Konka Group Co., Ltd. Interim Report 2018
KONKA GROUP CO., LTD.
INTERIM REPORT 2018
2018-65
August 2018
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Konka Group Co., Ltd. Interim Report 2018
Part I Important Notes, Table of Contents and Definitions
The Board of Directors (or the “Board”), the Supervisory Committee as well as the directors,
supervisors and senior management of Konka Group Co., Ltd. (hereinafter referred to as the
“ Company ” ) hereby guarantee the factuality, accuracy and completeness of the contents of
this Report and its summary, and shall be jointly and severally liable for any
misrepresentations, misleading statements or material omissions therein.
Liu Fengxi, the Company’s legal representative, Li Chunlei, the Company’s Chief Financial
Officer (CFO), and Feng Junxiu, head of the Company’s financial department (equivalent to
financial manager) hereby guarantee that the Financial Statements carried in this Report are
factual, accurate and complete.
All the Company’s directors have attended the Board meeting for the review of this Report
and its summary.
Any plans for the future or other forward-looking statements mentioned in this Report and its
summary shall NOT be considered as absolute promises of the Company to investors.
Therefore, investors are reminded to exercise caution when making investment decisions.
The Company has no interim dividend plan, either in the form of cash or stock.
This Report and its summary have been prepared in both Chinese and English. Should there
be any discrepancies or misunderstandings between the two versions, the Chinese versions
shall prevail.
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Konka Group Co., Ltd. Interim Report 2018
Table of Contents
Interim Report 2018...........................................................................................................................1
Part I Important Notes, Table of Contents and Definitions........................................................... 2
Part II Corporate Information and Key Financial Information................................................... 7
Part III Business Summary............................................................................................................. 10
Part IV Operating Performance Discussion and Analysis............................................................13
Part V Significant Events.................................................................................................................28
Part VI Share Changes and Shareholder Information................................................................. 45
Part VII Preferred Shares................................................................................................................50
Part VIII Directors, Supervisors and Senior Management..........................................................51
Part IX Corporate Bonds.................................................................................................................52
Part X Financial Statements............................................................................................................53
Part XI Documents Available for Reference................................................................................ 266
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Konka Group Co., Ltd. Interim Report 2018
Definitions
Term Definition
The “Company”, the “Group”, “Konka Group” Konka Group Co., Ltd. and its consolidated subsidiaries, except where the
or “we” context otherwise requires
Telecommunication Technology Shenzhen Konka Telecommunications Technology Co., Ltd.
Konka Electrical Appliances Shenzhen Konka Electrical Appliances Co., Ltd.
Plastic Products Shenzhen Konka Plastic Products Co., Ltd.
Electrical Appliances Shenzhen Konka Electrical Appliances Co., Ltd.
Fittings Technology Shenzhen Konka Electronic Fittings Technology Co., Ltd.
Mudanjiang Appliances Mudanjiang Arctic Ocean Appliances Co., Ltd.
Chongqing Qingjia Chongqing Qingjia Electronics Co., Ltd.
Anhui Konka Anhui Konka Electronic Co., Ltd.
Dongguan Konka Dongguan Konka Electronic Co., Ltd.
Dongguan Packing Dongguan Konka Packing Materials Co., Ltd.
Boluo Konka Boluo Konka PCB Co., Ltd.
Boluo Konka Precision Boluo Konka Precision Technology Co., Ltd.
Hong Kong Konka Hong Kong Konka Co., Ltd.
Konka Electrical Appliances Investment Konka Electrical Appliances Investment & Development Co., Ltd.
Konka Electrical Appliances International Trading Konka Electrical Appliances International Trading Co., Ltd.
Konka Europe Konka (Europe) Co., Ltd.
Konka Factoring Konka Factoring (Shenzhen) Co., Ltd.
Wankaida Shenzhen Wankaida Science and Technology Co., Ltd.
Kunshan Kangsheng Kunshan Kangsheng Investment Development Co., Ltd.
Anhui Tongchuang Anhui Konka Tongchuang Electrical Appliances Co., Ltd.
Shushida Logistics Shenzhen Shushida Logistics Service Co., Ltd.
Beijing Konka Electronic Beijing Konka Electronic Co., Ltd.
Konka E-display Shenzhen Konka E-display Co., Ltd.
E-display Service Shenzhen E-display Service Co., Ltd.
Xiamen Dalong Xiamen Dalong Trading Co., Ltd.
Youshi Kangrong Youshi Kangrong Culture Communication Co., Ltd.
Konka SmartTech Konka SmartTech Limited
Kaikai Shijie Anhui Kaikai Shijie E-commerce Co., Ltd.
E2info Shenzhen E2info Network Technology Co., Ltd.
Mobile Interconnection Shenzhen Konka Mobile Interconnection Technology Co., Ltd.
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Konka Group Co., Ltd. Interim Report 2018
Commercial System Technology Shenzhen Konka Commercial System Technology Co., Ltd.
Chain Kingdom Chain Kingdom Co., Limited
Kangqiao Easy Chain Shenzhen Kangqiao Easy Chain Technology Co., Ltd.
E3info E3info (Hainan) Technology Co., Ltd.
Chuzhou Konka TID Chuzhou Konka Technology & Industry Development Co., Ltd.
Konka Ventures Konka Ventures Development (Shenzhen) Co., Ltd.
Konka Pengrun Shenzhen Konka Pengrun Technology & Industry Co., Ltd.
Konka Unifortune Shenzhen Konka Unifortune Supply Chain Management Co., Ltd.
Konka Investment Shenzhen Konka Investment Holding Co., Ltd.
Kangzhi Trade Anhui Kangzhi Trade Co., Ltd.
Konka Material Hainan Konka Material Technology Co., Ltd.
Konka Leasing Tianjin Konka Leasing Co., Ltd.
Yantai Konka Yantai Konka Healthcare Enterprise Service Co., Ltd.
Konka Capital Shenzhen Konka Capital Equity Investment Management Co., Ltd.
Chain Kingdom Shenzhen Chain Kingdom (Shenzhen) Co., Ltd.
Electronics Technology Shenzhen Konka Electronics Technology Co., Ltd.
Sichuan Konka Sichuan Konka Smart terminal Technology Co., Ltd
Jiaxin Technology Jiaxin Technology Co., Ltd.
Kangjietong Kangjietong (Hong Kong) Limited
Sichuan Kangjiatong Sichuan Kangjiatong Supply Chain Management Co., Ltd.
Konka Huanjia Konka Huanjia (Dalian) Environmental Technology Co., Ltd.
Chengdu Konka Chengdu Konka Incubator Management Co., Ltd.
Yibin Konka Yibin Konka Technology Park Operation Co., Ltd.
Konka Suiyong Konka Suiyong Investment (Shenzhen) Co., Ltd.
Electrical Appliance Technology Anhui Konka Electrical Appliance Technology Co., Ltd.
Jiali International Jiali International (Hong Kong) Limited
XingDa HongYe GuangDong XingDa HongYe Electronic Co., Ltd.
Xinfeng Zhuoqun Shanghai Xinfeng Zhuoqun PCB Co., Ltd.
Zewei Kechuang Zhongshan Zewei Kechuang Investment Management Co., Ltd.
Econ Technology Shandong Econ Technology Co., Ltd.
Beijing Econ Beijing Econ Runfeng Technology Co., Ltd.
Shanghai Jiyi Shanghai Jiyi Environmental Technology Co., Ltd.
Binzhou Econ Binzhou Econ Zhongke Environmental Technology Co., Ltd.
Lairun Holdings Laizhou Lairun Holdings Co., Ltd.
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Konka Group Co., Ltd. Interim Report 2018
Econ Environmental Engineering Econ Environmental Engineering Co., Ltd.
Rushan Yike Rushan Yike Water Treatment Co., Ltd.
Binzhou Weiyijie Binzhou Weiyijie Environmental Technology Co., Ltd.
Yantai Chunzhiran Yantai Chunzhiran Environmental Technology Co., Ltd.
Rushan Econ Rushan Econ Beike Technology Incubator Co., Ltd.
Fujian Econ Fujian Econ Changrun Environmental Protection Co., Ltd.
Lairun Huayang Laizhou Lairun Huayang Heating Co., Ltd.
Lairun Heating Laizhou Lairun Heating Co., Ltd.
Lairun Green Energy Laizhou Lairun Green Energy Co., Ltd.
Beihai Jingmai Binzhou Beihai Jingmai Industrial Development Co., Ltd.
Huanhai Xinze Yantai Huanhai Xinze Enterprise Management Co., Ltd.
Binzhou Weinengda Binzhou Weinengda Transport Co., Ltd.
Binhai Sewage Treatment Laizhou Binhai Sewage Treatment Co., Ltd.
Lairun Environmental Protection Laizhou Lairun Environmental Protection Co., Ltd.
CSRC The China Securities Regulatory Commission
SZSE The Shenzhen Stock Exchange
CSRC Shenzhen The Shenzhen Bureau of the China Securities Regulatory Commission
Expressed in the Chinese currency of Renminbi, expressed in tens of thousands
RMB, RMB’0,000, RMB’00,000,000
of Renminbi, expressed in hundreds of millions of Renminbi
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Konka Group Co., Ltd. Interim Report 2018
Part II Corporate Information and Key Financial Information
I Corporate Information
Stock name Konka Group-A, Konka Group-B Stock code 000016, 200016
Changed stock name (if any) N/A
Stock exchange for stock listing Shenzhen Stock Exchange
Company name in Chinese 康佳集团股份有限公司
Abbr. (if any) 康佳集团
Company name in English (if any) KONKA GROUP CO., LTD.
Abbr. (if any) KONKA GROUP
Legal representative Liu Fengxi
II Contact Information
Board Secretary Securities Representative
Name Wu Yongjun Miao Leiqiang
Board Secretariat, 24/F, Konka R&D Centre, 28 Keji Board Secretariat, 24/F, Konka R&D Centre, 28 Keji
South Twelfth Road, Science and Technology Park, South Twelfth Road, Science and Technology Park,
Address
Yuehai Street, Nanshan District, Shenzhen, Guangdong Yuehai Street, Nanshan District, Shenzhen, Guangdong
Province, China Province, China
Tel. 0755-26609138 0755-26609138
Fax 0755-26601139 0755-26601139
Email
szkonka@konka.com szkonka@konka.com
address
III Other Information
1. Contact Information of the Company
Indicate by tick mark whether any change occurred to the registered address, office address and
their zip codes, website address and email address of the Company in the Reporting Period.
□ Applicable √ Not applicable
No change occurred to the said information in the Reporting Period, which can be found in the 2017
Annual Report.
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Konka Group Co., Ltd. Interim Report 2018
2. Media for Information Disclosure and Place where this Report is Kept
Indicate by tick mark whether any change occurred to the information disclosure media and the
place for keeping the Company’s periodic reports in the Reporting Period.
□ Applicable √ Not applicable
The newspapers designated by the Company for information disclosure, the website designated by
the CSRC for disclosing the Company’s periodic reports and the place for keeping such reports did
not change in the Reporting Period. The said information can be found in the 2017 Annual Report.
IV Key Financial Information
Indicate by tick mark whether there is any retrospectively restated datum in the table below.
□ Yes √ No
H1 2018 H1 2017 Change (%)
Operating revenue (RMB) 17,625,414,769.82 11,405,965,979.43 54.53%
Net profit attributable to the listed
341,793,039.03 30,871,267.86 1007.16%
company’s shareholders (RMB)
Net profit attributable to the listed
company ’ s shareholders before -300,870,612.80 -44,456,212.17 -576.78%
exceptional items (RMB)
Net cash generated from/used in
-1,838,158,705.86 -2,264,014,704.88 18.81%
operating activities (RMB)
Basic earnings per share (RMB/share) 0.1419 0.0128 1008.59%
Diluted earnings per share (RMB/share) 0.1419 0.0128 1008.59%
Weighted average return on equity (%) 4.19% 1.06% 3.13%
30 June 2018 31 December 2017 Change (%)
Total assets (RMB) 28,134,003,876.94 23,558,735,469.78 19.42%
Equity attributable to the listed
7,940,999,540.26 7,994,145,476.61 -0.66%
company’s shareholders (RMB)
V Accounting Data Differences under China’s Accounting Standards for Business Enterprises
(CAS) and International Financial Reporting Standards (IFRS) and Foreign Accounting
Standards
1. Net Profit and Equity Differences under CAS and IFRS
□ Applicable √ Not applicable
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Konka Group Co., Ltd. Interim Report 2018
No such differences for the Reporting Period.
2. Net Profit and Equity Differences under CAS and Foreign Accounting Standards
□ Applicable √ Not applicable
No such differences for the Reporting Period.
XI Exceptional Gains and Losses
√ Applicable □ Not applicable
Unit: RMB
Item Reporting Period Note
Gain or loss on disposal of non-current assets (inclusive of impairment allowance write-offs) 109,176,724.28
Government subsidies charged to current profit or loss (exclusive of government subsidies
given in the Company ’ s ordinary course of business at fixed quotas or amounts as per 95,673,059.56
government’s uniform standards)
Gain or loss on investments or assets entrusted to other entities for management 83,860,015.29
Gain or loss on fair-value changes in trading financial assets and liabilities & investment
income from disposal of trading financial assets and liabilities and available-for-sale financial
-5,196,666.98
assets (exclusive of effective portion of hedges that arise in the Company’s ordinary course of
business)
Gain or loss on loan entrustments 599,186.29
Non-operating income and expense other than above 14,941,575.60
Other gains and losses that meet definition of exceptional gain/loss 445,568,627.45
Less: Income tax effects 38,310,511.85
Non-controlling interests effects (net of tax) 63,648,357.81
Total 642,663,651.83 --
Explanation of why the Company reclassifies as recurrent an exceptional gain/loss item defined or
listed in the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering
Their Securities to the Public—Exceptional Gain/Loss Items:
√ Applicable □ Not applicable
Item Amount (RMB) Reason
Tax rebates Recurrent government subsidies given in the Company’s ordinary course of business at
34,848,961.96
on software fixed quotas or amounts as per government’s uniform standards
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Konka Group Co., Ltd. Interim Report 2018
Part III Business Summary
I Core Business Scope of the Company in Reporting Period
Is the Company subject to any disclosure requirements for special industries?
No.
Currently, the Company consists of three major business divisions, namely, the consumer electronic
division, the supply chain management division and the environmental protection division, which
are detailed as follows:
(I) The Consumer Electronic Division
This division primarily comprises the multimedia sub-division, the white goods sub-division and
the mobile phone sub-division, with details as follows:
1. The Multimedia Sub-Division
The Company provides multimedia products and services, including colour TVs and Internet TV
services, for both domestic and overseas markets.
The domestic sales of the Company ’ s colour TVs are realized mainly through B2B
(Business-to-Business) and B2C (Business-to-Consumer), with its branch companies, business
departments and after-sales maintenance points operating across the country. And the Company
profits from the margins between the costs and the selling prices of its colour TVs.
As for selling its colour TVs abroad, the Company mainly relies on B2B. Its colour TVs are sold to
Asia Pacific, Middle East, Central & South America, East Europe, etc. And operating profit
source is also the differences between the costs and the selling prices of its colour TVs.
The Company offers Internet TV services based on the smart TVs it has sold to end users. Firstly, it
works with other Internet companies to provide end users with, among other content, video,
educational, music, medical and game content to generate earnings. Secondly, it analyses user
behaviours and offer certain free, interactive services to increase attractiveness to users, promote its
brand and stimulate desire for its hardware products. Finally, it is trying to build an Internet TV
platform with tens of millions of users, on which it will profit through commercial and application
distribution. This Internet TV business is key to the Company’s Internet-oriented transformation and
upgrade to a development model of “hardware + software” and “smart TV + end users”.
2. The White Goods Sub-Division
The white goods produced by the Company mainly include refrigerators, washing machines, air
conditioners, freezers, etc., which are sold through B2B and B2C mainly to the domestic market.
And the Company profits from the margins between the costs and the selling prices of its white
goods.
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Konka Group Co., Ltd. Interim Report 2018
3. The Mobile Phone Sub-Division
The mobile phones of the Company are sold to both the domestic and overseas markets. The
overseas sales mainly rely on B2B and the profit comes from the margins between the costs and the
selling prices of the mobile phones. As for the domestic sales of its mobile phones, the Company
relies on B2B and B2C, and profits mainly from the costs and the selling prices of its products and
slightly from the related value added services.
(II) The Supply Chain Management Division
In this business, relying on the advantages of the raw material procurement channels, distribution
systems and terminal networks of its consumer electronic business, the Company helps upstream
and downstream enterprises of the supply chain solve channel problems caused by asymmetric
information and improve efficiency. At present, this business runs on two models. In the
procurement and distribution supply chain model, the Company benefits from purchasing IC chips,
LCD screens, etc. from upstream suppliers and selling them to downstream customers through the
supply chain of its traditional core business. Supply chain services are another model. Capitalizing
on its years of experience in product quality control, outsourcing partner assessment and
international trade, the Company is able to help improve the client’s supply chain in efficiency and
cost through the provision of services including product quality control, warehousing and logistics,
customs clearance of imports and exports, documentation, tax handling, outsourcing partner
selection, etc. Profit comes from service charges. Additionally, the supply chain management
business can help the Company establish good relationships with its upstream suppliers and
downstream customers, and keep it informed of prices of the materials used in its production for
better cost control over its existing products.
(III) The Environmental Protection Division
Currently, this business focuses on water treatment and recycling of renewable resources. Water
engineering PPP (Public-Private Partnership) projects are undertaken under BOT
(Build-Operate-Transfer) or EPC (Energy Performance Contracting) models. And renewable
resources are collected, sorted, processed, distributed and sold.
II Material Changes in Major Assets
1. Material Changes in Major Assets
Major assets Main reason for material changes
Long-term equity investments rose 65.72% at the end of the Reporting Period
compared to the beginning amount, primarily driven by the shift of Anhui Kaikai Shijie
Equity assets
E-commerce Co., Ltd. from a consolidated subsidiary to a long-term equity investment
measured at the equity method, as well as by new equity investments in associates.
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Konka Group Co., Ltd. Interim Report 2018
Fixed assets No material change
Up 101.09% at the end of the Reporting Period compared to the beginning amount,
primarily driven by the consolidated intangible assets (land use rights, franchise rights,
Intangible assets
etc., at their carrying amounts) of acquirees Shandong Econ Technology Co., Ltd. and
GuangDong XingDa HongYe Electronic Co., Ltd. in the Current Period
Construction in progress No material change
Up 13965.55% at the end of the Reporting Period compared to the beginning amount,
primarily driven by the Company ’s acquisitions of a 51% interest in both Shandong
Goodwill
Econ Technology Co., Ltd. and GuangDong XingDa HongYe Electronic Co., Ltd. in
the Current Period
2. Major Assets Overseas
□ Applicable √ Not applicable
III Core Competitiveness Analysis
Is the Company subject to any disclosure requirements for special industries?
No.
The Company’s core competitiveness lies in its R&D ability, brand, marketing network and human
resources. It has developed a three-level R&D system of “ Konka Research Institute-Multimedia
R&D Centre-specialized design institutes”, with close to 100 core technologies and approximately
2,000 R&D personnel. It also boasts a strong brand presence among consumers, as well as among
banks and other financing channels. Additionally, its domestic marketing and service network,
including 67 branch companies, over 200 offices and about 3,300 after-sales service stations across
the country, directly connect to around 3,000 retail terminals, along with a well-established overseas
marketing network. Meanwhile, it has high-level personnel with years of rich management and
industry experience, as well as a high-quality team with strong execution capabilities.
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Konka Group Co., Ltd. Interim Report 2018
Part IV Operating Performance Discussion and Analysis
I Overview
(I) In the Reporting Period, in order for faster transformation and upgrade and leapfrog growth, the
Company has formulated a strategic plan for its medium- and long-term development, that is, “One
Centric Orientation, Two Development Paths, Three Development Strategies and Four Business
Divisions”. With the centric orientation to become a platform driven by technological innovation, as
well as with industrial products as the basis supported by the composite capabilities of
“Technology + Holding”, the Company will upgrade towards strategic emerging industries, expand
its technology park business, and extend its Internet and supply chain service business, so as to
formulate four major collaborating business divisions—the technology park division, the industrial
product division, the platform service division and the investment & finance division.
Focused on its strategic plan, the Company made the following achievements in the Reporting
Period:
1. The mixed ownership reform was carried forward for stronger competitiveness in the multimedia
business. Shenzhen Konka Electronics Technology Co., Ltd. has been set up in the Reporting Period
to run the Company ’ s colour TV and other multimedia businesses, which will accelerate the
Company’s platform transformation, and enable a mixed ownership reform on the said business at a
proper timing for better competitiveness.
Anhui Kaikai Shijie E-commerce Co., Ltd. (“Kaikai Shijie”), one of the Company’s majority-owned
subsidiary, is responsible for operations under the Company’s online colour TV brand—KKTV. In
order to make up its lack of digital contents and shift from a hardware provider to an Internet
company featuring “ digital contents + hardware + operation ” , Kaikai Shijie has introduced
Guangdong South Aishi Entertainment Technology Co., Ltd. (“South Aishi”) as a 10% shareholder.
South Aishi is a professional Internet company offering Internet TV entertainment services, with
fully-licensed joint operation rights, rich digital contents and years of OTT experience.
2. The technology park, environmental protection and other businesses have gradually taken shape.
In terms of the technology park business, in addition to carrying forward the existing projects
including Phase I of the Konka Chuzhou Technological Innovation Centre and the Yibin Konka
Smart Terminals Industrial Park, the Company has also newly launched the Konka Belt and Road
Headquarters, Phase II of the Konka Chuzhou Technological Innovation Centre, the Zibo High-End
Equipment Industrial Park, the Nanjing K-Star Cloud Network Headquarters, etc. Meanwhile, talks
are underway for the Konka Smart Appliances and Equipment Industrial Park, the Ankang Smart
Plant, Minghu K-Care Town and so on.
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Konka Group Co., Ltd. Interim Report 2018
In the environmental protection business, the Company acquired a 51% interest in Shandong Econ
Technology Co., Ltd. (“Econ Technology”), which specializes in water treatment. Recently, one of
Econ Technology’s affiliates has won the bids for the RMB1.299 billion urban river comprehensive
treatment PPP project for the Donggang city, as well as for the RMB2.849 billion city centre
comprehensive improvement project for the Weifang Binhai Economic and Technological
Development Zone.
Additionally, the Company has recently acquired a 51% stake in Jiujiang Golden Phoenix
Decoration Material Co., Ltd. (“Golden Phoenix”), which produces glass ceramic materials, a new
green material. This acquisition has great significance for the Company’s plan in the new material
sector.
3. During the Reporting Period, Anhui Konka Electrical Appliance Technology Co., Ltd., a 51%
indirectly controlled subsidiary of the Company, won the bid of RMB455 million for the 100%
interests of Henan Frestec Electrical Appliances Co., Ltd., Henan Frestec Refrigeration Appliance
Co., Ltd. and Henan Frestec Household Appliances Co., Ltd. (The above three companies are
collectively referred to as “ Frestec Company ” , the asset pool of which mainly includes Frestec
brand, patents and related fixed assets).So far Frestec Company has completed the industrial and
commercial registration of changes and gradually resumes production.This acquisition can help the
Company quickly expand its white goods business under the two collaborating brands of “Konka”
and “Frestec” for better profitability.
4. During the Reporting Period, four business sub-divisions based on the Internet ecology had taken
shape in the Company ’ s Internet operation business, including the cross-device user operation
sub-division based on Konka’s smart terminal user operation platform, the IoT (Internet of Things)
operation sub-division based on Konka ’ s smart terminal hardware, as well as the other two
sub-divisions in planning — the comprehensive healthcare business based on Konka ’ s
comprehensive healthcare user operation platform and the smart town business based on Konka ’s
smart town operation platform, so as to build a complete household smart healthcare ecosystem.
The Internet operation business was running well in the Reporting Period, with a new high in
income.
(II) Due to the rapid growth in the new businesses, the Company is expected to achieve operating
revenue of approximately RMB17.625 billion for H1 2018, up around 54.53% compared to H1
2017.
(III) Exceptional income was RMB643 million for the Reporting Period, which primarily came
from the sale of certain interests in Kaikai Shijie for the mixed ownership reform.
II Analysis of Core Businesses
See “I Overview” above.
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Konka Group Co., Ltd. Interim Report 2018
Year-on-year changes in key financial data:
Unit: RMB
Change
H1 2018 H1 2017 Main reason for change
(%)
Operating revenue
17,625,414,769.82 11,405,965,979.43 54.53% Growth in the supply chain
management business
Cost of sales 16,442,256,445.26 10,110,191,258.07 62.63%
Selling expense 1,103,181,074.51 974,003,306.54 13.26%
A rise in R&D and trial
Administrative expense 364,827,669.33 264,108,100.97 38.14%
production expense
A rise in exchange gains due
Finance costs 36,292,909.41 110,882,895.46 -67.27%
to exchange rate fluctuations
Income tax expense -17,446,049.13 -3,838,772.97 -354.47%
R&D expense 137,008,896.76 96,753,027.87 41.61%
Net cash generated from/used in
-1,838,158,705.86 -2,264,014,704.88 18.81%
operating activities
A decline in cash payments
Net cash generated from/used in
-343,094,565.17 -1,580,867,932.13 78.30% for wealth management
investing activities
products
A decline in net cash
Net cash generated from/used in
2,880,630,318.57 4,161,145,047.39 -30.77% generated from/used in
financing activities
borrowings
Net increase in cash and cash
664,088,931.90 305,883,134.09 117.11%
equivalents
Material changes to the profit structure or sources of the Company in the Reporting Period:
√ Applicable □ Not applicable
Exceptional income was RMB643 million for the Reporting Period, which primarily came from the
gain of RMB445.5686 million from remeasuring the remaining 46% interest in Anhui Kaikai Shijie
E-commerce Co., Ltd. (formerly measured at the equity method) at the fair value method after the
cease of the Company’s control over Kaikai Shijie upon the sale of some interests in it for the mixed
ownership reform.
Breakdown of core businesses:
Unit: RMB
Gross YoY change in YoY change in
YoY change in
Operating revenue Cost of sales profit operating revenue gross profit margin
cost of sales (%)
margin (%) (%)
By operating division
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Konka Group Co., Ltd. Interim Report 2018
Electronics 6,716,672,638.19 5,811,221,512.70 13.48% -1.35% 2.07% -2.90%
Supply chain
10,008,880,630.62 9,925,786,697.58 0.83% 132.37% 133.68% -0.56%
management
Environmental
77,951,411.92 52,515,288.25 32.63%
protection
By product category
Colour TVs 4,963,088,596.70 4,352,820,070.48 12.30% -6.18% -1.78% -3.93%
White goods 1,084,381,984.51 892,338,557.03 17.71% 21.58% 22.90% -0.89%
Supply chain
10,008,880,630.62 9,925,786,697.58 0.83% 132.37% 133.68% -0.56%
management
Environmental
77,951,411.92 52,515,288.25 32.63%
protection
Other 669,202,056.98 566,062,885.19 15.41% 6.74% 5.68% 0.85%
By operating segment
Domestic 4,672,082,285.24 3,847,140,507.59 17.66% -36.38% -39.07% 3.64%
Overseas 12,131,422,395.49 11,942,382,990.94 1.56% 221.57% 229.28% -2.31%
III Analysis of Non-Core Businesses
√ Applicable □ Not applicable
Unit: RMB
As % of total
Amount Source/Reason Exceptional or recurrent
profit
The gain from remeasuring the
remaining interest in Anhui Kaikai
Investment Shijie E-commerce Co., Ltd. at the
531,758,571.71 135.90% Exceptional
income fair value method after the cease of
the Company’s control over Kaikai
Shijie
Gain/loss on Assessed gains/losses on fair-value
changes in 59,855,412.48 15.30% fluctuations of deliverable forward Exceptional
fair value contracts
Asset
59,552,100.41 15.22% Exceptional
impairments
Non-operatin
27,217,492.97 6.96% Exceptional
g income
Non-operatin
5,951,749.57 1.52% Exceptional
g expense
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Konka Group Co., Ltd. Interim Report 2018
IV Analysis of Assets and Liabilities
1. Material Changes in Asset Composition
Unit: RMB
30 June 2018 30 June 2017
Change in
As % of As % Reason for material
percentage
Amount total Amount of total change
(%)
assets assets
Monetary
3,911,820,154.60 13.90% 2,490,079,604.07 12.05% 1.85%
assets
Accounts
4,428,390,613.21 15.74% 1,966,918,540.02 9.52% 6.22%
receivable
Inventories 4,854,235,062.74 17.25% 6,374,483,463.58 30.85% -13.60%
Investment
213,639,992.84 0.76% 219,271,267.11 1.06% -0.30%
property
Long-term
equity 2,187,539,867.00 7.78% 629,257,019.68 3.04% 4.74%
investments
Fixed assets 1,789,101,811.32 6.36% 1,544,239,052.29 7.47% -1.11%
Construction in
120,644,724.53 0.43% 404,450,172.08 1.96% -1.53%
progress
Short-term
10,397,447,703.32 36.96% 10,744,965,110.13 51.99% -15.03%
borrowings
Long-term
501,000,000.00 1.78% 70,000,000.00 0.34% 1.44%
borrowings
2. Assets and Liabilities at Fair Value
√ Applicable □ Not applicable
Unit: RMB
Gain/loss on
Impairment Purchase
fair-value Cumulative Sold in
allowance for d in
Item Beginning amount changes in fair-value changes Reportin Ending amount
Reporting Reportin
Reporting charged to equity g Period
Period g Period
Period
Financial assets
1. Financial assets at
fair value through
296,799.53 14,497,221.94
profit or loss
(exclusive of
17
Konka Group Co., Ltd. Interim Report 2018
derivatives)
3. Available-for-sale
712,170,399.09 20,058,1 692,112,236.33
financial assets
62.76
Subtotal of financial
712,467,198.62 20,058,1 706,609,458.27
assets
62.76
Total of above 712,467,198.62 20,058,1 706,609,458.27
62.76
Financial liabilities 47,482,470.50 1,827,480.43
Material changes in the measurement attributes of the major assets in the Reporting Period:
□ Yes √ No
3. Restricted Asset Rights as at Period-End
Ending carrying
Item Reason for restriction
amount
Monetary
149,831,518.94 Various security deposits where access on demand is not allowed
assets
① Up to 30 June 2018, the Company had put RMB1,414,894,166.20 (carrying amount)
of bank acceptance bills in pledge for various financing activities including bank
acceptance bills, letters of credit, letters of guarantee and trade financings. ② Up to 30
Notes 1,666,718,524.73
June 2018, a trade acceptance bill of RMB241,824,358.53 (carrying amount) had been
receivable
discounted by a bank with recourse for a short-term loan of RMB227,979,976.51, and
another trade acceptance bill of RMB10,000,000.00 (carrying amount) had been
discounted by a bank with recourse for a short-term loan of RMB9,545,000.00.
5,807,674.32 Property preservation under a lawsuit
Fixed assets
60,288,708.63
Up to 30 June 2018, subsidiary GuangDong XingDa HongYe Electronic Co., Ltd.
( “ XingDa HongYe ” ) had put up building properties of RMB60,288,708.63 (carrying
Intangible
38,617,359.68 amount) and land use rights of RMB38,617,359.68 (carrying amount) as collateral in
assets
order to get a loan of RMB210,700,000.00.
Total 1,921,263,786.30
18
Konka Group Co., Ltd. Interim Report 2018
V Investments Made
1. Total Investment Amount
√ Applicable □ Not applicable
Total investment amount in Reporting Total investment amount in same period
Change (%)
Period (RMB) of last year (RMB)
198,399,656.00 326,090,459.58 -39.16%
2. Significant Equity Investments Made in Reporting Period
□ Applicable √ Not applicable
3. Significant Non-Equity Investments Ongoing in Reporting Period
√ Applicable □ Not applicable
Unit: RMB
Reason
Total
for falling
Way Investm actual Total
Investm Fundi Proje Expect behind Index to
of ent in investme income as Disclosure
Industr ent in ng ct ed schedule disclosed
Project inve fixed nt as of of end of date (if
y Reportin sourc progr incom or not informatio
stme assets end of Reporting any)
g Period e ess e achieving n (if any)
nt or not Reporting Period
expected
Period
income
Self-f
Konka unde
Built
Technolog d,
by
ical inclu To be
the Electro 2,612,26 79,270,07 17.6 30 Decem
Innovation Yes ding estim 0 N/A
Com nics 3.42 7.92 2% ber 2016
Centre custo ated
pany
one phase mer
itself
project paym
ents
www.cnin
Built fo.com.cn
New plant by
Self-f To be
in the Electro 11 March
Yes 0 0 unde 0% estim 0 N/A
Dongguan Com nics 2017
d ated
city pany
itself
Yibin Built Self-f To be
Electro 18,000,0 18,000,00 4.86 22 May 2
Smart by Yes unde estim 0 N/A
nics 00 0 % 018
Terminal the d ated
19
Konka Group Co., Ltd. Interim Report 2018
High-Tech Com
Park pany
itself
Built
Chengdu
by
Belt and Self-f To be
the Electro 27 June 2
Road Yes 0 0 unde 0% estim 0 N/A
Com nics 018
Headquart d ated
pany
ers
itself
20,612,2 97,270,07
Total -- -- -- -- -- 0 -- -- --
63.42 7.92
Notes: (1) In regard to the Konka Technological Innovation Centre one phase project ,the land use
right transfer agreement has been signed, the general plan and the landscaping plan are being
approved, and the construction design for Phase I has been completed and is being optimized.
(2) Concerning the Dongguan city’s new plant, preparations are underway and the Company is
waiting for the local government to put out the project target land for bids.
(3) With respect to the yibin smart terminal high-tech park, the land use right transfer agreement has
been signed and the general plan is underway.
(4) As for the Chengdu Belt and Road Headquarters, preparations are underway and the Company is
waiting for the local government to put out the project target land for bids.
4. Financial Investments
(1) Securities Investments
√ Applicable □ Not applicable
Gain/L
Initial oss on Purc Fundi
Accumulat Endin
Secur fair-val hase Gain/lo
Beginni ed Sold in g
Securit Securit invest Measur ue d in ss in Accountin ng
ng fair-value Reporti carryi
ity ement change Repo Reporti
y type y code ment carrying changes ng ng g title sourc
method s in rting ng
name amount charged to Period amou
Reporti Perio Period
cost equity nt e
ng d
Period
Domes
New
tically/ Available-f
stock
Overse ZXF 1,459.6 Fair 7,988.1 8,353.6 6,893.9 or-sale
002915 value 0.00 0.00 0.00 0.00 subsc
as C 1 3 0 9 financial
method riptio
listed assets
n
stock
KCX 1,513.1 7,520.5 8,282.5 6,769.4
Ditto 300730 Ditto 0.00 0.00 0.00 0.00 Ditto Ditto
X 6 5 6 0
20
Konka Group Co., Ltd. Interim Report 2018
DSX 12,537. 24,025. 26,420. 13,882.
Ditto 002920 Ditto 0.00 0.00 0.00 0.00 Ditto Ditto
W 88 82 42 54
MCJ 1,406.7 3,949.1 4,715.2 3,308.4
Ditto 002919 Ditto 0.00 0.00 0.00 0.00 Ditto Ditto
K 2 2 0 8
3,462.3 4,985.7 9,466.4 6,004.0
Ditto 002922 YGE Ditto 0.00 0.00 0.00 0.00 Ditto Ditto
9 3 7 8
GHK 5,064.9 7,295.7 14,767. 9,702.9
Ditto 300735 Ditto 0.00 0.00 0.00 0.00 Ditto Ditto
J 3 3 84 1
PYH 5,026.0 5,02 13,668. 8,642.8
Ditto 300664 Ditto 0.00 0.00 0.00 0.00 Ditto Ditto
B 8 6.08 90 2
RDG 3,129.8 3,12 8,780.4 5,650.6
Ditto 002923 Ditto 0.00 0.00 0.00 0.00 Ditto Ditto
F 4 9.84 8 4
1,376.0 2,397.6 9,683.6 8,307.6
Ditto 300684 ZSKJ Ditto 0.00 0.00 0.00 0.00 Ditto Ditto
0 8 0 0
XLD 5,160.0 5,16 12,000. 6,840.0
Ditto 300733 Ditto 0.00 0.00 0.00 0.00 Ditto Ditto
L 0 0.00 00 0
13,0
YQK 13,095. 47,724. 34,629.
Ditto 002925 Ditto 0.00 0.00 0.00 95.0 0.00 Ditto Ditto
J 00 00 00
0
Other securities investments
0.00 -- 0.00 0.00 0.00 0.00 0.00 0.00 0.00 -- --
held at period-end
26,4
53,231. 58,162. 163,86 110,63
Total -- 0.00 0.00 10.9 0.00 -- --
61 76 3.07 1.46
2
Disclosure date of announcement on Board’s consent for securities investments N/A
Disclosure date of announcement on general meeting’s consent for securities investments
N/A
(if any)
(2) Investments in Derivative Financial Instruments
√ Applicable □ Not applicable
Unit: RMB’0,000
Funding source for derivative investment U.S. dollar financings
Legal matters involved (if applicable) N/A
Disclosure date of board announcement
24 May 2014
approving derivative investment (if any)
Disclosure date of shareholders ’ meeting
announcement approving derivative investment 10 June 2014
(if any)
21
Konka Group Co., Ltd. Interim Report 2018
We engage in forward forex transactions to reduce the currency risk when
securing foreign-currency financing. This is very needed in our routine
Analysis of risks and control measures operation and is in compliance with the applicable laws and regulations. We
associated with derivative investments held in have formulated the Management Rules of Konka Group Co., Ltd. for
Reporting Period (including but not limited to Investment In Derivative Financial Instruments, making clear the relevant
market risk, liquidity risk, credit risk, consideration and approval procedure, risk control, etc.. We always sign
operational risk, legal risk, etc.) forward forex contracts with large banks such as the Bank of China, which
operate steadily and have good credit standing, which could help prevent loss
on forward forex contracts due to bank failure.
How we usually measure the fair value of derivative financial instruments:
Based on the forward forex sales and purchase contracts that are signed
Changes in market prices or fair value of between the Company and banks and have not expired in a Reporting Period,
derivative investments in Reporting Period we recognize the differences between the quotations for these contracts on the
(fair value analysis should include balance sheet dates provided by the banks and the contractual prices as
measurement method and related assumptions transactional financial assets or liabilities, and the profit/loss on fair value
and parameters) changes is recognized accordingly. Because these contracts have locked in
exchange rates, no changes will occur when comparing the fair value on
signing dates with that on delivery dates.
Material changes in accounting policies and
specific accounting principles adopted for
No material changes
derivative investments in Reporting Period
compared to last reporting period
It is considered necessary for the Company to lock in foreign-currency
financing costs through financial instruments, because it could effectively
Opinion of independent directors on derivative reduce the currency risk when securing foreign-currency financing. The
investments and risk control Company has formulated the internal control mechanism for investment in
derivative financial instruments, and the relevant risk control measures that the
Company has taken are considered effective.
Unit: RMB’0,000
Type of derivative Opening Closing
Gain/loss in Closing investment amount as a percentage of
financial contractual contractual
Reporting Period the Company’s closing net asset value
instrument amount amount
Forward forex
224,712.77 74,021.85 -2,255.71 9.32%
contract
VI Sale of Major Assets and Equity Investments
1. Sale of Major Assets
□ Applicable √ Not applicable
No such cases in the Reporting Period.
22
Konka Group Co., Ltd. Interim Report 2018
2. Sale of Major Equity Investments
√ Applicable □ Not applicable
Amoun
t Amoun
contrib t
uted by contrib
the uted by
equity the sale
Relatio Executed
interest to net
nship as Index
s to net Effect income Owners
betwee scheduled to
Selling income of the of the Related hip
Equity Pricing n or not, if Disclo discl
Counte Date of price of the sale on Compa transact fully
interest principl counter not, state sure osed
rparty sale (RMB’ Compa the ny as a ion or transfer
s sold e party reason date infor
0,000) ny Compa percent not red or
and the and matio
from ny age of not
Compa actions n
period- the
ny taken
beginni Compa
ng to ny’s
date of net
sale income
(RMB’ (%)
0,000)
Suzhou Optimi
Anze zing
6%
Fuxing the
interest
Venture Compa
in
Capital ny’s
Shenzh
Centre allocati
en
(Limite on of
Qianha
d assets,
i
Partner generat
Qingso www
ship) 29 ing 31
ng Market Not .cninf
and March 3,725 0 cash 5.04% Not Yes N/A March
Venture price related o.co
Gongqi 2018 inflows 2018
Capital m.cn
ngchen ,
Fund
g Little increasi
Compa
Cherry ng
ny
Invest assets’
(Limite
ment liquidit
d
Manag y and
Partner
ement improv
ship)
Partner ing the
ship Compa
23
Konka Group Co., Ltd. Interim Report 2018
Compa ny’s
ny earning
(Limite s
d
Partner
ship)
VII Major Majority- and Minority-Owned Subsidiaries
√ Applicable □ Not applicable
Major majority-owned subsidiaries and those minority-owned subsidiaries with an over 10% effect
on the Company’s net profit:
Unit: RMB
Relationship
Core
Registered Operating Operating
Name with the Total assets Net assets Net profit
business
capital revenue profit
Company
Shenzhen Software
Wankaida technology
RMB1000
Science and Subsidiary development 121,816,00 85,962,617 30,150,200 28,889,8 23,898,735.6
0000
Technology and 2.76 .71 .00 74.28 0
Co., Ltd. maintenance
Production
and sale of
Anhui Konka
refrigerators,
Tongchuang
washing RMB5020
Household Subsidiary 1,227,510, 160,106,40 1,260,194, 18,893,7 19,115,133.1
machines and 00000
Appliances 711.48 4.80 032.54 64.29 1
other
Co., Ltd.
household
appliances
Production
Anhui Konka
and sale of RMB1400
Electronic Subsidiary 1,406,749, 364,561,79 1,732,222, -10,344, -8,851,847.7
multimedia 00000
Co., Ltd. 963.99 1.99 387.44 768.50 1
products
Shenzhen
Production
Konka
and sale of
Telecommuni RMB4000
Subsidiary mobile 456,589,04 114,374,94 236,912,37 -7,444,5
cations 00000 2,831,121.04
communicati 0.42 9.05 4.91 01.78
Technology
on products
Co., Ltd.
Dongguan Subsidiary Production RMB2666
24
Konka Group Co., Ltd. Interim Report 2018
Konka and sale of 70000 763,041,66 652,719,53 220,128,01 3,896,08 3,218,716.32
Electronic multimedia 9.55 9.46 3.35 3.70
Co., Ltd. products
Export &
Hong Kong import of
HKD5000
Konka Co., Subsidiary electromecha 2,062,112, 157,194,76 1,902,698, 4,793,55
00 4,851,113.34
Ltd. nical and 708.48 5.99 072.57 4.89
electronics
Chain
Supply chain USD15000
Kingdom Subsidiary 1,405,717, 57,597,008 3,256,025, 33,878,6 28,291,883.6
management 00
Co., Limited 090.58 .22 071.58 17.65 8
Konka Export &
Electrical import of
HKD5000 1,500,797, -221,045,1 4,071,108, 16,955,3 16,955,358.1
Appliances Subsidiary electromecha
00 452.01 57.93 379.48 58.10 0
Internation nical and
al Trading. electronics
Subsidiaries obtained or disposed in the Reporting Period:
√ Applicable □ Not applicable
How subsidiary was obtained or Effects on overall production and
Subsidiary
disposed in Reporting Period operating results
After the loss of control over Anhui
Kaikaijie E-commerce Co., Ltd., the
Anhui Kaikai Shijie E-commerce Co., A 5% interest in this subsidiary was
surplus shares were re-measured at fair
Ltd. transferred
value, resulting in a large amount of
profits.
Kangjietong (Hong Kong) Limited Incorporated by investment No significant effects
Yibin Konka Technology Park Operation
Incorporated by investment No significant effects
Co., Ltd.
Shenzhen Konka Electronics Technology
Incorporated by investment No significant effects
Co., Ltd.
Jiaxin Technology Co., Ltd. Incorporated by investment No significant effects
Jiali International (Hong Kong) Limited Incorporated by investment No significant effects
Chengdu Konka Incubator Management
Incorporated by investment No significant effects
Co., Ltd.
Sichuan Konka Smart terminal
Incorporated by investment No significant effects
Technology Co., Ltd
Sichuan Kangjiatong Supply Chain
Incorporated by investment No significant effects
Management Co., Ltd.
Konka Suiyong Investment (Shenzhen)
Incorporated by investment No significant effects
Co., Ltd.
25
Konka Group Co., Ltd. Interim Report 2018
Konka Huanjia (Dalian) Environmental
Incorporated by investment No significant effects
Technology Co., Ltd.
Anhui Konka Electrical Appliance
Incorporated by investment No significant effects
Technology Co., Ltd.
Shandong Econ Technology Co., Ltd.
and its subsidiaries, including Beijing
Econ Runfeng Technology Co., Ltd.,
Shanghai Jiyi Environmental
Technology Co., Ltd., Binzhou Econ
Zhongke Environmental Technology
Co., Ltd., Laizhou Lairun Holdings Co.,
Ltd., Econ Environmental Engineering
Co., Ltd., Rushan Yike Water Treatment
Co., Ltd., Binzhou Weiyijie
Environmental Technology Co., Ltd.,
Yantai Chunzhiran Environmental
Technology Co., Ltd., Rushan Econ A 51% interest in Shandong Econ
No significant effects
Beike Technology Incubator Co., Ltd., Technology Co., Ltd. was acquired
Fujian Econ Changrun Environmental
Protection Co., Ltd., Laizhou Lairun
Huayang Heating Co., Ltd., Laizhou
Lairun Heating Co., Ltd., Laizhou
Lairun Green Energy Co., Ltd., Binzhou
Beihai Jingmai Industrial Development
Co., Ltd., Yantai Huanhai Xinze
Enterprise Management Co., Ltd.,
Binzhou Weinengda Transport Co., Ltd.,
Laizhou Binhai Sewage Treatment Co.,
Ltd. and Laizhou Lairun Environmental
Protection Co., Ltd.
GuangDong XingDa HongYe Electronic
Co., Ltd. and its subsidiaries, including A 51% interest in GuangDong XingDa
Shanghai Xinfeng Zhuoqun PCB Co., HongYe Electronic Co., Ltd. was No significant effects
Ltd. and Zhongshan Zewei Kechuang acquired
Investment Management Co., Ltd.
Information about the major majority- and minority-owned subsidiaries:
None.
VIII Structured Bodies Controlled by the Company
□ Applicable √ Not applicable
26
Konka Group Co., Ltd. Interim Report 2018
IX Performance Forecast for January-September 2018
Warning of forecast negative net profit for January-September 2018 or considerable YoY change
therein, as well as the reasons:
□ Applicable √ Not applicable
X Risks Facing the Company and Countermeasures
The Company’s consumer electronics business is seeing a decreased gross profit margin caused by
slow growth in demand and increasingly fierce competition in the color TV, white goods and mobile
phone markets. In response, the Company will adopt measures including adjusting the hardware
product mix, strengthening product competitiveness, enhancing professionalism in user operation,
improving Internet operations, and improving internal management.
As for the environmental protection business, the Company is a new comer in this sector. It still
needs some time for the newly acquired and invested enterprises to integrate with the Company in
operational and management mechanism, resource and corporate culture. And a great number of
reserve projects in this business is making more requirements for human resources. Therefore, the
Company has started to work on the relevant operational mechanism, improve its monitoring of the
majority-owned subsidiaries ’ operations, and bring in various resources so as to strengthen its
operational capabilities in this respect.
27
Konka Group Co., Ltd. Interim Report 2018
Part V Significant Events
I Annual and Extraordinary General Meetings Convened during Reporting Period
1. General Meetings Convened during Reporting Period
Investor Index to
Date of resolution
Meeting Type participati Convened date disclosed
disclosure
on ratio resolutions
2017 Annual General Meeting Annual 32.80% 23 April 2018 24 April 2018
The 1st Extraordinary General
Extraordinary 2.52％ 3 May 2018 4 May 2018 www.cninfo.c
Meeting of 2018
om.cn
The 2nd Extraordinary General
Extraordinary 32.85％ 7 June 2018 8 June 2018
Meeting of 2018
2. Extraordinary General Meetings Convened at Request of Preferred Shareholders with
Resumed Voting Rights
□ Applicable √ Not applicable
II Interim Dividend Plan
□ Applicable √ Not applicable
The Company has no interim dividend plan, either in the form of cash or stock.
III Commitments of the Company ’ s Actual Controller, Shareholders, Related Parties and
Acquirers, as well as the Company Itself and Other Entities Fulfilled in Reporting Period or
Ongoing at Period-End
□ Applicable √ Not applicable
No such cases in the Reporting Period.
IV Engagement and Disengagement of Independent Auditor
Are the interim financial statements audited?
□Yes √ No
The interim financial statements are unaudited.
28
Konka Group Co., Ltd. Interim Report 2018
V Explanations Given by Board of Directors and Supervisory Committee Regarding
Independent Auditor's “Modified Opinion” for Reporting Period
□ Applicable √ Not applicable
VI Explanations Given by Board of Directors Regarding Independent Auditor's “ Modified
Opinion” for Last Year
□ Applicable √ Not applicable
VII Insolvency and Reorganization
□ Applicable √ Not applicable
No such cases in the Reporting Period.
VIII Legal Matters
Material lawsuits or arbitrations:
√ Applicable □ Not applicable
Involved Index to
General amount Decisions and Execution of Disclosure disclosed
Provision Progress
information (RMB’ effects decisions date informati
0,000) on
As for the details, please refer to the Notes 2. Description of the Contingencies of the Commitments and the Contingencies of
Chapter XII of the Notes to the Financial Report. Because the involved amount was small, there was no need to fulfil the
obligation of information disclosure.
Other legal matters:
□ Applicable √ Not applicable
IX Punishments and Rectifications
□ Applicable √ Not applicable
No such cases in the Reporting Period.
X Credit Quality of the Company as well as Its Controlling Shareholder and Actual
Controller
□ Applicable √ Not applicable
XI Equity Incentive Plans, Employee Stock Ownership Plans or Other Incentive Measures for
Employees
□ Applicable √ Not applicable
29
Konka Group Co., Ltd. Interim Report 2018
No such cases in the Reporting Period.
XII Major Related-Party Transactions
1. Continuing Related-Party Transactions
√ Applicable □ Not applicable
Obt
aina
As % ble
Appro Ove
of mar Index
Total ved r Met
Spe Pric Tra total ket to
Relations Type value transac app hod Disc
cific ing nsac value pric disclo
hip with of (RM tion rov of losu
Related party tran prin tion of all e for sed
the transa B’ line ed settl re
sact cipl pric same- sam infor
Company ction 0,000 (RMB line eme date
ion e e type e-ty matio
) ’ or nt
transa pe n
0,000) not
ctions tran
sacti
ons
Pur
Purch Neg
OCT Under the chas Mar Not
ase of otia
Enterprises Co., same e of ket 1,349. appl
com ted 0.31% 2,500 No Cash
Ltd and its actual mat pric 46 icab
modit pric
subsidiaries controller erial e le
ies e
s 31
www.
Sales Mar
cninf
of ch
o.co
goods Neg 201
OCT Sale Mar Not m.cn
Under the otia 8
and
Enterprises same s of ket appl
servic ted 570.14 0.11% 3,000 No Cash
Co., Ltd and actual LC pric icab
es pric
its subsidiaries controller D e le
e
1,919.
Total -- -- -- 5,500 -- -- -- --
60
Details of large amount of sales returns N/A
As for the prediction on the total amount of The Company has published the Forecasting Public Notice on Routine Related
routine related-party transactions to be Transaction for Y2018 on Securities Times, Shanghai Securities News, China
occurred in the Reporting Period by relevant Securities Journal and Hong Kong Ta Kung Pao as well as the Internet website
types, the actual performance in the Reporting designated by CSRC http://www.cninfo.com.cn on 31 March 2018. In the
Period (if any) Reporting Period, the basis for pricing, transaction price, transaction amount
30
Konka Group Co., Ltd. Interim Report 2018
and settlement methods of raw materials purchased by the Company were
basically in accordance with the forecast. The total amount was
RMB19.1960million.
Reason for major difference between
transaction price and reference market price N/A
(if applicable)
2. Related-Party Transactions Regarding Purchases or Sales of Assets or Equity Interests
√ Applicable □ Not applicable
The related-party transactions regarding purchases or sales of assets or equity interests during the R
eporting Period are shown below.
3. Related-Party Transactions Regarding Joint Investments in Third Parties
√ Applicable □ Not applicable
The related-party transactions regarding joint investments in third parties during the Reporting Perio
d are shown below.
4. Credits and Liabilities with Related Parties
√ Applicable □ Not applicable
Whether there is non-operating credits and liabilities with related parties
√ Applicable □ Not applicable
Credits of parties related to account receivable
Whether Amount
Amount
there is newly Ending
Beginning recovered Current
Relation Formati non-opera added in balance
Related balance in current Interest interest
with the on ting current
party (RMB’ period rate (RMB’
Company reason capital period (RMB’
0,000) (RMB’ 0,000)
occupatio (RMB’ 0,000)
0,000)
n 0,000)
Naught Naught Naught No 0 0 0 0 0 0
Impact of related credits on the company's operation result and financial
Naught
condition
Liabilities of parties related to account payable
Relat Amount Ending
ion Beginning Amount newly returned in Current balance
with Formation balance added in current Interest interest
Related party
the reason current period period rate (RMB’
Com (RMB’ (RMB’0,000) (RMB’ 0,000) (RMB’
pany 0,000) 0,000) 0,000)
OCT Enterprises
Contr The 0 50,000 50,000 4.35% 151 0
Co., Ltd
ollin company
g applies
OCT Enterprises share entrusted 0 50,000 0 6.00% 342 50,000
31
Konka Group Co., Ltd. Interim Report 2018
Co., Ltd holde loan to it
r
OCT Enterprises
Co., Ltd 0 140,000 0 6.00% 1,120 140,000
OCT Enterprises
0 10,000 0 5.40% 26 10,000
Co., Ltd
Impact of related
liabilities on the The company applies entrusted loan from OCT Enterprises Co., LTD which meets the needs of the
company's operation result company's existing business development and reduces the financing cost.
and financial condition
5. Other Major Related-Party Transactions
√ Applicable □ Not applicable
(1) The Project of Capital Increase to Yibin OCT Sanjiang Real Estate Co., Ltd.: On 3 May 2018,
the 1st Extraordinary General Meeting of 2018 passed the Proposal on Capital Increase to Yibin
OCT Sanjiang Real Estate Co., Ltd. by voting, and decided to take Shenzhen Konka
Telecommunications Technology Co., Ltd., a wholly-owned subsidiary as the main body to
contribute RMB80 million to increase capital to Yibin OCT Sanjiang Real Estate Co., Ltd.
according to shareholding ratio.
(2) The Project of Transferring Equity of Kunshan Kangsheng Investment Development Co., Ltd.:
On 14 June 2018, the 44th Meeting of the 8th Board of Directors of the Company deliberated and
passed Proposal on Transferring 51% Equity of Kunshan Kangsheng Investment Development Co.,
and decided that the Company transferred 51% equity of Kunshan Kangsheng Investment
Development Co., Ltd. to Taizhou Overseas Chinese Town Co., Ltd., with the transfer price of
RMB280,680,300. At present, the Company has received the 50% equity transfer fund from
Taizhou Overseas Chinese Town Co., Ltd., and Kunshan Kangsheng Investment Development Co.,
Ltd. has completed industrial and commercial registration of changes.
(3)Project regarding venture capital platform service: Konka Ventures Development (Shenzhen) Co.,
Ltd., the majority-owned subsidiary of the Company, signed an agreement with OCT Group and
provided venture capital platform service for the latter. OCT Group has paid the service charge of
RMB20 million to Konka Ventures Development (Shenzhen) Co., Ltd. The income confirmed by
Konka Ventures Development (Shenzhen) Co., Ltd. during the Reporting Period was
RMB12,944,983.86.
Index to the public announcements about the said related-party transactions disclosed
Title of public announcement Disclosure date Disclosure website
Announcement about Capital Increase in Sanjiang Real
18 April 2018
Estate and Related-party Transactions
www.cninfo.com.cn
Announcement about the Transfer of 51% Equities of
16 June 2018
Kunshan Kangsheng and Related-party Transactions
32
Konka Group Co., Ltd. Interim Report 2018
Announcement about the Progress of the Transfer of
3 July 2018
51% Equities of Kunshan Kangsheng
XIII Occupation of the Company’s Capital by Controlling Shareholder or Its Related Parties
for Non-Operating Purposes
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XIV Major Contracts and Their Execution
1. Entrustment, Contracting and Leases
(1) Entrustment
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(2) Contracting
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(3) Leases
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Major Guarantees
√ Applicable □ Not applicable
(1) Guarantees
Unit: RMB'0,000
Guarantees provided by the Company and its subsidiaries for external parties (excluding those for subsidiaries)
Amou Type Perio Guarante
Actual
Guarantee Disclosure date of nt for Actual occurrence date of d of Executed e for a
guarantee
d party relevant announcement guara (date of agreement) guara guar or not related-pa
amount
ntee ntee antee rty or not
Naug
Naught Naught 0 Naught 0 0 Naught Naught
ht
Total external guarantee line approved during 100,000 Total actual occurred amount of external 0
33
Konka Group Co., Ltd. Interim Report 2018
the Reporting Period (A1) guarantee during the Reporting Period (A2)
Total external guarantee line that has been
Total actual external guarantee balance at the end
approved at the end of the Reporting Period 113,000 0
of the Reporting Period (A4)
(A3)
Guarantees provided by the Company for its subsidiaries
Guaran
Actual Period tee for
Disclosure date of Amount Actual occurrence Execu
Guarantee guarant Type of of a
relevant for date (date of ted or
d party ee guarantee guara related
announcement guarantee agreement) not
amount ntee party
or not
24 October 2017 6,000 Joint liability 1 year No No
Anhui
Tongchua 70,000 9 May 2018 4,500 Joint liability 1 year No No
ng 19 June 2018 3,000 Joint liability 1 year No No
Communi
cation
50,000 5 February 2018 50,000 Joint liability 1 year No No
technolog
y
Anhui 2 May 2018 20,000 Joint liability 1 year No No
110,000
Konka 31 March 2017 and 1 June 2018 8,000 Joint liability 1 year No No
31 March 2018
E-display 8,000 20 July 2017 2,000 Joint liability 1 year No No
28 August 2017 7,056 Joint liability 1 year No No
Hong
27 September 2017 3,207 Joint liability 1 year No No
Kong 355,000
13 October 2017 22,450 Joint liability 1 year No No
Konka
31 May 2018 19,243 Joint liability 1 year No No
17 October 2017 50,000 Joint liability 1 year No No
Konka
300,000 24 October 2017 20,000 Joint liability 1 year No No
Factoring
27 June 2018 14,000 Joint liability 1 year No No
Total actual occurred amount of guarantee
Total guarantee line approved for the subsidiaries
173,200 for the subsidiaries during the Reporting 118,743
during the Reporting Period (B1)
Period (B2)
Total actual guarantee balance for the
Total guarantee line that has been approved for the
1,118,000 subsidiaries at the end of the Reporting 229,456
subsidiaries at the end of the Reporting Period (B3)
Period (B4)
Guarantees provided by the subsidiaries for their subsidiaries
34
Konka Group Co., Ltd. Interim Report 2018
Amount Actual Period
Disclosure date of Actual Type of Guarantee
Guarantee for occurrence date of Executed
relevant guarantee guarante for a related
d party guarant (date of guarant or not
announcement amount e party or not
ee agreement) ee
Sichuan Joint
30 May 2018 14,000 28 May 2018 14,000 7 years No No
Konka liability
Rushan Joint
29,000 29 Dec 2016 29,000 10years No No
Econ liability
Total guarantee line approved for the subsidiaries Total actual occurred amount of guarantee for the
14,000 14,000
during the Reporting Period (C1) subsidiaries during the Reporting Period (C2)
Total guarantee line that has been approved for the Total actual guarantee balance for the subsidiaries
43,000 43,000
subsidiaries at the end of the Reporting Period (C3) at the end of the Reporting Period (C4)
Total guarantee amount provided by the Company (total of the above-mentioned three kinds of guarantees)
Total guarantee line approved during the Total actual occurred amount of guarantee
287,200 132,743
Reporting Period (A1+B1+C1) during the Reporting Period (A2+B2+C2)
Total guarantee line that has been approved at Total actual guarantee balance at the end of the
1,274,000 272,456
the end of the Reporting Period (A3+B3+C3) Reporting Period (A4+B4+C4)
Proportion of total guarantee amount (A4+B4+C4) to the net
34.31%
assets of the Company
Of which:
Amount of debt guarantee provided for shareholders, actual controller and the related-party
0
(D)
Amount of debt guarantee provided for the guaranteed party whose asset-liability ratio is not
272,456
less than 70% directly or indirectly (E)
Total guarantee amount exceeded 50% of the net assets (F) 0
Total amount of the above three guarantees (D+E+F) 272,456
Explanation on the occurred warranty liability or possible bearing joint responsibility of N/A
liquidation due to immature guarantee (if any)
Explanation on provision of guarantees for external parties in violation of the prescribed N/A
procedure (if any)
Note: Shandong Econ Technology Co., Ltd., acquired by the Company during the Reporting Period,
provided a joint-liability guarantee for the RMB0.29 billion project loan for its majority-owned sub
sidiary Rushan Yike Water Treatment Co., Ltd. on 27 December 2016.
Explanation on guarantee that adopts complex method
N/A
35
Konka Group Co., Ltd. Interim Report 2018
(2) Illegal Provision of Guarantees for External Parties
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Other Major Contracts
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XV Corporate Social Responsibility (CSR)
1. Material Environmental Issues
Is the Company or any of its subsidiaries is identified as a major polluter by the environmental
protection authorities?
Yes
Name of
Distribut Excessi
Main Quanti Total
Name of ion Executed Approved ve
Pollutant Dischar ty of Weight
Company Informat Emission Emission Total Emissi
and ge Emissi of
or ion of Concentration Standard of Weight of on
Distinctiv Method on Emissio
subsidiary Emissio Pollutant Emission Conditi
e Outlet n
n Outlet on
Pollutant
Pollution
Table 1 in
sources of
Dischar Total PH6-9; copper≤ Emission COD27.9
waste Annual
ge outlet of 0.5mg/L; COD≤ standard of t/year;
water: waste
directly waste 80mg/L; electroplating ammonia
PH, 1 water: Naught
(to water ammonia water nitrogen
Copper, 448,500
Fusha treatmen nitrogen≤ pollutants 6.727t/ye
COD, and t/year
Guangdo Surge) t station 15mg/L DB44/1597-20 ar
Ammonia
ng 15
nitrogen
Xingda
Waste gas 3 outlets sulfuric acid Emission 2,953,000
Hongye
pollutants on the mist＜30mg/m3; limits of air ,000m3/y
Electronic
: sulfuric Dischar roof of NOx＜ pollutants ear in
Co., Ltd
acid mist, ge of the No. 200mg/m3; Table 5 in Pollutant
3,027,36
chlorine fixed 1 chlorine hydride Emission s
14 0,000m3 Naught
hydride, pollutio factory, ＜30mg/m3; standard of Discharg
/year
Formalde n 10 VOCS＜ electroplating e License
hyde, sources outlets 90mg/m3; pollutants of 2017,
hydrogen on the benzene＜ GB21900-200 no
cyanide, roof of 12mg/m3; 8, the second specific
36
Konka Group Co., Ltd. Interim Report 2018
NOx, the No. methylbenzene level standard details in
Ammonia 2 ＜40mg/m3; in phase 2 of the latest
, benzene, factory, xylene＜ Emission National
methylbe and 1 70mg/m3; standard of Air Pollutant
nzene, outlet on Pollutants in s
xylene, the roof Guangdong Discharg
and of the DB44/27-2001 e License
VOCs canteen , and standard of 2018
in Table 2 in
Emission
standard of
Stink
Pollutants (GB
14554-1993)
(1) The Construction of Anti-pollution Facilities and Its Operation Situation
All production equipment of the Company shall be set up with supporting environmental protection
facilities according to the requirements of environmental impact assessment. The discharge of
wastewater, waste gas and noise in the Company all met with the standards, as well as the dispose
of all solid wastes, during the reporting period.
The Investment of Guangdong Xingda Hongye Electronics Co., Ltd.: The sewage treatment centre
with an investment of about RMB15 million was formally put into production in June 2007, and the
treatment capacity of the sewage treatment facility was 2566 tons/day. The wastewater
environmental protection facilities have been operated well with the discharge of main pollutants
meeting with the acceptance criteria, during the reporting period.
(2) Environmental Impact Assessment and Other Environmental Protection Administrative Licenses
of the Construction Project
The technical innovation and expansion projects of Guangdong Xingda Hongye Electronics Co.,
Ltd. have been approved by Zhongshan Environmental Protection Bureau, Guangdong on 31
December 2012 (Zhongshan Environmental Protection Bureau Construction Notice [2012] No. 115),
and have been checked and accepted by Zhongshan Environmental Protection Bureau, Guangdong
on 21 December 2012. (Zhongshan Environmental Protection Bureau Acceptance Report [2012] No.
000092), with a sewage permit, certificate No.: 91442000768405216J001P.
(3) Contingency Plan for Emergent Environmental Incident
Guangdong Xingda Hongye Electronics Co., Ltd. has formulated the Contingency Plan for
Emergent Environmental Incident strictly abided by requirements of laws and regulations, such as
Law of the People's Republic of China on Emergency Response and Interim Measures on
Environmental Emergency Response Plan, and put on records at Zhongshan Environmental
Protection Bureau, Guangdong.
37
Konka Group Co., Ltd. Interim Report 2018
(4) Environmental Self-Monitoring Plan
According to the requirements of the Environmental Protection Administration, Guangdong Xingda
Hongye Electronics Co., Ltd. pays high attention to environmental monitoring management, so as
to formulate the Environmental Self-Monitoring Plan and report to the municipal environmental
protection bureau for approval and record. It implements online monitoring for the PH, COD and
ammonia nitrogen pollutants discharged in wastewater with the automatic frequency of every 2
hours and entrusts the qualified third-party institute to carry out regular maintenance on automatic
monitoring equipment and monitoring data networking equipment. The self-monitoring results will
be reported daily to the public on the national pollution source monitoring information management
and sharing platform and monitored by the public.
(5) Other Environmental Information That Should Be Disclosed
The environmental protection investment of Guangdong Xingda Hongye Electronics Co., Ltd. was
about RMB6.28 million in the first half of 2018, mainly used as the environmental engineering
investment (about RMB3.5 million) and the operation of environmental protection equipment
(about RMB2.78 million).
(6) Other Environmental Information
According to the examination by the Company, the Company and its other holding subsidiaries are
not key pollutant units. All have faithfully implemented the laws and regulations related to
environmental protection, such as Environmental Protection Law of the People's Republic of China,
Water Pollution Prevention and Control Law of the People's Republic of China, Law of the People's
Republic of China on the Prevention and Control of Atmospheric Pollution, Law of the People's
Republic of China on Prevention and Control of Pollution From Environmental Noise, Law of the
People's Republic of China on the Prevention and Control of Environmental Pollution by Solid
Waste in the daily production and operation, without being punished for violations of laws and
regulations during the reporting period.
2. Measures Taken for Targeted Poverty Alleviation
(1) Plan for Targeted Measures
The Company and the China Youth Development Foundation (CYDF) have jointly held the large
public benefit activity “Heart Journey” since 2013. Five sessions of activities have been held until
now. In 2013, we helped thousands of migrant workers to go home. In 2014, we planted tens of
thousands of trees nationwide and improved the living conditions of 5,000 needy families by
planting the economic and ecological trees. In 2015, we donated nearly 100 music classrooms to the
remote regions of China by carrying out “Happy Music Classroom” Project with CYDF. In 2016,
we sponsored the professional training of 100 music teachers in remote areas to promote the
construction of teaching staff in poverty-stricken areas. In 2017, the activities of “Heart Journey”
focused on affectionate care for families of left-behind children in poverty-stricken areas. We
38
Konka Group Co., Ltd. Interim Report 2018
helped 100 left-behind children to come to cities to reunite with their parents during the summer
vacation, and donated houses named Konka Heart Journey Family in schools in western areas.
(2) Outline of Targeted Measures in the Reporting Period
In the first half year of 2018, the activity of “Heart Journey” is still in the planning, and not carried
out officially.
(3) Results of Targeted Measures
Naught
(4) Subsequent Targeted Measure Plans
The Company and the China Youth Development Foundation (CYDF) will continue to hold a series
of public benefit activity “Heart Journey”.
XVI. Other Significant Events
√ Applicable □ Not applicable
(1) Project regarding founding a company for multimedia business: On 17 November 2017, the 37th
Meeting of the 8th Board of Directors of the Company reviewed and approved the Proposal on
Founding a Company for Multimedia Business of Konka. So far, Shenzhen Konka Electronics
Technology Co., Ltd. has been formally established and going into operation. The Company is in
the process of business switching and asset introduction.
(2) The Project of Working with China Orient Asset Management (International) Holding Limited
to Plan to Establish an Industrial Fund and Conduct Strategic Cooperation: On 16 April 2018, the
41st Meeting of the 8th Board of Directors of the Company deliberated and passed the Proposal on
Launching the Establishment of China Orient Konka Industry M&A Fund, and the fund is currently
in the process of filing.
(3) The Project of Listing Transfer of Shanghai Real Estate: On 23 August 2017, the 34th Meeting of
the 8th Board of Directors of the Company deliberated and passed the Proposal on Listing Transfer
of Part Real Estate on the. At present, the Shanghai Real Estate to be listed for transfer has been
officially listed, and is currently in the publicity period.
(4) Signed a Strategic Cooperation Agreement with the Chuzhou Municipal Government: On 27
June 2018, the 45th Meeting of the 8th Board of Directors of the Company deliberated and passed
the Proposal on Investment in the Construction of the Second Phase of Konka Science and
Technology Innovation Centre in Chuzhou. At present, the second phase of the Science and
Technology Centre project has won the bid for the project land and other projects are still under
negotiation.
Announ Link
cement Date Title Page on newspaper
No. Link on http://www.cninfo.com.cn
3 January Announcement on Receiving the Securities Times B5, http://www.cninfo.com.cn/finalpage/20
2018-01
2018 Grants of Zombie Enterprises Ta Kung Pao B1 18-01-03/1204299322.PDF
39
Konka Group Co., Ltd. Interim Report 2018
Announcement on Restructuring and
Securities Times
4 January Renaming of Controlling Shareholders http://www.cninfo.com.cn/finalpage/20
2018-02 B44, Ta Kung Pao
2018 and the Changes of Relevant of 18-01-04/1204302079.PDF
A20
Business Registration Events
Securities Times
4 January Announcement on Recognition of http://www.cninfo.com.cn/finalpage/20
2018-03 B44, Ta Kung Pao
2018 Disclosure Fee 18-01-04/1204302080.PDF
A20
Announcement on Majority-owned Securities Times
4 January http://www.cninfo.com.cn/finalpage/20
2018-04 Subsidiary’ receiving of the B44, Ta Kung Pao
2018 18-01-04/1204302081.PDF
Government Subsidies A20
Announcement on the Planned Listing Securities Times
19 January http://www.cninfo.com.cn/finalpage/20
2018-05 to Transfer the Shares of Qingsong B148, Ta Kung Pao
2018 18-01-19/1204342883.PDF
Venture Investment Fund B2
Announcement on the Changes of Securities Times
25 January http://www.cninfo.com.cn/finalpage/20
2018-06 Consulting Telephone of the Company’ B28, Ta Kung Pao
2018 18-01-25/1204358631.PDF
s Investors B1
Securities Times
26 January Announcement on the 2017 Earnings http://www.cninfo.com.cn/finalpage/20
2018-07 B25, Ta Kung Pao
2018 Forecasts 18-01-26/1204362267.PDF
B5
Announcement about the Progress of
Securities Times
20 March the Planned Listing to Transfer the http://www.cninfo.com.cn/finalpage/20
2018-08 B40, Ta Kung Pao
2018 Shares of Qingsong Venture 18-03-20/1204488812.PDF
B3
Investment Fund
Securities Times
24 March Announcement on Receiving the Tax http://www.cninfo.com.cn/finalpage/20
2018-09 B177, Ta Kung Pao
2018 Reimbursement Events 18-03-24/1204510528.PDF
B1
31 March Announcement on the 2017 Annual http://www.cninfo.com.cn/finalpage/20
2018-10
2018 Report 18-03-31/1204553590.PDF
Securities Times
31 March Announcement on the Abstract of the http://www.cninfo.com.cn/finalpage/20
2018-11 B253, Ta Kung Pao
2018 2017 Annual Report 18-03-31/1204553579.PDF
A18
Announcement on the Resolution of the Securities Times
31 March http://www.cninfo.com.cn/finalpage/20
2018-12 40 Meeting of the 8 Board of
th th
B253, Ta Kung Pao
2018 18-03-31/1204553581.PDF
Directors A18
Announcement on the Resolution of the Securities Times
31 March http://www.cninfo.com.cn/finalpage/20
2018-13 17 Meeting of the 8 Supervisory
th th
B253, Ta Kung Pao
2018 18-03-31/1204553582.PDF
Committee A18
31 March Announcement on the Expectation of Securities Times http://www.cninfo.com.cn/finalpage/20
2018-14
2018 the 2018 Routine Related Transaction B253, Ta Kung Pao 18-03-31/1204553583.PDF
40
Konka Group Co., Ltd. Interim Report 2018
A18
Securities Times
31 March Announcement about the External http://www.cninfo.com.cn/finalpage/20
2018-15 B253, Ta Kung Pao
2018 Guarantee of Konka Group Co., Ltd. 18-03-31/1204553584.PDF
A18
Securities Times
31 March Announcement on the Changes of Part http://www.cninfo.com.cn/finalpage/20
2018-16 B254, Ta Kung Pao
2018 of Accounting Policies 18-03-31/1204553585.PDF
A18
Announcement about Offering Securities Times
31 March http://www.cninfo.com.cn/finalpage/20
2018-17 Entrusted Loans to Majority-owned B254, Ta Kung Pao
2018 18-03-31/1204553586.PDF
Subsidiary A18
Securities Times
31 March Notice on Convening the 2017 Annual http://www.cninfo.com.cn/finalpage/20
2018-18 B254, Ta Kung Pao
2018 General Meeting 18-03-31/1204553580.PDF
A19
Announcement on the Completion of
Securities Times
31 March Industrial and Commercial Registration http://www.cninfo.com.cn/finalpage/20
2018-19 B254, Ta Kung Pao
2018 of Changes of Transferring the Shares 18-03-31/1204553587.PDF
A19
of Qingsong Venture Investment Fund
Announcement on Majority-owned Securities Times
10 April http://www.cninfo.com.cn/finalpage/20
2018-20 Subsidiary’ receiving of the B40, Ta Kung Pao
2018 18-04-10/1204593954.PDF
Government Subsidies B6
Securities Times
14 April Announcement on the 2018 First http://www.cninfo.com.cn/finalpage/20
2018-21 B48, Ta Kung Pao
2018 Quarter Earnings Forecasts 18-04-14/1204624897.PDF
B3
Announcement on the Resolution of the Securities Times
18 April http://www.cninfo.com.cn/finalpage/20
2018-22 41st Meeting of the 8th Board of B37, Ta Kung Pao
2018 18-04-18/1204646424.PDF
Directors B9
Securities Times
18 April Notice on Convening the 1st http://www.cninfo.com.cn/finalpage/20
2018-23 B37, Ta Kung Pao
2018 Extraordinary General Meeting of 2018 18-04-18/1204646425.PDF
B9
Announcement about Capital Increase Securities Times
18 April http://www.cninfo.com.cn/finalpage/20
2018-24 in Sanjiang Real Estate and B37, Ta Kung Pao
2018 18-04-18/1204646430.PDF
Related-party Transactions B9
Announcement on Sponsoring the Securities Times
18 April http://www.cninfo.com.cn/finalpage/20
2018-25 Establishment of Industrial Buyout B37, Ta Kung Pao
2018 18-04-18/1204646426.PDF
Fund B9
Securities Times
24 April Announcement on the Resolution of the http://www.cninfo.com.cn/finalpage/20
2018-26 B189, Ta Kung Pao
2018 2017 Annual General Meeting 18-04-24/1204700352.PDF
B5
41
Konka Group Co., Ltd. Interim Report 2018
28 April http://www.cninfo.com.cn/finalpage/20
2018-27 2018 First Quarter Report
2018 18-04-28/1204821265.PDF
Securities Times
28 April http://www.cninfo.com.cn/finalpage/20
2018-28 Text of the 2018 First Quarter Report B44, Ta Kung Pao
2018 18-04-28/1204821263.PDF
B14
Announcement on the Resolution of the Securities Times
4 May http://www.cninfo.com.cn/finalpage/20
2018-29 1 Extraordinary General Meeting of
st
B16, Ta Kung Pao
2018 18-05-04/1204906066.PDF
2018 B5
Securities Times
8 May Announcement about the Progress of http://www.cninfo.com.cn/finalpage/20
2018-30 B28, Ta Kung Pao
2018 External Guarantee 18-05-08/1204918242.PDF
B6
Announcement on Signing the Strategic Securities Times
22 May http://www.cninfo.com.cn/finalpage/20
2018-31 Cooperation Agreement with Chuzhou B25, Ta Kung Pao
2018 18-05-22/1204979369.PDF
Municipal Government A17
Securities Times
22 May Outline of Medium and Long-term http://www.cninfo.com.cn/finalpage/20
2018-32 B25, Ta Kung Pao
2018 Development Strategy Programming 18-05-22/1204979370.PDF
A17
Announcement on the Resolution of the Securities Times
23 May http://www.cninfo.com.cn/finalpage/20
2018-33 43rd Meeting of the 8th Board of B17, Ta Kung Pao
2018 18-05-23/1204981920.PDF
Directors B4
Securities Times
23 May Announcement on Offering Guarantee http://www.cninfo.com.cn/finalpage/20
2018-34 B17, Ta Kung Pao
2018 Limit to the Wholly-owned Subsidiary 18-05-23/1204981921.PDF
B4
Announcement on the Private Securities Times
23 May http://www.cninfo.com.cn/finalpage/20
2018-35 Placement of Corporate Bond B17, Ta Kung Pao
2018 18-05-23/1204981927.PDF
Programming by the Company B4
Announcement on Carrying out the
Securities Times
23 May Business of Asset Securitization of http://www.cninfo.com.cn/finalpage/20
2018-36 B17, Ta Kung Pao
2018 Business Factoring by the 18-05-23/1204981922.PDF
B4
wholly-owned Subsidiary
Announcement on Carrying out the Securities Times
23 May http://www.cninfo.com.cn/finalpage/20
2018-37 Business of Asset Securitization of B17, Ta Kung Pao
2018 18-05-23/1204981923.PDF
Accounts Receivable B4
Securities Times
23 May Notice on Convening the 2nd http://www.cninfo.com.cn/finalpage/20
2018-38 B17, Ta Kung Pao
2018 Extraordinary General Meeting of 2018 18-05-23/1204981924.PDF
B4
Announcement on Signing the Strategic Securities Times
25 May http://www.cninfo.com.cn/finalpage/20
2018-39 Cooperation Agreement with CMS B32, Ta Kung Pao
2018 18-05-25/1204999668.PDF
Zhiyuan Capital B8
42
Konka Group Co., Ltd. Interim Report 2018
Securities Times
29 May Announcement on the Implementation http://www.cninfo.com.cn/finalpage/20
2018-40 B114, Ta Kung Pao
2018 of Dividend Plan of 2017 18-05-30/1205014254.PDF
B14
Announcement on the wholly-owned Securities Times
29 May http://www.cninfo.com.cn/finalpage/20
2018-41 subsidiary’s Offering Guarantee to B114, Ta Kung Pao
2018 18-05-30/1205014255.PDF
Majority-owned Subsidiary B14
Announcement on the Controlling
Securities Times
31 May Shareholders’ Planning of Providing http://www.cninfo.com.cn/finalpage/20
2018-42 B100, Ta Kung Pao
2018 the Business of Asset Securitization of 18-06-01/1205021832.PDF
B5
Business Factoring with the Difference
Announcement on the Resolution of the Securities Times
8 June http://www.cninfo.com.cn/finalpage/20
2018-43 2 Extraordinary General Meeting of
nd
B40, Ta Kung Pao
2018 18-06-08/1205044244.PDF
2018 B5
Announcement on Offering Overseas Securities Times
14 June http://www.cninfo.com.cn/finalpage/20
2018-44 Loan under Domestic Guarantee to B36, Ta Kung Pao
2018 18-06-14/1205057941.PDF
Foreign Wholly-owned Subsidiary B2
Announcement on the Resolution of the Securities Times
16 June http://www.cninfo.com.cn/finalpage/20
2018-45 44 Meeting of the 8 Board of
th th
B29, Ta Kung Pao
2018 18-06-16/1205062957.PDF
Directors B6
Announcement about the Transfer of Securities Times
16 June http://www.cninfo.com.cn/finalpage/20
2018-46 51% Equities of Kunshan Kangsheng B29, Ta Kung Pao
2018 18-06-16/1205062958.PDF
and Related-party Transactions B6
Indicative Announcement on the
16 June Securities Times B4, http://www.cninfo.com.cn/finalpage/20
2018-47 Expectation of Winning the Bid of the
2018 Ta Kung Pao B6 18-06-16/1205064576.PDF
Project
Announcement about the Progress of Securities Times
20 June http://www.cninfo.com.cn/finalpage/20
2018-48 Offering Guarantees to the B52, Ta Kung Pao
2018 18-06-21/1205077958.PDF
wholly-owned subsidiary B1
Announcement about the Progress of Securities Times
22 June http://www.cninfo.com.cn/finalpage/20
2018-49 Offering Guarantees to the B29, Ta Kung Pao
2018 18-06-22/1205079784.PDF
Majority-owned Subsidiary B6
Announcement on the Resolution of the Securities Times
28 June http://www.cninfo.com.cn/finalpage/20
2018-50 45 Meeting of the 8 Board of
th th
B44, Ta Kung Pao
2018 18-06-28/1205099880.PDF
Directors B7
Announcement on the Investment and
Securities Times
28 June Establishment of Headquarter Base http://www.cninfo.com.cn/finalpage/20
2018-51 B44, Ta Kung Pao
2018 of Konka One Belt and One Road in 18-06-28/1205099881.PDF
B7
Chengdu
2018-52 28 June Announcement on Information Securities Times http://www.cninfo.com.cn/finalpage/20
43
Konka Group Co., Ltd. Interim Report 2018
2018 Disclosure of Voluntariness of B44, Ta Kung Pao 18-06-28/1205099882.PDF
Receiving Letter of Acceptance B7
XVII. Significant Events of Subsidiaries
□ Applicable √ Not applicable
44
Konka Group Co., Ltd. Interim Report 2018
Part VI Share Changes and Shareholder Information
I Share Changes
1. Share Changes
Unit: share
Before Increase/decrease in Reporting Period (+/-) After
Shares
Share as
s as dividen
divid d
New Perce
Percent end convert
Shares issue Other Subtotal Shares ntage
age (%) conv ed
s (%)
erted from
from capital
profit reserve
s
1. Restricted shares 19,500 0.00% 19,500 0.00%
1.3 Shares held by
other domestic 19,500 0.00% 19,500 0.00%
investors
Among which: Shares
held by domestic
legal persons
Shares
held by domestic 19,500 0.00% 19,500 0.00%
natural persons
2. Unrestricted shares 2,407,925,908 100% 2,407,925,908 100%
2.1
RMB-denominated 1,596,574,300 66.31% 1,596,574,300 66.31%
ordinary shares
2.2 Domestically
811,351,608 33.69% 811,351,608 33.69%
listed foreign shares
3. Total shares 2,407,945,408 100% 2,407,945,408 100%
Reasons for share changes:
□ Applicable √ Not applicable
Approval of share changes:
□ Applicable √ Not applicable
45
Konka Group Co., Ltd. Interim Report 2018
Transfer of share ownership:
□ Applicable √ Not applicable
Effects of share changes on the basic earnings per share, diluted earnings per share, equity per share
attributable to the Company’s ordinary shareholders and other financial indicators of the prior year
and the prior accounting period, respectively:
□ Applicable √ Not applicable
Other information that the Company considers necessary or is required by the securities regulator to
be disclosed:
□ Applicable √ Not applicable
2. Changes in Restricted Shares
□ Applicable √ Not applicable
II Issuance and Listing of Securities
□ Applicable √ Not applicable
III Shareholders and Their Holdings at Period-End
Unit: share
Number of ordinary Number of preferred shareholders with resumed voting rights (if
87,774 0
shareholders any) (see note 8)
5% or greater ordinary shareholders or top 10 ordinary shareholders
Increase/ Restric Shares in
Shareh
decrease ted Unrestricted pledge or
Nature of olding Ordinary
Name of shareholder in ordinar ordinary frozen
shareholder percent shares
Reporting y shares Shar
age Status
Period shares es
OVERSEAS CHINESE
State-owned
TOWN ENTERPRISES 21.75% 523,746,932 0 0 523,746,932
legal person
CO., LTD
CITIC SECURITIES
Foreign
BROKERAGE (HONG 7.56% 182,100,202 0 0 182,100,202
legal person
KONG) CO., LTD.
HOLY TIME GROUP Foreign
2.33% 56,039,500 -10,324 0 56,039,500
LIMITED legal person
GUOYUAN
Foreign
SECURITIES BROKER 2.25% 54,203,779 -551,366 0 54,203,779
legal person
(HK) CO., LTD.
GAOLING FUND,L.P. Foreign 2.19% 52,801,250 0 0 52,801,250
46
Konka Group Co., Ltd. Interim Report 2018
legal person
Domestic
-9,394,54
WANG LEI natural 1.52% 36,715,300 0 36,715,300
1
person
CHINA MERCHANTS
State-owned
SECURITIES (HK) 0.94% 22,665,024 833,004 0 22,665,024
legal person
LIMITED
Domestic
NAM NGAI natural 0.90% 21,712,140 -307,900 0 21,712,140
person
YUNNAN
INTERNATIONAL
TRUST CO., LTD-JULI Other 0.88% 21,145,380 928,520 0 21,145,380
NO. 48 SINGLE
CAPITAL TRUST
Domestic
20,476,61
ZHANG XIAOYU natural 0.85% 20,476,618 0 20,476,618
8
person
Strategic investor or general legal person
becoming top-10 ordinary shareholder due to N/A
rights issue (if any) (see note 3)
Jialong Investment Limited, a wholly-funded subsidiary of the Company ’ s
first majority shareholder Overseas Chinese Town Enterprises Co. ( “ OCT
Group” for short), holds 180,001,110 and 18,360,000 ordinary shares in the
Related or acting-in-concert parties among Company respectively through CITIC Securities Brokerage (Hong Kong) Co.,
shareholders above Ltd. and China Merchants Securities (HK) Limited. Jialong Investment
Limited and Overseas Chinese Town Enterprises Co. are parties acting in
concert. Other than that, it is unknown whether the other shareholders are
related parties or acting-in-concert parties or not.
Top 10 unrestricted ordinary shareholders
Unrestricted ordinary Type of shares
Name of shareholder
shares Type Shares
RMB-denominate
OVERSEAS CHINESE TOWN ENTERPRISES CO., LTD 523,746,932 523,746,932
d ordinary stock
Domestically
CITIC SECURITIES BROKERAGE (HONG KONG) CO.,
182,100,202 listed foreign 182,100,202
LTD.
stock
Domestically
HOLY TIME GROUP LIMITED 56,039,500 listed foreign 56,039,500
stock
47
Konka Group Co., Ltd. Interim Report 2018
Domestically
GUOYUAN SECURITIES BROKER (HK) CO., LTD. 54,203,779 listed foreign 54,203,779
stock
Domestically
GAOLING FUND, L.P. 52,801,250 listed foreign 52,801,250
stock
RMB-denominate
WANG LEI 36,715,300 36,715,300
d ordinary stock
Domestically
CHINA MERCHANTS SECURITIES (HK) LIMITED 22,665,024 listed foreign 22,665,024
stock
Domestically
NAM NGAI 21,712,140 listed foreign 21,712,140
stock
YUNNAN INTERNATIONAL TRUST CO., LTD-JULI NO. RMB-denominate
21,145,380 21,145,380
48 SINGLE CAPITAL TRUST d ordinary stock
RMB-denominate
ZHANG XIAOYU 20,476,618 20,476,618
d ordinary stock
Jialong Investment Limited, a wholly-funded subsidiary of the Company ’ s first
majority shareholder Overseas Chinese Town Enterprises Co. ( “ OCT Group ” for
Related or acting-in-concert parties
short), holds 180,001,110 and 18,360,000 common shares in the Company
among top 10 unrestricted ordinary
respectively through CITIC Securities Brokerage (Hong Kong) Co., Ltd. and China
shareholders, as well as between top 10
Merchants Securities (HK) Limited. Jialong Investment Limited and Overseas
unrestricted ordinary shareholders and
Chinese Town Enterprises Co. are parties acting in concert. Other than that, it is
top 10 ordinary shareholders
unknown whether the other shareholders are related parties or acting-in-concert parties
or not.
Wang Lei holds 36,715,300 A-shares in the Company through his account of collateral
Top 10 ordinary shareholders
securities for margin trading in GF Securities Co., Ltd. Zhang Xiaoyu holds
conducting securities margin trading (if
20,476,618 A-shares in the Company through her account of collateral securities for
any) (see note 4)
margin trading in Huaxi Securities Co., Ltd.
Indicate by tick mark whether any of the top ten common shareholders or the top ten non-restricted
common shareholders of the Company conducted any promissory report during this Reporting
Period.
□ Yea √ No
No such cases in this Reporting Period.
IV Change of Controlling Shareholder or Actual Controller in Reporting Period
Change of the controlling shareholder in the Reporting Period:
48
Konka Group Co., Ltd. Interim Report 2018
□ Applicable √ Not applicable
The controlling shareholder remained the same in the Reporting Period.
Change of the actual controller in the Reporting Period:
□ Applicable √ Not applicable
The actual controller remained the same in the Reporting Period.
49
Konka Group Co., Ltd. Interim Report 2018
Part VII Preferred Shares
□ Applicable √ Not applicable
No preferred shares in the Reporting Period.
50
Konka Group Co., Ltd. Interim Report 2018
Part VIII Directors, Supervisors and Senior Management
I Changes in Shareholdings of Directors, Supervisors and Senior Management
□ Applicable √ Not applicable
There was no change in shareholding of Directors, Supervisors, Senior Management Staffs and
Employees, for details, please refer to 2017 Annual Report
II Change of Directors, Supervisors and Senior Management
□ Applicable √ Not applicable
There was no change in Directors, Supervisors, Senior Management Staffs and Employees, for
details, please refer to 2017 Annual Report
51
Konka Group Co., Ltd. Interim Report 2018
Part IX Corporate Bonds
Does the Company have any corporate bonds publicly offered on the stock exchange, which were
undue before the date of this Report’s approval or were due but could not be redeemed in full?
No.
52
Konka Group Co., Ltd. Interim Report 2018
Part X Financial Statements
I Independent Auditor’s Report
Is this interim financial report audited by an independent auditor?
□Yes √ No
This interim financial report is unaudited by such an auditor.
II Financial Statements
Currency unit for the financial statements and the notes thereto: RMB
1. Consolidated Balance Sheet
Prepared by Konka Group Co., Ltd.
30 June 2018
Unit: RMB
Item 30 June 2018 31 December 2017
Current assets:
Monetary assets 3,911,820,154.60 3,212,044,851.08
Settlement reserve
Interbank loans granted
Financial assets at fair value through profit or loss 14,497,221.94 296,799.53
Derivative financial assets
Notes receivable 4,615,251,240.57 5,178,668,988.23
Accounts receivable 4,428,390,613.21 3,443,095,947.26
Prepayments 901,453,498.53 467,123,091.74
Premiums receivable
Reinsurance receivables
Receivable reinsurance contract reserve
Interest receivable 5,717,301.31 1,813,256.77
Dividends receivable
Other receivables 602,976,440.35 182,405,099.39
Financial assets purchased under resale agreements
Inventories 4,854,235,062.74 4,690,363,565.53
Assets classified as held for sale
Current portion of non-current assets
53
Konka Group Co., Ltd. Interim Report 2018
Other current assets 1,845,595,871.52 1,715,326,868.81
Total current assets 21,179,937,404.77 18,891,138,468.34
Non-current assets:
Loans and advances to customers
Available-for-sale financial assets 692,112,236.33 712,170,399.09
Held-to-maturity investments
Long-term receivables 345,206,723.50
Long-term equity investments 2,187,539,867.00 1,319,987,343.74
Investment property 213,639,992.84 216,455,629.99
Fixed assets 1,789,101,811.32 1,587,170,348.35
Construction in progress 120,644,724.53 135,863,821.01
Engineering materials
Proceeds from disposal of fixed assets
Productive living assets
Oil and gas assets
Intangible assets 412,349,807.84 205,057,773.69
R&D expense
Goodwill 506,030,181.63 3,597,657.15
Long-term prepaid expense 168,727,536.93 150,060,937.30
Deferred income tax assets 447,191,781.88 307,942,263.12
Other non-current assets 71,521,808.37 29,290,828.00
Total non-current assets 6,954,066,472.17 4,667,597,001.44
Total assets 28,134,003,876.94 23,558,735,469.78
Current liabilities:
Short-term borrowings 10,397,447,703.32 6,927,472,037.35
Borrowings from central bank
Customer deposits and deposits from banks and other
financial institutions
Interbank loans obtained
Financial liabilities at fair value through profit or loss 1,827,480.43 47,482,470.50
Derivative financial liabilities
Notes payable 926,402,659.29 541,175,312.09
Accounts payable 3,698,545,344.05 3,612,216,266.59
Advances from customers 936,672,416.32 640,510,784.17
Financial assets sold under repurchase agreements
54
Konka Group Co., Ltd. Interim Report 2018
Handling charges and commissions payable
Payroll payable 197,104,499.84 291,370,297.67
Taxes payable 198,493,151.37 1,326,569,094.53
Interest payable 44,957,010.99 35,723,963.94
Dividends payable
Other payables 2,374,301,159.44 1,608,359,305.87
Reinsurance payables
Insurance contract reserve
Payables for acting trading of securities
Payables for underwriting of securities
Liabilities directly associated with assets classified as
held for sale
Current portion of non-current liabilities 10,165,596.84 374,358.99
Other current liabilities
Total current liabilities 18,785,917,021.89 15,031,253,891.70
Non-current liabilities:
Long-term borrowings 501,000,000.00 167,000,000.00
Bonds payable
Including: Preferred shares
Perpetual bonds
Long-term payables 11,631,339.65 61,538.46
Long-term payroll payable 11,440,243.54 13,361,821.86
Specific payables
Provisions 1,552,310.49 6,181,865.10
Deferred income 130,861,490.43 130,049,911.87
Deferred income tax liabilities 64,138,889.89 12,636,633.40
Other non-current liabilities
Total non-current liabilities 720,624,274.00 329,291,770.69
Total liabilities 19,506,541,295.89 15,360,545,662.39
Owners’ equity:
Share capital 2,407,945,408.00 2,407,945,408.00
Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserves 104,732,242.30 104,732,242.30
55
Konka Group Co., Ltd. Interim Report 2018
Less: Treasury shares
Other comprehensive income -1,154,381.79 3,697,458.95
Specific reserve
Surplus reserves 1,217,644,874.79 1,217,644,874.79
General reserve
Retained earnings 4,211,831,396.96 4,260,125,492.57
Total equity attributable to owners of the Company as the
7,940,999,540.26 7,994,145,476.61
parent
Non-controlling interests 686,463,040.79 204,044,330.78
Total owners’ equity 8,627,462,581.05 8,198,189,807.39
Total liabilities and owners’ equity 28,134,003,876.94 23,558,735,469.78
Legal representative: Liu Fengxi CFO: Li Chunlei
Head of the financial department: Feng Junxiu
2. Balance Sheet of the Company as the Parent
Unit: RMB
Item 30 June 2018 31 December 2017
Current assets:
Monetary assets 1,745,554,700.43 1,760,838,390.83
Financial assets at fair value through profit or loss 14,497,221.94 296,799.53
Derivative financial assets
Notes receivable 2,497,170,749.31 2,864,064,309.99
Accounts receivable 4,511,624,049.28 4,732,153,992.25
Prepayments 1,646,569,512.18 1,066,260,182.37
Interest receivable 2,606,829.77 23,894,771.88
Dividends receivable 2,690,276.72
Other receivables 3,487,600,787.78 4,314,882,334.26
Inventories 1,584,221,574.12 2,090,697,937.23
Assets classified as held for sale
Current portion of non-current assets 100,000,000.00
Other current assets 1,382,920,586.50 1,547,454,872.74
Total current assets 16,872,766,011.31 18,503,233,867.80
Non-current assets:
Available-for-sale financial assets 562,612,236.33 562,612,236.33
Held-to-maturity investments
Long-term receivables
56
Konka Group Co., Ltd. Interim Report 2018
Long-term equity investments 4,617,530,028.77 2,649,074,424.45
Investment property 213,639,992.84 216,455,629.99
Fixed assets 471,773,144.33 482,020,892.58
Construction in progress 88,654,150.01 79,927,345.88
Engineering materials
Proceeds from disposal of fixed assets
Productive living assets
Oil and gas assets
Intangible assets 90,186,303.05 91,718,400.70
R&D expense
Goodwill
Long-term prepaid expense 79,293,494.84 78,305,555.97
Deferred income tax assets 393,296,375.06 279,324,511.96
Other non-current assets 20,000,000.00 20,000,000.00
Total non-current assets 6,536,985,725.23 4,459,438,997.86
Total assets 23,409,751,736.54 22,962,672,865.66
Current liabilities:
Short-term borrowings 5,083,795,772.39 3,269,730,888.60
Financial liabilities at fair value through profit or loss 1,827,480.43 47,482,470.50
Derivative financial liabilities
Notes payable 2,960,886,821.61 2,394,426,158.76
Accounts payable 5,114,630,069.06 6,167,204,323.22
Advances from customers 246,705,278.32 601,036,147.76
Payroll payable 103,682,253.17 163,066,135.71
Taxes payable 10,460,012.97 1,070,771,570.12
Interest payable 32,598,284.85 50,336,913.53
Dividends payable
Other payables 2,061,843,680.86 1,868,073,013.59
Liabilities directly associated with assets classified as
held for sale
Current portion of non-current liabilities
Other current liabilities
Total current liabilities 15,616,429,653.66 15,632,127,621.79
Non-current liabilities:
Long-term borrowings 266,000,000.00 167,000,000.00
57
Konka Group Co., Ltd. Interim Report 2018
Bonds payable
Including: Preferred shares
Perpetual bonds
Long-term payables
Long-term payroll payable
Specific payables
Provisions 1,552,310.49 6,181,865.10
Deferred income 88,209,431.31 94,590,560.82
Deferred income tax liabilities 27,308,921.77
Other non-current liabilities
Total non-current liabilities 383,070,663.57 267,772,425.92
Total liabilities 15,999,500,317.23 15,899,900,047.71
Owners’ equity:
Share capital 2,407,945,408.00 2,407,945,408.00
Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserves 111,525,163.22 111,525,163.22
Less: Treasury shares
Other comprehensive income -1,646,283.60 -1,970,304.62
Specific reserve
Surplus reserves 1,217,644,874.79 1,217,644,874.79
Retained earnings 3,674,782,256.90 3,327,627,676.56
Total owners’ equity 7,410,251,419.31 7,062,772,817.95
Total liabilities and owners’ equity 23,409,751,736.54 22,962,672,865.66
3. Consolidated Income Statement
Unit: RMB
Item H1 2018 H1 2017
1. Revenue 17,625,414,769.82 11,405,965,979.43
Including: Operating revenue 17,625,414,769.82 11,405,965,979.43
Interest income
Premium income
Handling charge and commission income
2. Operating costs and expenses 18,033,756,773.54 11,495,886,195.84
58
Konka Group Co., Ltd. Interim Report 2018
Including: Cost of sales 16,442,256,445.26 10,110,191,258.07
Interest expense
Handling charge and commission expense
Surrenders
Net claims paid
Net amount provided as insurance contract reserve
Expenditure on policy dividends
Reinsurance premium expense
Taxes and surtaxes 27,646,574.62 34,429,592.04
Selling expense 1,103,181,074.51 974,003,306.54
Administrative expense 364,827,669.33 264,108,100.97
Finance costs 36,292,909.41 110,882,895.46
Asset impairment loss 59,552,100.41 2,271,042.76
Add: Gain on changes in fair value (“-” for loss) 59,855,412.48 -103,077,757.73
Investment income (“-” for loss) 531,758,571.71 67,005,572.06
Including: Share of profit or loss of joint ventures and
6,075,182.59 -4,574,294.19
associates
Foreign exchange gain (“-” for loss)
Asset disposal income (“-” for loss) 63,722,105.38
Other income 123,026,283.50 36,838,391.51
3. Operating profit (“-” for loss) 370,020,369.35 -89,154,010.57
Add: Non-operating income 27,217,492.97 123,347,108.29
Less: Non-operating expense 5,951,749.57 3,635,538.11
4. Profit before taxation (“-” for loss) 391,286,112.75 30,557,559.61
Less: Income tax expense -17,446,049.13 -3,838,772.97
5. Net profit (“-” for net loss) 408,732,161.88 34,396,332.58
5.1 Net profit from continuing operations ( “ - ” for net
loss)
5.2 Net profit from discontinued operations (“-” for net
loss)
Net profit attributable to owners of the Company as the
341,793,039.03 30,871,267.86
parent
Net profit attributable to non-controlling interests 66,939,122.85 3,525,064.72
6. Other comprehensive income, net of tax -4,400,958.71 -2,226,560.59
Attributable to owners of the Company as the parent -4,851,840.74 -2,249,706.48
59
Konka Group Co., Ltd. Interim Report 2018
6.1 Items that will not be reclassified to profit or loss
6.1.1 Changes in net liabilities or assets caused by
remeasurements on defined benefit pension schemes
6.1.2 Share of other comprehensive income of
investees that will not be reclassified to profit or loss under
equity method
6.2 Items that may subsequently be reclassified to
-4,851,840.74 -2,249,706.48
profit or loss
6.2.1 Share of other comprehensive income of
investees that will be reclassified to profit or loss under
equity method
6.2.2 Gain/Loss on changes in fair value of
-31,342.08 -11,347,998.58
available-for-sale financial assets
6.2.3 Gain/Loss arising from reclassification of
held-to-maturity investments to available-for-sale financial
assets
6.2.4 Effective gain/loss on cash flow hedges
6.2.5 Differences arising from translation of foreign
-4,820,498.66 9,098,292.10
currency-denominated financial statements
6.2.6 Other
Attributable to non-controlling interests 450,882.03 23,145.89
7. Total comprehensive income 404,331,203.17 32,169,771.99
Attributable to owners of the Company as the parent 336,941,198.29 28,621,561.38
Attributable to non-controlling interests 67,390,004.88 3,548,210.61
8. Earnings per share
8.1 Basic earnings per share 0.1419 0.0128
8.2 Diluted earnings per share 0.1419 0.0128
Legal representative: Liu Fengxi CFO: Li Chunlei
Head of the financial department: Feng Junxiu
4. Income Statement of the Company as the Parent
Unit: RMB
Item H1 2018 H1 2017
1. Operating revenue 6,556,568,515.30 6,272,712,644.73
Less: Cost of sales 5,958,024,932.71 5,443,839,907.56
Taxes and surtaxes 10,295,805.36 10,868,803.46
Selling expense 796,586,717.96 711,874,597.16
Administrative expense 227,760,646.63 188,310,629.91
Finance costs 146,845,768.60 127,560,085.67
60
Konka Group Co., Ltd. Interim Report 2018
Asset impairment loss 36,873,991.62 2,244,928.43
Add: Gain on changes in fair value (“-” for loss) 59,855,412.48 -63,255,380.36
Investment income (“-” for loss) 1,159,447,278.28 77,763,929.57
Including: Share of profit or loss of joint ventures
13,240,183.30 -6,495,694.18
and associates
Asset disposal income (“-” for loss) 18,949.32
Other income 42,392,110.12 26,416,590.40
2. Operating profit (“-” for loss) 641,894,402.62 -171,061,167.85
Add: Non-operating income 13,874,505.45 46,954,770.89
Less: Non-operating expense 5,440,364.14 2,589,238.41
3. Profit before taxation (“-” for loss) 650,328,543.93 -126,695,635.37
Less: Income tax expense -86,913,171.05 -38,114,239.37
4. Net profit (“-” for net loss) 737,241,714.98 -88,581,396.00
4.1 Net profit from continuing operations ( “ - ” for net
loss)
4.2 Net profit from discontinued operations (“-” for net
loss)
5. Other comprehensive income, net of tax 324,021.02 -11,808,114.04
5.1 Items that will not be reclassified to profit or loss
5.1.1 Changes in net liabilities or assets caused by
remeasurements on defined benefit pension schemes
5.1.2 Share of other comprehensive income of
investees that will not be reclassified into profit or loss
under equity method
5.2 Items that may subsequently be reclassified to profit
324,021.02 -11,808,114.04
or loss
5.2.1 Share of other comprehensive income of
investees that will be reclassified into profit or loss under
equity method
5.2.2 Gain/Loss on changes in fair value of
-11,358,312.00
available-for-sale financial assets
5.2.3 Gain/Loss arising from reclassification of
held-to-maturity investments to available-for-sale financial
assets
5.2.4 Effective gain/loss on cash flow hedges
5.2.5 Differences arising from translation of foreign
324,021.02 -449,802.04
currency-denominated financial statements
5.2.6 Other
6. Total comprehensive income 737,565,736.00 -100,389,510.04
61
Konka Group Co., Ltd. Interim Report 2018
7. Earnings per share
7.1 Basic earnings per share
7.2 Diluted earnings per share
5. Consolidated Cash Flow Statement
Unit: RMB
Item H1 2018 H1 2017
1. Cash flows from operating activities:
Proceeds from sale of commodities and rendering of
17,548,318,013.29 10,702,542,891.56
services
Net increase in customer deposits and deposits from
banks and other financial institutions
Net increase in loans from central bank
Net increase in loans from other financial institutions
Premiums received on original insurance contracts
Net proceeds from reinsurance
Net increase in deposits and investments of policy
holders
Net increase in proceeds from disposal of financial assets
at fair value through profit or loss
Interest, handling charges and commissions received
Net increase in interbank loans obtained
Net increase in proceeds from repurchase transactions
Tax rebates 234,219,656.63 153,594,635.95
Cash generated from other operating activities 1,477,259,476.38 242,504,590.42
Subtotal of cash generated from operating activities 19,259,797,146.30 11,098,642,117.93
Payments for commodities and services 16,457,966,672.41 11,531,432,202.90
Net increase in loans and advances to customers
Net increase in deposits in central bank and in interbank
loans granted
Payments for claims on original insurance contracts
Interest, handling charges and commissions paid
Policy dividends paid
Cash paid to and for employees 830,723,675.14 810,851,488.87
Taxes paid 1,461,811,434.09 264,698,689.66
Cash used in other operating activities 2,347,454,070.52 755,674,441.38
Subtotal of cash used in operating activities 21,097,955,852.16 13,362,656,822.81
62
Konka Group Co., Ltd. Interim Report 2018
Net cash generated from/used in operating activities -1,838,158,705.86 -2,264,014,704.88
2. Cash flows from investing activities:
Proceeds from disinvestment 42,903,231.61 9,766,980.30
Investment income 72,250,837.30 78,957,443.99
Net proceeds from disposal of fixed assets, intangible
1,682,604.46 78,716,573.22
assets and other long-lived assets
Net proceeds from disposal of subsidiaries or other
42,511,059.22
business units
Cash generated from other investing activities 942,900,000.00 857,901,449.68
Subtotal of cash generated from investing activities 1,102,247,732.59 1,025,342,447.19
Payments for acquisition of fixed assets, intangible
140,086,476.23 124,051,006.64
assets and other long-lived assets
Payments for investments 198,399,656.00 326,090,459.58
Net increase in pledged loans granted
Net payments for acquisition of subsidiaries and other
232,126,165.53
business units
Cash used in other investing activities 874,730,000.00 2,156,068,913.10
Subtotal of cash used in investing activities 1,445,342,297.76 2,606,210,379.32
Net cash generated from/used in investing activities -343,094,565.17 -1,580,867,932.13
3. Cash flows from financing activities:
Capital contributions received 115,980,594.60 265,000.00
Including: Capital contributions by non-controlling
115,980,594.60 265,000.00
interests to subsidiaries
Increase in borrowings obtained 6,725,691,416.47 5,023,816,944.90
Net proceeds from issuance of bonds
Cash generated from other financing activities 1,023,076.93 444,475,802.89
Subtotal of cash generated from financing activities 6,842,695,088.00 5,468,557,747.79
Repayment of borrowings 3,377,017,426.30 1,143,869,292.69
Payments for interest and dividends 562,435,220.65 162,968,902.94
Including: Dividends paid by subsidiaries to
746,714.88
non-controlling interests
Cash used in other financing activities 22,612,122.48 574,504.77
Subtotal of cash used in financing activities 3,962,064,769.43 1,307,412,700.40
Net cash generated from/used in financing activities 2,880,630,318.57 4,161,145,047.39
4. Effect of foreign exchange rate changes on cash and cash
-35,288,115.64 -10,379,276.29
equivalents
5. Net increase in cash and cash equivalents 664,088,931.90 305,883,134.09
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Add: Cash and cash equivalents, beginning of the period 3,097,899,703.76 2,020,902,945.13
6. Cash and cash equivalents, end of the period 3,761,988,635.66 2,326,786,079.22
6. Cash Flow Statement of the Company as the Parent
Unit: RMB
Item H1 2018 H1 2017
1. Cash flows from operating activities:
Proceeds from sale of commodities and rendering of
8,900,547,132.50 7,169,804,450.63
services
Tax rebates 80,805,268.47 45,615,145.13
Cash generated from other operating activities 1,231,787,065.42 1,557,443,931.45
Subtotal of cash generated from operating activities 10,213,139,466.39 8,772,863,527.21
Payments for commodities and services 6,889,739,101.21 6,398,479,799.13
Cash paid to and for employees 508,124,450.52 490,539,972.72
Taxes paid 1,139,215,454.64 74,454,460.84
Cash used in other operating activities 1,847,843,398.55 2,206,102,049.40
Subtotal of cash used in operating activities 10,384,922,404.92 9,169,576,282.09
Net cash generated from/used in operating activities -171,782,938.53 -396,712,754.88
2. Cash flows from investing activities:
Proceeds from disinvestment 55,600,000.00
Investment income 77,823,977.16 90,904,415.99
Net proceeds from disposal of fixed assets, intangible
28,777.00 157,331.75
assets and other long-lived assets
Net proceeds from disposal of subsidiaries or other
business units
Cash generated from other investing activities 1,115,044,083.79 857,000,000.00
Subtotal of cash generated from investing activities 1,248,496,837.95 948,061,747.74
Payments for acquisition of fixed assets, intangible
54,103,982.64 25,893,599.53
assets and other long-lived assets
Payments for investments 1,222,391,400.00 361,799,598.00
Net payments for acquisition of subsidiaries and other
business units
Cash used in other investing activities 861,154,315.32 2,229,985,587.07
Subtotal of cash used in investing activities 2,137,649,697.96 2,617,678,784.60
Net cash generated from/used in investing activities -889,152,860.01 -1,669,617,036.86
3. Cash flows from financing activities:
Capital contributions received
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Konka Group Co., Ltd. Interim Report 2018
Increase in borrowings obtained 3,216,716,364.16 2,676,935,367.72
Net proceeds from issuance of bonds
Cash generated from other financing activities 141,159,174.39
Subtotal of cash generated from financing activities 3,216,716,364.16 2,818,094,542.11
Repayment of borrowings 1,207,765,069.15 303,221,456.06
Payments for interest and dividends 552,129,671.31 155,399,679.20
Cash used in other financing activities 335,984,291.92 574,504.77
Sub-total of cash used in financing activities 2,095,879,032.38 459,195,640.03
Net cash generated from/used in financing activities 1,120,837,331.78 2,358,898,902.08
4. Effect of foreign exchange rate changes on cash and cash
-75,185,223.64 2,847,903.92
equivalents
5. Net increase in cash and cash equivalents -15,283,690.40 295,417,014.26
Add: Cash and cash equivalents, beginning of the period 1,743,269,944.67 973,613,753.40
6. Cash and cash equivalents, end of the period 1,727,986,254.27 1,269,030,767.66
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7. Consolidated Statements of Changes in Owners’ Equity
H1 2018 Unit: RMB
H1 2018
Equity attributable to owners of the Company as the parent
Other equity instruments
Item
Other Non-controlling
Less: Treasury Specific General Total owners’ equity
Share capital Capital reserves comprehensive Surplus reserves Retained earnings interests
Preferred Perpetual shares reserve reserve
Other income
shares bonds
1. Balances as of end of prior year 2,407,945,408.00 104,732,242.30 3,697,458.95 1,217,644,874.79 4,260,125,492.57 204,044,330.78 8,198,189,807.39
Add: Adjustments for changed accounting policies
Adjustments for corrections of previous errors
Adjustments for business combinations under
common control
Other adjustments
2. Balances as of beginning of the year 2,407,945,408.00 104,732,242.30 3,697,458.95 1,217,644,874.79 4,260,125,492.57 204,044,330.78 8,198,189,807.39
3. Increase/ decrease in the period ( “ - ” for -4,851,840.74 -48,294,095.61 482,418,710.01 429,272,773.66
decrease) comprehensive income
3.1 Total -4,851,840.74 341,793,039.03 67,390,004.88 404,331,203.17
3.2 Capital increased and reduced by owners 415,028,705.13 415,028,705.13
3.2.1 Ordinary shares increased by
415,028,705.13 415,028,705.13
shareholders
3.2.2 Capital increased by holders of other
equity instruments
3.2.3 Share-based payments included in
owners’ equity
3.2.4 Other
3.3 Profit distribution -390,087,134.64 -390,087,134.64
3.3.1 Appropriation to surplus reserves
3.3.2 Appropriation to general reserve
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Konka Group Co., Ltd. Interim Report 2018
3.3.3 Appropriation to owners (or
-390,087,134.64 -390,087,134.64
shareholders)
3.3.4 Other
3.4 Carryforwards within owners’ equity
3.4.1 Increase in capital (or share capital) from
capital reserves
3.4.2 Increase in capital (or share capital) from
surplus reserves
3.4.3 Surplus reserves used to make up losses
3.4.4 Other
3.5 Specific reserve
3.5.1 Withdrawn for the period
3.5.2 Used during the period
3.6 Other
4. Balances as of end of the period 2,407,945,408.00 104,732,242.30 -1,154,381.79 1,217,644,874.79 4,211,831,396.96 686,463,040.79 8,627,462,581.05
H1 2017 Unit: RMB
H1 2017
Equity attributable to owners of the Company as the parent
Other equity instruments Less: Other
Item Non-controlling
Specific General Total owners’ equity
Share capital Capital reserves Treasury comprehensive Surplus reserves Retained earnings interests
Preferred Perpetual reserve reserve
Other shares income
shares bonds
1. Balances as of end of prior year 2,407,945,408.00 79,723,092.04 -6,932,104.65 847,908,466.28 -427,163,254.63 417,017,287.63 3,318,498,894.67
Add: Adjustments for changed accounting policies
Adjustments for corrections of previous errors
Adjustments for business combinations under
common control
Other adjustments
2. Balances as of beginning of the year 2,407,945,408.00 79,723,092.04 -6,932,104.65 847,908,466.28 -427,163,254.63 417,017,287.63 3,318,498,894.67
3. Increase/ decrease in the period (“-” for decrease) 25,009,150.26 10,629,563.60 369,736,408.51 4,687,288,747.20 -212,972,956.85 4,879,690,912.72
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Konka Group Co., Ltd. Interim Report 2018
3.1 Total comprehensive income 10,629,563.60 5,057,025,155.71 29,636,931.01 5,097,291,650.32
3.2 Capital increased and reduced by owners -241,190,603.80 -241,190,603.80
3.2.1 Ordinary shares increased by shareholders -235,037,235.08 -235,037,235.08
3.2.2 Capital increased by holders of other equity
instruments
3.2.3 Share-based payments included in owners’
equity
3.2.4 Other -6,153,368.72 -6,153,368.72
3.3 Profit distribution 369,736,408.51 -369,736,408.51 -1,419,284.06 -1,419,284.06
3.3.1 Appropriation to surplus reserves 369,736,408.51 -369,736,408.51
3.3.2 Appropriation to general reserve
3.3.3 Appropriation to owners (or shareholders) -1,419,284.06 -1,419,284.06
3.3.4 Other
3.4 Carryforwards within owners’ equity
3.4.1 Increase in capital (or share capital) from
capital reserves
3.4.2 Increase in capital (or share capital) from
surplus reserves
3.4.3 Surplus reserves used to make up losses
3.4.4 Other
3.5 Specific reserve
3.5.1 Withdrawn for the period
3.5.2 Used during the period
3.6 Other 25,009,150.26 25,009,150.26
4. Balances as of end of the period 2,407,945,408.00 104,732,242.30 3,697,458.95 1,217,644,874.79 4,260,125,492.57 204,044,330.78 8,198,189,807.39
8. Statements of Changes in Owners’ Equity of the Company as the Parent
H1 2018 Unit: RMB
H1 2018
Item Other equity instruments Less: Treasury Other Specific
Share capital Capital reserves Surplus reserves Retained earnings Total owners’ equity
Preferred Perpetual Other shares comprehensive reserve
1. Balances as of end of prior year 2,407,945,408.00 111,525,163.22 -1,970,304.62 1,217,644,874.79 3,327,627,676.56 7,062,772,817.95
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Konka Group Co., Ltd. Interim Report 2018
Add: Adjustments for changed accounting policies
Adjustments for corrections of previous errors
Other adjustments
2. Balances as of beginning of the year 2,407,945,408.00 111,525,163.22 -1,970,304.62 1,217,644,874.79 3,327,627,676.56 7,062,772,817.95
3. Increase/ decrease in the period (“-” for decrease) 324,021.02 347,154,580.34 347,478,601.36
3.1 Total comprehensive income 324,021.02 737,241,714.98 737,565,736.00
3.2 Capital increased and reduced by owners
3.2.1 Ordinary shares increased by shareholders
3.2.2 Capital increased by holders of other equity instruments
3.2.3 Share-based payments included in owners’ equity
3.2.4 Other
3.3 Profit distribution -390,087,134.64 -390,087,134.64
3.3.1 Appropriation to surplus reserves
3.3.2 Appropriation to owners (or shareholders) -390,087,134.64 -390,087,134.64
3.3.3 Other
3.4 Carryforwards within owners’ equity
3.4.1 Increase in capital (or share capital) from capital reserves
3.4.2 Increase in capital (or share capital) from surplus reserves
3.4.3 Surplus reserves used to make up losses
3.4.4 Other
3.5 Specific reserve
3.5.1 Withdrawn for the period
3.5.2 Used during the period
3.6 Other
4. Balances as of end of the period 2,407,945,408.00 111,525,163.22 -1,646,283.60 1,217,644,874.79 3,674,782,256.90 7,410,251,419.31
H1 2017 Unit: RMB
H1 2017
Item Other equity instruments Less: Other Specific
Share capital Capital reserves Surplus reserves Retained earnings Total owners’ equity
Preferred Perpetual Other Treasury comprehensive reserve
1. Balances as of end of prior year 2,407,945,408.00 64,794,108.39 6,714,437.62 847,908,466.28 -589,696,203.91 2,737,666,216.38
Add: Adjustments for changed accounting policies
Adjustments for corrections of previous errors
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Konka Group Co., Ltd. Interim Report 2018
Other adjustments 7,350,000.00 -25,347,306.92 -17,997,306.92
2. Balances as of beginning of the year 2,407,945,408.00 72,144,108.39 6,714,437.62 847,908,466.28 -615,043,510.83 2,719,668,909.46
3. Increase/ decrease in the period (“-” for decrease) 39,381,054.83 -8,684,742.24 369,736,408.51 3,942,671,187.39 4,343,103,908.49
3.1 Total comprehensive income -8,684,742.24 4,312,407,595.90 4,303,722,853.66
3.2 Capital increased and reduced by owners
3.2.1 Ordinary shares increased by shareholders
3.2.2 Capital increased by holders of other equity instruments
3.2.3 Share-based payments included in owners’ equity
3.2.4 Other
3.3 Profit distribution 369,736,408.51 -369,736,408.51
3.3.1 Appropriation to surplus reserves 369,736,408.51 -369,736,408.51
3.3.2 Appropriation to owners (or shareholders)
3.3.3 Other
3.4 Carryforwards within owners’ equity
3.4.1 Increase in capital (or share capital) from capital
reserves
3.4.2 Increase in capital (or share capital) from surplus reserves
3.4.3 Surplus reserves used to make up losses
3.4.4 Other
3.5 Specific reserve
3.5.1 Withdrawn for the period
3.5.2 Used during the period
3.6 Other 39,381,054.83 39,381,054.83
4. Balances as of end of the period 2,407,945,408.00 111,525,163.22 -1,970,304.62 1,217,644,874.79 3,327,627,676.56 7,062,772,817.95
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Konka Group Co., Ltd. Interim Report 2018
Konka Group Co., Ltd.
Notes to Financial Statements for H1 2018
(All amounts are expressed, unless otherwise stated, in Renminbi (RMB).)
I. Company Profile
1. Establishment
Konka Group Co., Ltd. (hereinafter referred to as “ Company ” or “ the Company ” ), is a
joint-stock limited company reorganized from the former Shenzhen Konka Electronic Co.,
Ltd. in August 1991 upon approval of the People’s Government of Shenzhen Municipality,
and has its ordinary shares (A-share and B-share) listed on Shenzhen Stock Exchange with
prior consent from the People’s Bank of China Shenzhen Special Economic Zone Branch. On
29 August 1995, the Company was renamed to “Konka Group Co., Ltd.” (Credibility code:
914403006188155783) with its main business falling into electronic industry. And now the
headquarters locates in No. 28 of No. 12 of Keji South Rd., Science & Technology Park,
Yuehai Street, Nanshan District, Shenzhen, Guangdong Province.
2. Share Capital Changes upon Establishment
On 27 November 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 8 December 1991—31 December 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 29 January 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 20 December 1991— 31 January 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 10 April 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 30 April 1993: distributing
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Konka Group Co., Ltd. Interim Report 2018
RMB 0.90 in cash plus 3.5 bonus shares for every 10 shares to all shareholders. The total
capital stock reached 187,473,150 shares after this distribution.
On 18 April 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 10 June 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 2 June 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 6 June 1994, with the prior
consent of Shenzhen Securities Regulatory Office and Shenzhen Stock Exchange.
On 8 October 1994, the Proposal on Negotiable Bonus Shares of B-Share Corporate
Shareholders 1992 was adopted at the interim general meeting of shareholders of the
Company. With approval from the SZBF No. 224 [1994] document as issued by Shenzhen
Securities Regulatory Office, the 16,930,305.00 bonus shares for FY 1992 granted to foreign
legal persons were listed and negotiated at B-share market on 26 October 1994.
On 6 February 1996, the Proposal on Share Allotment Modes 1996 was adopted at the
interim general metering of shareholders of the Company. With approval from the SZBF No.
5 [1996] document as issued by Shenzhen Securities Regulatory Office, and re-examination
from the ZJPSZ No. 16 [1996] document and ZJGZ No. 2 [1996] document as issued by
China Securities Regulatory Commission, on 16 July 1996 and 29 October 1996, all
shareholders were respectively allotted three shares for every ten existing shares held at
RMB6.28/A-share and HKD5.85/B-share. Corporate shareholders took their respective
existing shares as bases for full subscription of the allocable shares. The total capital stock
reached 365,572,641.00 shares after this allotment.
On 25 January 1998, the Plan on Share Allotment 1998 was adopted at the 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 15 July 1998, negotiable
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Konka Group Co., Ltd. Interim Report 2018
A-shares were allotted in proportion of 3:10 at RMB10.50/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 cancelled, and the corporate shareholders of the Company
waived the preemptive right. The total capital stock reached 389,383,603 shares after this
allotment.
On 30 June 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
20 August 1999, the profit distribution for FY 1998 was carried out: all shareholders were
presented RMB3.00 in cash for every 10 shares, plus 2 shares capitalized from capital public
reserve. The total capital stock reached 467,260,323.00 shares after this capitalization.
On 30 June 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 1 November
1999, 80,000,000.00 A-shares were additionally issued to the public at RMB15.50/share. The
total capital stock reached 547,260,323.00 shares after this additional issue.
On 30 May 2000, the Plan on Profit Distribution and Dividend Payout 1999 was adopted at
the ninth general meeting of shareholders of the Company. On 25 July 2000, the profit
distribution for FY 1999 was carried out: all shareholders were distributed RMB4.00 in cash
plus 1 bonus shares for every 10 shares. The total capital stock reached 601,986,352.00
shares after this distribution.
On 26 May 2008, the 2017 general meeting of shareholders s was convened, during which
the following resolutions were discussed and adopted: based on the total capital stock of
601,986,352.00 shares for the year ended 31 December 2007, capitalization from capital
public reserve was made to all shareholders at a proportion of 1:1, namely 10 new shares for
every 10 existing shares. On 16 December 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 10 April 2009. The total
capital stock reached 1,203,972,704.00 shares after change.
According to the regulations of the 2015 1st Extraordinary General Meeting and the revised
articles of the Company, the Company applied to increase the registered capital of
RMB1,203,972,704.00, which totally turned into capital reserve with the altered registered
capital of RMB2,407,945,408.00 and managed the industrial and commercial alternation
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Konka Group Co., Ltd. Interim Report 2018
registration on 28 January 2016 with the altered share capital of 2,407,945,408.00 shares.
3. Approved business scope: research and development, production and operation of such
intelligent household electric appliances as televisions, refrigerators, washing machines, and
personal electronic appliances, and kitchen and bathroom electronic appliances;
manufacturing and application of home AV, IPTV set-top boxes, OTT terminal products,
digital TV receivers (including ground receiving equipment of satellite television
broadcasting), digital products, intelligent wearable products, intelligent health products,
intelligent electric products, intelligent switch plug, power bank, mobile communication
equipments and terminal products, daily-use electronic products, automotive electronic
products, satellite navigation systems, intelligent transportation systems, fire-fighting and
security systems, office equipments, computers, displays, large screen display systems; LED
(OLED) back light, illumination, light-emitting devices, and packaging thereof; Touch TV
AIO, wireless broadcasting television transiting equipment; emergency broadcast system
equipment, electronic parts and components, moulds, plastic and rubber products, and
packing materials, design and in-door installation security products, monitoring products,
wireless and cable digital television system and system integration, and technical consultancy
and after-sale paid services of related products (except mobile phone, the other products in
the above business scope are manufactured in other places outside Shenzhen); Wholesale,
retail, import & export and relevant support services of the aforesaid products (including
spare parts) (Commodities subject to state trading management are not involved. Products
involved in quota, license management and other specified management shall be subject to
the relevant state provisions.); sale of self-developed technological achievements; provision
of maintenance services, technical consultant service for electronic products; ordinary cargo
transportation, domestic freight forwarding, international freight forwarding, and
warehousing services; management of supply chain, consultancy on enterprise management;
and self-owned property leasing and management services, recovery of waste electrical
appliances and electronic products (excluding dissembling) (operated by branch offices); and
outsourcing services of information technology and business procedures by means of
undertaking services in the way of outsourcing, including management and maintenance of
system application, management of information technology, bank background service,
financial settlement, human resource service, software development, call centre, and data
processing. Import & export business: domestic trade; international trade (excluding
monopoly, exclusive control, and monopolized commodities); selling security products,
intelligent household products, door lock, and hardware; doing various business entrusted by
(Mobile, Unicom, Telecom, and BC&TV)
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Konka Group Co., Ltd. Interim Report 2018
4. The Company and its subsidiaries are mainly engaged in the production and sales of colour
TVs, white goods, mobile phones, etc.; trade business; environmental protection business;
real estate development and marketing; commercial factoring, and etc.
5. The financial statements contained herein have been approved for issue by the Board of
Directors of the Company on 29 August 2018.
6. There were 77 subsidiaries included in the consolidation scope of 2018 of the Company,
and please refer to the Notes VIII. “Equities among other entities” for details. There were 33
subsidiaries increased and 1 decreased in the consolidation scope of the Reporting Period
over the last period of the Company, for details, see the Notes VII. “ Changes of the
consolidation scope”.
7. A check list of corporate names and their abbreviations mentioned in this Report
Corporate name Abbreviation
Shenzhen Konka Telecommunications Technology Co., Ltd. Telecommunication Technology
Shenzhen Konka Electrical Appliances Co., Ltd. Konka Electrical Appliances
Shenzhen Konka Plastic Products Co., Ltd. Plastic Products
Shenzhen Konka Electrical Appliances Co., Ltd. Electrical Appliances
Shenzhen Konka Electronic Fittings Technology Co., Ltd. Fittings Technology
Mudanjiang Arctic Ocean Appliances Co., Ltd. Mudanjiang Appliances
Chongqing Qingjia Electronics Co., Ltd. Chongqing Qingjia
Anhui Konka Electronic Co., Ltd. Anhui Konka
Dongguan Konka Electronic Co., Ltd. Dongguan Konka
Dongguan Konka Packing Materials Co., Ltd. Dongguan Packing
Boluo Konka PCB Co., Ltd. Boluo Konka
Boluo Konka Precision Technology Co., Ltd. Boluo Konka Precision
Hong Kong Konka Co., Ltd. Hong Kong Konka
Konka Household Appliances
Konka Household Appliances Investment & Development Co., Ltd.
Investment
Konka Household Appliances
Konka Household Appliances International Trading Co., Ltd.
International Trading
Konka (Europe) Co., Ltd. Konka Europe
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Konka Group Co., Ltd. Interim Report 2018
Corporate name Abbreviation
Konka Factoring (Shenzhen) Co., Ltd. Konka Factoring
Shenzhen Wankaida Science and Technology Co., Ltd. Wankaida
Kunshan Kangsheng Investment Development Co., Ltd. Kunshan Kangsheng
Anhui Konka Tongchuang Household Appliances Co., Ltd. Anhui Tongchuang
Shenzhen Shushida Logistics Service Co., Ltd. Shushida Logistics
Beijing Konka Electronic Co., Ltd. Beijing Konka Electronic
Shenzhen Konka E-display Co., Ltd. Konka E-display
Shenzhen E-display Service Co., Ltd. E-display Service
Xiamen Dalong Trading Co., Ltd. Xiamen Dalong
Youshi Kangrong Culture Communication Co., Ltd. Youshi Kangrong
Konka SmartTech Limited Konka SmartTech
Anhui Kaikai Shijie E-commerce Co., Ltd. Kaikai Shijie
Shenzhen E2info Network Technology Co., Ltd. E2info
Shenzhen Konka Mobile Interconnection Technology Co., Ltd. Mobile Interconnection
Shenzhen Konka Commercial System Technology Co., Ltd. Commercial System Technology
Chain Kingdom Co., Limited Chain Kingdom
Shenzhen Kangqiao Easy Chain Technology Co., Ltd. Kangqiao Easy Chain
E3info (Hainan) Technology Co., Ltd. E3info
Chuzhou Konka Technology & Industry Development Co., Ltd. Chuzhou Konka TID
Konka Ventures Development (Shenzhen) Co., Ltd. Konka Ventures
Shenzhen Konka Pengrun Technology & Industry Co., Ltd. Konka Pengrun
Shenzhen Konka Unifortune Supply Chain Management Co., Ltd. Konka Unifortune
Shenzhen Konka Investment Holding Co., Ltd. Konka Investment
Anhui Kangzhi Trade Co., Ltd. Kangzhi Trade
Hainan Konka Material Technology Co., Ltd. Konka Material
Tianjin Konka Leasing Co., Ltd. Konka Leasing
Yantai Konka Healthcare Enterprise Service Co., Ltd. Yantai Konka
Shenzhen Konka Capital Equity Investment Management Co., Ltd. Konka Capital
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Corporate name Abbreviation
Chain Kingdom (Shenzhen) Co., Ltd. Chain Kingdom Shenzhen
Shenzhen Konka Electronics Technology Co., Ltd. Electronics Technology
Sichuan Konka Smart terminal Technology Co., Ltd Sichuan Konka
Jiaxin Technology Co., Ltd. Jiaxin Technology
Kangjietong (Hong Kong) Limited Kangjietong
Sichuan Kangjiatong Supply Chain Management Co., Ltd. Sichuan Kangjiatong
Konka Huanjia (Dalian) Environmental Technology Co., Ltd. Konka Huanjia
Chengdu Konka Incubator Management Co., Ltd. Chengdu Konka
Yibin Konka Technology Park Operation Co., Ltd. Yibin Konka
Konka Suiyong Investment (Shenzhen) Co., Ltd. Konka Suiyong
Anhui Konka Electrical Appliance Technology Co., Ltd. Electrical Appliance Technology
Jiali International (Hong Kong) Limited Jiali International
GuangDong XingDa HongYe Electronic Co., Ltd. XingDa HongYe
Shanghai Xinfeng Zhuoqun PCB Co., Ltd. Xinfeng Zhuoqun
Zhongshan Zewei Kechuang Investment Management Co., Ltd. Zewei Kechuang
Shandong Econ Technology Co., Ltd. Econ Technology
Beijing Econ Runfeng Technology Co., Ltd. Beijing Econ
Shanghai Jiyi Environmental Technology Co., Ltd. Shanghai Jiyi
Binzhou Econ Zhongke Environmental Technology Co., Ltd. Binzhou Econ
Laizhou Lairun Holdings Co., Ltd. Lairun Holdings
Econ Environmental Engineering Co., Ltd. Econ Environmental Engineering
Rushan Yike Water Treatment Co., Ltd. Rushan Yike
Binzhou Weiyijie Environmental Technology Co., Ltd. Binzhou Weiyijie
Yantai Chunzhiran Environmental Technology Co., Ltd. Yantai Chunzhiran
Rushan Econ Beike Technology Incubator Co., Ltd. Rushan Econ
Fujian Econ Changrun Environmental Protection Co., Ltd. Fujian Econ
Laizhou Lairun Huayang Heating Co., Ltd. Lairun Huayang
Laizhou Lairun Heating Co., Ltd. Lairun Heating
Laizhou Lairun Green Energy Co., Ltd. Lairun Green Energy
Binzhou Beihai Jingmai Industrial Development Co., Ltd. Beihai Jingmai
Yantai Huanhai Xinze Enterprise Management Co., Ltd. Huanhai Xinze
Binzhou Weinengda Transport Co., Ltd. Binzhou Weinengda
Laizhou Binhai Sewage Treatment Co., Ltd. Binhai Sewage Treatment
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Corporate name Abbreviation
Laizhou Lairun Environmental Protection Co., Ltd. Lairun Environmental Protection
II. Basis for the Preparation of Financial Statements
With the going-concern assumption as the basis and based on transactions and other events
that actually occurred, the Group prepared financial statements in accordance with The
Accounting Standards for Business Enterprises — Basic Standard issued by the Ministry of
Finance with Decree No. 33 and revised with Decree No. 76, the 42 specific accounting
standards, the Application Guidance of Accounting Standards for Business Enterprises, the
Interpretation of Accounting Standards for Business Enterprises and other regulations issued
and revised from February15, 2006 onwards (hereinafter jointly referred to as the Accounting
Standards for Business Enterprises, China Accounting Standards or “CAS”), as well as the
Rules for Preparation Convention of Disclosure of Public Offering Companies No.15 –
General Regulations for Financial Reporting (revised in 2014) by China Securities
Regulatory Commission.
In accordance with relevant provisions of the Accounting Standards for Business Enterprises,
the Group adopted the accrual basis in accounting. Except for some financial instruments and
investment properties, the financial statements are based on historic costs to measure.
Non-current assets held for sale is priced by the lower amount between the amounts that fair
value minus estimated amount and the original book value that meets the held for sale
requirement. Where impairment occurred on an asset, an impairment reserve was withdrawn
accordingly pursuant to relevant requirements.
III. Statement of Compliance with the Accounting Standards for Business Enterprises
The financial statements prepared by the Group are in compliance with in compliance with
the Accounting Standards for Business Enterprises, which factually and completely present
the Company’s financial positions as at 30 June 2018, business results and cash flows for the
first half year of 2018, and other relevant information. In addition, the Company ’s and the
Group ’s financial statements meet the requirements of disclosing financial statements and
notes thereto stated in the Rules for Preparation Convention of Disclosure of Public Offering
Companies No.15 – General Regulations for Financial Reporting (revised in 2014) by
China Securities Regulatory Commission.
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IV. Important Accounting Policies and Estimations
The Company and its subsidiaries formulated certain specific accounting policies and
accounting estimates according to the actual production and operation characteristics and the
regulations of the relevant ASBE on the transactions and events of the revenues recognition.
For the details, please refer to each description of Notes IV. 23 “Revenues”. For the notes of
the significant accounting judgment and estimations made by the management layer, please
refer to Notes IV. 29 “Significant accounting judgment and estimations”.
1. Fiscal Period
The Group ’s fiscal periods include fiscal years and fiscal periods shorter than a complete
fiscal year. The Group ’s fiscal year starts on January 1 and ends on December 31 of every
year according to the Gregorian calendar.
2. Operating Cycle
A normal operating cycle refers to a period from the Group purchasing assets for processing
to realizing cash or cash equivalents. An operating cycle for the Group is 12 months, which
is also the classification criterion for the liquidity of its assets and liabilities.
3. Recording Currency
Renminbi is the dominant currency used in the economic circumstances where the Group and
its domestic subsidiaries are involved. Therefore, the Group and its domestic subsidiaries use
Renminbi as their bookkeeping base currency.The Company and its overseas
subsidiary-European Konka use Euro as their bookkeeping base currency according to their
currency used in the economic circumstances. Subsidiaries such as Hong Kong Konka,
Konka Household Appliances Investment, Konka Household Appliances International
Trading, Konka Zhisheng, Chain Kingdom, Kangjietong, and Jiaxin Technology and Jiali
International use HK Dollar as their recording currency. And the Group adopted Renminbi as
the bookkeeping base currency when preparing the financial statements for the Reporting
Year.
4. Accounting Treatment Methods for Business Combinations under the Same Control
or not under the Same Control
Business combinations, it is refer to two or more separate enterprises merge to form a
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reporting entity transactions or events. Business combination is divided into under the same
control and those non under the same control.
(1) Business combinations under the same control
A business combination under the same control is a business combination in which all of the
combining enterprises are ultimately controlled by the same party or the same parties both
before and after the business combination and on which the control is not temporary. In a
business combination under the same control, the party which obtains control of other
combining enterprise(s) on the combining date is the combining party, the other combining
enterprise(s) is (are) the combined party. The “combining date” refers to the date on which
the combining party actually obtains control on the combined party.
The assets and liabilities that the combining party obtains in a business combination shall be
measured on the basis of their carrying amount in the combined party on the combining date.
As for the balance between the carrying amount of the net assets obtained by the combining
party and the carrying amount of the consideration paid by it (or the total par value of the
shares issued), the additional paid-in capital (share premium) shall be adjusted. If the
additional paid-in capital (share premium) is not sufficient to be offset, the retained earnings
shall be adjusted.
The direct cost for the business combination of the combining party shall be recorded into the
profits and losses at the current period.
(2) Business combinations not under the same control
A business combination not under the same control is a business combination in which the
combining enterprises are not ultimately controlled by the same party or the same parties
both before and after the business combination. In a business combination not under the same
control, the party which obtains the control on other combining enterprise(s) on the purchase
date is the acquirer, and other combining enterprise(s) is (are) the acquiree.
For a business combination not under the same control, the combination costs shall include
the fair values, on the acquisition date, of the assets paid, the liabilities incurred or assumed
and the equity securities issued by the acquirer in exchange for the control on the acquiree,
the expenses for audit, legal services and assessment, and other administrative expenses,
which are recorded into the profits and losses in the current period. The trading expenses for
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the equity securities or debt securities issued by the acquirer as the combination
consideration shall be recorded into the amount of initial measurement of the equity
securities or debt securities. The involved contingent consideration shall be recorded into the
combination costs at its fair value on the acquiring date. Where new or further evidences
emerge, within 12 months since the acquiring date, against the existing circumstances on the
acquiring date and the contingent consideration thus needs to be adjusted, the combined
goodwill shall be adjusted accordingly. The combination costs of the acquirer and the
identifiable net assets obtained by it in the combination shall be measured according to their
fair values at the acquiring date. The acquirer shall recognize the positive balance between
the combination costs and the fair value of the identifiable net assets it obtains from the
acquiree as business reputation. Where the combination costs are less then the fair value of
the identifiable net assets it obtains from the acquiree, the acquirer shall re-examine the
measurement of the fair values of the identifiable assets, liabilities and contingent liabilities it
obtains from the acquiree as well as the combination costs. If, after the re-examination, the
combination costs are still less than the fair value of the identifiable net assets it obtains from
the acquiree, the acquirer shall record the balance into the profits and losses of the current
period.
As for the deductible temporary differences the acquirer obtains from the acquiree which are
not recognized into deferred income tax liabilities due to their not meeting the recognition
standards, if new or further information shows that the relevant situation has existed on the
acquiring date and the economic benefits brought by the deductible temporary differences the
acquirer obtains from the acquiree on the acquiring date can be realized, they shall be
recognized into deferred income tax assets and the relevant goodwill shall be reduced. Where
the goodwill is not sufficient to be offset, the difference shall be recognized into the profits
and losses in the current period. In other circumstances than the above, where the deductible
temporary differences are recognized into deferred income tax assets on the acquiring date,
they shall be recorded into the profits and losses in the current period.
In a business combination not under same control realized by two or more transactions of
exchange, according to about the No. 5 Notice about the Treasury Issuing the Accounting
Standards for Enterprises (Finance accounting) [2012] No. 19 and the Article 51 of
Accounting Standards for Enterprises No. 33—Consolidated Financial Statements Criterion
about the “package deal” (see Note IV, 5 (2)), Whether the deals are “package deal” or not,
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belong to the “package deal”, see the previous paragraphs described in this section and Note
IV, 13 “long term equity investment” and conduct accounting treatment, those not belong to
the “ package deal ” distinguish between the individual financial statements and the
consolidated financial statements and conduct relevant accounting treatment.
In the individual financial statements, the sum of the book value and new investment cost of
the Group holds in the acquiree before the acquiring date shall be considered as initial cost of
the investment. Other related comprehensive gains in relation to the equity interests that the
Group holds in the acquiree before the acquiring date shall be treated on the same basis as the
acquiree directly disposes the related assets or liabilities when disposing the investment (that
is, except for the corresponding share in the changes in the net liabilities or assets with a
defined benefit plan measured at the equity method arising from the acquiree ’ s
re-measurement, the others shall be transferred into current investment gains).
In the Group ’ s consolidated financial statements, as for the equity interests that the Group
holds in the acquiree before the acquiring date, they shall be re-measured according to their
fair values at the acquiring date; the positive difference between their fair values and carrying
amounts shall be recorded into the investment gains for the period including the acquiring
date. Other related comprehensive gains in relation to the equity interests that the Group
holds in the acquiree before the acquiring date shall be treated on the same basis as the
acquiree directly disposes the related assets or liabilities when disposing the investment (that
is, except for the corresponding share in the changes in the net liabilities or assets with a
defined benefit plan measured at the equity method arising from the acquiree ’ s
re-measurement, the others shall be transferred into current investment gains on the acquiring
date).
5. Methods for Preparing Consolidated Financial Statements
(1) Principle for determining the consolidation scope
The consolidation scope for financial statements is determined on the basis of control. The
term “control” is the power of the Group upon an investee, with which it can take part in
relevant activities of the investee to obtain variable returns and is able to influence the
amount of returns. The scope of consolidation includes the Company and its all subsidiaries.
A subsidiary is an enterprise or entity controlled by the Group.
Once any changes in the relevant facts or situations resulted in any changes in the elements
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involved in the aforesaid definition of “ control ” , the Company shall carry out a
reassessment.
(2) Methods for preparing the consolidated financial statements
Subsidiaries are fully consolidated from the date on which the Group obtains control on their
net assets and operation decision-making and are de-consolidated from the date when such
control ceases. As for a disposed subsidiary, its operating results and cash flows before the
disposal date has been appropriately included in the consolidated income statement and cash
flow statement; and as for subsidiaries disposed in the current period, the opening items in
the consolidated balance sheet are not adjusted. For a subsidiary acquired in a business
combination not under the same control, its operating results and cash flows after the
acquiring date have been appropriately included in the consolidated income statement and
cash flow statement, and the opening items and comparative items in the consolidated
financial statements are not adjusted. For a subsidiary acquired in a business combination
under the same control or a combined party obtained in a takeover, its operating results and
cash flows from the beginning of the Reporting Period of the combination to the combination
date have been appropriately included in the consolidated income statement and cash flow
statement, and the comparative items in the consolidated financial statements are adjusted at
the same time.
The financial statements of subsidiaries are adjusted in accordance with the accounting
policies and accounting period of the Group during the preparation of the consolidated
financial statements, where the accounting policies and the accounting periods are
inconsistent between the Group and subsidiaries. For a subsidiary acquired from a business
combination not under the same control, the individual financial statements of the subsidiary
are adjusted based on the fair value of the identifiable net assets at the acquisition date.
All significant inter-group balances, transactions and unrealized profits are offset in the
consolidated financial statements.
The portion of a subsidiary ’ s shareholders ’ equity and the portion of a subsidiary ’ s net
profits and losses for the period not held by the Group are recognized as minority interests
and minority shareholder profits and losses respectively and presented separately under
shareholders’ equity and net profits in the consolidation financial statements. The portion of
a subsidiary ’ s net profits and losses for the period that belong to minority interests is
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presented as the item of “minority shareholder profits and losses” under the bigger item of
net profits in the consolidated financial statements. Where the loss of a subsidiary shared by
minority shareholders exceeds the portion enjoyed by minority shareholders in the
subsidiary’s opening owners’ equity, minority interests are offset.
Where the Group losses control on its original subsidiaries due to disposal of some equity
investments or other reasons, the residual equity interests are re-measured according to the
fair value on the date when such control ceases. The summation of the consideration obtained
from the disposal of equity interests and the fair value of the residual equity interests, minus
the portion in the original subsidiary ’s net assets measured on a continuous basis from the
acquisition date that is enjoyable by the Group according to the original shareholding
percentage in the subsidiary, is recorded in investment gains for the period when the Group’s
control on the subsidiary ceases. Other comprehensive incomes in relation to the equity
investment in the original subsidiary are treated on the same accounting basis as the acquiree
directly disposes the relevant assets or liabilities (that is, except for the changes in the net
liabilities or assets with a defined benefit plan resulted from re-measurement of the original
subsidiary, the rest shall all be transferred into current investment gains) when such control
ceases. And subsequent measurement is conducted on the residual equity interests according
to the No. 2 Accounting Standard for Business Enterprises —Long-term Equity Investments
or the No. 22 Accounting Standard for Business Enterprises—Recognition and Measurement
of Financial Instruments. For details, see Note IV. 13 “long term equity investment” or Note
IV. 9 “financial instruments”.
Where the Group losses control on its original subsidiaries due to step by step disposal of
equity investments through multiple transactions, it need to distinguish the Group losses
control on its subsidiaries due to disposal of equity investments whether belongs to a package
deal. All the transaction terms, conditions and economic impact of the disposal of
subsidiaries ’ equity investment are in accordance with one or more of the following
conditions, which usually indicate the multiple transactions, should be considered as a
package deal for accounting treatment. ① These deals are at the same time or under the
condition of considering the influence of each other to concluded; ② These transactions
only be as a whole can achieve a complete business result; ③ The occurrence of a deal
depends on at least one other transactions ； ④ A deal alone is not economical, it is
economical with other trading together. Those not belong to a package deal, each of them a
deal depends on circumstances respectively conduct accounting treatment in accordance with
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the applicable principles of “ part disposal of subsidiaries of a long-term equity investment
under the condition of not losing control on its subsidiaries” (see Note IV. 13. (2) ④) and
“Where the Group losses control on its original subsidiaries due to disposal of some equity
investments or other reasons ” (See the front paragraph) relevant transactions of the Group
losses control on its subsidiaries due to disposal of equity investments belonging to a
package deal, considered as a transaction and conduct accounting treatment. However,
Before losing control, every disposal cost and corresponding net assets balance of subsidiary
of disposal investment are confirmed as other comprehensive income in consolidated
financial statements, which together transferred into the current profits and losses in the loss
of control , when the Group losing control on its subsidiary.
6. Classification of Joint Arrangements and Accounting Treatment of Joint Operations
A joint arrangement refers to an arrangement jointly controlled by two participants or above.
The Group classifies joint arrangements into joint operations and joint ventures according to
its rights and duties in the joint arrangements. A joint operation refers to a joint arrangement
where the Group enjoys assets and has to bear liabilities related to the arrangement. A joint
venture refers to a joint arrangement where the Group is only entitled to the net assets of the
arrangement.
The Group ’ s investments in joint ventures are measured at the equity method according to
the accounting policies mentioned in Note IV. 13 (2) ② “ Long-term equity investments
measured at the equity method”.
For a joint operation, the Group, as a joint operator, recognizes the assets and liabilities that it
holds and bears in the joint operation, and recognizes the jointly-held assets and jointly-borne
liabilities according to the Group’s stake in the joint operation; recognizes the income from
sale of the Group’s share in the output of the joint operation; recognizes the income from sale
of the joint operation ’ s outputs according to the Group ’ s stake in it; and recognizes the
expense solely incurred to the Group and the expense incurred to the joint operation
according to the Group’s stake in it.
When the Group, as a joint operator, transfers or sells assets (the assets not constituting
business, the same below) to the joint operation, or purchases assets from the joint operation,
before the assets are sold to a third party, the Group only recognizes the share of the other
joint operators in the gains and losses arising from the sale. Where impairment occurs to the
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assets as prescribed in The Accounting Standard No. 8 for Business Enterprises — Asset
Impairment, the Group shall fully recognizes the loss for a transfer or sale of assets to a joint
operation; and shall recognize the loss according to its stake in the joint operation for a
purchase of assets from the joint operation.
7. Recognition Standard for Cash and Cash Equivalents
In the Group’s understanding, cash and cash equivalents include cash on hand, any deposit
that can be used for cover, and short-term (usually due within 3 months since the day of
purchase) and high circulating investments, which are easily convertible into known amount
of cash and whose risks in change of value are minimal.
8. Foreign Currency Businesses and Translation of Foreign Currency Financial
Statements
(1) Accounting treatments for translation of foreign currency transactions
As for a foreign currency transaction, the Company shall convert the amount in a foreign
currency into amount in its bookkeeping base at the spot exchange rate (usually referring to
the central parity rate that day announced by the People’s Bank of China, the same below) of
the transaction date, while as for such transactions as foreign exchange or involving in
foreign exchange, the Company shall converted into amount in the bookkeeping base
currency at actual exchange rate the transaction is occurred.
(2) Accounting treatments for translation of foreign currency monetary items and
non-monetary items
On the balance sheet date, the foreign currency monetary items shall be translated at the spot
exchange rate on the balance sheet date. The exchange difference arising from the difference
between the spot exchange rate on the balance sheet date and the spot exchange rate at the
time of initial recognition or prior to the balance sheet date shall be recorded in the profits
and losses in the current period, excluding the following situations: ① the exchange
difference arising from foreign currency loans related to acquisition of fixed assets shall be
treated at the principle of capitalization of borrowing costs; ② the exchange difference
arising from the hedging instruments used for effective hedging of net overseas operation
investments shall be recorded into other comprehensive incomes, and shall be recognized
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Konka Group Co., Ltd. Interim Report 2018
into current gains and losses when the net investments are disposed; and ③ the exchange
difference arising from change in the book balance of foreign currency monetary items
available for sale except the amortized costs shall be recorded into other comprehensive
gains and losses.
When it involves overseas business in preparing the consolidated financial statement, for the
translation difference of foreign currency monetary items of net investment in overseas
business arising from the change in exchange rate, it shall be recorded into the other
comprehensive income; and be recorded into disposal gains and losses at current period when
disposing overseas business.
A foreign currency non-monetary item measured at the historical costs shall still be translated
at the spot exchange rate on the transaction date. Where the foreign non-monetary items
measured at the fair value shall be converted into amount in its bookkeeping base currency at
spot exchange rate, the exchange gains and losses arising thereof shall be treated as change in
fair value, and recorded into the current period gains and losses or as other comprehensive
incomes.
(3) Translation of foreign currency financial statements
When it involves overseas business in preparing the consolidated financial statement, for the
translation difference of foreign currency monetary items of net investment in overseas
business arising from the change in exchange rate, it shall be recorded into the item of
“difference of foreign currency financial statement translation ” under the owners ’ equity;
and be recorded into disposal gains and losses at current period when disposing overseas
business.
The foreign currency financial statement of overseas business should be translated in to RMB
financial statement by the following methods: The asset and liability items in the balance
sheets shall be translated at a spot exchange rate on the balance sheet date. Among the
owner ’ s equity items, except for the items as “ undistributed profits ” , other items shall be
translated at the spot exchange rate at the time when they are incurred. The income and
expense items in the profit statements shall be translated at the spot exchange rate of the
transaction date. The undistributed profits at year-begin is the undistributed profits at the end
of last year after the translation; undistributed profits at year-end shall be listed as various
distribution items after the translation; after the translation, the balance between assets and
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Konka Group Co., Ltd. Interim Report 2018
the sum of liabilities and owners’ equities shall be recorded into other comprehensive gains
and losses as difference of foreign currency translation. Where an enterprise disposes of an
overseas business without the control right, it shall shift the differences, which is presented
under the items of the owner ’ s equities in the balance sheet and which arises from the
translation of foreign currency financial statements relating to this overseas business, into the
disposal profits and losses of the current period by all or proportion of the disposed overseas
business.
Foreign cash flow shall be translated at the spot exchange rate of the current period of the
date of cash flow incurred. The influence of exchange rate on the cash flow shall be
adjustment item and individually listed in the cash flow statement.
And the opening balance and the actual balance of last year shall be listed at the amounts
after translation of foreign currency financial statement in last year.
Where the control of the Group over an overseas operation ceases due to disposal of all or
some of the Group ’ s owner ’ s equity in the overseas operation or other reasons, the
foreign-currency statement translation difference belonging to the parent company’s owner’s
equity in relation to the overseas operation which is stated under the owner ’s equity in the
balance sheet shall be all restated as gains and losses of the disposal period.
Where the Group’s equity in an overseas operation decreases due to disposal of some equity
investment or other reasons but the Group still has control over the overseas operation, the
foreign-currency statement translation difference in relation to the disposed part of the
overseas operation shall be recorded into minority interests instead of current gains and
losses. If what’s disposed is some equity in an overseas associated enterprise or joint venture,
the foreign-currency statement translation difference related to the overseas operation shall
be recorded into the gains and losses of the current period of the disposal according to the
disposal ratio.
9. Financial Instruments
The Group recognizes a financial asset or liability when it becomes a party of the relevant
financial instrument contract. Financial assets and liabilities are measured at fair value in
initial recognition. As for the financial assets and liabilities measured at fair value of which
changes are recorded into current gains and losses, the relevant dealing expenses are directly
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Konka Group Co., Ltd. Interim Report 2018
recorded into gains and losses; and the dealing expenses on other kinds of financial assets
and liabilities are included in the amounts initially recognized.
(1) Determination of the fair value of main financial assets and financial liabilities
Fair value refers to the price that a market participant shall receive for selling an asset or
shall pay for transferring a liability in an orderly transaction on the measurement date. As for
the financial assets or financial liabilities for which there is an active market, the quoted
prices in the active market shall be used to determine the fair values thereof. The quoted
prices in the active market refers to the prices available from stock exchange, broker ’ s
agencies, guilds, pricing organization and etc., which represent the actual trading price under
equal transaction. Where there is no active market for a financial instrument, the enterprise
concerned shall adopt value appraisal techniques, including the prices adopted by the parties,
who are familiar with the condition, in the latest market transaction upon their own free will,
the current fair value obtained by referring to other financial instruments of the same
essential nature, the cash flow capitalization method and the option pricing model, etc., to
determine its fair value.
(2) Classification, recognition and measurement of financial assets
The purchase and sale of financial assets under the normal ways shall be recognized and
stopped to be recognized respectively at the price of transaction date. Financial assets shall
be classified into the following four categories when they are initially recognized: (a) the
financial assets which are measured at their fair values and the variation of which is recorded
into the profits and losses of the current period, (b) the investments which will be held to
their maturity; (c) loans and the account receivables; and (d) financial assets available for
sale.
① The financial assets which are measured at their fair values and the variation of which is
recorded into the profits and losses of the current period
Including transactional financial assets and the financial assets which are designated to be
measured at their fair value when they are initially recognized and of which the variation is
recorded into the profits and losses of the current period;
The financial assets meeting any of the following requirements shall be classified as
transactional financial assets：A. The purpose to acquire the said financial assets is mainly for
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selling them in the near future; B. Forming a part of the identifiable combination of financial
instruments which are managed in a centralized way and for which there are objective
evidences proving that the enterprise may manage the combination by way of short-term
profit making in the near future; C. Being a derivative instrument, excluding the designated
derivative instruments which are effective hedging instruments, or derivative instruments to
financial guarantee contracts, and the derivative instruments which are connected with the
equity instrument investments for which there is no quoted price in the active market, whose
fair value cannot be reliably measured, and which shall be settled by delivering the said
equity instruments.
The financial assets meeting any of the following requirements shall be designated as
financial assets which are measured at their fair values and the variation of which is recorded
into the profits and losses of the current period for initial recognition: A. the designation can
eliminate or significantly reduce the difference of relevant gains and losses between
recognition and measurement causing from different bases for measurement of financial
assets; B. The official written documents for risk management and investment strategies of
the enterprise have clearly stated that it shall ,manage, evaluate and report to important
management personnel based on the fair value, about the financial assets group or the group
of financial assets & liabilities which the financial assets are belong to.
For the financial assets which are measured at their fair values and the variation of which is
recorded into the profits and losses of the current period shall continue to be measured by fair
value, gains and losses of change in fair value, dividends and interest related with these
financial assets should be recorded into gains and losses of current period.
② Held-to-maturity investment
The term “ held-to-maturity investment ” refers to a non-derivative financial asset with a
fixed date of maturity, a fixed or determinable amount of repo price and which the enterprise
holds for a definite purpose or the enterprise is able to hold until its maturity.
For the held-to-maturity investment adopting actual interest rate method, which is measured
at the post-amortization costs, the profits and losses that arise when such financial assets or
financial liabilities are terminated from recognition, or are impaired or amortized, shall be
recorded into the profits and losses of the current period.
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The actual interest rate method refers to the method by which the post-amortization costs and
the interest incomes of different instalments or interest expenses are calculated in light of the
actual interest rates of the financial assets or financial liabilities (including a set of financial
assets or financial liabilities). The actual interest rate refers to the interest rate adopted to
cash the future cash flow of a financial asset or financial liability within the predicted term of
existence or within a shorter applicable term into the current carrying amount of the financial
asset or financial liability.
When the actual interest rate is determined, the future cash flow shall be predicted on the
basis of taking into account all the contractual provisions concerning the financial asset or
financial liability (the future credit losses shall not be taken into account).and also the various
fee charges, trading expenses, premiums or reduced values, etc., which are paid or collected
by the parties to a financial asset or financial liability contract and which form a part of the
actual interest rate.
③ Loans and the accounts receivables
Loans and the accounts receivables refer to non-derivative financial assets, which there is no
quotation in the active market, with fixed recovery cost or recognizable. Financial assets that
are defined as loans and the accounts receivables by the Group including notes receivables,
accounts receivables, interest receivable, dividends receivable and other receivables etc..
Loans and the accounts receivables are made follow-up measurement on the basis of
post-amortization costs employing the effective interest method. Gains or loss arising from
the termination recognition, impairment occurs or amortization shall be recorded into the
profits and losses of the current period.
④ Assets available for sales
Assets available for sales including non-derivative financial asset that has been assigned as
assets available for sales on the initial recognition and financial assets excluded those
measured at fair value and of which the variation into profits and losses of the current period,
they are some financial assets, loans and accounts receivables, held-to-maturity investment.
The cost at the period-end of the available-for-sale liabilities instruments should be
confirmed according to its amortized cost method, that is the initially recognized amount
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which deduct the principal that had been repaid, to plus or minus the accumulative
amortization amount formed by the amortization between the difference of the initially
recognized amount and the amount on the due date that adopted the actual interest rate
method, and at the same time deduct the amount after the impairment loss happened. The
cost at the period-end of the available-for-sale liabilities instruments is its initial cost.
Financial assets available-for-trade are subsequently measured at fair value, and gains or
losses arising from changes in the fair value are recognized as other comprehensive income，
and be carried forward when the said financial assets stopped recognition, then it shall be
recorded into the profits and losses of the current period. But, the equity instrument
investment which neither have quotation in the active market nor its fair value could not be
reliable measured, as well as the derivative financial assets that concern with the equity
instruments and should be settled through handing over to its equity instruments, should take
the follow-up measurement according to the cost.
Interest receive during the holding of assets available for sales and cash dividends with
distribution announcement by invested companies, it shall be recorded into the profits and
losses of the current period.
(3) Impairment of financial assets
The Group assesses at the balance sheet date the carrying amount of every financial asset
except for the financial assets that measured by the fair value. If there is objective evidence
indicating a financial asset may be impaired, a provision is provided for the impairment.
The Group carries out a separate impairment test for every financial asset which is
individually significant. As for a financial asset which is individually insignificant, an
impairment test is carried out separately or in the financial asset group with similar credit risk.
Where the financial asset (individually significant or insignificant) is found not impaired
after the separate impairment test, it is included in the financial asset group with similar
credit risk and tested again on the group basis. Where the impairment loss is recognized for
an individual financial asset, it is not included in the financial asset group with similar credit
risk for an impairment test.
① Impairment on held-to maturity investment, loans and receivables
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The financial assets measured by cost or amortized cost write down their carrying value by
the estimated present value of future cash flow. The difference is recorded as impairment loss.
If there is objective evidence to indicate the recovery of value of financial assets after
impairment, and it is related with subsequent event after recognition of loss, the impairment
loss recorded originally can be reversed. The carrying value of financial assets after
impairment loss reversed shall not exceed the amortized cost of the financial assets without
provisions of impairment loss on the reserving date.
② Impairment of available-for-sale financial assets
When it judged that the decrease of fair value of the available-for-sale equity instrument
investment is serious and not temporarily after comprehensive considering relevant factors, it
reflected that the available-for-sale equity instrument investment occurred impairment. Of
which, the “serious decline” refers to the accumulative decline range of the fair value over
20%; while the “non-temporary decline” refers to the consecutive decline time of the fair
value over 12 months.
Where an available-for-sale financial asset is impaired, the accumulative losses arising from
the decrease of the fair value of the capital reserve which is directly included are transferred
out and recorded in the profits and losses for the current period. The accumulative losses
transferred out are the balance obtained from the initially obtained cost of the said financial
asset after deducting the principals as taken back, the amortized amount, the current fair
value and the impairment loss originally recorded in the profits and losses.
Where the impairment loss has been recognized for an available-for-sale financial asset, if,
within the accounting periods thereafter, there is any objective evidence proving that the
value of the said financial asset has been restored and the restoration is objectively related to
the events that occur after the impairment loss was recognized, the originally recognized
impairment loss is reversed. The impairment losses on the available-for-sale equity
instrument investments are reversed and recognized as other comprehensive incomes, and the
impairment losses on the available-for-sale liability instruments are reversed and recorded in
the profits and losses for the current period.
The impairment loss incurred to an equity instrument investment for which there is no quoted
price in the active market and whose fair value cannot be reliably measured, or incurred to a
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derivative financial asset which is connected with the said equity instrument investment and
which must be settled by delivering the said equity investment, is not reversed.
(4) Recognition and measurement of financial asset transfers
Where a financial asset satisfies any of the following requirements, the recognition of it is
terminated: ① The contractual rights for collecting the cash flow of the said financial asset
are terminated; ② The said financial asset has been transferred and nearly all of the risks
and rewards related to the ownership of the financial asset to the transferee; or ③ The said
financial asset has been transferred. And the Group has ceased its control on the said
financial asset though it neither transfers nor retains nearly all of the risks and rewards
related to the ownership of the financial asset.
Where the Group neither transfers nor retains nearly all of the risks and rewards related to the
ownership of a financial asset, and it does not cease its control on the said financial asset, it
recognizes the relevant financial asset and liability accordingly according to the extent of its
continuous involvement in the transferred financial asset. The term "continuous involvement
in the transferred financial asset" refers to the risk level that the enterprise faces resulting
from the change of the value of the financial asset.
If the transfer of an entire financial asset satisfies the conditions for stopping recognition, the
difference between the amounts of the following 2 items is recorded in the profits and losses
of the current period: (1) The book value of the transferred financial asset; and (2) The sum
of consideration received from the transfer, and the accumulative amount of the changes of
the fair value originally recorded in other comprehensive incomes.
If the transfer of partial financial asset satisfies the conditions to stop the recognition, the
book value of the transferred financial asset is apportioned between the portion whose
recognition has been stopped and the portion whose recognition has not been stopped
according to their respective relative fair value, and the difference between the amounts of
the following 2 items is included into the profits and losses of the current period: (1) The
summation of the consideration received from the transfer and the portion of the
accumulative amount of changes in the fair value originally recorded in other comprehensive
incomes which corresponds to the portion whose recognition has been stopped; and (2) The
amortized carrying amounts of the aforesaid amounts.
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In respect of the assets using recourse to sell or using endorsement to transfer, the Group
needs to determine whether almost all of the risks and rewards of the financial asset
ownership are transferred. If almost all of the risks and rewards of the financial asset
ownership had been transferred to the transferee, derecognize the financial assets. For almost
all of the risks and rewards of the financial asset ownership retained, do not end to recognize
the financial assets. For which neither transfer or retain almost all of the risks and rewards of
the financial asset ownership, continuously judge whether the Company retain the control of
the assets, and conduct accounting treatment according to the principle of mentioned in the
previous paragraphs.
(5) Classification and measurement of financial liabilities
In the initial recognition, financial liabilities are divided into the financial liabilities measured
at fair values and whose changes are recorded in current gains and losses and other financial
liabilities. Financial liabilities are initially recognized at their fair values. As for a financial
liability measured at fair value and whose changes are recorded in current gains and losses,
the relevant trading expense is directly recorded in the profits and losses for the current
period. As for other financial liabilities, the relevant trading expenses are recorded in the
initially recognized amounts.
① Financial liabilities measured at fair values and whose changes are recorded in current
gains and losses
Such financial liabilities are divided into transactional financial liabilities and financial
liabilities designated to be measured at fair values and whose changes are recorded in current
gains and losses in the initial recognition under the same conditions where such financial
assets are divided into transactional financial assets and financial assets designated to be
measured at fair values and whose changes are recorded in current gains and losses in the
initial recognition.
Financial liabilities measured at fair values and whose changes are recorded in current gains
and losses are subsequently measured at their fair values. Gains or losses arising from the fair
value changes, as well as the dividend and interest expenses in relation to the said financial
liabilities, are recorded in the profits and losses for the current period.
② Other financial liabilities
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As for a derivative financial liability connected to an equity instrument for which there is not
quoted price in an active market and whose fair value cannot be reliably measured and which
must be settled by delivering the equity instrument, it is subsequently measured on the basis
of costs. Other financial liabilities are subsequently measured according to the amortized cost
using the actual interest rate method. Gains or losses arising from de-recognition or
amortization of the said financial liabilities is recorded in the profits and losses for the
current period.
③ Financial guarantee contract and loan commitment
For the financial guarantee contracts which are not designated as a financial liability
measured at its fair value and the variation thereof is recorded into the profits and losses of
the current period, or the loan commitment which is not designated as a financial liability
measured at its fair value and the variation thereof is recorded into the gains and losses that
will be loaned lower than the market interest rate, which shall be initially recognized by fair
value, and the subsequent measurement shall be made after they are initially recognized
according to the higher one of the following: a. the amount as determined according to the
Accounting Standards for Enterprises No. 13 – Contingencies; b. the surplus after
accumulative amortization as determined according to the principles of the Accounting
Standards for Enterprises No. 14 - Revenues is subtracted from the initially recognized
amount.
(6) De-recognition of financial liabilities
Only when the prevailing obligations of a financial liability are relieved in all or in part may
the recognition of the financial liability be terminated in all or partly. Where the Group
(debtor) enters into an agreement with a creditor so as to substitute the existing financial
liabilities by way of any new financial liability, and if the contractual stipulations regarding
the new financial liability is substantially different from that regarding the existing financial
liability, it terminates the recognition of the existing financial liability, and at the same time
recognizes the new financial liability.
Where the recognition of a financial liability is totally or partially terminated, the enterprise
concerned shall include into the profits and losses of the current period for the gap between
the book value which has been terminated from recognition and the considerations it has paid
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(including the non-cash assets it has transferred out and the new financial liabilities it has
assumed)
(7) Derivatives and embedded derivatives
Derivative financial instruments include derivatives are initially measured at fair value at the
date when the derivative contracts are entered into and are substantially re-measured at fair
value. The resulting gain and loss is recognized in profit or loss.
An embedded derivative is separated from the hybrid instrument, where the hybrid
instrument is not designated as a financial asset or financial liability at fair value though
profit or loss, and the treated as a standalone derivative if (a) the economic characteristics
and risks of the embedded derivative are not closely related to the economic characteristics
and risks of the host contract; and (b) a separate instrument with the same terms as the
embedded derivative would meet the definition of a derivative. If the Company is unable to
measure the embedded derivative separately either at acquisition or at a subsequent balance
sheet date, it designates the entire hybrid instrument as a financial asset or financial liability
at fair value through profit or loss.
(8) Offsetting financial assets and financial liabilities
When the Group has a legal right that is currently enforceable to set off the recognized
financial assets and financial liabilities, and intends either to settle on a net basis, or to realize
the financial asset and settle the financial liability simultaneously, a financial asset and a
financial liability shall be offset and the net amount is presented in the balance sheet. Except
for the above circumstances, financial assets and financial liabilities shall be presented
separately in the balance sheet and shall not be offset.
(9) Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the
Company after deducting all of its liabilities. The Group issues (including refinancing),
re-purchases, sells or written-offs the equity instrument as the disposing of the changes of the
equity. The Group not recognized the changes of the fair value of the equity instrument. The
transaction expenses related to the equity transaction would be deducted from the equity.
All types of distribution (excluding stock dividends) made by the Group to holders of equity
instruments are deducted from shareholders ’ equity. The Group does not recognize any
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changes in the fair value of equity instruments.
10. Receivables
Receivables include account receivables and other accounts receivables.
(1) Recognition of provision for bad debts:
The Group shall test the carrying amount of receivables on the balance sheet date. Where
there is any objective evidence proving that such receivables have been impaired, an
impairment provision shall be made.
① Debtor has serious financial difficult;
② Debtor goes against the contract clause (for instance, breach of faith or overdue paying
interests or principal);
③ Debtors have a great probability of bankruptcy or other financial reorganization;
④ Other objective evidence proving such accounts receivable has been impaired;
(2) Withdraw method of provision for bad debts
① The recognition criteria and method of individual provision for bad debts of receivables
that are individually significant
The Group recognized the receivables with amount above RMB20 million and other
receivables above RMB10 million as receivables with significant single amounts and
withdrawn the provision for bad debts.
The Group made an independent impairment test on receivables with significant single
amounts; the financial assets without impairment by independent impairment test should be
included in financial assets portfolio with similar credit risk to take the impairment test.
Receivables was recognized with impairment should no longer be included in receivables
portfolio with similar credit risk to take the impairment test.
② The recognition and method of provision for bad debts of receivables by credit risk
portfolio
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A. Recognition of credit risk group
Receivables that not individually significant and individually significant but without
impairment by independent impairment test, are grouped on the basis of similarity and
relevance of credit risk. This credit risk usually reflects the debtor’s ability to repay all the
due accounts in accordance with contract for such assets, which also are related with the
measurement on future cash flow of the examined assets.
Recognition basic of different groups:
Item Basic
Divide the groups according to the credit risks characteristics of the accounts
Group 1: Aging group
receivable
Group 2: Internal related party groups Divide the groups according to the credit risks characteristics of whether the
in the scope of consolidation of the creditor is the internal related party in the scope of consolidation of the
Company Company
B. Withdrawal method of provision for bad debts recognized by credit risk group
For the impairment test implemented by groups, the amount of provision for bad debts was
appraised and recognized in accordance with the structure of accounts receivable group and
similar characteristics of credit risk (the debtor ’s ability to pay off the loans in accordance
with the provisions of contract), experience of losses, current economic status and the
predicted losses in the accounts receivable group.
Methods of making provisions for bad debt in different groups:
Item Withdrawal method
Group 1: Aging group Aging analysis method
Group 2: Internal related party groups in the To make an independent impairment test and if there was no
scope of consolidation of the Company impairment, should not withdraw the bad debts provision.
In the group 1, adopting aging analysis method to withdraw bad debt provision:
Withdrawal proportion for accounts Withdrawal proportion for other
Age
receivable (%) accounts receivable (%)
Within 1 year (including 1 year, similarly
2-5 2-5
hereinafter)
1-2 years 5-10 5-10
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Withdrawal proportion for accounts Withdrawal proportion for other
Age
receivable (%) accounts receivable (%)
2-3 years 20-30 20-30
3-4 years 50 50
4-5 years 50-80 50-80
Over 5 years 100 100
③ Receivables with insignificant amount but being individually withdrawn the provision for
bad debts
The Group made independent impairment test on receivables with insignificant amount but
with the following characteristics, if any objective evidence shows that the accounts
receivable has been impaired, impairment loss shall be recognized on the basis of the gap
between the current values of the future cash flow lower than its book value so as to
withdraw provision for bad debts:
A. Receivables have dispute with the other parties or involving lawsuit and arbitration;
B. Receivables have obvious indication showing that the debtors are likely to fail to perform
the duty of repayment, etc.
C. There is other evidence of impairment and the impairment amount can estimated reliably.
(3) Reversal of provision for bad debts
If there is any objective evidence proving that the value of the said receivables has been
restored, and it is objectively related to the events occurred after such loss is recognized, the
impairment-related losses as originally recognized shall be reversed and be recorded into the
profits and losses of the current period. However, the reversed carrying amount shall not be
any more than the post-amortization costs of the said accounts receivable on the day of
reverse under the assumption that no provision is made for the impairment.
11. Inventory
(1) Classification
The Group’s inventories are classified as non-property inventories and property inventories.
And the non-property inventories include raw materials, goods in process; merchandise on
hand, goods delivered, circulating materials, and engineering constructions, etc; while the
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property inventories include property in process and finished property, etc.
① The finished property refers to the finished and held-for-sale property.
② The property in process (development costs) refers to the unfinished property with the
development purpose for sale.
(2) Pricing method for outgoing inventories
The inventories shall be measured in light of their cost when obtained. The cost of inventory
consists of purchase costs, processing costs and other costs. Inventory is accounted by weight
average method upon receiving and giving. For merchandise on hand shall be accounted by
planned cost, if the difference between planned cost of and actual cost of raw materials is
accounted through the cost variance item, and the planned cost is adjusted to the actual cost
according to the cost difference which the carryover and given-out inventory should shoulder
in the period.
The construction contracts shall be measured at actual cost, including all direct and indirect
costs related to the execution of the contract from the time signing the contract to completing
the contract. The expenses such as travel expenses and bidding fees incurred for the purpose
of signing the contract, which can be separately and reliably measured and the contract is
likely to be concluded, are included in the contract cost when the contract is obtained; if the
above conditions are not met, they are included in the current profit and loss.
The accumulated costs incurred in the contract in progress, the accumulated recognized gross
profit (loss) and the settled price are stated in the balance sheet as net offset. The part of the
sum of the accumulated costs incurred in the contract in progress and the accumulated
recognized gross profit (loss) that exceeds the settled price is stated as the inventory; the part
of the settlement costs of the contract in progress that exceeds the sum of the accumulated
costs incurred and the accumulated recognized gross profit (loss) are stated as account
collected in advance.
The property inventories are initially measured at the costs, and the costs of the developed
property include the land premium, expenditures for supporting infrastructures, expenditures
for construction and installation projects, the borrowing costs before the completion of the
developed project and other expenses occurred during the development process.
① The public supporting facilities recorded the development costs at the actual costs, the
amortization upon completion was transferred to the costs of houses and other
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available-for-sale property, while as for the supporting facilities with operating value and
beneficiary rights owned by the Group as well as available for individual sale and
measurement, which shall be recorded into the “investment property”
② For the accounting policies on borrowing costs occurred for developing property, please
refer to Note IV. 17 Pricing of “Borrowing Costs”.
(3) Recognition basis of net realizable value and withdrawal method of depreciation reserves
for inventories
The net realizable value refers, in the ordinary course of business, to the account after
deducting the estimated cost of completion, estimated sale expense and relevant taxes from
the estimated sale price of inventories. The net realizable value of inventories shall be fixed
on the basis of valid evidence as well as under consideration of purpose of inventories and
the effect of events after balance-sheet-date.
On the balance sheet date, the inventories shall be measured according to the cost or the net
realizable value, whichever is lower. If the net realizable value is lower than the cost, it shall
withdraw the depreciation reserves for inventories, which was withdrawn in accordance with
the balance that the cost of individual inventory item exceeding the net realizable value. The
inventories with various numbers and low unit price shall be made provisions for
depreciation reserves of inventories according to the category of inventories.
After withdrawing the depreciation reserves for inventories, if the factors, which cause any
write-down of the inventories, have disappeared, causing the net realizable value of
inventories is higher than its carrying amount; the amount of write-down shall be reversed
from the original amount of depreciation reserve for inventories. The reversed amount shall
be included in the profits and losses of the current period.
(4) The perpetual inventory system is maintained for stock system.
(5) Amortization method of the low-value consumption goods and packing articles
The low-value consumption goods should be amortized by one time amortization when
acquiring and the packing articles are amortized by one time amortization when acquiring.
12. Assets Held for Sale and Disposal Group
When a company relies mainly on selling (including the exchanges of non-monetary assets
with commercial substance, similarly hereinafter) instead of continuing to use a non-current
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asset or disposal group to recover its book value, then the non-current asset or disposal group
is classified as assets held for sale. The specific standards are simultaneously meeting the
following conditions: assets or disposal groups can be sold immediately under current
conditions based on the practice of selling such assets or disposal groups in similar
transactions; the Company has already made a resolution on the sale plan and obtained a
certain purchase commitment, and the sale is expected to be completed within one year. A
disposal group refers to a group of assets that are disposed of together as a whole by sale or
other means in a transaction and the liabilities directly related to these assets transferred in
the transaction. Where the asset group or combination of asset groups to which a disposal
group belongs apportions the goodwill acquired in the business combination in accordance
with the Accounting Standards for Enterprises No. 8 - Asset Impairment, the disposal group
shall include the goodwill allocated to it.
If there are non-current assets or disposal groups held for sale during initial measurement or
on the balance sheet day based on remeasurement of this Company, if the book value is
higher than the net amount by deducting the selling expenses with the fair value, the book
value shall be written down and be equal to the net amount by deducting the selling expenses
with the fair value. The write-down amount shall be confirmed as the loss of depreciation of
assets and shall be included into the profits and losses of the current period. At the same time,
prepare to calculate and withdraw the assets purchased and under agreements to resell. For
the disposal group, deduct the book value of the goodwill in the disposal group with the asset
depreciation losses confirmed, then deduct the book value of each non-current asset in the
disposal group conforming to the measurement regulations of Accounting Standards for
Business Enterprises No. 42-non-current Assets Purchased and under Agreements to Resell,
Disposal Group and Operation Termination (herein after referred to as "the Standard for
Assets Purchased and under Agreements to Resell"). If the net amount by deducting the
selling expenses with the fair value of the disposal group purchased and under agreements to
resell on the subsequent balance sheet date, the previous write-down amount shall be
recovered and shall be reversed within the asset depreciation losses amount of the
non-current confirmed as per regulation of the Standard for Assets Purchased and under
Agreements to Resell after being classified into the category purchased and under agreements
to resell. The reverse amount shall be included into the current profits and losses, and the
book value shall be added as per the proportion of the book value of each non-current asset in
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the disposal group applicable to the Standard for Assets Purchased and under Agreements to
Resell except for the goodwill; The goodwill book value deducted and the asset depreciation
losses of the non-current assets applicable to the measurement regulations of the Standard for
Assets Purchased and under Agreements to Resell before its confirmation of being classified
into the category purchased and under agreements to resell shall not be reversed.
Depreciation or amortization in the non-current assets held for sale or the non-current assets
in the disposal group shall not be calculated or withdrawn. Interests of liabilities and other
expenses in the disposal group purchased and under agreements to resell shall be confirmed
continuously.
When a non-current asset or disposal group fail to meet the classification conditions for the
category of held-for-sale, the Company will no longer classify a non-current asset or disposal
group as held-for-sale or remove out a non-current asset from the held-for-sale disposal
group, and it will be measured by one of the followings whichever is lower: (1) The book
value before being classified as held for sale will be adjusted according to the depreciation,
amortization or impairment that would have been recognized under the assumption that it
was not classified as held for sale; (2) The recoverable amount.
13. Long-term Equity Investments
The long-term equity investments of this part refer to the long-term equity investments that
the Group has control, joint control or significant influence over the investees. The long-term
equity investment that the Group does not have control, joint control or significant influence
over the investees, should be recognized as available-for-sale financial assets or be measured
by fair value with the changes should be included in the financial assets accounting of the
current gains and losses, and please refer the details of the accounting policies to Notes IV 9
“Financial Instrument”.
Joint control, refers to the control jointly owned according to the relevant agreement on an
arrangement by the Group and the relevant activities of the arrangement should be decided
only after the participants which share the control right make consensus. Significant
influence refers to the power of the Group which could anticipate in the finance and the
operation polices of the investees, but could not control or jointly control the formulation of
the policies with the other parties.
(1) Recognition of investment costs
As for long-term equity investments acquired by enterprise merger, if the merger is under the
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same control, the share of the book value of the owner’s equity of the merged enterprise, on
the date of merger, is regarded as the initial cost of the long-term equity investment. The
difference between the initial cost of the long-term equity investment and the payment in
cash, non-cash assets transferred as well as the book value of the debts borne by the merging
party shall offset against the capital reserve. If the capital reserve is insufficient to dilute, the
retained earnings shall be adjusted. If the consideration of the merging enterprise is that it
issues equity securities, it shall, on the date of merger, regard the share of the book value of
the shareholder's equity of the merged enterprise on the consolidated financial statement of
the ultimate control party as the initial cost of the long-term equity investment. The total face
value of the stocks issued shall be regarded as the capital stock, while the difference between
the initial cost of the long-term equity investment and total face value of the shares issued
shall offset against the capital reserve. If the capital reserve is insufficient to dilute, the
retained earnings shall be adjusted. The equities of the combined party which respectively
acquired through multiple transaction under the same control that ultimately form into the
combination of the enterprises under the same control, should be disposed according whether
belongs to package deal; if belongs to package deal, each transaction would be executed
accounting treatment by the Company as a transaction of acquiring the control right. If not
belongs to package deal, it shall, on the date of merger, regard the enjoyed share of the book
value of the shareholder's equity of the merged enterprise on the consolidated financial
statement of the ultimate control party as the initial cost of the long-term equity investment,
and as for the difference between the initial investment cost of the long-term equity
investment and sum of the book value of the long-term equity investment before the
combination and the book value of the consideration of the new payment that further
required on the combination date, should adjust the capital reserve; if the capital reserve is
insufficient to dilute, the retained earnings shall be adjusted. The equity investment held
before the combination date which adopted the equity method for accounting, or the other
comprehensive income confirmed for the available-for-sale financial assets, should not have
any accounting disposal for the moment.
For the long-term investment required from the business combination under different control,
the initial investment cost regarded as long-term equity investment on the purchasing date
according to the combination cost, the combination costs shall be the sum of the fair values
of the assets paid, the liabilities incurred or assumed and the equity securities issued by the
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Company. The equities of the acquirees which respectively acquired through multiple
transaction that ultimately form into the combination of the enterprises under the different
control, should be disposed according whether belongs to package deal; if belongs to
package deal, each transaction would be executed accounting treatment by the Company as a
transaction of acquiring the control right. If not belongs to package deal, the sum of the book
value of the original held equity investment of the acquirees and the newly added investment
cost should be regarded as the initial investment cost of the long-term equity investment that
changed to be accounted by cost method. If the original held equity is calculated by cost
method, the other relevant comprehensive income would not have any accounting disposal
for the moment. If the original held equity investment is the financial assets available for sale,
its difference between the fair value and the book value as well as the accumulative changes
of the fair value that include in the other comprehensive income, should transfer into the
current gains and losses.
The commission fees for audit, law services, assessment and consultancy services and other
relevant expenses occurred in the business combination by the combining party or the
purchase party, shall be recorded into current profits and losses upon their occurrence; the
transaction expense from the issuance of equity securities or bonds securities which are as
consideration for combination by the combining party, should be recorded as the initial
amount of equity securities and bonds securities.
Besides the long-term equity investments formed by business combination, the other
long-term equity investments shall be initially measured by cost, the cost is fixed in
accordance with the ways of gaining, such as actual cash payment paid by the Group, the fair
value of equity securities issued by the Group, the agreed value of the investment contract or
agreement, the fair value or original carrying amount of exchanged assets from non-monetary
assets exchange transaction, the fair value of the long-term equity investments, etc. The
expenses, taxes and other necessary expenditures directly related with gaining the long-term
equity investments shall also be recorded into investment cost. The long-term equity
investment cost for those could execute significant influences on the investees because of
appending the investment or could execute joint control but not form as control, should be as
the sum of the fair value of the original held equity investment and the newly added
investment cost recognized according to the No. 22 of Accounting Standards for Business
Enterprises—Recognition and Measurement of Financial Instrument.
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(2) Subsequent measurement and recognition of gains or losses
A long-term equity investment where the investing enterprise has joint control (except for
which forms into common operators) or significant influence over the investors should be
measured by equity method. Moreover, long-term equity investment adopting the cost
method in the financial statements, and which the Company has control on invested entity.
① Long-term equity investment measured by adopting cost method
The price of a long-term equity investment measured by adopting the cost method shall be
included at its initial investment cost and append as well as withdraw the cost of investing
and adjusting the long-term equity investment. The return on investment at current period
shall be recognized in accordance with the cash dividend or profit announced to distribute by
the invested entity, except the announced but not distributed cash dividend or profit included
in the actual payment or consideration upon gaining the investment.
② Long-term equity investment measured by adopting equity method
If the initial cost of a long-term equity investment is more than the Company's attributable
share of the fair value of the invested entity's identifiable net assets for investment, the initial
cost of the long-term equity investment may not be adjusted. If the initial cost of a long-term
equity investment is less than the Company's attributable share of the fair value of the
invested entity's identifiable net assets for investment, the difference shall be included in the
current profits and losses and the cost of the long-term equity investment shall be adjusted
simultaneously.
When measured by adopting equity method, respectively recognize investment income and
other comprehensive income according to the net gains and losses as well as the portion of
other comprehensive income which should be enjoyed or be shared, and at the same time
adjust the book value of the long-term equity investment; corresponding reduce the book
value of the long-term equity investment according to profits which be declared to distribute
by the investees or the portion of the calculation of cash dividends which should be enjoyed;
for the other changes except for the net gains and losses, other comprehensive income and
the owners’ equity except for the profits distribution of the investees, should adjust the book
value of the long-term equity investment as well as include in the capital reserve. The
investing enterprise shall, on the ground of the fair value of all identifiable assets of the
invested entity when it obtains the investment, recognize the attributable share of the net
profits and losses of the invested entity after it adjusts the net profits of the invested entity. If
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the accounting policies adopted by the investees are not accord with that of the Group,
should be adjusted according to the accounting policies of the Group and the financial
statement of the investees during the accounting period and according which to recognize the
investment income as well as other comprehensive income. For the transaction happened
between the Group and associated enterprises as well as joint ventures, if the assets launched
or sold not form into business, the portion of the unrealized gains and losses of the internal
transaction, which belongs to the Group according to the calculation of the enjoyed
proportion, should recognize the investment gains and losses on the basis. But the losses of
the unrealized internal transaction happened between the Group and the investees which
belongs to the impairment losses of the transferred assets, should not be neutralized. If the
assets launched by this Company to the associated enterprise or joint ventures constitute the
business, and the investor obtains the long-term equity investment but fails to obtain the
control right, the fair value of business launched is taken as the initial investment cost of
newly-increased long-term equity investment, and the difference between initial investment
cost and book value of business launched will be included in current profit and loss. If the
assets sold by this Company to the associated enterprises or joint ventures constitute the
business, the difference between consideration and book value of business will be included in
current profit and loss. If this Company's assets purchased from the associated enterprises or
joint ventures constitute business, accounting treatment shall be conducted in accordance
with the provisions of the Accounting Standards for Business Enterprises No. 20 -- Business
Combination, fully recognize the gains or losses related to the transaction.
The Group shall recognize the net losses of the invested enterprise until the book value of the
long-term equity investment and other long-term rights and interests which substantially
from the net investment made to the invested entity are reduced to zero. However, if the
Group has the obligation to undertake extra losses, it shall be recognized as the estimated
liabilities in accordance with the estimated duties and then recorded into investment losses at
current period. If the invested entity realizes any net profits later, the Group shall, after the
amount of its attributable share of profits offsets against its attributable share of the
un-recognized losses, resume recognizing its attributable share of profits.
For the long-term equity investment held by the Group before the first execution of the new
accounting criterion of the associated enterprises and joint ventures, if there is debit
difference of the equity investment related to the investment, should be included in the
current gains and losses according to the amount of the straight-line amortization during the
original remained period.
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③ Acquiring shares of minority interest
In the preparation for the financial statements, the balance existed between the long-term
equity investment increased by acquiring shares of minority interest and the attributable net
assets on the subsidiary calculated by the increased shares held since the purchase date (or
combination date), the capital reserves shall be adjusted, if the capital reserves are not
sufficient to offset, the retained profits shall be adjusted.
④ Disposal of long-term equity investment
In the preparation of financial statements, the Company disposed part of the long-term equity
investment on subsidiaries without losing its controlling right on them, the balance between
the disposed price and attributable net assets of subsidiaries by disposing the long-term
equity investment shall be recorded into owners ’ equity; where the Company losses the
controlling right by disposing part of long-term equity investment on such subsidiaries, it
shall treated in accordance with the relevant accounting policies in Note IV. 5 (2) “Method
on preparation of combined financial statements”.
For other ways on disposal of long-term equity investment, the balance between the book
value of the disposed equity and its actual payment gained shall be recorded into current
profits and losses.
For the long-term equity investment measured by adopting equity method, if the remained
equity after disposal still adopts the equity method for measurement, the other
comprehensive income originally recorded into owners’ equity should adopt the same basis
of the accounting disposal of the relevant assets or liabilities directly disposed by the
investees according to the corresponding proportion. The owners’ equity recognized owning
to the changes of the other owners ’ equity except for the net gains and losses, other
comprehensive income and the profits distribution of the investees, should be transferred into
the current gains and losses according to the proportion.
For the long-term equity investment which adopts the cost method of measurement, if the
remained equity still adopt the cost method, the other comprehensive income recognized
owning to adopting the equity method for measurement or the recognition and measurement
standards of financial instrument before acquiring the control of the investees, should adopt
the same basis of the accounting disposal of the relevant assets or liabilities directly disposed
by the investees and should be carried forward into the current gains and losses according to
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the proportion; the changes of the other owners’ equity except for the net gains and losses,
other comprehensive income and the profits distribution among the net assets of the investees
which recognized by adopting the equity method for measurement, should be carried forward
into the current gains and losses according to the proportion.
For those the Group lost the control of the investees by disposing part of the equity
investment as well as the remained equity after disposal could execute joint control or
significant influences on the investees, should change to measure by equity method when
compiling the individual financial statement and should adjust the measurement of the
remained equity to equity method as adopted since the time acquired; if the remained equity
after disposal could not execute joint control or significant influences on the investees,
should change the accounting disposal according to the relevant regulations of the
recognition and measurement standards of financial instrument, and its difference between
the fair value and book value on the date lose the control right should be included in the
current gains and losses. For the other comprehensive income recognized by adopting equity
method for measurement or the recognition and measurement standards of financial
instrument before the Group acquired the control of the investees, should execute the
accounting disposal by adopting the same basis of the accounting disposal of the relevant
assets or liabilities directly disposed by the investees when lose the control of them, while the
changes of the other owners’ equity except for the net gains and losses, other comprehensive
income and the profits distribution among the net assets of the investees which recognized by
adopting the equity method for measurement, should be carried forward into the current
gains and losses according to the proportion. Of which, for the disposed remained equity
which adopted the equity method for measurement, the other comprehensive income and the
other owners’ equity should be carried forward according to the proportion; for the disposed
remained equity which changed to execute the accounting disposal according to the
recognition and measurement standards of financial instrument, the other comprehensive
income and the other owners’ equity should be carried forward in full amount.
For those the Group lost the control of the investees by disposing part of the equity
investment, the disposed remained equity should change to calculate according to the
recognition and measurement standards of financial instrument, and difference between the
fair value and book value on the date lose the control right should be included in the current
gains and losses. For the other comprehensive income recognized from the original equity
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investment by adopting the equity method, should execute the accounting disposal by
adopting the same basis of the accounting disposal of the relevant assets or liabilities directly
disposed by the investees when terminate the equity method for measurement, while for the
owners’ equity recognized owning to the changes of the other owner’s equity except for the
net gains and losses, other comprehensive income and the profits distribution of the investees,
should be transferred into the current investment income with full amount when terminate
adopting the equity method.
The Group respectively disposes the equity investment of the subsidiaries through multiple
transactions until lose the control right, if the above transactions belongs to the package deal,
should execute the accounting disposal by regarding each transaction as a deal of disposing
the equity investment of the subsidiaries until lose the control right, while the difference
between each expenses of the disposal and the book value of the long-term equity investment
in accord with the disposed equity before losing the control right, should firstly be
recognized as other comprehensive income then be transferred into the current gains and
losses of losing the control right along until the time when lose it.
14. Investment Real Estates
The term “ investment real estate ” refers to the real estate held for generating rent and/or
capital appreciation. Investment real estates of the Group include the right to use any land
which has already been rented; the right to use any land which is held and prepared for
transfer after appreciation; and the right to use any building which has already been rented.
The initial measurement of the investment real estate shall be made at its cost. Subsequent
expenditures incurred for an investment real estate is included in the cost of the investment
real estate when it is probable that economic benefits associated with the investment real
estate will flow to the Group and the cost can be reliably measured, otherwise the
expenditure is recognized in profit or loss in the period in which they are incurred.
The Group shall make a follow-up measurement to the investment real estate by employing
the cost pattern on the date of the balance sheet. An accrual depreciation or amortization shall
be made for the investment real estates in the light of the accounting policies of the use right
of buildings or lands.
For details of impairment test method and withdrawal method of impairment provision of
investment real estates, please refer to Note IV. 20. “Long-term assets impairment”.
When owner-occupied real estate or inventories are changed into investment real estate or
investment real estate is changed into owner-occupied real estate, of which book value prior
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to the change shall be the entry value after the change.
When an investment real estate is changed to an owner-occupied real estate, it would be
transferred to fixed assets or intangible assets at the date of such change. When an
owner-occupied real estate is changed to be held to earn rental or for capital appreciation, the
fixed asset or intangible asset is transferred to investment real estate at the date of such
change. If the fixed asset or intangible asset is changed into investment real estate measured
by adopting the cost pattern, whose book value prior to the change shall be the entry value
after the change; if the fixed asset or intangible asset is changed into investment real estate
measured by adopting the fair value pattern, whose fair value on the date of such change
shall be the entry value after the change
An investment real estate is derecognized on disposal or when the investment real estate is
permanently withdrawn from use and no future economic benefits are expected from its
disposal. The amount of proceeds on sale, transfer, retirement or damage of an investment
real estate less its carrying amount and related taxes and expenses is recognized in profit or
loss in the period in which it is incurred.
15. Fixed Assets
(1) Conditions for recognition of fixed assets
The term "fixed assets" refers to the tangible assets that simultaneously possess the features
as follows: (a) they are held for the sake of producing commodities, rendering labour service,
renting or business management; and (b) their useful life is in excess of one fiscal year. The
fixed assets are only recognized when the relevant economic benefits probably flow in the
Group and its cost could be reliable measured. The fixed assets should take the initial
measurement according to the cost and at the same time consider the influences of the factors
of the estimated discard expenses.
(2) Depreciation methods of each fixed asset
The fixed assets should be withdrawn and depreciation by straight-line depreciation within
the useful life since the next month when the fixed assets reach the estimated available state.
The useful life, estimated net salvage and the yearly discounted rate of each fixed asset are as
follows:
Expected net
Annual
Category of fixed assets Method Useful life (Year) salvage value
deprecation (%)
(%)
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Expected net
Annual
Category of fixed assets Method Useful life (Year) salvage value
deprecation (%)
(%)
Housing and building Straight-line
20-40 5.00-10.00 2.25-4.50
depreciation
Machinery equipment Straight-line 5.00-10.00
5-10 9.00-19.00
depreciation
Electronic equipment Straight-line 0.00-10.00
3-5 18.00-33.33
depreciation
Transportation vehicle Straight-line 5.00-10.00
4-5 18.00-23.75
depreciation
Other equipment Straight-line 5-25 5.00-10.00
3.8-19.00
depreciation
The “expected net salvage value” refers to the expected amount that the Group may obtain
from the current disposal of a fixed asset after deducting the expected disposal expenses at
the expiration of its expected useful life.
(3) Testing method of impairment and withdrawal method of provision for impairment on
fixed assets
For details of the testing method of impairment and withdraw method of impairment
provision for impairment on fixed assets, please refer to Note IV. 20 “ Long-term assets
impairment”.
(4) Recognition basis, pricing and depreciation method of fixed assets by finance lease
The “finance lease” shall refer to a lease that has transferred in substance all the risks and
rewards related to the ownership of an asset. Its ownership may or may not eventually be
transferred. The fixed assets by finance lease shall adopt the same depreciation policy for
self-owned fixed assets. If it is reasonable to be certain that the lessee will obtain the
ownership of the leased asset when the lease term expires, the leased asset shall be fully
depreciated over its useful life. If it is not reasonable to be certain that the lessee will obtain
the ownership of the leased asset at the expiry of the lease term, the leased asset shall be fully
depreciated over the shorter one of the lease term or its useful life.
(5) Other explanations
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The follow-up expenses related to a fixed asset, if the economic benefits pertinent to this
fixed asset are likely to flow into the enterprise and its cost can be reliably measured, shall be
recorded into cost of fixed assets and ultimately recognized as the book value of the replaced
part; otherwise, they shall be included in the current profits and losses.
Terminate to recognize the fixed assets when the fixed assets under the disposing state or be
estimated that could not occur any economy benefits through using or disposing. When the
Group sells, transfers or discards any fixed assets, or when any fixed assets of the Group is
damaged or destroyed, the Group shall deduct the book value of the fixed assets as well as
the relevant taxes from the disposal income, and include the amount in the current profits and
losses.
The Group shall check the useful life, expected net salvage value and depreciation method of
the fixed assets at the end of the year at least, if there is any change, it shall be regarded as a
change of the accounting estimates.
16. Construction in Progress
Construction in process is measured at actual cost. Actual cost comprises construction costs,
borrowing costs that are eligible for capitalization before the fixed assets being ready for
their intended us and other relevant costs. Construction in process is transferred to fixed
assets when the assets are ready for their intended use.
For details of the testing method of impairment and withdraw method of impairment
provision on construction in progress, please refer to Note IV. 20 “ Long-term assets
impairment”.
17. Borrowing Costs
The borrowing costs shall include interest on borrowings, amortization of discounts or
premiums on borrowings, ancillary expenses, and exchange balance on foreign currency
borrowings. When the borrowing costs can be directly attributable to the construction or
production of assets eligible for capitalization, and the asset disbursements or the borrowing
costs have already incurred, and the construction or production activities which are necessary
to prepare the asset for its intended use or sale have already started, the capitalization of
borrowing costs begins. When the asset eligible for capitalization under acquisition and
construction or production is ready for the intended use or sale, the capitalization of the
borrowing costs shall be ceased. Other borrowing costs shall be recognized as expenses when
incurred.
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The to-be-capitalized amount of interests shall be determined in light of the actual interests
incurred of the specially borrowed loan at the present period minus the income of interests
earned on the unused borrowing loans as a deposit in the bank or as a temporary investment;
the enterprise shall calculate and determine the to-be-capitalized amount on the general
borrowing by multiplying the weighted average asset disbursement of the part of the
accumulative asset disbursements minus the general borrowing by the capitalization rate of
the general borrowing used. The capitalization rate shall be calculated and determined in
light of the weighted average interest rate of the general borrowing.
During the period of capitalization, the exchange balance on foreign currency special
borrowings shall be capitalized; the exchange balance on foreign currency general
borrowings shall be recorded into current profits and losses.
The term “assets eligible for capitalization” refers to the fixed assets, investment real estate,
inventories and other assets, of which the acquisition and construction or production may
take quite a long time to get ready for its intended use or for sale.
Where the acquisition and construction or production of a qualified asset is interrupted
abnormally and the interruption period lasts for more than 3 months, the capitalization of the
borrowing costs shall be suspended.
18. Intangible Assets
(1) Pricing method, useful life and impairment test
The term “ intangible asset ” refers to the identifiable non-monetary assets possessed or
controlled by enterprises which have no physical shape.
The intangible assets shall be initially measured according to its cost. The costs related with
the intangible assets, if the economic benefits related to intangible assets are likely to flow
into the enterprise and the cost of intangible assets can be measured reliably, shall be
recorded into the costs of intangible assets; otherwise, it shall be recorded into current profits
and losses upon the occurrence.
The use right of land gained is usually measured as intangible assets. For the self-developed
and constructed factories and other constructions, the related expenditures on use right of
land and construction costs shall be respectively measured as intangible assets and fixed
assets. For the purchased houses and buildings, the related payment shall be distributed into
the payment for use right of land and the payment for buildings, if it is difficult to be
distributed, the whole payment shall be treated as fixed assets.
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For intangible assets with a finite service life, from the time when it is available for use, the
cost after deducting the sum of the expected salvage value and the accumulated impairment
provision shall be amortized by straight line method during the service life. While the
intangible assets without certain service life shall not be amortized.
At the end of period, the Group shall check the service life and amortization method of
intangible assets with finite service life, if there is any change, it shall be regarded as a
change of the accounting estimates. Besides, the Group shall check the service life of
intangible assets without certain service life, if there is any evidence showing that the period
of intangible assets to bring the economic benefits to the enterprise can be prospected, it shall
be estimated the service life and amortized in accordance with the amortization policies for
intangible assets with finite service life.
(2) R & D expenses
The expenditures for internal research and development projects of an enterprise shall be
classified into research expenditures and development expenditures.
The research expenditures shall be recorded into the profit or loss for the current period.
The development expenditures shall be confirmed as intangible assets when they satisfy the
following conditions simultaneously, and shall be recorded into profit or loss for the current
period when they don’t satisfy the following conditions.
① It is feasible technically to finish intangible assets for use or sale;
② It is intended to finish and use or sell the intangible assets;
③ The usefulness of methods for intangible assets to generate economic benefits shall be
proved, including being able to prove that there is a potential market for the products
manufactured by applying the intangible assets or there is a potential market for the
intangible assets itself or the intangible assets will be used internally;
④ It is able to finish the development of the intangible assets, and able to use or sell the
intangible assets, with the support of sufficient technologies, financial resources and other
resources;
⑤ The development expenditures of the intangible assets can be reliably measured.
As for expenses that can ’ t be identified as research expenditures or development
expenditures, the occurred R & D expenses shall be all included in current profits and losses.
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(3) Testing method of impairment and withdraw method of impairment provision of
intangible assets
For details of the testing method of impairment and withdraw method of impairment
provision on intangible assets, see Notes IV. 20 “Long-term assets impairment”.
19. Amortization Method of Long-term Deferred Expenses
Long-term deferred expenses refer to general expenses with the apportioned period over one
year (one year excluded) that have occurred but attributable to the current and future periods.
Long-term deferred expense shall be amortized averagely within benefit period.
20. Impairment of Long-term Assets
For non-current financial Assets of fixed Assets, projects under construction, intangible
Assets with limited service life, investing real estate with cost model, long-term equity
investment of subsidiaries, cooperative enterprises and joint ventures, the Group should
judge whether decrease in value exists on the date of balance sheet. Recoverable amounts
should be tested for decrease in value if it exists. Other intangible Assets of reputation and
uncertain service life and other non-accessible intangible assets should be tested for decrease
in value no matter whether it exists.
If the recoverable amount is less than book value in impairment test results, the provision for
impairment of differences should include in impairment loss. Recoverable amounts would be
the higher of net value of asset fair value deducting disposal charges or present value of
predicted cash flow. Asset fair value should be determined according to negotiated sales price
of fair trade. If no sales agreement exists but with asset active market, fair value should be
determined according to the Buyer ’s price of the asset. If no sales agreement or asset active
market exists, asset fair value could be acquired on the basis of best information available.
Disposal expenses include legal fees, taxes, cartage or other direct expenses of merchantable
Assets related to asset disposal. Present value of predicted asset cash flow should be
determined by the proper discount rate according to Assets in service and predicted cash flow
of final disposal. Asset depreciation reserves should be calculated on the basis of single
Assets. If it is difficult to predict the recoverable amounts for single Assets, recoverable
amounts should be determined according to the belonging asset group. Asset group is the
minimum asset combination producing cash flow independently.
In impairment test, book value of the business reputation in financial report should be shared
to beneficial asset group and asset group combination in collaboration of business merger. It
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is shown in the test that if recoverable amounts of shared business reputation asset group or
asset group combination are lower than book value, it should determine the impairment loss.
Impairment loss amount should firstly be deducted and shared to the book value of business
reputation of asset group or asset group combination, then deduct book value of all assets
according to proportions of other book value of above assets in asset group or asset group
combination except business reputation.
After the asset impairment loss is determined, recoverable value amounts would not be
returned in future.
21. Employee Compensation
Employee compensation of the Company mainly includes short-term employee
compensation, departure benefits, demission benefits and other long-term employee
compensation. Of which:
Short-term compensation mainly including salary, bonus, allowances and subsidies,
employee services and benefits, medical insurance premiums, birth insurance premium,
industrial injury insurance premium, housing fund, labour union expenditure and personnel
education fund, non-monetary benefits etc. The short-term compensation actually happened
during the accounting period when the active staff offering the service for the Group should
be recognized as liabilities and is included in the current gains and losses or relevant assets
cost. Of which the non-monetary benefits should be measured according to the fair value.
Welfare after demission mainly includes setting drawing plan. Defined contribution plans
include basic endowment insurance, unemployment insurance and annuity. Deposited
amounts are charged to relevant asset costs or current profits and losses during the
period in which they are incurred. Defined benefit plan of the Company is internal early
retirement plan. According to anticipated accumulative welfare unit, the Company makes
estimates by unbiased and consistent actuarial assumption for the demographic variables and
financial variables, measures the obligations produced in defined benefit plans, and
determines the vesting period. On balance sheet date, the Company will list all obligations in
defined benefit plans as present value and include current service costs into current profits
and losses.
When terminating labour relations before expiration of contract, or layoffs with
compensations, and the Company cannot terminate the labour relations unilaterally or reduce
the demission welfare, remuneration and liabilities produced from the demission welfare
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should be determined and included in current profits and losses when determining the costs
of demission welfare and recombination. However, demission welfare not fully paid within
12 months after annual Reporting Period should be handled the same as other long-term
employees’ payrolls.
The inside employee retirement plan is treated by adopting the same principle with the above
dismiss ion welfare. The group would recorded the salary and the social security insurance
fees paid and so on from the employee’s service terminative date to normal retirement date
into current profits and losses (dismiss ion welfare) under the condition that they meet the
recognition conditions of estimated liabilities.
The other long-term welfare that the Group offers to the staffs, if met with the setting
drawing plan, should be accounting disposed according to the setting drawing plan, while the
rest should be disposed according to the setting revenue plan.
22. Estimated Liabilities
The company should recognize the related obligation as a provision for liability when the
obligation meets the following conditions: (1) That obligation is a present obligation of the
enterprise; (2) It is probable that an outflow of economic benefits from the enterprise will be
required to settle the obligation; (3) A reliable estimate can be made of the amount of the
obligation.
On the balance sheet date, an enterprise shall take into full consideration of the risks,
uncertainty, time value of money, and other factors pertinent to the Contingencies to measure
the estimated liabilities in accordance with the best estimate of the necessary expenses for the
performance of the current obligation.
When all or some of the expenses necessary for the liquidation of an estimated liabilities of
an enterprise is expected to be compensated by a third party, the compensation should be
separately recognized as an asset only when it is virtually certain that the reimbursement will
be obtained. Besides, the amount recognized for the reimbursement should not exceed the
book value of the estimated liabilities.
23. Revenue
(1) Revenue from selling goods
No revenue from selling goods may be recognized unless the following conditions are met
simultaneously: the significant risks and rewards of ownership of the goods have been
transferred to the buyer by the enterprise; the enterprise retains neither continuous
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management right that usually keeps relation with the ownership nor effective control over
the sold goods; the relevant amount of revenue can be measured in a reliable way; the
relevant economic benefits may flow into the enterprise; and the relevant costs incurred or to
be incurred can be measured in a reliable way.
The recognition of revenue from commodities for the home market when shipping the goods
or transferring property in goods; for goods exported, the revenue shall be recognized once
the goods are cleared through customs and delivered to the carrier designated by the
purchaser.
(2) Providing labour services
If the Group can reliably estimate the outcome of a transaction concerning the labour services
it provides, it shall recognize the revenue from providing services employing the
percentage-of-completion method on the date of the balance sheet. The completed proportion
of a transaction concerning the providing of labour services shall be decided by the
proportion of the labour service already provided to the total labour service to provide.
The outcome of a transaction concerning the providing of labour services can be measured in
a reliable way, means that the following conditions shall be met simultaneously: ① The
amount of revenue can be measured in a reliable way; ② The relevant economic benefits
are likely to flow into the enterprise; ③ The schedule of completion under the transaction
can be confirmed in a reliable way; and ④ The costs incurred or to be incurred in the
transaction can be measured in a reliable way.
If the outcome of a transaction concerning the providing of labour services cannot be
measured in a reliable way, the revenue from the providing of labour services shall be
recognized in accordance with the amount of the cost of labour services incurred and
expected to be compensated, and make the cost of labour services incurred as the current
expenses. If it is predicted that the cost of labour services incurred couldn’t be compensated,
thus no revenue shall be recognized.
Where a contract or agreement signed between Group and other enterprises concerns selling
goods and providing of labour services, if the part of sale of goods and the part of providing
labour services can be distinguished from each other and can be measured respectively, the
part of sale of goods and the part of providing labour services shall be treated respectively. If
the part of selling goods and the part of providing labour services cannot be distinguished
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from each other, or if the part of sale of goods and the part of providing labour services can
be distinguished from each other but cannot be measured respectively, both parts shall be
conducted as selling goods.
(3) Recognition method of the sales revenues of real estate
The Group had signed the sales contract with the real estate had completed and be examined
qualified, and reached the referable using conditions agreed by the sales contract as well as at
the same time the housing accounts had been recognized the realize of the sales revenues
when received with full amount according to the sales contract.
(4) Royalty revenue
In accordance with relevant contract or agreement, the amount of royalty revenue should be
recognized as revenue on accrual basis.
(5) Interest revenue
The amount of interest revenue should be measured and confirmed in accordance with the
length of time for which the Group’s monetary fund is used by others and the agreed interest
rate.
(6) Property leasing revenue
For the recognition method of the property leasing revenue, please refer to Notes IV. 26.
(7) Factoring business revenue
Take the paid-in factoring payment as the fair value to carry out initial measurement.
Subsequent measurement shall be carried out as per the effective interest method according
to the amortized cost. Take the balance between the fair value initially confirmed and
transferred amount of accounts receivable or face value of notes receivable as the interest
income by effective interests method and amortized costs during the financing period or the
rest credit period; interest income shall be recognized by straight-line method if it is due
within 1 year. The profits and losses from termination of recognition, impairment, and
amortization shall be included into the current profits and losses.
(8) Construction contract income
Under circumstance of that the outcome of the construction contract can be reliably estimated,
the contract income and costs are confirmed on the balance sheet date in accordance with the
percentage of completion method. The completion of the contract is determined by the
proportion of the contracted work that has been completed to the estimated total workload of
the contract.
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That the result of the construction contract can be reliably estimated refers to that: ① the
total income of the contract can be reliably measured; ②the economic benefits related to the
contract are likely to flow into the enterprise; ③ The actual contract costs can be clearly
differentiated and reliably measured; ④ the completion of the contract and the costs needed
to complete the contract can be reliably determined.
If the result of the construction contract cannot be reliably estimated, but the contract cost
can be recovered, the contract income can be confirmed according to the actual contract cost
that can be recovered, and the contract cost is confirmed as the contract expense in the
current occurring period; for the contract cost that cannot be recovered, it is immediately
confirmed as the contract cost but not the contract income when it occurs. If the uncertainties
that make the results of the construction contract cannot be reliably estimated are no longer
in existence, the income and expenses related to the construction contract are determined
according to the percentage of completion method.
If the estimated total cost of the contract exceeds the total contract income, the estimated loss
is confirmed as the current expense.
The accumulated costs incurred in the contract in progress, the accumulated recognized gross
profit (loss) and the settled price are stated in the balance sheet as net offset. The part of the
sum of the accumulated costs incurred in the contract in progress and the accumulated
recognized gross profit (loss) that exceeds the settled price is stated as the inventory; the part
of the settlement costs of the contract in progress that exceeds the sum of the accumulated
costs incurred and the accumulated recognized gross profit (loss) are stated as account
collected in advance.
For the provision of business for government and social capital cooperation (PPP) to
participate in the public infrastructure construction, the Company confirms the relevant
income and expenses for the construction services provided in accordance with the
Accounting Standards for Business Enterprises No. 15 - Construction Contract; during the
project construction period. After completing the construction of the infrastructure, the
Company confirms the income and expenses related to the follow-up business services in
accordance with the Accounting Standards for Business Enterprises No. 14 - Income.
(9) The business income of BOT and BT confirms that the Company adopts the BOT to
participate in the public infrastructure construction business. And if the infrastructure
construction is contracted to other parties without providing the actual construction services,
the Company doesn ’ t confirm the construction service income, and considers the contract
provisions according to the project price paid in construction process and ensures the
financial assets or intangible assets.
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The contract stipulates that the Company has the right to charge the object of obtaining the
service within a certain period of operation after the completion of the relevant infrastructure.
If the amount of the fee is determined, it is confirmed as the financial asset; if the amount of
the fee is uncertain, it is confirmed as the intangible asset.
The processing principles for BOT business can also be applied to some cases, such as that
the Company builds or purchases infrastructure from a third party for the purpose of the
service agreement, or the current infrastructure business and BT business that the contractual
grantor provides to the Company based on the service agreement.
For the expenses specified by the relevant service agreement that belong to routine
maintenance management fees, the Company will directly include it in the profit and loss
during the period of service provision. If the compensation for the relevant maintenance and
management fee is sure to be received or is received from the government, it shall be
included in the operating income when providing the service, and shall be matched with the
relevant expenses.
The Company mainly provides integrated solutions for water treatment and sells industrial
automation products. The income recognition conditions for providing integrated solutions
for water treatment: the Company confirms the sales revenue based on the completion
schedule approved by both parties and carries down the sales cost. The income recognition
conditions for Revenue recognition conditions for selling industrial automation products: the
Company has delivered the products to the purchaser according to the contract, and the
products that need to be accepted have passed the acceptance of the purchaser, and the
amount of sales income of the products has been determined. The relevant economic benefits
are likely to flow in, and the related costs of products can be reliably measured.
24. Government Subsidies
A government subsidy means the monetary or non-monetary assets obtained free by the
Group from the government, but excluding the capital invested by the government as the
investor with corresponding owner’s equity. Government subsidies consist of the government
subsidies pertinent to assets and government subsidies pertinent to income. Government
subsidy that is obtained by this Company used for purchasing or acquisition and construction,
or forming the long-term assets by other ways, which is confirmed the government subsidy
related to assets; Other government subsidies shall be defined as the government subsidy that
related with interest. If it does not clear the subsidy object in the government document, the
grants will be divided based on the following modes into government subsidy related to
earnings and government subsidy related to assets: (1) If the particular project of the grants is
clear in the government document, make a division according to the relative proportion of
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expense amount of the formed assets in the budget of the particular project and the expense
amount included in the cost, shall review the division ratio required at each balance sheet
date and make changes if necessary; (2) Only make general statements for the application in
the government document, for not specifying the particular item, as the governmental
subsidy related to earnings. If a government subsidy is a monetary asset, it shall be measured
in the light of the received or receivable amount. If a government subsidy is a non-monetary
asset, it shall be measured at its fair value. If its fair value cannot be obtained in a reliable
way, it shall be measured at its nominal amount. The government subsidies measured at their
nominal amounts shall be directly included in the current profits and losses.
When this Company actually received the government subsidy, recognize and measure as the
actual measured amount.
If the government grants related to assets are recognized as deferred income and are included
in the profits and losses by instalments in a reasonable and systematic way within the service
life of underlying assets. The government grants related to income, using to compensate the
relevant expenses or losses in the later period shall be recognized as the deferred income and
are included in the current profit or loss in the period of confirming the related expenses or
losses; If the government grant is used for compensating the occurred costs or loss, include it
in the current profit and loss directly.
At the same time, for the government subsidies related to assets and profits, carry out
different accounting processing for different parts; for the governmental subsidy hard to
differentiate, the overall governmental subsidies are taken as the governmental subsidy
related to revenue.
The government grants related to daily activities of this Company shall be included in other
revenues or offset related costs according to the economic business nature; Government
subsidies unrelated to daily activities shall be included into the non-operating profits.
If the governmental subsidies confirmed needs to be returned and there is the deferred
earnings balance concerned, the book balance of relevant deferred earnings shall be offset
against, but the excessive part shall be included into current profits and losses; Government
subsidies belonging to other situations shall be directly included into current losses and
profits.
25. Deferred Income Tax Assets/Deferred Income Tax Liabilities
(1) Income tax of the current period
On the balance sheet date, for the current income tax liabilities (or assets) of the current
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period as well as the part formed during the previous period, should be measured by the
income tax of the estimated payable (returnable) amount which be calculated according to
the regulations of the tax law. The amount of the income tax payable which is based by the
calculation of the current income tax expenses, are according to the result measured from the
corresponding adjustment of the pre-tax accounting profit of 2014 which in accord to the
relevant regulations of the tax law.
(2) Deferred income tax assets and deferred income tax liabilities
The difference between the book value of certain assets and liabilities and their tax
assessment basis, as well as the temporary difference occurs from the difference between the
book value of the items which not be recognized as assets and liabilities but could confirm
their tax assessment basis according to the regulations of the tax law, the deferred income tax
assets and the deferred income tax liabilities should be recognized by adopting liabilities law
of the balance sheet.
No deferred tax liability is recognized for a temporary difference arising from the initial
recognition of goodwill, the initial recognition of assets or liabilities due to a transaction
other than a business combination, which affects neither accounting profit nor taxable profit
(or deductible loss). Besides, no deferred tax assets is recognized for the taxable temporary
differences related to the investments of subsidiary companies, associated enterprises and
joint enterprises, and the investing enterprise can control the time of the reverse of temporary
differences as well as the temporary differences are unlikely to be reversed in the excepted
future. Otherwise, the Group should recognize the deferred income tax liabilities arising from
other taxable temporary difference.
No deferred taxable assets should be recognized for the deductible temporary difference of
initial recognition of assets and liabilities arising from the transaction which is not business
combination, the accounting profits will not be affected, nor will the taxable amount or
deductible loss be affected at the time of transaction. Besides, no deferred taxable assets
should be recognized for the deductible temporary difference related to the investments of
the subsidiary companies, associated enterprises and joint enterprises, which are not likely to
be reversed in the expected future or is not likely to acquire any amount of taxable income
tax that may be used for making up such deductible temporary differences. Otherwise, the
Company shall recognize the deferred income tax assets arising from a deductible temporary
difference basing on the extent of the amount of the taxable income that is likely to be
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acquired to make up such deductible temporary differences
For any deductible loss or tax deduction that can be carried forward to the next year, the
corresponding deferred income tax asset shall be determined to the extent that the amount of
future taxable income to be offset by the deductible loss or tax deduction to be likely
obtained.
On the balance sheet date, the deferred income tax assets and the deferred income tax
liabilities shall be measured at the tax rate applicable to the period during which the assets
are expected to be recovered or the liabilities are expected to be settled.
The book value of deferred income tax assets shall be reviewed at each balance sheet date. If
it is unlikely to obtain sufficient taxable income to offset against the benefit of the deferred
income tax asset, the book value of the deferred income tax assets shall be written down. Any
such write-down should be subsequently reversed where it becomes probable that sufficient
taxable income will be available.
(3) Income tax expenses
Income tax expenses include current income tax and deferred income tax.
The rest current income tax and the deferred income tax expenses or revenue should be
included into current gains and losses except for the current income tax and the deferred
income tax related to the transaction and events that be confirmed as other comprehensive
income or be directly included in the shareholders’ equity which should be included in other
comprehensive income or shareholders ’ equity as well as the book value for adjusting the
goodwill of the deferred income tax occurs from the business combination.
(4) Offset of income tax
The current income tax assets and liabilities of the Group should be listed by the written-off
net amount which intend to executes the net amount settlement as well as the assets acquiring
and liabilities liquidation at the same time while owns the legal rights of settling the net
amount.
The deferred income tax assets and liabilities of the Group should be listed as written-off net
amount when having the legal rights of settling the current income tax assets and liabilities
by net amount and the deferred income tax and liabilities is relevant to the income tax which
be collected from the same taxpaying bodies by the same tax collection and administration
department or is relevant to the different taxpaying bodies but during each period which there
is significant reverse of the deferred income assets and liabilities in the future and among
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which the involved taxpaying bodies intend to settle the current income tax and liabilities by
net amount or are at the same time acquire the asset as well as liquidate the liabilities.
26. Leasing
Financing leasing virtually transferred the whole risks and leasing of the compensation
related to the assets ownership and their ownership may eventually be transferred or maybe
not. Other leasing except for the financing leasing is operating leasing.
(1) Business of operating leases recorded by the Group as the lessee
The rent expenses from operating leases shall be recorded by the lessee in the relevant asset
costs or the profits and losses of the current period by using the straight-line method over
each period of the lease term. The initial direct costs shall be recognized as the profits and
losses of the current period. The contingent rents shall be recorded into the profits and losses
of the current period in which they actually arise.
(2) Business of operating leases recorded by the Group as the lessor
The rent incomes from operating leases shall be recognized as the profits and losses of the
current period by using the straight-line method over each period of the lease term. The
initial direct costs of great amount shall be capitalized when incurred, and be recorded into
current profits and losses in accordance with the same basis for recognition of rent incomes
over the whole lease term. The initial direct costs of small amount shall be recorded into
current profits and losses when incurred. The contingent rents shall be recorded into the
profits and losses of the current period in which they actually arise.
(3) Business of finance leases recorded by the Group as the lessee
On the lease beginning date, the Group shall record the lower one of the fair value of the
leased asset and the present value of the minimum lease payments on the lease beginning
date as the entering value in an account, recognize the amount of the minimum lease
payments as the entering value in an account of long-term account payable, and treat the
balance between the recorded amount of the leased asset and the long-term account payable
as unrecognized financing charges. Besides, the initial direct costs directly attributable to the
leased item incurred during the process of lease negotiating and signing the leasing
agreement shall be recorded in the asset value of the current period. The balance through
deducting unrecognized financing charges from the minimum lease payments shall be
respectively stated in long-term liabilities and long-term liabilities due within 1 year.
Unrecognized financing charges shall be adopted by the effective interest rate method in the
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lease term, so as to calculate and recognize current financing charges. The contingent rents
shall be recorded into the profits and losses of the current period in which they actually arise.
(4) Business of finance leases recorded by the Group as the lessor
On the beginning date of the lease term, the Group shall recognize the sum of the minimum
lease receipts on the lease beginning date and the initial direct costs as the entering value in
an account of the financing lease values receivable, and record the unguaranteed residual
value at the same time. The balance between the sum of the minimum lease receipts, the
initial direct costs and the unguaranteed residual value and the sum of their present values
shall be recognized as unrealized financing income. The balance through deducting
unrealized financing incomes from the finance lease accounts receivable shall be respectively
stated in long-term claims and long-term claims due within 1 year.
Unrecognized financing incomes shall be adopted by the effective interest rate method in the
lease term, so as to calculate and recognize current financing revenues. The contingent rents
shall be recorded into the profits and losses of the current period in which they actually arise.
27. Other Main Accounting Policies and Estimates
Termination of operation refers to a separately identifiable constituent part that satisfies one
of the following conditions that has been disposed of by the Company or is classified as
held-for-sale: This constituent part represents an independent main business or a separate
main business area; This constituent part is part of an associated plan that is intended to be
disposed of in an independent main business or a separate major business area; This
constituent part is a subsidiary that is specifically acquired for resale.
For accounting method of termination of operation, please refer to relevant description of
Notes IV. 12 “Assets held for sale and disposal group”
28. Changes in Main Accounting Policies and Estimates
(1) Changes of accounting policies
Changes of accounting policies resulted from implementing new Accounting Standards for
Business Enterprises:
On 28 April 2017, the Ministry of Finance issued the Accounting Standards for Business
Enterprises No. 42 - Non-current Assets and Disposal Groups Held for Sale and Termination
of Operations (CaiKuai [2017] No. 13), which is required to be implemented from the date of
28 May 2017. On 10 May 2017, the Ministry of Finance issued the Accounting Standards for
Business Enterprises No. 16-Governmental Subsidies (revised in 2017) (CaiKuai [2017] No.
15), which is required to be implemented from the date of 12 June 2017. The Company
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began to implement the two above-mentioned accounting standards according to the time
required by the Ministry of Finance.
The Accounting Standards for Business Enterprises No. 42 - Non-current Assets and
Disposal Groups Held for Sale and Termination of Operations specified the classification,
measurement, presentation and disclosure of non-current assets and disposal group held for
sale, and the presentation and disclosure of termination of operations. The financial statement
has already adjusted the termination of operation existed on the date of implementation (28
May 2017) and presentation of comparative annual financial statement and the disclosure of
annotations according to the Standards. The above-mentioned changes of accounting policies
had no influences on the data of last year of the Company, so there was no need to
retroactively adjust.
Before implementing the Accounting Standards for Business Enterprises No.
16-Governmental Subsidies (revised in 2017), the Company included the obtained
governmental subsidies into non-operating income; the governmental subsidies related to
assets were recognized as deferred income, which is amortized averagely within the useful
life and included into current gains and losses. After implementing the Accounting Standards
for Business Enterprises No. 16-Governmental Subsidies (revised in 2017), the governmental
subsidies related to routine activities occurred after 1 January 2017 were included into other
income; the governmental subsidies have nothing to do with routine activities were included
into non-operating income and expense.
(2) Change of accounting estimates
There was no any change of accounting estimate of the Company in the Reporting Period.
29. Critical Accounting Judgments and Estimates
Due to the inside uncertainty of operating activity, the Group needed to make judgments,
estimates and assumption on the book value of the accounts without accurate measurement
during the employment of accounting policies. And these judgments, estimates and
assumption were made basing on the prior experience of the senior executives of the Group,
as well as in consideration of other factors. These judgments, estimates and assumption
would also affect the report amount of income, costs, assets and liabilities, as well as the
disclosure of contingent liabilities on balance sheet date. However, the uncertainty of these
estimates was likely to cause significant adjustment on the book value of the affected assets
and liabilities.
The Group would check periodically the above judgments, estimates and assumption on the
basis of continuing operation. For the changes in accounting estimates only affected on the
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current period, the influence should be recognized at the period of change occurred; for the
changes in accounting estimates affected the current period and also the future period, the
influence should be recognized at the period of change occurred and future period.
On the balance sheet date, the Group needed to make judgments, estimates and assumption
on the accounts in the following important items:
(1) Revenue Recognition - Construction Contract
If the construction contract results can be reliably estimated, the Company adopts the method
of completion percentage to confirm the contract income on the balance sheet date. The
percentage of contract completion is confirmed in accordance with the method described in
Note IV, 23, Revenue, and is cumulatively calculated in each fiscal year in which each
construction contract is executed.
Significant judgment is required in determining the percentage of completion, contract costs
incurred, estimated total contract income and total cost, and contract recyclability, and the
project management personnel usually make judgments mainly based on past experience and
work. The estimated total contract income and total cost, as well as estimated changes in
contract execution results, may have an impact on operating income, operating costs, and
profit or loss for the current or subsequent period of the change, and may have a significant
impact.
(2) Categorization of leasing
In accordance with Accounting Standards for Enterprises No. 21 – Leasing, the Group
categorized the leasing into operating lease and finance lease. During the categorization, the
management level needed to make analysis and judgment on whether all the risk and
compensation related with the leased assets had been transferred to the leasee, or whether the
Group had already undertaken all the risk and compensation related with the leased assets.
(3) Provision for bad debts
In accordance with the accounting policies of accounts receivable, the Group measured the
losses for bad debts by adopting allowance method. The impairment of accounts receivable
was based on the appraisal of the recoverability of accounts receivable. The impairment of
accounts receivable was dependent on the judgment and estimates. The actual amount and
the difference of previous estimates would affect the book value of accounts receivable and
the withdrawal and reversal on provision for bad debts of accounts receivable during the
period of estimates being changed.
(4) Provision for falling price of inventories
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In accordance with the accounting policies of inventories, for the inventories that the costs
were more than the net realizable value as well as out-of-date and dull-sale inventories, the
Group withdrawn the provision for falling price of inventories on the lower one between
costs and net realizable value. Evaluating the falling price of inventories needed the
management level gain the valid evidence and take full consideration of the purpose of
inventories, influence of events after balance sheet date and other factors, and then made
relevant judgments and estimates. The actual amount and the difference of previous estimates
would affect the book value of inventories and the withdrawal and reversal on provision for
bad debts of inventories during the period of estimates being changed.
(5) The fair value of financial instrument
For the financial instruments without active market, the Group recognized the fair value by
various methods. These evaluation methods included discounted cash flow mode analysis,
etc. The Group needed to estimate the future cash flow, credit risk, fluctuation rate of market
and relativity and other factors, as well as choose the property discount rate. Due to the
uncertainty of relevant assumptions, so their changes would affect the fair value of financial
instrument.
(6) Held-to-maturity investments
The Company classifies the non-derivative financial asset with a fixed or determinable
amount of repo price, and a fixed date of maturity, which the enterprise holds for a definite
purpose or the enterprise is able to hold until its maturity, to held-to-maturity investment.
Such classification concerns lots of judgments. During the judgment process, the Company
will assess the purpose and capability for holding such kind of investment to maturity. Except
for special cases (for example, selling investment with no-large amount when the maturity
date is closely to come), if the Company can ’ t hold the investment to maturity date, the
Company should re-classify all that investment to available-for-sale financial assets, and
shouldn’t classify those financial assets into hold-to-maturity investment in the current fiscal
year and the next two complete fiscal years. Such cases may have significant impact on
related financial assets value stated in financial statements, and may influence the risk
management strategy for financial tools of the Company.
(7) Impairment of held-to-maturity investment
The decision about confirming the impairment of the investment held-to-maturity by the
Company depends on the judgment of the management layer to a great extent. The objective
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evidences of the occurrence of the impairment include there is serious financial difficulties of
the issuer which lead the financial assets could not be continued to deal in the active market
and could not execute the clauses of the contracts (for example, to pay for the interests or the
principal occurs default) and so on. When executing the judgment, the Company should
assess the influences of the objective evidences of the occurrence of the impairment on the
estimated future cash flow of the investment.
(8) The impairment of financial assets available for sale
The Group judged whether the financial assets available for sale were impaired relying
heavily on the judgment and assumption of the management team, so as to decide whether
recognized the impairment losses in the income statement. During the process of making the
judgment and assumption, the Group needed to appraise the balance of the cost of the
investment exceeding its fair value and the continuous period, the financial status and
business forecast in a short period, including the industrial situation, technical reform, credit
level, default rate and risk of counterparty.
(9) Provision for impairment of long-term assets
The Group made a judgment on the non-current assets other than financial assets whether
they had any indication of impairment on the balance sheet date. For the intangible assets
without finite service life, other than the annual impairment test, they should be subject to the
impairment test when there was any indication of impairment. For other non-current
non-financial assets, which should be subjected to impairment test when there was indication
of impairment indicated that the book value can’t be recoverable.
When the book value of the assets or assets portfolio was more than the recoverable amount,
which was the higher one between the net amount of fair value after deducting the disposal
expenses and the discounted amount of the estimated future cash flow, it means impairment
incurred.
The net amount of fair value after deducting the disposal expenses should be fixed the price
in the sale agreement for similar assets in the fair transaction minus the increased costs
directly attributable to the assets disposal.
When estimated the discounted value of future cash flow, the Group needed to make
important judgment on the output, selling price, relevant costs and the discount rate for
calculating the discounted amount, etc. When estimated the recoverable amount, the Group
would adopt all the available documents, including the prediction for relevant output, selling
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price and relevant operating costs arising from reasonable and supportive assumptions.
The Group made the impairment test on goodwill at least one time per year, which required
to predict the discounted amount of the future cash flow of the assets or assets portfolio with
the distributed good will, for which, the Group needed to predict the future cash flow of the
assets or assets portfolio, and adopt the property discounted rate to decide the discounted
amount of future cash flow.
(10) Depreciation and amortization
For the investment real estate, fixed assets and intangible assets, the Group withdrew the
depreciation and amortization by adopting the straight-line method during the service life
after full consideration of the salvage value. The Group checked the service life periodically
so as to decide the amount of depreciation and amortization at each Reporting Period. The
service life was fixed by the Group in accordance with the previous experience of the similar
assets and the expected technical update. If there was any significant change on the previous
estimates, the depreciation and amortization expenses should be adjusted.
(11) Deferred income tax assets
Within the limit that it was likely to have sufficient taxable profits to offset the losses, the
Group recognized the deferred income tax assets by all the unused tax losses, which needed
the management level of the Group to estimate time and amount of the future taxable profits
incurred with many judgments, as well as integrate strategy of tax payment, to decide the
amount of deferred income tax assets which should be recognized.
(12) Income tax
During the routine operating activities, there were some uncertainty in the ultimate tax
treatment and calculation for parts of transactions. Some accounts of such transaction could
be listed as pre-tax expenditures only after the approval of taxation authorities. If there were
any differences between the ultimate result of recognition for these taxation maters and their
initial estimates, the differences would affect the current income tax and deferred income tax
at the period of ultimate recognition.
(13) Internal early retirement welfare and supplementary retirement welfare
Amounts of expenditures and liabilities of internal early retirement welfare and
supplementary retirement welfare should be determined according to assumption terms.
Assumption terms include discount rate, average growth rate of medical costs, growth rate of
subsidies for early retirement employees and retirees and other factors. The differences of
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actual results and assumption should be confirmed immediately and included into costs of
current year. Although the management have adopted reasonable assumption terms, changes
of actual experience value and assumption terms may affect the internal early retirement
welfare, supplementary retirement benefits and balance of liabilities.
(14) Estimated liabilities
The Group made the estimation on product quality guarantee, predicted loss of contract and
the fine for delayed delivery etc. and withdrew the relevant provision for estimated liabilities
in accordance the provisions of contract, current knowledge and experience. Under the
condition that the contingent event has formed a current duty and fulfilling the duty is likely
to cause the economical interest outflow the Group, the Group measures the estimated
liabilities in accordance with the best estimate of the necessary expenses for the performance
of the current duty. The recognition and measurement of estimated liabilities were heavily
relied on the judgment of the management team. During the process of making judgment, the
Group needed to appraise the relevant risks, uncertainty and the time value of money and etc.
Of which, the Group estimated the liabilities basing on the after-sale services commitments
to the customers upon the sale, repair and reform of goods. When estimating the liabilities,
the Group has fully taken the consideration of the latest repair experience, but which may not
reflect the repair situation in the future. Any increase / decrease of the provision for estimated
liabilities may affect the profits and losses in the future periods.
(15) Measurement for fair value
Some assets and liabilities of this Company will be measured at fair value in the financial
statements. The board of directors of this Company has established the appraisement
committee (led by the CFO of this Company) to confirm appropriate appraisement
technology and input value for measurement of fair value. This Company will apply
available and observable market data during estimating the fair value of some assets and
liabilities. If the input value in Level 1 is not available, this Company will entrust a third
qualified appraiser for the estimation. The appraisement committee will closely cooperate
with the outside appraiser to determine proper estimation technology and input values of the
related models. CFO submits a report to the discoveries of the appraisement committee to the
board of directors of this Company to explain the reasons of fluctuation of fair value of
related assets and liabilities. Related information of the appraisement technology and input
value during the process of confirming the fair value of various assets and liabilities shall be
disclosed in Note X.
V. Taxation
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1. Main Taxes and Tax Rate
Category of taxes Specific situation of the taxes rate
Calculated the output tax at 3%, 5%, 6%, 10%, 11%, 13%, 16%, 17% and paid
the VAT by the amount after deducting the deductible withholding VAT at
VAT
current period, of which the VAT applicable to easy collection won’t belong to
the deductible withholding VAT.
Paid at 7% of the circulating tax actually paid, of which Dongguan Packing,
Urban maintenance and construction
tax Dongguan Konka, Boluo Konka, Boluo Konka Precision, and Kunshan
Kangsheng of 5%.
Hong Kong Konka, Konka Household Appliances Investment, Konka
Household Appliances International Trading, Konka Zhisheng, and Chain
Kingdom of 16.5%; Telecommunication Technology, Dongguan Konka, Anhui
Enterprise income tax Konka, E-display, Kangqiao Easy Chain, and Wankaida and Chongqing
Qingjia, Commercial System Technology, and Econ Technology of 15%; and
Europe Konka of 31%. The Company as the parent and the other subsidiaries
paid at 25% of the taxable income.
Education surtax Paid at 3% of the circulating tax actually paid.
Local education surtax Paid at 2% of the circulating tax actually paid.
Foundation for water works Paid at 1% and 0.5% of the circulating tax actually paid.
Note: (1) In accordance with the Notice on Printing the Administration Method on Charging
and Use of the Treatment Funds of Discarded Electronic Appliance and Electric Products
issued by the Ministry of Finance, Ministry of Environmental Protection, National
Development and Reform Commission, Ministry of Industry and Information, General
Administration of Customs and National Taxation Bureau (CZ [2012] No. 34), and the
Administration Method on Charging and Use of the Treatment Funds of Discarded Electronic
Appliance and Electric Products issued by National Taxation Bureau (GJSWZJGG [2012] No.
41), the domestic manufacturer of the electrical appliances and electronic products of PRC
started to pay the treatment funds for discarded electrical appliance and electronic products
according the sales volume (trusted processing amount) and relevant charging standards from
1 July 2012. According to the regulations, the Group’s charging standards were RMB13 per
set of TV, RMB12 per set of refrigerator and RMB7 per set of washing machine.
(2) According to regulations of Temporary Provisions of Income Tax of Trans-boundary Tax
Payment Enterprises by State Administration of Taxation, resident enterprises without
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Konka Group Co., Ltd. Interim Report 2018
business establishment or places of legal persons should be tax payment enterprises with the
administrative measures of income tax of “unified computing, level-to-level administration,
local prepayment, liquidation summary, and finance transfer ” . It came into force from 1
January 2008. According to the above methods, the Company ’s sales branch companies in
each area will hand in the corporate income taxes in advance from 1 January 2008 and will
be final settled uniformly by the Company at the year-end.
(3) According to the document of Finance and Taxation [2018] No. 32 issued by the
Ministry of Finance and the State Administration of Taxation, for the taxpayers who have
taxable sales behaviors of VAT, the tax rates shall be adjusted from originally applicable 17%
and 11% to 16% and 10% respectively from 1 May 2018.
2. Tax Preference and Approved Documents
(1) On 31 October 2017, Shenzhen Konka Telecommunications Technology Co., Ltd., the
subsidiary of this Company obtained the high-tech enterprise certificate (certificate No.:
GR201444201722) jointly issued by Shenzhen Technology Innovation Committee, Finance
Commission of Shenzhen Municipality, Shenzhen Municipal Office, SAT, Shenzhen Local
Taxation Bureau, with a valid period of three years. According to related taxation regulations,
Shenzhen Konka Telecommunications Technology Co., Ltd. enjoys related taxation
preferential policies as a high-tech enterprise from 2017 to 2019 and pays the enterprise
income tax as per the preferential tax rate of 15%.
(2) On 31 October 2017, Wankaida, the subsidiary of this Company obtained the High-tech
Enterprise Certificate (certificate No.: GR201744204716) joint issued by Shenzhen
Technology Innovation Committee, Finance Committee of Shenzhen Municipality, Shenzhen
Municipal Office, SAT and Shenzhen Local Taxation Bureau with a valid period of three
years. According to related taxation regulations, Wankaida enjoys related taxation
preferential policies as a high-tech enterprise from 2017 to 2019and pays the enterprise
income tax as per the referential tax rate of 15%.
(3) On 1 November 2017, Dongguan Konka Electronic Co., Ltd., the subsidiary of this
Company obtained the High-tech Enterprise Certificate (certificate No.: GR201744003812)
jointly issued by Department of Science and Technology of Guangdong Province,
Department of Finance of Guangdong Province, Guangdong Provincial Office, SAT,
Guangdong Local Taxation Bureau with a valid period of three years. According to related
taxation regulations, the company enjoys related taxation preferential policies as a high-tech
enterprise from 2017 to 2019 and pays the enterprise income tax as per the preferential tax
rate of 15%.
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Konka Group Co., Ltd. Interim Report 2018
(4) On 21 October 2016, the subsidiary of the Company, Anhui Konka acquired the
certificate of high-technology enterprises joint issued by Anhui Province Science and
Technology Department, Department of Finance of Anhui Province, Anhui Provincial Office,
SAT, and Anhui Local Taxation Bureau with the certification number of GR201634000520
and the validity of three years. According to the relevant taxation regulations, the Anhui
Konka could enjoy the relevant preferential tax policy on the high-tech enterprise for
continuous 3 years from 2016 to 2018, and pay for the corporate income tax according to
15% of the preferential tax rate.
(5) On 21 November 2016, the subsidiary of the Company, Konka E-display acquired the
certificate of high-technology enterprises joint issued by Shenzhen Science and Technology
Innovation Committee, Finance Commission of Shenzhen Municipality, Shenzhen Municipal
Office, SAT, and Shenzhen Local Taxation Bureau with the certification number of
GR201644201332 and the validity of three years. According to the relevant taxation
regulations, the Konka E-display could enjoy the relevant preferential tax policy on the
high-tech enterprise for continuous 3 years from 2016 to 2018, and pay for the corporate
income tax according to 15% of the preferential tax rate.
(6) On 31 October 2017, Shenzhen Konka Commercial System Technology Co., Ltd., the
subsidiary of this Company obtained the high-tech enterprise certificate (certificate No.:
GR201744202349) jointly issued by Shenzhen Technology Innovation Committee, Finance
Committee of Shenzhen Municipality, Shenzhen Municipal Office, SAT, Shenzhen Local
Taxation Bureau with a valid period of three years. According to related taxation regulations,
the company enjoys related taxation preferential policies as a high-tech enterprise from 2017
to 2019 and pays the enterprise income tax as per the preferential tax rate of 15%.
(7) According to Notice about Related Taxation Policy Problems of Further Implementation
of the Western Development Strategy CS [2011] No. 58, Chongqing Qingjia, the subsidiary
of this Company pays the enterprise income tax as per the referential tax rate of 15% from 1
January 2011 to 31 December 2020.
(8) According to the Overall Development Plan on Shenzhen-Hong Kong Cooperation on
Modern Service Industries in Qianhai Area approved by the State Council and the Industry
Access Catalogue of Modern Service Industry in Qianhai, Shenzhen issued by the National
Development and Reform Commission, Shenzhen Kangqiao Easy Chain Technology Co.,
Ltd., a subsidiary of the Company was established in Qianhai, and enjoyed a 15% income tax
rate, and the privileges in Qianhai can be superimposed with others.
(9) According to the fiscal and taxation document [2011] No. 100 published by the Ministry
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Konka Group Co., Ltd. Interim Report 2018
of Finance and the State Administration of Taxation, for the VAT general taxpayers who sell
their self-developed and produced software products, the VAT shall be levied at the rate of
17%, and then the part that the actual tax burden on their VAT exceeds 3 will be implemented
with the policy of immediate withdrawal. The Company and its subsidiaries,
Telecommunication Technology, Wankaida Technology, and E-display Service all enjoy this
preferential policy.
(10) On 28 December 2017, Econ Technology, a subsidiary of the Company, obtained the
High-tech Enterprise Certificate, certificate No.: GR201737001495, valid for three years.
According to the relevant tax regulations, the Telecommunication Technology enjoys related
tax incentives for high-tech companies for three consecutive years from 2017 to 2019 and is
subject to corporate income tax at a preferential rate of 15%.
(11) According to the regulations of the Special Catalogue of VAT Concessions for Products
and Labors with Comprehensive Utilization of Resources issued by the Ministry of Finance
and the State Administration of Taxation (Finance and Taxation [2015] No. 78), the
wastewater treatment business operated by Lairun Holdings belongs to the this catalogue.
Then after it has been levied the VAT at a rate of 17 %, the actual tax burden on the
wastewater treatment income tax will be refunded in accordance with the 70% of the actual
tax burden, and the actual tax burden on the renewable water income VAT will be refunded
immediately at 50%. That Lairun Holdings enjoyed the tax concession was registered and
recorded in August 2017 in Laizhou Taxation Bureau of Shandong Province.
(12) As mentioned in (11), Laizhou Binhai Sewage Treatment Co., Ltd. enjoys the policy of
immediate withdrawal of VAT levied for the income of sewage treatment. The Binhai
Company was registered and recorded in December 2017 in Laizhou Taxation Bureau of
Shandong Province.
(13) According to the Notice on Promoting the Development of VAT, Business Tax and
Enterprise Income Tax Policy for Energy-Saving Service Industry issued by the Ministry of
Finance and the State Administration of Taxation (Finance and Taxation [2010] No. 110),
Lairun Holdings enjoys the preferential policy of tax exemptions since 2017 for three years
and halved in next three years.
(14) As mentioned in (13), Laizhou Binhai Sewage Treatment Co., Ltd. enjoys the
preferential policy of tax exemptions since 2017 for three years and halved in next three
years.
VI. Notes on Major Items in Consolidated Financial Statements of the Company
Unless otherwise noted, the following annotation project (including the main projects
annotation of the financial statement of the Company), the period-begin refers to 1 January
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Konka Group Co., Ltd. Interim Report 2018
2018, the period-end refers to 30 June 2018 and this period refers to January – June 2018
with the last period of January – June 2017.
1. Monetary Funds
Item Ending balance Beginning balance
Cash on hand 122,746.45 49,343.08
Bank deposits 3,761,865,889.21 3,097,850,360.68
Other monetary funds 149,831,518.94 114,145,147.32
Total 3,911,820,154.60 3,212,044,851.08
Of which: total amount deposited in overseas 188,007,556.28 535,621,931.96
Notes: The ending balance of other monetary fund was the deposits of each margin deposit
not withdrawn at any time.
On 30 June 2018, the monetary funds deposited in overseas by the Company was
RMB188,007,556.28
2. Financial Assets at Fair Value through Profit or Loss
Item Ending balance Beginning balance
Income from agreement of forward foreign
14,497,221.94 296,799.53
exchange purchase
Transactional financial assets — —
Total 14,497,221.94 296,799.53
3. Notes Receivable
(1) Notes Receivable Listed by Category
Item Ending balance Beginning balance
Bank acceptance bill 2,174,328,097.06 3,324,023,541.23
Trade acceptance bill 2,440,923,143.51 1,854,645,447.00
Total 4,615,251,240.57 5,178,668,988.23
(2) Notes Receivable Pledged by the Company at the Period-end
Item Amount
Bank acceptance bill 1,414,894,166.20
Trade acceptance bill -
Total 1,414,894,166.20
Notes: Up to 30 June 2018, the Company pledged the banker’s acceptance bill of the carrying
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Konka Group Co., Ltd. Interim Report 2018
value of RMB1,414,894,166.20 for the comprehensive financing business such as handling
the billing, letter of credit, letter of guarantee, and the trading financing.
(3) Notes Receivable Which had Endorsed by the Company or had Discounted and had not
Due on the Balance Sheet Date at the Period-end
Amount of recognition termination Amount of not terminated
Item
at the period-end recognition at the period-end
Bank acceptance bill - 10,000,000.00
Commercial acceptance bill - 241,824,358.53
Total - 251,824,358.53
Note: Up to 30 June 2018, the Company used the trade acceptance bill of the carrying value
of RMB241,824,358.53 as discount of bank with right of recourse, getting
RMB227,979,976.51 of short-term borrowings, and used the bank acceptance bill of the
carrying value of RMB10,000,000.00 as discount of bank with right of recourse, getting
RMB9,545,000.00 of short-term borrowings.
4. Accounts Receivable
(1) Accounts Receivable Disclosed by Category
Ending balance
Carrying amount Bad debt provision
Category Withdrawal
Proportion Carrying value
Amount Amount proportion
(%)
(%)
Accounts receivable with
significant individual amount
100.00 -
23,544,065.47 0.49 23,544,065.47
and make independent
provision for bad debt
Accounts receivable withdrawn
bad debt provision according to - - - -
credit risks characteristics
Group 1: aging group 5.84
4,690,073,018.72 97.92 273,671,868.15 4,416,401,150.57
Subtotal of groups 5.84
4,690,073,018.72 97.92 273,671,868.15 4,416,401,150.57
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Konka Group Co., Ltd. Interim Report 2018
Ending balance
Carrying amount Bad debt provision
Category Withdrawal
Proportion Carrying value
Amount Amount proportion
(%)
(%)
Accounts receivable with
insignificant single amount for
84.28
which bad debt provision 76,275,854.05 1.59 64,286,391.41 11,989,462.64
separately accrued
Total 7.55
4,789,892,938.24 100 361,502,325.03 4,428,390,613.21
(Continued)
Beginning balance
Carrying amount Bad debt provision
Withdrawa
Category
Proportion l Carrying value
Amount Amount
(%) proportion
(%)
Accounts receivable with
significant individual amount and
23,250,858.84 0.62 23,250,858.84 100.00 —
make independent provision for
bad debt
Accounts receivable withdrawn
bad debt provision according to
credit risks characteristics
Group 1: aging group 3,664,952,156.09 97.62 241,524,112.19 6.59 3,423,428,043.90
Subtotal of groups 3,664,952,156.09 97.62 241,524,112.19 6.59 3,423,428,043.90
Accounts receivable with
insignificant single amount for
which bad debt provision 65,920,181.32 1.76 46,252,277.96 70.16 19,667,903.36
separately accrued
Total 3,754,123,196.25 100.00 311,027,248.99 8.28 3,443,095,947.26
① Accounts receivable with significant individual amount and make independent
provision for bad debt at the period-end
Accounts receivable (classified Ending balance
by units)
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Konka Group Co., Ltd. Interim Report 2018
Bad debt Withdrawal
Account receivable Withdrawal reason
provision proportion (%)
Difficult to recover due to the
DSC HOLDINGS LIMITED 23,544,065.47 23,544,065.47 100 bankruptcy of that company
② In the groups, accounts receivable adopting aging analysis method to withdraw bad debt
provision:
Ending balance
Aging Withdrawal proportion
Account receivable Bad debt provision
(%)
Within 1 year 4,431,328,061.98 96,707,915.56 2.00-5.00
1 to 2 years 59,120,920.84 3,072,750.80 5.00-10.00
2 to 3 years 31,528,215.41 8,862,752.71 20.00-30.00
3 to 4 years 3,265,899.42 1,632,949.72 50.00
4 to 5 years 2,869,166.34 1,434,744.63 50.00-80.00
Over 5 years 161,960,754.73 161,960,754.73 100.00
Total 4,690,073,018.72 273,671,868.15
③ Top five of account receivable with insignificant single amount for which bad debt
provision separately accrued
Ending balance
Accounts receivable (classified by units) Bad debt Withdrawal Withdrawal
Account receivable
provision proportion (%) reason
Difficult to
H-BUSTER DO BRASIL INDUSTRIA 17,980,150.07 17,980,150.07 100 recover
Difficult to
SUBSIDIARIES OF LITE-ON GROUP 17,433,707.52 17,433,707.52 100 recover
Part of it is
expected to
HENAN BROADCAST & TELEVISION be difficult to
NETWORK CO., LTD. 4,580,000.00 1,374,000.00 30 recover
Difficult to
HILEVEL CONSUMER ITALIA S.P.A 3,374,913.78 3,374,913.78 100 recover
Part of it is
YUNNAN CABLE NETWORK GROUP expected to
be difficult to
CO., LTD
2,138,825.00 748,588.75 35 recover
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Konka Group Co., Ltd. Interim Report 2018
Ending balance
Accounts receivable (classified by units) Bad debt Withdrawal Withdrawal
Account receivable
provision proportion (%) reason
Total 45,507,596.37 40,911,360.12
(2) Accounts Receivable Withdraw, Reversed or Collected during the Reporting Period
The withdrawal amount of the bad debt provision during the Reporting Period was of
RMB29,523,274.52; the amount of the reversed or collected part during the Reporting Period
was of RMB17,339,612.15. The increased amount was RMB30,781,473.78 due to the
acquirement of controlling right of subsidiaries. The decreased amount was
RMB5,196,395.05 due to the loss of controlling right of subsidiaries. The write-off amount
was RMB0.
(3) Top 5 of the Ending Balance of the Accounts Receivable Collected according to the
Arrears Party
The total amount of top five of account receivable of ending balance collected by arrears
party was RMB1,887,434,278.576, 39.40% of total closing balance of account receivable,
the relevant closing balance of bad debt provision withdrawn was RMB37,748,685.57.
5. Prepayment
(1) Listed by Aging Analysis
Ending amount Beginning amount
Carrying amount Carrying amount
Aging Bad debt Bad debt
Proportion ( Proportion (
Amount provision Amount provision
%) %)
Within 1 year 897,670,289.17 99.17 340,443.14 466,156,792.72 99.06 175,964.90
1 to 2 years 3,257,733.06 0.36 84,702.50 1,199,279.69 0.25 565,892.65
2 to 3 years 950,621.94 0.11 329,339.03 23,736.73 0.01 —
Over 3 years 3,213,629.83 0.36 2,884,290.80 3,208,755.30 0.68 2,723,615.15
Total 905,092,274.00 100.00 3,638,775.47 470,588,564.44 100.00 3,465,472.70
Notes: (1) Significant prepayment with aging more than 1 year was mainly the prepayment
of companies with no cooperation.
(2) Top 5 of the ending balance of the prepayment collected according to the prepayment
target
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Konka Group Co., Ltd. Interim Report 2018
The total amount of top five of prepayment of closing balance collected by arrears party was
RMB485,564,872.80, accounting for 53.65% of total closing balance of prepayment.
(3) The withdrawal amount of bad debt provision this year was of RMB228,596.09; the
collected or reversed bad debt provision was RMB59,415.35 this year; and the write-off bad
debt provision was RMB0.
6. Interest Receivable
Item Ending balance Beginning balance
Deposit interest 5,506,845.29 1,422,238.38
Entrusted loan interest and
210,456.02 391,018.39
occupation fee of capital
Total 5,717,301.31 1,813,256.77
7. Dividends Receivable
Investee Ending balance Beginning balance
Shenzhen Jielunte Technology Co., Ltd — —
Total — —
8. Other Accounts Receivable
(1) Other Accounts Receivable Disclosed by Category
Ending balance
Carrying amount Bad debt provision
Category
Proportion Withdrawal Carrying value
Amount Amount
(%) proportion (%)
Other accounts receivable with
significant single amount for
183,915,489.33 22.64 173,320,694.97 94.24 10,594,794.36
which bad debt provision
separately accrued
Other accounts receivable
withdrawn bad debt provision
0.00 0.00 0.00 0.00
according to credit risks
characteristics
Group 1: aging group 625,783,203.74 77.05 35,182,845.12 5.62 590,600,358.62
Subtotal of groups 625,783,203.74 77.05 35,182,845.12 5.62 590,600,358.62
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Konka Group Co., Ltd. Interim Report 2018
Ending balance
Carrying amount Bad debt provision
Category
Proportion Withdrawal Carrying value
Amount Amount
(%) proportion (%)
Other accounts receivable
with insignificant single amount
2,515,181.05 0.31 733,893.68 29.18 1,781,287.37
for which bad debt provision
separately accrued
Total 812,213,874.12 100.00 209,237,433.77 25.76 602,976,440.35
(Continued)
Beginning balance
Carrying amount Bad debt provision
Withdrawa
Category
Proportion l Carrying value
Amount Amount
(%) proportion
(%)
Other accounts receivable with
significant single amount for
183,915,489.33 47.74 173,320,694.97 94.24 10,594,794.36
which bad debt provision
separately accrued
Other accounts receivable
withdrawn bad debt provision
according to credit risks
characteristics
Group 1: aging group 198,796,860.68 51.61 28,768,843.02 14.47 170,028,017.66
Subtotal of groups 198,796,860.68 51.61 28,768,843.02 14.47 170,028,017.66
Other accounts receivable
with insignificant single
2,516,181.05 0.65 733,893.68 29.17 1,782,287.37
amount for which bad debt
provision separately accrued
Total 385,228,531.06 100.00 202,823,431.67 52.65 182,405,099.39
Other account receivable with significant single amount for which bad debt provision
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Konka Group Co., Ltd. Interim Report 2018
separately accrued at the period-end
Ending balance
Other accounts receivable (unit) Other accounts Withdrawal
Bad debt provision Withdrawal reason
receivable proportion
Energy saving subsidy 152,402,680.00 152,402,680.00 100.00% Difficult to recover
Shenzhen Konka Video &
Part of it is expected to be
Communication Systems 18,115,952.51 7,521,158.15 41.52% difficult to recover
Engineering Co., Ltd.
Chongqing Konka Auto Electronic Irrecoverable, under
Company 13,396,856.82 13,396,856.82 100.00%
bankruptcy liquidation
Total 183,915,489.33 173,320,694.97
② In the groups, other accounts receivable adopting aging analysis method to withdraw bad
debt provision:
Ending balance
Aging
Other accounts receivable Bad debt provision Withdrawal proportion (%)
Within 1 year 578,597,643.16 12,555,416.81 2.00-5.00
1 to 2 years 16,866,255.09 966,056.61 5.00-10.00
2 to 3 years 6,551,097.99 1,324,426.95 20.00-30.00
3 to 4 years 4,418,555.84 2,209,277.92 50.00
4 to 5 years 2,443,969.67 1,221,984.84 50.00-80.00
Over 5 years 16,905,681.99 16,905,681.99 100.00
Total 625,783,203.74 35,182,845.12
(2) Bad Debt Provision Withdrawal, Reversed or Recovered in the Reporting Period
The withdrawal amount of the bad debt provision during the Reporting Period was of RMB
1,814,413.27. The increased bad debt provision was RMB5,662,913.15 due to merger and
acquistion; the amount of the reversed or collected part during the Reporting Period was of
RMB 771,614.38. The decreased amount was RMB296,147.88 due to the loss of controlling
right of subsidiaries. The write-off amount was RMB0.
(3) Other Account Receivable Classified by Account Nature
Nature Ending carrying amount
Energy-saving subsidies 152,402,680.00
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Konka Group Co., Ltd. Interim Report 2018
Nature Ending carrying amount
Intercourse funds of units 481,171,341.62
Deposit and margin 32,732,734.17
Pretty cash 6,811,882.40
Transferred funds 74,564,442.45
Others 64,530,793.48
Total 812,213,874.12
(4) Top 5 Other Accounts Receivable in Ending Balance Collected according to the
Arrears Party
Proportion of
ending balance of Ending balance of
Name of units Nature Ending balance Aging
the total other bad debt provision
accounts receivable
National energy-saving
and benefiting people 1-2 years, 4-5 years,
Subsidies
(Energy-saving over 5 years
subsidies) 152,402,680.00 19.81 152,402,680.00
Jiangbei District Transferred
Within 1 year
Housing Authority funds 61,167,585.63 7.95 1,223,351.71
Export tax rebate
Tax rebate
receivables 31,287,301.48 Within 1 year 4.07 625,746.03
Shenzhen Konka Video
& Communication Transferred
Systems Engineering funds
Co., Ltd. 18,115,952.51 3-4 years 2.35 7,521,158.15
2-3 years, 3-4 years,
Chongqing Konka Auto Intercourse
4-5 years, over 5
Electronic Company funds
13,396,856.82 years 1.74 13,396,856.82
Total — 276,370,376.44 35.92 175,169,792.71
9. Inventory
(1) Category of Inventory
Item Ending balance
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Konka Group Co., Ltd. Interim Report 2018
Of which:
the
capitalized Falling price
Carrying amount Carrying value
reserves
amount of
the
borrowings
Development projects of the property:
Development cost 563,064,669.44 0.00 563,064,669.44
Development products 11,823,931.07 0.00 11,823,931.07
94,119.39
Subtotal 574,888,600.51 94,119.39 0.00 574,888,600.51
Non-development projects of the property: 0.00
Raw materials 768,744,643.75 30,731,630.56 738,013,013.19
Semi-finished product 73,309,911.45 10,104,501.08 63,205,410.37
Inventory goods 3,785,679,772.30 318,860,184.08 3,466,819,588.22
Turnover material 43,294.21 0.00 43,294.21
Engineering construction 11,265,156.24 0.00 11,265,156.24
Subtotal 4,639,042,777.95 0.00 359,696,315.72 4,279,346,462.23
Total 5,213,931,378.46 94,119.39 359,696,315.72 4,854,235,062.74
(Continued)
Beginning balance
Of which:
the
Item capitalized Falling price
Carrying amount Carrying value
reserves
amount of
the
borrowings
Development projects of the property:
Development cost 382,096,368.17 — — 382,096,368.17
Development products 17,203,260.25 94,119.39 — 17,203,260.25
Subtotal 399,299,628.42 94,119.39 — 399,299,628.42
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Konka Group Co., Ltd. Interim Report 2018
Beginning balance
Of which:
the
Item capitalized Falling price
Carrying amount Carrying value
reserves
amount of
the
borrowings
Non-development projects of the property:
Raw materials 761,148,857.65 — 22,807,431.06 738,341,426.59
Semi-finished product 112,079,579.22 — 8,475,640.99 103,603,938.23
Inventory goods 3,740,419,327.12 — 291,591,777.78 3,448,827,549.34
Turnover material 291,022.95 — — 291,022.95
Subtotal 4,613,938,786.94 — 322,874,849.83 4,291,063,937.11
Total 5,013,238,415.36 94,119.39 322,874,849.83 4,690,363,565.53
(2) List of the Development Cost
Expected completion
Name of item Starting time Beginning amount Ending amount
time of the next batch
Finishing by phases,
Phases of Shuiyue Phase IV is estimated to 304,110,330.47 482,049,634.94
Zhouzhuang Project 2015 be finished in 2018
Innovation Center April 2018 December 2022 77,986,037.70 81,015,034.50
Total 382,096,368.17 563,064,669.44
(3) List of the Developed Products
Completion
Name of item Beginning amount Increased Decreased Ending amount
time
Shuiyue
Zhouzhuang Project Y 2014 3,955,097.73 3,955,097.73
(Phase I)
Shuiyue
Zhouzhuang Project Y 2015 2,072,508.39 2,072,508.39
(Phase II)
Shuiyue Y 2017 11,175,654.13 5,379,329.18 5,796,324.95
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Konka Group Co., Ltd. Interim Report 2018
Completion
Name of item Beginning amount Increased Decreased Ending amount
time
Zhouzhuang Project
(Phase III)
Total 17,203,260.25 5,379,329.18 11,823,931.07
(4) Falling Price Reserves of Inventory
Increased amount Decreased amount
Item Beginning balance Ending balance
Withdrawal Other Reverse Write-off Other
Raw
22,807,431.06 9,384,807.50 1,257,185.73 399,577.86 2,318,215.87 30,731,630.56
materials
Semi-finishe
8,475,640.99 2,653,611.25 0.00 1,024,751.16 10,104,501.08
d product
Inventory
291,591,777.78 34,644,733.04 3,456,305.22 127,115.52 2,950,588.67 7,754,927.77 318,860,184.08
goods
Total 322,874,849.83 46,683,151.79 4,713,490.95 526,693.38 6,293,555.70 7,754,927.77 359,696,315.72
Notes: other increase was due to the acquisition of control right by merging companies, and
other decrease was due to the loss of control right to subsidiaries.
(5) Withdrawal Provision Basis of the Falling Price of the Inventory and the Reasons of the
Write-off
Specific basis of withdrawal of falling price
Item Reasons for reverse Reasons for write-off
reserves of inventory
The realizable net value was lower than the Sold or disposed in the current
Raw materials carrying value — period
Semi-finished The realizable net value was lower than the Sold or disposed in the current
carrying value — period
product
Inventory The realizable net value was lower than the
— Sold in the current period
goods carrying value
The decrease of inventories ’ market price in the first half year of 2018 resulted into the
realizable net value of finished products and relevant raw materials value lower than
inventory cost.
(6) Ending balance of the inventory which includes capitalized borrowing expenses was
RMB 94,119.39.
10. Other Current Assets
150
Konka Group Co., Ltd. Interim Report 2018
Item Ending balance Beginning balance
Financial products 320,000,000.00 400,063,013.70
Entrusted financing 887,000,000.00 979,000,000.00
Unreached bank deposits
4,401,110.41
Prepayments and deductible taxes 638,595,871.52 331,862,744.70
Total 1,845,595,871.52 1,715,326,868.81
151
Konka Group Co., Ltd. Interim Report 2018
11. Available-for-sale Financial Assets
(1) List of Available-for-sale Financial Assets
Ending balance Beginning balance
Item Depreciation
Carrying amount Carrying value Carrying amount Depreciation reserves Carrying value
reserves
Available-for-sale equity instruments 702,860,021.97 10,747,785.64 692,112,236.33 722,918,184.73 10,747,785.64 712,170,399.09
Of which: measured at fair value 58,162.76 - 58,162.76
Measured by cost 702,860,021.97 10,747,785.64 692,112,236.33 722,860,021.97 10,747,785.64 712,112,236.33
Total 702,860,021.97 10,747,785.64 692,112,236.33 722,918,184.73 10,747,785.64 712,170,399.09
(2) Available-for-sale Financial Assets Measured by Cost at the Period-end
Carrying amount
Investee
Period-begin Increased Decreased Period-end
Shenzhen Qianhai Qingsong Venture Capital Fund Enterprise 20,000,000.00 20,000,000.00 0.00
Shenzhen Tianyilian Science & Technology Co., Ltd. 4,800,000.00 4,800,000.00
Shenzhen A Dot TV Co., Ltd. 5,750,000.00 5,750,000.00
Feihong Electronics Co., Ltd. 1,300,000.00 1,300,000.00
ZAEFI 100,000.00 100,000.00
Shenzhen Chuangce Investment Development Co., Ltd. 485,000.00 485,000.00
Shanlian Information Technology Engineering Center 5,000,000.00 5,000,000.00
Shenzhen CIU Science & Technology Co., Ltd. 1,153,000.00 1,153,000.00
152
Konka Group Co., Ltd. Interim Report 2018
Carrying amount
Investee
Period-begin Increased Decreased Period-end
Shenzhen Digital TV National Engineering Laboratory Co., Ltd. 6,000,000.00 6,000,000.00
Shanghai National Engineering Research Center of Digital TV Co., Ltd. 2,400,000.00 2,400,000.00
ChinaAMC - Jiayi Overseas Orientation Programs 203,000,000.00 203,000,000.00
Hunan Vary Science & Technology Co., Ltd. 47,230,000.00 47,230,000.00
Beijing Konka Technology Co., Ltd 4,700,000.00 4,700,000.00
Yibin OCT Sanjiang Real Estate Co., Ltd 120,000,000.00 120,000,000.00
Enraytek Optoelectronics (Shanghai) Co., Ltd. 61,494,666.97 61,494,666.97
Wuhan Tianyuan Environmental Protection Co., Ltd 239,447,355.00 239,447,355.00
Chongqing Konka Eurotomotive Electronic Co., Ltd. (Note) 0.00
Total 722,860,021.97 0.00 20,000,000.00 702,860,021.97
(Continued)
Depreciation reserves
Shareholding
Cash bonus of the
Investee proportion among
Period-begin Increased Decreased Period-end Reporting Period
the investees (%)
Shenzhen Qianhai Qingsong Venture Capital Fund Enterprise — — — — 6.00 —
Shenzhen Tianyilian Science & Technology Co., Ltd. — — — — 6.10 —
Shenzhen A Dot TV Co., Ltd. 5,750,000.00 — — 5,750,000.00 12.67 —
Feihong Electronics Co., Ltd. 1,300,000.00 — — 1,300,000.00 9.60 —
153
Konka Group Co., Ltd. Interim Report 2018
Depreciation reserves
Shareholding
Cash bonus of the
Investee proportion among
Period-begin Increased Decreased Period-end Reporting Period
the investees (%)
ZAEFI 100,000.00 — — 100,000.00 — —
Shenzhen Chuangce Investment Development Co., Ltd. 485,000.00 — — 485,000.00 1.00 —
Shanlian Information Technology Engineering Center 1,639,190.80 — — 1,639,190.80 9.62 —
Shenzhen CIU Science & Technology Co., Ltd. 200,000.00 — — 200,000.00 11.50 —
Shenzhen Digital TV National Engineering Laboratory Co.,
1,273,594.84 — — 1,273,594.84 6.00 —
Ltd.
Shanghai National Engineering Research Center of Digital
— — — — 4.26 —
TV Co., Ltd.
ChinaAMC - Jiayi Overseas Orientation Programs — — — — — 13,740,000.00
Hunan Vary Science & Technology Co., Ltd. — — — — 8.38 —
Beijing Konka Technology Co., Ltd — — — — 3.62 —
Yibin OCT Sanjiang Real Estate Co., Ltd — — — — 20.00 —
Enraytek Optoelectronics (Shanghai) Co., Ltd. — — — — —
18.90
Wuhan Tianyuan Environmental Protection Co., Ltd — — — — —
15.22
Chongqing Konka Eurotomotive Electronic Co., Ltd. — — — — — —
Total 10,747,785.64 — — 10,747,785.64 — —
154
Konka Group Co., Ltd. Interim Report 2018
(3) Changes of the Impairment of the Available-for-sale Financial Assets in the Reporting
Period
Category of available-for-sale financial assets Available-for-sale equity instruments
Withdrawn impairment balance at the
10,747,785.64
period-begin
Withdrawal of the Reporting Period —
Of which: transferred from other
—
comprehensive income
Decrease of the Reporting Period —
Of which: recovered or reversed from the fair
—
value after the Period
Withdrawn impairment balance at the
10,747,785.64
period-end
Note: On 27 March 2015, the People's Court of Jiangbei District, Chongqing handled the
bankruptcy liquidation application of Chongqing Electronics, the subsidiary of this Company
and established the liquidation group. This Company will not own the right of controlling
related activities of Chongqing Electronics. After bankruptcy, it will not be included into the
consolidation scope. It will be reclassified into the financial asset available for sale with the
net value of zero. Liquidation has not been finished in the current period.
155
Konka Group Co., Ltd. Interim Report 2018
12. Long-term Equity Investment
Increase/decrease in the Reporting Period
Investee Beginning balance Investment profit and loss Adjustment of other
Additional Decreased
Other equity changes
investment investment recognized under the equity method comprehensive income
Associated enterprises
Shanghai Konka Green Science &
79,729,560.91 -1,062,323.74 324,021.02
Technology Co., Ltd.
Zhuhai Jinsu Plastic Co., Ltd. 9,444,160.97 627,916.90
Shenzhen Jielunte Technology Co., Ltd ① 99,562,391.48 -6,716,864.96
Panxu Intelligence Co., Ltd 48,417,046.08 226,132.34
Shenzhen Zhongbin Konka technology co.,
14,317,400.80 -2,208,794.15
Ltd.
Shenzhen Konka Intelligent Electric Co., Ltd 4,927,589.47 -2,065,657.20
Shenzhen Konka Information Network Co.,
26,462,212.34 196,728.66
Ltd
Shenzhen Yaode Technology Co., Ltd 210,279,132.55 3,705,243.63
Guangdong Chutian Dragon Smart Card Co.,
617,214,571.50 10,226,294.00
Ltd.
Guangdong Hotcomm Information
1,523,166.24 0.00
Technology Co., Ltd
Guoguang Ruilian (Shenzhen) Internet
2,425,262.66 -939,401.62
Technology Co., Ltd
156
Konka Group Co., Ltd. Interim Report 2018
Increase/decrease in the Reporting Period
Investee Beginning balance Investment profit and loss Adjustment of other
Additional Decreased
Other equity changes
investment investment recognized under the equity method comprehensive income
Shenzhen OCT Life Network Technology Co.,
-22,084.12 3,771,400.00 0.00
Ltd
Kunshan Konka 205,706,932.86 3,587,367.82
Weihai City Water Environmental Protection
0.00
Technology Co., Ltd
Weihai Yiheng Environment Technology
Co.,Ltd
Laizhou Lairun Financial Leasing Co., Ltd
Binzhou Beihai Weiqiao Solid Waste Disposal
Co., Ltd
Shandong Bishuiyuan Environmental
Protection Technology Co., Ltd
Yantai Yikang Business Management Ceneter
(LLP)
Guangzhou Sanchuan Control System
0.00
Engineering Equipment Co., Ltd
Shenzhen Bosheng New Materials Co., Ltd 75,000,000.00 233,407.38
Heilongjiang Longkang Zhijia Technology
7,000,000.00 0.00
Co., Ltd
Shanxi Silk Road Yunqi Intelligent
5,400,000.00 0.00
Technology Co., Ltd
157
Konka Group Co., Ltd. Interim Report 2018
Increase/decrease in the Reporting Period
Investee Beginning balance Investment profit and loss Adjustment of other
Additional Decreased
Other equity changes
investment investment recognized under the equity method comprehensive income
Anhui Kaikai Shijie E-commerce Co., Ltd. 0.00
Beijing Konka Jingyuan Technology Co., Ltd 760,000.00 0.00
Shenzhen Xiaorui Technology Co., Ltd 98,000,000.00 265,133.53
Konka Venture Capital Investment (Shenzhen)
2,450,000.00
Co., Ltd
Oriexcellent (Zhuhai) Assets Management
6,000,000.00
Co., Ltd
Total 1,319,987,343.74 198,381,400.00 0.00 6,075,182.59 324,021.02 0.00
(Continued)
Increase/decrease in the Reporting Period
Ending balance
Withdrawn
Investee Declaration of cash Ending balance of impairment
impairment Cost method converted into equity method Increased merger firms
dividends or profits provision
provision
Associated enterprises
Shanghai Konka Green Science &
78,991,258.19 —
Technology Co., Ltd.
Zhuhai Jinsu Plastic Co., Ltd. 10,072,077.87 —
Shenzhen Jielunte Technology Co., Ltd ① 92,845,526.52 —
158
Konka Group Co., Ltd. Interim Report 2018
Panxu Intelligence Co., Ltd 48,643,178.42 —
Shenzhen Zhongbin Konka technology co.,
12,108,606.65 —
Ltd.
Shenzhen Konka Intelligent Electric Co., Ltd 2,861,932.27 —
Shenzhen Konka Information Network Co.,
26,658,941.00 —
Ltd
Shenzhen Yaode Technology Co., Ltd 213,984,376.18 —
Guangdong Chutian Dragon Smart Card Co.,
627,440,865.50 —
Ltd.
Guangdong Hotcomm Information
1,523,166.24 —
Technology Co., Ltd
Guoguang Ruilian (Shenzhen) Internet
1,485,861.04 —
Technology Co., Ltd
Shenzhen OCT Life Network Technology
3,749,315.88 —
Co., Ltd
Kunshan Konka 209,294,300.68 —
Weihai City Water Environmental Protection
2,027,201.88 2,027,201.88
Technology Co., Ltd
Weihai Yiheng Environment Technology
4,337,942.19 4,337,942.19
Co.,Ltd
Laizhou Lairun Financial Leasing Co., Ltd 100,033,567.26 100,033,567.26
Binzhou Beihai Weiqiao Solid Waste
63,492,789.75 63,492,789.75
Disposal Co., Ltd
Shandong Bishuiyuan Environmental 22,232,418.57 22,232,418.57
159
Konka Group Co., Ltd. Interim Report 2018
Protection Technology Co., Ltd
Yantai Yikang Business Management Ceneter
648,000.00 648,000.00
(LLP)
Guangzhou Sanchuan Control System
10,000,000.00 10,000,000.00
Engineering Equipment Co., Ltd
Shenzhen Bosheng New Materials Co., Ltd 75,233,407.38
Heilongjiang Longkang Zhijia Technology
7,000,000.00
Co., Ltd
Shanxi Silk Road Yunqi Intelligent
5,400,000.00
Technology Co., Ltd
Anhui Kaikai Shijie E-commerce Co., Ltd. 460,000,000.00 460,000,000.00
Beijing Konka Jingyuan Technology Co., Ltd 760,000.00
Shenzhen Xiaorui Technology Co., Ltd 98,265,133.53
Konka Venture Capital Investment
2,450,000.00
(Shenzhen) Co., Ltd
Oriexcellent (Zhuhai) Assets Management
6,000,000.00
Co., Ltd
Total 0.00 0.00 460,000,000.00 202,771,919.65 2,187,539,867.00 —
160
Konka Group Co., Ltd. Interim Report 2018
Note: ①Shenzhen Konka Precision Mold Manufacturing Co., Ltd was renamed as Shenzhen
Jielunte Technology Co., Ltd on 20 April 2018.
13. Investment Property
Investment Property Adopted the Cost Measurement Mode
Item Houses and buildings Total
I. Original carrying value
1. Beginning balance 249,923,047.75 249,923,047.75
2. Increased amount of the period — —
3. Decreased amount of the period — —
4. Ending balance 249,923,047.75 249,923,047.75
II. The accumulative depreciation and accumulative amortization — —
1. Beginning balance 33,467,417.76 33,467,417.76
2. Increased amount of the period 2,815,637.15 2,815,637.15
Withdraw or amortization 2,815,637.15 2,815,637.15
3. Decreased amount of the period — —
4. Ending balance 36,283,054.91 36,283,054.91
III. Impairment provision — —
1. Beginning balance — —
2. Increased amount of the period — —
3. Decreased amount of the period — —
4. Ending balance — —
IV. Carrying value — —
1. Ending carrying value 213,639,992.84 213,639,992.84
2. Beginning carrying value 216,455,629.99 216,455,629.99
161
Konka Group Co., Ltd. Interim Report 2018
14. Fixed Assets
(1) List of Fixed Assets
Transportation
Item Houses and buildings Machinery equipment Electronic equipment Other equipment Total
equipment
I. Original carrying value
1. Beginning balance 1,559,039,774.48 715,947,835.05 187,109,755.76 49,930,623.13 174,208,488.89 2,686,236,477.31
2. Increased amount of the
167,412,660.07 202,563,637.23 8,911,081.35 10,120,140.22 49,222,115.30 438,229,634.17
period
(1) Purchase 66,858,030.01
384,266.06 45,787,673.49 7,605,512.75 1,005,292.68 12,075,285.03
(2) Transfer of project under
17,325,661.28 8,871,138.39 15,400.00 1,610,504.29 5,394,043.03 33,216,746.99
construction
(3) increase of business
149,702,732.73 338,154,857.17
147,904,825.35 1,290,168.60 7,504,343.25 31,752,787.24
combination
3. Decreased amount of the
3,147,948.27 55,651,559.18 12,340,532.22 2,355,940.70 13,101,858.54 86,597,838.91
period
(1) Disposal or Scrap 3,147,948.27 55,483,214.12 12,340,532.22 2,355,940.70 13,101,858.54 86,429,493.85
(2) decrease of loss of
0.00 168,345.06 0.00 0.00 0.00 168,345.06
controlling right
4. Ending balance 1,723,304,486.28 862,859,913.10 183,680,304.89 57,694,822.65 210,328,745.65 3,037,868,272.57
162
Konka Group Co., Ltd. Interim Report 2018
Transportation
Item Houses and buildings Machinery equipment Electronic equipment Other equipment Total
equipment
II. Accumulative
depreciation
1. Beginning balance 367,660,000.41 428,143,422.45 129,422,777.12 36,768,297.26 115,293,690.98 1,077,288,188.22
2. Increased amount of the
58,501,360.68 117,083,959.55 11,799,023.66 5,407,726.87 22,465,416.81 215,257,487.57
period
(1) Withdrawal 19,721,777.35 52,337,774.41 11,149,709.12 1,864,790.85 14,903,165.88 99,977,217.61
3. Decreased amount of the
38,779,583.33 64,746,185.14 649,314.54 3,542,936.02 7,562,250.93 115,280,269.96
period
(1) Disposal or Scrap 2,403,761.41 42,556,170.47 8,863,984.18 2,463,354.38 9,771,651.56 66,058,922.00
(2) decrease of loss of
2,403,761.41 42,556,170.47 8,798,985.45 2,463,354.38 9,771,651.56 65,993,923.27
controlling right
4. Ending balance 0.00 0.00 64,998.73 0.00 0.00 64,998.73
III. Depreciation reserves 423,757,599.68 502,671,211.53 132,357,816.60 39,712,669.75 127,987,456.23 1,226,486,753.79
1. Beginning balance
2. Increased amount of the
1,064,479.47 17,067,824.99 1,249,373.18 862,703.36 1,533,559.74 21,777,940.74
period
(1) Withdrawal - 2,170,185.45 - - - 2,170,185.45
3. Decreased amount of the - 0.00 0.00 - 0.00 0.00
163
Konka Group Co., Ltd. Interim Report 2018
Transportation
Item Houses and buildings Machinery equipment Electronic equipment Other equipment Total
equipment
period
(1) Disposal or Scrap - 2,170,185.45 0.00 - 0.00 2,170,185.45
(2) decrease of loss of
0.00 1,037,548.46 425,131.58 21,775.12 183,963.57 1,668,418.73
controlling right
4. Ending balance 0.00 1,037,548.46 425,131.58 21,775.12 183,963.57 1,668,418.73
IV. Carrying value - - - - 0.00 0.00
1. Ending carrying value 1,064,479.47 18,200,461.98 824,241.60 840,928.24 1,349,596.17 22,279,707.46
2. Beginning carrying value
1,298,482,407.13 341,988,239.59 50,498,246.69 17,141,224.66 80,991,693.25 1,789,101,811.32
1,190,315,294.60 270,736,587.61 56,437,605.46 12,299,622.51 57,381,238.17 1,587,170,348.35
(2) List of Temporarily Idle Fixed Assets
Item Original carrying value Accumulative depreciation Impairment provision Carrying value
Mechanical equipment 17,316,561.19 7,128,572.44 7,419,088.45 2,768,900.30
Electronic equipment 4,417,917.35 4,417,917.35 0.00 0.00
Other equipment 157,611.28 157,611.28 0.00 0.00
Total 21,892,089.82 11,704,101.07 7,419,088.45 2,768,900.30
164
Konka Group Co., Ltd. Interim Report 2018
(3) Fixed Assets Leased in from Financing Lease
Original Accumulative
Item Impairment provision Carrying value
carrying value depreciation
Mechanical equipment 29,163,849.33 5,088,859.14 0.00 24,074,990.19
Electronic equipment 205,128.20 136,752.13 0.00 68,376.07
Total 29,368,977.53 5,225,611.27 0.00 24,143,366.26
(4) Fixed Assets Leased out from Operation Lease
Item Ending carrying value
Houses and buildings 33,819,268.21
Total 33,819,268.21
(5) Details of Fixed Assets Failed to Accomplish Certification of Property
Original Accumulative Impairment Net carrying
Item Reason
value
carrying value depreciation provision
Kangsheng Aquatic Club 21,481,356.96 2,363,211.89 — 19,118,145.07 Under processing
Huaguoyuan Project in
Huaguoyuan Road, 3,628,629.00 129,269.92 — 3,499,359.08 Under processing
Guiyang
Pangjiang Street
The problems of
Property in Dadong 10,189,892.23 842,885.68 — 9,347,006.55
developers
District, Shenyang
Yinhai Shangyu Property
in Guandu District, 5,432,239.86 244,450.82 — 5,187,789.04 Under processing
Kunming
Jingyuan Building 20,018,497.00 8,194,102.38 — 11,824,394.62 Historical reasons
Yikang Building 76,610,752.33 31,733,590.84 — 44,877,161.49 Historical reasons
15. Construction in Progress
(1) List of Construction in Progress
Ending balance Beginning balance
Impair Impair
Item ment ment
Carrying amount Carrying value Carrying amount Carrying value
provis provis
ion ion
Kunshan
— — 0.00 29,125,312.81 — 29,125,312.81
Kangsheng
165
Konka Group Co., Ltd. Interim Report 2018
Ending balance Beginning balance
Impair Impair
Item ment ment
Carrying amount Carrying value Carrying amount Carrying value
provis provis
ion ion
- Green
Park
Guangming
83,241,261.25 — 83,241,261.25 76,514,067.90 — 76,514,067.90
Project
Kunshan
2,351,789.02 — 2,351,789.02 1,643,881.07 — 1,643,881.07
gallery
Other small
35,051,674.26 — 35,051,674.26 28,580,559.23 — 28,580,559.23
projects
Total 120,644,724.53 — 120,644,724.53 135,863,821.01 — 135,863,821.01
(2) Changes of Significant Construction in Progress
Amount that
Other
transferred to
Estimated Beginning Increase decreased
Name o f item long-term fixed Ending balance
number balance Amount amount of
assets of the
the period
period
Guangming RMB241
76,514,067.90 6,727,193.35 83,241,261.25
Project million
RMB35
Green Park 29,125,312.81 0.00 29,125,312.81 0.00
million
RMB263
Kunshan gallery 1,643,881.07 707,907.95 2,351,789.02
million
Other small
28,580,559.23 20,860,829.46 14,389,714.43 35,051,674.26
projects
Total 135,863,821.01 28,295,930.76 43,515,027.24 120,644,724.53
（Continued）
Of which: the
Proportion estimated Accumulative Capitalization
amount of the
of the project Project amount of rate of the
Project name capitalized Capital resources
accumulative input capitalized interests of
progress interests of the
(%) interests the period (%)
period
Guangming Project Self-owned fund
34.54 34.54 — — —
Green Park Self-owned fund
90.63 90.63 — — —
166
Konka Group Co., Ltd. Interim Report 2018
Of which: the
Proportion estimated Accumulative Capitalization
amount of the
of the project Project amount of rate of the
Project name capitalized Capital resources
accumulative input capitalized interests of
progress interests of the
(%) interests the period (%)
period
Kunshan gallery Self-owned fund
8.81 8.81 — — —
16. Intangible Assets
(1) List of intangible assets
Foreign Franchise
Patent and
Item Land use right registered rights Other Total
know-how
trademark
I. Original
carrying
value
1. Beginning
196,989,129.47 3,519,159.61 40,234,111.64 66,665,916.59 307,408,317.31
balance
2. Increased
139,050,625.0
amount of 73,106,270.05 0.00 11,221,785.00 4,805,660.47 228,184,340.53
1
the period
(1) Purchase 0.00 0.00 0.00 2,753,050.37 2,753,050.37
(2) Transfer
of project
0.00 0.00 0.00 0.00 0.00
under
construction
(3) increase
139,050,625.0
of business 73,106,270.05 0.00 11,221,785.00 2,052,610.10 225,431,290.16
1
combination
3. Decreased
amount of 1,170,000.00 0.00 0.00 0.00 0.00 1,170,000.00
the period
(1) Disposal 1,170,000.00 0.00 1,170,000.00
(2) other
0.00 0.00 0.00
decrease
4. Ending 139,050,625.0
268,925,399.52 3,519,159.61 51,455,896.64 71,471,577.06 534,422,657.84
1
balance
167
Konka Group Co., Ltd. Interim Report 2018
Foreign Franchise
Patent and
Item Land use right registered rights Other Total
know-how
trademark
II.
Accumulated 0.00
amortization
1. Beginning
34,734,302.29 3,519,159.61 34,420,126.84 26,775,872.27 99,449,461.01
balance
2. Increased
amount of 11,472,335.15 0.00 276,920.89 4,442,025.00 4,478,725.34 20,670,006.38
the period
(1)
2,636,294.83 0.00 276,920.89 740,337.50 3,146,460.46 6,800,013.68
Withdrawal
(2) increase
of business 8,836,040.32 0.00 0.00 3,701,687.50 1,332,264.88 13,869,992.70
combination
3. Decreased
amount of 947,700.00 0.00 0.00 0.00 0.00 947,700.00
the period
(1) Disposal 947,700.00 947,700.00
(2) other
— 0.00
decrease
4. Ending
45,258,937.44 3,519,159.61 34,697,047.73 4,442,025.00 31,254,597.61 119,171,767.39
balance
III.
Depreciation 0.00
reserves
1. Beginning
2,901,082.61 2,901,082.61
balance
2. Increased
amount of 0.00
the period
(1)
0.00
Withdrawal
168
Konka Group Co., Ltd. Interim Report 2018
Foreign Franchise
Patent and
Item Land use right registered rights Other Total
know-how
trademark
3. Decreased
amount of 0.00
the period
(1) Disposal 0.00
(2) other
0.00
decrease
4. Ending
0.00 0.00 2,901,082.61 0.00 2,901,082.61
balance
IV. Carrying
0.00
value
1. Ending
134,608,600.0
carrying 223,666,462.08 0.00 13,857,766.30 40,216,979.45 412,349,807.84
1
value
2. Beginning
carrying 162,254,827.18 0.00 2,912,902.19 39,890,044.32 205,057,773.69
value
17. Goodwill
(1) Original Carrying Value of Goodwill
Increased Decreased
Name of the investees or the Formed from the
Beginning balance Ending balance
events formed goodwill business Other Dispose Other
combination
Anhui Konka 3,597,657.15 — — — 3,597,657.15
Econ Technology 460,743,447.02 460,743,447.02
Xingda Hongye 35,680,773.95 35,680,773.95
Beihai Jingmai 3,208,303.51 3,208,303.51
Econ Environmental
2,800,000.00 2,800,000.00
Engineering
Total 3,597,657.15 502,432,524.48 — — — 506,030,181.63
(2) Provisions for Goodwill Impairment
Name of the investees or the Increased Decreased
Beginning balance Ending balance
events formed goodwill Withdrawal Other Dispose Other
169
Konka Group Co., Ltd. Interim Report 2018
Name of the investees or the Increased Decreased
Beginning balance Ending balance
events formed goodwill Withdrawal Other Dispose Other
Anhui Konka — — — — — —
Econ Technology — — — — — —
Xingda Hongye — — — — — —
Beihai Jingmai — — — — — —
Econ Environmental
Engineering — — — — — —
Total — — — — — —
18. Long-term Unamortized Expenses
Amortization Other decrease
Item Beginning balance Increased amount Ending amount
amount amount
Renovation
23,241,203.51 27,609,384.34 5,032,922.46 0.00 45,817,665.39
costs
Shoppe expe
56,402,256.28 24,554,895.87 22,413,323.85 17,439.56 58,526,388.74
nse
Other 70,417,477.51 6,012,231.03 12,045,640.32 585.42 64,383,482.80
Total 150,060,937.30 58,176,511.24 39,491,886.63 18,024.98 168,727,536.93
Notes: Other decrease included the decreased amount RMB0.00 mainly generated from the
loss of control over subsidiaries.
19. Deferred Income Tax Assets/Deferred Income Tax Liabilities
(1) Deferred Income Tax Assets without Offset
Ending balance Beginning balance
Item Deductible temporary Deferred income tax Deductible temporary Deferred income tax
difference assets difference assets
Assets impairment provision 865,728,820.65 211,783,617.94 796,345,288.62 197,835,345.27
Unrealized internal sales
54,102,230.48 13,525,557.62 32,715,116.95 8,178,779.24
gain and loss
Accrued expenses 77,434,022.64 18,633,318.72 118,441,697.07 28,839,536.61
Deferred income 99,261,495.92 23,710,167.52 106,943,380.58 25,500,563.17
Deductible losses 552,517,701.19 135,814,854.93 2,250,284.11 364,943.32
170
Konka Group Co., Ltd. Interim Report 2018
Changes in fair value of
transactional financial 0.00 47,482,470.52 11,870,617.63
liabilities
others 177,909,267.07 43,724,265.15 141,409,911.41 35,352,477.88
Total 1,826,953,537.95 447,191,781.88 1,245,588,149.26 307,942,263.12
(2) Lists of Deferred Income Tax Liabilities without Offset
Ending balance Beginning balance
Item Taxable temporary Deferred income tax Taxable temporary Deferred income tax
difference liabilities difference liabilities
Accelerated depreciation of
5,237,869.27 785,680.39 6,889,703.33 1,033,455.50
fixed assets
Change in fair value of
12,372,942.00 3,093,235.50 --- ---
trading financial assets
Change in fair value of
available-for-sale financial --- --- ---
assets
Prepaid interests 142,724,394.92 35,681,098.73 45,386,505.16 11,346,626.29
Prepaid taxes 1,452,756.00 363,189.00 1,026,206.42 256,551.61
Expected equity transfer 96,862,745.08 24,215,686.27
Total 258,650,707.27 64,138,889.89 53,302,414.91 12,636,633.40
(3) List of Unrecognized Deferred Income Tax Assets
Item Ending balance Beginning balance
Deductible temporary
135,874,599.56 132,372,523.56
difference
Deductible losses 1,055,016,010.25 1,085,593,457.20
Total 1,190,890,609.81 1,217,965,980.76
20. Assets Impairment Provision
Increased Decreased
Beginning
Item Increase of Ending balance
balance Withdrawal Reverse Write-off or others
combination or other
I. Bad debt provision 517,316,153.36 31,566,283.88 49,098,516.01 18,170,641.88 5,431,777.10 574,378,534.27
II. Impairment of
322,874,849.83 46,683,151.79 4,713,490.95 526,693.38 14,048,483.47 359,696,315.72
inventories
III. Impairment provision 10,747,785.64 0.00 0.00 0.00 10,747,785.64
171
Konka Group Co., Ltd. Interim Report 2018
Increased Decreased
Item Beginning Ending balance
of the available-for-sale
balance
financial assets
IV. Impairment provision of
21,777,940.74 0.00 2,170,185.45 0.00 1,668,418.73 22,279,707.46
the fixed assets
V. Impairment provision of
2,901,082.61 0.00 0.00 0.00 2,901,082.61
the intangible assets
VI. Long-term equity
0.00 0.00 0.00 0.00
investment
Total 875,617,812.18 78,249,435.67 55,982,192.41 18,697,335.26 21,148,679.30 970,003,425.70
21. Other Non-current Assets
Item Ending balance Beginning balance
Prepayment for equipment 41,422,528.53 1,122,880.00
Prepayment for house-purchase 10,099,279.84 8,167,948.00
Entrusted loans 20,000,000.00 20,000,000.00
Total 71,521,808.37 29,290,828.00
22. Short-term Loans
Item Ending balance Beginning balance
Credit loan 41,422,528.53 1,122,880.00
Guaranteed loan 10,099,279.84 8,167,948.00
Mortgage loan 20,000,000.00 20,000,000.00
Pledged loan 71,521,808.37 29,290,828.00
Total 10,397,447,703.32 6,927,472,037.35
Note: ① Konka Household Appliances International Trading took US$72,000,000.00
usance letter of credit with 360 days as pledge, obtaining RMB476,395,071.41 short-term
loans.
② Konka Factoring discounted the notes receivable with right of recourse, obtaining
RMB237,524,976.51 short-term loans in equal amount.
Xingda Hongye obtained mortgage loan RMB210,700,000.00 by house and building with
carrying value of RMB60,288,708.63 and land use rights with carrying value of
RMB38,617,359.68
23. Financial Liabilities at Fair Value through Profit or Loss
Item Ending balance Beginning balance
172
Konka Group Co., Ltd. Interim Report 2018
Item Ending balance Beginning balance
Loss from forward foreign exchange purchase agreement 1,827,480.43 47,482,470.50
Total 1,827,480.43 47,482,470.50
24. Notes Payable
Category Ending balance Beginning balance
Trade acceptance 610,205,567.87 133,211,455.00
Bank’s acceptance bill 316,197,091.42 407,963,857.09
Total 926,402,659.29 541,175,312.09
Notes: The amount of notes payable due during the next accounting period was
RMB926,402,659.29.
25. Accounts Payable
(1) List of Accounts Payable
Aging Ending balance Beginning balance
Within 1 year 3,597,923,005.02 3,519,530,711.60
1 to 2 years 57,570,544.64 53,966,422.15
2 to 3 years 9,634,490.48 5,991,933.36
Over 3 years 33,417,303.91 32,727,199.48
Total 3,698,545,344.05 3,612,216,266.59
(2) Significant Accounts Payable Aging over One Year
Item Ending balance Unpaid/ Un-carry-over reason
Estimated construction costs 18,271,970.18 Unsettled
Payment for material purchase 17,920,695.44 Unsettled
Total 36,192,665.62
26. Advances from Customers
(1) List of Advances from Customers
Item Ending balance Beginning balance
Within 1 year 888,441,204.46 571,998,516.53
1 to 2 years 9,866,764.66 36,662,083.53
2 to 3 years 13,858,968.24 14,937,831.50
173
Konka Group Co., Ltd. Interim Report 2018
Item Ending balance Beginning balance
Over 3 years 24,505,478.96 16,912,352.61
Total 936,672,416.32 640,510,784.17
(2) The Significant Advances from Customers Aging over One Year Were Mainly the
Advances from Customers from Companies without Continuous Cooperation.
(3) Advance Receipts of Houses
Item Ending balance Beginning balance
Shuiyue Zhouzhuang
Project (Phase I 2,383,130.00 2,383,130.00
Residence)
Shuiyue Zhouzhuang
Project (Phase II 2,559,493.00 2,559,493.00
Residence)
Shuiyue Zhouzhuang
Project (Phase III 2,126,839.00 11,129,253.00
Residence)
Shuiyue Zhouzhuang
Project (Phase IV 115,062,809.00 30,861,638.00
Residence)
Total 122,132,271.00 46,933,514.00
27. Payroll Payable
(1) List of Payroll Payable
Beginning Other Other Ending
Item Increase Decrease
balance increase decrease balance
I. Short-term
289,046,664.85 639,875,510.00 11,618,430.65 749,247,534.97 2,060,020.02 189,233,050.51
salary
II.
Post-employ
ment 2,323,632.82 58,833,576.00 6,597.36 53,275,816.00 16,540.85 7,871,449.33
benefit-defin
ed
174
Konka Group Co., Ltd. Interim Report 2018
Beginning Other Other Ending
Item Increase Decrease
balance increase decrease balance
contribution
plans
III.
Termination 1,168,975.44 0.00 1,168,975.44 0.00 0.00
benefits
IV. Other
benefits due
0.00
within one
year
Total 291,370,297.67 699,878,061.44 11,625,028.01 803,692,326.41 2,076,560.87 197,104,499.84
(2) List of Short-term Salary
Beginning Other Other decrease Ending
Item Increase Decrease
balance increase balance
1. Salary, bonus, 275,524,552. 556,001,754.8
11,310,409.72 674,937,666.70 1,794,961.49 166,104,088.73
allowance, subsidy 33 7
2. Employee
4,562,983.10 31,644,919.42 0.00 25,543,116.73 3,235.51 10,661,550.28
welfare
3. Social insurance 2,816,379.51 28,995,101.22 3,199.92 26,185,328.94 128,405.25 5,500,946.46
Of which: 1.
Medical insurance 815,364.61 25,523,063.63 2,529.60 23,805,844.80 127,521.51 2,407,591.53
premiums
Work-relat
ed injury 247,215.23 1,587,821.19 352.80 1,333,628.03 445.00 501,316.19
insurance
Maternity
1,753,799.67 1,884,216.40 317.52 1,045,856.11 438.74 2,592,038.74
insurance
4. Housing fund 299,531.17 12,272,740.04 0.00 12,332,139.98 7,204.63 232,926.60
5. Labor union
budget and
3,624,491.64 4,793,354.11 269,437.80 3,106,294.57 126,213.14 5,454,775.84
employee
education budget
175
Konka Group Co., Ltd. Interim Report 2018
Beginning Other Other decrease Ending
Item Increase Decrease
balance increase balance
6.Short-term
absence
0.00
with
payment
7. Short-term
0.00
profit sharing plan
8. Other 2,218,727.10 6,167,640.34 35,383.21 7,142,988.05 0.00 1,278,762.60
289,046,664. 639,875,510.0
Total 11,618,430.65 749,247,534.97 2,060,020.02 189,233,050.51
85 0
(3) List of Defined Contribution Plan
Beginning Other Other Ending
Item Increase Decrease
balance increase decrease balance
1. Basic pension
2,096,931.52 57,401,468.77 6,350.40 51,852,532.03 15,368.97 7,636,849.69
benefits
2. Unemployment
226,701.30 1,432,107.23 246.96 1,423,283.97 1,171.88 234,599.64
insurance
3. Annuity 0.00 0.00 0.00 0.00 0.00
Total 2,323,632.82 58,833,576.00 6,597.36 53,275,816.00 16,540.85 7,871,449.33
The Company, in line with the requirement, participate the endowment insurance,
unemployment insurance scheme and so on, according to the scheme, the Company monthly
pay to the scheme in line with requirements of local government, except the monthly
payment, the Company no longer shoulder the further payment obligation, the relevant
expense occurred was recorded into current profits and losses or related assets costs.
28. Taxes Payable
Item Ending balance Beginning balance
VAT 22,655,545.28 47,749,976.31
Corporate income tax 47,395,613.36 1,124,832,572.96
Fund for disposing abandoned appliances and
10,733,357.08 23,666,123.67
electronic products
Land use tax 2,043,328.90 1,855,882.68
176
Konka Group Co., Ltd. Interim Report 2018
Item Ending balance Beginning balance
Real estate tax 3,876,005.59 4,802,640.61
Business tax 401,823.10 401,823.10
Tariff 3,240,037.08 3,451,843.43
Personal income tax 2,691,802.73 3,570,618.46
Urban maintenance and construction tax 1,964,597.39 4,155,984.89
Stamp duty 723,813.88 1,851,821.21
Education fees and local education Surcharge 1,646,083.02 4,749,633.12
Flood control fund, fund for embankment, fund
for water conservancy and fund for river 264,623.34 344,630.28
management
Land VAT 98,073,836.96 104,967,760.07
Others 2,782,683.66 167,783.74
Total 198,493,151.37 1,326,569,094.53
29. Interest Payable
Item Ending balance Beginning balance
Loan interests 44,957,010.99 35,723,963.94
Total 44,957,010.99 35,723,963.94
30. Other Payables
(1) Other Payables Listed by Nature of Account
Item Ending balance Beginning balance
Expenses payable 915,409,402.16 826,839,671.60
Cash deposit and front
364,632,999.76 472,308,401.08
money
Intercourse funds 641,055,203.42 222,637,701.31
Payment on behalf 1,369,414.67 3,606,727.50
Payment for stock rights 350,500,000.00
Other 101,334,139.43 82,966,804.38
Total 2,374,301,159.44 1,608,359,305.87
(2) Significant Other Payables Aging over One Year
177
Konka Group Co., Ltd. Interim Report 2018
Item Ending balance Unpaid/Un-carry-over reason
Cash deposit 123,137,443.40 Unsettled
Total 123,137,443.40 —
31. Current Portion of Non-current Liabilities
Item Ending balance Beginning balance
Current portion of long-term borrowings
10,000,000.00
(Note VI-32)
Current portion of long-term payables
165,596.84 374,358.99
(Note VI-33)
Total 10,165,596.84 374,358.99
32. Long-term Borrowings
Item Period-end Period-beginning
Credit loan 316,000,000.00 167,000,000.00
Guarantee loan 150,000,000.00
Pledge loan 45,000,000.00
Less: current portion of long-term
10,000,000.00
borrowings
Total 501,000,000.00 167,000,000.00
Note: (1) Rushan Yike Water Treatment Co., Ltd., the Company ’ s subsidiary, obtained a
borrowing of RMB290 million from Yantai Economic Development Zone Branch of China
Everbright Bank with the period of ten years from the date of drawings on. The service
charge of Rushan Finance Bureau for Rushan Silver Beach PPP Project was taken as the
pledge during the 29 December 2016 to 28 December 2026. In the meanwhile, the Company
provided the guarantee and undertook joint several liabilities regarding the aforesaid
borrowing. As of 30 June 2018, the actual borrowing was RMB150 million.
(2) Laizhou Lairun Holdings Co., Ltd., the Company’s subsidiary, made the sale-lease-back
transaction with Laizhou Lairun Finance Lease Co., Ltd., the Company’s joint stock company,
with guarantee amount of RMB50 million, pledged by the future charging right of sewage
plant of Laizhou Lairun Holdings Co., Ltd. As of 30 June 2018, the ending balance of the
pledge loan was RMB45 million.
33. Long-term Payables
Item Ending balance Beginning balance
178
Konka Group Co., Ltd. Interim Report 2018
Item Ending balance Beginning balance
Accrued financing lease outlay 11,796,936.49 435,897.45
Less: current portion (Note VI-31) 165,596.84 374,358.99
Total 11,631,339.65 61,538.46
34. Long-term Payroll Payable
(1) List of Long-term Payroll Payable
Item Ending balance Beginning balance
I. Termination benefits-net liabilities of defined
11,440,243.54 13,361,821.86
contribution plans
II. Termination benefits — —
III. Other long term welfare — —
Total 11,440,243.54 13,361,821.86
(2) Changes in Defined Benefit Pension Schemes
① Present Worth of Defined Benefit Pension Schemes Obligation:
Same period of last
Item Reporting Period
year
I. Beginning balance 13,361,821.86 18,151,659.90
II. Defined benefit cost recorded into current profits
— —
and losses
1. Current service cost — —
2. Previous service cost — —
3. Settlement gains (loss “－”) — —
4. Net interest — —
III. The cost of defined benefit recorded into other
— —
comprehensive income
1. Actuarial gains (loss “-“) — —
IV. Other changes 1,921,578.32 2,536,813.42
1. Consideration paid when settled — —
2.Welfare paid 1,921,578.32 2,536,813.42
179
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Same period of last
Item Reporting Period
year
V. Ending balance 11,440,243.54 15,614,846.48
② Notes to the influence of the content and related risk of defined benefit pension schemes
to the future cash flows, time and uncertainty of the Company:
Due to upgrading and reconstruction of current work sites of the subsidiary, communication
technology, it is to adjust the labor relations according to Implementation Measures for
Accompanying Employees in manufacturing system of Shenzhen Konka Telecommunication
Technology Co., Ltd on the premise to balance the Company’s and employees’ benefits and
voluntary selection, Telecommunication Technology provides early retirement plans for
senior employees (employed before 31 December 1990 and signed non-fixed term labor
contract with the Company or Communication Technology).
The accumulative compensation paid to the internal early retirement pensions in future year
is RMB11,440,243.54, the Company in line with Agreement of Internal Early Retirement
Pension, in line with the standard of salary remaining the same, turnover rate of 0, the
mortality rate of, fix standard of social security base payment remaining the same to test the
present worth of defined benefit plans. The actual payment for the employee is influence by
the actual turnover rate, death rate and the changes of minimum cardinality of social security.
③ Notes to Actuarial Assumptions and Sensibility Analysis Result of Defined Benefit
Pension Schemes
Period-end of Reporting Period-end of last
Significant assumptions estimated
Period period
Treasury bond rate in same
Discount rate —
period
Death rate 0% —
Expected life expectancy Over legal emeritus age —
Expected compensation growth rate 0% —
35. Provisions
Beginning
Item Ending balance Reason for formation
balance
Pending litigations 82,042.98 4,711,597.59 Litigation
Other 1,470,267.51 1,470,267.51 Contract consideration
180
Konka Group Co., Ltd. Interim Report 2018
Total 1,552,310.49 6,181,865.10
181
Konka Group Co., Ltd. Interim Report 2018
36. Government Subsidies
1. Government Subsidies Initially Recognized during the Reporting Period
Related to assets Related to income
Offsetting Whether
Offsettin
Item Amount Deferred carrying Deferred Non-operating received
Other income g cost
income value of income income actually
expenses
assets
I. Government subsidies related to income
Rewards and subsidies Support fund 28,748,955.99 — — — 18,563,333.33 10,185,622.66 — Yes
Tax rebate for software 34,848,961.96 — — — 34,848,961.96 — Yes
Support fund 48,012,477.79 — — — 48,012,477.79 — Yes
Subsidies for L/C export 132,738.00 — — — 132,738.00 — Yes
Subsidies for posts 3,229,884.31 — — — 3,229,884.31 — Yes
Other government subsidies related to income 7,409,880.69 — — — 6,133,800.00 1,276,080.69 — Yes
II. Government Subsidies related to assets
Subsidy for Yantai Konka Life Science Innovation
— Yes
Center 10,000,000.00 10,000,000.00 — — —
Other government subsidies related to assets 2,916,666.67 2,916,666.67 — — — — — Yes
Total 135,299,565.41 12,916,666.67 0.00 0.00 110,921,195.39 11,461,703.35 —
2. Government Subsidies Recorded into the Current Profit or Loss
Recorded into non-operating
Item Related to assets/income Recorded into other income Offsetting cost expenses
income
182
Konka Group Co., Ltd. Interim Report 2018
Recorded into non-operating
Item Related to assets/income Recorded into other income Offsetting cost expenses
income
Rewards and subsidies Related to income 18,563,333.33 10,185,622.66 —
Tax rebate for software Related to income 34,848,961.96 — —
Support fund Related to income 48,012,477.79 — —
Transferred from deferred income Related to assets/income 12,105,088.11 — —
Subsidies for L/C export Related to income 132,738.00 — —
Subsidies for posts Related to income 3,229,884.31 — —
Other Related to income 6,133,800.00 1,276,080.69 —
Total 123,026,283.50 11,461,703.35 —
3. Government Subsidies Returned in the Reporting Period
No such case in the Reporting Period.
37. Deferred Income
Item Beginning balance Increase Decrease Other decrease Ending balance Reason for formation
Government
Related to assets/income
subsidies 130,049,911.87 12,916,666.67 12,105,088.11 0.00 130,861,490.43
Total 130,049,911.87 12,916,666.67 12,105,088.11 0.00 130,861,490.43 —
Notes: Other decrease in the Reporting Period was mainly caused by the loss of controlling rights over the subsidiaries.
183
Konka Group Co., Ltd. Interim Report 2018
Of which, items related to government subsidies:
Decrease
Beginning Recorded into Related to
Item Increase Recorded into Offsetting Ending balance
balance assets/income
non-operating Other decrease
other income cost expenses
income
Smart TV industrial chain of Related to
Konka Group Co., Ltd 19,848,500.00 0.00 2,247,000.00 17,601,500.00 assets
Subsidy for Yantai Konka
Related to
Life Science Innovation
assets
Center 10,000,000.00 499,999.98 9,500,000.02
R & D of double
Related to
HDR OLED smart television
assets
and industrialization 13,300,000.00 13,300,000.00
Research, production and
industrialization smart Related to
terminal system of assets
next-generation internet 7,761,844.66 990,873.78 6,770,970.88
AVS/DRA terminal and Related to
matched core chip R & D 5,620,000.00 5,620,000.00 assets
Research, development and
industrialization of new smart Related to
TV of man-machine assets
interaction 5,256,893.21 5,256,893.21
184
Konka Group Co., Ltd. Interim Report 2018
Decrease
Beginning Recorded into Related to
Item Increase Recorded into Offsetting Ending balance
balance assets/income
non-operating Other decrease
other income cost expenses
income
Laboratory project of
next-generation Konka Related to
multimedia terminal assets
technology 4,500,000.02 499,999.98 4,000,000.04
Investment items located in
Related to
the weak sector of Shenzhen
assets
industrial link in 2017 4,500,000.00 4,500,000.00
Project of display terminal
Related to
smart plant with new pattern
assets
based on NB-IOT 3,822,000.00 409,500.00 3,412,500.00
Konka Smart Home Project
Related to
of Constructing Cloud Smart
assets
Control Platform 3,620,000.00 3,620,000.00
Post rewards and
subsidies for technical Related to
transformation of industrial assets
enterprises in 2016 3,281,040.00 91,684.98 3,189,355.02
Funds of Shenzhen Industrial
Design Center from Related to
Shenzhen Economic, Trade assets
and Information in 2015 3,000,000.00 3,000,000.00
185
Konka Group Co., Ltd. Interim Report 2018
Decrease
Beginning Recorded into Related to
Item Increase Recorded into Offsetting Ending balance
balance assets/income
non-operating Other decrease
other income cost expenses
income
R & D and industrialization
of new application service Related to
system of mobile smart assets
terminal 2,809,233.44 399,999.96 2,409,233.48
Industrialization of mobile
internet and 4th generation Related to
mobile communication assets
industry 2,754,867.45 267,895.02 2,486,972.43
Research, development and
industrialization of digital Related to
products of synergetic assets
interconnection 2,600,000.00 2,600,000.00
R & D of key technologies of
Related to
information safety system for
assets
mobile smart terminal 2,400,000.00 844,812.96 1,555,187.04
Special funds of provincial
Related to
strategic emerging industry of
assets
Dongguan Finance Bureau 2,400,000.00 5,805.00 2,394,195.00
Provincial major special Related to
projects in 2017 2,360,000.00 240,000.00 2,120,000.00 assets
186
Konka Group Co., Ltd. Interim Report 2018
Decrease
Beginning Recorded into Related to
Item Increase Recorded into Offsetting Ending balance
balance assets/income
non-operating Other decrease
other income cost expenses
income
Comprehensive integration
and innovation project of lean Related to
manufacturing assets
implementation system 2,100,000.00 2,100,000.00
Design of Curved TV and the Related to
achievement transformation 1,960,000.00 1,960,000.00 assets
Embedded OS development
and terminal system Related to
development for TV assets
application 1,951,430.02 229,579.98 1,721,850.04
Whole machine integration of Related to
module 1,875,000.00 150,000.00 1,725,000.00 assets
Research, development and
industrialization of Major Related to
technology of LED backlight assets
FPTV 1,750,000.13 499,999.98 1,250,000.15
Special fund of 2010-2012 Related to
industrial technology 1,680,000.00 114,610.02 1,565,389.98 assets
Research, development and
industrialization project of Related to
new two-channel 3D smart assets
TV 1,590,166.71 202,999.98 1,387,166.73
187
Konka Group Co., Ltd. Interim Report 2018
Decrease
Beginning Recorded into Related to
Item Increase Recorded into Offsetting Ending balance
balance assets/income
non-operating Other decrease
other income cost expenses
income
Glasses-free 3D Smart LCD
Related to
TV with Multi-view and
assets
High Definition 1,500,000.00 1,500,000.00
R & D of UST Laser Related to
Projection Smart TV 1,500,000.00 1,500,000.00 assets
Real-time Synthesis and Pilot
Related to
of True 3D Video with
assets
Continuous Viewpoint 1,420,000.00 1,420,000.00
R & D and industrialization
Related to
of Information Terminal
assets
based on the IGRS 1,400,000.00 1,400,000.00
Provincial fiscal subsidies for
Related to
R & D of Guangdong
assets
enterprises in 2016 1,375,319.98 114,610.02 1,260,709.96
R & D and industrialization
of operation system for Related to
exploiting users based on big assets
data 1,320,000.00 1,320,000.00
R & D and engineering of 3D Related to
TV Terminal 1,300,000.00 1,300,000.00 assets
Special fund for industrial Related to
structural adjustment 1,199,999.88 210,000.00 989,999.88 assets
188
Konka Group Co., Ltd. Interim Report 2018
Decrease
Beginning Recorded into Related to
Item Increase Recorded into Offsetting Ending balance
balance assets/income
non-operating Other decrease
other income cost expenses
income
Post rewards and
subsidies received for Related to
technical transformation of assets
industrial enterprises in 2016 1,100,220.00 0.00 1,100,220.00
Development subsidies for Related to
tourist resort in 2014 1,094,583.35 18,499.98 1,076,083.37 assets
Smart TV and system
Related to
supporting platform of three
assets
networks combination 1,066,666.76 199,999.98 866,666.78
Satellite Receiving Facility
Related to
based on safe and reliable
assets
chips 1,000,000.00 1,000,000.00
Related to
Others
10,602,751.22 2,916,666.67 3,682,968.63 9,836,449.26 assets
Subtotal 128,620,516.83 12,916,666.67 0.00 11,920,840.23 0.00 0.00 129,616,343.27
Related to
Others
1,429,395.04 184,247.88 1,245,147.16 income
Subtotal 1,429,395.04 0.00 0.00 184,247.88 0.00 0.00 1,245,147.16
Total 130,049,911.87 12,916,666.67 0.00 12,105,088.11 0.00 0.00 130,861,490.43
189
Konka Group Co., Ltd. Interim Report 2018
38. Share Capital
Increase/decrease (+/-)
Beginning balance New Ending balance
Item Bonus Bonus issue
shares Other Subtotal
shares from profit
issued
The sum of
2,407,945,408.00 — — — — — 2,407,945,408.00
shares
39. Capital Reserves
Item Beginning balance Increase Decrease Ending balance
Capital premium
(premium on 7,393,378.55 7,393,378.55
stock)
Other capital
97,338,863.75 97,338,863.75
reserves
Total 104,732,242.30 104,732,242.30
190
Konka Group Co., Ltd. Interim Report 2018
40. Other Comprehensive Income
Reporting Period
Less:
recorded
in other
comprehen
sive
Attributable to Ending
Item Beginning balance Income before income in Attributable to
Less: Income tax owners of the balance
taxation in the prior non-controlling
expense Company as the
Current Period period and interests after tax
parent after tax
transferred
in profit or
loss in the
Current
Period
I. Items that will
not be
— — — — — — —
reclassified to
profit or loss
II. Items that
may
subsequently be 3,697,458.95 -4,369,616.63 31,342.08 0.00 -4,851,840.74 450,882.03 -1,154,381.79
reclassified to
profit or loss
Of which: Share
of other
-3,138,048.04 -3,138,048.04
comprehensive
income of
191
Konka Group Co., Ltd. Interim Report 2018
Reporting Period
Less:
recorded
in other
comprehen
sive
Attributable to Ending
Item Beginning balance Income before income in Attributable to
Less: Income tax owners of the balance
taxation in the prior non-controlling
expense Company as the
Current Period period and interests after tax
parent after tax
transferred
in profit or
loss in the
Current
Period
investees that
will be
reclassified into
profit or loss
under equity
method
Gain/Loss on
changes in fair
value of 31,342.08 31,342.08 -31,342.08 0
available-for-sal
e financial assets
Differences
arising from
6,804,164.91 -4,369,616.63 -4,820,498.66 450,882.03 1,983,666.25
translation of
foreign
192
Konka Group Co., Ltd. Interim Report 2018
Reporting Period
Less:
recorded
in other
comprehen
sive
Attributable to Ending
Item Beginning balance Income before income in Attributable to
Less: Income tax owners of the balance
taxation in the prior non-controlling
expense Company as the
Current Period period and interests after tax
parent after tax
transferred
in profit or
loss in the
Current
Period
currency-denomi
nated financial
statements
Total of other
comprehensive 3,697,458.95 -4,369,616.63 31,342.08 0.00 -4,851,840.74 450,882.03 -1,154,381.79
income
193
Konka Group Co., Ltd. Interim Report 2018
41. Surplus Reserves
Item Beginning balance Increase Decrease Ending balance
Statutory surplus reserves 963,582,609.22 963,582,609.22
Discretional surplus reserves 254,062,265.57 254,062,265.57
Total 1,217,644,874.79 1,217,644,874.79
Notes: Based on the regulations of the Corporation Law and Constitution, the Company
should withdraw 10% of the statutory surplus reserves according to the net profits. If the
accumulated amount of the statutory surplus reserves exceeded the 50% of the registered
capital, the Company could no more withdraw.
The Company can withdraw the discretional surplus reserves after withdrawing the statutory
surplus reserves. The discretional surplus reserves can be used to make up for the previous
losses or to increase share capital once approved.
42. Retained Earnings
Item This year Last year
Beginning balance of retained earnings before
4,260,125,492.57 -427,163,254.63
adjustments
Total beginning balance of retained earnings before
— —
adjustments (increase+, decrease -)
Beginning balance of retained earnings after
4,260,125,492.57 -427,163,254.63
adjustments
Add: Net profit attributable to owners of the
341,793,039.03 5,057,025,155.71
Company as the parent
Less: Withdrawal of statutory surplus reserves 369,736,408.51
Withdrawal of discretional surplus reserves — —
Dividend of ordinary shares payable 390,087,134.64 —
Dividend of ordinary shares transferred into share
— —
capital
Other — —
Ending retained earnings 4,211,831,396.96 4,260,125,492.57
43. Operating Revenue and Cost of Sales
(1) Operating Revenue and Cost of Sales
194
Konka Group Co., Ltd. Interim Report 2018
Reporting Period Same Period of last year
Item
Operating revenue Cost of sales Operating revenue Cost of sales
Main
16,803,504,680.73 15,789,523,498.53 11,116,190,367.22 9,941,054,112.21
operations
Other
821,910,089.09 652,732,946.73 289,775,612.21 169,137,145.86
operations
Total 17,625,414,769.82 16,442,256,445.26 11,405,965,979.43 10,110,191,258.07
(2) Main Operations (Classified by product)
Reporting Period Same period of last year
Product name
Operating revenue Cost of sales Operating revenue Cost of sales
Color TV
4,963,088,596.70 4,352,820,070.48 5,289,992,150.21 4,431,743,317.09
business
White electricity
1,084,381,984.51 892,338,557.03 891,933,843.48 726,049,054.97
service
Supply chain
10,008,880,630.62 9,925,786,697.58 4,307,330,068.12 4,247,646,007.45
trade business
Environmental
protection 77,951,411.92 52,515,288.25
business
Other 669,202,056.98 566,062,885.19 626,934,305.41 535,615,732.70
Total 16,803,504,680.73 15,789,523,498.53 11,116,190,367.22 9,941,054,112.21
(3) Main Operations (Classified by area)
Reporting Period Same period of last year
Area
Operating revenue Cost of sales Operating revenue Cost of sales
Domestic
4,672,082,285.24 3,847,140,507.59 7,343,613,290.29 6,314,287,989.74
sales
Overseas
12,131,422,395.49 11,942,382,990.94 3,772,577,076.93 3,626,766,122.47
sales
Total 16,803,504,680.73 15,789,523,498.53 11,116,190,367.22 9,941,054,112.21
(4) Other Operations (Classified by product)
Reporting Period Same period of last year
Product name
Operating revenue Cost of sales Operating revenue Cost of sales
Sale of materials 461,460,767.54 463,125,455.40 44,655,567.09 30,009,254.48
Maintenance cost 23,647,020.02 12,451,873.87 17,463,699.51 14,710,810.95
Sale of waste 5,528,818.17 885,134.95 2,580,270.82 925,711.74
195
Konka Group Co., Ltd. Interim Report 2018
Reporting Period Same period of last year
Product name
Operating revenue Cost of sales Operating revenue Cost of sales
Housing lease 55,541,441.82 7,877,581.44 42,485,581.44 5,088,830.73
Others 275,732,041.54 168,392,901.07 182,590,493.35 118,402,537.96
Total 821,910,089.09 652,732,946.73 289,775,612.21 169,137,145.86
(5) Operating Revenue from Top 5 Customers
Total operating revenue from top 5 Proportion to operating revenue of
Period
customers Reporting Period
35.79
Jan.-June of 2018 6,013,731,094.97
Jan.-June of 2017 2,662,113,944.10 23.95
44. Taxes and Surtaxes
Item Reporting Period Same Period of last year
Land VAT 0.00 9,045,781.48
Urban maintenance and
7,615,970.19 102,929.05
construction tax
Stamp duty 5,471,304.55 47,500.00
Property tax 2,268,252.08 4,011,787.05
Land use tax 4,628,137.36 2,617,655.26
Education surcharge 3,403,425.83 4,633,250.57
Local education surcharge 2,284,037.36 6,808,790.65
Business tax 0.00 5,698,979.66
Water resources fund 162,579.33 13,620.00
Vehicle and vessels usage tax 3,180.00 457,748.63
Others 1,809,687.92 991,549.69
Total 27,646,574.62 34,429,592.04
Note: Refer to Note V Taxation for details of the measurement standards of various taxes and
surtaxes.
45. Selling Expense
Item Reporting Period Same Period of last year
Salary 144,544,854.91 146,655,505.33
196
Konka Group Co., Ltd. Interim Report 2018
Item Reporting Period Same Period of last year
Promotional activities 339,904,932.61 320,216,302.42
Logistic Fee 163,966,076.58 148,814,891.66
Warranty fee 121,621,614.96 114,430,603.12
Advertising expense 161,559,044.17 93,547,508.94
Social security charges 19,599,139.12 21,205,649.26
Taxes and fund 179,335.16 95.10
Business travel charges 16,371,700.85 16,044,394.98
Rental charges 15,783,834.11 14,424,674.47
Employee welfare 7,276,619.77 7,914,094.31
Other 112,373,922.27 90,749,586.95
Total 1,103,181,074.51 974,003,306.54
46. Administrative Expense
Item Reporting Period Same Period of last year
R&D expenses 137,008,896.76 96,753,027.87
Salary 72,498,745.45 68,075,439.56
Depreciation charge 30,392,140.28 16,955,414.43
Consulting fees 17,149,760.33 6,907,424.07
Social security charges 14,494,572.24 9,395,168.52
Business entertainment expense 9,155,485.63 8,204,092.21
Patent fee 883,906.94 2,018,722.61
Business travel charges 7,528,524.84 4,518,651.08
Employee welfare 7,882,174.11 6,552,271.96
Water & electricity fees 4,538,405.21 2,590,650.84
Labor-union expenditure 2,467,456.89 3,456,348.07
Other 60,827,600.65 38,680,889.75
Total 364,827,669.33 264,108,100.97
47. Finance Costs
Item Reporting Period Same Period of last year
Interest expense 138,646,255.45 165,919,248.32
Less: Interest income 49,719,529.94 61,587,922.88
197
Konka Group Co., Ltd. Interim Report 2018
Item Reporting Period Same Period of last year
Foreign exchange profit or loss -72,148,811.10 -94,091.34
Other 19,514,995.00 6,645,661.36
Total 36,292,909.41 110,882,895.46
48. Asset Impairment Loss
Item Reporting Period Same Period of last year
Bad debt loss 13,395,642.00 -10,238,423.79
Inventory falling price loss 46,156,458.41 12,397,789.34
Fixed assets impairment losses 0.00 111,677.21
Total 59,552,100.41 2,271,042.76
49. Gain on changes in fair value
Same period of last
Sources Reporting Period
year
Financial assets at fair value through profit or loss 59,855,412.48 -103,077,757.73
Of which: gain on changes in fair value of derivative
59,855,412.48 -59,008,507.733
financial instruments
Trading financial assets -44,069,250.00
Financial liabilities at fair value through profit or loss —
Of which: gain on changes in fair value of derivative
—
financial instruments
Total 59,855,412.48 -103,077,757.73
50. Investment Income
Same Period of
Item Reporting Period
last year
Long-term equity investment income measured by equity method 6,075,182.59 -4,574,294.19
Investment income from disposal of long-term equity investment 47,126,189.12 28,234.62
Investment income from holding of financial assets at fair value
0.00 263,100.00
through profit or loss
Investment income from disposal of financial assets at fair value
-82,412,478.05 15,901,726.37
through profit or loss
Investment income from holding of available-for-sale financial assets 13,740,000.00 —
198
Konka Group Co., Ltd. Interim Report 2018
Same Period of
Item Reporting Period
last year
Investment income from disposal of available-for-sale financial
17,360,398.59 25,048,785.15
assets
Income from purchase of financial products and entrust loans 84,300,652.01 30,338,020.11
Income from re-measurement of residual stock rights at fair value
445,568,627.45 —
after losing control power
Total 531,758,571.71 67,005,572.06
51. Asset Disposal Income
Amount recorded
Same Period of last into the current
Item Reporting Period
year non-recurring
profit or loss
Fixed assets disposal income 89,814.27 — 89,814.27
Intangible assets disposal income 63,632,291.11 — 63,632,291.11
Total 63,722,105.38 — 63,722,105.38
52. Other Income
Amount recorded into
Same Period of the current
Item Reporting Period
last year non-recurring profit or
loss
Tax rebates of software 34,848,961.96 35,115,965.51
—
Rewards and subsidies 18,563,333.33 18,563,333.33
—
Support fund 48,012,477.79 48,012,477.79
—
Transferred from deferred
income 12,105,088.11 12,105,088.11
—
Land tax return 0.00
—
Subsidy for L/C export 132,738.00 132,738.00
—
Subsidy for posts 3,229,884.31 3,229,884.31
1,722,426.00
Other 6,133,800.00 6,133,800.00
Total 123,026,283.50 36,838,391.51 88,177,321.54
53. Non-operating Income
199
Konka Group Co., Ltd. Interim Report 2018
Amount recorded into the
Same Period of last
Item Reporting Period current non-recurring profit
year
or loss
Government subsidies unrelated to
the normal operation of the 11,461,703.35 79,034,666.86 11,461,703.35
Company
Gains on debt restructuring 0.00 — 0.00
Penalty income 870,715.65 3,366,979.21 870,715.65
Compensation income 0.00 — 0.00
Gains on the damage and 33,597,795.57
94,061.30 94,061.30
scrapping of non-current assets
Other 14,791,012.67 7,347,666.65 14,791,012.67
Total 27,217,492.97 123,347,108.29 27,217,492.97
Of which, government subsidies recorded into current profit or loss:
Item Reporting Same period of Related to the assets/ income
Period last year
Tax rebate for software — — —
Support fund — 40,225,800.00 Related to income
Deferred income — 11,561,486.48 Related to income
Rewards and subsidies 10,185,622.66 21,005,000.00 Related to income
Specific fund for smart home appliances — — —
Return of land tax — 1,948,800.00 Related to income
Subsidies for posts — — —
Subsidies for L/C export — — —
Financial discount — — —
Other 1,276,080.69 4,293,580.38 Related to income
Total 11,461,703.35 79,034,666.86
54. Non-operating Expense
Amount recorded into
Same Period of last the current
Item Reporting Period
year non-recurring profit
or loss
200
Konka Group Co., Ltd. Interim Report 2018
Amount recorded into
Same Period of last the current
Item Reporting Period
year non-recurring profit
or loss
Losses on damage and scraping of
1,671,547.63 1,065,392.90 1,671,547.63
non-current assets
Compensation expense 3,500.00 1,531.07 3,500.00
Donations 20,000.00 13,600.00 20,000.00
Other 4,256,701.94 2,555,014.14 4,256,701.94
Total 5,951,749.57 3,635,538.11 5,951,749.57
55. Income Tax Expense
(1) Lists of Income Tax Expense
Item Reporting Period Same period of last year
Current income tax expense 59,240,226.94 21,286,293.02
Deferred income tax expense -76,686,276.07 -25,125,065.99
Total -17,446,049.13 -3,838,772.97
(2) Adjustment Process of Accounting Profit and Income Tax Expense
Item Reporting Period
Profit before taxation 391,286,112.75
Current income tax expense accounted at
97,821,528.18
statutory/applicable tax rate
Influence of applying different tax rates by subsidiaries -14,964,781.64
Influence of income tax before adjustment 748,615.33
Influence of non-taxable income -41,708,898.94
Influence of not deductable costs, expenses and losses 9,218,497.91
Influence of deductable loss of unrecognized deferred
-91,144,150.70
income tax assets in prior period
Influence of deductable temporary difference or deductable
losses of unrecognized deferred income tax in the 22,583,140.73
Reporting Period
Changes in the balance of deferred income tax assets/
---
liabilities in previous period due to adjustment of tax rate
Influence of plus deducting costs
Income tax expense -17,446,049.13
201
Konka Group Co., Ltd. Interim Report 2018
56. Other Comprehensive Income
Refer to Note VI-40 for details.
57. Cash Flow Statement
(1) Cash Generated from Other Operating Activities
Same Period of last
Item Reporting Period
year
Commercial factoring accounts received (Note ①) 1,177,791,975.34 ---
Intercourse funds 87,455,725.93
76,180,729.27
Income from government subsidy 97,520,522.22 73,794,757.98
Front money and guarantee deposit 19,955,669.93 35,452,861.96
Interest income from bank deposits 6,703,808.76 7,386,176.08
Compensation from suppliers 30,537,543.95
Income from waste 3,377,283.28 5,528,381.42
Repayment of individual borrowings 2,206,730.89 2,369,554.91
Temporary received repair fund 17,717.50 2,820,613.27
Income from penalty and default money 245,081.28 170,823.92
Other 51,447,417.30 38,800,691.61
Total 1,477,259,476.38 242,504,590.42
Note：①The Commercial factoring accounts were referred to the accounts received from the
bill discounting of the factoring business by the Company.
(2) Cash Used in Other Operating Activities
Same Period of last
Item Reporting Period
year
The commercial factoring payment (Note) 1,607,828,551.79 —
Expense for cash payment 643,840,207.45 619,722,220.51
Payment made on behalf 18,580,685.28 16,655,746.00
Payment for guarantee deposit, cash deposit and repair 1,607,828,551.79 —
Petty cash for employees 643,840,207.45 619,722,220.51
Expense for bank handling charges 18,580,685.28 16,655,746.00
Donation expense 1,607,828,551.79 —
202
Konka Group Co., Ltd. Interim Report 2018
Same Period of last
Item Reporting Period
year
Default money 643,840,207.45 619,722,220.51
Other expense 18,580,685.28 16,655,746.00
Total 2,347,454,070.52 755,674,441.38
Note: The commercial factoring payment referred to the accounts paid to the factoring applicant by the
Company’s subsidiary- Konka Factoring (Shenzhen) Co., Ltd.
(3) Cash Generated from Other Investing Activities
Same Period of last
Item Reporting Period
year
Recovery of financial products 942,900,000.00 857,900,000.00
Other 1,449.68
Total 942,900,000.00 857,901,449.68
(4) Cash Used in Other Investing Activities
Same Period of last
Item Reporting Period
year
Purchase of financial products 774,730,000.00 2,130,900,000.00
Payment for stock bidding 100,000,000.00 ---
Other 25,168,913.10
Total 874,730,000.00 2,156,068,913.10
(5) Cash Generated from Other Financing Activities
Item Reporting Period Same Period of last year
The solution pay of pledged RMB certificate of deposit at
444,475,802.89
maturity
Other 1,023,076.93
Total 1,023,076.93 444,475,802.89
(6) Cash Used in Other Financing Activities
Same Period of last
Item Reporting Period
year
Deposit as margin for pledge 574,504.77
Financing expense 22,612,122.48 —
Total 22,612,122.48 574,504.77
203
Konka Group Co., Ltd. Interim Report 2018
58. Supplemental Information for Cash Flow Statement
(1) Supplemental Information for Cash Flow Statement
Same period of last
Supplemental information Reporting Period
year
1. Reconciliation of net profit to net cash flows
generated from operating activities
Net profit 408,732,161.88 34,396,332.58
Add: Provision for impairment of assets 59,552,100.41 2,271,042.76
Depreciation of fixed assets, oil-gas assets, and
99,977,217.61 57,373,770.25
productive living assets
Amortization of intangible assets 6,800,013.68 5,514,858.35
Amortization of long-term prepaid expenses 39,491,886.63 32,110,310.89
Losses on disposal of fixed assets, intangible assets
-63,722,105.38 -32,532,402.67
and other long-lived assets (gains: negative)
Losses on scrap of fixed assets (gains: negative) 1,577,486.33 —
Losses on changes in fair value (gains: negative) -59,855,412.48 103,077,757.73
Finance costs (gains: negative) 138,646,255.45 205,629,196.69
Investment loss (gains: negative) -531,929,987.83 -67,005,572.06
Decrease in deferred income tax assets (gains:
-139,323,718.64 -35,150,295.62
negative)
Increase in deferred income tax liabilities
51,576,456.37 2,453,021.63
(“-” means decrease)
Decrease in inventories (gains: negative) -200,692,963.10 -2,097,599,214.55
Decrease in accounts receivable generated from
-1,290,880,669.75 274,747,714.15
operating activities (gains: negative)
Increase in accounts payable used in operating
-358,107,427.04 -737,739,738.53
activities (decrease: negative)
Other -11,561,486.48
Net cash generated from/used in operating activities -1,838,158,705.86 -2,264,014,704.88
2. Significant investing and financing activities
without involvement of cash receipts and payments
Transfer of debt to capital — —
Current portion of convertible corporate bonds — —
Fixed assets leased in by financing — —
3. Net increase/decrease of cash and cash
equivalent:
Ending balance of cash 3,761,988,635.66 2,326,786,079.22
204
Konka Group Co., Ltd. Interim Report 2018
Same period of last
Supplemental information Reporting Period
year
Less: beginning balance of cash 3,097,899,703.76 2,020,902,945.13
Add: Ending balance of cash equivalents — —
Less: Beginning balance of cash equivalents — —
Net increase in cash and cash equivalents 664,088,931.90 305,883,134.09
(2) Net Cash Receive from Disposal of the Subsidiaries
Item Amount
Cash or cash equivalents received currently from the disposal of subsidiaries in
the Reporting Period
Of which: Kaikai Shijie 50,000,000.00
Less: cash and cash equivalents held by subsidiaries on the date of losing control
—
power
Of which: Kaikai Shijie 7,488,940.78
Net cash from disposal of subsidiaries 42,511,059.22
(3) Cash and Cash Equivalents
Item Ending balance Beginning balance
I. Cash 3,761,988,635.66 2,326,786,079.22
Including: Cash on hand 122,746.45 2,243.88
Bank deposit on demand 3,761,865,889.21 2,326,783,835.34
III. Ending balance of cash and cash equivalents 3,761,988,635.66 2,326,786,079.22
Note: The cash and cash equivalents excluded other monetary assets with restriction on use.
59. Assets with Restricted Ownership or Right to Use
Item Ending carrying value Reason for restriction
Monetary assets 149,831,518.94 Margin deposit that cannot be drawn at any time
205
Konka Group Co., Ltd. Interim Report 2018
Item Ending carrying value Reason for restriction
①As of 30 June 2018, the Company pledged the
bank ’ s acceptance with carrying value of
RMB1,414,894,166.20 used in issuing the bank
acceptance, letter of credit, letter of guarantee,
trade financing and other comprehensive
financing businesses.
②As of 30 June 2018, the trade acceptance with
1,666,718,524.73
Notes receivable carrying value of RMB241,824,358.53 was used
by the Company for the bank discount with
recourse and obtained a short-term borrowing of
RMB227,979,976.51, and the bank ’ s acceptance
bill with carrying value of RMB10,000,000.00
was used by the Company for the bank discount
with recourse and obtained a short-term
borrowing of RMB9,545,000.00.
5,807,674.32 Conservatory measures in litigation
Fixed assets
60,288,708.63 As of 30 June 2018, the subsidiary of the
Company, Xingda Hong Ye, obtained a pledge
loan of RMB210,700,000.00 taking houses and
buildings with carrying value of
Intangible assets 38,617,359.68
RMB60,288,708.63 and land use right with
carrying value of RMB38,617,359.68 as the
pledge.
Total 1,921,263,786.30
60. Foreign Currency Monetary Items
(1) Foreign Currency Monetary Items
Ending foreign currency Ending balance converted
Item Exchange rate
balance to RMB
Monetary assets
Including: USD 112,780,634.54 6.6166 746,224,346.50
EUR 5,312.33 7.6515 40,647.29
HKD 13,029,927.79 0.8431 10,985,532.12
GBP 1.11 8.6551 9.61
206
Konka Group Co., Ltd. Interim Report 2018
Ending foreign currency Ending balance converted
Item Exchange rate
balance to RMB
PLN 7,250,355.04 1.75497 12,724,155.58
Accounts receivable
Including: USD 166,139,933.57 6.6166 1,099,281,484.49
HKD 5,945,102.95 0.8431 5,012,316.30
AUD 49,764.00 4.8633 242,017.26
Accounts payable
Including: USD 238,075,212.16 6.6166 1,575,248,448.78
Other receivables
Including: USD 2,276,499.71 6.6166 15,062,687.98
Other payables
Including: USD 9,192,347.10 6.6166 60,822,083.82
HKD 603,122.24 0.8431 508,492.36
Short-term borrowings
Including: USD 253,872,941.35 6.6166 1,679,775,703.74
HKD 86,065,100.00 0.8431 72,561,485.81
Interest payable
Including: USD 2,909,774.15 6.6166 19,252,811.64
VII. Changes of Consolidation Scope
1. Single Disposal of Investment to Subsidiary that Losing Control Power
207
Konka Group Co., Ltd. Interim Report 2018
The differences of
enjoyed net assets
share of the
Name of Equity Recognition basis subsidiary in
Method Time of
The equity disposal disposal for the time of corresponding
the of equity losing
price proportio losing control consolidated
disposal control
subsidiary n (%) power statements of the
disposal price and
the disposal
investment
Transfer of equity,
Kaikai operation and
50,000,000.00 5 Transfer 2018/6/28 47,126,189.12
Shijie financial
controlling power
(Continued)
Recognition Amount of
Residual method and other
equity Carrying value of Fair value of Gains or losses main comprehensive
Name of proportion residual equity residual equity from assumption of income related
the on the date on the date of on the date of re-measurement of fair value of to former
of losing losing control losing control residual equity at residual equity subsidiaries
subsidiary
control power power fair value on the date of transferred into
power (%) losing control investment
power profit or loss
Kaikai
Market trading
Shijie 46% 14,431,372.55 460,000,000.00 445,568,627.45 price —
2. Changes in Combination Scope for Other Reasons
(1) Kangjietong (Hong Kong) Limited was incorporated by Konka Electrical Appliances
Investment & Development Co., Ltd. (a subsidiary of the Company) and Aujet Industry
Limited in Hong Kong on 9 January 2018 with a registered capital of HKD1 million, of
which Konka Electrical Appliances Investment & Development Co., Ltd. contributed
HKD0.51 million (or 51%) and Aujet Industry Limited contributed HKD0.49 million (or
49%). Therefore, the Company has the control over Kangjietong (Hong Kong) Limited and it
has been included into the Company’s consolidation scope since 9 January 2018.
(2) Sichuan Konka Smart Terminal Technology Co., Ltd. was incorporated by Shenzhen
Konka Mobile Interconnection Technology Co., Ltd. (a subsidiary of the Company) on 15
January 2018 with a registered capital of RMB100 million, of which Shenzhen Konka
Mobile Interconnection Technology Co., Ltd. contributed RMB100 million (or 100%).
Therefore, the Company has the control over Sichuan Konka Smart Terminal Technology Co.,
Ltd. and it has been included into the Company’s consolidation scope since 15 January 2018.
208
Konka Group Co., Ltd. Interim Report 2018
(3) Yibin Konka Technology Park Operation Co., Ltd. was incorporated by the Company on
15 January 2018 with a registered capital of RMB100 million, of which the Company
contributed RMB100 million (or 100%). Therefore, the Company has the control over Yibin
Konka Technology Park Operation Co., Ltd. and it has been included into the Company ’s
consolidation scope since 15 January 2018.
(4) Shenzhen Konka Electronics Technology Co., Ltd. was incorporated by the Company on
16 January 2018 with a registered capital of RMB1 billion, of which the Company
contributed RMB1 billion (or 100%). Therefore, the Company has the control over Shenzhen
Konka Electronics Technology Co., Ltd. and it has been included into the Company ’ s
consolidation scope since 16 January 2018.
(5) Jiaxin Technology Co., Ltd. was incorporated by Shenzhen Konka Pengrun Technology
& Industry Co., Ltd. (a subsidiary of the Company) in Hong Kong on 25 January 2018 with a
registered capital of HKD10 million, of which Shenzhen Konka Pengrun Technology &
Industry Co., Ltd. contributed HKD10 million (or 100%). Therefore, the Company has the
control over Jiaxin Technology Co., Ltd. and it has been included into the Company ’ s
consolidation scope since 25 January 2018.
(6) Jiali International (Hong Kong) Limited was incorporated by Shenzhen Konka
Unifortune Supply Chain Management Co., Ltd. (a subsidiary of the Company) in Hong
Kong on 2 February 2018 with a registered capital of HKD5 million, of which Shenzhen
Konka Unifortune Supply Chain Management Co., Ltd. contributed HKD5 million (or
100%). Therefore, the Company has the control over Jiali International (Hong Kong) Limited
and it has been included into the Company’s consolidation scope since 2 February 2018.
(7) Chengdu Konka Incubator Management Co., Ltd. was incorporated by Konka Ventures
Development (Shenzhen) Co., Ltd. (a subsidiary of the Company) on 5 February 2018 with a
registered capital of RMB5 million, of which Konka Ventures Development (Shenzhen) Co.,
Ltd. contributed RMB5 million (or 100%). Therefore, the Company has the control over
Chengdu Konka Incubator Management Co., Ltd. and it has been included into the
Company’s consolidation scope since 5 February 2018.
(8) Sichuan Kangjiatong Supply Chain Management Co., Ltd. was incorporated by the
Company, Shenzhen Trade Link Supply Chain Management Co., Ltd. and Sichuan Yibin Port
(Group) Co., Ltd. on 26 March 2018 with a registered capital of RMB30 million, of which
the Company contributed RMB15.3 million (or 51%) in cash, Shenzhen Trade Link Supply
Chain Management Co., Ltd. contributed RMB13.2 million (or 44%) in cash and Sichuan
Yibin Port (Group) Co., Ltd. contributed RMB1.5 million (or 5%) in cash. Therefore, the
209
Konka Group Co., Ltd. Interim Report 2018
Company has the control over Sichuan Kangjiatong Supply Chain Management Co., Ltd. and
it has been included into the Company’s consolidation scope since 26 March 2018.
(9) Konka Suiyong Investment (Shenzhen) Co., Ltd. was incorporated by Shenzhen Konka
Investment Holding Co., Ltd. (a subsidiary of the Company) and Suiyong Rongxin Capital
Management Co., Ltd. on 11 May 2018 with a registered capital of RMB50 million, of which
Shenzhen Konka Investment Holding Co., Ltd. contributed RMB25.5 million (or 51%) in
cash and Suiyong Rongxin Capital Management Co., Ltd. contributed RMB24.5 (or 49%) in
cash. Therefore, the Company has the control over Konka Suiyong Investment (Shenzhen)
Co., Ltd. and it has been included into the Company ’s consolidation scope since 11 May
2018.
(10) Konka Huanjia (Dalian) Environmental Technology Co., Ltd. was incorporated by the
Company, Huanjia Group and Zhang Yuyin on 6 June 2018 with a registered capital of
RMB180 million, of which the Company contributed 91.8 million (or 51%) in cash, Huanjia
Group contributed RMB70.2 million (or 39%) in cash and Zhang Yuyin contributed RMB18
million (or 10%) in cash. Therefore, the Company has the control over Konka Huanjia
(Dalian) Environmental Technology Co., Ltd. and it has been included into the Company ’s
consolidation scope since 6 June 2018.
(11) Anhui Konka Electrical Appliance Technology Co., Ltd. was incorporated by Anhui
Konka Tongchuang Electrical Appliances Co., Ltd. (a subsidiary of the Company) and
Chuzhou Hanshang Electrical Appliance Co., Ltd. on 12 June 2018 with a registered capital
of RMB100 million, of which Anhui Konka Tongchuang Electrical Appliances Co., Ltd.
contributed RMB51 million (or 51%) in cash and Chuzhou Hanshang Electrical Appliance
Co., Ltd. contributed RMB49 million (or 49%) in cash. Therefore, the Company has the
control over Anhui Konka Electrical Appliance Technology Co., Ltd. and it has been
included into the Company’s consolidation scope since 12 June 2018.
(12) The Company completed the merger & acquisition of Shandong Econ Technology Co.,
Ltd. on 4 May 2018 with a registered capital of RMB164 million, of which the Company
contributed RMB688.5 million (or 51%) in cash. Therefore, the Company has the control
over Shandong Econ Technology Co., Ltd. and its following subsidiaries: Beijing Econ
Runfeng Technology Co., Ltd., Shanghai Jiyi Environmental Technology Co., Ltd., Binzhou
Econ Zhongke Environmental Technology Co., Ltd., Laizhou Lairun Holdings Co., Ltd.,
Econ Environmental Engineering Co., Ltd., Rushan Yike Water Treatment Co., Ltd., Binzhou
Weiyijie Environmental Technology Co., Ltd., Yantai Chunzhiran Environmental Technology
Co., Ltd., Rushan Econ Beike Technology Incubator Co., Ltd., Fujian Econ Changrun
210
Konka Group Co., Ltd. Interim Report 2018
Environmental Protection Co., Ltd., Laizhou Lairun Huayang Heating Co., Ltd., Laizhou
Lairun Heating Co., Ltd., Laizhou Lairun Green Energy Co., Ltd., Binzhou Beihai Jingmai
Industrial Development Co., Ltd., Yantai Huanhai Xinze Enterprise Management Co., Ltd.,
Binzhou Weinengda Transport Co., Ltd., Laizhou Binhai Sewage Treatment Co., Ltd. and
Laizhou Lairun Environmental Protection Co., Ltd. And these acquirees have been included
into the Company’s consolidation scope since 4 May 2018.
(13) Shenzhen Konka Electronics Technology Co., Ltd. (a subsidiary of the Company) has
completed the merger & acquisition of GuangDong XingDa HongYe Electronic Co., Ltd. on
29 June 2018 with a registered capital of RMB88.89 million, of which the Company
contributed RMB99.45 million (or 51%) in cash. Therefore, Shenzhen Konka Electronics
Technology Co., Ltd. has the control over GuangDong XingDa HongYe Electronic Co., Ltd.
and its following subsidiaries: Shanghai Xinfeng Zhuoqun PCB Co., Ltd. and Zhongshan
Zewei Kechuang Investment Management Co., Ltd. And these acquirees have been included
into the Company’s consolidation scope since 29 June 2018.
VIII. Equity in Other Entities
1. Equity in Subsidiary
(1) Subsidiaries
Holding
Main percentage (%)
Registration Nature of Way of
Name operating
place business Directl Indirec gaining
place
y tly
Shenzhen Konka
Shenzhen, Shenzhen, Manufacturin Set up or
Telecommunications Technology 75 25
Guangdong Guangdong g industry investment
Co., Ltd.
Manufacturin
Shenzhen, Shenzhen, Set up or
Konka Household Appliances g industry, 100 —
Guangdong Guangdong commerce investment
Shenzhen Konka Plastic Products Shenzhen, Shenzhen, Manufacturin Set up or
49 51
Co., Ltd. Guangdong Guangdong g industry investment
Shenzhen Konka Life Electronic Shenzhen, Shenzhen, Manufacturin Set up or
75 25
Co., Ltd. Guangdong Guangdong g industry investment
Shenzhen Konka Electronic Fittings Shenzhen, Shenzhen, Investment Set up or
75 25
Technology Co., Ltd. Guangdong Guangdong holding investment
Mudanjiang Arctic Ocean Mudanjiang, Mudanjiang, Manufacturin
Set up or
Appliances Co., Ltd. Heilongjiang Heilongjian g industry 60 —
investment
g
211
Konka Group Co., Ltd. Interim Report 2018
Holding
Main percentage (%)
Registration Nature of Way of
Name operating
place business Directl Indirec gaining
place
y tly
Chongqing Konka Electronic Co., Chongqing Chongqing Manufacturin Set up or
— 40
Ltd. ① g industry investment
Chuzhou, Chuzhou, Manufacturin Set up or
Anhui Konka Electronic Co., Ltd. 78 —
Anhui Anhui g industry investment
Dongguan Konka Electronic Co., Dongguan, Dongguan, Manufacturin Set up or
75 25
Ltd. Guangdong Guangdong g industry investment
Dongguan Konka Packing Materials Dongguan, Dongguan, Manufacturin Set up or
— 100
Co., Ltd. Guangdong Guangdong g industry investment
Boluo, Boluo, Manufacturin Set up or
Boluo Konka PCB Co., Ltd. — 100
Guangdong Guangdong g industry investment
Boluo Konka Precision Technology Boluo, Boluo, Manufacturin Set up or
— 100
Co., Ltd. Guangdong Guangdong g industry investment
Hong Kong Konka Co., Ltd. Hong Kong, Hong Kong, International Set up or
100 —
China China Trading investment
Konka Household Appliances
Hong Kong, Hong Kong, Investment Set up or
Investment & Development Co., — 100
China China holding investment
Ltd.
Konka Household Appliances Hong Kong, Hong Kong, International Set up or
— 100
International Trading Co., Ltd. China China Trading investment
Konka (Europe) Co., Ltd. Frankfurt, Frankfurt, International
Set up or
Germany, Germany, Trading 100 —
investment
Europe Europe
Konka Commercial Factoring Shenzhen, Shenzhen, Insurance
(Shenzhen) Co., Ltd Guangdong Guangdong agents Set up or
100 —
(non-bank investment
finance)
Shenzhen Wankaida Science and Shenzhen, Shenzhen, Software Set up or
100 —
Technology Co., Ltd. Guangdong Guangdong development investment
Kunshan Kangsheng Investment Kunshan, Kunshan, Real estate Set up or
100 —
Development Co., Ltd. Jiangsu Jiangsu investment
Anhui Konka Tongchuang Chuzhou, Chuzhou, Manufacturin Set up or
100 —
Household Appliances Co., Ltd.② Anhui Anhui g industry investment
212
Konka Group Co., Ltd. Interim Report 2018
Holding
Main percentage (%)
Registration Nature of Way of
Name operating
place business Directl Indirec gaining
place
y tly
Shenzhen Shushida Logistics Shenzhen, Shenzhen, Logistics Set up or
100 —
Service Co., Ltd. Guangdong Guangdong investment
Beijing Konka Electronic Co., Ltd. Beijing Beijing Sale of home Set up or
100 —
appliance investment
Shenzhen Konka E-display Co., Shenzhen, Shenzhen, Manufacturin Set up or
60 —
Ltd. Guangdong Guangdong g industry investment
Shenzhen E-display Service Co., Shenzhen, Shenzhen, Manufacturin Set up or
— 60
Ltd. Guangdong Guangdong g industry investment
Xiamen Dalong Trade Co., Ltd. Xiamen, Xiamen, Commerce Set up or
— 69.23
Fujian Fujian investment
Youshi Kangrong Cultural Tianjin Tianjin Advertisemen Set up or
— 70
Communication Co., Ltd. t investment
Konka Smarttech Limited Hong Kong, Hong Kong, International Set up or
— 61
China China trading investment
Shenzhen Yipingfang Network Shenzhen, Shenzhen, Information Set up or
100 —
Technology Co., Ltd Guangdong Guangdong service investment
Shenzhen Konka Commercial Shenzhen, Shenzhen, Commerce Set up or
81 —
Systems Technology Co., Ltd Guangdong Guangdong investment
Shenzhen Konka Mobile Internet Shenzhen, Shenzhen, Commerce Set up or
51 —
Technology Co., Ltd. Guangdong Guangdong investment
Chain Kingdom Co., Limited Hong Kong Hong Kong International Set up or
— 51
Trade investment
Shenzhen Kangqiao Yilian Shenzhen, Shenzhen, Commerce Set up or
60 —
Technology Co., Ltd. Guangdong Guangdong investment
Network
Yilifang (Hainan) Technology Co., Haikou, Haikou, Set up or
platform 60 —
Ltd Hainan Hainan investment
development
Chuzhou, Chuzhou, Science and
Chuzhou Konka Technology & Set up or
Anhui Anhui technology 100 —
Industry Development Co., Ltd. investment
industry
Konka Ventures Development Shenzhen, Shenzhen, Software and
51 — Set up
(Shenzhen) Co., Ltd. Guangdong Guangdong IT industry
Shenzhen Konka Pengrun Shenzhen, Shenzhen, Retail
51 — Set up
Technology & Industry Co., Ltd. Guangdong Guangdong industry
Shenzhen Konka Unifortune Supply Shenzhen, Shenzhen, Retail
51 — Set up
Chain Management Co., Ltd. Guangdong Guangdong industry
213
Konka Group Co., Ltd. Interim Report 2018
Holding
Main percentage (%)
Registration Nature of Way of
Name operating
place business Directl Indirec gaining
place
y tly
Shenzhen, Shenzhen, Capital
Shenzhen Konka Investment
Guangdong Guangdong markets 100 — Set up
Holding Co., Ltd.
service
Chuzhou, Chuzhou, Wholesale
Anhui Kangzhi Trade Co., Ltd. — 78 Set up
Anhui Anhui business
Hainan Konka Material Technology Haikou, Haikou, Commercial
— 51 Set up
Co., Ltd. Hainan Hainan service
Tianjin pilot Tianjin pilot Leasing
Tianjin Konka Leasing Co., Ltd. — 100 Set up
FTZ FTZ industry
Yantai Konka Healthcare Enterprise Yantai, Yantai, Commercial
— 51 Set up
Service Co., Ltd. Shandong Shandong service
Shenzhen, Shenzhen, Capital
Shenzhen Konka Capital Equity
Guangdong Guangdong markets — 100 Set up
Investment Management Co., Ltd.
service
Chain Kingdom (Shenzhen) Co., Shenzhen, Shenzhen, Wholesale
— 51 Set up
Ltd. Guangdong Guangdong business
Shenzhen Konka Electronics Shenzhen, Shenzhen, Manufacturin
100 Set up
Technology Co., Ltd. Guangdong Guangdong g industry
Sichuan Konka Smart terminal Yibin, Yibin, Manufacturin
51 Set up
Technology Co., Ltd. Sichuan Sichuan g industry
Hong Kong, Hong Kong, Wholesale
Jiaxin Technology Co., Ltd. 51 Set up
China China business
Hong Kong, Hong Kong, Wholesale
Kangjietong (Hong Kong) Limited Set up
China China business 51
Sichuan Kangjiatong Supply Chain Yibin, Yibin, Wholesale
51
Set up
Management Co., Ltd. Sichuan Sichuan business
Konka Huanjia (Dalian) Environmenta
Dalian,
Environmental Technology Co., Dalian, l protection Set up
Liaoning 51
Ltd. Liaoning industry
Chengdu Konka Incubator Chengdu, Chengdu, Commercial
Set up
Management Co., Ltd. Sichuan Sichuan service 51
Science and
Yibin Konka Technology Park Yibin, Yibin,
technology Set up
Operation Co., Ltd. Sichuan Sichuan 100
industry
Shenzhen, Shenzhen, Capital
Konka Suiyong Investment
Guangdong Guangdong markets Set up
(Shenzhen) Co., Ltd. 51
service
Anhui Konka Electrical Appliance Chuzhou, Chuzhou, Manufacturin Set up
Technology Co., Ltd. Anhui Anhui g industry 51
214
Konka Group Co., Ltd. Interim Report 2018
Holding
Main percentage (%)
Registration Nature of Way of
Name operating
place business Directl Indirec gaining
place
y tly
Jiali International (Hong Kong) Hong Kong, Hong Kong, Wholesale
Set up
Limited China China business 51
Guangdong XingDa HongYe Zhongshan, Zhongshan, Manufacturin Merger and
Electronic Co., Ltd. Guangdong Guangdong g industry 51 acquisition
Shanghai Xinfeng Zhuoqun PCB Shanghai, Shanghai, Manufacturin Merger and
Co., Ltd. China China g industry 51 acquisition
Capital
Zhongshan Zewei Kechuang Zhongshan,
Zhongshan, markets Merger and
Investment Management Co., Ltd. Guangdong 25.5 acquisition
Guangdong service
Environmenta
Shandong Econ Technology Co., Yantai, Yantai,
l protection Merger and
Ltd. Shandong Shandong 51
industry acquisition
Science
research and
Beijing Econ Runfeng Technology
technological
Co., Ltd.
Beijing, Beijing, service Merger and
China China industry 51.00 acquisition
Science
research and
Shanghai Jiyi Environmental Shanghai,
technological
Technology Co., Ltd. China
Shanghai, service Merger and
China industry 51.00 acquisition
Science
Binzhou Econ Zhongke research and
Environmental Technology Co., technological
Ltd. Binzhou, Binzhou, service Merger and
Shandong Shandong industry 51.00 acquisition
Production
and supply of
electric
Laizhou Lairun Holdings Co., Ltd. power,
heating
Laizhou, Laizhou, power, gas Merger and
Shandong Shandong and water 30.60 acquisition
Econ Environmental Engineering Yantai, Yantai, Architecture Merger and
Co., Ltd. Shandong Shandong industry 51.00 acquisition
215
Konka Group Co., Ltd. Interim Report 2018
Holding
Main percentage (%)
Registration Nature of Way of
Name operating
place business Directl Indirec gaining
place
y tly
Management
of water
Rushan Yike Water Treatment Co., conservancy,
Ltd. environment
Rushan, Rushan, and public Merger and
Shandong Shandong facilities 44.37 acquisition
information
transmission,
Binzhou Weiyijie Environmental
software and
Technology Co., Ltd.
Binzhou, Binzhou, IT service Merger and
Shandong Shandong industry 35.70 acquisition
Science
research and
Yantai Chunzhiran Environmental Yantai, Yantai,
technological
Technology Co., Ltd. Shandong Shandong
service Merger and
industry 35.70 acquisition
Management
of water
Rushan Econ Beike Technology conservancy,
Incubator Co., Ltd. environment
Rushan, Rushan, and public Merger and
Shandong Shandong facilities 51.00 acquisition
Production
and supply of
electric
Fujian Econ Changrun
power,
Environmental Protection Co., Ltd.
heating
Changle, Changle, power, gas Merger and
Fujian Fujian and water 33.15 acquisition
Science
research and
Laizhou Lairun Huayang Heating
technological
Co., Ltd.
Laizhou, Laizhou, service Merger and
Shandong Shandong industry 26.01 acquisition
Production
and supply of
electric
Laizhou Lairun Heating Co., Ltd. power,
heating
Laizhou, Laizhou, power, gas Merger and
Shandong Shandong and water 51.00 acquisition
216
Konka Group Co., Ltd. Interim Report 2018
Holding
Main percentage (%)
Registration Nature of Way of
Name operating
place business Directl Indirec gaining
place
y tly
Management
of water
Laizhou Lairun Green Energy Co., conservancy,
Ltd. environment
Laizhou, Laizhou, and public Merger and
Shandong Shandong facilities 30.60 acquisition
preparation of
project on
Binzhou Beihai Jingmai Industrial
comprehensiv
Development Co., Ltd.
Binzhou, Binzhou, e utilization Merger and
Shandong Shandong of solid waste 30.60 acquisition
business
administration
Yantai Huanhai Xinze Enterprise Yantai, Yantai,
and
Management Co., Ltd. Shandong Shandong
consulting Merger and
services 51.00 acquisition
Binzhou Weinengda Transport Co., Binzhou, Binzhou, transportation Merger and
Ltd. Shandong Shandong of goods 37.23 acquisition
treatment of
sewage,
consulting of
environmental
Laizhou Binhai Sewage Treatment protection
Co., Ltd. engineering
and
environmental
Laizhou, Laizhou, technical Merger and
Shandong Shandong services 30.60 acquisition
Management
of water
Laizhou Lairun Environmental conservancy,
Protection Co., Ltd. environment
Laizhou, Laizhou, and public Merger and
Shandong Shandong facilities 30.60 acquisition
Notes: ① Chongqing Qingjia: the Company holds its 40% shares, and all senior executive
officers are designated and appointed by the Company; more than half of the members of
Board of Director are directly or indirectly designated by the Company who has absolute
influence and control over its production and operation, so it ’s included into the scope of
consolidated statements.
(2) Significant Non-wholly-owned Subsidiary
217
Konka Group Co., Ltd. Interim Report 2018
Declaring
Shareholding The profit or loss Balance of
dividends
proportion of attributable to the non-controlling
Name distributed to
non-controlling non-controlling interests at the
non-controlling
interests interests period-end
interests
Anhui Konka Household
22.00 -1,947,406.50 — 80,203,594.24
Appliances Co., Ltd.
Chain Kingdom (Shenzhen) Co.,
49.00 13,863,023.00 — 28,222,534.03
Ltd.
218
Konka Group Co., Ltd. Interim Report 2018
(3) The Main Financial Information of Significant Non-wholly-owned Subsidiary
Ending balance
Name
Current assets Non-current assets Total assets Current liabilities Non-current liability Total liabilities
Anhui Konka
Household 1,180,349,696.72 226,400,267.27 1,406,749,963.99 1,030,643,579.13 11,544,592.87 1,042,188,172.00
Appliances Co., Ltd.
Chain Kingdom
1,405,583,233.71 133,856.87 1,405,717,090.58 1,348,120,082.36 0 1,348,120,082.36
(Shenzhen) Co., Ltd.
(Continued)
Beginning balance
Name
Current assets Non-current assets Total assets Current liabilities Non-current liability Total liabilities
Anhui Konka
Household 1,743,305,524.22 234,515,077.28 1,977,820,601.50 1,589,905,412.55 13,198,499.65 1,603,103,912.20
Appliances Co., Ltd.
Chain Kingdom
1,162,693,203.78 129,592.90 1,162,822,796.68 1,134,435,779.93 — 1,134,435,779.93
(Shenzhen) Co., Ltd.
Reporting Period Same period of last year
Total Cash flows from Total Cash flows from
Name
Operating revenue Net profit comprehensive operating Operating revenue Net profit comprehensive operating
income activities income activities
Anhui Konka
Household 1,732,222,387.44 -8,851,847.71 -8,851,847.71 286,378,066.73 2,399,150,981.00 8,748,900.14 8,748,900.14 -25,296,816.63
Appliances Co.,
219
Konka Group Co., Ltd. Interim Report 2018
Name Reporting Period Same period of last year
Ltd.
Chain Kingdom
(Shenzhen) Co., 3,256,025,071.58 28,291,883.68 28,291,883.68 25,288,584.51 1,909,913,550.33 11,394,229.70 11,394,229.70 49,714,579.94
Ltd.
(4) There Was No Significant Restriction on Using the Group’s Assets and Liquidating the Group’s Liabilities.
(5) There Were No Financial Supports or Other Supports Provided to Structural Entities Incorporated into the Scope of Consolidated Financial
Statements
220
Konka Group Co., Ltd. Interim Report 2018
2. Equity in Associated Enterprises
(1) Significant Associated Enterprises
Holding Accounting
percentage (%) treatment of the
Main Registr
Nature of investment to joint
Name operating ation
business Indirect venture or
place place Directly
ly associated
enterprise
Production and
Shanghai Konka Green Science & Shangh
Shanghai 39.00 —
Technology Co., Ltd. ai sale of plastic Equity method
mould
Production and
Shenzhen Jielunte Technology Co., Shenzhe Shenzh
— 42.79
Ltd. n en sale of light Equity method
emitting diode
Manufacturing
industry in
computer,
Shenzhen Yaode Technology Co., Shenzhe Shenzh
20.00 —
Ltd. n en communication Equity method
and other
electronic
equipment
Manufacturing
industry in
computer,
Guangdong Chutian Dragon Smart Donggua Dongg
communication 22.4513 — Equity method
Card Co., Ltd. n uan
and other
electronic
equipment
Manufacturing
industry in
computer,
Kunshan Konka Electronic Co., Kunsha
Kunshan communication 49.00 — Equity method
Ltd. n
and other
electronic
equipment
221
Konka Group Co., Ltd. Interim Report 2018
Note: Shenzhen Konka Precision Mould Manufacturing Co., Ltd. was renamed Shenzhen
Jielunte Technology Co., Ltd. on 20 April 2018.
(2) Main Financial Information of Significant Associated Enterprise
Ending balance/Reporting Period
Shanghai Konka
Shenzhen Jielunte Shenzhen Yaode Guangdong Chutian Kunshan Konka
Item Green Science &
Technology Co., Technology Co., Dragon Smart Card Electronic Co.,
Technology Co.,
Ltd. Ltd. Co., Ltd. Ltd.
Ltd.
Current assets 238,505,916.56 277,297,528.36 716,867,398.25 1,314,638,426.28 525,061,810.64
Of which: cash and
138,267,820.64 25,052,334.89 520,507,991.35 216,879,312.23 8,144,241.21
cash equivalents
Non-current assets 331,607,537.58 232,773,836.21 36,493,058.35 234,997,541.23 251,965,997.66
Total assets 570,113,454.14 510,071,364.57 753,360,456.60 1,549,635,967.51 777,027,808.30
Current liabilities 113,208,488.33 266,511,418.86 227,846,560.60 574,363,961.20 358,430,185.04
Non-current liability 74,625,997.45 16,855,660.69 3,442,363.70 15,192,263.19 8,678,352.12
Total liabilities 187,834,485.78 283,367,079.55 231,288,924.30 589,556,224.39 367,108,537.16
Equity of
non-controlling 179,737,280.68 9,724,788.60 6,999,542.20
interests
Equity attributable
to shareholders of
202,541,687.68 216,979,496.42 522,071,532.30 953,080,200.92 409,919,271.14
the Company as the
parent
Share of net assets
accounted by
78,991,258.19 92,845,526.52 104,414,306.46 213,978,895.15 200,860,442.86
shareholding
percentage
Adjusted events
222
Konka Group Co., Ltd. Interim Report 2018
-Goodwill — — 109,570,069.72 413,461,970.35 8,433,857.82
-Unrealized internal
— — — — —
sales gain and loss
-Other — — — — —
Carrying value of
equity investment to
78,991,258.19 92,845,526.52 213,984,376.18 627,440,865.50 209,294,300.68
associated
enterprises
Fair value of equity
investment to joint
— — — — —
ventures with public
offer
Operating revenue 188,967,645.42 188,975,170.98 319,742,579.72 486,019,598.26 649,068,015.15
Finance costs 569,432.88 3,668,764.35 7,373,783.33 -3,172,333.74 -3,467,057.33
Income tax expense 268,388.28 -2,459,079.12 2,534,205.92 13,415,113.49 0.00
Net profit -1,253,334.90 -15,866,759.35 18,526,218.16 64,781,109.89 7,321,158.81
Net profit from
discontinued — — — — —
operations
Other
comprehensive 830,823.12 — — — —
income
Total
comprehensive -422,511.78 -15,866,759.35 18,526,218.16 64,781,109.89 7,321,158.81
income
Dividends received
from joint venture in — — — — —
Reporting Period
(Continued)
Item Beginning balance/The same period of last year
223
Konka Group Co., Ltd. Interim Report 2018
Shanghai Konka Shenzhen Konka
Shenzhen Yaode Guangdong Chutian Kunshan Konka
Green Science & Precision Mould
Technology Co., Dragon Smart Card Electronic Co.,
Technology Co., Manufacturing Co.,
Ltd. Co., Ltd. Ltd.
Ltd. Ltd.
Current assets 277,102,107.32 317,214,657.83 529,254,428.27 1,275,973,644.95 450,377,789.88
Of which: cash and
102,675,515.63 77,139,577.86 8,909,487.50 520,507,991.35 50,721,392.08
cash equivalents
Non-current assets 342,856,720.05 229,756,861.75 81,833,013.73 265,717,459.13 339,299,159.57
Total assets 619,958,827.37 546,971,519.58 611,087,442.00 1,541,691,104.08 789,676,949.45
Current liabilities 164,142,536.68 283,150,937.49 102,411,669.34 610,280,220.79 393,186,594.32
Non-current liability 58,156,470.99 21,263,925.10 5,130,458.50 14,700,720.45 652,129.50
Total liabilities 222,299,007.67 304,414,862.59 107,542,127.84 624,980,941.24 387,078,837.13
Equity of
non-controlling 193,225,048.13 9,879,883.26 — 9,178,745.28 —
interests
Equity attributable
to shareholders of
204,434,771.57 232,676,773.73 503,545,314.16 907,531,417.56 402,598,112.32
the Company as the
parent
Share of net assets
accounted by
79,729,560.91 99,562,391.48 100,709,062.83 203,752,601.15 197,273,075.04
shareholding
percentage
Adjusted events
-Goodwill — — 109,570,069.72 413,461,970.35 8,433,857.82
-Unrealized internal
— — — — —
sales gain and loss
-Other — — — — —
224
Konka Group Co., Ltd. Interim Report 2018
Beginning balance/The same period of last year
Shanghai Konka Shenzhen Konka
Shenzhen Yaode Guangdong Chutian Kunshan Konka
Item Green Science & Precision Mould
Technology Co., Dragon Smart Card Electronic Co.,
Technology Co., Manufacturing Co.,
Ltd. Co., Ltd. Ltd.
Ltd. Ltd.
Carrying value of
equity investment to
79,729,560.91 99,562,391.48 210,279,132.55 617,214,571.50 205,706,932.86
associated
enterprises
Fair value of equity
investment to joint
— — — — —
ventures with public
offer
Operating revenue 510,907,923.27 437,458,462.41 782,641,588.11 927,468,144.67 1,843,565,739.98
Finance costs 11,748,541.28 6,320,383.30 23,563,857.52 8,182,245.66 5,261,591.15
Income tax expense 3,287,206.08 -2,377,582.97 6,679,871.51 12,858,203.25 -
Net profit -846,400.27 15,492,439.99 39,929,305.04 91,253,269.69 -1,656,818.45
Net profit from
discontinued — — — — —
operations
Other
comprehensive -2,440,477.18 — — — —
income
Total
comprehensive -3,286,877.45 15,492,439.99 39,929,305.04 91,253,269.69 -1,656,818.45
income
Dividends received
from joint venture in — — — — —
Reporting Period
IX. The Risk Related to Financial Instruments
225
Konka Group Co., Ltd. Interim Report 2018
The Company's main financial instruments include monetary assets, notes receivable, interest
receivable, other receivables, available-for-sale financial assets, other current assets,
short-term borrowings, other payables, interest payable, long-term borrowings, etc. Details of
the various financial instruments are shown in the relevant notes to Annotation VI. Risks
related to these financial instruments, and risk management policies the Company has
adopted to reduce these risks are described as follows. The Company management manages
and monitors the risk exposure in order to ensure the above risks to be controlled in a limited
scope.
The Company use sensitivity analysis technology to analyze the reasonable of risk variables,
influence of probable changes to the current profit or loss and Stockholders’ equity. Because
rarely any risk variables change in isolation, and the correlation between variables for the
eventual impact of the change of a risk variables will have a significant effect, thus, the
aforesaid content was processing under the assumption of the change of each variable was
conducted independently.
(I) Risk Management Objectives and Policies
The goals of Company engaged in the risk management is to achieve the proper balance
between the risks and benefits, reduced the negative impact to the Company operating
performance risk to a minimum, maximized the profits of shareholders and other equity
investors. Based on the risk management goal, the basic strategy of the Company's risk
management is determine and analyze the various risks faced by the Company, set up the
bottom line of risk and conducted appropriate risk management, and timely supervised
various risks in a reliable way and controlled the risk within the range of limit.
1. Market Risk
(1) Foreign Exchange Risk
Foreign exchange risk is referred to the risk incurred due to loss of changes in exchange rate.
Foreign exchange risk refers to the risks that may lead to losses due to fluctuation in
exchange rate. The foreign exchange risk borne by the Company is related to USD and HKD,
except the procurement, sales and financing by US dollars for several subsidiaries such as the
Company, Hong Kong Konka, Konka Household Appliances International Trading Co., Ltd.,
Chain Kingdom (Shenzhen) Co., Ltd., Europe Konka, Kangjietong, Jiaxin Technology and
Jiali International which settled by USD for purchase and sale, the other main businesses of
the Company and the subsidiaries were settled by RMB. On 30 June 2018, refer to Note.
VI-60 Foreign Currency Monetary Items for details of foreign currency monetary items, and
226
Konka Group Co., Ltd. Interim Report 2018
the foreign exchange risks produced by the assets and liabilities balance may affect the
business performance of the Company.
The Company timely paid attention to the influence of change of the exchange rate to the
Company's foreign exchange risk, which required the Group and others which conducted
purchase and sale with settlement by foreign currency to purchase foreign currency long-term
forward contract to lock the cost of purchase on forward date to reduce the risk exposure of
foreign exchange.
(2) Interest Rate Risk- Cash Flow Change Risk
Cash flow change risk caused by financial instruments due to interest rate change is related to
bank loans. By establishing good relations with banks and reasonable planning of credit line,
credit varieties and credit period, it is to guarantee sufficient band line of credit and satisfy all
financial demands. Moreover, it is to reduce risks of interest rate uncertainty by shortening
single loan term and establishing repayment terms.
The risk of change in cash flow of financial instruments due to the change of interest rate of
the Company is mainly related to the borrowing of banks. As of 30 June 2018, the long-term
and short-term borrowings had a total balance of RMB10,898,447,703.32.
The Sensitivity analysis to interest rate risk was based on the follow assumption:
● Market interest rates change may affect the interest income or expense of variable rate
financial instruments;
Based on the above assumptions, if other variables remain the same, the pre-tax impacts of
possible reasonable interest rate changes on the profits and losses of the Current Period and
the shareholders' equities are as follows:
Item Changes in interest rate Influence on profits
Short-term and long-term Up 1.00%
-108,984,477.03
borrowings
Short-term and long-term Down 1.00%
108,984,477.03
borrowings
(3) Other Price Risk
The investment held by the Company classified as available-for-sale financial assets and
tradable financial assets, the financial assets at fair value through profit or loss, and the
financial liabilities at fair value through profit or loss shall be accounted at fair value on the
balance sheet date. The management of the Company believed the market price risk facing
227
Konka Group Co., Ltd. Interim Report 2018
those investment activities was acceptable. For details of equity investment in listed
companies held by the Company, please refer to Note VI-11. Available-for-sale Financial
Assets.
2. Credit Risk
On 30 June 2018, the biggest credit risk exposure may lead to the financial assets losses of
the Company was mainly from the one party fail to perform its obligation, which included:
carrying amount recognized in consolidated balance sheet. For financial instruments
measured at fair value, the carrying value reflect its risk exposure, but not the biggest one,
and the biggest risk exposure will change along with the change of future fair value.
In order the reduce the credit risk, the Company establish a group response for recognizing
line of credit, conducting credit approval and other monitor procedures to ensure that the
necessary measures were used to recycle expired claims. In addition, the Company at each
balance sheet date, review every single receivables recycling situation, to ensure that the
money unable to recycle withdrawn provision for bad debt fully. Thus, the Company
management believed that have assume the credit risk the Company shouldered had been
greatly reduced.
The company's working capital was in bank with higher credit rating, so credit risk of
working capital was low.
3. Liquidity Risk
When managing liquidity risk, the Company maintained the management ’ s believe that
supervising the sufficient cash and cash equivalents to meet the operating demand of the
Company and reduce the influence of the fluctuation of cash flow. The management of the
Company monitored the use of bank’s loans and guaranteed the observance of the borrowing
agreements.
The Company took the bank’s loans as the main financing channel. The retained amount of
loans of the Company by the end of 30 June 2018 was presented in Note XIV. Other
Significant Events-7 in detail.
(II) Offset between Financial Assets and Financial Liabilities
The recognized financial assets under the executable general off-set agreement or similar
agreement at the end of the Reporting Period were listed as follows:
Period-end
Total confirmed Amount offset of Net financial assets listed
Item
financial assets confirmed financial in the balance sheet
(RMB’0,000) liabilities (RMB’0,000) (RMB’0,000)
228
Konka Group Co., Ltd. Interim Report 2018
Off-set of trading
borrowings between 588,937.54 588,577.74 359.80
financial products
Off-set of trading — —
borrowings between notes —
receivable
X. The Disclosure of Fair Value
1. Ending Fair Value of Assets and Liabilities at Fair Value
Ending fair value
Fair value Fair value
Item Fair value
measurement measurement
measurement Total
items at level items at level
items at level 1
2 3
I. Consistent fair value measurement
(I) Financial assets at fair value
14,497,221.94 — — 14,497,221.94
through profit or loss
1. Trading financial assets — — — —
2. Income from purchase agreement
14,497,221.94 — — 14,497,221.94
of forward foreign exchange
(II)Available-for-sale financial assets — — — —
1. Debt instrument investment — — — —
2. Equity instrument investment — — — —
3. Other — — — —
Total assets of consistent fair value
14,497,221.94 — — 14,497,221.94
measurement
(III) Financial liabilities at fair value
1,827,480.43 — — 1,827,480.43
through profit or loss
1. Income from purchase agreement
1,827,480.43 — — 1,827,480.43
of forward foreign exchange
Total liabilities of consistent fair
1,827,480.43 — — 1,827,480.43
value measurement
Total assets of inconsistent fair — — — —
value measurement
Total liabilities of inconsistent fair — — — —
value measurement
2. Market Price Recognition Basis for Consistent and Inconsistent Fair Value
Measurement Items at Level 1
As of the end of Reporting Period, the Company in line with the difference of DF forward
foreign exchange purchase cost ( DF base price on balance sheet date) on assets balance
229
Konka Group Co., Ltd. Interim Report 2018
sheet and agreement DF forward foreign exchange purchase cost (DF exchange rate agreed)
recognized as losses or profits
XI. Connected Party and Connected Transaction
1. Information Related to the Company as the Parent of the Company
Proportion of
Proportion of
voting rights
share held by the
Registration Nature of Registered owned by the
Name Company as the
place business capital Company as the
parent against the
parent against the
Company (%)
Company (%)
Tourism, real
Overseas Chinese RMB12
Shenzhen estate, electronics 30.30 30.30
Town Enterprises Co. billion
industry
Note: the final controller of the Company is State-owned Assets Supervision and
Administration Commission
2. Subsidiaries of the Company
Refer to Note VIII-1. Equity in Subsidiaries
3. Information on the Associated Enterprises of the Company
Refer to Note VIII-2. Equity in Associated Enterprises for details of significant associated
enterprises of the Company. Information on other joint ventures or associated enterprises
occurring connected transactions with the Company in Reporting Period, or forming balance
due to connected transactions made in previous period:
Name Relationship with the Company
Shenzhen Jielunte Technology Co., Ltd.① Associated enterprise
Kunshan Konka Electronic Co., Ltd. Associated enterprise
Shenzhen Konka Information Network Co., Ltd.
Shenzhen Konka Precision Mould Manufactory Associated enterprise
Co., Ltd.
Zhuhai Jinsu Plastic Co., Ltd. Associated enterprise
Shenzhen Konka Intelligent Electrical Apparatus
Associated enterprise
Co., Ltd.
Beijing Konka Technology Co., Ltd. Associated enterprise
Shenzhen Zhongbing Konka Technology Co.,
Associated enterprise
Ltd.
Anhui Konka Green Lighting Technology Co.,
Associated enterprise
Ltd.
Shenzhen Bosheng Advanced Materials Co., Ltd. Associated enterprise
230
Konka Group Co., Ltd. Interim Report 2018
Name Relationship with the Company
Helongjiang Longkang Zhijia Technology Co., Associated enterprise
Ltd.
Shaanxi Silk Road Cloud Smart Tech Co., Ltd. Associated enterprise
Anhui Kaikai Shijie E-commerce Co., Ltd. Associated enterprise
Note: ① Shenzhen Konka Precision Mould Manufacturing Co., Ltd. was renamed
Shenzhen Jielunte Technology Co., Ltd.
4. Information on Other Connected Parties
Name Relationship with the Company
Guoguang Eastern Network (Beijing) Co., Ltd. Shareholder of the associated enterprise
Shenzhen Shangyongtong Investment
Non-controlling interest of the subsidiary
Development Co., Ltd.
Guoguang Ruilian (Shenzhen) Internet
Associated enterprise of the subsidiary
Technology Co., Ltd.
Weihai City Water Environmental Protection Associated enterprise of the subsidiary
Technology Co., Ltd.
Weihai Yiheng Environment Technology Co., Associated enterprise of the subsidiary
Ltd.
Laizhou Lairun Financing Lease Co., Ltd. Associated enterprise of the subsidiary
Binzhou Beihai Weiqiao Solid Waste Disposal Associated enterprise of the subsidiary
Co., Ltd.
Shandong Bishuiyuan Environmental Protection Associated enterprise of the subsidiary
Technology Co., Ltd.
Yantai Econ Business Management Center (LLP) Associated enterprise of the subsidiary
Suntrans Intelligence & Equipment Co., Ltd. Associated enterprise of the subsidiary
Beijing Konka Jingyuan Technology Co., Ltd. Associated enterprise of the subsidiary
Shenzhen RF-LINK Polytron Technologies Inc Associated enterprise of the subsidiary
Konka Ventures Development (Shenzhen) Co., Associated enterprise of the subsidiary
Ltd.
Oriental Huijia (Zhuhai) Assets Management Co., Associated enterprise of the subsidiary
Ltd.
The final controller of the non-controlling interest of
Changrong Media Co., Ltd.
the subsidiary
Jiangxi Youshi Xinrong Culture Communication Controlled by the final controller of the non-controlling
Co., Ltd. interest of the subsidiary
Shenzhen Zhonglian Datong Supply Chain Controlled by the final controller of the non-controlling
Management and Consulting Co., Ltd interest of the subsidiary
Wulianfeng Huichuan Internet Technology
Non-controlling interest of the subsidiary
Partnership (LLP)
5. List of Connected Transactions
(1) Information on Acquisition of Goods and Reception of Labor Service
231
Konka Group Co., Ltd. Interim Report 2018
①Information on acquisition of goods and reception of labor service
Same period of
Connected party Content Reporting Period
last year
Shenzhen Jielunte Technology Co.,
Purchase of materials 165,222,526.85 72,430,652.14
Ltd. and its subsidiaries
Purchase of materials
Kunshan Konka Electronic Co., Ltd.
and commodity 576,672,801.38 —
Shenzhen Konka Information Network
Commodity purchase
Co., Ltd. 219,735,005.00 2,585,675.21
Purchase of materials
OCT Group and its subsidiaries
and services 13,494,613.22 49,578,374.49
Jiangxi Youshi Xinrong Culture
Advertising agency
Communication Co., Ltd. —
Zhuhai Jinsu Plastics Co., Ltd. Material purchase 4,146,000.00 —
Shenzhen Konka Intelligent Electrical
Material purchase
Apparatus Co., Ltd. 289,054.46 799,033.15
ChainKingdom Co., Limited Consultancy 1,160,469.47 0.00
Beijing Konka Technology Co., Ltd. Commodity purchase 1,393,783.09 —
Guoguang Ruilian (Shenzhen)
Commodity purchase
Network Technology Co., Ltd. 351,361.55 —
Shenzhen Refond Optoelectronics Co.,
Material purchase
Ltd. 77,564,260.96
Guoguang Eastern Network (Beijing)
Commodity purchase
Co., Ltd. - 81,484,429.91
Changrong Media Co., Ltd. Advertising agency 1,660,000.00 6,415,094.34
Binzhou Beihai Weiqiao Solid Waste Engineering
Disposal Co., Ltd. construction 7,391,146.29
②Information of sales of goods and provision of labor service
Same period of
Connected party Content Reporting Period
last year
Kunshan Konka Electronic Co., Ltd. Sales of materials 422,921,017.22 —
Shenzhen Konka Information Network Sales of materials and
Co., Ltd. providing service 102,627,704.48 2,648,776.15
Commodity sales,
OCT Group and its subsidiaries
providing service 18,646,368.89 9,671,398.15
Shenzhen Jielunte Technology Co.,
Commercial factoring
Ltd. and its subsidiaries 14,485,742.69 11,568,683.11
Guoguang Eastern Network (Beijing)
Commodity sales
Co., Ltd. 1,385,765.21 80,608,719.74
232
Konka Group Co., Ltd. Interim Report 2018
Same period of
Connected party Content Reporting Period
last year
Shenzhen Zhongbing Technology Co., material sales,
Ltd. providing service - 1,233,572.79
Guoguang Ruilian (Shenzhen) Internet
Commodity sales
Technology Co., Ltd. —
Anhui Konka Green Lighting
Providing service
Technology Co., Ltd. 216,246.39
Beijing Konka Technology Co., Ltd. Providing service 7,901,215.40
Shenzhen Konka Intelligent Electrical
Commodity sales,
Apparatus Co., Ltd. 3,235.90 147,369.23
Shenzhen Refond Optoelectronics Co.,
Purchase material
Ltd. 11,997,198.94
Changrong Media Co., Ltd. Advertising agency — 0
(2) Information on Connected Lease
The Company was lessee:
The lease fee
The lease fee
Category of leased confirmed in the
Name of lessor confirmed in the
assets same period of
Reporting Period
last year
Commercial
OCT Group and its subsidiaries residential building and 0 601,969.48
office building
(3) Information on Inter-bank Lending of Capital of Connected Parties
Connected party Amount Start date End date Applicable interest rate
Borrowing:
OCT Group Co., Ltd. 500,000,000.00 26 April 2018 21 May 2018 4.35%
OCT Group Co., Ltd. 500,000,000.00 21 May 2018 31 Dec. 2018 6.00%
OCT Group Co., Ltd. 1,400,000,000.00 14 May 2018 13 May 2019 6.00%
OCT Group Co., Ltd. 100,000,000.00 14 June 2018 6 June 2021 5.40%
Note: The interest confirmed with OCT Group Co., Ltd. is RMB 16,382,083.32.
(4) Information on Connected Guarantee
The Company was guarantor:
Guarantee Amount Execution
Curren
Secured party amount (RMB’ actually used Start date End date accomplishe
cy d or not
0,000) (RMB’0,000)
24 Oct.
Anhui Tongchuang CNY 6,000.00 3,930.00 24 Oct. 2017 2018 No
233
Konka Group Co., Ltd. Interim Report 2018
Guarantee Amount Execution
Curren
Secured party amount (RMB’ actually used Start date End date accomplishe
cy d or not
0,000) (RMB’0,000)
Anhui Tongchuang CNY 4,500.00 4,002.50 9 May 2018 9 May 2019 No
Anhui Tongchuang CNY 3,000.00 0.00 19 June 2018 18 Jun. 2019 No
Telecommunication
Technology CNY 50,000.00 5,224.64 5 Feb. 2018 4 Feb. 2019 No
Anhui Konka CNY 20,000.00 6,774.14 2018/5/2 2019/4/9 No
Anhui Konka CNY 8,000.00 8,000.00 1 June 2018 1 June 2019 No
Konka E-display CNY 2,000.00 1,081.93 20 Jul. 2017 20 Jul. 2018 No
16 Oct.
Konka Factoring CNY 50,000.00 6,210.85 17 Oct. 2017 2018 No
27 Sep.
Konka Factoring CNY 20,000.00 17,971.59 24 Oct. 2017 2018 No
Konka Factoring CNY 14,000.00 14,000.00 27 Jun. 2018 26 Jun. 2019 No
27 Oct.
Hong Kong Konka USD 1,100.00 1,100.00 28 Oct. 2017 2018 No
27 Sep.
Hong Kong Konka USD 500.00 500.00 27 Sep. 2017 2018 No
13 Oct.
Hong Kong Konka USD 3,500.00 3,500.00 13 Oct. 2017 2018 No
30 May
Hong Kong Konka USD 3,000.00 3,000.00 31 May 2018 2019 No
24 May
Sichuan Konka CNY 14,000.00 5,000.00 28 May 2018 2025 No
29 Dec.
Rushan Yike Water 29 Dec. 2016 No
Treatment Co., Ltd. CNY 29,000.00 15,000.00 2026
Note: The Company provided a joint liability guarantee for the project financing borrowing
of RMB290,000,000.00 on 27 December 2016 by Rushan Yike Water Treatment Co., Ltd.
(within the consolidation scope) which was a subsidiary of Econ Technology-a new
subsidiary of the Company via merger & acquisition. As of 30 June 2018, there was amount
of RMB150,000,000.00 not repaid under the guarantee for Rushan Yike Water Treatment Co.,
Ltd. The duration of the borrowing in the master contract was from 29 December 2016 to 28
December 2026 and the guarantee period was two years from the expiration of the debt on.
The Company was secured party (not approved by the Board Secretary, put aside)
Guarantee Execution
Guarantor Currency amount Start date End date accomplished or
not
(RMB’0,000)
234
Konka Group Co., Ltd. Interim Report 2018
Guarantee Execution
Guarantor Currency amount Start date End date accomplished or
not
(RMB’0,000)
Wu Guoren and Xiao Yongsong
USD 3,500.00 11 Nov. 2016 17 Oct. 2018 No
(Note: ①）
Wu Guoren and Xiao Yongsong
USD 1,000.00 6 Mar. 2017 31 Dec. 2018 No
(Note: ①）
Wu Guoren and Xiao Yongsong
USD 1,000.00 24 Apr. 2017 31 Dec. 2018 No
(Note: ①）
Wu Guoren and Xiao Yongsong
USD 1,000.00 11 May 2017 31 Dec. 2018 No
(Note: ①）
Wu Guoren and Xiao Yongsong
USD 300.00 20 June 2018 20 June 2019 No
(Note: ①）
Wu Guoren and Xiao Yongsong
USD 500.00 3 Jul. 2017 2 Jul. 2018 No
(Note: ①）
Wu Guoren and Xiao Yongsong
USD 500.00 24 Jul. 2017 24 Jul. 2018 No
(Note: ①）
Wu Guoren and Xiao Yongsong
USD 500.00 9 Aug. 2017 8 Aug. 2018 No
(Note: ①）
Wu Guoren and Xiao Yongsong
USD 2,000.00 6 Sep. 2017 5 Sep. 2018 No
(Note: ①）
Wu Guoren and Xiao Yongsong
USD 2,000.00 5 Mar. 2018 4 Apr. 2019 No
(Note: ①）
Wu Guoren and Xiao Yongsong
USD 1,500.00 6 June 2018 5 June 2019 No
(Note: ①）
Shenzhen Konka Yi Capital
Investment Partnership (Limited RMB 480.00 13 Apr. 2015 — No
Partnership) (Note: ②）
Hunan Vary Tech Packing Co.,
RMB 2,000.00 5 Apr. 2017 — No
Ltd.(Note: ③）
Shenzhen Kangwei Investment RMB 6,860.00 28 May 2018 27 May 2025 No
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Konka Group Co., Ltd. Interim Report 2018
Guarantee Execution
Guarantor Currency amount Start date End date accomplished or
not
(RMB’0,000)
Partnership (Limited Partnership)
(Note: ④)
Chuzhou State-owned Assets
RMB 4,400.00 2 May 2018 9 Apr. 2019 No
Operation Co., Ltd. (Note: ⑤)
Chuzhou State-owned Assets
RMB 1,760.00 1 June 2018 1 June 2019 No
Operation Co., Ltd. (Note: ⑥)
Note: ①The Company’s subsidiary-Hong Kong Konka-provided a short-term borrowing of
USD138 million with one-year period. The individual shareholders of Chain Kingdom Co.,
Ltd. Wu Guosong (holding 25% of shares) and Xiao Yongsong (holding 24% of shares)
provided an equity pledge guarantee jointly taking a total shares of 49% they held as the
pledge as well as the mortgage guarantee pledged by personal properties.
② Konka Group provided a credit guarantee of RMB20,000,000.00 for its controlling
subsidiary-Konka E-display-with the period from 20 July 2017 to 20 July 2018. The
businesses covered the opening of L/C, bill acceptance and obtaining banks’ financing credit,
etc. The non-controlling interest-Shenzhen Yi Capital Investment Partnership (Limited
Partnership)-provided the pledge guarantee taking the 40% of shares it held of Konka
E-display as the pledge.
③ The Company provided an entrust loan of RMB20 million for the joint-stock
company-Hunan Vary Tech Co., Ltd. Hunan Vary Tech Packing Co., Ltd. provided a joint
and several guarantee for the principal and interests of the said entrust loan as well as the
mortgage guarantee pledged by 4.65 million shares of Hunan Vary Tech Co., Ltd. it held.
④ Shenzhen Konka Telecommunications Technology Co., Ltd., the Company’s subsidiary,
provided a credit guarantee of RMB140,000,000.00 with the period from 28 May 2018 to 27
May 2025 for Sichuan Konka Intelligent Terminal Technology Co., Ltd., its affiliated
company, for obtaining the financing credit business from banks by the latter. Sichuan Konka
Intelligent Terminal Technology Co., Ltd. is a wholly-owned subsidiary of Shenzhen Konka
Mobile Interconnection Technology Co., Ltd. Shenzhen Kangwei Investment Partnership
(Limited Partnership), the non-controlling interest of Shenzhen Konka Mobile
Interconnection Technology Co., Ltd., provided a guarantee with 49% shares of Shenzhen
Konka Mobile Interconnection Technology Co., Ltd. it held.
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Konka Group Co., Ltd. Interim Report 2018
⑤The Company provided a credit guarantee of RMB200,000,000.00 with the period from 2
May 2018 to 9 April 2019 for its majority-owned subsidiary-Anhui Konka-for issuing of L/C
and acceptance bill and obtaining financing businesses such as financing credit by the latter.
The non-controlling interest-Chuzhou State-owned Assets Operation Co., Ltd.-provided a
counter guarantee of 22% for the amount guaranteed by the Company.
⑥The Company provided a credit guarantee of RMB80,000,000.00 with the period from 1
June 2018 to 1 June 2019 for its majority-owned subsidiary-Anhui Konka-for issuing of L/C
and acceptance bill and obtaining financing businesses such financing credit. The
non-controlling interest-Chuzhou State-owned Assets Operation Co., Ltd.-provided a counter
guarantee of 22% for the amount guaranteed by the Company.
(5) Information on Remuneration for Key Management Personnel
Item Reporting period Same period of last year
Remuneration for key
RMB7.6233 million RMB4.1094 million
management personnel
6. Accounts Receivable and Payable of Connected Party
(1) Accounts Receivable
Ending balance Beginning balance
Item Bad debt Bad debt
Carrying amount Carrying amount
provision provision
Accounts receivable:
Kunshan Konka Electronic Co.,
Ltd. 893,458,982.03 17,869,179.63 340,827,332.77 6,816,546.66
Shenzhen Konka Information
Network Co., Ltd. 136,119,685.74 2,722,066.80 50,237,204.89 1,586,224.62
Shenzhen Jielunte Technology Co.,
Ltd. and its subsidiaries 5,850,541.55 117,010.83 13,685,968.41 614,448.23
OCT Group and its subsidiaries 12,872,909.50 565,241.60 12,597,677.70 398,014.48
Guoguang Eastern Network
(Beijing) Co., Ltd. 128,115.00 2,562.30 889,327.11 17,786.54
Anhui Konka Green Lighting
Technology Co., Ltd. - - 2,479.62 49.59
Shanghai Konka Green Lighting
Technology Co., Ltd. — — — —
Shenzhen Zhongbing Konka
Technology Co., Ltd. — — — —
Shenzhen Refond Optoelectronics
Co. Ltd. — —
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Konka Group Co., Ltd. Interim Report 2018
Ending balance Beginning balance
Item Bad debt Bad debt
Carrying amount Carrying amount
provision provision
Binzhou Beihai Weiqiao Solid
Waste Disposal Co., Ltd. 8,647,641.16 432,382.06
Total 1,057,077,874.98 21,708,443.22 418,239,990.50 9,433,070.12
Notes receivable
Kunshan Konka Electronic Co.,
Ltd. — 20,000,000.00 —
Shenzhen Jielunte Technology Co.,
Ltd. and its subsidiaries — 657,263.10 —
Total — 20,657,263.10 —
Other receivables:
OCT Group and its subsidiaries 448,000.00 16,250.00 20,335,596.53 8,752,805.29
Guoguang Eastern Network
(Beijing) Co., Ltd. - - 5,600.00 112.00
Shenzhen Jielunte Technology Co.,
Ltd. and its subsidiaries 4,448.00 2,224.00 4,448.00 2,224.00
Shandong Chuangweijia
Environmental Protection
Technology Co., Ltd. 300.00 15.00
Shenzhen Konka Information
Network Co., Ltd. — —
Jiangxi Youshi Xinrong Culture
Communication Co., Ltd. — —
Total 452,748.00 18,489.00 20,345,644.53 8,755,141.29
(2) Accounts Payable
Beginning
Item Ending balance
balance
Accounts payable:
Shenzhen Jielunte Technology Co., Ltd. and its subsidiaries 2,478,270.34 31,792,226.82
Shenzhen Konka Information Network Co., Ltd. 113,767,615.79 9,131,218.97
OCT Group and its subsidiaries 1,540,653.48 42,942,847.99
Kunshan Konka Electronic Co., Ltd. 705,683,753.62 —
Shenzhen Shangyongtong Investment Development Co., Ltd. 9,543,100.00 9,543,100.00
Shenzhen Konka Intelligent Electrical Apparatus Technology Co., Ltd. - 682,275.95
Shenzhen Dekang Electronics Co., Ltd. 358,929.03 358,929.03
Guoguang Ruilian (Shenzhen) Internet Technology Co., Ltd. 170,774.08 —
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Konka Group Co., Ltd. Interim Report 2018
Beginning
Item Ending balance
balance
Zhuhai Jinsu Plastic Co., Ltd. 264,307.04 —
Guoguang Eastern Network (Beijing) Co., Ltd. — 13,907,425.83
Shenzhen Refond Optoelctronic Co., Ltd. — 27,963,779.92
Total 833,807,403.38 136,321,804.51
Notes payable:
Shenzhen Jielunte Technology Co., Ltd. and its subsidiaries 2,797,151.22 82,378,625.80
OCT Group and its subsidiaries 6,423,681.26 21,427,941.44
Kunshan Konka Electronic Co., Ltd. 1,888,881.59 —
Zhuhai Jinsu Plastics Co., Ltd. - 1,000,000.00
Shenzhen Refond Optoelectronics Co. Ltd. — 45,043,301.91
Changrong Media Co., Ltd. — 275,291.47
Total 11,109,714.07 150,125,160.62
Advances from customers:
OCT Group and its subsidiaries 1,294,380.72 16,149,510.73
Kunshan Konka Electronic Co., Ltd. - —
Shenzhen Konka Information Network Co., Ltd. - —
Shenzhen Zhongbing Konka Technology Co., Ltd. - —
Guoguang Ruilian (Shenzhen) Internet Technology Co., Ltd. - —
Shenzhen Jielunte Technology Co., Ltd. and its subsidiaries 14,842,049.31 23,468,903.76
Zhonglianda Co., Ltd. — 232,667.70
Anhui Konka Green Lighting Technology Co., Ltd. — 4,063.72
Total 16,136,430.03 39,855,145.91
Other payables:
Shenzhen Konka Information Network Co., Ltd. 20,000.00 9,021,630.77
Chongqing Konka Auto Electronics Co., Ltd. 0.00 —
Shenzhen Jielunte Technology Co., Ltd. and its subsidiaries 350,000.00 19,440.00
OCT Group and its subsidiaries 105,000.00 4,031,354.68
Shenzhen Konka Intelligent Electrical Apparatus Technology Co., Ltd. 8,955.00 686,375.00
Guoguang Ruilian (Shenzhen) Internet Technology Co., Ltd. - —
ChainKingdom Co., Limited - 992,890.82
Kunshan Konka Electronic Co., Ltd. 10,000.00 —
Anhui Konka Green Lighting Technology Co., Ltd. - 48,670.70
Shenzhen Refond Optoelectronics Co. Ltd. 807,135.00
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Konka Group Co., Ltd. Interim Report 2018
Beginning
Item Ending balance
balance
Shenzhen Telen Science & Technology Co., Ltd. — 10,000.00
Laizhou Lairun Financing Lease Co., Ltd. 100,000,000.00
Total 100,763,955.00 15,617,496.97
Interest payable:
OCT Group and its subsidiaries 9,151,083.33 43,541.67
Total 9,151,083.33 43,541.67
XII. Commitments and Contingency
1. Significant Commitments
(1) Capital Commitment
Item Ending balance Beginning balance
Commitments signed but hasn’t been recognized
in financial statements
—Commitment on construction and purchase of — —
long-lived assets
- Contract with large amount 384,379,413.35 247,552,974.60
- Foreign investment commitments — —
Total 384,379,413.35 247,552,974.60
(2) Operating Lease Commitments
As of the balance sheet date, the irrevocable operating lease commitments that the Company
signed were as followed:
Item Ending balance Beginning balance
Minimum lease payments of irrevocable
operating lease
1 year after balance date 17,316,803.89 19,362,845.58
2 year after balance date 2,791,887.31 10,257,149.32
3 year after balance date 650,463.88 4,199,375.82
Following years 148,664.00 2,570,971.55
Total 20,907,819.08 36,390,342.27
(3) Other Commitments
As of 30 June 2018, there were no other significant commitments for the Company to
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disclose.
2. Contingencies
(1) Contingent Liabilities Generated from Pending Action and Arbitration and their Financial
Impacts
Due to the problems of quality and construction delay in the settlement of intelligent
engineering project between the Company and Shenzhen GNG Co., Ltd, they didn’t agree on
the related deductions. On 28 September 2017, Shenzhen GNG Co., Ltd filed a lawsuit to
People ’ s Court of Nanshan District, Shenzhen for the payment in project arrears in the
Construction Contract of Konka R&D Building Intelligent Engineering, which required the
Company to pay RMB2,770,487.13 for the project arrears and RMB340,761.69 for the
interests of the project arrears. Up to the issuance date of this Report, People ’ s Court of
Nanshan District, Shenzhen hasn’t gave judgment.
Due to the dispute in rent lease contract among the Company ’s subsidiary-Mudanjiang
Appliances, Heilongjiang Jinri Optoelectronics Technology Co., Ltd. and Jinyue Group Co.,
Ltd., the People's Court of Aimin District, Mudanjiang City, Helongjiang Province made the
main civil judgment (2016) Hei 1004 Minchu No. 604 on 25 August 2017. The Judgment
was as follows: The defendants Heilongjiang Jinri Optoelectronics Technology Co., Ltd. and
Jinyue Group Co., Ltd. should jointly pay the plaintiff-Mudanjiang Appliances a total of
RMB3,656,910.82 in occupancy fees, rent, and interest. As of the issue date of this report, it
has not yet been implemented completely.
There was a dispute among the Company’s subsidiary-Mudanjiang Appliances, Mudanjiang
Wangjiangmian Restaurant Management Co., Ltd., Liu Lixia (the actual controller of
Mudanjiang Wangjiangmian Restaurant Management Co., Ltd.), Heilongjiang Jinri
Optoelectronics Technology Co., Ltd., and Jinyue Group Co., Ltd over the compensation of
RMB4.2 million for the death and losses of Mudanjiang Wangjiangmian Restaurant
Management Co., Ltd. Mudanjiang Appliances believed that it should not be held liable for
natural disasters, and the RMB4.2 million paid by Mudanjiang Appliances is the advance
payment which should be regarded as the accounts paid on the behalf of Mudanjiang
Wangjiangmian Restaurant Management Co., Ltd. and Liu Lixia. As of the issue date of this
report, the People's Court of Dongan District of Mudanjiang City, Heilongjiang Province had
not made a judgment yet.
There was a dispute among the Company ’ s subsidiary- Mudanjiang Appliances, Zhang
Zhiqiang (the plaintiff) and Jinyue Group Co., Ltd. over the loan of RMB6.5 million. The
amount was actually generated from the intention acquisition by Jinyue Group Co., Ltd. of
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Konka Group Co., Ltd. Interim Report 2018
stocks held by the Company and Mudanjiang State-owned Assets Investment Holdings Co.,
Ltd. due to staff relocation. The main judgments of the (2016) Hei 1004 Minchu No. 223
Civil Judgment issued by the People’s Court of Aimin District, Mudajiang City, Helongjiang
Province on 29 November 2017 were as follows: the Company and the Municipal
State-owned Assets Investment Holding Co., Ltd. should pay the plaintiff-Zhang Zhiqiang
RMB765,993.95 and the interest of RMB115,576.77; the subsidiary- Mudanjiang Appliances
should assume joint and several liquidation liabilities for the above amount; and other claims
of Zhang Zhiqiang were rejected. On 12 April 2018, the judgment of second instance rejected
the appeal of Zhang Zhiqiang and affirmed the original judgment.
(2) Contingent Liabilities Generated from Providing Debt Guarantee for Other Entities and
their Financial Impacts
① The Company signed the guarantee contract of maximum amount (No. 2017XCYZBZ
No.17czA0017-a) with Chuzhou Branch of China Citic Bank on 24 October 2017, in which
the Company provided credit guarantee of RMB60 million to Anhui Tongchuang from 24
October 2017 to 24 October 2018. The credit line is mainly used to open and accept the letter
of credit of Anhui Tongchuang and obtain the financing credit and other daily businesses
from the bank. As of 30 June 2018, the guarantee amount has been used RMB39,300,000.00.
②The Company signed the guarantee contract of maximum amount (No. CZZHZGBZ 2018
No.0103) with Chengzhong Branch of Chuzhou Eastern Anhui Rural Commercial Bank on 9
May 2018, in which the Company provided credit guarantee of RMB45,000,000.00 to Anhui
Tongchuang from 9 May 2018 to 9 May 2019. The credit line is mainly used to open and
accept the letter of credit of Anhui Tongchuang and obtain the financing credit and other
daily businesses from the bank. As of 30 June 2018, the guarantee amount has been used
RMB40,025,000.00.
③ The Company signed the guarantee contract of maximum amount (No.
CZGSB02GBT20180011) with Chuzhou Branch of China Everbright Bank on 19 June 2018,
in which the Company provided credit guarantee of RMB30,000,000.00 to Anhui
Tongchuang from 19 June 2018 to 18 June 2019. The credit line is mainly used to open and
accept the letter of credit of Anhui Tongchuang and obtain the financing credit and other
daily businesses from the bank. As of 30 June 2018, the guarantee amount has not been used
yet.
④The Company signed the guarantee contract of maximum amount (No. 07301KB20178088)
with Shenzhen Branch of Bank of Ningbo on 21 July 2017, in which the Company provided
credit guarantee of RMB20,000,000.00 to Konka E-display from 20 July 2017 to 20 July
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Konka Group Co., Ltd. Interim Report 2018
2018. The credit line is mainly used to open and accept the letter of credit of Konka
E-display and obtain the financing credit and other daily businesses from the bank. As of 30
June 2018, the guarantee amount has been used RMB10,606,743.10. Shenzhen Konka E
Capital Investment Partnership (LLP), the non-controlling interest of Konka E-display,
provided 40% of counter guarantee to the amount.
⑤ The Company signed the Guarantee Contract of Maximum Amount (No.
ZB7908201700000042) with Shenzhen Branch of Shanghai Pudong Development Bank for
comprehensive credit line of RMB500,000,000.00 on 14 November 2017 used to help Konka
Factoring to obtain the financing loan from the bank. The guarantee period is from 17
October 2017 to 16 October 2018. As of 30 June 2018, the amount has been used
RMB62,108,473.38.
⑥ The Company signed the Guarantee Contract of Maximum Amount (HXSFZLEBZ
No.20171023002001) with Shenzhen Branch of Guangdong Huaxing Bank for
comprehensive credit line of RMB200,000,000.00 on 23 October 2017 used to help Konka
Factoring to obtain the financing loan from the bank. The guarantee period is from 24
October 2017 to 27 September 2018. As of 30 June 2018, the amount has been used
RMB179,715,885.15.
⑦ The Company signed Issuing Guarantee/SLC Agreement (No. 81050120180000040) and
applied to Shenzhen OCT Branch of ABC for issuing the letter of guarantee of
RMB140,000,000.00 on 27 June 2018 for Konka Factoring to obtain the financing loan from
the bank. The guarantee period is 27 June 2018 to 26 June 2019. Konka Factoring has
obtained the loan of RMB135,800,000.00 from Dubai Branch of ABC as of 30 June 2018.
⑧ The Company signed the Guarantee Contract (2018CZYEDBZNo.006) with Chuzhou
Branch of Bank of China on 2 May 2018, in which the Company provided credit guarantee
of RMB200,000,000.00 to Anhui Konka from 2 May 2018 to 9 April 2019. The credit line is
mainly used to open and accept the letter of credit of Anhui Konka and obtain the financing
credit and other daily businesses from the bank. As of 30 June 2018, the guarantee amount
has been used RMB67,550,000.00. Chuzhou State-owned Assets Operation Co., Ltd., the
non-controlling interest of Anhui Konka, provided 22% of counter guarantee to the amount.
⑨ The Company signed the Guarantee Contract of Maximum Amount
(CZZHZGBZ2018No.0133) with Chengzhong Branch of Chuzhou Eastern Anhui Rural
Commercial Bank Co., Ltd. on 1 June 2018, in which the Company provided credit
guarantee of RMB80,000,000.00 to Anhui Konka from 1 June 2018 to 1 June 2019. The
credit line is mainly used to open and accept the letter of credit of Anhui Konka and obtain
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Konka Group Co., Ltd. Interim Report 2018
the financing credit and other daily businesses from the bank. As of 30 June 2018, the
guarantee amount has been used RMB80,000,000.00. Chuzhou State-owned Assets
Operation Co., Ltd., the non-controlling interest of Anhui Konka, provided 22% of counter
guarantee to the amount.
⑩The Company applied to Shenzhen OCT Branch of ABC for issuing the letter of guarantee
of USD11,000,000.00 on 28 August 2017 for Hong Kong Konka to obtain the financing loan
from the bank. The guarantee period is 28 August 2017 to 27 August 2018. Hong Kong
Konka has obtained the loan of USD11,000,000.00 from Bank of China (Hong Kong) Co.,
Ltd. as of 30 June 2018.
The Company signed Issuing Guarantee/SLC Agreement (No.2017SJTZEZNo.008) and
applied to Shenzhen Branch of China Mingsheng Bank Corp for issuing the letter of
guarantee of USD5,000,000.00 on 25 September 2017 for Hong Kong Konka to obtain the
financing loan from the bank. The guarantee period is 27 September 2017 to 27 September
2018. Hong Kong Konka has obtained the loan of USD5,000,000.00 from Bank of China
(Hong Kong) Co., Ltd. as of 30 June 2018.
The Company signed Issuing Guarantee/SLC Agreement (No.2017SJTZEZNo.008) and
applied to Shenzhen Branch of China Mingsheng Bank Corp for issuing the letter of
guarantee of USD35,000,000.00 on 25 September 2017 for Hong Kong Konka to obtain the
financing loan from the bank. The guarantee period is 13 October 2017 to 13 October 2018.
Hong Kong Konka has obtained the loan of USD35,000,000.00 from Bank of China (Hong
Kong) Co., Ltd. as of 30 June 2018.
The Company signed Issuing Guarantee/SLC Agreement (No. 81050120180000032) and
applied to Shenzhen OCT Branch of ABC for issuing the letter of guarantee of
USD30,000,000.00 on 31 May 2018 for Hong Kong Konka to obtain the financing loan from
the bank. The guarantee period is 31 May 2018 to 30 May 2019. Hong Kong Konka has
obtained the loan of USD30,000,000.00 from Bank of China (Hong Kong) Co., Ltd. as of 30
June 2018.
Shenzhen Konka Telecommunications Technology Co., Ltd. signed the Guarantee Contract
(No.[23301]YSHBZ[180525]No.00001) with Lingang Branch of Yinbin City Commercial
Bank for providing its subsidiary-Sichuan Konka Smart terminal Technology Co., Ltd.-with a
credit guarantee of RMB140,000,000.00 on 28 May 2018 used to help Sichuan Konka Smart
terminal Technology Co., Ltd. to obtain the financing loan from the bank. The guarantee
period is from 28 May 2018 to 27 May 2025. As of 30 June 2018, the amount has been used
RMB50,000,000.00. Shenzhen Kangwei Investment Partnership (LLP), the other shareholder
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Konka Group Co., Ltd. Interim Report 2018
of Sichuan Konka Smart terminal Technology Co., Ltd., provided 49% of counter guarantee
to the amount guaranteed by Telecommunication Technology.
The Company applied a comprehensive credit line of RMB500,000,000.00 to OCT Branch
of Bank of Communications. As of 30 June 2018, the amount has been used RMB300 million.
The rest amount of RMB200 million has not been used yet.
The Company applied a comprehensive credit line of RMB1,000,000,000.00 to Shenzhen
Branch of Guangdong Huaxing Bank. As of 30 June 2018, the amount has been used
RMB300,000,000.00. Among the rest amount, RMB500,000,000.00 has not been used, and
RMB200,000,000.00 has been transferred to Konka Factoring (Shenzhen) Co., Ltd.
(3) Other Contingent Liabilities and their Financial Influence
As of 30 June 2018, there was no significant contingent for the Company to disclose.
XIII. Events after Balance Sheet Date
1. On 8 August 2018, the 8th Board of Directors of Konka Group made decisions on an
increased capital of RMB232 million to Anhui Konka Tongchuang Household Appliances
Co., Ltd. due to business development, after the resolution of the 46th meeting, with the
capital increase price of RMB1 to registered capital of RMB1. Then the registered capital of
Anhui Konka Tongchuang Household Appliances Co., Ltd. will increase to RMB502 million.
2. As the joint stock company of the Company, Kunshan Kangsheng Investment
Development Co., Ltd. (the Company holds 49% of its equity), purchased the Kunshan Land
Network [2018] No. 5-8 Parcel of Land for RMB590,062 through public auction and
obtained the Notice of Online Listing Transfer of State-Owned Construction Land Use Rights
issued by the Kunshan Municipal Bureau of Land and Resources.
3. On 16 August 2018, the Company will complete the merger and acquisition of Jiujiang
Golden Phoenix Decoration Material Co., Ltd. with a registered capital of RMB272.7273
million. The Company contributes RMB765 million (or 51% shares) and possesses the
control power over it.
XIV. Other Significant Events
1. On 22 May 2018, the 8th Board of Directors of the Company deliberated and passed the
Proposal on the Company's Compliance with Non-Public Issuance of Corporation Bonds, the
Proposal on the Company's Non-Public Issuance of Corporation Bonds, and Proposal on
Requesting General Meeting of Stockholders of the Company to Authorize the Board of
Directors to Fully Handle Issues Related to Non-public Issuance of Corporation Bonds on
the 43rd meeting. In order to widen the financing channels and optimize the debt structure,
the Company plans to issue non-public corporation bonds, with the total amount of face
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Konka Group Co., Ltd. Interim Report 2018
value not exceeding RMB5 billion (including RMB5 billion). The non-public issuance of
corporation bonds has been approved by the General Meeting of Stockholders of the
Company.
2. On 22 May 2018, the Eighth Board of Directors of the Company deliberated and passed
the Proposal on Carrying out the Securitization of Receivables Assets on the 43rd meeting. In
order to reduce the occupation of Company funds by accounts receivable, the Company plans
to carry out the asset securitization of receivables, which has been approved by the General
Meeting of Stockholders of the Company and will be issued according to market conditions.
3. On 22 May 2018, the Eighth Board of Directors of the Company deliberated and passed
the Proposal on the Wholly-owned Subsidiary Implementing Commercial Factoring Asset
Securitization Business on the 43rd meeting. In order to widen the financing channels,
revitalize the stock assets and accelerate the assets turnover, Konka Factoring (Shenzhen) Co.,
Ltd., a wholly-owned subsidiary of the Company, plans to carry out commercial factoring
asset securitization business, which has been deliberated and passed by the General Meeting
of Stockholders of the Company as a special plan. It is still necessary to obtain a no objection
letter for listing issued by the security exchange and to report to the China Securities
Investment Fund Association for filing after finishing the issuance.
4. The 8th Board of Directors of the Company agreed that Konka Group transferred 51%
equity of Kunshan Kangsheng Investment Development Co., Ltd. to Taizhou Overseas
Chinese Town Co., Ltd., with the transfer price of RMB280,680,300 due to business
development after the resolution of the 44th meeting.So far, the Company received 50%
equity transfer fund from Taizhou Overseas Chinese Town Co., Ltd. and completed the
equity change of Kunshan Kangsheng Investment Development Co., Ltd.
5. In order to implement the expansion idea of “Technology + Industry + Urbanization”, the
Company plans to invest no less than RMB1 billion in the Tianfu New District, Sichuan, via
its holding subsidiary to build the headquarters base of the Konka Group’s ‘Belt and Road’.
The Board of Directors of the Company held the 45th meeting of the Eighth Board of
Directors on 27 June 2018, deliberating and passing the Proposal on Investing in the
Construction of the Konka Group’s ‘Belt and Road’ Headquarters Base in Chengdu.
6. On 29 June 2018, Anhui Konka Electrical Appliance Technology Co., Ltd., the
majority-owned subsidiary of the Company (the Company indirectly holds 51% shares), won
the 100% shares of Henan Frestec Electrical Appliance Co., Ltd., Henan Frestec
Refrigeration Appliance Co., Ltd. and Henan Frestec Household Appliance Co., Ltd. at
RMB455 million. At present, the three companies are in the process of reorganization and
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Konka Group Co., Ltd. Interim Report 2018
will formally resume production on 28 August 2018.
7. In November 2015, the Company and the Company ’ s subsidiary E-display signed the
Intention Agreement on Equity Transfer with Guangdong Sunwill Precising Plastic Co., Ltd.
(hereinafter referred to as the “ Sunwill Company ” ), in which the Company intended to
transfer the 60% shares in E-display to Sunwill Company. As stipulated in the agreement,
Sunwill Company should perform the obligation of information disclosure and reporting to
CSRC and corresponding stock exchange within 3 days from the date when its shareholding
exceeds 5% on, pay the cash deposit and sign the formal agreement in accordance with the
agreement and the listing announcement, and compensate for the Company’s losses (such as
the listing expense and expected revenues of Party B etc.) if any defaults were made by it.
After the signing of the agreement, the Company has made the preparations for the equity
transfer in line with the agreement including entrusting the CPAs to audit and evaluate the
corporate appraisal, etc. In January 2016, the Company sold the 60% shares of E-display it
held on Shanghai United Assets and Equity Exchange pursuant to the agreement. However
Sunwill Company had not delisted yet when the listing period expired. Then, the Company
sent a notice to Sunwill Company to urge its delisting. And Sunwill Company replied and
clearly gave up delisting. In May 2016, the Company and E-display filed a lawsuit to
Shenzhen Nanshan District People’s Court against the default of Sunwill Company.
In accordance with the civil judgment (2016)Yue 0305MC No. 6421 by Guangdong
Shenzhen Nanshan District People ’ s Court, the Intention Agreement on Equity Transfer
signed by the Company and E-display with Sunwill Company was terminated on 16 March
2016; Sunwill Company compensated for the Company ’s direct losses of RMB150,880.00
and for E-display ’s direct losses of RMB27,576.60; and other claims of the Company and
E-display were rejected. The Company appealed to Shenzhen Intermediate People’s Court for
the rejection of the first-instance judgment. Pursuant to the civil judgment (2017) Yue 03 MZ
No.: 5299 by Shenzhen Intermediate People’s Court made on 7 February 2018, the original
judgment was affirmed other than the fourth item- “ rejecting other claims of the Company
and E-display” in the civil judgment (2016)Yue 0305MC No. 6421 by Guangdong Shenzhen
Nanshan District People’s Court, and Sunwill Company was requested to compensate for the
Company ’ s losses on acquirable interest of RMB7.2 million. On 16 March 2018, the
Company received the compensation paid by Sunwill Company. So far the case has been
closed.
8. Chongqing Qingjia Electronics Co., Ltd., a subsidiary of the Company, will conduct the
liquidation after completing land purchasing and storage.
247
Konka Group Co., Ltd. Interim Report 2018
XV. Notes of Main Items in the Financial Statements of the Company
1. Accounts Receivable
(1) Accounts Receivable Disclosed by Category
Ending balance
Carrying amount Bad debt provision
Category Withdrawal
Proportion Carrying value
Amount Amount proportion
(%)
(%)
Accounts receivable with
significant single amount
for which bad debt — — — — —
provision separately
accrued
Accounts receivable
withdrawal of bad debt
provision of by credit risks
characteristics:
Group 1: aging group 2,103,437,646.59 44.50 198,119,251.75 9.42 1,905,318,394.84
Group 2: connected party
2,594,439,350.80 54.89 2,594,439,350.80
group
Subtotal of groups 4,697,876,997.39 99.39 198,119,251.75 4.22 4,499,757,745.64
Accounts receivable with
insignificant single amount
for which bad debt 28,826,439.50 0.61 16,960,135.86 58.84 11,866,303.64
provision separately
accrued
Total 4,726,703,436.89 100.00 215,079,387.61 4.55 4,511,624,049.28
(Continued)
Beginning balance
Carrying amount Bad debt provision
Category Withdrawal
Proportion Carrying value
Amount Amount proportion
(%)
(%)
Accounts receivable with
significant single amount
for which bad debt — — — — —
provision separately
accrued
Accounts receivable
withdrawal of bad debt
248
Konka Group Co., Ltd. Interim Report 2018
Beginning balance
Carrying amount Bad debt provision
Category Withdrawal
Proportion Carrying value
Amount Amount proportion
(%)
(%)
provision of by credit risks
characteristics:
Group 1: aging group 2,082,823,910.69 42.10 197,902,700.06 9.50 1,884,921,210.63
Group 2: connected party
2,827,688,037.26 57.16 — — 2,827,688,037.26
group
Subtotal of groups 4,910,511,947.95 99.26 197,902,700.06 4.03 4,712,609,247.89
Accounts receivable with
insignificant single amount
for which bad debt 36,839,946.40 0.74 17,295,202.04 46.95 19,544,744.36
provision separately
accrued
Total 4,947,351,894.35 100.00 215,197,902.10 4.35 4,732,153,992.25
① In the groups, accounts receivable adopting aging analysis method to accrue bad debt
provision:
Ending balance
Aging
Accounts receivable Bad debt provision Withdrawal proportion
Within 1 year 1,894,407,746.72 37,874,274.02 2.00%
1 to 2 years 46,567,170.20 2,328,358.51 5.00%
2 to 3 years 2,718,733.96 543,746.79 20.00%
3 to 4 years 2,251,224.67 1,125,612.34 50.00%
4 to 5 years 2,491,021.90 1,245,510.95 50.00%
Over 5 years 155,001,749.14 155,001,749.14 100.00%
Total 2,103,437,646.59 198,119,251.75
②In the groups, accounts receivable adopting other methods to withdraw bad debt provision:
Ending balance
Name of the group Bad debt
Accounts receivable Withdrawal proportion
provision
Connected party group within the
2,594,439,350.80 — —
consolidation scope
Total 2,594,439,350.80 — —
③ The top 5 accounts receivable with insignificant single amount for which bad debt
249
Konka Group Co., Ltd. Interim Report 2018
provision separately accrued
Ending balance
Name of customer Account Bad debt Withdrawal
Withdrawal reason
receivable provision proportion (%)
It is estimated that
Yunnan Radio and part of the amount
Television Network 2,138,825.00 748,588.75 35.00 is difficult to
Group Co., Ltd. recover.
It is estimated that
Henan Radio and part of the amount
Television Network Co., 4,580,000.00 1,374,000.00 30.00 is difficult to
Ltd. recover.
Administration of It is estimated that
Radio, Film and part of the amount
Television in Xinjiang 1,708,054.00 546,577.28 32.00 is difficult to
Uygur Autonomous recover.
Region
It is estimated that
Beijing CP Lotus Store 1,656,628.91 1,656,628.91 100.00 the amount is
difficult to recover
It is estimated that
Qinhuangdao Baihai part of the amount
Electric Appliance Co., 1,430,290.00 230,290.00 16.10 is difficult to
Ltd. recover.
Total 11,513,797.91 4,556,084.94
(2) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting Period
The withdrawal amount of the bad debt provision during the Reporting Period was of
RMB0.00; the amount of the reversed or collected part during the Reporting Period was of
RMB118,514.49, the amount of write-off during the Reporting Period was RMB0.00.
(3) Top 5 Accounts Receivable in Ending Balance Collected according to the Arrears Party
The total top 5 accounts receivable in ending balance collected according to the arrears party
waas RMB3,143,265,739.53, accounting for 66.50% of total ending balance of accounts
receivable, the total ending balance of bad debt provision correspondingly withdrawn was
RMB2,713,403.37.
2. Other Receivables
(1) Other Receivables Classified by Category
250
Konka Group Co., Ltd. Interim Report 2018
Ending balance
Carrying amount Bad debt provision
Category Withdra
Proportion wal Carrying value
Amount Amount
(%) proportio
n (%)
Other receivables with
significant single amount
for which bad debt 173,061,959.33 4.71 162,467,164.97 93.88 10,594,794.36
provision separately
accrued
Other receivables
withdrawn bad debt
provision according to
credit risks characteristics
Group 1: aging group 139,981,486.90 3.81 24,771,476.52 17.70 115,210,010.38
Group 2: connected party
3,360,014,695.66 91.41 0.00 3,360,014,695.66
group
Subtotal of groups 3,499,996,182.56 95.22 24,771,476.52 0.71 3,475,224,706.04
Other receivables with
insignificant single amount
for which bad debt 2,515,181.05 0.07 733,893.67 29.18 1,781,287.38
provision separately
accrued
Total 3,675,573,322.94 100.00 187,972,535.16 5.11 3,487,600,787.78
(Continued)
Beginning balance
Carrying amount Bad debt provision
Category Withdrawa
Proportion l Carrying value
Amount Amount
(%) proportion
(%)
Other receivables with
significant single amount for
173,061,959.33 3.84 162,467,164.97 93.88 10,594,794.36
which bad debt provision
separately accrued
Other receivables withdrawn
bad debt provision according -
to credit risks characteristics
Group 1: aging group 121,170,320.79 2.69 24,301,146.90 20.06 96,869,173.89
251
Konka Group Co., Ltd. Interim Report 2018
Group 2: connected party
4,205,636,078.64 93.41 — — 4,205,636,078.64
group
Subtotal of groups 4,326,806,399.43 96.10 24,301,146.90 0.56 4,302,505,252.53
Other receivables with
insignificant single amount
2,516,181.05 0.06 733,893.68 29.17 1,782,287.37
for which bad debt provision
separately accrued
Total 4,502,384,539.81 100.00 187,502,205.55 4.16 4,314,882,334.26
①Other receivables with significant single amount for which bad debt provision separately
accrued at the period-end
Ending balance
Withdra
Other receivables (unit) Withdra
Other Bad debt wal
wal
receivables provision proporti
reason
on (%)
141,549,150. 141,549,150. Irrecover
Energy saving subsidy 100.00
00 00 able
Difficult
to
recover
Shenzhen Konka Video & Communication Systems 18,115,952.5
7,521,158.15 41.52 in full
Engineering Co., Ltd. 1
amount
after
evaluated
Difficult
to
recover
13,396,856.8 13,396,856.8 due to
Chongqing Konka Auto Electronic Company 100.00
2 2 bankrupt
cy
liquidatio
n
173,061,959. 162,467,164.
Total — —
33 97
② In the groups, other receivables adopting aging analysis method to withdraw bad debt
provision:
Ending balance
Aging
Other receivables Bad debt provision Withdrawal proportion (%)
Within 1 year 112,476,602.77 2,249,518.22 2.00
252
Konka Group Co., Ltd. Interim Report 2018
Ending balance
Aging
Other receivables Bad debt provision Withdrawal proportion (%)
1 to 2 years 3,893,887.94 194,694.40 5.00
2 to 3 years 877,853.20 175,570.64 20.00
3 to 4 years 833,557.46 416,778.74 50.00
4 to 5 years 329,342.03 164,671.02 50.00
Over 5 years 21,570,243.50 21,570,243.50 100.00
Total 139,981,486.90 24,771,476.52
③In the groups, other receivables adopting other methods to withdraw bad debt provision:
Ending balance
Name of the group Bad debt Withdrawal
Other receivables
provision proportion (%)
Connected party group within the consolidation
3,360,014,695.66 — —
scope
Total 3,360,014,695.66 — —
(2) Bad Debt Provision Withdrawn, Reversed or Recovered in the Reporting Period
The withdrawal amount of the bad debt provision during the Reporting Period was of
RMB470,329.61; the amount of the reversed or collected part during the Reporting Period
was of RMB0.00.
(3) Top 5 Other Receivables in Ending Balance Collected according to the Arrears Party
Proportion to total
Ending balance
Name of the ending balance of
Nature Ending balance Aging of bad debt
entity other receivables
provision
(%)
Loan and Within 1
Konka Factoring 1,506,771,426.27 40.99
interest year
Loan and Within 1
Kangzhi Trade 402,848,734.02 10.96
interest year
Anhui Loan and Within 1
399,745,633.35 10.88
Tongchuang interest year
Energy saving Loan and Within 1
141,549,150.00 3.85 141,549,150.00
subsidy interest year
Communication Loan and Within 1
61,129,833.33 1.66
Technology interest year
Total — 2,512,044,776.97 — 68.34 141,549,150.00
253
Konka Group Co., Ltd. Interim Report 2018
3. Long-term Equity Investment
(1) Category of Long-term Equity Investment
Ending balance Beginning balance
Item Carrying Depreciation Carrying Depreciation
Carrying value Carrying value
amount reserve amount reserve
Investment to subsidiaries 2,996,452,345.01 46,732,484.69 2,949,719,860.32 1,592,732,345.01 46,732,484.69 1,545,999,860.32
Investment to joint ventures and associated
1,672,969,077.51 5,158,909.06 1,667,810,168.45 1,108,233,473.19 5,158,909.06 1,103,074,564.13
enterprises
Total 4,669,421,422.52 51,891,393.75 4,617,530,028.77 2,700,965,818.20 51,891,393.75 2,649,074,424.45
(1) Investment to the Subsidiaries
Depreciation
Ending balance of
Investee Beginning balance Increase Decrease Ending balance reserve
depreciation reserve
withdrawn
Mudangjiang
36,000,000.00 36,000,000.00 36,000,000.00
electric appliances
Anhui Konka 122,780,937.98 122,780,937.98 —
Dongguan Konka 274,783,988.91 274,783,988.91 —
Hong Kong Konka 781,828.61 781,828.61 —
Konka Europe 261,482.50 261,482.50 —
Kunshan Konka 0.00 —
Plasthetics 4,655,000.00 4,655,000.00 —
Konka Household
10,732,485.69 10,732,485.69 10,732,484.69
Appliances
Telecommunication 90,000,000.00 210,000,000.00 300,000,000.00 —
254
Konka Group Co., Ltd. Interim Report 2018
Depreciation
Ending balance of
Investee Beginning balance Increase Decrease Ending balance reserve
depreciation reserve
withdrawn
Technology
Information
0.00 —
Network
Shushida 31,500,000.00 31,500,000.00 —
Fittings
48,750,000.00 48,750,000.00 —
Technology
Kunshan
350,000,000.00 350,000,000.00 —
Kangsheng
Anhui Tongchuang 249,702,612.22 249,702,612.22 —
Konka Factoring 200,000,000.00 100,000,000.00 300,000,000.00 —
Wankaida 10,000,000.00 10,000,000.00 —
Beijing Konka 30,000,000.00 170,000,000.00 200,000,000.00 —
Shushida Logistics 10,000,000.00 10,000,000.00 —
Konka E-display 7,200,000.00 7,200,000.00 —
Kaikai Shijie 16,000,000.00 16,000,000.00 0.00 —
Commercial
5,832,000.00 5,832,000.00 —
Technology
Mobile Internet 10,200,000.00 10,200,000.00 —
Yilifang 12,000,000.00 12,000,000.00 —
Dongguan Packing 8,602,009.10 8,602,009.10 —
Konka TID 40,000,000.00 40,000,000.00 —
Konka Ventures 2,550,000.00 2,550,000.00 —
255
Konka Group Co., Ltd. Interim Report 2018
Depreciation
Ending balance of
Investee Beginning balance Increase Decrease Ending balance reserve
depreciation reserve
withdrawn
Konka Pengrun 5,100,000.00 20,400,000.00 25,500,000.00 —
Konka Unifortune 15,300,000.00 15,300,000.00 —
Konka Investment 38,000,000.00 38,000,000.00 —
Electronics
100,000,000.00 100,000,000.00
Technology
Sichuan
1,020,000.00 1,020,000.00
Kangjiatong
Econ Technology 688,500,000.00 688,500,000.00
Konka Huanjia 91,800,000.00 91,800,000.00
Total 1,592,732,345.01 1,419,720,000.00 16,000,000.00 2,996,452,345.01 0.00 46,732,484.69
(3) Investment to Associated Enterprises
Beginning Increase/decrease
balance of
Beginning Reduced
Investee depreciatio Additional Gains and losses recognized under the equity Adjustment of other comprehensive Changes of other
balance investme
n on investment method income equity
nt
reserve
Shanghai
Konka
Green
79,729,560.91 — -1,062,323.74 324,021.02
Science &
Technolog
y Co., Ltd.
256
Konka Group Co., Ltd. Interim Report 2018
Beginning Increase/decrease
balance of
Beginning Reduced
Investee depreciatio Additional Gains and losses recognized under the equity Adjustment of other comprehensive Changes of other
balance investme
n on investment method income equity
nt
reserve
Zhuhai
Jinsu
9,444,160.97 — 627,916.90
Plastic
Co., Ltd.
Shenzhen
Konka
Intelligent 4,927,589.47 — -2,065,657.20
Electric
Co., Ltd
Shenzhen
Zhongbing
Konka
14,317,400.80 — -2,208,794.15
Technolog
y Co.,
Ltd
Shenzhen
Konka
5,158,909.0
Informatio 18,960,898.67 196,728.66
6
n Network
Co., Ltd
257
Konka Group Co., Ltd. Interim Report 2018
Beginning Increase/decrease
balance of
Beginning Reduced
Investee depreciatio Additional Gains and losses recognized under the equity Adjustment of other comprehensive Changes of other
balance investme
n on investment method income equity
nt
reserve
Shenzhen
Yaode
210,279,132.55 — 3,705,243.63
Technolog
y Co., Ltd.
Guangdon
g Chutian
Dragon
617,214,571.50 — 10,226,294.00
Smart
Card Co.,
Ltd.
Guangdon
g
Hotcomm 1,523,166.24 — 0.00
IT Co.,
Ltd.
Kunshan
151,859,076.20 — 3,587,367.82
Konka
Shenzhen
-22,084.12 — 3,771,400.00 0.00
OCT LIFE
258
Konka Group Co., Ltd. Interim Report 2018
Beginning Increase/decrease
balance of
Beginning Reduced
Investee depreciatio Additional Gains and losses recognized under the equity Adjustment of other comprehensive Changes of other
balance investme
n on investment method income equity
nt
reserve
Shenzhen
Bosheng
75,000,000.0
Advanced 233,407.38
0
Materials
Co., Ltd.
Heilongjia
ng
Longkang
7,000,000.00 0.00
Zhijia
Technolog
y Co., Ltd.
Shaanxi
Silk Road
Cloud
5,400,000.00 0.00
Smart
Tech Co.,
Ltd.
Anhui
Kaikai
Shijie
0.00
E-commer
ce Co.,
Ltd.
259
Konka Group Co., Ltd. Interim Report 2018
Beginning Increase/decrease
balance of
Beginning Reduced
Investee depreciatio Additional Gains and losses recognized under the equity Adjustment of other comprehensive Changes of other
balance investme
n on investment method income equity
nt
reserve
1,108,233,473.1 5,158,909.0 91,171,400.0
Total 0.00 13,240,183.30 324,021.02 0.00
9 6 0
(Continued)
Increase/decrease
Ending balance of
Investee Cash bonus or profits Ending balance
Withdrawal of impairment provision Other depreciation reserve
announced to issue
Shanghai Konka Green Science &
78,991,258.19 —
Technology Co., Ltd.
Zhuhai Jinsu Plastic Co., Ltd. 10,072,077.87 —
Shenzhen Konka Intelligent Electric
2,861,932.27 —
Co., Ltd
Shenzhen Zhongbing Konka
12,108,606.65 —
Technology Co., Ltd
Shenzhen Konka Information Network
19,157,627.33 5,158,909.06
Co., Ltd
Shenzhen Yaode Technology Co., Ltd. 213,984,376.18 —
Guangdong Chutian Dragon Smart
627,440,865.50 —
Card Co., Ltd.
Guangdong Hotcomm IT Co., Ltd. 1,523,166.24 —
260
Konka Group Co., Ltd. Interim Report 2018
Increase/decrease
Ending balance of
Investee Cash bonus or profits Ending balance
Withdrawal of impairment provision Other depreciation reserve
announced to issue
Kunshan Konka 155,446,444.02 —
Shenzhen OCT LIFE 3,749,315.88 —
Shenzhen Bosheng Advanced
75,233,407.38
Materials Co., Ltd.
Heilongjiang Longkang Zhijia
7,000,000.00
Technology Co., Ltd.
Shaanxi Silk Road Cloud Smart Tech
5,400,000.00
Co., Ltd.
Anhui Kaikai Shijie E-commerce Co.,
460,000,000.00 460,000,000.00
Ltd.
Total 0.00 0.00 460,000,000.00 1,672,969,077.51 5,158,909.06
261
Konka Group Co., Ltd. Interim Report 2018
4. Operating Revenue and Cost of Sales
(1) Operating Revenue and Cost of Sales
Reporting Period Same period of last year
Item
Operating revenue Cost of sales Operating revenue Cost of sales
Main
4,519,683,896.29 4,013,358,791.77 4,206,989,260.45 3,482,365,918.48
operations
Other
2,036,884,619.01 1,944,666,140.94 2,065,723,384.28 1,961,473,989.08
operations
Total 6,556,568,515.30 5,958,024,932.71 6,272,712,644.73 5,443,839,907.56
(2) Main Operations (Classified by Industry)
Reporting Period Same period of last year
Industry
Operating revenue Cost of sales Operating revenue Cost of sales
Electronic industry 4,519,683,896.29 4,013,358,791.77 4,206,989,260.45 3,482,365,918.48
Total 4,519,683,896.29 4,013,358,791.77 4,206,989,260.45 3,482,365,918.48
(3) Main Operations (Classified by Product)
Reporting Period Same period of last year
Product
Operating revenue Cost of sales Operating revenue Cost of sales
Color TV
4,224,714,468.42 3,730,979,831.79 4,058,572,854.30 3,352,318,191.14
business
Consumer
appliances 100,943,929.96 89,279,454.11 148,212,399.29 129,780,963.65
business
Other 194,025,497.91 193,099,505.86 204,006.86 266,763.69
Total 4,519,683,896.29 4,013,358,791.77 4,206,989,260.45 3,482,365,918.48
(4) Main Operations (Classified by Area)
Reporting Period Same period of last year
Area
Operating revenue Cost of sales Operating revenue Cost of sales
Domestic
3,600,826,510.58 3,175,143,251.38 3,822,475,481.58 3,102,447,555.27
sales
Overseas
918,857,385.71 838,215,540.39 384,513,778.87 379,918,363.21
sales
Total 4,519,683,896.29 4,013,358,791.77 4,206,989,260.45 3,482,365,918.48
262
Konka Group Co., Ltd. Interim Report 2018
(5) Operating Revenue from the Top 5 Customers
Total operating revenue from the top 5 Proportion to the operating revenue of
Period
customers the Reporting Period
Jan.-Jun. of 2018 1,421,092,900.82 11.74
Jan.-Jun. of 2017 1,153,169,124.71 18.38
5. Investment Income
Item Reporting Period Same period of last year
Long-term equity investment income accounted by cost
634,394,080.11 33,233,152.36
method
Long-term equity investment income accounted by equity
13,240,183.30 -6,495,694.18
method
Investment income from disposal of long-term equity
48,431,372.55
investment
Investment income from holding of financial assets at fair
0.00
value through profit or loss
Investment income from disposal of financial assets at
-82,412,478.05 16,271,994.98
fair value through profit or loss
Investment income from holding of held-to-maturity
—
investments
Investment income from holding of available-for-sale
13,740,000.00
financial assets
Investment income from disposal of available-for-sale
—
financial assets
Gains from re-measurement of residual equity at fair
445,568,627.45
value after losing control power
Income from entrust financial products and entrust loans 86,485,492.92 34,754,476.41
Financial assets transferred from equity investments
0.00
accounted by equity method
Total 1,159,447,278.28 77,763,929.57
XVI. Supplementary Materials
1. Items and Amounts of Non-recurring Profit or Loss
Item Amount Note
Gain/Loss arising from disposal of non-current assets 109,176,724.28
263
Konka Group Co., Ltd. Interim Report 2018
Item Amount Note
Tax rebates, reductions or exemptions due to approval beyond authority or the
0.00
lack of official approval documents
Government subsidies recognized in the current period, except for those
acquired in the ordinary course of business or granted at certain quotas or 95,673,059.56
amounts according to the government’s unified standards
Capital occupation charges on non-financial enterprises that are recorded into
0.00
current profit or loss
Gains due to that the investment costs for the Company to obtain subsidiaries,
associates and joint ventures are lower than the enjoyable fair value of the 0.00
identifiable net assets of the investees when making the investments
Gain/Loss on non-monetary asset swap 0.00
Gain/Loss on entrusting others with investments or asset management 83,860,015.29
Asset impairment provisions due to acts of God such as natural disasters 0.00
Gain/Loss from debt restructuring 0.00
Expenses on business reorganization, such as expenses on staff arrangements,
0.00
integration, etc.
Gain/Loss on the part over the fair value due to transactions with distinctly
0.00
unfair prices
Current net profit or loss of subsidiaries acquired in business combination under the
0.00
same control from period-beginning to combination date
Gain/Loss incurred from contingency unrelated to the Company ’ s normal
0.00
operating businesses.
Gain/Loss on changes in fair value arising from holding of trading financial
assets and liabilities and investment income from disposal of trading financial
-5,196,666.98
assets, financial liabilities and available-for-sale financial assets other than
effective hedge business related to the Company’s normal operating businesses
Reverse of bad debt provision of accounts receivable individually conducting
0.00
impairment test
Gain/loss on entrustment loans 599,186.29
Gain/loss on change in fair value of investment property of which the 0.00
264
Konka Group Co., Ltd. Interim Report 2018
Item Amount Note
subsequent measurement is carried out adopting fair value method
Effect on current profit or loss when a one-off adjustment is made to current
profit or loss according to requirements of taxation, accounting and other 0.00
relevant laws and regulations
Custody fee income when entrusted with operation 0.00
Other non-operating income and expense other than the above 14,941,575.60
Project confirmed with the definition of non-recurring gains and losses and
445,568,627.45
losses
Subtotal 744,622,521.49
Income tax effects 38,310,511.85
Non-controlling interests effects (after tax) 63,648,357.81
Total 642,663,651.83
Notes: the number “+” among the non-recurring profit or loss items refers to revenue and income, while “-”referred to losses or
expense.
The recognition of the non-recurring profit or loss items was executed according to the regulations
of No.1 of the Information Disclosure Explanatory Notice of the Companies Public Offering
Securities-Non- recurring Profit or Loss (ZJH Announcement [2008] No. 43) .
Item Amount Reason
Closely related to the normal operating business of the
Company which met with the regulations of the state
Tax rebate of
34,848,961.96 policies as well as constantly enjoyed the governmental
software subsidies according to certain standard quotas or
quantities
2. Return on Equity and Earnings Per Share
Weighted average EPS (Yuan/share)
Profit as of Reporting Period
ROE (%) EPS-basic EPS-diluted
Net profit attributable to ordinary shareholders of the
4.19% 0.1419 0.1419
Company
Net profit attributable to ordinary shareholders of the
-3.69% -0.1249 -0.1249
Company after deduction of non-recurring profit or loss
265
Konka Group Co., Ltd. Interim Report 2018
Part XI Documents Available for Reference
I. The financial statements with the signatures and stamps of the Company ’s legal representative,
Chief Financial Officer and head of the financial department (equivalent to financial manager);
II. The originals of all the Company ’s documents and announcements disclosed to the public via
newspapers designated by the CSRC in the Reporting Period; and
III. Other relevant materials.
The Board of Directors
Konka Group Co., Ltd.
30 August 2018
266
