Semi-Annual Report 2014
August 2014
Content
Section I Important Notice and Paraphrase .................................................................................... 1
Section II Company Profile ............................................................................................................... 3
Section III Accounting data and summary of finnaical indexes .................................................... 5
Section IV Report of the Board of Directors ................................................................................... 8
Section V Important Events ............................................................................................................ 16
Section VI Changes in shares and particular about shareholders............................................... 23
Section VII Preferred Stock ............................................................................................................ 27
Section VIII Directors, Supervisors and Senior Executives ....................................................... 28
Section IX Financial Report ............................................................................................................ 29
Section X Documents Available for Reference ........................................................................... 143
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
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.
Other directors attending the Meeting for semi-annual report deliberation
except for the followed:
Name of director absent Title for absent director Reasons for absent Attorney
Submitted application for
Wang Kaiyuan Independent director
resignation
The Company has no plans of cash dividend distributed, no bonus shares and
has no share converted from capital reserve either.
Yu Haitian, 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)Sun Jingping hereby confirm the accuracy, truthfulness and
completeness of the Financial Report in the Semi-annual Report 2014.
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 2014
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 Refers to Air China Limited, the second largest shareholder of the Company
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Shandong Airlines Co., Ltd. Semi-Annual Report 2014
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 the
山东航空股份有限公司
Company
Abbr. of legal Chinese name
of the Company (if 山东航空
applicable)
Legal English Name of the
SHANDONG AIRLINES CO.,LTD.
Company (if applicable)
Abbr. of legal English name
of the Company(if SDA
applicable)
Legal Representative Yu Haitian
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 East
Contact adds.
East Road, Jinan, Shandong Road, Jinan, Shandong
Tel. 0531－85698229 0531－85698678
Fax. 0531－85698767 ext.8679 0531－85698767 ext.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 2013.
2. Information disclosure and preparation place
Newspaper appointed for information disclosure, website for annual report publish appointed by CSRC and preparation place for
3
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
semi-annual report have no change in reporting period, more details please found in the Annual Report of 2013.
3. Registration changes of the Company
Registration NO.
Place for No. of taxation Organization
Date for registration for enterprise legal
registration registration code
license
Shandong
Registration at
Administration
beginning of report 2013-03-22 370000400002351 370112720721201 72072120-1
for Industry &
period
Commerce
Shandong
Registration at end of Administration
2014-03-26 370000400002351 370112720721201 72072120-1
report period for Industry &
Commerce
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Shandong Airlines Co., Ltd. Semi-Annual Report 2014
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) 5,564,290,182.81 5,524,710,931.04 0.72%
Net profit attributable to shareholders of
46,730,122.59 82,366,027.52 -43.27%
the listed company(RMB)
Net profit attributable to shareholders of
the listed company after deducting -17,803,680.48 17,509,015.92 -201.68%
non-recurring gains and losses(RMB)
Net cash flow arising from operating
677,852,376.10 369,369,632.79 83.52%
activities(RMB)
Basic earnings per share (RMB/Share) 0.12 0.21 -42.86%
Diluted earnings per share (RMB/Share) 0.12 0.21 -42.86%
1.59 percentage points
Weighted average ROE (%) 1.71% 3.30%
down
Increase/decrease over
End of current Period End of period of last year same period-end of last
year
Total assets (RMB) 11,992,779,434.30 11,403,124,428.82 5.17%
Net assets attributable to shareholder of
2,654,867,786.59 2,708,137,664.00 -1.97%
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 listed Net assets attributable to shareholders of
company listed company
Amount at Amount at
Current amount Amount of last period
period-end period-begin
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Shandong Airlines Co., Ltd. Semi-Annual Report 2014
Chinese GAAP 46,730,122.59 82,366,027.52 2,654,867,786.59 2,708,137,664.00
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 listed Net assets attributable to shareholders of
company listed company
Amount at Amount at
Current amount Amount of last period
period-end period-begin
Chinese GAAP 46,730,122.59 82,366,027.52 2,654,867,786.59 2,708,137,664.00
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
-2,742,953.75
the write-off parts that accrued for impairment of assets)
Tax refund or exemption out of authorization, with absence of
official approval document or accidentally
Governmental subsidy reckoned into current gains/losses (not
including the subsidy enjoyed in quota or ration according to
62,938,349.06
national standards, which are closely relevant to enterprise’s
business)
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
6
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
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
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 -2,598,136.93
and financial assets available 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 non-operating income and expenditure except for the
28,447,812.38
aforementioned items
Other item that satisfied the definition of non-recurring gains
and losses
Less: Impact on income tax 21,511,267.69
Impact on minority shareholders’ equity (post-tax)
Total 64,533,803.07
In reporting period, the Company has no particular about 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
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Shandong Airlines Co., Ltd. Semi-Annual Report 2014
Section IV. Report of the Board of Directors
I. Introduction
Since the beginning of the year, facing the complicated and severe safety benefit situations, the Company has
unswervingly adhered to the prudent operation, taken innovating the management and control and improving the
quality and efficiency as the main line, promoted and implemented ten strategic management points, continued to
improve the safety control, operation control, benefit control, service control and strategic control, actively
implemented the adjustment to the strategic resource structure, maintained a relatively stable trend of production
and operations, and achieved rather satisfactory business performance.
(I) Strengthen the infrastructure of security control, and the production safety situation is stable
In the first half year, the company has guaranteed the safety flight of 134,000 hours and 71,000 sorties,
respectively increased by 11.2% and 11.4% year on year, and no transport and aviation accident proneness caused
by the company has occurred. The safety quality evaluation index was 10.48, and security situation was stable.
The Company has effectively promoted the construction of the safety supervision and management system,
strengthened the supervision and assessment to the branch offices, established the outside regulatory and
evaluation system, developed the assessment implementation rules, optimized the risk management tools,
introduced the key risk warning mechanism, warned and analyzed the key risks and significant sources of danger;
carried out the activity of "Hundred Days of Problem Solving, Safety Census", rectified and reformed,
implemented and verified the problems according to the requirements, enhanced the closed-loop management to
the causes of accidents and unsafe events, deepened the flight quality monitoring, improved the cabin safety
management level, continued to strengthen the management and control to the key links and personnel upgraded
the air security warning systems, strengthened the monitoring to the key links and key personnel, accurately
grasped the aviation security situation, improved the working mechanism of security and protection, promoted the
special governance to the ground protection and safety, and the air defense and ground security governance have
been effectively implemented.
(II) Pay close attention to the normal flight management, operational efficiency has improved organization
The Company has been constantly optimizing and completing the flight control measures, the regularity of the
starting and release has been improved significantly, and the professional support capability of transport and
control has been enhanced. From January to March, the average flight punctuality rate was 78.17%, ranked first in
the civil aviation; in April, the Civil Aviation Administration carried out the new flight punctuality management
approaches, and the flight punctuality rate was 67.45%, ranked sixth in the civil aviation; successfully guaranteed
26 flights for the "two sessions" and the defense transportations and the flights above special III (included), and
the flight punctuality rate was 88.46%.
(III) Intensify the efforts to increase revenue and reduce expenditure and the benefits almost conform to the
expectations
In the first half year, the company has completed the total transport turnover of 950 million ton-kilometer, the
passenger transport volume of 7.44 million person-time, total mail volume of 70,000 tons, respectively increased
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Shandong Airlines Co., Ltd. Semi-Annual Report 2014
by 15.1%, 14.7% and 14.4%; achieved the operating income of 5,564,290,182.81 Yuan, increase by 0.72% year
on year, and net profit of 46,730,122.59 Yuan, reduced by 43.27% year on year. The company has strengthened
the linkage between the production and marketing departments, strengthened the management and control to the
key aspects such as the aircraft availability, crew scheduling, flight speed, and flight arrangement, etc., and
maintained the high resource use efficiency; the e-commerce channel has been effectively integrated and
developed, and the channel sales capability has been strengthened; many measures have been taken to promote the
energy saving and emission reduction, the cost control system and means have been improved, and the task to
increase revenue and reduce expenditure has achieved the practical results.
(IV) Improve and optimize the service control and the service quality continues to improve
In the first half year, the company has continued to enhance the star level of the service, the service has been
improved, and the service management and control capabilities have been further enhanced. The overall score of
CSS (customer satisfaction survey) reaches 91.3, which has increased by 1.71 scores on a year-on-year basis and
exceeded 1.71 scores compared with the target at the beginning of the year; the effective customer complaint rate
is 0.24 piece/ten thousand person-time, which has reduced by 0.32 piece/ten thousand person-time on a
year-on-year basis and is below the index the company made at the beginning of the year; the company has
obtained the title of ―China’s 500 Most Valuable Brands‖ for seven consecutive years, its brand value has reached
18.272 billion Yuan, which has increased by 2.986 billion Yuan compared with the previous year and moved up 9
rankings to No. 112.
Operation data summary:
Index Jan-Jun 2014 Jan-Jun 2013 Changes
Total t-km load rate (10 thousand t-km) 94749.3 82352.4 15.1%
Volume of passenger traffic (10 744.2 648.9 14.7%
thousand passengers)
Cargo & mail traffic volume (10 7.0 6.1 14.4%
thousand tons)
Flying km (one million km) 75.3 67.9 11.0%
Flying hours(10 thousand hours) 13.4 12.0 11.2%
Number of flight (10 thousand times) 7.1 6.4 11.4%
PLF(passenger load factor) 78.50 78.24 0.25 percentage points up
Cargo&Mail OLF (overall load factor) 44.07 46.49 2.42 percentage points down
In the Period, totally two B737-800aircrafts are introduced by the Company and a B737-300 aircraft is out of services. Up to 30
June 2014, the Company operates 73 aircrafts in total and the fleet distribution below
Model Numbers Average service age (Year)
737-300 1
737-700 3
737-800 62 4.86
CRJ-200 5
CRJ-700 2
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Shandong Airlines Co., Ltd. Semi-Annual Report 2014
II. Main business analysis
Introduction
In RMB
Item of balance
2014.6.30 2013.12.31 +,- Reasons
sheet
Balance of monetary funds only reflects the
capital stock on a point of time, the changes
Monetary funds 302,785,902.50 444,522,271.21 -31.89%
related with the amount of cash inflow/outflow
and time etc.
Dividend Dividend for year of 2012 received from
1,826,370.00 14,325,586.06 -87.25%
receivable Sichuan Airlines
Long-term equity Investment in Qingdao Airlines Co., Ltd. in the
285,106,129.88 88,352,100.00 222.69%
investment Period
Construction in Progress amount for aircraft purchased paid in
2,678,906,510.75 1,647,915,995.78 62.56%
progress the period
Short-term Short-term borrowing due to return at
200,000,000.00 434,137,220.00 -53.93%
borrowing period-begin.
Transaction The fair value for interest rate swaps changed in
1,473,379.53 296,902.47 396.25%
financial liability the Period
The dividend for year of 2013 should be paid in
Dividend payable 100,011,940.00 11,940.00 837520.94%
the period
Interest payable 4,419,376.31 16,064,294.43 -72.49%
Payment of medium-term note interest
Subsidy with assets disposal concerned received
Other accounts
314,863,518.89 193,868,858.34 62.41% in the Period and assets are not dispose
payable
completed yet
Non-current
liabilities due 986,560,433.84 533,150,658.42 85.04% The long-term loans pay back next year
within 1 year increased
Item of profit Jan.-June Jan.-June
+,- Reasons
statement 2014 2013
Operating tax Implementation of ―Business tax changed to
15,270,214.40 181,432,118.32 -91.58%
and extras VAT‖ policy since August 2013
Exchange loss arising from the Yuan devaluation
Financial
140,688,160.56 70,267,029.24 100.22% against the Dollar; at same period of last year
expenses
mainly due to the exchange gains
Fixed assets impairment losses of 5 B737-300
Assets 1,414,344.32 79,934,308.49 -98.23% aircraft was recognized in the same period of last
impairment loss year
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Shandong Airlines Co., Ltd. Semi-Annual Report 2014
Gains/losses
form changes of -1,176,477.06 7,328,944.15 -116.05% The fair value for interest rate swaps changed in
fair value the Period
Investment Net gain and loss of the invested entity
-2,841,259.99 492,501.02 -676.90%
income confirmed in the period
Profit of the Company decreased in the period,
Income tax
15,943,549.14 39,815,150.31 -59.96% corresponding enterprise income tax expenses
expenses
decreased
Item of cash Jan.-June Jan.-June
+,- Reasons
flow statement 2014 2014
Affected by the profit of the Company and
policy implementation of ―Business tax changed
Taxes paid 171,060,869.92 392,409,961.97 -56.41%
to VAT‖, corresponding taxes paid actually
decreased in the Period
Net cash received
from disposal of
fixed assets,
43,776,039.01 318,907.50 13626.88%
intangible assets
and other
long-term assets Disposal of aircraft assets in the Period
Cash paid for
purchasing fixed,
intangible and 1,176,764,986.77 532,078,980.45 121.16%
other long-term Progress amount for aircraft purchased paid in
assets the period
Cash paid for Investment in Qingdao Airlines Co., Ltd in the
260,000,000.00 0.00
investment Period
Other cash paid
concerning
656,994.75 1,242,550.48 -47.13%
investing The actually delivery costs from transactional
activities financial assets decreased in the period
Y-o-y changes of main financial data
In RMB
Current Period Same period of last year y-o-y changed Reasons
Operating revenue 5,564,290,182.81 5,524,710,931.04 0.72%
Operating cost 4,925,753,120.76 4,692,981,248.20 4.96%
Sale expenses 391,847,618.88 356,183,689.42 10.01%
Management expenses 111,268,522.80 111,060,399.83 0.19%
Financial expenses 140,688,160.56 70,267,029.24 100.22%
Income tax expenses 15,943,549.14 39,815,150.31 -59.96%
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Shandong Airlines Co., Ltd. Semi-Annual Report 2014
R&D expenses
Net cash flow arising
677,852,376.10 369,369,632.79 83.52%
from operating activities
Net cash flow arising
from investment -1,145,320,356.45 -533,002,623.43 114.88%
activities
Net cash flows arising
327,174,239.45 332,683,209.31 -1.66%
from financing activities
Net increase of cash and
-141,736,368.71 168,825,854.82 -183.95%
cash 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 operating se of gross
Operating
Operating cost Gross profit revenue over cost over same profit over
revenue
same period the period the year same period the
year before before year before
According to industries
Aviation
5,458,326,649. 4,891,116,105.
transportation 10.39% 0.44% 4.59% -3.56%
44 47
service
Hotel and food
20,120,153.79 18,888,629.34 6.12% 103.13% 79.48% 12.37%
service
Training
9,995,259.81 3,814,520.51 61.84% -1.84% 48.19% -12.88%
Services
Logistics
transportation 12,236,757.59 7,965,968.53 34.90% 130.64% 361.67% -32.58%
service
According to region
5,217,986,567. 4,702,749,604.
Domestic 9.87% -1.49% 2.78% -3.75%
86 36
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Shandong Airlines Co., Ltd. Semi-Annual Report 2014
Hong Kong,
Macao and 133,411,563.88 117,567,135.03 11.88% 27.32% 49.74% -13.19%
Taiwan China
Overseas 149,280,688.89 101,468,484.46 32.03% 157.54% 173.62% -3.99%
IV. Core competitive-ness analysis
Core competitive-ness of the Company has no major changes in the Period.
V. Investment analysis
1. External equity investment
Invested company
Proportion of equity in invested
Name Main business
company for listed company (%)
Qingdao Feisheng International
Air cargo warehousing, ground delivery 100.00%
Logistics Center Co., Ltd.
Qingdao Feisheng International Aviation
Technology Development Training Co., Pilot training 100.00%
Ltd.
Shandong Rainbow Corporate Aircraft
Air transport 45.00%
Co., ltd.
Qingdao Airlines Co., Ltd. Air transport 20.00%
Sichuan Airlines Co., Ltd. Air transport 10.00%
Jinan International Airport Co., Ltd. Civil airport 2.53%
Civil aviation information technology
China Travelsky Holding Company 0.45%
service
2. Raised fund utilization
In reporting period, there is 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 Net Operating Operating
Type Industries products Net profit
name capital assets Assets revenue profit
or service
13
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
Air cargo
Qingdao
Transport warehous
Feisheng
ation and ing,
Internationa Subsidiar 30,000,00 108,082,7 42,592,57 12,236,75
warehous ground 64,010.07 43,808.35
l Logistics y 0.00 93.96 0.05 7.59
ing delivery;
Center Co.,
industry E-busines
Ltd.
s etc.
Qingdao
Feisheng
Internationa
l Aviation Subsidiar Pilot Pilot 51,545,50 71,848,34 70,986,33 5,573,532 772,776.4 556,529.0
Technology y training training 0.00 4.44 9.67 .04 0 2
Developme
nt Training
Co., Ltd.
Shandong
Rainbow Joint-sto Air
Air 50,000,00 1,924,265 -165,841, -32,757.7 -32,757.7
Corporate ck transport
transport 0.00 .13 548.20 1 1
Aircraft company industry
Co., ltd.
Qingdao Joint-sto Air
Air 1,000,000 945,138,0 915,693,2 39,505,38 -55,138,7 -55,148,1
Airlines ck transport
transport ,000.00 46.41 89.37 2.27 86.20 85.51
Co., Ltd. company industry
VI. Prediction of business performance from January–September 2014
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
Nil
VII. Explanation on “Qualified Opinion” from the Certified Public Accountants in the report
period by the Board and Supervisory Committee
Nil
VIII. Explanation on “Qualified Opinion” of last year from the Board
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 2013 was approved in the Annual Shareholders General Meeting 2013 dated 27 June 2014, that
is distributed 2.5 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 29 July 2014.
Special explanation on cash dividend policy
14
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
Satisfy regulations of General Meeting or requirement of
Y
Article of Association (Y/N):
Well-defined and clearly dividend standards and proportion
Y
(Y/N):
Completed relevant decision-making process and mechanism
Y
(Y/N):
Independent directors perform duties completely and play a
Y
proper role (Y/N):
Minority shareholders have opportunity to express opinions
and demands totally and their legal rights are fully protected Y
(Y/N):
Condition and procedures are compliance and transparent
Y
while the cash bonus policy adjusted or changed (Y/N):
X. Profit distribution plan and transfer of public reserve to common shares in the Period
The Company has no plans of cash dividend distributed, no bonus shares and has no share converted from capital reserve either for
the semi-annual year
XI. In the report period, reception of research, communication and interview
Contents discussed and
Time Place Way Type Reception
material provided
Telephone
Operation of the Company and
Jan. –June 2014 Jinan communicatio Individual Individual investor
no material required
n
News media, legal
person’s Operation of the Company and
2014-06-27 Jinan Field research Other
shareholders and annual report required
individual investor
15
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
Section V. Important 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
The Company entered into an agreement with Boeing Company dated 21 April 2014 for purchasing 50 Boeing 737 aircrafts, the
transaction was non-affiliated transaction and does not constitute a material assets reorganization; and has been deliberated and
approved by first extraordinary meeting of 5th session of the Board for year of 2014 and annual general meeting of 2013. The 50
Boeing 737 aircrafts will deliver in batches to the Company from 2016 to 2020. The aircraft purchasement aims at satisfy
requirement of soaring capacity in the future, and will improve the operation capacity and sustainable business ability of the
Company effectively after purchasement. (Found more in Notice No.: 2014-10—Announcement of 50 Boeing 737 Aircrafts
Purchased)
2. Assets sales
No assets sale in reporting period
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
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Shandong Airlines Co., Ltd. Semi-Annual Report 2014
VII. Material related transactions
1. Related transaction with daily operation concerned
Marke
Amount t price
Proporti
of of
Content on in Settle
Type of Deali related simila Index of
of Pricing amount ment Disclos
Related Relatio related
related principl ng transacti r disclosur
party nship transact of same metho ure date
transacti es price on (10 transa e
ion
on transact d
thousand ction
ions
Yuan) receiv
able
Shando
ng Subsidi
Taikoo ary of Labor Airplane
Cash
Aircraft control service mainten Market 2014-03
3,541.53 9.22% settle 2014-05
Enginee ling receive ance price -22
ment
ring shareh d charge
Co., older
Ltd.
Rent of
Contro Labor office
Cash
lling service and Market 2014-03
SDA 1,418.79 32.52% settle 2014-05
shareh receive board&l price -22
ment
older d odging
expenses
Shando
ng Subsidi
Xiangyu ary of Labor
Mainten Cash
Air control service Market 2014-03
ance 1,690.47 5.57% settle 2014-05
Technol ling receive price -22
charge ment
ogy shareh d
Service older
Co., ltd
Beijing Subsidi
Aircraft ary of Labor
Mainten Cash
Mainten 2nd service Market 2014-03
ance 154.07 0.51% settle 2014-05
ance largest receive price -22
charge ment
Engine shareh d
Co., Ltd older
Beijing Subsidi Labor Ground Market Cash 2014-03
555.88 0.86% 2014-05
Aircraft ary of service service price settle -22
17
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
Mainten 2nd receive expenses ment
ance largest d
Engine shareh
Co., Ltd older
2nd Labor
Ground Cash
Air largest service Market 2014-03
service 949.94 1.48% settle 2014-05
China shareh receive price -22
expenses ment
older d
2nd Labor
Mainten Cash
Air largest service Market 2014-03
ance 1,938.8 6.38% settle 2014-05
China shareh receive price -22
charge ment
older d
Expense
2nd Labor
s of Cash
Air largest service Market 2014-03
agent 465.23 67.59% settle 2014-05
China shareh receive price -22
commiss ment
older d
ion
Subsidi
Shenzhe Expense
ary of Labor
n s of Cash
2nd service Market 2014-03
Airlines agent 43.69 6.35% settle 2014-05
largest receive price -22
Co., commiss ment
shareh d
Ltd. ion
older
Subsidi
Air
ary of Labor
China nd
Ground Cash
2 service Market 2014-03
Cargo service 175.4 0.27% settle 2014-05
largest receive price -22
Co., expenses ment
shareh d
Ltd.
older
Sichuan
Internati
Subsidi
onal
ary of Labor
Airlines nd
Mainten Cash
2 service Market 2014-03
Engine ance 2,444.47 8.01% settle 2014-05
largest receive price -22
mainten charge ment
shareh d
ance
older
Co.,
Ltd.
Chengd Subsidi Labor
Mainten Cash
u Fukai ary of service Market 2014-03
ance 137.52 0.45% settle 2014-05
Aircraft 2nd receive price -22
charge ment
Engine largest d
18
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
Service shareh
Co., Ltd older
Income
2nd Provide
from Cash
Air largest labor Negotiat 2014-03
flight 85.83 98.96% settle 2014-05
China shareh servic ed price -22
service ment
older e
support
2nd Income
Provide Cash
Air largest from Market 2014-03
labor 27.5 37.36% settle 2014-05
China shareh ground price -22
service ment
older service
Income
2nd
Provide from Cash
Air largest Market 2014-03
labor agent 140.43 49.65% settle 2014-05
China shareh price -22
service commiss ment
older
ion
Subsidi
Shenzhe Income
ary of
n Provide from Cash
2nd Market 2014-03
Airlines labor agent 31.69 11.20% settle 2014-05
largest price -22
Co., service commiss ment
shareh
Ltd. ion
older
Subsidi
Shenzhe
ary of Income
n nd
Provide Cash
2 from Market 2014-03
Airlines labor 9.26 12.59% settle 2014-05
largest ground price -22
Co., service ment
shareh service
Ltd.
older
2nd
Engine Confere Cash
Air largest Related 2014-03
leasing nce 284.73 39.08% settle 2014-05
China shareh leasing -22
expenses pricing ment
older
Lease of
2nd
flight Confere Cash
Air largest Related 100.00 2014-03
simulato nce 53.65 settle 2014-05
China shareh leasing % -22
r pricing ment
older
expenses
Shando Subsidi
ng ary of Sales of Confere Cash
2014-03
Xiangyu control Sales air nce 7.24 7.30% settle 2014-05
-22
Air ling material pricing ment
Technol shareh
19
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
ogy older
Service
Co., Ltd
2nd Other
Cash
Air largest related Wet Negotiat 30,703.8 100.00 2014-03
settle 2014-05
China shareh transact lease ed price 8 % -22
ment
older ion
2nd Other
Route Cash
Air largest related Negotiat 100.00 2014-03
affiliatio -4.49 settle 2014-05
China shareh transact ed price % -22
n ment
older ion
Subsidi
Air
ary of Other
China Cargo Cash
2nd related Negotiat 100.00 2014-03
Cargo affiliatio -18.3 settle 2014-05
largest transact ed price % -22
Co., n ment
shareh ion
Ltd.
older
Frequent
2nd Other
passenge Cash
Air largest related Negotiat 100.00 2014-03
r 1,600 settle 2014-05
China shareh transact ed price % -22
cooperat ment
older ion
ion
Total -- -- 46,437.2 -- -- -- -- --
Details of return of sales in significant
N/A
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, which is
shareholders’ general meeting
going to happen in this Period (if
applicable)
Reasons for major difference between
trading price and market reference price N/A
(if applicable)
2. Other material related transaction
On 30 May 2014, the Proposal of Related Transaction of Operation lease of Two CRJ-700 Aircraft was deliberated and approved in
6th meeting of 5th session of eth Board, agreed to leasing two CRJ-700 aircraft put into operation from Qingdao Airlines by way of
operation lease. The transaction implemented based on the status of market competitions and requirement of airlines development,
rental price reference to the trading price of aircrafts leasing with similar type leasing in the market. The trading in favour of making
use of the charateristic of the aircraft type to supporting marketing strategy of the Company without bad influence occurred to the
Company.
20
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
Disclosure information for material related transaction temporary disclosed
Temporary notice Dated disclosed Website for disclosure
Announcement of Related Transaction of
Operation lease of Two CRJ-700 Aircraft 2014-05-31 Juchao Website (www.cninfo.com.cn)
(Notice No.: 2014-13)
VIII. Non-business capital occupying by controlling shareholders and its related parties
No non-business capital occupied by controlling shareholders and its related parties in Period
IX. Major contract and implementation
1. Trusteeship, contract and leasing
(1) Trusteeship
No trusteeship occurred in reporting period
(2) Contract
No contract occurred in reporting period
(3) Leasing
In reporting period, more details about leasing of the Company see the section other material related transaction in material
related transactions
The Company had no item generated over 10% gains/losses in total profit in reporting period for the Company in Period.
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
X. Commitments made by the Company or shareholders holding above 5% shares of the
Company in reporting period or occurred in the previous reporting period but continued to
reporting period
Commitm
Commitments Accepter Contents Commitment time Implementation
ent period
Commitments Air China In February 2004, China National 2004-12-06 Long-ter Strictly
21
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
in report of Aviation Holding Company m implement
acquisition or (CNAHC) entered into a equity effective timely
equity change transfer agreement with SDA , that
is promise ―to avoiding horizontal
competition with the Company
through reasonable business
arrangement‖; in December, being
approved, the equity assignee was
replaced by Air China, and all rights
and obligations under the agreement
was transfer to Air China as the
party who implemented the
commitments
Controlling shareholder—SDA
Commitments provide a commitment letter of
Long-ter Strictly
make in Initial avoiding horizontal competition to
SDA 2000-09-12 m implement
public offering the Company in year of 2000 when
effective timely
or re-financing the Company initial public offering
shares
Completed on
Y
time(Y/N)
XI. Appointment and non-reappointment (dismissal) of CPA
Whether financial report of this Semi-annual report is audited or not
□ Yes √No
XII. Penalty and rectification
No penalty and rectification in reporting period
XIII. Risk disclosure of delisting with laws and rules violated
The Company has no delisting risks with laws and rules violated in Period
XIV. Explanation on other significant events
Securities Times, Hong Kong Commercial Daily and Juchao Website (http: //www.cninfo.com.cn) , more details can be found in the
above said media.
22
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
Section VI. Changes in Shares and Particulars about Shareholders
I. Changes in shares
In share
Before changed Increase/decrease in this time (+ , - ) After changed
Capitali
zation
New Bonus
Amount Ratio of Other Subtotal Amount Ratio
issue share
public
reserve
260,000 260,000
I. Unlisted shares 65.00% 65.00%
,000 ,000
168,601 168,601
1. Sponsor’s shares 42.15% 42.15%
,000 ,000
Including: State-owned 168,402 168,402
42.10% 42.10%
shares ,000 ,000
Domestic legal person’s
199,000 0.05% 199,000 0.05%
shares
4. Preference shares or 91,399, 91,399,
22.85% 22.85%
other 000 000
140,000 140,000
II. Listed shares 35.00% 35.00%
,000 ,000
2.Domestically listed 140,000 140,000
35.00% 35.00%
foreign shares ,000 ,000
400,000 100.00 400,000 100.00
III. Total shares
,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
23
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
□ Applicable √ Not applicable
II. Number of shareholders of the Company and share-holding
In share
Total preference shareholders with
Total common shareholders at voting rights recovered at end of
17,153 0
period-end reporting period (if applicable) (see
Note 8)
Particulars about shares held above 5% by shareholders or top ten shareholders
Total Number of shares
Proport shareholders Changes Amount of Amount of pledged/frozen
Nature of ion of
Shareholders at the end in report un-listed listed
shareholder shares
State of Amoun
held of report period shares held shares held
share t
period
Shandong Aviation State-owned
42.00% 168,004,000 0 168,004,000 0
Group corporate
State-owned
Air China Limited 22.80% 91,200,000 0 91,200,000 0
corporate
GUOTAI JUNAN
SECURITIES(HO Overseas
0.89% 3,576,056 38,283 0 3,576,056
NGKONG) corporate
LIMITED
Domestic
Yao Ming nature 0.60% 2,409,658 1,482,658 0 2,409,658
person
WANXIANG
INTERNATIONA Overseas
0.45% 1,800,000 -5,525 0 1,800,000
L INVESTMENT corporate
CORPORATION
Domestic
Chen Jingjian nature 0.36% 1,438,800 0 0 1,438,800
person
BOCI
Overseas
SECURITIES 0.33% 1,334,387 774,966 0 1,334,387
corporate
LIMITED
NAV CANADA Overseas
0.26% 1,052,295 531,000 0 1,052,295
PENSION PLAN corporate
Domestic
Ou Yanping nature 0.24% 969,100 24,057 0 969,100
person
24
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
Overseas
HUANG LIU LIA nature 0.23% 918,917 0 0 918,917
person
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;
2. Air China Limited is the second largest shareholder of the Company, who holds the
Explanation on related
shares of the Company on behalf of the State with unlisted shares;
relationship or concerted action
3. Among the above top ten shareholders, Air China Limited is the first largest shareholder
among the abovementioned
of the SDA, and there exists no associated relationship between SDA and Air China and the
shareholders
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
Type of shares
Shareholders Amount of listed shares held at period-end
Type Amount
GUOTAI JUNAN
Domestically listed
SECURITIES(HONGKONG) 3,576,056 3,576,056
foreign shares
LIMITED
Domestically listed
Yao Ming 2,409,658 2,409,658
foreign shares
WANXIANG INTERNATIONAL Domestically listed
1,800,000 1,800,000
INVESTMENT CORPORATION foreign shares
Domestically listed
Chen Jingjian 1,438,800 1,438,800
foreign shares
Domestically listed
BOCI SECURITIES LIMITED 1,334,387 1,334,387
foreign shares
Domestically listed
NAV CANADA PENSION PLAN 1,052,295 1,052,295
foreign shares
Domestically listed
Ou Yanping 969,100 969,100
foreign shares
Domestically listed
HUANG LIU LIA 918,917 918,917
foreign shares
Domestically listed
Ou Yanping 825,730 825,730
foreign shares
Domestically listed
Ye Qufa 820,607 820,607
foreign shares
Explanation on related relationship The Company is not aware of their associated relationship among the top ten shareholders
or concerted action among the top of circulation share, and is unknown whether other circulation shareholders belong to the
ten shareholders with un-restricted consistent actionist regulated by the Management Regulation of Information Disclosure on
25
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
shares held and between the top ten Change of Shareholding for Listed Companies.
shareholders with un-restricted
shares held and top ten
shareholders
The seventh and ninth place in the trade-able shareholders shows the same security
account name, but has different certificate numbers for registration, the Company
Other
incapable of judging that if the same person was behind the name, thus unable to
consolidate accounting.
The shareholders of the Company had no buy-back agreement dealing in reporting period.
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
IV. Share holding increasing plan proposed or implemented in reporting period from
shareholder of the Company and its concerted action person
As far as the Company know, there are no share holding increasing plan proposed or implemented in Period from shareholder of the
Company and its concerted action person
26
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
Section VII. Preferred Stock
I. Issuance and listing of preferred stock in Period
□ Applicable √ Not applicable
II. Number of shareholders with preferred stock held and shareholdings
□ Applicable √ Not applicable
III. Repurchase and conversion of preferred stock
1. Preferred stock repurchased
□ Applicable √ Not applicable
2. Preferred stock converted
□ Applicable √ Not applicable
IV. Preferred stock with voting rights recovered and executed
□ Applicable √ Not applicable
V. Accounting policy taken for preferred stock and reasons
□ Applicable √ Not applicable
27
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
Section VIII. 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 2013.
II. Resignation and dismissal of directors, supervisors and senior executives
Name Title Type Date Reason
Zhang Xingfu Chairman Office leaving 2014-03-20 Occupation mobility
Appointment
Yu Haitian Chairman 2014-03-20 Occupation mobility
and dismissal
Appointment
Miao Liubin GM 2014-03-20 Occupation mobility
and dismissal
Security
Wang Xianlin Appointment 2014-03-20 Occupation mobility
director
Xiong Jianbo Deputy GM Dismissal 2014-03-25 For change of workplace
28
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
Section IX. 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 302,785,902.50 444,522,271.21
Settlement provisions
Capital lent
Transaction finance asset
Notes receivable
Accounts receivable 281,996,777.77 250,524,757.67
Accounts paid in advance 91,025,194.44 88,182,040.98
Insurance receivable
Reinsurance receivables
Contract reserve of reinsurance
receivable
Interest receivable
Dividend receivable 1,826,370.00 14,325,586.06
Other receivables 192,302,512.32 236,105,804.44
Purchase restituted finance asset
Inventories 136,089,585.17 107,973,473.35
Non-current asset due within one
year
Other current assets 75,680,302.24 71,828,962.65
Total current assets 1,081,706,644.44 1,213,462,896.36
Non-current assets:
29
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
Granted loans and advances
Finance asset available for sales
Held-to-maturity investment
Long-term account receivable
Long-term equity investment 285,106,129.88 88,352,100.00
Investment real estate
Fixed assets 7,024,146,639.26 7,564,658,140.23
Construction in progress 2,678,906,510.75 1,647,915,995.78
Engineering material
Disposal of fixed asset
Productive biological asset
Oil and gas asset
Intangible assets 99,038,188.98 101,127,636.82
Expense on Research and
Development
Goodwill
Long-term expenses to be
378,941,655.63 347,945,540.61
apportioned
Deferred income tax asset 444,933,665.36 439,662,119.02
Other non-current asset
Total non-current asset 10,911,072,789.86 10,189,661,532.46
Total assets 11,992,779,434.30 11,403,124,428.82
Current liabilities:
Short-term loans 200,000,000.00 434,137,220.00
Loan from central bank
Absorbing deposit and interbank
deposit
Capital borrowed
Transaction financial liabilities 1,473,379.53 296,902.47
Notes payable
Accounts payable 1,107,938,330.99 1,132,126,690.25
Accounts received in advance 255,101,386.04 343,468,052.97
Financial asset sold for
repurchase
Commission charge and
30
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
commission payable
Wage payable 255,216,675.68 338,866,981.54
Taxes payable 119,628,846.75 110,064,437.61
Interest payable 4,419,376.31 16,064,294.43
Dividend payable 100,011,940.00 11,940.00
Other accounts payable 314,863,518.89 193,868,858.34
Reinsurance payables
Insurance contract reserve
Security trading of agency
Security sales of agency
Non-current liabilities due
986,560,433.84 533,150,658.42
within 1 year
Other current liabilities
Total current liabilities 3,345,213,888.03 3,102,056,036.03
Non-current liabilities:
Long-term loans 3,845,454,340.85 3,525,047,206.06
Bonds payable 500,000,000.00 500,000,000.00
Long-term account payable 1,629,233,894.55 1,542,515,998.39
Special accounts payable
Accrual liabilities
Deferred income tax liabilities
Other non-current liabilities 18,009,524.28 25,367,524.34
Total non-current liabilities 5,992,697,759.68 5,592,930,728.79
Total liabilities 9,337,911,647.71 8,694,986,764.82
Owner’s equity (or shareholders’
equity):
Paid-in capital (or share capital) 400,000,000.00 400,000,000.00
Capital reserve 75,410,363.70 75,410,363.70
Less: Inventory shares
Reasonable reserve
Surplus reserve 297,349,585.70 297,349,585.70
Provision of general risk
Retained profit 1,882,107,837.19 1,935,377,714.60
Balance difference of foreign
currency translation
31
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
Total owner’s equity attributable to
2,654,867,786.59 2,708,137,664.00
parent company
Minority interests
Total owner’s equity ( or
2,654,867,786.59 2,708,137,664.00
shareholders’ equity)
Total liabilities and owner’s
11,992,779,434.30 11,403,124,428.82
equity( or shareholders’ equity)
Legal Representative: Yu Haitian
Person in charge of Accounting Works: Xu Guojian
Person in charge of Accounting Institution: Sun Jingping
2. Balance Sheet of parent company
Prepared by Shandong Airlines Co., Ltd
In RMB
Item Closing balance Opening balance
Current assets:
Monetary funds 286,916,756.99 421,826,370.62
Transaction finance asset
Notes receivable
Accounts receivable 274,813,978.00 243,767,591.18
Accounts paid in advance 90,845,365.83 87,961,234.82
Interest receivable
Dividend receivable 1,826,370.00 14,325,586.06
Other receivables 234,280,508.15 278,365,290.97
Inventories 136,034,354.88 107,972,423.35
Non-current asset due within
one year
Other current assets 75,680,302.24 71,828,962.65
Total current assets 1,100,397,636.09 1,226,047,459.65
Non-current assets:
Finance asset available for sales
Held-to-maturity investment
Long-term account receivable
Long-term equity investment 391,106,815.31 194,352,785.43
Investment real estate
Fixed assets 6,917,410,637.23 7,454,288,584.97
32
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
Construction in progress 2,677,063,510.75 1,647,839,995.78
Engineering material
Disposal of fixed asset
Productive biological asset
Oil and gas asset
Intangible assets 84,312,629.39 86,384,749.30
Expense on Research and
Development
Goodwill
Long-term expenses to be
378,941,655.63 347,945,540.61
apportioned
Deferred income tax asset 444,297,929.76 439,209,204.04
Other non-current asset
Total non-current asset 10,893,133,178.07 10,170,020,860.13
Total assets 11,993,530,814.16 11,396,068,319.78
Current liabilities:
Short-term loans 200,000,000.00 434,137,220.00
Transaction financial liabilities 1,473,379.53 296,902.47
Notes payable
Accounts payable 1,102,871,500.15 1,130,120,671.84
Accounts received in advance 251,163,753.44 338,572,262.93
Wage payable 254,488,918.07 338,104,603.04
Taxes payable 119,456,290.96 109,369,269.33
Interest payable 4,419,376.31 16,064,294.43
Dividend payable 100,011,940.00 11,940.00
Other accounts payable 326,726,674.43 195,015,301.41
Non-current liabilities due
986,560,433.84 533,150,658.42
within 1 year
Other current liabilities
Total current liabilities 3,347,172,266.73 3,094,843,123.87
Non-current liabilities:
Long-term loans 3,845,454,340.85 3,525,047,206.06
Bonds payable 500,000,000.00 500,000,000.00
Long-term account payable 1,629,233,894.55 1,542,515,998.39
Special accounts payable
33
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
Accrual liabilities
Deferred income tax liabilities
Other non-current liabilities 18,009,524.28 25,367,524.34
Total non-current liabilities 5,992,697,759.68 5,592,930,728.79
Total liabilities 9,339,870,026.41 8,687,773,852.66
Owner’s equity (or shareholders’
equity):
Paid-in capital (or share capital) 400,000,000.00 400,000,000.00
Capital reserve 86,911,168.71 86,911,168.71
Less: Inventory shares
Reasonable reserve
Surplus reserve 296,688,881.17 296,688,881.17
Provision of general risk
Retained profit 1,870,060,737.87 1,924,694,417.24
Balance difference of foreign
currency translation
Total owner’s equity ( or
2,653,660,787.75 2,708,294,467.12
shareholders’ equity)
Total liabilities and owner’s
11,993,530,814.16 11,396,068,319.78
equity( or shareholders’ equity)
Legal Representative: Yu Haitian
Person in charge of Accounting Works: Xu Guojian
Person in charge of Accounting Institution: Sun Jingping
3. Consolidated Profit Statement
Prepared by Shandong Airlines Co., Ltd
In RMB
Item Current amount Amount at last period
I. Total operating revenue 5,564,290,182.81 5,524,710,931.04
Including: Operating revenue 5,564,290,182.81 5,524,710,931.04
Interest income
Insurance gained
Commission charge and
commission income
II. Total operating cost 5,586,241,981.72 5,491,858,793.50
Including: Operating cost 4,925,753,120.76 4,692,981,248.20
Interest expense
Commission charge and commission
expense
34
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
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 15,270,214.40 181,432,118.32
Sales expenses 391,847,618.88 356,183,689.42
Management expenses 111,268,522.80 111,060,399.83
Financial expenses 140,688,160.56 70,267,029.24
Assets impairment loss 1,414,344.32 79,934,308.49
Add: Changing income of fair
-1,176,477.06 7,328,944.15
value(Loss is listed with ―-‖)
Investment income (Loss is listed
-2,841,259.99 492,501.02
with ―-‖)
Including: Investment income on
affiliated company and joint venture
Exchange income (Loss is listed with
―-‖)
III. Operating profit (Loss is listed
-25,969,535.96 40,673,582.71
with ―-‖)
Add: Non-operating revenue 92,416,504.98 87,133,004.04
Less: Non-operating expense 3,773,297.29 5,625,408.92
Including: Disposal loss of
3,690,350.76 2,116,060.38
non-current asset
IV. Total Profit (Loss is listed with
62,673,671.73 122,181,177.83
―-‖)
Less: Income tax expense 15,943,549.14 39,815,150.31
V. Net profit (Net loss is listed with
46,730,122.59 82,366,027.52
―-‖)
Including: net profit realized before
consolidation by mergered party
Net profit attributable to owner’s of
46,730,122.59 82,366,027.52
parent company
Minority shareholders’ gains and
losses
VI. Earnings per share -- --
i. Basic earnings per share 0.12 0.21
ii. Diluted earnings per share 0.12 0.21
VII. Other consolidated income
VIII. Total comprehensive income 46,730,122.59 82,366,027.52
Total consolidated income
attributable to owners of parent 46,730,122.59 82,366,027.52
company
Total consolidated income
attributable to minority shareholders
Legal Representative: Yu Haitian
Person in charge of Accounting Works: Xu Guojian
Person in charge of Accounting Institution: Sun Jingping
35
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
4. Profit Statement of parent company
Prepared by Shandong Airlines Co., Ltd
In RMB
Item Current amount Amount at last period
I. Operating revenue 5,547,851,815.18 5,517,047,510.74
Less: operating cost 4,915,866,523.44 4,690,340,878.33
Operating tax and extras 15,178,946.89 180,992,811.81
Sales expenses 391,847,618.88 356,183,689.42
Management expenses 107,339,359.30 107,322,337.57
Financial expenses 140,715,553.21 70,290,083.63
Assets impairment loss 484,664.32 80,163,911.80
Add: Changing income of fair
-1,176,477.06 7,328,944.15
value(Loss is listed with ―-‖)
Investment income (Loss is listed
-2,841,259.99 492,501.02
with ―-‖)
Including: Investment income on
affiliated company and joint venture
II. Operating profit (Loss is listed
-27,598,587.91 39,575,243.35
with ―-‖)
Add: Non-operating income 92,416,504.93 87,129,319.04
Less: Non-operating expense 3,773,297.29 5,609,083.05
Including: Disposal loss of
3,690,350.76 2,099,734.51
non-current asset
III. Total Profit (Loss is listed with
61,044,619.73 121,095,479.34
―-‖)
Less: Income tax expense 15,678,299.10 39,624,213.86
IV. Net profit (Net loss is listed with
45,366,320.63 81,471,265.48
―-‖)
V. Earnings per share -- --
i. Basic earnings per share
ii. Diluted earnings per share
VI. Other consolidated income
VII. Total comprehensive income 45,366,320.63 81,471,265.48
Legal Representative: Yu Haitian
Person in charge of Accounting Works: Xu Guojian
Person in charge of Accounting Institution: Sun Jingping
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
6,036,280,864.00 5,275,165,815.93
commodities and providing labor
36
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
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
139,496,635.66 137,068,823.37
operating activities
Subtotal of cash inflow arising from
6,175,777,499.66 5,412,234,639.30
operating activities
Cash paid for purchasing
commodities and receiving labor 4,373,592,775.81 3,753,267,933.36
service
Net increase of customer loans and
advances
Net increase of deposits in
central bank and interbank
Cash paid for original insurance
contract compensation
Cash paid for interest,
commission charge and commission
Cash paid for bonus of guarantee
slip
Cash paid to/for staff and workers 882,701,871.58 820,878,727.48
Taxes paid 171,060,869.92 392,409,961.97
Other cash paid concerning operating
70,569,606.25 76,308,383.70
activities
Subtotal of cash outflow arising from
5,497,925,123.56 5,042,865,006.51
operating activities
Net cash flows arising from operating
677,852,376.10 369,369,632.79
activities
II. Cash flows arising from investing
activities:
Cash received from recovering
investment
Cash received from investment
14,325,586.06
income
Net cash received from disposal 43,776,039.01 318,907.50
37
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
of fixed, intangible and 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
58,101,625.07 318,907.50
investing activities
Cash paid for purchasing fixed,
1,176,764,986.77 532,078,980.45
intangible and other long-term assets
Cash paid for investment 26,000,000.00
Net increase of mortgaged loans
Net cash received from subsidiaries
and other units
Other cash paid concerning investing
656,994.75 1,242,550.48
activities
Subtotal of cash outflow from
1,203,421,981.52 533,321,530.93
investing activities
Net cash flows arising from investing
-1,145,320,356.45 -533,002,623.43
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 1,056,028,750.00 1,006,012,798.00
Cash received from issuing bonds
Other cash received concerning
30,000.00
financing activities
Subtotal of cash inflow from
1,056,028,750.00 1,006,042,798.00
financing activities
Cash paid for settling debts 553,278,280.37 465,348,332.99
Cash paid for dividend and
101,397,290.64 106,322,123.02
profit distributing or interest paying
Including: Dividend and profit
of minority shareholder paid by
subsidiaries
Other cash paid concerning
74,178,939.54 101,689,132.68
financing activities
Subtotal of cash outflow from
728,854,510.55 673,359,588.69
financing activities
Net cash flows arising from financing
327,174,239.45 332,683,209.31
activities
IV. Influence on cash and cash
equivalents due to fluctuation in -1,442,627.81 -224,363.85
exchange rate
V. Net increase of cash and cash
-141,736,368.71 168,825,854.82
equivalents
38
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
Add: Balance of cash and cash
444,522,271.21 155,387,742.97
equivalents at the period -begin
VI. Balance of cash and cash
302,785,902.50 324,213,597.79
equivalents at the period -end
Legal Representative: Yu Haitian
Person in charge of Accounting Works: Xu Guojian
Person in charge of Accounting Institution: Sun Jingping
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 6,021,401,382.88 5,268,796,750.21
services
Write-back of tax received
Other cash received concerning
147,988,125.56 142,602,663.01
operating activities
Subtotal of cash inflow arising from
6,169,389,508.44 5,411,399,413.22
operating activities
Cash paid for purchasing
commodities and receiving labor 4,367,939,684.34 3,752,672,221.27
service
Cash paid to/for staff and
879,595,845.24 818,126,338.98
workers
Taxes paid 169,007,757.79 391,223,132.73
Other cash paid concerning
70,184,083.86 83,789,952.17
operating activities
Subtotal of cash outflow arising from
5,486,727,371.23 5,045,811,645.15
operating activities
Net cash flows arising from operating
682,662,137.21 365,587,768.07
activities
II. Cash flows arising from investing
activities:
Cash received from recovering
investment
Cash received from investment
14,325,586.06
income
Net cash received from disposal
of fixed, intangible and other 43,776,039.01 310,737.50
long-term assets
39
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
Net cash received from disposal
of subsidiaries and other units
Other cash received concerning
investing activities
Subtotal of cash inflow from
58,101,625.07 310,737.50
investing activities
Cash paid for purchasing fixed,
1,174,747,992.80 531,738,243.46
intangible and other long-term assets
Cash paid for investment 26,000,000.00
Net cash received from
subsidiaries and other units
Other cash paid concerning
656,994.75 1,242,550.48
investing activities
Subtotal of cash outflow from
1,201,404,987.55 532,980,793.94
investing activities
Net cash flows arising from investing
-1,143,303,362.48 -532,670,056.44
activities
III. Cash flows arising from financing
activities
Cash received from absorbing
investment
Cash received from loans 1,056,028,750.00 1,006,012,798.00
Cash received from issuing
bonds
Other cash received concerning
30,000.00
financing activities
Subtotal of cash inflow from
1,056,028,750.00 1,006,042,798.00
financing activities
Cash paid for settling debts 553,278,280.37 465,348,332.99
Cash paid for dividend and
101,397,290.64 106,322,123.02
profit distributing or interest paying
Other cash paid concerning
74,178,939.54 101,689,132.68
financing activities
Subtotal of cash outflow from
728,854,510.55 673,359,588.69
financing activities
Net cash flows arising from financing
327,174,239.45 332,683,209.31
activities
IV. Influence on cash and cash -1,442,627.81 -224,363.85
40
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
equivalents due to fluctuation in
exchange rate
V. Net increase of cash and cash
-134,909,613.63 165,376,557.09
equivalents
Add: Balance of cash and cash
421,826,370.62 143,212,750.59
equivalents at the period -begin
VI. Balance of cash and cash
286,916,756.99 308,589,307.68
equivalents at the period -end
Legal Representative: Yu Haitian
Person in charge of Accounting Works: Xu Guojian
Person in charge of Accounting Institution: Sun Jingping
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-i
n
Capita Less: Surpl Provis Minorit Total
Item capita Reaso Retain
l Invent us ion of Other y owners’
l (or nable ed
reserv ory reserv gener s interests equity
share reserv profit
e shares e al risk
capita e
l)
400,0 75,41 297,3 1,935,
I. Balance at the end of last 2,708,13
00,00 0,363. 49,58 377,7
year 7,664.00
0.00 70 5.70 14.60
Add: Changes of accounting
policy
Error correction of the last
period
Others
400,0 75,41 297,3 1,935,
II. Balance at the beginning 2,708,13
00,00 0,363. 49,58 377,7
of this year 7,664.00
0.00 70 5.70 14.60
-53,26
III. Increase/ Decrease in this -53,269,
year (Decrease is listed 9,877.
with'"-") 877.41
41
46,73
46,730,1
(i) Net profit 0,122.
22.59
59
(ii) Other consolidated
income
41
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
46,73
46,730,1
Subtotal of (i)and (ii) 0,122.
22.59
59
(III) Owners' devoted and
decreased capital
1. Owners' devoted capital
2. Amount calculated into
owners' equity paid in shares
3. Others
-100,0
-100,000
(IV)Profit distribution 00,00
,000.00
0.00
1. Withdrawal of surplus
reserves
2. Withdrawal of general risk
provisions
-100,0
3. Distribution for owners -100,000
00,00
(shareholders) ,000.00
0.00
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
400,0 75,41 297,3 1,882,
IV. Balance at the end of the 2,654,86
00,00 0,363. 49,58 107,8
report period 7,786.59
0.00 70 5.70 37.19
Amount at last year
In RMB
Amount at last year
Owners’ equity attributable to the parent company
Paid-i
Capita Less: Surpl Provis Minorit Total
Item Reaso
n Retain
l Invent us ion of Other y owners’
capita nable ed
reserv ory reserv gener s interests equity
l (or reserv profit
e shares e al risk
share e
42
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
capita
l)
400,0 75,41 257,6 1,746,
I. Balance at the end of last 2,479,05
00,00 0,363. 42,79 002,6
year 5,852.28
0.00 70 9.31 89.27
Add: retroactive adjustment
arising from enterprise
consolidation under the same
control
Add: Changes of accounting
policy
Error correction of the last
period
Others
400,0 75,41 257,6 1,746,
II. Balance at the beginning 2,479,05
00,00 0,363. 42,79 002,6
of this year 5,852.28
0.00 70 9.31 89.27
39,70 189,3
III. Increase/ Decrease in this 229,081,
year (Decrease is listed 6,786. 75,02
with'"-") 811.72
39 5.33
389,0
389,081,
(i) Net profit 81,81
811.72
1.72
(ii) Other consolidated
income
389,0
389,081,
Subtotal of (i)and (ii) 81,81
811.72
1.72
(III) Owners' devoted and
decreased capital
1. Owners' devoted capital
2. Amount calculated into
owners' equity paid in shares
3. Others
39,70 -199,7
-160,000
(IV)Profit distribution 6,786. 06,78
,000.00
39 6.39
39,70 -39,70
1. Withdrawal of surplus
6,786. 6,786.
reserves
39 39
2. Withdrawal of general risk
provisions
-160,0
3. Distribution for owners -160,000
00,00
(shareholders) ,000.00
0.00
4. Others
43
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
(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
400,0 75,41 297,3 1,935,
IV. Balance at the end of the 2,708,13
00,00 0,363. 49,58 377,7
report period 7,664.00
0.00 70 5.70 14.60
Legal Representative: Yu Haitian
Person in charge of Accounting Works: Xu Guojian
Person in charge of Accounting Institution: Sun Jingping
8. Statement on Changes of Owners' Equity of Parent Company
Prepared by Shandong Airlines Co., Ltd
Current amount
In RMB
Current amount
Paid-in Provisio
Less: Total
Item capital Capital Reasona Surplus n of Retained
Inventor owners’
(or share reserve ble reserve general profit
y shares equity
capital) reserve risk
I. Balance at the end of last 400,000, 86,911,1 296,688, 1,924,69 2,708,29
year 000.00 68.71 881.17 4,417.24 4,467.12
Add: Changes of accounting
policy
Error correction of the last
period
Others
II. Balance at the beginning of 400,000, 86,911,1 296,688, 1,924,69 2,708,29
this year 000.00 68.71 881.17 4,417.24 4,467.12
III. Increase/ Decrease in this -54,633, -54,633,
year (Decrease is listed
with'"-") 679.37 679.37
45,366,3 45,366,3
(i) Net profit
20.63 20.63
(ii) Other consolidated income
45,366,3 45,366,3
Subtotal of (i)and (ii)
20.63 20.63
44
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
(III) Owners' devoted and
decreased capital
1. Owners' devoted capital
2. Amount calculated into
owners' equity paid in shares
3. Others
-100,000 -100,000
(IV) Profit distribution
,000.00 ,000.00
1. Withdrawal of surplus
reserves
2. Withdrawal of general
risk reserve
3. Distribution for owners -100,000 -100,000
(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, 86,911,1 296,688, 1,870,06 2,653,66
report period 000.00 68.71 881.17 0,737.87 0,787.75
Amount at last year
In RMB
Amount at last year
Paid-in Provisio
Less: Total
Item capital Capital Reasona Surplus n of Retained
Inventor owners’
(or share reserve ble reserve general profit
y shares equity
capital) reserve 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
45
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
III. Increase/ Decrease in this 39,706,7 197,361, 237,067,
year (Decrease is listed
with'"-") 86.39 077.56 863.95
397,067, 397,067,
(i) Net profit
863.95 863.95
(ii) Other consolidated income
397,067, 397,067,
Subtotal of (i)and (ii)
863.95 863.95
(III) Owners' devoted and
decreased capital
1. Owners' devoted capital
2. Amount calculated into
owners' equity paid in shares
3. Others
39,706,7 -199,706 -160,000
(IV) Profit distribution
86.39 ,786.39 ,000.00
1. Withdrawal of surplus 39,706,7 -39,706,
reserves 86.39 786.39
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, 86,911,1 296,688, 1,924,69 2,708,29
report period 000.00 68.71 881.17 4,417.24 4,467.12
Legal Representative: Yu Haitian
Person in charge of Accounting Works: Xu Guojian
Person in charge of Accounting Institution: Sun Jingping
46
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
Shandong Airlines Co., Ltd.
Notes to the Financial Statements
As at 30th June 2014
(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
47
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
(国资产权[2004]956 号：《关于中国航空集团公司将受让山东航空股份有限公司国有股的合同
实施转让有关问题的批复》)) issued by the State-owned Assets Supervision and Administration
Commission of the State Council, authorised China Aviation Group to transfer the state-owned corporate
shares received from SDA Group to Air China Co., Ltd. (hereafter, Air China). As so provided in
GuoZiChanQuan[2004]No.956, the rights and obligation attributable to China Aviation Group as specified in
the Agreement of Share Transfer shall be afforded by Air China. The change of share ownership was
registered at the China Securities Depository and Clearing Corporation Limited Shenzhen Office by SDA
Group and Air China on December 3rd, 2004; And, 91,200,000 shares of the Company then became held by
Air China.
Legal representative of the Company: YU,Haitian
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 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
Enterprise Accounting Standard - General Standard and 38 specific standards issued by the Ministry of
Finance of People’s Republic of China on 15 February 2006, and the application guidance, explanation and
48
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
relevant regulations subsequently issued (hereafter, collectively as Enterprise Accounting Standards or CASs);
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
The financial statements of the Company are prepared in accordance with the requirements of the Enterprise
Accounting Standards and give a true and complete view of the consolidated and separate financial position of
the Company as at 30 June 2014, and the consolidated and separate business result and cash flows for the
year then ended. In addition, the consolidated and separate 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. A complete 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 as the functional currency to prepare its financial 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.
49
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
(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
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
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Shandong Airlines Co., Ltd. Semi-Annual Report 2014
be offset.
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’ 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’ identifiable net assets, the acquirer shall recognize the remaining difference immediately in profit or
loss for the current period.
Where the temporary difference obtained by the acquirer was not recognized due to inconformity with the
conditions applied for recognition of deferred income tax, if, within the 12 months after acquisition, additional
information can prove the existence of related information at acquisition date and the expected economic
benefits on the acquisition date arose from deductible temporary difference by the acquiree can be achieved,
relevant income tax assets can be recognized, and goodwill offset. If the goodwill is not sufficient, the
difference shall be recognized as profit of the current period.
Apart from above, the differences shall be taken into profit or loss of the current period if the recognition of
deferred income tax assets is related to the combination.
For business combination involving entities not under common control achieved through multiple transactions
(acquistion in stages), the multiple agreements are assessed to determine whether they should be viewed as a
whole with reference the conditions stipulated by the Notice of the Ministry of Finance on the No. 5
Explanation of Enterprise Accounting Standards (Cai Kuai [2012] No. 19) (see Note 4.4.2 for details). Where
multiple agreements of an acquisition in stages are viewed as a whole, the accounting treatment for the
multiple agreements shall be performed in accordance with the previous paragraphs and Note 4.10; and,
where multiple agreements of an acquistion in stages fail the conditions of CaiKuai[2012]19Hao, the
accounting treatments shall be perfomed as follow.
For the purpose of the separate financial statements, the cost of acquistion is measured as the sum of the
carrying amount of investment in the investee immediately prior to the acquistion and the consideration for the
addition investment. Cumulative other comprehensive income relevant to the investment recognised prior to
the acquistion is reclassfied to profit or loss as investment income at the time of acquistion.
For the purpose of the consolidated financial statements, the investment in the investee prior to the acquistion
is remeasured by fair value, difference between the acquistion date fair value of the investment in the investee
prior to the acquisition and its carrying amount is recognised in profit or loss as investment income at the time
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of acquistion. Cumulative other comprehensive income relevant to the investment recognised prior to the
acquistion is reclassfied to profit or loss as investment income at the time of acquistion.
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.
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Minority interest and the portion in the net profit or loss not attributable to the Company are presented
separately in the consolidated balance sheet within shareholders’owners’ equity and net profit. Net profit or
loss attributable to minority shareholders in the subsidiaries is presented separately as minority interest in the
consolidated income statement below the net profit line item.
When the amount of loss for the current period attributable to the minority shareholders of a subsidiary
exceeds the minority shareholders’ portion of the opening balance of [shareholders’ [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’ 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.
Where loss of control over a subsidiary results from multiple transactions (agreements), asssessment shall be
made as to whether the multiple agreements shall be viewed as a whole as a single transaction. Multiple
agreements giving rise to loss of control over a subsidiary is generally viewed as a whole as a single
transaction if the terms, conditions and economic implications of the multiple agreements satisfy one or more
of the following conditions: 1) the agreements are entered into simultaneously or taking into account the
implication of each other; 2) the business objective cannot be achieved without successful completion of all the
agreements; the occurrance of one agreement is dependent on the result of at least another one agreement;
and/or 4) any one single agreement is not recognised as economic and the agreements as a whole is
economic. Where multiple agreements do not satisfy the conditions of being viewed as a single transaction,
each agreement shall be treated and accounted for in accordance with the provisions of disposal of long-term
equity investments not resulting loss of control (see Note 4.10.2.2)) or loss of control due to disposal of shares
or other events (see the previous paragraph). Where nultiple agreements satisfy the conditions of being
viewed as a single transaction, each agreement shall be treated and accounted for as a transaction which
results in loss of control; differences between the consideration for disposals prior to loss of control and the net
assets proportionate to the shares disposed prior to loss of control are recognised as other comprehensive
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income in the consolidated financial statements and transfered to profit or loss at the time of loss of control.
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
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
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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.
(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-sale 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
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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.
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
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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-sale
Financial assets available-for-sale 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.
The cost of an available-for-sale debt instrument at each balance sheet date is determined by the amortised
cost, ie. the residual amount after adjustment on the cost upon initial recognition for the following items:
a. repaid principal (negative adjustment);
b. cumulative amortisation of the difference between the amount upon expiry and the amount upon initial
recognition using teh effective interest rate method (positive adjustment if expiry amount higher than amount
upon initial recognition and vice versa);
c. cumulative impairment.
The cost of an available-for-sale instrument at each balance sheet date is its cost upon initial recognition.
Financial assets available-for-sale 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-sale are held, are recognized in investment gains.
(3) Impairment of financial assets
The Company 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.
An impairment test shall be made on the financial assets with significant single amounts. The financial assets
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which single amount is not significant shall be tested for asset impairment or be included in any combination of
financial assets with similar risk features for any impairment test. Where,upon independent test, the financial
assets (including those financial assets with significant single amounts and those with insignificant amounts)
has not been impaired, it shall be included in a combination of financial assets with similar risk features so as
to conduct another impairment test. The financial assets which have suffered from an impairment loss in any
single amount shall not be included in any combination of financial assets with similar risk features for any
impairment test.
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-sale financial assets
Where the fair value of the equity instrument investment drops significantly or not contemporarily according to
the integrated relevant factors, an available-for-trade financial asset is impaired.
When an available-for-trade financial asset is impaired, the cumulative loss arising from declining in fair value
that had been recognized in capital reserve shall be removed and recognized in profit or loss. The amount of
the cumulative loss that is removed shall be difference between the acquisition cost with deduction of
recoverable amount less amortized cost, current fair value and any impairment loss on that financial asset
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 Company derecognizes a financial asset when one of the following conditions is met:
1) the rights to receive cash flows from the asset have expired;
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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.
For financial assets transferred in which the Company has continued involvement, the financial assets are
accounted for in accordance with the following criteria:
a. if the risks and rewards associated with the ownership of the financial assets are transferred to the
transferee, the Company de-recognises the financial assets;
b. if the risks and rewards associated with the ownership of the financial assets are retained by the Company,
the Company continue to recognise the financial assets;
c. if the Company neither retain nor transfer the risks and rewards associated with the ownership of the
financial assets, the Company accounts for the financial assets in accordance with the provisions present in
previous paragraph with reference to whether the Company retains control of the financial assets.
(5) Classification and measurement of financial liabilities
The Company’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 Company 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
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standalone derivative if (a) the economic characteristics and risks of the embedded derivative are not closely
related to the economic characteristics and risks of the host contract; and (b) a separate instrument with the
same terms as the embedded derivative would meet the definition of a derivative. If the Company is unable to
measure the embedded derivative separately either at acquisition or at a subsequent balance sheet date, it
designates the entire hybrid instrument as a financial asset or financial liability at fair value through profit or
loss.
(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.
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For an account receivable that is individually significant, the asset is individually assessed for impairment, the
impairment loss is recognized at the difference between the present value of future cash flow less the carrying
amount, and provision is made accordingly.
2) Provisions of bad debts in account receivables that individually insignificant items with similar credit risk
characteristics that have significant risk:
A.Evidence of credit risk characteristics
Whether the financial asset is individually significant or not individually significant, it is included in a group of
financial assets with similar credit risk characteristics and collectively assessed for impairment. Such credit risk
reflects the repayment of all due amount under the contract, and is related to the estimation of future cash flow
expected to be derived from the assets.
Evidence of portfolios:
Item Basis
Receivables not individually assessed for impairment are categorised on the basis of
credit risk. Provision for bad debts for each category of receivables is recognised at
Categorisation by nature of receivables
the actual rate of loss for the previous year of the same or similar category bearing
similar credit risk characteristics after adjustment for the current 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 recognition of
Percentage of carrying amount for recognition of
Category allowance for bad debt applicable to accounts
allowance for bad debt applicable to other receivables
receivable
Categorisation by nature of
5% 5%
receivables
3) Provisions of bad debts that is individually insignificant.
For the account receivables not individually significant, the Company assesses the account receivables
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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
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
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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’ share of the shareholder’ 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
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.
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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
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.
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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
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.
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(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 furniture 4-10 0-5.00 9.5-23.75
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.
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(4) Fixed Assets under finance leases
A finance lease is a lease that transfers in substance all the risks and rewards incident to ownership of an
asset. Title may or may not eventually be transferred.
Fixed assets that are held under finance leases shall be depreciated by applying the same policy as that for
the fixed assets owned by the Company. If it can be reasonably determined that the ownership of the leased
assets can be obtained at the end of the lease period, the leased assets are depreciated over their useful lives;
otherwise, the leased assets are depreciated over the shorter of the lease terms and the useful lives of the
leased assets.
(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.
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Where funds are borrowed for a specific-purpose, the amount of interest to be capitalized is the actual interest
expense incurred on that borrowing for the period less any bank interest earned from depositing the borrowed
funds before being used on the asset or any investment income on the temporary investment of those funds.
Where funds are borrowed for a general-purpose, the amount of interest to be capitalized on such borrowings
is determined by applying a weighted average interest rate to the weighted average of the excess amounts of
accumulated expenditure on the asset over and above the amounts of specific-purpose borrowings
During the capitalization period, exchange differences related to a specific-purpose borrowing denominating in
foreign currency are all capitalized. Exchange differences in connection with general-purpose borrowings are
recognized in profit or loss in the period in which they are incurred.
Assets qualified for capitalization are the fixed assets, investment properties or inventories which need a long
time of construction or production activities before ready for intended used or sale.
Capitalization of borrowing costs is suspended during periods in which the acquisition, construction or
production of a qualifying asset is interrupted by activities other than those necessary to prepare the asset for
its intended use or sale, when the interruption is for a continuous period of more than 3 months. Borrowing
costs incurred during these periods recognized as an expense for the current period until the acquisition,
construction or production is resumed.
4.14 Intangible assets
(1) Intangible asset
The term “intangible asset” refers to the identifiable non-monetary assets without physical shape,
possessed or controlled by enterprises.
The intangible assets are initially measured by its cost. Expenses related to intangible assets, if the economic
benefits related to intangible assets are likely to flow into the enterprise and the cost of intangible assets can
be measured reliably, shall be recorded as cost of intangible assets. The expenses other than this shall be
booked in the profit or loss when they occur.
Land use rights that are purchased by the Company are accounted for as intangible assets. Buildings, such as
plants that are developed and constructed by the Company, and relevant land use rights and buildings, are
accounted for as intangible assets and fixed assets, respectively. Payments for the land and buildings
purchased are allocated between the land use rights and the buildings; if they cannot be reasonably allocated,
all of the land use rights and buildings are accounted for as fixed assets.
When an intangible asset with a definite useful life is available for use, its original cost less net residual value
and any accumulate impairment losses is amortized over its estimated useful life using the straight-line
method . An intangible asset with an indefinite useful life is not amortized.
For an intangible asset with a definite useful life, the Company reviews the useful life and amortization method
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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.
(2) the expenditure of research and development
The expenditures for its internal research and development projects of the Company shall be classified
into research expenditures and developmentexpenditures.
The research expenditures shall be recorded into the profits and losses of the current period when they are
incurred.
Development expenditures in internal research and development projects shall be recognized as intangible
assets where they satisfy all of the following conditions:
①Technical feasibility of completing the intangible asset so that it will be available for use or sale;
②Intention to complete the intangible asset and use or sell it;
③How the intangible asset will generate economic benefits, including the ability to demonstrate the existence
of a market for the output of the intangible asset or the intangible asset itself or, if it is to be used internally, the
usefulness of the intangible asset;
④Availability of adequate technical, financial and other resources to complete the development and to use
or sell the intangible asset;
⑤Ability to measure reliably the expenditure that is attributable to the intangible asset during its development.
The expenses which can not be distinguished between research and development stage,
shall be recorded into the profit or loss for the current period.
(3) Impairment testing methods and recognition of impairment provision of intangible assets
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
subsidiaries, jointly operations. The Company assesses whether there are any indicators of impairment for all
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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
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when the service is rendered
③ Revenue 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.
(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. Government grants
obtained by the Company which are relevant to construction or acquisition of long-term assets are classified
as asset-related government grants; all other government grants are classified as revenue-related government
grants. For government grants without speficied beneficiary, the Company performs classification in
accordance with the following criteria.
(1) Where a grant is obtained for a specified project, the grant is spitted into asset-related and revenue related
portions proportionate to the project's investment to expense ratio; the classification is reviewed on each
balance sheet date and revised if necessary.
(2) Where a grant is obtained for general purpose, the grant as a whole is classified as a revenue-related
government grant.
If a government grant is in the form of a transfer of a monetary asset, it is measured at the amount received or
receivable. If a government grant is in the form of a non-monetary asset, it is measured at fair value. If the fair
value cannot be reliably determined, it is measured at a nominal amount. A government grant measured at a
nominal amount is recognized immediately in profit or loss for the period.
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
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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
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
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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.
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
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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 Leasor under operating Lease
Lease income from operating leases shall be recognized by the leasor in profit or loss on a straight-line basis
over the lease term. Initial direct cost of significance in amount shall be capitalized when incurred. If another
basis is more systematic and rational, that basis may be used. Contingent rents are credited to profit or loss in
the period in which they actually arise.
(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 leasor of a financing lease
For an asset that is leased out under a finance lease, the aggregate of the minimum lease receipts at the
inception of the lease and the initial direct costs is recorded as a finance lease receivable, and unguaranteed
residual value is recorded at the same time; the difference between the aggregate of the minimum lease
receipt, initial direct costs, and unguaranteed residual value, and the aggregate of their present values, is
recognized as unearned finance income, which is amortized using the effective interest rate method over each
period during the lease term.
Finance lease receivable less unearned finance income shall be separated into long-term liabilities and
long-term liability within one year for presentation.
Unearned finance income shall be computed by the effective interest method during the lease term.
Contingent rent shall be credited into profit or loss in which actually incurred.
4.21 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
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Shandong Airlines Co., Ltd. Semi-Annual Report 2014
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
76
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
(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 accounting judgments 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.
77
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
(3) Impairment of inventories
The Company measures inventories by the lower of cost and realizable net value according to the accounting
policies in regard of inventories and provisions for decline in value of inventories is made if the cost is higher
than their net realizable value, and obsolete and slow-movement inventories. Inventories decline in value to
net realizable value is the estimated selling price in the ordinary course of business. Net realizable value is
determined on the basis of clear evidence obtained, and takes into consideration the purposes of holding
inventories and effect of post balance 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
78
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
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.
(7) Deferred tax assets
The Company shall recognize all unused tax losses as deferred tax assets to the extent that it is probable that
future taxable profit will be available against which the unused tax losses and unused tax credits can be
utilized. This requires the management of the Company make a lot of 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) 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.
(9) Aircraft operating lease and engine overhaul expenses
Aircraft operating lease and engine overhaul expenses are accrued and charged to profit or loss in accordance
with the expected maintenance cycle, based on flight hours, flight cycles overhaul period and the amount of
the cost of repairs which may occur. These estimates are largely based on past historical data about the same
or similar types of aircraft and engines repairance. The withholding amount and overhaul costs may be
affected by different judgments and estimates and affect current profit or loss.
Note 5 Taxation
5.1 Major taxes and tax rate
Tax Tax rate (%)
Value Added Tax The Company pays the value-added tax based on value-added amount from sale of
79
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
Tax Tax rate (%)
goods or rendering of services, which will be subject to deduction of the input tax credit,
and the rate of value-added tax of the main goods is 11%.
Business Tax Business tax rate is the 3%-5% of taxable income
Enterprise income tax Income tax is calculated with the ratio of 25%.
Civil aviation development fund shall be calculated using the rates set out within
Civil Aviation Development Fund applicable to the relevant category of flight routes, maximum departure weight and flight
distance adopted by the civil aviation industry.
Prior to 1 August 2013, revenue arising from air transportation was taxable for business tax at the rate of 3%.
As from 1 August 2013, value added tax, instead of business tax, became chargeable on such revenue at the
rate of 11% in accordance with the Tax Policy Concerning Nationwide Implementation of VAT Pilot Program
for Transport and Modern Services Sectors (Cai Shui [2013] No. 37).
5.2 Tax incentives
5.2.1. 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)
5.2.2. According to CAI SHUI [2013] No. 37 (Circular 37) Notice on Tax Policy Concerning Nationwide
Implementation of VAT Pilot Program for Transport and Modern Services Sectors, as from 1 August 2013,
the zero VAT rate applies to international transport services provided by any entity or individual
within the territory of the people's republic of china (hereinafter referred to as within chinese territory), foreign
research and develop services, roundtrip transportation services between Hongkong, Marcau,and Taiwan, as
well as transport services provided in Hongkong, Marcau, and Taiwan.
5.2.3. 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 30, 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
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 31, 2008 continues to apply from January 1, 2010
to the expiry date of the relevant contract.
5.2.4. 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. As provided by CaiShui[2013]No.53, the tax rate of
80
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
imported planes, which were obligated to be levied at a reduced tax rate of 4%, shall be adjusted to 5%.
Note 6 Business combination and consolidated financial statements
6.1 Subsidiaries
6.1.1 Subsidiaries acquired through establishment or investment
Unit: CNY ten thousand yuan
Registered Scope of
Subsidiary Type of subsidiary Place of registration Nature of operation
capital operation
Qingdao International Strorage and
Air Logistics Centre ground logistics
Wholly-owned
Co., Ltd Qingdao, Shandong Logistics and storage 3,000.00 for aero cargo,
Subsidiary
(hereafter, Qingdao electionic
Logistics) commerce, etc.
(Continued)
Balance of
Type of Acutal investment as other de facto
Subsidiary Legal representative Institution code
incorporation at the reporting date investment in
subsidiary
Qingdao International
Air Logistics Centre
Limited liability
Co., Ltd SU, Zhongmin 73349654-1 4,832.32 0.00
company
(hereafter, Qingdao
Logistics)
(Continued)
Equity attributable to minority interst for
Shareholding Voting right Minority
Subsidiary Consolidation set-off of profit or loss attributable to Note
(%) (%) interests
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
Unit: CNY ten thousand yuan
81
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
Nature of
Subsidiary Type of subsidiary Place of registration Registered capital Scope of operation
operation
Qingdao Feisheng Ddevelopment and
International Aviation application of civil
Training Technology Wholly-owned aviation new
Qingdao, Shandong Pilot training 5,154.55
Development Co., Ltd Subsidiary technology, pilot
(hereafter, Qingdao training and related
Feisheng) consultancy
(Continued)
Balance of
Type of Acutal investment as other de facto
Subsidiary Legal representative Institution code
incorporation at the reporting date investment in
subsidiary
Qingdao Feisheng
International Aviation
Training Technology Limited liability
SONG, Yuxia 72557262-0 5,767.75 0.00
Development Co., Ltd company
(hereafter, Qingdao
Feisheng)
(Continued)
Equity attributable to minority
Shareholding Voting right Consolidatio Minority
Subsidiary interst for set-off of profit or loss Note
(%) (%) n interests
attributable to minority intterest
Qingdao Feisheng 100.00 100.00 Yes 0.00 0.00
6.2 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 2014", "30th June 2014", "the date
ended June 30th 2014", and " the date ended June 30th 2013" respectively.
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Shandong Airlines Co., Ltd. Semi-Annual Report 2014
7.1 Monetary funds
C/f B/f
Item Currency Exchange CNY Currency Exchange CNY
amount rate amount amount rate amount
Cash at hand: 293,467.42 348,205.99
- CNY 230,506.41 258,386.68
USD 8,359.77 6.1528 51,435.99 13,137.00 6.0969 80,094.98
GBP 208.55 10.4978 2,189.32 308.55 10.0556 3,102.66
Others 9,335.70 6,621.67
Bank deposit: 302,465,414.44 444,168,730.31
- CNY 215,458,390.48 441,037,854.80
USD 13,790,136.38 6.1528 84,847,951.11 444,224.11 6.0969 2,708,389.97
Others 2,159,072.85 422,485.54
Other monetary
27,020.64 5,334.91
funds:
- CNY
USD 4,391.60 6.1528 27,020.64 875.02 6.0969 5,334.91
Total 302,785,902.50 444,522,271.21
7.2 Accounts receivables
7.2.1 Disclosure by category
C/f
Category Carrying amount Allowance for bad debt
Amount % Amount %
Accounts receivable of individual significance
and subject to individual impairment 181,726,041.41 62.94 0.00 0.00
assessment
Accounts receivable subject to impairment
assessment by portfolio
Portfolio by nature 97,438,361.58 33.75 4,871,918.08 5.00
83
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
Subtotal 97,438,361.58 33.75 4,871,918.08 5.00
Accounts receivable of individual insignificance
but subject to individual impairment 9,545,500.91 3.31 1,841,208.05 19.29
assessment
Total 288,709,903.90 100.00 6,713,126.13 2.33
(Continued)
B/f
Category Carrying amount Allowance for bad debt
Amount % Amount %
Accounts receivable of individual significance
and subject to individual impairment 179,936,813.57 70.72 0.00 0.00
assessment
Accounts receivable subject to impairment
assessment by portfolio
Portfolio by nature 60,090,747.20 23.62 3,004,537.36 5.00
Subtotal 60,090,747.20 23.62 3,004,537.36 5.00
Accounts receivable of individual insignificance
but subject to individual impairment 14,418,242.31 5.66 916,508.05 6.36
assessment
Total 254,445,803.08 100.00 3,921,045.41 1.54
7.2.2 Disclosure by age
C/f B/f
Age
Amount % Amount %
Within 1 year 282,418,098.01 97.82 240,499,205.27 94.52
1 to 2 years 1,267,420.71 0.44 7,722,963.06 3.04
2 to 3 years 1,503,660.21 0.52 2,163,566.48 0.85
Over 3 years 3,520,724.97 1.22 4,060,068.27 1.59
Total 288,709,903.90 100.00 254,445,803.08 100.00
7.2.3 Allowance for bad debt
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Shandong Airlines Co., Ltd. Semi-Annual Report 2014
① Accounts receivable of individual significance and subject to individual impairment assessment
Allowance for bad Rate of allowance
Debtor Carrying amount Reason for allowance
debt (%)
No indication of impairment upon
Air China 97,371,162.50 0.00 0.00
individual assessment
No indication of impairment upon
BSP-CHINA 56,135,494.22 0.00 0.00
individual assessment
Accounting Center of China No indication of impairment upon
28,219,384.69 0.00 0.00
Aviation Limited Company individual assessment
Total 181,726,041.41 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 97,438,361.58 5.00 4,871,918.08
Total 97,438,361.58 5.00 4,871,918.08
③ Accounts receivable of individual insignificance but subject to individual impairment assessment
Allowance for bad Rate of allowance
Debtor Carrying amount Reason for allowance
debt (%)
No indication of impairment upon
BSP-JAPAN 453,303.04 0.00 0.00
individual assessment
No indication of impairment upon
BSP-TAIWAN 3,654,308.06 0.00 0.00
individual assessment
No indication of impairment upon
UATP 2,671,981.76 0.00 0.00
individual assessment
Impaired collectability upon
CR Airways 916,508.05 100.00 916,508.05
individual assessment
Indication of impairment upon
Kun Peng Airlines Co., Ltd. 1,849,400.00 50.00 924,700.00
individual assessment
Total 9,545,500.91 19.29 1,841,208.05
7.2.4 Accounts receivable owed by investors holding 5% or more of the shares of the Company
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Shandong Airlines Co., Ltd. Semi-Annual Report 2014
C/f B/f
Investor
Carrying amount Allowance for bad debt Carrying amount Allowance for bad debt
Air China 97,371,162.50 0.00 123,439,238.90 0.00
Total 97,371,162.50 0.00 123,439,238.90 0.00
7.2.5 Top five accounts receivable
Relationship to the % of total accounts
Debtor Amount Age
Company receivable
Air China Related party 97,371,162.50 Within 1 year 33.73
BSP-CHINA Third party 56,135,494.22 Within 1 year 19.44
Accounting Center of China Aviation Limited
Third party 28,219,384.69 Within 1 year 9.77
Company
Hebei Airport Management HoldingCo., L
Third party 6,900,000.00 Within 1 year 2.39
td.
Qinghai Airport Co. Ltd. Third party 5,425,000.00 Within 1 year 1.88
Total 194,051,041.41 67.21
7.2.6 Related party balances
See Note 8.6 Related party balances for details.
7.3 Prepayments
7.3.1 Disclosure by age
C/f B/f
Age
Amount % Amount %
Within 1 year 90,360,637.46 99.27 87,515,232.08 99.24
1 to 2 years 87,000.00 0.10 87,000.00 0.10
2 to 3 years 63.58 0.00 2,315.50 0.00
Over 3 years 577,493.40 0.63 577,493.40 0.66
Total 91,025,194.44 100.00 88,182,040.98 100.00
7.3.2 Top five prepaid suppliers
Relationship to the Reason for pending
Supplier Amount Age
Company settlement
Supplier #1 Third party 16,429,202.12 Within 1 year Prepayment for aircraft
86
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
lease rental
Prepayment for aircraft
Supplier #2 Third party 7,293,958.36 Within 1 year
lease rental
Prepayment for aircraft
Supplier #3 Third party 5,710,526.61 Within 1 year
lease rental
Prepayment for aircraft
Supplier #4 Third party 5,698,949.53 Within 1 year
lease rental
Prepayment for aircraft
Supplier #5 Third party 5,203,955.66 Within 1 year
lease rental
Total 40,336,592.28
7.3.3 No prepayment was owed by investors holding 5% or more of the shares of the Company.
7.4 Dividends receivable
Current period Current period Reason for Indication of
Item B/f C/f
increase decrease unsettlement impairment
Dividends receivable within 1
14,325,586.06 1,826,370.00 14,325,586.06 1,826,370.00
year
including:
Payment
TravelSky Technology Limited 0.00 1,826,370.00 0.00 1,826,370.00 No
pending
Sichuan Airlines 14,325,586.06 0.00 14,325,586.06 0.00
Shandong International Airport
0.00 0.00 0.00 0.00
Company Limited
Total 14,325,586.06 1,826,370.00 14,325,586.06 1,826,370.00
7.5 Other receivables
7.5.1 Disclosure by category
C/f
Category Carrying amount Allowance for bad debt
Amount % Amount %
Other receivables of individual significance and
200,668,805.08 67.32 101,551,717.65 50.61
subject to individual impairment assessment
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Shandong Airlines Co., Ltd. Semi-Annual Report 2014
C/f
Category Carrying amount Allowance for bad debt
Amount % Amount %
Other receivables subject to impairment
assessment by portfolio
Portfolio by nature 84,632,536.71 28.39 4,231,626.83 5.00
Subtotal 84,632,536.71 28.39 4,231,626.83 5.00
Other receivables of individual insignificance but
12,787,515.01 4.29 3,000.00 0.02
subject to individual impairment assessment
Total 298,088,856.80 100.00 105,786,344.48 35.49
(Continued)
B/f
Category Carrying amount Allowance for bad debt
Amount % Amount %
Other receivables of individual significance and
178,108,064.87 51.89 101,551,717.65 57.02
subject to individual impairment assessment
Other receivables subject to impairment
assessment by portfolio
Portfolio by nature 112,247,264.53 32.70 5,612,363.23 5.00
Subtotal 112,247,264.53 32.70 5,612,363.23 5.00
Other receivables of individual insignificance but
52,914,555.92 15.41 0.00 0.00
subject to individual impairment assessment
Total 343,269,885.32 100.00 107,164,080.88 31.22
7.5.2 Disclosure by age
C/f B/f
Age
Amount % Amount %
Within 1 year 121,811,802.44 40.87 139,365,183.80 40.60
1 to 2 years 3,380,750.35 1.13 23,296,453.58 6.79
2 to 3 years 915,478.87 0.31 5,178,629.05 1.51
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Shandong Airlines Co., Ltd. Semi-Annual Report 2014
C/f B/f
Age
Amount % Amount %
Over 3 years 171,980,825.14 57.69 175,429,618.89 51.10
Total 298,088,856.80 100.00 343,269,885.32 100.00
7.5.3 Allowance for bad debt
① Other receivables of individual significance and subject to individual impairment assessment
Allowance for bad Rate of allowance
Debtor Carrying amount Reason for allowance
debt (%)
Shandong Rainbow Impaired collectibility identified upon
101,551,717.65 101,551,717.65 100.00
Commercial Jet Co., Ltd. individual assessment
No indication of impairment upon
CBD-leasing Co., Ltd. 41,354,563.28 0.00 0.00
individual assessment
No indication of impairment upon
Debtor #1 40,462,164.15 0.00 0.00
individual assessment
No indication of impairment upon
Debtor #2 17,300,360.00 0.00 0.00
individual assessment
Total 200,668,805.08 101,551,717.65 50.61
② Other receivables 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 84,632,536.71 5.00 4,231,626.83
Total 84,632,536.71 5.00 4,231,626.83
③ Other receivables of individual insignificance but subject to individual impairment assessment
Allowance for bad Rate of allowance
Debtor Carrying amount Reason for allowance
debt (%)
No indication of impairment upon
Air China 7,230,898.31 0.00 0.00
individual assessment
No indication of impairment upon
Debtor #1 4,238,588.20 0.00 0.00
individual assessment
Debtor #2 1,315,028.50 0.00 0.00 No indication of impairment upon
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Shandong Airlines Co., Ltd. Semi-Annual Report 2014
Allowance for bad Rate of allowance
Debtor Carrying amount Reason for allowance
debt (%)
individual assessment
Impaired collectibility identified upon
Deposit 3,000.00 100.00 3,000.00
individual assessment
Total 12,787,515.01 100.00 3,000.00
7.5.4 Other receivables 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 7,230,898.31 0.00 13,047,895.61 0.00
Total 7,230,898.31 0.00 13,047,895.61 0.00
7.5.5 Top five other receivables
Relationship to the % of total other
Debtor Amount Age
Company receivables
Shandong Rainbow Commercial Jet Co.,
Related party 101,551,717.65 Over 3 years 34.07
Ltd.
Debtor #1 Third party 54,907,919.14 Within 2 years 18.42
CBD-leasing Co., Ltd. Third party 41,354,563.28 Over 3 years 13.87
Debtor #2 Third party 40,462,164.15 Within 1 years 13.57
Debtor #3 Third party 17,300,360.00 Over 3 years 5.80
Total 255,576,724.22 85.73
7.5.6 Related party balances
See Note 8.6 Related party balances for details.
7.5.7 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 15,388,577.98 6.1528 94,682,842.60 20,080,940.89 6.0969 122,431,488.51
7.6 Inventories
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Shandong Airlines Co., Ltd. Semi-Annual Report 2014
Disclosure by type
C/f
Type Impairment
Gross carrying amount Net carrying amount
allowance
Consumable air quipements 132,988,932.35 0.00 132,988,932.35
Low-value consumables 2,056,379.69 0.00 2,056,379.69
Materials 1,044,273.13 0.00 1,044,273.13
Total 136,089,585.17 0.00 136,089,585.17
(Continued)
B/f
Type
Gross carrying amount Impairment allowance Net carrying amount
Consumable air quipements 104,936,631.52 0.00 104,936,631.52
Low-value consumables 2,075,509.92 0.00 2,075,509.92
Materials 961,331.91 0.00 961,331.91
Total 107,973,473.35 0.00 107,973,473.35
7.7 Other current assets
Type C/f B/f
VAT deductible 19,311,844.00 13,184,687.03
Income tax overpaid 56,368,458.24 58,644,275.62
Total 75,680,302.24 71,828,962.65
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 22,500,000.00 196,754,029.88 0.00 219,254,029.88
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 88,352,100.00 196,754,029.88 0.00 285,106,129.88
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Shandong Airlines Co., Ltd. Semi-Annual Report 2014
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 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
Qingdao Airlines Co., Ltd. Equity method 200,000,000.00
Total 310,852,100.00
(Continued)
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 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
Qingdao Airlines Co., Ltd. 0.00 196,754,029.88 196,754,029.88
Total 110,852,100.00 196,754,029.88 307,606,129.88
(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 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
Qingdao Airlines Co., Ltd. 20.00 20.00 In agreement
Total
(Continued)
92
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
Impairment allowance recognised Cash dividend in current
Investee Impairment allowance
in current period period
China Travelsky Technology Co., Ltd. 0.00 0.00 1,826,370.00
Sichuan Airlines 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
Qingdao Airlines Co., Ltd. 0.00 0.00 0.00
Total 22,500,000.00 1,826,370.00
7.8.3 Details of long-term equity investments in associates
Legal Nature of
Investee Type of incorporation Place of registration
representative operation
Limited liability Aero
Shandong Rainbow Commercial Jet Co., Ltd. Jinan, Shandong ZHAO, Hong
company transportation
Aero
Qingdao Airlines Co., Ltd. Corporation Limited Qingdao, Shandong SONG,Zuowen
transportation
(Continued)
Investee Registered capital Shareholding (%) Voting right(%)
Shandong Rainbow Commercial Jet Co., Ltd. 50.00 million 45.00 45.00
Qingdao Airlines Co., Ltd. 1,000million 20.00 20.00
(Continued)
Investee Total assets c/f Total liabilities c/f Net assets c/f
Shandong Rainbow Commercial Jet Co., Ltd. 1,924,265.13 167,765,813.33 -165,841,548.20
Qingdao Airlines Co., Ltd. 945,138,046.41 29,444,757.04 915,693,289.37
(Continued)
Revenue for Net profit for Relationship to the
Investee Institution code
current year current year company
Shandong Rainbow Commercial Jet Co., Ltd. 0.00 -32,757.71 Associate 72497146X
Qingdao Airlines Co., Ltd. 39,505,382.27 -55,148,185.51 Associate 073252022
Note: The investment after the confirmation of the investment income account to -3,245,970.12
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Shandong Airlines Co., Ltd. Semi-Annual Report 2014
7.8.4 Details of impairment allowance for long-term equity investments
Current period Currentperiod
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 12,126,215,781.30 102,112,297.39 573,547,855.93 11,654,780,222.76
Houses and buildings 310,004,180.85 0.00 12,838,372.10 297,165,808.75
Aircrafts and engines 10,906,977,450.41 38,709,220.14 532,496,507.21 10,413,190,163.34
High-value rotables 687,974,621.37 56,278,983.53 25,387,376.22 718,866,228.68
Transportation vehicles 60,759,168.36 1,986,927.02 1,229,568.00 61,516,527.38
Others 160,500,360.31 5,137,166.70 1,596,032.40 164,041,494.61
2. Cumulative depreciation Addition Recognition
Total cumulative
4,242,554,401.13 363,339,226.57 231,925,203.65 4,373,968,424.05
depreciation
Houses and buildings 53,776,323.92 4,811,102.03 440,710.08 58,146,715.87
Aircrafts and engines 3,846,899,823.57 329,815,316.88 222,119,151.40 3,954,595,989.05
High-value rotables 245,237,815.60 18,551,999.74 6,819,314.20 256,970,501.14
Transportation vehicles 27,115,565.84 2,421,893.27 1,102,902.98 28,434,556.13
Others 69,524,872.20 7,738,914.65 1,443,124.99 75,820,661.86
3. NBV before impairment 7,280,811,798.71
7,883,661,380.17
allowance
Houses and buildings 256,227,856.93 239,019,092.88
Aircrafts and engines 7,060,077,626.84 6,458,594,174.29
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Shandong Airlines Co., Ltd. Semi-Annual Report 2014
Current period Current period
Category B/f C/f
increase decrease
High-value rotables 442,736,805.77 461,895,727.54
Transportation vehicles 33,643,602.52 33,081,971.25
Others 90,975,488.11 88,220,832.75
4. Impairment allowance 319,003,239.94 0.00 62,338,080.49 256,665,159.45
Houses and buildings 0.00 0.00 0.00 0.00
Aircrafts and engines 288,245,487.96 0.00 61,095,097.31 227,150,390.65
High-value rotables 30,757,751.98 0.00 1,242,983.18 29,514,768.80
Transportation vehicles 0.00 0.00 0.00 0.00
Others 0.00 0.00 0.00 0.00
5. NBV 7,564,658,140.23 7,024,146,639.26
Houses and buildings 256,227,856.93 239,019,092.88
Aircrafts and engines 6,771,832,138.88 6,231,443,783.64
High-value rotables 411,979,053.79 432,380,958.74
Transportation vehicles 33,643,602.52 33,081,971.25
Others 90,975,488.11 88,220,832.75
Note: Depreciation recognised during the current period amounted to 363,339,226.57.
7.9.2 Fixed assets with imposed restriction on ownership
As at reporting date, aircrafts and engines with NBV amounting to 4,742,975,564.58 (historical cost amounting
to 6,863,550,378.58; 2013 comparative: NBV and historical cost amounting to 4,970,849,215.75 and
6,882,550,190.06 respectively) were pledged as security for long-term borrowings amounting to
2,825,197,044.85 (2013 comparative: 3,218,251,198.06, see Note 7.27) and long-term borrowings due within
one year amounting to 401,616,290.33 (2013 comparative: 283,870,512.12, see Note 7.26); ownership of
aircrafts and engines with NBV amountig to 1,039,549,287.73 (historical cost amounting to 1,753,640,674.88;
2013 comparative: NBV and historical cost amounting to 1,069,241,837.97 and 1,737,112,531.96 respectively)
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
95
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
Category C/f B/f
Aircrafts and engines 1,753,640,674.88 1,737,112,531.96
Total 1,753,640,674.88 1,737,112,531.96
2. Cumulative depreciation
Aircrafts and engines 714,091,387.15 667,870,693.99
Total 714,091,387.15 667,870,693.99
3. NBV before impairment allowance
Aircrafts and engines 1,039,549,287.73 1,069,241,837.97
Total 1,039,549,287.73 1,069,241,837.97
4. Impairment allowance
Aircrafts and engines 0.00 0.00
Total 0.00 0.00
5. NBV
Aircrafts and engines 1,039,549,287.73 1,069,241,837.97
Total 1,039,549,287.73 1,069,241,837.97
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, not eligible
warehouses for ownership registration —— 14,013,845.48
Qingdao aircraft maintenance workshops Ownership registration in process 2014 44,166,575.53
Yantai terminal building Ownership registration in process 2014 23,585,547.34
Total 81,765,968.35
7.10. Construction in progress
7.10.1 General information
C/f
Project
Gross carrying amount Impairment allowance Net carrying amount
Prepayment for aircrafts 2,608,496,325.20 0.00 2,608,496,325.20
96
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
C/f
Project
Gross carrying amount Impairment allowance Net carrying amount
Others 70,410,185.55 0.00 70,410,185.55
Total 2,678,906,510.75 0.00 2,678,906,510.75
(Continued)
B/f
Project
Gross carrying amount Impairment allowance Net carrying amount
Prepayment for aircrafts 1,611,984,965.18 0.00 1,611,984,965.18
Others 35,931,030.60 0.00 35,931,030.60
Total 1,647,915,995.78 0.00 1,647,915,995.78
7.10.2 Significant projects
Project Budget B/f Current year increase
Prepayment for aircrafts 25,253,461,525.68 1,611,984,965.18 1,003,593,826.36
Others 192,431,000.00 35,931,030.60 35,614,470.35
Total 25,445,892,525.68 1,647,915,995.78 1,039,208,296.71
(Continued)
Transferred to fixed assets in
Project Other decrease C/f
current period
Prepayment for aircrafts 0.00 7,082,466.34 2,608,496,325.20
Others 0.00 1,135,315.40 70,410,185.55
Total 0.00 8,217,781.74 2,678,906,510.75
(Continued)
Cumulative borrowing costs Borrowing costs capitalised Rate of interest capitalisation
Project
capitalized in the current period for the current period
Prepayment for aircrafts 10,541,240.22 12,506,978.44 2-4
Others 0.00 0.00 N/A
Total 10,541,240.22 12,506,978.44 —
(Continued)
97
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
% of investment : Percentage of
Project Source of finance
budget completion
Prepayment for aircrafts 10.33% 10.33% Borrowings from financial institutions
Others 36.59 36.59 Self-financing
Total — —
7.10.3 Impairment of construction in progress
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
7.11.1 General information
Current period Current period
Category B/f C/f
increase decrease
1. Historical cost 108,860,557.54 0.00 0.00 108,860,557.54
Land rights 84,663,933.13 0.00 0.00 84,663,933.13
Software 24,196,624.41 0.00 0.00 24,196,624.41
2. Cumulative depreciation 7,732,920.72 2,089,447.84 0.00 9,822,368.56
Land rights 7,277,301.45 714,069.98 0.00 7,991,371.43
Software 455,619.27 1,375,377.86 0.00 1,830,997.13
3. Impairment allowance 0.00 0.00 0.00 0.00
Land rights 0.00 0.00 0.00 0.00
Software 0.00 0.00 0.00 0.00
4. NBV 101,127,636.82 99,038,188.98
Land rights 77,386,631.68 76,672,561.70
Software 23,741,005.14 22,365,627.28
Amortisation recognised during the current period amounted to 2,089,447.84.
7.11.2 Impairment of intangible assets
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
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Shandong Airlines Co., Ltd. Semi-Annual Report 2014
Current period Current period Impairment allowance
Investee B/f C/f
increase decrease c/f
Qingdao Feisheng 10,220,816.22 0.00 0.00 10,220,816.22 10,220,816.22
Total 10,220,816.22 0.00 0.00 10,220,816.22 10,220,816.22
7.13 Deferred charges
Current period Current period Other Reason for other
Item B/f C/f
increase amortisation decrease decrease
Pilot training 333,657,141.80 60,048,770.40 27,835,782.27 0.00 365,870,129.93
According to the protocol
Decoration
14,288,398.81 1,335,689.92 2,235,127.60 317,435.43 13,071,525.70 approved price
expenditure
adjustment project cost
Total 347,945,540.61 61,384,460.32 30,070,909.87 317,435.43 378,941,655.63
7.14 Deferred tax assets
C/f B/f
Deductible temporary Deductible temporary
Category Deferred tax Deferred tax
difference and tax loss difference and tax loss
assets assets
carried forwards carried forwards
Allowance for bad debt 28,124,867.65 112,499,470.61 27,771,281.57 111,085,126.29
Impairment allowance for fixed assets 64,166,289.86 256,665,159.45 79,750,809.99 319,003,239.94
Fair value movement of financial
368,344.88 1,473,379.53 74,225.62 296,902.47
liabilities held for trading
Provisions 282,153,886.73 1,128,615,546.92 242,560,865.24 970,243,460.92
Employment benefits payable 59,712,454.75 238,849,819.00 83,026,150.77 332,104,603.04
Deferred income 4,502,381.07 18,009,524.28 6,341,881.10 25,367,524.34
Tax loss carried forwards 5,905,440.42 23,621,761.64 136,904.73 547,618.90
Total 444,933,665.36 1,779,734,661.43 439,662,119.02 1,758,648,475.90
7.15 Allowance for asset impairment
Current period Current decrease
Category B/f C/f
recognition Reversal Expanded
1. Allowance for bad debt 111,085,126.29 1,414,344.32 0.00 0.00 112,499,470.61
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Shandong Airlines Co., Ltd. Semi-Annual Report 2014
Current period Current decrease
Category B/f C/f
recognition Reversal Expanded
2. Impairment allowance for long-term
22,500,000.00 0.00 0.00 0.00 22,500,000.00
equity investments
3. Impairment allowance for fixed
319,003,239.94 0.00 0.00 62,338,080.49 256,665,159.45
assets
4. Impairment allowance for goodwill 10,220,816.22 0.00 0.00 0.00 10,220,816.22
Total 462,809,182.45 1,414,344.32 0.00 62,338,080.49 401,885,446.28
7.16 Assets with imposed restriction on ownership
Category C/f Reason of restriction
Assets pledged as security
Aircrafts and engines 4,742,975,564.58 Pledge as security for borrowings
Other form of restriction:
Aircrafts and engines 1,039,549,287.73 Assets acquired under financial lease
Total 5,782,524,852.31
7.17 Short-term borrowings
Type C/f B/f
Credit loans 200,000,000.00 434,137,220.00
Total 200,000,000.00 434,137,220.00
7.18 Financial liabilities held for trading
Item Fair value c/f Fair value b/f
Interest rate swaps 1,473,379.53 296,902.47
Total 1,473,379.53 296,902.47
The immature interest rate swaps held by the Company had a principal amount of USD 107,471,708.80 as at
the reporting date; bankers confirmed that the reporting date fair value of these interest rate swaps is
-1,473,379.53 (USD-230,289.99).
7.19 Accounts payable
7.19.1 General information
Item C/f B/f
100
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
Aircraft maintenance costs 313,720,164.46 370,702,424.44
Fuel cost 302,185,704.99 281,866,639.72
Landing fee 229,901,448.10 225,666,680.33
Aero equipments 70,991,389.75 81,971,026.18
Flight catering 63,134,387.60 61,129,425.69
Computer booking fee 41,021,476.50 42,333,567.66
Lease rental 5,871,959.08 3,950,584.37
Others 81,111,800.51 64,506,341.86
Total 1,107,938,330.99 1,132,126,690.25
7.19.2 See Note 8.6 Related party balances for accounts payable owed to investors holding 5% or more of the
shares of the Company.
7.19.3 No significant account payable due for more than 1 year as at the reporting date.
7.20 Advance from customers
7.20.1 General information
Item C/f B/f
Ticket clearing 229,964,823.90 318,907,952.74
Advanced payment for tickets 14,699,867.39 15,493,312.51
Others 10,436,694.75 9,066,787.72
Total 255,101,386.04 343,468,052.97
7.20.2 See Note 8.6 Related party balances for advance from customers owed to investors holding 5% or more
of the shares of the Company.
7.20.3 No significant advance from customers due for more than 1 year as at the reporting date.
7.21 Employment benefits payable
Current period Current period
Category B/f C/f
increase decrease
(1) Wages and salaries, bonuses, subsidies
310,846,755.84 672,836,044.13 757,971,206.32 225,711,593.65
and allowances
(2) Employee benefits 0.00 13,797,463.81 13,797,463.81 0.00
(3) Social insurance 0.00 79,306,026.54 79,306,026.54 0.00
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Current period Current period
Category B/f C/f
increase decrease
Within: ①Medical insurance 0.00 18,107,634.69 18,107,634.69 0.00
②Basic retirement insurance 0.00 34,463,657.32 34,463,657.32 0.00
③Annuity fee 0.00 21,365,893.70 21,365,893.70 0.00
④Unemployment fee 0.00 1,982,432.18 1,982,432.18 0.00
⑤Work injury insurance 0.00 1,470,995.86 1,470,995.86 0.00
⑥Pregnancy insurance 0.00 1,915,412.79 1,915,412.79 0.00
⑦Reserved funds for disable
0.00 0.00 0.00 0.00
jobseekers
(4) Housing provident fund 12,032.40 27,095,150.22 27,094,484.22 12,698.40
(5) Labor union fee and employee
28,008,193.30 8,329,214.31 6,845,023.98 29,492,383.63
education fee
(6) Non-monetary benefits 0.00 0.00 0.00 0.00
(7) Redemption of termination of labor
0.00 69,708.00 69,708.00 0.00
contract
(8) Others 0.00 0.00 0.00 0.00
Total 338,866,981.54 801,433,607.01 885,083,912.87 255,216,675.68
7.22 Taxes and fees payable
Tax (Fee) C/f B/f
VAT 31,680,678.55 23,173,422.56
Business tax 453,214.75 517,483.64
Urban construction and maintenance tax 1,468,404.21 1,131,299.11
Education surcharge 1,039,138.92 799,023.02
Enterprise income tax 156,500.39 321,144.21
Property tax 1,140,518.30 1,313,944.58
Land tax 99,874.11 142,738.11
Personal income tax 6,094,004.84 5,178,599.23
Stamp duty 0.00 4,456,114.47
102
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
Tax (Fee) C/f B/f
Civil aviation development fund 75,129,685.42 70,197,348.09
Provision for income tax deducted at source 1,581,780.71 1,886,243.81
Sales tax deducted at source 601,685.96 779,876.14
Others 183,360.59 167,200.64
Total 119,628,846.75 110,064,437.61
7.23 Interests payable
Item C/f B/f
Interest on long-term borrowings with repayment by
2,826,319.65 3,538,461.10
installments
Interest on corporate bond 1,310,833.33 12,035,833.33
Interest on short-term borrowings 282,223.33 490,000.00
Total 4,419,376.31 16,064,294.43
7.24 Dividend payable
The reason for more than a year
Investment unit name C/f B/f
of unpaid
SDA Group 42,000,000.00 0.00
Air China 22,800,000.00 0.00
Shandong Hualu Group Co., Ltd. 50,000.00 0.00
Inspur Co., Ltd. 50,000.00 0.00
Luyin Investment Group 50,000.00 0.00
Qingdao Zhenyuan Shipbuilding
50,000.00 0.00
Co., Ltd.
Shandong Group Corp. of
11,940.00 11,940.00
Fisheries Enterprises
B share dividend 35,000,000.00 0.00
Total 100,011,940.00 11,940.00
7.25 Other payables
7.25.1 General information
103
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
Item C/f B/f
Payable for construction projects 7,409,009.09 19,941,754.75
Payable for down payments 86,669,790.72 68,715,061.67
Payables associated with aircraft purchase 3,949,505.05 3,949,505.02
Taxes deducted at source 30,653,185.32 36,330,461.25
Others 186,182,028.71 64,932,075.65
Total 314,863,518.89 193,868,858.34
7.25.2 See Note 8.6 Related party balances for other payables owed to investors investors holding 5% or more
of the shares of the Company.
7.25.3 Significant other payables due for more than 1 year
Post reporting date
Creditor Amount Reason for pending settlement
repayment
Margin deposit to be settled upon expiry of immature
Air China 20,000,000.00 No
wet lease
Total 20,000,000.00
7.25.4 Significant other payables
Creditor C/f Description
Air China 20,000,000.00 Margin deposit for wet lease
Total 20,000,000.00
7.26 Non-current liabilities due within one year
7.26.1 General information
Category C/f B/f
Long-term borrowings due within one year (Note 7.27) 893,840,290.33 443,609,292.12
Long-term payables due within one year (Note 7.29) 92,720,143.51 89,541,366.30
Total 986,560,433.84 533,150,658.42
7.26.2 Long-term borrowings due within one year
① General information
Category C/f B/f
Secured loans 401,616,290.33 283,870,512.12
104
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
Category C/f B/f
Credit loans 492,224,000.00 159,738,780.00
Total 893,840,290.33 443,609,292.12
② Top five long-term borrowings due within one year
Creditor Start date Expiry date Currency
Creditor #1 2014-1-24 Step repayment USD
Creditor #2 2013-12-27 Step repayment USD
Creditor #3 2013-10-31 Step repayment USD
Creditor #4 2013-12-27 Step repayment USD
Creditor #5 2005-10-19 Step repayment USD
Total
(Continued)
C/f B/f
Creditor Currency CNY Currency CNY
amount amount Amount amount
Creditor #1 18,000,000.00 110,750,400.00 0.00 0.00
Creditor #2 17,500,000.00 107,674,000.00 17,500,000.00 106,695,750.00
Creditor #3 17,200,000.00 105,828,160.00 17,200,000.00 104,866,680.00
Creditor #4 13,800,000.00 84,908,640.00 0.00 0.00
Creditor #5 11,200,000.00 68,911,360.00 11,200,000.00 68,285,280.00
Total 77,700,000.00 478,072,560.00 45,900,000.00 279,847,710.00
7.26.3 Long-term payables due within one year
Creditor Term Principal amount Interest rate(%)
CBD-leasing Co., Ltd. 2005.6-2020.6 1,440,000,000.00 6.943
CALC Jian Zhao Limited 2011.8-2026.8 284,290,146.39 7.05
Total 1,724,290,146.39
(Continued)
105
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
Creditor Accrued interest C/f Condition
CBD-leasing Co., Ltd. 41,689,757.30 76,237,006.79 Financial lease for aircraft
CALC Jian Zhao Limited 15,508,223.82 16,483,136.72 Financial lease for aircraft
Total 57,197,981.12 92,720,143.51
7.27 Long-term borrowings
① Disclosure by category
Category C/f B/f
Secured loans (by tangible assets) 3,226,813,335.18 3,502,121,710.18
Credit loans 1,512,481,296.00 466,534,788.00
Less: Long-term borrowings due within one year (Note 7.26) 893,840,290.33 443,609,292.12
Total 3,845,454,340.85 3,525,047,206.06
② Top five long-term borrowings
Creditor Start date Expiry date Currency
Creditor #1 2014-4-30 Step repayment USD
Creditor #2 2012-11-30 Repayment on expiry USD
Creditor #3 2012-12-27 Repayment on expiry USD
Creditor #4 2012-10-9 Step repayment USD
Creditor #5 2005-12-21 Step repayment USD
Total
(Continued)
Creditor C/f B/f
Currency CNY Currency CNY
amount amount amount amount
Creditor #1 45,000,000.00 276,876,000.00 0.00 0.00
Creditor #2 31,000,000.00 190,736,800.00 31,000,000.00 189,003,900.00
Creditor #3 28,500,000.00 175,354,800.00 28,500,000.00 173,761,650.00
Creditor #4 25,000,000.00 153,820,000.00 25,000,000.00 152,422,500.00
Creditor #5 22,529,058.60 138,616,791.75 26,213,260.00 159,819,624.89
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Shandong Airlines Co., Ltd. Semi-Annual Report 2014
Creditor C/f B/f
Currency CNY Currency CNY
amount amount amount amount
Total 152,029,058.60 935,404,391.75 110,713,260.00 675,007,674.89
7.28 Bonds payable
Bond Face value Issue date Term Amount issued
Medium-term bond 500,000,000.00 2012/6/12 Three years 500,000,000.00
Total 500,000,000.00 500,000,000.00
(Continued)
Interest accrued in Interest paid in current Interest payable
Bond Interest payable b/f C/f
current period 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
7.29. Long-term payables
7.29.1 Disclosure by category
Category C/f B/f
Financial lease rental payables 846,170,562.06 890,403,647.93
Maintenance payables for aircrafts and engines held under operating lease 1,023,784,649.00 961,121,308.95
Less: Financial lease rental payables due within one year (Note 7.26) 92,720,143.51 89,541,366.30
Less: Maintenance payables for aircrafts and engines held under operating lease due
148,001,173.00 219,467,592.19
within one year (Note 1)
Total 1,629,233,894.55 1,542,515,998.39
Note : Maintenance payables for aircrafts and engines held under operating lease due within one year had
been included in accounts payable.
7.29.2 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 6.943
CALC Jian Zhao Limited 2011.8-2026.8 284,290,146.39 7.05
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Shandong Airlines Co., Ltd. Semi-Annual Report 2014
Creditor Term Principal amount Interest rate (%)
Total 1,724,290,146.39
(Continue)
Creditor Accrued interest C/f Condition
CBD-leasing Co., Ltd. 117,507,275.20 544,126,545.24 Financial lease for aircraft
CALC Jian Zhao Limited 91,172,699.12 209,323,873.31 Financial lease for aircraft
Total 208,679,974.32 753,450,418.55
7.30 Other non-current liabilities
Item C/f B/f
Designated subsidy for snow disaster 2,739,208.34 2,988,958.34
Designated subsidy for civil aviation energy-saving program 15,270,315.94 15,758,566.00
Designated subsidy for RNP aircraft equipment modification 0.00 6,620,000.00
Total 18,009,524.28 25,367,524.34
Details of deferred revenue:
Subsidy increased Transfer to non-operating Other
Item B/f C/f
in curent period income in current period movements
Designated subsidy for snow
2,988,958.34 0.00 249,750.00 0.00 2,739,208.34
disaster
Designated subsidy for civil
6,620,000.00 0.00 6,620,000.00 0.00 0.00
aviation energy-saving program
Designated subsidy for RNP
15,758,566.00 0.00 488,250.06 0.00 15,270,315.94
aircraft equipment modification
Total 25,367,524.34 0.00 7,358,000.06 0.00 18,009,524.28
7.31 Share capital
B/f
Category
Amount %
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Shandong Airlines Co., Ltd. Semi-Annual Report 2014
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 (+, -)
Category Coversion from
Share issue Bonus issue 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
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
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Shandong Airlines Co., Ltd. Semi-Annual Report 2014
Currency period movement (+, -)
Category Coversion from
Share issue Bonus issue Others Subtotal
reserves
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 foreign
0.00 0.00 0.00 0.00 0.00
currency
2.3 Shares issued in foreign market in foreign currency 0.00 0.00 0.00 0.00 0.00
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
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Shandong Airlines Co., Ltd. Semi-Annual Report 2014
C/f
Category
Amount %
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
7.32 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
7.33 Surplus reserves
Current period Current period
Category B/f C/f
increase decrease
Statutory surplus reserve 297,349,585.70 0.00 0.00 297,349,585.70
Total 297,349,585.70 0.00 0.00 297,349,585.70
Notes: according to the Company Law and the Articles of Association, 10% of net profit was transferred to
statutory surplus reserve.
The company may make allocations to the discretionary common reserve from the after-tax profits after
making allocations to the statutory surplus reserve from the after-tax profits. Approved surplus reserves can be
released to recover losses or for conversion into share capital.
7.34. Retained earnings
Movement of retained earnings
Rate of
Item Current peride Last period
appropriation
B/f 1,935,377,714.60 1,746,002,689.27
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Total adjustment to retained earnings b/f (+, -)
Retained earnings b/f after adjustment 1,935,377,714.60 1,746,002,689.27
Add: Net profit attributable to shareholders of the parent 46,730,122.59 82,366,027.52
Loss recovery by surplus reserves
Others
Less: Appropriation to statutory surplus reserve 0.00 0.00
Appropriation to discretionary surplus reserve
Ordinary dividends declared 100,000,000.00 160,000,000.00
Bonus issue
C/f 1,882,107,837.19 1,668,368,716.79
7.35 Revenue and operating costs
7.35.1 General information
Category Current peride Last period
Principal operating income 5,500,678,820.63 5,459,600,152.37
Other operating income 63,611,362.18 65,110,778.67
Total 5,564,290,182.81 5,524,710,931.04
Principal operating cost 4,921,785,223.85 4,691,128,168.27
Other operating cost 3,967,896.91 1,853,079.93
Total 4,925,753,120.76 4,692,981,248.20
7.35.2 Disclosure by service line
Current peride Last period
Service line
Operating income Operating cost Operating income Operating cost
Aero transportation 5,458,326,649.44 4,891,116,105.47 5,434,206,939.71 4,676,304,819.71
Hospitality and catering 20,120,153.79 18,888,629.34 9,904,972.35 10,523,876.28
Training 9,995,259.81 3,814,520.51 10,182,728.01 2,574,004.54
Freight logistics 12,236,757.59 7,965,968.53 5,305,512.30 1,725,467.74
Total 5,500,678,820.63 4,921,785,223.85 5,459,600,152.37 4,691,128,168.27
7.35.3 Operating income from top five customers
112
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
Year Operating income % of total operating income
2014 January-June 337,509,050.92 6.07
2013 January-June 375,571,278.55 6.80
7.36 Business tax and surcharges
Item Current peride Last period
Business tax 2,900,751.18 160,347,906.26
Urban maintenance and construction tax 6,660,480.20 11,334,209.74
Education surcharge and others 5,708,983.02 9,750,002.32
Total 15,270,214.40 181,432,118.32
Notes: Applicable rates for business tax and surcharges see Note 5 Taxation.
7.37 Sales expenses
Category Current peride Last period
Agency fees 212,807,771.41 203,727,904.85
Employment benefits 70,626,376.04 63,444,369.86
Computer booking 39,217,887.31 35,246,082.25
Online payment 17,051,557.65 11,419,130.34
Sales expense of annual tickets 14,837,869.68 16,230,550.00
Lease rental 7,761,505.84 6,633,982.85
Advertisement 8,411,695.16 6,002,909.13
Office 3,076,033.70 3,209,497.09
Travel 2,188,798.94 2,128,328.09
System and network 3,936,829.44 582,785.97
BSP data processing 1,062,561.32 922,685.99
Depreiciation 845,330.26 1,103,784.38
Others 10,023,402.13 5,531,678.62
Total 391,847,618.88 356,183,689.42
7.38 General and administrative expenses
Category Current peride Last period
113
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
Category Current peride Last period
Employment benefits 57,430,239.49 54,948,515.96
Lease rental 7,761,480.22 8,327,340.02
Entertainment 3,703,688.75 5,902,900.67
Depreiciation 5,333,465.76 4,432,141.06
Taxes and fees 2,234,886.11 4,482,333.16
Office 880,496.79 1,484,875.69
Technology development 3,287,277.48 2,412,512.81
Amortisation of intangibles 2,089,447.84 713,635.18
Others 28,547,540.36 28,356,145.28
Total 111,268,522.80 111,060,399.83
7.39 Financial costs
Category Current peride Last period
Interest expenses 112,284,969.44 130,526,237.97
Less: Interest income 2,982,599.49 2,005,587.12
Exchange difference 30,161,415.96 -59,536,643.10
Bank charges and others 1,224,374.65 1,283,021.49
Total 140,688,160.56 70,267,029.24
7.40 Loss on asset impairment
Category Current peride Last period
Allowance for bad debt 1,414,344.32 819,489.83
Impairment allowance for fixed assets 0.00 79,114,818.66
Total 1,414,344.32 79,934,308.49
7.41 Gain from changes in fair value
Source Current peride Last period
Interest rate swaps -1,176,477.06 7,328,944.15
Total -1,176,477.06 7,328,944.15
7.42 Investment income
114
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
7.42.1 Disclosure by category
Category Current peride Last period
Income from long-term equity investments measured at cost 1,826,370.00 1,735,051.50
Income from long-term equity investments measured at equity -3,245,970.12 0.00
Income from holding of financial assets held for trading -1,421,659.87 -1,242,550.48
Total -2,841,259.99 492,501.02
7.42.2 Income from long-term equity investments measured at cost
Investee Current peride Last period
China Travelsky Technology Co., Ltd. 1,826,370.00 1,735,051.50
Sichuan Airlines 0.00 0.00
Jinan International Airport Co., Ltd. 0.00 0.00
Total 1,826,370.00 1,735,051.50
7.42.3 Income from long-term equity investments measured at equity
Investee Current peride Last period
Qingdao Airlines Co., Ltd. -3,245,970.12 0.00
Total -3,245,970.12 0.00
7.43 Non-operating income
Included in current
Category Current peride Last period year non-recurring
profit and loss
Gain on non-current asset disposals 947,397.01 314,422.50 947,397.01
Within: Gain on fixed asset disposals 947,397.01 314,422.50 947,397.01
Government grants (See details of government grants) 62,938,349.06 38,624,958.06 62,938,349.06
Subsidy for air routes 6,476,087.00 42,085,283.00 6,476,087.00
Others 22,054,671.91 6,108,340.48 22,054,671.91
Total 92,416,504.98 87,133,004.04 92,416,504.98
Details of government grants:
Government assistance Current peride Last period Description
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Shandong Airlines Co., Ltd. Semi-Annual Report 2014
Government assistance Current peride Last period Description
Subsidy for side air routes 6,280,000.00 0.00 Granted by the CAAC regional office
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
Designated subsidy for RNP
6,620,000.00 0.00
aircraft equipment modification
Others 49,300,349.00 37,886,958.00 Granted by regional government
Total 62,938,349.06 38,624,958.06
7.44 Non-operating expenses
Included in current period
Category Current peride Last period
non-recurring profit and loss
Loss on non-current asset disposals 3,690,350.76 2,116,060.38 3,690,350.76
Within: Loss on fixed asset disposals 3,690,350.76 2,116,060.38 3,690,350.76
Charitable donation 0.00 0.00 0.00
Fines 28,174.53 20,580.21 28,174.53
Others 54,772.00 3,488,768.33 54,772.00
Total 3,773,297.29 5,625,408.92 3,773,297.29
7.45 Income tax expenses
Category Current peride Last period
Current tax calculated in accordance with relevant tax law 21,215,095.48 24,791,367.71
Deferred tax -5,271,546.34 15,023,782.60
Total 15,943,549.14 39,815,150.31
7.46 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
116
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
or expense at the time of conversion and their related income tax implication by the sum of the weighted
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.
7.46.1 General disclosure
Current peride Last period
Category of earning
Basic EPS Diluted EPS Basic EPS Diluted EPS
Net profit attributable to ordinary shareholders 0.12 0.12 0.21 0.21
Recurring profit or loss attributable to ordinary
-0.04 -0.04 0.04 0.04
shareholders
7.46.2 Calculation
① Net profit attributable for ordinary shareholders for the calculation of basic EPS
Category Current peride Last period
Net profit attributable for ordinary shareholders 46,730,122.59 82,366,027.52
Within: From continuing operation 46,730,122.59 82,366,027.52
From curtailed operation 0.00 0.00
Recurring profit or loss attributable to ordinary shareholders -17,803,680.48 17,509,015.92
Within: From continuing operation -17,803,680.48 17,509,015.92
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 peride 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
Number of ordinary shares c/f 400,000,000.00 400,000,000.00
7.47 Notes to the consolidated statement of cash flows
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Shandong Airlines Co., Ltd. Semi-Annual Report 2014
7.47.1 Other cash receipts relating to operating activities
Category Current peride Last period
Government assistance 62,056,436.00 47,922,616.95
Interest income on bank deposit 2,982,599.49 2,005,587.12
Cash receiptes from non-operating income 21,395,217.75 20,316,716.00
Margin deposit repaid 53,062,382.42 66,823,903.30
Total 139,496,635.66 137,068,823.37
7.47.2 Other cash payments relating to operating activities
Category Current peride Last period
Bank charges 1,224,374.65 1,283,021.49
Cash payments for non-operating expenses 82,946.53 3,509,348.54
Cash payments for operating balance 41,300,040.05 43,513,412.78
Cash payments for sales and general and administrative expenses 27,962,245.02 28,002,600.89
Total 70,569,606.25 76,308,383.70
7.47.3 Other cash payments relating to investing activities
Category Current peride Last period
Cash payments of settlement of interest rate swaps 656,994.75 1,242,550.48
Total 656,994.75 1,242,550.48
7.47.4 Other cash payments relating to financing activities
Category Current peride Last period
Cash payments for aircraft financial lease rental 74,178,939.54 101,689,132.68
Total 74,178,939.54 101,689,132.68
7.48 Supplementary information to the consolidated statement of cash flows
7.48.1 Reconciliation of cash flows from operating activities to net profit
Category Current peride Last period
① Reconciliation of cash flows from operating activities to net profit:
Net profit
46,730,122.59 82,366,027.52
Add: Loss on asset impairment
1,414,344.32 79,934,308.49
118
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
Category Current peride Last period
Depreciation of fixed assets, oil and gas assets, bioogical assets held for
production 363,339,226.58 397,080,519.44
Amortisation of intangible assets
2,089,447.84 713,635.18
Amortisation of deferred charges
30,070,909.87 25,245,811.06
Loss on non-current assets disposal (gain presented by "-" prefix)
-947,397.01 -314,422.50
Loss on scrap of fixed assets (gain presented by "-" prefix)
3,690,350.76 2,116,060.38
Loss on fair value changes (gain presented by "-" prefix)
1,176,477.06 -7,328,944.15
Fianncial costs (gain presented by "-" prefix)
140,941,691.12 68,153,435.88
Investment loss (gain presented by "-" prefix)
2,841,259.99 -492,501.02
Decrease of deferred tax assets (increase presented by "-" prefix)
-5,271,546.34 15,023,782.60
Increase of deferred tax liabilities (increase presented by "-" prefix)
0.00 32,540.14
Decrease of inventories (increase presented by "-" prefix)
-28,116,111.82 -2,075,609.05
Decrease of operating receivables (increase presented by "-" prefix)
4,618,530.02 -117,591,071.52
Increase of operating payables (decrease presented by "-" prefix)
115,275,071.12 -173,493,939.66
Others 0.00 0.00
Net cash flows generated from operating activities
677,852,376.10 369,369,632.79
Significant investing and financing acitivities involve no cash: 0.00 0.00
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
Movement of cash and cash equivalents: 0.00 0.00
119
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
Category Current peride Last period
Cash C/f
302,785,902.50 324,213,597.79
Less: Cash B/f
444,522,271.21 155,387,742.97
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
-141,736,368.71 168,825,854.82
7.48.2 Compostion of cash and cash equivalents
Category Current peride Last period
① Cash
302,785,902.50 324,213,597.79
Including: Cash at hand
293,467.42 353,335.07
Demand bank deposit
302,492,435.08 323,860,262.72
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
302,785,902.50 324,213,597.79
Note 8 Related parties and related party transaction
8.1 Major investors
Relationship to the Legal
Investor Type of incorporation Place of registration Nature of operation
Company representative
Investment and
Limited liability
SDA Group Largest shareholder Jinan MA, Chongxian management of aero
company
transportation
120
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
Air China 2nd largest shareholder Joint stock company Beijing CAI, Jianjiang Aero transportation
(Continued)
Shareholding in the Voting right in the Ultimate
Investor Registered capital Company Company controller of the Institution code
(%) (%) Company
SDA Group 580,000,000.00 42.00 42.00 Note 61407164-7
Air China 12,891,954,673.00 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 Limited Controlled by major investors 70588297-1
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 Co., Ltd. Controlled by major investors 71188088-4
Aircraft Maintenance and Engineering Corporation (Ameco
Controlled by major investors 62591162-1
Beijing)
Chengfu FuKai Aircraft Engineering Co., Ltd. Controlled by major investors 72808856-X
8.5 Related party transactions
8.5.1 Purchase of goods and services
Related party Transaction Pricing principle
Taikoo (Shandong) Aircraft Engineering Company Limited Aircraft maintenance Market price
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Shandong Airlines Co., Ltd. Semi-Annual Report 2014
Related party Transaction Pricing principle
SDA Group Office lease rental and catering Market price
Shandong XiangYu Air Technology Co., Ltd. Repairment Market price
Aircraft Maintenance and Engineering Corporation (Ameco
Repairment Market price
Beijing)
Aircraft Maintenance and Engineering Corporation (Ameco
Ground service Market price
Beijing)
Air China Ground service Market price
Air China Repairment Market price
Air China Agency service Market price
Shenzhen Airlines Co., Ltd. Agency service Market price
Air China Cargo Co., Ltd. Ground service Market price
Sichuan International Aero Engine Maintenance Co., Ltd. Repairment Market price
Chengfu FuKai Aircraft Engineering Co., Ltd. Repairment Market price
Total
(Continue)
Current period Last period
% in total % in total
Related party
Amount transaction of the Amount transaction of the
same category same category
Taikoo (Shandong) Aircraft Engineering Company
35,415,258.57 9.22 40,241,910.62 14.65
Limited
SDA Group 14,187,931.85 32.52 16,027,395.60 40.87
Shandong XiangYu Air Technology Co., Ltd. 16,904,702.68 5.57 15,314,004.26 5.04
Aircraft Maintenance and Engineering Corporation
1,540,725.63 0.51 5,725,772.83 1.88
(Ameco Beijing)
Aircraft Maintenance and Engineering Corporation
5,558,808.45 0.86 12,837,526.03 2.46
(Ameco Beijing)
122
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
Current period Last period
% in total % in total
Related party
Amount transaction of the Amount transaction of the
same category same category
Air China 9,499,359.04 1.48 7,389,320.99 1.42
Air China 19,387,982.54 6.38 16,783,224.87 5.52
Air China 4,652,337.93 67.59 3,365,886.70 72.32
Shenzhen Airlines Co., Ltd. 436,875.20 6.35 310,882.60 6.68
Air China Cargo Co., Ltd. 1,753,961.75 0.27 1,252,836.25 0.24
Sichuan International Aero Engine Maintenance Co.,
24,444,721.31 8.01 93,985,788.47 30.93
Ltd.
Chengfu FuKai Aircraft Engineering Co., Ltd. 1,375,200.33 0.45 1,672,225.18 0.55
Total 135,157,865.28 214,906,774.40
8.5.2 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 Agency service Market price
Shenzhen Airlines Co., Ltd. Agency service Market price
Shenzhen Airlines Co., Ltd. Ground service Market price
Taikoo (Shandong) Aircraft Engineering Company
Training By agreement
Limited
Total
(Continued)
Current period Last period
% in total % in total
Related party
Amount transaction of the Amount transaction of the
same category same category
123
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
Current period Last period
% in total % in total
Related party
Amount transaction of the Amount transaction of the
same category same category
Air China 858,281.13 98.96 3,605,522.00 99.50
Air China 274,999.63 37.36 771,008.42 37.12
Air China 1,404,267.96 49.65 319,568.49 15.38
Shenzhen Airlines Co., Ltd. 316,878.08 11.20 0.00 0.00
Shenzhen Airlines Co., Ltd. 92,641.51 12.59 220,932.90 28.70
Taikoo (Shandong) Aircraft Engineering
0.00 0.00 76,400.00 9.92
Company Limited
Total 2,947,068.31 4,993,431.81
8.5.3 Lease between related parties
The Company as leasee
Lease rental
Leasor Leasee Leased asset Start date Expiry date Pricing principle
recognised
Air China The Company Engines 2014-1-1 2014-6-30 By agreement 2,847,266.56
Qingdao Airlines The Company aircraft 2014-6-1 2014-6-30 By agreement 2,691,000.00
Air China The Company Simulators 2014-1-1 2014-6-30 By agreement 536,500.00
8.5.4 Lending between related parties
Related party Amount Start date Expiry date Description
Borrowed from:
China National Aviation Finance
100,000,000.00 2013/11/28 2014/5/27 Repaid
Co., Ltd.
8.5.5 Asset transfer between related parties
Related party Transaction Pricing principle
Type of transaction
Shandong XiangYu Air Technology Co., Ltd. Sales Aero materials
(Continued)
124
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
Current period Last period
Related party % in total transaction of % in total transaction of
Amount Amount
the same category the same category
Shandong XiangYu Air Technology Co., Ltd. 72,429.35 7.30 14,245.10 2.10
8.5.6 Other related party transactions
Related party Transaction Pricing principle
Air China Wet lease
Air China Code sharing
Air China Cargo Co., Ltd. Code sharing for cargo
Air China Reward Points Transfer
Air China Frequent flyer cooperation
(Continued)
Current period Last period
Related party % in total transaction % in total transaction
Amount Amount
of the same category of the same category
Air China 307,038,800.00 100.00 320,771,462.89 100.00
Air China -44,913.51 100.00 -130,734.16 100.00
Air China Cargo Co., Ltd. -183,039.65 100.00 300,000.00 100.00
Air China 0.00 0.00 93,860,000.00 100.00
Air China 16,000,000.00 100.00 00.00 0.00
Total 322,810,846.84 414,800,728.73
8.6 Related party balances
8.6.1 Receivables owed by and prepayments to related parties
C/f B/f
Related party Allowance for bad Allowance for bad
Carrying amount Carrying amount
debt debt
Accounts receivable
125
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
C/f B/f
Related party Allowance for bad Allowance for bad
Carrying amount Carrying amount
debt debt
Air China 97,371,162.50 0.00 123,439,238.90 0.00
Shenzhen Airlines Co., Ltd. 3,340,167.94 999,238.40 3,448,445.83 172,422.29
Air China Cargo Co., Ltd. 2,402,050.99 120,102.55 2,585,423.47 129,271.17
Taikoo (Shandong) Aircraft Engineering Company
120,750.00 6,037.50 6,300.00 315.00
Limited
Qingdao Airlines Co., Ltd. 3,259.60 162.98 0.00 0.00
Total 103,237,391.03 1,125,541.43 129,479,408.20 302,008.46
Other receivables
Air China 7,230,898.31 0.00 13,047,895.61 0.00
Shandong XiangYu Air Technology Co., Ltd. 8,582.69 429.13 5,862.79 293.14
Shandong Rainbow Commercial Jet Co., Ltd. 101,551,717.65 101,551,717.65 101,551,717.65 101,551,717.65
Shenzhen Airlines Co., Ltd. 54,000.00 2,700.00 75,900.00 3,795.00
Total 108,845,198.65 101,554,846.78 114,681,376.05 101,555,805.79
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 855,663.43 2,415,571.68
(Ameco Beijing)
Sichuan International Aero Engine Maintenance Co., 0.00 275,714.73
Ltd.
Air China 43,638,063.40 42,636,103.76
Taikoo (Shandong) Aircraft Engineering Company 16,088,022.22 22,893,378.90
Limited
Shandong XiangYu Air Technology Co., Ltd. 2,147,238.22 5,868,612.81
Air China Cargo Co., Ltd. 235,408.01 2,571.66
Chengfu FuKai Aircraft Engineering Co., Ltd. 0.00 460,000.00
126
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
Shenzhen Airlines Co., Ltd. 22,302.15 5,360.12
Total 62,986,697.43 74,557,313.66
Other payables
Air China 20,000,000.00 20,000,000.00
SDA Group 3,428,417.96 898,021.66
Taikoo (Shandong) Aircraft Engineering Company 245,400.00 245,400.00
Limited
Shenzhen Airlines Co., Ltd. 1,850,144.00 1,850,144.00
Total 25,523,961.96 22,993,565.66
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 20,638,861,525.68 4,362,887,276.54
Total 20,638,861,525.68 4,362,887,276.54
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 1,251,424,053.73 1,072,181,014.56
Within two years from the reporting date 1,247,455,497.73 1,059,880,518.81
127
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Within three years from the reporting date 1,202,245,937.78 1,059,880,518.81
Subsequent years 6,293,142,687.90 5,552,796,027.63
Total 9,994,268,177.14 8,744,738,079.81
Note 11 Post balance sheet date events
Caikuai[2014]No.6, Caikuai[2014]No.7, Caikuai[2014]No.8, Caikuai[2014]No.10 Caikuai[2014]No.11
Caikuai[2014]No.14 and Caikuai[2014]No.16 were issued by the Ministry of Finance in early 2014 for CAS No.
39 - Fair Value Measurement, CAS No.30 - Presentation of Financial Statement (revised in 2014), CAS No.9 -
Employee benefits (revised in 2014), CAS No. 33 - Consolidated Financial Statements (revised in 2014) and
CAS No. 40 - Joint Arrangements respectively, CAS No.2- long-term equity investment(revised in 2014), CAS
No.41- lDisclosure of Interests in Other Entities. The Company is going to adopt the said standards as from 1
July 2014 and the accounting policies are to be revised accordingly.
Note 12 Other significant events
12.1 Assets and liabilities measured by fair value
Cumulative fair value
Current year fair value Current period
Item B/f movement recognised in C/f
movement impairment
equity
Financial liabilities
Derivative financial liabilities 296,902.47 -1,176,477.06 0.00 0.00 1,473,379.53
Total 296,902.47 -1,176,477.06 0.00 0.00 1,473,379.53
12.2 Financial assets and liabilities denominated in foreign currencies
Cumulative fair value
Current year fair value Current period
Item B/f movement recognised C/f
movement impairment
in equity
Financial liabilities
Derivative financial liabilities 296,902.47 -1,176,477.06 0.00 0.00 1,473,379.53
Total 296,902.47 -1,176,477.06 0.00 0.00 1,473,379.53
Note 13 Notes to the separate financial statements
128
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
13.1 Accounts receivable
13.1.1 Disclosure by category
C/f
Category Carrying amount Allowance for bad debt
Amount % Amount %
Accounts receivable of individual significance and
181,726,041.41 65.05 0.00 0.00
subject to individual impairment assessment
Accounts receivable subject to impairment
assessment by portfolio
Portfolio by nature 90,850,888.14 32.52 4,542,544.41 5.00
Subtotal 90,850,888.14 32.52 4,542,544.41 5.00
Accounts receivable of individual insignificance
6,779,592.86 2.43 0.00 0.00
but subject to individual impairment assessment
Total 279,356,522.41 100.00 4,542,544.41 1.63
(Continued)
B/f
Category Carrying amount Allowance for bad debt
Amount % Amount %
Accounts receivable of individual significance and
179,936,813.57 73.02 0.00 0.00
subject to individual impairment assessment
Accounts receivable subject to impairment
assessment by portfolio
Portfolio by nature 52,977,940.37 21.50 2,648,897.02 5.00
Subtotal 52,977,940.37 21.50 2,648,897.02 5.00
Accounts receivable of individual insignificance
13,501,734.26 5.48 0.00 0.00
but subject to individual impairment assessment
Total 246,416,488.20 100.00 2,648,897.02 1.07
13.1.2 Disclosure by age
Age C/f B/f
129
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
Amount % Amount %
Within 1 year 278,885,711.00 99.83 246,299,519.24 99.95
1 to 2 years 416,247.96 0.15 25,803.14 0.01
2 to 3 years 17,623.45 0.01 13,173.40 0.01
Over 3 years 36,940.00 0.01 77,992.42 0.03
Total 279,356,522.41 100.00 246,416,488.20 100.00
13.1.3 Allowance for bad debt
① Accounts receivable of individual significance and subject to individual impairment assessment
Allowance for Rate of allowance
Debtor Carrying amount Reason for allowance
bad debt (%)
No indication of impairment
Air China 97,371,162.50 0.00 0.00
upon individual assessment
No indication of impairment
BSP-CHINA 56,135,494.22 0.00 0.00
upon individual assessment
Accounting Center of China Aviation No indication of impairment
28,219,384.69 0.00 0.00
Limited Company upon individual assessment
Total 181,726,041.41 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 90,850,888.14 5.00 4,542,544.41
Total 90,850,888.14 5.00 4,542,544.41
③ Accounts receivable of individual insignificance but subject to individual impairment assessment
Allowance for bad Rate of
Debtor Carrying amount Reason for allowance
debt allowance (%)
No indication of impairment upon
BSP-JAPAN 453,303.04 0.00 0.00
individual assessment
No indication of impairment upon
BSP-TAIWAN 3,654,308.06 0.00 0.00
individual assessment
UATP 2,671,981.76 0.00 0.00 No indication of impairment upon
130
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
individual assessment
Total 6,779,592.86 0.00 0.00
13.1.4 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 97,371,162.50 0.00 123,439,238.90 0.00
Total 97,371,162.50 0.00 123,439,238.90 0.00
13.1.5 Top five accounts receivable
Relationship to the % of total accounts
Debtor Amount Age
Company receivable
Air China Related party 97,371,162.50 Within 1 year 34.86
BSP-CHINA Third party 56,135,494.22 Within 1 year 20.09
Accounting Center of China Aviation
Third party 28,219,384.69 Within 1 year 10.10
Limited Company
Hebei Airport Management Holding Co.,
Third party 6,900,000.00 Within 1 year 2.47
Ltd.
Qinghai Airport Co. Ltd. Third party 5,425,000.00 Within 1 year 1.94
Total 194,051,041.41 69.46
13.1.6 Related party balances
% of total
Debtor Relationship to the Company Amount accounts
receivable
Air China Major investor 97,371,162.50 34.86
Shenzhen Airlines Co., Ltd. Controlled by the main investor 1,490,767.94 0.53
Qingdao International Air Logistics
The subsidiary of the company 4,997,652.66 1.79
Centre Co., Ltd
Air China Cargo Co., Ltd. Controlled by the main investor 2,402,050.99 0.86
Taikoo (Shandong) Aircraft Engineering
Controlled by the main investor 120,750.00 0.04
Company Limited
131
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
Qingdao Airlines Co., Ltd. Associate 3,259.60 0.00
Total 106,385,643.69 38.08
13.2 Other receivables
13.2.1 Disclosure by category
C/f
Category Carrying amount Allowance for bad debt
Amount % Amount %
Other receivables of individual significance and
243,029,447.70 71.47 101,551,717.65 41.79
subject to individual impairment assessment
Other receivables subject to impairment
assessment by portfolio
Portfolio by nature 84,229,750.62 24.77 4,211,487.53 5.00
Subtotal 84,229,750.62 24.77 4,211,487.53 5.00
Other receivables of individual insignificance but
12,784,515.01 3.76 0.00 0.00
subject to individual impairment assessment
Total 340,043,713.33 100.00 105,763,205.18 31.10
(Continued)
B/f
Category Carrying amount Allowance for bad debt
Amount % Amount %
Other receivables of individual significance and
185,011,727.43 47.99 101,551,717.65 54.89
subject to individual impairment assessment
Other receivables subject to impairment
assessment by portfolio
Portfolio by nature 112,409,411.93 29.16 5,620,470.60 5.00
Subtotal 112,409,411.93 29.16 5,620,470.60 5.00
Other receivables of individual insignificance but
88,116,339.86 22.86 0.00 0.00
subject to individual impairment assessment
Total 385,537,479.22 100.00 107,172,188.25 27.80
132
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13.2.2 Disclosure by age
C/f B/f
Age
Amount % Amount %
Within 1 year 122,059,195.13 35.89 145,558,853.12 37.76
1 to 2 years 22,055,011.96 6.49 47,973,303.18 12.44
2 to 3 years 14,675,408.53 4.32 16,699,480.03 4.33
Over 3 years 181,254,097.71 53.30 175,305,842.89 45.47
Total 340,043,713.33 100.00 385,537,479.22 100.00
13.2.3 Allowance for bad debt
① Other receivables of individual significance and subject to individual impairment assessment
Allowance for bad Rate of allowance
Debtor Carrying amount Reason for allowance
debt (%)
Shandong Rainbow Impaired collectibility identified upon
101,551,717.65 101,551,717.65 100.00
Commercial Jet Co., Ltd. individual assessment
Qingdao International Air No indication of impairment upon
42,360,642.62 0.00 0.00
Logistics Centre Co., Ltd individual assessment
No indication of impairment upon
CBD-leasing Co., Ltd. 41,354,563.28 0.00 0.00
individual assessment
No indication of impairment upon
Debtor #1 40,462,164.15 0.00 0.00
individual assessment
No indication of impairment upon
Debtor #2 17,300,360.00 0.00 0.00
individual assessment
Total 243,029,447.70 101,551,717.65 41.79
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 84,229,750.62 5.00 4,211,487.53
Total 84,229,750.62 5.00 4,211,487.53
③ Other receivables of individual insignificance but subject to individual impairment assessment
133
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Allowance for bad Rate of allowance
Debtor Carrying amount Reason for allowance
debt (%)
No indication of impairment upon
Air China 7,230,898.31 0.00 0.00
individual assessment
No indication of impairment upon
Debtor #1 4,238,588.20 0.00 0.00
individual assessment
No indication of impairment upon
Debtor #2 1,315,028.50 0.00 0.00
individual assessment
Total 12,784,515.01 0.00 0.00
13.2.4 Other receivables 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 7,230,898.31 0.00 13,047,895.61 0.00
Total 7,230,898.31 0.00 13,047,895.61 0.00
13.2.5 Top five other receivables
Relationship to the % of total other
Debtor Amount Age
Company receivables
Shandong Rainbow Commercial Jet Co., Ltd. Related party 101,551,717.65 Over 3 years 29.86
Debtor #1 Third party 54,907,919.14 Within 2 year 16.15
Qingdao International Air Logistics Centre
Related party 42,360,642.62 Within 4 year
Co., Ltd 12.46
CBD-leasing Co., Ltd. Third party 41,354,563.28 Over 3 years 12.16
Debtor #2 Third party 40,462,164.15 Within 1 year 11.90
Total 280,637,006.84 82.53
13.2.6 Related party balances
% of total other
Debtor Relationship to the Company Amount
receivables
Shandong Rainbow Commercial Jet Co., Ltd. Associate 101,551,717.65 29.86
Qingdao Logistics Wholly owned subsidiary 42,360,642.62 12.46
Air China Major investor 7,230,898.31 2.13
134
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
% of total other
Debtor Relationship to the Company Amount
receivables
Shenzhen Airlines Co.,Ltd. Controlled by major investor 54,000.00 0.02
Shandong XiangYu Air Technology Co., Ltd. Controlled by major investor 8,582.69 0.00
Total 151,205,841.27 44.47
13.2.7 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 15,388,577.98 6.1528 94,682,842.60 20,080,940.89 6.0969 122,431,488.51
13.3 Long-term equity investments
13.3.1 Disclosure by category
Current period Current period
Category B/f C/f
increase decrease
Investment in subsidiaries 106,000,685.43 0.00 0.00 106,000,685.43
Investment in associates 22,500,000.00 196,754,029.88 0.00 219,254,029.88
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 194,352,785.43 196,754,029.88 0.00 391,106,815.31
13.3.2 Details of long-term equity investments
Cost of Current period
Investee Measurement method B/f C/f
investment movement
China Travelsky Technology Co.,
Cost method 6,690,000.00 6,690,000.00 0.00 6,690,000.00
Ltd.
Sichuan Airlines Cost method 35,000,000.00 35,000,000.00 0.00 35,000,000.00
Jinan International Airport Co.,
Cost method 46,662,100.00 46,662,100.00 0.00 46,662,100.00
Ltd.
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 Equity method 22,500,000.00 22,500,000.00 0.00 22,500,000.00
135
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
Cost of Current period
Investee Measurement method B/f C/f
investment movement
Jet Co., Ltd.
Qingdao Airlines Co., Ltd. Equity method 200,000,000.00 0.00 196,754,029.88 196,754,029.88
Total 416,852,785.43 216,852,785.43 196,754,029.88 413,606,815.31
(Continued)
Reason for
Impairment
disagreement
Shareholding Voting right Impairment allowance Cash dividend in
Investee between
(%) (%) allowance recognised in current year
shareholding and
current year
voting right
China Travelsky Technology Co.,
0.45 0.45 In agreement 0.00 0.00 1,826,370.00
Ltd.
Sichuan Airlines 10.00 10.00 In agreement 0.00 0.00 0.00
Jinan International Airport Co., Ltd. 2.53 2.53 In agreement 0.00 0.00 0.00
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 Commercial
45.00 45.00 In agreement 22,500,000.00 0.00 0.00
Jet Co., Ltd.
Qingdao Airlines Co., Ltd. 20.00 20.00 In agreement 0.00 0.00 0.00
Total 22,500,000.00 0.00 1,826,370.00
13.3.3 Details of impairment allowance for long-term equity investments
Currentperiod Current period
Investee B/f C/f
increase decrease
Investment in associates
Shandong Rainbow Commercial Jet Co.,
22,500,000.00 0.00 0.00 22,500,000.00
Ltd.
Total 22,500,000.00 0.00 0.00 22,500,000.00
13.4 Revenue and operating costs
13.4.1 General information
136
Shandong Airlines Co., Ltd. Semi-Annual Report 2014
Category Current period Last period
Principal operating income 5,484,240,453.00 5,451,936,732.07
Other operating income 63,611,362.18 65,110,778.67
Total 5,547,851,815.18 5,517,047,510.74
Principal operating cost 4,911,898,626.53 4,688,487,798.40
Other operating cost 3,967,896.91 1,853,079.93
Total 4,915,866,523.44 4,690,340,878.33
13.4.2 Disclosure by service line
Current period Last period
Service line
Operating income Operating cost Operating income Operating cost
Aero transportation 5,458,326,649.44 4,891,116,105.47 5,434,206,939.71 4,676,304,819.71
Hospitality and catering 20,120,153.79 18,888,629.34 9,904,972.35 10,523,876.28
Training 5,793,649.77 1,893,891.72 7,824,820.01 1,659,102.41
Total 5,484,240,453.00 4,911,898,626.53 5,451,936,732.07 4,688,487,798.40
13.4.3 Operating income from top five customers
Year Operating income % of total operating income
2014 January-June 337,509,050.92 6.08
2013 January-June 375,571,278.55 6.81
13.5 Investment income
13.5.1 Disclosure by category
Category Current period Last period
Income from long-term equity investments measured at cost 1,826,370.00 1,735,051.50
Income from long-term equity investments measured at equity -3,245,970.12 0.00
Income from holding of financial assets held for trading -1,421,659.87 -1,242,550.48
Total -2,841,259.99 492,501.02
13.5.2 Income from long-term equity investments measured at cost
Investee Current period Last period
China Travelsky Technology Co., Ltd. 1,826,370.00 1,735,051.50
137
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Investee Current period Last period
Total 1,826,370.00 1,735,051.50
13.5.3 Income from long-term equity investments measured at equity
Investee Current period Last period
Qingdao Airlines Co., Ltd. -3,245,970.12 0.00
Total -3,245,970.12 0.00
13.6 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 45,366,320.63 81,471,265.48
Add: Loss on asset impairment 484,664.32 80,163,911.80
Depreciation of fixed assets, oil and gas assets, bioogical assets held for
359,455,444.23 393,446,387.11
production
Amortisation of intangible assets 2,072,119.91 696,307.32
Amortisation of deferred charges 30,070,909.87 25,222,697.08
Loss on non-current assets disposal (gain presented by "-" prefix) -947,397.01 -310,737.50
Loss on scrap of fixed assets (gain presented by "-" prefix) 3,690,350.76 2,099,734.51
Loss on fair value changes (gain presented by "-" prefix) 1,176,477.06 -7,328,944.15
Fianncial costs (gain presented by "-" prefix) 140,941,691.12 68,153,435.88
Investment loss (gain presented by "-" prefix) 2,841,259.99 -492,501.02
Decrease of deferred tax assets (increase presented by "-" prefix) -5,088,725.72 15,100,869.23
Increase of deferred tax liabilities (increase presented by "-" prefix) 0.000 32,540.14
Decrease of inventories (increase presented by "-" prefix) -28,061,931.53 -2,075,609.05
Decrease of operating receivables (increase presented by "-" prefix) 6,214,356.45 -122,197,662.70
Increase of operating payables (decrease presented by "-" prefix) 124,446,597.13 -168,393,926.06
Others 0.00 0.00
Net cash flows generated from operating activities 682,662,137.21 365,587,768.07
② Significant investing and financing acitivities involve no cash: 0.00 0.00
Debt-to-capital conversion 0.00 0.00
Convertable loan due within one year 0.00 0.00
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Category Current period Last period
Fixed assets acquired under financial lease 0.00 0.00
③ Movement of cash and cash equivalents: 0.00 0.00
Cash C/f 286,916,756.99 308,589,307.68
Less: Cash B/f 421,826,370.62 143,212,750.59
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 -134,909,613.63 165,376,557.09
Note 14 Supplementary information
14.1 Non-recurring profit and loss
Category Current period Last period
Gains from disposals of non-current assets after expending impairment
-2,742,953.75 -1,801,637.88
provisions
Exceeded-authority approved, non-official approved or accidental tax
0.00 0.00
repayment and relief
Government grants recognised through profit or loss for the current reporting
period, excluding grants which are closely related to the Company’s operating
62,938,349.06 38,624,958.06
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 recognised
0.00 0.00
through profit or loss for the current reporting period
Gains arising from bargain purchase in business combination and investments
0.00 0.00
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
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Category Current period Last period
Net profits or losses achieved by an acquired under-common-control entity
0.00 0.00
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
-2,598,136.93 6,086,393.67
financial liabilities and available-for-sale financial assets, excluding hedging contracts
relevant to the Company’s daily operating activities
Reversal of impairment provision for accounts receivables eligible for individual
0.00 0.00
impairment assessment
Gains or losses arising from consigned borrowings 0.00 0.00
Fair value changes of property investments subsequently measured at fair
0.00 0.00
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 28,447,812.38 44,684,274.94
Other gains or losses satisfying the definition of extraordinary gains or losses 0.00 0.00
Subtotal 86,045,070.76 87,593,988.79
Less: Impact of income tax 21,511,267.69 22,736,977.19
Less: Impact on non-controlling interest 0.00 0.00
Total 64,533,803.07 64,857,011.60
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).
14.2 Rate of return on net assets and earnings per share
Profit catetory Weighted average rate Earnings per share (CNY/share)
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of RONA Basic EPS Diluted EPS
Net profit attributable to ordinary shareholders 1.71% 0.12 0.12
Recurring profit or loss attributable to ordinary shareholders -0.65% -0.04 -0.04
Notes: Computation of basic earnings per share and diluted earnings per share Note 7.46.
14.3 Significant change of major element of the consolidated financial statements
14.3.1 Elements of the consolidated statement of financial position
① Monetary funds amounting to 302,785,902.50 as at the closing period: 31.89% decrease from last period
mainly resulted from that: the balance of monetary fund referred to the stock of monetary fund at a
particular date, changes related to amount and timing of fund inflow and outflow integratedly.
② Dividends receivable amounting to 1,826,370.00 a as at the closing period: 87.25% decrease from last
period mainly resulted from cash receipt for dividend from Sichuan Airlines in 2012.
③ Long-term equity investments amounting to 285,106,129.88 as at the closing period: 222.69% increase
from last period mainly due to investment in Qingdao Airlines Co., Ltd.
④ Construction in progress amounting to 2,678,906,510.75 as at the closing period: 62.56% increase from
last period mainly due to install payments of purchasing aircrafts.
⑤Short-term borrowings amounting to 200,000,000.00 as at the reporting date: 53.93% decrease from last
period mainly due to repayment of short-term borrowings in the current period as at the reporting date.
⑥Financial liabilities held for trading amounting to 1,473,379.53 as at the closing period: 396.25% increase
from last period mainly resulted from changes of fair value of interest rate swaps held.
⑦Interests payable amounting to 4,419,376.31 as at the closing period: 72.49% decrease from last period
mainly due to interest payment of medium-term notes.
⑧Other payables amounting to 314,863,518.89 as at the closing period: 62.41% increase from last period
mainly due to subsidy receipt related to unfinished disposal of assets.
⑨ Non-current liabilities due within one year amounting to 986,560,433.84 as at the closing period: 85.04%
increase from last period mainly resulted from increase of long-term borrowings due in next year.
14.3.2 Elements of the consolidated statement comprehensive income
① Business tax and surcharges amounting to 15,270,214.40 for the period: 91.58% decrease from last
period mainly resulted from business-tax-to-value-added-tax conversion as from August 2013.
② Financial costs amounting to 140,688,160.56 for the period: 100.22% increase from last period mainly
resulted from increased loss from exchange difference due to CNY's depreciation against USD, CNY's
appreciation against USD for the last period.
③ Loss on asset impairment amounting to 1,414,344.32 for the period: 98.23% decrease from last period
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mainly resulted from confirming impairment for 5 B737-300 aircraft fixed assets in 2013.
④ Changes in the fair value of derivatives amounting to -1,176,477.06 for the period: 116.05% decrease from
last period mainly resulted from changes of fair value of interest rate swaps held
⑤Investment income amounting to -2,841,259.99 for the period: 676.90% decrease from last period mainly
resulted from recognizing Net investment gains and losses .
⑥Income tax expense amounting to 15,943,549.14 for the period: 59.96% decrease from last period mainly
resulted from lower profits and corresponding a lower income tax expense.
14.3.3 Elements of the statement of cash flows
①The tax payments amounting to 171,060,869.92 for the period: 56.41% decrease from last period mainly
resulted from the influencing factors of the reduced profit and business-tax-to-value-added-tax conversion.
② The net cash receipt from disposal of fixed assets, intangible assets and other long-term assets amounting
to 43,776,039.01 for the period: 13626.88% increase from last period mainly resulted from increase in receipts
of aircraft assets disposal.
③The net Cash paid to acquire fixed assets, intangible assets and other long-term assets amounting to
1,176,764,986.77 for the period: 121.16% increase from last period mainly resulted from purchasing aircraft
progress payments.
④Other cash payments relating to investing activities amounting to 656,994.75 for the period: 47.13%
decrease from last period mainly resulted from decrease in payment to financial assets held for trading.
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Section X. 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 and websites designated by CSRC in
the reporting 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.
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