exchange difference thus resulted are
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recognized in profit or loss for the current period or as capital reserve.
(3) The translation of financial statement in foreign currency
When the consolidated financial statements include foreign operation(s), if there is a foreign currency
monetary item constituting a net investment in a foreign operation, exchange difference arising from changes
in exchange rates are recognized as “exchange differences arising on translation of financial statements
denominated in foreign currencies” in owner’s equity, and in profit or loss for the period upon disposal of the
foreign operation.
The Group translates the financial statements of its foreign operations into CNY by following rules. Assets
and liabilities in the balance sheet are translated at the spot exchange rate prevailing at the balance sheet
date; all equity items except for retained earnings are translated at the spot exchange rates at the dates on
which such items occur; income and expenses in income statement are translated at the spot exchange rates
at the date of transaction; the opening retained earnings is the closing retained earnings of the last period after
translation; the closing balance of retained earnings is calculates and presented in the basis of each translated
income statements and profit distribution item; the difference arising between the assets and liabilities and
shareholders’ equity shall be booked as translation difference of foreign currency statements, and shall be
presented as a separate component of equity in the balance sheet. On a loss of control over Group’s oversea
operation due to disposal, the Company transfers the accumulated or proportionate share of the accumulated
exchange difference arising on translation of financial statements of this oversea operation attributable to the
owners’ equity of the Company and presented under shareholders’ equity, to profit or loss in the period in
which the disposal occurs.
Foreign currency cash flows and cash flow of oversea subsidiaries are translated at the spot exchange rates
on the date of cash flows.The effect of exchange rate changes on cash is separately presented as an
adjustment item in the cash flow statement.
The opening and actual amount of last year are presented in the financial statement after translation
4.7 Financial instruments
(1) Determination of financial assets and liabilities’ fair value
Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable,
willing parties in an arm’s length transaction. For a financial instrument which has an active market, the
Company uses quoted price in the active market to establish its fair value. The quoted price in the active
market refers to the price that can be regularly obtained from exchange market, agencies, industry
associations, pricing authorities; it represents the fair market trading price in the actual transaction.
For a financial instrument which does not have an active market, the Company establishes fair value by using
a valuation technique. Valuation techniques include using recent arm’s length market transactions between
knowledgeable, willing parties, reference to the current fair value of another instrument that is substantially the
same, discounted cash flow analysis and option pricing models.
The Company measures initially and subsequently the fair value of an interest rate swap at the value of a
competitor’s interest rate swap quoted by a recognised financial institution as at the Company’s balance sheet
date in accordance with the principle of consistency.
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(2) Classification, recognition and measurement of financial assets
All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis.
On initial recognition, the Company’s financial assets are classified into one of the four categories, including
financial assets at fair value though profit or loss, held-to maturity investments, loans and receivables and
available-for-trade financial assets. A financial asset is recognized initially at fair value. In the case of financial
assets at fair value through profit or loss, relevant transaction costs are immediately charged to the profit and
loss of the current period; transaction costs relating to financial assets of other categories are included in the
amount initially recognized.
1) Financial assets at fair value through profit or loss:
Including financial assets held-for-trade and financial assets designated at fair value through profit or loss.
Financial asset held-for-trade is the financial asset that meets one of the following conditions:
A. the financial asset is acquired for the purpose of selling it in a short term;
B. the financial asset is a part of a portfolio of identifiable financial instruments that are collectively managed,
and there is objective evidence indicating that the enterprise recently manages this portfolio for the purpose of
short-term profits;
C. the financial asset is a derivative, except for a derivative that is designated and effective hedging instrument,
or a financial guarantee contract, or a derivative that is linked to and must be settled by delivery of an
unquoted equity instrument (without a quoted price from an active market) whose fair value cannot be reliably
measured. For such kind of financial assets, fair values are adopted for subsequent measurement.
Financial asset is designated on initial recognition as at fair value through profit or loss only when it meets one
of the following conditions:
A. the designation eliminates or significantly reduces the inconsistency in the measurement or recognition of
relevant gains or losses that would otherwise arise from measuring the financial instruments on different
bases.
B. a Group of financial instruments is managed and its performance is evaluated on a fair value basis, and is
reported to the enterprise’s key management personnels. Formal documentation regarding risk management
or investment strategy has prepared.
Financial assets at fair value through profit or loss are subsequently measured at the fair value. Any gains
or losses arising from changes in the fair value and any dividends or interest income earned on the financial
assets are recognized in the profit or loss.
2) Investment held-to maturity
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed
maturity that an entity has the positive intention and ability to hold to maturity. Such kind of financial assets are
subsequently measured at amortized cost using the effective interest method. Gains or losses arising from
derecognition, impairment or amortization are recognized in profit or loss for the current period.
Effective interest rate is the rate that exactly discounted estimated future cash flows through the expected life
of the financial asset or financial liability or, where appropriate, a shorter period to the net carrying amount of
the financial asset or financial liability.
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When calculating the effective interest rate, the Company shall estimate future cash flow considering all
contractual terms of the financial asset or financial liability without considering future credit losses, and also
consider all fees paid or received between the parties to the contract giving rise to the financial asset and
financial liability that are an integral part of the effective interest rate, transaction costs, and premiums or
discounts, etc.
3) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed determinable payment that are not quoted
in an active market. Financial assets classified as loans and receivables by the Company include note
receivables, account receivables, interest receivable dividends receivable and other receivables.
Loans and receivables are subsequently measured at amortized cost using the effective interest method. Gain
or loss arising from derecognition, impairment or amortization is recognized in profit or loss.
4) Financial assets available-for-trade
Financial assets available-for-trade include non-derivative financial assets that are designated on initial
recognition as available for trade, and financial assets that are not classified as financial assets at fair value
through profit or loss, loans and receivables or investment held-to-maturity.
Financial assets available-for-trade are subsequently measured at fair value, and gains or losses arising from
changes in the fair value are recognized as other comprehensive income and included in the capital reserve,
except that impairment losses and exchange differences related to amortized cost of monetary financial assets
denominated in foreign currencies are recognized in profit or loss, until the financial assets are derecognized,
at which time the gains or losses are released and recognized in profit or loss.
Interests obtained and dividends declared by the investee during the period in which the financial assets
available-for-trade are held, are recognized in investment gains.
(3) Impairment of financial assets
The Group assesses at the balance sheet date the carrying amount of every financial asset except for the
financial assets that measured by the fair value. If there is objective evidence indicating a financial asset may
be impaired, a provision is provided for the impairment.
1) Impairment on held-to maturity investment, loans and receivables
The financial assets measured by cost or amortized cost write down their carrying value by the estimated
present value of future cash flow. The difference is recorded as impairment loss. If there is objective evidence
to indicate the recovery of value of financial assets after impairment, and it is related with subsequent event
after recognition of loss, the impairment loss recorded originally can be reversed. The carrying value of
financial assets after impairment loss reversed shall not exceed the amortized cost of the financial assets
without provisions of impairment loss on the reserving date.
2) Impairment loss on available-for-trade financial assets
Where the fair value of the equity instrument investment drops significantly or not contemporarily according to
the integrated relevant factors, an available-for-trade financial asset is impaired.
When an available-for-trade financial asset is impaired, the cumulative loss arising from declining in fair value
that had been recognized in capital reserve shall be removed and recognized in profit or loss. The amount of
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the cumulative loss that is removed shall be difference between the acquisition cost with deduction of
recoverable amount less amortized cost, current fair value and any impairment loss on that financial asset
previously recognized in profit or loss.
If, after an impairment loss has been recognized, there is objective evidence that the value of the financial
asset is recovered, and it is objectively related to an event occurring after the impairment loss was recognized,
the initial impairment loss can be reversed and the reserved impairment loss on available-for-trade equity
instrument is recorded in the profit or loss, the reserved impairment loss on available-for-trade debt instrument
is recorded in the current profit or loss.
The equity instrument where there is no quoted price in an active market, and whose fair value cannot be
reliably measured, or impairment loss on a derivative asset that is linked to and must be settled by delivery of
such an unquoted equity instrument shall not be reversed.
(4) Recognition and measurement of financial assets transfer
The Group derecognizes a financial asset when one of the following conditions is met:
1) the rights to receive cash flows from the asset have expired;
2) the enterprise has transferred its rights to receive cash flows from the asset to a third party under a
“pass-through” arrangement; or
3) the enterprise has transferred its rights to receive cash flows from the asset and either (a) has transferred
substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all
the risks and rewards of the asset, but has transferred control of the asset.
If the enterprise has neither retained all the risks and rewards from the financial asset nor control over the
asset, the asset is recognized according to the extent it exists as financial asset, and correspondent liability is
recognized. The extent of existence refers the level of risk by the financial asset changes the enterprise is
facing.
For a transfer of a financial asset in its entirety that satisfies the derecognition criteria, (a). the carrying amount
of the financial asset transferred; and (b) the sum of the consideration received from the transfer and any
cumulative gain or loss that had been recognized in other comprehensive income, is recognized in profit or
loss.
If a part of the transferred financial asset qualifies for derecognition, the carrying amount of the transferred
financial asset is allocated between the part that continues to be recognized and the part that is derecognized,
based on the relative fair value of those parts. The difference between (a) the carrying amount allocated to the
part derecognized; and (b) the sum of the consideration received for the part derecognized and any cumulative
gain or loss allocated to the part derecognized which has been previously recognized in other comprehensive
income, is recognized in profit or loss.
(5) Classification and measurement of financial liabilities
The Group’s financial liabilities are, on initial recognition, classified into financial liabilities at fair value through
profit or loss and other financial liabilities. For financial liabilities at fair value through profit or loss, relevant
transaction costs are immediately recognized in profit or loss for the current period, and transaction costs
relating to other financial liabilities are included in the initial recognition amounts.
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1) Financial liabilities measured by the fair value and the changes recorded in profit or loss
The classification by which financial liabilities held-for-trade and financial liabilities designed at the initial
recognition to be measured by the fair value follows the same criteria as the classification by which financial
assets held-for-trade and financial assets designed at the initial recognition to be measured by the fair value
and their changes are recorded in the current profit or loss.
For the financial liabilities measured by the fair value and changes recorded in the profit or loss, fair values are
adopted for subsequent measurement. All the gains or losses on the change of fair value and the expenses on
dividends or interests related to these financial liabilities are recognized in profit or loss for the current period.
2) Other financial liabilities
Derivative financial liabilities that linked with equity instruments, which do not have a quoted price in an active
market and their fair value cannot be measured reliably, is subsequently measured by cost Other financial
liabilities are subsequently measured at amortized cost using the effective interest method. Gains or losses
arising from derecognition or amortization are recognized in profit or loss for the current period.
3) Financial guarantee contracts
For financial guarantee contracts that are not designated as at fair value through profit or loss,they are, after
initial recognition, subsequently measured at the higher of: (i) the amount determined according to the
principles of Accounting Standards for Business Enterprises No. 13 - Contingencies, and (ii) the amount
initially recognized less the accumulated amortization determined according to the principles of Accounting
Standards for Business Enterprises No. 14 - Revenue.
(6) Derecognition
The Group derecognizes a financial liability (or part of it) when the underlying present obligation (or part of it) is
discharged or cancelled or has expired. An agreement between the Company (an existing borrower) and
existing lender to replace original financial liability with a new financial liability with substantially different terms
is accounted for as an extinguishment of the original financial liability and the recognition of a new liability.
When the Company derecognizes a financial liability or a part of it, it recognizes the difference between the
carrying amount of the financial liability (or part of the financial liability) derecognized the consideration paid
(including any non-cash assets transferred or new financial liabilities assumed) in profit or loss.
(7) Derivatives and embedded derivatives
Derivative financial instruments include derivatives are initially measured at fair value at the date when the
derivative contracts are entered into and are substantially re-measured at fair value. The resulting gain and
loss is recognized in profit or loss.
An embedded derivative is separated from the hybrid instrument, where the hybrid instrument is not
designated as a financial asset or financial liability at fair value though profit or loss, and the treated as a
standalone derivative if (a) the economic characteristics and risks of the embedded derivative are not closely
related to the economic characteristics and risks of the host contract; and (b) a separate instrument with the
same terms as the embedded derivative would meet the definition of a derivative. If the Company is unable to
measure the embedded derivative separately either at acquisition or at a subsequent balance sheet date, it
designates the entire hybrid instrument as a financial asset or financial liability at fair value through profit or
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loss.
(8) Offsetting financial assets and financial liabilities
When the Company has a legal right that is currently enforceable to set off the recognized financial assets and
financial liabilities, and intends either to settle on a net basis, or to realize the financial asset and settle the
financial liability simultaneously, a financial asset and a financial liability shall be offset and the net amount is
presented in the balance sheet. Except for the above circumstances, financial assets and financial liabilities
shall be presented separately in the balance sheet and shall not be offset.
(9) Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Company after
deducting all of its liabilities. The consideration received from issuing equity instruments, net of transaction
costs, are added to [shareholders’ / owners’] equity.
All types of distribution (excluding stock dividends) made by the Company to holders of equity instruments are
deducted from [shareholders’ /owners’] equity. The Group does not recognize any changes in the fair value of
equity instruments.
4.8 Accounts receivable
The receivables by the Company includes account receivables, and other receivables.
(1) Criteria for recognition of bad debts:
The Company carries out an inspection on the balance sheet date. Where there is any objective evidence
proving that the receivables have been impaired, an impairment provision shall be made:
1) A serious financial difficulty occurs to the issuer or debtor;
2) The debtor breaches any of the contractual stipulations, for example, fails to pay or delays the payment of
interests or the principal, etc.;
3) The debtor will probably become bankrupt or carry out other financial reorganizations;
4) Other objective evidences showing the impairment of the receivables.
(2) Method for bad debts provision
1) Provisions of bad debts in account receivables that is individually significant.
Individual receivables equal to or higher than 5% of total receivables are classified as receivables of individual
significance.
For an account receivable that is individually significant, the asset is individually assessed for impairment, the
impairment loss is recognized at the difference between the present value of future cash flow less the carrying
amount, and provision is made accordingly.
2) Provisions of bad debts in account receivables that individually insignificant items with similar credit risk
characteristics that have significant risk:
A.Evidence of credit risk characteristics
Whether the financial asset is individually significant or not individually significant, it is included in a group of
financial assets with similar credit risk characteristics and collectively assessed for impairment. Such credit risk
reflects the repayment of all due amount under the contract, and is related to the estimation of future cash flow
expected to be derived from the assets.
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Evidence of portfolios：
Item Basis
Receivables not individually assessed for impairment are categorised on
the basis of credit risk. Provision for bad debts for each category of
Categorisation by nature of
receivables is recognised at the actual rate of loss for the previous year of
receivables
the same or similar category bearing similar credit risk characteristics after
adjustment for the current year circumstances.
B.Provision by credit risk characteristics
During the Company impairment test, the amount of bad debts provisions is determined by the assessed result
from the experience of historical loss and current economic status and the existing loss in the estimated
account receivables according to the set of account receivables and credit risk characteristic.
Provisions for difference portfolios:
Item Provision
Categorisation by nature of receivables Percentage of carrying amount
a. Portfolio 1 by Aging analysis
Percentage of carrying amount for Percentage of carrying amount for
Category recognition of allowance for bad debt recognition of allowance for bad debt
applicable to accounts receivable applicable to other receivables
Categorisation by nature of receivables 5% 5%
3) Provisions of bad debts that is individually insignificant.
For the account receivables not individually significant, the Company assesses the account receivables
individually for impairment when are of following characteristics: if there is objective evidence indicating the
impairment, the impairment loss is recognized at the difference between the present value of future cash flow
less the carrying amount, and provision is made accordingly. For examples: receivables of individual
insignificance bears differing credit risk characteristics to other receivables of individual insignificance account
receivables with related parties; account receivables under litigations or arbitrations, or account receivables
with obvious indication that debtor cannot fulfill the obligation of repayment.
(3) The reversal of bad debts provision
If there is objective evidence of recovery in value of account receivables, and the recovery can be related to an
event occurring after the impairment was recognized, the previously recognized impairment loss is reversed
and recognized in profit or loss. However, the reversal shall not result in a carrying amount that exceeds what
the amortized cost would have been had the impairment loss not been recognized at the date the impairment
is reversed.
4.9 Inventories
(1) Classification of inventory
The Company’s inventory mainly include air materials and low-value consumables.。
(2) Valuation method of inventories upon delivery
Inventories are initially carried at the actual cost. The actual cost of inventories transferred out is assigned by
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using first-in, first out (FIFO) method.
(3) Basis for determining net realizable value of inventories and provision methods for decline in value of
inventories
Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of
completion, the estimated costs necessary to make the sale and relevant taxes. Net realizable value is
determined on the basis of clear evidence obtained, and takes into consideration the purpose of holding
inventories and effect of post balance sheet events.
At the balance sheet date, inventories are measured at the lower of the cost and net realizable value. If the net
realizable value is below the cost of inventories, a provision for decline in value of inventories is made. The
provision for inventories decline in value is determined normally by the difference of the cost of individual item
less its realizable value. For large quantity and low value items of inventories, provision for decline in value is
made based on categories of inventories. For items of inventories relating to a product line that are produced
and marketed in the same geographical area, have the same or similar end users or purposes, and cannot be
practicably evaluated separately from other items in that product line provision for decline in value is
determined on an aggregate basis.
After the provision for decline in value of inventories is made, if the circumstances that previously caused
inventories to be written down below cost no longer exist so that the net realizable value of inventories is
higher than their cost, the original provision for decline in value is reversed and the reversal is included in profit
or loss for the period.
(4) The perpetual inventory system is maintained for stock system.
(5) Amortization method for low cost and short-lived consumable items and packaging materials.
Low cost and short-lived consumable items are amortized using immediate write-off method; packaging
materials are amortized using immediate write-off method.
4.10 Long-term equity investments
(1) Determination of Investment cost
For a business combination involving enterprises under common control, the initial investment cost of the
long-term equity investment shall be carrying value of the absorbing party’s share of the shareholder’s equity
of the party being absorbed at the date of combination.
For a business combination not involving enterprise under common control, the combination cost including the
sum of fair value, at the acquisition date, of the assets given, liabilities incurred or assumed, and equity
securities issued by the acquirer. The intermediary expenses incurred by the acquirer in respect of auditing,
legal services, valuation and consultancy services etc and other associated administrative expenses
attributable to the business combination are recognized in profit or loss when they are incurred.
The transaction cost for the equity securities or liability securities issued by the acquirer in the business
combination shall be recognized as initial amount of equity security or liability.
The equity investments other than the long-term equity through combination shall be initially measured by cost.
The cost shall be recognized to the difference in the way of acquisition of long-term equity investment. Theses
ways include the cash purchase price the Companythe Company actually paid, the fair value of equity security
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issued by the Companythe Company, value specified in the investment contract or agreement, the fair value or
carrying value of the asset out in the transaction of non-monetary asset exchanges, and the fair value of the
long-term equity investment.
Expenses, taxes and other necessary expenditures directly attributable to the acquisition of long-term equity
investment are taken into investment cost.
(2) Subsequent Measurement
Cost method shall be adopted in a long-term equity investment where the investing enterprise does not have
common control or significant influence over the investee, the investment is not quoted in an active market and
its fair value cannot be measured reliably.
Where an investing enterprise can exercise common control or significant influence over the investee, a
long-term investment shall be accounted for using the equity method.
When an investing enterprise can no longer exercise joint control or common control nor significant influence
over the investee, and its fair value cannot be measured reliably, a long-term investment shall be counted as
financial asset ready-for trade.
A long-term equity investment where cost method is adopted in the Company’s financial statements can
exercise controls over the investee.
1) Cost method of accounting for long-term equity investments
Under the cost method, a long-term equity investment is measured at initial investment cost. Except for cash
dividends or profits declared but not yet paid that are included in the price or consideration actually paid upon
acquisition of the long-term equity investment, investment income is recognized in the period in accordance
with the attributable share of cash dividends or profit distributions declared by the investee.
2) Equity method of accounting for long-term equity investments
Where the initial investment cost of a long-term equity investment exceeds the investing enterprise’s interest in
the fair values of the investee’s identifiable net assets at the time of acquisition, no adjustment shall be made
to the initial investment cost.
Where the initial investment cost of a long-term equity investment is less than the investing enterprise’s
interest in the fair values of investee’s identifiable net assets at the time of acquisition, the difference shall be
charged to profit or loss for the current period, and the cost of the long-term equity investment shall adjusted
accordingly.
Under the equity method, the Company recognizes its share of the net profit or loss of the investee for the
period as investment income or loss for the period. The Group recognizes it share of the investee’s net profit or
loss based on the fair value of the investee’s individual separately indentible assets, etc at the acquisition date
after making appropriate adjustments to confirm with the Company’s accounting policies and accounting
period. Unrealized profits or losses resulting from the Company’s transactions with its associates and joint
ventures are recognized as investment income or loss to the extent that those attributable to the Company’s
equity interest are eliminated. However, unrealized losses resulting from the Company’s transactions with its
investees on the transferred assets, in accordance with "Accounting Standards for Enterprises No. 8 -
Impairment of Assets", are not eliminated. Changes in owners’ equity of the investee other than net profit or
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loss are correspondingly adjusted to the carrying amount of the long-term equity investment, and recognized
as other compressive income which is included in the capital reserve.
When the investee is recognized net losses, reduce the carrying value of long-term equity investments and
long-term equity of net investment (in substance) in investee to zero. In addition, the Company has the
obligations on additional losses, then the expected obligation as estimated liabilities and included in the
current investment losses. Where the net profit from investee units, restoration confirm the amount of revenue
sharing after offset the amount of unrecognized loss sharing.
For long-term equity investments in associates and joint ventures which had been held by the Company before
its first time adoption of Accounting Standards for Business Enterprises, where the initial investment cost of a
long-term equity investment exceeds the Company’s interest in the investee’s net assets at the time of
acquisition, the excess is amortized and is recognized in profit or loss on a straight line basis over the original
remaining life.
3) Acquisition of minority interest
The difference between newly increased equity investment due to acquisition of minority interests and portion
of net asset cumulatively calculated from the acquisition date is adjusted as capital reserve. If the capital
reserve is not sufficient to absorb the difference, the excess are adjusted against returned earnings.
4) Disposal of long-term equity investment
Where the parent company disposes long-term investment in a subsidiary without a change in control, the
difference in the net asset between the amount of disposed long-term investment and the amount of the
consideration paid or received is adjusted to the owner’s equity. If the disposal of long-term investment in a
subsidiary involves loss of control over the subsidiary, the related accounting policies in Note 4.2(2) applies.
On disposal of a long-term equity investment, the difference between the proceeds actually received and
receivable and the carrying amount is recognized in profit or loss for the period. For along-term equity
investment accounted for using the equity method, the amount included in the owners’ equity attributable to
the percentage interest disposed is transferred to profit or loss for the period.
For any retained interest, it shall be subsequently measured according to the related accounting policies in
regard of long-term equity investments or financial assets as described above if its carrying amount is
recognized as long-term equity investments or other related financial assets. Retroactive adjustment is made
on the basis of relevant policies if the retained interests are settled from cost method to equity method.
(3) Recognition of investee under common control or significant influence
Control is the power to govern the financial and operating policies of an enterprise so as to obtain benefits
from its operating activities.
Common control is the contractually agreed sharing of control over an economic activity, and exists only when
the strategic financial and operating decisions relating to the activity require the unanimous consent of the
parties sharing control.
Significant influence is the power to participate in the financial and operating policy decisions of the investee
but is not control or joint control over those policies.
When determining whether an investing enterprise is able to exercise control or significant influence over an
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investee, the effect of potential voting rights of the investee held be the investing enterprise or other parties
that are currently exercisable or convertible shall be considered.
(4) Impairment testing methods and recognition of impairment provision
The company assesses the long-term equity investment at the balance sheet date whether there is any
indication of impairment. If any indication exists that an asset may be impaired, the enterprise shall estimate its
recoverable value of the asset. If the recoverable value of the asset is less than its carrying amount, a
provision for impairment loss of the asset is recognized accordingly.
Once an impairment loss is recognized, it shall not be reversed in a subsequent period.
4.11 Fixed assets
(1) The conditions of recognition
Fixed assets refers to the tangible assets that are held for the sake of producing commodities, rendering labor
service, renting or business management and their useful life is in excess of one fiscal year.
(2) The method for depreciation
Fixed assets are stated at cost and consider the impact of expected costs of abandoning the initial
measurement. From the following month of state of intended use, depreciation method of the straight-line
method is used for different categories of fixed assets to take depreciation. The recognition of the classification,
useful life and estimated residual rate are as follows:
Estimated residual
Category Expected useful life Depreciation(%)
value(%)
Houses and building 27-33 5.00 2.88-3.52
Key components and power supports of
15-20 5.00 4.75-6.33
aircraft engine
Replacement parts of aircraft body 6-8 0.00 12.5-16.67
Replacement parts of engine 3-5 0.00 20-33.33
Equipments, electronic devices and
4-10 0-5.00 9.5-23.75
furniture
High value rotables 15-18 0.00 5.56-6.67
Transportation vehicles 5-10 5.00 9.5-19.00
Expected net residual value of fixed assets is the balance of the Company currently obtained from the disposal
of the asset less the estimated costs of disposal amount, assuming the asset is out of useful life and state the
expected service life in the end.
(3) Measurement and recognition of fixed assets
Impairment and provisions of fixed assets are disclosed on Note 4.16.
(4) Fixed Assets under finance leases
A finance lease is a lease that transfers in substance all the risks and rewards incident to ownership of an
asset. Title may or may not eventually be transferred.
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Fixed assets that are held under finance leases shall be depreciated by applying the same policy as that for
the fixed assets owned by the Company. If it can be reasonably determined that the ownership of the leased
assets can be obtained at the end of the lease period, the leased assets are depreciated over their useful lives;
otherwise, the leased assets are depreciated over the shorter of the lease terms and the useful lives of the
leased assets.
(5) Others
A fixed asset is recognized only when the economic benefits associated with the asset will probably flow to the
Company and the cost of the asset can be measured reliably. Subsequent expenditure incurred for a fixed
asset that meet the recognition criteria shall be included in the cost of the fixed asset, and the carrying amount
of the component of the fixed asset that is replaced shall be derecognized. Otherwise, such expenditure shall
be recognized in profit or loss in the period in which they are incurred.
The revenue from selling or transferring, or disposing a fixed asset is booked into profit and loss after
deduction of carrying value and related tax.
The Company conducts a review of useful life, expected net realizable value and depreciation methods of the
fixed asset at least on an annual base. Any change is regarded as change in accounting estimates.
4.12 Construction in progress
Construction in progress is measured at its actual cost. The actual costs include various construction
expenditures during the construction period, borrowing costs capitalized before it is ready for intended use and
other relevant costs. Construction in progress is transferred to a fixed asset when it is ready for intended use.
Testing method for provision impairment of construction in progress and accrued method for provision
impairment please refer to Note 4.16.
4.13 Borrowing costs
Borrowing costs include interest, amortization of discounts or premiums related to borrowings, ancillary costs
incurred in connection with the arrangement of borrowings, and exchange differences arising from foreign
currency borrowings.
The borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying
asset are capitalized. The amounts of other borrowing costs incurred are recognized as an expense in the
period in which they are incurred. Qualifying assets are asset (fixed assets, investment property and
inventories, etc.) that necessarily take a substantial period of time for acquisition, construction or production to
get ready for their intended use or sale.
Where funds are borrowed for a specific-purpose, the amount of interest to be capitalized is the actual interest
expense incurred on that borrowing for the period less any bank interest earned from depositing the borrowed
funds before being used on the asset or any investment income on the temporary investment of those funds.
Where funds are borrowed for a general-purpose, the amount of interest to be capitalized on such borrowings
is determined by applying a weighted average interest rate to the weighted average of the excess amounts of
accumulated expenditure on the asset over and above the amounts of specific-purpose borrowings
During the capitalization period, exchange differences related to a specific-purpose borrowing denominating in
foreign currency are all capitalized. Exchange differences in connection with general-purpose borrowings are
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recognized in profit or loss in the period in which they are incurred.
Assets qualified for capitalization are the fixed assets, investment properties or inventories which need a long
time of construction or production activities before ready for intended used or sale.
Capitalization of borrowing costs is suspended during periods in which the acquisition, construction or
production of a qualifying asset is interrupted by activities other than those necessary to prepare the asset for
its intended use or sale, when the interruption is for a continuous period of more than 3 months. Borrowing
costs incurred during these periods recognized as an expense for the current period until the acquisition,
construction or production is resumed.
4.14 Intangible assets
The term “intangible asset” refers to the identifiable non-monetary assets without physical shape, possessed
or controlled by enterprises.
The intangible assets are initially measured by its cost. Expenses related to intangible assets, if the economic
benefits related to intangible assets are likely to flow into the enterprise and the cost of intangible assets can
be measured reliably, shall be recorded as cost of intangible assets. The expenses other than this shall be
booked in the profit or loss when they occur.
Land use rights that are purchased by the Company are accounted for as intangible assets. Buildings, such as
plants that are developed and constructed by the Company, and relevant land use rights and buildings, are
accounted for as intangible assets and fixed assets, respectively. Payments for the land and buildings
purchased are allocated between the land use rights and the buildings; if they cannot be reasonably allocated,
all of the land use rights and buildings are accounted for as fixed assets.
When an intangible asset with a definite useful life is available for use, its original cost less net residual value
and any accumulate impairment losses is amortized over its estimated useful life using the straight-line
method . An intangible asset with an indefinite useful life is not amortized.
For an intangible asset with a definite useful life, the Company reviews the useful life and amortization
method at the end of the period, and makes adjustment when necessary.. An additional review is also carried
out for useful life of the intangible assets with indefinite useful life. If there is evidence showing the foreseeable
limit period of economic benefits generated to the enterprise by the intangible assets, then estimate its useful
life and amortize according to the policy of intangible assets with definite useful life.
Impairment and provisions of intangible assets are disclosed on Note 4.16.
4.15 Deferred charges
Deferred charges represent expenses incurred that should be borne and amortized over the current and
subsequent period (together of more than one year). Deferred charges are amortized by using straight line
method. Such as expenses for pilots’ initial trainings, those expenses are amortized at 10 years according to
their benefit period respectively. When a pilot is transferred from the Company, the cost of transfer is the
unamortized part of the original expenditure.
4.16 Impairment of non-current non-financial assets
Non-financial assets with non-current nature include fixed assets, construction in progress, intangible assets
with definite useful lives, investment properties measured by cost methods and long-term equity investment on
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subsidiaries, jointly operations. The Company assesses whether there are any indicators of impairment for all
non-financial assets at the balance sheet date, and impairment test is carried out and recoverable value is
estimated if such an indicator exits. Goodwill and intangible assets with indefinite useful lives, as well as
intangible assets not ready for use, are tested for impairment annually regardless of indicators of impairment.
Impairment of loss is calculated and provisions taken by the difference if the recoverable value of the assets is
lower than the book value. The recoverable value is the higher of estimated present value of the future
expected cash flows from the asset and net fair value of the asset less disposed cost. The fair value of asset is
determined by the sales agreement price within an arm’s length transaction. In case there is no sales
agreement, but there is active market of assets, the fair value can be determined by the selling price. If there is
neither sales agreement nor active market, the fair value of the asset can be estimated based on the best
information obtained.
Disposal expenses include expenses related to the legislation, taxes, transportations and the direct expense
for the asset to be ready for sale. When calculating the present value of expected future cash flows from an
asset or asset Group, the management shall estimate the expected future cash flows from the asset or asset
Group and choose a suitable discount rate in order to calculate the present value of those cash flows.
Provision for asset impairment is calculated and determined on the individual basis. If the recoverable of
individual asset is hard to estimate, the recoverable amount can be determined by the asset Group where
subject asset belongs. Asset Group is the smallest set of assets that can have cash flow in independently.
The Company determines whether goodwill is impaired at least on an annual basis. This requires an
estimation of the present value of the future expected cash flows from the asset Groups or sets of asset
Groups to which the goodwill is allocated. Estimating the present value requires the Company to make an
estimate of the expected future cash flows from the asset Groups or sets of asset Groups and also choose a
suitable discount rate in order to calculate the present value of those cash flows.
Once the loss from above asset impairment is recognized, the recoverable part cannot be reserved in the
subsequent periods.
4.17 Revenue
(1) Revenue from rendering of service
① The Company company recognise revenue from rendering of air service for carriage of passengers when
the service is rendered or when an unused ticket expires. The sale of a ticket does not constitute revenue. An
unused ticket expires on the annual anniversary of its sale. Tickets sold but of which the service is not yet
rendered are recognised in current liabilities as Advances from customers. If service is rendered through code
sharing, revenue arising from the service provision is apportioned amongst parties to the code sharing
agreement. The revenue arising from code sharing is also recognised when the service is rendered.
② The Company company recognise air cargo revenue from rendering of air service for carriage of cargo
when the service is rendered
③Revenue arising from other air service rendering is recognised when the service rendering is completed.
(2) Royalty Revenue
According to the contract or agreement, the revenue is recognized on an accrual basis.
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(3) Interest Income
The amount of interest revenue should be measured and confirmed in accordance with the length of time for
which the enterprise's cash is used by others and the actual interest rate.
4.18 Government Grants
Government grants are transfer of monetary assets and non-monetary assets from the government to the
Company at no consideration, excluding the capital invested by the government as equity owner. Government
grant can be classified as grant related to the assets and grants related to the income.
If a government grant is in the form of a transfer of a monetary asset, it is measured at the amount received or
receivable. If a government grant is in the form of a non-monetary asset, it is measured at fair value. If the fair
value cannot be reliably determined, it is measured at a nominal amount. A government grant measured at a
nominal amount is recognized immediately in profit or loss for the period.
A government grant related to an asset is recognized as deferred income, and evenly amortized to profit or
loss over the useful life of the related asset. For a government grant related to income, if the grant is a
compensation for related expenses or losses to be incurred in subsequent period, the grant is recognized as
deferred income, and recognized in profit or loss over the periods in which the related costs are recognized. If
the grant is a compensation for related expenses or losses already incurred, the grant is recognized
immediately in profit or loss for the period.
For repayment of a government grant already recognized, if there is a related deferred income, the repayment
is offset against the carrying amount of the deferred income, and any excess is recognized in profit or loss for
the period. If there is no related deferred income, the repayment is recognized immediately in profit or loss for
the period.
4.19 Deferred tax assets and deferred tax liabilities
(1) Income tax for the current period
At the balance sheet date, deferred tax assets and liabilities are measured at the tax rates that are expected to
apply to the period when the asset is realized or the liability is settled, according to the requirements of tax
laws. The measurement of deferred tax assets and deferred tax liabilities reflects the tax consequences that
would follow from the manner in which the Company expects at the balance sheet date, to recover the assets
or settle the liabilities.
At the balance sheet date, current income tax liabilities or assets for the current and prior periods, are
measured at the amount expected to be paid (or recovered) according to the requirements of tax laws. The
calculation for income tax expenses in the current period is based on the taxable income according to the
related tax laws after adjustment to the accounting profit of the reporting period.
(2) Deferred income tax assets and liabilities
For temporary differences between the carrying amount of certain assets or liabilities and their tax base, or
between the nil carrying amount of those items that are not recognized as assets or liabilities and their tax
base that can be determined according to tax laws, deferred tax assets and liabilities are recognized using the
balance sheet liability method.
For temporary differences associated with the initial recognition of goodwill and the initial recognition of an
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asset or liability arising from a transaction (not a business combination) that affects neither the accounting
profit nor taxable profits (or deductible losses) at the time of transaction, no deferred tax asset or liability is
recognized.
For taxable temporary differences associated with investments in subsidiaries and associates, and interests in
joint ventures, no deferred income tax liability related is recognized except where the Company is able to
control the timing of reversal of the temporary difference and it is probable that the temporary difference will
not reverse in the foreseeable future.
All deferred income tax liabilities arising from taxable temporary differences except the ones mentioned above
are recognized.
For temporary deductible differences associated with the initial recognition of an asset or liability arising from a
transaction (not a business combination) that affects neither the accounting profit nor taxable profits (or
deductible losses) at the time of transaction, no deferred tax asset is recognized.
For taxable temporary deductible differences associated with investments in subsidiaries and associates, and
interests in joint ventures, no deferred income tax asset related is recognized if it is impossible to reversal the
temporary difference in the foreseeable future, or it is not probable to obtain taxable income which can be used
for the deduction of the temporary difference in the future.
Except mentioned above, the Company recognizes other deferred income tax assets that can deduct
temporary differences to the extent that it is probable that taxable profits will be available against which the
deductible temporary differences can be utilized.
For the deductible losses and tax credit that can be carried forward, deferred tax assets for deductible
temporary differences are recognized to the extent that it is probable that taxable profits will be available
against which the deductible temporary differences can be utilized.
At the balance sheet date, deferred tax assets and liabilities are measured at the tax rates according to tax
laws, that are expected to apply in the period in which the asset is realized or the liability is settled.
At the balance sheet date, the Company reviews the carrying amount of deferred tax assets. If it is no longer
probable that sufficient taxable profit will be available in future periods to allow the benefits of the deferred tax
assets to be used, the Company reduces the carrying amount of deferred tax assets. The amount of such
reduction is reversed when it becomes probable that sufficient taxable profit will be available
(3) Income tax expenses
Income tax expenses consist of current income tax and deferred income tax.
The expenses from income tax and deferred income tax, as well as the revenue, shall be recorded into profit
or loss in current accounting period, except expense for income tax of the current period and deferred income
tax that booked into other income or equity and adjusted carrying value of deferred income tax goodwill arose
from business combination.
(4) Income tax offset
When we have the legal right, and have intended to, to make settlement with net amount, or through the asset
acquisition and liability fulfillment simultaneously, the Company shall present the net value from the offset
between current income tax asset and current income tax liability in the financial statement.
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When the Company has the legal right to make a settlement with the current income tax asset and current
income tax liability, and the deferred income tax asset and deferred income tax liability are related to the same
taxable subject under the same tax payer, or related to different taxable subject, but the intension of net value
settlement in regard of the current income tax asset and current income tax liability, the Company shall present
net value after the offset of deferred income tax asset and deferred income tax liability.
4.20 Leases
A finance lease is a lease that transfers in substance all the risks and rewards incident to ownership of an
asset. Title may or may not eventually be transferred. An operating lease is a lease other than a finance lease.
(1) The Company as Lessee under operating Lease
Lease payments under an operating lease are recognized by a lessee on a straight-line basis over the lease
term, and either included in the cost of the related asset or charged to profit or loss for the current period. The
contingent rents shall be recorded in the profit or loss of the period in which they actually arise.
(2) The Company as Leaser under operating Lease
Lease income from operating leases shall be recognized by the leaser in profit or loss on a straight-line basis
over the lease term. Initial direct cost of significance in amount shall be capitalized when incurred. If another
basis is more systematic and rational, that basis may be used. Contingent rents are credited to profit or loss in
the period in which they actually arise.
(3) The Company as Lessee under financing Lease
For an asset that is held under a finance lease, at the lease commencement, the leased asset is recorded at
the lower of its fair value at the lease commencement and the present value of the minimum lease payments,
and the minimum lease payment is recorded as the carrying amount of the long-term payables; the difference
between the recorded amount of the leased asset and the recorded amount of the payable is accounted for as
unrecognized finance charge, Initial direct costs incurred by the lessee during the process of negotiating and
securing the lease agreement shall be added to the amount recognized for the leased asset.
The net amount of minimum lease payment deducted by the unrecognized finance shall be separated into
long-term liabilities and long-term liability within one year for presentation.
Unrecognized finance charge shall be computed by the effective interest method during the lease term.
Contingent rent shall be booked into profit or loss when actually incurred.
(4) In the case of the lesser of a financing lease
For an asset that is leased out under a finance lease, the aggregate of the minimum lease receipts at the
inception of the lease and the initial direct costs is recorded as a finance lease receivable, and unguaranteed
residual value is recorded at the same time; the difference between the aggregate of the minimum lease
receipt, initial direct costs, and unguaranteed residual value, and the aggregate of their present values, is
recognized as unearned finance income, which is amortized using the effective interest rate method over each
period during the lease term.
Finance lease receivable less unearned finance income shall be separated into long-term liabilities and
long-term liability within one year for presentation.
Unearned finance income shall be computed by the effective interest method during the lease term.
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Contingent rent shall be credited into profit or loss in which actually incurred.
4.21 Assets held-for-sale
The Company has made decision on disposal of some non-current assets, and signed irrecoverable
transferring agreements with buyers. The transaction is probably to be completed with one year. If so, the
non-current asset shall be counted as an asset ready-for-sale, not depreciated or amortized, and shall be
measured by the lower of carrying amount and faire value less net value of disposal expenses. Non-current
assets ready-for-sale includes individual asset and disposal Group. If disposal Group is an asset Group, and
has allocated goodwill acquired during the combination according to the Accounting Standard for Business
Enterprises No. 8 - Impairment, or. the disposal Group is an operation in the asset Group, the disposal Group
includes goodwill in the business combination.
Where an asset or a disposal Group is classified as held-for-trade, but cannot satisfy the condition of
non-current asset ready-for-trade, the Company shall derecognize it as held-for-trade, and measure it by the
lower of the followings:
(1) the carrying amount of the asset or disposal Group before it is classified as held-for-trade, the value after
the adjustment of depreciation, amortization or impairment recognized under the assumption that it is not
classified as held-for-trade;
(2) the recoverable value on the date when decided not to trade any more.
4.22 Employee Benefits
During the accounting period of an employee’ providing services to the Company, the Company recognizes the
compensation payable as liabilities.
The Company participates in the employees social security system set up by government agencies, including
pensions, medical insurance, housing fund and other social security system, and the corresponding
expenditures are included in the cost of related assets or the profit or loss.
When an enterprise terminates the employment relationship with employees before the end of the employment
contracts or provides compensation as an offer to encourage employees to accept voluntary redundancy, a
provision shall be recognized for the compensation arising from termination of employment relationship with
employees, with a corresponding charge to the profit or loss for the current period. The enterprise cannot
unilaterally withdraw from the termination plan or the redundancy offer.
The early retirement plan adopts the same principles of termination benefits. Salaries and social insurance
(from the date of ceasing services to the date of normal retirement) are paid by the Company, subject to the
conditions to be recognized in profit or loss (termination benefits).
4.23 Regular repair and substantial repair
Regular repair expenditure of own aircrafts and aircrafts acquired under a financial lease is accounted for
through profit or loss for the period in which it is incurred. Substantial repair expenditure eligible for
capitalisation is capitalised when incurred and recognised as replacement cost of non-current assets and
depreciated over a reasonable length of time. Substantial repair expenditure of aircrafts under an operating
lease incurred before the lease expiry date is amortised on the basis of air hours over the lease period.
4.24 Changes in major accounting policies and accounting estimates
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(1) change of accounting policies
There is no significant change of accounting policies for the Company during the reporting period.
(2) change of accounting estimates
There is no significant change of accounting estimates for the Company during the reporting period.
4.25 Correction of prior period errors
There is no significant change of previous accounting errors for the Company during the reporting period.
4.26 Significant account judgment and estimates
The Company is required to make judgments, estimates and assumptions about the carrying amounts of items
in the financial statements that cannot be measured accurately, due to the internal uncertainties of operation
activities. These judgments, estimates and assumptions are based on historical experiences of the Company’s
management as well as other factors that are considered to be relevant. These judgments, estimates and
assumptions may affect value of the financial statements in revenue, expenses, assets and liabilities and the
disclosure of contingency at the balance sheet date. However, the result derived from those uncertainties in
estimates may lead significant adjustments to the carrying amounts of the assets or liabilities affected in the
future.
The Company has reviews the judgments, estimates and assumptions regularly on the basis of going concern.
Where the changes in accounting estimates only affect the period when changes occurred, and they are
recognized within the same period. Where the changes in accounting estimates affect both current period and
future period, the changes are recognized within the period of change and future period.
At balance sheet date, the followings are the significant areas where the Company needs to make judgment,
estimates and assumptions over the value of items in the financial statements:
(1) Classification of lease
The Company classifies leases as operating lease and financing lease according to the rule stipulated in the
Accounting Standard for Business Enterprises No. 21--Leasing-. The management shall make analysis and
judgment on whether the risks and rewards related to the title of leased assets has been transferred to the
leaser, or whether the Company has substantially held the risks and rewards related to the ownership of
leased assets.
(2) Allowance for bad debt
According to the relevant accounting policies of the Company in receivables, allowance method is used for
bad debt’s calculation. The impairment of receivables is calculated based on the assessment of recoverable of
receivables. Assurance of receivable impairment needs judgments and estimations from the management. The
difference between actual results and original estimates shall have impact on the carrying amount of
receivables and receivable bad debt provisions or the reverse during the change of estimation.
(3) Impairment of inventories
The Company measures inventories by the lower of cost and realizable net value according to the accounting
policies in regard of inventories and provisions for decline in value of inventories is made if the cost is higher
than their net realizable value, and obsolete and slow-movement inventories. Inventories decline in value to
net realizable value is the estimated selling price in the ordinary course of business. Net realizable value is
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determined on the basis of clear evidence obtained, and takes into consideration the purposes of holding
inventories and effect of post balance sheet events. The difference between the actual result and the original
estimates shall have impact on reverse of the carrying amount of the inventories and their decline in value or
provisions during the period of change.
(4) The fair value of financial instruments
For a financial instrument which has no active market, the Company establishes fair value by using various
valuation methods, including of discounted cash flow analysis model. The Company needs to estimate future
cash flow, credit risk, volatility and relationship during the valuation and choose appropriate discount rate.
Such assumptions have uncertainties and their changes shall have impact on the fair value of financial
instruments.
(5) Impairment of non-financial, non-current assets
The Company assesses whether there are any indicators of impairment for all non-current assets other than
financial assets at the balance sheet date. For an intangible asset that has indefinite useful life, impairment
test is made in addition to the annual impairment test if there is any indication of impairment. For non-current
assets other than financial assets, impairment test is made when there is any indication that its account
balance cannot be recovered.
Impairment exists when the recoverable amount of an asset is the higher of its fair value less cost of disposal
and present value of the future cash flows expected to be derived from the asset.
Net value between the difference of fair value and disposal cost is determined by reference of the price of
similar product in a sale agreement in an arm’s length transaction or an observable market price less the
additional cost directly attributable to the disposal of the asset.
When estimating the present value of future cash flow, significant judgments are made over the asset’s
production, selling price and relevant operating expenses, and discount rate used to calculate present value.
All available materials that are considered to be relevant shall be used in the estimation of recoverable value.
These materials include estimations of production, selling price and operating expenses based on reasonable
and supportable assumptions.
The Company makes an impairment test for goodwill at least at each year end. This requires an estimation of
present value of future cash flow of the assets or assets group where goodwill has been allocated. The
Company shall makes estimation on the future cash flow derived from assets or assets group and determine
an appropriate discount rate for the present value of future cash flow when the estimation of present value of
future cash flow is made.
(6) Depreciation and amortization
Investment property, fixed assets and intangible assets are depreciated and amortized using the straight-line
method over their useful lives after taking into account residual value. The useful lives are regularly reviewed
to determine the depreciation and amortization costs charged in each reporting period. The useful lives are
determined based on historical experience of similar assets and the estimated technical changes. If there is an
indication that there has been a change in the factor used to determine the depreciation or amortization, the
rate of depreciation or amortization is revised.
69
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
(7) Deferred tax assets
The group shall recognize all unused tax losses as deferred tax assets to the extent that it is probable that
future taxable profit will be available against which the unused tax losses and unused tax credits can be
utilized. This requires the management of the Company make a lot of judgments over the estimation of time
period, value and tax planning strategies when future taxable profit incurs so that the value of deferred tax
assets can be determined.
(8) Aircraft operating lease and engine overhaul expenses
Aircraft operating lease and engine overhaul expenses are accrued and charged to profit or loss in accordance
with the expected maintenance cycle, based on flight hours, flight cycles overhaul period and the amount of
the cost of repairs which may occur. These estimates are largely based on past historical data about the same
or similar types of aircraft and engines repairance. The withholding amount and overhaul costs may be
affected by different judgments and estimates and affect current profit or loss.
(9) Income tax
There are some transactions where ultimate tax treatments and calculations have uncertainties in the
Company’s everyday operation. Whether it is possible for some items to make expenditure before tax needs
approval from competent tax authorities. If there is any difference between finalized determination value and
their initial estimations value, the difference shall have the impact on the income tax and deferred income tax
of the current period during the final determination.
Note 5 Taxation
5.1 Major taxes and tax rate
Tax Tax rate (%)
Business Tax Business tax rate is the 3%-5% of taxable income
Enterprise income tax Income tax is calculated with the ratio of 25%.
Other taxes applicable to the Company are calculated in accordance with the relevant law and regulation.
5.2 Civil Aviation Development Fund
Civil Aviation Development Fund for civil aviation is calculated in accordance with the guidance set out in
CaiZong[2012] No.17 ( 财政 部 关于 印发民 航发展 基金征 收使 用管理 暂行办 法 ) issued by the
Ministry of Finance. CaiZong[2012] No.17 provides that infrastructure fund and civil aviation shall be calculated
using the rates set out within applicable to the relevant category of flight routes, maximum departure weight
and flight distance adopted by the civil aviation industry.
5.3 Tax incentives
5.3.1. Revenue earned by domestic individuals and incorporation domiciled in the PRC for the provision
of international transportation services is exempted for operating tax purposes as from January 1st, 2010 as
provided by Caishui[2010]No.8 (财政部国家税务总局关于国际运输劳务免征营业税的通知)
5.3.2. As provided by CaiShui[2011]No.48 (财税[2011]48 号《关于跨境设备租赁合同继续实行过渡性
营业税免税政策的通知》 jointly issued by the Ministry of Finance and the State Adnimistration of Taxation
on June 30th, 2011 and approved by the State Council, the transitional operating tax exemption applicable to
revenue received by overseas leasor(s) to lease contracts (applicable to both financing lease and operating
70
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
lease) of machinery and equipment import leasing involving domestic leasee(s) and overseas leasor(s)
entered into prior to and remaining in force as at December 31st, 2008 continues to apply from January 1st,
2010 to the expiry date of the relevant contract. Operating tax over-payment in relation to the subject of the
operating tax exemption paid by either the tax payer or the withholding agent during the period from January
1st, 2010 to the issue date of CaiShui[2011]No.48 (here after, the OTO) shall be utilised against the operating
tax payable by the tax payer or the withholding agent calculated from the issue date of CaiShui[2011]No.48.
The OTO remaining utilised as at December 31st, 2011 shall become repayable to the tax payer or the
withholding agent.
5.3.3. Notice of the General Administration of Customs. CAAC on issuing the policies[2004]No.43( 财 关 税
[2004]43 号《财政部国家税务总局关于调整国内航空公司进口飞机有关增值税政策的通知》),
upon the approval of the State Council on October 01, 2004, import VAT of only 4% will be levied
on passenger and freight planes with an unladen weight of 25 tons or more (hereinafter referred to as
“planes”) imported by domestic airline companies.
Note 6 Business combination and consolidated financial statements
6.1 Subsidiaries
6.1.1 Subsidiaries acquired through establishment or investment
Monetary unit: CNY
Subsidiary Type of subsidiary Place of registration Nature of operation Registered Scope of
capital operation
Qingdao Wholly-owned Qingdao, Logistics and storage 30 Million Strorage and
International Air Subsidiary Shandong ground logistics
Logistics Centre for aero cargo,
Co., Ltd electionic
(hereafter, Qingdao commerce, etc.
Logistics)
(Continued)
Subsidiary Type of Legal Institution code Acutal investment Balance of
incorporation representative as at the reporting other de facto
date investment in
subsidiary
Qingdao Limited liability SU, Zhongmin 73349654-1 48,323,205.97 0.00
International Air company
Logistics Centre
Co., Ltd
(hereafter, Qingdao
Logistics)
(Continued)
71
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
Subsidiary Shareholding Voting right Consolidation Minority Equity attributable to minority interst Note
interests for set-off of profit or loss attributable
(%) (%)
to minority intterest
Qingdao 100.00 100.00 Yes 0.00 0.00
Logistics
6.1.2 Subsidiaries acquired through business combination not under common control
Monetary unit: CNY
Nature of
Subsidiary Type of subsidiary Place of registration Registered capital Scope of operation
operation
Qingdao Feisheng
International development and
Aviation Training application of civil
Technology Wholly-owned Qingdao, aviation new
Pilot training 51,545,500.00
Development Co., Subsidiary Shandong technology, pilot
Ltd training and related
(hereafter, Qingdao consultancy
Feisheng)
(Continued)
Balance of
Acutal investment
Type of Legal other de facto
Subsidiary Institution code as at the reporting
incorporation representative investment in
date
subsidiary
Qingdao Feisheng
International
Aviation Training
Limited liability
Technology SONG, Yuxia 72557262-0 57,677,479.46 0.00
company
Development Co.,
Ltd (hereafter,
Qingdao Feisheng)
(Continued)
Shareholdi Equity attributable to minority
Voting right Consolidati Minority interst for set-off of profit or
Subsidiary ng Note
(%) on interests loss attributable to minority
(%) intterest
72
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
Qingdao
100.00 100.00 Yes 0.00 0.00
Feisheng
6.3 Change of scope of consolidation
No change of scope of consolidation from last year.
Note 7 Notes to significant elements of the financial statements
Unless otherwise stated, the meaning of "B/f", "C/f", "Current period ", "Last period " in the following notes (incl.
notes to significant elements of the financial statements is "1st January 2013", "30th June 2013", "the date
ended June 30th, 2013", "the date ended June 30th, 2012" respectively.
7.1 Monetary funds
C/f B/f
Item Currency Exchange CNY Currency Exchange CNY
amount rate amount amount rate amount
Cash at hand: 353,335.07 349,489.05
- CNY 228,088.60 277,891.69
USD 4,332.00 6.1787 26,766.13 4,881.63 6.2855 30,683.48
GBP 308.55 9.4213 2,906.94 1,658.55 10.1611 16,852.69
Others 95,573.40 24,061.19
323,860,262.7 155,038,253.9
Bank deposit:
2 2
321,370,000.0 144,719,592.5
- CNY
3 1
USD 287,144.91 6.1787 1,774,182.26 1,424,159.60 6.2855 8,951,555.18
Others 716,080.43 1,367,106.23
254,270,215.0
Other monetary funds: 30,000.00
9
254,270,215.0
- CNY 30,000.00
9
578,483,812.8 155,417,742.9
Total
8 7
Other monetary funds as at the reporting date include margin deposit amounting to 254,270,215.09 (2012
comparative: 30,000.00). Refund of foreign exchange under the amount of goods trade, July 1, 2013 has
passed the safe verification, the group can withdraw at any time
73
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
7.2 Financial assets held for trading
Item Fair value as at 2013.6.30 Fair value as at 2012.12.31
Interest rate swaps 130,160.56 0.00
Total 130,160.56 0.00
The immature interest rate swaps held by the Company had a principal amount of USD 127,320,763.40 as at
the reporting date; bankers confirmed that the reporting date fair value of these interest rate swaps is
130,160.56 (USD 21,066.01).
7.3 Accounts receivables
7.3.1 Disclosure by category
C/f
Category Carrying amount Allowance for bad debt
Amount % Amount %
Accounts receivable of individual
significance and subject to individual 190,575,403.24 71.43 0.00 0.00
impairment assessment
Accounts receivable subject to
impairment assessment by portfolio
Portfolio by nature 64,088,982.68 24.02 3,204,449.13 5.00
Subtotal 64,088,982.68 24.02 3,204,449.13 5.00
Accounts receivable of individual
insignificance but subject to individual 12,144,393.96 4.55 916,508.05 7.55
impairment assessment
Total 266,808,779.88 100.00 4,120,957.18 1.54
(Continued)
B/f
Category Carrying amount Allowance for bad debt
Amount % Amount %
Accounts receivable of individual
significance and subject to individual 137,210,577.33 72.52 0.00 0.00
impairment assessment
Accounts receivable subject to
impairment assessment by portfolio
Portfolio by nature 43,875,679.81 23.19 2,193,763.64 5.00
Subtotal 43,875,679.81 23.19 2,193,763.64 5.00
Accounts receivable of individual
insignificance but subject to individual 8,114,191.72 4.29 916,508.05 11.30
impairment assessment
Total 189,200,448.86 100.00 3,110,271.69 1.64
74
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
7.3.2 Disclosure by age
C/f B/f
Age
Amount % Amount %
Within 1 year 260,944,427.89 97.80 181,367,393.86 95.86
1 to 2 years 2,991,909.58 1.12 3,699,462.88 1.96
2 to 3 years 17,568.54 0.01 1,121,571.85 0.59
Over 3 years 2,854,873.87 1.07 3,012,020.27 1.59
Total 266,808,779.88 100.00 189,200,448.86 100.00
7.3.3 Allowance for bad debt
① Accounts receivable of individual significance and subject to individual impairment assessment
Allowance Rate of
Debtor Carrying amount Reason for allowance
for bad debt allowance (%)
No indication of impairment
BSP-CHINA 76,353,807.74 0.00 0.00 upon individual
assessment
No indication of impairment
Accounting Center of China Aviation
62,889,315.00 0.00 0.00 upon individual
Limited Company
assessment
No indication of impairment
Air China 51,332,280.50 0.00 0.00 upon individual
assessment
Total 190,575,403.24 0.00 0.00
② Accounts receivable subject to impairment assessment by portfolio
Allowance by percentage of remaining balance
Portfolio Carrying amount Rate of allowance (%) Allowance for bad debt
Portfolio by nature 64,088,982.68 5.00 3,204,449.13
Total 64,088,982.68 5.00 3,204,449.13
③ Accounts receivable of individual insignificance but subject to individual impairment assessment
Rate of
Allowance for
Debtor Carrying amount allowance Reason for allowance
bad debt
(%)
75
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
Rate of
Allowance for
Debtor Carrying amount allowance Reason for allowance
bad debt
(%)
No indication of impairment
UATP 7,719,525.63 0.00 0.00 upon individual
assessment
No indication of impairment
BSP-TWD 3,230,714.75 0.00 0.00 upon individual
assessment
Impaired collectibility
CR Airways 916,508.05 100.00 916,508.05 identified upon individual
assessment
No indication of impairment
BSP-JAPAN 277,645.53 0.00 0.00 upon individual
assessment
Total 12,144,393.96 7.55 916,508.05
7.3.4 Accounts receivable owed by investors holding 5% or more of the shares of the Company
C/f B/f
Investor
Carrying amount Allowance for bad debt Carrying amount Allowance for bad debt
Air China 51,332,280.50 0.00 54,927,044.11 0.00
Total 51,332,280.50 0.00 54,927,044.11 0.00
7.3.5 Top five accounts receivable
Relationship to % of total accounts
Debtor Amount Age
the Company receivable
BSP-CHINA Third party 76,353,807.74 Within 1 year 28.62
Accounting Center of China Aviation
Third party 62,889,315.00 Within 1 year 23.57
Limited Company
Air China Related party 51,332,280.50 Within 1 year 19.24
Erdos Civil Aviation Airport
Third party 29,261,438.41 Within 1 year 10.97
Company Limited
UATP Third party 7,719,525.63 Within 1 year 2.89
Total 227,556,367.28 85.29
7.3.6 Related party balances
76
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
See Note 8.6 Related party balances for details.
7.4 Advances to suppliers
7.4.1 Disclosure by age
C/f B/f
Age
Amount % Amount %
Within 1 year 84,984,567.98 97.30 56,117,454.43 98.58
1 to 2 years 1,772,963.68 2.03 163,289.18 0.29
2 to 3 years 10,500.00 0.01 159,468.60 0.28
Over 3 years 577,493.40 0.66 486,993.40 0.85
Total 87,345,525.06 100.00 56,927,205.61 100.00
7.4.2 Top five prepaid suppliers
Relationship to Reason for pending
Supplier Amount Age
the Company settlement
Prepayment for
Supplier #1 Third party 13,200,000.00 Within 1 year
machinery
Prepayment for
Supplier #2 Third party 10,674,681.85 Within 1 year
aircraft lease rental
Prepayment for
Supplier #3 Third party 5,710,468.14 Within 1 year
aircraft lease rental
Prepayment for
Supplier #4 Third party 5,490,249.66 Within 1 year
aircraft lease rental
Prepayment for
Supplier #5 Third party 5,206,555.71 Within 1 year
aircraft lease rental
Total 40,281,955.36
7.4.3 No advance to supplier was owed by investors holding 5% or more of the shares of the Company.
7.5 dividend receivable
Item Current period Current period
B/f C/f
increase decrease
TravelSky Technology Limited 0.00 1,735,051.50 0.00 1,735,051.50
Total 0.00 1,735,051.50 0.00 1,735,051.50
7.6 Other receivables
7.6.1 Disclosure by category
77
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
C/f
Category Carrying amount Allowance for bad debt
Amount % Amount %
Other receivables of individual
significance and subject to individual 168,307,704.87 47.55 109,051,717.65 64.79
impairment assessment
Other receivables subject to impairment
assessment by portfolio
Portfolio by nature 114,167,454.10 32.26 5,708,372.70 5.00
Subtotal 114,167,454.10 32.26 5,708,372.70 5.00
Other receivables of individual
insignificance but subject to individual 71,439,765.15 20.19 0.00 0.00
impairment assessment
Total 353,914,924.12 100.00 114,760,090.35 32.43
(Continued)
B/f
Category Carrying amount Allowance for bad debt
Amount % Amount %
Other receivables of individual
significance and subject to individual 170,529,977.31 46.45 109,051,717.65 63.95
impairment assessment
Other receivables subject to impairment
assessment by portfolio
Portfolio by nature 117,991,367.19 32.14 5,899,568.36 5.00
Subtotal 117,991,367.19 32.14 5,899,568.36 5.00
Other receivables of individual
insignificance but subject to individual 78,577,743.62 21.41 0.00 0.00
impairment assessment
Total 367,099,088.12 100.00 114,951,286.01 31.31
7.6.2 Disclosure by age
C/f B/f
Age
Amount % Amount %
Within 1 year 119,151,674.71 33.67 156,252,301.80 42.56
1 to 2 years 25,483,004.74 7.20 9,668,933.94 2.64
2 to 3 years 16,009,863.40 4.52 15,390,105.67 4.19
Over 3 years 193,270,381.27 54.61 185,787,746.71 50.61
Total 353,914,924.12 100.00 367,099,088.12 100.00
78
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
7.6.3 Allowance for bad debt
① Other receivables of individual significance and subject to individual impairment assessment
Rate of
Carrying Allowance for
Debtor allowance Reason for allowance
amount bad debt
(%)
Impaired collectibility
Shandong Rainbow Commercial Jet
109,051,717.65 109,051,717.65 100.00 identified upon
Co., Ltd.
individual assessment
No indication of
CBD-leasing Co., Ltd. 41,354,563.28 0.00 0.00 impairment upon
individual assessment
No indication of
Debtor #2 17,901,423.94 0.00 0.00 impairment upon
individual assessment
Total 168,307,704.87 109,051,717.65 64.79
② Other receivables subject to impairment assessment by portfolio
Allowance by percentage of remaining balance
Rate of allowance
Portfolio Carrying amount Allowance for bad debt
(%)
Portfolio by nature 114,167,454.10 5.00 5,708,372.70
Total 114,167,454.10 5.00 5,708,372.70
③ Other receivables of individual insignificance but subject to individual impairment assessment
Rate of
Allowance for
Debtor Carrying amount allowance Reason for allowance
bad debt
(%)
No indication of
Debtor #3 17,300,360.00 0.00 0.00 impairment upon
individual assessment
No indication of
Beijing FuLaiTe Technology
14,378,959.41 0.00 0.00 impairment upon
Development Co., Ltd.
individual assessment
No indication of
Debtor #4 12,961,830.40 0.00 0.00 impairment upon
individual assessment
79
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
Rate of
Allowance for
Debtor Carrying amount allowance Reason for allowance
bad debt
(%)
No indication of
Debtor #5 4,942,960.00 0.00 0.00 impairment upon
individual assessment
No indication of
Debtor #6 4,238,588.20 0.00 0.00 impairment upon
individual assessment
No indication of
Debtor #7 3,262,353.60 0.00 0.00 impairment upon
individual assessment
No indication of
Air China 7,595,193.00 0.00 0.00 impairment upon
individual assessment
No indication of
Debtor #8 2,326,550.44 0.00 0.00 impairment upon
individual assessment
No indication of
Debtor #9 1,714,342.10 0.00 0.00 impairment upon
individual assessment
No indication of
Debtor #10 1,278,990.90 0.00 0.00 impairment upon
individual assessment
No indication of
Debtor #11 617,870.00 0.00 0.00 impairment upon
individual assessment
No indication of
Debtor #12 469,581.20 0.00 0.00 impairment upon
individual assessment
No indication of
Debtor #13 185,361.00 0.00 0.00 impairment upon
individual assessment
No indication of
Debtor #14 166,824.90 0.00 0.00 impairment upon
individual assessment
80
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
Rate of
Allowance for
Debtor Carrying amount allowance Reason for allowance
bad debt
(%)
Total 71,439,765.15 0.00 0.00
7.6.4 Other receivables owed by investors holding 5% or more of the shares of the Company
C/f B/f
Investor Allowance for Allowance for bad
Carrying amount Carrying amount
bad debt debt
Air China 7,595,193.00 0.00 9,336,264.20 0.00
Total 7,595,193.00 0.00 9,336,264.20 0.00
7.6.5 Top five other receivables
Relationship to % of total other
Debtor Amount Age
the Company receivables
Shandong Rainbow Commercial Jet 109,051,717.6
Related party Over 3 years 30.81
Co., Ltd. 5
CBD-leasing Co., Ltd. Third party 41,354,563.28 Over 3 years 11.68
Debtor #1 Third party 34,401,215.57 Within 1 year 9.72
Debtor #2 Third party 17,901,423.94 Within 1 year 5.06
Debtor #3 Third party 17,300,360.00 Over 3 years 4.89
220,009,280.4
Total 62.16
4
7.6.6 Related party balances
See Note 8.6 Related party balances for details.
7.6.7 Other receivables denominated in foreign currencies and the relevant rate for translation
C/f B/f
Currency Currency Exchange CNY Currency Exchange CNY
amount rate amount amount rate amount
USD 12,074,978.02 6.1787 74,607,666.69 13,821,767.06 6.2855 86,876,716.86
7.7 Inventories
Disclosure by type
Type C/f
81
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
Impairment
Gross carrying amount Net carrying amount
allowance
Consumable air quipements 117,048,061.46 0.00 117,048,061.46
Low-value consumables 1,345,152.69 0.00 1,345,152.69
Materials 627,308.79 0.00 627,308.79
Total 119,020,522.94 0.00 119,020,522.94
(Continued)
Type B/f
Impairment
Gross carrying amount Net carrying amount
allowance
Consumable air quipements 110,802,491.47 0.00 110,802,491.47
Low-value consumables 5,405,045.57 0.00 5,405,045.57
Materials 737,376.85 0.00 737,376.85
Total 116,944,913.89 0.00 116,944,913.89
7.8 Long-term equity investments
7.8.1 Disclosure by category
Current period Current period
Category B/f C/f
increase decrease
Investment in associates 22,500,000.00 0.00 0.00 22,500,000.00
Other equity investments 88,352,100.00 0.00 0.00 88,352,100.00
Less: Impairment allowance 22,500,000.00 0.00 0.00 22,500,000.00
Total 88,352,100.00 0.00 0.00 88,352,100.00
7.8.2 Details of long-term equity investments
Investee Measurement method Cost of investment
China Travelsky Technology Co., Ltd. Cost method 6,690,000.00
Sichuan Airlines Co., Ltd. Cost method 35,000,000.00
Jinan International Airport Co., Ltd. Cost method 46,662,100.00
Shandong Rainbow Commercial Jet Co., Ltd. Equity method 22,500,000.00
Total 110,852,100.00
(Continued)
82
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
Current period
Investee B/f C/f
movement
China Travelsky Technology Co., Ltd. 6,690,000.00 0.00 6,690,000.00
Sichuan Airlines Co., Ltd. 35,000,000.00 0.00 35,000,000.00
Jinan International Airport Co., Ltd. 46,662,100.00 0.00 46,662,100.00
Shandong Rainbow Commercial Jet Co., Ltd. 22,500,000.00 0.00 22,500,000.00
Total 110,852,100.00 0.00 110,852,100.00
(Continued)
Shareholding Voting right Reason for disagreement between
Investee
(%) (%) shareholding and voting right
China Travelsky Technology Co., Ltd. 0.45 0.45 In agreement
Sichuan Airlines Co., Ltd. 10.00 10.00 In agreement
Jinan International Airport Co., Ltd. 2.53 2.53 In agreement
Shandong Rainbow Commercial Jet Co., Ltd. 45.00 45.00 In agreement
Total
(Continued)
Impairment Impairment allowance Cash dividend in
Investee
allowance recognised in current year current year
China Travelsky Technology Co., Ltd. 0.00 0.00 1,735,051.50
Sichuan Airlines Co., Ltd. 0.00 0.00 0.00
Jinan International Airport Co., Ltd. 0.00 0.00 0.00
Shandong Rainbow Commercial Jet Co., Ltd. 22,500,000.00 0.00 0.00
Total 22,500,000.00 1,735,051.50
7.8.3 Details of long-term equity investments measured by equity method
Type of Place of Legal Nature of
Investee
incorporation registration representative operation
Limited liability Aero
Shandong Rainbow Commercial Jet Co., Ltd. Jinan, Shandong ZHAO, Hong
company transportation
(Continued)
Investee Registered capital Shareholding (%) Voting right(%)
Shandong Rainbow Commercial Jet Co., Ltd. 50.00 million 45.00 45.00
83
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
(Continued)
Investee Total assets c/f Total liabilities c/f Net assets c/f
Shandong Rainbow Commercial Jet Co., Ltd. 11,775,213.88 175,265,154.52 -163,489,940.64
(Continued)
Revenue for Net profit for Relationship to
Investee Institution code
current period current period the company
Shandong Rainbow Commercial Jet Co., Ltd. 0.00 1,063.12 Associate 72497146
7.6.4 Details of impairment allowance for long-term equity investments
Current period Current period
Investee B/f C/f
increase decrease
Investment in associates
Shandong Rainbow Commercial Jet Co., Ltd. 22,500,000.00 0.00 0.00 22,500,000.00
Total 22,500,000.00 0.00 0.00 22,500,000.00
7.9 Fixed assets
7.9.1 General information
Current period Current period
Category B/f C/f
increase decrease
1. Historical cost 12,502,314,115.70 245,692,991.33 69,148,805.13 12,678,858,301.90
Houses and buildings 283,494,370.54 770,490.58 0.00 284,264,861.12
Aircrafts and engines 11,425,420,286.95 167,036,604.09 49,876,094.64 11,542,580,796.40
High-value rotables 620,652,258.77 42,828,216.91 13,798,023.58 649,682,452.10
Transportation vehicles 57,414,226.49 1,602,802.00 2,024,909.30 56,992,119.19
Machinery , electronics&
115,332,972.95 33,454,877.75 3,449,777.61 145,338,073.09
furniture
2. Cumulative depreciation Addition Recognition
Total cumulative
3,985,755,426.26 397,080,519.44 59,316,865.86 4,323,519,079.84
depreciation
Houses and buildings 44,880,915.72 4,405,818.51 0.00 49,286,734.23
Aircrafts and engines 3,635,313,040.46 368,295,866.71 49,876,094.64 3,953,732,812.53
High-value rotables 218,256,536.65 16,308,220.86 5,245,440.37 229,319,317.14
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Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
Current period Current period
Category B/f C/f
increase decrease
Transportation vehicles 24,348,244.01 2,273,205.99 1,775,985.50 24,845,464.50
Machinery , electronics&
62,956,689.42 5,797,407.37 2,419,345.35 66,334,751.44
furniture
3. NBV before impairment
8,516,558,689.44 8,355,339,222.06
allowance
Houses and buildings 238,613,454.82 234,978,126.89
Aircrafts and engines 7,790,107,246.49 7,588,847,983.87
High-value rotables 402,395,722.12 420,363,134.96
Transportation vehicles 33,065,982.48 32,146,654.69
Machinery , electronics&
52,376,283.53 79,003,321.65
furniture
4. Impairment allowance 383,771,823.22 79,114,818.66 1,006,283.51 461,880,358.37
Houses and buildings 0.00 0.00 0.00 0.00
Aircrafts and engines 351,887,855.38 79,114,818.66 0.00 431,002,674.04
High-value rotables 31,883,967.84 0.00 1,006,283.51 30,877,684.33
Transportation vehicles 0.00 0.00 0.00 0.00
Machinery , electronics&
0.00 0.00 0.00 0.00
furniture
5. NBV 8,132,786,866.22 7,893,458,863.69
Houses and buildings 238,613,454.82 234,978,126.89
Aircrafts and engines 7,438,219,391.11 7,157,845,309.83
High-value rotables 370,511,754.28 389,485,450.63
Transportation vehicles 33,065,982.48 32,146,654.69
Machinery , electronics&
52,376,283.53 79,003,321.65
furniture
Note: Depreciation recognised during the current period amounted to 397,080,519.44; historical cost of fixed
assets transferred from construction in progress during the current period amounted to 2,519,281.90.
7.9.2 Fixed assets with imposed restriction on ownership
As at reporting date, aircrafts and engines with NBV amounting to 5,186,362,733.59 (historical cost amounting
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Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
to 6,882,550,190.06; 2012 comparative: NBV and historical cost amounting to 5,290,960,014.07 and
6,784,301,763.02 respectively) were pledged as security for long-term borrowings amounting to
3,723,113,084.92 (2012 comparative: 3,854,676,638.03, see Note 7.28) and long-term borrowings due within
one year amounting to 417,971,247.24 (2012 comparative: 283,051,698.10, see Note 7.27); ownership of
aircrafts and engines with NBV amountig to 1,130,511,474.18 (historical cost amounting to 1,737,112,531.96;
2012 comparative: NBV and historical cost amounting to 1,191,901,011.49 and 1,737,224,257.96respectively)
was restricted as the fact that they were acquired under financial leases.
7.9.3 Fixed assets acquired under financial leases
Category C/f B/f
1. Historical cost
Aircrafts and engines 1,737,112,531.96 1,737,224,257.96
Total 1,737,112,531.96 1,737,224,257.96
2. Cumulative depreciation
Aircrafts and engines 606,601,057.78 545,323,246.47
Total 606,601,057.78 545,323,246.47
3. NBV before impairment allowance
Aircrafts and engines 1,130,511,474.18 1,191,901,011.49
Total 1,130,511,474.18 1,191,901,011.49
4. Impairment allowance
Aircrafts and engines 0.00 0.00
Total 0.00 0.00
5. NBV
Aircrafts and engines 1,130,511,474.18 1,191,901,011.49
Total 1,130,511,474.18 1,191,901,011.49
7.9.4 Fixed assets pending ownership registration
Estimated
Item Reason for pending NBV
registration
Jinan cargo arrival and departure Land rented from Jinan Air Control, no
14,477,571.05
warehouses eligible for ownership registration
Qingdao aircraft maintenance
Ownership registration in process 2013 38,072,891.36
workshops
Yantai terminal building Ownership registration in process 2013 18,363,551.69
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Estimated
Item Reason for pending NBV
registration
Qingdao logistic operation
Ownership registration in process 2013 61,503,187.58
building
Total 132,417,201.68
7.9.5 Impairment allowance for fixed assets
Impairment allowance for the asset group consisting of 5 B737-300 aircrafts amounting to 79,114,818.66 was
recognised during the current period with reference to the disposal plan for B737-300 aircrafts.
7.10. Construction in progress
7.10.1 General information
C/f
Project
Gross carrying amount Impairment allowance Net carrying amount
Prepayment for aircrafts 1,432,834,326.48 0.00 1,432,834,326.48
The introduction of engine 17,576,619.23 0.00 17,576,619.23
Others 27,795,591.37 0.00 27,795,591.37
Total 1,478,206,537.08 0.00 1,478,206,537.08
(Continued)
B/f
Project
Gross carrying amount Impairment allowance Net carrying amount
Prepayment for aircrafts 1,414,569,228.22 0.00 1,414,569,228.22
The introduction of engine 0.00 0.00 0.00
Others 16,316,585.89 0.00 16,316,585.89
Total 1,430,885,814.11 0.00 1,430,885,814.11
7.10.2 Significant projects
Project Budget B/f Current period increase
Prepayment for aircrafts 5,282,788,500.00 1,414,569,228.22 794,896,300.44
The introduction of engine 62,309,779.81 0.00 17,576,619.23
Others 192,355,000.00 16,316,585.89 11,479,005.48
Total 5,537,453,279.81 1,430,885,814.11 823,951,925.15
(Continued)
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Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
Transferred to fixed
Project Other decrease C/f
assets in current period
Prepayment for aircrafts 2,519,281.90 774,111,920.28 1,432,834,326.48
The introduction of engine 0.00 0.00 17,576,619.23
Others 0.00 0.00 27,795,591.37
Total 2,519,281.90 774,111,920.28 1,478,206,537.08
(Continued)
Borrowing costs Rate of interest
Cumulative borrowing
Project capitalised in the current capitalisation for the
costs capitalised
period current period
Prepayment for aircrafts -1,350,072.47 70,368.37 1.2280—4.4374
The introduction of engine 0.00 0.00 n/a
Others 0.00 0.00 n/a
Total -1,350,072.47 70,368.37
(Continued)
Project % of investment : budget Percentage of completion Source of finance
Borrowings from financial
Prepayment for aircrafts 27.12 27.12
institutions
The introduction of engine 28.21 28.21 Self-financing
Others 14.45 14.45 Self-financing
Total
7.10.3 No indication of impairment on construction in progress was present as at the reporting date, therefore
no impairment allowance was recognised.
7.11 Intangible assets
General information
Current period Current period
Category B/f C/f
increase decrease
1. Historical cost 84,663,933.13 0.00 0.00 84,663,933.13
Land rights 84,663,933.13 0.00 0.00 84,663,933.13
2. Cumulative depreciation 5,849,161.58 713,635.18 0.00 6,562,796.76
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Current period Current period
Category B/f C/f
increase decrease
Land rights 5,849,161.58 713,635.18 0.00 6,562,796.76
3. Impairment allowance 0.00 0.00 0.00 0.00
Land rights 0.00 0.00 0.00 0.00
4. NBV 78,814,771.55 78,101,136.37
Land rights 78,814,771.55 78,101,136.37
Note: ① Amortisation recognised during the current year amounted to 713,635.18.
② No indication of impairment on intangible assets was present as at the reporting date, therefore no
impairment allowance was recognised.
7.12 Goodwill
7.12.1 General information
Impairment
Current period Current period
Investee B/f C/f alowance
increase decrease
c/f
Qingdao Feisheng 10,220,816.22 0.00 0.00 10,220,816.22 0.00
Total 10,220,816.22 0.00 0.00 10,220,816.22 0.00
7.13 Deferred charges
Current period Current period Other Reason for
Item B/f C/f
increase amortisation decrease other decrease
Pilot training 283,833,279.68 28,008,852.05 23,198,629.92 0.00 288,643,501.81
Decoration
18,034,629.07 74,500.00 2,047,181.14 0.00 16,061,947.93
expenditure
Total 301,867,908.75 28,083,352.05 25,245,811.06 0.00 304,705,449.74
7.14 Deferred tax assets and deferred income tax liability
7.14.1 Deferred tax assets
C/f B/f
Category Deductible temporary Deductible temporary
Deferred tax
Deferred tax assets difference and tax loss difference and tax loss
assets
carried forwards carried forwards
Allowance for bad debt 29,720,261.88 118,881,047.53 29,515,389.43 118,061,557.70
Impairment allowance for
115,470,089.59 461,880,358.37 95,942,955.81 383,771,823.22
fixed assets
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C/f B/f
Category Deductible temporary Deductible temporary
Deferred tax
Deferred tax assets difference and tax loss difference and tax loss
assets
carried forwards carried forwards
Fair value movement of
financial liabilities held for 0.00 0.00 1,799,695.90 7,198,783.59
trading
Provisions 231,560,350.43 926,241,401.69 198,150,745.16 792,602,980.62
Employment benefits
48,231,937.01 192,927,748.03 85,129,768.80 340,519,075.19
payable
Deferred income 6,048,766.51 24,195,066.05 40,300,683.54 161,202,734.16
Tax loss carried forwards 4,830,123.41 19,320,493.66 46,072.79 184,291.18
Total 435,861,528.83 1,743,446,115.33 450,885,311.43 1,803,541,245.66
7.14.2 deferred income tax liability
C/f B/f
Category Deductible temporary Deductible temporary
Deferred tax
Deferred tax assets difference and tax loss difference and tax loss
assets
carried forwards carried forwards
Financial assets held for
32,540.14 130,160.56 0.00 0.00
trading
Total 32,540.14 130,160.56 0.00 0.00
7.15 Allowance for asset impairment
Current period Current decrease
Category B/f C/f
recognition Reversal Expanded
1. Allowance for bad debt 118,061,557.70 819,489.83 0.00 0.00 118,881,047.53
2. Impairment allowance for
22,500,000.00 0.00 0.00 0.00 22,500,000.00
long-term equity investments
3. Impairment allowance for fixed
383,771,823.22 79,114,818.66 0.00 1,006,283.51 461,880,358.37
assets
Total 524,333,380.92 79,934,308.49 0.00 1,006,283.51 603,261,405.90
7.16 Assets with imposed restriction on ownership
Category C/f Reason of restriction
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Category C/f Reason of restriction
Assets pledged as security
Aircrafts and engines 5,186,362,733.59 Pledge as security for long-term
borrowings
Other form of restriction:
Aircrafts and engines 1,130,511,474.18 Assets acquired under financial lease
Total 6,316,874,207.77
7.17 Short-term borrowings
7.17.1 Disclosure by type
Type C/f B/f
Credit loans 800,000,000.00 321,378,829.28
Guarantee loans 0.00 0.00
Total 800,000,000.00 321,378,829.28
7.18 Financial liabilities held for trading
Item Fair value c/f Fair value b/f
Interest rate swaps 0.00 7,198,783.59
Total 0.00 7,198,783.59
7.19 Notes payable
Type C/f B/f
Bankers' acceptance 0.00 100,000.00
Commercial acceptance 0.00 0.00
Total 0.00 100,000.00
7.20 Accounts payable
7.20.1 General information
Item C/f B/f
Fuel cost 299,923,935.39 296,059,868.05
Aircraft maintenance costs 315,037,152.35 253,358,086.69
Landing fee 198,536,319.23 194,407,548.18
Computer booking fee 36,675,297.36 58,105,416.36
Flight catering 58,660,989.26 53,351,961.08
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Item C/f B/f
Aero equipments 49,439,520.79 45,048,851.36
Lease rental 13,832,220.31 20,551,734.38
Others 139,913,598.93 30,085,312.50
Total 1,112,019,033.62 950,968,778.60
7.20.2 Accounts payable owed to investors investors holding 5% or more of the shares of the Company
See Note 8.6 Related party balances for details.
7.20.3 No material accounts payable due for more than 1 year as at the reporting date.
7.21 Advances from customers
7.21.1 General information
Item C/f B/f
Ticket clearing 178,477,102.05 191,551,691.08
Advanced payment for tickets 13,623,909.86 15,459,309.56
Others 14,772,506.31 8,096,572.49
Total 206,873,518.22 215,107,573.13
7.21.2 Advances from customers owed to investors investors holding 5% or more of the shares of the
Company
See Note 8.6 Related party balances for details.
7.21.3 No material advances from customers due for more than 1 year as at the reporting date.
7.22 Employment benefits payable
Current year Current year
Category B/f C/f
increase decrease
(1) Wages and salaries, bonuses,
306,610,783.99 575,381,675.91 698,671,083.90 183,321,376.00
subsidies and allowances
(2) Employee benefits 0.00 31,871,959.89 26,871,959.89 5,000,000.00
(3) Social insurance 2,930,451.14 71,237,151.22 70,383,814.33 3,783,788.03
Within: ①Medical insurance 0.00 16,743,656.83 16,743,656.83 0.00
②Basic retirement insurance 0.00 32,359,348.50 32,359,348.50 0.00
③Annuity fee 2,930,451.14 18,042,552.20 17,189,215.31 3,783,788.03
④Unemployment fee 0.00 905,823.58 905,823.58 0.00
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Current year Current year
Category B/f C/f
increase decrease
⑤Work injury insurance 0.00 1,320,025.24 1,320,025.24 0.00
⑥Pregnancy insurance 0.00 1,865,744.87 1,865,744.87 0.00
⑦Reserved funds for disable
0.00 0.00 0.00 0.00
jobseekers
(4) Housing provident fund 18,808.40 22,448,844.67 22,079,037.55 388,615.52
(5) Labor union fee and employee
34,143,751.18 8,967,345.97 7,331,882.82 35,779,214.33
education fee
(6) Non-monetary benefits 0.00 0.00 0.00 0.00
(7) Redemption of termination of
0.00 82,531.14 82,531.14 0.00
labor contract
(8) Others 0.00 0.00 0.00 0.00
Within: Share-based payments
0.00 0.00 0.00 0.00
settled by cash
Total 343,703,794.71 709,989,508.80 825,420,309.63 228,272,993.88
7.23 Taxes and fees payable
Tax (Fee) C/f B/f
VAT and custom 2,889.52 2,889.52
Business tax 26,549,580.09 21,097,209.73
Urban construction and maintenance
1,854,947.71 1,422,656.41
tax
Education surcharge 1,489,194.22 1,031,247.63
Enterprise income tax -21,687,290.97 139,026,409.94
Property tax 1,313,944.58 1,225,434.50
Land tax 142,738.11 150,775.11
Personal income tax 9,613,512.69 4,736,473.47
Stamp duty 1,708,996.70 3,651,170.17
Civil aviation development fund 65,957,203.70 59,423,302.82
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Tax (Fee) C/f B/f
Provision for income tax deducted at
1,886,243.91 -3,000,686.74
source
Sales tax deducted at source 779,876.17 703,487.16
Others 1,372.76 214,108.31
Total 89,613,209.19 229,684,478.03
7.24 Interests payable
Item C/f B/f
Interest on long-term borrowings by
4,324,911.98 3,939,751.55
installment
Interest on corporate bond 1,310,833.33 12,035,833.33
Interest on short-term borrowings 1,080,002.00 490,510.37
Total 6,715,747.31 16,466,095.25
7.25 dividends payable
The reason for more than a
Investment unit name C/f B/f
year of unpaid
SDA Group 67,201,600.00 0.00
Air China 36,480,000.00 0.00
Shandong Hualu Group Co., Ltd. 79,600.00 0.00
Inspur Co., Ltd. 79,600.00 0.00
Luyin Investment Group 79,600.00 0.00
Qingdao Zhenyuan Shipbuilding
79,600.00 0.00
Co., Ltd.
Shandong Group Corp. of
11,940.00 11,940.00
Fisheries Enterprises
B share dividend 56,000,000.00 0.00
合 计 160,011,940.00 11,940.00
7.26 Other payables
7.26.1 General information
Item C/f B/f
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Item C/f B/f
Payable for construction projects 14,723,752.31 24,002,111.06
Payable for down payments 90,720,567.97 57,843,473.65
Payables associated with aircraft
12,083,955.02 19,098,882.67
purchase
Civil aviation development fund
22,917,049.72 25,039,913.23
deducted at source
Others 78,383,420.32 84,090,633.33
Total 218,828,745.34 210,075,013.94
7.26.2 Other payables owed to investors investors holding 5% or more of the shares of the Company
See Note 8.6 Related party balances for details.
7.26.3 Material other payables due for more than 1 year
Reason for pending Post reporting date
Creditor Amount
settlement repayment
Margin deposit to be
Air China 20,000,000.00 settlement upon expiry of No
immature wet lease
Total 20,000,000.00
7.26.4 Material other payables
Creditor C/f Description
Air China 20,000,000.00 Margin deposit for wet lease
Total 20,000,000.00
7.27 Non-current liabilities due within one year
7.27.1 General information
Category C/f B/f
Long-term borrowings due within one year (Note 7.28) 417,971,247.24 283,051,698.10
Financial lease rental payables due within one year (Note 7.30) 86,962,164.33 109,521,823.77
Total 504,933,411.57 392,573,521.87
7.27.2 Long-term borrowings due within one year
① General information
Category C/f B/f
Secured loans 417,971,247.24 283,051,698.10
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Category C/f B/f
Total 417,971,247.24 283,051,698.10
② Top five long-term borrowings due within one year
Creditor Start date Expiry date Interest rate (%) Currency
China Development Bank, Shandong 2012/5/7 Step repayment 1-7 USD
Bank of China, Jinan 2005/7/15 Step repayment 1-7 USD
Minsheng Bank, Jinan 2004/6/29 Step repayment 1-7 CNY
China Development Bank, Shandong 2008/7/11 Step repayment 1-7 USD
ICBC, Jinan Dongjiao Branch 2009/6/30 Step repayment 1-7 USD
Total
(Continued)
C/f B/f
Creditor
Currency CNY Currency CNY
China Development Bank, Shandong 22,320,000.00 137,908,584.00 amount 31,427,500.00
Bank of China, Jinan 11,200,000.00 69,201,440.00 11,200,000.00 70,397,600.00
Minsheng Bank, Jinan 0.00 50,000,000.00 0.00 50,000,000.00
China Development Bank, Shandong 6,600,000.00 40,779,420.00 6,600,000.00 41,484,300.00
ICBC, Jinan Dongjiao Branch 4,000,000.00 24,714,800.00 4,000,000.00 25,142,000.00
Total 322,604,244.00 218,451,400.00
7.27.3 Financial lease rental payables due within one year (top five)
Creditor Term Principal amount Interest rate(%)
CBD-leasing Co., Ltd. 2005.6-2020.6 1,440,000,000.00 6.5500
CALC Jian Zhao Limited 2011.8-2026.8 284,290,146.39 6.5500
Total 1,724,290,146.39
(Continued)
Creditor Accrued interest C/f Condition
CBD-leasing Co., Ltd. 47,090,316.12 70,836,447.97 Financial lease for aircraft
CALC Jian Zhao Limited 16,000,310.71 16,125,716.36 Financial lease for aircraft
Total 63,090,626.83 86,962,164.33
7.28 Long-term borrowings
Disclosure by category
Category C/f B/f
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Secured loans (by tangible assets) 4,141,084,332.16 4,137,728,336.13
Less: Long-term borrowings due within one year (Note 7.24) 417,971,247.24 283,051,698.10
Total 3,723,113,084.92 3,854,676,638.03
See Note 7.9.2 for details of collaterals for secured loans.
② Top five long-term borrowings
Creditor Start date Expiry date Interest rate (%) Currency
China Development Bank, Shandong 2012/5/7 Step repayment 1-7 USD
China Development Bank, Shandong 2008/7/11 Step repayment 1-7 USD
Bank of China, Jinan 2005/7/15 Step repayment 1-7 USD
ICBC, Jinan Dongjiao Branch 2009/6/30 Step repayment 1-7 USD
Minsheng Bank, Jinan 2004/6/29 Step repayment 1-7 CNY
Total
(Continued)
C/f B/f
Creditor Currency CNY Currency CNY
amount amount amount amount
China Development Bank, Shandong 212,500,000.00 1,312,973,750.00 207,000,000.00 1,301,098,500.00
China Development Bank, Shandong 99,590,808.50 615,341,728.48 109,490,808.50 688,204,476.83
Bank of China, Jinan 33,729,058.60 208,401,734.37 39,329,058.60 247,202,797.83
ICBC, Jinan Dongjiao Branch 20,491,654.64 126,611,786.52 26,491,654.64 166,513,295.24
Minsheng Bank, Jinan 0.00 100,000,000.00 0.00 0.00
Total 366,311,521.74 2,363,328,999.37 382,311,521.74 2,403,019,069.90
7.29 Bonds payable
Bond Face value Issue date Term Amount issued
Medium-term
500,000,000.00 2012/6/12 Three years 500,000,000.00
bond
Total 500,000,000.00 500,000,000.00
(Continued)
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Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
Interest payable Interest accrued in Interest paid in Interest payable
Bond C/f
b/f current period current period c/f
Medium-term bond 12,035,833.33 10,725,000.00 21,450,000.00 1,310,833.33 500,000,000.00
Total 12,035,833.33 10,725,000.00 21,450,000.00 1,310,833.33 500,000,000.00
7.30. Long-term payables
Disclosure by category
Category C/f B/f
Financial lease rental payables 932,231,705.43 1,003,581,510.68
Maintenance payables for aircrafts and engines held under
917,119,249.72 783,480,828.66
operating lease
Less: Financial lease rental payables due within one year
86,962,164.33 109,521,823.77
(Note 7.24)
Less: Maintenance payables for aircrafts and engines held
160,955,799.52 123,336,184.53
under operating lease due within one year (Note 1)
Total 1,601,432,991.30 1,554,204,331.04
Note : Maintenance payables for aircrafts and engines held under operating lease due within one year had
been included in accounts payable.
7.30.2 Top five financial lease rental payables
Creditor Term Principal amount Interest rate (%)
CBD-leasing Co., Ltd. 2005.6-2020.6 1,440,000,000.00 6.5500
CALC Jian Zhao Limited 2011.8-2026.8 284,290,146.39 6.5500
Total 1,724,290,146.39
(Continue)
Creditor Accrued interest C/f Condition
CBD-leasing Co., Ltd. 159,197,032.52 620,363,552.04 Financial lease for aircraft
CALC Jian Zhao Limited 107,516,693.87 224,905,989.06 Financial lease for aircraft
Total 266,713,726.39 845,269,541.10
7.31 Other non-current liabilities
Item C/f B/f
Designated subsidy for snow disaster 3,238,708.34 3,488,458.34
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Item C/f B/f
PhoenixMiles Program 0.00 161,202,734.17
Desigated subsidy for IT construction 4,709,541.65 4,709,541.65
Designated subsidy for civil aviation energy-saving
16,246,816.06 16,735,066.12
program
Total 24,195,066.05 186,135,800.28
7.32 Share capital
B/f
Category
Amount %
1. Shares with restriction on disposal
1.1 State-held shares 0.00 0.00
1.2 Shares held by state-owned entities 259,801,000.00 64.95
1.3 Shares held by other domestic investors 199,000.00 0.05
Within: Held by institutional investors 199,000.00 0.05
Held by non-institutional investors 0.00 0.00
1.4 Shares held by foreign investors 0.00 0.00
Within: Held by institutional investors 0.00 0.00
Held by non-institutional investors 0.00 0.00
Subtotal of shares with restriction on disposal 260,000,000.00 65.00
2. Floating shares
2.1 Ordianry shares issued in CNY 0.00 0.00
2.2 Shares issued in domestic stock market in foreign currency 140,000,000.00 35.00
2.3 Shares issued in foreign market in foreign currency 0.00 0.00
2.4 Others 0.00 0.00
Subtotal of floating shares 140,000,000.00 35.00
Total 400,000,000.00 100.00
(Continued)
Currency period movement (+, -)
Coversion
Category
Share issue Bonus issue from Others Subtotal
reserves
1. Shares with restriction on disposal
1.1 State-held shares 0.00 0.00 0.00 0.00 0.00
1.2 Shares held by state-owned entities 0.00 0.00 0.00 0.00 0.00
99
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
Currency period movement (+, -)
Coversion
Category
Share issue Bonus issue from Others Subtotal
reserves
1.3 Shares held by other domestic investors 0.00 0.00 0.00 0.00 0.00
Within: Held by institutional investors 0.00 0.00 0.00 0.00 0.00
Held by non-institutional investors 0.00 0.00 0.00 0.00 0.00
1.4 Shares held by foreign investors 0.00 0.00 0.00 0.00 0.00
Within: Held by institutional investors 0.00 0.00 0.00 0.00 0.00
Held by non-institutional investors 0.00 0.00 0.00 0.00 0.00
Subtotal of shares with restriction on disposal 0.00 0.00 0.00 0.00 0.00
2. Floating shares
2.1 Ordianry shares issued in CNY 0.00 0.00 0.00 0.00 0.00
2.2 Shares issued in domestic stock market in
0.00 0.00 0.00 0.00 0.00
foreign currency
2.3 Shares issued in foreign market in foreign
0.00 0.00 0.00 0.00 0.00
currency
2.4 Others 0.00 0.00 0.00 0.00 0.00
Subtotal of floating shares 0.00 0.00 0.00 0.00 0.00
Total 0.00 0.00 0.00 0.00 0.00
(Continue)
C/f
Category
Amount %
1. Shares with restriction on disposal
1.1 State-held shares 0.00 0.00
1.2 Shares held by state-owned entities 259,801,000.00 64.95
1.3 Shares held by other domestic investors 199,000.00 0.05
Within: Held by institutional investors 199,000.00 0.05
Held by non-institutional investors 0.00 0.00
1.4 Shares held by foreign investors 0.00 0.00
Within: Held by institutional investors 0.00 0.00
Held by non-institutional investors 0.00 0.00
Subtotal of shares with restriction on disposal 260,000,000.00 65.00
2. Floating shares
2.1 Ordianry shares issued in CNY 0.00 0.00
100
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
C/f
Category
Amount %
2.2 Shares issued in domestic stock market in foreign currency 140,000,000.00 35.00
2.3 Shares issued in foreign market in foreign currency 0.00 0.00
2.4 Others 0.00 0.00
Subtotal of floating shares 140,000,000.00 35.00
Total 400,000,000.00 100.00
Note: ① Shares were issued at CNY 1.00 each at par.
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.
7.33 Capital reserves
Current period Current period
Category B/f C/f
increase decrease
Share premium 67,618,282.54 0.00 0.00 67,618,282.54
Other capital reserves 7,792,081.16 0.00 0.00 7,792,081.16
Total 75,410,363.70 0.00 0.00 75,410,363.70
7.34 Surplus reserves
Current period Current period
Category B/f C/f
increase decrease
Statutory surplus reserve 257,642,799.31 0.00 0.00 257,642,799.31
Total 257,642,799.31 0.00 0.00 257,642,799.31
7.35 Retained earnings
Movement of retained earnings
Rate of
Item Current period Last period
appropriation
B/f 1,746,002,689.27 1,374,420,534.36
Total adjustment to retained earnings b/f (+, -) 0.00 0.00
Retained earnings b/f after adjustment 1,746,002,689.27 1,374,420,534.36
Add: Net profit attributable to shareholders of the
82,366,027.52 191,022,381.16
parent
Loss set off by surplus reserves 0.00 0.00
Others 0.00 0.00
Less: Appropriation to statutory surplus reserve 0.00 0.00
Appropriation to discretionary surplus reserve 0.00 0.00
Ordinary dividends declared 160,000,000.00 160,000,000.00
101
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Rate of
Item Current period Last period
appropriation
Bonus issue 0.00 0.00
C/f 1,668,368,716.79 1,405,442,915.52
7.36 Revenue and operating costs
7.36.1 General information
Category Current period Last period
Principal operating income 5,459,600,152.37 5,016,118,681.75
Other operating income 65,110,778.67 56,289,021.23
Total 5,524,710,931.04 5,072,407,702.98
Principal operating cost 4,691,128,168.27 4,090,899,252.91
Other operating cost 1,853,079.93 4,037,786.10
Total 4,692,981,248.20 4,094,937,039.01
7.36.2 Disclosure by service line
Current period Last period
Service line
Operating income Operating cost Operating income Operating cost
Aero transportation 5,434,206,939.71 4,676,304,819.71 4,996,878,206.46 4,080,162,639.35
Hospitality and catering 9,904,972.35 10,523,876.28 7,811,810.36 6,829,054.69
Training 10,182,728.01 2,574,004.54 7,084,704.57 2,423,290.18
Freight logistics 5,305,512.30 1,725,467.74 4,343,960.36 1,484,268.69
Total 5,459,600,152.37 4,691,128,168.27 5,016,118,681.75 4,090,899,252.91
7.36.3 Operating income from top five customers
Year Operating income % of total operating income
Current period 375,571,278.55 6.80
Last period 355,721,616.67 7.00
7.37 Business tax and surcharges
Item Current period Last period
Business tax 160,347,906.26 149,559,872.78
Urban maintenance and construction tax 11,334,209.74 10,295,838.38
Education surcharge and others 9,750,002.32 8,658,053.18
Total 181,432,118.32 168,513,764.34
7.38 Sales expenses
102
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Category Current period Last period
Employment benefits 63,444,369.86 90,554,616.57
Depreiciation 1,103,784.38 1,039,336.03
Travel 2,128,328.09 1,993,621.75
Advertisement 6,002,909.13 6,417,282.63
Brokerage 203,727,904.85 185,619,375.72
Computer booking 35,246,082.25 30,925,115.69
Online payment charge 11,419,130.34 9,104,318.34
Ticket printing cost 87,690.00 406,951.00
Lease rental 6,633,982.85 5,688,144.38
Accommodation and catering expenses
639,586.60 437,956.80
for transit passengers
office 3,209,497.09 2,266,165.85
Uniforms 181,257.00 238,938.75
Others 22,359,166.98 18,781,125.09
Total 356,183,689.42 353,472,948.60
7.39 General and administrative expenses
Category Current period Last period
Employment benefits 54,948,515.96 71,648,035.73
Depreiciation 4,432,141.06 3,498,809.26
Office 1,484,875.69 619,168.43
Amortisation of intangibles 713,635.18 720,715.26
Taxes and fees 4,482,333.16 1,519,415.79
Entertainment 5,902,900.67 7,158,756.42
Lease rental 8,327,340.02 6,886,511.72
Technology development 2,412,512.81 2,881,730.95
Subscription for clearing system 1,684,856.05 1,913,108.21
Others 26,671,289.23 14,174,898.61
Total 111,060,399.83 111,021,150.38
7.40 Financial costs
Category Current period Last period
Interest expenses 130,526,237.97 117,606,812.74
Less: Interest income 2,005,587.12 1,345,863.46
Exchange difference -59,536,643.10 9,693,787.35
103
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Category Current period Last period
Bank charges and others 1,283,021.49 4,295,268.13
Total 70,267,029.24 130,250,004.76
7.41 Loss on asset impairment
Category Current period Last period
Allowance for bad debt 819,489.83 81,973.79
Impairment allowance for fixed assets 79,114,818.66 0.00
Total 79,934,308.49 81,973.79
7.42 Gain (loss) on asset impairment
Source Current period Last period
Interest rate swaps 7,328,944.15 -4,237,979.04
Total 7,328,944.15 -4,237,979.04
7.43 Investment income
7.43.1 Disclosure by category
Category Current period Last period
Income from long-term equity investments measured at cost 1,735,051.50 15,295,400.00
Income from holding of financial assets held for trading -1,242,550.48 -916,894.81
Total 492,501.02 14,378,505.19
7.43.2 Income from long-term equity investments measured at cost
Investee Current period Last period
China Travelsky Technology Co., Ltd. 1,735,051.50 1,565,400.00
Sichuan Airlines Co., Ltd. 0.00 13,730,000.00
Total 1,735,051.50 15,295,400.00
7.44 Non-operating income
Included in
current period
Category Current period Last period non-recurring
profit and loss
Gain on non-current asset disposals 314,422.50 38,876.45 314,422.50
Within: Gain on fixed asset disposals 314,422.50 38,876.45 314,422.50
Government assistance (See details of government assistance 38,624,958.06 6,358,400.06 38,624,958.06
Subsidy for air routes 42,085,283.00 29,098,602.00 42,085,283.00
Others 6,108,340.48 3,858,980.87 6,108,340.48
104
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Included in
current period
Category Current period Last period non-recurring
profit and loss
Total 87,133,004.04 39,354,859.38 87,133,004.04
Details of government assistance:
Government assitance Current period Last period Description
Designated subsidy for snow disaster 249,750.00 249,750.00 Amortisation of utilised subsidy
Designated subsidy for civil aviation
488,250.06 488,250.06 Amortisation of utilised subsidy
energy-saving program
Others 37,886,958.00 5,620,400.00 Granted by regional government
Tota 38,624,958.06 6,358,400.06
7.45 Non-operating expenses
Included in current
Category Current period Last period period non-recurring
profit and loss
Loss on non-current asset disposals 2,116,060.38 9,188,914.83 2,116,060.38
Within: Loss on fixed asset disposals 2,116,060.38 9,188,914.83 2,116,060.38
Charitable donation 0.00 10,000.00 0.00
Fines 20,580.21 0.00 20,580.21
Others 3,488,768.33 43,159.70 3,488,768.33
Total 5,625,408.92 9,242,074.53 5,625,408.92
7.46 Income tax expenses
Category Current period Last period
Current tax calculated in accordance with relevant tax law 24,791,367.71 139,248,593.76
Deferred tax 15,023,782.60 -75,886,841.82
Total 39,815,150.31 63,361,751.94
7.47 Computation of basic earnings per share and diluted earnings per share
Basic earngings per share is calculated by dividing net profit attributable to shareholders of the parent by the
weighted average number of issued shares. The start date of ordinary shares issued in the period for the
purpose of calculation of basic earnings per share is the date on which subscription becomes receivable per
contract of issuance.
Diluted earnings per share is calculated by dividing the results of adjustment of net profit attributable to
shareholders of the parent for the interest expense for the dilutive convertible instruments, the expected gain
or expense at the time of conversion and their related income tax implication by the sum of the weighted
105
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
average number of issued shares for calculation of baisc earnings per shares and the weighted average
number of potential shares from convertible instruments.
For the purpose of calculation of the weighted average number of potential shares from convertible
instruments, the conversion date for dilutive conventible instruments issued in prior period and dilutive
convertible instruments issued in the period is the the 1st date of the period and the issue date respectively.
7.47.1 General disclosure
Current period Last period
Category of earning
Basic EPS Diluted EPS Basic EPS Diluted EPS
Net profit attributable to ordinary
0.21 0.21 0.48 0.48
shareholders
Recurring profit or loss attributable to
0.04 0.04 0.43 0.43
ordinary shareholders
7.47.2 Calculation
During the reporting period, the Company does not have dilutive potential ordinary shares, diluted earnings per
share therefore is equal to the earnings per share.
① Net profit attributable for ordinary shareholders for the calculation of basic EPS
Category Current period Last period
Net profit attributable for ordinary shareholders 82,366,027.52 191,022,381.16
Within: From continuing operation 82,366,027.52 191,022,381.16
From curtailed operation 0.00 0.00
Recurring profit or loss attributable to ordinary shareholders 17,509,015.92 172,303,947.91
Within: From continuing operation 17,509,015.92 172,303,947.91
From curtailed operation 0.00 0.00
②When calculating the basic earnings per share, the denominator is the weighted average number of
outstanding ordinary shares, calculated as follows
Category Current period Last period
Number of ordinary shares issued b/f 400,000,000.00 400,000,000.00
Add: the number of ordinary shares issued this year 0.00 0.00
Less: the number of ordinary shares bought back this year 0.00 0.00
Numberofordinaryshares c/f 400,000,000.00 400,000,000.00
7.48 Notes to the statement of cash flows
106
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7.48.1 Cash received relating to other operating activities
Category Current period Last period
Government assistance 47,922,616.95 2,996,400.00
Interest income on bank deposit 2,005,587.12 1,345,863.46
Cash receiptes from non-operating income 20,316,716.00 616,476.45
Cash receiptes from operating balance 66,823,903.30 68,716,883.74
Total 137,068,823.37 73,675,623.65
7.48.2 Other cash payments relating to operating activities
Category Current period Last period
Bank charges 1,283,021.49 2,795,268.13
Cash payments for non-operating expenses 3,509,348.54 14,283.25
Cash payments for operating balance 43,513,412.78 40,923,875.31
Cash payments for sales and general and administrative expenses 28,002,600.89 19,219,655.81
Total 76,308,383.70 62,953,082.50
7.48.3 Other cash payments relating to investing activities
Category Current period Last period
Cash payments of settlement of interest rate swaps 1,242,550.48 916,894.81
Total 1,242,550.48 916,894.81
7.48.4 Other cash receipts relating to financing activities
Category Current period Last period
Margin deposit for bankers' acceptance repaid 30,000.00 7,500,000.00
Total 30,000.00 7,500,000.00
7.48.5 Other cash payments relating to financing activities
Category Current period Last period
Cash payments for aircraft lease rental 101,689,132.68 102,826,674.86
Cash payments for issuance of medium-term bonds 0.00 1,500,000.00
Total 101,689,132.68 104,326,674.86
107
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7.49 Supplementary information to the statement of cash flows
7.49.1 Reconciliation of cash flows from operating activities to net profit
Category Current period Last period
① Reconciliation of cash flows from operating activities to net profit:
Net profit 82,366,027.52 191,022,381.16
Add: Loss on asset impairment 79,934,308.49 81,973.79
Depreciation of fixed assets, oil and gas assets, bioogical assets held for
397,080,519.44 331,006,395.60
production
Amortisation of intangible assets 713,635.18 720,715.26
Amortisation of deferred charges 25,245,811.06 21,733,719.03
Loss on non-current assets disposal (gain presented by "-" prefix) -314,422.50 -38,876.45
Loss on scrap of fixed assets (gain presented by "-" prefix) 2,116,060.38 9,188,914.83
Loss on fair value changes (gain presented by "-" prefix) -7,328,944.15 4,237,979.04
Fianncial costs (gain presented by "-" prefix) 68,153,435.88 129,114,938.74
Investment loss (gain presented by "-" prefix) -492,501.02 -14,378,505.19
Decrease of deferred tax assets (increase presented by "-" prefix) 15,023,782.60 -75,886,841.82
Increase of deferred tax liabilities (increase presented by "-" prefix) 32,540.14 0.00
Decrease of inventories (increase presented by "-" prefix) -2,075,609.05 17,041,799.14
Decrease of operating receivables (increase presented by "-" prefix) -117,591,071.52 -84,546,095.23
Increase of operating payables (decrease presented by "-" prefix) -173,493,939.66 112,191,483.51
Others 0.0 0.00
Net cash flows generated from operating activities 369,369,632.79 641,489,981.41
② Significant investing and financing acitivities involve no cash:
Debt-to-capital conversion 0.00 0.00
Convertable loan due within one year 0.00 0.00
Fixed assets acquired under financial lease 0.00 0.00
③ Movement of cash and cash equivalents:
Cash C/f 324,213,597.79 345,851,446.97
108
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
Category Current period Last period
Less: Cash B/f 155,387,742.97 240,185,747.48
Add: Cash equivalents C/f 0.00 0.00
Less: Cash equivalents B/f 0.00 0.00
Net increase of cash and cash equivalents 168,825,854.82 105,665,699.49
7.49.2 Compostion of cash and cash equivalents
Category Current period Last period
① Cash 324,213,597.79 345,851,446.97
Including: Cash at hand 353,335.07 918,866.82
Demand bank deposit 323,860,262.72 344,932,580.15
Demand other monetary funds 0.00 0.00
Demand deposit in the Central Bank 0.00 0.00
Deposit in peer firms 0.00 0.00
Loan to peer firms 0.00 0.00
② Cash equivalents 0.00 0.00
Including: Debt instrument matured within three months 0.00 0.00
③ Cash and cash equivalents C/f 324,213,597.79 345,851,446.97
Note 8 Related parties and related party transaction
8.1 Major investors
Relationship to the Type of Legal
Investor Place of registration Nature of operation
Company incorporation representative
Investment and
Limited liability
SDA Group Largest shareholder Jinan MA, Chongxian management of aero
company
transportation
2nd largest Joint stock WANG,
Air China Beijing Aero transportation
shareholder company Changshun
(Continued)
Shareholding in the Voting right in the Ultimate
Investor Registered capital Company Company controller of Institution code
(%) (%) the Company
109
Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
SDA Group 580,000,000.00 42.00 42.00 Note 61407164-7
Air China 13,084,751,004.00 22.80 22.80 Note 71787100-6
Note: SDA Group and Air China is the first and second largest shareholder of the Company respectively. Air
China is the largest shareholder of SDA Group; Air China’s shareholding and voting right in SDA Group is
49.406％ and 49.406％ respectively.
8.2 Subsidiaries
See Note 6.1 Subsidiaries.
8.3 Associates and joint ventures
See Note 7.8.3.
8.4 Other related parties
Other related party Relationship to the Company Institution code
Taikoo (Shandong) Aircraft Engineering Company
Controlled by major investors 70588297-1
Limited
Shandong XiangYu Air Technology Co., Ltd. Controlled by major investors 720736454
Shenzhen Airlines Co., Ltd. Controlled by major investors 19221129-0
Air China Cargo Co., Ltd. Controlled by major investors 71093205-6
China National Aviation Finance Co., Ltd. Controlled by major investors 10113699
Sichuan International Aero Engine Maintenance
Controlled by major investors 71188088-4
Co., Ltd.
Aircraft Maintenance and Engineering Corporation
Controlled by major investors 62591162-1
(Ameco Beijing)
Chengfu FuKai Aircraft Engineering Co., Ltd. Controlled by major investors 72808856-X
8.5 Related party transactions
① Goods and services purchase
Related party Transaction Pricing principle
Taikoo (Shandong) Aircraft Engineering Company
Aircraft maintenance Market price
Limited
SDA Group Office lease rental and catering Market price
Shandong XiangYu Air Technology Co., Ltd. Repairment Market price
Aircraft Maintenance and Engineering Corporation
Repairment Market price
(Ameco Beijing)
Aircraft Maintenance and Engineering Corporation
Ground service Market price
(Ameco Beijing)
110
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Related party Transaction Pricing principle
Air China Ground service Market price
Air China Repairment Market price
Air China Brokerage Market price
Shenzhen Airlines Co., Ltd. Brokerage Market price
Air China Cargo Co., Ltd. Ground service Market price
Sichuan International Aero Engine Maintenance
Repairment Market price
Co., Ltd.
Chengdu FuKai Aircraft Engineering Co., Ltd. Repairment Market price
Total
(Continue)
Current period Last period
% in total % in total
Related party transaction of transaction of
Amount Amount
the same the same
category category
Taikoo (Shandong) Aircraft Engineering
40,241,910.62 14.65 38,243,558.71 12.63
Company Limited
SDA Group 16,027,395.60 40.87 11,777,701.91 33.05
Shandong XiangYu Air Technology Co., Ltd. 15,314,004.26 5.04 15,520,889.14 5.13
Aircraft Maintenance and Engineering
5,725,772.83 1.88 1,203,111.41 0.40
Corporation (Ameco Beijing)
Aircraft Maintenance and Engineering
12,837,526.03 2.46 4,558,370.44 1.03
Corporation (Ameco Beijing)
Air China 7,389,320.99 1.42 7,049,759.64 1.59
Air China 16,783,224.87 5.52 3,500.00 0.00
Air China 3,365,886.70 72.32 2,704,364.68 73.15
Shenzhen Airlines Co., Ltd. 310,882.60 6.68 343,217.64 9.28
Air China Cargo Co., Ltd. 1,252,836.25 0.24 1,199,174.99 0.29
Sichuan International Aero Engine
93,985,788.47 30.93 44,390,291.88 14.66
Maintenance Co., Ltd.
111
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Current period Last period
% in total % in total
Related party transaction of transaction of
Amount Amount
the same the same
category category
Chengdu FuKai Aircraft Engineering Co., Ltd. 1,672,225.18 0.55 1,949,272.58 0.64
Total 214,906,774.40 128,943,213.02
② Sales of goods and vendering of services
Related party Transaction Pricing principle
Air China Flight support By agreement
Air China Ground service Market price
Air China Brokerage Market price
Shenzhen Airlines Co., Ltd. Ground service Market price
Taikoo (Shandong) Aircraft Engineering
Training By agreement
Company Limited
Total
(Continued)
Current period Last period
% in total % in total
Related party
transaction of transaction of
Amount Amount
the same the same
category category
Air China 3,605,522.00 99.50 4,454,085.60 94.88
Air China 771,008.42 37.12 793,840.64 43.86
Air China 319,568.49 15.38 341,351.50 18.86
Shenzhen Airlines Co., Ltd. 220,932.90 28.7 0.00 0.00
Taikoo (Shandong) Aircraft Engineering
76,400.00 9.92 0.00 0.00
Company Limited
Total 4,993,431.81 5,589,277.74
8.5.3 Lease between related parties
The Company as leasee
112
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Lease rental
Leasor Leasee Leased asset Start date Expiry date Pricing principle
recognised
Air China The Company Engines 2013.1.1 2013.6.30 By agreement 7,041,902.02
Air China The Company Simulators 2013.1.1 2013.6.30 By agreement 254,500.00
8.5.4 Lending between related parties
Related party Amount Start date Expiry date Description
Lended from:
China National Aviation Finance Co., Ltd. 50,000,000.00 2012/3/21 2013/3/21 Repaid
China National Aviation Finance Co., Ltd. 100,000,000.00 2013/6/25 2014/6/25 Not yet paid
8.5.5Other related party transaction
Related party Transaction Pricing principle
Air China Wet lease By agreement
Air China
assignment the obligation of By agreement
PhoenixMiles Program
Air China Code sharing By agreement
Air China Cargo Co., Ltd. Code sharing for cargo By agreement
(Continued)
Current period Prior period
% in total
% in total
Related party transaction
transaction
Amount Amount of the
of the same
same
category
category
325,294,684.7
Air China 320,771,462.89 100.00 100.00
3
Air China 93,860,000.00 100.00 0.00 0.00
Air China -130,734.16 100.00 459,958.09 100.00
Air China Cargo Co., Ltd. 300,000.00 100.00 222,288.64 100.00
325,976,931.4
414,800,728.73
6
8.6 Related party balance
8.6.1 Receivables owed by and advances paid to related parties
C/f B/f
Related party Carrying Allowance for Carrying Allowance for
amount bad debt amount bad debt
113
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C/f B/f
Related party Carrying Allowance for Carrying Allowance for
amount bad debt amount bad debt
Accounts receivable
Air China 51,332,280.50 0.00 54,927,044.11 0.00
Shenzhen Airlines Co., Ltd. 1,849,400.00 92,470.00 1,849,400.00 92,470.00
Taikoo (Shandong) Aircraft Engineering Company
0.00 0.00 11,100.00 555.00
Limited
Total 53,181,680.50 92,470.00 56,787,544.11 93,025.00
Advances to suppliers
Chengfu FuKai Aircraft Engineering Co., Ltd. 0.00 0.00 252,000.00 0.00
Total 0.00 0.00 252,000.00 0.00
Other receivables
Air China 7,595,193.00 0.00 9,336,264.20 0.00
Shandong Rainbow Commercial Jet Co., Ltd. 109,051,717.65 109,051,717.65 109,051,717.65 109,051,717.65
Shenzhen Airlines Co., Ltd. 500.00 25.00 55,400.00 2,770.00
Shandong XiangYu Air Technology Co., Ltd. 2,264.87 113.24 0.00 0.00
Total 116,649,675.52 109,051,855.89 118,443,381.85 109,054,487.65
8.6.2 Payables owed to and advances received from related parties
Related party C/f B/f
Accounts payable
Aircraft Maintenance and Engineering Corporation (Ameco Beijing) 2,211,872.36 1,358,745.52
Sichuan International Aero Engine Maintenance Co., Ltd. 60,991.15 9,189,096.07
Air China 107,825,842.71 4,363,260.34
Taikoo (Shandong) Aircraft Engineering Company Limited 16,911,537.92 15,434,555.99
Air China Cargo Co., Ltd. 222,211.26 211,086.76
Chengfu FuKai Aircraft Engineering Co., Ltd. 1,524,225.18 631,044.32
Shandong XiangYu Air Technology Co., Ltd. 1,221,699.89 0.00
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Related party C/f B/f
Shenzhen Airlines Co., Ltd. 0.00 3,360.00
Total 129,978,380.47 31,191,149.00
Notes payable:
Shandong XiangYu Air Technology Co., Ltd. 0.00 100,000.00
Total 0.00 100,000.00
Other payables
Air China 20,000,000.00 20,000,000.00
SDA Group 9,250,533.18 1,967,892.49
Taikoo (Shandong) Aircraft Engineering Company Limited 245,400.00 245,400.00
Shenzhen Airlines Co., Ltd. 1,850,144.00 1,850,144.00
Total 31,346,077.18 24,063,436.49
Note 9 Contingencies
No contingency is subject to disclosure as at the reporting date.
Note 10 Commitments
10.1 Signifcant commitments
10.1.1 Capital commitment
CNY
Item C/f B/f
Firm contracts not recognised in the financial
statements
- Commitment to acquire non-current assets 5,653,121,425.00 6,381,289,558.12
Total 5,653,121,425.00 6,381,289,558.12
10.1.2 Operating lease
Information of irrevocable operating lease contracts as at the reporting date:
CNY
Item C/f B/f
Minimum lease rental for irrevocable operating
lease contracts
Within one year from the reporting date 853,069,482.80 766,080,155.32
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Item C/f B/f
Within two years from the reporting date 836,858,322.29 764,243,425.08
Within three years from the reporting date 836,858,322.29 763,137,177.08
Subsequent years 4,009,010,699.07 3,734,609,417.85
Total 6,535,796,826.44 6,028,070,175.33
Note 11 Post reporting date events
No Post reporting date events is subject to disclosure as at the reporting date.
Note 12 Other significant events
12.1 Assets and liabilities measured by fair value
Current period Cumulative fair Current
Item B/f fair value value movement period C/f
movement recognised in equity impairment
financial assets
derivative financial assets 0.00 130,160.56 0.00 0.00 130,160.56
Total 0.00 130,160.56 0.00 0.00 130,160.56
Financial liabilities
Derivative financial liabilities 7,198,783.59 -7,198,783.59 0.00 0.00 0.00
Total 7,198,783.59 -7,198,783.59 0.00 0.00 0.00
12.2 Financial assets and liabilities denominated in foreign currency
Cumulative fair
Current
Current year fair value movement
Item B/f period C/f
value movement recognised in
impairment
equity
financial assets
derivative financial assets 0.00 130,160.56 0.00 0.00 130,160.56
Total 0.00 130,160.56 0.00 0.00 130,160.56
Financial liabilities
Derivative financial liabilities 7,198,783.59 -7,198,783.59 0.00 0.00 0.00
Total 7,198,783.59 -7,198,783.59 0.00 0.00 0.00
Note 13 Comparatives
Certain comparatives have been editted for the pupose of the presentation layout adopted for the current
period.
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Note 14 Notes to the separate financial statements
14.1 Accounts receivable
14.1.1 Disclosure by category
C/f
Category Carrying amount Allowance for bad debt
Amount % Amount %
Accounts receivable of individual
significance and subject to individual 190,575,403.24 74.72 0.00 0.00
impairment assessment
Accounts receivable subject to
impairment assessment by portfolio
Portfolio by nature 53,259,340.64 20.88 2,662,967.03 5.00
Subtotal 53,259,340.64 20.88 2,662,967.03 5.00
Accounts receivable of individual
insignificance but subject to individual 11,227,885.91 4.40 0.00 0.00
impairment assessment
Total 255,062,629.79 100.00 2,662,967.03 1.04
(Continued)
B/f
Category Carrying amount Allowance for bad debt
Amount % Amount %
Accounts receivable of individual
significance and subject to individual 137,210,577.33 76.05 0.00 0.00
impairment assessment
Accounts receivable subject to
impairment assessment by portfolio
Portfolio by nature 36,015,985.80 19.96 1,800,778.94 5.00
Subtotal 36,015,985.80 19.96 1,800,778.94 5.00
Accounts receivable of individual
insignificance but subject to individual 7,197,683.67 3.99 0.00 0.00
impairment assessment
Total 180,424,246.80 100.00 1,800,778.94 1.00
117
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14.1.2 Disclosure by age
C/f B/f
Age
Amount % Amount %
Within 1 year 254,971,406.97 99.96 180,029,268.67 99.78
1 to 2 years 0.00 0.00 252,427.26 0.14
2 to 3 years 2,257.00 0.00 107,775.05 0.06
Over 3 years 88,965.82 0.03 34,775.82 0.02
Total 255,062,629.79 100.00 180,424,246.80 100.00
14.1.3 Allowance for bad debt
① Accounts receivable of individual significance and subject to individual impairment assessment
Rate of
Allowance for
Debtor Carrying amount allowance Reason for allowance
bad debt
(%)
No indication of
BSP-CHINA 76,353,807.74 0.00 0.00 impairment upon
individual assessment
No indication of
Accounting Center of China Aviation
62,889,315.00 0.00 0.00 impairment upon
Limited Company
individual assessment
No indication of
Air China 51,332,280.50 0.00 0.00 impairment upon
individual assessment
Total 190,575,403.24 0.00 0.00
② Accounts receivable subject to impairment assessment by portfolio
Allowance by percentage of remaining balance
Portfolio Carrying amount Rate of allowance (%) Allowance for bad debt
Portfolio by nature 53,259,340.64 5.00 2,662,967.03
Total 53,259,340.64 5.00 2,662,967.03
③ Accounts receivable of individual insignificance but subject to individual impairment assessment
Rate of
Allowance for
Debtor Carrying amount allowance Reason for allowance
bad debt
(%)
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No indication of
UATP 7,719,525.63 0.00 0.00 impairment upon
individual assessment
No indication of
BSP-TWD 3,230,714.75 0.00 0.00 impairment upon
individual assessment
No indication of
BSP-JAPAN 277,645.53 0.00 0.00 impairment upon
individual assessment
合 计 11,227,885.91 0.00 0.00
14.1.4 Accounts receivable owed by investors holding 5% or more of the shares of the Company
Investor C/f B/f
Carrying amount Allowance for bad debt Carrying amount Allowance for bad debt
Air China 51,332,280.50 0.00 54,927,044.11 0.00
Total 51,332,280.50 0.00 54,927,044.11 0.00
14.1.5 Top five accounts receivable
Relationship to % of total accounts
Debtor Amount Age
the Company receivable
BSP-CHINA Third party 76,353,807.74 Within 1 year 29.94
Accounting Center of China Aviation
Third party 62,889,315.00 Within 1 year 24.66
Limited Company
Air China Related party 51,332,280.50 Within 1 year 20.13
Erdos Civil Aviation Airport Company
Third party 29,261,438.41 Within 1 year 11.47
Limited
UATP Third party 7,719,525.63 Within 1 year 3.03
Total 227,556,367.28 89.23
14.1.6 Related party balances
Debtor Relationship to the Company Amount % of total accounts receivable
Air China Major investor 51,332,280.50 20.13
Total 51,332,280.50 20.13
14.2 Other receivables
14.2.1 Disclosure by category
Category C/f
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Carrying amount Allowance for bad debt
Amount % Amount %
Other receivables of individual
significance and subject to individual 150,406,280.93 37.77 109,051,717.65 72.50
impairment assessment
Other receivables subject to impairment
assessment by portfolio
Portfolio by nature 158,427,567.25 39.79 7,921,378.36 5.00
Subtotal 158,427,567.25 39.79 7,921,378.36 5.00
Other receivables of individual
insignificance but subject to individual 89,341,189.09 22.44 0.00 0.00
impairment assessment
Total 398,175,037.27 100.00 116,973,096.01 29.38
(Continued)
B/f
Category Carrying amount Allowance for bad debt
Amount % Amount %
Other receivables of individual
significance and subject to individual 150,406,280.93 37.25 109,051,717.65 72.50
impairment assessment
Other receivables subject to impairment
assessment by portfolio
Portfolio by nature 154,689,466.21 38.31 7,734,473.31 5.00
Subtotal 154,689,466.21 38.31 7,734,473.31 5.00
Other receivables of individual
insignificance but subject to individual 98,701,440.00 24.44 0.00 0.00
impairment assessment
Total 403,797,187.14 100.00 116,786,190.96 28.92
14.2.2 Disclosure by age
C/f B/f
Age
Amount % Amount %
Within 1 year 140,169,258.79 35.20 181,310,421.00 44.90
1 to 2 years 39,281,427.81 9.87 21,442,689.76 5.31
2 to 3 years 25,456,969.40 6.39 15,259,329.67 3.78
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C/f B/f
Age
Amount % Amount %
Over 3 years 193,267,381.27 48.54 185,784,746.71 46.01
Total 398,175,037.27 100.00 403,797,187.14 100.00
14.2.3 Allowance for bad debt
① Other receivables of individual significance and subject to individual impairment assessment
Rate of
Allowance for
Debtor Carrying amount allowance Reason for allowance
bad debt
(%)
Impaired collectibility
Shandong Rainbow
109,051,717.65 109,051,717.65 100.00 identified upon individual
Commercial Jet Co., Ltd.
assessment
No indication of impairment
CBD-leasing Co., Ltd. 41,354,563.28 0.00 0.00
upon individual assessment
Total 150,406,280.93 109,051,717.65 72.50
② Other receivables subject to impairment assessment by portfolio
A. Allowance by percentage of remaining balance
Portfolio Carrying amount Rate of allowance (%) Allowance for bad debt
Portfolio by nature 158,427,567.25 5.00 7,921,378.36
Total 158,427,567.25 5.00 7,921,378.36
③ Other receivables of individual insignificance but subject to individual impairment assessment
Allowance for Rate of
Debtor Carrying amount Reason for allowance
bad debt allowance (%)
No indication of impairment
Debtor #2 17,901,423.94 0.00 0.00 upon individual
assessment
No indication of impairment
Debtor #3 17,300,360.00 0.00 0.00 upon individual
assessment
No indication of impairment
Beijing FuLaiTe Technology
14,378,959.41 0.00 0.00 upon individual
Development Co., Ltd.
assessment
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Allowance for Rate of
Debtor Carrying amount Reason for allowance
bad debt allowance (%)
No indication of impairment
Debtor #4 12,961,830.40 0.00 0.00 upon individual
assessment
No indication of impairment
Debtor #5 4,942,960.00 0.00 0.00 upon individual
assessment
No indication of impairment
Debtor #6 4,238,588.20 0.00 0.00 upon individual
assessment
No indication of impairment
Debtor #7 3,262,353.60 0.00 0.00 upon individual
assessment
No indication of impairment
中国国航 7,595,193.00 0.00 0.00 upon individual
assessment
No indication of impairment
Debtor #8 2,326,550.44 0.00 0.00 upon individual
assessment
No indication of impairment
Debtor #9 1,714,342.10 0.00 0.00 upon individual
assessment
No indication of impairment
Debtor #10 1,278,990.90 0.00 0.00 upon individual
assessment
No indication of impairment
Debtor #11 617,870.00 0.00 0.00 upon individual
assessment
No indication of impairment
Debtor #12 469,581.20 0.00 0.00 upon individual
assessment
No indication of impairment
Debtor #13 185,361.00 0.00 0.00 upon individual
assessment
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Allowance for Rate of
Debtor Carrying amount Reason for allowance
bad debt allowance (%)
No indication of impairment
Debtor #14 166,824.90 0.00 0.00 upon individual
assessment
Total 89,341,189.09 0.00 0.00
14.2.4 Other receivables owed by investors holding 5% or more of the shares of the Company
C/f B/f
Investor Allowance for bad Allowance for bad
Carrying amount Carrying amount
debt debt
Air China 7,595,193.00 0.00 9,336,264.20 0.00
Total 7,595,193.00 0.00 9,336,264.20 0.00
14.2.5 Top five other receivables
Relationship to % of total other
Debtor Amount Age
the Company receivables
Shandong Rainbow Commercial Jet
Related party 109,051,717.65 Over 3 years 27.39
Co., Ltd.
Qingdao Logistics Related party 41,924,673.68 Within 1 year 10.53
CBD-leasing Co., Ltd. Third party 41,354,563.28 Over 3 years 10.39
Debtor #1 Third party 34,401,215.57 Within 1 year 8.64
Debtor #2 Third party 17,901,423.94 Within 1 year 4.50
Total 244,633,594.12 61.45
14.2.6 Related party balances
% of total other
Debtor Relationship to the Company Amount
receivables
Shandong Rainbow Commercial Jet
Associate 109,051,717.65 27.39
Co., Ltd.
Qingdao Logistics Wholly owned subsidiary 41,924,673.68 10.53
Air China Major investor 7,595,193.00 1.91
Shenzhen Airlines Co., Ltd. Controlled by major investor 500.00 0.00
Shandong XiangYu Air Technology
Controlled by major investor 2,264.87 0.00
Co., Ltd.
123
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% of total other
Debtor Relationship to the Company Amount
receivables
Total 158,574,349.20 39.83
14.2.7 Other receivables denominated in foreign currencies and the relevant rate for translation
C/f B/f
Currency Currency Exchange CNY Currency Exchange CNY
amount rate amount amount rate amount
USD 12,074,978.02 6.1787 74,607,666.69 13,821,767.06 6.2855 86,876,716.85
14.3 Long-term equity investments
14.3.1 Disclosure by category
Current
Current period
Category B/f period C/f
increase
decrease
Investment in subsidiaries 106,000,685.43 0.00 0.00 106,000,685.43
Investment in associates 22,500,000.00 0.00 0.00 22,500,000.00
Other equity investments 88,352,100.00 0.00 0.00 88,352,100.00
Less: Impairment allowance 22,500,000.00 0.00 0.00 22,500,000.00
Total 194,352,785.43 0.00 0.00 194,352,785.43
14.3.2 Details of long-term equity investments
Current
Measurement Cost of
Investee B/f period C/f
method investment
movement
China Travelsky Technology Co., Ltd. Cost method 6,690,000.00 6,690,000.00 0.00 6,690,000.00
Sichuan Airlines Co., Ltd. Cost method 35,000,000.00 35,000,000.00 0.00 35,000,000.00
Jinan International Airport Co., Ltd. Cost method 46,662,100.00 46,662,100.00 0.00 46,662,100.00
Qingdao Losgistics Cost method 48,323,205.97 48,323,205.97 0.00 48,323,205.97
Qingdao Feisheng Cost method 57,677,479.46 57,677,479.46 0.00 57,677,479.46
Shandong Rainbow Commercial Jet
Equity method 22,500,000.00 22,500,000.00 0.00 22,500,000.00
Co., Ltd.
Total 216,852,785.43 216,852,785.43 0.00 216,852,785.43
(Continued)
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Reason for Impairment
Shareholdin disagreement allowance Cash dividend
Voting right Impairment
Investee g between recognised in current
(%) allowance
(%) shareholding and in current period
voting right period
China Travelsky Technology
0.45 0.45 In agreement 0.00 0.00 1,735,051.50
Co., Ltd.
Sichuan Airlines Co., Ltd. 10.00 10.00 In agreement 0.00 0.00 0.00
Jinan International Airport
2.53 2.53 In agreement 0.00 0.00 0.00
Co., Ltd.
Qingdao Losgistics 100.00 100.00 In agreement 0.00 0.00 0.00
Qingdao Feisheng 100.00 100.00 In agreement 0.00 0.00 0.00
Shandong Rainbow
45.00 45.00 In agreement 22,500,000.00 0.00 0.00
Commercial Jet Co., Ltd.
Total 22,500,000.00 0.00 1,735,051.50
14.3.3 Details of impairment allowance for long-term equity investments
Current period Current period
Investee B/f C/f
increase decrease
Investment in associates
Shandong Rainbow Commercial
22,500,000.00 0.00 0.00 22,500,000.00
Jet Co., Ltd.
Total 22,500,000.00 0.00 0.00 22,500,000.00
14.4 Revenue and operating costs
14.4.1 General information
Category Current period Last period
Principal operating income 5,451,936,732.07 5,007,345,044.39
Other operating income 65,110,778.67 56,289,021.23
Total 5,517,047,510.74 5,063,634,065.62
Principal operating cost 4,688,487,798.40 4,088,326,136.88
Other operating cost 1,853,079.93 4,037,786.10
Total 4,690,340,878.33 4,092,363,922.98
14.4.2 Disclosure by service line
Current period Last period
Service line
Operating income Operating cost Operating income Operating cost
Aero transportation 5,434,206,939.71 4,676,304,819.71 4,996,878,206.46 4,080,162,639.35
Hospitality and catering 9,904,972.35 10,523,876.28 7,811,810.36 6,829,054.69
Training 7,824,820.01 1,659,102.41 2,655,027.57 1,334,442.84
125
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Current period Last period
Service line
Operating income Operating cost Operating income Operating cost
Total 5,451,936,732.07 4,688,487,798.40 5,007,345,044.39 4,088,326,136.88
14.4.3 Operating income from top five customers
Year Operating income % of total operating income
Current period 375,571,278.55 6.81
Last period 355,721,616.67 7.03
14.5 Investment income
15.5.1 Disclosure by category
Category Current period Last period
Income from long-term equity investments measured at cost 1,735,051.50 15,295,400.00
Income from holding of financial assets held for trading -1,242,550.48 -916,894.81
Total 492,501.02 14,378,505.19
14.5.2 Income from long-term equity investments measured at cost
Investee Current period Last period
China Travelsky Technology Co., Ltd. 1,735,051.50 1,565,400.00
Sichuan Airlines Co., Ltd. 0.00 13,730,000.00
Total 1,735,051.50 15,295,400.00
14.6 Supplementary information to the statement of cash flows
Category Current period Last period
① Reconciliation of cash flows from operating activities to net profit:
Net profit 81,471,265.48 187,870,504.52
Add: Loss on asset impairment 80,163,911.80 431,688.81
Depreciation of fixed assets, oil and gas assets, bioogical assets held for
393,446,387.11 328,151,445.90
production
Amortisation of intangible assets 696,307.32 703,387.32
Amortisation of deferred charges 25,222,697.08 21,703,072.32
Loss on non-current assets disposal (gain presented by "-" prefix) -310,737.50 -38,876.45
Loss on scrap of fixed assets (gain presented by "-" prefix) 2,099,734.51 9,188,914.83
126
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Category Current period Last period
Loss on fair value changes (gain presented by "-" prefix) -7,328,944.15 4,237,979.04
Fianncial costs (gain presented by "-" prefix) 68,153,435.88 129,114,938.74
Investment loss (gain presented by "-" prefix) -492,501.02 -14,378,505.19
Decrease of deferred tax assets (increase presented by "-" prefix) 15,100,869.23 -76,081,962.43
Increase of deferred tax liabilities (increase presented by "-" prefix) 32,540.14 0.00
Decrease of inventories (increase presented by "-" prefix) -2,075,609.05 17,041,799.14
Decrease of operating receivables (increase presented by "-" prefix) -122,197,662.70 -90,857,063.45
Increase of operating payables (decrease presented by "-" prefix) -168,393,926.06 110,095,924.57
Others 0.00 0.00
Net cash flows generated from operating activities 365,587,768.07 627,183,247.67
② Significant investing and financing acitivities involve no cash:
Debt-to-capital conversion 0.00 0.00
Convertable loan due within one year 0.00 0.00
Fixed assets acquired under financial lease 0.00 0.00
③ Movement of cash and cash equivalents:
Cash C/f 308,589,307.68 338,895,692.45
Less: Cash B/f 143,212,750.59 235,921,301.34
Add: Cash equivalents C/f 0.00 0.00
Less: Cash equivalents B/f 0.00 0.00
Net increase of cash and cash equivalents 165,376,557.09 102,974,391.11
Note 15 Supplementary information
15.1 Non-recurring profit and loss
Category Current period Last period
Gains from disposals of non-current assets after expending impairment
-1,801,637.88 -9,150,038.38
provisions
Exceeded-authority approved, non-official approved or accidental tax 0.00
0.00
repayment and relief
127
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Category Current period Last period
Government grants recognised through profit or loss for the current
reporting period, excluding grants which are closely related to the Company’s
38,624,958.06 6,358,400.06
operating activities and of which the quota or approval is eligible for automatic
renewal in accordance with relevant regulations
Financial resource usage fees charged on non-financial institution
0.00 0.00
recognised through profit or loss for the current reporting period
Gains arising from bargain purchase in business combination and
0.00 0.00
investments in associates and joint ventures
Non-monetary asset exchange 0.00 0.00
Consigned investment and asset management 0.00 0.00
Impairment provision resulting from force majeure, eg. natural desasters 0.00 0.00
Reorganisation 0.00 0.00
Reorganisation expenditure 0.00 0.00
Unfair transactions 0.00 0.00
Net profits or losses achieved by an acquired under-common-control
0.00 0.00
entity during the period from the start of the period to the acquisition date
Gains or losses arising from contingent events unconnected with the
0.00 0.00
Company’s daily operating activities
Fair value changes of tradable financial assets and tradable financial
liabilities held and gains or losses arising from disposals of tradable financial
assets, tradable financial liabilities and available-for-sale financial assets, 6,086,393.67 -5,154,873.85
excluding hedging contracts relevant to the Company’s daily operating
activities
Reversal of impairment provision for accounts receivables eligible for
0.00 0.00
individual impairment assessment
Gains or losses arising from consigned borrowings 0.00 0.00
Fair value changes of property investments subsequently measured at
0.00 0.00
fair value
One-off adjustment of profit or loss for the current reporting period in
0.00 0.00
accordance with tax and accounting laws and regulations
Consignment income arising from consigned operations 0.00 0.00
Income and expenses other than items listed above 44,684,274.94 32,904,423.17
128
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Category Current period Last period
Other gains or losses satisfying the definition of extraordinary gains or
0.00 0.00
losses
Subtotal 87,593,988.79 24,957,911.00
Less: Impact of income tax 22,736,977.19 6,239,477.75
Less: Impact on non-controlling interest 0.00 0.00
Total 64,857,011.60 18,718,433.25
Note: Positive amounts and negative amounts in non-recurring categories mean income and expense or loss
respectively.
The Company recognised non-recurring categories of activities in accodance with the Explanatory
Announcement regarding Information Disclosure by Publicly Listed Company No. 1 - Non-recurring Profit and
Loss (Zhengjianhui Gonggao [2008] No.43).
15.2 Rate of return on net assets and earnings per share
Weighted Earnings per share (CNY/share)
Profit catetory average rate of
RONA Basic EPS Diluted EPS
Net profit attributable to ordinary shareholders 3.30% 0.21 0.21
Recurring profit or loss attributable to ordinary shareholders 0.70% 0.04 0.04
15.3 Significant change of major element of the consolidated financial statements
15.3.1 Elements of the consolidated statement of financial position
① Monetary funds amounting to 578,483,812.88 as at the reporting date: 272.21% increase from last period
mainly resulted from Monetary fund balance reflects only a point of capital stock, its changes is related to
capital money of inflow and outflow , time and other integrated .
② Accounts receivables amounting to 262,687,822.70 as at the reporting date:41.16% increase from last
period mainly resulted from timing differences caused by netting ticketed unsettled due.
③ Advances to suppliers amounting to 87,345,525.06 as at the reporting date: 53.43% increase from last
period mainly resulted from increase of prepaid aircraft lease rental due to increased number of leased
aircrafts.
④ Short-term borrowings amounting to 800,000,000.00 as at the reporting date: 148.93% increase from last
period mainly resulted from increasing of Current borrowings obtained from financing activities.
⑤Financial liabilities held for trading amounting to 0.00 as at the reporting date: 100.00% decrease from last
period mainly resulted from changes of fair value of interest rate swaps held.
⑥Notes payable amounting tp 0.00 as at the reporting date: 100.00% decrease from last period mainly
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resulted from settlement upon expiry.
⑦ Employment benefits payable amounting to 228,272,993.88 as at the reporting date: 33.58% decrease
from last period mainly resulted from repayment annual bonus in the period..
⑧Taxes and fees payable amounting to 89,613,209.19 as at the reporting date: 60.98% decrease from last
period mainly resulted from Current completed 2012 annual corporate income tax final settlement, subject to
the relevant corporate income tax, while the current taxable income is lower than last period, and the
corresponding corporate income tax payable reduced.
⑨ Interests payable amounting to 6,715,747.31 as at the reporting date: 59.21% decrease from last period
mainly resulted from repayment interest on medium-term bonds in the period.
⑩ Other non-current liabilities amounting to 24,195,066.05 as at the reporting date: 87.00% decrease from
last period mainly resulted from assignment the obligation of PhoenixMiles Program in the period. 15.3.2 Elements
of the consolidated statement comprehensive income
1 Financial costs amounting to 70,267,029.24 for the period: 46.05% decrease from last period mainly
resulted from decrease in gain on exchange difference.
2 Loss on asset impairment amounting to 79,934,308.49 for the period:97412.04% increase from last
period mainly resulted from recognizing 5 B737-300 aircraft impairment of fixed assets.
3 Gains from changes in fair value amounting to 7,328,944.15 for the period: 272.93% decrease from last
period mainly resulted from changes of fair value of interest rate swaps held.
4 Investment income amounting to 492,501.02 for the period: 96.57% decrease from last period mainly
resulted from cash dividend decreases by investees.
5 Non-operating income amounting to or the period: 121.40% increase from last period mainly resulted
from increase in receipts of government assistance and air route subsidy.
6 Non-operating expenses amounting to 5,625,408.92 for the period: 39.13% decrease from last period
mainly resulted from decrease in loss on non-current asset disposals.
7 Income tax expenses amounting to 39,815,150.13 for the period: 37.16% decrease from last period
mainly resulted from decreases the taxable income amount
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Shandong Airlines Co., Ltd. Semi-Annual Report 2013 (Full-Text)
Section IX. Documents available for Reference
1. Financial statements carrying the personal signatures and seals of Chairman of the Board, Chief Accountant and
Person in Charge of Accounting Department;
2. Originals of all documents and notices publicly disclosed on newspapers designated by CSRC in the report ing
period
3. The Company will offer above documents for reference timely while CSRC or Stock Exchange demands or
shareholders requires according to the regulations and Articles of Association.
Board of Directors of
Shandong Airlines Co., Ltd.
14 August 2013
131
