KONKA GROUP CO., LTD.
INTERIM REPORT 2010
KONKA GROUP CO., LTD.
CHAIRMAN OF THE BOARD: HOU SONG RONG
AUGUST 2010KONKA GROUP CO., LTD
FULL TEXT OF INTERIM REPORT 2010
Important Notice
The Board of Directors, the Supervisory Committee as well as all the
directors, supervisors and senior executives of KONKA GROUP CO., LTD
(hereinafter referred to as the Company), hereby assure that there are
no false records, misleading statements or significant omissions in this
report, and they would shoulder any individual as well as joint
responsibility concerning the authenticity, accuracy and completeness of
the contents.
This Interim Report has been examined and approved by the 46th meeting of
the 6th Board of Directors of the Company.
No director, supervisor or senior executive has declared that he or she
cannot guarantee the authenticity, accuracy and completeness of this
report, or that he or she has any objections.
After careful examination, the 15th meeting of the 6th Supervisory Committee
believes that the Interim Report 2010 and its Summary have faithfully,
accurately and completely reflected the financial status, business
achievement, corporate administration and business development of the
Company in the interim of 2010.
Chairman of the Board of the Company Mr. Hou Songrong, Chief Financial
Officer Ms. Yang Rong and Person in Charge of Accounting work Mr. Ruan
Renzong hereby confirm that the Financial Report in the Interim Report
is true and complete.
The Interim Financial Report of the Company has not been audited.
This report was prepared in both Chinese and English. Should there be any
difference in interpretation between the two versions, the Chinese
version shall prevail.
Contents
I．Company Profile.
II. Changes in Share Capital and Shares Held by Principal Shareholders
III. Particulars about Directors, Supervisors and Senior Executives
IV. Report of the Board of Directors
V. Significant EventsVI. Financial Report
VII. Documents Available for ReferenceI. Company Profile
(I) Basic information of the Company
1. Legal Name of the Company in Chinese: 康佳集团股份有限公司
Abbreviation in Chinese: 康佳集团
Legal Name of the Company in English: KONKA GROUP CO., LTD.
Abbreviation in English: KONKA GROUP
2. Legal Representative: Chairman of the Board, Mr. Hou Songrong
3. Secretary of Board of Directors: Mr. Xiao Qing
Securities Affairs Representative: Mr. Wu Yongjun
Contact Address: Konka Group Co., Ltd., Overseas Chinese Town, Shenzhen,
P.R.C.
Tel.: 0755-26608866
Fax: 0755-26601139
E-mail: szkonka@konka.com
4. Registered (Office) Address: Overseas Chinese Town, Nanshan District,
Shenzhen
Post Code: 518053
Internet Website: http://www.konka.com
E-mail: szkonka@konka.com
5. Newspaper Designated for Disclosing the Information of the Company:
Securities Times and etc.
Internet Website Designated by CSRC for Publishing the Interim Report:
http://www.cninfo.com.cn
The Place Where the Interim Report is Prepared and Placed: Secretariat
of the Board of Directors of the Company
6. Stock Exchange Listed with: Shenzhen Stock Exchange
Short Form of the Stock: Shen Konka A, Shen Konka B
Stock Code: 000016, 200016
7. Date of the Initial Registration: 1 Oct. 1980
Place of the Initial Registration: Shenzhen City
8. Registration Code of Enterprise Business License: 440301501121863
9. Registration Code of Tax: 440301618815578
10. CPA firm engaged by the Company
Name: RSM China Certified Public Accountants Co., Ltd.
Address: 8-9/F, Block A, Corporate Square, 35 Financial Street, Xicheng
District, Beijing
(II) Main financial data and indices
1. Main accounting data and financial indices (Unit: RMB Yuan)
Items
At the end of report
period
At the end of last
year
Increase/decrease
(%)
Total assets 13,374,857,869.25 13,568,083,128.38 -1.42
Owners’ equity (or 3,918,638,320.39 3,875,367,861.56 1.12shareholders’ equity)
Share capital 1,203,972,704.00 1,203,972,704.00 0.00
Net assets per share attributable
to shareholders of listed company
3.25 3.22 0.93
Items
In the report period
(Jan.-Jun.)
The same period of
last year
Increase/decrease
(%)
Operating revenue 7,940,183,795.09 5,172,000,028.20 53.52
Operating profit 32,449,533.57 83,178,884.78 -60.99
Total profit 80,297,180.96 87,602,573.02 -8.34
Net profit attributable to
shareholders of listed company
50,887,520.39 80,302,015.01 -36.63
Net profit attributable to
shareholders of listed company
after deducting non-recurring
gain and loss
35,625,098.49 75,004,503.91 -52.50
Basic earnings per share 0.0423 0.0667 -36.58
Diluted earnings per share 0.0423 0.0667 -36.58
Net return on equity 1.30% 2.12% -0.82
Net cash flows arising from
operating activities
-1,968,450.22 99,694,380.71 -101.97
Net cash flows per share arising
from operating activities
-0.0016 0.0828 -101.93
2. Items of non-recurring gains and losses (Unit: RMB Yuan)
Items Amount
Note (if
applicable)
Profit and loss from disposal of non-current assets 14,413,137.27 -
Governmental grants counted into the current profit and loss, except
for the one closely related with the normal operation of the company
and gained constantly at a fixed amount or quantity according to certain
standard based on state policies
7,373,346.55
-
Profit or loss from change in fair value by holding tradable financial
assets and liabilities, and investment income from disposal of tradable
financial assets and liabilities as well as salable financial assets,
excluding the effective hedging businesses related with the normal
operations of the company
-5,324,378.65
-
Other non-operating income and expenses besides the above items 3,392,967.22 -
Effect on income tax -4,324,623.39 -
Effect on minority interests -268,027.10 -
Total 15,262,421.90 -
3. There existed no difference between the domestic and overseas financial
statements of the Company.
II. Changes in Share Capital and Shares Held by PrincipalShareholders
(I) Changes in share capital
During the report period, the Company’s total number of shares and share
structure both remained unchanged.
(II) Time to list and trade for shares subject to moratorium
Unit: share
Time
Number of shares can be
listed newly after
expiration of moratorium
Balance of
shares subject
to trading
moratorium
Balance of shares
not subject to
trading
moratorium
Remark
30 Mar. 2010 198,381,940 0 198,381,940
Note: 1. In accordance with commitments made by OCT Group Corporation and
THOMSON INVESTMENTS GROUP LIMITED (original shareholders with
non-tradable shares of the Company) when implemented share merger reform,
the shares subject to trading moratorium can be listed for trading or
transferred since 30 Mar 2008. However, by the disclosing date of this
report, OCT Group Corporation holding shares subject to trading
moratorium had never applied to Shenzhen Stock Exchange for release of
shares subject to trading moratorium.
2. Shares subject to trading moratorium in the table excluded shares
subject to trading moratorium held by senior executives.
(III) Particulars about shares held by top ten shareholders and top ten
shareholders with tradable shares at the end of report period:
Number of shares held by the top ten shareholders holding shares subject
to moratorium and the moratorium
Unit: Share
No.
Name of shareholders
subject to
moratorium
Number of
shares held
subject to
moratorium
Number of shares
subject to trading
moratorium
applied actually
Time
to be
listed
and
traded
Newly
increased
shares to
be listed
and
traded
Moratorium
1
Overseas Chinese
Town Group Company
198,381,940 198,381,940
30 Mar.
2010
0 Notes
Note: 1. The original shareholder of the Company, Overseas Chinese Town
Group Company, promised not to trade or transfer the non-tradable shares
of Konka Group within 24 months since the day those shares were authorized
with listing and circulating rights in A share market. After the
expiration of the aforesaid commitment, the total former non-circulating
shares of Konka Group listing at the Stock Exchange shall not exceed 5
percent of the Konka Group’s total share number within 12 months, and
not exceed 10 percent within 24 months2. In accordance with commitments made by OCT Group Corporation (original
non-tradable shareholders of the Company) when implemented share merger
reform, the shares subject to trading moratorium can be listed for trading
or transferred since 30 Mar. 2008. However, by the disclosing date of this
report period, OCT Group Corporation holding shares subject to trading
moratorium had never applied to Shenzhen Stock Exchange for release of
shares subject to trading moratorium.
3. In the table, shares subject to trading moratorium held by senior
executives of the Company were out of consideration.
(IV) Particulars about the shares held by the top ten shareholders and
the top ten shareholders holding shares not subject to trading moratorium
Unit: Share
Total number of
shareholders
109,769
Particulars about shares held by top ten shareholders
Name of shareholder
Nature of
shareholder
Proportion of
share held (%)
Total shares
held
Shares held
subject to
trading
moratorium
Shares
pledged or
frozen
Overseas Chinese Town Group
Company
State-owned
corporation
19.00 228,754,783 198,381,940 0
HOLY TIME GROUP LIMITED
Foreign
corporation
4.02 48,375,250 0 Unknown
GAOLING FUND,L.P.
Foreign
corporation
2.19 26,400,625 0 Unknown
BOCI SECURITIES LIMITED
Foreign
corporation
1.65 19,917,659 0 Unknown
Dacheng Value Growth
Securities Investment Fund
Domestic
non-state-owned
corporation
1.22 14,658,389 0 Unknown
NOMURA SECURITIES CO.LTD
Foreign
corporation
1.12 13,500,000 0 Unknown
NAM NGAI
Foreign natural
person
0.98 11,751,620 0 Unknown
Bank of China—Invesco Great
Wall Dingyi Stock Open
Securities Investment Fund
Domestic
non-state-owned
corporation
0.91 10,994,958 0 Unknown
CNCA A/C COMPAGNIE FINANCIERE
EDMOND DE ROTHSCHILD
Foreign
corporation
0.83 9,999,997 0 Unknown
ICBC—Hua An Mid-cap and
Small-cap Growth Stock
Securities Investment Fund
Domestic
non-state-owned
corporation
0.82 9,923,097 0 Unknown
Particulars about shares held by the top ten shareholders not subject to moratorium
Name of shareholder Numbers of shares not subject to Type of sharesmoratorium held
HOLY TIME GROUP LIMITED 48,375,250
Domestically listed foreign
shares
Overseas Chinese Town Group Company 30,372,843 Renminbi ordinary shares
GAOLING FUND,L.P. 26,400,625
Domestically listed foreign
shares
BOCI SECURITIES LIMITED 19,917,659
Domestically listed foreign
shares
Dacheng Value Growth Securities
Investment Fund
14,658,389
Renminbi ordinary shares
NOMURA SECURITIES CO.LTD 13,500,000
Domestically listed foreign
shares
NAM NGAI 11,751,620
Domestically listed foreign
shares
Bank of China—Invesco Great Wall Dingyi
Stock Open Securities Investment Fund
10,994,958 Renminbi ordinary shares
CNCA A/C COMPAGNIE FINANCIERE EDMOND DE
ROTHSCHILD
9,999,997
Domestically listed foreign
shares
ICBC—Hua An Mid-cap and Small-cap Growth
Stock Securities Investment Fund
9,923,097 Renminbi ordinary shares
Explanation on associated relationship
among the aforesaid shareholders or
acting-in-concert
Overseas Chinese Town Group Corporation, the first principal
shareholder, neither has any related relationship with other
shareholders, nor has joined in any consistent actions; the
Company is not aware whether the other shareholders have joined
in any consistent action or have related relationships among them.
(V) Particulars about shareholders holding over 5% shares
Name
Type of
shares
held
Nature of
enterpri
se
Legal
represe
ntative
Date of
foundat
ion
Registered
capital
(RMB’0000)
Main operations
Overseas
Chinese Town
Group Company
Domestic
corporate
shares
Wholly
State-fu
nd
company
Ren
Kelei
Nov.
1985
RMB 200,000
Development and operation of real
estate and hotels; operation of
tourism and relevant cultural
industries; manufacture of
electronics and supporting
packing products.
(VI) Particulars about controlling shareholder and actual controller
In the report period, the first principal shareholder and actual
controller of the Company remained unchanged, both being Overseas Chinese
Town Group Corporation.
III. Particulars about Directors, Supervisors and Senior Executives
(I) Shares held by directors, supervisors and senior executives of the
Company
1. Shares held by directors, supervisors and senior executives of theCompany remained unchanged in the report period.
2. In the report period, directors, supervisors and senior executives of
the Company neither hold stock option of the Company nor be authorized
restricted shares.
(II) Change of directors, supervisors and senior executives of the Company
in report period
1. During the report period, members of the Board of Directors remained
unchanged while members of the Supervisory Committee changed.
A staff representative meeting of the Company was held on 8 Feb. 2010,
at which agreed Mr. Ye Xiangyang didn’t take post of staff supervisor
of the Supervisory Committee of KONKA Group due to work transfer. At the
staff representative meeting, unanimously approved to elect Mr. Liu Yong
as the staff supervisor of the 6th Supervisory Committee at by vote.
2. During the report period, senior executives of the Company remained
unchanged.
IV. Report of the Board of Directors
(I) Overall operation in the report period
The Company mainly engages in the production and operation of color TV,
digital mobile phones, white home appliances, LED products as well as the
supporting products (such as high-frequency head, tools, injection mould,
and package, etc), and belongs to the industries of electronics
manufacture and telecommunication manufacture.
For the report period, the Company achieved an sales income of RMB
7,940,183,795.09, up by 53.52% year on year; a net profit of RMB
50,887,520.39, down by 36.63% year on year; and an earning per share
amounting to RMB 0.0423.
1. The main business income in the report period rose year on year mainly
due to the reason that the Company continued to encourage product
innovations, create differently fine products and increase product
competitiveness.
In the report period, all business units of the Company continued to carry
out the value operation strategy, emphasize the awareness of
aggressiveness, an open mind and the awareness of reform and innovation,
and expedite the reform of the marketing organization. Meanwhile, the
Company worked hard to improve its R&D capability, stick to product
innovation, tighten quality control and develop differently fine products,
which mad come true a rapid development of its color TV, cell phone and
white-electricity appliance businesses and other main businesses.
In terms of its color TV business in the report period, the Company focused
on new technology research and development and introduced a “fine product
project” to increase technological contents, create superstar products
and increase added value. LED TV products and internet TV took up a largerand larger proportion in the product structure, which was greatly improved.
As an outstanding representative product of the fine product project, the
Konka Net Rui LED Intelligent TV took the lead to adopt the Konka open
platform technology, which reflected the Company’s advance response to
the market. Through the open SDK software development tool, Net Rui LED
TV was able to realize smooth operation of any application program and
provide more intelligent TV experience for consumers. What’s more, the
Net Rui LED Intelligent TV also adopted the LED high-definition screen
and the color wheel technology. The IVRIV color vision solution, a color
technology for color TVs, provided the best picture quality all over the
world. With the strong driving force of Net Rui LED Intelligent TVs, the
report period witnessed a strong sales of the Company’s liquid-crystal
flat-panel TVs, with a soaring volume and amount of sales as compared with
the same period of last year.
During the report period, the Company further carried forward the
internationalization strategy, expanded the overseas market, and made
innovations in terms of products and marketing means. For the first half
as a whole, the Company achieved a sales income of RMB 2,095,885,600 from
the overseas market, up by 184.52% year on year, representing the highest
figure at the same period in the history of overseas sales.
In terms of the cell phone business, the Company made itself stand out
among other cell phone makers by its speed to constantly improve the
product structure. While maintaining a rapid development in the overseas
market, the Company continued to reinforce the channel layout in the
domestic market, strictly controlled risks and further solidified its
position in the domestically-made cell phone market.
As for the white home appliance business, the Company followed the market
trends to develop, with energy saving as the main line, fine products with
fashionable appearance, a unique fresh technology and a high
performance-cost ratio. Meanwhile, it actively expanded marketing
channels for its white home appliance products and increased the channel
coverage rate to make come true a steady growth of the white home appliance
business.
2. The net profit achieved by the Company in the report period registered
a year-on-year decrease due to reasons as follows
(1) During the report period, in order to fight for a larger share in the
flat-panel TV market, most domestic and foreign color TV brands resorted
to measures such as price reduction, which resulted in mounting
competition over prices of flat-panel TVs. Particularly since the second
quarter, foreign color TV brands started to reduce their prices in the
terminal end to an unprecedentedly low level and domestic brands were
forced to follow. As such, the gross profit rate of the Company’s products
was brought down quickly, which explained why the gross profit rate of
the Company’s flat-panel TVs in the report period was much lower thanthe same period of last year.
(2) Expenses on market expansion increased to some degree because the
Company was trying to make Konka a more powerful brand in the flat-panel
TV market and fight for a larger share in the market.
(3) The slow introduction of new products also affected profitability of
the Company’s color TV products to some extent in the report period.
Due to the reasons mentioned above, the net profit attributable to the
parent company achieved by the Company in the first half of 2010 went down
from that at the same period in 2009.
(II) Analysis on financial indices of the Company
Unit: RMB Yuan
Items Jan.– Jun. 2010 Jan.–Jun. 2009
Increase/decrea
se year-on-year
(%)
Operating income 7,940,183,795.09 5,172,000,028.20 53.52
Operating cost 6,700,253,316.40 4,191,720,715.02 59.84
Administrative expense 246,449,124.58 214,206,657.60 15.05
Operating expense 927,839,634.02 670,563,855.90 38.37
Financial expense 22,524,675.26 16,182,434.83 39.19
Operating profit 32,449,533.57 83,178,884.78 -60.99
Net profit 50,887,520.39 80,302,015.01 -36.63
Net cash flows from operating
activities
-1,968,450.22 99,694,380.71 -101.97
Items 30 Jun. 2010 31 Dec. 2009 Increase/decrea
se (%)
Total assets 13,374,857,869.25 13,568,083,128.38 -1.42
Shareholders’ equity 3,918,638,320.39 3,875,367,861.56 1.12
Account receivable 1,144,937,235.58 1,302,066,597.13 -12.07
Fixed assets 1,413,045,879.05 1,433,674,626.29 -1.44
Retained profit 652,626,692.19 613,778,898.84 6.33
Explanation and analysis on changes of some main items:
1. Operating expense was up by 38.37% year on year mainly due to the reasons
that marketing expense increased as a result of income increase and that
more efforts were made in promotion and advertising activities.
2. Financial expense was up by 39.19% year on year mainly due to the
increase in interest expense on the short-term operating financing
business.
(III) Particulars about main operations classified according to
industries, products and regions and statement of their comparison with
those of the same period of last year
1. Main operations classified according to industries and products
Unit: RMB Ten thousand
Indust
ries
Pro
duc
Income from main
operations
Cost of main
operations
Gross
profit
Comparison with that of the same period of
last yearts ratio (%)
Increase/dec
rease of
income (%)
Increase/decr
ease of cost
(%)
Increase/de
crease of
gross profit
ratio (%)
Manufa
cturin
g of
multimedia
Col
or
tel
evi
sio
n
604,459.42 510,497.37 15.54 62.02 67.39 -2.72
Manufa
cturin
g of
commun
icatio
n
Mob
ile
pho
ne
97,256.15 85,400.98 12.19 37.66 35.90 1.14
Others 87,198.47 71,180.92 18.37 30.16 49.03 -10.34
2. Main operations classified according to regions
Unit: RMB Ten thousand
Region Operating income
Increase/decrease from last year
(%)
Domestic 579,325.49 32.55
Overseas 209,588.56 184.52
Total 788,914.04 54.47
(IV) Operation of shareholding companies whose earnings influenced over
10% of the net profit of the Company
No shareholding company with earnings influencing over 10% of the net
profit of the Company existed in the report period.
(V) Major problems and difficulties met in operation during the first half
of the year
In order to fight for a larger share in the flat-panel TV market, most
domestic and foreign color TV brands resorted to measures such as price
reduction, which resulted in mounting competition over prices of
flat-panel TVs. As such, the gross profit ratio of the Company’s
flat-panel TVs decreased considerably as compared with that at the same
period of last year.
(Ⅵ) Investment of the Company
1. In the report period, the Company neither raised fund nor had
significant investment.
2. Particulars about significant project invested with non-raised fund
In the report period, the Company did not invest significant project with
non-raised fund.
(VII) Fair value measurement
At the end of report period, assets adopted fair value measurement of the
Company was financial assets available for sale, which was equity of Vanke
A。
As for the financial assets available for sale, the Company initiallymeasured in accordance with fair value obtained, relevant transaction
charge listed in initial confirmed amount, gains or losses from change
of fair value directly listed in owners’ equity, which transferred into
current gains and losses when the financial assets was confirmed. Fair
value was market value of financial assets available for sale.
During the report period, impact on owners’ equity calculated with fair
value measurement referred to notes to financial statement.
V. Significant Events
(I) corporate governance
In the report period, the Company operated in strict accordance with the
Company Law, Securities Law and relevant regulations and laws set by CSRC
and Shenzhen Stock Exchange. Based on the relevant regulations newly
issued, the Company amended its Specific Rules for Engaging CPA Firm and
formulated the Rules for Responsibility Locating in Major Errors in Annual
Report Disclosure. At the same time, it continued to perfect its corporate
governance structure, standardize the operation and better the
information disclosure. And all the resolutions made by the
Shareholders’ General Meeting and the Board of Directors were faithfully
executed. The actual corporate governance of the Company was in line with
regulatory documents issued by CSRC on the corporate governance of listed
companies.
(Ⅱ) Particulars about profit distribution, capitalization and share
issuance
Examined and approved at the 2009 Annual Shareholders’ General Meeting,
the Company’s profit distribution plan for the year 2009 was detailed
as follows:
1. 10% of the net profit as recognized in the parent company’s accounting
statements for the year 2009, i.e. RMB 2,524,736.37, was withdrawn as
statutory surplus reserves;
2. The remaining net profit of 2009 after withdrawing the statutory
surplus reserves was kept as the retained profit for the year, which,
together with the retained profit for the year 2008, became the sources
of profit distribution for the year of 2009.
Plan of profit distribution: based on the total shares of 1,203,972,704
shares at the end of 2009, a cash dividend of RMB 0.1 (tax included) was
distributed for every 10 shares to all the shareholders. And a total
dividend of RMB 12,039,727.04 was distributed, with the rest of the
retained profit carried forward for distribution in the future years.
The said profit distribution plan had been implemented, with the date of
record and the ex-dividend date for A shares respectively on 14 Jul. 2010
and 15 Jul. 2010, and the last trading date, the ex-dividend date and the
date of record for B shares respectively on 14 Jul. 2010, 15 Jul. 2010and 19 Jul. 2010.
(Ⅲ) Significant lawsuits and arbitrations
In the report period, the Company was not involved in any significant
lawsuits or arbitrations.
(IV) Other significant events, as well as analysis and explanation on
their influence and relevant solutions
1. Equity of other listed companies held by the Company
Unit: RMB
Stock
code
Short
form
of
stock
Initial
investment
amount
Proport
ion in
the
equity
of the
said
company
Book value
at
period-end
Gains
and
losses
in
report
period
Changes in
owners’
equity in
report
period
Accounting
entry
Source
of
stock
000002 Vanke
2,311,748.0
7
0.00％
1,114,445.0
0
0.00 -368,752.26
Financial
assets
available
for sale
Subscri
ption
of new
stock
600891
ST
CHURI
N
9,000,000.0
0
3.84％
9,000,000.0
0
0.00 0.00
Financial
assets
available
for sale
Subscri
ption
of
corpora
te
shares
Total -
11,311,748.
07
-
10,114,445.
00
0.00 -368,752.26 - -
Notes: 1. The equities of other listed companies held by the Company as
shown in the table above were those included in the accounting items of
long-term equity investment and financial assets available for sale.
2. The gains and losses in the report period in the table above referred
to the effect of an investment on the consolidated net profit of the
Company in the report period.
2. Statement on derivatives investment
Analysis on Risks of Positions of
Derivatives Held and Explanations on
Control Measures during the Period of Report
(including but not limited to the market
risk, liquidity risk, credit risk,
operational risk, legal risk, etc).
For each NDF portfolio transaction conducted by the company, the yield
to maturity is fixed, so no risk will occur.
The major risks that may arise from the NDF portfolio transactions
conducted by the Company include:
1. The risk due to the possible bankruptcy of the deposit pledge bank.
If the deposit pledge bank becomes bankrupt, the deposit pledged in such
bank may be difficult to be recovered in full.
2. The risk due to the possible bankruptcy of the bank engaging in
overseas NDF portfolio business. In case of the bankruptcy, the earnings
on NDF portfolio business may not be paid.
The Company always engages in NDF transactions with large-sized banks
such as Bank of China, which have steady operations and sound creditstanding with a low possibility of becoming bankrupt, so we do not
consider the loss arising from the possible bankruptcy of such banks.
The changes to the market prices and the fair
value of the derivatives invested in the
Period of Report, and the methods and
setting of relevant assumptions and
parameters to be disclosed in the analysis
on the fair value of the derivatives.
As the yield to maturity is fixed for the NDF portfolio business
conducted by the Company, no changes have taken place to the fair value.
Notes on any major change in the basic
principals of accounting policies and
accounting of the Company’s derivatives
comparing with those of last report period
in this report period
Up to the Date of Announcement, there is no special accounting method
applicable to the NDF portfolio business conducted by the Company, and
the accounting principles are subject to the Accounting Standards for
Business Enterprises.
Notes on whether there is any significant
change to the accounting policies and
principles applicable to the derivatives
invested by the Company during the Period of
Report, and the specific opinions of the
independent director(s), the sponsor or the
financial consultant on the Company’s
derivatives investments and the risk
control.
The Company’s independent director believes that conducting the NDF
business is necessary for the Company because it can benefit the Company
from RMB floating exchange rates, enabling the Company to achieve the
risk-free fixed income, and that as the Company is improving its
internal control system for the derivatives investment, the specific
risk control measures taken are enforceable.
2. Positions of derivatives investments held at the end of the period of
report
Unit: RMB
Type of contract
Amount of contract at
the beginning
Amount of contract
at end of the Period
Profit & loss
during period of
report
Percentage of amount
of contract at end of
period to the net
assets at end of the
period
NDF Portfolio
Business
2,584,356,800.00 1,794,700,000.00 19,350,000.00 45.80%
Total 2,584,356,800.00 1,794,700,000.00 19,350,000.00 45.80%
3. In the report period, the Company held no equities of financial
enterprises such as commercial banks, securities banks, insurance
companies, trust companies and futures companies, as well as companies
to be listed.
(V) Significant asset acquisition, sale and reorganization
1. In the report period, the Company did not conduct any significant asset
acquisition, sale or reorganization.
2. In the report period, there existed no transferring of property rightsor creditor’s rights and liabilities, for the Company did not conduct
any significant asset acquisition, sale or reorganization.
(VI) Significant related transactions
1. Related transactions with controlling shareholder and its subsidiaries
During the first half of 2010, there existed some related transactions
between the Company and its controlling shareholder—Overseas Chinese
Town Group Company—and its subsidiaries, mainly involving the Company’s
paying property management fee, water and power fee, land use fee to and
purchasing goods from the latter. All the involved transactions were
conducted fairly based on normal market prices, with no harm done to the
Company and the other shareholders of the Company. For more details,
please refer to “5. Transactions with related companies” in the “Note
VIII” to the accounting statements of the financial report.
2. Implementation of related transactions arising from routine operation
(Unit: RMB)
Type of
related
transactions
Further
classificati
on according
to product or
labor service
Related parties
Total implemented amount in the
first half of 2010
Proportion in
the same kind of
transactions
Anhui Huali Packaging Co.,
Ltd.
15,088,297.02 0.28
Huizhou Huali Packing Co.,
Ltd.
4,415,621.43 0.08
Shenzhen Huali Packing &
Trading Co., Ltd
559,711.13 0.01
Raw material
for color TV
Shanghai Huali Packing Co.,
Ltd
6,193,885.44 0.11
Purchase of
raw materials
Instruction
books
Guangzhou Panyu Hualiyoude
Color Printing & Packing Co.,
Ltd.
2,229,370.73
28,486,885.75
0.04
Notes: Proportion in the same type of transaction refers to the proportion
in raw materials for TV use.
(1) The Company has published the Forecasting Public Notice on Routine
Affiliated Transaction (public notice No. 2010-11) on Securities Times,
Shanghai Securities News, China Securities Journal and Hong Kong Ta Kung
Pao as well as the Internet website designated by CSRC
http://www.cninfo.com.cn on April 30, 2010. In the report period, the
basis for pricing, transaction price, transaction amount and settlement
methods of raw packaging material purchased by the Company from Anhui
Huali Packing Co., Ltd, Huizhou Huali Packing Co., Ltd., Shanghai Huali
Packing Co., Ltd. And Guangzhou Panyu Hualiyoude Color Printing & PackingCo., Ltd., were basically in accordance with the forecast; in the report
period, the business with Shenzhen Huali Packing & Trading Co., Ltd was
transferred to Huizhou Huali Packing Co., Ltd step by step. It was
forecasted that the basis for pricing, transaction price, transaction
amount and settlement methods of raw material purchased by the Company
from Shenzhen Huali Packing & Trading Co., Ltd and Huizhou Huali Packing
Co., Ltd was basically in accordance with the forecast that from Huizhou
Huali Packing Co., Ltd.
(2) Business transactions between the Company and the above affiliated
enterprises were carried out based on the general market operation rules
and the principle of fairness and justice. The Company treated such
enterprises as equally as other transaction enterprises, and there was
no damage to interests of the Company and all of its shareholders.
(3) Associated transactions of the Company with the above affiliated
parties occurred in daily operation of the Company. They were carried out
based on the principle of public bidding, and were necessary. The Company
would continue the cooperation of fairness and mutual benefits with them,
given the operation and development of the Company was stable. The
aforesaid associated transactions were beneficial for maintaining the
long-term cooperation between the Company and affiliated parties as well
as promoting development of the Company’s production and operation.
3. Guarantees between the Company and the affiliated parties
In the report period, no guarantee occurred between the Company and the
affiliated parties.
4. Joint external investment between the Company and the affiliated
parties
In the report period, the Company did not involve in joint external
investment with affiliated parties.
5. In the report period, the Company did not conduct any other significant
related transactions.
(VII) Significant contracts and their implementation
1. In the report period, the Company did not hold in trust, contract or
lease assets of other companies, or vice versa.
2. In the report period, the Company did not entrust others with financial
affairs.
(VIII) Commitments made by shareholders
Commitment Promisee Contents of commitment Implementation
Commitment made in
the share reform
Overseas
Chinese Town
Group Company
(1) No trading or transferring of the non-tradable shares of Konka
Group held by OCT Group would be conducted within 24 months since
the date when those shares became tradable in the A-share market.
(2) After the expiration of the aforesaid commitment, the
originally non-tradable shares of Konka Group sold by OCT Group
Up until now, no
shares subject
to trading
moratorium have
been traded orthrough listing at the stock exchange would not exceed 5% of Konka
Group’s total shares within 12 months, and not exceed 10% within
24 months.
transferred.
Commitment
concerning share
trading
moratorium
Naught Naught Naught
Commitment in the
acquisition
report or the
report on equity
changes
Naught Naught Naught
Commitment made in
the significant
asset
reorganization
Naught Naught Naught
Commitment made in
the issuance
Naught Naught Naught
Other commitments
(including
supplementary
ones)
Naught Naught Naught
(IX) Particulars about reception of visit and investigation of the Company
in the report period
In the report period, the Company provided materials, which had been
disclosed, to the visitors, in accordance with provisions in Guidelines
of Fair Information Disclosure for Companies Listed on the Shenzhen Stock
Exchange, Administrative Methods for Information Disclosure of Konka
Group Co., Ltd and Investor Relations Management System of Konka Group
Co., Ltd. Besides, the Company provided objective, true, accurate and
complete information for visitors, which reflected actual operation and
management; meanwhile, no significant non-public information was
disclosed or leaked out.
Reception
time
Reception
place
Receptio
n way
Visitor
Main discussion and materials provided by
the Company
5 Jan. 2010
Meeting room
of the Company
Field
research
Guoxin Securities,
Yinhua Fund and
Caitong Securities
The company’s core competitive power,
competitive status of LED TV and the Color
TV industry status of the Company
8 Jan. 2010
Meeting room
of the Company
Field
research
Donghai Securities
and Sinosafe General
Insurance
Company development strategy in Color TV
industry, promotion of new products of LCD
TV and competitive status of LED TV
13 Jan. 2010
Meeting room
of the Company
Field
research
Invesco Great Wall
Funds and Morgan
Stanley Huaxin Funds
Status quo of color TV industry，the Color
TV industry status of the Company and
competitive status of LED TV
20 Jan. 2010
Meeting room
of the Company
Field
research
ESSENCE SECURITIES
Development strategy of cell-phone
business of the Company, market
possibility of new products of color TV and
progress of relevant work
26 Jan. 2010
Meeting room
of the Company
Field
research
Xiangcai Securities
The investment of LCD module project,
basic status of the Company’s business of
Color TV and mobile telephone.
27 Jan. 2010
Meeting room
of the Company
Field
research
Central China
Securities
Situation of LCD module project putting
into production and development trend of
color TV industry19 Mar. 2010
Meeting room
of the Company
Field
research
Guotai Junan
Securities and
Bosera Funds, Lion
Fund, Penghua Fund
and CRTZ Asset
management Co., Ltd
The company’s core competitive power and
the sales status in the project of home
appliances to the countryside
22 Mar. 2010
Meeting room
of the Company
Field
research
Bank of China
Investment
Situation of LCD module project putting
into production and competitive strategy
of color TV
25 Mar. 2010
Meeting room
of the Company
Field
research
Bank of
Communications
Schroder Fund
The situation about color TV, mobile
telephone and market competitive power of
color TV
30 Mar. 2010
Meeting room
of the Company
Field
research
China Asset
Management
Development trend of color TV industry,
market competitive power of color TV of the
Company, market prospect of new products
and progress of relevant work
9 Apr. 2010
Meeting room
of the Company
Field
research
First Shanghai
Investments Ltd and
China Asset
Management
Competitive status of LED TV, Status quo
of color TV industry and situation on
cell-phone business
10 May 2010
Meeting room
of the Company
Field
research
Guosen Securities
Development strategy of white electricity
products, situation on launching new
products of LED TV and competitive status
of LED TV market of the Company
10 May 2010
Meeting room
of the Company
Field
research
HFT Investment
Management
Current status of white electricity
products, industry position of color TV
business and competitive status of LED TV
11 May 2010
Meeting room
of the Company
Field
research
CITIC Securities and
Industrial
Securities
sales situations in project of “Promoting
Household Appliances in Rural Area” and
development trends in industries of the
Company’s main products
24 May 2010
Meeting room
of the Company
Field
research
CITIC Securities
Development strategy, sales situations in
project of “Promoting Household
Appliances in Rural Area” and
generalization of change new appliances
with ole ones
29 May 2010
Meeting room
of the Company
Field
research
Toyo Securities Asia
Competitiveness of the Company’s
color-TV, cell-phone and white
electricity products, planning and market
possibility of new products
3 Jun. 2010
Meeting room
of the Company
Field
research
KGI Securities
Development strategy of the Company and
situation of LCD module project putting
into production
10 Jun. 2010
Meeting room
of the Company
Field
research
Morgan Stanley
Market conditions of color-TV industry,
cell-phone industry and white
electricity, and development concept of
the Company
11 Jun. 2010
Meeting room
of the Company
Field
research
CLSA Asia-Pacific
Markets
Business development, and internal
management of the Company
21 Jun. 2010
Meeting room
of the Company
Field
research
Everbright
Securities
Competitiveness of the Company’s
color-TV, cell-phone and white
electricity products, and market
possibility of new products
(X) Other significant events
In the report period, the Company, its Board of Directors and directors
received no investigations, administrative punishment or criticism by
circular from CSRC, as well as no punishment from other administrative
authorities or open criticism from the stock exchange.(XI) Index for information disclosed
1. Public Notice on Change of Employee Supervisor; Public Notice No.:
2010-01; Disclosure Date: 10 Feb. 2010.
2. Public Notice on NDF Portfolio Business; Public Notice No.: 2010-04;
Disclosure Date: 6 Mar. 2010
3. Public Notice on Estimate of Routine Related Transaction in 2010;
Public Notice No.: 2010-11; Disclosure Date: 30 Apr. 2010
4. Public Notice on Retroactive Accounting Adjustment; Public Notice No.:
2010-12; Disclosure Date: 30 Apr. 2010
All the said public notices were disclosed on Securities Times, Shanghai
Securities News, China Securities Journal, Hong Kong Ta Kung Pao and
www.cninfo.com.cn.
(XII) Explanation on capital flows and guarantees between the Company and
its related parties
1. Capital flows between the Company and its related parties by 30 Jun.
2010
(Unit: RMB’0000)
Name of related
party
Relationship with
the Company
Accountin
g entry
Beginning
balance
Debit Credit
Closing
balance
Occupa
tion
way
Repa
ymen
t
way
Whether or not
an irregular
capital
occupation
prohibited by
document No. 56
Shenzhen OCT
East Co., Ltd.
Subsidiary of the
principal
shareholder
Accounts
receivabl
e 380.80 579.11 409.85
550.06
Operat
ing
Cash No
Chengdu Tianfu
OCT Industry
Development
Co., Ltd.
Subsidiary of the
principal
shareholder
Accounts
receivabl
e
361.72 - 214.60
147.12
Operat
ing
Cash No
Century OCT
(Beijing) Co.,
Ltd.
Subsidiary of the
principal
shareholder
Accounts
receivabl
e 6.25 90.00 173.94
-77.69
Operat
ing
Cash No
Shenzhen Konka
Energy
Technology Co.,
Ltd.
Affiliated
company
Accounts
receivabl
e
- - -
-
Operat
ing
Cash No
Shanghai OCT
Investment &
Development
Co., Ltd.
Subsidiary of the
principal
shareholder
Accounts
receivabl
e
55.07 - -
55.07
Operat
ing
Cash No
Shenzhen OCT Subsidiary of the Other Operat Cash NoReal Estate Co.,
Ltd.
principal
shareholder
receivabl
es
121.22 4.13 0.64 124.71 ing
Shenzhen OCT
Property
Management Co.,
Ltd
Subsidiary of the
principal
shareholder
Other
receivabl
es
7.74 - -
7.74
Operat
ing
Cash No
Shenzhen OCT
Water and Power
Company
Subsidiary of the
principal
shareholder
Other
receivabl
es 103.34 446.80 423.34
126.80
Operat
ing
Cash No
Shanghai Huali
Packaging Co.,
Ltd.
Subsidiary of the
principal
shareholder
Accounts
payable
- 670.82 724.68
-53.87
Operat
ing
Cash No
Shenzhen Huali
Packing &
Trading Co.,
Ltd.
Subsidiary of the
principal
shareholder
Accounts
payable
165.89 65.03 71.35
159.57
Operat
ing
Cash No
Shenzhen Huayou
Package Co.,
Ltd.
Sub-subsidiary of
the principal
shareholder
Accounts
payable
0.02 - -
0.02
Operat
ing
Cash No
2. Particulars about guarantees
In the report period, the Company provided no guarantees for its holding
subsidiaries or any other external parties.
3. Special explanation and independent opinion of independent directors
on the Company’s provision of external guarantees and executing the
Circular of CSRC on Certain Issues Regarding Regulating Capital Flows
between Listed Companies and Related Parties and Regarding Provisional
of External Guarantees by Listed Companies (ZJF [2003] No. 56)
According to the Circular of CSRC on Certain Issues Regarding Regulating
Capital Flows between Listed Companies and Related Parties and Regarding
Provisional of External Guarantees by Listed Companies (ZJF [2003] No.
56), as the independent directors of Konka Group Co., Ltd. (hereinafter
referred to as “the Company”), we conducted specific examinations on
the capital flows between the Company and its related parties, as well
as on the external guarantees provided by the Company. And we hereby
express our independent opinions as follows:
1. Up to 30 Jun. 2010, the principal shareholder of the Company had not
occupy any capital of the Company; and the capital occupation by some
related parties of the principal shareholder (Shenzhen OCT Real Estate
Co., Ltd., Shenzhen OCT Property Management Co., Ltd., Shenzhen OCT Water
& Power Co., Ltd., etc.) was mainly resulted from the deposit collection
and other timing differences arising from routine business contacts.
2. The operational capital flows between the Company and its principal
shareholder and the related parties of the principal shareholder duringthe first six months of 2010 were specified as follows:
(1) There were related transactions concerning the Company’s purchase
of raw materials from Anhui Huali Packing Co., Ltd Huizhou Huali Packing
Co., Ltd., Shanghai Huali Packing Co., Ltd. and Guangzhou Panyu Hualiyoude
Color Printing & Packing Co., Ltd., which were subsidiaries indirectly
controlled by the principal shareholder of the Company. The said related
transactions had been submitted to and approved by the relevant board
meetings, which were later disclosed to the public. The Company settled
the relevant accounts with the said related parties at fixed periods
according to relevant contracts, and consequently, there occurred no
non-operational capital flows.
(2) There existed small-amount operational capital flows arising from the
Company’s selling TV walls to and repairing TV walls for some
subsidiaries of the principal shareholder (Shenzhen OCT East Co., Ltd.,
Chengdu Tianfu OCT Industry Development Co., Ltd., etc.).
3. During the first half of 2010, there occurred no non-operational
capital flows between the Company and its principal shareholder and the
latter’s related parties.
4. Up to 30 Jun. 2010, the Company had been operating in a regular manner
with no provision of guarantees for external parties.
To sum up, we were of the opinion that the Company did not violate relevant
provisions in the Document ZJF [2003] No.56.
Independent Directors: Feng Yutao, Yang Haiying and Zhang
Zhong
(XIII) Significant asset pledge
As approved at the 39th Meeting of the 6th Board of Directors and the Annual
Shareholders’ General Meeting in 2009, the Company applied to Bank of
China for a comprehensive credit line not exceeding RMB 5.6 billion with
a term of two years. At the same time, the Company provided the following
assets for Bank of China as pledge: (1) bank’s acceptance bills
receivable with the par value of specific time point not lower than RMB
1.2 billion; (2) house properties of Dongguan Konka Electronics Co., Ltd.
with the original value about RMB 180 million; (3) loan for Konka R&D
Building provided with pledge of land use right certificate of the project,
and then pledged with title deed when the project was established and the
title deed was finished.
VI. Financial Report
The interim financial report 2010 of the Company (unaudited) is attached
behind.VII. Documents Available for Reference
1. Text of the interim report 2010 carrying the signature of Chairman of
the Board of Directors;
2. Text of financial report carrying the signatures and seals of person
in charge of the Company, chief in charge of accounting and person in
charge of the accounting organization;
3. Texts of all documents disclosed on newspapers designated by CSRC;
4. Text of the Company’s Articles of Association;
5. Other relevant materials.
Board of Directors
Konka Group Co., Ltd.
31 AUG. 2010Konka Group Co., Ltd.
FINANCIAL REPORT
For the period from Jan. 2010 to Jun. 2010
（un-audited）
Contents
Balance Shhet
Income Statement
Cash Flow Statement
Statement of Changes in Owners' Equity
Notes to Accounting Statements
Regal Representative: Hou Songrong
Person-in-charge of Accounting: Yang Rong
Person-in-charge of the Accounting Agency: Ruan RenzongBalance Sheet
Prepared by: Konka Group Co., Ltd. 30 Jun. 2010 Unit: (RMB) Yuan
Closing balance Beginning balance
Items
Consolidation Parent company Consolidation Parent company
Current Assets:
Monetary funds 2,845,093,161.87 2,233,550,941.15
3,624,480,380.2
5
2,920,787,369.99
Settlement reserve
Dismantle fund
Transaction financial asset 3,673,164.00 2,781,054.00
Notes receivable 2,797,430,209.07 2,345,491,045.73
2,807,539,700.2
7
2,679,933,632.86
Account receivable 1,144,937,235.58 785,878,682.21
1,302,066,597.1
3
1,105,121,784.81
Account paid in advance 189,532,879.94 492,569,630.69 275,850,813.27 259,306,577.60
Premiums receivable
Reinsurance premiums
receivable
Reinsurance contract reserves
receivable
Interest receivable 13,187,535.33 12,499,828.04 32,529,920.96 29,442,469.13
Dividend receivable 19,092,952.03
Other receivables 165,931,695.55 518,168,273.59 19,572,445.66 863,563,519.29
Buying back the sale of
financial assets
Inventories 4,258,509,762.19 3,506,221,694.95
3,580,780,457.0
1
2,880,442,228.65
Non-current assets due within 1
year
Other current assets
Total current assets 11,414,622,479.53 9,913,473,048.39
11,646,493,478.
55
10,741,378,636.33
Non-current assets:
Loans and advances
Available-for-sale financial
assets
9,795,361.80 9,795,361.80 10,268,121.10 10,268,121.10
Held-to-maturity investments
Long-term account receivable
Long-term equity investment 61,104,576.15 1,298,602,169.87 57,800,445.23 1,278,602,169.87
Investment properties
Fixed assets 1,413,045,879.05 374,871,054.19
1,433,674,626.2
9
397,886,724.19Construction in progress 138,548,628.29 100,619,834.39 61,087,946.18 35,542,625.38
Engineering material
Disposal of fixed assets 20,851,110.89
Production biological assets
Oil-gas assets
Intangible assets 166,627,790.12 18,422,465.21 167,502,525.56 18,952,170.77
Development expenses
Goodwill 3,943,671.53 3,943,671.53
Long-term deferred expenses 12,535,914.10 5,016,077.38 15,774,783.95 6,011,778.39
Deferred income tax assets 154,633,568.68 138,795,932.20 150,686,419.10 139,410,896.12
Other non-current assets
Total of non-current assets 1,960,235,389.72 1,946,122,895.04
1,921,589,649.8
3
1,886,674,485.82
Total assets 13,374,857,869.25 11,859,595,943.43
13,568,083,128.
38
12,628,053,122.15
Regal Representative: Hou Songrong
Person-in-charge of Accounting: Yang Rong
Person-in-charge of the Accounting Agency: Ruan Renzong
Balance Sheet (Continued)
Prepared by: Konka Group Co., Ltd. 30 Jun. 2010 Unit: (RMB)
Yuan
Current liabilities:
Short-term borrowings 3,980,050,288.15
3,688,890,561.08
2,770,014,060.0
0
2,553,412,550.00
Borrowings from central bank
Deposits and due to banks and
other financial institutions
Call loan received
Transaction financial
liabilities
1,661,744.00 1,409,434.00
Notes payable 2,380,582,059.85 2,026,496,784.14
2,884,697,072.4
2
2,546,131,169.12
Account payable 1,980,497,062.73 1,657,516,138.02
2,599,242,285.0
4
2,490,629,061.71
Account received in advance 200,479,404.84 111,447,884.90 279,331,464.38 162,177,552.53
Financial assets sold for
repurchase
Handling charges and
commissions payable
Payroll payable 173,699,000.28 79,608,953.20 193,217,075.52 94,499,554.84
Tax payable -321,176,496.00 -288,736,678.04 -132,897,711.14 -74,701,335.32Interest payable 9,628,358.03 9,090,108.84 23,633,016.78 21,675,319.92
Dividend payable 16,048,530.52 12,039,727.04 804,527.20
Other account payable 698,494,906.19
689,854,053.23
763,923,600.66 940,384,863.17
Reinsurance premiums payable
Insurance contract reserves
Money paid for acting trading
of securities
Money paid for acting
underwriting of securities
Non-current liabilities due
within 1 year
Other current liabilities
Total current liabilities 9,119,964,858.59 7,987,616,966.41
9,381,965,390.8
6
8,734,208,735.97
Non-current liabilities:
Long-term borrowings
Bonds payable
Long-term payables
Specific payables
Estimated liabilities
Deferred income tax
liabilities
1,308,715.59 611,831.88 1,308,715.59 611,831.88
Other non-current liabilities 98,441,048.48 71,205,048.48 78,541,048.48 62,205,048.48
Total non-current liabilities 99,749,764.07 71,816,880.36 79,849,764.07 62,816,880.36
Total liabilities 9,219,714,622.66 8,059,433,846.77
9,461,815,154.9
3
8,797,025,616.33
Owner’s equity (or
shareholder’s equity)
Paid-in capital (or share
capital)
1,203,972,704.00 1,203,972,704.00
1,203,972,704.0
0
1,203,972,704.00
Capital reserves 1,257,080,975.32 1,248,950,808.74
1,257,449,727.5
8
1,249,319,561.00
Less: treasury stock
Specific reserves
Surplus reserves 809,307,995.80 809,307,995.80 809,307,995.80 809,307,995.80
Provisions for general risks
Retained profits 652,626,692.19 537,930,588.12 613,778,898.84 568,427,245.02
Foreign exchange difference -4,350,046.92 -9,141,464.66
Total owners' equity
attributable to parent company
3,918,638,320.39 3,800,162,096.66
3,875,367,861.5
6
3,831,027,505.82
Minority interest 236,504,926.20 230,900,111.89
Total owner’s equity 4,155,143,246.59 3,800,162,096.66 4,106,267,973.4 3,831,027,505.825
Total liabilities and owner’s
equity
13,374,857,869.25 11,859,595,943.43
13,568,083,128.
38
12,628,053,122.15
Regal Representative: Hou Songrong
Person-in-charge of Accounting: Yang Rong
Person-in-charge of the Accounting Agency: Ruan Renzong
Income Statement
Prepared by: Konka Group Co., Ltd. Jan.-Jun. 2010 Unit: (RMB)
Yuan
Current period Last period
Items
Consolidation Parent company Consolidation Parent company
I. Total operation income 7,940,183,795.09 7,565,353,506.27
5,172,000,028.2
0
4,329,763,251.61
Including: Sales income 7,940,183,795.09 7,565,353,506.27
5,172,000,028.2
0
4,329,763,251.61
Interest income
Premium income
Handling charges and
commission income
II. Total operation cost 7,905,714,013.79 7,632,624,904.44
5,090,423,890.9
6
4,286,504,527.20
Including: Cost of sales 6,700,253,316.40 6,686,604,551.61
4,191,720,715.0
2
3,555,349,542.17
Interest expenses
Handling charges and
commission expenses
Surrender value
Net amount of claims
Net amount of insurance
contract reserve withdrawn
Expenditure on policy
dividends
Reinsurance premium
expenses
Taxes and associate
charges
1,481,488.39 422,417.70 1,501,410.71 564,937.43
Selling expenses 927,839,634.02 786,219,597.76 670,563,855.90 584,764,007.10
Administrative expenses 246,449,124.58 139,578,001.27 214,206,657.60 140,842,934.39
Financial expenses 22,524,675.26 16,253,542.17 16,182,434.83 9,934,612.96
Impairment loss 7,165,775.14 3,546,793.93 -3,751,183.10 -4,951,506.85
Add: gain from change in fair
value (“-” means loss)
-5,334,908.00 -4,190,488.00 2,178,002.85 2,178,002.85Gain from investment (“-”
means loss)
3,314,660.27 19,103,481.38 -575,255.31 1,350,000.00
Including: income form
investment in affiliated
enterprise and joint ventures
3,304,130.92 -575,255.31
Foreign exchange difference
(“-” means loss)
III. Operation profit (“-”
means loss)
32,449,533.57 -52,358,404.79 83,178,884.78 46,786,727.26
Add: non-operation income 52,364,509.45 38,868,524.81 6,278,055.51 3,479,033.75
Less: non-business expense 4,516,862.06 1,693,970.37 1,854,367.27 889,650.21
Including: loss from non-current
asset disposal
283,324.10 212,460.68 753,175.86 462,078.33
IV. Total profit (“-” means
loss)
80,297,180.96 -15,183,850.35 87,602,573.02 49,376,110.80
Less: income tax expense 19,784,172.49 3,273,079.51 12,616,092.53 6,853,138.30
V. Net profit (“-” means loss) 60,513,008.47 -18,456,929.86 74,986,480.49 42,522,972.50
Attributable to owners of
parent company
50,887,520.39 -18,456,929.86 80,302,015.01 42,522,972.50
Minority interest 9,625,488.08 -5,315,534.52
VI. Earnings per share
(I) Basic earnings per share 0.0423 -0.0153 0.0667 0.1934
(II) Diluted earnings per share 0.0423 -0.0153 0.0667 0.1934
VII. Other composite income 4,422,665.48 -368,752.26 971,370.48 591,242.40
VIII. Total composite income 64,935,673.95 -18,825,682.12 75,957,850.97 43,114,214.90
Attributable to owners of
parent company
55,310,185.87 -18,825,682.12 81,273,385.49 43,114,214.90
Minority interest 9,625,488.08 - -5,315,534.52 -
Regal Representative: Hou Songrong
Person-in-charge of Accounting: Yang Rong
Person-in-charge of the Accounting Agency: Ruan Renzong
Cash Flow Statement
Prepared by: Konka Group Co., Ltd. Jan.-Jun. 2010 Unit: (RMB)
Yuan
Current period Last period
Items
Consolidation Parent company Consolidation Parent company
I. Cash flows from operating
activities:
Cash received from sale of
commodities and rendering of
service
9,468,101,045.07 7,778,062,165.90 6,575,122,853.39 5,762,056,807.56
Net increase of deposits fromcustomers and due from banks
Net increase of loans from the
central bank
Net increase of funds borrowed
from other financial
institutions
Cash received from premium of
original insurance contracts
Net cash received from
reinsurance business
Net increase of savings of
policy holders and investment
fund
Net increase of disposal of
tradable financial assets
Cash received from interest,
handling charges and commissions
Net increase of borrowed
inter-bank funds
Net increase of buy-back funds
Tax refunds received 141,105,164.31 30,175,004.83 38,971,081.08 11,796,183.47
Other cash received relating to
operating activities
147,423,140.63 425,771,643.58 134,216,272.04 168,237,617.44
Subtotal of cash inflows from
operating activities
9,756,629,350.01 8,234,008,814.31 6,748,310,206.51 5,942,090,608.47
Cash paid for purchase of
commodities and reception of
service
7,753,978,854.62 6,844,247,948.81 5,090,616,508.09 4,897,784,258.68
Net increase of customer
lending and advance
Net increase of funds deposited
in the central bank and amount due
from banks
Cash for paying claims of the
original insurance contract
Cash for paying interest,
handling charges and commissions
Cash for paying policy
dividends
Cash paid to and for employees 548,892,574.34 309,818,063.70 433,766,746.42 258,790,124.13
Various taxes paid 776,122,648.52 612,827,937.88 680,438,593.05 580,139,020.60
Other cash paid relating to
operating activities
679,603,722.75 576,323,747.24 443,793,978.24 328,248,721.95Subtotal of cash outflows from
operating activities
9,758,597,800.23 8,343,217,697.63 6,648,615,825.80 6,064,962,125.36
Net cash flows from operating
activities
-1,968,450.22 -109,208,883.32 99,694,380.71 -122,871,516.89
II. Cash Flows from investment
activities:
Cash received from disposal of
investments
95,940.00 95,940.00
Cash received from investment
income
10,529.35 10,529.35 1,350,000.00
Net cash received from disposal
of fixed assets, intangible
assets and other long-term assets
30,098,396.52 26,603,217.52 4,092,314.92 3,000,754.21
Net cash received from disposal
of subsidiary or other business
units
Other cash received relating
to investment activities
10,164,944.00
Subtotal of cash inflows
from investment activities
30,204,865.87 26,709,686.87 14,257,258.92 4,350,754.21
Cash paid to acquire fixed
assets, intangible assets and
other long-term assets
170,905,523.41 77,165,340.26 101,003,020.36 5,596,863.88
Cash paid for investment 20,000,000.00
Net increase of pledged loans
Net cash paid to acquire
subsidiaries and other business
units
Other cash paid relating to
investment activities
69,000,000.00 69,000,000.00
Subtotal of cash outflows from
investment activities
239,905,523.41 166,165,340.26 101,003,020.36 5,596,863.88
Net cash flows from investment
activities
-209,700,657.54 -139,455,653.39 -86,745,761.44 -1,246,109.67
III. Cash flows from financing
activities:
Cash received from absorbing
investment
Including: Cash received by
subsidiaries from investment of
minority interest
Cash received from borrowings 1,231,028,524.94 1,003,818,000.00 1,387,409,892.00 1,247,289,300.00
Cash received from issuance of
bondsOther cash received relating
to financing activities
1,599,292,865.39 1,458,579,686.30 1,458,711,172.54 1,131,355,911.64
Subtotal of cash inflows from
financing activities
2,830,321,390.33 2,462,397,686.30 2,846,121,064.54 2,378,645,211.64
Cash paid to repay loans 1,896,587,469.09 1,630,445,526.14 856,297,186.92 675,542,098.17
Cash paid for interest
expenses and distribution of
dividends or profit
7,815,231.89 3,095,860.70 9,144,221.25
Including: dividends or
profit paid to minority
shareholders by subsidiaries
Other cash payments relating
to financing activities
500,024,110.99 479,005,766.00 1,406,885,638.20 1,266,157,839.52
Sub-total of cash outflows from
financing activities
2,404,426,811.97 2,112,547,152.84 2,272,327,046.37 1,941,699,937.69
Net cash flows from financing
activities
425,894,578.36 349,850,533.46 573,794,018.17 436,945,273.95
IV. Effect of foreign exchange
rate changes on cash and cash
equivalents
-5,576,575.02 -3,777,925.59 -4,032,221.84 -3,696,290.89
V. Net increase in cash and cash
equivalents
208,648,895.58 97,408,071.16 582,710,415.60 309,131,356.50
Add : beginning balance of
cash and cash equivalents
749,501,416.29 341,440,119.99 845,026,867.06 358,631,499.14
VI. Closing balance of cash and
cash equivalents
958,150,311.87 438,848,191.15 1,427,737,282.66 667,762,855.64
Regal Representative: Hou Songrong
Person-in-charge of Accounting: Yang Rong
Person-in-charge of the Accounting Agency: Ruan RenzongConsolidated Statement of Changes in Owners’ Equity
Prepared by: Konka Group Co., Ltd. 30 Jun. 2010 Unit: (RMB) Yuan
Amount for current period
Owners’ equity attributable to parent company
Items
Paid-in
capital (or
share
capital)
Capital
reserve
Less:
treasury
stock
Specifi
c
reserve
s
Surplus
public
reserve
General
risk
reserve
Retained
profit
Others
Minority
interests
Total owners’
equity
I. Balance at the end of last year 1,203,972,704.00
1,257,449,7
27.58
809,307,995.80 613,778,898.84 -9,141,464.66 230,900,111.89 4,106,267,973.45
Add: change of accounting policy
Correction of errors in previous periods
Others
II. Balance at the beginning of this year 1,203,972,704.00
1,257,449,7
27.58
809,307,995.80 613,778,898.84 -9,141,464.66 230,900,111.89 4,106,267,973.45
III. Increase/ decrease of amount in this
year (“-” means decrease)
-368,752.26 38,847,793.35 4,791,417.74 5,604,814.31 48,875,273.14
(I) Net profit 50,887,520.39 9,625,488.08 60,513,008.47
(II) Other composite income -368,752.26 4,791,417.74 4,422,665.48
Subtotal of (I) and (II) -368,752.26 50,887,520.39 4,791,417.74 9,625,488.08 64,935,673.95
(III) Capital input and reduction of
owners
1. Capital input of owners
2. Amount of stock payment included in
the owners’ equity
3. Others(IV) Profit distribution -12,039,727.04 -4,020,673.77 -16,060,400.81
1. Withdrawing surplus public reserve
2. Withdrawing general risk reserve
3. Distribution to owners (or
shareholders)
-12,039,727.04 -4,020,673.77 -16,060,400.81
4. Others
(V) Internal carrying forward of owners’
equity
1. New increase of capital (or share
capital) from capital reserves
2. Converting surplus reserves to
capital (or share capital)
3. Surplus reserves make up losses
4. Others
(VI) Specific reserves
1. Appropriated in current period
2. Used in current period
IV. Balance at the end of this period 1,203,972,704.00
1,257,080,9
75.32
809,307,995.80 652,626,692.19 -4,350,046.92 236,504,926.20 4,155,143,246.59
Regal Representative: Hou Songrong Person-in-charge of Accounting: Yang Rong
Person-in-charge of the Accounting Agency: Ruan Renzong
Consolidated Statement of Changes in Owners’ Equity (Continued)
Prepared by: Konka Group Co., Ltd. 30 Jun. 2010 Unit: (RMB) Yuan
Items Amount for the year 2009Owners’ equity attributable to parent company
Paid-in
capital (or
share
capital)
Capital
reserve
Less:
treasury
stock
Specific
reserves
Surplus
public
reserve
General
risk
reserve
Retained
profit
Others
Minority
interests
Total owners’
equity
I. Balance at the end of last year 1,203,972,704.00
1,256,138,2
95.21
804,896,533.8
2
500,638,125.11 9,397,273.34 224,430,267.07 3,999,473,198.55
Add: change of accounting policy
Correction of errors in previous periods
Others
II. Balance at the beginning of this year 1,203,972,704.00
1,256,138,2
95.21
804,896,533.8
2
500,638,125.11 9,397,273.34 224,430,267.07 3,999,473,198.55
III. Increase/ decrease of amount in this
year (“-” means decrease)
591,242.40 20,103,379.81 380,128.08 -10,831,658.95 10,243,091.34
(I) Net profit 80,302,015.01 -5,315,534.52 74,986,480.49
(II) Other composite income 591,242.40 380,128.08 971,370.48
Subtotal of (I) and (II) 591,242.40 80,302,015.01 380,128.08 -5,315,534.52 75,957,850.97
(III) Capital input and reduction of
owners
1. Capital input of owners
2. Amount of stock payment included in
the owners’ equity
3. Others
(IV) Profit distribution -60,198,635.20 -5,516,124.43 -65,714,759.63
1. Withdrawing surplus public reserve
2. Withdrawing general risk reserve
3. Distribution to owners (or -60,198,635.20 -5,516,124.43 -65,714,759.63shareholders)
4. Others
(V) Internal carrying forward of owners’
equity
1. New increase of capital (or share
capital) from capital reserves
2. Converting surplus reserves to
capital (or share capital)
3. Surplus reserves make up losses
4. Others
(VI) Specific reserves
1. Appropriated in current period
2. Used in current period
IV. Balance at the end of this period 1,203,972,704.00
1,256,729,5
37.61
804,896,533.8
2
520,741,504.92 9,777,401.42 213,598,608.12 4,009,716,289.89
Regal Representative: Hou Songrong Person-in-charge of Accounting: Yang Rong
Person-in-charge of the Accounting Agency: Ruan Renzong
Statement of Changes in Owners’ Equity of Parent Company
Prepared by: Konka Group Co., Ltd. 30 Jun. 2010 Unit: (RMB) Yuan
Amount for the year 2010
Owners’ equity attributable to parent company
Items
Paid-in capital
(or share capital)
Capital
reserve
Less:
treasury
stock
Specific
reserves
Surplus public
reserve
General
risk
reserve
Retained profit
Total owners’
equityI. Balance at the end of last year 1,203,972,704.00 1,249,319,561.00 809,307,995.80 568,427,245.02 3,831,027,505.82
Add: change of accounting policy
Correction of errors in previous periods
Others
II. Balance at the beginning of this year 1,203,972,704.00 1,249,319,561.00 809,307,995.80 568,427,245.02 3,831,027,505.82
III. Increase/ decrease of amount in this
year (“-” means decrease)
-368,752.26 -30,496,656.90 -30,865,409.16
(I) Net profit -18,456,929.86 -18,456,929.86
(II) Gain/loss listed to owners’ equity
directly
-368,752.26 -368,752.26
1. Net amount of changes in fair value
of financial assets available for sale
-368,752.26 -18,456,929.86 -18,825,682.12
2. Effect of changes in other owners’
equity of invested units under equity method
3. Effect on income tax related to items
listed to owners’ equity
4. Others
Subtotal of (I) and (II)
(III) Capital input and reduction of
owners
-12,039,727.04 -12,039,727.04
1. Capital input of owners
2. Amount of stock payment included in
the owners’ equity
3. Others -12,039,727.04 -12,039,727.04
(IV) Profit distribution
1. Withdrawing surplus public reserve2. Distribution to owners (or
shareholders)
3. Others
(V) Internal carrying forward of owners’
equity
1. New increase of capital (or share
capital) from capital reserves
2. Converting surplus reserves to
capital (or share capital)
3. Surplus reserves make up losses
4. Others
IV. Balance at the end of this period 1,203,972,704.00 1,248,950,808.74 809,307,995.80 537,930,588.12 3,800,162,096.66
Regal Representative: Hou Songrong Person-in-charge of Accounting: Yang Rong
Person-in-charge of the Accounting Agency: Ruan Renzong
Statement of Changes in Owners’ Equity of Parent Company (Continued)
Prepared by: Konka Group Co., Ltd. 30 Jun. 2010 Unit: (RMB) Yuan
Amount for the year 2009
Owners’ equity attributable to parent company
Items
Paid-in capital
(or share capital)
Capital
reserve
Less:
treasury
stock
Specific
reserves
Surplus public
reserve
General
risk
reserve
Retained profit
Total owners’
equity
I. Balance at the end of last year 1,203,972,704.00 1,248,889,511.18 804,896,533.82 588,922,722.41 3,846,681,471.41
Add: change of accounting policy
Correction of errors in previous periods
OthersII. Balance at the beginning of this year 1,203,972,704.00 1,248,889,511.18 804,896,533.82 588,922,722.41 3,846,681,471.41
III. Increase/ decrease of amount in this
year (“-” means decrease)
591,242.40 -17,675,662.70 -17,084,420.30
(I) Net profit 42,522,972.50 42,522,972.50
(II) Gain/loss listed to owners’ equity
directly
591,242.40 591,242.40
1. Net amount of changes in fair value
of financial assets available for sale
591,242.40 42,522,972.50 43,114,214.90
2. Effect of changes in other owners’
equity of invested units under equity method
3. Effect on income tax related to items
listed to owners’ equity
4. Others
Subtotal of (I) and (II)
(III) Capital input and reduction of
owners
-60,198,635.20 -60,198,635.20
1. Capital input of owners
2. Amount of stock payment included in
the owners’ equity
3. Others -60,198,635.20 -60,198,635.20
(IV) Profit distribution
1. Withdrawing surplus public reserve
2. Distribution to owners (or
shareholders)
3. Others
(V) Internal carrying forward of owners’equity
1. New increase of capital (or share
capital) from capital reserves
2. Converting surplus reserves to
capital (or share capital)
3. Surplus reserves make up losses
4. Others
IV. Balance at the end of this period 1,203,972,704.00 1,249,480,753.58 804,896,533.82 571,247,059.71 3,829,597,051.11
Regal Representative: Hou Songrong Person-in-charge of Accounting: Yang Rong
Person-in-charge of the Accounting Agency: Ruan RenzongKonka Group Co., Ltd.
Notes to Financial Statements
For the First Half Year of 2010
(Unless otherwise specified, the currency is RMB)
I. Company Profile
1. Establishment
Konka Group Co., Ltd. (hereinafter referred to as “Company” or “the
Company”), is a joint-stock limited company reorganized from the former
Shenzhen Konka Electronic Co., Ltd. in August 1991 upon approval of the
People’s Government of Shenzhen Municipality, and has its ordinary
shares (A-share and B-share) listed on Shenzhen Stock Exchange with prior
consent from the People’s Bank of China Shenzhen Special Economic Zone
Branch. On August 29, 1995, the Company, renamed to “Konka Group Co.,
Ltd.”, obtained corporate business license (registration No.:
440301501121863) with its main business falling into electronic industry.
2. Share Capital Changes upon Establishment
On November 27, 1991, with approval from the SRYFZ No. 102 [1991] document
as issued by the People’s Bank of China Shenzhen Special Economic Zone
Branch, Shenzhen Konka Electronic Co., Ltd., during December 8—December
31, 1991, has issued 128,869,000 RMB ordinary shares (A-share) at a par
value of RMB1.00 per share, of which the original net assets were converted
into 98,719,000 state-owned institutional shares, 30,150,000 new shares
were issued, including 26,500,000 circulating shares issued to the public
and 3,650,000 staff shares issued to the staff of the Company.
On January 29, 1992, with approval from the SRYFZ No. 106 [1991] document
as issued by the People’s Bank of China Shenzhen Special Economic Zone
Branch, Shenzhen Konka Electronic Co., Ltd., during December 20, 1991—
January 31, 1992, has issued to investors abroad 58,372,300 RMB special
shares (B-share) at a par value of RMB1.00 per share, of which 48,372,300
shares held by the former foreign investor and founder—Hong Kong Ganghua
Electronic Group Co., Ltd. are converted into foreign legal person’s
shares, and 10,000,000 B-shares are issued additionally.
On April 10, 1993, the Proposal on Profit Distribution and Dividend Payout
1992 was adopted at the second general meeting of shareholders of the
Company. With approval from the SZBF No. 2 [1993] document as issued by
Shenzhen Securities Regulatory Office, the Company began to perform
dividend policy for FY 1992 as of April 30, 1993: distributing RMB 0.90
in cash plus 3.5 bonus shares for every 10 shares to all shareholders.
The total capital stock reached 187,473,150 shares after thisdistribution.
On April 18, 1994, the Proposal on Profit Distribution and Dividend Payout
1993 was adopted at the third general meeting of shareholders of the
Company. With approval from the SZBF No. 115 [1994] document as issued
by Shenzhen Securities Regulatory Office, the Company began to perform
dividend policy for FY1993 as of June 10, 1994: distributing RMB 1.10 in
cash plus 5 bonus shares (including 4.4 profit bonus shares and 0.6 bonus
share capitalized from capital public reserve) for every 10 shares to all
shareholders. The total capital stock reached 281,209,724 shares after
this distribution and capitalization from capital public reserve.
On June 2, 1994, in accordance with the provisions that “staff shares
could go public and be transferred six months after listing”, as jointly
promulgated by the State Commission for Restructuring the Economic System
and the State Council’s Securities Commission, the staff shares of the
Company was planned to be listed on the flow on June 6, 1994, with the
prior consent of Shenzhen Securities Regulatory Office and Shenzhen Stock
Exchange.
On October 8, 1994, the Proposal on Negotiable Bonus Shares of B-Share
Corporate Shareholders 1992 was adopted at the 1994 interim general
meeting of shareholders of the Company. With approval from the SZBF No.
224 [1994] document as issued by Shenzhen Securities Regulatory Office,
the 16,930,305 bonus shares for FY 1992 granted to foreign legal persons
were listed and negotiated at B-share market on October 26, 1994.
On February 6, 1996, the Proposal on Share Allotment Modes 1996 was adopted
at the 1996 interim general metering of shareholders of the Company. With
approval from the SZBF No. 5 [1996] document as issued by Shenzhen
Securities Regulatory Office, and reexamination from the ZJPSZ No. 16
[1996] document and ZJGZ No. 2 [1996] document as issued by China
Securities Regulatory Commission, on July 16, 1996 and October 29, 1996,
all shareholders were respectively allotted three shares for every ten
existing shares held at RMB 6.28/A-share and HKD 5.85/B-share. Corporate
shareholders took their respective existing shares as bases for full
subscription of the allocable shares. The total capital stock reached
365,572,641 shares after this allotment.
On January 25, 1998, the Plan on Share Allotment 1998 was adopted at the
1998 interim general meeting of shareholders of the Company. With approval
from the ZZBZ No. 29 [1998] document as issued by Shenzhen Securities
Regulatory Office, and ZJSZ No.64 [1998] document as issued by China
Securities Regulatory Commission, on July 15, 1998, negotiable A-shares
were allotted in proportion of 3:10 at RMB 10.50/A-share. For such reasons
as continued weakness in B-share secondary market (lower than share
allotment price), B-share negotiation and allotment plan was canceled,
and the corporate shareholders of the Company waived the preemptive right.
The total capital stock reached 389,383,603 shares after this allotment.On June 30,1999, the Proposal on Profit Distribution and Capitalization
from Capital Public Reserve 1998 was adopted at the eighth general meeting
of shareholders of the Company. On August 20, 1999, the profit
distribution for FY 1998 was carried out: all shareholders were presented
RMB3.00 in cash for every 10 shares, plus 2 shares capitalized from capital
public reserve. The total capital stock reached 467,260,323 shares after
this capitalization.
On June 30,1999, the Plan on A-Share Issue for Capital Increase was adopted
at the eighth general meeting of shareholders of the Company. With
approval from the ZJFXZ No.140 [1999] document as issued by China
Securities Regulatory Commission, on November 1, 1999, 80,000,000
A-shares were additionally issued to the public at RMB15.50/share. The
total capital stock reached 547,260,323 shares after this additional
issue.
On May 30, 2000, the Plan on Profit Distribution and Dividend Payout 1999
was adopted at the ninth general meeting of shareholders of the Company.
On July 25, 2000, the profit distribution for FY 1999 was carried out:
all shareholders were distributed RMB4.00 in cash plus 1 bonus shares for
every 10 shares. The total capital stock reached 601,986,352 shares after
this distribution.
On April 3, 2008, the 7th meeting of the sixth Board of Directors was
convened, during which the following resolutions were discussed and
adopted: based on the total capital stock of 601,986,352 shares for the
year ended December 31, 2007, capitalization from capital public reserve
was made to all shareholders at a proportion of 1:1, namely 10 new shares
for every 10 existing shares. And the said resolution was subject to
approval by the 2007 annual general meeting of shareholders convened on
May 26, 2008. The Company, in June 2008, implemented the capitalization
from capital public reserve and went through the formalities for transfer
registration with China Securities Depository and Clearing Corporation
Limited. On December 16, 2008, with approval from the SMGZF No. 2662 [2008]
document as issued by Shenzhen Bureau of Trade and Industry, the Company
was agreed to increase its share capital, and went through the formalities
for registration of changes with the administration for industry and
commerce on April 10, 2009. The total capital stock reached 1,203,972,704
shares after change.
3. Approved business scope: research and development, production and
operation of such household appliances as televisions, refrigerators,
washing machines, and personal electronic appliances; manufacturing and
application of home AV, IPTV set-top boxes, digital TV receivers, digital
products, mobile phones, mobile communication equipments and terminal
products, daily-use electronic products, automotive electronic products,
satellite navigation systems, intelligent transportation systems,fire-fighting and security systems, office equipments, computers,
displays, large screen display systems; manufacturing and packaging of
LED (OLED) back light, illumination and light-emitting devices;
production and operation of electronic parts and components, moulds,
plastic and rubber products, and packing materials, and technical
consultancy and services of related products (Among the above production
items in business scope, all of which are produced in other place except
for mobile phones ); wholesale, retail, import & export and relevant
support services of the aforesaid products (including spare parts)
(Commodities subject to state trading management are not involved.
Products involved in quota, license management and other specified
management shall be subject to the relevant state provisions.); sale of
self-developed technological achievements; provision of maintenance
services for electronic products; domestic freight forwarding;
warehousing services; consultancy on enterprise management; and
self-owned property leasing and management services.
4. A check list of corporate names and their abbreviations mentioned in
this Report
Corporate name Abbreviations
Shenzhen Konka Telecommunications Technology Co., Ltd. Telecommunication Technology
Shenzhen Konka Video & Communication Systems Engineering Co., Ltd.
Video & Communication Systems
Engineering
Shenzhen Konka Precision Mold Manufacturing Co., Ltd. Precision Mold
Shenzhen Konka Electronic Co., Ltd. Konka Electronic
Shenzhen Konka Information Network Co., Ltd. Information Network
Shenzhen Konka Plastic Products Co., Ltd. Plastic Products
Shenzhen Shushida Electronic Co., Ltd. Shushida
Shenzhen Electronic Fittings Technology Co., Ltd. Fittings Technology
Mudanjiang Konka Industrial Co., Ltd. Mudanjiang Konka
Shaanxi Konka Electronic Co., Ltd. Shaanxi Konka
Chongqing Konka Electronic Co., Ltd. Chongqing Konka
Chongqing Konka Automotive Electronic Co., Ltd. Chongqing Electronic
Chongqing Qingjia Electronics Co., Ltd. Chongqing Qingjia
Anhui Konka Electronic Co., Ltd. Anhui Konka
Anhui Konka Household Appliances Co., Ltd. Anhui Household Appliances
Changshu Konka Electronic Co., Ltd. Changshu Konka
Kunshan Konka Electronic Co., Ltd. Kunshan Konka
Dongguan Konka Electronic Co., Ltd. Dongguan Konka
Dongguan Konka Packing Materials Co., Ltd. Dongguan Packing
Dongguan Konka Mould Plastic Co., Ltd. Dongguan Mould Plastic
Boluo Konka PCB Co., Ltd. Boluo Konka
Boluo Konka Precision Technology Co., Ltd. Boluo PrecisionCorporate name Abbreviations
Konka (Nanhai) Development Center Nanhai Institute
Hongkong Konka Co., Ltd. Hongkong Konka
Konka Household Appliances Investment & Development Co., Ltd.
Konka Household Appliances
Investment
Konka Household Appliances International Trading Co., Ltd.
Konka Household Appliances
International Trading
KONKA AMERICA,INC. KONKA AMERICA
Konka (Europe) Co., Ltd. Konka Europe
Shenzhen Wankaida Science & Technology Co., Ltd Shenzhen Wankada
Shenzhen Konka Optoelectronics Technology Co., Ltd Shenzhen Optoelectronics
Konka (Kunshan) Real Estate Investment Co., Ltd. Kunshan Real Estate
Dongguan Xutongda Mould Plastic Co., Ltd. Xutongda
The financial statements of the Company were submitted upon approval of
the board of directors on July 26, 2010.
II. Basis for the formulation of financial statements
The financial Statements of the Company have been prepared on a going
concern basis in the light of actually occurred transactions and events,
in accordance with Accounting Standard for Business Enterprises - Basic
Standard promulgated in February 2006 by the Ministry of Finance and 38
specific accounting standards, guidelines, explanations and other
relevant provisions promulgated subsequently (hereinafter referred to as
“Accounting Standards for Business Enterprises”).
III. Declaration on compliance with the accounting standards for business
enterprises
The financial statements of the Company prepared for the firs half year
of 2010 are in conformity with the requirements of the accounting
standards for business enterprises, presenting truthfully and completely
the financial position for the year ended December 31, 2009, results of
operations and cash flows for the firs half year of 2010 of the Company.
In addition, the financial statements of the Company conform, in all
material aspects, to the disclosure requirements regarding financial
statements and notes to financial statements of the Compilation Rules for
information disclosures by Companies that Offer Securities to the Public
No. 15 -General Provisions for Financial Reports revised by China
Securities Regulatory Commission in 2009.
IV. Significant accounting policies, accounting estimates and prior
period errors
1. Accounting period
The accounting period of the Company includes both fiscal year and interimperiod. An interim period refers to a report period which is shorter than
a full fiscal year. The fiscal year of the company begins on Jan. 1 and
ends on Dec. 31 under the Gregorian calendar.
2. Recording currency
The Company adopts Renminbi as its recording currency.
3. Accounting methods of business combinations
Business combinations are classified into business combinations under the
same control and business combinations not under the same control.
(1) Business combinations under the same control
The assets and liabilities that the combining party obtains in a business
combination shall be measured on the basis of their carrying amount in
the combined party on the combining date. As for the balance between the
carrying amount of the net assets obtained by the combining party and the
carrying amount of the consideration paid by it (or the total par value
of the shares issued), the share premium in capital surplus shall be
adjusted. If the share premium is not sufficient to be offset, the retained
earnings shall be adjusted. The direct cost for the business combination
of the combining party shall be recorded into the profits and losses at
the current period.
(2) Business combinations not under the same control
For a business combination not under the same control, the combination
costs shall be the fair value, on the acquisition date, of the assets paid,
the liabilities incurred or assumed and the equity securities issued by
the acquirer in exchange for the control on the acquiree, as well as all
relevant direct costs incurred to the acquirer for the business
combination. For a business combination realized by two or more
transactions of exchange, the combination costs shall be the summation
of the costs of all separate transactions. Where any future event that
is likely to affect the combination costs is stipulated in the combination
contract, if it is likely to occur and its effects on the combination costs
can be measured reliably, the acquirer shall record the said amount into
the combination costs. The acquirer shall, on the acquisition date,
measure all identifiable assets, liabilities and contingent liabilities
it obtains from the acquiree in a business combination not under the same
control in light of their fair value.
The acquirer shall recognize the positive balance between the combination
costs and the fair value of the identifiable net assets it obtains from
the acquiree as business reputation. For combination costs less than the
fair value of the identifiable net assets it obtains from the acquiree,
the acquirer shall reexamine the measurement of the fair value of the
identifiable assets, liabilities and contingent liabilities it obtains
from the acquiree as well as the combination costs; and if, after thereexamination, the combination costs are still less than the fair value
of the identifiable net assets it obtains from the acquiree, the acquirer
shall record the balance into the profits and losses of the current period.
4. Basis for the formulation of consolidated financial statements
(1) Principle of Determining Consolidation Scope of Consolidated
Financial Statements
The consolidation scope of consolidated financial statements is
determined on the basis of control. Control is the power to govern the
financial and operating policies of an invested enterprise so as to obtain
benefits from its operating activities. Other entities, to which the
Company occupies more than 50% of the total voting capital of the invested
enterprise (excluding 50%) or occupies less than 50% of such capital but
has actual control right, shall all be included into the scope of
consolidation.
(2) Methods to work out consolidated financial statements
The consolidated financial statements are prepared on the basis of the
financial statements of the parent company and subsidiaries included into
the scope of consolidation with reference to other relevant materials,
after adjusting long-term equity investment by equity method and
offsetting equity capital investment of the parent company and shares held
by the parent company in ownership interest of subsidiaries as well as
significant internal transactions and inter-office accounts. Minority
stockholder’s interest is presented as “minority interest” under
ownership interest item of the consolidated balance sheet. Minority
interest income is presented as “minority interest income” under the
net profit item of consolidated income statement. Where the accounting
policies adopted by a subsidiary are in conflict with those of the parent
company in the preparation of consolidated financial statements, the
subsidiary shall make necessary adjustments to its financial statements
or prepare new financial statements in accordance with the accounting
policies and accounting period of the parent company.
Where a subsidiary has been acquired through a business combination under
the same control during the report period, adjustments shall be made to
the beginning balance while preparing consolidated balance sheet. Where
a subsidiary has been acquired through a business combination not under
the same control, no adjustments shall be made to the beginning balance
of consolidated balance sheet. For a subsidiary disposed of during the
report period, no adjustments shall be made to the beginning balance while
preparing consolidated balance sheet.
Where a subsidiary has been acquired through a business combination under
the same control during the report period, the subsidiary’s proceeds,
and costs and profits from the beginning of the current period till end
of the report period shall be appropriately included in the consolidatedincome statement. Where a subsidiary has been acquired through a business
combination not under the same control, the subsidiary’s proceeds, and
costs and profits from the day of purchase of the subsidiary till end of
the report period shall be appropriately included in the consolidated
income statement. For a subsidiary disposed of during the report period,
the subsidiary’s proceeds, and costs and profits from the beginning of
the current period till the day of disposal shall be appropriately
included in the consolidated income statement.
Where a subsidiary has been acquired through a business combination under
the same control during the report period, the subsidiary’s cash flows
from the beginning of the current period till end of the report period
shall be appropriately included in the consolidated cash flow statement.
Where a subsidiary has been acquired through a business combination not
under the same control during the report period, the subsidiary’s cash
flows from the day of purchase of the subsidiary till end of the report
period shall be appropriately included in the consolidated cash flow
statement. For a subsidiary disposed of during the report period, the
subsidiary’s cash flows from the beginning of the current period till
the day of disposal shall be appropriately included in the consolidated
income statement.
5. Recognition criteria of cash and cash equivalents
The cash and cash equivalents of the Company comprise cash on hand,
deposits that are available for payment at any time, and short-term
(having been within three months of maturity at acquisition), highly
liquid investments that are readily convertible into known amounts of cash
and which are subject to an insignificant risk of change in value,.
6. Foreign currency transactions and translation of foreign currency
financial statements
(1) Translation methods of foreign currency transactions
The Company shall translate the amount in a foreign currency into amount
in Renminbi at the spot exchange rate of the transaction date (generally,
the middle rate of foreign exchange quotations on that day, promulgated
by the People’s Bank of China, the same below) at the time of initial
recognition of a foreign currency transaction. For foreign currency
exchange or transactions involving foreign currency exchange, the amount
in a foreign currency shall be translated into amount in Renminbi at real
exchange rate.
(2) Translation methods of foreign currency monetary items and foreign
currency non-monetary items
The foreign currency monetary items shall be translated at the spot
exchange rate on the balance sheet date. The balance of exchange arising
from the difference between the spot exchange rate on the balance sheetdate and the spot exchange rate at the time of initial recognition or on
the prior balance sheet date shall be recorded into the profits and losses
at the current period, except capitalizing balance of exchange arising
from foreign currency borrowings for the purchase and construction or
production of qualified assets in accordance with the provisions of
Accounting Standards for Business Enterprises No. 17 - Borrowing Costs.
The foreign currency non-monetary items measured at the historical cost
shall still be translated at the spot exchange rate on the transaction
date, of which the amount of recording currency shall not be changed.
The foreign currency non-monetary items measured at fair value shall be
translated at the spot exchange rate on the day of determining fair value,
and the balance between the recording currency amount after translation
and the original recording currency amount shall be treated as changes
(including change in exchange rate) in fair value, and recorded into the
profits and losses at the current period.
(3) Translation methods of foreign currency financial statements
When translating the financial statements in a foreign currency into
financial statements in Renminbi, the Company shall comply with the
following provisions:
The asset and liability items in the balance sheet shall be translated
at a spot exchange rate on the balance sheet date. Among the owner's equity
items, except the ones as “undistributed profits”, others shall be
translated at the spot exchange rate at the time when they are incurred.
The income and expense items in the profit statement shall be translated
at the current average exchange rate of the transaction date. When
disposing an overseas business, the Company shall shift the balance
arising from the translation of foreign currency financial statements
related to this oversea business, into the disposal profits and losses
of the current period. If the overseas business is disposed of partially,
the calculation shall be based on the disposal rate.
The balance arising from the translation of foreign currency financial
statements in compliance with the aforesaid methods shall be presented
separately under the owner’s equity item of the balance sheet.
The cash flow statement in a foreign currency shall be translated at the
current average exchange rate of the cash flow day. The amount of influence
of exchange rate change in cash shall be regarded as reconciling item and
be presented separately under cash flow statement.
7. Financial instruments
(1) Recognition basis of financial instruments
Recognition basis of financial instruments: the Company has become a party
to financial instruments.
(2) Classification of financial instruments
Financial assets shall be classified into the following four categoriesaccording to investment objectives and economic substance: ①the
financial assets which are measured at their fair value and the variation
of which is recorded into the profits and losses of the current period,
including transactional financial assets and the financial assets which
are measured at their fair value and of which the variation is included
in the current profits and losses; ②the investments which will be held
to their maturity; ③loans and the accounts receivable; and ④financial
assets available for sale.
Financial liabilities shall be classified into the following two
categories according to economic substance: ①the financial liabilities
which are measured at their fair value and of which the variation is
included in the current profits and losses, including transactional
financial liabilities and the designated financial liabilities which are
measured at their fair value and of which the variation is included in
the current profits and losses; and ②other financial liabilities.
(3) Measurement of financial instruments.
① Financial assets and liabilities measured at their fair value and of
which the variation is recorded into the profits and losses of the current
period
The financial assets and financial liabilities initially recognized by
the Company shall be measured at their fair value (cash dividends declared
to distribute but haven’t been granted or due bond interest that hasn’t
been taken shall be deducted), and the transaction expenses thereof shall
be directly recorded into the profits and losses of the current period.
The interest or cash dividends obtained shall be recognized as investment
yield during the holding period, and changes in fair value shall be
recorded into the current profits and losses at the end of the period.
When disposing, the difference between fair value and initially recorded
amount shall be recognized as investment yield, and adjustment shall be
made to profits and losses on the changes in fair value.
② Investments held until their maturity
The investments held until their maturity initially recognized by the
Company shall be measured at their fair value (due bond interest that
haven’t been taken shall be deducted) plus the transaction expenses
thereof.
The interest income shall be calculated and recognized on the basis of
the post-amortization costs and actual interest rate (if the difference
between actual interest rate and coupon rate is insignificant, the coupon
rate shall be based), and recorded into the investment yield. The actual
interest rate shall be determined while acquiring, and will maintain
unchanged within the predicted term of existence or within a shorter
applicable term. The difference between proceeds and investment carrying
amount shall be recorded into the investment yield.
③Accounts receivableFor credit receivables formed for sale of commodities or rending of
services, and creditor’s rights of other enterprises held by the Company
excluding those of debt instruments for which there is quoted price in
the active market, including accounts receivable, notes receivable, other
receivables, and long-term receivables, the initially recognized amount
shall be measured at their receivable prices stipulated in the contract
or agreement from the buyer; for those of financing nature, the initially
recognized amount shall be measured at their present value. The difference
between proceeds and carrying amount of accounts receivable shall be
recorded into the profits and losses at the current period while taking
back or disposing.
④ Financial assets available for sale
The initially recognized amounts shall be measured at their fair value
(cash dividends declared to distribute but haven’t been granted or due
bond interest that hasn’t been taken shall be deducted) plus the
transaction expenses thereof. The interest or cash dividends obtained
shall be recognized as investment yield during the holding period. At the
end of the period, measurement shall be made at fair value and changes
in fair value shall be recorded into the capital surplus (other capital
surplus). When disposing, the difference between proceeds and carrying
amount of financial assets shall be recorded into the investment yield,
and the amount of corresponding disposal part of the accumulative amount
of the changes of the fair value originally recorded in the owner's
equities shall be transferred out and recorded into the investment yield.
⑤ Other financial liabilities
The initially recognized amounts shall be measured at their fair value
plus the transaction expense thereof. Subsequent measurement shall be
made on the basis of the post-amortization costs.
(4) Recognition basis and measurement methods of the transfer of financial
instruments
Where the Company has transferred nearly all of the risks and rewards
related to the ownership of the financial assets to the transferee, it
shall stop recognizing the financial assets. If it retained nearly all
of the risks and rewards related to the ownership of the financial assets,
it shall not stop recognizing the financial assets.
When the Company makes a judgment about whether the transfer of a financial
asset can satisfy the aforesaid conditions for stopping the recognition
of a financial asset, the Company shall pay more attention to the essential
of the transfer of the financial asset. The Company shall differentiate
the transfer of a financial asset into the entire transfer and the partial
transfer of financial asset.
If the transfer of an entire financial asset satisfies the conditions for
stopping recognition, the difference between the amounts of the following
2 items shall be recorded in the profits and losses of the current period:①the carrying amount 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 recorded
in the owner's equities (in the event that the financial asset involved
in the transfer is a financial asset available for sale).
If the transfer of partial financial asset satisfies the conditions to
stop the recognition, the entire carrying amount of the transferred
financial asset shall, between the portion whose recognition has been
stopped and the portion whose recognition has not been stopped (under such
circumstance, the service asset retained shall be deemed as a portion of
financial asset whose recognition has not been stopped), be apportioned
according to their respective relative fair value, and the difference
between the amounts of the following 2 items shall be included into the
profits and losses of the current period :
①the carrying amount of the portion whose recognition has been stopped;
②the sum of consideration of the portion whose recognition has been
stopped, and the portion of the accumulative amount of the changes in the
fair value originally recorded in the owner's equities which is
corresponding to the portion whose recognition has been stopped (in the
event that the financial asset involved in the transfer is a financial
asset available for sale). If the transfer of financial asset does not
satisfy the conditions to stop the recognition, the Company shall continue
to recognize the financial asset and shall recognize the consideration
it receives as a financial liability.
(5) Determination methods of fair value of financial instruments
①As for the financial assets or financial liabilities for which there
is an active market, the quoted prices in the active market shall be used
to determine the fair value thereof. The quotation shall be determined
in accordance with the following principles:
A. In the active market, the quoted prices of the Company for the financial
assets it holds or the financial liabilities it plans to assume shall be
the present actual offer, while the quoted prices of the Company for the
financial assets it plans to acquire or the financial liabilities it has
assumed shall be the available charge.
B. Where there is no available offer or charge for a financial asset or
financial liability, the Company shall adopt the market quoted price or
the adjusted market quoted price of the latest transaction, unless the
Company has adequate evidences to prove that the market quoted price is
not a fair value.
②Where there is no active market for a financial asset or financial
liability, the Company shall adopt value appraisal techniques to
determine its fair value.
(6) Impairment of financial assets
The Company shall carry out an inspection, on the balance sheet day, onthe carrying amount of the financial assets. Where there is any objective
evidence proving that such financial asset has been impaired, an
impairment provision shall be made. The expression "objective evidence
proving that the financial asset has been impaired" refers to the actually
incurred events which, after the financial asset is initially recognized,
have an impact on the predicted future cash flow of the said financial
asset that can be reliably measured by the Company.
①Financial assets available for sale.
Where an investment held until its maturity measured on the basis of
post-amortization costs is impaired, the carrying amount of the said
investment shall be written down to the current value (the discount
interest rate shall be the original actual interest rate) of the predicted
future cash flow (excluding the loss of future credits not yet occurred),
and the amount as written down shall be recognized as loss of the
impairment of the asset and shall be recorded into the profits and losses
of the current period.
② Accounts receivable
For provision methods for bad debts of accounts receivable, please refer
to “8. Accounts receivable, Article IV, Notes to Financial Statements”.
③ Financial assets available for sale.
Where the fair value of a sellable financial asset drops significantly,
or it is predicted that the down trend is non-temporal after a
comprehensive consideration of all relevant factors, the
impairment-related losses shall be recognized, and an impairment
provision shall be made based on the difference between its fair value
and carrying amount. When the impairment-related losses are recognized,
the accumulative losses arising from the decrease of the fair value
directly included into the owner’s equity shall be transferred out and
recorded into the impairment-related losses.
8. Receivables
(1) Determination of provision for bad debts
The Company shall check the carrying amount of receivables on the balance
sheet date, and withdraw the provision for impairment when the following
objective evidences indicating the impairment of receivables: ①the
debtor suffers from severe financial difficulties; ②the debtor violates
the terms and conditions of contract (e.g. the reimbursement of interests
or principal is breaching the contract or overdue); ③the debtor is
probably bankrupt or subject to other financial reorganization; ④other
objective evidences which can indicate the impairment of receivables.
(2) Withdrawal of provision for bad debts
①Determination and withdrawal of provision for bad debts of receivables
with significant individual amounts
A ． Determination of provision for bad debts of receivables withsignificant individual amounts: the accounts receivable is the payment
with the individual amount more than RMB 20 million, other receivable is
the payment with the individual amount more than RMB 10 million.
B．Withdrawal of bad debts of receivables with significant individual
amounts: the impairment test should be done separately. The provision for
bad debts should be measured as per the balance between the carrying amount
and the present value of the cash flow in future if there is an objective
evidence for the impairment occurrence.
②Determination and withdrawal of provision for bad debts of receivables
with non-significant individual amounts with the high risk portfolio
after combination upon the credit risk characteristics:
A．Basis for determination of portfolio of credit risk characteristics:
the portfolio with non-significant individual amounts but with amount age
more than three years.
B．Withdrawal method determined as per the portfolio of credit risk
characteristics: the impairment test should be done separately. The
provision for bad debts should be measured as per the balance between the
carrying amount and the present value of the cash flow in future if there
is an objective evidence for the impairment occurrence.
③the method of withdrawal: for receivables which do not belong to
individual amounts and receivables combined as per the credit risk
characteristics after test, and has no impairment after being subject to
the separate test, the estimated cash flow in future may not be discounted.
The receivables shall be divided into several portfolios as per the amount
age. The impairment loss shall be determined and the provision for bad
debts shall be withdrawn as per the certain proportion of balance of
receivables portfolio (the balance of related parties shall not be
withdrawn as the provision for bad debts). The proportion of withdrawal
proportion of provision for bad debts of receivables generally shall be:
Amount age
Withdrawal proportion
of accounts
receivable (%)
Withdrawal proportion
of other receivables
(%)
Within 1 year (including 1 year,
similarly hereinafter)
2 2
1-2 years 5 5
2-3 years 20 20
More than 3 years 50 50
Impairment of prepayment: The prepayment shall be subject to the
individual impairment test on the balance sheet date. The provision for
bad debts should be measured as per the balance between the carrying amount
and the present value of the cash flow in future if there is an objective
evidence for the impairment occurrence.
(3) Reversal of bad debt provisionIf there is any objective evidence indicating the value of receivables
is recovered and is objectively related to the issue occurring after the
determination of such losses, the originally determined impairment losses
shall be reversed, and shall be recorded into the current profit and loss.
However, the reversed carrying amount shall not exceed the amortized cost
of receivables at the date of reversal under the assumption of impairment
provision uncalculated.
9. Inventories
(1) Classification of inventories
Inventories of the Company mainly include raw materials,
semi-finished products, commodity stocks, delivered commodities,
materials on cyclic use, low-value consumables etc.
(2) Valuation of acquired and delivered inventories
The inventories shall be valuated at the actual cost when being acquired. The
inventory costs include purchase cost, processing cost, and other cost. The
inventories shall be valuated as per the weighted moving average method on
issuance and delivery. The commodity stocks shall be calculated as per the
planned cost. The difference between the planned cost and actual cost of
commodity stocks shall be calculated as per the cost variance. The cost variance
caused by delivered inventories shall be accounted periodically. The planned
cost shall be adjusted into actual cost.
(3) Determination and withdrawal of provision for inventory write-down
On the balance sheet date, the inventories of the Company shall be measured
at the lower of cost and net realizable value.
The net realizable value refers to the amount after the estimated selling
price of the inventories deducting the cost to occur at the completion
of project, estimated sales expenses and relevant taxes. Including: ①for
the salable inventories like finished products, salable materials etc,
during the normal production and operation process, the net realizable
value is the amount after the estimated selling price of the inventories
deducting the salable inventories and relevant taxes; ②for the material
stocks to be processed, during the normal production and operation process,
the net realizable value is the amount after the estimated selling price
of the finished products deducting the cost to occur at the completion
of project, estimated sales expenses and relevant taxes; ③for the
inventories held for implementing the sales contract or labor contract,
the net realizable value shall be calculated on the basis of contract price.
If the quantity of inventories held by the Company is more than the ordered
quantity of the sales contract, the net realizable value of the excessive
inventories shall be calculated on the basis of general sales price.
On the balance sheet date, if the cost of inventories is higher than thenet realizable value, the provision for inventory write-down shall be
withdrawn, and recorded into the current profit and loss. If the
influencing factor of the previous written-down value of inventories has
vanished, the written-down amount shall be recovered and be reversed
within the previous amount of provision for inventory write-down. The
reversed amount shall be recorded into the current profit and loss.
(4) The inventory system shall be the perpetual inventory system.
(5) Amortization of low-value consumables and packaging
Low-value consumables and packaging shall be amortized in full amount on
issuance;
10. Long-term equity investment
(1) Ascertainment of initial cost of the long-term equity investment
For the merger of enterprises under the same control, it shall regard the
share of the book value of the owner's equity of the merged enterprise
as the initial cost of the long-term equity investment. The long-term
equity investment obtained from the merger under different control shall
be measured as per the ascertained merger costs. For the long-term equity
investment obtained by other means, the initial cost shall be ascertained
in accordance with cash which is actually paid, fair value of issuing
equity securities, value stipulated in the investment contract or
agreement etc. The initial investment costs include the expenses, taxes
and other necessary expenditures directly related to the obtaining of
long-term equity investment.
(2) Subsequent measurement and recognition of profit and loss for long-term
equity investment
①The cost method should be used to account for long-term equity investment where
the Company is able to control the invested enterprise but does not do joint
control or does not have significant influences on the invested enterprise, and
has no offer in the active market, and its fair value cannot be reliably measured.
The long-term equity investment calculated by the cost method shall be
valuated at its initial investment cost. If there are additional
investments or disinvestment, the cost of long-term equity investment
shall be adjusted. The cash dividends or profits declared to be
distributed by the invested enterprise shall be recognized as investment
income in the current period.
②The equity method is used for long-term equity investments where the
Company can jointly control or has significant influence over the invested
enterprise. The initial investment cost of the long-term equity
investment, when is more than the fair value of the identifiable net assets
of the invested enterprise during the investment, shall not be adjusted.
The initial investment cost of the long-term equity investment, when is
less than the fair value of the identifiable net assets of the investedenterprise during the investment, shall has its balance recorded into the
current profit and loss. The cost of long-term equity investment shall
also be adjusted.
The Company should, after acquisition of the long-term equity investment,
recognize the investment profits and losses and adjust the carrying amount
of the long-term equity investment according to its attributable share
of the invested enterprise’s net profit or losses. The Company should
reduce the carrying amount of the long-term equity investment by its
attributable share of the invested enterprise’s profit or cash dividend
declared to be distributed.
The Company recognizes the net losses of the invested enterprise to the
extent that the carrying amount of the long-term equity investment and
other actual long-term equity which substantially form the net investment
of invested enterprise are reduced to zero. The investment to which the
Company has the obligation to bear the additional losses shall be excluded.
If the invested enterprise realizes net profits in subsequent periods,
the Company shall recover to recognize its attributable share of profits
after the share of profit offsetting against its attributable share of
the unrecognized losses.
The Company should, when recognizing the share of net profits and losses
of the invested enterprise, recognize the adjusted net profit of the
invested enterprise on the basis of the fair value of identifiable assets
of the invested enterprise when obtaining the investment, as per the
accounting policy and accounting period of the Company, and offset the
profits and losses of the internal transaction of the Company (the losses
of internal transaction which belong to the losses of assets impairment
shall be recognized in full amount) occurring between the associated
enterprise and joint-venture enterprise calculated as per the share
proportion.
For other changes of owner’s equity of the invested enterprise except
the net profits and losses, the Company shall adjust the carrying amount
of the long-term equity investment and record it into the owner’s equity.
When disposing the investment, the Company shall transfer the originally
part recorded in the owner’s equity (only refers to the part recorded
in the capital surplus) in to the current profits and losses as per the
relevant proportion.
(3) Basis for determination of joint control and significant influence
of the invested enterprise
①Basis for determining the joint control mainly includes: any
joint-venture party can not solely control the production and operation
activities of the joint-venture enterprise; decision related to the basic
operation activities of the joint-venture enterprise shall be subject to
the unanimous consent of joint-venture parties.
②Basis for determining the significant influences mainly includes: theCompany directly or indirectly (through its subsidiary) holds 20% or more
but less than 50% of the voting capital of the invested enterprise (unless
there is any specific evidence indicating that the Company can not
participate in the decision of production and operation of the invested
enterprise, and produces insignificant influences), shall be determined
as the company produces significant influence over the invested
enterprise. The Company holds less than 20% of the voting capital of the
invested enterprise shall generally be regarded as the company produces
insignificant influences over the invested enterprise.
However, under the following circumstances, the Company can be regarded
as producing significant influences over the invested enterprise: A.
assigning representatives in the board of directors or similar authority
of the invested enterprise; B. participating in the policy-making process
of the invested enterprise; C. having significant transactions with the
invested enterprise; D. assigning managers to the invested enterprise;
E. providing critical technical materials to the invested enterprise.
(4) Impairment test and withdrawal of provision for impairment
The Company shall determine whether the long-term equity investment has
impairment on the balance sheet date. If there is any impairment, the
Company should estimate the recoverable amount, and conduct the
impairment test.
When the recoverable amount of the asset group of single long-term equity
investment or long-term equity investment is lower than the carrying value,
the Company shall reduce the carrying value to the recoverable amount,
record the written-down amount into the current profits and losses, and
withdraw the relevant provision for impairment of long-term equity
investment.
The losses of impairment of long-term equity investment will not be
reversed in the following accounting periods once they are recognized.
11. Fixed assets
(1) Recognition of fixed assets
The fixed assets of the Company refer to the tangible assets which held
for the production, service offering, lease or management over one
accounting year service life. The fixed assets can be recognized only when
the following conditions are satisfied: ① the economic interests
related to the fixed assets probably flow into the enterprise; ② the
costs of the fixed assets can be reliably measured.
(2) Depreciation of fixed assets
The fixed assets should be depreciated by the straight-line method. The
followings are the service life, rate of estimated net residual value and
annual depreciation rate of the fixed assets:
Category Service life
Rate of estimated
net residual
Annual
depreciation ratevalue % %
Buildings and structures 20-40 10.00 2.25-4.50
Machinery equipment 10 10.00 9.00
Transportation equipment 5 10.00 18.00
Electronic devices 5 10.00 18.00
Other equipment 5 10.00 18.00
The Company should record the depreciation of the fixed assets with the
provision for impairment recorded as per the amount after original price
of fixed assets deducting the estimated net residual value and withdrawn
provision of depreciation and impairment, and the residual service life.
The Company shall determine the costs of a fixed asset which has reached
its working condition for intend use but the final cost of construction
has not yet been ascertained, and record the depreciation. The previously
estimated value shall be adjusted as per the actual costs after the final
cost of construction is ascertained. The recorded depreciated amount
shall not be adjusted.
The Company shall review the service life, estimated net residual value
and depreciation method of the fixed assets, and adjust them when
necessary.
(3) Impairment test and withdrawal of provision for impairment
The Company shall determine whether the fixed assets have impairment on
the balance sheet date. If there is any impairment, the Company should
estimate the recoverable amount, and conduct the impairment test.
The recoverable amount can be ascertained as per the higher between the
net amount after the fair value deducting the disposal expense and the
present value of estimated cash flow in future of the fixed assets. The
Company shall estimate the recoverable amount on the basis of single fixed
asset. When the recoverable amount of the single fixed asset is lower than
its carrying value, the Company shall reduce the carrying value to the
recoverable amount, record the written-down amount into the current
profits and losses, and record the relevant provision for impairment of
long-term equity investment. The losses of impairment of fixed assets will
not be reversed in the following accounting periods once they are
recognized.
12. Construction in progress
The constructions in progress of the Company include the preparatory work
before the commencement of the construction, work under construction,
installation, technological improvement project, capital maintenance
project, etc. The constructions in progress shall be valuated as per the
actual costs.
The construction in progress shall be transferred to fixed assets when
it reaches its working condition for intend use.
The Company shall determine whether the construction in progress hasimpairment on the balance sheet date. If there is any impairment, the
Company should estimate the recoverable amount, and conduct the
impairment test.
The recoverable amount can be ascertained as per the higher between the
net amount after the fair value of the construction in progress deducting
the disposal expense and the present value of estimated cash flow in future
of the construction in progress. The Company shall estimate the
recoverable amount on the basis of single construction in progress.
When the recoverable amount of the single construction in progress is
lower than its carrying value, the Company shall reduce the carrying value
to the recoverable amount, record the written-down amount into the current
profits and losses, and record the relevant provision for impairment of
the relevant construction in progress. The losses of impairment of
construction in progress will not be reversed in the following accounting
periods once it is recognized.
13. Borrowing costs
The borrowing costs refer to any interest incurred and other relevant
costs of the company arise from borrowings, which including the interest
on borrowings, amortization of discounts or premiums on borrowings,
ancillary expenses, and exchange balance on foreign currency borrowings.
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 shall be capitalized and recorded into
the costs of relevant assets. Other borrowing costs shall be recognized
as expenses on the basis of the actual amount incurred, and shall be
recorded into the current profits and losses.
(1) Recognition of capitalization of borrowing costs
The borrowing costs shall not be capitalized unless they simultaneously
meet the following requirements:
①The asset disbursements have already incurred.
②The borrowing costs have already incurred.
③The acquisition and construction or production activities which are
necessary to prepare the asset for its intended use or sale have already
started.
(2) Period of capitalization
The capitalization period shall refer to the period from the commencement
to the cessation of capitalization of the borrowing costs, excluding the
period of suspension of capitalization of the borrowing costs.
Where the acquisition and construction or production of a qualified asset
is interrupted abnormally and the interruption period lasts for more than
3 months, the capitalization of the borrowing costs shall be suspended.
The borrowing costs incurred during such period shall be recognized as
expenses, and shall be recorded into the profits and losses of the currentperiod, till the acquisition and construction or production of the asset
restarts. If the interruption is a necessary step for making the qualified
asset under acquisition and construction or production ready for the
intended use or sale, the capitalization of the borrowing costs shall
continue.
When the qualified asset under acquisition and construction or production
is ready for the intended use or sale, the capitalization of the borrowing
costs shall be ceased. The borrowing costs incurred after the qualified
asset under acquisition and construction or production is ready for the
intended use or sale shall be recognized as expenses at the incurred amount
when they are incurred, and shall be recorded into the profits and losses
of the current period.
(3) Calculation of capitalized amount of borrowing costs
During the period of capitalization, the to-be-capitalized amount of
interests (including the amortization of discounts or premiums) in each
accounting period shall be determined according to the following
provisions:
①As for specifically borrowed loans for the acquisition and construction
or production of assets eligible for capitalization, the
to-be-capitalized amount of interests shall be determined in light of the
actual cost incurred of the specially borrowed loan at the present period
deducting the income of interests earned on the unused borrowing loans
as a deposit in the bank or as a temporary investment.
②Where a general borrowing is used for the acquisition and construction
or production of assets eligible for capitalization, the enterprise shall
calculate and determine 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 deducting the general
borrowing by the capitalization rate of the general borrowing used. The
capitalization rate shall be calculated and determined in light of the
weighted average interest rate of the general borrowing.
14. Intangible assets
(1) Initial Measurement of intangible assets
The intangible assets shall be initially measured according to its cost.
The actual cost shall be determined as per the following principles:
①The cost of outsourcing intangible assets shall include the purchase
price, relevant taxes and other necessary expenditures directly
attributable to intangible assets for the expected purpose. Where the
payment of purchase price for intangible assets is delayed beyond the
normal credit conditions, which is of financing intention, the cost of
intangible assets shall be determined on the basis of the current value
of the purchase price. The difference between the actual payment and the
current value of the purchase price shall be recorded into profit or lossfor the credit period, unless it shall be capitalized under the Accounting
Standards for Enterprises No. 17 - Borrowing Cost.
②The cost invested into intangible assets by investors shall be
determined according to the conventional value in the investment contract
or agreement, except for those of unfair value in the contract or
agreement.
③Self-developed intangible assets
The cost of self-developed intangible assets shall include the total
expenditures incurred during the period from the time when it meets the
provisions of Articles 4 to 9 of these Standards to the time when the
expected purposes of use are realized, except that the expenditures which
have already been treated prior to the said period shall not be adjusted.
④The costs of intangible assets acquired from non-monetary assets transaction,
debt recombination, government subsides, and merger of enterprises shall be
determined respectively according to the Accounting Standard for Business
Enterprises No. 7 -Exchange of non-monetary assets, Accounting Standard for
Business Enterprises No. 12 - Debt Restructurings, Accounting Standard for
Business Enterprises No. 16 - Government Grants and Accounting Standard for
Business Enterprises No. 20 -Business Combinations.
(2) Subsequent measurement of intangible assets
The Company will determine the service life of the intangible asset during the
acquirement. If it is unable to forecast the period when the intangible asset
can bring economic benefits to the Company, it shall be regarded as an intangible
asset with uncertain service life.
With regard to intangible assets with limited service life, its
amortization amount shall be amortized within its service life
systematically and reasonably. The intangible assets shall be amortized
by the straight-line method.
Category Estimated service life
Software 5 years
Patent right 5 years
Right to use a trademark 5 years
Land use right 50 years
The reasonable amortization amount of intangible assets shall be its cost
deducting the expected residual value. For intangible assets with an
impairment provision, the accumulative amount of impairment provision
shall be deducted from the cost as well. The amortized amount of intangible
assets shall be recorded into profit or loss for the current period.
Intangible assets with uncertain service life may not be amortized.
The Company shall, at least at the end of each year, check the service
life and the amortization method of intangible assets with limited service
life, and shall adjust them when necessary.
(3) Expenditures for the internal research and development stagesThe expenditures for the internal research and development stages of the
Company shall be classified into research expenditures and development
expenditures. The research expenditures for its internal research and
development stages of an enterprise shall be recorded into the profit or
loss for the current period. The development expenditures for its internal
research and development stages of an enterprise may be capitalized when
they satisfy the following conditions simultaneously:
A．It is feasible technically to finish intangible assets for use or sale.
B．It is intended to finish and use or sell the intangible assets.
C．The usefulness of methods for intangible assets to generate economic
benefits shall be proved, including being able to prove that there is a
potential market for the products manufactured by applying the intangible
assets or there is a potential market for the intangible assets itself
or the intangible assets will be used internally.
D．It is able to finish the development of the intangible assets, and able
to use or sell the intangible assets, with the support of sufficient
technologies, financial resources and other resources.
E．The development expenditures of the intangible assets can be reliably
measured.
Expenditures for development stages which fail to meet the foresaid
conditions shall all be recorded into the profit or loss for the current
period. The development expenditures recorded in the profits and losses
in the previous periods shall not be reconfirmed as assets in the following
periods. The capitalized expenditures for development stages shall be
listed as the development expenditures on the balance sheet. Such item
can be transferred to intangible assets when it reaches its working
condition for intend use.
(4) Impairment test and withdrawal of provision for impairment
The Company shall determine whether the intangible assets with limited
service life have impairment on the balance sheet date. If there is any
impairment, the Company should estimate the recoverable amount, and
conduct the impairment test. The Company should conduct the impairment
test for the intangible asset with uncertain service life no matter
whether there is any impairment.
The recoverable amount can be ascertained as per the higher between the
net amount after the fair value of the intangible assets deducting the
disposal expense and the present value of estimated cash flow in future
of the intangible assets. The Company shall estimate the recoverable
amount on the basis of single intangible asset. When the recoverable
amount of the single intangible asset is lower than its carrying value,
the Company shall reduce the carrying value to the recoverable amount,
record the written-down amount into the current profits and losses, and
record the relevant provision for impairment of intangible assets. The
losses of impairment of intangible assets will not be reversed in thefollowing accounting periods once they are recognized.
15. Long-term prepayments
Long-term prepayments are expenditures incurred by the Company that
should be amortized over one year. Long-term prepayments shall be recorded
as per the actual expenditures, and shall be amortized by the
straight-line method within five years.
16. Estimated debts
(1) Recognition of estimated debts
The debts shall be recognized when the business related to contingencies
like foreign guarantee, pending litigation or arbitration, product
quality assurance, plan of staff reduction, loss contract, restructuring
obligations, retirement obligation of fixed assets etc. simultaneously
meet the following requirements:
①The obligation is a current obligation of the enterprise.
②It is likely to cause any economic benefit to flow out of the enterprise
as a result of performance of the obligation
③The amount of the obligation can be measured in a reliable way.
(2) Measurement of estimated debts
The estimated debts shall be initially measured in accordance with the
best estimate of the necessary expenses for the performance of the current
obligation. The Company shall take into full consideration of the risks,
uncertainty, time value of money, and other factors pertinent to the
Contingencies. The Company shall check the book value of the estimated
debts on the balance sheet date. If there is any exact evidence indicating
that the book value cannot really reflect the current best estimate, the
enterprise shall adjust the book value in accordance with the current best
estimate.
17. Income
Operating incomes of the Company include income from commodities sales,
revenue from providing labor services and income from abalienating the
right to use assets. The revenue principles and specific periods are as
follows:
(1) The significant risks and rewards of ownership of the commodities have
been transferred to the buyer by the enterprise; the enterprise retains
neither continuous management right nor effective control over the sold
commodities; The relevant amount of revenue is collected or relevant
receipts are received; and the revenue can be recognized when the relevant
costs incurred or to be incurred is measured in a reliable way. Recognition
of incomes from exporting commodities: For FOB export, revenue can be
recognized after commodities are delivered to the carriers entrusted by
buyers; For CIF export, revenue can be recognized when commodities aredelivered to the docks of buyers.
(2) Labor services of the Company have been provided and the relevant
amount has been collected or can be recognized when relevant receipts are
received. Income from providing property management services: Property
management services have been provided; the relevant economic benefits
may flow into the enterprise; and the income from providing property
management services can be recognized when the relevant costs incurred
or to be incurred is measured in a reliable way.
(3) The economic benefits related to transactions may flow into the
enterprise and the income from abalienating the right to use assets can
be recognized when the relevant amount revenue is measured in a reliable
way.
18. Government grants
The government grants of the Company include government grants related
to assets and government grants related to profits.
(1) Recognition of government grants
No government grants may be recognized unless the following conditions
are met simultaneously as follows:
a. The enterprise can meet the conditions for the government subsidies;
b. The enterprise can obtain the government subsidies.
(2) Measurement of government grants
① Where a government grant is a monetary asset, it shall be measured in
the light of the received or receivable amount. Where a government grant
is a non-monetary asset, it shall be measured at its fair value. If its
fair value cannot be obtained in a reliable way, it shall be measured at
its nominal amount (Renminbi one Yuan).
② The government subsidies pertinent to assets shall be recognized as
deferred income, equally distributed within the useful lives of the
relevant assets, and included in the current profits and losses. But the
government subsidies measured at their nominal amounts shall be directly
included in the current profits and losses. The government subsidies
pertinent to incomes shall be treated respectively in accordance with the
circumstances as follows:
a. Those subsidies used for compensating the related future expenses or
losses of the enterprise shall be recognized as deferred income and shall
be included in the current profits and losses during the period when the
relevant expenses are recognized; or
b. Those subsidies used for compensating the related expenses or losses
incurred to the enterprise shall be directly included in the current
profits and losses.
③Where it is necessary to refund any government grant which has been
recognized, it shall be treated respectively in accordance with the
circumstances as follows:a. If there is the deferred income concerned, the book balance of the
deferred income shall be offset against, but the excessive part shall be
included in the current profits and losses; and b. If there is no deferred
income concerned, it shall be directly included in the current profits
and losses.
19. Deferred income tax assets/Deferred income tax liabilities
The deferred income tax of the Company is calculated in the balance sheet
approach based on the temporary difference between the carrying amount
of an asset or liability and its tax base and the temporary difference
between the tax base and its carrying amount of items that have not been
recognized as assets or liabilities on the balance sheet date.
(1) Recognition of deferred income tax assets
For deductible temporary differences and deductible loss or tax deduction
that can be carried forward to the next year, the corresponding deferred
income tax assets are determined to the extent that the amount of future
taxable income to be offset by the deductible loss or tax deduction to
be likely obtained unless:
① The deductible temporary difference is produced in the following
transactions: the transaction does not involve in business combination
and the transaction neither affects the accounting profits nor affects
the amount of the taxable income or deductible loss.
② The relevant deferred income tax assets are recognized where the
amounts of deductible temporary differences related to the investments
of the subsidiary companies, associated enterprises and joint enterprise
simultaneously meet the following
a. conditions: temporary differences are likely to be reversed in the
expected future; and
b. it is likely to acquire any amount of taxable income tax that may be
used for making up the deductible temporary differences.
(2) Recognition of deferred income tax liabilities
Deferred income tax liabilities are recognized based on temporary
differences of taxable income taxes, unless:
① Temporary differences of taxable income taxes incur under the following
circumstances:
A. The initial recognition of business reputation;
B. The initial recognition of assets or liabilities arising from the
following transactions which are simultaneously featured by the
following:
a) The transaction is not business combination; and
b) At the time of transaction, the accounting profits will not be affected,
nor will the taxable amount or the deductible loss be affected.②The taxable temporary differences related to the investments of
subsidiary companies, associated enterprises and joint enterprises shall
recognize corresponding deferred income tax liabilities where:
a. The investing enterprise can control the time of the reverse of
temporary differences; and
b. The temporary differences are unlikely to be reversed in the excepted
future.
20. Leases
A lease that has transferred in substance all the risks and rewards related
to the ownership of an asset is called finance lease. Other leases are
called operating leases. The rents from operating leases shall be recorded
by the lessee in the relevant asset costs or the profits and losses of
the current period by using the straight-line method over each period of
the lease term.
21. Assets held for sale
Assets that meet the following conditions are classified as non-current
assets (excluding financial assets, deferred income tax assets):
(1) Resolution on disposal of the non-current asset has been made by the
Company;
(2) An irrevocable transfer agreement has been signed with the transferee;
and
(3) The transfer will be completed within one year.
Individual assets and asset group (referring to a group of assets that
are sold as a whole or disposed in other ways) that are classified as assets
held for sale are measured as their fair values minus the amount after
disposal. But the values should not exceed the original carrying amount
when the assets meet the criteria for being held for sale. The difference
between the amount that the carrying amount is higher than the fair value
and the disposal expenses is recognized as loss of the impairment of the
asset and shall be recorded into the profits and losses of the current
period.
22. Change of significant accounting policies and accounting estimate
(1) Change of accounting policies
No change has been made to the accounting policies within the reporting
period of the Company.
(2) Change of accounting estimate
No change has been made to the accounting estimate within the reporting
period of the Company.
V. Taxes
1. Main tax categories and tax rateTax Tax Base Tax Rate
Value-added tax
Income from selling
commodities
17%
Business tax Taxable income 5%
Urban maintenance
and construction
tax
Paid VAT and business tax 1%、5%、7%
Educational Surtax Paid VAT and business tax 3%、4％
Corporate income
tax
Income tax payable
In the year of 2010, 22% for the companies
incorporated in Shenzhen except Konka
Telecommunication Technology Video &
Communication Systems Engineering with the
income tax of 5%; 25% for the companies
incorporated in other places; 16.5% for the
companies incorporated in Hong Kong; and 15% for
Chongqing Qingjia and Dongguan Konka Mould
Plastic.
Remark: According to the Interim Measures for the Administration of
Collection of Business Income Tax for Trans-regional Business Operations,
where a resident enterprise sets up a business institution or
establishment without the qualification of legal person across the
regions within the territory of China, this resident enterprise shall be
a consolidated taxpayer enterprise, and shall be governed by the
administrative measures for enterprise income tax, namely “uniform
calculation, level-by-level administration, pre-payment in place,
consolidated settlement, and transfer to treasury”. These measures shall
be implemented as from the date of January 1, 2008.
In accordance with the measures mentioned above, the sales branches of
the Company in all parts of the country shall, as from the date of January
1, 2008, prepay the business income tax, and the Company shall make the
uniform settlement in the year-end.
2. Tax preference and approved document
On December 16, 2008, the wholly-owned subsidiary of the Company-Shenzhen
Konka Telecommunications Technology Co., Ltd. obtained the Certificate
of High-Tech Enterprise jointly issued by Shenzhen Bureau of Science
Technology & Information, Shenzhen Financial Bureau, Shenzhen Municipal
State Taxation Bureau, and Shenzhen Municipal Local Taxation Bureau,
valid for three years. In light of the relevant tax regulations, Shenzhen
Konka Telecommunications Technology Co., Ltd. would be entitled to the
relevant preferential policies concerning the hi-tech enterprise for
three years in succession, and be levied the business income tax at the
preferential tariff of 15%.
The company and subsidiary companies incorporated in Shenzhen exceptKonka Telecommunication Technology Co., Ltd gradually implemented the
legal tax rate five years after the implementation of the new tax law and
implemented the tax rate of 20% in 2009 according to the relevant
regulations in GF No. 39 (2007) Notice by the PRC State Council on the
Implementation of the Grandfathering Preferential Policies under the PRC
Enterprise Income Tax Law.
The subsidiary company Chongqing Qingjia of the Company was levied at the
preferential income tax rate of 15% from year 2001 to year 2010 according
to the regulations in YGSH No. (2002) 488 of Chongqing Office of State
Administration of Taxation.
On November 10, 2009, the subsidiary company Dongguan Konka Mould Plastic
of the Company was filed for the high-tech enterprise certification by
Ministry of Science and Technology, valid for three years. According to
relevant taxation regulations, Dongguan Konka Mould Plastic would enjoy
relevant preferential policies for high-tech enterprises for successive
three years since 2009 and was levied at the preferential corporate income
tax rate of 15%.
On October 8, 2008, Guangdong Boluo Office of State Administration of
Taxation approved the application of Bokang Precision Electronics for tax
preferential in BGSH No. (2008) 94 and thus Bokang Precision Electronics
was exempted from the corporate income tax in year 2008 and 2009 and will
be levied at 50% of the corporate income tax rate from year 2010 to year
2012.
On December 31, 2009, subsidiary of the Company-Video & Communication
Systems Engineering obtained the Certificate of High-Tech Enterprise
jointly issued by Science Industry Trade and Information Technology
Commission of Shenzhen Municipality, Finance Commission of Shenzhen
Municipality, Shenzhen Municipal State Taxation Bureau, and Shenzhen
Municipal Local Taxation Bureau, valid for three years. In light of the
relevant tax regulations, Shenzhen Konka Telecommunications Technology
Co., Ltd. would be entitled to the relevant preferential policies
concerning the hi-tech enterprise for three years in succession, and be
levied the business income tax at the preferential tariff of 15%.
VI. Business combination and consolidated financial statements
1. Particulars about subsidiary companies
Subsidiaries obtained through establishment or investment
Name of subsidiary
Registration
place
Business nature
Registered
capital
Actual
paid-in
amount at
the
period-end
Net
Investment
Balance for
Subsidiary
MateriallyConstitute
d
Shenzhen Konka
Telecommunication
Technology Co., Ltd
Shenzhen
Guangdong
Mobile communication
products
RMB120,000,000 12,000.00 -
Shenzhen Konka Video
& Communication
Systems Engineering
Co., Ltd
Shenzhen
Guangdong
Development and sales of
commercial televisions
RMB15,000,000 900.00 -
Dongguan Konka Mould
Plastic Co., Ltd
Shenzhen
Guangdong
Moulds RMB15,968,800 739.50 -
Konka Electric and
Electronic Co., Ltd
Shenzhen
Guangdong
Electronic equipment RMB8,300,000 1,073.25 -
Shenzhen Information
Network Co., Ltd
Shenzhen
Guangdong
Manufacturing and
selling digital network
products
RMB30,000,000 3,000.00 -
Shenzhen Plastic
Products Co., Ltd
Shenzhen
Guangdong
Plastic product
manufacturing
RMB9,500,000 950.00 -
Shenzhen Shushida
Electronics Co., Ltd
Shenzhen
Guangdong
Video and audio products
and components
RMB42,000,000 4,200.00 -
Shenzhen Electronic
Fittings Technology
Co., Ltd
Shenzhen
Guangdong
R&D of electronic
components
RMB65,000,000 6,500.00 -
Mudanjiang Konka
Industry Co., Ltd
Mudanjiang
Heilongjiang
Color television
products
RMB60,000,000 3,600.00 -
Shaanxi Konka
Electronic Co., Ltd
Xianyang
Shaanxi
Color television
products
RMB69,500,000 5,529.48 -
Chongqing Konka
Electronic Co., Ltd
Chongqing
Color television
products
RMB45,000,000 2,700.00 -
Chongqing Konka
Automotive
Electronic Co., Ltd
Chongqing
Development and sales of
automotive electronic
equipment
RMB30,000,000 1,710.00 -
Chongqing Qingjia
Electronic Co., Ltd
Chongqing Electronic tuners RMB15,000,000 600.00 -
Anhui Konka
Electronic Co., Ltd
Chuzhou Anhui
Color television
products
RMB140,000,000 12,278.09 -
Anhui Konka
Household Appliance
Co., Ltd
Chuzhou Anhui
Manufacturing and
selling household
appliance such as
refrigerators
RMB78,190,000 8,087.17 -
Changshu Konka
Electronic Co., Ltd
Changshu
Jiangsu
Manufacturing and
selling electronic
products
RMB24,650,000 2,027.89 -
Kunshan Konka Kunshan Researching, designing RMB350,000,000 35,000.00 -Electronic Co., Ltd Jiangsu and manufacturing
liquid crystal modules
and flat panel
television
Dongguan Konka
Electronic Co., Ltd
Dongguan
Guangdong
Television and audio
products
RMB266,670,000 21,582.38 7,478.40
Dongguan Konka
Packing Material
Co., Ltd
Dongguan
Guangdong
Plastic product
manufacturing
RMB10,000,000 1,000.00 -
Dongguan Konka Mould
Plastic Co., Ltd
Dongguan
Guangdong
Manufacturing moulds
and plastic products
RMB10,000,000 1,000.00 -
Boluo Konka Printed
Board Co., Ltd
Bolo
Guangdong
Manufacturing and
selling electronic
products
RMB40,000,000 2,428.52 -
Boluo Konka
Precision Technology
Co., Ltd
Bolo
Guangdong
Manufacturing and
selling electronic
products
RMB15,000,000 1,125.00 -
Konka Nanhai
Institute
Foshan
Guangdong
R&D of flat panel
display technologies
and products
RMB500,000 50.00 -
Hong Kong Konka
International
Electronics Co., Ltd
Hong Kong
China
Exporting and importing
machinery and
electronic products
HKD500,000 78.18 -
Konka Household
Appliances
Investment &
Development Co., Ltd
Hong Kong
China
Investment and
shareholding
HKD500,000 53.06 -
Konka Household
Appliances
International
Trading Co., Ltd
Hong Kong
China
International trade HKD500,000 53.31 -
KONKA AMERICA,INC USA
Selling electronic
products
USD1,000,000 806.25 -
Konka (Europe) Ltd Europe
Selling electronic
products
EUR25,000 26.15 -
Shenzhen Wankaida
Science & Technology
Co., Ltd
Shenzhen
China
Research and
development of
technology of
electronic device
RMB10,000,000 1,000.00 -
Shenzhen Konka
Optoelectronics
Technology Co., Ltd
Shenzhen
China
Research and
development of
technology of
electronic device
RMB10,000,000 1,000.00
Konka (Kunshan) Real Kunshan Real estate investment RMB200,000,000 20,000.00 -Estate Investment
Co., Ltd
Jiangsu
Xutongda
Dongguan
Guangdong
Manufacturing moulds
and plastic products
RMB5,000,000 500.00 -
Continued
Unit: RMB Yuan
Name of subsidiary
Holdi
ng
propo
rtion
(%)
Percent
age of
vote
rights
(%)
Is
consolida
ted
financial
statement
applied?
Equity of the
minority
shareholders
Amount of
equity of
minority
shareholde
rs used to
offset
income/los
s of the
minority
shareholde
r
Owner’s equity of the
parent company used to
offset the balance
between the current loss
borne by the minority
shareholders of the
subsidiaries and the
shares enjoyed by the
minority shareholders in
the owner’s equity of
the subsidiaries
Shenzhen Konka
Communication
Technology Co.,
Ltd
100.0
0
100.00 Yes - - -
Shenzhen Konka
Video &
Communication
Systems
Engineering Co.,
Ltd
60.00 60.00 Yes 3,910,506.10 - -
Dongguan Konka
Mould Plastic Co.,
Ltd
46.31 52.49 Yes 65,722,357.01 - -
Konka Electric and
Electronic Co.,
Ltd
51.00 51.00 Yes - -8,411,441.73
Shenzhen
Information
Network Co., Ltd
100.0
0
100.00 Yes - - -
Plastic product
manufacturing
100.0
0
100.00 Yes - - -
Shenzhen Shushida
Electronics Co.,
Ltd
100.0
0
100.00 Yes - - -
Shenzhen
Electronic
100.0
0
100.00 Yes - - -Fittings
Technology Co.,
Ltd
Mudanjiang Konka
Electronics Co.,
Ltd
60.00 60.00 Yes 20,618,592.40 - -
Shaanxi Konka
Electronic Co.,
Ltd
60.00 60.00 Yes 43,422,987.76 - -
Chongqing Konka
Electronic Co.,
Ltd
60.00 60.00 Yes 5,794,700.80 - -
Chongqing Konka
Automotive
Electronic Co.,
Ltd
57.00 57.00 Yes - -3,910,642.32
Chongqing Qingjia
Electronic Co.,
Ltd
40.00 40.00 Yes 17,061,227.12 - -
Anhui Konka
Electronic Co.,
Ltd
78.00 78.00 Yes 51,904,887.81 - -
Anhui Konka
Household
Appliance Co., Ltd
96.46 97.45 Yes 1,999,249.49 - -
Changshu Konka
Electronic Co.,
Ltd
60.00 60.00 Yes 9,819,432.63 - -
Kunshan Konka
Electronic Co.,
Ltd
100.0
0
100.00 Yes - - -
Dongguan Konka
Electronic Co.,
Ltd
100.0
0
100.00 Yes - - -
Dongguan Konka
Packing Material
Co., Ltd
100.0
0
100.00 Yes - - -
Dongguan Konka
Mould Plastic Co.,
Ltd
59.73 100.00 Yes - - -
Boluo Konka
Printed Board Co.,
Ltd
51.00 51.00 Yes 16,250,985.08 - -
Boluo Konka 100.0 100.00 Yes - - -Precision
Technology Co.,
Ltd
0
Konka Nanhai
Institute
100.0
0
100.00 Yes - - -
Hong Kong Konka
International
Electronics Co.,
Ltd
100.0
0
100.00 Yes - - -
Konka Household
Appliances
Investment &
Development Co.,
Ltd
100.0
0
100.00 Yes - - -
Konka Household
Appliances
International
Trading Co., Ltd
100.0
0
100.00 Yes - - -
KONKA AMERICA,INC
100.0
0
100.00 Yes - - -
Konka (Europe) Ltd
100.0
0
100.00 Yes - - -
Shenzhen Wankaida
Science &
Technology Co.,
Ltd
100.0
0
100.00 Yes - - -
Shenzhen Konka
Optoelectronics
Technology Co.,
Ltd
100.0
0
100.00 Yes - - -
Konka (Kunshan)
Real Estate
Investment Co.,
Ltd
100.0
0
100.00 Yes - - -
Xutongda 46.31 100.00 Yes - - -
Total
236,504,926.2
0
-11,059,264.64
Note: ① The Company holds 46.31% of shares of Dongguan Konka Mould Plastic
Co., Ltd. Konka Household Appliances Investment & Development Co., Ltd,
a subsidiary company of the Company, is entrusted to manage 6.18% shares
held by Shenzhen Dingshengxin Mould Technology Consultation Co., Ltd.
After the entrustment, the percentage of voting rights of the Companyincreases to 52.49%. Therefore, the financial statements of Dongguan
Konka Mould Plastic Co., Ltd are combined into the consolidated financial
statements. Xutongda is a wholly funded subsidiary of Dongguan Konka Mould
Plastic Co., Ltd and is also combined into the consolidated financial
statements.
② Senior managers of Chongqing Qingjia Electronic Co., Ltd are appointed
and dismissed by the Company. 70 to 80% of its products are sold to the
Company and thus the Company has absolute influence and control over the
production and operation of Chongqing Qingjia Electronic Co., Ltd.
2. Subsidiary companies that are combined into the consolidated
financial statements in the current period
Name
Establishing
Method
End. Net Assets
Net Profit of the
Current Period
Shenzhen
Wankaida
Newly
founded
9,991,044.00 -8,956.00
Konka
Optoelectronics
Newly
founded
9,991,044.00 -8,956.00
Ⅶ. Notes to Items in the Consolidated Financial Statements
Unless otherwise specified, in the following notes to the items in
the consolidated financial statements (including notes to main items in
the financial statements of the parent company), the end of the period
refers to the day of 30 Jun. 2010; the beginning of the period refers to
the day of 1 Jan. 2010; the current period refers to the first half of
2010; and the previous period refers to the first half of 2009.
1. Monetary funds
End. balance Beg. balance
Items
Amount in
foreign
currency
Translat
ed
exchange
rate
Amount in
renminbi
(yuan)
Amount in
foreign
currency
Translat
ed
exchange
rate
Amount in
renminbi
(yuan)
Cash: - - 7,625.43 - - 78,085.59
RMB 6,491.32 1.00 6,491.32 8,820.37 1.00 8,820.37
HKD 92.78 0.88 81.47 292.76 0.88 257.77
USD 143.21 6.77 969.93 27.65 6.83 188.8
EUR 10.00 8.27 82.71 7,024.39 9.80 68,818.65
Bank - - 958,142,686.44 - - 749,873,330.End. balance Beg. balance
Items
Amount in
foreign
currency
Translat
ed
exchange
rate
Amount in
renminbi
(yuan)
Amount in
foreign
currency
Translat
ed
exchange
rate
Amount in
renminbi
(yuan)
deposit
:
70
RMB
621,232,943.4
6
1.00 621,232,943.46 499,987,018.08 1.00
499,987,018.
08
HKD
8,407,596.67 0.88 7,382,314.19 31,503,342.66 0.88
27,738,686.7
6
USD
48,461,629.54 6.77 328,220,644.83 32,465,512.99 6.83
221,685,758.
32
JPY 2,170,716.00 0.08 166,463.53 1,836,287.61 0.07 135,481.30
EUR 83,089.61 8.27 687,260.59 12.61 9.80 123.54
GBP 1.32 10.21 13.48 - - -
CAD 70,063.27 6.47 453,046.36 - - -
Other
s
50,001.18 6.53 326,262.70
Other
monetar
y funds:
- -
1,886,942,850.
00
- -
2,874,528,96
3.96
RMB
1,886,942,850
.00
1.00
1,886,942,850.
00
2,874,508,857.
93
1.00
2,874,508,85
7.93
HKD - - - 22,834.79 0.88 20,106.03
Total
2,845,093,161
.87
3,624,480,38
0.25
Remark: The balance of other monetary funds at the end of the period
includes marginal deposits that cannot be withdrawn freely, totaling
renminbi 1,886,942,850.00 yuan, which is used as USD loan pledge for NDF
service.
2. Transactional financial assets
Item End. fair value Beg. fair value
Derivative financial instruments (NDF) - 3,673,164.00
Remark: The balance of derivative financial instruments at the end
of the period is the fair value of NDF service at the end of the period,
which is carried out by the Company and Shenzhen Telecommunication
Technology Co., Ltd to dodge exchange risks through long-term irrevocable
contracts.
3. Notes receivable(1) Category of notes receivable
Category End. balance Beg. balance
Banker's
acceptance bill
2,777,730,209.07 2,781,539,700.27
Commercial
acceptance bill
19,700,000.00 26,000,000.00
Total 2,797,430,209.07 2,807,539,700.27
(2) The balance of notes used as pledge in the accounts receivable at
the end of the period amounts to renminbi 1,525,195,250.29 yuan.
(3) Top five notes that are endorsed but not due at the end of the period
Issuing entity Issuing date Maturity date Amount
Shenzhen GOME Electrical
Appliances Co., Ltd. 2010.02.03 2010.08.03
6,194,305.37
Beijing Suning Appliance Co.,
Ltd. 2010.02.26 2010.08.26
5,000,000.00
Jiangsu FiveStar Electrical
Appliances Co., Ltd. 2010.03.04 2010.09.04
4,300,000.00
Beijing Dazhong Home Appliances
Retail Co., Ltd. 2010.03.18 2010.09.18
2,000,000.00
Hainan Xinxing Electrical
Appliances Co., Ltd. 2010.01.29 2010.07.29
2,000,000.00
Total 19,494,305.37
(4) Commercial acceptance bills that cannot be discounted and pledged
at the end of the period by the Company.
(5) For accounts of related parties, see No. 6 in Note 8.
4. Accounts receivable
(1) Accounts receivable are listed below as per category
End. balance
Book balance Bad debt reserves
Category
Amount
Proportion
(%)
Amount
Proportion
(%)
Accounts receivable with
significant individual amount
163,120,658.75 11.97 6,363,132.17 2.92
The portfolio with
insignificant single amount has
a greater risk after combined on
the credit risk basis
193,510,710.55 14.20 179,883,021.36 82.53
Other insignificant accounts
receivable
1,006,266,158.61 73.83 31,714,138.80 14.55
Total 1,362,897,527.91 100.00 217,960,292.33 100.00(Continued)
Beg. balance
Book balance Bad debt reserves
Category
Amount
Proportion
(%)
Amount
Proportion
(%)
Accounts receivable with
significant individual amount
494,067,023.84 32.6 12,982,059.48 6.08
The portfolio with
insignificant individual
amount has a greater risk after
combined on the credit risk
basis
188,023,658.33 12.4 176,017,194.71 82.40
Other insignificant accounts
receivable
833,601,803.02 55.00 24,626,633.87 11.52
Total 1,515,692,485.19 100.00 213,625,888.06 100.00
Remark: Recognition basis of accounts receivable with significant
individual amount: the account receivable with the balance at the end of
the period greater than renminbi 20,000,000 yuan.
(2) Bad debt reserves
① The accounts receivable with significant individual amount or with
insignificant amount but independently impairment tested
Contents of
account receivable
Book amount
Bad debt
reserve
Withdrawing
ratio (%)
Reasons
Goods payment 163,120,658.75 6,363,132.18 3.90
No impairment
occurred upon an
independent test.
It was withdrawn
according to its
account age.
② The portfolio with insignificant single amount has a greater risk
after combined on the credit risk basis
End. balance Beg. balance
Book balance
Bad debt
reserves
Book balance
Bad debt
Age reserves
Amount
Proportion
(%)
Amount
Proportion
(%)
Three to
four
years
5,309,340.56 0.39 4,010,760.90 23,441,767.92 1.55 12,612,946.71
Four to
five
23,239,314.54 1.71 10,910,205.01 13,107,093.10 0.86 11,929,450.69years
Five
years or
longer
164,962,055.45 12.10 164,962,055.45 151,474,797.31 9.99 151,474,797.31
Total 193,510,710.55 14.20 179,883,021.36 188,023,658.33 12.40 176,017,194.71
Remark: The recognition basis of the account receivables with
insignificant individual amount but with a greater risk after portfolio
on the credit risk basis: the balance of the account receivable is less
than renminbi 20,000,000 yuan with the age of three or longer years.
Accounts receivable that have been tested without impairment in
independent tests can be classified into combinations with accounts
receivable with insignificant individual amounts as per similar credit
risk characters. The bad debt reserves are allotted on the basis of the
combinations of credit risks.
(3) In the reporting period, no shareholder entity that holds 5% or
more shares of the Company owes debts to the Company.
(4) The amount of the top five accounts receivable totals renminbi
216,733,163.02 yuan, taking up 15.90% of the total account receivable.
(5) For other accounts receivable from related parties among the
accounts receivables, see No. 6 in Note 8.
5. Advance Payment
(1) The advance payment is listed on the basis of account age
End. balance Beg. balance
Age
Amount
Proporti
on (%)
Bad debt
reserves
Amount
Proporti
on (%)
Bad debt
reserves
Within one
year
181,749,
999.22
93.97
1,061,507.
33
255,109,
000.62
91.14
1,061,507.
33
One to two
years
7,548,85
3.82
3.90 427,723.40
20,970,4
83.54
7.49 427,723.40
Two to three
years
879,304.
99
0.46 7,377.45
482,960.
55
0.17 7,377.45
Three years
or longer
3,227,37
3.81
1.67
2,376,043.
72
3,356,86
2.30
1.2
2,571,885.
56
Total
193,405,
531.84
100.00
3,872,651.
90
279,919,
307.01
100.00
4,068,493.
74
(2) Five entities with the highest amount of advance payments
Name
Relationship
with the
Amount Age
Reasons for
unsettlementCompany
Yantai Wanhua Polyurethanes Co., Ltd
Non-related
party
9,771,278.41
Within one
year
Materials
have not
arrived.
ON TIM TECHNOLOGIES LTD ONTIM
Non-related
party
7,297,342.64
Within one
year
Materials
have not
arrived.
Huai’an Zhenzhun Building
Engineering Co., Ltd.
Non-related
party
5,936,000.00
Within one
year
Advance
payment for
construction
Bailong Technology Co., Ltd
Non-related
party
5,111,957.05
Within one
year
Materials
have not
arrived.
Shanghai Novel Color Picture Tube Co.,
Ltd.
Non-related
party
4,168,825.44
One to two
years
Materials
have not
arrived.
Total 32,285,403.54
(3) In the advance payment in the reporting period, no shareholder
entity that holds 5% or more shares of the Company owes debts to the
Company.
6. Interest receivable
Item End. balance Beg. balance
Income from NDF
renminbi pledge
deposits
13,187,535.33 32,529,920.96
7. Other receivables
(1) Other receivables are listed below as per category
End. balance
Book balance Bad debt reserves
Category
Amount
Proportion
(%)
Amount
Proportion
(%)
Other receivables with
significant individual amount
69,000,000.00 38.44 - -
Other receivables with
insignificant single amount has a
greater risk after combined on the
credit risk basis
14,149,350.84 7.88 12,358,814.79 91.00
Other insignificant receivables 96,363,533.99 53.68 1,222,374.49 9.00
Total 179,512,884.83 100.00 13,581,189.28 100.00
(Continued)Beg. balance
Book balance Bad debt reserves
Category
Amount
Proportion
(%)
Amount
Proportion
(%)
Other receivables with
significant individual amount
- - - -
Other receivables with
insignificant single amount has a
greater risk after combined on the
credit risk basis
13,462,777.33 40.68 11,948,643.53 88.37
Other insignificant receivables 19,631,075.06 59.32 1,572,763.20 11.63
Total 33,093,852.39 100.00 13,521,406.73 100.00
Remark: Recognition basis of accounts receivable with significant
individual amount: the account receivable with the balance at the end of
the period is greater than renminbi 10,000,000 yuan.
(2) Bad debt reserves at the end of the period
① The other receivable with significant individual amount at the end
of the period is the land bidding deposit prepaid to Kunshan Land and
Resources Bureau, which involves no recovery risk.
② Other receivables with insignificant single amount has a greater
risk after combined on the credit risk basis
End. balance Beg. balance
Book balance Book balance
Age
Amount
Proportion
(%)
Bad debt
reserves Amount
Proportion
(%)
Bad debt
reserves
Three to
four
years
2,643,962.53 1.47 1,464,882.86 2,682,026.35 8.1 1,471,789.20
Four to
five
years
983,353.03 0.55 371,896.65 585,793.30 1.77 281,896.65
Five
years or
longer
10,522,035.28 5.86 10,522,035.28 10,194,957.68 30.81 10,194,957.68
Total 14,149,350.84 7.88 12,358,814.79 13,462,777.33 40.68 11,948,643.53
Remark: The recognition basis of the account receivables with
insignificant individual amount but with a greater risk after portfolio
on the credit risk basis: the balance of the account receivable is less
than renminbi 10,000,000 yuan with the age of three or longer years.(3) In other receivables in the reporting period, no shareholder entity
that holds 5% or more shares of the Company owes debts to the Company.
(4) Nature and content of other receivables with larger amount
Name Amount Nature or content
Kunshan Land and Resources Bureau 69,000,000.00 Deposit
Shenzhen Social Insurance Administration
6,699,786.17
Social insurance
fees
Asset custody special account at ICBC Beijing branch 2,100,000.00 Deposits
Shenzhen OCT Water and Electricity Supply Co., Ltd
1,267,992.21
Water and
electricity
expenses, unsettled
for now
Shenzhen OCT Real Estate Co., Ltd 1,247,137.86 Deposit
Total 80,314,916.24
(5) For other receivables from related parties in the report period,
see No. 6 in Note 8.
8. Inventories
(1) Categories of inventories
End. balance
Item
Book balance
Falling price
reserves
Book value
Raw materials
1,622,051,741.
62
109,270,650.03 1,512,781,091.59
Semi-finished products 383,727,029.98 66,241,096.06 317,485,933.92
Stock
2,705,139,379.
36
289,604,228.11 2,415,535,151.25
Goods in transit 5,494,367.63 - 5,494,367.63
Turnover materials 7,868,740.19 655,522.39 7,213,217.80
Total
4,724,281,258.
78
465,771,496.59 4,258,509,762.19
(Continued)
Beg. balance
Item
Book balance
Falling price
reserves
Book value
Raw materials 1,403,142,683.27 110,618,813.52 1,292,523,869.75
Semi-finished products 286,601,129.93 66,241,096.06 220,360,033.87
Stock 2,382,906,650.66 332,400,884.84 2,050,505,765.82
Goods in transit 8,486,406.30 - 8,486,406.30
Turnover materials 9,565,635.07 661,253.80 8,904,381.27
Total 4,090,702,505.23 509,922,048.22 3,580,780,457.01(2) Inventory falling price reserves
Decrease of the period
Item Beg. balance
Allotment of
the period
Recovered
amount
Write-off
amount End. balance
Raw materials 110,618,813.52 396,607.27 500,955.98 1,243,814.78 109,270,650.03
Semi-finished
products
66,241,096.06 - - - 66,241,096.06
Stock 332,400,884.84 750,251.04 235,493.14 43,311,414.63 289,604,228.11
Turnover
materials
661,253.80 - - 5,731.41 655,522.39
Total 509,922,048.22 1,146,858.31 736,449.12 44,560,960.82 465,771,496.59
9. Financial assets available for sale
Item End. fair value Beg. fair value
Stock investment 9,795,361.80 10,268,121.10
10. Investment on affiliated enterprises
The investments on affiliated enterprises of the Company are as
follows:
Invested
entity
Nature of
enterpri
se
Registrati
on place
Legal
representati
ve
Business
nature
Registered
capital
(Renminbi:
yuan)
Proporti
on of
shares
held by
the
Company
(%)
Percenta
ge of
voting
rights of
the
Company
in the
invested
enterpri
se (%)
Chongqing
Jingkang
Plastic
Products Co.,
Ltd
Company
of
limited
liabilit
y
Chongqing
Wang
Xiaoyong
Manufacturi
ng and
processing
mold
products
12,000,000.0
0
31.25 31.25
Shenzhen
Refond
Optoelectroni
cs Co., Ltd
Company
of
limited
liabilit
y
Shenzhen Gong Weibin
Manufacturi
ng and
selling
LEDs
35,566,667.0
0
25.87 25.87
Shenzhen
Konka Energy
Technology
Co., Ltd
Company
of
limited
liabilit
y
Shenzhen Dong Yaping
New energy
products
for mobile
equipment
20,000,000.0
0
30.00 30.00(Continued)
Invested
entity
Total assets at
the end of the
period
Total liabilities
at the end of the
period
Total net
assets at the
end of the
period
Total
operating
income of the
period
Net Profit of
the Current
Period
Chongqing
Jingkang
Plastic
Products Co.,
Ltd
5,605,604.07 1,840,764.87 3,764,839.20 36,764.39 -1,161,360.84
Shenzhen
Refond
Optoelectroni
cs Co., Ltd
278,202,285.95 111,975,426.02 166,226,859.93
120,799,160.1
1
14,174,936.90
Shenzhen Konka
Energy
Technology
Co., Ltd
13,792,442.90 1,643,585.59 12,148,857.31 - -
11. Long-term equity investment
(1) Category of long-term equity investment
Item Beg. balance
Increase of the
period
Decrease of the
period
End. balance
Investment on subsidiary
companies
- -
Investment on jointly funded
enterprises
- -
Investment on affiliated
enterprises
49,162,445.23 3,667,056.18 362,925.26 52,466,576.15
Other equity investments 10,038,000.00 10,038,000.00
Less: provisions for
depreciation of long-term
equity investments
1,400,000.00 1,400,000.00
Total 57,800,445.23 3,667,056.18 362,925.26 61,104,576.15
(2) List of long-term equity investment
Invested entity
Accounting
method
Initial
investment costs
Beg. balance
Increase/decrease
amounts
End. balance
Chongqing Jingkang
Plastic Products Co.,
Ltd
Equity
method
3,750,000.00 1,451,506.32 -362,925.26 1,088,581.06
Shenzhen Refond
Optoelectronics Co.,
Ltd
Equity
method
36,923,786.00 36,923,786.00 3,667,056.18 40,590,842.18
Shenzhen Konka Energy Equity 5,983,965.19 3,649,728.08 3,649,728.08Invested entity
Accounting
method
Initial
investment costs
Beg. balance
Increase/decrease
amounts
End. balance
Technology Co., Ltd method
Shenzhen Dekon
Electronic Co., Ltd
Cost method 3,000,000.00 7,137,424.83 7,137,424.83
Feihong Electronics
Co., Ltd
Cost method 1,300,000.00 1,300,000.00 1,300,000.00
Shenzhen Association
of Enterprises with
Foreign Investment
Cost method 100,000.00 100,000.00 100,000.00
Shenzhen Make-plan
Investment
Development Co., Ltd
Cost method 485,000.00 485,000.00 485,000.00
IGRS Information
Technology
Engineering Center
Co., Ltd
Cost method 5,000,000.00 5,000,000.00 5,000,000.00
Shenzhen Julong
Optoelectronics Co.,
Ltd
Cost method 2,000,000.00 2,000,000.00 2,000,000.00
Shenzhen CTU Hi-tech
Ltd
Cost method 1,153,000.00 1,153,000.00 1,153,000.00
Total 59,200,445.23 3,304,130.92 62,504,576.15
(Continued)
Invested entity
Proportion
of shares
held in the
invested
entity (%)
Percentage
of voting
rights in
the
invested
entity (%)
Interpretations
of difference
between the
equity
percentage and
vote right
percentage in
the invested
entity
Impairment
provision
Impairment
provision
allotted
of the
current
period
Cash
dividends
of the
current
period
Chongqing Jingkang Plastic
Products Co., Ltd
31.25 31.25 - - - -
Shenzhen Refond
Optoelectronics Co., Ltd
25.87 25.87 - - - -
Shenzhen Konka Energy
Technology Co., Ltd
30.00 30.00 - - - -
Shenzhen Dekon Electronic
Co., Ltd
30.00 - - - - -
Feihong Electronics Co.,
Ltd
8.33 8.33 - 1,300,000.00 - -
Shenzhen Association of - - - 100,000.00 - -Invested entity
Proportion
of shares
held in the
invested
entity (%)
Percentage
of voting
rights in
the
invested
entity (%)
Interpretations
of difference
between the
equity
percentage and
vote right
percentage in
the invested
entity
Impairment
provision
Impairment
provision
allotted
of the
current
period
Cash
dividends
of the
current
period
Enterprises with Foreign
Investment
Shenzhen Julong
Optoelectronics Co., Ltd
10.00 10.00 - - - -
Shenzhen Make-plan
Investment Development
Co., Ltd
1.00 1.00 - - - -
IGRS Information
Technology Engineering
Center Co., Ltd
9.62 9.62 - - - -
Shenzhen CTU Hi-tech Ltd 11.50 11.50 - - - -
Total 1,400,000.00 - -
(3) Long-term equity investments without restrictions on selling
12. Fixed assets
(1) Details of fixed assets
Item Beg. balance
Increase of the
period
Decrease of the
period
End. balance
I. Total original book
value
2,793,446,285.42 64,276,276.90 91,817,048.93 2,765,905,513.39
Including: housings
and buildings
1,185,382,298.95 8,330,650.05 17,495,849.80 1,176,217,099.20
Mechanical equipment 1,055,625,592.88 30,470,443.93 65,717,424.02 1,020,378,612.79
Electronic equipment 329,239,348.67 5,554,607.33 3,990,091.37 330,803,864.63
Vehicles 49,867,120.37 9,866,100.70 1,722,603.45 58,010,617.62
Other equipment 173,331,924.55 10,054,474.89 2,891,080.29 180,495,319.15
II. Total accumulated
depreciation
1,332,326,121.97 62,343,590.70 66,235,040.51 1,328,434,672.16
Including: housings
and buildings
249,000,434.97 15,152,869.51 540,335.16 263,612,969.32
Mechanical equipment 659,273,609.48 25,815,112.47 57,145,998.13 627,942,723.82
Electronic equipment 246,207,253.24 9,907,877.49 2,740,838.08 253,374,292.65
Vehicles 39,873,961.29 2,694,371.87 1,616,146.73 40,952,186.43Item Beg. balance
Increase of the
period
Decrease of the
period
End. balance
Other equipment 137,970,862.99 8,773,359.36 4,191,722.41 142,552,499.94
III. Total net book
value
1,461,120,163.45 1,437,470,841.23
Including: housings
and buildings
936,381,863.98 912,604,129.88
Mechanical equipment 396,351,983.40 392,435,888.97
Electronic equipment 83,032,095.43 77,429,571.98
Vehicles 9,993,159.08 17,058,431.19
Other equipment 35,361,061.56 37,942,819.21
IV. Total provisions
for depreciation
27,445,537.16 227,378.50 3,247,953.48 24,424,962.18
Including: housings
and buildings
1,247,805.91 - - 1,247,805.91
Mechanical equipment 21,222,582.75 226,978.50 3,231,601.32 18,217,959.93
Electronic equipment 2,453,203.93 - 15,267.16 2,437,936.77
Vehicles 998,585.64 400.00 - 998,985.64
Other equipment 1,523,358.93 - 1,085.00 1,522,273.93
V. Total book value 1,433,674,626.29 1,413,045,879.05
Including: housings
and buildings
935,134,058.07 911,356,323.97
Mechanical equipment 375,129,400.65 374,217,929.04
Electronic equipment 80,578,891.50 74,991,635.21
Vehicles 8,994,573.44 16,059,445.55
Other equipment 33,837,702.63 36,420,545.28
Remark: The amount of depreciation of the current period is renminbi
74,386,084.96 yuan. The original book value of fixed assets that are
transferred from construction in progress in the current period is
renminbi 7,277,608.49 yuan.
(2) Details of fixed assets whose certificates of title are not
prepared
Item
Reason for the absence of
certificate of title
Estimated time
for winding up
the
certificate of
title
Book value
Dorms of
Dongguan Konka
In progress Year 2010 38,221,832.27
Main factory
building, etc.
The license for using
state-owned land has not been
The winding up
time cannot be
16,507,069.46of Mudanjiang
Konka
obtained and the certificate of
title to house property cannot
be handled temporarily.
estimated
Factory
buildings, etc.
of Kunshan
Konka
The project is just finished
and the settlement is in
progress.
Year 2010
112,622,676.2
5
Color TV office
building, etc.
of Changshu
Konka
The license for using
state-owned land has not been
obtained and the certificate of
title to house property cannot
be handled temporarily.
The winding up
time cannot be
estimated
1,911,675.74
Yikang Building
of Konka Group
The building is purchased from
an external party and the
certificate of title to house
property is in progress.
The winding up
time cannot be
estimated
67,900,449.22
Total 237,163,702.
94
(3) For pledges with fixed assets, see No. 20 in Note 7.
13. Construction in progress
(1) Information about construction in progress
End. balance Beg. balance
Item
Book
balance
Impai
rment
provi
sion
Book value
Book
balance
Impai
rment
provi
sion
Book
value
R&D building of Konka
Group
78,213,496.5
6
-
78,213,496.5
6
33,159,935.6
4
-
33,159,935.6
4
Warehouse of Anhui Konka
Household Appliance Co.,
Ltd
803,200.00 - 803,200.00 3,493,776.32 - 3,493,776.32
Factory buildings and
other infrastructures of
Baidian Industrial Park
Phase II
22,303,272.8
1
-
22,303,272.8
1
18,282,170.8
0
-
18,282,170.8
0
Kunshan module
production base project
12,220,601.2
1
12,220,601.2
1
Purchase of office
buildings
19,231,798.0
9
19,231,798.0
9
Other small projects 5,776,259.62 - 5,776,259.62 6,152,063.42 - 6,152,063.42
Total
138,548,628.
29
-
138,548,628.
29
61,087,946.1
8
-
61,087,946.1
8(2) Change of significant construction in progress
Name Budget Beg. balance
Increase of
the current
period
Amount of
construction-in-progress
transferred to fixed
assets in the current
period
Other
decrease
End. balance
R&D building of
Konka Group
566,565,800.00 33,159,935.6445,628,993.92 - 5 75,433.00 78,213,496.56
Warehouse of
Anhui Konka
Household
Appliance Co.,
Ltd
22,743,100.00 3,493,776.32 2,863,335.00 5,553,911.32 - 803,200.00
Factory
buildings and
other
infrastructures
of Baidian
Industrial Park
Phase II
- 18,282,170.80 4,021,102.01 - - 22,303,272.81
Kunshan module
production base
project
- -3,191,028.58 970,427.37
-
12,220,601.21
Purchase of
office
buildings
- -9,231,798.09 - - 19,231,798.09
Other small
projects
- 6,152,063.42 797,935.47 1,071,514.24 102,225.03 5,776,259.62
Total 589,308,900.00 61,087,946.18 5,734,193.07 7,595,852.93 677,658.03 138,548,628.29
Remark: Construction in progress of the Company uses self-owned
capital and no loan is capitalized.
(3) By 30 Jun. 2010, the book value of construction in progress of
the Company is not higher than the amount that can be recovered.
14. Disposal of fixed assets
Item Beg. Book value End. Book value Reason for disposal
Transferring and
dismantling to be
handled
20,851,110.89 -
Transferring of factory of
Anhui Konka Household
Appliance Co., Ltd, see
remark.
Remark: Fixed assets of Anhui Konka Household Appliance Co., Ltd, asubsidiary company of the Company, are disposed in the form of net book
value of fixed assets and net book value of intangible assets and labor
service expenses, installation and commissioning expenses and shutdown
loss caused by equipment transferring. All has been carried forward in
the report period. For details, see No. 3 in Note 12.
15. Intangible assets
Item Beg. Book balance
Increase of the
period
Decrease of
the period
End. Book
balance
I. Total original book
value
218,231,265.36 3,059,070.60 - 221,290,335.96
Land use right 175,242,497.61 1,536,828.20 - 176,779,325.81
Trademark
registration costs in
foreign countries
3,037,299.61 78,987.00 - 3,116,286.61
Patents and
proprietary
technologies
31,956,276.32 910,253.31 - 32,866,529.63
Others 7,995,191.82 533,002.09 - 8,528,193.91
II. Total accumulated
amortization
47,827,657.19 3,933,806.04 - 51,761,463.23
Land use right 14,281,746.80 1,890,164.83 - 16,171,911.63
Trademark
registration costs in
foreign countries
2,568,996.92 198,088.39 - 2,767,085.31
Patents and
proprietary
technologies
25,654,210.91 1,122,578.65 - 26,776,789.56
Others 5,322,702.56 722,974.17 - 6,045,676.73
III. Total net book
value
170,403,608.17 169,528,872.73
Land use right 160,960,750.81 160,607,414.18
Trademark
registration costs in
foreign countries
468,302.69 349,201.30
Patents and
proprietary
technologies
6,302,065.41 6,089,740.07
Others 2,672,489.26 2,482,517.18
IV. Total provisions
for depreciation
2,901,082.61 - - 2,901,082.61
Land use right - - - -Item Beg. Book balance
Increase of the
period
Decrease of
the period
End. Book
balance
Trademark
registration costs in
foreign countries
- - - -
Patents and
proprietary
technologies
2,901,082.61 - - 2,901,082.61
Others - - - -
V. Total book value
167,502,525.56
166,627,790.12
Land use right 160,960,750.81 160,607,414.18
Trademark
registration costs in
foreign countries
468,302.69 349,201.30
Patents and
proprietary
technologies
3,400,982.80 3,188,657.46
Others 2,672,489.26 2,482,517.18
(1) The amortized amount of the current period is renminbi 3,933,806.04
yuan.
(2) For pledges with intangible assets, see No. 20 in Note 7.
16. Goodwill
Name of invested entity or
items forming goodwill
Beg. balance
Increase
of the
period
Decrease
of the
period
End. balance
Impairment
provision
at the end
of the
period
Purchase of shares of
subsidiary companies
3,943,671.53 - - 3,943,671.53 -
Remark: By 30 Jun. 2010, the book value of the goodwill of the Company
is not higher than the amount that can be recovered.
17. Long-term expenses to be apportioned
Item Beg. balance
Increase of
the period
Amortization
of the
current
period
Other
decrease
End. balance
Decoration 8,605,659.90 396,369.11 1,204,958.05 - 7,797,070.96
Shoppe 313,009.57 - 197,139.76 - 115,869.81Item Beg. balance
Increase of
the period
Amortization
of the
current
period
Other
decrease
End. balance
Software
license
1,136,145.90 - 173,990.41 - 962,155.49
Development
platform
expenses
3,871,202.55 3,878,402.55 977,151.72 3,878,402.55 2,894,050.83
Mould
expenses
409,057.55 462,741.92 96,026.64 462,741.92 313,030.91
Model machine 119,652.73 - 119,652.73 - -
Others 1,320,055.75 438,534.19 1,068,996.83 235,857.01 453,736.10
Total 15,774,783.95 5,176,047.77 3,837,916.14 4,577,001.48 12,535,914.10
18. Deferred income tax assets/Deferred income tax liabilities
Item End. balance Beg. balance
Deferred income tax asset:
Asset impairment reserves 115,204,628.53 115,897,984.71
Warranty expenses 11,498,859.90 11,498,859.90
Deferred income 17,760,110.67 17,760,110.67
Change of the fair value of the financial assets that are
recorded into the capital reserves and available for sale
333,604.97
229,597.93
Others 9,836,364.61 5,299,865.89
Subtotal 154,633,568.68 150,686,419.10
Deferred income tax liabilities
Estimation by transactional financial instruments and
derivative financial instruments
745,648.38 745,648.38
Appreciation of fixed asset estimation 563,067.21 563,067.21
Subtotal 1,308,715.59 1,308,715.59
19. List of provisions for impairment of assets
Decrease of the period
Item
Beg. balance
Allotment of
the current
period
Recovered
amount
Write-off
amount
End. balance
I. Bad debt reserves 231,215,788.53 9,070,452.07 2,542,064.62 2,330,042.47 235,414,133.51
Including: Accounts
receivable
213,625,888.06 8,873,434.58 2,299,934.55 2,239,095.76 217,960,292.33
Other receivables 13,521,406.73 197,017.49 46,288.23 90,946.71 13,581,189.28
Advance payments 4,068,493.74 - 195,841.84 - 3,872,651.90
II. Inventory falling
price reserves
509,922,048.22 1,146,858.31 736,449.12 44,560,960.82 465,771,496.59Decrease of the period
Item
Beg. balance
Allotment of
the current
period
Recovered
amount
Write-off
amount
End. balance
Including: Raw
materials
110,618,813.52 396,607.27 500,955.98 1,243,814.78 109,270,650.03
Stock 332,400,884.84 750,251.04 235,493.14 43,311,414.63 289,604,228.11
Semi-finished
products and other
66,902,349.86 - - 5,731.41 66,896,618.45
III. Provisions for
depreciation of
long-term equity
investments
1,400,000.00 - - - 1,400,000.00
IV. Provision for
impairment of fixed
assets
27,445,537.16 226,978.50 - 3,247,553.48 24,424,962.18
Including: Housings and
buildings
1,247,805.91 - - - 1,247,805.91
Machinery equipment 21,222,582.75 226,978.50 - 3,231,601.32 18,217,959.93
Electronic equipment 2,453,203.93 - - 8,968.56 2,444,235.37
Vehicles 998,585.64 - - 5,898.60 992,687.04
Other equipment 1,523,358.93 - - 1,085.00 1,522,273.93
V. Provision for
impairment of
intangible assets
2,901,082.61 - - - 2,901,082.61
Including: Patent
rights
2,901,082.61 - - - 2,901,082.61
Total 772,884,456.52 10,444,288.88 3,278,513.74
50,138,556.77
729,911,674.89
20. Assets with restricted proprietary rights or use rights
Item End. Book value
Reason of
restriction
Subtotal of assets for
guarantee
226,929,377.10
Including: Fixed assets 215,687,609.56 Credit pledge
Intangible assets 11,241,767.54 Credit pledge
Subtotal of assets with
restricted proprietary
rights of use rights caused
by other reasons
3,412,138,100.29
Including: Notes receivable 1,525,195,250.29
Pledge for
credit-extension
contractsItem End. Book value
Reason of
restriction
Bank deposit 1,886,942,850.00
Pledge for NDF
service, banker’s
acceptance bills
and engineering
margins of safety
Total 3,639,067,477.39
21. Short-term loans
Item End. balance Beg. balance
Pledged borrowings (remark 1) 19,000,000.00 8,000,000.00
Collateral borrowings (remark 2) 2,014,494,812.35 2,762,014,060.00
Credit borrowings (remark 3) 1,946,555,475.80 -
Guarantee borrowings - -
Total 3,980,050,288.15 2,770,014,060.00
Remark 1: For pledges for pledge borrowings, see No. 4 and 5 in Note
12.
Remark 2: Collateral borrowings are USD loans obtained with the pledge
of bank deposit to develop NDF service. For details about pledged renminbi
deposits, see No. 1 of Note 7.
Remark 3: Credit borrowings come from the operating short-term
financing business launched by the Company.
22. Transactional financial liabilities
Item End. fair value Beg. fair value
Derivative financial liabilities (NDF) 1,661,744.00 -
23. Notes payable
Category End. balance Beg. balance
Banker's acceptance bill 2,380,582,059.85 2,884,697,072.42
Commercial acceptance bill - -
Total 2,380,582,059.85 2,884,697,072.42
Remark: The amount due in the next accounting period is renminbi
2,380,582,059.85 yuan. For other notes payable to related parties, see
No. 6 in Note 8.
24. Accounts payable
(1) List of accounts payableItem End. balance Beg. balance
Within one year 1,923,114,262.06 2,563,334,270.00
One to two years 40,842,912.14 22,046,559.29
Two to three years 6,266,858.58 4,758,006.47
Three years or longer 10,273,029.95 9,103,449.28
Total 1,980,497,062.73 2,599,242,285.04
(2) In the accounts payable in the current reporting period, no account
is payable to shareholder entity that holds 5% or more voting shares of
the Company.
(3) Accounts payable with an age over one year are unsettled purchases.
(4) For information about other accounts payable to related parties
among the accounts payable, see No. 6 of Note 8.
25. Advance receipts
(1) List of advance receipts
Item End. balance Beg. balance
Within one year 163,334,814.06 238,818,585.41
One to two years 8,504,620.32 11,140,698.63
Two to three years 1,024,292.68 2,412,606.19
Three years or longer 27,615,677.78 26,959,574.15
Total 200,479,404.84 279,331,464.38
(2) In the advance receipts in the current reporting period, no advance
payment is received from shareholder entity that holds 5% or more voting
shares of the Company.
(3) Advance receipts with an age over one year are unsettled sales.
(4) For information about advance receipts from other related parties
in the current reporting period, see No. 6 of Note 8.
26. Accrued payroll
Item Beg. balance Increase of the period
Decrease of the
period
End. balance
I. Payroll,
bonus,
allowance
and
subsidies
167,357,260.76 459,624,596.35 486,577,501.25 140,404,355.86
II. Welfare
expenses
8,350,990.19 28,996,772.51 29,457,905.51 7,889,857.19Item Beg. balance Increase of the period
Decrease of the
period
End. balance
III. Social
insurance
expenses
8,721,834.54 60,712,576.21 53,306,090.08 16,128,320.67
Medical
insurance
4,569,322.50 14,729,874.17 14,061,874.35 5,237,322.32
Endowment
insurance
2,963,628.54 41,627,377.30 35,079,251.91 9,511,753.93
Unemployment
insurance
328,392.57 2,125,175.65 1,846,129.82 607,438.40
Insurance
against
injuries at
work
807,392.44 1,190,323.60 1,444,785.88 552,930.16
Maternity
insurance
53,098.49 1,039,825.49 874,048.12 218,875.86
IV. Public
reserve for
housing
construction
1,355,013.19 2,602,728.35 2,760,432.68 1,197,308.86
V. Labor
union
expenditure
and expenses
for
education of
employees
5,126,175.63 4,460,552.96 3,003,522.93 6,583,205.66
VI. Welfare
for
dismissing
368,322.03 3,906,277.24 4,121,028.74 153,570.53
Ⅶ. Others 1,937,479.18 8,424,950.19 9,020,047.86 1,342,381.51
Total 193,217,075.52 568,728,453.81 588,246,529.05 173,699,000.28
Remark: No payroll payable is unpaid.
27. Tax payable
Item End. balance Beg. balance
Value-added tax -304,507,086.18 -148,759,705.82
Business tax 604,098.89 756,110.65
Income tax -19,289,103.15 11,973,283.20
Urban maintenance and construction tax -192,803.75 467,744.82
Educational Surtax 65,943.30 153,294.23Item End. balance Beg. balance
Personal income tax 1,003,333.24 859,826.28
Flood control fund, fund for embankment, fund
for water conservancy and fund for river
management
- 185,392.48
Others 1,139,121.65 1,466,343.02
Total -321,176,496.00 -132,897,711.14
Remark: The income taxes of sale branches of the Company are prepaid
based on their locations and a unified settlement is conducted by the
Company at the end of the year. See No.1 in Note 5 for more details.
28. Interest payable
Item End. balance Beg. balance
Expense for interest on NDF USD
loans
9,628,358.03
23,633,016.78
29. Dividends payable
30. Other payables
(1) List of other payables
Item End. balance Beg. balance
Within one year 607,649,174.17 652,813,276.95
One to two years 43,128,544.49 68,292,388.68
Two to three years 14,459,592.36 11,084,906.13
Three years or longer 33,257,595.17 31,733,028.90
Total 698,494,906.19 763,923,600.66
(2) In other payables in the current reporting period, no account
is payable to shareholder entity that holds 5% or more voting shares
Name End. balance Beg. balance
Reasons for dividends
unpaid for more than one
year
OCT Group Corporation 2,287,547.83 -
Dividend funds, etc. 9,752,179.21 -
External shareholders such as
Qingjia and Foshan Anden
Industry
3,204,276.28 -
Shenzhen Shangyongtong Investment
Development Co., Ltd
804,527.20 804,527.20
Temporarily unpaid
Total 16,048,530.52 804,527.20of the Company.
(3) Other payables more than one year are mainly guarantees
payable.
(4) For other payables to related parties among the other payables,
see No. 6 in Note 8.
31. Deferred incomes
32. Share capital
Beg. balance
Increase/decrease of the current period
(+/-)
End. balance
Item
Amount
Propor
tion
(％)
Newly
issued
shares
G
i
f
t
e
d
s
h
a
r
e
s
Share
s
conve
rted
from
publi
c
reser
ves
Others Subtotal Amount
Pro
por
tio
n
(％
)
Item End. balance Beg. balance
Subsidies for supporting equipment of Kunshan liquid
crystal module project
25,700,000.00 15,100,000.00
Fund for flat panel display industry in year 2008 10,000,000.00 10,000,000.00
Development of new type display technologies such as
liquid crystal module (Ministry of Industry and
Information Technology)
10,000,000.00 10,000,000.00
R&D and industrialization of large size liquid crystal
display module
7,000,000.00 7,000,000.00
R&D and industrialization of key technologies for LED
back-light flat-panel TVs
5,000,000.00 -
R&D and industrialization of super-thin flat-panel TV
audio system and thin type loudspeakers
2,000,000.00 -
R&D and development of intelligence terminals based on
standards of the Information Equipment Resource
Sharing and Coordination Service
2,000,000.00 -
Others 36,741,048.48 36,441,048.48
Total 98,441,048.48 78,541,048.48Beg. balance
Increase/decrease of the current period
(+/-)
End. balance
Item
Amount
Propor
tion
(％)
Newly
issued
shares
G
i
f
t
e
d
s
h
a
r
e
s
Share
s
conve
rted
from
publi
c
reser
ves
Others Subtotal Amount
Pro
por
tio
n
(％
)
I. Shares with
restrictions on
selling
1. Founder’s shares
198,388,174.0
0
16.48 - - - - -
198,388,174.0
0
16.
48
Including:
State-owned shares
198,381,940.0
0
- - - - - -
198,381,940.0
0
-
2. Shares held by
employees
4,950.00 - - - - -
-
4,950.00 -
Subtotal of shares
with restrictions on
selling
198,386,890.0
0
16.48 - - - -
-
198,386,890.0
0
16.
48
II. Shares without
restrictions on
selling
1. Common stock
(renminbi
denominated)
599,910,010.0
0
49.83 - - -
- -
599,910,010.0
0
49.
83
2.
Domestically-list
ed shares held by
foreign investors
405,675,804.0
0
33.69 - - -
- -
405,675,804.0
0
33.
69
Subtotal of shares
without
restrictions on
selling
1,005,585,814
.00
83.52 - - -
- -
1,005,585,814
.00
83.
52
III. Total shares
1,203,972,704
.00
100.0
0
- - - - -
1,203,972,704
.00
100
.0033. Capital surplus
Item Beg. balance
Increase of
the period
Decrease
of the
period
End. balance
Capital premium 1,211,366,082.55 - - 1,211,366,082.55
Other capital
surpluses
46,083,645.03 - 368,752.26 45,714,892.77
Total 1,257,449,727.58 - 368,752.26 1,257,080,975.32
Remark: ① The decrease of other capital surpluses in the current
period is mainly caused by change of the fair value of transactional
financial assets.
34. Surplus reserves
Item Beg. balance
Increase of
the period
Decrease of
the period
End. balance
Statutory surplus
public reserves
555,245,730.23 - - 555,245,730.23
Discretionary
surplus public
reserves
254,062,265.57 - - 254,062,265.57
Total 809,307,995.80 - - 809,307,995.80
35. Undistributed profits
Item Amount Remark
Undistributed profits at the end
of the previous period before
adjustment
613,778,898.84
Total of undistributed profits at the
beginning of the adjustment period
(+/-)
-
Undistributed profits at the
beginning of the period after
adjustment
613,778,898.84
Add: Net income attributed to the
parent company
50,887,520.39
Making up losses with surplus
public reserves
-
Other transfer-ins -
Less: Allotted statutory surplus
public reserve
-Item Amount Remark
Allotted discretionary surplus
public reserves
-
Payable dividends for common
stocks
12,039,727.04
Dividends of common stock that are
converted into capital shares
-
Undistributed profits at the end
of the period
652,626,692.19
36. Revenues and operating costs
(1) Revenues and operating costs
Item Amount of the current period
Amount of the
previous period
Revenues from main operations 7,889,140,439.34 5,107,148,120.78
Revenues from other operations 51,043,355.75 64,851,907.42
Total revenues 7,940,183,795.09 5,172,000,028.20
Costs of main operations 6,670,792,642.95 4,155,707,059.99
Costs of other operations 29,460,673.45 36,013,655.03
Total operating costs 6,700,253,316.40 4,191,720,715.02
(2) Main operations (by industries)
Amount of the current period Amount of the previous period
Industry
Revenues Operating costs Revenues Operating costs
Electronic
industry
7,889,140,439.34 6,670,792,642.95 5,107,148,120.78 4,155,707,059.99
(3) Main operations (by products)
Amount of the Product current period Amount of the previous period
category Revenues Operating costs Revenues Operating costs
Color
television
business
6,044,594,174.81 5,104,973,696.12 3,730,733,159.98 3,049,658,994.29
Mobile
phone
business
972,561,524.29 854,009,795.45 706,483,464.16 628,420,965.23
White
goods
business
646,013,862.15 509,390,405.51 508,011,409.51 401,558,332.48
Others 225,970,878.09 202,418,745.87 161,920,087.13 76,068,767.99
Total 7,889,140,439.34 6,670,792,642.95 5,107,148,120.78 4,155,707,059.99
(4) Main operations (by regions)Amount of the current period Amount of the previous period
Region
Revenues Operating costs Revenues Operating costs
Domestic
sales
5,793,254,880.74 4,623,405,503.47 4,370,519,089.99 3,487,659,581.30
Overseas
sales
2,095,885,558.59 2,047,387,139.48 736,629,030.79 668,047,478.69
Total 7,889,140,439.33 6,670,792,642.95 5,107,148,120.78 4,155,707,059.99
(5) Revenues from the top five customers
The revenues from the top five customers amount to renminbi
2,005,136,373.82 yuan, taking up 25.42% of the total revenues.
37. Taxes and surtax
Item
Amount of the
current period
Amount of the
previous period
Allotment
criteria
Business tax 723,818.88 568,778.47 5%
Urban maintenance and
construction tax
258,052.35 428,980.04 1%、5%、7%
Educational Surtax 268,742.95 371,208.04 3%、4％
Others 230,874.21 132,444.16
Total 1,481,488.39 1,501,410.71
38. Loss of asset impairment
Item Amount of the current period
Amount of the previous
period
Loss of bad debts 6,528,387.45 -5,120,579.65
Loss of inventory falling
price
410,409.19 1,369,396.55
Loss of impairment of fixed
assets
226,978.50 -
Total 7,165,775.14 -3,751,183.10
39. Income from change of fair value
Source of income from change of fair value
Amount of the current
period
Amount of the
previous period
Derivative financial instruments (NDF) -5,334,908.00 2,178,002.85
40. Investment income
(1) List of investment income items
Invested entity
Amount of the
current period
Amount of the
previous period
Income from long-term equity investment measured - -Invested entity
Amount of the
current period
Amount of the
previous period
by employing the cost method
Income from long-term equity investment measured
by employing the equity method
3,304,130.92 -575,255.31
Investment income from disposing long-term
equity investments
- -
Investment income from disposing transactional
financial assets (NDF)
- -
Investment income from financial assets
available for sale
10,529.35 -
Total 3,314,660.27 -575,255.31
(2) Income from long-term equity investment measured by employing the
equity method
Invested entity
Amount of the
current period
Amount of the
previous period
Chongqing Jingkang Plastic Products Co., Ltd -362,925.26 -575,255.31
Shenzhen Refond Optoelectronics Co., Ltd 3,667,056.16 -
Total 3,304,130.92 -575,255.31
Remark: No significant restriction is imposed on repatriation of the
investment income of the Company.
41. Non-operating revenues
(1) List of non-operation revenues
Item Amount of the current period
Amount of the previous
period
Total revenue from disposing
non-current assets 16,504,673.61
905,122.06
Including: Revenue from
disposal of fixed assets 16,504,673.61
905,122.06
Revenue from disposal of
intangible assets -
-
Government grants 30,041,542.90 999,155.00
Revenue from penalty 2,304,406.68 2,714,760.72
Revenue from compensation - -
Revenues from accounts
payable that cannot be paid 3,144.25
237,213.13
Others 3,510,742.01 1,421,804.60
Total 52,364,509.45 6,278,055.51
(2) List of government grants
Item Amount of the current Amount of theperiod previous period
Tax refunds 22,810,484.54 -
Tax refund from Chuzhou Bureau of Finance 232,900.00 -
Government awards 1,426,642.00 -
Financial and social insurance subsidies 3,103,035.46 7,000.00
Award for being one of the top ten biggest tax
payers 790,000.00 970,000.00
R&D subsidy 1,500,000.00 -
Others 178,480.90 22,155.00
Total 30,041,542.90 999,155.00
42. Non-operating expenses
Item
Amount of the
current period
Amount of the
previous period
Total loss of disposing non-current assets 2,091,536.04 1,087,703.66
Including: Loss of disposal of fixed assets 2,091,536.04 1,087,703.66
Expenses of donations 1,534,878.00 439,773.43
Expenses for penalty 554,882.88 287,620.09
Others 335,565.14 39,270.09
Total 4,516,862.06 1,854,367.27
43. Income tax expenses
Item
Amount of the
current period
Amount of the
previous period
Income tax of the current period calculated as per the
tax law and relevant regulations
19,067,278.11 13,144,938.51
Adjustment of deferred income tax 716,894.38 -528,845.98
Total 19,784,172.49 12,616,092.53
44. Basic earnings per share and diluted earnings per share
Amount of the current
period
Amount of the previous
period
Profits in the reporting
period
Basic
earnings
per share
Diluted
earnings
per share
Basic
earnings
per share
Diluted
earnings
per share
Net profits attributed to
shareholders of common
shares of the Company
0.0423 0.0423 0.0667 0.0667
Net profits of
non-recurring gains and
losses attributed to
0.0296 0.0296 0.0623 0.0623shareholders of common
shares
Remark: The earnings per share are calculated as follows:
(1) Basic earnings per share corresponding to the net profits
attributed to shareholders of common shares of the Company = Net profits
attributed to shareholders of common shares of the Company / weighted mean
of issued common share = 50,887,520.39 ÷1,203,972,704=0.0423
(2) Basic earnings per share corresponding to the net profits of
non-recurring gains and losses attributed to shareholders of common
shares of the Company = Net profits of non-recurring gains and losses
attributed to shareholders of common shares of the Company / weighted mean
of issued common share = （ 50,887,520.39 － 15,262,421.90 ） ÷
1,203,972,704=0.0296
(3) The diluted earnings per share is calculated by dividing the
consolidated net profits attributed to shareholders of common shares of
the company adjusted according to the dilutive potential common share by
the weighted mean of the adjusted issued common shares of the Company.
In the first half of 2010, no dilutive potential common share exists in
the company; thus the diluted earnings per share are equal to the basic
earnings per share.
45. Other comprehensive income
Item
Amount of the
current period
Amount of the
previous period
1. Amount of profit/loss from financial assets
available for sale
-472,759.30 739,053.00
Less: income tax of the financial assets available for
sale
-104,007.04 147,810.60
Net book value that was measured as other
comprehensive income in the previous period and is
converted to profit and loss in the current period
- -
Subtotal -368,752.26 591,242.40
2. Shares enjoyed in the other comprehensive income
of the invested entity measured by employing the
equity method
- -Item
Amount of the
current period
Amount of the
previous period
Less: Income tax from shares enjoyed in the other
comprehensive income of the invested entity measured
by employing the equity method
- -
Net book value that was measured as other
comprehensive income in the previous period and is
converted to profit and loss in the current period
- -
Subtotal - -
3. Foreign currency capital 4,791,417.74 380,128.08
Less: Net book value of profit/loss that is converted
in the current period by disposing oversea operations
- -
Subtotal 4,791,417.74 380,128.08
4. Other
Less: Income tax from other that is recorded into
the other comprehensive income
- -
Net book value of other that was measured as other
comprehensive income in the previous period and is
converted to profit and loss in the current period
- -
Subtotal - -
Total 4,422,665.48 971,370.48
46. Notes to the cash flow statements
(1) Other cash receipts relating to operating activities
Item Amount
Mortgage guarantee deposits -
Maintenance fund advance -
Revenues from interests of bank
deposits
2,669,219.35
Foregift and deposits 37,451,891.50
Revenue from penalty and fine for
breach of contract
529,741.52
Repayment of individual loans 4,698,037.40
Revenues from grants 59,143,601.52
Income from disposable items 3,177,410.03
Other accounts receivable and
payable
39,753,239.31
Total 147,423,140.63
(2) Other cash payments relating to operating activities
Item Amount
Cash paid for administrative
expenses
67,931,157.18Cash paid for operating expenses 421,857,012.79
Deposits for mortgage guarantees -
Payment for pledges, guarantee and
warranty
12,775,467.92
Petty cash fund for employees 17,759,859.20
Donations 1,279,373.20
Advance money for others 16,210,104.64
Expenses on contract breach 196,832.36
Interest and handling fees 11,371,720.86
Other expenses and payments 130,222,194.60
Total 679,603,722.75
(3) Other cash receipts relating to investment activities
Item Amount
Capital reflux from new shares
subscribed
-
Comprehensive income from forward
exchange contracts
-
Others -
Total -
(4) Other cash payments relating to investment activities
Item Amount
Deposit paid for land bidding 69,000,000.00
Total 69,000,000.00
(5) Other cash receipts relating to financing activities
Item Amount
Payment of pledged renminbi fixed
deposits
1,599,167,652.02
Other 125,213.37
Total 1,599,292,865.39
(6) Other cash payments relating to financing activities
Item Amount
Pledged renminbi fixed deposits 499,338,600.00
Other 685,510.99
Total 500,024,110.99
47. Supplementary information about the cash flow statements(1) Information about converting net profits into cash for operating
activities
Supplementary information
Amount of the
current period
Amount of the
previous period
1. Information about converting net profits
into cash for operating activities:
Net income / loss 60,513,008.47 74,986,480.49
Add: Asset impairment reserves 7,165,775.14 -3,751,183.10
Depreciation of fixed assets, oil and gases
and production materials
46,375,575.29 59,240,104.33
Amortization of intangible assets 3,807,056.42 3,946,117.72
Amortization of long-term expenses to be
apportioned
3,837,916.14 5,145,013.11
Loss on disposal of fixed assets, intangible
assets and other long-term assets (or deduct:
gains)
-15,090,395.07 -905,122.06
Losses on scrapping of fixed assets (or
deduct: gains)
677,257.50 1,087,703.66
Losses on change of fair value (or deduct:
gains)
5,334,908.00 -2,178,002.85
Financial expenses (or deduct: gains) 10,435,209.21 5,497,188.82
Investment losses (or deduct: gains) -3,314,660.27 575,255.31
Decrease in deferred income tax assets (or
deduct: increase)
-3,947,149.58 -381,035.38
Increase of deferred income tax liabilities
(or deduct: decrease)
- -
Decrease in inventories (or deduct: increase) -633,578,753.55 -201,723,059.05
Decrease in operating receivables (or deduct:
increase)
375,059,094.98 415,015,961.04
Increase of operating payables (or deduct:
decrease)
140,756,707.10 -256,861,041.33
Other - -
Net cash flows from operating activities -1,968,450.22 99,694,380.71
2. investing and financing activities that do
not involve cash receipts and payments:
Conversion of debt into capital - -
Convertible bonds to be expired within one
year
- -
Fixed assets under finance lease - -
3. Net increase in cash and cash equivalents
Cash at the end of the period 958,150,311.87 1,427,737,282.66
Less: Cash at the beginning of the period 749,501,416.29 845,026,867.06Supplementary information
Amount of the
current period
Amount of the
previous period
Add: Cash equivalents at the end of the period - -
Less: Cash equivalents at the beginning of the
period
- -
Net increase in cash and cash equivalents 208,648,895.58 582,710,415.60
(2) Composition of cash and cash equivalents
Item End. balance Beg. balance
I. Cash 958,150,311.87 749,951,416.29
Including: Inventory cash 7,625.43 78,085.59
Bank deposits that can be used for
payments at any time 958,142,686.44 749,873,330.70
Other currency funds that can be used for
payment at any time - -
Deposits in the central bank that can be
used for payments - -
II. Cash equivalents - -
Including: Bond investment due within
three months - -
III. Balance of cash and cash equivalents
at the end of the period 958,150,311.87 749,951,416.29
VIII. Related Parties and Associated Transactions
1. Information about the parent company
Name of the
parent
company
Relationship
Nature of
enterprise
Registration
place
Legal
representative
Business
nature
OCT
Enterprises
Co.
The parent of
the Company
State-owned
holdings
Shenzhen Ren Kelei
Tourism,
real
estate and
electronic
industry
(Continued)
Name of the
parent company
Registered
capital
Proportion of
shares held by
the parent
company (%)
Proportion of
voting shares
held by the
parent
company (%)
The final
holding
party of the
Company
Organization
code
OCT
Enterprises
RMB
2,000,000,000
19.00 19.00
OCT
Enterprises
19034617-5Co. Co.
2. For information about subsidiary companies of the Company, see No.
1 of Note 6.
3. For information about joint ventures and affiliated enterprises of
the Company, see No. 10 of Note 7.
4. Information about other related parties of the Company
Name of other related party
Relationship with the
Company
Organization code
Shenzhen OCT East Co., Ltd
Subsidiary company of the
final holding company
75252879-9
Shanghai OCT Investment Development Co.,
Ltd
Subsidiary company of the
final holding company
78589775-0
Chengdu Tianfu OCT Industrial
Development Co., Ltd
Subsidiary company of the
final holding company
78012858-1
Beijing Century OCT Industrial Co.,
Ltd
Subsidiary company of the
final holding company
74005033-7
Taizhou OCT Co., Ltd
Subsidiary company of the
final holding company
79457788-X
Shanghai Tianxiang OCT Investment Co.,
Ltd
Subsidiary company of the
final holding company
74805502-8
Guangzhou Panyu Huali Youde Printing
and Packing Co., Ltd
Subsidiary company of the
final holding company
72378549-7
Anhui Huali Packaging Co., Ltd
Subsidiary company of the
final holding company
76276957X
Chongqing Machinery & Electronics
Holding (Group) Co., Ltd
Shareholder of Chongqing
Qingjia
OCT Hotel Group
Subsidiary company of the
final holding company
71524077-X
Shenzhen OCT Water and Electricity
Supply Co., Ltd
Subsidiary company of the
final holding company
19217869-7
5. Transactions among related parties
Amount of the current period
Amount of the previous
period
Related party
Transaction
type
Transaction
content
Pricing
principle
Amount
Percentage
in the same
transactions
(%)
Amount
Percent
age in
the same
transac
tions
(%)
Shenzhen OCT East
Co., Ltd
Selling
commodities
Selling
LCDs
Negotiated
prices
4,949,658.12 18.97 5,817,906.02 56.92
Shanghai OCT
Investment
Selling
commodities
Selling
LCDs
Negotiated
prices
- - - -Amount of the current period
Amount of the previous
period
Related party
Transaction
type
Transaction
content
Pricing
principle
Amount
Percentage
in the same
transactions
(%)
Amount
Percent
age in
the same
transac
tions
(%)
Development Co.,
Ltd
Chengdu Tianfu
OCT Industrial
Development Co.,
Ltd
Selling
commodities
Selling
LCDs
Negotiated
prices
- - 2,455,641.03 24.02
Taizhou OCT Co.,
Ltd
Selling
commodities
Selling
LCDs
Negotiated
prices
1,051,282.05 4.03 - -
Shanghai
Tianxiang OCT
Investment Co.,
Ltd
Selling
commodities
Selling
LCDs
Negotiated
prices
- - - -
Beijing Century
OCT Industrial
Co., Ltd
Selling
commodities
Selling
LCDs
Negotiated
prices
769,230.77 2.95 - -
Shenzhen Dekon
Electronic Co.,
Ltd
Purchasing
goods
Buying
components
Negotiated
prices
- - 4,993.07 -
Anhui Huali
Packaging Co.,
Ltd
Purchasing
goods
Buying
packing
materials
Negotiated
prices
15,088,297.02 0.28 8,407,392.45 0.28
Shanghai Huali
Packaging Co.,
Ltd
Purchasing
goods
Buying
packing
materials
Negotiated
prices
6,193,885.44 0.11 2,882,256.22 0.10
Shenzhen Huayou
Packaging Co.,
Ltd
Purchasing
goods
Buying
packing
materials
Market
prices
- - 8,267,001.58 0.27
Shenzhen Huali
Packing and
Trading Co., Ltd
Purchasing
goods
Buying
packing
materials
Negotiated
prices
559,711.13 0.01 2,679,312.32 0.09
Guangzhou Panyu
Huali Youde
Printing and
Packing Co., Ltd
Purchasing
goods
Buying
packing
materials
Negotiated
prices
2,229,370.73 0.04 1,556,416.38 0.05
Huizhou Huali
Packaging &
Purchasing
goods
Buying
packing
Negotiated
prices
4,415,621.43 0.08 - -Amount of the current period
Amount of the previous
period
Related party
Transaction
type
Transaction
content
Pricing
principle
Amount
Percentage
in the same
transactions
(%)
Amount
Percent
age in
the same
transac
tions
(%)
Trading Co., Ltd materials
Shenzhen OCT
Water and
Electricity
Supply Co., Ltd
Purchasing
goods
Water and
electricity
supply
Negotiated
prices
3,918,027.40 0.07 3,259,852.84 0.08
6. Amounts receivable from and amount payable to related parties
Item Related party End. balance Beg. balance
Accounts
receivable
Shenzhen OCT East Co., Ltd 5,500,517.00 3,807,962.00
Beijing Century OCT Industrial Co., -776,880.00 62,500.00
Chengdu Tianfu OCT Industrial 1,471,200.00 3,617,200.00
Shanghai OCT Investment Development 550,665.00 550,665.00
Shenzhen Konka Energy Technology - -
Taizhou OCT Co., Ltd 546,000.00 -684,000.00
Total 7,291,502.00 7,354,327.00
Other
receivables
Anhui Huali Packaging Co., Ltd - 9,585.00
Shenzhen OCT Gas Station Co., Ltd 80,000.00 80,000.00
Shenzhen OCT Real Estate Co., Ltd
1,247,137.86
1,212,178.86
Shenzhen OCT Property Management
Co., Ltd 77,402.65 77,402.65
Dongyangyi Industry Co., Ltd - 490,000.00
Shenzhen OCT Water and Electricity
Supply Co., Ltd 1,267,992.21 1,033,314.68
Total 2,672,532.72 2,902,481.19
Accounts
payable
Chongqing Jingkang Plastic Products
Co., Ltd
56,188.95 56,188.95
Shenzhen Dekon Electronic Co., Ltd 356,545.32 356,545.32Item Related party End. balance Beg. balance
Anhui Huali Packaging Co., Ltd 7,397,351.27 627,399.63
Shenzhen Huali Packing and Trading
Co., Ltd
1,595,675.54 1,658,918.20
Guangzhou Panyu Huali Youde Printing
and Packing Co., Ltd
841,463.84 261,230.02
Shenzhen Huayou Packaging Co., Ltd 169.91 169.91
Huizhou Huali Packaging & Trading
Co., Ltd
1,263,597.40 216,974.11
Shanghai Huali Packaging Co., Ltd 538,685.89 -
Total 12,049,678.12 3,177,426.14
Other
payables
Guangzhou Panyu Huali Youde Printing
and Packing Co., Ltd
16,666.67 800,000.00
Chongqing Machinery & Electronics
Holding (Group) Co., Ltd
129,179.23 129,179.23
Anhui Huali Packaging Co., Ltd 261,120.00 50,000.00
Shenzhen Dekon Electronic Co., Ltd - -
Total 406,965.90 979,179.23
IX. Contingencies
1. Contingent liabilities and financial effects caused by pending
litigation or arbitration
(1) As of December 19, 2007, the Design, Manufacture and Erection
Contract for the Beijing Pangu Large-scale Outdoors Full-Color LED
Display Screen (Turn-key Project) (hereinafter referred to as the
“Contract Agreement”) was made by and between the subsidiary of
Company-Shenzhen Konka Video & Communication Systems Engineering Co.,
Ltd., (hereinafter referred to as Shenzhen Konka Video & Communication)
and Beijing Pangu Investment Co., Ltd. (hereinafter referred to as the
“Pangu Company”), stipulating that the total project period shall be
120 days, the contracted budget price of total engineering payment shall
be renminbi 103,357,500 yuan. With six apartments of 3,707.70m2 at a total
price of renminbi 103,357,500 yuan of “Beijing Mogan 7 Star Plaza” in
pledge, Pangu Company and Konka Video & Communication entered into the
Advance Sale for Beijing Commercial Building (hereinafter referred to asthe “Advance Sale Contract”) numbered [Y581462], [Y581455], [Y581458],
[Y581459], [Y581460] and [Y581461], and the receipt with equivalent
purchase price shall be issued. Meanwhile, both parties have entered into
the Supplementary Agreement concerning the payment time and payment mode.
As agreed, Beijing Pangu, prior to March 30, 2009, shall pay the total
construction cost amounting to renminbi 103,357,300 yuan in a lump sum
to Shenzhen Konka Video & Communication. ○2○2 Termination of the Advance
Agreement: The agreement terminates automatically where Beijing Pangu
deposits the payment of renminbi 103,357,300 yuan to the account of
Shenzhen Konka Video & Communication prior to March 30, 2009. Shenzhen
Konka Video & Communication returns pledged apartments and receipts to
Beijing Pangu and assists Beijing Pangu in canceling the Advance Agreement.
The responsibilities and obligations of both parties arising from the
Advance Agreement are terminated.
After the completion of the project, Shenzhen Konka Video &
Communication delivered LED displays to Beijing Pangu in July 2008 prior
to the start of Beijing Olympic Games. In March, 2009, the project was
accepted after the joint acceptance inspection by the involved
engineering supervision entity, design entity, Beijing Pangu and Shenzhen
Konka Video & Communication and Shenzhen Konka Video & Communication
delivered all engineering documents to Beijing Pangu. Shenzhen Konka
Video & Communication performed all its responsibilities under the
agreement, however Beijing Pangu failed to perform its responsibilities.
As of the date of the reporting date, Shenzhen Konka Video & Communication
did not receive the account receivable from Beijing Pangu amounting to
renminbi 103,357,300 yuan and the Advance Agreement is not terminated.
Shenzhen Konka Video & Communication raised a civil litigation to
Beijing Higher People’s Court on July 13, 2009 to and submitted an
application for attachment at the same day to seal up Apartments 1001,
1101, 1201, 1501, 1601 and 1701 in Unit 5 and Apartment 1001, 1101 and
901 in Unit 6 in Beijing Mogan 7 Star Plaza at Beisihuan M. Road, ChaoyangDistrict, Beijing or freeze properties or assets of the respondent,
amounting to renminbi 150,609,219 yuan.
On August 17, 2009, Beijing Higher People’s Court issued GMCZ (2009)
No. 4237 Civil Ruling Paper and sealed up the property amounting to
renminbi 150,609,219 yuan owned by Beijing Pangu.
As of the reporting date of the financial statement, Beijing Higher
People’s Court did not make the first-instance judgment on the
litigation.
(2) The Company had established long-term product purchase and sales
contract relationship with LG-Philips-Shuguang Electronics Co., Ltd
(hereinafter referred to as LG-Philips) since 1995 and signed a product
purchase and sales contract with LG-Philips every year. Due to the default
on advance payment amounting to renminbi 8,575,429.64 yuan by LG-Philips,
the Company raised a civil litigation against LG-Philips to Shenzhen
Nanshan District People’s Court on June 11, 2009, asking for ordering
LG-Philips to pay up the amount of renminbi 8,575,429.64 yuan and
undertake all expense in litigation. Upon the final confirmation of both
parties, it was agreed that LG-Philips owed renminbi 1,338,100 to the
Company for goods. A Civil Mediation was issued by the Shenzhen Nanshan
District People’s Court on 9 Jul. 2010, according to which LG-Philips
should repay renminbi 1,338,100 to the Company for goods. The Civil
Mediation also stated that LG-Philips should pay renminbi 200,000 to the
Company within three months after the Civil Mediation took effect, pay
renminbi 500,000 to the Company within six months after the Civil
Mediation took effect, and pay the remaining renminbi 638,100 to the
Company within one year after the Civil Mediation took effect.
2. Use of letters of credit
In 2010, the Company issued letters of credit with the total amount
of renminbi 2,847 million yuan, of which an amount of renminbi 2,283
million yuan has been paid and an amount of renminbi 564 million yuan is
not paid.
3. Other contingent liabilities and effects on financial affairs
As of 30 Jun. 2010, the Company has no other significant contingencies
that need to be disclosed.
X. Commitments
As of 30 Jun. 2010, the Company has no significant commitments thatneed to be disclosed.
XI. Post Balance Sheet Date Events
The Company has no post balance sheet date events that need to be
disclosed.
XII. Description of Other Significant Matters
1. Assets and liabilities measured in fair value
Item
Amount at the
beginning of
the period
Profit/loss
from change of
fair value of
the current
period
Change of
fair value
that is
recorded
into the
equity in
the current
period
Change of
accumulated
fair value
that is
recorded
into the
equity
Allotted
impairment
in the
current
period
Amount at the
end of the
period
Derivative
financial
assets
3,673,164.00 -3,673,164.00 - -
Financial
assets
available
for sale
10,268,121.10 -472,759.30 -532,155.37 - 9,795,361.80
Subtotal of
financial
assets
13,941,285.10 -3,673,164.00 -472,759.30 -532,155.37 - 9,795,361.80
Derivative
financial
liabilities
- -1,661,744.00 - - - 1,661,744.00
Subtotal of
financial
liabilities
- -1,661,744.00 - - - 1,661,744.00
2. Losses have occurred in Chongqing Konka Automotive Electronic Co.,
Ltd, Chongqing Konka Electronic C., Ltd and Mudanjiang Konka Electronic
Co., Ltd, subsidiary companies of the company, in successive years and
their operating activities are virtually stopped. As of the approval date
of the financial statement, the Company has not made any decision to stop
operating activities of these companies.3. In accordance with the agreement on relocation and investment
compensation of old factory of Anhui Konka Household Appliance Co., Ltd
signed between Anhui Konka Household Appliance Co., Ltd, a subsidiary
company of the Company, and the Administrative Committee of Chuzhou
Economic Development Zone on March 27, 2009, the factory of Anhui Konka
Household Appliance Co., Ltd at No. 42 Langya Gudao with an area of
54,620.40 square meters shall be relocated according to the urban planning
of Chuzhou (CGYZ No. (2002) 01544 and CGYZ No. (2003) 00138). The
Administrative Committee supported the strategic development, product
upgrade and technical reform of Anhui Konka Household Appliance Co., Ltd
and provided subsidies of renminbi 50,000,000 yuan for the losses on
relocation, housings and buildings, equipment and relevant expenses.
Meanwhile, to support the transformation from tradition color television
to flat panel television, accelerate product upgrade and technical reform,
the Administrative Committee provided a special subsidy of renminbi
30,000,000 yuan to Anhui Konka Household Appliance Co., Ltd. The agreement
defines the terms and time of payment: Anhui Konka Household Appliance
Co., Ltd starts the relocation from April 1, 2009 and the Administrative
Committee pays an amount of renminbi 10,000,000 yuan to Anhui Konka
Household Appliance Co., Ltd prior to March 30, 2009; Anhui Konka
Household Appliance Co., Ltd starts factory and logistic planning and
construction in August 2009 and the Administrative Committee tries to pay
an amount of renminbi 10,000,000 yuan prior to September 30 and an amount
of renminbi 20,000,000 yuan prior to December 20, 2009 (if the
Administrative Committee fails to pay the amount of renminbi 10,000,000
yuan on time, it pays the amount of renminbi 30,000,000 prior to December
20, 2009). The Administrative Committee pays up all subsidies prior to
June 30, 2010.
Anhui Konka Household Appliance Co., Ltd completed the relocation in
2009. As of the approval date of the financial statement, Anhui Konka
Household Appliance Co., Ltd received cumulatively the subsidy onrelocation of renminbi 50,000,000 yuan and special subsidy of renminbi
10,000,000 yuan.
4. The subsidiary of the Company-Anhui Konka Household Appliance Co.,
Ltd got a loan of renminbi 30,000,000 yuan from Chuzhou Branch of Bank
of China. As of March 1, 2008, the Ceiling Amount of Mortgage Contract
numbered 2008 CZYDIZ No. 021, was entered into by Anhui Electric and
Chuzhou Branch of Bank of China. As stipulated, the business for loan,
trade financing, Guarantee, financial and other credit business
(collectively called “Single contract”) as well as the amended or
supplemented parts were the main contracts under that contract. The
maximum principal balance of the secured Debt of the contract was renminbi
25,000,000 yuan, with the following guaranties: the land tenancy
numbering CGY (2007) No. 00144 at original carrying value of renminbi
3,357,100 yuan, net carrying value of renminbi 3,150,000 yuan and assessed
value of renminbi 17,282,400 yuan; the land tenancy numbering CGY (2007)
No. 00464 at original carrying value of renminbi 2,996,800 yuan, net
carrying value of renminbi 2,842,000 yuan and assessed value of renminbi
15,593,700 yuan; the No.00886 building of 2008 Zi Property Right
Certificate at original carrying value of renminbi 15,250,600 yuan, net
carrying value of renminbi 14,443,900 yuan and assessed value of renminbi
23,151,800 yuan.
5. The subsidiary of the Company-Anhui Konka got a loan of renminbi
50,000,000 yuan from Chuzhou Branch of Bank of China. As stipulated, the
land tenancy (CGY (2006) No. 00451 Land Certificate and CGY(2007) No.00476
Land Certificate) of the Company’s land of 93,946m2 located in the east
side of Nanqiao South Road, Chuzhou Development Zone, at original carrying
value of renminbi 8,511,900 yuan and net carrying value of renminbi
6,438,200 yuan; and the Company’s house property right (Chu 2000 Zi No.
01194 Property Right Certificate, Chu 2002 Zi No. 02068 Property Right
Certificate, Chu 2007 Zi No. 00357 Property Right Certificate) of the old
factory, buildings A, B, D, E, substation, and warehouse F located in theeast side of Nanqiao South Road, Chuzhou Development Zone, at original
carrying value of renminbi 59,502,400 yuan and net carrying value of
renminbi 44,803,200 yuan shall be jointly mortgaged and evaluated as
renminbi 38,050,000 yuan to secure the loan amounting to renminbi
38,000,000 yuan including the principal of renminbi 22,000,000 yuan
extended before November 9, 2007 by Chuzhou Branch, Bank of China to Anhui
Konka valid from November 20, 2007 to November 20, 2010, and the principal
prior to November 9, 2007.
6.On 17 Jun. 2010, Shenzhen Konka Communication Technology Co., Ltd.
and Shenzhen Branch of Bank of China entered into the Credit Line Agreement
numbered “2010 ZZYEX No. 000301”, stipulating that the loan amount valid
from 17 Jun. 2010 to 17 Jun. 2011 shall not exceed the comprehensive credit
line of renminbi 5,300,000,000 yuan. According to the Agreement, the
Company shall be the accredited party, and Shenzhen Konka Communication
Technology Co., Ltd. shall be the authorized withdrawer. Meanwhile, the
Company issued a commitment letter to the Bank of China, promising that
during the valid period of the Credit Line Agreement numbered “2010 ZZYEX
No. 000301” and the period when any liability under the said credit line
is unsettled, no housing properties of the Company, its controlled
subsidiary Dongguan Konka and Shenzhen Konka Communication Technology
shall be pledged to any other legal person, institution or natural person
than the Bank of China. On 17 Jun. 2010, the ceiling amount mortgage
contracts numbered ZYSZE Zi No.0008 and No.0010 were made between the
Company and Shenzhen Branch of Bank of China. As stipulated, the
Company’s banker’s acceptance bill of not less than renminbi
1,200,000,000 yuan and its margin account with No. 820100364308401001,
shall be pledged to secure all liabilities incurred under the Credit Line
Agreement.
XIII. Note to the Financial Statements of the Parent Company
1. Accounts receivable(1) Accounts receivable are listed below as per category
End. balance
Book balance Bad debt reserves
Category
Amount
Proportion
(%)
Amount
Proportion
(%)
Accounts receivable with
significant individual amount
106,923,800.97 10.98 - -
The portfolio with
insignificant single amount
has a greater risk after
combined on the credit risk
basis
180,623,729.23 18.54 169,493,473.85 90.04
Other insignificant accounts
receivable
686,579,632.36 70.48 18,755,006.50 9.96
Total 974,127,162.56 100.00 188,248,480.35 100.00
(Continued)
Beg. balance
Book balance Bad debt reserves
Category
Amount
Proportion
(%)
Amount
Proportion
(%)
Accounts receivable with
significant individual
amount
536,752,914.49 41.61 4,823,680.38 2.61
The portfolio with
insignificant single
amount has a greater risk
after combined on the
credit risk basis
180,324,893.47 13.98 167,680,448.26 90.78
Other insignificant
accounts receivable
572,745,663.27 44.41 12,197,557.78 6.61
Total 1,289,823,471.23 100.00 184,701,686.42 100.00
Remark: Recognition basis of accounts receivable with significant
individual amount: the account receivable with the balance at the end of
the period greater than renminbi 20,000,000.
(2) Bad debt reserves at the end of the period
① The accounts receivable with significant individual amount or with
insignificant amount but independently impairment tested
Contents of
account
receivable
Book value
Bad debt
reserve
Withdrawing
ratio
Reason
Goods payment 106,923,800.97 - - Bad debt reservesContents of
account
receivable
Book value
Bad debt
reserve
Withdrawing
ratio
Reason
were not
withdrawn for
related parties
within the
consolidation
scope.
② The portfolio with insignificant single amount has a greater risk
after combined on the credit risk basis
End. balance Beg. balance
Book balance Book balance
Age
Amount
Proportion
(%)
Bad debt
reserves Amount
Proportion
(%)
Bad debt
reserves
Three to
four years
541,700.75 0.06 270,850.38 22,054,231.26 1.71 11,733,415.02
Four to five
years
21,718,810.02 1.68 10,859,405.01 8,153,136.90 0.63 5,829,507.93
Five years
or longer
158,363,218.46 12.28 158,363,218.46 150,117,525.31 11.64 150,117,525.31
Total 180,623,729.23 14.02 169,493,473.85 180,324,893.47 13.98 167,680,448.26
Remark: The recognition basis of the account receivables with
insignificant individual amount but with a greater risk after portfolio
on the credit risk basis: the balance of the account receivable is less
than renminbi 20,000,000 yuan with the age of three or longer years.
(3) No accounts receivable are actually written off in the current
reporting period.
(4) For information about accounts receivable that were written off
in the previous period and are recovered in the current period, see 4(3)
of Note 7.
(5) In the reporting period, no shareholder entity that holds 5%
or more shares of the Company owes debts to the Company.
(6) The total amount of the top five accounts receivable at the end
of the current period is renminbi 155,645,355.56 yuan, about 15.98％ of
the total accounts receivable.
2. Other receivables(1) Other receivables are listed below as per category
End. balance
Book balance Bad debt reserves
Category
Amount
Proportion
(%)
Amount
Proporti
on (%)
Other receivables with
significant individual amount
443,200,457.76 83.50 - -
Other receivables with
insignificant single amount
has a greater risk after
combined on the credit risk
basis
18,255,370.18 3.44 11,683,839.77 92.53
Other insignificant
receivables
69,340,054.40 13.06 943,768.98 7.47
Total 530,795,882.34 100.00 12,627,608.75 100.00
(Continued)
Beg. balance
Book balance Bad debt reserves
Category
Amount
Proportion
(%)
Amount
Proportion
(%)
Other receivables with
significant individual amount
808,467,408.91 92.27 - -
Other receivables with
insignificant single amount has a
greater risk after combined on
the credit risk basis
27,658,478.47 3.16 11,782,510.53 93.31
Other insignificant receivables 40,065,240.66 4.57 845,098.22 6.69
Total 876,191,128.04 100.00 12,627,608.75 100.00
Remark: Recognition basis of accounts receivable with significant
individual amount: the account receivable with the balance at the end of
the period is greater than renminbi 10,000,000 yuan.
(2) Bad debt reserves at the end of the period
① Other receivables with significant individual amounts or with
insignificant individual amounts but independently tested for
impairment at the end of the period
Other
receivables
Book value
Bad debt
reserves
Allotment
proportion
Reason
Accounts
receivable and
443,200,457.76 - -
Bad debt reserves
were notOther
receivables
Book value
Bad debt
reserves
Allotment
proportion
Reason
payable withdrawn for
related parties
within the
consolidation
scope.
② Other receivables with insignificant single amount has a greater
risk after combined on the credit risk basis
End. balance Beg. balance
Book balance Book balance
Age
Amount
Proportio
n (%)
Bad debt
reserves Amount
Proporti
on (%)
Bad debt
reserves
Three to
four years
2,033,433.70 0.38 1,248,118.44
12,050,552.6
7 1.37 1,346,789.20
Four to
five years
931,087.03 0.18 255,763.65
373,008.42 0.04 255,763.65
Five years
or longer
15,290,849.45 2.88
10,179,957.6
8
15,234,917.3
8 1.75 10,179,957.68
Total 18,255,370.18 3.44
11,683,839.7
7
27,658,478.4
7 3.16 11,782,510.53
(3) In other receivables in the reporting period, no shareholder
entity that holds 5% or more shares of the Company owes debts to the
Company.
(4) Accounts receivable from related parties
Name
Relationship
with the
Company
Amount
Percentage in total
receivables (%)
Shenzhen Konka
Information Network Co.,
Ltd
Subsidiary
company
103,357,300.00
19.47
Kunshan State-owned Land
and Resource Bureau
Non-related
party
69,000,000.00
13.00
Dongguan Konka
Electronic Co., Ltd.
Subsidiary
company
38,560,741.84
7.26
Boluo Konka Precision
Technology Co., Ltd.
Subsidiary
company
26,770,700.00
5.04
Anhui Konka Electronic
Co., Ltd.
Subsidiary
company
26,560,803.43
5.00
Total 264,249,545.27 49.773. Long-term equity investment
(1) List of long-term equity investment
Item Beg. balance
Increase of
the period
Decrease
of the
period
End. balance
Investment on subsidiary
companies
1,374,259,154.56 20,000,000.00 - 1,394,259,154.56
Investment on jointly funded
enterprises
- - - -
Investment on affiliated
enterprises
- - - -
Other equity investments 10,038,000.00 - - 10,038,000.00
Less: provisions for
depreciation of long-term
equity investments
105,694,984.69 - - 105,694,984.69
Total 1,278,602,169.87 20,000,000.00 - 1,298,602,169.87
(2) Long-term equity investment measured by employing the equity
method
Invested entity
Accounting
method
Initial
investment costs
Beg. balance
Increase/decrease
amounts
End. balance
Mudanjiang Konka
Electronics Co., Ltd
Cost method 36,000,000.00 36,000,000.00 36,000,000.00
Shaanxi Konka Electronic
Co., Ltd
Cost method 44,869,809.80 44,869,809.80 44,869,809.80
Anhui Konka Electronic
Co., Ltd
Cost method 122,780,937.98 122,780,937.98 122,780,937.98
Dongguan Konka Electronic
Co., Ltd
Cost method 274,783,988.91 274,783,988.91 274,783,988.91
Hong Kong Konka
International Electronics
Co., Ltd
Cost method 781,828.61 781,828.61 781,828.61
Chongqing Konka
Electronic Co., Ltd
Cost method 27,000,000.00 27,000,000.00 27,000,000.00
Anhui Konka Household
Appliance Co., Ltd
Cost method 74,981,122.07 74,981,122.07 74,981,122.07
Konka (Europe) Ltd Cost method 261,482.50 261,482.50 261,482.50
Konka Nanhai Institute Cost method 500,000.00 500,000.00 500,000.00
Kunshan Konka Electronic
Co., Ltd
Cost method 350,000,000.00 350,000,000.00 350,000,000.00
Chongqing Jingkang
Plastic Products Co., Ltd
Cost method 4,655,000.00 4,655,000.00 4,655,000.00
Konka Electric and Cost method 10,732,484.69 10,732,484.69 10,732,484.69Invested entity
Accounting
method
Initial
investment costs
Beg. balance
Increase/decrease
amounts
End. balance
Electronic Co., Ltd
Shenzhen Konka
Communication Technology
Co., Ltd
Cost method 90,000,000.00 90,000,000.00 90,000,000.00
KONKA AMERICA,INC Cost method 8,062,500.00 8,062,500.00 8,062,500.00
Shenzhen Information
Network Co., Ltd
Cost method 22,500,000.00 22,500,000.00 22,500,000.00
Shenzhen Shushida
Electronics Co., Ltd
Cost method 31,500,000.00 31,500,000.00 31,500,000.00
Shenzhen Konka Video &
Communication Systems
Engineering Co., Ltd
Cost method 9,000,000.00 9,000,000.00 9,000,000.00
Chongqing Konka
Automotive Electronic
Co., Ltd
Cost method 17,100,000.00 17,100,000.00 17,100,000.00
Shenzhen Electronic
Fittings Technology Co.,
Ltd
Cost method 48,750,000.00 48,750,000.00 48,750,000.00
Konka (Kunshan) Real
Estate Investment Co., Ltd
Cost method 200,000,000.00 200,000,000.00 200,000,000.00
Konka Optoelectronics Cost method 10,000,000.00 - 10,000,000.00 10,000,000.00
Shenzhen Wankaida Cost method 10,000,000.00 - 10,000,000.00 10,000,000.00
Shenzhen Julong
Optoelectronics Co., Ltd
Cost method 2,000,000.00 2,000,000.00 2,000,000.00
Feihong Electronics Co.,
Ltd
Cost method 1,300,000.00 1,300,000.00 1,300,000.00
Shenzhen Association of
Enterprises with Foreign
Investment
Cost method 100,000.00 100,000.00 100,000.00
Shenzhen Make-plan
Investment Development
Co., Ltd
Cost method 485,000.00 485,000.00 485,000.00
IGRS Information
Technology Engineering
Center Co., Ltd
Cost method 5,000,000.00 5,000,000.00 5,000,000.00
Shenzhen CTU Hi-tech Ltd Cost method 1,153,000.00 1,153,000.00 1,153,000.00
Total 1,384,297,154.56 1,384,297,154.56 20,000,000.00 1,404,297,154.56
(Continued)Invested entity
Proportion
of shares
held in the
invested
entity (%)
Percentage
of voting
rights in
the
invested
entity (%)
Interpretations
of difference
between the
equity
percentage and
vote right
percentage in
the invested
entity
Impairment
provision
Impairment
provision
allotted of
the current
period
Cash
dividends of
the current
period
Mudanjiang
Konka
Electronics
Co., Ltd
60.00 60.00 36,000,000.00 - -
Shaanxi Konka
Electronic Co.,
Ltd
60.00 60.00 - - -
Anhui Konka
Electronic Co.,
Ltd
96.46 97.45
Anhui Konka
Electronic Co.,
Ltd indirectly
holds 4.48% of
shares of Anhui
Konka Household
Appliance Co.,
Ltd
- - -
Dongguan Konka
Electronic Co.,
Ltd
100.00 100.00 - - -
Hong Kong Konka
International
Electronics
Co., Ltd
99.00 100.00 - - -
Chongqing Konka
Electronic Co.,
Ltd
60.00 60.00 27,000,000.00 - -
Anhui Konka
Household
Appliance Co.,
Ltd
78.00 78.00 - - -
Konka (Europe)
Ltd
100.00 100.00 - - -
Konka Nanhai
Institute
100.00 100.00 - - -
Kunshan Konka
Electronic Co.,
100.00 100.00 - - -Invested entity
Proportion
of shares
held in the
invested
entity (%)
Percentage
of voting
rights in
the
invested
entity (%)
Interpretations
of difference
between the
equity
percentage and
vote right
percentage in
the invested
entity
Impairment
provision
Impairment
provision
allotted of
the current
period
Cash
dividends of
the current
period
Ltd
Chongqing
Jingkang
Plastic
Products Co.,
Ltd
100.00 100.00 - - -
Konka Electric
and Electronic
Co., Ltd
51.00 51.00 10,732,484.69 - -
Shenzhen Konka
Communication
Technology Co.,
Ltd
75.00 100.00 - - -
KONKA
AMERICA,INC
100.00 100.00 8,062,500.00 - -
Shenzhen
Information
Network Co., Ltd
100.00 100.00 22,500,000.00 - -
Shenzhen
Shushida
Electronics
Co., Ltd
100.00 100.00 - - -
Shenzhen Konka
Video &
Communication
Systems
Engineering
Co., Ltd
60.00 60.00 - - -
Chongqing Konka
Automotive
Electronic Co.,
Ltd
57.00 57.00 - - -
Shenzhen
Electronic
Fittings
100.00 100.00 - - -Invested entity
Proportion
of shares
held in the
invested
entity (%)
Percentage
of voting
rights in
the
invested
entity (%)
Interpretations
of difference
between the
equity
percentage and
vote right
percentage in
the invested
entity
Impairment
provision
Impairment
provision
allotted of
the current
period
Cash
dividends of
the current
period
Technology Co.,
Ltd
Konka (Kunshan)
Real Estate
Investment Co.,
Ltd
100.00 100.00 - - -
Konka
Optoelectronics
100.00 100.00
Shenzhen
Wankaida
100.00 100.00
Feihong
Electronics
Co., Ltd.
8.33 8.33 1,300,000.00 - -
Shenzhen Julong
Optoelectronics
Co., Ltd
10.00 10.00 - - -
Shenzhen
Association of
Enterprises
with Foreign
Investment
- - 100,000.00 - -
Shenzhen
Make-plan
Investment
Development
Co., Ltd
10.00 10.00 - - -
IGRS
Information
Technology
Engineering
Center Co., Ltd
9.62 9.62 - - -
Shenzhen CTU
Hi-tech Ltd
11.50 11.50 - - -
Total 105,694,984.69 - -4. Revenues and operating costs
(1) Revenues and operating costs
Item Amount of the current period
Amount of the previous
period
Revenues from main
operations
6,524,311,285.69 4,216,259,024.45
Revenues from other
operations
1,041,042,220.58 113,504,227.16
Total revenues 7,565,353,506.27 4,329,763,251.61
Costs of main operations 5,651,885,943.38 3,455,284,868.28
Costs of other operations 1,034,718,608.23 100,064,673.89
Total operating costs 6,686,604,551.61 3,555,349,542.17
(2) Main operations (by industries)
Amount of the current period Amount of the previous period
Industry
Revenues Operating costs Revenues Operating costs
Electronic
industry
6,524,311,285.69 5,651,885,943.38 4,216,259,024.45 3,455,284,868.28
(3) Main operations (by products)
Amount of the current period Amount of the previous period
Name
Revenues Operating costs Revenues Operating costs
Color
television
business
5,908,583,213.90 5,171,044,861.97 3,710,284,808.09 3,054,809,730.82
White
goods
business
605,118,826.33 469,960,034.65 505,974,216.36 400,475,137.46
Other 10,609,245.46 10,881,046.76 - -
Total 6,524,311,285.69 5,651,885,943.38 4,216,259,024.45 3,455,284,868.28
(4) Main operations (by regions)
Amount of the current period Amount of the previous period
Region
Revenues Operating costs Revenues Operating costs
Domestic
revenues
5,302,820,965.52 4,432,876,169.99 3,959,082,565.95 3,188,442,615.72
Overseas
revenues
1,221,490,320.16 1,219,009,773.39 257,176,458.50 266,842,252.56
Total 6,524,311,285.68 5,651,885,943.38 4,216,259,024.45 3,455,284,868.28
(5) Revenues from the top five customers
The revenues from the top five customers amount to renminbi2,373,699,674.51 yuan, taking up 31.38 % of the total revenues.
5. Investment income
(1) List of investment income items
Invested entity
Amount of the
current period
Amount of the
previous period
Income from long-term equity investment
measured by employing the cost method 19,092,952.03 1,350,000.00
Investment income from disposing
transactional financial assets - -
Investment income from financial assets
available for sale 10,529.35 -
Total 19,103,481.38 1,350,000.00
Remark: No significant restriction is imposed on repatriation of the
investment income of the Company.
(2) Income from long-term equity investment measured by employing the
cost method
Invested entity
Amount of the
current period
Amount of the
previous
period
Reason for
increase/decrease
of the current
period by comparing
with the previous
period
Anhui Konka Household
Appliance Co., Ltd
19,092,952.03 -
Increase of profit
distributed by the
subsidiary
Shaanxi Konka Electronic
Co., Ltd
- 1,350,000.00
Decrease of profit
distributed by the
subsidiary
Total 19,092,952.03 1,350,000.00
6. Supplementary information about the cash flow statements
Supplementary information
Amount of the
current period
Amount of the
previous period
1. Information about converting net profits
into cash for operating activities:
Net income / loss -18,456,929.86 42,522,972.50
Add: Asset impairment reserves 3,546,793.93 -4,951,506.85
Depreciation of fixed assets, oil and gases
and production materials 15,906,582.84
29,986,860.81Supplementary information
Amount of the
current period
Amount of the
previous period
Amortization of intangible assets 1,132,162.65 806,328.50
Amortization of long-term expenses to be
apportioned 995,701.01
1,008,511.95
Loss on disposal of fixed assets, intangible
assets and other long-term assets (or deduct:
gains) -15,090,395.07
54,738.78
Losses on scrapping of fixed assets (or
deduct: gains) 221059.86
174269.53
Losses on change of fair value (or deduct:
gains) 4,190,488.00
-2,178,002.85
Financial expenses (or deduct: gains) 8,513,441.54 4,356,685.76
Investment losses (or deduct: gains) -19,103,481.38 -1,350,000.00
Decrease in deferred income tax assets (or
deduct: increase) 614,963.92
147,810.60
Increase of deferred income tax liabilities
(or deduct: decrease) -
-
Decrease in inventories (or deduct: increase) -582,628,647.84 -161,860,769.48
Decrease in operating receivables (or deduct:
increase) 799,754,696.60
626,731,032.73
Increase of operating payables (or deduct:
decrease) -308,805,319.52
-658,320,448.87
Other - -
Net cash flows from operating activities -109,208,883.32 -122,871,516.89
2. investing and financing activities that do
not involve cash receipts and payments:
Conversion of debt into capital -
Convertible bonds to be expired within one
year
-
Fixed assets under finance lease -
3. Net increase in cash and cash equivalents
Cash at the end of the period 438,848,191.15 667,762,855.64
Less: Cash at the beginning of the period 341,440,119.99 358,631,499.14
Add: Cash equivalents at the end of the period - -
Less: Cash equivalents at the beginning of the
period
- -
Net increase in cash and cash equivalents 97,408,071.16 309,131,356.50
(2) Composition of cash and cash equivalents
Item End. balance Beg. balance
I. Cash 438,848,191.15 341,440,119.99Item End. balance Beg. balance
Including: Inventory cash 5,102.03 6,129.34
Bank deposits that can be used for
payments at any time
438,843,089.12 341,433,990.65
Other currency funds that can be used for
payment at any time
-
Deposits in the central bank that can be
used for payments
-
II. Cash equivalents -
Including: Bond investment due within
three months
-
III. Balance of cash and cash equivalents
at the end of the period
438,848,191.15 341,440,119.99
XIV. Supplementary information
1. Non-recurring gains and losses of the current period
Item Amount Remark
Gains/losses on disposal of non-current assets 14,413,137.27
Government grants that are recorded into the gains and
losses of the period (closely related to services of a
company, excluding governments grants that are entitled
in certain amount or quantity according to relevant
regulations of the government) 7,373,346.55
Gains and losses on change of fair value of transactional
financial asserts and transactional financial
liabilities -5,334,908.00
NDF
Investment revenues from selling financial assets that
are available for sale 10,529.35
Other operating revenues and expenses except the
abovementioned items 3,392,967.22
Subtotal 19,855,072.39
Effect of amount of the income tax 4,324,623.39
Effect on the amount of the equity of minority
shareholders (post-tax) 268,027.10
Total 15,262,421.90
2. Rate of return on net assets and earnings per share
Amount of the current period Amount of the previous period
Earnings per share
(renminbi yuan/share)
Earnings per share
Profits in the (renminbi yuan/share)
reporting period
Weighted
average
rate of
return on
net assets
Basic
earnings
per
Diluted
earnings
per
Weighted
average
rate of
return on
net assets
Basic
earnings
per
Diluted
earnings
pershare share share share
Net profits
attributed to
shareholders of
common shares of
the Company
1.30 0.0423 0.0423 2.10 0.0667 0.0667
Net profits of
non-recurring
gains and losses
attributed to
shareholders of
common shares
0.91 0.0296 0.0296 1.97 0.0623 0.0623
Calculation of weighted average rate of return on net assets
(1) Weighted average rate of return on net assets corresponding to
the net profits attributed to shareholders of common shares of the Company
= the net profits attributed to shareholders of common shares of the
Company / Weighted average rate of return on net assets attributed to
shareholders of common shares of the Company = 50,887,520.39 ÷
390,0811,621.755×100%=1.30%
(2) Weighted average rate of return on net assets corresponding to
the net profits of non-recurring gains or losses attributed to
shareholders of common shares of the Company = the net profits of
non-recurring gains or losses attributed to shareholders of common shares
of the Company / Weighted average rate of return on net assets attributed
to shareholders of common shares of the Company = （50,887,520.39－
15,262,421.90）÷390,0811,621.755×100%=0.91%
(3) For calculation of basic earnings per share and diluted earnings per
share, see 45 of Note 44: basic earnings per share and diluted earnings
per share.
3. Abnormities of main items in the financial statements and
explanation of relevant reasons (In renminbi: 10,000 yuan)
Year 2010 Year 2009
Change
Rate of
change
(%)
Reasons for change
Item a b a-b (a-b)/|b|
Transactional
financial assets 0.00 367.32 -367.32 -100.00 Fair value changes of NDF
Prepayment 18,953.29 27,585.08 -8,631.79 -31.29
Notes were mainly adopted in
payment for purchases in the
current period.Year 2010 Year 2009
Change
Rate of
change
(%)
Reasons for change
Item a b a-b (a-b)/|b|
Interest
receivable 1,318.75 3,252.99 -1,934.24 -59.46
Lots of NDF pledge deposits were
due and relevant interest
receivables were collected.
Other receivables 16,593.17 1,957.24 14,635.93 747.78
Land bidding deposits, etc. in
the current period
Construction in
process 13,854.86 6,108.79 7,746.07 126.80
An increase of renminbi 45
million yuan for investment in
the Konka R&D Building; an
increase of renminbi 19 million
yuan for office building
acquisition; and an increase of
renminbi 12 million for the
Kunshan module production base
project
Short-term
borrowings 398,005.03 277,001.40 121,003.63 43.68
The increase was due to the
short-term operating financing
business.
Taxes and fares
payable -32,117.65 -13,289.77 -18,827.88 141.67
Value-added tax expiation
increased due to increase of the
purchase amount in the current
period.
Interest payable 962.84 2,363.30 -1,400.46 -59.26
Lots of NDF foreign-currency
borrowings were due and interest
payable decreased.
Dividend payable 1,604.85 80.45 1,524.40 1894.84
Stock dividends recognized in
the current period
Operating income 794,018.38 517,200.00 276,818.38 53.52
Plat-panel TVs, which were of a
relatively high value, took up a
larger proportion in sales in
the current period.
Operating cost 670,025.33 419,172.07 250,853.26 59.84
Plat-panel TVs, which were of a
relatively high cost, took up a
larger proportion in sales in
the current period.
Selling expenses 92,783.96 67,056.39 25,727.57 38.37
The selling expenses increased
due to the revenue growth, as
well as more promotion and
advertising.
Financial expenses 2,252.47 1,618.24 634.23 39.19
Interest expenses on the
short-term operating financingYear 2010 Year 2009
Change
Rate of
change
(%)
Reasons for change
Item a b a-b (a-b)/|b|
business increased.
Asset impairment
loss 716.58 -375.12 1,091.70 291.03
More bad debt reserves in the
current period
Income from fair
value changes -533.49 217.80 -751.29 -344.94
NDF contracts signed in 2009
were settled due to maturity,
which offset the fair value
change incomes recognized at the
end of 2009.
Investment income 331.47 -57.53 389.00 676.17
Income from long-term equity
investment measured at the
equity method increased.
Non-operating
income 5,236.45 627.81 4,608.64 734.08
Incomes from tax refunds and
fixed asset disposal increased
in the current period.
Non-operating
expenses 451.69 185.44 266.25 143.58
Increase in the loss from fixed
asset disposal and donations
Income tax expenses 1,978.42 1,261.61 716.81 56.82
The income tax and deferred
income tax increased, which were
calculated according to the Law
of Taxation and relevant
regulations.
Net profit
attributable to
owners of the
parent company 5,088.75 8,030.20 -2,941.45 -36.63
Profit decreased in the current
period.
Minority interests 962.55 -531.55 1,494.10 281.08
Profit of subsidiaries
increased in the current period.
