| – | a significant or prolonged declinea significant or prolonged declined in the fair value of an investment in an equity instrument below its cost.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | 2 | Significant accounting policies (continued) |
| (l) | Credit losses and impairment of assets (continued) |
| (i) | Credit losses from financial instruments and lease receivables (continued) |
| (B) | Policy applicable prior to January 1, 2018 (continued) |
If any such evidence exists,existed, any impairment loss iswas determined and recognized as follows: | – | For investments in subsidiaries, associates and joint ventures (including those recognized using the equity method (Note 2(c))), the impairment loss is measured by comparing the recoverable amount of the investment with its carrying amount in accordance with Note 2(k)(ii). The impairment loss is reversed if there has been a favourable change in the estimates used to determine the recoverable amount in accordance with Note 2(k)(ii). |
For unquoted equity securities carried at cost, the impairment loss is measured as the difference between the carrying amount of the financial asset and the estimated future cash flows, discounted at the current market rate of return for a similar financial asset where the effect of discounting was material. Impairment losses for equity securities carried at cost were not reversed. Notes
For trade and other current receivables and other financial assets carried at amortized cost, the impairment loss was measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate (i.e. the effective interest rate computed at initial recognition of these assets), where the effect of discounting was material. This assessment was made collectively where these financial assets shared similar risk characteristics, such as similar past due status, and had not been individually assessed as impaired. Future cash flows for financial assets which were assessed for impairment collectively were based on historical loss experience for assets with credit risk characteristics similar to the consolidated financial statementscollective group. (Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated)
| 2 | Significant accounting policies (continued) |
| (k) | Impairment of assets (continued) |
| (i) | Impairment of investments in equity securities and receivables (continued) |
| – | For unquoted equity securities carried at cost, the impairment loss is measured as the difference between the carrying amount of the financial asset and the estimated future cash flows, discounted at the current market rate of return for a similar financial asset where the effect of discounting is material. Impairment losses for equity securities carried at cost are not reversed. |
| – | For trade and other current receivables and other financial assets carried at amortised cost, the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate (i.e. the effective interest rate computed at initial recognition of these assets), where the effect of discounting is material. This assessment is made collectively where these financial assets share similar risk characteristics, such as similar past due status, and have not been individually assessed as impaired. Future cash flows for financial assets which are assessed for impairment collectively are based on historical loss experience for assets with credit risk characteristics similar to the collective group. |
If in a subsequent period the amount of an impairment loss decreasesdecreased and the decrease cancould be linked objectively to an event occurring after the impairment loss was recognized, the impairment loss iswas reversed through profit or loss. A reversal of an impairment loss shallwas only recognized to the extent that it did not result in the asset’s carrying amount exceeding that which would have been determined had no impairment loss been recognized in prior years. | – | For available-for-sale securities, the cumulative loss that has been recognized in the fair value reserve is reclassified to profit or loss. The amount of the cumulative loss that is recognized in income statement is the difference between the acquisition cost (net of any principal repayment and amortisation) and current fair value, less any impairment loss on that asset previously recognized in income statement. |
Foravailable-for-sale equity securities, the cumulative loss that had been recognized in the fair value reserve (recycling) was reclassified to profit or loss. The amount of the cumulative loss that was recognized in consolidated income statement was the difference between the acquisition cost and current fair value, less any impairment loss on that asset previously recognized in profit or loss. Impairment losses recognized in income statementprofit or loss in respect ofavailable-for-sale equity securities arewere not reversed through profit or loss. Any subsequent increase in the fair value of such assets iswas recognized directly in other comprehensive income. Impairment losses arewere written off against the corresponding asset directly, except for impairment losses recognized in respect of trade and other receivables, whose recovery iswas considered doubtful but not remote. In this case, the impairment losses for doubtful debts arewere recorded using an allowance account. When the Group iswas satisfied that recovery iswas remote, the amount considered irrecoverable iswas written off against trade and other receivables directly and any amounts held in the allowance account relating to that debt arewere reversed. Subsequent recoveries of amounts previously charged to the allowance account arewere reversed against the allowance account. Other changes in the allowance account and subsequent recoveries of amounts previously written off directly arewere recognized in consolidated income statement. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated) | 2 | 2 | Significant accounting policies (continued) |
| (l) | (k) | ImpairmentCredit losses and impairment of assets (continued) |
| (ii) | Credit losses from financial guarantees issued |
Financial guarantees are contracts that require the issuer (i.e. the guarantor) to make specified payments to reimburse the beneficiary of the guarantee (the “holder”) for a loss the holder incurs because a specified debtor fails to make payment when due in accordance with the terms of a debt instrument. After initial recognition at fair value, the Group, as an issuer of such a contract, subsequently measure it at the higher of: (i) the amount of the loss allowance and (ii) the amount initially recognized less, when appropriate, the cumulative amount of income recognized. (A) Policy applicable from January 1, 2018 The Group monitors the risk that the specified debtor will default on the contract and recognizes a provision when ECLs on the financial guarantees are determined to be higher than the amount recorded in respect of the guarantees (i.e. the amount initially recognized, less accumulated amortization). To determine ECLs, the Group considers changes in the risk of default of the specified debtor since the issuance of the guarantee. A12-month ECL is measured unless the risk that the specified debtor will default has increased significantly since the guarantee is issued, in which case a lifetime ECL is measured. The same definition of default and the same assessment of significant increase in credit risk as described in Note 2(l)(i) apply. As the Group is required to make payments only in the event of a default by the specified debtor in accordance with the terms of the instrument that is guaranteed, an ECL is estimated based on the expected payments to reimburse the holder for a credit loss that it incurs less any amount that the Group expects to receive from the holder of the guarantee, the specified debtor or any other party. The amount is then discounted using the current risk-free rate adjusted for risks specific to the cash flows. (B) Policy applicable prior to January 1, 2018 Prior to January 1, 2018, a provision would be recognized if and when it became probable that (i) the holder of the guarantee would call upon the Group under the guarantee and (ii) the amount of the claim on the Group was expected to exceed the amount carried in “trade and other payables” in respect of the guarantee, i.e. the amount initially recognized, less accumulated amortization. | (iii) | Impairment of othernon-current assets |
Internal and external sources of information are reviewed at the end of each financial yearreporting period to identify indications that the following assets may be impaired or, except in the case of goodwill, an impairment loss previously recognized no longer exists or may have decreased: | – | Property,Other property, plant and equipment; Construction in progress; Investments in subsidiaries, associates and joint ventures in the Company’s statement of financial position. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | 2 | Significant accounting policies (continued) |
| (l) | – | Investment properties;Credit losses and impairment of assets (continued) |
| (iii) | – | Construction in progress; |
Impairment of othernon-current assets (continued) If any such indication exists, the asset’s recoverable amount is estimated. The recoverable amount of goodwill is estimated annually whether or not there is any indication of impairment. | – | Calculation of recoverable amount |
Calculation of recoverable amount The recoverable amount of an asset is the greaterhigher of its fair value less costs to sellof disposal and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using apre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where an asset does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the smallest group of assets that generates cash inflows independently (i.e. a cash-generating unit).
| – | Recognition of impairment losses |
Recognition of impairment losses An impairment loss is recognized in income statementprofit or loss if the carrying amount of an asset, or the cash-generating unit to which it belongs, exceeds its recoverable amount. Impairment losses recognized in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit (or group of units) and then, to reduce the carrying amount of the other assets in the unit (or group of units) on a pro rata basis, except that the carrying value of an asset will not be reduced below its individual fair value less costs to sell,of disposal (if measurable), or value in use if determinable.(if determinable).
| – | Reversals of impairment losses |
Reversals of impairment losses In respect of assets other than goodwill, an impairment loss is reversed if there has been a favourablefavorable change in the estimates used to determine the recoverable amount. An impairment loss in respect of goodwill is not reversed. A reversal of an impairment loss is limited to the asset’s carrying amount that would have been determined had no impairment loss been recognized in prior years. Reversals of impairment losses are credited to income statementprofit or loss in the year in which the reversals are recognized. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated) | 2 | 2 | Significant accounting policies (continued) |
| (m) | (k) | Impairment of assets (continued)Inventories |
| (iii) | Interim financial reporting and impairment |
Under the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, the Group is required to prepare an interim financial report in compliance with IAS 34, Interim financial reporting, in respect of the first six months of the financial year. At the end of the interim period, the Group applies the same impairment testing, recognition, and reversal criteria as it would at the end of the financial year (Notes 2(k)(i) and (ii)).
Impairment losses recognized in an interim period in respect of goodwill, available-for-sale equity securities and unquoted equity securities carried at cost are not reversed in a subsequent period. This is the case even if no loss, or a smaller loss, would have been recognized had the impairment been assessed only at the end of the financial year to which the interim period relates. Consequently, if the fair value of an available-for-sale equity security increases in the remainder of the annual period, or in any other period subsequently, the increase is recognized in other comprehensive income and not profit or loss.
Inventories, which consist primarily of consumable spare parts and supplies, are stated at cost less any applicable provision for obsolescence, and are charged to consolidated income statement when used in operations. Cost represents the average unit cost. Inventories held for sale or disposal are carried at the lower of cost and net realisablerealizable value. Net realisablerealizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. When inventories are sold, the carrying amount of those inventories is recognized as an expense in the period in which the related revenue is recognized. The amount of any write-down of inventories to net realisablerealizable value and all losses of inventories are recognized as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of inventories is recognized as a reduction in the amount of inventories recognized as an expense in the period in which the reversal occurs. | (n) | (m)Contract assets and contract liabilities |
A contract asset is recognized when the Group recognizes revenue (see Note 2(y)) before being unconditionally entitled to the consideration under the payment terms set out in the contract. Contract assets, if any, are assessed for ECL and are reclassified to receivables when the right to the consideration has become unconditional (see Note 2(o)). A contract liability is recognized when the customer paysnon-refundable consideration before the Group recognizes the related revenue (see Note 2(y)). A contract liability would also be recognized if the Group has an unconditional right to receivenon-refundable consideration before the Group recognizes the related revenue. In such cases, a corresponding receivable would also be recognized (see Note 2(o)). For a single contract with the customer, either a net contract asset or a net contract liability is presented. For multiple contracts, contract assets and contract liabilities of unrelated contracts are not presented on a net basis. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | 2 | Significant accounting policies (continued) |
| (o) | Trade and other receivables |
A receivable is recognized when the Group has an unconditional right to receive consideration. A right to receive consideration is unconditional if only the passage of time is required before payment of that consideration is due. If revenue has been recognized before the Group has an unconditional right to receive consideration, the amount is presented as a contract asset (see Note 2(n)). Trade and other receivablesReceivables are initially recognized at fair value and thereafter stated at amortisedamortized cost using the effective interest method less allowance for impairment of doubtful debts (Note 2(k)credit losses (see Note 2(l)(i)), except where the effect of discounting would be immaterial. In such cases, the receivables are stated at cost less allowance for impairment of bad and doubtful debts..
| (p) | (n) | Interest-bearing borrowings |
Interest-bearing borrowings are recognized initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortisedamortized cost with any difference between the amount initially recognized and redemption value being recognized in consolidated income statement over the period of the borrowings, together with any interest and fees payable, using the effective interest method.
Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated)
| (q) | 2 | Significant accounting policies (continued) |
| (o) | Trade and other payables |
Trade and other payables are initially recognized at fair value. Except for financial guarantee liabilities measured in accordance with (Note 2(q)(i)2(l)(ii)), trade and other payables are subsequently stated at amortisedamortized cost unless the effect of discounting would be immaterial, in which case they are stated at cost. | (r) | (p)Non-current assets held for sale
|
Anon-current asset (or disposal group) is classified as held for sale if it is highly probable that its carrying amount will be recovered through a sale transaction rather than through continuing use and the asset (or disposal group) is available for sale in its present condition. A disposal group is a group of assets to be disposed of together as a group in a single transaction, and liabilities directly associated with those assets that will be transferred in the transaction. Immediately before classification as held for sale, the measurement of thenon-current assets (and all individual assets and liabilities in a disposal group) is broughtup-to-date in accordance with the accounting policies before the classification. Then, on initial classification as held for sale and until disposal, thenon-current assets (except for certain assets as explained below), or disposal groups, are recognized at the lower of their carrying amount and fair value less costs to sell. The principal exceptions to this measurement policy so far as the financial statements of the Group and the Company are concerned are deferred tax assets, assets arising from employee benefits, financial assets (other than investments in subsidiaries, associates and joint ventures) and investment properties. These assets, even if held for sale, would continue to be measured in accordance with the policies set out elsewhere in Note 2. Impairment losses on initial classification as held for sale, and on subsequent remeasurement while held for sale, are recognized in profit or loss. As long as anon-current asset is classified as held for sale, or is included in a disposal group that is classified as held for sale, thenon-current asset is not depreciated or amortized. | (s) | Cash and cash equivalents |
Cash and cash equivalents comprise cash at bank and on hand, demand deposits with banks and other financial institutions, and short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value, having been generally within three months of maturity at acquisition. Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management are also included as a component of cash and cash equivalents for the purpose of the consolidated cash flow statement. Cash and cash equivalents are assessed for ECL in accordance with the policy set out in Note 2(l)(i). NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | 2 | (q) | Financial guarantees issued, provisions and contingent liabilitiesSignificant accounting policies (continued) |
| (t) | (i) | Financial guarantees issued |
Financial guarantees are contracts that require the issuer (i.e. the guarantor) to make specified payments to reimburse the beneficiary of the guarantee (the “holder”) for a loss the holder incurs because a specified debtor fails to make payment when due in accordance with the terms of a debt instrument.
Where the Group issues a financial guarantee, the fair value of the guarantee (being the transaction price, unless the fair value can otherwise be reliably estimated) is initially recognized.
The amount of the guarantee initially recognized is amortised in income statement over the term of the guarantee as income from financial guarantees issued. In addition, provisions are recognized in accordance with (Note 2(q)(ii)) if and when (i) it becomes probable that the holder of the guarantee will call upon the Group under the guarantee, and (ii) the amount of that claim on the Group is expected to exceed the amount currently carried in trade and other payables in respect of that guarantee i.e. the amount initially recognized, less accumulated amortisation.
| (ii) | ProvisionProvisions and contingent liabilities |
Provisions are recognized for other liabilities of uncertain timing or amount when the Group or the Company has a legal or constructive obligation arising as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made. Where the time value of money is material, provisions are stated at the present value of the expenditures expected to settle the obligation. Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence ornon-occurrence of one or more future events are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote. Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated)
| (u) | 2 | Significant accounting policies (continued)Dividend distribution |
Dividend distribution to the Company’s shareholders is recognized as a liability in the Group’s consolidated financial statements in the period in which the dividends are approved by the Company’s shareholders. Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. | (w) | (t) | Defeasance of long-term liabilities |
Where long-term liabilities have been defeased by the placement of security deposits, those liabilities and deposits (and income and charge arising therefrom) are netted off in order to reflect the overall commercial effect of the arrangements. Such netting off has been effected where a right is held by the Group to insist on net settlement of the liability and deposit including in all situations of default and where that right is assured beyond doubt.
| (u) | Deferred benefits and gains |
In connection with the acquisitions or leases of certain aircraft and engines, the Group receives various credits. Such credits are deferred until the aircraft and engines are delivered, at which time they are either applied as a reduction of the cost of acquiring the aircraft and engines, resulting in a reduction of future depreciation, or amortised as a reduction of rental expense for aircraft and engines under leases.depreciation. Income tax for the year comprises current tax and movements in deferred tax assets and liabilities. Current tax and movements in deferred tax assets and liabilities are recognized in consolidated income statement except to the extent that they relate to items recognized in other comprehensive income or directly in equity, in which case the relevant amounts of tax are recognized in other comprehensive income or directly in equity, respectively. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the end of the financialreporting year, and any adjustment to tax payable in respect of previous years. Deferred tax assets and liabilities arise from deductible and taxable temporary differences respectively, being the differences between the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases. Deferred tax assets also arise from unused tax losses and unused tax credits. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | 2 | Significant accounting policies (continued) |
| (x) | Income tax (continued) |
Apart from certain limited exceptions, all deferred tax liabilities, and all deferred tax assets to the extent that it is probable that future taxable profits will be available against which the asset can be utilized, are recognized. Future taxable profits that may support the recognition of deferred tax assets arising from deductible temporary differences include those that will arise from the reversal of existing taxable temporary differences, provided those differences relate to the same taxation authority and the same taxable entity, and are expected to reverse either in the same period as the expected reversal of the deductible temporary difference or in periods into which a tax loss arising from the deferred tax asset can be carried back or forward. The same criteria are adopted when determining whether existing taxable temporary differences support the recognition of deferred tax assets arising from unused tax losses and credits, that is, those differences are taken into account if they relate to the same taxation authority and the same taxable entity, and are expected to reverse in a period, or periods, in which the tax loss or credit can be utilized.
Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated)
| 2 | Significant accounting policies (continued) |
| (v) | Income tax (continued) |
The limited exception to the recognition of deferred tax assets and liabilities are those temporary differences arising from goodwill, the initial recognition of assets or liabilities that affect neither accounting nor taxable profit (provided they are not part of a business combination), and temporary differences relating to investments in subsidiaries, associates and joint ventures to the extent that, in the case of taxable differences, the Group controls the timing of the reversal and it is probable that the differences will not reverse in the foreseeable future, or in the case of deductible differences, unless it is probable that they will reverse in the future and it is probable that future taxable profit will be available against which the temporary difference can be utilized. The amount of deferred tax recognized is measured based on the expected manner of realisationrealization or settlement of the carrying amount of the assets and liabilities, using tax rates enacted or substantively enacted at the end of the financial yearreporting period and are expected to apply when related deferred tax asset is realized or the deferred tax liability is settled. Deferred tax assets and liabilities are not discounted. The carrying amount of a deferred tax asset is reviewed at the end of each reporting period and is reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow the related tax benefit to be utilized. Any such reduction is reversed to the extent that it becomes probable that sufficient taxable profits will be available. Current tax balances and deferred tax balances, and movements therein, are presented separately from each other and are not offset. Current tax assets are offset against current tax liabilities, and deferred tax assets against deferred tax liabilities, if the Company or the Group has the legally enforceable right to set off current tax assets against current tax liabilities and the following additional conditions are met: | – | in the case of current tax assets and liabilities, the Group intends either to settle on a net basis,in the case of current tax assets and liabilities, the Company or to realize the asset and settle the liability simultaneously; or |
| – | in the case of deferred tax assets and liabilities, if they relate to income taxes levied by the same taxation authority on either: |
| – | the same taxable entity; or |
| – | different taxable entities, which, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered, intend to realize the current tax assets and settle the current tax liabilities on a net basis or realize and settle simultaneously. |
Revenue is measured at the fair value of the consideration received or receivable. Provided it is probable that the economic benefits will flow to the Group intends either to settle on a net basis, or to realize the asset and settle the revenueliability simultaneously; or
in the case of deferred tax assets and costs,liabilities, if applicable, canthey relate to income taxes levied by the same taxation authority on either: the same taxable entity; or different taxable entities, which, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be measured reliably, revenue is recognized in income statement as follows:settled or recovered, intend to realize the current tax assets and settle the current tax liabilities on a net basis or realize and settle simultaneously. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
| (i) | Passenger, cargo and mail revenues |
Passenger revenue is recognized at the fair value of the consideration received when the transportation is provided or when an unused ticket expires rather than a ticket is sold. Ticket sales for transportation not yet provided are included in current liabilities as sales in advance of carriage.
Cargo and mail revenues are recognized when the transportation is provided.
Revenues from airline-related business are recognized when services are rendered.
Revenue is stated net of sales tax.
Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated) | 2 | 2 | Significant accounting policies (continued) |
| (y) | (w)Revenue and other income |
Income is classified by the Group as revenue when it arises from the sale of goods, the provision of services or the use by others of the Group’s assets under leases in the ordinary course of the Group’s business. Revenue is recognized when control over a product or service is transferred to the customer, or the lessee has the right to use the asset, at the amount of promised consideration to which the Group is expected to be entitled, excluding those amounts collected on behalf of third parties. Revenue excludes value added tax or other sales taxes and is after deduction of any trade discounts. Further details of the Group’s revenue and other income recognition policies are as follows: | (i) | Passenger, cargo and mail revenue |
Revenue is recognized when passenger, cargo and mail transportation services are provided. Unearned passenger revenue at the reporting date is included within “sales in advance of carriage” in the consolidated statement of financial position. Ticket breakage relates to a portion of contractual rights that the Group does not expect to be exercised. When the Group expects that the consideration received in advance of carriage is not refundable, and the customer is likely to give up a portion of the contractual rights, the Group recognizes, in proportion to the pattern of rights exercised by the customer, the breakage amount to which the Group expects to be entitled as revenue. If the Group does not expect to be entitled to a breakage amount, the Group recognizes the expected breakage amount as revenue when the likelihood of the customer exercising its remaining rights becomes remote. Revenue from airline-related business is recognized when the customers take possession of and accept the relevant services. In the comparative period prior to January 1, 2018, revenue from passenger, cargo and mail transportation, or airline-related business, was recognized when the transportation service or relevant services was provided. As a result of the change in accounting policy, adjustments have been made to opening balances as at January 1, 2018 (see Note 2(b)). NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | 2 | Significant accounting policies (continued) |
| (y) | Revenue recognitionand other income (continued) |
| | (ii) | Frequent flyer revenue |
The Group maintains two major frequent flyer award programmes,programs, namely, the China Southern Airlines Sky Pearl Club and the Xiamen Airlines’ Egret Card Frequent Flyer Programme,Program, which provide travel and other awards to members based on accumulated mileages. AmountAccording to the frequent flyer award programs, the Group allocates the transaction price received in relation to mileage earning flights to flight and mileage awarded on a relative stand-alone selling price basis, and recognized the portion allocated to mileage awarded as “contract liabilities”. The mileage awarded to customers by third parties through means other than flights are initially recognized as “contract liabilities”.
The Group estimates the standalone selling price of mileage awarded through mileage earning flights based on inputs and assumptions derived from historical data, including the estimates on the percentage of mileage awarded that are expected to be redeemed (“expected redemption rate”). Contract liabilities in relation to mileage awarded are subsequently recognized as revenue when the mileage is redeemed and the related benefits are received or used. Revenue on redeemed flights is recognized in accordance with the accounting policy set out in Note 2(y)(i), and revenue on redeemed goods or services is recognized when the customers take possession of the goods or services. In the comparative period prior to January 1, 2018, the amount received in relation to mileage earning flights was allocated, based on fair value, between the flight and mileages earned by members ofmileage awarded under the Group’s frequent flyer award programmes. The value attributedprograms. As a result of the change in accounting policy, adjustments have been made to the awarded mileages is deferredopening balances as a liability, within deferred revenue, until the mileages are redeemed or expired.at January 1, 2018 (see Note 2(b)). NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) Amount received from third parties for the issue of mileages under the frequent flyer award programmes is also deferred as a liability, within deferred revenue.
| 2 | Significant accounting policies (continued) |
| (y) | Revenue and other income (continued) |
As members of the frequent flyer award programmes redeem mileages for an award, revenue is recorded in income statement. Revenue in relation to flight awards is recognized when the transportation is provided. Revenue in relation to non-flight rewards is recognized at the point of redemption where non-flight rewards are selected.
| | (iii) | Operating rentalRental income from operating leases |
ReceivableRental income receivable under operating leases is recognized in consolidated income statement in equal instalments over the periods covered by the lease term, except where an alternative basis is more representative of the pattern of benefits to be derived from the use of the leased asset. Lease incentives granted are recognized in income statementprofit or loss as an integral part of the aggregate net lease payments receivables.receivable. Contingent rentals are recognized as income in the accounting period in which they are earned.
| – | Dividend income from unlisted investments is recognized when the shareholder’s right to receive payment is established. |
Dividend income from unlisted investments is recognized when the shareholder’s right to receive payment is established. | – | Dividend income from listed investments is recognized when the share price of the investment goes ex-dividend. |
Dividend income from listed investments is recognized when the share price of the investment goesex-dividend. | | (v) | Government grants are recognized in consolidated balance sheet initially when there is reasonable assurance that they will be received and that the Group will comply with the conditions attaching to them. Grants that compensate the Group for expenses incurred are recognized as revenue inInterest income statement on a systematic basis in the same periods in which the expenses are incurred. Grants that compensate the Group for the cost of an asset are deducted from the carrying amount of the asset and consequently are effectively recognized in income statement over the useful life of the asset by way of reduced depreciation expense. |
Interest income is recognized as it accrues under the effective interest method using the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the gross carrying amount of the financial asset. For financial assets measured at amortized cost or FVOCI (recycling) that are not credit-impaired, the effective interest rate is applied to the gross carrying amount of the asset. For credit-impaired financial assets, the effective interest rate is applied to the amortized cost (i.e. gross carrying amount net of loss allowance) of the asset (see Note 2(l)(i)). | | (vi) | Interest income is recognized as it accrues using the effective interest method.Government grants |
Government grants are recognized in the consolidated statement of financial position initially when there is reasonable assurance that they will be received and that the Group will comply with the conditions attaching to them. Grants that compensate the Group for expenses incurred are recognized as income in consolidated income statement on a systematic basis in the same periods in which the expenses are incurred. Grants that compensate the Group for the cost of an asset are deducted from the carrying amount of the asset and consequently are effectively recognized in profit or loss over the useful life of the asset by way of reduced depreciation expense. | (z) | (x) | Traffic commissions |
Traffic commissions are expensed in the consolidated income statement when the transportation is provided and the related revenue is recognized. Traffic commissions for transportation not yet provided are recorded on the consolidated balance sheetstatement of financial position as prepaid expense.
Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | 2 | 2 | Significant accounting policies (continued) |
| (aa) | (y) | Maintenance and overhaul costs |
Routine maintenance, repairs and overhauls are charged to income statement as and when incurred.
In respect of owned and finance leased aircraft, components within the aircraft subject to replacement during major overhauls are depreciated over the average expected life between major overhauls. When each major overhaul is performed, its cost is recognized in the carrying amount of property, plantas Note 2(i) and equipmentNote 2(k). Other routine maintenance, repairs and is depreciated over the estimated period between major overhauls. Any remaining carrying amount of cost of previous major overhaul is derecognized andoverhauls are charged to consolidated income statement. statement as and when incurred. In respect of certain leased aircraft, held under operating leases, the Group has responsibility to fulfil certain return conditions under relevant lease agreements. In order to fulfil these return conditions, major overhauls are required to be conducted on a regular basis.conducted. Accordingly, except for the estimated costs of major overhauls recognized asright-of-use assets at the lease commencement date, see Note 2(k), other estimated costs of major overhauls are accrued and charged to the consolidated income statement over the estimated period between overhauls. After the aircraft has completed its last overhaul cycle prior to being returned, expected cost of overhaul to be incurred at the end of the lease is estimated and accrued over the remaining period of the lease.period. Differences between the estimated costs and the actual costs of overhauls are charged to consolidated income statement in the period when the overhaul is performed. In the comparative periods prior to January 1, 2019, estimated costs of major overhaul for the aircraft held under operating lease were accrued and charged to the consolidated income statement over the estimated overhaul period. As a result of the change of accounting policy, adjustments have been made to opening balances as at January 1, 2019 (see Note 2(b)). BorrowingGeneral and specific borrowing costs that are directly attributable to the acquisition, construction or production of an asset which necessarily takes a substantial period of time to get ready for its intended use or sale are capitalisedcapitalized as part of the cost of that asset. Other borrowing costs are expensed in the period in which they are incurred.
The capitalisationcapitalization of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the asset is being incurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for its intended use or sale are in progress. CapitalisationCapitalization of borrowing costs is suspended or ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are interrupted or complete. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization. Borrowing costs include interest expense, finance charges in respect of lease liabilities and exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | 2 | (aa) | Employee benefitsSignificant accounting policies (continued) |
| Short term(i) | Short-term employee benefits and contributions to defined contribution retirement schemes |
Salaries, annual bonuses and contributions to defined contribution retirement schemes are accrued in the year in which the associated services are rendered by employees. Where payment or settlement is deferred and the effect would be material, these amounts are stated at their present values. Termination benefits are recognized when, and only when, the Group demonstrably commits itself to terminate employment or to provide benefits as a result of voluntary redundancy by having a detailed formal plan which is without realistic possibility of withdrawal. | (iii) | Share-based paymentRetirement benefits |
According to IAS 19, Employee Benefits, an entity shall account not only for its legal obligation under the formal terms of a defined benefit plan, but also for any constructive obligation that arises from the entity’s informal practices where the entity has no realistic alternative but to pay the employee benefits. The fair valueGroup believes the payments of welfare subsidy to those retirees who retired before the amount payable to employee in respectestablishment of share appreciation rights (“SARs”), whichPension Scheme are settled in cash, is recognized as an expense withdiscretionary and have not created a corresponding increase in liabilities, over the vesting period. The liability is remeasured at each reporting date and at settlement date. Any changes in the fair value of the liabilitylegal or constructive obligation. Such payments are recognized as staff cost in the consolidated income statement.
Notesmade according to the consolidated financial statementsGroup’s business performance, and can be suspended at any time.
(Prepared in accordance with International Financial Reporting Standards)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | 2 | 2 | Significant accounting policies (continued) |
| (ad) | (ab) | Translation of foreign currencies |
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘(“the functional currency’currency”). The consolidated financial statements are presented in Renminbi, which is the Company’s functional and the Group’s presentation currency. Foreign currencies transactions during the year are translated into Renminbi at the applicable rates of exchange quoted by the People’s Bank of China (“PBOC”) prevailing at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated into Renminbi at the PBOC exchange rates prevailing at the end of the financial year.reporting period. Exchange gains and losses are recognized in income statement.profit or loss. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated into Renminbi at the PBOC exchange rates prevailing at the transaction dates. The transaction date is the date on which the Group initially recognizes suchnon-monetary assets or liabilities.Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated into Renminbi at the PBOC exchange rates prevailing at the dates the fair value was determined. The results of foreign operations are translated into Renminbi at the PBOC exchange rates approximating the foreign exchange rates prevailing at the dates of the transactions. Statement of financial position items are translated into Renminbi at the PBOC exchange rates prevailing at the end of the reporting period. The resulting exchange differences are recognized in other comprehensive income and accumulated separately in equity in the exchange reserve. | (a) | A person, or a close member of that person’s family, is related to the Group if that person: |
| | (i) | has control or joint control over the Group; |
| | (ii) | has significant influence over the Group; or |
| | (iii) | is a member of the key management personnel of the Group or the Group’s parent. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | 2 | Significant accounting policies (continued) |
| (ae) | Related parties (continued) |
| (b) | An entity is related to the Group if any of the following conditions applies: |
| | (i) | The entity and the Group are members of the same Groupgroup (which means that each parent, subsidiary and fellow subsidiary is related to the others). |
| | (ii) | One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member). |
| | (iii) | Both entities are joint ventures of the same third party. |
| | (iv) | One entity is a joint venture of a third entity and the other entity is an associate of the third entity. |
| | (v) | The entity is a post-employment benefit plan for the benefit of employees of either the Group or an entity related to the Group. |
| | (vi) | The entity is controlled or jointly controlled by a person identified in (a). |
| | (vii) | A person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity). |
| (viii) | The entity, or any member of a group of which it is a part, provides key management personnel services to the Group or to the Group’s parent. |
Close members of the family of a person are those family members who may be expected to influence, or be influenced by, that person in their dealings with the entity.
Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated)
| (af) | 2 | Significant accounting policies (continued)Segment reporting |
| (ad) | Segmental information |
Operating segments, and the amounts of each segment item reported in the financial statements, are identified from the financial information provided regularly to the Group’s most senior executive management, who is the chief operating decision maker, for the purposes of allocating resources to, and assessing the performance of, the Group’s various lines of business and geographical locations. Individually material operating segments are not aggregated for financial reporting purposes unless the segments have similar economic characteristics and are similar in respect of the nature of products and services, the nature of production processes, the type or class of customers, the methods used to distribute the products or provide the services, and the nature of the regulatory environment. Operating segments which are not individually material may be aggregated if they share a majority of these criteria. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | 3 | 3 | Accounting estimates and judgements |
The Groups’Group’s financial position and results of operations are sensitive to accounting methods, assumptions and estimates that underlie the preparation of the consolidated financial statements. The Group bases the assumptions and estimates on historical experience and on various other assumptions that the Group believes to be reasonable and which form the basis for making judgements about matters that are not readily apparent from other sources. On an ongoing basis, management evaluates its estimates. Actual results may differ from those estimates as facts, circumstances and conditions change. The selection of critical accounting policies, the judgements and other uncertainties affecting application of those policies and the sensitivity of reported results to changes in condition and assumptions are factors to be considered when reviewing the financial statements. In addition to the assumptions and estimates regarding provision for early retirement benefits and fair value measurements of financial instruments disclosed in Note 43 and Note 4(g) respectively,, the Group believes the following critical accounting policies also involve the most significantkey accounting estimates and judgements and estimates used in the preparation of the financial statements. | (a) | (a) | Accounting estimates |
| (i) | Impairment of trade receivables |
Trade receivables are recognized initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments are considered indicators that the trade receivable is impaired. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the assets is reduced through the use of an allowance account, and the amount of the loss is recognized in the income statement. When a trade receivable is uncollectible, it is written off against the provision account for trade receivables. Subsequent recoveries of amounts previously written off are credited in the income statement.
Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated)
| 3 | Accounting estimates and judgements (continued) |
| (a) | Accounting estimates (continued) |
| (ii) | Impairment of long-lived assets (other than goodwill) |
If circumstances indicate that the carrying amount of a long-lived asset may not be recoverable, the asset may be considered “impaired”, and an impairment loss may be recognized in accordance with IAS36, IAS 36,Impairment of Assets.Assets. The carrying amounts of long-lived assets are reviewed periodically in order to assess whether the recoverable amounts have declined below the carrying amounts. These assets are tested for impairment whenever events or changes in circumstances indicate that their recorded carrying amounts may not be recoverable. When such a decline has occurred, the carrying amount is reduced to the recoverable amount. The recoverable amount is the greaterhigher of the fair value less costs to sellof disposal and value in use. In particular, in determining the value in use of the Group’s aircraft fleet, expected future cash flows to be generated by the asset are discounted to their present value, which requires significant judgement relating to the level offorecast traffic revenue, forecast operating costs and the amount of operating costs.discount rate applied. The Group uses all readily available information in determining an amount that is a reasonable approximation of recoverable amount, including estimates based on reasonable and supportable assumptions for projections of traffic revenue and amountoperating costs and application of operating costs.discount rate. | (b) | (iii) | Depreciation and amortization |
Property, plant and equipment and right-of-use assets are depreciated or amortized on a straight-line basis over the estimated useful lives, after taking into account the estimated residual value. The Group reviews the estimated useful lives of assets annually in order to determine the amount of depreciation and amortization expense to be recorded during any financial year. The useful lives are based on the Group’s historical experience with similar assets and take into account anticipated technological changes. The depreciation and amortization expense for future periods is adjusted if there are significant changes from previous estimates. | (c) | (iv) | Provision for major overhaulsDiscount rate and return overhaul costs used to measureright-of-use assets relating to aircraft |
As disclosed in Note 2(k) to the consolidated financial statements, the Group’sright-of-use assets relating to aircraft consists primarily of lease payments over the term of the leases and an estimate of cost of overhauls to restore the underlying assets to the agreed conditions at the end of the lease term (“return overhaul costs”), discounted to the present value. The minor change in the discount rate and the return overhaul costs may have a significant impact on the measurement of the Group’sright-of-use assets. ProvisionIn the comparative periods prior to January 1, 2019, provision for the cost of major overhaulsoverhaul to fulfil certainthe lease return conditionconditions for airframes and engines under operating leases isleased aircraft were accrued and charged to consolidated income statement.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | 3 | Accounting estimates and judgements (continued) |
| (d) | Frequent flyer revenue |
According to the income statement overfrequent flyer award programs, the estimated overhaul period. This requiresallocation of stand-alone selling price of the mileage awarded involves the estimation of the expected overhaul cycle and overhaul cost, which areredemption rate. The expected redemption rate is estimated based on the historical experience, of actual cost incurred for overhauls of airframesmileage redemption, taking into consideration future mileage redemption patterns, which are associated with changes in the terms to mileage programs and engines of the same or similar types.customer behavior. Different estimates could significantly affect the estimated provisioncontract liabilities and the results of operations. | (v) | Frequent flyer revenue |
TheIn the comparative period prior to January 1, 2018, the amount of revenue attributable to the mileagesmileage earned by the members of the Group’s frequent flyer award programmes isprograms was estimated based on the fair value of the mileagesmileage awarded and the expected redemption rate. The fair value of the mileagesmileage awarded iswas estimated by reference to external sales. The method to estimate the expected redemption rate was estimated based on historical experience, anticipated redemption pattern and the frequent flyer programme design.remains unchanged.
| (e) | (vi) | Provision for consumable spare parts and maintenance materialsIncome tax |
Provision for consumable spare parts and maintenance materials is made based on the difference between the carrying amount and the net realisable value. The net realisable value is estimated based on current market condition, historical experience and Company’s future operation plan for the consumable spare parts and maintenance materials. The net realisable value may be adjusted significantly due to the change of market condition and the future plan for the consumable spare parts and maintenance materials.
Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated)
| 3 | Accounting estimates and judgements (continued) |
| (a) | Accounting estimates (continued) |
Significant judgment is required in determining the provision for income tax. There are manycertain transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognizes liabilities for anticipated tax audit issues based onneeds to make judgements and estimates of whether additional tax will be due.in determining the current income tax. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the year in which such determination is made.
| (f) | (b) | Accounting judgementsTicket breakage revenue |
According to IAS 19, an entity shall account not only for its legal obligation under the formal terms of a defined benefit plan, but also for any constructive obligation that arises from the entity’s informal practices where the entity has no realistic alternative but to pay the employee benefits. The Company believes the payments of welfare subsidy to those retirees who retired before the establishment of Pension Scheme (as definedGroup recognizes, in Note 49 (a)) are discretionary and have not created a legal or constructive obligation. Such payments are made accordingproportion to the pattern of rights exercised by the customer, the breakage amount to which the Group expects to be entitled as ticket breakage revenue. Such portion is estimated based on the Group’s business performance,historical experiences, and can be suspended at any time (Note 14).the estimated revenue is recognized only to the extent that it is highly probable that a significant reversal in cumulative revenue recognized will not occur when the uncertainty is resolved. Different estimates could significantly affect the ticket breakage revenue recognized in the current financial year.
In the comparative period prior to January 1, 2018, ticket breakage revenue was recognized when the tickets expired, and such revenue recognition did not involve significant accounting estimates. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | 4 | 4 | Financial risk management and fair values |
The Group is exposed to liquidity, interest rate, currency, credit risks and commodity jet fuel price risk in the normal course of business. The Group’s overall risk management programmeprogram focuses on the unpredictability of financial market and seeks to minimize the adverse effects on the Group’s financial performance. The Group’s exposure to these risks and the financial risk management policies and practices used by the Group to manage these risks are described below. As at December 31, 2015,2019, the Group’s current liabilities exceeded its current assets by RMB51,422RMB78,752 million. For the year ended December 31, 2015,2019, the Group recorded a net cash inflow from operating activities of RMB23,734RMB31,175 million, a net cash outflow from investing activities of RMB6,931RMB14,427 million and a net cash outflow from financing activities of RMB27,695RMB21,833 million, which in total resulted in a net decrease in cash and cash equivalents of RMB10,892 million RMB5,085 million. The Group is dependent on its ability to maintain adequate cash inflow from operations, its ability to maintain existing external financing, and its ability to obtain new external financing to meet its debt obligations as they fall due and to meet its committed future capital expenditures. The Group’s policy is to regularly monitor its liquidity requirements and its compliance with lending covenants, to ensure that it maintains sufficient reserves of cash and adequate committed lines of funding from major financial institutions to meet its liquidity requirements in the short and longer term. As at December 31, 2015,2019, the Group had banking facilities with several PRC banks and financial institutions for providing bank financing up to approximately RMB173,739RMB308,343 million, (2014: RMB187,133 million), of which approximately RMB131,021RMB251,165 million (2014: RMB126,703 million) was unutilised.unutilized. The Directors of the Company believe that sufficient financing will be available to the Group when and where needed. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated) | 4 | 4 | Financial risk management and fair values (continued) |
| (a) | (a) | Liquidity risk (continued) |
The Directors offollowing tables show the Company have carried out a detailed review of the cash flow forecast of the Group for the twelve months ending December 31, 2016. Based on such forecast, the Directors have determined that adequate liquidity exists to finance the working capital, capital expenditure requirements and dividend payments of the Group during that period. In preparing the cash flow forecast, the Directors have considered historical cash requirements of the Group as well as other key factors, including the availability of the above-mentioned bank facilities, which may impact the operations of the Group during the next twelve-month period. The Directors of the Company are of the opinion that the assumptions and sensitivities which are included in the cash flow forecast are reasonable. However, as with all assumptions in regard to future events, these are subject to inherent limitations and uncertainties and some or all of these assumptions may not be realized. As at December 31, 2015, theremaining contractual maturities at the end of financial yearsthe reporting period of the Group’s borrowingsnon-derivative financial liabilities, which are based on contractual undiscounted cash flows (including interest payments computed using contractual rates or, if floating, based on rates current at the end of the reporting period) and obligations under finance leases are disclosedthe earliest date the Group can be required to pay:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | 2019 Contractual undiscounted cash outflow | | | | | | | Within 1 year or on demand
RMB million | | | More than 1 year but
less than 2 years
RMB million | | | More than 2 years but
less than 5 years
RMB million | | | More than 5 years
RMB million | | | Total RMB million | | | Carrying amount at December 31 RMB million | | Borrowings | | | 38,304 | | | | 4,251 | | | | 8,720 | | | | 2,007 | | | | 53,282 | | | | 51,180 | | Lease liabilities | | | 25,404 | | | | 23,860 | | | | 63,003 | | | | 44,814 | | | | 157,081 | | | | 134,074 | | Trade and other payables and accrued charges | | | 21,300 | | | | — | | | | — | | | | — | | | | 21,300 | | | | 21,300 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 85,008 | | | | 28,111 | | | | 71,723 | | | | 46,821 | | | | 231,663 | | | | 206,554 | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | 2018 Contractual undiscounted cash outflow | | | Carrying amount at December 31
RMB million | | | | Within 1 year or on demand
RMB million | | | More than 1 year but
less than 2 years
RMB million | | | More than 2 years but
less than 5 years
RMB million | | | More than 5 years
RMB million | | | Total
RMB million | | | | | | | | | | | | | | | | | | | | (Note) | | Borrowings | | | 40,121 | | | | 8,272 | | | | 6,335 | | | | 2,188 | | | | 56,916 | | | | 54,417 | | Obligations under finance leases | | | 12,062 | | | | 11,738 | | | | 36,765 | | | | 22,200 | | | | 82,765 | | | | 72,221 | | Trade and other payables and accrued charges | | | 21,292 | | | | — | | | | — | | | | — | | | | 21,292 | | | | 21,292 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 73,475 | | | | 20,010 | | | | 43,100 | | | | 24,388 | | | | 160,973 | | | | 147,930 | | | | | | | | | | | | | | | | | | | | | | | | | | |
Note: The Group has initially applied IFRS 16 at January 1, 2019 using the modified retrospective approach. Under this approach, comparative information is not restated. See Note 2(b). NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Notes 35, 36 respectively.Renminbi unless otherwise indicated) | 4 | (b)Financial risk management and fair values (continued) |
TheInterest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates and maturity information of therates. The Group’s borrowings and obligations under finance leases are disclosed in Note 35 and Note 36, respectively. Majority of the Group’s borrowing arelease liabilities issued at floating and fixed interest rates which expose the Group to cash flow interest rate risk. Borrowings at fixed interest rates expose the Group torisk and fair value interest risk.rate risk, respectively. The Group hasdetermines the ratio of fixed-rate and floating-rate instruments according to the market environment, and maintains an appropriate combination of fixed-rate and floating-rate instruments by reviewing and monitoring it on a regular basis.
Interest rate swaps, denominated in United States Dollars (“USD”), have been entered into interest rate swap contracts to mitigate its cash flow and fair value interest rate risk. Based on the various scenarios, the Group manages its cash flow interest rate risk by using floating-to-fixed interest rate swaps. Such interest rate swaps have the economic effect of converting borrowings or obligations under finance leases from floating rates to fixed rates. Generally, the Group raises long-term borrowings or obligations under finance leases at floating rates and swaps them into fixed rates that are lower than those available if the Group borrowed at fixed rates directly. Under the interest rate swaps, the Group agrees with other third parties to exchange, at specified intervals (primarily quarterly), the difference between fixed contract rates and floating-rate interest amounts calculated by reference to the agreed notional amounts.amounts (Note 27).
Cross currency swaps have been entered into to mitigate its interest rate risk and foreign currency risk. Under the cross currency swaps, the Group agrees with other third parties to exchange the floating interest and principal payments in USD for fixed interest and principal payments in RMB for certain USD bank loans (Note 27). AtAs at December 31, 2015,2019, it is estimated that a general increase/decrease of 100 basis points in interest rates, with all other variables held constant, would have decreased/increased the Group’s profit after tax and retained profits by approximately RMB416RMB559 million (2014: RMB569(2018: RMB539 million; 2013: RMB4432017: RMB530 million). Other components of consolidated equity would not be affected (2014 and 2013: Nil) by the changes in interest rates.
The sensitivity analysis above indicates the instantaneous change in the Group’s profit after tax and retained profits and other components of consolidated equity that would arise assuming that the change in interest rates had occurred at the end of the reporting period and had been applied tore-measure those financial instruments held by the Group which expose the Group to fair value interest rate risk at the end of the reporting period. In respect of the exposure to cash flow interest rate risk arising from floating ratenon-derivative instruments held by the Group at the end of the reporting period, the impact on the Group’s profit after tax (and retained profits) and other components of consolidated equity is estimated as an annualisedannualized impact on interest expense or income of such a change in interest rates. This analysis is performed on the same basis as that for 20142018 and 2013.
Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated)2017.
| (c) | 4 | Financial risk management and fair values (continued) |
Renminbi is not freely convertible into foreign currencies. All foreign exchange transactions involving Renminbi must take place either through the PBOC or other institutions authorisedauthorized to buy and sell foreign exchange or at a swap centre. center. The Group has significant exposure to foreign currency risk as substantially allmajority of the Group’s obligations under finance leaseslease liabilities (Note 36),37) and certain of the bank borrowings (Note 35) and operating lease commitments (Note 47(b))36) are denominated in foreign currencies, principally US dollars,USD, Euro and Japanese Yen. Depreciation or appreciation of Renminbi against foreign currencies affects the Group’s results significantly because the Group’s foreign currency liabilities generally exceed its foreign currency assets. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | 4 | Financial risk management and fair values (continued) |
| (c) | Foreign currency risk (continued) |
The following table indicates the instantaneous change in the Group’s profit after tax and retained profits that would arise if foreign exchange rates to which the Group has significant exposure at the beginningend of the financial yearreporting period had changed at that date, assuming all other risk variables remained constant. The range of such sensitivity was considered to be reasonably possible at the end of the reporting date. | | | 2015 | | | 2014 | | | 2013 | | | | | Appreciation
/(depreciation) of
Renminbi
against
foreign
currency | | | Increase
/(decrease) on
profit after tax
and
retained
profits RMB
million | | | Appreciation/
(depreciation)
of Renminbi
against
foreign
currency | | | Increase
/(decrease)
on profit
after tax and
retained
profits RMB
million | | | Appreciation/
(depreciation)
of Renminbi
against
foreign
currency | | | Increase/
(decrease) on
profit after
tax and
retained
profits RMB
million | | | | | | | | | | | | | | | | | | | | | | | United States | | | | | | | | | | | | | | | | | | | | | | | | | | Dollars | | | 1 | % | | | 453 | | | | 1 | % | | | 767 | | | | 1 | % | | | 654 | | | | | | (1 | )% | | | (453 | ) | | | (1 | )% | | | (767 | ) | | | (1 | )% | | | (654 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | Euro | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1 | % | | | 38 | | | | | - | | | - | | | | | - | | | - | | | | | | (1 | )% | | | (38 | ) | | | | - | | | - | | | | | - | | | - | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Singapore | | | | | | | | | | | | | | | | | | | | | | | | | | Dollars | | | | - | | | | - | | | 2 | % | | | 6 | | | | 2 | % | | | 7 | | | | | | | - | | | | - | | | (2 | )% | | | (6 | ) | | | (2 | )% | | | (7 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | Japanese | | | | | | | | | | | | | | | | | | | | | | | | | | Yen | | | 10 | % | | | 135 | | | | 10 | % | | | 145 | | | | 10 | % | | | 177 | | | | | | (10 | )% | | | (135 | ) | | | (10 | )% | | | (145 | ) | | | (10 | )% | | | (177 | ) |
| | | | | | | | | | | | 2019 | | | | | Appreciation/(depreciation) of Renminbi against foreign currency | | | Increase/(decrease) on profit after tax and retained profits RMB million | | USD | | | 1 | % | | | 434 | | | | | (1 | %) | | | (434 | ) | Euro | | | 1 | % | | | 26 | | | | | (1 | %) | | | (26 | ) | Japanese Yen | | | 10 | % | | | 94 | | | | | (10 | %) | | | (94 | ) |
| | | | | | | | | | | | 2018 | | | | | Appreciation/(depreciation) of Renminbi against foreign currency | | | Increase/(decrease) on��profit after tax and retained profits RMB million | | USD | | | 1 | % | | | 195 | | | | | (1 | %) | | | (195 | ) | Euro | | | 1 | % | | | 28 | | | | | (1 | %) | | | (28 | ) | Japanese Yen | | | 10 | % | | | 103 | | | | | (10 | %) | | | (103 | ) |
| | | | | | | | | | | | 2017 | | | | | Appreciation/(depreciation) of Renminbi against foreign currency | | | Increase/(decrease) on profit after tax and retained profits RMB million | | USD | | | 1 | % | | | 278 | | | | | (1 | %) | | | (278 | ) | Euro | | | 1 | % | | | 31 | | | | | (1 | %) | | | (31 | ) | Japanese Yen | | | 10 | % | | | 116 | | | | | (10 | %) | | | (116 | ) |
Results of the analysis as presented in the above table represent an aggregation of the instantaneous effects on each of the Group entities’ profit after tax and retained profits measured in the respective functional currencies, translated into Renminbi at the exchange rate ruling at the end of the financial yearreporting period for presentation purposes. The sensitivity analysis assumes that the change in foreign exchange rates had been applied tore-measure those financial instruments, borrowings, and lease obligationsliabilities held by the Group which expose the Group to foreign currency risk at the end of the financial year,reporting period, including inter-company payables and receivables within the Group which are denominated in a currency other than the functional currencies of the lender or the borrower. The analysis excludes differences that would result from the translation of the financial statements of foreign operations into the Group’s presentation currency. The analysis is performed on the same basis for 20142018 and 2013.2017. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated) | 4 | Financial risk management and fair values (continued) |
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the Group. The Group’s credit risk is primarily attributable to cash and cash equivalents, trade receivables, other receivables and the guarantees on personal bank loans provided to the Group’s pilot trainees.derivative financial instruments. Cash and cash equivalents Substantially all of the Group’s cash and cash equivalents are deposited with major reputable PRC financial institutions, which management believes are of high credit quality. As the counterparties have favorable credit ratings, the Group does not expect there to be a risk of default. Trade receivables A significant portion of the Group’s air tickets are sold by agents participating in the Billing and Settlement Plan (“BSP”), a clearing scheme between airlines and sales agents organisedorganized by International Air Transportation Association. The use of the BSP reduces credit risk to the Group. As at December 31, 2015,2019, the balance due from BSP agents amounted to RMB1,054RMB984 million (2014: RMB990(December 31, 2018: RMB955 million). The credit risk exposure to BSP and the remaining trade receivables balance are monitored by the Group on an ongoing basis and the allowance for impairment of doubtful debtsrelevant credit risk is within management’s expectations. Further quantitative disclosures in respect of The Group measures loss allowances for trade receivables at an amount equal to lifetime ECLs, which is calculated using a provision matrix. As the Group’s historical credit loss experience indicates significantly different loss patterns for different customer segments, the loss allowance based on past due status is further distinguished between air ticket receivables, mileage credits sales receivables, general aviation service receivables, receivables on cooperation flights and other trade receivables. The following table provides information about the Group’s exposure to credit risk arising fromand ECLs for air ticket receivables as at December 31, 2019 and 2018: | | | | | | | | | | | | | | | | December 31, 2019 | | | | | Expected loss rate % | | | Gross carrying amount RMB million | | | Loss allowance RMB million | | Within 3 months | | | 0.01 | % | | | 1,877 | | | | — | | More than 3 months but less than 1 year | | | 50.00 | % | | | 11 | | | | 6 | | More than 1 year but less than 2 years | | | 100.00 | % | | | 7 | | | | 7 | | More than 2 years but less than 3 years | | | 100.00 | % | | | — | | | | — | | More than 3 years | | | 100.00 | % | | | 16 | | | | 16 | | | | | | | | | | | | | | | | | | | | | | 1,911 | | | | 29 | | | | | | | | | | | | | | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | 4 | Financial risk management and fair values (continued) |
| (d) | Credit risk (continued) |
| | | | | | | | | | | | | | | | December 31, 2018 | | | | | Expected
loss rate
% | | | Gross
carrying
amount
RMB million | | | Loss
allowance
RMB million | | Within 3 months | | | 0.01 | % | | | 1,940 | | | | — | | More than 3 months but less than 1 year | | | 50.00 | % | | | 8 | | | | 4 | | More than 1 year but less than 2 years | | | 100.00 | % | | | 2 | | | | 2 | | More than 2 years but less than 3 years | | | 100.00 | % | | | 6 | | | | 6 | | More than 3 years | | | 100.00 | % | | | 16 | | | | 16 | | | | | | | | | | | | | | | | | | | | | | 1,972 | | | | 28 | | | | | | | | | | | | | | |
Expected loss rates are estimated with reference to actual loss experience over the past years. These rates are adjusted to reflect differences between economic conditions during the period over which the historical data has been collected, current conditions and the Group’s view of economic conditions over the expected lives of the receivables. The credit risk of mileage credits sales receivables, general aviation service receivables and receivables on cooperation flights are considered to be low. The Group does not make credit loss allowance for these receivables. The Group measures credit loss allowance for other trade receivables is set out in Note 32. The Company and its subsidiary, Xiamen Airlines, entered into agreements with their pilot trainees and certain banksamounted to provide guarantees on personal bank loans amounting to RMB627RMB7 million (December 31, 2014: RMB6462018: RMB8 million) that can be drawn by the pilot trainees to finance their respective flight training expenses. As at December 31, 2015, total personal bank loans of RMB454 million (December 31, 2014: RMB486 million), under these guarantees, were drawn down from the banks. During the year, the Group has paid RMB4 million (2014: RMB2 million) to the banks due to the default of payments of certain pilot trainees.based on ECLs.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | 4 | (e)Financial risk management and fair values (continued) |
| (d) | Credit risk (continued) |
Movement in the loss allowance account in respect of trade receivables during the year is as follows: | | | | | | | | | | | | 2019
RMB
million | | | 2018
RMB
million | | Balance at January 1 | | | 36 | | | | 37 | | Amounts written off during the year | | | (11 | ) | | | (2 | ) | Impairment losses written back | | | (1 | ) | | | (4 | ) | Impairment losses recognized during the year | | | 12 | | | | 5 | | | | | | | | | | | Balance at December 31 | | | 36 | | | | 36 | | | | | | | | | | |
Derivative financial instruments The Group entered into derivative financial instruments arrangements with counterparties such as banks. Such arrangements are settled in net. As the counterparties have favourable credit ratings, the Group does not expect there to be a risk of default. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | 4 | Financial risk management and fair values (continued) |
The Group’s results of operations may be significantly affected by fluctuations in fuel prices since the jet fuel expenses are a significant cost for the Group. A reasonable possible increase/decrease of 10% (2014(2018 and 2013:2017:10%) in jet fuel price, with volume of fuel consumed and all other variables held constant, would have increased/decreased the fuel costs by approximately RMB2,627RMB4,281 million (2014: RMB3,773(2018: RMB4,292 million; 2013: RMB3,5542017: RMB3,190 million). The sensitivity analysis indicates the instantaneous change in the Group’s jet fuel costcosts that would arise assuming that the change in fuel price had occurred at the beginning of the financial year. The Group’s primary objectives in managing capital are to safeguard the Group’s ability to continue as a going concern, and to generate sufficient profit to maintain growth and provide returns to its shareholders, by securing access to finance at a reasonable cost. The Group manages the amount of capital in proportion to risk and manages its debt portfolio in conjunction with projected financing requirements. The Group monitors capital on the basis of the debt ratio, which is calculated as total liabilities divided by total assets. During 2019, the Group’s strategy, which was unchanged from 2018 and 2017, was to maintain a debt ratio at a range of levels to support the operations and development of the Group’s business in the long run. In order to maintain or adjust the debt ratio, the Group may adjust the amount of dividends paid to shareholders, issue new shares, return capital to shareholders, raise new debt financing or sell assets to reduce debt. The Group has initially applied IFRS 16 using the modified retrospective approach. Under this approach, the Group recognizesright-of-use assets and corresponding lease liabilities for almost all leases previously accounted for as operating leases as at January 1, 2019. This caused a significant increase in the Group’s total debt and hence the Group’s debt ratio rose from 68% to 75% on January 1, 2019 when compared to its position as at December 31, 2018. NeitherExcept for the Company nor anycompliance of its subsidiaries arecertain financial covenants for maintaining the Group’s banking facilities and borrowings, the Group is not subject to any externally imposed capital requirements. The Group’s debt ratio was 73% atGroup complied with the financial covenants attached to borrowings as of and for the years ended December 31, 2015 (2014: 77%).2019 and 2018.
Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | 4 | Financial risk management and fair values (continued) |
| | (i) | Financial instruments carried at fair value |
Fair value hierarchy The following table presents the carrying value of financial instruments measured at fair value at the end of financialthe reporting period acrosson a recurring basis, categorized into the three levels of thethree-level fair value hierarchy as defined in IFRS 7, Financial Instruments: Disclosures, with the13,Fair value measurement. The level into which a fair value measurement is classified is determined with reference to the observability and significance of each financial instrument categorisedthe inputs used in its entirety based on the lowest level of input that is significant to that fair value measurement. The levels are definedvaluation technique as follows: – Level 1 (highest level): fair valuesvaluations: Fair value measured using quoted prices (unadjusted) in active markets for identical financial instruments
–only Level 2: fair values measured using1 inputs i.e. unadjusted quoted prices in active markets for similar financial instruments,identical assets or liabilities at the measurement date
Level 2 valuations: Fair value measured using valuation techniques inLevel 2 inputs i.e. observable inputs which allfail to meet Level 1, and not using significant unobservable inputs. Unobservable inputs are directly or indirectly based on observableinputs for which market data are not available Level 3 valuations: Fair value measured using significant unobservable inputs | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Fair value measurements as at December 31, 2019
categorized into | | | | | Note | | | Fair value at
December 31,
2019
RMB
million | | | Level 1
RMB
million | | | Level 2
RMB
million | | | Level 3
RMB
million | | Recurring fair value measurement | | | | | | | | | | | | | | | | | | | | | Financial assets: | | | | | | | | | | | | | | | | | | | | | Other equity instrument investments: | | | | | | | | | | | | | | | | | | | | | -Non-listed shares | | | 26 | | | | 188 | | | | — | | | | — | | | | 188 | | -Non-tradable shares | | | 26 | | | | 861 | | | | — | | | | — | | | | 861 | | Othernon-current financial assets: | | | | | | | | | | | | | | | | | | | | | -Listed shares | | | 26 | | | | 74 | | | | 74 | | | | — | | | | — | | -Non-listed shares | | | 26 | | | | 32 | | | | — | | | | — | | | | 32 | | Derivative financial assets: | | | | | | | | | | | | | | | | | | | | | -Interest rate swaps | | | 27 | | | | 3 | | | | — | | | | 3 | | | | — | | -Cross currency swaps | | | 27 | | | | 187 | | | | — | | | | 187 | | | | — | | -Forward foreign exchange contracts | | | 27 | | | | 31 | | | | — | | | | 31 | | | | — | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) – Level 3 (lowest level): fair values measured using valuation techniques in which any significant input is not based on observable market data
| 4 | Financial risk management and fair values (continued) |
The following table presents the Group’s financial assets that are measured at fair value at December 31, 2015.
| (g) | Fair value (continued) |
| 2015 | | Level 1
RMB
million | | | Level 2
RMB
million | | | Level 3
RMB
million | | | Total
RMB
million | | | | | | | | | | | | | | | | | Assets | | | | | | | | | | | | | | | | | | Available-for-sale equity securities: | | | | | | | | | | | | | | | | | | -Listed | | | 104 | | | | - | | | | - | | | | 104 | | | Derivative financial instruments | | | | | | | | | | | | | | | | | | -Interest rate swap | | | - | | | | 13 | | | | - | | | | 13 | | | Total | | | 104 | | | | 13 | | | | - | | | | 117 | | | | | | | | | | | | | | | | | | | | | 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Assets | | | | | | | | | | | | | | | | | | Available-for-sale equity securities: | | | | | | | | | | | | | | | | | | -Listed | | | 104 | | | | - | | | | - | | | | 104 | |
| (i) | Financial instruments carried at fair value (continued) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Fair value measurements as at December 31, 2018
categorized into | | | | | Note | | | Fair value at
December 31,
2018
RMB
million | | | Level 1
RMB
million | | | Level 2
RMB
million | | | Level 3
RMB
million | | Recurring fair value measurement | | | | | | | | | | | | | | | | | | | | | Financial assets: | | | | | | | | | | | | | | | | | | | | | Other equity instrument investments: | | | | | | | | | | | | | | | | | | | | | -Non-listed shares | | | 26 | | | | 234 | | | | — | | | | — | | | | 234 | | -Non-tradable shares | | | 26 | | | | 846 | | | | — | | | | — | | | | 846 | | Othernon-current financial assets: | | | | | | | | | | | | | | | | | | | | | -Listed shares | | | 26 | | | | 71 | | | | 71 | | | | — | | | | — | | -Non-listed shares | | | 26 | | | | 32 | | | | — | | | | — | | | | 32 | | Other financial assets | | | 26 | | | | 440 | | | | — | | | | 440 | | | | — | | Derivative financial assets: | | | | | | | | | | | | | | | | | | | | | -Interest rate swaps | | | 27 | | | | 75 | | | | — | | | | 75 | | | | — | | Financial liabilities: | | | | | | | | | | | | | | | | | | | | | Derivative financial liabilities: | | | | | | | | | | | | | | | | | | | | | -Cross currency swaps | | | 27 | | | | (44 | ) | | | — | | | | (44 | ) | | | — | |
During the years ended December 31, 20152019 and 2014,2018, there were no significanttransfers among level 1, level 2 and level 3. The Group’s policy is to recognize transfers between instrumentslevels of fair value hierarchy as at the end of the reporting period in which they occur. Valuation techniques and inputs used in Level 12 fair value measurements Fair value of interest rate swaps in derivative financial assets is measured by discounting the expected receivable or payable amounts under the assumption that these swaps had been terminated at the end of the reporting period. The discount rates used are the US Treasury bond yield curve as at the end of the reporting period. Fair value of cross currency swaps is the estimated amount that the Group would receive or pay to terminate the swaps at the end of the reporting period, taking into account current exchange rates and Level 2.
Notes tointerest rates and the consolidatedcurrent creditworthiness of the swap counterparties.
Fair value of forward foreign exchange contracts is determined using quoted forward exchange rates at the reporting date and present value calculations based on high credit quality yield curves in the respective currencies. Fair value of other financial statementsassets are the estimated amount that the Group would receive at the end of the reporting period, taking into account the current creditworthiness of the other financial assets counterparties. (Prepared in accordance with International Financial Reporting Standards)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) 4 Financial risk management and fair values (continued) 4(g) | Fair value (continued) |
| (i) | Financial instruments carried at fair value (continued) |
Information about Level 3 fair value measurements | | | | | | | | | | | Valuation technique | | Significant unobservable inputs | | Range | | Other equity instruments investments | | | | | | | | | -Non-listed shares (1)&(3) | | Market comparable companies | | Discount for lack of marketability | | | 22 | % | -Non-tradable shares (2)&(3) | | Discounted cash flow | | Expected profit growth rate during the projection period | | | 10-12 | % | | | | | Perpetual growth rate | | | 3 | % | | | | | Perpetual dividend payout rate | | | 80 | % | | | | | Expected dividend payout rate during the projection period | | | 34 | % | | | | | Discount rate | | | 9.90 | % | Othernon-current financial assets | | | | | | | | | -Non-listed shares (2) | | Discounted cash flow | | Expected profit growth rate during the projection period | | | 11%-15 | % | | | | | Perpetual growth rate | | | 1%-4 | % | | | | | Perpetual dividend payout rate | | | 80 | % | | | | | Expected dividend payout rate during the projection period | | | 27%-43 | % | | | | | Discount rate | | | 9.90%-11.08 | % |
| (1) | The fair value ofnon-listed shares are determined by using comparable listed companies adjusted for lack of marketability discount. The fair value measurement is negatively correlated to the discount for lack of marketability. |
| (2) | The fair value of thesenon-tradable shares andnon-listed shares is determined by discounting projected cash flow series associated with respective investments. The valuation takes into account the expected profit growth rates and expected dividend payout rate of the investees. The discount rates used have been adjusted to reflect specific risks relating to respective investees. The fair value measurement is positively correlated to the expected profit growth rates during the projection period, perpetual growth rate, perpetual dividend payout rate and expected dividend payout rates during the projection period of respective investees, and negatively correlated to the discount rates. |
| (3) | Any gain or loss arising from the remeasurement of the Group’s unlisted equity securities held for strategic purposes are recognized in the fair value reserve(non-recycling) in other comprehensive income. Upon disposal of the equity securities, the amount accumulated in other comprehensive income is transferred directly to retained earnings. |
| (4) | From January 1, 2018, any gain or loss arising from the remeasurement of the Group’s unlisted equity securities held for strategic purposes are recognized in the fair value reserve(non-recycling) in other comprehensive income. Upon disposal of the equity securities, the amount accumulated in other comprehensive income is transferred directly to retained earnings. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | 4 | Financial risk management and fair values (continued) |
| (g) | (g) | Fair value (continued) |
| (i) | Financial instruments carried at fair value (continued) |
| | (a)(ii) | Financial instruments in level 1 |
The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date without any deduction for transaction costs. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The quoted market price used for financial assets held by the Group is the current bid price. These instruments are included in level 1. Instruments included in level 1 comprise primarily A share equity investments classified as trading securities or available-for-sale.
| (b) | Financial instruments in level 2 |
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.
| (ii) | Financial instruments not carried at fair value |
All other financial instruments, including cash and cash equivalents, amounts due from/to related companies, trade and other receivables, trade and other payables, borrowings, and lease liabilities are carried at amounts not materially different from their fair values as at December 31, 2019 and 2018. | 5 | (a) | Other investments in equity securities represent unlisted equity securities of companies established in the PRC. There is no quoted market price for such equity securities and accordingly a reasonable estimate of the fair value could not be measured reliably. Accordingly, they are recognized in the consolidated balance sheet at cost less impairment losses.Operating revenue |
The Group is principally engaged in the operation of civil aviation, including the provision of passenger, cargo, mail delivery, and other extended transportation services. | (i) | (b) | All other financial instruments, including amounts due from/to related companies, trade and other receivables, trade and other payables, borrowings and obligation under finance leases are carried at amounts not materially different from their fair values as at December 31, 2015 and December 31, 2014.Disaggregation of revenue |
Disaggregation of revenue from contracts with customers by major services lines is as follow: | | | 2015 | | | 2014 | | | 2013 | | | | | RMB million | | | RMB million | | | RMB million | | | | | | | | | | | | | | Passenger | | | 94,677 | | | | 84,740 | | | | 76,687 | | | Cargo and mail | | | 6,122 | | | | 5,842 | | | | 4,935 | | | Fuel Surcharge Income | | | 6,300 | | | | 13,746 | | | | 13,062 | | | | | | 107,099 | | | | 104,328 | | | | 94,684 | |
| | | | | | | | | | | | | | | | | | | | | | | 2019 | | | 2018 | | | 2017 | | | | | Note | | | RMB million | | | RMB million | | | RMB million | | | | | | | | | | | | | | (Note) | | Revenue from contracts with customers within the scope of IFRS 15: | | | | | | | | | | | | | | | | | Disaggregated by service lines | | | | | | | | | | | | | | | | | -Traffic revenue | | | | | | | | | | | | | | | | | – Passenger | | | | | | | 138,502 | | | | 128,038 | | | | 112,791 | | – Cargo and mail | | | | | | | 9,615 | | | | 10,026 | | | | 9,082 | | -Commission income | | | | | | | 2,952 | | | | 2,619 | | | | 2,781 | | -Hotel and tour operation income | | | | | | | 712 | | | | 676 | | | | 547 | | -General aviation income | | | | | | | 564 | | | | 476 | | | | 467 | | -Ground services income | | | | | | | 409 | | | | 429 | | | | 429 | | -Expired sales in advance of carriage | | | | | | | — | | | | — | | | | 396 | | -Air catering income | | | | | | | 353 | | | | 391 | | | | 335 | | -Cargo handling income | | | | | | | 359 | | | | 254 | | | | 241 | | -Others | | | | | | | 654 | | | | 536 | | | | 553 | | | | | | | | | | | | | | | | | | | | | | | | | | 154,120 | | | | 143,445 | | | | 127,622 | | Revenue from other sources: | | | | | | | | | | | | | | | | | -Rental income | | | 19(f) | | | | 202 | | | | 178 | | | | 184 | | | | | | | | | | | | | | | | | | | | | | | | | | 154,322 | | | | 143,623 | | | | 127,806 | | | | | | | | | | | | | | | | | | |
Note: The Group has initially applied IFRS 15 at January 1, 2018, using the cumulative effect method. Under this method, the comparative information is not restated (see Note 2(b)). Disaggregation of revenue from contracts with customers by the timing of revenue recognition and by geographic markets is disclosed in Notes to the consolidated financial statements6(a) and 6(b) respectively. (Prepared in accordance with International Financial Reporting Standards)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | 5 | 6Operating revenue (continued) |
| (ii) | (a)Revenue expected to be recognized in the future arising from contracts with customers in existence at the reporting date. |
As at December 31, 2019, the aggregated amount of the transaction price allocated to the remaining performance obligation, which is the unredeemed credits under the frequent flyer award programs, amounted to RMB3,331 million (December 31, 2018: RMB3,711 million) (Note 40). This amount represents revenue expected to be recognized in the future when the customers take possession of the goods or services redeemed. | 6 | Business segmentsSegment reporting |
The Group has two reportable operating segments “airline transportation operations” and “other segments”, according to internal organization structure, managerial needs and internal reporting system. “Airline transportation operations” comprises the Group’s network passenger and cargo and mail transportation are managed as a single business unit. The Group’s chief operating decision maker (“CODM”), which is the senior executive management, makes resource allocation decisions based on route profitability, which considers aircraft type and route economics. The objective in making resource allocation decisions is to optimise consolidated financial results. Therefore, based on the way the Group manages the network passenger and cargo operations, and the manner in which resource allocation decisions are made, the Group has only one reportable operating segment for financial reporting purposes, reported as the “airline transportation operations”. Other operating segments consist primarily of business segments ofoperations. “Other segments” includes hotel and tour operation, air catering services, ground services, cargo handling and other miscellaneous services. These other operating segments are combined and reported as “other segments”.
Inter-segment sales are based on prices set on an arm’s length basis.
For the purposes of assessing segment performance and allocating resources between segments, the Group’s CODMchief operating decision maker (“CODM”) monitors the results, assets and liabilities attributable to each reportable segment based on financial results prepared under the People’s Republic of China Accounting Standards for Business Enterprises (“PRC GAAP”). As such, the amount of each material reconciling item from the Group’s reportable segment revenue, profit before tax,taxation, assets and liabilities, arisingwhich arises from different accounting policies, are set out in Note 6(c). Inter-segment sales and transfers are transacted with reference to the selling prices used for sales made to third parties at the then prevailing market prices. Information regarding the Group’s reportable segments as provided to the Group’s CODM for the purposes of resource allocation and assessment of segment performance is set out below. The segment results of the Group for the year ended December 31, 2015 are as follows:
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | | | Airline
transportation
operations | | | Other
segments | | | Elimination | | | Unallocated* | | | Total | | | | | RMB
million | | | RMB
million | | | RMB
million | | | RMB
million | | | RMB
million | | | | | | | | | | | | | | | | | | | | Revenue from external customers | | | 110,067 | | | | 1,400 | | | | - | | | | - | | | | 111,467 | | | Inter-segment sales | | | 114 | | | | 1,528 | | | | (1,642 | ) | | | - | | | | - | | | Reportable segment revenue | | | 110,181 | | | | 2,928 | | | | (1,642 | ) | | | - | | | | 111,467 | | | Reportable segment profit before taxation | | | 5,480 | | | | 279 | | | | - | | | | 582 | | | | 6,341 | | | Reportable segment profit after taxation | | | 4,199 | | | | 205 | | | | - | | | | 582 | | | | 4,986 | | | Other segment information | | | | | | | | | | | | | | | | | | | | | | Income tax | | | 1,281 | | | | 74 | | | | - | | | | - | | | | 1,355 | | | Interest income | | | 244 | | | | 9 | | | | - | | | | - | | | | 253 | | | Interest expense | | | 2,156 | | | | 32 | | | | - | | | | - | | | | 2,188 | | | Depreciation and amortisation | | | 11,915 | | | | 97 | | | | - | | | | - | | | | 12,012 | | | Impairment loss | | | 105 | | | | 3 | | | | - | | | | - | | | | 108 | | | Share of associates’ results | | | - | | | | - | | | | - | | | | 462 | | | | 462 | | | Share of joint ventures’ results | | | - | | | | - | | | | - | | | | 107 | | | | 107 | | | Non-current assets additions during the year | | | 24,242 | | | | 98 | | | | - | | | | - | | | | 24,340 | |
Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated) | 6 | 6 | Segment reporting (continued) |
| (a) | (a) | Business segments (continued) |
The segment results of the Group for the year ended December 31, 20142019 are as follows: | | | Airline
transportation
operations | | Other
segments | | Elimination | | Unallocated* | | Total | | | | | | | | | | | | | | | RMB
million | | RMB
million | | RMB
million | | RMB
million | | RMB
million | | | Airline
transportation
operations | | | Other
segments | | | Elimination | | Unallocated* | | Total | | | | | | | | | | | | | | | | RMB million | | | RMB million | | | RMB million | | RMB million | | RMB million | | Disaggregated by timing of revenue recognition | | | | | | | | | | | | Point in time | | | | 2,996 | | | | 2,747 | | | | (2,401 | ) | | | — | | | 3,342 | | Over time | | | | 149,799 | | | | 2,785 | | | | (1,604 | ) | | | — | | | 150,980 | | | | | | | | | | | | | | | | | | | | Revenue from external customers | | | 107,790 | | | | 523 | | | | - | | | | - | | | | 108,313 | | | | 152,591 | | | | 1,731 | | | | — | | | | — | | | 154,322 | | | Inter-segment sales | | | - | | | | 1,364 | | | | (1,364 | ) | | | - | | | | - | | | | 204 | | | | 3,801 | | | | (4,005 | ) | | | — | | | | — | | | | | | | | | | | | | | | | | | | | Reportable segment revenue | | | 107,790 | | | | 1,887 | | | | (1,364 | ) | | | - | | | | 108,313 | | | | 152,795 | | | | 5,532 | | | | (4,005 | ) | | | — | | | 154,322 | | | | | | | | | | | | | | | | | | | | Reportable segment profit before taxation | | | 2,422 | | | | 257 | | | | - | | | | 416 | | | | 3,095 | | | | 3,020 | | | | 558 | | | | 2 | | | 490 | | | 4,070 | | | | | | | | | | | | | | | | | | | | Reportable segment profit after taxation | | | 1,800 | | | | 202 | | | | - | | | | 416 | | | | 2,418 | | | | 2,224 | | | | 446 | | | | 2 | | | 423 | | | 3,095 | | | | | | | | | | | | | | | | | | | | Other segment information | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Income tax | | | 622 | | | | 55 | | | | - | | | | - | | | | 677 | | | | 796 | | | | 112 | | | | — | | | 67 | | | 975 | | | Interest income | | | 369 | | | | 7 | | | | - | | | | - | | | | 376 | | | | 64 | | | | 41 | | | | (31 | ) | | | — | | | 74 | | | Interest expense | | | 2,155 | | | | 38 | | | | - | | | | - | | | | 2,193 | | | | 5,833 | | | | 43 | | | | (31 | ) | | | — | | | 5,845 | | | Depreciation and amortisation | | | 10,915 | | | | 88 | | | | - | | | | - | | | | 11,003 | | | Depreciation and amortization | | | | 24,256 | | | | 354 | | | | — | | | | — | | | 24,610 | | | Impairment loss | | | 205 | | | | - | | | | - | | | | - | | | | 205 | | | | 38 | | | | — | | | | — | | | | — | | | 38 | | Credit loss | | | | 11 | | | | 2 | | | | — | | | | — | | | 13 | | | Share of associates’ results | | | - | | | | - | | | | - | | | | 263 | | | | 263 | | | | — | | | | — | | | | — | | | (178 | ) | | (178 | ) | | Share of joint ventures’ results | | | - | | | | - | | | | - | | | | 140 | | | | 140 | | | | — | | | | — | | | | — | | | 365 | | | 365 | | | Non-current assets additions during the year | | | 29,523 | | | | 98 | | | | - | | | | - | | | | 29,621 | | | Remeasurement of the originally held equity interests in a joint venture | | | | — | | | | — | | | | — | | | 13 | | | 13 | | Change in fair value of financial assets / liabilities | | | | — | | | | — | | | | — | | | 265 | | | 265 | | Non-current assets additions during the year# | | | | 44,851 | | | | 739 | | | | — | | | | — | | | 45,590 | | | | | | | | | | | | | | | | | | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | 6 | Segment reporting (continued) |
| (a) | Business segments (continued) |
The segment results of the Group for the year ended December 31, 20132018 are as follows: | | | Airline
transportation
operations | | | Other
segments | | | Elimination | | | Unallocated* | | | Total | | | | | RMB
million | | | RMB
million | | | RMB
million | | | RMB
million | | | RMB
million | | | | | | | | | | | | | | | | | | | | Revenue from external customers | | | 97,659 | | | | 471 | | | | - | | | | - | | | | 98,130 | | | Inter-segment sales | | | - | | | | 1,147 | | | | (1,147 | ) | | | - | | | | - | | | Reportable segment revenue | | | 97,659 | | | | 1,618 | | | | (1,147 | ) | | | - | | | | 98,130 | | | Reportable segment profit before taxation | | | 2,796 | | | | 123 | | | | - | | | | 431 | | | | 3,350 | | | Reportable segment profit after taxation | | | 2,118 | | | | 100 | | | | - | | | | 431 | | | | 2,649 | | | Other segment information | | | | | | | | | | | | | | | | | | | | | | Income tax | | | 678 | | | | 23 | | | | - | | | | - | | | | 701 | | | Interest income | | | 300 | | | | 7 | | | | - | | | | - | | | | 307 | | | Interest expense | | | 1,611 | | | | 40 | | | | - | | | | - | | | | 1,651 | | | Depreciation and amortisation | | | 9,425 | | | | 80 | | | | - | | | | - | | | | 9,505 | | | Impairment loss | | | 567 | | | | 1 | | | | - | | | | - | | | | 568 | | | Share of associates’ results | | | - | | | | - | | | | - | | | | 296 | | | | 296 | | | Share of joint ventures’ results | | | - | | | | - | | | | - | | | | 96 | | | | 96 | | | Non-current assets additions during the year | | | 28,780 | | | | 82 | | | | - | | | | - | | | | 28,862 | |
| | | | | | | | | | | | | | | | | | | | | | | | Airline
transportation
operations | | | Other
segments | | | Elimination | | | Unallocated* | | | Total | | | | | RMB million | | | RMB million | | | RMB million | | | RMB million | | | RMB million | | Disaggregated by timing of revenue recognition | | | | | | | | | | | | | | | | | | | | | Point in time | | | 2,532 | | | | 1,975 | | | | (1,596 | ) | | | — | | | | 2,911 | | Over time | | | 139,671 | | | | 3,822 | | | | (2,781 | ) | | | — | | | | 140,712 | | | | | | | | | | | | | | | | | | | | | | | Revenue from external customers | | | 141,968 | | | | 1,655 | | | | — | | | | — | | | | 143,623 | | Inter-segment sales | | | 235 | | | | 4,142 | | | | (4,377 | ) | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | Reportable segment revenue | | | 142,203 | | | | 5,797 | | | | (4,377 | ) | | | — | | | | 143,623 | | | | | | | | | | | | | | | | | | | | | | | Reportable segment profit before taxation | | | 3,448 | | | | 604 | | | | (60 | ) | | | 495 | | | | 4,487 | | | | | | | | | | | | | | | | | | | | | | | Reportable segment profit after taxation | | | 2,567 | | | | 457 | | | | (60 | ) | | | 492 | | | | 3,456 | | | | | | | | | | | | | | | | | | | | | | | Other segment information | | | | | | | | | | | | | | | | | | | | | Income tax | | | 881 | | | | 147 | | | | — | | | | 3 | | | | 1,031 | | Interest income | | | 107 | | | | 18 | | | | — | | | | — | | | | 125 | | Interest expense | | | 3,054 | | | | 148 | | | | — | | | | — | | | | 3,202 | | Depreciation and amortization | | | 14,084 | | | | 282 | | | | — | | | | — | | | | 14,366 | | Impairment loss | | | 12 | | | | — | | | | — | | | | — | | | | 12 | | Credit loss | | | 2 | | | | 1 | | | | — | | | | — | | | | 3 | | Share of associates’ results | | | — | | | | — | | | | — | | | | 263 | | | | 263 | | Share of joint ventures’ results | | | — | | | | — | | | | — | | | | 200 | | | | 200 | | Fair value movement of financial instruments | | | — | | | | — | | | | — | | | | 12 | | | | 12 | | Non-current assets additions during the year# | | | 37,155 | | | | 406 | | | | — | | | | — | | | | 37,561 | | | | | | | | | | | | | | | | | | | | | | |
Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | 6 | 6 | Segment reporting (continued) |
| (a) | (a) | Business segments (continued) |
The segment results of the Group for the year ended December 31, 2017 are as follows: | | | | | | | | | | | | | | | | | | | | | | | | Airline
transportation
operations | | | Other
segments | | | Elimination | | | Unallocated* | | | Total | | | | | RMB million | | | RMB million | | | RMB million | | | RMB million | | | RMB million | | Revenue from external customers | | | 126,077 | | | | 1,412 | | | | — | | | | — | | | | 127,489 | | Inter-segment sales | | | 159 | | | | 2,823 | | | | (2,982 | ) | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | Reportable segment revenue | | | 126,236 | | | | 4,235 | | | | (2,982 | ) | | | — | | | | 127,489 | | | | | | | | | | | | | | | | | | | | | | | Reportable segment profit before taxation | | | 7,708 | | | | 529 | | | | — | | | | 561 | | | | 8,798 | | | | | | | | | | | | | | | | | | | | | | | Reportable segment profit after taxation | | | 5,875 | | | | 381 | | | | — | | | | 577 | | | | 6,833 | | | | | | | | | | | | | | | | | | | | | | | Other segment information | | | | | | | | | | | | | | | | | | | | | Income tax | | | 1,833 | | | | 148 | | | | — | | | | (16 | ) | | | 1,965 | | Interest income | | | 74 | | | | 15 | | | | — | | | | — | | | | 89 | | Interest expense | | | 2,724 | | | | 23 | | | | — | | | | — | | | | 2,747 | | Depreciation and amortization | | | 13,112 | | | | 201 | | | | — | | | | — | | | | 13,313 | | Impairment loss | | | 440 | | | | 2 | | | | — | | | | — | | | | 442 | | Share of associates’ results | | | — | | | | — | | | | — | | | | 420 | | | | 420 | | Share of joint ventures’ results | | | — | | | | — | | | | — | | | | 99 | | | | 99 | | Remeasurement of the originally held equity interests in a joint venture | | | — | | | | — | | | | — | | | | 88 | | | | 88 | | Fair value movement of derivative financial instruments | | | — | | | | — | | | | — | | | | (64 | ) | | | (64 | ) | Non-current assets additions during the year# | | | 30,776 | | | | 1,828 | | | | — | | | | — | | | | 32,604 | | | | | | | | | | | | | | | | | | | | | | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | 6 | Segment reporting (continued) |
| (a) | Business segments (continued) |
The segment assets and liabilities of the Group as at December 31, 20152019 and December 31, 20142018 are as follows: | | | Airline
transportation
operations | | | Other
segments | | | Elimination | | | Unallocated* | | | Total | | | | | RMB
million | | | RMB
million | | | RMB
million | | | RMB
million | | | RMB
million | | | | | | | | | | | | | | | | | | | | As at December 31, 2015 | | | | | | | | | | | | | | | | | Reportable segment assets | | | 180,753 | | | | 2,795 | | | | (1,004 | ) | | | 3,706 | | | | 186,250 | | | Reportable segment liabilities | | | 136,391 | | | | 1,290 | | | | (1,004 | ) | | | - | | | | 136,677 | | | As at December 31, 2014 | | | | | | | | | | | | | | | | | | | | | | Reportable segment assets | | | 184,661 | | | | 2,427 | | | | (568 | ) | | | 3,177 | | | | 189,697 | | | Reportable segment liabilities | | | 144,782 | | | | 1,209 | | | | (568 | ) | | | - | | | | 145,423 | |
| | | | | | | | | | | | | | | | | | | | | | | | Airline
transportation
operations | | | Other
segments | | | Elimination | | | Unallocated* | | | Total | | | | | RMB million | | | RMB million | | | RMB million | | | RMB million | | | RMB million | | As at December 31, 2019 | | | | | | | | | | | | | | | | | | | | | Reportable segment assets | | | 295,439 | | | | 7,048 | | | | (3,662 | ) | | | 7,821 | | | | 306,646 | | Reportable segment liabilities | | | 230,738 | | | | 2,458 | | | | (3,604 | ) | | | — | | | | 229,592 | | | | | | | | | | | | | | | | | | | | | | | As at December 31, 2018 | | | | | | | | | | | | | | | | | | | | | Reportable segment assets | | | 234,755 | | | | 6,479 | | | | (1,829 | ) | | | 7,250 | | | | 246,655 | | Reportable segment liabilities | | | 167,806 | | | | 2,391 | | | | (1,769 | ) | | | 44 | | | | 168,472 | | | | | | | | | | | | | | | | | | | | | | |
| * | Unallocated assets primarily include interest in associates and joint ventures, derivative financial assets and equity securities. Unallocated results primarily include the share of results of associates and joint ventures, dividend income from equity securities, and the fair value movement of financial instruments recognized through profit or loss. |
| # | The additions ofnon-current assets do not include interest in associates and joint ventures, other equity instrument investments, othernon-current financial assets, derivative financial assets and deferred tax assets. |
* Unallocated assets primarily include investments
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in associates and joint ventures, available-for-sale financial assets, derivative financial instruments and other investments in equity securities. Unallocated results primarily include the share of results of associates and joint ventures, dividend income from available-for-sales financial assets and other investments in equity securities.Renminbi unless otherwise indicated) | 6 | (b) | The Group’s business segments operate in three main geographical areas, even though they are managed on a worldwide basis.Segment reporting (continued) |
| (b) | Geographical information |
The Group’s revenuesbusiness segments operate in three main geographical areas, even though they are managed on a worldwide basis. The Group’s revenue by geographical segment are analyzedanalysed based on the following criteria: | (i)(1) | Traffic revenuesrevenue from services of both origin and destination within the PRC (excluding Hong Kong Special Administrative Region, Macau Special Administrative Region and Taiwan (“Hong Kong, Macau and Taiwan”)), is classified as domestic operations.revenue. Traffic revenue from inboundwith origin and outbound services between overseas markets, excludingdestination among PRC, Hong Kong, Macau and Taiwan is classified as Hong Kong, Macau and Taiwan revenue; while that with origin from or destination to other overseas markets is classified as international operations revenues.revenue. |
| (ii)(2) | RevenuesRevenue from commission income, hotel and tour operation, air catering services, ground services, cargo handling and other miscellaneous services are classified on the basis of where the services are performed. |
| | | 2015 | | | 2014 | | | 2013 | | | | | RMB million | | | RMB million | | | RMB million | | | | | | | | | | | | | | Domestic | | | 82,981 | | | | 82,764 | | | | 76,828 | | | International | | | 25,872 | | | | 22,952 | | | | 19,053 | | | Hong Kong, Macau and Taiwan | | | 2,614 | | | | 2,597 | | | | 2,249 | | | | | | 111,467 | | | | 108,313 | | | | 98,130 | |
| | | | | | | | | | | | | | | | 2019 | | | 2018 | | | 2017 | | | | | RMB million | | | RMB million | | | RMB million | | Domestic | | | 110,112 | | | | 103,287 | | | | 92,986 | | International | | | 41,651 | | | | 37,773 | | | | 32,117 | | Hong Kong, Macau and Taiwan | | | 2,559 | | | | 2,563 | | | | 2,386 | | | | | | | | | | | | | | | | | | 154,322 | | | | 143,623 | | | | 127,489 | | | | | | | | | | | | | | |
The major revenue earning assetsasset of the Group areis its aircraft fleet which is registered in the PRC and is deployed across its worldwide route network. Majority of the Group’s other assets are located in the PRC. CODM considers that there is no suitable basis for allocating such assets and related liabilities to geographical locations. Accordingly, geographical segment assets and liabilities are not disclosed.
Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | 6 | 6 | Segment reporting (continued) |
| (c) | (c) | Reconciliation of reportable segment revenues, profit before income tax, assets and liabilities to the consolidated figures as reported in the consolidated financial statement. |
| | | 2015 | | | 2014 | | | 2013 | | | | | Note | | RMB
million | | | RMB
million | | | RMB
million | | | Revenue | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Reportable segment revenues | | | | | 111,467 | | | | 108,313 | | | | 98,130 | | | Reclassification of expired sales in advance of carriage | | (i) | | | 459 | | | | 459 | | | | 684 | | | Reclassification of sales tax | | (ii) | | | (274 | ) | | | (188 | ) | | | (267 | ) | | Consolidated revenues | | | | | 111,652 | | | | 108,584 | | | | 98,547 | |
| | | 2015 | | | 2014 | | | 2013 | | | | | Note | | RMB
million | | | RMB
million | | | RMB
million | | | Profit before income tax | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Reportable segment profit before taxation | | | | | 6,341 | | | | 3,095 | | | | 3,350 | | | Capitalization of exchange difference of specific loans | | (iii) | | | (222 | ) | | | (28 | ) | | | 133 | | | Government grants | | (iv) | | | 1 | | | | 1 | | | | 3 | | | Others | | | | | (2 | ) | | | (2 | ) | | | (2 | ) | | Consolidated profit before income tax | | | | | 6,118 | | | | 3,066 | | | | 3,484 | |
| | | | | | | | 2015 | | | 2014 | | | | | Note | | | | | RMB million | | | RMB million | | | Assets | | | | | | | | | | | | | | | | Reportable segment assets | | | | | | | | | 186,250 | | | | 189,697 | | | Capitalization of exchange difference of specific loans | | (iii) | | | | | | | 101 | | | | 323 | | | Government grants | | (iv) | | | | | | | (342 | ) | | | (259 | ) | | Others | | | | | | | | | (20 | ) | | | (73 | ) | | Consolidated total assets | | | | | | | | | 185,989 | | | | 189,688 | |
| | | | | | | | 2015 | | | 2014 | | | | | Note | | | | | RMB million | | | RMB million | | | Liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Reportable segment liabilities | | | | | | | | | 136,677 | | | | 145,423 | | | Government grants | | (iv) | | | | | | | (312 | ) | | | (228 | ) | | Consolidated total liabilities | | | | | | | | | 136,365 | | | | 145,195 | |
Notes:
| (i) | In accordance with the PRC GAAP, expired sales in advance of carriage are recorded under non-operating income. Under IFRSs, such income is recognized as other operating income. |
| (ii) | In accordance with the PRC GAAP, sales tax is separately disclosed rather than deducted from revenue under IFRSs. |
Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated)
| 6 | Segment reporting (continued) |
| (c) | Reconciliation of reportable segment revenue, profit before income tax, assets and liabilities to the consolidated figures as reported in the consolidated financial statement.statements |
| | | | | | | | | | | | | | | | | | | | | 2019 | | | 2018 | | | 2017 | | | | | Note | | | RMB
million | | | RMB
million | | | RMB
million | | Revenue | | | | | | | | | | | | | | | | | Reportable segment revenue | | | 6(a) | | | | 154,322 | | | | 143,623 | | | | 127,489 | | Reclassification of expired sales in advance of carriage | | | (i) | | | | — | | | | — | | | | 396 | | Reclassification of sales tax | | | | | | | — | | | | — | | | | (65 | ) | Adjustments arising from business combinations under common control | | | (iv) | | | | — | | | | — | | | | (14 | ) | | | | | | | | | | | | | | | | | | Consolidated revenue | | | | | | | 154,322 | | | | 143,623 | | | | 127,806 | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | 2019 | | | 2018 | | | 2017 | | | | | Note | | | RMB
million | | | RMB
million | | | RMB
million | | Profit before income tax | | | | | | | | | | | | | | | | | Reportable segment profit before taxation | | | 6(a) | | | | 4,070 | | | | 4,487 | | | | 8,798 | | Capitalization of exchange difference of specific loans | | | (ii) | | | | (16 | ) | | | (124 | ) | | | 47 | | Government grants | | | (iii) | | | | 1 | | | | 1 | | | | 21 | | Adjustments arising from business combinations under common control | | | (iv) | | | | — | | | | — | | | | 8 | | | | | | | | | | | | | | | | | | | Consolidated profit before income tax | | | | | | | 4,055 | | | | 4,364 | | | | 8,874 | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | 2019 | | | 2018 | | | | | Note | | | RMB million | | | RMB million | | Assets | | | | | | | | | | | | | Reportable segment assets | | | 6(a) | | | | 306,646 | | | | 246,655 | | Capitalization of exchange difference of specific loans | | | (ii) | | | | 56 | | | | 72 | | Government grants | | | (iii) | | | | (6 | ) | | | (7 | ) | Adjustments arising from business combinations under common control | | | (iv) | | | | 237 | | | | 237 | | Others | | | | | | | (5 | ) | | | (8 | ) | | | | | | | | | | | | | | Consolidated total assets | | | | | | | 306,928 | | | | 246,949 | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | 2019 | | | 2018 | | | | | | | | RMB million | | | RMB million | | Liabilities | | | | | | | | | | | | | Reportable segment liabilities | | | 6(a) | | | | 229,592 | | | | 168,472 | | Others | | | | | | | 7 | | | | 8 | | | | | | | | | | | | | | | Consolidated total liabilities | | | | | | | 229,599 | | | | 168,480 | | | | | | | | | | | | | | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | 6 | Segment reporting (continued) |
| (c) | (iii)Reconciliation of reportable segment revenue, profit before income tax, assets and liabilities to the consolidated figures as reported in the consolidated financial statements (continued) |
Notes: | (i) | Expired sales in advance of carriage are recorded undernon-operating income in the 2017 PRC GAAP financial statements. Such income is recognized as other operating revenue in the IFRS financial statements. Effective from January 1, 2018, ticket breakage revenue is included in traffic revenue, as a result of the adoption of IFRS 15 (see Note 2(b)), and the same adjustment was also adopted in the PRC GAAP financial statements. |
| (ii) | In accordance with the PRC GAAP, exchange difference arising on translation of specific loans and related interest denominated in a foreign currency is capitalized as part of the cost of qualifying assets. Under IFRSs, such exchange difference is recognized in income statement unless the exchange difference represents an adjustment to interest. |
| (iii) | (iv) | In accordance with the PRC GAAP, special funds such as investment grants allocated by the government, if clearly defined on official documents as part of “capital reserve”, are credited to capital reserve. Otherwise,assets related government grants related to assets are recognized as deferred income and amortised to profit or loss on a straight line basis over the useful life of the related assets. Under IFRSs, government grants relating to purchase of fixed assets(other than special funds) are deducted from the cost of the related fixed assets. Special funds granted by the government and clearly defined in the approval documents as part of “capital reserve” are accounted for as increase in capital reserve. Under IFRSs, assets related government grants are deducted to the cost of the related assets. The difference is resulted from government grants received in previous years and are recognized in capital reserve under PRC GAAP. |
| (iv) | In accordance with the PRC GAAP, the Company accounts for the business combination under common control by applying the7pooling-of-interest | method. Under theOther operating revenuepooling-of-interest method, the difference between the historical carrying amount of the acquiree and the consideration paid is accounted for as an equity transaction. Business combinations under common control are accounted for as if the acquisition had occurred at the beginning of the earliest comparative year presented or, if later, at the date that common control was established; for this purpose, relevant comparative figures are restated under PRC GAAP. Under IFRSs, the Company adopts the purchase accounting method for acquisition of business under common control. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
| | | 2015 | | | 2014 | | | 2013 | | | | | RMB million | | | RMB million | | | RMB million | | | | | | | | | | | | | | Commission income | | | 1,545 | | | | 1,335 | | | | 1,040 | | | Expired sales in advance of carriage | | | 459 | | | | 459 | | | | 684 | | | Hotel and tour operation income | | | 621 | | | | 508 | | | | 565 | | | General aviation income | | | 490 | | | | 576 | | | | 484 | | | Ground services income | | | 345 | | | | 293 | | | | 349 | | | Air catering income | | | 239 | | | | 272 | | | | 226 | | | Cargo handling income | | | 230 | | | | 236 | | | | 176 | | | Rental income | | | 182 | | | | 156 | | | | 137 | | | Others | | | 442 | | | | 421 | | | | 202 | | | | | | 4,553 | | | | 4,256 | | | | 3,863 | |
| 8 | Flight operation expenses |
| | | 2015 | | | 2014 | | | 2013 | | | | | RMB million | | | RMB million | | | RMB million | | | | | | | | | | | | | | Jet fuel costs | | | 26,274 | | | | 37,728 | | | | 35,538 | | | Flight personnel payroll and welfare | | | 8,070 | | | | 6,803 | | | | 5,799 | | | Aircraft operating lease charges | | | 6,153 | | | | 5,383 | | | | 4,767 | | | Air catering expenses | | | 2,680 | | | | 2,497 | | | | 2,295 | | | Civil Aviation Development Fund | | | 2,482 | | | | 2,279 | | | | 2,036 | | | Training expenses | | | 1,003 | | | | 1,003 | | | | 784 | | | Aircraft insurance | | | 168 | | | | 202 | | | | 194 | | | Others | | | 3,582 | | | | 3,006 | | | | 2,597 | | | | | | 50,412 | | | | 58,901 | | | | 54,010 | |
Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated) | 7 | 9 | MaintenanceFlight operation expenses |
| | | 2015 | | | 2014 | | | 2013 | | | | | RMB million | | | RMB million | | | RMB million | | | | | | | | | | | | | | Aviation repair and maintenance charges | | | 7,396 | | | | 5,525 | | | | 5,334 | | | Staff payroll and welfare | | | 2,131 | | | | 1,966 | | | | 1,712 | | | Maintenance materials | | | 880 | | | | 813 | | | | 759 | | | | | | 10,407 | | | | 8,304 | | | | 7,805 | |
| 10 | Aircraft and transportation service expenses |
| | | 2015 | | | 2014 | | | 2013 | | | | | RMB million | | | RMB million | | | RMB million | | | | | | | | | | | | | | Landing and navigation fees | | | 11,510 | | | | 10,496 | | | | 9,510 | | | Ground service and other charges | | | 6,398 | | | | 5,906 | | | | 5,581 | | | | | | 17,908 | | | | 16,402 | | | | 15,091 | |
| | | | | | | | | | | | | | | | 2019 | | | 2018 | | | 2017 | | | | | RMB million | | | RMB million (Note) | | | RMB million (Note) | | Jet fuel costs | | | 42,814 | | | | 42,922 | | | | 31,895 | | Flight personnel payroll and welfare | | | 12,709 | | | | 11,467 | | | | 10,574 | | Air catering expenses | | | 3,975 | | | | 3,734 | | | | 3,379 | | Civil Aviation Development Fund | | | 2,332 | | | | 2,940 | | | | 2,720 | | Aircraft operating lease charges | | | 1,412 | | | | 8,726 | | | | 8,022 | | Training expenses | | | 1,142 | | | | 894 | | | | 1,184 | | Aircraft insurance | | | 192 | | | | 163 | | | | — | | Others | | | 5,990 | | | | 5,370 | | | | 5,204 | | | | | | | | | | | | | | | | | | 70,566 | | | | 76,216 | | | | 62,978 | | | | | | | | | | | | | | |
Note: The Group has initially applied IFRS 16 at January 1, 2019 using the modified retrospective approach. Under this approach, comparative information is not restated. See Note 2(b). | 11 | Promotion and selling expenses |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | | | 2015 | | | 2014 | | | 2013 | | | | | RMB million | | | RMB million | | | RMB million | | | | | | | | | | | | | | Sales commissions | | | 3,150 | | | | 4,263 | | | | 4,356 | | | Ticket office expenses | | | 2,605 | | | | 2,465 | | | | 2,303 | | | Computer reservation services | | | 605 | | | | 542 | | | | 526 | | | Advertising and promotion | | | 122 | | | | 116 | | | | 118 | | | Others | | | 494 | | | | 455 | | | | 451 | | | | | | 6,976 | | | | 7,841 | | | | 7,754 | |
| 12 | General and administrative expenses |
| | | 2015 | | | 2014 | | | 2013 | | | | | RMB million | | | RMB million | | | RMB million | | | | | | | | | | | | | | General corporate expenses | | | 2,325 | | | | 2,195 | | | | 2,334 | | | Auditors’ remuneration | | | 15 | | | | 18 | | | | 16 | | | - Audit services | | | 15 | | | | 18 | | | | 16 | | | - Non-audit services | | | - | | | | - | | | | - | | | Other taxes and levies | | | 124 | | | | 124 | | | | 120 | | | | | | 2,464 | | | | 2,337 | | | | 2,470 | |
| 13 | Depreciation and amortisation |
| | | 2015 | | | 2014 | | | 2013 | | | | | RMB million | | | RMB million | | | RMB million | | | | | | | | | | | | | | Depreciation | | | | | | | | | | | | | | – Owned assets | | | 7,082 | | | | 8,021 | | | | 6,861 | | | – Assets acquired under finance leases | | | 4,684 | | | | 2,768 | | | | 2,477 | | | Amortisation of deferred benefits and gains | | | (148 | ) | | | (156 | ) | | | (146 | ) | | Other amortisation | | | 227 | | | | 195 | | | | 155 | | | | | | 11,845 | | | | 10,828 | | | | 9,347 | |
Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated)
| 8 | 14 | Staff costsMaintenance expenses |
| | | 2015 | | | 2014 | | | 2013 | | | | | RMB million | | | RMB million | | | RMB million | | | | | | | | | | | | | | Salaries, wages and welfare | | | 16,636 | | | | 14,667 | | | | 12,938 | | | Contribution to retirement schemes | | | 1,726 | | | | 1,554 | | | | 1,324 | | | Other retirement welfare subsidy | | | 177 | | | | 167 | | | | 175 | | | Early retirement benefits (Note 43) | | | 3 | | | | 7 | | | | 12 | | | | | | 18,542 | | | | 16,395 | | | | 14,449 | |
| | | | | | | | | | | | | | | | 2019 | | | 2018 | | | 2017 | | | | | RMB million | | | RMB million | | | RMB million | | Aviation repair and maintenance charges | | | 8,565 | | | | 8,394 | | | | 7,930 | | Staff payroll and welfare | | | 2,976 | | | | 2,736 | | | | 2,620 | | Maintenance materials | | | 1,516 | | | | 1,574 | | | | 1,327 | | | | | | | | | | | | | | | | | | 13,057 | | | | 12,704 | | | | 11,877 | | | | | | | | | | | | | | |
| 9 | Aircraft and transportation service expenses |
| | | | | | | | | | | | | | | | 2019 | | | 2018 | | | 2017 | | | | | RMB million | | | RMB million | | | RMB million | | Landing and navigation fees | | | 17,658 | | | | 15,980 | | | | 14,910 | | Ground service and other charges | | | 8,933 | | | | 8,399 | | | | 8,025 | | | | | | | | | | | | | | | | | | 26,591 | | | | 24,379 | | | | 22,935 | | | | | | | | | | | | | | |
| 10 | Promotion and selling expenses |
| | | | | | | | | | | | | | | | 2019 | | | 2018 | | | 2017 | | | | | RMB million | | | RMB million | | | RMB million | | Ticket office expenses | | | 3,299 | | | | 3,173 | | | | 3,160 | | Sales commissions (Note) | | | 2,214 | | | | 2,027 | | | | 1,935 | | Computer reservation services | | | 959 | | | | 892 | | | | 835 | | Advertising and promotion | | | 314 | | | | 217 | | | | 196 | | Others | | | 969 | | | | 727 | | | | 755 | | | | | | | | | | | | | | | | | | 7,755 | | | | 7,036 | | | | 6,881 | | | | | | | | | | | | | | |
Note: The Group applies the practical expedient in IFRS 15 and therefore expenses the portion of sales commissions which are regarded as directly related incremental costs of obtaining transportation contracts, as the amortization period is less than one year. | 11 | General and administrative expenses |
| | | | | | | | | | | | | | | | 2019 | | | 2018 | | | 2017 | | | | | RMB million | | | RMB million | | | RMB million | | General corporate expenses | | | 3,705 | | | | 3,477 | | | | 3,218 | | Auditors’ remuneration | | | 20 | | | | 18 | | | | 14 | | - Audit services | | | 18 | | | | 15 | | | | 14 | | -Non-audit services | | �� | 2 | | | | 3 | | | | — | | Other taxes and levies | | | 348 | | | | 275 | | | | 159 | | | | | | | | | | | | | | | | | | 4,073 | | | | 3,770 | | | | 3,391 | | | | | | | | | | | | | | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | 12 | Depreciation and amortization |
| | | | | | | | | | | | | | | | 2019 | | | 2018 | | | 2017 | | | | | RMB million | | | RMB million | | | RMB million | | | | | | | | (Note) | | | (Note) | | Depreciation of property, plant and equipment | | | | | | | | | | | | | – Owned assets | | | 9,029 | | | | 8,193 | | | | 8,080 | | – Finance leases | | | — | | | | 5,776 | | | | 4,883 | | Depreciation ofright-of-use assets | | | 15,263 | | | | — | | | | — | | Other amortization | | | 328 | | | | 339 | | | | 199 | | | | | | | | | | | | | | | | | | 24,620 | | | | 14,308 | | | | 13,162 | | | | | | | | | | | | | | |
Note: The Group has initially applied IFRS 16 at January 1, 2019 using the modified retrospective approach. Under this approach, comparative information is not restated. See Note 2(b). | | | | | | | | | | | | | | | | 2019 | | | 2018 | | | 2017 | | | | | RMB million | | | RMB million | | | RMB million | | Salaries, wages and welfare | | | 24,647 | | | | 22,445 | | | | 21,400 | | Defined contribution retirement scheme | | | 2,794 | | | | 2,387 | | | | 2,114 | | Other retirement welfare subsidy | | | 206 | | | | 197 | | | | 194 | | Early retirement benefits (Note 47) | | | — | | | | 1 | | | | 1 | | | | | | | | | | | | | | | | | | 27,647 | | | | 25,030 | | | | 23,709 | | | | | | | | | | | | | | |
Staff costs relating to flight operationsoperation and maintenance are also included in the respective total amounts disclosed separately in Note 8 to7 and Note 9 above. Details of staff costs arising from cash-settled share appreciation rights are disclosed in Note 49(c). Such costs have been included in “salaries, wages and welfare”8 above.
| | | 2015 | | | 2014 | | | 2013 | | | | | RMB million | | | RMB million | | | RMB million | | | | | | | | | | | | | | Government grants (Note) | | | 2,331 | | | | 1,700 | | | | 1,155 | | | Gain/ (losses) on disposal of property, plant and equipment, net | | | | | | | | | | | | | | – Aircraft and spare engines | | | 414 | | | | 344 | | | | (8 | ) | | – Other property, plant and equipment | | | (102 | ) | | | (77 | ) | | | (70 | ) | | Others | | | 635 | | | | 223 | | | | 166 | | | | | | 3,278 | | | | 2,190 | | | | 1,243 | |
| | | | | | | | | | | | | | | | 2019 | | | 2018 | | | 2017 | | | | | RMB million | | | RMB million | | | RMB million | | Government grants (Note) | | | 4,129 | | | | 4,348 | | | | 3,075 | | Gains on disposal of property, plant and equipment and construction in progress | | | | | | | | | | | | | – Aircraft and spare engines and construction in progress | | | 34 | | | | 584 | | | | 960 | | – Other property, plant and equipment | | | 106 | | | | 18 | | | | 29 | | Penalty income | | | 273 | | | | 216 | | | | 126 | | Others | | | 582 | | | | 272 | | | | 258 | | | | | | | | | | | | | | | | | | 5,124 | | | | 5,438 | | | | 4,448 | | | | | | | | | | | | | | |
Note: Government grants mainly represent (i) subsidies based on certain amount of tax paid granted by governments to the Group; (ii) subsidies granted by various local governments to encourage the Group to operate certain routes to cities where these governments are located. The government grants are recognized when fulfilling the requirements and when cash is received. There are no unfulfilled conditions and other contingencies related to subsidies that have been recognized during the yearyears ended December 31, 2015.2019, 2018 and 2017. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated) | | | | 2015 | | 2014 | | 2013 | | | 2019 | | | 2018 | | | 2017 | | | | | RMB million | | RMB million | | RMB million | | | RMB million | | | RMB million | | | RMB million | | | | | | | | | | | | | | | (Note(i)) | | | (Note(i)) | | | Interest on borrowings | | 1,320 | | 1,628 | | 1,275 | | | | 1,840 | | | | 1,891 | | | | 1,628 | | Interest relating to lease liabilities (Note 21) | | | | 5,302 | | | | — | | | | — | | | Interest relating to obligations under finance leases | | 1,248 | | 978 | | 692 | | | | — | | | | 2,409 | | | | 2,009 | | | Interest relating to provision for early retirement benefits(Note 43) | | 2 | | 4 | | 5 | | | | Less: interest expense capitalized (Note) | | | (382 | ) | | | (417 | ) | | | (321 | ) | | Interest relating to provision for early retirement benefits | | | | — | | | | — | | | | 1 | | | | | | 2,188 | | | 2,193 | | | 1,651 | | | | | | | | | | | Total interest expense on financial liabilities not at fair value through profit or loss | | | | 7,142 | | | | 4,300 | | | | 3,638 | | Less: interest expense capitalized (Note(ii)) | | | | (1,279 | ) | | | (1,085 | ) | | | (908 | ) | | | | | | | | | | | | | | | | 5,863 | | | | 3,215 | | | | 2,730 | | Interest rate swaps: cash flow hedge, reclassified from equity (Note 17&21) | | | | (18 | ) | | | (13 | ) | | | 17 | | | | | | | | | | | | | | | | | 5,845 | | | | 3,202 | | | | 2,747 | | | | | | | | | | | | |
Note:
The weighted average interest rate used for interest capitalisation was 2.77% per annum in 2015 (2014: 2.37%; 2013: 2.50%).Notes:
| (i) | 17 | Other non-operating incomeThe Group has initially applied IFRS 16 at January 1, 2019 using the modified retrospective approach. Under this approach, comparative information is not restated. See Note 2(b). |
| | | 2015 | | | 2014 | | | 2013 | | | | | RMB million | | | RMB million | | | RMB million | | | | | | | | | | | | | | Interest income on wealth management products | | | - | | | | - | | | | 25 | | | Gain recognized on acquisition of a subsidiary | | | - | | | | 26 | | | | - | | | | | | - | | | | 26 | | | | 25 | |
Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated)
| (ii) | 18 | Income taxThe weighted average interest rate used for interest capitalization was 3.51% per annum in 2019 (2018: 3.54%; 2017: 3.32%). |
| (a) | Income tax expense in the consolidated income statement |
| | | 2015 | | | 2014 | | | 2013 | | | | | RMB
million | | | RMB
million | | | RMB
million | | | | | | | | | | | | | | PRC income tax | | | | | | | | | | | | | | – Provision for the year | | | 1,700 | | | | 430 | | | | 705 | | | – Over-provision in prior year | | | (41 | ) | | | (29 | ) | | | (31 | ) | | | | | 1,659 | | | | 401 | | | | 674 | | | Deferred tax (Note 29) | | | | | | | | | | | | | | Origination and reversal of temporary differences | | | (359 | ) | | | 267 | | | | 60 | | | | | | | | | | | | | | | | | Tax expense | | | 1,300 | | | | 668 | | | | 734 | |
| | | | | | | | | | | | | | | | 2019 | | | 2018 | | | 2017 | | | | | RMB million | | | RMB million | | | RMB million | | PRC income tax | | | | | | | | | | | | | –Provision for the year | | | 1,611 | | | | 962 | | | | 2,280 | | –Under/(over)-provision in prior year | | | 10 | | | | (27 | ) | | | (2 | ) | | | | | | | | | | | | | | | | | 1,621 | | | | 935 | | | | 2,278 | | Deferred tax (Note 29) | | | | | | | | | | | | | Origination and reversal of temporary differences | | | (650 | ) | | | 65 | | | | (302 | ) | | | | | | | | | | | | | | Income tax expense | | | 971 | | | | 1,000 | | | | 1,976 | | | | | | | | | | | | | | |
In respect of a majority of the Group’s airlineairlines operation outside mainland China, the Group has either obtained exemptions from overseas taxation pursuant to the bilateral aviation agreements between the overseas governments and the PRC government, or has sustained tax losses in those overseas jurisdictions. Accordingly, no provision for overseas income tax has been made for overseas airlines operation in the current and prior years. UnderFor the Corporate Income Tax Lawyear of the PRC,2019, the Company and majorityits branches are liable to income tax rates ranging from 15% to 25% (2018: 15% to 25%; 2017: 15% to 25%), and the subsidiaries of itsthe Company are liable to income tax rates ranging from 15% to 30% (2018: 15% to 30%; 2017: 15% to 25%). China Southern West Australian Flying College Pty Ltd. (“Flying College”), one of the subsidiaries areof the Company, is located in Australia and is subject to PRC income tax at 25% (2014: 25%)30%. Certain subsidiaries of the Company are located in Hong Kong and are subject to preferential income tax rate at 15% according to the preferential tax policy16.5%.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in locations, where those subsidiaries are located.Renminbi unless otherwise indicated) | (b) | Reconciliation between actual tax expense and calculated tax based on accounting profit at applicable tax rates |
| | | 2015 | | | 2014 | | | 2013 | | | | | RMB million | | | RMB million | | | RMB million | | | | | | | | | | | | | | Profit before taxation | | | 6,118 | | | | 3,066 | | | | 3,484 | | | | | | | | | | | | | | | | | Notional tax on profit before taxation, calculated at the rates applicable to profits in the tax jurisdictions concerned (Note) | | | 1,482 | | | | 738 | | | | 863 | | | | | | | | | | | | | | | | | Adjustments for tax effect of: | | | | | | | | | | | | | | Non-deductible expenses | | | 3 | | | | 11 | | | | 19 | | | Share of results of associates and joint ventures | | | (144 | ) | | | (104 | ) | | | (108 | ) | | Unused tax losses and deductible temporary differences for which no deferred tax assets were recognized | | | 23 | | | | 63 | | | | 32 | | | Utilisation of unused tax losses and deductible temporary differences for which no deferred tax assets were recognized in prior years | | | (18 | ) | | | (11 | ) | | | (41 | ) | | Over-provision in prior year | | | (41 | ) | | | (29 | ) | | | (31 | ) | | Others | | | (5 | ) | | | - | | | | - | | | Tax expense | | | 1,300 | | | | 668 | | | | 734 | |
| | | | | | | | | | | | | | | | 2019 | | | 2018 | | | 2017 | | | | | RMB million | | | RMB million | | | RMB million | | Profit before income tax | | | 4,055 | | | | 4,364 | | | | 8,874 | | | | | | | | | | | | | | | Notional tax on profit before taxation, calculated at the rates applicable to profits in the tax jurisdictions concerned (Note 16(a)) | | | 964 | | | | 1,089 | | | | 2,179 | | Adjustments for tax effect of: | | | | | | | | | | | | | Non-deductible expenses | | | 18 | | | | 23 | | | | 9 | | Share of results of associates and joint ventures and othernon-taxable income | | | (50 | ) | | | (121 | ) | | | (137 | ) | Taxable temporary differences for which no deferred tax liabilities were recognized | | | — | | | | — | | | | (27 | ) | Unused tax losses and deductible temporary differences for which no deferred tax assets were recognized | | | 62 | | | | 73 | | | | 26 | | Utilization of unused tax losses and deductible temporary differences for which no deferred tax assets were recognized in prior years | | | (3 | ) | | | (17 | ) | | | (72 | ) | Under/(over)-provision in prior year | | | 10 | | | | (27 | ) | | | (2 | ) | Super deduction of research and development expenses | | | (30 | ) | | | (20 | ) | | | — | | | | | | | | | | | | | | | Tax expense | | | 971 | | | | 1,000 | | | | 1,976 | | | | | | | | | | | | | | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated) | 17 | 18 | Income tax (continued)Other comprehensive income |
| (b) | Reconciliation between actual tax expense and calculated tax based on accounting profit at applicable tax rates (continued) |
| | | | | | | | | | | | | | | | 2019 | | | 2018 | | | 2017 | | | | | RMB million | | | RMB million | | | RMB million | | | | | | | | | | | (Note) | | Cash flow hedges: | | | | | | | | | | | | | Effective portion of changes in fair value of hedging instruments recognized during the year | | | (54 | ) | | | 42 | | | | 8 | | Reclassification adjustments for amounts transferred to profit or loss: | | | | | | | | | | | | | - interest expense (Note 15) | | | (18 | ) | | | (13 | ) | | | 17 | | Net deferred tax credited / (debited) to other comprehensive income | | | 17 | | | | (7 | ) | | | (6 | ) | | | | | | | | | | | | | | | | | (55 | ) | | | 22 | | | | 19 | | | | | | | | | | | | | | | Equity investments measured at FVOCI: | | | | | | | | | | | | | Changes in fair value recognized during the year | | | (31 | ) | | | 319 | | | | — | | Net deferred tax credited / (debited) to other comprehensive income | | | 7 | | | | (80 | ) | | | — | | | | | | | | | | | | | | | | | | (24 | ) | | | 239 | | | | — | | | | | | | | | | | | | | | Share of other comprehensive income of an associate | | | | | | | | | | | | | Will not be reclassified to profit or loss | | | 3 | | | | (4 | ) | | | — | | May be reclassified subsequently to profit or loss | | | — | | | | — | | | | 2 | | | | | | | | | | | | | | | | | | 3 | | | | (4 | ) | | | 2 | | | | | | | | | | | | | | | Differences resulting from the translation of foreign currency financial statements | | | (7 | ) | | | (2 | ) | | | — | | | | | | | | | | | | | | | Available-for-sale financial assets: | | | | | | | | | | | | | Changes in fair value recognized during the year | | | — | | | | — | | | | 123 | | Net deferred tax debited to other comprehensive income | | | — | | | | — | | | | (31 | ) | | | | | | | | | | | | | | | | | — | | | | — | | | | 92 | | | | | | | | | | | | | | |
Note: The Group has initially applied IFRS 9 at January 1, 2018. Under the transition methods chosen, comparative information is not restated. See Note 2(b). Note:
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS The headquarters of the Company and its branches are taxed at rate at 25% (2014 and 2013: 25%). The subsidiaries of the Group are taxed at rates ranging from 15% to 25% (2014 and 2013: 15% to 25%).(Expressed in Renminbi unless otherwise indicated)
The calculation of basic earnings per share for the year ended December 31, 20152019 is based on the profit attributable to equity shareholders of the Company of RMB3,736RMB2,640 million (2014: RMB1,777(2018: RMB2,895 million; 2013: RMB1,9862017: RMB5,961 million) and the weighted average of 9,817,567,00012,267,172,286 shares in issue during the year (2014 and 2013: 9,817,567,000 shares).(2018: 10,718,916,979 shares; 2017: 9,923,585,348 shares ). | | | | | | | | | | | | | | | | 2019 | | | 2018 | | | 2017 | | | | | million | | | million | | | million | | Issued ordinary shares at January 1 | | | 12,267 | | | | 10,088 | | | | 9,818 | | Effect of issuance of A shares | | | — | | | | 450 | | | | — | | Effect of issuance of H shares | | | — | | | | 181 | | | | 106 | | | | | | | | | | | | | | | Weighted average number of ordinary shares at December 31 | | | 12,267 | | | | 10,719 | | | | 9,924 | | | | | | | | | | | | | | |
The amounts of diluted earnings per share are the same as basic earnings per share as there were no dilutive potential ordinary shares in existence for the yearyears ended December 31, 20152019, 2018 and 2014.2017. | 20 | Property, plant and equipment, net |
| | | | | | | | | Aircraft | | | | | | | | | | | | | | Investment
properties | | | Buildings | | | Owned | | | Acquired
under
finance
leases | | | Other flight
equipment
including
rotables | | | Machinery,
equipment
and
vehicles | | | Total | | | | | RMB
million | | | RMB
million | | | RMB
million | | | RMB
million | | | RMB
million | | | RMB
million | | | RMB
million | | | Cost: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | At January 1, 2014 | | | 681 | | | | 8,672 | | | | 88,864 | | | | 58,318 | | | | 17,477 | | | | 5,346 | | | | 179,358 | | | Additions | | | - | | | | 151 | | | | 726 | | | | 8,521 | | | | 821 | | | | 608 | | | | 10,827 | | | Transfer from construction in progress (Note 21) | | | 1 | | | | 444 | | | | 382 | | | | 11,546 | | | | 957 | | | | 133 | | | | 13,463 | | | Transfer to buildings upon cease of lease intention | | | (99 | ) | | | 99 | | | | - | | | | - | | | | - | | | | - | | | | - | | | Transfer to lease prepayments upon cease of lease intention | | | (21 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | (21 | ) | | Transfer to investment properties upon lease out | | | 84 | | | | (84 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | Acquisition of a subsidiary | | | - | | | | - | | | | 539 | | | | 1,931 | | | | 261 | | | | 23 | | | | 2,754 | | | Disposals | | | - | | | | (77 | ) | | | (5,390 | ) | | | (443 | ) | | | (946 | ) | | | (227 | ) | | | (7,083 | ) | | At December 31, 2014 | | | 646 | | | | 9,205 | | | | 85,121 | | | | 79,873 | | | | 18,570 | | | | 5,883 | | | | 199,298 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | At January 1, 2015 | | | 646 | | | | 9,205 | | | | 85,121 | | | | 79,873 | | | | 18,570 | | | | 5,883 | | | | 199,298 | | | Additions | | | - | | | | 138 | | | | 1,564 | | | | 5,901 | | | | 660 | | | | 353 | | | | 8,616 | | | Transfer from construction in progress (Note 21) | | | - | | | | 849 | | | | 1,777 | | | | 8,174 | | | | 896 | | | | 103 | | | | 11,799 | | | Transfer from lease prepayments | | | 6 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 6 | | | Transfer to buildings upon cease of lease intention | | | (8 | ) | | | 8 | | | | - | | | | - | | | | - | | | | - | | | | - | | | Transfer to investment properties upon lease out | | | 88 | | | | (88 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | Reclassification on exercise of purchase option | | | - | | | | - | | | | 6,700 | | | | (6,700 | ) | | | - | | | | - | | | | - | | | Disposals | | | (2 | ) | | | (38 | ) | | | (1,454 | ) | | | (416 | ) | | | (1,156 | ) | | | (230 | ) | | | (3,296 | ) | | At December 31, 2015 | | | 730 | | | | 10,074 | | | | 93,708 | | | | 86,832 | | | | 18,970 | | | | 6,109 | | | | 216,423 | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated) | 19 | 20Property, plant and equipment, net |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Aircraft | | | | | | | | | | | | | | Investment properties | | | Buildings | | | Owned | | | Acquired
under
finance
leases | | | Other flight
equipment
including
rotables | | | Machinery,
equipment
and vehicles | | | Total | | | | | RMB million | | | RMB
million | | | RMB
million | | | RMB
million | | | RMB
million | | | RMB million | | | RMB
million | | Cost: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | At January 1, 2018 | | | 794 | | | | 12,611 | | | | 105,974 | | | | 99,367 | | | | 21,906 | | | | 6,629 | | | | 247,281 | | Acquisitions through business combinations | | | — | | | | 51 | | | | — | | | | — | | | | 12 | | | | 34 | | | | 97 | | Additions | | | — | | | | 48 | | | | 3,644 | | | | 7,049 | | | | 1,250 | | | | 424 | | | | 12,415 | | Transfer from construction in progress | | | — | | | | 489 | | | | 4,792 | | | | 8,038 | | | | 401 | | | | 414 | | | | 14,134 | | Reclassification on change of holding intention | | | 19 | | | | (19 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | Reclassification on exercise of purchase option | | | — | | | | — | | | | 3,940 | | | | (3,940 | ) | | | — | | | | — | | | | — | | Transfer to assets held for sale | | | — | | | | — | | | | (1,804 | ) | | | — | | | | (106 | ) | | | — | | | | (1,910 | ) | Disposals | | | — | | | | (26 | ) | | | (7,784 | ) | | | (154 | ) | | | (774 | ) | | | (252 | ) | | | (8,990 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | At December 31, 2018 | | | 813 | | | | 13,154 | | | | 108,762 | | | | 110,360 | | | | 22,689 | | | | 7,249 | | | | 263,027 | | Impact on initial application of IFRS 16 (Note 2(b)) | | | — | | | | — | | | | — | | | | (110,360 | ) | | | (81 | ) | | | — | | | | (110,441 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | At January 1, 2019 | | | 813 | | | | 13,154 | | | | 108,762 | | | | — | | | | 22,608 | | | | 7,249 | | | | 152,586 | | Acquisitions through business combinations | | | — | | | | — | | | | — | | | | — | | | | — | | | | 18 | | | | 18 | | Additions | | | — | | | | 181 | | | | 3,034 | | | | — | | | | 2,380 | | | | 860 | | | | 6,455 | | Transferred from construction in progress (Note 20) | | | — | | | | 2,515 | | | | 871 | | | | — | | | | 200 | | | | 456 | | | | 4,042 | | Reclassification on change of holding intention: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | - transferred to other property, plant and equipment, net | | | (327 | ) | | | 327 | | | | — | | | | — | | | | — | | | | — | | | | — | | - transferred toright-of-use assets, net (Note 21) | | | (16 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | (16 | ) | Transferred fromright-of-use assets on exercise of purchase option (Note 21) | | | — | | | | — | | | | 2,641 | | | | — | | | | — | | | | — | | | | 2,641 | | Disposals | | | — | | | | (131 | ) | | | (2,032 | ) | | | — | | | | (803 | ) | | | (330 | ) | | | (3,296 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | At December 31, 2019 | | | 470 | | | | 16,046 | | | | 113,276 | | | | — | | | | 24,385 | | | | 8,253 | | | | 162,430 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | 19 | Property, plant and equipment, net (continued) |
| | | | | | | | | Aircraft | | | | | | | | | | | | | | Investment
properties | | | Buildings | | | Owned | | | Acquired
under
finance
leases | | | Other flight
equipment
including
rotables | | | Machinery,
equipment
and
vehicles | | | Total | | | | | RMB
million | | | RMB
million | | | RMB
million | | | RMB
million | | | RMB
million | | | RMB
million | | | RMB
million | | | Accumulated depreciation and impairment losses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | At January 1, 2014 | | | 173 | | | | 2,794 | | | | 32,812 | | | | 10,240 | | | | 10,216 | | | | 3,346 | | | | 59,581 | | | Depreciation charge for the year | | | 21 | | | | 292 | | | | 6,095 | | | | 2,768 | | | | 1,063 | | | | 550 | | | | 10,789 | | | Transfer to buildings upon cease of lease intention | | | (22 | ) | | | 22 | | | | - | | | | - | | | | - | | | | - | | | | - | | | Transfer to lease prepayments upon cease of lease intention | | | (4 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | | (4 | ) | | Transfer to investment properties upon lease out | | | 19 | | | | (19 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | Disposals | | | - | | | | (61 | ) | | | (3,966 | ) | | | (429 | ) | | | (701 | ) | | | (211 | ) | | | (5,368 | ) | | Provision for impairment loss (Note 20(d)) | | | - | | | | - | | | | 176 | | | | - | | | | 39 | | | | - | | | | 215 | | | Impairment losses written off on disposal (Note 20(c)) | | | - | | | | - | | | | (317 | ) | | | - | | | | (51 | ) | | | - | | | | (368 | ) | | At December 31, 2014 | | | 187 | | | | 3,028 | | | | 34,800 | | | | 12,579 | | | | 10,566 | | | | 3,685 | | | | 64,845 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | At January 1, 2015 | | | 187 | | | | 3,028 | | | | 34,800 | | | | 12,579 | | | | 10,566 | | | | 3,685 | | | | 64,845 | | | Depreciation charge for the year | | | 19 | | | | 351 | | | | 5,089 | | | | 4,684 | | | | 1,104 | | | | 519 | | | | 11,766 | | | Transfer to buildings upon cease of lease intention | | | (2 | ) | | | 2 | | | | - | | | | - | | | | - | | | | - | | | | - | | | Transfer to investment properties upon lease out | | | 18 | | | | (18 | ) | | | - | | | | - | | | | - | | | | - | | | | - | | | Transfer from lease prepayments | | | 2 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 2 | | | Reclassification on exercise of purchase options | | | - | | | | - | | | | 2,301 | | | | (2,301 | ) | | | - | | | | - | | | | - | | | Disposals | | | (1 | ) | | | (14 | ) | | | (1,315 | ) | | | (416 | ) | | | (1,087 | ) | | | (191 | ) | | | (3,024 | ) | | Provision for impairment loss (Note 20(d)) | | | - | | | | - | | | | 15 | | | | 40 | | | | 35 | | | | - | | | | 90 | | | Impairment losses written off on disposal (Note 20(c)) | | | - | | | | - | | | | (108 | ) | | | - | | | | (18 | ) | | | - | | | | (126 | ) | | At December 31, 2015 | | | 223 | | | | 3,349 | | | | 40,782 | | | | 14,586 | | | | 10,600 | | | | 4,013 | | | | 73,553 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net book value | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | At December 31, 2015 | | | 507 | | | | 6,725 | | | | 52,926 | | | | 72,246 | | | | 8,370 | | | | 2,096 | | | | 142,870 | | | At December 31, 2014 | | | 459 | | | | 6,177 | | | | 50,321 | | | | 67,294 | | | | 8,004 | | | | 2,198 | | | | 134,453 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Aircraft | | | | | | | | | | | | | | Investment properties | | | Buildings | | | Owned | | | Acquired
under
finance
leases | | | Other flight
equipment
including
rotables | | | Machinery,
equipment
and vehicles | | | Total | | | | | RMB million | | | RMB
million | | | RMB
million | | | RMB
million | | | RMB
million | | | RMB million | | | RMB
million | | Accumulated depreciation and impairment losses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | At January 1, 2018 | | | 270 | | | | 3,965 | | | | 50,995 | | | | 17,011 | | | | 11,678 | | | | 4,436 | | | | 88,355 | | Depreciation charge for the year | | | 29 | | | | 413 | | | | 5,667 | | | | 5,776 | | | | 1,462 | | | | 622 | | | | 13,969 | | Reclassification on change of holding intention | | | 15 | | | | (15 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | Reclassification on exercise of purchase options | | | — | | | | — | | | | 1,072 | | | | (1,072 | ) | | | — | | | | — | | | | — | | Transferred to assets held for sale | | | — | | | | — | | | | (1,582 | ) | | | — | | | | (104 | ) | | | — | | | | (1,686 | ) | Disposal | | | — | | | | (10 | ) | | | (6,912 | ) | | | (154 | ) | | | (664 | ) | | | (240 | ) | | | (7,980 | ) | Impairment losses written off on disposals | | | — | | | | — | | | | (322 | ) | | | — | | | | (1 | ) | | | — | | | | (323 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | At December 31, 2018 | | | 314 | | | | 4,353 | | | | 48,918 | | | | 21,561 | | | | 12,371 | | | | 4,818 | | | | 92,335 | | Impact on initial application of IFRS 16 (Note 2(b)) | | | — | | | | — | | | | — | | | | (21,561 | ) | | | — | | | | — | | | | (21,561 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | At January 1, 2019 | | | 314 | | | | 4,353 | | | | 48,918 | | | | — | | | | 12,371 | | | | 4,818 | | | | 70,774 | | Depreciation charge for the year | | | 29 | | | | 444 | | | | 6,390 | | | | — | | | | 1,483 | | | | 683 | | | | 9,029 | | Reclassification on change of holding intention: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | - transferred to other property, plant and equipment, net | | | (172 | ) | | | 172 | | | | — | | | | — | | | | — | | | | — | | | | — | | - transferred toright-of-use assets, net (Note 21) | | | (5 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | (5 | ) | Transferred fromright-of-use assets on exercise of purchase option (Note 21) | | | — | | | | — | | | | 874 | | | | — | | | | — | | | | — | | | | 874 | | Disposals | | | — | | | | (52 | ) | | | (1,993 | ) | | | — | | | | (698 | ) | | | (238 | ) | | | (2,981 | ) | Provision for impairment losses (Note 19(d)) | | | — | | | | — | | | | 18 | | | | — | | | | — | | | | — | | | | 18 | | Impairment losses written off on disposals (Note 19(c)) | | | — | | | | — | | | | (30 | ) | | | — | | | | (37 | ) | | | — | | | | (67 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | At December 31, 2019 | | | 166 | | | | 4,917 | | | | 54,177 | | | | — | | | | 13,119 | | | | 5,263 | | | | 77,642 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net book value: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | At December 31, 2019 | | | 304 | | | | 11,129 | | | | 59,099 | | | | — | | | | 11,266 | | | | 2,990 | | | | 84,788 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | At December 31, 2018 | | | 499 | | | | 8,801 | | | | 59,844 | | | | 88,799 | | | | 10,318 | | | | 2,431 | | | | 170,692 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | 19 | Property, plant and equipment, net (continued) |
| (a) | As at December 31, 2015,2019, the accumulated impairment provision of aircraft and flight equipment of the Group is RMB1,570RMB985 million and RMB125 million respectively (2014: RMB1,623 million and RMB108 million respectively)(December 31, 2018: RMB1,034 million). |
| (b) | (b) | As at December 31, 2015,2019, certain aircraft and other flight equipment of the Group with an aggregate carrying value of approximately RMB88,060RMB339 million (2014: RMB99,119(December 31, 2018: RMB373 million) were mortgaged under certain loans or certain lease agreements (Notes 35 and 36)(Note 36(a)(i)). |
| (c) | (c) | DuringFor the year ended December 31, 2015, 2 Boeing 757-2002019, certain aircraft and other flight equipment were disposed, against which impairment provision had been provided in previous years were disposed of and the impairment provision of RMB108RMB30 million for these aircraft and RMB37 million for the other flight equipment was written of on disposal.off respectively. |
| (d) | (d) | As at December 31, 2015,2019, the Group reviewed the recoverable amounts of the aircraftsaircraft and related assets and made an additional impairment provision of RMB55RMB18 million for 5 EMB 145 aircraft and 2 EMB 190 aircraft against which impairment provision had been provided in previous years.its aircraft. The estimates of recoverable amounts were based on the greater of the assets’ fair value less costs to sellof disposal and the value in use. The fair value on which the recoverable amount is based is categorized as a level 3 measurement and it was determined by reference to the recent observable market prices for the aircraft fleet and flight equipment. In cases when value in use are based, the pre-tax discount rate used in the estimate is 9.00%. |
Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated)
| (e) | 20 | Property, plant and equipment, net (continued) |
| (e) | As at December 31, 20152019 and up to the date of approval of these financial statements, the Group is in the process of applying for the property title certificates in respect of the properties located in Guangzhou (including Guangzhou Baiyun International Airport),Guangdong, Guangxi, Guizhou, Xiamen, Heilongjiang, Jilin, Dalian, Guangxi, Hunan, Beijing, Henan, Xinjiang, Hainan, Shanghai, Zhuhai, Shenzhen, Shenyang, Xi’an, Xinjiang, Henan,Hubei, Chongqing, Liaoning and Chengdu, Guizhou, Hainan, Hubei, Sanya and Shantou, in which the Group has interests and for which such certificates have not been granted. As at December 31, 2015,2019, carrying value of such properties of the Group amounted to RMB3,615RMB7,106 million (2014: RMB3,572(December 31, 2018: RMB5,289 million). The Directors of the Company are of the opinion that the use of and the conduct of operating activities at the properties referred to above are not affected by the fact that the Group has not yet obtained the relevant property title certificates. |
| (f) | (f) | The Group leased out investment properties and certain flight training facilities under operating leases. The leases typically run for an initial period of one to fourteenten years, with an option to renew the leases after that date at which time all terms are renegotiated. None of the leases includes contingent rentals. In this connection, rental income totalling RMB182RMB202 million (2014: RMB156(2018: RMB178 million; 2017: RMB184 million) was receivedrecognized by the Group during the year in respect of the leases. Directors estimated the fair value of these investment properties approximate the carrying amount. |
The properties are reclassified between investment properties and other property, plant and equipment, upon the intention of commencement or ceasecessation of lease. The Group’s total future minimum lease income undernon-cancellable operating leases are as follows: | | | 2015 | | 2014 | | | | | | | | | RMB million | | RMB million | | | 2019 | | | 2018 | | | | | | | | | | RMB million | | | RMB million | | | Within 1 year | | 53 | | 54 | | | | 38 | | | | 55 | | | After 1 year but within 5 years | | 77 | | 72 | | | | 74 | | | | 39 | | | After 5 years | | | 20 | | | 11 | | | | 36 | | | | 7 | | | | | | 150 | | | 137 | | | | | | | | | | | | 148 | | | | 101 | | | | | | | | | |
| (g) | As at December 31, 2019, certain investment properties of the Group with an aggregate carrying value of approximately RMB15 million (December 31, 2018: RMB18 million) were mortgaged for certain bank borrowings (Note 36(a)(i)). |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated) | 20 | 21 | Construction in progress |
| | | Advance payment for
aircraft and flight
equipment | | | Others | | | Total | | | | | RMB million | | | RMB million | | | RMB million | | | | | | | | | | | | | | At January 1, 2014 | | | 16,413 | | | | 1,046 | | | | 17,459 | | | Additions | | | 13,742 | | | | 1,342 | | | | 15,084 | | | Acquisition of a subsidiary | | | 484 | | | | 2 | | | | 486 | | | Transferred to property, plant and equipment (Note 20) | | | (12,885 | ) | | | (578 | ) | | | (13,463 | ) | | Transfer to lease prepayments and other assets upon completion of development | | | - | | | | (219 | ) | | | (219 | ) | | At December 31, 2014 | | | 17,754 | | | | 1,593 | | | | 19,347 | | | | | | | | | | | | | | | | | At January 1, 2015 | | | 17,754 | | | | 1,593 | | | | 19,347 | | | Additions | | | 13,671 | | | | 1,287 | | | | 14,958 | | | Transferred to property, plant and equipment (Note 20) | | | (10,787 | ) | | | (1,012 | ) | | | (11,799 | ) | | Transferred to lease prepayments and other assets upon completion of development | | | - | | | | (123 | ) | | | (123 | ) | | Disposals | | | (2,938 | ) | | | (12 | ) | | | (2,950 | ) | | At December 31, 2015 | | | 17,700 | | | | 1,733 | | | | 19,433 | |
| | | | | | | | | | | | | | | | Advance payment for aircraft and flight
equipment | | | Others | | | Total | | | | | RMB million | | | RMB million | | | RMB million | | At January 1, 2018 | | | 27,543 | | | | 2,690 | | | | 30,233 | | Additions | | | 19,973 | | | | 4,486 | | | | 24,459 | | Transferred to property, plant and equipment | | | (13,231 | ) | | | (903 | ) | | | (14,134 | ) | Transferred to others | | | — | | | | (155 | ) | | | (155 | ) | Transferred to lease prepayments | | | — | | | | (7 | ) | | | (7 | ) | Disposals | | | (2,605 | ) | | | — | | | | (2,605 | ) | | | | | | | | | | | | | | At December 31, 2018 | | | 31,680 | | | | 6,111 | | | | 37,791 | | | | | | | | | | | | | | | At January 1, 2019 | | | 31,680 | | | | 6,111 | | | | 37,791 | | Additions | | | 10,512 | | | | 5,780 | | | | 16,292 | | Transferred to property, plant and equipment (Note 19) | | | (1,071 | ) | | | (2,971 | ) | | | (4,042 | ) | Transferred toright-of-use assets (Note 21) | | | (10,202 | ) | | | (313 | ) | | | (10,515 | ) | Transferred to others | | | — | | | | (304 | ) | | | (304 | ) | | | | | | | | | | | | | | At December 31, 2019 | | | 30,919 | | | | 8,303 | | | | 39,222 | | | | | | | | | | | | | | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | 21 | 22Right-of-use
| Lease prepayments assets |
| | | | | | | | | | | | | | | | | | | | | | | | Aircraft
and
engines | | | Land use
rights | | | Buildings | | | Others | | | Total | | | | | RMB
million | | | RMB
million | | | RMB
million | | | RMB
million | | | RMB
million | | | | | | | | (Note 1) | | | | | | | | | | | Cost: | | | | | | | | | | | | | | | | | | | | | At January 1, 2019 | | | 187,991 | | | | 3,671 | | | | 1,300 | | | | 138 | | | | 193,100 | | Additions | | | 20,609 | | | | 225 | | | | 1,490 | | | | 51 | | | | 22,375 | | Transfer from construction in progress (Note 20) | | | 10,202 | | | | 110 | | | | — | | | | 203 | | | | 10,515 | | Reclassification with investment properties (Note 19) | | | — | | | | 16 | | | | — | | | | — | | | | 16 | | Transferred to property, plant and equipment on exercise of purchase option (Note 19) | | | (2,641 | ) | | | — | | | | — | | | | — | | | | (2,641 | ) | Disposals | | | (780 | ) | | | — | | | | — | | | | — | | | | (780 | ) | | | | | | | | | | | | | | | | | | | | | | At December 31, 2019 | | | 215,381 | | | | 4,022 | | | | 2,790 | | | | 392 | | | | 222,585 | | | | | | | | | | | | | | | | | | | | | | | Accumulated amortization: | | | | | | | | | | | | | | | | | | | | | At January 1, 2019 | | | 55,048 | | | | 701 | | | | — | | | | — | | | | 55,749 | | Amortization charge for the year | | | 14,485 | | | | 107 | | | | 637 | | | | 34 | | | | 15,263 | | Reclassification with investment properties (Note 19) | | | — | | | | 5 | | | | — | | | | — | | | | 5 | | Transferred to property, plant and equipment on exercise of purchase option (Note 19) | | | (874 | ) | | | — | | | | — | | | | — | | | | (874 | ) | Disposals | | | (769 | ) | | | — | | | | — | | | | — | | | | (769 | ) | | | | | | | | | | | | | | | | | | | | | | At December 31, 2019 | | | 67,890 | | | | 813 | | | | 637 | | | | 34 | | | | 69,374 | | | | | | | | | | | | | | | | | | | | | | | Net book value: | | | | | | | | | | | | | | | | | | | | | At December 31, 2019 | | | 147,491 | | | | 3,209 | | | | 2,153 | | | | 358 | | | | 153,211 | | | | | | | | | | | | | | | | | | | | | | | At January 1, 2019 | | | 132,943 | | | | 2,970 | | | | 1,300 | | | | 138 | | | | 137,351 | | | | | | | | | | | | | | | | | | | | | | |
Lease prepayments relate to the Group’s land use rights. In 2015, the amount of amortisation charged to consolidated income statement was RMB64 million (2014: RMB61 million; 2013: RMB58 million).Note 1:
A majority of the Group’s properties are located in the PRC. The Group was formally granted the rights to use certain parcels of land in Guangzhou, Shenzhen, Zhuhai, Beihai, Changsha, Shantou, Haikou, Zhengzhou, Jilin, Guiyang and other PRC cities by the relevant PRC authorities for periods of 30 to 70 years, which expire between 2020 and 2073.
As at December 31, 20152019 and up to the date of approval of these financial statements, the Group is in the process of applying for certain land use right certificates.certificates in respect of certain land used by the Group. As at December 31, 2015,2019, carrying value of such land use rights of the Group amounted to RMB1,359RMB843 million (2014: RMB1,038(December 31, 2018: RMB922 million). The Directors of the Company are of the opinion that the use of and the conduct of operating activities at the land use rights referred to above are not affected by the fact that the Group has not yet obtained the relevant land use right certificates. As at December 31, 2019, certain land use rights of the Group with an aggregate carrying value of approximately RMB87 million (December 31, 2018: lease prepayments of RMB88 million) were mortgaged for certain bank borrowings (Note 36(a)(i)). Notes to the consolidated financial statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated)
| 21 | 23 | SubsidiariesRight-of-use assets (continued) |
In addition to the amortization charged, the analysis of expense items in relation to leases recognized in profit or loss is as follows: | | | | | | | | | | | | | | | | 2019 | | | 2018 | | | 2017 | | | | | RMB million | | | RMB million | | | RMB million | | | | | | | | (Note) | | | (Note) | | Interest on lease liabilities (Note 15) | | | 5,302 | | | | 2,409 | | | | 2,009 | | Interest rate swaps: cash flow hedge, reclassified from equity (Note 15) | | | (18 | ) | | | (13 | ) | | | 17 | | Expense relating to leases with remaining lease term ending on or before December 31, 2019 | | | 2,092 | | | | — | | | | — | | Expense relating to leases of variable lease payments not included in the measurement of lease liabilities | | | 81 | | | | — | | | | — | | Total minimum lease payments for leases previously classified as operating leases under IAS 17 | | | — | | | | 9,920 | | | | 8,996 | |
Note: The Group has initially applied IFRS 16 using the modified retrospective approach and adjusted the opening balances at January 1, 2019 to recognizeright-of-use assets relating to leases which were previously classified as operating leases under IAS 17. The depreciated carrying amount of the finance lease assets which were previously included in property, plant and equipment and lease prepayments is also identified asright-of-use assets. After initial recognition ofright-of-use assets at January 1, 2019, the Group as a lessee is required to recognize the amortization ofright-of-use assets, instead of the previous policy of recognizing rental expenses incurred under operating leases on a straight-line basis over the lease term. Under this approach, the comparative information is not restated. See Note 2(b). During the year, additions toright-of-use assets were primarily related to the capitalized lease payments payable under new tenancy agreements and newly acquired leasehold aircraft. Details of total cash outflow for leases and the maturity analysis of lease liabilities are set out in Note 34(d) and Note 37 respectively. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | | | | | | | | | | | | 2019 | | | 2018 | | | | | RMB million | | | RMB million | | Cost and carrying amount: | | | 237 | | | | 237 | | | | | | | | | | |
Impairment tests for cash-generating units containing goodwill | | | | | | | | | | | | 2019 | | | 2018 | | | | | RMB million | | | RMB million | | Southern Airlines Group Import and Export Trading Company (“SAIETC”) | | | 182 | | | | 182 | | Xiamen Airlines Culture and Media Co., Ltd. (“XACM”) | | | 55 | | | | 55 | | | | | | | | | | | Total | | | 237 | | | | 237 | | | | | | | | | | |
The recoverable amount of the CGU is determined based onvalue-in-use calculation. The calculation uses cash flow projections based on financial budgets approved by management covering a five-year period. Cash flows beyond the five-year period are extrapolated using an estimated weighted average growth rate which does not exceed the long-term average growth rates for the business in which the CGU operates. The cash flows of the above entities are discounted usingpre-tax discount rates ranging from 10.5% to 13.5% (2018: 10.5% to 13.5%). NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) All the subsidiaries of the Company are unlisted. The following list contains only the particulars of subsidiaries which principally affect the results, assets or liabilities of the Group. | | | | | | | | | | | | | Name of company | | Place of establishment/ operation | | Registered
capital | | | Proportion of
ownership
interest
held by the
Company | | | Principal activity | China Southern Airlines Henan Airlines Company Limited (i) | | PRC | | RMB | 6,000,000,000 | | | | 60 | % | | Airline transportation | Xiamen Airlines (i)&(viii) | | PRC | | RMB | 8,000,000,000 | | | | 55 | % | | Airline transportation | Chongqing Airlines Company Limited (i) | | PRC | | RMB | 1,200,000,000 | | | | 60 | % | | Airline transportation | Shantou Airlines Company Limited (i) | | PRC | | RMB | 280,000,000 | | | | 60 | % | | Airline transportation | Zhuhai Airlines Company Limited (i) | | PRC | | RMB | 250,000,000 | | | | 60 | % | | Airline transportation | Guizhou Airlines Company Limited (i) | | PRC | | RMB | 1,220,000,000 | | | | 60 | % | | Airline transportation | Guangzhou Nanland Air Catering Company Limited (ii) | | PRC | | RMB | 240,000,000 | | | | 70.50 | % | | Air catering | Guangzhou Baiyun International Logistic Company Limited (i) | | PRC | | RMB | 50,000,000 | | | | 61 | % | | Logistics operations | Beijing Southern Airlines Ground Services Company Limited (i) | | PRC | | RMB | 18,000,000 | | | | 100 | % | | Airport ground services | Nan Lung International Freight Limited | | Hong Kong | | HKD | 3,270,000 | | | | 51 | % | | Freight services | Southern Airlines General Aviation Company Limited (i) | | PRC | | RMB | 1,000,000,000 | | | | 100 | % | | General aviation |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) Name of23 | Subsidiaries (continued) |
| | | | | | | | | | | | | Name of company | | Place of establishment/ operation | | Registered
capital | | | Proportion of
ownership
interest
held by the
Company | | | Principal activity | SAIETC (i) | | PRC | | RMB | 15,000,000 | | | | 100 | % | | Import and export agent services | Zhuhai Xiang Yi Aviation Technology Company Limited (“Zhuhai Xiang Yi”) (i)&(vi) | | PRC | | RMB | 469,848,000 | | | | 100 | % | | Flight simulation services | China Southern Airlines Xiongan Airlines Company Limited (i) | | PRC | | RMB | 600,000,000 | | | | 100 | % | | Airline transportation | Flying College (v) | | Australia | | AUD | 39,651,627 | | | | 84.30 | % | | Pilot training services | Southern Airlines Freight and Logistics (Guangzhou) Co.,Ltd (i) | | PRC | | RMB | 1,000,000,000 | | | | 100 | % | | Logistics operations | Shenyang Northern Aircraft Maintenance Co., Ltd. (“Shenyang Aircraft Maintenance”) (i) & (iii) | | PRC | | RMB | 31,520,545 | | | | 100 | % | | Aircraft repair and maintenance services | Guangdong Southern Airline Pearl Aviation Services Company Limited (“Pearl Aviation Services”) (i) & (iv) | | PRC | | RMB | 5,000,000 | | | | 100 | % | | Hotel management services |
| (i) | These subsidiaries are PRC limited liability companies. |
| (ii) | This subsidiary is a sino-foreign equity joint venture company established in the PRC. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | 23 | Subsidiaries (continued) |
| (iii) | Shenyang Aircraft Maintenance |
Pursuant to the equity transfer agreement entered into between the Company and a third party, the Company acquired 21% equity interests Shenyang Aircraft Maintenance, a former joint venture of the Company, at a cash consideration of RMB14 million on April 23, 2019. On the same date, the Company obtained control over Shenyang Aircraft Maintenance, and Shenyang Aircraft Maintenance became a wholly-owned subsidiary of the Company. The acquisition of Shenyang Aircraft Maintenance enables the Group to engage in comprehensive maintenance service. In the period from the acquisition date to December 31, 2019, Shenyang Aircraft Maintenance contributed revenue of RMB39 million and profit of RMB1 million to the Group’s results. If the acquisition had occurred on January 1, 2019, management estimates that consolidated revenue would have been increased by RMB21 million, and consolidated profit for the year would have been increased by RMB4 million. In determining these amounts, management have assumed that the fair value adjustments that arose on the acquisition date would have been the same if the acquisition had occurred on January 1, 2019. The information above is the amount before inter-company eliminations. The above acquisitions had the following effect on the Group’s assets and liabilities on acquisition date: | | | | | | | Place ofRecognized values on
acquisition
establishment/
operation
| | | | Registered
capital
RMB million | | Proportion of
ownership
interest held by
the CompanyNon-current assets
| | | Principal31 | | Current assets | | | 41 | | Non-current liabilities | | | (6 | ) | Current liabilities | | | (3 | ) | | | | | | Total net identifiable assets | | | 63 | | | | | | |
Analysis of the net inflow of cash and cash equivalents in respect of the acquisitions: | | | | | Cash consideration paid | | | (14 | ) | Cash and cash equivalents acquired | | | 26 | | | | | | | Net cash inflow | | | 12 | | | | | | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | 23 | Subsidiaries (continued) |
| (iv) | Pearl Aviation Services |
Pursuant to the equity transfer agreement entered into between the Company and the other third parties shareholders of Pearl Aviation Services, the Company acquired 100% equity interests in Pearl Aviation Services at a consideration of RMB9 million on December 17, 2019. On the same date, the Company obtained the control of Pearl Aviation Services, and Pearl Aviation Services became a wholly-owned subsidiary of the company. The acquisition of Pearl Aviation Services enables the Group to engage in hotel management services business. As the acquisition was completed in December, limited amount of revenue and profit were contributed to the Group by Pearl Aviation Services. If the acquisition had occurred on January 1, 2019, management estimates that consolidated revenue would have been increased by RMB499 million, and consolidated profit for the year would have been increased by RMB17 million. In determining these amounts, management have assumed that the fair value adjustments that arose on the acquisition date would have been the same if the acquisition had occurred on January 1, 2019. The information above is the amount before inter-company eliminations. The above acquisitions had the following effect on the Group’s assets and liabilities on acquisition date: | | | | | | | Recognized values on
activityacquisition | | | | RMB million | | Non-current assets | | | 19 | | Current assets | | | 252 | | Current liabilities | | | (257 | ) | | | | | | Total net identifiable assets | | | 14 | | | | | | |
Analysis of the net inflow of cash and cash equivalents in respect of the acquisitions: | | | | | Cash consideration paid | | | (9 | ) | Cash and cash equivalents acquired | | | 173 | | | | | | | Net cash inflow | | | 164 | | | | | | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | 23 | Subsidiaries (continued) |
Pursuant to the subscription agreement entered into between the Company, CAE International Holding Limited, Nan Lung Holding Limited and Flying College, the Company made a capital injection of cash equivalent to RMB63 million to Flying College on November 20, 2018, as a result of which the Company’s equity interests in Flying College increased from 48.12% to 84.30%. After the capital injection, the Company is entitled to appoint all 3 members of Board of directors of Flying College in accordance with the subscription agreement, and Flying College thus became a subsidiary of the Company upon completion of the capital injection. The acquisition through the capital injection of Flying College enables the Group to engage in pilot flying training services. In the period from the acquisition date to December 31, 2018, Flying College contributed a loss of RMB5 million to the Group’s results. If the acquisition had occurred on January 1, 2018, management estimates that consolidated revenue would have been increased by RMB0 million, and consolidated profit for the year would have been decreased by RMB60 million. In determining these amounts, management have assumed that the fair value adjustments that arose on the acquisition date would have been the same if the acquisition had occurred on January 1, 2018. The information above is the amount before inter-company eliminations. The above acquisitions had the following effect on the Group’s assets and liabilities on acquisition date: | | | | | | | Recognized values on
acquisition | | | | RMB million | | Non-current assets | | | 153 | | Current assets | | | 77 | | Current liabilities | | | (155 | ) | | | | | | Total net identifiable assets | | | 75 | | | | | | |
Analysis of the net inflow of cash and cash equivalents in respect of the acquisitions: | | | | | Cash consideration paid | | | (63 | ) | Cash and cash equivalents acquired | | | 69 | | | | | | | Net cash inflow | | | 6 | | | | | | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | 23 | Subsidiaries (continued) |
| (vi) | Pursuant to the equity transfer agreement entered into between the Company and a third party, the Company acquired 49% equity interests in Zhuhai Xiang Yi, a former joint venture of the Company, at a cash consideration of USD99.52 million (equivalent to RMB678 million) on July 10, 2017. Zhuhai Xiang Yi became a wholly-owned subsidiary of the Company upon completion of the acquisition. The acquisition of Zhuhai Xiang Yi enables the Group to engage in flight simulation services. |
In the period from the acquisition date to December 31, 2017, Zhuhai Xiang Yi contributed revenue of RMB196 million and profit of RMB15 million to the Group’s results. If the acquisition had occurred on January 1, 2017, management estimates that consolidated revenue would have been increased by RMB424 million, and consolidated profit for the year would have been increased by RMB53 million. In determining these amounts, management have assumed that the fair value adjustments that arose on the acquisition date would have been the same if the acquisition had occurred on January 1, 2017. The information above is the amount before inter-company eliminations. The above acquisitions had the following effect on the Group’s assets and liabilities on acquisition date: Analysis of the net outflow of cash and cash equivalents in respect of the acquisitions: | | | | | | | | | | | | | | | Recognized values on
acquisition | | | | | | | | RMB million | | Henan Airlines Company Limited (“China Southern Henan Airlines”) (i)&(ii)Property, plant and equipment, net | | PRC | | RMB6,000,000,000 | | | 601,556 | % | Lease prepayments | | Airline transportation | Xiamen Airlines Company Limited (“Xiaman Airlines”) (ii)&(v) | | PRC | | RMB5,000,000,000 | | | 55115 | % | Trade and other receivables | | Airline transportation | Chongqing Airlines Company Limited (ii) | | PRC | | RMB1,200,000,000 | | | 6070 | % | Cash and cash equivalents | | Airline transportation | Shantou Airlines Company Limited (ii) | | PRC | | RMB280,000,000 | | | 6041 | % | Other assets | | Airline transportation | Xinjiang Civil Aviation Property Management Limited (ii) | | PRC | | RMB251,332,832 | | | 51.8432 | % | Trade and other payables | | Property management | Zhuhai Airlines Company Limited (ii) | | PRC | | RMB250,000,000 | | | 60(34 | %) | Borrowings | | Airline transportation | Guizhou Airlines Company Limited (“Guizhou Airlines”) (ii) | | PRC | | RMB650,000,000 | | | 60(342 | %) | Deferred tax liabilities | | Airline transportation | Guangzhou Nanland Air Catering Company Limited (iii) | | PRC | | RMB120,000,000 | | | 55(30 | %) | Other liabilities | | Air catering | Guangzhou Baiyun International Logistic Company Limited (ii) | | PRC | | RMB50,000,000 | | | 61(24 | %) | | | Logistics operations | Beijing Southern Airlines Ground Services Company Limited (ii) | | | PRC | | | Total net identifiable assets | | RMB18,000,000 | | | | | 1001,384 | % | | | Airport ground services | China Southern Airlines Group Air Catering Company Limited (ii) | | | PRC | | | Cash consideration paid | | RMB10,200,000 | | | | | 100(678 | %) | Cash and cash equivalents acquired | | Air catering | Nan Lung International Freight Limited | | Hong Kong | | HKD3,270,000 | | | 5141 | % | | | Freight services | | | | | | | Net cash outflow | | | | | | | (637 | ) | | | | | | | | | |
Effect of the acquisition on the Group’s consolidated income statements | (i) | Pursuant to an agreement entered into in 2014 by the equity holders of China Southern Henan Airlines, a subsidiary | | | | | | | Fair value of the Company, the equity holders of China Southern Henan Airlines agreed to further inject capital of RMB 2.8 billion into the company based on their equity percentage. The Company’s capital injection of RMB1.68 billion comprises of RMB1.33 billion in cash and RMB0.35 billion in the form of property, plant and equipment and lease prepayments. The non-controlling shareholder’s capital injection of RMB1.12 billion is in the form of cash contribution. As at 31 December 2015, the above capital injection was fully completed. |
| (ii) | These subsidiaries are PRC limited liability companies. |
| (iii) | This subsidiary is a Sino-foreign equity joint venture company established in the PRC. |
| (iv) | Certain subsidiaries of the Group are PRC joint ventures which have limited terms pursuant to thePRC law. |
| (v) | The Companyoriginally held 51% equity interests in Xiamen Airlines since its incorporation. In December 2015, | | | | | | | 706 | | Less: carrying value of the Company acquired additional 4%originally held 51% equity interests in Xiamen Airlines from its non-controlling shareholders at a consideration | | | | | | | (597 | ) | | | | | | | | | | Remeasurement of RMB 626 million.the originally held 51% equity interests | | | | | | | 109 | | | | | | | | | | |
Notes toAcquisition-related costs were minimal and included in “general and administrative expenses” in the consolidated financial statementsincome statements.
(Prepared in accordance with International Financial Reporting Standards)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | 23 | Subsidiaries (continued) |
| (vii) | Pursuant to the equity transfer agreement entered into between the Company’s subsidiary, Xiamen Airlines, and Southern Airlines Culture and Media Co., Ltd. (“SACM”, an associate of the Company) on October 13, 2017, Xiamen Airlines acquired 51% equity interests in XACM, at a consideration of RMB47 million. Xiamen Airlines held 49% equity interest in XACM before the acquisition. XACM became a wholly-owned subsidiary of the Xiamen Airlines upon completion of the acquisition. The acquisition of XACM enables the Group to engage in advertising agency business. |
In the period from the acquisition date to December 31, 2017, XACM contributed revenue of RMB7 million and profit of RMB1 million to the Group’s results. If the acquisition had occurred on January 1, 2017, management estimates that consolidated revenue would have been increased by RMB44 million, and consolidated profit for the year would have been increased by RMB2 million. In determining these amounts, management have assumed that the fair value adjustments that arose on the acquisition date would have been the same if the acquisition had occurred on January 1, 2017. The information above is the amount before inter-company eliminations. The above acquisitions had the following effect on the Group’s assets and liabilities on acquisition date: | | | | | | | Recognized
values on
acquisition | | | | RMB million | | Trade and other receivables | | | 46 | | Cash and cash equivalents | | | 2 | | Trade and other payables | | | (11 | ) | | | | | | Total net identifiable assets | | | 37 | | | | | | |
Analysis of the net outflow of cash and cash equivalents in respect of the acquisitions: | | | | | Cash consideration paid | | | (47 | ) | Cash and cash equivalents acquired | | | 2 | | | | | | | Net cash outflow | | | (45 | ) | | | | | |
Goodwill Goodwill was recognized as a result of the acquisitions as follows: | | | | | | | Recognized
values on
acquisition | | | | RMB million | | Total consideration transferred | | | 47 | | The fair value of 49% equity of XACM on the acquisition date | | | 45 | | Less: fair value of identifiable net assets | | | (37 | ) | | | | | | Goodwill (Note 22) | | | 55 | | | | | | |
The goodwill resulting from this acquisition represented the expected synergies from combining operations of XACM and the Group. Acquisition-related costs were minimal and included in “general and administrative expenses” in the consolidated income statements. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | 23 | Subsidiaries (continued) |
| (a)(viii) | Materialnon-controlling interests : |
As at December 31, December 2015,2019, the balance of totalnon-controlling interests is RMB10,579RMB13,223 million (December 31, 2018: RMB13,212 million), of which RMB6,706RMB9,003 million (December 31, 2018: RMB9,035 million) is for Xiamen Airlines. The rest ofnon-controlling interests are not individually material. Set out below are the summarisedsummarized financial information for Xiamen Airlines that has non-controlling interests that are material to the Group.Airlines. Summarised balance sheet
| | | Xiamen Airlines | | | | | 2015 | | | 2014 | | | | | RMB million | | | RMB million | | | | | | | | | | | Current | | | | | | | | | | Assets | | | 2,435 | | | | 6,397 | | | Liabilities | | | (12,148 | ) | | | (8,527 | ) | | Total current net liabilities | | | (9,713 | ) | | | (2,130 | ) | | | | | | | | | | | | Non-current | | | | | | | | | | Assets | | | 35,628 | | | | 32,883 | | | Liabilities | | | (11,336 | ) | | | (17,579 | ) | | Total non-current net assets | | | 24,292 | | | | 15,304 | | | | | | | | | | | | | Net assets | | | 14,579 | | | | 13,174 | |
Summarised statement of comprehensive income
| | | Xiamen Airlines | | | | | 2015 | | | 2014 | | | 2013 | | | | | RMB million | | | RMB million | | | RMB million | | | | | | | | | | | | | | Revenue | | | 19,915 | | | | 17,831 | | | | 16,598 | | | | | | | | | | | | | | | | | Profit before income tax | | | 1,576 | | | | 993 | | | | 1,750 | | | Income tax expense | | | (406 | ) | | | (238 | ) | | | (438 | ) | | | | | | | | | | | | | | | | Post-tax profit from continuing operations | | | 1,170 | | | | 755 | | | | 1,312 | | | Other comprehensive (loss)/income | | | (5 | ) | | | 32 | | | | (8 | ) | | | | | | | | | | | | | | | | Total comprehensive income | | | 1,165 | | | | 787 | | | | 1,304 | | | | | | | | | | | | | | | | | Dividends paid to non-controlling interests | | | - | | | | 3 | | | | 74 | |
Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated)
| 23 | Subsidiaries (continued) |
| (a) | Material non-controlling interests (continued) |
Summarised cash flows
| | | Xiamen Airlines | | | | | 2015 | | | 2014 | | | 2013 | | | | | RMB million | | | RMB million | | | RMB million | | | | | | | | | | | | | | Cash generated from operating activities | | | | | | | | | | | | | | Cash generated from operations | | | 5,035 | | | | 2,660 | | | | 3,152 | | | Interest received | | | 162 | | | | 140 | | | | 86 | | | Interest paid | | | (312 | ) | | | (377 | ) | | | (209 | ) | | Income tax paid | | | (473 | ) | | | (180 | ) | | | (477 | ) | | | | | | | | | | | | | | | | Net cash generated from operating activities | | | 4,412 | | | | 2,243 | | | | 2,552 | | | Net cash used in investing activities | | | (3,521 | ) | | | (4,866 | ) | | | (4,171 | ) | Net cash (used in)/generated from financing
activities | | | (3,296 | ) | | | 1,850 | | | | 1,833 | | | | | | | | | | | | | | | | | Net (decrease)/increase in cash and cash equivalents | | | (2,405 | ) | | | (773 | ) | | | 214 | | | Cash and cash equivalents at beginning of year | | | 3,036 | | | | 3,809 | | | | 3,595 | | | Exchange gain on cash and cash equivalents | | | 13 | | | | - | | | | - | | | Cash and cash equivalents at end of year | | | 644 | | | | 3,036 | | | | 3,809 | |
| | | | | | | | | | | | 2019 | | | 2018 | | | | | RMB million | | | RMB million (Note) | | Non-controlling interests percentage | | | 45 | % | | | 45 | % | Current assets | | | 3,010 | | | | 4,029 | | Non-current assets | | | 53,855 | | | | 43,234 | | Current liabilities | | | (15,494 | ) | | | (14,397 | ) | Non-current liabilities | | | (22,233 | ) | | | (13,678 | ) | Net assets | | | 19,138 | | | | 19,188 | | Carrying amount ofnon-controlling interests | | | 9,003 | | | | 9,035 | | Revenue | | | 32,612 | | | | 30,225 | | Profit for the year | | | 784 | | | | 915 | | Total comprehensive income | | | 798 | | | | 1,111 | | Profit allocated tonon-controlling interests | | | 350 | | | | 393 | | Dividend paid tonon-controlling interests | | | 45 | | | | 68 | | Net cash generated from operating activities | | | 8,259 | | | | 3,559 | | Net cash (used in) / generated from investing activities | | | (1,990 | ) | | | 889 | | Net cash used in financing activities | | | (6,097 | ) | | | (4,363 | ) |
The information above is the amount before inter-company eliminations. Note: The subsidiary has initially applied IFRS 16 using the modified retrospective approach and adjusted the opening balances at January 1, 2019 to recognizeright-of-use assets and lease liabilities relating to leases which were previously classified as operating leases under IAS 17. Under this approach, the comparative information is not restated.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated) | 24 | 24 | Interest in associates |
| | | 2015 | | | 2014 | | | | | RMB million | | | RMB million | | | | | | | | | | | | | Share of net assets | | | 1,995 | | | | 1,583 | |
| | | | | | | | | | | | 2019 | | | 2018 | | | | | RMB million | | | RMB million | | Share of net assets | | | 3,322 | | | | 3,181 | | | | | | | | | | |
All the Group’s associates are unlisted without quoted market price. The particulars of the Group’s principal associates as ofat December 31, 20152019 are as follows: | | | | | | | | Proportion of ownership
interest held by | | | | | | | | | | Place of
establishment
/ operation | | Group’s
effective
interest | | | The
Company | | | Subsidiaries | | | Proportion
of voting
rights held
by the Group | | | Principal activity | | | | | | | | | | | | | | | | | | | | China Southern Group Finance Co.,Ltd (“SA Finance”) | | PRC | | | 33.98 | % | | | 21.09 | % | | | 12.89 | % | | | 33.98 | % | | Provision of Airlines financial services | | Sichuan Airlines Co.,Ltd (“Sichuan Airlines”) | | PRC | | | 39 | % | | | 39 | % | | | - | | | | 39 | % | | Airline transportation | | Southern Airlines Culture and Meida Co., Ltd (“SACM”) | | PRC | | | 40 | % | | | 40 | % | | | - | | | | 40 | % | | Advertising services |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Proportion of ownership
interest held by | | | | | | | | | | Place of
establishment / operation | | | Group’s effective interest | | | The Company | | | Subsidiaries | | | Proportion of voting rights held by the Group | | | Principal activity | Southern Airlines Group Finance Co., Ltd. (“SA Finance”) (Note) | | | PRC | | | | 48.59 | % | | | 41.81 | % | | | 6.78 | % | | | 48.59 | % | | Provision of airlines financial services | Sichuan Airlines Co., Ltd. (“Sichuan Airlines”) | | | PRC | | | | 39 | % | | | 39 | % | | | — | | | | 39 | % | | Airline transportation | Southern Airlines Culture and Media Co., Ltd. (“SACM”) | | | PRC | | | | 40 | % | | | 40 | % | | | — | | | | 40 | % | | Advertising services | Shenyang Konggang Logistic Co.,Ltd. (“Shenyang Konggang”) | | | PRC | | | | 42.80 | % | | | 42.80 | % | | | — | | | | 42.80 | % | | Ground services | Xinjiang Civil Aviation Property Management Limited | | | PRC | | | | 42.80 | % | | | 42.80 | % | | | — | | | | 42.80 | % | | Property management |
Note: In March 2019, the Group made capital injection of RMB500 million into SA Finance, and the share of equity interest held by the Group increased from 33.98% to 48.59%; There is no associate that is individually material to the Group. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | 24 | Interest in associates (continued) |
The Group has interestsinterest in a number of individually immaterial associates that are accounted for using the equity method. The aggregate financial information of these associates is summarized as following: | | | | 2015 | | 2014 | | 2013 | | | 2019 | | | 2018 | | | 2017 | | | | | RMB million | | RMB million | | RMB million | | | RMB million | | | RMB million | | | RMB million | | | | | | | | | | | | | | | (Note) | | | (Note) | | | Aggregate carrying amount of individually immaterial associates | | 1,995 | | 1,583 | | 1,305 | | | | 3,322 | | | | 3,181 | | | | 3,031 | | | Aggregate amounts of the Group’s share of: | | | | | | | | | | | | | | | Profit from continuing activities | | 460 | | 261 | | 294 | | | | Other comprehensive (loss)/income | | | (7 | ) | | | 21 | | | (3 | ) | | (Loss)/profit from continuing operations | | | | (178 | ) | | | 263 | | | | 431 | | Other comprehensive income | | | | 3 | | | | (4 | ) | | | 2 | | | | | | | | | | | | | | Total comprehensive income | | | 453 | | | 282 | | | 291 | | | | (175 | ) | | | 259 | | | | 433 | | | | | | | | | | | | |
Note: The Group has initially applied IFRS 16 at January 1, 2019 using the modified retrospective approach. Under this approach, comparative information is not restated. See Note 2(b). NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated) | 25 | 25 | Interest in joint ventures |
| | | 2015 | | | 2014 | | | | | RMB million | | | RMB million | | | | | | | | | | | | | Share of net assets | | | 1,440 | | | | 1,338 | |
| | | | | | | | | | | | 2019 | | | 2018 | | | | | RMB million | | | RMB million | | Share of net assets | | | 3,124 | | | | 2,812 | | | | | | | | | | |
All the Group’s joint ventures are unlisted without quoted market price. The particulars of the Group’s principal joint ventures as ofat December 31, 20152019 are as follows: | | | | | | | | Proportion of ownership
interest held by | | | | | | | | | | Place of
establishment/
operation | | Group’s
effective
interest | | | The
Company | | | Subsidiaries | | | Proportion
of voting
rights held
by the Group | | | Principal activity | | | | | | | | | | | | | | | | | | | | Guangzhou Aircraft Maintenance Engineering Co.,Ltd (”GAMECO”) | | PRC | | | 50 | % | | | 50 | % | | | - | | | | 50 | % | | Aircraft repair and maintenance services | | Zhuhai Xiang Yi Aviation Technology Company Limited (“Zhuhai Xiang Yi”) | | PRC | | | 51 | % | | | 51 | % | | | - | | | | 50 | % | | Flight simulation services | | Guangzhou China Southern Zhongmian Dutyfree Store Co., Limited | | PRC | | | 50 | % | | | 50 | % | | | - | | | | 50 | % | | Sales of duty free goods in flight | | China Southern West Australian Flying College Pty Ltd (“Flying College”) | | Australia | | | 48.12 | % | | | 48.12 | % | | | - | | | | 50 | % | | Pilot training
services |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Proportion of ownership
interest held by | | | | | | | | | | Place of establishment/ operation | | | Group’s effective interest | | | The Company | | | Subsidiaries | | | Proportion of voting rights held by the Group | | | Principal activity | Guangzhou Aircraft Maintenance Engineering Co., Ltd. (“GAMECO”) | | | PRC | | | | 50 | % | | | 50 | % | | | — | | | | 50 | % | | Aircraft repair and maintenance services | MTU Maintenance Zhuhai Co. Ltd. (“MTU”) | | | PRC | | | | 50 | % | | | 50 | % | | | — | | | | 50 | % | | Aircraft repair and maintenance services |
There is no joint venture that is individually material to the Group. The Group has interest in a number of individually immaterial joint ventures that are accounted for using the equity method. The aggregate financial information of these joint ventures is summarized as following:follows: | | | 2015 | | | 2014 | | | 2013 | | | | | RMB million | | | RMB million | | | RMB million | | | | | | | | | | | | | | Aggregate carrying amount of individually immaterial joint venture | | | 1,440 | | | | 1,338 | | | | 1,197 | | | Aggregate amounts of the Group’s share of: | | | | | | | | | | | | | | Profit from continuing activities | | | 108 | | | | 140 | | | | 96 | | | Total comprehensive income | | | 108 | | | | 140 | | | | 96 | |
| | | | | | | | | | | | | | | | 2019 | | | 2018 | | | 2017 | | | | | RMB
million | | | RMB
million | | | RMB
million | | Aggregate carrying amount of individually immaterial joint ventures | | | 3,124 | | | | 2,812 | | | | 1,015 | | Aggregate amounts of the Group’s share of: | | | | | | | | | | | | | Profit from continuing operations and total comprehensive income | | | 365 | | | | 200 | | | | 99 | | | | | | | | | | | | | | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated) | 26 | 26 | Other investments in equity securitiesFinancial assets |
Non-current financial assets | | | 2015 | | | 2014 | | | | | RMB million | | | RMB million | | | | | | | | | | | | | Unlisted equity securities, at cost | | | 136 | | | | 136 | |
| | | | | | | | | | | | | | | | 2019 | | | 2018 | | | | | Note | | RMB
million | | | RMB
million | | Other equity instrument investments (FVOCI) | | | | | | | | | | | -Non-listed shares | | (i) | | | 188 | | | | 234 | | -Non-tradable shares | | (i) | | | 861 | | | | 846 | | | | | | | | | | | | | | | | | | 1,049 | | | | 1,080 | | | | | | | | | | | | | Othernon-current financial assets (FVPL) | | | | | | | | | | | - Listed shares | | (i) | | | 74 | | | | 71 | | -Non-listed shares | | (i) | | | 32 | | | | 32 | | | | | | | | | | | | | | | | | | 106 | | | | 103 | | | | | | | | | | | | |
Dividend income from unlisted equity securities of the Group amounted to RMB10 million during the year ended December 31, 2015 (2014: RMB10 million; 2013: RMB11 million).Current financial assets
| | | | | | | | | | | | | | | | 2019 | | | 2018 | | | | | Note | | RMB
million | | | RMB
million | | Other financial assets | | (ii) | | | — | | | | 440 | | | | | | | | | | | | |
Notes: | (i) | 27 | Available-for-sale financial assetsDividend income generated from the investments amounted to RMB23 million for the year of 2019 in total (2018: RMB20 million). |
| | | 2015 | | | 2014 | | | | | RMB million | | | RMB million | | | | | | | | | | | Available-for-sale financial assets | | | | | | | | | | - Listed in the PRC | | | 104 | | | | 104 | | | Quoted market value of listed securities | | | 104 | | | | 104 | |
Dividend income from listed securities of the Group amounted to RMB3 million during the year ended December 31, 2015 (2014: RMB3 million, 2013: RMB3 million).
| (ii) | 28 | Derivative financial instrumentsThis represents certain financing product the Group purchased from a commercial bank. |
| | | 2015 | | | 2014 | | | | | RMB million | | | RMB million | | | | | | | | | | | Interest rate swaps | | | 13 | | | | - | | | | | | | | | | | |
The Group uses interest rate swap to mitigate the risk of changes in market interest rates. At December 31, 2015, the fixed interest rates vary from 1.64% to 1.72%, and the main floating rates are LIBOR. As at December 31, 2015, the notional principal of the outstanding interest rate swap contracts at December 31, 2015 amounted to USD581 million.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | 29 | Deferred tax assets/(liabilities) |
| (a) | The analysis of deferred tax assets and deferred tax liabilities is as follows: |
| | | 2015 | | | 2014 | | | | | RMB million | | | RMB million | | | | | | | | | | | Deferred tax assets | | | | | | | | | | – Deferred tax asset to be utilized after 12 months | | | 525 | | | | 390 | | | – Deferred tax asset to be utilized within 12 months | | | 862 | | | | 576 | | | | | | 1,387 | | | | 966 | | | | | | | | | | | | | Deferred tax liabilities | | | | | | | | | | – Deferred tax liability to be realized after 12 months | | | (938 | ) | | | (873 | ) | | Net deferred tax assets | | | 449 | | | | 93 | |
Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated) | 27 | 29Derivative financial assets / (liabilities) |
| | | | | | | | | | | | | | | | 2019 | | | 2018 | | | | | Note | | RMB
million | | | RMB
million | | Current assets: | | | | | | | | | | | Cross currency swaps | | (i) | | | 187 | | | | — | | Forward foreign exchange contracts | | (ii) | | | 31 | | | | — | | | | | | | | | | | | | | | | | | 218 | | | | — | | Non-current assets: | | | | | | | | | | | Interest rate swaps | | (iii) | | | 3 | | | | 75 | | | | | | | | | | | | | Current liabilities: | | | | | | | | | | | Cross currency swaps | | (i) | | | — | | | | (44 | ) | | | | | | | | | | | |
Notes: | (i) | Deferred tax assets/(liabilities) (continued)The Group entered into cross currency swaps to mitigate its interest rate risk and currency risk. Under the cross currency swaps, the Group agrees with other third parties to exchange the floating interest and principal payments in USD for fixed interest rate ranging from 3.39% to 3.67% per annum (2018: 3.20% to 3.91% per annum) and principal payments in RMB. At December 31, 2019, the fair value of the cross currency swaps amounted to RMB187 million was recognized in assets (December 31, 2018: RMB44 million recognized in liabilities). The notional principal of the outstanding cross currency swaps as at December 31, 2019 amounted to USD620 million (December 31, 2018: USD979 million). |
| (ii) | In 2019, the Group entered into forward foreign exchange contracts to mitigate its forward currency risk. At December 31, 2019, the fair value of the forward foreign exchange contracts amounted to RMB31 million was recognized in assets (December 31, 2018: nil). The notional principal of the outstanding forward foreign exchange contracts as at December 31, 2019 amounted to USD1,035 million (December 31, 2018: nil). |
| (iii) | In 2015, the Group entered into interest rate swaps to mitigate its cash flow interest rate risk. The interest rate swaps allow the Group to pay at fixed rate from 1.64% to 1.72% per annum to receive LIBOR. The notional principal of the outstanding interest rate swap contracts as at December 31, 2019 amounted to USD325 million (December 31, 2018: USD393 million). |
| 28 | (b)Changes in fair value of financial assets / (liabilities) |
| | | | | | | | | | | | 2019 | | | 2018 | | | | | RMB million | | | RMB million | | Othernon-current financial assets (FVPL) (Note 26) | | | 3 | | | | (8 | ) | Cross currency swaps (Note 27) | | | 231 | | | | 20 | | Forward foreign exchange contracts (Note 27) | | | 31 | | | | — | | | | | | | | | | | | | | 265 | | | | 12 | | | | | | | | | | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | 29 | Deferred tax assets / (liabilities) |
| (a) | Movements of net deferred tax assets are as follows: |
| | | At the
beginning
of the year | | (Charged)/
credited to
income
statement | | Charged to other
comprehensive
income | | At the end of
the year | | | | | | | | | | | | | | | | | RMB million | | RMB million | | RMB million | | RMB million | | | At December 31,
2018 | | Impact on Initial
application of IFRS 16 | | Acquired in business combination | | (Charged)/ credited to consolidated income
statement | | Credited to
other
comprehensive income | | | At December 31, 2019 | | | For the year ended December 31, 2015 | | | | | | | | | | | | | | | RMB million | | RMB million | | RMB million | | RMB million | | RMB million | | | RMB million | | For the year ended December 31, 2019 | | | | | | | | | | | | | | | Deferred tax assets: | | | | | | | | | | | | | | | | | | | | | | Net effect onright-of-use assets | | | | — | | | 1,312 | | | | — | | | 511 | | | | — | | | | 1,823 | | | Accrued expenses | | 561 | | 190 | | - | | 751 | | | | 929 | | | | — | | | | — | | | 185 | | | | — | | | | 1,114 | | | Provision for major overhauls | | 296 | | 176 | | - | | 472 | | | | 697 | | | (417 | ) | | | — | | | (18 | ) | | | — | | | | 262 | | | Deferred revenue | | 76 | | 6 | | - | | 82 | | | Contract liabilities/othernon-current liabilities | | | | 81 | | | | — | | | | — | | | (13 | ) | | | — | | | | 68 | | | Provision for impairment losses | | 235 | | (34 | ) | | - | | 201 | | | | 210 | | | | — | | | | — | | | (129 | ) | | | — | | | | 81 | | Provision for tax losses | | | | 22 | | | | — | | | | — | | | (15 | ) | | | — | | | | 7 | | Change in fair value of derivative financial liabilities | | | | 11 | | | | — | | | | — | | | (11 | ) | | | — | | | | — | | | Others | | | 82 | | | (20 | ) | | | - | | | 62 | | | | 85 | | | | — | | | | — | | | 29 | | | | — | | | | 114 | | | | | | 1,250 | | | 318 | | | - | | | 1,568 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2,035 | | | 895 | | | | — | | | 539 | | | | — | | | | 3,469 | | | | | | | | | | | | | | | | | | | | | | | Deferred tax liabilities: | | | | | | | | | | | | | | | | | | | | | | | Provision for major overhauls | | (363 | ) | | (21 | ) | | - | | (384 | ) | | Accrued expenses | | | | (211 | ) | | | — | | | | — | | | 20 | | | | — | | | | (191 | ) | | Depreciation allowances under tax in excess of the related depreciation under accounting | | (689 | ) | | 2 | | - | | (687 | ) | | | (618 | ) | | | — | | | | — | | | 140 | | | | — | | | | (478 | ) | | Change in fair value of derivative financial instruments | | - | | - | | (3 | ) | | (3 | ) | | | Change in fair value of available-for-sale equity securities | | (20 | ) | | - | | - | | (20 | ) | | Change in fair value of derivative financial assets | | | | (18 | ) | | | — | | | | — | | | | — | | | 17 | | | | (1 | ) | Change in fair value of other equity instrument investments | | | | (236 | ) | | | — | | | | — | | | | — | | | 7 | | | | (229 | ) | Change in fair value of othernon-current financial assets | | | | (19 | ) | | | — | | | | — | | | (1 | ) | | | — | | | | (20 | ) | Change in fair value of financial assets | | | | — | | | | — | | | | — | | | (54 | ) | | | — | | | | (54 | ) | Fair valuere-measurement of identifiable assets in business combination | | | | (25 | ) | | | — | | | (6 | ) | | 2 | | | | — | | | | (29 | ) | | Others | | | (85 | ) | | | 60 | | | - | | | (25 | ) | | | (18 | ) | | | — | | | | — | | | 4 | | | | — | | | | (14 | ) | | | | | (1,157 | ) | | | 41 | | | (3 | ) | | | (1,119 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (1,145 | ) | | | — | | | (6 | ) | | 111 | | | 24 | | | | (1,016 | ) | | | | | | | | | | | | | | | | | | | | | | Net deferred tax assets | | | 93 | | | 359 | | | (3 | ) | | | 449 | | | | 890 | | | 895 | | | (6 | ) | | 650 | | | 24 | | | | 2,453 | | | | | | | | | | | | | | | | | | | | | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated) | 29 | 29 | Deferred tax assets/assets / (liabilities) (continued) |
| (a) | (b) | Movements of net deferred tax assets are as follows: (continued) |
| | | At the
beginning
of the year | | (Charged)/
credited to
income
statement | | Charged to other
comprehensive
income | | At the end of
the year | | | | | | | | | | | | | | | RMB million | | RMB million | | RMB million | | RMB million | | | At December 31,
2017 | | Impact on
initial application
of IFRS 9/15 | | (Charged)/ credited to consolidated income
statement | | Charged to
other
comprehensive income | | At December 31,
2018 | | | For the year ended December 31, 2014 | | | | | | | | | | | | | | | | | | | | | | RMB million | | RMB million | | RMB million | | RMB million | | RMB million | | For the year ended December 31, 2018 | | | | | | | | | | | | | Deferred tax assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | Accrued expenses | | | 847 | | | | (286 | ) | | | - | | | | 561 | | | | 1,020 | | | | — | | | (91 | ) | | | — | | | 929 | | | Provision for major overhauls | | | 173 | | | | 123 | | | | - | | | | 296 | | | | 691 | | | | — | | | 6 | | | | — | | | 697 | | | Deferred revenue | | | 75 | | | | 1 | | | | - | | | | 76 | | | | 88 | | | (88 | ) | | | — | | | | — | | | | — | | Contract liabilities/othernon-current liabilities | | | | — | | | 87 | | | (6 | ) | | | — | | | 81 | | | Provision for impairment losses | | | 393 | | | | (158 | ) | | | - | | | | 235 | | | | 248 | | | | — | | | (38 | ) | | | — | | | 210 | | Provision for tax losses | | | | 10 | | | | — | | | 12 | | | | — | | | 22 | | Change in fair value of derivative financial liabilities | | | | 16 | | | | — | | | (5 | ) | | | — | | | 11 | | | Others | | | 69 | | | | 13 | | | | - | | | | 82 | | | | 82 | | | | — | | | 3 | | | | — | | | 85 | | | | | | 1,557 | | | | (307 | ) | | | - | | | | 1,250 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2,155 | | | (1 | ) | | (119 | ) | | | — | | | 2,035 | | | | | | | | | | | | | | | | | | | | Deferred tax liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | Provision for major overhauls | | | (363 | ) | | | - | | | | - | | | | (363 | ) | | Accrued expenses | | | | (216 | ) | | | — | | | 5 | | | | — | | | (211 | ) | | Depreciation allowances under tax in excess of the related depreciation under accounting | | | (707 | ) | | | 18 | | | | - | | | | (689 | ) | | | (633 | ) | | | — | | | 15 | | | | — | | | (618 | ) | Change in fair value of derivative financial assets | | | | (11 | ) | | | — | | | | — | | | (7 | ) | | (18 | ) | | Change in fair value of available-for-sale equity securities | | | (9 | ) | | | - | | | | (11 | ) | | | (20 | ) | | | (141 | ) | | 141 | | | | — | | | | — | | | | — | | Change in fair value of other equity instrument investments | | | | — | | | (156 | ) | | | — | | | (80 | ) | | (236 | ) | Change in fair value of othernon-current financial assets | | | | — | | | (21 | ) | | 2 | | | | — | | | (19 | ) | Fair valuere-measurement of identifiable assets in business combination | | | | (26 | ) | | | — | | | 1 | | | | — | | | (25 | ) | | Others | | | (107 | ) | | | 22 | | | | - | | | | (85 | ) | | | (49 | ) | | | — | | | 31 | | | | — | | | (18 | ) | | | | | (1,186 | ) | | | 40 | | | | (11 | ) | | | (1,157 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (1,076 | ) | | (36 | ) | | 54 | | | (87 | ) | | (1,145 | ) | | | | | | | | | | | | | | | | | | | Net deferred tax assets | | | 371 | | | | (267 | ) | | | (11 | ) | | | 93 | | | | 1,079 | | | (37 | ) | | (65 | ) | | (87 | ) | | 890 | | | | | | | | | | | | | | | | | | |
| (b) | Reconciliation to the consolidated statement of financial position: |
| | | | | | | | | | | | 2019 | | | 2018 | | | | | RMB million | | | RMB million | | Net deferred tax asset recognized in the statement of financial position | | | 2,692 | | | | 1,566 | | Net deferred tax liability recognized in the statement of financial position | | | (239 | ) | | | (676 | ) | | | | | | | | | | | | | 2,453 | | | | 890 | | | | | | | | | | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | 29 | Deferred tax assets / (liabilities) (continued) |
| (c) | Deferred tax assets not recognized |
At December 31, 2015, the Group’s deductible temporary differences amounting to RMB371 million (2014: RMB272 million) have not been recognized as deferred tax assets as it was determined by management that it is not probable that future taxable profits will be available for these deductible temporary differences to reverse in the foreseeable future.
Tax losses in the PRC are available for carrying forward to set off future assessable income for a maximum period of five years. At December 31, 2015, theThe Group’s unused tax losses of RMB843RMB667 million (2014: RMB970(2018: RMB492 million) have not been recognized as deferred tax assets, as it was determined by management that it is not probable that future taxable profits against which the losses can be utilized will be available before they expire. The expiry dates of unrecognized unused tax losses are analyzed as follows: | | | | | | | | | | | | 2019 | | | 2018 | | | | | RMB million | | | RMB million | | Expiring in: | | | | | | | | | 2019 | | | — | | | | 193 | | 2020 | | | — | | | | — | | 2021 | | | 92 | | | | 95 | | 2022 | | | 82 | | | | 82 | | 2023 | | | 116 | | | | 122 | | 2024 | | | 377 | | | | — | | | | | | | | | | | | | | 667 | | | | 492 | | | | | | | | | | |
As at December 31, 2019, the Group’s other deductible temporary differences amounting to RMB951 million (December 31, 2018: RMB822 million) have not been recognized as deferred tax assets as it was determined by management that it is not probable that future taxable profits will be available for these deductible temporary differences to reverse in the foreseeable future. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated) | 30 | 29 | Deferred tax assets/(liabilities) (continued)Other assets |
| (c) | Deferred tax assets not recognized (continued) |
| | | | | | | | | | | | | | | | | | | | | | | | Prepayment for exclusive use right of an airport
terminal | | | Software | | | Leasehold
improvements | | | Others | | | Total | | | | | RMB million | | | RMB million | | | RMB million | | | RMB
million | | | RMB
million | | At January 1, 2018 | | | 220 | | | | 316 | | | | 181 | | | | 677 | | | | 1,394 | | Additions | | | — | | | | 105 | | | | — | | | | 407 | | | | 512 | | Acquisitions through business combinations | | | — | | | | — | | | | 36 | | | | — | | | | 36 | | Transferred from construction in progress | | | — | | | | 69 | | | | 86 | | | | — | | | | 155 | | Disposals | | | — | | | | — | | | | — | | | | (6 | ) | | | (6 | ) | Amortization for the year | | | (10 | ) | | | (118 | ) | | | (61 | ) | | | (126 | ) | | | (315 | ) | | | | | | | | | | | | | | | | | | | | | | At December 31, 2018 | | | 210 | | | | 372 | | | | 242 | | | | 952 | | | | 1,776 | | Impact on initial application of IFRS 16 (Note 2(b)) | | | (210 | ) | | | — | | | | — | | | | — | | | | (210 | ) | | | | | | | | | | | | | | | | | | | | | | At January 1, 2019 | | | — | | | | 372 | | | | 242 | | | | 952 | | | | 1,566 | | Additions | | | — | | | | 75 | | | | — | | | | 338 | | | | 413 | | Acquisitions through business combinations | | | — | | | | — | | | | 9 | | | | 23 | | | | 32 | | Transferred from construction in progress | | | — | | | | 183 | | | | 113 | | | | — | | | | 296 | | Amortization for the year | | | — | | | | (148 | ) | | | (113 | ) | | | (67 | ) | | | (328 | ) | | | | | | | | | | | | | | | | | | | | | | At December 31, 2019 | | | — | | | | 482 | | | | 251 | | | | 1,246 | | | | 1,979 | | | | | | | | | | | | | | | | | | | | | | |
Representing: | | | 2015 | | | 2014 | | | | | RMB million | | | RMB million | | | | | | | | | | | Expiring in: | | | | | | | | | | 2015 | | | - | | | | 95 | | | 2016 | | | 230 | | | | 230 | | | 2017 | | | 200 | | | | 201 | | | 2018 | | | 214 | | | | 250 | | | 2019 | | | 194 | | | | 194 | | | 2020 | | | 5 | | | | - | | | | | | 843 | | | | 970 | |
| | | | | | | | | | | | | | | | | | | 2019 | | | 2018 | | | | | Note | | | RMB million | | | RMB million | | Prepayments to related parties for acquisition of long-term assets | | | 43(b)&52(c) | | | | 513 | | | | 227 | | Amount paid to third parties and others | | | | | | | 1,466 | | | | 1,549 | | | | | | | | | | | | | | | | | | | | | | 1,979 | | | | 1,776 | | | | | | | | | | | | | | |
| | | Prepayment
for exclusive
use right of
an airport
terminal | | | Software | | | Leasehold
improvement | | | Others | | | Total | | | | | RMB million | | | RMB million | | | RMB million | | | RMB million | | | RMB million | | | | | | | | | | | | | | | | | | | | At January 1, 2014 | | | 260 | | | | 174 | | | | 91 | | | | 64 | | | | 589 | | | Additions | | | - | | | | 18 | | | | 37 | | | | 8 | | | | 63 | | | Acquisition of a subsidiary | | | - | | | | 5 | | | | - | | | | 290 | | | | 295 | | Transferred from
construction in progress | | | - | | | | 63 | | | | 45 | | | | - | | | | 108 | | | Disposal | | | - | | | | (1 | ) | | | - | | | | - | | | | (1 | ) | | Amortization for the year | | | (10 | ) | | | (72 | ) | | | (36 | ) | | | (16 | ) | | | (134 | ) | | At December 31, 2014 | | | 250 | | | | 187 | | | | 137 | | | | 346 | | | | 920 | | | | | | | | | | | | | | | | | | | | | | | | | At January 1, 2015 | | | 250 | | | | 187 | | | | 137 | | | | 346 | | | | 920 | | | Additions | | | - | | | | 29 | | | | 3 | | | | 7 | | | | 39 | | Transferred from
construction in progress | | | - | | | | 106 | | | | 17 | | | | - | | | | 123 | | | Disposal | | | - | | | | - | | | | - | | | | (31 | ) | | | (31 | ) | | Amortization for the year | | | (10 | ) | | | (75 | ) | | | (39 | ) | | | (39 | ) | | | (163 | ) | | At December 31, 2015 | | | 240 | | | | 247 | | | | 118 | | | | 283 | | | | 888 | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated) | | | 2015 | | 2014 | | | | | | | | | RMB million | | RMB million | | | 2019 | | | 2018 | | | | | | | | | | RMB million | | | RMB million | | | Consumable spare parts and maintenance materials | | 1,519 | | 1,587 | | | | 1,683 | | | | 1,688 | | | Other supplies | | | 197 | | | 178 | | | | 264 | | | | 232 | | | | | 1,716 | | 1,765 | | | | | | | | | | | | | | | | | 1,947 | | | | 1,920 | | | Less: impairment | | | (110 | ) | | | (104 | ) | | Less: provision | | | | (54 | ) | | | (221 | ) | | | | | | | | | | | | | | | | | | 1,606 | | | 1,661 | | | | 1,893 | | | | 1,699 | | | | | | | | | |
Impairment of inventoryProvision for inventories is shown as below:
| | | 2015 | | | 2014 | | | | | RMB million | | | RMB million | | | | | | | | | | | At January 1 | | | 104 | | | | 305 | | | Provision for impairment of inventories | | | 13 | | | | - | | | Provision for impairment written back | | | - | | | | (22 | ) | | Provision written off in relation to disposal of inventories | | | (7 | ) | | | (179 | ) | | At December 31 | | | 110 | | | | 104 | |
| | | | | | | | | | | | 2019 | | | 2018 | | | | | RMB million | | | RMB million | | At January 1 | | | 221 | | | | 226 | | Provision for inventories | | | 20 | | | | 12 | | Provision written off upon disposal | | | (187 | ) | | | (17 | ) | | | | | | | | | | At December 31 | | | 54 | | | | 221 | | | | | | | | | | |
| | | 2015 | | 2014 | | | | | | | | | RMB million | | RMB million | | | 2019 | | | 2018 | | | | | | | | | | RMB million | | | RMB million | | | Trade receivables | | 2,613 | | 2,716 | | | | 3,188 | | | | 2,937 | | | Less: bad-debt provision | | | (33 | ) | | | (33 | ) | | Less: loss allowance | | | | (36 | ) | | | (36 | ) | | | | | 2,580 | | | 2,683 | | | | | | | | | | | | 3,152 | | | | 2,901 | | | | | | | | | |
Credit terms granted by the Group to sales agents and other customers generally range from one to three months. Ageing analysis of trade receivables based on transaction date is set out below: | | | 2015 | | | 2014 | | | | | RMB million | | | RMB million | | | | | | | | | | | Within 1 month | | | 2,157 | | | | 2,133 | | | More than 1 month but less than 3 months | | | 383 | | | | 535 | | | More than 3 months but less than 12 months | | | 30 | | | | 25 | | | More than 1 year | | | 43 | | | | 23 | | | | | | 2,613 | | | | 2,716 | | | Less: bad-debt provision | | | (33 | ) | | | (33 | ) | | | | | 2,580 | | | | 2,683 | |
| | | | | | | | | | | | 2019 | | | 2018 | | | | | RMB million | | | RMB million | | Within 1 month | | | 2,308 | | | | 2,325 | | More than 1 month but less than 3 months | | | 555 | | | | 492 | | More than 3 months but less than 12 months | | | 297 | | | | 90 | | More than 1 year | | | 28 | | | | 30 | | | | | | | | | | | | | | 3,188 | | | | 2,937 | | Less: loss allowance | | | (36 | ) | | | (36 | ) | | | | | | | | | | | | | 3,152 | | | | 2,901 | | | | | | | | | | |
All of the trade receivables are expected to be recovered within one year. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated) | 32 | 32 | Trade receivables (continued) |
| (b) | (b) | Impairment of trade receivables |
| (i) | Impairment loss in respect of trade receivables is recorded using an allowance account unless the Group is satisfied that recovery of the amount is remote, in which case the impairment loss is written off against trade receivables directly (Note 2(k)). |
The movements in the allowance for doubtful debts during the year are as follows:
| | | 2015 | | | 2014 | | | | | RMB million | | | RMB million | | | | | | | | | | | At January 1 | | | 33 | | | | 27 | | | Impairment loss recognized | | | 4 | | | | 12 | | | Impairment loss written back | | | - | | | | (2 | ) | | Uncollectible amounts written off | | | (4 | ) | | | (4 | ) | | At December 31 | | | 33 | | | | 33 | |
| (ii) | As of December 31, 2015, trade receivables of RMB47million (2014: RMB5 million) were past due but not impaired. These relate to a number of independent customers for whom there is no significant financial difficulty and based on past experience, the overdue amounts can be recovered. |
The ageing analysis of these trade receivables is as follows:
| | | 2015 | | | 2014 | | | | | RMB million | | | RMB million | | | | | | | | | | | | | 3 to 12 months | | | 19 | | | | 5 | | | Over 12 months | | | 28 | | | | - | | | | | | 47 | | | | 5 | |
| (iii) | As of December 31, 2015, trade receivables of RMB48 million (2014: RMB43 million) were impaired. The amount of the provision was RMB33 million as of December 31, 2015 (2014: RMB33 million). The individually impaired receivables mainly relate to customers, which are in unexpectedly difficult economic situations. It was assessed that a portion of the receivables is expected to be recovered. The ageing of these receivables is as follows: |
| | | 2015 | | | 2014 | | | | | RMB million | | | RMB million | | | | | | | | | | | 3 to 12 months | | | 30 | | | | 20 | | | Over 12 months | | | 18 | | | | 23 | | | | | | 48 | | | | 43 | |
Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated)
| 32 | Trade receivables (continued) |
| (c) | Trade receivables that are not impaired |
The ageing analysis of trade receivables that are neither individually nor collectively considered to be impaired is as follows:
| | | 2015 | | | 2014 | | | | | RMB million | | | RMB million | | | | | | | | | | | Neither past due nor impaired | | | 2,518 | | | | 2,668 | |
Trade receivables that were neither past due nor impaired relate to customers for whom there was no recent history of default.
| (d) | Trade receivables by currencies |
The carrying amounts of the Group’s trade receivables are denominated in the following currencies: | | | 2015 | | | 2014 | | | | | RMB million | | | RMB million | | | | | | | | | | | Renminbi | | | 2,016 | | | | 2,231 | | | US dollar | | | 218 | | | | 118 | | | Euro | | | 129 | | | | 134 | | | Australian dollar | | | 49 | | | | 36 | | | Taiwan dollar | | | 33 | | | | 30 | | | UK pound | | | 28 | | | | 38 | | | Other currencies | | | 140 | | | | 129 | | | | | | 2,613 | | | | 2,716 | |
| | | | | | | | | | | | 2019 | | | 2018 | | | | | RMB million | | | RMB million | | RMB | | | 2,686 | | | | 2,430 | | USD | | | 151 | | | | 179 | | EURO | | | 65 | | | | 104 | | AUD | | | 33 | | | | 6 | | TWD | | | 22 | | | | 27 | | GBP | | | 18 | | | | 13 | | Others | | | 213 | | | | 178 | | | | | | | | | | | | | | 3,188 | | | | 2,937 | | | | | | | | | | |
As at December 31, 2015,2019, the fair value of trade receivables approximate its carrying amount. | | | 2015 | | | 2014 | | | | | RMB million | | | RMB million | | | | | | | | | | | VAT recoverable | | | 1,596 | | | | 1,562 | | | Rebate receivables on aircraft acquisitions | | | 901 | | | | 1,018 | | | Term deposit (Note) | | | 761 | | | | 2,454 | | | Deposits for aircraft purchase | | | - | | | | 239 | | | Interest receivables | | | 66 | | | | 126 | | | Other rental deposits | | | 119 | | | | 73 | | | Others | | | 583 | | | | 695 | | | | | | | | | | | | | Subtotal | | | 4,026 | | | | 6,167 | | | Less: impairment | | | (2 | ) | | | (3 | ) | | | | | 4,024 | | | | 6,164 | | | Less: non-current portion of term deposit recognized as non-current assets (Note) | | | (304 | ) | | | (300 | ) | | Current portion of other receivables | | | 3,720 | | | | 5,864 | |
Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated)
| 33 | Other receivables (continued) |
Note:
As at December 31, 2015, the balance represents the term deposit amounting to RMB761 million at bank with maturity over 3 months (2014: RMB2,454 million). Term deposit with maturity over 1 years amounting to RMB304 million is classified as non-current asset(2014: RMB300 million). The weighted average annualized interest rate of term deposits as of December 31, 2015 is 3.26% (2014: 3.06%).
As at December 31, 2015, the fair value of other receivables approximates its carrying amount.
| | | | | | | | | | | | | | | | 2019 | | | 2018 | | | | | Note | | RMB million | | | RMB million | | VAT recoverable | | | | | 5,214 | | | | 5,342 | | Government grants receivables | | (i) | | | 1,275 | | | | 982 | | Rebate receivables on aircraft acquisitions | | | | | 616 | | | | 686 | | Other deposits | | | | | 203 | | | | 426 | | Others | | (ii) | | | 557 | | | | 584 | | | | | | | | | | | | | | | | | | 7,865 | | | | 8,020 | | Less: loss allowance | | | | | (5 | ) | | | (5 | ) | | | | | | | | | | | | | | | | | 7,860 | | | | 8,015 | | | | | | | | | | | | |
Notes: | (i) | Government grants receivables are recognized as there is reasonable assurance that they will be received and the Group has complied with the conditions attaching to them. |
| (ii) | The amounts include term deposits of RMB43 million (December 31, 2018: RMB264 million), which have a maturity over 3 months at acquisition. The weighted average annualized interest rate of term deposits as at December 31, 2019 is 2.54% (December 31, 2018: 2.26%). |
As at December 31, 2019, the fair value of other receivables approximates to their carrying amount. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | 34 | Cash and cash equivalents |
| (a) | (a) | Cash and cash equivalents comprise: |
| | | 2015 | | | 2014 | | | | | RMB million | | | RMB million | | | | | | | | | | | Deposits in banks and other financial institution | | | 98 | | | | 4,445 | | | Cash at bank and in hand | | | 4,462 | | | | 10,969 | | | Cash and cash equivalents in the statement of balance sheet | | | 4,560 | | | | 15,414 | |
| | | | | | | | | | | | 2019 | | | 2018 | | | | | RMB million | | | RMB million | | Deposits in banks and other financial institutions | | | 1 | | | | 19 | | Cash at bank and other financial institutions and on hand | | | 1,848 | | | | 6,909 | | | | | | | | | | | Cash and cash equivalents in the consolidated statement of financial position | | | 1,849 | | | | 6,928 | | | | | | | | | | |
As at December 31, 2015, the Group’s deposits with SA Finance, this is a qualified financial institution amounted to RMB2,934 million (2014: RMB4,264 million) (Note 48(d)(ii)). As at December 31, 2015,2019, the fair value of cash and cash equivalents approximateapproximates its carrying amount.
The carrying amounts of the Group’s cash and cash equivalents are denominated in the following currencies: | | | 2015 | | | 2014 | | | | | RMB million | | | RMB million | | | | | | | | | | | Renminbi | | | 3,756 | | | | 13,649 | | | US dollar | | | 587 | | | | 1,296 | | | Euro | | | 69 | | | | 136 | | | Japanese Yen | | | 15 | | | | 5 | | | Hong Kong Dollars | | | 12 | | | | 60 | | | Others | | | 121 | | | | 268 | | | | | | 4,560 | | | | 15,414 | |
| | | | | | | | | | | | 2019 | | | 2018 | | | | | RMB million | | | RMB million | | RMB | | | 1,231 | | | | 6,281 | | USD | | | 395 | | | | 267 | | EURO | | | 34 | | | | 53 | | AUD | | | 59 | | | | 138 | | JPY | | | 17 | | | | 22 | | HKD | | | 13 | | | | 22 | | Others | | | 100 | | | | 145 | | | | | | | | | | | | | | 1,849 | | | | 6,928 | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated) | 34 | Cash and cash equivalents (continued) |
| (b) | (b) | Reconciliation of profit before income tax to cash generated from operating activities: |
| | | | | | 2015 | | | 2014 | | | 2013 | | | | | Note | | | RMB
million | | | RMB
million | | | RMB
million | | | | | | | | | | | | | | | | | | | | | Profit before income tax | | | | | | | 6,118 | | | | 3,066 | | | | 3,484 | | | Depreciation charges | | | 13 | | | | 11,766 | | | | 10,789 | | | | 9,338 | | | Other amortisation | | | 13 | | | | 227 | | | | 195 | | | | 155 | | | Amortisation of deferred benefits and gains | | | 13 | | | | (148 | ) | | | (156 | ) | | | (146 | ) | | Impairment losses on property, plant, equipment | | | 21 | | | | 90 | | | | 215 | | | | 536 | | | Share of profits of associates | | | 24 | | | | (460 | ) | | | (261 | ) | | | (294 | ) | | Share of profits of joint ventures | | | 25 | | | | (108 | ) | | | (140 | ) | | | (96 | ) | | (Gain)/losses on sale of property, plant and equipment, net and lease prepayments | | | 15 | | | | (312 | ) | | | (267 | ) | | | 78 | | | Other non-operating income | | | 17 | | | | - | | | | (26 | ) | | | (25 | ) | | Interest income | | | | | | | (253 | ) | | | (376 | ) | | | (307 | ) | | Interest expense | | | 16 | | | | 2,188 | | | | 2,193 | | | | 1,651 | | | Dividend income from other investments in equity securities and available-for-sale financial assets | | | 26 & 27 | | | | (13 | ) | | | (13 | ) | | | (14 | ) | | Exchange losses/(gain), net | | | | | | | 5,516 | | | | 292 | | | | (2,903 | ) | | Decrease in inventories | | | | | | | 55 | | | | 15 | | | | 61 | | | Decrease/(increase) in trade receivables | | | | | | | 103 | | | | (391 | ) | | | (321 | ) | | Decrease/(increase) in other receivables | | | | | | | 418 | | | | 108 | | | | (959 | ) | | Increase in prepaid expenses and other current assets | | | | | | | (184 | ) | | | (203 | ) | | | (205 | ) | | (Decrease)/increase in net amounts due to related companies | | | | | | | (153 | ) | | | (154 | ) | | | 118 | | | Increase/(decrease) in trade payables | | | | | | | 843 | | | | 45 | | | | (418 | ) | | Increase in sales in advance of carriage | | | | | | | 1,030 | | | | 261 | | | | 961 | | | Increase in accrued expenses | | | | | | | 695 | | | | 308 | | | | 648 | | | (Decrease)/increase in other liabilities | | | | | | | (277 | ) | | | 369 | | | | 200 | | | (Decrease)/increase in deferred revenue | | | | | | | (75 | ) | | | (410 | ) | | | 463 | | | Increase/(decrease) in provision for major overhauls | | | | | | | 630 | | | | 244 | | | | (421 | ) | | Decrease in provision for early retirement benefits | | | | | | | (20 | ) | | | (28 | ) | | | (31 | ) | | Increase/(decrease) in deferred benefits and gains | | | | | | | 181 | | | | 151 | | | | (7 | ) | | Cash generated from operating activities | | | | | | | 27,857 | | | | 15,826 | | | | 11,546 | |
| | | | | | | | | | | | | | | | | | | | 2019 | | | 2018 | | | 2017 | | | | | Note | | RMB
million | | | RMB
million | | | RMB million | | | | | | | | | | (Note(i)) | | | (Note (i)&(ii)) | | Profit before income tax | | | | | 4,055 | | | | 4,364 | | | | 8,874 | | Adjustments for: | | | | | | | | | | | | | | | Depreciation and amortization charges | | 12 | | | 24,292 | | | | 13,969 | | | | 12,963 | | Other amortization | | 12 | | | 328 | | | | 339 | | | | 199 | | Impairment losses on property, plant, equipment | | 19 | | | 18 | | | | — | | | | 324 | | Share of associates’ results | | 24 | | | 178 | | | | (263 | ) | | | (431 | ) | Share of joint ventures’ results | | 25 | | | (365 | ) | | | (200 | ) | | | (99 | ) | Gain on disposal of property, plant and equipment and construction in progress | | 14 | | | (140 | ) | | | (602 | ) | | | (989 | ) | Changes in fair value of financial instruments | | 28 | | | (265 | ) | | | (12 | ) | | | 64 | | Remeasurement of the originally held equity interests in a joint venture | | | | | (13 | ) | | | — | | | | (109 | ) | Interest income | | | | | (74 | ) | | | (125 | ) | | | (89 | ) | Interest expense | | 15 | | | 5,845 | | | | 3,202 | | | | 2,747 | | Dividends income from othernon-current financial assets | | | | | (23 | ) | | | (20 | ) | | | — | | Dividend income from investments | | | | | — | | | | — | | | | (18 | ) | Exchange losses / (gains), net | | | | | 1,268 | | | | 2,820 | | | | (642 | ) | Changes in working capital: | | | | | | | | | | | | | | | Increase in inventories | | | | | (179 | ) | | | (77 | ) | | | (34 | ) | (Decrease) /increase in contract liabilities and othernon-current liabilities | | | | | (337 | ) | | | 450 | | | | — | | Increase / (decrease) in sales in advance of carriage | | | | | 1,709 | | | | 1,441 | | | | (567 | ) | Increase / (decrease) in deferred benefits and gains | | | | | 73 | | | | (147 | ) | | | 362 | | Decrease / (increase) in operating receivables | | | | | 1,178 | | | | (5,322 | ) | | | (281 | ) | Increase in operating payables | | | | | 2,180 | | | | 1,357 | | | | 1,204 | | | | | | | | | | | | | | | | | Cash generated from operating activities | | | | | 39,728 | | | | 21,174 | | | | 23,478 | | | | | | | | | | | | | | | | |
Notes: | (i) | The Group has initially applied IFRS 16 using the modified retrospective approach and adjusted the opening balances at January 1, 2019 to recognizeright-of-use assets and lease liabilities relating to leases which were previously classified as operating leases under IAS 17. In the comparative periods in 2018 and 2017, cash payments under operating leases made by the Group as a lessee of RMB9,920 million and RMB8,996 million, respectively, were included in operating cash outflows in the consolidated cash flow statements. Under IFRS 16, except for short-term lease payments and payments for leases of low value assets not included in the measurement of lease liabilities, all other rentals paid on leases are now split into capital element and interest element and classified as financing cash outflows and operating cash outflows, respectively. Under the modified retrospective approach, the comparative information is not restated. Further details on the impact of the transition to IFRS 16 are set out in Note 2(b). |
| (ii) | The Group has initially applied IFRS 15 and IFRS 9 at January 1, 2018. Under the transition methods chosen, comparative information is not restated. See Note 2(b). |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated) | 34 | Cash and cash equivalents (continued) |
| (c) | Reconciliation of liabilities arising from financing activities |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Bank loans
and other
borrowings | | | Obligations
under
finance
leases | | | Lease liabilities | | | Interest rate
swaps held to
hedge
borrowings
(assets) | | | Cross
currency
swaps (liabilities) | | | Cross
currency
swaps (assets) | | | Total | | | | | RMB million | | | RMB million | | | RMB million | | | RMB million | | | RMB million | | | RMB million | | | RMB million | | | | | (Note 36) | | | (Note 38) | | | (Note 37) | | | (Note 27) | | | (Note 27) | | | (Note 27) | | | | | At December 31, 2018 (Note) | | | 54,417 | | | | 72,221 | | | | — | | | | (75 | ) | | | 44 | | | | — | | | | 126,607 | | Impact on initial application of IFRS 16 | | | — | | | | (72,221 | ) | | | 120,377 | | | | — | | | | — | | | | — | | | | 48,156 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | At January 1, 2019 | | | 54,417 | | | | — | | | | 120,377 | | | | (75 | ) | | | 44 | | | | — | | | | 174,763 | | Changes from financing cash flows: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Proceeds from bank borrowings | | | 33,985 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 33,985 | | Proceeds from ultra-short-term financing bills | | | 43,489 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 43,489 | | Proceeds from corporate bonds | | | 7,497 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 7,497 | | Repayment of bank borrowings | | | (50,374 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | (50,374 | ) | Repayment of ultra-short-term financing bills | | | (25,000 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | (25,000 | ) | Repayment of corporate bonds | | | (12,951 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | (12,951 | ) | Capital element of lease rentals paid | | | — | | | | — | | | | (17,784 | ) | | | — | | | | — | | | | — | | | | (17,784 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total changes from financing cash flows | | | (3,354 | ) | | | — | | | | (17,784 | ) | | | — | | | | — | | | | — | | | | (21,138 | ) | Exchange adjustments | | | 108 | | | | — | | | | 1,130 | | | | — | | | | — | | | | — | | | | 1,238 | | Changes in fair value | | | — | | | | — | | | | — | | | | 72 | | | | (44 | ) | | | (187 | ) | | | (159 | ) | Other changes: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Increase in lease liabilities from entering into new leases during the year (Note 54) | | | — | | | | — | | | | 30,351 | | | | — | | | | — | | | | — | | | | 30,351 | | Amortization amount of bond | | | 9 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 9 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total other changes | | | 9 | | | | — | | | | 30,351 | | | | — | | | | — | | | | — | | | | 30,360 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | At December 31, 2019 | | | 51,180 | | | | — | | | | 134,074 | | | | (3 | ) | | | — | | | | (187 | ) | | | 185,064 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Note: The Group has initially applied IFRS 16 using the modified retrospective method and adjusted the opening balances at January 1, 2019 to recognize lease liabilities relating to leases which were previously classified as operating leases under IAS 17. See Note 2(b) and Note 34(b). NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | 34 | Cash and cash equivalents (continued) |
| (c) | Reconciliation of liabilities arising from financing activities (continued) |
| | | | | | | | | | | | | | | | | | | | | | | | Bank loans
and other
borrowings | | | Obligations
under
finance
leases | | | Interest rate
swaps held
to hedge
borrowings
(assets) | | | Cross
currency
swaps
(liabilities) | | | Total | | | | | RMB million | | | RMB million | | | RMB million | | | RMB million | | | RMB million | | | | | (Note 36) | | | (Note 38) | | | (Note 27) | | | (Note 27) | | | | | At January 1, 2018 | | | 48,287 | | | | 67,924 | | | | (46 | ) | | | 64 | | | | 116,229 | | Changes from financing cash flows: | | | | | | | | | | | | | | | | | | | | | Proceeds from bank borrowings | | | 34,385 | | | | — | | | | — | | | | — | | | | 34,385 | | Proceeds from issuance of ultra-short-term financing bills | | | 5,500 | | | | — | | | | — | | | | — | | | | 5,500 | | Proceeds from corporate bonds | | | 2,000 | | | | — | | | | — | | | | — | | | | 2,000 | | Repayment of bank borrowings | | | (34,260 | ) | | | — | | | | — | | | | — | | | | (34,260 | ) | Repayment of ultra-short-term financing bills | | | (1,500 | ) | | | — | | | | — | | | | — | | | | (1,500 | ) | Repayment of corporate bonds | | | (345 | ) | | | — | | | | — | | | | — | | | | (345 | ) | Repayment of principal under finance lease obligations | | | — | | | | (10,433 | ) | | | — | | | | — | | | | (10,433 | ) | | | | | | | | | | | | | | | | | | | | | | Total changes from financing cash flows | | | 5,780 | | | | (10,433 | ) | | | — | | | | — | | | | (4,653 | ) | | | | | | | | | | | | | | | | | | | | | | Exchange adjustments | | | 350 | | | | 1,440 | | | | — | | | | — | | | | 1,790 | | Changes in fair value | | | — | | | | — | | | | (29 | ) | | | (20 | ) | | | (49 | ) | Other changes: | | | | | | | | | | | | | | | | | | | | | Additions of obligations under finance leases (Note 54) | | | — | | | | 13,290 | | | | — | | | | — | | | | 13,290 | | | | | | | | | | | | | | | | | | | | | | | Total other changes | | | — | | | | 13,290 | | | | — | | | | — | | | | 13,290 | | | | | | | | | | | | | | | | | | | | | | | At December 31, 2018 | | | 54,417 | | | | 72,221 | | | | (75 | ) | | | 44 | | | | 126,607 | | | | | | | | | | | | | | | | | | | | | | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | 34 | Cash and cash equivalents (continued) |
| (d) | Total cash outflow for leases |
Amounts included in the cash flow statement for leases comprise the following: | | | | | | | | | | | | | | | | 2019 | | | 2018 | | | 2017 | | | | | RMB million | | | RMB million | | | RMB million | | | | | | | | (Note) | | | (Note) | | Within operating cash flows | | | (7,457 | ) | | | (12,316 | ) | | | (11,022 | ) | Within investing cash flows | | | (224 | ) | | | (113 | ) | | | — | | Within financing cash flows | | | (17,784 | ) | | | (10,433 | ) | | | (9,835 | ) | | | | | | | | | | | | | | | | | (25,465 | ) | | | (22,862 | ) | | | (20,857 | ) | | | | | | | | | | | | | |
Note: As explained in the Note to Note 34(b), the adoption of IFRS 16 introduces a change in classification of cash flows of certain rentals paid on leases. The comparative amounts have not been restated. These amounts relate to the following: | | | | | | | | | | | | | | | | 2019 | | | 2018 | | | 2017 | | | | | RMB million | | | RMB million | | | RMB million | | Lease rentals paid | | | (25,241 | ) | | | (22,749 | ) | | | (20,857 | ) | Addition of land use rights | | | (224 | ) | | | (113 | ) | | | — | | | | | | | | | | | | | | | | | | (25,465 | ) | | | (22,862 | ) | | | (20,857 | ) | | | | | | | | | | | | | |
Assets held for sale mainly represent property, plant and equipment which are planned to be sold in the next 12 months and are measured at the lower of their carrying amounts and fair values less costs to sell. | 35 | | | | | | | | | | 2019 RMB million | | | 2018 RMB million | | Owned aircraft and other flight equipment | | | — | | | | 224 | | | | | | | | | | |
As at December 31, 2018, the carrying amount of the assets held for sale is RMB224 million, while their fair value less cost to sell is RMB238 million. The fair value on which the recoverable amount is based is categorized as a level 3 measurement. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | (a) | (a) | As at December 31, 2015, borrowingsBorrowings are analyzed as follows: |
| | | | | 2019 RMB million | | | 2018 RMB million | | Non-current | | | | | | Long-term borrowings | | | | | | – secured (Note (i)) | | | | 10 | | | | 511 | | – unsecured | | | | 2,381 | | | | 8,911 | | | | | | | | | | | | | | 2,391 | | | | 9,422 | | Corporate bond | | | | | | – unsecured (Note (ii)) | | | | 8,646 | | | | 4,655 | | Medium-term notes | | | | | | – unsecured (Note (iii)) | | | | 2,600 | | | | 1,599 | | | | | 2015 | | 2014 | | | | | | | | | | | RMB million | | RMB million | | | | 13,637 | | | | 15,676 | | | | | | | | | | | | | | | | Non-current | | | | | | | | Long-term bank borrowings | | | | | | | | – secured(Note (i)(iii)) | | 7,819 | | 19,846 | | | Current | | | | | | Current portion oflong-term borrowings | | | | | | – secured (Note (i)) | | | | 90 | | | | 94 | | – unsecured | | | | 51 | | | | 808 | | Short-term borrowings | | | | | | – unsecured | | | | 12,250 | | | | 20,739 | | Ultra-short-term financing bills | | | | | | | – unsecured | | | 5,065 | | | 22,220 | | | | 22,497 | | | | 4,000 | | | | | | 12,884 | | | 42,066 | | | | | | | | | Corporate Bond | | | | | | | | –unsecured(Note (iv)) | | | 3,000 | | | - | | | | | | | 15,884 | | | 42,066 | | | | 34,888 | | | | 25,641 | | | Current | | | | | | | | Current portion of long-term bank borrowings | | | | | | | | – secured(Note (i)(ii)(iii)) | | 1,696 | | 3,834 | | | | – unsecured | | 823 | | 6,902 | | | | Short-term bank borrowings | | | | | | | | – secured(Note (ii)) | | - | | 232 | | | | – unsecured | | 19,483 | | 7,011 | | | | Ultra short-term financing bills | | | | | | | | – unsecured(Note (v)) | | | 8,000 | | | 3,000 | | | Current portion of corporate bond and medium-term notes | | | | | | – unsecured (Notes (ii)&(iii)) | | | | 2,655 | | | | 13,100 | | | | | | | | | | | | | | 30,002 | | | 20,979 | | | | 37,543 | | | | 38,741 | | | | | | | | | | | | | | | | Total borrowings | | | 45,886 | | | 63,045 | | | | 51,180 | | | | 54,417 | | | | | | | | | | | | | | | | The borrowings are repayable: | | | | | | | | | | | Within one year | | 30,002 | | 20,979 | | | | 37,543 | | | | 38,741 | | | In the second year | | 6,774 | | 17,226 | | | | 3,773 | | | | 7,757 | | | In the third to fifth year inclusive | | 8,381 | | 19,991 | | | In the third to fifth year | | | | 8,389 | | | | 6,004 | | | After the fifth year | | | 729 | | | 4,849 | | | | 1,475 | | | | 1,915 | | | | | | | | | | | Total borrowings | | | 45,886 | | | 63,045 | | | | 51,180 | | | | 54,417 | | | | | | | | | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | (a) | Borrowings are analyzed as follows (continued): |
Notes: | (i) | As at December 31, 2015,2019, bank borrowings of the Group totalling RMB9,100of approximately RMB10 million (2014: RMB22,946(December 31, 2018: RMB390 million) were secured by mortgages over certain owned aircraft with a carrying amount of the Group’s aircraft and other flight equipment with aggregate carrying amounts of RMB15,814RMB339 million (2014: RMB31,825(December 31, 2018: RMB373 million). |
| (ii) | As at December 31, 2015, none of the Bank borrowings of the Group (2014: RMB532approximately RMB90 million (December 31, 2018: RMB215 million) were secured by pledged bank deposits (2014: RMB324 million). |
| (iii) | As at December 31, 2015, borrowings of the Group amounting to RMB415 million (2014: RMB434 million) was secured bycertain land use rights under right-of-use assets of RMB66RMB87 million (2014: RMB68(December 31, 2018: lease prepayments of RMB88 million) and investment property of RMB50 million(2014: RMB51RMB15 million (December 31, 2018: RMB18 million). |
| (ii) | (iv) | The Group issued corporate bonds with aggregate nominal value of RMB 3,000RMB3,000 million on November 20, November 2015 at a bond rate of 3.63%. The corporate bonds mature in five years. The Company will be entitled at its option to adjust its bond rate and the investors will be entitled to request the Company to redeem all or a portion of the bonds after three years of the issue date. The bonds with nominal value of RMB345 million were redeemed by the Company in 2018 at the request of investors, and the remaining bonds of RMB2,655 million will mature within one year. |
The Group issued corporate bonds with aggregate nominal value of RMB5,000 million on March 3, 2016 at a bond rate of 2.97%. The corporate bonds mature in three years. The bonds with nominal value of RMB5,000 million were redeemed by the Company in 2019. The Group issued corporate bonds with aggregate nominal value of RMB5,000 million on May 25, 2016 at a bond rate of 3.12%. The corporate bonds mature in five years. The Company will be entitled at its option to adjust its bond rate and the investors will be entitled to request the Company to redeem all or a portion of the bonds after three years of the issue date. The bonds with nominal value of RMB4,851 million were redeemed by the Company in 2019 at the request of investors, and the remaining bonds of RMB149 million will mature in five years from the issue date. The Group issued corporate bonds with aggregate nominal value of RMB2,000 million on November 26, 2018 at a bond rate of 3.92%. The corporate bonds mature in three years. The Group issued corporate bonds with aggregate nominal value of RMB3,000 million on February 21, 2019 at a bond rate of 3.45%. The corporate bonds mature in three years. The Group issued corporate bonds with aggregate nominal value of RMB2,000 million on May 16, 2019 at a bond rate of 3.72%. The corporate bonds mature in three years. Xiamen Airlines issued corporate bonds with aggregate nominal value of RMB1,500 million on November 20, 2019 at a bond rate of 3.58%. The corporate bonds mature in three years. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated) | 36 | 35 | Borrowings (continued) |
| (a) | As at December 31, 2015, borrowings are analyzed as follows:(continued) |
| (v) | The Group issued the first tranche of Ultra-short-term Financing Bills for the year 2015 with an amount of RMB 3,000 million on 19 November 2015 at a bond rate of 3.20%, with a maturity period of 270 days.
The Group issued the second tranche of Ultra-short-term Financing Bills for the year 2015 with an amount of RMB 2,000 million on 24 November 2015 at a bond rate of 3.04%, with a maturity period of 180 days.
The Group issued the third tranche of Ultra-short-term Financing Bills for the year 2015 with an amount of RMB 3,000 million on 30 November 2015 at a bond rate of 3.16%, with a maturity period of 268 days.
|
| (a) | (b)Borrowings are analyzed as follows (continued): |
| (iii) | Xiamen Airlines issued medium-term notes with aggregate nominal value of RMB1,300 million on August 15, 2016 at an interest rate of 2.97%. The medium-term notes mature in three years and were redeemed in 2019. |
Xiamen Airlines issued medium-term notes with aggregate nominal value of RMB1,600 million on October 20, 2016 at an interest rate of 3.11%. The medium-term notes mature in five years. Xiamen Airlines issued medium-term notes with aggregate nominal value of RMB1,800 million on November 21, 2016 at an interest rate of 3.38%. The medium-term notes mature in three years and were redeemed in 2019. The Group issued medium-term notes with aggregate nominal value of RMB1,000 million on October 18, 2019 at an interest rate of 3.20%. The medium-term notes mature in three years. | (b) | As at December 31, 2015,2019, the Group’s weighted average interest rates on short-term borrowings were 3.66%3.70% per annum (2014: 3.30%(December 31, 2018: 3.92% per annum). |
| (c) | (c) | Details of borrowings with original maturity over one year are as follows: |
| | | 2015 | | | 2014 | | | | | RMB million | | | RMB million | | | | | | | | | | | Renminbi denominated loans | | | | | | | | | | Fixed interest rate at 1.20% per annum as at December 31, 2015, with maturities through 2027 | | | 20 | | | | 226 | | | Corporate Bond - Fixed bond rate at 3.63% | | | 3,000 | | | | - | | | Floating interest rates 90%, 95%, 100% of benchmark interest rate (stipulated by PBOC) as at December 31, 2015, with maturities through 2022 | | | 783 | | | | 570 | | | | | | | | | | | | | United States Dollars denominated loans | | | | | | | | | | Fixed interest rates ranging from 1.89% to 3.30% per annum as at December 31, 2014 | | | - | | | | 927 | | | Floating interest rates ranging from one-month LIBOR + 1.20% to one-month LIBOR + 2.20% per annum as at December 31, 2015, with maturities through 2021 | | | 1,097 | | | | 1,832 | | | Floating interest rates ranging from three-month LIBOR + 0.59% to three-month LIBOR + 2.80% per annum as at December 31, 2015, with maturities through 2024 | | | 10,327 | | | | 38,546 | | | Floating interest rates at six-month LIBOR + 0.45% to six-month LIBOR + 2.55% per annum as at December 31, 2015,with maturities through 2022 | | | 3,176 | | | | 10,701 | | | | | | 18,403 | | | | 52,802 | | | Less: loans due within one year classified as current liabilities | | | (2,519 | ) | | | (10,736 | ) | | | | | 15,884 | | | | 42,066 | |
| | | | | | | | | | | | 2019 RMB million | | | 2018 RMB million | | Renminbi denominated loans | | | | | | | | | Fixed interest rate at 1.20% per annum as at December 31, 2019, with maturities through 2027 | | | 19 | | | | 19 | | Corporate Bond - Fixed bond rate at 2.97%~3.92% | | | 11,301 | | | | 14,655 | | Medium-term notes - Fixed interest rate at 2.97%~3.38% | | | 2,600 | | | | 4,699 | | Floating interest rates 90%~100% of benchmark interest rate (stipulated by PBOC) as at December 31, 2019, with maturities through 2033 | | | 1,633 | | | | 10,213 | | Fixed interest rate at 3.92% per annum as at December 31, 2019, with maturities through 2022 | | | 800 | | | | — | | Fixed interest rate at 4.41% per annum as at December 31, 2019, with maturities through 2034 | | | 80 | | | | — | | USD denominated loans | | | | | | | | | Fixed interest rate at 3.32% per annum as at December 31, 2018, with maturities through 2020 | | | — | | | | 92 | | | | | | | | | | | | | | 16,433 | | | | 29,678 | | Less: loans due within one year classified as current liabilities | | | (2,796 | ) | | | (14,002 | ) | | | | | | | | | | | | | 13,637 | | | | 15,676 | | | | | | | | | | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated) | 36 | 35 | Borrowings (continued) |
| (d) | (d) | The remaining contractual maturities at the end of the financial year of the Group’s borrowings, which are based on contractual undiscounted cash flows (including interest payments computed using contractual rates, or if floating, based on rates current at the end of the financial year) and the earliest date the Group can be required to pay, are as follows: |
| | | 2015 | | | 2014 | | | | | RMB million | | | RMB million | | | | | | | | | | | Contractual undiscounted cash flows | | | | | | | | | | | | | | | | | | | | Within 1 year | | | 30,789 | | | | 22,293 | | | After 1 year but within 2 years | | | 7,110 | | | | 18,098 | | | After 2 years but within 5 years | | | 8,700 | | | | 20,758 | | | After 5 years | | | 744 | | | | 5,040 | | | | | | | | | | | | | | | | 47,343 | | | | 66,189 | |
| (e) | The carrying amounts of the borrowings are denominated in the following currencies: |
| | | 2015 | | | 2014 | | | | | RMB million | | | RMB million | | | | | | | | | | | Renminbi | | | 30,145 | | | | 4,444 | | | US Dollars | | | 15,110 | | | | 58,601 | | | Euro | | | 631 | | | | - | | | | | | 45,886 | | | | 63,045 | |
| | | | | | | | | | | | 2019 RMB million | | | 2018 RMB million | | Renminbi | | | 46,823 | | | | 47,607 | | USD | | | 4,357 | | | | 6,810 | | | | | | | | | | | | | | 51,180 | | | | 54,417 | | | | | | | | | | |
The Group has significantcertain borrowings balances as well as obligations under finance leasessignificant lease liabilities (Note 36)37) which are denominated in US dollarsUSD as at December 31, 2015.2019. The net exchange loss of RMB5,953RMB1,477 million (2014:for the year ended December 31, 2019 (2018: net exchange loss of RMB292RMB1,853 million; 2013:2017: net exchange gain RMB2,903of RMB1,801 million) recorded by the Group was mainly attributable to the exchange loss/gain arising from translation of balances of borrowings balances and finance lease obligationsliabilities which are denominated in US dollars.USD. | (e) | (f) | AsThe balance of long-term and short-term borrowings as at December 31, 2015,2019 included entrusted loans from CSAH via SA Finance to the Group from SA finance amounted to RMB105RMB800 million (2014: RMB105and RMB4,720 million (December 31, 2018: Nil and RMB500 million), respectively (Note 48(d)(i)52(d)(ii)). |
| (f) | (g) | Certain of the Group’s banking facilities are subject to the fulfilment of covenants relating to certain of the Group’s consolidated statement of financial position ratios, as are commonly found in lending arrangements with financial institutions. If the Group were to breach the covenants, the drawn down facilities would become payable on demand. The Group regularly monitors its compliance with these covenants. Further details of the Group’s management of liquidity risk are set out in Note 4(a). As at December 31, 2015, the fair value of borrowings approximate their carrying amount. The fair value is within level 22019 and 2018, none of the fair value hierarchy.covenants relating to drawn down facilities had been breached. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated) | 37 | 36 | Obligations under finance leasesLease liabilities |
The Group has commitments under finance lease agreements in respect of aircraft and related equipment. The majority of these leases have terms of 10 to 12 years expiring duringfollowing table shows the years 2016 to 2027. The Group has made careful assessment on the classification of leased aircraft pursuant to IAS 17 and believes all leased aircraft classified as finance lease meet one or moreremaining contractual maturities of the criteria as set out in IAS 17 that would lead to aGroup’s lease being classified as a finance lease (i.e. the lease transfers ownership of the asset to the lessee byliabilities at the end of the lease term; the lessee has the option to purchase the asset at a price that is expected to be sufficiently lower than the fair valuecurrent reporting period and at the date the option becomes exercisable for itof transition to be reasonably certain, at the inception of the lease, that the option will be exercised; at the inception of the lease the present value of the minimum lease payments amounts to at least substantially all of the fair value of the leased asset).IFRS 16: As at December 31, 2015, future payments under these finance leases are as follows:
| | | | | | | | | | | | | | | | | | | | December 31, 2019 | | | | | | | | | | | Present value of the
minimum lease
payments | | | Total
minimum
lease
payments | | | Present value
of the
minimum lease
payments | | | January 1, 2019 (Note) Total minimum
lease payments | | | | | RMB million | | | RMB million | | | RMB million | | | RMB million | | Within 1 year | | | 19,998 | | | | 25,404 | | | | 16,921 | | | | 21,507 | | | | | | | | | | | | | | | | | | | After 1 year but within 2 years | | | 19,249 | | | | 23,860 | | | | 16,018 | | | | 20,033 | | After 2 years but within 5 years | | | 54,155 | | | | 63,003 | | | | 50,709 | | | | 59,111 | | After 5 years | | | 40,672 | | | | 44,814 | | | | 36,729 | | | | 40,307 | | | | | | | | | | | | | | | | | | | | | | 114,076 | | | | 131,677 | | | | 103,456 | | | | 119,451 | | | | | | | | | | | | | | | | | | | | | | 134,074 | | | | 157,081 | | | | 120,377 | | | | 140,958 | | | | | | | | | | | | | | | | | | | Less: total future interest expenses | | | | | | | (23,007 | ) | | | | | | | (20,581 | ) | | | | | | | | | | | | | | | | | | Present value of lease liabilities | | | | | | | 134,074 | | | | | | | | 120,377 | | | | | | | | | | | | | | | | | | |
| | | 2015 | | | 2014 | | | | | Present
value of the
minimum
lease
payments | | | Total
minimum
lease
payments | | | Future
interest | | | Present
value of the
minimum
lease
payments | | | Total
minimum
lease
payments | | | Interest | | | | | RMB
million | | | RMB
million | | | RMB
million | | | RMB
million | | | RMB
million | | | RMB
million | | | | | | | | | | | | | | | | | | | | | | | Within 1 year | | | 6,416 | | | | 7,864 | | | | 1,448 | | | | 5,992 | | | | 7,312 | | | | 1,320 | | | After 1 year but within 2 years | | | 7,369 | | | | 8,613 | | | | 1,244 | | | | 5,487 | | | | 6,643 | | | | 1,156 | | | After 2 years but within 5 years | | | 16,818 | | | | 19,515 | | | | 2,697 | | | | 15,781 | | | | 18,277 | | | | 2,496 | | | After 5 years | | | 25,221 | | | | 26,731 | | | | 1,510 | | | | 22,651 | | | | 24,345 | | | | 1,694 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 55,824 | | | | 62,723 | | | | 6,899 | | | | 49,911 | | | | 56,577 | | | | 6,666 | | | Less: balance due within one year classified as current liabilities | | | (6,416 | ) | | | | | | | | | | | (5,992 | ) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 49,408 | | | | | | | | | | | | 43,919 | | | | | | | | | |
| Note: | The Group has initially applied IFRS 16 using the modified retrospective approach and adjusted the opening balances at January 1, 2019 to recognize lease liabilities relating to leases which were previously classified as operating leases under IAS 17. These liabilities have been aggregated with the brought forward balances relating to leases previously classified as finance leases. Comparative information as at December 31, 2018 has not been restated as set out in Note 38 and relates solely to leases previously classified as finance leases. Further details on the impact of the transition to IFRS 16 are set out in Note 2(b). |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Denominated obligations by currencies | | For the year ended
December 31, 2019 | | Effective interest
rate | | | USD RMB million | | | Japanese Yen
RMB million | | | Renminbi RMB million | | | Euro RMB million | | | Other currencies
RMB million | | | Total RMB million | | Fixed interest rates | | | 1.75%~5.03% | | | | 50,568 | | | | 10 | | | | 7,023 | | | | 15 | | | | 22 | | | | 57,638 | | Floating interest rates | | | 0%~5.22% | | | | 15,335 | | | | 1,272 | | | | 56,100 | | | | 3,535 | | | | 194 | | | | 76,436 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 65,903 | | | | 1,282 | | | | 63,123 | | | | 3,550 | | | | 216 | | | | 134,074 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Denominated obligations by currencies | | For the year ended
December 31, 2018 | | Effective interest
rate | | | USD
RMB million | | | Japanese Yen
RMB million | | | Renminbi
RMB million | | | Euro
RMB million | | | Other currencies
RMB million | | | Total RMB million | | Fixed interest rates | | | 1.75%~5.03% | | | | 8,630 | | | | — | | | | 1,097 | | | | — | | | | — | | | | 9,727 | | Floating interest rates | | | 0%~5.80% | | | | 18,237 | | | | 1,457 | | | | 38,629 | | | | 3,927 | | | | 244 | | | | 62,494 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 26,867 | | | | 1,457 | | | | 39,726 | | | | 3,927 | | | | 244 | | | | 72,221 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
F-66
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated) | 38 | 36 | Obligations under finance leases (continued) |
Details ofAs at December 31, 2018, obligations under finance leases are as follows:
| | | 2015 | | | 2014 | | | | | RMB
million | | | RMB
million | | | | | | | | | | | United States Dollars denominated obligations | | | | | | | | | | Fixed interest rates ranging from 2.09% to 6.01% per annum as at December 31, 2015 | | | 9,570 | | | | 4,176 | | | | | | | | | | | | | Floating interest rates ranging from three-month LIBOR + 0.18% to three-month LIBOR + 3.30% per annum as at December 31, 2015 | | | 21,168 | | | | 25,819 | | | | | | | | | | | | Floating interest rates ranging from six-month LIBOR + 0.03% to six-month LIBOR + 3.30% per annum as at December 31, 2015 | | | 16,744 | | | | 16,797 | | | | | | | | | | | | | Singapore Dollars denominated obligations | | | | | | | | | | Floating interest rate at six-month SIBOR + 1.44% per annum as at December 31, 2015 | | | 368 | | | | 418 | | | | | | | | | | | | | Japanese Yen denominated obligations | | | | | | | | | | Floating interest rate at three-month TIBOR + 0.75% to three-month LIBOR + 1.90% per annum as at December 31, 2015 | | | 1,524 | | | | 1,610 | | | | | | | | | | | | | Floating interest rate at six-month TIBOR + 3.00% per annum as at December 31, 2015 | | | 325 | | | | 331 | | | | | | | | | | | | | Renminbi denominated obligations | | | | | | | | | | Floating interest rate at 130 % of five-year RMB loan benchmark interest rate announced by the PBOC per annum as at December 31, 2015 | | | 369 | | | | 438 | | | | | | | | | | | | | Floating interest rate at 100 % of five-year RMB loan benchmark interest rate announced by the PBOC per annum as at December 31, 2015 | | | 242 | | | | 322 | | | | | | | | | | | | | Floating interest rate at 95 % of five-year RMB loan benchmark interest rate announced by the PBOC per annum as at December 31, 2015 | | | 435 | | | | - | | | | | | | | | | | | | Floating interest rate at three-month CHN HIBOR + 0.38% | | | 551 | | | | - | | | | | | | | | | | | | Euro denominated obligations | | | | | | | | | | Floating interest rate ranging from three-month EURIBOR + 0.32% to three-month EURIBOR + 2.70% per annum as at December 31, 2015 | | | 2,951 | | | | - | | | | | | | | | | | | Floating interest rate ranging from six-month EURIBOR + 1.45% to six-month EURIBOR + 1.80% per annum as at December 31, 2015 | | | 1,577 | | | | - | | | | | | | | | | | | | | | | 55,824 | | | | 49,911 | |
| | | | | | | | | | | | | | | | 2018 | | | | | Present value of the minimum lease payments | | | Total minimum lease payments | | | Interest | | | | | RMB million | | | RMB million | | | RMB million | | Within 1 year | | | 9,555 | | | | 12,062 | | | | 2,507 | | After 1 year but within 2 years | | | 9,572 | | | | 11,738 | | | | 2,166 | | After 2 years but within 5 years | | | 32,285 | | | | 36,765 | | | | 4,480 | | After 5 years | | | 20,809 | | | | 22,200 | | | | 1,391 | | | | | | | | | | | | | | | | | | 72,221 | | | | 82,765 | | | | 10,544 | | Less: balance due within one year classified as current liabilities | | | (9,555 | ) | | | | | | | | | | | | | | | | | | | | | | | | | 62,666 | | | | | | | | | | | | | | | | | | | | | | |
The Group has initially applied IFRS 16 at January 1, 2019 using the modified retrospective approach. Under this approach, obligations under finance leases of RMB72,221 million (including the current portion) at December 31, 2018 was reclassified to lease liabilities (Note 37) at January 1, 2019. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated) 3639 | Obligations under finance leases (continued)Trade payables |
Charges over the assets concerned and relevant insurance policies are provided to the lessors as collateral and security. As at December 31, 2015, certainAgeing analysis of the Group’s aircraft with carrying amounts of RMB72,246 million (2014: RMB67,294 million) secured finance lease obligations totaling RMB55,824 million (2014: RMB49,911 million).trade payables based on transaction date is set out below:
| | | | | | | | | | | | 2019 RMB million | | | 2018 RMB million | | Within 1 month | | | 563 | | | | 406 | | More than 1 month but less than 3 months | | | 506 | | | | 829 | | More than 3 months but less than 6 months | | | 450 | | | | 476 | | More than 6 months but less than 1 year | | | 568 | | | | 423 | | More than 1 year | | | 230 | | | | 175 | | | | | | | | | | | | | | 2,317 | | | | 2,309 | | | | | | | | | | |
As at December 31, 2015, the fair value of obligation under finance leases approximate their carrying amount. The fair value is within level 2 of the fair value hierarchy. | | | 2015 | | | 2014 | | | | | RMB
million | | | RMB
million | | | | | | | | | | | Within 1 month | | | 735 | | | | 755 | | | More than 1 month but less than 3 months | | | 504 | | | | 633 | | | More than 3 months but less than 6 months | | | 843 | | | | 107 | | | More than 6 months but less than 1 year | | | 314 | | | | 76 | | | More than 1 year | | | 104 | | | | 86 | | | | | | | | | | | | | | | | 2,500 | | | | 1,657 | |
As at December 31, 2015,2019, the fair value of trade payable approximatepayables approximates to their carrying amounts.
amount. The carrying amounts of the Group’s trade payablepayables are denominated in the following currencies: | | | 2015 | | | 2014 | | | | | RMB
million | | | RMB
million | | | | | | | | | | | Renminbi | | | 2,418 | | | | 1,558 | | | US Dollars | | | 69 | | | | 86 | | | Others | | | 13 | | | | 13 | | | | | | 2,500 | | | | 1,657 | |
| | | | | | | | | | | | 2019 RMB million | | | 2018 RMB million | | Renminbi | | | 1,845 | | | | 1,910 | | USD | | | 423 | | | | 376 | | Others | | | 49 | | | | 23 | | | | | | | | | | | | | | 2,317 | | | | 2,309 | | | | | | | | | | |
Deferred revenue represents the unredeemed credits under the frequent flyer award programme.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated) | | | | | | | | | | | | 2019 RMB million | | | 2018
RMB million | | Unredeemed credits under the frequent flyer award programs (Notes (i) & (ii)) | | | 1,568 | | | | 1,693 | | Others | | | 42 | | | | — | | | | | | | | | | | | | | 1,610 | | | | 1,693 | | | | | | | | | | |
Notes: | (i) | As at December 31, 2019, the aggregated amount of the transaction price allocated to the remaining performance obligation, which is the unredeemed credits under the frequent flyer award programs, amounted to RMB3,331 million (December 31, 2018: RMB3,711 million). This amount represents revenue expected to be recognized in the future when the customers take possession of the goods or services redeemed. |
| (ii) | The amounts represent the unredeemed credits under the frequent flyer award programs. Movement in the accounts is set out below: |
| | | | | | | | | | | | 2019 | | | 2018 | | | | | RMB million | | | RMB million | | Balance at January 1 | | | 3,711 | | | | 3,261 | | -Current | | | 1,693 | | | | 1,461 | | -Non-current | | | 2,018 | | | | 1,800 | | Addition as a result of increase of the unredeemed credits under the frequent flyer award programs | | | 1,979 | | | | 2,161 | | Reduction as a result of revenue recognized during the year | | | (2,359 | ) | | | (1,711 | ) | Representing: | | | | | | | | | -Recognized as revenue from opening balance of contract liabilities | | | (1,948 | ) | | | (1,461 | ) | -Recognized as revenue from current year addition of contract liabilities | | | (411 | ) | | | (250 | ) | | | | | | | | | | Balance at December 31 | | | 3,331 | | | | 3,711 | | | | | | | | | | | Representing: | | | | | | | | | -Current | | | 1,568 | | | | 1,693 | | -Non-current (Note 42) | | | 1,763 | | | | 2,018 | |
| 41 | Sales in advance of carriage |
As at December 31, 2019, the amount of sales in advance of carriage represents revenue expected to be recognized in the future when the customers take possession of and accept the passenger transportation services to be provided by the Group. During the year, RMB8,398 million (2018: RMB7,279 million) which was included in the opening balance of the sales in advance of carriage was recognized as revenue. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | 42 | OtherAmounts due from/tonon-current liabilities |
| | | | | | | | | | | | | | | | Note | | | 2019
RMB million | | | 2018
RMB million | | Unredeemed credits under the frequent flyer award programs | | | 40 | | | | 1,763 | | | | 2,018 | | Others | | | | | | | 19 | | | | 18 | | | | | | | | | | | | | | | | | | | | | | 1,782 | | | | 2,036 | | | | | | | | | | | | | | |
| 43 | Balances with related companies |
| (a) | (a) | Amounts due from related companies |
| | | | | 2015 | | | 2014 | | | | | Note | | RMB
million | | | RMB
million | | | | | | | | | | | | | CSAHC and its affiliates | | | | | 21 | | | | 78 | | | Associates | | | | | 226 | | | | 284 | | | Joint ventures | | | | | 86 | | | | 124 | | | | | 48(c) | | | 333 | | | | 486 | |
| | | | | | | | | | | | | | | | Note | | | 2019
RMB million | | | 2018
RMB million | | Current | | | | | | | | | | | | | CSAH and its affiliates | | | | | | | 18 | | | | 51 | | Associates | | | | | | | 35 | | | | 22 | | Joint ventures | | | | | | | 20 | | | | 17 | | | | | | | | | | | | | | | | | | 52(c) | | | | 73 | | | | 90 | | | | | | | | | | | | | | |
The amounts due from related companies are unsecured, interest free and have no fixed terms of repayment. They are expected to be recovered within one year. | (b) | (b)Prepayments to related companies for acquisition of long-term assets |
| | | | | | | | | | | | | | Note | | 2019 | | | 2018 | | | | | | | RMB million | | | RMB million | | Non-current | | | | | | | | | | | CSAH and its affiliates | | | | | 160 | | | | 80 | | An associate | | | | | 353 | | | | 147 | | | | | | | | | | | | | | | 30&52(c) | | | 513 | | | | 227 | | | | | | | | | | | | |
| (c) | Amounts due to related companies |
| | | | | 2015 | | | 2014 | | | | | Note | | RMB
million | | | RMB
million | | | | | | | | | | | | | CSAHC and its affiliates | | | | | 59 | | | | 144 | | | A joint venture of CSAHC | | | | | 18 | | | | 112 | | | An associate | | | | | 13 | | | | 13 | | | Joint ventures | | | | | 60 | | | | 119 | | | Other related company | | | | | 2 | | | | 70 | | | | | 48(c) | | | 152 | | | | 458 | |
| | | | | | | | | | | | | | | | | | | 2019 | | | 2018 | | | | | Note | | | RMB million | | | RMB million | | Current | | | | | | | | | | | | | CSAH and its affiliates | | | | | | | 116 | | | | 49 | | Associates | | | | | | | 1 | | | | 12 | | Joint ventures | | | | | | | 53 | | | | 63 | | Other related companies | | | | | | | — | | | | 3 | | | | | | | | | | | | | | | | | | 52(c) | | | | 170 | | | | 127 | | | | | | | | | | | | | | |
The amounts due to related companies are unsecured, interest free and have no fixed terms of repayment. They are expected to be settled within one year. | | | 2015 | | | 2014 | | | | | RMB
million | | | RMB
million | | | | | | | | | | | Repairs and maintenance | | | 5,179 | | | | 3,518 | | | Jet fuel costs | | | 1,179 | | | | 1,814 | | | Salaries and welfare | | | 2,434 | | | | 2,385 | | | Landing and navigation fees | | | 2,003 | | | | 2,240 | | | Computer reservation services | | | 340 | | | | 338 | | | Provision for major overhauls (Note 42) | | | 470 | | | | 112 | | | Interest expense | | | 385 | | | | 471 | | | Air catering expenses | | | 307 | | | | 311 | | | Provision for early retirement benefits (Note 43) | | | 12 | | | | 20 | | | Others | | | 772 | | | | 913 | | | | | | 13,081 | | | | 12,122 | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated) | 44 | 41 | Other liabilitiesAccrued expenses |
| | | 2015 | | | 2014 | | | | | RMB
million | | | RMB
million | | | | | | | | | | | Civil Aviation Development Fund and airport tax payable | | | 1,335 | | | | 1,379 | | | Payable for purchase of property, plant and equipment | | | 767 | | | | 703 | | | Sales agent deposits | | | 384 | | | | 418 | | | Other taxes payable | | | 395 | | | | 397 | | | Deposit received for chartered flights | | | 103 | | | | 188 | | | Payable due to the former shareholder of a subsidiary (Note (a)) | | | 658 | | | | 758 | | | Others | | | 1,516 | | | | 1,478 | | | | | | 5,158 | | | | 5,321 | |
| | | | | | | | | | | | 2019 | | | 2018 | | | | | RMB million | | | RMB million | | | | | | | | (Note) | | Repairs and maintenance | | | 4,312 | | | | 4,468 | | Jet fuel costs | | | 1,846 | | | | 1,900 | | Salaries and welfare | | | 3,974 | | | | 3,212 | | Landing and navigation fees | | | 2,612 | | | | 2,492 | | Computer reservation services | | | 461 | | | | 585 | | Provision for major overhauls (Note 46) | | | 883 | | | | 821 | | Interest expenses | | | 345 | | | | 771 | | Air catering expenses | | | 147 | | | | 166 | | Provision for early retirement benefits (Note 47) | | | 1 | | | | 2 | | Others | | | 1,164 | | | | 1,265 | | | | | | | | | | | | | | 15,745 | | | | 15,682 | | | | | | | | | | |
Note: The Group has initially applied IFRS 16 at January 1, 2019 using the modified retrospective approach. Under this approach, comparative information is not restated. See Note 2(b). (a) Balance represented a loan of a subsidiary acquired by the Group in 2014 due to its former shareholder, which was interest-free previously and has started to bear interest with an annual rate of 6% since March 1, 2015.
| | | | | | | | | | | | 2019 | | | 2018 | | | | | RMB million | | | RMB million | | Civil Aviation Development Fund and airport tax payable | | | 1,937 | | | | 2,012 | | Payable for purchase of property, plant and equipment | | | 2,070 | | | | 1,608 | | Sales agent deposits | | | 592 | | | | 597 | | Other taxes payable | | | 426 | | | | 443 | | Deposit received for chartered flights | | | 214 | | | | 186 | | Others | | | 2,002 | | | | 1,727 | | | | | | | | | | | | | | 7,241 | | | | 6,573 | | | | | | | | | | |
As at December 31, 2015,2019, the fair value of the balancebalances approximate their carrying amount. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | 46 | 42 | Provision for major overhauls |
Details of provision for major overhauls in respect of aircraft held under operating leases are as follows: | | | 2015 | | | 2014 | | | | | RMB
million | | | RMB
million | | | | | | | | | | | At January 1 | | | 1,735 | | | | 1,491 | | | Additional provision | | | 823 | | | | 682 | | | Utilisation | | | (193 | ) | | | (438 | ) | | | | | | | | | | | | At December 31 | | | 2,365 | | | | 1,735 | | | Less: current portion (Note 40) | | | (470 | ) | | | (112 | ) | | | | | | | | | | | | | | | 1,895 | | | | 1,623 | |
| | | | | | | | | | | | 2019 | | | 2018 | | | | | RMB million | | | RMB million | | At January 1 (Note) | | | 4,349 | | | | 3,370 | | Additional provision | | | 768 | | | | 943 | | Utilization | | | (692 | ) | | | (661 | ) | | | | | | | | | | At December 31 | | | 4,425 | | | | 3,652 | | Less: current portion (Note 44) | | | (883 | ) | | | (821 | ) | | | | | | | | | | | | | 3,542 | | | | 2,831 | | | | | | | | | | |
Note: On the date of transition to IFRS 16, provision for major overhauls of RMB697 million (including current portion) were recognized at January 1, 2019. See Note 2(b). | 47 | 43 | Provision for early retirement benefits |
Details of provision for early retirement benefits in respect of obligations to early retired employees are as follows: | | | 2015 | | | 2014 | | | | | RMB
million | | | RMB
million | | | | | | | | | | | At January 1 | | | 45 | | | | 73 | | | Provision for the year (Note 14) | | | 3 | | | | 7 | | | Financial cost (Note 16) | | | 2 | | | | 4 | | | Payments made during the year | | | (25 | ) | | | (39 | ) | | | | | | | | | | | | At December 31 | | | 25 | | | | 45 | | | Less: current portion (Note 40) | | | (12 | ) | | | (20 | ) | | | | | | | | | | | | | | | 13 | | | | 25 | |
Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated)
43 | Provision for early retirement benefits (continued) |
| | | | | | | | | | | | 2019 | | | 2018 | | | | | RMB million | | | RMB million | | At January 1 | | | 4 | | | | 7 | | Provision for the year (Note 13) | | | — | | | | 1 | | Payments made during the year | | | (3 | ) | | | (4 | ) | | | | | | | | | | At December 31 | | | 1 | | | | 4 | | Less: current portion (Note 44) | | | (1 | ) | | | (2 | ) | | | | | | | | | | | | | — | | | | 2 | | | | | | | | | | |
The Group has implemented an early retirement plan for certain employees. The benefits of the early retirement plan are calculated based on factors including the remaining number of years of service from the date of early retirement to the normal retirement date and the salary amount on the date of early retirement of the employees. The present value of the future cash flows expected to be required to settle the obligations is recognized as provision for early retirement benefits. | 44 | Deferred benefits and gains |
| | | 2015 | | | 2014 | | | | | RMB
million | | | RMB
million | | | | | | | | | | | Leases rebates (Note (i)) | | | 145 | | | | 184 | | | Maintenance rebates (Note (ii)) | | | 455 | | | | 367 | | | Gains relating to sale and leaseback (Note (iii)) | | | 77 | | | | 103 | | | Government grants | | | 190 | | | | 177 | | | Others | | | 19 | | | | 22 | | | | | | 886 | | | | 853 | |
Notes:
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | (i) | The Company was granted rebates by the lessors under certain lease arrangements when it fulfilled certain requirements. The rebates are deferred and amortised using the straight line method over the remaining lease terms. |
| (ii) | The Company was granted rebates by the engine suppliers under certain arrangements when it fulfilled certain requirements. The rebates are deferred and amortised using the straight line method over the beneficial period. |
| (iii) | The Company entered into sale and leaseback transactions with certain third parties under operating leases. The gains are deferred and amortised over the lease terms of the aircraft. |
| | | 2015 | | | 2014 | | | | | RMB million | | | RMB million | | | | | | | | | | | Registered, issued and paid up capital: | | | | | | | | | 4,039,228,665 domestic state-owned shares of RMB1.00 each (2014: 4,208,586,278 shares of RMB1.00 each) | | | 4,039 | | | | 4,209 | | 2,983,421,335 A shares of RMB1.00 each (2014: 2,814,063,722 shares of RMB1.00 each) | | | 2,984 | | | | 2,814 | | 2,794,917,000 H shares of RMB1.00 each (2014: 2,794,917,000 shares of RMB1.00 each) | | | 2,795 | | | | 2,795 | | | | | | 9,818 | | | | 9,818 | |
All the domestic state-owned, H and A shares rank pari passu in all material respects.
Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated) | 48 | 46 | ReservesDeferred benefits and gains |
| | | 2015 | | | 2014 | | | | | RMB
million | | | RMB
million | | | | | | | | | | | Share premium | | | | | | | | | | At January 1 and December 31 | | | 14,131 | | | | 14,131 | | | | | | | | | | | | | Fair value reserve | | | | | | | | | | At January 1 | | | 44 | | | | 22 | | | Change in fair value of available-for-sale equity securities | | | 1 | | | | 22 | | | Change in fair value of derivative financial instruments | | | 10 | | | | - | | | | | | | | | | | | | At December 31 | | | 55 | | | | 44 | | | | | | | | | | | | | Statutory and discretionary surplus reserve | | | | | | | | | | At January 1 | | | 1,306 | | | | 1,169 | | | Appropriations to reserves (Note (a)) | | | 246 | | | | 137 | | | | | | | | | | | | | At December 31 | | | 1,552 | | | | 1,306 | | | | | | | | | | | | | Other reserve | | | | | | | | | | At January 1 | | | 180 | | | | 167 | | | Share of an associate’s reserves movement | | | (5 | ) | | | 14 | | | Acquisition of non-controlling interests in a subsidiary | | | (52 | ) | | | (1 | ) | | | | | | | | | | | | At December 31 | | | 123 | | | | 180 | | | | | | | | | | | | | Retained profits | | | | | | | | | | At January 1 | | | 10,269 | | | | 9,022 | | | Profit for the year | | | 3,736 | | | | 1,777 | | | Appropriations to reserves (Note (a)) | | | (246 | ) | | | (137 | ) | | Dividends approved in respect of the previous year | | | (393 | ) | | | (393 | ) | | | | | | | | | | | | At December 31 | | | 13,366 | | | | 10,269 | | | | | | | | | | | | | Total | | | 29,227 | | | | 25,930 | |
| | | | | | | | | | | | 2019 | | | 2018 | | | | | RMB million | | | RMB million | | | | | | | | (Note) | | Leases rebates | | | — | | | | 47 | | Maintenance rebates | | | 600 | | | | 746 | | Gains relating to sale and leaseback | | | — | | | | 15 | | Government grants | | | 222 | | | | 85 | | Others | | | 11 | | | | 13 | | | | | | | | | | | | | | 833 | | | | 906 | | | | | | | | | | |
Note: On the date of transition to IFRS 16, leases rebates of RMB47 million, maintenance rebates of RMB84 million and gains relating to sales and leaseback of RMB15 million, previously included in deferred benefits and gains, were adjusted to costs ofright-of-use assets recognized at January 1, 2019. See Note 2(b). | 49 | (a) | Appropriations to reservesShare capital |
| | | | | | | | | | | | 2019 | | | 2018 | | | | | RMB million | | | RMB million | | Registered, issued and paid up capital: | | | | | | | | | Trade-restricted: | | | | | | | | | 489,202,658 A shares of RMB1.00 each
owned by CSAH (2018: 489,202,658 shares of RMB1.00 each) (Note (ii)) | | | 489 | | | | 489 | | Nil A share (2018: 1,088,870,431 shares of RMB1.00 each) (Note (ii)) | | | — | | | | 1,089 | | 600,925,925 H shares of RMB1.00 each
(2018: 600,925,925 shares of RMB1.00 each) (Note (ii)) | | | 601 | | | | 601 | | | | | | | | | | | | | | 1,090 | | | | 2,179 | | Tradable: | | | | | | | | | 4,039,228,665 A shares of RMB1.00 each owned by CSAH
(2018: 4,039,228,665 shares of RMB1.00 each) | | | 4,039 | | | | 4,039 | | 4,072,291,766 A shares of RMB1.00 each
(2018: 2,983,421,335 shares of RMB1.00 each) | | | 4,073 | | | | 2,984 | | 3,065,523,272 H shares of RMB1.00 each
(2018: 3,065,523,272 shares of RMB1.00 each) | | | 3,065 | | | | 3,065 | | | | | | | | | | | | | | 11,177 | | | | 10,088 | | | | | 12,267 | | | | 12,267 | | | | | | | | | | |
Notes: | (i) | All the A and H shares rank pari passu in all material respects. |
| (ii) | In September 2018, the Company issued 1,578,073,089 A shares (“new A shares”) to CSAH and other six entities, and issued 600,925,925 H shares (“new H shares”) to a fellow subsidiary of CSAH. The new A shares issued to CSAH are restricted for trading within 36 months upon completion of the issuance, whereas other new A shares issued to other parties are restricted for trading within 12 months upon completion of the issuances. In 2019, the trading restriction of 1,088,870,431 A shares issued to other parties was released. Further, in accordance with the H shares subscription agreement entered into between the Company and the fellow subsidiary of CSAH, the fellow subsidiary of CSAH committed not to trade or transfer any of the new H shares within 36 months upon completion of the issuance. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) Dividends payable to equity shareholders of the Company attributable to the year: | | | | | | | | | | | | 2019 | | | 2018 | | | | | RMB
million | | | RMB
million | | Nil dividend proposed after the end of the reporting year (2018: RMB0.05 per share) (inclusive of applicable tax) | | | — | | | | 613 | | | | | | | | | | |
The directors did not propose any final dividend in respect of the year ended December 31, 2019 (2018: RMB0.05 per share (inclusive of applicable tax), amounting to a total dividend of RMB613 million). The share premium represents the difference between the par value of the shares of the Company and proceeds received from the issuance of the shares of the Company. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | (c) | Fair value reserve (recycling) |
The fair value reserve (recycling) represents the hedge reserve which comprises the effective portion of the cumulative net change in the fair value of hedging instruments used in cash flow hedges pending subsequent recognition of the hedged cash flow in accordance with the accounting policy adopted for cash flow hedges in Note 2(g). | (d) | Fair value reserve (non-recycling) |
The fair value reserve (non-recycling) comprises the cumulative net change in the fair value of equity investments designated at FVOCI under IFRS 9 that are held at the end of the reporting period (see Note 2(f)). Other reserves mainly comprise statutory surplus reserve. According to the PRC Company Law and the Articles of Association of the Company and certain of its subsidiaries, the Company and the relevant subsidiaries are required to transfer 10% of their annual net profits after taxation, as determined under the PRC accounting rules and regulations, to a statutory surplus reserve until the reserve balance reaches 50% of the registered capital. The transfer to this reserve must be made before distribution of dividend to shareholders and when there are retained profits at the end of the financial year. Statutory surplus reserve can be used to offset prior years’ losses, if any, and may be converted into share capital by the issue of new shares to shareholders in proportion to their existing shareholding or by increasing the par value of the shares currently held by them, provided that the balance after such issue is not less than 25% of the registered capital. For the year ended December 31, 2019, the Company made appropriation of statutory surplus reserve of RMB181 million (2018: RMB221 million). For the year ended December 31, 2019, the Group recorded an increase in other reserves of RMB44 million arising from adjustments in carrying amount of interest in associates relating to changes in an associate’s reserves (2018: RMB4 million), and recorded a decrease in other reserves of RMB10 million arising from acquisition of non-controlling interests in a subsidiary (2018: Nil). NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated) | 51 | 46 | Reserves (continued)Commitments |
| (a) | (b) | DividendsCapital commitments |
Dividends payable to equity shareholders of the Company attributable to the year
| | | 2015 | | | 2014 | | | | | RMB million | | | RMB million | | | | | | | | | | | Final dividend proposed after the end of the reporting year of RMB0.8 per 10 ordinary shares (2014: RMB0.4 per 10 ordinary shares) (inclusive of applicable tax) | | | 785 | | | | 393 | |
A dividend in respect of the year ended December 31, 2015 of RMB0.8 per 10 shares (inclusive of applicable tax) (2014: RMB0.4 per 10 shares (inclusive of applicable tax)), amounting to a total dividend of RMB785 million (2014: RMB393 million), was proposed by the directors on March 30, 2016. The final dividend proposed after the end of the financial year has not been recognized as a liability at the end of the financial year.
Capital commitments outstanding as at December 31, 20152019 and 2018, not provided for in the financial statements were as follows: | | | 2015 | | | 2014 | | | | | RMB million | | | RMB million | | | Commitments in respect of aircraft and flight equipment | | | | | | | | | | – authorised and contracted for | | | 83,427 | | | | 59,467 | | | | | | | | | | | | | Investment commitments | | | | | | | | | | – authorised and contracted for | | | | | | | | | | – capital contributions for acquisition of interests in associates | | | 34 | | | | 70 | | | – share of capital commitments of a joint venture | | | 56 | | | | 52 | | | | | | | | | | | | | | | | 90 | | | | 122 | | | | | | | | | | | | | – authorised but not contracted for | | | | | | | | | | – share of capital commitments of a joint venture | | | 41 | | | | - | | | | | | | | | | | | | | | | 131 | | | | 122 | | | | | | | | | | | | | Commitments for other property, plant and equipment | | | | | | | | | | – authorised and contracted for | | | 2,550 | | | | 1,512 | | | – authorised but not contracted for | | | 4,183 | | | | 3,610 | | | | | | | | | | | | | | | | 6,733 | | | | 5,122 | | | | | | | | | | | | | | | | 90,291 | | | | 64,711 | |
| | | | | | | | | | | | 2019 | | | 2018 | | | | | RMB million | | | RMB million | | Commitments in respect of aircraft and flight equipment | | | | | | | | | – authorized and contracted for | | | 71,224 | | | | 82,199 | | | | | | | | | | | Investment commitments | | | | | | | | | – authorized and contracted for | | | | | | | | | – share of capital commitments of a joint venture | | | 322 | | | | 26 | | – capital contributions for acquisition of non-controlling interests in a subsidiary | | | 232 | | | | — | | – capital contributions for acquisition of interests in a joint venture | | | — | | | | 14 | | | | | | | | | | | | | | 554 | | | | 40 | | – authorized but not contracted for | | | | | | | | | – share of capital commitments of a joint venture | | | 31 | | | | 21 | | | | | | | | | | | | | | 585 | | | | 61 | | | | | | | | | | | Commitments for other property, plant and equipment | | | | | | | | | – authorized and contracted for | | | 4,571 | | | | 7,224 | | – authorized but not contracted for | | | 10,451 | | | | 14,062 | | | | | | | | | | | | | | 15,022 | | | | 21,286 | | | | | | | | | | | | | | 86,831 | | | | 103,546 | | | | | | | | | | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated) | 51 | 47 | Commitments (continued) |
| (a) | (a) | Capital commitments (continued) |
As at December 31, 2015,2019 and 2018, the approximate total future payments, including estimated amounts for price escalation through anticipated delivery dates for aircraft and flight equipment are as follows: | | | 2015 | | | 2014 | | | | | RMB
million | | | RMB
million | | | | | | | | | | | 2015 | | | - | | | | 18,146 | | | 2016 | | | 19,074 | | | | 11,628 | | | 2017 | | | 22,359 | | | | 10,081 | | | 2018 | | | 18,898 | | | | 7,552 | | | 2019 and afterwards | | | 23,096 | | | | 12,060 | | | | | | 83,427 | | | | 59,467 | |
| | | | | | | | | | | | 2019 | | | 2018 | | | | | RMB million | | | RMB million | | 2019 | | | — | | | | 38,141 | | 2020 | | | 41,442 | | | | 32,395 | | 2021 | | | 21,077 | | | | 8,628 | | 2022 | | | 5,464 | | | | 3,035 | | 2023 and afterwards | | | 3,241 | | | | — | | | | | | | | | | | | | | 71,224 | | | | 82,199 | | | | | | | | | | |
| (b) | (b) | Operating lease commitments |
As at December 31, 2015,2018, the Group recorded a total future minimumcommitment to operating leases of RMB75,729 million for contracted lease. Among which, the Group had operating lease commitments to CSAH and its affiliates in respect of lease payments under non-cancellable operating leasesfor land and buildings of RMB665 million and aircraft of RMB78 million. The Group is the lessee in respect of a number of properties, aircraft and flight equipment held under leases which were previously classified as operating leases under IAS 17. The Group has initially applied IFRS 16 using the modified retrospective approach. Under this approach, the Group adjusted the opening balances at January 1, 2019 to recognize lease liabilities relating to these leases (see Note 2(b)). From January 1, 2019 onwards, future lease payments are recognized as follows: | | | 2015 | | | 2014 | | | | | RMB
million | | | RMB
million | | | | | | | | | | | Payments due | | | | | | | | | | Within 1 year | | | 6,560 | | | | 5,072 | | | After 1 year but within 5 years | | | 18,582 | | | | 15,496 | | | After 5 years | | | 10,967 | | | | 8,230 | | | | | | 36,109 | | | | 28,798 | |
Notes tolease liabilities in the consolidated statement of financial statements
(Preparedposition in accordance with International Financial Reporting Standards)the policies set out in Note 2(k), and the details regarding the Group’s future lease payments are disclosed in Note 37.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | 52 | 48 | Material related party transactions |
| (a) | (a) | Key management personnel remuneration |
Remuneration for key management personnel of the Group, including amounts paid to the Company’s directors (excluding independentnon-executive directors) as disclosed in Note 54,60, is as follows: | | | 2015 | | 2014 | | 2013 | | | | | | | | | | | RMB
thousand | | RMB
thousand | | RMB
thousand | | | 2019 | | | 2018 | | | 2017 | | | | | | | | | | | | RMB ’000 | | | RMB ’000 | | | RMB ’000 | | | Salaries, wages and welfare | | 8,907 | | 13,013 | | 12,412 | | | | 13,803 | | | | 15,218 | | | | 12,151 | | | Retirement scheme contributions | | | 1,868 | | | 2,359 | | | 2,074 | | | | 1,785 | | | | 1,797 | | | | 1,841 | | | | | | 10,775 | | | 15,372 | | | 14,486 | | | | | | | | | | | | | | | 15,588 | | | | 17,015 | | | | 13,992 | | | | | | | | | | | | |
| | | 2015 | | | 2014 | | | 2013 | | | | | RMB
thousand | | | RMB
thousand | | | RMB
thousand | | | | | | | | | | | | | | Directors and supervisors (Note 54(a)) | | | 2,471 | | | | 3,241 | | | | 3,108 | | | Senior management | | | 8,304 | | | | 12,131 | | | | 11,378 | | | | | | 10,775 | | | | 15,372 | | | | 14,486 | |
| | | | | | | | | | | | | | | | 2019 | | | 2018 | | | 2017 | | | | | RMB ’000 | | | RMB ’000 | | | RMB ’000 | | Directors and supervisors (Note 60) | | | 1,298 | | | | 878 | | | | 2,952 | | Senior management | | | 14,290 | | | | 16,137 | | | | 11,040 | | | | | | | | | | | | | | | | | | 15,588 | | | | 17,015 | | | | 13,992 | | | | | | | | | | | | | | |
Total remuneration is included in “staff costs” (Note 14)13). NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | 52 | Material related party transactions (continued) |
| (b) | Transactions with CSAHCCSAH and its affiliates, (the “CSAHC Group”), associates, joint ventures and other related companycompanies of the Group |
The Group provided or received various operational services to or by the CSAHC Group,CSAH and its affiliates, associates, joint ventures and other related companycompanies of the Group during the normal course of its business.
Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated)
| 48 | Material related party transactions (continued) |
| (b) | Transactions with CSAHC and its affiliates (the “CSAHC Group”), associates, joint ventures and other related company of the Group (continued) |
The Group also received operational services provided by these entities. Details of the significant transactions carried out by the Group are as follows: | | | | | 2015 | | 2014 | | 2013 | | | | | | | | | | | | | Note | | RMB
million | | RMB
million | | RMB
million | | | | | | 2019 | | | 2018 | | | 2017 | | | | | | | | | | | | | | Note | | | RMB million | | | RMB million | | | RMB
million | | | Income received from the CSAHC Group | | | | | | | | | | | | Charter flight and pallet income | | (i) | | 19 | | 32 | | 107 | | | | Air catering supplies income | | (ii) | | 1 | | 1 | | - | | | | Cargo handling income | | (i) | | 1 | | - | | 1 | | | | Aircraft material sales | | (iii) | | 1 | | - | | - | | | | | | | | | | | | | | | | Expenses paid to the CSAHC Group | | | | | | | | | | | Income received from CSAH and its affiliates | | | | | | | | | | Cargo handling income and rental income | | | | (i) | | | | 7 | | | | 4 | | | | 3 | | Aviation material sales income | | | | (ii) | | | | 36 | | | | 6 | | | | 4 | | Entrusted management income | | | | (iii) | | | | 27 | | | | 27 | | | | — | | Commission income | | | | (iv) | | | | 14 | | | | — | | | | — | | Others | | | | | | 1 | | | | 9 | | | | 8 | | Purchase of goods and services from CSAH and its affiliates | | | | | | | | | | Cargo handling charges | | | | (v) | | | | — | | | | 111 | | | | 112 | | Commission expenses | | | | (v) | | | | 44 | | | | 14 | | | | 44 | | Transportation expense | | | | (v) | | | | — | | | | 10 | | | | — | | Maintenance material purchase expense and lease charges for maintenance material | | | | (ii) | | | | 165 | | | | 98 | | | | 43 | | Software service expenses | | | | (ii) | | | | — | | | | 5 | | | | 4 | | Air catering supplies expenses | | | | (i) | | | | 142 | | | | 135 | | | | 125 | | | Repairing charges | | (iii) | | 1,324 | | 780 | | 796 | | | | (vi) | | | | — | | | | 1,184 | | | | 1,537 | | | Lease charges for land and buildings | | (iv) | | 193 | | 173 | | 169 | | | | (vii) | | | | 353 | | | | 294 | | | | 189 | | | Handling charges | | (v) | | 114 | | 119 | | 121 | | | | Property management fee | | (vi) | | 73 | | 61 | | 63 | | | | (viii) | | | | 151 | | | | 106 | | | | 72 | | | Air catering supplies expenses | | (ii) | | 100 | | 89 | | 84 | | | | Cargo handling charges | | (i) | | 109 | | 46 | | 33 | | | | Commission expenses | | (i) | | 98 | | 8 | | 19 | | | | Printing expenses | | (vii) | | 4 | | 4 | | - | | | | Construction supervision expenses | | (xx) | | 2 | | - | | - | | | | | | | | | | | | | | | | Expenses paid to joint ventures and associates | | | | | | | | | | | Acquisition of property | | | | (ix) | | | | — | | | | 160 | | | | — | | Others | | | | | | 7 | | | | 5 | | | | 12 | | Purchase of goods and services from joint ventures and associates | | | | | | | | | | | Repairing charges | | (viii) | | 1,714 | | 1,335 | | 1,783 | | | | (vi) | | | | 2,442 | | | | 786 | | | | — | | Repairing charges and maintenance material purchase expenses | | | | (x) | | | | 2,956 | | | | 2,692 | | | | 2,492 | | | Flight simulation service charges | | (ix) | | 324 | | 316 | | 270 | | | | (xxiv) | | | | — | | | | — | | | | 194 | | | Training expenses | | (x) | | 112 | | 169 | | 120 | | | | (xxv) | | | | — | | | | — | | | | 36 | | | Ground service expenses | | (xi) | | 119 | | 111 | | 14 | | | | (xi) | | | | 112 | | | | 123 | | | | 123 | | | Air catering supplies | | (xii) | | 108 | | 102 | | - | | | | (xii) | | | | 93 | | | | 98 | | | | 109 | | | Advertising expenses | | (xiii) | | 67 | | 75 | | 77 | | | | (xiii) | | | | 196 | | | | 105 | | | | 74 | | | Commission expense | | (xiv) | | 1 | | 29 | | - | | | | Maintenance material purchase expenses | | (viii) | | 29 | | 24 | | - | | | | Intercom rental expenses | | (xxi) | | 2 | | - | | - | | | | Rental expense | | (xxii) | | 1 | | - | | - | | | | | | | | | | | | | | | Property management fee | | | | (xiv) | | | | 26 | | | | 28 | | | | 26 | | Commission expenses | | | | (xv) | | | | 14 | | | | — | | | | — | | Others | | | | | | 7 | | | | 7 | | | | 6 | | Income received from joint ventures and
associates | | | | | | | | | | | | | | | | | | Maintenance material sales and handling income | | | | (xvi) | | | | 7 | | | | 15 | | | | 28 | | Rental income | | | | (xxiv) | | | | — | | | | — | | | | 18 | | | Entrustment income for advertising media business | | (xiii) | | 21 | | 34 | | 32 | | | | (xiii) | | | | 1 | | | | 1 | | | | 20 | | | Rental income | | (ix) | | 37 | | 33 | | 31 | | | Repairing income | | | | (xv) | | | | 4 | | | | 11 | | | | 1 | | Air catering supplies income | | | | (xv) | | | | 35 | | | | 16 | | | | 26 | | Transfer of pilots income | | | | (xv) | | | | 35 | | | | — | | | | — | | | Commission income | | (xv) | | 17 | | 40 | | 12 | | | | (xvii) | | | | — | | | | 20 | | | | 26 | | | Repairing income | | (xiv) | | 12 | | 17 | | 14 | | | | Air catering supplies | | (xiv) | | 23 | | 10 | | 18 | | | | Ground service income | | (xvi) | | 8 | | 8 | | 7 | | | | (xviii) | | | | 16 | | | | 13 | | | | 10 | | | Air ticket Income | | (xv) | | 1 | | 2 | | - | | | | Maintenance material sales revenue | | (xvii) | | 1 | | 2 | | - | | | | Air catering supplies income | | (xii) | | 1 | | 1 | | - | | | | | | | | | | | | | | | Labor service income and rental income | | | | (xix) | | | | 8 | | | | 22 | | | | 20 | | Others | | | | | | 15 | | | | 13 | | | | 7 | | | Income received from other related company | | | | | | | | | | | | | | | | | | | Air tickets income | | (xviii) | | 10 | | 12 | | 12 | | | | (xx) | | | | — | | | | 9 | | | | 6 | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated) | 52 | 48 | Material related party transactions (continued) |
| (b) | (b) | Transactions with CSAHCCSAH and its affiliates, (the “CSAHC Group”), associates, joint ventures and other related companycompanies of the Group (continued) |
| | | | | 2015 | | 2014 | | 2013 | | | | | | | | | | | | | Note | | RMB million | | RMB
million | | RMB
million | | | | | | 2019 | | | 2018 | | | 2017 | | | | | | | | | | | | | | Note | | | RMB million | | | RMB million | | | RMB
million | | | Expenses paid to other related company | | | | | | | | | | | Purchase of goods and services from other related companies | | | | | | | | | | Advertising expenses | | | | (xx) | | | | — | | | | 10 | | | | 10 | | | Computer reservation services | | (xix) | | 515 | | 435 | | 444 | | | | (xxii) | | | | 685 | | | | 592 | | | | 576 | | | Advertising expenses | | (xviii) | | | - | | | 20 | | | 10 | | | Aviation supplies expenses | | | | (xxi) | | | | 53 | | | | 48 | | | | 39 | | Canteen service | | | | (xxi) | | | | 24 | | | | 19 | | | | 15 | | Others | | | | | | 9 | | | | 3 | | | | 4 | | Acquisition from CSAH and its affiliates | | | | | | | | | | Acquisition of a subsidiary | | | | (xiii) | | | | — | | | | — | | | | 47 | | Equity transaction | | | | (vi) | | | | — | | | | 1,602 | | | | — | | Aircraft related transactions with CSAH and its affiliates | | | | | | | | | | Payment of lease charges on aircraft | | | | (xxiii) | | | | 2,696 | | | | 1,542 | | | | 175 | | Consideration of disposal of aircraft | | | | (xxiii) | | | | — | | | | 481 | | | | — | |
| (i) | Shenzhen Air Catering Co., Ltd. (“SACC”) is an associate of CSAH. |
| | (i) | China Southern Air Holding Ground Services Co.,Ltd (“CSA Groud Services”), a wholly- owned subsidiary of CSAHC, purchases cargo spaces and charter flights from the Group. In addition, cargo handling income/chargescatering supplies expenses are earned/payable by the Group in respect of the cargo handlingcertainin-flight meals and related services with CSA Ground Services.SACC. |
Commission is earned by CSA Ground Services in connection with the air tickets sold by them on behalf of the Group. Commission is calculated based on the rates stipulated by the CAAC and International Air Transportation Association.
| | (ii) | Shenzhen Air Catering Company Limited (“SZ Catering”) became a related party ofIn addition, the Group since its Chairman, Mr. Yuan Xin An was appointed as a non-executive Director of the Company in November 2011.leased certain equipment to SACC under operating lease agreements. |
Air catering supplies income/expenses are earned/payable by the group in respect of certain in-flight meals and related services with SZ catering.
| (ii) | China Aviation Supplies Holding Company (“CASC”) is an associate of CSAH. |
| | The Group purchases software service, as well as purchases and leases maintenance material from CASC, and CASC also purchases maintenance material from the Group. |
| (iii) | MTU Maintenance ZhuhaiThe Group provides entrusted management service to CSAH. |
| (iv) | Southern Airlines Insurance Brokerage Co., Ltd,Ltd. (“SAIB”), is a wholly-owned subsidiary of CSAH. The Group provides certain website resources to SAIB for the sales of air insurance. |
| (v) | China Southern Airlines Group Ground Services Co., Ltd. (“GSC”), is a wholly-owned subsidiary of CSAH. GSC entered into liquidation at the year end of 2018 and has no transaction with the Group this year. |
| Commission is earned by Shenzhen Baiyun Air Service Co.,Ltd., the subsidiary of GSC, in connection with the air tickets sold by them on behalf of the Group. Commission is calculated based on the rates stipulated by the Civil Aviation Administration of China and International Air Transportation Association. |
| (vi) | MTU, a former joint venture of CSAHC,CSAH, provides comprehensive maintenance services to the Group. MTU became a joint venture of the Group on August 28, 2018. |
| (vii) | (iv) | The Group leases certain land and buildings in the PRC from CSAHC.CSAH and its affiliates. The amount represents rental payments for land and buildings paid or payable to CSAHC.CSAH and its affiliates. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | 52 | Material related party transactions (continued) |
| (b) | (v) | The Group acquires aircraft, flight equipmentTransactions with CSAH and its affiliates, associates, joint ventures and other airline-related facilities throughrelated companies of the Group (continued) |
| (viii) | China Southern Airlines (Group) Import and Export Trading Company Limited (“SAIETC”)Group Property Management Co., Ltd., a wholly-owned subsidiary of CSAHC, and pays handling charges to SAIETC. |
| (vi) | Guangzhou China Southern Airlines Property Management Company Limited,CSAH. COHL & CSAH Construction Development Co., Ltd., a subsidiaryjoint venture of CSAHC, providesCSAH. Both of them provide property management services to the Group. |
| (ix) | (vii) | Printing Plant of China Nothern Airlines Vestibule School provides printing services for the Group.The Group acquires properties from COHL & CSAH Construction Development Co., Ltd. |
| (viii)(x) | Guangzhou Aircraft Maintenance Engineering Company Limited (“GAMECO”)GAMECO and Shenyang Northern Aircraft Maintenance, Limited, joint ventures of the Group, provide comprehensive maintenance services to the Group.
|
| The Company acquired 21% equity interest in Shenyang Aircraft Maintenance on April 23, 2019, Shenyang Aircraft Maintenance became a wholly-owned subsidiary of the Company (Note 23(iii)). |
| The Group also purchases maintenance material from GAMECO. |
| (ix) | Zhuhai Xiang Yi Aviation Technology Company Limited (“Zhuhai Xiang Yi”), a joint venture of the Group, provides flight simulation services to the Group. |
In addition, the Group leased certain flight training facilities and buildings to Zhuhai Xiang Yi under operating lease agreements.
Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated)
| 48 | Material related party transactions (continued) |
| (b) | Transactions with CSAHC and its affiliates (the “CSAHC Group”), associates, joint ventures and other related company of the Group (continued) |
| (x) | China Southern West Australian Flying College Pty Limited (“Flying College”), a joint venture of the Group, provides training services to the Group. |
| (xi) | Beijing Aviation Ground Services Co.,Ltd., and Shenyang Konggang Logistic Co., Ltd., associates of the Group provide ground serviceservices to the group .Group. |
| (xii) | Air catering supplies income/expenses are earned/payable by the Group in respect of certain in-flight meals and related services with Beijing Airport Inflight Kitchen Co.,Ltd., which is an associate of the Group and provides air catering related services to the Group. |
| (xiii) | SACM, an associate of the Group, provides advertising services to the Group. The Group provides certain media resources to SACM. |
In addition, Xiamen Airlines provides certain media resources to Xiamen Airlines Culture and Media Co., Ltd., a subsidiary of SACM.
| | XACM, a former associate of Xiamen Airlines, provided advertising service to Xiamen Airlines. In October 2017, XACM became a wholly-owned subsidiary of Xiamen Airlines. Xiamen Airlines provides certain media resources to XACM before the acquisition. |
| (xiv) | Sichuan Airlines,Xinjiang Civil Aviation Property Management Ltd., an associate of the Group, provides commission serviceproperty management services to the Group. The charge is determined according to the market price. |
In addition, The Company provides aircraft maintenance services to Sichuan Airlines. The Group provides air catering services and repairing services
| (xv) | The Group provides repairing service and air catering supplies service to Sichuan Airlines. |
| | (xv)Commission is earned by Sichuan Airlines in connection with the air tickets sold on behalf of the Group. |
| In addition, the Group transferred pilots to Sichuan Airlines. |
| (xvi) | The Group imports and sells maintenance materials to GAMECO and earns maintenance material sales and handling income. |
| (xvii) | The Group provides certain website resources to SA Finance for the sales of air insurance to passengers and provides commission service to Sichuan Airlines.insurance. |
In addition, the Group sells tickets to SA Finance as a gift to passengers for the sales of insurance.
| (xviii) | (xvi) | The Group provides ground services to Shenyang Konggang Logistic Co., Ltd. and Sichuan Airlines.Airlines, which are associates of the Group. |
| (xix) | (xvii) | The Group sells maintenance materialsprovides labor service to Shenyang Northern Aircraft Maintenance, Ltd., which is a joint venture ofand the Group.charge rates are determined by reference to prevailing market price. In addition, the Group leases certain property and equipment to Shenyang Aircraft Maintenance. |
| (xx) | (xviii) | Phoenix Satellite Television Holdings Limited ("Ltd. (“the Phoenix Group"Group”) iswas a related party of the Group as the board chairman of the Phoenix Group was appointed as anon-executive director of the Group.Group and resigned on December 20, 2017. The transaction incurred in the year before December 20, 2018 was deemed to be the related party transaction. It provides advertising services to the Group. |
In addition, the Group Sells tickets to the Phoenix Group on market price.
| | (xix)In addition, the Group sells tickets to the Phoenix Group on market price. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | 52 | Material related party transactions (continued) |
| (b) | Transactions with CSAH and its affiliates, associates, joint ventures and other related companies of the Group (continued) |
| (xxi) | The chairman of Pearl Aviation Services is the key management personnel of the Company. The Group purchases aviation supplies and canteen services from Pearl Aviation Services. |
| In December 2019, Pearl Aviation Services became a wholly-owned subsidiary of the Group (Note 23(iv)). |
| (xxii) | China Travel Sky Holding Company is a related party of the Group as a directorkey management personnel of the Group was appointed as the director of China Travel Sky Holding Company. It provides computer reservation services. |
| (xxiii) | China Southern Airlines International Finance Leasing Co., Ltd. (“CSA International”), originally a wholly-owned subsidiary of CSAH, and became a joint venture of CSAH in 2019, provides aircraft and engines lease services to the Group. Also, the Group disposed aircraft to CSA International. |
| (xxiv) | Zhuhai Xiang Yi, a former joint venture of the Group, provides flight simulation services to the Group. In addition, the Group leased certain flight training facilities and buildings to Zhuhai Xiang Yi. |
| | (xx) | CSA Construction Supervision Co. Ltd., an associateIn July 2017, Zhuhai Xiang Yi became a wholly-owned subsidiary of the CSAHC,Company. The amount represents the transactions in 2017 which incurred prior to the acquisition (Note 23(vi)). |
| (xxv) | Flying College, a former joint venture of the Group, provides supervisiontraining services to the Group. |
| | (xxi) | Guangzhou Tuokang Communication Technology Co. Ltd. , an associateFlying College became a subsidiary of the Group provides intercom rental services to the Group. | | (xxii) | Shenyang Konggang Logistic Co. Ltd., an associate of the Group, provides facilities and buildings to the Group under operating lease agreement.on November 20, 2018 (Note 23(v)). |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated) | 52 | 48 | Material related party transactions (continued) |
| (c) | (c) | Balances with the CSAHC Group,CSAH and its affiliates, associates, joint ventures and other related companycompanies of the Group |
Details of amounts due from/to the CSAHC Group,CSAH and its affiliates, associates, joint ventures and other related company of the Group: | | | | | 2015 | | 2014 | | | | | | | | | | | | | | | | | Note | | RMB million | | RMB million | | | | | | 2019 | | | 2018 | | | | | | | | | | | | Note | | | RMB million | | | RMB million | | | Receivables: | | | | | | | | | | | | | | | The CSAHC Group | | 21 | | 78 | | | CSAH and its affiliates | | | | | | 18 | | | | 51 | | | Associates | | | | 226 | | 284 | | | | | | 35 | | | | 22 | | | Joint ventures | | | | | 86 | | | 124 | | | | | | 20 | | | | 17 | | | | | 39(a) | | | 333 | | | 486 | | | | | | | | | | | | | | 43(a) | | | | 73 | | | | 90 | | | | | | | | | | | |
| | | | | 2015 | | | 2014 | | | | | Note | | RMB million | | | RMB million | | | | | | | | | | | | | Payables: | | | | | | | | | | | | The CSAHC Group | | | | | 77 | | | | 256 | | | Associates | | | | | 13 | | | | 13 | | | Joint ventures | | | | | 60 | | | | 119 | | | Other related company | | | | | 2 | | | | 70 | | | | | 39(b) | | | 152 | | | | 458 | |
| | | | | | | | | | | | | | | | | | | 2019 | | | 2018 | | | | | Note | | | RMB million | | | RMB million | | Prepayments of acquisition of long-term assets: | | | | | | | | | | | | | CSAH and its affiliates | | | | | | | 160 | | | | 80 | | An associate | | | | | | | 353 | | | | 147 | | | | | | | | | | | | | | | | | | 30&43(b) | | | | 513 | | | | 227 | | | | | | | | | | | | | | |
| | | 2015 | | | 2014 | | | | | RMB million | | | RMB million | | | | | | | | | | | Accrued expenses: | | | | | | | | | | The CSAHC Group | | | 571 | | | | 451 | | | Associates | | | 97 | | | | 92 | | | Joint ventures | | | 931 | | | | 836 | | | Other related company | | | 282 | | | | 269 | | | | | | 1,881 | | | | 1,648 | |
| | | | | | | | | | | | | | | | | | | 2019 | | | 2018 | | | | | Note | | | RMB million | | | RMB million | | Payables: | | | | | | | | | | | | | CSAH and its affiliates | | | | | | | 116 | | | | 49 | | Associates | | | | | | | 1 | | | | 12 | | Joint ventures | | | | | | | 53 | | | | 63 | | Other related companies | | | | | | | — | | | | 3 | | | | | | | | | | | | | | | | | | 43(c) | | | | 170 | | | | 127 | | | | | | | | | | | | | | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | 52 | Material related party transactions (continued) |
The
| (c) | Balances with CSAH and its affiliates, associates, joint ventures and other related companies of the Group (continued) |
| | | | | | | | | | | | 2019 | | | 2018 | | | | | RMB million | | | RMB million | | Accrued expenses: | | | | | | | | | CSAH and its affiliates | | | 55 | | | | 62 | | Associates | | | 169 | | | | 139 | | Joint ventures | | | 2,092 | | | | 2,320 | | Other related companies | | | 274 | | | | 633 | | | | | | | | | | | | | | 2,590 | | | | 3,154 | | | | | | | | | | | Lease liabilities | | | | | | | | | The CSAH and its affiliates | | | 23,734 | | | | — | | | | | | | | | | | Obligations under finance leases: | | | | | | | | | CSAH and its affiliates | | | — | | | | 13,360 | | | | | | | | | | |
Except the lease liabilities, the amounts due from/to the CSAHC Group,CSAH and its affiliates, associates, joint ventures and other related companycompanies of the Group are unsecured, interest freeinterest-free and have no fixed terms of repayment.
Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated)
| (d) | 48 | Material related party transactions (continued) |
| (d) | Loans from and deposits placed with related parties |
| | (i) | Loans from related parties |
At December 31, 2015,2019, loans from SA Finance to the Group amounted to RMB105RMB76 million (2014: RMB105(December 31, 2018: RMB758 million). The unsecured loans are repayable as follows: | | | | | | | | | | | | 2019 | | | 2018 | | | | | RMB million | | | RMB million | | Within 1 year | | | 23 | | | | 630 | | After 1 year but within 2 years | | | — | | | | 10 | | After 2 years but within 5 years | | | 53 | | | | 118 | | | | | | | | | | | | | | 76 | | | | 758 | | | | | | | | | | |
Interest expense paid on such loans amounted to RMB9 million (2018: RMB18 million ) and the interest rates range from 4.28% to 4.35% per annum during the year ended December 31, 2019 (2018: 3.92% to 4.51% ). NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | 52 | Material related party transactions (continued) |
| (d) | Loans from and deposits placed with related parties (continued) |
| (ii) | Entrusted loans from CSAH |
In 2015, CSAHC,2019, CSAH, SA Finance and the Group entered into an entrusted loan agreement, pursuant to which, CSAHC,CSAH, as the lender, entrusted SA Finance to lend RMB105RMB5,520 million (December 31, 2018: RMB500 million) to the Group from April 27, 2015July 10, 2019 to April 27, 2016.July 8, 2022. The interest rate is 90% of benchmark interest rate stipulated by PBOC per annum. The unsecured entrusted loans are repayable as follows: | | | | | 2015 | | | 2014 | | | | | Note | | RMB million | | | RMB million | | | | | | | | | | | | | Within 1 year | | | | | 105 | | | | 105 | | | | | 35(f) | | | 105 | | | | 105 | |
| | | | | | | | | | | | | | | | | | | 2019 | | | 2018 | | | | | Note | | | RMB million | | | RMB million | | Within 1 year | | | 36(e) | | | | 4,720 | | | | 500 | | After 1 year but within 2 years | | | | | | | — | | | | — | | After 2 years but within 5 years | | | 36(e) | | | | 800 | | | | — | | | | | | | | | | | | | | | | | | | | | | 5,520 | | | | 500 | | | | | | | | | | | | | | |
Interest expense paid on such loans amounted to RMB4RMB86 million (2014: RMB11 million; 2013: RMB28 million) and the(2018: RMB10 million ) at interest rates ranged from 3.92% to 4.14% per annum during the year ended December 31, 2015(2014: 5.04% to 5.70% per annum; 2013: 5.54% to 5.84%2019 (2018: 3.92% per annum). | | (ii)(iii) | Deposits placed with SA Finance |
AtAs at December 31, 20152019, the Group’s deposits with SA Finance are presented in the table below. The applicable interest rates are determined in accordance with the rates published by the PBOC.
| | | | | 2015 | | | 2014 | | | | | Note | | RMB million | | | RMB million | | | | | | | | | | | | | | | Deposits placed with SA Finance | | 34 | | | 2,934 | | | | 4,264 | |
| | | | | | | | | | | | 2019 | | | 2018 | | | | | RMB million | | | RMB million | | Deposits placed with SA Finance | | | 711 | | | | 5,583 | | | | | | | | | | |
Interest income received on such deposits amounted to RMB70RMB40 million during the year ended December 31, 2015 (2014: RMB68 million; 2013: RMB662019 (2018: RMB80 million). | (e) | (e) | Commitments to CSAHC CSAH |
AtAs at December 31, 2015,2018, the Group had operating lease commitments to CSAHCCSAH and its affiliates in respect of lease payments for land and buildings of RMB320RMB665 million (2014: RMB207 million).
Notesand aircraft of RMB78 million. The Group is the lessee in respect of a number of properties, aircraft and flight equipment held under leases which were previously classified as operating leases under IAS 17. The Group has initially applied IFRS 16 using the modified retrospective approach. Under this approach, the Group adjusted the opening balances at January 1, 2019 to recognize lease liabilities relating to these leases (see Note 2(b)). From January 1, 2019 onwards, operating lease commitments are recognized as lease liabilities in the consolidatedstatement of financial statements
(Preparedposition in accordance with International Financial Reporting Standards)the policies set out in Note 2(k), and the details regarding the Group’s future lease payments are disclosed in Note 37.
As at December 31, 2019, the Group did not have capital commitments to CSAH (December 31, 2018: RMB291 million in respect of capital payments for other flight equipment). NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | 53 | 49 | Employee benefits plan |
| (a) | (a) | Retirement benefits |
Employees of the Group participate in several defined contribution retirement schemes organisedorganized separately by the PRC municipal and provincial governments in regions where the major operations of the Group are located. The Group is required to contribute to these schemes at rates ranging from 12% to 16% (2018: 13% to 21% (2014: 11%20%; 2017: 13% to 21%; 2013: 10% to 22%20%) of salary costs including certain allowances. A member of the retirement schemes is entitled to pension benefits from the Local LabourLabor and Social Security Bureau upon his/her retirement. The retirement benefit obligations of all retired staff of the Group are assumed by these schemes. The Group, asat its sole discretion, had made certain welfare subsidy payments to these retirees. In 2014, the Company and its major subsidiaries joined a new defined contribution retirement scheme (“Pension Scheme”) that was implemented by CSAHC.CSAH. The annual contribution to the Pension Scheme is based on a fixed specified percentage of prior year’s annual wage. There will be no further obligation beyond the annual contribution according to the Pension Scheme. The total contribution into the Pension Scheme in 20152019 was approximately RMB438,000,000.RMB985 million (2018: RMB598 million; 2017: RMB546 million). The Group contributes on a monthly basis to housing funds organisedorganized by municipal and provincial governments based on certain percentages of the salaries of employees. The Group’s liability in respect of these funds is limited to the contributions payable in each year. In additionThe Group also pays cash housing subsidies on a monthly basis to theeligible employees. The monthly cash housing funds, certain employees of the Groupsubsidies are eligiblecharged to one of the following housing benefit schemes:income statement.
| 54 | (i) | Pursuant to a staff housing benefit scheme effective on September 2002, the Group agreed to pay lump sum housing allowances to certain employees who have not received quarters from CSAHC or the Group according to the relevant PRC housing reform policy. An employee who leaves the Company prior to the end of the vesting benefit period is required to pay back a portion of the lump sum housing benefits determined on a pro rata basis of the vesting benefit period. The Group has the right to effect a charge on the employee’s house and to enforce repayment through the sale of the house in the event of default in repayment. Any remaining shortfall is charged to income statement. The amount was fully amortised in 2012. |
| (ii) | The Group also pays cash housing subsidies on a monthly basis to eligible employees. The monthly cash housing subsidies are charged to income statement. |
Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated)
| 49 | Employee benefits plan (continued) |
| (c) | Share Appreciation Rights Scheme |
On November 30, 2011, the Company’s General Meeting approved the “H Share Appreciation Rights Scheme of China Southern Airlines Company Limited” and “Initial Grant under the H Share Appreciation Rights Scheme of China Southern Airlines Company Limited” (“the Scheme”).
Under the Scheme, 24,660,000 units of SARs were granted to 118 employees of the Group at the exercise price of HKD3.92 per unit in December 2011. No shares will be issued under the Scheme and each SAR is notionally linked to one existing H share of the Company. Upon exercise of the SARs, a recipient will receive an amount of cash equal to the difference between the market share price of the relevant H share and the exercise price.
The SARs will have an exercise period of six years from the date of grant. Upon the satisfaction of certain performance conditions after the second, third and fourth anniversary of the date of grant, each one third of the SARs will become exercisable.
A dividend of RMB0.2 (equivalent to HKD0.25) (inclusive of applicable tax), a dividend of RMB 0.05(equivalent to HKD0.06) (inclusive of applicable tax), a dividend of RMB0.04 (equivalent to HKD0.05) (inclusive of applicable tax) and a dividend of RMB0.04 (equivalent to HKD0.05) (inclusive of applicable tax) per share was approved by the Company’s General Meeting on May 31, 2012, June 18, 2013, June 26, 2014 and 30 June, 2015 respectively (Note 46(b)), therefore, the exercise price for the SARs was adjusted to HKD3.51 per share in accordance with the predetermined formula stipulated in the Scheme.
The fair value of the liability for SARs is measured using the Black-Scholes option pricing model. The risk free rate, expected dividend yield and expected volatility of the share price are used as the inputs into the model. As at 31 December 2015, 24,660,000 units of SARs granted by the Company have all expired and correspondingly, the liability for SARs was RMB0.
| 50 | Supplementary information to the consolidated cash flow statement |
Non-cash transactions-acquisition of aircraft transactions | (i) | Introducing of aircraft |
During the year ended December 31, 2015,2019, aircraft introduced under leases amounted to RMB30,351 million (2018: aircraft acquired under finance leases amounted to RMB11,251RMB13,290 million, (2014: RMB19,163 million; 2013: RMB17,2682017: aircraft acquired under finance leases RMB17,283 million). 51 | (ii) | Acquisition of a joint venture through issuance of new shares |
During the year ended December 31, 2018, CSAH subscribed the new A shares (Note 49) of the Company with a cash consideration and the equity interests held in MTU, representing 50% of the total equity interests of MTU. The relatednon-cash equity transaction of financing activities amounted to RMB1,741 million (2017: nil). | (a) | The Group leased certain properties and buildings from CSAHCCSAH which were located in Guangzhou, Wuhan, and Haikou, etc. However, to the knowledge of the Group, such properties and buildings lack adequate documentation evidencing CSAHC’sCSAH’s rights thereto. Pursuant to the indemnification agreement dated May 22, 1997 between the Group and CSAH, CSAH has agreed to indemnify the Group against any loss or damage arising from any challenge of the Group’s right to use the certain properties and buildings. |
Pursuant to the indemnification agreement dated May 22, 1997 between the Group and CSAHC, CSAHC has agreed to indemnify the Group against any loss or damage arising from any challenge of the Group’s right to use such properties and buildings.
| (b) | The Group entered into certain agreements with CSAH in prior years to acquire certain land use right and buildings from CSAH. The change of business registration of such land use right and buildings are still in progress. CSAH issued letters of commitment to the Company, committing to indemnify the Group against any claims from third parties to the Group, or any loss or damage in the Group’s operation activities due to lack adequate documentation of the certain properties and buildings, without recourse to the Group. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS In addition, as disclosed in notes 21 and 23, the Group is applying title certificates for certain of the Group’s properties and land use rights certificates for certain properties and parcels of land. The Company is of the opinion that the use of and the conduct of operating activities at these properties and these parcels of land are not affected by the fact that the Group has not yet obtained the relevant certificates.
Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated) | 54 | 51 | Contingent liabilities (continued) |
| (c) | (b) | The Company and its subsidiary, Xiamen Airlines, entered into agreements with theircertain pilot trainees and certain banks to provide guarantees on personal bank loans amounting to RMB627RMB696 million (December 31, 2014: RMB6462018: RMB696 million) that can be drawn by the pilot trainees to finance their respective flight training expenses. As at December 31, 2015,2019, total personal bank loans of RMB454RMB275 million (December 31, 2014: RMB4862018: RMB318 million), under these guarantees, were drawn down from the banks. During the year, no payment has been made by the Group paid RMB4 million (2014: RMB2(2018: RMB1 million) to the banks due to the default of payments of certain pilot trainees. |
| 56 | (c) | The Company is engaged in International Court of Arbitration proceedings ("ICC arbitration proceedings") in London against a lessor SASOF TR-81 AVIATION IRELAND LIMITED, arising out of the redelivery of two Boeing 737 aircraft. The lessor has made various claims of approximately USD13 million in the arbitration proceedings relating to the redelivery condition of the aircraft, and the Company has counterclaimed against the lessor for the recovery of approximately USD9.8 million. The hearing in the ICC arbitration proceedings commenced in London on March 7, 2016 and will conclude on April 19, 2016, and the award of the Arbitral Tribunal is awaited. As of the date of this report, the Company cannot reasonably predict the result and potential financial impact of this pending arbitration, if any. Therefore, no additional provision has been made against this pending arbitration.Comparative figures |
The Group has initially applied IFRS 16 at January 1, 2019 using the modified retrospective approach. Under this approach, comparative information is not restated. Further details of the changes in accounting policies are disclosed in Note 2(b). The Group has initially applied IFRS 15 and IFRS 9 at January 1, 2018. Under the transition methods chosen, comparative information is not restated. Further details of the changes in accounting policies are disclosed in Note 2(b). | 57 | (d) | With regard to the investigation of the Company’s former chairman as a result of suspected severe disciplinary violation of Communist Party rules and regulations, management of the Company and the internal audit of the Company under the direction of the Audit Committee, have carried out a robust assessment by taking into consideration the fact that the former chairman was a non-executive director and has not been involved in the operation of the Company. Based on the work carried out, we have not identified any possible material misstatements of the financial statements or impact on the internal control over financial reporting caused by the incident. |
| 52 | Immediate and ultimate controlling party |
As at December 31, 2015,2019, the Directors of the Company consider the immediate parent and ultimate controlling party of the Group to be CSAHC,CSAH, a state-owned enterprise established in the PRC. CSAHC does not produce financial statements available for public use. | 58 | 53 | Subsequent eventsApproval of financial statements |
| (a) | On February 2, 2016, the Company entered into the “Equity Transfer Agreement between China Southern Airlines Company Limited and China Southern Air Holding Company in relation to transfer of 100% equity interest in Southern Airlines (Group) Import and Export Trading Company” with CSAHC, the controlling shareholder of the Company, pursuant to which the Company agreed to acquire 100% equity interest in Southern Airlines (Group) Import and Export Trading Company at a consideration of RMB400,570,400. |
| (b) | On March 7, 2016, the Group has completed the issuance of the 2016 Corporate Bonds (Frist Tranche) with nominal value of RMB5 billion for a term of three years and at nominal interest rate of 2.97%. |
| (c) | On March 8, 2016, the Board approved that, Xiamen Airlines shall make an application to the National Association of Financial Market Institutional Investors for the registration and issuance of ultra-short-term financing bills with the aggregate maximum principal amount of RMB10 billion. The term of this issuance shall be no more than one year. The issuance of ultra-short-term financing is subject to the registration with the National Association of Financial Market Institutional Investors. |
Notes to the consolidated financial statements were approved by the Board of Directors on April 28, 2020.
(Prepared in accordance with International Financial Reporting Standards)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | 59 | 54Non-adjusting
| Remuneration of directors, supervisors and senior management events after the financial year end |
| (a) | (a)On October 30, 2019, the Company entered into the A Share Subscription Agreement with CSAH, pursuant to which the Company is to issue not more than 2,453,434,457 (inclusive) new A Shares to CSAH (“the A Share Issuance”). The total funds to be raised from the A Share Issuance will be not more than RMB16,800 million (inclusive). In the meantime, the Company entered into the H Share Subscription Agreement with Nan Lung (a wholly-owned subsidiary of CSAH), pursuant to which the Company is to issue not more than 613,358,614 (inclusive) new H shares (“the H Share Issuance”). The total funds to be raised from the H Share Issuance will be not more than HKD3,500 million (inclusive). The consideration of A and H shares will be satisfied by cash. Both of the A Share Issuance and the H Share Issuance were approved by the Extraordinary General Meeting and the respective Class Meetings on December 27, 2019. The Company received the “Acceptance Notice of the Application for Administration Permission” issued by China Securities Regulatory Commission (“CSRC”) for the A Share Issuance and H share Issuance on 6 January 2020 and 11 February 2020, respectively. The H Share Issuance has been completed on April 15, 2020. On April 24, 2020, the Issuance Examination Committee of the CSRC reviewed the application for the A Share Issuance and informed the Company that the Company’s application for the A Share Issuance was approved. Up to the issuance date of these financial statements, the Company had not received the written approval of A Share Issuance from the CSRC. |
| (b) | TheCOVID-19 outbreak (the “Outbreak”) since early 2020 has brought about uncertainties in the Group’s operating environment and has impacted the Group’s operations and financial position. The Group’s revenue tonne kilometers for the first three months of 2020 has decreased by approximately 45% as compared to the same period of 2019. The Group estimates the Outbreak will have an adverse impact on the Group’s business operation and operating revenue for the year 2020, which casts uncertainties in the Group’s operating environment. The Group has been closely monitoring the impact of the developments on the Group’s business and has put in place contingency measures. These contingency measures include: temporarily reducing the numbers of flights of certain routes, provisionally suspending certain domestic and international routes according to the travel restrictions of related countries and regions. Based on the Group’s actual performance in the first three months of 2020, contingent measures put in place and unutilized available banking facilities (Note 4(a)), etc., the Directors of the Company have carried out a review of the cash flow forecast of the Group for the eighteen months period after the balance sheet date. Based on such forecast, the Directors of the Company believe that adequate funding will be available for the working capital and capital expenditure requirements of the Group during that period. Up to the issuance date of these financial statements, the Outbreak hasn’t ended and the Group cannot reasonably estimate its impact on the business operation and financial performance. The Group will proactively keep contingency measures under review as the situation evolves. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | 60 | Directors’ and supervisors’ remunerationemoluments |
DetailsThe remuneration of directors’every director and supervisors’ remunerationsupervisor for the year ended December 31, 2015 are2019 is set out below:
| Name | | Directors’
fees | | | Salaries, wages
and welfare | | | Retirement
scheme
contributions | | | Total | | | | | RMB
thousand | | | RMB
thousand | | | RMB
thousand | | | RMB
thousand | | | | | | | | | | | | | | | | | Non-executive directors | | | | | | | | | | | | | | | | | | Wang Quan Hua (Note (i) & (ii)) | | | - | | | | - | | | | - | | | | - | | | Yuan Xin An (Note (i)) | | | - | | | | - | | | | - | | | | - | | | Yang Li Hua (Note (i)) | | | - | | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | | | | | Executive directors | | | | | | | | | | | | | | | | | | Tan Wan Geng (Note (i)) | | | - | | | | - | | | | - | | | | - | | | Zhang Zi Fang (Note (i)) | | | - | | | | - | | | | - | | | | - | | | Li Shao Bin | | | - | | | | 636 | | | | 137 | | | | 773 | | | | | | | | | | | | | | | | | | | | | Supervisors | | | | | | | | | | | | | | | | | | Pan Fu (Note (i)) | | | - | | | | - | | | | - | | | | - | | | Li Jia Shi | | | - | | | | 636 | | | | 139 | | | | 775 | | | Zhang Wei (Note (i)) | | | - | | | | - | | | | - | | | | - | | | Yang Yi Hua | | | - | | | | 240 | | | | 92 | | | | 332 | | | Wu De Ming | | | - | | | | 451 | | | | 140 | | | | 591 | | | | | | | | | | | | | | | | | | | | | Independent non-executive directors | | | | | | | | | | | | | | | | | | Ning Xiang Dong | | | 150 | | | | - | | | | - | | | | 150 | | | Liu Chang Le | | | 150 | | | | - | | | | - | | | | 150 | | | Tan Jin Song | | | 150 | | | | - | | | | - | | | | 150 | | | Wei Jin Cai (Note (iii)) | | | 75 | | | | - | | | | - | | | | 75 | | | Guo Wei (Note (iv)) | | | 75 | | | | - | | | | - | | | | 75 | | | Jiao Shu Ge (Note (iv)) | | | 75 | | | | - | | | | - | | | | 75 | | | | | | 675 | | | | 1,963 | | | | 508 | | | | 3,146 | |
| | | | | | | | | | | | | | | | | | | | | | Name | | Directors’ fees | | | Salaries,
wages
and
welfare | | | Housing
allowance | | | Employer’s
contribution
to a
retirement
benefit
scheme | | | Total | | | | | RMB ’000 | | | RMB ’000 | | | RMB ’000 | | | RMB ’000 | | | RMB ’000 | | Executive directors | | | | | | | | | | | | | | | | | | | | | Wang Chang Shun (Note (i)) | | | — | | | | — | | | | — | | | | — | | | | — | | Ma Xu Lun (Note (i)&(iii)) | | | — | | | | — | | | | — | | | | — | | | | — | | Han Wen Sheng (Note (i)&(iii)) | | | — | | | | — | | | | — | | | | — | | | | — | | Zhang Zi Fang (Note (i)&(iv)) | | | — | | | | — | | | | — | | | | — | | | | — | | Supervisors | | | | | | | | | | | | | | | | | | | | | Pan Fu (Note (i)&(iv)) | | | — | | | | — | | | | — | | | | — | | | | — | | Li Jia Shi (Note (ii)) | | | — | | | | — | | | | — | | | | — | | | | — | | Mao Juan | | | — | | | | 712 | | | | — | | | | 129 | | | | 841 | | Lin Xiao Chun (Note (iii)) | | | — | | | | 367 | | | | — | | | | 90 | | | | 457 | | Independentnon-executive directors | | | | | | | | | | | | | | | | | | | | | Tan Jin Song | | | 150 | | | | — | | | | — | | | | — | | | | 150 | | Jiao Shu Ge | | | 150 | | | | — | | | | — | | | | — | | | | 150 | | Zheng Fan (Note (vi)) | | | 60 | | | | — | | | | — | | | | — | | | | 60 | | Gu Hui Zhong (Note (vi)) | | | 60 | | | | — | | | | — | | | | — | | | | 60 | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated) | 60 | 54 | Remuneration of directors, supervisors and senior management (continued) |
| (a) | Directors’ and supervisors’ remunerationemoluments (continued) |
DetailsThe remuneration of directors’every director and supervisors’ remunerationsupervisor for the year ended December 31, 2014 are2018 is set out below:
| Name | | Directors’
fees | | | Salaries, wages
and welfare | | | Retirement
scheme
contributions | | | Total | | | | | RMB
thousand | | | RMB
thousand | | | RMB
thousand | | | RMB
thousand | | | | | | | | | | | | | | | | | Non-executive directors | | | | | | | | | | | | | | | | | | Wang Quan Hua(Note (i) & (ii)) | | | - | | | | - | | | | - | | | | - | | | Yuan Xin An (Note (i)) | | | - | | | | - | | | | - | | | | - | | | Yang Li Hua (Note (i)) | | | - | | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | | | | | Executive directors | | | | | | | | | | | | | | | | | | Tan Wan Geng (Note (i)) | | | - | | | | - | | | | - | | | | - | | | Zhang Zi Fang (Note (i)) | | | - | | | | - | | | | - | | | | - | | | Li Shao Bin | | | - | | | | 636 | | | | 130 | | | | 766 | | | | | | | | | | | | | | | | | | | | | Supervisors | | | | | | | | | | | | | | | | | | Pan Fu (Note (i)) | | | - | | | | - | | | | - | | | | - | | | Li Jia Shi | | | - | | | | 636 | | | | 132 | | | | 768 | | | Zhang Wei (Note (i)) | | | - | | | | - | | | | - | | | | - | | | Yang Yi Hua | | | - | | | | 294 | | | | 140 | | | | 434 | | | Wu De Ming | | | - | | | | 367 | | | | 140 | | | | 507 | | | | | | | | | | | | | | | | | | | | | Independent non-executive directors | | | | | | | | | | | | | | | | | | Wei Jin Cai (Note (iii)) | | | 150 | | | | - | | | | - | | | | 150 | | | Ning Xiang Dong | | | 150 | | | | - | | | | - | | | | 150 | | | Liu Chang Le | | | 150 | | | | - | | | | - | | | | 150 | | | Tan Jin Song | | | 150 | | | | - | | | | - | | | | 150 | | | | | | 600 | | | | 1,933 | | | | 542 | | | | 3,075 | |
| | | | | | | | | | | | | | | | | | | | | | Name | | Directors’ fees | | | Salaries,
wages
and
welfare | | | Housing
allowance | | | Employer’s
contribution
to a
retirement
benefit
scheme | | | Total | | | | | RMB ’000 | | | RMB ’000 | | | RMB ’000 | | | RMB ’000 | | | RMB ’000 | | Executive directors | | | | | | | | | | | | | | | | | | | | | Wang Chang Shun (Note (i)) | | | — | | | | — | | | | — | | | | — | | | | — | | Tan Wan Geng (Note (i) & (v)) | | | — | | | | — | | | | — | | | | — | | | | — | | Zhang Zi Fang (Note (i) & (iv)) | | | — | | | | — | | | | — | | | | — | | | | — | | Supervisors | | | | | | | | | | | | | | | | | | | | | Pan Fu (Note (i) & (iv)) | | | — | | | | — | | | | — | | | | — | | | | — | | Li Jia Shi (Note (ii)) | | | — | | | | 84 | | | | — | | | | 12 | | | | 96 | | Mao Juan | | | — | | | | 658 | | | | — | | | | 124 | | | | 782 | | Independentnon-executive directors | | | | | | | | | | | | | | | | | | | | | Tan Jin Song | | | 150 | | | | — | | | | — | | | | — | | | | 150 | | Jiao Shu Ge | | | 150 | | | | — | | | | — | | | | — | | | | 150 | | Zheng Fan (Note (vi)) | | | — | | | | — | | | | — | | | | — | | | | — | | Gu Hui Zhong (Note (vi)) | | | 60 | | | | — | | | | — | | | | — | | | | 60 | |
Notes to the consolidated financial statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated) | 60 | 54 | Remuneration of directors, supervisors and senior management (continued) |
| (a) | Directors’ and supervisors’ remunerationemoluments (continued) |
DetailsThe remuneration of directors’every director and supervisors’ remunerationsupervisor for the year ended December 31, 2013 are2017 is set out below:
| Name | | Directors’
fees | | | Salaries, wages
and welfare | | | Retirement
scheme
contributions | | | Total | | | | | RMB
thousand | | | RMB
thousand | | | RMB
thousand | | | RMB
thousand | | | | | | | | | | | | | | | | | Non-executive directors | | | | | | | | | | | | | | | | | | Wang Quan Hua (Note (i) & (ii)) | | | - | | | | - | | | | - | | | | - | | | Yuan Xin An (Note (i)) | | | - | | | | - | | | | - | | | | - | | | Yang Li Hua (Note (i)) | | | - | | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | | | | | Executive directors | | | | | | | | | | | | | | | | | | Tan Wan Geng (Note (i)) | | | - | | | | - | | | | - | | | | - | | | Zhang Zi Fang (Note (i)) | | | - | | | | - | | | | - | | | | - | | | Li Shao Bin | | | - | | | | 639 | | | | 120 | | | | 759 | | | | | | | | | | | | | | | | | | | | | Supervisors | | | | | | | | | | | | | | | | | | Pan Fu (Note (i)) | | | - | | | | - | | | | - | | | | - | | | Li Jia Shi | | | - | | | | 636 | | | | 120 | | | | 756 | | | Zhang Wei (Note (i)) | | | - | | | | - | | | | - | | | | - | | | Yang Yi Hua | | | - | | | | 291 | | | | 122 | | | | 413 | | | Liang Zhong Gao | | | - | | | | 300 | | | | 122 | | | | 422 | | | Wu De Ming | | | - | | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | | | | | Independent non-executive directors | | | | | | | | | | | | | | | | | | Gong Hua Zhang | | | 150 | | | | - | | | | - | | | | 150 | | | Wei Jin Cai(Note (iii)) | | | 150 | | | | - | | | | - | | | | 150 | | | Ning Xiang Dong | | | 150 | | | | - | | | | - | | | | 150 | | | Liu Chang Le | | | 150 | | | | - | | | | - | | | | 150 | | | Tan Jin Song | | | - | | | | - | | | | - | | | | - | | | | | | 600 | | | | 1,866 | | | | 484 | | | | 2,950 | |
| | | | | | | | | | | | | | | | | | | | | | Name | | Directors’ fees | | | Salaries,
wages
and
welfare | | | Housing
allowance | | | Employer’s
contribution
to a
retirement
benefit
scheme | | | Total | | | | | RMB ’000 | | | RMB ’000 | | | RMB ’000 | | | RMB ’000 | | | RMB ’000 | | Non-executive directors | | | | | | | | | | | | | | | | | | Yuan Xin An (Note (i) & (vii)) | | | — | | | | — | | | | — | | | | — | | | | — | | Yang Li Hua (Note (i) & (vii)) | | | — | | | | — | | | | — | | | | — | | | | — | | Executive directors | | | | | | | | | | | | | | | | | | | | | Wang Chang Shun (Note (i) & (x)) | | | — | | | | — | | | | — | | | | — | | | | — | | Tan Wan Geng (Note (i)) | | | — | | | | — | | | | — | | | | — | | | | — | | Zhang Zi Fang (Note (i)) | | | — | | | | — | | | | — | | | | — | | | | — | | Li Shao Bin (Note (vii)) | | | — | | | | 812 | | | | — | | | | 123 | | | | 935 | | Supervisors | | | | | | | | | | | | | | | | | | | | | Pan Fu (Note (i)) | | | — | | | | — | | | | — | | | | — | | | | — | | Li Jia Shi | | | — | | | | 901 | | | | — | | | | 126 | | | | 1,027 | | Zhang Wei (Note (i) & (vii)) | | | — | | | | — | | | | — | | | | — | | | | — | | Yang Yi Hua (Note (vii) & (ix)) | | | — | | | | — | | | | — | | | | — | | | | — | | Wu De Ming (Note (vii)) | | | — | | | | 419 | | | | — | | | | 127 | | | | 546 | | Mao Juan (Note (viii)) | | | — | | | | 324 | | | | — | | | | 120 | | | | 444 | | Independent non-executive directors | | | | | | | | | | | | | | | | | | | | | Ning Xiang Dong (Note (vii)) | | | 150 | | | | — | | | | — | | | | — | | | | 150 | | Liu Chang Le (Note (vii)) | | | 150 | | | | — | | | | — | | | | — | | | | 150 | | Tan Jin Song | | | 150 | | | | — | | | | — | | | | — | | | | 150 | | Guo Wei (Note (vii)) | | | 150 | | | | — | | | | — | | | | — | | | | 150 | | Jiao Shu Ge | | | 150 | | | | — | | | | — | | | | — | | | | 150 | | Zheng Fan (Note (viii)) | | | — | | | | — | | | | — | | | | — | | | | — | | Gu Hui Zhong (Note (viii)) | | | — | | | | — | | | | — | | | | — | | | | — | |
Save as disclosed above, the Company's non-excecutive director, Mr. Si Xian Min resigned on January 15, 2016. For the years ended December 31, 2015, 2014 and 2013, Mr. Si Xian Min did not receive any remuneration for his service in the capacity of the non-excecutive director of the Company. He also held management positions in CSAHC and his salary were borne by CSAHC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS The Company’s executive director, Mr. Xu Jie Bo resigned on January 5, 2015. For the year ended December 31, 2014, Mr. Xu Jie Bo’s total remuneration was RMB766 thousand, including salaries, wages and welfare of RMB636 thousand and retirement scheme of RMB130 thousand. For the year ended December 31, 2013, Mr. Xu Jie Bo’s total remuneration was RMB757 thousand, including salaries, wages and welfare of RMB636 thousand and retirement scheme of RMB121 thousand.
Notes to the consolidated financial statements
(Prepared in accordance with International Financial Reporting Standards)
(Expressed in Renminbi unless otherwise indicated) | 60 | 54 | Remuneration of directors, supervisors and senior management (continued) |
| (a) | Directors’ and supervisors’ remunerationemoluments (continued) |
Notes: | (i) | These directors or supervisors did not receive any remuneration for their services in the capacity of the directors or supervisors of the Company. They also held management positions in CSAHCCSAH and their salaries were borne by CSAHC.CSAH. |
| (ii) | Mr. Li Jia Shi did not receive any remuneration for his service in the capacity of the supervisor of the Company since February 1, 2018. He also held management position in CSAH and his salary was borne by CSAH. |
| (iii) | Appointed on May 8, 2019. |
| (iv) | Resigned on May 8, 2019. |
| (v) | Mr. Tan Wan Geng was an executive director of the Company before November 30, 2018, and resigned from the Company on November 30, 2018. |
| (vi) | Mr. Zheng Fan and Mr. Gu Hui Zhong receive remuneration in accordance with the relevant provisions of the PRC. |
| (vii) | Resigned on December 20, 2017. |
| (viii) | Appointed on December 20, 2017. |
| (ix) | Ms. Yang Yi Hua retired in September 2015, while still served as supervisor before December 20, 2017. Ms. Yang Yi Hua did not receive any remuneration for her service in the capacity of the supervisor of the Company since September 2015. |
| (x) | Mr. Wang Chang Shun was a non-executive director of the Company before December 20, 2017 and was appointed to be the executive director since December 20, 2017. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in Renminbi unless otherwise indicated) | 61 | (ii) | Resigned on 25 March 2015.Possible impact of amendments, new standards and interpretations issued but not yet effective for the year ended December 31, 2019 |
Up to the date of issue of these financial statements, the IASB has issued a number of amendments, new standards and interpretations which are not yet effective for the year ended December 31, 2019 and which have not been adopted in these financial statements. These include the following which may be relevant to the Group. | (iii) | Resigned on 30 June 2015. | | |
| | (iv) | AppointedEffective for accounting periods
beginning on 30 June 2015.or after | | Amendments to IFRS 3, Definition of a business | | | January 1, 2020 | | Amendments to IAS 1 and IAS 8, Definition of material | | | January 1, 2020 | |
The Group is in the process of making an assessment of what the impact of these developments is expected to be in the period of initial application. So far it has concluded that the adoption of them is unlikely to have a significant impact on the consolidated financial statements. |
|
