Nanjing Putian Telecommunications Co., Ltd.
Financial Report of the Semi-annual Report 2017
Page 1
Contents
I. Financial Statements ………………………………………………Page 3-14
(I) Consolidated Balance Sheet ……………………………………Page 3-4
(II) Parent Company Balance Sheet…………………………………Page 5-6
(III) Consolidated Income Statement …………………………………Page 7
(IV) Parent Company Income Statement ……………………………Page 8
(V) Consolidated Cash Flow Statement ………………………………Page 9
(VI) Parent Company Cash Flow Statement…………………………Page 10
(VII) Consolidated Statement of Changes in Equity
…………………………………………………………………Page 11-12
(VIII) Parent Company Statement of Changes in Equity
…………………………………………………………………Page 13-14
II. Notes to Financial Statements …………………………………Page 15-81
Page 2
Nanjing Putian Telecommunications Co., Ltd.
Consolidated balance sheet as at June 30, 2017
(Expressed in Renminbi Yuan)
Note
Assets Closing balance Opening balance
No.
Current assets:
Cash and bank balances 1 247,719,501.23 519,683,411.72
Settlement funds
Loans to other banks
Financial assets at fair value through profit or
loss
Derivative financial assets
Notes receivable 2 42,716,179.49 59,748,722.91
Accounts receivable 3 821,611,117.89 761,252,410.36
Advances paid 4 594,863,965.53 44,578,182.05
Premiums receivable
Reinsurance accounts receivable
Reinsurance reserve receivable
Interest receivable
Dividend receivable
Other receivables 5 30,009,542.76 30,414,138.94
Reverse-REPO financial assets
Inventories 6 431,882,325.99 527,931,889.47
Assets classified as held-for-sale
Non-current assets due within one year
Other current assets 7 10,613,416.93 6,842,370.71
Total current assets 2,179,416,049.82 1,950,451,126.16
Non-current assets:
Loans and advances paid
Available-for-sale financial assets 8 741,953.00 741,953.00
Held-to-maturity investments
Long-term receivable
Long-term equity investments 9 186,464,764.51 187,082,857.56
Investment property 10 13,168,058.49 13,533,631.71
Fixed assets 11 122,508,650.46 124,281,522.14
Construction in progress 12 171,473.78
Construction materials
Fixed assets disposal
Productive biological assets
Oil & gas assets
Intangible assets 13 25,821,442.77 26,163,577.94
Development expenditures
Goodwill
Long-term prepayments 14 2,291,656.98 2,264,499.03
Deferred tax assets
Other non-current assets
Total non-current assets 351,167,999.99 354,068,041.38
Total assets 2,530,584,049.81 2,304,519,167.54
Page 3
Nanjing Putian Telecommunications Co., Ltd.
Consolidated balance sheet as at June 30, 2017 (continued)
(Expressed in Renminbi Yuan)
Liabilities & Equity Note No. Closing balance Opening balance
Current liabilities:
Short-term borrowings 15 368,350,000.00 473,500,000.00
Central bank loans
Absorbing deposit and interbank deposit
Loans from other banks
Financial liabilities at fair value through profit or loss
Derivative financial liabilities
Notes payable 16 27,315,996.58 83,071,160.95
Accounts payable 17 997,474,557.49 897,012,031.63
Advances received 18 607,032,186.23 310,313,462.24
Proceeds from sale of repurchase financial assets
Handling fee and commission payable
Employee benefits payable 19 18,545,120.07 17,476,239.20
Taxes and rates payable 20 13,421,227.75 24,491,066.21
Interest payable 21 709,377.30 732,412.79
Dividend payable 22 1,692,213.38 1,692,213.38
Other payables 23 43,786,245.91 42,214,822.29
Reinsurance accounts payable
Insurance policy reserve
Deposit for agency security transaction
Deposit for agency security underwriting
Liabilities classified as held-for-sale
Non-current liabilities due within one year
Other current liabilities
Total current liabilities 2,078,326,924.71 1,850,503,408.69
Non-current liabilities:
Long-term borrowings
Bonds payable
Including: Preferred shares
Perpetual bonds
Long-term payables 24
Long-term employee benefits payable
Special payables
Provisions
Deferred income 25 8,590,858.74 1,599,211.58
Deferred tax liabilities
Other non-current liabilities
Total non-current liabilities 8,590,858.74 1,599,211.58
Total liabilities 2,086,917,783.45 1,852,102,620.27
Equity:
Share capital 26 215,000,000.00 215,000,000.00
Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserve 27 185,374,533.85 185,374,533.85
Less: Treasury shares
Other comprehensive income 28 -4,782,658.84 -4,634,605.50
Special reserve
Surplus reserve 29 589,559.77 589,559.77
General risk reserve
Undistributed profit 30 -69,737,796.54 -56,491,072.91
Total equity attributable to the parent company 326,443,638.24 339,838,415.21
Non-controlling interest 117,222,628.12 112,578,132.06
Total equity 443,666,266.36 452,416,547.27
Total liabilities & equity 2,530,584,049.81 2,304,519,167.54
Page 4
Nanjing Putian Telecommunications Co., Ltd.
Parent company balance sheet as at June 30, 2017
(Expressed in Renminbi Yuan)
Note Closing balance Opening balance
Assets
No.
Current assets:
Cash and bank balances 88,870,600.92 190,187,786.60
Financial assets at fair value through profit or
loss
Derivative financial assets
Notes receivable 25,750,466.49 26,166,177.42
Accounts receivable 1 429,774,693.29 418,155,912.47
Advances paid 539,448,584.82 22,118,450.95
Interest receivable
Dividend receivable
Other receivables 2 45,033,404.13 67,477,161.09
Inventories 252,547,764.66 382,213,995.39
Assets classified as held-for-sale
Non-current assets due within one year
Other current assets 702,049.56
Total current assets 1,382,127,563.87 1,106,319,483.92
Non-current assets:
Available-for-sale financial assets 741,953.00 741,953.00
Held-to-maturity investments
Long-term receivable
Long-term equity investments 3 355,243,380.27 355,898,601.98
Investment property
Fixed assets 57,690,657.66 56,774,280.91
Construction in progress 111,073.78
Construction materials
Fixed assets disposal
Productive biological assets
Oil & gas assets
Intangible assets 7,450,614.48 7,685,388.54
Development expenditures
Goodwill
Long-term prepayments 2,030,468.98 1,957,219.03
Deferred tax assets
Other non-current assets
Total non-current assets 423,268,148.17 423,057,443.46
Total assets 1,805,395,712.04 1,529,376,927.38
Page 5
Nanjing Putian Telecommunications Co., Ltd.
Parent company balance sheet as at June 30, 2017 (continued)
(Expressed in Renminbi Yuan)
Note
Liabilities & Equity Closing balance Opening balance
No.
Current liabilities:
Short-term borrowings 254,850,000.00 350,000,000.00
Financial liabilities at fair value
through profit or loss
Derivative financial liabilities
Notes payable 25,315,996.58 73,071,160.95
Accounts payable 564,156,527.86 484,405,589.93
Advances received 545,175,249.08 256,897,356.96
Employee benefits payable 7,388,766.96 6,437,798.79
Taxes and rates payable 3,320,021.98 8,618,382.65
Interest payable 208,892.07 556,665.54
Dividend payable
Other payables 226,601,169.74 148,211,527.27
Liabilities classified as held-for-sale
Non-current liabilities due within one
year
Other current liabilities
Total current liabilities 1,627,016,624.27 1,328,198,482.09
Non-current liabilities:
Long-term borrowings
Bonds payable
Including: Preferred shares
Perpetual bonds
Long-term payables
Long-term employee benefits payable
Special payables
Provisions
Deferred income 1,156,061.74 1,599,211.58
Deferred tax liabilities
Other non-current liabilities
Total non-current liabilities 1,156,061.74 1,599,211.58
Total liabilities 1,628,172,686.01 1,329,797,693.67
Equity:
Share capital 215,000,000.00 215,000,000.00
Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserve 172,417,299.81 172,417,299.81
Less: Treasuryshares
Other comprehensive income
Special reserve
Surplus reserve 589,559.76 589,559.76
Undistributed profit -210,783,833.54 -188,427,625.86
Total equity 177,223,026.03 199,579,233.71
Total liabilities & equity 1,805,395,712.04 1,529,376,927.38
Page 6
Nanjing Putian Telecommunications Co., Ltd.
Consolidated income statement for the year ended June 30, 2017
(Expressed in Renminbi Yuan)
Note Current period Preceding period
Items
No. cumulative comparative
I. Total operating revenue 1,012,396,407.39 834,739,223.47
Including: operating revenue 1 1,012,396,407.39 834,739,223.47
Interest proceeds
Premium earned
Revenue from handling charges and commission
II. Total operating cost 1,021,785,412.19 853,416,882.48
Including: Operating cost 1 854,596,490.18 686,173,649.02
Interest expenses
Handling charges and commission expenditures
Surrender value
Net payment of insurance claims
Net provision of insurance policy reserve
Premium bonus expenditures
Reinsurance expenses
Taxes & surcharge for operations 2 4,727,442.61 4,387,733.29
Selling expenses 3 79,331,110.14 80,474,718.48
Administrative expenses 4 72,960,165.72 69,513,112.10
Financial expense 5 8,701,588.82 11,247,942.96
Assets impairment loss 6 1,468,614.72 1,619,726.63
Add: Gains on changes in fair value(or less: losses)
Investment income (or less: losses) 7 -618,093.05 917,844.11
Including: investment income from associates and joint ventures -618,093.05 917,844.11
Gains on foreign exchange (or less: losses)
8 2,784,809.60
Other gains
III.Operating profit(or less: losses) -7,222,288.25 -17,759,814.90
Add: Non-operating revenue 9 2,769,599.18 3,864,657.27
Including: Gains on disposal of non-current assets 29,788.25 30,429.96
Less: Non-operating expenditures 10 929,676.29 81,403.56
Including: Losses on disposal of fixed assets 693,153.07 16,712.60
IV.Profit before tax (or less: total loss) -5,382,365.36 -13,976,561.19
Less: Income tax 11 3,203,411.84 3,235,803.32
V.Net profit (or less: net loss) -8,585,777.20 -17,212,364.51
Net profit attributable to owners of parent company -13,246,723.63 -21,109,095.63
Non-controlling interest 4,660,946.43 3,896,731.12
VI. Other comprehensive income after tax 12 -164,503.71 -241,817.20
Items attributable to the owners of the parent company -148,053.34 -217,635.48
(I) Not reclassified subsequently to profit or loss
1.Changes in re-measurement on the net defined benefit liability/asset
2. Items attributable to investees under equity method that will not
reclassified to profit or loss
(II) To be reclassified subsequently to profit or loss -148,053.34 -217,635.48
1. Items attributable to investees under equity method that may be
reclassified to profit or loss
2. Profit or loss from changes in fair value of available-for-sale
financial assets
3. Profit or loss from reclassification of held-to-maturity investments
as available-for-sale financial assets
4. Profit or loss on cash flow hedging
5. Translation reserve -148,053.34 -217,635.48
6. Others
Items attributable to non-controlling shareholders -16,450.37 -24,181.72
VII. Total comprehensive income -8,750,280.91 -17,454,181.71
Items attributable to the owners of the parent company -13,394,776.97 -21,326,731.11
Items attributable to non-controlling shareholders 4,644,496.06 3,872,549.40
VIII. Earnings per share (EPS):
(I) Basic EPS (yuan per share) -0.06 -0.10
(II) Diluted EPS (yuan per share) -0.06 -0.10
Page 7
Nanjing Putian Telecommunications Co., Ltd.
Parent company income statement for the year ended June 30, 2017
(Expressed in Renminbi Yuan)
Note Current period Preceding period
Items
No. cumulative comparative
I. Operating revenue 1 492,270,145.47 349,225,599.24
Less: Operating cost 1 440,095,821.25 303,368,276.90
Taxes & surcharge for operations 1,953,988.13 1,939,343.25
Selling expenses 33,154,285.12 37,592,065.04
Administrative expenses 29,286,433.07 27,500,532.77
Financial expense 8,503,408.00 8,778,329.36
Assets impairment loss 1,566,147.48 1,351,891.24
Add: Gain on changes in fair value (or less: losses)
Investment income (or less: losses) 2 -655,221.71 760,849.53
Including: investment income from associates
-655,221.71 760,849.53
and joint ventures
Other gains 44,991.45
II. Operating profit(or less: losses) -22,900,167.84 -30,543,989.79
Add: Non-operating revenue 760,110.35 1,153,404.83
Including: Gains on disposal of non-current
assets
Less: Non-operating expenditures 216,150.19 52,324.49
Including: Losses on disposal of non-current
assets
III. Profit before tax (or less: total loss) -22,356,207.68 -29,442,909.45
Less: Income tax
IV. Net profit (or less: net loss) -22,356,207.68 -29,442,909.45
V. Other comprehensive income after tax
(I) Not reclassified subsequently to profit or loss
1. Changes in re-measurement on the net
defined benefit liability/asset
2. Items attributable to investees under equity
method that will not reclassified to profit or loss
(II) To be reclassified subsequently to profit or loss
1. Items attributable to investees under equity
method that may be reclassified to profit or loss
2. Profit or loss from changes in fair value of
available-for-sale financial assets
3. Profit or loss from reclassification of
held-to-maturity investments as
available-for-sale financial assets
4. Profit or loss on cash flow hedging
5. Translation reserve
6. Others
VI. Total comprehensive income -22,356,207.68 -29,442,909.45
VII. Earnings per share (EPS):
(I) Basic EPS (yuan per share) -0.10 -0.14
(II) Diluted EPS (yuan per share) -0.10 -0.14
Page 8
Nanjing Putian Telecommunications Co., Ltd.
Consolidated cash flow statement for the year ended June 30, 2017
(Expressed in Renminbi Yuan)
Note Current period Preceding period
Items
No. cumulative comparative
I. Cash flows from operating activities:
Cash receipts from sale of goods or rendering of services 1,425,486,893.70 934,700,876.85
Net increase of client deposit and interbank deposit
Net increase of central bank loans
Net increase of loans from other financial institutions
Cash receipts from original insurance contract premium
Net cash receipts from reinsurance
Net increase of policy-holder deposit and investment
Net increase from disposal of financial assets at fair value through profit or loss
Cash receipts from interest, handling charges and commission
Net increase of loans from others
Net increase of repurchase
Receipts of tax refund 2,787,151.76 2,560,296.70
Other cash receipts related to operating activities 1 89,760,092.99 47,740,548.02
Subtotal of cash inflows from operating activities 1,518,034,138.45 985,001,721.57
Cash payments for goods purchased and services received 1,349,795,208.94 802,685,394.00
Net increase of loans and advances to clients
Net increase of central bank deposit and interbank deposit
Cash payments for insurance indemnities of original insurance contracts
Cash payments for interest, handling charges and commission
Cash payments for policy bonus
Cash paid to and on behalf of employees 135,086,143.63 125,026,411.42
Cash payments for taxes and rates 50,137,010.08 32,610,794.24
Other cash payments related to operating activities 2 119,180,369.61 121,260,532.80
Subtotal of cash outflows from operating activities 1,654,198,732.26 1,081,583,132.46
Net cash flows from operating activities -136,164,593.81 -96,581,410.89
II. Cash flows from investing activities:
Cash receipts from withdrawal of investments
Cash receipts from investment income 362,372.00
Net cash receipts from the disposal of fixed assets, intangible assets and other
29,417.47 32,592.24
long-term assets
Net cash receipts from the disposal of subsidiaries & other business units
Other cash receipts related to investing activities
Subtotal of cash inflows from investing activities 29,417.47 394,964.24
Cash payments for the acquisition of fixed assets, intangible assets and other
4,378,311.80 1,667,289.75
long-term assets
Cash payments for investments
Net increase of pledged borrowings
Net cash payments for the acquisition of subsidiaries & other business units
Other cash payments related to investing activities 20,000,000.00
Subtotal of cash outflows from investing activities 24,378,311.80 1,667,289.75
Net cash flows from investing activities -24,348,894.33 -1,272,325.51
III. Cash flows from financing activities:
Cash receipts from absorbing investments
Including: Cash received by subsidiaries from non-controlling shareholders as
investments
Cash receipts from borrowings 232,350,000.00 317,500,000.00
Cash receipts from issuing of bonds
Other cash receipts related to financing activities
Subtotal of cash inflows from financing activities 232,350,000.00 317,500,000.00
Cash payments for the repayment of borrowings 337,500,000.00 361,000,000.00
Cash payments for distribution of dividends or profits and for interest expenses 9,694,078.68 17,884,722.62
Including: Cash paid by subsidiaries to non-controlling shareholders as dividend
or profit
Other cash payments related to financing activities
Subtotal of cash outflows from financing activities 347,194,078.68 378,884,722.62
Net cash flows from financing activities -114,844,078.68 -61,384,722.62
IV. Effect of foreign exchange rate changes on cash & cash equivalents -23,235.89 -273,093.14
V. Net increase in cash and cash equivalents -275,380,802.71 -159,511,552.16
Add: Opening balance of cash and cash equivalents 484,954,713.07 405,920,943.68
VI. Closing balance of cash and cash equivalents 209,573,910.36 246,409,391.52
Page 9
Nanjing Putian Telecommunications Co., Ltd.
Parent company cash flow statement for the year ended June 30, 2017
(Expressed in Renminbi Yuan)
Note Current period Preceding period
Items
No. cumulative comparative
I.Cash flows from operating activities:
Cash receipts from sale of goods and rendering of services 847,352,874.13 379,526,190.68
Receipts of tax refund 47,333.61 239,819.41
Other cash receipts related to operating activities 114,587,795.86 663,533.60
Subtotal of cash inflows from operating activities 961,988,003.60 380,429,543.69
Cash payments for goods purchased and services received 843,778,952.58 302,330,893.01
Cash paid to and on behalf of employees 58,743,976.97 53,370,601.93
Cash payments for taxes and rates 16,423,861.43 4,468,888.31
Other cash payments related to operating activities 23,342,375.76 55,865,617.23
Subtotal of cash outflows from operating activities 942,289,166.74 416,036,000.48
Net cash flows from operating activities 19,698,836.86 -35,606,456.79
II.Cash flows from investing activities:
Cash receipts from withdrawal of investments
Cash receipts from investment income 362,372.00
Net cash receipts from the disposal of fixed assets, intangible
31,378.65
assets and other long-term assets
Net cash receipts from the disposal of subsidiaries & other
business units
Other cash receipts related to investing activities
Subtotal of cash inflows from investing activities 393,750.65
Cash payments for the acquisition of fixed assets, intangible assets
3,322,596.02 1,256,889.19
and other long-term assets
Cash payments for investments
Net cash payments for the acquisition of subsidiaries & other
business units
Other cash payments related to investing activities
Subtotal of cash outflows from investing activities 3,322,596.02 1,256,889.19
Net cash flows from investing activities -3,322,596.02 -863,138.54
III. Cash flows from financing activities:
Cash receipts from absorbing investments
Cash receipts from borrowings 170,850,000.00 236,000,000.00
Other cash receipts related to financing activities
Subtotal of cash inflows from financing activities 170,850,000.00 236,000,000.00
Cash payments for the repayment of borrowings 266,000,000.00 296,000,000.00
Cash payments for distribution of dividends or profits and for 9,341,661.54 9,504,963.82
interest expenses
Other cash payments related to financing activities
Subtotal of cash outflows from financing activities 275,341,661.54 305,504,963.82
Net cash flows from financing activities -104,491,661.54 -69,504,963.82
IV. Effect of foreign exchange rate changes on cash and cash
-100,956.62 68,383.33
equivalents
V. Net increase in cash and cash equivalents -88,216,377.32 -105,906,175.82
Add: Opening balance of cash and cash equivalents 164,361,696.67 192,969,689.69
VI. Closing balance of cash and cash equivalents 76,145,319.35 87,063,513.87
Page 10
Nanjing Putian Telecommunications Co., Ltd.
Consolidated statement of changes in equity for the year ended June 30, 2017
(Expressed in Renminbi Yuan)
Current period cumulative
Equity attributable to parent company
Items Other equity instruments Less: Other General Non-controlling
Special Surplus Total equity
Share capital Preferred Perpetual Others Capital reserve treasury comprehensive risk Undistributed profit interest
reserve reserve
shares bonds shares income reserve
I. Balance at the end of prior year 215,000,000.00 185,374,533.85 -4,634,605.50 589,559.77 -56,491,072.91 112,578,132.06 452,416,547.27
Add: Cumulative changes of accounting policies
Error correction of prior period
Business combination under common control
Others
II. Balance at the beginning of current year 215,000,000.00 185,374,533.85 -4,634,605.50 589,559.77 -56,491,072.91 112,578,132.06 452,416,547.27
III. Current period increase (or less: decrease) -148,053.34 -13,246,723.63 4,644,496.06 -8,750,280.91
(I) Total comprehensive income -148,053.34 -13,246,723.63 4,644,496.06 -8,750,280.91
(II) Capital contributed or withdrawn by owners
1. Capital contributed by owners
2. Capital contributed by holders of other equity
instruments
3. Amount of share-based payment included in
equity
4. Others
(III) Profit distribution
1. Appropriation of surplus reserve
2. Appropriation of general risk reserve
3. Appropriation of profit to owners
4. Others
(IV) Internal carry-over within equity
1.Transfer of capital reserve to capital
2.Transfer of surplus reserve to capital
3.Surplus reserve to cover losses
4.Others
(V) Special reserve
1. Appropriation of current period
2. Application of current period
(VI) Others
IV. Balance at the end of current period 215,000,000.00 185,374,533.85 -4,782,658.84 589,559.77 -69,737,796.54 117,222,628.12 443,666,266.36
Page11
Nanjing Putian Telecommunications Co., Ltd.
Consolidated statement of changes in equity for the year ended June 30, 2017 (continued)
(Expressed in Renminbi Yuan)
Preceding period comparative
Equity attributable to parent company
Items Other equity instruments Less: Other General Non-controlling
Special Surplus Undistributed Total equity
Share capital Preferred Perpetual Others Capital reserve treasury comprehensive risk interest
reserve reserve profit
shares bonds shares income reserve
I. Balance at the end of prior year 215,000,000.00 185,374,533.85 -4,223,184.69 589,559.77 -50,056,514.64 106,131,917.02 452,816,311.31
Add: Cumulative changes of accounting policies
Error correction of prior period
Business combination under common control
Others
II. Balance at the beginning of current year 215,000,000.00 185,374,533.85 -4,223,184.69 589,559.77 -50,056,514.64 106,131,917.02 452,816,311.31
III. Current period increase (or less: decrease) -217,635.48 -21,109,095.63 3,872,549.40 -17,454,181.71
(I) Total comprehensive income -217,635.48 -21,109,095.63 3,872,549.40 -17,454,181.71
(II) Capital contributed or withdrawn by owners
1. Capital contributed by owners
2. Capital contributed by holders of other equity
instruments
3. Amount of share-based payment included in
equity
4. Others
(III) Profit distribution
1. Appropriation of surplus reserve
2. Appropriation of general risk reserve
3. Appropriation of profit to owners
4. Others
(IV) Internal carry-over within equity
1.Transfer of capital reserve to capital
2.Transfer of surplus reserve to capital
3.Surplus reserve to cover losses
4.Others
(V) Special reserve
1. Appropriation of current period
2. Application of current period
(VI) Others
IV. Balance at the end of current period 215,000,000.00 185,374,533.85 -4,440,820.17 589,559.77 -71,165,610.27 110,004,466.42 435,362,129.60
Page12
Nanjing Putian Telecommunications Co., Ltd.
Parent company statement of changes in equity for the year ended June 30, 2017
(Expressed in Renminbi Yuan)
Current period cumulative
Other equity instruments
Items Other
Less: treasury Special Undistributed
Share capital Preferred Perpetual Others Capital reserve comprehensive Surplus reserve Total equity
shares reserve profit
shares bonds income
I. Balance at the end of prior year 215,000,000.00 172,417,299.81 589,559.76 -188,427,625.86 199,579,233.71
Add: Cumulative changes of accounting policies
Error correction of prior period
Others
II. Balance at the beginning of current year 215,000,000.00 172,417,299.81 589,559.76 -188,427,625.86 199,579,233.71
III. Current period increase (or less: decrease) -22,356,207.68 -22,356,207.68
(I) Total comprehensive income -22,356,207.68 -22,356,207.68
(II) Capital contributed or withdrawn by owners
1. Capital contributed by owners
2. Capital contributed by holders of other equity
instruments
3. Amount of share-based payment included in
equity
4. Others
(III) Profit distribution
1. Appropriation of surplus reserve
2. Appropriation of profit to owners
3. Others
(IV) Internal carry-over within equity
1.Transfer of capital reserve to capital
2.Transfer of surplus reserve to capital
3.Surplus reserve to cover losses
4.Others
(V) Special reserve
1. Appropriation of current period
2. Application of current period
(VI) Others
IV. Balance at the end of current period 215,000,000.00 172,417,299.81 589,559.76 -210,783,833.54 177,223,026.03
Page13
Nanjing Putian Telecommunications Co., Ltd.
Parent company statement of changes in equity for the year ended June 30, 2017(continued)
(Expressed in Renminbi Yuan)
Preceding period comparative
Other equity instruments
Items Less: Other
Special
Share capital Preferred Perpetual Others Capital reserve treasury comprehensive Surplus reserve Undistributed profit Total equity
reserve
shares bonds shares income
I. Balance at the end of prior year 215,000,000.00 172,417,299.81 589,559.76 -202,845,587.23 185,161,272.34
Add: Cumulative changes of accounting policies
Error correction of prior period
Others
II. Balance at the beginning of current year 215,000,000.00 172,417,299.81 589,559.76 -202,845,587.23 185,161,272.34
III. Current period increase (or less: decrease) -29,442,909.45 -29,442,909.45
(I) Total comprehensive income -29,442,909.45 -29,442,909.45
(II) Capital contributed or withdrawn by owners
1. Capital contributed by owners
2. Capital contributed by holders of other equity
instruments
3. Amount of share-based payment included in
equity
4. Others
(III) Profit distribution
1. Appropriation of surplus reserve
2. Appropriation of profit to owners
3. Others
(IV) Internal carry-over within equity
1.Transfer of capital reserve to capital
2.Transfer of surplus reserve to capital
3.Surplus reserve to cover losses
4.Others
(V) Special reserve
1. Appropriation of current period
2. Application of current period
(VI) Others
IV. Balance at the end of current period 215,000,000.00 172,417,299.81 589,559.76 -232,288,496.68 155,718,362.89
[Li Linzhen] [Li Linzhen] [Gao Wen]
[Legal representative] [Officer in charge of accounting] [Head of accounting department]
(Signature and stamp) (Signature and stamp) (Signature and stamp)
Page14
Nanjing Putian Telecommunications Co., Ltd.
Notes to Financial Statements
Semi-annual Report 2017
Monetary unit: RMB Yuan
I. Company profile
Nanjing Putian Telecommunications Co., Ltd. (the “Company”), whose predecessor is 邮电部南
京通信设备厂 (Nanjing Telecommunication Facility Factory*), was established as a limited
liability company (by shares) through financing under the approval of National Economic
Institutional Reform Commission with document of approval numbered TGS [1997] 28 dated
March 21, 1997. The Company is headquartered in Nanjing City, Jiangsu Province. Currently it
holds a business license with unified social credit code of 91320000134878054G, with registered
capital of 215,000,000.00 yuan, total share of 215,000,000.00 shares, with par value of 1 yuan per
share. Among them, 115,000,000 shares are state-owned legal person shares, and 100,000,000
shares are B shares. The Company was listed on the Shenzhen Stock Exchange on May 22, 1997.
The Company belongs to telecommunication equipment manufacture industry and is mainly
engaged in R&D, production, and sale of data, wire and wireless telecommunication equipment,
distribution and allocation of layout of telecommunication product, multimedia computer, digital
television, vehicle electronics and conference video system. The main services rendered by the
Company include installation and maintenance equipment, communication information network
and computer information system projects design, and systems integration and related consultancy
service.
The financial statements have been deliberated and approved for issue by the 2th meeting of the 7th
session of the Board of Directors dated August 24, 2017.
The Company has brought 11 subsidiaries including 南京南方电讯有限公司 (Nanjing South
Telecommunications Company Limited*), 南 京 普 天 天 纪 楼 宇 智 能 有 限 公 司 (Nanjing
PotevioTelege Intelligent Building Ltd.*) and 南京曼奈柯斯电器有限公司 (Nanjing Mennekes
Electrics Co., Ltd.*) etc. into the consolidated scope. Please refer to notes to changes in the
consolidated scope and interest in other entities for details.
II. Preparation basis of the financial statements
(I) Preparation basis
The financial statements have been prepared on the basis of going concern.
*
The English names are for identification purpose only.
Page15
(II) Assessment of the ability to continue as a going concern
The Company has no events or conditions that may cast significant doubts upon the Company’s
ability to continue as a going concern within the 12 months after the balance sheet date.
III. Significant accounting policies and estimates
Important note:
The Company has set up accounting policies and estimates on transactions or events such as
provision for bad debts of receivables, depreciation of fixed assets, amortization of intangible
assets, and revenue recognition, etc. based on the Company’s actual production and operation
features.
(I) Statement of compliance
The financial statements have been prepared in accordance with the requirements of China
Accounting Standards for Business Enterprises (CASBEs), and present truly and completely the
financial position, results of operations and cash flows of the Company.
(II) Accounting period
The accounting year of the Company runs from January 1 to December 31 under the Gregorian
calendar.
(III) Operating cycle
The Company has a relatively short operating cycle for its business, an asset or a liability is
classified as current if it is expected to be realized or due within 12 months.
(IV) Functional currency
The Company’s functional currency is Renminbi (RMB) Yuan.
(V) Accounting treatments of business combination under and not under common control
1. Accounting treatment of business combination under common control
Assets and liabilities arising from business combination are measured at carrying amount of the
combined party included in the consolidated financial statements of the ultimate controlling party
at the combination date. Difference between carrying amount of the equity of the combined party
included in the consolidated financial statements of the ultimate controlling party and that of the
combination consideration or total par value of shares issued is adjusted to capital reserve, if the
balance of capital reserve is insufficient to offset, any excess is adjusted to retained earnings.
2. Accounting treatment of business combination not under common control
When combination cost is in excess of the fair value of identifiable net assets obtained from the
acquiree at the acquisition date, theexcess is recognized as goodwill; otherwise, the fair value of
identifiable assets, liabilities and contingent liabilities, and the measurement of the combination
cost are reviewed, then the difference is recognized in profit or loss.
Page16
(VI) Compilation method of consolidated financial statements
The parent company brings all its controlled subsidiaries into its consolidation scope. The
consolidated financial statements are compiled by the parent company according to “CASBE 33 -
Consolidated Financial Statements”, based on relevant information and the financial statements of
the parent company and its subsidiaries.
(VII) Classification of joint arrangements and accounting treatment of joint operations
1. Joint arrangements include joint operations and joint ventures.
2. When the Company is a joint operator of a joint operation, it recognizes in relation to its interest
in a joint operation:
(1) its assets, including its share of any assets held jointly;
(2) its liabilities, including its share of any liabilities incurred jointly;
(3) its revenue from the sale of its share of the output arising from the joint operation;
(4) its share of the revenue from the sales of the output by the joint operation; and
(5) its expenses, including its share of any expenses incurred jointly.
(VIII) Recognition criteria of cash and cash equivalents
Cash as presented in cash flow statement refers to cash on hand and deposit on demand for
payment. Cash equivalents refer to short-term, highly liquid investments that can be readily
converted to cash and that are subject to an insignificant risk of changes in value.
(IX) Foreign currency translation
1. Translation of transactions denominated in foreign currency
Transactions denominated in foreign currency are translated into RMB yuan at the spot exchange
rate at the transaction date at initial recognition. At the balance sheet date, monetary items
denominated in foreign currency are translated at the spot exchange rate at the balance sheet date
with difference, except for those arising from the principal and interest of exclusive borrowings
eligible for capitalization, included in profit or loss; non-cash items carried at historical costs are
translated at the spot exchange rate at the transaction date, with its RMB amount unchanged;
non-cash items carried at fair value in foreign currency are translated at the spot exchange rate at
the date when the fair value was determined, with difference included in profit or loss or other
comprehensive income.
2. Translation of financial statements measured in foreign currency
The assets and liabilities in the balance sheet are translated into RMB at the spot rate at the
balance sheet date; the equity items, other than undistributed profit, are translated at the spot rate
at the transaction date; the revenues and expenses in the income statement are translated into RMB
at the spot exchange rate at the transaction date. The difference arising from foreign currency
Page17
translation is included in other comprehensive income.
(X) Financial instruments
1. Classification of financial assets and financial liabilities
Financial assets are classified into the following four categories when initially recognized:
financial assets at fair value through profit or loss (including held-for-trading financial assets and
financial assets designated at initial recognition as at fair value through profit or loss),
held-to-maturity investments, loans and receivables, and available-for-sale financial assets.
Financial liabilities are classified into the following two categories when initially recognized:
financial liabilities at fair value through profit or loss (including held-for-trading financial
liabilities and financial liabilities designated at initial recognition as at fair value through profit or
loss), and other financial liabilities.
2. Recognition criteria, measurement method and derecognition condition of financial assets and
financial liabilities
When the Company becomes a party to a financial instrument, it is recognized as a financial asset
or financial liability. The financial assets and financial liabilities initially recognized by the
Company are measured at fair value; for the financial assets and liabilities at fair value through
profit or loss, the transaction expenses thereof are directly included in profit or loss; for other
categories of financial assets and financial liabilities, the transaction expenses thereof are included
into the initially recognized amount.
The Company measures its financial assets at fair value subsequent to initial recognition, and does
not deduct the transaction expenses that may occur when it disposes of the said financial asset in
the future. However, those under the following circumstances are excluded: (1) the
held-to-maturity investments, loans and receivables are measured at amortized costs using
effective interest method; (2) the equity instrument investments for which there is no quotation in
the active market and whose fair value cannot be measured reliably, and the derivative financial
assets which are connected with the said equity instrument and must be settled by the delivery of
the said equity instrument are measured at their costs.
The Company measures its financial liabilities at the amortized costs using effective interest
method, with the exception of those under the following circumstances: (1) for the financial
liabilities at fair value through profit or loss, they are measured at fair value, and none of the
transaction expenses may be deducted, which may occur when the financial liabilities are settled
in the future; (2) for the derivative financial liabilities, which are connected to the equity
instrument for which there is no quotation in the active market and whose fair value cannot be
reliably measured, and which must be settled by the delivery of the equity instrument, they are
measured at their costs; (3) for the financial guarantee contracts which are not designated as a
financial liability at fair value through profit or loss, and for the commitments to grant loans which
Page18
are not designated as at fair value through profit or loss and which will enjoy an interest rate lower
than that of the market, they are measured subsequent to initial recognition at the higher of the
following two items 1) The amount as determined according to “CASBE13 - Contingencies”; 2)
the surplus after accumulative amortization as determined according to “CASBE14 - Revenues”.
The gains or losses arising from changes in fair value of financial assets or financial liabilities, if
not related to hedging, are measured with the following methods: (1) Gains or losses, arising from
the changes in fair value of financial asset or liability at its fair value through profit or loss, is
included in gains or losses on changes in fair value; interests or cash dividends gained during the
asset-holding period are recognized as investment income; when disposing of the assets,
investment income is recognized at the difference between the actual amount received and the
initial recorded amount, at the same time, gains or losses on changes in fair value are adjusted
accordingly. (2) For available-for-sale financial asset, changes in fair value are recorded as other
comprehensive income during the holding period, interests measured at effective interest method
are recorded as investment income; cash dividends from available-for-sale equity instrument
investment are recognized as investment income at the date of dividend declaration; when
disposing of the assets, investment income is recognized at the difference between the actual
amount received and the book value deducting the accumulative amount of changes in fair value
originally included in other comprehensive.
Financial assets are derecognized when the contractual rights for collecting the cash flow of the
said financial assets expire or substantially all risks and rewards related to the said financial assets
have been transferred. Only when the underlying present obligations of a financial liability are
relieved totally or partly may the financial liability be derecognized accordingly.
3. Recognition criteria and measurement method of financial assets transfer
Where the Company has transferred substantially all of the risks and rewards related to the
ownership of the financial asset to the transferee, it derecognizes the financial asset. If it retained
substantially all of the risks and rewards related to the ownership of the financial asset, it
continues recognizing the financial asset, and the consideration received is recognized as a
financial liability. Where the Company does not transfer or retain substantially all of the risks and
rewards related to the ownership of a financial asset, it is dealt with according to the
circumstances as follows respectively: (1) if the Company gives up its control over the financial
asset, it derecognizes the financial asset; (2) if the Company does not give up its control over the
financial asset, according to the extent of its continuing involvement in the transferred financial
asset, it recognizes the related financial asset and recognizes the relevant liability accordingly.
If the transfer of an entire financial asset satisfies the conditions for derecognition, the difference
between the amounts of the following two items are included in profit or loss: (1) the book value
of the transferred financial asset; (2) the sum of consideration received from the transfer, and the
accumulative amount of the changes of the fair value originally included in equity. If the transfer
Page19
of financial asset partially satisfies the conditions to derecognition, the entire book value of the
transferred financial asset is, between the portion which is derecognized and the portion which is
not, apportioned according to their respective relative fair value, and the difference between the
amounts of the following two items are included into profit or loss: (1) the book value of the
portion which is derecognized; (2) the sum of consideration of the portion which is derecognized,
and the portion of the accumulative amount of the changes in the fair value originally included in
equity which is corresponding to the portion which is derecognized.
4. Fair value determination method of financial assets and liabilities
The Company use valuation techniques that are appropriate in the circumstances and for which
sufficient data are available to measure fair value. The inputs to valuation techniques used to
measure fair value are arranged in the following hierarchy and used accordingly:
(1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities
that the Company can access at the measurement date.
(2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable
for the asset or liability, either directly or indirectly. Level 2 inputs include: quoted prices for
similar assets or liabilities in active markets; quoted prices for identical or similar assets or
liabilities in markets that are not active; inputs other than quoted prices that are observable for the
asset or liability, for example, interest rates and yield curves observable at commonly quoted
intervals; market-corroborated inputs;
(3) Level 3 inputs are unobservable inputs for the asset or liability. Level 3 inputs include interest
rate that is not observable and cannot be corroborated by observable market data at commonly
quoted intervals, historical volatility, future cash flows to be paid to fulfill the disposal obligation
assumed in business combination, and financial forecast developed using the Company’s own data,
etc.
5. Impairment test and provision for impairment loss of financial assets
(1) An impairment test is carried out at the balance sheet date on the financial assets other than
those at fair value through profit or loss, and provisions for impairment loss should be made if
there is objective evidence indicating impairment loss.
(2) For held-to-maturity investments, borrowings, and receivables, an impairment test is made on
an individual basis on financial assets of individually significant amount; with regard to the
financial assets of individually insignificant amount, they may be included in a portfolio of
financial assets with similar credit risk features so as to carry out an impairment-related test;
where, upon the impairment test on an individual basis, the financial asset (including those
financial assets of individually significant amount and of individually insignificant amount) is not
impaired, it is included in a portfolio of financial assets with similar credit risk features so as to
conduct further impairment test.Where a financial asset is impaired, the carrying amount of the
Page20
said financial asset is written down to the present value of the predicted future cash flow.
(3) Available-for-sale financial assets
1) Objective evidence indicating that available-for-sale debt instrument investments may be
impaired includes:
a. significant financial difficulties in the debtor;
b. breach of contract by the debtor, such as principal or interest past due or default;
c. concessions made to debtors with financial difficulties considering economic and legal factors;
d. it is highly probable that the debtor is going to dissolve or going through other terms of
financial restructuring;
e. owing to significant financial difficulties occurred to the debtor, the debt instrument is
discontinued to trade in active market; or
f. Other circumstances indicating that available-for-sale debt instrument may be impaired.
2) Evidence indicating that available-for-sale equity instrument investment may be impaired
includes the fair value of equity instrument investment is suffered from significant or
non-temporary decline and the technical, market, economic, or legal environment in which the
investee operates has significant adverse changes under which the Company may not be able to
recover its investment cost.
The Company performs review on available-for-sale equity instrument investment on an
individual basis at the balance sheet date. For equity instrument investment at fair value, if the
balance sheet date fair value is 50% or above lower than the cost, or the balance sheet date fair
value has been lower than the cost for a consecutive of 12 months or longer, it is determined that
such equity instrument investment is impaired; if the balance sheet date fair value is 20% or above
but not exceeding 50% lower than the cost, or the balance sheet date fair value has been lower
than the cost for a consecutive of 6 months or longer but not exceeding 12 months, the Company
may take other factors such as price volatility into consideration in determining whether such
equity instrument investment is impaired. For equity instrument investment at cost, the Company
considers whether the technical, market, economic, or legal environment in which the investee
operates has significant adverse changes to determine whether such equity instrument is impaired.
When an available-for-sale financial asset at fair value is impaired, the cumulative loss arising
from decline in fair value that has been recognized directly in other comprehensive income is
reclassified to impairment loss. If, after an impairment loss has been recognized on
available-for-sale debt instrument investment, there is objective evidence of a recovery in value of
the financial asset which can be related objectively to an event occurring after the impairment was
recognized, the previously recognized impairment loss is reversed through profit or loss.
Page21
Subsequent fair value increase in available-for-sale debt instrument investment whose impairment
loss has been recognized is directly recognized in other comprehensive income.
When an available-for-sale equity instrument at cost is impaired, impairment loss on such equity
instrument investment is recognized at any excess of its carrying amount over the present value of
future cash flows, and such impairment loss is not reversed upon recognition.
(XI) Receivables
1. Receivables of individually significant amount and with provision made on an individual basis
Judgment basis or amount criteria of Receivables amounting to more than 10 million yuan
individually significant amount
Provision method for receivables of Provisions are made on the difference between the
individually significant amount and lower of present value of future cash flow and their
with provision made on an individual carrying amount based on impairment testing on an
basis individual basis.
2. Receivables with provision made on a collective basis using portfolios with similar credit risk
features
(1) Specific portfolios and provision method
Provision method of provision being made on collective basis using portfolios with similar
credit risk features:
Portfolio 1 Grouped with related party balances within the consolidation
scope
Portfolio 2 Grouped with age
Portfolios and provision method
Portfolio 1 No provision
Portfolio 2 Age analysis method
(2) Age analysis method
Ages Proportion of provision for Proportion of provision for
accounts receivable (%) other receivables (%)
Within 1 year (inclusive, the 0.00 0.00
same hereinafter)
1-2 years 0.00 0.00
2-3 years 10.00 10.00
3-4 years 30.00 30.00
4-5 years 40.00 40.00
5-6 years 80.00 80.00
Over 6 years 100.00 100.00
3. Receivables of individually insignificant amount but with provision made on an individual basis
Reasons for provision made on an Impairment test on an individual basis with objective
individual basis evidence indicating that the receivable is impaired
Provision method Provision method made on an individual basis
For other receivables such as notes receivable, interest receivable and long-term receivable, etc.,
Page22
provision for bad debts is made at the difference between the present value of future cash flow and
the carrying amount.
(XII) Inventories
1. Classification of inventories
Inventories include finished goods or goods held for sale in the ordinary course of business, work
in process in the process of production, and materials or suppliers etc. to be consumed in the
production process or in the rendering of services.
2. Accounting method for dispatching inventories:
Inventories dispatched from storage are accounted for with weighted average method.
3. Basis for determining net realizable value
At the balance sheet date, inventories are measured at the lower of cost or net realizable value;
provisions for inventory write-down are made on the excess of its cost over the net realizable
value. The net realizable value of inventories held for sale is determined based on the amount of
the estimated selling price less the estimated selling expenses and relevant taxes and surcharges in
the ordinary course of business; the net realizable value of materials to be processed is determined
based on the amount of the estimated selling price less the estimated costs of completion, selling
expenses and relevant taxes and surcharges in the ordinary course of business; at the balance sheet
date, when only part of the same item of inventories have agreed price, their net realizable value is
determined separately and is compared with their costs to set the provision for inventory
write-down to be made or reversed.
4. Inventory system
Perpetual inventory method is adopted.
5. Amortization method of low-value consumables and packages
(1) Low-value consumables
Low-value consumables are amortized with one-off method.
(2) Packages
Packages are amortized with one-off method.
(XIII) Assets classified as held-for-sale
Non-current assets (excluding financial assets) are accounted for as held-for-sale when the
following conditions are all met: a. the component must be available for immediate sale in its
present condition subject only to terms that are usual and customary for sales of such component;
b. the Company has made a decision on the disposal of the component; c. the Company has signed
an irrevocable transfer agreement with the transferee; and d. the transfer is expected to be
completed within one year.
(XIV) Long-term equity investments
Page23
1. Judgment of joint control and significant influence
Joint control is the contractually agreed sharing of control of an arrangement, which exists only
when decisions about the relevant activities require the unanimous consent of the parties sharing
control. Significant influence is the power to participate in the financial and operating policy
decisions of the investee but is not control or joint control of these policies.
2. Determination of investment cost
(1) For business combination under common control, if the consideration of the combining party
is that it makes payment in cash, transfers non-cash assets, assumes its liabilities or issues equity
securities, on the date of combination, it regards the share of the carrying amount of the equity of
the combined party included the consolidated financial statements of the ultimate controlling party
as the initial cost of the investment. The difference between the initial cost of the long-term equity
investment and the carrying value of the combination consideration paid or the par value of shares
issued offsets capital reserve; if the balance of capital reserve is insufficient to offset, any excess is
adjusted to retained earnings.
When long-term equity investments are obtained through business combination under common
control achieved in stages, the Company determines whether it is a “bundled transaction”.If it is a
“bundled transaction”, stages as a whole are considered as one transaction in accounting treatment.
If it is not a “bundled transaction”, investment cost is initially recognized at the share of the
carrying amount of net assets of the combined party included the consolidated financial statements
of the ultimate controlling party. The difference between the acquisition-date investment cost of
long-term equity investments and the carrying amount of the previously held long-term equity
investments plus the carrying amount of the consideration paid for the newly acquired equity is
adjusted to capital reserve; if the balance of capital reserve is insufficient to offset, any excess is
adjusted to retained earnings.
(2) For business combination not under common control, investment cost is initially recognized at
the acquisition-date fair value of considerations paid.
When long-term equity investments are obtained through business combination not under
common control achieved in stages, the Company determined whether they are stand-alone
financial statements or consolidated financial statements in accounting treatment:
1) In the case of stand-alone financial statements, investment cost is initially recognized at the
carrying amount of the previously held long-term equity investments plus the carrying amount of
the consideration paid for the newly acquired equity.
2) In the case of consolidated financial statements, the Company determines whether it is a
“bundled transaction”. If it is a “bundled transaction”, stages as a whole are considered as one
transaction in accounting treatment. If it is not a “bundled transaction”, the carrying value of the
acquirer’s previously held equity interest in the acquire is re-measured at the acquisition-date fair
Page24
value, and the difference between the fair value and the carrying amount is recognized in
investment income; when the acquirer’s previously held equity interest in the acquire involves
other comprehensive income under equity method, the related other comprehensive income is
reclassified as income for the acquisition period, excluding other comprehensive income arising
from changes in net liabilities or assets from re-measurement of defined benefit plan of the
acquiree.
(3) Long-term equity investment obtained through ways other than business combination: the
initial cost of a long-term equity investment obtained by making payment in cash is the purchase
cost which is actually paid; that obtained on the basis of issuing equity securities is the fair value
of the equity securities issued; that obtained through debt restructuring is determined according to
“CASBE12 - Debt Restructuring”; and that obtained through non-cash assets exchange is
determined according to “CASBE7 - Non-cash Assets Exchange”.
3. Subsequent measurement and recognition method of gain or loss
For long-term equity investment with control relationship, it is accounted for with cost method;
for long-term equity investment with joint control or significant influence relationship, it is
accounted for with equity method.
4. Disposal of a subsidiary in stages resulting in the Company’s loss of control
(1) Stand-alone financial statements
The difference between the carrying amount of the disposed equity and the consideration obtained
thereof is recognized in profit or loss. If the disposal does not result in the Company’s loss of
significant influence or joint control, the remained equity is accounted for with equity method;
however, if the disposal results in the Company’s loss of control, joint control, or significant
influence, the remained equity is reclassified as available-for-sale financial assets, and accounted
for according to CASBE 22 –Financial Instruments: Recognition and Measurement.
(2) Consolidated financial statements
1) Disposal of a subsidiary in stages not qualified as “bundled transaction” resulting in the
Company’s loss of control
Before the Company’s loss of control, the difference between the disposal consideration and the
proportionate share of net assets in the disposed subsidiary from acquisition date or combination
date to the disposal date is adjusted to capital reserve (capital premium), if the balance of capital
reserve is insufficient to offset, any excess is adjusted to retained earnings.
When the Company loses control, the remained equity is re-measured at the loss-of-control-date
fair value. The aggregated value of disposal consideration and the fair value of the remained
equity, less the share of net assets in the disposed subsidiary held before the disposal from the
acquisition date or combination date to the disposal date is recognized in investment income in the
period when the Company loses control over such subsidiary, and meanwhile goodwill is offset
Page25
correspondingly. Other comprehensive income related to equity investments in former subsidiary
is reclassified as investment income upon the Company’s loss of control.
2) Disposal of a subsidiary in stages qualified as “bundled transaction” resulting in the Company’s
loss of control
In case of “bundled transaction”, stages as a whole are considered as one transaction resulting in
loss of control in accounting treatment. Before the Company loses control, the difference between
the disposal consideration at each stage and the proportionate share of net assets in the disposed
subsidiary is recognized as other comprehensive income at the consolidated financial statements
and reclassified as profit or loss in the period when the Company loses control over such
subsidiary.
(XV) Investment property
1. Investment property includes land use right of rent-out property and of property held for capital
appreciation and buildings that have been leased out.
2. The initial measurement of investment property is based on its cost, and subsequent
measurement is made using the cost model, the depreciation or amortization method is the same as
that of fixed assets and intangible assets.
(XVI) Fixed assets
1. Recognition principles of fixed assets
Fixed assets are tangible assets held for use in the production or supply of goods or services, for
rental to others, or for administrative purposes, and expected to be used during more than one
accounting year. Fixed assets are recognized if, and only if, it is probable that future economic
benefits associated with the assets will flow to the Company and the cost of the assets can be
measured reliably.
2. Depreciation method of different categories of fixed assets
Estimated Annual
Categories Depreciation method Useful life residual value depreciation
(years)
proportion (%) rate (%)
Buildings and structures Straight-line method 15-35 3.00 2.77-6.47
Machinery Straight-line method 10-15 3.00 6.47-9.70
Transport facilities Straight-line method 6-8 3.00 12.13-16.17
Electronic equipment Straight-line method 4-11 3.00 2.2-24.25
Office equipment and others Straight-line method 4-11 3.00 2.2-24.25
(XVII) Construction in progress
1. Construction in progress is recognized if, and only if, it is probable that future economic
benefits associated with the item will flow to the Company, and the cost of the item can be
measured reliably. Construction in progress is measured at the actual cost incurred to reach its
designed usable conditions.
Page26
2. Construction in progress is transferred into fixed assets at its actual cost when it reaches its
designed usable conditions. When the construction completion cost reaches final estimating and
auditing of the construction in progress was not finished while it reaching the designed usable
conditions, it is transferred to fixed assets using estimated value first, and then adjusted
accordingly when the actual cost is settled, but the accumulated depreciation is not to be adjusted
retrospectively.
(XVIII) Borrowing costs
1. Recognition principle of borrowing costs capitalization
Where the borrowing costs incurred to the Company can be directly attributable to the acquisition
and construction or production of assets eligible for capitalization, it is capitalized and included in
the costs of relevant assets; other borrowing costs are recognized as expenses on the basis of the
actual amount incurred, and are included in profit or loss.
2. Borrowing costs capitalization period
(1) The borrowing costs are not capitalized unless they following requirements are all met: 1) the
asset disbursements have already incurred; 2) the borrowing costs have already incurred; and 3)
the acquisition and construction or production activities which are necessary to prepare the asset
for its intended use or sale have already started.
(2) Suspension of capitalization: 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 is suspended; the borrowing costs incurred during such
period are recognized as expenses, and are included in profit or loss, till the acquisition and
construction or production of the asset restarts.
(3) Ceasing of capitalization: when the qualified asset under acquisition and construction or
production is ready for the intended use or sale, the capitalization of the borrowing costs is ceased.
3. Capitalization rate and capitalized amount of borrowing costs
For borrowings exclusively for the acquisition and construction or production of assets eligible for
capitalization, the to-be-capitalized amount of interests is determined in light of the actual interest
expenses incurred (including amortization of premium or discount based on effective interest
method) of the special borrowings at the present period minus the income of interests earned on
the unused borrowings as a deposit in the bank or as a temporary investment; where a general
borrowing is used for the acquisition and construction or production of assets eligible for
capitalization, the Company calculates and determines the to-be-capitalized amount of interests 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.
(XIX) Intangible assets
Page27
1. Intangible asset includes land use right, patent right and non-patented technology etc. The initial
measurement of intangible asset is based its cost.
2. For intangible assets with finite useful lives, its amortization amount is amortized within its
useful lives systematically and reasonably, if it is unable to determine the expected realization
pattern reliably, intangible assets are amortized by the straight-line method with details as follows:
Items Amortization period (years)
Software 3-10
Patent right and non-patented technology 5-10
Land use right 40-50
3. Expenditures on the research phase of an internal project are recognized as profit or loss when it
is incurred. An intangible asset arising from the development phase of an internal project is
recognized if the Company can demonstrate all of the following: (1) the technical feasibility of
completing the intangible asset so that it will be available for use or sale; (2) its intention to
complete the intangible asset and use or sell it; (3) how the intangible asset will generate probable
future economic benefits. Among other things, the Company can demonstrate the existence of a
market for the output of the intangible asset or the intangible asset itself or, if it is to be used
internally, the usefulness of the intangible asset; (4) the availability of adequate technical,
financial and other resources to complete the development and to use or sell the intangible asset;
and (5) its ability to measure reliably the expenditure attributable to the intangible asset during its
development.
(XX) Impairment of part of non-current assets
For non-current assets such as long-term equity investments, investment property at cost model,
fixed assets, construction in progress, intangible assets with finite useful life, etc., if at the balance
sheet date there is indication of impairment, the recoverable amount is estimated. For goodwill
recognized in business combination and intangible assets with indefinite useful life, no matter
whether there is indication of impairment, impairment test is performed annually. Impairment test
on goodwill is performed on related group of assets or a portfolio of groups of assets.
When the recoverable amount of such non-current assets is lower than their carrying amount, the
difference is recognized as assets impairment loss through profit or loss.
(XXI) Long-term prepayments
Long-term prepayments are expenses that have been recognized but with amortization period over
one year (excluding one year). They are recorded with actual cost, and evenly amortized within its
beneficiary period or stipulated period. If items of long-term prepayments fail to be beneficial to
the following accounting periods, residual values of such items are included in profit or loss.
(XXII) Employee benefits
1. Employee benefits include short-term employee benefits, post-employment benefits,
Page28
termination benefits and other long-term employee benefits.
2. Short-term employee benefits
The Company recognizes, in the accounting period in which an employee provides service,
short-term employee benefits actually incurred as liabilities, with a corresponding charge to profit
or loss or the cost of a relevant asset.
3. Post-employment benefits
The Company classifies post-employment benefit plans as either defined contribution plans or
defined benefit plans.
(1) The Company recognizes in the accounting period in which an employee provides service the
contribution payable to a defined contribution plan as a liability, with a corresponding charge to
profit or loss or the cost of a relevant asset.
(2) Accounting treatment by the Company for defined benefit plan usually involves the following
steps:
1) In accordance with the projected unit credit method, using unbiased and mutually compatible
actuarial assumptions to estimate related demographic variables and financial variables, measure
the obligations under the defined benefit plan, and determine the periods to which the obligations
are attributed. The Company discounts obligations under the defined benefit plan using the
discount rate to determine the present value of the defined benefit plan obligations and the current
service cost;
2) When a defined benefit plan has assets, the Company recognizes the deficit or surplus by
deducting the present value of the defined benefit plan obligation from the fair value of defined
benefit plan assets as a net defined benefit plan liability or net defined benefit plan asset. When a
defined benefit plan has a surplus, the Company measures the net defined benefit plan asset at the
lower of the surplus in the defined benefit plan and the asset ceiling;
3) At the end of reporting period, the Company recognizes the following components of employee
benefits cost arising from defined benefit plan: a. service cost; b. net interest on the net defined
benefit plan liability (asset); and c. Changes as a result of re-measurement of the net defined
benefit liability (asset). Item a and item b are recognized in profit or loss or the cost of a relevant
asset. Item c is recognized in other comprehensive income and is not to be reclassified
subsequently to profit or loss. However, the Company may transfer those amounts recognized in
other comprehensive income within equity.
4. Termination benefits
Termination benefits provided to employees are recognized as an employee benefit liability for
termination benefits, with a corresponding charge to profit or loss at the earlier of the following
dates: a. when the Company cannot unilaterally withdraw the offer of termination benefits because
Page29
of an employment termination plan or a curtailment proposal; or b. when the Company recognizes
cost or expenses related to a restructuring that involves the payment of termination benefits.
5. Other long-term employee benefits
When other long-term employee benefits provided by the Company to the employees satisfied the
conditions for classifying as a defined contribution plan, those benefits are accounted for in
accordance with the requirements relating to defined contribution plan. The Company recognizes
and measures the net liability or net asset of other long-term employee benefits in accordance with
the requirements relation to defined benefit plan. At the end of the reporting period, the Company
recognizes the components of cost of employee benefits arising from other long-term employee
benefits as the followings: a. service cost; b. net interest on the net liability or net assets of other
long-term employee benefits; and c. changes as a result of re-measurement of the net liability or
net assets of other long-term employee benefits. As a practical expedient, the net total of the
aforesaid amounts are recognized in profit or loss or included in the cost of a relevant asset.
(XXIII) Provisions
1. Provisions are recognized when fulfilling the present obligations arising from contingencies
such as providing guarantee for other parties, litigation, products quality guarantee, onerous
contract, etc., may cause the outflow of the economic benefit and such obligations can be reliably
measured.
2. The initial measurement of provisions is based on the best estimated expenditures required in
fulfilling the present obligations, and its carrying amount is reviewed at the balance sheet date.
(XXIV) Revenue
1. Revenue recognition principles
(1) Sale of goods
Revenue from sale of goods is recognized if, and only if, the following conditions are all satisfied:
a) significant risks and rewards of ownership of the goods is transferred to the buyer; b) the
Company retains neither continuing managerial involvement of ownership nor effective control
over the goods sold; c) the amount of revenue can be measured reliably; d) it is probable that the
economic benefits of the transaction will flow to the Company; and e) the costs of the transaction
incurred and to be incurred can be measured reliably.
(2) Rendering of services
When the outcome of the transaction can be estimated reliably (the amount of revenue can be
measured reliably, it is probable that the economic benefits will flow to the Company, the
percentage of completion of the transaction can be determined reliably, and the costs of the
transaction incurred and to be incurred can be measured reliably), revenue from rendering of
services is recognized using the percentage of completion method, and the stage of completion is
determined atthe proportion of costs incurred to the estimated total costs. When the outcome of the
Page30
transaction cannot be estimated reliably at the balance sheet date, revenue is recognized based on
the amount of the costs incurred and the costs incurred are charged off at the same amount when
the costs incurred are expected to be recoverable; and no revenue is recognized and the costs
incurred are charged off as an expense of the period when the costs incurred are not expected to be
recovered.
(3) Revenue arising from use by others of assets
Revenue arising from use by others of assets is recognized if, and only if, it is probable that
economic benefits associated with the transaction will flow to the Company and the amount of the
revenue can be measured reliably. Interest income is recognized based on the length of time for
which the Company’s cash is used by others and the effective interest rate; and royalties are
recognized according to the period and method of charging as specified in relevant contract or
agreement.
2. Revenue recognition method adopted by the Company
The Company’s main product is the telecommunication product. Revenue is recognized if, and
only if, the following conditions are all met:the Company has delivered goods to the purchaser
based on contractual agreements; customers have accepted goods and settled the payment; goods
payment has been collected or the Company has obtained receipts invoices and it is probable that
economic benefits associated with the transaction will flow to the Company; and the costs of the
transaction incurred and to be incurred can be measured reliably.
(XXV) Government grants
1. Government grants related to assets
Government grants related to assets are government grants, with which the Company purchase,
construct or otherwise acquire non-current assets. They are recognized as deferred income, and
amortized on a straight-line method over the useful lives of the relevant assets, and included in
profit or loss. However, those measured at notional amount is directly included into profit or loss.
2. Government grants related to income
Government grants related to income are government grants other than those related to assets.
Government grants related to income if used for compensating the related future expenses or
losses of the Company are recognized as deferred income and are included in profit or loss during
the period when the relevant expenses are recognized; if used for compensating the related
expenses or losses incurred to the Company are directly included in profit or loss.
3. Policy-based concessional discount loans
(1) Fiscal interest discount funds allocated to the loan bank, then the lending bank provide loans to
the company with policy of preferential interest rates, borrowing is received by the actual amount
as original borrowing costs, according to the loan principal borrowing costs associated with the
preferential interest rate policy. (2) The financial interest will be allocated directly to the company,
Page31
and the corresponding discount rate shall be reduced to the relatedborrowing costs.
(XXVI) Operating leases
When the Company is the lessee, lease payments are recognized as cost or profit or loss with
straight-line method over the lease term. Initial expenses are recognized directly into profit or loss.
Contingent rents are charged as profit or loss in the periods in which they are incurred.
When the Company is the lessor, lease income is recognized as profit or loss with straight-line
method over the lease term. Initial expenses, other than those with material amount and eligible
for capitalization which are recognized as profit or loss by installments, are recognized directly as
profit or loss. Contingent rents are charged into profit or loss in the periods in which they are
incurred.
(XXVII) Work safety fund
The Company accrues work safety fund in accordance with the Circular on Management
Measures on the Accrual and Use of Work Safety Fund numbered Cai Qi [2012] 16 by Ministry of
Finance and State Administration of Work Safety. Standard work safety fund is included in the
cost or current profit or loss, meanwhile accounted for under “special reserve”. When work safety
fund is used as an expense, it is to offset special reserve directly. When work safety fund is
qualified to be included in the cost of fixed assets, it is accounted for under “construction in
progress” and transferred to fixed assets when related safety projects reach the designed useful
conditions; meanwhile, the cost included in fixed assets is to offset “special reserve”, and
accumulated depreciation shall be recognized at the same amount. Such fixed assets shall not be
depreciated in future periods.
(XXVIII) Segment reporting
Reportable segments are identified based on operating segments which are determined based on
the structure of the Company’s internal organization, management requirements and internal
reporting system. An operating segment is a component of the Company that:
(1) engages in business activities from which it may earn revenues and incur expenses;
(2) whose financial performance are regularly reviewed by Management to make decisions about
resource to be allocated to the segment and assess its performance; and
(3) for which financial information regarding financial position, financial performance and cash
flows is available.
(XXIX) Important changes in accounting policies and accounting estimates
(1) Important change in accounting policies
1）Accounting policy changes caused by changes in accounting standards of enterprises
The company executive formulated by the ministry of finance CASBEsNo. 42 - hold illiquid
assets for sale, the disposal of the group and termination of business since May 28, 2017", since
June 12, 2017 the implementation of the revised "CASBEsNo. 16 - government grants.
This accounting policy change has deliberated and approved for issue by the 2th meeting of the
Page32
7thsession of the Board of Directorsand using prospective application..
(I)The content and reason of change in accounting policies
Content and reason Approval procedures Notes
The company treatment of the original software
products in the process of government VAT
refund in non-operating income accounting, in
This accounting policy change has
order to implement the revised CASBEsNo. 16
deliberated and approved for
- government grants,the change in other income issue by the 2th meeting of the 7th
accountingsince January 1, 2017. This session of the Board of Directors
accounting policy change applies to prospective
application.
(II)Report items and amounts that are subject to significant impact
Significant impact Influence amount Notes
Income statement of semi-annual of 2017
Non-operating income -2,784,809.60
Other income 2,784,809.60
IV. Taxes
(I) Main taxes and tax rates
Taxes Tax bases Tax rates
Value-added tax (VAT) The taxable revenue from sales of goods or 17%
rendering of services
Business tax The taxable business turnover 3%-5%
Urban maintenance and Turnover tax payable 7%
construction tax
Education surcharge Turnover tax payable 3%
Local education surcharge Turnover tax payable 2%
Enterprise income tax Taxable income 15%-25%
Different enterprise income tax rates applicable to different taxpayers:
Taxpayers Income tax rate
Nanjing PotevioTelege Intelligent Building Ltd. 15%
南京普天长乐通信设备有限公司 15%
(Nanjing PotevioChangle Telecommunications Equipment Co., Ltd.*)
南京普天大唐信息电子有限公司 15%
(Nanjing PotevioDatang Information Electronic Co., Ltd.*)
南京普天网络有限公司 15%
(Nanjing Potevio Network Co., Ltd.*)
普天通信(香港)股份有限公司 16.5%
(Potevio Telecommunications (H.K.) Co., Ltd.*)
*
The English names are for identification purpose only.
Page33
Taxpayers Income tax rate
Taxpayers other than the above-mentioned 25%
The subsidiary, Potevio Telecommunications (H.K.) Co., Ltd., was established in Hong Kong on
December 1, 2000, and is subject to the enterprise income tax at a rate of 16.5%, according to
relevant rules in Hong Kong.
(II) Tax preferential policies
The subsidiary, Nanjing PotevioTelege Intelligent Building Ltd., obtained high-tech enterprise
certificate in October 31, 2014,valid for 3 years. The certificate number is GR201432002922. As a
result, it is subject to the enterprise income tax at a rate of 15% for 2014 to 2016.
The subsidiary,Nanjing PotevioChangle Telecommunications Equipment Co., Ltd., obtained
high-tech enterprise certificate in October 10, 2015,valid for 3 years. The certificate number is
GR201532001302. As a result, it is subject to the enterprise income tax at a rate of 15% for 2015
to 2017.
The subsidiary,Nanjing Potevio Network Co., Ltd., obtained high-tech enterprise certificate in
August 5, 2014,valid for 3 years. The certificate number is GF201432000602. As a result, it is
subject to the enterprise income tax at a rate of 15% for 2014 to 2016.
The subsidiary, Nanjing PotevioDatang Information Electronic Co., Ltd., obtained high-tech
enterprise certificate in August 24, 2015,valid for 3 years. The certificate number is
GF201532000188. As a result, it is subject to the enterprise income tax at a rate of 15% for 2015
to 2017.
The subsidiary, 南京通信设备厂七分厂(Nanjing Telecommunication Equipment Factory - the
Seventh Branch*), is a social welfare enterprise. Accordance to the provisions of GuoShui Fa[2007]
No.067, it enjoys the preferential tax policy of VAT refund upon collection and plus deduction of
wages paid to the disabled employees.
The subsidiaries, Nanjing PotevioDatang Information Electronic Co., Ltd. and 南京普天通信科
技有限公司(Nanjing Potevio Telecommunication Technology Co., Ltd.*), were certified as
software enterprises, and some of the software products produced by Nanjing South
Telecommunications Company Limited and Nanjing Potevio Network Co., Ltd. are entitled
toenjoy the preferential tax policy of VAT refund upon collection in accordance with the
provisions of CaiShui [2011] No.100.
V. Notes to items of consolidated financial statements
Remarks: “Opening balance” in this report refers to balances as at January 1, 2017, while “closing
balance” refers to balances as at June 30, 2017; and “current period” refers to the period from
January 1, 2017 to June 30, 2017, while “preceding period” refers to the period from January 1,
Page34
2016 to June 30, 2016. This is also applicable to that of the parent company.
(I) Notes to items of the consolidated balance sheet
1. Cash and bank balances
(1) Details
Items Closing balance Opening balance
Cash on hand 1,922.76 2,762.57
Cash in bank 229,571,987.60 484,951,950.50
Other cash and bank balances 18,145,590.87 34,728,698.65
Total 247,719,501.23 519,683,411.72
(2) Other remarks
Other cash and bank balances include deposit for acceptance of 12,415,452.22 yuan and deposit
for L/G of 5,730,138.65 yuan, which are with use restrictions.
2. Notes receivable
(1) Details
Closing balance Opening balance
Items
Book balance Provision for Carrying Book balance Provision for Carrying
bad debts amount bad debts amount
Bank 32,937,444.29 32,937,444.29 34,605,985.99 34,605,985.99
acceptance
Trade 9,778,735.20 9,778,735.20 25,142,736.92 25,142,736.92
acceptance
Total 42,716,179.49 42,716,179.49 59,748,722.91 59,748,722.91
(2) Endorsed or discounted but undue notes at the balance sheet date
Items Closing balance derecognized Closing balance not yet
derecognized
Bank acceptance 548,402,335.67
Trade acceptance 7,664,511.09
Subtotal 556,066,846.76
Due to the fact that the acceptor of bank acceptance is commercial bank, which is of high credit
level, there is very little possibility of failure in recoverability when it is due. Based on this fact,
the Company derecognized the endorsed or discounted bank acceptance. However, if any bank
acceptance is not recoverable when it is due, the Company still holds joint liability on such
acceptance, according to the China Commercial Instrument Law.
In the current period, trade acceptance is endorsed for goods payment. As it relates to many
endorsements and the drawer is 中 国 电 信 股 份 有 限 公 司 (China Telecommunications
Corporation*), it is with low default risk and thus derecognized.
*
The English name is for identification purpose only.
Page35
3. Accounts receivable
(1) Details
1) Details on categories
Closing balance
Categories Book balance Provision for bad debts
Carrying amount
Amount Amount Provision
% to total
proportion (%)
Receivables of individually
significant amount and with
provision made on an
individual basis
Receivables with provision
made on a collective basis 849,786,549.44 98.89 28,175,431.55 3.32 821,611,117.89
using portfolios with similar
credit risk features
Portfolio 1
Portfolio 2 849,786,549.44 98.89 28,175,431.55 100.00 821,611,117.89
Receivable of individually
insignificant amount but 9,512,416.41 1.11 9,512,416.41
with provision made on an
individual basis
Total 859,298,965.85 100.00 37,687,847.96 4.39 821,611,117.89
(Continued)
Opening balance
Categories Book balance Provision for bad debts
Carrying amount
Amount Amount Provision
% to total
proportion (%)
Receivables of individually
significant amount and with
provision made on an
individual basis
Receivables with provision
made on a collective basis 788,271,210.47 98.81 27,018,800.11 3.43 761,252,410.36
using portfolios with similar
credit risk features
Portfolio 1
Portfolio 2 788,271,210.47 98.81 27,018,800.11 3.43 761,252,410.36
Receivable of individually
insignificant amount but 9,464,819.50 1.19 9,464,819.50 100.00
with provision made on an
individual basis
Total 797,736,029.97 100.00 36,483,619.61 4.57 761,252,410.36
2) In portfolios, accounts receivable with provision made on a collective basis with age analysis
method
Closing balance
Ages
Book balance Provision for bad debts Provision proportion (%)
Within 1 year 595,066,349.35
1-2 years 163,495,361.06
2-3 years 53,235,404.57 5,323,540.47 10
Page36
Closing balance
Ages
Book balance Provision for bad debts Provision proportion (%)
3-4 years 12,880,903.08 3,864,270.92 30
4-5 years 6,030,567.74 2,412,227.09 40
5-6 years 12,512,852.85 10,010,282.28 80
Over 6 years 6,565,110.79 6,565,110.79 100
Subtotal 849,786,549.44 28,175,431.55 3.32
(2) Provisions made, collected or reversed in current period
Provision for bad debts made in current period totaled 1,156,626.78 yuan, and provision increased
due to fluctuations in exchange totaled47,601.57 yuan.
(3) Details of the top 5 debtors with largest balances
Proportion to the
Debtors Book balance total balance of Provision for
accounts bad debts
receivable (%)
中国联合网络通信有限公司河南省分公司
(China United Network Communications 28,062,903.95 3.27
GroupCo., Ltd., Henan Branch*)
中国电信股份有限公司江苏分公司 24,986,127.34 2.91 2,378.00
(Jiangsu branch of China telecom co. LTD )
江苏翰讯通讯科技有限公司
(Jiangsu hanxun communication technology 24,574,853.00 2.86
co. LTD *)
北京融通致远科技有限责任公司
(Beijing RongtongZhiyuan Science and 24,128,955.70 2.81
Technology Co., Ltd.*)
中国普天信息产业股份有限公司 23,908,728.37 2.78 940,358.59
(China Potevio Information Industry Inc.*)
Subtotal 125,661,568.36 14.63 942,736.59
4. Advances paid
(1) Age analysis
1) Details
Closing balance
Ages
Book balance % to total Provision for Carrying amount
bad debts
Within 1 year 575,275,839.34 96.71 575,275,839.34
1-2 years 9,957,263.53 1.67 9,957,263.53
2-3 years 3,236,254.69 0.54 3,236,254.69
Over 3 years 6,394,607.97 1.08 6,394,607.97
Total 594,863,965.53 100.00 594,863,965.53
(Continued)
*
The English names are for identification purpose only.
Page37
Opening balance
Ages
Book balance % to total Provision for Carrying amount
bad debts
Within 1 year 33,863,490.70 75.96 33,863,490.70
1-2 years 3,798,788.14 8.52 3,798,788.14
2-3 years 1,394,603.89 3.13 1,394,603.89
Over 3 years 5,521,299.32 12.39 5,521,299.32
Total 44,578,182.05 100.00 44,578,182.05
2) Reasons for unsettlement on advances paid with age over one year and significant amount
Debtors Closing balance Reasons for unsettlement
江苏纽盾科技有限公司 1,012,631.85 The contract hasn’t been
(Jiangsu newshield technology co. LTD *) fulfilled
连云港康普特科技有限公司 1,058,596.77 The contract hasn’t been
(Lianyungang conte technology co. LTD) fulfilled
南京锐熠科技有限公司 1,879,088.03 The contract hasn’t been
(Nanjing Ruiyi Technology Co., Ltd.*) fulfilled
Subtotal 3,950,316.65
(2) Details of the top 5 debtors with largest balances
Debtors Book balance Proportion to the total
balance of advances paid (%)
上海星地通通信科技有限公司
(Shanghai xingdiong communication 270,707,000.00 45.51
technology co. LTD)
江苏舜天国际集团机械进出口有限公司
(Jiangsu shuntian international group 243,317,400.00 40.90
machinery import and export co. LTD)
南京衡尔辉网络科技有限公司
(Nanjing hengerhui network technology co. 21,839,401.00 3.67
LTD)
上海瀛联信息科技股份有限公司
(Shanghai yinglian information technology 2,797,600.00 0.47
co. LTD)
南京普天天纪线缆有限公司 2,136,947.88 0.36
(Nanjing Poteviotianji cable co. LTD)
Subtotal 540,798,348.88 90.91
5. Other receivables
(1) Details
1) Details on categories
Closing balance
Categories Book balance Provision for bad debts
Carrying amount
Amount % to total Amount Provision
proportion (%)
Receivables of individually 28,912,122.71 45.25 28,912,122.71 100.00
significant amount and with
Page38
Closing balance
Categories Book balance Provision for bad debts
Carrying amount
Amount % to total Amount Provision
proportion (%)
provision made on an
individual basis
Receivables with provision
made on a collective basis 34,982,394.78 54.75 4,972,852.02 14.22 30,009,542.76
using portfolios with similar
credit risk features
Including: Portfolio 1
Portfolio 2 34,982,394.78 54.75 4,972,852.02 14.22 30,009,542.76
Receivable of individually
insignificant amount but
with provision made on an
individual basis
Total 63,894,517.49 100.00 33,884,974.73 53.03 30,009,542.76
(Continued)
Opening balance
Categories Book balance Provision for bad debts
Carrying amount
Amount Amount Provision
% to total
proportion (%)
Receivables of individually
significant amount and with 28,912,122.71 45.14 28,912,122.71 100
provision made on an
individual basis
Receivables with provision
made on a collective basis 35,141,893.68 54.86 4,727,754.74 13.45 30,414,138.94
using portfolios with similar
credit risk features
Including: Portfolio 1
Portfolio 2 35,141,893.68 54.86 4,727,754.74 13.45 30,414,138.94
Receivable of individually
insignificant amount but
with provision made on an
individual basis
Total 64,054,016.39 100.00 33,639,877.45 52.52 30,414,138.94
2) Other receivables of individually significant amount and with provision made on an individual
basis
Debtors Book balance Provision for Provision Reasons for
bad debts proportion (%) provision made
北京立康普通信设备有限公司 With long age
(Beijing Likangpu Communications 28,912,122.71 28,912,122.71 100.00 and is hard to
EquipmentCo., Ltd.*) recover
Subtotal 28,912,122.71 28,912,122.71 100.00
3) In portfolios, other receivables with provision made on a collective basis with age analysis
method
*
The English name is for identification purpose only.
Page39
Closing balance
Ages
Book balance Provision for bad debts Provision proportion (%)
Within 1 year 17,836,218.42
1-2 years 8,189,618.07
2-3 years 2,751,404.23 275,140.43 10
3-4 years 1,284,597.74 385,379.32 30
4-5 years 594,304.27 237,721.71 40
5-6 years 1,268,207.46 1,016,565.97 80
Over 6 years 3,058,044.59 3,058,044.59 100
Subtotal 34,982,394.78 4,972,852.02 13.45
(2) Provisions made, collected or reversed in current period
Provision for bad debts made in current period totaled 243,672.86 yuan, and provision increased
due to fluctuations in exchange totaled 1,424.42 yuan.
(3) Other receivables categorized by nature
Nature of receivables Closing balance Opening balance
Petty cash for business traveling 2,481,270.63 1,272,004.43
Deposits 21,782,061.57 24,954,466.74
Temporary advance payment receivable 35,806,306.05 36,515,776.06
Others 3,824,879.24 1,311,769.16
Total 63,894,517.49 64,054,016.39
(4) Details of the top 5 debtors with largest balances
Proportion to the
Debtors Nature of Book balance Ages total balance of Provision for
receivables other receivables bad debts
(%)
Beijing Likangpu Temporary
Communications advance payment 28,912,122.71 Over 6 years 28,912,122.71
Equipment Co., Ltd. receivable
中招国际招标有限公司
(China recruitment 2,450,000.00 Within 1 year
Deposits
international tendering
co. LTD)
China Potevio 2,170,000.00 1-3 years 3,750.00
Deposits
Information Industry Inc.
公诚管理咨询有限公
司(Gongcheng Deposits 1,252,700.00 1-3 years 2,920.00
management consulting
co. LTD)
Temporary
河南中广信息管网 advance
(Henan province wide 1,000,000.00 Over 6 years 1,000,000.00
information network) payment
receivable
Subtotal 35,784,822.71 29,918,792.71
Page40
6. Inventories
(1) Details
Closing balance Opening balance
Items
Book balance Provision for Carrying amount Book balance Provision for Carrying amount
write-down write-down
Raw materials 51,384,702.56 1,183,252.44 50,201,450.12 37,701,729.36 1,123,498.35 36,578,231.01
Work in process 91,181,361.21 91,181,361.21 16,703,581.54 16,703,581.54
Goods on hand 299,729,442.17 9,229,927.51 290,499,514.66 483,885,909.72 9,235,832.80 474,650,076.92
Total 442,295,505.94 10,413,179.95 431,882,325.99 538,291,220.62 10,359,331.15 527,931,889.47
(2) Provision for inventory write-down
1) Details
Increase Decrease
Items Opening balance Closing balance
Provision Others Reversal or Others
written-off
Raw materials 1,123,498.35 57,393.76 1,183,252.44
Goods on hand 9,235,832.80 10,921.32 14,466.28 9,229,927.51
Subtotal 10,359,331.15 68,315.08 14,466.28 10,413,179.95
2) Determination basis of net realizable value and reasons for the reversal or written-off of
provision for inventory write-down
Please refer to XII for determination basis of net realizable value. Reversal of provision for
inventory write-down is due to the sale of raw materials in the current period, which is with
provision for inventory write-down made in prior period totaling 1,713,418.79 yuan.
7. Other current assets
Items Closing balance Opening balance
Input VAT to be credited 10,613,416.93 6,842,370.71
Total 10,613,416.93 6,842,370.71
8. Available-for-sale financial assets
(1) Details
Closing balance Opening balance
Items
Book balance Provision for Carrying Book balance Provision for Carrying
impairment amount impairment amount
Available-for-sale
equity instrument
Including: at cost 2,596,863.00 1,854,910.00 741,953.00 2,596,863.00 1,854,910.00 741,953.00
Total 2,596,863.00 1,854,910.00 741,953.00 2,596,863.00 1,854,910.00 741,953.00
(2) Available-for-sale financial assets at cost
Book balance
Investees
Opening Increase Decrease Closing
balance balance
南京雨花电镀厂 420,915.00 420,915.00
Page41
(Nanjing
YuhuaElectroplatingFactory*)
杭州鸿雁电器有限公司
(Hangzhou Honyar Electrical Co., 321,038.00 321,038.00
Ltd.*)
Beijing Likangpu Communications 1,854,910.00 1,854,910.00
Equipment Co., Ltd. [Note]
Subtotal 2,596,863.00 2,596,863.00
(Continue)
Provision for impairment Holding Cash dividend
Investees proportion in in current
Opening Increase Decrease Closing
balance balance investees (%) period
Nanjing Yuhua 10.00
Electroplating Factory
Hangzhou Honyar 2.26
Electrical Co., Ltd.
Beijing Likangpu
Communications 1,854,910.00 1,854,910.00 51.00
Equipment Co., Ltd.
Subtotal 1,854,910.00 1,854,910.00
Note:Up to the end of 2007, Beijing Likangpu Communications Equipment Co., Ltd. was
significantly insolvent and was shut down with no operations since 2008. In October 2007, Beijing
Administration for Industry and Commerce issued the decision on treatment of cancellation of
license and required it to carry out liquidation under laws and regulations. Pursuant to “CASBE 33
- Consolidated Financial Statements”, Beijing Likangpu Communications Equipment Co., Ltd.
shall no longer be brought into consolidation scope since 2008 and such event has been reported to
China Potevio Information Industry Inc. and State-owned Assets Supervision and Administration
Commission of the State Council.
9. Long-term equity investments
(1) Categories
Closing balance Opening balance
Items
Book balance Provision for Carrying Book balance Provision for Carrying
impairment amount impairment amount
Investments in 172,876,762.07 172,876,762.07 173,270,977.42 173,270,977.42
associates
Investments in 13,588,002.44 13,588,002.44 13,811,880.14 13,811,880.14
joint ventures
Total 186,464,764.51 186,464,764.51 187,082,857.56 187,082,857.56
(2) Details
Increase/decrease
Investees Opening balance Investment income Adjustment in other
Investments Investments
recognized under comprehensive
increased decreased
equity method income
Joint ventures
南京普住光网络有限公司 13,811,880.14 -223,877.70
*
The English names are for identification purpose only.
Page42
Increase/decrease
Investees Opening balance Investment income Adjustment in other
Investments Investments
recognized under comprehensive
increased decreased
equity method income
(SEI-Nanjing Potevio Optical
Network Co.,Ltd.*)
Subtotal 13,811,880.14 -223,877.70
Associates
南京普天天纪线缆有限公司
(Nanjing PotevioTelege Cable Co., 3,061,006.22 37,128.66
Ltd.*)
普天高新科技产业有限公司 170,209,971.20 -431,344.01
(Potevio Hi-tech Industry Co., Ltd.*)
Subtotal 173,270,977.42 -394,215.35
Total 187,082,857.56 -618,093.05
(Continued)
Increase/decrease
Closing
Investees Cash Closing balance balance of
Changes in dividend/profit Provision for Others provision for
other equity declared for impairment impairment
distribution
Joint ventures
SEI-Nanjing Potevio 13,588,002.44
Optical Network Co., Ltd.
Subtotal 13,588,002.44
Associates
Nanjing PotevioTelege 3,098,134.88
Cable Co., Ltd.
Potevio Hi-tech Industry 169,778,627.19
Co., Ltd.
Subtotal 172,876,762.07
Total 186,464,764.51
10. Investment property
Items Buildings and Land use right Total
structures
Cost
Opening balance 23,851,020.30 3,642,147.87 27,493,168.17
Increase
Decrease
1) Transferred into fixed
assets
Closing balance 23,851,020.30 3,642,147.87 27,493,168.17
Accumulated depreciation and
amortization
Opening balance 10,472,505.23 1,644,613.23 12,117,118.46
Increase 305,592.90 59,980.32 365,573.22
*
The English names are for identification purpose only.
Page43
Items Buildings and Land use right Total
structures
1) Accrual or amortization 305,592.90 59,980.32 365,573.22
Decrease
1) Transferred into fixed
assets
Closing balance 10,778,098.13 1,704,593.55 12,482,691.68
Provision for impairment
Opening balance 1,842,418.00 1,842,418.00
Increase
Decrease
Closing balance 1,842,418.00 1,842,418.00
Carrying amount
Closing balance 11,230,504.17 1,937,554.32 13,168,058.49
Opening balance 11,536,097.07 1,997,534.64 13,533,631.71
11. Fixed assets
(1) Details
Items Buildings and Machinery Transport Electronic Office Others Total
structures equipment facilities equipment facilities
Cost
Opening balance 154,375,202.08 80,943,809.67 13,896,907.27 6,459,832.24 10,973,405.02 40,023,337.49 306,672,493.77
Increase 2,635,226.35 3,076.92 87,179.43 179,238.89 1,209,000.76 4,113,722.35
1) Acquisition 2,635,226.35 3,076.92 87,179.43 179,238.89 1,209,000.76 4,113,722.35
2) Transferred in
from construction
in progress
3) Transferred in
from investment
property
Decrease 21,664,349.55 806,967.00 310,977.51 644,485.40 23,426,779.46
1) Disposal/scrap 21,664,349.55 806,967.00 310,977.51 644,485.40 23,426,779.46
Closing balance 154,375,202.08 61,914,686.47 13,093,017.19 6,547,011.67 10,841,666.40 40,587,852.85 287,359,436.66
Accumulated
depreciation
Opening balance 47,989,288.43 70,908,465.92 12,222,463.90 5,443,494.82 9,611,473.27 33,856,816.63 180,032,002.97
Increase 2,553,841.04 1,020,158.76 332,805.09 149,465.91 312,244.33 810,587.87 5,179,103.00
1) Accrual 2,553,841.04 1,020,158.76 332,805.09 149,465.91 312,244.33 810,587.87 5,179,103.00
2) Transferred in
from investment
property
Decrease 19,624,532.59 782,757.99 280,187.44 622,788.49 21,310,266.51
1) Disposal/scrap 19,624,532.59 782,757.99 280,187.44 622,788.49 21,310,266.51
Closing balance 50,543,129.47 52,304,092.09 11,772,511.00 5,592,960.73 9,643,530.16 34,044,616.01 163,900,839.46
Provision for
impairment
Opening balance 539,124.00 572,777.78 847,107.16 92,064.43 307,895.29 2,358,968.66
Page44
Items Buildings and Machinery Transport Electronic Office Others Total
structures equipment facilities equipment facilities
Increase
Decrease 561,914.76 847,107.16 1,409,021.92
Closing balance 539,124.00 10,863.02 92,064.43 307,895.29 949,946.74
Carrying amount
Closing balance 103,292,948.61 9,599,731.36 1,320,506.19 954,050.94 1,106,071.81 6,235,341.55 122,508,650.46
Opening balance 105,846,789.65 9,462,565.97 1,674,443.37 169,230.26 1,269,867.32 5,858,625.57 124,281,522.14
(2) Fixed assets temporarily idle
Items Cost Accumulated Provision for Carrying Note
depreciation impairment amount
Machinery 498,800.00 474,134.65 11,048.35 13,617.00
equipment
Other equipment 601,241.55 286,357.39 296,846.94 18,037.22
Subtotal 1,100,041.55 760,492.04 307,895.29 31,654.22
(3) Fixed assets with certificate of titles being unsettled
Items Carrying amount Reasons for unsettlement
Houses forproduction 8,084,003.14 Not applicable for allocated land
Structures 718,609.43 Not applicable for allocated land
Houses not forproduction 1,172,271.33 Not applicable for allocated land
Subtotal 9,974,883.90
12. Construction in progress
(1) Details
Closing balance Opening balance
Projects Book
Book Provision for Carrying Provision for Carrying
balance impairment amount balance impairment amount
Yuhua Scientific
Innovation Industry 111,073.78 111,073.78
Park
Phase ii factory 60,400.00 60,400.00
Total 171,473.78 171,473.78
13. Intangible assets
Items Software Land use right Patent right Non-patent Total
technology
Cost
Opening balance 10,006,573.23 29,924,994.74 607,500.00 4,560,000.00 45,099,067.97
Increase 199,506.42 199,506.42
1) Acquisition 199,506.42 199,506.42
Decrease
Closing balance 10,206,079.65 29,924,994.74 607,500.00 4,560,000.00 45,298,574.39
Page45
Items Software Land use right Patent right Non-patent Total
technology
Accumulated
amortization
Opening balance 8,439,630.51 5,328,359.52 607,500.00 4,560,000.00 18,935,490.03
Increase 200,707.92 340,933.67 541,641.59
1) Accrual 200,707.92 340,933.67 541,641.59
Decrease
Closing balance 8,640,338.43 5,669,293.19 607,500.00 4,560,000.00 19,477,131.62
Carrying amount
Closing balance 1,565,741.22 24,255,701.55 25,821,442.77
Opening balance 1,566,942.72 24,596,635.22 26,163,577.94
14. Long-term prepayments
Items Opening balance Increase Amortization Other decreases Closing balance
Reconstruction of 576,972.01 36,828.02 540,143.99
canteen
Reconstruction 1,634,036.45 696,352.95 231,036.78 371,220.13 1,728,132.49
ofoffice building
Others 53,490.57 30,110.07 23,380.50
Total 2,264,499.03 696,352.95 297,974.87 371,220.13 2,291,656.98
15. Short-term borrowings
Items Closing balance Opening balance
Mortgaged borrowings 84,350,000.00 64,500,000.00
Secured borrowings 120,000,000.00 245,000,000.00
Pledged borrowings 164,000,000.00 164,000,000.00
Total 368,350,000.00 473,500,000.00
In the current period, the Company entrusted the parent company to apply for loans from Bank of
Beijing, Jiangning Sub-branch, which is the pledged borrowings amounting to 164,000,000.00
yuan. The Company pledged its holding equities to the parent company, which include equity of
Nanjing PotevioTelege Intelligent Building Ltd. amounting to 4.80 million yuan, equity ofNanjing
PotevioChangle Telecommunications Equipment Co., Ltd.amounting to 5.07 million yuan, equity
of 南京普天王之电子有限公司(Nanjing PotevioWangzhiElectronic Co., Ltd. * )amounting to
60.4273 million yuan, equity ofNanjing Potevio NetworkCo., Ltd.amounting to 7.80 million
yuanand equity ofNanjing South Telecommunications Company Limitedamounting to 33.17
million yuan. The Company has registeredthe equity pledge at Nanjing Jiangning Market
Supervision Administration.
*
The English names are for identification purpose only.
Page46
16. Notes payable
Items Closing balance Opening balance
Trade acceptance 25,315,996.58 41,071,160.95
Bank acceptance 2,000,000.00 42,000,000.00
Total 27,315,996.58 83,071,160.95
17. Accounts payable
(1) Details
Items Closing balance Opening balance
Purchase of materials 997,474,557.49 892,652,102.47
Project payment 4,359,929.16
Total 997,474,557.49 897,012,031.63
(2) Significant accounts payable with age over one year
Items Closing balance Reasons for unsettlement
江苏舜天国际集团机械进出口股份有限
公司(Jiangsu shuntian international group 38,949,989.78 Settlement is not completed
machinery import and export co. LTD)
China Potevio Information Industry Inc. 23,856,875.10 Settlement is not completed
POLYCOM 通讯技术（北京）有限公司
(POLYCOM communication technology 17,737,438.13 Settlement is not completed
(Beijing) co. LTD *)
北京荣基创建科技有限公司(Beijing 4,917,823.33 Settlement is not completed
rongji founded technology co. LTD)
江苏有线邦联新媒体科技有限公司
（Jiangsu cable confederation new 4,155,485.88 Settlement is not completed
media technology co. LTD）
北京直真信通科技有限公司（Beijing 2,978,532.96 Settlement is not completed
direct faith technology co. LTD）
杭州舜格信息科技有限公司
（Hangzhou shunge information 2,469,935.67 Settlement is not completed
technology co. LTD）
南京涌新电器配套有限公司（Nanjing
chung new electric appliance co. 2,430,786.78 Settlement is not completed
LTD）
北京诺信泰克信息技术有限公司
（Beijing noxintek information 2,079,148.49 Settlement is not completed
technology co. LTD）
浙江大丰实业股份有限公司（Zhejiang 1,669,808.99 Settlement is not completed
dafeng industrial co. LTD）
北电网络通信设备（上海）有限公司
(Nortel Network Communications 1,307,941.99 Settlement is not completed
Equipment (Shanghai) Co., Ltd.*)
上海贝尔阿尔卡特业务通信系统有限公
司(Shanghai Bell Alcatel Business 1,240,837.17 Settlement is not completed
Communications System Co., Ltd. *)
北京诺信恒通科技有限公司
(Beijing noxinhengtong technology co. 1,182,587.59 Settlement is not completed
LTD)
Page47
Items Closing balance Reasons for unsettlement
陕西畅想数码有限公司 1,080,000.00 Settlement is not completed
*
(Shaanxi Think About Digital Co., Ltd. )
Subtotal 106,057,191.86
18. Advances received
(1) Details
Items Closing balance Opening balance
Payment for goods 607,032,186.23 310,313,462.24
Total 607,032,186.23 310,313,462.24
(2) Significant advances received with age over one year
Items Closing balance Reasons for unsettlement
China Potevio Information 5,108,024.00 The contract hasn’t been
Industry Inc. fulfilled
Beijing rail transit construction 3,378,602.78 The contract hasn’t been
management co. LTD fulfilled
Yancheng national property co. 1,370,340.19 The contract hasn’t been
LTD fulfilled
Subtotal 9,856,966.97
19. Employee benefits payable
(1) Details
Items Opening balance Increase Decrease Closing balance
Short-term employee 17,476,239.20 121,324,652.99 120,255,772.12 18,545,120.07
benefits
Post-employment benefits 12,760,407.77 12,760,407.77
- defined benefit plan
Termination benefits 1,869,372.24 1,869,372.24
Total 17,476,239.20 135,954,433.00 134,885,552.13 18,545,120.07
*
The English names are for identification purpose only.
Page48
(2) Details of short-termemployee benefits
Items Opening balance Increase Decrease Closing balance
Wage, bonus, allowance 11,158,534.74 91,552,398.07 92,035,313.19 10,675,619.62
and subsidy
Employee welfare fund 5,690,173.83 5,337,303.39 352,870.44
Social insurance 8,456,550.41 8,456,550.41
premium
Including: Medicare 7,659,884.47 7,659,884.47
premium
Occupational injuries 370,697.41 370,697.41
premium
Maternity premium 425,968.53 425,968.53
Housing provident fund 104,705.95 5,196,026.85 5,218,725.25 82,007.55
Trade union fund and 6,212,998.51 1,970,373.52 748,749.57 7,434,622.46
employee education fund
Others 8,459,130.31 8,459,130.31
Subtotal 17,476,239.20 121,324,652.99 120,255,772.12 18,545,120.07
(3) Details of defined benefit plan
Items Opening balance Increase Decrease Closing balance
Basic endowment 11,478,461.86 11,478,461.86
insurance premium
Unemployment 213,034.90 213,034.90
insurance premium
Company annuity 1,068,911.01 1,068,911.01
payment
Subtotal 12,760,407.77 12,760,407.77
20. Taxes and rates payable
Items Closing balance Opening balance
VAT 7,738,713.19 15,299,432.99
Business tax 8,482.01 8,482.01
Enterprise income tax 4,430,984.80 6,093,895.51
Urban maintenance and 397,530.22 1,246,859.03
construction tax
Housing property tax 242,708.04 351,524.46
Land use tax 81,754.16 81,754.17
Individual income tax 231,203.95 431,795.45
Education surcharge 182,232.39 652,216.95
Local education surcharge 98,738.59 250,076.33
Other taxes 8,880.40 75,029.31
Total 13,421,227.75 24,491,066.21
Page49
21. Interest payable
Items Closing balance Opening balance
Short-term borrowings interest 709,377.30 732,412.79
Total 709,377.30 732,412.79
22. Dividend payable
(1) Details
Items Closing balance Opening balance
Dividend of ordinary shares 1,692,213.38 1,692,213.38
Total 1,692,213.38 1,692,213.38
(2) Significant dividend payable with age over one year
Items Closing balance Opening balance Reasons for
being unpaid
宁波峰诗恩塑胶有限公司 253,832.01 253,832.01 Temporarily
(Ningbo Fengshien Plastic Co., Ltd.*) unable to pay
余姚市国昌电器公司 423,053.34 423,053.34 Temporarily
(YuyaoGuochang Electric Co., Ltd.*) unable to pay
Nanjing YongxinElectric ApplianceCo., 253,832.01 253,832.01 Temporarily
Ltd. unable to pay
靖江市华胜通信器材有限公司
84,610.67 84,610.67 Temporarily
(JingjiangHuashengCommunications
unable to pay
Equipment Co., Ltd.*)
江都市亚特电力通讯塑料制品有限公司
(Jiangdu City Yate Power 423,053.34 423,053.34 Temporarily
Telecommunication Plastic Product Co., unable to pay
Ltd.*)
镇江市盛唐光电器件有限公司
253,832.01 253,832.01 Temporarily
(ZhenjiangShengtangPhotoelectrictyEqui unable to pay
pment Co., Ltd.*)
Subtotal 1,692,213.38 1,692,213.38
23. Other payables
Items Closing balance Opening balance
Deposits 8,677,245.80 8,777,499.29
Temporary receipts payable 14,790,892.85 11,695,101.46
Unsettled installation cost 14,282,107.52 16,022,313.31
Operating expenses 2,050,332.65 2,575,999.04
Others 3,985,667.09 3,143,909.19
Total 43,786,245.91 42,214,822.29
*
The English names are for identification purpose only.
Page50
24. Deferred income
(1) Details
Items Opening Increase Decrease Closing Reasons for
balance balance balance
Government 1,599,211.58 9,097,456.00 2,105,808.84 8,590,858.74
grants
Total 1,599,211.58 9,097,456.00 2,105,808.84 8,590,858.74
(2) Details of government grants
Included in
Items Opening Increase non-operating Other Related to
Closing balance
balance revenue in movements assets/income
current period
Subsidy forhigh-end
talent project from
Science and 1,599,211.58 443,149.84 1,156,061.74 Related to
Technology Bureau income
of Qinhuai District,
Nanjing
Subsidy for disposal 9,097,456.00 1,662,659.00 7,434,797.00 Related to
of zombie company income
Subtotal 1,599,211.58 9,097,456.00 2,105,808.84 8,590,858.74
(3) Other remarks
The new government subsidy of 9,097,456.00 yuan for the subsidiary of nanjingbada
communications equipment co., LTD. is a subsidiary of the central enterprise for the disposal of
zombie company, which will be used to pay for the relocation of employees. The enterprise shall
transfer the government subsidy from the deferred revenue to the non-operating income according
to the actual personnel settlement of the period.
25. Share capital
Movements
Items Opening balance Reserve Closing balance
Issue of Bonus Others Subtotal
transferred to
new shares shares
shares
Total shares 215,000,000.00 215,000,000.00
26. Capital reserve
Items Opening balance Increase Decrease Closing balance
Share/capital premium 139,592,332.04 139,592,332.04
Other capital reserve 45,782,201.81 45,782,201.81
Total 185,374,533.85 185,374,533.85
Page51
27. Other comprehensive income (OCI)
Current period cumulative
Current period Less: OCI
Items Opening balance Less: Attributable to Attributable to Closing balance
cumulative carried forward
income parent non-controlling
before income transferred to
tax company interest
tax profit or loss
Items not to be reclassified
subsequently to profit or loss
Items to be reclassified -4,634,605.50 -164,503.71 -148,053.34 -16,450.37 -4,782,658.84
subsequently to profit or loss
Including: Translation -4,634,605.50 -164,503.71 -148,053.34 -16,450.37 -4,782,658.84
reserve
Total -4,634,605.50 -164,503.71 -148,053.34 -16,450.37 -4,782,658.84
28. Surplus reserve
Items Opening balance Increase Decrease Closing balance
Statutory surplus reserve 589,559.77 589,559.77
Total 589,559.77 589,559.77
29. Undistributed profit
(1) Details
Items Current period Preceding period
cumulative comparative
Balance before adjustment at the end of -56,491,072.91 -50,056,514.64
preceding period
Add: Increase due to adjustment (or less:
decrease)
Opening balance after adjustment -56,491,072.91 -50,056,514.64
Add: Net profit attributable to owners of the -13,246,723.63 -6,434,558.27
parent company
Closing balance -69,737,796.54 -56,491,072.91
(II) Notes to items of the consolidated income statement
1. Operating revenue/Operating cost
Current period cumulative Preceding period comparative
Items
Income Cost Income Cost
Revenue from main 988,549,333.34 835,871,803.11 799,290,563.30 654,441,609.66
operations
Revenue from other 23,847,074.05 18,724,687.07 35,448,660.17 31,732,039.36
operations
Total 1,012,396,407.39 854,596,490.18 834,739,223.47 686,173,649.02
2. Taxes and surcharge for operations
Items Current period cumulative Preceding period comparative
Business tax 70,020.78 245,668.85
Page52
Items Current period cumulative Preceding period comparative
Education surcharge 1,333,649.74 1,735,641.31
Urban maintenance and 1,887,542.83 2,405,871.95
construction tax
Housing property tax [Note] 743,011.81
Land use tax [Note] 307,838.40
Stamp duty[Note] 304,729.73
Vehicle and vessel use tax 360.00
[Note]
Others 80,289.32 551.18
Total 4,727,442.61 4,387,733.29
Note: Pursuant to Provisions on Accounting Treatment of Value-Added Tax (numbered CaiKuai
[2016] 22) and Interpretation about Provisions on Accounting Treatment of Value-Added Tax that
issued by Ministry of Finance, amounts of housing property tax, vehicle and vessel use tax, land
use tax and stamp duty for the period from May to December are listed in “taxes and surcharge for
operations”, while those for the period prior to May 2016 are listed in “administrative expenses”.
3. Selling expenses
Items Current period cumulative Preceding period comparative
Employee benefits 40,410,988.01 35,332,445.32
Business entertainment 12,506,326.83 11,552,284.70
Travelling expenses 8,527,473.91 8,326,482.17
Transport fees and transport 6,244,626.75 11,088,298.50
damages
Office expenses 2,418,013.33 5,423,780.26
Conference expenses 766,886.71 1,292,444.62
Sales service charges 1,324,029.54 1,235,935.02
Promotion expenses 624,200.69 951,066.49
Equipment maintain fees 433,299.53 496,036.48
Others 6,075,264.84 4,775,944.92
Total 79,331,110.14 80,474,718.48
4. Administrative expenses
Items Current period cumulative Preceding period comparative
Employee benefits 26,652,034.10 19,328,181.10
Technology development fees 33,592,736.42 32,935,519.58
Lease expenses 251,056.88 3,763,281.11
Depreciation and amortization 2,921,316.55 1,887,533.90
Office expenses 1,788,657.50 2,730,509.81
Page53
Items Current period cumulative Preceding period comparative
Travelling expense 777,036.64 696,820.56
Business entertainment 1,589,428.71 1,151,560.97
Consulting, intermediary and 1,174,061.81 2,259,364.57
ligation fees
Taxes 1,117,969.85
Others 4,213,837.11 3,642,370.65
Total 72,960,165.72 69,513,112.10
Notes: Details are attached to tax and additional notes in this financial statement.
5. Financial expenses
Items Current period cumulative Preceding period comparative
Interest expenditures 9,671,043.19 12,437,759.85
Less: Interest income 1,235,408.10 1,393,645.72
Losses on foreign exchange 101,222.11 99,659.27
Less: Gains from foreign 21,259.35 68,383.33
exchange
Handling charges 185,990.97 172,552.89
Total 8,701,588.82 11,247,942.96
6. Assets impairment loss
Items Current period cumulative Preceding period comparative
Bad debts 1,400,299.64 1,619,726.63
Inventory write-down 68,315.08
Total 1,468,614.72 1,619,726.63
7. Investment income
Items Current period cumulative Preceding period comparative
Investment income from
long-term equity investments -618,093.05 917,844.11
under equity method
Total -618,093.05 917,844.11
8. Other income
Items Current period cumulative Preceding period comparative
The software product VAT tax 2,784,809.60
returns
Total 2,784,809.60
9. Non-operating revenue
Page54
Amount included in
Items Current period Preceding period
non-recurring profit
cumulative comparative
or loss
Gains on disposal of 29,788.25 30,429.96 29,788.25
non-current assets
Including: Gains on disposal 29,788.25 30,429.96 29,788.25
of fixed assets
Government grants 2,368,873.77 3,531,664.76 2,368,873.77
Gains ondebt restructuring 301,606.55 301,606.55
Others 69,330.61 302,562.55 69,330.61
Total 2,769,599.18 3,864,657.27 2,769,599.18
(2) Government grants
Items Current period Preceding period Related to assets/income
cumulative comparative
Refund of VAT 2,320,477.29 Related to income
Subsidy income 213,064.93 205,619.65 Related to income
Subsidy for Nanjing
municipal high-end talent 443,149.84 1,001,167.82 Related to income
project
Subsidy for disposal of Related to income
1,662,659.00 2,400.00
zombie company
Jiangning district finance
bureau intellectual property 2,000.00 Related to income
award
Subsidies for high-tech 50,000.00 Related to income
enterprises
Subtotal 2,368,873.77 3,531,664.76
10. Non-operating expenditures
Items Current period Preceding period Amount included in
cumulative comparative non-recurring profit or loss
Losses on disposal of 693,153.07 16,712.60 693,153.07
non-current assets
Including: Losses on 693,153.07 16,712.60 693,153.07
disposal of fixed assets
Donation expenditures 2,000.00 10,000.00 2,000.00
Fines expenditures 1,725.22 25,051.31 1,725.22
Penalty 187,832.09 187,832.09
Others 44,965.91 29,639.65 44,965.91
Total 929,676.29 81,403.56 929,676.29
11. Income tax expenses
(1) Details
Items Current period cumulative Preceding period comparative
Current period income tax expenses 3,203,411.84 3,235,803.32
Page55
Items Current period cumulative Preceding period comparative
Deferred income tax expenses
Total 3,203,411.84 3,235,803.32
(2) Reconciliation of accounting profit to income tax expenses
Items Current period cumulative
Profit before tax -5,382,365.36
Income tax expenses based on statutory tax rate -1,345,591.34
applicable to the parent company
Effect of different tax rate applicable to subsidiaries -409,465.39
Effect of prior income tax reconciliation 192,009.22
Effect of non-taxable income -163,805.43
Effect of non-deductible costs, expenses and losses 1,628,506.99
Effect of deducible temporary differences or
deductible losses not recognized as deferred income -155,618.48
tax assets
Adjustment of valuation appreciation 5,733,731.90
Deduction of R&D expenditures 92,031.50
Income tax expenses -2,368,387.13
12. Other comprehensive income, net of income tax
Please refer to notes to items of the consolidated balance sheet - other comprehensive income for
details.
(III) Notes to items of the consolidated cash flow statement
1. Other cash receipts related to operating activities
Items Current period cumulative Preceding period comparative
Government grants 9,360,520.93 210,019.65
Interest income 1,235,408.10 1,393,645.72
Temporary receipts and recovery of 76,751,381.14 45,346,412.20
temporarypayment
Others 2,412,782.82 790,470.45
Total 89,760,092.99 47,740,548.02
2. Other cash payments related to operating activities
Items Current period cumulative Preceding period comparative
Temporary payment and repayment 63,705,426.62 54,374,593.08
of temporary receipts
Out of pocket expense 55,240,035.72 66,739,004.42
Others 234,907.27 146,935.30
Page56
Total 119,180,369.61 121,260,532.80
3. Payment of other cash related to investment activities
Items Current period cumulative Preceding period comparative
Fixed deposits 20,000,000.00
Total 20,000,000.00
4. Supplement information to the cash flow statement
(1) Supplement information to the cash flow statement
Supplement information Current period Preceding period
cumulative comparative
(1) Reconciliation of net profit to cash flow from
operating activities:
Net profit -8,585,777.20 -17,212,364.51
Add: Provision for assets impairment loss 1,468,614.72 1,725,216.33
Depreciation of fixed assets, oil and gas assets, 5,484,695.90 5,159,988.82
productive biological assets
Amortization of intangible assets 601,621.91 584,358.05
Amortization of long-term prepayments 297,974.87 287,667.67
Loss on disposal of fixed assets, intangible 632,574.75 -13,717.36
assets and other non-current assets (Less: gains)
Fixed assets retirement loss (Less: gains) 30,790.07
Losses on changes in fair value (Less: gains)
Financial expenses (Less: gains) 9,751,005.95 12,469,035.79
Investments losses (Less: gains) 618,093.05 -917,844.11
Decrease of deferred tax assets (Less: increase)
Increase of deferred tax liabilities (Less:
decrease)
Decrease in inventories (Less: increase) 95,981,248.40 6,897,520.30
Decrease in operating receivables (Less: -579,098,066.73 -153,899,907.08
increase)
Increase of operating payables (Less: decrease) 336,652,630.50 48,338,635.21
Others
Net cash flow from operating activities -136,164,593.81 -96,581,410.89
(2) Significant investing and financing activities not
related to cash receipts and payments:
Conversion of debt into share capital
Convertible bonds due within one year
Fixed assets rented in under finance leases
(3) Net changes in cash and cash equivalents:
Cash at the end of the period 209,573,910.36 246,409,391.52
Less: Cash at the beginning of the period 484,954,713.07 405,920,943.68
Page57
Supplement information Current period Preceding period
cumulative comparative
Add: Cash equivalents at the end of the period
Less: Cash equivalents at the beginning of the
period
Net increase of cash and cash equivalents -275,380,802.71 -159,511,552.16
(2) Cash and cash equivalents
Items Closing balance Opening balance
1) Cash 209,573,910.36 484,954,713.07
Including: Cash on hand 1,922.76 2,762.57
Cash in bank on demand for payment 209,571,987.6 484,951,950.50
Other cash and bank balances on demand
for payment
2) Cash equivalents
Including: Bond investments maturing within three
months
3) Cash and cash equivalents at the end of the period 209,573,910.36 484,954,713.07
Including: Cash and cash equivalents of parent
company or subsidiaries with use restrictions
(3) Remarks on supplement information to the cash flow statement
Cash and cash equivalents with use restrictions are deposit for acceptance and deposit for L/G, of
which closing balance amounts to 38,145,590.87yuan and opening balance amounts to
48,381,421.04 yuan.
(IV) Others
1. Assets with title or use right restrictions
Items Closing carrying amount Reasons for restrictions
Cash and bank balances 38,145,590.87 Deposit for acceptance and
deposit for L/G
Providing
Investment property 3,890,588.45 mortgagedguarantee for
borrowings
Providing
Fixed assets 59,766,012.14 mortgagedguarantee for
borrowings
Providing
Intangible assets 3,691,805.82 mortgagedguarantee for
borrowings
Total 105,493,997.28
Note: We draw the attention of users of financial statements that,apart from the above assets with
title or use right restrictions, in order to entrust the parent company to apply for loans from Bank
of Beijing, Jiangning Sub-branch, the Company pledged its holding equities to the parent company,
which include equity of Nanjing PotevioTelege Intelligent Building Ltd. amounting to 4.80
Page58
million yuan, equity ofNanjing PotevioChangle Telecommunications Equipment Co., Ltd.
amounting to 5.07 million yuan, equity of Nanjing PotevioWangzhi Electronic Co., Ltd.amounting
to 60.4273 million yuan, equity ofNanjing Potevio Network Co., Ltd. amounting to 7.8 million
yuan and equity ofNanjing South Telecommunications Company Limited amounting to 33.17
million yuan. The Company has registered the equity pledge at Nanjing Jiangning Market
Supervision Administration.Those equities are with use restrictions before released.
2. Monetary items in foreign currencies
Items Closing balance in Exchange rate RMB equivalent
foreign currencies
Cash and bank balances
Including: USD 1,152,674.27 6.7744 7,808,676.57
HKD 647,997.08 0.86792 562,409.63
EUR 1,654.30 7.7496 12,820.16
GBP 208.79 8.81441 1,840.36
Accounts payable
Including: HKD 1,834,742.89 0.86792 1,592,410.05
3. Government grants
1)Related to income, and used to compensate for costs or losses incurred during the company's
future
current
Opening Closing
Current carrying
balance Current balance Notes
Items carrying forward
Deferred subsidy Deferred
forward Presentation
income income
project
Special funds
for the
Non-operati
introduction 443,149.84 1,156,061.74
1,599,211.58
of high-end ng income
talent team in
nanjing
Subsidy for
Non-operati
disposal of
9,097,456.00 1,662,659.00 7,434,797.00
zombie ng income
company
Total 1,599,211.58 9,097,456.00 2,105,808.84 8,590,858.74
2)Related to income, andused tocompensate for the costs or losses incurred by the company
Items Amount Presentation project Notes
VAT tax return on software products 2,784,809.60 Other income
Subsidies income 213,064.93 Non-operating income
Subsidies for high-tech enterprises 50,000.00 Non-operating income
Total 3,047,874.53
Page59
VI. Interest in other entities
(I) Interest in significant subsidiaries
1. Significant subsidiaries
(1) Basis information
Main Holding
Subsidiaries Place of Business proportion (%) Acquisition
operating
registration nature Direct Indirect method
place
Nanjing South
Nanjing Nanjing Manufacture 96.99 1.38 Set up
Telecommunications
City City
Company Limited
Nanjing Mennekes Nanjing Nanjing Manufacture 75.00 Set up
Electrics Co., Ltd. City City
Nanjing PotevioTelege Nanjing Nanjing Manufacture 45.767 Set up
Intelligent Building Ltd. City City
Nanjing
PotevioChangle Nanjing Nanjing Manufacture 50.70 Set up
Telecommunications City City
Equipment Co., Ltd.
Nanjing PotevioDatang
Nanjing Nanjing Manufacture 40.00 Set up
Information Electronic
City City
Co., Ltd.
(2) Other remarks
1) Remarks on inconsistency between holding proportion owned and voting rights proportion
owned in subsidiaries
The Company holds 40% equity of Nanjing PotevioDatang Information Electronic Co., Ltd.The
Company signed the agreement with 严 耀 明 (Yan Yaoming), a shareholder of Nanjing
PotevioDatang Information Electronic Co., Ltd., to exercise his 21% right to vote. The agreement
is valid during the period of the existence of Nanjing PotevioDatang Information Electronic Co.,
Ltd. The Company has 61% of the voting right during the existence period of Nanjing
PotevioDatang Information Electronic Co., Ltd.
2) Basis for the control of an investee while holding its half or less than half voting rights, and the
non-control of an investee while holding its more than half voting rights
The Company holds 45.767% of voting rights in Nanjing PotevioTelege Intelligent Building Ltd.,
the other voting rights are decentralized. The Company has over half member of the Board of
Directors, and it not only controls this company but also has a privileged variable return by taking
part in this company’s related activity. The Company has the ability to impact the amount of
return and control this company.
2. Significant not wholly-owned subsidiaries
(1) Details
Holding Profit or loss Dividend Closing
Subsidiaries proportion of attributable to declared to balance of
non-controlling non-controlling non-controlling non-controlling
shareholders shareholders shareholders shareholders
Page60
Holding Profit or loss Dividend Closing
Subsidiaries proportion of attributable to declared to balance of
non-controlling non-controlling non-controlling non-controlling
shareholders shareholders shareholders shareholders
Nanjing South
Telecommunications 1.630% 124,696.54 2,081,487.61
Company Limited
Nanjing Mennekes 25.00% 581,619.71 24,347,495.19
Electrics Co., Ltd.
Nanjing PotevioTelege 54.233% 3,471,633.08 60,199,990.33
Intelligent Building Ltd.
Nanjing PotevioChangle
Telecommunications 49.30% -90.18 15,769,883.61
Equipment Co., Ltd.
Nanjing PotevioDatang
Information Electronic 60.00% 1,178,924.42 17,409,233.44
Co., Ltd.
3. Main financial information of significant not wholly-owned subsidiaries
(1) Assets and liabilities
Closing balance
Subsidiaries
Current assets Non-current Total assets Current liabilities Non-current Total liabilities
assets liabilities
Nanjing South
Telecommunications 344,194,038.04 13,035,198.99 357,229,237.03 229,530,610.67 229,530,610.67
Company Limited
Nanjing Mennekes 193,541,706.51 33,460,976.63 227,002,683.14 129,612,702.37 129,612,702.37
Electrics Co., Ltd.
Nanjing
PotevioTelege 234,180,498.43 40,869,667.30 275,050,165.73 164,047,657.43 164,047,657.43
Intelligent Building
Ltd.
Nanjing
PotevioChangle 74,630,705.10 659,466.45 75,290,171.55 43,302,578.02 43,302,578.02
Telecommunications
Equipment Co., Ltd.
Nanjing
PotevioDatang 25,683,250.77 16,286,215.53 41,969,466.30 12,954,077.22 12,954,077.22
Information
Electronic Co., Ltd.
(Continued)
Opening balance
Subsidiaries
Current assets Non-current Total assets Current liabilities Non-current Total liabilities
assets liabilities
Nanjing South
Telecommunications 369,198,464.82 13,067,689.53 382,266,154.35 262,217,622.67 262,217,622.67
Company Limited
Nanjing Mennekes 164,748,368.62 34,146,046.19 198,894,414.81 103,830,912.88 103,830,912.88
Electrics Co., Ltd.
Nanjing
PotevioTelege 258,226,846.80 41,353,498.45 299,580,345.25 194,979,166.54 194,979,166.54
Intelligent Building
Ltd.
Nanjing
PotevioChangle 75,621,044.49 664,458.52 76,285,503.01 44,297,726.56 44,297,726.56
Telecommunications
Equipment Co., Ltd.
Nanjing
PotevioDatang 29,135,939.82 16,745,277.23 45,881,217.05 18,830,702.01 18,830,702.01
Information
Page61
Opening balance
Subsidiaries
Current assets Non-current Total assets Current liabilities Non-current Total liabilities
assets liabilities
Electronic Co., Ltd.
(2) Profit or loss and cash flows
Current period cumulative
Subsidiaries Total Cash flows from
Operating Net profit comprehensive operating
revenue
income activities
Nanjing South
Telecommunications 243,730,139.55 7,650,094.68 7,650,094.68 -84,539,271.37
Company Limited
Nanjing Mennekes 71,301,568.30 2,326,478.84 2,326,478.84 -20,466,738.78
Electrics Co., Ltd.
Nanjing PotevioTelege 163,937,091.78 6,401,329.59 6,401,329.59 -39,074,056.70
Intelligent Building Ltd.
Nanjing
PotevioChangle 28,820,122.05 -182.92 -182.92 -407,928.66
Telecommunications
Equipment Co., Ltd.
Nanjing PotevioDatang
Information Electronic 20,982,232.12 1,964,874.04 1,964,874.04 -4,741,851.24
Co., Ltd.
(Continued)
Preceding period comparative
Subsidiaries Total Cash flows from
Operating Net profit comprehensive operating
revenue
income activities
Nanjing South
Telecommunications 246,824,340.55 8,174,011.25 8,174,011.25 -28,012,375.76
Company Limited
Nanjing Mennekes 59,853,154.52 2,686,829.19 2,686,829.19 -13,853,022.18
Electrics Co., Ltd.
Nanjing PotevioTelege 144,073,856.61 7,478,429.00 7,478,429.00 -23,312,954.54
Intelligent Building Ltd.
Nanjing
PotevioChangle 30,703,788.91 -94,363.26 -94,363.26 -444,134.92
Telecommunications
Equipment Co., Ltd.
Nanjing PotevioDatang
Information Electronic 21,359,235.76 2,107,868.66 2,107,868.66 -50,181.47
Co., Ltd.
(II) Interest in joint venture or associates
1. Significant joint ventures or associates
Main Holding
Joint ventures or Place of Business nature proportion (%) Accounting
operating
associates registration Direct Indirect treatment
place
Optical
SEI-Nanjing Potevio
Nanjing Nanjing communication 50.00 Equity
Optical Network Co.,
City City products production method
Ltd.
and sale
Page62
Main Holding
Joint ventures or Place of Business nature proportion (%) Accounting
operating
associates registration Direct Indirect treatment
place
Industrial park
Potevio Hi-tech Nanjing Nanjing 49.64 Equity
venue rental
Industry Co., Ltd. City City method
management etc.
2. Main financial information of significant joint ventures
Closing balance/ Opening balance/
Items current period cumulative preceding period comparative
SEI-Nanjing Potevio Optical Network Co., Ltd.
Current assets 43,839,423.50 40,490,589.14
Including: Cash and cash 3,167,116.86 1,707,598.89
equivalents
Non-current assets 1,231,696.85 1,349,024.62
Total assets 45,071,120.35 41,839,613.76
Current liabilities 17,895,115.48 14,215,853.48
Non-current liabilities
Total liabilities 17,895,115.48 14,215,853.48
Non-controlling interest
Equity attributable to owners of 27,176,004.87 27,623,760.28
parent company
Proportionate share in net assets 13,588,002.44 13,811,880.14
Adjustments
Goodwill
Unrealized profit in internal
trading
Others
Carrying amount of investments 13,588,002.44 13,811,880.14
in joint ventures
Fair value of equity investments
in joint ventures in association
with quoted price
Operating revenue 8,226,323.40 26,720,749.13
Financial expenses -272,455.78 -622,792.36
Income tax expenses
Net profit -447,755.41 537,520.27
Net profit of discontinued
operations
Other comprehensive income
Total comprehensive income -447,755.41 537,520.27
Dividend from joint ventures
received in current period
3. Main financial information of significant associates
Page63
Closing balance/ Opening balance/
Items current period cumulative preceding period comparative
Potevio Hi-tech Industry Co., Ltd.
Current assets 214,881,648.48 218,095,772.45
Non-current assets 128,729,805.69 128,129,896.79
Total assets 343,611,454.17 346,225,669.24
Current liabilities 1,591,657.26 3,336,927.90
Non-current liabilities
Total liabilities 1,591,657.26 3,336,927.90
Non-controlling interest
Equity attributable to owners of 342,019,796.91 342,888,741.34
parent company
Proportionate share in net assets 169,778,627.19 170,209,971.20
Adjustments
Goodwill
Unrealized profit in internal
trading
Others
Carrying amount of investments 169,778,627.19 170,209,971.20
in associates
Fair value of equity investments
in associates in association with
quoted price
Operating revenue 5,850,644.65 16,674,172.86
Net profit -868,944.43 1,747,840.13
Net profit of discontinued
operations
Other comprehensive income
Total comprehensive income -868,944.43 1,747,840.13
Dividend from associates 362,372.00
received in current period
4. Aggregated financial information of insignificant joint ventures and associates
Items Closing balance/current Opening balance/preceding
period cumulative period comparative
Associates
Total carrying amount of investments 3,098,134.88 3,061,006.22
Proportionate shares in the following
items
Net profit 82,508.92 450,600.72
Other comprehensive income
Total comprehensive income 82,508.92 450,600.72
VII. Risks related to financial instruments
Page64
The Company aims to seek the appropriate balance between the risks and benefits from its use of
financial instruments and to mitigate the adverse effects that the risks of financial instruments
have on the Company’s financial performance. Based on such objectives, the Company’s risk
management policies are established to identify and analyze the risks faced by the Company, to set
appropriate risk limits and controls, and to monitor risks and adherence to limits.
The Company has exposure to the following risks from its use of financial instruments, which
mainly include: credit risk, liquidity risk, and market risk. Management have deliberated and
approved policies concerning such risks, and details are:
(I) Credit risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the
other party by failing to discharge an obligation.
The Company’s credit risk is primarily attributable to bank balances and receivables.In order to
control such risks, the Company has taken the following measures:
1. Bank balances
The Company deposits its bank balances in financial institutions with relatively high credit levels,
hence, its credit risk is relatively low.
2. Receivables
The Company performs credit assessment on customers who uses credit settlement on a regular
basis. The Company selects credible and well-reputed customers based on credit assessment
result, and conducts ongoing monitoring on receivables, to avoid significant risks in bad debts.
As the Company’s credit risks fall into several business partners and customers, as of June 30, 2017,
14.63% (December 31, 2016: 17.49%) of the total accounts receivable was due from the five
largest customers of the Company. The Company has no significant central credit risk.
(1) Analysis of receivables neither past due nor impaired and receivables past due but not impaired
are as follows:
Closing balance
Items Past due but not impaired
Neither past due Total
nor impaired Within 1 1-2 years Over 2
year years
Notes 42,716,179.49 42,716,179.49
receivable
Accounts 595,066,349.35 163,495,361.06 758,561,710.41
receivable
Other 17,836,218.42 8,189,618.07 26,025,836.49
receivables
Subtotal 655,618,747.26 171,684,979.13 827,303,726.39
(Continued)
Page65
Opening balance
Items Past due but not impaired
Neither past due Total
nor impaired Within 1 1-2 years Over 2
year years
Notes 59,748,722.91 59,748,722.91
receivable
Accounts 603,015,571.33 106,446,095.08 709,461,666.41
receivable
Other 19,094,866.16 5,109,572.54 24,204,438.7
receivables
Subtotal 681,859,160.40 111,555,667.62 793,414,828.02
(2) Please refer to notes to receivables for receivables with provision for impairment made on
individual basis.
(II) Liquidity risk
Liquidity risk is the risk that the Company may encounter deficiency of funds in meeting
obligations associated with cash or other financial assets settlement, which is possibly attributable
to failure in selling financial assets at fair value on a timely basis, or failure in collecting liabilities
from counterparts of contracts, or early redemption of debts, or failure in achieving estimated cash
flows.
In order to control such risk, the Company utilized financing tools such as notes settlement and
bank borrowings, etc. to optimizing financing structures, and finally maintains a balance between
financing sustainability and flexibility. The Company has obtained credit limit from several
commercial banks to meet working capital requirements and expenditures.
Financial instruments classified based on remaining time period till maturity
Closing balance
Items
Carrying amount Contract amount not Within 1 year 1-3 years Over 3 years
yet discounted
Bank 368,350,000.00 376,362,448.54 376,362,448.54
borrowings
Notes 27,315,996.58 27,315,996.58 27,315,996.58
payable
Accounts 997,474,557.49 997,474,557.49 997,474,557.49
payable
Interest 709,377.30 709,377.30 709,377.30
payable
Dividend 1,692,213.38 1,692,213.38 1,692,213.38
payable
Subtotal 1,395,542,144.75 1,403,554,593.29 1,401,862,379.91 1,692,213.38
(Continued)
Opening balance
Items
Carrying amount Contract amount Within one year 1-3 years Over 3 years
not yet discounted
Bank 473,500,000.00 482,540,963.06 482,540,963.06
borrowings
Notes 83,071,160.95 83,071,160.95 83,071,160.95
payable
Accounts 897,012,031.63 897,012,031.63 897,012,031.63
Page66
Opening balance
Items
Carrying amount Contract amount Within one year 1-3 years Over 3 years
not yet discounted
payable
Interest 732,412.79 732,412.79 732,412.79
payable
Dividend 1,692,213.38 1,692,213.38 1,692,213.38
payable
Long-term 1,456,007,818.75 1,465,048,781.81 1,463,356,568.43 1,692,213.38
payable
Subtotal 473,500,000.00 482,540,963.06 482,540,963.06
(III) Market risk
Market risk is the risk that the Company may encounter fluctuation in fair value of financial
instruments or future cash flows due to changes in market price.
1. Interest risk
Interest risk is the risk that an enterprise may encounter fluctuation in fair value of financial
instruments or future cash flows due to changes in market interest. The Company’s interest risk
relates mainly to borrowings with floating interest rate.
As of June 30, 2016, balance of borrowings with interest accrued at floating interest rate totaled
254,850,000.00 yuan (December 31, 2016: 393,500,000.00 yuan). If interest rates had been 10
basis points higher/lower and all other variables were held constant, financial effect on the
Company would be a/an decrease/increase of 1.1086 million yuan (December 31, 2016: a/an
decrease/increase of 1.71 million yuan) in equity, a/an decrease/increase of 1.1086 million yuan
(2016: a/an decrease/increase of 1.71 million yuan) in net profit.
2. Foreign currency risk
Foreign currency risk is the risk arising from changes in exchange rate. The Company is mainly
operated in mainland China, with a small amount of imports and exports, and its main activities
are denominated in RMB, hence, the Company bears insignificant market risk arising from foreign
exchange changes.
Please refer to notes to foreign currency monetary items for details in foreign currency financial
assets and liabilities at the end of the period.
VIII. Related party relationships and transactions
(I) Related party relationships
1. Details of parent company
(1) Parent company
Registered Holding Voting right
Parent company Business
Place of registration capital proportion over proportion over
nature
(inmillion) the Company the Company
No.2 Tudi 2 Road,
China Potevio
ZhongguanVillage Information 1,903,050 53.49% 53.49%
Information
Economy Zone, industry
Industry Inc
HaidianDistrict, Beijing
Page67
The Company’s ultimate controlling party is 中 国 普 天 信 息 产 业 集 团 公 司 (China
POTEVIOCorporation*).
2. Please refer notes to interest in other entities for details on the Company’s subsidiaries.
3. Joint ventures and associates of the Company
Please refer to notes to interest in other entities for details on the Company’s significant joint
ventures and associates. Details of other joint ventures or associates carrying out related party
transactions with the Company in current period or in preceding period but with balance in current
period are as follows:
Joint ventures or associates Relationships with the Company
Potevio Hi-tech Industry Co., Ltd. Associates
Nanjing PotevioTelege Cable Co., Ltd. Associates
SEI-Nanjing Potevio Optical Network Co., Ltd. Joint ventures
4. Other related parties of the Company
Related parties Relationships with the Company
南京普天鸿雁电器科技有限公司 An affiliated company of the ultimate
(Nanjing Honyar Electrical Technology Co., Ltd.*) controlling party
南京普天鸿雁电器有限公司 An affiliated company of the ultimate
(Nanjing Honyar Electrical Co., Ltd.*) controlling party
上海普天邮通科技股份有限公司
An affiliated company of the ultimate
(Shanghai Potevio Post and Telecommunications
controlling party
Technology Co., Ltd.*)
北京普天太力通信科技有限公司
An affiliated company of the ultimate
(Beijing PotevioTaili Communications Technology Co., controlling party
Ltd.*)
杭州鸿雁东贝光电科技有限公司
An affiliated company of the ultimate
(Hangzhou HonyarDongbei Photoelectric Technology
controlling party
Co., Ltd.*)
上海普天网络技术有限公司 An affiliated company of the ultimate
(Shanghai Potevio Network Technology Co., Ltd.*) controlling party
普天通信有限责任公司 An affiliated company of the ultimate
(POTEVIO Telecommunications Co., Ltd.*) controlling party
南京普天通信通信实业有限公司 An affiliated company of the ultimate
（NanjingPotevio communication industry co. LTD） controlling party
普天信息技术有限公司 An affiliated company of the ultimate
(Potevio Information Technology Co., Ltd.*) controlling party
Beijing Picom Telecommunications Equipment Co., An affiliated company of the
Ltd. Company
Mennekes Electric Industrial Co., Ltd. (China) Non-controlling shareholder of the
Company’s subsidiary
普天和平科技有限公司 An affiliated company of the ultimate
(PotevioHeping Technology Co., Ltd.*) controlling party
An affiliated company of the ultimate
Hangzhou Honyar Electrical Co., Ltd.
controlling party
Potevio international trade co. LTD An affiliated company of the ultimate
*
The English names are for identification purpose only.
Page68
Related parties Relationships with the Company
controlling party
(II) Related party transactions
1. Purchase and sale of goods, rendering and receiving services
(1) Purchase of goods and receiving of services
Related parties Content of transaction Current period Preceding period
cumulative comparative
SEI-Nanjing Potevio Optical Telecommunication 4,402,431.79 9,024,031.01
Network Co., Ltd. products
Nanjing PotevioTelege Cable Telecommunication 10,287,304.27 12,577,759.12
Co., Ltd. products
Nanjing Honyar Electrical Telecommunication 211,020.46
Technology Co., Ltd. products
Nanjing Honyar Electrical Co., Telecommunication 141,138.49
Ltd. products
Potevio Hi-tech Industry Co., Telecommunication 1,341,156.00
Ltd. products
Mannikes industrial electrical Telecommunication 2,470,678.34
(China) co. LTD products
(2) Sale of goods and rendering of services
Related parties Content of transaction Current period Preceding period
cumulative comparative
Potevio Information Telecommunication 1,088,405.13 209,330.77
Technology Co., Ltd. products
China Potevio Information Telecommunication 11,588,384.12 25,562,525.57
Industry Inc products
Beijing PotevioTaili
Telecommunication 36,899.15
Communications Technology
products
Co., Ltd.
PotevioHeping Technology Telecommunication 30,769.23
Co., Ltd. products
Nanjing Potevio
Telecommunication 230,477.80
Communication Industry Co.,
products
Ltd.
Potevio Hi-tech Industry Co., Telecommunication 107,750.15 48,588.22
Ltd. products
Shanghai Potevio Post and
Telecommunication 9,692.31
Telecommunications
products
Technology Co., Ltd.
Shanghai Potevio Network Telecommunication 3,418.80
Technology Co., Ltd. products
Hangzhou hongyandongbei
Telecommunication 13,076.92
optoelectronic technology co.
products
LTD
Potevio international trade co. Telecommunication 382,000.66
LTD products
Nanjing puzhuguang network Telecommunication 156,975.39
co. LTD products
NanjingPoteviotianji cable co. Telecommunication 449,050.85
LTD products
2. Related party leases
Page69
(1) The Company as the lessor
Lessees Types of asset Lease income for Lease income for the
leased current period preceding period
SEI-Nanjing Potevio Optical Buildings and 490,015.58 401,248.38
Network Co., Ltd. structures
(2) The Company as the lessee
Lease expenses Property
Lease expenses Property
Lessors Types of asset for the services for the
for current services for
leased preceding preceding
period current period
period period
Potevio Hi-tech Buildings and 781,500.33 4,432,114.67 253,277.91 1,277,232.00
Industry Co., Ltd. structures
3. Related party guarantees
The Company and its subsidiaries as guaranteed parties
Whether
Guarantors Amount Commence- Maturity the
guaranteed ment date date guarantee
is mature
China Potevio Information Industry Inc 44,000,000.00 2016/7/14 2017/7/14 No
China Potevio Information Industry Inc 30,000,000.00 2016/9/18 2017/9/18 No
China Potevio Information Industry Inc 10,000,000.00 2016/11/11 2017/11/10 No
China Potevio Information Industry Inc 30,000,000.00 2016/12/14 2017/12/14 No
China Potevio Information Industry Inc 40,000,000.00 2017/3/31 2018/1/15 No
China Potevio Information Industry Inc 30,000,000.00 2017/4/5 2017/10/5 No
China Potevio Information Industry Inc 30,000,000.00 2017/6/12 2018/6/12 No
China Potevio Information Industry Inc 20,000,000.00 2017/6/23 2018/6/22 No
4. Interest expenditures
In the current period, the Company paid to China Potevio Information Industry Inc a total of
2,743,744.97 yuan as interest expenditures.
5. Key management’s emoluments
Items Current period cumulative Preceding period comparative
Key management’s emoluments 631,665.00 476,589.62
(III) Balance due to or from related parties
1. Balance due from related parties
Closing balance Opening balance
Items Related parties
Book balance Provision for Book balance Provision for
bad debts bad debts
Accounts China Potevio 23,908,728.37 940,358.59 30,685,856.21 351,548.00
receivable Information Industry Inc
Accounts Potevio Information 618,827.95 4,972.96
receivable Technology Co., Ltd.
Shanghai Potevio
Accounts 88,000.00 83,060.00 88,000.00 65,840.00
Network Technology Co.,
receivable
Ltd.
Accounts Shanghai Potevio Post 8,755,534.00 3,502,213.60 8,769,964.00 3,502,213.60
Page70
Closing balance Opening balance
Items Related parties
Book balance Provision for Book balance Provision for
bad debts bad debts
receivable and Telecommunications
Technology Co., Ltd.
Accounts Potevio Hi-tech Industry 14,455.30 14,455.30
receivable Co., Ltd.
Accounts Hangzhou Honyar 1,075,704.00
receivable Electrical Co., Ltd.
Accounts PotevioHeping 333,706.00 333,706.00
receivable Technology Co., Ltd.
Accounts Putian international trade 214,220.40
receivable co. LTD
Subtotal 33,933,472.02 4,525,632.19 40,972,658.47 3,919,601.60
Other China Potevio 2,170,000.00 3,750.00 1,570,000.00 8,500.00
receivables Information Industry Inc
Beijing Picom
Other 28,912,122.71 28,912,122.71 28,912,122.71 28,912,122.71
Telecommunications
receivables
Equipment Co., Ltd.
Nanjing Potevio science
Other 182,003.40
and technology industrial
receivables
park company
Subtotal 31,264,126.11 28,915,872.71 30,482,122.71 28,920,622.71
Advances PotevioHeping 436,294.00
paid Technology Co., Ltd.
NanjingPoteviohongyan
Advances 82,000.00
electric technology co.
paid
LTD
Subtotal 82,000.00 436,294.00
2. Balance due to related parties
Items Related parties Closing balance Opening balance
Accounts payable SEI-Nanjing Potevio Optical 31,001,679.04 31,925,323.52
Network Co., Ltd.
Accounts payable China Potevio Information 23,856,875.10 23,856,875.10
Industry Inc
Accounts payable Potevio Hi-tech Industry Co., Ltd. 1,796,059.00
Accounts payable Nanjing PotevioTelege Cable Co., 2,763,799.17
Ltd.
Accounts payable Nanjing Honyar Electrical 687,820.03 572,421.00
Technology Co., Ltd.
Accounts payable Shanghai Potevio Network 11,685.00 11,685.00
Technology Co., Ltd.
Accounts payable POTEVIO Telecommunications 21,951.67
Co., Ltd.
Accounts payable Wuhan putianhongyan electric 270,055.73
appliance co. LTD
Accounts payable Mennekes Electric Industrial Co., 2,918,155.76 431,943.36
Ltd. (China)
Subtotal 58,768,222.33 61,358,106.15
Advances received China Potevio Information 532,327,064.00 9,588,409.63
Industry Inc
Advances received Potevio Information Technology 15,307.90
Co., Ltd.
Nanjing putianhongyan electric
Advances received 82,000.00
technology co. LTD
Page71
Items Related parties Closing balance Opening balance
Advances received Wuhan putianhongyan electric 3,975,433.00
appliance co. LTD
Subtotal 536,384,497.00 9,603,717.53
Other payables Potevio Hi-tech Industry Co., Ltd. 223,578.14
Other payables POTEVIO Telecommunications 200,000.00
Co., Ltd.
Subtotal 423,578.14
IX. Commitments and contingencies
None.
X. Other significant events
Segment information
1. Identification basis for reportable segments
Reportable segments are identified based on operating segments which are determined based on
the structure of the Company’s internal organization, management requirements and internal
reporting system. The Company identified reportable segments based on products, which include
video conferencing products, generic cable products, electrical products, wiring products, and
other products.Assets and liabilities shared by different segments are allocated pro rata among
segments.
The Company identified reportable segments based on geographic information, revenue from
main operations and costs of main operations are allocated between segments based on locations
where sales realized, and assets and liabilities are allocated based on locations of operating
entities.
The Company identified reportable segments based on products, assets and liabilities of each
segment are the actual amount of its proportion in assets and liabilities, and revenue from main
operations and cost of main operations are those generated or incurred by each product segment.
2. Financial information of reportable segments
Products segment
Video Wireless
Items Generic cable Electrical Wiring products Inter-segment Total
conferencing network
products products offsetting
products products
Revenue from 243,563,472.88 161,900,328.48 71,301,568.30 236,288,888.90 310,388,629.99 34,893,555.21 988,549,333.34
main operations
Cost of main 199,396,334.35 130,919,397.37 52,613,603.22 222,275,291.34 265,560,732.04 34,893,555.21 835,871,803.11
operations
Total assets 357,229,237.03 275,050,165.73 227,002,683.14 624,733,247.00 1,465,166,429.88 418,597,712.97 2,530,584,049.81
Total liabilities 229,530,610.67 164,047,657.43 129,612,702.37 611,956,426.03 1,206,202,560.46 254,432,173.51 2,086,917,783.45
XI. Notes to items of parent company financial statements
Page72
(I) Notes to items of parent company balance sheet
1. Accounts receivable
(1) Details
1) Details on categories
Closing balance
Categories Book balance Provision for bad debts
Carrying amount
Amount Amount Provision
% to total
proportion (%)
Receivables of individually
significant amount and with
provision made on an
individual basis
Receivables with provision
made on a collective basis 449,145,159.92 19,370,466.63 429,774,693.29
using portfolios with similar
credit risk features
Portfolio 1
Portfolio 2 449,145,159.92 19,370,466.63 429,774,693.29
Receivable of individually
insignificant amount but 1,881,238.51 1,881,238.51
with provision made on an
individual basis
Total 451,026,398.43 21,251,705.14 429,774,693.29
(Continued)
Opening balance
Categories Book balance Provision for bad debts
Carrying amount
Amount Amount Provision
% to total
proportion (%)
Receivables of individually
significant amount and with
provision made on an
individual basis
Receivables with provision
made on a collective basis 436,305,272.67 99.57 18,149,360.20 4.16 418,155,912.47
using portfolios with similar
credit risk features
Portfolio 1 207,800.00 0.05 207,800.00
Portfolio 2 436,097,472.67 99.52 18,149,360.20 4.16 417,948,112.47
Receivable of individually
insignificant amount but 1,881,238.51 0.43 1,881,238.51 100.00
with provision made on an
individual basis
Total 438,186,511.18 100.00 20,030,598.71 4.57 418,155,912.47
2) In portfolios, accounts receivable with provision made on a collective basis with age analysis
method
Closing balance
Ages
Book balance Provision for bad debts Provision proportion (%)
Within 1 year 271,609,595.48
1-2 years 126,926,307.05
2-3 years 25,414,433.61 2,541,443.36 10
Page73
Closing balance
Ages
Book balance Provision for bad debts Provision proportion (%)
3-4 years 6,562,643.23 1,968,792.97 30
4-5 years 2,878,862.06 1,151,544.82 40
5-6 years 10,223,165.06 8,178,532.05 80
Over 6 years 5,530,153.43 5,530,153.43 100
Subtotal 449,145,159.92 19,370,466.63 4.31
(2) Provisions made, collected or reversed in current period
Provision for bad debts made in current period totaled 1,221,106.43 yuan,
(3) Details of the top 5 debtors with largest balances
Proportion to the total
Debtors Book balance Provision for
balance of accounts
receivable (%) bad debts
China United Network Communications 28,062,903.95 6.22
Group Co., Ltd.,Henan Branch
中国电信股份有限公司江苏分公司
(China Telecommunications 24,986,127.34 5.54 2,378.00
Corporation, Jiangsu Branch*)
China Potevio Information Industry Inc. 20,138,617.26 4.47 878,343.71
中国联合网络通信有限公司河北省分
公司 (China United Network 17,581,097.03 3.90
Communications Group Co.,
Ltd.,HebeiBranch*)
Quanzhou hua and communication 12,643,382.61 2.80
technology co. LTD
Subtotal 103,412,128.19 22.93 880,721.71
2. Other receivables
(1) Details
1) Details on categories
Closing balance
Categories Book balance Provision for bad debts
Carrying amount
Amount Amount Provision
% to total
proportion (%)
Receivables of individually
significant amount and with 32,997,289.04 40.23 32,997,289.04 100.00
provision made on an
individual basis
Receivables with provision
made on a collective basis 49,014,407.62 59.77 3,981,003.49 8.12 45,033,404.13
using portfolios with similar
credit risk features
Portfolio 1 23,979,896.53 29.24 23,979,896.53
*
The English names are for identification purpose only.
Page74
Closing balance
Categories Book balance Provision for bad debts
Carrying amount
Amount Amount Provision
% to total
proportion (%)
Portfolio 2 25,034,511.09 30.53 3,981,003.49 15.90 21,053,507.60
Receivable of individually
insignificant amount but
with provision made on an
individual basis
Total 82,011,696.66 100.00 36,978,292.53 45.09 45,033,404.13
(Continued)
Opening balance
Categories Book balance Provision for bad debts
Carrying amount
Amount Amount Provision
% to total
proportion (%)
Receivables of individually
significant amount and with 32,997,289.04 31.69 32,997,289.04 100.00
provision made on an
individual basis
Receivables with provision
made on a collective basis 71,142,407.39 68.31 3,665,246.30 5.15 67,477,161.09
using portfolios with similar
credit risk features
Portfolio 1 47,311,606.41 45.43 47,311,606.41
Portfolio 2 23,830,800.98 22.88 3,665,246.30 15.38 20,165,554.68
Receivable of individually
insignificant amount but
with provision made on an
individual basis
Total 104,139,696.43 100.00 36,662,535.34 35.21 67,477,161.09
2) Other receivables of individually significant amount and with provision made on an individual
basis
Debtors Book balance Provision for Provision Reasons for
bad debts proportion (%) provision made
Potevio With long age
Telecommunications (H.K.) 4,085,166.33 4,085,166.33 100.00 and is hard to
Co., Ltd. recover
Beijing Likangpu With long age
Communications 28,912,122.71 28,912,122.71 100.00 and is hard to
Equipment Co., Ltd. recover
Subtotal 32,997,289.04 32,997,289.04
3) In portfolios, other receivables with provision made on a collective basis with age analysis
method
Closing balance
Ages
Book balance Provision for bad debts Provision proportion (%)
Within 1 year 11,820,827.07
1-2 years 6,162,548.46
Page75
Closing balance
Ages
Book balance Provision for bad debts Provision proportion (%)
2-3 years 2,072,182.37 207,218.24 10
3-4 years 994,597.74 298,379.32 30
4-5 years 428,846.72 171,538.69 40
5-6 years 1,258,207.46 1,006,565.97 80
Over 6 years 2,297,301.27 2,297,301.27 100
Subtotal 25,034,511.09 3,981,003.49 8.12
(2) Provisions made, collected or reversed in current period
Provisions for bad debts made in current period totaled 315,757.19 yuan.
(3) Other receivables categorized by nature
Nature of receivables Closing balance Opening balance
Petty cash for business traveling 1,386,776.63 1,077,665.93
Deposits 17,668,194.83 18,347,856.65
Temporary advance payment receivable 61,096,146.63 83,464,497.53
Others 1,860,578.57 1,249,676.32
Total 82,011,696.66 104,139,696.43
(4) Details of the top 5 debtors with largest balances
Proportion to the
Debtors Nature of Book balance Ages total balance of Provision for
receivables other receivables bad debts
(%)
Beijing Likangpu Temporary
Communications advance payment 28,912,122.71 Over 6 years 35.25 28,912,122.71
Equipment Co., Ltd. receivable
中招国际招标有限公
司(China recruitment 2,450,000.00 Within 1 years 2.99
Deposits
international tendering
co. LTD)
China Potevio
information industry Deposits 2,170,000.00 1-3 years 2.65 3,750.00
co. LTD
Gongcheng
management consulting Deposits 1,252,700.00 1-3 years 1.53 2,920.00
co. LTD
Potevio Temporary
Telecommunications advance payment 4,097,886.33 Over 6 years 5.00 4,097,886.33
(H.K.) Co., Ltd. receivable
Subtotal 38,882,709.04 47.42 33,016,679.04
3. Long-term equity investments
(1) Categories
Closing balance Opening balance
Items
Book balance Provision for Carrying amount Book balance Provision for Carrying amount
impairment impairment
Page76
Investments in 173,787,270.64 1,910,520.00 171,876,750.64 173,787,270.64 1,910,520.00 171,876,750.64
subsidiaries
Investments in associates 183,366,629.63 183,366,629.63 184,021,851.34 184,021,851.34
and joint ventures
Total 357,153,900.27 1,910,520.00 355,243,380.27 357,809,121.98 1,910,520.00 355,898,601.98
(2) Investments in subsidiaries
Provision for Closing balance of
Investees Opening balance Increase Decrease Closing balance impairment made in provision for
current period impairment
Nanjing Mennekes Electrics Co., Ltd. 57,831,011.71 57,831,011.71
Nanjing Bada Communication 5,610,000.00 5,610,000.00
Equipment Co., Ltd.
Nanjing PotevioChangle
Telecommunications Equipment Co., 2,610,457.00 2,610,457.00
Ltd.
Nanjing PotevioTelecommunication 1,294,510.00 1,294,510.00
Technology Co., Ltd.
南京普天信息技术有限公司(Nanjing
Potevio Information Technology Co., 13,860,000.00 13,860,000.00
Ltd.*)
Nanjing PotevioTelege Intelligent 3,320,003.45 3,320,003.45
Building Ltd.
Potevio Telecommunications (H.K.) Co., 1,910,520.00 1,910,520.00 1,910,520.00
Ltd.
Nanjing Potevio Network Co., Ltd. 7,741,140.41 7,741,140.41
Nanjing PotevioWangzhi Electronic Co., 40,997,683.00 40,997,683.00
Ltd.
Nanjing South Telecommunications 33,175,148.00 33,175,148.00
Company Limited
Nanjing PotevioDatang Information 5,436,797.07 5,436,797.07
Electronic Co., Ltd.
Subtotal 173,787,270.64 173,787,270.64 1,910,520.00
(3) Investments in associates and joint ventures
Increase/decrease
Investees Opening balance Adjustment in
Investment income
Investments Investments other
recognized under
increased decreased comprehensive
equity method
income
Joint ventures
SEI-Nanjing Potevio Optical 13,811,880.14 -223,877.70
Network Co., Ltd.
Subtotal 13,811,880.14 -223,877.70
Associates
Potevio Hi-tech Industry 170,209,971.20 -431,344.01
Co., Ltd.
Subtotal 170,209,971.20 -431,344.01
Total 184,021,851.34 -655,221.71
(Continued)
Increase/decrease
Closing
Investees Cash Closing balance balance of
Changes in dividend/profit Provision for Others provision for
other equity declared for impairment impairment
distribution
Joint ventures
SEI-Nanjing Potevio 13,588,002.44
Page77
Increase/decrease
Closing
Investees Cash Closing balance balance of
Changes in dividend/profit Provision for Others provision for
other equity declared for impairment impairment
distribution
Optical Network Co., Ltd.
Subtotal 13,588,002.44
Associates
Potevio Hi-tech Industry 169,778,627.19
Co., Ltd.
Subtotal 169,778,627.19
Total 183,366,629.63
(II) Notes to items of the parent company income statement
1. Operating revenue/Operating cost
Current period cumulative Preceding period comparative
Items
Revenue Cost Revenue Cost
Revenue from main 477,333,066.05 428,357,160.89 317,684,044.43 278,160,497.11
operations
Revenue from other 14,937,079.42 11,738,660.36 31,541,554.81 25,207,779.79
operations
Total 492,270,145.47 440,095,821.25 349,225,599.24 303,368,276.90
2. Investment income
Items Current period cumulative Preceding period comparative
Investment income from
long-term equity investments -655,221.71 760,849.53
under equity method
Total -655,221.71 760,849.53
XII. Other supplementary information
(I) Non-recurring profit or loss
1. Schedule of non-recurring profit or loss of current period
Items Amount Remarks
Gains on disposal of non-current assets, including -663,364.82
written-off of provision for impairment
Tax refund, credit or exemption approved beyond the
power of authorities, without formal documents, or with
occasionality
Government grant included in profit or loss (excluding
those closely related to operating activities, or regular 2,368,873.77
government grants)
Fund possession charge from non-financial entities and
included in profit or loss
Gains on acquisition of subsidiaries, joint ventures and
associates due to the surplus of acquisition-date fair
value of net identifiable assets in acquiree over the
acquisition cost
Gains on non-cash assets exchange
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Items Amount Remarks
Gains on assets consigned to the third party for
investment or management
Assets impairment loss incurred due to force majeure
such as natural disasters
Gains on debt restructuring
Entity restructuring expenses, such as staffing and
integrating expenses
Gains on transactions with unfair value
Net profit gains on subsidiaries acquired through
business combination under common control from the
beginning of the period to the combination date
Contingent gains on non-operating activities
Gains on changes in fair value of held-for-trading
financial assets and liabilities and investment income
from disposal of held-for-trading financial assets and
liabilities, and available-for-sale financial assets,
excluding those arising from hedging business related to
operating activities
The reversed provision for impairment of receivables
based on impairment testing on an individual basis
Gains on designated loans
Gains on changes in fair value of investment properties
with subsequent measurement at the fair value mode
Gains on reconciliation of current period profit or loss
following legal and regulative requirements
Management charges for consigned operations
Other non-operating revenue or expenditures 134,413.94
Other profit or loss satisfying the definition of
non-recurring profit or loss
Subtotal 1,839,922.89
Less: enterprise income tax affected 39,788.87
Non-controlling interest affected (after tax) 763,084.07
Net non-recurring profit or loss attributable to 1,037,049.95
shareholders of the parent company
(II) RONA and EPS
1. Details
EPS (yuan/share)
Profit of the reporting period Weighted average
RONA (%) Basic EPS Diluted EPS
Net profit attributable to shareholders -3.98 -0.06 -0.06
of ordinary shares
Net profit attributable to shareholders
of ordinary shares after deducting -4.29 -0.07 -0.07
non-recurring profit or loss
2. Calculation process of weighted average RONA
Items Symbols Current period
cumulative
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Items Symbols Current period
cumulative
Net profit attributable to shareholders of ordinary A -13,246,723.63
shares
Non-recurring profit or loss B 1,037,049.95
Net profit attributable to shareholders of ordinary C=A-B -14,283,773.58
shares after deducting non-recurring profit or loss
Opening balance of net assets attributable to D 339,838,415.21
shareholders of ordinary shares
Net assets attributable to shareholders of ordinary
shares increased due to offering of new shares or E
conversion of debts into shares
Number of months counting from the next month
when the net assets were increased to the end of F 3
the reporting period
Net assets attributable to shareholders of ordinary
shares decreased due to share repurchase or cash G
dividends appropriation
Number of months counting from the next month
when the net assets were decreased to the end of H
the reporting period
Translation reserve
increased in current -148,053.34 -411,420.81
period
Number of months
Others counting from the next
month when the net 3 6
assets were increased or
decreased to the end of
the reporting period
Number of months in the reporting period K 6
L= D+A×1/2
Weighted average net assets + 333,141,026.73
E×F/K-G×H/K±I×J/
K
Weighted average RONA M=A/L -3.98%
Weighted average RONA after deducting N=C/L -4.29%
non-recurring profit or loss
3. Calculation process of basic EPS and diluted EPS
(1) Calculation process of basic EPS
Items Symbols Current period
cumulative
Net profit attributable to shareholders of ordinary A -13,246,723.63
shares
Non-recurring profit or loss B 1,037,049.95
Net profit attributable to shareholders of ordinary C=A-B -14,283,773.58
shares after deducting non-recurring profit or loss
Opening balance of total shares D 215,000,000.00
Number of shares increased due to conversion of
reserve to share capital or share dividend E
appropriation
Number of shares increased due to offering of new F
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Items Symbols Current period
cumulative
shares or conversion of debts into shares
Number of months counting from the next month
when the share was increased to the end of the G 3
reporting period
Number of shares decreased due to share H
repurchase
Number of months counting from the next month
when the share was decreased to the end of the I
reporting period
Number of shares decreased in the reporting period J
Number of months in the reporting period K 6
Weighted average of outstanding ordinary shares L=D+E+F×G/K-H×I/ 215,000,000.00
K-J
Basic EPS M=A/L -0.06
Basic EPS after deducting non-recurring profit or N=C/L -0.07
loss
(2) The calculation process of diluted EPS is the same with that of basic EPS.
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