Konka Group Co., Ltd.
FINANCIAL REPORT
For the Six Months Ended 30 June 2017
（Un-audited）
Contents
Balance Shhet
Income Statement
Cash Flow Statement
Statement of Changes in Owners' Equity
Notes to Accounting Statements
Legal representative: Liu Fengxi
Head of the accounting work:Li Chunlei
Head of the accounting department: Feng Junxiu
English Translation for Reference Only. Should there be any discrepancy between the two versions,
the Chinese version shall prevail.
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2017 Semi-annual Report of Konka Group Co., Ltd.
I. Auditor’s Report
Whether the semi-annual report has been audited?
□Yes √ No
The semi-annual report of the Company has not been audited.
II. Financial Statements
The unit of the financial statements attached: RMB
1. Consolidated Balance Sheet
Prepared by Konka Group Co., Ltd.
June 30, 2017
Unit: RMB
Item Closing balance Opening balance
Current assets:
Monetary funds 2,490,079,604.07 2,617,606,256.42
Settlement reserve
Interbank lendings
Financial assets at fair value through profit/loss 174,029,426.65 252,084,994.12
Derivative financial assets
Notes receivable 2,429,438,978.77 2,871,633,498.82
Accounts receivable 1,966,918,540.02 2,307,965,548.49
Accounts paid in advance 739,601,586.38 274,810,658.72
Premiums receivable
Reinsurance premiums receivable
Receivable reinsurance contract reserve
Interest receivable 1,185,860.75 1,342,063.84
Dividends receivable 10,171,609.48 10,171,609.48
Other accounts receivable 277,435,269.56 222,389,921.80
Financial assets purchased under agreements to resell
Inventories 6,374,483,463.58 4,287,413,944.35
Assets held for sale
Non-current assets due within one year
Other current assets 2,011,262,179.93 562,204,116.20
Total current assets 16,474,606,519.19 13,407,622,612.24
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2017 Semi-annual Report of Konka Group Co., Ltd.
Non-current assets:
Loans and advances to customers
Available-for-sale financial assets 290,355,459.18 314,967,639.36
Held-to-maturity investments
Long-term accounts receivable
Long-term equity investments 629,257,019.68 309,648,120.37
Investment property 219,271,267.11 222,086,904.26
Fixed assets 1,544,239,052.29 1,573,978,914.03
Construction in progress 404,450,172.08 315,536,437.05
Engineering materials
Disposal of fixed assets
Productive living assets
Oil-gas assets
Intangible assets 252,432,746.73 302,045,627.44
R&D expenses
Goodwill 3,597,657.15 3,597,657.15
Long-term deferred expense 94,751,697.66 91,901,533.39
Deferred income tax assets 733,098,344.30 701,734,152.68
Other non-current assets 20,000,000.00
Total non-current assets 4,191,453,416.18 3,835,496,985.73
Total assets 20,666,059,935.37 17,243,119,597.97
Current liabilities:
Short-term borrowings 10,744,965,110.13 6,562,834,226.51
Borrowings from the Central Bank
Money deposits accepted and inter-bank deposits
Interbank borrowings
Financial liabilities at fair value through profit/loss 20,181,325.74 337,263.13
Derivative financial liabilities
Notes payable 899,911,286.22 863,709,138.39
Accounts payable 2,297,215,140.77 3,160,073,575.56
Accounts received in advance 1,678,390,010.50 1,201,426,223.70
Financial assets sold for repurchase
Fees and commissions payable
Payroll payable 172,950,937.61 273,059,516.65
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2017 Semi-annual Report of Konka Group Co., Ltd.
Taxes payable 68,872,054.95 121,905,421.18
Interest payable 30,119,490.82 21,344,172.45
Dividends payable
Other accounts payable 1,132,518,296.11 1,444,349,986.74
Reinsurance premiums payable
Insurance contract reserve
Payables for acting trading of securities
Payables for acting underwriting of securities
Liabilities held for sale
Non-current liabilities due within one year 301,282.02 41,025.60
Other current liabilities
Total current liabilities 17,045,424,934.87 13,649,080,549.91
Non-current liabilities:
Long-term borrowings 70,000,000.00 70,000,000.00
Bonds payable
Of which: Preference shares
Perpetual bonds
Long-term accounts payable 30,144,871.84 30,102,564.14
Long-term payroll payable 15,614,846.48 18,151,659.90
Special payables
Provisions 7,551,985.10 7,551,985.10
Deferred income 126,952,107.30 130,571,125.42
Deferred income tax liabilities 21,615,840.46 19,162,818.83
Other non-current liabilities
Total non-current liabilities 271,879,651.18 275,540,153.39
Total liabilities 17,317,304,586.05 13,924,620,703.30
Owners’ equity:
Share capital 2,407,945,408.00 2,407,945,408.00
Other equity instruments
Of which: Preference shares
Perpetual bonds
Capital reserve 78,556,489.58 79,723,092.04
Less: Treasury shares
Other comprehensive income -9,181,811.13 -6,932,104.65
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2017 Semi-annual Report of Konka Group Co., Ltd.
Special reserve
Surplus reserve 847,908,466.28 847,908,466.28
Provisions for general risks
Retained earnings -396,291,986.77 -427,163,254.63
Equity attributable to owners of the Company 2,928,936,565.96 2,901,481,607.04
Minority interests 419,818,783.36 417,017,287.63
Total owners’ equity 3,348,755,349.32 3,318,498,894.67
Total liabilities and owners’ equity 20,666,059,935.37 17,243,119,597.97
Legal representative: Liu Fengxi Accounting head for this Report: Li Chunlei
Head of the accounting department: Feng Junxiu
2. Balance Sheet of the Company
Unit: RMB
Item Closing balance Opening balance
Current assets:
Monetary funds 1,271,047,943.41 982,562,273.45
Financial assets at fair value through profit/loss 1,608,526.37 39,894,844.12
Derivative financial assets
Notes receivable 2,217,478,346.39 2,513,459,083.61
Accounts receivable 2,579,464,881.21 3,145,529,199.35
Accounts paid in advance 767,711,288.96 523,905,219.52
Interest receivable 2,215,166.39 4,502,350.43
Dividends receivable
Other accounts receivable 2,658,019,649.37 1,725,494,161.08
Inventories 2,946,917,248.75 1,926,824,243.11
Assets held for sale
Non-current assets due within one year
Other current assets 1,992,042,082.60 505,418,961.79
Total current assets 14,436,505,133.45 11,367,590,336.46
Non-current assets:
Available-for-sale financial assets 255,073,223.36 270,217,639.36
Held-to-maturity investments 170,000,000.00 170,000,000.00
Long-term accounts receivable
Long-term equity investments 2,737,657,509.19 2,383,970,009.87
Investment property 219,271,267.11 222,086,904.26
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2017 Semi-annual Report of Konka Group Co., Ltd.
Fixed assets 493,652,144.76 499,826,176.39
Construction in progress 22,139,475.71 11,754,885.34
Engineering materials
Disposal of fixed assets
Productive living assets
Oil-gas assets
Intangible assets 88,383,149.81 90,880,022.23
R&D expenses
Goodwill
Long-term deferred expense 71,702,290.31 66,995,753.17
Deferred income tax assets 686,578,897.26 656,704,805.39
Other non-current assets 20,000,000.00
Total non-current assets 4,764,457,957.51 4,372,436,196.01
Total assets 19,200,963,090.96 15,740,026,532.47
Current liabilities:
Short-term borrowings 7,878,215,003.35 5,436,958,840.80
Financial liabilities at fair value through profit/loss 20,181,325.74 337,263.13
Derivative financial liabilities
Notes payable 2,291,729,831.35 1,454,982,347.31
Accounts payable 4,390,355,218.59 3,710,175,718.31
Accounts received in advance 427,249,879.85 322,402,357.59
Payroll payable 88,784,318.13 131,415,800.19
Taxes payable 10,440,304.17 19,823,949.08
Interest payable 39,816,809.21 23,767,528.97
Dividends payable
Other accounts payable 1,287,996,900.39 1,760,751,455.81
Liabilities held for sale
Non-current liabilities due within one year
Other current liabilities
Total current liabilities 16,434,769,590.78 12,860,615,261.19
Non-current liabilities:
Long-term borrowings 40,000,000.00 40,000,000.00
Bonds payable
Of which: Preference shares
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2017 Semi-annual Report of Konka Group Co., Ltd.
Perpetual bonds
Long-term payables
Long-term payroll payable
Special payables
Provisions 7,551,985.10 7,551,985.10
Deferred income 82,531,411.20 82,166,818.30
Deferred income tax liabilities 12,026,251.50
Other non-current liabilities
Total non-current liabilities 130,083,396.30 141,745,054.90
Total liabilities 16,564,852,987.08 13,002,360,316.09
Owners’ equity:
Share capital 2,407,945,408.00 2,407,945,408.00
Other equity instruments
Of which: Preference shares
Perpetual bonds
Capital reserve 63,627,505.93 64,794,108.39
Less: Treasury shares
Other comprehensive income -5,093,676.42 6,714,437.62
Special reserve
Surplus reserve 847,908,466.28 847,908,466.28
Retained earnings -678,277,599.91 -589,696,203.91
Total owners’ equity 2,636,110,103.88 2,737,666,216.38
Total liabilities and owners’ equity 19,200,963,090.96 15,740,026,532.47
3. Consolidated Income Statement
Unit: RMB
Item January-June 2017 January-June 2016
1. Operating revenues 11,405,965,979.43 8,609,080,822.24
Including: Sales income 11,405,965,979.43 8,609,080,822.24
Interest income
Premium income
Fee and commission income
2. Operating costs 11,495,886,195.84 8,741,569,244.93
Including: Cost of sales 10,110,191,258.07 7,177,725,092.42
Interest expenses
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2017 Semi-annual Report of Konka Group Co., Ltd.
Fee and commission expenses
Surrenders
Net claims paid
Net amount provided as insurance contract reserve
Expenditure on policy dividends
Reinsurance premium
Taxes and surtaxes 34,429,592.04 56,149,941.54
Selling expenses 974,003,306.54 1,109,146,923.61
Administrative expenses 264,108,100.97 290,919,290.02
Finance costs 110,882,895.46 68,373,432.00
Asset impairment loss 2,271,042.76 39,254,565.34
Add: Profit on fair value changes (“-” means loss) -103,077,757.73 -18,141,655.39
Investment income (“-” means loss) 67,005,572.06 10,586,381.62
Including: Share of profit/loss of associates and joint ventures -7,531,575.68
Exchange gains (“-” means loss)
Other gains 36,838,391.51
3. Operating profit (“-” means loss) -89,154,010.57 -140,043,696.46
Add: Non-operating income 123,347,108.29 154,187,662.64
Including: Profit on disposal of non-current assets 33,597,795.57 3,147,161.67
Less: Non-operating expense 3,635,538.11 3,531,018.36
Including: Loss on disposal of non-current assets 1,065,392.90 617,565.57
4. Total profit (“-” means loss) 30,557,559.61 10,612,947.82
Less: Corporate income tax -3,838,772.97 705,997.10
5. Net profit (“-” means loss) 34,396,332.58 9,906,950.72
Net profit attributable to owners of the Company 30,871,267.86 12,834,736.76
Minority interests’ income 3,525,064.72 -2,927,786.04
6. Other comprehensive income net of tax -2,226,560.59 -15,440,224.77
Other comprehensive income net of tax attributable to owners of
-2,249,706.48 -15,158,638.24
the Company
6.1 Other comprehensive income that will not be reclassified
into profit/loss
6.1.1 Changes in net liabilities or assets with a defined
benefit plan upon re-measurement
6.1.2 Share of other comprehensive income of investees that
cannot be reclassified into profit/loss under the equity method
6.2 Other comprehensive income to be subsequently -2,249,706.48 -15,158,638.24
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2017 Semi-annual Report of Konka Group Co., Ltd.
reclassified into profit/loss
6.2.1 Share of other comprehensive income of investees that
will be reclassified into profit/loss under the equity method
6.2.2 Profit/loss on fair value changes of available-for-sale
-11,347,998.58 -1,875.00
financial assets
6.2.3 Profit/loss on reclassifying held-to-maturity
investments into available-for-sale financial assets
6.2.4 Effective profit/loss on cash flow hedges
6.2.5 Currency translation differences 9,098,292.10 -15,156,763.24
6.2.6 Other
Other comprehensive income net of tax attributable to minority
23,145.89 -281,586.53
interests
7. Total comprehensive income 32,169,771.99 -5,533,274.05
Attributable to owners of the Company 28,621,561.38 -2,323,901.48
Attributable to minority interests 3,548,210.61 -3,209,372.57
8. Earnings per share
8.1 Basic earnings per share 0.0128 0.0053
8.2 Diluted earnings per share 0.0128 0.0053
Where business mergers under the same control occurred in this Reporting Period, the net profit achieved by the merged parties
before the business mergers was RMB0.00, with the corresponding amount for the last period being RMB0.00.
Legal representative: Liu Fengxi Accounting head for this Report: Li Chunlei
Head of the accounting department: Feng Junxiu
3. Consolidated Income Statement
Unit: RMB
Item January-June 2017 January-June 2016
1. Operating revenues 11,405,965,979.43 8,609,080,822.24
Including: Sales income 11,405,965,979.43 8,609,080,822.24
Interest income
Premium income
Fee and commission income
2. Operating costs 11,495,886,195.84 8,741,569,244.93
Including: Cost of sales 10,110,191,258.07 7,177,725,092.42
Interest expenses
Fee and commission expenses
Surrenders
Net claims paid
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2017 Semi-annual Report of Konka Group Co., Ltd.
Net amount provided as insurance contract reserve
Expenditure on policy dividends
Reinsurance premium
Taxes and surtaxes 34,429,592.04 56,149,941.54
Selling expenses 974,003,306.54 1,109,146,923.61
Administrative expenses 264,108,100.97 290,919,290.02
Finance costs 110,882,895.46 68,373,432.00
Asset impairment loss 2,271,042.76 39,254,565.34
Add: Profit on fair value changes (“-” means loss) -103,077,757.73 -18,141,655.39
Investment income (“-” means loss) 67,005,572.06 10,586,381.62
Including: Share of profit/loss of associates and joint ventures -4,574,294.19 -7,531,575.68
Exchange gains (“-” means loss)
Other gains 36,838,391.51
3. Operating profit (“-” means loss) -89,154,010.57 -140,043,696.46
Add: Non-operating income 123,347,108.29 154,187,662.64
Including: Profit on disposal of non-current assets 33,597,795.57 3,147,161.67
Less: Non-operating expense 3,635,538.11 3,531,018.36
Including: Loss on disposal of non-current assets 1,065,392.90 617,565.57
4. Total profit (“-” means loss) 30,557,559.61 10,612,947.82
Less: Corporate income tax -3,838,772.97 705,997.10
5. Net profit (“-” means loss) 34,396,332.58 9,906,950.72
Net profit attributable to owners of the Company 30,871,267.86 12,834,736.76
Minority interests’ income 3,525,064.72 -2,927,786.04
6. Other comprehensive income net of tax -2,226,560.59 -15,440,224.77
Other comprehensive income net of tax attributable to owners of
-2,249,706.48 -15,158,638.24
the Company
6.1 Other comprehensive income that will not be reclassified
into profit/loss
6.1.1 Changes in net liabilities or assets with a defined
benefit plan upon re-measurement
6.1.2 Share of other comprehensive income of investees that
cannot be reclassified into profit/loss under the equity method
6.2 Other comprehensive income to be subsequently
-2,249,706.48 -15,158,638.24
reclassified into profit/loss
6.2.1 Share of other comprehensive income of investees that
will be reclassified into profit/loss under the equity method
6.2.2 Profit/loss on fair value changes of available-for-sale -11,347,998.58 -1,875.00
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2017 Semi-annual Report of Konka Group Co., Ltd.
financial assets
6.2.3 Profit/loss on reclassifying held-to-maturity
investments into available-for-sale financial assets
6.2.4 Effective profit/loss on cash flow hedges
6.2.5 Currency translation differences 9,098,292.10 -15,156,763.24
6.2.6 Other
Other comprehensive income net of tax attributable to minority
23,145.89 -281,586.53
interests
7. Total comprehensive income 32,169,771.99 -5,533,274.05
Attributable to owners of the Company 28,621,561.38 -2,323,901.48
Attributable to minority interests 3,548,210.61 -3,209,372.57
8. Earnings per share
8.1 Basic earnings per share 0.0128 0.0053
8.2 Diluted earnings per share 0.0128 0.0053
Where business mergers under the same control occurred in this Reporting Period, the net profit achieved by the merged parties
before the business mergers was RMB0.00, with the corresponding amount for the last period being RMB0.00.
Legal representative: Liu Fengxi Accounting head for this Report: Li Chunlei
Head of the accounting department: Feng Junxiu
4. Income Statement of the Company
Unit: RMB
Item January-June 2017 January-June 2016
1. Operating revenues 6,272,712,644.73 6,445,980,538.16
Less: Operating costs 5,443,839,907.56 5,638,759,127.68
Taxes and surtaxes 10,868,803.46 21,209,160.52
Selling expenses 711,874,597.16 808,506,711.94
Administrative expenses 188,310,629.91 152,850,562.16
Finance costs 127,560,085.67 72,822,853.13
Asset impairment loss 2,244,928.43 24,699,388.50
Add: profit on fair value changes (“-” means loss) -63,255,380.36 7,670,643.10
Investment income (“-” means loss) 77,763,929.57 20,628,022.12
Including: Share of profit/loss of associates and joint ventures -6,495,694.18 4,112,715.97
Other gains 26,416,590.40
2. Operating profit (“-” means loss) -171,061,167.85 -244,568,600.55
Add: Non-operating income 46,954,770.89 98,624,509.69
Including: Profit on disposal of non-current assets 71,766.85 264,303.85
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2017 Semi-annual Report of Konka Group Co., Ltd.
Less: Non-operating expense 2,589,238.41 1,189,594.88
Including: Loss on disposal of non-current assets 141,009.66 145,122.77
3. Total profit (“-” means loss) -126,695,635.37 -147,133,685.74
Less: Corporate income tax -38,114,239.37 -35,628,495.40
4. Net profit (“-” means loss) -88,581,396.00 -111,505,190.34
5. Other comprehensive income net of tax -11,808,114.04 641,019.96
5.1 Other comprehensive income that will not be reclassified into
profit and loss
5.1.1 Changes in net liabilities or assets with a defined benefit
plan upon re-measurement
5.1.2 Share of other comprehensive income of investees that
cannot be reclassified into profit/loss under the equity method
5.2 Other comprehensive income to be subsequently reclassified
-11,808,114.04 641,019.96
into profit/loss
5.2.1 Share of other comprehensive income of investees that will
be reclassified into profit/loss under the equity method
5.2.2 Profit/loss on fair value changes of available-for-sale
-11,358,312.00 -1,875.00
financial assets
5.2.3 Profit/loss on reclassifying held-to-maturity investments
into available-for-sale financial assets
5.2.4 Effective profit/loss on cash flow hedges
5.2.5 Currency translation differences -449,802.04 642,894.96
5.2.6 Other
6. Total comprehensive income -100,389,510.04 -110,864,170.38
7. Earnings per share
7.1 Basic earnings per share
7.2 Diluted earnings per share
5. Consolidated Cash flow statement
Unit: RMB
Item January-June 2017 January-June 2016
1. Cash flows associated with operating activities:
Cash received from sale of commodities and rendering of service 10,702,542,891.56 9,435,398,454.00
Net increase in money deposits from customers and interbank
placements
Net increase in loans from the Central Bank
Net increase in funds borrowed from other financial institutions
Cash received from premium of original insurance contracts
Net cash received from reinsurance business
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2017 Semi-annual Report of Konka Group Co., Ltd.
Net increase in deposits of policy holders and investment fund
Net increase in disposal of financial assets at fair value through
profit/loss
Interest, fees and commissions received
Net increase in interbank borrowings
Net increase in funds in repurchase business
Tax refunds received 153,594,635.95 178,405,043.66
Cash generated by other operating activities 242,504,590.42 265,852,475.51
Subtotal of cash generated by operating activities 11,098,642,117.93 9,879,655,973.17
Cash paid for goods and services 11,531,432,202.90 8,174,460,211.13
Net increase in loans and advances to customers
Net increase in funds deposited in the Central Bank and interbank
placements
Cash paid for claims of original insurance contracts
Interest, fees and commissions paid
Cash paid as policy dividends
Cash paid to and for employees 810,851,488.87 844,148,334.80
Taxes paid 264,698,689.66 393,891,670.20
Cash used in other operating activities 755,674,441.38 592,697,813.46
Subtotal of cash used in operating activities 13,362,656,822.81 10,005,198,029.59
Net cash generated by operating activities -2,264,014,704.88 -125,542,056.42
2. Cash flows associated with investing activities:
Cash received from retraction of investments 9,766,980.30 10,039,975.96
Cash received as investment income 78,957,443.99 18,138,724.61
Net cash received from disposal of fixed assets, intangible assets
78,716,573.22 177,070.99
and other long-term assets
Net cash received from disposal of subsidiaries or other business
units
Cash generated by other investing activities 857,901,449.68 4,293,428,300.00
Subtotal of cash generated by investing activities 1,025,342,447.19 4,321,784,071.56
Cash paid to acquire fixed assets, intangible assets and other
124,051,006.64 57,679,455.60
long-term assets
Cash paid for investment 326,090,459.58 6,010,455.00
Net increase in pledged loans
Net cash paid to acquire subsidiaries and other business units
Cash used in other investing activities 2,156,068,913.10 4,321,807,285.63
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2017 Semi-annual Report of Konka Group Co., Ltd.
Subtotal of cash used in investing activities 2,606,210,379.32 4,385,497,196.23
Net cash generated by investing activities -1,580,867,932.13 -63,713,124.67
3. Cash flows associated with financing activities:
Cash received from capital contributions 265,000.00 4,900,000.00
Including: Cash received from minority shareholder investments
265,000.00 4,900,000.00
by subsidiaries
Cash received as borrowings 5,023,816,944.90 2,902,000,000.00
Cash received from issuance of bonds
Cash generated by other financing activities 444,475,802.89 1,091,505,232.65
Subtotal of cash generated by financing activities 5,468,557,747.79 3,998,405,232.65
Repayment of borrowings 1,143,869,292.69 2,762,733,295.48
Cash paid for interest expenses and distribution of dividends or
162,968,902.94 50,260,605.68
profit
Including: dividends or profit paid by subsidiaries to minority
746714.88
interests
Cash used in other financing activities 574,504.77 31,258,073.60
Sub-total of cash used in financing activities 1,307,412,700.40 2,844,251,974.76
Net cash generated by financing activities 4,161,145,047.39 1,154,153,257.89
4. Effect of foreign exchange rate changes on cash and cash
-10,379,276.29 16,897,838.33
equivalents
5. Net increase in cash and cash equivalents 305,883,134.09 981,795,915.13
Add: Opening balance of cash and cash equivalents 2,020,902,945.13 1,488,154,851.35
6. Closing balance of cash and cash equivalents 2,326,786,079.22 2,469,950,766.48
6. Cash Flow Statement of the Company
Unit: RMB
Item January-June 2017 January-June 2016
1. Cash flows associated with operating activities:
Cash received from sale of commodities and rendering of service 7,169,804,450.63 6,066,072,499.56
Tax refunds received 45,615,145.13 106,864,410.47
Cash generated by other operating activities 1,557,443,931.45 595,949,901.28
Subtotal of cash generated by operating activities 8,772,863,527.21 6,768,886,811.31
Cash paid for goods and services 6,398,479,799.13 7,097,799,617.56
Cash paid to and for employees 490,539,972.72 469,174,013.13
Taxes paid 74,454,460.84 199,964,096.41
Cash used in other operating activities 2,206,102,049.40 950,560,098.46
Subtotal of cash used in operating activities 9,169,576,282.09 8,717,497,825.56
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2017 Semi-annual Report of Konka Group Co., Ltd.
Net cash generated by operating activities -396,712,754.88 -1,948,611,014.25
2. Cash flows associated with investing activities:
Cash received from retraction of investments 5,685.00
Cash received as investment income 90,904,415.99 22,133,330.57
Net cash received from disposal of fixed assets, intangible assets
157,331.75 174,720.56
and other long-term assets
Net cash received from disposal of subsidiaries or other business
units
Cash generated by other investing activities 857,000,000.00 4,395,417,300.00
Subtotal of cash generated by investing activities 948,061,747.74 4,417,731,036.13
Cash paid to acquire fixed assets, intangible assets and other
25,893,599.53 8,706,651.29
long-term assets
Cash paid for investment 361,799,598.00 14,016,000.00
Net cash paid to acquire subsidiaries and other business units
Cash used in other investing activities 2,229,985,587.07 4,542,483,083.21
Subtotal of cash used in investing activities 2,617,678,784.60 4,565,205,734.50
Net cash generated by investing activities -1,669,617,036.86 -147,474,698.37
3. Cash flows associated with financing activities:
Cash received from capital contributions
Cash received as borrowings 2,676,935,367.72 3,501,874,941.51
Cash received from issuance of bonds
Cash generated by other financing activities 141,159,174.39
Subtotal of cash generated by financing activities 2,818,094,542.11 3,501,874,941.51
Repayment of borrowings 303,221,456.06 210,241,682.55
Cash paid for interest expenses and distribution of dividends or
155,399,679.20 15,544,969.44
profit
Cash used in other financing activities 574,504.77 322,169,966.60
Sub-total of cash used in financing activities 459,195,640.03 547,956,618.59
Net cash generated by financing activities 2,358,898,902.08 2,953,918,322.92
4. Effect of foreign exchange rate changes on cash and cash
2,847,903.92 7,375,907.16
equivalents
5. Net increase in cash and cash equivalents 295,417,014.26 865,208,517.46
Add: Opening balance of cash and cash equivalents 973,613,753.40 478,267,624.53
6. Closing balance of cash and cash equivalents 1,269,030,767.66 1,343,476,141.99
15
2017 Semi-annual Report of Konka Group Co., Ltd.
7. Consolidated Statement of Changes in Owners’ Equity
January-June 2017 Unit: RMB
January-June 2017
Equity attributable to owners of the Company
Other equity
Item Minority Total owners’
instruments Less: Other General
Special Surplus Retained
Share capital Prefere Perpet Capital reserve Treasury comprehensi risk interests equity
Othe reserve reserve earnings
nce ual shares ve income reserve
r
shares bonds
1. Balance at the end of the prior year 2,407,945,408.00 79,723,092.04 -6,932,104.65 847,908,466.28 -427,163,254.63 417,017,287.63 3,318,498,894.67
Add: Changes in accounting
policies
Correction of errors in prior
periods
Business mergers under the
same control
Other
2. Balance at the beginning of the
2,407,945,408.00 79,723,092.04 -6,932,104.65 847,908,466.28 -427,163,254.63 417,017,287.63 3,318,498,894.67
year
3. Increase/ decrease in the period
-1,166,602.46 -2,249,706.48 30,871,267.86 2,801,495.73 30,256,454.65
(“-” means decrease)
3.1 Total comprehensive income -2,249,706.48 30,871,267.86 3,548,210.61 32,169,771.99
3.2 Capital increased and reduced
by owners
3.2.1 Ordinary shares increased
by shareholders
16
2017 Semi-annual Report of Konka Group Co., Ltd.
3.2.2 Capital increased by
holders of other equity instruments
3.2.3 Amounts of share-based
payments charged to owners’ equity
3.2.4 Other
3.3 Profit distribution -746,714.88 -746,714.88
3.3.1 Appropriation to surplus
reserve
3.3.2 Appropriation to general
risk provisions
3.3.3 Appropriation to owners
-746,714.88 -746,714.88
(or shareholders)
3.3.4 Other
3.4 Internal carry-forward of
owners’ equity
3.4.1 New increase of capital (or
share capital) from capital reserve
3.4.2 New increase of capital (or
share capital) from surplus reserve
3.4.3 Surplus reserve for making
up loss
3.4.4 Other
3.5 Special reserve
3.5.1 Withdrawn for the period
3.5.2 Used in the period
3.6 Other -1,166,602.46 -1,166,602.46
4. Closing balance 2,407,945,408.00 78,556,489.58 -9,181,811.13 847,908,466.28 -396,291,986.77 419,818,783.36 3,348,755,349.32
17
2017 Semi-annual Report of Konka Group Co., Ltd.
January-June 2016 Unit: RMB
January-June 2016
Equity attributable to owners of the Company
Other equity
Less:
Item instruments Other General Minority Total owners’
Capital Treasu Special Surplus Retained
Share capital Prefer Perpet comprehensi risk interests equity
Othe reserve ry reserve reserve earnings
ence ual ve income reserve
r shares
shares bonds
1. Balance at the end of the prior year 2,407,945,408.00 78,209,535.19 3,155,744.00 847,908,466.28 -522,836,282.66 261,067,546.32 3,075,450,417.13
Add: Changes in accounting policies
Correction of errors in prior
periods
Business mergers under the same
control
Other
2. Balance at the beginning of the year 2,407,945,408.00 78,209,535.19 3,155,744.00 847,908,466.28 -522,836,282.66 261,067,546.32 3,075,450,417.13
3. Increase/ decrease in the period (“-”
1,513,556.85 -10,087,848.65 95,673,028.03 155,949,741.31 243,048,477.54
means decrease)
3.1 Total comprehensive income -10,087,848.65 95,673,028.03 -3,703,180.21 81,881,999.17
3.2 Capital increased and reduced by
159,564,888.59 159,564,888.59
owners
3.2.1 Ordinary shares increased by
261,842,331.23 261,842,331.23
shareholders
3.2.2 Capital increased by holders
of other equity instruments
3.2.3 Amounts of share-based
payments charged to owners’ equity
3.2.4 Other -102,277,442.64 -102,277,442.64
18
2017 Semi-annual Report of Konka Group Co., Ltd.
3.3 Profit distribution
3.3.1 Appropriation to surplus
reserve
3.3.2 Appropriation to general risk
provisions
3.3.3 Appropriation to owners (or
shareholders)
3.3.4 Other
3.4 Internal carry-forward of owners’
-35,543,805.21 -35,543,805.21
equity
3.4.1 New increase of capital (or
share capital) from capital reserve
3.4.2 New increase of capital (or
share capital) from surplus reserve
3.4.3 Surplus reserve for making
up loss
3.4.4 Other -35,543,805.21 - -35,543,805.21
3.5 Special reserve
3.5.1 Withdrawn for the period
3.5.2 Used in the period
3.6 Other 37,057,362.06 88,032.93 37,145,394.99
4. Closing balance 2,407,945,408.00 79,723,092.04 -6,932,104.65 847,908,466.28 -427,163,254.63 417,017,287.63 3,318,498,894.67
8. Statement of Changes in Owners’ Equity of the Company
January-June 2017 Unit: RMB
January-June 2017
Item Other equity Less: Other Special Retained Total owners’
Share capital Capital reserve Surplus reserve
instruments Treasury comprehe reserve earnings equity
19
2017 Semi-annual Report of Konka Group Co., Ltd.
Preferen Perpet shares nsive
Othe
ce ual income
r
shares bonds
1. Balance at the end of the prior year 2,407,945,408.00 64,794,108.39 6,714,437.62 847,908,466.28 -589,696,203.91 2,737,666,216.38
Add: Changes in accounting policies
Correction of errors in prior periods
Other
2. Balance at the beginning of the year 2,407,945,408.00 64,794,108.39 6,714,437.62 847,908,466.28 -589,696,203.91 2,737,666,216.38
3. Increase/ decrease in the period (“-” means -11,808,114.
-1,166,602.46 -88,581,396.00 -101,556,112.50
decrease) 04
3.1 Total comprehensive income -11,808,114. -88,581,396.00 -100,389,510.04
04
3.2 Capital increased and reduced by owners
3.2.1 Ordinary shares increased by
shareholders
3.2.2 Capital increased by holders of other
equity instruments
3.2.3 Amounts of share-based payments
charged to owners’ equity
3.2.4 Other
3.3 Profit distribution
3.3.1 Appropriation to surplus reserve
3.3.2 Appropriation to owners (or
shareholders)
3.3.3 Other
3.4 Internal carry-forward of owners’ equity
3.4.1 New increase of capital (or share capital)
from capital reserve
20
2017 Semi-annual Report of Konka Group Co., Ltd.
3.4.2 New increase of capital (or share capital)
from surplus reserve
3.4.3 Surplus reserve for making up loss
3.4.4 Other
3.5 Special reserve
3.5.1 Withdrawn for the period
3.5.2 Used in the period
3.6 Other -1,166,602.46 -1,166,602.46
4. Closing balance 2,407,945,408.00 63,627,505.93 -5,093,676.4 847,908,466.28 -678,277,599.91 2,636,110,103.88
January-June 2016 2 Unit: RMB
January-June 2016
Other equity
instruments Less: Other
Item Special Retained
Share capital Preferen Perpet Capital reserve Treasury comprehensi Surplus reserve Total owners’ equity
reserve earnings
ce ual Other shares ve income
shares bonds
1. Balance at the end of the prior year 2,407,945,408.00 46,505,607.34 1,803,252.77 847,908,466.28 -209,882,853.00 3,094,279,881.39
Add: Changes in accounting policies
Correction of errors in prior periods
Other
2. Balance at the beginning of the year 2,407,945,408.00 46,505,607.34 1,803,252.77 847,908,466.28 -209,882,853.00 3,094,279,881.39
3. Increase/ decrease in the period (“-” means
18,288,501.05 4,911,184.85 -379,813,350.91 -356,613,665.01
decrease)
3.1 Total comprehensive income 4,911,184.85 -379,813,350.91 -374,902,166.06
3.2 Capital increased and reduced by owners
3.2.1 Ordinary shares increased by
shareholders
21
2017 Semi-annual Report of Konka Group Co., Ltd.
3.2.2 Capital increased by holders of other
equity instruments
3.2.3 Amounts of share-based payments
charged to owners’ equity
3.2.4 Other
3.3 Profit distribution
3.3.1 Appropriation to surplus reserve
3.3.2 Appropriation to owners (or
shareholders)
3.3.3 Other
3.4 Internal carry-forward of owners’ equity
3.4.1 New increase of capital (or share
capital) from capital reserve
3.4.2 New increase of capital (or share
capital) from surplus reserve
3.4.3 Surplus reserve for making up loss
3.4.4 Other
3.5 Special reserve
3.5.1 Withdrawn for the period
3.5.2 Used in the period
3.6 Other 18,288,501.05 18,288,501.05
4. Closing balance 2,407,945,408.00 64,794,108.39 6,714,437.62 847,908,466.28 -589,696,203.91 2,737,666,216.38
22
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
` Konka Group Co., Ltd.
Notes to Financial Statements for January-June 2017
(All amounts are expressed, unless otherwise stated, in Renminbi (RMB).)
I. Company Profile
1. Establishment
Konka Group Co., Ltd. (hereinafter referred to as “Company” or “the Company”), is a
joint-stock limited company reorganized from the former Shenzhen Konka Electronic Co.,
Ltd. in August 1991 upon approval of the People’s Government of Shenzhen Municipality,
and has its ordinary shares (A-share and B-share) listed on Shenzhen Stock Exchange with
prior consent from the People’s Bank of China Shenzhen Special Economic Zone Branch. On
August 29, 1995, the Company was renamed to “Konka Group Co., Ltd.” (Credibility code:
914403006188155783) with its main business falling into electronic industry. And now the
headquarters locates in No. 28 of No. 12 of Keji South Rd., Science & Technology Park,
Yuehai Street, Nanshan District, Shenzhen, Guangdong Province.
2. Share Capital Changes upon Establishment
On November 27, 1991, with approval from the SRYFZ No. 102 [1991] document as issued
by the People’s Bank of China Shenzhen Special Economic Zone Branch, Shenzhen Konka
Electronic Co., Ltd., during December 8—December 31, 1991, has issued 128,869,000 RMB
ordinary shares (A-share) at a par value of RMB1.00 per share, of which the original net
assets were converted into 98,719,000 state-owned institutional shares, 30,150,000 new
shares were issued, including 26,500,000 circulating shares issued to the public and
3,650,000 staff shares issued to the staff of the Company.
On January 29, 1992, with approval from the SRYFZ No. 106 [1991] document as issued by
the People’s Bank of China Shenzhen Special Economic Zone Branch, Shenzhen Konka
Electronic Co., Ltd., during December 20, 1991— January 31, 1992, has issued to investors
abroad 58,372,300 RMB special shares (B-share) at a par value of RMB1.00 per share, of
which 48,372,300 shares held by the former foreign investor and founder—Hong Kong
Ganghua Electronic Group Co., Ltd. are converted into foreign legal person’s shares, and
10,000,000 B-shares are issued additionally.
On April 10, 1993, the Proposal on Profit Distribution and Dividend Payout 1992 was
adopted at the second general meeting of shareholders of the Company. With approval from
23
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
the SZBF No. 2 [1993] document as issued by Shenzhen Securities Regulatory Office, the
Company began to perform dividend policy for FY 1992 as of April 30, 1993: distributing
RMB 0.90 in cash plus 3.5 bonus shares for every 10 shares to all shareholders. The total
capital stock reached 187,473,150 shares after this distribution.
On April 18, 1994, the Proposal on Profit Distribution and Dividend Payout 1993 was
adopted at the third general meeting of shareholders of the Company. With approval from the
SZBF No. 115 [1994] document as issued by Shenzhen Securities Regulatory Office, the
Company began to perform dividend policy for FY1993 as of June 10, 1994: distributing
RMB 1.10 in cash plus 5 bonus shares (including 4.4 profit bonus shares and 0.6 bonus share
capitalized from capital public reserve) for every 10 shares to all shareholders. The total
capital stock reached 281,209,724 shares after this distribution and capitalization from capital
public reserve.
On June 2, 1994, in accordance with the provisions that “staff shares could go public and be
transferred six months after listing”, as jointly promulgated by the State Commission for
Restructuring the Economic System and the State Council’s Securities Commission, the staff
shares of the Company was planned to be listed on the flow on June 6, 1994, with the prior
consent of Shenzhen Securities Regulatory Office and Shenzhen Stock Exchange.
On October 8, 1994, the Proposal on Negotiable Bonus Shares of B-Share Corporate
Shareholders 1992 was adopted at the interim general meeting of shareholders of the
Company. With approval from the SZBF No. 224 [1994] document as issued by Shenzhen
Securities Regulatory Office, the 16,930,305.00 bonus shares for FY 1992 granted to foreign
legal persons were listed and negotiated at B-share market on October 26, 1994.
On February 6, 1996, the Proposal on Share Allotment Modes 1996 was adopted at the
interim general metering of shareholders of the Company. With approval from the SZBF No.
5 [1996] document as issued by Shenzhen Securities Regulatory Office, and reexamination
from the ZJPSZ No. 16 [1996] document and ZJGZ No. 2 [1996] document as issued by
China Securities Regulatory Commission, on July 16, 1996 and October 29, 1996, all
shareholders were respectively allotted three shares for every ten existing shares held at
RMB 6.28/A-share and HKD 5.85/B-share. Corporate shareholders took their respective
existing shares as bases for full subscription of the allocable shares. The total capital stock
reached 365,572,641.00 shares after this allotment.
On January 25, 1998, the Plan on Share Allotment 1998 was adopted at the interim general
24
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
meeting of shareholders of the Company. With approval from the ZZBZ No. 29 [1998]
document as issued by Shenzhen Securities Regulatory Office, and ZJSZ No.64 [1998]
document as issued by China Securities Regulatory Commission, on July 15, 1998,
negotiable A-shares were allotted in proportion of 3:10 at RMB 10.50/A-share. For such
reasons as continued weakness in B-share secondary market (lower than share allotment
price), B-share negotiation and allotment plan was canceled, and the corporate shareholders
of the Company waived the preemptive right. The total capital stock reached 389,383,603
shares after this allotment.
On June 30, 1999, the Proposal on Profit Distribution and Capitalization from Capital Public
Reserve 1998 was adopted at the eighth general meeting of shareholders of the Company. On
August 20, 1999, the profit distribution for FY 1998 was carried out: all shareholders were
presented RMB3.00 in cash for every 10 shares, plus 2 shares capitalized from capital public
reserve. The total capital stock reached 467,260,323.00 shares after this capitalization.
On June 30, 1999, the Plan on A-Share Issue for Capital Increase was adopted at the eighth
general meeting of shareholders of the Company. With approval from the ZJFXZ No.140
[1999] document as issued by China Securities Regulatory Commission, on November 1,
1999, 80,000,000.00 A-shares were additionally issued to the public at RMB15.50/share. The
total capital stock reached 547,260,323.00 shares after this additional issue.
On May 30, 2000, the Plan on Profit Distribution and Dividend Payout 1999 was adopted at
the ninth general meeting of shareholders of the Company. On July 25, 2000, the profit
distribution for FY 1999 was carried out: all shareholders were distributed RMB4.00 in cash
plus 1 bonus shares for every 10 shares. The total capital stock reached 601,986,352.00
shares after this distribution.
On May 26, 2008, the 2017 general meeting of shareholders s was convened, during which
the following resolutions were discussed and adopted: based on the total capital stock of
601,986,352.00 shares for the year ended December 31, 2007, capitalization from capital
public reserve was made to all shareholders at a proportion of 1:1, namely 10 new shares for
every 10 existing shares. On December 16, 2008, with approval from the SMGZF No. 2662
[2008] document as issued by Shenzhen Bureau of Trade and Industry, the Company was
agreed to increase its share capital, and went through the formalities for registration of
changes with the administration for industry and commerce on April 10, 2009. The total
capital stock reached 1,203,972,704.00 shares after change.
25
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
According to the regulations of the 2015 1st Extraordinary General Meeting and the revised
articles of the Company, the Company applied to increase the registered capital of
RMB1,203,972,704.00, which totally turned into capital reserve with the altered registered
capital of RMB2,407,945,408.00 and managed the industrial and commercial alternation
registration on January 28, 2016 with the altered share capital of 2,407,945,408.00 shares.
3. Approved business scope: research and development, production and operation of such
household appliances as televisions, refrigerators, washing machines, and personal electronic
appliances; manufacturing and application of home AV, IPTV set-top boxes, digital TV
receivers (including ground receiving equipment of satellite television broadcasting), digital
products, mobile communication equipments and terminal products, daily-use electronic
products, automotive electronic products, satellite navigation systems, intelligent
transportation systems, fire-fighting and security systems, office equipments, computers,
displays, large screen display systems; LED (OLED) back light, illumination, light-emitting
devices, and packaging thereof; Touch TV AIO, wireless broadcasting television transiting
equipment; electronic parts and components, moulds, plastic and rubber products, and
packing materials, design and in-door installation security products, monitoring products,
wireless and cable digital television system and system integration, and technical consultancy
and after-sale paid services of related products (except mobile phone, the other products in
the above business scope are manufactured in other places outside Shenzhen); Wholesale,
retail, import & export and relevant support services of the aforesaid products (including
spare parts) (Commodities subject to state trading management are not involved. Products
involved in quota, license management and other specified management shall be subject to
the relevant state provisions.); sale of self-developed technological achievements; provision
of maintenance services, technical consultant service for electronic products; ordinary cargo
transportation, domestic freight forwarding, warehousing services; consultancy on enterprise
management; and self-owned property leasing and management services, recovery of waste
electrical appliances and electronic products (excluding dissembling) (operated by branch
offices); and outsourcing services of information technology and business procedures by
means of undertaking services in the way of outsourcing, including management and
maintenance of system application, management of information technology, bank
background service, financial settlement, human resource service, software development, call
center, and data processing.
4. The Company and its subsidiaries are mainly engaged in the production and sales of color
TVs, white goods, mobile phones, etc.; trading; real estate development and marketing;
26
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
advertising agency; factoring, and etc.
5. The financial statements contained herein have been approved for issue by the Board of
the Company on August 23, 2017.
6. There were 39 subsidiaries included in the consolidation scope of June 30, 2017 of the
Company, and please refer to the Notes VIII. “Equities among other entities” for details.
There were 1 subsidiaries increased and 1 decreased in the consolidation scope of the
Reporting Period over the last period of the Company, and the reason for 1 decreased is that
Anhui Household Appliance is absorbed and consolidated by Anhui Tongchuang. For details,
please refer to the Notes VII. “Changes of the consolidation scope” for details.
7. A check list of corporate names and their abbreviations mentioned in this Report
Corporate name Abbreviation
Shenzhen Konka Telecommunications Technology Co., Ltd. Telecommunication Technology
Shenzhen Konka Household Appliances Co., Ltd. Konka Household Appliances
Shenzhen Konka Plastic Products Co., Ltd. Plastic Products
Shenzhen Konka Electrical Appliances Co., Ltd. Electrical Appliances
Shenzhen Konka Electronic Fittings Technology Co., Ltd. Fittings Technology
Mudanjiang Arctic Ocean Appliances Co., Ltd. Mudanjiang Appliances
Chongqing Qingjia Electronics Co., Ltd. Chongqing Qingjia
Anhui Konka Electronic Co., Ltd. Anhui Konka
Anhui Konka Household Appliances Co., Ltd. Anhui Household Appliances
Kunshan Konka Electronic Co., Ltd. Kunshan Konka
Dongguan Konka Electronic Co., Ltd. Dongguan Konka
Dongguan Konka Packing Materials Co., Ltd. Dongguan Packing
Boluo Konka PCB Co., Ltd. Boluo Konka
Boluo Konka Precision Technology Co., Ltd. Boluo Konka Precision
Hong Kong Konka Co., Ltd. Hong Kong Konka
Konka Household Appliances
Konka Household Appliances Investment & Development Co., Ltd.
Investment
27
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Corporate name Abbreviation
Konka Household Appliances
Konka Household Appliances International Trading Co., Ltd.
International Trading
Konka (Europe) Co., Ltd. Konka Europe
Konka Factoring (Shenzhen) Co., Ltd. Konka Factoring
Shenzhen Wankaida Science and Technology Co., Ltd. Wankaida
Kunshan Kangsheng Investment Development Co., Ltd. Kunshan Kangsheng
Anhui Konka Tongchuang Household Appliances Co., Ltd. Anhui Tongchuang
Indonesia Konka Electronics Co., Ltd. Indonesia Konka
Shenzhen Shushida Logistics Service Co., Ltd. Shushida Logistics
Beijing Konka Electronic Co., Ltd. Beijing Konka Electronic
Shenzhen Konka E-display Co., Ltd. Konka E-display
Shenzhen E-display Service Co., Ltd. E-display Service
Xiamen Dalong Trading Co., Ltd. Xiamen Dalong
Youshi Kangrong Culture Communication Co., Ltd. Youshi Kangrong
Shenzhen Kangqiao Jiacheng Property Investment Co., Ltd. Kangqiao Jiacheng
Konka SmartTech Limited Konka SmartTech
Anhui Kaikai Shijie E-commerce Co., Ltd. Kaikai Shijie
Shenzhen E2info Network Technology Co., Ltd. E2info
Shenzhen Konka Mobile Interconnection Technology Co., Ltd. Mobile Interconnection
Shenzhen Konka Commercial System Technology Co., Ltd. Commercial System Technology
Zhongkang Supply Chain Management Co., Ltd. Zhongkang Supply Chain
Shenzhen Kangqiao Easy Chain Technology Co., Ltd. Kangqiao Easy Chain
E3info (Hainan) Technology Co., Ltd. E3info
Konka Technology & Industry
Chuzhou Konka Technology & Industry Development Co., Ltd.
Development
28
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Corporate name Abbreviation
Anhui Kangzhi Trade Co., Ltd. Kangzhi Trade
II. Basis for the preparation of financial statements
1. Basis for the preparation
With the going-concern assumption as the basis and based on transactions and other events
that actually occurred, the Group prepared financial statements in accordance with issued by the Ministry of
Finance with Decree No. 33 and revised with Decree No. 76, the 41 specific accounting
standards, the Application Guidance of Accounting Standards for Business Enterprises, the
Interpretation of Accounting Standards for Business Enterprises and other regulations issued
and revised from 15 Feb. 2006 onwards (hereinafter jointly referred to as “the Accounting
Standards for Business Enterprises”, “China Accounting Standards” or “CAS”), as well as
the Rules for Preparation Convention of Disclosure of Public Offering Companies No.15 –
General Regulations for Financial Reporting (revised in 2014) by China Securities
Regulatory Commission.
In accordance with relevant provisions of the Accounting Standards for Business Enterprises,
the Group adopted the accrual basis in accounting. Except for some financial instruments,
where impairment occurred on an asset, an impairment reserve was withdrawn accordingly
pursuant to relevant requirements.
III. Statement of Compliance with the Accounting Standards for Business Enterprises
The financial statements prepared by the Group are in compliance with in compliance with
the Accounting Standards for Business Enterprises, which factually and completely present
the Company’s financial positions as at June 30, 2017, business results and cash flows for the
first half year of 2017, and other relevant information. In addition, the Company’s and the
Group’s financial statements meet the requirements of disclosing financial statements and
notes thereto stated in the Rules for Preparation Convention of Disclosure of Public Offering
Companies No.15 – General Regulations for Financial Reporting (revised in 2014) by China
Securities Regulatory Commission.
29
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
IV. Important accounting policies and estimations
The Company and each subsidiary formulated certain specific accounting policies and
accounting estimates according to the actual production and operation characteristics and the
regulations of the relevant ASBE on the transactions and events of the revenues recognition.
For the details, please refer to each description of Notes IV. 22 “Revenues”. For the notes of
the significant accounting judgment and estimations made by the management layer, please
refer to Notes IV. 27 “Significant accounting judgment and estimations”.
1. Fiscal period
The Group’s fiscal periods include fiscal years and fiscal periods shorter than a complete
fiscal year. The Group’s fiscal year starts on 1 Jan. and ends on 31 Dec. of every year
according to the Gregorian calendar.
2. Operating cycle
A normal operating cycle refers to a period from the Group purchasing assets for processing
to realizing cash or cash equivalents. An operating cycle for the Group is 12 months, which
is also the classification criterion for the liquidity of its assets and liabilities.
3. Recording currency
Renminbi is the dominant currency used in the economic circumstances where the Group and
its domestic subsidiaries are involved. Therefore, the Group and its domestic subsidiaries use
Renminbi as their bookkeeping base currency. As for the overseas subsidiaries of the
Company-America Konka, European Konka and Indonesia Konka, should be respectively
confirmed the US Dollar, Euro and Indonesia Rupiah as their recording currency according
its major economic environment of their operating address; subsidiaries such as Hong Kong
Konka, Konka Household Appliances International Trading, Konka Zhisheng and
Zhongkang Supply Chain use HK Dollar as their recording currency. And the Group adopted
Renminbi as the bookkeeping base currency when preparing the financial statements for the
reporting year.
4. Accounting treatment methods for business combinations under the same control or
30
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
not under the same control
Business combinations, it is refer to two or more separate enterprises merge to form a
reporting entity transactions or events. Business combination is divided into under the same
control and those non under the same control.
(1) Business combinations under the same control
A business combination under the same control is a business combination in which all of the
combining enterprises are ultimately controlled by the same party or the same parties both
before and after the business combination and on which the control is not temporary. In a
business combination under the same control, the party which obtains control of other
combining enterprise(s) on the combining date is the combining party, the other combining
enterprise(s) is (are) the combined party. The “combining date” refers to the date on which
the combining party actually obtains control on the combined party.
The assets and liabilities that the combining party obtains in a business combination shall be
measured on the basis of their carrying amount in the combined party on the combining date.
As for the balance between the carrying amount of the net assets obtained by the combining
party and the carrying amount of the consideration paid by it (or the total par value of the
shares issued), the additional paid-in capital (share premium) shall be adjusted. If the
additional paid-in capital (share premium) is not sufficient to be offset, the retained earnings
shall be adjusted.
The direct cost for the business combination of the combining party shall be recorded into the
profits and losses at the current period.
(2) Business combinations not under the same control
A business combination not under the same control is a business combination in which the
combining enterprises are not ultimately controlled by the same party or the same parties
both before and after the business combination. In a business combination not under the same
control, the party which obtains the control on other combining enterprise(s) on the purchase
date is the acquirer, and other combining enterprise(s) is (are) the acquiree.
For a business combination not under the same control, the combination costs shall include
the fair values, on the acquisition date, of the assets paid, the liabilities incurred or assumed
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Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
and the equity securities issued by the acquirer in exchange for the control on the acquiree,
the expenses for audit, legal services and assessment, and other administrative expenses,
which are recorded into the profits and losses in the current period. The trading expenses for
the equity securities or debt securities issued by the acquirer as the combination
consideration shall be recorded into the amount of initial measurement of the equity
securities or debt securities. The involved contingent consideration shall be recorded into the
combination costs at its fair value on the acquiring date. Where new or further evidences
emerge, within 12 months since the acquiring date, against the existing circumstances on the
acquiring date and the contingent consideration thus needs to be adjusted, the combined
goodwill shall be adjusted accordingly. The combination costs of the acquirer and the
identifiable net assets obtained by it in the combination shall be measured according to their
fair values at the acquiring date. The acquirer shall recognize the positive balance between
the combination costs and the fair value of the identifiable net assets it obtains from the
acquiree as business reputation. Where the combination costs are less than the fair value of
the identifiable net assets it obtains from the acquiree, the acquirer shall re-examine the
measurement of the fair values of the identifiable assets, liabilities and contingent liabilities it
obtains from the acquiree as well as the combination costs. If, after the reexamination, the
combination costs are still less than the fair value of the identifiable net assets it obtains from
the acquiree, the acquirer shall record the balance into the profits and losses of the current
period.
As for the deductible temporary differences the acquirer obtains from the acquiree which are
not recognized into deferred income tax liabilities due to their not meeting the recognition
standards, if new or further information shows that the relevant situation has existed on the
acquiring date and the economic benefits brought by the deductible temporary differences the
acquirer obtains from the acquiree on the acquiring date can be realized, they shall be
recognized into deferred income tax assets and the relevant goodwill shall be reduced. Where
the goodwill is not sufficient to be offset, the difference shall be recognized into the profits
and losses in the current period. In other circumstances than the above, where the deductible
temporary differences are recognized into deferred income tax assets on the acquiring date,
they shall be recorded into the profits and losses in the current period.
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Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
In a business combination not under same control realized by two or more transactions of
exchange, according to about the 5th Notice about the Treasury Issuing the Accounting
Standards for Enterprises (Finance accounting) [2012] No. 19 Criterion about the “package
deal” (see Notes IV. 5 (2)), Whether the deals are “package deal” or not, belong to the
“package deal”, see the previous paragraphs described in this section and Notes IV. 12 “long
term equity investment transaction” and conduct accounting treatment, those not belong to
the “package deal” distinguish between the individual financial statements and the
consolidated financial statements and conduct relevant accounting treatment.
In the individual financial statements, the sum of the book value and new investment cost of
the Group holds in the acquiree before the acquiring date shall be considered as initial cost of
the investment. Other related comprehensive gains in relation to the equity interests that the
Group holds in the acquiree before the acquiring date shall be treated on the same basis as the
acquiree directly disposes the related assets or liabilities when disposing the investment (that
is, except for the corresponding share in the changes in the net liabilities or assets with a
defined benefit plan measured at the equity method arising from the acquiree’s
re-measurement, the others shall be transferred into current investment gains).
In the Group’s consolidated financial statements, as for the equity interests that the Group
holds in the acquiree before the acquiring date, they shall be re-measured according to their
fair values at the acquiring date; the positive difference between their fair values and carrying
amounts shall be recorded into the investment gains for the period including the acquiring
date. Other related comprehensive gains in relation to the equity interests that the Group
holds in the acquiree before the acquiring date shall be treated on the same basis as the
acquiree directly disposes the related assets or liabilities when disposing the investment (that
is, except for the corresponding share in the changes in the net liabilities or assets with a
defined benefit plan measured at the equity method arising from the acquiree’s
re-measurement, the others shall be transferred into current investment gains on the acquiring
date).
5. Methods for preparing consolidated financial statements
(1) Principle for determining the consolidation scope
The consolidation scope for financial statements is determined on the basis of control. The
term “control” is the power of the Group upon an investee, with which it can take part in
33
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
relevant activities of the investee to obtain variable returns and is able to influence the
amount of returns. A subsidiary is an enterprise or entity controlled by the Group.
Once any changes in the relevant facts or situations result in any changes in the elements
involved in the aforesaid definition of “control”, the Company shall carry out a reassessment.
(2) Methods for preparing the consolidated financial statements
Subsidiaries are fully consolidated from the date on which the Group obtains control on their
net assets and operation decision-making and are de-consolidated from the date when such
control ceases. As for a disposed subsidiary, its operating results and cash flows before the
disposal date has been appropriately included in the consolidated income statement and cash
flow statement; and as for subsidiaries disposed in the current period, the opening items in
the consolidated balance sheet are not adjusted. For a subsidiary acquired in a business
combination not under the same control, its operating results and cash flows after the
acquiring date have been appropriately included in the consolidated income statement and
cash flow statement, and the opening items and comparative items in the consolidated
financial statements are not adjusted. For a subsidiary acquired in a business combination
under the same control or a combined party obtained in a takeover, its operating results and
cash flows from the beginning of the Reporting Period of the combination to the combination
date have been appropriately included in the consolidated income statement and cash flow
statement, and the comparative items in the consolidated financial statements are adjusted at
the same time.
The financial statements of subsidiaries are adjusted in accordance with the accounting
policies and accounting period of the Group during the preparation of the consolidated
financial statements, where the accounting policies and the accounting periods are
inconsistent between the Group and subsidiaries. For a subsidiary acquired from a business
combination not under the same control, the individual financial statements of the subsidiary
are adjusted based on the fair value of the identifiable net assets at the acquisition date.
All significant inter-group balances, transactions and unrealized profits are offset in the
consolidated financial statements.
The portion of a subsidiary’s shareholders’ equity and the portion of a subsidiary’s net profits
and losses for the period not held by the Group are recognized as minority interests and
34
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
minority shareholder profits and losses respectively and presented separately under
shareholders’ equity and net profits in the consolidation financial statements. The portion of
a subsidiary’s net profits and losses for the period that belong to minority interests is
presented as the item of “minority shareholder profits and losses” under the bigger item of
net profits in the consolidated financial statements. Where the loss of a subsidiary shared by
minority shareholders exceeds the portion enjoyed by minority shareholders in the
subsidiary’s opening owners’ equity, minority interests are offset.
Where the Group losses control on its original subsidiaries due to disposal of some equity
investments or other reasons, the residual equity interests are re-measured according to the
fair value on the date when such control ceases. The summation of the consideration obtained
from the disposal of equity interests and the fair value of the residual equity interests, minus
the portion in the original subsidiary’s net assets measured on a continuous basis from the
acquisition date that is enjoyable by the Group according to the original shareholding
percentage in the subsidiary, is recorded in investment gains for the period when the Group’s
control on the subsidiary ceases. Other comprehensive incomes in relation to the equity
investment in the original subsidiary are treated on the same accounting basis as the acquiree
directly disposes the relevant assets or liabilities (that is, except for the changes in the net
liabilities or assets with a defined benefit plan resulted from re-measurement of the original
subsidiary, the rest shall all be transferred into current investment gains) when such control
ceases. And subsequent measurement is conducted on the residual equity interests according
to the No. 2 Accounting Standard for Business Enterprises —Long-term Equity Investments
or the No. 22 Accounting Standard for Business Enterprises—Recognition and Measurement
of Financial Instruments. For details, see Note IV, 12 “long term equity investment” or Note
IV. 9 “financial instruments”.
Where the Group losses control on its original subsidiaries due to step by step disposal of
equity investments through multiple transactions, it need to distinguish the Group losses
control on its subsidiaries due to disposal of equity investments whether belongs to a package
deal. All the transaction terms, conditions and economic impact of the disposal of
subsidiaries’ equity investment are in accordance with one or more of the following
conditions, which usually indicate the multiple transactions, should be considered as a
package deal for accounting treatment. ① These deals are at the same time or under the
35
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
condition of considering the influence of each other to concluded; ② These transactions only
be as a whole can achieve a complete business result; ③ The occurrence of a deal depends
on at least one other transactions；④ A deal alone is not economical, it is economical with
other trading together. Those not belong to a package deal, each of them a deal depends on
circumstances respectively conduct accounting treatment in accordance with the applicable
principles of “part disposal of subsidiaries of a long-term equity investment under the
condition of not losing control on its subsidiaries” (see Note IV 12, (2) ④) and “Where the
Group losses control on its original subsidiaries due to disposal of some equity investments
or other reasons” (See the front paragraph) relevant transactions of the Group losses control
on its subsidiaries due to disposal of equity investments belonging to a package deal,
considered as a transaction and conduct accounting treatment. However, Before losing
control, every disposal cost and corresponding net assets balance of subsidiary of disposal
investment are confirmed as other comprehensive income in consolidated financial
statements, which together transferred into the current profits and losses in the loss of control,
when the Group losing control on its subsidiary.
6. Classification of joint arrangements and accounting treatment of joint operations
A joint arrangement refers to an arrangement jointly controlled by two participants or above.
The Group classifies joint arrangements into joint operations and joint ventures according to
its rights and duties in the joint arrangements. A joint operation refers to a joint arrangement
where the Group enjoys assets and has to bear liabilities related to the arrangement. A joint
venture refers to a joint arrangement where the Group is only entitled to the net assets of the
arrangement.
The Group’s investments in joint ventures are measured at the equity method according to
the accounting policies mentioned in Note IV. 12 (2) ② “Long-term equity investments
measured at the equity method”.
For a joint operation, the Group, as a joint operator, recognizes the assets and liabilities that it
holds and bears in the joint operation, and recognizes the jointly-held assets and jointly-borne
liabilities according to the Group’s stake in the joint operation; recognizes the income from
sale of the Group’s share in the output of the joint operation; recognizes the income from sale
of the joint operation’s outputs according to the Group’s stake in it; and recognizes the
36
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
expense solely incurred to the Group and the expense incurred to the joint operation
according to the Group’s stake in it.
When the Group, as a joint operator, transfers or sells assets (the assets not constituting
business, the same below) to the joint operation, or purchases assets from the joint operation,
before the assets are sold to a third party, the Group only recognizes the share of the other
joint operators in the gains and losses arising from the sale. Where impairment occurs to the
assets as prescribed in , the Group shall fully recognizes the loss for a transfer or sale of assets to a
joint operation; and shall recognize the loss according to its stake in the joint operation for a
purchase of assets from the joint operation.
7. Recognition standard for cash and cash equivalents
In the Group’s understanding, cash and cash equivalents include cash on hand, any deposit
that can be used for cover, and short-term (usually due within 3 months since the day of
purchase) and high circulating investments, which are easily convertible into known amount
of cash and whose risks in change of value are minimal.
8. Foreign currency businesses and translation of foreign currency financial statements
(1) Accounting treatments for translation of foreign currency transactions
As for a foreign currency transaction, the Company shall convert the amount in a foreign
currency into amount in its bookkeeping base at the spot exchange rate (usually referring to
the central parity rate announced by the People’s Bank of China, the same below) of the
transaction date, while as for such transactions as foreign exchange or involving in foreign
exchange, the Company shall converted into amount in the bookkeeping base currency at
actual exchange rate the transaction is occurred.
(2) Accounting treatments for translation of foreign currency monetary items and
non-monetary items
On the balance sheet date, the foreign currency monetary items shall be translated at the spot
exchange rate on the balance sheet date. The exchange difference arising from the difference
between the spot exchange rate on the balance sheet date and the spot exchange rate at the
37
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
time of initial recognition or prior to the balance sheet date shall be recorded in the profits
and losses in the current period, excluding the following situations: ① the exchange
difference arising from foreign currency loans related to acquisition of fixed assets shall be
treated at the principle of capitalization of borrowing costs; ② the exchange difference
arising from the hedging instruments used for effective hedging of net overseas operation
investments shall be recorded into other comprehensive incomes, and shall be recognized
into current gains and losses when the net investments are disposed; and ③ the exchange
difference arising from change in the book balance of foreign currency monetary items
available for sale except the amortized costs shall be recorded into other comprehensive
gains and losses.
When it involves overseas business in preparing the consolidated financial statement, for the
translation difference of foreign currency monetary items of net investment in overseas
business arising from the change in exchange rate, it shall be recorded into the other
comprehensive income; and be recorded into disposal gains and losses at current period when
disposing overseas business.
A foreign currency non-monetary item measured at the historical costs shall still be translated
at the spot exchange rate on the transaction date. Where the foreign non-monetary items
measured at the fair value shall be converted into amount in its bookkeeping base currency at
spot exchange rate, the exchange gains and losses arising thereof shall be treated as change in
fair value, and recorded into the current period gains and losses or as other comprehensive
incomes.
(3) Translation of foreign currency financial statements
When it involves overseas business in preparing the consolidated financial statement, for the
translation difference of foreign currency monetary items of net investment in overseas
business arising from the change in exchange rate, it shall be recorded into the item of
“difference of foreign currency financial statement translation” under the owners’ equity; and
be recorded into disposal gains and losses at current period when disposing overseas
business.
The foreign currency financial statement of overseas business should be translated in to RMB
financial statement by the following methods: The asset and liability items in the balance
sheets shall be translated at a spot exchange rate on the balance sheet date. Among the
38
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
owner’s equity items, except for the items as “undistributed profits”, other items shall be
translated at the spot exchange rate at the time when they are incurred. The income and
expense items in the profit statements shall be translated at the spot exchange rate of the
transaction date. The undistributed profits at year-begin is the undistributed profits at the end
of last year after the translation; undistributed profits at year-end shall be listed as various
distribution items after the translation; after the translation, the balance between assets and
the sum of liabilities and owners’ equities shall be recorded into other comprehensive gains
and losses as difference of foreign currency translation. Where an enterprise disposes of an
overseas business without the control right, it shall shift the differences, which is presented
under the items of the owner’s equities in the balance sheet and which arises from the
translation of foreign currency financial statements relating to this overseas business, into the
disposal profits and losses of the current period by all or proportion of the disposed overseas
business.
Foreign cash flow shall be translated at the spot exchange rate/the weighted average of the
exchange rate of the current period of the date of cash flow incurred. The influence of
exchange rate on the cash flow shall be adjustment item and individually listed in the cash
flow statement.
And the opening balance and the actual balance of last year shall be listed at the amounts
after translation of foreign currency financial statement in last year.
Where the control of the Group over an overseas operation ceases due to disposal of all or
some of the Group’s owner’s equity in the overseas operation or other reasons, the
foreign-currency statement translation difference belonging to the parent company’s owner’s
equity in relation to the overseas operation which is stated under the shareholders’ equity in
the balance sheet shall be all restated as gains and losses of the disposal period.
Where the Group’s equity in an overseas operation decreases due to disposal of some equity
investment or other reasons but the Group still has control over the overseas operation, the
foreign-currency statement translation difference in relation to the disposed part of the
overseas operation shall be recorded into minority interests instead of current gains and losses.
If what’s disposed is some equity in an overseas associated enterprise or joint venture, the
foreign-currency statement translation difference related to the overseas operation shall be
recorded into the gains and losses of the current period of the disposal according to the disposal
39
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
ratio.
9. Financial instruments
The Group recognizes a financial asset or liability when it becomes a party of the relevant
financial instrument contract. Financial assets and liabilities are measured at fair value in
initial recognition. As for the financial assets and liabilities measured at fair value of which
changes are recorded into current gains and losses, the relevant dealing expenses are directly
recorded into gains and losses; and the dealing expenses on other kinds of financial assets
and liabilities are included in the amounts initially recognized.
(1) Determination of the fair value of main financial assets and financial liabilities
Fair value refers to the price that a market participant shall receive for selling an asset or
shall pay for transferring a liability in an orderly transaction on the measurement date. As for
the financial assets or financial liabilities for which there is an active market, the quoted
prices in the active market shall be used to determine the fair values thereof. The quoted
prices in the active market refers to the prices available from stock exchange, broker’s
agencies, guilds, pricing organization and etc., which represent the actual trading price under
equal transaction. Where there is no active market for a financial instrument, the enterprise
concerned shall adopt value appraisal techniques, including the prices adopted by the parties,
who are familiar with the condition, in the latest market transaction upon their own free will,
the current fair value obtained by referring to other financial instruments of the same
essential nature, the cash flow capitalization method and the option pricing model, etc., to
determine its fair value.
(2) Classification, recognition and measurement of financial assets
The purchase and sale of financial assets under the normal ways shall be recognized and
stopped to be recognized respectively at the price of transaction date. Financial assets shall
be classified into the following four categories when they are initially recognized: (a) the
financial assets which are measured at their fair values and the variation of which is recorded
into the profits and losses of the current period, (b) the investments which will be held to
their maturity; (c) loans and the account receivables; and (d) financial assets available for
sale.
40
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
① The financial assets which are measured at their fair values and the variation of which is
recorded into the profits and losses of the current period
Including transactional financial assets and the financial assets which are designated to be
measured at their fair value when they are initially recognized and of which the variation is
recorded into the profits and losses of the current period;
The financial assets meeting any of the following requirements shall be classified as
transactional financial assets：A. The purpose to acquire the said financial assets is mainly for
selling them in the near future; B. Forming a part of the identifiable combination of financial
instruments which are managed in a centralized way and for which there are objective
evidences proving that the enterprise may manage the combination by way of short-term
profit making in the near future; C. Being a derivative instrument, excluding the designated
derivative instruments which are effective hedging instruments, or derivative instruments to
financial guarantee contracts, and the derivative instruments which are connected with the
equity instrument investments for which there is no quoted price in the active market, whose
fair value cannot be reliably measured, and which shall be settled by delivering the said
equity instruments.
The financial assets meeting any of the following requirements shall be designated as
financial assets which are measured at their fair values and the variation of which is recorded
into the profits and losses of the current period for initial recognition: A. the designation can
eliminate or significantly reduce the difference of relevant gains and losses between
recognition and measurement causing from different bases for measurement of financial
assets; B. The official written documents for risk management and investment strategies of
the enterprise have clearly stated that it shall ,manage, evaluate and report to important
management personnel based on the fair value, about the financial assets group or the group
of financial assets & liabilities which the financial assets are belong to.
For the financial assets which are measured at their fair values and the variation of which is
recorded into the profits and losses of the current period shall continue to be measured by fair
value, gains and losses of change in fair value, dividends and interest related with these
financial assets should be recorded into gains and losses of current period.
② Held-to-maturity investment
41
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
The term “held-to-maturity investment” refers to a non-derivative financial asset with a fixed
date of maturity, a fixed or determinable amount of repo price and which the enterprise holds
for a definite purpose or the enterprise is able to hold until its maturity.
For the held-to-maturity investment adopting actual interest rate method, which is measured
at the post-amortization costs, the profits and losses that arise when such financial assets or
financial liabilities are terminated from recognition, or are impaired or amortized, shall be
recorded into the profits and losses of the current period.
The actual interest rate method refers to the method by which the post-amortization costs and
the interest incomes of different installments or interest expenses are calculated in light of the
actual interest rates of the financial assets or financial liabilities (including a set of financial
assets or financial liabilities). The actual interest rate refers to the interest rate adopted to
cash the future cash flow of a financial asset or financial liability within the predicted term of
existence or within a shorter applicable term into the current carrying amount of the financial
asset or financial liability.
When the actual interest rate is determined, the future cash flow shall be predicted on the
basis of taking into account all the contractual provisions concerning the financial asset or
financial liability (the future credit losses shall not be taken into account).and also the various
fee charges, trading expenses, premiums or reduced values, etc., which are paid or collected
by the parties to a financial asset or financial liability contract and which form a part of the
actual interest rate.
③ Loans and the accounts receivables
Loans and the accounts receivables refer to non-derivative financial assets, which there is no
quotation in the active market, with fixed recovery cost or recognizable. Financial assets that
are defined as loans and the accounts receivables by the Group including notes receivables,
accounts receivables, interest receivable, dividends receivable and other receivables etc..
Loans and the accounts receivables are made follow-up measurement on the basis of
post-amortization costs employing the effective interest method. Gains or loss arising from
the termination recognition, impairment occurs or amortization shall be recorded into the
profits and losses of the current period.
42
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
④ Assets available for sales
Assets available for sales including non-derivative financial asset that has been assigned as
assets available for sales on the initial recognition and financial assets excluded those
measured at fair value and of which the variation into profits and losses of the current period,
they are some financial assets, loans and accounts receivables, held-to-maturity investment.
The cost at the period-end of the available-for-sale liabilities instruments should be
confirmed according to its amortized cost method, that is the initially recognized amount
which deduct the principal that had been repaid, to plus or minus the accumulative
amortization amount formed by the amortization between the difference of the initially
recognized amount and the amount on the due date that adopted the actual interest rate
method, and at the same time deduct the amount after the impairment loss happened. The
cost at the period-end of the available-for-sale liabilities instruments is its initial cost.
Financial assets available-for-trade are subsequently measured at fair value, and gains or
losses arising from changes in the fair value are recognized as other comprehensive income，
and be carried forward when the said financial assets stopped recognition, then it shall be
recorded into the profits and losses of the current period. But, the equity instrument
investment which neither have quotation in the active market nor its fair value could not be
reliable measured, as well as the derivative financial assets that concern with the equity
instruments and should be settled through handing over to its equity instruments, should take
the follow-up measurement according to the cost.
Interest receive during the holding of assets available for sales and cash dividends with
distribution announcement by invested companies, it shall be recorded into the profits and
losses of the current period.
(3) Impairment of financial assets
The Group assesses at the balance sheet date the carrying amount of every financial asset
except for the financial assets that measured by the fair value. If there is objective evidence
indicating a financial asset may be impaired, a provision is provided for the impairment.
The Group carries out a separate impairment test for every financial asset which is
individually significant. As for a financial asset which is individually insignificant, an
43
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
impairment test is carried out separately or in the financial asset group with similar credit risk.
Where the financial asset (individually significant or insignificant) is found not impaired
after the separate impairment test, it is included in the financial asset group with similar
credit risk and tested again on the group basis. Where the impairment loss is recognized for
an individual financial asset, it is not included in the financial asset group with similar credit
risk for an impairment test.
① Impairment on held-to maturity investment, loans and receivables
The financial assets measured by cost or amortized cost write down their carrying value by
the estimated present value of future cash flow. The difference is recorded as impairment loss.
If there is objective evidence to indicate the recovery of value of financial assets after
impairment, and it is related with subsequent event after recognition of loss, the impairment
loss recorded originally can be reversed. The carrying value of financial assets after
impairment loss reversed shall not exceed the amortized cost of the financial assets without
provisions of impairment loss on the reserving date.
② Impairment of available-for-sale financial assets
When it judged that the decrease of fair value of the available-for-sale equity instrument
investment is serious and not temporarily after comprehensive considering relevant factors, it
reflected that the available-for-sale equity instrument investment occurred impairment. Of
which, the “serious decline” refers to the accumulative decline range of the fair value over
20%; while the “non-temporary decline” refers to the consecutive decline time of the fair
value over 12 months.
Where an available-for-sale financial asset is impaired, the accumulative losses arising from
the decrease of the fair value of the capital reserve which is directly included are transferred
out and recorded in the profits and losses for the current period. The accumulative losses
transferred out are the balance obtained from the initially obtained cost of the said financial
asset after deducting the principals as taken back, the amortized amount, the current fair
value and the impairment loss originally recorded in the profits and losses.
Where the impairment loss has been recognized for an available-for-sale financial asset, if,
within the accounting periods thereafter, there is any objective evidence proving that the
value of the said financial asset has been restored and the restoration is objectively related to
44
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
the events that occur after the impairment loss was recognized, the originally recognized
impairment loss is reversed. The impairment losses on the available-for-sale equity
instrument investments are reversed and recognized as other comprehensive incomes, and the
impairment losses on the available-for-sale liability instruments are reversed and recorded in
the profits and losses for the current period.
The impairment loss incurred to an equity instrument investment for which there is no quoted
price in the active market and whose fair value cannot be reliably measured, or incurred to a
derivative financial asset which is connected with the said equity instrument investment and
which must be settled by delivering the said equity investment, is not reversed.
(4) Recognition and measurement of financial asset transfers
Where a financial asset satisfies any of the following requirements, the recognition of it is
terminated: ① The contractual rights for collecting the cash flow of the said financial asset
are terminated; ② The said financial asset has been transferred and nearly all of the risks and
rewards related to the ownership of the financial asset to the transferee; or ③ The said
financial asset has been transferred. And the Group has ceased its control on the said
financial asset though it neither transfers nor retains nearly all of the risks and rewards
related to the ownership of the financial asset.
Where the Group neither transfers nor retains nearly all of the risks and rewards related to the
ownership of a financial asset, and it does not cease its control on the said financial asset, it
recognizes the relevant financial asset and liability accordingly according to the extent of its
continuous involvement in the transferred financial asset. The term "continuous involvement
in the transferred financial asset" refers to the risk level that the enterprise faces resulting
from the change of the value of the financial asset.
If the transfer of an entire financial asset satisfies the conditions for stopping recognition, the
difference between the amounts of the following 2 items is recorded in the profits and losses
of the current period: (1) The book value of the transferred financial asset; and (2) The sum
of consideration received from the transfer, and the accumulative amount of the changes of
the fair value originally recorded in other comprehensive incomes.
If the transfer of partial financial asset satisfies the conditions to stop the recognition, the
book value of the transferred financial asset is apportioned between the portion whose
45
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
recognition has been stopped and the portion whose recognition has not been stopped
according to their respective relative fair value, and the difference between the amounts of
the following 2 items is included into the profits and losses of the current period: (1) The
summation of the consideration received from the transfer and the portion of the
accumulative amount of changes in the fair value originally recorded in other comprehensive
incomes which corresponds to the portion whose recognition has been stopped; and (2) The
amortized carrying amounts of the aforesaid amounts.
In respect of the assets using recourse to sell or using endorsement to transfer, the Group
needs to determine whether almost all of the risks and rewards of the financial asset
ownership are transferred. If almost all of the risks and rewards of the financial asset
ownership had been transferred to the transferee, derecognize the financial assets. For almost
all of the risks and rewards of the financial asset ownership retained, do not end to recognize
the financial assets. For which neither transfer or retain almost all of the risks and rewards of
the financial asset ownership, continuously judge whether the Company retain the control of
the assets, and conduct accounting treatment according to the principle of mentioned in the
previous paragraphs.
(5) Classification and measurement of financial liabilities
In the initial recognition, financial liabilities are divided into the financial liabilities measured
at fair values and whose changes are recorded in current gains and losses and other financial
liabilities. Financial liabilities are initially recognized at their fair values. As for a financial
liability measured at fair value and whose changes are recorded in current gains and losses,
the relevant trading expense is directly recorded in the profits and losses for the current
period. As for other financial liabilities, the relevant trading expenses are recorded in the
initially recognized amounts.
① Financial liabilities measured at fair values and whose changes are recorded in current
gains and losses
Such financial liabilities are divided into transactional financial liabilities and financial
liabilities designated to be measured at fair values and whose changes are recorded in current
gains and losses in the initial recognition under the same conditions where such financial
assets are divided into transactional financial assets and financial assets designated to be
46
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
measured at fair values and whose changes are recorded in current gains and losses in the
initial recognition.
Financial liabilities measured at fair values and whose changes are recorded in current gains
and losses are subsequently measured at their fair values. Gains or losses arising from the fair
value changes, as well as the dividend and interest expenses in relation to the said financial
liabilities, are recorded in the profits and losses for the current period.
② Other financial liabilities
As for a derivative financial liability connected to an equity instrument for which there is not
quoted price in an active market and whose fair value cannot be reliably measured and which
must be settled by delivering the equity instrument, it is subsequently measured on the basis
of costs. Other financial liabilities are subsequently measured according to the amortized cost
using the actual interest rate method. Gains or losses arising from de-recognition or
amortization of the said financial liabilities is recorded in the profits and losses for the
current period.
③ Financial guarantee contract and loan commitment
For the financial guarantee contracts which are not designated as a financial liability
measured at its fair value and the variation thereof is recorded into the profits and losses of
the current period, or the loan commitment which is not designated as a financial liability
measured at its fair value and the variation thereof is recorded into the gains and losses that
will be loaned lower than the market interest rate, which shall be initially recognized by fair
value, and the subsequent measurement shall be made after they are initially recognized
according to the higher one of the following: a. the amount as determined according to the
Accounting Standards for Enterprises No. 13 – Contingencies; b. the surplus after
accumulative amortization as determined according to the principles of the Accounting
Standards for Enterprises No. 14 - Revenues is subtracted from the initially recognized
amount.
(6) De-recognition of financial liabilities
Only when the prevailing obligations of a financial liability are relieved in all or in part may
the recognition of the financial liability be terminated in all or partly. Where the Group
47
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
(debtor) enters into an agreement with a creditor so as to substitute the existing financial
liabilities by way of any new financial liability, and if the contractual stipulations regarding
the new financial liability is substantially different from that regarding the existing financial
liability, it terminates the recognition of the existing financial liability, and at the same time
recognizes the new financial liability.
Where the recognition of a financial liability is totally or partially terminated, the enterprise
concerned shall include into the profits and losses of the current period for the gap between
the book value which has been terminated from recognition and the considerations it has paid
(including the non-cash assets it has transferred out and the new financial liabilities it has
assumed)
(7) Derivatives and embedded derivatives
Derivative financial instruments include derivatives are initially measured at fair value at the
date when the derivative contracts are entered into and are substantially re-measured at fair
value. The resulting gain and loss is recognized in profit or loss.
An embedded derivative is separated from the hybrid instrument, where the hybrid
instrument is not designated as a financial asset or financial liability at fair value though
profit or loss, and the treated as a standalone derivative if (a) the economic characteristics
and risks of the embedded derivative are not closely related to the economic characteristics
and risks of the host contract; and (b) a separate instrument with the same terms as the
embedded derivative would meet the definition of a derivative. If the Company is unable to
measure the embedded derivative separately either at acquisition or at a subsequent balance
sheet date, it designates the entire hybrid instrument as a financial asset or financial liability
at fair value through profit or loss.
(8) Offsetting financial assets and financial liabilities
When the Group has a legal right that is currently enforceable to set off the recognized
financial assets and financial liabilities, and intends either to settle on a net basis, or to realize
the financial asset and settle the financial liability simultaneously, a financial asset and a
financial liability shall be offset and the net amount is presented in the balance sheet. Except
for the above circumstances, financial assets and financial liabilities shall be presented
separately in the balance sheet and shall not be offset.
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Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
(9) Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the
Company after deducting all of its liabilities. The Group issues (including refinancing),
re-purchases, sells or written-offs the equity instrument as the disposing of the changes of the
equity. The Group not recognized the changes of the fair value of the equity instrument. The
transaction expenses related to the equity transaction would be deducted from the equity.
All types of distribution (excluding stock dividends) made by the Group to holders of equity
instruments are deducted from shareholders’ equity. The Group does not recognize any
changes in the fair value of equity instruments.
10. Receivables
Receivables include account receivables and other accounts receivables.
(1) Recognition of provision for bad debts:
The Group shall test the carrying amount of receivables on the balance sheet date. Where
there is any objective evidence proving that such receivables have been impaired, an
impairment provision shall be made.
① Debtor has serious financial difficult;
② Debtor goes against the contract clause (for instance, breach of faith or overdue paying
interests or principal);
③ Debtors have a great probability of bankruptcy or other financial reorganization;
④ Other evidence proving such accounts receivable has been impaired;
(2) Withdraw method of provision for bad debts
① The recognition criteria and method of individual provision for bad debts of receivables
that are individually significant
The Group recognized the receivables with amount above RMB20 million and other
receivables above 10 million as receivables with significant single amounts and withdrawn
the provision for bad debts.
49
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
The Group made an independent impairment test on receivables with significant single
amounts; the financial assets without impairment by independent impairment test should be
included in financial assets portfolio with similar credit risk to take the impairment test.
Receivables was recognized with impairment should no longer be included in receivables
portfolio with similar credit risk to take the impairment test.
② The recognition and method of provision for bad debts of receivables by credit risk
portfolio
A. Recognition of credit risk group
Receivables that not individually significant and individually significant but without
impairment by independent impairment test, are grouped on the basis of similarity and
relevance of credit risk. This credit risk usually reflects the debtor’s ability to repay all the
due accounts in accordance with contract for such assets, which also are related with the
measurement on future cash flow of the examined assets.
Recognition basic of different groups:
Item Basic
Divide the groups according to the credit risks characteristics of the accounts
Group 1: Aging group
receivable
Group 2: Internal related party groups in
Divide the groups according to the credit risks characteristics of whether the
the scope of consolidation of the
creditor is the internal related party in the scope of consolidation of the Company
Company
B. Withdrawal method of provision for bad debts recognized by credit risk group
For the impairment test implemented by groups, the amount of provision for bad debts was
appraised and recognized in accordance with the structure of accounts receivable group and
similar characteristics of credit risk (the debtor’s ability to pay off the loans in accordance
with the provisions of contract), experience of losses, current economic status and the
predicted losses in the accounts receivable group.
Item Withdrawal method
Group 1: Aging group Aging analysis method
Group 2: Internal related party groups in the To make an independent impairment test and if there was no
50
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Item Withdrawal method
scope of consolidation of the Company impairment, should not withdraw the bad debts provision.
In the groups, adopting aging analysis method to withdraw bad debt provision:
Withdrawal proportion for accounts Withdrawal proportion for other
Age
receivable (%) accounts receivable (%)
Within 1 year (including 1 year, similarly
2 2
hereinafter)
1-2 years 5 5
2-3 years 20 20
3-4 years 50 50
4-5 years 50 50
Over 5 years 100 100
③ Receivables with insignificant amount but being individually withdrawn the provision for
bad debts
The Group made independent impairment test on receivables with insignificant amount but
with the following characteristics, if any objective evidence shows that the accounts
receivable has been impaired, impairment loss shall be recognized on the basis of the gap
between the current values of the future cash flow lower than its book value so as to
withdraw provision for bad debts:
A. Receivables have dispute with the other parties or involving lawsuit and arbitration;
B. Receivables have obvious indication showing that the debtors are likely to fail to perform
the duty of repayment, etc.
C. There is other evidence of impairment and the impairment amount can estimated reliably.
(3) Reversal of provision for bad debts
If there is any objective evidence proving that the value of the said receivables has been
restored, and it is objectively related to the events occurred after such loss is recognized, the
impairment-related losses as originally recognized shall be reversed and be recorded into the
profits and losses of the current period. However, the reversed carrying amount shall not be
any more than the post-amortization costs of the said accounts receivable on the day of
51
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
reverse under the assumption that no provision is made for the impairment.
11. Inventory
(1) Classification
The Group’s inventories are classified as non-property inventories and property inventories.
And the non-property inventories include raw materials, goods in process; merchandise on
hand, goods delivered and circulating materials, etc; while the property inventories include
property in process and finished property, etc.
① The finished property refers to the finished and held-for-sale property.
② The property in process (development costs) refers to the unfinished property with the
development purpose for sale.
(2) Pricing method for outgoing inventories
The inventories shall be measured in light of their cost when obtained. The cost of inventory
consists of purchase costs, processing costs and other costs. Inventory is accounted by weight
average method upon receiving and giving. For merchandise on hand shall be accounted by
planned cost, if the difference between planned cost of and actual cost of raw materials is
accounted through the cost variance item, and the planned cost is adjusted to the actual cost
according to the cost difference which the carryover and given-out inventory should shoulder
in the period.
The property inventories are initially measured at the costs, and the costs of the developed
property include the land premium, expenditures for supporting infrastructures, expenditures
for construction and installation projects, the borrowing costs before the completion of the
developed project and other expenses occurred during the development process.
① The public supporting facilities recorded the development costs at the actual costs, the
amortization upon completion was transferred to the costs of houses and other
available-for-sale property, while as for the supporting facilities with operating value and
beneficiary rights owned by the Group as well as available for individual sale and
measurement, which shall be recorded into the “investment property”
② For the accounting policies on borrowing costs occurred for developing property, please
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Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
refer to Note IV. 16 Pricing of “Borrowing Costs”.
(3) Recognition basis of net realizable value and withdrawal method of depreciation reserves
for inventories
The net realizable value refers, in the ordinary course of business, to the account after
deducting the estimated cost of completion, estimated sale expense and relevant taxes from
the estimated sale price of inventories. The net realizable value of inventories shall be fixed
on the basis of valid evidence as well as under consideration of purpose of inventories and
the effect of events after balance-sheet-date.
On the balance sheet date, the inventories shall be measured according to the cost or the net
realizable value, whichever is lower. If the net realizable value is lower than the cost, it shall
withdraw the depreciation reserves for inventories, which was withdrawn in accordance with
the balance that the cost of individual inventory item exceeding the net realizable value.
After withdrawing the depreciation reserves for inventories, if the factors, which cause any
write-down of the inventories, have disappeared, causing the net realizable value of
inventories is higher than its carrying amount; the amount of write-down shall be reversed
from the original amount of depreciation reserve for inventories. The reversed amount shall
be included in the profits and losses of the current period.
(4) The perpetual inventory system is maintained for stock system.
(5) Amortization method of the low-value consumption goods and packing articles
The low-value consumption goods should be amortized by one time amortization when
acquiring and the packing articles are amortized by one time/gradation amortization when
acquiring.
12. Long-term equity investments
The long-term equity investments of this part refer to the long-term equity investments that
the Group has control, joint control or significant influence over the investees. The long-term
equity investment that the Group does not have control, joint control or significant influence
over the investees, should be recognized as available-for-sale financial assets or be measured
by fair value with the changes should be included in the financial assets accounting of the
current gains and losses, and please refer the details of the accounting policies to Notes IV 9
53
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
“financial instrument”.
Joint control, refers to the control jointly owned according to the relevant agreement on an
arrangement by the Group and the relevant activities of the arrangement should be decided
only after the participants which share the control right make consensus. Significant
influence refers to the power of the Group which could anticipate in the finance and the
operation polices of the investees, but could not control or jointly control the formulation of
the policies with the other parties.
(1) Recognition of investment costs
As for long-term equity investments acquired by enterprise merger, if the merger is under the
same control, the share of the book value of the owner’s equity of the merged enterprise, on
the date of merger, is regarded as the initial cost of the long-term equity investment. The
difference between the initial cost of the long-term equity investment and the payment in
cash, non-cash assets transferred as well as the book value of the debts borne by the merging
party shall offset against the capital reserve. If the capital reserve is insufficient to dilute, the
retained earnings shall be adjusted. If the consideration of the merging enterprise is that it
issues equity securities, it shall, on the date of merger, regard the share of the book value of
the shareholder's equity of the merged enterprise on the consolidated financial statement of
the ultimate control party as the initial cost of the long-term equity investment. The total face
value of the stocks issued shall be regarded as the capital stock, while the difference between
the initial cost of the long-term equity investment and total face value of the shares issued
shall offset against the capital reserve. If the capital reserve is insufficient to dilute, the
retained earnings shall be adjusted. The equities of the combined party which respectively
acquired through multiple transaction under the same control that ultimately form into the
combination of the enterprises under the same control, should be disposed according whether
belongs to package deal; if belongs to package deal, each transaction would be executed
accounting treatment by the Company as a transaction of acquiring the control right. If not
belongs to package deal, it shall, on the date of merger, regard the enjoyed share of the book
value of the shareholder's equity of the merged enterprise on the consolidated financial
statement of the ultimate control party as the initial cost of the long-term equity investment,
and as for the difference between the initial investment cost of the long-term equity
investment and sum of the book value of the long-term equity investment before the
54
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
combination and the book value of the consideration of the new payment that further
required on the combination date, should adjust the capital reserve; if the capital reserve is
insufficient to dilute, the retained earnings shall be adjusted. The equity investment held
before the combination date which adopted the equity method for accounting, or the other
comprehensive income confirmed for the available-for-sale financial assets, should not have
any accounting disposal for the moment.
For the long-term investment required from the business combination under different control,
the initial investment cost regarded as long-term equity investment on the purchasing date
according to the combination cost, the combination costs shall be the sum of the fair values
of the assets paid, the liabilities incurred or assumed and the equity securities issued by the
Company. The equities of the acquirees which respectively acquired through multiple
transaction that ultimately form into the combination of the enterprises under the different
control, should be disposed according whether belongs to package deal; if belongs to
package deal, each transaction would be executed accounting treatment by the Company as a
transaction of acquiring the control right. If not belongs to package deal, the sum of the book
value of the original held equity investment of the acquirees and the newly added investment
cost should be regarded as the initial investment cost of the long-term equity investment that
changed to be accounted by cost method. If the original held equity is calculated by cost
method, the other relevant comprehensive income would not have any accounting disposal
for the moment. If the original held equity investment is the financial assets available for sale,
its difference between the fair value and the book value as well as the accumulative changes
of the fair value that include in the other comprehensive income, should transfer into the
current gains and losses.
The commission fees for audit, law services, assessment and consultancy services and other
relevant expenses occurred in the business combination by the combining party or the
purchase party, shall be recorded into current profits and losses upon their occurrence; the
transaction expense from the issuance of equity securities or bonds securities which are as
consideration for combination by the combining party, should be recorded as the initial
amount of equity securities and bonds securities.
Besides the long-term equity investments formed by business combination, the other
long-term equity investments shall be initially measured by cost, the cost is fixed in
55
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
accordance with the ways of gaining, such as actual cash payment paid by the Group, the fair
value of equity securities issued by the Group, the agreed value of the investment contract or
agreement, the fair value or original carrying amount of exchanged assets from non-monetary
assets exchange transaction, the fair value of the long-term equity investments, etc. The
expenses, taxes and other necessary expenditures directly related with gaining the long-term
equity investments shall also be recorded into investment cost. The long-term equity
investment cost for those could execute significant influences on the investees because of
appending the investment or could execute joint control but not form as control, should be as
the sum of the fair value of the original held equity investment and the newly added
investment cost recognized according to the No.22 of Accounting Standards for Business
Enterprises—Recognition and Measurement of Financial Instrument.
(2) Subsequent measurement and recognition of gains or losses
A long-term equity investment where the investing enterprise has joint control (except for
which forms into common operators) or significant influence over the investors should be
measured by equity method. Moreover, long-term equity investment adopting the cost
method in the financial statements, and which the Company has control on invested entity.
① Long-term equity investment measured by adopting cost method
The price of a long-term equity investment measured by adopting the cost method shall be
included at its initial investment cost and append as well as withdraw the cost of investing
and adjusting the long-term equity investment. The return on investment at current period
shall be recognized in accordance with the cash dividend or profit announced to distribute by
the invested entity, except the announced but not distributed cash dividend or profit included
in the actual payment or consideration upon gaining the investment.
② Long-term equity investment measured by adopting equity method
If the initial cost of a long-term equity investment is more than the Company's attributable
share of the fair value of the invested entity's identifiable net assets for investment, the initial
cost of the long-term equity investment may not be adjusted. If the initial cost of a long-term
equity investment is less than the Company's attributable share of the fair value of the
invested entity's identifiable net assets for investment, the difference shall be included in the
current profits and losses and the cost of the long-term equity investment shall be adjusted
simultaneously.
56
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
When measured by adopting equity method, respectively recognize investment income and
other comprehensive income according to the net gains and losses as well as the portion of
other comprehensive income which should be enjoyed or be shared, and at the same time
adjust the book value of the long-term equity investment; corresponding reduce the book
value of the long-term equity investment according to profits which be declared to distribute
by the investees or the portion of the calculation of cash dividends which should be enjoyed;
for the other changes except for the net gains and losses, other comprehensive income and
the owners’ equity except for the profits distribution of the investees, should adjust the book
value of the long-term equity investment as well as include in the capital reserve. The
investing enterprise shall, on the ground of the fair value of all identifiable assets of the
invested entity when it obtains the investment, recognize the attributable share of the net
profits and losses of the invested entity after it adjusts the net profits of the invested entity. If
the accounting policies adopted by the investees is not accord with that of the Group, should
be adjusted according to the accounting policies of the Group and the financial statement of
the investees during the accounting period and according which to recognize the investment
income as well as other comprehensive income. For the transaction happened between the
Group and associated enterprises as well as joint ventures, if the assets launched or sold not
form into business, the portion of the unrealized gains and losses of the internal transaction,
which belongs to the Group according to the calculation of the enjoyed proportion, should
recognize the investment gains and losses on the basis. But the losses of the unrealized
internal transaction happened between the Group and the investees which belongs to the
impairment losses of the transferred assets, should not be neutralized.
The Group shall recognize the net losses of the invested enterprise until the book value of the
long-term equity investment and other long-term rights and interests which substantially
form the net investment made to the invested entity are reduced to zero. However, if the
Group has the obligation to undertake extra losses, it shall be recognized as the estimated
liabilities in accordance with the estimated duties and then recorded into investment losses at
current period. If the invested entity realizes any net profits later, the Group shall, after the
amount of its attributable share of profits offsets against its attributable share of the
un-recognized losses, resume recognizing its attributable share of profits.
For the long-term equity investment held by the Group before the first execution of the new
accounting criterion of the associated enterprises and joint ventures, if there is debit
57
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
difference of the equity investment related to the investment, should be included in the
current gains and losses according to the amount of the straight-line amortization during the
original remained period.
③ Acquiring shares of minority interest
In the preparation for the financial statements, the balance existed between the long-term
equity investment increased by acquiring shares of minority interest and the attributable net
assets on the subsidiary calculated by the increased shares held since the purchase date (or
combination date), the capital reserves shall be adjusted, if the capital reserves are not
sufficient to offset, the retained profits shall be adjusted.
④ Disposal of long-term equity investment
In the preparation of financial statements, the Company disposed part of the long-term equity
investment on subsidiaries without losing its controlling right on them, the balance between
the disposed price and attributable net assets of subsidiaries by disposing the long-term
equity investment shall be recorded into owners’ equity; where the Company losses the
controlling right by disposing part of long-term equity investment on such subsidiaries, it
shall treated in accordance with the relevant accounting policies in Note IV. 5 (2) — Method
on preparation of combined financial statements.
For other ways on disposal of long-term equity investment, the balance between the book
value of the disposed equity and its actual payment gained shall be recorded into current
profits and losses.
For the long-term equity investment measured by adopting equity method, if the remained
equity after disposal still adopts the equity method for measurement, the other
comprehensive income originally recorded into owners’ equity should adopt the same basis
of the accounting disposal of the relevant assets or liabilities directly disposed by the
investees according to the corresponding proportion. The owners’ equity recognized owning
to the changes of the other owners’ equity except for the net gains and losses, other
comprehensive income and the profits distribution of the investees, should be transferred into
the current gains and losses according to the proportion.
For the long-term equity investment which adopts the cost method of measurement, if the
remained equity still adopt the cost method, the other comprehensive income recognized
owning to adopting the equity method for measurement or the recognition and measurement
58
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
standards of financial instrument before acquiring the control of the investees, should adopt
the same basis of the accounting disposal of the relevant assets or liabilities directly disposed
by the investees and should be carried forward into the current gains and losses according to
the proportion; the changes of the other owners’ equity except for the net gains and losses,
other comprehensive income and the profits distribution among the net assets of the investees
which recognized by adopting the equity method for measurement, should be carried forward
into the current gains and losses according to the proportion.
For those the Group lost the control of the investees by disposing part of the equity
investment as well as the remained equity after disposal could execute joint control or
significant influences on the investees, should change to measure by equity method when
compiling the individual financial statement and should adjust the measurement of the
remained equity to equity method as adopted since the time acquired; if the remained equity
after disposal could not execute joint control or significant influences on the investees,
should change the accounting disposal according to the relevant regulations of the
recognition and measurement standards of financial instrument, and its difference between
the fair value and book value on the date lose the control right should be included in the
current gains and losses. For the other comprehensive income recognized by adopting equity
method for measurement or the recognition and measurement standards of financial
instrument before the Group acquired the control of the investees, should execute the
accounting disposal by adopting the same basis of the accounting disposal of the relevant
assets or liabilities directly disposed by the investees when lose the control of them, while the
changes of the other owners’ equity except for the net gains and losses, other comprehensive
income and the profits distribution among the net assets of the investees which recognized by
adopting the equity method for measurement, should be carried forward into the current
gains and losses according to the proportion. Of which, for the disposed remained equity
which adopted the equity method for measurement, the other comprehensive income and the
other owners’ equity should be carried forward according to the proportion; for the disposed
remained equity which changed to execute the accounting disposal according to the
recognition and measurement standards of financial instrument, the other comprehensive
income and the other owners’ equity should be carried forward in full amount.
For those the Group lost the control of the investees by disposing part of the equity
investment, the disposed remained equity should change to calculate according to the
59
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
recognition and measurement standards of financial instrument, and difference between the
fair value and book value on the date lose the control right should be included in the current
gains and losses. For the other comprehensive income recognized from the original equity
investment by adopting the equity method, should execute the accounting disposal by
adopting the same basis of the accounting disposal of the relevant assets or liabilities directly
disposed by the investees when terminate the equity method for measurement, while for the
owners’ equity recognized owning to the changes of the other owner’s equity except for the
net gains and losses, other comprehensive income and the profits distribution of the investees,
should be transferred into the current investment income with full amount when terminate
adopting the equity method.
The Group respectively disposes the equity investment of the subsidiaries through multiple
transactions until lose the control right, if the above transactions belongs to the package deal,
should execute the accounting disposal by regarding each transaction as a deal of disposing
the equity investment of the subsidiaries until lose the control right, while the difference
between each expenses of the disposal and the book value of the long-term equity investment
in accord with the disposed equity before losing the control right, should firstly be
recognized as other comprehensive income then be transferred into the current gains and
losses of losing the control right along until the time when lose it.
13. Investment real estates
The term “investment real estate” refers to the real estate held for generating rent and/or
capital appreciation. Investment real estates of the Group include the right to use any land
which has already been rented; the right to use any land which is held and prepared for
transfer after appreciation; and the right to use any building which has already been rented.
The initial measurement of the investment real estate shall be made at its cost. Subsequent
expenditures incurred for an investment real estate is included in the cost of the investment
real estate when it is probable that economic benefits associated with the investment real
estate will flow to the Group and the cost can be reliably measured, otherwise the
expenditure is recognized in profit or loss in the period in which they are incurred.
The Group shall make a follow-up measurement to the investment real estate by employing
the cost pattern on the date of the balance sheet. An accrual depreciation or amortization shall
be made for the investment real estates in the light of the accounting policies of the use right
of buildings or lands.
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Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
For details of impairment test method and withdrawal method of impairment provision of
investment real estates, please refer to Note IV. 19. “Long-term assets impairment”.
When owner-occupied real estate or inventories are changed into investment real estate or
investment real estate is changed into owner-occupied real estate, of which book value prior
to the change shall be the entry value after the change.
When an investment real estate is changed to an owner-occupied real estate, it would be
transferred to fixed assets or intangible assets at the date of such change. When an
owner-occupied real estate is changed to be held to earn rental or for capital appreciation, the
fixed asset or intangible asset is transferred to investment real estate at the date of such
change. If the fixed asset or intangible asset is changed into investment real estate measured
by adopting the cost pattern, whose book value prior to the change shall be the entry value
after the change; if the fixed asset or intangible asset is changed into investment real estate
measured by adopting the fair value pattern, whose fair value on the date of such change
shall be the entry value after the change
An investment real estate is derecognized on disposal or when the investment real estate is
permanently withdrawn from use and no future economic benefits are expected from its
disposal. The amount of proceeds on sale, transfer, retirement or damage of an investment
real estate less its carrying amount and related taxes and expenses is recognized in profit or
loss in the period in which it is incurred.
14. Fixed assets
(1) Conditions for recognition of fixed assets
The term "fixed assets" refers to the tangible assets that simultaneously possess the features
as follows: (a) they are held for the sake of producing commodities, rendering labor service,
renting or business management; and (b) their useful life is in excess of one fiscal year. The
fixed assets are only recognized when the relevant economic benefits probably flow in the
Group and its cost could be reliable measured. The fixed assets should take the initial
measurement according to the cost and at the same time consider the influences of the factors
of the estimated discard expenses.
(2) Depreciation methods of each fixed asset
The fixed assets should be withdrawn and depreciation by straight-line depreciation within
the useful life since the next month when the fixed assets reach the estimated available state.
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Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
The useful life, estimated net salvage and the yearly discounted rate of each fixed asset are as
follows:
Expected net
Annual
Category of fixed assets Method Useful life (Year) salvage value
deprecation (%)
(%)
Housing and building Straight-line
20-40 10.00 2.25-4.50
depreciation
Machinery equipment Straight-line 10.00
10 9.00
depreciation
Electronic equipment Straight-line 10.00
5 18.00
depreciation
Transportation vehicle Straight-line 10.00
5 18.00
depreciation
Other equipment Straight-line 5 10.00
18.00
depreciation
The “expected net salvage value” refers to the expected amount that the Group may obtain
from the current disposal of a fixed asset after deducting the expected disposal expenses at
the expiration of its expected useful life.
(3) Testing method of impairment and withdrawal method of provision for impairment on
fixed assets
For details of the testing method of impairment and withdraw method of impairment
provision for impairment on fixed assets, please refer to Note IV. 19 “Long-term assets
impairment”.
(4) Recognition basis, pricing and depreciation method of fixed assets by finance lease
The “finance lease” shall refer to a lease that has transferred in substance all the risks and
rewards related to the ownership of an asset. Its ownership may or may not eventually be
transferred. The fixed assets by finance lease shall adopt the same depreciation policy for
self-owned fixed assets. If it is reasonable to be certain that the lessee will obtain the
ownership of the leased asset when the lease term expires, the leased asset shall be fully
depreciated over its useful life. If it is not reasonable to be certain that the lessee will obtain
62
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
the ownership of the leased asset at the expiry of the lease term, the leased asset shall be fully
depreciated over the shorter one of the lease term or its useful life.
(5) Other explanations
The follow-up expenses related to a fixed asset, if the economic benefits pertinent to this
fixed asset are likely to flow into the enterprise and its cost can be reliably measured, shall be
recorded into cost of fixed assets and ultimately recognized as the book value of the replaced
part; otherwise, they shall be included in the current profits and losses.
Terminate to recognize the fixed assets when the fixed assets under the disposing state or be
estimated that could not occur any economy benefits through using or disposing. When the
Group sells, transfers or discards any fixed assets, or when any fixed assets of the Group is
damaged or destroyed, the Group shall deduct the book value of the fixed assets as well as
the relevant taxes from the disposal income, and include the amount in the current profits and
losses.
The Group shall check the useful life, expected net salvage value and depreciation method of
the fixed assets at the end of the year at least, if there is any change, it shall be regarded as a
change of the accounting estimates.
15. Construction in progress
Construction in process is measured at actual cost. Actual cost comprises construction costs,
borrowing costs that are eligible for capitalization before the fixed assets being ready for
their intended us and other relevant costs. Construction in process is transferred to fixed
assets when the assets are ready for their intended use.
For details of the testing method of impairment and withdraw method of impairment
provision on construction in progress, please refer to Note IV. 19 “Long-term assets
impairment”.
16. Borrowing costs
The borrowing costs shall include interest on borrowings, amortization of discounts or
premiums on borrowings, ancillary expenses, and exchange balance on foreign currency
borrowings. When the borrowing costs can be directly attributable to the construction or
production of assets eligible for capitalization, and the asset disbursements or the borrowing
costs have already incurred, and the construction or production activities which are necessary
to prepare the asset for its intended use or sale have already started, the capitalization of
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Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
borrowing costs begins. When the asset eligible for capitalization under acquisition and
construction or production is ready for the intended use or sale, the capitalization of the
borrowing costs shall be ceased. Other borrowing costs shall be recognized as expenses when
incurred.
The to-be-capitalized amount of interests shall be determined in light of the actual interests
incurred of the specially borrowed loan at the present period minus the income of interests
earned on the unused borrowing loans as a deposit in the bank or as a temporary investment;
the enterprise shall calculate and determine the to-be-capitalized amount on the general
borrowing by multiplying the weighted average asset disbursement of the part of the
accumulative asset disbursements minus the general borrowing by the capitalization rate of
the general borrowing used. The capitalization rate shall be calculated and determined in
light of the weighted average interest rate of the general borrowing.
During the period of capitalization, the exchange balance on foreign currency special
borrowings shall be capitalized; the exchange balance on foreign currency general
borrowings shall be recorded into current profits and losses.
The term “assets eligible for capitalization” refers to the fixed assets, investment real estate,
inventories and other assets, of which the acquisition and construction or production may
take quite a long time to get ready for its intended use or for sale.
Where the acquisition and construction or production of a qualified asset is interrupted
abnormally and the interruption period lasts for more than 3 months, the capitalization of the
borrowing costs shall be suspended.
17. Intangible assets
(1) Pricing method, useful life and impairment test
The term “intangible asset” refers to the identifiable non-monetary assets possessed or
controlled by enterprises which have no physical shape.
The intangible assets shall be initially measured according to its cost. The costs related
with the intangible assets, if the economic benefits related to intangible assets are likely to
flow into the enterprise and the cost of intangible assets can be measured reliably, shall be
recorded into the costs of intangible assets; otherwise, it shall be recorded into current profits
and losses upon the occurrence.
The use right of land gained is usually measured as intangible assets. For the self-developed
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Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
and constructed factories and other constructions, the related expenditures on use right of
land and construction costs shall be respectively measured as intangible assets and fixed
assets. For the purchased houses and buildings, the related payment shall be distributed into
the payment for use right of land and the payment for buildings, if it is difficult to be
distributed, the whole payment shall be treated as fixed assets.
For intangible assets with a finite service life, from the time when it is available for use, the
cost after deducting the sum of the expected salvage value and the accumulated impairment
provision shall be amortized by straight line method during the service life. While the
intangible assets without certain service life shall not be amortized.
At the end of period, the Group shall check the service life and amortization method of
intangible assets with finite service life, if there is any change, it shall be regarded as a
change of the accounting estimates. Besides, the Group shall check the service life of
intangible assets without certain service life, if there is any evidence showing that the period
of intangible assets to bring the economic benefits to the enterprise can be prospected, it shall
be estimated the service life and amortized in accordance with the amortization policies for
intangible assets with finite service life.
(2) R & D expenses
The expenditures for internal research and development projects of an enterprise shall be
classified into research expenditures and development expenditures.
The research expenditures shall be recorded into the profit or loss for the current period.
The development expenditures shall be confirmed as intangible assets when they satisfy the
following conditions simultaneously, and shall be recorded into profit or loss for the current
period when they don’t satisfy the following conditions.
① It is feasible technically to finish intangible assets for use or sale;
② It is intended to finish and use or sell the intangible assets;
③ The usefulness of methods for intangible assets to generate economic benefits shall be
proved, including being able to prove that there is a potential market for the products
manufactured by applying the intangible assets or there is a potential market for the
intangible assets itself or the intangible assets will be used internally;
④ It is able to finish the development of the intangible assets, and able to use or sell the
intangible assets, with the support of sufficient technologies, financial resources and other
65
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
resources;
⑤ The development expenditures of the intangible assets can be reliably measured.
As for expenses that can’t be identified as research expenditures or development
expenditures, the occurred R & D expenses shall be all included in current profits and losses.
(3) Testing method of impairment and withdraw method of impairment provision of
intangible assets
For details of the testing method of impairment and withdraw method of impairment
provision on intangible assets, see Notes IV. 19 “Long-term assets impairment”.
18. Amortization method of long-term deferred expenses
Long-term deferred expenses refer to general expenses with the apportioned period over one
year (one year excluded) that have occurred but attributable to the current and future periods.
Long-term deferred expense shall be amortized averagely within benefit period.
19. Impairment of long-term assets
For non-current financial Assets of fixed Assets, projects under construction, intangible
Assets with limited service life, investing real estate with cost model, long-term equity
investment of subsidiaries, cooperative enterprises and joint ventures, the Group should
judge whether decrease in value exists on the date of balance sheet. Recoverable amounts
should be tested for decrease in value if it exists. Other intangible Assets of reputation and
uncertain service life and other non-accessible intangible assets should be tested for decrease
in value no matter whether it exists.
If the recoverable amount is less than book value in impairment test results, the provision for
impairment of differences should include in impairment loss. Recoverable amounts would be
the higher of net value of asset fair value deducting disposal charges or present value of
predicted cash flow. Asset fair value should be determined according to negotiated sales price
of fair trade. If no sales agreement exists but with asset active market, fair value should be
determined according to the Buyer’s price of the asset. If no sales agreement or asset active
market exists, asset fair value could be acquired on the basis of best information available.
Disposal expenses include legal fees, taxes, cartage or other direct expenses of merchantable
Assets related to asset disposal. Present value of predicted asset cash flow should be
determined by the proper discount rate according to Assets in service and predicted cash flow
of final disposal. Asset depreciation reserves should be calculated on the basis of single
66
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Assets. If it is difficult to predict the recoverable amounts for single Assets, recoverable
amounts should be determined according to the belonging asset group. Asset group is the
minimum asset combination producing cash flow independently.
In impairment test, book value of the business reputation in financial report should be shared
to beneficial asset group and asset group combination in collaboration of business merger. It
is shown in the test that if recoverable amounts of shared business reputation asset group or
asset group combination are lower than book value, it should determine the impairment loss.
Impairment loss amount should firstly be deducted and shared to the book value of business
reputation of asset group or asset group combination, then deduct book value of all assets
according to proportions of other book value of above assets in asset group or asset group
combination except business reputation.
After the asset impairment loss is determined, recoverable value amounts would not be
returned in future.
20. Employee compensation
Employee compensation of the Company mainly includes short-term employee
compensation, departure benefits, demission benefits and other long-term employee
compensation. Of which:
Short-term compensation mainly including salary, bonus, allowances and subsidies,
employee services and benefits, medical insurance premiums, birth insurance premium,
industrial injury insurance premium, housing fund, labor union expenditure and personnel
education fund, non-monetary benefits etc. The short-term compensation actually happened
during the accounting period when the active staff offering the service for the Group should
be recognized as liabilities and is included in the current gains and losses or relevant assets
cost. Of which the non-monetary benefits should be measured according to the fair value.
Welfare after demission mainly includes setting drawing plan. Defined contribution plans
include basic endowment insurance, unemployment insurance and annuity. Deposited
amounts are charged to relevant asset costs or current profits and losses during the
period in which they are incurred. Defined benefit plan of the Company is internal early
retirement plan. According to anticipated accumulative welfare unit, the Company makes
estimates by unbiased and consistent actuarial assumption for the demographic variables and
financial variables, measures the obligations produced in defined benefit plans, and
67
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
determines the vesting period. On balance sheet date, the Company will list all obligations in
defined benefit plans as present value and include current service costs into current profits
and losses.
When terminating labor relations before expiration of contract, or layoffs with compensations,
and the Company cannot terminate the labor relations unilaterally or reduce the demission
welfare, remuneration and liabilities produced from the demission welfare should be
determined and included in current profits and losses when determining the costs of
demission welfare and recombination. However, demission welfare not fully paid within 12
months after annual Reporting Period should be handled the same as other long-term
employees’ payrolls.
The inside employee retirement plan is treated by adopting the same principle with the above
dismiss ion welfare. The group would recorded the salary and the social security insurance
fees paid and so on from the employee’s service terminative date to normal retirement date
into current profits and losses (dismiss ion welfare) under the condition that they meet the
recognition conditions of estimated liabilities.
The other long-term welfare that the Group offers to the staffs, if met with the setting
drawing plan, should be accounting disposed according to the setting drawing plan, while the
rest should be disposed according to the setting revenue plan.
21. Estimated liabilities
The company should recognize the related obligation as a provision for liability when the
obligation meets the following conditions: (1) That obligation is a present obligation of the
enterprise; (2) It is probable that an outflow of economic benefits from the enterprise will be
required to settle the obligation; (3) A reliable estimate can be made of the amount of the
obligation.
On the balance sheet date, an enterprise shall take into full consideration of the risks,
uncertainty, time value of money, and other factors pertinent to the Contingencies to measure
the estimated liabilities in accordance with the best estimate of the necessary expenses for the
performance of the current obligation.
When all or some of the expenses necessary for the liquidation of an estimated liabilities of
an enterprise is expected to be compensated by a third party, the compensation should be
separately recognized as an asset only when it is virtually certain that the reimbursement will
68
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
be obtained. Besides, the amount recognized for the reimbursement should not exceed the
book value of the estimated liabilities.
22. Revenue
(1) Revenue from selling goods
No revenue from selling goods may be recognized unless the following conditions are met
simultaneously: the significant risks and rewards of ownership of the goods have been
transferred to the buyer by the enterprise; the enterprise retains neither continuous
management right that usually keeps relation with the ownership nor effective control over
the sold goods; the relevant amount of revenue can be measured in a reliable way; the
relevant economic benefits may flow into the enterprise; and the relevant costs incurred or to
be incurred can be measured in a reliable way.
The recognition of revenue from commodities for the home market when shipping the goods:
for goods exported, the revenue shall be recognized once the goods are cleared through
customs and delivered to the carrier designated by the purchaser.
(2) Providing labor services
If the Group can reliably estimate the outcome of a transaction concerning the labor services
it provides, it shall recognize the revenue from providing services employing the
percentage-of-completion method on the date of the balance sheet. The completed proportion
of a transaction concerning the providing of labor services shall be decided by the proportion
of the labor service already provided to the total labor service to provide.
The outcome of a transaction concerning the providing of labor services can be measured in a
reliable way, means that the following conditions shall be met simultaneously: ① The
amount of revenue can be measured in a reliable way; ② The relevant economic benefits are
likely to flow into the enterprise; ③ The schedule of completion under the transaction can be
confirmed in a reliable way; and ④ The costs incurred or to be incurred in the transaction
can be measured in a reliable way.
If the outcome of a transaction concerning the providing of labor services cannot be
measured in a reliable way, the revenue from the providing of labor services shall be
recognized in accordance with the amount of the cost of labor services incurred and expected
to be compensated, and make the cost of labor services incurred as the current expenses. If it
is predicted that the cost of labor services incurred couldn’t be compensated, thus no revenue
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Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
shall be recognized.
Where a contract or agreement signed between Group and other enterprises concerns selling
goods and providing of labor services, if the part of sale of goods and the part of providing
labor services can be distinguished from each other and can be measured respectively, the
part of sale of goods and the part of providing labor services shall be treated respectively. If
the part of selling goods and the part of providing labor services cannot be distinguished
from each other, or if the part of sale of goods and the part of providing labor services can be
distinguished from each other but cannot be measured respectively, both parts shall be
conducted as selling goods.
(3) Recognition method of the sales revenues of real estate
The Group had signed the sales contract with the real estate had completed and be examined
qualified, and reached the referable using conditions agreed by the sales contract as well as at
the same time the housing accounts had been recognized the realize of the sales revenues
when received with full amount according to the sales contract.
(4) Royalty revenue
In accordance with relevant contract or agreement, the amount of royalty revenue should be
recognized as revenue on accrual basis.
(5) Interest revenue
The amount of interest revenue should be measured and confirmed in accordance with the
length of time for which the Group’s monetary fund is used by others and the agreed interest
rate.
(6)Property leasing revenue
For the recognition method of the property leasing revenue, please refer to Notes IV. 25.
23. Government subsidies
A government subsidy means the monetary or non-monetary assets obtained free by the
Group from the government, but excluding the capital invested by the government as the
owner of the enterprise. Government subsidies consist of the government subsidies pertinent
to assets and government subsidies pertinent to income.
If a government subsidy is a monetary asset, it shall be measured in the light of the received
or receivable amount. If a government subsidy is a non-monetary asset, it shall be measured
at its fair value. If its fair value cannot be obtained in a reliable way, it shall be measured at
70
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
its nominal amount. The government subsidies measured at their nominal amounts shall be
directly included in the current profits and losses.
The government subsidies pertinent to assets shall be recognized as deferred income, equally
distributed within the useful lives of the relevant assets, and included in the current profits
and losses. The government subsidies pertinent to incomes shall be treated respectively in
accordance with the circumstances as follows: those subsidies used for compensating the
related future expenses or losses of the enterprise shall be recognized as deferred income and
shall included in the current profits and losses during the period when the relevant expenses
are recognized; or those subsidies used for compensating the related expenses or losses
incurred to the enterprise shall be directly included in the current profits and losses.
Where it is necessary to refund any government subsidy which has been recognized, it shall
be treated respectively in accordance with the circumstances as follows: if there is the
deferred income concerned, the book balance of the deferred income shall be offset against,
but the excessive part shall be included in the current profits and losses; or if there is no
deferred income concerned to the government subsidy, it shall be directly included in the
current profits and losses.
24. Deferred income tax assets/deferred income tax liabilities
(1) Income tax of the current period
On the balance sheet date, for the current income tax liabilities (or assets) of the current
period as well as the part formed during the previous period, should be measured by the
income tax of the estimated payable (returnable) amount which be calculated according to
the regulations of the tax law. The amount of the income tax payable which is based by the
calculation of the current income tax expenses, are according to the result measured from the
corresponding adjustment of the pre-tax accounting profit of 2014 which in accord to the
relevant regulations of the tax law.
(2) Deferred income tax assets and deferred income tax liabilities
The difference between the book value of certain assets and liabilities and their tax
assessment basis, as well as the temporary difference occurs from the difference between the
book value of the items which not be recognized as assets and liabilities but could confirm
their tax assessment basis according to the regulations of the tax law, the deferred income tax
assets and the deferred income tax liabilities should be recognized by adopting liabilities law
71
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
of the balance sheet.
No deferred tax liability is recognized for a temporary difference arising from the initial
recognition of goodwill, the initial recognition of assets or liabilities due to a transaction
other than a business combination, which affects neither accounting profit nor taxable profit
(or deductible loss). Besides, no deferred tax assets is recognized for the taxable temporary
differences related to the investments of subsidiary companies, associated enterprises and
joint enterprises, and the investing enterprise can control the time of the reverse of temporary
differences as well as the temporary differences are unlikely to be reversed in the excepted
future. Otherwise, the Group should recognize the deferred income tax liabilities arising from
other taxable temporary difference.
No deferred taxable assets should be recognized for the deductible temporary difference of
initial recognition of assets and liabilities arising from the transaction which is not business
combination, the accounting profits will not be affected, nor will the taxable amount or
deductible loss be affected at the time of transaction. Besides, no deferred taxable assets
should be recognized for the deductible temporary difference related to the investments of
the subsidiary companies, associated enterprises and joint enterprises, which are not likely to
be reversed in the expected future or is not likely to acquire any amount of taxable income
tax that may be used for making up such deductible temporary differences. Otherwise, the
Company shall recognize the deferred income tax assets arising from a deductible temporary
difference basing on the extent of the amount of the taxable income that is likely to be
acquired to make up such deductible temporary differences
For any deductible loss or tax deduction that can be carried forward to the next year, the
corresponding deferred income tax asset shall be determined to the extent that the amount of
future taxable income to be offset by the deductible loss or tax deduction to be likely
obtained.
On the balance sheet date, the deferred income tax assets and the deferred income tax
liabilities shall be measured at the tax rate applicable to the period during which the assets
are expected to be recovered or the liabilities are expected to be settled.
The book value of deferred income tax assets shall be reviewed at each balance sheet date. If
it is unlikely to obtain sufficient taxable income to offset against the benefit of the deferred
income tax asset, the book value of the deferred income tax assets shall be written down. Any
72
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
such write-down should be subsequently reversed where it becomes probable that sufficient
taxable income will be available.
(3) Income tax expenses
Income tax expenses include current income tax and deferred income tax.
The rest current income tax and the deferred income tax expenses or revenue should be
included into current gains and losses except for the current income tax and the deferred
income tax related to the transaction and events that be confirmed as other comprehensive
income or be directly included in the shareholders’ equity which should be included in other
comprehensive income or shareholders’ equity as well as the book value for adjusting the
goodwill of the deferred income tax occurs from the business combination.
(4) Offset of income tax
The current income tax assets and liabilities of the Group should be listed by the written-off
net amount which intend to executes the net amount settlement as well as the assets acquiring
and liabilities liquidation at the same time while owns the legal rights of settling the net
amount.
The deferred income tax assets and liabilities of the Group should be listed as written-off net
amount when having the legal rights of settling the current income tax assets and liabilities
by net amount and the deferred income tax and liabilities is relevant to the income tax which
be collected from the same taxpaying bodies by the same tax collection and administration
department or is relevant to the different taxpaying bodies but during each period which there
is significant reverse of the deferred income assets and liabilities in the future and among
which the involved taxpaying bodies intend to settle the current income tax and liabilities by
net amount or are at the same time acquire the asset as well as liquidate the liabilities.
25. Leasing
Financing leasing virtually transferred the whole risks and leasing of the compensation
related to the assets ownership and their ownership may eventually be transferred or maybe
not. Other leasing except for the financing leasing is operating leasing.
(1) Business of operating leases recorded by the Group as the lessee
The rent expenses from operating leases shall be recorded by the lessee in the relevant asset
costs or the profits and losses of the current period by using the straight-line method over
each period of the lease term. The initial direct costs shall be recognized as the profits and
73
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
losses of the current period. The contingent rents shall be recorded into the profits and losses
of the current period in which they actually arise.
(2) Business of operating leases recorded by the Group as the lessor
The rent incomes from operating leases shall be recognized as the profits and losses of the
current period by using the straight-line method over each period of the lease term. The
initial direct costs of great amount shall be capitalized when incurred, and be recorded into
current profits and losses in accordance with the same basis for recognition of rent incomes
over the whole lease term. The initial direct costs of small amount shall be recorded into
current profits and losses when incurred. The contingent rents shall be recorded into the
profits and losses of the current period in which they actually arise.
(3) Business of finance leases recorded by the Group as the lessee
On the lease beginning date, the Group shall record the lower one of the fair value of the
leased asset and the present value of the minimum lease payments on the lease beginning
date as the entering value in an account, recognize the amount of the minimum lease
payments as the entering value in an account of long-term account payable, and treat the
balance between the recorded amount of the leased asset and the long-term account payable
as unrecognized financing charges. Besides, the initial direct costs directly attributable to the
leased item incurred during the process of lease negotiating and signing the leasing
agreement shall be recorded in the asset value of the current period. The balance through
deducting unrecognized financing charges from the minimum lease payments shall be
respectively stated in long-term liabilities and long-term liabilities due within 1 year.
Unrecognized financing charges shall be adopted by the effective interest rate method in the
lease term, so as to calculate and recognize current financing charges. The contingent rents
shall be recorded into the profits and losses of the current period in which they actually arise.
(4) Business of finance leases recorded by the Group as the lessor
On the beginning date of the lease term, the Group shall recognize the sum of the minimum
lease receipts on the lease beginning date and the initial direct costs as the entering value in
an account of the financing lease values receivable, and record the unguaranteed residual
value at the same time. The balance between the sum of the minimum lease receipts, the
initial direct costs and the unguaranteed residual value and the sum of their present values
shall be recognized as unrealized financing income. The balance through deducting
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Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
unrealized financing incomes from the finance lease accounts receivable shall be respectively
stated in long-term claims and long-term claims due within 1 year.
Unrecognized financing incomes shall be adopted by the effective interest rate method in the
lease term, so as to calculate and recognize current financing revenues. The contingent rents
shall be recorded into the profits and losses of the current period in which they actually arise.
26. Changes in main accounting policies and estimates
(1) Change of accounting policies
There was no any change of accounting policies of the Company in the Reporting Period.
(2) Change of accounting estimates
There was no any change of accounting estimate of the Company in the Reporting Period.
27. Critical accounting judgments and estimates
Due to the inside uncertainty of operating activity, the Group needed to make judgments,
estimates and assumption on the book value of the accounts without accurate measurement
during the employment of accounting policies. And these judgments, estimates and
assumption were made basing on the prior experience of the senior executives of the Group,
as well as in consideration of other factors. These judgments, estimates and assumption
would also affect the report amount of income, costs, assets and liabilities, as well as the
disclosure of contingent liabilities on balance sheet date. However, the uncertainty of these
estimates was likely to cause significant adjustment on the book value of the affected assets
and liabilities.
The Group would check periodically the above judgments, estimates and assumption on the
basis of continuing operation. For the changes in accounting estimates only affected on the
current period, the influence should be recognized at the period of change occurred; for the
changes in accounting estimates affected the current period and also the future period, the
influence should be recognized at the period of change occurred and future period.
On the balance sheet date, the Group needed to make judgments, estimates and assumption
on the accounts in the following important items:
(1) Categorization of leasing
In accordance with Accounting Standards for Enterprises No. 21 – Leasing, the Group
categorized the leasing into operating lease and finance lease. During the categorization, the
management level needed to make analysis and judgment on whether all the risk and
75
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
compensation related with the leased assets had been transferred to the leasee, or whether the
Group had already undertaken all the risk and compensation related with the leased assets.
(2) Provision for bad debts
In accordance with the accounting policies of accounts receivable, the Group measured the
losses for bad debts by adopting allowance method. The impairment of accounts receivable
was based on the appraisal of the recoverability of accounts receivable. The impairment of
accounts receivable was dependent on the judgment and estimates. The actual amount and
the difference of previous estimates would affect the book value of accounts receivable and
the withdrawal and reversal on provision for bad debts of accounts receivable during the
period of estimates being changed.
(3) Provision for falling price of inventories
In accordance with the accounting policies of inventories, for the inventories that the costs
were more than the net realizable value as well as out-of-date and dull-sale inventories, the
Group withdrawn the provision for falling price of inventories on the lower one between
costs and net realizable value. Evaluating the falling price of inventories needed the
management level gain the valid evidence and take full consideration of the purpose of
inventories, influence of events after balance sheet date and other factors, and then made
relevant judgments and estimates. The actual amount and the difference of previous estimates
would affect the book value of inventories and the withdrawal and reversal on provision for
bad debts of inventories during the period of estimates being changed.
(4) The fair value of financial instrument
For the financial instruments without active market, the Group recognized the fair value by
various methods. These evaluation methods included discounted cash flow mode analysis,
etc. The Group needed to estimate the future cash flow, credit risk, fluctuation rate of market
and relativity and other factors, as well as choose the property discount rate. Due to the
uncertainty of relevant assumptions, so their changes would affect the fair value of financial
instrument.
(5) Held-to-maturity investments
The Company classifies the non-derivative financial asset with a fixed or determinable
amount of repo price, and a fixed date of maturity, which the enterprise holds for a definite
purpose or the enterprise is able to hold until its maturity, to held-to-maturity investment.
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Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Such classification concerns lots of judgments. During the judgment process, the Company
will assess the purpose and capability for holding such kind of investment to maturity. Except
for special cases (for example, selling investment with no-large amount when the maturity
date is closely to come), if the Company can’t hold the investment to maturity date, the
Company should re-classify all that investment to available-for-sale financial assets, and
shouldn’t classify those financial assets into hold-to-maturity investment in the current fiscal
year and the next two complete fiscal years. Such cases may have significant impact on
related financial assets value stated in financial statements, and may influence the risk
management strategy for financial tools of the Company.
(6) Impairment of held-to-maturity investment
The decision about confirming the impairment of the investment held-to-maturity by the
Company depends on the judgment of the management layer to a great extent. The objective
evidences of the occurrence of the impairment include there is serious financial difficulties of
the issuer which lead the financial assets could not be continued to deal in the active market
and could not execute the clauses of the contracts (for example, to pay for the interests or the
principal occurs default) and so on. When executing the judgment, the Company should
assess the influences of the objective evidences of the occurrence of the impairment on the
estimated future cash flow of the investment.
(7) The impairment of financial assets available for sale
The Group judged whether the financial assets available for sale were impaired relying
heavily on the judgment and assumption of the management team, so as to decide whether
recognized the impairment losses in the income statement. During the process of making the
judgment and assumption, the Group needed to appraise the balance of the cost of the
investment exceeding its fair value and the continuous period, the financial status and
business forecast in a short period, including the industrial situation, technical reform, credit
level, default rate and risk of counterparty.
(8) Provision for impairment of non-financial non-current assets
The Group made a judgment on the non-current assets other than financial assets whether
they had any indication of impairment on the balance sheet date. For the intangible assets
without finite service life, other than the annual impairment test, they should be subject to the
impairment test when there was any indication of impairment. For other non-current
77
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
non-financial assets, which should be subjected to impairment test when there was indication
of impairment indicated that the book value can’t be recoverable.
When the book value of the assets or assets portfolio was more than the recoverable amount,
which was the higher one between the net amount of fair value after deducting the disposal
expenses and the discounted amount of the estimated future cash flow, it means impairment
incurred.
The net amount of fair value after deducting the disposal expenses should be fixed the price
in the sale agreement for similar assets in the fair transaction minus the increased costs
directly attributable to the assets disposal.
When estimated the discounted value of future cash flow, the Group needed to make
important judgment on the output, selling price, relevant costs and the discount rate for
calculating the discounted amount, etc. When estimated the recoverable amount, the Group
would adopt all the available documents, including the prediction for relevant output, selling
price and relevant operating costs arising from reasonable and supportive assumptions.
The Group made the impairment test on goodwill at least one time per year, which required
to predict the discounted amount of the future cash flow of the assets or assets portfolio with
the distributed good will, for which, the Group needed to predict the future cash flow of the
assets or assets portfolio, and adopt the property discounted rate to decide the discounted
amount of future cash flow.
(9) Depreciation and amortization
For the investment real estate, fixed assets and intangible assets, the Group withdrew the
depreciation and amortization by adopting the straight-line method during the service life
after full consideration of the salvage value. The Group checked the service life periodically
so as to decide the amount of depreciation and amortization at each Reporting Period. The
service life was fixed by the Group in accordance with the previous experience of the similar
assets and the expected technical update. If there was any significant change on the previous
estimates, the depreciation and amortization expenses should be adjusted.
(10) Expenditures for development
When fixing the amount of capitalization, the management level of the Group needed to
make assumption on the predicted future cash flow, property discounted rate and estimated
beneficiary period for relevant assets.
78
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
(11) Deferred income tax assets
Within the limit that it was likely to have sufficient taxable profits to offset the losses, the
Group recognized the deferred income tax assets by all the unused tax losses, which needed
the management level of the Group to estimate time and amount of the future taxable profits
incurred with many judgments, as well as integrate strategy of tax payment, to decide the
amount of deferred income tax assets which should be recognized.
(12) Income tax
During the routine operating activities, there were some uncertainty in the ultimate tax
treatment and calculation for parts of transactions. Some accounts of such transaction could
be listed as pre-tax expenditures only after the approval of taxation authorities. If there were
any differences between the ultimate result of recognition for these taxation maters and their
initial estimates, the differences would affect the current income tax and deferred income tax
at the period of ultimate recognition.
(13) Internal early retirement welfare and supplementary retirement welfare
Amounts of expenditures and liabilities of internal early retirement welfare and
supplementary retirement welfare should be determined according to assumption terms.
Assumption terms include discount rate, average growth rate of medical costs, growth rate of
subsidies for early retirement employees and retirees and other factors. The differences of
actual results and assumption should be confirmed immediately and included into costs of
current year. Although the management have adopted reasonable assumption terms, changes
of actual experience value and assumption terms may affect the internal early retirement
welfare, supplementary retirement benefits and balance of liabilities.
(14) Estimated liabilities
The Group made the estimation on product quality guarantee, predicted loss of contract and
the fine for delayed delivery etc. and withdrew the relevant provision for estimated liabilities
in accordance the provisions of contract, current knowledge and experience. Under the
condition that the contingent event has formed a current duty and fulfilling the duty is likely
to cause the economical interest outflow the Group, the Group measures the estimated
liabilities in accordance with the best estimate of the necessary expenses for the performance
of the current duty. The recognition and measurement of estimated liabilities were heavily
relied on the judgment of the management team. During the process of making judgment, the
79
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Group needed to appraise the relevant risks, uncertainty and the time value of money and etc.
Of which, the Group estimated the liabilities basing on the after-sale services commitments
to the customers upon the sale, repair and reform of goods. When estimating the liabilities,
the Group has fully taken the consideration of the latest repair experience, but which may not
reflect the repair situation in the future. Any increase / decrease of the provision for estimated
liabilities may affect the profits and losses in the future periods.
V. Taxation
1. Main taxes and tax rate
Category of taxes Specific situation of the taxes rate
Calculated the output tax at 3%, 5%, 6%, 11%, 13%, 17% and paid the VAT by
the amount after deducting the deductible withholding VAT at current period,
VAT
of which the VAT applicable to easy collection won’t belong to the deductible
withholding VAT.
Paid by 5% of taxable business income.; and VAT replaced the business tax
Business tax
from May 1, 2016.
Paid at 7% of the circulating tax actually paid, of which Dongguan Packing,
Urban maintenance and construction
tax Dongguan Konka, Boluo Konka, Boluo Konka Precision, and Kunshan
Kangsheng of 5%.
Paid at 25% of the taxable income, of which Hong Kong Konka, Konka
Household Appliances Investment, Konka Household Appliances International
Trading, Konka Zhisheng, and Zhongkang Supply Chain of 16.5%;
Enterprise income tax
Telecommunication Technology, Kunshan Konka, Dongguan Konka, Anhui
Konka, Konka E-display, and Wankaida and Chongqing Qingjia of 15%; and
Europe Konka of 31%.
Education surtax Paid at 3% of the circulating tax actually paid.
Local education surtax Paid at 2% of the circulating tax actually paid.
Note: (1) On March 23, 2016, the Ministry of Finance and the State Administration of
Taxation issued the Notice on Overall Promotion of Pilot Change from Business Tax to VAT
(CS [2016)] NO.36). Since May 1, 2016, the pilot change from business tax to VAT has been
overall promoted in nationwide. The industries of construction, real estate, financing, life
service, and so on were all included into the pilot range and related business taxpayers will
pay VAT instead of business tax. The Company has followed the aforesaid policy for its
80
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
businesses belonging to the industries of real estate, information service, immovable property
leasing, and so on.
(2) In accordance with the Notice on Printing the Administration Method on Charging and
Use of the Treatment Funds of Discarded Electronic Appliance and Electric Products issued
by the Ministry of Finance, Ministry of Environmental Protection, National Development
and Reform Commission, Ministry of Industry and Information, General Administration of
Customs and National Taxation Bureau (CZ [2012] No. 34), and the Administration Method
on Charging and Use of the Treatment Funds of Discarded Electronic Appliance and Electric
Products issued by National Taxation Bureau (GJSWZJGG [2012] No. 41), the domestic
manufacturer of the electrical appliances and electronic products of PRC started to pay the
treatment funds for discarded electrical appliance and electronic products according the sales
volume (trusted processing amount) and relevant charging standards from July 1, 2012.
According to the regulations, the Group’s charging standards were RMB13 per set of TV,
RMB12 per set of refrigerator and RMB7 per set of washing machine.
(3) According to regulations of Temporary Provisions of Income Tax of Trans-boundary Tax
Payment Enterprises by State Administration of Taxation, resident enterprises without
business establishment or places of legal persons should be tax payment enterprises with the
administrative measures of income tax of “unified computing, level-to-level administration,
local prepayment, liquidation summary, and finance transfer”. It came into force from
January 1, 2008. According to the above methods, the Company’s sales branch companies in
each area will hand in the corporate income taxes in advance from January 1, 2008 and will
be final settled uniformly by the Company at the year-end.
2. Tax preference and approved document
(1) On August 5, 2014, the subsidiary of the Company, Kunshan Konka Electronics Co., Ltd.
acquired the certificate of high-technology enterprises joint issued by Jiangsu Province
Science and Technology Department, Department of Finance of Jiangsu Province, Jiangsu
Provincial Office, SAT, and Jiangsu Local Taxation Bureau with the certification number of
GF201432000413 and the validity of three years. According to the relevant taxation
regulations, the Kunshan Konka could enjoy the relevant preferential tax policy on the
high-tech enterprise for continuous 3 years from 2014 to 2016, and pay for the corporate
income tax according to 15% of the preferential tax rate.
(2) On September 30, 2014, the subsidiary of the Company Shenzhen Konka
81
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Telecommunication Technology Co., Ltd. acquired the certificate of high-technology
enterprises jointly issued by Shenzhen Science and technology Innovation Committee,
Shenzhen Finance Committee, Shenzhen Provincial Office, SAT, and Shenzhen Local
Taxation Bureau, with the certification number of GR201444201101 and the validity of three
years. According to the relevant taxation regulations, the Telecommunication Technology
could enjoy the relevant preferential tax policy on the high-tech enterprise for continuous 3
years from 2014 to 2016, and pay for the corporate income tax according to 15% of the
preferential tax rate.
(3) On September 30, 2014, the Company’s subsidiary- Wankaida acquired the certificate of
high-technology enterprises joint issued by Shenzhen Science and technology Innovation
Committee, Shenzhen Finance Committee, Shenzhen Provincial Office, SAT, and Shenzhen
Local Taxation Bureau with the certification number of GR201444201523 and the validity of
three years. According to the relevant taxation regulations, the Anhui Tongchuang could
enjoy the relevant preferential tax policy on the high-tech enterprise for continuous 3 years
from 2012 to 2014, and pay for the corporate income tax according to 15% of the preferential
tax rate.
(4) On October 10, 2014, the subsidiary of the Company, Dongguan Konka acquired the
certificate of high-technology enterprises joint issued by Guangdong Province Science and
Technology Department, Department of Finance of Guangdong Province, Guangdong
Province Municipal Office, SAT, and Guangdong Local Taxation Bureau with the
certification number of GF201444001341 and the validity of three years. According to the
relevant taxation regulations, the Dongguan Konka could enjoy the relevant preferential tax
policy on the high-tech enterprise for continuous 3 years since 2014 (2014~2016), and pay
for the corporate income tax according to 15% of the preferential tax rate.
(5) On October 21, 2016, the subsidiary of the Company, Anhui Konka acquired the
certificate of high-technology enterprises joint issued by Anhui Province Science and
Technology Department, Department of Finance of Anhui Province, Anhui Provincial Office,
SAT, and Anhui Local Taxation Bureau with the certification number of GR201634000520
and the validity of three years. According to the relevant taxation regulations, the Anhui
Konka could enjoy the relevant preferential tax policy on the high-tech enterprise for
continuous 3 years from 2016 to 2018, and pay for the corporate income tax according to
15% of the preferential tax rate.
82
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
(6) On November 21, 2016, the subsidiary of the Company, Konka E-display acquired the
certificate of high-technology enterprises joint issued by Shenzhen Science and Technology
Innovation Committee, Finance Commission of Shenzhen Municipality, Shenzhen Municipal
Office, SAT, and Shenzhen Local Taxation Bureau with the certification number of
GR201644201332 and the validity of three years. According to the relevant taxation
regulations, the Konka E-display could enjoy the relevant preferential tax policy on the
high-tech enterprise for continuous 3 years from 2016 to 2018, and pay for the corporate
income tax according to 15% of the preferential tax rate.
(7) According to CS[2011]No.58 Notice to Implement the Tax Policy Problem Related with
Western Development Strategy, Chongqing Qingjia Electronics Co., Ltd., a subsidiary of our
company shall pay the enterprise income tax according to the preferential rate of 15% from
January 1, 2011 to December 31, 2020.
(8) According to the CS No. [2011] 100 Article issued by Ministry of Finance and State
Administration of Taxation, if the ordinary VAT payer sells software products developed by
itself, the VAT is levied at the rate of 17% and after that, the part of actual tax burden of VAT
which exceeds 3% can enjoy the policy of refunding taxes immediately after levying taxes.
The subsidiaries of the Company, Shenzhen Konka Telecommunication Technology Co.,
Ltd., Shenzhen Konka Information Network Co., Ltd., Shenzhen Wankaida Science and
Technology Co., Ltd. and Shenzhen Konka Yishijie Commercial Display Co., Ltd. enjoy
such favorable policy.
VI. Notes on major items in consolidated financial statements of the Company
Unless otherwise noted, the following annotation project (including the main projects
annotation of the financial statement of the Company), the period-begin refers to January 1,
2017, the period-end refers to June 30, 2017 and this period refers to January – June 2017
with the last period of January – June 2016.
1. Monetary funds
Item Closing balance Opening balance
Cash on hand 2,243.88 2,354.63
Bank deposits 2,326,783,835.34 2,020,900,590.51
Other monetary funds 163,293,524.85 596,703,311.28
Total 2,490,079,604.07 2,617,606,256.42
Of which: total amount deposited in
443,043,503.51 643,590,382.98
overseas
83
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Notes: The closing balance of other monetary fund was the deposits of each margin deposit
not withdrawn at any time.
2. Financial assets measured by fair value and the changes be included in the current
gains and losses
Item Closing balance Opening balance
Income from agreement of forward
855,984.37 39,894,844.12
foreign exchange purchase
Transactional financial assets 168,120,900.00 212,190,150.00
Foreign exchange option 5,052,542.28
Total 174,029,426.65 252,084,994.12
3. Notes receivable
(1) Notes receivable listed by Item
Item Closing balance Opening balance
Bank acceptance bill 2,381,704,149.01 2,866,434,355.03
Trade acceptance 47,734,829.76 5,199,143.79
Total 2,429,438,978.77 2,871,633,498.82
(2) Notes receivable pledged at the period-end
Item Amount
Bank acceptance bill 1,367,853,053.41
Total 1,367,853,053.41
Notes: Up to June 30, 2017, the Company pledged the banker’s acceptance bill of the book
value of RMB 1,367,853,053.41 for the comprehensive financing business such as handling
the billing, letter of credit and the trading financing.
(3) Notes receivable which had endorsed by the Company or had discounted and had not due
on the balance sheet date at the year-end
Amount of recognition termination at the Amount of recognition
Item
period-end termination at the period-end
Bank acceptance bill 596,282,708.80 —
Total 596,282,708.80 —
4. Accounts receivable
84
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
(1) Accounts receivable disclosed by category
Closing balance
Book balance Bad debt provision
Category Withdra
Proportion wal Book value
Amount Amount
(%) proporti
on (%)
Accounts receivable with
significant individual amount
24,105,446.05 1.05 24,105,446.05 100.00 0.00
and make independent
provision for bad debt
Accounts receivable withdrawn
bad debt provision according to
credit risks characteristics
Group 1: aging group 2,172,166,790.55 94.18 234,656,920.97 10.80 1,937,509,869.58
Subtotal of groups 2,172,166,790.55 94.18 234,656,920.97 10.80 1,937,509,869.58
Accounts receivable with
insignificant single amount for
109,892,524.23 4.77 80,483,853.79 73.24 29,408,670.44
which bad debt provision
separately accrued
Total 2,306,164,760.83 100.00 339,246,220.81 14.71 1,966,918,540.02
(Continued)
Opening balance
Book balance Bad debt provision
Category Withdra
Proportion wal Book value
Amount Amount
(%) proporti
on (%)
Accounts receivable with
significant individual amount
24,684,155.33 0.93 24,684,155.33 100.00 -
and make independent
provision for bad debt
Accounts receivable withdrawn
bad debt provision according to
credit risks characteristics
Group 1: aging group 2,516,341,840.82 94.77 242,313,342.19 9.63 2,274,028,498.63
85
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Opening balance
Book balance Bad debt provision
Category Withdra
Proportion wal Book value
Amount Amount
(%) proporti
on (%)
Subtotal of groups 2,516,341,840.82 94.77 242,313,342.19 9.63 2,274,028,498.63
Accounts receivable with
insignificant single amount for
which bad debt provision 114,253,229.55 4.30 80,316,179.69 70.30 33,937,049.86
separately accrued
Total 2,655,279,225.70 100.00 347,313,677.21 13.08 2,307,965,548.49
① Accounts receivable with significant individual amount and make independent provision
for bad debt at the year-end
Closing balance
Accounts receivable (classified by
Withdrawal
units) Accounts receivable Bad debt provision Withdrawal reason
proportion (%)
The counterparty’s company
DSC HOLDINGS LIMITED 24,105,446.05 24,105,446.05 100.00 went bankrupt and expected
hard to recover
② In the groups, accounts receivable adopting aging analysis method to accrue bad debt
provision
Closing balance
Aging
Withdrawal proportion
Accounts receivable Bad debt provision
(%)
Within 1 year 1,934,601,471.67 38,692,029.42 2.00
1 to 2 years 33,435,887.73 1,671,794.39 5.00
2 to 3 years 8,034,493.35 1,606,898.67 20.00
3 to 4 years 5,547,644.29 2,773,822.15 50.00
4 to 5 years 1,269,834.34 634,917.17 50.00
Over 5 years 189,277,459.17 189,277,459.17 100.00
Total 2,172,166,790.55 234,656,920.97
86
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
③ Top 5 of the accounts receivable with insignificant single amount but individually
withdrawn the bad debt provision
Closing balance
Name Accounts Bad debt Withdrawal Withdrawal
receivable provision proportion (%) reason
H-BUSTER DO BRASIL Had difficulty in
18,509,467.26 18,509,467.26 100.00 operation
INDUSTRIA
HENAN BROADCAST & evidence shows
TELEVISION NETWORK CO., 18,320,000.00 5,496,000.00 30.00 that the amount
decreases by 30%
LTD.
DAEWOO DISPLAY Involved with
12,692,138.85 12,692,138.85 100.00 lawsuit dispute
CORPORATION
SHENZHEN TENGDA ELECTRIC Involved with
8,223,935.99 4,111,968.00 50.00 lawsuit dispute
APPLIANCE CO., LTD.
MOTOM ELECTRONICS GROUP Involved with
5,794,676.58 5,794,676.58 100.00 lawsuit dispute
SPA
Total 63,540,218.68 46,604,250.69 73.35
(2) Bad debt provision withdrawal, reversed or recovered in the Reporting Period
The withdrawal amount of the bad debt provision during the Reporting Period was of RMB
6,382,342.47; the amount of the reversed or collected part during the Reporting Period was
of RMB 13,333,986.11, no write-off amounts.
(3) Top five of account receivable of closing balance collected by arrears party
The total amount of top five of account receivable of closing balance collected by arrears
party was RMB 949,856,183.56, 41.62% of total closing balance of account receivable, the
relevant closing balance of bad debt provision withdrawn was RMB 18,997,123.67.
5. Prepayment
(1) List by aging analysis:
Closing balance Opening balance
Aging Book balance Book balance
Proportion Bad debt provision Proportion Bad debt provision
Amount Amount
(%) (%)
87
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Closing balance Opening balance
Aging Book balance Book balance
Proportion Bad debt provision Proportion Bad debt provision
Amount Amount
(%) (%)
Within 1
year 730,562,127.56 98.25 1,119,839.73 269,405,925.30 96.52 1,461,427.25
1 to 2 years 5,925,151.86 0.80 232.67 3,335,844.57 1.20 36,710.13
2 to 3 years 9,405.00 0.00 470.25 2,265,192.49 0.81 415,058.47
Over 3
7,097,388.89 0.95 2,871,944.28 4,099,193.21 1.47 2,382,301.00
years
Total 743,594,073.31 100.00 3,992,486.93 279,106,155.57 100.00 4,295,496.85
Notes: (1) prepayments of significant amount and aged more than 1 year, of which the
amount of RMB 8,146,945.00 was the relevant materials which had quality problems and
had not handle the accounts settlement as well as the material warehousing formalities, and
the materials purchase account prepaid should be presented as the prepayments.
(2) Top 5 of the closing balance of the prepayment collected according to the prepayment
target
The total amount of top five of account receivable of closing balance collected by arrears
party was RMB245,502,929.55, 33.02% of total closing balance of account receivable.
(3) The accrual bad debt reserve is RMB 35,186.42 this year; the withdrawing or reversing
bad debt reserve is RMB 322,952.31.
6. Interests receivable
Item Closing balance Opening balance
Fixed term deposit interest 1,158,069.08 1,342,063.84
Entrusted loan interest 27,791.67 —
Total 1,185,860.75 1,342,063.84
7. Dividends receivable
Item Closing balance Opening balance
Shenzhen Konka Precision Mould
10,171,609.48 10,171,609.48
Manufacturing Co., Ltd.
Total 10,171,609.48 10,171,609.48
88
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
8. Other accounts receivable
(1) Other account receivable classified by Item
Closing balance
Book balance Bad debt provision
Item Withdrawa
Proportion Book value
Amount Amount l
(%)
proportion
Other accounts receivable with
significant single amount for
183,915,489.33 38.53 174,186,734.34 94.71 9,728,754.99
which bad debt provision
separately accrued
Other accounts receivable
withdrawn bad debt provision
according to credit risks
characteristics
Group 1: aging group 288,041,256.20 60.34 24,293,649.44 8.43 263,747,606.75
Subtotal of groups 288,041,256.20 60.34 24,293,649.44 8.43 263,747,606.75
Other accounts receivable
with insignificant single amount
5,400,601.91 1.13 1,441,694.10 26.70 3,958,907.82
for which bad debt provision
separately accrued
Total 477,357,347.44 100.00 199,922,077.88 41.88 277,435,269.56
(Continued)
Opening balance
Book balance Bad debt provision
Item Withdrawa
Proportion Book value
Amount Amount l
(%)
proportion
89
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Opening balance
Book balance Bad debt provision
Item Withdrawa
Proportion Book value
Amount Amount l
(%)
proportion
Other accounts receivable with
significant single amount for
183,915,489.33 43.21 174,186,734.34 94.71 9,728,754.99
which bad debt provision
separately accrued
Other accounts receivable
withdrawn bad debt provision
according to credit risks
characteristics
Group 1: aging group 234,570,113.10 55.12 26,878,827.62 11.46 207,691,285.48
Subtotal of groups 234,570,113.10 55.12 26,878,827.62 11.46 207,691,285.48
Other accounts receivable with
insignificant single amount for
7,101,401.90 1.67 2,131,520.57 30.02 4,969,881.33
which bad debt provision
separately accrued
Total 425,587,004.33 100.00 203,197,082.53 47.75 222,389,921.80
Other account receivable with insignificant single amount for which bad debt provision
separately accrued
Closing balance
Other accounts receivable
Other accounts Withdrawal
(unit） Bad debt provision Withdrawal reason
receivable proportion
Energy saving subsidy 152,402,680.00 152,402,680.00 100.00% Irrecoverable
Shenzhen Konka Video &
Assessment irrecoverable for
Communication Systems 18,115,952.51 8,387,197.52 46.30% full amount
Engineering Co., Ltd.
Chongqing Konka Auto Irrecoverable, under
Electronic Company 13,396,856.82 13,396,856.82 100.00% bankruptcy liquidation
Total 183,915,489.33 174,186,734.34 94.71% —
90
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
② In the groups, other accounts receivable adopting aging analysis method to withdraw bad
debt provision:
Closing balance
Aging
Other accounts receivable Bad debt provision Withdrawal proportion (%)
Within 1 year 232,049,383.58 4,640,987.66 2.00
1 to 2 years 25,458,687.47 1,272,934.37 5.00
2 to 3 years 12,969,329.40 2,593,865.88 20.00
3 to 4 years 3,054,459.23 1,527,229.62 50.00
4 to 5 years 501,529.22 250,764.61 50.00
Over 5 years 14,007,867.30 14,007,867.30 100.00
Total 288,041,256.20 24,293,649.44
(2) Bad debt provision withdrawal, reversed or recovered in the Reporting Period
The withdrawal amount of the bad debt provision during the Reporting Period was of
RMB 1,160,417.80; the amount of the reversed or collected part during the Reporting
Period was of RMB 4,159,432.06, no write-off amounts.
(3) Top 5 of the closing balance of the other accounts receivable collected according to the
arrears party
Proportion of the
total amount of the Closing balance of
Name of units Nature Closing balance Aging closing balance of the bad debt
other accounts provision
receivable (%)
Energy-saving 2-3 years, 4-5
Energy-saving subsidies 152,402,680.00 31.93 152,402,680.00
subsidies years
Chuzhou Bureau of
Land fund 73,500,000.00 Within 1 year 15.40 1,470,000.00
Finance
Customs of the People’s
Export refund 20,511,658.91 Within 1 year 4.30 410,233.18
Republic of China
Shenzhen Konka Video
& Communication
Transfer fund 18,115,952.51 3-4 years 3.80 8,387,197.52
Systems Engineering
Co., Ltd.
Chongqing Konka 2-3 years, 3-4
Current account 13,396,856.82 2.81 13,396,856.82
Automotive Electronics years , 4-5 years ,
91
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Proportion of the
total amount of the Closing balance of
Name of units Nature Closing balance Aging closing balance of the bad debt
other accounts provision
receivable (%)
Co., Ltd. over 5 years
Total — 277,927,148.24 48.15 176,066,967.52
9. Inventory
(1) Category
Closing balance
Of which: the
Item Impairment of
Book balance capitalized amount Book value
inventories
of the borrowings
Development projects
of the property:
Development cost 1,516,368,571.23 1,516,368,571.23
Development products 6,036,068.26 128,525.78 6,036,068.26
Subtotal 1,522,404,639.49 128,525.78 0.00 1,522,404,639.49
Non-development
projects of the
property:
Raw materials 1,874,563,922.70 33,289,359.79 1,841,274,562.91
Semi-finished product 64,192,721.23 8,364,754.34 55,827,966.89
Inventory goods 3,199,778,821.51 244,943,725.65 2,954,835,095.86
Turnover material 141,198.43 141,198.43
Subtotal 5,138,676,663.87 0.00 286,597,839.78 4,852,078,824.09
Total 6,661,081,303.36 128,525.78 286,597,839.78 6,374,483,463.58
(Continued)
Opening balance
Of which: the
Item capitalized Impairment of
Book balance Book value
amount of the inventories
borrowings
92
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Opening balance
Of which: the
Item capitalized Impairment of
Book balance Book value
amount of the inventories
borrowings
Development projects
of the property:
Development cost 1,394,176,034.85 — — 1,394,176,034.85
Development products 7,596,482.12 141,378.83 — 7,596,482.12
Subtotal 1,401,772,516.97 141,378.83 — 1,401,772,516.97
Non-development
projects of the
property:
Raw materials 781,934,686.08 — 31,054,247.46 750,880,438.62
Semi-finished product 83,957,767.23 — 8,872,936.27 75,084,830.96
Inventory goods 2,306,460,682.29 — 247,224,025.03 2,059,236,657.26
Turnover material 439,500.54 — — 439,500.54
Subtotal 3,172,792,636.14 — 287,151,208.76 2,885,641,427.38
Total 4,574,565,153.11 141,378.83 287,151,208.76 4,287,413,944.35
(2) List of the development cost
Expected completion
Name of the projects Starting time Opening balance Closing balance
time of the next batch
Shuiyue Zhouzhuang (Phase
449,653,196.40 553,935,807.91
III, Phase IV) December 2015 Year 2018
Kangqiao Jiacheng Project October 2015 Year 2020 944,522,838.45 961,521,041.58
Chuzhou Technology
December 2017 Year 2019 911,721.74
Project
Total 1,394,176,034.85 1,516,368,571.23
(3) List of the developed products
Completion
Name of item Opening amount Increased Decreased Closing amount
time
93
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Completion
Name of item Opening amount Increased Decreased Closing amount
time
Shuiyue
Zhouzhuang Year 2014 3,953,247.18 3,953,247.18
Project(Phase I)
Shuiyue
Zhouzhuang Year 2015 3,643,234.94 1,560,413.86 2,082,821.08
Project(Phase II)
Total 7,596,482.12 1,560,413.86 6,036,068.26
(4) Impairment of inventories
Increased amount Decreased amount
Item Opening balance Closing balance
Withdrawal Other Reverse Write-off Other decrease
Raw materials 31,054,247.46 2,933,598.43 224,952.37 622,541.84 33,140,351.68
Semi-finished
8,872,936.27 131,142.03 0.00 268,529.82 8,735,548.48
product
Inventory
goods 247,224,025.03 12,628,069.47 3,070,068.22 12,060,086.66 244,721,939.62
Total 287,151,208.76 15,692,809.93 0.00 3,295,020.59 12,951,158.32 0.00 286,597,839.78
Notes: other decrease was due to the loss of control right to subsidiaries.
(5) Withdrawal provision basis of the falling price of the inventory and the reasons of the
reserve or write-off
Specific basis of withdrawal of falling price
Item Reasons for write-off
reserves of inventory
Difference that the realizable net value was
Raw materials Disposed in the current period
lower than the book value
Difference that the realizable net value was
Semi-finished product Disposed in the current period
lower than the book value
Difference that the realizable net value was
Inventory goods Disposed in the current period
lower than the book value
(6) Closing balance of the inventory which includes capitalized borrowing expenses was
RMB 128,525.78
10. Other current assets
Item Closing balance Opening balance
94
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Item Closing balance Opening balance
Financial products
1,570,016,568.58 299,745,437.03
Prepayments and deductible taxes
441,245,611.35 262,458,679.17
Total 2,011,262,179.93 562,204,116.20
95
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
11. Available-for-sale financial assets
(1) List of available-for-sale financial assets
Closing balance Opening balance
Item Depreciation Depreciation
Book balance Book value Book balance Book value
reserves reserves
Available-for-sale equity instruments 295,353,244.82 4,997,785.64 290,355,459.18 319,965,425.00 4,997,785.64 314,967,639.36
Of which: measured at fair value 40,665,244.82 40,665,244.82 55,777,425.00 — 55,777,425.00
Measured by cost 254,688,000.00 4,997,785.64 249,690,214.36 264,188,000.00 4,997,785.64 259,190,214.36
Total 295,353,244.82 4,997,785.64 290,355,459.18 319,965,425.00 4,997,785.64 314,967,639.36
(2) Available-for-sale financial assets measured by fair value at the period-end
Item Available-for-sale equity instruments
Cost of the equity instruments 47,251,922.40
Fair value 40,665,244.82
Changed amount of the fair value accumulatively included in other comprehensive income -6,586,677.58
Withdrawn impairment amount —
(3) Available-for-sale financial assets measured by cost at the period-end
Book balance
Investee
Period -begin Increase Decrease Period-end
96
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Book balance
Investee
Period -begin Increase Decrease Period-end
Shenzhen Qianhai Qingsong Venture Capital Fund Enterprise 20,000,000.00 20,000,000.00
Shenzhen Tianyilian Science & Technology Co., Ltd. 4,800,000.00 4,800,000.00
Shenzhen Yifan Interactive Science & Technology Co., Ltd. 9,500,000.00 9,500,000.00 0.00
Shenzhen A Dot TV Co., Ltd. 5,750,000.00 5,750,000.00
Feihong Electronics Co., Ltd. 1,300,000.00 1,300,000.00
ZAEFI 100,000.00 100,000.00
Shenzhen Chuangce Investment Development Co., Ltd. 485,000.00 485,000.00
Shanlian Information Technology Engineering Center 5,000,000.00 5,000,000.00
Shenzhen CIU Science & Technology Co., Ltd. 1,153,000.00 1,153,000.00
Shenzhen Digital TV National Engineering Laboratory Co., Ltd. 6,000,000.00 6,000,000.00
Shanghai National Engineering Research Center of Digital TV
Co., Ltd. 2,400,000.00 2,400,000.00
ChinaAMC - Jiayi Overseas Orientation Programs 203,000,000.00 203,000,000.00
Beijing Konka Technology Co., Ltd 4,700,000.00 4,700,000.00
Chongqing Konka Automotive Electronic Co., Ltd. — 0.00
Total 264,188,000.00 0.00 9,500,000.00 254,688,000.00
(Continued)
97
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Depreciation reserves Cash
Shareholding bonus of
Investee proportion among the
Period-begin Increase Decrease Period-end Reporting
the investees (%)
Period
Shenzhen Qianhai Qingsong Venture Capital Fund Enterprise — — — — 6.00 —
Shenzhen Tianyilian Science & Technology Co., Ltd. — — — — 6.10 —
Shenzhen Yifan Interactive Science & Technology Co., Ltd. — — — — 13.57 —
Shenzhen A Dot TV Co., Ltd. — — — — 12.67 —
Feihong Electronics Co., Ltd. 1,300,000.00 — — 1,300,000.00 9.60 —
ZAEFI 100,000.00 — — 100,000.00 — —
Shenzhen Chuangce Investment Development Co., Ltd. 485,000.00 — — 485,000.00 1.00 —
Shanlian Information Technology Engineering Center 1,639,190.80 — — 1,639,190.80 9.62 —
Shenzhen CIU Science & Technology Co., Ltd. 200,000.00 — — 200,000.00 11.50 —
Shenzhen Digital TV National Engineering Laboratory Co., Ltd. 1,273,594.84 — — 1,273,594.84 2.40 —
Shanghai National Engineering Research Center of Digital TV Co.,
Ltd. — — — 4.26 —
ChinaAMC - Jiayi Overseas Orientation Programs — — — — —
Hunan Vary Science & Technology Co., Ltd. — — — 9.56 —
Nobel Education Investment Development Co., Ltd. — — — — —
98
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Depreciation reserves Cash
Shareholding bonus of
Investee proportion among the
Period-begin Increase Decrease Period-end Reporting
the investees (%)
Period
Beijing Kanga Technology Co., Ltd — — — 3.62 —
Chongqing Konka Eurotomotive Electronic Co., Ltd. ( Note ) — — — — —
Total 4,997,785.64 — — 4,997,785.64 — —
Note: ① On March 27, 2015, Chongqing Jiangbei District People’s Court accepted the application of bankruptcy liquidation from Chongqing
Konka Automotive Electronic Co.,Ltd., a subsidiary of our company and appointed to establish the liquidation group, the company would not
have the leading right on the related activity of Chongqing Konka Automotive Electronic Co.,Ltd. After entering into the bankruptcy procedure,
it would not be included in the consolidation scope, and it would be classified again with the net value of zero to the available-for-sale financial
asset.
(4) Changes of the impairment of the available-for-sale financial assets of the Reporting Period
Category of available-for-sale financial assets Available-for-sale equity instruments
Withdrawn impairment balance at the period-begin 4,997,785.64
Withdrawal of the Reporting Period —
Of which: transferred from other comprehensive income —
Decrease of the Reporting Period —
Of which: recovered or reversed from the fair value after the Period —
Withdrawn impairment balance at the period-end 4,997,785.64
12. Long-term equity investment
99
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Increase/decrease in Reporting Period
Investment profit Adjustment of
Opening balance of Cost method
Investee Opening balance Additional Negative and loss recognized other Other equity
impairment reserves converted into
investment investment under the equity comprehensive changes
equity method
method income
I. Associated enterprises:
Enraytek Optoelectronics (Shanghai)
88,298,590.32 30,257,135.84
Co., Ltd.
Shenzhen Konka Energy Technology
3,649,728.08 3,649,728.08 3,649,728.08
Co., Ltd.
Shanghai Konka Green Science &
85,791,460.71 -3,733,992.50 -449,802.04 -1,166,602.46
Technology Co., Ltd.
Zhuhai Jinsu Plastic Co., Ltd. 7,438,647.50 1,923,787.63
Shenzhen Konka Precision Mold
Manufacturing Co., Ltd 85,405,031.28 -2,387.64
Dongguan Konka Mold Plastic Co.,
Ltd 27,166,487.52
Shenzhen Zhongbin Konka technology
co., Ltd. 19,164,691.78 -3,060,432.97
Shenzhen Konka Intelligent Electric
Co., Ltd 6,213,908.63 -495,301.18
100
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Increase/decrease in Reporting Period
Investment profit Adjustment of
Opening balance of Cost method
Investee Opening balance Additional Negative and loss recognized other Other equity
impairment reserves converted into
investment investment under the equity comprehensive changes
equity method
method income
Shenzhen Konka Information Network
Co., Ltd 20,426,438.47 794,032.47
Guoguang Ruilian (Shenzhen) Internet
4,000,000.00
Technology Co., Ltd
Guangdong Chutian Dragon Smart
150,000,000.00
Card Co., Ltd.
Shenzhen Yaode Technology Co., Ltd 171,799,598.00
Total 343,554,984.29 33,906,863.92 325,799,598.00 0.00 3,649,728.08 -4,574,294.19 -449,802.04 -1,166,602.46
(Continued)
Increase/decrease in Reporting Period Closing balance of
Investee Closing balance
impairment provision
Declaration of cash dividends or Withdrawn impairment Equity converted into
profits provision tradable financial assets
I. Associated enterprises:
101
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Increase/decrease in Reporting Period Closing balance of
Investee Closing balance
impairment provision
Declaration of cash dividends or Withdrawn impairment Equity converted into
profits provision tradable financial assets
Enraytek Optoelectronics (Shanghai) Co.,
Ltd. 88,298,590.32 30,257,135.84
Shenzhen Konka Energy Technology Co.,
Ltd. 0.00 0.00
Shanghai Konka Green Science &
Technology Co., Ltd. 80,441,063.71
Zhuhai Jinsu Plastic Co., Ltd. 9,362,435.13
Shenzhen Konka Precision Mold
Manufacturing Co., Ltd 85,402,643.64
Dongguan Konka Mold Plastic Co., Ltd 27,166,487.52
Shenzhen Zhongbin Konka technology co.,
Ltd. 16,104,258.81
Shenzhen Konka Intelligent Electric Co.,
Ltd 5,718,607.45
Shenzhen Konka Information Network Co.,
Ltd 21,220,470.94
Guoguang Ruilian (Shenzhen) Internet
4,000,000.00
Technology Co., Ltd
Guangdong Chutian Dragon Smart Card 150,000,000.00
102
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Increase/decrease in Reporting Period Closing balance of
Investee Closing balance
impairment provision
Declaration of cash dividends or Withdrawn impairment Equity converted into
profits provision tradable financial assets
Co., Ltd.
Shenzhen Yaode Technology Co., Ltd 171,799,598.00
Total 659,514,155.52 30,257,135.84
103
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
13. Investment property
Investment property adopted the cost measurement mode
Item Houses and buildings Total
I. Original book value
1. Opening balance 249,923,047.75 249,923,047.75
2. Increased amount of the period — —
3. Decreased amount of the period — —
4. Closing balance 249,923,047.75 249,923,047.75
II. The accumulative depreciation
— —
and accumulative amortization
1. Opening balance 27,836,143.49 27,836,143.49
2. Increased amount of the period 2,815,637.15 2,815,637.15
(1) withdraw or amortization 2,815,637.15 2,815,637.15
3. Decreased amount of the period — —
4. Closing balance 30,651,780.64 30,651,780.64
III. Impairment provision — —
1. Opening balance — —
2. Increased amount of the period — —
3. Decreased amount of the period — —
4. Closing balance — —
IV. book value — —
1. Closing book value 219,271,267.11 219,271,267.11
2. Opening book value 222,086,904.26 222,086,904.26
104
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
14. Fixed assets
(1) List of fixed assets
Houses and buildings Machinery equipment Electronic equipment Transportation Other
Item Total
equipment
I. Original book value
1.Opening balance 1,585,782,685.49 758,663,226.60 212,512,639.28 53,668,633.02 169,982,040.39 2,780,609,224.78
2. Increased amount of the
426,220.22 17,504,505.72 8,032,993.43 1,690,710.33 2,702,592.78 30,357,022.48
period
(1) Purchase 426,220.22 2,777,220.18 8,032,993.43 1,690,710.33 2,702,592.78 15,629,736.94
(2) Transfer of project under
14,727,285.54 14,727,285.54
construction
3.Decreased amount of the
721,422.82 4,934,460.03 19,964,185.75 2,094,235.69 3,234,950.46 30,949,254.75
period
(1) Disposal or Scrap 721,422.82 4,934,460.03 19,964,185.75 2,094,235.69 3,234,950.46 30,949,254.75
(2) Other 0.00
4.Closing balance 1,585,487,482.89 771,233,272.29 200,581,446.96 53,265,107.66 169,449,682.71 2,780,016,992.51
II. Accumulative depreciation
1.Opening balance 392,850,477.50 462,360,402.61 163,374,809.37 39,315,097.11 123,516,834.06 1,181,417,620.65
105
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Houses and buildings Machinery equipment Electronic equipment Transportation Other
Item Total
equipment
2. Increased amount of the
18,613,936.20 24,358,346.66 5,717,058.03 1,714,940.31 6,969,489.05 57,373,770.25
period
(1) Withdrawal 18,613,936.20 24,358,346.66 5,717,058.03 1,714,940.31 6,969,489.05 57,373,770.25
3.Decreased amount of the
182,014.07 3,720,311.79 17,907,864.12 1,559,641.60 2,854,875.57 26,224,707.15
period
(1) Disposal or Scrap 182,014.07 3,720,311.79 17,907,864.12 1,559,641.60 2,854,875.57 26,224,707.15
(2) Other 0.00
4.Closing balance 411,282,399.63 482,998,437.48 151,184,003.28 39,470,395.82 127,631,447.54 1,212,566,683.75
III. Depreciation reserves
1.Opening balance 2,006,749.30 16,777,278.59 3,760,562.66 950,517.86 1,717,581.69 25,212,690.10
2. Increased amount of the
0.00 2,579.50 48,191.00 0.00 60,906.71 111,677.21
period
(1) Withdrawal 0.00 2,579.50 48,191.00 0.00 60,906.71 111,677.21
3.Decreased amount of the
0.00 135,594.31 1,777,624.43 0.00 199,892.10 2,113,110.84
period
(1) Disposal or Scrap 0.00 135,594.31 1,777,624.43 0.00 199,892.10 2,113,110.84
(2) Other 0.00
106
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Houses and buildings Machinery equipment Electronic equipment Transportation Other
Item Total
equipment
4.Closing balance 2,006,749.30 16,644,263.78 2,031,129.23 950,517.86 1,578,596.30 23,211,256.47
IV. Book value
1. Closing book value 1,172,198,333.96 271,590,571.03 47,366,314.45 12,844,193.98 40,239,638.87 1,544,239,052.29
2. Opening book value 1,190,925,458.69 279,525,545.40 45,377,267.25 13,403,018.05 44,747,624.64 1,573,978,914.03
Notes: other decrease was due to the loss of control right to subsidiaries.
107
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
(2) List of Temporarily Idle Fixed Assets
Original Accumulative Impairment
Item Book value Notes
book value depreciation provision
Houses and buildings 39,474,322.57 20,230,130.99 542,558.97 18,701,632.61
Mechanical
25,533,099.58 11,996,854.48 8,321,804.55 5,214,440.55
equipment
Transportation
1,732,582.00 1,595,054.30 100,422.20 37,105.50
equipment
Electronic equipment 21,893,797.12 20,551,591.46 1,021,928.09 320,277.57
Other equipment 1,752,076.39 1,345,351.28 263,805.28 142,919.83
Total 90,385,877.66 55,718,982.51 10,250,519.09 24,416,376.06
(3) Fixed Assets Leased in from Financing Lease
Accumulative
Item Original book value Impairment provision Book value
depreciation
Mechanical equipment 5,988,219.52 1,953,324.23 4,034,895.29
Electronic equipment 205,128.20 95,726.49 109,401.71
Total 6,193,347.72 2,049,050.72 4,144,297.00
(4) Fixed Assets Leased out from Operation Lease
Item Closing book value
Houses and buildings 23,232,191.19
Total 23,232,191.19
(5) Details of Fixed Assets Failed to Accomplish Certification of Property
Item Book value Reason
Yikang building 45,739,032.33 Under processing
Kangsheng Aquatic Club 19,359,810.34 Under processing
Mudangjiang electric Has not obtained the state-owned land uses card, can not
12,187,010.26
appliances main workshop to deal with house property card
Jingyuan office building 12,197,713.76 Under processing
Kunming office building 5,248,901.73 Under processing
Guyang Huaguoyuan Property 3,540,181.14 Under processing
108
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
15. Construction in Progress
(1) List of Construction in Progress
109
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Closing balance Opening balance
Item Impairment Impairment
Book balance Book value Book balance Book value
provision provision
Kunshan hotel
361,913,329.77 361,913,329.77 286,093,111.12 — 286,093,111.12
Kunshan gallery
1,643,881.07 1,643,881.07 1,643,881.07 — 1,643,881.07
Green Park project
21,743,404.48 21,743,404.48 — — —
Other small projects 19,149,556.76 19,149,556.76 27,799,444.86 — 27,799,444.86
Total 404,450,172.08 0.00 404,450,172.08 315,536,437.05 — 315,536,437.05
(2) Changes of Significant Construction in Progress
Increase Amount that transferred to Other decreased
Name o f item Estimated number Opening balance Closing balance
Amount fixed assets of the period amount of the period
Kunshan hotel 444,600,000.00 286,093,111.12 75,820,218.65 361,913,329.77
Kunshan gallery 26,320,000.00 1,643,881.07 1,643,881.07
Green Park project 35,000,000.00 8,061,797.71 13,681,606.77 21,743,404.48
Other small projects 19,737,647.15 14,139,195.15 14,727,285.54 19,149,556.76
Total 505,920,000.00 315,536,437.05 103,641,020.57 14,727,285.54 0.00 404,450,172.08
Notes: Other decrease was mainly generated from the loss of control over subsidiaries.
110
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
（Continued）
Proportion Of which: the
Accumulative Capitalization
estimated of the amount of the
Project amount of rate of the
Project name project capitalized Capital resources
capitalized interests of the
accumulative progress interests of the
interests period
input period
Self-owned fund
Kunshan gallery 6.25 6.25 — — —
Loans to financial
Kunshan hotel 90 99 832,313.28 — — institutions and
self-owned fund
16. Intangible Assets
(1) List of Intangible Assets
Item Land use right Patent right Trademark Total
Others
registration expense
I. Original book value
1.Opening balance 316,997,134.11 40,234,111.64 3,519,159.61 56,205,873.76 416,956,279.12
2. Increased amount of
1,519,158.67 1,519,158.67
the period
(1) Purchase 1,519,158.67 1,519,158.67
(2) Transfer of project
0.00
under construction
3.Decreased amount of
45,617,181.03 45,617,181.03
the period
(1) Disposal 45,617,181.03 45,617,181.03
(2) Other decrease 0.00
4.Closing balance 271,379,953.08 40,234,111.64 3,519,159.61 57,725,032.43 372,858,256.76
II. Accumulated
0.00
amortization
1.Opening balance 53,371,371.76 33,745,464.74 3,412,215.10 21,480,517.47 112,009,569.07
2. Increased amount of
2,577,266.19 346,235.48 2,591,356.68 5,514,858.35
the period
111
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Item Land use right Patent right Trademark Total
Others
registration expense
(1) Withdrawal 2,577,266.19 346,235.48 2,591,356.68 5,514,858.35
3.Decreased amount of
the period
(1) Disposal
(2) Other decrease
4.Closing balance 55,948,637.95 34,091,700.22 3,412,215.10 24,071,874.15 117,524,427.42
III. Depreciation
-
reserves
1.Opening balance 2,901,082.61 2,901,082.61
2. Increased amount of
the period
(1) Withdrawal
3.Decreased amount of
the period
(1) Disposal
(2) Other decrease
4.Closing balance 2,901,082.61 2,901,082.61
IV. Book value -
1. Closing book value 215,431,315.13 3,241,328.81 106,944.51 33,653,158.28 252,432,746.73
2. Opening book value 263,625,762.35 3,587,564.29 106,944.51 34,725,356.29 302,045,627.44
Notes: Other decrease was mainly generated from the loss of control over subsidiaries.
(2) Details of Fixed Assets Failed to Accomplish Certification of Land Use Right
Item Book value Reason
Mudangjiang electric appliances etc. 3,153,608.13 Left over by history
17. Goodwill
(1) Original Book Value of Goodwill
Name of the investees or Opening balance Increase Decrease
Closing balance
112
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
the events formed Formed from the
goodwill Others Dispose Others
business combination
Anhui Konka 3,597,657.15 — — — — 3,597,657.15
Total 3,597,657.15 — — — — 3,597,657.15
For more information on the method of impairment test and impairment provision, please
refer to NoteIV.19.
As of June 30, 2017, there was no book value of goodwill higher than recoverable amount.
18. Long-term Unamortized Expenses
Item Opening balance Increased amount Amortization amount Decrease of others Closing balance
Renovati
16,313,225.16 5,011,364.82 3,734,066.14 0.00 17,590,523.84
on costs
Shop fees 51,212,313.70 25,845,674.19 22,994,414.21 0.00 54,063,573.68
Others 24,375,994.53 4,103,436.15 5,381,830.54 0.00 23,097,600.14
Total 91,901,533.39 34,960,475.16 32,110,310.89 0.00 94,751,697.66
Notes: Other decrease was mainly generated from the loss of control over subsidiaries.
19. Deferred Income Tax Assets/Deferred Income Tax Liabilities
(1) List of Deferred Income Tax Assets
Closing balance Opening balance
Item Deductible temporary Deferred income tax Deductible temporary Deferred income tax
difference assets difference assets
Assets impairment
740,047,560.61 183,885,720.72 746,292,412.93 184,974,531.80
provision
Unrealized internal sales
101,199,694.08 25,299,923.52 100,026,922.96 25,006,730.74
gain and loss
Accrued expenses 102,944,305.25 25,080,837.16 113,547,244.37 28,241,712.82
Deferred income 91,842,840.87 22,029,567.24 90,555,138.14 21,799,952.55
Deductible losses 1,737,704,820.92 434,109,795.78 1,622,776,529.02 405,694,132.25
Others 170,769,999.52 42,692,499.88 144,068,370.06 36,017,092.52
Total 2,944,509,221.25 733,098,344.30 2,817,266,617.48 701,734,152.68
Notes: Others were refundable subsidy for energy-saving without actual refund, accrued
liabilities, advance house payment, advance earnest money and payroll payable.
113
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
(2) List of Deferred Income Liabilities
Closing balance Opening balance
Item Deductible temporary Deferred income Deductible temporary Deferred income
difference tax liabilities difference tax liabilities
Accelerated depreciation of fixed assets 7,075,362.87 1,061,304.43 6,867,714.25 1,030,157.14
Change of fair value of trading financial
assets 0.00 0.00 39,557,580.99 9,889,395.25
Change in fair value of available-for-sale
financial assets 0.00 0.00 8,547,425.00 2,136,856.25
Unrealized profits from internal
71,782,644.68 17,945,661.17 14,848,590.56 3,712,147.64
transactions
Accrued taxes 10,435,499.44 2,608,874.86 9,577,050.20 2,394,262.55
Total 89,293,506.99 21,615,840.46 79,398,361.00 19,162,818.83
(3) List of Unrecognized Deferred Income Tax Assets
Item Closing balance Opening balance
Deductible temporary
difference 212,724,693.73 215,783,474.69
Deductible losses 1,219,362,942.89 1,198,447,416.45
Total 1,432,087,636.62 1,414,230,891.14
20. Other Non-current Assets
Item Closing balance Opening balance
Entrust loans 20,000,000.00 0.00
Total 20,000,000.00 0.00
21. Assets Impairment Provision
Withdrawn Decreased
impairment
Reverse
Item Opening balance Closing balance
balance at the Write-off
period-begin
I. Bad debt provision 554,806,256.59 7,577,946.69 17,816,370.48 1,407,047.18 543,160,785.62
II. Impairment of
287,151,208.76 15,692,809.93 3,295,020.59 12,951,158.32 286,597,839.78
inventories
III. Impairment provision
of the available-for-sale 4,997,785.64 0.00 0.00 4,997,785.64
financial assets
114
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Item Opening balance Withdrawn Decreased Closing balance
IV. Impairment provision of impairment
25,212,690.10 111,677.21 2,113,110.84 23,211,256.47
the fixed assets
balance at the
V. Impairment provision of
2,901,082.61 period-begin0.00 0.00 2,901,082.61
the intangible assets
VI. Long-term equity
33,906,863.92 0.00 3,649,728.08 30,257,135.84
investment
Total 908,975,887.62 23,382,433.83 21,111,391.07 20,121,044.42 891,125,885.96
22. Short-term Loans
Category of Short-term Loans
Item Closing balance Opening balance
Guaranteed loan (Note) 591,952,161.09 720,088,506.52
Credit loan 10,153,012,949.04 5,842,745,719.99
Total 10,744,965,110.13 6,562,834,226.51
Note: The closing balance of guaranteed loan of related party in guaranteed loan was
RMB591,952,161.09. For more details, please refer to Note XI. 5(4).
23. Financial Liabilities Measured by Fair Value and the Changes Included in the
Current Gains and Losses
Category Closing balance Opening balance
Loss from forward foreign
20,181,325.74 337,263.13
exchange purchase agreement
Total 20,181,325.74 337,263.13
24. Notes Payable
Category Closing balance Opening balance
Trade acceptance 56,604,230.04 259,499,645.15
Bank acceptance bill 843,307,056.18 604,209,493.24
Total 899,911,286.22 863,709,138.39
Notes: The amount of notes payable due during the next accounting period was
RMB899,911,286.22.
25. Accounts Payable
(1) List of Accounts Payable
115
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Item Closing balance Opening balance
Within 1 year 2,204,229,902.21 3,051,643,650.52
1 to 2 years 24,227,354.00 53,050,351.35
2 to 3 years 20,777,516.86 10,532,651.04
Over 3 years 47,980,367.70 44,846,922.65
Total 2,297,215,140.77 3,160,073,575.56
(2) Notes of the Accounts Payable Aging over One Year
Item Closing balance Unpaid/ Un-carry-over reason
Estimated construction costs 28,486,306.70 Unsettled
Accounts from the transfer of equity 9,543,100.00 Unsettled
Total 38,029,406.70
26. Advance from Customers
(1) List of Advance from Customers
Item Closing balance Opening balance
Within 1 year 1,645,102,587.82 1,160,427,420.29
1 to 2 years 23,635,582.74 19,169,243.24
2 to 3 years 365,269.67 6,518,376.19
Over 3 years 9,286,570.27 15,311,183.98
Total 1,678,390,010.50 1,201,426,223.70
(2) The Significant Advance from Customers Aging over 1 year was Mainly Generated from
the Advance from Customers from Companies without Continuous Cooperation.
(3) Advance Receipts of Houses
Item Closing balance Opening balance
Shuiyue Zhouzhuang Project
1,635,098.00 1,345,098.00
(Phase I Residence)
Shuiyue Zhouzhuang Project
1,608,868.00 2,560,000.00
(Phase II Residence)
Shuiyue Zhouzhuang Project
928,845,428.00 890,759,963.00
(Phase II Residence)
116
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Item Closing balance Opening balance
Total 932,089,394.00 894,665,061.00
27. Payroll Payable
(1) List of Payroll Payable
Other decrease
Item Opening balance Increase Decrease Closing balance
of the year
I. Short-term
269,328,946.11 651,894,639.51 750,826,484.09 0 170,397,101.53
salary
II.
Post-employment
2,067,376.48 55,267,430.99 54,878,592.67 2,456,214.80
benefit-defined
contribution plans
III. Termination
1,663,194.06 623,418.40 2,188,991.18 97,621.28
benefits
IV. Other benefits
due within one 0
year
Total 273,059,516.65 707,785,488.90 807,894,067.94 0 172,950,937.61
Notes: The other decrease of the year was generated from the loss of control over
subsidiaries.
(2) List of Short-term Salary
Other decrease of
Item Opening balance Increase Decrease Closing balance
the year
1. Salary, bonus,
259,948,249.68 567,441,027.96 672,099,201.27 155,290,076.37
allowance, subsidy
2. Employee welfare 1,210,626.63 32,381,092.08 27,957,944.98 5,633,773.73
3. Social insurance 1,799,379.97 28,512,836.10 27,603,281.93 2,708,934.14
Of which: 1. Medical
894,422.89 24,454,580.19 24,002,166.26 1,346,836.82
insurance premiums
Work-related
180,237.94 2,228,378.09 2,237,061.20 171,554.83
injury insurance
117
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Other decrease of
Item Opening balance Increase Decrease Closing balance
the year
Maternity
724,719.14 1,829,877.82 1,364,054.47 1,190,542.49
insurance
4. Housing fund 1,313,004.12 10,816,260.71 11,665,431.72 463,833.11
5. Labor union budget and
employee education 4,314,422.20 5,524,803.61 3,829,764.64 6,009,461.17
budget
6.Short-term absence with
— 0
payment
7. Short-term profit
— 0
sharing plan
8. Other 743,263.51 7,218,619.05 7,670,859.55 291,023.01
Total 269,328,946.11 651,894,639.51 750,826,484.09 0 170,397,101.53
Notes: The other decrease of the year was generated from the loss of control over
subsidiaries.
(3) List of Drawing Scheme
Other decrease
Item Opening balance Increase Decrease Closing balance
of the year
1. Basic pension benefits 1,929,475.33 53,419,061.57 53,021,070.86 2,327,466.04
2. Unemployment insurance 137,901.15 1,848,369.42 1,857,521.81 128,748.76
3. Annuity — 0.00
Total 2,067,376.48 55,267,430.99 54,878,592.67 2,456,214.80
Notes: The other decrease of the year was generated from the loss of control over
subsidiaries.
The Company, in line with the requirement, participate the endowment insurance,
unemployment insurance scheme and so on, according to the scheme, the Company monthly
pay to the scheme in line with requirements of local government, except the monthly
payment, the Company no longer shoulder the further payment obligation, the relevant
expense occurred was recorded into current profits and losses or related assets costs.
28. Taxes Payable
118
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Item Closing balance Opening balance
VAT 6,235,397.21 22,004,630.74
Corporate income tax 29,341,831.95 47,284,465.50
Fund for disposing abandoned appliances and electronic
products 11,854,045.00 22,247,050.00
Land use tax 7,887,162.23 7,665,004.34
Real estate tax 4,023,557.21 5,981,502.18
Business tax 1,005,946.96 5,657,810.54
Tariff 4,413,293.36 4,840,472.49
Personal income tax 2,819,699.91 3,057,758.99
Urban maintenance and construction tax 451,931.85 1,045,876.46
Stamp duty 351,288.38 1,038,401.33
Education fees and local education Surcharge 255,167.09 762,586.83
Flood control fund, fund for embankment, fund for water
conservancy and fund for river management 29,807.37 2,661.16
Others 202,926.43 317,200.62
Total 68,872,054.95 121,905,421.18
29. Interest Payable
Item Closing balance Opening balance
Loan interests 30,119,490.82 21,344,172.45
Total 30,119,490.82 21,344,172.45
30. Other Accounts Payable
(1) Other Accounts Payable Listed by Nature of the Account
Item Closing balance Opening balance
Accrued expenses 678,797,416.33 1,024,955,359.82
Margin 223,657,959.46 200,962,374.64
Intercourse funds 143,376,312.99 140,710,255.05
Payment on behalf 3,438,817.44 9,468,406.97
Others 83,247,789.89 68,253,590.26
119
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Item Closing balance Opening balance
Total 1,132,518,296.11 1,444,349,986.74
(2) Other Significant Accounts Payable with Aging over One Year
Item Closing balance Unpaid/ Un-carry-over reason
Cash deposit 70,959,377.96 Unsettled
Total 70,959,377.96 —
31. Non-current Liabilities Due within 1 Year
Item Closing balance Opening balance
Long-term loans due within 1 year(Note: 31) — —
Long-term loans due within 1 year(Note: 32) 301,282.02 41,025.60
Total 301,282.02 41,025.60
32. Long-term Loan
Item Closing balance Opening balance
Mortgage loan — —
Guaranteed loan — —
Credit loan 70,000,000.00 70,000,000.00
Less: long-term loans due within 1 year(Note: 30) — —
Total 70,000,000.00 70,000,000.00
33. Long-term Payable
Item Closing balance Opening balance
Chuzhou Tongchuang Jianshe Investment Co.,
30,000,000.00 30,000,000.00
Ltd.
Accrued financial lease outlay 446,153.86 143,589.74
Less: Expired part due within 1 year (Notes: 30) 301,282.02 41,025.60
Total 30,144,871.84 30,102,564.14
34. Long-term Payroll Payable
(1) List of Long-term Payroll Payable
Item Closing balance Opening balance
120
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Item Closing balance Opening balance
I. Termination benefits-net liabilities of defined
15,614,846.48 18,151,659.90
contribution plans
II. Termination benefits — —
III. Other long term welfare — —
Total 15,614,846.48 18,151,659.90
(2) Changes of Defined Benefit Plans
① Present Worth of Defined Benefit Plans Obligation
Item Reporting Period Same period of last year
I. Opening balance 18,151,659.90 23,435,856.86
II. Defined benefit cost recorded into current
—
profits and losses
1. Current service cost —
2. Previous service cost —
3. Settlement gains (loss “－”) —
III.Other changes 2,536,813.42 5,284,196.96
1. Consideration of settlement of payment —
2.Welfare had paid 2,536,813.42 5,284,196.96
IV. Closing balance 15,614,846.48 18,151,659.90
② Notes to the influence of the content and related risk of defined benefit plans to the future
cash flows, time and uncertainty of the Company:
Due to upgrading and reconstruction of current work sites of the subsidiary, communication
technology, it is to adjust the labor relations according to Implementation Measures for
Accompanying Employees in manufacturing system of Shenzhen Konka Communication
Technology Co., Ltd on the premise to balance the Company’s and employees’ benefits and
voluntary selection, Communication Technology provides early retirement plans for senior
employees (employed before December 31, 1990 and signed non-fixed term labor contract
with the Company or Communication Technology).
The accumulative compensation paid to the internal early retirement pensions in future year
is RMB34,931,714.55, the Company in line with Agreement of Internal Early Retirement
121
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Pension, in line with the standard of salary remaining the same, turnover rate of 0, the
mortality rate of, fix standard of social security base payment remaining the same to test the
present worth of defined benefit plans. The actual payment for the employee is influence by
the actual turnover rate, death rate and the changes of minimum cardinality of social security.
③ Notes to analysis results of actuarial assumptions and sensibility of defined benefit plans
Major assumptions estimated Period-end of Reporting Period Period-end of last period
Discount rate Treasury bond rate in same period —
Death rate 0% —
Expected life expectancy Over legal emeritus age —
Expected compensation growth rate 0% —
35. Estimated Liabilities
Item Opening balance Closing balance Formed reason
Pending litigation 4,711,597.59 4,711,597.59 Litigation
Contract
Employee compensation 2,840,387.51 2,840,387.51
consideration
Total 7,551,985.10 7,551,985.10
36. Deferred Revenue
Other decrease of Formed
Item Opening balance Increase Decrease Closing balance
the year reason
Governme
Amortizati
nt 130,571,125.42 7,942,660.60 11,561,486.48 192.24 126,952,107.30 on
subsidies
Total 130,571,125.42 7,942,660.60 11,561,486.48 192.24 126,952,107.30 —
122
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Of which, items involved in government subsidies:
Amount accrued
Amount of newly Related to the assets/
Item Opening balance in non-business Other changes Closing balance
subsidy income
income
Subsidies for equipment engineering and technology 10,530,000.00 1,755,000.00 8,775,000.00 Related to the assets
Smart TV industry chain of Konka Group Co., Ltd. 12,800,000.00 213,333.33 12,586,666.67 Related to the assets
Shenzhen Finance Committee Konka Group Smart TV
8,170,000.00 136,166.67 8,033,833.33 Related to the assets
Industry Project
Supporting the next generation Internet intelligent terminal
7,776,925.55 2,000,000.00 1,024,207.11 8,752,718.44 Related to the assets
system R & D and industrialization
R&D of mating core chip based on the terminal of AVS/DRA 5,620,000.00 0.00 5,620,000.00 Related to the assets
R&D and industrialization of new-type smart television with
5,256,893.21 0.00 5,256,893.21 Related to the assets
man-machine interaction
Konka next generation multimedia terminal technology
5,000,000.00 0.00 5,000,000.00 Related to the assets
engineering laboratory project
Fund for flat panel display industry in year 2008 2,499,999.90 1,000,000.02 1,499,999.88 Related to the assets
Mobile intelligent terminal new application service system 4,000,000.00 0.00 4,000,000.00 Related to the assets
Key technology and industrialization of LED Backlight of flat TV
2,750,000.05 499,999.98 2,250,000.07 Related to the assets
set
Special Fund of Strategic Emerging Industry of Dongguan
3,000,000.00 300,000.00 2,700,000.00 Related to the assets
Financial Bureau
Economic, trade and information commission, 2015 Shenzhen 6,620,000.00 0.00 6,620,000.00 Related to the assets
123
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Amount accrued
Amount of newly Related to the assets/
Item Opening balance in non-business Other changes Closing balance
subsidy income
income
Industrial Design Center subsidy
Supporting the research and development and industrialization of
2,600,000.00 0.00 2,600,000.00 Related to the assets
synergy internet-connected digital products
Special fund for 2010-2012 provincial finance industrial
2,136,666.58 210,000.00 1,926,666.58 Related to the assets
technology
Funds for provincial scientific and technological innovation and
1,956,521.76 260,869.56 1,695,652.20 Related to the assets
special guidance of achievements transfer of 2010
Machine module integration subsidy 2,175,000.00 150,000.00 2,025,000.00 Related to the assets
TV application oriented and embedded operating system
2,470,000.00 174,200.00 2,295,800.00 Related to the assets
development
mobile intelligent terminal information security system key 2,400,000.00 0.00 2,400,000.00 Related to the assets
Research and development and industrialization of Dual channel
1,996,166.67 202,999.98 1,793,166.69 Related to the assets
new 3 D smart TV
Lean manufacturing execution system comprehensive integrated
2,000,000.00 0.00 2,000,000.00 Related to the assets
innovation projects
R&D and industrialization of large size liquid crystal display
0.00 Related to the assets
module (LCM)
Supporting triple play smart TV and system support platform 1,466,666.68 199,999.98 1,266,666.70 Related to the assets
Research instruments subsidies 1,227,333.25 210,400.02 1,016,933.23 Related to the assets
Mobile intelligent terminal new application service system 850,000.00 300,000.00 550,000.00 Related to the assets
124
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Amount accrued
Amount of newly Related to the assets/
Item Opening balance in non-business Other changes Closing balance
subsidy income
income
Mobile internet and the 4G mobile communication industry 4,000,000.00 0.00 4,000,000.00 Related to the assets
Others 27,637,230.66 5,942,200.00 3,803,915.79 29,775,514.87 Related to the assets
Subtotal 126,939,404.31 7,942,200.00 10,441,092.44 0.00 124,440,511.87
Others 3,631,721.11 460.60 1,120,394.04 192.24 2,511,595.43 Related to the income
Subtotal 3,631,721.11 460.60 1,120,394.04 192.24 2,511,595.43
Total 130,571,125.42 7,942,660.60 11,561,486.48 192.24 126,952,107.30
37. Share Capital
Increase/decrease in Reporting Period (+,-)
Item Opening balance Issuing Bonus Capitalization Closing balance
Others Subtotal
new shares shares of public reserves
The sum of shares 2,407,945,408.00 — — — — — 2,407,945,408.00
38. Capital Surplus
Item Opening balance Increase Decrease Closing balance
Capital premium 7,393,378.55 7,393,378.55
Other capital reserves 72,329,713.49 1,166,602.46 71,163,111.03
Total 79,723,092.04 0.00 1,166,602.46 78,556,489.58
125
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Notes: The decrease of other capital surplus was generated from the changes in owner’s equity excluding the net gain/loss of Shanghai Konka
Green Technology Co., Ltd. with the amount of RMB1,166,602.46.
39. Other Comprehensive Income
Reporting Period
Less: recorded in
other
comprehensive Attributable
Amount before Attributable to
Item Opening balance income in prior Less: Income tax to minority Closing balance
income tax in owners of the
period and expense shareholders
current period Company after tax
transferred to after tax
profit or loss in
current period
I. Other comprehensive income cannot be
—
reclassified into profits and losses in future
II. Other comprehensive reclassified into
-6,932,104.65 -6,012,664.59 0.00 -3,786,104.00 -2,249,706.48 23,145.89 -9,181,811.13
profits or losses
Of which: other comprehensive income as per
equity method recognized into profit and loss in 0.00 0.00
future
Profits or losses of change in fair value of
6,410,568.76 -15,134,102.58 -3,786,104.00 -11,347,998.58 -4,937,429.82
available-for-sale financial assets
Converted difference of the foreign currency
-13,342,673.41 9,121,437.99 9,098,292.10 23,145.89 -4,244,381.31
financial statement
Total -6,932,104.65 -6,012,664.59 0.00 -3,786,104.00 -2,249,706.48 23,145.89 -9,181,811.13
126
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
40. Surplus Reserves
Item Opening balance Increase Decrease Closing balance
Statutory surplus reserves 593,846,200.71 — — 593,846,200.71
Discretionary surplus reserves 254,062,265.57 — — 254,062,265.57
Total 847,908,466.28 — — 847,908,466.28
Notes: Based on the regulations of the Corporation Law and Constitution, the Company
should withdraw 10% of the statutory surplus reserves according to the net profits. If the
accumulated amount of the statutory surplus reserves exceeded the 50% of the registered
capital, the Company could no more withdraw.
41. Retained Profits
Item Reporting Period Same period of last year
Opening balance of retained profits before
-427,163,254.63 -522,836,282.66
adjustments
Total opening balance of retained profits before
— —
adjustments (Increase+, decrease-)
Opening balance of retained profits after adjustments -427,163,254.63 -522,836,282.66
Add: Net profit attributable to owners of the
30,871,267.86 95,673,028.03
Company
Less: Withdrawal of statutory surplus reserves — —
Withdrawal of discretional surplus reserves — —
Dividend of common stock payable — —
Dividend of common stock transfer into share capital — —
Closing retained profits -396,291,986.77 -427,163,254.63
42. Revenue and Cost of Sales
(1) Revenue and Cost of Sales
Reporting Period Same period of last year
Item
Sales revenue Cost of sales Sales revenue Cost of sales
Main
11,116,190,367.22 9,941,054,112.21 7,724,414,205.37 6,397,747,058.44
operations
127
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Reporting Period Same period of last year
Item
Sales revenue Cost of sales Sales revenue Cost of sales
Other
289,775,612.21 169,137,145.86 884,666,616.87 779,978,033.98
operations
Total 11,405,965,979.43 10,110,191,258.07 8,609,080,822.24 7,177,725,092.42
(2) Main Operations (Classified by product)
Reporting Period Same period of last year
Product
Operation revenue Operation cost Operation revenue Operation cost
Color TV business 5,289,992,150.21 4,431,743,317.09 5,367,972,378.49 4,468,618,453.12
Consumer
891,933,843.48 726,049,054.97 829,752,654.59 648,051,838.45
appliances business
Mobile phone
420,602,444.99 365,383,403.95 471,731,609.94 415,431,430.93
business
Supply chain
4,307,330,068.12 4,247,646,007.45
business
Others 206,331,860.42 170,232,328.75 1,054,957,562.35 865,645,335.94
Total 11,116,190,367.22 9,941,054,112.21 7,724,414,205.37 6,397,747,058.44
(3) Main Operations (Classified by Area)
Reporting Period Same period of last year
Area
Operation revenue Operation cost Operation revenue Operation cost
Domestic sales 7,343,613,290.29 6,314,287,989.74 5,176,447,693.40 4,024,605,977.81
Overseas sales 3,772,577,076.93 3,626,766,122.47 2,547,966,511.97 2,373,141,080.63
Total 11,116,190,367.22 9,941,054,112.21 7,724,414,205.37 6,397,747,058.44
(4) Other Business
Reporting Period Same period of last year
Product
Operation revenue Operation cost Operation revenue Operation cost
Income gained from
598,960,641.11 591,804,734.74
supply chain
Others 289,775,612.21 169,137,145.86 534,917,991.67 444,108,975.70
Total 289,775,612.21 169,137,145.86 1,133,878,632.78 1,035,913,710.44
128
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
(5) The Revenue of Sales from the Top Five Customers
Period Main operation revenue Proportion of total business revenue (%)
January-June 2017 2,662,113,944.10 23.34
1,776,976,457.55 20.64
January-June 2016
43. Business Tax and Surcharges
Item Reporting Period Same period of last year
Urban maintenance and
9,045,781.48 20,776,311.03
construction tax
VAT of land 102,929.05
Business tax 47,500.00 13,191,515.48
Education Surcharge 4,011,787.05 9,430,266.44
Local education surtax 2,617,655.26 6,021,776.47
Stamp duty 4,633,250.57 —
Real estate tax 6,808,790.65 —
Land use tax 5,698,979.66 —
Vehicles and vessels fees 13,620.00 —
Water conservancy fund 457,748.63 —
Others 991,549.69 6,730,072.12
Total 34,429,592.04 56,149,941.54
Note: (1) After replacing business tax with value added tax is fully tried according to CK
[2016] No. 22 Provision on VAT Accounting Treatment issued by the Ministry of Finance,
the course title of “business tax and surcharge” is adjusted to be the course of “tax and
surcharge”, the course checks the consumption tax, urban maintenance and construction tax,
resource tax, educational expense and surcharge and property tax, land use tax, vehicle and
vessel use tax, stamp tax and other related taxes occurred in the enterprise’s operating
activity; the project of “business tax and surcharge” in the profit statement is adjusted as the
project of “tax and surcharge”.
(2) For more details about the measurement standards of business tax and surcharges, please
refer to Note V. Tax.
44. Sales Expenses
129
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Item Reporting Period Same period of last year
Salary 146,655,505.33 157,536,220.65
Promotional activities 320,216,302.42 372,587,893.03
Logistic Fee 148,814,891.66 154,776,709.59
Warranty fee 114,430,603.12 167,856,546.55
Advertising expense 93,547,508.94 91,273,551.74
Social security charges 21,205,649.26 21,910,951.20
Business travel charges 16,044,394.98 17,770,918.55
Rental charges 14,424,674.47 15,085,828.42
Business entertainment expense 10,651,455.99 11,450,052.22
Exhibition fee 6,530,558.33 6,719,144.35
Others 81,481,762.04 92,179,107.31
Total 974,003,306.54 1,109,146,923.61
45. Administrative Expenses
Item Reporting Period Same period of last year
R&D expenses 96,753,027.87 88,336,972.44
Salary 68,075,439.56 73,525,422.30
Depreciation charge 16,955,414.43 16,536,843.42
Social security charges 9,395,168.52 11,042,691.24
Business entertainment expense 8,204,092.21 7,228,540.05
Consulting fees 6,907,424.07 3,993,681.74
Tax and fund 0.00 17,286,987.83
Business travel charges 4,518,651.08 4,382,095.57
Employee welfare 6,552,271.96 6,728,436.24
Labor-union expenditure 3,456,348.07 3,969,760.83
Others 43,290,263.20 57,887,858.36
Total 264,108,100.97 290,919,290.02
46. Financial Expenses
Item Reporting Period Same period of last year
Interest expenses 165,919,248.32 115,905,577.29
130
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Item Reporting Period Same period of last year
Less: Interest income 61,587,922.88 47,941,503.94
Exchange gains and losses -94,091.34 -223,594.54
Others 6,645,661.36 632,953.19
Total 110,882,895.46 68,373,432.00
47. Asset Impairment Loss
Item Reporting Period Same period of last year
Bad debt loss -10,238,423.79 8,154,439.14
Inventory falling price loss 12,397,789.34 28,006,901.30
Fixed assets impairment losses 111,677.21 3,093,224.90
Total 2,271,042.76 39,254,565.34
48. Gains and Losses from Changes in Fair Value
Sources Reporting Period Last period
Financial assets measured by fair value and the changes be
-103,077,757.73
included in the current profits and losses -18,141,655.39
Of which, gains on the changes in the fair value of derivative
-103,077,757.73
financial instruments -18,141,655.39
Total -103,077,757.73 -18,141,655.39
49. Investment Income
Item Reporting Period Same period of last year
Long-term equity investment income accounted by equity method -4,574,294.19 -7,531,575.68
Investment income arising from disposal of long-term equity investments 28,234.62 3,030,280.93
Investment income received from holding of available-for-sale financial assets 0.00 1,310,000.00
Investment income received from disposal of available-for-sale financial assets 25,048,785.15 44,703.62
Investment income received from holding of available-for-sale trading financial
263,100.00
assets
Income received from re-measurement of the rest of stock at fair value after
4,510,212.49
losing control rights
131
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Item Reporting Period Same period of last year
Financial assets accounted by equity method transferred from equity investment
Income received from purchase of financial products and entrust loans 30,338,020.11 9,222,760.26
Investment income received from the disposal of financial assets/liabilities
measured by fair value and the changes be included in the current profits and 15,901,726.37 —
losses
Total 67,005,572.06 10,586,381.62
50. Other Income
Item Reporting Period Same period of last year
Tax refund of software 35,115,965.51 0.00
Subsidy for export credit insurance 1,722,426.00 0.00
Total 36,838,391.51 0.00
51. Non-operating Gains
Recorded in the amount of
Item Reporting Period Same period of last year the non-recurring gains
and losses
Total gains from disposal of non-current assets 33,597,795.57 3,147,161.67 33,597,795.57
Including: Gains from disposal of fixed assets 228,629.18 3,147,161.67 228,629.18
Government grants ( Details, see the statement
79,034,666.86 136,544,386.15 79,034,666.86
below, lists of government subsidies )
Income from compensation 7,639,245.00
Penalty income 3,366,979.21 2,148,787.76 3,366,979.21
Others 7,347,666.65 4,708,082.06 7,347,666.65
Total 123,347,108.29 154,187,662.64 123,347,108.29
Of which, government subsidies recorded into current profits and losses
Item Reporting Period Same period of last year Related to the assets/ income
Software tax returns 0.00 84,594,956.03 Related to the income
Support fund 40,225,800.00 29,076,900.00 Related to the income
Deferred income 11,561,486.48 12,057,366.44 See Note VI. 35
132
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Item Reporting Period Same period of last year Related to the assets/ income
Awards and subsidies 21,005,000.00 Related to the income
Refund of land tax 1,948,800.00 Related to the income
Others 4,293,580.38 10,815,163.68 Related to the income
Total 79,034,666.86 136,544,386.15
52. Non-operating Expenses
Recorded in the amount of
Item Reporting Period Same period of last year the non-recurring gains and
losses
Loss on disposal of non-current
1,065,392.90 617,565.57 1,065,392.90
assets
Including: Loss on disposal of
1,065,392.90 617,565.57 1,065,392.90
fixed assets
Compensation expenses 1,531.07 1,531.07
Penalty expenses 52,501.63 1,344,333.27 52,501.63
External donation expenses 13,600.00 28,000.00 13,600.00
Refundable national subsidy for
energy-saving
Others 2,502,512.51 1,541,119.52 2,502,512.51
Total 3,635,538.11 3,531,018.36 3,635,538.11
53. Income Tax Expense
(1) Lists of Income Tax Expense
Item Reporting Period Same period of last year
Current income tax expense 21,286,293.02 41,114,706.11
Deferred income tax expense -25,125,065.99 -40,408,709.01
Total -3,838,772.97 705,997.10
(2) Adjustment Process of Accounting Profit and Income Tax Expense
Item Reporting Period
Total profits 30,557,559.61
133
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Current income tax expense accounted by tax and relevant
7,639,389.90
regulations
Influence of different tax rate suitable to subsidiary -3,376,311.10
Influence of income tax before adjustment -726,692.04
Influence of non taxable income -2,265,211.18
Influence of not deductable costs, expenses and losses 561,232.11
Influence of deductable losses of deferred income tax assets
-4,832,078.47
derecognized used in previous period
Influence of deductible temporary difference or deductible losses of
-839,102.19
deferred income tax assets derecognized in Reporting Period.
Changes of the balance of deferred income tax assets/ liabilities in
previous period due to adjustment of tax rate
Influence of plus deducting costs
Income tax expense -3,838,772.97
54. Other Comprehensive Income
For more details, please refer to Note VI. 39.
55. Information of Cash Flow Statement
(1) Other Cash Received Relevant to Operating Activities
Item Reporting Period Same period of last year
Income from government subsidy 73,794,757.98 43,649,169.82
Bargain money and deposit 35,452,861.96 33,299,181.92
Interest income from bank deposits 7,386,176.08 23,481,811.90
Income from waste 5,528,381.42 6,679,741.15
Repayment of individual borrowing 2,369,554.91 2,937,490.67
Insurance indemnity 6,000.00
Temporary received repair fund 2,820,613.27 681,957.93
Income from fine and penalty 170,823.92 318,724.35
Current accounts and other 114,981,420.88 154,798,397.77
Total 242,504,590.42 265,852,475.51
134
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
(2) Other Cash Paid Relevant to Operating Activities
Item Reporting Period Same period of last year
Expense for cash payment 619,722,220.51 470,234,898.51
Payment made on behalf 16,655,746.00 23,090,996.59
Payment for pledges, guarantee and repair 55,078,829.30 42,278,211.56
Employee reserve fund 10,359,585.52 11,796,262.92
Expense for bank handling charges 9,929,886.88 4,984,527.17
Donation expense 0.00 28,000.00
Other expense 43,928,173.17 40,284,916.71
Total 755,674,441.38 592,697,813.46
(3) Other Cash Received Relevant to Investment Activities
Item Reporting Period Same period of last year
Received financial product 857,900,000.00 4,243,417,300.00
Interest of entrust loan 50,000,000.00
Others 1,449.68 11,000.00
Total 857,901,449.68 4,293,428,300.00
(4) Other Cash Paid Relevant to Investment Activity
Item Reporting Period Same period of last year
Purchase of financial products 2,130,900,000.00 4,293,417,300.00
Payment of entrust loan 20,000,000.00 —
Payment of option price 5,125,000.00
Others 43,913.10 28,389,985.63
Total 2,156,068,913.10 3,658,501,268.22
(5) Other Cash Received Relevant to Financing Activities
Item Reporting Period Same period of last year
Self opening and self discounting 1,087,905,232.65
Payment of due RMB certificate of deposit
444,475,802.89
as pledge
135
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Item Reporting Period Same period of last year
Others 3,600,000.00
Total 444,475,802.89 1,091,505,232.65
(6) Other Cash Paid Relevant to Financing Activities
Item Reporting Period Same period of last year
Margin deposit as pledge 574,504.77
Others 0.00 31,258,073.60
Total 574,504.77 31,258,073.60
56. Supplemental Information for Cash Flow Statement
(1) Supplemental Information for Cash Flow Statement
Supplemental information Reporting Period Same period of last year
1. Reconciliation of net profit to net cash flows
generated from operating activities
Net profit 34,396,332.58 9,906,950.72
Add: Provision for impairment of assets 2,271,042.76 39,254,565.34
Depreciation of fixed assets, of oil-gas assets, of productive
57,373,770.25 63,256,033.89
biological assets
Amortization of intangible assets 5,514,858.35 6,225,055.67
Long-term unamortized expenses 32,110,310.89 27,591,224.40
Losses on disposal of fixed assets, intangible assets and
-32,532,402.67 -2,529,596.10
other long-term assets (gains: negative)
Loss on retirement of fixed assets (gains: negative) — —
Losses from variation of fair value (gains: negative) 103,077,757.73 —
Financial cost (gains: negative) 205,629,196.69 129,789,423.55
Investment loss (gains: negative) -67,005,572.06 -10,586,381.62
Decrease in deferred income tax assets (gains: negative) -35,150,295.62 -36,491,902.56
Increase in deferred income tax liabilities
2,453,021.63 1,218,228.05
(crease in deferred
Decrease in inventory (gains: negative) -2,097,599,214.55 29,575,516.85
Decrease in accounts receivable from operating activities
274,747,714.15 203,319,939.04
(gains: negative)
Increase in payables from operating activities (decrease:
-737,739,738.53 -586,071,113.65
negative)
Others -11,561,486.48 —
Net cash flows generated from operating activities -2,264,014,704.88 -125,542,056.42
136
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Supplemental information Reporting Period Same period of last year
2. Investing and financing activities that do not
involving cash receipts and payment:
Conversion of debt into capital — —
Company bonus convertible due within one year — —
Fix assets under financing lease — —
3. Net increase in cash and cash equivalents
Closing balance of cash 2,326,786,079.22 2,469,950,766.48
Less: Opening balance of cash 2,020,902,945.13 1,488,154,851.35
Add: Closing balance of cash equivalents — —
Less: Opening balance of cash equivalents — —
Net increase in cash and cash equivalents 305,883,134.09 981,795,915.13
(2) Cash and Cash Equivalents
Item Closing balance Opening balance
I. Cash 2,326,786,079.22 2,469,950,766.48
Including: Cash on hand 2,243.88 3,160.55
Bank deposit on demand 2,326,783,835.34 2,469,947,605.93
II. Cash and cash equivalents — —
Of which: Bond investment due within three months — —
III. Closing balance of cash and cash equivalents 2,326,786,079.22 2,469,950,766.48
Notes: The cash and cash equivalents excluded the restricted cash and cash equivalents of the
Company and its subsidiaries.
57. The Assets with the Ownership or Use Right Restricted
Item Closing book value Restricted reason
Each margin deposit for security cannot be
Monetary funds 163,293,524.85
withdrawn at any time.
Used for comprehensive financing business
Notes receivable 1,367,853,053.41 such as the opening of bank’s acceptance bill,
L/C, letter of indemnity and trade financing
Fixed assets 5,807,674.32 Property preservation
Total 1,536,954,252.58
58. Foreign Currency Monetary Items
137
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
(1) Foreign Currency Monetary Items
Closing convert to RMB
Item Closing foreign currency balance Exchange rate
balance
Monetary capital 723,760,332.08
Including: USD 105,182,149.96 6.7744 712,545,956.69
EUR 103,868.04 7.7496 804,935.76
IDR 4,225,752,514.66 0.000509 2,150,908.03
GBP 1.32 8.8144 11.64
HKD 9,268,333.66 0.86792 8,044,172.15
CAD 6.96 5.2144 36.29
PLN 117,296.00 1.8271 214,311.52
Accounts receivable 391,992,421.81
Including: USD 57,647,203.61 6.7744 390,525,216.14
IDR 1,131,442,304.69 0.000509 575,904.13
HKD 1,026,939.74 0.86792 891,301.54
Other accounts receivable 4,024,272.48
Including: USD 361,691.10 6.7744 2,450,240.19
EUR 1,400.00 7.7496 10,849.44
HKD 305,018.72 0.86792 264,731.85
IDR 8,000,000.00 0.000509 4,072.00
JPY 21,400,000.00 0.060485 1,294,379.00
Accounts payable 101,202,241.41
Including: USD 14,843,770.66 6.7744 100,557,639.98
HKD 742,696.83 0.86792 644,601.43
VII. Changes of Merge Scope
1. The Disposal of Subsidiary
There was no subsidiary to dispose.
2. Other Reasons for the Changes in Combination Scope
(1) Anhui Konka Electronic Co., Ltd., a subsidiary of our company registered to set up the
138
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
wholly-owned subsidiary of Anhui Kangzhi Commerce and Trade Co., Ltd., in Anhui on
March 8, 2017 with the registered capital of RMB5.00 million. Until the date of asset balance
sheet, Anhui Konka Electronic Co., Ltd. has not invested actually. The company has the
control power, and it has been included in the merger scope since March 8, 2017.
(2) Anhui Konka Tongchuang Household Appliances Co., Ltd., a subsidiary of our company
absorbed and merged the wholly-owned subsidiary of Anhui Konka Household Appliances
Co., Ltd. on May 17, 2017, Anhui Konka Household Appliances Co., Ltd. completed the
industrial and commercial registration cancellation on May 17, 2017.
VIII. Equity in Other Entities
1. Equity in Subsidiary
(1) The Structure of the Enterprise Group
Holding
Main
percentage (%) Way
Registrati Nature of
Name operating
on place business of gaining
Direct Indirectl
place
ly y
Shenzhen Konka Shenzhen,
Shenzhen, Manufacturing Set up or
Telecommunications Technology Guangdon 75.00 25.00
Guangdong industry investment
Co., Ltd. g
Shenzhen, Manufacturing
Shenzhen Konka Electronic Co., Shenzhen, 100.0 Set up or
Guangdon industry and —
0
Ltd. Guangdong investment
g trade
Shenzhen,
Shenzhen Konka Plastic Products Shenzhen, Manufacturing Set up or
Guangdon 49.00 51.00
Co., Ltd. Guangdong industry investment
g
Shenzhen,
Shenzhen Konka Life Electronic Shenzhen, Manufacturing Set up or
Guangdon 75.00 25.00
Co., Ltd. Guangdong industry investment
g
Shenzhen,
Shenzhen Konka Electronic Shenzhen, Investment Set up or
Guangdon 75.00 25.00
Fittings Technology Co., Ltd. Guangdong holding investment
g
139
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Holding
Main
percentage (%) Way
Registrati Nature of
Name operating
on place business of gaining
Direct Indirectl
place
ly y
Mudanjia
Mudanjiang,
Mudanjiang Arctic Ocean ng, Manufacturing Set up or
Heilongjian 60.00 —
Appliances Co., Ltd. Heilongjia industry investment
g
ng
Chongqing Konka Electronic Co., Chongqin Manufacturing Set up or
Chongqing — 40.00
Ltd.① g industry investment
Chuzhou, Chuzhou, Manufacturing Set up or
Anhui Konka Electronic Co., Ltd. 78.00 —
Anhui Anhui industry investment
Chuzhou, Chuzhou, Manufacturing 100.0 Set up or
Anhui Konka Appliance Co., Ltd. —
0
Anhui Anhui industry investment
Kunshan Konka Electronic Co., Kunshan, Kunshan, Manufacturing Set up or
75.00 25.00
Ltd. Jiangsu Jiangsu industry investment
Dongguan
Dongguan Konka Electronic Co., Dongguan, , Manufacturing Set up or
— 100.00
Ltd. Guangdong Guangdon industry investment
g
Dongguan
Dongguan Konka Packing Dongguan, , Manufacturing Set up or
— 100.00
Materials Co., Ltd. Guangdong Guangdon industry investment
g
Boluo，
Boluo， Manufacturing Set up or
Boluo Konka PCB Co., Ltd. Guangdon — 100.00
Guangdong industry investment
g
Boluo，
Boluo Konka Precision Boluo， Manufacturing 100.0 Set up or
Guangdon —
0
Technology Co., Ltd. Guangdong industry investment
g
140
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Holding
Main
percentage (%) Way
Registrati Nature of
Name operating
on place business of gaining
Direct Indirectl
place
ly y
Hong
Hong Kong, International Set up or
Hong Kong Konka Co., Ltd. Kong, — 100.00
China Trading investment
China
Konka Household Appliances Hong
Hong Kong, Investment Set up or
Investment & Development Co., Kong, — 100.00
China holding investment
Ltd. China
Frankfurt, Frankfurt,
International 100.0 Set up or
Konka (Europe) Co., Ltd. Germany, Germany, —
0
Trading investment
Europe Europe
Shenzhen, Factoring
Konka Commercial Shenzhen, 100.0 Set up or
Guangdon (Non-bank —
0
Factor(Shenzhen) Co., Ltd.② Guangdong investment
g finance)
Shenzhen,
Shenzhen Wankaida Science and Shenzhen, Software 100.0 Set up or
Guangdon —
0
Technology Co., Ltd. Guangdong development investment
g
Kunshan Kangsheng Investment Kunshan, Kunshan, 100.0 Set up or
Real estate —
0
Development Co., Ltd. Jiangsu Jiangsu investment
Anhui Konka Tongchuang Chuzhou, Chuzhou, Manufacturing 100.0 Set up or
—
0
Household Appliances Co., Ltd.③ Anhui Anhui industry investment
Indonesia Konka Electronics Co., International Set up or
Indonesia Indonesia — 51.00
Ltd. Trading investment
Shenzhen,
Shenzhen Shushida Logistics Shenzhen, 100.0 Set up or
Guangdon Logistics —
0
Service Co., Ltd. Guangdong investment
g
Sale of home 100.0 Set up or
Beijing Konka Electronic Co., Ltd. Beijing Beijing —
0
appliance investment
141
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Holding
Main
percentage (%) Way
Registrati Nature of
Name operating
on place business of gaining
Direct Indirectl
place
ly y
Shenzhen,
Shenzhen Konka E-display Co., Shenzhen, Manufacturing Set up or
Guangdon 60.00 —
Ltd. Guangdong industry investment
g
Shenzhen,
Shenzhen E-display Service Co., Shenzhen, Manufacturing Set up or
Guangdon 60.00
Ltd. Guangdong industry investment
g
Xiamen, Xiamen, Set up or
Xiamen Dalong Trade Co., Ltd. Trade — 69.23
Fujian Fujian investment
Youshi Kangrong Cultural Set up or
Tianjin Tianjin Advertisement — 70.00
Communication Co., Ltd. investment
Shenzhen,
Shenzhen Kangqiaojiacheng Shenzhen, Set up or
Guangdon Real estate 70.00 —
Property Investment Co., Ltd Guangdong investment
g
Hong
Hong Kong, International Set up or
Konka Smarttech Limited Kong, — 61.00
China trading investment
China
Anhui Kakai Shijie E-Commerce Set up or
Anhui Anhui E-commerce 80.00 —
Co., Ltd investment
Shenzhen,
Shenzhen Yipingfang Network Shenzhen, Information 100.0 Set up or
Guangdon —
0
Technology Co., Ltd Guangdong service investment
g
Shenzhen,
Shenzhen Konka Commercial Shenzhen, Set up or
Guangdon Commerce 81.00 —
Systems Technology Co., Ltd Guangdong investment
g
Shenzhen,
Shenzhen Konka Mobile Internet Shenzhen, Set up or
Guangdon Commerce 51.00 —
Technology Co., Ltd. Guangdong investment
g
142
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Holding
Main
percentage (%) Way
Registrati Nature of
Name operating
on place business of gaining
Direct Indirectl
place
ly y
Hong
Hong Kong, International Set up or
Chain Kingdom Co.，Limited Kong, — 51.00
China trading investment
China
Shenzhen,
Shenzhen Kangqiao Easy Chain Shenzhen, Set up or
Guangdon Commerce 60.00 —
Technology Co., Ltd. Guangdong investment
g
Development of
E3info (Hainan) Technology Co., Haikou, Haikou, 100.0 Set up or
internet —
Ltd. Hainan Hainan 0 investment
platform
Chuzhou Konka Technology & Chuzhou, Chuzhou, Technology 100.0 Set up or
—
Industry Development Co., Ltd. Anhui Anhui industry 0
investment
Chuzhou, Chuzhou, Set up or
Anhui Kangzhi Trade Co., Ltd. Trade — 78.00
Anhui Anhui
investment
Notes: ① The Company holds 40.00% shares of Chongqing Qingjia Electronic Co., Ltd. that
all senior managers of Chongqing Qingjia Electronic Co., Ltd. are appointed and dismissed
by the Company. Among the directors, half of them or over half are dispatched directly or
indirectly by the Company. Moreover, in Chongqing Qingjia, 70% to 80% of its products
are sold to the Company and thus the Company has absolute influence and control over the
production and operation of Chongqing Qingjia Electronic Co., Ltd., which is combined into
the consolidated financial statement.
② Anhui Tongchuang is a limited company jointly invested and established by the Company
and Chuzhou Tongchuang Construction Investment Co., Ltd. (hereinafter refer to as
“Tongchuang Construction”) with registration capital of RMB 180 million, of which each
party invested in RMB 90 million respectively on contract. As to Dec. 31, 2013, Anhui
Tongchuang with a paid-up capital of RMB 120 million (including paid-up capital of RMB
90 million of the Company, 75.00% of total paid-up capital; and paid-up capital of RMB 30
million of Tongchuang Construction, 25.00% of total paid-up capital ). According to contract
143
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
sign by two parties, Tongchuang Construction has the rights of transferring stock ownership
three years after the establishment of Anhui Tongchuang Company. Meanwhile, the
Company can repurchase the said stock ownership and contracted with Tongchuang
Investment Company that the Company shall receive fixed investment gains at 2% of actual
capital invested by the Group annually. As of Dec. 31, 2016, “Tongchuang Construction” had
not transferred its equity and the Company had not repurchased it. So the Company can
conduct actual control to Anhui Tongchuang Company, and combines it into the consolidated
financial statement.
(2) Significant Not Wholly Owned Subsidiary
Shareholding The profits and losses Balance of minority
Dividends distribute to
Name proportion of minority arbitrate to the minority shareholder at closing
minority shareholder
shareholder shareholders period
Anhui Konka 22.00 1,924,758.03 — 79,305,956.28
Kangqiao Jiacheng 30.00 -1,379,203.28 — 295,555,154.69
Kaikai Shijie 20.00 589,684.00 — 5,835,182.48
Commercial
19.00 125,654.91 — 2,399,143.36
System Technology
Mobile
49.00 -1,862,724.74 — 3,402,493.98
Interconnection
(3) The Main Financial Information of Significant Not Wholly Owned Subsidiary
Closing balance
Name Non-current Current Non-current
Current assets Total assets Total liabilities
assets liabilities liability
Anhui Konka 956,041,713.09 231,071,142.68 1,187,112,855.77 818,317,044.11 8,314,192.20 826,631,236.31
Kangqiao
1,091,379,684.22 669,800.89 1,092,049,485.11 6,865,636.14 100,000,000.00 106,865,636.14
Jiacheng
Kaikai Shijie 450,332,965.18 1,603,761.86 451,936,727.04 422,760,814.65 0.00 422,760,814.65
Commercial
System 57,327,701.61 124,443.28 57,452,144.89 44,825,074.59 0.00 44,825,074.59
Technology
Mobile 43,693,816.15 23,095.72 43,716,911.87 36,773,046.61 0.00 36,773,046.61
144
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Closing balance
Name Non-current Current Non-current
Current assets Total assets Total liabilities
assets liabilities liability
Interconnectio
n
（Continued）
Opening balance
Name Non-current Current Non-current
Current assets Total assets Total liabilities
assets liabilities liability
Anhui Konka 882,686,223.79 237,235,477.46 1,119,921,701.25 758,810,489.87 9,378,492.06 768,188,981.93
Kangqiao
1,095,944,360.32 823,353.13 1,096,767,713.45 6,986,520.22 100,000,000.00 106,986,520.22
Jiacheng
Kaikai Shijie 415,460,985.44 1,976,121.55 417,437,106.99 391,209,614.58 — 391,209,614.58
Commercial
System 60,748,150.41 210,589.31 60,958,739.72 49,258,011.04 — 49,258,011.04
Technology
Mobile
Interconnectio 51,339,640.20 25,744.89 51,365,385.09 40,620,040.76 — 40,620,040.76
n
Reporting Period
Name Total comprehensive
Operation revenue Net profit Operating cash flow
income
Anhui Konka 2,399,150,981.00 8,748,900.14 8,748,900.14 -25,296,816.63
Kangqiao
0.00 -4,597,344.26 -4,597,344.26 -20,180,271.82
Jiacheng
Kaikai Shijie 470,025,219.90 2,948,419.98 2,948,419.98 82,976,543.24
Commercial
System 68,795,665.26 661,341.62 661,341.62 -10,618,619.61
Technology
145
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Reporting Period
Name Total comprehensive
Operation revenue Net profit Operating cash flow
income
Mobile
112,984,978.64 -3,801,479.07 -3,801,479.07 -6,303,289.22
Interconnection
（Continued）
Same period of last year
Name Total comprehensive
Operation revenue Net profit Operating cash flow
income
Anhui Konka 1,782,076,379.17 41,054,374.04 41,054,374.04 -18,411,271.87
Kangqiao
0.00 -1,974,407.17 -1,974,407.17 -344,371.26
Jiacheng
Kaikai Shijie 249,006,644.45 5,918,017.84 5,918,017.84 -27,434,290.16
Commercial
System 49,859,194.22 1,159,219.36 1,159,219.36 19,339,200.90
Technology
Mobile
145,032,685.28 2,756,416.09 2,756,416.09 23,235,560.41
Interconnection
2. Equity in Associated Enterprise
(1) Significant Associated Enterprises
Main Holding percentage (%) Accounting treatment of the
Registratio
Name operating Nature of business investment of joint venture or
n place Directly Indirectly
place associated enterprise
Shanghai Konka Production and sale
Green Science & Shanghai Shanghai of light emitting 39.00 — Equity method
Technology Co., Ltd. diode
(2) Main Financial Information of Significant Associated Enterprise
Closing balance/ Reporting
Opening balance /last period
Period
Item
Shanghai Konka Green
Shanghai Konka Green Science &
Science & Technology Co.,
Technology Co., Ltd.
Ltd.
146
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Current assets 312,266,543.64 361,468,348.74
Non-current assets 348,472,666.95 356,832,999.34
Total assets 660,739,210.59 718,301,348.08
Current liabilities 202,158,890.03 254,144,707.10
Non-current liability 60,315,740.08 71,618,268.97
Total liabilities 262,474,630.11 325,762,976.07
Minority interests 192,005,442.76 172,560,267.62
Equity attributable to owners of the
206,259,137.72 219,978,104.39
Company
85,791,460.71
Portion of net assets calculated according
80,441,063.71 85,791,460.71
to proportion of shareholdings
Adjusting events
-Goodwill — —
-Unrealized internal sales gain and loss — —
-Other — —
Book value of equity investment to
80,441,063.71 85,791,460.71
associated venture
Fair value of equity investment of
— —
associate enterprises with public offer
Operation revenue 260,884,229.06 474,548,859.80
Net profit 9,284,617.15 27,916,818.85
Net profits of termination operation — —
Other comprehensive income — —
Total comprehensive income 9,284,617.15 27,916,818.85
147
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Dividends received from associated
— —
enterprises in Reporting Period
IX. The Risk Related Financial Instruments
(I) Risk Management Objectives and Policies
Risk management objective of the Company is to balance the risks and profits, minimize the
negative effects to business performance and maximize the profits for stockholders and other
equity investors. On the basis of risk management objectives, basic strategies of risk
management are to determine and analyze all possible risks, establish appropriate risk
baseline, control and manage risks and monitor all risks timely and reliably within defined
scope.
1. Market Risk
(1) Foreign Exchange Risk
Foreign exchange risk refers to the risks that may lead to losses due to fluctuation in
exchange rate. Foreign exchange risk refers to the risks that may lead to losses due to
fluctuation in exchange rate. The foreign exchange risk borne by the Company is related to
USD, EURO, IDR and HKD, except the procurement and sales by US dollars for several
subsidiaries such as the Company, Kongkong Konka, Zhongkang Supply Chain, Konka
Trading, Europe Konka and Indonesia Konka which settled by USD, HKD, IDR and EURO
for purchase and sale. Until June 30, 2017 (refer to Notes VI 58, foreign monetary items),
foreign exchange risks may affect the business performance produced by the assets and
liabilities of the balance.
The Company timely pay attention to the influence of change of the exchange rate to the
Company's foreign exchange risk, which require the Group and others which conducted
purchase and sale with settlement by foreign currency to purchase foreign currency long-term
forward contract to lock the cost of purchase on forward date to reduce the risk exposure of
foreign exchange.
(2) Interest Rate Risk- cash Flow Change Risk
Cash flow change risk caused by financial instruments due to interest rate change is related to
floating interest rate of bank loan. By establishing good relations with banks and reasonable
planning of credit line, credit varieties and credit period, it is to guarantee sufficient band line
of credit and satisfy all financial demands. Moreover, it is to reduce risks of interest rate
uncertainty by shortening single loan term and establishing repayment terms.
148
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
3. Other Price Risk
The investment classified as available-for-sale financial assets and trading financial assets,
and the financial assets/liabilities measured at fair value and its changes be recorded into the
current gains/losses held by the Company were accounted at fair value on the balance sheet
date., For the equity investment of other listed companies holding by the Company, the
management considers that the market price risks are acceptable. Refer to Notes VI, 11
Available-for-sale financial assets for equity investment of other listed companies holding by
the Company.
2 Credit Risk
On June 30, 2017, the biggest credit risk exposure may lead to the financial assets losses of
the Company was mainly from the one party fail to perform its obligation, which included:
book amount recognized in consolidated balance sheet: for financial instruments measured at
fair value, the book value reflect its risk exposure, but not the biggest one, the biggest risk
exposure will change along with the change of future fair value.
In order the reduce the credit risk, the Company establish a group response for recognizing
line of credit, conducting credit approval and other monitor procedures to ensure that the
necessary measures were used to recycle expired claims. In addition, the Company at each
balance sheet date, review every single receivables recycling situation, to ensure that the
money unable to recycle withdrawn provision for bad debt fully. Thus, the Company
management believed that have assume the credit risk the Company shouldered had been
greatly reduced.
The company’s working capital was in bank with higher credit rating, so credit risk of
working capital was low.
3. Liquidity Risk
When managing liquidity risk, the Company maintained the management, so credit rat
supervising the sufficient cash and cash equivalents to meet the operating demand of the
Company and reduce the influence of the fluctuation of cash flow.
X. The Disclosure of the Fair Value
1. Closing Fair Value of Assets and Liabilities Calculated by Fair Value
Item Closing fair value
149
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Fair value Fair value
Fair value
measurement measurement
measurement items Total
items at level items at level
at level 1
2 3
I. Consistent fair value measurement
(I) Financial assets calculated by fair value
and changes record into current profits or
losses
1. Trading financial assets 168,120,900.00 — — 168,120,900.00
2. Income generated from the forward
855,984.37 — — 855,984.37
purchase agreement
3. Foreign exchange option 5,052,542.28 5,052,542.28
(II) Available-for-sale financial assets
1. Debt instruments investment — — — —
2. Equity instrument investment 40,665,244.82 — — 40,665,244.82
3. Other — — — —
Total assets of consistent fair value
214,694,671.47 — — 214,694,671.47
measurement
(I)Transaction financial liabilities
1. Losses generated from the forward
purchase agreement 20,181,325.74 — — 20,181,325.74
Total liabilities of consistent fair value
measurement 20,181,325.74 — — 20,181,325.74
Total assets inconsistently measured at fair
value — — — —
Total liabilities inconsistent measured at
fair value — — — —
2. Market Price Recognition Basis for Consistent and Inconsistent Fair Value
Measurement Items at Level 1
As of the end of Reporting Period, the Company in line with the difference of DF forward
foreign exchange purchase cost (DF base price on balance sheet date) on assets balance sheet
and agreement DF forward foreign exchange purchase cost (DF exchange rate agreed)
recognized as losses or profits
By the end of Reporting Period, for the 13,155,000 shares of Refond stock held by the
150
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
company, their final fair value was calculated and determined to be RMB168,120,900.00,
according to closing price of RMB12.78 for each share on June 30, 2017; for the 6,760,900
shares of Hunan VARY stock held by the company, their final fair value was calculated and
determined to be RMB40,633,009.00, according to closing price of RMB6.01 for each share
on June 30, 2017; for the 348 shares of Changlan Cable Accessories stock held by the
company, their final fair value was calculated and determined to be RMB6,270.96, according
to buying price of RMB18.02 for each share on June 7, 2017, and unlisted transaction had no
fair value on June 30; for the 350 shares of Konfoong Materials stock held by the company,
their final fair value was calculated and determined to be RMB6,681.5, according to closing
price of RMB19.09 for each share on June 30, 2017; for the 313 shares of MeiG Smart stock
held by the company, their final fair value was calculated and determined to be
RMB7,155.18, according to closing price of RMB 22.86 for each share on June 30, 2017; for
the 844 shares of Jinlongyu stock held by the company, their final fair value was calculated
and determined to be RMB5,232.80, according to closing price of RMB6.2 for each share on
June 19, 2017, and unlisted transaction had no fair value on June 30; for the 141 shares of
Huning Elevator Parts stock held by the company, their final fair value was calculated and
determined to be RMB2,456.22, according to closing price of RMB17.42 for each share on
June 30, 2017; for the 211 shares of Daye Intelligent stock held by the company, their final
fair value was calculated and determined to be RMB2,306.23, according to closing price of
RMB10.93 for each share on June 28, 2017, and unlisted transaction had no fair value on
June 30; for the 263 shares of Fuman Electronics stock held by the company, their final fair
value was calculated and determined to be RMB2,132.93, according to closing price of RMB
8.11 for each share on June 29, 2017, and unlisted transaction had no fair value on June 30.
XI. Related Party and Related Transaction
1. Information of Parent Company
Proportion of share Proportion of voting
Registration Registered held by parent rights owned by parent
Name of parent company Nature of business
place capital company against the company against the
Company (%) Company (%)
Shenzhen OCT East Co., Tourism, real estate, RMB11.30
Shenzhen 29.99 29.99
Ltd. electronics industry billion
Notes: the final control party of the Company is State-owned Assets Supervision and
Administration Commission
151
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
2. Information of Subsidiary of the Company
For more details, please refer to Note VIII. 1. Equity in Subsidiary.
3. Information on the Associated Enterprises of the Company
For more details, please refer to Note VIII. 2. Equity in Associated Enterprises. The
information on other joint ventures or associated enterprises with balance in related
transactions made with the Company in this year or before the reporting period was as
follows:
Name of joint ventures or associated enterprises Relationship
Shenzhen Konka Information Network Co., Ltd. Associated enterprise
Shenzhen Dekang Electronic Co., Ltd. Associated enterprise
Zhuhai Jinsu Plastics Co., Ltd. Associated enterprise
Shanghai Konka Green Technology Co., Ltd. Associated enterprise
Shenzhen Konka Intelligent Appliance Technology Co.,
Associated enterprise
Ltd.
Anhui Konka Green Lighting Technology Co., Ltd. Associated enterprise
Shenzhen Zhongbing Konka Technology Co., Ltd. Associated enterprise
Shenzhen Konka Precision Mould Manufacturing Co.,
Associated enterprise
Ltd.
Kunshan Branch of Shenzhen Konka Precision Mould
Subsidiary of associated enterprise
Manufacturing Co., Ltd.
Chuzhou Branch of Shenzhen Konka Precision Mould
Subsidiary of associated enterprise
Manufacturing Co., Ltd.
Dongguan Konka Mould & plastics Co., Ltd. Associated enterprise
Dongguan Xutongda Mould & Plastics Co., Ltd. Associated enterprise
Kunshan Jielunte Mould & Plastics Co., Ltd. Associated enterprise
Chuzhou Jielunte Mould & Plastics Co., Ltd. Associated enterprise
Dongguan Jielunte Mould & Plastics Co., Ltd. Associated enterprise
Anhui Jiasen Precision Technology Co., Ltd. Associated enterprise
4. Information on Other Related Parties of the Company
Name Relationship
152
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Shenzhen OCT East Co., Ltd. Under the same actual controller
Shanghai Tianxiang OCT Investment Co., Ltd. Under the same actual controller
Anhui Huali Packaging Co., Ltd. Under the same actual controller
Shenzhen OCT Water and Power Co., Ltd Under the same actual controller
Shanghai Huali Packaging Co., Ltd Under the same actual controller
Shenzhen Huali Packing & Trading Co., Ltd Under the same actual controller
Huali Packaging (Huizhou) Co., Ltd. Under the same actual controller
Suzhou Huali Environmental Packing Technology Co.,
Under the same actual controller
Ltd.
Shenzhen Konka Video & Communication Systems
Under the same actual controller
Engineering Co., Ltd.
Taizhou OCT Co., Ltd. Under the same actual controller
Shenzhen OCT Real Estate Co., Ltd. Under the same actual controller
Shenzhen OCT Hotel Co., Ltd. Under the same actual controller
Shenzhen OCT Property Management Co., Ltd. Under the same actual controller
Assets Management Branch of Shenzhen OCT Under the same actual controller
Shenzhen OCT Huck Culture Co., Ltd. Under the same actual controller
Shenzhen OCT Fire Engineering Co., Ltd. Under the same actual controller
Shenzhen OCT Gas Service Station Co., Ltd. Under the same actual controller
Chongqing OCT Industrial Development Co., Ltd. Under the same actual controller
Guangdong Shunde OCT Industrial Development Co.,
Under the same actual controller
Ltd.
Shenzhen OCT Properties Company Under the same actual controller
Shenzhen OCT Gas Service Station Company Under the same actual controller
Shenzhen OCT East Theme Hotels Under the same actual controller
Shenzhen OCT East Property Management Co., Ltd. Under the same actual controller
Chengdu OCT Industrial Development Co., Ltd. Under the same actual controller
Shenzhen OCT Culture-oriented Travel & Technology
Under the same actual controller
Co., Ltd.
Shenzhen OCT Sea View Hotel Co., Ltd. Under the same actual controller
Kunshan Branch of Shenzhen OCT Property Management
Under the same actual controller
Co., Ltd.
Shenzhen OCT Economic Development Corporation Under the same actual controller
Shenzhen OCT East Property Management Company Under the same actual controller
153
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Jiangxi Youshi Xinrong Culture & Communication Co., The company controlled by the final controller of Subsidiary’s
Ltd. minority shareholders
Charm Media Co. , Ltd. The final controller of minority shareholders of subsidiary
Guoguang Oriental Network (Beijing) Co., Ltd. Shareholder of associated enterprise
Shenzhen Refund Optoelectronics Co., Ltd. Ex-associated enterprise
5. List of Related-party Transactions
(1) Information on Acquisition of Goods and Reception of Labor Service (unit: ten thousand
Yuan)
① Information on acquisition of goods and reception of labor service
Same period of last
Related party Content Reporting Period
year
Shenzhen Refund Optoelectronics Co., Ltd. Purchase of materials 77,564,260.96 54,995,087.43
Chuzhou Jielunte Mould & Plastics Co., Ltd. Purchase of materials 53,840,442.74 68,600,936.93
Guoguang Oriental Network (Beijing) Co., Ltd. Purchase of products 81,484,429.91 —
Dongguan Konka Mould & Plastics Co., Ltd. Purchase of materials 5,254,342.08 23,984,888.98
Anhui Huali Packing Co., Ltd. Packing 24,527,123.44 13,316,909.09
Shenzhen Konka Precision Mould
Purchase of materials 0.00 14,541,172.21
Manufacturing Co., Ltd.
Shenzhen Konka Information Network Co., Ltd. Purchase of materials/others 2,585,675.21 —
Huali Packing (Huizhou) Co., Ltd. Purchase of materials 4,195,331.54 4,650,789.23
Anhui Jiasen Precision Technology Co., Ltd. Purchase of materials 11,286,323.82 —
Suzhou Huali Environmental Packing
Purchase of materials 7,278,815.34 —
Technology Co., Ltd.
Shanghai Huali Packing Co., Ltd. Purchase of materials 41,734.51 6,150,994.50
Shenzhen Konka Intelligent Appliance
Purchase of products 799,033.15 —
Technology Co., Ltd.
Shenzhen OCT Water and Power Co., Ltd Utilities 2,244,889.77 1,175,261.15
Kunshan Jielunte Mould & Plastics Co., Ltd. Purchase of materials 34,843.00 —
Chain Kingdom Co.，Limited Service charge 0.00 1,447,315.77
Kunshan Branch of Shenzhen OCT Property Service charge for property
1,262,436.01 —
Management Co., Ltd. management
Charm Media Co. , Ltd. Advertising expense 6,415,094.34
Dongguan Jielunte Mould & Plastics
Purchase of materials 2,014,700.50 —
Technology Co., Ltd.
Shenzhen OCT East Property Management
Service charge 28,043.88 —
Company
Shenzhen OCT Real Estate Co., Ltd. Service charge of 10,000,000.00 —
154
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Same period of last
Related party Content Reporting Period
year
engineering
②Information of sales of goods and provision of labor service
Same period of
Related party Content Reporting Period
last year
Guoguang Oriental Network (Beijing) Co., Ltd. Sales of products 80,608,719.74 —
Shenzhen Refund Optoelectronics Co., Ltd. Sales of products 11,997,198.94 14,403,685.82
Lease service charge and
Dongguan Konka Mould & Plastics Co., Ltd. 3,906,945.24 5,867,443.85
sales of materials
Charm Media Co. , Ltd. Advertising expense 0.00 11,320,754.76
Service charge and sales of
Shenzhen Zhongbing Konka Technology Co., Ltd. 1,233,572.79 —
products
Shenzhen Konka Information Network Co., Ltd. Sales of products 2,648,776.15 —
Dongguan Xutongda Mould & Plastics Co., Ltd. Lease service charge 3,359,016.16 4,306,505.64
Shenzhen Konka Intelligent Appliance Technology Service charge and sales of
147,369.23 —
Co., Ltd. products
Technical service fees and
Anhui Konka Green Lighting Technology Co., Ltd. 216,246.39 2,798,336.32
sales of materials
Chongqing OCT Industrial Development Co., Ltd. Sales of display screens 5,681,875.20 —
Shenzhen OCT East Co., Ltd. Maintenance service 1,417,777.78 35,400.00
Shenzhen OCT Real Estate Co., Ltd. Sales of display screens 2,564.10 —
Shenzhen Konka Video & Communication Systems
Maintenance service 1,051,681.35 —
Engineering Co., Ltd.
Happy Valley Branch of Tianjin OCT Industrial Co.,
Maintenance service 1,203,179.49 —
Ltd.
Shanghai Tianxiang OCT Investment Co., Ltd. Maintenance service 108,262.11 63,333.33
Shenzhen OCT Hotel Co., Ltd. Maintenance service 51,282.05 —
Shenzhen OCT Culture-oriented Travel Technology
Maintenance service 87,170.94 —
Co., Ltd.
Shenzhen Splendid China Development Co., Ltd. Sales of display screens 21,367.52 —
Shenzhen Crowne Plaza Hotel Sales of display screens 2,564.10 —
Shenzhen OCT Sea View Hotel Co., Ltd. Maintenance service 35,724.79 —
Shenzhen Konka Precision Mould Manufacturing Co.,
Maintenance service 4,302,721.71 179,645.20
Ltd.
Taizhou OCT Co., Ltd. Sales of display screens 7,948.72 —
(2) Borrowing and Lending of Related Parties
155
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Related party Amount Start date Maturity date notes
Borrowing:
The interest rate was
OCT 1,600,000,000.00 01/11/2017 09/28/2017
3.9%
The interest rate was
OCT 900,000,000.00 03/19/2017 11/26/2017
4.35%
The interest rate was
OCT 900,000,000.00 10/17/2016 07/14/2017
3.06%
The interest rate was
OCT 30,000,000.00 12/14/2016 12/13/2019
4.75%
Notes: The current interest expenses confirmed with OCT were RMB63,825,197.54.
(4) Related-party Guarantee
The Company severed as the guarantee
Actual using Execution
Guarantee amount
Secured party Currency amount Start date End date accomplished
(RMB’0,000)
(RMB’0,000) or not
Anhui
RMB 6,000.00 4,440.00 07/01/2016 07/01/2017 No
Tongchuang
Anhui Konka
RMB 10,000.00 7,200.00 10/26/2016 07/13/2017 No
（Note ①）
Konka E-display
RMB 2,000.00 646.92 07/01/2016 07/01/2017 No
（Note ②）
Telecommunicati
RMB 50,000.00 13,119.49 09/21/2016 09/21/2017 No
on Technology
Hong Kong
USD 500 500 10/20/2016 10/20/2017 No
Konka
Hong Kong
USD 3,500.00 3,500.00 11/07/2016 11/07/2017 No
Konka
Hong Kong
USD 1,000.00 1,000.00 04/24/2017 04/23/2018 No
Konka
Hong Kong
USD 2,000.00 2,000.00 05/22/2017 05/18/2018 No
Konka
Hong Kong
USD 1,000.00 1,000.00 06/12/2017 06/11/2018 No
Konka
Notes: ①The minority shareholders of Anhui Konka, Chuzhou State-owned Assets
156
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Operation Co., Ltd. provided 22% counter-guarantee to the limit amount of guarantee of the
Company.
②Shenzhen Konka Yi Capital Investment Partnership (Limited partnership) provided 40%
counter-guarantee to the limit amount of guarantee of the Company.
The Company served as the secured party
Guarantee amount
Guarantee Currency Start date End date Execution accomplished or not
(RMB’0,000)
Wu Guoren, Xiao
USD 4,000.00 10/17/2016 10/16/2017 No
Yongsong
Note: the subsidiary, Zhongkang Supply Chain Management Co., Ltd. obtained the
borrowing of USD 40 million from Hong Kong Konka Co., Ltd. The corresponding natural
persons of Zhongkang Supply Chain, minority shareholders, Wu Guoren (25%) and Xiao
Yongsong (24%) provided equity pledge guarantee for this loan. The third-party natural
person provided the house property mortgage guarantee as the third party guarantor.
(5) Rewards for the Key Management Personnel
Item Reporting Period Same period of last year
Rewards for the key management
RMB4,109,400 RMB4,086,800
personnel
6. Receivables and Payables of Related parties
(1) Receivables
Closing balance Opening balance
Name o f item
Book balance Bad debt provision Book balance Bad debt provision
Accounts receivable
Guoguang Oriental Network (Beijing)
66,382,152.00 1,327,643.04 61,566,084.52 1,231,321.69
Co., Ltd.
Shenzhen Konka Information Network
20,755,610.90 415,112.22 22,708,250.40 456,890.30
Co., Ltd.
Dongguan Xutongda Mould & Plastics
12,205,388.44 244,107.77 16,770,384.94 665,277.05
Co., Ltd.
Shenzhen Refund Optoelectronics Co.,
2,560,469.44 51,209.39 16,006,373.88 320,127.48
Ltd.
Shanghai Konka Green Lighting
6,263,614.12 1,252,722.82 7,463,614.12 1,627,495.78
Technology Co., Ltd.
157
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Closing balance Opening balance
Name o f item
Book balance Bad debt provision Book balance Bad debt provision
Shenzhen Zhongbing Konka Technology
189,668.62 3,793.37 6,236,403.32 124,728.07
Co., Ltd.
Dongguan Konka Mould & Plastics Co.,
2,165,092.05 43,301.84 4,376,574.40 179,174.65
Ltd.
Chongqing OCT Industrial Development
3,522,682.24 70,453.64 546,416.80 10,928.34
Co., Ltd.
Shenzhen Konka Precision Mould
1,132,419.90 22,648.40 287,956.74 5,759.13
Manufacturing Co., Ltd.
Beijing Century OCT Industry Co., Ltd. 270,000.00 5,400.00 270,000.00 5,400.00
Shanghai Tianxiang OCT Investment Co.,
95,000.00 1,900.00 89,733.33 2,586.67
Ltd.
Guangdong Shunde OCT Industrial
0.00 74,880.00 1,497.60
Development Co., Ltd.
Shenzhen OCT Huck Culture Co., Ltd. 3,297.39 65.95 55,281.17 2,665.14
Shenzhen Konka Intelligent Appliance
0.00 35,980.00 719.60
Technology Co., Ltd.
Shenzhen OCT East Co., Ltd. 530,947.11 10,618.94 6,000.00 120.00
Total 116,076,342.21 3,448,977.39 136,493,933.62 4,634,691.50
Notes receivable:
Dongguan Konka Mould & Plastics Co.,
0.00 2,473,998.29 —
Ltd.
Dongguan Xutongda Mould & Plastics
0.00 800,000.00 —
Co., Ltd.
Total 0.00 0.00 3,273,998.29 —
Payment in advance:
Dongguan Konka Mould & Plastics Co.,
25,353,644.56 507,072.89 16,230,337.81 324,606.76
Ltd.
Total 25,353,644.56 507,072.89 16,230,337.81 324,606.76
Other accounts receivable:
Jiangxi Youshi Xinrong Culture &
0.00 0.00 22,260,000.00 445,200.00
Communication Co., Ltd. (Note)
Shenzhen Konka Video & Communication
18,115,952.51 8,387,197.52 18,115,952.51 8,387,197.52
Systems Engineering Co., Ltd.
Shenzhen OCT Properties Company 1,053,706.86 1,033,907.60 1,053,706.86 1,033,907.60
158
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Closing balance Opening balance
Name o f item
Book balance Bad debt provision Book balance Bad debt provision
Shenzhen OCT Water & Power Co., Ltd. 753,553.73 15,071.07 801,006.26 16,020.13
Assets Management Branch of Shenzhen
0.00 0.00 145,638.00 7,281.90
OCT
Chongqing OCT Industrial Development
220,000.00 4,400.00 130,540.69 2,610.81
Co., Ltd.
Shenzhen OCT Gas Service Station
80,000.00 80,000.00 80,000.00 80,000.00
Company
Shenzhen OCT Property Management
778,305.14 88,947.15 77,402.65 74,929.10
Co., Ltd.
Beijing Century OCT Industry Co., Ltd. 0.00 0.00 50,000.00 1,000.00
Shenzhen OCT East Theme Hotels 0.00 0.00 49,640.00 992.80
OCT 0.00 0.00 49,626.92 992.54
Shenzhen Konka Information Network
0.00 0.00 17,940.73 358.81
Co., Ltd.
Shenzhen OCT East Co., Ltd. 5,000.00 100.00 5,000.00 100.00
Dongguan Konka Mould & Plastics Co.,
4,448.00 889.60 4,448.00 889.60
Ltd.
Shenzhen OCT East Property
3,000.00 60.00 3,000.00 60.00
Management Co., Ltd.
Shanghai Tianxiang OCT Investment Co.,
0.00 0.00 922.33 18.45
Ltd.
Total 21,013,966.24 9,610,572.94 42,844,824.95 10,051,559.26
(2) Payables
Name of item Closing balance Opening balance
Accounts payable:
Shenzhen Refond Optoelectronics Co., Ltd. 30,043,130.69 27,963,779.92
Chuzhou Jielunte Mould & Plastics Co., Ltd. 29,499,985.38 25,461,077.95
Shenzhen Konka Video & Communication Systems
17,134,148.23
Engineering Co., Ltd.
Anhui Huali Packing Co., Ltd. 18,174,005.86 15,811,189.21
Guoguang Oriental Network (Beijing) Co., Ltd. 67,312,882.13 13,907,425.83
Shenzhen Shangyongtong Investment Development Co.,
9,543,100.00 9,543,100.00
Ltd.
Shenzhen Konka Information Network Co., Ltd. 310,000.00 9,131,218.97
Suzhou Huali Environmental Packing Technology Co., 4,672,418.54 4,784,497.70
159
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Name of item Closing balance Opening balance
Ltd.
Anhui Jiasen Precision Technology Co., Ltd. 8,368,055.84 4,647,480.06
Huali Packing (Huizhou) Co., Ltd. 2,614,248.15 3,538,318.14
Shenzhen Huali Packing & trading Co., Ltd. 1,078,005.09 1,294,334.74
Dongguan Konka Mould & Plastics Co., Ltd. 1,540.19 1,017,067.85
Shenzhen Konka Intelligent Appliance Technology Co.,
721,103.02 682,275.95
Ltd.
Shenzhen Precision Mould Manufacturing Co., Ltd. 1,132,419.90 449,367.83
Shenzhen Dekang Electronics Co., Ltd. 358,929.03 358,929.03
Shanghai Huali Packing Co., Ltd. 1,259.03 321,039.97
Dongguan Jielunte Mould & Plastics Co., Ltd. 899,659.44 155,760.53
Kunshan Jielunte Mould & Plastics Co., Ltd. 10,915.86 61,472.60
Shenzhen OCT Culture-oriented Travel Technology Co.,
6,900.00 59,320.00
Ltd.
Total 174,748,558.15 136,321,804.51
Notes payable:
Chuzhou Jielunte Mould & Plastics Co., Ltd. 65,345,962.63
Shenzhen Refund Optoelectronics Co., Ltd. 12,623,941.41 45,043,301.91
Anhui Huali Packing Co., Ltd. 8,458,014.55 12,369,348.43
Anhui Jiasen Precision Technology Co., Ltd. 5,626,406.69
Shenzhen Konka Precision Mould Manufacturing Co.,
3,452,680.80
Ltd.
Suzhou Huali Environmental Packing Technology Co.,
2,448,292.14 3,152,101.04
Ltd.
Huali Packing (Huizhou) Co., Ltd. 1,815,156.91 3,104,985.16
Dongguan Konka Mould & Plastics Co., Ltd. 1,462,156.55 2,855,530.14
Shanghai Huali Packing Co., Ltd. 2,801,506.81
Kunshan Jielunte Mould & Plastics Co., Ltd. 2,594,086.07
Kunshan Branch of Shenzhen Konka Precision Mould
2,503,959.47
Manufacturing Co., Ltd.
Zhuhai Jinsu Plastics Co., Ltd. 1,000,000.00
Charm Media Co. , Ltd. 275,291.47
Dongguan Jielunte Mould & Plastics Co., Ltd. 702,203.57
Total 27,509,765.13 150,125,160.62
Accounts received in advance:
160
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Name of item Closing balance Opening balance
Dongguan Konka Mould & Plastics Co., Ltd. 22,537,909.18 23,468,903.76
Shenzhen Konka Video & Communication Systems
15,357,854.41 15,926,323.73
Engineering Co., Ltd.
Zhonglian Datong Co., Ltd. 955,155.90 232,667.70
Shenzhen OCT East Theme Hotels 0.00 187,888.00
Shenzhen OCT Sea View Hotel Co., Ltd. 0.00 35,299.00
Anhui Konka Green Lighting Technology Co., Ltd. 0.00 4,063.72
Total 38,850,919.49 39,855,145.91
Other accounts payable:
Shenzhen Konka Information Network Co., Ltd. 750,000.00 9,021,630.77
Anhui Huali Packing Co., Ltd. 1,187,000.00 1,267,000.00
Kunshan Branch of Shenzhen OCT Property
0.00 1,217,879.59
Management Co., Ltd.
Shenzhen OCT Property Management Co., Ltd. 0.00 1,073,975.09
Shenzhen Zhonglian Datong Supply Chain Management
0.00 992,890.82
Consulting Co., Ltd.
Shenzhen Refund Optoelectronics Co., Ltd. 301,135.00 807,135.00
Shenzhen Konka Intelligent Appliance Technology Co.,
0.00 686,375.00
Ltd.
Shanghai Huali Packing Co., Ltd. 222,000.00 222,000.00
Shenzhen OCT Water & Power Co., Ltd. 0.00 145,500.00
Shenzhen OCT Economic Development Corporation 105,000.00 105,000.00
Anhui Konka Green Lighting Technology Co., Ltd. 0.00 48,670.70
Shenzhen Konka Precision Mould Manufacturing Co.,
0.00 19,440.00
Ltd.
Shenzhen Tianyilian Technology Co., Ltd. 10,139.00 10,000.00
Total 2,575,274.00 15,617,496.97
Interest payable:
5,270,833.33 43,541.67
OCT
5,270,833.33 43,541.67
Total
XII. Commitments and Contingency
1. Significant Commitments
(1) Capital Commitment
161
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Item Closing balance Opening balance
Commitments signed but hasn’t been
recognized in financial statements
—
-- Commitment for constructing and —
purchasing long-term assets
457,003,294.00 91,710,250.89
- Contract with large amount
— —
- Foreign investment commitments
457,003,294.00 91,710,250.89
Total
(2) Operating Lease Commitments
As of the end of balance sheet date, the irrevocable operating lease commitments that the
Company signed were as followed:
Item Closing balance Opening balance
Minimum lease payments of irrevocable operating
lease
1 year after balance date 15,669,396.70 20,712,196.63
2 year after balance date 11,680,611.91 10,195,499.08
3 year after balance date 8,148,431.95 5,192,714.87
Future years 1,391,040.43 1,434,105.28
Total 36,889,480.99 37,534,515.86
2. Contingencies
(1) Contingent liabilities and financial effects caused by pending litigation or arbitration
①In May, 2013, the company’s subsidiary, Kunshan Konka entrusted Ningbo United to ship
goods from Shanghai to Genoa, Italy, and Econolines Limited was the carrier. After the
goods arrived at the destination port in Italy, due to releasing goods without B/L, and because
that the customer of Kunshan Konka, MOTOM ELECTRONICS GROUP SPA (hereinafter
referred to as the "MEG") didn't pay the full payment to Kunshan Konka after receiving the
goods, the amount in arrear reached USD 1,100,000.00. Kunshan Konka filed a suit to
Shanghai Maritime Court on August 15, 2013, requesting Econolines Limited and Ningbo
United to jointly compensate USD 1,099,423.52 and its interest to Kunshan Konka and bear
the case's acceptance fee and property preservation application fee.
On May 26, 2014, Shanghai Maritime Court made the first-instance judgment, which ordered
162
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Econolines Limited to compensate USD 1,099,423.52 and its interest to Kunshan Konka.
Ningbo United undertook the joint compensation liability. The case's acceptance fee and
property preservation application fee were jointly bore by Econolines Limited and Ningbo
United. In June, 2014, Ningbo United and Econolines Limited refused to accept and appealed
to Shanghai Higher People's Court, requiring to rescind the first-instance judgment. In the
second trial, because Kunshan Konka had received EUR 100 thousand from the overseas
consignee, it deducted the corresponding amount from the goods payment claimed by
Ningbo United and Econolines Limited. On July 16, 2015, Shanghai Higher People's Court
made the judgment that Econolines Limited compensated the goods loss of USD 990, 253.50
(discounted by the middle of the euro against the dollar exchange rate of People's Bank of
China on July 16, 2015) to Kunshan Konka and bore the litigation expense, and Ningbo
United bore the joint liability. In the execution stage, Kunshan Konka received the execution
funds of RMB 592,200 (USD 17,475) of "Ningbo United" enforced by Ningbo Marine Court.
By December 31, 2016, the credit receivable of Kunshan Konka should be USD 855,378.57.
This case is in the compulsory execution stage at present.
②Konka (Nanchang) Co., Ltd. litigated and applied for property preservation to Tengda
Electric Appliance Co., Ltd. due to the contract disputes in 2015. Nanchang Intermediate
People's Court ruled to freeze the bank deposit of RMB 9,918,725.43 of Tengda Electric
Appliance Co., Ltd. and closed down its 5 house properties. In the follow-up stage, we
changed the add-on interest of the original sue amount to RMB 595,123.50 based on the
actual conditions, which is accepted by the court. During the period, Tengda Electric
Appliance Co., Ltd. filed an objection to the jurisdiction of the case. Nanchang Intermediate
People's Court overruled the jurisdiction objection application of Tengda Electric Appliance
Co., Ltd. Tengda Electric Appliance Co., Ltd. was unsatisfied with the judgment result and
appealed to Jiangxi Superior People's Court. In January, 2016, Jiangxi Superior People's
Court overruled its jurisdiction objection appeal and upheld the original ruling.
In March, 2016, in the trial process of the case in Nanchang Intermediate People's Court,
Konka (Nanchang) Co., Ltd. received the notice of Xinyu Intermediate People's Court on
ruling to accept the bankruptcy and liquidation case of Tengda Electric Appliance Co., Ltd.
and designate an administrant to conduct the bankruptcy and liquidation for Tengda Electric
Appliance Co., Ltd. On March 16, Konka (Nanchang) Co., Ltd. received the notice of
Nanchang Intermediate People's Court on suspending the case trial. In May, 2017, Konka
(Nanchang) Co., Ltd. received the civil ruling paper of Nanchang Intermediate People's
Court, ruling to relieve the seal of the property of Tengda Electric Appliance Co., Ltd. and
163
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
the freeze of Gome acquisition payment and relieve the seal of the property provided by our
company for guarantee. At present, the creditor's right declaring data of Konka (Nanchang)
Co., Ltd. have been submitted to the bankruptcy administrator, and the declared claim
amount is RMB 12,051,251.40. The Tengda Electric Appliance Co., Ltd. is in bankruptcy
liquidation.
(2) Possible liabilities formed for providing debt guarantee for other institutions and their
financial impacts
①The company signed the guarantee contract (No. 16czA0030-a-XCYZBZD2016) with
China CITIC Bank Chuzhou Branch on July 1, 2016, providing credit guarantee of RMB
60,000,000.00 to Anhui Tongchuang International Trade Co., Ltd. from July 1, 2016 to July 1,
2017. The credit line was mainly used to open and accept the L/C of Anhui Tongchuang
International Trade Co., Ltd. and obtain the financing credit and other daily businesses from
the bank. The guarantee credit had been used RMB 44,400,000.00 by June 30, 2017. The
minority shareholder of Anhui Tongchuang International Trade Co., Ltd. -- Chuzhou
Tongchuang Investment Construction Co., Ltd. provided 50% of counter guarantee for our
company's guarantee amount.
② On October 26, 2016, the Company signed the guarantee contract with Bank of China
Chuzhou Branch and provided RMB 100,000,000.00 of credit line to Anhui Konka, a
sub-branch of the Company. The credit period was Oct. 26, 2016 ~ July 13, 2017. The credit
line can be used for Anhui Konka to issue the letter of credit, make acceptance bill and obtain
financing credit from the bank etc. By June 30, 2017, the credit line had been used RMB
72,000,000.00. A few shareholders in Anhui Konka, state-owned assets operation limited
companies in Chuzhou, provide 22% of counter guarantee for the Company’s credit line.
③The Company applied for RMB 6,000,000,000.00 of comprehensive credit line in Bank of
China Fukuda Branch on September 21, 2016. The Company made RMB 1,300,000,000.00
of bank acceptance for pledge guarantee. On September 21, 2016, the Company provided
RMB 500,000,000.00 from total RMB 6,000,000,000.00 comprehensive credit line to the
sub-branch for communication technology. Communication technology shall be jointly and
severally liable for the comprehensive credit. The credit period was Sept. 21, 2016 ~ Sept. 21,
2017. The credit line is mainly used for communication technology to obtain the financing
credit from the bank etc. By June 30, 2017, the credit line had been used RMB
131,194,900.00.
④ On October 20, 2016, the Company applied for opening 5,000,000.00 dollars of letter of
guarantee in China Minsheng Banking Shenzhen Branch. The letter of guarantee could be
164
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
used for Hong Kong Konka Sub-branch to obtain the financing credit. The credit period was
Oct. 20, 2016 ~ Oct. 20, 2017. By June 30, 2017, Hong Kong Konka Sub-branch had
obtained 5,000,000.00 dollars of loan from Bank of China (Hong Kong) Co., Ltd.
⑤On July 1, 2016, the Company signed the guarantee contract numbered
“07308BY20168072” with Bank of Ningbo Shenzhen Branch and provided RMB
20,000,000.00 of credit line to Konka Yishijie. The credit period was July 1, 2016 ~ July 1,
2017. The credit line could be used for Konka Yishijie to open a letter of credit, accept and
obtain the financing credit from the bank etc. By June 30, 2017, the credit line had been used
RMB 6,469,200.00. A few shareholders of Konka Yishijie, Shenzhen Konka Yi Capital
Investment Partnerships Enterprises (limited partnership), provided 40% of counter
guarantee for the Company’s credit line.
⑥On November 7, 20016, the Company applied for opening 35,000,000.00 dollars of letter
of guarantee in China Minsheng Banking Shenzhen Branch. The letter of guarantee could be
used for Hong Kong Konka Sub-branch to obtain the financing credit. The credit period was
November 7, 2016 ~ November 7, 2017. By June 30, 2017, Hong Kong Konka had obtained
35,000,000.00 dollars from Bank of China (Hong Kong) Co., Ltd.
⑦ On April 24, 2017, the Company applied for opening 10,000,000.00 dollars of letter of
guarantee in Agricultural Bank of China Shenzhen OTC Sub-branch. The letter of guarantee
could be used for Hong Kong Konka to obtain the financing loan from the bank. The credit
period was April 24, 2017 ~ April 23, 2018. By June 30, 2017, Hong Kong Konka had
obtained 10,000,000.00 dollars from Bank of China (Hong Kong) Co., Ltd.
⑧On May 22, 2017, the Company applied for opening 20,000,000.00 dollars of letter of
guarantee in Agricultural Bank of China Shenzhen OTC Sub-branch. The letter of guarantee
could be used Hong Kong Konka to obtain the financing credit from the bank. The credit
period was May 22, 2017 ~ May 18, 2018. By June 30, 2017, Hong Kong Konka had
obtained 20,000,000.00 dollars from Bank of China Hong Kong) Co., Ltd.
⑨On June 12, 2017, the Company applied for opening 10,000,000.00 dollars of letter of
guarantee in Agricultural Bank of China Shenzhen OTC Sub-branch. The letter of guarantee
could be used Hong Kong Konka to obtain the financing credit from the bank. The credit
period was June 12, 2017 ~ June 11, 2018. By June 30, 2017, Hong Kong Konka had
obtained 10,000,000.00 dollars from Bank of China Hong Kong) Co., Ltd.
⑩Kunshan Kangsheng, a sub-branch of the Company, signed the bank and enterprise
cooperation agreement on new house loan business with Agricultural Bank of China Corp.
Ltd in 2016. The Company provided the liability guarantee for the personal housing loan
165
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
issued by the bank for the house purchaser. The credit period was from the house loan issuing
day to the house ownership certificate day. It shall continue to the completion of mortgage
registration formalities, and the house purchaser shall be the mortgagee at the same time. The
Company shall pay 3% of house loan issued by the bank for the house purchaser as the cash
deposit. By June 30, 2017, Kunshan Konka provided RMB 233,632,522.00 of credit line for
the house purchaser’s loan. The deposit fund balance was RMB 9,142,975.66.
Kunshan Kangsheng, a sub-branch of the Company, signed the bank and enterprise
cooperation agreement on new house loan business with China Construction Bank Kunshan
Branch in 2016. The Company provided the liability guarantee for the personal housing loan
issued by the bank for the house purchaser. The credit period was from the house loan issuing
day to the house ownership certificate day. It shall continue to the completion of mortgage
registration formalities, and the house purchaser shall be the mortgagee at the same time. The
Company shall pay 3% of house loan issued by the bank for the house purchaser as the cash
deposit. By June 30, 2017, Kunshan Konka provided RMB 147,688,505.00 of credit line for
the house purchaser’s loan. The deposit fund balance was RMB 4,430,655.15.
Kunshan Kangsheng, a sub-branch of the Company, signed the bank and enterprise
cooperation agreement on new house loan business with Kunshan Rural Commercial Bank
Zhouzhuang Branch in 2016. The Company provided the liability guarantee for the personal
housing loan issued by the bank for the house purchaser. The credit period was from the
house loan issuing day to the house ownership certificate day. It shall continue to the
completion of mortgage registration formalities, and the house purchaser shall be the
mortgagee at the same time. The Company shall pay 3% of house loan issued by the bank for
the house purchaser as the cash deposit. By June 30, 2017, Kunshan Konka provided RMB
93,879,000.00 of credit line for the house purchaser’s loan. The deposit fund balance was
RMB 2,816,370.00.
XIII. Events after Balance Sheet Date
None
XIV. Other Significant Events
1. Lease
(1) The closing original price, accumulated depreciation and accumulated impairment
provision of all kinds of the rented fixed assets.
Particulars of the financing lease of the rented fixed assets, please refer to Notes VI, 14, (3)
(2) Minimum lease payment will be paid in future
166
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
The remaining lease term The minimum lease payment
301,282.02
Within 1 year (including 1 year)
144,871.84
Over 1 year and within 2 years (including 2 year)
446,153.86
Total
(3) Category of fixed assets leased by operating lease, please refer to Note VI, 14 (4)
2. The Company's subsidiary Mudanjiang Konka. Changshu Konka had finished liquidation.
3. The Company’s subsidiary Chongqing Qingjia conducted liquidation after the complement
of land purchasing and storage.
4. On February 16, 2017, the Company held the 25th meeting of the 8th Chairman of the
Board and passed Bill on Providing Entrusted Loan to Wanrong Science Technology. The
Company planned to provide Hunan Wanrong Science Technology Co., Ltd (“Wanrong
Science Technology”) with the entrusted loan not more than RMB 50,000,000.00. Entrusted
loan interest rate was the 150% of current financing institutions’ one-year loan interest rate
issued by People's Bank of China. The entrusted loan was mainly used for daily operation of
Wanrong Science Technology.
5. On March 10, 2017, the Company held the 26th meeting of the 8th Chairman of the Board
and passed Bill on Building New Factories in Dongguan. The Company planned to push the
“three-old” renovation project of Dongguan Konka factory area. The Company also planned
to raise RMB 800 million to build new factories (including color TV R&D building, main
production plant, logistics distribution warehouse, supporting staff dorms etc.) in Wulian
Village, Fenggang Town, Dongguan. At the same time, the Company carried out the
development, production and marketing of color TV and other electrical products.
6. On June 29, 2017, the Company held the 31st meeting of the 8th Chairman of the Board and
passed Resolution on listing transfer part of Kunshan Konka’s holdings. The Company
decided to transfer 51% of holdings of Kunshan Konka Electronic Household Co., Ltd in
assets and equity exchange. The listing price shall not be lower than the assessed value of
asset appraisal firm.
7. On May 28, 2015, the company signed the Comprehensive Credit Contract (No.
0005-SYQHZZD2015) with China CITIC Bank Shenzhen Citizen Center Sub-branch,
applying for credit line of RMB 400,000,000.00, which was used for loans, acceptance of
bills, discounting of bills, opening L/C, packing loans, import bill advance, outward bill
credit, opening letter of guarantee and other businesses. The credit period was May, 2017 ~
May, 2018. The credit line had been used RMB 250,000,000.00 by June 30, 2017.
167
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
8. On June 14, 2016, the company signed the Credit Line Contract (No. J2016Z15608HQC)
with China Construction Bank Shenzhen Branch, applying for credit line not more than RMB
3,570,000,000.00 at maximum. The credit period was June 14, 2016 ~ June 13, 2019. By
June 30, 2017, the credit line had been used RMB 661,127,500.00, and RMB
4,908,872,500.00 had not been used. Hereinto, the company and had agreed with China
Construction Bank Shenzhen Branch that it could apply for low risk credit not more than
RMB 2,000,000,000.00 at maximum. The credit line had not been used yet by June 30, 2017.
9. On August 11, 2016, the company signed the Comprehensive Credit Contract (No.
018-SJTZEZD2016) with China Minsheng Banking Corp. Ltd, applying for credit line not
more than RMB 500,000,000.00 at maximum, which was used for RMB business, trade
financing, import bill advance and outward bill credit, import refinance, delivery against
bank guarantee, packing loans, bill discounting and other businesses. The credit period was
August 11, 2016 ~ August 11, 2017. By June 30, 2017, the credit line had been used RMB
275,860,000.00, and RMB 224,140,000.00 had not been used.
10. On September 12, 2016, the company signed the Comprehensive Credit Agreement (No.
CN11002068781-160823) with HSBC Bank (China) Shenzhen Branch, applying for
uncommitted portfolio revolving credit not more than USD 15,000,000.00 at maximum. The
credit period was September 12, 2016 ~ September 12, 2017. By June 30, 2017, the credit
line had not been used yet.
11. On September 21, 2016, the company signed the Credit Line Agreement (No.
0000719-ZZYFEXZD2016) with Bank of China Shenzhen Futian Sub-branch, agreeing that
the company and Konka Communication which was its subsidiary provided bank acceptance
not less than RMB 1,300,000,000.00 as pledge guarantee to get the comprehensive credit line
not more than RMB 6,000,000,000.00. Hereinto, the company was the credited party, and the
Communication Technology Company was the authorized party that could draw the money.
The credit period was September 21, 2016 ~ September 21, 2017. By June 30, 2017, the
credit line had been used RMB 3,939,983,280.33, and RMB 2,060,016,719.67 had not been
used.
12. On September 30, 2016, the company agreed with Industrial and Commercial Bank of
China Shenzhen OTC Sub-branch to apply for credit line not more than RMB
2,200,000,000.00 at maximum. The credit period was September 30, 2016 ~ September 30,
2017. By June 30, 2017, the credit line had been used RMB 1,598,700,300.00, and RMB
601,299,700.00 had not been used.
13. On October 12, 2016, the company signed the Credit Line Agreement (No.
168
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
A596201609260001-PY(SZ)ZZD) with Ping An Banking Corp. Ltd Head Office Sales
Department, applying for credit line not more than RMB 400,000,000.00 at maximum, which
was used for liquidity loans, opening bank acceptances, opening import L/C, opening
domestic L/C, import bill advance and outward bill credit, import and export refinance,
opening financing guarantee and other businesses. The credit period was October 12, 2016 ~
October 12, 2017. By June 30, 2017, the comprehensive credit line had been used RMB
400,000,000.00.
14. On February 28, 2017, the company applied for credit line of RMB 1,200,000,000.00
from Agricultural Bank of China Shenzhen OCTOBER Sub-branch, for loans, acceptance of
bills, discounting of bills, opening L/C, packing loans, import bill advance, outward bill
credit, opening letter of guarantee and other businesses. The credit period was February 28,
2017 ~ February 28, 2018. By June 30, 2017, the comprehensive credit line had been used
RMB 604,610,000.00, and RMB 595,390,000.00 had not been used.
15. On April 11, 2017, the company applied for credit line of RMB 500,000,000.00 from
Bank of Communications Shenzhen OCTOBER Sub-branch, for loans, acceptance of bills,
discounting of bills, opening L/C, packing loans, import bill advance, outward bill credit,
opening letter of guarantee and other businesses. The credit period was April 11, 2017 ~
April 11, 2019. By June 30, 2017, the credit line had not been used yet.
16. On April 11, 2017, the company applied for credit line of RMB 500,000,000.00 from
Bank of Ningbo Shenzhen Branch, for loans, acceptance of bills, discounting of bills,
opening L/C, packing loans, import bill advance, outward bill credit, opening letter of
guarantee and other businesses. The credit period was April 11, 2017 ~ April 11, 2018. By
June 30, 2017, the credit line had been used RMB 9,070,000.00, and RMB 490,930,000.00
had not been used.
XV. Notes of Main Items in the Financial Statements of the Company
1. Accounts Receivable
(1) Accounts Receivable Disclosed by Category
Closing balance
Book balance Bad debt provision
Category
Proportio Proportion Book value
Amount n (%) Amount (%)
Accounts receivable with
— — — — —
significant single amount for
169
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Closing balance
Book balance Bad debt provision
Category
Proportio Proportion Book value
Amount n (%) Amount (%)
which bad debt provision
separately accrued
Accounts receivable
withdrawal of bad debt
provision of by credit risks
characteristics:
Group 1: aging group 1,137,172,860.75 40.41 201,098,271.61 17.68 936,074,589.14
Group 2: related party group
within the consolidation 1,613,987,991.63 57.35 — — 1,613,987,991.63
scope
Subtotal of groups 2,751,160,852.38 97.76 201,098,271.61 7.31 2,550,062,580.77
Accounts receivable with
insignificant single amount
63,021,334.66 2.24 33,619,034.22 53.35 29,402,300.44
for which bad debt provision
separately accrued
Total 2,814,182,187.04 100.00 234,717,305.83 8.34 2,579,464,881.21
（Continued）
Opening balance
Book balance Bad debt provision
Category
Proportion Proportion Book value
Amount (%) Amount (%)
Accounts receivable with
significant single amount for
— — — — —
which bad debt provision
separately accrued
170
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Opening balance
Book balance Bad debt provision
Category
Proportion Proportion Book value
Amount (%) Amount (%)
Accounts receivable
withdrawal of bad debt
provision of by credit risks
characteristics:
Group 1: aging group 1,457,500,829.10 43.04 204,973,829.53 14.06 1,252,526,999.57
Group 2: related party group
within the consolidation 1,859,065,149.92 54.89 — — 1,859,065,149.92
scope
Subtotal of groups 3,316,565,979.02 97.93 204,973,829.53 6.18 3,111,592,149.49
Accounts receivable with
insignificant single amount
70,065,431.01 2.07 36,128,381.15 51.56 33,937,049.86
for which bad debt provision
separately accrued
Total 3,386,631,410.03 100.00 241,102,210.68 7.12 3,145,529,199.35
①In the groups, accounts receivable adopting aging analysis method to withdraw bad debt
provision
Closing balance
Aging
Account receivable Bad debt provision Withdrawal proportion (%)
Within 1 year 929,687,065.77 18,593,741.32 2.00
1 to 2 years 22,891,350.59 1,144,567.53 5.00
2 to 3 years 291,468.26 58,293.65 20.00
3 to 4 years 5,346,073.44 2,673,036.72 50.00
4 to 5 years 656,540.60 328,270.30 50.00
Over 5 years 178,300,362.09 178,300,362.09 100.00
Total 1,137,172,860.75 201,098,271.61
②In the groups, accounts receivable adopting other methods to withdraw bad debt provision
171
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Closing balance
Name of the group Bad debt Withdrawal
Account receivable
provision proportion (%)
Related party group within the consolidation scope 1,613,987,991.63 — —
Total 1,613,987,991.63 — —
③The top 5 of accounts receivable with significant single amount for which bad debt
provision separately accrued
Closing balance
Name of customer Bad debt Withdrawal
Account receivable Reason
provision proportion (%)
30% impairment
Henan Broadcasting &
18,320,000.00 5,496,000.00 30 showed by
Television Network Co., Ltd.
evidence
Involving in
Tengda Electrical Appliance
8,223,935.99 4,111,968.00 50 litigation and
Co., Ltd.
disputes
Yunnan Broadcasting & 35% impairment
Television Network Group 3,674,078.28 1,285,927.40 35 showed by
Co., Ltd. evidence
Involving in
Yunmeng Zhengye Electrical
3,408,394.19 2,045,036.51 60 litigation and
Appliance Co., Ltd.
disputes
Administration of Radio, Film 31% impairment
and Television of 2,316,229.68 718,031.20 31 showed by
Heilongjiang Province evidence
Total 35,942,638.14 13,656,963.11 — —
(2) Bad Debt Provision Withdrawal, Reversed or Recovered in the Report Period
The withdrawal amount of the bad debt provision during the Reporting Period was of RMB
000; the amount of the reversed or collected part during the Reporting Period was of
RMB6,384,904.85.
(3) Top 5 of the Closing Balance of the Other Accounts Receivable Collected according to
the Arrears Party
The total amount of top five of account receivable of closing balance collected by arrears
party was RMB1,986,202,264.91, 70.58% of total closing balance of account receivable,
the relevant closing balance of bad debt provision withdrawn was RMB10,827,635.27.
172
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
2. Other Accounts Receivable
(1) Other Accounts Receivable Disclosed by Category
Closing balance
Book balance Bad debt provision
Category
Proportion( Proportion( Book value
Amount %) Amount %)
Other accounts receivable with
significant single amount for
173,061,959.33 6.09 163,333,204.34 0.94 9,728,754.99
which bad debt provision
separately accrued
Other accounts receivable
withdrawn bad debt provision
0
according to credit risks
characteristics
Group 1: aging group 121,519,248.71 4.27 20,120,580.97 0.17 101,398,667.74
Group 2: related party group 2,543,589,780.50 89.47 0 2,543,589,780.50
Subtotal of groups 2,665,109,029.21 93.74 20,120,580.97 0.01 2,644,988,448.24
Other accounts receivable with
insignificant single amount for
4,727,923.05 0.17 1,425,476.91 0.3 3,302,446.14
which bad debt provision
separately accrued
Total 2,842,898,911.59 100.00 184,879,262.22 0.07 2,658,019,649.37
（Continued）
Opening balance
Book balance Bad debt provision
Category
Proportion( Proportion( Book value
Amount %) Amount %)
Other accounts receivable with
significant single amount for which
173,061,959.33 9.04 163,333,204.34 94.38 9,728,754.99
bad debt provision separately
accrued
173
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Opening balance
Book balance Bad debt provision
Category
Proportion( Proportion( Book value
Amount %) Amount %)
Other accounts receivable
withdrawn bad debt provision
according to credit risks
characteristics
Group 1: aging group 126,005,125.10 6.58 22,703,322.23 18.02 103,301,802.87
Group 2: related party group 1,607,493,721.89 84.00 — — 1,607,493,721.89
Subtotal of groups 1,733,498,846.99 90.59 22,703,322.23 1.31 1,710,795,524.76
Other accounts receivable with
insignificant single amount for
7,101,401.90 0.37 2,131,520.57 30.02 4,969,881.33
which bad debt provision separately
accrued
Total 1,913,662,208.22 100.00 188,168,047.14 9.83 1,725,494,161.08
①Other receivable with single significant amount and withdrawal bad debt provision
separately at end of period
Closing balance
Other accounts receivable (unit） Other accounts Withdrawal
Bad debt provision Withdrawal reason
receivable proportion (%)
Irrecoverable due to policy
Energy saving subsidy 141,549,150.00 141,549,150.00 100.00
changes
Chongqing Konka Auto Electronic
13,396,856.82 13,396,856.82 100.00 Bankruptcy and liquidation
Company
Shenzhen Konka Video &
Communication Systems 18,115,952.51 8,387,197.52 46.30 Assessment impairment
Engineering Co., Ltd.
Total 173,061,959.33 163,333,204.34 — —
② In the groups, other accounts receivable adopting aging analysis method to withdraw bad
debt provision
Aging Closing balance
174
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Other accounts receivable Bad debt provision Withdrawal proportion (%)
Within 1 year 70,548,176.76 1,410,963.54 2.00
1 to 2 years 23,131,613.27 1,156,580.66 5.00
2 to 3 years 11,037,720.70 2,207,544.14 20.00
3 to 4 years 2,634,461.48 1,317,230.74 50.00
4 to 5 years 278,029.22 139,014.61 50.00
Over 5 years 13,889,247.28 13,889,247.28 100.00
Total 121,519,248.71 20,120,580.97 —
③ In the groups, accounts receivable adopting other methods to withdraw bad debt provision
Closing balance
Name of the group Bad debt Withdrawal
Account receivable
provision proportion (%)
Related party group within the consolidation scope 2,543,589,780.50 — —
Total 2,543,589,780.50 — —
(2) Bad Debt Provision Withdrawal, Reversed or Recovered in the Report Period
The withdrawal amount of the bad debt provision during the Reporting Period was of RMB
000; the amount of the reversed or collected part during the Reporting Period was of
RMB3,288,784.92.
(3) Top 5 of the Closing Balance of the Other Accounts Receivable Collected according to
the Arrears Party
Name of the Proportion (%) Bad debt provision
Nature Closing balance Aging
entity Closing balance
Within 1
Kaikai Shijie Intercourse funds 445,251,804.52 year, 1 to 2 15.66 —
years
Within 1
Anhui
Intercourse funds 438,095,069.40 year, 1 to 2 15.41 —
Tongchuang
years
Konka Household
Intercourse funds 359,413,591.91 Within 1 year 12.64 —
Appliances
175
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Name of the Proportion (%) Bad debt provision
Nature Closing balance Aging
entity Closing balance
Telecommunicati
Intercourse funds 347,253,097.02 Within 1 year 12.21 —
on Technology
Intercourse
Konka Factoring 344,417,113.46 Within 1 year 12.11 —
funds
Total 1,934,430,676.31 68.04 0.00
176
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
3. Long-term Equity Investment
(1) List of Long-term Equity Investment
Closing balance Opening balance
Item Depreciation Depreciation
Book balance Book value Book balance Book value
reserves reserves
Investment to the subsidiary 2,257,782,345.01 46,732,484.69 2,211,049,860.32 2,217,782,345.01 46,732,484.69 2,171,049,860.32
Investment to joint ventures and associated
531,766,557.93 5,158,909.06 526,607,648.87 218,079,058.61 5,158,909.06 212,920,149.55
enterprises
Total 2,789,548,902.94 51,891,393.75 2,737,657,509.19 2,435,861,403.62 51,891,393.75 2,383,970,009.87
(2) Investment to the Subsidiary
Withdrawn
impairment Decrease of
Opening balance Closing balance
provision in impairment
Investee Opening balance Increase Decrease Closing balance of impairment of impairment
the provision in the
provision provision
Reporting reporting period
Period
Mudangjian
g electric 36,000,000.00 36,000,000.00 36,000,000.00
appliances
Anhui
122,780,937.98 — —
Konka
Dongguan 274,783,988.91 — —
177
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Withdrawn
impairment Decrease of
Opening balance Closing balance
provision in impairment
Investee Opening balance Increase Decrease Closing balance of impairment of impairment
the provision in the
provision provision
Reporting reporting period
Period
Konka
Hong Kong
781,828.61 — —
Konka
Konka
261,482.50 — —
Europe
Kunshan
350,000,000.00 — —
Konka
Plasthetics 4,655,000.00 — —
Konka
Household 10,732,485.69 10,732,484.69 10,732,484.69
Appliances
Telecommun
ication 90,000,000.00 — —
Technology
Shushida 31,500,000.00 — —
Fittings
48,750,000.00 — —
Technology
Kunshan
350,000,000.00 — —
Kangsheng
178
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Withdrawn
impairment Decrease of
Opening balance Closing balance
provision in impairment
Investee Opening balance Increase Decrease Closing balance of impairment of impairment
the provision in the
provision provision
Reporting reporting period
Period
Anhui
69,702,612.22 — —
Tongchuang
Konka
Optoelectron 10,000,000.00 — —
ic
Wankaida 10,000,000.00 — —
Beijing
30,000,000.00 — —
Konka
Shushida
10,000,000.00 — —
Logistics
Konka
7,200,000.00 — —
E-display
Kaikai Shijie 16,000,000.00 — —
Kangqiao
700,000,000.00 — —
Jiacheng
Commercial
5,832,000.00 — —
Technology
Mobile
10,200,000.00 — —
Internet
179
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Withdrawn
impairment Decrease of
Opening balance Closing balance
provision in impairment
Investee Opening balance Increase Decrease Closing balance of impairment of impairment
the provision in the
provision provision
Reporting reporting period
Period
E3info 20,000,000.00 — —
Dongguan
8,602,009.10 — —
Packing
Chuzhou
40,000,000.00 40,000,000.00
Konka
Total 2,217,782,345.01 40,000,000.00 0.00 2,257,782,345.01 46,732,484.69 46,732,484.69
① Investment to associated enterprises
Increase/decrease in Reporting Period
Investment profit Adjustment of
Increase after Decre
Investee Opening book value the transfer to Increased ased and loss other Other equity
equity method investment invest
recognized under comprehensive changes
from cost ment
the equity method income
Shanghai Konka Green Science & Technology
85,791,460.70 -3,733,992.50 -449,802.04 -1,166,602.46
Co., Ltd.
Zhuhai Jinsu Plastic Co., Ltd. 7,438,647.50
Konka Intelligent Electric Appliance 6,213,908.63 -495,301.18
180
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Increase/decrease in Reporting Period
Investment profit Adjustment of
Increase after Decre
Investee Opening book value the transfer to Increased ased and loss other Other equity
equity method investment invest
recognized under comprehensive changes
from cost ment
the equity method income
Yingrui Optoelectronic (Shanghai) Co., Ltd. 86,545,225.20
Shenzhen Zhongbing Konka Technology
19,164,691.78 -3,060,432.97
Company
Shenzhen Konka Information Network Co.,
12,925,124.80 794,032.47
Ltd.
Guangdong Chutian Dragon Smart Card Co.,
150,000,000.00
Ltd.
Shenzhen Yaode Technology Co., Ltd. 171,799,598.00
Total 218,079,058.61 0.00 321,799,598.00 0.00 -6,495,694.18 -449,802.04 -1,166,602.46
（Continued）
Increase/decrease in Reporting Period
Closing balance of
Investee Declaration of cash Withdrawn Closing book value
Others impairment provision
dividends or profits impairment provision
Shanghai Konka Green Science & Technology Co., Ltd. 80,441,063.70 —
Zhuhai Jinsu Plastic Co., Ltd. 7,438,647.50 —
Konka Intelligent Electric Appliance 5,718,607.45 —
181
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Increase/decrease in Reporting Period
Closing balance of
Investee Declaration of cash Withdrawn Closing book value
Others impairment provision
dividends or profits impairment provision
Yingrui Optoelectronic (Shanghai) Co., Ltd. 86,545,225.20 —
Shenzhen Zhongbing Konka Technology Company 16,104,258.81 —
Shenzhen Konka Information Network Co., Ltd. 13,719,157.27 5,158,909.06
Guangdong Chutian Dragon Smart Card Co., Ltd. 150,000,000.00
Shenzhen Yaode Technology Co., Ltd. 171,799,598.00
Total 531,766,557.93 5,158,909.06
182
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
4. Revenue and Cost of Sales
(1) Revenue and Cost of Sales
Reporting Period Same period of last year
Item
Sales revenue Cost of sales Sales revenue Cost of sales
Main
4,206,989,260.45 3,482,365,918.48 4,302,017,760.17 3,585,433,823.43
operations
Other
2,065,723,384.28 1,961,473,989.08 2,143,962,777.99 2,053,325,304.25
operations
Total 6,272,712,644.73 5,443,839,907.56 6,445,980,538.16 5,638,759,127.68
(2) Main Operations (Classified by Industry)
Reporting Period Same period of last year
Industry
Sales revenue Cost of sales Sales revenue Cost of sales
Electronic
4,206,989,260.45 3,482,365,918.48 4,302,017,760.17 3,585,433,823.43
industry
Total 4,206,989,260.45 3,482,365,918.48 4,302,017,760.17 3,585,433,823.43
(3) Main Operations (Classified by Product)
Reporting Period Same period of last year
Product
Sales revenue Cost of sales Sales revenue Cost of sales
Color TV
4,058,572,854.30 3,352,318,191.14 4,081,763,878.87 3,396,084,238.81
business
Consumer
appliances 148,212,399.29 129,780,963.65 175,160,620.74 148,984,332.14
business
Others 204,006.86 266,763.69 45,093,260.56 40,365,252.48
Total 4,206,989,260.45 3,482,365,918.48 4,302,017,760.17 3,585,433,823.43
(4) Main Operations (Classified by Area)
Reporting Period Same period of last year
Area
Sales revenue Cost of sales Sales revenue Cost of sales
Domestic sales 3,822,475,481.58 3,102,447,555.27 3,760,982,130.37 3,052,781,690.91
183
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Reporting Period Same period of last year
Area
Sales revenue Cost of sales Sales revenue Cost of sales
Overseas sales 384,513,778.87 379,918,363.21 541,035,629.80 532,652,132.52
Total 4,206,989,260.45 3,482,365,918.48 4,302,017,760.17 3,585,433,823.43
(5) The Revenue of Sales from the Top Five Customers
Period Main operation revenue Proportion of total business revenue (%)
January-June 2017 1,153,169,124.71 18.38
January-June 2016 1,401,966,640.64 21.75
5. Investment Income
Item Reporting Period Same period of last year
Long-term equity investment income accounted by cost method 33,233,152.36
Long-term equity investment income accounted by equity method -6,495,694.18 4,112,715.97
Investment income arising from disposal of long-term equity
investments
Investment income received from holding of financial assets measured
at fair value and changes be recorded into the current gains/losses
Investment income received from disposal of financial assets measured
16,271,994.98
at fair value and changes be recorded into the current gains/losses
Investment income received from holding of held-to-maturity
investment
Investment income received from holding of available-for-sale financial
1,310,000.00
assets
Investment income received from disposal of available-for-sale
15,380.40
financial assets
Gains received from the rest of equity re-measured at fair value after
losing control rights
Income from trust management 34,754,476.41 15,189,925.75
Total 77,763,929.57 20,628,022.12
XVI. Supplementary Materials
184
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
1. Items and Amounts of Extraordinary Gains and Losses
Item Amount Notes
Gains/losses on the disposal of non-current assets 32,560,637.29
Tax rebates, reductions or exemptions due to approval beyond authority or the lack
of official approval documents
Government grants recognized in the current period, except for those acquired in the
ordinary course of business or granted at certain quotas or amounts according to the 79,034,666.86
government RMB000.ees for acc
Capital occupation charges on non-financial enterprises that are recorded into
current gains and losses
Gains due to that the investment costs for the Company to obtain subsidiaries,
associates and joint ventures are lower than the enjoyable fair value of the
identifiable net assets of the investees when making the investments
Gain/loss on non-monetary asset swap
Gain/loss on entrusting others with investments or asset management 30,058,960.78
Asset impairment provisions due to acts of God such as natural disasters
Gains and losses from debt restructuring
Expenses on business reorganization, such as expenses on staff arrangements,
integration, etc.
Gain/loss on the part over the fair value due to transactions with distinctly unfair
prices
Current net gains and losses of subsidiaries acquired in business combination under the
same control from period-begin to combination date
Profit and loss from contingencies irrelative to the normal business operations of
company
185
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
Item Amount Notes
Gain/loss from change of fair value of transactional assets and liabilities, and
investment gains from disposal of transactional financial assets and liabilities and
-61,493,877.60
available-for-sale financial assets, other than valid hedging related to the Company
and normal businesses
Depreciation reserves returns of receivables with separate depreciation test
Gain/loss on entrustment loans 280,538.52
Gain/loss on change of the fair value of investing real estate of which the
subsequent measurement is carried out adopting the fair value method
Effect on current gains/losses when a one-off adjustment is made to current
gains/losses according to requirements of taxation, accounting and other relevant
laws and regulations
Custody fee income when entrusted with operation
Other non-operating income and expenses other than the above 8,144,500.65
Project confirmed with the definition of non-recurring gains and losses and losses
Subtotal 88,585,426.50
Income tax effects 12,549,958.46
Minority interests effects (after tax) 707,988.01
Total 75,327,480.03
Notes: the number “+” among the non-current gains and losses items refers to profits and revenues, while “-”referred to losses or
expenditure.
The recognition of the non-current gains and losses items was executed according to the regulations
of No.1 of the Information Disclosure Explanatory Notice of the Companies Public Offering
Securities-Non-current Gains and losses (Z-J-H-Announcement [2008] No. 43) .
186
Konka Group Co., Ltd. Notes to Financial Statements for January-June 2017
The amount of
Item leased assets Reason
involved
Closely related to the normal operating business of the
Company which met with the regulations of the state policies
Software tax returns 35,115,965.51
as well as constantly enjoyed the governmental subsidies
according to certain standard quotas or quantities
2. Return on Equity and Earnings Per Share
Weighted average ROE EPS（RMB/share）
Profit as of Reporting Period
(%) Basic EPS Diluted EPS
Net profit attributable to common shareholders
1.06 0.0128 0.0128
of the Company
Net profits attributed to the common
shareholders after deducting the non-current -1.52 -0.0185 -0.0185
gains and losses
187
