Konka Group Co., Ltd. Semi-annual Report 2016
KONKA GROUP CO., LTD.
SEMI-ANNUAL REPORT 2016
2016-47
August 2016
1
2015 Semi-annual Report of Konka Group Co., Ltd.
Section I Important Statements, Contents and Terms
The board of directors (the “Board”), the board of supervisors (the “Board of Supervisors”) as well
as the directors, supervisors and senior management of Konka Group Co., Ltd. (the “Company”)
hereby guarantee the factuality, accuracy and completeness of the contents of the Report, and shall
be jointly and severally liable for any false representation, misleading statements or material
omissions in the Report.
Except for the following directors, all the other directors attended in person the board meeting for
the review of the Report.
Reason for not attending in
Name Office title Proxy
person
Chen Yuehua Director On a business trip Liu Fengxi
Sun Shengdian Independent Director On a business trip N/A
The Company plans not to distribute cash dividends or bonus shares or convert capital reserve into
share capital.
Liu Fengxi, head of the Company, Xiao Qing, accounting head for the Report, and Xu Youshan,
head of the accounting organ (head of accounting), hereby guarantee that the Financial Report
carried in the Report is factual, accurate and complete.
The Report has been prepared in both Chinese and English. Should there be any discrepancies or
misunderstandings between the two versions, the Chinese version shall prevail.
English Translation for Reference Only. Should there be any discrepancy between the two versions,
the Chinese version shall prevail.
2
2015 Semi-annual Report of Konka Group Co., Ltd.
Contents
Semi-annual Report 2016.................................................................................................................. 1
Section I Important Statements, Contents and Terms....................................................................2
Section II Corporate Profile.............................................................................................................. 6
Section III Highlights of Accounting Data and Financial Indicators............................................ 8
Section IV Report by the Board of Directors.................................................................................10
Section V Significant Events............................................................................................................21
Section VI Share Changes and Shareholders’ Profile................................................................... 33
Section VII Preference Shares.........................................................................................................38
Section VIII Directors, Supervisors and Senior Management..................................................... 39
Section IX Financial Report............................................................................................................ 40
Section X Documents Available for Reference.............................................................................192
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2015 Semi-annual Report of Konka Group Co., Ltd.
Terms
Term Meaning
Company, the Company, the Group Konka Group Co., Ltd.
Telecommunication Technology Shenzhen Konka Telecommunications Technology Co., Ltd.
Precision Mold Shenzhen Konka Precision Mold Manufacturing Co., Ltd.
Konka Household Appliances Shenzhen Konka Household Appliances Co., Ltd.
Information Network Shenzhen Konka Information Network Co., Ltd.
Plastic Products Shenzhen Konka Plastic Products Co., Ltd.
Electrical Appliances Shenzhen Konka Electrical Appliances Co., Ltd.
Fittings Technology Shenzhen Konka Electronic Fittings Technology Co., Ltd.
Mudanjiang Appliances Mudanjiang Arctic Ocean Appliances Co., Ltd.
Chongqing Qingjia Chongqing Qingjia Electronics Co., Ltd.
Anhui Konka Anhui Konka Electronic Co., Ltd.
Anhui Household Appliances Anhui Konka Household Appliances Co., Ltd.
Kunshan Konka Kunshan Konka Electronic Co., Ltd.
Dongguan Konka Dongguan Konka Electronic Co., Ltd.
Dongguan Packing Dongguan Konka Packing Materials Co., Ltd.
Dongguan Mould Plastic Dongguan Konka Mould Plastic Co., Ltd.
Boluo Konka Boluo Konka PCB Co., Ltd.
Boluo Precision Boluo Konka Precision Technology Co., Ltd.
Hong Kong Konka Hong Kong Konka Co., Ltd.
Konka Household Appliances Investment Konka Household Appliances Investment & Development Co., Ltd.
Konka Household Appliances International
Konka Household Appliances International Trading Co., Ltd.
Trading
Konka America Konka America, Inc.
Konka Europe Konka (Europe) Co., Ltd.
Konka Factoring Konka Factoring (Shenzhen) Co., Ltd.
Wankaida Shenzhen Wankaida Science and Technology Co., Ltd.
Kunshan Kangsheng Kunshan Kangsheng Investment Development Co., Ltd.
Anhui Tongchuang Anhui Konka Tongchuang Household Appliances Co., Ltd.
Indonesia Konka Indonesia Konka Electronics Co., Ltd.
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2015 Semi-annual Report of Konka Group Co., Ltd.
Shushida Logistics Shenzhen Shushida Logistics Service Co., Ltd.
Beijing Konka Electronic Beijing Konka Electronic Co., Ltd.
Konka E-display Shenzhen Konka E-display Co., Ltd.
E-display Service Shenzhen E-display Service Co., Ltd.
Xiamen Dalong Xiamen Dalong Trading Co., Ltd.
Youshi Kangrong Youshi Kangrong Culture Communication Co., Ltd.
Kangqiao Jiacheng Shenzhen Kangqiao Jiacheng Property Investment Co., Ltd.
Konka SmartTech Konka SmartTech Limited
Kaikai Shijie Anhui Kaikai Shijie E-commerce Co., Ltd.
E2info Shenzhen E2info Network Technology Co., Ltd.
Mobile Interconnection Shenzhen Konka Mobile Interconnection Technology Co., Ltd.
Commercial System Technology Shenzhen Konka Commercial System Technology Co., Ltd.
Anhui Jiasen Anhui Jiasen Precision Technology Co., Ltd.
CSRC China Securities Regulation Commission
SZSE Shenzhen Stock Exchange
CSRC Shenzhen Bureau Shenzhen Bureau of China Securities Regulation Commission
RMB Renminbi
5
2015 Semi-annual Report of Konka Group Co., Ltd.
Section II Corporate Profile
I Corporate information
Stock name Konka A, Konka B Stock code 000016, 200016
Changed stock name (if any) N/A
Stock exchange Shenzhen Stock Exchange
Company name in Chinese 康佳集团股份有限公司
Abbr. (if any) 康佳集团
Company name in English (if any) KONKA GROUP CO.,LTD
Abbr. (if any) KONKA GROUP
Legal representative Liu Fengxi
II Contact information
Board Secretary Securities Representative
Name Wu Yongjun Miao Leiqiang
Board Secretariat, 24/F, Konka R&D Center, 28 Keji Board Secretariat, 24/F, Konka R&D Center, 28 Keji
South Twelfth Road, Science and Technology Park, South Twelfth Road, Science and Technology Park,
Address
Yuehai Street, Nanshan District, Shenzhen, Yuehai Street, Nanshan District, Shenzhen,
Guangdong Province, China Guangdong Province, China
Tel. 0755-26608866 0755-26608866
Fax 0755-26601139 0755-26601139
E-mail szkonka@konka.com szkonka@konka.com
III Other information
1. Ways to contact the Company
Did any change occur to the registered address, office address and their postal codes, website
address and email address of the Company during the Reporting Period?
□ Applicable √ Not applicable
The registered address, office address and their postal codes, website address and email address of
the Company did not change during the Reporting Period. The said information can be found in the
2015 Annual Report.
2. About information disclosure and the place where the Report is kept
Did any change occur to information disclosure media and the place where the Report is kept during
the Reporting Period?
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2015 Semi-annual Report of Konka Group Co., Ltd.
□ Applicable √ Not applicable
The newspapers designated by the Company for information disclosure, the website designated by
the CSRC for disclosing the Report and the location where the Report is placed did not change
during the Reporting Period. The said information can be found in the 2015 Annual Report.
3. Change of the registered information
Did any change occur to the registered information during the Reporting Period?
□ Applicable √ Not applicable
The registration date and place of the Company, its business license No., taxation registration No.
and organizational code did not change during the Reporting Period. The said information can be
found in the 2015 Annual Report.
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2015 Semi-annual Report of Konka Group Co., Ltd.
Section III Highlights of Accounting Data and Financial Indicators
I Major accounting data and financial indicators
Whether the Company performs any retroactive adjustments to or restatements of its accounting
data of last year due to change in accounting policies or correction of accounting errors
□ Yes √ No
Reporting Period Same period of last year +/- (%)
Operating revenues (RMB) 8,609,080,822.24 8,944,558,920.96 -3.75%
Net profit attributable to shareholders
12,834,736.76 -296,953,507.39 104.32%
of the Company (RMB)
Net profit attributable to shareholders
of the Company excluding -28,736,147.20 -333,938,231.98 91.39%
exceptional profit and loss (RMB)
Net cash flows from operating
-125,542,056.42 70,042,909.63 -279.24%
activities (RMB)
Basic earnings per share
0.0053 -0.1233 104.30%
(RMB/share)
Diluted earnings per share
0.0053 -0.1233 104.30%
(RMB/share)
Weighted average return on equity
0.46% -7.52% 7.98%
(%)
As at the end of the
As at the end of last year +/- (%)
Reporting Period
Total assets (RMB) 14,881,788,535.36 14,250,367,548.28 4.43%
Net assets attributable to shareholders
2,814,748,518.53 2,814,382,870.81 0.01%
of the Company (RMB)
II Differences in accounting data under domestic and overseas accounting standards
1. Differences in the net profit and the net assets disclosed in the financial reports prepared
under international and Chinese accounting standards
□ Applicable √ Not applicable
No such differences for the Reporting Period.
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2015 Semi-annual Report of Konka Group Co., Ltd.
2. Differences in the net profit and the net assets disclosed in the financial reports prepared
under overseas and Chinese accounting standards
□ Applicable √ Not applicable
No such differences for the Reporting Period.
III Exceptional profit and loss
√ Applicable □ Not applicable
Unit: RMB
Item Reporting Period Note
Profit/loss on disposal of non-current assets (including offset asset impairment provisions) 5,604,580.65
Government grants charged to the profit/loss for the Reporting Period (except for the
government grants closely related to the business of the Company and given at a fixed quota 51,949,430.12
or amount in accordance with the State’s uniform standards)
Profit/loss on entrusting others with investments or asset management 8,514,982.48
Profit/loss on fair value changes of transactional financial assets and liabilities & investment
income from disposal of transactional financial assets and liabilities as well as financial assets
-18,141,655.39
available for sale, except for effective hedges related to normal business operations of the
Company
Impairment provision reversal for accounts receivable on which the impairment test is carried
72,735.80
out separately
Profit/loss on entrusted loans 707,777.78
Non-operating revenue and expense other than the above 11,582,662.03
Less: Corporate income tax 13,313,484.68
Minority interests (after tax) 5,406,144.83
Total 41,570,883.96 --
Explanation of why the Company classified an item as exceptional profit/loss according to the
definition in the Explanatory Announcement No. 1 on Information Disclosure for Companies
Offering Their Securities to the Public—Exceptional Profit and Loss, or reclassified any exceptional
profit/loss item given as an example in the said explanatory announcement to recurrent profit/loss
√ Applicable □ Not applicable
Amount involved
Item Reason
(RMB)
Tax rebates Government grants closely related to the Company’s normal operation and constantly given
84,594,956.03
on software at certain quotas or amounts according to the government’s policies and standards
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Konka Group Co., Ltd. Semi-annual Report 2016
Section IV Report by the Board of Directors
I Overview
We specialize in the production and operation of color TVs, mobile phones and consumer
appliances, which makes us belong to the industries of electronics manufacturing and
telecommunication equipment manufacturing.
In the Reporting Period, we accelerated our transformation, pushed forward mechanism reform and
focused on the improvement of our basic capability through the chain of planning, R&D,
manufacturing, supply, promotion, marketing, after-sales and so on. As a result, our profit increased.
For the Reporting Period, we achieved operating revenues of RMB8.609 billion, down 3.75% from
the same period of last year; net profit attributable to our shareholders of RMB12.8347 million, a
104.32% surge from a year earlier; and earnings per share of RMB0.0053/share.
(I) Performances of our main business lines in the Reporting Period:
1. Domestic sale of color TVs
We adjusted our product mix and marketing strategies according to market changes, launching
series of quality smart TVs such as the V91, X81, 6000, 3000, etc., which has improved our product
sales structure and gross profit margin.
2. Export of color TVs
We adopted a divided task mechanism while strengthening the coordination between finance staff
and business staff, made clear the double incentives in respect of business volume and profit, tried
to attract more customers and made full use of our back-end resources. As a result, the increased
export of our color TVs indicates a better performance in this respect.
3. Mobile phones
Our mobile phones made significant breakthroughs in the third-and-fourth-tier markets of the
country, resulting in increased sales volume, sales revenue and domestic brand recognition.
4. Consumer appliances
We carried out a differentiation strategy on our consumer appliances, quickly improving the product
structure by expanding the range and increasing incentive for our mid-and-high-end products. As a
result, the mid-and-high-end products such as multi-door refrigerators and roller washing machines
took up a higher percentage in our total sales volume, which thus brought up the gross profit
margin.
(II) The net profit attributable to our owners increased from the same period of last year because:
1. The profitability of our color TVs improved. In the Reporting Period, we integrated our resources,
10
Konka Group Co., Ltd. Semi-annual Report 2016
focused on improving our production coordination capability and overall supply planning capability
for the color TV business, and adjusted our color TV mix and marketing strategies in a timely
manner according to market changes. These measures have improved the profitability of our color
TVs by improving the cost, the sales structure and the inventory turnover speed.
2. Profit on smart TVs increased. In the Reporting Period, taking into account the current
development of the smart TV sector, we provided professional, quality Internet contents for
customers, creating value for customers and at the same time contributing profit to the Company.
II Analysis of main business
YoY movements in major financial data
Unit: RMB
Same period of last
Reporting Period YoY +/-% Main reason for movement
year
Operating revenues 8,609,080,822.24 8,944,558,920.96 -3.75%
Operating costs 7,177,725,092.42 7,791,215,800.57 -7.87%
Selling expenses 1,109,146,923.61 1,124,688,950.35 -1.38%
Administrative expenses 290,919,290.02 292,238,903.71 -0.45%
Finance costs 68,373,432.00 99,066,911.17 -30.98% Decrease in exchange loss
Corporate income tax 705,997.10 -51,101,619.20 101.38% Increased profit
R&D expenses 88,336,972.44 104,617,216.07 -15.56%
Net cash flows from operating
-125,542,056.42 70,042,909.63 -279.24%
activities
Net cash flows from investing
-63,713,124.67 326,173,576.74 -119.53%
activities
Net cash flows from financing
1,154,153,257.89 37,779,744.97 2,954.95% Increase in note financing
activities
Net increase in cash and cash
981,795,915.13 396,244,280.00 147.78%
equivalents
Major changes to the profit structure or sources of the Company in the Reporting Period:
√ Applicable □ Not applicable
1. The profitability of our color TVs improved. In the Reporting Period, we integrated our resources,
focused on improving our production coordination capability and overall supply planning capability
for the color TV business, and adjusted our color TV mix and marketing strategies in a timely
manner according to market changes. These measures have improved the profitability of our color
TVs by improving the cost, the sales structure and the inventory turnover speed.
2. Profit on smart TVs increased. In the Reporting Period, taking into account the current
11
Konka Group Co., Ltd. Semi-annual Report 2016
development of the smart TV sector, we provided professional, quality Internet contents for
customers, creating value for customers and at the same time contributing profit to the Company.
Reporting Period progress of the future development planning in the disclosed documents of the
Company such as share-soliciting prospectuses, offering prospectuses, asset reorganization reports,
etc.:
□ Applicable √ Not applicable
No such cases in the Reporting Period.
Review the progress of the previously disclosed business plan in the Reporting Period:
Not applicable
III Breakdown of main business
Unit: RMB
Operating Gross profit
Gross profit Operating cost:
Operating revenue Operating cost revenue: YoY margin: YoY
margin YoY +/-%
+/-% +/-%
By business segment
Electronic
7,724,414,205.37 6,397,747,058.44 17.17% -6.33% -10.67% 4.02%
s
Total 7,724,414,205.37 6,397,747,058.44 17.17% -6.33% -10.67% 4.02%
By product
Color
5,367,972,378.49 4,468,618,453.12 16.75% -8.07% -10.61% 2.36%
TVs
Mobile
471,731,609.94 415,431,430.93 11.93% 16.22% 5.41% 9.04%
phones
Customer
appliance 829,752,654.59 648,051,838.45 21.90% 0.16% -0.30% 0.36%
s
Others 1,054,957,562.35 865,645,335.94 17.95% -10.04% -22.61% 13.33%
Total 7,724,414,205.37 6,397,747,058.44 17.17% -6.33% -10.67% 4.02%
By geographical segment
Domestic 5,176,447,693.40 4,024,605,977.81 22.25% 7.68% 3.27% 3.32%
Overseas 2,547,966,511.97 2,373,141,080.63 6.86% -25.91% -27.31% 1.79%
Total 7,724,414,205.37 6,397,747,058.44 17.17% -6.33% -10.67% 4.02%
IV Core competitiveness analysis
Our capability in R&D, marketing network and manufacturing constitutes our competitive edges.
Through resource integration, we will try to make substantial breakthroughs in intelligent products,
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Konka Group Co., Ltd. Semi-annual Report 2016
cloud computing, application of the Internet technology, application software, etc. We will also try
to enhance the strength and thickness of technical innovations for improvement of our overall
competitiveness.
V Investment analysis
1. Investments in equities of external parties
(1) Investments in external parties
√ Applicable □ Not applicable
Investments in external parties
Investment amount in the Reporting Investment amount in the same period of
+/-%
Period (RMB) last year (RMB)
6,010,455.00 66,835,410.00 -91.01%
Investees’ profile
Name of investee Main business scope The Company’s stake in the investee (%)
N/A N/A 0
(2) Equity-holdings in financial enterprises
□ Applicable √ Not applicable
We had no equity-holdings in financial enterprises at the end of the Reporting Period.
(3) Securities investments
√ Applicable □ Not applicable
Ope Clos
Openin ning ing
Closing Profit/loss
Varie Code Name g secu secu
Initial securiti in the Accoun Securiti
ty of of of securiti ritie ritie Closing book
investment es-hold Reporting ting es
secur securit securi es-hold s-ho s-ho value (RMB)
cost (RMB) ings Period title source
ities ies ties ings ldin ldin
(share) (RMB)
(share) gs gs
(%) (%)
Applic
Availab ation
le-for-s for
Stoc 00000 Vank 2,311,748.0 117,31 117,31
0% 0% 2,865,883.30 0 ale newly
k 2 eA 7 0 0
financia increas
l assets ed
shares
Stoc 00278 HYB Availab New
5,685.00 500 0% 0 0% 0 15,380.40
k 7 Z le-for-s shares
13
Konka Group Co., Ltd. Semi-annual Report 2016
ale subscri
financia ption
l assets
Availab
New
le-for-s
Stoc 30050 shares
SZSJ 10,455.00 500 0% 0 0% 0 29,323.22 ale
k 0 subscri
financia
ption
l assets
Other securities
investment held at the 0.00 0 -- 0 -- 0 0.00 -- --
period-end
2,327,888.0 118,31 117,31
Total -- -- 2,865,883.30 44,703.62 -- --
7 0 0
Disclosure date of the announcement about the
Not applicable
board’s consent for the securities investment
Disclosure date of the announcement about the
general meeting’s consent for the securities Not applicable
investment (if any)
(4) Shareholdings in other listed companies
□ Applicable √ Not applicable
No such situation of the Company during the Reporting Period.
2. Wealth management entrustment, derivative investments and entrustment loans
(1) Wealth management entrustment
√ Applicable □ Not applicable
Unit: RMB’0,000
Princi
pals Amou
Actual
Relat actuall nt
Value Way profit/l
Relat ed y provid Projec
Name Prod of of oss in
ed trans Commencemen Termination recove ed for ted
of uct entrus repa the
party actio t date date red in impair earnin
trustee type ted yme Reporti
or not n or the ment gs
cash nt ng
not Report (if
Period
ing any)
Period
Shenzh Shor Capita
en t-ter l and
Shahe No No m 5,000 20 Apr. 2016 22 Jul. 2016 interes 0 0 58.6 43.4
Branch finan t
of cing preser
14
Konka Group Co., Ltd. Semi-annual Report 2016
ICBC vation
Shenzh Capita
Shor
en l and
t-ter
Shahe interes
No No m 5,000 20 Apr. 2016 Pending 0 0 - 36.49
Branch t
finan
of preser
cing
ICBC vation
Capi
Capita
tal
Shenzh l and
prese
en Ping 30,00 interes 303.2
No No rvati 20 Apr. 2016 19 Jul. 2016 0 0 239.26
An 0 t 9
on
Bank preser
finan
vation
cing
Capi
Capita
Shenzh tal
l and
en prese
10,00 interes
Shahe No No rvati 21 Apr. 2016 20 Jul. 2016 0 0 98.63 77.81
0 t
Branch on
preser
of ABC finan
vation
cing
Capi
Capita
tal
Shenzh l and
prese
en Ping interes
No No rvati 5,000 15 Jun. 2016 14 Sep. 2016 0 0 50.49 8.32
An t
on
Bank preser
finan
vation
cing
55,00 511.0
Total -- -- -- 0 0 405.28
0 1
Source of entrusted cash Our own funds
Cumulative amount of principal and
0
earnings overdue
Lawsuits (if applicable) N/A
Disclosure date of the announcement about
the board’s consent for the cash 29 Aug. 2015
management entrustment (if any)
Disclosure date of the announcement about
the general meeting’s consent for the cash Not applicable
management entrustment (if any)
(2) Derivative investments
15
Konka Group Co., Ltd. Semi-annual Report 2016
√ Applicable □ Not applicable
Source of investment funds Dollar financing
Lawsuit (if applicable) N/A
Disclosure date of the announcement about the
2014-05-24
board’s consent for the investment
Disclosure date of the announcement about the
2014-06-10
general meeting’s consent for the investment
We engage in forward forex transactions to reduce the currency risk when
securing Dollar financing. This is very needed in our routine operation and is
in compliance with the applicable laws and regulations. We have formulated
Risk analysis and risk control measures for the Management Rules of Konka Group Co., Ltd. for Investment In
positions held in derivatives in the Reporting Derivative Financial Instruments, making clear the relevant consideration
Period and approval procedure, risk control, etc.. We always sign forward forex
contracts with large banks such as the Bank of China, which operate steadily
and have good credit standing, which could help prevent loss on forward
forex contracts due to bank failure.
How we usually measure the fair value of derivative financial instruments:
Based on the forward forex sales and purchase contracts that are signed
Changes in market price or fair value of between the Company and banks and have not expired in a reporting period,
derivatives invested in the Reporting Period we recognize the differences between the quotations for these contracts on
(specific methods used and relevant assumption the balance sheet dates provided by the banks and the contractual prices as
and parameter settings shall be disclosed for transactional financial assets or liabilities, and the profit/loss on fair value
analysis of fair value of derivatives) changes is recognized accordingly. Because these contracts have locked in
exchange rates, no changes will occur when comparing the fair value on
signing dates with that on delivery dates.
Significant changes in the Company’s accounting
policies and specific accounting principles for
No significant changes
derivatives in the Reporting Period as compared
to the prior period
It is considered necessary for the Company to lock in dollar financing costs
through financial instruments, because it could effectively reduce the
Special opinions expressed by independent
currency risk when securing dollar financing. The Company has formulated
directors concerning the Company’s derivatives
the internal control mechanism for investment in derivative financial
investment and risk control
instruments, and the relevant risk control measures that the Company has
taken are considered effective.
Unit: RMB’0,000
Type of derivative Opening Closing
Profit/loss in the Closing investment amount as a percentage of
financial contractual contractual
Reporting Period the Company’s closing net assets
instrument amount amount
Forward forex
224,712.77 107,782.25 -1,287.64 36.44%
contract
16
Konka Group Co., Ltd. Semi-annual Report 2016
*Note: Forward foreign exchange contracts signed in 2015,fair value changes of forward forex contracts signed in 2015 generated
profit of RMB32 million 590 thousand .
(3) Entrustment loans
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Use of raised funds
□ Applicable √ Not applicable
No such cases in the Reporting Period.
4. Analysis to main subsidiaries and stock-participating companies
√ Applicable □ Not applicable
Particulars about main subsidiaries and stock-participating companies:
Unit: RMB
Rela
tion
ship Regis
Main
Company with Indu tered Operating Operating
products Total assets Net assets Net profit
name the stry capit revenues profit
/services
Co al
mpa
ny
Develop
Shenzhen
ment
Wankaida Elec
and
Science Sub troni RMB10
mainten 13,985,273. 13,559,724.
and sidi cs 00000 352,800,091.3 16,250,270.00
ance of 356,085,832.29 30 40
Technolo ary indu 0 8
software
gy Co., stry
technolo
Ltd.
gy
Shenzhen Producti
Elec
Konka on and
Sub troni RMB30
Informati sale of
sidi cs 00000 5,056,386.0 5,575,572.3
on digital 106,675,265.62 16,103,958.16 124,701,775.25
ary indu 0 5 1
Network network
stry
Co., Ltd. products
Anhui Producti
Konka Elec on and
Tongchua Sub troni sale of RMB18
10,145,503. 22,709,563.
ng sidi cs refrigera 00000 -38,692,445.6
966,114,676.39 780,428,401.44 96 30
Househol ary indu tors, 00 8
d stry washing
Applianc machine
17
Konka Group Co., Ltd. Semi-annual Report 2016
es Co., s and
Ltd. other
househo
ld
applianc
es
Producti
Anhui Elec
on and
Konka Sub troni RMB14
sale of 1,782,076,379. 28,833,004. 41,054,374.
Electroni sidi cs 00000 328,365,288.8
multime 953,415,489.96 17 46 04
c Co., ary indu 00 0
dia
Ltd. stry
products
EnRay Join
Tek t Elec
Producti
Optoelect stoc troni USD64
on and 1,392,787,226. -77,915,536 -45,113,945
ronics k cs 19660 185,934,052.7 83,883,271.42
sale of 52 .48 .96
(Shanghai com indu 0 6
LED
) Co., pan stry
Ltd. y
Producti
on and
Shenzhen sale of
Konka mobile
Elec
Telecom commun
Sub troni RMB12
municatio ication -249,387,945. -6,009,638. -4,831,399.
sidi cs 00000
ns products 289,342,057.13 83 426,081,244.88 43 37
ary indu 00
Technolo & sale
stry
gy Co., of
Ltd. multime
dia
products
Producti
on and
Kunshan Elec
sale of
Konka Sub troni RMB35
TFT-LC
Electroni sidi cs 00000 314,418,162.0 2,408,967.8
M and 663,193,530.34 929,589,471.64 -357,420.02
c Co., ary indu 00 1 7
multime
Ltd. stry
dia
products
Donggua Elec Producti
Sub RMB26
n Konka troni on and
sidi 66700 466,503,216.6 -19,496,047 -15,305,981
Electroni cs sale of 625,305,655.39 325,252,491.87
ary 00 1 .70 .35
c Co., indu multime
18
Konka Group Co., Ltd. Semi-annual Report 2016
Ltd. stry dia
products
Export
&
Elec import
Hong
Sub troni of
Kong HKD50 1,594,637,371. 40,507,777. 33,739,406.
sidi cs electrom
Konka 0000 995,363,866.07 94,545,308.06 96 27 73
ary indu echanica
Co., Ltd.
stry l and
electroni
cs
5. Significant projects invested with non-raised funds
√ Applicable □ Not applicable
Unit: RMB’0,000
Total Cumulative
Disclosu
planed Input for actual input Project Disclosure
Project name Project earnings re date
investmen this period as at the progress index (if any)
(if any)
t period-end
The Phase I and Phase II
Kunshan residences had completed
Shuiyue the construction and were 6 Jul. www.cninfo.
200,000 14,706 114,835 57.42%
Zhouzhuang selling while the Phase III 2010 com.cn
Project residences were still in
progress.
Urban
renewal
projects of Had acquired the land
the conceptual drawing and 21 Nov. www.cninfo.
690,000 -190 5,565 0.81%
headquarters planning permission and 2014 com.cn
factory of was executing the EIA.
Konka
Group
Total 890,000 14,516 120,400 -- -- -- --
VI Performance forecast for January-September 2016
Warning of possible loss or considerable YoY movement in the accumulated net profit made during
the period-beginning to the end of the next Reporting Period, as well as the reasons
□ Applicable √ Not applicable
VII Explanation of the Board of Directors and the Board of Supervisors on the
“non-standard” auditor’s report issued by the CPAs firm for the Reporting Period
□ Applicable √ Not applicable
19
Konka Group Co., Ltd. Semi-annual Report 2016
VIII Explanation of the Board of Directors on the issues mentioned in the “non-standard”
auditor’s report issued by the CPAs firm for last year
□ Applicable √ Not applicable
IX Profit distribution in the Reporting Period
Profit distribution plan implemented in the Reporting Period, especially execution and adjustment
of any cash dividend plan and any plan for converting capital reserve into share capital
□ Applicable √ Not applicable
The profits distribution of the Company of the first half year was not to distribute any cash bonus or
bonus share with no plan for converting capital reserve into share capital.
X Preliminary plan for profit distribution and converting capital reserve into share capital for
the Reporting Period
□ Applicable √ Not applicable
The Company plans not to distribute cash dividends or bonus shares or convert capital reserve into
share capital for the first half of the year.
XI Visits paid to the Company for purposes of research, communication, interview, etc.
□ Applicable √ Not applicable
No such situation of the Company during the Reporting Period.
20
Konka Group Co., Ltd. Semi-annual Report 2016
Section V Significant Events
I. Corporate governance
In the Reporting Period, in strict compliance with the Company Law, the Securities Law and other
relevant laws, regulations and rules governing corporate governance of listed companies, as well as
the Company’s Articles of Association, the Company kept optimizing its corporate governance
structure, promoted compliance with applicable laws and regulations in its operation, and performed
the information disclosure duty strictly in accordance with the Stock Listing Rules of the Shenzhen
Stock Exchange. All directors, supervisors and senior executives of the Company performed their
duties diligently. The Shareholders’ General Meeting, the Board of Directors and the Supervisory
Committee all operated in compliance with relevant laws and regulations. The Company’s existing
internal control rules played the role of supervision, control and guidance effectively in its
production and operation. Independence and transparency of the Company, together with a
professional board of directors, ensured that every decision of the Company was made in a
scientific procedure. The actual situation of the Company’s governance was in compliance with the
Company Law and the relevant CSRC requirements.
II. Lawsuits
Significant litigations and arbitrations
□ Applicable √ Not applicable
There was no any significant litigation and arbitration of the Company in the Reporting Period.
Other lawsuits
√ Applicable □ Not applicable
Amount
Forming Progress
involved in Trial result and Enforcement on
the of the Discl Discl
Basic information of the the lawsuit influence of the the judgment of
estimated lawsuit osure osure
lawsuit (arbitration) (arbitration) lawsuit the lawsuit
liabilities (arbitrati date index
(RMB Ten (arbitration) (arbitration)
or not? on)
thousand)
See the details to the
description of the Notes 2.
Contingencies of the Chapter
XII. Commitments and
Contingencies among the
notes to the financial
statement.
21
Konka Group Co., Ltd. Semi-annual Report 2016
III. Media’s queries
□Applicable √Not applicable
There was no media’s common query during the Reporting Period.
IV. Bankruptcy reorganization
□ Applicable √ Not applicable
No event involving bankruptcy reorganization occurred to the Company in the Reporting Period.
V. Asset transactions
1. Purchase of assets
□ Applicable √ Not applicable
There was no purchase of assets by the Company during the Reporting Period.
2. Sale of assets
□ Applicable √ Not applicable
There was no sale of assets by the Company during the Reporting Period.
3. Business combination
□ Applicable √ Not applicable
No business combination occurred to the Company during the Reporting Period.
VI. Implementation of equity incentive and its influence
□ Applicable √ Not applicable
The Company did not make or carry out any equity incentive plan during the Reporting Period.
VII. Significant related-party transactions
1. Related-party transactions concerning routine operation
√ Applicable □ Not applicable
Obtaina
Cont As a Approve ble
Type Transact
Relation ents Pricin Tran percentage d Over the Mode market
of ion Index to the
Related with the of g sacti of transacti approve of price for Disclosu
trans amount disclosed
party Compan trans princip on transaction on line d line or settle transacti re date
actio (RMB’0 information
y actio le price s of the (RMB’0 not ment ons of
n ,000)
n same kind ,000) the same
kind
Anhui Purc Purc
Under
Huali hase hase Negoti Mar
the same
of
Packing actual of ated ket 1,331.69 5,000 No Cash N/A
com http://www.cninfo.co
Co., controll mate price price
modi 8 Apr. m.cn/finalpage/2016-
Ltd. er rials
ties 2016 04-08/1202150009.P
Shangha Under Purc Purc DF
Negoti Mar
i Huali the same hase hase
ated ket 615.10 2,000 No Cash N/A
Packing actual of of
price price
Co., controll com mate
22
Konka Group Co., Ltd. Semi-annual Report 2016
Ltd. er modi rials
ties
Huali Purc Purc
Under
Packing the same hase hase Negoti Mar
of
(Huizho actual of ated ket 465.08 2,000 No Cash N/A
com
u) Co., controll mate price price
modi
Ltd. er rials
ties
Maint
enanc
Shenzhe Under e
n OCT the same Labor and Negoti Mar
East actual servic proce ated ket 3.54 No Cash N/A
Co., controll e ssing price price
Ltd. er fee
inco
1,000
me
Shangha Sales
i Under of
Sales
Tianxia the same liquid Negoti Mar
of
ng OCT actual crysta ated ket 6.33 No Cash N/A
comm
Investm controll l price price
odities
ent Co., er displa
Ltd. y
Total -- -- 2,421.74 -- 10,000 -- -- -- -- --
Details of any sales return of a
Not applicable
large amount
Give the actual situation in the
The Company has published the Forecasting Public Notice on Routine Related Transaction for
Reporting Period (if any)
Y2016 (public notice No. 2016-20) on Securities Times, Shanghai Securities News, China
where a forecast had been
Securities Journal and Hong Kong Ta Kung Pao as well as the Internet website designated by CSRC
made for the total amounts of
http://www.cninfo.com.cn on 8 April 2016. In the Reporting Period, the basis for pricing,
routine related-party
transaction price, transaction amount and settlement methods of raw materials purchased by the
transactions by type to occur
Company were basically in accordance with the forecast. The total amount was RMB24.2174
in the Reporting Period (if
million.
any)
Reason for any significant
difference between the
The transaction price was fixed by referring to the market price, which had not any significant
transaction price and the
difference with the market price.
market reference price (if
applicable)
2. Related-party transactions arising from acquisition and sale of assets
□ Applicable √ Not applicable
No such cases in the Reporting Period.
23
Konka Group Co., Ltd. Semi-annual Report 2016
3. Related-party transactions arising from joint investment in external parties
□ Applicable √ Not applicable
No such cases in the Reporting Period.
4. Credits and liabilities with related parties
□ Applicable √ Not applicable
No such cases in the Reporting Period.
5. Other related transactions
√ Applicable □ Not applicable
(1) For satisfying the need of the current business development of the Company and at the same
time reduce the financing cost. The Company reviewed and approved the Proposal on Applying the
Entrusted Loan Quota for OCT Holdings Company on the 12th Session of the 8th Board of Directors,
which agreed the Company to apply for the entrusted loans not more than RMB5 billion for OCT
Holdings Company in Y2016 and needed to withdraw the loans by specific times and periods
according to the business when using. What’s more, the Company could sign the entrusted loans
contract with the bank as well as the OCT Holdings Company within RMB5 billion. And the
meeting aslo agreed the interest rate of the entrusted loans not more than the benchmark interest rate
of the loans during the same period of People’s Bank of China with the interests amount paid for
OCT Holdings Company within 1 year by the Company involved with transation should not exceed
RMB0.2 billion.
(2) In Y2016, the total amount of the planed private offering of the Company not more than
636,942,675 shares of the A Shares. On 12 April 2016, the Company and the controlling
shareholder OCT Holdings Company signed the Share Subscription Contract with Sub Conditione,
of which OCT Holdings Company planed to subscribe the private offering A Shares of the
Company of 297,239,915 shares in cash. The number of the subsciped shares by the controlling
shareholder was with untertainty owning to the events of the private offering shares of the Company
still needed to be approved by CSRC.
Related index of the disclosure website of the interim reports on the related transactions
Name Disclosure date Disclosed website
Announcement on the Related Transactions 3 Mar. 2016 www.cninfo.com.cn
Announcement on the Private Offering the A
Share of the Company Involving with 13 Apr. 2016 www.cninfo.com.cn
Related Transactions Events
VIII. Occupation of the Company’s funds for non-operating purposes by the controlling
shareholder and its related parties
□ Applicable √ Not applicable
The controlling shareholder or its related parties did not occupy the Company’s funds for
non-operating purposes during the Reporting Period.
24
Konka Group Co., Ltd. Semi-annual Report 2016
IX. Significant contracts and fulfillment thereof
1. Trusteeship, contracting and leasing
(1) Trusteeship
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(2) Contracting
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(3) Leasing
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Guarantees provided by the Company
√ Applicable □ Not applicable
Unit: RMB’0,000
Guarantees provided by the company for external parties (excluding those for subsidiaries)
Guarantee
Disclosure date on Actual Actual Period
Guarant Execut for a
relevant Amount for occurrence date guarante Type of of
eed ed or related
announcement of guarantee (date of e guarantee guarante
party not party or
guaranteed amount agreement) amount e
not
N/A N/A 0 N/A 0 N/A 0 N/A N/A
Total external guarantee line approved during Total actual occurred amount of external
0 0
the Reporting Period (A1) guarantee during the Reporting Period (A2)
Total external guarantee line that has been
Total actual external guarantee balance at the end
approved at the end of the Reporting Period 0 0
of the Reporting Period (A4)
(A3)
Guarantees provided by the Company for its subsidiaries
Disclosure date of Guarant
Period
relevant Amount Actual occurrence Actual Execut ee for a
Guarantee Type of of
announcement on for date (date of guarante ed or related
d party guarantee guarant
the guarantee guarantee agreement) e amount not party or
ee
amount not
Anhui
General
Tongchua 31 Dec. 2015 10,500 1 year No No
guaranty
ng
21 Nov. 2014 30,000
Anhui
General
Tongchua 16 Jun. 2016 2,000 1 year No No
guaranty
ng
25
Konka Group Co., Ltd. Semi-annual Report 2016
Communi
cation General 17
21 Nov. 2014 60,000 22 Apr. 2015 50,000 No No
technolog guaranty months
y
Hong
General
Kong 17 Sep. 2014 18,880 2 years No No
guaranty
Konka
30 Sep. 2013 307,500
Hong
General 9
Kong 23 Nov. 2015 43,300 No No
guaranty months
Konka
Total guarantee line approved for the subsidiaries Total actual occurred amount of guarantee for the
427,500 2,000
during the Reporting Period (B1) subsidiaries during the Reporting Period (B2)
Total guarantee line that has been approved for the Total actual guarantee balance for the
subsidiaries at the end of the Reporting Period 597,050 subsidiaries at the end of the Reporting Period 124,680
(B3) (B4)
Guarantees provided by the subsidiaries for the subsidiaries
Disclosure date
Amount Actual Actual
of relevant Type of Guarantee
Guarantee for occurrence date guarante Period of Executed
announcement guarante for a related
d party guarant (date of e guarantee or not
on the guarantee e party or not
ee agreement) amount
amount
N/A N/A 0 N/A 0 N/A 0 N/A N/A
Total guarantee line approved for the Total actual occurred amount of guarantee for
0 0
subsidiaries during the Reporting Period (C1) the subsidiaries during the Reporting Period (C2)
Total guarantee line that has been approved for Total actual guarantee balance for the
the subsidiaries at the end of the Reporting 0 subsidiaries at the end of the Reporting Period 0
Period (C3) (C4)
Total guarantee amount provided by the Company (total of the above-mentioned three kinds of guarantees)
Total guarantee line approved during the Reporting Total actual occurred amount of guarantee
427,500 2,000
Period (A1+B1+C1) during the Reporting Period (A2+B2+C2)
Total guarantee line that has been approved at the
Total actual guarantee balance at the end of
end of the Reporting Period 597,050 124,680
the Reporting Period (A4+B4+C4)
(A3+B3+C3)
Proportion of total guarantee amount (A4+B4+C4) to the net assets
44.30%
of the Company
Of which:
Amount of guarantee for shareholders, actual controller and related parties (D) 0
Amount of debt guarantee provided for the guaranteed party whose asset-liability ratio is not
124,680
less than 70% directly or indirectly (E)
26
Konka Group Co., Ltd. Semi-annual Report 2016
Part of the amount of the total guarantee over 50% of net assets (F) 0
Total amount of the above three guarantees (D+E+F) 124,680
Explanation on possible bearing joint responsibility of liquidation due to immature
N/A
guarantee (if any)
Explanation on provision of guarantees for external parties in violation of the prescribed
N/A
procedure (if any)
Explanation on guarantee that adopts complex method
There was no any guarantee that adopted complex method of the Company during the Reporting
Period.
(1) Illegal provision of guarantees for external parties
□ Applicable √ Not applicable
The Company did not illegally provide any guarantee for any external party in the Reporting Period.
3. Other significant contracts
□ Applicable √ Not applicable
There was no other significant contract of the Company in the Reporting Period.
4. Other significant transactions
□ Applicable √ Not applicable
The Company was not involved in any other significant transaction in the Reporting Period.
X. Commitments made by the Company or any shareholder holding over 5% of the
Company’s shares in the Reporting Period or such commitments carried down into the
Reporting Period
√ Applicable □ Not applicable
Perio
Date of d of
Commitmen Commitment Execu
Contents of commitment commitme com
t maker tion
nt mitm
ent
The irregularity actions such as hadn’t disclose the idle land,
bid up the land price with property hoarding as well as bid up Being
the housing prices by the subsidiaries which engaged in the norm
Commitmen Konka Group 12 Apr. Long
real estate business that subordinated to Konka Group Co., ally
ts at the Co., Ltd. 2016 -term
Ltd. caused the losses for the listed companies and the execu
time of
investors, those subsidiaries should burden the compensation ting.
initial
responsibility.
public
The irregularity actions such as hadn’t disclose the idle land, Being
issuance or
bid up the land price with property hoarding as well as bid up norm
re-financing OCT Holdings 12 Apr. Long
the housing prices by the subsidiaries which engaged in the ally
Company 2016 -term
real estate business that subordinated to Konka Group Co., execu
Ltd. caused the losses for the listed companies and the ting.
27
Konka Group Co., Ltd. Semi-annual Report 2016
investors, those subsidiaries should burden the compensation
responsibility.
(I) I committed neither to gratuitously transport the benefits or China
with unfair conditions for other units or individuals nor to Secur
harm the interests of the Company through other methods; (II) ities
I committed to restrain myself for my position consumer Regul
behaviors; (III) I committed not to engage in the investment or atory
consumption activities irrelevant with my duty on the position Com
by employing the Company’s assets; (IV) I committed to missi
Directors and
connect the salary system that established by the Board of on is
Senior
Directors or the Remuneration and Appraisal Committee with 12 Apr. 1 revie
Executive Staffs
the execution of the Company’s filling up and return 2016 year wing
of Konka Group
measures; (V) I committed the vesting conditions of the stock the
Co., Ltd.
ownership incentive and the execution of the Company’s refina
filling up and return measures link correspondingly if the ncing
Company would execute the former in the future. And as the matte
responsibility main body of the practical performance of the rs, so
private offering filling up prompt return measures, I would the
like to undertake the corresponding legal liability if violated comm
or refused to perform the above-mentioned commitments. itmen
The Company committed not to carry out any excessive t has
intervention in the operating and management activities of not
OCT Holdings Konka Group Co., Ltd. and not carry out any embezzlement 12 Apr. 1 yet
Company of the interests of Konka Group Co., Ltd.. If the Company 2016 year entere
violated or refused to perform the above commitments should d into
willing to undertake corresponding legal liability. force.
Executed timely or not? No
Detailed reason for failing to execute and the next
Not applicable
plan (if any)
XI. Engagement and disengagement of the CPAs firm
Has the semi-annual financial report been audited?
□ Yes √ No
The semi-annual financial report had not been audited.
XII. Punishment and rectification
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XIII. Delisting risk due to violation of laws or regulations
□ Applicable √ Not applicable
No such risk in the Reporting Period.
XIV. Other significant events
28
Konka Group Co., Ltd. Semi-annual Report 2016
√ Applicable □ Not applicable
1. Progress of the private offering shares of the Company
In present, the relevant proposals such as the Proposal on the Preplan for the Private Offering A
Share of the Copmany had been reviewed and approved by the Board of Directors and Annual
General Meeting with the reply from the SASAC. And the CSRC were executing the verification
and review on the private offering shares of the Company.
As for the relevant contents of the private offering shares, please refer to the announcements of the
company on http://www.cninfo.com.cn.
Link
No. Time Name of announcement Page
www.cninfo.com.cn
Securities Times
Announcement on the 2015 Earnings http://www.cninfo.com.cn/finalpage/2016-01
2016-01 2016-1-23 B32, Ta Kung Pao
Forecasts -23/1201934829.PDF
B4
Securities Times
Announcement on the Resolution of the http://www.cninfo.com.cn/finalpage/2016-01
2016-02 2016-1-27 B40, Ta Kung Pao
11 Session of the 8 Board of Directors
th th
-27/1201943171.PDF
B7
Securities Times
Announcement on the Resolution of the 7th http://www.cninfo.com.cn/finalpage/2016-01
2016-03 2016-1-27 B40, Ta Kung Pao
Session of the 8 Board of Supervisors
th
-27/1201943172.PDF
B7
Securities Times
Indicative Announcement on the Listing http://www.cninfo.com.cn/finalpage/2016-02
2016-04 2016-2-27 B48, Ta Kung Pao
and Circulating of the Restricted Shares -27/1202003527.PDF
A21
Securities Times
Announcement on the Resolution of the http://www.cninfo.com.cn/finalpage/2016-03
2016-06 2016-3-3 B29, Ta Kung Pao
12 Session of the 8 Board of Directors
th th
-03/1202017481.PDF
B13
Securities Times
Announcement on the Related http://www.cninfo.com.cn/finalpage/2016-03
2016-07 2016-3-3 B29,Ta Kung Pao
Transactions -03/1202017480.PDF
B13
Securities Times
Notice on Convening the 2016 1st http://www.cninfo.com.cn/finalpage/2016-03
2016-08 2016-3-3 B29, Ta Kung Pao
Extraordinary General Meeting -03/1202017482.PDF
B13
Indicative Announcement on Convening Securities Times
http://www.cninfo.com.cn/finalpage/2016-03
2016-09 2016-3-16 the 2016 1st Extraordinary General B44, Ta Kung Pao
-16/1202045996.PDF
Meeting B10
Securities Times
Announcement on the Delisting owning to http://www.cninfo.com.cn/finalpage/2016-03
2016-10 2016-3-17 B45, Ta Kung Pao
Significant Events -17/1202051293.PDF
B4
Indicative Announcement on the Securities Times http://www.cninfo.com.cn/finalpage/2016-03
2016-11 2016-3-17
Temporarily Ceasing of the Listing and B24, Ta Kung -17/1202051277.PDF
29
Konka Group Co., Ltd. Semi-annual Report 2016
Transferring of the Yishijie Company PaoB4
Securities Times
Announcement on the Resolution of the http://www.cninfo.com.cn/finalpage/2016-03
2016-12 2016-3-22 B64,Ta Kung Pao
2016 1 Extraordinary General Meeting
st
-22/1202063800.PDF
B15
Securities Times
Announcement on the Progress of the http://www.cninfo.com.cn/finalpage/2016-03
2016-13 2016-3-24 B25, Ta Kung Pao
Significant Events -24/1202068976.PDF
B5
Securities Times
Announcement on Receiving the Tax http://www.cninfo.com.cn/finalpage/2016-03
2016-14 2016-3-26 B73, Ta Kung Pao
Reimbursement Events -26/1202081746.PDF
A21
Securities Times
Announcement on the Progress of the http://www.cninfo.com.cn/finalpage/2016-03
2016-15 2016-3-31 B73, Ta Kung Pao
Significant Events -31/1202110076.PDF
A21
Securities Times
http://www.cninfo.com.cn/finalpage/2016-04
2016-16 2016-4-8 Announcement on the 2015 Annual Report B40, Ta Kung Pao
-08/1202150039.PDF
A28
Securities Times
Announcement on the Abstract of the 2015 http://www.cninfo.com.cn/finalpage/2016-04
2016-17 2016-4-8 B40, Ta Kung Pao
Annual Report -08/1202150021.PDF
A28
Securities Times
Announcement on the Resolution of the http://www.cninfo.com.cn/finalpage/2016-04
2016-18 2016-4-8 B40, Ta Kung Pao
13 Session of the 8 Board of Directors
th th
-08/1202150019.PDF
A28
Securities Times
Announcement on the Resolution of the 8th http://www.cninfo.com.cn/finalpage/2016-04
2016-19 2016-4-8 B40, Ta Kung Pao
Session of the 8 Board of Supervisors
th
-08/1202150026.PDF
A28
Securities Times
Announcement on the Expectation of the http://www.cninfo.com.cn/finalpage/2016-04
2016-20 2016-4-8 B40, Ta Kung Pao
2016 Routine Related Transaction -08/1202150009.PDF
A28
Securities Times
http://www.cninfo.com.cn/finalpage/2016-04
2016-21 2016-4-8 Announcement on the External Guarantee B40, Ta Kung Pao
-08/1202150010.PDF
A28
Securities Times
Notice on Convening the 2015 Annual http://www.cninfo.com.cn/finalpage/2016-04
2016-22 2016-4-8 B40, Ta Kung Pao
General Meeting -08/1202150020.PDF
A28
Securities Times
Announcement on the Progress of the http://www.cninfo.com.cn/finalpage/2016-04
2016-23 2016-4-8 B40, Ta Kung Pao
Significant Events -08/1202150011.PDF
A29
Announcement on the Notes to the Securities Times http://www.cninfo.com.cn/finalpage/2016-04
2016-24 2016-4-13
Number of the Subscription Entities B11, Ta Kung Pao -13/1202169859.PDF
30
Konka Group Co., Ltd. Semi-annual Report 2016
Involved after the Penetration of the B8
Subscription Target of the Private Offering
A Shares
Announcement on the Risks Reminders of
Securities Times
the Diluted Prompt Return of the Private http://www.cninfo.com.cn/finalpage/2016-04
2016-25 2016-4-13 B11, Ta Kung Pao
Offering Shares and the Filling Up -13/1202169860.PDF
B8
Measures
Announcement on the Related Securities Times
http://www.cninfo.com.cn/finalpage/2016-04
2016-26 2016-4-13 Transactions Involved with the Private B11,Ta Kung Pao
-13/1202169862.PDF
Offering A Shares of the Company B8
Announcement on the Company signed the
Securities Times
Share Subscription Contract with Sub http://www.cninfo.com.cn/finalpage/2016-04
2016-27 2016-4-13 B11, Ta Kung Pao
Conditione with the Subscription Target of -13/1202169863.PDF
B8
Konka Group Co., Ltd.
Notes to the Specific Report on the Securities Times
http://www.cninfo.com.cn/finalpage/2016-04
2016-28 2016-4-13 Company Needn’t to Compile the Previous B11, Ta Kung Pao
-13/1202169864.PDF
Raise Funds Usage Situation B9
Securities Times
Announcement on the Resolution of the http://www.cninfo.com.cn/finalpage/2016-04
2016-29 2016-4-13 B11, Ta Kung Pao
14 Session of the 8 Board of Directors
th th
-13/1202169865.PDF
B9
Securities Times
Announcement on the Resolution of the 9th http://www.cninfo.com.cn/finalpage/2016-04
2016-30 2016-4-13 B11, Ta Kung Pao
Session of the 8th Board of Supervisors -13/1202169866.PDF
B9
Securities Times
Indicative Announcement on the http://www.cninfo.com.cn/finalpage/2016-04
2016-31 2016-4-13 B11, Ta Kung Pao
Resumption of the Significant Events -13/1202169867.PDF
B9
Securities Times
Indicative Announcement on Convening http://www.cninfo.com.cn/finalpage/2016-04
2016-32 2016-4-23 B44, Ta Kung Pao
the 2015 Annual General Meeting -23/1202225330.PDF
B17
Securities Times
http://www.cninfo.com.cn/finalpage/2016-04
2016-33 2016-4-29 2016 First Quarter Report B84, Ta Kung Pao
-29/1202263671.PDF
B9
http://www.cninfo.com.cn/finalpage/2016-04
2016-34 2016-4-29 Text of the 2016 First Quarter Report
-29/1202263674.PDF
Securities Times
Announcement on the Resolution of the http://www.cninfo.com.cn/finalpage/2016-04
2016-35 2016-4-30 B212, Ta Kung Pao
2015 Annual General Meeting -30/1202282189.PDF
A10
Announcement on the Resolution of the Securities Times http://www.cninfo.com.cn/finalpage/2016-05
2016-36 2016-5-4
16th Session of the 8th Board of Directors B36, Ta Kung Pao -04/1202287814.PDF
31
Konka Group Co., Ltd. Semi-annual Report 2016
B1
Securities Times
Announcement on the Resign of the Vice http://www.cninfo.com.cn/finalpage/2016-05
2016-37 2016-5-11 B64, Ta Kung Pao
President of the Company -11/1202314647.PDF
B2
Securities Times
Announcement on Receiving the Reply http://www.cninfo.com.cn/finalpage/2016-05
2016-38 2016-5-12 B56, Ta Kung Pao
from SASAC of the Private Offering -12/1202316512.PDF
A16
Indicative Announcement on Convening Securities Times
http://www.cninfo.com.cn/finalpage/2016-05
2016-39 2016-5-12 the 2016 2nd Extraordinary General B56, Ta Kung Pao
-12/1202316511.PDF
Meeting A16
Securities Times
Announcement on the Resolution of the http://www.cninfo.com.cn/finalpage/2016-05
2016-40 2016-5-20 B76, Ta Kung Pao
2016 2nd Extraordinary General Meeting -20/1202330961.PDF
B9
Announcement on the Receiving of the Securities Times
http://www.cninfo.com.cn/finalpage/2016-06
2016-41 2016-6-22 Acceptance of the Private Offering B45, Ta Kung Pao
-22/1202380173.PDF
Application from CSRC B3
Securities Times
Announcement on Receiving the Tax http://www.cninfo.com.cn/finalpage/2016-06
2016-42 2016-6-25 B24, Ta Kung Pao
Reimbursement -25/1202402692.PDF
B1
XV Corporate bonds
Corporate bonds publicly offered and listed on the stock exchange which were undue before the
approval date of the Report or were due but could not be redeemed in full
No
32
Konka Group Co., Ltd. Semi-annual Report 2016
Section VI Share Changes and Shareholders’ Profile
I Changes in shares
Unit: Share
Reasons for share changes
Before Increase/decrease (+/-) After
Incre
Bo ase
Ne
nu from
Perce w Perce
Number s capit Other Subtotal Number
ntage issu ntage
sha al
es
res reser
ve
I. Shares subject to 16.48 -396,932,96 -396,932,96
396,932,960 0 0%
trading moratorium % 0 0
2. Shares held by
16.48 -396,763,88 -396,763,88
state-owned 396,763,880 0 0%
% 0 0
corporation
.3 Shares held by
other domestic 169,080 0% -169,080 -169,080 0 0%
investors
Shares held by
the domestic 169,080 0% -169,080 -169,080 0 0%
individuals
II. Shares not
83.52 2,407,945,40
subject to trading 2,011,012,448 396,932,960 396,932,960 100%
% 8
moratorium
1. RMB ordinary 49.83 1,596,593,80 66.31
1,199,829,920 396,763,880 396,763,880
shares % 0 %
2. Domestically
33.69 33.69
listed foreign 811,182,528 169,080 169,080 811,351,608
% %
shares
2,407,945,40
III. Total shares 2,407,945,408 100% 0 100%
8
√ Applicable □ Not applicable
1. 2 March 2016, 396,763,880 shares of the Company; stocks held by OCT Holdings Company
were relieved the restriction. See the details on the Indicative Announcement on the Listing and
Circulating of the Restricted Shares disclosed on 27 February by the Company (Announcement No.
33
Konka Group Co., Ltd. Semi-annual Report 2016
2016-04).
2. Mr. Zhang Guanghui had resigned the position as a Supervisor officially on 5 November 2015
with the 169,080 shares subject to trading moratorium held by whom of the Company's had all
automatically terminated the restriction on 5 May 2016.
Reasons for changes in shares
□ Applicable √ Not applicable
Approval of share changes
□ Applicable √ Not applicable
Transfer of share ownership
□ Applicable √ Not applicable
Effects of changes in shares on the basic EPS, diluted EPS, net assets per share attributable to
common shareholders of the Company and other financial indexes over the last year and the last
Reporting Period
□ Applicable √ Not applicable
Other contents that the Company considers necessary or is required by the securities regulatory
authorities to disclose
□ Applicable √ Not applicable
Change of the total shares, shareholder structure, asset structure and liability structure
□ Applicable √ Not applicable
II. Total number of shareholders and their shareholdings
Unit: Share
Total number of ordinary
Total number of preference shareholders who had resumed their
shareholders at the end of 153,573 0
voting right at the end of the Reporting Period (if any) (see note 8)
the Reporting Period
Shareholdings of ordinary shareholders with a stake over 5% or top 10 ordinary shareholders
Pledged or
Number of Increase/decre Number frozen shares
Shareho
Nature of shares held at ase of shares of Number of Num
lding Statu
Name of shareholder sharehold the end of the during the restricte non-restricted ber
percenta s of
er Reporting Reporting d shares shares held of
ge (%) share
Period Period held shar
s
es
Pledg
State-own 0
ed ed
OCT Enterprises Co. 21.75% 523,746,932 0 0 523,746,932
corporatio Froze
n 0
n
Pledg
CITIC Securities Foreign 0
ed
Brokerage (Hong corporatio 7.48% 180,001,110 0 0 180,001,110
Froze
Kong) Co., Ltd. n 0
n
34
Konka Group Co., Ltd. Semi-annual Report 2016
Pledg
Guoyuan Securities Foreign 0
ed
Broker (HK) Co., corporatio 2.33% 55,987,919 -3,839,251 0 55,987,919
Froze
Ltd. n 0
n
Pledg
Foreign 0
Holy Time Group ed
corporatio 2.32% 55,971,924 3,391,570 0 55,971,924
Limited Froze
n 0
n
Pledg
Foreign 0
ed
Gaoling Fund, L.P. corporatio 2.19% 52,801,250 0 0 52,801,250
Froze
n 0
n
State-own Pledg
0
ed ed
CMS (HK) 1.04% 24,987,716 2,260,912 0 24,987,716
corporatio Froze
0
n n
Pledg
0
Foreign ed
Nam Ngai 0.97% 23,285,040 -96,000 0 23,285,040
Individual Froze
0
n
Pledg
CSI Capital Foreign 0
ed
Management corporatio 0.83% 20,050,928 -500,000 0 20,050,928
Froze
Limited n 0
n
Pledg
0
Domestic ed
Meng Diliang 0.58% 13,851,983 13,851,983 0 13,851,983
Individual Froze
0
n
Nanhua Futures Co., Pledg
0
Ltd. － Nanhua ed
Futures Silver Leaf Other 0.44% 10,698,201 10,698,201 0 10,698,201
Froze
No. 2 Assets 0
n
Management Plan
Strategic investor or general
corporation becoming a top ten
ordinary shareholder due to N/A
placing of new shares (if any) (see
Note 3)
Related or act-in-concert parties Jialong Investment Limited, a wholly-funded subsidiary of the Company’s first majority
35
Konka Group Co., Ltd. Semi-annual Report 2016
among the shareholders above shareholder OCT Enterprises Co., holds 180,001,110 and 18,360,000 ordinary shares in the
Company respectively through CITIC Securities Brokerage (Hong Kong) Co., Ltd. and
CMS (HK). Jialong Investment Limited and OCT Enterprises Co. are parties acting in
concert. Other than that, it is unknown whether the other shareholders are related parties or
act-in-concert parties or not.
Particulars about shares held by the top ten common shareholders holding shares not subject to trading moratorium
Number of tradable Type of shares
Name of shareholder shares held at the
Type Number
period-end
RMB ordinary
OCT Enterprises Co. 523,746,932 523,746,932
share
Domestically
CITIC Securities Brokerage (Hong Kong) Co., Ltd. 180,001,110 listed foreign 180,001,110
shares
Domestically
Guoyuan Securities Broker (HK) Co., Ltd. 55,987,919 listed foreign 55,987,919
shares
Domestically
Holy Time Group Limited 55,971,924 listed foreign 55,971,924
shares
Domestically
Gaoling Fund, L.P. 52,801,250 listed foreign 52,801,250
shares
Domestically
CMS (HK) 24,987,716 listed foreign 24,987,716
shares
Domestically
Nam Ngai 23,285,040 listed foreign 23,285,040
shares
Domestically
CSI Capital Management Limited 20,050,928 listed foreign 20,050,928
shares
RMB ordinary
Meng Diliang 13,851,983 13,851,983
share
Nanhua Futures Co., Ltd. － Nanhua Futures Silver Leaf No. RMB ordinary
10,698,201 10,698,201
2 Assets Management Plan share
Related or act-in-concert parties Jialong Investment Limited, a wholly-funded subsidiary of the Company’s first majority
among the top 10 non-restricted shareholder OCT Enterprises Co., holds 180,001,110 and 18,360,000 ordinary shares in the
ordinary shareholders as well as Company respectively through CITIC Securities Brokerage (Hong Kong) Co., Ltd. and
between the top 10 non-restricted CMS (HK). Jialong Investment Limited and OCT Enterprises Co. are parties acting in
36
Konka Group Co., Ltd. Semi-annual Report 2016
ordinary shareholders and the top concert. Other than that, it is unknown whether the other shareholders are related parties or
10 ordinary shareholders act-in-concert parties or not.
Top 10 ordinary shareholders
Meng Diliang holds 13,851,983 A-shares in the Company through a client account of
conducting securities margin
collateral securities for margin trading in Essence Securities Co., Ltd..
trading (if any) (see Note 4)
Did any of the top 10 ordinary shareholders or the top 10 non-restricted ordinary shareholders of the
Company conduct any promissory repo during the Reporting Period?
□ Yea √ No
No such cases in the Reporting Period.
III Change of the controlling shareholder or the actual controller
Change of the controlling shareholder in the Reporting Period
□ Applicable √ Not applicable
No such cases in the Reporting Period.
Change of the actual controller in the Reporting Period
□ Applicable √ Not applicable
No such cases in the Reporting Period.
IV Any shareholding increase plan proposed or implemented by any shareholder or its
act-in-concert parties during the Reporting Period
√ Applicable □ Not applicable
In Y2016, the total amount of the planed private offering of the Company not more than
636,942,675 shares of the A Shares. On 12 April 2016, the Company and the controlling
shareholder OCT Holdings Company signed the Share Subscription Contract with Sub Conditione,
of which OCT Holdings Company planed to subscribe the private offering A Shares of the
Company of 297,239,915 shares in cash. The number of the subsciped shares by the controlling
shareholder was with untertainty owning to the events of the private offering shares of the Company
still needed to be approved by CSRC.
37
Konka Group Co., Ltd. Semi-annual Report 2016
Section VII Preference Shares
□ Applicable √ Not applicable
No preference shares in the Reporting Period.
38
Konka Group Co., Ltd. Semi-annual Report 2016
Section VIII Directors, Supervisors and Senior Management
I. Changes in shareholding of Directors, Supervisors and Senior Management Staff
□ Applicable √ Not applicable
There was no change in shareholding of Directors, Supervisors and Senior Management Staffs, for
the specific information please refer to the 2015 Annual Report.
II. Change of directors, supervisors and senior management staff
√ Applicable □ Not applicable
Name Position Type Date Reason
Lin Gaike Vice President Left 9 May 2016 Owning to personal reasons.
39
Konka Group Co., Ltd. Semi-annual Report 2016
Section IX Financial Report
I Auditor’s report
Has this semi-annual report been audited?
□ Yes √ No
This semi-annual financial report has not been audited.
II Financial statements
Currency unit for the statements in the notes to these financial statements: RMB
1. Consolidated balance sheet
Prepared by Konka Group Co., Ltd.
Unit: RMB
Item Closing balance Opening balance
Current assets:
Monetary funds 2,598,216,832.20 1,706,446,928.92
Settlement reserve
Interbank lendings
Financial assets at fair value
15,462,265.94 33,196,377.28
through profit/loss
Derivative financial assets
Notes receivable 2,458,053,333.17 2,880,860,750.44
Accounts receivable 2,041,011,200.19 2,048,813,439.34
Accounts paid in advance 390,800,922.01 193,664,620.66
Premiums receivable
Reinsurance premiums receivable
Receivable reinsurance contract
reserve
Interest receivable 5,287,614.37 7,426,409.52
Dividends receivable 10,171,609.48
Other accounts receivable 121,908,173.25 160,165,779.82
Financial assets purchased under
agreements to resell
Inventories 2,925,556,540.93 2,882,515,913.28
Assets held for sale
Non-current assets due within one
year
Other current assets 749,984,012.78 647,311,938.45
Total current assets 11,316,452,504.32 10,560,402,157.71
Non-current assets:
Loans and advances to customers
Available-for-sale financial assets 311,966,097.66 311,974,282.66
40
Konka Group Co., Ltd. Semi-annual Report 2016
Held-to-maturity investments
Long-term accounts receivable
Long-term equity investments 276,561,119.65 190,573,524.29
Investment property 224,902,541.38 227,718,178.53
Fixed assets 1,604,828,298.83 1,763,503,189.50
Construction in progress 173,840,293.07 207,854,180.88
Engineering materials
Disposal of fixed assets
Productive living assets
Oil-gas assets
Intangible assets 302,534,275.68 352,591,887.48
R&D expenses
Goodwill 3,597,657.15 3,597,657.15
Long-term deferred expenses 81,308,337.05 82,846,982.07
Deferred tax assets 585,797,410.57 549,305,508.01
Other non-current assets
Total non-current assets 3,565,336,031.04 3,689,965,390.57
Total assets 14,881,788,535.36 14,250,367,548.28
Current liabilities:
Short-term borrowings 4,588,542,749.93 4,150,773,195.76
Borrowings from the Central Bank
Money deposits accepted and
inter-bank deposits
Interbank borrowings
Financial liabilities at fair value
607,587.55
through profit/loss
Derivative financial liabilities
Notes payable 1,576,295,677.85 929,176,857.06
Accounts payable 2,397,684,987.37 2,980,416,983.25
Accounts received in advance 1,095,680,485.97 349,784,807.32
Financial assets sold for repurchase
Fees and commissions payable
Payroll payable 215,805,759.96 279,631,258.71
Taxes and fares payable 94,188,828.34 92,097,951.90
Interest payable 17,321,232.74 20,552,763.14
Dividends payable
Other accounts payable 1,534,161,912.92 1,550,931,573.35
Reinsurance premiums payable
Insurance contract reserve
Payables for acting trading of
securities
41
Konka Group Co., Ltd. Semi-annual Report 2016
Payables for acting underwriting of
securities
Liabilities held for sale
Non-current liabilities due within
198,777,984.78 573,398,959.65
one year
Other current liabilities
Total current liabilities 11,719,067,207.41 10,926,764,350.14
Non-current liabilities:
Long-term borrowings 23,700,000.00
Bonds payable
Of which: Preference shares
Perpetual bonds
Long-term accounts payable 30,123,076.96 30,133,333.37
Long-term payroll payable 20,652,314.24 23,435,856.86
Special payables
Provisions 4,711,597.59 4,629,554.61
Deferred income 144,644,524.59 162,786,004.20
Deferred tax liabilities 4,686,260.02 3,468,031.97
Other non-current liabilities
Total non-current liabilities 204,817,773.40 248,152,781.01
Total liabilities 11,923,884,980.81 11,174,917,131.15
Owners’ equity:
Share capital 2,407,945,408.00 2,407,945,408.00
Other equity instruments
Of which: Preference shares
Perpetual bonds
Capital reserve 80,899,084.39 78,209,535.19
Less: Treasury shares
Other comprehensive income -12,002,894.24 3,155,744.00
Special reserve
Surplus reserve 847,908,466.28 847,908,466.28
Provisions for general risks
Retained earnings -510,001,545.90 -522,836,282.66
Equity attributable to owners of the
2,814,748,518.53 2,814,382,870.81
Company
Minority interests 143,155,036.02 261,067,546.32
Total owners’ equity 2,957,903,554.55 3,075,450,417.13
Total liabilities and owners’ equity 14,881,788,535.36 14,250,367,548.28
Legal representative: Liu Fengxi Chief of the accounting work: Xiao Qing
Chief of the accounting organ: Xu Youshan
42
Konka Group Co., Ltd. Semi-annual Report 2016
2. Balance sheet of the Company
Unit: RMB
Item Closing balance Opening balance
Current assets:
Monetary funds 1,368,113,756.52 502,899,530.83
Financial assets at fair value
15,462,265.94 7,184,035.29
through profit/loss
Derivative financial assets
Notes receivable 2,228,459,839.02 2,635,643,772.62
Accounts receivable 1,735,206,602.19 1,417,915,276.56
Accounts paid in advance 799,360,624.63 372,509,871.77
Interest receivable 10,318,031.05 14,901,123.48
Dividends receivable
Other accounts receivable 1,117,623,693.70 938,447,798.08
Inventories 1,597,555,765.74 1,771,302,947.50
Assets held for sale
Non-current assets due within one
year
Other current assets 698,755,624.48 530,272,796.83
Total current assets 9,570,856,203.27 8,191,077,152.96
Non-current assets:
Available-for-sale financial assets 271,916,097.66 271,924,282.66
Held-to-maturity investments 300,000,000.00 352,000,000.00
Long-term accounts receivable
Long-term equity investments 1,642,656,278.35 1,621,195,118.22
Investment property 224,902,541.38 227,718,178.53
Fixed assets 503,401,495.39 512,933,612.51
Construction in progress 12,436,925.45 12,619,010.21
Engineering materials
Disposal of fixed assets
Productive living assets
Oil-gas assets
Intangible assets 87,988,201.92 88,336,594.02
R&D expenses
Goodwill
Long-term deferred expenses 60,005,130.51 57,865,790.98
Deferred tax assets 541,803,004.08 504,252,794.29
Other non-current assets
Total non-current assets 3,645,109,674.74 3,648,845,381.42
Total assets 13,215,965,878.01 11,839,922,534.38
43
Konka Group Co., Ltd. Semi-annual Report 2016
Current liabilities:
Short-term borrowings 4,290,090,735.59 1,022,612,362.58
Financial liabilities at fair value
607,587.55
through profit/loss
Derivative financial liabilities
Notes payable 1,164,440,075.89 377,002,860.08
Accounts payable 2,310,488,841.49 5,173,897,087.35
Accounts received in advance 553,275,573.46 251,204,710.89
Payroll payable 107,865,817.71 118,684,992.99
Taxes and fares payable 15,507,111.50 31,360,675.68
Interest payable 12,084,447.45 7,761,519.53
Dividends payable
Other accounts payable 1,681,167,162.38 1,667,884,936.14
Liabilities held for sale
Non-current liabilities due within
one year
Other current liabilities
Total current liabilities 10,135,527,353.02 8,650,409,145.24
Non-current liabilities:
Long-term borrowings
Bonds payable
Of which: Preference shares
Perpetual bonds
Long-term payables
Long-term payroll payable
Special payables
Provisions 4,711,597.59 4,629,554.61
Deferred income 85,769,463.79 88,668,785.51
Deferred tax liabilities 3,852,203.40 1,935,167.63
Other non-current liabilities
Total non-current liabilities 94,333,264.78 95,233,507.75
Total liabilities 10,229,860,617.80 8,745,642,652.99
Owners’ equity:
Share capital 2,407,945,408.00 2,407,945,408.00
Other equity instruments
Of which: Preference shares
Perpetual bonds
Capital reserve 49,195,156.54 46,505,607.34
Less: Treasury shares
Other comprehensive income 2,444,272.73 1,803,252.77
44
Konka Group Co., Ltd. Semi-annual Report 2016
Special reserve
Surplus reserve 847,908,466.28 847,908,466.28
Retained earnings -321,388,043.34 -209,882,853.00
Total owners’ equity 2,986,105,260.21 3,094,279,881.39
Total liabilities and owners’ equity 13,215,965,878.01 11,839,922,534.38
3. Consolidated income statement
Unit: RMB
Item Reporting Period Same period of last year
I. Total operating revenues 8,609,080,822.24 8,944,558,920.96
Including: Sales income 8,609,080,822.24 8,944,558,920.96
Interest income
Premium income
Handling charge and
commission income
II. Total operating costs 8,741,569,244.93 9,373,665,025.38
Including: Cost of sales 7,177,725,092.42 7,791,215,800.57
Interest expenses
Handling charge and
commission expenses
Surrenders
Net claims paid
Net amount withdrawn for the
insurance contract reserve
Expenditure on policy
dividends
Reinsurance premium
Taxes and associate charges 56,149,941.54 28,710,006.67
Selling and distribution
1,109,146,923.61 1,124,688,950.35
expenses
Administrative expenses 290,919,290.02 292,238,903.71
Financial expenses 68,373,432.00 99,066,911.17
Asset impairment loss 39,254,565.34 37,744,452.91
Add: Gain/(loss) from change in fair
-18,141,655.39
value (“-” means loss)
Gain/(loss) from investment (“-”
10,586,381.62 7,185,454.13
means loss)
Including: share of profits in
-7,531,575.68 -5,017,326.86
associates and joint ventures
Foreign exchange gains (“-”
means loss)
III. Business profit (“-” means loss) -140,043,696.46 -421,920,650.29
45
Konka Group Co., Ltd. Semi-annual Report 2016
Add: non-operating income 154,187,662.64 69,423,163.55
Including: Gains on disposal of
3,147,161.67 140,774.90
non-current assets
Less: non-operating expense 3,531,018.36 3,222,304.15
Including: Losses on disposal
617,565.57 1,333,624.80
of non-current assets
IV. Total profit (“-” means loss) 10,612,947.82 -355,719,790.89
Less: Income tax expense 705,997.10 -51,101,619.20
V. Net profit (“-” means loss) 9,906,950.72 -304,618,171.69
Net profit attributable to owners
12,834,736.76 -296,953,507.39
of the Company
Minority shareholders’ income -2,927,786.04 -7,664,664.30
VI. After-tax net amount of other
-15,440,224.77 1,132,503.31
comprehensive incomes
After-tax net amount of other
comprehensive incomes attributable to -15,158,638.24 765,032.54
owners of the Company
(I) Other comprehensive
incomes that will not be reclassified
into gains and losses
1. Changes in net liabilities
or assets with a defined benefit plan
upon re-measurement
2. Enjoyable shares in other
comprehensive incomes in investees
that cannot be reclassified into gains
and losses under the equity method
(II) Other comprehensive
incomes that will be reclassified into -15,158,638.24 765,032.54
gains and losses
1. Enjoyable shares in other
comprehensive incomes in investees
that will be reclassified into gains and
losses under the equity method
2. Gains and losses on fair
value changes of available-for-sale -1,875.00 90,185.65
financial assets
3. Gains and losses on
reclassifying held-to-maturity
investments into available-for-sale
financial assets
4. Effective hedging gains
and losses on cash flows
5. Foreign-currency financial
-15,156,763.24 674,846.89
statement translation difference
46
Konka Group Co., Ltd. Semi-annual Report 2016
6. Other
After-tax net amount of other
comprehensive incomes attributable to -281,586.53 367,470.77
minority shareholders
VII. Total comprehensive incomes -5,533,274.05 -303,485,668.38
Attributable to owners of the
-2,323,901.48 -296,188,474.85
Company
Attributable to minority
-3,209,372.57 -7,297,193.53
shareholders
VIII. Earnings per share
(I) Basic earnings per share 0.0053 -0.1233
(II) Diluted earnings per share 0.0053 -0.1233
Where business mergers under the same control occurred in this Reporting Period, the net profit achieved by
the merged parties before the business mergers was RMBXXX, with the corresponding amount for the last
period being RMBXXX.
Legal representative: Liu Fengxi Chief of the accounting work: Xiao Qing
Chief of the accounting organ: Xu Youshan
4. Income statement of the Company
Unit: RMB
Item Reporting Period Same period of last year
I. Total sales 6,445,980,538.16 7,789,566,135.08
Less: cost of sales 5,638,759,127.68 7,039,398,999.32
Business taxes and surcharges 21,209,160.52 14,474,426.92
Distribution expenses 808,506,711.94 809,860,840.08
Administrative expenses 152,850,562.16 153,399,610.11
Financial costs 72,822,853.13 11,216,562.70
Impairment loss 24,699,388.50 18,082,479.13
Add: gain/(loss) from change in
7,670,643.10
fair value (“-” means loss)
Gain/(loss) from investment (“-”
20,628,022.12 39,372,796.93
means loss)
Including: income form
investment on associates and joint 4,112,715.97 -1,682,308.76
ventures
II. Business profit (“-” means loss) -244,568,600.55 -217,493,986.25
Add: non-operating income 98,624,509.69 39,750,811.83
Including: Gains on disposal of
264,303.85 78,912.49
non-current assets
Less: non-operating expense 1,189,594.88 1,526,230.88
Including: Losses on disposal of
145,122.77 903,506.68
non-current assets
III. Total profit (“-” means loss) -147,133,685.74 -179,269,405.30
47
Konka Group Co., Ltd. Semi-annual Report 2016
Less: Income tax expense -35,628,495.40 -46,949,068.57
IV. Net profit (“-” means loss) -111,505,190.34 -132,320,336.73
V. After-tax net amount of other
641,019.96 70,962.90
comprehensive incomes
(I) Other comprehensive incomes
that will not be reclassified into gains
and losses
1. Changes in net liabilities or
assets with a defined benefit plan
upon re-measurement
2. Enjoyable shares in other
comprehensive incomes in investees
that cannot be reclassified into gains
and losses under the equity method
(II) Other comprehensive incomes
that will be reclassified into gains and 641,019.96 70,962.90
losses
1. Enjoyable shares in other
comprehensive incomes in investees
that will be reclassified into gains and
losses under the equity method
2. Gains and losses on fair value
changes of available-for-sale financial -1,875.00 70,962.90
assets
3. Gains and losses on
reclassifying held-to-maturity
investments into available-for-sale
financial assets
4. Effective hedging gains and
losses on cash flows
5. Foreign-currency financial
642,894.96 0.00
statement translation difference
6. Other
VI. Total comprehensive incomes -110,864,170.38 -132,249,373.83
VII. Earnings per share
(I) Basic earnings per share
(II) Diluted earnings per share
5. Consolidated cash flow statement
Unit: RMB
Item Reporting Period Same period of last year
I. Cash flows from operating
activities:
Cash received from sale of
9,435,398,454.00 9,102,327,477.32
commodities and rendering of service
48
Konka Group Co., Ltd. Semi-annual Report 2016
Net increase of deposits from
customers and dues 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 deposits of policy
holders and investment fund
Net increase of disposal of
financial assets measured at fair value
of which changes are recorded into
current gains and losses
Cash received from interest,
handling charges and commissions
Net increase of intra-group
borrowings
Net increase of funds in repurchase
business
Tax refunds received 178,405,043.66 179,813,857.62
Other cash received relating to
265,852,475.51 175,470,429.38
operating activities
Subtotal of cash inflows from
9,879,655,973.17 9,457,611,764.32
operating activities
Cash paid for goods and services 8,174,460,211.13 7,600,273,858.24
Net increase of customer lendings
and advances
Net increase of funds deposited in
the central bank and amount due from
banks
Cash for paying claims of the
original insurance contracts
Cash for paying interest, handling
charges and commissions
Cash for paying policy dividends
Cash paid to and for employees 844,148,334.80 914,786,833.95
Various taxes paid 393,891,670.20 290,017,993.03
Other cash payment relating to
592,697,813.46 582,490,169.47
operating activities
Subtotal of cash outflows from
10,005,198,029.59 9,387,568,854.69
operating activities
49
Konka Group Co., Ltd. Semi-annual Report 2016
Net cash flows from operating
-125,542,056.42 70,042,909.63
activities
II. Cash flows from investing
activities:
Cash received from withdrawal of
10,039,975.96 20,170,536.85
investments
Cash received from return on
18,138,724.61 13,104,708.65
investments
Net cash received from disposal of
fixed assets, intangible assets and 177,070.99 244,057.50
other long-term assets
Net cash received from disposal of
subsidiaries or other business units
Other cash received relating to
4,293,428,300.00 1,788,563,979.00
investing activities
Subtotal of cash inflows from
4,321,784,071.56 1,822,083,282.00
investing activities
Cash paid to acquire fixed assets,
intangible assets and other long-term 57,679,455.60 122,139,343.19
assets
Cash paid for investment 6,010,455.00 66,835,410.00
Net increase of pledged loans
Net cash paid to acquire
subsidiaries and other business units
Other cash payments relating to
4,321,807,285.63 1,306,934,952.07
investing activities
Subtotal of cash outflows from
4,385,497,196.23 1,495,909,705.26
investing activities
Net cash flows from investing
-63,713,124.67 326,173,576.74
activities
III. Cash Flows from Financing
Activities:
Cash received from capital
4,900,000.00 70,678,264.16
contributions
Including: Cash received from
minority shareholder investments by 4,900,000.00 70,678,264.16
subsidiaries
Cash received from borrowings 2,902,000,000.00 2,233,051,652.35
Cash received from issuance of
bonds
Other cash received relating to
1,091,505,232.65 118,095,176.56
financing activities
Subtotal of cash inflows from
3,998,405,232.65 2,421,825,093.07
financing activities
50
Konka Group Co., Ltd. Semi-annual Report 2016
Repayment of borrowings 2,762,733,295.48 2,182,019,607.37
Cash paid for interest expenses
50,260,605.68 68,163,779.14
and distribution of dividends or profit
Including: dividends or profit
paid by subsidiaries to minority
shareholders
Other cash payments relating to
31,258,073.60 133,861,961.59
financing activities
Sub-total of cash outflows from
2,844,251,974.76 2,384,045,348.10
financing activities
Net cash flows from financing
1,154,153,257.89 37,779,744.97
activities
IV. Effect of foreign exchange rate
16,897,838.33 -37,751,951.34
changes on cash and cash equivalents
V. Net increase in cash and cash
981,795,915.13 396,244,280.00
equivalents
Add: Opening balance of cash
1,488,154,851.35 1,640,236,837.08
and cash equivalents
VI. Closing balance of cash and cash
2,469,950,766.48 2,036,481,117.08
equivalents
6. Cash flow statement of the Company
Unit: RMB
Item Reporting Period Same period of last year
I. Cash flows from operating
activities:
Cash received from sale of
6,066,072,499.56 6,629,377,417.70
commodities and rendering of service
Tax refunds received 106,864,410.47 64,799,118.52
Other cash received relating to
595,949,901.28 1,377,079,891.69
operating activities
Subtotal of cash inflows from
6,768,886,811.31 8,071,256,427.91
operating activities
Cash paid for goods and services 7,097,799,617.56 6,545,865,079.11
Cash paid to and for employees 469,174,013.13 476,270,145.75
Various taxes paid 199,964,096.41 107,694,528.48
Other cash payment relating to
950,560,098.46 1,141,233,856.69
operating activities
Subtotal of cash outflows from
8,717,497,825.56 8,271,063,610.03
operating activities
Net cash flows from operating
-1,948,611,014.25 -199,807,182.12
activities
II. Cash flows from investing
activities:
Cash received from retraction of 5,685.00 5,278,509.85
51
Konka Group Co., Ltd. Semi-annual Report 2016
investments
Cash received from return on
22,133,330.57 23,022,273.10
investments
Net cash received from disposal of
fixed assets, intangible assets and 174,720.56 55,338,137.50
other long-term assets
Net cash received from disposal of
8,889.24
subsidiaries or other business units
Other cash received relating to
4,395,417,300.00 1,400,000,000.00
investing activities
Subtotal of cash inflows from
4,417,731,036.13 1,483,647,809.69
investing activities
Cash paid to acquire fixed assets,
intangible assets and other long-term 8,706,651.29 25,438,491.22
assets
Cash paid for investment 14,016,000.00 188,835,410.00
Net cash paid to acquire
subsidiaries and other business units
Other cash payments relating to
4,542,483,083.21 1,374,884,590.00
investing activities
Subtotal of cash outflows from
4,565,205,734.50 1,589,158,491.22
investing activities
Net cash flows from investing
-147,474,698.37 -105,510,681.53
activities
III. Cash Flows from Financing
Activities:
Cash received from capital
contributions
Cash received from borrowings 3,501,874,941.51 61,422,000.00
Cash received from issuance of
bonds
Other cash received relating to
434,734,396.24
financing activities
Subtotal of cash inflows from
3,501,874,941.51 496,156,396.24
financing activities
Repayment of borrowings 210,241,682.55
Cash paid for interest expenses
15,544,969.44
and distribution of dividends or profit
Other cash payments relating to
322,169,966.60 133,921,663.91
financing activities
Sub-total of cash outflows from
547,956,618.59 133,921,663.91
financing activities
Net cash flows from financing
2,953,918,322.92 362,234,732.33
activities
52
Konka Group Co., Ltd. Semi-annual Report 2016
IV. Effect of foreign exchange rate
7,375,907.16 -3,281,640.26
changes on cash and cash equivalents
V. Net increase in cash and cash
865,208,517.46 53,635,228.42
equivalents
Add: Opening balance of cash
478,267,624.53 991,459,790.62
and cash equivalents
VI. Closing balance of cash and cash
1,343,476,141.99 1,045,095,019.04
equivalents
53
Konka Group Co., Ltd. Semi-annual Report 2016
7. Consolidated statement of changes in owners’ equity
Reporting Period
Unit: RMB
Reporting Period
Equity attributable to owners of the Company
Item Minority Total owners’
Other equity Less: Other Special Surplus General Retained
Share capital Capital reserve interests equity
Prefere Perpet Othe Treasury comprehensi reserve reserve risk earnings
1. Balance at the end of the prior year 2,407,945,408.00 78,209,535.19 3,155,744.00 847,908,466.28 -522,836,282.66 261,067,546.32 3,075,450,417.13
Add: Changes in accounting policies
Correction of errors in prior periods
Business mergers under the same
Other
2. Balance at the beginning of the 2,407,945,408.00 78,209,535.19 3,155,744.00 847,908,466.28 -522,836,282.66 261,067,546.32 3,075,450,417.13
3. Increase/ decrease in the period 2,689,549.20 -15,158,638.24 12,834,736.76 -117,912,510.30 -117,546,862.58
3.1 Total comprehensive income -15,158,638.24 12,834,736.76 -3,209,372.57 -5,533,274.05
3.2 Capital increased and reduced by -113,385,466.48 -113,385,466.48
3.2.1 Ordinary shares increased 4,900,000.00 4,900,000.00
3.2.2 Capital increased by
3.2.3 Amounts of share-based
3.2.4 Other -118,285,466.48 -118,285,466.48
3.3 Profit distribution
3.3.1 Appropriation to surplus
3.3.2 Appropriation to general risk
3.3.3 Appropriation to owners (or
3.3.4 Other
3.4 Internal carry-forward of owners’
3.4.1 New increase of capital (or
3.4.2 New increase of capital (or
3.4.3 Surplus reserve for making up
3.4.4 Other
3.5 Special reserve
3.5.1 Withdrawn for the period
3.5.2 Used in the period
3.6 Other 2,689,549.20 -1,317,671.25 1,371,877.95
4. Closing balance 2,407,945,408.00 80,899,084.39 -12,002,894.24 847,908,466.28 -510,001,545.90 143,155,036.02 2,957,903,554.55
54
Konka Group Co., Ltd. Semi-annual Report 2016
Same period of last year
Unit: RMB
Same period of last year
Equity attributable to owners of the Company
Item Minority Total owners’
Other equity Capital Less: Other Specific Surplus General Retained
Share capital interests equity
Prefer Perpet Othe reserve Treasu comprehensi reserve reserve risk earnings
1. Balance at the end of the prior year 1,203,972,704.00 1,289,403,563.99 16,171,477.91 847,908,466.28 746,022,758.89 193,977,533.95 4,297,456,505.02
Add: Changes in accounting policies
Correction of errors in prior periods
Business mergers under the same
Other
2. Balance at the beginning of the year 1,203,972,704.00 1,289,403,563.99 16,171,477.91 847,908,466.28 746,022,758.89 193,977,533.95 4,297,456,505.02
3. Increase/ decrease in the period (“-” 1,203,972,704.00 -1,211,194,028.8 -13,015,733.91 -1,268,859,041.55 67,090,012.37 -1,222,006,087.89
3.1 Total comprehensive income -13,015,733.91 -1,256,819,314.51 -18,424,178.95 -1,288,259,227.37
3.2 Capital increased and reduced by 65,749,452.92 65,749,452.92
3.2.1 Ordinary shares increased by 65,749,452.92 65,749,452.92
3.2.2 Capital increased by holders
3.2.3 Amounts of share-based
3.2.4 Other
3.3 Profit distribution -12,039,727.04 19,565,831.91 7,526,104.87
3.3.1 Appropriation to surplus reserve
3.3.2 Appropriation to general risk
3.3.3 Appropriation to owners (or -12,039,727.04 -1,343,265.96 -13,382,993.00
3.3.4 Other 20,909,097.87 20,909,097.87
3.4 Internal carry-forward of owners’ 1,203,972,704.00 -1,203,972,704.0
3.4.1 New increase of capital (or share 1,203,972,704.00 -1,203,972,704.0
3.4.2 New increase of capital (or share
3.4.3 Surplus reserve for making up loss
3.4.4 Other
3.5 Special reserve
3.5.1 Withdrawn for the period
3.5.2 Used in the period
3.6 Other -7,221,324.80 198,906.49 -7,022,418.31
4. Closing balance 2,407,945,408.00 78,209,535.19 3,155,744.00 847,908,466.28 -522,836,282.66 261,067,546.32 3,075,450,417.13
55
Konka Group Co., Ltd. Semi-annual Report 2016
8. Statement of changes in owners’ equity of the Company
Reporting Period
Unit: RMB
Reporting Period
Item Other equity Less: Other Special Retained Total owners’
Share capital Capital reserve Surplus reserve
Preferen Perpet Othe Treasury comprehe reserve earnings equity
1. Balance at the end of the prior year 2,407,945,408.00 46,505,607.34 1,803,252.77 847,908,466.28 -209,882,853.00 3,094,279,881.39
Add: Changes in accounting policies
Correction of errors in prior periods
Other
2. Balance at the beginning of the year 2,407,945,408.00 46,505,607.34 1,803,252.77 847,908,466.28 -209,882,853.00 3,094,279,881.39
3. Increase/ decrease in the period (“-” means 2,689,549.20 641,019.96 -111,505,190.34 -108,174,621.18
3.1 Total comprehensive income 641,019.96 -111,505,190.34 -110,864,170.38
3.2 Capital increased and reduced by owners
3.2.1 Ordinary shares increased by
3.2.2 Capital increased by holders of other
3.2.3 Amounts of share-based payments
3.2.4 Other
3.3 Profit distribution
3.3.1 Appropriation to surplus reserve
3.3.2 Appropriation to owners (or shareholders)
3.3.3 Other
3.4 Internal carry-forward of owners’ equity
3.4.1 New increase of capital (or share capital) from
3.4.2 New increase of capital (or share capital) from
3.4.3 Surplus reserve for making up loss
3.4.4 Other
3.5 Special reserve
3.5.1 Withdrawn for the period
3.5.2 Used in the period
3.6 Other 2,689,549.20 2,689,549.20
4. Closing balance 2,407,945,408.00 49,195,156.54 2,444,272.73 847,908,466.28 -321,388,043.34 2,986,105,260.21
Same period of last year
Unit: RMB
56
Konka Group Co., Ltd. Semi-annual Report 2016
Same period of last year
Item Other equity Less: Other Special Retained
Share capital Capital reserve Surplus reserve Total owners’ equity
instruments Othe Treasury comprehensi reserve earnings
1. Balance at the end of the prior year 1,203,972,704.00 ce ual r 1,250,283,488.79 shares income
ve 471,827.51 847,908,466.28 499,655,859.67 3,802,292,346.25
Add: Changes in accounting policies
Correction of errors in prior periods
Other
2. Balance at the beginning of the year 1,203,972,704.00 1,250,283,488.79 471,827.51 847,908,466.28 499,655,859.67 3,802,292,346.25
3. Increase/ decrease in the period (“-” means 1,203,972,704.00 -1,203,777,881.45 1,331,425.26 -709,538,712.67 -708,012,464.86
3.1 Total comprehensive income 1,331,425.26 -697,498,985.63 -696,167,560.37
3.2 Capital increased and reduced by owners 1,203,972,704.00 -1,203,972,704.00
3.2.1 Ordinary shares increased by 1,203,972,704.00 -1,203,972,704.00
3.2.2 Capitalshareholdersby holders of other
3.2.3 Amounts instruments payments
charged to owners’ equity
3.3 Profit distribution -12,039,727.04 -12,039,727.04
3.3.1 Appropriation to surplus reserve
3.3.2 Appropriation to owners (or shareholders) -12,039,727.04 -12,039,727.04
3.3.3 Other
3.4 Internal carry-forward of owners’ equity
3.4.1 New increase of capital (or share capital)
3.4.2 New increasecapitalcapitalreserveshare capital)
3.4.3 from surplus reserve up loss
3.4.4 Other
3.5 Special reserve
3.5.1 Withdrawn for the period
3.5.2 Used in the period
3.6 Other 194,822.55 194,822.55
4. Closing balance 2,407,945,408.00 46,505,607.34 1,803,252.77 847,908,466.28 -209,882,853.00 3,094,279,881.39
57
Konka Group Co., Ltd. Semi-annual Report 2016
Konka Group Co., Ltd.
Notes to Financial Statements for January-June 2016
(All amounts are expressed, unless otherwise stated, in Renminbi (CNY).)
I. Company Profile
1. Establishment
Konka Group Co., Ltd. (hereinafter referred to as “Company” or “the Company”), is a
joint-stock limited company reorganized from the former Shenzhen Konka Electronic Co.,
Ltd. in August 1991 upon approval of the People’s Government of Shenzhen Municipality,
and has its ordinary shares (A-share and B-share) listed on Shenzhen Stock Exchange with
prior consent from the People’s Bank of China Shenzhen Special Economic Zone Branch. On
August 29, 1995, the Company, renamed to “Konka Group Co., Ltd.”, obtained corporate
business license (registration No.: 440301501121863) with its main business falling into
electronic industry.
2. Share Capital Changes upon Establishment
On November 27, 1991, with approval from the SRYFZ No. 102 [1991] document as issued
by the People’s Bank of China Shenzhen Special Economic Zone Branch, Shenzhen Konka
Electronic Co., Ltd., during December 8—December 31, 1991, has issued 128,869,000 RMB
ordinary shares (A-share) at a par value of RMB1.00 per share, of which the original net
assets were converted into 98,719,000 state-owned institutional shares, 30,150,000 new
shares were issued, including 26,500,000 circulating shares issued to the public and
3,650,000 staff shares issued to the staff of the Company.
On January 29, 1992, with approval from the SRYFZ No. 106 [1991] document as issued by
the People’s Bank of China Shenzhen Special Economic Zone Branch, Shenzhen Konka
Electronic Co., Ltd., during December 20, 1991— January 31, 1992, has issued to investors
abroad 58,372,300 RMB special shares (B-share) at a par value of RMB1.00 per share, of
which 48,372,300 shares held by the former foreign investor and founder—Hong Kong
Ganghua Electronic Group Co., Ltd. are converted into foreign legal person’s shares, and
10,000,000 B-shares are issued additionally.
On April 10, 1993, the Proposal on Profit Distribution and Dividend Payout 1992 was
adopted at the second general meeting of shareholders of the Company. With approval from
the SZBF No. 2 [1993] document as issued by Shenzhen Securities Regulatory Office, the
Company began to perform dividend policy for FY 1992 as of April 30, 1993: distributing
RMB0.90 in cash plus 3.5 bonus shares for every 10 shares to all shareholders. The total
capital stock reached 187,473,150 shares after this distribution.
On April 18, 1994, the Proposal on Profit Distribution and Dividend Payout 1993 was
adopted at the third general meeting of shareholders of the Company. With approval from the
SZBF No. 115 [1994] document as issued by Shenzhen Securities Regulatory Office, the
Company began to perform dividend policy for FY1993 as of June 10, 1994: distributing
RMB1.10 in cash plus 5 bonus shares (including 4.4 profit bonus shares and 0.6 bonus share
capitalized from capital public reserve) for every 10 shares to all shareholders. The total
capital stock reached 281,209,724 shares after this distribution and capitalization from capital
public reserve.
On June 2, 1994, in accordance with the provisions that “staff shares could go public and be
transferred six months after listing”, as jointly promulgated by the State Commission for
58
Konka Group Co., Ltd. Semi-annual Report 2016
Restructuring the Economic System and the State Council’s Securities Commission, the staff
shares of the Company was planned to be listed on the flow on June 6, 1994, with the prior
consent of Shenzhen Securities Regulatory Office and Shenzhen Stock Exchange.
On October 8, 1994, the Proposal on Negotiable Bonus Shares of B-Share Corporate
Shareholders 1992 was adopted at the 1994 interim general meeting of shareholders of the
Company. With approval from the SZBF No. 224 [1994] document as issued by Shenzhen
Securities Regulatory Office, the 16,930,305 bonus shares for FY 1992 granted to foreign
legal persons were listed and negotiated at B-share market on October 26, 1994.
On February 6, 1996, the Proposal on Share Allotment Modes 1996 was adopted at the 1996
interim general metering of shareholders of the Company. With approval from the SZBF No.
5 [1996] document as issued by Shenzhen Securities Regulatory Office, and reexamination
from the ZJPSZ No. 16 [1996] document and ZJGZ No. 2 [1996] document as issued by
China Securities Regulatory Commission, on July 16, 1996 and October 29, 1996, all
shareholders were respectively allotted three shares for every ten existing shares held at
RMB6.28/A-share and HKD5.85/B-share. Corporate shareholders took their respective
existing shares as bases for full subscription of the allocable shares. The total capital stock
reached 365,572,641 shares after this allotment.
On January 25, 1998, the Plan on Share Allotment 1998 was adopted at the 1998 interim
general meeting of shareholders of the Company. With approval from the ZZBZ No. 29
[1998] document as issued by Shenzhen Securities Regulatory Office, and ZJSZ No.64 [1998]
document as issued by China Securities Regulatory Commission, on July 15, 1998,
negotiable A-shares were allotted in proportion of 3:10 at RMB10.50/A-share. For such
reasons as continued weakness in B-share secondary market (lower than share allotment
price), B-share negotiation and allotment plan was canceled, and the corporate shareholders
of the Company waived the preemptive right. The total capital stock reached 389,383,603
shares after this allotment.
On June 30, 1999, the Proposal on Profit Distribution and Capitalization from Capital Public
Reserve 1998 was adopted at the eighth general meeting of shareholders of the Company. On
August 20, 1999, the profit distribution for FY 1998 was carried out: all shareholders were
presented RMB3.00 in cash for every 10 shares, plus 2 shares capitalized from capital public
reserve. The total capital stock reached 467,260,323 shares after this capitalization.
On June 30, 1999, the Plan on A-Share Issue for Capital Increase was adopted at the eighth
general meeting of shareholders of the Company. With approval from the ZJFXZ No.140
[1999] document as issued by China Securities Regulatory Commission, on November 1,
1999, 80,000,000 A-shares were additionally issued to the public at RMB15.50/share. The
total capital stock reached 547,260,323 shares after this additional issue.
On May 30, 2000, the Plan on Profit Distribution and Dividend Payout 1999 was adopted at
the ninth general meeting of shareholders of the Company. On July 25, 2000, the profit
distribution for FY 1999 was carried out: all shareholders were distributed RMB4.00 in cash
plus 1 bonus shares for every 10 shares. The total capital stock reached 601,986,352 shares
after this distribution.
On April 3, 2008, the 7th meeting of the sixth Board of Directors was convened, during
which the following resolutions were discussed and adopted: based on the total capital stock
of 601,986,352 shares for the year ended December 31, 2007, capitalization from capital
public reserve was made to all shareholders at a proportion of 1:1, namely 10 new shares for
every 10 existing shares. And the said resolution was subject to approval by the 2007 annual
general meeting of shareholders convened on May 26, 2008. The Company, in June 2008,
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Konka Group Co., Ltd. Semi-annual Report 2016
implemented the capitalization from capital public reserve and went through the formalities
for transfer registration with China Securities Depository and Clearing Corporation Limited.
On December 16, 2008, with approval from the SMGZF No. 2662 [2008] document as
issued by Shenzhen Bureau of Trade and Industry, the Company was agreed to increase its
share capital, and went through the formalities for registration of changes with the
administration for industry and commerce on April 10, 2009. The total capital stock reached
1,203,972,704 shares after change.
According to the regulations of the 2015 1st Extraordinary General Meeting and the revised
articles, the Company applied to increase the registered capital of RMB1,203,972,704.00, all
of which were though turning capital reserve into share capital with the changed registered
capital of RMB2,407,945,408.00. The Company had managed the industrial and commercial
registration of changes on 28 January 2016 with the changed share capital of 2,407,945,408
shares.
3. Approved business scope: research and development, production and operation of such
household appliances as televisions, refrigerators, washing machines, and personal electronic
appliances; manufacturing and application of home AV, IPTV set-top boxes, digital TV
receivers (including ground receiving equipment of satellite television broadcasting), digital
products, mobile communication equipments and terminal products, daily-use electronic
products, automotive electronic products, satellite navigation systems, intelligent
transportation systems, fire-fighting and security systems, office equipments, computers,
displays, large screen display systems; LED (OLED) back light, illumination, light-emitting
devices, and packaging thereof; Touch TV AIO, wireless broadcasting television transiting
equipment; electronic parts and components, moulds, plastic and rubber products, and
packing materials, design and in-door installation security products, monitoring products,
wireless and cable digital television system and system integration, and technical consultancy
and after-sale paid services of related products (except mobile phone, the other products in
the above business scope are manufactured in other places outside Shenzhen); Wholesale,
retail, import & export and relevant support services of the aforesaid products (including
spare parts) (Commodities subject to state trading management are not involved. Products
involved in quota, license management and other specified management shall be subject to
the relevant state provisions.); sale of self-developed technological achievements; provision
of maintenance services, technical consultant service for electronic products; ordinary cargo
transportation, domestic freight forwarding, warehousing services; consultancy on enterprise
management; and self-owned property leasing and management services, recovery of waste
electrical appliances and electronic products (excluding dissembling) (operated by branch
offices); and outsourcing services of information technology and business procedures by
means of undertaking services in the way of outsourcing, including management and
maintenance of system application, management of information technology, bank
background service, financial settlement, human resource service, software development, call
center, and data processing.
4. The Company and each subsidiary mainly engaged in the production and sales of the color
TV, white goods and cell phones.
5. The financial statements of the Company were submitted upon approval of the Board of
Directors on 26 August 2016.
6. There were 37 subsidiaries included in the consolidation scope of January – June of 2015
of the Company, and please refer to the Notes VIII. “Equities among other entities” for
details. There were 8 decreased in the consolidation scope during the Reporting Period over
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the same period of last term of the Company, and the gains and losses as well as the cash
flows of the subsidiary which be decreased before the date losing the control right should be
recorded in the consolidation of the Reporting Period and please refer to the Notes VII.
“Changes of the consolidation scope” for details.
7. A check list of corporate names and their abbreviations mentioned in this Report
Corporate name Abbreviation
Shenzhen Konka Telecommunications Technology Co., Ltd. Telecommunication Technology
Shenzhen Konka Precision Mold Manufacturing Co., Ltd. Precision Mold
Shenzhen Konka Electronic Co., Ltd. Konka Electronic
Shenzhen Konka Information Network Co., Ltd. Information Network
Shenzhen Konka Plastic Products Co., Ltd. Plastic Products
Shenzhen Konka Housing Appliances Co., Ltd. Housing Appliances
Shenzhen Electronic Fittings Technology Co., Ltd. Fittings Technology
Mudanjiang Arctic Ocean Appliances Co., Ltd. Mudanjiang Appliances
Chongqing Qingjia Electronics Co., Ltd. Chongqing Qingjia
Anhui Konka Electronic Co., Ltd. Anhui Konka
Anhui Konka Household Appliances Co., Ltd. Anhui Household Appliances
Kunshan Konka Electronic Co., Ltd. Kunshan Konka
Dongguan Konka Electronic Co., Ltd. Dongguan Konka
Dongguan Konka Packing Materials Co., Ltd. Dongguan Packing
Dongguan Konka Mould Plastic Co., Ltd. Dongguan Mould Plastic
Boluo Konka PCB Co., Ltd. Boluo Konka
Boluo Konka Precision Technology Co., Ltd. Boluo Precision
Hong Kong Konka Co., Ltd. Hong Kong Konka
Konka Household Appliances Investment & Development Co., Ltd. Konka Household Appliances Investment
Konka Household Appliances
Konka Household Appliances International Trading Co., Ltd.
International Trading
KONKA AMERICA,INC. KONKA AMERICA
Konka (Europe) Co., Ltd. Konka Europe
Konka Commercial Factoring (Shenzhen) Co., Ltd. Konka Factoring
Shenzhen Wankaida Science and Technology Co., Ltd. Wankaida
Kunshan Kangsheng Investment Development Co., Ltd. Kunshan Kangsheng
Anhui Konka Tongchuang Household Appliances Co., Ltd. Anhui Tongchuang
Indonesia Konka Electronics Co., Ltd. Indonesia Konka
Shenzhen Shushida Logistics Service Co., Ltd. Shushida Logistics
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Konka Group Co., Ltd. Semi-annual Report 2016
Corporate name Abbreviation
Beijing Konka Electronic Co., Ltd. Beijing Konka Electronic
Shenzhen Konka Yishijie Commercial Display Co., Ltd. Konka Yishijie
Shenzhen Yishijie Commercial Display Service Co., Ltd. Yishijie Commercial
Xiamen Dalong Trading Co., Ltd. Xiamen Dalong
Usee Kangrong Culture Communication Co., Ltd. Usee Kangrong
Shenzhen Kangqiao Jiacheng Real Estate Investment Co., Ltd. Kangqiao Jiacheng
Konka Zhisheng Co., Ltd. Konka Zhisheng
Anhui Kaikai Shijie E-commerce Co., Ltd. Kaikai Shijie
Shenzhen E2info Internet Science and Technology Co., Ltd. E2info
Shenzhen Konka Mobile Interconnection Technology Co., Ltd. Mobile Interconnection
Shenzhen Konka Business System Technology Co., Ltd. Business Technology
II. Basis for the preparation of financial statements
With the going-concern assumption as the basis and based on transactions and other events
that actually occurred, the Group prepared financial statements in accordance with issued by the Ministry of
Finance with Decree No. 33 and revised with Decree No. 76, the 41 specific accounting
standards, the Application Guidance of Accounting Standards for Business Enterprises, the
Interpretation of Accounting Standards for Business Enterprises and other regulations issued
and revised from 15 February 2006 onwards (hereinafter jointly referred to as “the
Accounting Standards for Business Enterprises”, “China Accounting Standards” or “CAS”),
as well as the Rules for Preparation Convention of Disclosure of Public Offering Companies
No.15 – General Regulations for Financial Reporting (revised in 2014) by China Securities
Regulatory Commission.
In accordance with relevant provisions of the Accounting Standards for Business Enterprises,
the Group adopted the accrual basis in accounting. Except for some financial instruments,
where impairment occurred on an asset, an impairment reserve was withdrawn accordingly
pursuant to relevant requirements.
III. Statement of Compliance with the Accounting Standards for Business Enterprises
The financial statements prepared by the Group are in compliance with in compliance with
the Accounting Standards for Business Enterprises, which factually and completely present
the Company’s financial positions as at 30 Jun. 2016, business results and cash flows of
January–June of 2016, and other relevant information. In addition, the Company’s and the
Group’s financial statements meet the requirements of disclosing financial statements and
notes thereto stated in the Rules for Preparation Convention of Disclosure of Public Offering
Companies No.15 – General Regulations for Financial Reporting (revised in 2014) by China
Securities Regulatory Commission.
IV. Important accounting policies and estimations
The Company and each subsidiary formulated certain specific accounting policies and
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accounting estimates according to the actual production and operation characteristics and the
regulations of the relevant ASBE on the transactions and events of the revenues recognition.
For the details, please refer to each description of Notes IV. 22 “Revenues”. For the notes of
the significant accounting judgment and estimations made by the management layer, please
refer to Notes IV. 27 “Significant accounting judgment and estimations”.
1. Fiscal period
The Group’s fiscal periods include fiscal years and fiscal periods shorter than a complete
fiscal year. The Group’s fiscal year starts on 1 January and ends on 31 December of every
year according to the Gregorian calendar.
2. Operating cycle
A normal operating cycle refers to a period from the Group purchasing assets for processing
to realizing cash or cash equivalents. An operating cycle for the Group is 12 months, which is
also the classification criterion for the liquidity of its assets and liabilities.
3. Recording currency
Renminbi is the dominant currency used in the economic circumstances where the Group and
its domestic subsidiaries are involved. Therefore, the Group and its domestic subsidiaries use
Renminbi as their bookkeeping base currency. According to the major economic
circumstances where the overseas subsidiaries of the Company, Konka America, Konka
Europe, Indonesia Konka involved, their recording currency respectively were confirmed as
U.S. Dollar, Euro and Indonesia Rupiah; while the subsidiaries such as the Hong Kong
Konka, Konka Household Appliances International Trading, Konka Household Appliances
Investment and Konka Zhisheng confirmed the Hong Kong Dollar as their recording
currency. And the Group adopted Renminbi as the bookkeeping base currency when
preparing the financial statements for the Reporting Period.
4. Accounting treatment methods for business combinations under the same control or
not under the same control
Business combinations, it is refer to two or more separate enterprises merge to form a
reporting entity transactions or events. Business combination is divided into under the same
control and those non under the same control.
(1) Business combinations under the same control
A business combination under the same control is a business combination in which all of the
combining enterprises are ultimately controlled by the same party or the same parties both
before and after the business combination and on which the control is not temporary. In a
business combination under the same control, the party which obtains control of other
combining enterprise(s) on the combining date is the combining party, the other combining
enterprise(s) is (are) the combined party. The “combining date” refers to the date on which
the combining party actually obtains control on the combined party.
The assets and liabilities that the combining party obtains in a business combination shall be
measured on the basis of their carrying amount in the combined party on the combining date.
As for the balance between the carrying amount of the net assets obtained by the combining
party and the carrying amount of the consideration paid by it (or the total par value of the
shares issued), the additional paid-in capital (share premium) shall be adjusted. If the
additional paid-in capital (share premium) is not sufficient to be offset, the retained earnings
shall be adjusted.
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The direct cost for the business combination of the combining party shall be recorded into the
profits and losses at the current period.
(2) Business combinations not under the same control
A business combination not under the same control is a business combination in which the
combining enterprises are not ultimately controlled by the same party or the same parties
both before and after the business combination. In a business combination not under the same
control, the party which obtains the control on other combining enterprise(s) on the purchase
date is the acquirer, and other combining enterprise(s) is (are) the acquiree.
For a business combination not under the same control, the combination costs shall include
the fair values, on the acquisition date, of the assets paid, the liabilities incurred or assumed
and the equity securities issued by the acquirer in exchange for the control on the acquiree,
the expenses for audit, legal services and assessment, and other administrative expenses,
which are recorded into the profits and losses in the current period. The trading expenses for
the equity securities or debt securities issued by the acquirer as the combination
consideration shall be recorded into the amount of initial measurement of the equity
securities or debt securities. The involved contingent consideration shall be recorded into the
combination costs at its fair value on the acquiring date. Where new or further evidences
emerge, within 12 months since the acquiring date, against the existing circumstances on the
acquiring date and the contingent consideration thus needs to be adjusted, the combined
goodwill shall be adjusted accordingly. The combination costs of the acquirer and the
identifiable net assets obtained by it in the combination shall be measured according to their
fair values at the acquiring date. The acquirer shall recognize the positive balance between
the combination costs and the fair value of the identifiable net assets it obtains from the
acquiree as business reputation. Where the combination costs are less then the fair value of
the identifiable net assets it obtains from the acquiree, the acquirer shall re-examine the
measurement of the fair values of the identifiable assets, liabilities and contingent liabilities it
obtains from the acquiree as well as the combination costs. If, after the reexamination, the
combination costs are still less than the fair value of the identifiable net assets it obtains from
the acquiree, the acquirer shall record the balance into the profits and losses of the current
period.
As for the deductible temporary differences the acquirer obtains from the acquiree which are
not recognized into deferred income tax liabilities due to their not meeting the recognition
standards, if new or further information shows that the relevant situation has existed on the
acquiring date and the economic benefits brought by the deductible temporary differences the
acquirer obtains from the acquiree on the acquiring date can be realized, they shall be
recognized into deferred income tax assets and the relevant goodwill shall be reduced. Where
the goodwill is not sufficient to be offset, the difference shall be recognized into the profits
and losses in the current period. In other circumstances than the above, where the deductible
temporary differences are recognized into deferred income tax assets on the acquiring date,
they shall be recorded into the profits and losses in the current period.
In a business combination not under same control realized by two or more transactions of
exchange, according to about the 5th Notice about the Treasury Issuing the Accounting
Standards for Enterprises (Finance accounting) [2012] No. 19 Criterion about the “package
deal” (see note 4, 4 (2)), Whether the deals are “package deal” or not, belong to the “package
deal”, see the previous paragraphs described in this section and note 4, 10 “long term equity
investment transaction” and conduct accounting treatment, those not belong to the “package
deal” distinguish between the individual financial statements and the consolidated financial
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Konka Group Co., Ltd. Semi-annual Report 2016
statements and conduct relevant accounting treatment.
In the individual financial statements, the sum of the book value and new investment cost of
the Group holds in the acquiree before the acquiring date shall be considered as initial cost of
the investment. Other related comprehensive gains in relation to the equity interests that the
Group holds in the acquiree before the acquiring date shall be treated on the same basis as the
acquiree directly disposes the related assets or liabilities when disposing the investment (that
is, except for the corresponding share in the changes in the net liabilities or assets with a
defined benefit plan measured at the equity method arising from the acquiree’s
re-measurement, the others shall be transferred into current investment gains).
In the Group’s consolidated financial statements, as for the equity interests that the Group
holds in the acquiree before the acquiring date, they shall be re-measured according to their
fair values at the acquiring date; the positive difference between their fair values and carrying
amounts shall be recorded into the investment gains for the period including the acquiring
date. Other related comprehensive gains in relation to the equity interests that the Group
holds in the acquiree before the acquiring date shall be treated on the same basis as the
acquiree directly disposes the related assets or liabilities when disposing the investment (that
is, except for the corresponding share in the changes in the net liabilities or assets with a
defined benefit plan measured at the equity method arising from the acquiree’s
re-measurement, the others shall be transferred into current investment gains on the acquiring
date).
5. Methods for preparing consolidated financial statements
(1) Principle for determining the consolidation scope
The consolidation scope for financial statements is determined on the basis of control. The
term “control” is the power of the Group upon an investee, with which it can take part in
relevant activities of the investee to obtain variable returns and is able to influence the
amount of returns. The consolidated financial statements comprise the financial statements of
the Group and its subsidiaries. A subsidiary is an enterprise or entity controlled by the Group.
(2) Methods for preparing the consolidated financial statements
Subsidiaries are fully consolidated from the date on which the Group obtains control on their
net assets and operation decision-making and are de-consolidated from the date when such
control ceases. As for a disposed subsidiary, its operating results and cash flows before the
disposal date has been appropriately included in the consolidated income statement and cash
flow statement; and as for subsidiaries disposed in the current period, the opening items in
the consolidated balance sheet are not adjusted. For a subsidiary acquired in a business
combination not under the same control, its operating results and cash flows after the
acquiring date have been appropriately included in the consolidated income statement and
cash flow statement, and the opening items and comparative items in the consolidated
financial statements are not adjusted. For a subsidiary acquired in a business combination
under the same control or a combined party obtained in a takeover, its operating results and
cash flows from the beginning of the Reporting Period of the combination to the combination
date have been appropriately included in the consolidated income statement and cash flow
statement, and the comparative items in the consolidated financial statements are adjusted at
the same time.
The financial statements of subsidiaries are adjusted in accordance with the accounting
policies and accounting period of the Group during the preparation of the consolidated
financial statements, where the accounting policies and the accounting periods are
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inconsistent between the Group and subsidiaries. For a subsidiary acquired from a business
combination not under the same control, the individual financial statements of the subsidiary
are adjusted based on the fair value of the identifiable net assets at the acquisition date.
All significant inter-group balances, transactions and unrealized profits are offset in the
consolidated financial statements.
The portion of a subsidiary’s shareholders’ equity and the portion of a subsidiary’s net profits
and losses for the period not held by the Group are recognized as minority interests and
minority shareholder profits and losses respectively and presented separately under
shareholders’ equity and net profits in the consolidation financial statements. The portion of a
subsidiary’s net profits and losses for the period that belong to minority interests is presented
as the item of “minority shareholder profits and losses” under the bigger item of net profits in
the consolidated financial statements. Where the loss of a subsidiary shared by minority
shareholders exceeds the portion enjoyed by minority shareholders in the subsidiary’s
opening owners’ equity, minority interests are offset.
Where the Group losses control on its original subsidiaries due to disposal of some equity
investments or other reasons, the residual equity interests are re-measured according to the
fair value on the date when such control ceases. The summation of the consideration obtained
from the disposal of equity interests and the fair value of the residual equity interests, minus
the portion in the original subsidiary’s net assets measured on a continuous basis from the
acquisition date that is enjoyable by the Group according to the original shareholding
percentage in the subsidiary, is recorded in investment gains for the period when the Group’s
control on the subsidiary ceases. Other comprehensive incomes in relation to the equity
investment in the original subsidiary are treated on the same accounting basis as the acquiree
directly disposes the relevant assets or liabilities (that is, except for the changes in the net
liabilities or assets with a defined benefit plan resulted from re-measurement of the original
subsidiary, the rest shall all be transferred into current investment gains) when such control
ceases. And subsequent measurement is conducted on the residual equity interests according
to the No. 2 Accounting Standard for Business Enterprises —Long-term Equity Investments
or the No. 22 Accounting Standard for Business Enterprises—Recognition and Measurement
of Financial Instruments. For details, see note IV, 13 “long term equity investment” or 9
“financial instruments”.
Where the Group losses control on its original subsidiaries due to step by step disposal of
equity investments through multiple transactions, it need to distinguish the Group losses
control on its subsidiaries due to disposal of equity investments whether belongs to a package
deal. All the transaction terms, conditions and economic impact of the disposal of
subsidiaries’ equity investment are in accordance with one or more of the following
conditions, which usually indicate the multiple transactions, should be considered as a
package deal for accounting treatment. ① These deals are at the same time or under the
condition of considering the influence of each other to concluded; ② These transactions only
be as a whole can achieve a complete business result; ③ The occurrence of a deal depends
on at least one other transactions；④ A deal alone is not economical, it is economical with
other trading together. Those not belong to a package deal, each of them a deal depends on
circumstances respectively conduct accounting treatment in accordance with the applicable
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principles of “part disposal of subsidiaries of a long-term equity investment under the
condition of not losing control on its subsidiaries” (see note IV 13, (2) ④) and “Where the
Group losses control on its original subsidiaries due to disposal of some equity investments
or other reasons” (See the front paragraph) relevant transactions of the Group losses control
on its subsidiaries due to disposal of equity investments belonging to a package deal,
considered as a transaction and conduct accounting treatment. However, Before losing
control, every disposal cost and corresponding net assets balance of subsidiary of disposal
investment are confirmed as other comprehensive income in consolidated financial
statements, which together transferred into the current profits and losses in the lose of
control , when the Group losing control on its subsidiary.
6. Classification of joint arrangements and accounting treatment of joint operations
A joint arrangement refers to an arrangement jointly controlled by two participants or above.
The Group classifies joint arrangements into joint operations and joint ventures according to
its rights and duties in the joint arrangements. A joint operation refers to a joint arrangement
where the Group enjoys assets and has to bear liabilities related to the arrangement. A joint
venture refers to a joint arrangement where the Group is only entitled to the net assets of the
arrangement.
The Group’s investments in joint ventures are measured at the equity method according to
the accounting policies mentioned in Note IV. 13 (2) ② “Long-term equity investments
measured at the equity method”.
For a joint operation, the Group, as a joint operator, recognizes the assets and liabilities that it
holds and bears in the joint operation, and recognizes the jointly-held assets and jointly-borne
liabilities according to the Group’s stake in the joint operation; recognizes the income from
sale of the Group’s share in the output of the joint operation; recognizes the income from sale
of the joint operation’s outputs according to the Group’s stake in it; and recognizes the
expense solely incurred to the Group and the expense incurred to the joint operation
according to the Group’s stake in it.
When the Group, as a joint operator, transfers or sells assets (the assets not constituting
business, the same below) to the joint operation, or purchases assets from the joint operation,
before the assets are sold to a third party, the Group only recognizes the share of the other
joint operators in the gains and losses arising from the sale. Where impairment occurs to the
assets as prescribed in , the Group shall fully recognizes the loss for a transfer or sale of assets to a
joint operation; and shall recognize the loss according to its stake in the joint operation for a
purchase of assets from the joint operation.
7. Recognition standard for cash and cash equivalents
In the Group’s understanding, cash and cash equivalents include cash on hand, any deposit
that can be used for cover, and short-term (usually due within 3 months since the day of
purchase) and high circulating investments, which are easily convertible into known amount
of cash and whose risks in change of value are minimal.
8. Foreign currency businesses and translation of foreign currency financial statements
(1) Accounting treatments for translation of foreign currency transactions
As for a foreign currency transaction, the Company shall convert the amount in a foreign
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currency into amount in its bookkeeping base at the spot exchange rate (usually referring to
the central parity rate announced by the People’s Bank of China, the same below) of the
transaction date, while as for such transactions as foreign exchange or involving in foreign
exchange, the Company shall converted into amount in the bookkeeping base currency at
actual exchange rate the transaction is occurred.
(2) Accounting treatments for translation of foreign currency monetary items and
non-monetary items
On the balance sheet date, the foreign currency monetary items shall be translated at the spot
exchange rate on the balance sheet date. The exchange difference arising from the difference
between the spot exchange rate on the balance sheet date and the spot exchange rate at the
time of initial recognition or prior to the balance sheet date shall be recorded in the profits
and losses in the current period, excluding the following situations: ① the exchange
difference arising from foreign currency loans related to acquisition of fixed assets shall be
treated at the principle of capitalization of borrowing costs; ② the exchange difference
arising from the hedging instruments used for effective hedging of net overseas operation
investments shall be recorded into other comprehensive incomes, and shall be recognized
into current gains and losses when the net investments are disposed; and ③ the exchange
difference arising from change in the book balance of foreign currency monetary items
available for sale except the amortized costs shall be recorded into other comprehensive
gains and losses.
When it involves overseas business in preparing the consolidated financial statement, for the
translation difference of foreign currency monetary items of net investment in overseas
business arising from the change in exchange rate, it shall be recorded into other
comprehensive incomes; and be recorded into disposal gains and losses at current period
when disposing overseas business.
A foreign currency non-monetary item measured at the historical costs shall still be translated
at the spot exchange rate on the transaction date. Where the foreign non-monetary items
measured at the fair value shall be converted into amount in its bookkeeping base currency at
spot exchange rate, the exchange gains and losses arising thereof shall be treated as change in
fair value, and recorded into the current period gains and losses or as other comprehensive
incomes.
(3) Translation of foreign currency financial statements
When it involves overseas business in preparing the consolidated financial statement, for the
translation difference of foreign currency monetary items of net investment in overseas
business arising from the change in exchange rate, it shall be recorded into the item of
“difference of foreign currency financial statement translation” under the owners’ equity; and
be recorded into disposal gains and losses at current period when disposing overseas
business.
The foreign currency financial statement of overseas business should be translated in to RMB
financial statement by the following methods: The asset and liability items in the balance
sheets shall be translated at a spot exchange rate on the balance sheet date. Among the
owner’s equity items, except for the items as “undistributed profits”, other items shall be
translated at the spot exchange rate at the time when they are incurred. The income and
expense items in the profit statements shall be translated at the spot exchange rate of the
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Konka Group Co., Ltd. Semi-annual Report 2016
transaction date. The undistributed profits at year-begin is the undistributed profits at the end
of last year after the translation; undistributed profits at year-end shall be listed as various
distribution items after the translation; after the translation, the balance between assets and
the sum of liabilities and owners’ equities shall be recorded into other comprehensive gains
and losses as difference of foreign currency translation. Where an enterprise disposes of an
overseas business without the control right, it shall shift the differences, which is presented
under the items of the owner’s equities in the balance sheet and which arises from the
translation of foreign currency financial statements relating to this overseas business, into the
disposal profits and losses of the current period by all or proportion of the disposed overseas
business.
Foreign cash flow shall be translated at the spot exchange rate of the date of cash flow
incurred. The influence of exchange rate on the cash flow shall be adjustment item and
individually listed in the cash flow statement.
And the opening balance and the actual balance of last year shall be listed at the amounts
after translation of foreign currency financial statement in last year.
Where the control of the Group over an overseas operation ceases due to disposal of all or
some of the Group’s owner’s equity in the overseas operation or other reasons, the
foreign-currency statement translation difference belonging to the parent company’s owner’s
equity in relation to the overseas operation which is stated under the shareholders’ equity in
the balance sheet shall be all restated as gains and losses of the disposal period.
Where the Group’s equity in an overseas operation decreases due to disposal of some equity
investment or other reasons but the Group still has control over the overseas operation, the
foreign-currency statement translation difference in relation to the disposed part of the
overseas operation shall be recorded into minority interests instead of current gains and
losses. If what’s disposed is some equity in an overseas associated enterprise or joint venture,
the foreign-currency statement translation difference related to the overseas operation shall
be recorded into the gains and losses of the current period of the disposal according to the
disposal ratio.
9. Financial instruments
The Group recognizes a financial asset or liability when it becomes a party of the relevant
financial instrument contract. Financial assets and liabilities are measured at fair value in
initial recognition. As for the financial assets and liabilities measured at fair value of which
changes are recorded into current gains and losses, the relevant dealing expenses are directly
recorded into gains and losses; and the dealing expenses on other kinds of financial assets
and liabilities are included in the amounts initially recognized.
(1) Determination of the fair value of main financial assets and financial liabilities
Fair value refers to the price that a market participant shall receive for selling an asset or
shall pay for transferring a liability in an orderly transaction on the measurement date. As for
the financial assets or financial liabilities for which there is an active market, the quoted
prices in the active market shall be used to determine the fair values thereof. The quoted
prices in the active market refers to the prices available from stock exchange, broker’s
agencies, guilds, pricing organization and etc., which represent the actual trading price under
equal transaction. Where there is no active market for a financial instrument, the enterprise
concerned shall adopt value appraisal techniques, including the prices adopted by the parties,
who are familiar with the condition, in the latest market transaction upon their own free will,
the current fair value obtained by referring to other financial instruments of the same
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Konka Group Co., Ltd. Semi-annual Report 2016
essential nature, the cash flow capitalization method and the option pricing model, etc., to
determine its fair value.
(2) Classification, recognition and measurement of financial assets
The purchase and sale of financial assets under the normal ways shall be recognized and
stopped to be recognized respectively at the price of transaction date. Financial assets shall
be classified into the following four categories when they are initially recognized: (a) the
financial assets which are measured at their fair values and the variation of which is recorded
into the profits and losses of the current period, (b) the investments which will be held to
their maturity; (c) loans and the account receivables; and (d) financial assets available for
sale.
① The financial assets which are measured at their fair values and the variation of which is
recorded into the profits and losses of the current period
Including transactional financial assets and the financial assets which are designated to be
measured at their fair value when they are initially recognized and of which the variation is
recorded into the profits and losses of the current period;
The financial assets meeting any of the following requirements shall be classified as
transactional financial assets：A. The purpose to acquire the said financial assets is mainly for
selling them in the near future; B. Forming a part of the identifiable combination of financial
instruments which are managed in a centralized way and for which there are objective
evidences proving that the enterprise may manage the combination by way of short-term
profit making in the near future; C. Being a derivative instrument, excluding the designated
derivative instruments which are effective hedging instruments, or derivative instruments to
financial guarantee contracts, and the derivative instruments which are connected with the
equity instrument investments for which there is no quoted price in the active market, whose
fair value cannot be reliably measured, and which shall be settled by delivering the said
equity instruments.
The financial assets meeting any of the following requirements shall be designated as
financial assets which are measured at their fair values and the variation of which is recorded
into the profits and losses of the current period for initial recognition: A. the designation can
eliminate or significantly reduce the difference of relevant gains and losses between
recognition and measurement causing from different bases for measurement of financial
assets; B. The official written documents for risk management and investment strategies of
the enterprise have clearly stated that it shall ,manage, evaluate and report to important
management personnel based on the fair value, about the financial assets group or the group
of financial assets & liabilities which the financial assets are belong to.
For the financial assets which are measured at their fair values and the variation of which is
recorded into the profits and losses of the current period shall continue to be measured by fair
value, gains and losses of change in fair value, dividends and interest related with these
financial assets should be recorded into gains and losses of current period.
② Held-to-maturity investment
The term “held-to-maturity investment” refers to a non-derivative financial asset with a fixed
date of maturity, a fixed or determinable amount of repo price and which the enterprise holds
for a definite purpose or the enterprise is able to hold until its maturity.
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Konka Group Co., Ltd. Semi-annual Report 2016
For the held-to-maturity investment adopting actual interest rate method, which is measured
at the post-amortization costs, the profits and losses that arise when such financial assets or
financial liabilities are terminated from recognition, or are impaired or amortized, shall be
recorded into the profits and losses of the current period.
The actual interest rate method refers to the method by which the post-amortization costs and
the interest incomes of different installments or interest expenses are calculated in light of the
actual interest rates of the financial assets or financial liabilities (including a set of financial
assets or financial liabilities). The actual interest rate refers to the interest rate adopted to
cash the future cash flow of a financial asset or financial liability within the predicted term of
existence or within a shorter applicable term into the current carrying amount of the financial
asset or financial liability.
When the actual interest rate is determined, the future cash flow shall be predicted on the
basis of taking into account all the contractual provisions concerning the financial asset or
financial liability (the future credit losses shall not be taken into account).and also the various
fee charges, trading expenses, premiums or reduced values, etc., which are paid or collected
by the parties to a financial asset or financial liability contract and which form a part of the
actual interest rate.
③ Loans and the accounts receivables
Loans and the accounts receivables refer to non-derivative financial assets, which there is no
quotation in the active market, with fixed recovery cost or recognizable.
Financial assets that are defined as loans and the accounts receivables by the Group including
notes receivables, accounts receivables, interest receivable, dividends receivable and other
receivables etc..
Loans and the accounts receivables are made follow-up measurement on the basis of
post-amortization costs employing the effective interest method. Gains or loss arising from
the termination recognition, impairment occurs or amortization shall be recorded into the
profits and losses of the current period.
④ Assets available for sales
Assets available for sales including non-derivative financial asset that has been assigned as
assets available for sales on the initial recognition and financial assets excluded those
measured at fair value and of which the variation into profits and losses of the current period,
they are some financial assets, loans and accounts receivables, held-to-maturity investment.
The cost at the period-end of the available-for-sale liabilities instruments should be
confirmed according to its amortized cost method, that is the initially recognized amount
which deduct the principal that had been repaid, to plus or minus the accumulative
amortization amount formed by the amortization between the difference of the initially
recognized amount and the amount on the due date that adopted the actual interest rate
method, and at the same time deduct the amount after the impairment loss happened. The
cost at the period-end of the available-for-sale liabilities instruments is its initial cost.
Financial assets available-for-trade are subsequently measured at fair value, and gains or
losses arising from changes in the fair value are recognized as other comprehensive income，
and be carried forward when the said financial assets stopped recognition, then it shall be
recorded into the profits and losses of the current period. But, the equity instrument
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investment which neither have quotation in the active market nor its fair value could not be
reliable measured, as well as the derivative financial assets that concern with the equity
instruments and should be settled through handing over to its equity instruments, should take
the follow-up measurement according to the cost.
Interest receive during the holding of assets available for sales and cash dividends with
distribution announcement by invested companies, it shall be recorded into the profits and
losses of the current period.
(3) Impairment of financial assets
The Group assesses at the balance sheet date the carrying amount of every financial asset
except for the financial assets that measured by the fair value. If there is objective evidence
indicating a financial asset may be impaired, a provision is provided for the impairment.
The Group carries out a separate impairment test for every financial asset which is
individually significant. As for a financial asset which is individually insignificant, an
impairment test is carried out separately or in the financial asset group with similar credit risk.
Where the financial asset (individually significant or insignificant) is found not impaired
after the separate impairment test, it is included in the financial asset group with similar
credit risk and tested again on the group basis. Where the impairment loss is recognized for
an individual financial asset, it is not included in the financial asset group with similar credit
risk for an impairment test.
① Impairment on held-to maturity investment, loans and receivables
The financial assets measured by cost or amortized cost write down their carrying value by
the estimated present value of future cash flow. The difference is recorded as impairment loss.
If there is objective evidence to indicate the recovery of value of financial assets after
impairment, and it is related with subsequent event after recognition of loss, the impairment
loss recorded originally can be reversed. The carrying value of financial assets after
impairment loss reversed shall not exceed the amortized cost of the financial assets without
provisions of impairment loss on the reserving date.
② Impairment of available-for-sale financial assets
When it judged that the decrease of fair value of the available-for-sale equity instrument
investment is serious and not temporarily after comprehensive considering relevant factors, it
reflected that the available-for-sale equity instrument investment occurred impairment. Of
which, the “serious decline” refers to the accumulative decline range of the fair value over
20%; while the “non-temporary decline” refers to the consecutive decline time of the fair
value over 12 months.
Where an available-for-sale financial asset is impaired, the accumulative losses arising from
the decrease of the fair value of the capital reserve which is directly included are transferred
out and recorded in the profits and losses for the current period. The accumulative losses
transferred out are the balance obtained from the initially obtained cost of the said financial
asset after deducting the principals as taken back, the amortized amount, the current fair
value and the impairment loss originally recorded in the profits and losses.
Where the impairment loss has been recognized for an available-for-sale financial asset, if,
within the accounting periods thereafter, there is any objective evidence proving that the
value of the said financial asset has been restored and the restoration is objectively related to
the events that occur after the impairment loss was recognized, the originally recognized
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impairment loss is reversed. The impairment losses on the available-for-sale equity
instrument investments are reversed and recognized as other comprehensive incomes, and the
impairment losses on the available-for-sale liability instruments are reversed and recorded in
the profits and losses for the current period.
The impairment loss incurred to an equity instrument investment for which there is no quoted
price in the active market and whose fair value cannot be reliably measured, or incurred to a
derivative financial asset which is connected with the said equity instrument investment and
which must be settled by delivering the said equity investment, is not reversed.
(4) Recognition and measurement of financial asset transfers
Where a financial asset satisfies any of the following requirements, the recognition of it is
terminated: ① The contractual rights for collecting the cash flow of the said financial asset
are terminated; ② The said financial asset has been transferred and nearly all of the risks and
rewards related to the ownership of the financial asset to the transferee; or ③ The said
financial asset has been transferred. And the Group has ceased its control on the said
financial asset though it neither transfers nor retains nearly all of the risks and rewards
related to the ownership of the financial asset.
Where the Group neither transfers nor retains nearly all of the risks and rewards related to the
ownership of a financial asset, and it does not cease its control on the said financial asset, it
recognizes the relevant financial asset and liability accordingly according to the extent of its
continuous involvement in the transferred financial asset. The term "continuous involvement
in the transferred financial asset" refers to the risk level that the enterprise faces resulting
from the change of the value of the financial asset.
If the transfer of an entire financial asset satisfies the conditions for stopping recognition, the
difference between the amounts of the following 2 items is recorded in the profits and losses
of the current period: (1) The book value of the transferred financial asset; and (2) The sum
of consideration received from the transfer, and the accumulative amount of the changes of
the fair value originally recorded in other comprehensive incomes.
If the transfer of partial financial asset satisfies the conditions to stop the recognition, the
book value of the transferred financial asset is apportioned between the portion whose
recognition has been stopped and the portion whose recognition has not been stopped
according to their respective relative fair value, and the difference between the amounts of
the following 2 items is included into the profits and losses of the current period: (1) The
summation of the consideration received from the transfer and the portion of the
accumulative amount of changes in the fair value originally recorded in other comprehensive
incomes which corresponds to the portion whose recognition has been stopped; and (2) The
amortized carrying amounts of the aforesaid amounts.
In respect of the assets using recourse to sell or using endorsement to transfer, the Group
needs to determine whether almost all of the risks and rewards of the financial asset
ownership are transferred. If almost all of the risks and rewards of the financial asset
ownership had been transferred to the transferee, derecognize the financial assets. For almost
all of the risks and rewards of the financial asset ownership retained, do not end to recognize
the financial assets. For which neither transfer or retain almost all of the risks and rewards of
the financial asset ownership, continuously judge whether the Company retain the control of
the assets, and conduct accounting treatment according to the principle of mentioned in the
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previous paragraphs.
(5) Classification and measurement of financial liabilities
In the initial recognition, financial liabilities are divided into the financial liabilities measured
at fair values and whose changes are recorded in current gains and losses and other financial
liabilities. Financial liabilities are initially recognized at their fair values. As for a financial
liability measured at fair value and whose changes are recorded in current gains and losses,
the relevant trading expense is directly recorded in the profits and losses for the current
period. As for other financial liabilities, the relevant trading expenses are recorded in the
initially recognized amounts.
① Financial liabilities measured at fair values and whose changes are recorded in current
gains and losses
Such financial liabilities are divided into transactional financial liabilities and financial
liabilities designated to be measured at fair values and whose changes are recorded in current
gains and losses in the initial recognition under the same conditions where such financial
assets are divided into transactional financial assets and financial assets designated to be
measured at fair values and whose changes are recorded in current gains and losses in the
initial recognition.
Financial liabilities measured at fair values and whose changes are recorded in current gains
and losses are subsequently measured at their fair values. Gains or losses arising from the fair
value changes, as well as the dividend and interest expenses in relation to the said financial
liabilities, are recorded in the profits and losses for the current period.
② Other financial liabilities
As for a derivative financial liability connected to an equity instrument for which there is not
quoted price in an active market and whose fair value cannot be reliably measured and which
must be settled by delivering the equity instrument, it is subsequently measured on the basis
of costs. Other financial liabilities are subsequently measured according to the amortized cost
using the actual interest rate method. Gains or losses arising from de-recognition or
amortization of the said financial liabilities is recorded in the profits and losses for the
current period.
③ Financial guarantee contract and loan commitment
For the financial guarantee contracts which are not designated as a financial liability
measured at its fair value and the variation thereof is recorded into the profits and losses of
the current period, or the loan commitment which is not designated as a financial liability
measured at its fair value and the variation thereof is recorded into the gains and losses that
will be loaned lower than the market interest rate, which shall be initially recognized by fair
value, and the subsequent measurement shall be made after they are initially recognized
according to the higher one of the following: a. the amount as determined according to the
Accounting Standards for Enterprises No. 13 – Contingencies; b. the surplus after
accumulative amortization as determined according to the principles of the Accounting
Standards for Enterprises No. 14 - Revenues is subtracted from the initially recognized
amount.
(6) De-recognition of financial liabilities
Only when the prevailing obligations of a financial liability are relieved in all or in part may
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the recognition of the financial liability be terminated in all or partly. Where the Group
(debtor) enters into an agreement with a creditor so as to substitute the existing financial
liabilities by way of any new financial liability, and if the contractual stipulations regarding
the new financial liability is substantially different from that regarding the existing financial
liability, it terminates the recognition of the existing financial liability, and at the same time
recognizes the new financial liability.
Where the recognition of a financial liability is totally or partially terminated, the enterprise
concerned shall include into the profits and losses of the current period for the gap between
the book value which has been terminated from recognition and the considerations it has paid
(including the non-cash assets it has transferred out and the new financial liabilities it has
assumed)
(7) Derivatives and embedded derivatives
Derivative financial instruments include derivatives are initially measured at fair value at the
date when the derivative contracts are entered into and are substantially re-measured at fair
value. The resulting gain and loss is recognized in profit or loss.
An embedded derivative is separated from the hybrid instrument, where the hybrid
instrument is not designated as a financial asset or financial liability at fair value though
profit or loss, and the treated as a standalone derivative if (a) the economic characteristics
and risks of the embedded derivative are not closely related to the economic characteristics
and risks of the host contract; and (b) a separate instrument with the same terms as the
embedded derivative would meet the definition of a derivative. If the Company is unable to
measure the embedded derivative separately either at acquisition or at a subsequent balance
sheet date, it designates the entire hybrid instrument as a financial asset or financial liability
at fair value through profit or loss.
(8) Offsetting financial assets and financial liabilities
When the Group has a legal right that is currently enforceable to set off the recognized
financial assets and financial liabilities, and intends either to settle on a net basis, or to realize
the financial asset and settle the financial liability simultaneously, a financial asset and a
financial liability shall be offset and the net amount is presented in the balance sheet. Except
for the above circumstances, financial assets and financial liabilities shall be presented
separately in the balance sheet and shall not be offset.
(9) Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the
Company after deducting all of its liabilities. The Group issues (including refinancing),
re-purchases, sells or written-offs the equity instrument as the disposing of the changes of the
equity. The Group not recognized the changes of the fair value of the equity instrument. The
transaction expenses related to the equity transaction would be deducted from the equity.
All types of distribution (excluding stock dividends) made by the Group to holders of equity
instruments are deducted from shareholders’ equity. The Group does not recognize any
changes in the fair value of equity instruments.
10. Receivables
Receivables include account receivables and other accounts receivables.
(1) Recognition of provision for bad debts:
The Group shall test the carrying amount of receivables on the balance sheet date. Where
there is any objective evidence proving that such receivables have been impaired, an
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impairment provision shall be made.
① Debtor has serious financial difficult;
② Debtor goes against the contract clause (for instance, breach of faith or overdue paying
interests or principal);
③ Debtors have a great probability of bankruptcy or other financial reorganization;
④ Other objective evidence proving such accounts receivable has been impaired;
(2) Withdraw method of provision for bad debts
① The recognition criteria and method of individual provision for bad debts of receivables
that are individually significant
The Group recognized the receivables with amount above RMB20 million and other
receivables above 10 million as receivables with significant single amounts and withdrawn
the provision for bad debts.
The Group made an independent impairment test on receivables with significant single
amounts; the financial assets without impairment by independent impairment test should be
included in financial assets portfolio with similar credit risk to take the impairment test.
Receivables was recognized with impairment should no longer be included in receivables
portfolio with similar credit risk to take the impairment test.
② The recognition and method of provision for bad debts of receivables by credit risk
portfolio
A. Recognition of credit risk group
Receivables that not individually significant and individually significant but without
impairment by independent impairment test, are grouped on the basis of similarity and
relevance of credit risk. This credit risk usually reflects the debtor’s ability to repay all the
due accounts in accordance with contract for such assets, which also are related with the
measurement on future cash flow of the examined assets.
Recognition basic of different groups:
Item Basic
Aging group Divide the groups according to the credit risks characteristics of the accounts
receivable
Internal related party groups of Divide the groups according to the credit risks characteristics of whether the creditor
the Company is the internal related party of the Company
B. Withdrawal method of provision for bad debts recognized by credit risk group
For the impairment test implemented by groups, the amount of provision for bad debts was
appraised and recognized in accordance with the structure of accounts receivable group and
similar characteristics of credit risk (the debtor’s ability to pay off the loans in accordance
with the provisions of contract), experience of losses, current economic status and the
predicted losses in the accounts receivable group.
Withdrawal method of the bad debts provision of the different groups:
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Item Withdrawal method
Aging group Aging analysis method
Internal related party groups of the Executes the impairment test individually and if there is no impairment, should
Company not withdraw the bad debt provision
In the groups, adopting aging analysis method to withdraw bad debt provision:
Withdrawal proportion for accounts Withdrawal proportion for other
Age
receivable (%) accounts receivable (%)
Within 1 year (including 1 year, similarly
hereinafter) 2 2
1-2 years 5 5
2-3 years 20 20
3-4 years 50 50
4-5 years 50 50
Over 5 years 100 100
③ Receivables with insignificant amount but being individually withdrawn the provision for
bad debts
The Group made independent impairment test on receivables with insignificant amount but
with the following characteristics, if any objective evidence shows that the accounts
receivable has been impaired, impairment loss shall be recognized on the basis of the gap
between the current values of the future cash flow lower than its book value so as to
withdraw provision for bad debts:
A. Receivables have dispute with the other parties or involving lawsuit and arbitration;
B. Receivables have obvious indication showing that the debtors are likely to fail to perform
the duty of repayment, etc.
(3) Reversal of provision for bad debts
If there is any objective evidence proving that the value of the said receivables has been
restored, and it is objectively related to the events occurred after such loss is recognized, the
impairment-related losses as originally recognized shall be reversed and be recorded into the
profits and losses of the current period. However, the reversed carrying amount shall not be
any more than the post-amortization costs of the said accounts receivable on the day of
reverse under the assumption that no provision is made for the impairment.
11. Inventory
(1) Classification
The Group’s inventories are classified as non-property inventories and property inventories.
And the non-property inventories include raw materials, goods in process; merchandise on
hand, goods delivered and circulating materials, etc; while the property inventories include
property in process and finished property, etc.
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① The finished property refers to the finished and held-for-sale property.
② The property in process (development costs) refers to the unfinished property with the
development purpose for sale.
(2) Pricing method for outgoing inventories
Pricing method: weighted average method
The inventories shall be measured in light of their cost when obtained. The cost of inventory
consists of purchase costs, processing costs and other costs. Inventory is accounted by weight
average method upon receiving and giving. For merchandise on hand shall be accounted by
planned cost, if the difference between planned cost of and actual cost of raw materials is
accounted through the cost variance item, and the planned cost is adjusted to the actual cost
according to the cost difference which the carryover and given-out inventory should shoulder
in the period.
The property inventories are initially measured at the costs, and the costs of the developed
property include the land premium, expenditures for supporting infrastructures, expenditures
for construction and installation projects, the borrowing costs before the completion of the
developed project and other expenses occurred during the development process.
① The public supporting facilities recorded the development costs at the actual costs, the
amortization upon completion was transferred to the costs of houses and other
available-for-sale property, while as for the supporting facilities with operating value and
beneficiary rights owned by the Group as well as available for individual sale and
measurement, which shall be recorded into the “investment property”
② For the accounting policies on borrowing costs occurred for developing property, please
refer to Note IV. 17 Pricing of “Borrowing Costs”.
(3) Recognition basis of net realizable value and withdrawal method of depreciation reserves
for inventories
The net realizable value refers, in the ordinary course of business, to the account after
deducting the estimated cost of completion, estimated sale expense and relevant taxes from
the estimated sale price of inventories. The net realizable value of inventories shall be fixed
on the basis of valid evidence as well as under consideration of purpose of inventories and
the effect of events after balance-sheet-date.
On the balance sheet date, the inventories shall be measured according to the cost or the net
realizable value, whichever is lower. If the net realizable value is lower than the cost, it shall
withdraw the depreciation reserves for inventories, which was withdrawn in accordance with
the balance that the cost of individual inventory item exceeding the net realizable value.
After withdrawing the depreciation reserves for inventories, if the factors, which cause any
write-down of the inventories, have disappeared, causing the net realizable value of
inventories is higher than its carrying amount; the amount of write-down shall be reversed
from the original amount of depreciation reserve for inventories. The reversed amount shall
be included in the profits and losses of the current period.
(4) The perpetual inventory system is maintained for stock system.
(5) Amortization method of the low-value consumption goods and packing articles
The low-value consumption goods should be amortized by one time amortization when
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acquiring and the packing articles are amortized by one time/gradation amortization when
acquiring.
12. Long-term equity investments
The long-term equity investments of this part refer to the long-term equity investments that
the Group has control, joint control or significant influence over the investees. The long-term
equity investment that the Group does not have control, joint control or significant influence
over the investees, should be recognized as available-for-sale financial assets or be measured
by fair value with the changes should be included in the financial assets accounting of the
current gains and losses, and please refer the details of the accounting policies to Notes IV 9
“financial instrument”.
Joint control, refers to the control jointly owned according to the relevant agreement on an
arrangement by the Group and the relevant activities of the arrangement should be decided
only after the participants which share the control right make consensus. Significant
influence refers to the power of the Group which could anticipate in the finance and the
operation polices of the investees, but could not control or jointly control the formulation of
the policies with the other parties.
(1) Recognition of investment costs
As for long-term equity investments acquired by enterprise merger, if the merger is under the
same control, the share of the book value of the owner’s equity of the merged enterprise, on
the date of merger, is regarded as the initial cost of the long-term equity investment. The
difference between the initial cost of the long-term equity investment and the payment in
cash, non-cash assets transferred as well as the book value of the debts borne by the merging
party shall offset against the capital reserve. If the capital reserve is insufficient to dilute, the
retained earnings shall be adjusted. If the consideration of the merging enterprise is that it
issues equity securities, it shall, on the date of merger, regard the share of the book value of
the shareholder's equity of the merged enterprise on the consolidated financial statement of
the ultimate control party as the initial cost of the long-term equity investment. The total face
value of the stocks issued shall be regarded as the capital stock, while the difference between
the initial cost of the long-term equity investment and total face value of the shares issued
shall offset against the capital reserve. If the capital reserve is insufficient to dilute, the
retained earnings shall be adjusted. The equities of the combined party which respectively
acquired through multiple transaction under the same control that ultimately form into the
combination of the enterprises under the same control, should be disposed according whether
belongs to package deal; if belongs to package deal, each transaction would be executed
accounting treatment by the Company as a transaction of acquiring the control right. If not
belongs to package deal, it shall, on the date of merger, regard the enjoyed share of the book
value of the shareholder's equity of the merged enterprise on the consolidated financial
statement of the ultimate control party as the initial cost of the long-term equity investment,
and as for the difference between the initial investment cost of the long-term equity
investment and sum of the book value of the long-term equity investment before the
combination and the book value of the consideration of the new payment that further
required on the combination date, should adjust the capital reserve; if the capital reserve is
insufficient to dilute, the retained earnings shall be adjusted. The equity investment held
before the combination date which adopted the equity method for accounting, or the other
comprehensive income confirmed for the available-for-sale financial assets, should not have
any accounting disposal for the moment.
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For the long-term investment required from the business combination under different control,
the initial investment cost regarded as long-term equity investment on the purchasing date
according to the combination cost, the combination costs shall be the sum of the fair values
of the assets paid, the liabilities incurred or assumed and the equity securities issued by the
Company. The equities of the acquirees which respectively acquired through multiple
transaction that ultimately form into the combination of the enterprises under the different
control, should be disposed according whether belongs to package deal; if belongs to
package deal, each transaction would be executed accounting treatment by the Company as a
transaction of acquiring the control right. If not belongs to package deal, the sum of the book
value of the original held equity investment of the acquirees and the newly added investment
cost should be regarded as the initial investment cost of the long-term equity investment that
changed to be accounted by cost method. If the original held equity is calculated by cost
method, the other relevant comprehensive income would not have any accounting disposal
for the moment. If the original held equity investment is the financial assets available for sale,
its difference between the fair value and the book value as well as the accumulative changes
of the fair value that include in the other comprehensive income, should transfer into the
current gains and losses.
The commission fees for audit, law services, assessment and consultancy services and other
relevant expenses occurred in the business combination by the combining party or the
purchase party, shall be recorded into current profits and losses upon their occurrence; the
transaction expense from the issuance of equity securities or bonds securities which are as
consideration for combination by the combining party, should be recorded as the initial
amount of equity securities and bonds securities.
Besides the long-term equity investments formed by business combination, the other
long-term equity investments shall be initially measured by cost, the cost is fixed in
accordance with the ways of gaining, such as actual cash payment paid by the Group, the fair
value of equity securities issued by the Group, the agreed value of the investment contract or
agreement, the fair value or original carrying amount of exchanged assets from non-monetary
assets exchange transaction, the fair value of the long-term equity investments, etc. The
expenses, taxes and other necessary expenditures directly related with gaining the long-term
equity investments shall also be recorded into investment cost. The long-term equity
investment cost for those could execute significant influences on the investees because of
appending the investment or could execute joint control but not form as control, should be as
the sum of the fair value of the original held equity investment and the newly added
investment cost recognized according to the No.22 of Accounting Standards for Business
Enterprises—Recognition and Measurement of Financial Instrument.
(2) Subsequent measurement and recognition of gains or losses
A long-term equity investment where the investing enterprise has joint control (except for
which forms into common operators) or significant influence over the investors should be
measured by equity method. Moreover, long-term equity investment adopting the cost
method in the financial statements, and which the Company has control on invested entity.
① Long-term equity investment measured by adopting cost method
The price of a long-term equity investment measured by adopting the cost method shall be
included at its initial investment cost and append as well as withdraw the cost of investing
and adjusting the long-term equity investment. The return on investment at current period
shall be recognized in accordance with the cash dividend or profit announced to distribute by
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the invested entity, except the announced but not distributed cash dividend or profit included
in the actual payment or consideration upon gaining the investment.
② Long-term equity investment measured by adopting equity method
If the initial cost of a long-term equity investment is more than the Company's attributable
share of the fair value of the invested entity's identifiable net assets for investment, the initial
cost of the long-term equity investment may not be adjusted. If the initial cost of a long-term
equity investment is less than the Company's attributable share of the fair value of the
invested entity's identifiable net assets for investment, the difference shall be included in the
current profits and losses and the cost of the long-term equity investment shall be adjusted
simultaneously.
When measured by adopting equity method, respectively recognize investment income and
other comprehensive income according to the net gains and losses as well as the portion of
other comprehensive income which should be enjoyed or be shared, and at the same time
adjust the book value of the long-term equity investment; corresponding reduce the book
value of the long-term equity investment according to profits which be declared to distribute
by the investees or the portion of the calculation of cash dividends which should be enjoyed;
for the other changes except for the net gains and losses, other comprehensive income and
the owners’ equity except for the profits distribution of the investees, should adjust the book
value of the long-term equity investment as well as include in the capital reserve. The
investing enterprise shall, on the ground of the fair value of all identifiable assets of the
invested entity when it obtains the investment, recognize the attributable share of the net
profits and losses of the invested entity after it adjusts the net profits of the invested entity. If
the accounting polices adopted by the investees is not accord with that of the Group, should
be adjusted according to the accounting policies of the Group and the financial statement of
the investees during the accounting period and according which to recognize the investment
income as well as other comprehensive income. For the transaction happened between the
Group and associated enterprises as well as joint ventures, if the assets launched or sold not
form into business, the portion of the unrealized gains and losses of the internal transaction,
which belongs to the Group according to the calculation of the enjoyed proportion, should
recognize the investment gains and losses on the basis. But the losses of the unrealized
internal transaction happened between the Group and the investees which belongs to the
impairment losses of the transferred assets, should not be neutralized. The assets launched by
the Group to the associated enterprises or the joint ventures if could form into business, the
long-term equity investment without control right which acquired by the investors, should
regard the fair value of the launched business as the initial investment cost the newly added
long-term equity investment, and for the difference between the initial investment cost and
the book value of the launched business, should be included into the current gains and losses
with full amount. The assets sold by the Group to the associated enterprises or the joint
ventures if could form into business, the difference between the acquired consideration and
the book value of the business should be included in the current gains and losses with full
amount. The assets purchased by the Group to the associated enterprises or the joint ventures
if could form into business, should be accounting disposed according to the regulations of No.
20 of ASBE—Business Combination, and should be recognized gains or losses related to the
transaction with full amount.
The Group shall recognize the net losses of the invested enterprise until the book value of the
long-term equity investment and other long-term rights and interests which substantially
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form the net investment made to the invested entity are reduced to zero. However, if the
Group has the obligation to undertake extra losses, it shall be recognized as the estimated
liabilities in accordance with the estimated duties and then recorded into investment losses at
current period. If the invested entity realizes any net profits later, the Group shall, after the
amount of its attributable share of profits offsets against its attributable share of the
un-recognized losses, resume recognizing its attributable share of profits.
For the long-term equity investment held by the Group before the first execution of the new
accounting criterion on 1 Jan. 2008 of the associated enterprises and joint ventures, if there is
debit difference of the equity investment related to the investment, should be included in the
current gains and losses according to the amount of the straight-line amortization during the
original remained period.
③ Acquiring shares of minority interest
In the preparation for the financial statements, the balance existed between the long-term
equity investment increased by acquiring shares of minority interest and the attributable net
assets on the subsidiary calculated by the increased shares held since the purchase date (or
combination date), the capital reserves shall be adjusted, if the capital reserves are not
sufficient to offset, the retained profits shall be adjusted.
④ Disposal of long-term equity investment
In the preparation of financial statements, the Company disposed part of the long-term equity
investment on subsidiaries without losing its controlling right on them, the balance between
the disposed price and attributable net assets of subsidiaries by disposing the long-term
equity investment shall be recorded into owners’ equity; where the Company losses the
controlling right by disposing part of long-term equity investment on such subsidiaries, it
shall treated in accordance with the relevant accounting policies in Note IV. 5 (2) — Method
on preparation of combined financial statements.
For other ways on disposal of long-term equity investment, the balance between the book
value of the disposed equity and its actual payment gained shall be recorded into current
profits and losses.
For the long-term equity investment measured by adopting equity method, if the remained
equity after disposal still adopts the equity method for measurement, the other
comprehensive income originally recorded into owners’ equity should adopt the same basis
of the accounting disposal of the relevant assets or liabilities directly disposed by the
investees according to the corresponding proportion. The owners’ equity recognized owning
to the changes of the other owners’ equity except for the net gains and losses, other
comprehensive income and the profits distribution of the investees, should be transferred into
the current gains and losses according to the proportion.
For the long-term equity investment which adopts the cost method of measurement, if the
remained equity still adopt the cost method, the other comprehensive income recognized
owning to adopting the equity method for measurement or the recognition and measurement
standards of financial instrument before acquiring the control of the investees, should adopt
the same basis of the accounting disposal of the relevant assets or liabilities directly disposed
by the investees and should be carried forward into the current gains and losses according to
the proportion; the changes of the other owners’ equity except for the net gains and losses,
other comprehensive income and the profits distribution among the net assets of the investees
which recognized by adopting the equity method for measurement, should be carried forward
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into the current gains and losses according to the proportion.
For those the Group lost the control of the investees by disposing part of the equity
investment as well as the remained equity after disposal could execute joint control or
significant influences on the investees, should change to measure by equity method when
compiling the individual financial statement and should adjust the measurement of the
remained equity to equity method as adopted since the time acquired; if the remained equity
after disposal could not execute joint control or significant influences on the investees,
should change the accounting disposal according to the relevant regulations of the
recognition and measurement standards of financial instrument, and its difference between
the fair value and book value on the date lose the control right should be included in the
current gains and losses. For the other comprehensive income recognized by adopting equity
method for measurement or the recognition and measurement standards of financial
instrument before the Group acquired the control of the investees, should execute the
accounting disposal by adopting the same basis of the accounting disposal of the relevant
assets or liabilities directly disposed by the investees when lose the control of them, while the
changes of the other owners’ equity except for the net gains and losses, other comprehensive
income and the profits distribution among the net assets of the investees which recognized by
adopting the equity method for measurement, should be carried forward into the current
gains and losses according to the proportion. Of which, for the disposed remained equity
which adopted the equity method for measurement, the other comprehensive income and the
other owners’ equity should be carried forward according to the proportion; for the disposed
remained equity which changed to execute the accounting disposal according to the
recognition and measurement standards of financial instrument, the other comprehensive
income and the other owners’ equity should be carried forward in full amount.
For those the Group lost the control of the investees by disposing part of the equity
investment, the disposed remained equity should change to calculate according to the
recognition and measurement standards of financial instrument, and difference between the
fair value and book value on the date lose the control right should be included in the current
gains and losses. For the other comprehensive income recognized from the original equity
investment by adopting the equity method, should execute the accounting disposal by
adopting the same basis of the accounting disposal of the relevant assets or liabilities directly
disposed by the investees when terminate the equity method for measurement, while for the
owners’ equity recognized owning to the changes of the other owner’s equity except for the
net gains and losses, other comprehensive income and the profits distribution of the investees,
should be transferred into the current investment income with full amount when terminate
adopting the equity method.
The Group respectively disposes the equity investment of the subsidiaries through multiple
transactions until lose the control right, if the above transactions belongs to the package deal,
should execute the accounting disposal by regarding each transaction as a deal of disposing
the equity investment of the subsidiaries until lose the control right, while the difference
between each expenses of the disposal and the book value of the long-term equity investment
in accord with the disposed equity before losing the control right, should firstly be
recognized as other comprehensive income then be transferred into the current gains and
losses of losing the control right along until the time when lose it.
13. Investment real estates
The term “investment real estates” refers to the real estate held for generating rent and/or
capital appreciation. Investment real estates of the Group include the right to use any land
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which has already been rented; the right to use any land which is held and prepared for
transfer after appreciation; and the right to use any building which has already been rented.
The initial measurement of the investment real estate shall be made at its cost. Subsequent
expenditures incurred for an investment real estate is included in the cost of the investment
real estate when it is probable that economic benefits associated with the investment real
estate will flow to the Group and the cost can be reliably measured, otherwise the
expenditure is recognized in profit or loss in the period in which they are incurred.
The Group shall make a follow-up measurement to the investment real estates by employing
the cost pattern on the date of the balance sheet. An accrual depreciation or amortization shall
be made for the investment real estates in the light of the accounting policies of the use right
of buildings or lands.
For details of impairment test method and withdrawal method of impairment provision of
investment real estates, please refer to Note IV. 16. Impairment of Non-current Non-financial
Assets.
When owner-occupied real estate or inventories are changed into investment real estate or
investment real estate is changed into owner-occupied real estate, of which book value prior
to the change shall be the entry value after the change.
When an investment real estate is changed to an owner-occupied real estate, it would be
transferred to fixed assets or intangible assets at the date of such change. When an
owner-occupied real estate is changed to be held to earn rental or for capital appreciation, the
fixed asset or intangible asset is transferred to investment real estate at the date of such
change. If the fixed asset or intangible asset is changed into investment real estate measured
by adopting the cost pattern, whose book value prior to the change shall be the entry value
after the change; if the fixed asset or intangible asset is changed into investment real estate
measured by adopting the fair value pattern, whose fair value on the date of such change
shall be the entry value after the change
An investment real estate is derecognized on disposal or when the investment real estate is
permanently withdrawn from use and no future economic benefits are expected from its
disposal. The amount of proceeds on sale, transfer, retirement or damage of an investment
real estate less its carrying amount and related taxes and expenses is recognized in profit or
loss in the period in which it is incurred.
14. Fixed assets
(1) Conditions for recognition of fixed assets
The term "fixed assets" refers to the tangible assets that simultaneously possess the features
as follows: (a) they are held for the sake of producing commodities, rendering labor service,
renting or business management; and (b) their useful life is in excess of one fiscal year. The
fixed assets are only recognized when the relevant economic benefits probably flow in the
Group and its cost could be reliable measured. The fixed assets should take the initial
measurement according to the cost and at the same time consider the influences of the factors
of the estimated discard expenses.
(2) Depreciation methods of each fixed asset
The fixed assets should be withdrawn and depreciation by straight-line depreciation within
the useful life since the next month when the fixed assets reach the estimated available state.
The useful life, estimated net salvage and the yearly discounted rate of each fixed asset are as
follows:
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Expected net
Annual
Category of fixed assets Method Useful life (Year) salvage value
deprecation (%)
(%)
Housing and building
Straight-line
20-40 10.00 2.25-4.50
depreciation
Machinery equipment
Straight-line 10.00
10 9.00
depreciation
Electronic equipment
Straight-line 10.00
5 18.00
depreciation
Transportation vehicle
Straight-line 10.00
5 18.00
depreciation
Other equipment
Straight-line 5 10.00
18.00
depreciation
The “expected net salvage value” refers to the expected amount that the Group may obtain
from the current disposal of a fixed asset after deducting the expected disposal expenses at
the expiration of its expected useful life.
(3) Testing method of impairment and withdrawal method of provision for impairment on
fixed assets
For details of the testing method of impairment and withdraw method of impairment
provision for impairment on fixed assets, please refer to Note IV. 19 “Long-term assets
impairment”.
(4) Recognition basis, pricing and depreciation method of fixed assets by finance lease
The “finance lease” shall refer to a lease that has transferred in substance all the risks and
rewards related to the ownership of an asset. Its ownership may or may not eventually be
transferred. The fixed assets by finance lease shall adopt the same depreciation policy for
self-owned fixed assets. If it is reasonable to be certain that the lessee will obtain the
ownership of the leased asset when the lease term expires, the leased asset shall be fully
depreciated over its useful life. If it is not reasonable to be certain that the lessee will obtain
the ownership of the leased asset at the expiry of the lease term, the leased asset shall be fully
depreciated over the shorter one of the lease term or its useful life.
(5) Other explanations
The follow-up expenses related to a fixed asset, if the economic benefits pertinent to this
fixed asset are likely to flow into the enterprise and its cost can be reliably measured, shall be
recorded into cost of fixed assets and ultimately recognized as the book value of the replaced
part; otherwise, they shall be included in the current profits and losses.
Terminate to recognize the fixed assets when the fixed assets under the disposing state or be
estimated that could not occur any economy benefits through using or disposing. When the
Group sells, transfers or discards any fixed assets, or when any fixed assets of the Group is
damaged or destroyed, the Group shall deduct the book value of the fixed assets as well as
the relevant taxes from the disposal income, and include the amount in the current profits and
losses.
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The Group shall check the useful life, expected net salvage value and depreciation method of
the fixed assets at the end of the year at least, if there is any change, it shall be regarded as a
change of the accounting estimates.
15. Construction in progress
Construction in process is measured at actual cost. Actual cost comprises construction costs,
borrowing costs that are eligible for capitalization before the fixed assets being ready for
their intended us and other relevant costs. Construction in process is transferred to fixed
assets when the assets are ready for their intended use.
For details of the testing method of impairment and withdraw method of impairment
provision on construction in progress, please refer to Note IV. 19 “Long-term assets
impairment”.
16. Borrowing costs
The borrowing costs shall include interest on borrowings, amortization of discounts or
premiums on borrowings, ancillary expenses, and exchange balance on foreign currency
borrowings. When the borrowing costs can be directly attributable to the construction or
production of assets eligible for capitalization, and the asset disbursements or the borrowing
costs have already incurred, and the construction or production activities which are necessary
to prepare the asset for its intended use or sale have already started, the capitalization of
borrowing costs begins. When the asset eligible for capitalization under acquisition and
construction or production is ready for the intended use or sale, the capitalization of the
borrowing costs shall be ceased. Other borrowing costs shall be recognized as expenses when
incurred.
The to-be-capitalized amount of interests shall be determined in light of the actual interests
incurred of the specially borrowed loan at the present period minus the income of interests
earned on the unused borrowing loans as a deposit in the bank or as a temporary investment;
the enterprise shall calculate and determine the to-be-capitalized amount on the general
borrowing by multiplying the weighted average asset disbursement of the part of the
accumulative asset disbursements minus the general borrowing by the capitalization rate of
the general borrowing used. The capitalization rate shall be calculated and determined in
light of the weighted average interest rate of the general borrowing.
During the period of capitalization, the exchange balance on foreign currency special
borrowings shall be capitalized; the exchange balance on foreign currency general
borrowings shall be recorded into current profits and losses.
The term “assets eligible for capitalization” refers to the fixed assets, investment real estate,
inventories and other assets, of which the acquisition and construction or production may
take quite a long time to get ready for its intended use or for sale.
Where the acquisition and construction or production of a qualified asset is interrupted
abnormally and the interruption period lasts for more than 3 months, the capitalization of the
borrowing costs shall be suspended.
17. Intangible assets
(1) Pricing method, useful life and impairment test
The term “intangible asset” refers to the identifiable non-monetary assets possessed or
controlled by enterprises which have no physical shape.
The intangible assets shall be initially measured according to its cost. The costs related with
the intangible assets, if the economic benefits related to intangible assets are likely to flow
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into the enterprise and the cost of intangible assets can be measured reliably, shall be
recorded into the costs of intangible assets; otherwise, it shall be recorded into current profits
and losses upon the occurrence.
The use right of land gained is usually measured as intangible assets. For the self-developed
and constructed factories and other constructions, the related expenditures on use right of
land and construction costs shall be respectively measured as intangible assets and fixed
assets. For the purchased houses and buildings, the related payment shall be distributed into
the payment for use right of land and the payment for buildings, if it is difficult to be
distributed, the whole payment shall be treated as fixed assets.
For intangible assets with a finite service life, from the time when it is available for use, the
cost after deducting the sum of the expected salvage value and the accumulated impairment
provision shall be amortized by straight line method during the service life. While the
intangible assets without certain service life shall not be amortized.
At the end of period, the Group shall check the service life and amortization method of
intangible assets with finite service life, if there is any change, it shall be regarded as a
change of the accounting estimates. Besides, the Group shall check the service life of
intangible assets without certain service life, if there is any evidence showing that the period
of intangible assets to bring the economic benefits to the enterprise can be prospected, it shall
be estimated the service life and amortized in accordance with the amortization policies for
intangible assets with finite service life.
(2) R & D expenses
The expenditures for internal research and development projects of an enterprise shall be
classified into research expenditures and development expenditures.
The research expenditures shall be recorded into the profit or loss for the current period.
The development expenditures shall be confirmed as intangible assets when they satisfy the
following conditions simultaneously, and shall be recorded into profit or loss for the current
period when they don’t satisfy the following conditions.
① It is feasible technically to finish intangible assets for use or sale;
② It is intended to finish and use or sell the intangible assets;
③ The usefulness of methods for intangible assets to generate economic benefits shall be
proved, including being able to prove that there is a potential market for the products
manufactured by applying the intangible assets or there is a potential market for the
intangible assets itself or the intangible assets will be used internally;
④ It is able to finish the development of the intangible assets, and able to use or sell the
intangible assets, with the support of sufficient technologies, financial resources and other
resources;
⑤ The development expenditures of the intangible assets can be reliably measured.
As for expenses that can’t be identified as research expenditures or development
expenditures, the occurred R & D expenses shall be all included in current profits and losses.
(3) Testing method of impairment and withdraw method of impairment provision of
intangible assets
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For details of the testing method of impairment and withdraw method of impairment
provision on intangible assets, see Notes IV. 19 “Long-term assets impairment”.
18. Amortization method of long-term deferred expenses
Long-term deferred expenses refer to general expenses with the apportioned period over one
year (one year excluded) that have occurred but attributable to the current and future periods.
Long-term deferred expense shall be amortized averagely within benefit period.
19. Impairment of long-term assets
For non-current financial Assets of fixed Assets, projects under construction, intangible
Assets with limited service life, investing real estate with cost model, long-term equity
investment of subsidiaries, cooperative enterprises and joint ventures, the Group should
judge whether decrease in value exists on the date of balance sheet. Recoverable amounts
should be tested for decrease in value if it exists. Other intangible Assets of reputation and
uncertain service life and other non-accessible intangible assets should be tested for decrease
in value no matter whether it exists.
If the recoverable amount is less than book value in impairment test results, the provision for
impairment of differences should include in impairment loss. Recoverable amounts would be
the higher of net value of asset fair value deducting disposal charges or present value of
predicted cash flow. Asset fair value should be determined according to negotiated sales price
of fair trade. If no sales agreement exists but with asset active market, fair value should be
determined according to the Buyer’s price of the asset. If no sales agreement or asset active
market exists, asset fair value could be acquired on the basis of best information available.
Disposal expenses include legal fees, taxes, cartage or other direct expenses of merchantable
Assets related to asset disposal. Present value of predicted asset cash flow should be
determined by the proper discount rate according to Assets in service and predicted cash flow
of final disposal. Asset depreciation reserves should be calculated on the basis of single
Assets. If it is difficult to predict the recoverable amounts for single Assets, recoverable
amounts should be determined according to the belonging asset group. Asset group is the
minimum asset combination producing cash flow independently.
In impairment test, book value of the business reputation in financial report should be shared
to beneficial asset group and asset group combination in collaboration of business merger. It
is shown in the test that if recoverable amounts of shared business reputation asset group or
asset group combination are lower than book value, it should determine the impairment loss.
Impairment loss amount should firstly be deducted and shared to the book value of business
reputation of asset group or asset group combination, then deduct book value of all assets
according to proportions of other book value of above assets in asset group or asset group
combination except business reputation.
After the asset impairment loss is determined, recoverable value amounts would not be
returned in future.
20. Employee compensation
Employee compensation of the Company mainly includes short-term employee
compensation, departure benefits, demission benefits and other long-term employee
compensation. Of which:
Short-term compensation mainly including salary, bonus, allowances and subsidies,
employee services and benefits, medical insurance premiums, birth insurance premium,
industrial injury insurance premium, housing fund, labor union expenditure and personnel
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education fund, non-monetary benefits etc. The short-term compensation actually happened
during the accounting period when the active staff offering the service for the Group should
be recognized as liabilities and is included in the current gains and losses or relevant assets
cost. Of which the non-monetary benefits should be measured according to the fair value.
Welfare after demission mainly includes setting drawing plan. Defined contribution plans
include basic endowment insurance, unemployment insurance and annuity. Deposited
amounts are charged to relevant asset costs or current profits and losses during the
period in which they are incurred. Defined benefit plan of the Company is internal early
retirement plan. According to anticipated accumulative welfare unit, the Company makes
estimates by unbiased and consistent actuarial assumption for the demographic variables and
financial variables, measures the obligations produced in defined benefit plans, and
determines the vesting period. On balance sheet date, the Company will list all obligations in
defined benefit plans as present value and include current service costs into current profits
and losses.
When terminating labor relations before expiration of contract, or layoffs with compensations,
and the Company can not terminate the labor relations unilaterally or reduce the demission
welfare, remuneration and liabilities produced from the demission welfare should be
determined and included in current profits and losses when determining the costs of
demission welfare and recombination. However, demission welfare not fully paid within 12
months after annual report period should be handled the same as other long-term employees’
payrolls.
The inside employee retirement plan is treated by adopting the same principle with the above
dismiss ion welfare. The group would recorded the salary and the social security insurance
fees paid and so on from the employee’s service terminative date to normal retirement date
into current profits and losses (dismiss ion welfare) under the condition that they meet the
recognition conditions of estimated liabilities.
The other long-term welfare that the Group offers to the staffs, if met with the setting
drawing plan, should be accounting disposed according to the setting drawing plan, while the
rest should be disposed according to the setting revenue plan.
21. Estimated liabilities
The company should recognize the related obligation as a provision for liability when the
obligation meets the following conditions: (1) That obligation is a present obligation of the
enterprise; (2) It is probable that an outflow of economic benefits from the enterprise will be
required to settle the obligation; (3) A reliable estimate can be made of the amount of the
obligation.
On the balance sheet date, an enterprise shall take into full consideration of the risks,
uncertainty, time value of money, and other factors pertinent to the Contingencies to measure
the estimated liabilities in accordance with the best estimate of the necessary expenses for the
performance of the current obligation.
When all or some of the expenses necessary for the liquidation of an estimated liabilities of
an enterprise is expected to be compensated by a third party, the compensation should be
separately recognized as an asset only when it is virtually certain that the reimbursement will
be obtained. Besides, the amount recognized for the reimbursement should not exceed the
book value of the estimated liabilities.
22. Revenue
(1) Revenue from selling goods
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No revenue from selling goods may be recognized unless the following conditions are met
simultaneously: the significant risks and rewards of ownership of the goods have been
transferred to the buyer by the enterprise; the enterprise retains neither continuous
management right that usually keeps relation with the ownership nor effective control over
the sold goods; the relevant amount of revenue can be measured in a reliable way; the
relevant economic benefits may flow into the enterprise; and the relevant costs incurred or to
be incurred can be measured in a reliable way.
The recognition of revenue from commodities for the home market when shipping the goods:
for good exported by way of FOB, the revenue shall be recognized once the goods were
delivered to the carrier designated by the purchaser; for goods exported by way of CIF, the
revenue shall be recognized once the goods reach the port of the purchase.
(2) Providing labor services
If the Group can reliably estimate the outcome of a transaction concerning the labor services
it provides, it shall recognize the revenue from providing services employing the
percentage-of-completion method on the date of the balance sheet. The completed proportion
of a transaction concerning the providing of labor services shall be decided by the proportion
of the labor service already provided to the total labor service to provide.
The outcome of a transaction concerning the providing of labor services can be measured in a
reliable way, means that the following conditions shall be met simultaneously: ① The
amount of revenue can be measured in a reliable way; ② The relevant economic benefits are
likely to flow into the enterprise; ③ The schedule of completion under the transaction can be
confirmed in a reliable way; and ④ The costs incurred or to be incurred in the transaction
can be measured in a reliable way.
If the outcome of a transaction concerning the providing of labor services cannot be
measured in a reliable way, the revenue from the providing of labor services shall be
recognized in accordance with the amount of the cost of labor services incurred and expected
to be compensated, and make the cost of labor services incurred as the current expenses. If it
is predicted that the cost of labor services incurred couldn’t be compensated, thus no revenue
shall be recognized.
Where a contract or agreement signed between Group and other enterprises concerns selling
goods and providing of labor services, if the part of sale of goods and the part of providing
labor services can be distinguished from each other and can be measured respectively, the
part of sale of goods and the part of providing labor services shall be treated respectively. If
the part of selling goods and the part of providing labor services can not be distinguished
from each other, or if the part of sale of goods and the part of providing labor services can be
distinguished from each other but can not be measured respectively, both parts shall be
conducted as selling goods.
(3) Recognition method of the sales revenues of real estate
The Group had signed the sales contract with the real estate had completed and be examined
qualified, and reached the referable using conditions agreed by the sales contract as well as at
the same time the housing accounts had been recognized the realize of the sales revenues
when received with full amount according to the sales contract.
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(4) Royalty revenue
In accordance with relevant contract or agreement, the amount of royalty revenue should be
recognized as revenue on accrual basis.
(5) Interest revenue
The amount of interest revenue should be measured and confirmed in accordance with the
length of time for which the Group’s monetary fund is used by others and the agreed interest
rate.
(6)Property leasing revenue
For the recognition method of the property leasing revenue, please refer to Notes IV. 25.
23. Government subsidies
A government subsidy means the monetary or non-monetary assets obtained free by the
Group from the government, but excluding the capital invested by the government as the
owner of the enterprise. Government subsidies consist of the government subsidies pertinent
to assets and government subsidies pertinent to income.
If a government subsidy is a monetary asset, it shall be measured in the light of the received
or receivable amount. If a government subsidy is a non-monetary asset, it shall be measured
at its fair value. If its fair value cannot be obtained in a reliable way, it shall be measured at
its nominal amount. The government subsidies measured at their nominal amounts shall be
directly included in the current profits and losses.
The government subsidies pertinent to assets shall be recognized as deferred income, equally
distributed within the useful lives of the relevant assets, and included in the current profits
and losses. The government subsidies pertinent to incomes shall be treated respectively in
accordance with the circumstances as follows: those subsidies used for compensating the
related future expenses or losses of the enterprise shall be recognized as deferred income and
shall included in the current profits and losses during the period when the relevant expenses
are recognized; or those subsidies used for compensating the related expenses or losses
incurred to the enterprise shall be directly included in the current profits and losses.
Where it is necessary to refund any government subsidy which has been recognized, it shall
be treated respectively in accordance with the circumstances as follows: if there is the
deferred income concerned, the book balance of the deferred income shall be offset against,
but the excessive part shall be included in the current profits and losses; or if there is no
deferred income concerned to the government subsidy, it shall be directly included in the
current profits and losses.
24. Deferred income tax assets/deferred income tax liabilities
(1) Income tax of the current period
On the balance sheet date, for the current income tax liabilities (or assets) of the current
period as well as the part formed during the previous period, should be measured by the
income tax of the estimated payable (returnable) amount which be calculated according to
the regulations of the tax law. The amount of the income tax payable which is based by the
calculation of the current income tax expenses, are according to the result measured from the
corresponding adjustment of the pre-tax accounting profit of 2014 which in accord to the
relevant regulations of the tax law.
(2) Deferred income tax assets and deferred income tax liabilities
The difference between the book value of certain assets and liabilities and their tax
assessment basis, as well as the temporary difference occurs from the difference between the
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book value of the items which not be recognized as assets and liabilities but could confirm
their tax assessment basis according to the regulations of the tax law, the deferred income tax
assets and the deferred income tax liabilities should be recognized by adopting liabilities law
of the balance sheet.
No deferred tax liability is recognized for a temporary difference arising from the initial
recognition of goodwill, the initial recognition of assets or liabilities due to a transaction
other than a business combination, which affects neither accounting profit nor taxable profit
(or deductible loss). Besides, no deferred tax assets is recognized for the taxable temporary
differences related to the investments of subsidiary companies, associated enterprises and
joint enterprises, and the investing enterprise can control the time of the reverse of temporary
differences as well as the temporary differences are unlikely to be reversed in the excepted
future. Otherwise, the Group should recognize the deferred income tax liabilities arising form
other taxable temporary difference.
No deferred taxable assets should be recognized for the deductible temporary difference of
initial recognition of assets and liabilities arising from the transaction which is not business
combination, the accounting profits will not be affected, nor will the taxable amount or
deductible loss be affected at the time of transaction. Besides, no deferred taxable assets
should be recognized for the deductible temporary difference related to the investments of
the subsidiary companies, associated enterprises and joint enterprises, which are not likely to
be reversed in the expected future or is not likely to acquire any amount of taxable income
tax that may be used for making up such deductible temporary differences. Otherwise, the
Company shall recognize the deferred income tax assets arising from a deductible temporary
difference basing on the extent of the amount of the taxable income that is likely to be
acquired to make up such deductible temporary differences
For any deductible loss or tax deduction that can be carried forward to the next year, the
corresponding deferred income tax asset shall be determined to the extent that the amount of
future taxable income to be offset by the deductible loss or tax deduction to be likely
obtained.
On the balance sheet date, the deferred income tax assets and the deferred income tax
liabilities shall be measured at the tax rate applicable to the period during which the assets
are expected to be recovered or the liabilities are expected to be settled.
The book value of deferred income tax assets shall be reviewed at each balance sheet date. If
it is unlikely to obtain sufficient taxable income to offset against the benefit of the deferred
income tax asset, the book value of the deferred income tax assets shall be written down. Any
such write-down should be subsequently reversed where it becomes probable that sufficient
taxable income will be available.
(3) Income tax expenses
Income tax expenses include current income tax and deferred income tax.
The rest current income tax and the deferred income tax expenses or revenue should be
included into current gains and losses except for the current income tax and the deferred
income tax related to the transaction and events that be confirmed as other comprehensive
income or be directly included in the shareholders’ equity which should be included in other
comprehensive income or shareholders’ equity as well as the book value for adjusting the
goodwill of the deferred income tax occurs from the business combination.
(4) Offset of income tax
The current income tax assets and liabilities of the Group should be listed by the written-off
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Konka Group Co., Ltd. Semi-annual Report 2016
net amount which intend to executes the net amount settlement as well as the assets acquiring
and liabilities liquidation at the same time while owns the legal rights of settling the net
amount.
The deferred income tax assets and liabilities of the Group should be listed as written-off net
amount when having the legal rights of settling the current income tax assets and liabilities
by net amount and the deferred income tax and liabilities is relevant to the income tax which
be collected from the same taxpaying bodies by the same tax collection and administration
department or is relevant to the different taxpaying bodies but during each period which there
is significant reverse of the deferred income assets and liabilities in the future and among
which the involved taxpaying bodies intend to settle the current income tax and liabilities by
net amount or are at the same time acquire the asset as well as liquidate the liabilities.
25. Leasing
Financing leasing virtually transferred the whole risks and leasing of the compensation
related to the assets ownership and their ownership may eventually be transferred or maybe
not. Other leasing except for the financing leasing is operating leasing.
(1) Business of operating leases recorded by the Group as the lessee
The rent expenses from operating leases shall be recorded by the lessee in the relevant asset
costs or the profits and losses of the current period by using the straight-line method over
each period of the lease term. The initial direct costs shall be recognized as the profits and
losses of the current period. The contingent rents shall be recorded into the profits and losses
of the current period in which they actually arise.
(2) Business of operating leases recorded by the Group as the lessor
The rent incomes from operating leases shall be recognized as the profits and losses of the
current period by using the straight-line method over each period of the lease term. The
initial direct costs of great amount shall be capitalized when incurred, and be recorded into
current profits and losses in accordance with the same basis for recognition of rent incomes
over the whole lease term. The initial direct costs of small amount shall be recorded into
current profits and losses when incurred. The contingent rents shall be recorded into the
profits and losses of the current period in which they actually arise.
(3) Business of finance leases recorded by the Group as the lessee
On the lease beginning date, the Group shall record the lower one of the fair value of the
leased asset and the present value of the minimum lease payments on the lease beginning
date as the entering value in an account, recognize the amount of the minimum lease
payments as the entering value in an account of long-term account payable, and treat the
balance between the recorded amount of the leased asset and the long-term account payable
as unrecognized financing charges. Besides, the initial direct costs directly attributable to the
leased item incurred during the process of lease negotiating and signing the leasing
agreement shall be recorded in the asset value of the current period. The balance through
deducting unrecognized financing charges from the minimum lease payments shall be
respectively stated in long-term liabilities and long-term liabilities due within 1 year.
Unrecognized financing charges shall be adopted by the effective interest rate method in the
lease term, so as to calculate and recognize current financing charges. The contingent rents
shall be recorded into the profits and losses of the current period in which they actually arise.
(4) Business of finance leases recorded by the Group as the lessor
On the beginning date of the lease term, the Group shall recognize the sum of the minimum
lease receipts on the lease beginning date and the initial direct costs as the entering value in
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Konka Group Co., Ltd. Semi-annual Report 2016
an account of the financing lease values receivable, and record the unguaranteed residual
value at the same time. The balance between the sum of the minimum lease receipts, the
initial direct costs and the unguaranteed residual value and the sum of their present values
shall be recognized as unrealized financing income. The balance through deducting
unrealized financing incomes from the finance lease accounts receivable shall be respectively
stated in long-term claims and long-term claims due within 1 year.
Unrecognized financing incomes shall be adopted by the effective interest rate method in the
lease term, so as to calculate and recognize current financing revenues. The contingent rents
shall be recorded into the profits and losses of the current period in which they actually arise.
26. Changes in main accounting policies and estimates
(1) Change of accounting policies
There was no any change of accounting policies of the Company in the Reporting Period.
(2) Change of accounting estimates
There was no any change of accounting estimate of the Company in the Reporting Period.
27. Critical accounting judgments and estimates
Due to the inside uncertainty of operating activity, the Group needed to make judgments,
estimates and assumption on the book value of the accounts without accurate measurement
during the employment of accounting policies. And these judgments, estimates and
assumption were made basing on the prior experience of the senior executives of the Group,
as well as in consideration of other factors. These judgments, estimates and assumption
would also affect the report amount of income, costs, assets and liabilities, as well as the
disclosure of contingent liabilities on balance sheet date. However, the uncertainty of these
estimates was likely to cause significant adjustment on the book value of the affected assets
and liabilities.
The Group would check periodically the above judgments, estimates and assumption on the
basis of continuing operation. For the changes in accounting estimates only affected on the
current period, the influence should be recognized at the period of change occurred; for the
changes in accounting estimates affected the current period and also the future period, the
influence should be recognized at the period of change occurred and future period.
On the balance sheet date, the Group needed to make judgments, estimates and assumption
on the accounts in the following important items:
(1) Categorization of leasing
In accordance with Accounting Standards for Enterprises No. 21 – Leasing, the Group
categorized the leasing into operating lease and finance lease. During the categorization, the
management level needed to make analysis and judgment on whether all the risk and
compensation related with the leased assets had been transferred to the leasee, or whether the
Group had already undertaken all the risk and compensation related with the leased assets.
(2) Provision for bad debts
In accordance with the accounting policies of accounts receivable, the Group measured the
losses for bad debts by adopting allowance method. The impairment of accounts receivable
was based on the appraisal of the recoverability of accounts receivable. The impairment of
accounts receivable was dependent on the judgment and estimates. The actual amount and
the difference of previous estimates would affect the book value of accounts receivable and
the withdrawal and reversal on provision for bad debts of accounts receivable during the
period of estimates being changed.
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(3) Provision for falling price of inventories
In accordance with the accounting policies of inventories, for the inventories that the costs
were more than the net realizable value as well as out-of-date and dull-sale inventories, the
Group withdrawn the provision for falling price of inventories on the lower one between
costs and net realizable value. Evaluating the falling price of inventories needed the
management level gain the valid evidence and take full consideration of the purpose of
inventories, influence of events after balance sheet date and other factors, and then made
relevant judgments and estimates. The actual amount and the difference of previous estimates
would affect the book value of inventories and the withdrawal and reversal on provision for
bad debts of inventories during the period of estimates being changed.
(4) The fair value of financial instrument
For the financial instruments without active market, the Group recognized the fair value by
various methods. These evaluation methods included discounted cash flow mode analysis,
etc. The Group needed to estimate the future cash flow, credit risk, fluctuation rate of market
and relativity and other factors, as well as choose the property discount rate. Due to the
uncertainty of relevant assumptions, so their changes would affect the fair value of financial
instrument.
(5) Impairment of the investment held-to-maturity
Whether execute the impairment on the investment held-to-maturity depends on the judge
from the management level. The objective evidence of the occurrence of the impairment
including the situations such as the serious financial difficulties of the issuer which led the
financial assets couldn’t continue to deal in the active market and the failure of executing the
contract regulations (e.g. there was violation of the interest or principal payment). During the
execution of the judgment, the Company needs to assess the influences from the objective
evidence of the impairment occurrence on the expected future cash flow of the investment.
(6) The impairment of financial assets available for sale
The Group judged whether the financial assets available for sale were impaired relying
heavily on the judgment and assumption of the management team, so as to decide whether
recognized the impairment losses in the income statement. During the process of making the
judgment and assumption, the Group needed to appraise the balance of the cost of the
investment exceeding its fair value and the continuous period, the financial status and
business forecast in a short period, including the industrial situation, technical reform, credit
level, default rate and risk of counterparty.
(7) Provision for impairment of non-financial non-current assets
The Group made a judgment on the non-current assets other than financial assets whether
they had any indication of impairment on the balance sheet date. For the intangible assets
without finite service life, other than the annual impairment test, they should be subject to the
impairment test when there was any indication of impairment. For other non-current
non-financial assets, which should be subjected to impairment test when there was indication
of impairment indicated that the book value can’t be recoverable.
When the book value of the assets or assets portfolio was more than the recoverable amount,
which was the higher one between the net amount of fair value after deducting the disposal
expenses and the discounted amount of the estimated future cash flow, it means impairment
incurred.
The net amount of fair value after deducting the disposal expenses should be fixed the price
in the sale agreement for similar assets in the fair transaction minus the increased costs
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Konka Group Co., Ltd. Semi-annual Report 2016
directly attributable to the assets disposal.
When estimated the discounted value of future cash flow, the Group needed to make
important judgment on the output, selling price, relevant costs and the discount rate for
calculating the discounted amount, etc. When estimated the recoverable amount, the Group
would adopt all the available documents, including the prediction for relevant output, selling
price and relevant operating costs arising from reasonable and supportive assumptions.
The Group made the impairment test on goodwill at least one time per year, which required
to predict the discounted amount of the future cash flow of the assets or assets portfolio with
the distributed good will, for which, the Group needed to predict the future cash flow of the
assets or assets portfolio, and adopt the property discounted rate to decide the discounted
amount of future cash flow.
(8) Depreciation and amortization
For the investment real estate, fixed assets and intangible assets, the Group withdrew the
depreciation and amortization by adopting the straight-line method during the service life
after full consideration of the salvage value. The Group checked the service life periodically
so as to decide the amount of depreciation and amortization at each Reporting Period. The
service life was fixed by the Group in accordance with the previous experience of the similar
assets and the expected technical update. If there was any significant change on the previous
estimates, the depreciation and amortization expenses should be adjusted.
(9) Expenditures for development
When fixing the amount of capitalization, the management level of the Group needed to
make assumption on the predicted future cash flow, property discounted rate and estimated
beneficiary period for relevant assets.
(10) Deferred income tax assets
Within the limit that it was likely to have sufficient taxable profits to offset the losses, the
Group recognized the deferred income tax assets by all the unused tax losses, which needed
the management level of the Group to estimate time and amount of the future taxable profits
incurred with many judgments, as well as integrate strategy of tax payment, to decide the
amount of deferred income tax assets which should be recognized.
(11) Income tax
During the routine operating activities, there were some uncertainty in the ultimate tax
treatment and calculation for parts of transactions. Some accounts of such transaction could
be listed as pre-tax expenditures only after the approval of taxation authorities. If there were
any differences between the ultimate result of recognition for these taxation maters and their
initial estimates, the differences would affect the current income tax and deferred income tax
at the period of ultimate recognition.
(12) Internal early retirement welfare and supplementary retirement welfare
Amounts of expenditures and liabilities of internal early retirement welfare and
supplementary retirement welfare should be determined according to assumption terms.
Assumption terms include discount rate, average growth rate of medical costs, growth rate of
subsidies for early retirement employees and retirees and other factors. The differences of
actual results and assumption should be confirmed immediately and included into costs of
current year. Although the management have adopted reasonable assumption terms, changes
of actual experience value and assumption terms may affect the internal early retirement
welfare, supplementary retirement benefits and balance of liabilities.
(13) Estimated liabilities
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Konka Group Co., Ltd. Semi-annual Report 2016
The Group made the estimation on product quality guarantee, predicted loss of contract and
the fine for delayed delivery etc. and withdrew the relevant provision for estimated liabilities
in accordance the provisions of contract, current knowledge and experience. Under the
condition that the contingent event has formed a current duty and fulfilling the duty is likely
to cause the economical interest outflow the Group, the Group measures the estimated
liabilities in accordance with the best estimate of the necessary expenses for the performance
of the current duty. The recognition and measurement of estimated liabilities were heavily
relied on the judgment of the management team. During the process of making judgment, the
Group needed to appraise the relevant risks, uncertainty and the time value of money and etc.
Of which, the Group estimated the liabilities basing on the after-sale services commitments
to the customers upon the sale, repair and reform of goods. When estimating the liabilities,
the Group has fully taken the consideration of the latest repair experience, but which may not
reflect the repair situation in the future. Any increase / decrease of the provision for estimated
liabilities may affect the profits and losses in the future periods.
V. Taxation
1. Main taxes and tax rate
Category of taxes Specific situation of the taxes rate
Calculated the output tax at 17% of taxable income and paid the VAT by the amount
after deducting the deductible withholding VAT at current period, of which the
VAT
subsidiary Europe Konka of 19%; the value added apart of the brand of
Telecommunication Technology of 6%.
Paid by 5% of taxable business income in January – April, and changed to paid by VAT
Business tax
since May.
Urban maintenance and Paid at 7% of the circulating tax actually paid, of which Dongguan Packing, Dongguan
construction tax
Konka, Boluo Konka, Boluo Konka Precision and Kunshan Kangsheng of 5%.
Paid at 25% of the taxable income, of which Hong Kong Konka, Konka Household
Appliances Investment, Konka Household Appliances International Trading and Konka
Enterprise income tax Zhisheng of 16.5%, Telecommunication Technology, Chongqing Qingjia, Kunshan
Konka, Dongguan Konka, Wankaida and Business System of 15%, Konka America of
28% , Konka Europe of 31% and E2info 10%.
Education surtax Paid at 3% of the circulating tax actually paid.
Local education surtax Paid at 2% of the circulating tax actually paid.
(1) In accordance with the Notice on Printing the Administration Method on Charging and
Use of the Treatment Funds of Discarded Electronic Appliance and Electric Products issued
by the Ministry of Finance, Ministry of Environmental Protection, National Development
and Reform Commission, Ministry of Industry and Information, General Administration of
Customs and National Taxation Bureau (CZ [2012] No. 34), and the Administration Method
on Charging and Use of the Treatment Funds of Discarded Electronic Appliance and Electric
Products issued by National Taxation Bureau (GJSWZJGG [2012] No. 41), the domestic
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Konka Group Co., Ltd. Semi-annual Report 2016
manufacturer of the electrical appliances and electronic products of PRC started to pay the
treatment funds for discarded electrical appliance and electronic products according the sales
volume (trusted processing amount) and relevant charging standards from 1 July 2012.
According to the regulations, the Group’s charging standards were RMB13 per set of TV,
RMB12 per set of refrigerator and RMB7 per set of washing machine.
(2) According to regulations of Temporary Provisions of Income Tax of Trans-boundary Tax
Payment Enterprises by State Administration of Taxation, resident enterprises without
business establishment or places of legal persons should be tax payment enterprises with the
administrative measures of income tax of “unified computing, level-to-level administration,
local prepayment, liquidation summary, and finance transfer”. It came into force from
January 1, 2008. According to the above methods, the Company’s sales branch companies in
each area will hand in the corporate income taxes in advance from 1 January 2008 and will
be final settled uniformly by the Company at the year-end.
(3) The Company’s subsidiary, Communication Technology Co., Ltd, is engaged in
value-added services of brand costs. According to Notice of the Ministry of Finance and the
State Administration of Taxation on the Pilot Work of Levying Value-Added Tax in Lieu of
Business Tax in the Transportation Industry and Some Modern Service Industries in Beijing
and Other Seven Provinces and Cities (CS[2012] No.71), added-value tax is levied from 1
November 2012, with tax rate of 6%.
2. Tax preference and approved document
(1) On 30 September 2014, the subsidiary of the Company Shenzhen Konka
Telecommunication Technology Co., Ltd. acquired the certificate of high-technology
enterprises jointly issued by Shenzhen Science and technology Innovation Committee,
Shenzhen Finance Committee, Shenzhen Provincial Office, SAT, and Shenzhen Local
Taxation Bureau, with the certification number of GR201444201101 and the validity of three
years. According to the relevant taxation regulations, the Telecommunication Technology
could enjoy the relevant preferential tax policy on the high-tech enterprise for continuous 3
years from 2014 to 2016, and pay for the corporate income tax according to 15% of the
preferential tax rate.
(2) The Company’s subsidiary—Chongqing Qingjia Electronics Co., Ltd. is levied the
business income tax at the preferential tariff of 15% from 1 Jan. 2011 to 31 Dec. 2020 in
accordance with CS (2011) No. 58 Notice on Relevant Tax Policies on Deeply Implementing
the western development strategy.
(3) On 5 August 2014, the subsidiary of the Company, Kunshan Konka Electronics Co., Ltd.
acquired the certificate of high-technology enterprises joint issued by Jiangsu Province
Science and Technology Department, Department of Finance of Jiangsu Province, Jiangsu
Province Municipal Office, SAT, and Jiangsu Local Taxation Bureau with the certification
number of GF201432000413 and the validity of three years. According to the relevant
taxation regulations, the Kunshan Konka could enjoy the relevant preferential tax policy on
the high-tech enterprise for continuous 3 years from 2014 to 2016, and pay for the corporate
income tax according to 15% of the preferential tax rate.
(4) On 10 October 2014, the subsidiary of the Company, Dongguan Konka acquired the
certificate of high-technology enterprises joint issued by Guangdong Province Science and
Technology Department, Department of Finance of Guangdong Province, Guangdong
Province Municipal Office, SAT, and Guangdong Local Taxation Bureau with the
certification number of GF201444001341 and the validity of three years. According to the
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Konka Group Co., Ltd. Semi-annual Report 2016
relevant taxation regulations, the Dongguan Konka could enjoy the relevant preferential tax
policy on the high-tech enterprise for continuous 3 years since 2014, and pay for the
corporate income tax according to 15% of the preferential tax rate.
(5) On 30 September 2014, the Company’s subsidiary, Shenzhen Wankaida Science and
Technology Co., Ltd. acquired the certificate of high-technology enterprises joint issued by
Shenzhen Science and technology Innovation Committee, Shenzhen Finance Committee,
Shenzhen Provincial Office, SAT, and Shenzhen Local Taxation Bureau with the certification
number of GR201444201523 and the validity of three years. According to the relevant
taxation regulations, the Anhui Tongchuang could enjoy the relevant preferential tax policy
on the high-tech enterprise for continuous 3 years from 2012 to 2014, and pay for the
corporate income tax according to 15% of the preferential tax rate.
(6) The annual income tax payable ≤ RMB0.2 million of the subsidiary of the Company
Shenzhen Internet Science and Technology Co., Ltd. according to the small micro enterprise
income tax preferential policies among the category of the enterprise income tax, which lasts
from 1 January 2015 to 31 December 2017 with 50% of the income be included in the
taxable income and 20% of the tax rate to pay for the corporate income tax.
(7) According to the Notice on the Income Tax Preferential Policies and the Catalog of the
Hengqin New Area of Guangdong, Fujian Pingtan Comprehensive Experimental Area and
Shenzhen Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone issued
by Ministry of Finance and SAT CS [2014] No. 26 Document, the subsidiary of the Company,
Shenzhen Konka Business System Technology Co., Ltd. should pay for the corporate income
tax according to 15% of the preferential tax rate since 1 January 2015 to 31 December 2020.
(8) According to the CS No. [2011] 100 Article issued by Ministry of Finance and State
Administration of Taxation, if the ordinary VAT payer sells software products developed by
itself, the VAT is levied at the rate of 17% and after that, the part of actual tax burden of VAT
which exceeds 3% can enjoy the policy of refunding taxes immediately after levying taxes.
The subsidiaries of the Company, Telecommunication Technology Co., Ltd., Information
Network Co., Ltd., Wankaida Science and Technology Co., Ltd. and Yishijie Commercial
Display Co., Ltd. enjoy such favorable policy.
VI. Notes on major items in consolidated financial statements of the Company
Unless otherwise noted, the following annotation project (including the main projects
annotation of the financial statement of the Company), the period-begin refers to 1 January
2016, the period-end refers to 30 June 2016 and this period refers to January – June 2016
with the last period of January – June 2015.
1. Monetary funds
Item Closing balance Opening balance
Cash on hand 3,160.55 4,217.37
Bank deposits 2,469,947,605.93 1,488,150,633.98
Other monetary funds 128,266,065.72 218,292,077.57
Total 2,598,216,832.20 1,706,446,928.92
of which: total amount deposited in overseas 239,092,489.89 205,900,491.11
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Konka Group Co., Ltd. Semi-annual Report 2016
Notes: The closing balance of other monetary funds was the deposits of each margin deposit
not withdrawn at any time.
2. Financial assets measured by fair value and the changes be included in the current
gains and losses
Item Closing balance Opening balance
Protocol proceeds of the forward foreign
15,462,265.94 33,196,377.28
exchange purchase
Total 15,462,265.94 33,196,377.28
3. Notes receivable
(1) Category of notes receivable
Item Closing balance Opening balance
Banker’s acceptance bill 2,458,053,333.17 2,879,244,863.46
Commercial acceptance bill 0.00 1,615,886.98
Total 2,458,053,333.17 2,880,860,750.44
(2) Notes receivable pledged by the Company at the period-end
Item Amount
Banker’s acceptance bill 1,487,252,160.59
Total 1,487,252,160.59
(3) Notes receivable which had endorsed by the Company or had discounted and had not due
on the balance sheet date at the period-end
Amount of recognition termination Amount of not terminated
Item
at the period-end recognition at the period-end
Banker’s acceptance bill 512,025,328.95 —
Total 512,025,328.95 —
Notes: Up to 30 June 2016, the Company pledged the banker’s acceptance bill of the book
value of RMB1,487,252,160.59 for the comprehensive financing business such as handling
the billing, letter of credit and the trading financing.
4. Accounts receivable
(1) Accounts receivable disclosed by category
Closing balance
Category
Book balance Bad debt provision Book value
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Konka Group Co., Ltd. Semi-annual Report 2016
Withdrawal
Amount Proportion (%) Amount
proportion (%)
Accounts receivable
with significant
individual amount and 21,847,005.37 0.92 21,847,005.37 100.00 —
make independent
provision for bad debt
Accounts receivable
withdrawn bad debt
provision according to
credit risks
characteristics
Group 1: aging group 2,277,788,645.31 95.71 244,952,995.37 10.75 2,032,835,649.94
Subtotal of groups 2,277,788,645.31 95.71 244,952,995.37 10.75 2,032,835,649.94
Accounts receivable
with insignificant
single amount for
80,311,713.92 3.37 72,136,163.67 89.82 8,175,550.25
which bad debt
provision separately
accrued
Total 2,379,947,364.60 100.00 338,936,164.41 14.24 2,041,011,200.19
(Continued)
Opening balance
Book balance Bad debt provision
Category
Withdrawal Book value
Amount Proportion (%) Amount
proportion (%)
Accounts receivable
with significant
individual amount and 21,847,005.37 0.92 21,847,005.37 100.00 —
make independent
provision for bad debt
Accounts receivable
withdrawn bad debt
provision according to
credit risks
characteristics
Group 1: aging group 2,284,090,249.64 95.88 244,107,868.37 10.69 2,039,982,381.27
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Konka Group Co., Ltd. Semi-annual Report 2016
Opening balance
Book balance Bad debt provision
Category
Withdrawal Book value
Amount Proportion (%) Amount
proportion (%)
Subtotal of groups 2,284,090,249.64 95.88 244,107,868.37 10.69 2,039,982,381.27
Accounts receivable
with insignificant
single amount for
which bad debt 76,251,927.24 3.20 67,420,869.17 88.42 8,831,058.07
provision separately
accrued
Total 2,382,189,182.25 100.00 333,375,742.91 13.99 2,048,813,439.34
① Accounts receivable with significant individual amount and make independent provision
for bad debt at the year-end
Closing balance
Accounts receivable (classified by units) Withdrawal
Accounts receivable Bad debt provision Withdrawal reason
proportion
The counterparty’s
company went bankrupt
Customer A 21,847,005.37 21,847,005.37 100.00 and expected hard to
recover
② In the groups, accounts receivable adopting aging analysis method to accrue bad debt
provision
Closing balance
Aging Withdrawal proportion
Accounts receivable Bad debt provision
(%)
Within 1 year 1,993,357,875.61 41,438,196.96 2.00
1 to 2 years 53,662,510.21 2,683,125.52 5.00
2 to 3 years 30,227,303.41 6,045,460.69 20.00
3 to 4 years 11,509,487.78 5,754,743.90 50.00
4 to 5 years 0.00 0.00 50.00
Over 5 years 189,031,468.30 189,031,468.30 100.00
Total 2,277,788,645.31 244,952,995.37
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Konka Group Co., Ltd. Semi-annual Report 2016
③ Top 5 of the accounts receivable with insignificant single amount but individually
withdrawn the bad debt provision
Accounts receivable (classified by units) Closing balance
Accounts receivable Bad debt provision Withdraw Withdraw reason
proportion
Had difficulty in
18,226,894.62 18,226,894.62 100.00
Customer 1 operation
Involved with lawsuit
12,423,847.30 12,423,847.30 100.00
Customer 2 dispute
Involved with lawsuit
8,223,935.99 4,111,968.00 50.00
Customer 3 dispute
Involved with lawsuit
5,672,186.37 5,672,186.37 100.00
Customer 4 dispute
Involved with lawsuit
3,421,228.28 3,421,228.28 100.00
Customer 5 dispute
Total 47,968,092.56 43,856,124.57 91.43
(2) Accounts receivable withdraw, reversed or collected of 2016
The withdrawn bad debt provision of 2016 was of RMB7,227,998.88, the amount of the bad
debt provision reversed of 2016 was of RMB2,069,693.65 and the other increase of
RMB402,116.27.
(3) Top 5 of the closing balance of the accounts receivable colleted according to the arrears
party at the year-end
The total amount of the Top 5 of the closing balance of the accounts receivable colleted
according to the arrears party at the year-end was of RMB772,415,216.56 that covered the
proportion of 32.46% in the total amount of the accounts receivable at the year-end, and the
total amount of the corresponding withdrew bad debt provision was of RMB15,448,304.33.
5. Prepayment
(1) List by aging analysis:
Closing balance Opening balance
Aging Book value Book value
Bad debt Bad debt
Proportion Proportion
Amount provision Amount provision
(%) (%)
Within 1
386,002,591.20 96.52 653,338.17 192,024,479.90 92.75 527,017.04
year
1 to 2 years 2,812,252.50 0.70 440,563.89 1,037,032.15 3.04 406,683.12
2 to 3 years 3,796,698.61 0.95 983,384.72 3,154,864.60 0.85 1,716,100.63
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Konka Group Co., Ltd. Semi-annual Report 2016
Over 3 years 7,307,892.82 1.83 7,041,226.34 6,774,559.86 3.36 6,676,515.06
Total 399,919,435.13 100.00 9,118,513.12 202,990,936.51 100.00 9,326,315.85
Notes: prepayments of significant amount and aged more than 1 year were mainly the
unamortized expenses and the prepayments of the purchase of the materials respectively of
RMB4,632,126.10 and RMB4,154,625.44. Of which the amount of RMB4,154,625.44 was
the relevant materials which had quality problems and had not handle the accounts settlement
as well as the material warehousing formalities, and the materials purchase account prepaid
should be presented as the prepayments.
(2) Top 5 of the closing balance of the prepayment colleted according to the prepayment
target
The total amount of the Top 5 of the closing balance of the prepayment colleted according to
the prepayment target was of RMB56,430,648.46, which was of 14.11% of the total amount
of the year-end balance of the prepayments.
6. Interests receivable
Item Closing balance Opening balance
Fixed term deposit interest 5,287,614.37 7,325,298.41
Entrusted loan interest 0.00 101,111.11
Total 5,287,614.37 7,426,409.52
7. Dividends receivable
Item Closing balance Opening balance
Shenzhen Konka Precision Mould
10,171,609.48 —
Manufacturing Co., Ltd.
Total 10,171,609.48 —
8. Other accounts receivable
(1) Other accounts receivable disclosed by category
Closing balance
Book balance Bad debt provision
Category
Withdrawal
Proportion Book value
Amount Amount proportion
(%)
(%)
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Konka Group Co., Ltd. Semi-annual Report 2016
Closing balance
Book balance Bad debt provision
Category Withdrawal
Proportion Book value
Amount Amount proportion
(%)
(%)
Other accounts receivable
with significant individual
amount and make 183,915,489.33 57.58 172,103,832.55 93.58 11,811,656.78
independent provision for bad
debt
Other accounts receivable
withdrawn bad debt provision
0.00
according to credit risks
characteristics
Group 1: Aging group 135,060,279.72 42.29 24,963,763.25 18.48 110,096,516.47
Subtotal of groups 135,060,279.72 42.29 24,963,763.25 18.48 110,096,516.47
Other accounts receivable with
insignificant single amount for
402,820.00 0.13 402,820.00 100.00 0.00
which bad debt provision
separately accrued
Total 319,378,589.05 100.00 197,470,415.80 61.83 121,908,173.25
(Continued)
Book balance
Book balance Bad debt provision
Category Withdrawal
Proportion Book value
Amount Amount proportion
(%)
(%)
Other accounts receivable with
significant individual amount and
183,881,677.62 51.78 171,132,382.98 93.07 12,749,294.64
make independent provision for
bad debt
Other accounts receivable
withdrawn bad debt provision
according to credit risks
characteristics
Group 1: Aging group 170,855,404.47 48.11 23,438,919.29 13.72 147,416,485.18
105
Konka Group Co., Ltd. Semi-annual Report 2016
Book balance
Book balance Bad debt provision
Category Withdrawal
Proportion Book value
Amount Amount proportion
(%)
(%)
Subtotal of groups 170,855,404.47 48.11 23,438,919.29 13.72 147,416,485.18
Other accounts receivable with
insignificant single amount for
which bad debt provision 402,820.00 0.11 402,820.00 100.00 —
separately accrued
Total 355,139,902.09 100.00 194,974,122.27 54.90 160,165,779.82
① In the groups, other accounts receivable adopting aging analysis method to accrue bad
debt provision at the period-end
Other accounts receivable Closing balance
(classified by units) Other accounts Bad debt provision Withdraw Withdraw reason
receivable proportion (%)
Energy saving subsidies 152,402,680.00 152,402,680.00 100.00 Unable to recover
Shenzhen Konka Video &
Difficult to recover in full
Communication Systems 18,115,952.51 6,304,295.73 34.80
amount after assessment
Engineering Co., Ltd.
Difficult to recover
Chongqing Automotive
13,396,856.82 13,396,856.82 100.00 owning to bankruptcy and
Electronics
liquidation
Total 183,915,489.33 172,103,832.55 93.58 —
② Other accounts receivable with insignificant single amount for which bad debt provision
Closing balance
Aging
Other accounts receivable Bad debt provision Withdraw proportion (%)
Within 1 year 79,590,370.77 1,593,781.62 2.00
1 to 2 years 14,685,550.19 734,277.51 5.00
2 to 3 years 18,515,241.36 3,703,048.27 20.00
3 to 4 years 4,097,562.92 2,048,781.46 50.00
4 to 5 years 2,575,360.19 1,287,680.10 50.00
Over 5 years 15,596,194.29 15,596,194.29 100.00
Total 135,060,279.72 24,963,763.25
106
Konka Group Co., Ltd. Semi-annual Report 2016
(2) Accounts receivable withdraw, reversed or collected of the Reporting Period
The withdrawn bad debt provision of the Reporting Period was of RMB3,215,819.37, the
amount of the bad debt provision reversed of the Reporting Period was of RMB206,261.96
and the other increase of RMB513,263.88.
(3) Top 5 of the closing balance of the accounts receivable colleted according to the arrears
party at the year-end
Proportion of the total
Closing balance of
amount of the closing
Name of units Nature Closing balance Aging the bad debt
balance of other accounts
provision
receivable (%)
Energy saving 1-2 years 2-3
Customer A 152,402,680.00 47.72 152,402,680.00
subsidies years
Advance money 1-2 years, 2-3
Customer B 8,161,648.00 2.56 486,098.96
for another years
Customer C Land account 2,570,568.00 2-3 years 0.80 514,113.60
Customer D Cash deposits 2,480,401.90 3-4 years 0.78 1,240,200.95
Advance money
Customer E 2,564,977.18 Within 1 year 0.80 51,299.54
for another
Total 168,180,275.08 52.66 154,694,393.05
9. Inventory
(1) Category
Closing balance
Item Of which: the
Impairment of
Book balance capitalized amount of Book value
inventories
the borrowings
Development projects of
the property:
Development cost 339,604,408.30 339,604,408.30
Development products 37,351,801.85 976,899.59 37,351,801.85
Subtotal 376,956,210.15 976,899.59 376,956,210.15
Non-development
projects of the property:
Raw materials 785,602,577.94 27,489,540.80 758,113,037.14
Semi-finished product 114,726,751.46 11,594,633.30 103,132,118.16
107
Konka Group Co., Ltd. Semi-annual Report 2016
Closing balance
Item Of which: the
Impairment of
Book balance capitalized amount of Book value
inventories
the borrowings
Inventory goods 1,874,135,968.87 186,780,793.39 1,687,355,175.48
Turnover material
Subtotal 2,774,465,298.27 225,864,967.49 2,548,600,330.78
Total 3,151,421,508.42 976,899.59 225,864,967.49 2,925,556,540.93
(Continued)
Opening balance
Of which: the
Item Impairment of
Book balance capitalized amount of Book value
inventories
the borrowings
Development projects of
the property:
Development cost 270,136,005.18 — — 270,136,005.18
Development products 194,778,406.05 3,693,784.24 — 194,778,406.05
Subtotal 464,914,411.23 3,693,784.24 — 464,914,411.23
Non-development
projects of the property:
Raw materials 611,138,306.26 — 53,034,708.44 558,103,597.82
Semi-finished product 152,737,782.18 — 54,853,159.84 97,884,622.34
Inventory goods 1,960,267,024.10 — 199,769,581.12 1,760,497,442.98
Turnover material 1,115,838.91 — — 1,115,838.91
Subtotal 2,725,258,951.45 — 307,657,449.40 2,417,601,502.05
Total 3,190,173,362.68 3,693,784.24 307,657,449.40 2,882,515,913.28
(2) List of the development cost
Expected completion time
Name of the projects Starting time Opening balance Closing balance
of the next batch
Shuiyue Zhouzhuang Project Y2011 Completion by stages 268,056,798.18 339,125,697.71
Kangqiao Jiacheng Undetermined Undetermined 2,079,207.00 478,710.59
108
Konka Group Co., Ltd. Semi-annual Report 2016
Total 270,136,005.18 339,604,408.30
(3) List of the developed products
Completion
Name of the projects Opening balance Increased Decreased Closing balance
time
Shuiyue Zhouzhuang
Y2014 79,683,074.34 61,370,551.66 18,312,522.68
(Phase I Residence)
Shuiyue Zhouzhuang
Y2015 115,095,331.71 96,056,052.54 19,039,279.17
(Phase II Residence)
Total 194,778,406.05 157,426,604.20 37,351,801.85
(4) Impairment of inventories
Increased amount Decreased amount
Item Opening balance Closing balance
Withdrawal Other Reverse Write-off
Raw
53,034,708.44 4,354,311.47 1,473,780.62 28,425,698.49 27,489,540.80
materials
Semi-finishe
54,853,159.84 738,416.61 2,506,669.84 41,490,273.31 11,594,633.30
d product
Inventory
199,769,581.12 32,653,916.40 5,759,292.72 39,883,411.41 186,780,793.39
goods
Total 307,657,449.40 37,746,644.48 9,739,743.18 109,799,383.21 225,864,967.49
(5) Withdrawal provision basis of the falling price of the inventory and the reasons of the
reserve or write-off
Reasons of writing off the
Specific basis of the withdrawal of the falling price
Item falling price provision of
provision of inventory
the inventory
The realizable net value was lower than the inventory Disposed in the current
Raw materials
cost period
The realizable net value was lower than the inventory Disposed in the current
Semi-finished product
cost period
The realizable net value was lower than the inventory Disposed in the current
Inventory goods
cost period
10. Other current assets
109
Konka Group Co., Ltd. Semi-annual Report 2016
Item Closing balance Opening balance
Prepayments and deductible taxes 199,984,012.78 89,108,687.45
Entrust loans 50,000,000.00
Financial products 550,000,000.00 500,000,000.00
Unreached bank deposits 8,203,251.00
Total 749,984,012.78 647,311,938.45
11. Available-for-sale financial assets
(1) Information of available-for-sale financial assets
Closing balance Opening balance
Item Depreciation Depreciation
Book balance Book value Book balance Book value
reserves reserves
Available-for-sale
equity 316,963,883.30 4,997,785.64 311,966,097.66 316,972,068.30 4,997,785.64 311,974,282.66
instruments
Of which:
measured by fair 2,865,883.30 2,865,883.30 2,874,068.30 — 2,874,068.30
value
Measured by cost 314,098,000.00 4,997,785.64 309,100,214.36 314,098,000.00 4,997,785.64 309,100,214.36
Total 316,963,883.30 4,997,785.64 311,966,097.66 316,972,068.30 4,997,785.64 311,974,282.66
(2) Available-for-sale financial assets measured by fair value at the period-end
Available-for-sale equity
Category of available-for-sale financial assets
instruments
Cost of the equity instruments 2,311,748.07
Fair value 554,135.23
Change amount of the fair value accumulatively included in the other
1,235,274.30
comprehensive income
Withdrawn impairment amount —
(3) Available-for-sale financial assets measured by cost at the period-end
Book balance
Investee Decre
Period -begin Increase Period-end
ase
Shenzhen Qianhai Qingsong Venture 20,000,000.0
Capital Fund Enterprise 20,000,000.00
0
110
Konka Group Co., Ltd. Semi-annual Report 2016
Book balance
Investee Decre
Period -begin Increase Period-end
ase
Shenzhen Tianyilian Science & Technology
Co., Ltd. 4,800,000.00 4,800,000.00
Shenzhen Yifan Interactive Science &
Technology Co., Ltd. 9,500,000.00 9,500,000.00
Shenzhen A Dot TV Co., Ltd. 5,750,000.00 5,750,000.00
Feihong Electronics Co., Ltd. 1,300,000.00 1,300,000.00
ZAEFI 100,000.00 100,000.00
Shenzhen Chuangce Investment
Development Co., Ltd. 485,000.00 485,000.00
Shanlian Information Technology
Engineering Center 5,000,000.00 5,000,000.00
Shenzhen CIU Science & Technology Co.,
Ltd. 1,153,000.00 1,153,000.00
Shenzhen Digital TV National Engineering
Laboratory Co., Ltd. 6,000,000.00 6,000,000.00
Shanghai National Engineering Research
Center of Digital TV Co., Ltd. 2,400,000.00 2,400,000.00
ChinaAMC - Jiayi Overseas Orientation 203,000,000. 203,000,000.0
Programs
00 0
Hunan Vary Science & Technology Co., 47,230,000.0
47,230,000.00
Ltd. 0
Nobel Education Investment Development
7,380,000.00 7,380,000.00
Co., Ltd.
314,098,000. 314,098,000.0
Total
00 0
(Continued)
Book balance Shareholdin
Cash bonus
g proportion
of the
Investees Period-e among the
Period-begin Increase Decrease Reporting
nd investees
Period
(%)
111
Konka Group Co., Ltd. Semi-annual Report 2016
Book balance Shareholdin
Cash bonus
g proportion
of the
Investees Period-e among the
Period-begin Increase Decrease Reporting
nd investees
Period
(%)
Shenzhen Qianhai
Qingsong Venture
Capital Fund — — 6.00
Enterprise
Shenzhen Tianyilian
Science & — — 7.05
Technology Co., Ltd.
Shenzhen Yifan
Interactive Science & — — 13.57
Technology Co., Ltd.
Shenzhen A Dot TV
Co., Ltd. — — 9.50
Feihong Electronics 1,300,0
Co., Ltd. 1,300,000.00 8.33
00.00
100,000
ZAEFI 100,000.00 —
.00
Shenzhen Chuangce
Investment 485,000
Development Co., 485,000.00 1.00
.00
Ltd.
Shanlian Information
1,639,1
Technology 1,639,190.80 9.62
Engineering Center 90.80
Shenzhen CIU
200,000
Science & 200,000.00 11.50
Technology Co., Ltd. .00
Shenzhen Digital TV
1,273,5
National Engineering 1,273,594.84 6.00
Laboratory Co., Ltd. 94.84
Shanghai National
Engineering Research
Center of Digital TV 4.26
Co., Ltd.
ChinaAMC - Jiayi
1,310,000.
Overseas Orientation — — —
00
Programs
112
Konka Group Co., Ltd. Semi-annual Report 2016
Book balance Shareholdin
Cash bonus
g proportion
of the
Investees Period-e among the
Period-begin Increase Decrease Reporting
nd investees
Period
(%)
Hunan Vary Science
& Technology Co., — — 10.04
Ltd.
Nobel Education
Investment
— — 14.76
Development Co.,
Ltd.
4,997, 1,310,000.
Total 4,997,785.64
785.64 00
(4) Changes of the impairment of the available-for-sale financial assets of the Reporting
Period
Available-for-sale equity
Category of available-for-sale financial assets
instruments
Withdrawn impairment balance at the period-begin 4,997,785.64
Withdrawal of the Reporting Period
Of which: transferred from other comprehensive income
Decrease of the Reporting Period
Of which: recovered or reversed from the fair value after the Period
Withdrawn impairment balance at the period-end 4,997,785.64
12. Long-term equity investment
Increase/decrease
Adjustment
Gains and losses
Investees Opening balance Additional Reduced of other Changes of
recognized under
investment investment comprehensi other equity
the equity method
ve income
I. Associated
enterprises:
113
Konka Group Co., Ltd. Semi-annual Report 2016
Increase/decrease
Adjustment
Gains and losses
Investees Opening balance Additional Reduced of other Changes of
recognized under
investment investment comprehensi other equity
the equity method
ve income
Shenzhen Refund
Optoelectronics Co., 44,317,016.67 1,543,310.20
Ltd.
Enraytek
Optoelectronics Co., 94,673,758.00 -12,569,174.19
Ltd.
Shenzhen Konka Energy
Technology Co., Ltd. 3,649,728.08
Shanghai Konka Green
2,689,549.2
Science & Technology 68,250,273.03 3,708,640.88 642,894.96
0
Co., Ltd.
Shenzhen Dekang
7,137,424.83 7,137,424.83
Electronics Co., Ltd.
Zhuhai Jinsu Plastic
6,452,187.60 331,516.41
Co., Ltd.
Shenzhen Konka
Intelligent Electronic 6,000,000.00 72,558.68
Appliances Co., Ltd.
Shenzhen Konka
Precision Mould 76,014,057.32 1,783,665.24
Manufacturing Co., Ltd.
Shenzhen Refund
Optoelectronics Co., 8,978,922.83 -346,603.11
Ltd.
2,689,549.2
Total 224,480,388.21 90,992,980.15 7,137,424.83 -5,476,085.89 642,894.96
0
(Continued)
Increase/ decrease Closing balance of
Investee entity Declaration of cash Withdraw bad Closing balance impairment
Other
dividend or profits debt provision provision
Associated enterprises:
Shenzhen Refund 257,796.60 45,602,530.27
114
Konka Group Co., Ltd. Semi-annual Report 2016
Optoelectronics Co.,
Ltd.
Enraytek
Optoelectronics Co., 82,104,583.81 30,257,135.84
Ltd.
Shenzhen Konka Energy
3,649,728.08 3,649,728.08
Technology Co., Ltd.
Shanghai Konka Green
Science & Technology 75,291,358.07
Co., Ltd.
Shenzhen Dekang
0.00
Electronics Co., Ltd.
Zhuhai Jinsu Plastic
6,783,704.01
Co., Ltd.
Shenzhen Konka
Intelligent Electronic 6,072,558.68
Appliances Co., Ltd.
Shenzhen Konka
Precision Mould 2,741,503.37 80,539,225.93
Manufacturing Co., Ltd.
Shenzhen Refund
Optoelectronics Co., 1,791,975.00 10,424,294.72
Ltd.
Total 257,796.60 0.00 4,533,478.37 310,467,983.57 33,906,863.92
13. Investment property
(1) Investment property calculated by cost
Houses and construction in
Item Land use right Total
buildings progress
I. Original book value
1. Opening balance 249,923,047.75 — — 249,923,047.75
2. Increased amount of the period — —
3. Decreased amount of the period — —
4. Closing balance 249,923,047.75 — — 249,923,047.75
II. The accumulative depreciation and
accumulative amortization
115
Konka Group Co., Ltd. Semi-annual Report 2016
Houses and construction in
Item Land use right Total
buildings progress
1. Opening balance 22,204,869.22 — — 22,204,869.22
2. Increased amount of the period 2,815,637.15 — — 2,815,637.15
(1) withdraw or amortization 2,815,637.15 — — 2,815,637.15
3. Decreased amount of the period — —
4. Closing balance 25,020,506.37 — — 25,020,506.37
III. Impairment provision
1. Opening balance — —
2. Increased amount of the period — —
3. Decreased amount of the period — —
4. Closing balance — —
IV. book value
1. Closing book value 224,902,541.38 — — 224,902,541.38
2. Opening book value 227,718,178.53 — — 227,718,178.53
116
Konka Group Co., Ltd. Semi-annual Report 2016
14. Fixed assets
(1) List of fixed assets
Transportation
Item Houses and buildings Machinery equipment Electronic equipment Other 合计
equipment
I. Original book value
1. Opening balance 1,610,405,611.03 995,990,722.42 225,934,784.83 64,713,750.93 209,487,021.91 3,106,531,891.12
2. Increased amount of
572,440.92 8,037,290.04 6,063,955.11 1,741,382.64 4,195,790.64 20,610,859.35
the period
(1) Purchase 572,440.92 6,691,253.56 6,063,955.11 1,741,382.64 2,336,982.83 17,406,015.06
(2) Transfer of project
1,346,036.48 1,858,807.81 3,204,844.29
under construction
3. Decreased amount of
41,407,136.07 191,637,186.84 6,764,703.23 9,779,367.00 33,876,159.88 283,464,553.02
the period
(1) Disposal or Scrap 3,229,910.98 22,283,529.30 6,764,703.23 3,365,549.30 4,348,849.15 39,992,541.96
4. Closing balance 38,177,225.09 169,353,657.54 0.00 6,413,817.70 29,527,310.73 243,472,011.06
II. Accumulated
1,569,570,915.88 812,390,825.62 225,234,036.71 56,675,766.57 179,806,652.67 2,843,678,197.45
depreciation
1. Opening balance
2. Increased amount of
365,828,714.85 582,924,576.99 173,954,788.56 45,962,359.91 136,450,040.99 1,305,120,481.30
the period
(1) Withdrawal 18,427,796.98 26,290,089.61 6,166,875.77 2,192,069.89 7,363,564.49 60,440,396.74
3. Decreased amount of 18,427,796.98 26,290,089.61 6,166,875.77 2,192,069.89 7,363,564.49 60,440,396.74
117
Konka Group Co., Ltd. Semi-annual Report 2016
Transportation
Item Houses and buildings Machinery equipment Electronic equipment Other 合计
equipment
the end of period
(1) Disposal or Scrap 3,821,539.17 121,325,430.68 5,367,687.56 7,228,173.76 23,499,490.13 161,242,321.30
4. Closing balance 1,180,936.50 19,522,094.02 5,367,687.56 2,786,250.57 3,726,634.75 32,583,603.40
III. Impairment
2,640,602.67 101,803,336.66 0.00 4,441,923.19 19,772,855.38 128,658,717.90
provision
1. Opening balance 380,434,972.66 487,889,235.92 174,753,976.77 40,926,256.04 120,314,115.35 1,204,318,556.74
2. Increased amount of
the period
(1) Withdrawal 2,006,749.30 26,068,129.89 5,313,847.45 963,345.92 3,556,147.76 37,908,220.32
3. Decreased amount of
0.00 2,369,232.10 610,558.02 26,444.19 86,990.59 3,093,224.90
the period
4. Closing balance 0.00 2,369,232.10 610,558.02 26,444.19 86,990.59 3,093,224.90
IV. book value 0.00 4,923,685.23 411,118.58 25,061.06 1,110,238.47 6,470,103.34
1. Closing book value 0.00 2,302,401.38 411,118.58 1,181.06 473,852.66 3,188,553.68
2. Opening book value 0.00 2,621,283.85 0.00 23,880.00 636,385.81 3,281,549.66
I. Original book value 2,006,749.30 23,513,676.76 5,513,286.89 964,729.05 2,532,899.88 34,531,341.88
1. Opening balance
2. Increased amount of
1,187,129,193.92 300,987,912.94 44,966,773.05 14,784,781.48 56,959,637.44 1,604,828,298.83
the period
118
Konka Group Co., Ltd. Semi-annual Report 2016
Transportation
Item Houses and buildings Machinery equipment Electronic equipment Other 合计
equipment
(1) Purchase 1,242,570,146.88 386,998,015.54 46,666,148.82 17,788,045.10 69,480,833.16 1,763,503,189.50
Notes: As of 30 June 2016, there was no fixed asset with restricted ownership in the Company.
(2) List of temporarily idle fixed assets
Item Original book value Accumulative depreciation Impairment provision Book value Notes
Houses and buildings 0.00 0.00 0.00 0.00
Mechanical equipments 6,705,827.19 5,373,639.29 718,159.24 614,028.66
Vehicles 1,518,035.00 1,365,551.40 87,259.60 65,224.00
Electronic equipments 18,487,968.56 17,046,250.13 1,021,928.09 419,790.34
Other equipments 2,975,099.09 2,687,379.80 43,920.91 243,798.38
Total 29,686,929.84 26,472,820.62 1,871,267.84 1,342,841.38
(3) Fixed assets leased in from financing lease
Item Original book value Accumulative depreciation Impairment provision Book value
Mechanical equipments 205,128.20 54,700.85 150,427.35
119
Konka Group Co., Ltd. Semi-annual Report 2016
(4) Fixed assets leased out from operation lease
Item Closing book value
Houses and buildings 50,806,402.35
Total 50,806,402.35
(5) Details of fixed assets failed to accomplish certification of property
Item Book value Reason
Yikang building 47,462,774.26 Under processing
Kangsheng Aquatic Club 20,098,935.75 Under processing
Mudangjiang electric appliances Has not obtained the state-owned land uses card, can not
12,187,010.26
main workshop to deal with house property card
Jingyuan office building 12,652,117.97 Under processing
Office building of Pang river street,
9,310,490.45 Under processing
Big East District, Shenyang
Kunming office building 5,371,127.14 Under processing
Foshan office building 4,786,730.44 Under processing
15. Construction in progress
(1) List of construction in progress
Closing balance Opening balance
Impairm
Impairmen
Item ent
Book balance Book value Book balance t Book value
provisio
provision
n
Kunshan hotel 153,397,313.49 153,397,313.49 138,816,397.92 138,816,397.92
Kunshan gallery 1,643,881.07 1,643,881.07 1,643,881.07 1,643,881.07
Kunshan Jielunte
0.00 0.00 4,801,714.50 4,801,714.50
new factory
Wuhan Jielunte
0.00 0.00 31,032,889.26 31,032,889.26
factory construction
Canteen project of
the Tongchuang 4,354,583.11 4,354,583.11 4,035,058.76 4,035,058.76
Industrial Park
Chuzhou Jielunte
0.00 0.00 9,613,833.54 9,613,833.54
Phase I workshop
120
Konka Group Co., Ltd. Semi-annual Report 2016
Closing balance Opening balance
Impairm
Impairmen
Item ent
Book balance Book value Book balance t Book value
provisio
provision
n
establishment
Other small projects 14,444,515.40 14,444,515.40 17,910,405.83 17,910,405.83
Total 173,840,293.07 173,840,293.07 207,854,180.88 207,854,180.88
(2) Changes of significant construction in progress
Amount that
Other decreased
Increase transferred to
Name o f item Estimated number Opening balance amount of the Closing balance
Amount fixed assets of
period
the period
Kunshan hotel 441,600,000.00 138,816,397.92 14,580,915.57 153,397,313.49
Kunshan gallery 26,320,000.00 1,643,881.07 1,643,881.07
Kunshan Jielunte
37,992,500.00 4,801,714.50 4,801,714.50 0.00
new factory
Wuhan Jielunte
factory 40,000,000.00 31,032,889.26 31,032,889.26 0.00
construction
Canteen project of
the Tongchuang 4,186,655.78 4,035,058.76 319,524.35 4,354,583.11
Industrial Park
Chouzhou Jielute
factory phase I 9,613,833.54 9,613,833.54 0.00
construction
Other small 3,204,844.2
17,910,405.83 3,808,608.68 4,069,654.82 14,444,515.40
9
projects
3,204,844.2
Total 550,099,155.78 207,854,180.88 18,709,048.60 49,518,092.12 173,840,293.07
9
(Continued)
121
Konka Group Co., Ltd. Semi-annual Report 2016
Proportion Of which: the
Accumulative Capitalization
estimated of the amount of the
Project amount of rate of the Capital
Project name project capitalized
capitalized interests of the resources
accumulative progress interests of the
interests period
input period
Loans to
financial
institutions
Kunshan hotel 51.00 70.00 832,313.28 22,148.12 0.71
and
self-owned
fund
Self-owned
Kunshan gallery 6.25 6.25 — — —
fund
Canteen project of the
Self-owned
Tongchuang Industrial 97.00 90 — — —
fund
Park
Notes: other decrease in construction in progress was mainly the Group purchased soft ware
transferred into intangible assets and the subsidiary included into consolidation which lead to
the decrease in construction in progress.
16. Intangible assets
(1) List of intangible assets
Trademark
Item Land use right Patent right registration Others Total
expense
I. Original book value
1.Opening balance 366,197,934.11 40,171,004.84 3,519,159.61 47,885,989.61 457,774,088.17
2. Increased amount of
0.00 0.00 0.00 2,751,978.76 2,751,978.76
the period
(1) Purchase 0.00 0.00 0.00 1,888,846.27 1,888,846.27
(2) Transfer of project
863,132.49 863,132.49
under construction
3.Decreased amount of
49,200,800.00 0.00 0.00 147,863.25 49,348,663.25
the period
(1) Disposal
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Konka Group Co., Ltd. Semi-annual Report 2016
Trademark
Item Land use right Patent right registration Others Total
expense
49,200,800 147,863.2 49,348,663
(2) Other decrease
.00 5 .25
4.Closing balance 316,997,134.11 40,171,004.84 3,519,159.61 50,490,105.12 411,177,403.68
II. Accumulated
amortization
1.Opening balance 48,719,074.90 32,955,386.83 3,400,022.14 17,206,634.21 102,281,118.08
2. Increased amount of
3,677,407.78 411,907.98 12,192.96 2,123,546.95 6,225,055.67
the period
(1) Withdrawal 3,677,407.78 411,907.98 12,192.96 2,123,546.95 6,225,055.67
2,764,128.
3.Decreased amount of
2,702,518.67 0.00 0.00 61,609.69
the period 36
(1) Disposal 0.00
2,702,518. 2,764,128.
(2) Other decrease 0.00 0.00 61,609.69
67 36
4.Closing balance 49,693,964.01 33,367,294.81 3,412,215.10 19,268,571.47 105,742,045.39
III. Depreciation
reserves
1.Opening balance 2,901,082.61 2,901,082.61
2. Increased amount of
the period
(1) Withdrawal
3.Decreased amount of
the period
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Trademark
Item Land use right Patent right registration Others Total
expense
(1) Disposal
4.Closing balance 0.00 2,901,082.61 0.00 0.00 2,901,082.61
IV. Book value
1. Closing book value 267,303,170.10 3,902,627.42 106,944.51 31,221,533.65 302,534,275.68
2. Opening book value 317,478,859.21 4,314,535.40 119,137.47 30,679,355.40 352,591,887.48
(2) Details of fixed assets failed to accomplish certification of land use right
Item Book value Reason
Mudangjiang electric appliances
3,153,608.13 Left over by history
etc.
17. Goodwill
(1) Original book value of goodwill
Increase Decrease
Formed
Name of the investees or the
Opening balance from the Closing balance
events formed goodwill Others Dispose Others
business
combination
Anhui Konka 3,597,657.15 3,597,657.15
Total 3,597,657.15 3,597,657.15
(2) The method of impairment test and impairment provision, see note 19, IV.
As of 30 June 2016, there was no book value of goodwill higher than recoverable amount.
18. Long-term unamortized expenses
Amortization
Item Opening balance Increased amount Decrease Closing balance
amount
Renovation costs 25,781,274.74 2,545,520.04 4,556,622.98 23,770,171.80
Advertising
33,132,182.48 18,510,350.51 12,768,532.00 38,874,000.99
expense
Others 23,933,524.85 7,097,709.88 10,266,069.42 2,101,001.05 18,664,164.26
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Amortization
Item Opening balance Increased amount Decrease Closing balance
amount
Total 82,846,982.07 28,153,580.43 27,591,224.40 2,101,001.05 81,308,337.05
19. Deferred income tax assets/deferred income tax liabilities
(1) Deferred income tax assets had not been off-set
Closing balance Opening balance
Item Deductible temporary Deferred income tax Deductible temporary Deferred income
Differences assets Differences tax assets
Assets impairment
658,503,561.40 164,269,975.23 682,074,474.66 160,938,084.03
provision
Unrealized internal
84,832,959.88 21,208,239.97 75,656,622.48 18,914,155.62
sales gain and loss
Accrued expenses 106,052,076.00 26,513,018.99 114,093,986.59 28,165,776.55
Deferred income 94,976,438.73 22,863,412.18 98,649,185.43 23,704,256.37
Deductible losses 1,351,771,709.27 328,452,764.20 1,223,305,795.11 295,093,235.44
Others 89,960,000.00 22,490,000.00 89,960,000.00 22,490,000.00
Total 2,386,096,745.28 585,797,410.57 2,283,740,064.27 549,305,508.01
(2) Lists of deferred income tax liabilities had not been off-set
Closing balance Opening balance
Item Deductible
Deferred income tax Deductible temporary Deferred income tax
temporary
liabilities difference liabilities
difference
Accelerated
depreciation of fixed 5,560,377.47 834,056.62 10,219,095.65 1,532,864.34
assets
Change of fair value of
14,854,678.40 3,713,669.60 7,184,035.28 1,796,008.82
trading financial assets
Change in fair value of
available-for-sale 554,135.20 138,533.80 556,635.24 139,158.81
financial assets
Total 20,969,191.07 4,686,260.02 17,959,766.17 3,468,031.97
(3) List of unrecognized deferred income tax assets
Item Closing balance Opening balance
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Konka Group Co., Ltd. Semi-annual Report 2016
Deductible temporary difference 272,755,117.19 385,065,293.90
Deductible losses 1,024,887,783.81 1,162,480,889.15
Total 1,297,642,901.00 1,547,546,183.05
20. Assets impairment provision
Withdrawn Decreased
Item Opening balance impairment balance Closing balance
Reverse
Write-off
at the period-begin
I.Bad debt
537,676,181.03 10,464,173.14 2,309,734.00 305,526.84 545,525,093.33
provision
II.Impairment
307,657,449.40 37,746,644.48 9,739,743.18 109,799,383.21 225,864,967.49
of inventories
III.
Impairment
provision of
the 4,997,785.64 0.00 0.00 0.00 4,997,785.64
available-for-s
ale financial
assets
IV.
Impairment
provision of 37,908,220.32 3,093,224.90 0.00 6,470,103.34 34,531,341.88
the fixed
assets
V. Impairment
provision of
2,901,082.61 0.00 0.00 0.00 2,901,082.61
the intangible
assets
VI.Long-term
equity 33,906,863.92 0.00 0.00 0.00 33,906,863.92
investment
Total 925,047,582.92 51,304,042.52 12,049,477.18 116,575,013.39 847,727,134.87
21. Short-term loans
Item Closing balance Opening balance
Pledge loan — —
Mortgage loan — —
Guaranteed loan 419,999,196.46 1,196,103,036.53
Credit loan 4,168,543,553.47 2,954,670,159.23
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Konka Group Co., Ltd. Semi-annual Report 2016
Item Closing balance Opening balance
Total 4,588,542,749.93 4,150,773,195.76
22. Financial liabilities measured by fair value and the changes included in the current
gains and losses
Category Closing balance Opening balance
Loss from forward foreign exchange
607,587.55 —
purchase agreement
Total 607,587.55 —
23. Notes payable
Category Closing balance Opening balance
Trade acceptance 48,361,251.67 —
Bank acceptance bill 1,527,934,426.18 929,176,857.06
Total 1,576,295,677.85 929,176,857.06
Notes: RMB1, 576,295,677.85 will be due in next fiscal period.
24. Accounts payable
(1) List of accounts payable
Item Closing balance Opening balance
Within 1 year 2,360,999,061.37 2,806,965,708.04
1 to 2 years 13,990,163.23 126,958,011.57
2 to 3 years 5,015,300.39 28,320,658.56
Over 3 years 17,680,462.38 18,172,605.08
Total 2,397,684,987.37 2,980,416,983.25
(2) Notes of the accounts payable aging over one year
Item Closing balance Unpaid/ Un-carry-over reason
Interior decoration 13,804,404.30 Unsettled
Exterior components 7,382,037.13 Unsettled
Building projects 2,902,005.96 Unsettled
Project supervision fee 165,100.00 Unsettled
Total 24,253,547.39
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25. Advance from customers
(1) List of advance from customers
Item Closing balance Opening balance
Within 1 year 1,072,688,078.30 308,012,574.61
1 to 2 years 5,638,818.04 21,697,745.80
2 to 3 years 3,306,278.78 5,825,837.33
Over 3 years 14,047,310.85 14,248,649.58
Total 1,095,680,485.97 349,784,807.32
(2) Significant large advance from customers aging over one year was prepayment of goods
undelivered.
(3) Advance receipts of houses
Item Closing balance Opening balance
Shuiyue Zhouzhuang Project (Phase I
10,484,937.91 15,387,876.00
Residence)
Shuiyue Zhouzhuang Project (Phase II
17,901,195.00 8,542,534.36
Residence)
Shuiyue Zhouzhuang Project (Phase II
409,326,563.00
Residence)
Total 437,712,695.91 23,930,410.36
26. Payroll payable
(1) List of Payroll payable
Item Opening balance Increase Decrease Closing balance
I. Short-term salary 271,481,205.46 715,631,869.44 775,231,391.90 211,881,683.00
II. Post-employment
benefit-defined 2,458,579.25 44,893,412.31 45,273,252.35 2,078,739.21
contribution plans
III. Termination benefits 5,691,474.00 12,948,581.93 16,794,718.18 1,845,337.75
IV. Other benefits due
within one year
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Item Opening balance Increase Decrease Closing balance
Total 279,631,258.71 773,473,863.68 837,299,362.43 215,805,759.96
(2) List of Short-term salary
Item Opening balance Increase Decrease Closing balance
1. Salary, bonus, allowance,
262,158,525.22 624,077,722.15 689,588,960.81 196,647,286.56
subsidy
2. Employee welfare 1,257,181.26 36,282,142.15 31,903,893.20 5,635,430.21
3. Social insurance 1,937,335.09 29,872,761.54 29,761,625.64 2,048,470.99
Of which: 1. Medical insurance
1,392,834.34 26,399,176.29 26,627,479.69 1,164,530.94
premiums
Work-related injury
102,543.07 1,902,561.50 1,849,179.99 155,924.58
insurance
Maternity insurance 441,957.68 1,571,023.75 1,284,965.96 728,015.47
4. Housing fund 1,496,698.09 11,418,247.41 11,180,923.29 1,734,022.21
5. Labor union budget and
4,219,899.55 5,257,636.29 3,957,174.40 5,520,361.44
employee education budget
6.Short-term absence with payment
7. Short-term profit sharing plan
8. Other 411,566.25 8,723,359.90 8,838,814.56 296,111.59
Total 271,481,205.46 715,631,869.44 775,231,391.90 211,881,683.00
(3) List of drawing scheme
Item Opening balance Increase Decrease Closing balance
1. Basic pension benefits 2,129,581.26 42,852,257.69 43,099,966.98 1,881,871.97
2. Unemployment insurance 328,997.99 2,041,154.62 2,173,285.37 196,867.24
Annuity — — — —
Total 2,458,579.25 44,893,412.31 45,273,252.35 2,078,739.21
The Company, in line with the requirement, participate the endowment insurance,
unemployment insurance scheme and so on, according to the scheme, the Company monthly
pay to the scheme in line with requirements of local government, except the monthly
payment, the Company no longer shoulder the further payment obligation, the relevant
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Konka Group Co., Ltd. Semi-annual Report 2016
expense occurred was recorded into current profits and losses or related assets costs.
27. Taxes payable
Item Closing balance Opening balance
VAT 13,187,834.99 13,316,492.43
Corporate income tax 34,419,298.07 15,106,336.81
Business tax 604,659.91 2,049,531.99
Urban maintenance and construction tax 926,888.59 1,392,874.16
Personal income tax 3,165,661.37 5,468,489.97
Education Surcharge 665,249.28 939,576.85
Flood control fund, fund for embankment, fund for
1,669,684.28 1,286,346.53
water conservancy and fund for river management
Fund for disposing abandoned appliances and
18,756,724.00 19,694,608.00
electronic products
Others 20,792,827.85 32,843,695.16
Total 94,188,828.34 92,097,951.90
28. Interest payable
Item Closing balance Opening balance
Loan interests 17,321,232.74 20,552,763.14
Total 17,321,232.74 20,552,763.14
29. Other accounts payable
(1) Other accounts payable listed by nature of the account
Item Closing balance Opening balance
Accrued expenses 1,004,542,796.08 958,366,586.73
Margin 177,467,442.82 228,909,206.83
Intercourse funds 185,646,026.99 172,797,449.90
Payment on behalf 5,602,917.51 10,769,352.74
Others 160,902,729.52 180,088,977.15
Total 1,534,161,912.92 1,550,931,573.35
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Konka Group Co., Ltd. Semi-annual Report 2016
(2) Other significant accounts payable with aging over one year
Item Closing balance Unpaid/ Un-carry-over reason
Shanghai Shensy Logistics Co., Ltd. 3,800,000.00 Margin
Ningbo Huacai Electric Appliance Co., Ltd. 3,031,041.94 Guarantee money of operation
Shanghai Yongxin Color CRT Ltd. Co., Ltd. 2,075,485.15 Margin
Shanghai Henry Da International Logistics Co.,
2,000,000.00 Margin
Ltd.
Total 10,906,527.09
30. Non-current liabilities due within 1 year
Item Closing balance Opening balance
Long-term loans due within 1 year(Note: 30) 198,736,959.18 573,341,856.11
Long-term loans due within 1 year(Note: 31) 41,025.60 57,103.54
Total 198,777,984.78 573,398,959.65
31. Long-term loan
Item Closing balance Opening balance
Mortgage loan 63,776,957.13
Guaranteed loan 23,700,000.00
Credit loan 198,736,959.18 509,564,898.98
Less: long-term loans due within 1 year(Note: 29) 198,736,959.18 573,341,856.11
Total — 23,700,000.00
32. Long-term payable
Item Closing balance Opening balance
Chuzhou Tongchuang Jianshe Investment Co., Ltd. 30,000,000.00 30,000,000.00
Accrued financial lease outlay 164,102.56 190,436.91
Less: Expired part due within 1 year (Notes: 29) 41,025.60 57,103.54
Total 30,123,076.96 30,133,333.37
33. Long-term payroll payable
(1) List of long term payroll payable
Item Closing balance Opening balance
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Konka Group Co., Ltd. Semi-annual Report 2016
Item Closing balance Opening balance
I. Termination benefits-net liabilities of defined
20,652,314.24 23,435,856.86
contribution plans
II. Termination benefits — —
III. Other long term welfare — —
Total 20,652,314.24 23,435,856.86
(2) Changes of defined benefit plans
① Present worth of defined benefit plans obligation:
Item Reporting Period Same period of last year
I. Opening balance 23,435,856.86 28,554,734.16
II. Defined benefit cost recorded into current profits
and losses —
1. Current service cost —
2. Previous service cost —
3. Settlement gains (loss “－”) —
4. Net interest —
III.Other changes 5,118,877.30
1. Consideration of settlement of payment —
2.Welfare had paid 2,783,542.62 5,118,877.30
III. Closing balance 20,652,314.24 23,435,856.86
② Notes to the influence of the content and related risk of defined benefit plans to the future
cash flows, time and uncertainty of the Company:
Due to upgrading and reconstruction of current work sites of the subsidiary, communication
technology, it is to adjust the labor relations according to Implementation Measures for
Accompanying Employees in manufacturing system of Shenzhen Konka Communication
Technology Co., Ltd on the premise to balance the Company’s and employees’ benefits and
voluntary selection, Communication Technology provides early retirement plans for senior
employees (employed before December 31, 1990 and signed non-fixed term labor contract
with the Company or Communication Technology). Content of the plans includes:
1. Until March 31, 2014, the internal retire employee in line with the time length to
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Konka Group Co., Ltd. Semi-annual Report 2016
mandatory age for retirement, which are classified as three classes, conducted relevant
standard of retirement pensions.
2. Internal early retirement pensions include social insurance and housing provident funds
borne by individuals. The age is subject to that recorded in personnel archives.
3. Seniority subsidies for internal early retirement are classified as four classes in line with
the time length of working age, of which, working age is calculated on an annualized basis.
4. Voluntary early retirement should be applied by individuals and approved by the leaders of
Communication Technology and the Group. During the period of early retirement,
management of the employees is responsible by the Company.
The accumulative compensation paid to the internal early retirement pensions in future year
is RMB34,931,714.55, the Company in line with Agreement of Internal Early Retirement
Pension, in line with the standard of salary remaining the same, turnover rate of 0, the
mortality rate of, fix standard of social security base payment remaining the same to test the
present worth of defined benefit plans. The actual payment for the employee is influence by
the actual turnover rate, death rate and the changes of minimum cardinality of social security.
③ Notes to analysis results of actuarial assumptions and sensibility of defined benefit plans
Major assumptions estimated Period-end of Reporting Period Period-end of last period
Discount rate Treasury bond rate in same period —
Death rate 0% —
Expected life expectancy Over legal emeritus age —
Expected compensation growth rate 0% —
34. Estimated liabilities
Item Opening balance Closing balance Formed reason
Pending litigation 4,629,554.61 4,711,597.59 Litigation
Total 4,629,554.61 4,711,597.59
35. Deferred revenue
Item Opening balance Increase Decrease Closing balance Formed reason
Government
162,786,004.20 7,880,000.00 26,021,479.61 144,644,524.59 Amortization
subsidies
Total 162,786,004.20 7,880,000.00 26,021,479.61 144,644,524.59
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Of which, items involved in government subsidies:
Amount accrued in
Amount of newly Related to the assets/
Item Opening balance non-business Other changes Closing balance
subsidy income
income
Subsidies for equipment engineering and technology 14,040,000.00 1,755,000.00 12,285,000.00 Related to the assets
Smart TV industry chain of Konka Group Co., Ltd. 12,800,000.00 12,800,000.00 Related to the assets
Compensation for infrastructure construction of Jielunte 11,550,000.00 11,550,000.00 0.00 Related to the assets
Supporting the next generation Internet intelligent
7,908,737.85 7,908,737.85 Related to the assets
terminal system research projects
Fund for flat panel display industry in year 2008 4,499,999.90 1,000,000.02 3,499,999.88 Related to the assets
R&D of mating core chip based on the terminal of
5,620,000.00 5,620,000.00 Related to the assets
AVS/DRA
R&D and industrialization of new-type smart television
5,256,893.21 5,256,893.21 Related to the assets
with man-machine interaction
Key technology and industrialization of LED Backlight
3,750,000.05 499,999.98 3,250,000.07 Related to the assets
of flat TV set
Industrialization project of large size liquid crystal
2,000,000.00 1,200,000.00 800,000.00 Related to the assets
display module (LCM)
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Konka Group Co., Ltd. Semi-annual Report 2016
Amount accrued in
Amount of newly Related to the assets/
Item Opening balance non-business Other changes Closing balance
subsidy income
income
Special Fund of Strategic Emerging Industry of
3,600,000.00 300,000.00 3,300,000.00 Related to the assets
Dongguan Financial Bureau
R&D and industrialization of large size liquid crystal
1,200,000.00 1,200,000.00 0.00 Related to the assets
display module
Funds for provincial scientific and technological
innovation and special guidance of achievements 2,478,260.88 260,869.56 2,217,391.32 Related to the assets
transfer of 2010
Special fund for 2010-2012 provincial finance industrial
2,556,666.66 210,000.04 2,346,666.62 Related to the assets
technology
R&D and industrialization of integrated DTMB 1,229,999.85 820,000.02 409,999.83 Related to the assets
Government grant for Qianhai Project 2,800,000.00 2,800,000.00 Related to the assets
Machine module integration subsidy 2,475,000.00 150,000.00 2,325,000.00 Related to the assets
Supporting the research and development and
industrialization of synergy internet-connected digital 2,600,000.00 2,600,000.00 Related to the assets
products
TV application oriented and embedded operating
2,470,000.00 2,470,000.00 Related to the assets
system development
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Konka Group Co., Ltd. Semi-annual Report 2016
Amount accrued in
Amount of newly Related to the assets/
Item Opening balance non-business Other changes Closing balance
subsidy income
income
Industrialization technological transformation of large
precise multi-color injection mold based on green 1,909,920.93 1,909,920.93 0.00 Related to the assets
Manufacturing
Research instruments subsidies 1,648,133.29 210,400.02 1,437,733.27 Related to the assets
R&D and industrialization of new-type terminal
1,450,000.00 300,000.00 1,150,000.00 Related to the assets
application service system of internet
Research and development and industrialization of Dual
2,030,000.00 0.00 2,030,000.00 Related to the assets
channel new 3 D smart TV
Supporting triple play smart TV and system support
1,866,666.68 199,999.98 1,666,666.70 Related to the assets
platform
Shenzhen Finance Committee Konka Group Smart
8,170,000.00 8,170,000.00 Related to the assets
TV Industry Project
Konka next generation multimedia terminal
5,000,000.00 5,000,000.00 Related to the assets
technology engineering laboratory project
Special fund for Scientifically Create Committee
4,500,000.00 4,500,000.00 Related to the assets
technology PR project
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Konka Group Co., Ltd. Semi-annual Report 2016
Amount accrued in
Amount of newly Related to the assets/
Item Opening balance non-business Other changes Closing balance
subsidy income
income
Mobile intelligent terminal new application service
4,000,000.00 4,000,000.00 Related to the assets
system
Economic, trade and information commission, 2015
3,000,000.00 3,000,000.00 Related to the assets
Shenzhen Industrial Design Center subsidy
Deferred income-mobile intelligent terminal
2,400,000.00 2,400,000.00 Related to the assets
information security system key
Lean manufacturing execution system comprehensive
2,000,000.00 2,000,000.00 Related to the assets
integrated innovation projects
Others 27,511,134.19 7,880,000.00 2,616,302.02 32,774,832.17 Related to the assets
Subtotal 154,321,413.49 7,880,000.00 10,722,571.64 13,459,920.93 138,018,920.92
Others 8,464,590.71 1,334,794.80 504,192.24 6,625,603.67 Related to the income
Subtotal 8,464,590.71 1,334,794.80 504,192.24 6,625,603.67
Total 162,786,004.20 7,880,000.00 12,057,366.44 13,964,113.17 144,644,524.59
36. Share capital
Item Opening balance Increase/decrease in Reporting Period (+,-) Closing balance
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Konka Group Co., Ltd. Semi-annual Report 2016
Issuing Capitalization
Bonus
new of public Others Subtotal
shares
shares reserves
The sum of shares 2,407,945,408.00 — — — — — 2,407,945,408.00
37. Capital surplus
Item Opening balance Increase Decrease Closing balance
Capital premium 7,393,378.55 7,393,378.55
Other capital reserves 70,816,156.64 2,689,549.20 73,505,705.84
Total 78,209,535.19 2,689,549.20 80,899,084.39
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Konka Group Co., Ltd. Semi-annual Report 2016
38. Other comprehensive income
Reporting Period
Less: recorded in
other
comprehensive Attributable to
Amount before Attributable to
Item Opening balance income in prior Less: Income tax minority Closing balance
income tax in owners of the
period and expense shareholders after
current period Company after tax
transferred to tax
profit or loss in
current period
I. Other comprehensive
income can not be
—
reclassified into profits
and losses in future
II. Other comprehensive
reclassified into profits or —
losses
Of which: other
comprehensive income as
per equity method —
recognized into profit and
loss in future
Profits or losses of change
in fair value of
1,444,788.01 -2,500.00 -625.00 -1,875.00 1,442,913.01
available-for-sale
financial assets
Converted difference of
1,710,955.99 -15,438,349.77 -15,156,763.24 -281,586.53 -13,445,807.25
the foreign currency
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Konka Group Co., Ltd. Semi-annual Report 2016
Reporting Period
Less: recorded in
other
comprehensive Attributable to
Amount before Attributable to
Item Opening balance income in prior Less: Income tax minority Closing balance
income tax in owners of the
period and expense shareholders after
current period Company after tax
transferred to tax
profit or loss in
current period
financial statement
Total 3,155,744.00 -15,440,849.77 -625.00 -15,158,638.24 -281,586.53 -12,002,894.24
Notes: Corresponding other comprehensive of opening balance, closing balance in relevant balance sheet. Closing balance + comprehensive
income AT attributable to the parent company = closing balance. Amount in Reporting Period and corresponding other comprehensive in income
statement, Amount before tax in Reporting Period-recorded into other comprehensive income in previous period transferred into current profits
or losses - income tax expense = other comprehensive income AT attributable to the parent company + other comprehensive income AT
attributable to minority shareholder.
140
Konka Group Co., Ltd. Semi-annual Report 2016
39. Surplus reserves
Item Opening balance Increase Decrease Closing balance
Statutory surplus reserves 593,846,200.71 — — 593,846,200.71
Discretionary surplus reserves 254,062,265.57 — — 254,062,265.57
Total 847,908,466.28 — — 847,908,466.28
Notes: Based on the regulations of the Corporation Law and Constitution, the Company
should withdraw 10% of the statutory surplus reserves according to the net profits. If the
accumulated amount of the statutory surplus reserves exceeded the 50% of the registered
capital, the Company could no more withdraw.
The Company, after withdraw statutory surplus reserves, can withdraw discretional surplus
reserves, in line with the approval, the discretional surplus reserves can be used for making
up losses in previous year or increase share capital
40. Retained profits
Item Reporting Period Same period of last year
Opening balance of retained profits before adjustments -522,836,282.66 746,022,758.89
Total opening balance of retained profits before adjustments
— —
(Increase+, decrease-)
Opening balance of retained profits after adjustments -522,836,282.66 746,022,758.89
Add: Net profit attributable to owners of the Company 12,834,736.76 -1,256,819,314.51
Less: Withdrawal of statutory surplus reserves — —
Withdrawal of discretional surplus reserves — —
Dividend of common stock payable — 12,039,727.04
Dividend of common stock transfer into share capital — —
Closing retained profits -510,001,545.90 -522,836,282.66
Notes: on 6 April 2016, the Company held 13th Meeting of the 8th Board of Directors; the
meeting reviewed and approved the proposal of not implementing the allocation of profits.
41. Revenue and Cost of Sales
(1) Revenue and Cost of Sales
Item Reporting Period Same period of last year
141
Konka Group Co., Ltd. Semi-annual Report 2016
Sales revenue Cost of sales Sales revenue Cost of sales
Main operations 7,724,414,205.37 6,397,747,058.44 8,246,299,638.18 7,161,672,404.62
Other operations 884,666,616.87 779,978,033.98 698,259,282.78 629,543,395.95
Total 8,609,080,822.24 7,177,725,092.42 8,944,558,920.96 7,791,215,800.57
(2) Main operations (Classified by product)
Reporting Period Same period of last year
Product
Operation revenue Operation cost Operation revenue Operation cost
Color TV business 5,367,972,378.49 4,468,618,453.12 5,839,273,101.30 4,998,980,729.53
Mobile phone
471,731,609.94 415,431,430.93 405,882,081.01 394,112,904.23
business
Consumer appliances
829,752,654.59 648,051,838.45 828,393,555.30 650,002,713.45
business
Others 1,054,957,562.35 865,645,335.94 1,172,750,900.57 1,118,576,057.41
Total 7,724,414,205.37 6,397,747,058.44 8,246,299,638.18 7,161,672,404.62
(3) Main operations (Classified by area)
Reporting Period Same period of last year
Area
Operation revenue Operation cost Operation revenue Operation cost
Domestic sales 5,176,447,693.40 4,024,605,977.81 4,807,213,043.19 3,897,064,692.75
Overseas sales 2,547,966,511.97 2,373,141,080.63 3,439,086,594.99 3,264,607,711.87
Total 7,724,414,205.37 6,397,747,058.44 8,246,299,638.18 7,161,672,404.62
(4) The revenue of sales from the top five customers
Proportion of total business revenue
Period Main operation revenue
(%)
1,776,976,457.55 20.64
January-June 2016
1,682,516,602.23 18.81
January-June 2015
42. Business tax and surcharges
Item Reporting Period Same period of last year
Business tax 13,191,515.48 5,496,133.92
Urban maintenance and construction tax 20,776,311.03 12,849,394.39
142
Konka Group Co., Ltd. Semi-annual Report 2016
Item Reporting Period Same period of last year
Education Surcharge 9,430,266.44 6,391,442.89
Local education surtax 6,021,776.47 3,641,622.06
Others 6,730,072.12 331,413.41
Total 56,149,941.54 28,710,006.67
Notes: the measurement standards of business tax and surcharges see Notes V. Tax
43. Sales expenses
Item Reporting Period Same period of last year
Promotional activities 372,587,893.03 332,857,088.15
Warranty fee 167,856,546.55 174,049,619.44
Logistic Fee 154,776,709.59 168,134,586.26
Salary 157,536,220.65 155,114,369.05
Advertising expense 91,273,551.74 119,606,305.71
Social security charges 21,910,951.20 20,877,888.67
Business travel charges 17,770,918.55 18,327,672.91
Rental charges 15,085,828.42 14,363,429.92
Business entertainment expense 11,450,052.22 13,263,180.79
Exhibition fee 6,719,144.35 11,618,648.04
Others 92,179,107.31 96,476,161.41
Total 1,109,146,923.61 1,124,688,950.35
44. Administrative expenses
Item Reporting Period Same period of last year
R&D expenses 88,336,972.44 104,617,216.07
Salary 73,525,422.30 67,908,610.15
Depreciation charge 16,536,843.42 18,202,729.34
Taxes and fund 17,286,987.83 17,552,634.06
Social security charges 11,042,691.24 10,056,569.85
Business entertainment expense 7,228,540.05 8,726,615.59
Employee welfare 6,728,436.24 8,059,767.37
Consulting fees 3,993,681.74 5,633,366.65
Business travel charges 4,382,095.57 5,429,742.03
Labor-union expenditure 3,969,760.83 4,966,713.86
Others 57,887,858.36 41,084,938.74
143
Konka Group Co., Ltd. Semi-annual Report 2016
Item Reporting Period Same period of last year
Total 290,919,290.02 292,238,903.71
45. Financial expenses
Item Reporting Period Same period of last year
Interest expenses 115,905,577.29 82,012,379.10
Less: Interest income 47,941,503.94 25,280,539.71
Exchange gains and losses -223,594.54 39,133,044.16
Others 632,953.19 3,202,027.62
Total 68,373,432.00 99,066,911.17
46. Asset impairment loss
Item Reporting Period Same period of last year
Bad debt loss 8,154,439.14 22,299,365.88
Inventory falling price loss 28,006,901.30 12,818,060.85
Fixed assets impairment losses 3,093,224.90 2,627,026.18
Total 39,254,565.34 37,744,452.91
47. Gains and losses from changes in fair value
Sources Reporting Period Last period
Financial assets/liabilities measured by fair value and the changes be
—
included in the current profits and losses -18,141,655.39
Of which, gains on the changes in the fair value of derivative financial
—
instruments -18,141,655.39
Total -18,141,655.39 —
48. Investment income
Item Reporting Period Same period of last year
Long-term equity investment income accounted by equity method -7,531,575.68 -5,017,326.85
Dividend or profits measured by cost method declare to distribute by
1,310,000.00
investment entity
Investment income arising from disposal of long-term equity
3,030,280.93 —
investments
Investment income received from holding of available-for-sale 0.00 2,153,880.21
144
Konka Group Co., Ltd. Semi-annual Report 2016
Item Reporting Period Same period of last year
financial assets
Investment income received from disposal of
44,703.62
available-for-sale financial assets
Equity investment income after losing control 4,510,212.49
Income from trust management 9,222,760.26 10,048,900.77
Total 10,586,381.62 7,185,454.13
49. Non-operating gains
Recorded in the
Same period of last amount of the
Item Reporting Period
year non-recurring gains
and losses
Total gains from disposal of non-current assets 3,147,161.67 140,774.90 3,147,161.67
Including: Gains from disposal of fixed assets 3,147,161.67 140,774.90 3,147,161.67
Gains from disposal of intangible assets — — —
Government grants ( Details, see the statement below, lists
136,544,386.15 61,900,356.24 51,949,430.12
of government subsidies )
Income from compensation 7,639,245.00 3,598,283.81 7,639,245.00
Penalty income 2,148,787.76 2,879,986.02 2,148,787.76
Others 4,708,082.06 903,762.58 4,708,082.06
Total 154,187,662.64 69,423,163.55 69,592,706.61
Of which, government subsidies recorded into current profits and losses
Item Reporting Period Same period of last year Related to the assets/ income
Transfer of deferred income 12,057,366.44 12,944,347.31 See note VI. 35
Software tax returns 84,594,956.03 34,130,823.15 Related to the income
Government financing 29,076,900.00 8,000,000.00 Related to the income
Others 10,815,163.68 6,825,185.78 Related to the income
Total 136,544,386.15 61,900,356.24
50. Non-operating expenses
Recorded in the amount of
Item Reporting Period Same period of last year the non-recurring gains
and losses
145
Konka Group Co., Ltd. Semi-annual Report 2016
Recorded in the amount of
Item Reporting Period Same period of last year the non-recurring gains
and losses
Loss on disposal of non-current assets 617,565.57 1,333,624.80 617,565.57
Including: Loss on disposal of fixed
617,565.57 1,333,624.80 617,565.57
assets
Losses from disposal of intangible assets — — —
Compensation expenses — — —
Penalty expenses 1,344,333.27 517,570.40 1,344,333.27
External donation expenses 28,000.00 36,000.00 28,000.00
Others 1,541,119.52 1,335,108.95 1,541,119.52
Total 3,531,018.36 3,222,304.15 3,531,018.36
51. Income tax expense
(1) Lists of income tax expense
Item Reporting Period Same period of last year
Current income tax expense 41,114,706.11 3,363,107.56
Deferred income tax expense -40,408,709.01 -54,464,726.76
Total 705,997.10 -51,101,619.20
(2) Adjustment process of accounting profit and income tax expense
Item Reporting Period
Total profits 10,612,947.82
Current income tax expense accounted by tax and relevant regulations 2,653,236.96
Influence of different tax rate suitable to subsidiary 1,286,213.23
Influence of income tax before adjustment -123,517.89
Influence of non taxable income —
Influence of not deductable costs, expenses and losses 1,041,166.19
Influence of deductable losses of deferred income tax assets derecognized
-15,884,776.73
used in previous period
Influence of deductible temporary difference or deductible losses of
11,733,675.34
deferred income tax assets derecognized in Reporting Period.
Changes of the balance of deferred income tax assets/ liabilities in previous —
146
Konka Group Co., Ltd. Semi-annual Report 2016
period due to adjustment of tax rate
Influence of plus deducting costs —
Income tax expense 705,997.10
52. Supplementary information to cash flow statement
(1) Other cash received relevant to operating activities:
Item Reporting Period Same period of last year
Income from government subsidy 43,649,169.82 63,116,201.19
Current accounts and other 154,798,397.77 50,806,977.96
Interest income from bank deposits 23,481,811.90 25,280,539.71
Bargain money and deposit 33,299,181.92 17,710,940.97
Income from waste 6,679,741.15 7,399,974.01
Repayment of individual borrowing 2,937,490.67 4,012,389.68
Income from compensation 6,000.00 3,677,654.89
Income from fine and penalty 318,724.35 2,879,986.02
Temporary received repair fund 681,957.93 585,764.95
Total 265,852,475.51 175,470,429.38
(2) Other cash paid relevant to operating activities:
Item Reporting Period Same period of last year
Expense for cash payment 470,234,898.51 460,136,035.36
Payment for pledges, guarantee and repair 42,278,211.56 54,634,052.75
Employee reserve fund 11,796,262.92 15,101,732.17
Payment made on behalf 23,090,996.59 7,520,596.52
Expense for bank handling charges 4,984,527.17 3,202,027.62
Donation expense 28,000.00 36,000.00
Other expense 40,284,916.71 41,859,725.05
Total 592,697,813.46 582,490,169.47
(3) Other cash received relevant to investment activities
Item Reporting Period Same period of last year
Received financial product 4,243,417,300.00 1,300,500,000.00
Interest of entrust loan 50,000,000.00 —
Interest of land fund — 488,063,979.00
147
Konka Group Co., Ltd. Semi-annual Report 2016
Others 11,000.00 —
Total 4,293,428,300.00 1,788,563,979.00
(4) Other cash paid relevant to investment activity
Item Reporting Period Same period of last year
Purchase of financial product 4,293,417,300.00 1,301,000,000.00
Purchase of new share — 5,784,590.00
Subsidiary excluded in consolidation or
28,348,985.63 —
disposal of closing capital outflow
Others 41,000.00 150,362.07
Total 4,321,807,285.63 1,306,934,952.07
(5) Other cash received relevant to financing activities
Item Reporting Period Same period of last year
Note financing guarantee — 118,095,176.56
Self opening and self discounting 1,087,905,232.65 —
Others 3,600,000.00 —
Total 1,091,505,232.65 118,095,176.56
(6) Other cash paid relevant to financing activities
Item Reporting Period Same period of last year
Financing guarantee deposit — 132,986,357.83
Financing lease — 875,603.76
Interest of self opening and self discounting 31,252,365.37 —
Others 5,708.23
Total 31,258,073.60 133,861,961.59
53. Supplemental information for Cash Flow Statement
(1) Supplemental information for Cash Flow Statement
Supplemental information Reporting Period Same period of last year
1. Reconciliation of net profit to net cash flows generated
from operating activities
Net profit 9,906,950.72 -304,618,171.69
Add: Provision for impairment of assets 39,254,565.34 37,744,452.91
Depreciation of fixed assets, of oil-gas assets, of productive
63,256,033.89 72,037,148.23
biological assets
Amortization of intangible assets 6,225,055.67 6,114,059.53
Long-term unamortized expenses 27,591,224.40 10,613,072.64
148
Konka Group Co., Ltd. Semi-annual Report 2016
Supplemental information Reporting Period Same period of last year
Losses on disposal of fixed assets, intangible assets and
-2,529,596.10 1,192,849.90
other long-term assets (gains: negative)
Loss on retirement of fixed assets (gains: negative) — —
Losses from variation of fair value (gains: negative) — —
Financial cost (gains: negative) 129,789,423.55 99,380,910.41
Investment loss (gains: negative) -10,586,381.62 7,185,454.13
Decrease in deferred income tax assets (gains: negative) -36,491,902.56 -60,779,263.28
Increase in deferred income tax liabilities
1,218,228.05 6,341,583.07
(crease in deferred
Decrease in inventory (gains: negative) 29,575,516.85 155,252,082.46
Decrease in accounts receivable from operating activities
203,319,939.04 706,029,496.58
(gains: negative)
Increase in payables from operating activities (decrease:
-586,071,113.65 -666,450,765.26
negative)
Others — —
Net cash flows generated from operating activities -125,542,056.42 70,042,909.63
2. Investing and financing activities that do not involving
cash receipts and payment:
Conversion of debt into capital — —
Company bonus convertible due within one year — —
Fix assets under financing lease — —
3. Net increase in cash and cash equivalents
Closing balance of cash 2,469,950,766.48 2,036,481,117.08
Less: Opening balance of cash 1,488,154,851.35 1,640,236,837.08
Add: Closing balance of cash equivalents — —
Less: Opening balance of cash equivalents — —
Net increase in cash and cash equivalents 981,795,915.13 396,244,280.00
(2) Cash and cash equivalents
Item Closing balance Opening balance
I. Cash 2,469,950,766.48 2,036,481,117.08
Including: Cash on hand 3,160.55 193,395.85
Bank deposit on demand 2,469,947,605.93 2,036,287,721.23
II. Cash and cash equivalents — —
Of which: Bond investment due within three months — —
149
Konka Group Co., Ltd. Semi-annual Report 2016
Item Closing balance Opening balance
III. Closing balance of cash and cash equivalents 2,469,950,766.48 2,036,481,117.08
54. The assets with the ownership or use right restricted
Item Closing book value Restricted reason
Each margin deposit for security can not be withdrawn at any
Other monetary funds 128,266,065.72
time.
Notes: Up to 30 June 2016, the Company pledged the
banker’s acceptance bill of the book value of RMB1,
Notes receivable 1,487,252,160.59 487,252,160.59 for the comprehensive financing business
such as handling the billing, letter of credit and the trading
financing.
Total 1,615,518,226.31
55. Foreign currency monetary items
Closing foreign currency
Item Exchange rate Closing convert to RMB balance
balance
Monetary capital 590,552,973.08
Including: USD 86,581,837.73 6.6312 574,141,482.38
EUR 50,485.65 7.3750 372,331.67
HKD 18,064,682.39 0.85467 15,439,342.10
Canadian Dollar 6.96 5.1222 35.65
GBP 1.32 8.9212 11.78
IDR 1,190,018,852.98 0.000504 599,769.50
Account receivable 691,886,942.59
Including: USD 103,225,983.24 6.6312 684,512,140.09
HKD 5,355,962.53 0.85467 4,577,580.50
IDR 5,061,764,020.87 0.000504 2,551,129.07
AUD 49,764.00 4.9452 246,092.93
Other accounts receivable 5,904,963.59
Including: USD 848,167.38 6.6312 5,624,367.53
EUR 6,635.14 7.3750 48,934.16
HKD 160,916.88 0.85467 137,530.83
150
Konka Group Co., Ltd. Semi-annual Report 2016
Closing foreign currency
Item Exchange rate Closing convert to RMB balance
balance
IDR 186,768,000.00 0.000504 94,131.07
Accounts payable 205,741,631.80
Including: USD 30,819,516.40 6.6312 204,370,377.15
HKD 1,503,452.49 0.85467 1,284,955.74
IDR 171,228,001.36 0.000504 86,298.91
Short-term loans 1,104,246,895.59
Including: USD 166,522,936.36 6.6312 1,104,246,895.59
VII. Changes of merge scope
1. The disposal of subsidiary
Single disposal of investment to subsidiary that losing control
The differences enjoyed
of net assets share of the
Equity subsidiary in
The equity Method of Recognition basis of
disposal Time of losing corresponding
Name disposal equity the time of losing
proportion control consolidated statements
price disposal control
(%) between the disposal of
price and the disposal of
investment
Changshu Konka Electronic
— 60.00 Cancel 5/31/2016 Finished liquidation 0.00
Co., Ltd.
(Continued)
Amount related to
Residual Book value Fair value of Profits or
Recognition method other comprehensive
equity of residual residual losses of
and main assumption income transfer into
proportion equity on equity on residual equity
Name of fair value of investment profits
on the date the date of the date of recalculated
residual equity on the or loss of original
of losing losing losing in line with
date of losing control subsidiary equity
control (%) control control fair value
investment
Changshu Konka Electronic
— — — — — —
Co., Ltd.
2. Other reasons for the changes in combination scope
On 31 December 2015, the Company's subsidiary, Konka Household Appliances Investment
signed agreement with Shenzhen Dingshengxin Mould Technology Consultation Co., Ltd.
151
Konka Group Co., Ltd. Semi-annual Report 2016
Since 1Jan. 2016, Dingshengxin Mould Technology Consultation Co., Ltd. no longer
entrusted Konka Household Appliances Investment managed its holding of 6.18% shares of
Precision Mold, and since 1 January 2016, the Precision Mold and its subsidiaries (Kunshan
Jielunte Mould Plastic Co., Ltd, Dongguan Xutongda Mould Plastic Co., Ltd.,Chuzhou
Jielunte Mould Plastic Co., Ltd., Anhui Jiasen Precision Technology Co., Ltd., Wuhan
Jielunte Mould Plastic Co., Ltd. and Dongguan Konka Mould Plastic Co., Ltd., which
excluded into consolidated statements scope.
VIII. Equity in other entities
1. Equity in subsidiary
(1) The structure of the enterprise group
Main Holding percentage
Registration Nature of Way of
Name operating (%)
place business gaining
place Directly Indirectly
Shenzhen Konka Telecommunications Shenzhen, Shenzhen, Manufacturing Set up or
75.00 25.00
Technology Co., Ltd. Guangdong Guangdong industry investment
Electrical
Shenzhen, Shenzhen, Set up or
Shenzhen Konka Electronic Co., Ltd. Appliances 100.00 —
Guangdong Guangdong investment
Retail
Shenzhen Konka Information Network Shenzhen, Shenzhen, Manufacturing Set up or
75.00 25.00
Co., Ltd. Guangdong Guangdong industry investment
Shenzhen Konka Plastic Products Co., Shenzhen, Shenzhen, Manufacturing Set up or
49.00 51.00
Ltd. Guangdong Guangdong industry investment
Shenzhen Konka Life Electronic Co., Shenzhen, Shenzhen, Manufacturing Set up or
75.00 25.00
Ltd. Guangdong Guangdong industry investment
Shenzhen Konka Electronic Fittings Shenzhen, Shenzhen, Investment Set up or
75.00 25.00
Technology Co., Ltd. Guangdong Guangdong holding investment
Mudanjiang Arctic Ocean Appliances Mudanjiang, Mudanjiang, Manufacturing Set up or
60.00 —
Co., Ltd. Heilongjiang Heilongjiang industry investment
Chongqing Konka Electronic Co., Ltd. Manufacturing Set up or
Chongqing Chongqing — 40.00
① industry investment
152
Konka Group Co., Ltd. Semi-annual Report 2016
Main Holding percentage
Registration Nature of Way of
Name operating (%)
place business gaining
place Directly Indirectly
Chuzhou, Chuzhou, Manufacturing Set up or
Anhui Konka Electronic Co., Ltd. 78.00 —
Anhui Anhui industry investment
Chuzhou, Chuzhou, Manufacturing Set up or
Anhui Konka Appliance Co., Ltd. — 100.00
Anhui Anhui industry investment
Kunshan, Kunshan, Manufacturing Set up or
Kunshan Konka Electronic Co., Ltd. 100.00 —
Jiangsu Jiangsu industry investment
Dongguan, Dongguan, Manufacturing Set up or
Dongguan Konka Electronic Co., Ltd. 75.00 25.00
Guangdong Guangdong industry investment
Dongguan Konka Packing Materials Dongguan, Dongguan, Manufacturing Set up or
— 100.00
Co., Ltd. Guangdong Guangdong industry investment
Boluo， Boluo， Manufacturing Set up or
Boluo Konka PCB Co., Ltd. — 100.00
Guangdong Guangdong industry investment
Boluo Konka Precision Technology Boluo， Boluo， Manufacturing Set up or
— 100.00
Co., Ltd. Guangdong Guangdong industry investment
Hong Kong, Hong Kong, International Set up or
Hong Kong Konka Co., Ltd. 100.00 —
China China Trading investment
Konka Household Appliances Hong Kong, Hong Kong, Investment Set up or
— 100.00
Investment & Development Co., Ltd. China China holding investment
Konka Household Appliances Hong Kong, Hong Kong, International Set up or
— 100.00
International Trading Co., Ltd. China China Trading investment
International Set up or
KONKA AMERICA,INC. America America 100.00 —
Trading investment
Frankfurt, Frankfurt,
International Set up or
Konka (Europe) Co., Ltd. Germany, Germany, 100.00 —
Trading investment
Europe Europe
Konka Commercial Factor(Shenzhen) Shenzhen, Shenzhen, R&D Set up or
100.00 —
Co., Ltd.② Guangdong Guangdong expenses investment
153
Konka Group Co., Ltd. Semi-annual Report 2016
Main Holding percentage
Registration Nature of Way of
Name operating (%)
place business gaining
place Directly Indirectly
Shenzhen Wankaida Science and Shenzhen, Shenzhen, Software Set up or
100.00 —
Technology Co., Ltd. Guangdong Guangdong development investment
Kunshan Kangsheng Investment Kunshan, Kunshan, Set up or
Real estate 100.00 —
Development Co., Ltd. Jiangsu Jiangsu investment
Anhui Konka Tongchuang Household Chuzhou, Chuzhou, Manufacturing Set up or
100.00 —
Appliances Co., Ltd.③ Anhui Anhui industry investment
International Set up or
Indonesia Konka Electronics Co., Ltd. Indonesia Indonesia — 51.00
Trading investment
Shenzhen Shushida Logistics Service Shenzhen, Shenzhen, Set up or
Logistics 100.00 —
Co., Ltd. Guangdong Guangdong investment
Sale of home Set up or
Beijing Konka Electronic Co., Ltd. Beijing Beijing 100.00 —
appliance investment
Shenzhen, Shenzhen, Manufacturing Set up or
Shenzhen Konka E-display Co., Ltd. 60.00 —
Guangdong Guangdong industry investment
Shenzhen, Shenzhen, Manufacturing Set up or
Shenzhen E-display Service Co., Ltd. 60.00
Guangdong Guangdong industry investment
Xiamen, Xiamen, Set up or
Xiamen Dalong Trade Co., Ltd. Commerce — 69.23
Fujian Fujian investment
Youshi Kangrong Cultural Set up or
Tianjin Tianjin Others — 70.00
Communication Co., Ltd. investment
Shenzhen Kangqiaojiacheng Property Shenzhen, Shenzhen, Set up or
Real estate 70.00 —
Investment Co., Ltd Guangdong Guangdong investment
Hong Kong, Hong Kong, Set up or
Konka Smarttech Limited Others — 61.00
China China investment
Anhui Kakai Shijie E-Commerce Co., Set up or
Anhui Anhui E-commerce 80.00 —
Ltd investment
Shenzhen Yipingfang Network Shenzhen, Shenzhen, Information Set up or
100.00 —
Technology Co., Ltd Guangdong Guangdong service investment
154
Konka Group Co., Ltd. Semi-annual Report 2016
Main Holding percentage
Registration Nature of Way of
Name operating (%)
place business gaining
place Directly Indirectly
Shenzhen Konka Commercial Systems Shenzhen, Shenzhen, Set up or
Commerce 81.00 —
Technology Co., Ltd Guangdong Guangdong investment
Shenzhen Konka Mobile Internet Shenzhen, Shenzhen, Set up or
Commerce 51.00 —
Technology Co., Ltd. Guangdong Guangdong investment
① The Company holds 40.00% shares of Chongqing Qingjia Electronic Co., Ltd. that all
senior managers of Chongqing Qingjia Electronic Co., Ltd. are appointed and dismissed by
the Company. Among the directors, half of them or over half are dispatched directly or
indirectly by the Company. Moreover, in Chongqing Qingjia, 70% to 80% of its products
are sold to the Company and thus the Company has absolute influence and control over the
production and operation of Chongqing Qingjia Electronic Co., Ltd., which is combined into
the consolidated financial statement.
Konka Factor: Shenzhen Konka Optoelectronic Technology Co., Ltd. renamed as Konka
Commercial Factor (Shenzhen) Co., Ltd..
③ Anhui Tongchuang is a limited company jointly invested and established by the Company
and Chuzhou Tongchuang Construction Investment Co., Ltd. (hereinafter refer to as
“Tongchuang Construction”) with registration capital of RMB 180 million, of which each
party invested in RMB 90 million respectively on contract. As to 31 Dec. 2013, Anhui
Tongchuang with a paid-up capital of RMB 120 million (including paid-up capital of RMB
90 million of the Company, 75.00% of total paid-up capital; and paid-up capital of RMB 30
million of Tongchuang Construction, 25.00% of total paid-up capital ). According to contract
sign by two parties, Tongchuang Construction has the rights of transferring stock ownership
three years after the establishment of Anhui Tongchuang Company. Meanwhile, the
Company can repurchase the said stock ownership and contracted with Tongchuang
Investment Company that the Company shall receive fixed investment gains at 2% of actual
capital invested by the Group annually. So the Company can conduct actual control to Anhui
Tongchuang Company, and combines it into the consolidated financial statement.
(2) Significant not wholly owned subsidiary
155
Konka Group Co., Ltd. Semi-annual Report 2016
Shareholding The profits and
Dividends distribute Balance of minority
proportion of losses arbitrate to
Name to minority shareholder at
minority the minority
shareholder closing period
shareholder shareholders
Anhui Konka 22.00 9,031,962.29 — 74,010,197.39
Kaikai Shijie 20.00 1,183,603.57 — 5,551,579.26
(3) The main financial information of significant not wholly owned subsidiary
Closing balance
Name Non-current
Current assets Non-current assets Total assets Current liabilities Total liabilities
liability
Anhui Konka 711,425,495.07 241,989,994.89 953,415,489.96 616,703,059.63 8,347,141.53 625,050,201.16
Kaikai Shijie 350,802,357.49 1,650,943.82 352,453,301.31 324,695,404.99 0.00 324,695,404.99
Opening balance
Name Non-current
Current assets Non-current assets Total assets Current liabilities Total liabilities
liability
Anhui Konka 861,543,505.16 246,490,103.64 1,108,033,608.80 811,514,052.71 9,208,641.33 820,722,694.04
Kaikai Shijie 150,449,151.27 569,437.47 151,018,588.74 129,178,710.26 0.00 129,178,710.26
Reporting Period
Name Total comprehensive
Operation revenue Net profit Operating cash flow
income
Anhui Konka 1,782,076,379.17 41,054,374.04 41,054,374.04 -18,411,271.87
Kaikai Shijie 249,006,644.45 5,918,017.84 5,918,017.84 -27,434,290.16
Same period of last year
Name Total comprehensive
Operation revenue Net profit Operating cash flow
income
Anhui Konka 2,428,514,346.89 -11,901,124.74 -11,901,124.74 58,973,435.78
Kaikai Shijie 170,879,853.80 369,937.21 369,937.21 -4,453,057.48
2. Equity in associated enterprise
156
Konka Group Co., Ltd. Semi-annual Report 2016
(1) Significant joint venture arrangement or associated enterprise
Holding percentage (%) Accounting
Main treatment of the
Registration
Name operating Nature of business investment of joint
place Directly Indirectly
place venture or
associated enterprise
Shenzhen Refund Production and sale of
Shenzhen Shenzhen — 5.90 Equity method
Optoelectronics Co., Ltd. light emitting diode
Enraytek Optoelectronics Production and sale of
Shanghai Shanghai — 28.04 Equity method
Co., Ltd. light emitting diode
Shanghai Konka Green
Production and sale of
Science & Technology Shanghai Shanghai 39.00 — Equity method
light emitting diode
Co., Ltd.
Shenzhen Konka Production and
Precision Mould Shenzhen Shenzhen marketing of plastic — 46.31 Equity method
Manufacturing Co., Ltd. mould
Production and
Dongguan Konka Mould
Dongguan Dongguan marketing of plastic — 59.73 Equity method
Plastic Co., Ltd.
mould
157
Konka Group Co., Ltd. Semi-annual Report 2016
(2) Main financial information of significant associated enterprise
Closing balance/ Reporting Period Opening balance /last period
Item Enraytek Optoelectronics Co., Shanghai Konka Green Science & Shanghai Konka Green Science &
Enraytek Optoelectronics Co., Ltd.
Ltd. Technology Co., Ltd. Technology Co., Ltd.
Current assets 672,863,442.16 307,126,443.33 643,665,278.09 124,548,698.88
Non-current assets 719,923,784.36 319,021,992.02 693,903,656.72 237,205,034.02
Total assets 1,392,787,226.52 626,148,435.35 1,337,568,934.81 361,753,732.90
0.00
Current liabilities 458,027,910.04 230,934,164.88 551,431,214.97 97,706,289.06
Non-current liability 748,825,263.72 87,124,707.56 556,666,832.72 86,797,751.49
Total liabilities 1,206,853,173.76 318,058,872.44 1,108,098,047.69 184,504,040.55
0.00
Minority interests 1,289,036.50 115,034,798.59 -260,290.34 2,248,992.25
Equity attributable to owners of
184,645,016.26 193,054,764.31 229,731,177.46 175,000,700.10
the Company
Portion of net assets calculated
according to proportion of 51,847,447.97 75,291,358.07 64,416,622.16 68,250,273.03
shareholdings
158
Konka Group Co., Ltd. Semi-annual Report 2016
Closing balance/ Reporting Period Opening balance /last period
Item Enraytek Optoelectronics Co., Shanghai Konka Green Science & Shanghai Konka Green Science &
Enraytek Optoelectronics Co., Ltd.
Ltd. Technology Co., Ltd. Technology Co., Ltd.
Adjusting events
-Goodwill — — —
-Unrealized internal sales gain
— — — —
and loss
-Other — — — —
Book value of equity investment
64,416,622.16 68,250,273.03
to associated venture
Fair value of equity investment
of associate enterprises with — —
public offer
Operation revenue 83,883,271.42 206,432,914.79 165,482,576.55 120,572,337.08
Net profit -45,113,945.96 -11,943,355.21 -58,648,256.05 -21,424,479.94
Net profits of termination
— —
operation
159
Konka Group Co., Ltd. Semi-annual Report 2016
Closing balance/ Reporting Period Opening balance /last period
Item Enraytek Optoelectronics Co., Shanghai Konka Green Science & Shanghai Konka Green Science &
Enraytek Optoelectronics Co., Ltd.
Ltd. Technology Co., Ltd. Technology Co., Ltd.
Other comprehensive income 1,294,461.56 — 1,033,575.71
Total comprehensive income -45,113,945.96 -10,648,893.65 -58,648,256.05 -20,390,904.23
Equity received from associated
— — — —
enterprises in Reporting Period
160
Konka Group Co., Ltd. Semi-annual Report 2016
IX. The risk related financial instruments
Main financial instruments include monetary capital, accounts receivable and accounts
payable. Refer to Note XI for the details of all financial instruments. Risks related to
financial instruments and risk management policies to reduce risks are as follows. The
management should control and monitor the risk exposure to ensure all risks within defined
scope.
The Company use sensitivity analysis technology to analyze the reasonable of risk variables,
influence of probable changes to the current profits and Stockholders' equity. Because risk
variables are not happened independently, correlation of variables to certain risk variable
may affect the final amount. Therefore, the following items are conducted under assumptions
of each variable changing independently.
(I) Risk management objectives and policies
Risk management objective of the Company is to balance the risks and profits, minimize the
negative effects to business performance and maximize the profits for stockholders and other
equity investors. On the basis of risk management objectives, basic strategies of risk
management are to determine and analyze all possible risks, establish appropriate risk
baseline, control and manage risks and monitor all risks timely and reliably within defined
scope.
1. Market risk
(1) Foreign exchange risk
Foreign exchange risk refers to the risks that may lead to losses due to fluctuation in
exchange rate. Foreign exchange risk refers to the risks that may lead to losses due to
fluctuation in exchange rate. The foreign exchange risk borne by the Company is related to
USD, EURO and HKD, except the procurement and sales by US dollars for several
subsidiaries such as the Company, Kongkong Konka, American Konka, Konka Trading
Europe Konka and Indonesia Konka which settled by USD HKD and EURO for purchase
and sale. Until 30 June 2016 (refer to Notes VI 55, foreign monetary items), foreign
exchange risks may affect the business performance produced by the assets and liabilities of
the balance.
The Company timely pay attention to the influence of change of the exchange rate to the
Company's foreign exchange risk, which require the Group and others which conducted
purchase and sale with settlement by foreign currency to purchase foreign currency long-term
forward contract to lock the cost of purchase on forward date to reduce the risk exposure of
foreign exchange.
161
Konka Group Co., Ltd. Semi-annual Report 2016
(2) Interest rate risk- cash flow change risk
Cash flow change risk caused by financial instruments due to interest rate change is related to
floating interest rate of bank loan. By establishing good relations with banks and reasonable
planning of credit line, credit varieties and credit period, it is to guarantee sufficient band line
of credit and satisfy all financial demands. Moreover, it is to reduce risks of interest rate
uncertainty by shortening single loan term and establishing repayment terms.
3. Other price risk
For the equity investment of other listed companies holding by the Company, the
management considers that the market price risks are acceptable. Refer to Notes VI, 11
Available-for-sale financial assets for equity investment of other listed companies holding by
the Company.
2 Credit risk
On 30 June 2016, the biggest credit risk exposure may lead to the financial assets losses of
the Company was mainly from the one party fail to perform its obligation, which included:
book amount recognized in consolidated balance sheet: for financial instruments measured at
fair value, the book value reflect its risk exposure, but not the biggest one, the biggest risk
exposure will change along with the change of future fair value.
In order the reduce the credit risk, the Company establish a group response for recognizing
line of credit, conducting credit approval and other monitor procedures to ensure that the
necessary measures were used to recycle expired claims. In addition, the Company at each
balance sheet date, review every single receivables recycling situation, to ensure that the
money unable to recycle withdrawn provision for bad debt fully. Thus, the Company
management believed that have assume the credit risk the Company shouldered had been
greatly reduced.
The company’s working capital was in bank with higher credit rating, so credit risk of
working capital was low.
3. Liquidity Risk
When managing liquidity risk, the Company maintained the management, so credit rat
supervising the sufficient cash and cash equivalents to meet the operating demand of the
Company and reduce the influence of the fluctuation of cash flow.
X. The disclosure of the fair value
1. Closing fair value of assets and liabilities calculated by fair value
Item Closing fair value
162
Konka Group Co., Ltd. Semi-annual Report 2016
Fair value Fair value Fair value
measurement measurement measurement Total
items at level 1 items at level 2 items at level 3
I. Consistent fair value
measurement
(I) Financial assets calculated
by fair value and changes
record into current profits or — — — —
losses
Trading financial assets 15,462,265.94 — — 15,462,265.94
(II) Available-for-sale financial
assets
1. Debt instruments investment — — — —
2. Equity instrument
2,865,883.30 — — 2,865,883.30
investment
3. Other — — — —
(I)Financial liabilities measured
by fair value and the changes
included in the current gains
and losses
Transaction financial liabilities 607,587.55 607,587.55
Total assets of consistent fair
18,328,149.24 — — 18,328,149.24
value measurement
Total liabilities of consistent
607,587.55 — — 607,587.55
fair value measurement
Total assets inconsistently
measured at fair value — — — —
Total liabilities inconsistent
measured at fair value — — — —
2. Market price recognition basis for consistent and inconsistent fair value
measurement items at level 1
① As of the end of Reporting Period, the Company in line with the difference of DF forward
foreign exchange purchase cost (DF base price on balance sheet date) on assets balance sheet
and agreement DF forward foreign exchange purchase cost (DF exchange rate agreed)
163
Konka Group Co., Ltd. Semi-annual Report 2016
recognized as losses or profits
② As of the end of Reporting Period, the Company held 117,310.00 shares of stock A of
Vanke, and their fair value at the end of the Reporting Period was determined to be RMB2,
865,883.30 according to closing price of RMB24.43 for each share on 30 June 2016.
XI. Related party and related Transaction
1. Information of parent company
Proportion of Proportion of
share held by voting rights
Registration Registered
Name of parent company Nature of business parent company owned by parent
place capital
against the company against
Company (%) the Company (%)
Shenzhen OCT East Co., Tourism, real estate,
Shenzhen 6.3 billion 29.99 29.99
Ltd. electronics industry
Notes: the final control party of the Company is State-owned Assets Supervision and
Administration Commission
2. Information of subsidiary of the Company
Details of information of subsidiary of the Company see note 1. Equity in subsidiary VIII
3. Information on the joint ventures of the Company
See note 10. Long term equity investment, VI
4. Information on other related parties of the Company
Name Relationship
Shenzhen OCT East Co., Ltd. Shareholder of the Company
Shanghai OCT Investment Development Co., Ltd. Subsidiary of shareholder
Shanghai OCT Investment Development Co., Ltd. Subsidiary of shareholder
Shanghai Tianxiang OCT Investment Co., Ltd. Subsidiary of shareholder
Anhui Huali Packaging Co., Ltd. Subsidiary of shareholder
Shenzhen OCT Water and Power Co., Ltd Subsidiary of shareholder
Shanghai Huali Packaging Co., Ltd Subsidiary of shareholder
Shenzhen Huayou Packaging Co., Ltd Subsidiary of shareholder
Shenzhen Huali Packing & Trading Co., Ltd Subsidiary of shareholder
164
Konka Group Co., Ltd. Semi-annual Report 2016
Name Relationship
Huali Packaging (Huizhou) Co., Ltd. Subsidiary of shareholder
Huizhou Huali Packaging Co., Ltd. Subsidiary of shareholder
Shenzhen Konka Video & Communication Systems
Subsidiary of shareholder
Engineering Co., Ltd.
Taizhou OCT Co., Ltd. Subsidiary of shareholder
Shenzhen OCT Real Estate Co., Ltd. Subsidiary of shareholder
Yunnan OCT Industry Co., Ltd. Subsidiary of shareholder
Shenzhen OCT Hotel Co., Ltd. Subsidiary of shareholder
Shenzhen OCT Property Management Co., Ltd. Subsidiary of shareholder
Shenzhen OCT Hotel Group Co., Ltd. Subsidiary of shareholder
Shenzhen Splendid China Development Co., Ltd. Joint venture of shareholder
Shenzhen the Windows of the world Co., Ltd. Joint venture of shareholder
Shanghai Konka Green Science & Technology Co.,
Associated enterprise
Ltd.
Anhui Konka Green Science & Technology Co.,
Subsidiary of associated enterprise
Ltd.
Shenzhen Refund Optoelectronics Co., Ltd. Subsidiary of joint venture
Enraytek Optoelectronics Co., Ltd. Subsidiary of joint venture
Zhuhai Jinsu Plastic Co., Ltd. Subsidiary of joint venture
Charm Media Co. , Ltd. Shareholder of the subsidiary
Shenzhen Konka Precision Mould Manufacturing Subsidiary of joint venture
Co., Ltd.
Wuhan Jielunte Mould Plastic Co., Ltd. Subsidiary of joint venture
Dongguan Konka Mould Plastic Co., Ltd. Subsidiary of joint venture
Kunshan Jielunte Mould Plastic Co., Ltd. Subsidiary of joint venture
Dongguan Xutongda Mould Plastic Co., Ltd. Subsidiary of joint venture
Chuzhou Jielunte Mould Plastic Co., Ltd. Subsidiary of joint venture
Anhui Jiasen Precision Technology Co., Ltd Subsidiary of joint venture
165
Konka Group Co., Ltd. Semi-annual Report 2016
5. List of related-party transactions
(1) Information on acquisition of goods and reception of labor service (unit: ten thousand
Yuan)
① Information on acquisition of goods and reception of labor service
Related party Content Reporting Period Same period of last year
Shenzhen Refund Optoelectronics Co.,
Purchase of raw material 54,995,087.43 47,882,999.94
Ltd.
Anhui Huali Packaging Co., Ltd. Purchase of raw material 13,316,909.09 13,685,714.34
Shenzhen OCT Water and Power Co., Ltd Water and power 1,175,261.15 2,982,321.50
Huali Packaging (Huizhou) Co., Ltd. Purchase of raw material 4,650,789.23 5,062,131.26
Shanghai Huali Packaging Co., Ltd Purchase of raw material 6,150,994.50 5,313,689.89
Zhuhai Jinsu Plastic Co., Ltd. Purchase of raw material — 456,923.11
Shenzhen OCT Hotel Group Co., Ltd. Purchase of raw material — 155,425.55
Dongguan Konka Mould Plastic Co., Ltd. Purchase of raw material 23,984,888.98 —
Kunshan Jielunte Mould Plastic Co., Ltd. Purchase of raw material 1,447,315.77 —
Chuzhou Jielunte Mould Plastic Co., Ltd. Purchase of raw material 68,600,936.93 —
Shenzhen Konka Precision Mould Purchase of raw material
14,541,172.21 —
Manufacturing Co., Ltd.
Information of sales of goods and provision of labor service
Related party Content Reporting Period Same period of last year
Charm Media Co. , Ltd. Advertising expense 11,320,754.76 18,868,462.33
Shenzhen Refund Optoelectronics Co.,
Selling materials 14,403,685.82 10,381,121.06
Ltd.
Shanghai OCT Investment Development Repair processing charge
35,400.00 —
Co., Ltd. income
Shanghai Tianxiang OCT Investment Co.,
Selling LCDs 63,333.33 —
Ltd.
Anhui Konka Green Science & Selling LCDs, maintenance
2,798,336.32 374,606.74
Technology Co., Ltd. cost
166
Konka Group Co., Ltd. Semi-annual Report 2016
Shenzhen Konka Precision Mould
Selling materials 179,645.20 —
Manufacturing Co., Ltd.
Sale of materials, rental of
Dongguan Konka Mould Plastic Co., Ltd. 5,867,443.85 —
houses
Kunshan Jielunte Mould Plastic Co., Ltd. Selling materials 3,688.80 —
Dongguan Xutongda Mould Plastic Co., Sale of materials, rental of
4,306,505.64 —
Ltd. houses
(2) Related-party guarantee
Guarantee Actual using Execution
Curren Curre
Secured party amount amount Start date End date accomplished or
cy ncy
(RMB’0,000) (RMB’0,000) not
1,225.00 2016-6-16 2017-6-15 No
Anhui Tongchuang
RMB 30,000.00 RMB
(notes ①) 5,700.00 2015-12-31 2016-12-31 No
Shenzhen Konka
Telecommunications RMB 50,000.00 RMB 15,689.16 2015-4-23 2016-9-30 No
Technology Co., Ltd.
Anhui Konka RMB 20,000.00 RMB — 2014-12-8 2017-12-7 No
Kunshan Konka RMB 30,000.00 RMB — 2014-12-8 2017-12-7 No
USD 3,090.00 USD 3,090.00 2014-9-17 2016-10-17 No
Hong Kong Konka
RMB 43,300.00 RMB 43,300.00 2015-11-23 2016-8-26 No
Hong Kong Konka
① Notes: the minority shareholders of Anhui Tongchuang and Chouzhou Tongchuang
Investment Construction Co., Ltd. provided50% counter-guarantee to the limit amount of
guarantee.
Notes: the minority shareholders of Anhui Tongchuang, Chouzhou State-owned Assets
Operation Co., Ltd. provided 22% counter-guarantee to the limit amount of guarantee of the
Company.②
(3) Rewards for the key management personnel
Item Reporting Period Same period of last year
Rewards for the key management personnel RMB4.0868 million RMB5.1135 million
5. Receivables and payables of related parties
167
Konka Group Co., Ltd. Semi-annual Report 2016
(1) Receivables
Closing balance Opening balance
Name o f item Book balance Bad debt Book balance Bad debt
provision provision
Account receivable:
Shenzhen Refund Optoelectronics Co., Ltd. 12,571,947.92 251,438.96 12,116,064.48 242,321.29
Shanghai Konka Green Science & Technology
11,037,967.18 849,203.14 10,963,614.12 548,180.71
Co., Ltd.
Shanghai OCT Investment Development Co.,
6,000.00 120.00 150,000.00 3,000.00
Ltd.
Shenzhen Konka Video & Communication
— — — —
Systems Engineering Co., Ltd.
Charm Media Co. , Ltd. — — 775,587.00 15,511.74
Chongqing Konka Eurotomotive Electronic
981,218.48 981,218.48 981,218.48 981,218.48
Co., Ltd.
Dongguan Konka Mould Plastic Co., Ltd. 18,486,734.32 368,475.89
Dongguan Xutongda Mould Plastic Co., Ltd. 18,343,955.14 1,065,580.77
Total 61,427,823.04 3,516,037.24 24,986,484.08 1,790,232.22
Other accounts receivable:
Shenzhen Konka Video & Communication
18,115,952.51 6,304,295.73 18,115,952.51 5,366,657.87
Systems Engineering Co., Ltd.
Chongqing Konka Eurotomotive Electronic
13,396,856.82 13,396,856.82 13,396,856.82 13,396,856.82
Co., Ltd.
Shenzhen OCT Property Management Co.,
77,402.65 38,701.33 6,491,248.10 203,206.00
Ltd.
Shenzhen OCT Water and Power Co., Ltd 1,331,890.64 26,637.81 1,198,932.32 23,978.65
Shenzhen OCT Real Estate Co., Ltd. 1,053,706.86 1,053,706.86 1,053,706.86 1,033,282.36
Chengdu Tianfu OCT Industrial Development
440,000.00 8,800.00 440,000.00 8,800.00
Co., Ltd.
Shenzhen Overseas Chinese Town Gas Station 80,000.00 80,000.00 80,000.00 80,000.00
168
Konka Group Co., Ltd. Semi-annual Report 2016
Closing balance Opening balance
Name o f item Book balance Bad debt Book balance Bad debt
provision provision
Co., Ltd.
Dongguan Konka Mould Plastic Co., Ltd. 4,448.00 222.40
Total 34,500,257.48 20,909,220.95 40,776,696.61 20,112,781.70
(2) Payables
Name o f item Closing balance Opening balance
Accounts payable:
Shenzhen Konka Video & Communication Systems
17,142,460.81 20,412,650.58
Engineering Co., Ltd.
Anhui Huali Packaging Co., Ltd. 8,983,451.22 4,160,761.50
Shenzhen Refund Optoelectronics Co., Ltd. 8,282,445.54 3,309,766.50
Shanghai Huali Packaging Co., Ltd 2,464,761.33 2,634,241.04
Huali Packaging (Huizhou) Co., Ltd. 1,432,252.56 1,747,011.10
Shenzhen Huali Packing & Trading Co., Ltd 1,078,005.09 1,078,005.09
Shenzhen Dekang Electronics Co., Ltd. 358,929.03
Shenzhen Konka Precision Mould Manufacturing
18,057,643.45
Co., Ltd.
Dongguan Konka Mould Plastic Co., Ltd. 19,327,420.28
Chuzhou Jielunte Mould Plastic Co., Ltd. 21,967,239.10
Kunshan Jielunte Mould Plastic Co., Ltd. 1,210,460.66
Total 99,946,140.04 33,701,364.84
Notes payable:
Shenzhen Refund Optoelectronics Co., Ltd. 13,251,695.28 12,997,249.74
Anhui Huali Packaging Co., Ltd. 5,289,708.07 5,150,030.89
Huali Packaging (Huizhou)Co.,Ltd. 2,416,694.14 988,662.81
Zhuhai Jinsu Plastic Co., Ltd. 186,000.04
169
Konka Group Co., Ltd. Semi-annual Report 2016
Name o f item Closing balance Opening balance
Shanghai Huali Packaging Co., Ltd 5,056,332.39 3,126,818.21
Dongguan Konka Mould Plastic Co., Ltd. 3,150,252.14
Chuzhou Jielunte Mould Plastic Co., Ltd. 5,988,283.88
Total 35,152,965.90 22,448,761.69
Accounts received in advance:
Charm Media Co. , Ltd. 0.00 126,000.00
Shenzhen OCT Property Management Co., Ltd. 5,500.00
Chongqing OCT Industrial Development Co., Ltd. 816,190.20
Taizhou OCT Co., Ltd. 50,000.00
Total 871,690.20 126,000.00
Other account payable:
Anhui Huali Packaging Co., Ltd. 258,000.00 258,000.00
Shanghai Huali Packaging Co., Ltd 652,000.00 652,000.00
Shenzhen Refund Optoelectronics Co., Ltd. 51,135.00 51,135.00
Shenzhen Konka Precision Mould Manufacturing
19,440.00
Co., Ltd.
Chuzhou Jielunte Mould Plastic Co., Ltd. 20,000.00
Shenzhen OCT Property Management Co., Ltd. 658,823.73
Total 1,659,398.73 961,135.00
XII. Commitments and contingency
1. Significant commitments
(1) Capital commitment
Item Closing balance Opening balance
Commitments signed but hasn’t been recognized in
financial statements
-- Commitment for constructing and purchasing long-term — —
assets
- Contract with large amount 291,009,210.10 184,797,300.59
170
Konka Group Co., Ltd. Semi-annual Report 2016
Item Closing balance Opening balance
- Foreign investment commitments — —
Total 291,009,210.10 184,797,300.59
(2) Operating lease commitments
As of the end of balance sheet date, the irrevocable operating lease commitments that the
Company signed were as followed:
Item Closing balance Opening balance
Minimum lease payments of irrevocable operating lease
1 year after balance date 18,853,170.69 20,414,436.47
2 year after balance date 10,327,948.62 10,962,573.65
3 year after balance date 8,850,987.35 5,382,286.87
Future years 2,799,344.23 4,007,824.20
Total 40,831,450.89 40,767,121.19
2. Contingency
1. Contingent liabilities and its financial effect arising from unsettled litigation or arbitration
①Contingent liabilities and financial effects caused by pending litigation or arbitration
On 4 February 2013, the Company’s subsidiary Kunshan Konka signed Purchase Order
(Hereinafter referred to as "PO") with Italy customer MOTOM ELECTRONICS GROUP
SPA (Hereinafter referred to as the "MEG").
The PO payment was 90 days L/C, L/C amount was $1.29744 million. MEG opened L/C
which Kunshan Konka was beneficiary on 26 February due to the problems of delivery time
and related items, after the agreement of both parties, MEG respectively opened two
revisions of L/C on 11 Mar. and 13 May. Then the Kunshan Konka entrusted Ningbo
United International Freight Forwarding Co., Ltd. (Hereinafter referred to as the “Ningbo
United”) to book space, and Ningbo United signed and issued the carrier’s bill of lading of
Econolines Ltd. (Hereinafter referred to as the “Econolines” (No.
NGB1305005\GNB1305016\NGB1305034), the whole case handover with Container
delivery conditions of CY TO CY) on 5, 14 and 19 May 2013. According to the verification,
after the goods arrived to the port of destination in Italy, the empty cargo container had
returned to the shipping company, but the full set of original bill of lading was still in
Kunshan Konka; Ningbo United and Econolines’s behaviors of delivery of goods without
171
Konka Group Co., Ltd. Semi-annual Report 2016
original bill of lading had violated the “maritime law” and other relevant laws and
regulations, Kunshan Konka had right to require Econolines return the goods. The total
amount of the goods was $ 1,214,780.04, equivalents RMB7,507,340.65, MEG received the
goods but not pay the full amount of the goods to Kunshan Konka, the amount in arrear
reached $1,100,000.00.
Kunshan Konka entrusted Shanghai Jiajia Law firm to file a suit from Shanghai Maritime
Court, requested Ningbo United and Econolines compensate for the loss of payment for
goods USD1,099,423.52 and its interest; meanwhile bear the fees for acceptance and
property preservation application fee on 15 August 2013. On 26 May 2014, Shanghai
Maritime Court made the first-instance judgment, which ordered Ningbo United and
Econolines compensate for the loss of payment for goods USD1,099,423.52 and its interest,
and bear the fees for acceptance and property preservation application fee In Jun. 2014
Ningbo United appealed to the Shanghai Higher People's Court against its sentence. On 24
Nov. 2014, the second trial had been made. During the second trial, the Kunshan Konka
indicated that as of 31 May 2015, the company had received EUR100000 payment from the
oversea receivers which would be deducted from the payment of goods of United and
Econolines. Kunshan Konka were willing to give up the interest part of EUR100000
discounted by bank rate on the date of the second trial basing on USD1,099,423.52 in the
first trial. On 16 Jul. 2015, Shanghai Higher People’s Court made the second-instance
judgment, which ordered Econolines compensate for the loss of payment for goods USD990,
253.50 (discounted by the middle of the euro against the dollar exchange rate of People's
Bank of China on 16 July 2015) and bear the fees for acceptance, United bear the joint
liability. Execution stage, Kunshan Konka received RMB592, 000 and USD17475 of
compulsory execution amount of Ningbo United by Ningbo Maritime Court. As of 30 June
2016, Kunshan Konka receivable of debt right was USD 855,378.57.
②The Company’s subsidiary Nanchang Branch applied for property preservation for Tengda
Electric Appliance Co., Ltd. due to the contract dispute. After the judgment from Nanchang
Intermediate People’s Court, RMB9, 918,725.43 of Tengda Electric Appliance Co., Ltd. was
frozen and five houses were closed down. The follow-up in line with the actual situation, the
Company conduct additional interest change to the original prosecuting amount, the
additional amount was RM595, 123.50, the court had accepted. Tengda Electric Appliance
Co., Ltd. refused the result of judgment and filed a suit to Jiangxi Province Municipal Senior
People’s Court. On 29 February 2016, the judgment of Jiangxi Province Municipal Senior
People’s Court was affirming the original judgment. As of 30 June 2016, Nanchang Branch
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Konka Group Co., Ltd. Semi-annual Report 2016
had debt receivable of RMB8, 223,935.99 to Tengda Electric Appliance Co., Ltd..
On 1 March 2016, Nanchang Branch received notice from Xinyu Municipal Senior People's
Court accepting case of bankruptcy liquidation of Tengda Electric Appliance Co., Ltd. and
referred management personnel to conduct the process and on 16 March, received
suspending trial of case. So far, debt right application information of Nanchang Branch had
submitted to the bankruptcy management personnel.
③ 3 November 2015, the Company, Shenzhen Konka Yishijie Commercial Display Co.,
Ltd. (Hereinafter named as Yishijie) together with Guangdong Shunwei Precise Plastics Co.,
Ltd.( Hereinafter named as Shunwei Company) signed Agreement of Equity Transfer, the
agreement upon the Company planned to transfer 60% equity of Yishijie to Shunwei
Company, which agreed that Shunwei Company accepted the aforesaid equity and tentatively
pricing the equity transfer as RMB72 million, meanwhile, the other shareholder of Yishiye,
Shenzhen Konka Yi Capital Investment Cooperation Enterprise, Agreement of Equity
Transfer Intention signed by Yishijie and Shunwei Company had made agreement to the Yi
Capital transfer its holding 15% equity of Yishijie to Shunwei Company, the Company
signed agreement with Shunwei Company which agreed that, Shunwei Company shall
conduct banner, paying the guarantee and signing the formal agreement in line with the
agreement and listed announcement, if violate a treaty, the Company losses shall be
repaid( such as B party listing cost and listing prospective earnings).
In January 2016, the Company in line with the agreement, listed and sold its holding of 60%
equity of Yishijie on Shanghai United Assets and Equity Exchange. The listing period was
from 29 January 2016 to 2 March 2016. As of 26 February 2016, Shunwei Company had not
submitted the equity transferee application, the Company sent Communication Letter to urge
Shunwei Company to deal with the relevant application procedure. On 29 February 2016,
Shunwei Company sent Reply Letter to the Company, which declared that it decided not to
submit the application of transferee, and hope to release agreement, Then, Shunwei refused
to bare the losses of the Company, and the dispute incurred. On 2 March, 2016, at the
expiration of listing period, Shunwei Company did not submit the application as agreed. On
30 May 2016, the Company and Yishijie filed a suit to the Shenzhen Nanshan District
People’s Court upon the illegal behaviors of Shunwei Company.
(2) Possible liabilities formed for providing debt guarantee for other institutions and their
financial impacts
The Company applied to China Construction Bank, Shenzhen Branch for a credit line of
USD30.90 million (about RMB188.9102 million) on Wednesday, September 17, 2014 and
China Construction Bank (Asia) Co., Ltd. provided a short-term loan of USD29.97million to
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Konka Group Co., Ltd. Semi-annual Report 2016
Hong Kong Konka on September 17, 2014, and the guarantee period was from Wednesday,
September 17, 2014 to October 17, 2016.
The Company signed a Credit Line Contract with the serial number of BJ2014Z241JTBB-1
with China Construction Bank, Shenzhen Branch on December 8, 2014, and provided a
credit guarantee with a line of RMB200million for Anhui Konka Electronics Co., Ltd, and its
guarantee term was from December 8, 2014 to December 7, 2017. The line is mainly used by
Anhui Konka Electronics Co., Ltd. for the purposes of daily operating businesses such as
opening and acceptance of letters of credit and acquiring financial loans from banks. By June
30, 2016, RMB0.00 had been used in this line. Chuzhou State-owned Assets Operation Co.,
Ltd, a minority stockholder of Anhui Konka provided 22% of counter guarantee of the line
guaranteed by the Company.
The Company provided a credit guarantee with a line of RMB300million for Anhui
KonkaTongchuang Household Appliances Co., Ltd., and its guarantee term was from
December 8, 2014 to December 7, 2017. The line is mainly used by Anhui
KonkaTongchuang Household Appliances Co., Ltd. for the purposes of daily operating
businesses such as opening and acceptance of letters of credit and acquiring financial loans
from banks. By June 30, 2016, RMB69,250,000.00 had been used in this line.
ChuzhouTongchuang Investment and Construction Co., Ltd., a minority stockholder of
Toptry Electric Appliance Co., Ltd provided 50% of counter guarantee of the line guaranteed
by the Company.
The Company signed a Credit Line Contract with the serial number of BJ2014Z241JTBB-2
with China Construction Bank, Shenzhen Branch on December 8, 2014, and provided a
credit guarantee with a line of RMB 300 million for KunshanKonka Electronic Co., Ltd., and
its guarantee term was from December 8, 2014 to December 7, 2017. The line is mainly used
by KunshanKonka Electronic Co., Ltd. for the purposes of daily operating such as acquiring
financial loans from banks. By June 30, 2016, the amount in this line had been used.
The Company applied to Bank of China, Shenzhen Branch for a comprehensive credit line of
RMB5.3 billion on April 21, 2015, and provided a credit guarantee of RMB500 million for
Shenzhen Konka Telecommunications Technology Co., Ltd. with its comprehensive credit
line of RMB500 million on April 22, 2015, and its guarantee term was from April 22, 2015 to
April 21, 2016.After the expiration of the guarantee term, the Company signed a Supplement
Agreement of Credit Line with Bank of China, Shenzhen Branch for an extension of
guarantee term, which became from 22 April 2016 to 17 June 2016. And on 13 July 2016,the
Company signed a Supplement Agreement of Credit Line with Bank of China, Shenzhen
Branch for an extension of guarantee term again, which became from 13 July 2016 to 16
September 2016. The credit line is mainly used for the purposes of daily operating businesses
such as acquiring financial loans from banks. By June 30, 2016, RMB156, 891,604.85 in this
line had been used.
The Company applied to Bank of China Limited, Shenzhen Nanshan Branch, for a credit line
by letter of guarantee of RMB433 million on November 10, 2015, and China Construction
Bank (Asia) Co., Ltd. provided a short-term loan of RMB420 million to Hongkong Konka
and its guarantee term was from November 23, 2015 to August 26, 2016.
XIII. Events after balance sheet date
1. On 7 July 2016, the Company held the 19th meeting of the 8th Board of Directors; the
meeting reviewed and approved that the Company investing USD765000 and together with
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Konka Group Co., Ltd. Semi-annual Report 2016
nature person Wu Guoren, XiaoYongsong set up Zhongkang Supply Chain Management Co.,
Ltd., the registration capital of the company was USD1.5 million, of which Konka Group
invested USD765000, held 51% equity, Wu Guoren invested cash USD375000, held 25%
equity, Xiao Yongsong invested USD360000, held 24% equity. As of the date of financial
report issued, the joint venture company had established, but not yet registered.
2. On 7 July, the Company held the 19th meeting of the 8th Board of Directors; the meeting
decided that the Company invested RMB4 million together with Guoguang Eastern Network
(Beijing) Co., Ltd. and Zhongxin New Technology Group Co., Ltd. set up joint venture
Company, the registration capital was RMB20 million, of which, Konka Group invested
RMB4 million, held 20% equity, Guoguang Eastern invested RMB12 million, held 60%
equity, and Zhongxin Technology invested cash of RMB4 million, held 20% equity, As of the
date of financial report issued, the joint venture company had not been established.
XIV. Other significant events
1. Lease
(1) The closing original price accumulated depreciation and accumulated impairment
provision of all kinds of the rented fixed assets.
Particulars of the financing lease of the rented fixed assets, please refer to notes VI, 14, (3)
(2) Minimum lease payment will be paid in future
The minimum lease
The remaining lease term
payment
Within 1 year (including 1 year) 123,076.96
Over 1 year and within 2 years (including 2 year) 41,025.60
Total 164,102.56
(3) The balance of unrecognized financing charges, and the method used to allocate the
unrecognized financing charges.
As of the balance sheet date, the balance of unrecognized financing charges was RMB0.00;
amortization method is the actual interest rate method.
(4) Category of fixed assets leased by operating lease, please refer to note VI, 14 (4)
2. The Company's subsidiary Mudajiang Konka. Changshu Konka had finished liquidation.
3. The Company’s subsidiary Chongqing Qingjia conducted liquidation after the complement
of land purchasing and storage.
4 In order to meet the need of current business development of the Company and reduce the
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financing cost, the Company held12th meeting of 8th Board of Directors on 2 Mar. 2016, the
meeting reviewed and approved the Proposal on Application for the Entrusted Loan Amount
from OCT Group Co., Ltd. The meeting agreed that the Company could apply entrust loans
with amount no more than RMB5 billion from OCT Group Co., Ltd. in 2016,which
withdrawn by stages, and the Company can sign entrust loan contract with bank and OCT
Group Co., Ltd. within the amount of RMB5 billion. The meeting also agreed that the interest
rate of entrust loan was lower than the benchmark interest rate for loan of People's Bank of
China at same period. The transaction involving the interest no more than RMB0.2 billion the
Company should pay to OCT Group Co., Ltd. within one year.
As for the aforesaid loan amount, the Company will in line with the actual demand of capital,
and after reasonably measuring the capital cost, recognized the actual loan amount prudently.
5. On 6 April 2016, after the research of 13th Meeting of the 8th Board of Directors, the
meeting decided that the subsidiary of the Company Yishijie invested RMB 5 million to set
up Shenzhen Kangqiao Easy Chain Technology Co., Ltd., held 100% equity, As of the date of
financial report issued, the joint venture company had established, but not yet registered, the
Yishijie had invested RMB5000
6. On 15 June 2016,the Company held 18th Meeting of the 8th Board of Directors, the meeting
decided that the Company invested RMB1.05 million together with Beijing Youpeng Pule
Technology Co., Ltd. set up joint venture company, of which Konka Group invested
RMB1.05 million, held 35% equity, Beijing Youpeng Pule invested RMB1.95 million, held
65% equity. As of the issue date financial statements, the joint venture company hadn't been set
up.
7. Plan of non-public issue of stock
The Company plan to prepare the non-public issue of shares. Now the Company was
negotiating with the potential objects upon the amount of non-public issue of stock, actively
preparing the materials and sparing no effort to promote the relevant work. The relevant
events were under processing and existing uncertainty.
XV. Notes of main items in the financial statements of the Company
1. Accounts receivable
(1) Accounts receivable disclosed by category
Category Closing balance
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Konka Group Co., Ltd. Semi-annual Report 2016
Book balance Bad debt provision
Proportion Proportion Book value
Amount (%) Amount (%)
Accounts receivable with
insignificant single amount
for which bad debt — — — — —
provision separately
accrued
Accounts receivable
withdrawal of bad debt
provision of by credit risks
characteristics:
Group 1: aging group 1,162,961,905.11 59.30 202,181,435.83 17.39 960,780,469.28
Group 2: related party
766,250,582.66 39.07 — — 766,250,582.66
group
Subtotal of groups 1,929,212,487.77 98.37 202,181,435.83 10.48 1,727,031,051.94
Accounts receivable with
insignificant single amount
for which bad debt 31,921,351.77 1.63 23,745,801.52 74.39 8,175,550.25
provision separately
accrued
Total 1,961,133,839.54 100.00 225,927,237.35 11.52 1,735,206,602.19
(Continued)
Opening balance
Book balance Bad debt provision
Category
Proportion( Proportion( Book value
Amount %) Amount %)
Accounts receivable with
insignificant single amount
— — — — —
for which bad debt provision
separately accrued
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Opening balance
Book balance Bad debt provision
Category
Proportion( Proportion( Book value
Amount %) Amount %)
Accounts receivable
withdrawal of bad debt
provision of by credit risks
characteristics:
Group 1: aging group 1,126,362,276.00 68.50 202,746,563.72 18.00 923,615,712.28
Group 2: related party group 486,174,280.87 29.57 — — 486,174,280.87
Subtotal of groups 1,612,536,556.87 98.06 202,746,563.72 12.57 1,409,789,993.15
Accounts receivable with
insignificant single amount
31,826,201.74 1.94 23,700,918.33 74.47 8,125,283.41
for which bad debt provision
separately accrued
Total 1,644,362,758.61 100.00 226,447,482.05 13.77 1,417,915,276.56
① In the groups, accounts receivable adopting aging analysis method to withdraw bad debt
provision:
Closing balance
Aging
Account receivable Bad debt provision Withdrawal proportion (%)
Within 1 year 959,857,847.60 19,165,753.81 2.00
1 to 2 years 14,186,252.65 709,312.64 5.00
2 to 3 years 4,150,606.57 830,121.32 20.00
3 to 4 years 6,581,900.47 3,290,950.24 50.00
4 to 5 years — — 50.00
Over 5 years 178,185,297.82 178,185,297.82 100.00
Total 1,162,961,905.11 202,181,435.83
② In the groups, accounts receivable adopting other methods to withdraw bad debt
provision:
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Closing balance
Name of the group
Account receivable Bad debt provision Withdrawal proportion (%)
Related party group 766,250,582.66 — —
Total 766,250,582.66 — —
(2) Reversed or recovered in the Report Period
The withdrawn bad debt provision of Reporting Period was of RMB520, 244.70.
(3) Top 5 of the closing balance of the accounts receivable collected according to the
arrears party
The total amount of top five of account receivable of closing balance collected by arrears
party was RMB784, 409,655.48, 40.00% of total closing balance of account receivable,
the relevant closing balance of bad debt provision withdrawn was RMB11, 289,845.42.
2. Other accounts receivable
(1) Other accounts receivable disclosed by category
Closing balance
Book balance Bad debt provision
Category
Proportion Book value
Amount Proportion(%) Amount (%)
Other accounts receivable
with insignificant single
173,061,959.33 13.32 161,250,302.55 93.17 11,811,656.78
amount for which bad debt
provision separately accrued
Other accounts receivable
withdrawn bad debt
— — — — —
provision according to credit
risks characteristics
Group 1: aging group 66,480,823.25 5.11 20,786,919.32 31.27 45,693,903.93
Group 2: related party group 1,060,118,132.99 81.57 0.00 1,060,118,132.99
Subtotal of groups 1,126,598,956.24 86.68 20,786,919.32 1.85 1,105,812,036.92
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Konka Group Co., Ltd. Semi-annual Report 2016
Closing balance
Book balance Bad debt provision
Category
Proportion Book value
Amount Proportion(%) Amount (%)
Other accounts receivable
with insignificant single
— — — — —
amount for which bad debt
provision separately accrued
Total 1,299,660,915.57 100.00 182,037,221.87 14.01 1,117,623,693.70
(Continued)
Opening balance
Book balance Bad debt provision
Category
Proportion( Book value
Amount Proportion(%) Amount %)
Other accounts receivable
with insignificant single
173,028,147.62 15.48 160,278,852.98 92.63 12,749,294.64
amount for which bad debt
provision separately accrued
Other accounts receivable
withdrawn bad debt provision
— — — — —
according to credit risks
characteristics
Group 1: aging group 75,906,726.27 6.79 19,005,412.74 31.11 56,901,313.53
Group 2: related party group 868,797,189.91 77.73 — — 868,797,189.91
Subtotal of groups 944,703,916.18 84.52 19,005,412.74 2.01 925,698,503.44
Other accounts receivable
with insignificant single
— — — — —
amount for which bad debt
provision separately accrued
Total 1,117,732,063.80 100.00 179,284,265.72 16.04 938,447,798.08
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① Other receivable with single significant amount and withdrawal bad debt provision
separately at end of period：
Closing balance
Other accounts receivable (unit） Other accounts Withdrawal
Bad debt provision Withdrawal reason
receivable proportion (%)
Irrecoverable due
Energy saving subsidy 141,549,150.00 141,549,150.00 100.00 to policy changes
Chongqng Konka Auto Electronic Bankruptcy and
Company 13,396,856.82 13,396,856.82 100.00 liquidation
Shenzhen Konka Video & Communication Assessment
Systems Engineering Co., Ltd. 18,115,952.51 6,304,295.73 34.80 impairment
Total 173,061,959.33 161,250,302.55 93.17
② In the groups, other accounts receivable adopting aging analysis method to withdraw bad
debt provision:
Closing balance
Aging
Other accounts receivable Bad debt provision Withdrawal proportion (%)
Within 1 year 17,993,808.02 359,915.93 2.00
1 to 2 years 13,030,320.40 651,516.02 5.00
2 to 3 years 16,439,531.20 3,287,906.24 20.00
3 to 4 years 2,928,420.20 1,464,210.10 50.00
4 to 5 years 2,130,744.80 1,065,372.40 50.00
Over 5 years 13,957,998.63 13,957,998.63 100.00
Total 66,480,823.25 20,786,919.32
③ In the groups, accounts receivable adopting other methods to withdraw bad debt
provision:
Closing balance
Name of the group
Account receivable Bad debt provision Withdrawal proportion (%)
Related party group 1,060,118,132.99 — —
Total 1,060,118,132.99 — —
(2) Bad debt provision withdrawal, reversed or recovered in the Report Period
The withdrawal amount of the bad debt provision during the Reporting Period was of RMB
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Konka Group Co., Ltd. Semi-annual Report 2016
2,752,956.14; the amount of the reversed or collected part during the Reporting Period was
of RMB000.
(3) Top 5 of the closing balance of the other accounts receivable collected according to the
arrears party
Proportion (%) Bad debt provision
Name of the entity Nature Closing balance Aging
Closing balance
Energy
1-2years, 2-3
Customer 1 saving 141,549,150.00 10.89 141,549,150.00
years
subsidy
Intercourse
Customer 2 116,212,947.56 Within 1 year 8.94
funds
Intercourse
Customer 3 103,704,436.89 Within 1 year 7.98
funds
Intercourse
Customer 4 80,213,800.38 Within 1 year 6.17
funds
Intercourse
Customer 5 74,056,032.30 Within 1 year 5.70
funds
Total 515,736,367.13 39.68 141,549,150.00
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3. Long-term equity investment
(1) Long-term equity investment
Closing balance Opening balance
Item Depreciation
Book balance Book value Book balance Depreciation reserves Book value
reserves
Investment to the
1,631,742,835.91 77,294,984.69 1,554,447,851.22 1,623,726,835.91 77,294,984.69 1,546,431,851.22
subsidiary
Investment to
joint ventures and
88,208,427.13 — 88,208,427.13 74,763,267.00 — 74,763,267.00
associated
enterprises
Total 1,719,951,263.04 77,294,984.69 1,642,656,278.35 1,698,490,102.91 77,294,984.69 1,621,195,118.22
(2) Investment to the subsidiary
Withdrawn impairment
Closing balance of
Investee Opening balance Increase Decrease Closing balance provision in the Reporting
impairment provision
Period
Mudangjiang electric 36,000,000.00
36,000,000.00 36,000,000.00 —
appliances
Anhui Konka 122,780,937.98 122,780,937.98 — —
Dongguan Konka 274,783,988.91 274,783,988.91 — —
Hong Kong Konka 781,828.61 781,828.61 — —
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Konka Group Co., Ltd. Semi-annual Report 2016
Withdrawn impairment
Closing balance of
Investee Opening balance Increase Decrease Closing balance provision in the Reporting
impairment provision
Period
Konka Europe 261,482.50 261,482.50 — —
Nanhai Konka 0.00 — —
Kunshan Konka 350,000,000.00 350,000,000.00 — —
Plasthetics 4,655,000.00 4,655,000.00 — —
Konka Household
10,732,485.69 10,732,485.69 — 10,732,484.69
Appliances
Telecommunication
90,000,000.00 90,000,000.00 — —
Technology
Konka America 8,062,500.00 8,062,500.00 — 8,062,500.00
Information Network 22,500,000.00 22,500,000.00 — 22,500,000.00
Shushida 31,500,000.00 31,500,000.00 — —
Chongqing Electronic 0.00 — —
Fittings Technology 48,750,000.00 48,750,000.00 — —
Kunshan Kangsheng 350,000,000.00 350,000,000.00 — —
Anhui Tongchuang 69,702,612.22 69,702,612.22 — —
Konka Optoelectronic 10,000,000.00 10,000,000.00 — —
Wankaida 10,000,000.00 10,000,000.00 — —
Beijing Konka 30,000,000.00 30,000,000.00 — —
Shushida Logistics 10,000,000.00 10,000,000.00 — —
Konka E-display 7,200,000.00 7,200,000.00 — —
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Konka Group Co., Ltd. Semi-annual Report 2016
Withdrawn impairment
Closing balance of
Investee Opening balance Increase Decrease Closing balance provision in the Reporting
impairment provision
Period
Kaikai Shijie 16,000,000.00 16,000,000.00 — —
Kangqiao Jiacheng 112,000,000.00 112,000,000.00 — —
Commercial
2,916,000.00 2,916,000.00 5,832,000.00 — —
Technology
Mobile Internet 5,100,000.00 5,100,000.00 10,200,000.00 — —
Total 1,623,726,835.91 8,016,000.00 — 1,631,742,835.91 — 77,294,984.69
(3) Investment to joint ventures
Increase/decrease in Reporting Period
Investment profit and loss
Investee Opening balance Additional Negative Adjustment of other
recognized under the equity Other equity changes
investment investment comprehensive income
method
Shanghai Konka Green
Science & Technology 68,250,273.03 3,708,640.88 642,894.96 2,689,549.20
Co., Ltd.
Zhuhai Jinsu Plastic Co.,
6,512,993.97 331,516.41
Ltd.
Konka Intelligent Electric
6,000,000.00 72,558.68
Appliance
Total 74,763,267.00 6,000,000.00 — 4,112,715.97 642,894.96 2,689,549.20
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Konka Group Co., Ltd. Semi-annual Report 2016
(Continued)
Increase/decrease in Reporting Period
Closing balance of impairment
Investee Withdrawn impairment Closing balance
Declaration of cash dividends or profits Others provision
provision
Shanghai Konka
Green Science & 75,291,358.07
Technology Co., Ltd.
Zhuhai Jinsu Plastic
6,844,510.38 —
Co., Ltd.
Konka Intelligent
6,072,558.68
Electric Appliance
Total — — — 88,208,427.13 —
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Konka Group Co., Ltd. Semi-annual Report 2016
4. Revenue and Cost of Sales
(1) Revenue and Cost of Sales
Reporting Period Same period of last year
Item
Sales revenue Cost of sales Sales revenue Cost of sales
Main operations 4,302,017,760.17 3,585,433,823.43 5,206,152,132.20 4,497,471,865.49
Other operations 2,143,962,777.99 2,053,325,304.25 2,583,414,002.88 2,541,927,133.83
Total 6,445,980,538.16 5,638,759,127.68 7,789,566,135.08 7,039,398,999.32
(2) Main operations (Classified by industry)
Reporting Period Same period of last year
Industry
Operation revenue Operation cost Operation revenue Operation cost
Electronic industry 4,302,017,760.17 3,585,433,823.43 5,206,152,132.20 4,497,471,865.49
Total 4,302,017,760.17 3,585,433,823.43 5,206,152,132.20 4,497,471,865.49
(3) Main operations (Classified by product)
Reporting Period Same period of last year
Product
Operation revenue Operation cost Operation revenue Operation cost
Color TV business 4,081,763,878.87 3,396,084,238.81 4,941,412,033.28 4,263,991,650.08
Consumer appliances
175,160,620.74 148,984,332.14 257,995,693.55 226,820,496.00
business
Others 45,093,260.56 40,365,252.48 6,744,405.37 6,659,719.41
Total 4,302,017,760.17 3,585,433,823.43 5,206,152,132.20 4,497,471,865.49
(4) Main operations (Classified by area)
Reporting Period Same period of last year
Area
Operation revenue Operation cost Operation revenue Operation cost
Domestic sales 3,760,982,130.37 3,052,781,690.91 4,482,238,335.25 3,820,646,881.53
Overseas sales 541,035,629.80 532,652,132.52 723,913,796.95 676,824,983.96
Total 4,302,017,760.17 3,585,433,823.43 5,206,152,132.20 4,497,471,865.49
(5) The revenue of sales from the top five customers
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Konka Group Co., Ltd. Semi-annual Report 2016
Period Main operation revenue Proportion of total business revenue
1,401,966,640.64 (%) 21.75
January-June 2016
1,076,825,404.57 13.82
January-June 2015
5. Investment income
Item Reporting Period Same period of last year
Dividend or profits measured by cost method declare to distribute
1,310,000.00 2,014,898.95
by investment entity
Long-term equity investment income accounted by equity method 4,112,715.97 -1,682,308.76
Investment income arising from disposal of long-term equity
-491,110.76
investments
Investment income received from holding of available-for-sale
2,153,880.21
financial assets
Investment income received from disposal of available-for-sale
15,380.40
financial assets
Income from trust management 15,189,925.75 37,377,437.29
Total 20,628,022.12 39,372,796.93
188
Konka Group Co., Ltd. Semi-annual Report 2016
XVI. Supplementary materials
1. Items and amounts of extraordinary gains and losses
Item Amount
Gains/losses on the disposal of non-current assets 5,604,580.65
Tax rebates, reductions or exemptions due to approval beyond authority or the lack of official
0.00
approval documents
Government grants recognized in the current period, except for those acquired in the ordinary course
51,949,430.12
of business or granted at certain quotas or amounts according to the government RMB000.ees for acc
Capital occupation charges on non-financial enterprises that are recorded into current gains and losses 0.00
Gains due to that the investment costs for the Company to obtain subsidiaries, associates and joint
ventures are lower than the enjoyable fair value of the identifiable net assets of the investees when 0.00
making the investments
Gain/loss on non-monetary asset swap 0.00
Gain/loss on entrusting others with investments or asset management 8,514,982.48
Asset impairment provisions due to acts of God such as natural disasters 0.00
Gains and losses from debt restructuring 0.00
Expenses on business reorganization, such as expenses on staff arrangements, integration, etc. 0.00
Gain/loss on the part over the fair value due to transactions with distinctly unfair prices 0.00
Current net gains and losses of subsidiaries acquired in business combination under the same control from
0.00
period-begin to combination date
Profit and loss from contingencies irrelative to the normal business operations of company 0.00
Gain/loss from change of fair value of transactional assets and liabilities, and investment gains from
disposal of transactional financial assets and liabilities and available-for-sale financial assets, other -18,141,655.39
than valid hedging related to the Company and normal businesses
Depreciation reserves returns of receivables with separate depreciation test 72,735.80
Gain/loss on entrustment loans 707,777.78
Gain/loss on change of the fair value of investing real estate of which the subsequent measurement is
0.00
carried out adopting the fair value method
Effect on current gains/losses when a one-off adjustment is made to current gains/losses according to
0.00
requirements of taxation, accounting and other relevant laws and regulations
189
Konka Group Co., Ltd. Semi-annual Report 2016
Item Amount
Custody fee income when entrusted with operation 0.00
Other non-operating income and expenses other than the above 11,582,662.03
Project confirmed with the definition of non-recurring gains and losses and losses 0.00
Subtotal 60,290,513.47
Income tax effects 13,313,484.68
Minority interests effects (after tax) 5,406,144.83
Total 41,570,883.96
Notes: the number “+” among the non-current gains and losses items refers to profits and revenues,
while “-”referred to losses or expenditure.
The recognition of the non-current gains and losses items was executed according to the regulations
of No.1 of the Information Disclosure Explanatory Notice of the Companies Public Offering
Securities-Non-current Gains and losses (Z-J-H-Announcement [2008] No. 43) .
The amount of leased assets
Item Reason
involved
Closely related to the normal operating business of the Company
which met with the regulations of the state policies as well as
Software tax returns 84,594,956.03
constantly enjoyed the governmental subsidies according to
certain standard quotas or quantities
Total 84,594,956.03
2. Return on equity and earnings per share
EPS（Yuan/share）
Profit as of Reporting Period Weighted average ROE (%)
Basic EPS Diluted EPS
Net profit attributable to
common shareholders of the 0.46 0.0053 0.0053
Company
Net profits attributed to the
common shareholders after
-1.02 -0.0119 -0.0119
deducting the non-current gains
and losses
190
Konka Group Co., Ltd. Semi-annual Report 2016
Notes: (1) The corresponding ROEWA of the net profits attributed the common shareholders of the
Company =12,834,736.76/(2,814,382,870.81-15,158,638.24/2+2,689,549.2*1/6)
The corresponding ROEWA of the net profits attributed the common shareholders after deducting
the non-current gains and losses=
(12,834,736.76-41,570,883.96)/(2,814,382,870.81-15,158,638.24/2+2,689,549.2*1/6)
191
Konka Group Co., Ltd. Semi-annual Report 2016
Section X Documents Available for Reference
I Financial statements signed and sealed by the head of the Company, the accounting head for the
Report, and the head of the accounting organ (the head of accounting);
II Originals of all the announcements and documents that the Company disclosed on the newspaper
designated by the CSRC in the Reporting Period; and
III Other relevant materials.
The Board of Directors
Konka Group Co., Ltd.
29 August 2016
192
