Shandong Airlines Co., Ltd.
Semi-Annual Report 2021
Content Page
1. Consolidated Statement of Financial Position 1
2. Consolidated Statement of Comprehensive Income 5
3. Consolidated Statement of Cash Flows 9
4. Consolidated Statement of Changes in Shareholders’ Equity 12
5. Statement of Financial Position 19
6. Statement of Comprehensive Income 22
7. Statement of Cash Flows 25
8. Statement of Changes in Shareholders’ Equity 27
9. Notes to the Financial Statements 34
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
1. Consolidated Statement of Financial Position
Prepared by Shandong Airlines Co., Ltd.
June 30, 2021
In RMB/CNY
Item June 30, 2021 December 31, 2020
Current assets:
Monetary funds 5,845,226,291.47 5,306,474,451.06
Settlement provisions
Capital lent
Trading financial assets
Derivative financial assets
Note receivable
Account receivable 468,432,280.01 354,352,296.99
Receivable financing
Accounts paid in advance 10,573,257.02 213,530,865.28
Insurance receivable
Reinsurance receivables
Contract reserve of reinsurance
receivable
Other account receivable 215,898,965.10 159,397,943.13
Including: Interest receivable
Dividend receivable 208,728.00
Buying back the sale of financial
assets
Inventories 114,969,908.89 110,572,399.50
Contractual assets
Assets held for sale
Non-current asset due within one
year
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Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
Other current assets 251,905,607.02 282,572,739.73
Total current assets 6,907,006,309.51 6,426,900,695.69
Non-current assets:
Loans and payments on behalf
Debt investment
Other debt investment
Long-term account receivable
Long-term equity investment
Investment in other equity
517,002,105.83 541,789,406.63
instrument
Other non-current financial assets
Investment real estate
Fixed assets 6,302,939,376.67 6,904,082,012.35
Construction in progress 4,865,466,051.71 5,770,696,951.56
Productive biological asset
Oil and gas asset
Right-of-use assets 12,248,599,440.94 Not applicable
Intangible assets 112,341,517.73 118,699,980.33
Expense on Research and
Development
Goodwill 454,020.13 454,020.13
Long-term expenses to be
612,068,928.70 641,782,578.43
apportioned
Deferred income tax asset 2,836,757,074.21 1,999,099,488.87
Other non-current asset 344,688,942.00
Total non-current asset 27,840,317,457.92 15,976,604,438.30
Total assets 34,747,323,767.43 22,403,505,133.99
Current liabilities:
Short-term loans 2,401,333,333.33 2,001,111,111.11
2
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
Loan from central bank
Capital borrowed
Trading financial liability 403,491.71 862,955.67
Derivative financial liability
Note payable 165,870,145.47 472,095,003.24
Account payable 2,658,722,964.70 2,543,319,300.31
Accounts received in advance
Contractual liability 429,232,599.42 445,400,801.19
Selling financial asset of
repurchase
Absorbing deposit and interbank
deposit
Security trading of agency
Security sales of agency
Wage payable 564,814,235.73 346,238,955.37
Taxes payable 107,529,179.67 102,206,477.49
Other account payable 664,003,768.02 635,865,961.62
Including: Interest payable
Dividend payable 602,306.96 602,306.96
Commission charge and
commission payable
Reinsurance payable
Liability held for sale
Non-current liabilities due within
3,199,440,796.79 321,577,566.89
one year
Other current liabilities 26,810,654.43 31,100,597.66
Total current liabilities 10,218,161,169.27 6,899,778,730.55
Non-current liabilities:
Insurance contract reserve
3
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
Long-term loans 6,761,709,701.99 6,117,434,899.32
Bonds payable 1,000,000,000.00 1,000,000,000.00
Including: Preferred stock
Perpetual capital
securities
Lease liability 10,447,980,110.88 Not applicable
Long-term account payable 4,882,590,105.18 5,303,354,015.63
Long-term wages payable 254,025,000.00
Accrual liability 1,011,106,148.00
Deferred income 96,059,180.45 100,513,810.37
Deferred income tax liabilities 187,058,269.75 158,137,753.91
Other non-current liabilities
Total non-current liabilities 24,386,503,516.25 12,933,465,479.23
Total liabilities 34,604,664,685.52 19,833,244,209.78
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 321,487,504.37 322,552,319.90
Reasonable reserve
Surplus public reserve 538,773,444.97 538,773,444.97
Provision of general risk
Retained profit -1,193,012,231.13 1,233,524,795.64
Total owner’ s equity attributable to
142,659,081.91 2,570,260,924.21
parent company
4
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
Minority interests
Total owner’ s equity 142,659,081.91 2,570,260,924.21
Total liabilities and owner’ s equity 34,747,323,767.43 22,403,505,133.99
Legal Representative: Sun Xiujiang
Person in charge of Accounting Works: Xu Guojian
Person in charge of Accounting Institution: Zhou Shoubin
2. Consolidated Statement of Comprehensive Income
In RMB/CNY
Item 2021 semi-annual 2020 semi-annual
I. Total operating income 6,635,551,376.88 4,190,649,796.09
Including: Operating income 6,635,551,376.88 4,190,649,796.09
Interest income
Insurance gained
Commission charge and
commission income
II. Total operating cost 7,808,892,908.91 5,990,078,683.88
Including: Operating cost 6,979,539,868.81 5,502,524,031.31
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 7,012,586.86 5,744,128.82
5
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
Sales expense 331,321,124.62 212,135,078.19
Administrative expense 222,080,778.68 164,119,792.84
R&D expense 12,465,619.43 10,424,275.10
Financial expense 256,472,930.51 95,131,377.62
Including: Interest
416,888,796.79 85,728,100.07
expenses
Interest income 47,139,814.05 9,474,223.70
Add: Other income 45,965,381.03 40,709,237.21
Investment income (Loss is
-252,102.55 3,523,000.00
listed with “-”)
Including: Investment income
on affiliated company and joint venture
The termination of income
recognition for financial assets measured
by amortized cost
Exchange income (Loss is
listed with “-”)
Net exposure hedging income
(Loss is listed with “-”)
Income from change of fair
459,463.96 -867,700.45
value (Loss is listed with “-”)
Loss of credit impairment
-2,820,851.87 3,560,655.71
(Loss is listed with “-”)
Losses of devaluation of asset
(Loss is listed with “-”)
Income from assets disposal
59,408.78 13,834.98
(Loss is listed with “-”)
III. Operating profit (Loss is listed with
-1,129,930,232.68 -1,752,489,860.34
“-”)
Add: Non-operating income 71,567,327.61 14,819,384.53
Less: Non-operating expense 1,215,033.16 405,767.84
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Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
IV. Total profit (Loss is listed with “-”) -1,059,577,938.23 -1,738,076,243.65
Less: Income tax expense -264,379,185.45 -442,065,669.75
V. Net profit (Net loss is listed with “-”) -795,198,752.78 -1,296,010,573.90
(i) Classify by business continuity
1.continuous operating net profit
-795,198,752.78 -1,296,010,573.90
(net loss listed with ‘-”)
2.termination of net profit (net loss
listed with ‘-”)
(ii) Classify by ownership
1.Net profit attributable to owner’s
-795,198,752.78 -1,296,010,573.90
of parent company
2.Minority shareholders’ gains and
losses
VI. Net after-tax of other comprehensive
-1,064,815.53 -302,639,499.08
income
Net after-tax of other comprehensive
income attributable to owners of parent -1,064,815.53 -302,639,499.08
company
(I) Other comprehensive income
items which will not be reclassified -1,064,815.53 -302,639,499.08
subsequently to profit of loss
1.Changes of the defined
17,525,660.07
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
-18,590,475.60 -302,639,499.08
investment in other equity instrument
4.Fair value change of
enterprise's credit risk
5. Other
(ii) Other comprehensive income
7
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
items which will be reclassified
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.Amount of financial assets
re-classify to other comprehensive
income
4.Credit impairment
provision for other debt investment
5.Cash flow hedging reserve
6.Translation differences
arising on translation of foreign currency
financial statements
7.Other
Net after-tax of other comprehensive
income attributable to minority
shareholders
VII. Total comprehensive income -796,263,568.31 -1,598,650,072.98
Total comprehensive income
-796,263,568.31 -1,598,650,072.98
attributable to owners of parent Company
Total comprehensive income
attributable to minority shareholders
VIII. Earnings per share:
(i) Basic earnings per share -1.99 -3.24
(ii) Diluted earnings per share -1.99 -3.24
Legal Representative: Sun Xiujiang
Person in charge of Accounting Works: Xu Guojian
Person in charge of Accounting Institution: Zhou Shoubin
8
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
3. Consolidated Statement of Cash Flows
In RMB/CNY
Item Semi-annual of 2021 Semi-annual of 2020
I. Cash flows arising from operating
activities:
Cash received from selling
commodities and providing labor 7,066,092,100.24 3,971,039,075.75
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 35,460,001.73 50,973,934.55
Other cash received concerning
200,595,455.78 85,287,017.15
operating activities
Subtotal of cash inflow arising from
7,302,147,557.75 4,107,300,027.45
operating activities
9
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
Cash paid for purchasing
commodities and receiving labor 4,449,420,310.35 4,354,801,724.42
service
Net increase of customer loans and
advances
Net increase of deposits in central
bank and interbank
Cash paid for original insurance
contract compensation
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 1,778,938,298.86 1,545,001,396.40
Taxes paid 118,536,857.72 53,916,310.57
Other cash paid concerning
86,627,702.33 51,329,374.49
operating activities
Subtotal of cash outflow arising from
6,433,523,169.26 6,005,048,805.88
operating activities
Net cash flows arising from operating
868,624,388.49 -1,897,748,778.43
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 59,708.78 13,834.98
assets
Net cash received from disposal of
10
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
subsidiaries and other units
Other cash received concerning
investing activities
Subtotal of cash inflow from investing
59,708.78 13,834.98
activities
Cash paid for purchasing fixed,
689,067,229.92 92,081,258.80
intangible and other long-term assets
Cash paid for investment
Net increase of mortgaged loans
Net cash received from
subsidiaries and other units obtained
Other cash paid concerning
460,830.55 247,100.00
investing activities
Subtotal of cash outflow from investing
689,528,060.47 92,328,358.80
activities
Net cash flows arising from investing
-689,468,351.69 -92,314,523.82
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 2,100,000,000.00 2,720,000,000.00
Other cash received concerning
financing activities
Cash received from issuing bonds 2,000,000,000.00
Subtotal of cash inflow from financing
2,100,000,000.00 4,720,000,000.00
activities
Cash paid for debt repayment 256,483,142.25 1,536,479,945.64
Cash paid for distribution of 171,844,748.62 50,541,437.88
11
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
dividends, profits or repayment of
interest
Including: Dividend and profit of
minority shareholder paid by
subsidiaries
Other cash paid in connection with
1,311,982,904.59 245,703,910.97
financing activities
Subtotal of cash outflow from financing
1,740,310,795.46 1,832,725,294.49
activities
Net cash flows arising from financing
359,689,204.54 2,887,274,705.51
activities
IV. Influence on cash and cash
equivalents due to fluctuation in -93,400.93 -166,297.50
exchange rate
V. Net increase of cash and cash
538,751,840.41 897,045,105.76
equivalents
Add: Balance of cash and cash
5,306,474,451.06 598,861,065.69
equivalents at the period -begin
VI. Balance of cash and cash
5,845,226,291.47 1,495,906,171.45
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
4. Consolidated Statement of Changes in Shareholders’ Equity
Current Amount
In RMB/CNY
Semi-annual of 2021
Owners’ equity attributable to the parent Company
Minori Total
Other
Item Less: Other Provisi
Share Reaso Surplu Retain ty owners
equity instrument Capital Invent compr on of Subtot
capita nable s ed Other interes ’
Prefe Perpe reserve ory ehensi genera al
l reserve reserve profit ts equity
Other
rred tual shares ve l risk
12
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
stock capit incom
al e
secur
ities
I. The ending 400,0 75,410 322,55 538,77 1,233, 2,570, 2,570,
balance of the 00,00 ,363.7 2,319. 3,444. 524,79 260,92 260,92
previous year 0.00 0 90 97 5.64 4.21 4.21
Add:
-1,613, -1,613, -1,613,
Changes of
812,61 812,61 812,61
accounting
3.92 3.92 3.92
policy
Error
correction of the
last period
Enterprise
combine under
the same control
Other
II. The
400,0 75,410 322,55 538,77 -380,2 956,44 956,44
beginning
00,00 ,363.7 2,319. 3,444. 87,818 8,310. 8,310.
balance of the
0.00 0 90 97 .28 29 29
current year
III. Increase/
Decrease in the -812,7 -813,7 -813,7
-1,064,
period 24,412 89,228 89,228
815.53
(Decrease is .85 .38 .38
listed with “-”)
(i) Total -795,1 -796,2 -796,2
-1,064,
comprehensive 98,752 63,568 63,568
815.53
income .78 .31 .31
(ii) Owners’
devoted and
decreased
capital
1.Common
13
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
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
distribution
1. Withdrawal
of surplus
reserves
2. Withdrawal
of general risk
provisions
3. Distribution
for owners (or
shareholders)
4. Other
(iv) Carrying -17,52 -17,52 -17,52
forward internal 5,660. 5,660. 5,660.
owners’ equity 07 07 07
1. Capital
reserves
conversed to
capital (share
capital)
14
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
2. Surplus
reserves
conversed to
capital (share
capital)
3. Remedying
loss with
surplus reserve
4. Carry-over
retained -17,52 -17,52 -17,52
earnings from 5,660. 5,660. 5,660.
the defined 07 07 07
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 75,410 321,48 538,77 -1,193, 142,65 142,65
the end of the 00,00 ,363.7 7,504. 3,444. 012,23 9,081. 9,081.
period 0.00 0 37 97 1.13 91 91
Amount of the previous period
In RMB/CNY
Item Semi-annual of 2020
15
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
Owners’ equity attributable to the parent Company
Other
equity instrument Other
Minorit
Less: compr Provisi Total
Perp y
Share Reaso Surplu Retain
Capital Invent ehensi on of Subtot owners’
etual interest
capita Prefe nable s ed Other
reserve ory ve genera al equity
capit s
l rred Other reserve reserve profit
al shares incom l risk
stock
secur e
ities
I. The ending 400,0 75,410 570,48 538,77 3,588, 5,173, 5,173,5
balance of the 00,00 ,363.7 7,739. 3,444. 847,45 519,00 19,005.
previous year 0.00 0 92 97 6.98 5.57 57
Add:
26,692 26,692
Changes of 26,692,
,794.4 ,794.4
accounting 794.47
7 7
policy
Error
correction of
the last period
Enterprise
combine under
the same
control
Other
II. The
400,0 75,410 570,48 538,77 3,615, 5,200, 5,200,2
beginning
00,00 ,363.7 7,739. 3,444. 540,25 211,80 11,800.
balance of the
0.00 0 92 97 1.45 0.04 04
current year
III. Increase/
Decrease in the -302,6 -1,296, -1,598, -1,598,
period 39,499 010,57 650,07 650,072
(Decrease is .08 3.90 2.98 .98
listed with “-”)
(i) Total -302,6 -1,296, -1,598, -1,598,
16
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
comprehensive 39,499 010,57 650,07 650,072
income .08 3.90 2.98 .98
(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
distribution
1. Withdrawal
of surplus
reserves
2. Withdrawal
of general risk
provisions
3. Distribution
for owners (or
shareholders)
4. Other
(iv) Carrying
17
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
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
18
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
(vi) Others
IV. Balance at 400,0 75,410 267,84 538,77 2,319, 3,601, 3,601,5
the end of the 00,00 ,363.7 8,240. 3,444. 529,67 561,72 61,727.
period 0.00 0 84 97 7.55 7.06 06
Legal Representative: Sun Xiujiang
Person in charge of Accounting Works: Xu Guojian
Person in charge of Accounting Institution: Zhou Shoubin
5. Statement of Financial Position
In RMB/CNY
Item June 30, 2021 December 31, 2020
Current assets:
Monetary funds 5,838,443,075.94 5,302,302,306.13
Trading financial assets
Derivative financial assets
Note receivable
Account receivable 465,645,605.38 350,673,304.20
Receivable financing
Accounts paid in advance 5,035,196.90 213,297,372.67
Other account receivable 223,100,888.23 165,544,964.64
Including: Interest receivable
Dividend receivable 208,728.00
Inventories 113,718,844.50 108,682,699.25
Contractual assets
Assets held for sale
Non-current assets maturing within
one year
Other current assets 251,458,029.43 282,309,117.39
Total current assets 6,897,401,640.38 6,422,809,764.28
Non-current assets:
19
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
Debt investment
Other debt investment
Long-term receivables
Long-term equity investments 144,101,285.43 144,101,285.43
Investment in other equity
517,002,105.83 541,789,406.63
instrument
Other non-current financial assets
Investment real estate
Fixed assets 6,214,198,254.11 6,812,145,764.90
Construction in progress 4,865,466,051.71 5,770,696,951.56
Productive biological assets
Oil and natural gas assets
Right-of-use assets 12,248,599,440.94 Not applicable
Intangible assets 100,145,880.64 106,310,248.22
Research and development costs
Goodwill
Long-term deferred expenses 612,067,991.40 641,779,766.13
Deferred income tax assets 2,836,013,942.07 1,998,341,086.43
Other non-current assets 344,688,942.00
Total non-current assets 27,882,283,894.13 16,015,164,509.30
Total assets 34,779,685,534.51 22,437,974,273.58
Current liabilities:
Short-term borrowings 2,401,333,333.33 2,001,111,111.11
Trading financial liability 403,491.71 862,955.67
Derivative financial liability
Notes payable 165,870,145.47 472,095,003.24
Account payable 2,671,117,610.41 2,560,482,401.82
Accounts received in advance
20
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
Contractual liability 428,108,012.61 443,746,099.43
Wage payable 560,993,983.86 341,473,984.67
Taxes payable 104,710,119.68 99,360,041.47
Other accounts payable 753,435,641.71 726,704,906.20
Including: Interest payable
Dividend payable 11,940.00 11,940.00
Liability held for sale
Non-current liabilities due within
3,199,440,796.79 321,577,566.89
one year
Other current liabilities 26,810,654.43 31,100,597.66
Total current liabilities 10,312,223,790.00 6,998,514,668.16
Non-current liabilities:
Long-term loans 6,761,709,701.99 6,117,434,899.32
Bonds payable 1,000,000,000.00 1,000,000,000.00
Including: Preferred stock
Perpetual capital
securities
Lease liability 10,447,980,110.88 Not applicable
Long-term account payable 4,882,590,105.18 5,303,354,015.63
Long term employee compensation
254,025,000.00
payable
Accrued liabilities 1,011,106,148.00
Deferred income 96,059,180.45 100,513,810.37
Deferred income tax liabilities 186,210,618.78 157,224,899.02
Other non-current liabilities
Total non-current liabilities 24,385,655,865.28 12,932,552,624.34
Total liabilities 34,697,879,655.28 19,931,067,292.50
Owners’ equity:
Share capital 400,000,000.00 400,000,000.00
21
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
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 321,487,504.37 322,552,319.90
Special reserve
Surplus reserve 538,112,740.44 538,112,740.44
Retained profit -1,264,705,534.29 1,159,330,752.03
Total owner’s equity 81,805,879.23 2,506,906,981.08
Total liabilities and owner’s equity 34,779,685,534.51 22,437,974,273.58
Legal Representative: Sun Xiujiang
Person in charge of Accounting Works: Xu Guojian
Person in charge of Accounting Institution: Zhou Shoubin
6. Statement of Comprehensive Income
In RMB/CNY
Item Semi-annual of 2021 Semi-annual of 2020
I. Operating income 6,617,356,229.86 4,177,295,385.40
Less: Operating cost 6,969,532,137.17 5,495,633,063.88
Taxes and surcharge 5,775,245.92 4,806,924.40
Sales expenses 330,115,289.48 211,221,525.71
Administration expenses 213,801,556.28 156,169,770.63
R&D expenses 12,465,619.43 10,424,275.10
Financial expenses 256,477,337.37 95,131,940.39
Including: Interest
416,888,796.79 85,728,100.07
expenses
Interest
47,115,689.94 9,452,770.00
income
22
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
Add: Other income 45,896,352.06 40,674,894.01
Investment income (Loss is
-252,102.55 3,523,000.00
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
listed with “-”)
Net exposure hedging income
(Loss is listed with “-”)
Changing income of fair
459,463.96 -867,700.45
value (Loss is listed with “-”)
Loss of credit impairment
-2,881,933.06 3,472,458.74
(Loss is listed with “-”)
Losses of devaluation of asset
(Loss is listed with “-”)
Income on disposal of assets
59,408.78 13,834.98
(Loss is listed with “-”)
II. Operating profit (Loss is listed with
-1,127,529,766.60 -1,749,275,627.43
“-”)
Add: Non-operating income 71,489,738.61 14,742,586.99
Less: Non-operating expense 1,210,757.01 404,301.52
III. Total Profit (Loss is listed with “-”) -1,057,250,785.00 -1,734,937,341.96
Less: Income tax -264,552,772.67 -441,220,370.77
IV. Net profit (Net loss is listed with
-792,698,012.33 -1,293,716,971.19
“-”)
(i) continuous operating net profit
-792,698,012.33 -1,293,716,971.19
(net loss listed with ‘-”)
(ii) termination of net profit (net
loss listed with ‘-”)
V. Net after-tax of other comprehensive -1,064,815.53 -302,639,499.08
23
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
income
(i) Other comprehensive income
items which will not be reclassified -1,064,815.53 -302,639,499.08
subsequently to profit of loss
1.Changes of the defined
17,525,660.07
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
-18,590,475.60 -302,639,499.08
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
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.Amount of financial
assets re-classify to other
comprehensive income
4.Credit impairment
provision for other debt investment
5.Cash flow hedging
reserve
6.Translation differences
arising on translation of foreign
currency financial statements
7.Other
24
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
VI. Total comprehensive income -793,762,827.86 -1,596,356,470.27
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
7. Statement of Cash Flows
In RMB/CNY
Item Semi-annual of 2021 Semi-annual of 2020
I. Cash flows arising from operating
activities:
Cash received from selling
commodities and providing labor 7,040,805,750.82 3,953,208,766.59
services
Write-back of tax received 35,460,001.73 50,973,934.55
Other cash received in connection
200,424,713.70 85,428,956.83
with operating activities
Subtotal of cash inflow arising from
7,276,690,466.25 4,089,611,657.97
operating activities
Cash paid for purchasing
commodities and receiving labor 4,457,483,833.33 4,337,402,962.87
service
Cash paid to/for staff and workers 1,754,441,457.44 1,521,227,160.53
Taxes paid 114,728,005.38 50,515,780.74
Other cash paid in connection with
85,530,425.34 51,199,549.80
operating activities
Subtotal of cash outflow arising from
6,412,183,721.49 5,960,345,453.94
operating activities
Net cash flows arising from operating
864,506,744.76 -1,870,733,795.97
activities
25
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
II. Cash flows arising from investing
activities:
Cash received from recovering
investment
Cash received from investment
income
Net cash received from disposal of
fixed assets, intangible assets and other 59,408.78 13,834.98
long-term assets
Net cash received from disposal of
subsidiaries and other units
Other cash received concerning
investing activities
Subtotal of cash inflow from investing
59,408.78 13,834.98
activities
Cash paid for purchasing fixed
assets, intangible assets and other 687,560,356.79 88,741,539.33
long-term assets
Cash paid for investment
Net cash received from
subsidiaries and other units obtained
Other cash paid in connection with
460,830.55 247,100.00
investment activities
Subtotal of cash outflow from investing
688,021,187.34 88,988,639.33
activities
Net cash flows arising from investment
-687,961,778.56 -88,974,804.35
activities
III. Cash flows arising from financing
activities:
Cash received from absorbing
investment
Cash received from loans 2,100,000,000.00 2,720,000,000.00
26
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
Other cash received concerning
financing activities
Cash received from issuing bonds 2,000,000,000.00
Subtotal of cash inflow from financing
2,100,000,000.00 4,720,000,000.00
activities
Cash paid for debt repayment 256,483,142.25 1,536,479,945.64
Cash paid for distribution of
dividends, profits or repayment of 171,844,748.62 50,541,437.88
interest
Other cash paid in connection with
1,311,982,904.59 245,703,910.97
financing activities
Subtotal of cash outflow from financing
1,740,310,795.46 1,832,725,294.49
activities
Net cash flows arising from financing
359,689,204.54 2,887,274,705.51
activities
IV. Influence on cash and cash
equivalents due to fluctuation in -93,400.93 -166,297.50
exchange rate
V. Net increase of cash and cash
536,140,769.81 927,399,807.69
equivalents
Add: Balance of cash and cash
5,302,302,306.13 563,534,831.81
equivalents at the period -begin
VI. Balance of cash and cash
5,838,443,075.94 1,490,934,639.50
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
8. Statement of Changes in Shareholders’ Equity
Current Amount
In RMB/CNY
Item Semi-annual of 2021
27
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
Other
equity instrument
Less: Other
Perpet Reasona Total
Share Capital compreh Surplus Retaine
Inventor ble Other owners’
Preferr ual ensive reserve d profit
capital reserve reserve equity
ed capital Other y shares income
stock securiti
es
I. The ending 400,00 1,159,3
86,911,1 322,552, 538,112, 2,506,906,
balance of the 0,000.0 30,752.
68.71 319.90 740.44 981.08
previous year 0 03
Add: Changes -1,613,
-1,613,812
of accounting 812,61
,613.92
policy 3.92
Error
correction of the
last period
Other
II. The
400,00 -454,48
beginning 86,911,1 322,552, 538,112, 893,094,3
0,000.0 1,861.8
balance of the 68.71 319.90 740.44 67.16
0 9
current year
III. Increase/
-810,22
Decrease in the -1,064,8 -811,288,4
3,672.4
period (Decrease 15.53 87.93
0
is listed with “-”)
(i) Total -792,69
-1,064,8 -793,762,8
comprehensive 8,012.3
15.53 27.86
income 3
(ii) Owners’
devoted and
decreased capital
1.Common
shares invested
by shareholders
28
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
2. Capital
invested by
holders of other
equity
instruments
3. Amount
reckoned into
owners equity
with share-based
payment
4. Other
(iii) Profit
distribution
1. Withdrawal of
surplus reserves
2. Distribution
for owners (or
shareholders)
3. Other
(iv) Carrying
-17,525 -17,525,66
forward internal
,660.07 0.07
owners’ equity
1. Capital
reserves
conversed to
capital (share
capital)
2. Surplus
reserves
conversed to
capital (share
capital)
3. Remedying
loss with surplus
29
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
reserve
4. Carry-over
retained earnings -17,525 -17,525,66
from the defined ,660.07 0.07
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 400,00 -1,264,
86,911,1 321,487, 538,112, 81,805,87
the end of the 0,000.0 705,53
68.71 504.37 740.44 9.23
period 0 4.29
Amount of the previous period
In RMB/CNY
Semi-annual of 2020
Other
equity instrument
Other
Less:
Item Total
Share Perpet Capital compre Reasonab Surplus Retained
Inventor Other owners’
capital Preferr ual reserve hensive le reserve reserve profit
equity
ed capital Other y shares income
stock securit
ies
I. The ending 400,00
86,911,1 570,487 538,112 3,517,509 5,113,020,7
balance of the 0,000.
68.71 ,739.92 ,740.44 ,150.78 99.85
previous year 00
30
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
Add:
Changes of 26,692,79 26,692,794.
accounting 4.47 47
policy
Error
correction of
the last period
Other
II. The
400,00
beginning 86,911,1 570,487 538,112 3,544,201 5,139,713,5
0,000.
balance of the 68.71 ,739.92 ,740.44 ,945.25 94.32
00
current year
III. Increase/
Decrease in the -302,63
-1,293,71 -1,596,356,
period 9,499.0
6,971.19 470.27
(Decrease is 8
listed with “-”)
(i) Total -302,63
-1,293,71 -1,596,356,
comprehensive 9,499.0
6,971.19 470.27
income 8
(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
31
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
with
share-based
payment
4. Other
(iii) Profit
distribution
1. Withdrawal
of surplus
reserves
2. Distribution
for owners (or
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
32
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
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 400,00
86,911,1 267,848 538,112 2,250,484 3,543,357,1
the end of the 0,000.
68.71 ,240.84 ,740.44 ,974.06 24.05
period 00
Legal Representative: Sun Xiujiang
Person in charge of Accounting Works: Xu Guojian
Person in charge of Accounting Institution: Zhou Shoubin
33
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
Shandong Airlines Co., Ltd.
Notes to the Financial Statements
for the Year Ended 30 June 2021
(All amounts are expressed in CNY unless otherwise stated)
Note 1 BASIC INFORMATION ABOUT THE COMPANY
1.1 Corporation Information
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 29, 1999.
Shandong Airlines Group Co., Ltd. acquired 259,204,000 state-owned corporate shares (国有法人股), with CNY 1.00 at
par, of the Company by transferring its air transportation operation and the related assets and liabilities to the Company on
November 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 22 2000; 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 authorized 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, authorized 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
34
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
Address of headquarter: Shandong Airlines Centre, 5746 – East 2nd Ring Road, Jinan, Shandong
The main operating activities of the Company include: 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 equipment, grocery, food, health food, art work, souvenir,
etc.; retailing of tobacco products (limited to Qingdao Red-Crowned Crane Hotel); lease of airborne material and
equipment; 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 (国
营贸易管理),but involve operation related to commodity that are subject to quotas , license requirements, which are
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 Company and the subsidiaries mainly operate in the industry of air transportation.
1.2 Scope and Changes of Consolidation
The scope of consolidation includes 4 subsidiaries in total. There is no change in the scope of consolidation compared to
last financial year. For details of the subsidiaries, please refer to Note 7 INTERESTS IN OTHER ENTITIES.
Note 2 BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS
2.1 Basis for Preparation
Based on going concern, according to actually occurred transactions and events, the Company prepares its financial
statements in accordance with the Accounting Standards for Business Enterprises – Basic standards and concrete
accounting standards, Accounting Standards for Business Enterprises – Application Guidelines, Accounting Standards for
Business Enterprises – Interpretations and other relevant provisions (collectively known as “Accounting Standards for
Business Enterprises, issued by Ministry of Finance of PRC”). Besides, the Company has disclosed related financial
information in conformity with the 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).
2.2 Going Concern
The Company has assessed its ability to continually operate for the next twelve months from the end of the reporting
period, and no any matters that may result in doubt on its ability as a going concern were noted. Therefore, it is reasonable
for the Company to prepare financial statements on the going concern basis.
Note3 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
The following significant accounting policies and accounting estimates of the Company are formulated in accordance with
the Accounting Standards for Business Enterprises. Businesses not mentioned are complied with relevant accounting
policies of the Accounting Standards for Business Enterprises.
3.1 Statement of Compliance with The Accounting Standards for Business Enterprises
The Company prepares its financial statements in accordance with the requirements of the Accounting Standards for
Business Enterprises, truly and completely reflecting the Company’s financial position as at 31 December 2020, and its
operating results, changes in shareholders' equity, cash flows and other related information for the year then ended.
3.2 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.
35
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
3.3 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.
3.4 Functional Currency
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.
3.5 Accounting Treatment of Business Combinations Under and Not Under Common Control
3.5.1 Business Combinations Under Common Control
The assets and liabilities that the Company obtains in a business combination under common control shall be measured at
their carrying amount of the acquired entity at the combination date. If the accounting policy adopted by the acquired entity
is different from that adopted by the acquiring entity, the acquiring entity shall, according to accounting policy it adopts,
adjust the relevant items in the financial statements of the acquired party based on the principal of materiality. As for the
difference between the carrying amount of the net assets obtained by the acquiring entity and the carrying amount of the
consideration paid by it, the capital reserve (capital premium or share premium) shall be adjusted. If the capital reserve
(capital premium or share premium) is not sufficient to absorb the difference, any excess shall be adjusted against retained
earnings.
For the accounting treatment of business combination under common control by step acquisitions, please refer to Note 3.6
(6).
3.5.2 Business combinations not under common control
The assets and liabilities that the Company obtains in a business combination not under common control shall be measured
at their fair value at the acquisition date. If the accounting policy adopted by the acquired entity is different from that
adopted by the acquiring entity, the acquiring entity shall, according to accounting policy it adopts, adjust the relevant
items in the financial statements of the acquired entity based on the principal of materiality. The acquiring entity shall
recognise the positive balance between the combination costs and the fair value of the identifiable net assets it obtains from
the acquired entity as goodwill. The acquiring entity shall, pursuant to the following provisions, treat the negative balance
between the combination costs and the fair value of the identifiable net assets it obtains from the acquired entity:
(i) It shall review the measurement of the fair values of the identifiable assets, liabilities and contingent liabilities it obtains
from the acquired entity as well as the combination costs;
(ii) If, after the review, the combination costs are still less than the fair value of the identifiable net assets it obtains from
the acquired entity, the balance shall be recognised in profit or loss of the reporting period.
For the accounting treatment of business combination under common control by step acquisitions, please refer to Note 3.6
(6).
3.5.3 Treatment of Business Combination Related Costs
The intermediary costs such as audit, legal services and valuation consulting and other related management costs that are
directly attributable to the business combination shall be charged in profit or loss in the period in which they are incurred.
The costs to issue equity or debt securities for the consideration of business combination shall be recorded as a part of the
value of the respect equity or debt securities upon initial recognition.
3.6 Method of Preparing the Consolidated Financial Statements
3.6.1 Scope of Consolidation
The scope of consolidated financial statements shall be determined on the basis of control. It not only includes subsidiaries
determined based on voting power (or similar) or other arrangement, but also structured entities under one or several
contract arrangements.
Control exists when the Company has all the following: power over the investee; exposure, or rights to variable returns
from the Company’s involvement with the investee; and the ability to use its power over the investee to affect the amount
36
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
of the investor’s returns. Subsidiaries are the entities that controlled by the Company (including enterprise, a divisible part
of the investee, and structured entity controlled by the enterprise). A structured entity (sometimes called a Special Purpose
Entity) is an entity that has been designed so that voting or similar rights are not the dominant factor in deciding who
controls the entity.
3.6.2 Special provisions on the parent company being an investment subject
If the parent company is an investment entity, it should measure its investments in particular subsidiaries as financial assets
at fair value through profit or loss instead of consolidating those subsidiaries in its consolidated and separate financial
statements. However, as an exception to this requirement, if a subsidiary provides investment-related services or activities
to the investment entity, it should be consolidated.
The parent company is defined as investment entity when meets following conditions:
①Obtains funds from one or more investors for the purpose of providing those investors with investment management
services;
②Commits to its investors that its business purpose is to invest funds solely for returns from capital appreciation,
investment income or both; and
③Measures and evaluates the performance of substantially all of its investments on a fair value basis.
If the parent company becomes an investment entity, it shall cease to consolidate its subsidiaries at the date of the change
in status, except for any subsidiary which provides investment-related services or activities to the investment entity shall be
continued to be consolidated. The deconsolidation of subsidiaries is accounted for as though the investment entity partially
disposed subsidiaries without loss of control.
When the parent company previously classified as an investment entity ceases to be an investment entity, subsidiary that
was previously measured at fair value through profit or loss shall be included in the scope of consolidated financial
statements at the date of the change in status. The fair value of the subsidiary at the date of change represents the
transferred deemed consideration in accordance with the accounting for business combination not under common control.
3.6.3 Method of Preparing the Consolidated Financial Statements
The consolidated financial statements shall be prepared by the Company based on the financial statements of the Company
and its subsidiaries, and using other related information.
When preparing consolidated financial statements, the Company shall consider the entire group as an accounting entity,
adopt uniform accounting policies and apply the requirements of Accounting Standard for Business Enterprises related to
recognition, measurement and presentation. The consolidated financial statements shall reflect the overall financial position,
operating results and cash flows of the group.
①Like items of assets, liabilities, equity, income, expenses and cash flows of the parent are combined with those of the
subsidiaries.
②The carrying amount of the parent’s investment in each subsidiary is eliminated (off-set) against the parent’s portion of
equity of each subsidiary.
③Eliminate the impact of intragroup transactions between the Company and the subsidiaries or between subsidiaries, and
when intragroup transactions indicate an impairment of related assets, the losses shall be recognised in full.
④Make adjustments to special transactions from the perspective of the group.
3.6.4 Method of preparation of the consolidated financial statements when subsidiaries are acquired or disposed in
the reporting period
①Acquisition of subsidiaries or business
A. Subsidiaries or business acquired through business combination under common control
(a) When preparing consolidated statements of financial position, the opening balance of the consolidated balance sheet
shall be adjusted. Related items of comparative financial statements shall be adjusted as well, deeming that the combined
entity has always existed ever since the ultimate controlling party began to control.
37
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
(b) Incomes, expenses and profits of the subsidiary incurred from the beginning of the reporting period to the end of the
reporting period shall be included into the consolidated statement of profit or loss. Related items of comparative financial
statements shall be adjusted as well, deeming that the combined entity has always existed ever since the ultimate
controlling party began to control.
(c) Cash flows from the beginning of the reporting period to the end of the reporting period shall be included into the
consolidated statement of cash flows. Related items of comparative financial statements shall be adjusted as well, deeming
that the combined entity has always existed ever since the ultimate controlling party began to control.
B. Subsidiaries or business acquired through business combination not under common control
(a) When preparing the consolidated statements of financial position, the opening balance of the consolidated statements of
financial position shall not be adjusted.
(b) Incomes, expenses and profits of the subsidiary incurred from the acquisition date to the end of the reporting period
shall be included into the consolidated statement of profit or loss.
(c) Cash flows from the acquisition date to the end of the reporting period shall be included into the consolidated statement
of cash flows.
②Disposal of subsidiaries or business
A. When preparing the consolidated statements of financial position, the opening balance of the consolidated statements of
financial position shall not be adjusted.
B. Incomes, expenses and profits incurred from the beginning of the subsidiary to the disposal date shall be included into
the consolidated statement of profit or loss.
C. Cash flows from the beginning of the subsidiary to the disposal date shall be included into the consolidated statement of
cash flows.
3.6.5 Special consideration in consolidation elimination
①Long-term equity investment held by the subsidiaries to the Company shall be recognised as treasury stock of the
Company, which is offset with the owner’s equity, represented as “treasury stock” under “owner’s equity” in the
consolidated statement of financial position.
Long-term equity investment held by subsidiaries between each other is accounted for taking long-term equity investment
held by the Company to its subsidiaries as reference. That is, the long-term equity investment is eliminated (off- set)
against the portion of the corresponding subsidiary’s equity.
②Due to not belonging to paid-in capital (or share capital) and capital reserve, and being different from retained earnings
and undistributed profit, “Specific reserves” and “General risk provision” shall be recovered based on the proportion
attributable to owners of the parent company after long-term equity investment to the subsidiaries is eliminated with the
subsidiaries’ equity.
③If temporary timing difference between the book value of the assets and liabilities in the consolidated statement of
financial position and their tax basis is generated as a result of elimination of unrealized inter-company transaction profit or
loss, deferred tax assets of deferred tax liabilities shall be recognised, and income tax expense in the consolidated statement
of profit or loss shall be adjusted simultaneously, excluding deferred taxes related to transactions or events directly
recognised in owner’s equity or business combination.
④Unrealised inter-company transactions profit or loss generated from the Company selling assets to its subsidiaries shall
be eliminated against “net profit attributed to the owners of the parent company” in full. Unrealized inter-company
transactions profit or loss generated from the subsidiaries selling assets to the Company shall be eliminated between “net
profit attributed to the owners of the parent company” and “non-controlling interests” pursuant to the proportion of the
Company in the related subsidiaries. Unrealized inter-company transactions profit or loss generated from the assets sales
between the subsidiaries shall be eliminated between “net profit attributed to the owners of the parent company” and
“non-controlling interests” pursuant to the proportion of the Company in the selling subsidiaries.
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⑤If loss attributed to the minority shareholders of a subsidiary in current period is more than the proportion of
non-controlling interest in this subsidiary at the beginning of the period, non-controlling interest is still to be written down.
3.6.6 Accounting for Special Transactions
①Purchasing of non-controlling interests
Where, the Company purchases non-controlling interests of its subsidiary, in the separate financial statements of the
Company, the cost of the long-term equity investment obtained in purchasing non-controlling interests is measured at the
fair value of the consideration paid. In the consolidated financial statements, difference between the cost of the long-term
equity investment newly obtained in purchasing non-controlling interests and share of the subsidiary’s net assets from the
acquisition date or combination date continuingly calculated pursuant to the newly acquired shareholding proportion shall
be adjusted into capital reserve (capital premium or share premium). If capital reserve is not enough to be offset, surplus
reserve and undistributed profit shall be offset in turn.
②Gaining control over the subsidiary in stages through multiple transactions
A. Business combination under common control in stages through multiple transactions
On the combination date, in the separate financial statement, initial cost of the long-term equity investment is determined
according to the share of carrying amount of the acquiree’s net assets in the ultimate controlling entity’s consolidated
financial statements after combination. The difference between the initial cost of the long-term equity investment and the
carrying amount of the long -term investment held prior of control plus book value of additional consideration paid at
acquisition date is adjusted into capital reserve (capital premium or share premium). If the capital reserve is not enough to
absorb the difference, any excess shall be adjusted against surplus reserve and undistributed profit in turn.
In the consolidated financial statements, the assets and liabilities acquired during the combination should be recognized at
their carrying amount in the ultimate controlling entity’s consolidated financial statements on the combination date unless
any adjustment is resulted from the difference in accounting policies. The difference between the carrying amount of the
investment held prior of control plus book value of additional consideration paid on the acquisition date and the net assets
acquired through the combination is adjusted into capital reserve (capital premium or share premium). If the capital reserve
is not enough to absorb the difference, any excess shall be adjusted against retained earnings.
If the acquiring entity holds equity investment in the acquired entity prior to the combination date and the equity
investment is accounted for under the equity method, related profit or loss, other comprehensive income and other changes
in equity which have been recognised during the period from the later of the date of the Company obtaining original equity
interest and the date of both the acquirer and the acquiree under common control of the same ultimate controlling party to
the combination date should be offset against the opening balance of retained earnings at the comparative financial
statements period respectively.
B. Realize the combination of enterprises under different control step by step through multiple transactions
On the consolidation date, in the separate financial statements, the initial cost of long-term equity investment is determined
according to the carrying amount of the original long-term investment plus the cost of new investment.
In the consolidated financial statements, the equity interest of the acquired entity held prior to the acquisition date shall be
re-measured at its fair value on the acquisition date. Difference between the fair value of the equity interest and its book
value is recognised as investment income. The other comprehensive income related to the equity interest held prior to the
acquisition date calculated through equity method, should be transferred to current investment income of the acquisition
period, excluding other comprehensive income resulted from the remeasurement of the net assets or net liabilities under
defined benefit plan. The Company shall disclose acquisition-date fair value of the equity interest held prior to the
acquisition date, and the related gains or losses due to the remeasurement based on fair value.
③Disposal of investment in subsidiaries without a loss of control
For partial disposal of the long-term equity investment in the subsidiaries without a loss of control, when the Company
prepares consolidated financial statements, difference between consideration received from the disposal and the
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corresponding share of subsidiary’s net assets cumulatively calculated from the acquisition date or combination date shall
be adjusted into capital reserve (capital premium or share premium). If the capital reserve is not enough to absorb the
difference, any excess shall be offset against retained earnings.
④Disposal of investment in subsidiaries with a loss of control
A. Disposal through one transaction
If the Company loses control in an investee through partial disposal of the equity investment, when the consolidated
financial statements are prepared, the retained equity interest should be re-measured at fair value at the date of loss of
control. The difference between i) the fair value of consideration received from the disposal plus non-controlling interest
retained; ii) share of the former subsidiary’s net assets cumulatively calculated from the acquisition date or combination
date according to the original proportion of equity interest, shall be recognised in current investment income when control
is lost.
Moreover, other comprehensive income and other changes in equity related to the equity investment in the former
subsidiary shall be transferred into current investment income when control is lost, excluding other comprehensive income
resulted from the remeasurement of the movement of net assets or net liabilities under defined benefit plan.
B. Disposal in stages
In the consolidated financial statements, whether the transactions should be accounted for as “a single transaction” needs to
be decided firstly.
If the disposal in stages should not be classified as “a single transaction”, in the separate financial statements, for
transactions prior of the date of loss of control, carrying amount of each disposal of long-term equity investment need to be
recognized, and the difference between consideration received and the carrying amount of long-term equity investment
corresponding to the equity interest disposed should be recognized in current investment income; in the consolidated
financial statements, the disposal transaction should be accounted for according to related policy in “Disposal of long-term
equity investment in subsidiaries without a loss of control”.
If the disposal in stages should be classified as “a single transaction”, these transactions should be accounted for as a single
transaction of disposal of subsidiary resulting in loss of control. In the separate financial statements, for each transaction
prior of the date of loss of control, difference between consideration received and the carrying amount of long-term equity
investment corresponding to the equity interest disposed should be recognised as other comprehensive income firstly, and
transferred to profit or loss as a whole when control is lost; in the consolidated financial statements, for each transaction
prior of the date of loss of control, difference between consideration received and proportion of the subsidiary’s net assets
corresponding to the equity interest disposed should be recognised in profit or loss as a whole when control is lost.
In considering of the terms and conditions of the transactions as well as their economic impact, the presence of one or more
of the following indicators may lead to account for multiple transactions as a single transaction:
(a) The transactions are entered into simultaneously or in contemplation of one another.
(b) The transactions form a single transaction designed to achieve an overall commercial effect.
(c) The occurrence of one transaction depends on the occurrence of at least one other transaction.
(d) One transaction, when considered on its own merits, does not make economic sense, but when considered together with
the other transaction or transactions would be considered economically justifiable.
⑤ Diluting equity share of parent company in its subsidiaries due to additional capital injection by the subsidiaries’
minority shareholders.
Other shareholders (minority shareholders) of the subsidiaries inject additional capital in the subsidiaries, which resulted in
the dilution of equity interest of parent company in these subsidiaries. In the consolidated financial statements, difference
between share of the corresponding subsidiaries’ net assets calculated based on the parent’s equity interest before and after
the capital injection shall be adjusted into capital reserve (capital premium or share premium). If the capital reserve is not
enough to absorb the difference, any excess shall be adjusted against retained earnings.
3.7 Classification of Joint Arrangements and Accounting for Joint Operation
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A joint arrangement is an arrangement of which two or more parties have joint control. Joint arrangement of the Company
is classified as either a joint operation or a joint venture.
3.7.1 Joint operation
A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the
assets, and obligations for the liabilities, relating to the arrangement.
The Company shall recognise the following items in relation to shared interest in a joint operation, and account for them in
accordance with relevant accounting standards of the Accounting Standards for Business Enterprises:
①its assets, including its share of any assets held jointly;
②its liabilities, including its share of any liabilities incurred jointly;
③its revenue from the sale of its share of the output arising from the joint operation;
④ its share of the revenue from the sale of the output by the joint operation; and
⑤ its expenses, including its share of any expenses incurred jointly.
3.7.2 Joint venture
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net
assets of the arrangement.
The Company accounts for its investment in the joint venture by applying the equity method of long-term equity
investment.
3.8 Cash and Cash Equivalents
Cash comprises cash on hand and deposits that can be readily withdrawn on demand. Cash equivalents include short-term
(generally within three months of maturity at acquisition), highly liquid investments that are readily convertible into known
amounts of cash and which are subject to an insignificant risk of changes in value.
3.9 Foreign Currency Transactions and Translation of Foreign Currency Financial Statements
3.9.1 Determination of the exchange rate for foreign currency transactions
At the time of initial recognition of a foreign currency transaction, the amount in the foreign currency shall be translated
into the amount in the functional currency at the spot exchange rate of the transaction date, or at an exchange rate which is
determined through a systematic and reasonable method and is approximate to the spot exchange rate of the transaction
date (hereinafter referred to as the approximate exchange rate).
3.9.2 Translation of monetary items denominated in foreign currency on the balance sheet date
The foreign currency monetary items shall be translated at the spot exchange rate on the balance sheet date. The balance of
exchange arising from the difference between the spot exchange rate on the balance sheet date and the spot exchange rate
at the time of initial recognition or prior to the balance sheet date shall be recorded into the profits and losses at the current
period. The foreign currency non-monetary items measured at the historical cost shall still be translated at the spot
exchange rate on the transaction date; for the foreign currency non-monetary items restated to a fair value measurement,
shall be translated into the at the spot exchange rate at the date when the fair value was determined, the difference between
the restated functional currency amount and the original functional currency amount shall be recorded into the profits and
losses at the current period.
3.9.3 Translation of foreign currency financial statements
Before translating the financial statements of foreign operations, the accounting period and accounting policy shall be
adjusted so as to conform to the Company. The adjusted foreign operation financial statements denominated in foreign
currency (other than functional currency) shall be translated in accordance with the following method:
①The asset and liability items in the statement of financial position shall be translated at the spot exchange rates at the
date of that statement of financial position.. The owners’ equity items except undistributed profit shall be translated at the
spot exchange rates when they are incurred.
②The income and expense items in the statement of profit and other comprehensive income shall be translated at the spot
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exchange rates or approximate exchange rate at the date of transaction.
③Foreign currency cash flows and cash flows of foreign subsidiaries shall be translated at the spot exchange rate or
approximate exchange rate when the cash flows are incurred. The effect of exchange rate changes on cash is presented
separately in the statement of cash flows as an adjustment item.
④The differences arising from the translation of foreign currency financial statements shall be presented separately as
“other comprehensive income” under the owners’ equity items of the consolidated statement of financial position.
When disposing a foreign operation involving loss of control, the cumulative amount of the exchange differences relating
to that foreign operation recognised under other comprehensive income in the statement of financial position, shall be
reclassified into current profit or loss according to the proportion disposed.
3.10 Financial Instruments
Financial instrument is any contract which gives rise to both a financial asset of one entity and a financial liability or equity
instrument of another entity.
3.10.1Recognition and derecognition of financial instrument
A financial asset or a financial liability should be recognised in the statement of financial position when, and only when, an
entity becomes party to the contractual provisions of the instrument.
A financial asset can only be derecognised when meets one of the following conditions:
①The rights to the contractual cash flows from a financial asset expire; and
②The financial asset has been transferred and meets one of the following derecognition conditions.
Financial liabilities (or part thereof) are derecognised only when the liability is extinguished—i.e., when the obligation
specified in the contract is discharged or cancelled or expires. An exchange of the Company (borrower) and lender of debt
instruments that carry significantly different terms or a substantial modification of the terms of an existing liability are both
accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability.
Purchase or sale of financial assets in a regular-way shall be recognised and derecognised using trade date accounting. A
regular-way purchase or sale of financial assets is a transaction under a contract whose terms require delivery of the asset
within the time frame established generally by regulations or convention in the market place concerned. Trade date is the
date at which the entity commits itself to purchase or sell an asset.
3.10.2 Classification and measurement of financial assets
At initial recognition, the Company classified its financial asset based on both the business model for managing the
financial asset and the contractual cash flow characteristics of the financial asset: financial asset at amortised cost, financial
asset at fair value through profit or loss (FVTPL) and financial asset at fair value through other comprehensive income
(FVTOCI). Reclassification of financial assets is permitted if, and only if, the objective of the entity’s business model for
managing those financial assets changes. In this circumstance, all affected financial assets shall be reclassified on the first
day of the first reporting period after the changes in business model; otherwise the financial assets cannot be reclassified
after initial recognition.
Financial assets shall be measured at initial recognition at fair value. For financial assets measured at FVTPL, transaction
costs are recognised in current profit or loss. For financial assets not measured at FVTPL, transaction costs should be
included in the initial measurement. Notes receivable or accounts receivable that arise from sales of goods or rendering of
services are initially measured at the transaction price defined in the accounting standard of revenue where the transaction
does not include a significant financing component.
Subsequent measurement of financial assets will be based on their categories:
①Financial asset at amortised cost
The financial asset at amortised cost category of classification applies when both the following conditions are met: the
financial asset is held within the business model whose objective is to hold financial assets in order to collect contractual
cash flows, and the contractual term of the financial asset gives rise on specified dates to cash flows that are solely
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payment of principal and interest on the principal amount outstanding. These financial assets are subsequently measured at
amortised cost by adopting the effective interest rate method. Any gain or loss arising from derecognition according to the
amortization under effective interest rate method or impairment are recognised in current profit or loss.
②Financial asset at fair value through other comprehensive income (FVTOCI)
The financial asset at FVTOCI category of classification applies when both the following conditions are met: the financial
asset is held within the business model whose objective is achieved by both collecting contractual cash flows and selling
financial assets, and the contractual term of the financial asset gives rise on specified dates to cash flows that are solely
payment of principle and interest on the principal amount outstanding. All changes in fair value are recognised in other
comprehensive income except for gain or loss arising from impairment or exchange differences, which should be
recognised in current profit or loss. At derecognition, cumulative gain or loss previously recognised under OCI is
reclassified to current profit or loss. However, interest income calculated based on the effective interest rate is included in
current profit or loss.
The Company make an irrevocable decision to designate part of non-trading equity instrument investments as measured
through FVTOCI. All changes in fair value are recognised in other comprehensive income except for dividend income
recognised in current profit or loss. At derecognition, cumulative gain or loss are reclassified to retained earnings.③
Financial asset at fair value through profit or loss (FVTPL)
Financial asset except for above mentioned financial asset at amortised cost or financial asset at fair value through other
comprehensive income (FVTOCI), should be classified as financial asset at fair value through profit or loss (FVTPL).
These financial assets should be subsequently measured at fair value. All the changes in fair value are included in current
profit or loss.
3.10.3 Classification and measurement of financial liabilities
The Company classified the financial liabilities as financial liabilities at fair value through profit or loss (FVTPL), loan
commitments at a below-market interest rate and financial guarantee contracts and financial asset at amortised cost.
Subsequent measurement of financial assets will be based on the classification:
①Financial liabilities at fair value through profit or loss (FVTPL)
Held-for-trading financial liabilities (including derivatives that are financial liabilities) and financial liabilities designated
at FVTPL are classified as financial liabilities at FVTP. After initial recognition, any gain or loss (including interest
expense) are recognised in current profit or loss except for those hedge accounting is applied. For financial liability that is
designated as at FVTPL, changes in the fair value of the financial liability that is attributable to changes in the own credit
risk of the issuer shall be presented in other comprehensive income. At derecognition, cumulative gain or loss previously
recognised under OCI is reclassified to retained earnings.
②Loan commitments and financial guarantee contracts
Loan commitment is a commitment by the Company to provide a loan to customer under specified contract terms. The
provision of impairment losses of loan commitments shall be recognised based on expected credit losses model.
Financial guarantee contract is a contract that requires the Company to make specified payments to reimburse the holder
for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified
terms of a debt instrument. Financial guarantee contracts liability shall be subsequently measured at the higher of: The
amount of the loss allowance recognised according to the impairment principles of financial instruments; and the amount
initially recognised less the cumulative amount of income recognised in accordance with the revenue principles.
③Financial liabilities at amortised cost
After initial recognition, the Company measured other financial liabilities at amortised cost using the effective interest
method.
Except for special situation, financial liabilities and equity instrument should be classified in accordance with the following
principles:
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①If the Company has no unconditional right to avoid delivering cash or another financial instrument to fulfill a contractual
obligation, this contractual obligation meet the definition of financial liabilities. Some financial instruments do not
comprise terms and conditions related to obligations of delivering cash or another financial instrument explicitly, they may
include contractual obligation indirectly through other terms and conditions.
②If a financial instrument must or may be settled in the Company's own equity instruments, it should be considered that
the Company’s own equity instruments are alternatives of cash or another financial instrument, or to entitle the holder of
the equity instruments to sharing the remaining rights over the net assets of the issuer. If the former is the case, the
instrument is a liability of the issuer; otherwise, it is an equity instrument of the issuer. Under some circumstances, it is
regulated in the contract that the financial instrument must or may be settled in the Company's own equity instruments,
where, amount of contractual rights and obligations are calculated by multiplying the number of the equity instruments to
be available or delivered by its fair value upon settlement. Such contracts shall be classified as financial liabilities,
regardless that the amount of contractual rights and liabilities is fixed, or fluctuate totally or partially with variables other
than market price of the entity’s own equity instruments (such as interest rate, price of some kind of goods or some kind of
financial instrument).
3.10.4 Derivatives and embedded derivatives
At initial recognition, derivatives shall be measured at fair value at the date of derivative contracts are signed and
subsequently measured at fair value. The derivative with a positive fair value shall be recognized as an asset, and with a
negative fair value shall be recognised as a liability.
Gains or losses arising from the changes in fair value of derivatives shall be recognised directly into current profit or loss
except for the effective portion of cash flow hedges which shall be recognised in other comprehensive income and
reclassified into current profit or loss when the hedged items affect profit or loss.
An embedded derivative is a component of a hybrid contract with a financial asset as a host, the Company shall apply the
requirements of financial asset classification to the entire hybrid contract. If a host that is not a financial asset and the
hybrid contract is not measured at fair value with changes in fair value recognised in profit or loss, and the economic
characteristics and risks of the embedded derivative are not closely related to the economic characteristics and risks of the
host, and a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative,
the embedded derivative shall be separated from the hybrid instrument and accounted for as a separate derivative
instrument. If the Company is unable to measure the fair value of the embedded derivative at the acquisition date or
subsequently at the balance sheet date, the entire hybrid contract is designated as financial assets or financial liabilities at
fair value through profit or loss.
3.10.5 Impairment of financial instrument
The Company shall recognise a loss allowance based on expected credit losses on a financial asset that is measured at
amortised cost, a debt investment at fair value through other comprehensive income, a contract asset, a lease receivable, a
loan commitment and a financial guarantee contract.
①Measurement of expected credit losses
Expected credit losses are the weighted average of credit losses of the financial instruments with the respective risks of a
default occurring as the weights. Credit loss is the difference between all contractual cash flows that are due to the
Company in accordance with the contract and all the cash flows that the Company expects to receive (ie all cash shortfalls),
discounted at the original effective interest rate or credit- adjusted effective interest rate for purchased or originated
credit-impaired financial assets.
Lifetime expected credit losses are the expected credit losses that result from all possible default events over the expected
life of a financial instrument.
12-month expected credit losses are the portion of lifetime expected credit losses that represent the expected credit losses
that result from default events on a financial instrument that are possible within the 12 months after the reporting date (or
the expected lifetime, if the expected life of a financial instrument is less than 12 months).
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At each reporting date, the Company classifies financial instruments into three stages and makes provisions for expected
credit losses accordingly. A financial instrument of which the credit risk has not significantly increased since initial
recognition is at stage 1. The Company shall measure the loss allowance for that financial instrument at an amount equal to
12-month expected credit losses. A financial instrument with a significant increase in credit risk since initial recognition
but is not considered to be credit-impaired is at stage 2. The Company shall measure the loss allowance for that financial
instrument at an amount equal to the lifetime expected credit losses. A financial instrument is considered to be
credit-impaired as at the end of the reporting period is at stage 3. The Company shall measure the loss allowance for that
financial instrument at an amount equal to the lifetime expected credit losses.
The Company may assume that the credit risk on a financial instrument has not increased significantly since initial
recognition if the financial instrument is determined to have low credit risk at the reporting date and measure the loss
allowance for that financial instrument at an amount equal to 12-month expected credit losses.
For financial instrument at stage 1, stage 2 and those have low credit risk, the interest revenue shall be calculated by
applying the effective interest rate to the gross carrying amount of a financial asset (ie, impairment loss not been deducted).
For financial instrument at stage 3, interest revenue shall be calculated by applying the effective interest rate to the
amortised cost after deducting of impairment loss.
For notes receivable, accounts receivable and accounts receivable financing, no matter it contains a significant financing
component or not, the Company shall measure the loss allowance at an amount equal to the lifetime expected credit losses.
A.Receivables
For the notes receivable, accounts receivable, other receivables, accounts receivable financing and long-term receivables
which are demonstrated to be impaired by any objective evidence, or applicable for individual assessment, the Company
shall individually assess for impairment and recognise the loss allowance for expected credit losses. If the Company
determines that no objective evidence of impairment exists for notes receivable, accounts receivable, other receivables,
accounts receivable financing and long-term receivables, or the expected credit loss of a single financial asset cannot be
assessed at reasonable cost, such notes receivable, accounts receivable, other receivables, accounts receivable financing
and long-term receivables shall be divided into several groups with similar credit risk characteristics and collectively
calculated the expected credit loss. The determination basis of groups is as following:
a. Determination basis of notes receivable is as following:
The Company shall measure the credit loss for notes receivable at an amount equal to the lifetime expected credit losses.
Based on the credit risk characteristics of notes receivable, it is divided into different groups:
Item Characteristics of the group
Banker’s acceptable bill Acceptor who is a bank with less credit risk
b.Determination basis of accounts receivable is as following:
For accounts receivable and contract assets without the existence of a significant financing component, the Company shall
measure the loss allowance at the amount equal to the lifetime expected credit losses.
For accounts receivable, contract assets and lease receivable with the existence of a significant financing component, the
Company chooses to always measure its losses allowance at the amount equal to the lifetime expected credit losses.
Except for accounts receivable and contract assets which are individually assessed for credit risk, accounts receivable and
contract assets shall be divided into different groups based on its credit risk characteristics:
Item Characteristics of the group
Amounts due from the clearing center The receivables are due from the clearing center.
Amounts due from the aviation association The receivables are due from the aviation association.
The receivables are business operating receivables due from
Amounts due from related parties
related parties.
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Item Characteristics of the group
The receivables are business operating receivables which are
Other receivables
not included in the above categories.
c. Determination basis of other receivables is as following:
For each group, the Company calculates expected credit losses through default exposure and the 12-months or lifetime
expected credit losses rate, taking reference to historical experience for credit losses and considering current condition and
expectation for the future economic situation.
Item Determine basis of the combination
Deposits receivable The receivables are deposits receivables daily activities.
The receivables are receivables due from related parties in
Amounts due from related parties
daily activities.
Other receivables The receivables are other receivables in daily activities.
d.Determination basis of long-term receivables financing is as following (except for receivables with a material financing
component and lease receivables):
The Company calculates expected credit losses through default exposure and the lifetime expected credit losses rate, taking
reference to historical experience for credit losses and considering current condition and expectation for the future
economic situation.
B.Debt investment and other debt investment
For debt investment and other debt investment, the Company shall calculate the expected credit loss through the default
exposure and the 12-month or lifetime expected credit loss rate based on the nature of the investment, counterparty and the
type of risk exposure.
②Low credit risk
If the financial instrument has a low risk of default, the borrower has a strong capacity to meet its contractual cash flow
obligations in the near term and adverse changes in economic and business conditions in the longer term may, but will not
necessarily, reduce the ability of the borrower to fulfill its contractual cash flow obligations.
③Significant increase in credit risk
The Company shall assess whether the credit risk on a financial instrument has increased significantly since initial
recognition, using the change in the risk of a default occurring over the expected life of the financial instrument, through
the comparison of the risk of a default occurring on the financial instrument as at the reporting date with the risk of a
default occurring on the financial instrument as at the date of initial recognition.
To make that assessment, the Company shall consider reasonable and supportable information, that is available without
undue cost or effort, and that is indicative of significant increases in credit risk since initial recognition, including
forward-looking information. The information considered by the Company are as following:
A.Significant changes in internal price indicators of credit risk as a result of a change in credit risk since inception；and
B.Existing or forecast adverse change in the business, financial or economic conditions of the borrower that results in a
significant change in the borrower’s ability to meet its debt obligations；and
C.An actual or expected significant change in the operating results of the borrower; An actual or expected significant
adverse change in the regulatory, economic, or technological environment of the borrower；and
D.Significant changes in the value of the collateral supporting the obligation or in the quality of third-party guarantees or
credit enhancements, which are expected to reduce the borrower’s economic incentive to make scheduled contractual
payments or to otherwise have an effect on the probability of a default occurring；and
F.Expected changes in the loan documentation including an expected breach of contract that may lead to covenant waivers
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or amendments, interest payment holidays, interest rate step-ups, requiring additional collateral or guarantees, or other
changes to the contractual framework of the instrument；and
G.Significant changes in the expected performance and behaviour of the borrower；and
H.Contractual payments are more than 30 days past due.
Depending on the nature of the financial instruments, the Company shall assess whether the credit risk has increased
significantly since initial recognition on an individual financial instrument or a group of financial instruments. When
assessed based on a group of financial instruments, the Company can group financial instruments on the basis of shared
credit risk characteristics, for example, past due information and credit risk rating.
Generally, the Company shall determine the credit risk on a financial asset has increased significantly since initial
recognition when contractual payments are more than 30 days past due. The Company can only rebut this presumption if
the Company has reasonable and supportable information that is available without undue cost or effort, that demonstrates
that the credit risk has not increased significantly since initial recognition even though the contractual payments are more
than 30 days past due.
④Credit-impaired financial asset
The Company shall assess at each reporting date whether the credit impairment has occurred for financial asset at
amortised cost and debt investment at fair value through other comprehensive income. A financial asset is credit-impaired
when one or more events that have a detrimental impact on the estimated future cash flows of that financial asset have
occurred. Evidences that a financial asset is credit-impaired include observable data about the following events:
Significant financial difficulty of the issuer or the borrower；a breach of contract, such as a default or past due event; the
lender(s) of the borrower, for economic or contractual reasons relating to the borrower’s financial difficulty, having granted
to the borrower a concession(s) that the lender(s) would not otherwise consider；it is becoming probable that the borrower
will enter bankruptcy or other financial reorganisation；the disappearance of an active market for that financial asset
because of financial difficulties；the purchase or origination of a financial asset at a deep discount that reflects the incurred
credit losses.
⑤Presentation of impairment of expected credit loss
In order to reflect the changes of credit risk of financial instrument since initial recognition, the Company shall at each
reporting date remeasure the expected credit loss and recognise in profit or loss, as an impairment gain or loss, the amount
of expected credit losses addition(or reversal). For financial asset at amortised cost, the loss allowance shall reduce the
carrying amount of the financial asset in the statement of financial position; for debt investment at fair value through other
comprehensive income, the loss allowance shall be recognised in other comprehensive income and shall not reduce the
carrying amount of the financial asset in the statement of financial position.
⑥Write-off
The Company shall directly reduce the gross carrying amount of a financial asset when the Company has no reasonable
expectations of recovering the contractual cash flow of a financial asset in its entirety or a portion thereof. Such write-off
constitutes a derecognition of the financial asset. This circumstance usually occurs when the Company determines that the
debtor has no assets or sources of income that could generate sufficient cash flow to repay the write-off amount.
Recovery of financial asset written off shall be recognised in profit or loss as reversal of impairment loss.
3.10.6 Transfer of financial assets
Transfer of financial assets refers to following two situations:
A.Transfers the contractual rights to receive the cash flows of the financial asset; and
B.Transfers the entire or a part of a financial asset and retains the contractual rights to receive the cash flows of the
financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.
①Derecognition of transferred assets
If the Company transfers substantially all the risks and rewards of ownership of the financial asset, or neither transfers nor
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retains substantially all the risks and rewards of ownership of the financial asset but has not retained control of the financial
asset, the financial asset shall be derecognised.
Whether the Company has retained control of the transferred asset depends on the transferee’s ability to sell the asset. If the
transferee has the practical ability to sell the asset in its entirety to an unrelated third party and is able to exercise that
ability unilaterally and without needing to impose additional restrictions on the transfer, the Company has not retained
control.
The Company judges whether the transfer of financial asset qualifies for derecognition based on the substance of the
transfer.
If the transfer of financial asset qualifies for derecognition in its entirety, the difference between the following shall be
recognised in profit or loss:
A.The carrying amount of transferred financial asset;
B.The sum of consideration received and the part derecognised of the cumulative changes in fair value previously
recognised in other comprehensive income (The financial assets involved in the transfer are classified as financial assets at
fair value through other comprehensive income in accordance with Article 18 of the Accounting Standards for Business
Enterprises - Recognition and Measurement of Financial Instruments).
If the transferred asset is a part of a larger financial asset and the part transferred qualifies for derecognition, the previous
carrying amount of the larger financial asset shall be allocated between the part that continues to be recognised (For this
purpose, a retained servicing asset shall be treated as a part that continues to be recognised) and the part that is
derecognised, based on the relative fair values of those parts on the date of the transfer. The difference between following
two amounts shall be recognised in profit or loss:
A.The carrying amount (measured at the date of derecognition) allocated to the part derecognised；
B.The sum of the consideration received for the part derecognised and part derecognised of the cumulative changes in fair
value previously recognised in other comprehensive income (The financial assets involved in the transfer are classified as
financial assets at fair value through other comprehensive income in accordance with Article 18 of the Accounting
Standards for Business Enterprises - Recognition and Measurement of Financial Instruments).
②Continuing involvement in transferred assets
If the Company neither transfers nor retains substantially all the risks and rewards of ownership of a transferred asset, and
retains control of the transferred asset, the Company shall continue to recognise the transferred asset to the extent of its
continuing involvement and also recognise an associated liability.
The extent of the Company’s continuing involvement in the transferred asset is the extent to which it is exposed to changes
in the value of the transferred asset.
③Continue to recognise the transferred assets
If the Company retains substantially all the risks and rewards of ownership of the transferred financial asset, the Company
shall continue to recognise the transferred asset in its entirety and the consideration received shall be recognised as a
financial liability.
The financial asset and the associated financial liability shall not be offset. In subsequent accounting period, the Company
shall continuously recognise any income (gain) arising from the transferred asset and any expense (loss) incurred on the
associated liability.
3.10.7 Offsetting financial assets and financial liabilities
Financial assets and financial liabilities shall be presented separately in the statement of financial position and shall not be
offset. When meets the following conditions, financial assets and financial liabilities shall be offset and the net amount
presented in the statement of financial position:
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 asset and settle the liability simultaneously.
In accounting for a transfer of a financial asset that does not qualify for derecognition, the Company shall not offset the
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transferred asset and the associated liability.
3.10.8 Determination of fair value of financial instruments
Determination of financial assets and financial liabilities please refer to Note 3.11
3.11 Fair Value Measurement
Fair value refers to the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date.
The Company determines fair value of the related assets and liabilities based on market value in the principal market, or in
the absence of a principal market, in the most advantageous market price for the related asset or liability. The fair value of
an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or
liability, assuming that market participants act in their economic best interest.
The principal market is the market in which transactions for an asset or liability take place with the greatest volume and
frequency. The most advantageous market is the market which maximizes the value that could be received from selling the
asset and minimizes the value which is needed to be paid in order to transfer a liability, considering the effect of transport
costs and transaction costs both.
If the active market of the financial asset or financial liability exists, the Company shall measure the fair value using the
quoted price in the active market. If the active market of the financial instrument is not available, the Company shall
measure the fair value using valuation techniques.
A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic
benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset
in its highest and best use.
① Valuation techniques
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are
available to measure fair value, including the market approach, the income approach and the cost approach. The Company
shall use valuation techniques consistent with one or more of those approaches to measure fair value. If multiple valuation
techniques are used to measure fair value, the results shall be evaluated considering the reasonableness of the range of
values indicated by those results. A fair value measurement is the point within that range that is most representative of fair
value in the circumstances.
When using the valuation technique, the Company shall give the priority to relevant observable inputs. The unobservable
inputs can only be used when relevant observable inputs is not available or practically would not be obtained. Observable
inputs refer to the information which is available from market and reflects the assumptions that market participants would
use when pricing the asset or liability. Unobservable Inputs refer to the information which is not available from market and
it has to be developed using the best information available in the circumstances from the assumptions that market
participants would use when pricing the asset or liability.
② Fair value hierarchy
To Company establishes a fair value hierarchy that categorises into three levels the inputs to valuation techniques used to
measure fair value. The fair value hierarchy gives the highest priority to Level 1 inputs and second to the Level 2 inputs
and the lowest priority to Level 3 inputs. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets
or liabilities that the entity can access at the measurement date. Level 2 inputs are inputs other than quoted prices included
within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable
inputs for the asset or liability.
3.12 Inventory
3.12.1 Classification of Inventory
The Company’s inventories mainly includes air materials and low-value consumables.
3.12.2 Measurement Method of Cost of Inventories Sold or Used
Inventories are initially carried at the actual cost. The actual cost of inventories transferred out is assigned by using
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weighted average method.
3.12.3 Inventory System
The perpetual inventory system is adopted. The inventories should be counted at least once a year, and surplus or losses of
inventory stocktaking shall be included in current profit and loss.
3.12.4 Provision for Impairment of Inventory
Inventories are stated at the lower of cost and net realizable value. The excess of cost over net realizable value of the
inventories is recognized as provision for impairment of inventory, and recognized in current profit or loss.
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.
3.12.5 Amortization Method for Low-Value Consumables
Low cost and short-lived consumable items are amortized using immediate write-off method; packaging materials are
amortized using immediate write-off method.
3.13 Contract assets and contract liabilities
Contract assets and contract liabilities are reocgnised on the basis of fulfilment of performance obligations and payment
received from clients. A right to receive a promised consideration from a client resulting from goods transferred to or
services provided to the client (where the right to consideration is dependent on factors other than the passage of time) is
reocgnised a contract asset. A payment received from a client for which goods shall be transferred to or services shall be
provided to the client is recognised as a contract liability.
See Note 3.10 for impairment of contract assets.
Contract assets and contract liabilities are presented as line items on the statement of financial position. A contract asset
and contract liability arising from one contract are presented in net; while the net amount is a debit balance, it is presented
in contract assets or other non-current assets depending on liquidity; while the net amount is a credit balance, it is
presented in contract liabilities or other non-current liabilities depending on liquidity. Contract assets and contract
liabilities arising from different contracts are not be offset.
3.14 Contract costs
Costs for a contract include costs to fulfill the contract and costs to obtain the contract.
An asset is recognised for the costs incurred to fulfill a contract on if those costs meet all of the following criteria:
I. the costs are directly associated with a contract or an anticipated contract, explicitly chargeable to the client under the
contract, incurred only for the contract;
II. the costs generate or enhance resources of the Company that will be used in satisfying performance obligations in the
future; and
III. the costs are expected to be recovered.
An asset is recognised for the costs incurred to obtained a contract with a client if those costs are expected to be recovered.
An asset recognised for the costs of a contract are amortised on a systematic basis that is consistent with recognition of
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revenue arising from the contract. Where the costs incurred to obtain a contract would be amortised for a period less than
one year should they be recognised as an asset, the costs are recognised in the current profit or loss as incurred.
An impairment is recognised for an asset recognised for the costs of a contract to the extent that the carrying amount of the
asset exceeds:
I. the remaining amount of consideration that is expected to be received in exchange for the goods or services to which the
asset relates; less
II. the costs that relate directly to providing those goods or services and that have not been recognised as expenses.
Upon recognition of the impairment, further consideration is given for provision for an onerous contract, in necessary.
A reversal of some or all of an impairment loss previously recognised for an asset for the costs of a contract when the
impairment conditions no longer exist or have improved. The increased carrying amount of the asset is cappted by the
amount that would have been determined (net of amortisation) if no impairment loss had been recognised previously.
An asset recognised for the costs to fulfill a contract is presented in inventories if its amortisation is not longer than 1 year
or an operating cycle upon initial recognition; otherwise, it is presented in other non-current assets.
An asset recognised for the costs to obtain a contract is presented in other current assets if its amortisation is not longer
than 1 year or an operating cycle upon initial recognition; otherwise, it is presented in other non-current assets.
3.15 Long-term Equity Investments
Long-term equity investments refer to equity investments where an investor has control of, or significant influence over, an
investee, as well as equity investments in joint ventures. Associates of the Company are those entities over which the
Company has significant influence.
3.15.1Determination basis of joint control or significant influence over the investee
Joint control is the relevant agreed sharing of control over an arrangement, and the arranged relevant activity must be
decided under unanimous consent of the parties sharing control. In assessing whether the Company has joint control of an
arrangement, the Company shall assess first whether all the parties, or a group of the parties, control the arrangement.
When all the parties, or a group of the parties, considered collectively, are able to direct the activities of the arrangement,
the parties control the arrangement collectively. Then the Company shall assess whether decisions about the relevant
activities require the unanimous consent of the parties that collectively control the arrangement. If two or more groups of
the parties could control the arrangement collectively, it shall not be assessed as have joint control of the arrangement.
When assessing the joint control, the protective rights are not considered.
Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not
control or joint control of those policies. In determination of significant influence over an investee, the Company should
consider not only the existing voting rights directly or indirectly held but also the effect of potential voting rights held by
the Company and other entities that could be currently exercised or converted, including the effect of share warrants, share
options and convertible corporate bonds that issued by the investee and could be converted in current period.
If the Company holds, directly or indirectly 20% or more but less than 50% of the voting power of the investee, it is
presumed that the Company has significant influence of the investee, unless it can be clearly demonstrated that in such
circumstance, the Company cannot participate in the decision-making in the production and operating of the investee.
3.15.2Determination of initial investment cost
① Long-term equity investments generated in business combinations
A. For a business combination involving enterprises under common control, if the Company makes payment in cash,
transfers non-cash assets or bears liabilities as the consideration for the business combination, the share of carrying amount
of the owners’ equity of the acquiree in the consolidated financial statements of the ultimate controlling party is recognised
as the initial cost of the long-term equity investment on the combination date. The difference between the initial investment
cost and the carrying amount of cash paid, non-cash assets transferred and liabilities assumed shall be adjusted against the
capital reserve; if capital reserve is not enough to be offset, undistributed profit shall be offset in turn; and
B. For a business combination involving enterprises under common control, if the Company issues equity securities as the
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consideration for the business combination, the share of carrying amount of the owners’ equity of the acquiree in the
consolidated financial statements of the ultimate controlling party is recognised as the initial cost of the long-term equity
investment on the combination date. The total par value of the shares issued is recognised as the share capital. The
difference between the initial investment cost and the carrying amount of the total par value of the shares issued shall be
adjusted against the capital reserve; if capital reserve is not enough to be offset, undistributed profit shall be offset in turn；
and
C. For business combination not under common control, the assets paid, liabilities incurred or assumed and the fair value
of equity securities issued to obtain the control of the acquiree at the acquisition date shall be determined as the cost of the
business combination and recognised as the initial cost of the long-term equity investment. The audit, legal, valuation and
advisory fees, other intermediary fees, and other relevant general administrative costs incurred for the business
combination, shall be recognised in profit or loss as incurred.
②Long-term equity investments acquired not through the business combination, the investment cost shall be determined
based on the following requirements:
A. For long-term equity investments acquired by payments in cash, the initial cost is the actually paid purchase cost,
including the expenses, taxes and other necessary expenditures directly related to the acquisition of long-term equity
investments; and
B. For long-term equity investments acquired through issuance of equity securities, the initial cost is the fair value of the
issued equity securities; and
C. For the long-term equity investments obtained through exchange of non-monetary assets, if the exchange has
commercial substance, and the fair values of assets traded out and traded in can be measured reliably, the initial cost of
long-term equity investment traded in with non-monetary assets are determined based on the fair values of the assets traded
out together with relevant taxes. Difference between fair value and book value of the assets traded out is recorded in
current profit or loss. If the exchange of non-monetary assets does not meet the above criterion, the book value of the
assets traded out and relevant taxes are recognised as the initial investment cost; and
D.For long-term equity investment acquired through debt restructuring, the book value is determined based on the fair
value of waived debts and the taxes and other costs directly attributable to the assets. Difference between fair value and
carrying amount of waived debts shall be recorded in current profit or loss.
3.15.3Subsequent measurement and recognition of profit or loss
Long-term equity investment to an entity over which the Company has ability of control shall be accounted for at cost
method. Long-term equity investment to a joint venture or an associate shall be accounted for at equity method.
①Cost method
For Long-term equity investment at cost method, cost of the long-term equity investment shall be adjusted when additional
amount is invested or a part of it is withdrawn. The Company recognises its share of cash dividends or profits which have
been declared to distribute by the investee as current investment income.
②Equity method
For long-term equity investment at equity method, the general accounting treatment is as follows:
If the initial cost of the investment is in excess of the share of the fair value of the net identifiable assets in the investee at
the date of investment, the difference shall not be adjusted to the initial cost of long-term equity investment; if the initial
cost of the investment is in short of the share of the fair value of the net identifiable assets in the investee at the date
investment, the difference shall be included in the current profit or loss and the initial cost of the long-term equity
investment shall be adjusted accordingly.
The Company recognises the share of the investee’s net profits or losses, as well as its share of the investee’s other
comprehensive income, as investment income or losses and other comprehensive income respectively, and adjusts the
carrying amount of the investment accordingly. The carrying amount of the investment shall be reduced by the share of any
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profit or cash dividends declared to distribute by the investee. The investor’s share of the investee’s owners’ equity
changes, other than those arising from the investee’s net profit or loss, other comprehensive income or profit distribution,
shall be recognised in the investor’s equity, and the carrying amount of the long-term equity investment shall be adjusted
accordingly. The Company recognises its share of the investee’s net profits or losses after making appropriate adjustments
of investee’s net profit based on the fair values of the investee’s identifiable net assets at the investment date. If the
accounting policy and accounting period adopted by the investee is not in consistency with the Company, the financial
statements of the investee shall be adjusted according to the Company’s accounting policies and accounting period, based
on which, investment income or loss and other comprehensive income, etc., shall be adjusted. The unrealized profits or
losses resulting from inter-company transactions between the company and its associate or joint venture are eliminated in
proportion to the company’s equity interest in the investee, based on which investment income or losses shall be
recognised. Any losses resulting from inter-company transactions between the investor and the investee, which belong to
asset impairment, shall be recognised in full.
Where the Company obtains the power of joint control or significant influence, but not control, over the investee, due to
additional investment or other reason, the relevant long-term equity investment shall be accounted for by using the equity
method, initial cost of which shall be the fair value of the original investment plus the additional investment. Where the
original investment is classified as available-for sale investment, difference between its fair value and the carrying value, in
addition to the cumulative changes in fair value previously recorded in other comprehensive income, shall be recogised
into current profit or loss using equity method.
If the Company loses the joint control or significant influence of the investee for some reasons such as disposal of equity
investment, the retained interest shall be measured at fair value and the difference between the carrying amount and the fair
value at the date of loss the joint control or significant influence shall be recognised in profit or loss. When the Company
discontinues the use of the equity method, the Company shall account for all amounts previously recognised in other
comprehensive income under equity method in relation to that investment on the same basis as would have been required if
the investee had directly disposed of the related assets or liabilities.
3.15.4 Equity investment classified as held for sale
For an equity investment, or a portion of an equity investment, in an associate or a joint venture is classified as held for
sale, the relevant accounting treatment please refer to Note 3.20.
3.16 Fixed Assets
Fixed assets refer to the tangible assets with higher unit price held for the purpose of producing commodities, rendering
services, renting or business management with useful lives exceeding one year.
3.16.1 Recognition criteria of fixed assets
Fixed assets will only be recognised at the actual cost paid when obtaining as all the following criteria are satisfied:
①It is probable that the economic benefits relating to the fixed assets will flow into the Company;
②The costs of the fixed assets can be measured reliably.
Subsequent expenditure for fixed assets shall be recorded in cost of fixed assets, if recognition criteria of fixed assets are
satisfied, otherwise the expenditure shall be recorded in current profit or loss when incurred.
3.16.2 Depreciation methods of fixed assets
Fixed assets are initially measured at cost and taking into account the impact of expected disposal costs. The Company
begins to depreciate the fixed asset from the next month after it is available for intended use by the straight-line-method,
except for the replacement parts of the engine, which is depreciated by units of production method based on flight hours.
The useful life, estimated net residual value and annual depreciation rate of various types of fixed assets are as follows:
Estimated useful life(Year)/ Residual Annual depreciation
Category
Estimated flight hours (KHrs) rates (%) rates/KHrs (%)
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Estimated useful life(Year)/ Residual Annual depreciation
Category
Estimated flight hours (KHrs) rates (%) rates/KHrs (%)
Buildings and constructions 20-33 5.00 2.88-4.75
Aircraft engine core parts and engine
15-20 0.00-5.00 4.75-6.67
auxiliary power unit
Engine replacement parts (KHrs) 17-23 0.00 4.35-5.88
High-priced revolving parts 3-15 0.00 6.67-33.33
Transportation equipment and others 4-20 5.00 4.75-23.75
For the fixed assets with impairment provided, the impairment provision should be excluded from the cost when
calculating depreciation.
At the end of reporting period, the Company shall review the useful life, estimated net residual value and depreciation
method of the fixed assets. Estimated useful life of the fixed assets shall be adjusted if it is changed compared to the
original estimation.
3.17 Construction in Progress
The initial book values of the fixed assets are stated at total expenditures incurred before they are ready for their intended
use, including construction costs, original price of machinery equipment, other necessary expenses incurred to bring the
construction in progress to get ready for its intended use and borrowing costs of the specific loan for the construction or the
proportion of the general loan used for the constructions incurred before they are ready for their intended use. The
construction in progress shall be transferred to fixed asset when the installation or construction is ready for the intended
use. For construction in progress that has been ready for their intended use but relevant budgets for the completion of
projects have not been completed, the estimated values of project budgets, prices, or actual costs should be included in the
costs of relevant fixed assets, and depreciation should be provided according to relevant policies of the Company when the
fixed assets are ready for intended use. After the completion of budgets needed for the completion of projects, the
estimated values should be substituted by actual costs, but depreciation already provided is not adjusted.
3.18 Borrowing Costs
3.18.1Recognition criteria and period for capitalization of borrowing costs
The Company shall capitalize the borrowing costs that are directly attributable to the acquisition, construction or
production of qualifying assets when meet the following conditions:
①Expenditures for the asset are being incurred;
②Borrowing costs are being incurred; and
③Acquisition, construction or production activities that are necessary to prepare the assets for their intended use or sale
are in progress.
Other borrowing cost, discounts or premiums on borrowings and exchange differences on foreign currency borrowings
shall be recognized into current profit or loss when incurred.
Capitalization of borrowing costs is suspended during periods in which the acquisition, construction or production of a
qualifying asset is interrupted abnormally and the interruption is for a continuous period of more than 3 months.
Capitalization of such borrowing costs ceases when the qualifying assets being acquired, constructed or produced become
ready for their intended use or sale. The expenditure incurred subsequently shall be recognised as expenses when incurred.
3.18.2Capitalization rate and measurement of capitalized amounts of borrowing costs
When funds are borrowed specifically for purchase, construction or manufacturing of assets eligible for capitalization, the
Company shall determine the amount of borrowing costs eligible for capitalisation as the actual borrowing costs incurred
on that borrowing during the period less any interest income on bank deposit or investment income on the temporary
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investment of those borrowings.
Where funds allocated for purchase, construction or manufacturing of assets eligible for capitalization are part of a general
borrowing, the eligible amounts are determined by the weighted-average of the cumulative capital expenditures in excess
of the specific borrowing multiplied by the general borrowing capitalization rate. The capitalization rate will be the
weighted average of the borrowing costs applicable to the general borrowing.
During the capitalization period, all the exchange differences of special foreign currency loans shall be capitalized. The
exchange difference of foreign currency general borrowings is carried to the current profit and loss.
3.19 Intangible Assets
3.19.1 Measurement method of intangible assets
Intangible assets are recognised at actual cost at acquisition.
3.19.2 The useful life and amortisation of intangible assets
①The estimated useful lives of the intangible assets with finite useful lives are as follows:
Category Estimated useful life
Land use right Legal life
The service life is determined by reference to the period that can bring
Software
economic benefits to the Company
For intangible assets with finite useful life, the estimated useful life and amortisation method are reviewed annually at the
end of each reporting period and adjusted when necessary. No change incur in current year in the estimated useful life and
amortisation method upon review.
②Assets of which the period to bring economic benefits to the Company are unforeseeable are regarded as intangible
assets with indefinite useful lives. The Company reassesses the useful lives of those assets at every year end. If the useful
lives of those assets are still indefinite, impairment test should be performed on those assets at the balance sheet date.
③Amortisation of the intangible assets
For intangible assets with finite useful lives, their useful lives should be determined upon their acquisition and
systematically amortised on a straight-line basis [units of production method] over the useful life. The amortisation amount
shall be recognized into current profit or loss according to the beneficial items. The amount to be amortised is cost
deducting residual value. For intangible assets which has impaired, the cumulative impairment provision shall be deducted
as well. The residual value of an intangible asset with a finite useful life shall be assumed to be zero unless: there is a
commitment by a third party to purchase the asset at the end of its useful life; or there is an active market for the asset and
residual value can be determined by reference to that market; and it is probable that such a market will exist at the end of
the asset’s useful life.
Intangible assets with indefinite useful lives shall not be amortised. The Company reassesses the useful lives of those
assets at every year end. If there is evidence to indicate that the useful lives of those assets become finite, the useful lives
shall be estimated and the intangible assets shall be amortised systematically and reasonably within the estimated useful
lives.
3.19.3Criteria of classifying expenditures on internal research and development projects into research phase and
development phase
①Preparation activities related to materials and other relevant aspects undertaken by the Company for the purpose of
further development shall be treated as research phase.
②Development activities after the research phase of the Company shall be treated as development phase.
3.19.4Criteria for capitalization of qualifying expenditures during the development phase
Expenditures arising from development phase on internal research and development projects shall be recognised as
intangible assets only if all of the following conditions have been met:
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A.Technical feasibility of completing the intangible assets so that they will be available for use or sale; and
B.Its intention to complete the intangible asset and use or sell it; and
C.The method that the intangible assets generate economic benefits, including the Company can demonstrate the existence
of a market for the output of the intangible assets or the intangible assets themselves or, if it is to be used internally, the
usefulness of the intangible assets; and
D. The availability of adequate technical, financial and other resources to complete the development and to use or sell the
intangible asset; and
E. Its ability to measure reliably the expenditure attributable to the intangible asset.
3.20 Impairment of Long-Term Assets
Impairment loss of long-term equity investment in subsidiaries, associates and joint ventures, investment properties, fixed
assets and constructions in progress subsequently measured at cost, productive biological assets, intangible assets, goodwill,
the rights and interests of proved mining areas of petroleum and natural gas and wells and other relevant facilities
measured at cost (excluding inventories, investment properties measured at fair value, deferred tax assets, financial assets),
shall be determined according to following method:
The Company shall assess at the end of each reporting period whether there is any indication that an asset may be impaired.
If any such indication exists, the Company shall estimate the recoverable amount of the asset and test for impairment.
Irrespective of whether there is any indication of impairment, the Company shall test for impairment of goodwill acquired
in a business combination, intangible assets with an indefinite useful life or intangible assets not yet available for use
annually.
The recoverable amounts of the long-term assets are the higher of their fair values less costs to dispose and the present
values of the estimated future cash flows of the long-term assets. The Company estimate the recoverable amounts on an
individual basis. If it is difficult to estimate the recoverable amount of the individual asset, the Company estimates the
recoverable amount of the groups of assets that the individual asset belongs to. Identification of a group of asset is based on
whether the cash inflows from it are largely independent of the cash inflows from other assets or groups of assets.
If, and only if, the recoverable amount of an asset or a group of assets is less than its carrying amount, the carrying amount
of the asset shall be reduced to its recoverable amount and the provision for impairment loss shall be recognised
accordingly.
For the purpose of impairment testing, goodwill acquired in a business combination shall, from the acquisition date, be
allocated to relevant group of assets based on reasonable method; if it is difficult to allocate to relevant group of assets,
good will shall be allocated to relevant combination of asset groups. The relevant group of assets or combination of asset
groups is a group of assets or combination of asset groups that is benefit from the synergies of the business combination
and is not larger than the reporting segment determined by the Company.
When test for impairment, if there is an indication that relevant group of assets or combination of asset groups may be
impaired, impairment testing for group of assets or combination of asset groups excluding goodwill shall be conducted first,
and calculate the recoverable amount and recognize the impairment loss. Then the group of assets or combination of asset
groups including goodwill shall be tested for impairment, by comparing the carrying amount with its recoverable amount.
If the recoverable amount is less than the carrying amount, the Company shall recognise the impairment loss.
The mentioned impairment loss will not be reversed in subsequent accounting period once it had been recognised.
3.21 Long-term Deferred Expenses
Long-term deferred expenses are various expenses already incurred, which shall be amortised over current and subsequent
periods with the amortisation period exceeding one year. Long-term prepaid expenses are amortized on a straight-line basis
over the period of expected benefit. In the case of pilot training expenses, they shall be amortized on an average basis of 10
years according to the period of benefit of the expense items.
3.22 Employee Benefits
Employee benefits refer to all forms of consideration or compensation given by the Company in exchange for service
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rendered by employees or for the termination of employment relationship. Employee benefits include short-term employee
benefits, post-employment benefits, termination benefits and other long-term employee benefits. Benefits provided to an
employee's spouse, children, dependents, family members of decreased employees, or other beneficiaries are also
employee benefits.
According to liquidity, employee benefits are presented in the statement of financial position as “Employee benefits
payable” and “Long-term employee benefits payable”.
3.22.1Short-term employee benefits
①Employee basic salary (salary, bonus, allowance, subsidy)
The Company recognises, in the accounting period in which an employee provides service, actually occurred short-term
employee benefits as a liability, with a corresponding charge to current profit except for those recognised as capital
expenditure based on the requirement of accounting standards.
②Employee welfare
The Company shall recognise the employee welfare based on actual amount when incurred into current profit or loss or
related capital expenditure. Employee welfare shall be measured at fair value as it is a non-monetary benefits.
③Social insurance such as medical insurance, work injury insurance and maternity insurance, housing funds, labor union
fund and employee education fund.
Payments made by the Company of social insurance for employees, such as medical insurance, work injury insurance and
maternity insurance, payments of housing funds, and labor union fund and employee education fund accrued in accordance
with relevant requirements, in the accounting period in which employees provide services, is calculated according to
required accrual bases and accrual ratio in determining the amount of employee benefits and the related liabilities, which
shall be recognised in current profit or loss or the cost of relevant asset.
④Short-term paid absences
The company shall recognise the related employee benefits arising from accumulating paid absences when the employees
render service that increases their entitlement to future paid absences. The additional payable amounts shall be measured at
the expected additional payments as a result of the unused entitlement that has accumulated. The Company shall recognise
relevant employee benefit of non-accumulating paid absences when the absences actually occurred.
⑤Short-term profit-sharing plan
The Company shall recognise the related employee benefits payable under a profit-sharing plan when all of the following
conditions are satisfied:
A.The Company has a present legal or constructive obligation to make such payments as a result of past events; and
B.A reliable estimate of the amounts of employee benefits obligation arising from the profit- sharing plan can be made.
3.22.2Post-employment benefits
①Defined contribution plans
The Company shall recognise, in the accounting period in which an employee provides service, the contribution payable to
a defined contribution plan as a liability, with a corresponding charge to the current profit or loss or the cost of a relevant
asset.
When contributions to a defined contribution plan are not expected to be settled wholly before twelve months after the end
of the annual reporting period in which the employees render the related service, they shall be discounted using relevant
discount rate (market yields at the end of the reporting period on high quality corporate bonds in active market or
government bonds with the currency and term which shall be consistent with the currency and estimated term of the
defined contribution obligations) to measure employee benefits payable.
②Defined benefit plan
A.The present value of defined benefit obligation and current service costs
Based on the expected accumulative welfare unit method, the Company shall make estimates about demographic variables
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and financial variables in adopting the unbiased and consistent actuarial assumptions and measure defined benefit
obligation, and determine the obligation period. The Company shall discount the obligation arising from defined benefit
plan using relevant discount rate (market yields at the end of the reporting period on high quality corporate bonds in active
market or government bonds with the currency and term which shall be consistent with the currency and estimated term of
the defined benefit obligations) in order to determine the present value of the defined benefit obligation and the current
service cost.
B.The net defined benefit liability or asset
The net defined benefit liability (asset) is the deficit or surplus recognised as the present value of the defined benefit
obligation less the fair value of plan assets (if any).
When the Company has a surplus in a defined benefit plan, it shall measure the net defined benefit asset at the lower of the
surplus in the defined benefit plan and the asset ceiling.
C.The amount recognised in the cost of asset or current profit or loss
Service cost comprises current service cost, past service cost and any gain or loss on settlement. Other service cost shall be
recognised in profit or loss unless accounting standards require or allow the inclusion of current service cost within the cost
of assets.
Net interest on the net defined benefit liability (asset) comprising interest income on plan assets, interest cost on the
defined benefit obligation and interest on the effect of the asset ceiling, shall be included in profit or loss.
D.The amount recognised in other comprehensive income
Changes in the net liability or asset of the defined benefit plan resulting from the remeasurements including:
(a) Actuarial gains and losses, the changes in the present value of the defined benefit obligation resulting from experience
adjustments or the effects of changes in actuarial assumptions; and
(b) Return on plan assets, excluding amounts included in net interest on the net defined benefit liability or asset; and
(c) Any change in the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit
liability (asset).
Remeasurements of the net defined benefit liability (asset) recognised in other comprehensive income shall not be
reclassified to profit or loss in a subsequent period. However, the Company may transfer those amounts recognised in other
comprehensive income within equity.
3.22.3Termination benefits
The Company providing termination benefits to employees shall recognise an employee benefits liability for termination
benefits, with a corresponding charge to the profit or loss of the reporting period, at the earlier of the following dates:
①When the Company cannot unilaterally withdraw the offer of termination benefits because of an employment
termination plan or a curtailment proposal.
②When the Company recognises costs or expenses related to a restructuring that involves the payment of termination
benefits.
If the termination benefits are not expected to be settled wholly before twelve months after the end of the annual reporting
period, the Company shall discount the termination benefits using relevant discount rate (market yields at the end of the
reporting period on high quality corporate bonds in active market or government bonds with the currency and term which
shall be consistent with the currency and estimated term of the defined benefit obligations) to measure the employee
benefits.
3.22.4 Other long-term employee benefits
①Meet the conditions of the defined contribution plan
When other long-term employee benefits provided by the Company to the employees satisfies the conditions for
classifying as a defined contribution plan, all those benefits payable shall be accounted for as employee benefits payable at
their discounted value.
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②Meet the conditions of the defined benefit plan
At the end of the reporting period, the Company recognised the cost of employee benefit from other long-term employee
benefits as the following components:
A.Service costs; and
B.Net interest cost for net liability or asset of other long-term employee benefits; and
C.Changes resulting from the remeasurements of the net liability or asset of other long-term employee benefits.
In order to simplify the accounting treatment, the net amount of above items shall be recognised in profit or loss or relevant
cost of assets.
3.23 Estimated liabilities
3.23.1Recognition standard of estimated liabilities
The Company recognizes the estimated liabilities when obligations related to contingencies satisfy all the following
conditions:
I. The obligation is the current obligation of the Company;
II. It is likely to cause any economic benefit to flow out of the Company as a result of performance of the obligation;
III. The amount of the obligation can be measured reliably.
3.23.2 Measurement method of estimated liabilities
The estimated liabilities of the Company are initially measured at the best estimate of expenses required for the
performance of relevant present obligations. The Company, when determining the best estimate, has had a comprehensive
consideration of risks with respect to contingencies, uncertainties and the time value of money. The carrying amount of the
estimated liabilities shall be reviewed at the end of every reporting period. If conclusive evidences indicate that the
carrying amount fails to be the best estimate of the estimated liabilities, the carrying amount shall be adjusted based on the
updated best estimate.
3.24 Revenue
3.24.1 General principle
Revenue is the gross inflow of economic benefits arising from the ordinary operating activities of the Company that will
result in an increase in Stockholders' equity and is unrelated to the capital invested by Stockholders.
The company recognises revenue when the performance obligation of the contract with the customer is fulfilled, that is,
when the customer obtains control of the relevant commodity. Control of the relevant commodity refers to the ability to
direct the use of, and obtain substantially all of the remaining benefits from the commodity.
If the contract contains two or more performance obligations, the Company shall, on the commencement date of the
contract, allocate the contract price in proportion to the stand-alone selling prices of the distinct good or service underlying
each performance obligation in the contract and recognize revenue according to the transaction price apportioned to each
individual performance obligation.
The transaction price is the amount of consideration the Company is expected to be entitled to receive for the transfer of
goods or services to a Customer, excluding payments received on behalf of third parties. When determining the transaction
price of the contract, if there is a variable consideration, the Company shall determine the best estimate of the variable
consideration according to the expected value or the most likely amount, and shall include in the transaction price some or
all of an amount of variable consideration estimated to the extent that it is highly probable that a significant reversal in the
amount of cumulative revenue recognised will not occur when the uncertainty associated with the variable consideration is
subsequently resolved. In the circumstances where the contract contains a significant financing component, the Company
shall recognise revenue at an amount that reflects the price that a customer would have paid for the promised goods or
services if the customer had paid cash for those goods or services when the customer obtains the control of the commodity.
The difference between the transaction price and the contract consideration is amortised in the contract period using
effective rate method. The Company does not consider the financing component if the period between when the entity
transfers a promised good or service to a customer and when the customer pays for that good or service is one year or less.
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If one of the following conditions is met, the performance obligation is satisfied over time. Otherwise, the performance
obligation is satisfied at a certain point:
I. the client simultaneously receives and consumes the benefits provided by the entity’s performance as the entity performs;
II. the entity’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced; or
III. the entity’s performance does not create an asset with an alternative use to the entity and the entity has an enforceable
right to payment for performance completed to date.
For the performance obligations over time, the Company shall recognize revenue in accordance with the performance
progress during that period, except where the performance progress cannot be reasonably determined. The progress of
completion can be measured using either the input method or output method. Where the progress of completion cannot be
reliably measured but the entity expects to recover the costs incurred, revenue is measured to the extent of the costs
incurred until such time that the progress of completion can be reliably measured.
For performance obligations performed at a certain point, the Company recognizes revenue at the point when the Customer
obtains control of the relevant commodity. In determining whether a customer has acquired control of goods or services,
the Company will consider the following indications:
I. the entity has a present right to payment for the asset, ie. the client is presently obliged to pay for an asset;
II. the legal title to the asset has been transferred to the client, ie. the client has the legal title to the asset;
III. the entity has transferred physical possession of the asset to the client, ie. the client has physical possession of the asset;
IV. the entity has transferred substantially significant risks and rewards of ownership of the asset, ie. the client has the
significant risks and rewards of ownership of the asset;
V. the client has accepted the asset;
When the Company receives payment for goods or services from the customer in advance, such payment shall first be
recognized as a liability and shall be transferred to revenue when the relevant performance obligations are fulfilled. Where
the Company does not need to refund the advance payment and the Client may waive all or part of its contractual rights,
the Company expects to be entitled to an amount related to the waiver of the Contract rights by the Client, such amount
shall be recognized as revenue pro rata in accordance with the mode in which the Client exercises the contractual rights;
Otherwise, the company will only convert the relevant balance of the aforesaid liability into revenue when the possibility
of the client’s request to fulfill the remaining performance obligations is extremely low.
3.24.2 Specific methods
The specific methods of revenue recognition of the Company are as follows:
① Revenue from providing services
A. The Company recognises passenger revenue based on the provision of transport services and not on ticket sales. The
airline tickets sold by the Company shall be included in current liabilities when they have not been carried out, and
recognized as contract liabilities. In addition, the Company has entered into code-sharing agreements with other airlines,
under which the flight number of one carrier can use the code specified by the other carrier's airline. Code sharing revenue
is apportioned among code sharing standard partners in accordance with the contractual agreements entered into and the
proportional apportionment standards of the aviation industry, and is also recognized as passenger revenue when
transportation services are provided.
An overdue ticket is an unexercised contractual right. When the company sells air tickets without refund and the customer
may waive all or part of its contractual rights, the company expects to be entitled to the amount related to the contractual
rights waived by the customer, the aforesaid amount shall be recognized as revenue on a pro rata basis; otherwise, the
company will only convert the relevant balance of the aforesaid liability into revenue when the possibility of the client’s
request to fulfill the remaining performance obligations is extremely low.
B. The Company recognised freight transportation revenue based on the provision of transportation services.
C. Other revenues from providing labor services and selling goods. Other revenue mainly includes revenues from ground
services and aircraft maintenance, and revenues from selling goods on board, which shall be recognized when the customer
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obtains control over relevant goods or services.
3.25Government Grants
3.25.1 Recognition of government grants
A government grant shall not be recgonised until there is reasonable assurance that:
①The Company will comply with the conditions attaching to them; and
②The grants will be received.
3.25.2Measurement of government grants
Monetary grants from the government shall be measured at amount received or receivable, and non-monetary grants from
the government shall be measured at their fair value or at a nominal value of RMB 1.00 when reliable fair value is not
available.
3.25.3Accounting for government grants
①Government grants related to assets
Government grants pertinent to assets mean the government grants that are obtained by the Company used for purchase or
construction, or forming the long-term assets by other ways. Government grants pertinent to assets shall be recognised as
deferred income, and should be recognised in profit or loss on a systematic basis over the useful lives of the relevant assets.
Grants measured at their nominal value shall be directly recognised in profit or loss of the period when the grants are
received. When the relevant assets are sold, transferred, written off or damaged before the assets are terminated, the
remaining deferred income shall be transferred into profit or loss of the period of disposing relevant assets.
②Government grants related to income
Government grants other than related to assets are classified as government grants related to income. Government grants
related to income are accounted for in accordance with the following principles:
If the government grants related to income are used to compensate the enterprise’s relevant expenses or losses in future
periods, such government grants shall be recognised as deferred income and included into profit or loss in the same period
as the relevant expenses or losses are recognised;
If the government grants related to income are used to compensate the enterprise’s relevant expenses or losses incurred,
such government grants are directly recognised into current profit or loss.
For government grants comprised of part related to assets as well as part related to income, each part is accounted for
separately; if it is difficult to identify different part, the government grants are accounted for as government grants related
to income as a whole.
Government grants related to daily operation activities are recognised in other income in accordance with the nature of the
activities, and government grants irrelevant to daily operation activities are recognised in non-operating income.
③Loan interest subsidy
When loan interest subsidy is directly allocated to the Company, the subsidy shall be recognised as offsetting the relevant
borrowing cost.
④Repayment of the government grants
Repayment of the government grants shall be recorded by increasing the carrying amount of the asset if the book value of
the asset has been written down, or reducing the balance of relevant deferred income if deferred income balance exists, any
excess will be recognised into current profit or loss; or directly recognised into current profit or loss for other
circumstances.
3.26 Deferred Tax Assets and Deferred Tax Liabilities
Temporary differences are differences between the carrying amount of an asset or liability in the statement of financial
position and its tax base at the balance sheet date. The Company recognise and measure the effect of taxable temporary
differences and deductible temporary differences on income tax as deferred tax liabilities or deferred tax assets using
liability method. Deferred tax assets and deferred tax liabilities shall not be discounted.
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3.26.1 Recognition of deferred tax asset
Deferred tax assets should be recognised for deductible temporary differences, the carryforward of unused tax losses and
the carryforward of unused tax credits to the extent that it is probable that taxable profit will be available against which the
deductible temporary differences, the carryforward of unused tax losses and the carryforward of unused tax credits can be
utilised at the tax rates that are expected to apply to the period when the asset is realised, unless the deferred tax asset arises
from the initial recognition of an asset or liability in a transaction that:
A. Is not a business combination; and
B.At the time of the transaction, affects neither accounting profit nor taxable profit (tax loss).
The Company shall recognise a deferred tax asset for all deductible temporary differences arising from investments in
subsidiaries, associates and joint ventures, only to the extent that, it is probable that:
A.The temporary difference will reverse in the foreseeable future; and
B.Taxable profit will be available against which the deductible temporary difference can be utilised.
At the end of each reporting period, if there is sufficient evidence that it is probable that taxable profit will be available
against which the deductible temporary difference can be utilized, the Company recognises a previously unrecognised
deferred tax asset.
The carrying amount of a deferred tax asset shall be reviewed at the end of each reporting period. The Company shall
reduce the carrying amount of a deferred tax asset to the extent that it is no longer probable that sufficient taxable profit
will be available to allow the benefit of part or all of that deferred tax asset to be utilised. Any such reduction shall be
reversed to the extent that it becomes probable that sufficient taxable profit will be available.
3.26.2 Recognition of deferred tax liabilities
A deferred tax liability shall be recognised for all taxable temporary differences at the tax rate that are expected to apply to
the period when the liability is settled.
①No deferred tax liability shall be recognised for taxable temporary differences arising from:
A.The initial recognition of goodwill; or
B.The initial recognition of an asset or liability in a transaction which: is not a business combination; and at the time of the
transaction, affects neither accounting profit nor taxable profit (tax loss).
②An entity shall recognise a deferred tax liability for all taxable temporary differences associated with investments in
subsidiaries, associates, and joint ventures, except to the extent that both of the following conditions are satisfied:
A.The Company is able to control the timing of the reversal of the temporary difference; and
B.It is probable that the temporary difference will not reverse in the foreseeable future.
3.26.3 Recognition of deferred tax liabilities or assets involved in special transactions or events
①Deferred tax liabilities or assets related to business combination
For the taxable temporary difference or deductible temporary difference arising from a business combination not under
common control, a deferred tax liability or a deferred tax asset shall be recognised, and simultaneously, goodwill
recognised in the business combination shall be adjusted based on relevant deferred tax expense (income).
②Items directly recognised in equity
Current tax and deferred tax related to items that are recognised directly in equity shall be recognised in equity. Such items
include: other comprehensive income generated from fair value fluctuation of available for sale investments; an adjustment
to the opening balance of retained earnings resulting from either a change in accounting policy that is applied
retrospectively or the correction of a prior period (significant) error; amounts arising on initial recognition of the equity
component of a compound financial instrument that contains both liability and equity component.
③Unused tax losses and unused tax credits
A.Unsused tax losses and unused tax credits generated from daily operation of the Company itself
Deductible loss refers to the loss calculated and permitted according to the requirement of tax law that can be offset against
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taxable income in future periods. The criteria for recognising deferred tax assets arising from the carryforward of unused
tax losses and tax credits are the same as the criteria for recognising deferred tax assets arising from deductible temporary
differences. The Company recognises a deferred tax asset arising from unused tax losses or tax credits only to the extent
that there is convincing other evidence that sufficient taxable profit will be available against which the unused tax losses or
unused tax credits can be utilised by the Company. Income taxes in current profit or loss shall be deducted as well.
B.Unsused tax losses and unused tax credits arising from a business combination
Under a business combination, the acquiree’s deductible temporary differences which do not satisfy the criteria at the
acquisition date for recognition of deferred tax asset shall not be recognised. Within 12 months after the acquisition date, if
new information regarding the facts and circumstances exists at the acquisition date and the economic benefit of the
acquiree’s deductible temporary differences at the acquisition is expected to be realised, the Company shall recognise
acquired deferred tax benefits and reduce the carrying amount of any goodwill related to this acquisition. If goodwill is
reduced to zero, any remaining deferred tax benefits shall be recognised in profit or loss. All other acquired deferred tax
benefits realised shall be recognised in profit or loss.
④Temporary difference generated in consolidation elimination
When preparing consolidated financial statements, if temporary difference between carrying value of the assets and
liabilities in the consolidated financial statements and their taxable bases is generated from elimination of inter-company
unrealized profit or loss, deferred tax assets or deferred tax liabilities shall be recognised in the consolidated financial
statements, and income taxes expense in current profit or loss shall be adjusted as well except for deferred tax related to
transactions or events recognised directly in equity and business combination.
⑤Share-based payment settled by equity
If tax authority permits tax deduction that relates to share-based payment, during the period in which the expenses are
recognised according to the accounting standards, the Company estimates the tax base in accordance with available
information at the end of the accounting period and the temporary difference arising from it. Deferred tax shall be
recognised when criteria of recognition are satisfied. If the amount of estimated future tax deduction exceeds the amount of
the cumulative expenses related to share-based payment recognised according to the accounting standards, the tax effect of
the excess amount shall be recognised directly in equity.
3.27 Leases
Effective at 1 January 2021
3.27.1 Identification of leases
At inception of a contract, the Company shall assess whether the contract is, or contains, a lease. A contract is, or contains,
a lease if the contract conveys the right to control the use of one or more identified assets for a period of time in exchange
for consideration. To assess whether a contract conveys the right to control the use of an identified asset for a period of
time, the Company shall assess whether, throughout the period of use, the customer has the right to obtain substantially all
of the economic benefits from use of the identified asset and to direct the use of the identified asset.
3.27.2 Identification of individual leases
When a contract includes more than one separate lease components, the Company shall separate components of the
contract and account for each lease component separately. The right to use an underlying asset is a separate lease
component if both conditions have been satisfied:
I. The lessee can benefit from use of the underlying asset either on its own or together with other resources that are readily
available to the lessee;
II. The underlying asset is neither highly dependent on, nor highly interrelated with, the other underlying assets in the
contract.
3.27.3 The Company as the lessee
At the commencement date of the lease, the Company will consider a lease not exceeding 12 months, excluding the option
to buy, to be a short-term lease;A lease with a lower value when a single leased asset is a new asset is identified as a
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low-value asset lease. Where the company subleases or expects to sublease the leased asset, the original lease shall not be
deemed as a low-value asset lease.
For all short-term leases and low-value asset leases, the Company will, at each period of the lease term, record the lease
payments as the cost of the relevant asset or current profit or loss in accordance with the straight-line method.
In addition to the short-term leases and low-value asset leases above, which are treated in a simplified manner, the
Company recognizes the right to use assets and lease liabilities in respect of the lease at the commencement date of the
lease term.
① Right to use assets
The right to use assets refers to the company's right to use the leased assets during the lease term.
On the commencement date of the lease term, the usufruct is initially measured at cost.The cost includes:
(a) The initial measurement amount of the lease liability;
(b) The amount of the lease payment paid on or before the commencement date of the Lease term, if there is a lease
incentive, less the amount of the lease incentive already enjoyed;
(c) Initial direct expenses incurred by the Company;
(d) The costs expected to be incurred by the Company to dismantle and remove the leased asset, restore the leased asset to
the site or restore the leased asset to the state agreed upon in the lease terms.The Company recognizes and measures the
cost in accordance with the recognition standard and measurement method of estimated liabilities, see Note III and 23 for
details.The above costs are incurred for the production of inventory and will be included in inventory costs.
Depreciation of usufruct assets shall be calculated and withdrawn by means of years average method or workload
method.Where it can be reasonably determined that ownership of the leased asset will be acquired at the end of the lease
term, the depreciation rate shall be determined within the estimated remaining service life of the leased asset according to
the class of the use-right asset and the estimated net salvage value rate;Where it cannot be reasonably determined that
ownership of the leased asset will be acquired at the end of the lease term, the depreciation rate shall be determined
according to the class of the usufruct within the shorter period of the lease term or the remaining useful life of the leased
asset.
The depreciation method, depreciation life, salvage value rate and annual depreciation rate of various usufruct assets are as
follows:
Depreciated life
Depreciation (years)/Estimated Residuals rate Annual depreciation rates
Categories
Method flight hours （%） （%）
(thousand hours)
straight-line
Houses and Buildings 1-5 0.00 20-100
depreciation
Aircraft engine core
straight-line
components and engine 5-20 0.00-5.00 4.75-20
depreciation
auxiliary power unit
unit-of-
Engine replacement 17-23 0.00 4.35-5.88
production
At the commencement date, the lease liability shall be measured at the present value of the lease payments that are not paid
at that date. The lease payments included in the measurement of the lease liability comprise the following 5 items:
(a) fixed payments and in-substance fixed payments, less any lease incentives receivable;
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(b) variable lease payments dependent on indices or ratios;(c) the exercise price of a purchase option if the lessee is
reasonably certain to exercise that option；
(d) payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the
lease；
(e)amounts expected to be payable by the lessee under residual value guarantees.
In order to calculate the present value of the lease payments, interest rate implicit in the lease shall be used as the discount
rate. If that rate cannot be readily determined, the Company shall use the incremental borrowing rate. The difference
between the lease payments and its present value shall be recognised as unrecognised financing charges, calculated bases
on the discount rate of the present value of the lease payments in each period within the lease term and recorded as interest
expense in current profit or loss. Variable lease payments not included in the measurement of lease liabilities shall be
recognised in current profit or loss when incurred.
After the commencement date, the Company shall remeasure the lease liability based on the revised present value of the
lease payments and adjust the carrying amount of the right-of-use asset if there is a change in the in-substance fixed
payments, or change in the amounts expected to be payable under a residual value guarantee, or change in an index or a
rate used to determine lease payments, or change in the assessment or exercising of an option to purchase the underlying
asset, or an option to extend or terminate the lease.
3.27.4 The Company as the lessor
At the commencement date, the Company shall classify a lease as a finance lease if it transfers substantially all the risks
and rewards incidental to ownership of an underlying asset, otherwise it shall be classified as an operating lease.
①Operating leases
The Company shall recognize lease payments from operating leases as income on a straight-line basis / units of production
method (or other systematic and rational basis) over the term of the relevant lease and the initial direct costs incurred in
obtaining an operating lease shall be capitalized and recognized as an expense over the lease term on the same basis as the
lease income. The Company shall recognize the variable lease payments relating to the operating lease but not included in
the measurement of the lease receivables into current profit or loss when incurred.
②Finance leases
At the commencement date, the Company shall recognize the lease receivables at an account equal to the net investment in
the lease (the sum of the present value of the unguaranteed residual values and the lease payment that are not received at
the commencement date discounted at the interest rate implicit in the lease) and derecognize the asset relating to the
finance lease. The Company shall recognize interest income using the interest rate implicit in the lease over the lease term.
The Company shall recognize the variable lease payments relating to the finance lease but not included in the measurement
of the net investment in the lease into current profit or loss when incurred.
3.27.5 Accounting treatment of lease change
If the operating lease is changed, the Company shall treat it as a new lease as of the effective date of the change, and the
amount received in advance or receivable from the lease related to the changed lease shall be regarded as the amount
received from the new lease.
3.27.6 Sale and leaseback transactions
The Company evaluates whether the transfer of assets in a sale-leaseback transaction is a sale in accordance with the
provisions of Notes III and 24.
①The company as the seller (lessee)
If the transfer of the asset is not a sale, the Company shall continue to recognise the transferred asset and shall recognise a
financial liability equal to the transfer proceeds. It shall account for the financial liability according to Note III and 10. If
the transfer of the asset is a sale, the Company shall measure the right-of-use asset arising from the leaseback at the
proportion of the previous carrying amount of the asset that relates to the right of use retained by the Company.
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Accordingly, the Company shall recognize only the amount of any gain or loss that relates to the rights transferred to the
buyer-lessor.
②The company as the buyer (lessor)
If the transfer of the asset is not a sale, the Company shall not recognise the transferred asset and shall recognise a financial
asset equal to the transfer proceeds. It shall account for the financial asset according to Note 3.10. If the transfer of the
asset is a sale, the Company shall account for the purchase of the asset applying applicable Accounting Standards of
Business Enterprises, and for the lease applying the lessor accounting requirements.
The following accounting policies for operating leases and financial leases apply to the year 2020 and up
The Company classifies the lease that substantially transfers all the risks and rewards incidental to ownership of an
underlying asset as a finance lease. Other lease shall be classified as an operating lease.
(1) Accounting for operating leases
①When the Company as a lessee, the lease payments should be recognised into profit or loss of the reporting period over
the lease terms on a straight-line basis or the amount of usage. If the lessor provides the rent-free period, the Company
shall allocate total lease payment over the entire lease terms including the rent-free period using straight-line basis or other
reasonable method. Lease expense and the corresponding liabilities shall be recognised during the rent-free period. If
expenses relating to lease which should be borne by the Company are paid by the lessor of the assets, they shall be
deducted from the total lease expenses and the balances shall be amortised over the lease terms by the Company.
Initial direct costs relating to lease transactions incurred by the Company shall be recognised into current profit or loss.
Contingent rental, if included in the lease contract, shall be recognised into profit or loss upon occurrence.
②When the Company as a lessor, lease income should be recognised over the lease terms on a straight-line basis. If the
lessor provides the rent-free period, the Company shall allocate total lease income over the entire lease terms including the
rent-free period using straight-line basis or other reasonable method. Lease income shall be recognised during the rent-free
period. If expenses relating to leases which should be borne by the lessee of the assets are paid by the Company, they shall
be deducted from the total lease income and the balances shall be amortised over the lease terms by the Company.
Initial direct costs relating to lease transactions incurred by the Company shall be recognised into current profit or loss ; if
the amounts are material, they shall be capitalised and amortised over the lease terms on the same basis as the recognition
of lease income. Contingent rental, if included in the lease contract, shall be recognised into profit or loss upon occurrence.
(2) Accounting for finance leases
① When the Company as a lessee, at commencement of the lease, assets obtained through finance leases should be
recorded at the lower of their fair values and the present values of the minimum lease payments. The Company shall
recognise long-term payables at amounts equal to the minimum lease payments, and the differences shall be recognised as
unrecognised finance charges, which shall be amortised over the lease terms as finance expenses by using effective interest
rate method and recognised into finance cost.
Initial direct costs are recorded in the value of the leased assets.
The Company adopts the same depreciation policy for the leased assets as its self-owned fixed assets. Depreciation period
is determined according to the lease contract. If it is reasonably certain that the Company will obtain the ownership of the
assets at the expiration of the lease, the depreciation period will be the useful lives of the leased assets. If it is not certain
that the Company will obtain the ownership of the asset at the expiration of the lease, the depreciation period is the shorter
of the lease period and their useful lives.
② When the Company as a lessor, at commencement of the lease, lease receivables shall be measured at minimum lease
receivables plus initial direct costs relating to lease transactions and recognised as long-term receivable in the statement of
financial position. Unguaranteed residual values are recorded simultaneously. The differences between the total of
minimum lease receivable, initial direct cost and unguaranteed residual values and their present value shall be recognised
as unearned finance income, and shall amortised over the lease terms as lease income at the effective interest rate method.
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3.28 Regular Repair and Substantial Repair
In accordance with the relevant lease agreements, the Company needs to carry out regular maintenance work on certain
leased aircraft held by the Company in order to ensure that the aircraft are returned to the agreed state.I Except for to the
inspection preparation for the surrender of lease which has been recognized in the initial measurement of the right to use
assets on the commencement date of lease as stated in Note III, 27.(3), other overhaul costs related to the surrender of lease
shall be deducted during the lease period.The difference between the provision for overhauling and the actual outlay of
overhauling is included in the current profit and loss during the overhauling period.
3.29 Changes in Significant Accounting Policies and Accounting Estimates
3.29.1Significant changes in accounting polices
On December 7, 2018, the Ministry of Finance issued the revised Accounting Standards for Business Enterprises No. 21 -
Leasing (Accounting [2018] No. 35) (hereinafter referred to as the "New Leasing Standards"), requiring listed enterprises
in China to implement the new leasing standards from January 1, 2021.
With the resolution adopted by the 10th meeting of the 7th Board of Directors on March 25, 2021, the Company will begin
to implement the aforementioned new lease standards on January 1, 2021 and adjust relevant contents of the accounting
policy, as detailed in Note III and 27.
①The company as the lessee
The Company chooses to recognize the cumulative impact of initially applying this standard as an adjustment to the
opening balance of retained earnings and other related accounts of the financial statements at the date of initial application
(1 January 2021), not restating comparative information.
A. For leases previously classified as finance leases, the carrying amount of the right-of-use asset and the lease liability at
the date of initial application shall be the carrying amount of the lease asset and finance lease payable immediately before
that date measured applying previous standard.
B. For the operating lease prior to the first execution date, the Company shall measure the right to use assets in the
following ways:
For aircraft and engine leases, the book value of these Standards is assumed to be adopted on the commencement of the
lease period on the first execution date (the lessee's incremental borrowing rate on the first execution date is used as the
discount rate);
For leases other than aircraft and engine leases, an amount equal to the liabilities of the lease, subject to necessary
adjustments to the prepaid rents.
C. The Company tests whether the right-of-use asset has been impaired and accounts for the impairment loss according to
note 3 and 20 at the date of initial application.
The Company accounts for the operating lease for which the underlying asset is of low value in a simplified method in
which no right-of-use asset and lease liability need to be recognised.
②The company as the lessor
The company does not make transition adjustment for the lease as the lessor, and conducts accounting treatment according
to the new lease standards from the first execution date.
③ Sale and leaseback transactions
The Company does not reassess sale and leaseback transactions entered into beforethe date of initial application to
determine whether the transfer of theunderlying asset satisfies the requirements in note III and 24 to be accounted for as
asale.For the first execution of a future transaction, the Company, as seller and lessee, evaluates whether the transfer of
assets in a sale-leaseback transaction is a sale in accordance with the income Standards.
See Note III, 29 (3) for the cumulative impact of the above accounting policies.
3.29.2 Significant changes in accounting estimates
The company has no changes in accounting estimates in the current period.
3.29.3 Adjustments of the Financial Statements at the Beginning of the Reporting Period for the First-Year
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Adoption of New Leases
Consolidated Statement of Financial Position
Unit: Yuan, Currency: CNY
Items 31 December 2020 1 January 2021 Adjustment
Current assets:
Monetary funds 5,306,474,451.06 5,306,474,451.06
Held-for-trading financial assets
Derivative financial assets
Notes receivable
Accounts receivable 354,352,296.99 354,352,296.99
Accounts receivable financing
Prepayments 213,530,865.28 6,408,523.03 -207,122,342.25
Other receivables 159,397,943.13 159,397,943.13
Including: Interests receivable
Dividends receivable
Inventories 110,572,399.50 110,572,399.50
Contract assets
Held-for-sale assets
Non-current assets maturing within one
year
Other current assets 282,572,739.73 282,572,739.73
Total current assets 6,426,900,695.69 6,219,778,353.44 -207,122,342.25
Non-current assets:
Debt investments
Other debt investments
Long-term receivables
Long-term equity investments
Other equity instrument investment 541,789,406.63 541,789,406.63
Other non-current financial assets
Investment property
Fixed assets 6,904,082,012.35 5,313,062,985.24 -1,591,019,027.11
Construction in progress 5,770,696,951.56 5,770,696,951.56
Biological assets held for production
Oil and gas assets
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Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
Items 31 December 2020 1 January 2021 Adjustment
Right-of-use assets Not applicable 13,096,845,510.69 13,096,845,510.69
Intangible assets 118,699,980.33 118,699,980.33
Development expenditure
Goodwill 454,020.13 454,020.13
Deferred charges 641,782,578.43 641,782,578.43
Deferred tax assets 1,999,099,488.87 2,537,037,026.88 537,937,538.01
Other non-current assets
Total non-current assets 15,976,604,438.30 28,020,368,459.89 12,043,764,021.59
Total assets 22,403,505,133.99 34,240,146,813.33 11,836,641,679.34
Current liabilities
Short-term borrowings 2,001,111,111.11 2,001,111,111.11
Held-for-trading financial liabilities 862,955.67 862,955.67
Derivative financial liabilities
Notes payable 472,095,003.24 472,095,003.24
Accounts payable 2,543,319,300.31 2,137,248,727.24 -406,070,573.07
Advance from customers
Employee benefits payable 346,238,955.37 346,238,955.37
Taxes and fees payable 102,206,477.49 102,206,477.49
Other payables 635,865,961.62 635,865,961.62
Including: Interests payables
Dividend payables 602,306.96 602,306.96
Contract liabilities 445,400,801.19 445,400,801.19
Held-for-sale liabilities
Non-current liabilities due within one
321,577,566.89 2,804,980,819.75 2,483,403,252.86
year
Other current liabilities 31,100,597.66 31,100,597.66
Total current liabilities 6,899,778,730.55 8,977,111,410.34 2,077,332,679.79
Non-current liabilities:
Long-term borrowings 6,117,434,899.32 6,117,434,899.32
Bonds payable 1,000,000,000.00 1,000,000,000.00
Including: Preference share
Perpetual capital securities
Lease liabilities Not applicable 11,218,614,628.36 11,218,614,628.36
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Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
Items 31 December 2020 1 January 2021 Adjustment
Long-term payables 5,303,354,015.63 4,464,861,000.74 -838,493,014.89
Long-term employee benefits payable 254,025,000.00 254,025,000.00
Accrued liabilities 993,000,000.00 993,000,000.00
Deferred income 100,513,810.37 100,513,810.37
Deferred tax liabilities 158,137,753.91 158,137,753.91
Other non-current liabilities
Total non-current liabilities 12,933,465,479.23 24,306,587,092.70 11,373,121,613.47
Total liabilities 19,833,244,209.78 33,283,698,503.04 13,450,454,293.26
Shareholders' equity
Share capital 400,000,000.00 400,000,000.00
Other equity instruments
Including: Preference shares
Perpetual capital securities
Capital reserves 75,410,363.70 75,410,363.70
Less: Treasury stock
Other comprehensive income 322,552,319.90 322,552,319.90
Specific reserves
Surplus reserves 538,773,444.97 538,773,444.97
General risk reserves
Retained earnings 1,233,524,795.64 -380,287,818.28 -1,613,812,613.92
Equity attributable to shareholders of the
2,570,260,924.21 956,448,310.29 -1,613,812,613.92
parent
Minority interests
Total owners’ equity 2,570,260,924.21 956,448,310.29 -1,613,812,613.92
Total liabilities and owners' equity 22,403,505,133.99 34,240,146,813.33 11,836,641,679.34
Statement of Financial Position of the Parent Company
Unit: Yuan Currency: CNY
Items 31 December 2020 1 January 2021 Adjustment
Current assets:
Monetary funds 5,302,302,306.13 5,302,302,306.13
Held-for-trading financial assets
Derivative financial assets
Notes receivable
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Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
Items 31 December 2020 1 January 2021 Adjustment
Accounts receivable 350,673,304.20 350,673,304.20
Accounts receivable financing
Prepayments 213,297,372.67 6,175,030.42 -207,122,342.25
Other receivables 165,544,964.64 165,544,964.64
Including: Interests receivable
Dividend receivables
Inventories 108,682,699.25 108,682,699.25
Contract assets
Held-for-sale assets
Non-current assets maturing within one
year
Other current assets 282,309,117.39 282,309,117.39
Total current assets 6,422,809,764.28 6,215,687,422.03 -207,122,342.25
Non-current assets:
Debt investments
Other debt investments
Long-term receivables
Long-term equity investments 144,101,285.43 144,101,285.43
Other equity instrument investment 541,789,406.63 541,789,406.63
Other non-current financial assets
Investment property
Fixed assets 6,812,145,764.90 5,221,126,737.79 -1,591,019,027.11
Construction in progress 5,770,696,951.56 5,770,696,951.56
Biological assets held for production
Oil and gas assets
Right-of-use assets Not applicable 13,096,845,510.69 13,096,845,510.69
Intangible assets 106,310,248.22 106,310,248.22
Development expenditure
Goodwill
Deferred charges 641,779,766.13 641,779,766.13
Deferred tax assets 1,998,341,086.43 2,536,278,624.44 537,937,538.01
Other non-current assets
Total non-current assets 16,015,164,509.30 28,058,928,530.89 12,043,764,021.59
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Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
Items 31 December 2020 1 January 2021 Adjustment
Total assets 22,437,974,273.58 34,274,615,952.92 11,836,641,679.34
Current liabilities
Short-term borrowings 2,001,111,111.11 2,001,111,111.11
Held-for-trading financial liabilities 862,955.67 862,955.67
Derivative financial liabilities
Notes payable 472,095,003.24 472,095,003.24
Accounts payable 2,560,482,401.82 2,154,411,828.75 -406,070,573.07
Advance from customers
Employee benefits payable 341,473,984.67 341,473,984.67
Taxes and fees payable 99,360,041.47 99,360,041.47
Other payables 726,704,906.20 726,704,906.20
Including: Interests payables
Dividend payables 11,940.00 11,940.00
Contract liabilities 443,746,099.43 443,746,099.43
Held-for-sale liabilities
Non-current liabilities due within one
321,577,566.89 2,804,980,819.75 2,483,403,252.86
year
Other current liabilities 31,100,597.66 31,100,597.66
Total current liabilities 6,998,514,668.16 9,075,847,347.95 2,077,332,679.79
Non-current liabilities:
Long-term borrowings 6,117,434,899.32 6,117,434,899.32
Bonds payable 1,000,000,000.00 1,000,000,000.00
Including: Preference share
Perpetual capital securities
Lease liabilities Not applicable 11,218,614,628.36 11,218,614,628.36
Long-term payables 5,303,354,015.63 4,464,861,000.74 -838,493,014.89
Long-term employee benefits payable 254,025,000.00 254,025,000.00
Accrued liabilities 993,000,000.00 993,000,000.00
Deferred income 100,513,810.37 100,513,810.37
Deferred tax liabilities 157,224,899.02 157,224,899.02
Other non-current liabilities
Total non-current liabilities 12,932,552,624.34 24,305,674,237.81 11,373,121,613.47
Total liabilities 19,931,067,292.50 33,381,521,585.76 13,450,454,293.26
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Items 31 December 2020 1 January 2021 Adjustment
Shareholders' equity
Share capital 400,000,000.00 400,000,000.00
Other equity instruments
Including: Preference shares
Perpetual capital securities
Capital reserves 86,911,168.71 86,911,168.71
Less: Treasury stock
Other comprehensive income 322,552,319.90 322,552,319.90
Specific reserves
Surplus reserves 538,112,740.44 538,112,740.44
General risk preparation
Retained earnings 1,159,330,752.03 -454,481,861.89 -1,613,812,613.92
Total owners’ equity 2,506,906,981.08 893,094,367.16 -1,613,812,613.92
Total liabilities and owners' equity 22,437,974,273.58 34,274,615,952.92 11,836,641,679.34
3.29.4 For the first execution of new lease, the previous comparative data is retroactively adjusted
Note 1 .fixed assets, long-term payables, right to use assets, lease liabilities, prepayments, non-current liabilities due within
one year
On January 1, 2021, for the finance lease prior to the first execution date, the Company will reclassify the book value of
the finance lease fixed asset originally included in the fixed asset of CNY 1,591,019,027.11 to the right-to-use
asset.Reclassify the payable finance lease amount of CNY 1,048,235,448.82 previously included in the long-term payables
to lease liabilities.The non-current liability due within one year CNY 181,264,490.05 payable finance lease is reclassified
as non-current liability due within one year - lease liability.
On January 1, 2021, for the operating leases prior to the first execution date, for aircraft and engine leases, the Company
will measure the use right assets on the basis of the book value of each lease assuming that the new lease criteria will be
adopted as of the commencement date of the lease term, in an amount of CNY 11,484,632,839.77;At the same time, the
advance payment was reduced by CNY 207,122,342.25.For the lease of a leased building, the Company uses an amount
equal to the lease liability and recognizes the use right asset as CNY 21,193,643.81.
3.30 Correction of Prior Period Errors
There is no significant correction of prior period errors for the Company during the reporting period.
3.31 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 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
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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:
3.31.1 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.
3.31.2 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.
3.31.3 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.
3.31.4 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.
3.31.5 Depreciation and Amortization
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Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
The Company shall, after considering the residual value of fixed assets and assets with the right to use, deduct the
depreciation within their service life by the straight-line method or the workload method, and amortize intangible assets
within their service life by the straight-line method after considering the residual value of intangible assets.The Company
periodically reviews the service life to determine the amount of depreciation and amortization expense to be charged to
each reporting period.Service life is determined by the Company based on past experience with similar assets combined
with anticipated technological updates.If there is a material change in previous estimates, an adjustment is made to
depreciation and amortization expense in future periods.
3.31.6 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.
3.31.7 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.
3.31.8 Aircraft Operating Lease and Engine Overhaul Compensation
The provision for overhauling of the aircraft shall be accrued during the lease period and recorded into the profit and loss
of the current period. The calculation of the provision for overhauling of the aircraft involves a number of variable factors
and assumptions, including the estimated use of the aircraft and the estimated maintenance cost, etc.These estimates are
based to a large extent on historical data from previous repairs of aircraft and engines of the same or similar type.Different
judgments and estimates may affect the amount of the overhaul-rent-back compensation accrual and the current profit and
loss.
Note 4.TAXATION
4.1 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 and deductible input tax for the
period, and the tax rates are 6%, 9%, 13% (Note 2). The output tax is calculated using the
Value added tax
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
Property tax
specific 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.
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Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
Tax Tax rate (%)
Civil aviation development fund shall be calculated using the collection standard of the
relevant category of flight routes, maximum departure weight and flight distance adopted
Civil aviation
by the civil aviation industry. According to “Interim measures for the administration of the
development Fund
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 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: As a taxpayer in production and living service industry, from 1 April 2019 to 31 December 2021, the Company can
deduct the taxable amount according to the current deductible input tax plus 10% of the current deductible input tax.
4.2 Tax Incentives and Approvals
4.2.1. 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, Macao, and Taiwan, as well as transportation services provided in Hongkong,
Macao, 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》)..
4.2.2. According to the "Announcement of the State Administration of Taxation on The Enterprise Income Tax Issues
related to the In-depth Implementation of the Strategy of Western Development"(《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)and the "Announcement of the State
Administration of Finance and Taxation and the National Development and Reform Commission on the Continuation of
the Enterprise Income Tax Policy of the Western Development"(《财政部 税务总局 国家发展改革委关于延续西部大开
发企业所得税政策的公告》)(Announcement of the Ministry of Finance no. 23, 2020),The Chongqing branch of the
Company meets the conditions of reducing and reducing the western development, and can enjoy the preferential policy of
reducing the enterprise income tax by 15%.
4.2.3.According to the Announcement on Abolishment of Port Construction Fees and Adjustment of Relevant Policies of
The Civil Aviation Development Fund ( 关于取消港口建设费和调整民航发展基金有关政策的公告》 (Announcement
of the Ministry of Finance No. 8, 2021), starting from April 1, 2021, the collection standard of the civil aviation
Development Fund payable by airlines,A further 20% reduction will be made on top of the 50% cut in the Notice of the
Ministry of Finance on Adjusting Policies related to Some Government-managed Funds 《财政部关于调整部分政府性基
金有关政策的通知》) (Caishui [2019] No. 46).
Note 5 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Unless otherwise indicated, "Beginning of the period" means 31 December 2020 and "End of the period" means 30 June
2021;"Current period" means the period from January to June 2021 and " Prior period" means the period from January to
76
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
June 2020.
5.1 Monetary funds
Item 30 June 2021 31 December 2020
Cash at hand: 74,734.86 225,522.11
Bank deposit: 5,845,151,556.61 5,306,248,928.95
Other monetary funds
Total 5,845,226,291.47 5,306,474,451.06
Including: the total amount of deposit abroad 5,045,334.59 5,411,252.96
5.2 Accounts receivable
5.2.1 Disclosure by Age
Age 30 June 2021 31 December 2020
Within 1 year 400,953,910.81 283,442,317.86
1 to 2 years 39,181,768.48 52,253,563.71
2 to 3 years 46,601,786.05 34,123,063.16
3 to 4 years
4 to 5 years
Over 5 years 3,186,437.70 3,186,437.70
Subtotal 489,923,903.04 373,005,382.43
Less: provision for bad debt 21,491,623.03 18,653,085.44
Total 468,432,280.01 354,352,296.99
5.2.2 Disclosure by Category
① 30June 2021 (Provision using simple model)
30 June 2021
Book balance Provision for bad debt
Category
Proportion Provision Carrying amount
Amount Amount
(%) ratio (%)
Accounts receivable subject
to individual impairment 2,765,908.05 0.56 2,765,908.05 100.00
assessment
Accounts receivable subject
to group impairment 487,157,994.99 99.44 18,725,714.98 3.84 468,432,280.01
assessment
Total 489,923,903.04 100.00 21,491,623.03 4.39 468,432,280.01
77
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
(Continued)
31 December 2020
Book balance Provision for bad debt
Category
Proportion Provision Carrying amount
Amount Amount
(%) ratio (%)
Accounts receivable subject
to individual impairment 2,765,908.05 0.74 2,765,908.05 100.00
assessment
Accounts receivable subject
to group impairment 370,239,474.38 99.26 15,887,177.39 4.29 354,352,296.99
assessment
Total 373,005,382.43 100.00 18,653,085.44 5.00 354,352,296.99
Detailed explanation of provision for bad debt:
② Accounts receivable subject to individual impairment assessment as of 30 June 2021
30 June 2021
Category Probision for bad Provision ratio
Book balance Reason
debt (%)
Impairment upon
Kun Peng Airlines Co., Ltd 1,849,400.00 1,849,400.00 100.00 individual assessment
Impairment upon
CR Airways 916,508.05 916,508.05 100.00 individual assessment
Total 2,765,908.05 2,765,908.05 100.00
③ Accounts receivable subject to group impairment assessment as of 30 June 2021
30 June 2021
Category
Book balance Probision for bad debt Provision ratio (%)
Amounts due from the
17,492,906.21
clearing center
Amounts due from the
89,242,872.86
aviation association
Amounts due from related
5,907,916.38
parties
Other receivables 374,514,299.54 18,725,714.98 5.00
Total 487,157,994.99 18,725,714.98 3.84
The Company calculate provision of bad debt according to the combination of credit risk characteristics and the expected
loss amount.
④ Accounts receivable with individually significant balance and provision for bad debt recognized individually as of 31
December 2020
78
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
31 December 2020
Entity name Book balance Provision for bad Provision ratio Reason
debt (%)
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 2,765,908.05 2,765,908.05 100.00
⑤Accounts receivable with individually insignificant balance but provision for bad debt recognized individually as of 31
December 2020
31 December 2020
Entity name
Book balance Provision for bad debt Book balance
Amounts due from the
10,455,297.15
clearing center
Amounts due from the
31,724,360.89
aviation association
Amounts due from related
10,316,268.77
parties
Other receivables 317,743,547.57 15,887,177.39 5.00
Total 370,239,474.38 15,887,177.39 4.29
The Company calculate provision of bad debt according to the combination of credit risk characteristics and the expected
loss amount.
5.2.3 Changes of Provision for Bad Debt During the Reporting Period
Changes during the reporting period
Category 31 December 2020 30 June 2021
Provision Recovery or reversal Write-off
Accounts receivable
subject to individual
2,765,908.05 2,765,908.05
impairment
assessment
Accounts receivable
subject to impairment 15,887,177.39 2,838,537.59 18,725,714.98
assessment by group
Total 18,653,085.44 2,838,537.59 21,491,623.03
5.2.4 The company has no actual write-off accounts receivable in the current period.
5.2.5 According to the ending balance collected by the debtor, the summary amount of the top five accounts receivable is
CNY 242,101,472.06, accounting for 49.42% of the total ending balance of accounts receivable, and the corresponding
summary amount of the ending balance of bad debt provision is CNY 7,642,929.96.
5.2.6 The Company has no assets or liabilities arising from continuing involvement in transferred accounts receivable.
79
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
5.2.7 The Company has no assets or liabilities arising from continuing involvement in transferred accounts receivable.
5.3 Prepayments
5.3.1 Disclosure by Age
30 June 2021 31 December 2020
Age
Amount % Amount %
Within 1 year 10,441,974.40 98.77 213,189,480.25 99.84
1 to 2 years 90,265.47 0.85 151,385.03 0.07
2 to 3 years 31,017.15 0.29 120,000.00 0.06
Over 3 years 10,000.00 0.09 70,000.00 0.03
Total 10,573,257.02 100.00 213,530,865.28 100.00
The Company has no prepayments with an age of over 1 year and significant amounts.
5.4 Other receivables
5.4.1 Other Receivables by Category
Items 30 June 2021 31 December 2020
Interest receivable
Dividend receivable 208,728.00
Other receivables 215,690,237.10 159,397,943.13
Total 215,898,965.10 159,397,943.13
5.4.2 Dividend Receivable
①Listed by the invested units
Investee 30 June 2021 31 December 2020
TravelSky Technology Limited 208,728.00
Total 208,728.00
②At the end of the period, there is no significant dividend receivable aging more than 1 year.
③There is no provision for bad debts in the current period.
5.4.3 Other Receivables
①Other receivables by age
Age 30 June 2021 31 December 2020
Within one year 178,459,060.75 129,289,406.75
1-2 years 16,578,568.84 5,366,941.18
2-3 years 10,073,518.33 12,340,149.83
3-4 years 3,977,588.36 4,004,091.99
4-5 years 614,731.31 803,055.01
Over 5 years 111,448,023.12 113,073,237.70
Subtotal 321,151,490.71 264,876,882.46
Less: provision for bad debt 105,461,253.61 105,478,939.33
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Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
Age 30 June 2021 31 December 2020
Total 215,690,237.10 159,397,943.13
②Other receivables by nature
Nature 30 June 2021 31 December 2020
Deposits receivable 118,775,572.10 63,646,894.09
Amounts due from related parties 124,185,199.43 122,685,554.68
Other receivables 78,190,719.18 78,544,433.69
Subtotal 321,151,490.71 264,876,882.46
Less: provision for bad debt 105,461,253.61 105,478,939.33
Total 215,690,237.10 159,397,943.13
③ Other receivables by bad debt provision method
A．Provision for bad debts recognized based on three stages model as of 30 June 2021 is as follows:
Provision for bad debt in the first stage as of 30 June 2021:
Lifetime
Provision for Carrying
Category Book balance expected credit Reason
bad debt amount
losses rate (%)
Provision for bad debt
recognized individually
Provision for bad debt
219,599,773.06 1.78 3,909,535.96 215,690,237.10
recognized collectively
Including: Deposits No significant increase
118,775,572.10 118,775,572.10
receivable on credit risk
Amounts due No significant increase
22,633,481.78 22,633,481.78
from related parties on credit risk
No significant increase
Other receivables 78,190,719.18 5.00 3,909,535.96 74,281,183.22
on credit risk
Total 219,599,773.06 1.78 3,909,535.96 215,690,237.10
As of 30 June 2021, the Company have no other receivables recognized in the second Stage.
Provision for bad debt in the third stage as of 30 June 2021:
Lifetime expected credit Provision for Carrying
Category Book balance Reason
losses rate (%) bad debt amount
Provision for bad debt
101,551,717.65 100.00 101,551,717.65
recognized individually
Shandong Rainbow Credit
101,551,717.65 100.00 101,551,717.65
Commercial Jet Co., Ltd impairment has
81
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
Lifetime expected credit Provision for Carrying
Category Book balance Reason
losses rate (%) bad debt amount
occurred
Total 101,551,717.65 100.00 101,551,717.65
B．Provision for bad debt using incurred loss model as of 31 December 2020:
Provision for bad debt in the first stage as of 31 December 2020:
Lifetime
Provision for Carrying
Category Book balance expected credit Reason
bad debt amount
losses rate (%)
Provision for bad debt
recognized individually
Provision for bad debt
163,325,164.81 2.40 3,927,221.68 159,397,943.13
recognized collectively
Including: Deposits No significant increase
63,646,894.09 63,646,894.09
receivable on credit risk
Amounts due No significant increase
21,133,837.03 21,133,837.03
from related parties on credit risk
No significant increase
Other receivables 78,545,433.69 5.00 3,927,221.68 74,617,212.01
on credit risk
Total 163,325,164.81 2.40 3,927,221.68 159,397,943.13
As of 31 December 2020, the Company have no other receivables recognized in the second Stage.
Provision for bad debt in the third stage as of 31 December 2020:
Lifetime expected Provision for bad Carrying
Category Book balance Reason
credit losses rate (%) debt amount
Provision for bad debt
101,551,717.65 100.00 101,551,717.65
recognized individually
Credit
Shandong Rainbow
101,551,717.65 100.00 101,551,717.65 impairment
Commercial Jet Co., Ltd
has occurred
Total 101,551,717.65 100.00 101,551,717.65
④ Changes of provision for bad debt during the reporting period
Changes during the reporting period
Category 31 December 2020 Recovery or 30 June 2021
Provision Write-off
reversal
Other receivables of
101,551,717.65 101,551,717.65
individual significance and
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Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
Changes during the reporting period
Category 31 December 2020 Recovery or 30 June 2021
Provision Write-off
reversal
subject to individual
impairment assessment
Other receivables subject to
impairment assessment by
3,927,221.68 17,685.72 3,909,535.96
credit risk characteristics of a
group
Total 105,478,939.33 17,685.72 105,461,253.61
⑤There are no written off to other receivables during the reporting period.
⑥Top five closing balances by entity
Proportion of
Balance at 30 June the balance to Provision for bad
Entity nae Nature Age
2021 the total other debt
receivables (%)
Shandong Rainbow Related
101,551,717.65 Over 5 years 31.62 101,551,717.65
Commercial Jet Co., Ltd. party
Debtor #1 Deposits 83,428,265.05 Within 2 years 25.98
Debtor #2 Others 15,408,879.30 Within 1 year 4.80 770,443.97
Shandong Air New Media Related
14,268,050.50 Within 1 year 4.44
Co., Ltd. party
Debtor #3 Others 8,860,717.14 Within 1 year 2.76
Total 223,517,629.64 69.60 102,322,161.62
⑦ The Company has no other receivables relating to government grants.
⑧ The Company has no other receivables relating to derecognition of other receivables for transfer of financial assets.
⑨ The Company has no assets or liabilities arising from continuing involvement in transferred other receivables.
5.5 Inventories
5.5.1 Inventories by Category
30 June 2021 31 December 2020
Items Provision for Carrying Provision for
Book balance Book balance Carrying amount
impairment amount impairment
Consumable
114,531,718.89 4,227,205.99 110,304,512.90 109,543,973.05 4,227,205.99 105,316,767.06
air equipment
Low-value 2,463,613.75 2,463,613.75 2,325,185.14 2,325,185.14
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Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
30 June 2021 31 December 2020
Items Provision for Carrying Provision for
Book balance Book balance Carrying amount
impairment amount impairment
consumables
Materials 2,201,782.24 2,201,782.24 2,930,447.30 2,930,447.30
Total 119,197,114.88 4,227,205.99 114,969,908.89 114,799,605.49 4,227,205.99 110,572,399.50
5.5.2 Provision for Impairment
Increase during the Decrease during the reporting
31 December reporting period period
Items 30 June 2021
2020 Reversal or
Provision Others Others
written-down
Consumable air
4,227,205.99 4,227,205.99
equipment
Total 4,227,205.99 4,227,205.99
5.6 Other current assets
Items 30 June 2021 31 December 2020
VAT deductible 251,905,607.02 282,572,739.73
Total 251,905,607.02 282,572,739.73
5.7 Long-term equity investment
Changes in the current period (+, -)
Investment gains
Other
31 December and losses Other
Investees Provision b/f Additional Investment comprehens
2020 recognized under changes
investment reduction ive income
the equity in equity
adjustment
method
Associates
Shandong
Rainbow
22,500,000.00 22,500,000.00
Commercial Jet
Co., Ltd.
Total 22,500,000.00 22,500,000.00
(Continued)
Changes in the current period (+, -)
Declared cash Provision as at
Investees Provision 30 June 2021
dividends or Others 30 June 2021
recognized
profits
84
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
Changes in the current period (+, -)
Declared cash Provision as at
Investees Provision 30 June 2021
dividends or Others 30 June 2021
recognized
profits
Associates
Shandong Rainbow Commercial Jet
22,500,000.00 22,500,000.00
Co., Ltd.
Total 22,500,000.00 22,500,000.00
5.8 Other equity instrument investment
5.8.1 General Information of Other Equity Instrument Investment
Items 30June 2021 31 December 2020
Non-trading equity instrument investment 517,002,105.83 541,789,406.63
Total 517,002,105.83 541,789,406.63
5.8.2 General Information of Non-Trading Equity Instrument Investment
Other
Reasons for being Reasons for other
Dividend comprehensive
measured at fair value comprehensive
income in Cumulative Cumulative income
Item and its changes are income transferred
current gain loss transferred into
included in other into retained
period retained
comprehensive income earnings
earnings
TravelSky Non-trading financial
208,728.00 175,242,490.82
Technology Limited assets
Non-trading financial
Sichuan Airlines 251,758,061.96
assets
Jinan International Non-trading financial
1,649,453.05
Airport assets
Total 208,728.00 428,650,005.83
5.9 Fixed assets
5.9.1 Fixed Assets by Category
Items 30 June 2021 31 December 2020
Fixed assets 6,302,939,376.67 6,904,082,012.35
Disposal of fixed assets
Total 6,302,939,376.67 6,904,082,012.35
85
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
5.9.2 Fixed Assets
①General information of fixed assets
Houses and Transportation
Category Aircrafts and engines High-value rotables Others Total
buildings vehicles
1. Cost:
1.1 31 December 2020 572,253,146.88 12,379,288,425.67 764,930,369.31 73,914,807.79 240,054,880.79 14,030,441,630.44
Changes of accounting policy -2,128,488,287.78 -2,128,488,287.78
1 January 2021 572,253,146.88 10,250,800,137.89 764,930,369.31 73,914,807.79 240,054,880.79 11,901,953,342.66
1.2 Increased in current period 1,065,938,721.88 253,642,207.33 13,363,461.45 914,867.28 5,070,032.98 1,338,929,290.92
(1) Purchase 268,112.00 253,642,207.33 13,363,461.45 914,867.28 5,070,032.98 273,258,681.04
(2) Transferred from construction-in-progress 1,065,670,609.88 1,065,670,609.88
(3) Transferred from merger and acquisitions
(4) Others
1.3 Decreased in current period 156,678,561.62 281,764.95 824,427.00 2,618,918.51 160,403,672.08
(1) Disposal or scrap 156,678,561.62 281,764.95 824,427.00 2,618,918.51 160,403,672.08
(2) Others
1.4 Balance as at 30June 2021 1,638,191,868.76 10,347,763,783.60 778,012,065.81 74,005,248.07 242,505,995.26 13,080,478,961.50
2. Accumulated depreciation
2.1 31 December 2020 150,076,855.72 6,345,506,840.16 422,221,950.34 48,373,090.74 157,983,058.20 7,124,161,795.16
Changes of accounting policy -537,469,260.67 -537,469,260.67
1 January 2021 150,076,855.72 5,808,037,579.49 422,221,950.34 48,373,090.74 157,983,058.20 6,586,692,534.49
2.2 Increased in current period 16,441,971.01 277,684,768.52 41,720,988.77 2,681,509.84 10,041,858.40 348,571,096.54
(1) Accrual 16,441,971.01 277,684,768.52 41,720,988.77 2,681,509.84 10,041,858.40 348,571,096.54
(2) Transferred from merger and acquisitions
86
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
Houses and Transportation
Category Aircrafts and engines High-value rotables Others Total
buildings vehicles
2.3 Decreased in current period 156,678,561.62 171,899.79 726,779.61 2,340,471.30 159,917,712.32
(1) Disposal or scrap 156,678,561.62 171,899.79 726,779.61 2,340,471.30 159,917,712.32
(2) Others
2.4 Balance as at 30June 2021 166,518,826.73 5,929,043,786.39 463,771,039.32 50,327,820.97 165,684,445.30 6,775,345,918.71
3. Impairment provision
3.1 Balance as at 31 December 2020 2,197,822.93 2,197,822.93
Changes of accounting policy
1 January 2021 2,197,822.93 2,197,822.93
3.2 Increased in current period
(1) Accrual
(2) Transferred from merger and acquisitions
3.3 Decreased in current period 4,156.81 4,156.81
(1) Disposal or scrap 4,156.81 4,156.81
(2) Others
3.4 Balance as at 30June 2021 2,193,666.12 2,193,666.12
4 Carrying amount of fixed assets
4.1 Carrying amount as at 30 June 2021 1,471,673,042.03 4,418,719,997.21 312,047,360.37 23,677,427.10 76,821,549.96 6,302,939,376.67
4.2 Carrying amount as at 31 December 2020 422,176,291.16 6,033,781,585.51 340,510,596.04 25,541,717.05 82,071,822.59 6,904,082,012.35
87
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
②Fixed assets leased out under operating leases.
Item Carrying value as at 30 June 2021
Yantai operation comprehensive
18,162,711.95
building
Total 18,162,711.95
③Fixed assets without certificate of title
Items Carrying amount Reason
Jinan cargo arrival and departure Land rented from Jinan Air Control,
10,767,766.42
warehouses not eligible for ownership registration
Land use rights belonging to Shandong
Buildings of Jinping Food Co., Ltd. 9,641,359.16 SDA Group, not eligible for ownership
registration
5.10 Construction in progress
5.10.1 Construction in Progress by Category
Items 30 June 2021 31 December 2020
Construction in progress 4,865,466,051.71 5,770,696,951.56
Construction material
Total 4,865,466,051.71 5,770,696,951.56
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Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
5.10.2 Construction in Progress
① General Information of Construction in Progress
30 June 2021 31 December 2020
Items Provision for Provision for
Book balance Carrying amount Book balance Carrying amount
impairment impairment
Factory building project 14,875,322.70 14,875,322.70 920,262,448.04 920,262,448.04
Prepayment for aircrafts introduction
4,845,889,181.13 4,845,889,181.13 4,845,805,623.68 4,845,805,623.68
project
Construction of information system 779,580.00 779,580.00 706,911.96 706,911.96
Simulator 3,921,967.88 3,921,967.88 3,921,967.88 3,921,967.88
Total 4,865,466,051.71 4,865,466,051.71 5,770,696,951.56 5,770,696,951.56
② Changes in significant projects of construction in progress
Increase during the Transfer to fixed Decrease during the
Projects Budget 31 December 2020 30 June 2021
reporting period asset reporting period
Jiaodong airport project 1,100,000,000.00 907,818,189.40 157,852,420.48 1,065,670,609.88
Aircraft asset introduction project 9,937,456,340.04 4,845,805,623.68 83,557.45 4,845,889,181.13
Total 11,037,456,340.04 5,753,623,813.08 157,935,977.93 1,065,670,609.88 4,845,889,181.13
(Continued）
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Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
Including: Including:
Including: cost of
Weight of cost to Cumulative Transferred into Transferred into Capitalisation rate
borrowing capitalized
Items date in budgeted Stage of completion cost of borrowing leaseback assets fixed assets applicable to the Source of finance
during the current
cost capitalized during the current during the current current period
period
period period
Jiaodong airport
96.88 completed Working capital
project
Aircraft asset Loans from
introduction project 48.76 Not applicable 134,270,401.12 financial
institution
Total 134,270,401.12
90
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
5.11 Right-of-use assets
Houses and
Items Aircrafts and engines Total
buildings
1. Cost:
1.1 31 December 2020 — — —
Changes of accounting policy 21,193,643.81 27,956,907,834.86 27,978,101,478.67
1 January 2021 21,193,643.81 27,956,907,834.86 27,978,101,478.67
1.2 Increased in current period 2,747,086.38 157,846,816.31 160,593,902.69
1.3 Decreased in current period
1.4 Balance as at 30 June 2021 23,940,730.19 28,114,754,651.17 28,138,695,381.36
2. Accumulated depreciation
2.1 31 December 2020 — — —
Changes of accounting policy 14,881,255,967.98 14,881,255,967.98
1 January 2021 14,881,255,967.98 14,881,255,967.98
2.2 Increased in current period 5,339,453.26 1,003,500,519.18 1,008,839,972.44
2.3 Decreased in current period
2.4 Balance as at 30June 2021 5,339,453.26 15,884,756,487.16 15,890,095,940.42
3. Impairment provision
3.1 31 December 2020 — — —
Changes of accounting policy
1 January 2021
3.2 Increased in current period
3.3 Decreased in current period
3.4 Balance as at 30June 2021
4. Carrying amount
4.1 Carrying amount as at 30 June 2021 18,601,276.93 12,229,998,164.01 12,248,599,440.94
4.2 Carrying amount as at 1 January 2021 21,193,643.81 13,075,651,866.88 13,096,845,510.69
5.12 Intangible assets
5.12.1 General Information of Intangible Assets
Items Land rights Software Total
1. Cost:
1.1 Balance as at 31 December 2020 108,347,341.13 70,177,954.74 178,525,295.87
1.2 Increased in current period 1,018,867.91 1,018,867.91
(1) Purchase 1,018,867.91 1,018,867.91
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Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
Items Land rights Software Total
(2) Diversion of construction
(3) Increased from business combination
1.3 Decreased in current period
(1) Disposal
1.4 Balance as at 30 June 2021 108,347,341.13 71,196,822.65 179,544,163.78
2. Accumulated amortization
2.1 Balance as at 31 December 2020 23,199,141.01 36,626,174.53 59,825,315.54
2.2 Increased in current period 1,201,791.44 6,175,539.07 7,377,330.51
(1) Accrual 1,201,791.44 6,175,539.07 7,377,330.51
2.3 Decreased in current period
(1) Disposal
2.4 Balance as at 31 December 2020 24,400,932.45 42,801,713.60 67,202,646.05
3. Impairment provision
3.1 Balance as at 31 December 2020
3.2 Increased in current period
(1) Accrual
3.3 Decreased in current period
(1) Disposal
3.4 Balance as at 30 June 2021
4. Carrying amount
4.1 Carrying amount as at 30 June 2021 83,946,408.68 28,395,109.05 112,341,517.73
4.2 Carrying amount as at 31 December 2020 85,148,200.12 33,551,780.21 118,699,980.33
5.12.2 The Company has no intangible assets arising from internal research and development project as at the end of
reporting period.
5.12.3 The Company has no land use rights without certificate of title as at the end of reporting period.
5.13 Goodwill
5.13.1 Initial Recognition of Goodwill
Increase during the Decrease during the
Investees or matters that 31 December reporting period reporting period
30 June 2021
goodwill arising from 2020 Business
Others Disposal Others
combination
Qingdao Feisheng 10,220,816.22 10,220,816.22
Shandong Jinping Food Co., 454,020.13 454,020.13
92
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
Increase during the Decrease during the
Investees or matters that 31 December reporting period reporting period
30 June 2021
goodwill arising from 2020 Business
Others Disposal Others
combination
Ltd.
Total 10,674,836.35 10,674,836.35
5.13.2 Provision for Impairment
Increase during the Decrease during the
Investees or matters that 31 December
reporting period reporting period 30 June 2021
goodwill arising from 2020
Provision Others Disposal Others
Qingdao Feisheng 10,220,816.22 10,220,816.22
Total 10,220,816.22 10,220,816.22
5.14 Deferred charges
Decrease during the reporting
Increase during
period
Items 31 December 2020 the reporting 30June 2021
Other
period Amortization
decrease
Pilot training 620,401,352.79 27,335,123.60 54,948,794.35 592,787,682.04
Decoration expenditure 407,277.20 406,339.90 937.30
Modification costs for
20,973,948.44 693,983.22 2,387,622.30 19,280,309.36
aircraft leasing
Total 641,782,578.43 28,029,106.82 57,742,756.55 612,068,928.70
5.15 Deferred tax assets and deferred tax liabilities
5.15.1 Deferred Tax Assets Before Offsetting
30 June 2021 31 December 2020
Deductible
Items Deductible temporary
temporary Deferred tax assets Deferred tax assets
differences
differences
Provision for bad debt 126,952,876.64 31,738,219.16 124,132,024.77 31,033,006.20
Impairment provision for
4,227,205.99 1,056,801.50 4,227,205.99 1,056,801.50
inventories
Impairment provision for
2,193,666.12 548,416.53 2,197,822.93 549,455.73
fixed assets
Fair value movement of
403,491.71 100,872.93 862,955.67 215,738.92
financial liabilities held for
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Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
30 June 2021 31 December 2020
Deductible
Items Deductible temporary
temporary Deferred tax assets Deferred tax assets
differences
differences
trading
Provisions 5,312,034,238.91 1,328,008,559.73 5,022,551,127.92 1,255,637,781.98
Employment benefits payable 63,178,119.86 15,794,529.97 39,140,304.16 9,785,076.04
Deferred income 17,743,657.91 4,435,914.48 19,074,728.93 4,768,682.23
Right-of-use assets related
2,325,064,998.51 581,266,249.63
impact
Deductible losses 3,495,230,041.08 873,807,510.28 2,784,211,785.04 696,052,946.27
Total 11,347,028,296.73 2,836,757,074.21 7,996,397,955.41 1,999,099,488.87
5.15.2 Deferred Tax Liabilities Before Offsetting
30 June 2021 31 December 2020
Items Deductible temporary Deferred tax Deductible temporary Deferred tax
differences liabilities differences liabilities
Asset evaluation increment
from Enterprise merger under 3,390,603.88 847,650.97 3,651,419.57 912,854.89
the different control
Changes in fair value of other
equity instruments 428,650,005.83 107,162,501.46 453,437,306.63 113,359,326.66
investment
Differences of fixed assets d
epreciation between accounti 191,645,120.12 47,911,280.03
ng and taxation
Others (Note) 124,547,349.16 31,136,837.29 175,462,289.43 43,865,572.36
Total 748,233,078.99 187,058,269.75 632,551,015.63 158,137,753.91
Note: According to the Announcement of the State Administration of Taxation no. 6, 2021, enterprises in January 1, 2018
to December 31, 2020 (extended to December 31, 2023) period of newly purchased equipment, appliances, unit value is
not more than 5 million yuan, allowed one-time into the current cost expenses in the calculation of taxable income
deducted.
5.16 Other Non-Current Assets
Items 30 June 2021 31 December 2020
Prepayment for Land Purchases 344,688,942.00
94
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Total 344,688,942.00
5.17 Short-term borrowings
5.17.1 Disclosure of Short-Term Borrowings by Category
Items 30 June 2021 31 December 2020
Credit loan 2,401,333,333.33 2,001,111,111.11
Total 2,401,333,333.33 2,001,111,111.11
5.17.2 The Company has no overdue short-term borrowings.
5.18 Held-for-trading financial liabilities
Increase Decrease
during the during the
Items 31 December 2020 30 June 2021
reporting reporting
period period
Financial liabilities designated at fair
862,955.67 459,463.96 403,491.71
value through profit or loss
Including: Interest rate swaps 862,955.67 459,463.96 403,491.71
Total 862,955.67 459,463.96 403,491.71
5.19 Notes payable
Category 30 June 2021 31 December 2020
Commercial acceptance bills 15,126,110.99 49,605,767.94
Bank acceptance bills 150,744,034.48 422,489,235.30
Total 165,870,145.47 472,095,003.24
The Company has no notes payable matured but not yet paid as at the reporting date.
5.20 Accounts payable
5.20.1 Accounts Payable by Nature
Items 30 June 2021 31 December 2020
Aircraft maintenance costs 103,805,508.55 492,193,935.93
Fuel cost 668,740,746.78 197,183,769.59
Landing fee 510,942,904.93 478,496,820.67
Aircraft service cost 674,468,571.54 549,082,156.02
Flight catering 131,313,817.16 125,530,208.70
Computer booking fee 153,085,476.42 325,614,566.13
Lease rental 52,956,997.69 96,262,308.48
Others 363,408,941.63 278,955,534.79
Total 2,658,722,964.70 2,543,319,300.31
5.20.2 No significant accounts payable at the end of the period with an aging of more than one year
95
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
5.21 Contract liabilities
Items 30 June 2021 31 December 2020
Ticket clearing 365,062,150.02 314,216,701.60
Advanced payment for tickets 34,985,466.63 99,366,787.75
Others 29,184,982.77 31,817,311.84
Total 429,232,599.42 445,400,801.19
The Company has no significant contract liabilities with aging of over one year as at the reporting date.
5.22 Employee benefits payable
5.22.1 Details of Employee Benefits Payable
31 December Increase during the Decrease during the
Items 30 June 2021
2020 reporting period reporting period
1. Short-term employee benefits 346,238,955.37 1,562,796,870.91 1,344,221,590.55 564,814,235.73
2. Post-employment benefits –
166,012,267.38 166,012,267.38
defined contribution plans
3. Termination benefits 577,093.70 577,093.70
4. Other long-term employee benefits
within one year
Total 346,238,955.37 1,729,386,231.99 1,510,810,951.63 564,814,235.73
5.22.2 Short-Term Employee Benefits
31 December Increase during the Decrease during the
Items 30 June 2021
2020 reporting period reporting period
1. Wages, salaries and subsidies 306,835,731.58 1,370,813,859.75 1,195,276,159.52 482,373,431.81
2. Employee welfare 10,538,815.26 10,538,815.26
3. Social insurance: 66,839,552.68 66,839,552.68
Including: Medical insurance 63,478,325.32 63,478,325.32
Employment injury
3,361,227.36 3,361,227.36
insurance
Maternity insurance
4. Housing provident fund 58,925,244.57 58,925,244.57
5. Labour union fee and employee
39,403,223.79 37,299,398.65 12,641,818.52 64,060,803.92
education fee
6. Short-term paid absences 18,380,000.00 18,380,000.00
7. Short-term profit-sharing plan
Total 346,238,955.37 1,562,796,870.91 1,344,221,590.55 564,814,235.73
5.22.3 Defined Contribution Plans
96
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
Increase during
Decrease during the
Items 31 December 2020 the reporting 30 June 2021
reporting period
period
Post-employment benefits:
1. Basic pension 111,353,987.43 111,353,987.43
2. Unemployment insurance 4,695,173.95 4,695,173.95
3. Annuity payment 49,963,106.00 49,963,106.00
Total 166,012,267.38 166,012,267.38
5.23 Taxes and fees payable
Items 30 June 2021 31 December 2020
VAT 1,525,729.63 1,476,083.36
Urban construction and
230,976.87 160,601.55
maintenance tax
Education surcharge 169,934.59 118,517.68
Enterprise income tax 761,837.22 944,983.82
Property tax 172,992.36
Land tax 537,933.60 179,311.20
Personal income tax 7,069,949.89 9,353,560.27
Stamp duty 1,200,796.90 1,380,000.00
Civil aviation development fund 96,032,020.97 88,404,867.39
Others 15,559.86
Total 107,529,179.67 102,206,477.49
5.24 Other payables
5.24.1 Other Payables by Category
Items 30 June 2021 31 December 2020
Interests payable
Dividends payable 602,306.96 602,306.96
Other payables 663,401,461.06 635,263,654.66
Total 664,003,768.02 635,865,961.62
5.24.2 Dividends Payable
Items 30 June 2021 31 December 2020
Dividend on common shares 602,306.96 602,306.96
Total 602,306.96 602,306.96
The Company has no significant dividends payable over one year as at the reporting date.
5.24.3 Other Payables
① Other Payables by Nature
97
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
Items 30 June 2021 31 December 2020
Payables for construction projects 277,536,823.32 225,955,475.65
Payables for construction projects 155,384,421.82 180,641,018.52
Taxes deducted at source 68,072,980.72 70,763,959.51
Others 162,407,235.20 157,903,200.98
Total 663,401,461.06 635,263,654.66
②The Company has no other payables with a significant amount and an age of more than one year as at the reporting date.
5.25 Non-current liabilities due within one year
Items 30 June 2021 31 December 2020
Long-term borrowings due within one
898,826,664.52 103,186,354.59
year
Bond payables due within one year 5,564,722.23 20,514,722.25
Long-term payables due within one year 181,264,490.05
Long-term employee benefits payable
16,612,000.00
due within one year
lease liabilities due within one year 2,295,049,410.04
Total 3,199,440,796.79 321,577,566.89
5.26 Other current liabilities
Items 30 June 2021 31 December 2020
VAT to be recognised 26,810,654.43 31,100,597.66
Total 26,810,654.43 31,100,597.66
5.27 Long-term borrowings
5.27.1 Long-Term Borrowings by Category
Items 30 June 2021 31 December 2020 Range of interest rates
Secured loans 418,420,344.30 464,796,466.93 0.9585%-3.3463%
Credit loans 7,242,116,022.21 5,755,824,786.98 3.250%-4.275%
Subtotal 7,660,536,366.51 6,220,621,253.91
Less: Long-term borrowings due
898,826,664.52 103,186,354.59
within one year (Note 5.25)
Total 6,761,709,701.99 6,117,434,899.32
5.28 Bonds payable
5.28.1 Bonds Payable by Category
Items 30 June 2021 31 December 2020
Medium-term notes 1,005,564,722.23 1,020,514,722.25
Subtotal 1,005,564,722.23 1,020,514,722.25
98
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Items 30 June 2021 31 December 2020
Less: Bonds payable due within one
5,564,722.23 20,514,722.25
year (Note 5.25)
Total 1,000,000,000.00 1,000,000,000.00
5.28.2 Changes in increase or decrease of bonds payable
Maturity of
Bond name Face value Issue date Issue price 31 December 2020
bond
20 Shandong Airlines
1,000,000,000.00 2020/4/22 3years 1,000,000,000.00 1,020,514,722.25
MTN001
Total 1,000,000,000.00 1,000,000,000.00 1,020,514,722.25
(Continued)
Issued this Interest accured at Amortization of Payback this
Bond name 30 June 2021
period face value excess discount period
20 Shandong Airlines
13,039,722.24 27,989,722.26 1,005,564,722.23
MTN001
Total 13,039,722.24 27,989,722.26 1,005,564,722.23
5.29 Lease liabilities
Items 30 June 2021 31 December 2020
Lease payment 14,173,083,406.02 —
Less: Financing charges not recognized 1,430,053,885.10 —
Subtotal 12,743,029,520.92 —
Less: lease liabilities due within one year (Note 5, 25) 2,295,049,410.04 —
Total 10,447,980,110.88 —
5.30 Long-term payables
5.30.1 Long-Term Payables by Category
Items 30 June 2021 31 December 2020
Long-term payables 4,986,395,613.73 5,976,812,441.61
Specific payables
Subtotal 4,986,395,613.73 5,976,812,441.61
Less: Long-term payables due within one year (Note 5.25) 103,805,508.55 673,458,425.98
Total 4,882,590,105.18 5,303,354,015.63
5.30.2 Long-Term Payables by Nature
Items 30June 2021 31 December 2020
Financial lease rental payables 1,229,499,938.87
99
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
Items 30June 2021 31 December 2020
Maintenance payables for aircrafts and engines held under
4,747,312,502.74
operating lease
Compensation payable for the cancellation of operating
4,514,198,041.48
leased aircraft and engines
Others 472,197,572.25
Subtotal 4,986,395,613.73 5,976,812,441.61
Less: Financial lease rental payables due within one year
181,264,490.05
(Note 5.25)
Less: Maintenance payables for aircrafts and engines held
492,193,935.93
under operating lease due within one year
Compensation payable for the cancellation of operating lea
sed aircraft and engines due within one year
Other payables due within one year(Note 1) 103,805,508.55
Total 4,882,590,105.18 5,303,354,015.63
Note 1: Other amounts due within one year had been included in accounts payable.
5.31 Long-term employee benefits payable
5.31.1 General Information of Long-Term Employee Benefits Payable
Items 30 June 2021 31 December 2020
1. Post-employment benefits-net defined benefit liability 270,637,000.00
Less: long-term staff remuneration payable due within one
16,612,000.00
year (Note 5.25)
Total 254,025,000.00
5.31.2 Changes in Defined Benefit Plans
Present value of the defined benefit obligation:
Items Current period 2020
1. Balance at the beginning of the reporting period 270,637,000.00 162,909,225.21
2. Cost recognized in current profit or loss: 120,860,000.00
2.1 Current service cost
2.2 Past service cost 115,723,000.00
2.3 Gains /(losses) on settlement (loss presented with "-"
prefix)
2.4 Net interest 5,137,000.00
3. Cost recognized in other comprehensive income: 1,769,000.00
3.1 Actuarial gains /(losses) (loss presented with "-" prefix) 1,769,000.00
4. Other changes: 270,637,000.00 11,363,225.21
100
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
Items Current period 2020
4.1 Consideration paid in settlements 264,723,621.69
4.2 Payment of benefits 5,913,378.31 11,363,225.21
5. Balance at the end of the reporting period 270,637,000.00
Note: During this period, the company signed an agreement with a third party, effectively terminating the future obligations
of the original set benefit plan through the one-time payment.
5.32 Accrued liabilities
Items 30 June 2021 31 December 2020 Formation reasons
Cost of recovery of lease liabilities 1,011,106,148.00
Total 1,011,106,148.00
5.33 Deferred income
5.33.1 General Information of Deferred Income
Increase during Decrease during
Items 31 December 2020 the reporting the reporting 30 June 2021 Reason
period period
Unrealized gains and The aircraft
losses of operating sale-leaseback
81,439,081.44 3,123,558.90 78,315,522.54
lease from aircraft disposal profits
leaseback and losses
Designated subsidy
for civil aviation Asset related
8,923,065.16 488,250.06 8,434,815.10
energy-saving subsidies
program
Designated subsidy
Asset related
for HUD and 10,151,663.77 842,820.96 9,308,842.81
subsidies
repackage project
Total 100,513,810.37 4,454,629.92 96,059,180.45
5.33.2 Items Related to Government Grants
Increase Recognized in
Recognized in Related to
during non-operating
31 December other income Other assets/Related
Items the income during 30 June 2021
2020 during the changes to profit or
reporting the reporting
reporting period loss
period period
Designated
Asset related
subsidy for 8,923,065.16 488,250.06 8,434,815.10
subsidies
civil aviation
101
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
Increase Recognized in
Recognized in Related to
during non-operating
31 December other income Other assets/Related
Items the income during 30 June 2021
2020 during the changes to profit or
reporting the reporting
reporting period loss
period period
energy-saving
program
Designated
subsidy for
Asset related
HUD and 10,151,663.77 842,820.96 9,308,842.81
subsidies
repackage
project
Total 19,074,728.93 1,331,071.02 17,743,657.91
5.34 Share capital
Changes during the reporting period (+, -)
31 December
Item Bonus Capitalisation 30 June 2021
2020 New issues Others Subtotal
issues of reserves
Number of
400,000,000.00 400,000,000.00
total shares
5.35 Capital reserves
Increase Decrease
during the during the
Items 31 December 2020 30 June 2021
reporting reporting
period period
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
102
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
5.36 Other comprehensive income
Changes during the reporting period
Less: Items previously
31 December recognized in other Attributable to Attributable
Items Amount before Less: Income tax 30 June 2021
2020 comprehensive income owners of the to minority
tax expenses
being reclassified to Company interests
retained earnings
1.Other comprehensive income
that cannot be reclassified into 322,552,319.90 -24,787,300.80 -17,525,660.07 -6,196,825.20 -1,064,815.53 321,487,504.37
profit or loss
Including: remeasurement of
net assets or net liabilities of -17,525,660.07 -17,525,660.07 17,525,660.07
defined benefit plans
Fair value change of the equity
340,077,979.97 -24,787,300.80 -6,196,825.20 -18,590,475.60 321,487,504.37
instruments
Total of other comprehensive
322,552,319.90 -24,787,300.80 -17,525,660.07 -6,196,825.20 -1,064,815.53 321,487,504.37
income
103
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
5.37 Surplus reserves
Increase Decrease
Changes of
31 December during the during the
Items accounting 1 January 2021 30 June 2021
2020 reporting reporting
policy
period period
Statutory
538,773,444.97 538,773,444.97 538,773,444.97
surplus reserve
Total 538,773,444.97 538,773,444.97 538,773,444.97
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.
5.38 Retained earnings
Items Current period Prior period
Pre-adjustment balance brought forward 1,233,524,795.64 3,588,847,456.98
Total adjustment to retained earnings b/f (+, -) -1,613,812,613.92 26,692,794.47
Retained earnings b/f after adjustment -380,287,818.28 3,615,540,251.45
Add: Net profit attributable to shareholders of the parent -795,198,752.78 -1,296,010,573.90
Other comprehensive income transfer to retained earnings -17,525,660.07
Less: Appropriation to statutory surplus reserve
Appropriation to discretionary surplus reserve
General reserve
Ordinary dividends declared
Bonus issue
Closing balance as of 31 December 2020 -1,193,012,231.13 2,319,529,677.55
5.39 Operating revenues and operating costs
Current period Prior period
Items
Operating revenues Operating costs Operating revenues Operating costs
Principal activities 6,308,434,889.85 6,977,561,161.28 3,897,876,220.42 5,500,295,122.53
Other activities 327,116,487.03 1,978,707.53 292,773,575.67 2,228,908.78
Total 6,635,551,376.88 6,979,539,868.81 4,190,649,796.09 5,502,524,031.31
5.40 Tax and surcharges
Items Current period Prior period
Urban maintenance and construction tax 1,239,554.97 652,154.53
Education surcharge and others 5,773,031.89 5,091,974.29
104
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
Items Current period Prior period
Total 7,012,586.86 5,744,128.82
5.41 Sales expenses
Items Current period Prior period
Agency fees 81,829,370.07 44,148,642.14
Employment benefits 123,471,420.22 83,393,161.98
Computer booking fees 55,162,274.68 40,747,548.62
Online payment fees 17,398,312.89 9,031,360.10
Lease rental 8,020,132.93 4,812,963.00
Advertisement fees 12,213,065.92 5,310,716.01
Administrative office expenses 1,035,776.91 579,543.63
Travel expenses 1,659,054.26 1,252,257.71
System and network fees 16,126,900.23 10,135,534.66
BSP data processing fees 2,013,541.84 2,054,411.53
Depreciation 3,007,486.64 777,486.99
Others 9,383,788.03 9,891,451.82
Total 331,321,124.62 212,135,078.19
5.42 General and administrative expenses
Items Current period Prior period
Employment benefits 123,237,290.33 89,149,437.01
Lease rental fees 6,619,818.89 7,232,223.29
Business entertainment costs 1,773,551.42 434,430.06
Depreciation 20,919,963.90 10,503,404.08
Administrative office expenses 5,173,312.20 3,820,239.80
Amortization of intangibles 7,377,330.51 5,405,336.47
Water, electricity charges 3,677,279.28 3,949,163.51
Outsourcing fees 14,704,349.49 8,590,710.13
Others 38,597,882.66 35,034,848.49
Total 222,080,778.68 164,119,792.84
5.43 Research and development expenses
Items Current period Prior period
Employment benefits 12,465,619.43 10,424,275.10
Total 12,465,619.43 10,424,275.10
5.44 Financial costs
Items Current period Prior period
105
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
Items Current period Prior period
Interest expenses 158,210,578.44 85,728,100.07
Less: Interest expense on lease
258,678,218.35
liabilities
Interest income 47,139,814.05 9,474,223.70
Net interest expenses 369,748,982.74 76,253,876.37
Foreign exchange losses 401,974,808.80 50,524,700.29
Less: Foreign exchange gains 516,124,205.76 32,538,126.79
Net foreign exchange losses -114,149,396.96 17,986,573.50
Bank charges 873,344.73 890,927.75
Total 256,472,930.51 95,131,377.62
5.45 Other income
Included in current
Category Current period Prior period period non-recurring
profit and loss
1. Government grant recognized in
43,771,787.90 38,080,616.43 43,771,787.90
other income
Including: Government grant related to
1,331,071.02 1,331,071.02 1,331,071.02
deferred income (related to assets)
Government grant related to
deferred income (related to income)
Government grant directly
recognized in current profit or loss 42,440,716.88 36,749,545.41 42,440,716.88
(related to income)
2. Others related to daily operation
activities and recognized in other 2,193,593.13 2,628,620.78 2,193,593.13
income
Including: Charges of withholding
2,092,818.21 2,586,974.60 2,092,818.21
individual income tax
Including: Input tax deduction 100,774.92 41,646.18 100,774.92
Total 45,965,381.03 40,709,237.21 45,965,381.03
5.46 Investment income
Items Current period Prior period
Investment income from held-for-trading financial assets during -460,830.55 -247,100.00
106
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
Items Current period Prior period
holding period
Dividend income from other equity instrument income during
208,728.00 3,770,100.00
holding period
Total -252,102.55 3,523,000.00
5.47 Gains/(losses) from changes in fair values
Sources of gains on changes in fair value Current period Prior period
Interest rate swaps 459,463.96 -867,700.45
Total 459,463.96 -867,700.45
5.48 Impairment loss of credit
Items Current period Prior period
Provision for bad debt for accounts receivable -2,838,537.59 2,302,520.80
Provision for bad debt for other receivables 17,685.72 1,258,134.91
Total -2,820,851.87 3,560,655.71
5.49 Gains/(losses) from disposal of assets
Included in current period
Current period Prior period
Category non-recurring profit and loss
Gains/(losses) from disposal of fixed assets,
construction in progress, productive biological
59,408.78 13,834.98 59,408.78
assets and intangible assets not classified as held
for sale
Including: Fixed assets 59,408.78 13,834.98 59,408.78
Total 59,408.78 13,834.98 59,408.78
5.50 Non-operating income
5.50.1 Details of Non-operating income
Included in current
Category Current period Prior period period non-recurring
profit and loss
Transferred income from pilot 58,780,020.43 4,716,981.14 58,780,020.43
Others 12,787,307.18 10,102,403.39 12,787,307.18
Total 71,567,327.61 14,819,384.53 71,567,327.61
5.50.2 The Company has no government grants irrelevant to daily operation activities during the reporting period.
5.51 Non-operating expenses
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Included in current period
Category Current period Prior period
non-recurring profit and loss
Loss on non-current asset disposals 467,865.97 233,744.92 467,865.97
Others 747,167.19 172,022.92 747,167.19
Total 1,215,033.16 405,767.84 1,215,033.16
5.52 Income tax expenses
5.52.1 Details of Income Tax Expenses
Items Current period Prior period
Current tax expenses 223,520.84 174,876.48
Deferred tax expenses -264,602,706.29 -442,240,546.23
Total -264,379,185.45 -442,065,669.75
5.52.2 Reconciliation of Accounting Profit and Income Tax Expenses
Items Current period Prior period
Profit before tax -1,059,577,938.23 -1,738,076,243.65
Income tax expense at the statutory /applicable tax rate -264,894,484.56 -434,519,060.91
Adjustments of impact from prior period income tax -371,111.79 -7,236,342.86
Effect of non-deductible costs, expenses or losses -52,182.00 -942,525.00
Effect of previously unrecognized deductible losses recognized as
186,671.24 693,517.48
deferred tax assets
Effect of deductible temporary differences or tax losses which no
751,921.66 -61,258.46
deferred income tax asset was recognised
Income tax expenses -264,379,185.45 -442,065,669.75
5.53 Other comprehensive income
For details of the other comprehensive income and related tax effect, transfer to profit or loss and adjustment of other
comprehensive income, please refer to Note 5.36 Other Comprehensive Income.
5.54 Notes to the Statement of Cash Flow
5.54.1 Other cash received relating to operating activities
Items Current period Prior period
Government grants 42,440,716.88 36,749,545.41
Cash received other than government grants which is recognized in
2,092,818.21 2,586,974.60
other income
Interest income on bank deposit 47,139,814.05 9,474,223.70
Cash receipts from non-operating income 71,567,327.61 14,819,384.53
Cash receipts from current account 37,354,779.03 21,656,888.91
Total 200,595,455.78 85,287,017.15
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5.54.2 Other cash payments relating to operating activities
Items Current period Prior period
Bank charges 873,344.73 890,927.75
Cash payments for non-operating expenses 747,167.19 172,022.92
Cash payments for current account 14,254,547.33 21,119,919.45
Cash payments for sales and general and administrative expenses 70,752,643.08 29,146,504.37
Total 86,627,702.33 51,329,374.49
5.54.3 Other cash payment relating to financing activities
Items Current period Prior period
Cash payment for settlement of interest rate swaps 460,830.55 247,100.00
Total 460,830.55 247,100.00
5.54.4 Other cash payment relating to financing activities
Items Current period Prior period
Cash payment for the lease of the aircraft 1,311,982,904.59 245,703,910.97
Total 1,311,982,904.59 245,703,910.97
5.55 Supplementary information to the Statement of Cash Flows
5.55.1 Supplementary Information to the Statement of Cash Flows
Supplementary information Current period Prior period
1．Adjustments of net profit to cash flows from operating
activities:
Net profit -795,198,752.78 -1,296,010,573.90
Add: Provisions for impairment of assets
Impairment loss of credit 2,820,851.87 -3,560,655.71
Depreciation of fixed assets, investment properties, oil and gas
348,571,096.54 407,855,285.33
assets and biological assets held for production
Depreciation of right-of-use asset 1,008,839,972.44
Amortization of intangible assets 7,377,330.51 5,405,336.47
Amortization of deferred charges 57,742,756.55 56,307,277.17
Loss on non-current assets disposal (gain presented by "-" prefix) -59,408.78 -13,834.98
Loss on scrap of fixed assets (gain presented by "-" prefix) 467,865.97 233,744.92
Loss on fair value changes (gain presented by "-" prefix) -459,463.96 867,700.45
Financial costs (gain presented by "-" prefix) 303,492,573.72 101,401,234.52
Investment loss (gain presented by "-" prefix) 252,102.55 -3,523,000.00
Decrease of deferred tax assets (increase presented by "-" prefix) -299,720,047.33 -442,175,342.31
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Supplementary information Current period Prior period
Increase of deferred tax liabilities (increase presented by "-"
35,117,341.04 -65,203.92
prefix)
Decrease of inventories (increase presented by "-" prefix) -4,397,509.39 -22,184,719.35
Decrease of operating receivables (increase presented by "-"
-177,357,862.85 192,148,432.24
prefix)
Increase of operating payables (decrease presented by "-" prefix) 381,135,542.39 -889,244,271.55
Others -5,190,187.81
Net cash flows generated from operating activities 868,624,388.49 -1,897,748,778.43
2．Significant investing and financing activities involve no cash:
Debt-to-capital conversion
Convertible loan due within one year
Fixed assets acquired under financial lease
3．Movement of cash and cash equivalents:
Cash at the end of the reporting period 5,845,226,291.47 1,495,906,171.45
Less: Cash at the beginning of the reporting period 5,306,474,451.06 598,861,065.69
Add: Cash equivalents at the end of the reporting period
Less: Cash equivalents at the beginning of the reporting period
Net increase in cash and cash equivalents 538,751,840.41 897,045,105.76
5.55.2 Net Cash Received from Disposals of Subsidiaries
Item 30 June 2021 31 December 2020
①Cash 5,845,226,291.47 5,306,474,451.06
Including: Cash at hand 74,734.86 225,522.11
Demand bank deposit 5,845,151,556.61 5,306,248,928.95
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 at the end of the reporting period 5,845,226,291.47 5,306,474,451.06
Among: the use of restricted cash and cash equivalents by the
parent company or its subsidiaries within the group
5.56 Assets with Imposed Restriction on Ownership
110
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Category Closing balance as of 30 June 2021 Reason of restriction
Assets pledged as security 953,544,654.91
Pledge as security for
Aircrafts and engines 953,544,654.91
borrowings
Other form of restriction: 1,943,422,308.10
Assets acquired under financial
Aircrafts and engines 1,943,422,308.10
lease
Total 2,896,966,963.01
5.57 Foreign Currency Monetary Items
Carrying amount at Carrying amount at
Items Exchange rate
foreign currency CNY
Monetary funds
Including: -USD 368,183.38 6.4601 2,378,501.45
-EUR 5,042.00 7.6862 38,753.82
-CAD 10.00 5.2097 52.10
-JPY 45,288,782.00 0.0584 2,644,864.87
-TWD 6,843,620.00 0.2314 1,583,613.67
-KRW 99,095,706.00 0.0057 564,845.52
-THB 1,339,375.15 0.2015 269,884.09
Other receivables
Including: -USD 6,966,689.32 6.4601 45,005,509.68
Accounts payable
Including: -USD 10,016,118.46 6.4601 64,705,126.86
Other payables
Including: -USD 11,138.56 6.4601 71,956.21
Non-current liabilities due within one year
Including: -USD 360,343,032.51 6.4601 2,327,852,024.32
Long-term borrowings
Including: -USD 10,790,808.50 6.4601 69,709,701.99
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Carrying amount at Carrying amount at
Items Exchange rate
foreign currency CNY
Lease liability
Including: -USD 1,265,766,069.87 6.4601 8,176,975,387.97
5.58 Government Grants
5.58.1 Government Grants Related to Assets
Recognized in current profit or Presented items that
Items presented
loss or directly as deduct of recognized in current
Items Amount in the Financial
related cost profit or loss or directly
Statements
Current period Prior period as deduct of related cost
Designated subsidy for
Deferred
civil aviation 488,250.06 488,250.06 488,250.06 Other income
income
energy-saving program
Designated subsidy for
Deferred
HUD and repackage 842,820.96 842,820.96 842,820.96 Other income
income
project
Total 1,331,071.02 1,331,071.02 1,331,071.02
5.58.2 Government grants related to income
Recognized in current profit or loss Presented items that
Items presented or directly as deduct of related cost recognized in current
Items Amount in the Financial profit or loss or
Statements Current period Prior period directly as deduct of
related cost
Airline grants 26,687,916.88 Other income 26,687,916.88 35,571,745.41 Other income
Other government
15,752,800.00 Other income 15,752,800.00 1,177,800.00 Other income
grants
Total 42,440,716.88 42,440,716.88 36,749,545.41
5.58.3 The Company has no return of government grants during the reporting period.
Note 6 CHANGES IN THE SCOPE OF CONSOLIDATION
The consolidation scope of the financial statements for the current period is consistent with the prior period.
Note 7 INTERESTS IN OTHER ENTITIES
7.1 Interests in Subsidiaries
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Place of Place Nature Holding proportion(%)
Subsidiaries Acquired method
operation of registration of business Directly Indirectly
Shandong aviation Logistics Acquired through
Ltd Qingdao, Qingdao, Logistics and investment
100.00
(hereafter, Qingdao Shandong Shandong storage
Logistics)
Qingdao Feisheng Acquired through
International Aviation business
Training Technology Qingdao, Qingdao, combination not
Pilot training 100.00
Development Co., Ltd Shandong Shandong under common
(hereafter, Qingdao control
Feisheng)
Acquired through
Shandong Jinping Air
Aeronautical business
Catering Co., Ltd. Jinan, Jinan,
food 100.00 combination not
(hereinafter referred to as Shandong Shandong
processing under common
"Jinping food")
control
Acquired through
Shandong Airlines Qingdao
Aeronautical business
Food Co., Ltd. (hereinafter Qingdao, Qingdao,
food 49.70 50.30 combination not
referred to as "Qingdao Shandong Shandong
processing under common
Food")
control
7.2 The Equity in Joint Ventures and Associates
7.2.1 Significant Joint Ventures and Associates
Place Holding proportion(%)
Place of Nature Holding
Subsidiaries of
operation of business Directly Indirectly proportion(%)
registration
Shandong Rainbow
Jinan, Jinan, Aero
Commercial Jet Co., 45.00 Equity method
Shandong Shandong transportation
Ltd.
7.2.2 Key Financial Information of Significant Associate - Shandong Rainbow Commercial Jet Co., Ltd.
30 June 2021 31 December 2020
Item
/ Current period / Prior period
Current assets 1,803,440.67 1,803,440.67
Non-current assets 360.00 360.00
Total assets 1,803,800.67 1,803,800.67
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30 June 2021 31 December 2020
Item
/ Current period / Prior period
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 -165,962,012.66 -165,962,012.66
Pro rata shares 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
Operating income
Net profit -684.00
Net profit from discontinued operations
Other comprehensive income
Total comprehensive income
Dividends received from associates during the year
7.2.3 Excess Loss Occurred by Joint Ventures and Associates
Cumulative unrecognized Unrecognized losses of current
Name of joint ventures and Cumulative unrecognized
losses as of 31 December year (Share of net profit of
associates losses as of 30 June 2021
2020 current year)
Shandong Rainbow Commercial
-74,685,696.99 -74,685,696.99
Jet Co., Ltd.
Note 8 RISKS RELATED TO FINANCIAL INSTRUMENTS
The main financial instruments of the Company include equity investments, loans, accounts receivable, and accounts
payable etc. Please see Note 5 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
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Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
variable. Therefore, the following content is based on the assumption that changes in each variable is independent.
8.1 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.
8.1.1 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 30 June 2021, except the following assets or liabilities in Note 5.57 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 5.17, 5.25, 5.27). 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.
8.1.2 Credit Risk
As of 30 June 2021, 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.
8.1.3 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 9 FAIR VALUE DISCLOSURES
The inputs used in the fair value measurement in its entirety are to be classified in the level of the hierarchy in which the
lowest level input that is significant to the measurement is classified.
Level 1: Inputs consist of unadjusted quoted prices in active markets for identical assets or liabilities
Level 2: Inputs for the assets or liabilities (other than those included in Level 1) that are either directly or indirectly
observable.
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Level 3: Inputs are unobservable inputs for the assets or liabilities
9.1 Assets and Liabilities Measured at Fair Value as at 30 June 2021
The fair value at 30 June 2021
The 1st level The 2nd level The 3rd level
Item
measured by fair measured by fair measured by fair Total
value value value
1. Continuous measurement by fair
value
1.1 Other equity instrument
181,932,490.82 335,069,615.01 517,002,105.83
investments
Total amount of assets continuous
181,932,490.82 335,069,615.01 517,002,105.83
measurement by fair value
1.2 Financial liabilities at fair value
403,491.71 403,491.71
through profit or loss
Interest rate swaps 403,491.71 403,491.71
Total amount of liabilities
continuous measurement by fair 403,491.71 403,491.71
value
The fair value of financial instruments traded in an active market is based on quoted market prices at the reporting date.
The fair value of financial instruments not traded in an active market is determined by using valuation techniques. Specific
valuation techniques used to value the above financial instruments include discounted cash flow and market approach to
comparable company model. Inputs in the valuation technique include risk-free interest rates, benchmark interest rates,
exchange rates, credit spreads, liquidity premiums, discount for lack of liquidity.
9.2 Determined on the Basis of Continuous and Noncontinuous First Level for Fair Value Measurement of the
Market of Project
Investment in other equity instruments for continued fair value measurement is an investment in TravelSky Technology
Limited, of which fair value was determined based on the closing price for the stock market in Hong Kong Stock Exchange
on balance sheet date.
9.3 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.
9.4 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 10 RELATED PARTIES AND RELATED PARTY TRANSACTIONS
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Recognition of related parties: The Company has control or joint control of, or exercise significant influence over another
party; or the Company is controlled or jointly controlled, or significant influenced by another party.
10.1 Major Parent Companies
Shareholding in Voting right in
Parent Place of
Nature of operation Registered capital the Company the Company
companies registration
(%) (%)
Investment and management
SDA Group Jinan 580,000,000.00 42.00 42.00
of aero 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 shareholders 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.
10.2 Subsidiaries
See Note 7 for subsidiaries.
10.3 Joint Ventures and Associates
See Note 7 for joint ventures and associates.
10.4 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
Chengdu Fukai Aircraft Engineering Services Limited Controlled by major investors
Beijing Aircraft Maintenance and Engineering Corporation 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
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Other related parties Relationship to the Company
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
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
10.5 Related Party Transactions
10.5.1 Purchases or Sales of Goods, Rendering or Receiving of Services
Purchase of goods and services
Related party Transaction Current period Prior period
Beijing Aircraft Maintenance and Engineering
Repairment 27,431,288.11 34,257,315.50
Corporation
Beijing Aircraft Maintenance and Engineering Purchase / lease of
67,449.40 125,905.30
Corporation aircraft materials
Beijing Aircraft Maintenance and Engineering
Ground service 17,401,991.15 6,864,207.26
Corporation
Beijing Golden Phoenix Human Resources
Ground service 1,086,421.79 666,357.91
Service Co., Ltd.
Chengdu Fukai Aircraft Engineering Services
Repairment 3,057,168.48 2,844,655.73
Limited
Aircraft offerings and
Shandong Air New Media Co., Ltd. 2,931,833.87 3,295,762.42
advertising fees
Shandong Air New Media Co., Ltd. Ground service 195,884.96 235,470.80
Taikoo (Shandong) Aircraft Engineering
Aircraft maintenance 52,874,609.86 35,746,862.98
Company Limited
Shandong XiangYu Air Technology Co., Ltd. Repairment 40,653,009.08 34,861,885.77
Office lease rental and
SDA Group 20,978,506.56 14,976,703.49
catering
SDA Group Group fee 2,322,629.44 3,214,498.71
SDA Group Irregular flight 18,948.68 17,820.00
Shandong Airlines Rainbow Auto Service Co., Vehicle rental fee and 40,833,190.96 30,677,713.74
118
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
Related party Transaction Current period Prior period
Ltd. maintenance fee
Shandong Airlines Rainbow Auto Service Co.,
Group fee 1,552,259.36 906,540.37
Ltd.
Shandong Airlines Rainbow Auto Service Co.,
Irregular flight 102,513.76 140,577.98
Ltd.
Shenzhen Airlines Co., Ltd. Ground service 1,814,626.65
Shenzhen Airlines Co., Ltd. Agency service 205,627.68
Purchase / lease of
Shenzhen Airlines Co., Ltd. 27,961.70 45,739.13
aircraft materials
Shenzhen Airlines Co., Ltd. Catering 663,260.36 213,383.51
Shenzhen Airlines Co., Ltd. Irregular flight 546,041.52 163,018.87
Sichuan International Aero Engine
Repairment 237,033,753.06 42,494,668.19
Maintenance Co., Ltd.
Air China Ground service 6,638,668.29 4,912,038.29
Purchase / lease of
Air China 97,627.94
aircraft materials
Air China Agency service 262,567.00
Irregular flight
Air China 6,820,913.01 12,092,569.52
expenditure
Kunming Airlines Co., Ltd Agency service 6,806.40 3,117.40
Dalian Airlines Co., Ltd. Irregular flight 189,962.27 135,962.26
Shanghai International Airport Ground Service
Ground service 64,306.04 64,075.25
Co., Ltd.
Total 465,314,004.76 229,522,673.00
Sales of goods and rendering of services
Related party Transaction Current period Prior period
Beijing Aircraft Maintenance and
Sale /rent of aircraft materials 593,543.00
Engineering Corporation
Dalian Airlines Co., Ltd. Ground service 190,196.69 399,956.23
Non-routine
Dalian Airlines Co., Ltd. 119,782.70 1,408.06
maintenance/machinery service
Kunming Airlines Co., Ltd Locomotive service income 41,067.90 46,622.64
119
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
Related party Transaction Current period Prior period
Kunming Airlines Co., Ltd Agency service 8,253.90 2,508.63
Shandong Air New Media Co., Ltd. Media resource fee 6,661,371.81 11,245,008.15
Taikoo (Shandong) Aircraft
Sale of aircraft materials 548,238.75 740,097.03
Engineering Company Limited
Taikoo (Shandong) Aircraft
Training fee 53,113.21 6,981.13
Engineering Company Limited
Taikoo (Shandong) Aircraft
Maintenance fee 173,396.23 909,059.53
Engineering Company Limited
Shandong XiangYu Air Technology
Sale of aircraft materials 239,958.23 1,211,429.60
Co., Ltd.
Shenzhen Airlines Co., Ltd. Agency service 210,885.60
Shenzhen Airlines Co., Ltd. Sale /rent of aircraft materials 71,669.70 195,966.68
Irregular flight
Shenzhen Airlines Co., Ltd. maintenance/locomotive service 7,501.75 495.58
income
Air China Ground service 2,210,081.05 2,099,758.11
Simulator maintenance / House
Air China 2,242,714.26
rental income
Air China Sale /rent of aircraft materials 513,654.70 477,147.66
Irregular flight
Air China maintenance/locomotive service 29,486.73
income
Air China Agency service 135,925.42 164,559.75
Beijing Airlines Co., Ltd. Ground service 5,433.96 452.83
China International Airlines Inner
Ground service 52,325.27 45,240.57
Mongolia Co., Ltd.
Shandong Airlines Rainbow Auto
Storage income 279,401.78 179,245.92
Service Co., Ltd.
Shandong Airlines Rainbow Auto
Property fee income 14,535.85 13,754.72
Service Co., Ltd.
Total 11,919,451.90 20,222,779.41
10.5.2 Borrowing of funds from related parties
120
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
Related Party Borrowing money Beginning date Due date Description
Borrowing:
China Aviation Group
296,000,000.00 2016-6-20 2026-6-20 Paid off at the end
Finance Co., Ltd.
10.5.3 Remuneration to Key Management Personnel
Item Current period Prior period
Key management personnel compensation CNY 2.9474 million CNY2.7969 million
10.5.4 Other Related Party Transactions
Related party Transaction Current period Prior period
Air China Frequent flyer cooperation 50,400,000.00 24,200,000.00
Total 50,400,000.00 24,200,000.00
10.6 Related Party Balances
10.6.1 Receivables
30 June 2021 31 December 2020
Related party Provision for bad Provision for bad
Carrying amount Carrying amount
debt debt
Accounts receivable
Air China 5,357,034.90 9,869,517.17
Air China Inner Mongolia Co., Ltd. 60,038.28 69,220.80
Dalian Airlines Co., Ltd. 99,043.20 2,530.80
Taikoo (Shandong) Aircraft
16,800.00
Engineering Company Limited
Shandong Air New Media Co., Ltd. 375,000.00 375,000.00
Total 5,907,916.38 10,316,268.77
Other receivables
Air China 5,738,383.29 6,284,099.27
Shenzhen Airlines Co., Ltd. 4,800.00 9,991.75
Shandong Rainbow Commercial Jet
101,551,717.65 101,551,717.65 101,551,717.65 101,551,717.65
Co., Ltd.
Shandong XiangYu Air Technology
158,519.78
Co., Ltd.
Taikoo (Shandong) Aircraft
876,955.60 32,760.70
Engineering Company Limited
Shandong Air New Media Co., Ltd. 14,268,050.50 13,212,795.39
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30 June 2021 31 December 2020
Related party Provision for bad Provision for bad
Carrying amount Carrying amount
debt debt
Beijing Aircraft Maintenance and 1,638,850.42 1,061,799.39
Dalian Airlines Co., Ltd. 54,741.20 321,199.10
Kunming Airlines Co., Ltd. 24,632.00 48,640.00
Shandong Airlines Rainbow Auto
27,068.77 4,031.65
Service Co., Ltd.
Total 124,185,199.43 101,551,717.65 122,685,554.68 101,551,717.65
10.6.2 Payables
Related party 30 June 2021 31 December 2020
Accounts payable
Shandong XiangYu Air Technology Co., Ltd. 39,247,756.70 62,612,200.70
Taikoo (Shandong) Aircraft Engineering Company Limited 62,154,679.96 71,170,122.15
Air China 340,780,660.27 288,157,344.35
Beijing Golden Phoenix Human Resources Service Co., Ltd. 603,330.01 468,107.35
Shenzhen Airlines Co., Ltd. 1,447,726.34 1,575,214.82
Beijing Aircraft Maintenance and Engineering Corporation 53,952,276.15 69,550,487.95
Sichuan International Aero Engine Maintenance Co., Ltd. 145,286,306.68 40,552,088.72
Shandong Air New Media Co., Ltd. 3,304,467.51 4,310,391.38
Shandong Airlines Rainbow Auto Service Co., Ltd. 50,904,991.73 45,500,000.00
Chengdu Fukai Aircraft Engineering Service Co., Ltd. 2,607,755.35 2,407,193.88
Shanghai International Airport Ground Service Co., Ltd. 50,916.84 53,210.80
Total 700,340,867.54 586,356,362.10
Other payables
SDA Group 30,501,923.20 20,892,072.83
Taikoo (Shandong) Aircraft Engineering Company Limited 755,526.14 641,414.74
Shandong Air New Media Co., Ltd. 831,162.00 3,138,323.91
Shandong XiangYu Air Technology Co., Ltd. 429,609.89
Shandong Rainbow Commercial Jet Co., Ltd. 1,257,646.00
Total 32,518,221.23 25,929,457.48
Note 11 COMMITMENTS AND CONTINGENCIES
11.1 Significant Commitments
The nature and amount of significant commitments existing at the balance sheet date:
122
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
11.1.1 Capital Commitment
Capital commitments signed but not yet recognized in the 30 June 2021 31 December 2020
financial statements
Commitment for purchase long-term assets 4,806,886,118.85 6,327,478,302.14
Large contract
Commitment for external investment
11.1.2 Other Commitment
The Company has no other significant commitment needed to be disclosed as of 30 June 2021.
11.2 Contingencies
The Company has no other significant contingencies needed to be disclosed as of 30 June 2021.
Note 12 EVENTS AFTER THE REPORTING PERIOD
As of this reporting date, the Company has no post-balance sheet events that should be disclosed.
Note 13 OTHER SIGNIFICANT MATTERS
13.1 Pension Plan
No significant change of the annuity program occurred for current period, see Note 5.22, 5.31.
Note14 NOTES TO ELEMENTS OF THE PARENT COMPANY’S FINANCIAL STATEMENTS
14.1 Accounts receivable
14.1.1 Disclosure by Age
Age 30 June 2021 31 December 2020
Within 1 year 398,103,038.55 279,757,208.36
1 to 2 years 39,127,165.49 52,098,250.31
2 to 3 years 46,600,680.08 34,122,000.00
3 to 4 years
4 to 5 years
Over 5 years 420,529.65 420,529.65
Subtotal 484,251,413.77 366,397,988.32
Less: provision for bad debt 18,605,808.39 15,724,684.12
Total 465,645,605.38 350,673,304.20
14.1.2 Disclosure by Category
30 June 2021
Book balance Provision for bad debt
Category
Proportion Provision Carrying amount
Amount Amount
(%) ratio (%)
Accounts receivable subject
123
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
to individual impairment
assessment
Accounts receivable subject
to group impairment 484,251,413.77 100.00 18,605,808.39 3.84 465,645,605.38
assessment
Total 484,251,413.77 100.00 18,605,808.39 3.84 465,645,605.38
(Continued)
31 December 2020
Book balance Provision for bad debt
Category
Proportion Provision Carrying amount
Amount Amount
(%) ratio (%)
Accounts receivable subject
to individual impairment
assessment
Accounts receivable subject
to group impairment 366,397,988.32 100.00 15,724,684.12 4.29 350,673,304.20
assessment
Total 366,397,988.32 100.00 15,724,684.12 4.29 350,673,304.20
① As at 30 June 2021, there is no provision for bad debts subject to individual impairment assessment.
② Accounts receivable subject to impairment assessment by credit risk characteristics of a group as of 30 June 2021.
30June 2021
Project
Book value Provision for bad debt Provision ratio (%)
Amounts due from the
17,492,906.21
clearing center
Amounts due from the
89,242,872.86
aviation association
Amounts due from related
5,399,467.00
parties
Other receivables 372,116,167.70 18,605,808.39 5.00
Total 484,251,413.77 18,605,808.39 3.84
③As of 31 December 2020, no provision for bad debts has been drawn on a single item.
④Accounts receivable subject to impairment assessment by credit risk characteristics of a group as of 31 December 2020
31 December 2020
Entity name Provision
Book value Provision for bad debt
ratio (%)
124
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
Amounts due from the clearing center 10,455,297.15
Amounts due from the aviation association 31,724,360.89
Amounts due from related parties 9,724,648.00
Other receivables 314,493,682.28 15,724,684.12 5.00
Total 366,397,988.32 15,724,684.12 4.29
The Company calculate provision of bad debt according to the combination of credit risk characteristics and the expected
loss amount.
14.1.3 Changes of Provision for Bad Debt During the Reporting Period
31 December Changes during the reporting period
Category 30June 2021
2020 Provision Recovery or reversal Write-off
Accounts receivable
subject to impairment 15,724,684.12 2,881,124.27 18,605,808.39
assessment by group
Total 15,724,684.12 2,881,124.27 18,605,808.39
14.1.4 There is no actual write-off accounts receivable in this period.
14.1.5 As of 30 June 2021, the top five accounts receivable amounted to CNY 242,101,472.06, accounting for 49.99% of
the total ending balance of accounts receivable, and the corresponding summary amount of the ending balance of bad debt
provision is CNY 7,642,929.96.
14.1.6 The Company has no derecognition of accounts receivable due to the transfer of financial assets.
14.1.7 The Company has no assets or liabilities arising from continuing involvement in transferred accounts receivable.
14.2 Other receivables
14.2.1 Other receivables by category
Items 30 June 2021 31 December 2020
Interests receivable
Dividends receivable 208,728.00
Other receivables 222,892,160.23 165,544,964.64
Total 223,100,888.23 165,544,964.64
14.2.2 Dividends receivable
①Listed by the Investee
Investee 30 June 2021 31 December 2020
TravelSky Technology Limited 208,728.00
Subtotal 208,728.00
②The company has no significant dividends receivable with an aging of more than one year
14.2.3 Other Receivables
① Other receivables by age
Age 30 June 2021 31 December 2020
Within one year 186,605,037.54 136,305,404.11
125
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
Age 30 June 2021 31 December 2020
1-2 years 15,902,541.29 4,690,877.26
2-3 years 10,069,518.33 12,288,561.13
3-4 years 3,771,988.36 3,882,745.43
4-5 years 564,731.31 773,009.94
Over 5 years 111,352,883.12 112,978,097.70
Subtotal 328,266,699.95 270,918,695.57
Less: provision for bad debt 105,374,539.72 105,373,730.93
Total 222,892,160.23 165,544,964.64
② Other receivables by nature
Nature 30 June 2021 31 December 2020
Deposits receivable 118,775,572.10 63,646,894.09
Amounts due from related parties 133,034,686.36 130,831,535.85
Other receivables 76,456,441.49 76,440,265.63
Subtotal 328,266,699.95 270,918,695.57
Less: provision for bad debt 105,374,539.72 105,373,730.93
Total 222,892,160.23 165,544,964.64
③ Other receivables by bad debt provision method
A．Provision for bad debts recognized based on three stages model as of 30 June 2021 is as follows:
Provision for bad debt in the first stage as of 30 June 2021:
Lifetime expected Provision for
Category Book balance Carrying amount Reason
credit losses rate (%) bad debt
Provision for bad
debt recognized
individually
Provision for bad
debt recognized 226,714,982.30 1.69 3,822,822.07 222,892,160.23
collectively
No significant
Including: Deposits
118,775,572.10 118,775,572.10 increase on
receivable
credit risk
No significant
Amounts due from
31,482,968.71 31,482,968.71 increase on
related parties
credit risk
Other receivables 76,456,441.49 5.00 3,822,822.07 72,633,619.42 No significant
126
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
Lifetime expected Provision for
Category Book balance Carrying amount Reason
credit losses rate (%) bad debt
increase on
credit risk
Total 226,714,982.30 1.69 3,822,822.07 222,892,160.23
As of 30 June 2021, the Company has no other receivables recognized in the second stage.
Provision for bad debt in the third stage as of 30 June 2021:
Lifetime expected
Provision for bad Carrying
Category Book balance credit losses rate Reason
debt amount
(%)
Provision for bad debt Credit impairment
101,551,717.65 100.00 101,551,717.65
recognized individually has occurred
Shandong Rainbow Credit impairment
101,551,717.65 100.00 101,551,717.65
Commercial Jet Co., Ltd has occurred
Total 101,551,717.65 100.00 101,551,717.65
B．Provision for bad debts based on incurred loss model as of 31 December 2020 is as follows:
Provision for bad debt in the first stage as of 31 December 2020:
Lifetime expected
Provision for
Category Book balance credit losses rate Carrying amount Reason
bad debt
(%)
Provision for bad
debt recognized
individually
Provision for bad
debt recognized 169,366,977.92 2.26 3,822,013.28 165,544,964.64
collectively
No significant
Including: Deposits
63,646,894.09 63,646,894.09 increase on credit
receivable
risk
No significant
Amounts due from
29,279,818.20 29,279,818.20 increase on credit
related parties
risk
No significant
Other receivables 76,440,265.63 5.00 3,822,013.28 72,618,252.35 increase on credit
risk
Total 169,366,977.92 2.26 3,822,013.28 165,544,964.64
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Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
As of 31 December 2020, the Company has no other receivables recognized in the second stage.
Provision for bad debt in the third stage as of 31 December 2020:
Lifetime expected
Provision for bad Carrying
Category Book balance credit losses rate Reason
debt amount
(%)
Provision for bad debt Credit impairment
101,551,717.65 100.00 101,551,717.65
recognized individually has occurred
Shandong Rainbow Credit impairment
101,551,717.65 100.00 101,551,717.65
Commercial Jet Co., Ltd has occurred
Total 101,551,717.65 100.00 101,551,717.65
④Changes of provision for bad debt during the reporting period
Changes during the reporting period
Category 31 December 2020 Recovery or 30 June 2021
Provision Write-off
reversal
Other receivables of
individual significance and
101,551,717.65 101,551,717.65
subject to individual
impairment assessment
Other receivables subject to
impairment assessment by
3,822,013.28 808.79 3,822,822.07
credit risk characteristics of a
group
Total 105,373,730.93 808.79 105,374,539.72
⑤There are no written off to other receivables during the reporting period.
⑥Top five closing balances by entity
Proportion of the
Balance as at 30 Provision for bad
Entity name Nature Age balance to the total
June 2021 debt
other receivables (%)
Shandong Rainbow
Commercial Jet Related party 101,551,717.65 Over 5 years 30.94 101,551,717.65
Co., Ltd.
Debtor #1 Deposits 83,428,265.05 Within 2 years 25.41
Debtor #2 Others 15,408,879.30 Within 1 year 4.69 770,443.97
Shandong Air New
Related party 14,268,050.50 Within 1 year 4.35
Media Co., Ltd.
128
Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
Proportion of the
Balance as at 30 Provision for bad
Entity name Nature Age balance to the total
June 2021 debt
other receivables (%)
Debtor #3 Others 8,860,717.14 Within 1 year 2.70
Total 223,517,629.64 68.09 102,322,161.62
⑦The Company has no other receivables relating to government grants.
⑧The Company has no other receivables relating to derecognition of other receivables for transfer of financial assets.
⑨The Company has no assets or liabilities arising from continuing involvement in transferred other receivables.
14.3 Long-term equity investments
14.3.1 Investments in Subsidiaries
Current Current
31 December Provision Period-end
Investee period period 30 June 2021
2020 recognized provision
increase decrease
Shandong aviation
48,323,205.97 48,323,205.97
Logistics 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
Food Co., Ltd.
Total 144,101,285.43 144,101,285.43
14.3.2 Investments in Joint Ventures and Associates
Changes in the current period (+, -)
Investment
gains
Other Other
31 December Impairment and losses
Investee Additional Investment comprehensive changes
2020 provision recognized
investment reduction income in
under
adjustment equity
the equity
method
Associates
Shandong Rainbow 22,500,000.00 22,500,000.00
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Changes in the current period (+, -)
Investment
gains
Other Other
31 December Impairment and losses
Investee Additional Investment comprehensive changes
2020 provision recognized
investment reduction income in
under
adjustment equity
the equity
method
Commercial Jet
Co., Ltd.
Total 22,500,000.00 22,500,000.00
(Continued)
Changes in the current period (+, -)
Declared cash
Investee Provision 30 June 2021 Period-end provision
dividends or Others
recognized
profits
Associates
Shandong Rainbow Commercial
22,500,000.00 22,500,000.00
Jet Co., Ltd.
Total 22,500,000.00 22,500,000.00
14.4 Operating revenues and operating costs
Current period Prior period
Items
Operating revenues Operating costs Operating revenues Operating costs
Principal
6,291,202,475.06 6,967,553,429.64 3,884,834,129.13 5,493,454,954.08
activities
Other activities 326,153,754.80 1,978,707.53 292,461,256.27 2,178,109.80
Total 6,617,356,229.86 6,969,532,137.17 4,177,295,385.40 5,495,633,063.88
14.5 Investment Income
Items Current period Prior period
Investment income from held-for-trading financial assets during
-460,830.55 -247,100.00
holding period
Dividend income from other equity instrument income during
208,728.00 3,770,100.00
holding period
Total -252,102.55 3,523,000.00
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Note 15 SUPPLEMENTARY INFORMATION
15.1 Current non-recurring statement of profit and loss
Items Current period Prior period Description
Gains /(losses) on disposal of non-current assets -408,457.19 -219,909.94
Government grants recognized in current profit or loss
(except government grants that is closely related to operations
43,771,787.90 38,080,616.43
and determined based on a fixed scale according to the national
unified standard)
Gains /(losses) arising from changes in fair value of
held-for-trading financial assets, derivative financial assets,
held-for-trading financial liabilities and derivative financial
liabilities during the holding period and investment income
arising from disposal of held-for-trading financial assets, -1,366.59 -1,114,800.45
derivative financial assets, held-for-trading financial liabilities,
derivative financial liabilities and other debt investment except
effective hedging transactions related to the Company's
principal activities
Other non-operating income/expenses except for items
70,820,160.42 14,647,361.61
mentioned above
Other gains or losses satisfying the definition of extraordinary
2,193,593.13 2,628,620.78
gains or losses
Total extraordinary gains/(losses) 116,375,717.67 54,021,888.43
Less: tax effect 29,101,429.42 13,513,493.98
Net extraordinary gains/(losses) 87,274,288.25 40,508,394.45
Less: net extraordinary gains/(losses) attributable to minority
interests
Net extraordinary gains/(losses) attributable to ordinary
87,274,288.25 40,508,394.45
shareholders
15.2 Return on Net Assets and Earnings Per Share (‘EPS’)
15.2.1 January to June 2021
Profit for the reporting period Weighted average return EPS
on net assets (%) Basic Diluted
Net profit attributable to ordinary shareholders -142.43 -1.99 -1.99
Net profit attributable to ordinary shareholders
-158.06 -2.21 -2.21
after extraordinary gains and losses
15.2.2 January to June 2020
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Shandong Airlines Co., Ltd. Semi-Annual Financial Report 2021
Weighted average return EPS
Profit for the reporting period
on net assets (%) Basic Diluted
Net profit attributable to ordinary shareholders -29.45 -3.24 -3.24
Net profit attributable to ordinary shareholders
-30.37 -3.34 -3.34
after extraordinary gains and losses
Company Name: Shandong Airlines Co., Ltd
Date: 27 August 2021
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