Shandong Airlines Co., Ltd. Summary of Annual Report 2019
Shandong Airlines Co., Ltd. Summary of Annual Report 2019
I. Important Notice
The summary is abstract from full-text of annual report, for more details of operating results, financial condition and future
development plan of the Company; investors should found in the full-text of annual report that published on media appointed by
CSRC.
Prompt of non-standard audit opinion
□ Applicable √ Not applicable
The Company has no plans of cash dividend distributed, no bonus shares and has no share converted from capital reserve either
Profit distribution pre-plan of preferred stock deliberated and approved by the Board in the reporting period
□ Applicable √ Not applicable
II. Basic information of the company
1. Company profile
Short form of the stock Shanhang-B Stock code 200152
Stock exchange for listing Shenzhen Stock Exchange
Person/Way to contact Secretary of the Board Rep. of security affairs
Name Dong Qiantang Fan Peng
1/F, Tiangong Office Building, North of 3/F, Tiangong Office Building, North of
Red-crowed cranes Hotel, Yaoqiang Red-crowed cranes Hotel, Yaoqiang
Office add.
International Airlines, Licheng District, International Airlines, Licheng District,
Jinan, Shandong Jinan, Shandong
Fax. 0531-85698034 0531-85698034
Tel. 0531-82085939 0531-82085586
E-mail dongqt@sda.cn fanp@sda.cn
2. Main business or product introduction 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”. As of the end of 2019, 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 b ases in
Qingdao, Yantai, Xiamen, Chongqing, Beijing, Urumqi and Guiyang. The Company operates more than 200 domestic, international
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Shandong Airlines Co., Ltd. Summary of Annual Report 2019
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.
3. Main accounting data and financial indexes
(1) Main accounting data and financial indexes for recently three years
Whether the Company needs to retroactively adjust or restate the accounting dat a of previous years
□Yes √No
In RM B
2019 2018 Changes over last year 2017
Operating income 18,990,415,024.88 18,765,953,326.74 1.20% 16,484,713,152.23
Net profit attributable to
361,005,776.31 347,379,314.89 3.92% 490,353,408.15
shareholders of the listed company
Net profit attributable to
shareholders of the listed company
203,107,863.26 132,549,289.96 53.23% 388,452,214.55
after deducting non-recurring gains
and losses
Net cash flow arising from
2,629,812,252.38 2,450,017,519.48 7.34% 1,870,048,122.23
operating activities
Basic earnings per share
0.9 0.87 3.45% 1.23
(RM B/Share)
Diluted earnings per share
0.9 0.87 3.45% 1.23
(RM B/Share)
0.72 percentage points
Weighted average ROE 7.22% 7.94% 12.19%
down
Changes over end of
Year end of 2019 Year end of 2018 Year end of 2017
last year
Total assets 17,392,935,986.48 16,563,979,100.41 5.00% 13,351,422,839.91
Net assets attributable to
5,173,519,005.57 4,471,325,978.28 15.70% 4,253,141,013.93
shareholder of listed company
(2) Quarterly main financial index
In RM B
First quarter Second quarter Third quarter Fourth quarter
Operating income 4,634,384,704.82 4,354,683,695.90 5,768,785,082.57 4,232,561,541.59
Net profit attributable to
34,059,084.70 -61,423,090.11 721,449,719.97 -333,079,938.25
shareholders of the listed company
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Shandong Airlines Co., Ltd. Summary of Annual Report 2019
Net profit attributable to
shareholders of the listed company
22,988,496.10 -89,019,199.90 660,558,166.44 -391,412,611.70
after deducting non-recurring gains
and losses
Net cash flow arising from
72,679,453.91 471,397,201.77 1,652,901,573.57 432,834,023.13
operating activities
Whether there are significant differences between the above-mentioned financial index or its total number and the relevant financial
index disclosed in the company’s quarterly report and semi-annual report
□Yes √ No
4. Shares and shareholders
(1) Particulars about common stock shareholders, preference shareholders with voting rights recovered
and top ten shareholders
In Share
Total
preference Total preference
Total common shareholders shareholders with
Total common stock
stock with voting voting rights
shareholders at end of last
shareholders in 14,699 14,675 rights 0 recovered at end of 0
month before annual report
reporting recovered at last month before
disclosed
period-end end of annual report
reporting disclosed
period
Top ten shareholders
Number of shares
Full name of Nature of Proportion of Amount of Amount of restricted
pledged/frozen
Shareholders shareholder shares held shares held shares held
State of share Amount
Shandong Aviation State-owned
42.00% 168,004,000 168,004,000
Group legal person
State-owned
Air China Limited 22.80% 91,200,000 91,200,000
legal person
Foreign legal
NORGES BANK 0.87% 3,498,479 0
person
VANGUARD
Foreign legal
EM ERGING
0.74% 2,960,917 0
MARKETS STOCK person
INDEX FUND
WANXIANG
Foreign legal
INTERNATIONAL
0.66% 2,658,100 0
INVESTM ENT person
CORPORATION
VANGUARD TOTAL Foreign legal
INTERNATIONAL 0.57% 2,268,651 0
person
STOCK INDEX FUND
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Shandong Airlines Co., Ltd. Summary of Annual Report 2019
ISHARES CORE M SCI Foreign legal
EM ERGING 0.52% 2,063,918 0
person
MARKETS ETF
Domestic
Hou Chunhu 0.44% 1,750,345 0
nature person
Domestic
Chen Jingjian 0.40% 1,595,200 0
nature person
Domestic
Wang Jingqing 0.33% 1,319,553 0
nature person
1. Shandong Aviation Group is the first largest shareholder of the Company, who holds the
shares of the Company on behalf of the State with unlisted shares;
2. Air China Limited is the second largest shareholder of the Company, who holds the
Explanation on related relationship or shares of the Company on behalf of the State with unlisted shares;
concerted action among the above 3. Among the above top ten shareholders, Air China Limited is the first largest shareholder
mentioned shareholders of the Shandong Aviation Group, and there exists no associated relationship between
Shandong Aviation Group and Air China and the other shareholders, and they don’t belong
to the persons acting in concert regulated by the M anagement Regulation of Information
Disclosure on Change of Shareholding for Listed Companies with the other shareholders.
(2) Total preferred stock shareholders of the Company and shares held by top ten shareholders with
preferred stock held
The Company had no shareholders with preferred stock held in the reporting.
(3) Property right and controlling relationships between the actual controllers of the Company and the
Company is as follows:
Shandong Aviation Group
42%
Shandong Airlines Co., Ltd.
5. Corporate bonds
Whether or not the Company public offering corporation bonds in stock exchange, which undue or without payment in full at
maturity on the approval date for annual report disclosed
No
III. Discussion and analysis of business
1. Introduction of operation in the reporting period
The Company runs a steady and progress operation in 2019, and basically achieve the scheduled targets.
——Safety position is generally stable: In transpiration, we have ensured security flight of 434,200 hours with a 0.01% down from a
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Shandong Airlines Co., Ltd. Summary of Annual Report 2019
year earlier; and 206,100 vehicles, a y -o-y growth of 0.14%. The Company has achieved 4 million hours of continuous safe flight,
and was awarded the Four-Star Flight Safety Award by Civil Aviation Administration.
—— Operation efficiency is consolidated and improved: On-time performance was 85.28%, a 3.64 percentage points up from a year
earlier, a 3.63 percentage points above the industry average, ranks No.1 within the industry. Guarantee 110 flights of import ant tasks
smoothly.
——Successful completion of the benefit targets: we completed a RTK of 3628 million TK in the year, and passenger traffic volume
came to 25,838,000 person-time, cargo and mail transport volume reached 182,200 tons, an increase of 2.53%, 1.48% and 7.07%
on a y-o-y basis respectively; the operation revenue reached 18.99 billion Yuan, an increase of 1.20% from a year earlier; net profit
has 361.01 million Yuan, an increase of 3.92% from a year earlier. The passenger load factor (PLF) comes to 84.03%, a 0.12
percentage points up on a y -o-y basis; freight rate goes to 40.29%, a 0.16 percentage points down from a year earlier.
——Steady improvement in service quality: Passenger satisfaction achieved 93.89 scores, risen by 1.19 score on a year-on-year basis;
passenger complaint rate was 0.643 times/ 10 thousand person, a 0.049 times/10 thousand person down; the acceptance of passenger
complaint rate ranks No. 2 (ranks in order of preference) in main airlines; won the title of “Best Airlines for Civil Aviation Service”
for continuous six years; awarded as the “Top 500 M ost Valuable Brand in China” for twelve years in a row with brand value up to
51,292 million Yuan, which ranking increased to ninety -eight.
The Company mainly carried out the following work:
(1) Improve the safety management efficiency to ensure continuous safety
The first was to strengthen the implementation of political responsibility to ensure security. Conscientiously implemented th e spirit
of General Secretary Xi Jinping’s important instructions on civil aviation work, and went all out to do a good job in safety. The
second was to continuously improve the safety management system. The safety management organization system was optimized, the
safety management responsibility interface was clearer, the collaboration was smoother, and the regional management and co ntrol
capabilities were enhanced. The third was to strengthen the construction of "three basics". Carried out an investigation on t he pilots'
technical capabilities, seriously investigated and dealt with the discipline issues of simulator training, improved the qualification
management and control mechanism of aircraft maintenance team, and improved the efficiency of regional maintenance support. T he
fourth was to deepen the prevention and control of security risks. Paid close attention to the key and difficult issues affecting safety
quality in recent years, and implemented rolling tracking control. The fifth was to solidly carry out the aviation security w ork. The
company continuously improved the security management system, carried out special work to strictly control the safety order on
board, and implemented two rounds of special inspections on security work. We have successfully completed the security work t asks
during important periods such as the spring festival transport, the two sessions, and the 70 th anniversary of the founding of the
People's Republic of China.
(2) Inspired the synergy of operation system and maintained the high-level flights normality
The first was to continuously optimize the working mechanism of flights normality management. Further implemented the
operational management and control responsibilities, and promoted the formation of organizational synergy. Deepened the flight
scheduling, adjusted and optimized the coordination mechanism, strengthened the flight early warning managem ent and special
rectification. The second was to improve the flights operation decision-making and support capabilities. The construction of the
operation quality management system was vigorously promoted, and the efficiency and application level of statis tical analysis of
operation data were improved. Improved the effectiveness of AOC collaborative decision-making and effectively controlled
operational risks. Improved the meteorological information system and wind control system alarm function, and further improved the
accuracy of release control. The rapid transit success rate was 78.50%, reducing the transit time by 1309 hours and reducing flight
delays by 11,292 all year round. The third was to focus on the key and difficult points, and pay close attention to promoting and
improving. We deepened the supervision and inspection of flight operation guarantees and rolled over the supervision month by
month; effectively solved the problems such as the aircraft pre-deicing and the cargo counterweighting of connecting flights. The
rectification of the terminals was carried out steadily, and the on-site guarantee quality of relevant terminals was improved.
(3) Coordinated the organization's response to risks, and increased revenue and reduced expenditures and achi eved results
The first was to continuously improve the competitiveness of the airline network. The hub airports’ time resources achieved growth,
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Shandong Airlines Co., Ltd. Summary of Annual Report 2019
and the international regions have made breakthroughs in time resources. In response to the impact of the grounding of B737MAX,
deployed the transport capacity of outside stations and increased the investment in main base markets, and the control of Jin an and
Qingdao was consolidated. The second was to effectively improve the production efficiency. Improved the pas senger source
matching ability, scientifically grasped the rhythm of transport capacity investment, and improved the level of resource allocation and
the operation efficiency. The third was to vigorously improve revenue management capabilities. The efficiency monitoring
mechanism of the sales department was improved, and the proportion of disadvantaged flights decreased. We actively created
value-added service products such as "business trip" and "Luyan trip" so as to increase the company revenue. The market share of the
main base of the freight business was consolidated, and the revenue from the international transit business increased. The fo urth was
to focus on risks and strengthen cost control. We actively responded to internal and external operating ris ks, improved resource
planning efficiency, implemented rigid budget management, and promoted accurate control to fuel efficiency.
(4) Consolidated and improved service quality, and enriched brand image
The first was to improve the service quality evaluation index system. In response to the requirements of the Civil Aviation
Administration, we actively organized the assessment of the capacity of transport services for the disabled, and comprehensively
implemented the information transmission mechanism for late baggage. The second was to comprehensively enrich the online
self-service check-in functions. Vigorously implemented "paperless" travel, simplified handling procedures, and the ticket policy
complaints decreased significantly, vigorously expanded the transit business around the main base and got good reputation from
travelers. The third was to actively participate in the industry service and innovation competition platform. Continued to pr omote
brand carrier innovation, launched the first brand image promotional video and a new generation of air crew uniforms, and built a
"Luyan" brand product system covering the complete service chain of open spaces.
(5) Consummated the operation management mechanism and improved the comprehensive management level
The first was to actively promote deepening reform and optimization of organizational structure. The second was to promote the
healthy development of investment enterprises. The third was to steadily advance infrastructure planning and construction. Focusing
on the relocation of Jinan Airport, the company carried out the office area demand calculation. Promoted the implementation of t he
annual infrastructure project, and the major projects of the Qingdao Jiaozhou Airport Base Project were basically completed, laying a
foundation for the smooth transition on schedule.
2. Whether the main business had major change in the reporting period
□ Yes √ No
3. About the industries, products, or regions accounting for over 10% of the company’s operating income
or operating profit
In RM B
Increase/decrease Increase/decrease Increase/decrease
Operating
Name Operating cost Gross profit ratio of operating of operating cost of gross profit
revenue
revenue y-o-y y-o-y ratio y-o-y
Air transport 0.92 percentage
18,256,980,628.8
1,139,576,427.54 6.24% 1.08% 18.59%
service 8 points up
4. Whether the characteristics of management seasonal or cyclical need special attention
□ Yes √ No
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Shandong Airlines Co., Ltd. Summary of Annual Report 2019
5. In the reporting period, note of major changes in operating income, operating cost, total net profit
attributable to common stock shareholders of listed company or composing the previous reporting period
□ Applicable √ Not applicable
6. Particular about suspension of listing and terminate listing of stocks
□ Applicable √ Not applicable
7. Relevant items involving financial report
(1) Particulars about the changes in aspect of accounting policy, estimates and calculation method
compared with the financial report of last year
The Proposal on Accounting policy Changes was deliberated and approved by 4 th session of 6th BOD held on 21 M arch 2019.
Change of the accounting policy as:
The Notice on Revising and Printing the Format of Financial Statements for General Enterprise in 2018 [Cai Kuai(2018) No.15] was
issued by the M inistry of Finance on 15 June 2018, financial statement’s format for general enterprise are being revised. The revised
Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments [Cai Kuai(2017)
No.7], Accounting Standards for Business Enterprises No. 23 - Transfer of Financial Assets [Cai Kuai(2017) No.8], Accounting
Standards for Business Enterprises No. 24 - Hedge Accounting [Cai Kuai(2017) No.9], and the Accounting Standards for Business
Enterprises No. 37 – Financial Instruments Presentation [Cai Kuai(2017) No.14] issued by M inistry of Finance in 2017 are required
all the enterprise listed in China should implemented the new financial inst rument standards since 1 Jan. 2019.
The Company prepared the financial statement for the year of 2018 and beyond according to the relevant requirement of Notice on
Revising and Printing the Format of Financial Statements for General Enterprise in 2018 issued by M inistry of Finance and
implemented the new financial instrument standards. For the rest unchanged parts, the specific accounting standards, applicat ion
guide of accounting standards, the interpretation announcement of accounting standards for business enterprise and relevant
regulations issued by the M inistry of Finance in the early stage shall still be implemented.
(2) Major accounting errors within reporting period that needs retrospective restatement
No major accounting errors within reporting period that needs retrospective restatement for the Company in the period.
(3) Compare with last year’s financial report; explain changes in consolidation statement’s scope
No changes in consolidation statement scope in the reporting period
Shandong Airlines Co., Ltd.
Legal representative: Sun Xiujiang
28 M arch 2020
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