Subsequent to the 1996 revaluation, the property, plant and equipment of the Group are carried at revalued amount, being the fair value at the date of the revaluation less any subsequent accumulated depreciation and impairment losses. Revaluation is performed periodically to ensure that the carrying amount does not differ materially from which would be determined using fair value at the balance sheet date. Based on a revaluation performed as of 30 September 2005, by a firm of independent valuers, on a depreciated replacement cost basis, and a further assessment performed as of 31 December 2008 by the directors, the carrying amount of property, plant and equipment as at 31 December 2008 did not differ materially from their fair value.
At 31 December 2008, the carrying amount of the revalued property, plant and equipment approximated their historical carrying value had they been stated at cost less accumulated depreciation and impairment losses.
(e)  
As at 31 December 2008, certain aircraft and land of the Group and the Company with an aggregate carrying value of approximately RMB29,321 million and RMB24,129 million, respectively (2007: RMB32,976 million and RMB28,365 million, respectively) were mortgaged under certain loan and lease agreements (Notes 32 and 34).

(f)  
The Group leased out investment properties and certain flight training facilities under operating leases. The leases typically run for an initial period of five to fifteen years, with an option to renew the lease after that date at which time all terms are renegotiated. None of the leases includes contingent rentals. In this connection, rental income totalling RMB54 million (2007: RMB49 million) was received by the Group during the year in respect of the leases.

All properties held under operating leases that would otherwise meet the definition of investment property are classified as investment property.
ANNUAL REPORT 2008
88 ANNUAL REPORT 2008

ANNUAL REPORT 2008
90 ANNUAL REPORT 2008

Notes to the Financial Statements
(Prepared in accordance with International Financial Reporting Standards) (Expressed in Renminbi)
22 INTEREST IN ASSOCIATES
Share of net assets
The Group
2008 2007 RMB million RMB million
235 219
The Company 2008 2007 RMB million RMB million
Unlisted capital contributions, at cost 439 410
Less: impairment loss (311) (248)

128 162
In the Company’s balance sheet, a provision for impairment loss of RMB311 million was recorded on 31 December 2008 (2007: RMB248 million) in respect of investments in certain associates in which their carrying amounts were determined to be not fully recoverable.
The details of the Group’s principal associates are set out in Note 57, all of which are unlisted corporate entities.
ANNUAL REPORT 2008

94 ANNUAL REPORT 2008

Notes to the Financial Statements
(Prepared in accordance with International Financial Reporting Standards) (Expressed in Renminbi)

95
ANNUAL REPORT 2008

Notes to the Financial Statements
(Prepared in accordance with International Financial Reporting Standards) (Expressed in Renminbi)
26 DEFERRED TAX ASSETS/(LIABILITIES) (cont’d)
(b) Deferred tax assets not recognised (cont’d)
At 31 December 2008, the Group’s and the Company’s deductible temporary differences relating to the accrued expenses and provision for impairment losses amounting to RMB2,627 million (2007: Nil) and RMB2,597 million (2007: Nil) respectively have not been recognised 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 carry forward to set off future PRC assessable income for a maximum period of five years. The Group and the Company has not recognised deferred tax assets of RMB658 million (2007: RMB92 million) and RMB493 million (2007: Nil) respectively in respect of their corresponding unused tax losses of RMB3,251 million (2007: RMB401 million) and RMB2,550 million (2007: Nil) respectively, as it was determined by management that it is not probable that future taxable profits against which the losses can be utilised will be available before they expire. The expiry dates of unrecognised unused tax losses are analysed as follows:
　
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