Semi-Annual Report 2019
August 2019
Content
Section I Important Notice and Paraphrase .................................................................................... 1
Section II Company Profile and Main Financial Indexes .............................................................. 3
Section III Summary of Company Business .................................................................................... 6
Section IV Discussion and Analysis of Operation ........................................................................... 8
Section V Important Events ............................................................................................................ 19
Section VI Changes in shares and particular about shareholders............................................... 27
Section VII Preferred Stock ............................................................................................................ 31
Section VIII Particulars about Directors, Supervisors and Senior Executives .......................... 32
Section IX Corporate Bond ............................................................................................................. 33
Section X Financial Report ............................................................................................................. 34
Section XI Documents available for reference ............................................................................ 160
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Section I. Important Notice and Paraphrase
Board of Directors, Supervisory Committee, all directors, supervisors and senior
executives of Shandong Airlines Co., Ltd. (hereinafter referred to as the
Company) hereby confirm that there are no any fictitious statements, misleading
statements, or important omissions carried in this report, and shall take all
responsibilities, individual and/or joint, for the reality, accuracy and completion
of the whole contents.
Sun Xiujiang , person in charge of the Company, Xu Guojian, person in charge
of accounting works as well as person in charge of accounting institution
(accounting officer) Zhou Shoubin hereby confirm the accuracy, truthfulness
and completeness of the Financial Report in the Semi-annual Report 2019.
All directors have attended the Board Meeting for Report Deliberation.
Concerning the forward-looking statements with development strategy and
business plans involved in the Report, they do not constitute a substantial
commitment for the investors. Investors are advised to exercise caution of
investment risks.
The Company has no plans of cash dividend distributed, no bonus shares and
has no share converted from capital reserve either.
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Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Paraphrases
Item Refers to Content
The Company, Company Refers to Shandong Airlines Co., Ltd.
Shandong Aviation Group, the first largest shareholder and controlling
SDA Refers to
shareholder of the Company,
Air China Refers to Air China Limited, the second largest shareholder of the Company
ATK (Available Tonne-Kilometre) Refers to Sum of products of payload and route distance for each segment
Sum of products of maximum numbers of seats and route distance for
ASK Refers to
each segment
Sum of products of maximum cargo carrying tonnage and route distance
AFTK Refers to
for each segment
Sum of products of tonnage of transport and route distance for each
RTK Refers to
segment actually
Sum of products of passenger traffic volume and route distance for each
RPK (Revenue Passenger Kilometers) Refers to
segment actually
Sum of products of freight carrying tonnage and route distance for each
RFTK Refers to
segment actually
Integrated carrier rate Refers to RTK/ATK
PLF (Passenger Load Factor) Refers to RPK/ASK
Freight Rate Refers to RFTK/ AFTK
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Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Section II. Company Profile and Main Financial Indexes
I. Company profile
Short form of the stock SHANHANG B Stock code 200152
Listing stock exchange Shenzhen Stock Exchange
Legal Chinese name of the
山东航空股份有限公司
Company
Abbr. of legal Chinese name
山东航空
of the Company (if applicable)
Legal English Name of the
SHANDONG AIRLINES CO.,LTD.
Company (if applicable)
Abbr. of legal English name of
SDA
the Company (if applicable)
Legal Representative Sun Xiujiang
II. Way/person to contact
Secretary of the Board Rep. of security affairs
Name Dong Qiantang Fan Peng
1/F Office Building, SDA, Yaoqiang 3/F Office Building, SDA, Yaoqiang
Contact adds.
International Airport Licheng District Jinan International Airport Licheng District Jinan
Tel. 0531-82085939 0531-82085586
Fax. 0531-85698034 0531-85698034
E-mail dongqt@sda.cn fanp@sda.cn
III. Others
1. Way to contact the Company
Register address, office address and code, Company website as well as the email of the Company have no changed in reporting
period, more details please found in the Annual Report of 2018.
2. Information disclosure and preparation place
Newspaper appointed for information disclosure, website for annual report publish appointed by CSRC and preparation place for
semi-annual report have no change in reporting period, more details please found in the Annual Report of 2018.
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Shandong Airlines Co., Ltd. Semi-Annual Report 2019
IV. Main accounting data and financial indexes
Whether it has retroactive adjustment or re-statement on previous accounting data or not
□Yes √ No
Increase/decrease over same
Current Period Same period of last year
period of last year
Operating revenue (RMB) 8,989,068,400.72 8,729,278,564.65 2.98%
Net profit attributable to shareholders of
-27,364,005.41 203,730,704.65 -113.43%
the listed Company (RMB)
Net profit attributable to shareholders of
the listed Company after deducting -66,030,703.80 61,909,312.57 -206.66%
non-recurring gains and losses (RMB)
Net cash flow arising from operating
544,076,655.68 858,898,162.88 -36.65%
activities (RMB)
Basic earnings per share (RMB/Share) -0.07 0.51 -113.73%
Diluted earnings per share (RMB/Share) -0.07 0.51 -113.73%
5.29 percentage points
Weighted average ROE (%) -0.61% 4.68%
decrease
Increase/decrease over same
End of current Period End of period of last year
period-end of last year
Total assets (RMB) 16,885,295,621.99 16,563,979,100.41 1.94%
Net assets attributable to shareholder of
4,684,060,262.44 4,471,325,978.28 4.76%
listed Company (RMB)
V. Difference of the accounting data under accounting rules in and out of China
1. Difference of the net profit and net assets disclosed in financial report, under both IAS (International
Accounting Standards) and Chinese GAAP (Generally Accepted Accounting Principles)
The Company has no condition of difference of the net profit and net assets disclosed in financial report, under both IAS
(International Accounting Standards) and Chinese GAAP (Generally Accepted Accounting Principles) in the reporting period.
2. Difference of the net profit and net assets disclosed in financial report, under both foreign accounting
rules and Chinese GAAP (Generally Accepted Accounting Principles)
The Company has no condition of difference of the net profit and net assets disclosed in financial report, under both foreign
accounting rules and Chinese GAAP (Generally Accepted Accounting Principles) in the reporting period.
VI. Items and amounts of extraordinary profit (gains)/loss
In RMB
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Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Item Amount Note
Gains/losses from the disposal of non-current asset (including the
-1,289,858.21
write-off parts that accrued for impairment of assets)
Governmental subsidy reckoned into current gains/losses (not including
the subsidy enjoyed in quota or ration according to national standards, 32,120,370.10
which are closely relevant to enterprise’s business)
Losses/gains from changes of fair values occurred in holding transaction
financial assets and transaction financial liabilities, and investment income
obtaining from the disposal of transaction financial assets and transaction
-867,609.82
financial liabilities and financial assets available for sales, excluded
effective hedging business relevant with normal operations of the
Company
Other non-operating income and expenditure except for the
21,389,202.14
aforementioned items
Other items of profits/losses that qualified the definition of non-recurring
258,298.31
profit/loss
Less: Impact on income tax 12,943,704.13
Total 38,666,698.39 --
In reporting period, the Company has no particular about items defined as recurring profit (gain)/loss according to the lists of
extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their Securities to
the Public --- Extraordinary Profit/loss.
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Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Section III. Summary of Company Business
I. Main businesses of the Company in the reporting period
The Company is mainly engaged in international and domestic air passenger and cargo transportation business; hotel catering; aircraft
maintenance; civil aviation personnel training; insurance agency; airline agency business; ground services related to main business;
sales of aviation materials, general merchandise, food, health foods, handicrafts, souvenirs, etc., and retail sales of tobacco; leasing of
aviation materials; leasing of premises, rental of houses; business services; hotel accommodation agents and ticket agents; conference
services; transport agency services, air cargo storage; and labor services. Among them, international and domestic air passenger and
cargo transportation business is the Company's main business.
For more than 20 years, the company has always been giving first priority to “ensure safety, pay close attention to efficiency, and
strive to punctuality and quality service”. Up to now, the company has 124 airplanes of Boeing B737 series, and striding into the
ranks of large airlines. At present, the company bases its headquarters in Jinan and has branch offices and flight bases in Qingdao,
Yantai, Xiamen, Chongqing, Beijing, Urumqi and Guiyang. The company operates more than 200 domestic, international and regional
air routes, every week more than 3,700 flights fly to more than 80 large and medium-sized cities across the country, as well as the
regional routes to Taiwan region of China, and the international routes to South Korea, Japan, Thailand, Cambodia and India.
II. Major changes in main assets
1. Major changes in main assets
Major assets Note of major changes
Equity assets No major changes in the period
Fixed assets No major changes in the period
Intangible assets No major changes in the period
Construction in progress No major changes in the period
Balance at period-end decreased 63.83% over that of period-beginning, mainly because
Monetary fund the monetary fund only reflects the amount at some point of time, and the changes will
related with cash in-flow, out-flow and times
Notes receivable The bank acceptance bill receivable from the bank increased in the period
Dividends receivable Bonus for 2018 from Sichuan Airline and Travelsky received in the period
2. Main overseas assets
□ Applicable √ Not applicable
III. Core Competitiveness Analysis
1. Industry-leading safety management capabilities
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Shandong Airlines Co., Ltd. Semi-Annual Report 2019
The Company has the industry-leading safety management model and safety management level. Excellent safety management
capabilities enable the Company to provide passengers with a safer journey, effectively reduce the Company’s operational risk, and
shape the Company’s safe brand image. At the same time, under the supervision of “safety first” in the civil aviation industry, the
good safety records have also brought opportunities for the Company to take the lead in applying new technologies in the industry
and play a leading role in promoting the safety control level in the industry.
2. Excellent resource allocation and organization & executive capacity
The Company has outstanding organization and execution capability, and the daily utilization rate of aircraft maintains number one
among the medium-sized and above airlines in the industry, the man-machine ratio is 83.1:1, which is far below the industry average.
Superior resource allocation and organizational execution capabilities maintain the Company’s industry-leading level in cost control.
Besides, the Company has formed a Company-specific management mode through continuous innovation and accumulation and by
focusing on safety, efficiency, service and operation. In 2017, the Company won the 17 th National Quality Award and became the first
and only award-winning aviation Company in the civil aviation industry, which proved the Company's management level and
execution efficiency.
3. Incentive and competitive corporate culture brand
By many years of practice, the Company has formed the corporate values of “harmony, safety, innovation, and kindness” and the
brand culture of “Honest Shanhang”. Qilu’s Confucianism and Shandong people’s character of “promise keeping and honor
credibility” have been integrated into the Company and widely recognized by the Company's employees, which has also formed a
resonance with the social mainstream’s recognition to honesty and kindness. Through the promotion of “honest and kind” culture and
brand, the Company can better convey the service value to the passengers, gain the trust of customers, constantly enhance the
passengers' sense of identity to the Company, and create greater value for the passengers.
The core competitiveness of the Company has no change in the reporting period.
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Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Section IV. Discussion and Analysis of the Operation
I. Introduction
(I) Operation data summary:
Item Jan.- Jun.2019 Jan.- Jun.2018 Changes
Transport capacity
(ATK) (10 thousand TK) 235,847.45 225,729.15 4.48%
Including: domestic flight 210,359.60 202,319.16 3.97%
International flight 21,629.71 20,519.34 5.41%
Regional routes 3,858.14 2,890.65 33.47%
(ASK) (10 thousand PK) 2,186,858.26 2,117,450.90 3.28%
Including: domestic flight 1,938,965.73 1,885,956.03 2.81%
International flight 211,796.18 204,340.61 3.65%
Regional routes 36,096.35 27,154.26 32.93%
(AFTK) (10 thousand TK) 39,030.21 35,158.57 11.01%
Including: domestic flight 35,852.69 32,583.12 10.03%
International flight 2,568.05 2,128.69 20.64%
Regional routes 609.47 446.76 36.42%
Carrying capacity
Total t-km load rate (RTK) (10 thousand 176,807.37 171,089.96 3.34%
t-km)
Including: domestic flight 158,895.84 154,577.15 2.79%
International flight 15,425.68 14,743.27 4.63%
Regional routes 2,485.85 1,769.54 40.48%
(RPK) (10 thousand PK) 1,836,785.05 1,775,041.10 3.48%
Including: domestic flight 1,643,551.31 1,596,417.70 2.95%
International flight 166,552.89 159,949.24 4.13%
Regional routes 26,680.85 18,674.15 42.88%
(RFTK) (10 thousand TK) 14,630.60 14,123.87 3.59%
Including: domestic flight 13,779.64 13,406.55 2.78%
International flight 706.54 597.51 18.25%
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Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Regional routes 144.42 119.81 20.54%
Volume of passenger traffic (10 1,239.10 1,218.84 1.66%
thousand passengers)
Including: domestic flight 1,125.39 1,121.50 0.35%
International flight 98.16 86.17 13.91%
Regional routes 15.55 11.16 39.36%
Cargo & mail traffic volume (ton) 85,807.04 84,474.43 1.58%
Including: domestic flight 81,209.28 80,829.89 0.47%
International flight 3,727.25 2,912.51 27.97%
Regional routes 870.52 732.04 18.92%
Load factor
Integrated carrier rate (%) 74.97 75.79 -0.83
Including: domestic flight 75.54 76.40 -0.87
International flight 71.32 71.85 -0.53
Regional routes 64.43 61.22 3.22
PLF (passenger load factor) (%) 83.99 83.83 0.16
Including: domestic flight 84.76 84.65 0.12
International flight 78.64 78.28 0.36
Regional routes 73.92 68.77 5.15
Cargo & Mail OLF (overall load factor) 37.49 40.17 -2.69
(%)
Including: domestic flight 38.43 41.15 -2.71
International flight 27.51 28.07 -0.56
Regional routes 23.70 26.82 -3.12
Utilization of aircraft on a daily basis 9.93 10.27 -0.34
(Daily cycle times per aircraft)
(ii) Fleet structure
In the Period, totally t two B737-8 aircraft are introduced by the Company, and zero aircraft withdraw. Up to 30 June 2019, the
Company operates 124 aircraft in total and the fleet distribution below:
Model Numbers Average service age (Year)
737-700 3
737-800 114 5.8 years
737-8 7
(III) Operation
In the first half of 2019, the Company has basically completed the intended targets in various works of production and management.
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Shandong Airlines Co., Ltd. Semi-Annual Report 2019
——Safety position is generally stable. In transpiration, we have ensured security flight of 213,800 hours and 100,100 vehicles, a
respective increase of 1.53% and 0.39% on a year-on-year basis. No transporting aviation incidents and above insecurity incidents
occurred due to the Company.
——Operation quality Steadily improved. The transportation main business totally organized and ensured the flights of 100455
flights, the flight punctuality rate was 84.85%, and an increase of 5.97% on a year-on-year basis, ranks No. 1 in the Civil Aviation
major airline.
——Profitability quality is challenged. The Company achieved operating income of 8.99 billion Yuan with an increase of 2.98% on a
year-on-year basis; the net profit of -27.36 million Yuan with an decrease of 113.43% on a year-on-year basis; The total turnover of
transportation reached 1.768 billion ton-kilometers, passenger traffic volume reached 12,391,000 person-time, cargo and mail
transport volume reached 85,800 tons, a respective increase of 3.34%, 1.66% and 1.58% on a year-on-year basis; passenger load
factor of 83.99%, an increase of 0,16% on a year-on-year basis, cargo and mail load factor of 37.49%, a decrease of 2.69% on a
year-on-year basis.
——Continuous improvement of service quality. Passenger satisfaction achieved 93.7 scores, risen by 1.59 score on a year-on-year
basis. The civil aviation media service ranked number four. CAAC accepted passenger complaint rate (from low to high) ranks
second among major airlines
The Company has been awarded as China Top 500 Most Valuable Brand for twelve consecutive years, ranking No. 98 with the brand
value of 51.292 billion Yuan.
The Company mainly carried out the following work:
1. Consolidate the foundation of safety management and continuously improve safety quality
The first is to strengthen the political responsibility for ensuring security, conscientiously study and implement General Secretary Xi
Jinping's important instructions for civil aviation work, and have a more correct attitude towards safety work. The enthusiasm and
initiative to promote the reform of safety management concepts and implement measures have been improved. The second is to
continuously improve the safety management system. The third is to carry out the "three foundations" construction in a solid manner.
The fourth is to comprehensively and thoroughly promote the construction of style and discipline. The fifth is to continue to deepen
the risk prevention and control.
2. Consolidate and optimize the operation and control mechanism, and maintain high-level flight regularity
The first is to continue to consolidate the operation and control basis, optimize the operation quality index system, optimize the
process of operation and control system, and hold the red line and bottom line of “not lower than the management and control
requirements of the administration bureau and each airport transportation management committee”. The second is to improve the
flight operation decision-making level and guarantee efficiency, continuously enhance the meteorological forecasting and early
warning capability, improve the rapid transit mechanism, and optimize the control measures for long hours delay flight. The third is
to focus on key links and improve problems. Since July 2018, the company has won the 12th consecutive championship in the on
time performance of China's large-scale airlines in the Asia-Pacific region, the operational efficiency has been consolidated and
improved, and the effect of operational management organizational structure optimization and management and control mode reform
has been fully reflected.
3. Actively respond to risk challenges and comprehensively strengthen efficiency control
The first is to unswervingly improve the competitiveness of the airline network, keep up with national and industry policy trends, and
actively strive for time resources in the potential markets. The second is to continuously polish the income management and control
capabilities, optimize the income management and control ideas, focus on market dynamics, coordinate production and investment
relations, and control the balance between quality and price. The third is to focus on the trend risk to strengthen cost control, and
actively respond to the risk of jet fuel prices and exchange rate fluctuations.
4. Optimize service presentation and brighten service brand
First, continue to promote the service quality construction, and the service quality management system becomes more perfect.
Second, actively implement service innovation and improvement, vigorously promote “paperless” travel, optimize the self-service
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Shandong Airlines Co., Ltd. Semi-Annual Report 2019
rescheduled function of all-channel irregular flights, and continuously improve service shortcomings. Third, continuously enrich the
“honest and kind” brand connotation, clarify the brand positioning and improvement plan, and the brand influence is continuously
enhanced.
II. Main business analysis
Summary
In RMB
Item of balance sheet 2019.6.30 2018.12.31 +,- Reasons
The main reason is that the balance of monetary
funds only reflects the stock of funds at a
Monetary funds 304,193,125.42 840,960,104.09 -63.83% certain point in time, and its changes are related
to the inflow and outflow of funds, the time
points, etc.
Financial assets
measured by fair value
Change of the fair value of interest rate swap
and with variation 90,488.17 -100.00%
held in the period
reckoned into current
gains/losses
The bank acceptance bill receivable increased
Notes receivable 11,600,000.00
in the period
Bonus for 2018 from Sichuan Airline and
Dividend receivable 5,861,939.50
Travelsky received in the period
Financial assets Impact by the implementation of new financial
310,842,965.35 -100.00%
available for sale instrument accounting standards
Investment in other Impact by the implementation of new financial
737,640,684.78
equity instruments instrument accounting standards
Transactional financial Change of the fair value of interest rate swap
990,989.10
liabilities held in the period
Employee compensation
306,885,302.53 543,294,439.81 -43.51% Year-end bonus for 2018 are paid in the period
payable
Dividend payable to shareholders for 2018 are
Dividend payable 80,602,306.96 602,306.96 13282.26%
recognized in the period
Non-current liabilities The long-term loans due within one year
1,187,999,792.02 455,840,675.34 160.62%
due within one year increased
Repayment of the principal of long-term loans
Long-term loans 916,789,856.70 1,885,556,557.83 -51.38%
in US dollars in the period
Impact by the implementation of new financial
Deferred tax liability 190,627,407.57 56,819,008.96 235.50%
instrument accounting standards
Other comprehensive Impact by the implementation of new financial
469,398,778.51 149,300,488.94 214.40%
income instrument accounting standards
Profit statement Jan.- June. 2019 Jan.- June. 2018 +,- Reasons
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Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Interest expenses increased and exchange
Financial expenses 70,886,727.56 44,959,465.21 57.67%
earnings declined on a y-o-y basis
The airline subsidy received in the period
Other income 32,378,668.41 136,377,656.23 -76.26%
decreased from a year earlier
The bonus for year of 2018 from Sichuan
Investment income 6,075,806.95 17,185,078.32 -64.64% Airline recognized in the period declined over
that of last year
Income from changes in Change of the fair value of interest rate swap
-1,081,477.27 3,510,568.94 -130.81%
fair value held in the period
Loss of credit Impact by the implementation of new financial
-752,815.03
impairment instrument accounting standards
Loss of assets Impact by the implementation of new financial
-4,271,098.28 -100.00%
impairment instrument accounting standards
Two CRJ700 aircraft assets are disposed in the
Assets disposal income 32,155.55 26,470,970.71 -99.88%
same period of last year
Loss from non-current assets disposal increased
Non-operating expenses 1,518,515.48 822,099.62 84.71%
on a y-o-y basis
Income tax expense -17,631,156.20 57,366,309.27 -130.73% Profit in the period decreased
Cash flow statement Jan.- June. 2019 Jan.- June. 2018 +,- Reasons
Cash received with The airline subsidy and customs deposit refund
other operation 112,106,927.26 320,117,399.23 -64.98% received in the period decreased over that of
activities concerned last year
Net cash received from
disposal of fixed, Two CRJ700 aircraft assets are disposed in the
32,155.55 60,179,426.82 -99.95%
intangible and other same period of last year
long-term assets
The trading financial assets are actually
Other cash received
delivery as gains in the period while they
concerning investing 213,867.45
delivery as expenditure at same period of last
activities
year
Cash paid for
purchasing fixed, The progress payment for airplane purchasing
1,221,400,170.90 1,861,780,571.74 -34.40%
intangible and other paid in the period decreased from a year earlier
long-term assets
Net cash received from Part of the amount for equity under the name of
subsidiaries and other 308,439.57 -100.00% Jinan Food and Qingdao Food are paid in the
units obtained same period of last year
The trading financial assets are actually
Other cash paid
delivery as gains in the period while they
concerning investing 23,033.18 -100.00%
delivery as expenditure at same period of last
activities
year
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Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Cash received from The loans received from financing activities
590,000,000.00 1,068,235,943.70 -44.77%
loans decreased in the period
Cash paid for settling The loans paid to the bank increased over that
664,738,351.88 296,942,824.00 123.86%
debts of last period
Cash paid for dividend
The interest for loans paid in the period
and profit distributing or 54,073,386.37 28,011,548.45 93.04%
increased
interest paying
Other cash paid
Compared with same period last year, finance
concerning financing 207,230,938.23 112,793,486.52 83.73%
lease rental for two aircraft paid in the period
activities
Impact on cash and cash
equivalent from foreign -9,594,042.56 16,694,919.05 -157.47% Changes of the RMB against foreign currencies
exchange rate change
Y-o-y changes of main financial data
In RMB
Current period Same period of last year Y-o-y increase/decrease Reasons for changes
Operating revenue 8,989,068,400.72 8,729,278,564.65 2.98%
Operating cost 8,395,245,086.04 8,021,020,129.22 4.67%
Sale expenses 388,566,377.89 393,527,536.39 -1.26%
Management expenses 219,351,048.16 201,566,182.20 8.82%
Interest expenses
increased and exchange
Financial expenses 70,886,727.56 44,959,465.21 57.67%
earnings declined on a
y-o-y basis
Income tax expenses
declined due to the
Income tax expenses -17,631,156.20 57,366,309.27 -130.73%
decrease of profit in the
period
R & D investment 8,960,946.50 2,127,502.63 321.20%
Net cash flow arising
544,076,655.68 858,898,162.88 -36.65%
from operating activities
Net cash flow arising
from investment -1,221,154,147.90 -1,801,932,617.67 32.23%
activities
Net cash flows arising
149,904,556.11 1,054,691,546.49 -85.79%
from financing activities
Net increase of cash and
-536,766,978.67 128,352,010.75 -518.20%
cash equivalent
No major changes on profit composition or profit resources in reporting period.
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Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Constitution of main business
In RMB
Increase/decrease Increase/decreas
Increase/decrease of
of operating e of operating
Operating gross profit over
Operating cost Gross profit revenue over same cost over same
revenue same period the year
period the year period the year
before
before before
According to industries
Aviation
2.06 percentage
transportation 8,630,005,422.96 8,360,393,142.67 3.12% 2.52% 4.74%
points decrease
service
Logistics
1.02 percentage
transportation 13,687,428.43 12,237,685.92 10.59% -32.15% -31.36%
points decrease
service
Hotel and food 1.80 percentage
15,068,517.60 11,877,095.05 21.18% 2.59% 5.00%
service points decrease
95.35 percentage
Training Services 3,740,543.55 9,034,189.83 -141.52% -34.74% 7.82%
points decrease
According to region
2.77 percentage
Domestic 7,809,011,529.97 7,552,737,557.88 3.28% 2.51% 5.53%
points decrease
3.50 percentage
Overseas 677,956,579.34 687,392,277.31 -1.39% -5.91% -9.05%
points increase
1.28 percentage
Region 175,533,803.23 153,412,278.28 12.60% 45.98% 43.87%
points increase
III. Analysis of the non-main business
□ Applicable √ Not applicable
IV. Assets and liability
1. Major changes of assets composition
In RMB
2019.6.30 2018.12.31
Notes of major
Ratio in total Ratio in total Ratio changes
Amount Amount changes
assets assets
3.28 percentage points
Monetary fund 304,193,125.42 1.80% 840,960,104.09 5.08%
decrease
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Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Account 0.11 percentage points
441,139,307.45 2.61% 413,726,456.71 2.50%
receivable increase
0.04 percentage points
Inventory 101,798,197.70 0.60% 105,625,519.42 0.64%
decrease
7,770,750,794.3 2.57 percentage points
Fix assets 7,486,219,644.67 44.34% 46.91%
7 decrease
Construction 4,790,300,972.1 2.65 percentage points
5,330,499,256.87 31.57% 28.92%
in process 3 increase
Short-term 0.65 percentage points
700,000,000.00 4.15% 580,000,000.00 3.50%
loans increase
Repayment of the
principal of
Long-term 1,885,556,557.8 5.95 percentage points
916,789,856.70 5.43% 11.38% long-term loans in
loans 3 decrease
US dollars in the
period
2. Assets and liability measured by fair value
In RMB
Accumulative
Gains/losses of Impairment Amount
Opening changes in fair Closing
Item changes in fair accrual in purchased in Sale amount
amount value reckoned amount
value this period this period
into equity
Financial assets
1.Transactional
financial assets
(excluding
90,488.17 -90,488.17 0.00
derivative
financial
assets)
4. Investment
in other equity 790,158,061.10 -52,517,376.32 486,966,438.58 737,640,684.78
instruments
The above total 790,248,549.27 -52,607,864.49 486,966,438.58 737,640,684.78
Financial
0.00 990,989.10 990,989.10
liability
Whether there have major changes on measurement attributes for main assets of the Company in report period or not
□ Yes √No
15
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
3. Assets rights restricted till end of the period
Nil
V. Investment
1. Overall situation
□ Applicable √ Not applicable
2. The major equity investment obtained in the reporting period
□ Applicable √ Not applicable
3. The major non-equity investment doing in the reporting period
□ Applicable √ Not applicable
4. Financial assets investment
(1) Securities investment
The Company had no securities investment in the reporting period.
(2) Derivative investment
The Company has no derivatives investment in the reporting period.
VI. Sales of major assets and equity
1. Sales of major assets
The Company has no sales of major assets in the reporting period.
2. Sales of major equity
□ Applicable √ Not applicable
VII. Analysis of main holding Company and stock-jointly companies
Main subsidiary and stock-jointly enterprise with over 10% influence on net profit of the Company
In RMB
Register Operating Operating
Company name Type Main business Total assets Net Assets Net profit
capital revenue profit
16
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Agency service
of land service
for the air cargo
Shandong
station, storage 30,000,000.
Airlines Logistic Subsidiary 98,621,940.05 73,526,350.40 24,580,126.26 4,356,518.48 3,275,431.18
of goods and 00
Co., Ltd.
ground
distribution
service etc.
Qingdao
Feisheng
International
Aviation 51,545,500.
Subsidiary Pilot training 69,184,348.23 68,969,938.93 1,613,598.12 -821,276.45 -649,367.76
Technology 00
Development
Training Co.,
Ltd.
Shandong Air food
5,094,545.0
Jinping Air Subsidiary supplying, 49,163,300.11 33,862,229.86 24,209,969.66 7,507,373.23 5,661,711.20
0
Food Co., Ltd. catering service
Souvenir
processing;
Shandong
production and 3,380,000.0
Airline Qingdao Subsidiary 29,149,930.60 24,836,300.77 18,373,586.55 1,990,559.62 1,518,979.43
processing of 0
Food Co., Ltd.
the air foods and
delivery service
Shandong
Rainbow Stock-join
50,000,000. -165,942,151.
Corporate tly Air transport 1,823,661.39 -2,500.00 -2,500.00
00 94
Aircraft Co., Company
Ltd.
Particular about subsidiaries obtained or disposed in report period
□ Applicable √ Not applicable
VIII. Structured entity controlled by the Company
□ Applicable √ Not applicable
IX. Prediction of business performance from January – September 2019
Estimation on accumulative net profit from the beginning of the year to the end of next report period to be loss probably or the
warning of its material change compared with the corresponding period of the last year and explanation on reason
□ Applicable √ Not applicable
17
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
X. Risks and countermeasures
(I) Risks
1. The risk of macroeconomic fluctuations
The prosperity of civil aviation industry is closely related to the domestic and international macroeconomic development. The
macroeconomic prosperity directly affects the development of economic activities, the disposable income of residents and the
increase or decrease of import and export trade volume, and thus affects the demand for air passenger transport and air cargo
transport.
2. Competition risk
With the gradual opening of the domestic civil aviation market, the competition among the four major aviation groups, foreign
airlines, and small and medium-sized airlines in terms of scale, flight schedules, prices, and services has become increasingly fierce,
the contradiction between the expansion of the industry's fleet and the lack of market resources needs to be digested, which poses
greater challenges to the Company's business model and management level.
3. The risk of aviation oil price fluctuations
The aviation oil cost is the Company's most important cost expenditure. The fluctuations in the international crude oil price and the
adjustment to the domestic aviation oil price of the National Development and Reform Commission will have a greater impact on the
Company’s profitability.
4. The risk of exchange rate fluctuations
The debt structure of the Company is mainly in U.S. dollars, and the aircraft rents, aircraft maintenance, and other major costs are
mainly paid in U.S. dollars, the RMB devaluation shall increase the Company's costs and exchange losses.
5. Other force majeure risks
The external environment has a great influence on the civil aviation transportation, the natural disasters, sudden public health
incidents, terrorist attacks and political turmoil will affect the normal operations of airlines and then will adversely affect the
Company’s production and operations.
(ii) Countermeasures
The company should adhere to the guiding principle of Xi Jinping's socialism with Chinese characteristics in the new era, adhere to the
general tone of "making progress while maintaining stability", take the supply-side reform as the main line, and take the whole year's
work ideas and goals as the guide, continuously improve the quality of safety production operations management, make efforts to
improve capabilities, prevent risks, strive to stabilize the security, the efficiency, and the team, maintain a good quality and good
development situation, and greet the 70th anniversary of the founding of the nation with outstanding performance.
The key points are to do the following work: first, strengthen the effectiveness of safety management, and ensure continuous safety;
second, improve the efficiency of running organizations, and consolidate and improve the regularity of flights; third, spare no effort to
increase revenues and reduce expenditures, and fight well to win the benefits; fourth, consolidate and improve the quality of services
and continue to promote the "honest and kind" brand.
18
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Section V. Important Events
I. In the report period, the Company held annual shareholders’ general meeting and
extraordinary shareholders’ general meeting
1. Shareholders’ General Meeting in the report period
Ratio of investor
Session of meeting Type Date Date of disclosure Index of disclosure
participation
Annual General
AGM 68.59% 2019-06-27 2019-06-28 2019-09
Meeting of 2018
2. Request for extraordinary general meeting by preferred stockholders whose voting rights restore
□ Applicable √ Not applicable
II. Profit distribution plan and capitalizing of common reserves plan for the reporting period
The Company has no plans of cash dividend distributed, no bonus shares and has no share converted from capital reserve either for
the semi-annual year.
III. Commitments that actual controller, shareholder, related parties, buyer and committed
party as the Company etc. have fulfilled during the reporting period and have not yet fulfilled
by the end of reporting period
There are no commitments that the actual controller, shareholder, related parties, buyer and committed party as the Company etc.
have fulfilled during the reporting period and have not yet fulfilled by the end of reporting period
IV. Appointment and non-reappointment (dismissal) of CPA
Semi-annual report of the Company has not been audited.
V. Explanation from Board of Directors and Supervisory Committee for “Qualified Opinion”
that issued by CPA
□ Applicable √ Not applicable
VI. Explanation from the Board for “Qualified Opinion” of last year’s
□ Applicable √ Not applicable
19
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
VII. Bankruptcy reorganization
No bankruptcy reorganization for the Company in the reporting period.
VIII. Lawsuits
During the reporting period, the Company has no major litigation or arbitration matter.
Other litigation matters
□ Applicable √ Not applicable
IX. Penalty and rectification
No penalty or rectification for the Company in the reporting period.
X. Integrity of the Company and its controlling shareholders and actual controllers
Four pilots of the company, Zhang Lingrui, Liu Wenbo, Liu Yuan and Shen Chao, applied for resignation, and caused labor disputes
with the company. After the trial of Beijing Shunyi District People's Court and Beijing No. 3 Intermediate People's Court, the relevant
cases have entered the execution stage of Beijing Shunyi District People's Court, the execution number is (2019) Jing 0113 Zhi No.
1573, (2019) Jing 0113 Zhi No. 1575, (2019) Jing 0113 Zhi No. 1576, and (2019) Jing 0113 Zhi No. 1577.
The pilot's occupation is special, it needs long-term professional training, flight skill keeping and promotion training, and it needs to
pay a huge amount of training fees to cultivate a pilot, the airline devotes a lot of efforts and resources to each pilot's training. Therefore,
after the court’s decision to terminate the labor relations came into effect, the company actively took the initiative to consult with the
next airlines to negotiate the compensation for training costs. However, due to the low price of the other party, no agreement was
reached. They were listed as the untrustworthy person subject to enforcement by the Beijing Shunyi District People's Court on June 24,
2019 as they didn’t conduct the transfer procedures for the relevant technical files and licenses.
At present, the company is actively negotiating with four pilots and their intended airlines about the training costs compensation, and
they have initially reached an agreement on some matters. The company will strive to realize the orderly flow of pilots under the
premise of safeguarding the company's interests, ensuring no loss of state-owned assets, and ensuring the stability of flight team and
the flight safety, and properly resolve related issues as soon as possible to.
XI. Implementation of the Company’s stock incentive plan, employee stock ownership plan or
other employee incentives
The Company has no equity incentive plan, employee stock ownership plans or other employee incentives in the reporting period.
XII. Major related transaction
1. Related transaction with routine operation concerned
Related Related Related
Related Pricing Trading Proporti Approve Whether Means Market Date of Index
transacti transacti transacti Dealing
relations principl amount on in the d to of price of disclosu of
on on on price
hip e (in 10 amount transacti exceed payment similar re disclos
parties type content
20
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
thousan of the on the s transacti ure
d Yuan) same amount approve on
transacti (in 10 d availabl
on thousan amount e
d Yuan)
Compan
y
Sales of
controll Sales of
goods/of Cash
STAEC ed by air Market 154,216. 154,216. 2019-03 2019-0
fering 15.42 50 No settleme
O the material price 00 00 -23 4
labor nt
largest revenue
service
sharehol
ders
Shandon
g Compan
Xiangyu y
Sales of
Aeronau controll Sales of
goods/of Cash
tical ed by air Market 283,444. 283,444. 2019-03 2019-0
fering 28.34 80 No settleme
Technol the material price 97 97 -23 4
labor nt
ogy largest revenue
service
Service sharehol
Co., ders
Ltd.
Shandon
g Compan
Wareho
Airlines y
Sales of using
Rainbo controll
goods/of fee Cash
w ed by Market 193,235. 193,235. 2019-03 2019-0
fering income/ 19.32 50 No settleme
Automo the price 77 77 -23 4
labor Property nt
bile largest
service fee
Service sharehol
income
Co., ders
Ltd.
Shandon Compan
g y
Sales of
Airlines controll Media
goods/of Cash
Xinzhih ed by resource Market 6,099,99 6,099,99 2019-03 2019-0
fering 610 1,600 No settleme
ang the usage price 6.00 6.00 -23 4
labor nt
Media largest fee
service
Co., sharehol
Ltd. ders
Air 2nd Sale of Agency Market 714,719. 71.47 172.92 No Cash 714,719. 2019-03 2019-0
21
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
China largest goods/P commis price 96 settleme 96 -23 4
sharehol rovide sion nt
der services revenue
Ground Cash
Market 4,047,31 4,047,31 2019-03 2019-0
services 404.73 950 No settleme
price 5.73 5.73 -23 4
revenue nt
Non-rou
tine
mainten
Cash
ance / Market 80,512.0 80,512.0 2019-03 2019-0
8.05 32 No settleme
revenue price 4 4 -23 4
nt
from
aircraft
service
Sales/le
ase of Cash
Market 44,044.0 44,044.0 2019-03 2019-0
air 4.4 22 No settleme
price 0 0 -23 4
material nt
revenue
Simulat
or
mainten Cash
Market 2,242,71 2,242,71 2019-03 2019-0
ance/ho 224.27 448.54 No settleme
price 4.31 4.31 -23 4
use nt
leasing
revenue
Compan
y
Sales/le
controll Sale of
ase of Cash
AMEC ed by goods/P Market 706,594. 706,594. 2019-03 2019-0
air 70.66 30 No settleme
O the rovide price 15 15 -23 4
material nt
second services
revenue
sharehol
ders
Office
rent and Cash
Market 21,387,8 21,387,8 2019-03 2019-0
The Purchas accomm 2,138.79 3,800 No settleme
price 61.95 61.95 -23 4
largest e goods odation nt
SDA
sharehol / Accept fee
ders service Cash
Residen Market 4,351,53 4,351,53 2019-03 2019-0
435.15 1,707 No settleme
ce fee price 4.65 4.65 -23 4
nt
22
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Compan
y
controll Purchas Aircraft
Cash
STAEC ed by e goods mainten Market 84,319,1 84,319,1 2019-03 2019-0
8,431.92 19,000 No settleme
O the / Accept ance price 57.89 57.89 -23 4
nt
largest service costs
sharehol
ders
Shandon
g Compan
Xiangyu y
Aeronau controll Purchas
Mainten Cash
tical ed by e goods Market 40,603,6 40,603,6 2019-03 2019-0
ance 4,060.37 15,000 No settleme
Technol the / Accept price 85.76 85.76 -23 4
cost nt
ogy largest service
Service sharehol
Co., ders
Ltd.
Vehicle
Shandon rental Cash
g Market 41,140,5 41,140,5 2019-03 2019-0
Compan fee and 4,114.05 8,000 No settleme
Airlines y price 35.12 35.12 -23 4
mainten nt
Rainbo controll Purchas ance fee
w ed by e goods
Cash
Automo the / Accept Residen Market 1,488,34 1,488,34 2019-03 2019-0
148.83 600 No settleme
bile largest service ce fee price 0.00 0.00 -23 4
nt
Service sharehol
Co., ders Cash
Abnorm Market 340,640. 340,640. 2019-03 2019-0
Ltd. 34.06 100 No settleme
al flights price 00 00 -23 4
nt
Shandon Compan
Aircraft
g y
suppli
Airlines controll Purchas
es and Cash
Xinzhih ed by e goods Market 2,795,63 2,795,63 2019-03 2019-0
and 279.56 1,360 No settleme
ang the / Accept price 8.44 8.44 -23 4
advert nt
Media largest service
ising
Co., sharehol
fees
Ltd. ders
Agency
2nd Purchas
commis Cash
Air largest e goods Market 1,026,59 1,026,59 2019-03 2019-0
sion 102.66 456 No settleme
China sharehol / Accept price 5.42 5.42 -23 4
expendit nt
der service
ure
23
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Ground
Cash
service Market 10,000,9 10,000,9 2019-03 2019-0
1,000.1 2,236 No settleme
expendit price 84.14 84.14 -23 4
nt
ure
Abnorm
al flight
and Cash
Market 13,620,1 13,620,1 2019-03 2019-0
resident 1,362.02 3,076 No settleme
price 67.56 67.56 -23 4
group nt
expense
s
Mainten Cash
Market 3,226,68 3,226,68 2019-03 2019-0
ance 322.67 1,200 No settleme
price 0.49 0.49 -23 4
cost nt
Purchasi
ng/leasi
Cash
ng air Market 185,603. 185,603. 2019-03 2019-0
18.56 40 No settleme
material price 37 37 -23 4
nt
expendit
ure
Cash
Market 889,287. 889,287. 2019-03 2019-0
Catering 88.93 180 No settleme
price 46 46 -23 4
nt
Ground
Cash
service Market 7,918,21 7,918,21 2019-03 2019-0
791.82 3,000 No settleme
expense price 6.40 6.40 -23 4
nt
Compan s
y
Mainten Cash
controll Purchas Market 87,204,4 87,204,4 2019-03 2019-0
ance 8,720.44 18,500 No settleme
AMEC ed by e goods price 01.98 01.98 -23 4
cost nt
O the / Accept
second service Purchasi
sharehol ng/leasi
Cash
ders ng air Market 90,670.2 90,670.2 2019-03 2019-0
9.07 20 No settleme
material price 1 1 -23 4
nt
expendit
ure
Sichuan Joint
Purchas
Services venture Mainten Cash
e goods Market 19,750.0 19,750.0 2019-03 2019-0
Aero-En of the ance 1.98 15,000 No settleme
/ Accept price 0 0 -23 4
gine 2nd cost nt
service
Mainten largest
24
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
ance sharehol
Co., der
Ltd.
Frequen
2nd Other t
Cash
Air largest related passeng Agreem 16,000,0 16,000,0 2019-03 2019-0
1,600 15,000 No settleme
China sharehol transacti er ent price 00.00 00.00 -23 4
nt
der on cooperat
ion
2nd Other Freight
Cash
Air largest related joint Agreem 1,914,42 1,914,42 2019-03 2019-0
191.44 600 No settleme
China sharehol transacti operatio ent price 6.62 6.62 -23 4
nt
der on n
35,309.0 112,310.
Total -- -- -- -- -- -- -- --
8 46
Details of return of sales in significant amount Not applicable
Report the actual implementation of the normal related transactions which were
Not applicable
projected about their total amount by types during the reporting period (if any)
Reasons for major difference between trading price and market reference price (if
Not applicable
applicable)
2. Related transactions of assets/equity acquisition and sold
No related transactions of assets/equity acquisition and sold for the Company in the reporting period.
3. Main related transactions of mutual investment outside
No main related transactions of mutual investment outside for the Company in the reporting period.
4. Contact of related credit and debt
There are no related credits or liabilities occurred in the reporting period.
5. Other related transactions
The Company has no other major related transaction in the reporting period.
XIII. Non-business capital occupying by controlling shareholders and its related parties
No non-business capital occupied by controlling shareholders and its related parties in the reporting period.
25
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
XIV. Significant contract and implementations
1. Trusteeship, contract and leasing
(1) Trusteeship
No trusteeship for the Company in the reporting period.
(2) Contract
No contract for the Company in the reporting period.
(3) Leasing
No leasing for the Company in the reporting period.
2. Major guarantees
No guarantees for the Company in the reporting period.
3. Other material contracts
No other material contracts for the Company in the reporting period.
XV. Social responsibility
1. Major environmental protection
The company and its subsidiaries do not belong to the key pollutant discharge units announced by the environmental protection
department.
2. Fulfill the social responsibility of target poverty alleviation
The Company has no target poverty alleviation temporary in the year and no subsequent program either.
XVI. Other major events
No other major events of the Company that need to be explained in the reporting period.
XVII. Major event of the subsidiaries
□ Applicable √ Not applicable
26
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Section VI. Changes in Shares and Particulars about Shareholders
I. Changes in Share Capital
1. Changes in Share Capital
In Share
Before changes (+,-) After changes
Capitalizatio
Amount Ratio New issue Bonus n of public Other Subtotal Amount Ratio
reserve
I. Unlisted shares 260,000,000 65.00% 260,000,000 65.00%
1. Sponsor shares 168,601,000 42.15% 168,601,000 42.15%
Including: State-owned
168,402,000 42.10% 168,402,000 42.10%
shares
Domestic
199,000 0.05% 199,000 0.05%
corporate shares
4. Preferred stock or
91,399,000 22.85% 91,399,000 22.85%
other
II. Listed shares 140,000,000 35.00% 140,000,000 35.00%
2. Domestically listed
140,000,000 35.00% 140,000,000 35.00%
foreign shares
III. Total shares 400,000,000 100.00% 400,000,000 100.00%
Reasons for share changed
□ Applicable √ Not applicable
Approval of share changed
□ Applicable √ Not applicable
Ownership transfer of share changes
□ Applicable √ Not applicable
Implementation progress of the share repurchases
□ Applicable √ Not applicable
Implementation progress of the reduction of repurchases shares by centralized bidding
□ Applicable √ Not applicable
Influence on the basic EPS and diluted EPS as well as other financial indexes of net assets per share attributable to common
shareholders of Company in latest year and period
□ Applicable √ Not applicable
Other information necessary to disclose or need to disclosed under requirement from security regulators
27
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
□ Applicable √ Not applicable
2. Changes of restricted shares
□ Applicable √ Not applicable
II. Securities issuance and listing
□ Applicable √ Not applicable
III. Number of shares and shares held
In Share
Total preference shareholders
Total common stock
with voting rights recovered at
shareholders in reporting 15,088 0
end of reporting period (if
period-end
applicable) (found in note 8)
Particulars about shares held above 5% by shareholders or top ten shareholders
Total common Amount of Amount of Number of shares
Proporti
shares hold at Changes in un-listed listed pledged/frozen
Nature of on of
Shareholders
shareholder shares the end of report report period common common State of
held Amount
period shares held shares held share
Shandong Aviation State-owned
42.00% 168,004,000 0 168,004,000 0
Group legal person
State-owned
Air China Limited 22.80% 91,200,000 0 91,200,000 0
legal person
Foreign
NORGES BANK 0.87% 3,498,479 0.00 0 3,498,479
legal person
VANGUARD
EMERGING Foreign
0.74% 2,960,917 0.00 0 2,960,917
MARKETS STOCK legal person
INDEX FUND
WANXIANG
INTERNATIONAL Foreign
0.66% 2,658,100 22100.00 0 2,658,100
INVESTMENT legal person
CORPORATION
VANGUARD TOTAL
Foreign
INTERNATIONAL 0.57% 2,268,651 395749.00 0 2,268,651
legal person
STOCK INDEX FUND
28
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
ISHARES CORE MSCI
Foreign
EMERGING 0.50% 1,982,453 -244200.00 0 1,982,453
legal person
MARKETS ETF
Domestic
Hou Chunhu nature 0.43% 1,731,045 0.00 0 1,731,045
person
Domestic
Chen Jingjian nature 0.40% 1,595,200 0.00 0 1,595,200
person
Domestic
Wang Jingqing nature 0.32% 1,279,053 0.00 0 1,279,053
person
Strategy investors or general legal
person becomes top 10 shareholders
N/A
due to rights issued (if applicable)
(found in note 3)
1. Shandong Aviation Group (SDA) is the first largest shareholder of the Company, who
holds the shares of the Company on behalf of the State with unlisted shares;
2. Air China Limited is the second largest shareholder of the Company, who holds the shares
Explanation on related relationship or of the Company on behalf of the State with unlisted shares;
concerted action among the 3. Among the above top ten shareholders, Air China Limited is the first largest shareholder
abovementioned shareholders of the SDA, and there exists no associated relationship between SDA and Air China and the
other shareholders, and they don’t belong to the consistent actionist regulated by the
Management Regulation of Information Disclosure on Change of Shareholding for Listed
Companies with the other shareholders.
Shareholding of top 10 circulated shareholders
Amount of listed shares held at end of Type of shares
Shareholders
the Period Type Amount
Domestically
NORGES BANK 3,498,479 listed foreign 3,498,479
shares
Domestically
VANGUARD EMERGING MARKETS STOCK
2,960,917 listed foreign 2,960,917
INDEX FUND
shares
Domestically
WANXIANG INTERNATIONAL INVESTMENT
2,658,100 listed foreign 2,658,100
CORPORATION
shares
Domestically
VANGUARD TOTAL INTERNATIONAL STOCK
2,268,651 listed foreign 2,268,651
INDEX FUND
shares
29
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Domestically
ISHARES CORE MSCI EMERGING MARKETS
1,982,453 listed foreign 1,982,453
ETF
shares
Domestically
Hou Chunhu 1,731,045 listed foreign 1,731,045
shares
Domestically
Chen Jingjian 1,595,200 listed foreign 1,595,200
shares
Domestically
Wang Jingqing 1,279,053 listed foreign 1,279,053
shares
Domestically
Xie Qingjun 1,131,391 listed foreign 1,131,391
shares
Domestically
GUOTAI JUNAN SECURITIES(HONGKONG)
987,753 listed foreign 987,753
LIMITED
shares
The Company is not aware of their associated relationship among the top ten
Expiation on associated relationship or consistent
shareholders of circulation share, and is unknown whether other circulation
actors within the top 10 un-restrict shareholders and
shareholders belong to the consistent actionist regulated by the Management
between top 10 un-restrict shareholders and top 10
Regulation of Information Disclosure on Change of Shareholding for Listed
common stock shareholders
Companies.
Top ten common shareholders or top ten common shareholders with un-restrict shares not held have a buy-back agreement dealing in
reporting period.
IV. Changes of controlling shareholders or actual controller
The controlling shareholder of the Company has no changed in reporting period.
The actual controller of the Company has no changed in reporting period.
30
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Section VII. Preferred Stock
The Company had no preferred stock in the reporting.
31
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Section VIII. Directors, Supervisors and Senior Executives
I. Changes of shares held by directors, supervisors and senior executives
Shares held by directors, supervisors and senior executives have no changes in reporting period, found more details in Annual Report
2018.
II. Resignation and dismissal of directors, supervisors and senior executives
No changes of directors, supervisors and senior executives, found more details in Annual Report 2018.
32
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Section IX. Corporate Bonds
Whether the Company has corporate bonds that issuance publicly and listed on stock exchange and without due on the date when
semi-annual report approved for released or fail to cash in full on due
No
33
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Section X. Financial Report
I. Audit report
The semi-annual financial report has not been audited.
II. Financial Statement
Statement in Financial Notes are carried in RMB/CNY
1. Consolidated Balance Sheet
Prepared by Shandong Airlines Co., Ltd
2019-06-30
In RMB
Item 2019-6-30 2018-12-31
Current assets:
Monetary funds 304,193,125.42 840,960,104.09
Settlement provisions
Capital lent
Tradable financial assets
Financial assets measured by fair
value and with variation reckoned into 90,488.17
current gains/losses
Derivative financial assets
Note receivable 11,600,000.00
Account receivable 441,139,307.45 413,726,456.71
Receivable financing
Accounts paid in advance 264,271,657.37 265,931,342.94
Insurance receivable
Reinsurance receivables
Contract reserve of reinsurance
receivable
Other account receivable 260,134,868.61 225,281,412.22
Including: Interest receivable
Dividend receivable 5,861,939.50
34
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Buying back the sale of financial
assets
Inventories 101,798,197.70 105,625,519.42
Contractual assets
Assets held for sale
Non-current asset due within one
year
Other current assets 208,392,765.74 236,596,457.60
Total current assets 1,591,529,922.29 2,088,211,781.15
Non-current assets:
Loans and payments on behalf
Debt investment
Finance asset available for sales 310,842,965.35
Other debt investment
Held-to-maturity investment
Long-term account receivable
Long-term equity investment
Investment in other equity
737,640,684.78
instrument
Other non-current financial assets
Investment real estate
Fixed assets 7,486,219,644.67 7,770,750,794.37
Construction in progress 5,330,499,256.87 4,790,300,972.13
Productive biological asset
Oil and gas asset
Right-of-use assets
Intangible assets 113,883,021.35 115,541,881.39
Expense on Research and
Development
Goodwill 454,020.13 454,020.13
Long-term expenses to be
563,904,330.04 573,645,342.64
apportioned
Deferred income tax asset 1,061,164,741.86 914,231,343.25
Other non-current asset
Total non-current asset 15,293,765,699.70 14,475,767,319.26
35
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Total assets 16,885,295,621.99 16,563,979,100.41
Current liabilities:
Short-term loans 700,000,000.00 580,000,000.00
Loan from central bank
Capital borrowed
Transactional financial liability 990,989.10
Financial liability measured by fair
value and with variation reckoned into
current gains/losses
Derivative financial liability
Note payable
Account payable 2,364,556,040.47 2,273,836,607.26
Accounts received in advance 616,440,029.96 787,371,671.33
Selling financial asset of
repurchase
Absorbing deposit and interbank
deposit
Security trading of agency
Security sales of agency
Wage payable 306,885,302.53 543,294,439.81
Taxes payable 187,517,958.00 252,717,258.87
Other account payable 725,736,208.84 635,499,470.13
Including: Interest payable 11,991,004.44 10,428,894.80
Dividend payable 80,602,306.96 602,306.96
Commission charge and
commission payable
Reinsurance payable
Contractual liability
Liability held for sale
Non-current liabilities due within
1,187,999,792.02 455,840,675.34
one year
Other current liabilities
Total current liabilities 6,090,126,320.92 5,528,560,122.74
Non-current liabilities:
Insurance contract reserve
36
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Long-term loans 916,789,856.70 1,885,556,557.83
Bonds payable
Including: Preferred stock
Perpetual capital
securities
Lease liability
Long-term account payable 4,756,048,059.26 4,368,213,445.33
Long-term wages payable 132,294,665.93 135,224,119.11
Accrual liability
Deferred income 115,349,049.17 118,279,868.16
Deferred income tax liabilities 190,627,407.57 56,819,008.96
Other non-current liabilities
Total non-current liabilities 6,111,109,038.63 6,564,092,999.39
Total liabilities 12,201,235,359.55 12,092,653,122.13
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
Less: Inventory shares
Other comprehensive income 469,398,778.51 149,300,488.94
Reasonable reserve
Surplus public reserve 503,999,977.58 503,999,977.58
Provision of general risk
Retained profit 3,235,251,142.65 3,342,615,148.06
Total owner’ s equity attributable to
4,684,060,262.44 4,471,325,978.28
parent company
Minority interests
Total owner’ s equity 4,684,060,262.44 4,471,325,978.28
Total liabilities and owner’ s equity 16,885,295,621.99 16,563,979,100.41
Legal Representative: Sun Xiujiang
Person in charge of Accounting Works: Xu Guojian
37
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Person in charge of Accounting Institution: Zhou Shoubin
2. Balance Sheet of Parent Company
In RMB
Item 2019-6-30 2018-12-31
Current assets:
Monetary funds 278,439,047.14 804,583,812.57
Transactional financial assets
Financial assets measured by fair
value and with variation reckoned into 90,488.17
current gains/losses
Derivative financial assets
Note receivable 11,600,000.00
Account receivable 440,475,793.23 412,570,738.01
Receivable financing
Accounts paid in advance 263,869,262.15 263,658,892.86
Other account receivable 270,169,429.36 239,078,612.04
Including: Interest receivable
Dividend receivable 5,861,939.50
Inventories 100,633,977.42 104,444,823.98
Contractual assets
Assets held for sale
Non-current assets maturing within
one year
Other current assets 207,928,635.50 236,057,827.36
Total current assets 1,573,116,144.80 2,060,485,194.99
Non-current assets:
Debt investment
Available-for-sale financial assets 310,842,965.35
Other debt investment
Held-to-maturity investments
Long-term receivables
Long-term equity investments 144,101,285.43 144,101,285.43
Investment in other equity
737,640,684.78
instrument
38
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Other non-current financial assets
Investment real estate
Fixed assets 7,384,367,240.12 7,667,474,888.84
Construction in progress 5,330,499,256.87 4,790,300,972.13
Productive biological assets
Oil and natural gas assets
Right-of-use assets
Intangible assets 100,911,004.18 102,375,769.20
Research and development costs
Goodwill
Long-term deferred expenses 563,439,893.34 572,919,885.06
Deferred income tax assets 1,060,218,808.84 913,510,618.39
Other non-current assets
Total non-current assets 15,321,178,173.56 14,501,526,384.40
Total assets 16,894,294,318.36 16,562,011,579.39
Current liabilities
Short-term borrowings 700,000,000.00 580,000,000.00
Transactional financial liability 990,989.10
Financial liability measured by fair
value and with variation reckoned into
current gains/losses
Derivative financial liability
Notes payable
Account payable 2,379,549,856.55 2,292,392,127.26
Accounts received in advance 615,394,198.49 785,082,130.23
Contractual liability
Wage payable 300,685,514.51 532,617,252.72
Taxes payable 183,978,225.86 248,981,430.52
Other accounts payable 788,973,447.85 680,079,759.56
Including: Interest payable 11,991,004.44 10,428,894.80
Dividend payable 80,011,940.00 11,940.00
Liability held for sale
Non-current liabilities due within
1,187,999,792.02 455,840,675.34
one year
Other current liabilities
39
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Total current liabilities 6,157,572,024.38 5,574,993,375.63
Non-current liabilities:
Long-term loans 916,789,856.70 1,885,556,557.83
Bonds payable
Including: preferred stock
Perpetual capital
securities
Lease liability
Long-term account payable 4,756,048,059.26 4,368,213,445.33
Long term employee compensation
132,294,665.93 135,224,119.11
payable
Accrued liabilities
Deferred income 115,349,049.17 118,279,868.16
Deferred income tax liabilities 189,518,940.91 55,645,338.38
Other non-current liabilities
Total non-current liabilities 6,110,000,571.97 6,562,919,328.81
Total liabilities 12,267,572,596.35 12,137,912,704.44
Owners’ equity:
Share capital 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 469,398,778.51 149,300,488.94
Special reserve
Surplus reserve 503,339,273.05 503,339,273.05
Retained profit 3,167,072,501.74 3,284,547,944.25
Total owner’s equity 4,626,721,722.01 4,424,098,874.95
Total liabilities and owner’s equity 16,894,294,318.36 16,562,011,579.39
Legal Representative: Sun Xiujiang
Person in charge of Accounting Works: Xu Guojian
40
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Person in charge of Accounting Institution: Zhou Shoubin
3. Consolidated Profit Statement
In RMB
Item Semi-annual of 2019 Semi-annual of 2018
I. Total operating income 8,989,068,400.72 8,729,278,564.65
Including: Operating income 8,989,068,400.72 8,729,278,564.65
Interest income
Insurance gained
Commission charge and
commission income
II. Total operating cost 9,090,783,089.32 8,670,223,238.39
Including: Operating cost 8,395,245,086.04 8,021,020,129.22
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
Tax and extras 7,772,903.17 7,022,422.74
Sales expense 388,566,377.89 393,527,536.39
Administrative expense 219,351,048.16 201,566,182.20
R&D expense 8,960,946.50 2,127,502.63
Financial expense 70,886,727.56 44,959,465.21
Including: Interest
70,674,180.26 52,548,207.24
expenses
Interest income 5,907,298.18 4,577,884.98
Add: other income 32,378,668.41 136,377,656.23
Investment income (Loss is
6,075,806.95 17,185,078.32
listed with “-”)
Including: Investment income
on affiliated company and joint venture
41
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
The termination of income
recognition for financial assets measured
by amortized cost(Loss is listed with “-”)
Exchange income (Loss is
listed with “-”)
Net exposure hedging income
(Loss is listed with “-”)
Income from change of fair
-1,081,477.27 3,510,568.94
value (Loss is listed with “-”)
Loss of credit impairment
-752,815.03
(Loss is listed with “-”)
Losses of devaluation of asset
-4,271,098.28
(Loss is listed with “-”)
Income from assets disposal
32,155.55 26,470,970.71
(Loss is listed with “-”)
III. Operating profit (Loss is listed with
-65,062,349.99 238,328,502.18
“-”)
Add: Non-operating income 21,585,703.86 23,590,611.36
Less: Non-operating expense 1,518,515.48 822,099.62
IV. Total profit (Loss is listed with “-”) -44,995,161.61 261,097,013.92
Less: Income tax expense -17,631,156.20 57,366,309.27
V. Net profit (Net loss is listed with “-”) -27,364,005.41 203,730,704.65
(i) Classify by business continuity
1.continuous operating net profit
-27,364,005.41 203,730,704.65
(net loss listed with ‘-”)
2.termination of net profit (net loss
listed with ‘-”)
(ii) Classify by ownership
1.Net profit attributable to owner’s
-27,364,005.41 203,730,704.65
of parent company
2.Minority shareholders’ gains and
losses
VI. Net after-tax of other comprehensive
-39,388,032.24 -3,297,445.81
income
Net after-tax of other comprehensive
income attributable to owners of parent -39,388,032.24 -3,297,445.81
company
(I) Other comprehensive income -39,388,032.24
42
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
items which will not be reclassified
subsequently to profit of loss
1.Changes of the defined
benefit plans that re-measured
2.Other comprehensive
income under equity method that cannot
be transfer to gain/loss
3.Change of fair value of
-39,388,032.24
investment in other equity instrument
4.Fair value change of
enterprise's credit risk
5. Other
(ii) Other comprehensive income
items which will be reclassified -3,297,445.81
subsequently to profit or loss
1.Other comprehensive
income under equity method that can
transfer to gain/loss
2.Change of fair value of
other debt investment
3.gain/loss of fair value
changes for available-for-sale financial -3,297,445.81
assets
4.Amount of financial assets
re-classify to other comprehensive
income
5.Gain/loss of
held-to-maturity investments that
re-classify to available-for-sale financial
asset
6.Credit impairment
provision for other debt investment
7.Cash flow hedging reserve
8.Translation differences
arising on translation of foreign currency
financial statements
9.Other
Net after-tax of other comprehensive
income attributable to minority
43
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
shareholders
VII. Total comprehensive income -66,752,037.65 200,433,258.84
Total comprehensive income
-66,752,037.65 200,433,258.84
attributable to owners of parent Company
Total comprehensive income
attributable to minority shareholders
VIII. Earnings per share:
(i) Basic earnings per share -0.07 0.51
(ii) Diluted earnings per share -0.07 0.51
Legal Representative: Sun Xiujiang
Person in charge of Accounting Works: Xu Guojian
Person in charge of Accounting Institution: Zhou Shoubin
4. Profit Statement of Parent Company
In RMB
Item Semi-annual of 2019 Semi-annual of 2018
I. Operating income 8,977,094,417.01 8,705,788,696.40
Less: Operating cost 8,407,682,821.24 8,024,729,324.52
Taxes and surcharge 6,505,227.42 5,698,254.63
Sales expenses 387,368,758.11 390,855,000.75
Administration expenses 210,684,463.59 193,189,730.69
R&D expenses 8,960,946.50 2,127,502.63
Financial expenses 70,919,841.98 44,994,192.39
Including: interest
70,674,180.26 52,565,577.11
expenses
Interest income 5,865,471.69 4,540,454.18
Add: other income 32,378,668.41 136,377,656.23
Investment income (Loss is
6,075,806.95 17,185,078.32
listed with “-”)
Including: Investment income
on affiliated Company and joint venture
The termination of
income recognition for financial assets
measured by amortized cost (Loss is
44
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
listed with “-”)
Net exposure hedging income
(Loss is listed with “-”)
Changing income of fair
-1,081,477.27 3,510,568.94
value (Loss is listed with “-”)
Loss of credit impairment
-712,515.81
(Loss is listed with “-”)
Losses of devaluation of asset
-4,230,286.05
(Loss is listed with “-”)
Income on disposal of assets
32,155.55 26,470,970.71
(Loss is listed with “-”)
II. Operating profit (Loss is listed with
-78,335,004.00 223,508,678.94
“-”)
Add: Non-operating income 21,491,775.88 22,810,217.85
Less: Non-operating expense 1,475,292.76 814,599.62
III. Total Profit (Loss is listed with “-”) -58,318,520.88 245,504,297.17
Less: Income tax -20,843,078.37 53,584,198.21
IV. Net profit (Net loss is listed with
-37,475,442.51 191,920,098.96
“-”)
(i)continuous operating net profit
-37,475,442.51 191,920,098.96
(net loss listed with ‘-”)
(ii) termination of net profit (net
loss listed with ‘-”)
V. Net after-tax of other comprehensive
-39,388,032.24 -3,297,445.81
income
(I) Other comprehensive income
items which will not be reclassified -39,388,032.24
subsequently to profit of loss
1.Changes of the defined
benefit plans that re-measured
2.Other comprehensive
income under equity method that cannot
be transfer to gain/loss
3.Change of fair value of
-39,388,032.24
investment in other equity instrument
4.Fair value change of
enterprise's credit risk
5. Other
45
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
(II) Other comprehensive income
items which will be reclassified -3,297,445.81
subsequently to profit or loss
1.Other comprehensive
income under equity method that can
transfer to gain/loss
2.Change of fair value of
other debt investment
3.gain/loss of fair value
changes for available-for-sale financial -3,297,445.81
assets
4.Amount of financial
assets re-classify to other
comprehensive income
5.Gain/loss of
held-to-maturity investments that
re-classify to available-for-sale financial
asset
6.Credit impairment
provision for other debt investment
7.Cash flow hedging
reserve
8.Translation differences
arising on translation of foreign
currency financial statements
9.Other
VI. Total comprehensive income -76,863,474.75 188,622,653.15
VII. Earnings per share:
(i) Basic earnings per share
(ii) Diluted earnings per share
Legal Representative: Sun Xiujiang
Person in charge of Accounting Works: Xu Guojian
Person in charge of Accounting Institution: Zhou Shoubin
5. Consolidated Cash Flow Statement
In RMB
46
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Item Semi-annual of 2019 Semi-annual of 2018
I. Cash flows arising from operating
activities:
Cash received from selling
commodities and providing labor 9,527,227,600.19 9,450,627,576.50
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
Cash received from interest,
commission charge and commission
Net increase of capital borrowed
Net increase of returned business
capital
Net cash received by agents in sale
and purchase of securities
Write-back of tax received 82,716,519.16 83,390,509.60
Other cash received concerning
112,106,927.26 320,117,399.23
operating activities
Subtotal of cash inflow arising from
9,722,051,046.61 9,854,135,485.33
operating activities
Cash paid for purchasing
commodities and receiving labor 6,916,956,252.90 6,822,788,678.81
service
Net increase of customer loans and
advances
Net increase of deposits in central
bank and interbank
Cash paid for original insurance
47
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
contract compensation
Net increase of financial assets
held for transaction purposes
Net increase of capital lent
Cash paid for interest, commission
charge and commission
Cash paid for bonus of guarantee
slip
Cash paid to/for staff and workers 1,722,383,558.60 1,703,025,818.36
Taxes paid 446,584,469.95 396,035,113.85
Other cash paid concerning
92,050,109.48 73,387,711.43
operating activities
Subtotal of cash outflow arising from
9,177,974,390.93 8,995,237,322.45
operating activities
Net cash flows arising from operating
544,076,655.68 858,898,162.88
activities
II. Cash flows arising from investing
activities:
Cash received from recovering
investment
Cash received from investment
income
Net cash received from disposal of
fixed, intangible and other long-term 32,155.55 60,179,426.82
assets
Net cash received from disposal of
subsidiaries and other units
Other cash received concerning
213,867.45
investing activities
Subtotal of cash inflow from investing
246,023.00 60,179,426.82
activities
Cash paid for purchasing fixed,
1,221,400,170.90 1,861,780,571.74
intangible and other long-term assets
Cash paid for investment
Net increase of mortgaged loans
Net cash received from
308,439.57
subsidiaries and other units obtained
Other cash paid concerning 23,033.18
48
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
investing activities
Subtotal of cash outflow from investing
1,221,400,170.90 1,862,112,044.49
activities
Net cash flows arising from investing
-1,221,154,147.90 -1,801,932,617.67
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 590,000,000.00 1,068,235,943.70
Cash received from issuing bonds
Other cash received concerning
485,947,232.59 424,203,461.76
financing activities
Subtotal of cash inflow from financing
1,075,947,232.59 1,492,439,405.46
activities
Cash paid for settling debts 664,738,351.88 296,942,824.00
Cash paid for dividend and profit
54,073,386.37 28,011,548.45
distributing or interest paying
Including: Dividend and profit of
minority shareholder paid by
subsidiaries
Other cash paid concerning
207,230,938.23 112,793,486.52
financing activities
Subtotal of cash outflow from financing
926,042,676.48 437,747,858.97
activities
Net cash flows arising from financing
149,904,556.11 1,054,691,546.49
activities
IV. Influence on cash and cash
equivalents due to fluctuation in -9,594,042.56 16,694,919.05
exchange rate
V. Net increase of cash and cash
-536,766,978.67 128,352,010.75
equivalents
Add: Balance of cash and cash
840,860,104.09 543,584,920.30
equivalents at the period -begin
VI. Balance of cash and cash 304,093,125.42 671,936,931.05
49
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
equivalents at the period -end
Legal Representative: Sun Xiujiang
Person in charge of Accounting Works: Xu Guojian
Person in charge of Accounting Institution: Zhou Shoubin
6. Cash Flow Statement of Parent Company
In RMB
Item Semi-annual of 2019 Semi-annual of 2018
I. Cash flows arising from operating
activities:
Cash received from selling
commodities and providing labor 9,508,517,501.17 9,421,086,850.96
services
Write-back of tax received 82,716,519.16 83,390,509.60
Other cash received concerning
130,625,833.27 349,582,900.65
operating activities
Subtotal of cash inflow arising from
9,721,859,853.60 9,854,060,261.21
operating activities
Cash paid for purchasing
commodities and receiving labor 6,949,755,088.64 6,863,379,480.88
service
Cash paid to/for staff and workers 1,694,914,700.43 1,673,930,736.16
Taxes paid 437,444,736.86 387,845,074.05
Other cash paid concerning
88,175,822.08 73,047,402.40
operating activities
Subtotal of cash outflow arising from
9,170,290,348.01 8,998,202,693.49
operating activities
Net cash flows arising from operating
551,569,505.59 855,857,567.72
activities
II. Cash flows arising from investing
activities:
Cash received from recovering
investment
Cash received from investment
income
50
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Net cash received from disposal of
fixed, intangible and other long-term 32,155.55 60,179,426.82
assets
Net cash received from disposal of
subsidiaries and other units
Other cash received concerning
213,867.45
investing activities
Subtotal of cash inflow from investing
246,023.00 60,179,426.82
activities
Cash paid for purchasing fixed,
1,218,270,807.57 1,860,537,911.36
intangible and other long-term assets
Cash paid for investment
Net cash received from
308,439.57
subsidiaries and other units obtained
Other cash paid concerning
23,033.18
investing activities
Subtotal of cash outflow from investing
1,218,270,807.57 1,860,869,384.11
activities
Net cash flows arising from investing
-1,218,024,784.57 -1,800,689,957.29
activities
III. Cash flows arising from financing
activities
Cash received from absorbing
investment
Cash received from loans 590,000,000.00 1,068,235,943.70
Cash received from issuing bonds
Other cash received concerning
485,947,232.59 424,203,461.76
financing activities
Subtotal of cash inflow from financing
1,075,947,232.59 1,492,439,405.46
activities
Cash paid for settling debts 664,738,351.88 296,942,824.00
Cash paid for dividend and profit
54,073,386.37 28,011,548.45
distributing or interest paying
Other cash paid concerning
207,230,938.23 112,793,486.52
financing activities
Subtotal of cash outflow from financing
926,042,676.48 437,747,858.97
activities
Net cash flows arising from financing 149,904,556.11 1,054,691,546.49
51
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
activities
IV. Influence on cash and cash
equivalents due to fluctuation in -9,594,042.56 16,694,919.05
exchange rate
V. Net increase of cash and cash
-526,144,765.43 126,554,075.97
equivalents
Add: Balance of cash and cash
804,583,812.57 516,216,370.03
equivalents at the period -begin
VI. Balance of cash and cash
278,439,047.14 642,770,446.00
equivalents at the period -end
Legal Representative: Sun Xiujiang
Person in charge of Accounting Works: Xu Guojian
Person in charge of Accounting Institution: Zhou Shoubin
7. Statement of Changes in Owners’ Equity (Consolidated)
This Period
In RMB
Semi-annual of 2019
Owners’ equity attributable to the parent Company
Other
equity instrument Other Minori Total
Item Perpe Less: compr Provisi
Share Reaso Surplu Retain ty owners
tual Capital Invent ehensi on of Subtot interes
capita Prefe nable s ed Other ’
capit reserve ory ve genera al
l rred Other reserve reserve profit ts equity
al shares incom l risk
stock
secur e
ities
I. Balance at the 400,0 75,410 149,30 503,99 3,342, 4,471, 4,471,
end of the last 00,00 ,363.7 0,488. 9,977. 615,14 325,97 325,97
year 0.00 0 94 58 8.06 8.28 8.28
Add: 359,48 359,48 359,48
Changes of
6,321. 6,321. 6,321.
accounting
81 81 81
policy
Error
correction of the
last period
Enterprise
combine under
the same
52
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
control
Other
II. Balance at 400,0 75,410 508,78 503,99 3,342, 4,830, 4,830,
the beginning of 00,00 ,363.7 6,810. 9,977. 615,14 812,30 812,30
this year 0.00 0 75 58 8.06 0.09 0.09
III. Increase/
Decrease in this -39,38 -107,3 -146,7 -146,7
year (Decrease 8,032. 64,005 52,037 52,037
is listed with 24 .41 .65 .65
“-”)
(i) Total -39,38 -27,36 -66,75 -66,75
comprehensive 8,032. 4,005. 2,037. 2,037.
income 24 41 65 65
(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
-80,00 -80,00 -80,00
(III) Profit
0,000. 0,000. 0,000.
distribution
00 00 00
1. Withdrawal
of surplus
reserves
2. Withdrawal
of general risk
provisions
3. Distribution -80,00 -80,00 -80,00
for owners (or 0,000. 0,000. 0,000.
shareholders) 00 00 00
4. Other
(IV) Carrying
forward internal
53
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
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．Carry-over
retained
earnings from
the defined
benefit plans
5．Carry-over
retained
earnings from
other
comprehensive
income
6. Other
(V) Reasonable
reserve
1. Withdrawal
in the report
period
2. Usage in the
report period
(VI)Others
IV. Balance at 400,0 75,410 469,39 503,99 3,235, 4,684, 4,684,
the end of the 00,00 ,363.7 8,778. 9,977. 251,14 060,26 060,26
report period 0.00 0 51 58 2.65 2.44 2.44
Last Period
In RMB
Semi-annual of 2018
Owners’ equity attributable to the parent Company
Other
Other Minorit
equity instrument Total
Item Less: compr Provisi y
Share Perp Reaso Surplu Retain owners’
Capital Invent ehensi on of Subtot interest
capita Prefe etual nable s ed Other equity
reserve ory ve genera al
l rred capit Other reserve reserve profit s
shares incom l risk
stock al
e
secur
54
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
ities
I. Balance at 400,0 75,410 178,49 471,45 3,127, 4,253, 4,253,1
the end of the 00,00 ,363.7 4,839. 7,259. 778,55 141,01 41,013.
last year 0.00 0 48 99 0.76 3.93 93
Add:
Changes of
accounting
policy
Error
correction of
the last period
Enterprise
combine
under the
same control
Other
II. Balance at 400,0 75,410 178,49 471,45 3,127, 4,253, 4,253,1
the beginning 00,00 ,363.7 4,839. 7,259. 778,55 141,01 41,013.
of this year 0.00 0 48 99 0.76 3.93 93
III. Increase/
Decrease in this 103,73 100,43
-3,297, 100,433
year (Decrease 0,704. 3,258.
445.81 ,258.84
is listed with 65 84
“-”)
(i) Total 203,73 200,43
-3,297, 200,433
comprehensive 0,704. 3,258.
445.81 ,258.84
income 65 84
(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
(III) Profit
-100,0 -100,0 -100,00
distribution
55
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
00,000 00,000 0,000.0
.00 .00 0
1. Withdrawal
of surplus
reserves
2. Withdrawal
of general risk
provisions
3. Distribution -100,0 -100,0 -100,00
for owners (or 00,000 00,000 0,000.0
shareholders) .00 .00 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．Carry-over
retained
earnings
from the
defined
benefit plans
5．Carry-over
retained
earnings from
other
comprehensive
income
6. Other
(V) Reasonable
reserve
1. Withdrawal
in the report
period
2. Usage in the
report period
56
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
(VI)Others
IV. Balance at 400,0 75,410 175,19 471,45 3,231, 4,353, 4,353,5
the end of the 00,00 ,363.7 7,393. 7,259. 509,25 574,27 74,272.
report period 0.00 0 67 99 5.41 2.77 77
Legal Representative: Sun Xiujiang
Person in charge of Accounting Works: Xu Guojian
Person in charge of Accounting Institution: Zhou Shoubin
8. Statement of Changes in Owners’ Equity (Parent Company)
This Period
In RMB
Semi-annual of 2019
Other equity instrument
Perpet Other
Capital Less: Reasona Total
Item Share Preferr ual compreh Surplus Retaine
public Inventor ble Other owners’
capital ed capital Other ensive reserve d profit
reserve y shares reserve equity
stock securiti income
es
I. Balance at the 400,00 86,911,1 149,300, 503,339,
3,284,5
4,424,098,
end of the last 0,000.0 47,944.
68.71 488.94 273.05 874.95
year 0 25
Add:
Changes of 359,486, 359,486,3
accounting 321.81 21.81
policy
Error
correction of the
last period
Other
II. Balance at the 400,00 86,911,1 508,786, 503,339,
3,284,5
4,783,585,
beginning of this 0,000.0 47,944.
68.71 810.75 273.05 196.76
year 0 25
III. Increase/ -117,47
Decrease in this -39,388, -156,863,4
5,442.5
year (Decrease is 032.24 74.75
1
listed with “-”)
(i) Total -39,388, -37,475 -76,863,47
comprehensive
032.24 ,442.51 4.75
income
(ii) Owners’
devoted and
decreased capital
57
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
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
(III) Profit -80,000 -80,000,00
distribution ,000.00 0.00
1. Withdrawal of
surplus reserves
2. Distribution -80,000 -80,000,00
for owners (or
,000.00 0.00
shareholders)
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．Carry-over
retained earnings
from the defined
benefit plans
5．Carry-over
retained earnings
from other
comprehensive
income
6. Other
(V) Reasonable
reserve
58
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
1. Withdrawal in
the report period
2. Usage in the
report period
(VI)Others
IV. Balance at 400,00 86,911,1 469,398, 503,339,
3,167,0
4,626,721,
the end of the 0,000.0 72,501.
68.71 778.51 273.05 722.01
report period 0 74
Last period
In RMB
Semi-annual of 2018
Other equity
instrument
Other
Perpet Capital Less: Total
Item Share compre Reasonab Surplus Retained
Preferr ual public Inventor Other owners’
capital hensive le reserve reserve profit
ed capital Other reserve y shares equity
income
stock securit
ies
I. Balance at the 400,00 86,911,1 178,494 470,796 3,091,663 4,227,866,0
end of the last 0,000.
68.71 ,839.48 ,555.46 ,485.91 49.56
year 00
Add:
Changes of
accounting
policy
Error
correction of
the last period
Other
II. Balance at 400,00 86,911,1 178,494 470,796 3,091,663 4,227,866,0
the beginning 0,000.
68.71 ,839.48 ,555.46 ,485.91 49.56
of this year 00
III. Increase/
Decrease in this -3,297,4 91,920,09 88,622,653.
year (Decrease
45.81 8.96 15
is listed with
“-”)
(i) Total -3,297,4 191,920,0 188,622,65
comprehensive
45.81 98.96 3.15
income
(ii) Owners’
devoted and
decreased
capital
1.Common
shares invested
59
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
by shareholders
2. Capital
invested by
holders of other
equity
instruments
3. Amount
reckoned into
owners equity
with
share-based
payment
4. Other
(III) Profit -100,000, -100,000,00
distribution 000.00 0.00
1. Withdrawal
of surplus
reserves
2. Distribution -100,000, -100,000,00
for owners (or
000.00 0.00
shareholders)
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．Carry-over
retained
earnings from
the defined
benefit plans
5．Carry-over
retained
earnings from
other
comprehensive
income
6. Other
60
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
(V) Reasonable
reserve
1. Withdrawal
in the report
period
2. Usage in the
report period
(VI)Others
IV. Balance at 400,00 86,911,1 175,197 470,796 3,183,583 4,316,488,7
the end of the 0,000.
68.71 ,393.67 ,555.46 ,584.87 02.71
report period 00
Legal Representative: Sun Xiujiang
Person in charge of Accounting Works: Xu Guojian
Person in charge of Accounting Institution: Zhou Shoubin
61
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Shandong Airlines Co., Ltd.
Notes to the Financial Statements
for the Year Ended 30 June 2019
(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 291999.
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 25 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 26 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 26 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 28 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 222000; and, the Company was listed on the Shenzhen Stock
Exchange on September 12 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 28 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 3 2004;
And, 91,200,000 shares of the Company then became held by Air China.
Legal representative of the Company: SUN, Xiujiang
Place of registration: Shandong Jinan Yaoqiang International Airport
62
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
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; inter-airline
agenting, and principal operation related ground services; sales of airborne material and equipments, grocery, food, health food, art work, souvenir,
etc.; retailing of tobacco products (limited to Qingdao Red-Crowned Crane Hotel); lease of airborne material and equipments; venue rental, private
house rental, business services, hotel accommodation agents and ticket agents; 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,but involve operation related to commoditythat are subject to quotas , licence requirements, whichare
restricted to obtain permission before the operation)(the project that subjects to the approval in accordance with the law, can carry out business
activities only after the approval of the relevant departments to carry out business activities).
The scope of the Company's consolidation in the current period has not changed compared with the previous year.
The Company and the subsidiaries mainly operate in the industry of air transportation.
Note 2 Basis for preparation of the financial statements
2.1 Basis for preparation
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) on February 15 2006, and revised Accounting Standards (order 42 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 June 30 2019.
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 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 formulate a number of specific
63
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
accounting policies and accounting estimates for the revenue recognition and other transactions in accordance with the actual features of
production and management, and the relevant provisions of the Accounting Standards. 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 judgements 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.
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
64
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
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 transactions,
according to “The notice of the Ministry of Finance on the issuance of Accounting Standards Interpretation No. 5” (CaiKuai [2012] No. 19) and
Article 51 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 transactions whether they are the "package deal". If it belongs to the “package deal” in reference to the preceding
paragraphs of this section and the Notes described in 4.13 “Long-term equity investments” 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 value of the acquiree'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
65
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
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 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 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
66
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
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:① these transactions are considered simultaneously, or in the case of mutual
influence made, ② these transactions as a whole in order to achieve a complete business results; ③ the occurrence of a transaction depends
on occurs at least one other transaction; ④ a 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 4.13.2.4)) 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 parties have 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, and obligations for the liabilities, relating to the arrangement. A joint venture is a joint arrangement whereby the
Company has rights to the net assets of the arrangement.
The Company accounts for joint ventures using the equity method, see Note 4.13.2.2) for details.
The company, a joint operator, recognizes in relation to its interest in a joint operation:(a)its assets, including its share of any assets held
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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 the joint
operation;(d)its share of the revenue from the sale of the output by the joint operation; 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 a joint 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, recognizes gains and losses resulting from such a transaction only to
the extent of the other parties' interests in the joint operation. When there is evidence of a reduction in the net realizable value of the assets to be
sold or contributed to the joint operation, or of an impairment loss of those assets which is in line with provision stipulated by CAS 8, those losses
are recognized fully by the Company. When there is evidence of a reduction in the net realizable value of the assets to be purchased or of an
impairment loss of those assets, the Company shall recognize 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
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.
In the preparation of consolidated financial statements involving overseas operations, if there is a monetary item in foreign
currency which essentially constitutes a net investment in overseas operation, the exchange difference arising from exchange
rate fluctuation will be included in other comprehensive income. When disposal of overseas operations, it will be transferred
to the current profit or loss.
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
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When the consolidated financial statements include foreign operation(s), if there is a foreign currency monetary item
constituting a net investment in a foreign operation, exchange difference arising from changes in exchange rates are
recognized as “exchange differences arising on translation of financial statements denominated in foreign currencies” in
owner’s equity, and in profit or loss for the period upon disposal of the foreign operation.
The Group translates the financial statements of its foreign operations into CNY by following rules. Assets and liabilities
in the balance sheet are translated at the spot exchange rate prevailing at the balance sheet date; all equity items except for
retained earnings are translated at the spot exchange rates at the dates on which such items occur; income and expenses in
income statement are translated at the spot exchange rates at the date of transaction; the opening retained earnings is the
closing retained earnings of the last period after translation; the closing balance of retained earnings is calculates and
presented in the basis of each translated income statements and profit distribution item; the difference arising between the
assets and liabilities and shareholders’ equity shall be booked as translation difference of foreign currency statements, and
shall be presented as a separate component of equity in the balance sheet. On a loss of control over Group’s oversea
operation due to disposal, the Company transfers the accumulated or proportionate share of the accumulated exchange
difference arising on translation of financial statements of this oversea operation attributable to the owners’ equity of the
Company and presented under shareholders’ equity, to profit or loss in the period in which the disposal occurs.
Foreign currency cash flows and cash flow of oversea subsidiaries are translated at the spot exchange rates on the date of
cash flows. The effect of exchange rate changes on cash is separately presented as an adjustment item in the cash flow
statement.
Comparatives are disclosed using the translated amounts for the previous period.
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
A financial asset or financial liability is recognised in the balance sheet when the Company becomes a party to the contractual provisions of a
financial instrument.
4.9.1 Classification, recognition and initial measurement of financial assets
The classification of financial assets is generally based on the business model in which a financial asset is managed and its contractual cash flow
characteristics. On initial recognition, a financial asset is classified as measured at amortised cost, at fair value through other comprehensive
income (“FVOCI”), or at fair value through profit or loss (“FVTPL”).
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Financial assets are measured at fair value on initial recognition. For FVTPL, the related transaction expense is directly recognised in current profit
or loss. For other types of financial assets, related transaction costs are included in the initial recognition amount.For the accounts receivable or
notes receivable arising from the sale of products or the provision of labor services that do not contain or consider the significant financing
components, the Company shall use the consideration amount that is expected to be received as the initial confirmation amount.
4.9.1.1 Financial asset at amortised cost
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:
-it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
-its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount
outstanding.
For these financial assets, the Company adopts the effective interest rate method and performs subsequent measurement according to the
amortized cost. The gains or losses arising from amortization or impairment are recognised in profit or loss for the current period.
4.9.1.2 Financial asset at FVOCI
A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:
- it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and
-its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount
outstanding. These financial assets are measured at fair value and their changes are included in other comprehensive income. The impairment loss
or gains, exchange gains and losses and interest income calculated according to the effective interest method are included in the current profit and
loss.
In addition, the Company has designated certain non-trading equity instrument investments as FVOCI. The relevant dividend income of such
financial assets is included in the current profit and loss, and changes in fair value are included in other comprehensive income.When the financial
assets are derecognised, the accumulated gains or losses previously recognised in other comprehensive income are transferred from other
comprehensive income to retained earnings, which are not recognised in profit or loss.
4.9.1.3 Financial asset at FVTPL
All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at FVTPL. On initial recognition, the
Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at FVOCI as at
FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.
4.9.2 Classification, recognition and initial measurement of financial liabilities
On initial recognition, a financial liabilities is classified as measured at amortised cost, at fair value through other comprehensive income (“FVOCI”),
or at fair value through profit or loss (“FVTPL”).
For financial liabilities at fair value through profit or loss, any related directly attributable transaction costs are charged to profit or loss; for other
categories of financial liabilities, any related directly attributable transaction costs are included in their initial costs.
4.9.2.1 Financial liabilities at FVTPL
A financial liability is classified as at FVTPL if it is classified as held-for-trading (including derivative financial liability) or it is designated as such on
initial recognition. Trading financial liabilities (including derivatives that are financial liabilities) are subsequently measured at fair value and changes
in fair value are recognised in profit or loss except for hedge accounting.
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A financial liabilities designated as at FVTPL, its changes in fair value of liabilities arising from changes in the Company's own credit risk are
included in other comprehensive income. When the liability is derecognised, the accumulated changes in fair value arising from changes in the
credit risk of other comprehensive income are transferred to retained earnings,othe changes in value are included in the current profit and loss.If
the effects of changes in the credit risk of these financial liabilities are treated as described above, the accounting mismatch in profit or loss will be
caused or expanded, and the entire gain or loss of the financial liability(including the amount of the company's own credit risk changes) will be
included in the current profit and loss.
4.9.2.2 Other financial liabilities
An entity shall classify all financial liabilities as measured at amortised cost, except for financial liabilities that arise when a transfer of a financial
asset does not qualify for derecognition or when the continuing involvement approach applies, and financial guarantee contracts. It is subsequently
measured at amortised costs and any gains or losses arising from derecognition and amortisation arerecognised in profit or loss.
4.9.3 Transfer of financial assets
A financial asset is derecognised is either of the following is present:
a. the contractual right to receive cash flows associated with this financial asset ceases;
b. the financial asset is given away and substantially all risks and rewards attached to the ownership of the financial asset is transferred to the
transferee;
c. the financial asset is given away while substantially all risks and rewards attached to the ownership of the financial asset is neither retained nor
transferred by the Company, but the Company has given up control of this financial asset.
Where the Company neither retains nor transfer substantially all risks and rewards attached to the ownership of a financial asset and does not give
up the control over this financial asset, the Company continues to recognise the financial asset and any financial liability based on the Company
continual involvement in the financial asset. The degree of the Company continual involvement in a financial asset is the level of risk faced by the
Company asiring from change in the value of the financial asset.
Where the transfer of a financial asset satisfies derecognition of the financial asset, the difference between the book value of the financial asset and
the sum of the consideration for giving away the financial asset and cumulative other comprehensive income associated with the financial asset is
recognised in profit or loss.
Where transfer of a financial asset partly satisfies the de-recognition criteria, the carrying amount of the transferred financial asset is allocated to
the de-recognised part and the part of continual involvement with reference to the respective fair value of the two parts; the excess of the sum of
the consideration received and the cumulative changes in fair value attributable to the de-recognised part previously recognised in other
comprehensive income over the carrying amount allocated to the de-recognised part is recognised in profit or loss for the period during which the
transfer occurs.
In terms of a financial asset sold with recourse or a financial asset transferred by endorsement, its de-recognition is subject to assessment of
whether substantially all risks and rewards attached to its ownership have been transferred. The financial asset is de-recognised if substantially all
risks and rewards attached to its ownership are transferred to the transferee; the Group continues to recognise such financial asset if the Group
retains substantially all risks and rewards attached to its ownership; where the Group neither transfers nor retains substantially all risks and rewards
attached to the ownership of the financial asset, the Group’s control over such financial asset shall be assessed and the financial asset accounted
for in accordance with the previous paragraphs accordingly.
4.9.4 Derecognition of financial liabilities
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A financial liability is wholly or partly de-recognised when the present obligation attached to it has been wholly or partly released. Where an
agreement is entered into by the Group and the creditor(s) which provides for the replacement of the existing financial liabilities by new financial
liabilities that are different in substance to the existing financial liabilities, the existing and new financial liabilities are de-recognised and recognised
respectively.
When a financial liability is wholly or partly de-recognised, the difference between the consideration paid (including non-monetary assets given
away and new financial liabilities assumed) and the book value of the de-recognised part is recognised in profit or loss for the period during which
the de-recognition occurs.
4.9.5 Offsetting
Financial assets and financial liabilities are generally presented separately in the balance sheet, and are not offset. However, a financial asset and
a financial liability are offset and the net amount is presented in the balance sheet when both of the following conditions are satisfied:
-The Company currently has a legally enforceable right to set off the recognised amounts;
-The Company intends either to settle on a net basis, or to realise the financial asset and settle the financial liability simultaneously.
4.9.6 Determination of the fair value of financial assets and financial liabilities
Fair value is the price for which an asset is exchange or a liability settled in an arm's length transaction between knowledgeable and willing parties.
The Group uses the market price as the fair value of a financial instrument if there is an active market for the instrument. A price quoted by an
active market is a price which can be easily and regularly obtained from stock exchanges, brokers, industrial associations, pricing agencies, etc.
and which is representative of the settlement price of an actual arm's length transaction. The fair value of a financial instrument for which there isn't
an active market is determined by the Group using pricing methodology. Applicable pricing methodology includes reference to recent settlement
prices in arm's length transactions between knowledgeable and willing parties, reference to the pricing-date fair value of financial instruments which
are in substance the same to the pricing subject, future cash flow discounting, and option pricing models. At the time of valuation, the company
uses valuation techniques that are available in the current situation with sufficient data and other information to support it. The company selects
input values that are consistent with the characteristics of the asset or liability that the market participants consider in the transaction of the relevant
asset or liability, and prioritizes the relevant observable inputs as much as possible. Use unallowable values if the relevant observable input values
are not available or are not practicable.
4.9.7 Equity instrument
An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. It is regarded as
change of equity when the Group issues (refinancing inclusive), buys back, sells or cancels an equity instrument. Changes in fair value of equity
instruments are not recognised. Costs associated with transations of equity instruments are deducted from equity.
All types of distribution (excluding stock dividends) made by the Group to holders of equity instruments are deducted from shareholders’ equity.A
4.10 Impairment of financial asset
Financial assets subject to impairment include financial assets measured by amortised cost, debt investments measured by fair value with changes
in fair value recognised in other comprehensive income, and lease receivables. These financial assets are presented on the financial statements
mainly as notes receivable, accounts receivable, other receivables, debt investments, other debt investments, and long-term receivables.
Impairment allowance for and loss from credit impairment of contract assets and certain financial guarantee contracts also follow the policies in this
section.
4.10.1 Impairment
Expected credit loss is the basis for impairment assessment. Measurement of expected credit loss, following either the general approach or
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simplified approach, applicable to a particular financial asset is used for computing impairment allowance for and loss arising from credit impairment
of that financial asset, if any.
The credit loss of a particular financial asset is the present value, discounted by the effective interest rate, of the excess of the contractual cash
inflows of the financial assets over its expected cash inflows. The effective interest rate applicable to a financial asset which is impaired at inception,
either purchase or self-generated, is the effective interest rate after credit adjustment.
Following the general approach, the expected credit loss of a financial asset (also applicable to any contract asset and other applicable asset, same
applied below) is computed annually. The computation involves assessment of the credit risk of the financial asset on each balance-sheet date. If
the credit risk upon assessment is significantly higher than the credit risk at the inception of the financial asset, impairment allowance for the
financial asset is recognised for the expected loss over its life time; if the credit risk upon assessment if not significantly higher than the credit risk at
it inception, impairment allowance for the financial asset is recognised for the expected loss for the next 12 months. During the assessment of credit
risk, the Company considers all resonable and evidential information, including forward-looking information.
Where a financial asset of which the credit risk is relatively low at a balance-sheet date, the Company measures its impairment allowance for the
expect loss for the next 12 months or over its life time depending on whether the credit risk of the financial asset is significantly higher than its credit
risk at inception.
4.10.2 Criteria for whether credit risk has increased significantly since inception
The credit risk of a financial asset is significantly higher than its credit risk at inception if the probability of default during its remaining life is
distinctively higher than its life-time probability of default at inception upon assessment. Except for exceptional circumstantce, the default risk in the
next 12 months is used as a reasaonble approximation for a financial asset’s default risk, upon which the Company assesses whether the credit
risk of the financial asset is significantly higher than its credit risk at inception.
4.10.3 Assess expected credit risk on a portfolio basis
A financial asset with distinctive credit loss is individually assessed for credit risk, such as a receivable due to from a related party, a reveivable due
from a party with which the Company has dispute or in litigation or arbitration, or a receivable due from a party of which the inability of settlement is
clearly evidential.
Except for the financial assets which are individually assessed for credit risk, other financial assets are collectively assessed for credit loss by
portfolios of similar risk characteristics.
4.10.4Accounting treatment of financial assets impairment
At the end of the period, the Company calculates the expected credit losses of various financial assets. If the expected credit loss is more than the
carrying amount of its current impairment provision, the difference is recognized as the impairment loss; if it is less than the carrying amount of the
current impairment provision, The difference is recognized as an impairment gain.
4.10.5 Method for credit loss of various financial assets
4.10.5.1 Notes receivable
The Company measures the loss impairment for the notes receivable in accordance with the amount equivalent to the expected credit loss in the
whole duration. Based on the credit risk characteristics of notes receivable, they are divided into different groups:
Category Reason for determining the groups
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Category Reason for determining the groups
Bank acceptance bill The acceptor is a bank with less credit risk
4.10.5.2 Accounts receivable and contract assets
For accounts receivable and contract assets that do not contain significant financing components, the Company measures the loss impairment in
accordance with the amount equivalent to the expected credit loss in the whole duration.
For accounts receivable, contract assets and lease receivables that contain significant financing components, the Company chooses to always
measure the loss impairment in accordance with the amount equivalent to the expected credit loss in the whole duration.
Except for accounts receivable and contract assets subject to individual credit risk assessment, other financia assets are classified into different
goups based on their credit risk characteristics:
Category Reason for determining thegroups
Receivables due from the clearing centre The receivables are due from the clearningcentre.
Receivables due to from the aviation association The receivables are due from the aviation association.
Related parties receivables The receivables are operating receivables due from related parties.
The receivables are operating receivables not included in the above
Other receivables
categories.
4.10.5.3 Other receivables
The Company measures the impairment allowance for an other receivable at the expect loss for the next 12 months or over its life time depending
on whether the credit risk of the other receivable is significantly higher than its credit risk at inception. Except for other receivables subject to
individual credit risk assessment, other other receivables are categorised into below portfolios of similar risk characteristics.
Category Reason for determining the groups
Deposits Deposit receivables
Related parties Operating receivables due from related parities
Others Operating receivablesnot included in the above categories
4.10.5.4 Debt investment
Debt investments mainly include for bond investments in bonds measured at amortized amortised cost, etc.. In accordance with whether the credit
risk of debt investment has significantly increased since initial recognition, the company utilizes the amount equivalent to the expected credit loss in
the next 12 months or the whole duration to measures the impairment loss.The Company measures the impairment allowance for a debt
investment at the expect loss for the next 12 months or over its life time depending on whether the credit risk of the other receivable is significantly
higher than its credit risk at inception.
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4.10.5.5 Other debt investment
Other debt investments mainly include bond investments in bonds measured at fair value with change in fair value recognised in other
comprehensive income.The Company measures the impairment allowance for a debt investment in this category at the expect loss for the next 12
months or over its life time depending on whether the credit risk of the other receivable is significantly higher than its credit risk at inception.
4.10.5.6 Long-term receivable (Except for accounts receivable and lease receivables that contain significant financing components)
The Company measures the impairment allowance for a long-term receivable in this category at the expect loss for the next 12 months or over its
life time depending on whether the credit risk of the other receivable is significantly higher than its credit risk at inception.
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 declines 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 Assets and disposal groups held for sale
The company classify an asset or disposal group as held for sale if its carrying amount will be recovered principally through a sale transaction
rather than through continuing use. Specific standards are as follows, which should be satisfied at the same time: the asset is immediately sellable
at its current condition according to the practice; the company has completed official decision to dispose the asset and has acquired firm
purchasing commitments; and the sales will be completed within one year. The disposal group refers to a group of assets that are sold as a whole
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or disposed of in a transaction as a whole, and the liabilities directly related to those assets transferred in the transaction at the same time. If the
assets group or asset group combination of the disposal group share the goodwill obtained in the business combination according to CAS 8 - Asset
Impairment, and the disposal group shall include the goodwill allocated to the disposal group.
Non-current assets held for sale and disposal group, which the company's initial measurement or remeasurement on the date of the balance sheet
divided into, if the book value is higher than the fair value deducting the sale cost, it’s book value will be written down to the fair value deducting the
sale cost , in addition the reduced amount is recognized as impairment loss included in the current profits and losses, while accruing the provision
for impairment of assets held for sale. For the disposal group, confirmed asset impairment losses, will reduce the book value of the goodwill of a
disposal group first, then reduce the book value of the non-current assets proportionally applying to CAS 42 - Non-Current Assets Held For Sale,
the Disposal group and Discontinued Operations (hereinafter referred to as the "held for sale rule"). With the fair value deducting the sale cost of
the disposal assets held for sale increasing on the date of the balance sheet, the deducted amount should be recovered accordingly Within the
relevant scope. The recovering amount is included in the profits and losses of the current period, and the book value is increased proportionally
according to the proportion of the book value of the non-current assets stipulated in the rules for sale in addition to the goodwill in the disposal
group. The deductible book value of goodwill and the asset impairment losses that are applied to the standards of assets for sale shall not be
recovered before they are classified as holding assets for sale.
Depreciation or amortization of non- current assets held for sale or disposal group are not raised. The interest of liabilities and other expenses in
the disposal group held for sale will continue to be confirmed.
When the non- current assets or disposal groups no longer meet the conditions of assets held for sale categories, the company will no longer divide
that into assets held for sale categories or will remove that from the disposal of non- current assets held for sale, and measured by the lower
amount: (1) the book value before being classified as held for sale category, and adjusted of the depreciation, amortization or impairment according
to the assumption not being classified as held for sale. (2)recoverable amount.
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 cannot 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 recognized 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. Where a business combination under common control is achieved by multiple
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acquisition of the acquiree's shareholding, the multiple acquisitions shall be assessed to determine whether the multiple acquisitions shall be
viewed as "a package deal". If the multiple acquisitions shall be viewed as "a package deal", the multiple acquisitions shall be accounted for as one
single transaction accordingly. If the multiple acquisitions shall not be viewed as "a package deal", the difference between the cost of combination
and the sum of the book value of the investment in the acquiree immediately before the combination and the book value of the consideration
transferred to acquire additional shareholding is adjusted to capital reserves and retained earnings if capital reserves is insufficient. Cumulative
other comprehensive income associated with the investment recognized as a result of the treatment of equity method or available-for-sale financial
assets prior to the combination is not affected by the combination.
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.
Through multiple transactions to obtain the shares of the merged party step by step, and ultimately the enterprise merger under the different control
is formed, which should be dealt with differently whether it belongs to "a package deal". If it belongs to "a package deal", all transactions should be
dealt as a transaction of acquiring the control. If not,the initial investment cost of the long-term equity investment which is changeably measured by
the cost method is calculated according to the sum of the book value of the original investor's equity plus the new investment cost. The original
ownership is measured by equity method, and the other comprehensive income is notcarried on an accountancy processing. The difference
between the fair value and the book value of the original holding equity investment which is financial assets held for the sale, as well as the
accumulated change of the fair value which is entered into the other comprehensive income before, will be transferred into the current profit and
loss.
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 recognized 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 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.For the implementation of major influence or common control but failing to reach control through
additional investment over the invested entity, the cost of the long-term equity investment is the sum of fair value of the original equity investment in
accordance with "the accounting standards for Enterprises No. 22 - recognition and measurement of financial instruments" and the new investment
cost.
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
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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 a 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 recognized 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 a 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 acquisition. 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 unrealized profit or loss arising from related party
transactions between the Company and an associate or joint venture is deducted from investment income. Unrealized 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 recognized 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
recognized 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 recognized 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 share of loss
recognized as accrued liabilities and investment loss. Where the Company has unrecognized share of loss of the investee when the investee
generates net profit, the Company's unrecognized share of loss is reduced by the Company's share of net profit and when the Company's
unrecognized share or loss is eliminated in full, the Company's share of net profit, if any, is recognized as investment income.
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 recognized in profit or loss.
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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 recognized prior to the acquisition 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 recognized 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 recognized, 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 recognized 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 recognized 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 statements and the difference between the fair
value and the book value of the remaining investment at the date of loss of control is recognized in profit or loss. Cumulative other comprehensive
income relevant to the investment recognized, 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 recognized 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 recognized 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 recognized 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 recognized in profit or loss.Cumulative other comprehensive income relevant to the investment recognized, 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 recognized 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 recognized in other comprehensive income and
reclassified in full to profit or loss at the time when control over the investee is lost.
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4.14 Fixed assets
4.14.1 The conditions of recognition
Fixed assets refer to the tangible assets that are held for the sake of producing commodities, rendering labour service, renting or business
management and their useful life is in excess of one fiscal year. Fixed assets are only confirmed when the related economic benefits are likely to
flow into the company and its cost can be reliably measured. The initial measurement is carried out on the basis of the cost of fixed assets and the
effect of the expected discarded cost.
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:
Expected useful Estimated residual
Category Depreciation (%)
life value (%)
Houses and building 20-33 5.00 2.88-4.75
Key components and power supports of aircraft engine 15-20 5.00 4.75-6.33
Replacement parts of engine 3-7 0.00 14.29-33.33
Equipments, electronic devices and furniture 4-10 5.00 9.5-23.75
High value rotables 15-18 0.00 5.56-6.67
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 4.19 “Impairment of long-term assets”.
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.
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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
“Impairment of long-term assets”.
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
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are likely to flow into the enterprise and the cost of intangible assets can be measured reliably, shall be recorded as cost of intangible assets. The
expenses other than this shall be booked in the profit or loss when they occur.
Land use rights that are purchased by the Company are accounted for as intangible assets. Buildings, such as plants that are developed and
constructed by the Company, and relevant land use rights and buildings, are accounted for as intangible assets and fixed assets, respectively.
Payments for the land and buildings purchased are allocated between the land use rights and the buildings; if they cannot be reasonably allocated,
all of the land use rights and buildings are accounted for as fixed assets.
When an intangible asset with a definite useful life is available for use, its original cost less net residual value and any accumulate impairment
losses is amortized over its estimated useful life using the straight-line method. An intangible asset with an indefinite useful life is not amortized.
For an intangible asset with a definite useful life, the Company reviews the useful life and amortization method at the end of the period and makes
adjustment when necessary. An additional review is also carried out for useful life of the intangible assets with indefinite useful life. If there is
evidence showing the foreseeable limit period of economic benefits generated to the enterprise by the intangible assets, then estimate its useful life
and amortize according to the policy of intangible assets with definite useful life.
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 and development
expenditures.
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 cannot 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 “Impairment of long-term assets”.
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.
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
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properties measured by cost method and long-term equity investment on subsidiaries, joint operations. The Company assesses whether there are
any indicators of impairment for all non-financial assets at the balance sheet date, and impairment test is carried out and recoverable value is
estimated if such an indicator exits. Goodwill and intangible assets with indefinite useful lives, as well as intangible assets not ready for use, are
tested for impairment annually regardless of indicators of impairment.
Impairment of loss is calculated, and provisions taken by the difference if the recoverable value of the assets is lower than the book value. The
recoverable value is the higher of estimated present value of the future expected cash flows from the asset and net fair value of the asset less
disposed cost. The fair value of asset is determined by the sales agreement price within an arm’s length transaction. In case there is no sales
agreement, but there is active market of assets, the fair value can be determined by the selling price. If there is neither sales agreement nor active
market, the fair value of the asset can be estimated based on the best information obtained.
Disposal expenses include expenses related to the legislation, taxes, transportations and the direct expense for the asset to be ready for sale.
When calculating the present value of expected future cash flows from an asset or asset group, the management shall estimate the expected future
cash flows from the asset or asset group and choose a suitable discount rate in order to calculate the present value of those cash flows.
Provision for asset impairment is calculated and determined on the individual basis. If the recoverable of individual asset is hard to estimate, the
recoverable amount can be determined by the asset group where subject asset belongs. Asset group is the smallest set of assets that can have
cash flow in independently.
The Company determines whether goodwill is impaired at least on an annual basis. This requires an estimation of the present value of the future
expected cash flows from the asset groups or sets of asset groups to which the goodwill is allocated. Estimating the present value requires the
Company to make an estimate of the expected future cash flows from the asset groups or sets of asset groups and also choose a suitable discount
rate in order to calculate the present value of those cash flows. Once the loss from above asset impairment is recognized, the recoverable part
cannot be reserved in the subsequent periods.
4.20 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
recognized 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 recognized 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
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voluntary redundancy compensation proposals in this company, a provision shall be recognized for the compensation arising from the termination of
employment relationship with employees at the time when the Company cannot unilaterally withdraw layoff proposal termination benefits provided
due to termination of employment, or the company ensures the costs related to the payment for 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 cannot be fully paid after
twelve 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 retirement shall be recognized 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
①The Company recognize 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 recognized 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 recognized when the service is rendered.
②The Company recognize air cargo revenue from rendering of air service for carriage of cargo when the service is rendered
③Revenue arising from other air service rendering is recognized 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
specified 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 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
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grant measured at a nominal amount is recognized immediately in profit or loss for the period.
The company's government subsidies are usually confirmed and measured by the actual amount when they are received. However for the end of
the period, if there are conclusive evidence that the relevant conditions can be meet of the financial support policy and financial support funds are
expected to receive, it should be measured according to the amount receivable. The following conditions should be meet at the same time if the
subsidies are measured by the amount receivable: (1) The amount of subsidy receivable has been confirmed by the document issued by the
government departments, or could be reasonably estimated in accordance with the relevant provisions of its own official release of financial
resources management approach, and the expected amount of a material uncertainty which does not exist; (2) It is based on the financial support
project and financial management measures which is released officially by the local finance department with active publicity according to the
provisions of the "Regulations on open government information". And the management measures should be inclusive (any enterprises complying
with the conditions may apply for that ), rather than specifically for specific enterprises; (3) The relevant subsidy has a clear commitment to the
allocation period, and guaranteed by corresponding financial budget, which can be received within the prescribed time limit with reasonable
guarantee; (4) Other relevant conditions (if any) should be met in accordance with the specific circumstances of the company and the grant.
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 according to a systematic and reasonable method. 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.
Government subsidies including both assets-related parts and income-related parts should be treated separately. If it is difficult to separate, the
government subsidies as a whole will be classified as income-related government grants.
The government subsidies related to daily activities of the company are included in other income and gain and expenses in accordance with the
essence of economic business; if it is not related to daily activities, it will be included in non-operating income and expense.
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 are other situations, 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
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liabilities are recognized using the balance sheet liability method.
For temporary differences associated with the initial recognition of goodwill and the initial recognition of an asset or liability arising from a
transaction (not a business combination) that affects neither the accounting profit nor taxable profits (or deductible losses) at the time of transaction,
no deferred tax asset or liability is recognized.
For taxable temporary differences associated with investments in subsidiaries and associates, and interests in joint ventures, no deferred income
tax liability related is recognized except where the Company is able to control the timing of reversal of the temporary difference and it is probable
that the temporary difference will not reverse in the foreseeable future.
All deferred income tax liabilities arising from taxable temporary differences except the ones mentioned above are recognized.
For temporary deductible differences associated with the initial recognition of an asset or liability arising from a transaction (not a business
combination) that affects neither the accounting profit nor taxable profits (or deductible losses) at the time of transaction, no deferred tax asset is
recognized.
For taxable temporary deductible differences associated with investments in subsidiaries and associates, and interests in joint ventures, no
deferred income tax asset related is recognized if it is impossible to reversal the temporary difference in the foreseeable future, or it is not probable
to obtain taxable income which can be used 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 in other income and gain 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
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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 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 lessor under operating Lease
Lease income from operating leases shall be recognized by the lessor 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 lessor 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 capitalization is capitalized when incurred and recognized 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
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Shandong Airlines Co., Ltd. Semi-Annual Report 2019
before the lease expiry date is amortized on the basis of air hours over the lease period.
4.26 Changes in major accounting policies and accounting estimates
4.26.1 Changes of accounting policies
On March 3, 2017, the Ministry of Finance issued the “Chinese Accounting Standards for Business Enterprises No.22 - Determination and
measurement of financial instruments (Revised in 2017” (Accounting [2017] No. 7), "Accounting Standards for Business Enterprises No. 23"
Transfer of Financial Assets (Revised in 2017) (Accounting [2017] No. 8), "Accounting Standards for Business Enterprises No. 24 - Hedge
Accounting (Revised in 2017)" (Accounting [2017] No. 9). On May 2 2017, the Ministry of Finance issued “Accounting Standards for Business
Enterprises No. 37 – Financial Instruments Presentation (Revised in 2017)” (Accounting [2017] No. 14) (the above-mentioned guidelines are
collectively referred to as the “New Financial Instruments Guidelines”), and domestic listed companies are required to implement it from January 1,
2019.
After the resolution of the 4th meeting of the 6th Board of Directors of the Company on March 21, 2019, the company will implement the above new
financial instrument guidelines from January 1, 2019.
All recognized financial assets under the new financial instrument criteria are subsequently measured at amortised cost or fair value.
On the implementation date of the new financial instrument standard, the business model of managing financial assets is evaluated based on the
facts and circumstances of the company on the implementation date. According to the contractual cash flow characteristics on the financial assets,
which are evaluated based on the facts and circumstances at the initial recognition of the financial assets, financial assets are classified into three
categories: measured at amortised cost, measured at fair value through other comprehensive income, and measured at fair value through profit or
loss. In case of an equity instrument investment measured at fair value through other comprehensive income, when the financial asset is
derecognised, the accumulated gain or loss previously recognised in other comprehensive income is transferred to retained earnings, rather than
profit and loss.
Under the new financial instrument standard, the Company accrues impairment provision and recognizes credit impairment losses for financial
assets measured at amortized cost, debt instrument investments measured at fair value through other comprehensive income, lease receivables,
contract assets and the financial guarantee contract based on expected credit losses.
The Company retrospective applies the new financial instrument guidelines, but in terms of classification and measurement (including impairment)
involving inconsistency between the previous comparative financial statement data and the new financial instrument guidelines, the company
chooses not to restate. Therefore, for the cumulative impact on the first implementation of the guideline, the Company adjusts retained earnings or
other comprehensive income of the opening of 2019 and other relevant items in the financial statement. The financial statements for 2018 were not
restated.
The main changes and effects of the Company's implementation of the new financial instrument guidelines are as follows:
On or after January 1 2019, the Company designated part of non-trading equity investment as financial assets measured at fair value through other
comprehensive income, which disclosed as other equity instruments investment.
The Company will reclassify financial assets measured at fair value through profit or loss into financial assets held for trading.
A. Financial assets classification and measurement comparison table before and after the first implementation date
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Shandong Airlines Co., Ltd. Semi-Annual Report 2019
a. The effects on consolidated financial statements
31/12/2018 (before changes) 01/01/2019 (after changes)
Category Classification Net carrying amount Category Classification Net carrying amount
Financial assets
measured at fair Measured at fair value Financial assets Measured at fair value
90,488.17 90,488.17
value through profit or through profit or loss held for trading through profit or loss
loss
Measured at fair value
Measured at fair value
through other Other investments
229,180,865.35 through other
Financial assets
comprehensive in equity
available for sale comprehensive 790,158,061.10
income instruments
income
Measured at cost 81,662,100.00
b. The effects on the company’s financial statements
31/12/2018 (before changes) 01/01/2019 (after changes)
Net carrying
Category Classification Category Classification Net carrying amount
amount
Financial assets
Measured at fair Financial Measured at fair
measured at fair
value through profit or 90,488.17 assets held for value through profit 90,488.17
value through profit
loss trading or loss
or loss
Measured at fair
Other Measured at fair
value through other
229,180,865.35 value through other
Financial assets investments in
comprehensive
available for sale equity comprehensive 790,158,061.10
income
instruments income
Measured at cost 81,662,100.00
B. Adjustment table showing the net carrying amout of the original financial assets is adjusted to the net carrying amount of the new financial assets
in accordance with the new financial instrument guidelines on the first implementation date.
a. The effects on consolidated financial statements
31/12/2018 (before 01/01/2019 (after
Category Reclassification Remeasurement
changes) changes)
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Shandong Airlines Co., Ltd. Semi-Annual Report 2019
31/12/2018 (before 01/01/2019 (after
Category Reclassification Remeasurement
changes) changes)
Amortised cost:
Accounts receivable 413,726,456.71
Add: adjustment of implementing the new
income guidelines
Less: transfer to accounts receivable
financing
Remeasurement: impairment of expected
credit loss
Closing balance disclosed by the new
413,726,456.71
financial instrument guidelines
Other receivables 225,281,412.22
Remeasurement: impairment of expected
credit loss
Closing balance disclosed by the new
225,281,412.22
financial instrument guidelines
Measured at fair value through profit or
loss:
Financial assets measured at fair value
through profit or loss (the original 90,488.17
guidelines)
Less: transfer to financial assets held for
trading 90,488.17
Closing balance disclosed by the new
financial instrument guidelines
Financial assets held for trading
Add: transfer from financial assets
measured at fair value through profit or loss 90,488.17
(the original guidelines)
Closing balance disclosed by the new 90,488.17
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Shandong Airlines Co., Ltd. Semi-Annual Report 2019
31/12/2018 (before 01/01/2019 (after
Category Reclassification Remeasurement
changes) changes)
financial instrument guidelines
Measured at fair value through other
comprehensive income:
Financial assets available for sale (the
310,842,965.35
original guidelines)
Less: transfer to other investments in equity
310,842,965.35
instruments
Closing balance disclosed by the new
financial instrument guidelines
Other equity instruments investment
Add: transfer from financial assets available
310,842,965.35
for sale (the original guidelines)
Remeasurement: measured at fair value 479,315,095.75
Closing balance disclosed by the new
790,158,061.10
financial instrument guidelines
b. The effects on the company’s financial statements
31/12/2018 (before 01/01/2019 (after
Category Reclassification Remeasurement
changes) changes)
Amortised cost:
Accounts receivable 412,570,738.01
Add: adjustment of implementing the new
income guidelines
Less: transfer to accounts receivable
financing
Remeasurement: impairment of expected
credit loss
Closing balance disclosed by the new
412,570,738.01
financial instrument guidelines
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Shandong Airlines Co., Ltd. Semi-Annual Report 2019
31/12/2018 (before 01/01/2019 (after
Category Reclassification Remeasurement
changes) changes)
Other receivables 239,078,612.04
Remeasurement: impairment of expected
credit loss
Closing balance disclosed by the new
239,078,612.04
financial instrument guidelines
Measured at fair value through profit or
loss:
Financial assets measured at fair value
through profit or loss (the original 90,488.17
guidelines)
Less: transfer to financial assets held for
90,488.17
trading
Closing balance disclosed by the new
financial instrument guidelines
Financial assets held for trading
Add: transfer from financial assets
measured at fair value through profit or loss 90,488.17
(the original guidelines)
Closing balance disclosed by the new
90,488.17
financial instrument guidelines
Measured at fair value through other
comprehensive income:
Financial assets available for sale (the
310,842,965.35
original guidelines)
Less: transfer to other investments in equity
310,842,965.35
instruments
Closing balance disclosed by the new
financial instrument guidelines
Other investments in equity instruments
Add: transfer from financial assets available 310,842,,965.35
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31/12/2018 (before 01/01/2019 (after
Category Reclassification Remeasurement
changes) changes)
for sale (the original guidelines)
Remeasurement: measured at fair value 479,315,095.75
Closing balance disclosed by the new
790,158,061.10
financial instrument guidelines
C. Table of adjustment of impairment provisions of financial assets
a. The effects on consolidated financial statements
31/12/2018 (before 01/01/2019 (after
Category Reclassification Remeasurement
changes) changes)
Amortised cost
Impairment provisions of
23,742,916.71 23,742,916.71
accounts receivable
Impairment provisions of other
108,981,379.40 108,981,379.40
receivables
b. The effects on the company’s financial statements
31/12/2018 (before 01/01/2019 (after
Category Reclassification Remeasurement
changes) changes)
Amortised cost
Impairment provisions of
20,867,525.52 20,867,525.52
accounts receivable
Impairment provisions of other
108,973,871.13 108,973,871.13
receivables
D. The effects on retained earnings and other comprehensive income of January 1 2019
Consolidated retained Consolidated surplus Consolidated other
Category
earnings reserves comprehensive income
31/12/2018 3,342,615,148.06 503,999,977.58 149,300,488.94
Reclassify financial assets available for
sale into other investments in equity 359,486,321.81
instruments and remeasure
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Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Consolidated retained Consolidated surplus Consolidated other
Category
earnings reserves comprehensive income
Remeasurement of impairment of
accounts receivable
01/01/2019 3,342,615,148.06 503,999,977.58 508,786,810.75
B. Execution of the Ministry of Finance "Notice on Amending the Issuance of the 2019 Annual General Financial Statements of Enterprises "
On April 30, 2019, the Ministry of Finance issued the "Notice on Amending the Format of the 2019 Annual General Enterprise Financial Statements"
(Accounting [2019] No. 6), and adjusted the financial statement format of the enterprise accordingly. The Company prepares the 2019 interim
financial statements in accordance with the new regulations and uses the retrospective adjustment method to change the presentation of relevant
financial statements.
The affected consolidated balance sheet and parent company's balance sheet items as of December 31, 2018 are as follows:
Consolidated report item Before change After change Change amount
Notes receivable and accounts receivable 413,726,456.71 -413,726,456.71
Accounts receivable 413,726,456.71 413,726,456.71
Notes payable and accounts payable 2,273,836,607.26 -2,273,836,607.26
Accounts payable 2,273,836,607.26 2,273,836,607.26
Parent company report item Before change After change Change amount
Notes receivable and accounts receivable 412,570,738.01 -412,570,738.01
Accounts receivable 412,570,738.01 412,570,738.01
Notes payable and accounts payable 2,292,392,127.26 -2,292,392,127.26
Accounts payable 2,292,392,127.26 2,292,392,127.26
4.26.1.2 Changes in other accounting policies
There is no significant change of other accounting policies for the company during the reporting period.
4.26.2 Changes of accounting estimates
There is no significant change of accounting estimates 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 judgement and estimates
The Company is required to make judgments, estimates and assumptions about the carrying amounts of items in the financial statements that
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Shandong Airlines Co., Ltd. Semi-Annual Report 2019
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 judgements, 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 actual result derived from those uncertainties in estimates may be different from the management estimates,
which 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 the balance sheet date, the followings are the significant areas where the Company needs to make judgement, 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 Impairment of financial assets
The Company uses the expected credit loss model to assess the impairment of financial instruments. The application of the expected credit loss
model requires significant judgment and estimation, and all reasonable and evidenced information, including forward-looking information, needs to
be considered.In making such judgments and estimates, the Company infers the expected changes in the debtor's credit risk based on historical
data combined with economic policies, macroeconomic indicators, industry risks, external market environment, technological environment, and
changes in customer circumstances.
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 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.If an equity instrument investment or contract has a public offer, the Company does not use cost as the best estimate of its fair value.
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Shandong Airlines Co., Ltd. Semi-Annual Report 2019
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
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.
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Shandong Airlines Co., Ltd. Semi-Annual Report 2019
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 refer to Note 6.28.
Note 5 Taxation
5.1 Major taxes and tax rate
Tax Tax rate (%)
Enterprise income tax Business tax is calculated according to the taxable income(Note1)
The VAT is calculated as the difference between output tax (11% of the taxable revenue) and
deductible input tax for the period, and the tax rates are 6%, 9%, 10%, 13% or 16% (Note 2). The
Value added tax
output tax is calculated using the sales of goods and taxable services income (including
transportation and ground services revenue).
Property tax is calculated by the nature of house property and is collected by ad valorem or specific
Property tax
duties according to the tax rules.
Urban maintenance and
Urban maintenance and construction tax are calculated at 7% of turnover tax.
construction tax
Education surcharge Education surcharge is calculated at 3% of turnover tax.
Local education surcharge Local education surcharge is calculated at 2% of turnover tax.
Civil aviation development fund shall be calculated using the collection standard of the relevant
Civil aviation development category of flight routes, maximum departure weight and flight distance adopted by the civil aviation
Fund industry. According to “Interim measures for the administration of the administration of civil aviation
development fund”《民航发展基金征收使用管理暂行办法》.
Note 1: According to the provision of National Development and Reform Commission ([2014]15) and Announcement of the State Administration of
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Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Taxation on the enterprise income tax on the in-depth implementation of the development strategy of the western region of China"(《国家税务总
局关于深入实施西部大开发战略有关企业所得税问题的公告》) (State Administration of Taxation [2012]12), the Chongqing branch of the
company can get a reduced rate of 15% to pay corporate income tax, when its international and domestic air passenger and cargo transport
projects are in line with the " Catalogue of Encouraged Industries in Western Region”(《西部地区鼓励类产业目录》). All companies in mainland
China are subject to a corporate income tax rate of 25%.
Note 2: The applicable tax rate for VAT-taxable sales or imported goods of the Company during the period from January to March 2019 is
16%/10%. According to the “Announcement of the Ministry of Finance, the State Administration of Taxation and the General Administration of
Customs on Deepening the Policies Related to Value-Added Tax Reform” (Ministry of Finance, State Administration of Taxation, General
Administration of Customs [2019] No. 39) regulations, the applicable tax rate is adjusted from April 1 2019 to 13%/9%. At the same time, the
company as a taxpayer of production and living service industry, from April 12019 to December 312021, can deduct the taxable amount according
to the current deductible input tax plus 10%.
5.2 Tax incentives
5.2.1.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 transportation 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》)..
5.2.2. According to the Announcement of the State Administration of Taxation on the enterprise income tax on the in-depth implementation of the
development strategy of the western region of China"(《国家税务总局关于深入实施西部大开发战略有关企业所得税问题的公告》)
(State Administration of Taxation [2012]12), Chongqing Branch of the Company meets the conditions for reduction and exemption in the
development of the western region, could enjoy the preferential policy of reducing enterprise income tax by 15% in 2018.
Note 6 Notes to significant elements of the consolidated financial statements
Unless otherwise stated, the meaning of "B/f", "C/f","Current period", "Prior period" in the following notes (incl. Notes to elements of the separate
financial statements) is "January 1 2019", "June 30 2019", "January – June 2019", and " January – June 2018" respectively.
6.1 Monetary funds
Closing balance as of
Category Closing balance as of 30/06/2019
31/12/2018
Cash at hand 292,210.71 291,347.27
Bank deposit 303,800,914.71 840,568,756.82
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Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Closing balance as of
Category Closing balance as of 30/06/2019
31/12/2018
Other monetary funds 100,000.00 100,000.00
Total 304,193,125.42 840,960,104.09
Including: the total amount of deposit abroad 5,697,543.38 2,047,660.50
Note: As at the year end, the Company used restricted monetary funds of CNY 100,000.00 (prior year: CNY 100,000.00), which was issued by the
Company with a bank deposit of CNY 100,000.00 as a guarantee.
6.2 Financial assets at fair value through profit or loss
Category Closing balance as of 31/12/2018
Interest rate swaps 90,488.17
Total 90,488.17
6.3 Notes receivable
Disclosure by category
Category Closing balance as of 30/06/2019 Closing balance as of 31/12/2018
Bank acceptance bill 11,600,000.00
Commercial acceptance bill
Subtotal 11,600,000.00
Less: allowance for bad debt
Total 11,600,000.00
As of June 30 2019, there are no notes receivable have been pledged, no notes receivable have been endorsed or discounted and have not yet
expired as of June 302019, no defaulted notes receivable transferred to accounts receivable.
6.4 Accounts receivable
6.4.1 Disclosure by age
Age Closing balance as of 30/06/2019
Within 1 year 439,730,722.39
1 to 2 years 13,292,116.90
2 to 3 years 550,936.59
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Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Age Closing balance as of 30/06/2019
3 to 4 years 233,707.19
4 to 5 years 8,138,874.25
Over 5 years 3,357,063.14
Subtotal 465,303,420.46
Less: allowance for bad debt 24,164,113.01
Total 441,139,307.45
6.4.2 Disclosure by category
Closing balance as of 30/06/2019
Category Carrying amount Allowance for bad debt
Book value
Amount % Amount %
Accounts receivable subject to individual
10,823,117.90 2.33 10,823,117.90 100.00
impairment assessment
Accounts receivable subject to group
454,480,302.56 97.67 13,340,995.11 2.94 441,139,307.45
impairment assessment
Total 465,303,420.46 100.00 24,164,113.01 5.19 441,139,307.45
(Continued)
Closing balance as of 31/12/2018
Category Carrying amount Allowance for bad debt Book value
Amount % Amount %
Accounts receivable of individual significance
and subject to individual impairment 105,366,572.73 24.08 105,366,572.73
assessment
Accounts receivable subject to impairment
assessment by credit risk characteristics of a 258,395,976.09 59.07 12,919,798.81 5.00 245,476,177.28
portfolio
Accounts receivable of individual insignificance
73,706,824.60 16.85 10,823,117.90 14.68 62,883,706.70
but subject to individual impairment
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Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Closing balance as of 31/12/2018
Category Carrying amount Allowance for bad debt Book value
Amount % Amount %
assessment
Total 437,469,373.42 100.00 23,742,916.71 5.43 413,726,456.71
6.4.2.1 Accounts receivable subject to individual impairment assessment
Closing balance as of 30/06/2019
Debtor Allowance for bad Rate of allowance
Carrying amount Reason for allowance
debt (%)
Impairment upon individual
Debtor #1 8,057,209.85 8,057,209.85 100.00
assessment
Impairment upon individual
Kun Peng Airlines Co., Ltd 1,849,400.00 1,849,400.00 100.00
assessment
Impairment upon individual
CR Airways 916,508.05 916,508.05 100.00
assessment
Total 10,823,117.90 10,823,117.90 100.00
6.4.2.2 Accounts receivable subject to impairment assessment by credit risk characteristics of a portfolio
Closing balance as of 30/06/2019
Category
Carrying amount Allowance for bad debt Rate of allowance (%)
Settlement center receivables 63,402,786.48
Aviation agreement receivables 112,310,498.33
Related parties receivables 11,947,115.55
Other receivables 266,819,902.20 13,340,995.11 5.00
Total 454,480,302.56 13,340,995.11 2.94
The Company calculate bad debt allowance according to the combination of credit risk characteristics and the expected loss amount.
6.4.3 Allowance for bad debt
Category Opening balance Current period movement Closing balance
101
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
as of 01/01/2019 Recovery or Used or written as of 30/06/2019
Recognition
reversal off
Accounts receivable subject to
individual impairment 10,823,117.90 10,823,117.90
assessment
Accounts receivable subject to
impairment assessment by 12,919,798.81 421,196.30 13,340,995.11
portfolio
Total 23,742,916.71 421,196.30 24,164,113.01
6.4.4 Top five accounts receivables by debtors
The total amount of top five accounts receivables summarized by debtors as at the end of current period is CNY 227,380,706.33, accounting for
48.87% of the total accounts receivable as at the end of current period, the total corresponding allowance for bad debt is CNY 4,735,150.33.
6.5 Prepayments
6.5.1 Disclosure by age
Closing balance as of 30/06/2019 Closing balance as of 31/12/2018
Age
Amount % Amount %
Within 1 year 263,672,663.77 99.77 265,432,349.34 99.81
1 to 2 years 100,000.00 0.04
2 to 3 years
Over 3 years 498,993.60 0.19 498,993.60 0.19
Total 264,271,657.37 100.00 265,931,342.94 100.00
6.5.2 Details of top five prepayments
The total amount of top five prepayments as at the end of current period is CNY 91,227,849.40, accounting for 34.52% of prepayments.
6.6 Other receivables
Category Closing balance as of 30/06/2019 Closing balance as of 31/12/2018
Interests receivable
Dividend receivable 5,861,939.50
Other receivables 254,272,929.11 225,281,412.22
102
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Category Closing balance as of 30/06/2019 Closing balance as of 31/12/2018
Total 260,134,868.61 225,281,412.22
6.6.1 Dividend receivable
Disclosure by category
Category Closing balance as of 30/06/2019 Closing balance as of 31/12/2018
Sichuan Airlines 2,352,700.00
TravelSky Technology Limited 3,509,239.50
Subtotal 5,861,939.50
Less: allowance for bad debt
Total 5,861,939.50
6.6.2 Other receivables
6.6.2.1 Disclosure by age
Age Closing balance as of 30/06/2019
Within 1 year 179,558,284.93
1 to 2 years 41,160,979.15
2 to 3 years 4,633,549.64
3 to 4 years 5,724,542.80
4 to 5 years 1,945,024.44
Over 5 years 130,563,546.28
Subtotal 363,585,927.24
Less: allowance for bad debt 109,312,998.13
Total 254,272,929.11
6.6.2.2 Disclosure by category
Category Closing balance as of 30/06/2019 Closing balance as of 31/12/2018
Deposits 78,339,708.42 82,454,112.14
Related parties 126,505,985.67 120,294,948.78
Others 158,740,233.15 131,513,730.70
Subtotal 363,585,927.24 334,262,791.62
103
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Less: allowance for bad debt 109,312,998.13 108,981,379.40
Total 254,272,929.11 225,281,412.22
6.6.2.3Recognition of allowance for bad debt
Stage 1 Stage 2 Stage 3
Expected credit loss for
Expected credit loss Expected credit loss
the whole
Allowance for bad debt for the next 12 for the whole Total
duration(Credit
months duration(no credit
impairment has
impairment)
occurred)
Opening balance as of
7,429,661.75 101,551,717.65 108,981,379.40
01/01/2019
Carrying amount of other
receivables in current period as
of 1/1/2019
- Turn to stage 2
- Turn to stage 3
- Turn back to stage 2
- Turn back to stage 1
Recognition 331,618.73
Reversal
Used
Written off
Other movements
Closing balance as of
7,761,280.48 101,551,717.65 109,312,998.13
30/06/2019
6.6.2.4Allowance for bad debt
Current period movement
Opening balance Closing balance as
Category Recovery or
as of 1/1/2019 Recognition Recognition of 30/6/2019
reversal
Subject to individual
101,551,717.65 101,551,717.65
impairment assessment
104
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Subject to impairment
assessment by credit risk
7,429,661.75 331,618.73 7,761,280.48
characteristics of a
portfolio
Total 108,981,379.40 331,618.73 109,312,998.13
There is no allowance for bad debt amount is reversed or recovered in this period.
6.6.2.5 Top five other receivables
Closing balance as Allowance for bad
Debtor Nature Age %
of 30/06/2019 debt
Shandong Rainbow
Others 101,551,717.65 Over 5 years 27.93 101,551,717.65
Commercial Jet Co., Ltd.
Debtor #1 Others 65,219,505.07 Within 4 years 17.94 3,260,975.25
Debtor #2 Deposits 64,132,796.01 Within 1 year 17.64
Debtor #3 Others 25,885,715.72 Over 5 years 7.12 1,294,285.79
Shandong Air New Media
Others 17,845,676.45 Within 2 years 4.91
Co., Ltd.
Total 274,635,410.90 75.54 106,106,978.69
6.7 Inventories
6.7.1 Disclosure by category
Closing balance as of 30/06/2019
Category
Gross carrying amount Impairment allowance Net carrying amount
Consumable air equipment 95,236,422.44 95,236,422.44
Low-value consumables 3,964,424.84 3,964,424.84
Materials 2,597,350.42 2,597,350.42
Total 101,798,197.70 101,798,197.70
(Continued)
Closing balance as of 31/12/2018
Category
Gross carrying amount Impairment allowance Net carrying amount
Consumable air equipment 99,169,118.33 99,169,118.33
Low-value consumables 3,870,289.81 3,870,289.81
105
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Closing balance as of 31/12/2018
Category
Gross carrying amount Impairment allowance Net carrying amount
Materials 2,586,111.28 2,586,111.28
Total 105,625,519.42 105,625,519.42
6.8 Other current assets
Category Closing balance as of 30/06/2019 Closing balance as of 31/12/2018
VAT deductible 208,392,765.74 236,596,457.60
Total 208,392,765.74 236,596,457.60
6.9 Financial assets available for sale
Closing balance as of 31/12/2018
Category
Carrying amount Impairment Net carrying amount
Equity instruments available for
310,842,965.35 310,842,965.35
sale
Including: measured by fair value 229,180,865.35 229,180,865.35
measured by cost 81,662,100.00 81,662,100.00
Total 310,842,965.35 310,842,965.35
6.10 Long-term equity investments
Currency period movement (+, -)
Investment
gains
Other
Opening balance Allowance as of and losses Other
Category Additional Investment comprehensive
as of 01/01/2019 01/01/2019 recognized changes
investment reduction income
under in equity
adjustment
the equity
method
Associates
Shandong Rainbow
Commercial Jet Co., 22,500,000.00 22,500,000.00
Ltd.
106
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Currency period movement (+, -)
Investment
gains
Other
Opening balance Allowance as of and losses Other
Category Additional Investment comprehensive
as of 01/01/2019 01/01/2019 recognized changes
investment reduction income
under in equity
adjustment
the equity
method
Total 22,500,000.00 22,500,000.00
(Continued)
Currency period movement (+, -) Allowance closing
Closing balance as of
Category Declared cash dividends Allowance balance as of
Others 30/06/2019
or profits recognized 30/06/2019
Associates
Shandong Rainbow
Commercial Jet Co., 22,500,000.00 22,500,000.00
Ltd.
Total 22,500,000.00 22,500,000.00
6.11 Other equity instrument investment
6.11.1 General information
Category Closing balance as of 30/06/2019
Non-trading equity instrument investment 737,640,684.78
Total 737,640,684.78
6.11.2 General information of non-trading equity instrument investment
107
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Reasons for Reasons for
Other
being measured other
comprehensive
Dividend at fair value and comprehensive
Cumulative income
Item income in Cumulative gain its changes are income
loss transferred into
current period included in other transferred into
retained
comprehensive retained
earnings
income earnings
TravelSky Non-trading
Technology financial assets
3,509,239.50 169,973,489.03
Limited
Sichuan Non-trading
Airlines 2,352,700.00 471,133,003.87 financial assets
Jinan Non-trading
International 8,182,091.88 financial assets
Airport
Total 5,861,939.50 649,288,584.78
6.12 Fixed assets
Category Closing balance as of 30/06/2019 Closing balance as of 31/12/2018
Fixed assets 7,486,219,644.67 7,770,750,794.37
Disposal of fixed assets
Total 7,486,219,644.67 7,770,750,794.37
6.12.1 General information
Houses and Aircrafts and High-value Transportation
Category Others Total
buildings engines rotables vehicles
1. Cost:
1.1 Balance as at
571,843,775.78 11,991,421,728.96 718,099,224.08 80,330,794.46 227,422,996.75 13,589,118,520.03
31/12/2018
1.2 Increased in
136,786,299.25 24,279,370.50 640,636.64 7,235,926.62 168,942,233.01
current period
108
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Houses and Aircrafts and High-value Transportation
Category Others Total
buildings engines rotables vehicles
(1) Purchase 136,786,299.25 24,279,370.50 640,636.64 7,235,926.62 168,942,233.01
(2) Transferred
fromconstruction
in-progress
(3) Transferred
from merger
and acquisitions
(4) Others
1.3 Decreased in
94,132,130.40 267,085.74 1,048,283.42 5,593,197.04 101,040,696.60
current period
(1) Disposal or
94,132,130.40 267,085.74 1,048,283.42 5,593,197.04 101,040,696.60
scrap
(2) Others
1.4 Balance as at
571,843,775.78 12,034,075,897.81 742,111,508.84 79,923,147.68 229,065,726.33 13,657,020,056.44
30/06/2019
2. Accumulated
Depreciation
2.1 Balance as at
113,760,776.16 5,284,241,593.74 241,303,561.80 48,642,854.82 128,424,317.82 5,816,373,104.34
31/12/2018
2.2 Increased in
8,864,297.45 410,403,128.33 19,812,944.42 3,017,793.77 10,053,204.98 452,151,368.95
current period
(1) Accrual 8,864,297.45 410,403,128.33 19,812,944.42 3,017,793.77 10,053,204.98 452,151,368.95
(2) Transferred
from merger
and acquisitions
2.3 Decreased in
94,132,130.40 99,681.61 868,344.32 4,606,006.44 99,706,162.77
current period
(1) Disposal or 94,132,130.40 99,681.61 868,344.32 4,606,006.44 99,706,162.77
109
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Houses and Aircrafts and High-value Transportation
Category Others Total
buildings engines rotables vehicles
scrap
(2) Others
2.4. Balance as at
122,625,073.61 5,600,512,591.67 261,016,824.61 50,792,304.27 133,871,516.36 6,168,818,310.52
30/06/2019
3. Impairment
1,994,621.32 1,994,621.32
allowance
3.1 Balance as at
1,994,621.32 1,994,621.32
31/12/2018
3.2 Increased in
current period
(1) Accrual
(2) Transferred
from merger
and acquisitions
3.3 Decreased in
12,520.07 12,520.07
current period
(1) Disposal or
12,520.07 12,520.07
scrap
(2) Others
3.4 Balance as at
1,982,101.25 1,982,101.25
30/06/2019
4.1 Carrying
amount as at
30/06/2019
4.2 Carrying
amount asat 449,218,702.17 6,433,563,306.14 479,112,582.98 29,130,843.41 95,194,209.97 7,486,219,644.67
31/12/2018
4.1 Carrying 458,082,999.62 6,707,180,135.22 474,801,040.96 31,687,939.64 98,998,678.93 7,770,750,794.37
110
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Houses and Aircrafts and High-value Transportation
Category Others Total
buildings engines rotables vehicles
amount as at
30/06/2019
6.12.2 Fixed assets acquired under financial leases
Category Cost Accumulated Depreciation Impairment allowance Carrying amount
Aircrafts and engines 3,633,328,127.95 1,418,563,984.90 2,214,764,143.05
Total 3,633,328,127.95 1,418,563,984.90 2,214,764,143.05
6.12.3 Fixed assets pending ownership registration
Category Carrying amount Reason for pending
Jinan cargo arrival and departure Land rented from Jinan Air Control, not eligible for
11,695,217.58
warehouses ownership registration
Land use rights belonging to Shandong SDA Group, not
Buildings of Jinping Food Co., Ltd. 12,201,542.38
eligible for ownership registration
Note: impairment allowance of fixed assets is CNY 1,982,101.25 as at June 30 2019, with no additional amount of allowance for fixed assets
impairment recognized during currentperiod.
6.13 Construction in progress
Category Closing balance as of 30/06/2019 Closing balance as of 31/12/2018
Construction in progress 5,330,499,256.87 4,790,300,972.13
Construction material
Total 5,330,499,256.87 4,790,300,972.13
6.13.1 General information
Closing balance as of 30/06/2019 Closing balance as of 31/12/2018
Category Impairment Net carrying Impairment Net carrying
Carrying amount Carrying amount
allowance amount allowance amount
Factory building
480,577,208.48 480,577,208.48 337,399,330.36 337,399,330.36
project
Prepayment 4,772,631,378.09 4,772,631,378.09 4,444,647,787.88 4,444,647,787.88
111
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Closing balance as of 30/06/2019 Closing balance as of 31/12/2018
Category Impairment Net carrying Impairment Net carrying
Carrying amount Carrying amount
allowance amount allowance amount
for aircrafts
Construction of
1,898,373.42 1,898,373.42 1,874,609.59 1,874,609.59
information system
Simulator 75,392,296.88 75,392,296.88 6,379,244.30 6,379,244.30
Total 5,330,499,256.87 5,330,499,256.87 4,790,300,972.13 4,790,300,972.13
6.13.2 Significant projects
Transferred
to fixed
Opening balance Current period Closing balance as
Project Budget assets in Other decrease
as of 01/01/2019 increase of 30/06/2019
current
period
Dining area of
84,478,748.00 32,219,746.74 22,990,084.79 55,209,831.53
Jiaodong airport
Freight area of
144,614,600.00 40,525,078.89 34,474,921.11 75,000,000.00
Jiaodong airport
Maintenance area of
361,793,762.00 126,091,135.85 22,281,176.15 148,372,312.00
Jiaodong airport
Auxiliary production
333,439,610.00 138,563,368.88 62,452,625.32 201,015,994.20
office area
Aircraft asset
10,432,388,610.26 4,444,647,787.88 850,574,394.28 522,590,804.07 4,772,631,378.09
introduction project
Total 11,356,715,330.26 4,782,047,118.24 992,773,201.65 522,590,804.07 5,252,229,515.82
(Continued)
112
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Including:Transfe Including:Tran Including:
Capitalisation
Weight of cost to Stage of Cumulative rred into sferred into interests
rate applicable Source of
Project date in budgeted completion interests leaseback assets fixed assets capitalized
to the current finance
cost (%) capitalised during the during the during the
period
current period current period current period
Dining area of Not yet Working
65.35
Jiaodong airport completed capital
Freight area of Not yet Working
51.86
Jiaodong airport completed capital
Maintenance area Not yet Working
41.01
of Jiaodong airport completed capital
Auxiliary
Not yet Working
production office 60.29
completed capital
area
Loans from
Aircraft asset
45.75 Not applicable 119,090,478.89 20,105,026.50 3.1172-4.2466 financial
introduction project
institution
Total 119,090,478.89 20,105,026.50
Note: The cumulative amount of interests capitalized as at January 1 2019 is CNY 98,985,452.39, the amount of current period is CNY
20,105,026.50, including CNY 0 transferred into fixed assets and CNY 0 transferred into leaseback assets during the current period, the cumulative
amount of interests capitalized as at June 30 2019 is CNY 119,090,478.89.
6.14 Intangible assets
6.14.1 General information
Category Land rights Software Total
1. Cost:
1.1 Balance as at 31/12/2018 108,347,341.13 45,805,422.86 154,152,763.99
1.2 Increased in current period 2,811,320.73 2,811,320.73
(1) Purchase
(2) Diversion of construction 2,811,320.73 2,811,320.73
(3) Increased from business
113
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Category Land rights Software Total
combination
1.3 Decreased in current period
(1) Disposal
1.4 Balance as at 30/06/2019 108,347,341.13 48,616,743.59 156,964,084.72
2. Accumulated amortization
2.1 Balance as at 31/12/2018 18,391,975.29 20,218,907.31 38,610,882.60
2.2 Increased in current period 1,201,791.44 3,268,389.33 4,470,180.77
(1) Accrual 1,201,791.44 3,268,389.33 4,470,180.77
(2) Increased from business
combination
2.3 Decreased in current period
(1) Disposal
2.4 Balance as at 30/06/2019 19,593,766.73 23,487,296.64 43,081,063.37
3. Impairment allowance
3.1 Balance as at 31/12/2018
3.2 Increased in current period
(1) Accrual
(2) Increased from business
combination
3.3 Decreased in current period
(1) Disposal
3.4 Balance as at 30/06/2019
4. Carrying amount
4.1 Carrying amount as at
88,753,574.40 25,129,446.95 113,883,021.35
30/06/2019
4.2 Carrying amount as at
89,955,365.84 25,586,515.55 115,541,881.39
31/12/2018
6.14.2 Land rights with pending ownership registration
114
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
No case of land rights with pending ownership registration was identified as of June 30 2019.
6.15 Goodwill
6.15.1 General information
Current period Current period
Opening balance as increase decrease Closing balance
Investee
of 01/01/2019 From business as of 30/06/2019
combination
Qingdao Feisheng 10,220,816.22 10,220,816.22
Shandong Jinping Food Co.,
454,020.13 454,020.13
Ltd.
Total 10,674,836.35 10,674,836.35
6.15.2 Impairment allowance
Current period Current period
Opening balance as Closing balance
Investee increase decrease
of 01/01/2019 as of 30/06/2019
Accrual Disposal
Qingdao Feisheng 10,220,816.22 10,220,816.22
Total 10,220,816.22 10,220,816.22
6.16 Deferred charges
Opening balance as Current period Current period Closing balance as
Category Other decrease
of 01/01/2019 increase amortization of 30/06/2019
Pilot training 560,825,591.19 36,488,608.59 44,527,976.75 552,786,223.03
Decoration expenditure 5,998,919.63 1,498,068.48 4,500,851.15
Modification costs for aircraft
6,820,831.82 203,575.96 6,617,255.86
leasing
Total 573,645,342.64 36,488,608.59 46,229,621.19 563,904,330.04
6.17 Deferred tax assets and deferred tax liabilities
6.17.1 Deferred tax assets
Closing balance as of 30/06/2019 Closing balance as of 31/12/2018
Category
Deductible temporary Deferred tax assets Deductible temporary Deferred tax assets
115
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
difference difference
Allowance for bad debt 133,477,111.12 33,369,277.78 132,724,296.11 33,181,074.03
Impairment allowance for
1,982,101.25 495,525.31 1,994,621.32 498,655.33
fixed assets
Fair value movement of
financial liabilities held for 990,989.10 247,747.28
trading
Provisions 4,043,627,722.70 1,010,906,930.68 3,480,184,220.23 870,046,055.05
Employment benefits
40,410,859.50 10,102,714.88 17,131,763.99 4,282,941.00
payable
Deferred income 23,309,650.33 5,827,412.58 24,890,471.35 6,222,617.84
Others 860,533.40 215,133.35
Total 4,244,658,967.40 1,061,164,741.86 3,656,925,373.00 914,231,343.25
6.17.2 Deferred tax liabilities
Closing balance as of 30/06/2019 Closing balance as of 31/12/2018
Category Taxable temporary Deferred tax Taxable temporary
Deferred tax liabilities
differences liabilities differences
Asset evaluation increment
from Enterprise merger 4,433,866.64 1,108,466.66 4,694,682.30 1,173,670.58
under the different control
Changes in fair value of
financial assets held for 90,488.17 22,622.04
trading
Changes in fair value of
financial assets available for 222,490,865.36 55,622,716.34
sale
Changes in fair value of other
equity instruments 649,288,584.78 162,322,146.20
investment
116
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Others (Note) 108,787,178.84 27,196,794.71
Total 762,509,630.26 190,627,407.57 227,276,035.83 56,819,008.96
Note: According to Caishui [2018] No. 54, the equipment and equipment newly purchased by the company from January 1 2018 to December 31
2020, with a unit value of less than 5 million yuan, are allowed to be included in the current profit and loss. The cost is deducted when calculating
the taxable income.
6.18 Short-term borrowing
Category Closing balance as of 30/6/2019 Closing balance as of 31/12/2018
Credit loan 700,000,000.00 580,000,000.00
Total 700,000,000.00 580,000,000.00
6.19 Financial liabilities at fair value through profit or loss
Opening balance as of Current period Current period
Category Closing balance as of 30/06/2019
01/01/2019 increase decrease
Interest rate swaps 990,989.10 990,989.10
Total 990,989.10 990,989.10
As of June 30 2019, the principal amount of the interest rate swap contract held by the company is USD12,000,000.00, and the bank confirmed the
market value of the interest rate swap contract as CNY -990,989.10.
6.20 Accounts payable
6.20.1 Disclosure by category
Category Closing balance as of 30/06/2019 Closing balance as of 31/12/2018
Aircraft maintenance costs 580,087,681.73 560,449,992.31
Fuel cost 443,522,439.71 327,714,163.12
Landing fee 478,213,259.44 446,878,244.86
Aircraft service cost 414,494,186.08 570,352,031.53
Flight catering 105,462,983.70 109,165,990.89
Computer booking fee 193,232,943.12 135,371,372.00
Lease rental 7,674,561.21 5,602,184.13
Others 141,867,985.48 118,302,628.42
Total 2,364,556,040.47 2,273,836,607.26
117
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
6.20.2 No significant accounts payable due for more than 1 year as at the reporting date.
6.21 Advance from customers
Category Closing balance as of 30/06/2019 Closing balance as of 31/12/2018
Ticket clearing 598,271,489.57 761,881,379.16
Advanced payment for tickets 4,291,389.50 4,286,573.58
Others 13,877,150.89 21,203,718.59
Total 616,440,029.96 787,371,671.33
6.22 Employee benefits payable
6.22.1 Disclosure by classification
Opening balance as Current period Current period Closing balance as of
Category
of 01/01/2019 increase decrease 30/06/2019
1. Short-term employee benefits 543,294,439.81 1,361,953,409.96 1,598,362,547.24 306,885,302.53
2. Post-employment benefits 123,568,217.57 123,568,217.57
3. Termination benefits 166,564.62 166,564.62
4. Other long-term employee benefits
within one year
Total 543,294,439.81 1,485,688,192.15 1,722,097,329.43 306,885,302.53
6.22.2 Disclosure by classification of short-term employee benefits
Opening balance Current period Current period Closing balance
Category
as of 01/01/2019 increase decrease as of 30/06/2019
1. Wages, salaries and subsidies 493,926,676.47 1,192,952,869.39 1,438,741,672.97 248,137,872.89
2. Employee welfare 9,856,327.78 9,856,327.78
3. Social insurance: 53,572,526.77 53,572,526.77
Including: Medical insurance 47,210,468.77 47,210,468.77
Employment injury insurance 1,846,975.93 1,846,975.93
Maternity insurance 4,515,082.07 4,515,082.07
4.Housing provident fund 2,544.00 51,370,139.48 51,372,683.48
118
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Opening balance Current period Current period Closing balance
Category
as of 01/01/2019 increase decrease as of 30/06/2019
5.Labour union fee and employee
17,202,010.55 35,976,546.54 12,656,127.45 40,522,429.64
education fee
6. Short-term paid absences 32,163,208.79 18,225,000.00 32,163,208.79 18,225,000.00
7. Short-term profit-sharing plan
Total 543,294,439.81 1,361,953,409.96 1,598,362,547.24 306,885,302.53
6.22.3 Disclosure by defined contribution plan
Opening balance Current period Current period Closing balance as of
Category
as of 01/01/2019 increase decrease 30/06/2019
1. Basic pension 77,021,111.43 77,021,111.43
2.Unemployment insurance 3,080,512.66 3,080,512.66
3. Annuity payment 43,466,593.48 43,466,593.48
Total 123,568,217.57 123,568,217.57
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.
6.23 Taxes and fees payable
Category Closing balance as of 30/06/2019 Closing balance as of 31/12/2018
VAT 1,686,737.56 1,550,891.34
Urban construction and maintenance tax 284,039.12 203,034.68
Education surcharge 121,731.06 144,777.29
Enterprise income tax 40,234,428.40 108,855,883.31
Property tax 188,184.37 207,271.63
Land tax 250,754.28 284,502.66
Personal income tax 8,775,124.18 8,016,428.72
Stamp duty 2,004,492.76 1,754,447.96
Civil aviation development fund 133,484,301.80 131,301,180.63
119
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Category Closing balance as of 30/06/2019 Closing balance as of 31/12/2018
Others 488,164.47 398,840.65
Total 187,517,958.00 252,717,258.87
6.24 Other payables
Category Closing balance as of 30/06/2019 Closing balance as of 31/12/2018
Interest payable 11,991,004.44 10,428,894.80
Dividend payable 80,602,306.96 602,306.96
Other payables 633,142,897.44 624,468,268.37
Total 725,736,208.84 635,499,470.13
6.24.1 Interest payable
Category Closing balance as of 30/06/2019 Closing balance as of 31/12/2018
Interest on long-term borrowings with
5,987,240.47 6,875,927.06
repayment by installments
Accrued interest on short-term borrowings 6,003,763.97 3,552,967.74
Total 11,991,004.44 10,428,894.80
6.24.2 Dividend payable
Category Closing balance as of 30/06/2019 Closing balance as of 31/12/2018
Dividend on common shares 80,602,306.96 602,306.96
Total 80,602,306.96 602,306.96
6.24.3 Other payables
6.24.3.1 Disclosure by nature
Category Closing balance as of 30/06/2019 Closing balance as of 31/12/2018
Payable for construction projects 237,369,058.63 241,249,024.10
Payable for down payments 141,960,472.78 133,300,822.32
Payables associated with aircraft purchase 3,949,505.02 3,949,505.02
Taxes deducted at source 103,925,265.15 102,180,386.82
Others 145,938,595.86 143,788,530.11
Total 633,142,897.44 624,468,268.37
120
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
6.24.3.2 No significant other payables due for more than 1 year as at the reporting date.
6.25 Non-current liabilities due within one year
Category Closing balance as of 30/06/2019 Closing balance as of 31/12/2018
Long-term borrowings due within one year (Note 6.26) 890,069,479.49 116,076,320.00
Long-term payables due within one year (Note 6.27) 288,305,564.69 330,554,355.34
Long-term employee benefits payable due within one
9,624,747.84 9,210,000.00
year (Note 6.28)
Total 1,187,999,792.02 455,840,675.34
6.26 Long-term borrowings
Category Closing balance as of 30/06/2019 Closing balance as of 31/12/2018
Secured loans 867,261,920.99 982,509,309.37
Credit loans 939,597,415.20 1,019,123,568.46
Less: Long-term borrowings due within one year
890,069,479.49 116,076,320.00
(Note 6.25)
Total 916,789,856.70 1,885,556,557.83
Note: ① Class and amount of mortgage assets see Note 6.53 assets with imposed restriction on ownership.
② Interest rates as at June 30 2019 of the above-mentioned long-term borrowings range from 3.30%-4.41%.
6.27 Long-term payables
Category Closing balance as of 30/06/2019 Closing balance as of 31/12/2018
Long-term payables 4,756,048,059.26 4,368,213,445.33
Specific payable
Total 4,756,048,059.26 4,368,213,445.33
6.27.1 Long-term payables by category
Closing balance as of Closing balance as of
Category
30/06/2019 31/12/2018
Financial lease rental payables 1,696,813,582.98 1,872,324,694.55
Maintenance payables for aircrafts and engines held under operating lease 3,927,627,722.70 3,380,184,220.23
Less: Financial lease rental payables due within one year (Note 6.25) 288,305,564.69 330,554,355.34
Less: Maintenance payables for aircrafts and engines held under 580,087,681.73 553,741,114.11
121
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Closing balance as of Closing balance as of
Category
30/06/2019 31/12/2018
operating lease due within one year (Note 1)
Total 4,756,048,059.26 4,368,213,445.33
Note 1: Maintenance payables for aircrafts and engines held under operating lease due within one year had been included in accounts payable.
6.28 Long-term employee benefits payable
6.28.1 General information
Closing balance as Closing balance as
Category
of 30/06/2019 of 31/12/2018
Post-employment benefits-net defined benefit liability 141,919,413.77 144,434,119.11
Less: long-term staff remuneration payable due within one year (Note 6.25) 9,624,747.84 9,210,000.00
Total 132,294,665.93 135,224,119.11
6.28.2 Movements
6.28.2.1 Defined benefit obligation
Category Current period Prior period
(1) Net Defined Benefit Asset/(Liability) at End of Prior Period 144,434,119.11 119,031,000.00
(2) Defined benefit costs recognized
2,300,000.00 1,584,500.00
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) 2,300,000.00 1,584,500.00
(3) Defined benefit costs recognized
into other comprehensive income
1. Actuarial gains/(losses)
(4) Other movements 4,814,705.34 4,160,850.58
1. Settlement payment
2. Benefits Paid Directly by Employer 4,814,705.34 4,160,850.58
(5) Net defined benefit asset/(liability) at end of current period 141,919,413.77 116,454,649.42
6.28.2.2 Actuarial Assumptions
Category 2019-06-30 2018-12-31
122
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Category 2019-06-30 2018-12-31
Discount Rate 3.25% 3.25%
Mortality Rate China Life Insurance Mortality Rate 2010-2013 (Annuity)
Cost of Living Adjustments for Retired Cadres and Retirees 0.00%
Cost of Living Adjustments for Internal Retirees 0.00%
Cost of Living Adjustments for Dependants 0.00%
6.29 Deferred income
Opening balance as Current period Current period Closing balance as
Category Causes
of 01/01/2019 increase decrease of 30/06/2019
The aircraft
Unrealized gains and losses of
sale-leaseback
operating lease from aircraft 93,389,396.81 599,193.98 1,949,191.95 92,039,398.84
disposal profits and
leaseback
losses
Designated subsidy for snow Asset related
491,458.34 249,750.00 241,708.34
disaster subsidies
Designated subsidy for civil Asset related
10,876,065.40 488,250.06 10,387,815.34
aviation energy-saving program subsidies
Designated subsidy for HUD Asset related
13,522,947.61 842,820.96 12,680,126.65
and repackage project subsidies
Total 118,279,868.16 599,193.98 3,530,012.97 115,349,049.17
Details of government grants:
Opening Current Current period decrease Asset
Closing balance
Category balance as of period Non-operating Other income Reduce Other /Income
as of 30/06/2019
01/01/2019 increase income and gain cost decrease Related
Designated Asset
subsidy for snow 491,458.34 249,750.00 241,708.34 related
disaster subsidies
Designated 10,876,065.40 488,250.06 10,387,815.34 Asset
123
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Opening Current Current period decrease Asset
Closing balance
Category balance as of period Non-operating Other income Reduce Other /Income
as of 30/06/2019
01/01/2019 increase income and gain cost decrease Related
subsidy for civil related
aviation subsidies
energy-saving
program
Designated
Asset
subsidy for HUD
13,522,947.61 842,820.96 12,680,126.65 related
and repackage
subsidies
project
Total 24,890,471.35 1,580,821.02 23,309,650.33
6.30 Share capital
Opening balance as of Closing balance as of
Currency period movement (+, -)
01/01/2019 30/06/2019
Category Coversion
Share Bonus Subt
Amount % from Others Amount %
issue issue otal
reserves
1. Shares with
restriction on
disposal
1.1 State-held
shares
1.2 Shares held
bystate-owned 259,801,000.00 64.95 259,801,000.00 64.95
entities
1.3 Shares held by
other domestic 199,000.00 0.05 199,000.00 0.05
investors
Including: Held by
199,000.00 0.05 199,000.00 0.05
institutional
124
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Opening balance as of Closing balance as of
Currency period movement (+, -)
01/01/2019 30/06/2019
Category Coversion
Share Bonus Subt
Amount % from Others Amount %
issue issue otal
reserves
investors
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 restriction on 260,000,000.00 65.00 260,000,000.00 65.00
disposal
2. Floating shares
2.1 Ordinary shares
issued in CNY
2.2 Shares issued in
domestic stock
140,000,000.00 35.00 140,000,000.00 35.00
market 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
125
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
6.31 Capital reserves
Opening balance as of Current period Current period
Category Closing balance as of 30/06/2019
01/01/2019 increase decrease
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
6.32 Other comprehensive income
Total amount in current period
Less:
previously
Closing balance Opening balance recognized in After tax After tax Closing
Amount for the
Category as of as of other Less: Income attributable to attributable balance as of
period before
31/12/2018 01/01/2019 comprehensive tax expense the parent to minority 30/06/2019
tax
income company shareholders
transferred into
profit or loss
1.Other comprehensive
income will be
-17,567,660.07 508,786,810.75 -52,517,376.32 -13,129,344.08 -39,388,032.24 469,398,778.51
reclassified into income
or loss in the future
Including:
remeasurement of net
-17,567,660.07 -17,567,660.07 -17,567,660.07
assets or net liabilities of
defined benefit plans
Changes in fair value of
other equity instruments 526,354,470.82 -52,517,376.32 -13,129,344.08 -39,388,032.24 486,966,438.58
investment
2.Other comprehensive
income reclassifiable to
166,868,149.01
profit or loss in
subsequent periods
Gains and losses from
changes in fair value of
166,868,149.01
financial assets available
for sale
126
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Total amount in current period
Less:
previously
Closing balance Opening balance recognized in After tax After tax Closing
Amount for the
Category as of as of other Less: Income attributable to attributable balance as of
period before
31/12/2018 01/01/2019 comprehensive tax expense the parent to minority 30/06/2019
tax
income company shareholders
transferred into
profit or loss
Total of other
149,300,488.94 508,786,810.75 -52,517,376.32 -13,129,344.08 -39,388,032.24 469,398,778.51
comprehensive income
6.33 Surplus reserves
Closing balance as of Opening balance Current period Current period Closing balance
Category
31/12/2018 as of 01/01/2019 increase decrease as of 30/06/2019
Statutory surplus
503,999,977.58 503,999,977.58 503,999,977.58
reserve
Total 503,999,977.58 503,999,977.58 503,999,977.58
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.
6.34 Retained earnings
Category Current period Prior period
Pre-adjustment balance brought forward 3,342,615,148.06 3,127,778,550.76
Total adjustment to retained earnings b/f (+, -)
Retained earnings b/f after adjustment 3,342,615,148.06 3,127,778,550.76
Add: Net profit attributable to shareholders of the parent -27,364,005.41 347,379,314.89
Less: Appropriation to statutory surplus reserve 32,542,717.59
Appropriation to discretionary surplus reserve
General reserve
Ordinary dividends declared 80,000,000.00 100,000,000.00
Bonus issue
127
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Category Current period Prior period
Closing balance as of 30/6/2019 3,235,251,142.65 3,342,615,148.06
6.35 Operating revenues and costs
Current period Prior period
Category
Operating revenues Operating costs Operating revenues Operating costs
Principal business 8,662,501,912.54 8,393,542,113.46 8,458,681,796.83 8,019,627,238.03
Other business 326,566,488.18 1,702,972.58 270,596,767.82 1,392,891.19
Total 8,989,068,400.72 8,395,245,086.04 8,729,278,564.65 8,021,020,129.22
6.36 Tax and surcharges
Category Current period Prior period
Urban maintenance and construction tax 1,660,551.31 1,667,845.17
Education surcharge and others 6,112,351.86 5,354,577.57
Total 7,772,903.17 7,022,422.74
Notes: Applicable rates for business tax and surcharges see Note 5.Taxation.
6.37 Sales expenses
Category Current period Prior period
Agency fees 108,172,942.32 126,855,350.48
Employment benefits 110,084,846.82 120,529,476.85
Computer booking 90,439,234.30 77,540,018.08
Online payment 18,500,546.84 18,331,136.28
System and network 13,504,168.24 6,797,220.84
Lease rental 11,132,987.19 8,031,295.30
Advertisement fees 10,721,524.81 8,602,671.37
Travel expenses 3,393,070.01 2,273,329.64
BSP data processing 5,891,147.19 4,734,359.24
Administrative office expenses 1,402,463.77 2,042,889.71
Depreciation 719,021.50 730,459.96
Sales expense of annual tickets 269,133.07 778,232.75
128
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Category Current period Prior period
Others 14,335,291.83 16,281,095.89
Total 388,566,377.89 393,527,536.39
6.38 General and administrative expenses
Category Current period Prior period
Employment benefits 113,804,877.27 111,343,130.41
Lease rental 12,190,868.44 8,596,970.11
Outsourcing fee 14,929,468.74 6,840,371.69
Depreciation 9,978,743.53 7,873,115.99
Water, electricity charges 6,131,159.05 6,359,946.07
Amortization of intangibles 4,470,180.77 4,078,005.18
Business entertainment costs 2,588,901.12 2,261,491.60
Administrative office expenses 5,271,841.62 4,189,367.23
Technology development costs 972,633.38 1,456,524.25
Others 49,012,374.24 48,567,259.67
Total 219,351,048.16 201,566,182.20
6.39 Research and development costs
Category Current period Prior period
Employment benefits 8,960,946.50 2,127,502.63
Total 8,960,946.50 2,127,502.63
6.40 Financial costs
Category Current period Prior period
Interest expenses 70,674,180.26 52,548,207.24
Less: Interest income 5,907,298.18 4,577,884.98
Exchange difference 5,354,159.74 -3,892,927.19
Bank charges and others 765,685.74 882,070.14
Total 70,886,727.56 44,959,465.21
6.41 Other income and gain
129
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Included in current
Category Current period Prior period period non-recurring
profit and loss
Government subsidies 32,120,370.10 130,079,158.92 32,120,370.10
Including: Route subsidy 30,431,871.97 118,358,337.90 30,431,871.97
Designated subsidy for HUD and
842,820.96 842,820.96 842,820.96
repackage project
Designated subsidy for civil aviation
488,250.06 488,250.06 488,250.06
energy-saving program
Designated subsidy for snow disaster 249,750.00 249,750.00 249,750.00
Other government subsidy 107,677.11 10,140,000.00 107,677.11
Other projects related to daily activities 258,298.31 6,298,497.31 258,298.31
Including: Withholding fee refund 258,298.31 6,298,497.31 258,298.31
Total 32,378,668.41 136,377,656.23 32,378,668.41
6.42 Investment income
Category Current period Prior period
Income from financial assets measured by fair value with
changes in -23,033.18
fair value recognized in profit or loss
Income from holding of financial assets available for sale 17,208,111.50
Income from holding of financial assets at fair value through
213,867.45
profit or loss
Income from holding of other equity instrument investments 5,861,939.50
Total 6,075,806.95 17,185,078.32
6.43 Gain from changes in fair value
Source Current period Prior period
Interest rate swaps -1,081,477.27 3,510,568.94
Total -1,081,477.27 3,510,568.94
6.44 Expected credit loss
Category Current period Prior period
130
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Category Current period Prior period
Bad debt allowance for accounts receivable -421,196.30
Bad debt allowance for other receivables -331,618.73
Total -752,815.03
6.45 Loss on asset impairment
Category Current period Prior period
Allowance for bad debt -4,271,098.28
Total -4,271,098.28
6.46 Gain on disposal of non-current assets
Included in current period
Category Current period Prior period
non-recurring profit and loss
Disposal of fixed assets 32,155.55 26,470,970.71 32,155.55
Total 32,155.55 26,470,970.71 32,155.55
6.47 Non-operating income
Included in current period
Category Current period Prior period
non-recurring profit and loss
Transferred income from pilot 13,443,396.23 13,679,245.28 13,443,396.23
Others 8,142,307.63 9,911,366.08 8,142,307.63
Total 21,585,703.86 23,590,611.36 21,585,703.86
6.48 Non-operating expenses
Included in current period
Category Current period Prior period
non-recurring profit and loss
Loss on non-current asset disposals 1,322,013.76 531,113.22 1,322,013.76
Others 196,501.72 290,986.40 196,501.72
Total 1,518,515.48 822,099.62 1,518,515.48
6.49 Income tax expenses
6.49.1 Income tax expenses
Category Current period Prior period
131
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Category Current period Prior period
Current income tax expense 102,193,273.66 164,428,600.55
Deferred tax expense -119,824,429.86 -107,062,291.28
Total -17,631,156.20 57,366,309.27
6.49.2 Reconciliation of account profit and income tax expenses
Category Current period
Profit before tax -44,995,161.61
Income tax computed in accordance with the applicable tax rate -11,248,790.40
Impact of income tax in the previous period -5,669,018.64
Impact of non-taxable income -1,465,484.87
Impact of non-deductible costs, expenses and losses 537,004.36
Impact of the deductible loss of deferred income tax assets not recognized in the
215,133.35
previous period
Income tax expenses -17,631,156.20
6.50 Other comprehensive income
Please see Note 6.32 for detail.
6.51 Notes to the consolidated statement of cash flows
6.51.1 Other cash receipts relating to operating activities
Category Current period Prior period
Government grants 30,531,871.97 128,498,337.90
Refund of withholding tax payment 258,298.31 6,298,497.31
Interest income on bank deposit 5,907,298.18 4,577,884.98
Cash receipts from non-operating income 21,438,805.97 23,590,611.36
Cash receipts from operating balance 53,970,652.83 157,152,067.68
Total 112,106,927.26 320,117,399.23
6.51.2 Other cash payments relating to operating activities
Category Current period Prior period
Bank charges 765,685.74 882,070.14
132
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Cash payments for non-operating expenses 196,501.72 290,986.40
Cash payments for operating balance 58,258,275.51 44,365,617.32
Cash payments for sales and general and
32,829,646.51 27,849,037.57
administrative expenses
Total 92,050,109.48 73,387,711.43
6.51.3 Other cash receipts relating to investing activities
Category Current period Prior period
Cash receipts of settlement of interest rate
213,867.45
swaps
Total 213,867.45
6.51.4 Other cash payments relating to investing activities
Category Current period Prior period
Cash payments of settlement of interest rate
23,033.18
swaps
Total 23,033.18
6.51.5 Other cash receipts relating to financing activities
Category Current period Prior period
Cash receipts for aircraft transfer of sale and
485,947,232.59 424,203,461.76
leaseback deals
Total 485,947,232.59 424,203,461.76
6.51.6 Other cash payments relating to financing activities
Category Current period Prior period
Cash payments for aircraft financial
207,230,938.23 112,793,486.52
lease rental
Total 207,230,938.23 112,793,486.52
6.52 Supplementary information to the consolidated statement of cash flows
6.52.1 Supplementary information to the statement of cash flows
Category Current period Prior period
133
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Category Current period Prior period
① Reconciliation of cash flows from operating activities to net
profit:
Net profit -27,364,005.41 203,730,704.65
Add: Loss on asset impairment 752,815.03 4,271,098.28
Depreciation of fixed assets, oil and gas assets, biological assets held
452,151,368.95 399,553,160.85
for production
Amortization of intangible assets 4,470,180.77 4,078,005.18
Amortization of Long-term deferred expenditure 46,229,621.19 45,884,088.41
Loss on non-current assets disposal (gain presented by "-" prefix) -32,155.55 -26,470,970.71
Loss on scrap of fixed assets (gain presented by "-" prefix) 1,322,013.76 531,113.22
Loss on fair value changes (gain presented by "-" prefix) 1,081,477.27 -3,510,568.94
Financial costs (gain presented by "-" prefix) 82,422,633.27 44,313,606.32
Investment loss (gain presented by "-" prefix) -6,075,806.95 -17,185,078.32
Decrease of deferred tax assets (increase presented by "-" prefix) -146,933,398.61 -106,997,087.36
Increase of deferred tax liabilities (increase presented by "-" prefix) 27,108,968.75 -65,203.92
Decrease of inventories (increase presented by "-" prefix) 3,827,321.72 1,955,226.92
Decrease of operating receivables (increase presented by "-" prefix) -67,153,349.11 18,269,625.14
Increase of operating payables (decrease presented by "-" prefix) 177,083,675.94 294,701,293.74
Others -4,814,705.34 -4,160,850.58
Net cash flows generated from operating activities 544,076,655.68 858,898,162.88
②Significant investing and financing activities involve no cash:
Debt-to-capital conversion
Convertible loan due within one year
Fixed assets acquired under financial lease
③Movement of cash and cash equivalents:
Cash as at 30/6/2019 304,093,125.42 671,936,931.05
Less: Cash as at 31/12/2018 840,860,104.09 543,584,920.30
134
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Category Current period Prior period
Add: Cash equivalents as at 30/6/2019
Less: Cash equivalents as at 31/12/2018
Net increase of cash and cash equivalents -536,766,978.67 128,352,010.75
6.52.2 Composition of cash and cash equivalents
Closing balance as of Opening balance as of
Category
30/06/2019 01/01/2019
①Cash 304,093,125.42 840,860,104.09
Including: Cash at hand 292,210.71 291,347.27
Demand bank deposit 303,800,914.71 840,568,756.82
Demand other monetary funds
Demand deposit in the Central Bank
Deposit in peer firms
Loan to peer firms
②Cash equivalents
Including: Debt instrument matured within three months
③Cash and cash equivalents as at 30/6/2019 304,093,125.42 840,860,104.09
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.
6.53 Assets with imposed restriction on ownership
Category Closing balance as of 30/06/2019 Reason of restriction
Assets pledged as security 1,565,789,674.81
Aircrafts and engines 1,565,689,674.81 Pledge as security for borrowings
Bank deposit 100,000.00 Guarantee deposit
Other form of restriction: 2,214,764,143.05
Aircrafts and engines 2,214,764,143.05 Assets acquired under financial lease
Total 3,780,553,817.86
6.54 Foreign currency monetary items
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Original amount as at Translated amount as at
Item Foreign exchange rate
30/06/2019 30/6/2019
Monetary funds
Including: -USD 9,544,050.31 6.8747 65,612,482.67
-CAD 10.00 5.2490 52.49
-Hwan 356,182,029.00 0.0059 2,101,473.97
-TWD 14,036,004.00 0.2220 3,115,992.89
-JPY 6,177,291.00 0.0638 394,111.17
-THB 396,028.10 0.2234 88,472.68
-EUR 5,042.00 7.8170 39,413.31
Other receivables
Including: -USD 15,808,960.17 6.8747 108,681,858.48
Accounts payable
Including: -USD 14,924,315.50 6.8747 102,600,191.77
-GBP 7,885.33 7.8170 61,639.62
-JPY 2,618,255.00 0.0638 167,044.67
Other payables
Including: -USD 11,138.56 6.8747 76,574.26
Non-current liabilities due within one
year
Including: -USD 113,884,087.69 6.8747 782,918,937.64
Long-term borrowings
Including: -USD 81,776,638.50 6.8747 562,189,856.70
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Original amount as at Translated amount as at
Item Foreign exchange rate
30/06/2019 30/6/2019
Long-term payables
Including: -USD 45,734,976.54 6.8747 314,414,243.22
6.55 Government grants
6.55.1 Basic information on government grants initially recognized this period
Amount in current profit and
Category Amount Presentation
loss
Airline grants 30,431,871.97 Other income and gain 30,431,871.97
Other government grants 107,677.11 Other income and gain 107,677.11
Total 30,539,549.08 30,539,549.08
6.55.2 The company did not returned government subsidies this period.
Note 7: Change of scope of consolidation
The consolidation scope of the financial statements for the current period is consistent with the previous year.
Note 8: The equity in other main entities
8.1 The equity in subsidiaries
8.1.1 The construction of the group
Place Holding proportion
Place of Nature
Subsidiaries of % Acquired method
operation of business
registration Directly Indirectly
Shandong aviation Logistics Ltd Qingdao, Qingdao, Logistics and
100.00 Acquired through investment
(hereafter, Qingdao Logistics) Shandong Shandong storage
Qingdao Feisheng International
Acquired through business
Aviation Training Technology Qingdao, Qingdao,
Pilot training 100.00 combination not under common
Development Co., Ltd Shandong Shandong
control
(hereafter, Qingdao Feisheng)
Shandong Jinping Air Catering Aeronautical Acquired through business
Jinnan, Jinnan,
Co., Ltd. (hereinafter referred to food 100.00 combination not under common
Shandong Shandong
as "Jinping food") processing control
Shandong Airlines Qingdao Food Qingdao, Qingdao, Aeronautical 49.70 50.30 Acquired through business
137
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Co., Ltd. (hereinafter referred to Shandong Shandong food combination not under common
as "Qingdao Food") processing control
8.2 The equity in joint ventures and associates
8.2.1 Significant joint ventures and associates
Holding proportion % The accounting
joint ventures and Place of Place Nature treatment of
associates operation of registration of business Directly Indirectly investments in joint
ventures and associates
Shandong Rainbow
Jinan, Jinan, Aero
Commercial Jet Co., 45.00 Equity treatment
Shandong Shandong transportation
Ltd.
8.2.2 Key financial information of significant associate- Shandong Rainbow Commercial Jet Co., Ltd.
Closing balance as of 30/06/2019 / Closing balance as of
Category
current period 30/12/2018 / prior period
Current assets 1,803,040.67 1,803,040.67
Non-current assets 20,620.72 23,120.72
Total assets 1,823,661.39 1,826,161.39
Current liabilities 167,765,813.33 167,765,813.33
Non-current liabilities
Total liabilities 167,765,813.33 167,765,813.33
Minority interests
Equity attributable to shareholders of the parent -165,942,151.94 -165,939,651.94
Pro rata share of the net assets calculated
Adjusting events
- Goodwill
-Unrealized profits from internal transaction
-Others
Book value of equity investments in associates
Fair value of publicly quoted equity investments in associates
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Closing balance as of 30/06/2019 / Closing balance as of
Category
current period 30/12/2018 / prior period
Operating income
Net profit -2,500.00 -1,503.88
Net profit from discontinued operations
Other comprehensive income
Total comprehensive income
Dividends received from associates during the year
8.2.3 Excess loss occurred by joint ventures and associates
Cumulative Unrecognized losses of current
Cumulative unrecognized
joint ventures and associates unrecognized losses of period (Share of net profit of current
losses of current period
prior year period)
Shandong Rainbow Commercial Jet Co.,
-74,672,803.39 -1,125.00 -74,673,928.39
Ltd.
Note 9 The risk associated with financial instruments
The main financial instruments of the Company include equity investments, loans, accounts receivable, and accounts payable etc. Please see Note
6 for details of related items. The risks 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 analyze the impact of reasonable and possible changes of risk variables on the
profit and loss or shareholders' equity for the current period. While risk variables seldomly change individually, the correlation among variables has
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 analyze the risks which are faced by the Company, to
establish suitable risk tolerance baseline and proceed the risk management, and to supervise a variety of risks timely and reliably, and control the
risk within a limited range.
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9.1.1 Market Risk
(1) Foreign exchange risk
Foreign exchange risk refers to the risk of loss due to exchange rate fluctuations. The company bears the foreign exchange risk primarily
concerned with USD, and uses USD settlement in main financing transactions, operating leases, and financing leasing. On June 30 2019, 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 6.18, 6.25, 6.26, 6.27). 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 are measured at fair value on the balance sheet date.
Hence, the company bears the risk of changes in the stock market.
9.1.2. Credit Risk
As of June 30 2019, 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 recognized 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 sets 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 recognized 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 working capital was deposited in banks with high credit ratings, so that the credit risk of working capital 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, meets the needs of operation of the Company, and reduces the impact of fluctuations in cash flows. The management of the Company
monitors the use of bank borrowings and ensures to abide by loan agreements.
Note 10 Disclosure of the fair value
10.1 The fair value at the end of current period of assets and liabilities which are measured by fair value
Category The fair value as of 30/06/2019
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The 1st level The 2nd level The 3rd level
measured by fair measured by fair measured by fair Total
value value value
1. Continuous measurement by fair value
1.1 Other equity instrument investments 176,663,489.03 560,977,195.75 737,640,684.78
Total amount of assets continuous
176,663,489.03 560,977,195.75 737,640,684.78
measurement by fair value
2. Financial liabilities at fair value through
990,989.10 990,989.10
profit or loss
2.1 Interest rate swaps 990,989.10 990,989.10
Total amount of liabilities continuous
990,989.10 990,989.10
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
Other equity instrument investments 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 Continuous and noncontinuous second level for fair value measurement of the market of project, the qualitative and quantitative
information of the valuation techniques and important parameters
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.
10.4 Continuous and noncontinuous third level for fair value measurement of the market of project, the qualitative and quantitative
information of the valuation techniques and important parameters
Other equity instrument investments that continue to be measured at fair value are investments in Sichuan Airlines and Jinan International
Airport.Unlisted equity instrument investments which using comparable company multiplier models to estimate fair value, their assumptions adopted are
not supported by observable market prices or interest rates.The company needs to make an estimate of the liquidity discount. The Company believes
that the fair value and its changes estimated by valuation techniques are reasonable and are also the most appropriate value on the balance sheet
date.
Note 11 Related parties and related party transaction
11.1 Major parent companies
141
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Shareholding in the Voting right in the
Parent Place of
Nature of operation Registered capital Company Company
companies registration
(%) (%)
Investment and
SDA Group Jinan management of aero 580,000,000.00 42.00 42.00
transportation
Air China Beijing Aero transportation 14,524,815,185.00 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 Joint ventures and associates
See Note 8.2 for joint ventures and associates.
11.4 Other related parties
Other related parties Relationship to the Company
Taikoo (Shandong) Aircraft Engineering Company Limited Controlled by major investors
Shandong XiangYu Air Technology Co., Ltd. Controlled by major investors
Shandong Rainbow Commercial Jet Co., Ltd. Controlled by major investors
Shandong Air New Media Co., Ltd. Controlled by major investors
Air China Import & Export Co., Ltd. Controlled by major investors
Zhejiang Aviation Service Co., Ltd. Controlled by major investors
Air China Shanghai Aviation Service Co., Ltd. Controlled by major investors
Beijing Golden Phoenix Human Resources Service Co., Ltd. Controlled by major investors
CATIC Industrial Co., Ltd. Controlled by major investors
Air Macau Corporation Controlled by major investors
Air China Offshore Holding Company Controlled by major investors
Air China Hongkong Development Limited Controlled by major investors
Beijing Airlines Co., Ltd. Controlled by major investors
China International Aviation Shantou Industrial Development Corporation Controlled by major investors
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Other related parties Relationship to the Company
Chengdu Fukai Aircraft Engineering Services Limited Controlled by major investors
Beijing Aircraft Maintenance and Engineering Corporation Controlled by major investors
Air China Cargo Co., Ltd. Controlled by major investors
China Aviation Group Finance Co., Ltd. Controlled by major investors
Shenzhen Airlines Co., Ltd. Controlled by major investors
Dalian Airlines Co., Ltd. Controlled by major investors
China International Airlines Inner Mongolia Co., Ltd. Controlled by major investors
Kunming Airlines Ltd Controlled by major investors
Sichuan international aero engine maintenance Co., Ltd. jointly operated by major investors
SkyWorks Capital Asia Ltd. jointly operated by major investors
Shanghai Pudong International Airport West Public Cargo Terminal Co., Ltd. jointly operated by major investors
Ji'an Beijing Aviation Asset Management Co., Ltd. jointly operated by major investors
Shanghai International Airport Ground Service Co., Ltd. jointly operated by major investors
Shandong Airlines Rainbow Auto Service Co., Ltd. Controlled by major investors
Chongqing Golden Phoenix Aviation Service Co., Ltd. Controlled by major investors
Shenzhen Airport Catering Company Limited Controlled by major investors
11.5 Related party transactions
11.5.1 Purchase of goods and services
Related party Transaction Current period Prior period
Beijing Aircraft Maintenance and Engineering Corporation Repairment 87,204,401.98 23,790,721.47
Purchase / lease of aircraft
Beijing Aircraft Maintenance and Engineering Corporation 90,670.21 132,352.80
materials
Beijing Aircraft Maintenance and Engineering Corporation Ground service 7,918,216.40 8,861,602.53
Beijing Golden Phoenix Human Resources Service Co., Ltd. Ground service 958,601.38 948,497.85
Chengdu Fukai Aircraft Engineering Services Limited Repairment 3,226,680.49 3,191,715.93
Aircraft offerings and
Shandong Air New Media Co., Ltd. 2,795,638.44 6,609,748.39
advertising fees
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Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Related party Transaction Current period Prior period
Taikoo (Shandong) Aircraft Engineering Company Limited Aircraft maintenance 84,319,157.89 63,241,646.33
Measurement fee for
Taikoo (Shandong) Aircraft Engineering Company Limited 119,155.29
measuring instruments
Shandong XiangYu Air Technology Co., Ltd. Repairment 40,603,685.76 26,495,726.50
Purchase / lease of aircraft
Shandong XiangYu Air Technology Co., Ltd. 85,831.54 16,035.36
materials
Office lease rental and
SDA Group 21,387,861.95 15,563,685.19
catering
SDA Group Irregular flight 16,480.00 32,740.00
SDA Group Group fee 4,335,054.65 6,850,000.00
Vehicle rental fee and
Shandong Airlines Rainbow Auto Service Co., Ltd. 41,140,535.12 37,473,015.00
maintenance fee
Shandong Airlines Rainbow Auto Service Co., Ltd. Group fee 1,488,340.00
Shandong Airlines Rainbow Auto Service Co., Ltd. Irregular flight 340,640.00 311,460.00
Shenzhen Airlines Co., Ltd. Agency service 677,857.68 1,569,683.70
Purchase / lease of aircraft
Shenzhen Airlines Co., Ltd. 71,015.05
materials
Shenzhen Airlines Co., Ltd. Catering 889,287.46 778,267.42
Shenzhen Airlines Co., Ltd. Irregular flight 133,800.00
Shenzhen Airlines Co., Ltd. Ground service 105,800.00
Sichuan International Aero Engine Maintenance Co., Ltd. Repairment 19,750.00 69,304,693.34
Air China Ground service 7,640,745.45 7,704,204.49
Purchase / lease of aircraft
Air China 114,588.32 2,295,962.83
materials
Air China Agency service 344,641.04 15,013,495.74
Air China Irregular flight and group fee 13,342,127.56 11,648,333.78
Air China Cargo Co., Ltd. Ground service 1,292,788.25 3,693,595.62
Kunming Airlines Ltd Agency service 4,096.70 7,349.43
144
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Related party Transaction Current period Prior period
Dalian Airlines Co., Ltd. Irregular flight 144,240.00
Shanghai International Airport Ground Service Co., Ltd. Ground service 108,849.06
Total 320,695,582.37 305,759,488.99
11.5.2 Sales of goods and rendering of services
Related party Transaction Current period Prior period
Beijing Aircraft Maintenance and Engineering Corporation Sale /rent of aircraft materials 706,594.15 89,192.04
Dalian Airlines Co., Ltd. Ground service 396,256.38 492,068.00
Non-routine
Dalian Airlines Co., Ltd. 19,060.73
maintenance/machinery service
Kunming Airlines Ltd Ground service 56,600.00 37,500.00
Kunming Airlines Ltd Locomotive service income 71,320.00 22,773.59
Kunming Airlines Ltd Agency service 6,389.15 8,930.09
Shandong Air New Media Co., Ltd. Media resource fee 6,099,996.00 5,640,000.00
Taikoo (Shandong) Aircraft Engineering Company Limited Sale of aircraft materials 154,216.00 127,361.16
Taikoo (Shandong) Aircraft Engineering Company Limited Training fee 34,197.00
Shandong XiangYu Air Technology Co., Ltd. Sale of aircraft materials 283,444.97 136,343.25
Shenzhen Airlines Co., Ltd. Agency service 597,123.55 683,627.58
Shenzhen Airlines Co., Ltd. Ground service 30,900.00 84,900.00
Shenzhen Airlines Co., Ltd. Sale /rent of aircraft materials 17,669.00
Shenzhen Airlines Co., Ltd. Irregular flight expenditure 88.50
Shenzhen Airlines Co., Ltd. Freight income 26,611.25 44,696.19
Air China Ground service 3,495,904.21 2,519,550.67
Simulator maintenance / House
Air China 2,242,714.31 1,719,132.11
rental income
Air China Sale /rent of aircraft materials 26,375.00 28,337.05
Air China Irregular flight expenditure 9,103.54
145
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Related party Transaction Current period Prior period
Air China Agency service 111,207.26 1,428,144.75
Air China Catering 39,379.30
Air China Cargo Co., Ltd. Freight income 606,293.84
Air China Cargo Co., Ltd. Warehouse rent income 2,641.51
Shandong Airlines Rainbow Auto Service Co., Ltd. Storage income 179,481.05
Shandong Airlines Rainbow Auto Service Co., Ltd. Property fee income 13,754.72
Beijing Airlines Co., Ltd. Ground service 60,539.14
China International Airlines Inner Mongolia Co., Ltd. Ground service 7,116.00
Total 14,627,601.18 13,729,931.86
11.5.3 Related Party borrowing funds demolition
Related Party Borrowing money Beginning date Due date Description
Borrowing:
China Aviation Group Balance as at 30/06/2019 CNY
296,000,000.00 2016-6-20 2026-6-20
Finance Co., Ltd. 207,200,000.00
11.5.4 Remuneration to key management personnel
Category Current period Prior period
Key management personnel compensation CNY 6.2940 million CNY 6.7757 million
11.5.5 Other related party transactions
Related party Transaction Current period Prior period
Air China Code sharing 2,548,476.84
Air China Frequent flyer cooperation 16,000,000.00 50,000,000.00
Air China Cargo Co., Ltd. Code sharing for cargo 1,914,426.62 2,968,207.05
Total 17,914,426.62 55,516,683.89
11.6 Related party balances
11.6.1 Receivables
146
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Closing balance as of 30/06/2019 Closing balance as of 31/12/2018
Related party Allowance for bad Allowance for bad
Carrying amount Carrying amount
debt debt
Accounts receivable
Air China 11,914,565.55 8,564,966.57
Air China Cargo Co., Ltd. 907,509.39
Dalian Airlines Co., Ltd. 87,473.50
Taikoo (Shandong) Aircraft Engineering Company Limited 32,550.00 8,400.00
Total 11,947,115.55 9,568,349.46
Other receivables
Air China 5,513,385.30 6,033,885.98
Shenzhen Airlines Co., Ltd. 100.00 50,787.34
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. 328,796.17 50,712.31
Taikoo (Shandong) Aircraft Engineering Company Limited 179,031.30 235,380.70
Shandong Air New Media Co., Ltd. 17,845,676.45 11,745,680.45
Beijing Aircraft Maintenance and Engineering Corporation 832,351.69 169,241.85
Dalian Airlines Co., Ltd. 113,145.00 241,412.00
Kunming Airlines Ltd 46,660.00 202,090.00
Shandong Airlines Rainbow Auto Service Co., Ltd. 95,122.11 14,040.50
Total 126,505,985.67 101,551,717.65 120,294,948.78 101,551,717.65
11.6.2 Payables
Closing balance as of Closing balance as of
Related party
30/06/2019 31/12/2018
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Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Closing balance as of Closing balance as of
Related party
30/06/2019 31/12/2018
Accounts payable
Shandong XiangYu Air Technology Co., Ltd. 18,064,187.64 8,707,204.12
Taikoo (Shandong) Aircraft Engineering Company Limited 62,142,012.62 45,732,196.37
Air China 157,145,093.02 138,532,747.16
Air China Cargo Co., Ltd. 3,699,156.66 507,357.91
Beijing Golden Phoenix Human Resources Service Co., Ltd. 492,927.79 350,189.85
Shenzhen Airlines Co., Ltd. 519,194.30 686,733.52
Beijing Aircraft Maintenance and Engineering Corporation 43,330,065.79 25,913,065.74
Sichuan International Aero Engine Maintenance Co., Ltd. 4,237,163.40 7,343,500.43
Shandong Air New Media Co., Ltd. 7,665,497.44 5,567,055.00
Shandong Airlines Rainbow Auto Service Co., Ltd. 6,627,145.00 4,602,800.00
Dalian Airlines Co., Ltd. 22,200.00 31,200.00
Chengdu Fukai Aircraft Engineering Services Limited 2,680,363.34 3,130,432.94
Shanghai International Airport Ground Service Co., Ltd. 20,460.00 34,557.70
Total 306,645,467.00 241,139,040.74
Other payables
Air China
SDA Group 6,883,965.37 1,648,781.43
Taikoo (Shandong) Aircraft Engineering Company Limited 484,291.74 484,291.74
Shandong Air New Media Co., Ltd. 9,191,912.89 7,094,412.89
Total 16,560,170.00 9,227,486.06
Note 12 Commitments
12.1 Signifcant commitments
12.1.1 Capital commitment
Category Closing balance as of 30/06/2019 Closing balance as of 31/12/2018
Signed but not yet confirmed in the financial
148
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
statements
- Commitment to acquire non-current assets 7,161,207,637.70 8,514,239,377.41
- large outsourcing contracts
- External investment commitments
Total 7,161,207,637.70 8,514,239,377.41
12.1.2 Operating lease
As of the balance sheet date, the irrevocable operating lease contracts signed by the Company are as follows:
Category Closing balance as of 30/06/2019 Closing balance as of 31/12/2018
Minimum lease rental for irrevocable operating lease
contracts
Within one year from the reporting date 2,929,369,048.28 2,940,809,183.76
Within two years from the reporting date 2,727,963,988.42 2,868,211,237.17
Within three years from the reporting date 2,531,618,658.26 2,616,077,071.91
Subsequent years 10,762,900,402.82 11,464,973,122.44
Total 18,951,852,097.78 19,890,070,615.28
12.1.3 Other commitment
No other significant commitments of the Company need to be disclosed as of 30/06/2019.
Note 13 Post balance sheet date events
No post balance sheet date events of the Company need to be disclosed as of 30/06/2019.
Note 14 Comparative data
A number of prior period comparison data have been reorganized to accommodate this period presentation.
Note 15 Other significant events
15.1 Pension Plan
No significant change of the annuity program occurred for current period, see note 6.22, 6.28.
Note 16 Notes to elements of the separate financial statements
16.1 Notes receivable
149
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
16.1.1 Disclosure by category
Category Closing balance as of 30/06/2019 Closing balance as of 31/12/2018
Bank acceptance bill 11,600,000.00
Commercial Acceptance Bill
Subtotal 11,600,000.00
Less: bad debt allowance
Total 11,600,000.00
As of 30/06/2019, there are no notes receivablehave been pledged, no notes receivable have been endorsed or discounted and have not yet
expired as of 30/06/2019, no defaulted notes receivable transferred to accounts receivable.
16.2 Accounts receivable
16.2.1 Disclosure by age
Age Closing balance as of 30/06/2019
Within 1 year 438,939,690.66
1 to 2 years 13,292,116.90
2 to 3 years 550,936.59
3 to 4 years 233,707.19
4 to 5 years 8,138,874.25
Over 5 years 591,155.09
Subtotal 461,746,480.68
Less: allowance for bad debt 21,270,687.45
Total 440,475,793.23
16.2.2 Disclosure by category
Closing balance as of 30/06/2019
Category Carrying amount Allowance for bad debt
Book value
Amount % %
Accounts receivable subject to individual
8,057,209.85 1.74 8,057,209.85 100.00
impairment assessment
Accounts receivable subject to
453,689,270.83 98.26 13,213,477.60 2.91 440,475,793.23
groupimpairment assessment
Total 461,746,480.68 100.00 21,270,687.45 4.61 440,475,793.23
150
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
（Continued）
Closing balance as of 31/12/2018
Category Carrying amount Allowance for bad debt
Book value
Amount % Amount %
Accounts receivable of individual
significance and subject to individual 105,366,572.73 24.31 105,366,572.73
impairment assessment
Accounts receivable subject to
impairment assessment by credit risk 256,206,313.25 59.11 12,810,315.67 5.00 243,395,997.58
characteristics of a portfolio
Accounts receivable of individual
insignificance but subject to individual 71,865,377.55 16.58 8,057,209.85 11.21 63,808,167.70
impairment assessment
Total 433,438,263.53 100.00 20,867,525.52 4.81 412,570,738.01
16.2.2.1 Accounts receivable subject to individual impairment assessment
Closing balance as of 30/06/2019
Debtor
Carrying amount Allowance for bad debt Rate of allowance (%) Reason for allowance
Impairment upon individual
Debtor 1 8,057,209.85 8,057,209.85 100.00
assessment
Total 8,057,209.85 8,057,209.85 100.00
16.2.2.2 Accounts receivable subject to impairment assessment by credit risk characteristics of a portfolio
Closing balance as of 30/06/2019
Category
Carrying amount Allowance for bad debt Rate of allowance (%)
Settlement center receivables 63,402,786.48
Aviation agreement receivables 112,310,498.33
Related parties receivables 13,706,434.05
Other receivables 264,269,551.97 13,213,477.60 5.00
Total 453,689,270.83 13,213,477.60 2.91
The Company calculate bad debt allowance according to the combination of credit risk characteristics and the expected loss amount.
16.2.3 Allowance for bad debt
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Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Current period movement
Opening balance Closing balance
Category Recovery or Used or
as of 01/01/2019 Recognition as of 30/06/2019
reversal written off
Accounts receivable subject to
individual impairment assessment 8,057,209.85 8,057,209.85
Accounts receivable subject to
groupimpairment assessment 12,810,315.67 403,161.93 13,213,477.60
Total
20,867,525.52 403,161.93 21,270,687.45
16.2.4 Top five accounts receivable by debtors
The total amount of top five accounts receivable summarized by debtors as at the end of current period is 227,380,706.33，accounting for 49.24%
of the total accounts receivable as at the end of current period, the total corresponding allowance for bad debt is CNY 4,735,150.33.
16.3 Other receivables
Category Closing balance as of 30/06/2019 Closing balance as of 31/12/2018
Interest receivable
Dividend receivable 5,861,939.50
Other receivables 264,307,489.86 239,078,612.04
Total 270,169,429.36 239,078,612.04
16.3.1 Dividend receivable
Project (or investee) Closing balance as of 30/06/2019 Closing balance as of 31/12/2018
Sichuan Airlines 2,352,700.00
TravelSky Technology Limited 3,509,239.50
Subtotal 5,861,939.50
Less: bad debt allowance
Total 5,861,939.50
16.3.2 Other receivable
16.3.2.1 Other receivable
Disclosure by age
Age Closing balance as of 30/06/2019
Within 1 year 189,685,472.56
152
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Age Closing balance as of 30/06/2019
1 to 2 years 41,133,479.15
2 to 3 years 4,633,549.64
3 to 4 years 5,686,142.80
4 to 5 years 1,893,524.44
Over 5 years 130,558,546.28
Subtotal 373,590,714.87
Less: allowance for bad debt 109,283,225.01
Total 264,307,489.86
16.3.2.2 Disclosure by category
Category Closing balance as of 30/06/2019 Closing balance as of 31/12/2018
Deposits 78,339,708.42 82,454,112.14
Related parties 140,620,859.28 134,434,805.80
Others 154,630,147.17 131,163,565.23
Subtotal 373,590,714.87 348,052,483.17
Less: bad debt allowance 109,283,225.01 108,973,871.13
Total 264,307,489.86 239,078,612.04
16.3.2.3 Recognition of allowance for bad debt
Stage 1 Stage 2 Stage 3
Expected credit loss for
Expected credit loss
Expected credit loss the whole
Allowance for bad debt for the whole Total
for the next 12 duration(Credit
duration(no credit
months impairment has
impairment)
occurred)
Opening balance as of
7,422,153.48 101,551,717.65 108,973,871.13
1/1/2019
Carrying amount of other
receivables in current period
on 1/1/2019
- Turn to stage 2
- Turn to stage 3
153
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Stage 1 Stage 2 Stage 3
Expected credit loss for
Expected credit loss
Expected credit loss the whole
Allowance for bad debt for the whole Total
for the next 12 duration(Credit
duration(no credit
months impairment has
impairment)
occurred)
- Turn back to stage 2
- Turn back to stage 1
Recognition 309,353.88
Reversal
Used
Written off
Other movements
Closing balance as of
7,731,507.36 101,551,717.65 109,283,225.01
30/6/2019
16.3.2.4 Allowance for bad debt
Current period movement
Opening balance as Closing balance as
Category Recovery or Used or
of 01/01/2019 Recognition of 30/06/2019
reversal written off
Subject to individual
101,551,717.65 101,551,717.65
impairment assessment
Subject to impairment
assessment by credit risk 7,422,153.48 309,353.88 7,731,507.36
characteristics of a portfolio
Total 108,973,871.13 309,353.88 109,283,225.01
There is no allowance for bad debt amount is reversed or recovered in this period.
16.3.2.5 Top five other receivables
Closing balance as of Allowance for bad
Debtor Nature Aging %
30/06/2019 debt
Shandong Rainbow
Others 101,551,717.65 Over 5 years 27.18 101,551,717.65
Commercial Jet Co., Ltd.
154
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Closing balance as of Allowance for bad
Debtor Nature Aging %
30/06/2019 debt
Debtor #1 Others 65,219,505.07 Within 4 years 17.46 3,260,975.25
Debtor #2 Deposits 64,132,796.01 Within 1 year 17.17
Debtor #3 Others 25,885,715.72 Over 5 years 6.93 1,294,285.79
Shandong Air New Media
Others 17,845,676.45 Within 2 years 4.78
Co., Ltd.
Total 274,635,410.90 73.51 106,106,978.69
16.4 Long-term equity investments
16.4.1 Disclosure by category
Closing balance as of 30/06/2019 Closing balance as of 31/12/2018
Category Impairment Net carrying Impairment
Carrying amount Carrying amount Net carrying amount
allowance amount allowance
Investments in
144,101,285.43 144,101,285.43 144,101,285.43 144,101,285.43
subsidiaries
Investments in
22,500,000.00 22,500,000.00 22,500,000.00 22,500,000.00
associates
Total 166,601,285.43 22,500,000.00 144,101,285.43 166,601,285.43 22,500,000.00 144,101,285.43
16.4.2 Investments in subsidiaries
Opening Current Current
Closing balance Allowance Period-end
Investee balance as of period period
as of 30/06/2019 recognized allowance
01/01/2019 increase decrease
Shandong aviation Logistics
48,323,205.97 48,323,205.97
Ltd
Qingdao Feisheng
International Aviation
57,677,479.46 57,677,479.46
Training Technology
Development Co., Ltd
Shandong Jinping aviation
30,310,200.00 30,310,200.00
food Co., Ltd.
Shandong Airlines Qingdao 7,790,400.00 7,790,400.00
155
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Opening Current Current
Closing balance Allowance Period-end
Investee balance as of period period
as of 30/06/2019 recognized allowance
01/01/2019 increase decrease
Food Co., Ltd.
Total 144,101,285.43 144,101,285.43
16.4.3 Investments in joint ventures and associates
Current period movement (+, -)
Investment gains
Opening Invest
Impairment and losses Other Other
Investee balance as of Additional ment
allowance recognized under comprehensive changes
01/01/2019 investment reducti
the equity income adjustment in equity
on
method
Associates
Shandong
Rainbow
Commercia 22,500,000.00 22,500,000.00
l Jet Co.,
Ltd.
Total 22,500,000.00 22,500,000.00
(Continued)
Current period movement (+, -)
Closing balance Year-end
Investee Declared cash Allowance
Others as of 30/06/2019 allowance
dividends or profits recognized
Associates
Shandong Rainbow Commercial Jet Co.,
22,500,000.00 22,500,000.00
Ltd.
Total 22,500,000.00 22,500,000.00
16.5 Operating revenues and costs
Current period Prior period
Category
Operating revenues Operating costs Operating revenues Operating costs
Principal business 8,650,608,567.79 8,405,979,848.66 8,437,476,769.18 8,023,468,231.34
Other business 326,485,849.22 1,702,972.58 268,311,927.22 1,261,093.18
156
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Current period Prior period
Category
Operating revenues Operating costs Operating revenues Operating costs
Total 8,977,094,417.01 8,407,682,821.24 8,705,788,696.40 8,024,729,324.52
16.6 Investment income
Category Current period Prior period
Income from financial assets measured by fair value with changes in
-23,033.18
fair value recognized in profit or loss
Income from holding of financial assets available for sale 17,208,111.50
Income from holding of financial assets at fair value through profit or
213,867.45
loss
Income from holding of other equity instrument investments 5,861,939.50
Total 6,075,806.95 17,185,078.32
Note 17 Supplementary information
17.1 Non-recurring profit and loss
Category Current peirod Description
Gains from disposals of non-current assets after expending impairment provisions -1,289,858.21
Exceeded-authority approved, non-official approved or accidental tax repayment and
relief
Government grants recognized through profit or loss for the current reporting period,
excluding grants which are closely related to the Company’s operating activities and of which 32,120,370.10
the quota or approval is eligible for automatic renewal in accordance with relevant regulations
Financial resource usage fees charged on non-financial institution recognized through
profit 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 disasters
Reorganization
157
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Category Current peirod Description
Reorganization 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
-867,609.82
and available-for-sale financial assets, excluding hedging contracts relevant to the Company’s
daily operating activities
Reversal of impairment provision for accounts receivables eligible for individual
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 21,389,202.14
Other gains or losses satisfying the definition of extraordinary gains or losses 258,298.31
Subtotal 51,610,402.52
Less: Impact of income tax 12,943,704.13
Less: Impact on non-controlling interest
Total 38,666,698.39
Note: Positive amounts and negative amounts in non-recurring categories mean income and expenses or loss respectively.
The Company recognized non-recurring categories of activities in accordance with the Explanatory Announcement regarding Information Disclosure
by Publicly Listed Company No. 1 - Non-recurring Profit and Loss (ZhengjianhuiGonggao [2008] No.43).
17.2 Rate of return on net assets and earnings per share
Types of Profit Weighted average rate Earnings per share (CNY/share)
158
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
of RONA Basic EPS Basic EPS
Net profit attributable to ordinary shareholders -0.61% -0.07 -0.07
Recurring profit or loss attributable to ordinary shareholders -1.48% -0.17 -0.17
159
Shandong Airlines Co., Ltd. Semi-Annual Report 2019
Section XI. Documents available for Reference
1. Financial statements carrying the personal signatures and seals of Chairman of the Board, Chief Accountant and Person in Charge
of Accounting Department.
2. Originals of all documents and notices publicly disclosed on newspapers and websites designated by CSRC in the reporting period.
3. The Company will offer above documents for reference timely provided that CSRC or Stock Exchange demands or shareholders
requires according to the regulations and Articles of Association.
Shandong Airlines Co., Ltd.
Legal representative: Sun Xiujiang
27 August 2019
160
