KONKA GROUP CO., LTD.
INTERIM REPORT 2009
KONKA GROUP CO., LTD.
CHAIRMAN OF THE BOARD: HOU SONG RONG
AUGUST 20092
KONKA GROUP CO., LTD
INTERIM REPORT 2009
Important Notice
The Board of Directors, the Supervisory Committee as well as all the directors, supervisors and senior
executives of KONKA GROUP CO., LTD (hereinafter referred to as the Company), hereby assure that
there are no false records, misleading statements or significant omissions in this report, and they would
shoulder any individual as well as joint responsibility concerning to the authenticity, accuracy and
completeness of the contents.
This Interim Report has been examined and approved by the 26th meeting of the 6th Board of Directors
of the Company.
No director, supervisor or senior executive has declared that he or she cannot guarantee the authenticity,
accuracy and completeness of this report, or that he or she has any objections.
After careful examination, the 12th meeting of the 6th Supervisory Committee believes that the Interim
Report 2009 and its Summary have faithfully, accurately and completely reflected the financial status,
business achievement, corporate administration and business development of the Company in the
interim of 2009.
Chairman of the Board of the Company Mr. Hou Songrong, Chief Financial Officer Mr. Yang Guobin
and Person in Charge of Accounting work Mr. Ruan Renzong hereby confirm that the Financial Report
in the Interim Report is true and complete.
The Interim Financial Report of the Company has not been audited.
This report was prepared in both Chinese and English. Should there be any difference in interpretation
between the two versions, the Chinese version shall prevail.
Contents
I . C o m p a n y P r o f i l e…………………………………………………………………….3
II. Changes in Share Capital and Shares Held by Principal Shareholders…………….4
III. Particulars about Directors, Supervisors and Senior Executives………………….6
IV. Report of the Board of Directors…………………………………………………..6
V. S i g n i f i c a n t Events………………………………………………………………....9
V I . F i n a n c i a l R e p o rt………………………………………………………………….14
VII. Documents Available for Reference…………………………………………….143
I. Company Profile
(I) Basic information of the Company
1. Legal Name of the Company in Chinese: 康佳集团股份有限公司
Abbreviation in Chinese: 康佳集团
Legal Name of the Company in English: KONKA GROUP CO., LTD.
Abbreviation in English: KONKA GROUP
2. Legal Representative: Chairman of the Board, Mr. Hou Songrong
3. Secretary of Board of Directors: Mr. Xiao Qing
Securities Affairs Representative: Mr. Wu Yongjun
Contact Address: Konka Group Co., Ltd., Overseas Chinese Town, Shenzhen, P.R.C.
Tel.: 0755-26608866
Fax: 0755-26601139
E-mail: szkonka@konka.com
4. Registered (Office) Address: Overseas Chinese Town, Nanshan District, Shenzhen
Post Code: 518053
Internet Website: http://www.konka.com
E-mail: szkonka@konka.com
5. Newspaper Designated for Disclosing the Information of the Company: Securities Times and etc.
Internet Website Designated by CSRC for Publishing the Interim Report:
http://www.cninfo.com.cn
The Place Where the Interim Report is Prepared and Placed: Secretariat of the Board of Directors of the Company
6. Stock Exchange Listed with: Shenzhen Stock Exchange
Short Form of the Stock: Shen Konka A, Shen Konka B
Stock Code: 000016, 200016
7. Date of the Initial Registration: 1 Oct. 1980
Place of the Initial Registration: Shenzhen City
8. Registration Code of Enterprise Business License: 440301501121863
9. Registration Code of Tax: 440301618815578
(II) Main financial data and indices
1. Main accounting data and financial indices (Unit” RMB Yuan)
Items At the end of report period At the end of last year Increase/decrease (%)
Total assets 10,867,555,753.76 10,517,285,515.63 3.33
Owners’ equity (or shareholders’ equity) 3,796,117,681.77 3,775,042,931.48 0.56
Share capital 1,203,972,704.00 1,203,972,704.00 0.00
Net profit attributable to shareholders of listed
company per share
3.153 3.135 0.57
Items
In the report period
(Jan.-Jun.)
The same period of last year Increase/decrease (%)
Operating revenue 5,172,000,028.20 5,620,525,986.16 -7.98
Operating profit 83,178,884.78 101,806,096.01 -18.30
Total profit 87,602,573.02 100,838,348.99 -13.13
Net profit attributable to shareholders of listed
company
80,302,015.01 80,555,227.21 -0.31
Net profit attributable to shareholders of listed
company after deducting non-recurring gain and loss
75,004,503.91 77,683,147.56 -3.45
Basic earnings per share 0.0667 0.0669 -0.30
Diluted earnings per share 0.0667 0.0669 -0.30
Return on equity 2.12% 2.24% -0.12
Net cash arising from operating activities 99,694,380.71 -42,686,785.79 333.55
Net cash per share arising from operating activities 0.0828 -0.0355 333.55
2. Items of non-recurring gains and losses (Unit: RMB Yuan)
Items Amount Note (if applicable)
Profit and loss from disposal of non-current assets -182,581.60 -
Governmental grants counted into the current profit and loss, except for the one closely
related with the normal operation of the company and gained constantly at a fixed amount or
quantity according to certain standard based on state policies
999,155.00 -4
Profit or loss from change in fair value by holding tradable financial assets and liabilities, and
investment income from disposal of tradable financial assets and liabilities as well as salable
financial assets, excluding the effective hedging businesses related with the normal
operations of the company
2,178,002.85 -
Other non-operating income and expenses besides the above items 3,607,114.84 -
Amount affected by income tax -806,507.67 -
Amount affected by minority interest -497,672.32
Total 5,297,511.10 -
II. Changes in Share Capital and Shares Held by Principal Shareholders
(I) Changes in share capital
1. During the report period, total shares of the Company remained unchanged.
2. During the report period, structure of shares of the Company changed as follows:
Before the change Increase/decrease in this time (+, - ) After the change
Amount Proportion
(%)
Issuance
of new
shares
Bonus
shares
Capitalization
of public
reserves
Others Subtotal Amount Proportion
(%)
I. Shares subject to trading
moratorium 198,388,174 16.48% - - - -1,284 -1,284 198,386,890 16.48%
1. Shares held by the state - - - - - - - - -
2. Shares held by
state-owned corporation 198,381,940 16.48% - - - - - 198,381,940 16.48%
3, Shares held by other
domestic investors 6,234 0.00% - - - -1,284 -1,284 4,950 0.00%
Including: - -
Shares held by domestic
corporation 0 0.00% - - - - - 0 0.00%
Shares held by domestic
natural person (senior
executives)
6,234 0.00% - - - -1,284 -1,284 4,950 0.00%
4. Shares held by foreign
investors 0 0.00% - - - - - 0 0.00%
Including:
Shares held by foreign
corporation 0 0.00% - - - - - 0 0.00%
Shares held by foreign
natural person - - - - - - - - -
II. Shares not subject to
trading moratorium 1,005,584,530 83.52% - - - 1,284 1,284 1,005,585,814 83.52%
1. RMB ordinary shares 599,908,726 49.83% - - - 1,284 1,284 599,910,010 49.83%
2. Domestically listed
foreign shares 405,675,804 33.69% - - - - - 405,675,804 33.69%
3. Foreign shares listed in
overseas - - - - - - - - -
4. Others - - - - - - - - -
III. Total shares 1,203,972,704 100 - - - 0 0 1,203,972,704 100
(II) Time to list and trade for shares subject to moratorium
Time
Number of shares can be listed newly
after expiration of moratorium
Balance of shares
subject to trading
moratorium
Balance of shares not
subject to trading
moratorium
Remark
30 Mar. 2009 120,397,270 77,984,670 1,125,988,034
30 Mar. 2010 77,984,670 0 1,203,972,704
Note: 1. In accordance with commitments made by OCT Group Corporation and THOMSON INVESTMENTS
GROUP LIMITED (original shareholders with non-tradable shares of the Company) when implemented share merger
reform, the shares subject to trading moratorium can be listed for trading or transferred since 30 Mar 2008. However,
by the disclosing date of this report period, OCT Group Corporation holding shares subject to trading moratorium had
never applied to Shenzhen Stock Exchange for release of shares subject to trading moratorium.
2. Shares subject to trading moratorium in the table excluded shares subject to trading moratorium held by senior
executives.
(III) Particulars about shares held by top ten shareholders and top ten shareholders with tradable shares at the end of
report period:
Number of shares held by the top ten shareholders holding shares subject to moratorium and the moratorium
Unit: Share5
No. Name of shareholders subject to
moratorium
Number of shares
held subject to
moratorium
Number of shares
subject to trading
moratorium applied
actually
Time to be
listed and
traded
Newly increased
shares to be
listed and traded
Moratorium
1 Overseas Chinese Town Group 30 Mar. 2009 120,397,270
Company 198,381,940 198,381,940 30 Mar. 2010 77,984,670 Notes
Note: 1. The original shareholder of the Company, Overseas Chinese Town Group Company, promised not to trade or
transfer the non-tradable shares of Konka Group within 24 months since the day those shares were authorized with
listing and circulating rights in A share market. After the expiration of the aforesaid commitment, the total former
non-circulating shares of Konka Group listing at the Stock Exchange shall not exceed 5 percent of the Konka Group’s
total share number within 12 months, and not exceed 10 percent within 24 months
2. In accordance with commitments made by OCT Group Corporation (original non-tradable shareholders of the
Company) when implemented share merger reform, the shares subject to trading moratorium can be listed for trading or
transferred since 30 Mar. 2008. However, by the disclosing date of this report period, OCT Group Corporation holding
shares subject to trading moratorium had never applied to Shenzhen Stock Exchange for release of shares subject to
trading moratorium.
3. In the table, shares subject to trading moratorium held by senior executives of the Company were out of
consideration.
(IV) Particulars about the shares held by the top ten shareholders and the top ten shareholders holding shares not
subject to trading moratorium
Unit: Share
Total number of shareholders 122,141
Particulars about shares held by top ten shareholders
Name of shareholder Nature of shareholder Proportion of
share held (%)
Total shares
held
Shares held subject to
trading moratorium
Shares
pledged or
frozen
Overseas Chinese Town Group Company State-owned corporation 17.48 210,457,260 198,381,940 0
GAOLING FUND,L.P. Foreign corporation 4.89 58,930,179 0 Unknown
GUOTAIJUNANSECURITIES
(HONGKONG) LIMITED Foreign corporation 1.38 16,662,923 0 Unknown
HOLY TIME GROUP LIMITED Foreign corporation 1.28 15,400,472 0 Unknown
NOMURA SECURITIES CO.LTD Foreign corporation 1.12 13,500,000 0 Unknown
CCB － Fortune SGAM Income Growth
Hybrid Fund
Domestic
non-state-owned
corporation
0.97 11,700,000 0 Unknown
NAM NGAI Foreign natural person 0.83 10,000,100 0 Unknown
GAOLING YALI FUND,L.P. Foreign corporation 0.75 9,005,161 0 Unknown
China Everbright Bank-Everbright
Pramerica Quantified Core Fund
Domestic
non-state-owned
corporation
0.74 8,961,275 0 Unknown
SBCI FINANCE ASIA LTD A/C SBC
HONG KONG Foreign corporation 0.63 7,604,985 0 Unknown
Particulars about shares held by the top ten shareholders not subject to moratorium
Name of shareholder Numbers of shares not subject to
moratorium held Type of shares
GAOLING FUND,L.P. 58,930,179 Domestically listed foreign shares
GUOTAI JUNAN SECURITIES(HONGKONG)
LIMITED 16,662,923 Domestically listed foreign shares
HOLY TIME GROUP LIMITED 15,400,472 Domestically listed foreign shares
NOMURA SECURITIES CO.LTD 13,500,000 Domestically listed foreign shares
CCB－Fortune SGAM Income Growth Hybrid Fund 11,700,000 Renminbi ordinary shares
NAM NGAI 10,000,100 Domestically listed foreign shares
GAOLING YALI FUND,L.P. 9,005,161 Domestically listed foreign shares
China Everbright Bank-Everbright Pramerica Quantified
Core Fund 8,961,275 Renminbi ordinary shares
SBCI FINANCE ASIA LTD A/C SBC HONG KONG 7,604,985 Domestically listed foreign shares
Tibet Autonomous Region Investment Co., Ltd 6,970,684 Renminbi ordinary shares
Explanation on associated relationship among the top ten
shareholders or acting-in-concert
Overseas Chinese Town Group Corporation, the first principal shareholder,
neither has any related relationship with other shareholders, nor has joined in
any consistent actions; GAO-LING FUND, L.P. and GLHH FUND II, L.P.
existed associated relationship and belonged to acting-in-concert. The Company
is not aware whether the other shareholders have joined in any consistent action
or have related relationships among them.6
(V) Particulars about shareholders holding over 5% shares
Name Type of
shares held
Nature of
enterprise
Legal
representative
Date of
foundation
Registered
capital
(RMB’0000)
Main operations
Overseas
Chinese Town
Group Company
Domestic
corporate
shares
Wholly
State-fund
company
Ren Kelei Nov. 1985 RMB 200,000
Development and operation of real estate
and hotels; operation of tourism and
relevant cultural industries; manufacture
of electronics and supporting packing
products.
(VI) Particulars about controlling shareholder and actual controller
In the report period, the first principal shareholder and actual controller of the Company remained unchanged, both
being Overseas Chinese Town Group Corporation.
III. Particulars about Directors, Supervisors and Senior Executives
(I) Shares held by directors, supervisors and senior executives of the Company
1. Shares held by directors, supervisors and senior executives of the Company remained unchanged in the report period.
2. In the report period, directors, supervisors and senior executives of the Company neither hold stock option of the
Company nor be authorized restricted shares.
(II) Change of directors, supervisors and senior executives of the Company in report period
1. In the report period, members of the Board of Directors and the Supervisory Committee of the Company remained
unchanged.
2. In the report period, the Company changed senior management staffs
(1) As advised by Mr. Hou Songrong, the Chairman of the Board and concurrently CEO, he no longer acted as
president concurrently, moreover, the daily operation and management of the Company was assigned to a full-time
president. At the same time, he proposed Mr. Chen Yuehua to take the post of President. In accordance with the
suggestion of Mr. Hou Songrong, the Board of Director, by reviewing and nominating officially by the Nomination
Committee of the Board, agreed to appoint Mr. Chen Yuehua as President of the Company.
(2)Mr. Yang Guobin was reengaged as CFO of the Company, and Mr. Cheng Dahou, Mr. Wang Youlai and Mr. He
Jianjun were reengaged as Vice President of the Company respectively.
IV. Report of the Board of Directors
(I) Overall operation in the report period
The Company mainly engages in the production and operation of color TV, digital mobile phone as well as the
supporting products (such as high-frequency head, tools, injection mould, and package, etc), and belongs to the
industries of electronics manufacture and telecommunication manufacture.
In the report period, facing strike from international financial crisis, the Company fully made use of chance brought by
rapid demand for flat panel television, insisted on operating strategy with value, emphasized on improvement of
competitive power and pushing reduction of cost, quickly replied to the market and realized stable development and
healthy operation.
In the report period, the Company realized sales income amounting to 5,172million, with a decrease of 7.98%
year-on-year; net profit amounting to 80.30 million, with a decrease of 0.31% year-on-year; and realized earnings per
share amounting to 0.0667.
1. Although influenced by lack goods of LCD and LCD Module, sales revenue in the second quarter of 2009 was equal
to that of the same period in last year.
Since the 4th quarter of 2008, domestic LCD television manufactures lacked stock of LCD and LCD Module, which
greatly influenced sales revenue and profitability of domestic LCD television manufacturer in the first half year. Sales
revenue in the first quarter of 2009 decreased 15.14% over the same period of last year due to lack of LCD and LCD
Module.
In the second quarter of 2009, lack of LCD and LCD Module was relieved, and the Company overcame difficulties of
big price rise of LCD and lack of main specification, enhanced measures such as cooperation with upper, panel update,
launch of new products and expanding customization of projects, etc., which caused rapid increase of sales of flat panel
television. Sales revenue in the second quarter of 2009 was equal to that of the same period in last year.
Influenced by lack of LCD and LCD Module, sales revenue of the Company decreased 7.98% compared with the same
period of last year.
2. Proportion of Sales of products with high gross profit raised by a large margin, therefore, net profit in the second
quarter of 2009 increased by 19.65% compared with the second quarter of 2008.
Net profit attributable to owners of parent company in the first quarter of 2009 decreased by 14.52% compared with the
same period of last year due to continual lack of LCD and LCD Module.
However, in the report period, the Company sequentially persisted and deepened operation with value strategy, based
on the three projects of masterpiece, quality and innovation, implemented different operation strategy, which promoted7
profit capacity of the Company; meanwhile, the Company optimized resource allocation, mainly produced and sold
high-end products with high gross ratio, then proportion of sales of products with high gross ratio rose up, so that
profitability of the Company promoted greatly. In the second quarter of 2009, net profit increased by 19.65%
year-on-year under the condition that sales revenue was equal to the same period of last year.
In the report period, although influenced by lack of LCD and LCD Module, net profit attributable to owners of parent
company was basically equal to that of the same period of last year.
3. The Company promoted operating efficiency, accelerated turnover of accounts receivable, and accounts receivable
decreased by 21.76% year-on-year.
Accounts receivable decreased by 21.76% year-on-year, mainly because the Company promoted operating efficiency,
accelerated turnover of accounts receivable, and payments receivable for goods in arrears from domestic principal
customer has been received.
(II) Analysis on financial indices of the Company
Unit: RMB’0000 Yuan
Items Jan.– Jun. 2008 Jan.–Jun. 2007 Increase/decrease
year-on-year (%)
Operating income 517,200.00 562,052.60 -7.98
Operating cost 419,172.07 458,070.31 -8.49
Administrative expense 21,420.67 21,226.97 0.91
Operating expense 67,056.39 72,172.26 -7.09
Financial expense 1,618.24 1,782.67 -9.22
Operating profit 8,317.89 10,180.61 -18.30
Net profit 8,030.20 8,055.52 -0.31
Net cash flow from operating activities 9,969.44 -4,268.68 333.55
Items At the end of report period At the end of last year Increase/decrease
(%)
Total assets 1,086,755.58 1,051,728.55 3.33
Shareholders’ equity 400,971.63 399,947.32 0.26
Account receivable 103,760.44 132,626.13 -21.76
Fixed assets 130,952.62 134,417.79 -2.58
Remained profit 52,074.15 50,063.81 4.02
Explanation and analysis on major items changed:
1. Accountants receivable at the period-end decreased by 21.76% over the period-begin, mainly because the Company
promoted operating efficiency, accelerated turnover of account receivables, and payments receivable for goods in
arrears from domestic principal customer has been received.
2. Net cash flow from operating activities increased 333.55% year-on-year, mainly because the Company increased
discount of bills receivable in current period in order to increase liquid capital and meet demand of cash for daily
operation.
(III) Particulars about main operations classified according to industries, products and regions and statement of their
comparison with those of the same period of last year
1. Main operations classified according to industries and products
Unit: RMB’0000 Yuan
Comparison with that of the same period of last year
Industries Products
Income
from main
operations
Cost of
main
operations
Gross
profit ratio
(%)
Increase/decrease
of income (%)
Increase/decrease
of cost (%)
Increase/decrease
of gross profit
ratio (%)
Manufacturing of
multi-media
Color
television 373,073.32 304,965.90 18.26 -7.96 -6.89 -0.94
Manufacturing of
communication
Mobile
phone 70,648.35 62,842.10 11.05 34.54 30.14 3.01
Others 66,993.15 47,762.71 28.71 -28.97 -37.03 9.12
Note: related transaction on selling products and providing labor service by the Company to controlling shareholders
and subsidiaries amounted to RMB 8,273,500 in the report period.
2. Main operations classified according to regions
Unit: RMB’0000 Yuan
Region Operating income Increase/decrease year-on-year (%)
Domestic 437,051.91 -12.57
Overseas 98,198.66 14.00
Offsetting each other among segments in
each area -24,535.76 -27.49
Total 510,714.81 -7.518
(IV) Operation of shareholding companies whose earnings influenced over 10% of the net profit of the Company
No shareholding company with earnings influencing over 10% of the net profit of the Company existed in the report
period.
(V) Major problems and difficulties met in operation
1. Since 2009, total sales volume of color-television in domestic market decreased. According to Allwin data, retails
volume of domestic color-television market decreased 26% year-on-year and retails decreased 28%.
2. Since the fourth quarter of 2008, supply of LED panel was lack, which greatly influenced product sales of the
Company.
3. Price of panel rose continuously, which weakened profitability of the Company.
4. Influenced by disadvantage factors of financial crisis, export of the Company confronted mounting pressure.
(VI) Business development plan in the half second year of 2009
1. Deepen push value operation and create diversity advantages
Masterpiece project: In respect of flat-panel television, the Company will focus on development new products like
240Hz, back light LCD and network television, etc.; in respect of color television, the Company will launch super low
ended products, reduce model, improve efficiency of single products, keep sales scale and ensure profit; In respect of
mobile phone, the Company will explore operating of masterpieces and ensure success rate of pattern of masterpieces;
In respect of white electrical products, the Company will insist on core of “energy saving products”, optimize
distribution and promote levels.
In respect of innovation project: firstly, the Company will enhance design innovation of ID; secondly, the Company
will strengthen exploitation and application of diverse functions, such as digital television, wireless high definition
video transmission, network television and LED back light, etc. thirdly, the Company will ensure key and innovated
products launched in market as scheduled.
In respect of quality project: the Company will promote connotation of quality management in quality of products,
service and cost; the Company will also encourage staffs to promote quality; then the Company will promote quality
with principle of “determined account, determined counting measure and determined rules”.
2. Perfect super low ended production lines
In the second half year of 2009, the Company will continue to strengthen and perfect high and low ended production
lines, promote competitive power and advantages in rural market by design innovation with low cost, enlarging reuse
rate of module after selection, pushing replacement of component and application of new technology.
3. Enlarge exploitation of rural market
In the second half year of 2009, the Company will manufacture products according to demand of rural market and
development of policy of pushing household electrical appliance to the rural market and exchange of new products with
used ones, especially products qualified with policy of pushing household electrical appliance to the rural market. The
Company will fully utilize advantage chance in development of policy of pushing household electrical appliance to the
rural market, shape complete promotion sales system. Meanwhile, the Company will enhance reconstruction of stores
in counties, ensure advantage position of brand in progress of large-margin increase of flat panel market and promote
competitive power and brand position of the Company in rural market.
4. Acceleration project and benefit from speed
Lack of panel resource caused uncertainty of supply chain, and exploitation of rural market caused risk enlarging and
mobile phone is a market that never stops cheapening. Speed is the key factor to win the market. Therefore, the
Company will accelerate project, especially focus on turnover of inventories and accounts receivable.
5. To make every endeavor to reduce cost and expenses
It is the key measures that reduction of cost and expenses for the Company to promote competitive power and confront
crisis. In the second half year of 2009, the Company will continue to execute annual target of reduction of cost and
expenses issued at the year-begin, formulated scheme of encourage and punishment and pus quickly and orderly.
Meanwhile, the Company will continue to collect reasonable advice on reduction cost and expenses, encourage staff to
take part in the activity, and realize the goal with new thinking method of innovation.
6. Accelerate construction of key projects
Project of Kunshan Konka: the Company will do well in quarter construction, prepare in cultivation of staff,
establishment of system procedure and technical reserves, and ensure to put into production and operation successfully
at the year-end.
Konka Digital Development & Research Centre Building project: the Company will strictly implement requirements of
safety, quality, cost and all requirements of control in the progress of construction, and struggle for completing as
scheduled.
2. Risks met in the second half year of 2009 and countermeasures
(1) Operating risk in the second half year of 2009
Firstly, price of LCD rose continuously and relationship between supply and demand is uncertainty, which brought
mounting pressure to sales of products.9
Secondly, part high ended products and foreign brand will join in the policy because maximum price of household
electrical appliance pushed to rural market rose up.
(2) Countermeasure
A. The Company will deepen strategy of value operation, execute diversity strategy, actively adjust products structure
and stably enlarge market scale to weak pressure from rise of cost.
B. The Company will focus on improvement of market advantage and profitability when promote sales revenue and
realize profit index.
C. The Company will actively take part in activities of pushing household electrical appliance to the rural market and
exchange of new products with used ones to enlarge sales scale and promote products structure.
D. the Company will promote enthusiasm of staffs in branch and operating department and improve sales ability of
branch and operating department.
E. The Company will promote veracity of sales plan, and hold whole relationship between supply and demand more
exactly.
(VII) Investment of the Company
1. In the report period, the Company neither raised fund nor had significant investment.
2. Particulars about significant project invested with non-raised fund
In the report period, the Company did not invest significant project with non-raised fund.
(VIII) Fair value measurement
At the end of report period, assets adopted fair value measurement of the Company was financial assets available for
sale, which was equity of Vanke A。
As for the financial assets available for sale, the Company initially measured in accordance with fair value obtained,
relevant transaction charge listed in initial confirmed amount, gains or losses from change of fair value directly listed in
owners’ equity, which transferred into current gains and losses when the financial assets was confirmed. Fair value was
market value of financial assets available for sale.
During the report period, impact on owners’ equity calculated with fair value measurement referred to notes to financial
statement.
V. Significant Events
(I) corporate governance
In the report period, the Company operated in strict accordance with the Company Law, Securities Law and relevant
regulations and laws set by CSRC and Shenzhen Stock Exchange. Based on the relevant regulations newly issued, the
Company amended its Articles of Association and formulated the Specific Rules for Engaging CPA Firm. At the same
time, it continued to perfect its corporate governance structure, standardize the operation and better the information
disclosure. And all the resolutions made by the Shareholders’ General Meeting and the Board of Directors were
faithfully executed. The actual corporate governance of the Company was in line with regulatory documents issued by
CSRC on the corporate governance of listed companies.
(Ⅱ) Particulars about profit distribution, capitalization and share issuance
Examined and approved at the 2008 Annual Shareholders’ General Meeting, the Company’s profit distribution plan for
the year 2008 was detailed as follows:
1. 10% of the net profit in the year 2008, i.e. RMB 23,226,113.46, was withdrawn as statutory surplus reserves;
2. The remaining net profit of 2008 after withdrawing the statutory surplus reserves was kept as the retained profit for
the year, which, together with the retained profit for the year 2007, became the sources of profit distribution for the
year of 2008.
Plan of profit distribution: based on the total shares of 1,203,972,704 shares at the end of 2008, a cash dividend of
RMB 0.5 (tax included) was distributed for every 10 shares to all the shareholders. And a total dividend of RMB
60,198,635.2 was distributed, with the rest of the retained profit carried forward for distribution in the future years.
The said profit distribution plan had been implemented, with the date of record and the ex-dividend date for A shares
respectively on 9 Jul. 2009 and 10 Jul. 2009, and the last trading date, the ex-dividend date and the date of record for B
shares respectively on 9 Jul. 2009, 10 Jul. 2009 and 14 Jul. 2009.
(Ⅲ) Significant lawsuits and arbitrations
In the report period, the Company was not involved in any significant lawsuits or arbitrations.
(Ⅳ) Other significant events, as well as analysis and explanation on their influence and relevant solutions
1. Equity of other listed companies held by the Company
Unit: RMB
Stock code
Short
form of
stock
Initial
investment
amount
Proportion
in the
equity of
the said
company
Book value at
period-end
Gains
and
losses in
report
period
Changes in
owners’
equity in
report
period
Accounting
entry Source of stock10
000002 Vanke 2,311,748.07 0.00％ 1,495,702.50 5,865.50 739,053.00
Financial
assets
available
for sale
Subscription of
new stock
600891 ST
CHURIN 9,000,000.00 3.84％ 9,000,000.00 0.00 0
Financial
assets
available
for sale
Subscription of
corporate shares
Total - 11,311,748.07 - 10,495,702.50 5,865.50 739,053.00 - -
Notes: 1. The equities of other listed companies held by the Company as shown in the table above were those included
in the accounting items of long-term equity investment and financial assets available for sale.
2. The gains and losses in the report period in the table above referred to the effect of an investment on the consolidated
net profit of the Company in the report period.
3. In the report period, the Company held no equities of financial enterprises such as commercial banks, securities
banks, insurance companies, trust companies and futures companies, as well as companies to be listed.
(Ⅴ) Significant asset acquisition, sale and reorganization
1. In the report period, the Company did not conduct any significant asset acquisition, sale or reorganization.
2. In the report period, there existed no transferring of property rights or creditor’s rights and liabilities, for the
Company did not conduct any significant asset acquisition, sale or reorganization.
(Ⅵ) Significant related transactions
1. Related transactions with controlling shareholder and its subsidiaries
During the first half of 2009, there existed some related transactions between the Company and its controlling
shareholder—Overseas Chinese Town Group Company—and its subsidiaries, mainly involving the Company’s paying
property management fee, water and power fee, land use fee to and purchasing goods from the latter. All the involved
transactions were conducted fairly based on normal market prices, with no harm done to the Company and the other
shareholders of the Company. For more details, please refer to “(4) Transactions with related companies” and “(5)
Contacts with related companies” in the “Note Ⅸ” to the accounting statements of the financial report.
2. Implementation of related transactions arising from routine operation (Unit: RMB)
Type of related
transactions
Further
classification
according to
product or labor
service
Related parties Total implemented amount in the first
half of 2009
Proportion in the
same kind of
transactions
Shanghai Huali Packaging Co., Ltd 2,882,256.22 0.10%
Shenzhen Huali Packing & Trading Co., Ltd 2,679,312.32 0.09%
Anhui Huali Package Co., Ltd. 8,407,392.45 0.28%
Purchase of raw
materials
Cardboard
boxes for color
TV
Shenzhen Huayou Package Co., Ltd. 8,267,001.58
22,235,962.57
0.27%
Notes: The proportion in the same kind of transactions in the table above referred to that in the purchase of raw
materials for color TVs.
(1) The Public Notice on Estimate of Routine Related Transactions (Public Notice No.: 2009-05) was disclosed by the
Company dated 30 Apr. 2009 on Securities Times, Shanghai Securities News, China Securities Journal, Hong Kong Ta
Kung Pao and the internet website http://www.cninfo.com.cn designated by CSRC. In the report period, the actual
pricing principles, transaction prices, transaction amounts and settlement modes of the Company’s packaging material
purchase from Shanghai Huali Packaging Co., Ltd., Shenzhen Huali Packing & Trading Co., Ltd., Anhui Huali
Package Co., Ltd. and Shenzhen Huayou Package Co., Ltd. were basically the same with the estimates.
(2) The business transactions between the Company and the said related parties were all conducted based on the general
business rules and the fair and just principles. And the related parties were treated the same way as other companies
with business relationship, which thus did no harm to the interests of the Company and all its shareholders.
(3) The related transactions between the Company and the said related parties were necessary for the Company’s
routine operation, which were all conducted on the principle of purchasing through public bidding. In order to ensure
its stable business development, the Company would continue to cooperate with the said related parties in a fair and
mutually beneficial way. The relevant related transactions were considered helpful both for the long-term cooperation
between the Company and the said related parties, and the business development of the Company.
3. Guarantees between the Company and its related parties11
In the report period, there existed no guarantees between the Company and its related parties.
4. Joint investments in external parties by the Company and its related parties
In the report period, there existed no joint investments in external parties by the Company and its related parties.
5. In the report period, the Company did not conduct any other significant related transactions.
(Ⅶ) Significant contracts and their implementation
1. In the report period, the Company did not hold in trust, contract or lease assets of other companies, or vice versa.
2. In the report period, the Company did not entrust others with financial affairs.
(Ⅷ) Commitments made by shareholders
1. When the Company conducted the share merger reform in 2006, its shareholder—Overseas Chinese Town Group
Company—made the following commitments:
Name of shareholder Special commitments Implementation Remarks
Overseas Chinese
Town Group
Company
(1) No trading or transferring of the non-tradable shares of Konka
Group held by OCT Group would be conducted within 24 months since
the date when those shares became tradable in the A-share market.
(2) After the expiration of the aforesaid commitment, the originally
non-tradable shares of Konka Group sold by OCT Group through
listing at the stock exchange would not exceed 5% of Konka Group’s
total shares within 12 months, and not exceed 10% within 24 months.
Up until now,
no shares
subject to
trading
moratorium
have been
traded or
transferred.
2. The Company or shareholders holding over 5% of the Company’s shares did not disclose any other commitments on
the designated newspapers and website in the report period.
(Ⅸ) Field researches, interviews and visits received by the Company in report period
In the report period, the Company received phone calls and visits from investors in an enthusiastic manner and gave
detailed answers to the questions raised. In strict compliance with the Guidelines of Shenzhen Stock Exchange on Fair
Information Disclosure of Listed Companies, the Administrative Rules of Konka Group Co., Ltd. for Information
Disclosure and the Administrative Rules of Konka Group Co., Ltd. for Relationship with Investors, the Company
provided disclosed information for visitors, and introduced to them the actual production and operation status of the
Company in a objective, factual, accurate and complete way, with no leak of the undisclosed important information.
And the phone calls and visits received by the Company in the report period were detailed as follows:
Reception time Reception place Reception
way Visitor Main discussion and materials provided by the
Company
21 Jan. 2009 Meeting room of
the Company
Field
research
Citic Securities and
Changsheng and Changsheng
Fund Management
Development trends in color-TV industry,
competitiveness of LCD TVs and the
Company’s position in color-TV industry
5 Feb. 2009 Meeting room of
the Company
Field
research PingAn Securities
Development strategies of the Company’s
color-TV business, the Company’s new LCD
TV products and status of the LCD TV industry
18 Feb. 2009 Meeting room of
the Company
Field
research
CCB International Asset
Management
Current status and development trends of
color-TV industry, and development strategies
of the Company’s LCD TV business
19 Feb. 2009 Meeting room of
the Company
Field
research
SYWG BNP Paribas, Boshi
Fund Management, Fullgoal
Fund Management, Yinhua
Fund Management, CCB
Principal Asset Management,
etc.
Competitiveness and development trends of the
Company’s color-TV products, market
possibility of new products and progress of new
product promotion
20 Feb. 2009 Meeting room of
the Company
Field
research China Securities
Particulars about investment in LCD module
project, basic information of the Company’s
color-TV and cell-phone businesses
23 Feb. 2009 Meeting room of
the Company
Field
research SINOLINK Securities Construction progress of Konka R&D Building
and development trends of color-TV industry
25 Feb. 2009 Jining Branch Field
research
Shenyin Wanguo Securities,
Tianhong Asset Management,
Fortune SGAM Fund
Management, Harfor Fund
Management, Power Pacific
Co., Ltd., etc.
Particulars about sales of household appliances
in the countryside
5 Mar. 2009 Meeting room of
the Company
Field
research
Penghua Fund Management,
United Securities, CJIS and
Yingda Securities
The Company’s investments in 2009, progress
of LCD module project and the competition
strategies of color-TV
5 Mar. 2009 Meeting room of
the Company
Field
research
Guoxin Securities, Rongtong
Fund Management, ABC-CA
Development trends in color-TV industry,
expense reduction of the Company and12
Fund Management and China
Merchants Fund Management
particulars about the Company’s investments in
2009
16 Mar. 2009 Meeting room of
the Company
By
telephone Citic Securities
Development trends in color-TV industry and
market competitiveness of the Company’s
color-TV products
2 Apr. 2009 Meeting room of
the Company
Field
research Morgan Stanley
Core competitiveness and development
strategies of the Company, and market
possibility of new products and progress of new
product promotion
30 Apr. 2009 Meeting room of
the Company
By
telephone
Shenyin Wanguo, SINOLINK
Securities, etc.
Basic information of the Company’s main
businesses and the Company’s position in the
industry
6 May 2009 Meeting room of
the Company
Field
research
CJIS, First-Trust Fund
Management, Da Cheng Fund
Management and Lion Fund
Management
Development trends in the industry, the
Company’s position in the industry and
development strategies of the Company
11 May 2009 Meeting room of
the Company
Field
research
BNP Paribas Securities, and
JP Morgan Securities
Particulars about bids won in the Project of
“Promoting Household Appliances in Rural
Area”, product sales in rural area, and
development trends in industries of the
Company’s main products
13 May 2009 Meeting room of
the Company
Field
research
Fortis Haitong Investment
Management
Particulars about the Company’s 2008 Annual
Report, development strategies of the Company
and product sales in rural area
13 May 2009 Meeting room of
the Company
Field
research
Congrong Investment
Management
Product competitiveness of the Company and its
planning on new products
15 May 2009 Meeting room of
the Company
Field
research
HSBC Jintrust Fund
Management
Development trends and internal management
of the Company, and particulars about
investments in LCD module project
2 Jun. 2009 Meeting room of
the Company
Field
research
Zhongjin Company, CCB
Principal Asset Management,
ABC-CA Fund Management
and Fortune Trust
Development strategies of the Company, and
market conditions of color-TV industry,
cell-phone industry and white electricity
10 Jun. 2009 Meeting room of
the Company
Field
research
SINOLINK Securities,
Fortune Securities, China
Securities and Hong Yuan
Securities
Business development, development strategies
and internal management of the Company,
15 Jun. 2009 Meeting room of
the Company
Field
research Guotai Junan Securities
Competitiveness and development strategies of
the Company’s color-TV, cell-phone and white
electricity products, and market possibility of
new products
25 Jun. 2009 Meeting room of
the Company
Field
research Guotai Junan Securities
Particulars about investment in LCD module
project, and basic information of the Company’s
color-TV and cell-phone businesses
(Ⅹ) Other significant events
In the report period, the Company, its Board of Directors and directors received no investigations, administrative
punishment or criticism by circular from CSRC, as well as no punishment from other administrative authorities or open
criticism from the stock exchange.
(Ⅺ) Index for information disclosed
1. Public Notice on Estimate of Routine Related Transactions; Public Notice No.: 2009-05; Disclosure Date: 30 Apr.
2009.
2. Public Notice on Retroactive Accounting Adjustment; Public Notice No.: 2009-06; Disclosure Date: 30 Apr. 2009.
3. Public Notice on Resolutions Made at 2008 Annual Shareholders’ General Meeting; Public Notice No.: 2009-11;
Disclosure Date: 30 Jun. 2009.
All the said public notices were disclosed on Securities Times, Shanghai Securities News, China Securities Journal,
Hong Kong Ta Kung Pao and www.cninfo.com.cn.
(Ⅻ) Explanation on capital flows and guarantees between the Company and its related parties
1. Capital flows between the Company and its related parties by 30 Jun. 2009 (Unit: RMB’0000)
Name of related party
Relationship
with the
Company
Accounting
entry
Beginning
balance Debit Credit Closing
balance
Occupation
way
Repayment
way
Whether or not an
irregular capital
occupation
prohibited by
Document No.5613
Shenzhen OCT East
Co., Ltd.
Subsidiary of
the principal
shareholder
Accounts
receivable 626.97 702.70 664.84 664.83
Cash No
Chengdu Tianfu OCT
Industry Development
Co., Ltd.
Subsidiary of
the principal
shareholder
Accounts
receivable 1,267.40 287.31 1,403.75 150.96
Cash No
Century OCT
(Beijing) Co., Ltd.
Subsidiary of
the principal
shareholder
Accounts
receivable 87.50 - 81.25 6.25
Cash No
Shenzhen Konka
Energy Technology
Co., Ltd.
Affiliated
company
Accounts
receivable 4.03 - 4.03 -
Cash No
Shenzhen OCT Real
Estate Co., Ltd.
Subsidiary of
the principal
shareholder
Other
receivables 130.34 - 7.07 123.27
Cash No
Shenzhen OCT
Property Management
Co., Ltd
Subsidiary of
the principal
shareholder
Other
receivables 7.74 - - 7.74
Cash No
Shenzhen OCT Water
and Power Company
Subsidiary of
the principal
shareholder
Other
receivables 200.77 432.99 374.60 259.16
Cash No
Shanghai Huali
Packaging Co., Ltd.
Subsidiary of
the principal
shareholder
Accounts
payable 164.43 501.65 337.22 -
Cash No
Shenzhen Huali
Packing & Trading
Co., Ltd.
Subsidiary of
the principal
shareholder
Accounts
payable 164.67 303.76 313.48 174.39
Cash No
Shenzhen Huayou
Package Co., Ltd.
Sub-subsidiary
of the
principal
shareholder
Accounts
payable 260.88 1,213.70 1,168.01 215.19
Cash No
Shanghai OCT
Investment &
Development Co., Ltd.
Subsidiary of
the principal
shareholder
Accounts
received in
advance -
-
881.06 881.06
Cash No
2. Particulars about guarantees
In the report period, the Company provided no guarantees for its holding subsidiaries or any other external parties.
3. Special explanation and independent opinion of independent directors on the Company’s provision of external
guarantees and executing the Circular of CSRC on Certain Issues Regarding Regulating Capital Flows between Listed
Companies and Related Parties and Regarding Provisional of External Guarantees by Listed Companies (ZJF [2003]
No.56)
According to the Circular of CSRC on Certain Issues Regarding Regulating Capital Flows between Listed Companies
and Related Parties and Regarding Provisional of External Guarantees by Listed Companies (ZJF [2003] No.56), as the
independent directors of Konka Group Co., Ltd. (hereinafter referred to as “the Company”), we conducted specific
examinations on the capital flows between the Company and its related parties, as well as on the external guarantees
provided by the Company. And we hereby express our independent opinions as follows:
1. Up to 30 Jun. 2009, the principal shareholder of the Company had not occupy any capital of the Company; and the
capital occupation by some related parties of the principal shareholder (Shenzhen OCT Real Estate Co., Ltd., Shenzhen
OCT Property Management Co., Ltd., Shenzhen OCT Water & Power Co., Ltd., etc.) was mainly resulted from the
deposit collection and other timing differences arising from routine business contacts. 2. The operational capital flows
between the Company and its principal shareholder and the related parties of the principal shareholder during the first
six months of 2009 were specified as follows:
(1) There existed related transactions concerning the Company’s purchase of color-TV packing materials from some
subsidiaries indirectly controlled by the principal shareholder (Shanghai Huali Packaging Co., Ltd., Shenzhen Huali
Packing & Trading Co., Ltd., Anhui Huali Packing Co., Ltd. and Shenzhen Huayou Package Co., Ltd.). And the said
related transactions had been submitted to and approved by the relevant board meetings, which were later disclosed to
the public. The Company settled the relevant accounts with the said related parties at fixed periods according to
relevant contracts, and consequently, there occurred no non-operational capital flows.
(2) There existed small-amount operational capital flows arising from the Company’s selling TV walls to and repairing
TV walls for some subsidiaries of the principal shareholder (Shenzhen OCT East Co., Ltd., Chengdu Tianfu OCT
Industry Development Co., Ltd., etc.).
3. During the first half of 2009, there occurred no non-operational capital flows between the Company and its principal
shareholder and the latter’s related parties.14
4. Up to 30 Jun. 2009, the Company had been operating in a regular manner with no provision of guarantees for
external parties.
To sum up, we were of the opinion that the Company did not violate relevant provisions in the Document ZJF [2003]
No.56.
Independent Directors: Feng Yutao, Yang Haiying and Zhang Zhong
(ⅩⅢ) Significant asset pledge
As approved at the 11th Meeting of the 6th Board of Directors and the 1st Provisional Shareholders’ General Meeting in
2008, the Company applied to Bank of China for a comprehensive credit line not exceeding RMB 3.5 billion with a
term of two years. At the same time, the Company provided the following assets for Bank of China as pledge: bank’s
acceptance bills receivable with the par value of specific time point not lower than RMB 1.2 billion, of which one
billion was provided by the Company and the other 0.2 billion by Shenzhen Konka Telecommunications Technology
Co., Ltd.
VI. Financial Report
The interim financial report 2009 of the Company (unaudited) is attached behind.
VII. Documents Available for Reference
1. Text of the interim report 2009 carrying the signature of Chairman of the Board of Directors;
2. Text of financial report carrying the signatures and seals of person in charge of the Company, chief in charge of
accounting and person in charge of the accounting organization;
3. Texts of all documents disclosed on newspapers designated by CSRC;
4. Text of the Company’s Articles of Association;
5. Other relevant materials.
Board of Directors
Konka Group Co., Ltd.
27 Aug. 200915
Konka Group Co., Ltd.
FINANCIAL REPORT
For the period from Jan. 2009 to Jun. 2009
（un-audited）
Contents
Balance Shhet
Income Statement
Cash Flow Statement
Statement of Changes in Owners' Equity
Notes to Accounting Statements
Regal Representative: Hou Songrong
Person-in-charge of Accounting: Yang Guobin
Person-in-charge of the Accounting Agency: Ruan Renzong16
Balance Sheet
Prepared by: Konka Group Co., Ltd. 30 Jun. 2009 Unit: (RMB) Yuan
Closing balance Beginning balance
Items
Consolidation Parent company Consolidation Parent company
Current Assets:
Monetary funds 3,323,801,475.66 2,362,501,455.64 2,066,252,494.08 1,475,666,531.16
Settlement reserve
Dismantle fund
Transaction financial asset
Notes receivable 1,803,663,218.25 1,704,103,705.94 2,602,862,135.40 2,490,683,124.51
Account receivable 1,037,604,429.67 817,254,216.48 1,326,261,316.54 1,047,632,207.37
Account paid in advance 138,273,374.82 243,847,478.18 258,992,334.73 202,116,433.21
Premiums receivable
Reinsurance premiums receivable
Reinsurance contract reserves receivable
Interest receivable 21,619,461.69 20,578,728.86 19,905,867.09 17,616,624.79
Dividend receivable
Other receivables 70,618,947.74 956,492,322.52 81,299,762.88 1,069,914,747.28
Buying back the sale of financial assets
Inventories 2,776,489,755.51 2,076,709,166.39 2,573,776,867.13 1,914,848,396.91
Non-current assets due within 1 year
Other current assets
Total current assets 9,172,070,663.34 8,181,487,074.01 8,929,350,777.85 8,218,478,065.23
Non-current assets:
Loans and advances
Available-for-sale financial assets 10,495,702.50 10,495,702.50 9,756,649.50 9,756,649.50
Held-to-maturity investments
Long-term account receivable
Long-term equity investment 21,035,083.44 1,149,511,669.87 21,610,338.75 1,149,511,669.87
Investment properties
Fixed assets 1,309,526,158.06 401,497,142.47 1,344,177,898.16 417,114,182.46
Construction in progress 63,099,441.17 29,077,186.56 27,331,613.11 17,412,689.40
Engineering material
Disposal of fixed assets
Production biological assets
Oil-gas assets
Intangible assets 174,975,940.39 19,662,067.24 69,223,899.60 19,277,794.23
Development expenses
Goodwill 3,943,671.53 3,943,671.53
Long-term deferred expenses 20,034,514.94 7,299,751.48 19,897,124.12 5,970,948.27
Deferred income tax assets 92,374,578.39 90,905,544.27 91,993,543.01 91,053,354.87
Other non-current assets
Total of non-current assets 1,695,485,090.42 1,708,449,064.39 1,587,934,737.78 1,710,097,288.60
Total assets 10,867,555,753.76 9,889,936,138.40 10,517,285,515.63 9,928,575,353.83
Regal Representative: Hou Songrong Person-in-charge of Accounting: Yang Guobin
Person-in-charge of the Accounting Agency: Ruan Renzong
Balance Sheet (Continued)
Prepared by: Konka Group Co., Ltd. 30 Jun. 2009 Unit: (RMB) Yuan
Current liabilities:
Short-term borrowings 1,867,811,259.60 1,659,101,209.60 1,346,375,610.78 1,094,765,111.29
Borrowings from central bank
Deposits and due to banks and other financial
institutions17
Call loan received
Transaction financial liabilities 10,303,877.31 8,445,431.25 12,481,880.16 10,623,434.10
Notes payable 2,521,140,057.15 1,946,026,187.07 2,637,681,947.36 2,441,813,730.21
Account payable 1,553,297,685.26 1,635,374,376.86 1,571,761,341.98 1,640,897,495.08
Account received in advance 197,966,561.12 96,366,858.96 179,376,510.50 110,769,256.44
Financial assets sold for repurchase
Handling charges and commissions payable
Payroll payable 129,723,700.15 55,968,478.22 168,838,494.96 81,507,222.39
Tax payable -113,130,500.94 -71,899,671.45 14,263,975.12 27,855,510.51
Interest payable 8,076,421.29 6,770,718.01 8,247,223.62 5,511,794.93
Dividend payable 68,757,003.94 60,198,635.20 7,108,659.46
Other account payable 553,598,962.16 611,394,493.95 527,535,236.31 628,707,957.85
Reinsurance premiums payable
Insurance contract reserves
Money paid for acting trading of securities
Money paid for acting underwriting of securities
Non-current liabilities due within 1 year
Other current liabilities
Total current liabilities 6,797,545,027.04 6,007,746,717.67 6,473,670,880.25 6,042,451,512.80
Non-current liabilities:
Long-term borrowings
Bonds payable
Long-term payables
Deferred income 59,731,369.62 52,592,369.62 43,578,369.62 39,442,369.62
Specific payables
Estimated liabilities
Deferred income tax liabilities 563,067.21 563,067.21
Other non-current liabilities
Total non-current liabilities 60,294,436.83 52,592,369.62 44,141,436.83 39,442,369.62
Total liabilities 6,857,839,463.87 6,060,339,087.29 6,517,812,317.08 6,081,893,882.42
Owner’s equity (or shareholder’s equity)
Paid-in capital (or share capital) 1,203,972,704.00 1,203,972,704.00 1,203,972,704.00 1,203,972,704.00
Capital reserves 1,256,729,537.61 1,249,480,753.58 1,256,138,295.21 1,248,889,511.18
Less: treasury stock
Specific reserves
Surplus reserves 804,896,533.82 804,896,533.82 804,896,533.82 804,896,533.82
Provisions for general risks
Retained profits 520,741,504.92 571,247,059.71 500,638,125.11 588,922,722.41
Foreign exchange difference 9,777,401.42 9,397,273.34
Total owners' equity attributable to parent company 3,796,117,681.77 3,829,597,051.11 3,775,042,931.48 3,846,681,471.41
Minority interest 213,598,608.12 224,430,267.07
Total owner’s equity 4,009,716,289.89 3,829,597,051.11 3,999,473,198.55 3,846,681,471.41
Total liabilities and owner’s equity 10,867,555,753.76 9,889,936,138.40 10,517,285,515.63 9,928,575,353.83
Regal Representative: Hou Songrong Person-in-charge of Accounting: Yang Guobin
Person-in-charge of the Accounting Agency: Ruan Renzong
Income Statement
Prepared by: Konka Group Co., Ltd. Jan.-Jun. 2009 Unit: (RMB) Yuan
Current period Last period
Items
Consolidation Parent company Consolidation Parent company
I. Total operation income 5,172,000,028.20 4,329,763,251.61 5,620,525,986.16 4,702,793,644.33
Including: Sales income 5,172,000,028.20 4,329,763,251.61 5,620,525,986.16 4,702,793,644.33
Interest income
Premium income
Handling charges and commission income
II. Total operation cost 5,090,423,890.96 4,286,504,527.20 5,526,319,698.61 4,593,246,334.0518
Including: Cost of sales 4,191,720,715.02 3,555,349,542.17 4,580,703,057.04 3,866,517,856.89
Interest expenses
Handling charges and commission expenses
Surrender value
Net amount of claims
Net amount of insurance contract reserve
withdrawn
Expenditure on policy dividends
Reinsurance premium expenses
Taxes and associate charges 1,501,410.71 564,937.43 1,034,435.32 37,041.48
Selling expenses 670,563,855.90 584,764,007.10 721,722,597.42 603,230,756.88
Administrative expenses 214,206,657.60 140,842,934.39 212,269,696.54 148,309,633.35
Financial expenses 16,182,434.83 9,934,612.96 17,826,655.80 -15,554,145.34
Impairment loss -3,751,183.10 -4,951,506.85 -7,236,743.51 -9,294,809.21
Add: gain from change in fair value (“-” means loss) 2,178,002.85 2,178,002.85
Gain from investment (“-” means loss) -575,255.31 1,350,000.00 7,599,808.46 7,365,762.03
Including: income form investment in
affiliated enterprise and joint ventures
-575,255.31
Foreign exchange difference (“-” means loss)
III. Operation profit (“-” means loss) 83,178,884.78 46,786,727.26 101,806,096.01 116,913,072.31
Add: non-operation income 6,278,055.51 3,479,033.75 5,137,548.70 2,303,275.91
Less: non-business expense 1,854,367.27 889,650.21 6,105,295.72 3,153,851.12
Including: loss from non-current asset disposal 753,175.86 462,078.33 2,412,998.20 323,710.66
IV. Total profit (“-” means loss) 87,602,573.02 49,376,110.80 100,838,348.99 116,062,497.10
Less: income tax expense 12,616,092.53 6,853,138.30 15,267,557.93 11,717,262.13
V. Net profit (“-” means loss) 74,986,480.49 42,522,972.50 85,570,791.06 104,345,234.97
Attributable to owners of parent company 80,302,015.01 42,522,972.50 80,555,227.21 104,345,234.97
Minority interest -5,315,534.52 5,015,563.85
VI. Earnings per share
(I) basic earnings per share 0.0667 0.0353 0.0669 0.0867
(II) diluted earnings per share 0.0667 0.0353 0.0669 0.0867
Regal Representative: Hou Songrong Person-in-charge of Accounting: Yang Guobin
Person-in-charge of the Accounting Agency: Ruan Renzong
Cash Flow Statement
Prepared by: Konka Group Co., Ltd. Jan.-Jun. 2009 Unit: (RMB) Yuan
Current period Last period
Items
Consolidation Parent company Consolidation Parent company
I. Cash flows from operating activities:
Cash received from sale of commodities and rendering of service 6,575,122,853.39 5,762,056,807.56 6,910,295,802.17 5,662,803,081.32
Net increase of deposits from customers and due from banks
Net increase of loans from the central bank
Net increase of funds borrowed from other financial institutions
Cash received from premium of original insurance contracts
Net cash received from reinsurance business
Net increase of savings of policy holders and investment fund
Net increase of disposal of tradable financial assets
Cash received from interest, handling charges and commissions
Net increase of borrowed inter-bank funds
Net increase of buy-back funds
Tax refunds received 38,971,081.08 11,796,183.47 42,963,705.50 28,341.28
Other cash received relating to operating activities 134,216,272.04 168,237,617.44 110,164,473.50 41,027,393.12
Subtotal of cash inflows from operating activities 6,748,310,206.51 5,942,090,608.47 7,063,423,981.17 5,703,858,815.72
Cash paid for purchase of commodities and reception of service 5,090,616,508.09 4,897,784,258.68 5,589,742,104.05 4,689,100,363.49
Net increase of customer lending and advance
Net increase of funds deposited in the central bank and amount due19
from banks
Cash for paying claims of the original insurance contract
Cash for paying interest, handling charges and commissions
Cash for paying policy dividends
Cash paid to and for employees 433,766,746.42 258,790,124.13 431,875,221.33 251,130,551.72
Various taxes paid 680,438,593.05 580,139,020.60 446,040,959.83 360,838,076.93
Other cash paid relating to operating activities 443,793,978.24 328,248,721.95 638,452,481.75 504,609,571.56
Subtotal of cash outflows from operating activities 6,648,615,825.80 6,064,962,125.36 7,106,110,766.96 5,805,678,563.70
Net cash flows from operating activities 99,694,380.71 -122,871,516.89 -42,686,785.79 -101,819,747.98
II. Cash Flows from investment activities:
Cash received from disposal of investments 41,682,518.25 27,685,782.74
Cash received from investment income 1,350,000.00 17,471,011.87 10,870,396.18
Net cash received from disposal of fixed assets, intangible assets
and other long-term assets
4,092,314.92 3,000,754.21 228,847.90 177,730.00
Net cash received from disposal of subsidiary or other business
units
Other cash received relating to investment activities 10,164,944.00
Subtotal of cash inflows from investment activities 14,257,258.92 4,350,754.21 59,382,378.02 38,733,908.92
Cash paid to acquire fixed assets, intangible assets and other
long-term assets
101,003,020.36 5,596,863.88 61,425,545.92 14,776,283.03
Cash paid for investment 84,360.00 84,360.00
Net increase of pledged loans
Net cash paid to acquire subsidiaries and other business units
Other cash paid relating to investment activities
Subtotal of cash outflows from investment activities 101,003,020.36 5,596,863.88 61,509,905.92 14,860,643.03
Net cash flows from investment activities -86,745,761.44 -1,246,109.67 -2,127,527.90 23,873,265.89
III. Cash flows from financing activities:
Cash received from absorbing investment
Including: Cash received by subsidiaries from investment of
minority interest
Cash received from borrowings 1,387,409,892.00 1,247,289,300.00 172,459,585.25 150,000,000.00
Cash received from issuance of bonds
Other cash received relating to financing activities 1,458,711,172.54 1,131,355,911.64
Subtotal of cash inflows from financing activities 2,846,121,064.54 2,378,645,211.64 172,459,585.25 150,000,000.00
Cash paid to repay loans 856,297,186.92 675,542,098.17 143,116,558.00 100,000,000.00
Cash paid for interest expenses and distribution of dividends or
profit
9,144,221.25 23,714,634.51 11,664,265.83
Including: dividends or profit paid to minority shareholders by
subsidiaries
Other cash payments relating to financing activities 1,406,885,638.20 1,266,157,839.52 1,550.97
Sub-total of cash outflows from financing activities 2,272,327,046.37 1,941,699,937.69 166,832,743.48 111,664,265.83
Net cash flows from financing activities 573,794,018.17 436,945,273.95 5,626,841.77 38,335,734.17
IV. Effect of foreign exchange rate changes on cash and cash
equivalents
-4,032,221.84 -3,696,290.89 -5,027,713.03
V. Net increase in cash and cash equivalents 582,710,415.60 309,131,356.50 -44,215,184.95 -39,610,747.92
Add : beginning balance of cash and cash equivalents 845,026,867.06 358,631,499.14 752,558,414.47 556,082,988.52
VI. Closing balance of cash and cash equivalents 1,427,737,282.66 667,762,855.64 708,343,229.52 516,472,240.60
Regal Representative: Hou Songrong Person-in-charge of Accounting: Yang Guobin
Person-in-charge of the Accounting Agency: Ruan Renzong1
Consolidated Statement of Changes in Owners’ Equity
Prepared by: Konka Group Co., Ltd. 30 Jun. 2009 Unit: (RMB) Yuan
Current period
Owners’ equity attributable to parent company
Items
Paid-in capital (or share
capital)
Capital reserve
Less: treasury
stock
Specific
reserves
Surplus public
reserve
General risk
reserve
Retained profit Others
Minority interest
Total owners’
equity
I. Balance at the end of last year 1,203,972,704.00 1,256,138,295.21 804,896,533.82 500,638,125.11 9,397,273.34 224,430,267.07 3,999,473,198.55
Add: change of accounting policy
Correction of errors in previous periods
Others
II. Balance at the beginning of this year 1,203,972,704.00 1,256,138,295.21 804,896,533.82 500,638,125.11 9,397,273.34 224,430,267.07 3,999,473,198.55
III. Increase/ decrease of amount in this year (“-” means decrease) 591,242.40 20,103,379.81 380,128.08 -10,831,658.95 10,243,091.34
(I) Net profit 80,302,015.01 -5,315,534.52 74,986,480.49
(II)Gain/loss listed to owners’ equity directly 591,242.40 380,128.08 971,370.48
1. Net amount of changes in fair value of financial assets
available for sale
591,242.40 591,242.40
2. Effect of changes in other owners’ equity of invested units
under equity method
3. Effect on income tax related to items listed to owners’
equity
4. Others 380,128.08 380,128.08
Subtotal of (I) and (II) 591,242.40 80,302,015.01 380,128.08 -5,315,534.52 75,957,850.97
(III) Capital input and reduction of owners
1. Capital input of owners
2. Amount of stock payment included in the owners’ equity
3. Others
(IV) Profit distribution -60,198,635.20 -5,516,124.43 -65,714,759.63
1. Withdrawing surplus public reserve
2. Withdrawing general risk reserve
3. Distribution to owners (or shareholders) -60,198,635.20 -5,516,124.43 -65,714,759.63
4. Others
(V) Internal carrying forward of owners’ equity
1. New increase of capital (or share capital) from capital
reserves
2. Converting surplus reserves to capital (or share capital)
3. Surplus reserves make up losses
4. Others
IV. Closing balance 1,203,972,704.00 1,256,729,537.61 804,896,533.82 520,741,504.92 9,777,401.42 213,598,608.12 4,009,716,289.89
Regal Representative: Hou Songrong Person-in-charge of Accounting: Yang Guobin Person-in-charge of the Accounting Agency: Ruan Renzong2
Consolidated Statement of Changes in Owners’ Equity (Continued)
Prepared by: Konka Group Co., Ltd. 30 Jun. 2009 Unit: (RMB) Yuan
Amount of last year
Owners’ equity attributable to parent company
Items
Paid-in capital (or
share capital)
Capital reserve
Less:
treasury
stock
Specific
reserves
Surplus public
reserve
General risk
reserve
Retained profit Others
Minority interest Total owners’ equity
I. Balance at the end of last year 601,986,352.00 1,884,899,450.09 781,670,420.36 271,471,632.93 7,799,216.25 238,161,627.35 3,785,988,698.98
Add: change of accounting policy
Correction of errors in previous periods
Others
II. Balance at the beginning of this year 601,986,352.00 1,884,899,450.09 781,670,420.36 271,471,632.93 7,799,216.25 238,161,627.35 3,785,988,698.98
III. Increase/ decrease of amount in this year (“-” means decrease) 601,986,352.00 -620,227,516.23 80,555,227.21 -6,102,388.36 -4,636,130.73 51,575,543.89
(I) Net profit 80,555,227.21 5,015,563.85 85,570,791.06
(II)Gain/loss listed to owners’ equity directly -18,241,164.23 -6,102,388.36 -24,343,552.59
1. Net amount of changes in fair value of financial assets
available for sale
-18,241,164.23 -18,241,164.23
2. Effect of changes in other owners’ equity of invested units
under equity method
3. Effect on income tax related to items listed to owners’
equity
4. Others -6,102,388.36 -6,102,388.36
Subtotal of (I) and (II) -18,241,164.23 80,555,227.21 -6,102,388.36 5,015,563.85 61,227,238.47
(III) Capital input and reduction of owners
1. Capital input of owners
2. Amount of stock payment included in the owners’ equity
3. Others
(IV) Profit distribution -9,651,694.58 -9,651,694.58
1. Withdrawing surplus public reserve
2. Withdrawing general risk reserve
3. Distribution to owners (or shareholders) -9,651,694.58 -9,651,694.58
4. Others
(V) Internal carrying forward of owners’ equity 601,986,352.00 -601,986,352.00
1. New increase of capital (or share capital) from capital
reserves
601,986,352.00 -601,986,352.00
2. Converting surplus reserves to capital (or share capital)
3. Surplus reserves make up losses
4. Others
IV. Closing balance 1,203,972,704.00 1,264,671,933.86 781,670,420.36 352,026,860.14 1,696,827.89 233,525,496.62 3,837,564,242.87
Regal Representative: Hou Songrong Person-in-charge of Accounting: Yang Guobin Person-in-charge of the Accounting Agency: Ruan Renzong3
Statement of Changes in Owners’ Equity of Parent Company
Prepared by: Konka Group Co., Ltd. 30 Jun. 2009 Unit: (RMB) Yuan
Current period
Owners’ equity attributable to parent company
Items
Paid-in capital (or share
capital)
Capital reserve
Less: treasury
stock
Specific
reserves
Surplus public
reserve
General
risk
reserve
Retained profit Others
Minority
interest
Total owners’ equity
I. Balance at the end of last year 1,203,972,704.00 1,248,889,511.18 804,896,533.82 588,922,722.41 3,846,681,471.41
Add: change of accounting policy
Correction of errors in previous periods
Others
II. Balance at the beginning of this year 1,203,972,704.00 1,248,889,511.18 804,896,533.82 588,922,722.41 3,846,681,471.41
III. Increase/ decrease of amount in this year (“-” means decrease) 591,242.40 -17,675,662.70 -17,084,420.30
(I) Net profit 42,522,972.50 42,522,972.50
(II)Gain/loss listed to owners’ equity directly 591,242.40 591,242.40
1. Net amount of changes in fair value of financial assets
available for sale
591,242.40 591,242.40
2. Effect of changes in other owners’ equity of invested units
under equity method
3. Effect on income tax related to items listed to owners’
equity
4. Others
Subtotal of (I) and (II) 591,242.40 42,522,972.50 43,114,214.90
(III) Capital input and reduction of owners
1. Capital input of owners
2. Amount of stock payment included in the owners’ equity
3. Others
(IV) Profit distribution -60,198,635.20 -60,198,635.20
1. Withdrawing surplus public reserve
2. Distribution to owners (or shareholders) -60,198,635.20 -60,198,635.20
3. Others
(V) Internal carrying forward of owners’ equity
1. New increase of capital (or share capital) from capital
reserves
2. Converting surplus reserves to capital (or share capital)
3. Surplus reserves make up losses
4. Others
IV. Closing balance 1,203,972,704.00 1,249,480,753.58 804,896,533.82 571,247,059.71 3,829,597,051.11
Regal Representative: Hou Songrong Person-in-charge of Accounting: Yang Guobin Person-in-charge of the Accounting Agency: Ruan Renzong4
Statement of Changes in Owners’ Equity of Parent Company (Continued)
Prepared by: Konka Group Co., Ltd. 30 Jun. 2009 Unit: (RMB) Yuan
Amount of last year
Owners’ e Items quity attributable to parent company
Paid-in capital (or
share capital) Capital reserve Less: treasury
stock
Specific
reserves Surplus public reserve General risk
reserve Retained profit Othe
rs
Minority
interest Total owners’ equity
I. Balance at the end of last year 601,986,352.00 1,876,302,677.10 781,670,420.36 443,298,627.13 3,703,258,076.59
Add: change of accounting policy
Correction of errors in previous periods
Others
II. Balance at the beginning of this year 601,986,352.00 1,876,302,677.10 781,670,420.36 443,298,627.13 3,703,258,076.59
III. Increase/ decrease of amount in this year (“-” means
decrease) 601,986,352.00 -620,227,516.23 104,345,234.97 86,104,070.74
(I) Net profit 104,345,234.97 104,345,234.97
(II)Gain/loss listed to owners’ equity directly -18,241,164.23 -18,241,164.23
1. Net amount of changes in fair value of financial
assets available for sale -18,241,164.23 -18,241,164.23
2. Effect of changes in other owners’ equity of
invested units under equity method
3. Effect on income tax related to items listed to
owners’ equity
4. Others
Subtotal of (I) and (II) -18,241,164.23 104,345,234.97 86,104,070.74
(III) Capital input and reduction of owners
1. Capital input of owners
2. Amount of stock payment included in the owners’
equity
3. Others
(IV) Profit distribution
1. Withdrawing surplus public reserve
2. Distribution to owners (or shareholders)
3. Others
(V) Internal carrying forward of owners’ equity 601,986,352.00 -601,986,352.00
1. New increase of capital (or share capital) from
capital reserves 601,986,352.00 -601,986,352.00
2. Converting surplus reserves to capital (or share
capital)
3. Surplus reserves make up losses
4. Others
IV. Closing balance 1,203,972,704.00 1,256,075,160.87 781,670,420.36 547,643,862.10 3,789,362,147.33
Regal Representative: Hou Songrong Person-in-charge of Accounting: Yang Guobin Person-in-charge of the Accounting Agency: Ruan Renzon1
Konka Group Co., Ltd.
Notes to the Financial Statements
For the First Six Months of 2009
Unless otherwise specified, the currency in this note is in RMB
Note I. Company Profile
Upon approval of People’s Government of Shenzhen Municipality, Konka Group Co., Ltd. (hereinafter referred to as “the
Company”) was reorganized from the former Shenzhen Konka Electronic Co., Ltd. to an incorporated company in August
1991. Upon approval of the Special Economic Zone Branch of the People's Bank of China, the Company has issued
ordinary shares (A share and B share) and listed at Shenzhen Stock Exchange. On August 29, 1995, the Company, with its
name changed into “Konka Group Co., Ltd.”, obtained the 440301501121863 Business License for Enterprise’s Legal
Person, with its main business falling into electronic industry.
On November 27, 1991, upon approval of the SRYFZ [1991] No. 102 document as issued by the Special Economic Zone
Branch of the People's Bank of China, Shenzhen Konka Electronic Co., Ltd., during December 8—December 31, 1991,
has issued 128,869,000 ordinary shares (A share) in RMB Yuan, with a par value of RMB￥1.00 per share, of which the
original assets were converted into 98,719,000 state-owned corporate 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.
On January 29, 1992, upon approval of the SRYFZ [1991] No. 106 document as issued by the Special Economic Zone
Branch of the People's Bank of China, Shenzhen Konka Electronic Co., Ltd., during December 20, 1991— January 31,
1992, has issued overseas RMB 58,372,300 special shares (B), with a par value of RMB￥1.00 per share, of which the
former foreign-invested founder, Hong Kong Ganghua Electronic Group Co., Ltd. holds 48,372,300 shares converted into
the foreign legal person’s shares, and 10,000,000 B shares are issued additionally.
On April 10, 1993, the Proposal on Profit Distribution and Dividend Payout 1992 was adopted at the second session of
shareholders general meeting of the Company, upon approval of the SZBF [1993] No. 2 document as issued by Shenzhen
Portfolio Management Office, As of April 30, 1993, the Company implemented the profit distribution plan for the year of
1992: presented all shareholders the shares based on RMB￥0.90 in cash plus 3.5 bonus shares for every 10 shares. There
was a total equity of 187,473,150 shares after shares were presented.
As of April 18, 1994, the third session of general meeting of the Company passed the Proposal on Profit Distribution and
Dividend Payout 1993. Upon approval of the SZBF [1994] No. 115 document as issued by Shenzhen Portfolio
Management Office, the Company, as of June 10, 1994, implemented the profit distribution plan for the year of 1993:
presented all shareholders the shares based on RMB￥1.10 in cash plus 5 bonus shares for every 10 shares. (Including 4.4
profit bonus shares and 0.6 equity share converted from capital reserve). There was a total equity of 281,209,724 shares
after shares were presented and equities were converted from capital reserve.
As of June 2, 19994, in accordance with the regulations concerning that “staff share could go public and be transferred six
month after listing”, as jointly promulgated by the State Commission for Restructuring and the Economic System
Securities Commission of the State Council, as agreed by Shenzhen Portfolio Management Office and Shenzhen Stock
Exchange, the staff shares of the Company was listed and negotiated on June 6, 1994.
As of October 8, 1994, the Proposal on Negotiable Bonus Share of B-Share Corporate Shareholders 1992 was adopted at
the interim general metering 1994 of the Company, upon approval of SZBF [1994] No. 224 document as issued by
Shenzhen Portfolio Management Office, The bonus shares of 16,930,305 for the year of 1992 were granted to the
foreign-invested corporate shares, and negotiated at B-share market on October 26, 1994.
As of February 6, 1996, the Proposal on Shares Allotment Modes 1996 was adopted at the interim general metering 1996
of the Company, upon approval of SZBF[1996] No. 5 document as issued by CSRC Shenzhen Office, ZJPSZ [1996] No.
16 document issued by CSRC and ZJGZ [1996] No. 2 document, on July 16, 1996 and October 29, 1996, all shareholders
were respectively allotted shares in proportion of 3:10 at RMB￥6.28/A-share, and HK$5.85/B-share. Corporate
shareholders took their respective shares as bases to subscribe the allocable shares in full amount. The total equity was
365,572,641 shares after this shares allotment.
As of January 25, 1998, the Proposal on Shares Allotment 1998 was adopted at the interim general metering 1998 of the
Company, upon agreement of ZZBZ[1998] No. 29 document as issued by Shenzhen Portfolio Management Office, and
upon approval of ZJSZ[1998] No. 64 document as issued by China National Securities Supervision and Management
Committee, on July 15, 1998, A-negotiable shares were allotted in proportion of 3:10 at RMB￥10.50/A-share; Due to the2
reasons attributable to continuously weakening price of B-share secondary market price (lower than share allotment price),
etc., B-share negotiation and allotment plan was canceled, and the corporate shareholders of the Company waived this
preemptive right. The total equity was 389,383,603 shares after this shares allotment.
As of June 30, 1999, the Proposal on Profit Distribution and Capital Reserve Converted into Equity 1998 was adopted at
the eighth session of the general meeting of the Company. On August 20, 1999, the profit distribution for the year of 1998
was carried out: all shareholders were presented cash at RMB￥3.00 for every 10 shares, plus 2 shares for every 10 shares
converted from capital reserves. The total equity was 467,260,323 shares after converted from capital reserves.
As of June 30, 1999, the Plan on A-Share Issue for Capital Increase was adopted at the eighth session of the general
meeting of the Company, upon approval of ZJFXZ[1999] No.140 document as issued by China National Securities
Supervision and Management Committee, on November 1, 1999, A-shares of 80,000,000 were additionally issued to the
public at RMB￥15.50/share. The total equity was 547,260,323 shares after this additional issue.
As of May 30, 2000, the Plan on Profit Distribution and Dividend Payout 1999 was adopted at the ninth session of the
general meeting of the Company. On July 25, 2000, the profit distribution for the year of 1999 was carried out: all
shareholders were presented cash at RMB￥4.00 for every 10 shares, plus 1 bonus shares for every 10 shares. The total
equity was 601,986,352 shares after this shares allotment.
The Company convened the seventh meeting of the six session of board on 3 Apr. 2008, approving and adopting the
following resolutions: With the total equity of 601,986,352 shares for the year ended on December 31, 2007 as the base,
the equities converted from capital reserves are transferred to all shareholders at the rate of 10 for 10. And the said
resolution was adopted by the general meeting 2007 convened on May 26, 2008. The Company, in June 2008,
implemented the capital reserves converted into equities and went through the formality of transfer at China Securities
Depository and Clearing Corporation Limited. On December 16, 2008, upon approval of SMGZF [2008] No. 2662
document as issued by Shenzhen Bureau of Trade and Industry, the Company was agreed to increase equities, and went
through the registration of changes at the administration for industry and commerce on April 10, 2009. After the change,
total share capital increased to 1,203,972,704 shares.
Approved business scope: the Company is engaged in R&D, production and business of household appliances such as TV,
refrigerator, washing machine, and small household appliances; household Audio and Visual Equipment (AV equipment);
IPTV Set-TopBox(STB);USB DVB-T Receiver; satellite navigation system; satellite television receiving system; digital
product; mobile communication equipment and final product; consumer electronic products; office equipment; electronic
computer; automobile electronics; intelligent transport system; fire-control/ burglar-alarm system; mould; plastics; various
packing materials; electronic component, device; monitor; and manufacturing, application and service of large-screen
display equipment; LED backlight, illumination, luminescent device and encapsulation, the relevant technical consulting
service, after-sales paid service, after-sales auxiliary products business, and business of spare and accessory parts in
connection with the products mentioned above; the wholesales, retails, import/export and relevant supporting services (not
relating to state trading manage product, the commodities involved in quota permit management and specified special
management shall be subject to the relevant national regulations) in connection with the products mentioned above. And
paid maintenance service of electronic products, domestic cargo agent, storage service, software development, sales &
service, consultancy and service for enterprise management, as well as self-owned property leasing and property
management.
Note II. Preparation Basis of Financial Statements and Declaration of Following Business
Accounting Standards
On the going-concern basis, the Company performs the recognition and metering in light of actual
transactions and events, according to the Accounting Standards for Business Enterprises-Basic Standards and
the regulations of other accounting standards, and prepares the financial statements hereon. The estimates and
assumptions are required to prepare the financial statements in conformity with the requirement of China
accounting standards, because such estimates and assumptions will influence the disclosure of assets, liability
and contingent liability on the date of financial statements, as well as the earnings and expenses during the
statements period. The financial statements prepared by the Company conform to the requirements of business
accounting standards, and truly and integrally reflect information about financial status, business results, cash
flow, etc. of the Company.
Note III. Business Mergers and Consolidated Financial Statements
1. Wholly-owned subsidiaries:
Name of Wholly-owned
Subsidiary
Registration
Place
Business Nature
Registered Capital
(Unit: ten
thousand)
Ending Actual
Investment Amount
(Unit: ten thousand)
Net Investment
Balance for
Subsidiary
Materially
Constituted
(Unit: ten
thousand)
Holding Proportion
Voting
Right
Proport
ion
Subsidiary established
by non-business merger.
Direct Indirect3
Dongguan Konka Electronic
Co., Ltd.
Dongguan
TV, audio and video
products, etc.
RMB20,000 RMB27,478 RMB27,478
100%
— 100%
Anhui Konka Electronic
Co., Ltd.（hereinafter referred
to as “ Anhui Konka ”）
Anhui Color TV RMB14,000 RMB12,278 RMB12,278
78%
— 78%
Mudanjiang Konka
Industry Co., Ltd.
Mudanjiang Color TV RMB6,000 RMB3,600 RMB3,600
60%
— 60%
Shenzhen Konka Household
Appliances Co., Ltd.
Shenzhen Electron device RMB830 RMB1,073 RMB1,073
51%
— 51%
Chongqing Konka Electronic
Co., Ltd.
Chongqing Color TV RMB4,500 RMB2,700 RMB2,700
60%
— 60%
Shenzhen Konka Video &
Communication Systems
Engineering Co., Ltd
(hereinafter referred to as
“ Konka Video &
Communication ”)
Shenzhen
Development, sales
and technology
consultation of LED
screen and DTV STB
RMB1,500 RMB900 RMB900
60%
— 60%
Chongqing Konka Electronic
Co., Ltd.
Chongqing
Development and
sales for auto
electronic products
RMB3,000 RMB1,710 RMB1,710
57%
— 57%
KONKA AMERICA,INC.
U．S．A
Sales of electronic
products
USD100 USD100 USD100
100%
— 100%
Shenzhen Konka
Telecommunications
Technology Co., Ltd.
Shenzhen
Mobile
communication
products
RMB12,000 RMB9,000 RMB9,000
75%
25%
100%
Shenzhen Shushida Electronic
Co., Ltd.
Shenzhen
Film & TV products
and relevant fittings
RMB4,200 RMB3,150 RMB3,150
75%
25%
100%
Hongkong Konka Co., Ltd.
Hongkong
Import & export of
electromechanical
and electronic
products
HKD50 HKD50 HKD50
99%
1%
100%
Anhui Konka Household
Appliances Co., Ltd.
Anhui
Production and sales
of refrigerator and
other electric
appliances
RMB7,819 RMB7,498 RMB7,498
92.97%
4.48%
97.45%
Shenzhen Konka Plastic
Manufacture Co., Ltd.
Shenzhen Plastic manufacture RMB950 RMB465 RMB465
49%
51%
100%
Chongqing Qingjia Electronic
Co., Ltd.
Chongqing
Electronic tuner and
high frequency
head
RMB1,500 RMB450 RMB450
—
40%
40%
Shaanxi Konka Electronic
Co., Ltd.
Shaanxi Color television RMB6,950 RMB4,487 RMB4,487
45%
15%
60%
Shenzhen Konka
Information Network Co.,
Ltd.
Shenzhen
Production and sales
of digital network
products
RMB3,000 RMB2,250 RMB2,250
75%
25%
100%
Shenzhen Konka Electron
Fittings Technology Co., Ltd.
Shenzhen
Technical
development of ED
RMB6,500 RMB4,875 RMB4,875
75%
25%
100%
Dongguan Konka Packing
Material Co., Ltd.
Dongguan Plastic products RMB1,000 RMB1,000 RMB1,000 — 100% 100%
Dongguan Konka Tooling
and Mould Co., Ltd.
Dongguan
Module and rubber
products
RMB1,000 RMB1,000 RMB1,000 — 100% 100%
Konka Household
Appliances Investment &
Development Co, Ltd.
Hongkong
Investment and
shareholding
HKD50 HKD50 HKD50
— 100% 100%
Konka Household
Appliances International
Trading Co., Ltd
Hongkong International trading HKD50 HKD50 HKD50
— 100% 100%
Changshu Konka Electronic
Co., Ltd.
Changshu
Production and sales
of electronic
products
RMB2,465 RMB2,028 RMB2,028
— 60% 60%
Boluo Konka Printed Board
Co., Ltd.
Guangdong
Production and sales
of electronic
products
RMB4,000 RMB1,443 RMB1,443
— 51% 51%
Shenzhen Konka Precision
Mold Manufacturing Co.,
Ltd
Shenzhen
All classes of
modules
RMB1,450 RMB739.5 RMB739.5
— 51% 51%
Boluo Konka Precision
Technology Co., Ltd.
Boluo
Production and sales
of electronic
products
RMB1,500 RMB1125 RMB1125
— 100% 100%
Konka (Nanhai) Developmen
Center Nanhai
R&D of panel
display technology,
RMB50 RMB50 RMB50 100% — 100%4
production
development, etc.
Konka (Europe) Ltd. Frankfurt
Sales of electronic
products
EUR2.5 EUR2.5 EUR2.5 100% — 100%
Kunshan Konka Electronic Co
Ltd.
Kunshan
Research, design,
and production of
LCM and panel TV
RMB35,000 RMB35,000 RMB35,000
100% — 100%
2. Information about Affiliated Company:
Name of Company
Registration
Place
Legal
Representative
Registered Capital
(Unit: ten
thousand)
Actual Investment
Amount
(Unit: ten
thousand)
Holding
Proportion
Main Business
Shenzhen Dekon Electronics
Co., Ltd
Shenzhen Qiu Weimin RMB1,000 RMB300 30%
Production and sales of
electronic products
Shenzhen Konka Energy
Technology Co., Ltd
Shenzhen Dong Yaping RMB2,000 RMB300 30%
Operation of new mobile
energy products, etc.
Chongqing Jingkang Plastic
Product Co., Ltd.
Chongqing Wang Xiaoyong RMB1,500 RMB375 31.25%
Manufacturing and
processing of module
products
Shenzhen Julong
OptoElectronics Co., Ltd
Shenzhen Yu Zhonghou RMB1,000 RMB200 20%
R&D, manufacture and sales
of panel optical display
device, etc.
Shanlian Information
Technology Project Co., Ltd
Beijing He Zhiqiang RMB5,200 RMB500 9.61525%
Technical development,
transfer, consultation,
service, etc.
Shnezhen Zhongcailian
Technology Co., Ltd
Shenzhen Fan Wenjian RMB1,000 RMB100 10%
Electronic technology
development, economic
information consultation
3. Information about Minority Interests
Name of Subsidiary Minority Interests
Mudanjiang Konka Industry Co., Ltd. 29,661,125.58
Shaanxi Konka Electronic Co., Ltd. 40,926,881.90
Anhui Konka Electronic Co., Ltd. 47,719,197.83
Shenzhen Konka Household Appliances Co., Ltd. (6,920,174.30)
Chongqing Konka Electronic Co., Ltd. 14,390,799.25
Boluo Konka Printed Board Co., Ltd. 22,277,654.27
Chongqing Konka Automotive Electronic Co., Ltd. (3,813,816.56)
Shenzhen Konka Precision Mold Manufacturing Co., Ltd. 34,654,353.75
Anhui Konka Household Appliances Co., Ltd. 3,791,687.86
Shenzhen Konka Video & Communication Engineering Co., Ltd 3,271,410.55
Changshu Konka Electronic Co., Ltd. 10,967,505.94
Shaanxi Qingjia Electronic Co., Ltd. 16,671,982.05
Total 213,598,608.12
Note IV Preparation Methods of Significant Accounting Policies, Accounting Estimate and
Consolidated Financial Statements
（1）The Company shall implement the Accounting Standards for Business Enterprises and the relevant regulations of
the Ministry of Finance.
（2）Fiscal year:
The fiscal year of the Company shall run from January 1 to December 31 of each calendar year.
（3）Recording currency:
RMB Yuan
（4）Book-keeping basis and valuation principle:
The Company shall adopt the accrual system as the base of bookkeeping basis, and use the real cost as the pricing basis
in general except the pricing principle especially stated in the notes. The assets shall enter into the account book on the5
actual cost basis at the time of acquisition. In case of subsequent assets depreciation, the corresponding assets
deprecation preparation shall be withdrawn.
（5）Accounting method of foreign currency operation and foreign currency conversion method of financial statements:
When initial recognition is made for foreign transaction, the amount in foreign currency shall be converted into the
amount in recording currency at the spot exchange rate on the date when transaction occurs. On the balance sheet date,
the monetary items in foreign currency shall be converted at the spot exchange rate on the balance sheet date. The
balance of exchange caused by the difference between the spot exchange rate on the balance sheet and that initially
recognized or that on previous balance sheet date shall be included in the current profits and losses. The non-monetary
items measured on the historical cost basis shall be converted at the spot exchange rate on the date when transaction
occurs, remaining its amount in recording currency unchanged.
（6）Criteria for fixing cash and cash equivalents:
The cash of the Company shall refer to cash in treasury, deposit and cash equivalents available for payment at any time;
cash equivalents shall refer to the short-term and strong-liquidity investment, easily convertible to known amounts of
cash, and subject to an insignificant risk of change in value; the cash equivalents of the Company include the investment
that falls dues or is convertible within 3 months or less.
（7）Tradable financial assets:
Tradable financial assets shall be classified as the financial assets for transaction and the financial assets measured via
fair value as specified, with alteration included in the current profits and losses.
Tradable financial assets shall be taken as the amount initially recognized based on the fair value at the time of
acquisition, and the transaction costs concerned are included in the current profits and losses when incurred.
On the balance sheet date, the tradable financial assets are subsequently measured at its fair value, the contingent
transaction costs available to dispose the financial assets will not be deducted, and the change in fair values of tradable
assets shall be included in the current profits and losses.
（8）Receivables and bad debt reserves calculating
Receivables shall refer to accounts receivables and accounts receivable other. The Company initially confirms the
accounts receivables based on the fair values when assets shall be obtained. With the method of actual interest rate, the
receivables shall be subsequently measured based on the amortized cost.
The Company shall calculate the contingent bad debt losses using the allowance method.
The Company shall perform depreciation test for the account receivable with significant single and insignificant of single
amount. The depreciation test shall be separately performed for the significant account receivable of single amount to
determine the impairment loss and withdraw bad debt reserves based on the difference between the cash value and
carrying amount of future cash flows.
As regards the insignificant account receivables of single amount and the significant account receivables of single
amount that depreciation does not incur after separate test, the bad debt reserves shall be withdrawn in the following
proportions:
Age Withdrawal Proportion
Within one year (incl. one year) 2%
One to two years (incl. two years) 5%
Two to three years (incl. three years) 20%
Above three years 50%
The Company shall implement the criterions to determine bad debts: where the accounts can not be recovered after the
use of bankruptcy assets or legacies for satisfaction due to cancellation, bankruptcy or death of the debtor; where the
distinct characteristics shows the accounts can not be recovered due to the failure of the debtor to fulfill the obligations
of debt service when overdue. The accounts receivable that unable to be recovered as shown by the well-established
evidence shall be determined as the bad debt losses to offset the bad debt reserves that have been withdrawn.
（9）Inventories:
The inventories of the Company shall be classified as four kinds: raw materials, products in process, finished products,
low-value consumables
The Company adopts the perpetual inventory for the inventory system, the inventories shall be priced at the actual cost
when being purchased and warehoused, and priced with the weighted average method when being delivered; the
low-value consumables shall be priced with the one-off amortization when being claimed. The packing materials shall be
included in production cost in one shot when being claimed.
In the end of year, when the costs are predicated to be unrecoverable due to inventory damage, all or partial obsolescence,
or sales prices lower than costs, etc. based on the wall-to-wall inventory, the inventory falling price reserves are
withdrawn and determined based on the difference between the cost of an single inventory item and its net realizable6
value at the time of withdrawal.
（10）Long-term equity investment:
As regards the business merger under the same control, it shall, on the date of merger, treat the share of the carrying
amount of the owner's equity of the merged enterprise 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 carrying amount of the debts borne by the merging party shall offset against the share premium
of capital reserve. If the capital reserve is insufficient, the retained earnings shall be adjusted. The relevant expenses
directly arising from business merger shall be included in the current profits and losses.
As regards the long-term equity investment formed by the business merger under different control, the merging cost shall
be the fair value of paid assets, incurred or borne liabilities and issued equity securities to obtain the right of control over
acquiree. The relevant expenses directly arising from business merger shall be included in the current profits and losses.
The Company is able to implement the controlled long-term equity investment in invested units, and the long-term
equity investment that has no common control or significant influence on invested entity, and has no offer in the active
market, and its fair value cannot be reliably measured shall be calculated on the cost basis.
The long-term equity investment that the Company has common or significant influence on invested entity shall be
calculated with equity method. The Company shall confirm the net losses of the invested enterprise until the carrying
amount of the long-term equity investment and other long-term rights and interests which substantially form the net
investment made to the invested entity are reduced to zero, unless the Company is obligated to bear extra losses.
If the initial investment cost of long-term equity investment is more than the share of the fair value of the invested
entity's identifiable net assets for the investment the Company is entitled to, the initial cost of the long-term equity
investment may not be adjusted; otherwise, the difference shall be included in the current profits and losses, and the cost
of long-term equity investment shall be adjusted in the meantime.
The Company shall, on the ground of the fair value of all identifiable assets of the invested entity when it obtains the
investment, recognize the share of the net profits and losses of the invested entity the Company is entitled to after it
adjusts the net profits of the invested entity.
At the end of period, the long-term investments are checked item by item. If the invested entity’s recoverable amount is
lower than the carrying amount of investment arising from continuous market price drop or deteriorated operation status
of the invested entity and other reasons, the depreciation preparation can be individual withdrawn based on the difference
between recoverable amount and carrying amount. The recoverable amount shall be determined in light of the net
amount of the fair value of the assets minus the disposal expenses and the current value of the expected future cash flow
of the assets, whichever is greater. Once recognized, the assets impairment loss must not be carried out during the
accounting period.
(11) Held-to-maturity investment:
The held-to-maturity investment shall be initially measured based on the fair value at the time of acquisition, and the
transaction expenses concerned shall be included in the initially recognized amount. The subsequent measurement shall
be performed with the effective interest method at amortized cost.
At end of period, the current value of current value shall be discounted and calculated based on the effective interest rate
of financial assets. If the current value of current value is less than the carrying amount of financial assets shall be
deducted to the current value of current value (excluding the expected credit loss that hasn’t occurred yet), the deducted
amount shall be recognized as assets impairment loss and included in the current profits and losses. When the
held-to-maturity investment value has been recovered as shown by objective evidences, and the held-to-maturity
investment is objectively associated with the events after such loss is recognized, the previously recognized impairment
loss will be carried back and included in current profits and losses.
（12）Available-for-sale financial assets:
The Company shall initially measure the financial assets on offer at its fair value at the time of acquisition, and the
transaction expenses concerned shall be included in the amount initially recognized.
As regards the available-for-sale financial assets that have offer in active market and whose fair value can be measured
continuously and reliably, subsequent measurement can be made with fair value; as regards the equity instrument
investment that have no offer in active market and whose fair value cannot be reliably measured, and the derivative
financial assets that are associated with the said equity instrument and must be settled by delivery of the said equity
instrument, the subsequent measurement can be made on cost basis.
The gains or losses formed by adjustment in fair value of available-for-sale financial assets, other than the exchange
difference between impairment loss and monetary financial assets in foreign currency, shall be directly included in the
owner’s equity, and be transferred out and included in the current profits and losses when the recognition for financial
assets is terminated.
Where an equity instrument investment for which there is no quoted price in the active market and whose fair value
cannot be reliably measured, or a derivative financial asset which is connected with the equity instrument and which
must be settled by delivering the equity instrument, suffers from any impairment, the difference between the carrying
amount of the equity instrument investment or the derivative financial asset and the current value of the future cash flow7
of similar financial assets capitalized according to the returns ratio of the market at the same time shall be recognized as
impairment-related losses and be included in the profits and losses of the current period. Once being recognized, the
impairment losses will not be transferred out during the accounting period.
Where available-for-sale financial assets are impaired, the accumulative losses arising from the decrease of the fair value
of the owner’s equity which was directly included shall be transferred out and included in the profits and losses of the
current period. As regards the available-for-sale debt instruments whose impairment-related losses have been recognized,
if, within the accounting period thereafter, the fair value has risen and are objectively related to the subsequent events
that occur after the originally impairment-related losses were recognized, the originally recognized impairment-related
losses shall be carried back and be included in the profits and losses of the current period. The impairment-related losses
incurred to available-for-sale equity instrument investment shall not be carried back through profits and losses.
（13）Fixed assets and accumulated depreciation:
a. The Company will confirm the assets held for commodity production, rendering of service, lease or operation
management, with useful lives in excess of one fiscal year as the fixed assets.
b. Fixed assets shall be initially measured on cost basis. Disposal expenses shall be expected for the fixed assets to be
disposed which is expected to generate relatively great expenses, and the current value thereof shall be included in the
cost of fixed assets. Where the payment of purchase price for fixed assets is delayed beyond the normal credit conditions,
which is of financing nature materially, the cost of fixed assets shall be determined on the basis of the current value of
the purchase price. The difference between the actual payment and the current value of the purchase price shall be
included in current profits and losses, unless it shall be capitalized in accordance with regulations.
c. Depreciation of fixed assets shall be calculated with the straight-line method, and the salvage value (10% of original
value) shall be deducted based on the original value of various fixed assets and estimated useful lives, with classified
depreciation rate as follows:
Assets Classifications Useful lives Annual Depreciation
Building construction 40 years 2.25%
Machinery equipment 10 years 9%
Electronic equipment 5 years 18%
Transportation means 5 years 18%
Other equipment 5 years 18%
At the end of period, the useful lives and net salvage rate shall be inspected item by item. In case of discrepancy with
original estimate, the adjustment shall be made. Where the recoverable amounts of fixed assets are caused to be lower
than the carrying amount arising from continuous market price drop, lag in technology, or obsolescence, damage and
long-term idling of equipment, etc., the recoverable account shall be expected based on the single asset or asset group,
and the deprecation reserves shall be withdrawn based on the difference between the recoverable amount and carrying
amount. Once recognized, the impairment losses shall not be carried back in the following accounting period. Where the
fixed assets are under disposal status, and fail to generate economic benefit upon use or disposal, the withdrawal of
depreciation shall be suspended, and net salvage value shall be adjusted simultaneously.
（14）Construction work in progress:
The engineering cost of construction work in progress shall be calculated and reflected based on the direct building and
installing cost, interest expenditure of borrowings and exchange profit and loss incurred for construction work. The
interest borne by the relevant construction works have been capitalized in the current year. When the fixed assets
purchased and built reach the expected working condition, the construction work in progress can be transformed into the
fixed assets.
At the end of period, construction work in progress shall be inspected in a comprehensive way. Depreciation reserves
shall be withdrawn and included in the current profits and losses based on the difference between the recoverable amount
of the said construction work and the carrying amount thereof. Once recognized, the assets depreciation shall not be
carried back in the subsequent accounting periods.
（15）Borrowings and borrowing costs
The borrowings shall enter into the account on the cost basis as the time of initial acquisition, and shall be measured on
the basis of amortized cost with the effective interest rate after acquisition. The borrowing costs shall be allowed to be
capitalized when satisfying the conditions that assets disbursement has incurred, borrowing costs has incurred, and
acquisition and construction as necessary to enable the assets to reach the expected serviceable condition has started.
Apart from this, the borrowings costs shall be recognized as the costs of the current period.
As for specifically borrowed loans for the acquisition and construction or production of assets eligible for capitalization,
the to-be-capitalized amount of interests shall be determined in light of the actual cost incurred of the specially borrowed
loan at the present period minus the income of interests earned on the unused borrowing loans as a deposit in the bank or8
as a temporary investment.
Where a general borrowing is used for the acquisition and construction or production of assets eligible for capitalization,
the enterprise shall calculate and determine the to-be-capitalized amount of interests on the general borrowings 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. Till the end of period, product of the
weighted average of accumulative disbursement of acquisition and construction of assets eligible for capitalization and
capitalization rate shall not exceed the actual interest incurred.
（16）Intangible assets and R&D costs:
The intangible assets shall enter into the account based on the actual paid amount or recognized value. Where the
payment of purchase price for fixed assets is delayed beyond the normal credit conditions, which is of financing nature
materially, the cost of intangible assets shall be determined on the basis of the current value of the purchase price. The
difference between the actual payment and the current value of the purchase price shall be included in the current profits
and losses, unless it shall be capitalized in accordance with regulations.
As regards intangible asset with limited useful lives, the amount of its cost minus expected salvage value shall be
amortized with the straight-line method within the expected useful lives.
The useful lives of intangible assets shall be judged as per the following procedures:
a. As regards the intangible asset derived from contractual right or other legal rights, its useful lives shall not exceed the
period of contractual right or other legal rights.
b．Where, as evidence shown, an enterprise does not have to pay a large amount of costs for renewal when the
contractual right or other legal rights expire, the renewal period shall be included in the useful lives. Where the useful
lives is not stipulated in the contract or laws, the Company shall take all factors as a whole to determine the period
during which the intangible asset can bring economic benefits to the enterprise.
Where the Company still fails to reasonably determine the period during which the intangible asset can bring economic
benefits to the enterprise according to the procedures mentioned above, the tangible asset shall be taken as the intangible
asset with uncertain useful lives. The intangible assets with the uncertain useful lives shall not be amortized.
Prior to commercial production or utilization, the expenditure available to produce the new or materially improved
materials, devices, products, etc. by means of a certain plan or design to which research findings or other knowledge
shall be taken as the expenditure at the development stage. Other expenditures shall be determined as expenses, except
the development-stage expenditures satisfying the following conditions confirmed as intangible assets:
a. Fulfill the intangible asset to enable it to be used or sold, with feasibility in technology;
b. Have the intention of fulfilling the intangible asset for use or sale;
c. The usefulness of methods for intangible assets to generate economic benefits shall be proved, including being able to
prove that there is a potential market for the products manufactured by applying the intangible assets or there is a
potential market for the intangible assets itself or the intangible assets will be used internally;
d. It is able to finish the development of the intangible assets, and able to use or sell the intangible assets, with the
support of sufficient technologies, financial resources and other resources; and
e. The expenditures for development of this intangible asset can be measured reliably.
The development-stage expenditure shall be included in the current expense when incurred.
At the end of period, the intangible assets shall be inspected item by time. For the intangible asset that has been replaced
by other new technologies to bring economic benefits to the enterprise, thereby resulting in more adverse influence, the
intangible asset that can not be recovered arising from the market price slump within the remaining amortization period,
the recoverable amount shall be expected on an single basis, and the depreciation reserves shall be withdrawn based on
the difference between the intangible asset and the accounting value. Once recognized, the assets depreciation loss shall
not be carried back in the subsequent accounting periods.
（17）Goodwill
At the time of business merger under different control, the difference between the paid combined costs and fair value of
identifiable net assets acquired from the acquiree during business merger shall be recognized as goodwill.
The Company, at the end of period, will prorate goodwill to the relevant asset groups for depreciation test. The
depreciation reserve withdrawn shall be included in the current profits and losses. Once withdrawn, the depreciation
reserves shall not be carried back in the subsequent accounting periods.
（18）Long-term deferred expenses
The long-term deferred expenses shall be amortized using the straight-line method, with amortization period for
long-term deferred expenses determined subject to the benefit period.
（19）Financial liabilities
The Company divides financial liabilities into: the financial liabilities measured by fair value with changes included in
the current profits and losses, and other financial liabilities.
The financial liabilities measured by fair value with changes included in the current profits and losses shall cover the
tradable financial liabilities and the financial liabilities measured by fair value, with changes included in the current9
profits and losses as specified. As regards the financial liabilities with the active market, the fair value shall be
determined based on the quoted price in the active market; as regards the financial liabilities without the active market,
the Company shall adopt the fair value using estimation technology.
（20）Income recognition:
Income from commodities sales: The significant risks and rewards of ownership of the commodities have been
transferred to the buyer by the enterprise; the enterprise retains neither continuous management right that usually keeps
relation with the ownership nor effective control over the sold commodities; 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 Company shall ascertain the revenue incurred by selling commodities in accordance with the received or receivable
price stipulated in the contract or agreement signed between the Company and the buyer, unless the received or
receivable amount as stipulated in the contract or agreement is unfair. If the collection of the price as stipulated in the
contract or agreement is delayed and if it has the financing nature, the revenue incurred by selling commodities shall be
ascertained in accordance with the fair value of the receivable price as stipulated in the contract or agreement. The
difference between the price stipulated in the contract or agreement and its fair value shall be amortized within the period
of the contract or agreement employing the real interest method and shall be included in the current profits and losses.
Revenue from providing labor services: The amount of revenue can be measured in a reliable way; the relevant economic
benefits are likely to flow into the enterprise; the schedule of completion under the transaction can be confirmed in a
reliable way; and the costs incurred or to be incurred in the transaction can be measured in a reliable way.
If, at the end of period (year), an enterprise can, reliably estimate the outcome of a transaction concerning the labor
services it provides, it shall recognize the revenue from providing services employing the percentage-of-completion
method. The Company shall ascertain the schedule of completion under the transaction concerning the providing of labor
services employing the measurement of the work completed (The proportion of the labor services provided against the
total labor services to be provided; and the proportion of the costs incurred against the estimated total costs).
（21）Governmental subsidy:
No government subsidy may be recognized unless the following conditions are met simultaneously as follows:
a. The enterprise can meet the conditions for the government subsidies;
b. The enterprise can obtain the government subsidies.
Where a government subsidy is a monetary asset, it shall be measured in the light of the received or receivable amount.
Where 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 for the Company consist of the government subsidies pertinent to assets and government
subsidies pertinent to income.
The government subsidies pertinent to assets mean the government assets that are obtained by the enterprise used for
purchase or construction, or forming the long-term assets by other ways. The government subsidies pertinent to assets
shall be recognized as deferred income, equally distributed within the useful lives of the relevant assets, and included in
the current profits and losses. But the government subsidies measured at their nominal amounts shall be directly included
in the current profits and losses.
The government subsidies pertinent to income refer to all the government subsides except those pertinent to assets. The
government subsidies pertinent to incomes shall be treated respectively in accordance with the circumstances as follows:
a. Those subsidies used for compensating the related future expenses or losses of the enterprise shall be recognized as
deferred income and shall be included in the current profits and losses during the period when the relevant expenses are
recognized; or
b. Those subsidies used for compensating the related expenses or losses incurred to the enterprise shall be directly
included in the current profits and losses.
Where it is necessary to refund any government subsidy which has been recognized, it shall be treated respectively in
accordance with the circumstances as follows:
a. If there is the deferred income concerned, the book balance of the deferred income shall be offset against, but the
excessive part shall be included in the current profits and losses; and
b. If there is no deferred income concerned, it shall be directly included in the current profits and losses.
（22）Staff salaries:
During each accounting period, the enterprise shall recognize the compensation payable as liabilities, which shall be
respectively recorded as the product or service costs, current expenses or costs of fixed assets or intangible assets subject
to the beneficiaries. According to the relevant regulations, the Company shall, based on a certain proportion of the
monthly wages, withdraw insurance premium and accumulation fund, and pay the same to the authority of labor and
social security on a monthly basis. The expenditures concerned shall be recorded into the current costs or expenses.
（23）Recognition of estimated liabilities
The Company shall recognize the obligation that simultaneously meets the following conditions and relates to the
contingent events as the liabilities: that obligation is a current obligation of the enterprise; It is likely to cause any10
economic benefit to flow out of the enterprise as a result of performance of the obligation; the amount of the obligation
can be measured in a reliable way.
Where an executory contract turns to be a loss contract, the obligations generated from the loss contract which meets the
aforesaid conditions shall be recognized as estimated liabilities.
Where the other obligations untaken by the Company (e.g. excess loss, restructuring obligations, discard expenses, etc.)
meet the aforesaid conditions shall be recognized as estimated liabilities.
（24）Income tax:
The Company shall recognize the accrued income tax of the current period and prior periods as a liability, and shall
recognize the part of the income tax already paid minus the payable amount as an asset.
Except for the deferred income tax liabilities arising from the following transactions, The Company shall recognize the
deferred income tax liabilities arising from all taxable temporary differences:
a. The initial recognition of business reputation;
b. The initial recognition of assets or liabilities arising from the following transactions which are simultaneously featured
by the following:
a) The transaction is not business merger;
b) At the time of transaction, the accounting profits will not be affected, nor will the taxable amount (or the deductible
loss) be affected.
The Company shall recognize the deferred income tax liabilities arising from a deductible temporary difference to the
extent of the amount of the taxable income which it is most likely to obtain and which can be deducted from the
deductible temporary difference. However, the deferred income tax assets, which are arising from the initial recognition
of assets or liabilities during a transaction which is simultaneously featured by the following, shall not be recognized:
a. This transaction is not business merger; and
b. At the time of transaction, the accounting profits will not be affected, nor will the taxable amount (or the deductible
loss) be affected.
On the balance sheet date, where there is any exact evidence showing that it is likely to acquire sufficient amount of
taxable income tax in a future period to offset against the deductible temporary difference, the deferred income tax assets
unrecognized in prior periods shall be recognized.
On the balance sheet day, the current income tax liabilities (or assets) incurred in the current period or prior periods shall
be measured in light of the expected payable (refundable) amount of income taxes according to the tax law. The deferred
income tax assets and 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.
In case the applicable tax rate changes, the deferred income tax assets and deferred income tax liabilities which have
been recognized shall be re-measured, excluding the deferred income tax assets and deferred income tax liabilities
arising from any transaction or event directly recognized as the owners' right.
The income taxes of the current period and deferred income tax of The Company shall be treated as income tax expenses
or incomes, and shall be recorded into the current profits and losses, excluding the income taxes incurred under the
following circumstances:
a. The business merger; and
b. The transactions or events directly recognized as the owner's rights and interests.
The income taxes of the current period and deferred income tax related to the transactions or events directly recorded in
the owner's rights and interests shall be recorded into the owner's rights and interests.
（25）Consolidated Financial Statement:
Where the Company can exercise control over all subsidiaries, they shall be incorporated into the consolidated range.
Where the accounting policies adopted by the subsidiaries are in conflict with those of the parent company, the
adjustment shall be made in accordance with the accounting policies of the parent company for consolidation.
As regards the subsidiaries to be acquired upon business merger under the same control, the revenues, expenses, profits
and cash flows of the subsidiaries from the beginning of the current merging period to the end of report period shall be
included in the consolidated profit statement and the consolidated cash flow statement.
As regards the subsidiaries to be acquired upon business merger under different control, the revenues, expenses, profits
and cash flows of the subsidiaries from the merging date to the end of report period shall be included in the consolidated
profit statement and the consolidated cash flow statement.
Where the current loss borne by the minority shareholders of the subsidiaries exceeds the shares enjoyed by the minority
shareholders in the owner’s equity of the subsidiaries, the balances thereof shall be respectively treated in the following
circumstances:
a. Where the articles of associations or agreement stipulate that the minority shareholders are obligated to undertake and
are able to make up for the loss, the said balance shall be used to offset the minority equity;
b. Where the articles of associations or agreement do not stipulate that the minority shareholders are obligated to
undertake the loss, the said balance shall be used to offset the owner’s equity of the parent company. Before the profits of
the subsidiaries in the subsequent periods have offset the loss undertaken by the owner’s equity and belonging to the11
minority shareholders of the parent company, they shall attribute to the owner’s equity of the parent company.
（26）Earnings per share：
Basic earnings per share
The Company shall calculate the basic earnings per share by dividing the net profits of the current period, which are
attributable to the shareholders of ordinary shares, by the weighted average number of ordinary shares issued to the
public. The weighted average number of ordinary shares issued to the public shall be calculated according to the
following formulas:
The weighted average number of ordinary shares issued to the public = the number of ordinary shares issued to the
public at the beginning of the period + the number of shares newly issued in the current period × the lapsed time after
issuance ÷ the time during the reporting period － the number of ordinary shares repurchased in the current period ×
the lapsed time after repurchase ÷ the time during the reporting period
Diluted earnings per share
If the Company has any diluted potential ordinary shares, it shall respectively adjust the net profits of the current period,
which are attributable to the shareholder of ordinary shares, and the weighted average number of ordinary shares issued
to the public, and then calculates the diluted earnings per share on the adjusted results. To calculate the diluted earnings
per share, the Company shall, according to the following items, adjust the net profits of the current period which are
attributable to the shareholders of ordinary shares, and take the influence of the relevant income tax into consideration:
a. The interests of the diluted potential ordinary shares which have been recognized as expenses in the current period;
b. The gains or expenses to be brought about or to be incurred from the conversion of the diluted potential ordinary
shares
When calculating the diluted earnings per share, the weighted average number of the ordinary shares issued to the public
in the current period shall be the sum of the weighted average number of ordinary shares in calculating the basic earnings
per share and the weighted average number of increased ordinary shares on supposing that the diluted potential ordinary
shares convert into ordinary shares already issued.
When calculating the weighted average number of increased ordinary shares resulted from that the diluted potential
ordinary shares convert into ordinary shares already issued, the diluted potential ordinary shares issued in prior periods
shall be supposed to be converted at the beginning of the current period. The diluted potential ordinary shares issued in
the current period shall be supposed to be converted on the date of issuance.
In case the exercise prices of the share warrants and share options are lower than the average market price of the ordinary
shares of the current period, the dilution shall be taken into consideration. The dilution shall be taken into consideration
when an enterprise promises that the price for the repurchase of its shares provided in the contract is higher than the
average market price of the current period.
The diluted potential ordinary shares shall be charged to the diluted earnings per share based on the extent of dilution
according to the sequential order from the big to the small, until the diluted earnings per share to be the minimum.
Recalculation
If the number of ordinary shares issued to the public or of potential ordinary shares is increased because of the
distribution of stocks or dividends, the increase of capital converted by accumulation fund or share split-up, or is reduced
because of reverse split-up, but causing no affect on the amount of the owner's equities, an enterprise shall recalculate the
earnings per share in each presentation period in accordance with the number of post-adjustment shares.
In case the aforesaid changes occur during the period from the balance sheet date to the date on which the financial
reports are authorized for issue, the earnings per share in each presentation period shall be recalculated in the light of the
number of post-modulation shares.
In case any of the profits and losses of any previous year are retroactively modulated or restated in the light of the
Accounting Standards for Enterprises No. 28 - Changes of Accounting Policies, Estimates and Corrections of Errors, the
earnings per share during the period of presentation shall be recalculated.
（27）Segment reporting:
The Company shall determine report segments based on the business segments or regional segments. The business
segment means the dividable component available to provide a single or a group of products or labor services. This
component has undertaken the risks and compensations different from those of other components. The regional segment
means the dividable component available to provide the products or labor service within a given economic environment.
This component has undertaken the risks and compensations different from those of other components that provide
products and labor services within the other economic environments.
Where most incomes of business segment or regional segment belong to foreign transactions and satisfy one of the
following conditions, the incomes shall be recognized as those of report segment.
a. Segment income accounts for 10% or more of the total incomes.
b. The absolute amount of segment profits (losses) accounts for 10% or more of absolute amounts of total segment profit
amount or total segment loss amount, whichever is greater.
c. The segment asset of this segment accounts for 10% or more of the total amount of all segment assets.
The Company shall determine the major report form or secondary report form based on the different risks and12
compensations to disclose the segment information.
Note V. Tax
(1) The main tax categories and tax rates applicable to the company are as follows:
Tax Item Tax Base Tax Rate
Value-added tax Income from commodity sales 17%
Business tax Income from general labor service and
income from immoveable property 5%
Urban maintenance and
construction tax Paid VAT and business tax Subject to the tax regulations of the place where each
tax unit is located
Educational Surtax Paid VAT and business tax
Subject to the tax regulations of the place where each
tax unit is located
Corporate income tax Income tax payable
In the year of 2009, 20% for the companies
incorporated in Shenzhen; 15% for Shenzhen
Communication Technology, 25% for the companies
incorporated in other places; 17.5% for the
companies incorporated in Hong Kong, 15% for
Chongqing Qingjia
(2) Tax preference and approved document
*According to the Interim Measures for the Administration of Collection of Business Income Tax for Trans-regional
Business Operations, where a resident enterprise sets up a business institution or establishment without the qualification
of legal person across the regions within the territory of China, this resident enterprise shall be a consolidated taxpayer
enterprise, and shall be governed by the administrative measures for enterprise income tax, namely “uniform calculation,
level-by-level administration, pre-payment in place, consolidated settlement, and transfer to treasury”. These measures
shall be implemented as from the date of January 1, 2008.
In accordance with the measures mentioned above, the sales branches of the Company in all parts of the country shall, as
from the date of January 1, 2008, prepay the business income tax, and the Company shall make the uniform settlement in
the yearend.
On December 16, 2008, the wholly-owned subsidiary of the Company-Shenzhen Konka Telecommunications
Technology Co., Ltd. obtained the Certificate of High-Tech Enterprise jointly issued by Shenzhen Bureau of Science
Technology & Information, Shenzhen Financial Bureau, Shenzhen Municipal State Taxation Bureau, and Shenzhen
Municipal Local Taxation Bureau, valid for three years. In light of the relevant tax regulations, Shenzhen Konka
Telecommunications Technology Co., Ltd. would be entitled to the relevant preferential policies concerning the hi-tech
enterprise for three years in succession, and be levied the business income tax at the preferential tariff of 15%. On April
21, 2009, the reduction and exemption that Shenzhen Konka Telecommunications Technology Co., Ltd. is levied the
business income at the reduced rate of 15% has been kept on records by Nanshan Local Taxation, Shenzhen.
On 8 Oct. 2008, in accordance with BGSH [2008] No. 94 document “the reply concerning Boluo Konka Precision
Technology Co., Ltd. applying for the tax preference of “two-year exemption and three-year half””, National Taxation
Bureau of Boluo County Guangdong agreed with Boluo Konka Precision Technology Co., Ltd. to enjoy the tax
preference of “two-year exemption and three-year half” since 2008 (be exempt from enterprise income tax for the 2008
to 2009, allowed a fifty percent reduction in the 2010 to 2012).
On 11 Nov. 2002, in accordance with the reply concerning five foreign-investment enterprises such as Chongqing
Qingjia enjoying the preferential tax policies for the “Western Development Program” (YGSH [2002] No. 488
document), National Taxation Bureau of Chongqing agreed with Chongqing Qingjia to enjoy the preferential tax policies
for the “Western Development Program” in 2001 to 2010, a 15 percent preferential income tax will be levied.
Note VI. Notes to Major Financial Statements (the data mentioned below shall be referred to as
consolidated data unless otherwise specified statements)
Note 1. Monetary Funds
Category Currency Original Currency Amount Converted Exchange Rate Ending amount Beginning amount
Cash RMB 11,231.58 1.00 11,231.58 10,028.46
HKD 276.90 0.88 244.09 323.29
USD 9.16 6.83 62.58 44.60
EUR 10 9.64 96.41 ---
Sub-total 11,634.66 10,396.35
Bank deposit RMB 1,259,071,680.25 1.00 1,259,071,680.25 730,184,096.80
HKD 20,089,084.50 0.88 17,708,527.99 16,580,634.12
USD 21,913,710.29 6.83 149,712,277.33 88,294,678.5713
GBP 1.32 11.34 14.97 13.01
CAD 17,126.34 5.93 101,500.93 1,740,032.23
JPY 5,777,141.00 0.07 414,991.89 497,062.47
EUR 74,334.55 9.64 716,654.64 716,353.76
Sub-total 1,427,725,648.00 838,012,870.96
Other monetary fund RMB 1,896,064,193.00 1.00 1,896,064,193.00 1,228,229,226.77
Sub-total 1,896,064,193.00 1,228,229,226.77
Total 3,323,801,475.66 2,066,252,494.08
* As compared with the beginning balance of monetary funds, the ending balance of the monetary funds is increased by
RMB￥1,257,548,981.58, up 60.86%, mainly attributable to ① increase in fixed deposit due to that the Company
launched deposits from discount on acceptance bill transferred to the bank in the reporting period;② increase in the
pledged deposit because the Company launched the NDF combination business, which Renminbi deposit was pledged
for purpose of borrowing in dollars.
** The ending balances of other monetary funds amounting to RMB￥982,972,940.05 shall be pledged to secure NDF
US dollars loan.
***The cash as listed in the Statements of Cash Flow shall include:
Item Ending amount
Monetary fund 3,323,801,475.66
Less：Restricted hypothecated deposit 1,896,064,193.00
Cash balance for the year ended on 30 Jun. 2009 1,427,737,282.66
Less: Cash balance for the year of December 31,
2008 845,026,867.06
Net increase cash equivalents 582,710,415.60
Note 2 Notes Receivable
Category Ending amount Beginning amount
Banker’s acceptance bill 1,795,577,496.53 2,600,112,135.40
Commercial Acceptance Bill 8,085,721.72 2,750,000.00
Total 1,803,663,218.25 2,602,862,135.40
* In the ending notes receivable, RMB 1,242,831,489.21 shall be pledged to secure the line of credit of Bank of China
** As compared with beginning balance of notes receivable, the ending balance in notes receivable is reduced by RMB
￥799,198,917.15, down 30.70%, mainly attributable to increase in discount on notes receivable due to that the
Company launched deposits from discount on acceptance bill transferred to the bank in the reporting period.
Note 3 Accounts Receivable
(1) The consolidated data of accounts receivable is listed as follows:
a. The risk-based portfolio analysis is made on the ending balance of accounts receivable as follows:
Ending amount Beginning amount
Category Amount
Proportion to
total amount Bad debt reserve Amount
Proportion to
total amount
Bad debt
reserve
RMB % RMB RMB % RMB
I. Single amounts
significant 176,655,358.66 14.30 3,533,107.18 438,800,687.41 28.77 8,776,013.75
II. The portfolio with
insignificant single
amount has a greater
risk after combined on
the credit risk basis
177,618,598.29 14.38 166,874,874.95 169,741,255.65 11.13 159,610,940.00
III Other insignificant
881,087,914.98 71.32 27,349,460.13 916,499,935.74 60.10 30,393,608.51
Total
1,235,361,871.93 100 197,757,442.26 1,525,041,878.80 100 198,780,562.2614
Total amount of top 5
310,610,232.20 25.14 6,212,204.64 409,470,498.40 26.85 8,189,409.97
Account receivable
amount occupied by
related parties 8,220,402.00 0.67 164,408.04 19,859,002.24 1.3 396,374.24
* Recognition basis of accounts receivable with significant individual amount: the account receivable with ending
balance greater than RMB￥20,000,000.
** The recognition basis of the account receivables with insignificant single amount but with a greater risk after portfolio
on the credit risk basis: the account receivable with the ending balance less than RMB ￥20,000,000 and the age of three
or more.
*** In the ending balance of account receivable, there is no account that the Company owes to the shareholders who
hold the shares of 5% or more;
**** As compared with the beginning balance of accounts receivable, the ending balance is decreased by RMB
￥289,680,006.87, down by 18.99%, mainly attributable to decrease in balance of accounts receivable from key
distributor such as Suning Appliance and Gome.
*****Due to litigation, bankruptcy and other reasons, it is hard to collect the payment from some customers, thereby the
Company has withdrawn the special bad debt reserves based on 100% of account receivable.
****** As regards accounts receivable, the information about top 5 is as follows:
Category Amount
Proportion of
Withdrawing Bad Debt
Reserves
Reason
Nanjing Purchasing Center, Suning Appliance Co.,
Ltd.
108,633,134.21 2% Age within one year
Beijing Pangushi Investment Co., Ltd.
103,357,300.00 2% Pledged with properties
SpiceMobilesLtd.(India) 40,901,567.32 2% Age within one year
Nanning Gome Logistics Co., Ltd.
32,396,491.34 2% Age within one year
Shanghai Darunfa Co., Ltd. 25,321,739.33 2% Age within one year
Total 310,610,232.20
b. The ending balance of account receivable is analyzed on the age basis:
Ending amount Beginning amount
Age Amount
Proportion
to Total
Amount
Bad debt reserve Amount
Proportion to
Total
Amount
Bad debt reserve
RMB % RMB RMB % RMB
Within 1 year 1,018,441,422.64 82.44 20,414,555.54 1,310,854,747.33 85.96 29,894,646.94
1-2 years 10,554,911.54 0.85 2,734,813.57 17,648,012.57 1.16 2,843,936.34
2-3 years 28,746,939.46 2.33 7,733,198.20 26,797,863.25 1.75 6,431,038.98
Over 3 years 177,618,598.29 14.38 166,874,874.95 169,741,255.65 11.13 159,610,940.00
Total 1,235,361,871.93 100 197,757,442.26 1,525,041,878.80 100 198,780,562.26
(2) Accounts receivables of companies are listed as follows:
a. The ending balance of accounts receivable is analyzed based on the risk portfolio:
Ending amount Beginning amount
Category Amount
Proportion
to total
amount
Bad debt reserve Amount
Proportion to
total amount
Bad debt reserve
RMB % RMB RMB % RMB
I. Single amounts significant 256,492,457.94 25.85 647,929.83 481,797,364.65 39.41 6,235,264.51
II. The portfolio with insignificant
single amount has a greater risk after
combined on the credit risk basis
168,057,902.20 16.94 159,650,897.10 163,149,481.88 13.35 152,427,748.12
III Other insignificant 567,600,061.11 57.21 14,597,377.84 577,364,766.21 47.24 16,016,392.7415
Total 992,150,421.25 100 174,896,204.77 1,222,311,612.74 100.00 174,679,405.37
Total amount of top 5 423,442,785.76 42.68 3,327,027.30 436,699,982.50 35.73 6,122,263.97
Account receivable amount occupied
by related parties
258,288,208.75
26.03 164,408.04
191,264,046.41 15.65 396,374.24
* As regards accounts receivable, the information about top 5 is as follows:
Category Amount Proportion of Withdrawing
Bad Debt Reserves
Reason
Hongkong Konka Co. Ltd.-payment for goods 216,820,898.67 --- Related current
Nanjing Purchasing Center, Suning Appliance
Co., Ltd. 108,633,134.21 2% Age within one year
Dongguan Konka Tooling and Mould Co., Ltd. 40,270,522.21 --- Related current
Nanning Gome Logistics Co., Ltd. 32,396,491.34 2% Age within one year
Shanghai Darunfa Co., Ltd. 25,321,739.33 2% Age within one year
Total 423,442,785.76
b. The ending balance of account receivable is analyzed on the age basis:
Ending amount Beginning amount
Age Amount
Proportion
to Total
Amount
Bad debt reserve Amount
Proportion
to Total
Amount
Bad debt reserve
RMB % RMB RMB % RMB
Within 1 year 801,928,236.49 80.83 11,532,594.64 1,031,908,073.16 84.42 17,233,996.34
1-2 years 2,425,314.70 0.24 121,265.74 2,887,670.86 0.24 144,383.54
2-3 years 17,957,236.46 1.81 3,591,447.29 24,366,386.84 1.99 4,873,277.37
Over 3 years 169,839,633.60 17.12 159,650,897.10 163,149,481.88 13.35 152,427,748.12
Total 992,150,421.25 100 174,896,204.77 1,222,311,612.74 100 174,679,405.37
Note 4. Prepayment
Ending amount Beginning amount
Age Amount Proportion to total
amount Amount Proportion to total
amount
RMB % RMB %
Within 1 year 128,565,860.09 92.98 241,568,633.96 93.27
1-2 years 4,446,193.21 3.22 545,713.77 0.21
2-3 years 677,977.44 0.49 11,879,806.39 4.59
Over 3 years 4,583,344.08 3.31 4,998,180.61 1.93
Total 138,273,374.82 100 258,992,334.73 100
* In the ending balance of prepayment, there is no account that the Company owes to the shareholders who hold the
shares of 5% or more.
**As compared with the beginning balance of prepayment, the ending balance is decreased by RMB￥120,718,959.91,
down 46.61%, mainly attributable to: ① Prepayment for Land Purchases amounting to RMB ￥54,729,792.00 by
Kunshan Konka Electronic Co., Ltd. (a wholly-owned subsidiary of the Company) at the beginning of the year, while the
said payment is transferred into intangible assets due to that certificate of the land use right was completed in the
reporting period; ② decrease in advance payment for materials over the last period.
Note 5. Interests receivable
Items Ending amount Beginning amount16
NDF business combination
- Interest income from RMB deposit pledge 21,619,461.69 19,905,867.09
Total 21,619,461.69 19,905,867.09
Note 6. Other Accounts Receivable
(1) The consolidated data of other accounts receivables is listed as follows:
a. The ending balance of other accounts receivable is analyzed on the portfolio risk:
Ending amount Beginning amount
Category Amount
Proportion
to Total
Amount
Bad debt reserve Amount
Proportion
to Total
Amount
Bad debt reserve
RMB % RMB RMB % RMB
I. Single amounts significant --- --- --- --- --- ---
II. The portfolio with insignificant
single amount has a greater risk
after combined on the credit risk
basis
26,856,270.82 32.81 9,373,893.11 18,140,475.47 19.47 9,367,264.16
III Other insignificant 54,996,423.87 67.19 1,859,853.84 75,034,212.62 80.53 2,507,661.05
Total 81,852,694.69 100 11,233,746.95 93,174,688.09 100 11,874,925.21
Total amount of top 5 13,257,923.63 16.20 457,283.15 23,959,812.64 25.71 360,037.79
Account receivable amount
occupied by related parties 3,901,748.49 4.77 1,367,089.69 3,388,543.73 3.64 1,359,305.46
* Recognition basis of accounts receivable with significant individual amount: the account receivable with ending
balance greater than RMB￥10,000,000.
** The recognition basis of the account receivables with insignificant single amount but with a greater risk after portfolio
on the credit risk basis: the account receivable with ending balance less than RMB ￥10,000,000 and the age of three or
more.
*** In the ending balance of other receivables, there is no account that the Company owes to the shareholders who hold
the shares of 5% or more;
**** As compared with the beginning balance of other receivables, the ending balance is decreased by RMB
￥11,321,993.40, down by 12.15%.
****** As regards accounts receivable, the information about top 5 is as follows:
Category Amount Proportion of Withdrawing Bad
Debt Reserves
Reason
Galaxy International Plaza 3,734,391.00 5% Age within one year
Sanqing Real Estate Co., Ltd 2,669,765.00 5% Age within one year
OCT Water and Power Company 2,591,610.98 2% Age within one year
Administration of Social Insurance of
Shenzhen Municipality 2,162,156.65 2% Age within one year
Industrial and Commercial Bank of
China, Beijing Branch, Special
Assets Custody Account
2,100,000.00 2%
Age within one year
Total 13,257,923.63
b. The ending balance of other accounts receivable is analyzed on the age basis.
Ending amount Beginning amount
Age Amount Proportion to
total amount Bad debt reserve Amount Proportion to
total amount Bad debt reserve
RMB % RMB RMB % RMB
Within 1 year 49,672,569.27 60.69 937,489.24 67,899,080.81 72.87 1,410,568.36
1-2 years 957,443.67 1.17 47,722.19 2,199,749.19 2.36 110,016.16
2-3 years 4,366,410.93 5.33 874,642.41 4,935,382.62 5.30 987,076.53
Over 3 years 26,856,270.82 32.81 9,373,893.11 18,140,475.47 19.47 9,367,264.16
Total 81,852,694.69 100 11,233,746.95 93,174,688.09 100 11,874,925.21
(2) As regards other accounts receivable, information of companies is listed as follows:17
a. The ending balance of other accounts receivable is analyzed on the risk portfolio basis:
Ending amount Beginning amount
Category Amount
Proportion
to total
amount
Bad debt
reserve Amount 占总额
比例 Bad debt reserve
RMB % RMB RMB % RMB
I. Single amount significant 876,789,388.37 90.68 --- 982,718,174.28 90.94 ---
II. The portfolio with
insignificant single amount has
a greater risk after combined on
the credit risk basis
26,188,996.51 2.71 8,868,755.21 20,926,212.94 1.94 8,888,078.42
III. Others insignificant 63,890,903.81 6.61 1,508,210.96 76,962,545.98 7.12 2,004,107.50
Total 966,869,288.69 100 10,376,966.17 1,080,806,933.20 100 10,892,185.92
Total amount of top 5 753,150,793.17 77.90 --- 799,080,346.45 73.93 ---
Account receivable amount
occupied by related parties 900,377,776.81 93.12 1,367,089.69 1,011,800,981.34 93.62 1,359,305.46
* In the ending balance of other receivables, there is no account that the Company owes to the shareholders who hold the
shares of 5% or more;
** As compared with the beginning balance of other receivables, the ending balance is decreased by RMB
￥113,937,644.51, down by 10.54%, mainly attributable to: decrease in call loans between the Company and its
subsidiaries.
*** As regards other receivables, the information about top 5 is as follows:
Category Amount Proportion of Withdrawing Bad
Debt Reserves
Reason
Video & Communication Systems
Engineering Co., Ltd 391,708,074.13 --- Related party
Dongguan Konka Electronic Co., Ltd. 143,636,328.50 --- Related party
Dongguan Konka Tooling and Mould
Co., Ltd. 124,967,709.36 --- Related party
Shenzhen Konka Household
Appliances Co., Ltd. 47,922,620.00 --- Related party
Shenzhen Konka Information Network
Co., Ltd. 44,916,061.18 --- Related party
Total 753,150,793.17
b. The ending balance of other accounts receivable is analyzed on the age basis:
Ending amount Beginning amount
Age Amount
Proportion
to total
amount
Bad debt reserve Amount
Proportion
to total
amount
Bad debt reserve
RMB % RMB RMB % RMB
Within 1 year 248,844,346.39 25.74 793,989.95 295,400,583.13 27.34 1,137,215.39
1-2 years 156,998,717.85 16.24 43,156.27 187,434,930.02 17.34 43,072.15
2-3 years 267,587,587.64 27.68 671,064.74 294,862,327.54 27.28 823,819.94
Over 3 years 293,438,636.81 30.35 8,868,755.21 303,109,092.51 28.04 8,888,078.44
Total 966,869,288.69 100 10,376,966.17 1,080,806,933.20 100 10,892,185.92
Note 7. Inventory and Inventory Falling Price Reserves
(1) Details are listed as below:
Ending amount Beginning amount
Category Book balance Book value Book balance Book value
Goods on hand 1,666,336,739.27 1,383,974,858.99 1,834,413,311.73 1,552,673,168.57
Raw materials 1,302,898,959.59 1,233,139,165.75 940,850,881.06 869,479,520.77
Turnover materials 6,492,576.10 6,301,838.28 10,641,253.45 10,450,515.6318
Goods in transit 2,822,229.26 2,822,229.26 2,667,697.02 2,667,697.02
Goods in process 155,415,095.31 150,251,663.23 143,669,397.22 138,505,965.14
Total 3,133,965,599.53 2,776,489,755.51 2,932,242,540.48 2,573,776,867.13
(2) Falling price reserves of inventory
Decrease in the current period
Falling price
reserves of
inventory
Beginning amount
Increase in the current
period
Carry-back
amount because
of picking up of
assets value
Writing off Total
Ending amount
Goods on hand 281,740,143.16 621,737.12 --- --- --- 282,361,880.28
Raw materials 71,371,360.29 1,111,293.85 363,634.42 2,359,225.88 2,722,860.30 69,759,793.84
Turnover
materials
190,737.82 --- --- --- --- 190,737.82
Goods in
process
5,163,432.08 --- --- --- --- 5,163,432.08
Total 358,465,673.35 1,733,030.97 363,634.42 2,359,225.88 2,722,860.30 357,475,844.02
Note 8. Available-for-sale Financial Assets
Item Ending amount Beginning amount
1.Available-for-sale bonds --- ---
2.Available-for-sale equity
instrument
---
---
3.Stock investment 10,495,702.50 9,756,649.50
Total 10,495,702.50 9,756,649.50
* At the end of period, the Company has still held *ST Qiulin share and Vanke share, and the measurement change in
ending fair value has been recorded in the capital reserves.
Note 9. Long-term Equity Investments
(1) Details about long-term equity investment are listed as below:
Ending amount Beginning amount
Item
Book Balance
Depreciation
Reserve
Carrying Value Book Balance
Depreciation
Reserve
Carrying Value
Long-term equity
investment
Including: investment for
affiliated companies
22,435,083.44 1,400,000.00 21,035,083.44 23,010,338.75 1,400,000.00 21,610,338.75
Other equity investment --- --- --- --- --- ---
Other long-term
investment
--- --- --- --- --- ---
Total 22,435,083.44 1,400,000.00 21,035,083.44 23,010,338.75 1,400,000.00 21,610,338.75
a. Investment for affiliated companies
I．Equity investment calculated using equity method
Name of Invested Entity Proportion
Initial
Investment Cost
Beginning
balance
Increase
(decrease)
Investment
Increased/decreased
Amount of Current
Equity
Accumulative
Increased/decreased
Amount of Equity
Ending balance
Shenzhen Konka Energy
Technology Co., Ltd
30% 5,983,965.19 3,649,728.08 --- --- (2,334,237.11) 3,649,728.08
Shenzhen Dekon Electronics Co.,
Ltd
30% 3,000,000.00 7,137,424.83 --- --- 4,137,424.83 7,137,424.83
Chongqing Jingkang Plastic
Product Co., Ltd.
31.25% 3,750,000.00 2,338,185.84 --- (575,255.31) (1,987,069.47) 1,762,930.53
Shenzhen Julong Optoelectronics
Co., Ltd
20% 2,000,000.00 2,000,000.00 --- --- --- 2,000,000.00
Total 14,733,965.19 15,125,338.75 --- (575,255.31) (183,881.75) 14,550,083.44
II．Equity investment calculated by cost method19
Name of Invested Entity
Proportion in
Invested Entity
Initial Investment
Cost
Beginning balance
Increase for the
current period
Decrease for
the current
period
Ending balance
Shenzhen Make-plan Investment
Development Co. , Ltd.
1% 485,000.00 485,000.00 --- --- 485,000.00
Feihong Electronics Co. , Ltd. 8.33% 1,300,000.00 1,300,000.00 --- --- 1,300,000.00
Shenzhen Association of Enterprises
with Foreign Investment
--- 100,000.00 100,000.00 --- --- 100,000.00
Shanlian Information Technology
Project Co., Ltd
9.62% 5,000,000.00 5,000,000.00 --- --- 5,000,000.00
Shnezhen Zhongcailian Technology
Co., Ltd *
10% 1,000,000.00 1,000,000.00 --- --- 1,000,000.00
Total 7,885,000.00 7,885,000.00 --- --- 7,885,000.00
b.Information about the change in depreciation reserve
Name of Invested Entity Beginning amount
Increase for the current
period
Write-off for the current
period
Ending amount
Feihong Electronics Co. , Ltd. 1,300,000.00 --- --- 1,300,000.00
Shenzhen Association of Enterprises with Foreign
Investment 100,000.00 --- --- 100,000.00
Guangzhou Huadou Longfeng Jianzhi Real Estate
Co., Ltd. --- --- --- ---
Total 1,400,000.00 --- --- 1,400,000.00
(2) As regards long-term investment company, the details are listed as below:
Ending amount Beginning amount
Item
Book Balance
Depreciation
Reserve
Carrying Value Book Balance
Depreciation
Reserve
Carrying Value
Long-term equity
investment
Including: Investment
for subsidiaries
1,174,259,154.56 33,232,484.69 1,141,026,669.87 1,174,259,154.56 33,232,484.69 1,141,026,669.87
investment for affiliated
companies
9,885,000.00 1,400,000.00 8,485,000.00 9,885,000.00 1,400,000.00 8,485,000.00
Other equity
investment
--- --- --- --- --- ---
Other long-term
investment
--- --- --- --- --- ---
Total 1,184,144,154.56 34,632,484.69 1,149,511,669.87 1,184,144,154.56 34,632,484.69 1,149,511,669.87
a. Investment for subsidiaries
Name of Invested Entity
Proportion
in Invested
Entity
Initial Investment
Cost
Beginning balance
Increase for the
current period
Decrease for the
current period
Ending balance
Dongguan Konka Electronic Co.,
Ltd.
100% 274,783,988.91 274,783,988.91 --- --- 274,783,988.91
Hong Kong Konka Co., Ltd. 100% 781,828.61 781,828.61 --- --- 781,828.61
Shenzhen Konka Household
Appliances Co., Ltd.
51% 10,732,484.69 10,732,484.69 --- --- 10,732,484.69
Shenzhen Shushida Electronic Co.,
Ltd.
75% 31,500,000.00 31,500,000.00 --- --- 31,500,000.00
Shenzhen Konka Telecommunications
Technology Co., Ltd.
75% 90,000,000.00 90,000,000.00 --- --- 90,000,000.00
Anhui Konka Electronic Co., Ltd. 78% 122,780,937.98 122,780,937.98 --- --- 122,780,937.98
Chongqing Qingjia Electronic Co.,
Ltd.
30% 4,500,000.00 --- --- --- ---
Mudanjiang Konka Industrial Co.,
Ltd.
60% 36,000,000.00 36,000,000.00 --- --- 36,000,000.00
Chongqing Konka Electronic Co.,
Ltd.
60% 27,000,000.00 27,000,000.00 --- --- 27,000,000.00
Shenzhen Konka Plastic Manufacture
Co., Ltd.
49% 4,655,000.00 4,655,000.00 --- --- 4,655,000.0020
Shaanxi Konka Electronic Co., Ltd. 45% 44,869,809.80 44,869,809.80 --- --- 44,869,809.80
Shenzhen Konka Video &
Communication Engineering Co., Ltd
60% 9,000,000.00 9,000,000.00 --- --- 9,000,000.00
Shenzhen Konka Information
Network Co., Ltd.
75% 22,500,000.00 22,500,000.00 --- --- 22,500,000.00
Chongqing Konka Automotive
Electronic Co., Ltd.
57% 17,100,000.00 17,100,000.00 --- --- 17,100,000.00
KONKA AMERICA,INC. 100% 8,062,500.00 8,062,500.00 --- --- 8,062,500.00
Anhui Konka Household Appliances
Co., Ltd.
92.97% 74,981,122.07 74,981,122.07 --- --- 74,981,122.07
Shenzhen Konka Electron Fittings
Technology Co., Ltd.
75% 48,750,000.00 48,750,000.00 --- --- 48,750,000.00
Konka (Europe) Electronic Co., Ltd. 100% 261,482.50 261,482.50 --- --- 261,482.50
Konka (Nanhai) Development Center 100% 500,000.00 500,000.00 --- --- 500,000.00
Kunshan Konka Electronic Co., Ltd. 100% 350,000,000.00 350,000,000.00 --- --- 350,000,000.00
Total 1,178,759,154.56 1,174,259,154.56 --- --- 1,174,259,154.56
b. Investment for affiliated enterprises
I．Equity investment calculated using equity method
Name of Invested Entity Proportion
Initial Investment
Cost
Beginning
balance
Increased
(reduced)
Investment
Increased/decreased
Amount of Current
Equity
Accumulative
Increased/decreased
Amount of Equity
Ending balance
Shenzhen Julong
Optoelectronics Co., Ltd 20% 2,000,000.00 2,000,000.00 --- --- --- 2,000,000.00
II．Equity investment calculated at cost basis.
Name of Invested Entity
Proportion in
Invested Entity
Initial Investment
Cost
Beginning balance Current Increase
Current
Decrease
Ending balance
Shenzhen Make-plan Investment
Development Co. , Ltd.
1% 485,000.00 485,000.00 --- --- 485,000.00
Feihong Electronics Co. , Ltd. 8.33% 1,300,000.00 1,300,000.00 --- --- 1,300,000.00
Shenzhen Association of Enterprises
with Foreign Investment.
--- 100,000.00 100,000.00 --- --- 100,000.00
Shanlian Information Technology
Project Co., Ltd
9.61525% 5,000,000.00 5,000,000.00 --- --- 5,000,000.00
Shnezhen Zhongcailian Technology
Co., Ltd *
10% 1,000,000.00 1,000,000.00 --- --- 1,000,000.00
Total 7,885,000.00 7,885,000.00 --- --- 7,885,000.00
c. Information about the change in depreciation reserve
Name of Invested Entity Beginning amount Current Increase Current Write-off Ending amount
Feihong Electronics Co. , Ltd. 1,300,000.00 --- --- 1,300,000.00
Shenzhen Association of Enterprises with Foreign
Investment. 100,000.00 --- --- 100,000.00
Guangzhou Huadou Longfeng Jianzhi Real Estate
Co., Ltd. --- --- --- ---
Shenzhen Konka Information Network Co., Ltd. 10,732,484.69 --- --- 10,732,484.69
Shenzhen Konka Household Appliances Co., Ltd. 22,500,000.00 --- --- 22,500,000.00
Total 34,632,484.69 --- --- 34,632,484.69
Note 10. Fixed Assets and Accumulated Depreciation
Original Value of Fixed
Assets Beginning balance Current Increase Current Decrease Ending balance
House and Building 1,078,776,032.56 2,202,925.82 4,501,090.03 1,076,477,868.35
Machinery equipment 1,070,851,747.47 17,680,217.53 6,678,729.66 1,081,853,235.34
Electronic equipment 302,901,787.04 6,227,701.40 3,181,058.24 305,948,430.20
Transportation equipment 60,967,592.94 3,082,428.53 5,760,858.64 58,289,162.8321
Other equipment 189,489,056.34 5,607,825.35 1,166,245.32 193,930,636.37
Total 2,702,986,216.35 34,801,098.63 21,287,981.89 2,716,499,333.09
Accumulated
Depreciation Beginning balance Current Increase Current Decrease Ending balance
House and Building 237,613,613.11 13,650,038.77 2,280,030.78 248,983,621.10
Machinery equipment 698,674,946.49 29,686,293.86 4,558,359.77 723,802,880.58
Electronic equipment 231,854,203.97 9,550,733.17 1,451,419.59 239,953,517.55
Transportation equipment 40,086,223.28 3,069,175.09 3,237,448.03 39,917,950.34
Other equipment 142,293,297.25 5,930,826.84 2,194,952.72 146,029,171.37
Total 1,350,522,284.10 61,887,067.73 13,722,210.89 1,398,687,140.94
Depreciation Reserve Beginning balance Current Increase Current Decrease Ending balance
House and Building 1,247,805.91 --- --- 1,247,805.91
Machinery equipment 4,270,167.58 --- --- 4,270,167.58
Electronic equipment 554,364.05 --- --- 554,364.05
Transportation equipment 863,868.59 --- --- 863,868.59
Other equipment 1,349,827.96 --- --- 1,349,827.96
Total 8,286,034.09 --- --- 8,286,034.09
Carrying Value Beginning balance Ending balance
House and Building 839,914,613.54 826,246,441.34
Machinery equipment 367,906,633.40 353,780,187.18
Electronic equipment 70,493,219.02 65,440,548.60
Transportation equipment 20,017,501.07 17,507,343.90
Other equipment 45,845,931.13 46,551,637.04
Total 1,344,177,898.16 1,309,526,158.06
* Construction work in progress amounting to RMB￥2,404,788.26 is transferred to the increased amount of fixed assets
in the current period.
Note 11.Construction Work in Progress
Name of Project
Beginning
amount
Current Increase
Amount
Current Amount
Transferred to Fixed
Assets
Current Amount of
Other Decreases
Ending amount
Source
Purchase of SMT
equipment as an agent
257,255.90 --- --- --- 257,255.90 Self-raised
Guankang LCM15-32
“module test wire”
2,916,000.00 --- --- --- 2,916,000.00
Self-raised
Purification project for
Guankang LCM test wire
398,100.00 862,550.00 --- --- 1,260,650.00
Self-raised
HD-SDI project 2,620,319.88 --- --- --- 2,620,319.88 Self-raised
Plant project of Anhui
Konka
3,428,106.00 1,869,363.93 --- 497,956.08 4,799,513.85 Self-raised
Production base project of
Kunshan Konka
--- 18,575,515.48 --- --- 18,575,515.48
Self-raised
Konka R&D Building 11,966,915.83 12,603,440.83 --- --- 24,570,356.66 Self-raised
Other 5,744,915.50 4,759,702.16 2,404,788.26 --- 8,099,829.40 Self-raised
Total 27,331,613.11 38,670,572.40 2,404,788.26 497,956.08 63,099,441.17
Note 12. Intangible Assets22
Items Beginning balance Current increase Current decrease Ending balance
I. Total original price
112,408,709.26 110,842,804.59 1,167,596.06 222,083,917.79
1. Land use right 71,223,144.62 108,479,557.00 --- 179,702,701.62
2. Foreign trademark
registration expenses 3,037,299.61 --- --- 3,037,299.61
3. Patent and know-how 31,708,543.74 28,000.00 --- 31,736,543.74
4. Other 6,439,721.29 2,335,247.59 1,167,596.06 7,607,372.82
II. Accumulated amortization
amount 40,283,727.05 3,946,117.72 22,949.98 44,206,894.79
1. Land use right 12,070,941.21 1,081,500.34 --- 13,152,441.55
2. Foreign trademark
registration expenses 2,374,704.40 97,380.58 --- 2,472,084.98
3. Patent and know-how 21,981,142.21 2,093,472.23 --- 24,074,614.44
4. Other 3,856,939.23 673,764.57 22,949.98 4,507,753.82
III. Total accumulated
amount of intangible assets
depreciation reserve 2,901,082.61 2,901,082.61
1. Land use right --- ---
2. Foreign trademark
registration expenses --- ---
3. Patent and know-how 2,901,082.61 2,901,082.61
4. Other --- ---
IV. Total book value of
intangible assets 69,223,899.60 174,975,940.39
1. Land use right 59,152,203.41 166,550,260.07
2. Foreign trademark
registration expenses 662,595.21 565,214.63
3. Patent and know-how 6,826,318.92 4,760,846.69
4. Other 2,582,782.06 3,099,619.00
* Of the ending balance of intangible assets, the land use right amounting to RMB ￥11,211,807.09 has been mortgaged
to secure the bank loan.
Note 13. Goodwill
Items Source Beginning balance Current increase Current decrease Ending balance
Acquisition of equities
of subsidiaries Acquisition of
equity 3,943,671.53 --- --- 3,943,671.53
Total 3,943,671.53 --- --- 3,943,671.53
* after testing, the Company considered that there existed no impairment on goodwill at the end of reporting period,
therefore, reserve for impairment did not be withdrawn.
Note 14. Long-term Deferred Expenses
Category Beginning balance Current increase Current amortization
Current
transfer out Ending balance
Decoration 8,212,792.36 2,530,287.69 1,702,328.92 --- 9,040,751.13
Special shoppe 868,232.52 224,737.27 622,999.18 --- 469,970.61
Software license 1,785,006.32 600.04 281,228.84 --- 1,504,377.52
Development
platform expenses 5,539,130.07 --- 920,075.76 --- 4,619,054.3123
Module expenses 601,110.83 --- 96,026.64 --- 505,084.19
Prototype 905,788.61 --- 416,556.71 --- 489,231.90
Other 1,985,063.41 2,534,389.10 1,105,797.06 7,610.17 3,406,045.28
Total 19,897,124.12 5,290,014.10 5,145,013.11 7,610.17 20,034,514.94
Note 15. Deferred income tax assets
Items Ending amount Beginning amount
1. Bad debt reserve for accounts
receivable 35,281,294.24 35,245,682.20
2. Bad debt reserve for other receivables 2,186,325.48 2,186,070.69
3. Reserve for falling price of
inventory 53,798,122.46 53,809,700.41
4. Change in fair value of
available-for-sales financial assets 163,209.11 311,019.71
5. Impairment reserve for long-term
equity investment 280,000.00 280,000.00
6. Other 665,627.10 161,070.00
Total 92,374,578.39 91,993,543.01
Note 16. Assets Depreciation Reserve
Items Beginning balance Current withdrawn
amount Current decrease Ending balance
Carry back Writer-off
1. Bad debt reserve 210,655,487.47 1,110,490.15 6,231,069.80 (3,456,281.39) 208,991,189.21
2. Reserve for falling price of
inventory 358,465,673.35 1,733,030.97 363,634.42 2,359,225.88 357,475,844.02
3. Impairment reserve for
long-term equity investment 1,400,000.00 --- --- --- 1,400,000.00
4. Impairment reserve for fixed
assets 8,286,034.09 --- --- --- 8,286,034.09
5. Impairment reserve for
intangible assets 2,901,082.61 --- --- --- 2,901,082.61
Total 581,708,277.52 2,843,521.12 6,594,704.22 （1,097,055.51） 579,054,149.93
Note 17. Short-term Loan
Type Ending amount Beginning amount
Credit loan --- ---
Collateral loan * 12,000,000.00 11,500,000.00
Pledged loan 1,855,811,259.60 1,197,352,457.29
Guaranteed loan --- 137,523,153.49
Total 1,867,811,259.60 1,346,375,610.78
* As for pledged object for collateral loan, please refer to Note 12 for details.
** Pledged loan shall be a loan in US dollar gained by the Company through pledging bank deposit in NDF portfolio
business carried out by the Company. As for RMB deposit pledged, please refer to Note 1 for details.
*** Guaranteed loan is the loan of USD 20 million entered into by Konka (Hong Kong) Co., Ltd. (the subsidiary of the
Company) and Bank of China (Hong Kong) Limited, which Minsheng Bank Shenzhen Branch issued a letter of
guarantee to Bank of China (Hong Kong) Limited. The said letter of guarantee is within the line of credit entered into
between the Company and Minsheng Bank Shenzhen Branch. The said guaranteed loan had been paid off in the24
reporting period.
Note 18.Tradable Financial Liabilities
Type Ending amount Beginning amount
Derivative financial instruments (NDF) 10,303,877.31 12,481,880.16
Total 10,303,877.31 12,481,880.16
* The closing balance of derivative financial instruments came from the ending profit and loss from change in fair value
of NDF business as a way of foreign exchange hedge, which was carried out due to that the Company and Shenzhen
Konka Telecommunications Technology Co., Ltd. (a subsidiary company of the Company) adopted the irrevocable
usance contracts to avoid the risk of exchange rate fluctuations.
Note 19. Notes Payable
Type Ending amount 一年内将到期的金额
Banker’s acceptance bill 2,521,140,057.15 2,521,140,057.15
Commercial Acceptance Bill --- ---
Total 2,521,140,057.15 2,521,140,057.15
* There is no account that the Company owes to the shareholders who hold the shares of 5% or more.
Note 20. Accounts Payable
Ending amount Beginning amount
Age Amount Proportion to total
amount Amount Proportion to total
amount
RMB % RMB %
Within 1 year 1,501,972,508.24 96.70 1,514,983,692.13 96.39
1-2 years 16,234,069.73 1.05 1,957,755.70 0.12
2-3 years 1,066,953.91 0.07 14,876,183.29 0.95
Over 3 years 34,024,153.38 2.19 39,943,710.86 2.54
Total 1,553,297,685.26 100 1,571,761,341.98 100
* There is no account that the company owes to the shareholders who hold 5% or more of voting right.
Note 21. Advance receipts
In the ending balance amounting to RMB￥197,966,561.12, there is no account that the Company owes to the
shareholders (holding 5% or more).
As compared with the beginning balance of advance receipts, the ending balance is increased by RMB￥18,590,050.62,
up 10.36%, mainly attributable to: reduction in advance receipts at the beginning of reporting period due to delivery
settlement.
Note 22. Staff Remuneration Payables
Items Beginning balance Current Amount
Incurred Current Payment Ending balance
I. Wages, bonuses, allowances and
subsidies 130,898,023.19 342,562,934.29 385,663,718.56 87,797,238.92
II. Welfare expenses for staffs 8,424,616.20 23,477,288.93 22,842,006.79 9,059,898.34
III. Social insurances 16,946,381.77 54,093,071.37 48,687,364.55 22,352,088.59
IV. Housing accumulation fund 1,471,228.22 2,122,696.78 2,278,809.00 1,315,116.00
V. Staff education expenses and labor
union expenses 6,641,064.35 4,584,385.20 5,588,015.31 5,637,434.24
VI. Non-monetary welfares --- --- --- ---
VII.Compensations for the
cancellation of the labor relationship 1,215,207.80 2,358,180.83 3,573,388.63 ---
Ⅷ.Others 3,241,973.43 12,125,066.22 11,805,115.59 3,561,924.06
Including: share-based payment
settled in cash --- --- --- ---25
Total 168,838,494.96 441,323,623.62 480,438,418.43 129,723,700.15
* The ending balance of staff welfare expenses shall be the staff welfare and bonus funds withdrawn by the
foreign-invested enterprises based on 5% of after-tax profits.
Note 23. Tax Payable
Taxation Ending amount Beginning amount
Value added tax payable (115,522,990.50) (4,626,297.30)
Sales tax 810,801.82 587,222.55
City maintenance and
construction tax (799,209.64) 314,342.02
Corporate income tax 438,785.35 16,615,583.47
Individual income tax 980,753.41 521,258.50
Educational Surtax 198,484.02 151,855.59
Other 762,874.60 700,010.29
Total (113,130,500.94) 14,263,975.12
* Due to amount purchased has increased in the reporting period, the ending balance of VAT has a growth by a big
margin over the same period of last year.
Note 24. Interests Payable
Items Ending amount Beginning amount
NDF business combination
- Interest expense from USD loan 8,076,421.29 8,247,223.62
Total 8,076,421.29 8,247,223.62
Note 25. Other Payables
Ending amount Beginning amount
Age Amount Proportion to total
amount Amount Proportion to total
amount
RMB % RMB %
Within 1 year 500,880,629.49 90.48 484,899,369.33 91.92
1-2 years 17,783,997.00 3.21 16,383,775.50 3.11
2-3 years 14,581,828.63 2.63 6,771,149.02 1.28
Over 3 years 20,352,507.04 3.68 19,480,942.46 3.69
Total 553,598,962.16 100 527,535,236.31 100
Note 26. Deferred income
Item Ending amount Beginning amount
Government’ grant for pure flat color TV R&D project 2,932,899.19 2,932,899.19
Government’ grant for LCD TV hi-tech industrialization demonstration project 581,583.33 581,583.33
Aid funds for key project of “Konka Logistics Information System” enterprise
informationization 689,200.00 689,200.00
The fifth batch of industrial technical research and development 1,000,000.00 1,000,000.00
Foundation for scientific and technological innovation 39,000.00 36,000.00
Government’s grant for industrialization project of conditional-access-separation
digital television receiver 7,150,000.00 7,150,000.00
Government’s grant for industrialization project of LCOS digital projector and
LCOS projector 478,333.33 478,333.33
Special technical transformation funds for treasury bond 4,826,300.00 4,826,300.00
Financial funds of financial bureau for technical innovation project- electrojet
control system 3,000,000.00 3,000,000.0026
Project funds for supply chain management information system 4,500,000.00 1,500,000.00
IPV6 HDTV payment of infrastructure office of financial bureau 3,050,720.44 3,050,720.44
HDTV production line construction 1,600,000.00 1,600,000.00
Industrialization project of auto motor fuel electrojet control system 883,333.33 883,333.33
Industry funds for flat plate display 2008 7,000,000.00 7,000,000.00
Digital TV patent pool- technical service platform for digital audio/video
generality 50,000.00 1,000,000.00
R&D and industrialization for digital products to support network 1,600,000.00 2,000,000.00
Innovative capability project of technical center 3,850,000.00 3,850,000.00
Research funds 1,000,000.00 1,000,000.00
Subsidize for R&D center 3,000,000.00 ---
R&D of new display technology such as LCM 10,000,000.00 ---
Interactive DTV based ground international transmission 500,000.00 ---
Industrialization projects of large size LCM 1,000,000.00 ---
IPv6-based multi-mode hand-hold and on-vehicle multimedia terminal 1,000,000.00 1,000,000.00
Total 59,731,369.62 43,578,369.62
Note 27. Deferred income tax liabilities
Item Ending amount Beginning amount
Change in fair value of available-for-sale
financial assets --- ---
Other 563,067.21 563,067.21
Total 563,067.21 563,067.21
Note 28. Share Capital
Increase/decrease for the current period
Item
Beginning amount
Rationed
shares
Bonus
shares
Capital
Reserves
Transferred to
Shares
Additional
issue
Other Subtotal
Ending amount
I. Non-circulation shares
I. Circulation share
subject to trading
moratorium
I. Circulation share
subject to trading
moratorium
1. Sponsor’s shares 198,381,940.00 --- --- --- --- --- --- 198,381,940.00
Including: Shares held by the
State
198,381,940.00 --- --- --- --- --- --- 198,381,940.00
2. Non-sponsor’s share 6,234.00 --- --- --- -1,284 -1,284 4,950.00
Including: Shares held by
domestic corporation
--- --- --- --- --- --- --- ---
Shares held by foreign
corporation
--- --- --- --- --- --- --- ---
Shares held by domestic
natural person
6,234.00 --- --- --- --- -1,284 -1,284 4,950.00
Total of noncirculation shares 198,388,174.00 --- --- --- --- -1,284 -1,284 198,386,890.00
II. Circulated shares
II. Circulation share
not subject to trading
moratorium
II. Circulation share
not subject to trading
moratorium
1. Domestically listed Renminbi
common share
599,908,726.00 --- --- --- --- - 1,284 1,284 599,910,010.00
2. Domestically listed foreign
share
405,675,804.00 --- --- --- --- --- --- 405,675,804.00
Total circulated shares 1,005,584,530.00 --- --- --- --- 1,284 1,284 1,005,585,814.00
III. Total shares 1,203,972,704.00 --- --- --- --- --- --- 1,203,972,704.00
*The beginning share capital has been verified by HDYZ [2009] No. B28 Capital Verification Report as made by BDO.27
Guangdong Dahua Delu CPA, LLP.
Note 29. Capital Reserve
Items Beginning amount Current increase Current decrease Ending amount
Share premium 1,210,484,700.00 --- --- 1,210,484,700.00
Other capital reserve 45,653,595.21 591,242.40 --- 46,244,837.61
Total 1,256,138,295.21 591,242.40 --- 1,256,729,537.61
* For the main reasons for decrease in other capital reserves of the Company is due to change in fair value of
available-for-sale financial assets.
Note 30. Surplus Reserves
Items Beginning amount Current increase Current decrease Ending amount
Statutory surplus reserves 550,834,268.25 --- --- 550,834,268.25
Arbitrary surplus reserves 254,062,265.57 --- --- 254,062,265.57
Total 804,896,533.82 --- --- 804,896,533.82
Note 31. Retained Profit
Note 32. Operating Revenue and Operating Cost
(1) The details about operating revenue and operating cost are listed as follows:
Current Last period
Item Operating revenue Operating cost Operating revenue Operating cost
1. Income from main
operation 5,107,148,120.78 4,155,707,059.99 5,521,679,310.83 4,516,853,106.48
2. Other operating
revenue 64,851,907.42 36,013,655.03 98,846,675.33 63,849,950.56
Total 5,172,000,028.20 4,191,720,715.02 5,620,525,986.16 4,580,703,057.04
(2) The proportion of total sales revenues of top 5 customers of the Company in the total sales revenues are listed as
below:
Items Current Last period
Total amount of sales revenue top 5
customers 794,197,206.64 933,059,014.20
Proportion in sales revenues 15.36% 16.60%
(3) Segment table of main operation:
Current Last period
Categories
Income from main
operation Cost of main operation Income from main
operation Cost of main operation
Color TV business 3,730,733,159.98 3,049,658,994.29 4,053,345,367.75 3,275,475,112.45
Cell phone business 706,483,464.16 628,420,965.23 525,107,654.04 482,874,041.63
Items Current Last period
Beginning retained profit 500,638,125.11 271,471,632.93
Add: Net profit attributable to shareholders
of parent company 80,302,015.01 80,555,227.21
Less: Withdrawal of statutory surplus
reserve --- ---
Withdrawal of staff welfares and bonus
funds --- ---
Cash dividends 60,198,635.20 ---
Ending retained profit 520,741,504.92 352,026,860.1428
Other 669,931,496.64 477,627,100.47 943,226,289.04 758,503,952.40
Total 5,107,148,120.78 4,155,707,059.99 5,521,679,310.83 4,516,853,106.48
(4) Regional segments of main operation:
Current Last period
Regions
Income from main
operation Cost of main operation Income from main
operation Cost of main operation
Domestic sales 4,370,519,089.99 3,498,084,655.25 4,998,695,917.35 4,026,917,811.64
Overseas sales 981,986,621.57 913,405,069.47 861,381,785.34 828,333,686.70
Subtotal 5,352,505,711.56 4,411,489,724.72 5,860,077,702.69 4,855,251,498.34
Mutual offsetting
among segments of the
Company in all regions
(245,357,590.78) (255,782,664.73) （338,398,391.86） （338,398,391.86）
Total 5,107,148,120.78 4,155,707,059.99 5,521,679,310.83 4,516,853,106.48
* As compared with that in the previous period, the main operation in the current period is reduced by RMB XXXX,
down %, mainly attributable to the decrease in sales revenue of color TV.
(5) Other business items:
Other business Current Last period
category Other operating
revenue Other operating
cost Profit Other operating
revenue
Other operating
cost Profit
Material transfer 32,303,446.40 33,820,486.70 (1,517,040.30) 66,170,057.51 56,856,555.87 9,313,501.64
Revenue from
wastes sales 5,395,997.92 1,493,070.38 3,902,927.54 10,219,098.62 2,048,732.87 8,170,365.75
Other 27,152,463.10 700,097.95 26,452,365.15 22,457,519.20 4,944,661.82 17,512,857.38
Total 64,851,907.42 36,013,655.03 28,838,252.39 98,846,675.33 63,849,950.56 34,996,724.77
The details about operation revenues and costs are listed as follows:
(1) Operation revenues and costs are listed as follows:
Current Last period
Items Operation revenue Operation cost Operation revenue Operation cost
1. Main operation
revenue
4,216,259,024.45 3,455,284,868.28 4,558,518,503.73 3,740,249,026.50
2. Other operation
revenue
113,504,227.16 100,064,673.89 144,275,140.60 126,268,830.39
Total 4,329,763,251.61 3,555,349,542.17 4,702,793,644.33 3,866,517,856.89
(2) The proportion of total sales revenues of top 5 customers of the Company in the total sales revenues are listed as
below:
Items Current Last period
Total amount of sales revenues top
5 customers 784,135,849.22 933,059,014.20
Proportion in sales revenues 18.11% 16.60%
(3) Segment table of main operation:
Categories of Current Last period
main
operation
Income from main
operation Cost of main operation Income from main
operation Cost of main
operation
Color TV
business 3,710,284,808.09 3,054,809,730.82 4,558,518,503.73 3,740,249,026.50
Cell phone
business --- --- --- ---
Other 505,974,216.36 400,475,137.46 --- ---
Total 4,216,259,024.45 3,455,284,868.28 4,558,518,503.73 3,740,249,026.5029
(4) Regional segment table of main operation:
Current Last period
Regions
Income from main
operation Cost of main operation Income from main
operation Cost of main
operation
Domestic
sales 3,959,082,565.95 3,188,442,615.72 4,220,120,111.87 3,401,303,136.77
Overseas
sales 257,176,458.50 266,842,252.56 338,398,391.86 338,945,889.73
Total 4,216,259,024.45 3,455,284,868.28 4,558,518,503.73 3,740,249,026.50
(5) Other operation items:
Other operation Current Last period
category Other operation
revenue
Other operation
cost Profit Other operation
revenue
Other operation
cost Profit
Material
transfer 97,842,458.89 100,003,436.51 (2,160,977.62) 131,027,609.23 124,967,302.43 6,060,306.80
Incomes from
wastes sales 2,255,827.32 --- 2,255,827.32 4,442,388.18 60,066.43 4,382,321.75
Other 13,405,940.95 61,237.38 13,344,703.57 8,805,143.19 1,241,461.53 7,563,681.66
Total 113,504,227.16 100,064,673.89 13,439,553.27 144,275,140.60 126,268,830.39 18,006,310.21
Note 33. Financial Expense
Items Current Last period
Interest expenditure 45,257,894.21 14,698,199.45
Less: interest income 35,728,483.55 1,393,737.96
Exchange loss 21,272,516.00 28,519,894.61
Less: exchange earnings 20,276,983.01 27,643,892.42
Other 5,657,491.18 3,646,192.12
Total 16,182,434.83 17,826,655.80
* Financial expense—interest expenditure for the current period increased by RMB 30,559,694.76 than last period, with
an increase of 207.91%. Reason for increase was: ① increase in USD loan of NDF portfolio business in the current
period, which caused increase of interest expenditure; ② discount on notes receivable in current period increased, which
caused increase of discount interest.
Financial expense—income from interest for the current period increased RMB 34,334,745.59 than last period, with an
increase of 2463.50%. Income from interest increased because RMB fixed deposit of NDF portfolio business, which was
used to pledged, increased.
Financial expense—exchange loss for the current period decreased by RMB 7,247,378.61 than last period, a drop of
25.41%.
Financial expense—exchange income for the current period decreased by RMB 7,366,909.41 than last period, a drop of
26.65%.
Note 34. Loss on Assets Impairment
Items Current Last period
1. Loss on bad debts (5,120,579.65) (4,430,792.84)
2. Loss on falling price of inventory 1,369,396.55 (8,972.87)
Total (3,751,183.10) (7,236,743.51)
Note 35. Gains and Losses of Change in Fair Value
Category Current Last period
Derivative financial instruments (NDF)
2,178,002.85
---30
Total 2,178,002.85 ---
* The profit and loss of derivative financial instruments in current period came from the profit and loss from change in
fair value of NDF business as a way of foreign exchange hedge, which was carried out due to that the Company and
Shenzhen Konka Telecommunications Technology Co., Ltd. (a subsidiary company of the Company) adopted the
irrevocable usance contracts to avoid the risk of exchange rate fluctuations.
Note 36. Investment Income
Category Current Last period
Gains on sale of available-for-sale financial assets --- 4,843,782.24
Net increase/decrease of owner’s equity of investee
enterprises adjusted at the end of year --- ---
Gains on transfer of equity investment --- 2,521,979.79
Gains on sale of tradable financial assets（NDF delivery） --- ---
Other (575,255.31) 234,046.43
Total (575,255.31) 7,599,808.46
Details about investment earnings are listed as below:
Category Current Last period
Gains on sale of available-for-sale financial assets --- 4,843,782.24
Net increase/decrease of owner’s equity of investee enterprises
adjusted at the end of year --- ---
Dividends received from the subsidiaries 1,350,000.00 ---
Gains on sale of tradable financial assets（NDF delivery） --- ---
Gains on transfer of equity investment --- 2,521,979.79
Total 1,350,000.00 7,365,762.03
Note 37. Non-operating income and expense
1. Non-operating income
Items Current Last period
1. Total gains on non-current assets disposal 905,122.06 2,322,134.25
Including: Gains on fixed assets disposal 905,122.06 40,273.49
Gains on Intangible assets disposal --- 2,281,860.76
Government grants 999,155.00 15,000.00
Inventory surplus of fixed assets --- 3,445.00
Net income from penalty 2,714,760.72 1,882,608.69
Accounts payable carried over due to inability to make
payment 237,213.13 117.77
Other 1,421,804.06 974,242.99
Total 6,278,055.51 5,137,548.70
* As compared with that in the last period, the non-operation income for the current period has increased by RMB
1,140,506.81, up 22.2%.
* Details about government grants are listed as below:
Items Current
Reward of Fenggang Town for the top 10 foreign-owned enterprises paying tax in
2008 970,000.00
Financial subsidies from Anhui Chuzhou 7,000.00
Reward for excellence enterprise from Anhui Chuzhou 10,000.00
Aid funds from Chongqing Financial Bureau for technology innovation for foreign
trade export for 2008 1,900.00
Subsidies of science and technology insurance for 2008 from Chongqing Financial
Bureau 10,255.00
Total 999,155.0031
2. Non-operating expense
Items Current Last period
1. Total losses on non-current assets
disposal 1,087,703.66 2,412,998.20
Including: Losses on fixed assets disposal 1,087,703.66 2,412,998.20
Losses on Intangible assets
disposal --- ---
Inventory shortages of fixed assets --- ---
Donation expenditures 439,773.43 2,379,562.51
Fine expenditures 287,620.09 577,467.74
Penalties 36,442.50 ---
Abnormal losses --- 149,094.64
Dismissal subsidies --- ---
Other 2,827.59 586,172.63
Total 1,854,367.27 6,105,295.72
As compared with that of the previous period, the non-business expense in the current period is reduced by RMB
￥4,250,928.45, down 69.63%, mainly attributable to bigger decrease in expenditures for non-current assets disposal and
donation expenditures.
Note 38. Income Tax
Items Current Last period
Current income tax expense 13,144,938.51 15,585,026.26
Deferred income tax expense （528,845.98） （317,468.33）
Total 12,616,092.53 15,267,557.93
Note 39. Other cash related to operating activities
Items Current Last period
Other cash received related to operating
activities
Temporarily received maintenance funds 303,342.00 1,314,004.27
Interest incomes from bank deposit 4,410,949.93 4,712,136.45
Advance and deposit 4,590,203.87 1,471,985.16
Incomes from fine and penalty 431,210.61 225,574.60
Repayment for personal loan 5,702,094.34 1,544,740.70
Subsidy revenue 17,648,147.60 ---
Revenue from rejected product 6,111,252.73 5,268,664.85
Other and current payment 95,019,070.96 95,627,367.47
Subtotal 134,216,272.04 110,164,473.50
Other cash paid related to operating
activities
Cashes paid for management expenses 68,736,387.95 100,525,644.09
Cashes paid for business expenses
261,739,935.34 373,165,669.06
Expenditures of deposit, guaranty funds and
maintenance funds 9,410,071.84 7,101,463.31
Staff reserve funds 13,053,423.35 11,779,566.23
Donation expenditures 10,108.00 ---
Reimbursed expenses 23,793,084.87 21,400,002.59
Penalty expenditures 8,683.55 1,103,692.47
Expense on bank commission 11,707,306.09 5,227,834.3732
Others and current payment 55,334,977.25 118,148,609.63
Subtotal 443,793,978.24 638,452,481.75
Note 40. Other cash related to investing activities
Items Current Last period
Other cash received related to investing activities
Backflow of capital for subscribing application
for new shares --- ---
Composite income from forward foreign
exchange contract --- ---
Other
10,164,944.00 ---
Subtotal 10,164,944.00 ---
Other cash paid related to investing activities --- ---
Outflow of capital for subscribing application for
new shares --- ---
Loss on forward foreign exchange contract
--- ---
Subtotal --- ---
Note 41. Other cash related to financing activities
Items Current Last period
Other cash received related to financing
activities
Paying matured RMB time deposit certificate
that are pledged 487,994,966.13 ---
Discharge of guaranty money for deposits used
for pledged 251,181,686.97 ---
Other 719,534,519.44 ---
Subtotal 1,458,711,172.54 ---
Other cash paid related to financing activities
Loan fees for forward foreign exchange contract
combination 632,063.77 ---
RMB time deposit certificate pledged
1,403,556,500.00 ---
Guaranty money for used for pledged
--- ---
Other 2,697,074.43 1,550.97
Subtotal 1,406,885,638.20 1,550.97
Note 42. Cash and Cash Equivalent
Items Current Last period
I. Cash 1,427,737,282.66 708,343,229.52
Including: Cash on hand 11,634.66 11,311.77
Bank deposits available for payment at any
time 1,427,725,648.00 708,331,917.75
Other monetary funds available for payment
at any time --- ---
Deposits in a central bank available for
payment --- ---33
Deposits in other banks --- ---
Inter-bank offered account --- ---
II. Cash equivalents --- ---
Including: Bond investment due within three months --- ---
III. Ending balance of cash and cash equivalent 1,427,737,282.66 708,343,229.52
Note VII. Government Grants
Category of government grants Amount to be deferred
I. Government grants related to assets
Government’ grant for pure flat color TV R&D project 2,932,899.19
Government’ grant for LCD TV hi-tech industrialization demonstration project 581,583.33
Aid funds for key project of “Konka Logistics Information System” enterprise
informationization 689,200.00
The fifth batch of industrial technical research and development 1,000,000.00
Foundation for scientific and technological innovation 39,000.00
Government’s grant for industrialization project of conditional-access-separation
digital television receiver 7,150,000.00
Government’s grant for industrialization project of LCOS digital projector and
LCOS projector 478,333.33
Special technical transformation funds for treasury bond 4,826,300.00
Financial funds of financial bureau for technical innovation project- electrojet
control system 3,000,000.00
Project funds for supply chain management information system 4,500,000.00
IPV6 HDTV payment of infrastructure office of financial bureau 3,050,720.44
HDTV production line construction 1,600,000.00
Industrialization project of auto motor fuel electrojet control system 883,333.33
Industry funds for flat plate display 2008 7,000,000.00
Digital TV patent pool- technical service platform for digital audio/video
generality 50,000.00
R&D and industrialization for digital products to support network 1,600,000.00
Innovative capability project of technical center 3,850,000.00
Research funds 1,000,000.00
Subsidize for R&D center 3,000,000.00
R&D of new display technology such as LCM 10,000,000.00
Interactive DTV based ground international transmission 500,000.00
Industrialization projects of large size LCM 1,000,000.00
IPv6-based multi-mode hand-hold and on-vehicle multimedia terminal 1,000,000.00
Total 59,731,369.62
Note VIII. Supplementary of Cash Flow Statement
Supplementary information Current Last period
1. Reconciliation of net profit to cash flows from operating activities
Net profit 74,986,480.49 85,570,791.06
Add: Assets impairment reserve (3,751,183.10) (7,236,743.51)
Depreciation of fixed assets, depletion of oil gas assets and
depreciation of productive biological asset 59,240,104.33 58,598,313.04
Amortization of intangible assets 3,946,117.72 7,952,475.07
Amortization of long-term deferred expenses 5,145,013.11 512,506.6234
Loss on disposal of fixed assets, intangible assets and other long term
assets (905,122.06) 439,606.15
Losses on retirement of fixed assets 1,087,703.66 2,219,918.64
Losses on change in fair value (2,178,002.85) ---
Financial expense 5,497,188.82 (16,267,878.62)
Investment losses 575,255.31 (7,599,808.46)
Decrease of deferred income tax assets (381,035.38) (385,844.62)
Increase of deferred income tax liabilities --- (3,384,693.50)
Decrease of inventory (201,723,059.05) 262,818,592.97
Decrease of operating, receivables 415,015,961.04 257,787,638.08
Increase of operating, payable (256,861,041.33) (678,468,508.91)
Other --- (5,243,149.80)
Net cash flow arising from operating activities 99,694,380.71 (42,686,785.79)
2. Significant investing and financing activities not concerned with
receipts and disbursements
Debts transferred into capital --- ---
Convertible bonds due within 1 year --- ---
Fixed assets under financing lease --- ---
3. Net change in cash and cash equivalents
Ending balance of cash 1,427,737,282.66 708,343,229.52
Less: Beginning balance of cash 845,026,867.06 752,558,414.47
Add: Ending balance of cash equivalents --- ---
Less: Beginning balance of cash equivalents --- ---
Net increase of cash and cash equivalents 582,710,415.60 (44,215,184.95)
Note IX. Related Parties and Transactions thereamong
(1) Information about parent company of the Company is as below:
Name of Parent Company and
Organization Code
Registration
Place
Nature of the
Business
Registered Capital
Holding Proportion
Voting Right
Proportion
Overseas Chinese Town Group
Company (190346175)
Shenzhen,
Guangdong
Ownership by
the entire people 2,000,000,000.00 17.48％ 17.48％
* As confirmed by China Securities Depository & Clearing Corporation Limited (CSDCC) Shenzhen Branch dated 30
Jun. 2009, Overseas Chinese Town Group Company, as of 30 June 2009, holds 210,457,260 shares of the Company,
accounting for 17.48% of the Company’s total shares, which was because OCT Group increases its shareholding to the
Company.
(2) For information about the subsidiary companies, affiliated enterprises and joint ventures of the Company, please see
Note 3.
(3) Information about the other affiliated parties of the Company is as follows:
Name of Company and Organization Code Relations with the Company
Shenzhen Overseas Chinese Town Real Estate Co., Ltd. Subsidiary company of the first major shareholder
Shenzhen Overseas Chinese Town Property Management Co.,
Ltd. Subsidiary company of the first major shareholder
Shenzhen Special Economic Zone Overseas Chinese Town
Hydropower Company Subsidiary company of the first major shareholder
Shanghai Huali Packaging Co., Ltd. Subsidiary company of the first major shareholder
Shenzhen Huali Packing & Trading Co., Ltd Subsidiary company of the first major shareholder
Anhui Huali Packaging Co., Ltd. Subsidiary company of the first major shareholder
Shanghai Overseas Chinese Town Investment Development
Co., Ltd. Subsidiary company of the first major shareholder
Chengdu Tianfu Overseas Chinese Town Industrial
Development Co., Ltd. Subsidiary company of the first major shareholder
Shenzhen East Overseas Chinese Town Co., Ltd. Subsidiary company of the first major shareholder
Shenzhen Huayou Packaging Co., Ltd. Subsidiary company of the first major shareholder35
Shenzhen Konka Energy Technology Co., Ltd Affiliated company
Shenzhen Dekon Electronics Co., Ltd. Affiliated company
(4) Transactions among related companies
Current Last period
Name of Company
Item
Amount
Proportion
in Total
Parallel
Transactions
Pricing
Policy
Amount
Proportion
in Total
Parallel
Transactions
Pricing
Policy
Shenzhen Dekon Electronics
Co., Ltd
Procurement of
goods
4,993.07 0.00%
Market
price 32,814,268.22
1.01%
Market
price
Shanghai Huali Packaging
Co., Ltd.
Procurement of
goods
2,882,256.22 0.10%
Market
price 13,970,180.56
0.43%
Market
price
Shenzhen Huali Packing &
Trading Co., Ltd
Procurement of
goods
2,679,312.32 0.09%
Market
price 3,270,317.66
0.10%
Market
price
Anhui Huali Packaging Co.,
Ltd.
Procurement of
goods
8,407,392.45 0.28%
Market
price 21,865,882.80
0.67%
Market
price
Shenzhen Huayou Packaging
Co., Ltd.
Procurement of
goods
8,267,001.58 0.27%
Market
price 4,049,132.12
0.12%
Market
price
Overseas Chinese Town
Group Company
To pay fee for
land use
--- --- --- 437,152.20 100% ---
Shenzhen East Overseas
Chinese Town Co., Ltd.
Sales of goods
5,817,906.02 56.92%
Market
price 2,358,212.00
2.51%
Market
price
Chengdu Tianfu Overseas
Chinese Town Industrial
Development Co., Ltd.
Sales of goods 2,455,641.03 24.02%
Market
price --- --- ---
(5) Current accounts among related companies
Current items Name of Affiliated Company Economic
Contents Ending amount Beginning amount
Accounts
receivable Shenzhen East Overseas Chinese Town Co., Ltd. Payments for
goods 6,648,302.00 6,269,712.00
Chengdu Tianfu Overseas Chinese Town Industrial
Development Co., Ltd.
Payments for
goods 1,509,600.00 12,674,000.00
Beijing Century Overseas Chinese Town Industrial
Co., Ltd.
Payments for
goods 62,500.00 875,000.00
Shenzhen Konka Energy Technology Co., Ltd Payments for
goods --- 40,290.24
Subtotal 8,220,402.00 19,859,002.24
Other receivables Shenzhen Overseas Chinese Town Real Estate Co.,
Ltd. Deposit 1,232,734.86 1,303,396.86
Shenzhen Overseas Chinese Town Property
Management Co., Ltd. Deposit 77,402.65 77,402.65
Shenzhen Special Economic Zone Overseas Chinese
Town Hydropower Company
Prepayment for
water/electricity
rate 2,591,610.98
2,007,744.22
Subtotal 3,901,748.49 3,388,543.73
Accounts payable Shenzhen Dekon Electronics Co., Ltd Payments for
goods 362,387.21 3,311,410.85
Shanghai Huali Packaging Co., Ltd. Payments for
goods --- 1,644,331.44
Shenzhen Huali Packing & Trading Co., Ltd Payments for
goods 1,743,852.41 1,646,697.78
Shenzhen Huayou Packaging Co., Ltd. Payments for
goods 2,151,911.10 2,608,821.88
Subtotal 4,258,150.72 9,211,261.95
Advance
receipts Shanghai Overseas Chinese Town
Investment Development Co., Ltd.
Payment for goods
received in
advance 8,810,640.00
---
Subtotal 8,810,640.00 ---
Note X. Other Significant Events36
Note XI. Extraordinary Gains and Losses
Character and content Current Last period
1. Gains and losses on non-current assets disposal
(1) Gains on long-term assets disposal
Including: Gains on disposal of fixed assets 905,122.06 40,273.49
Gains on disposal of intangible assets --- 2,281,860.76
Gains on equity transfer --- 5,318,957.59
Subtotal 905,122.06 7,641,091.84
(2) Gains on long-term assets disposal --- ---
Including: Losses on disposal of fixed assets 1,087,703.66 2,412,998.20
Losses on disposal of intangible assets --- ---
Losses on equity transfer --- ---
Subtotal 1,087,703.66 2,412,998.20
Net gains and losses on non-current assets disposal (182,581.60) 5,228,093.64
2. Governmental grants counted into the current profit and
loss 999,155.00 15,000.00
3. Profit and loss from change in fair value arising from
transaction financial assets 2,178,002.85 ---
4. Investment income from sale of financial assets available
for sale --- ---
5. Income from sale of transaction financial assets (NDF
delivery）
---
---
6. Other non-operating income and expenses besides the
above items
(1) Non-operating income 4,373,778.45 2,800,414.45
(2) Less: Non-operating expense 766,663.61 3,692,297.40
Net non-operating income and expense 3,607,114.84 （891,882.95）
Total of extraordinary gain and loss before deducting
income tax 6,601,691.09 4,351,210.69
Less: amount influenced by income tax 806,507.67 1,259,410.11
Total of extraordinary gain and loss after deducting income
tax 5,795,183.42 3,091,800.58
Less: amount influenced by minority interest 497,672.32 219,720.94
Total of extraordinary gain and loss after deducting income
tax 5,297,511.10 2,872,079.65
Note XII. Return on Equity
Return on equity
Profits during Report Period
Fully diluted Weighted average
Current Last period Current Last period
Net profits attributable to ordinary
shareholders of the Company 2.12% 2.24% 2.10% 2.25%
Net profits attributable to ordinary
shareholders of the Company after deduction
of extraordinary profits and losses
1.98% 2.16% 1.97% 2.17%
Note XIII. Earnings per Share
Earnings per share
Profits during Report Period Basic earnings per share Diluted earnings per share
Current Last period Current Last period
Net profits attributable to ordinary shareholders of the Company 0.0667 0.0669 0.0667 0.066937
Net profits attributable to ordinary shareholders of the Company after
deduction of extraordinary profits and losses 0.0623 0.0645 0.0623 0.0645
Items Current Last period
Calculation of basic earnings per share and diluted earnings per share
(I) Numerators
Net profit after tax 80,302,015.01 80,555,227.21
Adjustment: influences of dividend on preferred stock and other instruments --- ---
Profits and losses ascribed to ordinary shareholders of the parent
company in the calculation of earnings per share
80,302,015.01 80,555,227.21
Adjustment： --- ---
Dividend and interest related to potential diluted ordinary shares
Change in earnings or expenses due to translation of potential diluted
ordinary shares
--- ---
Profits and losses ascribed to ordinary shareholders of the parent
company in the calculation of earnings per share
80,302,015.01 80,555,227.21
(II) Denominators
Weighted average of ordinary shares issued in the current period in
the calculation of basic earnings per share
1,203,972,704.00 1,203,972,704.00
Add: Weighted average at the time of all potential diluted ordinary shares
translated into ordinary shares
--- ---
Weighted average of ordinary shares issued in the current period in the
calculation of earnings per share
1,203,972,704.00 1,203,972,704.00
(III) Earnings per share
Basic earnings per share
Net profits ascribed to ordinary shareholders of the Company 0.0667 0.0669
Net profits ascribed to ordinary shareholders of the Company after deduction
of extraordinary profits and losses
0.0623 0.0645
Diluted earnings per share
Net profits ascribed to ordinary shareholders of the Company 0.0667 0.0669
Net profits ascribed to ordinary shareholders of the Company after deduction
of extraordinary profits and losses
0.0623 0.0645
Note XIV. Approval for Financial Statement
The Financial statements of the Company have been approved by the Board of Directors of the Company
on 25 Aug. 2009.
