Shandong Airlines Co., Ltd. Summary of Annual Report 2016 Shandong Airlines Co., Ltd.
Summary of Annual Report 2016
1. Important Notice
The summary is abstract from full-text of annual report, for more details of operating results, financial condition and future development plan of the Company; investors should found in the full-text of annual report that published on media appointed by CSRC.
Other directors attending the Meeting for annual report deliberation except for the followed:
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|-|-|-|-|
|Name of director absent|Title for absent director|Reasons for absent|Attorney|
|Wang Mingyuan|Director|Work causes|Xu Chuanyu|

The profit distribution plan that deliberated and approved by the Board is: based on total stock issued 400,000,000 shares, distributed 3.0 Yuan (tax included) bonus in cash for every 10-share hold by all shareholders, 0 shares bonus issued (tax included) and no capitalizing of common reserves carried out.
II. Basic information of the company
1. Company profile
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|-|-|-|-|-|
|Short form of the stock|Shanhang-B|Stock code||200152|
|Stock exchange for listing|Shenzhen Stock Exchange||||
|Person/Way to contact|Secretary of the Board||Rep. of security affairs||
|Name|Dong Qiantang||Fan Peng||
||1/F, Tiangong Office Building, North ofRed-crowed cranes Hotel, YaoqiangInternational Airlines, Licheng District,Jinan, Shandong||3/F, Tiangong Office Building, North ofRed-crowed cranes Hotel, YaoqiangInternational Airlines, Licheng District,Jinan, Shandong||
|Office add.|||||
|Fax.|0531-85698767 ext.8679||0531-85698767 ext.8679||
|Tel.|0531-82085939||0531-82085586||
|E-mail|dongqt@shandongair.com.cn||fanp@shandongair.com.cn||

2. Main business or product introduction in the reporting period
Our Company and its subsidiaries are mainly engaged in provision of airline transportation service.
As of the end of 2016, the Company has 100 airplanes like Boeing B737 series, and enters into the ranks of large airlines. At present, the Company takes Jinan as the headquarters base, and sets up five branches (base) in Qingdao, Yantai, Xiamen, Chongqing, and Beijing, establishes four flight bases in Urumqi, Guiyang, Kunming, and Haikou, builds an airline network which cuts through south and north and connects east to west, and builds the triangle base pattern among Shandong, Xiamen, and Chongqing. The Company elaborately creates the "honest and kind" brand characteristics, which is increasingly blending in the enterprise blood along with the growth of fleet size and airline network. The Company has been awarded the title of the “most valuable top 500 brands of China” for successive nine years. In 2016, the brand value of the Company increased by RMB 5.313 billion as compared to previous year to RMB 28.528 billion, making it rank No.101 among the most valuable top 500 brands of China, with 4 positions improved than last year.
3. Main accounting data and financial indexes
(1) Main accounting data and financial indexes for recently three years
In RMB
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|-|-|-|-|-|
||2016|2015|Changes over last year|2014|
|Operating income|13,742,365,545.56|12,108,963,139.11|13.49%|11,570,296,757.48|

Shandong Airlines Co., Ltd. Summary of Annual Report 2016
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|-|-|-|-|-|
|Net profit attributable to|532,834,567.17|532,260,993.04|||
||||0.11%|287,851,542.09|
|shareholders of the listed company|||||
|Net profit attributable to|||||
|shareholders of the listed company|||||
||409,577,360.28|387,733,814.57|5.63%|146,403,043.43|
|after deducting non-recurring gains|||||
|and losses|||||
|Net cash flow arising from|2,427,055,988.42|2,424,457,843.01|||
||||0.11%|1,459,828,215.31|
|operating activities|||||
|Basic earnings per share|1.33|1.33|||
||||0.00%|0.72|
|(RMB/Share)|||||
|Diluted earnings per share|1.33|1.33|||
||||0.00%|0.72|
|(RMB/Share)|||||
||||2.34 percentage points||
|Weighted average ROE|14.88%|17.22%||10.33%|
||||down||
||||Changes over end of||
||End of 2016|End of 2015||End of 2014|
||||last year||
|Total assets|12,741,974,788.53|12,748,902,597.96|-0.05%|12,118,867,620.51|
|Net assets attributable to|3,836,172,828.06|3,365,013,204.57|||
||||14.00%|2,878,120,380.35|
|shareholder of listed company|||||

(2) Quarterly main financial index
In RMB
||||||
|-|-|-|-|-|
||First quarter|Second quarter|Third quarter|Fourth quarter|
|Operating income|3,219,038,263.72|3,090,711,026.50|4,281,345,876.23|3,151,270,379.11|
|Net profit attributable to|245,104,203.92|38,585,284.73|561,083,160.10|-311,938,081.58|
|shareholders of the listed company|||||
|Net profit attributable to|211,053,323.68|-8,590,154.76|543,592,573.16|-336,478,381.80|
|shareholders of the listed company|||||
|after deducting non-recurring gains|||||
|and losses|||||
|Net cash flow arising from|269,904,370.90|754,591,361.32|1,307,244,115.90|95,316,140.30|
|operating activities|||||

4. Shares and shareholders
(1) Particulars about common stock shareholders, preference shareholders with voting rights recovered and top ten shareholders
In Share
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|-|-|-|-|-|-|-|-|-|-|-|-|-|
||||||||||Total preference||||
|Total common||Total common||||Total preferenceshareholders with|||||||
||||||||||shareholders with||||
|stock||stock shareholders|||||||||||
||||||||||voting rights recovered||||
|shareholders in|15,801|at end of last month|||15,759|voting rights||0||||0|
||||||||||at end of last month||||
|reporting||before annual||||recovered at end ofreporting period|||||||
||||||||||before annual report||||
|period-end||report disclosed|||||||||||
||||||||||disclosed||||
|Top ten shareholders|||||||||||||
|||||||Amount of|Amount of restricted|||Number of shares|||
||||Nature of|Proportion of|||||||||
|Full name of Shareholders||||||||||pledged/frozen|||
||||shareholder|shares held||shares held|shares held||||||
|||||||||||State of share|Amount||
|Shandong Aviation Group|||State-ownedlegal person|42.00%||168,004,000|168,004,000||||||
|Air China Limited|||State-ownedlegal person|22.80%||91,200,000|91,200,000||||||
|BBH A/C VANGUARD|||Foreign legal|0.74%||2,960,917|0||||||

Shandong Airlines Co., Ltd. Summary of Annual Report 2016
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|-|-|-|-|-|
|EMERGING MARKETSSTOCK INDEX FUND|person||||
|NORGES BANK|Foreign legalperson|0.63%|2,520,800|0|
|WANXIANGINTERNATIONALINVESTMENTCORPORATION|Foreign legalperson|0.62%|2,490,000|0|
|侯春虎|Domesticnature person|0.41%|1,651,345|0|
|VANGUARD TOTALINTERNATIONAL STOCKINDEX FUND|Foreign legalperson|0.40%|1,582,720|0|
|陈经建|Domesticnature person|0.38%|1,519,400|0|
|姚明|Domesticnature person|0.33%|1,300,000|0|
|叶渠发|Domesticnature person|0.30%|1,180,169|0|
|||1. Shandong Aviation Group(SDA) is the first largest shareholder of the|||
|||Company, who holds the shares of the Company on behalf of the State with|||
|||unlisted shares;|||
|||2. Air China Limited is the second largest shareholder of the Company, who|||
|Explanation on related relationship or concerted||holds the shares of the Company on behalf of the State with unlisted shares;|||
|action among the abovementioned shareholders||3. Among the above top ten shareholders, Air China Limited is the first largest|||
|||shareholder of the SDA, and there exists no associated relationship between SDA|||
|||and Air China and the other shareholders, and they don’t belong to the consistent|||
|||actionist regulated by the Management Regulation of Information Disclosure on|||
|||Change of Shareholding for Listed Companies with the other shareholders.|||

 (2) Total preferred stock shareholders of the Company and shares held by top ten shareholders with preferred stock held
The Company had no shareholders with preferred stock held in the reporting.
(3) Property right and controlling relationships between the actual controllers of the Company and the Company is as follows:
Shandong Aviation Group
42%
Shandong Airlines Co., Ltd.
5. Corporate bonds
Not applicable
III. Discussion and analysis of business
1. Introduction of operation in the reporting period
Investors are advice to reading full text of the Annual Report, and pay attention to the follow risks
The security situation remained stable in year of 2016, operating quality continues to improve, main business maintain profitability
and service quality improved steadily, operation business are achieved the targets that predicted as a whole.
(I) continue to deepen security management
Shandong Airlines Co., Ltd. Summary of Annual Report 2016 In 2016, transportation segment, our principal business, has guaranteed 170,100 safe flights for 353,000 hours, representing increases of12.5% and9.5% respectively as compared to previous year. There is no civil aircraft incident or worse occurred due to the reason of the Company or external engagement. Safety quality evaluation indicator was 10.29. The Company continues to improve its security management policy, innovate a safety supervision mechanism, strengthen the safety production capacity and pay close attention to safety style rectification.
(II) Optimized and improve the operation control and decision-making mechanism
Our punctuation rate throughout the year was80.09%, representing an increase of 6.95 percentage points over last year, ranking the 2nd position among the major airline companies. 42 flights for significant missions and special III (inclusive) were ensured, with punctuation rate of98%. The Company reinforce management of flight normality, the normal rate for first flight in the whole year achieved as88%; optimized the operation decision-making mechanism, actively implement technological innovation. Implemented 143 times HUD LVTO in the whole year, and realized the effective support of technical factors to operation efficiency.
(III) Drive on structure optimization and cost control
In 2016, we completed a total turnover of 2.667 billion tons per kilometer, total passengers of 19.205 million and freights transportation of 155,600 tons, representing increases of19.6%,14.0% and8.9% respectively. In addition, we realized operating income of RMB 13.742 billion, representing an increase of13.49% year on year; total profit of RMB 709 million, representing a decrease of0.23% year on year. The occupation rate of our passenger flights was77.90%, with an increase of 2.02 percentage points year on year, the loading rate of freight flights was40.94%, with an increase of 5.36 percentage points year on year. The Company strengthen organization of production resources, positively advancing construction of direct marketing channel, and digging deep into customer value, actively winning synergize, achieved cost advantage strategy, innovation development ability of the investment enterprise is enhanced.
(IV) Promoting service quality and brand building
The overall comment on passenger satisfaction investigation reached at 96.33, increasing 2.17 points year on year.Customer’s effective complain rate was 0.165 per ten thousand people. We are ranking fourth in aspect of services in the civil aviation authoritative media, and honor the prize of Best Airline in Civil Aviation Service. The Company honor theChina’s 500 Most Valuable Brands for nine consecutive years with brand value up to over 28.528 billion Yuan, a 5313 million Yuan grown over last year, ranked 4 to enhance the ranking of the top 101st. Optimized the service management mechanism, continue to building the quality service brand-Lu Yan, and vigorously promote the construction of service team.
2. Whether the main business had major change in the reporting period
□ Yes√ No
3. About the industries, products, or regions accounting for over10% of thecompany’s operating income or operating profit
√Applicable□Not applicable
In RMB
||||||||
|-|-|-|-|-|-|-|
|||||Increase/decrease|Increase/decrease|Increase/decrease|
||||Gross profit||||
|Name|Operating revenue|Operating cost||of operating|of operating cost|of gross profit|
||||ratio||||
|||||revenue y-o-y|y-o-y|ratio y-o-y|
|Air transport||||||3.34 percentage|
||13,301,825,036.11|1,490,630,519.81|11.21%|12.21%|16.60%||
|service||||||points down|

 4. Whether the characteristics of management seasonal or cyclical need special attention
□ Yes√ No
5. In the reporting period, note of major changes in operating income, operating cost, total net profit attributable to common stock shareholders of listed company or composing the previous reporting period□ Applicable√ Not applicable
6. Particular about suspended and delisting
□ Applicable√ Not applicable
7. Relevant items involving financial report
(1) Particulars about the changes in aspect of accounting policy, estimates and calculation method
compared with the financial report of last year
No particulars about the changes in aspect of accounting policy, estimates or calculation method in Period.
Shandong Airlines Co., Ltd. Summary of Annual Report 2016 (2) Major accounting errors within reporting period that needs retrospective restatement
No major accounting errors within reporting period that needs retrospective restatement for the Company in the period.
(3) Compare with lastyear’s financial report; explain changes in consolidationstatement’s scope
No changes in consolidationstatement’s scope for the Company in the period.