Shandong Airlines Co., Ltd.
Independent Auditors' Report
Ruihua Shen Zi [2015] No. 48390004
(English Version for Reference Only)
Content Page
I INDEPENDENT AUDITOR’S REPORT
1
II AUDITED FINANCIAL STATEMENTS
1. Consolidated Statement of Financial Position
4
2. Consolidated Statement of Comprehensive Income
7
3. Consolidated Statement of Cash Flows
10
4. Consolidated Statement of Changes in Shareholders’ Equity
13
5. Statement of Financial Position
17
6. Statement of Comprehensive Income
19
7. Statement of Cash Flows
21
8. Statement of Changes in Shareholders’ Equity
23
9. Notes to the Financial Statements
28
通讯地址：北京市东城区永定门西滨河路 8 号院 7 号楼中海地产广场西塔 5-11 层
Postal Address:5-11/F,West Tower of China Overseas Property Plaza, Building 7,NO.8,Yongdingmen
Xibinhe Road, Dongcheng District, Beijing
邮政编码（Post Code）：100077
电话（Tel）：+86(10)88095588 传真（Fax）：+86(10)88091199
Independent Auditor’s Report
Ruihua Shen Zi [2015] No. 48390004
To The Board of Directors of Shandong Airlines Co., Ltd.：
We have audited the accompanying financial statements of Shandong Airlines Co.,
Ltd. (hereafter, Shandong Airlines), which comprise the consolidated and separate
statements of financial position as at 31 December 2014, the consolidated and
separate statements of comprehensive income, the consolidated and separate
statements of cash flows and the consolidated and separate statements of changes in
shareholders' equity for the year then ended and a summary of significant accounting
policies and other explanatory notes.
Ⅰ Management’s responsibility for the financial statements
Management of Shandong Airlines is responsible for the preparation and fair
presentation of financial statements. This responsibility includes: (1) preparation of
financial statements in accordance with Enterprise Accounting Standards of China
and for the purpose of fair presentation; (2) designing, implementing and maintaining
internal control necessary to the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
Ⅱ Auditors’ responsibility
Our responsibility is to express an opinion on those financial statements based on our
audit. We conducted our audit in accordance with the Chinese Certified Public
Accountants' Auditing Standards (hereafter, the Standards). The Standards require
1
that we comply with Chinese Certified Public Accountants Ethical Requirements and
plan and perform the audit to obtain reasonable assurance as to whether the financial
statements are free from material misstatement.
An audit involves the performance of audit procedures to obtain audit evidence
relevant to the amounts and disclosures in the financial statements. The procedures
selected depend on judgment of the Certified Public Accountants (hereafter, the
CPAs), including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the
CPAs consider internal control relevant to the entity’s preparation and fair
presentation of the financial statements in order to design audit procedures that are
appropriate in the circumstances. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting
estimates made by management, as well as evaluating the overall presentation of the
financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our audit opinion.
Ⅲ Audit opinion
In our opinion, the financial statements of Shandong Airlines have been prepared in
accordance with the Enterprise Accounting Standards of China and present fairly, in
all material respects, the consolidated and separate financial position of Shandong
Airlines Co., Ltd. as at 31 December 2014 and its consolidated and separate financial
performance and cash flows for the year then ended.
2
Ruihua Certified Public Accountants Certified Public Accountants
杨敢林
China. Beijing Certified Public Accountants
邬晓磊
19 March 2015
3
II. AUDITED FINANCIAL STATEMENTS
Statement in Financial Notes are carried in RMB/CNY
1. Consolidated Statement of Financial Position
Prepared by Shandong Airlines Co., Ltd
2014-12-31
In RMB
Item Closing balance Opening balance
Current assets:
Monetary funds 460,741,336.35 444,522,271.21
Settlement provisions
Capital lent
Financial liability measured by fair
value and with variation reckoned into
current gains/losses
Derivative financial liability
Notes receivable
Accounts receivable 217,039,947.40 250,524,757.67
Accounts paid in advance 138,893,259.40 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 239,160,662.84 236,105,804.44
Purchase restituted finance asset
Inventories 112,151,772.45 107,973,473.35
Divided into assets held for sale 91,522,334.40
Non-current asset due within one
year
Other current assets 108,805,651.21 71,828,962.65
Total current assets 1,370,141,334.05 1,213,462,896.36
Non-current assets:
Loans and payments on behalf
4
Finance asset available for sales 167,905,665.68 160,126,340.51
Held-to-maturity investment
Long-term account receivable
Long-term equity investment 173,410,020.12
Investment property
Fixed assets 6,923,262,003.49 7,564,658,140.23
Construction in progress 2,437,585,905.29 1,647,915,995.78
Engineering material
Disposal of fixed asset
Productive biological asset
Oil and gas asset
Intangible assets 120,544,428.04 101,127,636.82
Expense on Research and
Development
Goodwill
Long-term expenses to be
397,258,983.43 347,945,540.61
apportioned
Deferred income tax asset 470,104,638.00 439,662,119.02
Other non-current asset 58,654,642.41
Total non-current asset 10,748,726,286.46 10,261,435,772.97
Total assets 12,118,867,620.51 11,474,898,669.33
Current liabilities:
Short-term loans 434,137,220.00
Loan from central bank
Absorbing deposit and interbank
deposit
Capital borrowed
Financial liability measured by fair
value and with variation reckoned into 1,559,710.77 296,902.47
current gains/losses
Derivative financial liability
Notes payable 58,412,417.22
Accounts payable 890,345,747.24 1,132,126,690.25
Accounts received in advance 278,057,859.34 343,468,052.97
Selling financial asset of
repurchase
Commission charge and
commission payable
5
Wage payable 393,428,573.70 338,866,981.54
Taxes payable 88,141,153.44 110,064,437.61
Interest payable 15,379,074.56 16,064,294.43
Dividend payable 11,940.00 11,940.00
Other accounts payable 367,285,868.35 193,868,858.34
Reinsurance payables
Insurance contract reserve
Security trading of agency
Security sales of agency
Divided into liability held for sale
Non-current liabilities due within 1
1,741,517,725.20 538,030,658.42
year
Other current liabilities
Total current liabilities 3,834,140,069.82 3,106,936,036.03
Non-current liabilities:
Long-term loans 3,219,443,999.28 3,525,047,206.06
Bonds payable 500,000,000.00
Including: preferred stock
Perpetual capital
securities
Long-term account payable 2,079,557,697.82 1,542,515,998.39
Long-term wages payable 70,445,557.60 64,571,000.00
Special accounts payable
Projected liabilities
Deferred income 17,271,524.22 25,367,524.34
Deferred income tax liabilities 19,888,391.42 17,943,560.13
Other non-current liabilities
Total non-current liabilities 5,406,607,170.34 5,675,445,288.92
Total liabilities 9,240,747,240.16 8,782,381,324.95
Owner’s equity:
Share capital 400,000,000.00 400,000,000.00
Other equity instrument
Including: preferred stock
Perpetual capital
securities
Capital public reserve 75,410,363.70 75,410,363.70
6
Less: Inventory shares
Other comprehensive income 58,923,174.26 61,171,680.38
Reasonable reserve
Surplus public reserve 318,250,857.40 289,670,385.70
Provision of general risk
Retained profit 2,025,535,984.99 1,866,264,914.60
Total owner’s equity attributable to
2,878,120,380.35 2,692,517,344.38
parent company
Minority interests
Total owner’s equity 2,878,120,380.35 2,692,517,344.38
Total liabilities and owner’s equity 12,118,867,620.51 11,474,898,669.33
Legal Representative: Yu Haitian Person in charge of Accounting Works: Xu Guojian
Person in charge of Accounting Institution: Sun Jingping
2. Consolidated Statement of Comprehensive Income
In RMB
Item Current Period Last Period
I. Total operating income 11,570,296,757.48 11,427,157,933.15
Including: Operating income 11,570,296,757.48 11,427,157,933.15
Interest income
Insurance gained
Commission charge and commission
income
II. Total operating cost 11,336,738,980.62 11,173,194,367.33
Including: Operating cost 10,079,128,803.74 9,709,865,647.38
Interest expense
Commission charge and commission
expense
Cash surrender value
Net amount of expense of
compensation
Net amount of withdrawal of
insurance contract reserve
Bonus expense of guarantee slip
Reinsurance expense
7
Operating tax and extras 31,770,430.48 238,665,537.66
Sales expenses 789,909,342.97 775,204,419.75
Administration expenses 234,028,777.30 221,433,947.49
Financial expenses 200,729,150.28 145,665,611.58
Losses of devaluation of asset 1,172,475.85 82,359,203.47
Add: Changing income of fair
-1,262,808.30 6,901,881.12
value(Loss is listed with “-”)
Investment income (Loss is listed
-26,040,504.73 14,163,176.50
with “-”)
Including: Investment income on
-26,589,979.88
affiliated company and joint venture
Exchange income (Loss is listed
with “-”)
III. Operating profit (Loss is listed with
206,254,463.83 275,028,623.44
“-”)
Add: Non-operating income 207,191,726.99 270,407,969.61
Including: Disposal gains of
9,115,183.68 78,847,533.50
non-current asset
Less: Non-operating expense 15,079,971.87 13,449,762.40
Including: Disposal loss of
14,507,221.07 9,856,591.93
non-current asset
IV. Total Profit (Loss is listed with “-”) 398,366,218.95 531,986,830.65
Less: Income tax expense 110,514,676.86 141,865,018.93
V. Net profit (Net loss is listed with “-”) 287,851,542.09 390,121,811.72
Net profit attributable to owner’s of
287,851,542.09 390,121,811.72
parent company
Minority shareholders’ gains and
losses
VI. Net after-tax of other comprehensive
-2,248,506.12 33,344,665.27
income
Net after-tax of other comprehensive
income attributable to owners of parent -2,248,506.12 33,344,665.27
company
(I) Other comprehensive income
items which will not be reclassified -8,083,000.00 7,341,000.00
subsequently to profit of loss
1. Changes as a result of
-8,083,000.00 7,341,000.00
re-measurement of net defined benefit
8
plan liability or asset
2. Share of the other
comprehensive income of the investee
accounted for using equity method which
will not be reclassified subsequently to
profit and loss
(II) Other comprehensive income
items which will be reclassified 5,834,493.88 26,003,665.27
subsequently to profit or loss
1. Share of the other
comprehensive income of the investee
accounted for using equity method which
will be reclassified subsequently to profit
or loss
2. Gains or losses arising
from changes in fair value of 5,834,493.88 26,003,665.27
available-for-sale financial assets
3. Gains or losses arising
from reclassification of held-to-maturity
investment as available-for-sale financial
assets
4. The effect hedging portion
of gains or losses arising from cash flow
hedging instruments
5. Translation differences
arising on translation of foreign currency
financial statements
6. Other
Net after-tax of other comprehensive
income attributable to minority
shareholders
VII. Total comprehensive income 285,603,035.97 423,466,476.99
Total comprehensive income
285,603,035.97 423,466,476.99
attributable to owners of parent Company
Total comprehensive income
attributable to minority shareholders
VIII. Earnings per share:
(i) Basic earnings per share 0.72 0.98
(ii) Diluted earnings per share 0.72 0.98
Legal Representative: Yu Haitian Person in charge of Accounting Works: Xu Guojian
9
Person in charge of Accounting Institution: Sun Jingping
3. Consolidated Statement of Cash Flows
In RMB
Item Current Period Last Period
I. Cash flows arising from operating
activities:
Cash received from selling
commodities and providing labor 12,710,297,864.57 11,821,940,861.03
services
Net increase of customer deposit
and interbank deposit
Net increase of loan from central
bank
Net increase of capital borrowed
from other financial institution
Cash received from original
insurance contract fee
Net cash received from reinsurance
business
Net increase of insured savings and
investment
Net increase of amount from
disposal financial assets that measured
by fair value and with variation
reckoned into current gains/losses
Cash received from interest,
commission charge and commission
Net increase of capital borrowed
Net increase of returned business
capital
Write-back of tax received
Other cash received concerning
373,940,604.72 298,723,497.82
operating activities
Subtotal of cash inflow arising from
13,084,238,469.29 12,120,664,358.85
operating activities
Cash paid for purchasing
commodities and receiving labor 9,517,670,026.99 8,296,965,395.58
service
10
Net increase of customer loans and
advances
Net increase of deposits in central
bank and interbank
Cash paid for original insurance
contract compensation
Cash paid for interest, commission
charge and commission
Cash paid for bonus of guarantee
slip
Cash paid to/for staff and workers 1,410,482,218.24 1,491,076,519.28
Taxes paid 416,630,299.89 687,341,028.75
Other cash paid concerning
279,627,708.86 234,094,893.09
operating activities
Subtotal of cash outflow arising from
11,624,410,253.98 10,709,477,836.70
operating activities
Net cash flows arising from operating
1,459,828,215.31 1,411,186,522.15
activities
II. Cash flows arising from investing
activities:
Cash received from recovering
investment
Cash received from investment
15,149,770.75 2,447,115.15
income
Net cash received from disposal of
fixed, intangible and other long-term 74,201,380.68 174,681,542.77
assets
Net cash received from disposal of
subsidiaries and other units
Other cash received concerning
investing activities
Subtotal of cash inflow from investing
89,351,151.43 177,128,657.92
activities
Cash paid for purchasing fixed,
1,854,363,565.04 1,723,086,948.06
intangible and other long-term assets
Cash paid for investment
Net increase of mortgaged loans
Net cash received from 26,000,000.00
11
subsidiaries and other units obtained
Other cash paid concerning
2,101,079.54 2,609,524.71
investing activities
Subtotal of cash outflow from investing
1,882,464,644.58 1,725,696,472.77
activities
Net cash flows arising from investing
-1,793,113,493.15 -1,548,567,814.85
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 1,415,568,000.00 1,707,943,187.26
Cash received from issuing bonds
Other cash received concerning
876,880,748.00 903,064,822.94
financing activities
Subtotal of cash inflow from financing
2,292,448,748.00 2,611,008,010.20
activities
Cash paid for settling debts 1,493,180,860.91 1,664,222,540.40
Cash paid for dividend and profit
270,771,019.31 343,574,678.36
distributing or interest paying
Including: Dividend and profit of
minority shareholder paid by
subsidiaries
Other cash paid concerning
181,035,632.75 175,939,104.72
financing activities
Subtotal of cash outflow from financing
1,944,987,512.97 2,183,736,323.48
activities
Net cash flows arising from financing
347,461,235.03 427,271,686.72
activities
IV. Influence on cash and cash
equivalents due to fluctuation in 2,043,107.95 -755,865.78
exchange rate
V. Net increase of cash and cash
16,219,065.14 289,134,528.24
equivalents
Add: Balance of cash and cash
444,522,271.21 155,387,742.97
equivalents at the period -begin
12
VI. Balance of cash and cash
460,741,336.35 444,522,271.21
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
4. Consolidated Statement of Changes in Shareholders’ Equity
This Period
In RMB
This Period
Owners’ equity attributable to parent company
Other
equity instrument
Item Less: Other Provisio Minorit Total
Perpet Reason
Share Capital Invento compre Surplus n of Retaine y owners’
ual able
capital Prefer capita reserve ry hensive reserve general d profit interests equity
red Other reserve
l shares income risk
stock
securi
ties
400,00 1,866,2 2,692,5
I. Balance at the 75,410, 61,171, 289,670
0,000. 64,914. 17,344.
end of the last year 363.70 680.38 ,385.70
00 60 38
Add:
Changes of
accounting policy
Error
correction of the
last period
Enterprise
combine under
the same control
Other
II. Balance at the 400,00 1,866,2 2,692,5
75,410, 61,171, 289,670
beginning of this 0,000. 64,914. 17,344.
363.70 680.38 ,385.70
year 00 60 38
III. Increase/
Decrease in this -2,248,5 28,580, 159,271 185,603
year (Decrease is 06.12 471.70 ,070.39 ,035.97
listed with “-”)
(i) Total -2,248,5 287,851 285,603
comprehensive
06.12 ,542.09 ,035.97
income
(ii) Owners’
devoted and
13
decreased capital
1.Common shares
invested by
shareholders
2. Capital invested
by holders of other
equity instruments
3. Amount
reckoned into
owners equity with
share-based
payment
4. Other
-128,58 -100,00
(III) Profit 28,580,
0,471.7 0,000.0
distribution 471.70
0 0
1. Withdrawal of 28,580, -28,580,
surplus reserves 471.70 471.70
2. Withdrawal of
general risk
provisions
3. Distribution for -100,00 -100,00
owners (or 0,000.0 0,000.0
shareholders) 0 0
4. Other
(IV) Carrying
forward internal
owners’ equity
1. Capital reserves
conversed to
capital (share
capital)
2. Surplus reserves
conversed to
capital (share
capital)
3. Remedying loss
with surplus
reserve
4. Other
(V) Reasonable
reserve
1. Withdrawal in
the report period
2. Usage in the
report period
14
(VI)Others
IV. Balance at the 400,00 75,410, 58,923, 318,250
2,025,5 2,878,1
end of the report 0,000. 35,984. 20,380.
363.70 174.26 ,857.40
period 00 99 35
Last Period
In RMB
Last Period
Owners’ equity attributable to the parent Company
Other
equity instrument Minorit
Item Less: Other Provisio Total
Perpet Reason y
Share
ual Capital Invento compre Surplus n of Retaine interest owners’
able equity
capital Prefer capita reserve ry hensive reserve general d profit s
red Other reserve
l shares income risk
stock
securi
ties
400,00 1,675,9 2,429,0
I. Balance at the 75,410, 27,827, 249,859
0,000. 53,889. 50,867.
end of the last year 363.70 015.11 ,599.31
00 27 39
Add:
Changes of
accounting policy
Error
correction of the
last period
Enterprise
combine under the
same control
Other
II. Balance at the 400,00 75,410, 27,827, 249,859
1,675,9 2,429,0
beginning of this 0,000. 53,889. 50,867.
363.70 015.11 ,599.31
year 00 27 39
III. Increase/
Decrease in this 33,344, 39,810, 190,311 263,466
year (Decrease is 665.27 786.39 ,025.33 ,476.99
listed with “-”)
(i) Total 33,344, 390,121 423,466
comprehensive
665.27 ,811.72 ,476.99
income
(ii) Owners’
devoted and
decreased capital
1.Common shares
invested by
shareholders
15
2. Capital invested
by holders of other
equity instruments
3. Amount
reckoned into
owners equity with
share-based
payment
4 Other
-199,81 -160,00
(III) Profit 39,810,
0,786.3 0,000.0
distribution 786.39
9 0
1. Withdrawal of 39,810, -39,810,
surplus reserves 786.39 786.39
2. Withdrawal of
general risk
provisions
3. Distribution for -160,00 -160,00
owners (or 0,000.0 0,000.0
shareholders) 0 0
4. Other
(IV) Carrying
forward internal
owners’ equity
1. Capital reserves
conversed to
capital (share
capital)
2. Surplus reserves
conversed to
capital (share
capital)
3. Remedying loss
with surplus
reserve
4. Other
(V) Reasonable
reserve
1. Withdrawal in
the report period
2. Usage in the
report period
(VI)Others
IV. Balance at the
400,00 75,410, 61,171, 289,670 1,866,2 2,692,5
end of the report
0,000. 363.70 680.38 ,385.70 64,914. 17,344.
period
16
00 60 38
Legal Representative: Yu Haitian Person in charge of Accounting Works: Xu Guojian
Person in charge of Accounting Institution: Sun Jingping
5. Statement of Financial Position
In RMB
Item Closing balance Opening balance
Current assets:
Monetary funds 444,628,245.82 421,826,370.62
Financial liability measured by fair
value and with variation reckoned into
current gains/losses
Derivative financial liability
Notes receivable
Accounts receivable 215,447,973.81 243,767,591.18
Account paid in advance 137,871,249.15 87,961,234.82
Interest receivable
Dividends receivable 1,826,370.00 14,325,586.06
Other receivables 281,409,048.94 278,365,290.97
Inventories 112,151,772.45 107,972,423.35
Divided into assets held for sale 91,522,334.40
Non-current assets maturing within
one year
Other current assets 107,929,044.49 71,828,962.65
Total current assets 1,392,786,039.06 1,226,047,459.65
Non-current assets:
Available-for-sale financial assets 167,905,665.68 160,126,340.51
Held-to-maturity investments
Long-term receivables
Long-term equity investments 279,410,705.55 106,000,685.43
Investment property
Fixed assets 6,817,495,030.89 7,454,288,584.97
Construction in progress 2,434,596,341.61 1,647,839,995.78
Project materials
17
Disposal of fixed assets
Productive biological assets
Oil and natural gas assets
Intangible assets 105,836,196.37 86,384,749.30
Research and development costs
Goodwill
Long-term deferred expenses 397,258,983.43 347,945,540.61
Deferred income tax assets 469,311,960.57 439,209,204.04
Other non-current assets 58,654,642.41
Total non-current assets 10,730,469,526.51 10,241,795,100.64
Total assets 12,123,255,565.57 11,467,842,560.29
Current liabilities:
Short-term borrowings 434,137,220.00
Financial liability measured by fair
value and with variation reckoned into 1,559,710.77 296,902.47
current gains/losses
Derivative financial liability
Notes payable 58,412,417.22
Accounts payable 893,928,672.81 1,130,120,671.84
Accounts received in advance 269,901,234.14 338,572,262.93
Wage payable 389,889,657.63 338,104,603.04
Taxes payable 87,579,618.94 109,369,269.33
Interest payable 15,379,074.56 16,064,294.43
Dividend payable 11,940.00 11,940.00
Other accounts payable 382,237,985.57 195,015,301.41
Divided into liability held for sale
Non-current liabilities due within 1
1,741,517,725.20 538,030,658.42
year
Other current liabilities
Total current liabilities 3,840,418,036.84 3,099,723,123.87
Non-current liabilities:
Long-term loans 3,219,443,999.28 3,525,047,206.06
Bonds payable 500,000,000.00
Including: preferred stock
Perpetual capital
18
securities
Long-term account payable 2,079,557,697.82 1,542,515,998.39
Long-term wages payable 70,445,557.60 64,571,000.00
Special accounts payable
Projected liabilities
Deferred income 17,271,524.22 25,367,524.34
Deferred income tax liabilities 19,888,391.42 17,943,560.13
Other non-current liabilities
Total non-current liabilities 5,406,607,170.34 5,675,445,288.92
Total liabilities 9,247,025,207.18 8,775,168,412.79
Owners’ equity:
Share capita 400,000,000.00 400,000,000.00
Other equity instrument
Including: preferred stock
Perpetual capital
securities
Capital public reserve 86,911,168.71 86,911,168.71
Less: Inventory shares
Other comprehensive income 58,923,174.26 61,171,680.38
Reasonable reserve
Surplus reserve 317,590,152.87 289,009,681.17
Retained profit 2,012,805,862.55 1,855,581,617.24
Total owner’s equity 2,876,230,358.39 2,692,674,147.50
Total liabilities and owner’s equity 12,123,255,565.57 11,467,842,560.29
Legal Representative: Yu Haitian Person in charge of Accounting Works: Xu Guojian
Person in charge of Accounting Institution: Sun Jingping
6. Statement of Comprehensive Income
In RMB
Item Current Period Last Period
I. Operating income 11,550,383,115.23 11,411,894,387.57
Less: Operating cost 10,071,516,012.48 9,701,412,394.23
Operating tax and extras 31,611,429.24 238,106,240.18
Sales expenses 789,909,342.97 780,085,329.96
19
Administration expenses 226,098,278.90 214,597,884.21
Financial expenses 200,786,373.33 145,719,515.27
Losses of devaluation of asset -734,192.83 70,348,934.03
Add: Changing income of fair
-1,262,808.30 6,901,881.12
value(Loss is listed with “-”)
Investment income (Loss is
-26,040,504.73 14,163,176.50
listed with “-”)
Including: Investment income
-26,589,979.88
on affiliated company and joint venture
II. Operating profit (Loss is listed
203,892,558.11 282,689,147.31
with “-”)
Add: Non-operating income 207,191,526.94 270,405,947.11
Less: Non-operating expense 15,079,971.87 13,435,099.03
Including: Disposal loss of
14,507,221.07 9,841,928.56
non-current asset
III. Total Profit (Loss is listed with
396,004,113.18 539,659,995.39
“-”)
Less: Income tax expense 110,199,396.17 141,552,131.44
IV. Net profit (Net loss is listed with
285,804,717.01 398,107,863.95
“-”)
V. Net after-tax of other comprehensive
-2,248,506.12 33,344,665.27
income
(I) Other comprehensive income
items which will not be reclassified -8,083,000.00 7,341,000.00
subsequently to profit of loss
1. Changes as a result of
re-measurement of net defined benefit -8,083,000.00 7,341,000.00
plan liability or asset
2. Share of the other
comprehensive income of the investee
accounted for using equity method
which will not be reclassified
subsequently to profit and loss
(II) Other comprehensive income
items which will be reclassified 5,834,493.88 26,003,665.27
subsequently to profit or loss
1. Share of the other
comprehensive income of the investee
accounted for using equity method
which will be reclassified subsequently
20
to profit or loss
2. Gains or losses arising
from changes in fair value of 5,834,493.88 26,003,665.27
available-for-sale financial assets
3. Gains or losses arising
from reclassification of held-to-maturity
investment as available-for-sale
financial assets
4. The effect hedging
portion of gains or losses arising from
cash flow hedging instruments
5. Translation differences
arising on translation of foreign
currency financial statements
6. Other
VI. Total comprehensive income 283,556,210.89 431,452,529.22
VII. Earnings per share:
(i) Basic earnings per share
(ii) Diluted earnings per share
Legal Representative: Yu Haitian Person in charge of Accounting Works: Xu Guojian
Person in charge of Accounting Institution: Sun Jingping
7. Statement of Cash Flows
In RMB
Item Current Period Last Period
I. Cash flows arising from operating
activities:
Cash received from selling
commodities and providing labor 12,681,462,417.76 11,804,162,169.30
services
Write-back of tax received
Other cash received concerning
387,683,169.97 284,668,066.98
operating activities
Subtotal of cash inflow arising from
13,069,145,587.73 12,088,830,236.28
operating activities
Cash paid for purchasing
commodities and receiving labor 9,517,170,943.75 8,294,746,672.13
service
21
Cash paid to/for staff and workers 1,401,684,370.73 1,486,359,737.00
Taxes paid 412,690,376.73 685,735,029.36
Other cash paid concerning
277,261,323.97 237,896,956.32
operating activities
Subtotal of cash outflow arising from
11,608,807,015.18 10,704,738,394.81
operating activities
Net cash flows arising from operating
1,460,338,572.55 1,384,091,841.47
activities
II. Cash flows arising from investing
activities:
Cash received from recovering
investment
Cash received from investment
15,149,770.75 2,447,115.15
income
Net cash received from disposal of
fixed, intangible and other long-term 74,200,980.68 174,669,237.27
assets
Net cash received from disposal of
subsidiaries and other units
Other cash received concerning
investing activities
Subtotal of cash inflow from investing
89,350,751.43 177,116,352.42
activities
Cash paid for purchasing fixed,
1,848,290,712.22 1,706,500,870.09
intangible and other long-term assets
Cash paid for investment
Net cash received from
26,000,000.00
subsidiaries and other units
Other cash paid concerning
2,101,079.54 2,609,524.71
investing activities
Subtotal of cash outflow from investing
1,876,391,791.76 1,709,110,394.80
activities
Net cash flows arising from investing
-1,787,041,040.33 -1,531,994,042.38
activities
III. Cash flows arising from financing
activities
Cash received from absorbing
investment
22
Cash received from loans 1,415,568,000.00 1,707,943,187.26
Cash received from issuing bonds
Other cash received concerning
876,880,748.00 903,064,822.94
financing activities
Subtotal of cash inflow from financing
2,292,448,748.00 2,611,008,010.20
activities
Cash paid for settling debts 1,493,180,860.91 1,664,222,540.40
Cash paid for dividend and profit
270,771,019.31 343,574,678.36
distributing or interest paying
Other cash paid concerning
181,035,632.75 175,939,104.72
financing activities
Subtotal of cash outflow from financing
1,944,987,512.97 2,183,736,323.48
activities
Net cash flows arising from financing
347,461,235.03 427,271,686.72
activities
IV. Influence on cash and cash
equivalents due to fluctuation in 2,043,107.95 -755,865.78
exchange rate
V. Net increase of cash and cash
22,801,875.20 278,613,620.03
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
444,628,245.82 421,826,370.62
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
8. Statement of Changes in Shareholders’ Equity
This Period
In RMB
This Period
Other
equity instrument
Other Total
Item Perpetu Less:
Share Capital comprehe Reasonab Surplus Retaine
Inventory owners’
capital Preferre al reserve nsive le reserve reserve d profit
capital Other shares equity
d stock income
securiti
es
23
1,855,5
I. Balance at the 400,000, 86,911,16 61,171,68 289,009,6 2,692,674
81,617.
end of the last year 000.00 8.71 0.38 81.17 ,147.50
24
Add: Changes
of accounting
policy
Error
correction of the
last period
Other
II. Balance at the 400,000, 1,855,5
86,911,16 61,171,68 289,009,6 2,692,674
beginning of this 81,617.
000.00 8.71 0.38 81.17 ,147.50
year 24
III. Increase/
Decrease in this -2,248,50 28,580,47 157,224 183,556,2
year (Decrease is 6.12 1.70 ,245.31 10.89
listed with “-”)
(i) Total -2,248,50 285,804 283,556,2
comprehensive
6.12 ,717.01 10.89
income
(ii) Owners’
devoted and
decreased capital
1.Common shares
invested by
shareholders
2. Capital invested
by holders of other
equity instruments
3. Amount
reckoned into
owners equity with
share-based
payment
4. Other
-128,58
(III) Profit 28,580,47 -100,000,
0,471.7
distribution 1.70 000.00
0
1. Withdrawal of 28,580,47 -28,580,
surplus reserves 1.70 471.70
2. Distribution for -100,00
-100,000,
owners (or 0,000.0
000.00
shareholders) 0
3. Other
(IV) Carrying
forward internal
24
owners’ equity
1. Capital reserves
conversed to
capital (share
capital)
2. Surplus reserves
conversed to
capital (share
capital)
3. Remedying loss
with surplus
reserve
4. Other
(V) Reasonable
reserve
1. Withdrawal in
the report period
2. Usage in the
report period
(VI)Others
IV. Balance at the 400,000, 2,012,8
86,911,16 58,923,17 317,590,1 2,876,230
end of the report 05,862.
000.00 8.71 4.26 52.87 ,358.39
period 55
Last period
In RMB
Last period
Other
equity instrument
Other Total
Item Perpetu Less:
Share Capital comprehe Reasonab Surplus Retaine
Inventory owners’
capital Preferre al reserve nsive le reserve reserve d profit
capital Other shares equity
d stock income
securiti
es
1,657,2
I. Balance at the 400,000, 86,911,16 27,827,01 249,198,8 2,421,221
84,539.
end of the last year 000.00 8.71 5.11 94.78 ,618.28
68
Add: Changes
of accounting
policy
Error
correction of the
last period
Other
II. Balance at the
400,000, 86,911,16 27,827,01 249,198,8 1,657,2 2,421,221
beginning of this
25
year 000.00 8.71 5.11 94.78 84,539. ,618.28
68
III. Increase/
Decrease in this 33,344,66 39,810,78 198,297 271,452,5
year (Decrease is 5.27 6.39 ,077.56 29.22
listed with “-”)
(i) Total 33,344,66 398,107 431,452,5
comprehensive
5.27 ,863.95 29.22
income
(ii) Owners’
devoted and
decreased capital
1.Common shares
invested by
shareholders
2. Capital invested
by holders of other
equity instruments
3. Amount
reckoned into
owners equity with
share-based
payment
4. Other
-199,81
(III) Profit 39,810,78 -160,000,
0,786.3
distribution 6.39 000.00
9
1. Withdrawal of 39,810,78 -39,810,
surplus reserves 6.39 786.39
2. Distribution for -160,00
-160,000,
owners (or 0,000.0
000.00
shareholders) 0
3. Other
(IV) Carrying
forward internal
owners’ equity
1. Capital reserves
conversed to
capital (share
capital)
2. Surplus reserves
conversed to
capital (share
capital)
3. Remedying loss
with surplus
reserve
4. Other
26
(V) Reasonable
reserve
1. Withdrawal in
the report period
2. Usage in the
report period
(VI)Others
IV. Balance at the 400,000, 1,855,5
86,911,16 61,171,68 289,009,6 2,692,674
end of the report 81,617.
000.00 8.71 0.38 81.17 ,147.50
period 24
Legal Representative: Yu Haitian Person in charge of Accounting Works: Xu Guojian
Person in charge of Accounting Institution: Sun Jingping
27
Shandong Airlines Co., Ltd.
Notes to the Financial Statements
for the Year Ended 31 December 2014
(All amounts are expressed in CNY unless otherwise stated)
Note 1 Corporation profile
Shandong Airlines Co., Ltd. (hereafter, the Company) is a foreign-invested limited liability company incorporated in the People’s Republic
of China. The Company was incorporated through the restructuring project jointly initiated by Shandong Airlines Group Co., Ltd.
(hereafter, SDA Group), Inspur Co., Ltd. (previously known as Inspur Electronic Information Industry Group Company (浪潮电子信息
产业集团公司), Shandong Hualu Group Co., Ltd, Shandong Group Corp. of Fisheries Enterprises and Luyin Investment Group (鲁银
投资集团股份有限公司) following the approval (LuTiGaiQiZi(1999)No.88 (鲁体改企字(1999)第 88 号)) granted by the Economic
Reform Commission of Shandong Province (山东省经济体制改革委员会) on July 29th, 1999.
Shandong Airlines Group Co., Ltd. acquired 259,204,000 state-owned corporate shares (国有法人股), with CNY 1.00 at par, of the
Company by transferring its air transportation operation and the related assets and liabilities to the Company on November 25th, 1999.
Inspur Co., Ltd., Shandong Hualu Group Co., Ltd. and Shandong Group Corp. of Fisheries Enterprises each acquired 199,000
state-owned corporate shares, with CNY 1.00 at par, by cash investment of CNY 200,000.00 each on November 26th, 1999. Luyin
Investment Group acquired 199,000 domestic corporate shares (国内法人股), with CNY 1.00 at par, by cash investment of CNY
200,000.00 on November 26th, 1999.
The Company issued 140,000,000 domestically listed shares denominated in foreign currency (境内上市外资股) (hereafter, B
share(s)), with par value at CNY 1.00 each and issue price at HKD 1.58 each, on August 28th, 2000 upon the approval
(ZhengJianFaXingZi[2000]No.116 (证监发行字[2000]116 号)) granted by the China Securities Regulatory Commission on August 22nd,
2000; and, the Company was listed on the Shenzhen Stock Exchange on September 12th, 2000. Immediately after the issuance of the B
shares, the capital of the Company increased to CNY 400,000,000.00.
The Agreement of Share Transfer ( 股份转让协议》 signed by SDA Group and China National Aviation Holding Company (hereafter,
China Aviation Group) on February 28th, 2004 authorised the transfer of 91,200,000 shares of the Company, equal to 22.8%
shareholding, from SDA Group to China Aviation Group. Immediately after the share transfer, SDA Group’s shareholding in the Company
was 42.00%. In November 2004, the Board of Directors of the Company, in accordance with the approval (GuoZiChanQuan[2004]No.956
(国资产权[2004]956 号：《关于中国航空集团公司将受让山东航空股份有限公司国有股的合同实施转让有关问题的批
复》)) issued by the State-owned Assets Supervision and Administration Commission of the State Council, authorised China Aviation
Group to transfer the state-owned corporate shares received from SDA Group to Air China Co., Ltd. (hereafter, Air China). As so
provided in 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
28
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
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.
The financial statements of the Company has been approved by the board of directors on 19 Mar 2015. 2 subsidiaries of the Company
are included in the consolidated financial statements in 2014, see Note 8 "The equity in other main entities". No change of scope of
consolidation from last year.
The Company operates in the industry of transportation.
Note 2 Basis for preparation of the financial statements
The financial statements of company have been prepared on basis of going concern in conformity with Chinese Accounting Standards for
Business Enterprises and the Accounting Systems for Business Enterprises issued by the Ministry of Finance of People’s Republic of
China (Ministry of Finance issued order No.33, the Ministry of Finance revised order No.76) on15 February 2006, and revised Accounting
Standards (order 41 of the Ministry of Finance) and Compilation Rules for Information Disclosure by Companies Offering Securities to the
Public No.15 – General Provisions on Financial Reports (2014 Revision) issued by the China Securities Regulatory Commission (CSRC).
According to the relevant accounting regulations in Chinese Accounting Standards for Business Enterprises, the company has adopted
the accrual basis of accounting. Held-for-sale non-current assets are measured at the lower of its book value at its classification date and
fair value minus expected disposal costs. Where assets are impaired, provisions for asset impairment are made in accordance with
relevant requirements.
Note 3 Statement of Compliance with Enterprise Accounting Standards
The financial statements of the company are recognized and measured in accordance with the regulations in the Chinese Accounting
Standards for Business Enterprises and they give a true and fair view of the financial position, business result and cash flow of the
Company as of 31 December 2014. In addition, the financial statements of the company comply, in all material respects, with the revised
disclosing requirements for financial statements and the Compilation Rules for Information Disclosure by Companies Offering Securities
29
to the Public No.15—General Provisions on Financial Reports (2014 Revision) issued by China Securities Regulatory Commission
(CSRC) in 2014.
Note 4 Important Accounting Principles and Accounting Estimates
The Company and subsidiaries are principally engaged in air transportation. The Company and subsidiaries in accordance with the
actual production and management features, according to the relevant provisions of Accounting Standards, to make a number of specific
accounting policies and accounting estimates for other transactions and events of revenue recognition, see Note 4.21 ―Revenue‖ for the
description. For description of significant accounting judgments and estimates made by management, see Note 4.28 ―Significant
accounting judgments and estimates‖.
4.1 Accounting period
The accounting period of the Company is classified as interim period and annual period. Interim period refers to the reporting period
shorter than a complete annual period. The accounting period of the Company is the calendar year from January 1 to December 31.
4.2 Operating cycle
Normal business cycle is realized by the Company in cash or cash equivalents from the purchase of assets for processing until. The
company has a 12 -month operating cycle, and its assets and liabilities as liquidity criteria for the classification.
4.3 Monetary Unit
Yuan (CNY) is the currency of the primary economic environment in which the Company and its domestic subsidiaries operate. Therefore,
the Company and its domestic subsidiaries choose CNY as their functional currency. The Company adopts CNY to prepare its functional
statements.
4.4 Business combination
A business combination is a transaction or event that brings together two or more separate entities into one reporting entity. Business
combinations are classified into business combinations involving enterprises under common control and business combinations not
involving enterprises under common control.
4.4.1 Business combination involving entities under common control
A business combination involving enterprises under common control is a business combination in which all of the combining enterprises
are ultimately controlled by the same party or parties both before and after the combination, and that control is not transitory.
For a business combination involving enterprises under common control, the party that, on the combination date, obtains control of
another enterprise participating in the combination is the absorbing party, while that other enterprise participating in the combination is a
party being absorbed. Combination date is the date on which the absorbing party effectively obtains control of the party being absorbed.
The assets and liabilities obtained are measured at the carrying amounts as recorded by the enterprise being combined at the
combination date. The difference between the carrying amount of the net assets obtained and the carrying amount of consideration paid
for the combination (or the total face value of shares issued) is adjusted to the capital premium (or share premium) in the capital reserve.
If the balance of the capital premium (or share premium) is insufficient, any excess is adjusted to retained earnings.
30
The cost of a combination incurred by the absorbing party includes any costs directly attributable to the combination shall be recognized
as an expense through profit or loss for the current period when incurred.
4.4.2 Business combination involving entities not under common control
A business combination involving enterprises not under common control is a business combination in which all of the combining
enterprises are not ultimately controlled by the same party or parties both before and after the business combination.
For a business combination not involving enterprises under common control, the party that, on the acquisition date, obtains control of
another enterprise participating in the combination is the acquirer, while that other enterprise participating in the combination is the
acquiree. Acquisition date is the date on which the acquirer effectively obtains control of the acquiree.
For a business combination not involving enterprise under common control, the combination cost including the sum of fair value, at the
acquisition date, of the assets given, liabilities incurred or assumed, and equity securities issued by the acquirer. The intermediary
expenses incurred by the acquirer in respect of auditing, legal services, valuation and consultancy services etc and other associated
administrative expenses attributable to the business combination are recognized in profit or loss when they are incurred.
The transaction cost arose from issuing of equity securities or liability securities shall be initially recognized as equity securities or liability
securities.
The contingent consideration related to the combination shall be booked as combination cost at the fair value at the acquisition date. If,
within the 12 months after acquisition, additional information can prove the existence of related information at acquisition date and the
contingent consideration need to be adjusted, goodwill can be adjusted.
Combination cost of the acquirer’s interest and identifiable net assets of the acquirer acquired through the business combination shall be
measured by the fair value at the acquisition date. Where the cost of combination exceeds the acquirer’s interest in the fair value of the
acquiree’s identifiable net assets, the difference shall be recognized as goodwill. Where the cost of combination is less than the
acquirer’s interest in the fair value of the acquiree’s identifiable net assets, the difference shall be accounted for according to the
following requirements: (i) the acquirer shall reassess the measurement of the fair values of the acquiree’s identifiable assets, liabilities
and contingent liabilities and measurement of the cost of combination; (ii) if after that reassessment, the cost of combination is still less
than the acquirer’s interest in the fair values of the acquiree’s identifiable net assets, the acquirer shall recognize the remaining
difference immediately in profit or loss for the current period.
Where the temporary difference obtained by the acquirer was not recognized due to inconformity with the conditions applied for
recognition of deferred income tax, if, within the 12 months after acquisition, additional information can prove the existence of related
information at acquisition date and the expected economic benefits on the acquisition date arose from deductible temporary difference by
the acquiree can be achieved, relevant income tax assets can be recognized, and goodwill offset. If the goodwill is not sufficient, the
difference shall be recognized as profit of the current period.
Apart from above, the differences shall be taken into profit or loss of the current period if the recognition of deferred income tax assets is
related to the combination.
For a business combination not involving enterprise under common control, which achieved in stages that involves multiple exchange
31
transactions, according to ―The notice of the Ministry of Finance on the issuance of Accounting Standards Interpretation No. 5‖ (CaiKuai
[2012] No. 19) and Article55 of ―Accounting Standards for Business Enterprises No.33 - Consolidated Financial Statements‖ on the
―package deal‖ criterion (see Note 4.5.2), to judge the multiple exchange transations whether they are the"package deal". If it belong to
the ―package deal‖ in reference to the preceding paragraphs of this section and the Notes described in 4.13 ―long-term investment‖
accounting treatment, if it does not belong to the ―package deal‖ to distinguish the individual financial statements and the consolidated
financial statements related to the accounting treatment:
In the individual financial statements, the total value of the book valueoftheacquiree's equity investment before the acquisition date and
the cost of new investment at the acquisition date, as the initial cost of the investment, the acquiree's equity investment before the
acquisition date involved in other comprehensive income, in the disposal of the investment will be in other comprehensive income
associated with the use of infrastructure and the acquiree directly related to the disposal of assets or liabilities of the same accounting
treatment (that is, except in accordance with the equity method of accounting in the defined benefit plan acquiree is remeasured net
changes in net assets or liabilities other than in the corresponding share of the lead, and the rest into the current investment income).
In the combination financial statements, the equity interest in the acquiree previously held before the acquisition date re-assessed at the
fair value at the acquisition date, with any difference between its fair value and its carrying amount is recorded as investment income.The
previously-held equity interest in the acquiree involved in other comprehensive income and other comprehensive income associated with
the purchase of the foundation should be used party directly related to the disposal of assets or liabilities of the same accounting
treatment (that is, except in accordance with the equity method of accounting in the acquiree is remeasured defined benefit plans other
than changes in net liabilities or net assets due to a corresponding share of the rest of the acquisition date into current investment
income).
4.5 Preparation of the consolidated financial statements
4.5.1 The scope of consolidation
The scope of consolidation for the consolidated financial statements is determined on the basis of control. Control is the power to govern
the financial and operating policies of an enterprise so as to obtain benefits from its operating activities. The scope of consolidation
includes the Company and all of the subsidiaries. Subsidiary is an enterprise or entity under the control of the Company.
Once the change in the relevant facts and circumstances leading to the definition of the relevant elements involved in the control of the
change, the company will be re-evaluated.
4.5.2 Preparation of the consolidated financial statements
The subsidiary of the Company is included in the consolidated financial statements from the date when the control over the net assets
and business decisions of the subsidiary is effectively obtained, and excluded from the date when the control ceases.
For a subsidiary disposed of by the Company, the operating results and cash flows before the date of disposal (the date when control is
lost) are included in the consolidated income statement and consolidated statement of cash flows, as appropriate. For a subsidiary
disposed during the period, no adjustment is made to the opening balance of the consolidated financial statements.
For a subsidiary acquired through a business combination not under common control, the operating results and cash flows from the
32
acquisition (the date when the control is obtained) are included in the consolidated income statement and consolidated statement of cash
flows, as appropriated; no adjustment is made to the opening balance and comparative figures in the consolidated financial statements.
Where a subsidiary and a party being absorbed in a merger by absorption was acquired during the reporting period, through a business
combination involving enterprises under common control, the financial statements of the subsidiary are included in the consolidated
financial statements. The results of operations and cash flow are included in the consolidated balance sheet and the consolidated income
statement, respectively, based on their carrying amounts, from the date that common control was established, and the opening balances
and the comparative figures of the consolidated financial statements are restated.
When the accounting period or accounting policies of a subsidiary are different from those of the Company, the Company makes
necessary adjustments to the financial statements of the subsidiary based on the Company’s own accounting period or accounting
policies. Where a subsidiary was acquired during the reporting period through a business combination not under common control, the
financial statements was reconciliated on the basis of the fair value of identifiable net assets at the date of acquisition. Intra-Group
balances and transactions, and any unrealized profit or loss arising from intra-Group transactions, are eliminated in preparing the
consolidated financial statements.
Minority interest and the portion in the net profit or loss not attributable to the Company are presented separately in the consolidated
balance sheet within shareholders’/ owners’ equity and net profit. Net profit or loss attributable to minority shareholders in the subsidiaries
is presented separately as minority interest in the consolidated income statement below the net profit line item.
When the amount of loss for the current period attributable to the minority shareholders of a subsidiary exceeds the minority
shareholders’ portion of the opening balance of shareholders’/equity of the subsidiary, the excess is allocated against the minority
interests.
When the Company loses control of a subsidiary due to the disposal of a portion of an equity investment or other reasons, the remaining
equity investment is re-measured at its fair value at the date when control is lost. The difference between 1) the total amount of
consideration received from the transaction that resulted in the loss of control and the fair value of the remaining equity investment and 2)
the carrying amounts of the interest in the former subsidiary’s net assets immediately before the loss of the control is recognized as
investment income for the current period when control is lost. Other comprehensive income related to the former subsidiary's equity
investment, using the foundation and the acquiree directly related to the disposal of the same assets or liabilities are accounted when the
control is lost(ie, in addition to the former subsidiary is remeasured at the net defined benefit plan or changes in net assets and liabilities
resulting from, the rest are transferred to the current investment income). The retained interest is subsequently measured according to
the rules stipulated in the - ―Chinese Accounting Standards for Business Enterprises No.2 - Long-term equity investment‖ or ―Chinese
Accounting Standards for Business Enterprises No.22 - Determination and measurement of financial instruments‖. See Note 4.13
Long-term equity investments and Note 4.9 Financial instruments for details.
The company through multiple transactions step deal with disposal of the subsidiary's equity investment until the loss of control, need to
distinguish between equity until the disposal of a subsidiary's loss of control over whether the transaction is package deal. Terms of the
transaction disposition of equity investment in a subsidiary, subject to the following conditions and the economic impact of one or more of
cases, usually indicates that several transactions should be accounted for as a package deal:①these transactions are considered
33
simultaneously, or in the case of mutual influence made, ②these transactions as a whole in order to achieve a complete business
results; ③the occurrence of a transaction depends on occurs at least one other transaction; ④a transaction look alone is not
economical, but when considered together with other transaction is economical. If they does not belong to the package deal, each of
them separately, as the case of a transaction in accordance with ―without losing control over the disposal of a subsidiary part of a
long-term equity investments― (see Note 4.10.2, 4)) and ―due to the disposal of certain equity investments or other reasons lost control of
a subsidiary of the original‖ (see previous paragraph) principles applicable accounting treatment. Until the disposal of the equity
investment loss of control of a subsidiary of the transactions belonging to the package deal, the transaction will be used as a disposal of
a subsidiary and the loss of control of the transaction. However, before losing control of the price of each disposal entitled to share in the
net assets of the subsidiary 's investment corresponding to the difference between the disposal, recognized in the consolidated financial
statements as other comprehensive income, loss of control over the transferred together with the loss of control or loss in the period.
4.6 Joint arrangement
A joint arrangement is an arrangement of which two or more partieshave joint control.A joint arrangement is either a joint operation or a
joint venture, depending of the rights and obligation of the Company in the joint arrangement. A joint operation is a joint arrangement
whereby the Company has rights to the assets, andobligations for the liabilities, relating to the arrangement. A joint venture is a joint
arrangement whereby the Company has rights to the net assets of thearrangement.
The Company accounts for joint ventures using the equity method, see Note 4.13.2.2 for details.
The company, a joint operator, recognises in relation to its interest in a jointoperation:(a)its assets, including its share of any assets held
jointly;(b)its liabilities, including its share of any liabilities incurred jointly;(c)its revenue from the sale of its share of the output arising from
thejoint operation;(d)its share of the revenue from the sale of the output by the jointoperation; and (e)its expenses, including its share of
any expenses incurred jointly.
When the Company enters into a transaction with a joint operation in which it is ajoint operator, such as a sale or contribution of assets,
the Company, prior to disposal of the assets to a third party by the joint operation,recognises gains and losses resulting from such a
transaction onlyto the extent of the other parties's interests in the joint operation.When there is evidence of a reduction in the net
realisablevalue of the assets to be sold or contributed to the joint operation, or of animpairment loss of those assets which is in line with
provision stipulated by CAS 8, those losses arerecognised fully by the Company.When there is evidence of a reduction in the net
realisablevalue of the assets to be purchased or of an impairment loss of those assets, the Company shall recognise its share of those
losses.
4.7 Cash equivalent
Cash and cash equivalents of the Company include cash on hand, ready usable deposits and investments having short holding term
(normally will be due within three months from the day of purchase), with strong liquidity and easy to be exchanged into certain amount of
cash that can be measured reliably and have low risks of change.
4.8 Foreign exchange
4.8.1 Translation in foreign exchange transactions
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The foreign currency transactions are recorded, on initial recognition in the functional currency, by applying [the spot
exchange rate on the date of the transaction / an exchange rate that approximates the actual spot exchange rate on
the date of transaction]. The exchange of foreign currency and transactions related to the foreign exchange are
translated at the spot exchange rate.
4.8.2 Translation of monetary foreign currency and non-monetary foreign currency
At the balance sheet date, foreign currency monetary items are translated using the spot exchange rate at the
balance sheet date. All the exchange differences thus resulted are taken to profit or loss, except for ①those relating
to foreign currency borrowings specifically for construction and acquisition of qualifying assets, which are capitalized
in accordance with the principle of capitalization of borrowing costs, ②hedging accounting, the exchange difference
related to hedging instruments for the purpose of net oversea operating investment is recorded in the comprehensive
income till the date of disposal and recognized in profit or loss of the period; exchange difference from changes of
other account balance of foreign currency monetary items, ③available-for-trade is recorded into profit or loss except
for amortized cost.
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.
4.8.3 The translation of financial statement in foreign currency
When the consolidated financial statements include foreign operation(s), if there is a foreign currency monetary item
constituting a net investment in a foreign operation, exchange difference arising from changes in exchange rates are
recognized as ―exchange differences arising on translation of financial statements denominated in foreign currencies‖
in owner’s equity, and in profit or loss for the period upon disposal of the foreign operation.
The Group translates the financial statements of its foreign operations into CNY by following rules. Assets and
liabilities in the balance sheet are translated at the spot exchange rate prevailing at the balance sheet date; all equity
items except for retained earnings are translated at the spot exchange rates at the dates on which such items occur;
income and expenses in income statement are translated at the spot exchange rates at the date of transaction; the
opening retained earnings is the closing retained earnings of the last period after translation; the closing balance of
retained earnings is calculates and presented in the basis of each translated income statements and profit distribution
item; the difference arising between the assets and liabilities and shareholders’ equity shall be booked as translation
difference of foreign currency statements, and shall be presented as a separate component of equity in the balance
sheet. On a loss of control over Group’s oversea operation due to disposal, the Company transfers the accumulated
or proportionate share of the accumulated exchange difference arising on translation of financial statements of this
oversea operation attributable to the owners’ equity of the Company and presented under shareholders’ equity, to
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profit or loss in the period in which the disposal occurs.
Foreign currency cash flows and cash flow of oversea subsidiaries are translated at the spot exchange rates on the
date of cash flows.The effect of exchange rate changes on cash is separately presented as an adjustment item in the
cash flow statement.
The opening and actual amount of last year are presented in the financial statement after translation
At the disposal of all of the company's ownership interest in a foreign operation, or due to the disposal of part of the
equity investment or other reasons, the loss of control over a foreign operation, the project owner's equity in the
balance sheet listed under the relevant overseas operations attributable to statements of the parent company 's
shareholders' equity of foreign currency translation differences, all transferred to the disposal of the income
statement.
At the disposal of part of the equity investment or other causes lower hold percentage overseas business interests,
but does not lose control over a foreign operation, and disposal of the foreign operation section related to foreign
currency translation differences attributable to minority interests, is not transferred to the income statement. At the
disposal of a foreign operation as part of the equity joint venture or joint ventures, foreign currency financial
statements of the foreign operation and the associated translation difference in proportion to dispose of the foreign
operation into the disposal of the income statement.
4.9 Financial instruments
4.9.1 Determination of financial assets and liabilities’ fair value
Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing
parties in an arm’s length transaction. For a financial instrument which has an active market, the Company uses
quoted price in the active market to establish its fair value. The quoted price in the active market refers to the price
that can be regularly obtained from exchange market, agencies, industry associations, pricing authorities; it
represents the fair market trading price in the actual transaction.
For a financial instrument which does not have an active market, the Company establishes fair value by using a
valuation technique. Valuation techniques include using recent arm’s length market transactions between
knowledgeable, willing parties, reference to the current fair value of another instrument that is substantially the same,
discounted cash flow analysis and option pricing models.
The Company measures initially and subsequently the fair value of an interest rate swap at the value of a
competitor’s interest rate swap quoted by a recognised financial institution as at the Company’s balance sheet date in
accordance with the principle of consistency.
4.9.2 Classification, recognition and measurement of financial assets
All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis. On
initial recognition, the Company’s financial assets are classified into one of the four categories, including financial
assets at fair value though profit or loss, held-to maturity investments, loans and receivables and available-for-trade
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financial assets. A financial asset is recognized initially at fair value. In the case of financial assets at fair value
through profit or loss, relevant transaction costs are immediately charged to the profit and loss of the current period;
transaction costs relating to financial assets of other categories are included in the amount initially recognized.
1) Financial assets at fair value through profit or loss:
Including financial assets held-for-trade and financial assets designated at fair value through profit or loss.
Financial asset held-for-trade is the financial asset that meets one of the following conditions:
A. the financial asset is acquired for the purpose of selling it in a short term;
B. the financial asset is a part of a portfolio of identifiable financial instruments that are collectively managed, and
there is objective evidence indicating that the enterprise recently manages this portfolio for the purpose of short-term
profits;
C. the financial asset is a derivative, except for a derivative that is designated and effective hedging instrument, or a
financial guarantee contract, or a derivative that is linked to and must be settled by delivery of an unquoted equity
instrument (without a quoted price from an active market) whose fair value cannot be reliably measured. For such
kind of financial assets, fair values are adopted for subsequent measurement.
Financial asset is designated on initial recognition as at fair value through profit or loss only when it meets one of the
following conditions:
A. the designation eliminates or significantly reduces the inconsistency in the measurement or recognition of relevant
gains or losses that would otherwise arise from measuring the financial instruments on different bases.
B. a Group of financial instruments is managed and its performance is evaluated on a fair value basis, and is
reported to the enterprise’s key management personnels. Formal documentation regarding risk management or
investment strategy has prepared.
Financial assets at fair value through profit or loss are subsequently measured at the fair value. Any gains or
losses arising from changes in the fair value and any dividends or interest income earned on the financial assets are
recognized in the profit or loss.
2) Investment held-to maturity
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed
maturity that an entity has the positive intention and ability to hold to maturity. Such kind of financial assets are
subsequently measured at amortized cost using the effective interest method. Gains or losses arising from
derecognition, impairment or amortization are recognized in profit or loss for the current period.
Effective interest rate is the rate that exactly discounted estimated future cash flows through the expected life of the
financial asset or financial liability or, where appropriate, a shorter period to the net carrying amount of the financial
asset or financial liability.
When calculating the effective interest rate, the Company shall estimate future cash flow considering all contractual
terms of the financial asset or financial liability without considering future credit losses, and also consider all fees paid
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or received between the parties to the contract giving rise to the financial asset and financial liability that are an
integral part of the effective interest rate, transaction costs, and premiums or discounts, etc.
3) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed determinable payment that are not quoted in an
active market. Financial assets classified as loans and receivables by the Company include note receivables, account
receivables, interest receivable dividends receivable and other receivables.
Loans and receivables are subsequently measured at amortized cost using the effective interest method. Gain or loss
arising from derecognition, impairment or amortization is recognized in profit or loss.
4) Financial assets available-for-trade
Financial assets available-for-trade include non-derivative financial assets that are designated on initial recognition as
available for trade, and financial assets that are not classified as financial assets at fair value through profit or loss,
loans and receivables or investment held-to-maturity.
Financial assets available-for-trade are subsequently measured at fair value, and gains or losses arising from
changes in the fair value are recognized as other comprehensive income and included in the capital reserve, except
that impairment losses and exchange differences related to amortized cost of monetary financial assets denominated
in foreign currencies are recognized in profit or loss, until the financial assets are derecognized, at which time the
gains or losses are released and recognized in profit or loss.
Interests obtained and dividends declared by the investee during the period in which the financial assets
available-for-trade are held, are recognized in investment gains.
4.9.3 Impairment of financial assets
The Group assesses at the balance sheet date the carrying amount of every financial asset except for the financial
assets that measured by the fair value. If there is objective evidence indicating a financial asset may be impaired, a
provision is provided for the impairment.
1) Impairment on held-to maturity investment, loans and receivables
The financial assets measured by cost or amortized cost write down their carrying value by the estimated present
value of future cash flow. The difference is recorded as impairment loss. If there is objective evidence to indicate the
recovery of value of financial assets after impairment, and it is related with subsequent event after recognition of loss,
the impairment loss recorded originally can be reversed. The carrying value of financial assets after impairment loss
reversed shall not exceed the amortized cost of the financial assets without provisions of impairment loss on the
reserving date.
2) Impairment loss on available-for-trade financial assets
Where the fair value of the equity instrument investment drops significantly or not contemporarily according to the
integrated relevant factors, an available-for-trade financial asset is impaired.
When an available-for-trade financial asset is impaired, the cumulative loss arising from declining in fair value that
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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.
4.9.4 Recognition and measurement of financial assets transfer
The Group derecognizes a financial asset when one of the following conditions is met:
1) the rights to receive cash flows from the asset have expired;
2) the enterprise has transferred its rights to receive cash flows from the asset to a third party under a pass-through
arrangement; or
3) the enterprise has transferred its rights to receive cash flows from the asset and either (a) has transferred
substantially all the risks and rewards of the asset, or (b) has neither transferred norretained substantially all the risks
and rewards of the asset, but has transferred control of the asset.
If the enterprise has neither retained all the risks and rewards from the financial asset nor control over the asset, the
asset is recognized according to the extent it exists as financial asset, and correspondent liability is recognized. The
extent of existence refers the level of risk by the financial asset changes the enterprise is facing.
For a transfer of a financial asset in its entirety that satisfies the derecognition criteria, (a). the carrying amount of the
financial asset transferred; and (b) the sum of the consideration received from the transfer and any cumulative gain or
loss that had been recognized in other comprehensive income, is recognized in profit or loss.
If a part of the transferred financial asset qualifies for derecognition, the carrying amount of the transferred financial
asset is allocated between the part that continues to be recognized and the part that is derecognized, based on the
relative fair value of those parts. The difference between (a) the carrying amount allocated to the part derecognized;
and (b) the sum of the consideration received for the part derecognized and any cumulative gain or loss allocated to
the part derecognized which has been previously recognized in other comprehensive income, is recognized in profit
or loss.
4.9.5 Classification and measurement of financial liabilities
The Group’s financial liabilities are, on initial recognition, classified into financial liabilities at fair value through profit or
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loss and other financial liabilities. For financial liabilities at fair value through profit or loss, relevant transaction costs
are immediately recognized in profit or loss for the current period, and transaction costs relating to other financial
liabilities are included in the initial recognition amounts.
1) Financial liabilities measured by the fair value and the changes recorded in profit or loss
The classification by which financial liabilities held-for-trade and financial liabilities designed at the initial recognition
to be measured by the fair value follows the same criteria as the classification by which financial assets held-for-trade
and financial assets designed at the initial recognition to be measured by the fair value and their changes are
recorded in the current profit or loss.
For the financial liabilities measured by the fair value and changes recorded in the profit or loss, fair values are
adopted for subsequent measurement. All the gains or losses on the change of fair value and the expenses on
dividends or interests related to these financial liabilities are recognized in profit or loss for the current period.
2) Other financial liabilities
Derivative financial liabilities that linked with equity instruments, which do not have a quoted price in an active market
and their fair value cannot be measured reliably, is subsequently measured by cost Other financial liabilities are
subsequently measured at amortized cost using the effective interest method. Gains or losses arising from
derecognition or amortization is recognized in profit or loss for the current period.
3) Financial guarantee contracts
For financial guarantee contracts that are not designated as at fair value through profit or loss,they are, after initial
recognition, subsequently measured at the higher of: (i) the amount determined according to the principles of
Accounting Standards for Business Enterprises No. 13 - Contingencies, and (ii) the amount initially recognized less
the accumulated amortization determined according to the principles of Accounting Standards for Business
Enterprises No. 14 - Revenue.
4.9.6 Derecognition of financial liabilities
The Group derecognizes a financial liability (or part of it) when the underlying present obligation (or part of it) is
discharged or cancelled or has expired. An agreement between the Company (an existing borrower) and existing
lender to replace original financial liability with a new financial liability with substantially different terms is accounted
for as an extinguishment of the original financial liability and the recognition of a new liability.
When the Company derecognizes a financial liability or a part of it, it recognizes the difference between the carrying
amount of the financial liability (or part of the financial liability) derecognized the consideration paid (including any
non-cash assets transferred or new financial liabilities assumed) in profit or loss.
4.9.7 Derivatives and embedded derivatives
Derivative financial instruments include derivatives are initially measured at fair value at the date when the derivative contracts are
entered into and are substantially re-measured at fair value. The resulting gain and loss is recognized in profit or loss.
An embedded derivative is separated from the hybrid instrument, where the hybrid instrument is not designated as a financial asset or
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financial liability at fair value though profit or loss, and the treated as a standalone derivative if (a) the economic characteristics and risks
of the embedded derivative are not closely related to the economic characteristics and risks of the host contract; and (b) a separate
instrument with the same terms as the embedded derivative would meet the definition of a derivative. If the Company is unable to
measure the embedded derivative separately either at acquisition or at a subsequent balance sheet date, it designates the entire hybrid
instrument as a financial asset or financial liability at fair value through profit or loss.
4.9.8 Offsetting financial assets and financial liabilities
When the Company has a legal right that is currently enforceable to set off the recognized financial assets and
financial liabilities, and intends either to settle on a net basis, or to realize the financial asset and settle the financial
liability simultaneously, a financial asset and a financial liability shall be offset and the net amount is presented in the
balance sheet. Except for the above circumstances, financial assets and financial liabilities shall be presented
separately in the balance sheet and shall not be offset.
4.9.9 Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting
all of its liabilities. The consideration received from issuing equity instruments, net of transaction costs, are added to
shareholders’ equity. All types of distribution (excluding stock dividends) made by the Company to holders of equity
instruments are deducted from shareholders’ equity. The Group does not recognize any changes in the fair value of
equity instruments.
4.10 Receivables
The receivables by the Company include account receivables, and other receivables.
4.10.1 Criteria for recognition of bad debts:
The Company carries out an inspection on the balance sheet date. Where there is any objective evidence proving that the receivables
have been impaired, an impairment provision shall be made:
1) A serious financial difficulty occurs to the issuer or debtor;
2) The debtor breaches any of the contractual stipulations, for example, fails to pay or delays the payment of interests or the principal,
etc.;
3) The debtor will probably become bankrupt or carry out other financial reorganizations;
4) Other objective evidences showing the impairment of the receivables.
4.10.2 Method for bad debts provision
1) Provisions of bad debts in account receivables that is individually significant.
Individual receivables equal to or higher than 5% of total receivables are classified as receivables of individual significance.
For an account receivable that is individually significant, the asset is individually assessed for impairment, the impairment loss is
recognized at the difference between the present value of future cash flow less the carrying amount, and provision is made accordingly.
2) Provisions of bad debts in account receivables that individually insignificant items with similar credit risk characteristics that have
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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 the
Categorisation by nature of receivables
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 Percentage of carrying amount for
Category of allowance for bad debt applicable to recognition of allowance for bad debt
accounts receivable applicable to other receivables
Categorisation by nature of receivables 5% 5%
3) Provisions of bad debts that is individually insignificant.
For the account receivables not individually significant, the Company assesses the account receivables individually for impairment when
are of following characteristics: if there is objective evidence indicating the impairment, the impairment loss is recognized at the
difference between the present value of future cash flow less the carrying amount, and provision is made accordingly. For examples:
receivables of individual insignificance bears differing credit risk characteristics to other receivables of individual insignificance account
receivables with related parties; account receivables under litigations or arbitrations, or account receivables with obvious indication that
debtor cannot fulfill the obligation of repayment.
4.10.3 The reversal of bad debts provision
If there is objective evidence of recovery in value of account receivables, and the recovery can be related to an event occurring after the
impairment was recognized, the previously recognized impairment loss is reversed and recognized in profit or loss. However, the reversal
shall not result in a carrying amount that exceeds what the amortized cost would have been had the impairment loss not been recognized
42
at the date the impairment is reversed.
4.11 Inventories
4.11.1 Classification of inventory
The Company’s inventory mainly include air materials and low-value consumables.。
4.11.2 Valuation method of inventories upon delivery
Inventories are initially carried at the actual cost. The actual cost of inventories transferred out is assigned by using first-in, first out (FIFO)
method.
4.11.3 Basis for determining net realizable value of inventories and provision methods for decline in value of inventories
Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion, the estimated
costs necessary to make the sale and relevant taxes. Net realizable value is determined on the basis of clear evidence obtained, and
takes into consideration the purpose of holding inventories and effect of post balance sheet events.
At the balance sheet date, inventories are measured at the lower of the cost and net realizable value. If the net realizable value is below
the cost of inventories, a provision for decline in value of inventories is made. The provision for inventories decline in value is determined
normally by the difference of the cost of individual item less its realizable value. For large quantity and low value items of inventories,
provision for decline in value is made based on categories of inventories. For items of inventories relating to a product line that are
produced and marketed in the same geographical area, have the same or similar end users or purposes, and cannot be practicably
evaluated separately from other items in that product line provision for decline in value is determined on an aggregate basis.
After the provision for decline in value of inventories is made, if the circumstances that previously caused inventories to be written down
below cost no longer exist so that the net realizable value of inventories is higher than their cost, the original provision for decline in value
is reversed and the reversal is included in profit or loss for the period.
4.11.4 The perpetual inventory system is maintained for stock system.
4.11.5 Amortization method for low cost and short-lived consumable items and packaging materials.
Low cost and short-lived consumable items are amortized using immediate write-off method; packaging materials are amortized using
immediate write-off method.
4.12 Held-for-sale assets
A non-current asset is classified as held-for-sale if all of the following conditions are satisfied:
a. the asset is immediately sellable at its current condition per usual sales term applicable to the type of assets to which it belongs;
b. the Company's has completed official decision to dispose the asset;
c. the Company has entered into irrevokable sales contract with the purchaser; and
d. the sales will be completed within one year.
Amortization or depreciation of the held-for-sale asset ceases at the time of classification. The asset is measured at the lower of its book
value and its classification date fair value minus disposal costs upon classification. Held-for-sale non-current assets include individual
43
assets and disposal groups. If a disposal group satisfy the conditions of the asset group defined by CAS 8 - Asset Impairment and
includes goodwill arising from business combination allocated in accordance with CAS 8 or the disposal group is an operation with an
asset group, the disposal group include goodwill arising from business combination.
Individual non-current assets held for sale and assets of disposal groups held for sale are collectively presented on the (consolidated)
statement of financial position as a line item of current assets. Liabilities of disposal groups held for sale are collectively presented on the
(consolidated) statement of financial position as a line item of current liabilities.
A held-for-sale asset or held-for-sale disposal group is reclassified from held-for-sale when the conditions for classification of the asset
(disposal group) as held-for-sale are no longer satisfied and is measured at the lower of its classification date book value minus
cumulative depreciation, amortization and impairment as if it has not been reclassified as held-for-sale and it recoverable amount as of
the date on which the conditions for classification of the asset (disposal group) as held-for-sale are no longer satisfied.
4.13 Long-term equity investments
Long-term equity investments referred to in this section refer to the Company invested entity has control, joint control or significant
influence over the long-term equity investments. The Company invested does not have control, joint control or significant influence over
the long-term equity investments as financial assets available for sale or at fair value and the changes included financial assets through
profit or loss, which refer to the accounting policies in Note 4. 9 ―financial Instruments‖.
Joint control is the Company control over an arrangement in accordance with the relevant stipulations are common, related activities and
the arrangement must be after sharing control participants agreed to the decision-making. Significant influence is the Company s
financial and operating policies of the entity has the right to participate in decision-making, but can not control or with other parties joint
control over those policies.
4.13.1 Determination of Investment cost
The cost of a long-term equity investment acquired through business combination under common control is measured at the
acquirer's share of the combination date book value of the acquiree's net equity in the ultimate controller's consolidated financial
statements. The difference between the cost and book value of cash paid, non-monetary assets transferred and liabilities assumed is
adjusted to capital reserves, and to retained earnings if capital reserves is insufficient. If the consideration is transferred by way of issuing
equity instruments, the face value of the equity instruments issued is recognised in share capital and the difference between the cost of
the face value of the equity instruments issued is adjusted to capital reserves, and to retained earnings if capital reserves is insufficient.
The cost of a long-term equity investment acquired through business combination not under common control is the fair value of the
assets transferred, liabilities incurred or assumed and equity instruments issued.
All expenses incurred directly associated with the acquisition by the acquirer, including expenditure of audit, legal services, valuation and
consultancy and other administrative expenses, are recognised in profit or loss for the period during which the acquisition occurs.
Long-term equity investments acquired not through business combination are measured at cost on initial recognition. Depending on the
way of acquisition, the cost of acquisition can be the total cash paid, the fair value of equity instrument issued, the contract price, the fair
value or book value of the assets given away in the case of non-monetary asset exchange, or the fair value of the relevant long-term
44
equity investments. The cost of acquisition of a long-term equity investment acquired not through business combination also includes all
directly associated expenses, applicable taxes and fees, and other necessary expenses.
4.13.2 Subsequent Measurement
To be invested joint control ( except constitute common operator ) or long-term equity investments significant influence are accounted for
using the equity method. In addition, the Company's financial statements using the cost method of accounting for long-term equity can
exercise control over the investee.
1) Cost method of accounting for long-term equity investments
Under the cost method, a long-term equity investment is measured at initial investment cost. Except for cash dividends or profits declared
but not yet paid that are included in the price or consideration actually paid upon acquisition of the long-term equity investment,
investment income is recognized in the period in accordance with the attributable share of cash dividends or profit distributions declared
by the investee.
2) Equity method of accounting for long-term equity investments
Where the initial investment cost of a long-term equity investment exceeds the investing enterprise’s interest in the fair values of the
investee’s identifiable net assets at the time of acquisition, no adjustment shall be made to the initial investment cost.
The carrying amount of an long-term equity investment measured using the equity method is adjusted by the Company's share of the
investee's net profit and other comprehensive income, which is recognised as investment income and other comprehensive income
respectively. The carrying amount of an long-term equity investment measured using the equity method is reduced by profit distribution or
cash dividends announced by the investee. The carrying amount of an long-term equity investment measured using the equity method is
also adjusted by the investee's equity movement other than net profit, other comprehensive income and profit distribution, which is
adjusted to capital reserves. The net profit of the investee is adjusted by the fair value of the investee's identifiable assets as at
acquistion. The financial statements and hence the net profit and other comprehensive income of an investee which does not adopt
accounting policies or accounting period uniform with the Company is adjusted by the Company's accounting policies and accounting
period. The Company's share of unrealised profit or loss arising from related party transactions between the Company and an associate
or joint venture is deducted from investment income. Unrealised loss arising from related party transactions between the Company and
an associate or joint venture which is associated with asset impairment is not adjusted. Where assets transferred to an associate or joint
venture which form part of the Company's investment in the investee but which does not enable the Company obtain control over the
investee, the cost of the additional investment acquired is measured at the fair value of assets transferred and the difference between the
cost of the additional investment and the book value of the assets transferred is recognised in profit or loss. Where assets transferred to
an associate or joint venture form an operation, the difference between the consideration received and the book value of the assets
transferred in recognised in profit or loss. Where assets transferred from an associate or joint venture form an operation, the transaction
is accounted for in accordance with CAS 20 - Business Combination, any gain or loss is reocgnised in profit or loss.
The Company's share of an investee's net loss is limited by the sum of the book value of the long-term equity investment and other net
long-term investments in the investees. Where the Company has obligation to share additional net loss of the investee, the estimated
45
share of loss recognised as accrued liabilities and investment loss. Where the Company has unrecognised share of loss of the investee
when the investee generates net profit, the Company's unrecognised share of loss is reduced by the Company's share of net profit and
when the Company's unrecognised share or loss is eliminated in full, the Company's share of net profit, if any, is recognised as
investment income.
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 as of Jan 1 2007, 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 4.5.2 applies. For disposal of long-term equity investments in any situation other than the fore-mentioned situation, the difference
between the book value of the investment disposed and the consideration received is recognised in profit or loss.
Where a long-term equity investment is measured by the equity method both before and after part disposal of the investment, cumulative
other comprehensive income relevant to the investment recognised prior to the acquistion is treated in the same manner that the
investee disposes the relevant assets or liabilities proportionate to the disposal. The investee's equity movement other than net profit,
other comprehensive income and profit distribution is reocgnised in profit or loss proportionate to the disposal.
Where a long-term equity investment is measured at cost both before and after part disposal of the investment, cumulative other
comprehensive income relevant to the investment recognised, as a result of accounting by equity method or recognition and
measurement principles applicable to financial instruments, prior to the Company's acquisition of control over the investee is treated in
the same manner that the investee disposes the relevant assets or liabilities and recognised in profit or loss proportionate to the disposal.
The investee's equity movement other than net profit, other comprehensive income and profit distribution, as a result of accounting by
equity method, is reocgnised in profit or loss proportionate to the disposal.
Where the Company's control over an investee is lost due to partial disposal of investment in the investee and the Company continues to
have significant influence over the investee after the partial disposal, the investment in measured by the equity method in the Company's
separate financial statements; where the Company's control over an investee is lost due to partial disposal of investment in the investee
and the Company ceases to have significant influence over the investee after the partial disposal, the investment in measured in
accordance with the recognition and measurement principles applicable to financial instruments in the Company's separate financial
46
statements and the difference between the fair value and the book value of the remaining investment at the date of loss of control is
recognised in profit or loss. Cumulative other comprehensive income relevant to the investment recognised, as a result of accounting by
equity method or recognition and measurement principles applicable to financial instruments, prior to the Company's acquisition of
control over the investee is treated in the same manner that the investee disposes the relevant assets or liabilities on the date of loss of
control. The investee's equity movement other than net profit, other comprehensive income and profit distribution, as a result of
accounting by equity method, is reocgnised in profit or loss when control is lost. Where the remaining investment is measured by equity
method, the fore-mentioned other comprehensive income and other equity movement are recognised in profit or loss proportionate to the
disposal; Where the remaining investment is measured in accordance with the recognition and measurement principles applicable to
financial instruments, the fore-mentioned other comprehensive income and other equity movement are recognised in profit or loss in full.
Where the Company's joint control or significant influence over an investee is lost due to partial disposal of investment in the investee,
the remaining investment in the investee is measured in accordance with the recognition and measurement principles applicable to
financial instruments, the difference between the fair value and the book value of the remaining investment at the date of loss of joint
control or significant influence is recognised in profit or loss.Cumulative other comprehensive income relevant to the investment
recognised, as a result of accounting by equity method, prior to the partial disposal is treated in the same manner that the investee
disposes the relevant assets or liabilities on the date of loss of joint control or significant influence. The investee's equity movement other
than net profit, other comprehensive income and profit distribution is reocgnised in profit or loss when joint control or significant influence
is lost.
Where the Company's control over an investee is lost through multiple disposals and the multiple disposals shall be viewed as one single
transaction, the multiple disposals is accounted for one single transaction which result in the Company's loss of control over the investee.
Each difference between the consideration received and the book value of the investment disposed is recognised in other
comprehensive income and reclassified in full to profit or loss at the time when control over the investee is lost.
4.14 Fixed assets
4.14.1 The conditions of recognition
Fixed assets refers to the tangible assets that are held for the sake of producing commodities, rendering labor service, renting or
business management and their useful life is in excess of one fiscal year.
4.14.2 The method for depreciation
Fixed assets are stated at cost and consider the impact of expected costs of abandoning the initial measurement. From the following
month of state of intended use, depreciation method of the straight-line method is used for different categories of fixed assets to take
depreciation. The recognition of the classification, useful life and estimated residual rate are as follows:
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
47
Estimated residual
Category Expected useful life Depreciation(%)
value(%)
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.
4.14.3 Measurement and recognition of fixed assets
Impairment and provisions of fixed assets are disclosed on Note 4.16.
4.14.4 Fixed Assets under finance leases
A finance lease is a lease that transfers in substance all the risks and rewards incident to ownership of an asset. Title may or may not
eventually be transferred.
Fixed assets that are held under finance leases shall be depreciated by applying the same policy as that for the fixed assets owned by
the Company. If it can be reasonably determined that the ownership of the leased assets can be obtained at the end of the lease period,
the leased assets are depreciated over their useful lives; otherwise, the leased assets are depreciated over the shorter of the lease terms
and the useful lives of the leased assets.
4.14.5 Others
A fixed asset is recognized only when the economic benefits associated with the asset will probably flow to the Company and the cost of
the asset can be measured reliably. Subsequent expenditure incurred for a fixed asset that meet the recognition criteria shall be included
in the cost of the fixed asset, and the carrying amount of the component of the fixed asset that is replaced shall be derecognized.
Otherwise, such expenditure shall be recognized in profit or loss in the period in which they are incurred.
The revenue from selling or transferring, or disposing a fixed asset is booked into profit and loss after deduction of carrying value and
related tax.
The Company conducts a review of useful life, expected net realizable value and depreciation methods of the fixed asset at least on an
annual base. Any change is regarded as change in accounting estimates.
4.15 Construction in progress
Construction in progress is measured at its actual cost. The actual costs include various construction expenditures during the
construction period, borrowing costs capitalized before it is ready for intended use and other relevant costs. Construction in progress is
transferred to a fixed asset when it is ready for intended use.
Testing method for provision impairment of construction in progress and accrued method for provision impairment please refer to Note
4.19.
48
4.16 Borrowing costs
Borrowing costs include interest, amortization of discounts or premiums related to borrowings, ancillary costs incurred in connection with
the arrangement of borrowings, and exchange differences arising from foreign currency borrowings.
The borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized. The
amounts of other borrowing costs incurred are recognized as an expense in the period in which they are incurred. Qualifying assets are
asset (fixed assets, investment property and inventories, etc.) that necessarily take a substantial period of time for acquisition,
construction or production to get ready for their intended use or sale.
Where funds are borrowed for a specific-purpose, the amount of interest to be capitalized is the actual interest expense incurred on that
borrowing for the period less any bank interest earned from depositing the borrowed funds before being used on the asset or any
investment income on the temporary investment of those funds.
Where funds are borrowed for a general-purpose, the amount of interest to be capitalized on such borrowings is determined by applying
a weighted average interest rate to the weighted average of the excess amounts of accumulated expenditure on the asset over and
above the amounts of specific-purpose borrowings
During the capitalization period, exchange differences related to a specific-purpose borrowing denominating in foreign currency are all
capitalized. Exchange differences in connection with general-purpose borrowings are recognized in profit or loss in the period in which
they are incurred.
Assets qualified for capitalization are the fixed assets, investment properties or inventories which need a long time of construction or
production activities before ready for intended used or sale.
Capitalization of borrowing costs is suspended during periods in which the acquisition, construction or production of a qualifying asset is
interrupted by activities other than those necessary to prepare the asset for its intended use or sale, when the interruption is for a
continuous period of more than 3 months. Borrowing costs incurred during these periods recognized as an expense for the current period
until the acquisition, construction or production is resumed.
4.17 Intangible assets
4.17.1 Intangible asset
The term ―intangible asset‖ refers to the identifiable non-monetary assets without physical shape, possessed or controlled by enterprises.
The intangible assets are initially measured by its cost. Expenses related to intangible assets, if the economic benefits related to
intangible assets are likely to flow into the enterprise and the cost of intangible assets can be measured reliably, shall be recorded as
cost of intangible assets. The expenses other than this shall be booked in the profit or loss when they occur.
Land use rights that are purchased by the Company are accounted for as intangible assets. Buildings, such as plants that are developed
and constructed by the Company, and relevant land use rights and buildings, are accounted for as intangible assets and fixed assets,
respectively. Payments for the land and buildings purchased are allocated between the land use rights and the buildings; if they cannot
be reasonably allocated, all of the land use rights and buildings are accounted for as fixed assets.
When an intangible asset with a definite useful life is available for use, its original cost less net residual value and any accumulate
49
impairment losses is amortized over its estimated useful life using the straight-line method . An intangible asset with an indefinite useful
life is not amortized.
For an intangible asset with a definite useful life, the Company reviews the useful life and amortization method at the end of the
period, and makes adjustment when necessary.. An additional review is also carried out for useful life of the intangible assets with
indefinite useful life. If there is evidence showing the foreseeable limit period of economic benefits generated to the enterprise by the
intangible assets, then estimate its useful life and amortize according to the policy of intangible assets with definite useful life.
4.17.2 the expenditure of research and development
The expenditures for its internal research and development projects of the Company shall be classified
into research expenditures and 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.
4.17.3 Impairment testing methods and recognition of impairment provision of intangible assets
Impairment and provisions of intangible assets are disclosed on Note 4.19.
4.18 Deferred charges
Deferred charges represent expenses incurred that should be borne and amortized over the current and subsequent period (together of
more than one year). Deferred charges are amortized by using straight line method. Such as expenses for pilots’ initial trainings, those
expenses are amortized at 10 years according to their benefit period respectively. When a pilot is transferred from the Company, the cost
of transfer is the unamortized part of the original expenditure.
4.19 Impairment of long-term assets
Non-financial assets with non-current nature include fixed assets, construction in progress, intangible assets with definite useful lives,
investment properties measured by cost methods and long-term equity investment on subsidiaries, jointly operations. The Company
assesses whether there are any indicators of impairment for all non-financial assets at the balance sheet date, and impairment test is
carried out and recoverable value is estimated if such an indicator exits. Goodwill and intangible assets with indefinite useful lives, as well
as intangible assets not ready for use, are tested for impairment annually regardless of indicators of impairment.
50
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.
4.20 Employee Benefits
The employee benefits of the company include short-term employee benefits, post-employment benefits, termination benefits and other
long-term employee benefits:
Short-term employee benefits includes wages, bonuses, allowances and subsidies, welfare, health insurance , maternity insurance, work
injury insurance, housing funds, labor union funds, employee education funds, non-monetary benefits and etc. Short-term employee
benefits are recognised as liabilities and profit or loss account or the costs associated with the asset during the accounting period when
employees actually provide services,. The non -monetary benefits are measured at fair value.
Post-employment benefits include defined contribution plans and defined benefit plans. Defined contribution plan which includes the
basic pension, unemployment insurance and annuities shall be recognised as cost of related assets or profit or loss. Projected unit credit
cost method (―PUC‖) was used by independent actuaries engaged by the Company to determine the present value of the defined benefit
obligations with unbiased and consistent actuarial assumptions regarding population variables and financial variables. Defined benefit
obligation was presented with the present value and the related current service cost was accounted into current profit or loss.
When the Company terminates the labor relationship with employees prior to the employment contracts, or encourages employees to
accept voluntary redundancy compensation proposals in this company, a provision shall be recognised for the compensation arising from
the termination of employment relationship with employees at the time when the Company can not unilaterally withdraw layoff proposal
termination benefits provided due to termination of employment, or the company ensures the costs related to the payment for
51
termination benefits related to the restructuring, which one is early to confirm employee benefits liabilities, and recorded as profit or loss.
However, if termination benefits can not be fully paid aftert welve months of the reporting date,, the liability shall be processed in
accordance with other long-term employee benefits.
Retirement plan adopts the same principles as the termination benefits . The salaries and insurance to be paid from the date when
employees stop providing services to the date of normal retirementshall be recognised in profit or loss (termination benefits) when
satisfying the requirements of a provision..
Other long-term employee benefits provided by the company to employees that is in line with defined contribution plans shall adopt the
accounting treatment in accordance with defined contribution plans, otherwise the accounting treatment of defined benefit plans..
4.21 Revenue
4.21.1 Revenue from rendering of service
① The Company recognise revenue from rendering of air service for carriage of passengers when the service is rendered or when an
unused ticket expires. The sale of a ticket does not constitute revenue. An unused ticket expires on the annual anniversary of its sale.
Tickets sold but of which the service is not yet rendered are recognised in current liabilities as Advances from customers. If service is
rendered through code sharing, revenue arising from the service provision is apportioned amongst parties to the code sharing agreement.
The revenue arising from code sharing is also recognised when the service is rendered.
② The Company company recognise air cargo revenue from rendering of air service for carriage of cargo when the service is rendered
③ Revenue arising from other air service rendering is recognised when the service rendering is completed.
4.21.2 Royalty Revenue
According to the contract or agreement, the revenue is recognized on an accrual basis.
4.21.3 Interest Income
The amount of interest revenue should be measured and confirmed in accordance with the length of time for which the enterprise's cash
is used by others and the actual interest rate.
4.22 Government Grants
Government grants are transfer of monetary assets and non-monetary assets from the government to the Company at no consideration,
excluding the capital invested by the government as equity owner. Government grant can be classified as grant related to the assets and
grants related to the income. Government grants obtained by the Company which are relevant to construction or acquisition of long-term
assets are classified as asset-related government grants; all other government grants are classified as revenue-related government
grants. For government grants without speficied beneficiary, the Company performs classification in accordance with the following
criteria.
4.22.1 Where a grant is obtained for a specified project, the grant is spitted into asset-related and revenue related portions proportionate
to the project's investment to expense ratio; the classification is reviewed on each balance sheet date and revised if necessary.
4.22.2 Where a grant is obtained for general purpose, the grant as a whole is classified as a revenue-related government grant.
If a government grant is in the form of a transfer of a monetary asset, it is measured at the amount received or receivable. If a
52
government grant is in the form of a non-monetary asset, it is measured at fair value. If the fair value cannot be reliably determined, it is
measured at a nominal amount. A government grant measured at a nominal amount is recognized immediately in profit or loss for the
period.
A government grant related to an asset is recognized as deferred income, and evenly amortized to profit or loss over the useful life of the
related asset. For a government grant related to income, if the grant is a compensation for related expenses or losses to be incurred in
subsequent period, the grant is recognized as deferred income, and recognized in profit or loss over the periods in which the related
costs are recognized. If the grant is a compensation for related expenses or losses already incurred, the grant is recognized immediately
in profit or loss for the period.
For repayment of a government grant already recognized, if there is a related deferred income, the repayment is offset against the
carrying amount of the deferred income, and any excess is recognized in profit or loss for the period. If there is no related deferred
income, the repayment is recognized immediately in profit or loss for the period.
4.23 Deferred tax assets and deferred tax liabilities
4.23.1 Income tax for the current period
At the balance sheet date, deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when
the asset is realized or the liability is settled, according to the requirements of tax laws. The measurement of deferred tax assets and
deferred tax liabilities reflects the tax consequences that would follow from the manner in which the Company expects at the balance
sheet date, to recover the assets or settle the liabilities.
At the balance sheet date, current income tax liabilities or assets for the current and prior periods, are measured at the amount expected
to be paid (or recovered) according to the requirements of tax laws. The calculation for income tax expenses in the current period is
based on the taxable income according to the related tax laws after adjustment to the accounting profit of the reporting period.
4.23.2 Deferred income tax assets and liabilities
For temporary differences between the carrying amount of certain assets or liabilities and their tax base, or between the nil carrying
amount of those items that are not recognized as assets or liabilities and their tax base that can be determined according to tax laws,
deferred tax assets and liabilities are recognized using the balance sheet liability method.
For temporary differences associated with the initial recognition of goodwill and the initial recognition of an asset or liability arising from a
transaction (not a business combination) that affects neither the accounting profit nor taxable profits (or deductible losses) at the time of
transaction, no deferred tax asset or liability is recognized.
For taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint ventures, no deferred
income tax liability related is recognized except where the Company is able to control the timing of reversal of the temporary difference
and it is probable 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
53
deferred tax asset is recognized.
For taxable temporary deductible differences associated with investments in subsidiaries and associates, and interests in joint ventures,
no deferred income tax asset related is recognized if it is impossible to reversal the temporary difference in the foreseeable future, or it is
not probable to obtain taxable income which can be used for the deduction of the temporary difference in the future.
Except mentioned above, the Company recognizes other deferred income tax assets that can deduct temporary differences to the extent
that it is probable that taxable profits will be available against which the deductible temporary differences can be utilized.
For the deductible losses and tax credit that can be carried forward, deferred tax assets for deductible temporary differences are
recognized to the extent that it is probable that taxable profits will be available against which the deductible temporary differences can be
utilized.
At the balance sheet date, deferred tax assets and liabilities are measured at the tax rates according to tax laws, that are expected to
apply in the period in which the asset is realized or the liability is settled.
At the balance sheet date, the Company reviews the carrying amount of deferred tax assets. If it is no longer probable that sufficient
taxable profit will be available in future periods to allow the benefits of the deferred tax assets to be used, the Company reduces the
carrying amount of deferred tax assets. The amount of such reduction is reversed when it becomes probable that sufficient taxable profit
will be available
4.23.3 Income tax expenses
Income tax expenses consist of current income tax and deferred income tax.
The expenses from income tax and deferred income tax, as well as the revenue, shall be recorded into profit or loss in current accounting
period, except expense for income tax of the current period and deferred income tax that booked into other income or equity and
adjusted carrying value of deferred income tax goodwill arose from business combination.
4.23.4 Income tax offset
When we have the legal right, and have intended to, to make settlement with net amount, or through the asset acquisition and liability
fulfillment simultaneously, the Company shall present the net value from the offset between current income tax asset and current income
tax liability in the financial statement.
When the Company has the legal right to make a settlement with the current income tax asset and current income tax liability, and the
deferred income tax asset and deferred income tax liability are related to the same taxable subject under the same tax payer, or related
to different taxable subject, but the intension of net value settlement in regard of the current income tax asset and current income tax
liability, the Company shall present net value after the offset of deferred income tax asset and deferred income tax liability.
4.24 Leases
A finance lease is a lease that transfers in substance all the risks and rewards incident to ownership of an asset. Title may or may not
eventually be transferred. An operating lease is a lease other than a finance lease.
4.24.1 The Company as Lessee under operating Lease
Lease payments under an operating lease are recognized by a lessee on a straight-line basis over the lease term, and either included in
54
the cost of the related asset or charged to profit or loss for the current period. The contingent rents shall be recorded in the profit or loss
of the period in which they actually arise.
4.24.2 The Company as Leasor under operating Lease
Lease income from operating leases shall be recognized by the leasor in profit or loss on a straight-line basis over the lease term. Initial
direct cost of significance in amount shall be capitalized when incurred. If another basis is more systematic and rational, that basis may
be used. Contingent rents are credited to profit or loss in the period in which they actually arise.
4.24.3 The Company as Lessee under financing Lease
For an asset that is held under a finance lease, at the lease commencement, the leased asset is recorded at the lower of its fair value at
the lease commencement and the present value of the minimum lease payments, and the minimum lease payment is recorded as the
carrying amount of the long-term payables; the difference between the recorded amount of the leased asset and the recorded amount of
the payable is accounted for as unrecognized finance charge, Initial direct costs incurred by the lessee during the process of negotiating
and securing the lease agreement shall be added to the amount recognized for the leased asset.
The net amount of minimum lease payment deducted by the unrecognized finance shall be separated into long-term liabilities and
long-term liability within one year for presentation.
Unrecognized finance charge shall be computed by the effective interest method during the lease term. Contingent rent shall be booked
into profit or loss when actually incurred.
4.24.4 In the case of the leasor of a financing lease
For an asset that is leased out under a finance lease, the aggregate of the minimum lease receipts at the inception of the lease and the
initial direct costs is recorded as a finance lease receivable, and unguaranteed residual value is recorded at the same time; the difference
between the aggregate of the minimum lease receipt, initial direct costs, and unguaranteed residual value, and the aggregate of their
present values, is recognized as unearned finance income, which is amortized using the effective interest rate method over each period
during the lease term.
Finance lease receivable less unearned finance income shall be separated into long-term liabilities and long-term liability within one year
for presentation.
Unearned finance income shall be computed by the effective interest method during the lease term. Contingent rent shall be credited into
profit or loss in which actually incurred.
4.25 Regular repair and substantial repair
Regular repair expenditure of own aircrafts and aircrafts acquired under a financial lease is accounted for through profit or loss for the
period in which it is incurred. Substantial repair expenditure eligible for capitalisation is capitalised when incurred and 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.
4.26 Changes in major accounting policies and accounting estimates
4.26.1 change of accounting policies
55
(1) Accounting policies due to the implementation of new accounting standards result in changes
CAS 39 - Fair Value Measurement, CAS 30 - Financial Reporting (Revised in 2014), CAS 9 - Employment Benefits (Revised in 2014),
CAS 33 - Consolidated Financial Statements (Revised in 2014), CAS 40 - Joint Arrangement, CAS 2 - Long-term Equity Investments
(Revised in 2014) and CAS 41 - Interests in Other Entities were issued by the Ministry of Finance in early 2014 by CaiKuai[2014]6,
CaiKuai[2014]7, CaiKuai[2014]8,CaiKuai[2014]10,CaiKuai[2014]11,CaiKuai[2014]14,and CaiKuai[2014]16 which order adoption of the
above standards as from 1 July 2014 by all entities currently adopting CAS with encouraged early adoption by entities with overseas
listing.CAS 37 - Financial Instrument Disclosure (Revised in 2014) was issued by the Ministry by CaiKuai[2014]23 which orders
presentation of financial instruments in accordance with CAS 37 as from the year ended 31 December 2014.
As approved by the fourth interim board meeting of the fifth session of the Board of Directors, which was held on 23th October, 2014, the
Company adopted CAS 39, CAS 30 (Revised), CAS9 (Revised), CAS 33 (Revised), CAS 40, CAS 2 (Revised) and CAS 41 on 1 July
2014 and adopted CAS 37 (Revised) during the preparation of the financial statement for the year ended 31 December 2014. The
financial statements are adjusted in accordance with the relevant transitional provisions required by the new or revised CAS. Impacts of
adoption the new or revised CAS are as follow.
Impact on the financial statements
as at 1 January 2014/ during 2013 Year
CAS Change of accounting policies and the associated impact Amount
Line item Increase (+) /
Decrease (-)
Based on CAS 2 - Long-term Equity Investments Long-term equity
(Revised in 2014), for a long-term equity investment investments
where the investing enterprise does not have common
control or significant influence over the investee shall be -88,352,100.00
accounted as financial assets available for sale and Financial assets
retroactive adjustment should be made on the basis of available for sale 160,126,340.51
CAS 2 - Long-term
relevant policies.
Equity Other
Cost method was adopted in investment of the
Investments(Revised in comprehensive
shareholding of TravelSky Technology Limited from 2001,
2014) income 53,830,680.38
Sichuan Airlines from 2002, Jinan Yaoqiang International
Airport from 2004. As at 31/12/2004, the equity of stock Deferred tax
holdings were not changed. Taking effect of CAS 2 liabilities 17,943,560.13
(Revised in 2014), the above long-term equity were Gains and losses
recorded as financial assets available for sale. The from changes in fair
change of accounting policy is applied retrospectively. value of financial
assets available for
sale 26,003,665.27
CAS 9 - Employee Prior to the adoption of CAS 9 - Employee Benefits Non-current
56
Impact on the financial statements
as at 1 January 2014/ during 2013 Year
CAS Change of accounting policies and the associated impact Amount
Line item Increase (+) /
Decrease (-)
Benefits (revised 2014) (revised 2014), post-employment benefits besides social liabilities due within 4,880,000.00
welfare program were recorded by actual occurrence. As one year
from the adoption of CAS 9 (Revised), post-employment
Long-term
benefits besides social welfare program belonging to employee benefits
defined benefit plan, should be recorded in the employee
payable 64,571,000.00
service period. Accounting policy of termination benefits
see Note 4.20. The change of accounting policy is applied Retained earnings
-69,112,800.00
retrospectively.
Surplus reserves
-7,679,200.00
Other
comprehensive
income 7,341,000.00
General and
administrative
expenses -3,886,000.00
Financial costs
2,846,000.00
Changes from
remeasurement of
defined benefit
plans net liabilities
or net assets 7,341,000.00
Deferred income
25,367,524.34
Other non-current
liabilities -25,367,524.34
On the implementation of CAS 30 - Financial Reporting
Trading financial
CAS 30 - Financial (Revised in 2014), deferred income and financial liabilities
liabilities -296,902.47
Reporting (Revised in measured by fair value with changes in fair value
2014) recognised in profit or loss should be presented Financial liabilities
separately. measured by fair
value with changes
in fair value
recognised in profit
or loss 296,902.47
57
CAS 2 - Long-term Equity Investments (Revised in 2014)
Prior to the adoption of CAS 2 (Revised), an investment which does not enable the Company has joint control or significant influence
over the investee and is not quoted in active markets and of which the fair value cannot be reliably measured is recognized as a
long-term equity investment and measured by cost. As from the adoption of CAS 2 (Revised), such investments are recognised as
financial assets available-for-sale. The change of accounting policy is applied retrospectively.
Prior to the adoption of CAS 2 (Revised), due to acceptance of unilateral capital injection by other shareholders of joint ventures and
associates, equity ratio shared by the Company was diluted but equity share was increased, and the Company still maintain joint control
or significant influence. The situation should be deemed as partial disposal of the stake in the joint ventures and associates under equity
method. The difference between the Company's increased share in the net assets of the investees proportionate to the Company's new
shareholding in the investees and the book value of the long-term equity investments relevant with the decreased shareholding is
charged to profit or loss. Upon the adoption of CAS 2 (Revised), The Company's increased share in the net assets of the investees is
recognised in capital reserves and reclassified to profit or loss proportionately when the Company investments in the investees are
partially or fully disposed. The change in accounting policy has no impact on the financial statements.
CAS 9 - Employee Benefits (revised 2014)
Prior to the adoption of CAS 9 - Employee Benefits (revised 2014), post-employment benefits besides social welfare program were
recorded by actual occurrence. As from the adoption of CAS 9 (Revised), post-employment benefits besides social welfare program
belong to defined benefit plan and should be recorded in the employee service period. Accounting policy of termination benefits see Note
4.20. The change of accounting policy is applied retrospectively.
CAS 37 - Financial Instrument Disclosure (Revised in 2014)
CAS 37 - Financial Instrument Disclosure (Revised in 2014) introduces requirements and disclosures in relation to set-off, additional
disclosures in relation to transfer of financial assets, and additional disclosures in relation to due date analysis of financial assets and
financial liabilities. Change in accounting policy has no effect on the Company.
CAS 30 - Financial Reporting (Revised in 2014)
CAS 30 - Financial Reporting (Revised in 2014) distinguishes other comprehensive income into two categories: other comprehensive
income not reclassifiable to profit or loss in subsequent periods and other comprehensive income reclassifiable to profit or loss in
subsequent periods upon satisfaction of specific conditions; it also standardises the disclosure of held-for-sale items. The financial
statements are presented in accordance with the CAS and disclosures of comparatives have been adjusted.
CAS 39 - Fair Value Measurement standardises measurement and disclosure of fair value. The adoption of the CAS does not have
material impact on the measurement of the line items of the financial statements; the adoption, however, results in more comprehensive
disclosure in relation to fair value in the notes to the financial statements. The financial statements are presented in accordance with the
CAS.
CAS 41 - Interests in other entities:
CAS 41 - Interests in other entities applies to the disclosures in relation to the Company's interests in subsidiaries, joint arrangements,
58
associates and organised entities not within the scope consolidated. The adoption of the CAS results in more comprehensive disclosure
in the notes to the financial statements. The financial statements are presented in accordance with the CASand disclosures of
comparatives have been adjusted.
4.26.2 change of accounting estimates
There is no significant change of accountingestimates for the company during the reporting period.
4.27 Correction of prior period errors
There is no significant change of previous accounting errors for the Company during the reporting period.
4.28 Significant account judgment and estimates
The Company is required to make judgments, estimates and assumptions about the carrying amounts of items in the financial statements
that cannot be measured accurately, due to the internal uncertainties of operation activities. These judgments, estimates and
assumptions are based on historical experiences of the Company’s management as well as other factors that are considered to be
relevant. These judgments, estimates and assumptions may affect value of the financial statements in revenue, expenses, assets and
liabilities and the disclosure of contingency at the balance sheet date. However, the 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 reviewed the judgments, estimates and assumptions regularly on the basis of going concern. Where the changes in
accounting estimates only affect the period when changes occurred, and they are recognized within the same period. Where the changes
in accounting estimates affect both current period and future period, the changes are recognized within the period of change and future
period.
At balance sheet date, the followings are the significant areas where the Company needs to make judgment, estimates and assumptions
over the value of items in the financial statements:
4.28.1 Classification of lease
The Company classifies leases as operating lease and financing lease according to the rule stipulated in the Accounting Standard for
Business Enterprises No. 21--Leasing-. The management shall make analysis and judgment on whether the risks and rewards related to
the title of leased assets has been transferred to the leaser, or whether the Company has substantially held the risks and rewards related
to the ownership of leased assets.
4.28.2 Allowance for bad debt
According to the relevant accounting policies of the Company in receivables, allowance method is used for bad debt’s calculation. The
impairment of receivables is calculated based on the assessment of recoverable of receivables. Assurance of receivable impairment
needs judgments and estimations from the management. The difference between actual results and original estimates shall have impact
on the carrying amount of receivables and receivable bad debt provisions or the reverse during the change of estimation.
4.28.3 Impairment of inventories
The Company measures inventories by the lower of cost and realizable net value according to the accounting policies in regard of
inventories and provisions for decline in value of inventories is made if the cost is higher than their net realizable value, and obsolete and
slow-movement inventories. Inventories decline in value to net realizable value is the estimated selling price in the ordinary course of
59
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.
4.28.4 The fair value of financial instruments
For a financial instrument which has no active market, the Company establishes fair value by using various valuation methods, including
of discounted cash flow analysis model. The Company needs to estimate future cash flow, credit risk, volatility and relationship during the
valuation and choose appropriate discount rate. Such assumptions have uncertainties and their changes shall have impact on the fair
value of financial instruments.
4.28.5 Impairment of non-financial, non-current assets
The Company assesses whether there are any indicators of impairment for all non-current assets other than financial assets at the
balance sheet date. For an intangible asset that has indefinite useful life, impairment test is made in addition to the annual impairment
test if there is any indication of impairment. For non-current assets other than financial assets, impairment test is made when there is any
indication that its account balance cannot be recovered.
Impairment exists when the recoverable amount of an asset is the higher of its fair value less cost of disposal and present value of the
future cash flows expected to be derived from the asset.
Net value between the difference of fair value and disposal cost is determined by reference of the price of similar product in a sale
agreement in an arm’s length transaction or an observable market price less the additional cost directly attributable to the disposal of the
asset.
When estimating the present value of future cash flow, significant judgments are made over the asset’s production, selling price and
relevant operating expenses, and discount rate used to calculate present value. All available materials that are considered to be relevant
shall be used in the estimation of recoverable value. These materials include estimations of production, selling price and operating
expenses based on reasonable and supportable assumptions.
The Company makes an impairment test for goodwill at least at each year end. This requires an estimation of present value of future
cash flow of the assets or assets group where goodwill has been allocated. The Company shall makes estimation on the future cash flow
derived from assets or assets group and determine an appropriate discount rate for the present value of future cash flow when the
estimation of present value of future cash flow is made.
4.28.6 Depreciation and amortization
Investment property, fixed assets and intangible assets are depreciated and amortized using the straight-line method over their useful
lives after taking into account residual value. The useful lives are regularly reviewed to determine the depreciation and amortization costs
charged in each reporting period. The useful lives are determined based on historical experience of similar assets and the estimated
technical changes. If there is an indication that there has been a change in the factor used to determine the depreciation or amortization,
the rate of depreciation or amortization is revised.
4.28.7 Deferred tax assets
60
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.
4.28.8 Income tax
There are some transactions where ultimate tax treatments and calculations have uncertainties in the Company’s everyday operation.
Whether it is possible for some items to make expenditure before tax needs approval from competent tax authorities. If there is any
difference between finalized determination value and their initial estimations value, the difference shall have the impact on the income tax
and deferred income tax of the current period during the final determination.
4.28.9 Aircraft operating lease and engine overhaul expenses
Aircraft operating lease and engine overhaul expenses are accrued and charged to profit or loss in accordance with the expected
maintenance cycle, based on flight hours, flight cycles overhaul period and the amount of the cost of repairs which may occur. These
estimates are largely based on past historical data about the same or similar types of aircraft and engines repairance. The withholding
amount and overhaul costs may be affected by different judgments and estimates and affect current profit or loss.
4.28.10 Defined benefit plan
The defined benefit plan implemented and maintained by the Company includes post-employment benefits plan. The provided welfare
costs under the above defined benefit plan was calculated by expected cumulative unit credit method according to various actuarial
assumptions, and were recognized during the employee service providing period. Actuarial Assumptions include but not limited to
discount rate, mortality rate, and etc.. The discount rate is on the basis of management's review of national debt, and mortality rate
depends on the mortality rate adopted by the China life insurance industry. Supplemental information of defined benefit plan see Note
6.31.
Note 5 Taxation
5.1 Major taxes and tax rate
Tax Tax rate (%)
The VAT is calculated as the difference between output tax (11% of the taxable revenue)
Value Added Tax
and deductible input tax for the period.
Business Tax Business tax is calculated as 3%-5% of taxable turnover.
Enterprise income tax Income tax is calculated as 25% of taxable profits.
Civil aviation development fund shall be calculated using the rates set out within applicable
Civil Aviation Development Fund 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, f revenue arising from air transportation become VAT taxable per the Notice of Pilot Conversion of
61
Sales-tax-to-VAT for the Transportation Sector and Certain Contemporary Service Sectors by the Ministry of Finance
and State Administration of Taxation (Caishui[2013]37Hao).
5.2 Tax incentives
5.2.1. Revenue earned by entities and individuals within the territory of the People's Republic of China (hereafter,
the Chinese territory) for the provision of international transportation services is exempted from business tax as from January 1st, 2010
per the Notice of Exemption of Business Tax on Internation Transportation Service by the Ministry of Finance and State Administration of
Taxation (Caishui[2010]No.8) (财税〔2010〕8 号《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. Zero VAT rate applies to entities and individuals within the Chinese territory that provide international transportation services,
research and development services and designing services provided to foreign entities, roundtrip transportation services between
Hongkong, Marcau,and Taiwan, as well as transportion services provided in Hongkong, Marcau, and Taiwan per the Notice of Pilot
Conversion of Sales-tax-to-VAT for the Transportation Sector and Certain Contemporary Service Sectors by the Ministry of Finance and
State Administration of Taxation (Caishui[2013]No.37)(财税[2013]37号《财政部、国家税务总局关于在全国开展交通运输业和
部分现代服务业营业税改征增值税试点税收政策的通知》)..
5.2.3. Per the Notice of Continuous Implementation of Transitional Business Tax Exemption Policy for Cross-boarder Lease Contracts of
Equipment and Machinery(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.
Note 6 Notes to significant elements of the consolidated financial statements
Unless otherwise stated, the meaning of "B/f", "C/f", "Current year", "Prior year" in the following notes (incl. Notes to elements of the
separate financial statements) is "1st January 2014", "31st December 2014", "the year ended 31st December 2014", and "the year ended
31st December 2013" respectively.
6.1 Monetary funds
Item C/f B/f
Cash at hand: 241,603.21 348,205.99
Bank deposit: 460,499,733.14 444,168,730.31
Other monetary funds: 5,334.91
Total 460,741,336.35 444,522,271.21
Including: the total amount of deposit abroad 1,289,441.33 428,062.65
6.2 Accounts receivables
62
6.2.1 Disclosure by category
C/f
Category Carrying amount Allowance for bad debt
Book value
Amount % Amount %
Accounts receivable of individual significance and
subject to individual impairment assessment 139,181,872.21 62.23 139,181,872.21
Accounts receivable subject to impairment
assessment by credit risk characteristics of a
portfolio 76,830,269.16 34.35 3,841,513.46 5.00 72,988,755.70
Accounts receivable of individual insignificance
but subject to individual impairment assessment 7,635,227.54 3.42 2,765,908.05 36.23 4,869,319.49
Total 223,647,368.91 100.00 6,607,421.51 2.95 217,039,947.40
(Continued)
B/f
Category Carrying amount Allowance for bad debt
Book value
Amount % Amount %
Accounts receivable of individual significance and
subject to individual impairment assessment 179,936,813.57 70.72 179,936,813.57
Accounts receivable subject to impairment
assessment by credit risk characteristics of a
portfolio 60,090,747.20 23.62 3,004,537.36 5.00 57,086,209.84
Accounts receivable of individual insignificance but
subject to individual impairment assessment 14,418,242.31 5.66 916,508.05 6.36 13,501,734.26
Total 254,445,803.08 100.00 3,921,045.41 1.54 250,524,757.67
① Accounts receivable of individual significance and subject to individual impairment assessment
C/f
Debtor Allowance for bad Rate of
Carrying amount Reason for allowance
debt allowance (%)
No indication of impairment upon
Air China 51,318,792.65 individual assessment
No indication of impairment upon
Accounting Center of China Aviation 48,929,027.68 individual assessment
63
No indication of impairment upon
BSP-CHINA 38,934,051.88 individual assessment
Total 139,181,872.21
② Accounts receivable subject to impairment assessment by portfolio
C/f
Portfolio
Carrying amount Allowance for bad debt Rate of allowance
Portfolio by nature 76,830,269.16 3,841,513.46 5.00
Total 76,830,269.16 3,841,513.46 5.00
③ Accounts receivable of individual insignificance but subject to individual impairment assessment
C/f
Rate of
Debtor Allowance for bad
Carrying amount allowance Reason for allowance
debt
(%)
No indication of impairment
BSP-TAIWAN
2,029,229.24 upon individual assessment
No indication of impairment
UATP
1,860,556.49 upon individual assessment
Non recoverable upon
Kun Peng Airlines Co., Ltd.
1,849,400.00 1,849,400.00 100.00 individual assessment
Non recoverable upon
CR Airways
916,508.05 916,508.05 100.00 individual assessment
China Cargo Airlines LTD. 650,407.70 Related party
No indication of impairment
BSP-JAPAN
303,926.06 upon individual assessment
Taikoo Shandong Aircraft Engineering
Related party
Company Limited 25,200.00
Total 7,635,227.54 2,765,908.05 36.23
6.2.2 Recognisation, recovery or reversal of allowance for bad debt
The amount of allowance for bad debts recognised during the year is CNY2,686,376.10.
6.2.3 Top five accounts receivables by debtors
The total amount of top five accounts receivables summarised by debtors as at the end of current year is CNY 152,664,082.06,
accounting for 68.27% of the total accounts receivable as at the end of current year, the total corresponding allowance for bad debts is
CNY 674,110.49.
64
6.3 Prepayments
6.3.1 Disclosure by age
C/f B/f
Age
Amount % Amount %
Within 1 year 137,797,577.92 99.21 87,515,232.08 99.24
1 to 2 years 572,308.78 0.41 87,000.00 0.10
2 to 3 years 12,263.00 0.01 2,315.50 0.00
Over 3 years 511,109.70 0.37 577,493.40 0.66
Total 138,893,259.40 100.00 88,182,040.98 100.00
6.3.2 Details of top five prepayments
The total amount of top five prepayments as at the end of current year is CNY 48,423,797.97, accounting for 34.86% of the total
advance to suppliers.
6.4 Dividends receivable
6.4.1 Disclosure by item
Item C/f B/f
TravelSky Technology Limited 1,826,370.00 -
Sichuan Airlines 14,325,586.06
Total 1,826,370.00 14,325,586.06
6.5 Other receivables
6.5.1 Disclosure by category
C/f
Carrying amount Allowance for bad debt
Category Book value
Amount % Amount %
Other receivables of individual significance
and subject to individual impairment
assessment 230,651,294.53 66.89 101,551,717.65 44.03 129,099,576.88
Other receivables subject to subject to
impairment assessment by credit risk
characteristics of a portfolio 81,969,259.55 23.77 4,098,462.98 5.00 77,870,796.57
Other receivables of individual insignificance
but subject to individual impairment
assessment 32,190,289.39 9.34 32,190,289.39
65
C/f
Carrying amount Allowance for bad debt
Category Book value
Amount % Amount %
Total 344,810,843.47 100.00 105,650,180.63 30.64 239,160,662.84
(Continued)
Category B/f
Carrying amount Allowance for bad debt
Book value
Amount % Amount %
Other receivables of individual significance and
subject to individual impairment assessment 178,108,064.87 51.89 101,551,717.65 57.02 76,556,347.22
Other receivables subject to subject to impairment
assessment by credit risk characteristics of a
portfolio 112,247,264.53 32.70 5,612,363.23 5.00 106,634,901.30
Other receivables of individual insignificance but
subject to individual impairment assessment 52,914,555.92 15.41 52,914,555.92
Total 343,269,885.32 100.00 107,164,080.88 31.22 236,105,804.44
① Other receivables of individual significance and subject to individual impairment assessment
C/f
Debtor Allowance for bad Rate of allowance
Carrying amount Reason for allowance
debt (%)
Impaired collectibility identified
Shandong Rainbow Commercial Jet Co., Ltd. 101,551,717.65 101,551,717.65 100.00 upon individual assessment
No indication of impairment upon
Beijing Capital International Airport Customs 46,131,325.25 individual assessment
No indication of impairment upon
Debtor #1 17,300,360.00 individual assessment
No indication of impairment upon
41,354,563.28
CBD-leasing Co., Ltd. individual assessment
No indication of impairment upon
24,313,328.35
SDA Group individual assessment
Total 230,651,294.53 101,551,717.65
② Other receivables subject to impairment assessment by portfolio
Portfolio C/f
66
Carrying amount Allowance for bad debt Rate of allowance(%)
Portfolio by nature 81,969,259.55 4,098,462.98 5.00
Total 81,969,259.55 4,098,462.98 5.00
③ Other receivables of individual insignificance but subject to individual impairment assessment
C/f
Rate of
Debtor Allowance for
Carrying amount allowance Reason for allowance
bad debt
(%)
No indication of impairment upon
Shandong XiangYu Air Technology Co., Ltd. 16,867,219.43 individual assessment
No indication of impairment upon
Air China 5,932,722.00 individual assessment
No indication of impairment upon
Debtor #1 5,462,388.20 individual assessment
No indication of impairment upon
Debtor #2 1,226,900.00 individual assessment
Taikoo (Shandong) Aircraft Engineering Company No indication of impairment upon
Limited 860,829.14 individual assessment
No indication of impairment upon
Debtor #3 490,736.00 individual assessment
No indication of impairment upon
Debtor #4 469,581.20 individual assessment
No indication of impairment upon
Debtor #5 368,454.00 individual assessment
No indication of impairment upon
Debtor #6 185,361.00 individual assessment
No indication of impairment upon
Debtor #7 166,824.90 individual assessment
No indication of impairment upon
Qingdao Airlines Co. 100,000.00 individual assessment
No indication of impairment upon
Jinan Customs 59,273.52 individual assessment
Total 32,190,289.39
6.5.2 Recognisation, recovery or reversal of allowance for bad debt
The amount of allowance for bad debts recovered or reversed during the current year is CNY 1,513,900.25.
6.5.3 Disclosure by nature
67
Category C/f B/f
Deposits 113,601,336.27 116,630,553.83
Others 231,209,507.20 226,639,331.49
Total 344,810,843.47 343,269,885.32
6.5.4 Top five other receivables
Allowance for bad
Debtor Nature C/f Aging %
debt
Shandong Rainbow Commercial
Others 101,551,717.65 Over 3 years 29.45 101,551,717.65
Jet Co., Ltd.
Debtor #1 Others 49,803,933.02 Within 1 year 14.44 2,490,196.65
Beijing Capital International
Deposits 46,131,325.25 Within 1 year 13.38
Airport Customs
CBD-leasing Co., Ltd. Deposits 41,354,563.28 Over 3 years 11.99
SDA Group Others 24,313,328.35 Within 1 year 7.05
Total 263,154,867.55 76.31 104,041,914.30
6.6 Inventories
6.6.1 Disclosure by type
C/f
Type
Gross carrying amount Impairment allowance Net carrying amount
Consumable air quipements 108,651,656.49 108,651,656.49
Low-value consumables 2,619,600.31 2,619,600.31
Materials 880,515.65 880,515.65
Total 112,151,772.45 112,151,772.45
(Continued)
B/f
Type
Gross carrying amount Impairment allowance Net carrying amount
Consumable air quipements 104,936,631.52 104,936,631.52
Low-value consumables 2,075,509.92 2,075,509.92
Materials 961,331.91 961,331.91
Total 107,973,473.35 107,973,473.35
68
6.7 Held-for-sale assets
Type Net carrying amount Fair value Estimated disposal costs Estimated disposal time
Held-for-sale non-current assets 91,522,334.40 94,278,439.36 1,305,444.92 Year 2015
Including: fixed assets 91,522,334.40 94,278,439.36 1,305,444.92 Year 2015
Total 91,522,334.40 94,278,439.36 1,305,444.92
Note: the Company has entered into irrevocable sales contract with the purchaser in December in connection with B-3005, B-3006,
B-3007, B-3008, B-3009. The sales will be completed within one year. As a consequence, the above 5 aircrafts and relating air
equipments are classified as held-for-sale assets.
6.8 Other current assets
Type C/f B/f
VAT deductible 74,727,216.44 13,184,687.03
Income tax overpaid 27,913,022.04 58,644,275.62
Others 6,165,412.73
Total 108,805,651.21 71,828,962.65
6.9 Financial assets available for sale
6.9.1 General information
C/f B/f
Category Net carrying Net carrying
Carrying amount Impairment Carrying amount Impairment
amount amount
Available for sale equity
instruments
Including: measured by fair
86,243,565.68 86,243,565.68 78,464,240.51 78,464,240.51
value
measured by cost 81,662,100.00 81,662,100.00 81,662,100.00 81,662,100.00
Total 167,905,665.68 167,905,665.68 160,126,340.51 160,126,340.51
6.9.2 Financial assets available for sale measured by fair value at the end of current year
Available for sale equity
Category Total
instruments
Cost of equity instruments 6,690,000.00 6,690,000.00
69
Available for sale equity
Category Total
instruments
Fair value 86,243,565.68 86,243,565.68
Accumulated changes in the fair value recognised
into other comprehensive income 79,553,565.68 79,553,565.68
Impairment amount
6.9.3 Financial assets available for sale measured by cost at the end of current year
Carrying amounts as at 31/12/2014 Impairment
Shareholding Cash
Increase Increase
Decrease Decrease
Investee in in in dividend for
B/f in current C/f B/f in current C/f
current current investee(%) current year
year year
year year
Sichuan Airlines 35,000,000.00 35,000,000.00 10.00
Jinan Yaoqiang
International Airport 46,662,100.00 46,662,100.00 2.53
Total 81,662,100.00 81,662,100.00
6.10 Long-term equity investments
Currency year movement (+, -)
Investment gains Other
Investme Other
Category B/f Allowance b/f Additional and losses comprehensiv
nt changes
investment recognised under e income
reduction in equity
the equity method adjustment
Associates
Shandong Rainbow
22,500,000.00 22,500,000.00
Commercial Jet Co., Ltd.
Qingdao Airlines Co. 200,000,000.00 -26,589,979.88
Total 22,500,000.00 22,500,000.00 200,000,000.00 -26,589,979.88
(Continued)
Currency year movement (+, -)
Category C/f Allowance c/f
Declared cash Allowance recognised Others
70
dividends or profits
Investment in associates
Shandong Rainbow
Commercial Jet Co., Ltd. 22,500,000.00 22,500,000.00
Qingdao Airlines Co. 173,410,020.12
Total 195,910,020.12 22,500,000.00
6.11 Fixed assets
6.11.1 General information
Houses and Transportation
Items Aircrafts and engines High-value rotables Others Total
buildings vehicles
1. Cost:
1.1 Balance as at
31/12/2013 310,004,180.85 10,906,977,450.41 687,974,621.37 60,759,168.36 160,500,360.31 12,126,215,781.30
1.2 Increased in current
year 146,000.00 350,418,969.12 56,543,089.00 4,928,372.93 13,210,678.75 425,247,109.80
(1) Purchase 350,418,969.12 56,543,089.00 4,928,372.93 13,210,678.75 425,101,109.80
(2) Transferred from
construction in-progress
(3) Transferred from
merger and acquisitions
(4) Others 146,000.00 146,000.00
1.3 Decreased in current
year 17,874,528.24 1,841,781,421.74 104,881,261.30 1,641,747.00 4,046,794.13 1,970,225,752.41
(1) Disposal or scrap 1,577,701.50 741,457,586.54 23,474,760.04 1,641,747.00 4,046,794.13 772,198,589.21
(2) Others 16,296,826.74 1,100,323,835.20 81,406,501.26 1,198,027,163.20
1.4 Balance as at
31/12/2014 292,275,652.61 9,415,614,997.79 639,636,449.07 64,045,794.29 169,664,244.93 10,581,237,138.69
2. Accumulated
Depreciation
2.1 Balance as at 53,776,323.92 3,846,899,823.57 245,237,815.60 27,115,565.84 69,524,872.20 4,242,554,401.13
71
Houses and Transportation
Items Aircrafts and engines High-value rotables Others Total
buildings vehicles
31/12/2013
2.2 Increased in current
year 9,395,363.00 639,625,051.25 36,993,357.57 6,199,376.41 13,506,455.69 705,719,603.92
(1) Accrual 9,395,363.00 639,625,051.25 36,993,357.57 6,199,376.41 13,506,455.69 705,719,603.92
2.3 Decreased in current
year 2,018,411.58 1,232,392,819.75 65,024,244.38 1,475,826.07 3,380,843.35 1,304,292,145.13
(1) Disposal or scrap 1,577,701.50 383,783,079.65 11,382,552.39 1,475,826.07 3,380,843.35 401,600,002.96
(2) Others 440,710.08 848,609,740.10 53,641,691.99 902,692,142.17
2.4. Carrying amount 61,153,275.34 3,254,132,055.07 217,206,928.79 31,839,116.18 79,650,484.54 3,643,981,859.92
3. Impairment allowance
3.1 Balance as at
31/12/2013 288,245,487.96 30,757,751.98 319,003,239.94
3.2 Increased in current
year
(1) Accrual
3.3 Decreased in current
year 288,245,487.96 16,764,476.70 305,009,964.66
(1) Disposal or scrap 114,710,049.10 2,343,345.59 117,053,394.69
(2) Others 173,535,438.86 14,421,131.11 187,956,569.97
3.4 Carrying amount 13,993,275.28 13,993,275.28
4. Carrying amount
4.1 Carrying amount as
at 31/12/2014 231,122,377.27 6,161,482,942.72 408,436,245.00 32,206,678.11 90,013,760.39 6,923,262,003.49
4.2 Carrying amount as
at 31/12/2013 256,227,856.93 6,771,832,138.88 411,979,053.79 33,643,602.52 90,975,488.11 7,564,658,140.23
6.11.2 Fixed assets acquired under financial leases
Accumulated
Category Cost Impairment allowance Carrying amount
Depreciation
72
Accumulated
Category Cost Impairment allowance Carrying amount
Depreciation
Aircrafts and engines 2,094,255,983.89 783,502,957.28 1,310,753,026.61
Total 2,094,255,983.89 783,502,957.28 1,310,753,026.61
6.11.3 Fixed assets pending ownership registration
Item Carrying amount Reason for pending
Land rented from Jinan Air Control, not eligible for
Jinan cargo arrival and departure warehouses
13,781,982.69 ownership registration
Qingdao aircraft maintenance workshops 43,441,714.04 Ownership registration in process
Yantai terminal building 23,198,201.95 Ownership registration in process
Impairment allowance of fixed assets is CNY 13,993,275.28 as at 31/12/2014, with no additional amount of allowance for fixed assets
impairment recognised during the year.
6.12 Construction in progress
6.12.1 General information
C/f B/f
Items Impairment Impairment
Carrying amount Net carrying amount Carrying amount Net carrying amount
allowance allowance
Factory
building
project 118,727,408.52 118,727,408.52 34,532,194.69 34,532,194.69
Prepayment
for aircrafts 2,316,606,410.34 2,316,606,410.34 1,611,984,965.18 1,611,984,965.18
Construction
of information
system 2,252,086.43 2,252,086.43 1,398,835.91 1,398,835.91
Total 2,437,585,905.29 2,437,585,905.29 1,647,915,995.78 1,647,915,995.78
6.12.2 Significant projects
Transferred to
Project Budget B/f Current year increase fixed assets in Other decrease C/f
current year
Administrative office of
Xiamen branch 89,590,000.00 28,938,462.61 44,927,012.51 73,865,475.12
Operation guarantee
building program of
Yantai Penglai
internationnal airport 63,270,000.00 807,431.08 34,702,201.66 35,509,632.74
73
Prepayment for
aircrafts 20,944,720,102.00 1,611,984,965.18 1,621,269,672.98 916,648,227.82 2,316,606,410.34
Total 21,097,580,102.00 1,641,730,858.87 1,700,898,887.15 916,648,227.82 2,425,981,518.20
(Continued)
Weight of cost Including:
Stage of Cumulative Including:Transferred Capitalisation rate
to date in interests Source of
Items completion interests into leaseback assets applicable to the
budgeted cost capitalized during finance
(%) capitalised during the current year current year (%)
(%) the current year
Administrative office
In progress Liquidity
of Xiamen branch 82.45
Operation guarantee
building program of
In progress Liquidity
Yantai Penglai
internationnal airport 56.12
Loans from
Prepayment for
Not applicable 2.44-4.04 financial
aircrafts
11.06 17,966,767.14 4,250,299.95 24,182,805.31 institutions
Total 17,966,767.14 4,250,299.95 24,182,805.31
Note: The cumulative amount of interests capitalized as at 31/12/2013 is -1,965,738.22, which is mainly affected by
foreign exchange gains and losses, the amount of current year is 24,182,805.31, including ￥4,250,299.95
transferred into leaseback assets during the current year, the cumulative amount of interests capitalized as at
31/12/2014 is 17,966,767.14.
6.12.3 Recognization of impairment allowance for construction in progress
No sign of construction in progress impairment occurred as of December 31, 2014, no impairment provision shall be recognised.
6.13 Intangible assets
6.13.1 General information
Items Land rights Software Total
1. Cost:
1.1 Balance as at 31/12/2013 84,663,933.13 24,196,624.41 108,860,557.54
1.2 Increased in current year 23,678,530.00 23,678,530.00
(1) Purchase 23,678,530.00 23,678,530.00
(2) Internal R & D
(3) Increased from business
combination
1.3 Decreased in current year
(1) Disposal
74
Items Land rights Software Total
1.4 Balance as at 31/12/2014 108,342,463.13 24,196,624.41 132,539,087.54
2. Accumulated amortization
2.1 Balance as at 31/12/2013 7,277,301.45 455,619.27 7,732,920.72
2.2 Increased in current year 1,510,983.08 2,750,755.70 4,261,738.78
(1) Accrual 1,510,983.08 2,750,755.70 4,261,738.78
2.3 Decreased in current year
(1) Disposal
2.4 Balance as at 31/12/2014 8,788,284.53 3,206,374.97 11,994,659.50
3. Impairment allowance
3.1 Balance as at 31/12/2013
3.2 Increased in current year
(1) Accrual
3.3 Decreased in current year
(1) Disposal
3.4 Balance as at 31/12/2014
4. Carrying amount
4.1 Carrying amount as at
31/12/2014 99,554,178.60 20,990,249.44 120,544,428.04
4.2 Carrying amount as at
31/12/2013 77,386,631.68 23,741,005.14 101,127,636.82
6.13.2 Land rights with pending ownership registration
No case of land rights with pending ownership registration was identified as of 31/12/2014.
6.14 Goodwill
6.14.1 General information
Current year Current year
increase decrease
Investee B/f C/f
From business
…… Disposal ……
combination
Qingdao Feisheng 10,220,816.22 10,220,816.22
75
Total 10,220,816.22 10,220,816.22
6.14.1 Impairment allowance
Current year Current year
Investee B/f increase decrease C/f
Accrual …… Disposal ……
Qingdao Feisheng 10,220,816.22 10,220,816.22
合 计 10,220,816.22 10,220,816.22
6.15 Deferred charges
Current year Current year
Item B/f Other decrease C/f
increase amortization
Pilot training 333,657,141.80 111,169,326.79 58,722,519.83 386,103,948.76
Decoration expenditure 14,288,398.81 1,427,447.18 4,560,811.32 11,155,034.67
Total 347,945,540.61 112,596,773.97 63,283,331.15 397,258,983.43
6.16 Deferred tax assets and deferred tax liabilities
6.16.1 Without offsetting deferred tax assets
C/f B/f
Item Deductible temporary Deductible temporary
Deferred tax assets Deferred tax assets
difference difference
Allowance for bad debt 112,257,602.14 28,064,400.54 111,085,126.29 27,771,281.57
Impairment allowance for fixed
assets 201,949,845.25 50,487,461.31 319,003,239.94 79,750,809.99
Fair value movement of
financial liabilities held for
trading 1,559,710.77 389,927.69 296,902.47 74,225.62
Provisions 1,164,590,211.97 291,147,552.99 970,243,460.92 242,560,865.24
Employment benefits payable 382,789,657.63 95,697,414.41 332,104,603.04 83,026,150.77
Deferred income 17,271,524.22 4,317,881.06 25,367,524.34 6,341,881.10
Tax loss carried forwards 547,618.90 136,904.73
Total 1,880,418,551.98 470,104,638.00 1,758,648,475.90 439,662,119.02
6.16.2 Without offsetting deferred tax liabilities
Item C/f B/f
76
Deductible temporary Deductible temporary
Deferred tax liabilities Deferred tax liabilities
difference difference
Changes in fair value of
financial assets available for
sale 79,553,565.68 19,888,391.42 71,774,240.51 17,943,560.13
Total 79,553,565.68 19,888,391.42 71,774,240.51 17,943,560.13
6.17 Other non-current assets
Item C/f B/f
Unrealized gains and losses of operating
58,654,642.41
lease from aircraft leaseback
Total 58,654,642.41
6.18 Short-term borrowings
6.18.1 Disclosure by category
Type C/f B/f
Credit loans 434,137,220.00
Total 434,137,220.00
6.19 Financial liabilities measured by fair value with changes in fair value recognised in profit or loss
Item Fair value c/f Fair value b/f
Interest rate swaps 1,559,710.77 296,902.47
Total 1,559,710.77 296,902.47
The immature interest rate swaps held by the Company had a principal amount of USD 97,924,540.00 as at the reporting date; bankers
confirmed that the reporting date fair value of these interest rate swaps is CNY-1,559,710.77.
6.20 Notes payable
Type C/f B/f
Bankers' acceptance
Commercial acceptance 58,412,417.22
Total 58,412,417.22
6.21 Accounts payable
6.21.1 General information
Item C/f B/f
Aircraft maintenance costs 86,251,950.81 311,997,652.43
77
Item C/f B/f
Fuel cost 220,563,961.43 281,866,639.72
Landing fee 274,164,827.42 225,666,680.33
Aircraft service cost 134,348,464.33 140,675,798.19
Flight catering 65,643,540.55 61,129,425.69
Computer booking fee 28,923,595.38 42,333,567.66
Lease rental 3,052,136.16 3,950,584.37
Others 77,397,271.16 64,506,341.86
Total 890,345,747.24 1,132,126,690.25
6.21.2 No significant account payable due for more than 1 year as at the reporting date.
6.22 Advance from customers
6.22.1 General information
Item C/f B/f
Ticket clearing 257,886,010.75 318,907,952.74
Advanced payment for tickets 7,131,963.14 15,493,312.51
Others 13,039,885.45 9,066,787.72
Total 278,057,859.34 343,468,052.97
6.23 Employee benefits payable
6.23.1 Disclosure by classification
Current year Current year
Item B/f C/f
increase decrease
1. Short-term employee benefits 338,866,981.54 1,537,559,504.70 1,482,997,912.54 393,428,573.70
2. Post-employment benefits 121,285,235.98 121,285,235.98
3. Termination benefits 605,720.33 605,720.33
4. Other long-term employee benefits
within one year
Total 338,866,981.54 1,659,450,461.01 1,604,888,868.85 393,428,573.70
6.23.2 Disclosure by classification of short-term employee benefits
Current year Current year
Item B/f C/f
increase decrease
1. Wages, salaries and subsidies 294,699,755.84 1,361,787,739.20 1,306,398,565.33 350,088,929.71
2. Employee welfare 34,742,576.93 34,742,576.93
78
Current year Current year
Item B/f C/f
increase decrease
3. Social insurance: 52,904,383.00 52,904,383.00
Including: Medical insurance 41,980,836.58 41,980,836.58
Employment injury
insurance 3,389,859.48 3,389,859.48
Maternity insurance 4,433,873.37 4,433,873.37
Disabled security
payments 3,099,813.57 3,099,813.57
4.Housing provident fund 12,032.40 52,701,741.30 52,522,645.30 191,128.40
5.Labour union fee and
employee
education fee 28,008,193.30 16,363,064.27 20,282,741.98 24,088,515.59
6. Short-term paid absences 16,147,000.00 19,060,000.00 16,147,000.00 19,060,000.00
7. Short-term profit-sharing plan
Total 338,866,981.54 1,537,559,504.70 1,482,997,912.54 393,428,573.70
6.23.3 Disclosure by defined contribution plan
Current year Current year
Item B/f C/f
increase decrease
1. Basic pension 80,092,941.73 80,092,941.73
2. Unemployment insurance 4,553,737.47 4,553,737.47
3. Annuity payment 36,638,556.78 36,638,556.78
Total 121,285,235.98 121,285,235.98
The company participated in basic pension and unemployment insurance in accordance with the regulations. Based on the insurance
program, a percentage of total wages of employees were paid to the account separately. Except for the fee paid, enterprise annuity was
deposited to annuity management institution by a percentage of monthly payment base, which was determined by seniority pay and post
salary.
6.24 Taxes and fees payable
Tax (Fee) C/f B/f
VAT 20,884.78 23,173,422.56
Business tax 430,525.03 517,483.64
79
Tax (Fee) C/f B/f
Urban construction and maintenance tax 12,681.07 1,131,299.11
Education surcharge 9,731.38 799,023.02
Enterprise income tax 178,633.46 321,144.21
Property tax 1,326,161.87 1,313,944.58
Land tax 142,738.11 142,738.11
Personal income tax 6,573,418.52 5,178,599.23
Stamp duty 1,289,143.66 4,456,114.47
Civil aviation development fund 75,532,041.96 70,197,348.09
Provision for income tax deducted at source 1,377,524.44 1,886,243.81
Sales tax deducted at source 1,235,557.81 779,876.14
Others 12,111.35 167,200.64
Total 88,141,153.44 110,064,437.61
6.25 Interests payable
Item C/f B/f
Interest on long-term borrowings with repayment by
2,468,241.23 3,538,461.10
installments
Interest on corporate bond 12,910,833.33 12,035,833.33
Interest on short-term borrowings 490,000.00
Total 15,379,074.56 16,064,294.43
6.26 Other payables
6.26.1 Disclosure by nature
Item C/f B/f
Payable for construction projects 22,199,277.52 19,941,754.75
Payable for down payments 79,372,211.02 68,715,061.67
Payables associated with aircraft purchase 7,753,134.23 3,949,505.02
Taxes deducted at source 38,400,741.17 36,330,461.25
Others 219,560,504.41 64,932,075.65
Total 367,285,868.35 193,868,858.34
6.26.2 Significant other payables due for more than 1 year
Creditor Amount Reason for pending settlement
80
Margin deposit to be settled upon expiry of immature
Air China
20,000,000.00 wet lease
Total 20,000,000.00
6.27 Non-current liabilities due within one year
Category C/f B/f
Long-term borrowings due within one year (Note 6.28) 1,103,409,047.69 443,609,292.12
Bonds payable due within one year (Note 6.29) 500,000,000.00
Long-term payables due within one year (Note 6.30) 132,716,235.11 89,541,366.30
Long-term employee benefits payable due within one year
(Note 6.31) 5,392,442.40 4,880,000.00
Total 1,741,517,725.20 538,030,658.42
6.28 Long-term borrowings
Category C/f B/f
Mortgage loan
Secured loans 2,906,304,546.97 3,502,121,710.18
Guaranteed loans
Credit loans 1,416,548,500.00 466,534,788.00
Less: Long-term borrowings due within one year (Note 6.27) 1,103,409,047.69 443,609,292.12
Total 3,219,443,999.28 3,525,047,206.06
Note: ① Class and amount of mortgage assets see Note 6.52 assets with imposed restriction on ownership.
② Interest rates of the above-mentioned long-term borrowings range from 1.0217%-5.8950%.
6.29 Bonds payable
6.29.1 General information
Category C/f B/f
Medium-term bond 500,000,000.00
Total 500,000,000.00
6.29.2 Movement
Balance at the Overflow
Year Accrued interest
Bond Face value Issue date Term Amount issued beginning of discount Repayment C/f
issued at par
year amortization
81
Balance at the Overflow
Year Accrued interest
Bond Face value Issue date Term Amount issued beginning of discount Repayment C/f
issued at par
year amortization
Medium-term
500,000,000.00 2012-6-12 3 Year 500,000,000.00 500,000,000.00 21,450,000.00 21,450,000.00 500,000,000.00
bond
Subtotal 500,000,000.00 500,000,000.00 500,000,000.00 21,450,000.00 21,450,000.00 500,000,000.00
Less: Long-term
borrowings due
500,000,000.00
within one year
Note 6.27)
Total 500,000,000.00 500,000,000.00 500,000,000.00 21,450,000.00 21,450,000.00 -
6.30 Long-term payables
Category C/f B/f
Financial lease rental payables 1,103,663,159.96 890,403,647.93
Maintenance payables for aircrafts and engines held under
1,164,590,211.97 961,121,308.95
operating lease
Less: Financial lease rental payables due within one year
132,716,235.11 89,541,366.30
(Note 6.27)
Less: Maintenance payables for aircrafts and engines held
55,979,439.00 219,467,592.19
under operating lease due within one year (Note 1)
Total 2,079,557,697.82 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.
6.31 Long-term employee benefits payable
6.31.1 General information
Item C/f B/f
Post-employment benefits-net defined benefit liability 75,838,000.00 69,451,000.00
Less: long-term staff remuneration payable due within one
year (Note 6.27) 5,392,442.40 4,880,000.00
Total 70,445,557.60 64,571,000.00
6.31.2 Movements
① Defined benefit obligation
82
Item C/f B/f
(1) Net Defined Benefit Asset/(Liability) at End of Prior
Period 69,451,000.00 77,832,000.00
(2) Defined benefit costs recognised
into current profit or loss
1. Current Service Cost
2. Past Service Cost
3. Settlement (Gain)/Loss
4. Net Interest/(Income) on Net Defined Benefit
Liability/(Asset) 3,184,000.00 2,846,000.00
(3) Defined benefit costs recognised
into other comprehensive income
1. Actuarial gains/(losses) -8,083,000.00 7,341,000.00
(4) Other movements
1. Settlement payment
2. Benefits Paid Directly by Employer 4,880,000.00 3,886,000.00
(5) Net defined benefit asset/(liability) at end of current
year 75,838,000.00 69,451,000.00
② Actuarial Assumptions
Item 2012-12-31 2013-12-31 2014-12-31
Discount Rate 3.75% 4.75% 3.75%
China Life Insurance Mortality Rate 2000-2003
Mortality Rate
(Annuity)
Cost of Living Adjustments for
Retired Cadres and 0.00%
Retirees
Cost of Living Adjustments for
0.00%
Internal Retirees
Cost of Living Adjustments for
0.00%
Dependants
Medical Expense Inflation Rate 7.00%
6.32 Deferred income
83
Current year Current year
Item B/f C/f
increase decrease
Subsidy for RNP airborne equipment retrofit projects 6,620,000.00 6,620,000.00
Designated subsidy for snow disaster 2,988,958.34 499,500.00 2,489,458.34
Designated subsidy for civil aviation energy-saving program 15,758,566.00 976,500.12 14,782,065.88
Total 25,367,524.34 8,096,000.12 17,271,524.22
Details of government grants:
the amount included in
Current year
Item B/f non-operating income for Other changes C/f
increase
current year
Subsidy for RNP
airborne equipment
retrofit projects 6,620,000.00 6,620,000.00
Designated subsidy for
snow disaster 2,988,958.34 499,500.00 2,489,458.34
Designated subsidy for
civil aviation
energy-saving program 15,758,566.00 976,500.12 14,782,065.88
Total 25,367,524.34 8,096,000.12 17,271,524.22
6.33 Share capital
B/f Currency year movement (+, -) C/f
Coversion
Category Share Bonus
Amount % from Others Subtotal Amount %
issue issue
reserves
1. Shares with
restriction on disposal
1.1 State-held shares
1.2 Shares held by
259,801,000.00 64.95 259,801,000.00 64.95
state-owned entities
1.3 Shares held by other
199,000.00 0.05 199,000.00 0.05
domestic investors
Including: Held by
199,000.00 0.05 199,000.00 0.05
institutional investors
84
B/f Currency year movement (+, -) C/f
Coversion
Category Share Bonus
Amount % from Others Subtotal Amount %
issue issue
reserves
Held by
non-institutional
investors
1.4 Shares held by
foreign investors
Including: Held by
institutional investors
Held by
non-institutional
investors
Subtotal of shares with
260,000,000.00 65.00 260,000,000.00 65.00
restriction on disposal
2. Floating shares
2.1 Ordianry shares
issued in CNY
2.2 Shares issued in
domestic stock market 140,000,000.00 35.00 140,000,000.00 35.00
in foreign currency
2.3 Shares issued in
foreign market in foreign
currency
2.4 Others
Subtotal of floating
140,000,000.00 35.00 140,000,000.00 35.00
shares
Total 400,000,000.00 100.00 400,000,000.00 100.00
6.34 Capital reserves
Current year Current year
Category B/f C/f
increase decrease
85
Share premium 67,618,282.54 67,618,282.54
Other capital reserves 7,792,081.16 7,792,081.16
Total 75,410,363.70 75,410,363.70
6.35 Other comprehensive income
Total amount in current year
Less: previously
After tax After tax
Amount for recognised in other
Item B/f Less: Income attributable to attributable to C/f
the year comprehensive
tax expense the parent minority
before tax income transferred
company shareholders
into profit or loss
1.Other
comprehensive
income will be
reclassified into
income or loss in the
future 7,341,000.00 -8,083,000.00 -8,083,000.00 -742,000.00
Including:
remeasurement of
net assets or net
liabilities of defined
benefit plans 7,341,000.00 -8,083,000.00 -8,083,000.00 -742,000.00
2.Other
comprehensive
income reclassifiable
to profit or loss in
subsequent periods 53,830,680.38 7,779,325.17 1,944,831.29 5,834,493.88 59,665,174.26
Gains and losses
from changes in fair
value of financial
assets available for
sale 53,830,680.38 7,779,325.17 1,944,831.29 5,834,493.88 59,665,174.26
Total of other
comprehensive
income 61,171,680.38 -303,674.83 1,944,831.29 -2,248,506.12 58,923,174.26
6.36 Surplus reserves
Current year Current year
Category B/f C/f
increase decrease
86
Current year Current year
Category B/f C/f
increase decrease
Statutory surplus reserve 289,670,385.70 28,580,471.70 318,250,857.40
Total 289,670,385.70 28,580,471.70 318,250,857.40
Notes: according to the Company Law and the Articles of Association, 10% of net profit was transferred to statutory surplus reserve.
The company may make allocations to the discretionary surplus reserve from the after-tax profits after making allocations to the statutory
surplus reserve from the after-tax profits. Approved surplus reserves can be released to recover losses or for conversion into share
capital.
6.37 Retained earnings
Items Current year Prior year
Pre-adjustment balance brought forward 1,866,264,914.60 1,675,953,889.27
Total adjustment to retained earnings b/f (+, -)
Retained earnings b/f after adjustment 1,866,264,914.60 1,675,953,889.27
Add: Net profit attributable to shareholders of the parent 287,851,542.09 390,121,811.72
Other transfer
Less: Appropriation to statutory surplus reserve 28,580,471.70 39,810,786.39
Appropriation to discretionary surplus reserve
General reserve
Ordinary dividends declared 100,000,000.00 160,000,000.00
Bonus issue
Balance carrying forward 2,025,535,984.99 1,866,264,914.60
6.38 Operating revenues and costs
6.38.1 General information
Current year Prior year
Category
Operating revenues Operating costs Operating revenues Operating costs
Principal business 11,442,363,934.15 10,077,354,810.20 11,293,341,843.56 9,707,677,991.58
Other business 127,932,823.33 1,773,993.54 133,816,089.59 2,187,655.80
Total 11,570,296,757.48 10,079,128,803.74 11,427,157,933.15 9,709,865,647.38
6.39 Business tax and surcharges
Item Current year Prior year
Business tax 7,148,331.96 198,024,183.56
87
Urban maintenance and construction tax 13,286,772.81 22,330,168.35
Education surcharge and others 11,335,325.71 18,311,185.75
Total 31,770,430.48 238,665,537.66
Notes: Applicable rates for business tax and surcharges see Note 5 Taxation.
6.40 Sales expenses
Category Current year Prior year
Agency fees 451,489,391.04 440,471,809.02
Employment benefits 142,485,006.21 129,956,447.17
Computer booking 77,900,227.82 76,514,767.74
Online payment 28,464,805.79 27,857,792.92
Sales expense of annual tickets 15,972,346.77 27,304,337.80
Lease rental 18,274,913.68 15,777,216.30
Advertisement 6,550,566.36 13,358,997.77
Office 5,541,835.18 7,658,213.49
Travel 4,000,474.93 4,804,272.39
System and network 10,181,647.75 4,457,230.85
BSP data processing 2,568,462.82 2,124,907.23
Depreiciation 1,662,419.39 1,923,549.14
Others 24,817,245.23 22,994,877.93
Total 789,909,342.97 775,204,419.75
6.41 General and administrative expenses
Category Current year Prior year
Employment benefits 114,177,550.09 110,033,300.03
Lease rental 18,422,232.82 16,265,877.85
Entertainment 8,255,858.90 12,185,173.59
Depreiciation 12,263,673.56 10,294,628.87
Taxes and fees 11,554,770.47 9,157,436.31
Office 9,288,651.11 9,073,671.10
Technology development 4,924,479.33 3,342,852.73
Amortisation of intangibles 4,261,738.78 1,883,759.21
88
Category Current year Prior year
Others 50,879,822.24 49,197,247.80
Total 234,028,777.30 221,433,947.49
6.42 Financial costs
Category Current year Prior year
Interest expenses 180,638,783.36 257,036,451.00
Less: Interest income 7,116,632.02 4,362,149.98
Exchange difference 24,748,406.46 -109,295,243.48
Bank charges and others 2,458,592.48 2,286,554.04
Total 200,729,150.28 145,665,611.58
6.43 Loss on asset impairment
Category Current year Prior year
Allowance for bad debt 1,172,475.85 -6,976,431.41
Impairment allowance for fixed assets 79,114,818.66
Impairment allowance for goodwill 10,220,816.22
Total 1,172,475.85 82,359,203.47
6.44 Gain from changes in fair value
Source Current year Prior year
Interest rate swaps -1,262,808.30 6,901,881.12
Total -1,262,808.30 6,901,881.12
6.45 Investment income
Category Current year Prior year
Income from holding of financial assets available for sale 2,650,554.69 16,772,701.21
Income from long-term equity investment income of equity method -26,589,979.88
Income from financial assets measured by fair value with changes in fair value
recognised in profit or loss -2,101,079.54 -2,609,524.71
Total -26,040,504.73 14,163,176.50
6.46 Non-operating income
Included in current year
Category Current year Prior year non-recurring profit and
loss
89
Included in current year
Category Current year Prior year non-recurring profit and
loss
Gain on non-current asset disposals 9,115,183.68 78,847,533.50 9,115,183.68
Including: Gain on fixed asset disposals 9,115,183.68 78,847,533.50 9,115,183.68
Government grants (See details of government grants
below) 161,105,606.12 175,163,283.77 161,105,606.12
Others 36,970,937.19 16,397,152.34 36,970,937.19
Total 207,191,726.99 270,407,969.61 207,191,726.99
Details of government grants:
related to the assets/ related
Government assitance Current year Prior year
to the income
Airline subsidies 102,611,406.00 154,007,442.00 related to the income
Interest subsidies for civil aviation 28,000,000.00 related to the income
Energy-saving reward from ministry of finance 21,010,000.00 related to the income
Subsidy for RNP airborne equipment retrofit projects 6,620,000.00 related to the assets
Designated subsidy for snow disaster 499,500.00 499,500.00 related to the assets
Designated subsidy for civil aviation 976,500.12 976,500.12 related to the assets
energy-saving program
Subsidy for 12-5 construction of IT system 4,709,541.65 related to the income
Others 1,388,200.00 14,970,300.00 related to the income
Total 161,105,606.12 175,163,283.77
Note: Government grants are mainly referred to subsidy income received from government departments, which was used to support the
development of aviation business.
6.47 Non-operating expenses
Included in current year
Category Current year Prior year
non-recurring profit and loss
Loss on non-current asset disposals 14,507,221.07 9,856,591.93 14,507,221.07
Including: Loss on fixed asset disposals 14,507,221.07 9,856,591.93 14,507,221.07
Loss on intangible asset disposals
Loss on debt restructuring
Others 572,750.80 3,593,170.47 572,750.80
Total 15,079,971.87 13,449,762.40 15,079,971.87
6.48 Income tax expenses
6.43.1 Income tax expenses
90
Items Current year Prior year
Current income tax calculated in accordance with relevant tax law 140,957,195.84 130,641,826.52
Deferred tax -30,442,518.98 11,223,192.41
Total 110,514,676.86 141,865,018.93
6.43.2 Reconciliation of account profit and income tax expenses
Items Current year
Profit before tax 398,366,218.95
Income tax computed in accordance with the applicable tax rate 99,591,554.74
Impact of adjustment for prior period tax expenses 2,781,965.96
Impact of non-taxable income 5,984,856.30
Impact of non-deductible costs, expenses and losses 2,156,299.86
Income tax expenses 110,514,676.86
6.49 Other comprehensive income
Please see Note 6. 35 for detail.
6.50 Notes to the consolidated statement of cash flows
6.50.1 Other cash receipts relating to operating activities
Category Current year Prior year
Government grants 153,009,606.00 22,900,300.00
Interest income on bank deposit 7,116,632.02 4,362,149.98
Cash receiptes from non-operating income 36,970,937.19 152,647,494.34
Cash receiptes from operating balance 176,843,429.51 118,813,553.50
Total 373,940,604.72 298,723,497.82
6.50.2 Other cash payments relating to operating activities
Category Current year Prior year
Bank charges 30,923,398.27 30,144,346.96
Cash payments for non-operating expenses 572,750.80 3,593,170.47
Cash payments for operating balance 66,766,074.58 17,260,954.51
Cash payments for sales and general and administrative expenses 181,365,485.21 183,096,421.15
91
Category Current year Prior year
Total 279,627,708.86 234,094,893.09
6.50.3 Other cash payments relating to investing activities
Category Current year Prior year
Cash payments of settlement of interest rate swaps 2,101,079.54 2,609,524.71
Total 2,101,079.54 2,609,524.71
6.50.4 Other cash receipts relating to financing activities
Category Current year Prior year
Cash receipts for disposal of purchase rights on aircrafts (which became
acquired under operating lease instead of purchase) 876,880,748.00 903,064,822.94
Total 876,880,748.00 903,064,822.94
6.50.5 Other cash payments relating to financing activities
Category Current year Prior year
Cash payments for aircraft financial lease rental 181,035,632.75 175,939,104.72
Total 181,035,632.75 175,939,104.72
6.51 Supplementary information to the consolidated statement of cash flows
6.51.1 Supplementary information to the statement of cash flows
Items Current year Prior year
① Reconciliation of cash flows from operating activities to net profit:
Net profit 287,851,542.09 390,121,811.72
Add: Loss on asset impairment 1,172,475.85 82,359,203.47
Depreciation of fixed assets, oil and gas assets, biological assets held for
production 705,719,603.92 787,573,958.19
Amortisation of intangible assets 4,261,738.78 1,883,759.14
Amortisation of Long-term deferred expenditure 63,283,331.15 52,249,182.09
Loss on non-current assets disposal (gain presented by "-" prefix) 5,392,037.39 -71,764,546.71
Loss on scrap of fixed assets (gain presented by "-" prefix) - 2,773,605.14
Loss on fair value changes (gain presented by "-" prefix) -1,262,808.30 -6,901,881.12
Financial costs (gain presented by "-" prefix) 202,203,189.82 148,244,330.64
Investment loss (gain presented by "-" prefix) 26,040,504.73 -14,163,176.50
Decrease of deferred tax assets (increase presented by "-" prefix) -30,442,518.98 11,223,192.41
92
Items Current year Prior year
Increase of deferred tax liabilities (increase presented by "-" prefix) - -
Decrease of inventories (increase presented by "-" prefix) -4,178,299.10 8,971,440.54
Decrease of operating receivables (increase presented by "-" prefix) -88,491,843.08 -114,011,884.25
Increase of operating payables (decrease presented by "-" prefix) 289,975,261.04 133,667,527.39
Others -1,696,000.00 -1,040,000.00
Net cash flows generated from operating activities 1,459,828,215.31 1,411,186,522.15
②Significant investing and financing activities involve no cash:
Debt-to-capital conversion
Convertible loan due within one year
Fixed assets acquired under financial lease
342,855,221.91
③Movement of cash and cash equivalents:
Cash as at 31/12/2014 460,741,336.35 444,522,271.21
Less: Cash as at 31/12/2013 444,522,271.21 155,387,742.97
Add: Cash equivalents as at 31/12/2014
Less: Cash equivalents as at 31/12/2013
Net increase of cash and cash equivalents 16,219,065.14 289,134,528.24
6.51.2 Composition of cash and cash equivalents
Items Current year Prior year
①Cash
460,741,336.35 444,522,271.21
Including: Cash at hand
241,603.21 348,205.99
Demand bank deposit
460,499,733.14 444,168,730.31
Demand other monetary funds
5,334.91
Demand deposit in the Central Bank
Deposit in peer firms
Loan to peer firms
②Cash equivalents
93
Items Current year Prior year
Including: Debt instrument matured within three months
……
③Cash and cash equivalents as at 31/12/2014
460,741,336.35 444,522,271.21
Including: restricted cash and cash equivalents in parent company or
subsidiary
Note: Cash and cash equivalents excluding restricted cash and cash equivalents in parent company or subsidiary.
6.52 Assets with imposed restriction on ownership
Category C/f Reason of restriction
Assets pledged as security 3,154,851,053.22
Aircrafts and engines 3,154,851,053.22 Pledge as security for borrowings
Other form of restriction: 1,310,753,026.61
Aircrafts and engines 1,310,753,026.61 Assets acquired under financial lease
Total 4,465,604,079.83
6.53 Foreign currency monetary items
6.53.1 Foreign currency monetary items
Original amount as at Translated amount as at
Item Foreign exchange rate
31/12/2014 31/12/2014
Monetary funds
Including: -USD 2,069,495.98 6.1190 12,663,245.91
-EUR 625.00 7.4556 4,659.75
-GBP 208.55 9.5437 1,990.34
-CAD 10.00 5.2755 52.76
-Hwan 60,422,593.00 0.0057 341,871.03
-TWD 4,832,077.00 0.1961 947,570.30
Prepayments
Including: -USD 13,685,562.48 6.1190 83,741,956.82
94
Original amount as at Translated amount as at
Item Foreign exchange rate
31/12/2014 31/12/2014
Other receivables
Including: -USD 4,910,220.38 6.1190 30,045,638.51
Other payables
Including: -USD 20,513,867.35 6.1190 125,524,354.31
Non-current liabilities due within one year
Including: -USD 179,770,045.54 6.1190 1,100,012,908.66
Long-term borrowings
Including: -USD 493,520,603.74 6.1190 3,019,852,574.29
Long-term payables
Including: -USD 76,307,821.45 6.1190 466,927,559.42
Note 7: Change of scope of consolidation
No change of scope of consolidation from last year.
Note 8: The equity in other main entities
8.1 The equity in subsidiaries
8.1.1 The construction of the group
Place of Place Nature Holding proportion %
Subsidiaries Acquired method
operation of registration of business Directly Indirectly
Qingdao International Air
Qingdao, Qingdao, Logistics and acquired through invest
Logistics Centre Co., Ltd 100.00
Shandong Shandong storage ment
(hereafter, Qingdao Logistics)
Qingdao Feisheng International Qingdao, Qingdao, Acquired through
Pilot training 100.00
Aviation Training Technology Shandong Shandong business
95
Place of Place Nature Holding proportion %
Subsidiaries Acquired method
operation of registration of business Directly Indirectly
Development Co., Ltd combination not under
(hereafter, Qingdao Feisheng) common
control
8.2 The equity in associates
8.2.1 Significant associates
Holding proportion % The accounting
Place of Place Nature treatment of
Associates
operation of registration of business Directly Indirectly investments in
associates
Shandong Rainbow Jinan, Jinan, Aero
45.00 Equity method
Shandong Shandong
Commercial Jet Co., Ltd. transportation
Jinan, Jinan, Aero
Qingdao Airlines Co. 20.00 Equity method
Shandong Shandong
transportation
8.2.2 Key financial information of significant associates
2014.12.31/Year 2014 2013.12.31/Year 2013
Shandong Rainbow
Item Shandong Rainbow
Qingdao Airlines Co. Commercial Jet Co., Qingdao Airlines Co.
Commercial Jet Co., Ltd.
Ltd.
Current assets 335,429,606.46 1,858,246.62 462,367,677.66 2,028,248.84
Non-current assets 797,957,369.38 45,602.40 309,904,177.50 83,970.00
Total assets 1,133,386,975.84 1,903,849.02 772,271,855.16 2,112,218.84
Current liabilities 116,415,095.26 167,765,813.33 1,431,740.28 167,931,418.33
Non-current liabilities 218,000,000.00
Total liabilities 334,415,095.26 167,765,813.33 1,431,740.28 167,931,418.33
Minority interests
Equity attributable to shareholders of the 798,971,880.58 -165,861,964.31 770,840,114.88 -165,819,199.49
96
2014.12.31/Year 2014 2013.12.31/Year 2013
Shandong Rainbow
Item Shandong Rainbow
Qingdao Airlines Co. Commercial Jet Co., Qingdao Airlines Co.
Commercial Jet Co., Ltd.
Ltd.
parent
Pro rata share of the net assets
calculated 159,794,376.12
Adjusting events
- Goodwill 13,615,644.00
-Unrealized profits from internal
transaction
-Others
Book value of equity investments in
associates 173,410,020.12
Fair value of publicly quoted equity
investments in associates
Operating income 229,712,981.25
Net profit -171,868,234.30 -53,218.82 -29,159,885.12 -2,317,786.73
Net profit from discontinued operations
Other comprehensive income
Total comprehensive income -171,868,234.30 -29,159,885.12
Dividends received from associates
during the year
8.2.3 Excess loss occurred by associates
97
Unrecognized losses of current
Cumulative unrecognized Cumulative unrecognized
Associates year (Share of net profit of
losses of prior year losses of current year
current year)
Shandong Rainbow Commercial Jet Co., Ltd. -74,618,639.77 -19,244.17 -74,637,883.94
Note 9 The risk associated with financial instruments
The main financial instruments of the Company including equity investments, loans, accounts receivable, accounts payable etc., please
see Note 6 for detail of related items. The risk associated with financial instruments, and risk management policies which the company
use to reduce these risks are described below. The management of the Company manages and supervises the risks to ensure that the
risks can be controlled within a limited range.
Sensitivity analysis techniques are adopted by the Company to analyse the impact of reaonsable and possible changes of risk variables
on the profit and loss or shareholders' equity for the current period. While risk variables seldomly change in isolation, and the correlation
among variables will have a significant effect on the ultimate impact of the change of one risk variable. Therefore, the following content is
based on the assumption that changes in each variable is independent.
9.1 The targets and policies of risks management
The target of risks management is to obtain the proper balance between the risks and benefits, to reduce the negative impact that
caused by the risk of the Company to the lowest level, and to maximize the benefits of shareholders and other equity investors. Based on
the targets of risk management, the basic strategy of the Company’s risk management is to identify and analyse the risks which are
faced by the Company, establish suitable risk tolerance baseline and proceed the risk management, and supervise a variety of risks
timely and reliably, and control the risk within a limited range.
9.1.1 Market Risk
(1) Foreign exchange risk
Foreign exchange risk refers to the risk of loss due to exchange rate fluctuations generally. The company bears the foreign
exchange risk primarily concerned with USD, and uses USD for pricing or settlement in the field of main financing business, operating
leases, financing leasing. On 31 December 2014, except the following assets or liabilities in Note 6.54 are recorded in foreign currency,
the others are recorded in CNY. Foreign exchange risk of the assets and liabilities in foreign currencies may have an impact on the
Company's performance of operation.
(2) Interest rate risk - the risk of changes in cash flow
The risk of changes in cash flows of a financial instrument due to interest rate is mainly concerned with the floating rate of bank
borrowings (see Note 6.28). The company's policy is to maintain a floating interest rate on the borrowings.
(3) Other price risk
Financial assets available for sale and financial assets held-for-trade held by the company should be measured at fair value on the
balance sheet date. For the reason that, the company bears the risk of changes in the stock market.
98
9.1.2. Credit Risk
As at the statement date, the maximum risk that could cause the Company’s financial losses mainly comes from default of the other party
of the contract, which includes:
The carrying amount of financial assets recognised in the Consolidated statement of financial position; for financial instruments
measured by fair value, the book value reflects its risk exposure but not the maximum risk exposure, which will vary with changes in the
fair value in the future.
In order to reduce credit risk, the Company set up a team responsible for determination of credit limits, credit approvals and other
monitoring procedures to ensure that the necessary measures be taken to recover overdue debts. In addition, the Company reviews the
recoverable amount of each individual trade debt at each balance sheet date to ensure fully provision for bad debts recognised for the
money that cannot be recovered. Therefore the Company's management believes the Company’s credit risk has been greatly reduced.
The Company's circulating funds were deposited in banks with high credit ratings, so that the credit risk of circulating funds was low.
9.1.3 Liquidity risk
When managing liquidity risk,the Company’s management believes maintaining adequate cash and cash equivalents, and monitoring
that at same time, in order to meet the needs of operation of the Company, and to reduce the impact of fluctuations in cash flows.The
management of the Company monitors the use of bank borrowings and ensure to abide by loan agreements.
Bank loans are major sources of the fund for the Company. Bank borrowing limit that has not been used as of 31 December 2014 is CNY
9.8 billion yuan.
Note 10 Disclosure of the fair value
10.1 The fair value at the end of current year of assets and liabilities which are measured by fair value
The fair value at the end of current year
The first level The second level The third level
Item
measured by fair measured by fair measured by Total
value value fair value
1. Continuous measurement by fair value
1.1 financial assets available for sale 86,243,565.68 86,243,565.68
(1) Equity instruments investment 86,243,565.68 86,243,565.68
Total amount of assets continuous
86,243,565.68 86,243,565.68
measurement by fair value
2. Financial liabilities measured at fair value
with changes in fair value recognised in profit 1,559,710.77 1,559,710.77
or loss
99
The fair value at the end of current year
The first level The second level The third level
Item
measured by fair measured by fair measured by Total
value value fair value
Interest rate swaps
1,559,710.77 1,559,710.77
Total amount of liabilities continuous
1,559,710.77 1,559,710.77
measurement by fair value
10.2 Determined on the basis of continuous and noncontinuous first level for fair value measurement of the market of project
Financial assets available for sale of continuous measurement by fair value is the investment in TravelSky Technology Limited, whose
fair value was determined based on the closing price for the stock market in Hong Kong Stock Exchange on balance sheet date.
10.3 Determined on the basis of continuous and noncontinuous second level for fair value measurement of the market of
project
Fair value measurement basis of interest rate swaps which was continuously measured by fair value is quotes from counterparty banks
on the fair value of interest rate swaps.
Note 11 Related parties and related party transaction
11.1 Major investors
Shareholding in Voting right in the
Place of
Investor Nature of operation Registered capital the Company Company
registration (%) (%)
Investment and
SDA Group Jinan management of aero
transportation 580,000,000.00 42.00 42.00
Air China Beijing Aero transportation 13,084,751,004.00 22.80 22.80
Note: SDA Group and Air China is the first and second largest shareholder of the Company respectively. Air China is the largest
shareholder of SDA Group; Air China’s shareholding and voting right in SDA Group is 49.406% and 49.406% respectively.
11.2 Subsidiaries
See Note 8.1 for subsidiaries.
11.3 Associates
See Note 8.2 for associates.
11.4 Other related parties
Other related party Relationship to the Company
Taikoo (Shandong) Aircraft Engineering Company Limited Controlled by major investors
Shandong XiangYu Air Technology Co., Ltd. Controlled by major investors
100
Shenzhen Airlines Co., Ltd. Controlled by major investors
Air China Cargo Co., Ltd. Controlled by major investors
China National Aviation Finance Co., Ltd. Controlled by major investors
Sichuan International Aero Engine Maintenance Co., Ltd. Controlled by major investors
Aircraft Maintenance and Engineering Corporation (Ameco
Controlled by major investors
Beijing)
Chengfu FuKai Aircraft Engineering Co., Ltd. Controlled by major investors
11.5 Related party transactions
11.5.1 Purchase of goods and services
Related party Transaction Current year Prior year
SDA Group Office lease rental and catering 29,085,604.61 28,893,592.73
Taikoo (Shandong) Aircraft Engineering
Aircraft maintenance
Company Limited 75,512,104.46 83,756,980.25
Shandong XiangYu Air Technology Co.,
Repairment
Ltd. 22,747,907.54 39,708,456.88
Air China Ground service 18,484,871.15 17,077,551.66
Air China Repairment 39,671,050.51 38,441,791.87
Air China Agency service 9,167,008.57 8,517,578.17
Shenzhen Airlines Co., Ltd. Training service 2,436,000.00 -
Shenzhen Airlines Co., Ltd. Agency service 738,347.76 726,162.08
Air China Cargo Co., Ltd. Ground service 3,208,625.98 2,140,251.90
Beijing Aircraft Maintenance and Engineer
Repairment
ing Corporation 2,468,009.66 11,178,133.31
Beijing Aircraft Maintenance and Engineer
Ground service
ing Corporation 10,334,412.87 17,172,871.84
Sichuan International Aero Engine
Repairment
Maintenance Co., Ltd. 50,060,087.93 144,373,756.70
Chengfu FuKai Aircraft Engineering Co.,
Repairment
Ltd. 2,857,811.64 3,970,264.20
Total 266,771,842.68 395,957,391.59
11.5.2 Sales of goods and vendering of services
Related party Transaction Current year Prior year
Air China Flight support 713,251.80 6,899,922.00
Air China Ground service 394,756.70 230,332.10
101
Air China Agency service 3,076,989.28 1,783,584.94
Shenzhen Airlines Co., Ltd. Agency service 663,195.48 721,460.00
Shenzhen Airlines Co., Ltd. Ground service 206,400.00 215,482.08
Qingdao Airlines Co. Flight support 3,616,450.03 -
Total 8,671,043.29 9,850,781.12
11.5.3 Lease between related parties
The Company as leasee
Lease rental recognized for Lease rental recognized for
Leasor Leased asset
current year current year
Air China Engines 1,458,293.72 6,771,605.19
Air China Simulators 829,000.00 855,000.00
Qingdao Airlines Co. Aircrafts 16,100,000.00
Total 18,387,293.72 7,626,605.19
11.5.4 Asset transfer between related parties
Related party Type of transaction Current year Prior year
Shandong XiangYu Air Technology Co.,
Aero materials sales
Ltd. 102,732.90
Total 102,732.90
11.5.5 Remuneration to key management personel
Item Current year Prior year
Remuneration to key management personel CNY 8.2579 million CNY 10.1505 million
11.5.6 Other related party transactions
Related party Transaction Current year Prior year
Air China Wet lease 607,814,935.00 601,828,380.56
Air China Code sharing -1,119,319.06 -1,538,289.97
Air China Frequent flyer cooperation 35,000,000.00 29,000,000.00
Air China Cargo Co., Ltd. Code sharing for cargo 1,875,601.67 3,098,201.89
102
Related party Transaction Current year Prior year
Air China Reward Points Transfer 93,860,000.00
Total 643,571,217.61 726,248,292.48
11.6 Related party balances
11.6.1 Receivables
C/f B/f
Related party Allowance for bad Allowance for bad
Carrying amount Carrying amount
debt debt
Accounts receivable
Air China 51,318,792.65 123,439,238.90
Shenzhen Airlines Co., Ltd. 3,448,445.83 172,422.29
Air China Cargo Co., Ltd. 650,407.70 2,585,423.47 129,271.17
Taikoo (Shandong) Aircraft Engineering
Company Limited 25,200.00 6,300.00 315.00
Total 51,994,400.35 129,479,408.20 302,008.46
Other receivables
SDA Group 24,313,328.35
Air China 5,932,722.00 13,047,895.61
Shenzhen Airlines Co., Ltd. 2,500.00 125.00 75,900.00 3,795.00
Shandong Rainbow Commercial Jet Co., Ltd. 101,551,717.65 101,551,717.65 101,551,717.65 101,551,717.65
Shandong XiangYu Air Technology Co., Ltd. 16,867,219.43 5,862.79 293.14
Qingdao Airlines Co. 105,672.00 283.60
Taikoo (Shandong) Aircraft Engineering
Company Limited 860,829.14
Total 149,633,988.57 101,552,126.25 114,681,376.05 101,555,805.79
11.6.2 Payables
Related party C/f B/f
Accounts payable
103
Related party C/f B/f
Shandong XiangYu Air Technology Co., Ltd. 66,596.12 5,868,612.81
Taikoo (Shandong) Aircraft Engineering Company
Limited 15,125,622.47 22,893,378.90
Air China 72,690,966.64 42,636,103.76
Air China Cargo Co., Ltd. 259,067.19 2,571.66
Shenzhen Airlines Co., Ltd. 5,360.12
Aircraft Maintenance and Engineering Corporation
(Ameco Beijing) 1,059,354.42 2,415,571.68
Sichuan International Aero Engine Maintenance Co., Ltd. 8,871,093.40 275,714.73
Chengfu FuKai Aircraft Engineering Co., Ltd. 460,000.00
Total 98,072,700.24 74,557,313.66
Notes payable
SDA Group 898,021.66
Air China 20,000,000.00 20,000,000.00
Shenzhen Airlines Co., Ltd. 1,983,960.60 1,850,144.00
Taikoo (Shandong) Aircraft Engineering Company
Limited 245,400.00 245,400.00
Total 22,229,360.60 22,993,565.66
Note 12 Commitments
12.1 Signifcant commitments
12.1.1 Capital commitment
Item C/f B/f
Firm contracts not recognized in the financial statements
- Commitment to acquire non-current assets 18,701,359,576.58 4,362,887,276.54
-large outsourcing contract
-External investment commitments
Total 18,701,359,576.58 4,362,887,276.54
12.1.2 Operating lease
104
Information of irrevocable operating lease contracts as at the reporting date:
Item C/f B/f
Minimum lease rental for irrevocable operating lease contracts
Within one year from the reporting date 1,368,087,024.48 1,072,181,014.56
Within two years from the reporting date 1,347,682,200.48 1,059,880,518.81
Within three years from the reporting date 1,245,295,690.02 1,059,880,518.81
Subsequent years 6,864,607,194.13 5,552,796,027.63
Total 10,825,672,109.11 8,744,738,079.81
12.1.3 Other commitment
No other significant commitments of the Company need to be disclosed as at 31/12/2014.
Note 13 Post balance sheet date events
13.1 Post balance sheet date profit appropriation
The Proposal for Profit Appropriation for the Year ended 31 December 2014 of distributing cash dividend of CNY 2.00 (gross) per 10
shares for the 400 million shares outstanding as at the reporting date, which in total amounts to CNY 80 million, was approved by the 7 th
Meeting of the 5th Term of Board of Directors of the Company held on 19 March 2015; the Proposal was pending the approval of the
General Meeting of stockholders of the Company.
Note 14 Other significant events
14.1 Pension Plan
No significant change of the annuity program occurred for current year, see note 6.23, 6.31.
Note 15 Notes to elements of the separate financial statements
15.1 Accounts receivable
15.1.1 Disclosure by category
C/f
Category Carrying amount Allowance for bad debt
Book value
Amount % Amount %
Accounts receivable of individual significance
and subject to individual impairment
assessment 139,181,872.21 63.58 139,181,872.21
Accounts receivable subject to impairment
assessment by credit risk characteristics of a 69,032,792.75 31.54 3,451,639.64 5.00 65,581,153.11
105
portfolio
Accounts receivable of individual insignificance
but subject to individual impairment
assessment 10,684,948.49 4.88 10,684,948.49
Total 218,899,613.45 100.00 3,451,639.64 1.58 215,447,973.81
(Continued)
B/f
Category Carrying amount Allowance for bad debt
Book value
Amount % Amount %
Accounts receivable of individual significance
and subject to individual impairment
assessment 179,936,813.57 73.02 179,936,813.57
Accounts receivable subject to impairment
assessment by credit risk characteristics of a
portfolio 52,977,940.37 21.50 2,648,897.02 5.00 50,329,043.35
Accounts receivable of individual insignificance
but subject to individual impairment
assessment 13,501,734.26 5.48 13,501,734.26
Total 246,416,488.20 100.00 2,648,897.02 1.07 243,767,591.18
① Accounts receivable of individual significance and subject to individual impairment assessment
C/f
Rate of
Debtor Allowance for bad
Carrying amount allowance Reason for allowance
debt
(%)
No indication of impairment upon
Air China
51,318,792.65 individual assessment
No indication of impairment upon
Accounting Center of China Aviation
48,929,027.68 individual assessment
No indication of impairment upon
BSP-CHINA
38,934,051.88 individual assessment
Total 139,181,872.21
② Accounts receivable subject to impairment assessment by portfolio
Portfolio C/f
106
Carrying amount Rate of allowance (%) Allowance for bad debt
Portfolio by nature 69,032,792.75 3,451,639.64 5.00
Total 69,032,792.75 3,451,639.64 5.00
③ Accounts receivable of individual insignificance but subject to individual impairment assessment
C/f
Rate of
Debtor Allowance for bad
Carrying amount allowance Reason for allowance
debt
(%)
No indication of impairment
BSP-JAPAN
303,926.06 upon individual assessment
No indication of impairment
BSP-TAIWAN
2,029,229.24 upon individual assessment
No indication of impairment
UATP
1,860,556.49 upon individual assessment
Related party
China Cargo Airlines LTD. 650,407.70
Related party
Taikoo Shandong Aircraft Engineering
Company Limited 25,200.00
Qingdao International Air Logistics Centre
Wholly owned subsidiary
Co., Ltd 5,815,629.00
Total 10,684,948.49
15.1.2 Recognisation, recovery or reversal of allowance for bad debt
The amount of allowance for bad debts recognised during the year is CNY802,742.62.
15.1.3 Top five accounts receivables by debtors
The total amount of top five accounts receivables summarized by debtors as at the end of current year is CNY 152,664,082.06,
accounting for 69.74% of the total accounts receivable as at the end of current year, the total corresponding allowance for bad debts is
CNY 674,110.49.
15.2 Other receivables
15.2.1 Disclosure by category
C/f
Category Carrying amount Allowance for bad debt
Book value
Amount % Amount %
Other receivables of individual significance 273,283,309.34 70.61 101,551,717.65 37.16 171,731,591.69
107
and subject to individual impairment
assessment
Other receivables subject to subject to
impairment assessment by credit risk 81,670,703.01 21.10 4,083,535.15 5.00 77,587,167.86
characteristics of a portfolio
Other receivables of individual insignificance
but subject to individual impairment 32,090,289.39 8.29 32,090,289.39
assessment
Total 387,044,301.74 100.00 105,635,252.80 27.29 281,409,048.94
(Continued)
B/f
Category Carrying amount Allowance for bad debt
Book value
Amount % Amount %
Other receivables of individual significance
and subject to individual impairment
assessment 185,011,727.43 47.99 101,551,717.65 54.89 83,460,009.78
Other receivables subject to subject to
impairment assessment by credit risk
characteristics of a portfolio 112,409,411.93 29.16 5,620,470.60 5.00 106,788,941.33
Other receivables of individual insignificance
but subject to individual impairment
assessment 88,116,339.86 22.86 88,116,339.86
Total 385,537,479.22 100.00 107,172,188.25 27.80 278,365,290.97
① Other receivables of individual significance and subject to individual impairment assessment
C/f
Rate of
Debtor Allowance for bad
Carrying amount allowance Reason for allowance
debt
(%)
Impaired collectibility identified
Shandong Rainbow Commercial Jet Co., Ltd. 101,551,717.65 101,551,717.65 100.00 upon individual assessment
No indication of impairment upon
Beijing Capital International Airport Customs 46,131,325.25 individual assessment
No indication of impairment upon
Debtor #1 17,300,360.00 individual assessment
No indication of impairment upon
CBD-leasing Co., Ltd. 41,354,563.28 individual assessment
108
C/f
Rate of
Debtor Allowance for bad
Carrying amount allowance Reason for allowance
debt
(%)
No indication of impairment upon
SDA Group 24,313,328.35 individual assessment
No indication of impairment upon
Qingdao International Air Logistics Centre
individual assessment
Co., Ltd 42,632,014.81
Total 273,283,309.34 101,551,717.65
② Other receivables subject to impairment assessment by portfolio
C/f
Portfolio
Carrying amount Rate of allowance (%) Allowance for bad debt
Portfolio by nature 81,670,703.01 4,083,535.15 5.00
Total 81,670,703.01 4,083,535.15 5.00
③ Other receivables of individual insignificance but subject to individual impairment assessment
C/f
Rate of
Debtor Allowance for bad
Carrying amount allowance Reason for allowance
debt
(%)
No indication of impairment upon
Shandong XiangYu Air Technology Co., Ltd.
16,867,219.43 individual assessment
No indication of impairment upon
Air China
5,932,722.00 individual assessment
No indication of impairment upon
Debtor #1 5,462,388.20 individual assessment
No indication of impairment upon
Debtor #2 1,226,900.00 individual assessment
No indication of impairment upon
Taikoo (Shandong) Aircraft Engineering
individual assessment
Company Limited 860,829.14
No indication of impairment upon
Debtor #3 490,736.00 individual assessment
No indication of impairment upon
Debtor #4 469,581.20 individual assessment
109
No indication of impairment upon
Debtor #5 368,454.00 individual assessment
No indication of impairment upon
Debtor #6 185,361.00 individual assessment
No indication of impairment upon
Debtor #7 166,824.90 individual assessment
No indication of impairment upon
Jinan Customs
59,273.52 individual assessment
Total 32,090,289.39
15.5.2 Recognisation, recovery or reversal of allowance for bad debt
The amount of allowance for bad debts recovered or reversed during the current year is CNY 1,536,935.45.
15.5.3 Disclosure by nature
Category C/f B/f
Deposits 113,297,038.91 116,456,056.47
Others 273,747,262.83 269,081,422.75
Total 387,044,301.74 385,537,479.22
15.5.4 Top five other receivables
Allowance for bad
Debtor Nature C/f Aging %
debt
Shandong Rainbow 26.24
Commercial Jet Co., Ltd. Others 101,551,717.65 Over 3 years 101,551,717.65
Debtor #1 Others 49,803,933.02 Within 1 year 12.87 2,490,196.65
Beijing Capital International 11.92
Airport Customs Deposits 46,131,325.25 Within 1 year
CBD-leasing Co., Ltd. Deposits 41,354,563.28 Over 3 years 10.68
SDA Group Others 24,313,328.35 Within 1 year 6.28
Total 263,154,867.55 67.99 104,041,914.30
15.3 Long-term equity investments
15.3.1 Disclosure by category
C/f B/f
Item Impairment Net carrying Impairment Net carrying
Carrying amount Carrying amount
allowance amount allowance amount
110
C/f B/f
Item Impairment Net carrying Impairment Net carrying
Carrying amount Carrying amount
allowance amount allowance amount
Investments in
subsidiaries 106,000,685.43 106,000,685.43 106,000,685.43 106,000,685.43
Investments in
associates 195,910,020.12 22,500,000.00 173,410,020.12 22,500,000.00 22,500,000.00 -
Total
301,910,705.55 22,500,000.00 279,410,705.55 128,500,685.43 22,500,000.00 106,000,685.43
15.3.2 Investments in subsidiaries
Current
Current year Allowance Year-end
Investee B/f year C/f
decrease recognized allowance
increase
Qingdao International
Air Logistics Centre
Co., Ltd 48,323,205.97 48,323,205.97
Qingdao Feisheng
International Aviation
Training Technology
Development Co., Ltd 57,677,479.46 57,677,479.46
Total 106,000,685.43 106,000,685.43
15.3.3 Investments in associates
Currency year movement (+, -)
Investment gains and Other
Other
Investee B/f Additional Investment losses recognized comprehensive
changes in
investment reduction under the equity income
equity
method adjustment
Shandong Rainbow
Commercial Jet Co., Ltd. 22,500,000.00
Qingdao Airlines Co. 200,000,000.00 -26,589,979.88
Total 22,500,000.00 200,000,000.00 -26,589,979.88
111
(Continued)
Currency year movement (+, -)
Investee Declared cash C/f Year-end allowance
Allowance recognized Others
dividends or profits
Shandong Rainbow
Commercial Jet Co., Ltd. 22,500,000.00 22,500,000.00
Qingdao Airlines Co. 173,410,020.12
Total 195,910,020.12 22,500,000.00
15.4 Operating revenues and costs
Current year Prior year
Category
Operating revenues Operating costs Operating revenues Operating costs
Principal business 11,422,450,291.90 10,069,742,018.94 11,278,078,297.98 9,699,224,738.43
Other business 127,932,823.33 1,773,993.54 133,816,089.59 2,187,655.80
Total 11,550,383,115.23 10,071,516,012.48 11,411,894,387.57 9,701,412,394.23
15.5 Investment income
Category Current year Prior year
Income from long-term equity investments measured at cost 2,650,554.69 16,772,701.21
Income from long-term equity investment income of equity method -26,589,979.88
Income from long-term equity investment income of equity method -2,101,079.54 -2,609,524.71
Total -26,040,504.73 14,163,176.50
Note 16 Supplementary information
16.1 Non-recurring profit and loss
Category Current year Description
Gains from disposals of non-current assets after expending impairment provisions -5,392,037.39
Exceeded-authority approved, non-official approved or accidental tax 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 activities and of which the
quota or approval is eligible for automatic renewal in accordance with relevant regulations 161,105,606.12
Financial resource usage fees charged on non-financial institution recognised through profit -
112
Category Current year Description
or loss for the current reporting period
Gains arising from bargain purchase in business combination and investments in associates
and joint ventures -
Non-monetary asset exchange -
Consigned investment and asset management -
Impairment provision resulting from force majeure, eg. natural desasters -
Reorganisation -
Reorganisation expenditure -
Unfair transactions -
Net profits or losses achieved by an acquired under-common-control entity during the period
from the start of the period to the acquisition date -
Gains or losses arising from contingent events unconnected with the Company’s daily
operating activities -
Fair value changes of tradable financial assets and tradable financial liabilities held and
gains or losses arising from disposals of tradable financial assets, tradable financial liabilities and
available-for-sale financial assets, excluding hedging contracts relevant to the Company’s daily
operating activities -3,363,887.84
Reversal of impairment provision for accounts receivables eligible for individual impairment
assessment -
Gains or losses arising from consigned borrowings -
Fair value changes of property investments subsequently measured at fair value -
One-off adjustment of profit or loss for the current reporting period in accordance with tax
and accounting laws and regulations -
Consignment income arising from consigned operations -
Income and expenses other than items listed above 36,398,186.39
Other gains or losses satisfying the definition of extraordinary gains or losses -
Subtotal 188,747,867.28
Less: Impact of income tax 47,299,368.62
Less: Impact on non-controlling interest -
Total 141,448,498.66
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).
16.2 Rate of return on net assets and earnings per share
113
Earnings per share (CNY/share)
Profit catetory Weighted average rate of RONA
Basic EPS Diluted EPS
Net profit attributable to ordinary
shareholders 10.33 0.72 0.72
Recurring profit or loss attributable
to ordinary shareholders 5.25 0.37 0.37
16.3 Supplementary information related to changes in accounting policies
Based on changes of accounting policies due to the implementation of 8 accounting standards such as CAS 2 - Long-term Equity
Investments (Revised in 2014) issued by ministry of finance in 2014, comparative financial statements have been retroactively restated.
Restated consolidated balance sheets as at 01/01/2013, 31/12/2013 are as follows:
In RMB
Item 2013-1-1 2013-12-31 2014-12-31
Current assets:
Monetary funds 155,417,742.97 444,522,271.21 460,741,336.35
Accounts receivable 186,090,177.17 250,524,757.67 217,039,947.40
Accounts paid in advance 56,927,205.61 88,182,040.98 138,893,259.40
Dividend receivable 14,325,586.06 1,826,370.00
Other receivables 252,147,802.11 236,105,804.44 239,160,662.84
Inventories 116,944,913.89 107,973,473.35 112,151,772.45
Divided into assets held for
91,522,334.40
sale
Other current assets 71,828,962.65 108,805,651.21
Total current assets 767,527,841.75 1,213,462,896.36 1,370,141,334.05
Non-current assets:
Finance asset available for
125,454,786.81 160,126,340.51 167,905,665.68
sales
Long-term equity
173,410,020.12
investment
Fixed assets 8,132,786,866.22 7,564,658,140.23 6,923,262,003.49
Construction in progress 1,430,885,814.11 1,647,915,995.78 2,437,585,905.29
Intangible assets 78,814,771.55 101,127,636.82 120,544,428.04
Goodwill 10,220,816.22
Long-term expenses to be 301,867,908.75 347,945,540.61 397,258,983.43
114
apportioned
Deferred income tax asset 450,885,311.43 439,662,119.02 470,104,638.00
Other non-current asset 58,654,642.41
Total non-current asset 10,530,916,275.09 10,261,435,772.97 10,748,726,286.46
Total assets 11,298,444,116.84 11,474,898,669.33 12,118,867,620.51
Current liabilities:
Short-term loans 321,378,829.28 434,137,220.00
Financial liability
measured by fair value and with
7,198,783.59 296,902.47 1,559,710.77
variation reckoned into current
gains/losses
Notes payable 100,000.00 58,412,417.22
Accounts payable 950,968,778.60 1,132,126,690.25 890,345,747.24
Accounts received in
215,107,573.13 343,468,052.97 278,057,859.34
advance
Wage payable 343,703,794.71 338,866,981.54 393,428,573.70
Taxes payable 229,684,478.03 110,064,437.61 88,141,153.44
Interest payable 16,466,095.25 16,064,294.43 15,379,074.56
Dividend payable 11,940.00 11,940.00 11,940.00
Other accounts payable 210,075,013.94 193,868,858.34 367,285,868.35
Non-current liabilities due
396,459,521.87 538,030,658.42 1,741,517,725.20
within 1 year
Total current liabilities 2,691,154,808.40 3,106,936,036.03 3,834,140,069.82
Non-current liabilities:
Long-term loans 3,854,676,638.03 3,525,047,206.06 3,219,443,999.28
Bonds payable 500,000,000.00 500,000,000.00
Long-term account payable 1,554,204,331.04 1,542,515,998.39 2,079,557,697.82
Long-term wages payable 73,946,000.00 64,571,000.00 70,445,557.60
Deferred income 186,135,800.28 25,367,524.34 17,271,524.22
Deferred income tax
9,275,671.70 17,943,560.13 19,888,391.42
liabilities
Other non-current liabilities 6,178,238,441.05 5,675,445,288.92 5,406,607,170.34
Total liabilities 8,869,393,249.45 8,782,381,324.95 9,240,747,240.16
Owner’s equity:
Share capital) 400,000,000.00 400,000,000.00 400,000,000.00
115
Capital public reserve 75,410,363.70 75,410,363.70 75,410,363.70
Other comprehensive
27,827,015.11 61,171,680.38 58,923,174.26
income
Surplus public reserve 249,859,599.31 289,670,385.70 318,250,857.40
Retained profit 1,675,953,889.27 1,866,264,914.60 2,025,535,984.99
Total owner’s equity attributable
2,429,050,867.39 2,692,517,344.38 2,878,120,380.35
to parent company
Total owner’s equity 2,429,050,867.39 2,692,517,344.38 2,878,120,380.35
Total liabilities and owner’s
11,298,444,116.84 11,474,898,669.33 12,118,867,620.51
equity
116
117
