Konka Group Co., Ltd. Annual Report 2018
KONKA GROUP CO., LTD.
ANNUAL REPORT 2018
2019-22
March 2019
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Konka Group Co., Ltd. Annual Report 2018
Part I Important Notes, Table of Contents and Definitions
The Board of Directors (or the “Board”), the Supervisory Committee as well as the directors,
supervisors and senior management of Konka Group Co., Ltd. (hereinafter referred to as the
“Company”) hereby guarantee the factuality, accuracy and completeness of the contents of
this Report and its summary, and shall be jointly and severally liable for any
misrepresentations, misleading statements or material omissions therein.
Liu Fengxi, the Company’s legal representative, Li Chunlei, the Company’s Chief Financial
Officer (CFO), and Feng Junxiu, head of the Company’s financial department (equivalent to
financial manager) hereby guarantee that the Financial Statements carried in this Report are
factual, accurate and complete.
All the Company’s directors have attended the Board meeting for the review of this Report
and its summary.
Any plans for the future or other forward-looking statements mentioned in this Report and its
summary shall NOT be considered as absolute promises of the Company to investors.
Therefore, investors are reminded to exercise caution when making investment decisions.
The Board has approved a final dividend plan as follows: based on the 2,407,945,408 shares, a
cash dividend of RMB1.00 (tax inclusive) per 10 shares is to be distributed to the shareholders,
with no bonus issue from either profit or capital reserves.
This Report and its summary have been prepared in both Chinese and English. Should there
be any discrepancies or misunderstandings between the two versions, the Chinese versions
shall prevail.
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Konka Group Co., Ltd. Annual Report 2018
Table of Contents
Part I Important Notes, Table of Contents and Definitions........................................................... 2
Part II Corporate Information and Key Financial Information................................................... 7
Part III Business Summary............................................................................................................. 12
Part IV Operating Performance Discussion and Analysis............................................................15
Part V Significant Events.................................................................................................................45
Part VI Share Changes and Shareholder Information................................................................. 75
Part VII Preferred Shares................................................................................................................83
Part VIII Directors, Supervisors, Senior Management and Staff................................................84
Part IX Corporate Governance.......................................................................................................96
Part X Corporate Bonds................................................................................................................ 108
Part XI Financial Statements........................................................................................................ 112
Part XII Documents Available for Reference...............................................................................390
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Konka Group Co., Ltd. Annual Report 2018
Definitions
Term Definition
The “Company”, the “Group”, “Konka Group” or Konka Group Co., Ltd. and its consolidated subsidiaries, except where the
“we” context otherwise requires
Konka E-display Shenzhen Konka E-display Co., Ltd.
E-display Service Shenzhen E-display Service Co., Ltd.
Kangqiao Easy Chain Shenzhen Kangqiao Easy Chain Technology Co., Ltd.
Konka Ventures Konka Ventures Development (Shenzhen) Co., Ltd.
Yantai Konka Yantai Konka Healthcare Enterprise Service Co., Ltd.
Chengdu Konka Incubator Chengdu Konka Incubator Management Co., Ltd.
Chengdu Anren Chengdu Anren Konka Cultural and Creative Incubator Management Co., Ltd.
Konka Enterprise Service Guiyang Konka Enterprise Service Co., Ltd.
Chuanghui Smart Nanjing Chuanghui Smart Technology Co., Ltd.
Konka Enterprise Management Guizhou Konka Enterprise Management Service Co., Ltd.
Yibin Konka Incubator Yibin Konka Incubator Management Co., Ltd.
Cross-Border Technological Innovation Shenzhen Konka Cross-Border Technological Innovation Service Co., Ltd.
Anhui Konka Anhui Konka Electronic Co., Ltd.
Kangzhi Trade Anhui Kangzhi Trade Co., Ltd.
Konka Factoring Konka Factoring (Shenzhen) Co., Ltd.
Youshi Kangrong Youshi Kangrong Culture Communication Co., Ltd.
Chuzhou Konka TID Chuzhou Konka Technology & Industry Development Co., Ltd.
Konka Unifortune Shenzhen Konka Unifortune Supply Chain Management Co., Ltd.
Jiali International Jiali International (Hong Kong) Limited
Wankaida Shenzhen Wankaida Science and Technology Co., Ltd.
Dongguan Konka Dongguan Konka Electronic Co., Ltd.
Telecommunication Technology Shenzhen Konka Telecommunications Technology Co., Ltd.
Konka Electrical Appliances Shenzhen Konka Electrical Appliances Co., Ltd.
Mudanjiang Appliances Mudanjiang Arctic Ocean Appliances Co., Ltd.
Konka Europe Konka (Europe) Co., Ltd.
Commercial System Technology Shenzhen Konka Commercial System Technology Co., Ltd.
Konka Electrical Appliances Shenzhen Konka Electrical Appliances Co., Ltd.
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Konka Group Co., Ltd. Annual Report 2018
Konka Material Hainan Konka Material Technology Co., Ltd.
Shushida Logistics Shenzhen Shushida Logistics Service Co., Ltd.
Mobile Interconnection Shenzhen Konka Mobile Interconnection Technology Co., Ltd.
Sichuan Konka Sichuan Konka Smart terminal Technology Co., Ltd
Anhui Tongchuang Anhui Konka Tongchuang Electrical Appliances Co., Ltd.
Anhui Electrical Appliance Anhui Konka Electrical Appliance Technology Co., Ltd.
Frestec Refrigeration Henan Frestec Refrigeration Appliance Co., Ltd.
Frestec Electrical Appliances Henan Frestec Electrical Appliances Co., Ltd.
Frestec Household Appliances Henan Frestec Household Appliances Co., Ltd.
Konka Pengrun Shenzhen Konka Pengrun Technology & Industry Co., Ltd.
Jiaxin Technology Jiaxin Technology Co., Ltd.
E3info E3info (Hainan) Technology Co., Ltd.
Yifang Technology Shenzhen Konka Yifang Technology Co., Ltd.
Dongguan Packing Dongguan Konka Packing Materials Co., Ltd.
E2info Shenzhen E2info Network Technology Co., Ltd.
Beijing Konka Electronic Beijing Konka Electronic Co., Ltd.
Konka Leasing Tianjin Konka Leasing Co., Ltd.
Fittings Technology Shenzhen Konka Electronic Fittings Technology Co., Ltd.
Boluo Konka Precision Boluo Konka Precision Technology Co., Ltd.
Xiamen Dalong Xiamen Dalong Trading Co., Ltd.
Boluo Konka Boluo Konka PCB Co., Ltd.
Chongqing Qingjia Chongqing Qingjia Electronics Co., Ltd.
Kunshan Kangsheng Kunshan Kangsheng Investment Development Co., Ltd.
Kaikai Shijie Anhui Kaikai Shijie E-commerce Co., Ltd.
Hong Kong Konka Hong Kong Konka Co., Ltd.
Konka Electrical Appliances Investment Konka Electrical Appliances Investment & Development Co., Ltd.
Chain Kingdom Chain Kingdom Co., Limited
Chain Kingdom (Shenzhen) Chain Kingdom (Shenzhen) Co., Limited
Plastic Products Shenzhen Konka Plastic Products Co., Ltd.
Konka SmartTech Konka SmartTech Limited
Kangjietong Kangjietong (Hong Kong) Limited
Konka Electrical Appliances International Trading Konka Electrical Appliances International Trading Co., Ltd.
Konka Investment Shenzhen Konka Investment Holding Co., Ltd.
Yibin Konka Technology Park Yibin Konka Technology Park Operation Co., Ltd.
Industrial New Town Sichuan Konka Industrial New Town Development Co., Ltd.
Konka Capital Shenzhen Konka Capital Equity Investment Management Co., Ltd.
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Konka Group Co., Ltd. Annual Report 2018
Konka Suiyong Konka Suiyong Investment (Shenzhen) Co., Ltd.
Hainan Technology Hainan Konka Technology Industry Development Co., Ltd.
Kangquan Enterprise Shenzhen Kangquan Enterprise Management Consulting Co., Ltd.
Electronics Technology Shenzhen Konka Electronics Technology Co., Ltd.
XingDa HongYe GuangDong XingDa HongYe Electronic Co., Ltd.
Shanghai Xinfeng Shanghai Xinfeng Zhuoqun PCB Co., Ltd.
Zhongshan Zewei Zhongshan Zewei Kechuang Investment Management Co., Ltd.
Nanjing Konka Nanjing Konka Smart Technology Co., Ltd.
Anhui Zhilian Anhui Konka Zhilian E-Commerce Co., Ltd.
Konka Huanjia Konka Huanjia (Dalian) Environmental Technology Co., Ltd.
Shanghai Konka Shanghai Konka Industrial Co., Ltd.
Chuzhou Kangyong Chuzhou Kangyong Health Industry Development Co., Ltd.
Yantai Konka Industrial Yantai Konka Industrial Co., Ltd.
Yantai Kangjin Yantai Kangjin Technology Development Co., Ltd.
Shandong Kangxin Shandong Kangxin Industrial Development Co., Ltd.
Shandong Econ Technology Co., Ltd. (inclusive of its consolidated
Econ Technology
subsidiaries)
Jiangxi Konka Jiangxi Konka New Material Technology Co., Ltd.
Xinfeng Microcrystalline Jiangxi Xinfeng Microcrystalline Jade Co., Ltd.
Nano Crystallized Glass Jiangxi Golden Phoenix Nano Crystallized Glass Co., Ltd.
Shenzhen Kangxinwei Shenzhen Kangxinwei Semiconductor Co., Ltd.
Shenzhen Meixin Shenzhen Meixin Semiconductor Technology Co., Ltd.
Hefei Kangxinwei Hefei Kangxinwei Storage Technology Co., Ltd.
Shenzhen Nianhua Shenzhen Nianhua Enterprise Management Co., Ltd.
Konka Eco-Development Shenzhen Konka Eco-Development Investment Co., Ltd.
Konka Ronghe Konka Ronghe Industrial Technology (Foshan) Co., Ltd.
Suining Konka Industrial Park Suining Konka Industrial Park Development Co., Ltd.
Kangjiatong Sichuan Kangjiatong Supply Chain Management Co., Ltd.
Konka Suyuan Shenzhen Konka Suyuan Investment Industrial Co., Ltd.
CSRC The China Securities Regulatory Commission
SZSE The Shenzhen Stock Exchange
CSRC Shenzhen The Shenzhen Bureau of the China Securities Regulatory Commission
Expressed in the Chinese currency of Renminbi, expressed in tens of
RMB, RMB’0,000, RMB’00,000,000
thousands of Renminbi, expressed in hundreds of millions of Renminbi
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Konka Group Co., Ltd. Annual Report 2018
Part II Corporate Information and Key Financial Information
I Corporate Information
Konka Group-A, Konka
Stock name Stock code 000016, 200016
Group-B
Changed stock name (if any) N/A
Stock exchange for stock listing Shenzhen Stock Exchange
Company name in Chinese 康佳集团股份有限公司
Abbr. 康佳集团
Company name in English (if
KONKA GROUP CO.,LTD
any)
Abbr. (if any) KONKA GROUP
Legal representative Liu Fengxi
15-24/F, Konka R&D Center, 28 Keji South Twelfth Road, Science and Technology Park,
Registered address
Yuehai Street, Nanshan District, Shenzhen, Guangdong Province, China
Zip code 518057
15-24/F, Konka R&D Center, 28 Keji South Twelfth Road, Science and Technology Park,
Office address
Yuehai Street, Nanshan District, Shenzhen, Guangdong Province, China
Zip code 518057
Company website www.konka.com
Email address szkonka@konka.com
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, Guangdong Yuehai Street, Nanshan District, Shenzhen, Guangdong
Province, China Province, China
Tel. 0755-26609138 0755-26609138
Fax 0755-26601139 0755-26601139
Email
szkonka@konka.com szkonka@konka.com
address
III Media for Information Disclosure and Place where this Report Is Lodged
Newspapers designated by the Company for
Securities Times, etc.
information disclosure
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Konka Group Co., Ltd. Annual Report 2018
Website designated by CSRC for publication of
http://www.cninfo.com.cn/new/index
this Report
Board Secretariat, 24/F, Konka R&D Center, 28 Keji South Twelfth Road,
Place where this Report is lodged Science and Technology Park, Yuehai Street, Nanshan District, Shenzhen,
Guangdong Province, China
IV Change to Company Registered Information
Unified social credit code 914403006188155783
Change to principal activity of the Company Supply chain management and environmental protection operations have been
since going public (if any) added to the principal activities of the Company.
Every change of controlling shareholder since
No change
incorporation (if any)
V Other Information
The independent audit firm hired by the Company:
Name Ruihua Certified Public Accountants (LLP)
9F, West Tower, China Overseas Property Plaza, Building No. 7, Compound No. 8, Xibinhe
Office address
Road, Yongding Men, Dongcheng District, Beijing, P.R.C.
Accountants writing signatures Liu Jianhua, Shen Lingzhi
The independent sponsor hired by the Company to exercise constant supervision over the Company
in the Reporting Period:
□ Applicable √ Not applicable
The independent financial advisor hired by the Company to exercise constant supervision over the
Company in the Reporting Period:
□ Applicable √ Not applicable
VI Key Financial Information
Indicate by tick mark whether there is any retrospectively restated datum in the table below.
□ Yes √ No
2018-over-2
2018 2017 017 change 2016
(%)
Operating revenue (RMB) 46,126,797,341.33 31,227,763,249.71 47.71% 20,299,348,136.21
Net profit attributable to the listed
411,289,744.68 5,057,025,155.71 -91.87% 95,673,028.03
company’s shareholders (RMB)
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Konka Group Co., Ltd. Annual Report 2018
Net profit attributable to the listed
company’s shareholders before -795,400,491.44 -97,284,945.83 -717.60% -283,460,349.24
exceptional items (RMB)
Net cash generated from/used in
-3,229,823,872.66 -4,314,257,622.47 25.14% -972,135,787.43
operating activities (RMB)
Basic earnings per share
0.1708 2.1001 -91.87% 0.0397
(RMB/share)
Diluted earnings per share
0.1708 2.1001 -91.87% 0.0397
(RMB/share)
Weighted average return on equity
5.11% 63.26% -58.15% 3.35%
(%)
Change of
31
December
31 December 2018 31 December 2017 31 December 2016
2018 over 31
December
2017 (%)
Total assets (RMB) 32,985,061,889.03 23,558,735,469.78 40.01% 17,243,119,597.97
Equity attributable to the listed
8,104,736,790.53 7,994,145,476.61 1.38% 2,901,481,607.04
company’s shareholders (RMB)
VII Accounting Data Differences under China’s Accounting Standards for Business
Enterprises (CAS) and International Financial Reporting Standards (IFRS) and Foreign
Accounting Standards
1. Net Profit and Equity under CAS and IFRS
□ Applicable √ Not applicable
No difference for the Reporting Period.
2. Net Profit and Equity under CAS and Foreign Accounting Standards
□ Applicable √ Not applicable
No difference for the Reporting Period.
VIII Key Financial Information by Quarter
Unit: RMB
Q1 Q2 Q3 Q4
Operating revenue 7,773,238,729.83 9,852,176,039.99 12,136,315,129.29 16,365,067,442.22
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Konka Group Co., Ltd. Annual Report 2018
Net profit attributable to the
55,758,297.40 286,034,741.63 88,041,649.48 -18,544,943.83
listed company’s shareholders
Net profit attributable to the
listed company’s shareholders -68,684,426.14 -232,186,186.66 -202,316,654.64 -292,213,224.00
before exceptional items
Net cash generated from/used in
-1,019,365,516.72 -818,793,189.14 -1,058,825,594.70 -332,839,572.10
operating activities
Indicate by tick mark whether any of the quarterly financial data in the table above or their
summations differs materially from what have been disclosed in the Company’s quarterly or interim
reports.
□ Yes √ No
IX Exceptional Gains and Losses
√ Applicable □ Not applicable
Unit: RMB
Item 2018 2017 2016 Note
Gain or loss on disposal of non-current assets
(inclusive of impairment allowance 732,818,574.90 6,470,215,253.82 242,932,907.65
write-offs)
Government subsidies charged to current
profit or loss (exclusive of government
subsidies given in the Company’s ordinary 259,609,022.27 178,372,701.34 113,350,808.96
course of business at fixed quotas or amounts
as per the government’s uniform standards)
Gain equal to the amount by which
investment costs for the Company to obtain
subsidiaries, associates and joint ventures are
220,045,229.63
lower than the Company’s enjoyable fair
value of identifiable net assets of investees
when making investments
Gain or loss on assets entrusted to other
182,022,653.32 70,070,846.08 70,849,063.30
entities for investment or management
Gain or loss on fair-value changes in trading
financial assets and liabilities & investment
income from disposal of trading financial
assets and liabilities and available-for-sale 39,542,461.74 -63,931,276.14 17,953,552.28
financial assets (exclusive of effective portion
of hedges that arise in the Company’s
ordinary course of business)
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Konka Group Co., Ltd. Annual Report 2018
Gain or loss on loan entrustments 1,389,042.48 808,737.50 707,777.79
Non-operating income and expense other
73,907,331.00 41,449,367.77 22,934,301.50
than the above
Other gains and losses that meet the
17,974,523.98 87,640,651.87 168,175.52
definition of exceptional gain/loss
Less: Income tax effects 253,497,204.45 1,603,618,658.08 78,609,375.35
Non-controlling interests effects (net of
67,121,398.75 26,697,522.62 11,153,834.38
tax)
Total 1,206,690,236.12 5,154,310,101.54 379,133,377.27 --
Explanation of why the Company reclassifies as recurrent an exceptional gain/loss item defined or
listed in the Explanatory Announcement No. 1 on Information Disclosure for Companies Offering
Their Securities to the Public—Exceptional Gain/Loss Items:
√ Applicable □ Not applicable
Item Amount involved (RMB) Reason
Tax rebates on Government subsidies given in the Company’s ordinary course of business at
64,656,609.96
software fixed quotas or amounts as per government’s uniform standards
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Konka Group Co., Ltd. Annual Report 2018
Part III Business Summary
I Principal Activity of the Company in the Reporting Period
Is the Company subject to any industry-specific disclosure requirements?
No.
Currently, the Company consists of three major business divisions, namely, the consumer electronic
division, the supply chain management division and the environmental protection division, which
are detailed as follows:
(I) The Consumer Electronic Division
This division primarily comprises the multimedia sub-division, the white goods sub-division and
the mobile phone sub-division, with details as follows:
1. The Multimedia Sub-Division
The Company provides multimedia products and services, including colour TVs and Internet TV
services, for both domestic and overseas markets.
The domestic sales of the Company’s colour TVs are realized mainly through B2B
(Business-to-Business) and B2C (Business-to-Consumer), with its branch companies, business
departments and after-sales maintenance points operating across the country. And the Company
profits from the margins between the costs and the selling prices of its colour TVs.
As for selling its colour TVs abroad, the Company mainly relies on B2B. Its colour TVs are sold to
Asia Pacific, Middle East, Central & South America, East Europe, etc. And operating profit source
is also the differences between the costs and the selling prices of its colour TVs.
The Company offers Internet TV services based on the smart TVs it has sold to end users. Firstly, it
works with other Internet companies to provide end users with, among other content, video,
educational, music, medical and game content to generate earnings. Secondly, it analyses user
behaviours and offer certain free, interactive services to increase attractiveness to users, promote its
brand and stimulate desire for its hardware products. Finally, it is trying to build an Internet TV
platform with tens of millions of users, on which it will profit through commercial and application
distribution. This Internet TV business is key to the Company’s Internet-oriented transformation and
upgrade to a development model of “hardware + software” and “smart TV + end users”.
2. The White Goods Sub-Division
The white goods produced by the Company mainly include refrigerators, washing machines, air
conditioners, freezers, etc., which are sold through B2B and B2C mainly to the domestic market.
And the Company profits from the margins between the costs and the selling prices of its white
goods.
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Konka Group Co., Ltd. Annual Report 2018
3. The Mobile Phone Sub-Division
The mobile phones of the Company are sold to both the domestic and overseas markets. The
overseas sales mainly rely on B2B and the profit comes from the margins between the costs and the
selling prices of the mobile phones. As for the domestic sales of its mobile phones, the Company
relies on B2B and B2C, and profits mainly from the costs and the selling prices of its products and
slightly from the related value added services.
(II) The Supply Chain Management Division
In this business, relying on the advantages of the raw material procurement channels, distribution
systems and terminal networks of its consumer electronic business, the Company helps upstream
and downstream enterprises of the supply chain solve channel problems caused by asymmetric
information and improve efficiency. At present, this business runs on two models. In the
procurement and distribution supply chain model, the Company benefits from purchasing IC chips,
LCD screens, etc. from upstream suppliers and selling them to downstream customers through the
supply chain of its traditional core business. Supply chain services are another model. Capitalizing
on its years of experience in product quality control, outsourcing partner assessment and
international trade, the Company is able to help improve the client’s supply chain in efficiency and
cost through the provision of services including product quality control, warehousing and logistics,
customs clearance of imports and exports, documentation, tax handling, outsourcing partner
selection, etc. Profit comes from service charges. Additionally, the supply chain management
business can help the Company establish good relationships with its upstream suppliers and
downstream customers, and keep it informed of prices of the materials used in its production for
better cost control over its existing products.
(III) The Environmental Protection Division
Currently, this business focuses on water treatment, recycling of renewable resources and the new
material of glass ceramic. Water engineering PPP (Public-Private Partnership) projects are
undertaken under BOT (Build-Operate-Transfer) or EPC (Energy Performance Contracting) models.
Renewable resources are collected, sorted, processed, distributed and sold. And glass ceramic
products are developed, produced and marketed.
II Significant Changes in Major Assets
1. Significant Changes in Major Assets
Major
Main reason for significant changes
assets
Equity investments at the end of the Reporting Period rose 99.83% compared to the beginning amount, primarily
Equity
driven by the shift of Anhui Kaikai Shijie E-commerce Co., Ltd. and Kunshan Kangsheng Investment Development
assets
Co., Ltd. from consolidated subsidiaries to long-term equity investments measured at the equity method, as well as
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Konka Group Co., Ltd. Annual Report 2018
by new equity investments in associates.
Fixed Fixed assets at the end of the Reporting Period rose 51.86% compared to the beginning amount, primarily driven by
assets the fixed assets of the newly acquired subsidiaries.
Intangible assets at the end of the Reporting Period rose 259.79% compared to the beginning amount, primarily
driven by the consolidated intangible assets (land use rights, franchise rights, etc., at their carrying amounts) of
Intangible
acquirees Shandong Econ Technology Co., Ltd., GuangDong XingDa HongYe Electronic Co., Ltd. and Jiangxi
assets
Konka New Material Technology Co., Ltd. (formerly known as “Jiujiang Golden Phoenix Decoration Material Co.,
Ltd.”) in the Current Period.
Construct
Construction in progress at the end of the Reporting Period rose 1502.25% compared to the beginning amount,
ion in
primarily driven by the construction in progress of the newly acquired subsidiaries.
progress
Goodwill at the end of the Reporting Period rose 23,684.69% compared to the beginning amount, primarily driven
Goodwill by the Company’s acquisitions of a 51% interest in Shandong Econ Technology Co., Ltd., GuangDong XingDa
HongYe Electronic Co., Ltd. and Jiangxi Konka New Material Technology Co., Ltd. in the Current Period.
2. Major Assets Overseas
□ Applicable √ Not applicable
III Core Competitiveness Analysis
Is the Company subject to any industry-specific disclosure requirements?
No.
The Company’s core competitiveness lies in its R&D ability, brand, marketing network and human
resources. It has developed a three-level R&D system of “Konka Research Institute-Multimedia
R&D Centre-specialized design institutes”, with close to 100 core technologies and approximately
2,000 R&D personnel. It also boasts a strong brand presence among consumers, as well as among
banks and other financing channels. Additionally, its domestic marketing and service network,
including 67 branch companies, over 200 offices and about 3,300 after-sales service stations across
the country, directly connect to around 3,000 retail terminals, along with a well-established overseas
marketing network. Meanwhile, it has high-level personnel with years of rich management and
industry experience, as well as a high-quality team with strong execution capabilities.
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Konka Group Co., Ltd. Annual Report 2018
Part IV Operating Performance Discussion and Analysis
I Overview
(I) Key Operating Results of the Reporting Period
For 2018, the Company recorded operating revenue of RMB46.127 billion, up 47.71% year-on-year.
Net profit attributable to the listed company’s shareholders stood at RMB0.411 billion, representing
a year-on-year drop, as there was no such income during the Reporting Period as the large-amount
exceptional gain from the transfer of a 70% interest in Shenzhen Kangqiao Jiacheng Property
Investment Co., Ltd. in 2017. Excluding the gain from the transfer of the 70% interest in Shenzhen
Kangqiao Jiacheng Property Investment Co., Ltd., net profit attributable to the listed company’s
shareholders in 2018 rose 22.56% as compared to 2017. What the Company has accomplished in
2018 is summarized as follows:
1. Formulated and promoted the new development strategy oriented by transformation and
upgrading
In 2018, the Company formulated and promoted the implementation of the new development
strategy oriented by transformation and upgrading, defined the core positioning of a platform
company driven by scientific and technological innovation and persisted in the development
orientation of “Technology + Industry + Park” and the development mode of “Hardware +
Software”, “Terminals + Users” and “Technology + Holding”. With reform, transformation and
upgrading as its strategies, the Company strove to establish four major business groups, including
Industrial Product Business Group, Technology Park Business Group, Platform Service Business
Group and Investment and Finance Business Group. So far, the Company has gradually realized the
implementation of the transformation and upgrading strategy.
2. Further promoted the mixed-ownership reform
In 2018, the Company promoted the mode of mixed-ownership reform in its four major business
groups. The reform was carried out on 17 subsidiaries at all levels throughout the year. In particular,
Shenzhen E2info Network Technology Co., Ltd., a holding subsidiary of the Company engaged in
the business of Internet user operations, introduced Alibaba (China) Technology Co., Ltd. (holding
3.3898% of the shares). According to the agreement, Alibaba would increase its shareholding of
E2info through capital increase, with the ultimate shareholding proportion restricted within 5%;
Anhui Kaikai Shijie E-commerce Co., Ltd., a former holding subsidiary engaged in the operations
of KKTV color TV set business has introduced Guangdong South Aishi Entertainment Technology
Co., Ltd. (holding 10% of the shares) and Alibaba (China) Technology Co., Ltd. (holding 3.3898%
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Konka Group Co., Ltd. Annual Report 2018
of the shares), which is good for promoting the strategic upgrading and rapid development of the
Company’s Internet business. In addition, the Company diverted its multimedia business such as
color TV set to Shenzhen Konka Electronics Technology Co., Ltd. to facilitate the operations of
such business by an independent company, laying a foundation for introducing external resources
for related businesses and implementing the mixed-ownership reform.
3. Carried out industrial layout and the implementation of new businesses
In 2018, the Company formed an industrial layout consisting four major business groups step by
step, including Industrial Product Business Group, Technology Park Business Group, Platform
Service Business Group and Investment and Finance Business Group, and made great efforts in
driving the expansion and implementation of new businesses: First, the Company acquired 51% of
the equity of Econ Technology, a company engaged in comprehensive water management and was
consecutively awarded with a series of comprehensive water management projects. Furthermore,
the renewable resource treatment business saw a rapid development. Second, the Company acquired
51% of the equity of Jiangxi Konka New Material Technology Co., Ltd., a national hi-tech
enterprise engaged in the production of glass ceramic material. Third, the Company completed the
overall design and strategic planning for semiconductor business, defined the product orientation
for the business and introduced relevant technologies and management teams.
4. Accomplished the implementation of multiple technology parks
Technology park business is an important carrier of the development mode of “Technology +
Industry + Park”. In 2018, the Company made efforts and established the following three business
segments by integrating internal and external resources, i.e. headquarters economy, technology
parks and logistics parks: Headquarters economy was implemented in Jiangbei New District
(Nanjing), the Economic Development Zone (Chuzhou) and Guangming New District (Shenzhen);
technology parks were constructed in Suining, Yibin and Chuzhou respectively; logistics parks were
implemented in Kunshan (Jiangsu) and other cities, laying a solid foundation for the next step of
business development.
5. Acquired Frestec to expand white goods business
In June 2018, the Company acquired 100% of the equity of Henan Frestec Electrical Appliances Co.,
Ltd., Henan Frestec Refrigeration Appliance Co., Ltd. and Henan Frestec Household Appliances
Co., Ltd. at RMB 455 million yuan through Anhui Konka Electrical Appliance Technology Co.,
Ltd., and restored the production of Frestec within two months. The acquisition will help the
Company to rapidly expand the industrial scale in the field of white goods, form a framework of
synergistic development of “Konka + Frestec” and make the Company’s white goods business
bigger and stronger.
6. Increased R&D investment and promoted technological innovation
While promoting mechanism and system reforms, the Company continued to increase investment in
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Konka Group Co., Ltd. Annual Report 2018
R&D and technological innovation, which has produced positive results. The Company has recently
received the National Grade II Prize of Science and Technology Progress for the project of Digital
TV Broadcast System and Domestic Production of Core Chips. Additionally, it successfully
developed the “8K decode chip” with proprietary intellectual property rights and launched a series
of industrial leading products such as OLED TV, AI face recognition TV, semiconductor display TV,
wallpaper TV and “K-Fresh” fridges. Meanwhile, the Company was proactively planning the new
smart household model. It built a system based on “cloud to cloud interconnection” jointly with
third-party platforms including China Mobile and Amazon with a continuous extension from
intelligent products to smart household scenarios.
(II) Business Highlights for 2018
1. Multimedia business
In 2018, the Company further optimized the structure of its color TV business, with a year-on-year
increase of 33% in the sales volume of overseas business. Second, the Company proactively
promoted the mechanism reform in color TV business, such as the independent corporate operations
of color TV, channel model reforms and ownership reforms for sales branches. Finally, the
Company kept reinforcing innovation-driven for color TV business, increased R&D investment to
further enhance the technological innovation level and took the lead in launching 8K decode chips
with proprietary intellectual property rights as well as remote voice and face recognition.
2. White goods business
In 2018, the scale of white goods business (including Frestec) achieved a growth of 22.46%,
especially e-commerce business, which increased by 33% from the previous year; in addition, the
Company acquired Frestec Electrical Appliances and quickly completed reorganization, which
enabled the dual-brand operations of “Konka + Frestec” and synergy of multiple categories and
played a significant role in driving the rapid expansion of the Company’s industrial scale in the field
of white goods and enhancing the profitability and market competitiveness of white goods business.
3. Environmental protection business
In terms of comprehensive water management, in 2018, the Company was awarded with a total of
eight environmental protection projects in Donggang (Liaoning), Weifang (Shandong) and Laizhou
(Shandong) and the amount of awarded contracts reached nearly RMB 8 billion yuan; in respect of
renewable resources, the Company made plans for the recycling and processing for reuse of waste
paper, scrap metal and waste plastics; in terms of new materials, the Company established strategies
in the new material of glass ceramic.
4. Semiconductor business
In 2018, the Company completed the overall design and strategic planning for semiconductor
business, defined the product orientation for the business and introduced relevant technologies and
management teams.
17
Konka Group Co., Ltd. Annual Report 2018
5. Mobile Internet business
In 2018, in terms of mobile Internet business, the Company completed relocation of the integrated
business to Yibin, Sichuan, and started the exploration and transformation from mobile phone
manufacturer to a provider of integrated solutions of intelligent terminals.
6. Technology park business
In 2018, the Company vigorously developed the technology park business with industrial
development at its core and park development as the carrier by means of equity investment. It
implemented a number of projects, including Phase I & II of the Konka Chuzhou Technological
Innovation Centre, Yibin Konka Smart Terminals Industrial Park, Chuzhou Konka Smart
Appliances and Equipment Industrial Park, Nanjing K-Star Cloud Network Headquarters and
Suining Konka Electronic Technology Industrial Park to support the transformation and upgrading
of the Company’s development mode.
7. Supply chain management business
In 2018, the Company achieved a year-on-year increase of 107.65% in the operating revenue from
supply chain management business. Furthermore, it was selected on the list of “National Supply
Chain Innovation and Application Pilot Enterprises” through continuous upgrading of business
model and enhancement of risk control.
8. Internet business
In respect of Internet business, in 2018, the Company introduced Alibaba (China) Technology Co.,
Ltd. as a strategic investor, with the total number of users reaching 36 million. With a considerable
increase in user value and profitability, the Company experienced stable growth in profits and
marked improvement in operating quality while achieving a substantial increase in revenue.
9. Investment business
In 2018, the Company invested in Econ Technology and Jiangxi Konka New Material Technology
Co., Ltd., accomplishing the layout in the new businesses of environmental protection,
semiconductors and new materials and promoting the rapid development of the Company.
10. Venture capital business
In 2018, the Company accomplished global layout for its venture capital business. In respect of
domestic market, the Company set up eight incubators in seven cities such as Shenzhen, Yantai,
Chengdu and Yibin. In terms of overseas market, the Company established six incubators in six
cities such as Silicon Valley, Chicago, London and Helsinki. The newly formed incubation network
covering the globe has powerfully enhanced the Company’s influence in science and technology
innovation field.
18
Konka Group Co., Ltd. Annual Report 2018
II Core Business Analysis
(I) Overview
See “I Overview” above.
(II) Revenue and Cost Analysis
1. Breakdown of Operating Revenue
Unit: RMB
2018 2017
As % of total As % of total Change (%)
Operating revenue Operating revenue
operating revenue (%) operating revenue (%)
Total 46,126,797,341.33 100% 31,227,763,249.71 100% 47.71%
By operating division
Electronics 13,170,227,703.47 28.55% 16,148,586,075.45 51.71% -18.44%
Supply chain
28,348,817,442.89 61.46% 13,652,512,654.75 43.72% 107.65%
management
Environmental
3,020,514,260.13 6.55% 0.00 0.00%
protection
Other 1,587,237,934.84 3.44% 1,426,664,519.51 4.57% 11.26%
By product category
Colour TVs 9,892,486,636.93 21.45% 11,994,950,476.66 38.41% -17.53%
Mobile phones 331,298,592.29 0.72% 918,711,012.38 2.94% -63.94%
White goods 2,127,731,143.29 4.61% 1,737,464,511.08 5.56% 22.46%
Supply chain
28,348,817,442.89 61.46% 13,652,512,654.75 43.72% 107.65%
management
Environmental
3,020,514,260.13 6.55% 0.00 0.00%
protection
Other 2,405,949,265.80 5.22% 2,924,124,594.84 9.36% -17.72%
By operating segment
Domestic 16,868,143,462.93 36.57% 16,031,740,206.40 51.34% 5.22%
Overseas 29,258,653,878.40 63.43% 15,196,023,043.31 48.66% 92.54%
2. Operating Division, Product Category or Operating Segment Contributing over 10% of
Operating Revenue or Operating Profit
√ Applicable □ Not applicable
19
Konka Group Co., Ltd. Annual Report 2018
Is the Company subject to any industry-specific disclosure requirements?
No.
Unit: RMB
Gross YoY change in YoY change in
YoY change in
Operating revenue Cost of sales profit operating revenue gross profit margin
cost of sales (%)
margin (%) (%)
By operating division
Electronics 13,170,227,703.47 11,258,550,192.17 14.52% -18.44% -14.34% -4.10%
Supply chain
28,348,817,442.89 28,068,819,224.05 0.99% 107.65% 107.90% -0.12%
management
By product category
Colour TVs 9,892,486,636.93 8,689,731,404.20 12.16% -17.53% -13.64% -3.95%
Supply chain
28,348,817,442.89 28,068,819,224.05 0.99% 107.65% 107.90% -0.12%
management
By operating segment
Domestic 16,868,143,462.93 14,643,866,818.13 13.19% 5.22% 7.12% -1.54%
Overseas 29,258,653,878.40 28,583,747,096.32 2.31% 92.54% 102.46% -4.79%
Core business data of the prior year restated according to the changed statistical caliber for the
Reporting Period:
□ Applicable √ Not applicable
3. Whether Revenue from Physical Sales Is Higher than Service Revenue
√ Yes □ No
Operating division Item Unit 2018 2017 Change (%)
Unit sales 0,000 units 1,232 1,291 -4.57%
Electronics Output 0,000 units 1,063 1,091 -2.57%
Inventory 0,000 units 129 135 -4.44%
Any over 30% YoY movements in the data above and why:
□ Applicable √ Not applicable
4. Execution Progress of Major Signed Sales Contracts in the Reporting Period
□ Applicable √ Not applicable
20
Konka Group Co., Ltd. Annual Report 2018
5. Breakdown of Cost of Sales
By product category
Unit: RMB
2018 2017
As % of As % of
Product
Item total cost total cost Change (%)
category Cost of sales Cost of sales
of sales of sales
(%) (%)
Color TVs Color TVs 8,689,731,404.20 20.10% 10,062,760,446.56 36.21% -13.64%
Mobile phones Mobile phones 327,425,343.91 0.76% 827,228,372.16 2.98% -60.42%
White goods White goods 1,767,282,597.98 4.09% 1,404,308,959.94 5.05% 25.85%
Supply chain Supply chain
28,068,819,224.05 64.93% 13,501,073,391.55 48.58% 107.90%
services services
Environmental Environmental
2,634,491,782.63 6.09% 0.00 0.00%
protection protection
Other Other 1,739,863,561.68 4.02% 1,993,614,109.59 7.17% -12.73%
Note:
N/A
6. Changes in the Scope of Consolidated Financial Statements for the Reporting Period
√ Yes □ No
Registered capital The Company’s
Company name Date of change Reason for change
(RMB’0,000) interest (%)
Econ Technology (and its subsidiaries) 16,400.00 51.00 2018-5-4
Henan Frestec Refrigeration Appliance Co., Ltd. 12,305.11 51.00 2018-8-3
9,900.00 51.00 Added to the
Henan Frestec Household Appliances Co., Ltd. 2018-8-3
consolidated financial
Henan Frestec Electrical Appliances Co., Ltd. 66,863.77 51.00 2018-8-3
statements due to
GuangDong XingDa HongYe Electronic Co., Ltd.
8,889.00 51.00 2018-6-29 acquisition
(inclusive of its subsidiaries)
Jiangxi Konka New Material Technology Co., Ltd.
27,272.7273 51.00 2018-8-16
(inclusive of its subsidiaries)
Chengdu Konka Incubator Management Co., Ltd. 500.00 51.00 2018-2-5
Added to the
Chengdu Anren Konka Cultural and Creative
500.00 51.00 2018-8-16 consolidated financial
Incubator Management Co., Ltd.
statements due to
Guiyang Konka Enterprise Service Co., Ltd. 500.00 51.00 2018-9-5
incorporation
21
Konka Group Co., Ltd. Annual Report 2018
Nanjing Chuanghui Smart Technology Co., Ltd. 100.00 40.80 2018-7-26
Guizhou Konka Enterprise Management Service
500.00 51.00 2018-11-8
Co., Ltd.
Yibin Konka Incubator Management Co., Ltd. 2,000.00 51.00 2018-10-18
Shenzhen Konka Cross-Border Technological
100.00 26.01 2018-11-21
Innovation Service Co., Ltd.
Jiali International (Hong Kong) Limited HKD500.00 51.00 2018-2-2
Sichuan Konka Smart terminal Technology Co.,
10,000.00 51.00 2018-1-15
Ltd
Anhui Konka Electrical Appliance Technology
10,000.00 51.00 2018-6-12
Co., Ltd.
Jiaxin Technology Co., Ltd. HKD1,000.00 51.00 2018-1-25
Shenzhen Konka Yifang Technology Co., Ltd. 1,000.00 60.00 2018-12-3
Kangjietong (Hong Kong) Limited HKD100.00 51.00 2018-1-9
Yibin Konka Technology Park Operation Co., Ltd. 10,000.00 100.00 2018-1-15
Sichuan Konka Industrial New Town
10,000.00 51.00 2018-3-7
Development Co., Ltd.
Konka Suiyong Investment (Shenzhen) Co., Ltd. 5,000.00 51.00 2018-5-11
Hainan Konka Technology Industry Development
10,000.00 51.00 2018-8-9
Co., Ltd.
Shenzhen Kangquan Enterprise Management
1,000.00 51.00 2018-6-26
Consulting Co., Ltd.
Shenzhen Konka Electronics Technology Co., Ltd. 100,000.00 100.00 2018-1-16
Nanjing Konka Smart Technology Co., Ltd. 5,000.00 100.00 2018-12-28
Anhui Konka Zhilian E-Commerce Co., Ltd. 5,000.00 100.00 2018-9-20
Konka Huanjia (Dalian) Environmental
18,000.00 51.00 2018-6-6
Technology Co., Ltd.
Shanghai Konka Industrial Co., Ltd. 10,000.00 100.00 2018-4-11
Chuzhou Kangyong Health Industry Development
5,000.00 100.00 2018-7-18
Co., Ltd.
Yantai Konka Industrial Co., Ltd. 10,000.00 89.71 2018-9-5
Yantai Kangjin Technology Development Co.,
10,000.00 62.80 2018-9-7
Ltd.
Shandong Kangxin Industrial Development Co.,
10,000.00 51.00 2018-12-7
Ltd.
Shenzhen Kangxinwei Semiconductor Co., Ltd. 10,000.00 100.00 2018-10-19
22
Konka Group Co., Ltd. Annual Report 2018
Shenzhen Meixin Semiconductor Technology Co.,
1,000.00 51.00 2018-10-31
Ltd.
Hefei Kangxinwei Storage Technology Co., Ltd. 5,000.00 51.00 2018-11-7
Shenzhen Nianhua Enterprise Management Co.,
3,000.00 100.00 2018-8-22
Ltd.
Shenzhen Konka Eco-Development Investment
500.00 51.00 2018-12-27
Co., Ltd.
Konka Ronghe Industrial Technology (Foshan)
5,000.00 51.00 2018-12-26
Co., Ltd.
Suining Konka Industrial Park Development Co.,
20,000.00 100.00 2018-12-26
Ltd.
Sichuan Kangjiatong Supply Chain Management
3,000.00 51.00 2018-3-26
Co., Ltd.
Shenzhen Konka Suyuan Investment Industrial
1,000.00 51.00 2018-2-5
Co., Ltd.
Anhui Kaikai Shijie E-commerce Co., Ltd. 3,137.2549 46.00 2018-6-28 Excluded from the
consolidated financial
Kunshan Kangsheng Investment Development statements due to
35,000.00 49.00 2018-06-25
Co., Ltd.
equity transfer
Shenzhen Konka Supply Chain Management Excluded from the
1,000.00 100.00 2018-10-15
Holdings Co., Ltd. consolidated financial
statements due to
Shenzhen Konka Plastic Products Co., Ltd. 950.00 100.00
de-registration
As Regent Sky
Holdings Limited
entrusted its 20%
voting right in
Chongqing Qingjia to
Chongqing Machinery
& Electronics Holding
(Group) Co., Ltd. for
Chongqing Qingjia Electronics Co., Ltd. 1,500.00 40.00 2018-10-25
management, the
Company ceased its
control over
Chongqing Qingjia
and excluded it from
the Company’s
consolidated financial
statements.
23
Konka Group Co., Ltd. Annual Report 2018
7. Major Changes to the Business Scope or Product or Service Range in the Reporting Period
√ Applicable □ Not applicable
In 2018, the Company entered the environmental protection industry through the acquisition of
Shandong Econ Technology Co., Ltd. and Jiangxi Konka New Material Technology Co., Ltd.
8. Major Customers and Suppliers
Major customers:
Total sales to top five customers (RMB) 13,375,164,153.90
Total sales to top five customers as % of total sales of the Reporting Period (%) 29.00%
Total sales to related parties among top five customers as % of total sales of the
0.00%
Reporting Period (%)
Top five customers:
Sales revenue contributed
No. Customer for the Reporting Period As % of total sales revenue (%)
(RMB)
1 Customer A 3,737,481,105.58 8.10%
2 Customer B 3,595,163,483.38 7.79%
3 Customer C 2,613,661,736.46 5.67%
4 Customer D 1,785,310,036.98 3.87%
5 Customer E 1,643,547,791.50 3.56%
Total -- 13,375,164,153.90 29.00%
Other information about major customers:
√ Applicable □ Not applicable
None of the top five customers were related parties of the Company. And none of the Company’s
directors, supervisors, executive officers, core technicians, over5% shareholders, actual controller
or any other related parties held equity interests in the major customers, directly or indirectly.
Major suppliers:
Total purchases from top five suppliers (RMB) 14,800,491,686.75
Total purchases from top five suppliers as % of total purchases of the Reporting
33.46%
Period (%)
Total purchases from related parties among top five suppliers as % of total purchases
0.00%
of the Reporting Period (%)
Information about top five suppliers:
Purchase in the Reporting
No. Supplier As % of total purchases (%)
Period (RMB)
24
Konka Group Co., Ltd. Annual Report 2018
1 Supplier 1 4,859,389,472.98 10.99%
2 Supplier 2 4,697,048,055.43 10.62%
3 Supplier 3 2,246,973,758.27 5.08%
4 Supplier 4 1,642,707,211.56 3.71%
5 Supplier 5 1,354,373,188.51 3.06%
Total -- 14,800,491,686.75 33.46%
Other information about major suppliers:
√ Applicable □ Not applicable
None of the top five customers were related parties of the Company. And none of the Company’s
directors, supervisors, executive officers, core technicians, over 5% shareholders, actual controller
or any other related parties held equity interests in the major customers, directly or indirectly.
3. Expense
Unit: RMB
2018 2017 Change (%) Reason for any significant change
Selling expense 2,282,174,241.64 2,141,993,558.11 6.54%
Increase in R&D expense due to
Administrative increase in expense of subsidiaries
641,892,996.18 448,036,697.96 43.27%
expense newly merged and increase in labor
cost
Finance costs 399,165,814.39 340,918,550.61 17.09%
R&D expense 396,460,145.24 329,676,982.50 20.26% Increasing R&D investment
4. R&D Expense
√ Applicable □ Not applicable
In the Reporting Period, the Company continued to enhance the R&D input and tried to lay a solid
foundation for it to carry out product differentiation through constantly developing new products,
studying new techniques, altering the existing equipment and continuously enriching the product
varieties and series. Meanwhile, it constantly carried out technical innovation and encouraged
suggestions to increase its production efficiency and core competitiveness. In addition, the
Company won the second prize of National Scientific and Technological Progress Award in the
project of Localization of Digital TV & Broadcasting System and Core Chips the Company
participated in recently.
Details about R&D expense:
2018 2017 Change (%)
Number of R&D personnel 1,467 1,353 8.43%
R&D personnel as % of total
7.74% 7.59% 0.15%
employees
R&D expense (RMB) 396,460,145.24 329,676,982.50 20.26%
25
Konka Group Co., Ltd. Annual Report 2018
R&D expense as % of operating
0.86% 1.06% -0.20%
revenue
Capitalized R&D expense (RMB) 0.00 0.00 0.00%
Capitalized R&D expense as % of
0.00% 0.00% 0.00%
total R&D expense
Reasons for any significant YoY change in the percentage of R&D expense in operating revenue:
□ Applicable √ Not applicable
Reason for any sharp variation in the percentage of capitalized R&D expense and rationale:
□ Applicable √ Not applicable
5. Cash Flows
Unit: RMB
Item 2018 2017 Change (%)
Subtotal of cash generated from
50,553,979,675.62 40,942,886,533.13 23.47%
operating activities
Subtotal of cash used in operating
53,783,803,548.28 45,257,144,155.60 18.84%
activities
Net cash generated from/used in
-3,229,823,872.66 -4,314,257,622.47 25.14%
operating activities
Subtotal of cash generated from
2,900,532,752.51 9,053,115,239.75 -67.96%
investing activities
Subtotal of cash used in investing
5,152,413,759.55 4,323,599,750.38 19.17%
activities
Net cash generated from/used in
-2,251,881,007.04 4,729,515,489.37 -147.61%
investing activities
Subtotal of cash generated from
15,345,431,150.38 10,526,601,766.42 45.78%
financing activities
Subtotal of cash used in financing
9,548,537,823.66 9,779,757,140.80 -2.36%
activities
Net cash generated from/used in
5,796,893,326.72 746,844,625.62 676.18%
financing activities
Net increase in cash and cash
336,249,777.96 1,076,996,758.62 -68.78%
equivalents
Explanation of why any of the data above varies significantly:
√ Applicable □ Not applicable
The net cash generated from/used in investing activities was negative due to the subsidiaries newly
merged such as Guangdong Xingda Hongye Electronics Co., Ltd. and joint-stock companies newly
added such as Shenzhen RF-LINK Polytron Technologies Inc. in the Reporting Period.
The net cash generated from/used in financing activities increased due to the increase in borrowings
of the Company during the Reporting Period.
Reason for any big difference between the net operating cash flow and the net profit for this
26
Konka Group Co., Ltd. Annual Report 2018
Reporting Period
□ Applicable √ Not applicable
III Analysis of Non-Core Businesses
√ Applicable □ Not applicable
Unit: RMB
As % of total
Amount Source/Reason Exceptional or recurrent
profit
Transfer of some equity in
Investment income 927,414,370.96 203.87% Kaikai Shijie and Kunshan Exceptional
Kangsheng
Gain/loss on changes
50,191,052.64 11.03% Exceptional
in fair value
Asset impairments 226,869,220.67 49.87% Exceptional
Tax rebates of software is
Non-operating income 328,696,140.09 72.26% recurrent and others are
uncertain
Non-operating expense 8,037,851.90 1.77% Exceptional
IV Analysis of Assets and Liabilities
1. Significant Changes in Asset Composition
Unit: RMB
31 December 2018 31 December 2017 Change
Reason for any
in
As % of As % of significant
Amount Amount percenta
total assets total assets change
ge (%)
Monetary
4,348,144,129.53 13.18% 3,212,044,851.08 13.63% -0.45%
capital
Accounts
4,458,053,586.42 13.52% 3,443,095,947.26 14.61% -1.10%
receivable
Inventories 5,487,605,227.05 16.64% 4,690,363,565.53 19.91% -3.27%
Investment
210,824,355.72 0.64% 216,455,629.99 0.92% -0.28%
property
Long-term
equity 2,637,780,825.53 8.00% 1,319,987,343.74 5.60% 2.39%
investments
Fixed assets 2,410,226,495.81 7.31% 1,587,170,348.35 6.74% 0.57%
Construction in
2,176,871,530.80 6.60% 135,863,821.01 0.58% 6.02%
progress
Short-term 13,884,132,931.63 42.09% 6,927,472,037.35 29.41% 12.69%
27
Konka Group Co., Ltd. Annual Report 2018
borrowings
Long-term
445,000,000.00 1.35% 167,000,000.00 0.71% 0.64%
borrowings
2. Assets and Liabilities at Fair Value
√ Applicable □ Not applicable
Unit: RMB
Sold in
Gain/loss on Cumulative Impairment Purchased in
the
Beginning fair-value fair-value allowance for the
Item Reporti Ending amount
amount changes in the changes charged the Reporting Reporting
ng
Reporting Period to equity Period Period
Period
Financial assets
1. Financial assets at
fair value through
profit or loss 296,799.53 5,168,185.39 5,464,984.92
(derivative financial
assets excluded)
3. Available-for-sale 58,162
58,162.76
financial assets .76
Subtotal of financial 58,162
354,962.29 5,168,185.39 5,464,984.92
assets .76
Total of the above 354,962.29 5,464,984.92
Financial liabilities 47,482,470.50 45,022,867.25 2,459,603.25
Significant changes to the measurement attributes of the major assets in the Reporting Period:
□ Yes √ No
3. Restricted Asset Rights as at the Period-End
Ending carrying
Item Reason for restriction
value (RMB)
Among them, 45,1,609,200 yuan is all kinds of deposit that cannot be withdrawn at
any time; 235 million yuan is a time deposit; RMB 20,10.352 billion is the funds of
Monetary
913,994,647.81 the households under the supervision of repayment; 19.8 million yuan in deposits
capital
pledged as loans; 4.3466 million yuan is the lawsuit frozen fund; 2,203,600 yuan
restricted due to other reasons.
As of December 31, 2018, the company has pledged the notes receivable with the
Notes
1,321,454,860.01 book value of RMB 132,1454,900 for issuing bank acceptance bills, letters of credit,
receivable
letters of guarantee, trade financing and other comprehensive financing services.
28
Konka Group Co., Ltd. Annual Report 2018
Fixed assets 226,955,651.88 For mortgage borrowings. Refer to 20. Short-term Borrowings in Note VI
Intangible For mortgage borrowings. Refer to 20. Short-term Borrowings and 28. Long-term
57,207,934.40
assets Borrowings in Note VI
Long-term Note to the financial statements for 2018: "28 long-term loans" in "notes to
349,416,483.56
receivables consolidated financial statements"
Total 2,869,029,577.66
V Investments Made
1. Total Investment Amount
√ Applicable □ Not applicable
Amount of the same period of last year
Amount of Reporting Period (RMB) Change (%)
(RMB)
2,430,495,935.00 1,185,098,584.39 105.09%
2. Major Equity Investments Made in the Reporting Period
√ Applicable □ Not applicable
Unit: RMB
Profit
s or Inv
Est losses olv
Capi im of ing Disclo Disclo
Invest Invest Shareh Inve Type
Main tal Progress as of ate invest in sure sure
ment ment olding stme of
Investee busi reso Partner the balance d ment la date index
metho amoun percen nt produc
ness urce sheet date inc in the ws (if (if
d t tage term ts
s om Repor uit any) any)
e ting or
Perio not
d
Chuzho First Thai
u Huike Jinxin
Intellige (Changxin http://
nt g) http://
Househ Cred Self- Investmen www.c
Seve Complete 25
old its 1,000, own t ninfo.c
Acqui 13..33 n Credit registration No Dece
Applian inves 000,00 ed Managem - - om.cn/
sition % year s changing t mber
ce tmen 0.00 fund ent Co., new/in
s procedures 2018
Industri t s Ltd., dex/ne
al Chuzhou w/inde
Investm Tongchua x
ent ng
Partners Constructi
29
Konka Group Co., Ltd. Annual Report 2018
hip on
(Limite Investmen
d t Co., Ltd.
Partners and
hip) GuoYuan
Securities
Co., Ltd
The fund has
been set up
Shenzhen and has
Oriental Qianhai invested
Konka Oriental Jiangxi Yahua
No.1 Venture Electronic
(Zhuhai Capital Materials Co.,
) Private Equi Self- Holding Ltd. for
Equity ty Newly 1,001, own Co., Ltd., Five Equity 11.95% equity 18
49.95 No
Investm inves establi 000,00 ed and year invest and Genew - - April
% t
ent tmen shed 0.00 fund Oriental s ment Technologies 2018
Fund t s Huijia Co. Ltd. for
(Limite (Zhuhai) 2.07% equity
d Asset as well as
Partners Managem Roshow
hip) ent Co., Science and
Ltd. Technology
Co., Ltd. for
5% equity
2,001,
Total -- -- 000,00 -- -- -- -- -- -- - - -- -- --
0.00
3. Major Non-Equity Investments Ongoing in the Reporting Period
√ Applicable □ Not applicable
Unit: RMB
reason
for not
meeting
Accumu Accumu
Input lative lative the Disclos
Fixed Disclos
amount actual Capit Estimat realized
Investm assets Industry schedul ure
in the input al ed revenue
Item ent investm involve Progress ure date
Reporti amount resou revenue s as of e and index (if
method ent or d
ng as of the rces s the (if any)
not
Period period-e period-e expecte any)
nd nd
d
revenue
s
30
Konka Group Co., Ltd. Annual Report 2018
Konka
Technol Self-
Electron
ogical Self-bui owne 30,000 30
Yes ic 9,169, 88,482 7.79% / N/A
Innovati ld d ,000 Decemb
industry 900 ,900
on funds er 2016
Center
New Self-
Electron 11
plant in Self-bui owne
Yes ic 0 0 0 / 0 N/A March
Donggu ld d
industry 2017
an city funds
Yibin
Konka
Self-
Smart Electron
Self-bui owne 22 May
Termina Yes ic 19,250 19,250 5.20% / 0 N/A
ld d 2018
l industry ,000 ,000
funds
High-Te
ch Park
Chengd http://htt
u Belt Self- p://www
Electron
and Self-bui owne 27 June .cninfo.
Yes ic 0 0 0 / 0 N/A
Road ld d 2018 com.cn/
industry
Headqu funds new/ind
arters ex/new/i
ndex）
Suining
Konka
Electron Self-
Electron 17
ic Self-bui owne
Yes ic 0 0 0 / 0 N/A October
technol ld d
industry 2018
ogy funds
Industri
al Park
Konka
(Chuzh
ou)
Smart Self-
Electron 25
Applian Self-bui owne
Yes ic 76,222 76,222 6.76% / 0 N/A Decemb
ces and ld d
industry ,400 ,400 er 2018
Equipm funds
ent
Industri
al Park
Total -- -- -- 104,64 183,95 -- -- 0 -- -- --
31
Konka Group Co., Ltd. Annual Report 2018
2,300 5,300
Notes: (1) In regard to the Konka Technological Innovation Centre, the land use right transfer
agreement has been signed, the project is under planning and bidding.
(2) Concerning the Dongguan city’s new plant, preparations are underway and the Company is
waiting for the local government to put out the project target land for bids.
(3) With respect to the smart terminal high-tech park, the land use right transfer agreement has been
signed and the general plan is underway.
(4) As for the Chengdu Belt and Road Headquarters, preparations are underway and the Company is
waiting for the local government to put out the project target land for bids.
(5) As for Suining Konka Electronic technology Industrial Park, a project company has been set up
and the Company is waiting for the local government to put out the project target land for bids.
(6) With respect to Konka (Chuzhou) Smart Appliances and Equipment Industrial Park, the land use
right transfer agreement has been signed and the general contract for construction is under bidding.
4. Financial Investments
(1) Securities Investments
√ Applicable □ Not applicable
Unit: RMB
Gain/L
Initial oss on Capit
Accumul Endin
Secur fair-val Purcha Gain/lo
Beginni ated Sold in g
Securit Securit invest Measur ue sed in ss in Accountin al
ng fair-value Reporti carryi
ity ement change Report Reporti
y type y code ment carrying changes ng ng g title resou
method s in ing ng
name amount charged Period amou
Reporti Period Period
cost to equity nt rce
ng
Period
Domes
New
tically/ Available-f
Fair stock
Overse ZXF 1,459. 7,988. 8,353. 6,893. or-sale
002915 value 0.00 0.00 0.00 0.00 subsc
as C 61 13 60 99 financial
method riptio
listed assets
n
stock
Domes
New
tically/ Available-f
Fair stock
Overse KCX 1,513. 7,520. 8,282. 6,769. or-sale
300730 value 0.00 0.00 0.00 0.00 subsc
as X 16 55 56 40 financial
method riptio
listed assets
n
stock
Domes
New
tically/ Available-f
Fair stock
Overse DSX 12,537 24,025 26,420 13,882 or-sale
002920 value 0.00 0.00 0.00 0.00 subsc
as W .88 .82 .42 .54 financial
method riptio
listed assets
n
stock
32
Konka Group Co., Ltd. Annual Report 2018
Domes
New
tically/ Available-f
Fair stock
Overse MCJ 1,406. 3,949. 4,715. 3,308. or-sale
002919 value 0.00 0.00 0.00 0.00 subsc
as K 72 12 20 48 financial
method riptio
listed assets
n
stock
Domes
New
tically/ Available-f
Fair stock
Overse 3,462. 4,985. 9,466. 6,004. or-sale
002922 YGE value 0.00 0.00 0.00 0.00 subsc
as 39 73 47 08 financial
method riptio
listed assets
n
stock
Domes
New
tically/ Available-f
Fair stock
Overse GHK 5,064. 7,295. 14,767 9,702. or-sale
300735 value 0.00 0.00 0.00 0.00 subsc
as J 93 73 .84 91 financial
method riptio
listed assets
n
stock
Domes
New
tically/ Available-f
Fair stock
Overse PYH 5,026. 5,026 13,668 8,642. or-sale
300664 value 0.00 0.00 0.00 0.00 subsc
as B 08 .08 .90 82 financial
method riptio
listed assets
n
stock
Domes
New
tically/ Available-f
Fair stock
Overse RDG 3,129. 3,129 8,780. 5,650. or-sale
002923 value 0.00 0.00 0.00 0.00 subsc
as F 84 .84 48 64 financial
method riptio
listed assets
n
stock
Domes
New
tically/ Available-f
Fair stock
Overse 1,376. 2,397. 9,683. 8,307. or-sale
300684 ZSKJ value 0.00 0.00 0.00 0.00 subsc
as 00 68 60 60 financial
method riptio
listed assets
n
stock
Domes
New
tically/ Available-f
Fair stock
Overse XLD 5,160. 5,160 12,000 6,840. or-sale
300733 value 0.00 0.00 0.00 0.00 subsc
as L 00 .00 .00 00 financial
method riptio
listed assets
n
stock
33
Konka Group Co., Ltd. Annual Report 2018
Domes
New
tically/ Available-f
Fair stock
Overse YQK 13,095 13,09 47,724 34,629 or-sale
002925 value 0.00 0.00 0.00 0.00 subsc
as J .00 5.00 .00 .00 financial
method riptio
listed assets
n
stock
Other securities investments
0.00 -- 0.00 0.00 0.00 0.00 0.00 0.00 0.00 -- --
held at period-end
53,231 58,162 26,41 163,86 110,63
Total -- 0.00 0.00 0.00 -- --
.61 .76 0.92 3.07 1.46
Disclosure date of announcement on Board’s consent for securities investments N/A
Disclosure date of announcement on general meeting’s consent for securities
N/A
investments (if any)
(2) Investments in Derivative Financial Instruments
√ Applicable □ Not applicable
Unit: RMB’0,000
Funding source for derivative
U.S. dollar financings
investment
Legal matters involved (if applicable) None
Disclosure date of board announcement
24 May 2014
approving derivative investment
Disclosure date of shareholders’ meeting
announcement approving derivative 10 June 2014
investment
We engage in forward forex transactions to reduce the currency risk when securing
Analysis of risks and control measures foreign-currency financing. This is very needed in our routine operation and is in
associated with derivative investments compliance with the applicable laws and regulations. We have formulated the
held in Reporting Period (including but Management Rules of Konka Group Co., Ltd. for Investment In Derivative Financial
not limited to market risk, liquidity risk, Instruments, making clear the relevant consideration and approval procedure, risk
credit risk, operational risk, legal risk, control, etc.. We always sign forward forex contracts with large banks such as the
etc.) 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 between the Company
Changes in market prices or fair value of
and banks and have not expired in a Reporting Period, we recognize the differences
derivative investments in Reporting
between the quotations for these contracts on the balance sheet dates provided by the
Period (fair value analysis should
banks and the contractual prices as transactional financial assets or liabilities, and the
include measurement method and related
profit/loss on fair value changes is recognized accordingly. Because these contracts
assumptions and parameters)
have locked in exchange rates, no changes will occur when comparing the fair value
on signing dates with that on delivery dates.
34
Konka Group Co., Ltd. Annual Report 2018
Material changes in accounting policies
and specific accounting principles
adopted for derivative investments in No material changes
Reporting Period compared to last
reporting period
It is considered necessary for the Company to lock in foreign-currency financing
costs through financial instruments, because it could effectively reduce the currency
Opinion of independent directors on risk when securing foreign-currency financing. The Company has formulated the
derivative investments and risk control internal control mechanism for investment in derivative financial instruments, and
the relevant risk control measures that the Company has taken are considered
effective.
Unit: RMB’0,000
Type of derivative Beginning Ending
Gain/loss in Ending investment amount as a percentage of
financial contractual contractual
Reporting Period the Company’s ending net asset value
instrument amount amount
Forward forex
224,712.77 61,356.18 426.21 7.57%
contract
5. Use of Funds Raised
□ Applicable √ Not applicable
No such cases in the Reporting Period
VI Sale of Major Assets and Equity Interests
1. Sale of Major Assets
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Sale of Major Equity Interests
√ Applicable □ Not applicable
Amoun Amoun
t t
contrib contrib
uted by uted by Relatio Executed
the the sale nship as Index
Effect Owners
equity to net Related betwee scheduled to
Selling of the hip
Equity interest income Pricing -party n or not, if Disclo discl
Counte Date of price sale on fully
interest s to net of the principl transact counter not, state sure osed
rparty sale (RMB’ the transfer
s sold income Compa e ion or party reason date infor
0,000) Compa red or
of the ny as a not and the and matio
ny not
Compa percent Compa actions n
ny age of ny taken
from the
period- Compa
beginni ny’s
35
Konka Group Co., Ltd. Annual Report 2018
ng to net
date of income
sale (%)
(RMB’
0,000)
Suzhou
Anze
Fuxing
Venture
Capital
6%
Centre Optimi
interest
(Limite zing
in
d the
Shenzh
Partner Compa
en
ship) ny’s
Qianha
and allocati
i
Gongqi on of
Qingso http:/
ngchen 29 assets, 31
ng Market Not /http:
g Little March 3,725 0 generat 2.58% Not Yes N/A March
Venture price related //ww
Cherry 2018 ing 2018
Capital w.cni
Invest cash
Fund nfo.c
ment inflows
Compa om.c
Manag ,
ny n/ne
ement increasi
(Limite w/ind
Partner ng
d ex/ne
ship assets’
Partner w/ind
Compa liquidit
ship) ex
ny y and
(Limite improv
d ing the
Partner Compa
ship) ny’s
51% earning
shares s The
o 25 same 16
Taizho 28,068. Market
Kunsha June -1,997 29.19% Yes actual Yes N/A June
u OCT 03 price
n 2018 controll 2018
Kangsh er
eng
VII Major Subsidiaries
√ Applicable □ Not applicable
Major fully/majority-owned subsidiaries and those minority-owned subsidiaries with an over 10%
effect on the Company’s net profit
36
Konka Group Co., Ltd. Annual Report 2018
Unit: RMB
Relationship Principal Registered Total Operating Operating
Name with the activity Net assets Net profit
capital assets revenue profit
Company
Production
Anhui
and sale of
Konka
refrigerator
Tongchuan
s, washing RMB502000 2,497,405 630,622,4 2,712,561 -35,385,6 208,631,2
g Subsidiary
machines 000 ,642.84 84.01 ,615.72 71.10 12.32
Household
and other
Appliances
household
Co., Ltd.
appliances
Anhui Production
Konka and sale of RMB140000 1,207,383 396,051,8 2,501,118 24,658,42 22,638,16
Subsidiary
Electronic multimedia 000 ,538.81 06.15 ,245.38 3.92 6.45
Co., Ltd. products
Shenzhen Production
Konka and sale of
Telecomm mobile RMB400000 527,827,5 131,429,0 424,644,9 7,559,757 19,885,20
Subsidiary
unications communic 000 16.87 34.06 76.22 .66 6.05
Technolog ation
y Co., Ltd. products
Export &
Hong
import of
Kong 2,329,894 220,708,4 4,690,713 72,716,70 64,516,60
Subsidiary electromec HKD500000
Konka Co., ,580.30 55.97 ,709.84 5.17 9.60
hanical and
Ltd.
electronics
Chain Supply
Kingdom chain USD150000 1,815,415 76,067,65 9,093,158 52,696,31 44,048,41
Subsidiary
Co., manageme 0 ,092.76 0.05 ,938.89 0.44 3.75
Limited nt
Econ
Technolog
Utilities-ga RMB164000 2,768,488 664,938,9 1,097,227 170,548,3 146,768,3
y Subsidiary
s and water 000 ,596.93 10.78 ,129.62 89.06 72.61
(Consolida
ted)
Internet
RMB200000 292,174,3 84,354,43 219,157,3 66,848,77 56,688,97
E2info Subsidiary and related
00 77.67 3.38 94.91 6.43 2.55
services
Konka Popularity RMB180000 794,931,8 230,701,2 1,925,972 68,273,52 50,701,24
Subsidiary
Huanjia and 000 94.26 41.53 ,590.36 7.33 1.53
37
Konka Group Co., Ltd. Annual Report 2018
application
of
technologi
es
Manufactu
ring of
chemical
Jiangxi raw RMB272727 1,628,018 576,797,5 123,931,7 18,744,60 47,958,72
Subsidiary
Konka materials 273 ,929.61 04.44 69.36 5.94 5.00
and
chemical
products
Subsidiaries obtained or disposed in the Reporting Period:
√ Applicable □ Not applicable
How subsidiary was obtained or Effects on overall operations and
Subsidiary
disposed in the Reporting Period operating performance
Make the Company enter the
Econ Technology (and its subsidiaries) Share acquisition
environmental protection field
Beneficial to the development of
Henan Frestec Refrigeration Appliance Co., Ltd. Share acquisition the Company’s household
appliances
Beneficial to the development of
Henan Frestec Household Appliances Co., Ltd. Share acquisition the Company’s household
appliances
Beneficial to the development of
Henan Frestec Electrical Appliances Co., Ltd. Share acquisition the Company’s household
appliances
GuangDong XingDa HongYe Electronic Co., Ltd. Beneficial to the development of
Share acquisition
the Company’s PCB
(and its subsidiaries)
Jiangxi Konka New Material Technology Co., Make the Company enter the new
Share acquisition
materials field
Ltd. (and its subsidiaries)
Chengdu Konka Incubator Management Co., Ltd. Establishment by investment
Chengdu Anren Konka Wenchuang Incubator
Establishment by investment
Management Co., Ltd. Beneficial to promoting rapid
Guiyang Konka Enterprise Service Co., Ltd Establishment by investment development of relevant business
of the Company
Nanjing Chuanghui Intelligent Technology Co.,
Establishment by investment
Ltd
Guizhou Konka Enterprise management Service
Establishment by investment
Co., Ltd
38
Konka Group Co., Ltd. Annual Report 2018
Yibin konka Incubator Management Co., Ltd. Establishment by investment
Shenzhen Konka Cross-border Kechuang Co.,
Establishment by investment
Ltd
Jiali International (Hong Kong) Limited Establishment by investment
Sichuan Konka Smart terminal Technology Co.,
Establishment by investment
Ltd
Anhui Konka Electronic Co., Ltd. Establishment by investment
Jiaxin Technology Co., Ltd. Establishment by investment
Shenzhen Konka Yifang Technology Co., Ltd Establishment by investment
Kangjietong (Hong Kong) Limited Establishment by investment
Yibin Konka Technology Park Operation Co., Establishment by investment
Ltd.
Sichuan Konka Industry New Town Establishment by investment
Development Co., Ltd
Konka Suiyong Investment (Shenzhen) Co., Ltd. Establishment by investment
Hainan Konka Technology Industry Establishment by investment
Development Co., Ltd
Shenzhen Kangquan Enterprise Management Establishment by investment
Consultancy Co., Ltd
Shenzhen Konka Electronics Technology Co., Establishment by investment
Ltd.
Nanjing Konka Intelligent Technology Co., Ltd Establishment by investment
Anhui Konka Zhilian E-commerce Co., Ltd Establishment by investment
Konka Huanjia (Dalian) Environmental Establishment by investment
Technology Co., Ltd.
Shanghai Konka Industry Co., Ltd Establishment by investment
Chuzhou Kangyong Health Industry Establishment by investment
Development Co., Ltd
Yantai Konka Industry Co., Ltd Establishment by investment
Yantai kangjin Technology Development Co., Establishment by investment
Ltd
Shangdong Kangxin Industry Development Co., Establishment by investment
Ltd
Shenzhen kangxinwei Semiconductor Co., Ltd Establishment by investment
Shenzhen Meixin Semisonductor Technology Establishment by investment
Co., Ltd
Hefei kangxinwei Storage Technology Co.,Ltd Establishment by investment
39
Konka Group Co., Ltd. Annual Report 2018
Shenzhen Nianhua Enterprise Management Co., Establishment by investment
Ltd
Shenzhen Konka Eco-development Investment Establishment by investment
Co., Ltd
Konka Ronghe Industry Technology (Foshan) Establishment by investment
Co., Ltd
Suining Konka Industry Park Development Co., Establishment by investment
Ltd
Sichuan Kangjiatong Supply Chain Management Establishment by investment
Co., Ltd.
Shenzhen Konka Suyuan Investment Industry Establishment by investment
Co., Ltd
Anhui Kaikai Shijie E-commerce Co., Ltd. Transfer of part of shares
Bring about gains with certain
Kunshan Kangsheng Investment Development Transfer of part of shares
amount
Co., Ltd.
Shenzhen Konka Supply Chain Management Cancellation
No significant effects
Holding Co., Ltd.
Shenzhen Konka Plastic Products Co., Ltd. Cancellation No significant effects
Runtian Group entrusted the 20%
voting rights of Chongqing Qingjia to
Chongqing electromechanical Holding
Chongqing Qingjia (Group) Co. Ltd. for management. The No significant effects
Company lost the control power and it
will no longer be included into the
combination scope.
Information about major majority- and minority-owned subsidiaries:
None
VIII Structured Bodies Controlled by the Company
□ Applicable √ Not applicable
40
Konka Group Co., Ltd. Annual Report 2018
IX. Prospect of the Company’s Future Development
The Company will continue the strategic orientation of “Science & technology + Industry + Park”
in 2019 and take reform, transformation and upgrading as the development strategy to vigorously
establish the framework of concerted development of the four key business groups, proactively
enhance R&D capabilities and innovation abilities, promote brand rejuvenation, fully drive leaping
development, and build a platform company driven by scientific and technological innovations.
The Company’s work plan for 2019 is as follows:
(I) To proactively implement the strategy of “Science & technology + Industry + Park”
In 2019, the Company will further reinforce the promotion and implementation of the strategy of
“Science & technology + Industry + Park” and establish a system for the implementation from the
perspectives of policy culture, business operation, system flow and organization structure to convert
strategies and measures into tangible actions and ensure the full implementation of the strategic
planning.
(II) To promote the deep integrated development of emerging industries
First, the Company will make the emerging industries including environmental protection,
semiconductors and new materials bigger and stronger, deepen the comprehensive organization
from business scope and business platform to business mode, and gradually form stable business
scale and profits. Second, the Company will further enhance its management capabilities and level
for emerging industries, promote the synergy of new industries and original industries and
accomplish the all-round leaping development of emerging industries.
(III) To strengthen R&D investment and consolidate scientific and technological innovation driver
In 2019, the Company will further increase R&D investment. While doing that, the Company will
focus on the layout of cutting-edge technology fields including Micro LED, new materials, the
Internet of Things and semiconductors to achieve the innovation and breakthroughs in key
technologies and drive the macro development of the Company. In addition, the Company will
proactively promote the efforts for academician and postdoctoral programs and vigorously
introduce top talents including academicians and postdoctoral fellows to make breakthroughs in
prospective technologies and major innovation areas.
(IV) To increase brand investment and promote brand rejuvenation
The Company will adopt systemic placement strategies to increase brand investment continuously
and keep driving brand rejuvenation through innovative means.
(V) To enhance capital operation capabilities
41
Konka Group Co., Ltd. Annual Report 2018
On the basis of strengthening its concentrated management of funds, proactively developing
financing channels at low costs, optimizing the debt structure, vitalizing excellent assets and
increasing asset liquidity, the Company will reinforce the research on relevant policies, proactively
promote the capitalization of enterprises which have completed the mixed ownership reform and
enhance its capital operation capabilities.
(VI) To further boost the mixed ownership reform
In 2019, while improving the operation quality of enterprises which have completed the mixed
ownership reform, the Company will continue to intensify the reform and fully promote the reform
in subsidiaries to realize the reform comprehensively.
(VII) Major work in all business units
1. Multimedia business
In 2019, the Company will continue to deepen reforms in the multimedia business to achieve fast
growth in the scale of domestic e-commerce business and of overseas business, and prepare
adequate technical and team reserves for Micro LED, the new-generation display technology. In
addition, the Company will carry out intelligent upgrading and diverse operations for its multimedia
manufacturing business to build itself into a manufacturer of electronic products including color TV
sets and provider of manufacturing solutions.
2. White goods business
In terms of the white goods business, the Company will achieve substantial increase in the business
scale through channel reforms, excellent projects and marketing innovations and step up efforts to
promote the deep integration of the dual brand operation of “Konka + Frestec” to achieve the brand
influence of 1+1>2.
3. Environmental protection business
In 2019, the Company will give a comprehensive review on the implemented environmental and
new material enterprises from business scope and business platform to business model, proactively
boost their rapid development and refine and reinforce the layout in the environmental and new
material industries through a combination of approaches. In particular, the Company will advance
the material breakthroughs and implementations of glass ceramic materials in the field of electronic
business application, further laying a solid foundation for sustainable business growth.
4. Semiconductor business
In 2019, the Company needs to develop technologies and product routes with proprietary
intellectual property rights for its semiconductor business and enable the material implementation of
relevant projects as soon as possible.
5. Mobile Internet business
42
Konka Group Co., Ltd. Annual Report 2018
In respect of the mobile Internet business, the Company will keep improving the operation
performances by enhancing management abilities and developing new products at the mobile
terminal.
6. Science and technology park business
In terms of the science and technology park business, the Company will review and establish the
organization structure of business units, strengthen the building of talent echelons and enhance the
operation level to accommodate business development, thus further expediting the expansion of
new projects while ensuring the smooth promotion of existing projects.
7. Supply chain management business
In 2019, the Company will continue to drive the upgrading of business models for its supply chain
management business with a gradual shift towards the production stage while achieving the
balanced development of all product lines. Furthermore, the Company will further reinforce risk
control and forestall various risks during the business operation process by standardizing and
refining different business processes.
8. Internet business
In 2019, the Company will review and determine the strategic orientation for its Internet business,
promote multiple-scenario user operations and diverse development and make holistic
breakthroughs in the business. In addition, the Company will proactively push the cooperation with
Ali towards a greater depth and achieve the breakthroughs in content and service.
9. Investment business
In 2019, the Company will continue to strengthen industrial layout for its investment business. In
addition to the existing industries, the Company will focus on the fields with strong support from
the state such as strategic emerging industries and on the fields that are able to form strategic
synergy with the Company’s existing businesses in order to support the leaping development of the
Company; additionally, the Company will further intensify post-investment management, keep
itself updated with the operation status of investees and achieve the sustainable growth of them.
10. Venture capital business
In terms of the venture capital business, on one hand, the Company will achieve the positive
operation of implemented innovation centers and promote the industrial synergy with other
businesses; on the other hand, the Company will strengthen the expansion, strive to implement 3-5
new innovation centers and increase its industrial influence in venture capital.
X Communications with the Investment Community such as Researches, Inquiries and
Interviews
1. During the Reporting Period
√ Applicable □ Not applicable
Date Way of Type of Index to main information communicated
43
Konka Group Co., Ltd. Annual Report 2018
communicatio communication
n party
One-on-one http://irm.cninfo.com.cn/ircs/ssgs/companyIrmForSzse.do?stockc
8 June 2018 Individual
meeting ode=000016
Times of communications 1
Number of institutions communicated with 1
Number of individuals communicated with 0
Number of other communication parties 0
Tip-offs or leakages of substantial
supposedly-confidential information during None
communications
44
Konka Group Co., Ltd. Annual Report 2018
Part V Significant Events
I Profit Distributions to Ordinary Shareholders (in the Form of Cash and/or Stock)
How the profit distribution policy, especially the cash dividend policy, for ordinary shareholders
was formulated, executed or revised in the Reporting Period:
√ Applicable □ Not applicable
The cash dividend policy of the Company was clearly stated in its Articles of Association, with
specific and clear dividend standards and ratios. The relevant decision-making procedure and
mechanism were sound; the independent directors faithfully performed their duties and played their
due role; and the non-controlling interests were able to fully express their opinion and desire and
their legal rights and interests were fully protected. The Company strictly followed the cash
dividend policy in its Articles of Association, and the cash dividend payout of the Company was in
line with its Articles of Association and the relevant resolution of the Shareholders’ Meeting.
According to the requirements of the Listed Company Supervision Guideline No. 3—Listed
Companies’ Cash Dividend issued by the CSRC, the Company has revised the dividend payout
policy in its Articles of Association, further clarifying the priority and proportion of cash dividend
in dividend payouts. In order to further normalize its shareholder return mechanism, push forward
the establishment of a scientific, sustained and stable shareholder return mechanism, enhance the
transparency and operability of decision-making for its dividend payout policy, and effectively
protect the legal rights and interests of public investors, the Company strictly followed the
Shareholder Return Planning for Subsequent Three Years (2016-2018), which was formulated in
2016.
Special statement about the cash dividend policy
In compliance with the Company’s Articles of Association and resolution of general meeting Yes
Specific and clear dividend standard and ratio Yes
Complete decision-making procedure and mechanism Yes
Independent directors faithfully performed their duties and played their due role Yes
Non-controlling interests are able to fully express their opinion and desire and their legal
Yes
rights and interests are fully protected
In case of adjusting or changing the cash dividend policy, the conditions and procedures
Yes
involved are in compliance with applicable regulations and transparent
The profit distributions to ordinary shareholders, either in the form of cash or stock, in the past three
years (including the Reporting Period) are summarized as follows:
1. Dividend Payout Plan for 2018
45
Konka Group Co., Ltd. Annual Report 2018
Based on the total shares of 2,407,945,408 as of the end of 2018, a cash dividend of RMB1.00 (tax
inclusive) per 10 shares was planned to be distributed to all the shareholders, with the total dividend
payout reaching RMB240,794,540.80. And the retained earnings should carry forward for future
payout without bonus issue from capital reserves and profit.
2. Dividend Payout Plan for 2017
Based on the total shares of 2,407,945,408 as of the end of 2017, a cash dividend of RMB1.62 (tax
inclusive) per 10 shares was distributed to all the shareholders, with the total dividend payout
reaching RMB390,087,156.10. And the retained earnings should carry forward for future payout
without bonus issue from capital reserves and profit.
3. Dividend Payout Plan for 2016
The audited undistributed profits were RMB-427,163,254.63 for 2016. In light of the Company’s
realities and long-term development needs, the Company neither record capital reserves nor
distribute cash dividend, bonus issue from capital reserves and bonus issue from profit for the year.
Cash dividend for ordinary shareholders in the past three years (including the Reporting Period)
Unit: RMB
Net profit
attributable
to ordinary
Cash shareholder Cash Total cash
dividends in
dividends s of the dividends
A as % of B other forms C as % of B D as % of B
Year (tax listed (such as (including
(%) share (%) (%)
inclusive) company in those in other
repurchase)
(A) consolidate (C) forms) (D)
d statements
for the year
(B)
240,794,54 411,289,74 240,794,54
2018 58.55% 0.00 0.00% 58.55%
0.80 4.68 0.80
390,087,15 5,057,025, 390,087,15
2017 7.71% 0.00 0.00% 7.71%
6.10 155.71 6.10
95,673,028
2016 0 0.00% 0.00 0.00% 0.00 0.00%
.03
Indicate by tick mark whether the Company fails to put forward a cash dividend proposal for the
ordinary shareholders despite the facts that the Company has made profits in the Reporting Period
and the profits of the Company as the parent distributable to the ordinary shareholders are positive.
□ Applicable √ Not applicable
46
Konka Group Co., Ltd. Annual Report 2018
II Final Dividend Plan for the Reporting Period
√Applicable □ Not applicable
Share dividend per 10 shares from retained
0
earnings (share)
Cash dividend per 10 shares (RMB) (tax
1.00
inclusive)
Share dividend per 10 shares from capital
0
reserves (share)
Share base (share) 2,407,945,408
Total cash dividends (RMB) (tax inclusive) 240,794,540.80
Cash dividends in other ways (such as share
0.00
repurchase) (RMB)
Total cash dividends (including other ways)
240,794,540.80
(RMB)
Distributable profits (RMB) 411,289,744.68
Cash dividends as a percentage of total profits to 100%
be distributed (%)
Details of cash dividend for the Reporting Period
Details of plan for profit distribution or bonus issue from capital reserves
The audited net profit attributable to owners of the Company as the parent in 2018 was RMB411,289,744.68, retained earnings
were RMB4,271,408,192.21. In accordance with relevant laws and regulations, provisions of Articles of Associations and
demand of the Company for sustainable development, the profit distribution plan was supposed to be as follows: based on the
total shares of 2,407,945,408 as of the end of 2018, a cash dividend of RMB1.00 (tax inclusive) per 10 shares was distributed to
all the shareholders, with the total dividend payout expected reaching RMB240,794,540.80. And the retained earnings should
carry forward for future payout without bonus issue from capital reserves and profit.
III Fulfillment of Commitments
1. Commitments of the Company’s Actual Controller, Shareholders, Related Parties and
Acquirers, as well as the Company Itself and other Entities Fulfilled in the Reporting Period
or Ongoing at the Period-end
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Where there had an earnings forecast for an asset or project and the Reporting Period was
still within the forecast period, explain why the forecast has been reached for the Reporting
Period.
□ Applicable √ Not applicable
IV Occupation of the Company’s Capital by the Controlling Shareholder or Its Related
Parties for Non-Operating Purposes
□ Applicable √ Not applicable
47
Konka Group Co., Ltd. Annual Report 2018
No such cases in the Reporting Period.
V Explanations Given by the Board of Directors, the Supervisory Board and the Independent
Directors (if any) Regarding the Independent Auditor's “Modified Opinion” on the Financial
Statements of the Reporting Period
□ Applicable √ Not applicable
VI YoY Changes to Accounting Policies, Estimates and Methods
√Applicable □ Not applicable
On 31 March 2017, the Ministry of Finance revised and released the accounting standards related to
financial instruments, including ASBE No. 22- Recognition and Measurement of Financial
Instruments, ASBE No. 23- Transfer of Financial Assets, ASBE No. 24-Hedge Accounting. On 2
May 2017, it revised and issued ASBE No.37–Presentation of Financial Instruments. The above
four financial instruments (collectively referred to as “New Financial Instruments Standards”)
require to be implemented by various listed companies in China from 1 January 2019 on. In
addition, the Ministry of Finance issued the Notice on Printing and Distributing the 2018 Annual
Financial Statements of General Enterprises on 15 June 2018 (NO. CK [2018] 15), indicating that
various enterprises implementing ASBE need to prepare their financial statements in accordance
with these standards.
After this change, the Company shall formulate the financial statements according to The Format of
Financial Statements of General Enterprises (NO. CK [2018] 15) from 1 July 2018 to 1 January
2019 (applied to enterprises that have not yet implemented new financial standards and new income
standards). This change in accounting policy only affects the financial statement format and
presentation of report items, and will not have a significant impact on the Company’s 2018 financial
position, operating results and cash flow.
From 1 January 2019, the Company will start to implement new financial instruments standards and
formulate the financial statements according to The Format of Financial Statements of General
Enterprises (applied to enterprises that have implemented new financial standards and new income
standards). According to new financial instrument standards, the Company regards the “business
model” of financial assets held by the enterprises and the “cash flow characteristics of financial
assets contracts” as the basis for judging, classifying and measuring financial instruments (including
impairment), and the accounting treatment geared to the financial assets impairment shall be
changed from the “incurred loss method” to the “expected loss method”. The difference between the
original book value of the financial instrument and the new book value on the date of
implementation of the standard is included in the retained earnings at the beginning of 2019 or other
comprehensive incomes. Meanwhile, the format of the company’s financial statements was adjusted
according to The Format of Financial Statements of General Enterprises (No. CK[2018] 15)
(applied to enterprises that have implemented new financial standards and new income standards).
48
Konka Group Co., Ltd. Annual Report 2018
The change in above accounting policy will not have significant impact on the Company’s financial
situation, operating results and cash flow.
VII Retrospective Restatements due to Correction of Material Accounting Errors in the
Reporting Period
□ Applicable √ Not applicable
No such cases in the Reporting Period.
VIII YoY Changes to the Scope of the Consolidated Financial Statements
√Applicable □ Not applicable
Refer to Part IV-II-2-(6) for details.
IX Engagement and Disengagement of Independent Auditor
Current independent auditor:
Name of the domestic independent auditor Ruihua Certified Public Accountants LLP
The Company’s payment to the domestic independent auditor
254.4
(RMB’0,000)
How many consecutive years the domestic independent auditor
Six years
has provided audit service for the Company
Names of the certified public accountants from the domestic
Liu Jianhua and Shen Lingzhi
independent auditor writing signatures on the auditor’s report
How many consecutive years the certified public accountants
Four years
have provided audit service for the Company
Name of the overseas independent auditor (if any) N/A
How many consecutive years the overseas independent auditor
N/A
has provided audit service for the Company (if any)
Names of the certified public accountants from the overseas
independent auditor writing signatures on the auditor’s report N/A
(if any)
How many consecutive years the certified public accountants
N/A
have provided audit service for the Company (if any)
Indicate by tick mark whether the independent auditor was changed for the Reporting Period
□ Yes √ No
Independent auditor, financial advisor or sponsor engaged for the audit of internal controls
□ Applicable √ Not applicable
X Possibility of Listing Suspension or Termination after Disclosure of this Report
□ Applicable √ Not applicable
XI Insolvency and Reorganization
□ Applicable √ Not applicable
No such cases in the Reporting Period.
49
Konka Group Co., Ltd. Annual Report 2018
XII Major Legal Matters
√ Applicable □ Not applicable
Involved Index to
General amount Decisions and Execution of Disclosure disclosed
Provision Progress
information (RMB’0,00 effects decisions date informatio
0) n
As for the details, please refer to the Notes 2. Description of the Contingencies of the Commitments and the Contingencies of
Chapter XII of the Notes to the Financial Report
XIII Punishments and Rectifications
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XIV Credit Quality of the Company as well as Its Controlling Shareholder and Actual
Controller
□ Applicable √ Not applicable
XV Equity Incentive Plans, Employee Stock Ownership Plans or Other Incentive Measures
for Employees
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XVI Major Related-Party Transactions
1. Continuing Related-Party Transactions
√Applicable □ Not applicable
Obtain
As %
Appro able
Relatio of total Index
ved Over market
nship Specifi Total value Metho to
Type of Pricing Transa transac the price Disclos
Related with c value of all d of disclos
transac princip ction tion approv for ure
party the transact (RMB’ same-t settlem ed
tion le price line ed line same-t date
Compa ion 0,000) ype ent inform
(RMB’ or not ype
ny transac ation
0,000) transac
tions
tions
OCT
Purcha
Enterpris Under
se of Purchas
the
es Co., commo Negoti 31 http://
same e of Market 2,390.
Ltd and dities ated 0.28% 2,500 Not Cash N/A March www.c
actual materia price 81
its and price 2018 ninfo.c
control ls
subsidiari service om.cn/
ler
es s
new/in
OCT dex
Under Sales Sales of Market
Negoti 1,459. 31
Enterpris the of 0.15% 3,000 Not Cash N/A
LCD ated price 22 March
es Co., same goods
50
Konka Group Co., Ltd. Annual Report 2018
Ltd and actual and price 2018
its control service
subsidiari ler s
es
3,850.
Total -- -- -- 5,500 -- -- -- -- --
03
Large-amount sales return in detail N/A
The Company has published the Forecasting Public Notice on Routine Related-party Transaction for Y2018
Give the actual situation in the Reporting
on Securities Times, Shanghai Securities News, China Securities Journal and Hong Kong Ta Kung Pao as
Period (if any) where an estimate had been
well as the Internet website designated by CSRC http://http://www.cninfo.com.cn/new/index on 31 March
made for the total value of continuing
2018. In the Reporting Period, the basis for pricing, transaction price, transaction amount and settlement
related-party transactions by type to occur
methods of raw materials purchased by the Company were basically in accordance with the forecast. The
in the Reporting Period
total amount was RMB38.5003 million.
Reason for any significant difference
between the transaction price and the N/A
market reference price (if applicable)
2. Related-Party Transactions Regarding Purchase or Sales of Assets or Equity Interests
√ Applicable □ Not applicable
For the specific content, please refer to the relevant content of "5. Other material related
transactions" in this section
3. Related Transactions Regarding Joint Investments in Third Parties
√ Applicable □ Not applicable
For the specific content, please refer to the relevant content of "5. Other material related
transactions" in this section
4. Credits and Liabilities with Related Parties
√Applicable □ Not applicable
Indicate by tick mark whether there were any credits and liabilities with related parties for
non-operating purposes.
√ Yes □ No
Credits receivable with related parties:
Whether
there is Increased Recovere Interest
occupatio Beginning in the d in the in the Ending
Related
Related Forming n on balance Reporting Reporting Interest Reportin balance
relationshi
party reason non-opera (RMB’0,0 Period Period rate g Period (RMB’0,
p
ting 00) (RMB’0,0 (RMB’0,0 (RMB’0, 000)
capital or 00) 00) 000)
not
None None None Not 0 0 0 0 0 0
51
Konka Group Co., Ltd. Annual Report 2018
Effects of credits with related parties on the Company’s operating results and
None
financial conditions
Liabilities payable with related parties:
Increased in Recovered in Interest in
Beginnin the the the Ending
Related
Related Forming g balance Reporting Reporting Interest Reporting balance
relationsh
party reason (RMB’0, Period Period rate Period (RMB’0,00
ip
000) (RMB’0,00 (RMB’0,000 (RMB’0,0 0)
0) ) 00)
0 50,000 50,000 4.35% 151 -
0 50,000 50,000 6.00% 1,487 -
0 27,656 - 5.00% 42 27,656
0 50,000 - 5.00% 76 50,000
The
Controlli 0 50,000 - 5.00% 104 50,000
OCT Company
ng
Enterprises applies
sharehold 0 140,000 - 6.00% 5,413 140,000
Co., Ltd. entrusted
er
loan to it 0 10,000 - 5.40% 302 10,000
0 48,000 - 6.00% 1,328 48,000
0 100,000 - 6.00% 1,233 100,000
0 2,000 - 5.60% 52 2,000
0 50,000 50,000 3.05% 513 -
Effects of liabilities with
related parties on the
The Company applies entrusted loan from OCT Enterprises Co., Ltd. which meets the needs of the
Company’s operating
company's existing business development and reduces the financing cost.
results and financial
conditions
5. Other Major Related-Party Transactions
√ Applicable □ Not applicable
(1) The Project of Capital Increase to Yibin OCT Sanjiang Real Estate Co., Ltd.: On 3 May 2018,
the 1st Extraordinary General Meeting of 2018 passed the Proposal on Capital Increase to Yibin
OCT Sanjiang Real Estate Co., Ltd. by voting, and decided to take Shenzhen Konka
Telecommunications Technology Co., Ltd., a wholly-owned subsidiary as the main body to
contribute RMB80 million to increase capital to Yibin OCT Sanjiang Real Estate Co., Ltd.
according to shareholding ratio. At present, Shenzhen Konka Telecommunications Technology Co.,
Ltd. has completed the capital increase in Yibin OCT Sanjiang Real Estate Co., Ltd.
(2) The Project of Transferring Equity of Kunshan Kangsheng Investment Development Co., Ltd.:
On 14 June 2018, the 44th Meeting of the 8th Board of Directors of the Company deliberated and
passed Proposal on Transferring 51% Equity of Kunshan Kangsheng Investment Development Co.,
52
Konka Group Co., Ltd. Annual Report 2018
and decided that the Company transferred 51% equity of Kunshan Kangsheng Investment
Development Co., Ltd. to Taizhou Overseas Chinese Town Co., Ltd., with the transfer price of
RMB280,680,300. At present, the Company has received the equity transfer fund from Taizhou
Overseas Chinese Town Co., Ltd., and Kunshan Kangsheng Investment Development Co., Ltd. has
completed industrial and commercial registration of changes.
(3) Venture capital platform service project: Konka Ventures Development (Shenzhen) Co., Ltd., a
subsidiary of the Company entered into an agreement with OCT Group to provide venture capital
platform services for it. OCT Group has paid a service fee of RMB20 million to Konka Ventures
Development (Shenzhen) Co., Ltd. During the Reporting Period, Konka Ventures Development
(Shenzhen) Co., Ltd. recognized revenue of RMB19.4175 million.
(4) Provided financial aids to Sanjiang Group: On September 18, 2018, the Proposal on the
Provision of Financial Aids to Yibin OCT Sanjiang Group was deliberated and approved at the
Company’s 49th Meeting of the Eighth Session of the Board of Directors. According to the proposal,
Shenzhen Konka Communications Science and Technology Co., Ltd., a wholly-owned subsidiary of
the Company and the other shareholders of Yibin OCT Sanjiang Group would provide financial aids
to Yibin OCT Sanjiang Group in their shareholding proportion. So far, Shenzhen Konka
Communications Science and Technology Co., Ltd. has provided a borrowing of RMB100 million
in its shareholding proportion.
Index to the public announcements about the said related-party transactions disclosed
Title of public announcement Disclosure date Disclosure website
Announcement on Capital Increase in Sanjiang Real
18 April 2018
Estate and Related-party Transactions
Announcement on the Transfer of 51% Equities of
16 June 2018
Kunshan Kangsheng and Related-party Transactions
Announcement on the Progress of the Transfer of 51% http://http://www.cninfo.com.cn/new
3 July 2018
Equities of Kunshan Kangsheng /index
Announcement on Offering Financial Aid to Sanjiang
19 September 2018
Real Estate and Related-party Transactions
Announcement on Providing Guarantee Line for
19 September 2018
Joint-stock Company and Related-party Transactions
XVII Major Contracts and Execution thereof
1. Entrustment, Contracting and Leases
(1) Entrustment
□ Applicable √ Not applicable
No such cases in the Reporting Period.
(2) Contracting
□ Applicable √ Not applicable
53
Konka Group Co., Ltd. Annual Report 2018
No such cases in the Reporting Period.
(3) Leases
□ Applicable √ Not applicable
No such cases in the Reporting Period.
2. Major guarantees
√ Applicable □ Not applicable
(1) Guarantees
Unit: RMB'0,000
Guarantees provided by the Company and its subsidiaries for external parties (exclusive of those for subsidiaries)
Guaran
Havin
Disclosure date Actual Term tee for
Line of Actual occurrence g
of the guarantee guarante Type of of a
Obligor guarant date (date of expire
line e guarantee guara related
ee agreement signing) d or
announcement amount ntee party
not
or not
Jiangxi Xinxin
Jianan TWO
10,000 12 December 2016 10,000 Joint-liability Not Not
Engineering years
Co., Ltd.
Jiangxi
Zhongyi
TWO
Decoration 10,000 12 December 2016 10,000 Joint-liability Not Not
years
Materials Co.,
Ltd.
Jiangxi
Shanshi
TWO
Technological 10,000 12 December 2016 10,000 Joint-liability Not Not
years
Development
Co., Ltd.
Total approved line for such guarantees in the Total actual amount of such guarantees in the
177,500 0
Reporting Period (A1) Reporting Period (A2)
Total approved line for such guarantees at the Total actual balance of such guarantees at the
207,500 30,000
end of the Reporting Period (A3) end of the Reporting Period (A4)
Guarantees provided between the Company and subsidiaries
Havin Guaran
Disclosure Actual Term
Actual occurrence g tee for
date of the Line of guarante Type of of
Obligor date (date of expire a
guarantee line guarantee e guarantee guara
agreement signing) d or related
announcement amount ntee
not party
54
Konka Group Co., Ltd. Annual Report 2018
or not
One
7 November 2018 5,800 Joint-liability Not Not
year
One
9 May 2018 4,500 Joint-liability Not Not
Anhui year
90,000
Tongchuang One
20 September 2018 5,500 Joint-liability Not Not
year
One
19 June 2018 3,000 Joint-liability Not Not
year
Communicatio One
50,000 5 February 2018 50,000 Joint-liability Not Not
n technology year
One
2 May 2018 20,000 Joint-liability Not Not
year
One
Anhui Konka 31 March 2017 110,000 1 June 2018 8,000 Joint-liability Not Not
year
and 31 March
One
2018 6 December 2018 10,000 Joint-liability Not Not
year
One
E-display 8,000 29 November 2018 2,000 Joint-liability Not Not
year
One
31 May 2018 20,807 Joint-liability Not Not
year
Hong Kong One
365,258 25 July 2018 2,427 Joint-liability Not Not
Konka year
One
7 August 2018 10,403 Joint-liability Not Not
year
One
29 September 2018 20,000 Joint-liability Not Not
Konka year
300,000
Factoring One
27 June 2018 14,000 Joint-liability Not Not
year
XingDa 19 September Two
10,000 21 November 2018 5,800 Joint-liability Not Not
HongYe 2018 years
Econ 19 September One
120,000 10 October 2018 3,135 Joint-liability Not Not
Technology 2018 year
Konka 31 October One
60,000 4 December 2018 10,000 Joint-liability Not Not
Material 2018 year
Total approved line for such guarantees in the Total actual amount of such guarantees in the
993,686 195,372
Reporting Period (B1) Reporting Period (B2)
Total approved line for such guarantees at the end Total actual balance of such guarantees at the
1,903,486 195,372
of the Reporting Period (B3) end of the Reporting Period (B4)
55
Konka Group Co., Ltd. Annual Report 2018
Guarantees provided between subsidiaries
Havin Guarant
Actual Term
Disclosure date of Line of Actual occurrence g ee for a
guarant Type of of
Obligor the guarantee line guarant date (date of expire related
ee guarantee guara
announcement ee agreement signing) d or party or
amount ntee
not not
Sichuan Seven
14,000 28 May 2018 14,000 Joint-liability Not Not
Konka years
Rushan Ten
29,000 29 December 2016 29,000 Joint-liability Not Not
Econ years
Kangzhi
43,300 12 December 2018 43,300 Joint-liability Not Not
Trade
XingDa Two
1,000 13 November 2018 1,000 Joint-liability Not Not
HongYe years
Total approved line for such guarantees in the Total actual amount of such guarantees in the
58,300 58,300
Reporting Period (C1) Reporting Period (C2)
Total approved line for such guarantees at the end Total actual balance of such guarantees at the
87,300 87,300
of the Reporting Period (C3) end of the Reporting Period (C4)
Total guarantee amount (total of the three kinds of guarantees above)
Total guarantee line approved in the Reporting Total actual guarantee amount in the
1,229,486 253,672
Period (A1+B1+C1) Reporting Period (A2+B2+C2)
Total approved guarantee line at the end of the Total actual guarantee balance at the end of
2,198,286 312,672
Reporting Period (A3+B3+C3) the Reporting Period (A4+B4+C4)
Total actual guarantee amount (A4+B4+C4) as % of the
38.58%
Company’s net assets
Of which:
Balance of guarantees provided for shareholders, actual controller and their related parties
0
(D)
Balance of debt guarantees provided directly or indirectly for obligors with an over 70%
312,672
debt/asset ratio (E)
Amount by which the total guarantee amount exceeds 50% of the Company’s net assets (F) 0
Total of the three amounts above (D+E+F) 312,672
Joint responsibilities possibly borne in the Reporting Period for undue guarantees (if any) N/A
Provision of external guarantees in breach of the prescribed procedures (if any) N/A
Compound guarantees:
None
(2) Irregularities in Provision of Guarantees
□ Applicable √ Not applicable
56
Konka Group Co., Ltd. Annual Report 2018
No such cases in the Reporting Period.
3. Cash Entrusted to Other Entities for Management
(1) Cash Entrusted for Wealth Management
√ Applicable □ Not applicable
Overview of cash entrusted for wealth management
Unit: RMB’0,000
Type Capital resource Amount Outstanding balance Overdue amount
Trusted financial
Self-owned funds 3,000 3,000 0
products
Total 3,000 3,000 0
High-risk entrusted asset management with significant single amount or low security, poor liquidity
and no capital preservation:
□ Applicable √ Not applicable
Whether there is the case where the principal cannot be recovered at maturity or other case which
may cause impairment for entrusted asset management
□ Applicable √ Not applicable
(2) Entrusted Loans
√ Applicable □ Not applicable
Overview of entrusted loans
Unit: RMB'0,000
Total amount Capital resource Outstanding amount Overdue amount
2,000 Self-owned funds 2,000 0
High-risk entrusted loans with significant single amount or low security, poor liquidity and no
capital preservation:
□ Applicable √ Not applicable
Whether there is the case where the principal cannot be recovered at maturity or other case which
may cause impairment for entrusted loans
□ Applicable √ Not applicable
4. Other Major Contracts
□ Applicable √ Not applicable
No such cases in the Reporting Period.
XVIII Corporate Social Responsibility (CSR)
1. Measures Taken to Fulfill CSR Commitment
The Company insists the principle of health, stability and sustainable development to benefit
shareholders and employees and satisfy customers. In pursuit of economic profits and protection of
shareholders’ profits, the Company is active in protecting legal rights of debtors and employees,
57
Konka Group Co., Ltd. Annual Report 2018
treating suppliers, customers and consumers in good faith, and participating in environmental
protection and community establishment for harmonious development of the Company and society.
1. To protect rights of shareholders and creditors
(1) The Company protects rights of shareholders
The Company insists protection of rights for all shareholders, especially equal status and legal
rights for medium and small shareholders, and make insurance of rights to be informed,
participation and vote.
The Company would perform all obligations of information disclosure to ensure timely, accurate
and complete information and strictly execute confidential system of registrar and insider
information to guarantee justice.
The Company pays attention to repay to shareholders, and insists mutual development with
investors. In the previous three years, the Company shares dividends with all shareholders. The
Company strict executes dividend policies regulated in Articles of Association. All cash dividends
comply with regulations in Articles of Association and requirements in shareholders’ conference.
(2) The Company protects rights of creditors
In full consideration of legal rights of creditors, the Company complies with strict business rules of
credit cooperation to guarantee legal rights of creditors. No damages upon rights of creditors
happened.
2. The Company performs responsibilities to suppliers and customers
(1) It is devoted to improve customer service quality.
The Company is insisting philosophy of customer orientation to strengthen customer service
management, service consciousness for employees, service levels and to protect rights for
customers. Through customer service hot-line, field visit and follow-up service, the Company has
set a good corporate image for customers.
(2) Be honest to suppliers
Following the principle of integrity and mutually beneficial cooperation, the Company keeps good
cooperative relations with suppliers at each level. The corporate principle is open, fair and impartial
to standardize procurement, protect suppliers’ legal rights and lay solid foundation for further
cooperation.
3. Be enthusiastic to social and public welfare undertakings
Based on the principle of appreciating and repaying the society, the Company has participated in all
kinds of activities for public welfare, cooperated with society, undertaken social responsibilities
actively and promoted harmonious development between enterprise and society.
4. Be responsible for employees
The Company insists the principle of people orientation to improve working environment, promote
occupational skills, provide opportunity and platform for development and growth and encourage
58
Konka Group Co., Ltd. Annual Report 2018
self upgradation and realization for employees. Mutual improvement for employees and enterprise
could be achieved.
(1) Be honest and law-abiding to protect legal rights for employees
The Company would strictly comply with laws and regulations in Labor Law and Labor Contract
Law to sign labor contract with employees with fair treatment in employment, payment, promotion,
training, demission and retirement. Also, the Company would pay all kinds of insurances and
housing fund for employees. Regular physical examination would be organized for each year. Any
problems found would require re-examination and consultation from a doctor.
The Company would improve living quality; enhance cohesive force and sense of belongings
through a series of safeguard measures.
(2) To protect occupational health for employees
The Company would establish and perfect training, safety assessment by security system to
guarantee the safety and occupational health for employees. On the other hand, by promotion of the
importance of safety, safety awareness would be rooted in the heart to make all employees abide by
safety standards and fully play subjective initiative in protecting self-occupational safety and
production safety.
(3) To promote occupational skills by diversified professional training
The Company has always paid great attention on diversified training for employees. On the one
hand, the Company would be meticulous in training of regular business and occupational skills and
carry out all requirements positively to improve professional levels by normal training management.
On the other hand, the Company would establish methods of self-training platform, training
instructor, theme training and lectures to provide colorful training activities. Besides the work,
professional and comprehensive quality would be fully promoted.
5. Be responsible for environment
The company pays close attention to the changes of the ecological environment and the close
relationship between itself and the environment. Through technological innovation, it creates a
low-carbon economy, from green manufacturing to green products to green industrial circular
economy. The company hopes to contribute to the protection of the earth's ecological environment.
In the new year, the Company would undertake all social responsibilities by improving strategic
management, sustainable development and enterprise economic efficiency. It would reattribute all
shareholders and would protect legal rights for creditors and employees. To be honest to suppliers
and customers, the Company would serve local economic development and participate in social
public welfare activities and environment protection. It would undertake all responsibilities in many
fields and make attributions to social, economic, and environmental sustainable development for a
socialism harmonious society.
59
Konka Group Co., Ltd. Annual Report 2018
2. Measures Taken for Targeted Poverty Alleviation
(1) Plans
In accordance with the guiding principles of the state on the development of precision poverty
alleviation, the Company has proactively carried out critical work on poverty alleviation and
engaged in the targeted support in Sansui County and Tianzhu County in Guizhou Province.
The Company and the China Youth Development Foundation (CYDF) have jointly held the large
public benefit activity “Heart Journey” since 2013. Five sessions of activities have been held until
now. In 2013, we helped thousands of migrant workers to go home. In 2014, we planted tens of
thousands of trees nationwide and improved the living conditions of 5,000 needy families by
planting the economic and ecological trees. In 2015, we donated nearly 100 music classrooms to the
remote regions of China by carrying out “Happy Music Classroom” Project with CYDF. In 2016,
we sponsored the professional training of 100 music teachers in remote areas to promote the
construction of teaching staff in poverty-stricken areas. In 2017, the activities of “Heart Journey”
focused on affectionate care for families of left-behind children in poverty-stricken areas. We
helped 100 left-behind children to come to cities to reunite with their parents during the summer
vacation, and donated houses named Konka Heart Journey Family in schools in western areas.
(2) Summary of the Related Work Done in the Reporting Period
During the Reporting Period, the Company took active steps to help Sansui County to carry out the
marketing work in respect of Sansui ducks, including product sales and package planning, which
effectively drove the sales of local subsidiary agricultural products. In 2018, Liu Fengxi, Board
Chairman of the Company, led a team to Sansui and Tianzhu for site investigations and proposed
new notions for industrial poverty alleviation, laying a solid foundation for the targeted poverty
alleviation in 2019.
(3) Subsequent Plans
To fully perform its duties of targeted poverty alleviation, in 2019, the Company plans to donate
office supplies of approximately RMB300,000, including television sets and books to the two
counties, together with the work on public brand establishment of no more than RMB1.58 million
which will be used for the package planning and advertisement promotion of Sansui ducks of
Sansui County.
Additionally, the Company plans to continue carrying out the large commonweal event themed with
“The Trip of Heart”.
3. Issues Related to Environmental Protection
Indicate by tick mark whether the Company or any of its subsidiaries is identified as a major
polluter by the environmental protection authorities.
Yes
Number Excessi
Name of Name of Way of Distribution Discharge Discharge standards Total Approved total
of ve
polluter major discharge of discharge concentration implemented discharge discharge
discharge dischar
60
Konka Group Co., Ltd. Annual Report 2018
pollutants outlets outlets ge
Total discharge
448,500
Pollution PH6-9；copper
tons/year;
sources of ≤0.5mg/L；
pollutant COD
waste water: Main COD≤80mg/L； Electroplating water
Discharge of 24.891 tons/year;
PH、copper、 discharge ammonia nitrogen pollutant discharge 44.8milli
stationary ammonia nitroge
COD、 1 outlet of the ≤15mg/L；total standard on None
pollution n 3.982
ammonia nitr waste water nitrogen DB44/1597-2015 tons/year
sources tons/year; total
ogen、total station ≤20mg/L； total Table 1
nitrogen 9.373
nitrogen、tota phosphorus
tons/year; total
l phosphorus ≤1mg/L
phosphorus
0.439 tons/year
waste Emission Standard
2,986,560,000
gas pollutants for Electroplating
standard
: sulfuric acid sulfuric acid fume Pollutants
XingDa cube/year (note:
fume, ＜30mg/m3； GB21900-2008 Air
HongYe the total
hydrogen nitrogen oxide＜ Emission Limits
discharge is not
chloride, Three on the 200mg/m3； Table 5, Guangdong
stated in the
formaldehyde roof of one hydrogen chloride Air Pollutant
latest version of
,hydrogen plant , ten ＜30mg/m3； Emission Standard 2,986,56
Discharge of national
cyanide, on the roof TVOC＜ DB44/27-2001 the 0,000
stationary discharge permit
nitrogen 14 of two 90mg/m3；benzene Second Level standard None
pollution in 2018; two
oxide, plants and ＜12mg/m3； Standard in the cube/yea
sources exhaust towers
ammonia, be one on the methylbenzen＜ Second Period, r
were added in
nzene, roof of the 40mg/m3； Emission standard
2018; calculated
methylbenzen canteen dimethylbenzene for Odor Pollutants
based on air
e, TVOC, tin ＜70mg/m3；tin (GB 14554-1993)
volume in
and its and its compounds Table 2 Standard,
environmental
compounds, P ＜8.5mg/m3； Emission standard of
impact
M (dust), oil cooking fume
assessment)
fume (GB18483-2001)
(1) The construction of anti-pollution facilities and its operation situation
All production equipment of Guangdong Xingda Hongye Electronics Co., Ltd. has been set up with
supporting environmental protection facilities according to the requirements of environmental
impact assessment. The discharge of wastewater, waste gas and noise as well as the disposal of all
solid wastes in the Company all met the standards during the Reporting Period.
The sewage treatment centre of Guangdong Xingda Hongye Electronics Co., Ltd. with an
investment of about RMB15 million was formally put into production in June 2007, and the
treatment capacity of the sewage treatment facility was 2,566 tons/day. After technical improvement
and expansion, the capacity increased to 2,900 tons/day with the treatment process remaining
61
Konka Group Co., Ltd. Annual Report 2018
unchanged. Currently, the sewage treatment facilities are functioning well and the main pollutant
discharge meets the discharge standards and environmental assessment standards. The pollutants are
discharged to Fushachong after being treated at the self-built sewage treatment station.
(2) Environmental impact assessment and other environmental protection administrative licenses of
the construction project
Guangdong Xingda Hongye Electronics Co., Ltd. obtained the approval from Zhongshan
Environmental Protection Bureau (ZHJ [2004] No. 61) for the operations and construction here in
2004. Subsequently, it obtained the documents of ZHJD [2008] No. 06250 and ZHJD [2010] No.
04469 respectively in 2008 and 2010. After the operations of its original project, Guangdong
Xingda Hongye Electronics Co., Ltd. passed the two phases of acceptance assessment, including the
Phase I acceptance assessment in 2008 (HY [2008] No. 02) and the Phase II acceptance assessment
in 2012 (ZHYBG [2012] No. 000092).
In December 2012, Guangdong Xingda Hongye Electronics Co., Ltd. commissioned Zhongshan
Research Institute of Environmental Protection Science to conduct the assessment of environmental
impact for the technical improvement and expansion project of Guangdong Xingda Hongye
Electronics Co., Ltd. On December 31, 2012, it obtained the approval document titled Reply to the
Report on the Environmental Impact of the Technical Improvement and Expansion Project of
Guangdong Xingda Hongye Electronics Co., Ltd. (ZHJS (2012) No. 115) from Zhongshan
Environmental Protection Bureau. The document granted the approval for addition of the
production of six-layer PCB, eight-layer PCB and above and HDI boards and for reduction of the
production of single-sided PCB. After the technical improvement and expansion, the total
production capacity of single-sided PCB would be 200,000 m2/year, of double-sided PCB would be
250,000 m2/year, of four-layer PCB would be 300,000 m2/year, of six-layer PCB would be 200,000
m2/year, of eight-layer PCB and above would be 150,000 m2/year and of HDI boards would be
100,000 m2/year. In the project, while the original plating equipment and processes remained
unchanged, the brown oxide process was added to the original production process; all the increased
plating capacity would be outsourced. The technical improvement and expansion project was
commenced in 2013 and completed in January 2018. The commissioning was carried out from
February 10, 2018 to July 8, 2018. The construction of the project complied with the requirements
for environmental impact assessment and met the criteria for the acceptance of environmental
protection for the completion of construction projects. In 2018, the Company obtained the state
sewage permit, certificate No.: 91442000768405216J001P.
(3) Contingency plan for emergent environmental incident
In strict accordance with requirements of laws, regulations and relevant documents, such as Law of
the People’s Republic of China on Emergency Response and Interim Measures on Environmental
Emergency Response Plan, Guangdong Xingda Hongye Electronics Co., Ltd. has established risk
62
Konka Group Co., Ltd. Annual Report 2018
prevention measures and emergency response plans, kept its emergency equipment in a normal state,
formulated the Contingency Plan for Emergent Environmental Incident, and put on records at
Zhongshan Environmental Protection Bureau, Guangdong Province, record No.: 4420002017044M.
In addition, the Company conducts a drill of major environmental pollution incident on its factory
to enhance its emergency response capabilities for emergent environmental pollution incidents.
Furthermore, Guangdong Xingda Hongye Electronics Co., Ltd. has built an emergency pool (which
is the comprehensive water tank in the sewage treatment station covering an area of 800m3) and set
up a fire pool (500m3 and located on Floor 1 of Factory Building No. 2), which serve as temporary
storage pools for exterior drainage or fire drainage to eradicate accidental discharge of wastewater
in the case of failed operation of the sewage transmission pipeline or fire accident due to outage or
other special circumstances. The sewage transmission pipeline has been equipped with
anti-corrosion and cathodic protection using anti-corrosion pipes and carbon steel pipes. Pursuant to
the new discharge standards, the related discharge pipeline has been modified and the production
department has been required to discharge strictly in accordance with discharge standards to cut the
costs of wastewater treatment. Different types of wastewater are normally and properly treated
through fine shunting. Personnel have been specially arranged to manage the chemical liquid
warehouse and exert reasonable control and requirements over the liquid discharge by the plant and
timely transportation of the liquid by suppliers; emergency tools such as protective masks, boots
and immiscible pumps have been equipped;
(4) Environmental self-monitoring plan
According to the requirements of the Environmental Protection Administration, Guangdong Xingda
Hongye Electronics Co., Ltd. attaches great importance to environmental monitoring management.
Thus, pursuant to the Measures for Self-Monitoring and Information Disclosure of National Key
Monitored Enterprises, the Report on the Environmental Impact of the Technical Improvement and
Expansion Project of Guangdong Xingda Hongye Electronics Co., Ltd. and the reply opinions for
environmental impact assessment, the Company has formulated the Environmental Self-Monitoring
Plan and reported to the municipal environmental protection bureau for approval and record. It
implements online monitoring for the PH, COD and ammonia nitrogen pollutants discharged in
wastewater through real-time monitoring and an automatic frequency of every two hours, entrusts
the qualified third-party online monitoring equipment operation and maintenance institute to carry
out periodic maintenance on automatic monitoring equipment and monitoring data networking
equipment, and entrusts the qualified third-party monitoring unit to carry out the “three wastes”
project monitoring. All self-monitoring plan results will be reported and disclosed on public
platforms on a periodic basis.
In the case of normal production, the results will be updated on a daily basis, with online
monitoring data disclosed in real time and manual monitoring data disclosed on the next day after
63
Konka Group Co., Ltd. Annual Report 2018
completion. In the case of public holidays, the operation monitoring data for the holiday period will
be disclosed on the first working day after the holiday. Items monitored on a monthly basis will be
disclosed by the 25th day of the month. Items inspected on a quarterly basis will be disclosed by the
25th day of the last month of the quarter. The annual self-monitoring report for the previous year
will be disclosed at the end of January each year. In the case of shutdown with days off, the number
of days off will be indicated in the information bar and related proofs will be submitted to the
monitoring center of the municipal environmental bureau for record.
The results are disclosed on Guangdong Province Key Pollution Source Regulatory Information
Platform and on National Pollution Source Monitoring Information Management and Sharing
Platform for public monitoring.
(5) Other environmental information that should be disclosed
The environmental protection investment of Guangdong Xingda Hongye Electronics Co., Ltd. for
2018 was approximately RMB17.5 million, mainly used as the environmental engineering
investment (approximately RMB8.5 million) and the operation of environmental protection
equipment (approximately RMB9 million).
(6) Other Environmental Information
According to the examination by the Company, the Company and its other holding subsidiaries are
not key pollutant units. All have faithfully implemented the laws and regulations related to
environmental protection, such as Environmental Protection Law of the People's Republic of China,
Water Pollution Prevention and Control Law of the People's Republic of China, Law of the People's
Republic of China on the Prevention and Control of Atmospheric Pollution, Law of the People's
Republic of China on Prevention and Control of Pollution From Environmental Noise, Law of the
People's Republic of China on the Prevention and Control of Environmental Pollution by Solid
Waste in the daily production and operation, without being punished for violations of laws and
regulations during the Reporting Period.
XIX Other Significant Events
√ Applicable □ Not applicable
(1) The Project of Establishing Company for Multimedia Business: On 17 November 2017, the 37th
Meeting of the 8th Board of Directors of the Company deliberated and passed the Proposal on
Establishing a Company for Konka Multimedia Business. At present, Shenzhen Konka Electronics
Technology Co., Ltd. has been formally established, and the Company is in the process of business
switching and asset import.
(2) The Project of Listing Transfer of Shanghai Real Estate: On 23 August 2017, the 34th Meeting of
the 8th Board of Directors of the Company deliberated and passed the Proposal on Listing Transfer
of Part Real Estate on the. At present, the Shanghai Real Estate to be listed for transfer has been
officially listed, and is currently in the publicity period. However the project has been terminated
64
Konka Group Co., Ltd. Annual Report 2018
due to the failure of soliciting potential transferees.
(III) Private placement of corporate bonds, asset securitization of commercial factoring and asset
securitization of accounts receivable: Currently, the private placement of corporate bonds (Phase I)
of RMB2.5 billion has been issued; the asset securitization of commercial factoring and asset
securitization of accounts receivable are in the declaration.
(IV) Strategic cooperation agreement with Chuzhou Municipal Government: Currently, the project
land has been awarded for Konka Intelligent Home Appliance and Equipment Industrial Park
Project (including Ankang Intelligent Factory) and Science and Technology Innovation Center
Project Phase II and preparations are being made for the commencement of construction; in terms
of Opto-electronics Industrial Fund Project (namely, Chuzhou Huike Intelligent Home Appliance
Industry Investment Partnership (limited partnership)), the investment agreement has been signed
and changes in business registration have been completed; in respect of Konka New Retail
Headquarters Project, the project company has been established; in terms of Konka Minghu Health
& Wellness Town Project, negotiations are being carried out.
(V) The project of Nanjing K-Star Cloud Network Headquarters has signed the land use right
transfer agreement and is being reported for approval and piling. The Company has transferred the
control power over the project company recently.
(VI) Disclosure index of significant information
Announce Page on
Date Title Link on http://www.cninfo.com.cn
ment No. newspaper
Announcement on Receiving Securities Times
3 January
2018-01 the Grants of Zombie B5, Ta Kung Pao
2018
Enterprises B1
Announcement on
Restructuring and Renaming
Securities Times
4 January of Controlling Shareholders
2018-02 B44, Ta Kung Pao
2018 and the Changes of Relevant
A20
of Business Registration
Events
http://www.cninfo.com.cn/new/index
Announcement on Securities Times
4 January
2018-03 Recognition of Disclosure B44, Ta Kung Pao
2018
Fee A20
Announcement on
Securities Times
4 January Majority-owned Subsidiary’
2018-04 B44, Ta Kung Pao
2018 receiving of the Government
A20
Subsidies
19 January Announcement on the Securities Times
2018-05
2018 Planned Listing to Transfer B148, Ta Kung Pao
65
Konka Group Co., Ltd. Annual Report 2018
the Shares of Qingsong B2
Venture Investment Fund
Announcement on the
Securities Times
25 January Changes of Consulting
2018-06 B28, Ta Kung Pao
2018 Telephone of the Company’s
B1
Investors
Securities Times
26 January Announcement on the 2017
2018-07 B25, Ta Kung Pao
2018 Earnings Forecasts
B5
Announcement on the
Progress of the Planned Securities Times
20 March
2018-08 Listing to Transfer the Shares B40, Ta Kung Pao
2018
of Qingsong Venture B3
Investment Fund
Announcement on Receiving Securities Times
24 March
2018-09 the Tax Reimbursement B177, Ta Kung Pao
2018
Events B1
31 March Announcement on the 2017
2018-10
2018 Annual Report
Announcement on the Securities Times
31 March
2018-11 Abstract of the 2017 Annual B253, Ta Kung Pao
2018
Report A18
Announcement on the
Securities Times
31 March Resolution of the 40th
2018-12 B253, Ta Kung Pao
2018 Meeting of the 8th Board of
A18
Directors
Announcement on the
Securities Times
31 March Resolution of the 17th
2018-13 B253, Ta Kung Pao
2018 Meeting of the 8th
A18
Supervisory Committee
Announcement on the Securities Times
31 March
2018-14 Expectation of the 2018 B253, Ta Kung Pao
2018
Routine Related Transaction A18
Announcement onthe Securities Times
31 March
2018-15 External Guarantee of Konka B253, Ta Kung Pao
2018
Group Co., Ltd. A18
Announcement on the Securities Times
31 March
2018-16 Changes of Part of B254, Ta Kung Pao
2018
Accounting Policies A18
2018-17 31 March Announcement on Offering Securities Times
66
Konka Group Co., Ltd. Annual Report 2018
2018 Entrusted Loans to B254, Ta Kung Pao
Majority-owned Subsidiary A18
Notice on Convening the Securities Times
31 March
2018-18 2017 Annual General B254, Ta Kung Pao
2018
Meeting A19
Announcement on the
Completion of Industrial and
Securities Times
31 March Commercial Registration of
2018-19 B254, Ta Kung Pao
2018 Changes of Transferring the
A19
Shares of Qingsong Venture
Investment Fund
Announcement on
Securities Times
10 April Majority-owned Subsidiary’
2018-20 B40, Ta Kung Pao
2018 receiving of the Government
B6
Subsidies
Announcement on the 2018 Securities Times
14 April
2018-21 First Quarter Earnings B48, Ta Kung Pao
2018
Forecasts B3
Announcement on the
Securities Times
18 April Resolution of the 41st
2018-22 B37, Ta Kung Pao
2018 Meeting of the 8th Board of
B9
Directors
Notice on Convening the 1st Securities Times
18 April
2018-23 Extraordinary General B37, Ta Kung Pao
2018
Meeting of 2018 B9
Announcement on Capital
Securities Times
18 April Increase in Sanjiang Real
2018-24 B37, Ta Kung Pao
2018 Estate and Related-party
B9
Transactions
Announcement on Securities Times
18 April
2018-25 Sponsoring the Establishment B37, Ta Kung Pao
2018
of Industrial Buyout Fund B9
Announcement on the Securities Times
24 April
2018-26 Resolution of the 2017 B189, Ta Kung Pao
2018
Annual General Meeting B5
28 April
2018-27 2018 First Quarter Report
2018
Securities Times
28 April Text of the 2018 First Quarter
2018-28 B44, Ta Kung Pao
2018 Report
B14
67
Konka Group Co., Ltd. Annual Report 2018
Announcement on the
Securities Times
Resolution of the 1st
2018-29 4 May 2018 B16, Ta Kung Pao
Extraordinary General
B5
Meeting of 2018
Announcement onthe Securities Times
2018-30 8 May 2018 Progress of External B28, Ta Kung Pao
Guarantee B6
Announcement on Signing
Securities Times
the Strategic Cooperation
2018-31 22 May 2018 B25, Ta Kung Pao
Agreement with Chuzhou
A17
Municipal Government
Outline of Medium and Securities Times
2018-32 22 May 2018 Long-term Development B25, Ta Kung Pao
Strategy Programming A17
Announcement on the
Securities Times
Resolution of the 43rd
2018-33 23 May 2018 B17, Ta Kung Pao
Meeting of the 8th Board of
B4
Directors
Announcement on Offering Securities Times
2018-34 23 May 2018 Guarantee Limit to the B17, Ta Kung Pao
Wholly-owned Subsidiary B4
Announcement on the Private
Securities Times
Placement of Corporate
2018-35 23 May 2018 B17, Ta Kung Pao
Bond Programming by the
B4
Company
Announcement on Carrying
out the Business of Asset Securities Times
2018-36 23 May 2018 Securitization of Business B17, Ta Kung Pao
Factoring by the B4
wholly-owned Subsidiary
Announcement on Carrying
Securities Times
out the Business of Asset
2018-37 23 May 2018 B17, Ta Kung Pao
Securitization of Accounts
B4
Receivable
Notice on Convening the 2nd Securities Times
2018-38 23 May 2018 Extraordinary General B17, Ta Kung Pao
Meeting of 2018 B4
Announcement on Signing
Securities Times
the Strategic Cooperation
2018-39 25 May 2018 B32, Ta Kung Pao
Agreement with CMS
B8
Zhiyuan Capital
68
Konka Group Co., Ltd. Annual Report 2018
Announcement on the Securities Times
2018-40 29 May 2018 Implementation of Dividend B114, Ta Kung Pao
Plan of 2017 B14
Announcement on the
Securities Times
wholly-owned subsidiary’s
2018-41 29 May 2018 B114, Ta Kung Pao
Offering Guarantee to
B14
Majority-owned Subsidiary
Announcement on the
Controlling Shareholders’
Securities Times
Planning of Providing the
2018-42 31 May 2018 B100, Ta Kung Pao
Business of Asset
B5
Securitization of Business
Factoring with the Difference
Announcement on the
Securities Times
Resolution of the 2nd
2018-43 8 June 2018 B40, Ta Kung Pao
Extraordinary General
B5
Meeting of 2018
Announcement on Offering
Overseas Loan under Securities Times
2018-44 14 June 2018 Domestic Guarantee to B36, Ta Kung Pao
Foreign Wholly-owned B2
Subsidiary
Announcement on the
Securities Times
Resolution of the 44th
2018-45 16 June 2018 B29, Ta Kung Pao
Meeting of the 8th Board of
B6
Directors
Announcement onthe
Securities Times
Transfer of 51% Equities of
2018-46 16 June 2018 B29, Ta Kung Pao
Kunshan Kangsheng and
B6
Related-party Transactions
Indicative Announcement on Securities Times
2018-47 16 June 2018 the Expectation of Winning B4, Ta Kung Pao
the Bid of the Project B6
Announcement onthe
Securities Times
Progress of Offering
2018-48 20 June 2018 B52, Ta Kung Pao
Guarantees to the
B1
wholly-owned subsidiary
Announcement onthe
Securities Times
Progress of Offering
2018-49 22 June 2018 B29, Ta Kung Pao
Guarantees to the
B6
Majority-owned Subsidiary
69
Konka Group Co., Ltd. Annual Report 2018
Announcement on the
Securities Times
Resolution of the 45th
2018-50 28 June 2018 B44, Ta Kung Pao
Meeting of the 8th Board of
B7
Directors
Announcement on the
Investment and Establishment Securities Times
2018-51 28 June 2018 of Headquarter Base of B44, Ta Kung Pao
Konka One Belt and One B7
Road in Chengdu
Announcement on
Securities Times
Information Disclosure of
2018-52 28 June 2018 B44, Ta Kung Pao
Voluntariness of Receiving
B7
Letter of Acceptance
Announcement on Progress
Securities Times
of Transfer of 51% Equities
2018-53 3 July 2018 B52, Ta Kung Pao
of Kunshan Kangsheng and
B5
Related-party Transactions
Announcement on Progress Securities Times
2018-54 3 July 2018 of Providing Guarantees for B52, Ta Kung Pao
Wholly-owned Subsidiaries B5
Announcement on the
Securities Times
Changes of Consulting
2018-55 4 July 2018 B77, Ta Kung Pao
Telephone of the Company’s
B6
Investors
Securities Times
Announcement on the 2018
2018-56 14 July 2018 B21,Ta Kung Pao
Interim Earnings Forecasts
A18
Announcement on Volunteer
Securities Times
8 August Information Disclosure of
2018-57 B33,Ta Kung Pao
2018 Pre-winning the Bid for
B7
Project
Announcement on Progress
Securities Times
9 August of Providing Guarantees for
2018-58 B41,Ta Kung Pao
2018 Overseas Wholly-owned
B2
Subsidiaries
Announcement on Joint-stock Securities Times
11 August
2018-59 Company’s Winning the Bid B33,Ta Kung Pao
2018
for Land Use Right B1
Announcement on Securities Times
14 August
2018-60 Resolutions of the 47 th B21,Ta Kung Pao
2018
Meeting of the 8th Board of A18
70
Konka Group Co., Ltd. Annual Report 2018
Directors
Indicative Announcement on
Securities Times
14 August Construction of Zibo
2018-61 B21,Ta Kung Pao
2018 High-End Equipment
A18
Industrial Park by Investing
Indicative Announcement on
Securities Times
14 August Establishing Nanjing K-Star
2018-62 B25,Ta Kung Pao
2018 Cloud Network Headquarters
A18
by Investing
Announcement on Offering
Overseas Loan under Securities Times
21 August
2018-63 Domestic Guarantee to B60,Ta Kung Pao
2018
Foreign Wholly-owned B4
Subsidiary
Announcement on Volunteer
Securities Times
23 August Information Disclosure of
2018-64 B29,Ta Kung Pao
2018 Receiving the Letter of
B6
Acceptance
31 August Announcement on the 2018
2018-65
2018 Interim Report
Announcement on the Securities Times
31 August
2018-66 Abstract of the 2018 Interim B48,Ta Kung Pao
2018
Report B4
Announcement on
Completion of Record
Securities Times
7 September Registration of Private
2018-67 B32,Ta Kung Pao
2018 Placement Fund for the
A18
Industrial M&A Fund
Initiated by the Company
Announcement on
Securities Times
19 September Resolutions of the 49th
2018-68 B81,Ta Kung Pao
2018 Meeting of the 8th Board of
B4
Directors
Announcement on Providing
Securities Times
19 September Financial Aid to Sanjiang
2018-69 B82,Ta Kung Pao
2018 Real Estate Co., Ltd. and
B4
Related-party Transactions
Announcement on Providing
Securities Times
19 September Guarantee Line for
2018-70 B81,Ta Kung Pao
2018 Joint-stock Companies and
B4
Related-party Transactions
71
Konka Group Co., Ltd. Annual Report 2018
Securities Times
19 September Announcement on External
2018-71 B81,Ta Kung Pao
2018 Guarantees
B4
Notice on Convening the 3rd Securities Times
19 September
2018-72 Extraordinary General B82,Ta Kung Pao
2018
Meeting of 2018 B4
Announcement on Progress Securities Times
21 September
2018-73 of Providing Guarantees for B84,Ta Kung Pao
2018
Wholly-owned Subsidiaries B6
Securities Times
22 September Announcement on Reduction
2018-74 B25,Ta Kung Pao
2018 of Shares of Shareholders
B5
Announcement on Signing
Strategic Cooperation Securities Times
26 September
2018-75 Agreement with Shenzhen B20,Ta Kung Pao
2018
Binhai Fund Management B2
Co., Ltd.
Announcement on the 3rd Securities Times
9 October
2018-76 Extraordinary General B9,Ta Kung Pao
2018
Meeting of 2018 A18
Announcement on Progress Securities Times
13 October
2018-77 of Providing Guarantees for B45,Ta Kung Pao
2018
Majority-owned Subsidiaries B3
Announcement on the 2018 Securities Times
13 October
2018-78 First Quarter Earnings B45,Ta Kung Pao
2018
Forecasts B3
Announcement on
Securities Times
17 October Resolutions of the 50th
2018-79 B28,Ta Kung Pao
2018 Meeting of the 8th Board of
B5
Directors
Securities Times
17 October Announcement on External
2018-80 B28,Ta Kung Pao
2018 Investments
B5
Announcement on Receiving
No Objection Letter on the
Private Placement of the Securities Times
24 October
2018-81 Company’s corporate bonds B149,Ta Kung Pao
2018
in 2018 Meeting the Transfer B10
Conditions of Shenzhen
Stock Exchange
72
Konka Group Co., Ltd. Annual Report 2018
Announcement on Winning
Securities Times
27 October the Bidding for Land for
2018-82 B80,Ta Kung Pao
2018 Project of K-Star Cloud
B5
Network Headquarters
31 October
2018-83 2018 Third Quarter Report
2018
Securities Times
31 October Text of the 2018 Third
2018-84 B52,Ta Kung Pao
2018 Quarter Report
B6
Announcement on
Securities Times
31 October Resolutions of the 51st
2018-85 B52,Ta Kung Pao
2018 Meeting of the 8th Board of
B6
Directors
Securities Times
31 October Announcement on External
2018-86 B52,Ta Kung Pao
2018 Guarantees
B6
Announcement on Volunteer Securities Times
31 October
2018-87 Information Disclosure of B88,Ta Kung Pao
2018
Project Pre-concluded B6
Announcement on Volunteer
Securities Times
13 November Information Disclosure of
2018-88 B24,Ta Kung Pao
2018 Receiving Notice of Business
B3
Conclusion
Announcement on Progress Securities Times
14 November
2018-89 of Providing Guarantees for B20,Ta Kung Pao
2018
Wholly-owned Subsidiaries B5
Announcement on
Securities Times
17 November Resolutions of the 52nd
2018-90 B33,Ta Kung Pao
2018 Meeting of the 8th Board of
B7
Directors
Announcement on
Securities Times
17 November Resolutions of the 21st
2018-91 B33,Ta Kung Pao
2018 Meeting of the 8th
B7
Supervisory Committee
Notice on Convening the 4th Securities Times
17 November
2018-92 Extraordinary General B33,Ta Kung Pao
2018
Meeting of 2018 B7
Announcement on Progress Securities Times
30 November
2018-93 of Providing Guarantees for B32,Ta Kung Pao
2018
Majority-owned Subsidiaries A18
73
Konka Group Co., Ltd. Annual Report 2018
Announcement on General Securities Times
30 November
2018-94 Election of Employee B32,Ta Kung Pao
2018
Supervisors A18
Announcement on
Securities Times
3 December Resolutions of the 4th
2018-95 B64,Ta Kung Pao
2018 Extraordinary General
B6
Meeting of 2018
Announcement on Securities Times
5 December
2018-96 Resolutions of the 1 Meeting B25,Ta Kung Pao
st
2018
of the 9th Board of Directors A21
Announcement on
Securities Times
5 December Resolutions of the 1st Meeting
2018-97 B25,Ta Kung Pao
2018 of the 9th Supervisory
A21
Committee
Announcement on
Establishing Konka
(Chuzhou) Smart Appliances
Securities Times
5 December and Equipment Industrial
2018-98 B25,Ta Kung Pao
2018 Park by Investing and
A21
Government’s Intention to
Acquire Plant Land of Anhui
Konka
Announcement on Progress Securities Times
5 December
2018-99 of Providing Guarantees for B25,Ta Kung Pao
2018
Majority-owned Subsidiaries A21
Announcement on Progress Securities Times
22 December
2018-100 of Providing Guarantees for B17,Ta Kung Pao
2018
Majority-owned Subsidiaries B3
Announcement on
Securities Times
25 December Resolutions of the 2nd
2018-101 B32,Ta Kung Pao
2018 Meeting of the 9th Board of
B5
Directors
Announcement on
Assignment of Shares of
Chuzhou Huike Intelligent Securities Times
25 December
2018-102 Household Appliance B32,Ta Kung Pao
2018
Industrial Investment B5
Partnership (Limited
Partnership)
XX Significant Events of Subsidiaries
□ Applicable √ Not applicable
74
Konka Group Co., Ltd. Annual Report 2018
Part VI Share Changes and Shareholder Information
I. Share Changes
1. Share Changes
Unit: share
Before Increase/decrease in the Reporting Period (+/-) After
Shares
Share as
s as dividen
divid d
New Perce
Percent end convert
Shares issue Other Subtotal Shares ntage
age (%) conv ed
s (%)
erted from
from capital
profit reserve
s
1. Restricted shares 19,500 0.00% 19,500 0.00%
1.3 Shares held by
other domestic 19,500 0.00% 19,500 0.00%
investors
Among which: Shares
held by domestic
legal persons
Shares
held by domestic 19,500 0.00% 19,500 0.00%
natural persons
2. Unrestricted shares 2,407,925,908 100% 2,407,925,908 100%
2.1
RMB-denominated 1,596,574,300 66.31% 1,596,574,300 66.31%
ordinary shares
2.2 Domestically
811,351,608 33.69% 811,351,608 33.69%
listed foreign shares
3. Total shares 2,407,945,408 100% 2,407,945,408 100%
Reasons for share changes:
□ Applicable √ Not applicable
Approval of share changes:
75
Konka Group Co., Ltd. Annual Report 2018
□ Applicable √ Not applicable
Transfer of share ownership:
□ Applicable √ Not applicable
Progress on any share repurchases:
□ Applicable √ Not applicable
Progress on reducing the repurchased shares by means of centralized bidding:
□ Applicable √ Not applicable
Effects of share changes on the basic and diluted earnings per share, equity per share attributable to
the Company’s ordinary shareholders and other financial indicators of the prior year and the prior
accounting period, respectively:
□ Applicable √ Not applicable
Other information that the Company considers necessary or is required by the securities regulator to
be disclosed:
□ Applicable √ Not applicable
2. Changes in Restricted Shares
□ Applicable √ Not applicable
II. Issuance and Listing of Securities
1. Securities (Exclusive of Preferred Shares) Issued in the Reporting Period
□ Applicable √ Not applicable
2. Changes to Total Shares, Shareholder Structure and Asset and Liability Structures
□ Applicable √ Not applicable
3. Existing Staff-Held Shares
□ Applicable √ Not applicable
76
Konka Group Co., Ltd. Annual Report 2018
III Shareholders and Actual Controller
1. Shareholders and Their Shareholdings at the Period-End
Unit: share
Number of
Number of preferred
Number ordinary
Number of preferred shareholders with resumed
of shareholders at
shareholders with voting rights at the
ordinary 89,196 the month-end 88,015 0 0
resumed voting rights month-end prior to the
sharehold prior to the
(if any) disclosure of this Report (if
ers disclosure of this
any) (see note 8)
Report
5% or greater shareholders or top 10 shareholders
Shares in
Shareh Increase/dec Restrict
Total shares pledge or
Nature of olding rease in the ed Unrestricted
Name of shareholder held at the frozen
shareholder percent Reporting shares shares held
period-end Statu Sha
age Period held
s res
OVERSEAS
CHINESE TOWN State-owned
21.75% 523,746,932 0 0 523,746,932
ENTERPRISES CO., legal person
LTD
CITIC SECURITIES
BROKERAGE Foreign legal
7.56% 182,100,202 0 0 182,100,202
(HONG KONG) CO., person
LTD.
HOLY TIME Foreign legal
2.33% 56,139,100 89,276 0 56,139,100
GROUP LIMITED person
GUOYUAN
SECURITIES Foreign legal
2.25% 54,203,779 -551,366 0 54,203,779
BROKER (HK) CO., person
LTD.
GAOLING Foreign legal
2.19% 52,801,250 0 0 52,801,250
FUND,L.P. person
Domestic
ZHANG XIAOYU 0.99% 23,835,278 23,835,278 0 23,835,278
natural person
CHINA
MERCHANTS State-owned
0.93% 22,475,124 643,104 0 22,475,124
SECURITIES (HK) legal person
LIMITED
77
Konka Group Co., Ltd. Annual Report 2018
Foreign
NAM NGAI 0.90% 21,712,140 -307,900 0 21,712,140
natural person
YUNNAN
INTERNATIONAL
TRUST CO.,
Other 0.81% 19,530,380 -686,480 0 19,530,380
LTD-JULI NO. 48
SINGLE CAPITAL
TRUST
YUNNAN
INTERNATIONAL
TRUST CO.,
Other 0.72% 17,408,616 10,272,514 0 17,408,616
LTD-JULI NO. 49
SINGLE CAPITAL
TRUST
Strategic investor or general legal
person becoming a top-10 ordinary
N/A
shareholder due to rights issue (if any)
(see note 3)
Happy Bloom Investment Limited, a wholly-owned subsidiary of the Company’s first
majority shareholder Overseas Chinese Town Enterprises Co. (“OCT Group” for
short), holds 180,001,110 and 18,360,000 ordinary shares in the Company
Related or acting-in-concert parties respectively through CITIC Securities Brokerage (Hong Kong) Co., Ltd. and China
among the shareholders above Merchants Securities (HK) Limited. Happy Bloom Investment Limited and Overseas
Chinese Town Enterprises Co. are parties acting in concert. Other than that, it is
unknown whether the other shareholders are related parties or acting-in-concert
parties or not.
Top 10 unrestricted shareholders
Unrestricted shares held at Shares by type
Name of shareholder
the period-end Type Shares
OVERSEAS CHINESE TOWN ENTERPRISES CO., RMB-denominated
523,746,932 523,746,932
LTD ordinary stock
CITIC SECURITIES BROKERAGE (HONG KONG) Domestically listed
182,100,202 182,100,202
CO., LTD. foreign stock
Domestically listed
HOLY TIME GROUP LIMITED 56,139,100 56,139,100
foreign stock
Domestically listed
GUOYUAN SECURITIES BROKER (HK) CO., LTD. 54,203,779 54,203,779
foreign stock
Domestically listed
GAOLING FUND, L.P. 52,801,250 52,801,250
foreign stock
ZHANG XIAOYU 23,835,278 RMB-denominated 23,835,278
78
Konka Group Co., Ltd. Annual Report 2018
ordinary stock
Domestically listed
CHINA MERCHANTS SECURITIES (HK) LIMITED 22,475,124 22,475,124
foreign stock
Domestically listed
NAM NGAI 21,712,140 21,712,140
foreign stock
YUNNAN INTERNATIONAL TRUST CO., LTD-JULI RMB-denominated
19,530,380 19,530,380
NO. 48 SINGLE CAPITAL TRUST ordinary stock
YUNNAN INTERNATIONAL TRUST CO., LTD-JULI RMB-denominated
17,408,616 17,408,616
NO. 49 SINGLE CAPITAL TRUST ordinary stock
Happy Bloom Investment Limited, a wholly-owned subsidiary of the Company’s
first majority shareholder Overseas Chinese Town Enterprises Co. (“OCT Group”
Related or acting-in-concert parties among for short), holds 180,001,110 and 18,360,000 common shares in the Company
top 10 unrestricted public shareholders, as respectively through CITIC Securities Brokerage (Hong Kong) Co., Ltd. and China
well as between top 10 unrestricted public Merchants Securities (HK) Limited. Happy Bloom Investment Limited and
shareholders and top 10 shareholders Overseas Chinese Town Enterprises Co. are parties acting in concert. Other than
that, it is unknown whether the other shareholders are related parties or
acting-in-concert parties or not.
Top 10 ordinary shareholders involved in
Zhang Xiaoyu holds 23,835,278 A-shares in the Company through her account of
securities margin trading (if any) (see note
collateral securities for margin trading in Huaxi Securities Co., Ltd.
4)
Indicate by tick mark whether any of the top 10 ordinary shareholders or the top 10 unrestricted ordinary shareholders
of the Company conducted any promissory repo during the Reporting Period.
□ Yea √ No
No such cases in the Reporting Period.
2. Controlling Shareholder
Nature of the controlling shareholder: Controlled by a central state-owned legal person
Type of the controlling shareholder: legal person
Legal
Date of Unified social credit
Name of actual controller representative/p Principal activity
establishment code
erson in charge
Export of textile, light
industrial products, etc; import
of self-used goods in
Overseas Chinese Town 11 November 91440300190346175
Duan Xiannian Shenzhen, mechanical
Enterprises Co. 1985 T
equipment, light industrial
products, etc. as approved by
the relevant authorities of
79
Konka Group Co., Ltd. Annual Report 2018
Shenzhen (under Government
Document JMB [92]
WJMGTSZZ No. A19024);
compensation trade;
investment in tourism and
relevant cultural industry
(including art performance,
entertainment and their
services, etc), industry, real
estate, commerce & trade,
packaging, decoration and
investment in printing
industry. The convert of
export commodities into
domestic sale and the
domestic sales of import
commodities. Travelling,
rental of warehouses, culture
and art, bonded warehouse of
car donation, convention and
exhibition services (the
projects involved in license
management can be operated
after getting the relevant
license first ); sales of
automobile (sedan car
included)
As of 31 December 2018, Overseas Chinese Town Enterprises Co. held 47.38% equity of
Shenzhen Overseas Chinese Town Co., Ltd. (a company listed on the main Board of Shenzhen
Actual controller’s holdings Stock Exchange, SZ. 000069). Meanwhile, Shenzhen Overseas Chinese Town Co., Ltd.
in other listed companies at indirectly held 70.94% equity of OCT (Asia) Holdings Ltd. (a company listed on the main
home or abroad in the Board of Hong Kong Stock Exchange, 3366.HK). Overseas Chinese Town Enterprises Co.
Reporting Period indirectly held 49.52% equity of Yunnan Tourism Co., Ltd (a company listed on the SME Board
of Shenzhen Stock Exchange, SZ.002059) through increasing capital to Yunnan Expo Tourism
Group Holdings., Ltd.
Change of the controlling shareholder in the Reporting Period:
□ Applicable √ Not applicable
No such cases in the Reporting Period.
3. Actual Controller and Its Acting-in-Concert Parties
Nature of the actual controller: Central institution for state-owned assets management
80
Konka Group Co., Ltd. Annual Report 2018
Type of the actual controller: legal person
Legal
Date of
representative/ Unified social credit
Name of actual controller establishmen Principal activity
person in code
t
charge
State-owned Assets Supervision
and Administration Commission of Hao Peng Not applicable Not applicable
the State Council
Other listed companies at home or abroad controlled by the actual controller in the Reporting
Not applicable
Period
Change of the actual controller during the Reporting Period:
□ Applicable √ Not applicable
No such cases in the Reporting Period.
Ownership and control relations between the actual controller and the Company:
State-Owned Assets Supervision and Administration
Commission of the State Council
100%
Overseas Chinese Town Enterprises Co. and its
wholly owned subsidiaries
29.999997%
Konka Group Co., Ltd.
Indicate by tick mark whether the actual controller controls the Company via trust or other ways of
asset management.
□ Applicable √ Not applicable
4. Other 10% or Greater Corporate Shareholders
□ Applicable √ Not applicable
5. Limitations on Shareholding Decrease by the Company’s Controlling Shareholder, Actual
Controller, Reorganizer and Other Commitment Makers
√ Applicable □ Not applicable
In September 2018, Shenzhen Overseas Chinese Town Capital Investment Management Co., Ltd., a
81
Konka Group Co., Ltd. Annual Report 2018
wholly-owned subsidiary of OCT Group, the controlling shareholder of the Company, reduced its
holding of 7,183,800 shares of the Company through secondary market trading. Before the
reduction, OCT Group and its wholly-owned subsidiaries Happy Bloom Investment Limited and
Shenzhen Overseas Chinese Town Capital Investment Management Co., Ltd. held a total of
729,567,342 Konka Group-A-shares (000016) and B-shares (200016) (unrestricted ordinary shares),
accounting for 30.298334% of the Company’s equity. After the reduction, the aforementioned three
shareholders hold a total of 722,383,542 Konka Group-A shares (000016) and B-shares (200016)
(unrestricted ordinary shares), accounting for 29.999997% of the Company’s total share capital.
82
Konka Group Co., Ltd. Annual Report 2018
Part VII Preferred Shares
□ Applicable √ Not applicable
No preferred shares in the Reporting Period.
83
Konka Group Co., Ltd. Annual Report 2018
Part VIII Directors, Supervisors, Senior Management and Staff
I Change in Shareholdings of Directors, Supervisors and Senior Management
Incr
Decr
ease
ease Othe
Begin in Endi
in r
Incumbe ning the ng
Gende Start of the incre
Name Office title nt/Form Age End of tenure share Rep share
r tenure Repo ase/d
er holdi ortin holdi
rting ecrea
ng g ng
Perio se
Peri
d
od
Director and
Liu Incumbe 3 December 3 December
Chairman of Male 47 0 0 0 0 0
Fengxi nt 2018 2021
the Board
He Incumbe 3 December 3 December
Director Male 45 0 0 0 0 0
Haibin nt 2018 2021
Zhang Incumbe 3 December 3 December
Director Male 37 0 0 0 0 0
Jing nt 2018 2021
Zhou Incumbe 3 December 3 December
Director Male 40 0 0 0 0 0
Bin nt 2018 2021
Sun
Independent Incumbe 3 December 3 December
Shengdi Male 64 0 0 0 0 0
director nt 2018 2021
an
Wang
Independent Incumbe 3 December 3 December
Shugua Male 48 0 0 0 0 0
director nt 2018 2021
ng
Deng
Independent Incumbe Femal 3 December 3 December
Chunhu 56 0 0 0 0 0
director nt e 2018 2021
a
Supervisor,
chairman of
Wang Incumbe 3 December 3 December
the Male 58 0 0 0 0 0
Youlai nt 2018 2021
Supervisory
Committee
Yang Incumbe 3 December 3 December
Supervisor Male 50 0 0 0 0 0
Guobin nt 2018 2021
Employee Incumbe 29 3 December
Li Jun Male 48 0 0 0 0 0
supervisor nt November 2021
84
Konka Group Co., Ltd. Annual Report 2018
2018
Zhou Incumbe 10 March 10 March
President Male 40 0 0 0 0 0
Bin nt 2017 2020
He Vice Incumbe 10 March 10 March
Male 49 0 0 0 0 0
Jianjun president nt 2017 2020
Li
Vice Incumbe 10 March 10 March
Hongta Male 51 0 0 0 0 0
president nt 2017 2020
o
Wu
Board Incumbe 10 March 10 March
Yongju Male 44 0 0 0 0 0
Secretary nt 2017 2020
n
Li Incumbe 10 March 10 March
CFO Male 46 0 0 0 0 0
Chunlei nt 2017 2020
Yang Vice Incumbe 10 March 10 March
Male 49 0 0 0 0 0
Bo president nt 2017 2020
Cao Vice Incumbe 10 March 10 March
Male 41 0 0 0 0 0
Shiping president nt 2017 2020
Sun
Vice Incumbe 18 April 10 March 26,00 26,00
Qingya Male 47 0 0 0
president nt 2017 2020 0 0
n
Jin 28 May 3 December
Director Former Male 62 0 0 0 0 0
Qingjun 2015 2018
Xiao Independent 28 May 3 December
Former Male 53 0 0 0 0 0
Zuhe director 2015 2018
Zhang Independent 28 May 3 December
Former Male 54 0 0 0 0 0
Shuhua director 2015 2018
Hao 28 May 3 December
Supervisor Former Male 46 0 0 0 0 0
Gang 2015 2018
Chairman of
Hao the 3 December
Former Male 46 4 June 2015 0 0 0 0 0
Gang Supervisory 2018
Committee
26,00 26,00
Total -- -- -- -- -- -- 0 0 0
0 0
II Change of Directors, Supervisors and Senior Management
√Applicable □ Not applicable
Type of
Name Office title Date of change Reason for change
change
85
Konka Group Co., Ltd. Annual Report 2018
Liu
Director Engaged 3 December 2018 Elected as director through shareholders meeting
Fengxi
Liu Chairman of Elected as Chairman of the Board through Board of
Engaged 3 December 2018
Fengxi the Board Directors
He
Director Engaged 3 December 2018 Elected as director through shareholders meeting
Haibin
Zhang
Director Engaged 3 December 2018 Elected as director through shareholders meeting
Jing
Zhou Bin Director Engaged 3 December 2018 Elected as director through shareholders meeting
Sun
Independent Elected as independent director through shareholders
Shengdia Engaged 3 December 2018
director meeting
n
Wang Independent Elected as independent director through shareholders
Engaged 3 December 2018
Shuguang director meeting
Deng Independent Elected as independent director through shareholders
Engaged 3 December 2018
Chunhua director meeting
Wang
Supervisor Engaged 3 December 2018 Elected as supervisor through shareholders meeting
Youlai
chairman of
Wang the Elected as chairman of the Supervisory Committee
Engaged 3 December 2018
Youlai Supervisory through the Supervisory Committee
Committee
Yang
Supervisor Engaged 3 December 2018 Elected as supervisor through shareholders meeting
Guobin
Employee Elected as employee supervisor through congress of
Li Jun Engaged 29 November 2018
supervisor works and staff
Jin
Director Expired 3 December 2018 The service term was expired
Qingjun
Xiao Independent
Expired 3 December 2018 The service term was expired
Zuhe director
Zhang Independent
Expired 3 December 2018 The service term was expired
Shuhua director
Hao
Supervisor Expired 3 December 2018 The service term was expired
Gang
Chairman of
Hao the
Expired 3 December 2018 The service term was expired
Gang Supervisory
Committee
86
Konka Group Co., Ltd. Annual Report 2018
III Biographical Information
Professional backgrounds, major work experience and current duties in the Company of the
incumbent directors, supervisors and senior management:
1. Director
Liu Fengxi, male, born in 1972, was the Chairman of the Board with a master degree. He once
worked as the marketing GM for the multi-media division of Konka Group, Assistant GM and then
Vice GM of Shenzhen Konka Telecommunications Technology Co., Ltd., Chief of the Operation
Management Center of Konka Group, Assistant to President and Vice President of Konka Group,
etc. And now he is acting as the Board Chairman and CEO of Konka Group.
He Haibin, male, born in 1974, a senior accountant, was a director of the Company with a master
degree. He once worked as the Chief of Audit Department and Financial Department in Overseas
Chinese Town Group Corporation, as Principal of Finance in Planning Department of the Crowne
Plaza Shenzhen, as CFO in Shenzhen OCT Seaview Hotel Co., Ltd., as CFO in InterContinental
Shenzhen, as Vice CFO in Overseas Chinese Town Group Corporation and as CFO in Overseas
Chinese Town Hong Kong Limited, GM of OCT Capital Investment Management Co., Ltd., the
Chief Accountant of Shenzhen OCT Co., Ltd., and Chief of Business Management Division in
Overseas Chinese Town Enterprises Co. etc. Now he serves as the Standing Committee and Board
Secretary the Chief Accountant of Oversees Chinese Town Group Corporation, and the Chairman of
the Board of Shenzhen OCT Capital Investment Management Co., Ltd, director of OCT (Yunnan)
Investment Co., Ltd, Executive Director of Overseas Chinese City (Asia) Holding Co., Ltd., as well
as a director of Konka Group.
Zhang Jing, Director, male, was born in 1982, MBA. He served as Manager of the CEO’s Office in
OCT Group, Senior Manager of the Strategic Development Department in Shenzhen OCT Co., Ltd.,
a member of the Preparatory Work Group of Qingdao OCT, Director of the Administration
Department (Deputy Director of the Party Committee Office) in Shenzhen OCT Properties Co., Ltd.,
Deputy Director and Director of the Strategic Development Department in Shenzhen OCT Co., Ltd.,
General Manager of the Strategic Planning Department in OCT Group, General Manager of the
Corporate Management Department in OCT Group, and Director of the Corporate Management
Department in Shenzhen OCT Co., Ltd.. Currently, he serves as Executive Deputy General Manager
of OCT West Investment Co., Ltd., Chairman and General Manager of Xi’an OCT Industry Co.,
Ltd., Chairman and General Manager of Xi’an Qujiang OCT Investment Development Co., Ltd.,
General Manager of Xi’an OCT Land Co., Ltd., General Manager of Xi’an Fengdong OCT
Development Co., Ltd., Director of OCT (HK) Co., Ltd., Non-Executive Director of OCT (Asia),
Chairman of OCT (Beijing) Business Management Co., Ltd., Vice Chairman of Huawan Healthy
Industry Development Co., Ltd., Director of OCT (Yunnan) Investment Co., Ltd. and Director of
Konka Group.
Zhou Bin, male, born in 1979, was the director and president of the Company with a bachelor
degree. He once served as the director assistant, deputy director and director in Operating
Management Center in Konka Group, assistant of the president in the Board of Directors and
87
Konka Group Co., Ltd. Annual Report 2018
Director in Operating Management Center and others. Now, he acts as the director and president in
Konka Group.
2. Independent Director
Sun Shengdian, a male senior economist, born in 1955, was the independent director of the
Company with a doctor degree in engineering. Formerly vice GM, deputy secretary of the Party
committee, GM and president of Shenzhen SEG, Hitachi Color Display Devices Co., Ltd., president,
secretary of Party Committee of Shenzhen SEG Group Co., Ltd. director of Shenzhen China Star
Optoelectronics Technology Co., Ltd., independent director of Skyworth Holding Ltd., and the head
of Shenzhen Electronics Industries Association. Now, he serves as the vice president of Shenzhen
Huakong SEG Co., Ltd., the director of China Vanke Co., Ltd, and independent director of Konka
Group.
Wang Shuguang, Independent Director, male, was born in 1971, PhD in economics, professor and
doctoral supervisor. He served as Independent Director of Yantai Rural Commercial Bank, Jinan
Rural Commercial Bank, Ningbo Yuyao Rural Commercial Bank and SDIC Zhonglu, and External
Supervisor and Convener of the Board of Supervisors of Industrial Bank Co., Ltd. Currently, he
serves as Professor and Doctoral Supervisor in the School of Economics of Peking University,
Executive Deputy Director of the Institute for Cultural Industries, Peking University and
Independent Director of Konka Group.
Deng Chunhua, Independent Director, female, ethnic group of Han, born in 1963, MBA, professor
and master’s supervisor of accounting, Certified Public Accountant in China (non-practicing
member). She served as Chief Accountant and Project Manager of WUYIGE Certified Public
Accounts LLP, Zhongnan University of Economics and Law, Member of the Fifth Session of the
Corporate Special Committee of the Chinese Association of Quantitative Economics and Member
of the Professional Jury Committee of Hubei Administration of Sport. From July 1984 till now, she
has been teaching in the School of Accounting of Zhongnan University of Economics and Law as
Assistant Lecturer, Lecturer, Associate Professor and Professor. Currently, she serves as
Independent Director of Jiangsu Pomlead Co., Ltd and Independent Director of Konka Group.
3. Supervisor
Wang Youlai, a male engineer, born in 1961, was the chairman of the Supervisory Committee of the
Company with a doctor degree. He formerly worked as the business manager of the Quality
Department in Konka Group, assistant GM, vice GM, and vice president of Konka Group, Deputy
Director and Director of the Administration Department of Overseas Chinese Town Enterprise Co.,
and joint party secretary of General Headquarters. Presently he is working as joint party secretary of
General Headquarters in Overseas Chinese Town Enterprises Co. and director of Shenzhen
Guangming Group Co., Ltd and OCT (Hainan) Group Co., Ltd, and the chairman of the
Supervisory Committee of Konka Group.
Yang Guobin, Supervisor, male, was born in 1969, Bachelor’s Degree, Certified Public Accountant.
He served as Deputy Director of the Finance Department of OCT Group, CFO of Konka Group and
Deputy Director of the Corporate Management Department of OCT Group. Currently, he serves as a
full-time Director in OCT Group, Director of Shenzhen Guangming Group and Supervisor of
88
Konka Group Co., Ltd. Annual Report 2018
Konka Group.
Li Jun, male, born in 1971, member of Communist Party, was an employee supervisor of the
Company with a bachelor degree. Formerly worked as the financial manager of Nanchang Branch
of Telecommunications Technology Co., Ltd., Senior Manager of the Financial Department in
Telecommunications Technology Co., Ltd., the Senior Manager and assistant to the chief and
deputy director of Auditing and Legal Affairs Department in Konka Group, leader of discipline
inspection commission of Konka Group, and employee supervisor of the 8th Supervisory Committee
of konka Group. Presently working as the full-time deputy secretary of discipline inspection
commission of Konka Group, the director of Discipline inspection and Supervision Center, vice
chief of the Auditing and Legal Affairs Department, GM of the Internal Control and Risk
Management Department.
4. Senior Executive
Zhou Bin, male, born in 1979, was the director and president of the Company with a bachelor
degree. He once served as the director assistant, deputy director and director in Operating
Management Center in Konka Group, assistant of the president in the Board of Directors and
Director in Operating Management Center and others. Now, he acts as the director and president in
Konka Group.
He Jianjun, a male economist, Han nationality, born in 1969, was the vice president of the Company
with a bachelor degree. He has served successfully as Deputy Chief of Secretariat of the Board,
Deputy Chief and Chief of Strategic Development Dept. and Secretary to the Board as well as vice
president in Konka Group, etc. He now is acting as Vice President of Konka Group.
Li Hongtao, male, Han nationality, born in 1968, was the vice president of the Company with a
bachelor degree. He successively took the post such as Assistant to GM, GM, Chairman of the
Board and GM of Shenzhen Konka Telecommunication Technology Co., Ltd and Assistant to
President and vice president of Konka Group etc. He now is acting as Vice President of Konka
Group.
Wu Yongjun, male, Han nationality, born in 1975, was the Board Secretary with a master degree.
Formerly he worked as the senior manager of Secretariat, assistant to the chief, vice chief, chief,
Securities Affairs representative and Board Secretary in Konka Group. Presently he is working as
the secretary of the board of directors of Konka Group.
Li Chunlei, male, Han nationality, born in 1973, was the CFO of the Company with a master degree.
Once served as the director in Real Estate Business Division in Konka Group, vice GM and GM in
Kunshan Kangsheng Investment Development Co., Ltd., deputy director (preside the work) and
director in Strategic Development Center, GM in Financial Center and GM in Asset Settlement
Center and others, now he acts as the CFO in Konka Group.
Yang Bo, male, Han nationality, born in 1970, was the vice president of the Company with a master
89
Konka Group Co., Ltd. Annual Report 2018
degree. Once served as the director in Shenzhen Cable Television Education Financial Channel,
director in the market sales and support region of US Tailiyang Communications Company, GM in
Program Operating Department in Shenzhen Topway Video Communication Co., Ltd., director and
GM in Shenzhen Tianhua Century Media Co., Ltd., GM in Market Sales Center in Shenzhen
Topway Video Communication Co., Ltd. and others, he acts as the vice president in Konka Group
presently.
Cao Shiping, male, Han nationality, born in 1978, was the vice president of the Company with a
master degree. Once served as the GM in Jinzhou Branch and Tianjin Branch of Konka Group
Multi-media, GM in Multi-media Business Division Customer Cooperation Department, vice GM
in Multi-media Marketing Business Division, vice GM in Multi-media Business Division and GM
in Marketing Center, GM in Multi-media Business Division, GM in Internet Business Division and
others, he acts as the vice president in Konka Group.
Sun Qingyan, a male senior economist, Han nationality, born in 1972, was the vice president of the
Company with a doctor degree. Once served as the tutor in Northeast University of Finance and
Economies, vice GM in Shenzhen Huaixin Enterprise Investment Consulting Co., Ltd., CEO in
Shenzhen Xinheng Lida Capital Management Co., Ltd., vice GM in Shanying Investment
Management Co., Ltd., GM in Shenzhen Shenwo Asset Management Co., Ltd. and others, he now
acts as the vice president of Konka Group.
Offices held concurrently in shareholding entities:
√Applicable □Not applicable
Remuneratio
End n or
Office held in the of allowance
Name Shareholding entity Start of tenure
shareholding entity tenur from the
e shareholding
entity
Party Committee
Liu
OCT Enterprises Co. Standing Committee and 22 February 2016 Yes
Fengxi
vice GM
Party Committee
Standing Committee,
OCT Enterprises Co. 30 January 2018 Yes
Board Secretary, and
chief accountant
He
Shenzhen OCT Capital Investment
Haibin Chairman of the Board 8 February 2018
Management Co., Ltd
OCT (Yunnan) Investment Co., Ltd Director 18 December 2018
Overseas Chinese City (Asia) Holding
Executive director 5 JUN 2017
Co., Ltd.
Zhang Overseas Chinese Town (Asia) Non-executive director 30 March 2017 Yes
90
Konka Group Co., Ltd. Annual Report 2018
Jing Holdings Limited
OCT (Beijing) Business Management
Chairman of the Board 31 March 2017
Co., Ltd.
OCT (Yunnan) Investment Co., Ltd Director 18 January 2018
OCT West Investment Co., Ltd. Deputy General Manager 14 March 2019
Chairman of the Board,
Xi’an OCT Industry Co., Ltd. 14 March 2019
GM
Xi’an Qujiang OCT Investment Chairman of the Board,
14 March 2019
Development Co., Ltd. GM
Xi’an OCT Land Co., Ltd GM 14 March 2019
Xi’an Fengdong OCT Development
GM 14 March 2019
Co., Ltd
Huawan Health Industry Development
Vice Chairman 21 September 2018
Co., Ltd.
OCT Enterprises Co. Full-time director 7 March 2018 Yes
Wang
Shenzhen Guangming Group Co., Ltd Director 25 April 2018
Youlai
OCT (Hainan) Group Co., Ltd Director 29 May 2018
Yang Full-time director in
OCT Enterprises Co. 7 March 2018 Yes
Guobin Board Office
1. Except the above situation, other directors, supervisors and senior management didn’t hold any position in the
shareholders’ units.
Notes
2. It is unknown the ending date of the posts of Mr. Liu Fengxi, Mr. He Haibin, Mr. Zhang Jing, Mr. Wang Youlai,
and Mr. yang Guobin held in the shareholders’ units.
Offices held concurrently in other entities:
√Applicable □Not applicable
Remuneration
Office held in or allowance
Name Other entity Start of tenure End of tenure
the entity from the
entity
Sun Shenzhen Huakong SEG Co.,
Vice president 8 April 2013
Shengdian Ltd
Sun
China Vanke Co., Ltd Director 30 June 2018 Yes
Shengdian
Wang School of Economics of Peking
Professor Yes
Shuguang University
Wang Institute for Cultural Industries Deputy
Shuguang of Peking University director
Deng Zhongnan University of
Professor Yes
Chunhua Economics and Law
91
Konka Group Co., Ltd. Annual Report 2018
Deng Independent
Jiangsu Pomlead Co., Ltd
Chunhua director
Punishments imposed in the recent three years by the securities regulator on the incumbent directors,
supervisors and senior management as well as those who left in the Reporting Period:
□ Applicable √ Not applicable
IV Remuneration of Directors, Supervisors and Senior Management
Decision-making procedure, determination basis and actual payments of remuneration for directors,
supervisors and senior management:
1. The salary of directors and supervisors of the Company should be submitted to the shareholders
meeting for review after the approval and consent by the Board of directors.
Referred to the salary level of the Directors and Supervisor of the domestic listed companies of
same industry, the salary proposal of the Director and Supervisors of the Company which approved
and reviewed by the 2nd Extraordinary General Meeting of 2015 were as follows: (1) the basic
annual salary standard of the Board Chairman was of RMB1.2 million, the subsidy standard of
other Directors (excluding the Directors serving in the Company) was of RMB0.3 million per
person per year and the subsidy standard of the Supervisors (excluding the Employee Supervisors)
was of RMB0.2 million per person per year; which was executed since June 2015. (2) the above
standards were all pre-tax standard with the individual income tax burdened in person as well as the
Company withheld and remitted tax.
Other treatment for independent directors: travel expense when they went to attend the Board
sessions, Supervisory sessions or Shareholders’ General Meetings and the expenses when they were
performing their duties as stipulated in the relevant regulations and the Articles of Association and
other relevant systems, all these could be reported for deletion.
The Board of Directors determined the remuneration of senior management staffs referring to the
following factors: a. scope of jobs and responsibility shouldered; b. actual profit of the Company; c.
market remuneration level in the same industry and same area.
Remuneration of the directors, supervisors and senior management of the Company during the
Reporting Period
Unit: RMB'0,000
Total before-tax
Incumbent/ Any remuneration
Name Office title Gender Age remuneration from
Former from related party
the Company
Chairman of the Board and
Liu Fengxi Male 47 Incumbent 7.21 Yes
CEO
He Haibin Director Male 45 Incumbent 0 No
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Konka Group Co., Ltd. Annual Report 2018
Zhang Jing Director Male 37 Incumbent 0 Yes
Zhou Bin Director and president Male 40 Incumbent 395.24 Yes
Sun
Independent director Male 64 Incumbent 7.5 No
Shengdian
Wang
Independent director Male 48 Incumbent 2.5 No
Shuguang
Deng
Independent director Female 56 Incumbent 2.5 No
Chunhua
Wang Chairman of the
Male 58 Incumbent 0 Yes
Youlai Supervisory Committee
Yang
Supervisor Male 50 Incumbent 0 Yes
Guobin
Li Jun Employee supervisor Male 48 Incumbent 105.49 No
He Jianjun Vice president Male 49 Incumbent 236.13 No
Li Hongtao Vice president Male 51 Incumbent 228.64 No
Wu
Board secretary Male 44 Incumbent 236.20 No
Yongjun
Li Chunlei CFO Male 46 Incumbent 216.63 No
Yang Bo Vice president Male 49 Incumbent 189.86 No
Cao
Vice president Male 41 Incumbent 251.37 No
Shiping
Sun
Vice president Male 47 Incumbent 171.15 No
Qingyan
Jin Qingjun Director Male 62 Former 27.5 No
Xiao Zuhe Independent director Male 53 Former 27.5 Yes
Zhang
Independent director Male 54 Former 27.5 No
Shuhua
Chairman of the
Hao Gang Male 46 Former 0 No
Supervisory Committee
Total 2132.92
Equity incentives for directors, supervisors and senior management in the Reporting Period:
□ Applicable □ Not applicable
V Employees
1. Number, Functions and Educational Backgrounds of Employees
Number of in-service employees of the Company as the parent 1,826
Number of in-service employees of major subsidiaries 17,139
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Konka Group Co., Ltd. Annual Report 2018
Total number of in-service employees 18,965
Total number of paid employees in the Reporting Period 18,965
Number of retirees to whom the Company as the parent or its
0
major subsidiaries need to pay retirement pensions
Functions
Function Employees
Production 9,286
Sales 6,106
Technical 1,467
Financial 680
Administrative 1,426
Total 18,965
Educational backgrounds
Educational background Employees
Master and above 164
Bachelor 2,592
Junior college 7,133
High school and below 9,076
Total 18,965
2. Employee Remuneration Policy
The Company promulgated its remuneration system with the operating strategy of serving for the
enterprise development and enhancement, and the principle of deciding the remuneration according
to the post, business performance and capabilities, as well as the market competitiveness and
internal fairness. And it decided the employee’s remuneration level according to its business
earnings, the posts and fulfillment of the business performance of the employee.
3. Employee Training Plans
The Company adhered to the people-oriented and paid special attention to cultivate the talents.
Surrounded by the business development and the construction of talent team, the Company actively
organized and carried out various training activities, and continuously perfected its talents
cultivation system, as well as further enhanced the employee’s professional skills and overall quality,
so as to strengthen the construction of management talents, professional talents and technical talents
teams.
In 2018, guided by closing to the business needs, the Company centralized the superior resources to
94
Konka Group Co., Ltd. Annual Report 2018
promote the cultivation of key talents. And it organized and carried out the open class project for all
the employees, and organized and carried out the new employee’s training & cultivation projects
respectively for the graduates from campus recruiting and personnel from social recruitment.
Meanwhile, it centralized to organize the pointed the training projects of general management skills
and post professional knowledge, etc for the personnel from marketing, R&D, manufacturing,
financial and human resources systems, so as to better complete its annual training plan.
4. Labor Outsourcing
□ Applicable √ Not applicable
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Konka Group Co., Ltd. Annual Report 2018
Part IX Corporate Governance
I General Information of Corporate Governance
In the Reporting Period, strictly in accordance with the Company Law, Securities Law of the PRC,
Code of Corporate Governance for Listed Companies, Share Listing Rules of Shenzhen Stock
Exchange and the relevant rules and regulations of the CSRC, the Company timely amended the
internal control systems such as the Articles of Association and Administrative Method on Provision
of External Financial Aids as well as Management System on Investors Relationship, continuously
perfected the corporate governance structure and standardized the Company’s operation. By the end
of the Reporting Period, the actual conditions of corporate governance basically met the
requirements of the regulatory documents in respect of corporate governance structure of listed
companies issued by CSRC.
(I) Shareholders and the Shareholders’ General Meeting
The Company drew up Articles of Association and Rules for Procedure of Shareholders’ General
Meeting, ensured that all shareholders, in particular medium and minor shareholders, enjoy legal
rights and equal standard. In the Reporting Period, the Company was able to publish announcement
on Shareholders’ General Meetings in advance, convened Shareholders’ General Meeting with
strictly accordance to relevant requirements, so as to enable the shareholders have their rights of
information to the Company’s material issues and the participation rights. In 2018, the Company
convened five Shareholders’ General Meeting in total. The Company seriously did well the
registration, arrangement and organization work for the Shareholders’ General Meeting before the
circular on convening the Shareholders’ General Meeting being published at the designated media.
The Company convened the Shareholders’ General Meeting at the office address of the Company
strictly in line with relevant stipulations, which was convenient in traffic, and the shareholders
could attend the session in accordance with their actual situation. The Company’s directors,
supervisors and senior management staffs made explanations and description for the shareholders’
questions and advices at the session.
(II) Controlling shareholder and the Company
In the Reporting Period, the controlling shareholders and actual controllers strictly regulated its
behavior and complied with laws in exercising their rights and obligations, not bypassed the
Shareholders’ General Meeting to intervene in the Company’s decisions and operations directly or
indirectly. The Company was separated from the controlling shareholders and actual controllers in
aspects of its business, personnel, assets, organ and finance, the Board of Directors, Supervisory
Committee and the internal departments of the Company functioned independently.
(III) Directors and the Board of Directors
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Konka Group Co., Ltd. Annual Report 2018
The number and structure of the Board Bureau of the Company were in compliance with laws and
regulations. The Company drew up Rules for Procedures of the Board Bureau, so as to ensure a
high efficient operation and scientific decision-making of the Board Bureau; the Company has set
up Independent Director System and engaged three independent directors. In the Reporting Period,
the number of directors and composition of the Board of Directors of the Company as well as the
procedure of selection was in accordance with the requirements of the rules and laws as well as
Articles of Association. The Company set up four special committees, which were Financial Audit
Committee, Nomination Committee, Remuneration & Appraisal Committee, Strategy Committee to
provide profession opinion for the decision of the Board of Directors. All the directors carried out
their work, fulfilled their duties and scrupulously attended the Board sessions in accordance with
Rules of Procedure for the Board of Directors, Rules for Independent Directors, etc. 15 Board
sessions were convened by the Company during the Reporting Period, which brought the
decision-making mechanism of the Board of Directors into full play.
(IV) Supervisors and supervisory committee
The Company has established Rules for Procedures of the Supervisory Committee, persons and
structure of the Supervisory Committee was in line with relevant laws and statutes, supervisors can
earnestly perform their responsibilities, independently and efficiently executed supervision and
check responsibilities with a spirit of being responsible to shareholders. In the Reporting Period, the
number of supervisors and composition of the Supervisory Committee of the Company as well as
their selecting procedure complied with the laws, regulations. In accordance with the requirement of
the Rules of Procedure for Supervisory Committee, the supervisors performed their duties in an
earnest and responsible manner, and exercised their functions of supervision on the decision-making
procedure of the Board of Directors, resolutions and the Company’s operation by law, and took
effective supervision over the Company’s significant events, related transactions, financial position,
as well as the legality and compliance on duty performance by the directors, president and other
senior management members.
(V) Performance Appraisal and Incentive & Restrictive Mechanism
The senior management staffs of the Company were recruited on an open basis and in compliance
with the laws and regulations. The Company has established and gradually improved the
performance appraisal standards and incentive & restrictive mechanism for senior management
staffs, so as to attract qualified personnel, and ensure the stability of senior management staffs.
(VI) Interested parties
During the Reporting Period, the Company fully respected and maintained the legal rights of the
interested parties, and realized the balance of interest among the parties such as society,
shareholders and employees, etc. Meanwhile, the Company protected the rights of the employees,
promoted the environmental protection, and actively joined in the social benefit and charitable
97
Konka Group Co., Ltd. Annual Report 2018
cause so as to jointly promote sustainable and healthy development.
(VII) Information disclosure and transparency
The Company formulated the Management System for Investor Relations and the Management
System for Information Disclosure and the Rules on Implementation for Information Disclosure
Committee. And the Company designated specially-assigned person to take charge of the
information disclosure, and designated specialized department to be responsible for the reception of
shareholders and consultation, actively carrying out the work for investor relations management to
ensure equal access to information for all shareholders. The Company strictly complied with the
requirements of the laws, regulations and the Articles of Association to disclose its information as
required by the relevant regulations on an timely, honest, complete and accurate basis, to ensure the
accurate and timely information disclosure, while ensure equal access to information for all
shareholders.
(VIII) Non-standard governance
1. Type of non-standard governance matter existed
There was a situation that the Company disclosed undisclosed information.
2. Types and cycle of undisclosed information provided to the principal shareholder
The Company provided monthly financial data to the principal shareholder.
3. Reasons for the related non-standard governance existed
The Company submitted the undisclosed information such as monthly financial data to the
substantial shareholder directly administrated by the State-owned Assets Supervision and
Administration Commission of State Council in accordance with the managerial demand of
SASAC.
4. Impact on Company independence
After the self-inspection, the Company kept strictly to the requirements of “Notice on Strengthening
the Supervision of Listed Company’s Provision of Non-public Information to Substantial
Shareholders and Actual Controllers”, and “Supplementary Notice Concerning Strengthening the
Supervision of the Non-standard Governance Behavior of Listed Company's Provision of
Non-public Information to Substantial Shareholders and Actual Controllers”, while stringently
performed the necessary procedures. There existed no circumstances of substantial shareholder’s
abuse of control and disclosure of undisclosed information for insider trading, and hence, it has no
impact on the independence of the Company.
(IX) Development of company’s special governance activity, formulation and implementation of
registration and management system for the insider of inside information
1. Establishment and perfection of management system for the insider of inside information
To further standardize the company’s inside information management behavior, strengthen the
company’s inside information confidential work, and maintain the fair principle of information
98
Konka Group Co., Ltd. Annual Report 2018
disclosure, the company established Inside Information and Insider Management System in Konka
Group Co., Ltd. The company strictly implements the system in the information disclosure work,
meanwhile, carefully implements the company’s inside information and insider registration and
management method, registers the insider of inside information, and report to Shenzhen Stock
Exchange and Shenzhen Security Regulatory Bureau according to the provision.
The company conducted the special inspection on the inside information management during the
occurrence of major event in 2018 and the annual report in 2018. After the inspection, the company
actually realized that the insider of inside information strictly kept the confidential provision, did
not disclose, divulge and spread the company’s inside information to the outside, the insider of
inside information did not buy and sell the company’s share with the inside information before
disclosing the major sensitive information influencing the company’s share price, there was no
investigation and rectification from the regulatory department during the editing, review and
disclosure of regular report and major event. Management Rules for Inside Information and Insider
Management System was implemented in place and controlled effectively.
2. Establishment and implementation of external information user’s management system
To strengthen the management on the reporting of company’s inside information, the company
establishes Inside Information Reporting Management System, and prescribes the inside
information reporting range, reporting procedure, responsibility division and other matters
according to Security Law in People’s Republic of China, Information Disclosure Management
Method in Listed Company, Inside Information and Insider Management System in Konka Group
Co., Ltd. and other related provisions in the laws, regulations and regulatory documents.
The company conducted the special inspection on the inside information reporting status during the
occurrence of major event in 2018 and the annual report in 2018. After the inspection, the
company’s inside information reporting status complies with the requirements in Inside Information
Reporting Management System. Inside Information Reporting Management System was
implemented in place and controlled effectively.
Indicate by tick market whether there is any material incompliance with the regulatory documents
issued by the CSRC governing the governance of listed companies.
□ Yes √ No
No such cases in the Reporting Period.
II The Company’s Independence from Its Controlling Shareholder in Business, Personnel,
Asset, Organization and Financial Affairs
During the Reporting Period, the company was fully separated from the controlling shareholders in
terms of business, staff, assets, organs, and finance, which owned independent legal representative
and main status in market competition and had independent accounting, as well as possessed
complete business and the ability of independent operation to face the market.
99
Konka Group Co., Ltd. Annual Report 2018
(I) Business: the Company owned complete supply, R&D, production and sales system, possessed
ability of independent operation to face the market by independent operation, independent
accounting & decision-making, independent bearing responsibility & risks, didn’t subject to the
interference and control of the controlling shareholders, actual controller and its controlled
enterprises.
(II) Staff: the Company was independent of the controlling shareholder with respect to labor,
personnel and salaries management. The Company owned independent team of staffs, the senior
management staff, financial personnel and business personnel received their remunerations in the
Company, and they were full-time staffs of the Company without holding any post, except directors
and supervisors, in shareholders’ units or other related enterprises.
(III) Assets integrity: the Company had production and operation premises completely separated
from the controlling shareholder, and the unaffiliated and integral assets structure, as well as the
independent production system, ancillary production system, the ancillary facilities, house property
right and other assets, which also possessed independent procurement and sales system.
(IV) Organ: the Company had its own functional organs adapting to the needs of self-development
and market competitiveness, all the functional organs were separated from each other in aspects of
personnel, office premises and management rules, etc., there existed no particulars about any
shareholders, other units or individuals interfering the organ setting of the Company.
(V) Finance: the Company established an independent finance department with full-time financial
personnel and an independent finance and accounting system, and independently carried out the
financial work in line with requirements of relevant accounting rules; the Company promulgated
sound financial management system to operate independently without sharing common accounts
with the controlling shareholder, related enterprise, other units or individual; the Company
independently declared and paid the tax by laws without particulars on paying taxes together with
shareholders’ units.
III Horizontal Competition
□ Applicable √ Not applicable
IV Annual and Special General Meetings Convened during the Reporting Period
1. General Meeting Convened during the Reporting Period
Investor Index to
Meeting Type participati Date of the meeting Disclosure date disclosed
on ratio information
Annual
The 2017 Annual General /http://www.c
General 32.80% 23 April 2018 24 April 2018
Meeting ninfo.com.cn/
Meeting
new/index
The 1st Extraordinary General Extraordinary 2.52％ 3 May 2018 4 May 2018
100
Konka Group Co., Ltd. Annual Report 2018
Meeting of 2018 General
Meeting
Extraordinary
The 2nd Extraordinary General
General 32.85％ 7 June 2018 8 June 2018
Meeting of 2018
Meeting
Extraordinary
The 3rd Extraordinary General
General 24.30% 8 October 2018 9 October 2018
Meeting of 2018
Meeting
Extraordinary
The 4th Extraordinary General
General 32.71% 3 December 2018 4 December 2018
Meeting of 2018
Meeting
2. Special General Meetings Convened at the Request of Preferred Shareholders with
Resumed Voting Rights
□ Applicable √ Not applicable
V Performance of Duty by Independent Directors in the Reporting Period
1. Attendance of Independent Directors at Board Meetings and General Meetings
Attendance of independent directors at board meetings and general meetings
The
Total
independent
number of Board Board
Board director
board Board meetings meetings the
meetings failed to General
Independent meetings the meetings attended by independent
attended attend two meetings
director independent attended on way of director
through a consecutive attended
director was site telecommuni failed to
proxy board
eligible to cation attend
meetings
attend
(yes/no)
Sun Shengdian 15 5 10 0 0 No 2
Xiao Zuhe 13 4 9 0 0 No 0
Zhang Shuhua 13 4 9 0 0 No 0
Wang Shuguang 2 1 1 0 0 No 0
Deng Chunhua 2 1 1 0 0 No 0
Why any independent director failed to attend two consecutive board meetings:
Not applicable.
2. Objections Raised by Independent Directors on Matters of the Company
Indicate by tick mark whether any independent directors raised any objections on any matter of the
101
Konka Group Co., Ltd. Annual Report 2018
Company.
□ Yes √ No
No such cases in the Reporting Period.
3. Other Information about the Performance of Duty by Independent Directors
Indicate by tick mark whether any suggestions from independent directors were adopted by the
Company.
√ Yes □ No
Suggestions from independent directors adopted or not adopted by the Company:
During the Reporting Period, the Independent Directors of the Company vigorously attended the
relevant meetings, carefully reviewed each proposal, objectively stated their own views and
opinions, knew of the R&D progress and the operating situation of the Company, the execution
situation of the internal control construction and the resolutions of the meetings of the Board of
Directors and as well as the Annual General Meeting.
As the expert of the involved each field, the Independent Directors put forward the constructive
advices by use of their own professional knowledge towards the internal management, including: to
strengthen the business process management, to strengthen the researches on the cutting-edge
technology of the color TV and to strengthen the cash flow and the accounts receivable
management and so on. The Company carefully adopted the advices from the Independent Directors
and constantly improved and enhanced the management level of the Company.
VI Performance of Duties by Specialized Committees under the Board during this Reporting
Period
(I) Summary Report on the Performance of the Audit Committee Subject to the Board of
Directors
The Company had constituted the Work Rules for the Financial Audit Committee under the Board
which illustrated the exact personnel, obligations and rights and working process of annual report of
the Financial Audit Committee under the Board. In 2018, based on the principle of faithfulness, the
major execution situations of the Financial Audit Committee under the Board were as follows:
1. Reviewed financial statements of Annual Report 2017, First Quarter Report 2018, Interim Report
2018, and the Third Quarter Report 2018, and had no objection to the aforesaid financial statements.
2. Submitted the Proposal on Hiring CPA in 2018 to the Board on 29 March 2018 in which
proposing to continue to hire Ruihua CPA as the audit institution of financial statements of the
Company in 2018.
3. During the preparation of Annual Report 2018, the Company fulfilled the following duties:
(1) Issued the Notes of the Events such as the Audit Work Arrangement of the Finanical Audit
Committee and approved the arrangement for 2018 annual auditing of the Company;
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Konka Group Co., Ltd. Annual Report 2018
(2) Issued Audit Opinion of the Financial Audit Committee on Financial Accounting Statements
Prepared by the Company before CPAs’ entry of Audit;
(3) Communicated and exchanged ideas with the CPAs responsible for annual auditing on the
problems occurring during the auditing;
(4) Issued Audit Opinion on Financial Accounting Statements of the Company after CPAs Issued
the Preliminary Audit Opinion;
(5) Issued Summary Report on 2018 Annual Auditing by Ruihua Certified Public Accountants;
(6) Submitted the Resolution of the 2018 Annual Financial Statement of the Company to the Board;
(7) Submitted the Resolution of engagement of the CPAs in 2019 to the Board;
4. In 2018, according to the authorization of the Board of Directors, the Financial Audit Committee
accepted the report on the work of the Company’s Internal Auditing Department and carried out
management over the Internal Auditing Department of the Company and its work.
(II) Summary Report on the Performance of the Remuneration and Appraisal Committee
Subject to the Board of Directors
The Company had constituted the Work Rules for the Remuneration and Appraisal Committee
under the Board which illustrated the exact personnel, obligations and rights of the Remuneration
and Appraisal Committee under the Board. In Y2018, based on the principle of faithfulness, the
major execution situations of the Remuneration and Appraisal Committee under the Board were as
follows:
1. On 8 August 2018, the Remuneration and Appraisal Committee subject to the Board of Directors
submitted the Audit Opinion on the Reward Planning for the Management of the Company in 2017
to the Board.
2. During the preparation of Annual Report 2018, the Remuneration and Appraisal Committee
subject to the Board of Directors issued the Audit Opinion on the Disclosed Remuneration Situation
of the Directors, Supervisors and Senior Executives of the Company, which considered the
condition of the remuneration of the Directors, Supervisors and Senior Executives of the Company
disclosed in the 2018 Annual Report was verified. The disclosed remuneration situation of the
Directors, Supervisors and Senior Executives of the Company met with the remuneration
management system without any situation that violated the remuneration management system of the
Company.
(III) Summary Report on the Performance of the Nominations Committee Subject to the
Board of Directors
The Company had constituted the Work Rules for the Nominations Committee under the Board
which illustrated the exact personnel, obligations and rights of the Nominations Committee under
the Board. In line with the principle of diligence and responsibility, the nominating committee of
the board of directors of the company submitted the "examination and approval opinions on
103
Konka Group Co., Ltd. Annual Report 2018
candidates for the general election of the board of directors" to the board of directors on November
15, 2018, and submitted the candidates for the new general election of the board of directors to the
board of directors for discussion.
(IV) Summary Report on the Performance of the Strategy Committee Subject to the Board of
Directors
The Company had constituted the Work Rules for the Strategy Committee under the Board which
illustrated the exact personnel, obligations and rights of the Strategy Committee under the Board.
On 16 April 2018, the Strategy Committee subject to the Board of Directors issued Audit opinion of
Overall Strategic Planning of Konka Group after discussion, and submitted it to Board Meeting for
discussion
VII Performance of Duty by the Supervisory Committee
Indicate by tick mark whether the Supervisory Committee found any risk to the Company during its
supervision in the Reporting Period.
□ Yes √ No
The Supervisory Committee raised no objections in the Reporting Period.
VIII Appraisal of and Incentive for Senior Management
In order to enable the senior management staffs of the Company give better performance of their
duties, and clarify their rights and obligations, the Company established and improved a fair,
transparent and efficient Performance Appraisal Standard and Incentive & Restraint Mechanism for
the senior management staffs. The Company assessed the duty performance and completion of
business of senior management staffs in terms of professional skills, management level and job
performance; took the salary plus bonus as a main incentive way, to improve the incentive of senior
management. The senior management staff was appraised by the Board of Directors, which was
supervised by the Supervisory Committee.
IX Internal Control
1. Material Internal Control Weaknesses Identified for the Reporting Period
□ Yes √ No
2. Internal Control Self-Evaluation Report
Disclosure date of the internal control
30 March 2019
self-evaluation report
Index to the disclosed internal control
http://www.cninfo.com.cn/new/index
self-evaluation report
Evaluated entities’ combined assets as % 90.00%
104
Konka Group Co., Ltd. Annual Report 2018
of consolidated total assets
Evaluated entities’ combined operating
revenue as % of consolidated operating 90.00%
revenue
Identification standards for internal control weaknesses
Weaknesses in internal control over Weaknesses in internal control not
Type
financial reporting related to financial reporting
Those with the following characteristics
should be recognized as great defect: (1) The following signs indicated there
found out there were malpractices of the may exist great defect among the
Directors, Supervisors and Senior internal control of the non-financial
Executives of the Company that formed report; (1) the operating activities of
significant influences on the financial the enterprises seriously violated the
report; (2) the Company revised the national laws and regulations; (2)
published financial report and revised the negative news frequently disclosed by
great misstatements caused by the the media which caused significant
malpractices or the mistakes; (3) CPA harm to the Company’s reputation; (3)
found out there was great misstatement of the core management team left their
the current financial report while didn’t positions one after another or the
found during the operating process of the outflow of the key position personnel
internal control; (4) the supervision of the was serious; (4) significant business
internal control by the Finance Audit lacked of systematic control of the
Committee and the internal audit system was invalid; (5) great defect
institution of the Company was invalid; discovered among the internal control
(5) not yet revised the great defect after assessment not yet be revised in time.
Nature standard
the reasonable period as which was The following signs indicated there
discovered among the internal control may exist significant defect among the
assessment; (6) the significant business internal control of the non-financial
lacked of systematic control or the report: (1) negative news occurred
systematic control was invalid.. Those rather frequently which caused rather
with the following characteristics should big harm to the Company’s reputation;
be recognized as significant defect: (1) not (2) the outflow of the key position
yet chosen or applied the accounting personnel was rather serious; (3) there
polices according to the generally accepted was obvious defect among the control
accounting standards; (2) not yet system of the significant business; (4)
constructed the anti-spam process or the significant defect found among the
control measures; (3) as for the accounts internal control assessment not yet be
disposal of the unconventional or special revised in time. 3. Other defects from
transactions, there was no corresponding the internal control hadn’t reached the
control mechanism or execution or the recognition standards of the great
existence of the corresponding supplement defect or significant defect, should be
control; (4) there was one or multiple recognized as general defect.
defects during the control of the compile
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Konka Group Co., Ltd. Annual Report 2018
of the financial report at the period-end
and could not reasonable guarantee the
statement of the compiled financial report
reach the real and accurate target; (5) not
yet revised the significant defect after the
reasonable period as which was discovered
among the internal control assessment. 3.
Other defects from the internal control
hadn’t reached the recognition standards
of the great defect or significant defect
should be recognized as general defect.
Great defect: potential misstatement
amount≥1% of the gross profit margin of
the 2018 consolidated financial report of
the Company; significant defect: 0.5% of
the gross profit margin of the 2018
Implement in accordance with the
consolidated financial report of the
quantitative criteria of internal control
Quantitative standard Company ≤potential misstatement amount
defect evaluation in financial
＜ 1% of the gross profit margin of the
statements
2018 consolidated financial report of the
Company; general defect: potential
misstatement amount ＜ 0.5% of the gross
profit margin of the 2018 consolidated
financial report of the Company.
Number of material weaknesses in
internal control not related to financial 0
reporting
Number of serious weaknesses in
0
internal control over financial reporting
Number of serious weaknesses in
internal control not related to financial 0
reporting
X Independent Auditor’s Report on Internal Control
√ Applicable □ Not applicable
Opinion paragraph in the independent auditor’s report on internal control
We considered that, in all the significant aspects, Konka Group maintained efficient internal control of the financial report
according to the C-SOX and the relevant regulations on 31 December 2018.
Independent auditor’s report on
Disclosed
internal control disclosed or not
Disclosure date 30 March 2019
106
Konka Group Co., Ltd. Annual Report 2018
Index to such report disclosed http://www.cninfo.com.cn/new/index
Type of the auditor’s opinion Unmodified unqualified opinion
Material weaknesses in internal
control not related to financial None
reporting
Indicate by tick mark whether any modified opinion is expressed in the independent auditor’s report
on the Company’s internal control.
□ Yes √ No
Indicate by tick mark whether the independent auditor’s report on the Company’s internal control is
consistent with the internal control self-evaluation report issued by the Company’s Board.
√ Yes □ No
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Konka Group Co., Ltd. Annual Report 2018
Part X Corporate Bonds
Does the Company have any corporate bonds publicly offered on the stock exchange, which were
outstanding before the date of this Report’s approval or were due but could not be redeemed in full?
Refer to the disclosure
I. Basic Information of the Corporate Bonds
Bonds
balance Intere Way of
Name Abbr. Code Release date Due date
(RMB’0,0 st rate redemption
00)
Interests
shall be paid
Privately placed corporate every year
bonds in 2019 of Konka 19 Konka 14 January 14 January and the
114418 100,000 5.00%
Group Co., Ltd (Phase I) 01 2019 2022 principals
(Variety I) shall be
repaid when
expired.
Interests
shall be paid
Privately placed corporate every year
bonds in 2019 of Konka 19 Konka 14 January 14 January and the
114423 150,000 5.00%
Group Co., Ltd (Phase I) 02 2019 2022 principals
(Variety II) shall be
repaid when
expired.
Listed or transferred trading place of the
Shenzhen Stock Exchange
Company bonds
“19 Konka 01” and “19 Konka 02” was placed privately to qualified institutional
Appropriate arrangement of the investors investors (less than 200) meeting the requirements of Management method for
Investors Eligibility in Bonds Market of Shenzhen Stock Exchange
Interest payment during the Reporting During the Reporting Period, “19 Konka 01” and “19 Konka 02” were not issued
Period yet, without the interest payment of corporate bonds.
Execution of the relevant regulations
during the Reporting Period such as the
1. Option for issuer to adjust coupon rate; 2. Put-backs option for investors; there
affiliated option clause of the issuers or
was no implementation of relevant clauses.
investors, special clauses such as the
exchangeable regulations of the Company
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Konka Group Co., Ltd. Annual Report 2018
bonds (if applicable)
II. List of the Bond Trustee and the Rating Organization
Bond trustee:
Room 801, No. 35
Industrial Jinshifang Street,
Office Contact Pu Hang, and Contact 010-
Name Securities Co., Xicheng District,
address person Zhang Huifang number 50911203
Ltd Beijing
Rating organization executed the tracking rating of the corporate bonds of the Reporting Period:
Office
Name United Ratings Co., Ltd. No.2 Jianwai Street, Chaoyang District, Beijing
address
Alternation reasons, execution process and influences on the investors’ interests etc. if there was
alternation of the bond trustees and the credit rating agencies engaged by the Company during No
the Reporting Period (if applicable)
III. List of the Usage of the Raised Funds of the Corporate Bonds
The Company has used the raised funds and disclosed related information in a
timely, authentic, accurate and complete manner strictly in accordance with the terms
in the prospectus for the Period, related provisions and requirements in the Measures
List of the usage of the raised funds and for Issuance and Trading of Corporate Bonds, CSRC Releases No. 2 Guideline for
the execution process of the Company the Supervision of Listed Companies-Administration of Funds Raised by Listed
bonds Companies and Applicable Supervision Requirements, the Stock Listing Rules of the
Shenzhen Stock Exchange and the Rules of the Shenzhen Stock Exchange for Stock
Listing on ChiNext. It has not engaged in any violations in respect of the use and
management of the raised funds.
Ending balance (RMB’0,000) 0
Operating situation of the raised funds The operation was in good condition without any violations for relevant regulations
special account or capital supervision agreement
Whether the usage of the raised funds
met with the usage, using plan and other Yes
agreements committed on the prospectus
IV. Rating Situation of the Corporate Bonds Information
In August 2018, the entity of Konka Group Co., Ltd. was first rated as Grade AA by United Credit
Ratings Co., Ltd for its long-term credit and as “Stable” for its rating prospect; the bonds “19
Konka 01” and “19 Konka 02” by Konka Group Co., Ltd. issued by Konka Group Co., Ltd. through
private offering were rated as Grade AAA for their credit and as “Stable” for their rating prospect.
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Konka Group Co., Ltd. Annual Report 2018
V. Credit-adding Mechanism, Repayment Plan and Other Repayment Guarantee Measures of
the Corporate Bonds
OCT Group provided the unconditional and irrevocable joint liability guarantee in full amount for
the bonds in the Reporting Period.
VI. Convene Situation of the Bonds Holders Meeting during the Reporting Period
No such cases in the Reporting Period.
VII. List of the Duty Execution of the Bonds Trustee during the Reporting Period
During the Reporting Period, Industrial Securities Co., Ltd., the Company’s bond trustee manager,
proactively performed its trusteeship, continued to be concerned with the Company’s routine
production and operation and financial conditions, and endeavored to maintain the legitimate rights
and interests of the bond holder strictly in accordance with related laws, regulations, the
Management Measures for the Issue and Trading of Corporate Bonds, the Prospectus and the
Agreement for the Bond Trusteeship Management.
VIII. The Major Accounting Data and the Financial Indicators of the Recent 2 Years of the
Company up the Period-end
Unit: RMB’0,000
Change rate of the same
Item 2018 2017
period
EBITDA 125,522.52 713,613.81 -82.41%
Current ratio 96.33% 125.68% -29.35%
Asset-liability ratio 71.35% 65.20% 6.15%
Quick ratio 72.13% 94.47% -22.34%
Total debt ratio of EBITDA 8.18% 92.88% -84.70%
Times interest earned 1.86 23.98 -92.24%
Times interest earned of cash -3.06 -13.51 77.35%
Times interest earned of
-90.29%
EBITDA 2.39 24.62
Loan repayment rate 100.00% 100.00% 0.00%
Interest coverage 100.00% 100.00% 0.00%
Main reason of the above accounting data and the financial indicators with the YoY change
exceeded 30%
√ Applicable □ Not applicable
The main reason for the decrease of EBITDA, total debt ratio of EBITDA, times interest earned, times interest
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Konka Group Co., Ltd. Annual Report 2018
earned of EBITDA was that there was no such income in 2018 as the large-amount exceptional gain from the
transfer of a 70% interest in Shenzhen Kangqiao Jiacheng Property Investment Co., Ltd. in 2017. The increase of
times interest earned of cash was because Net cash generated from/used in operating activities and income tax
increased RMB1 billion respectively as compared with last year.
IX. List of the Interest Payment of Other Bonds and Debt Financing Instruments during the
Reporting Period
No such cases in the Reporting Period.
X. List of the Acquired Bank Credit Lines, Usage and the Repayment of the Bank Loans
As of the end of the Reporting Period, the Company acquired bank credit lines of RMB17.999
billion, and used RMB9.759 billion. All bank loans can be repaid on schedule without any overdue
situations.
XI. List of the Execution of the Agreements or the Commitments Related to the Company
Bonds Raising Specification during the Reporting Period
During the Reporting Period, the Company did not issued corporate bonds.
XII. Significant Events Occurring during the Reporting Period
As at 31January 2019, the balance of borrowings was RMB17,148 million. The cumulative amount
of new borrowings for January 2019 was RMB2,729 million, accounting for 28.87% of the net
assets as at the end of 2018. The Company has disclosed the information on the cumulative amount
of new borrowings pursuant to related regulations such as the Management Measures for the Issue
and Trading of Corporate Bonds. For details, see Announcement on Cumulative Amount of New
Borrowings (2019-11) disclosed by the Company.
XIII. Whether there Was Guarantor of the Corporate Bonds
√ Yes □ No
Whether the guarantor of the corporate bonds was legal person or other organizations
√ Yes □ No
Whether separately disclose the financial statements (including Balance Sheet, Income Statement,
Cash Flow Statement, and Changes in owners’ (shareholders’) Equity, and notes for Financial
Statements) of guarantor in the Reporting Period within 4 months from the ending date of every
accounting year
√ Yes □ No
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Konka Group Co., Ltd. Annual Report 2018
Part XI Financial Statements
I Independent Auditor’s Report
Type of the independent auditor’s opinion Unmodified unqualified opinion
Date of signing this report 29 March 2018
Name of the independent auditor Ruihua Certified Public Accountants (LLP)
Reference number of audit report RHSZ [2019] No. 44040004
Name of the certified public accountants Liu Jianhua and Shen Lingzhi
Independent Auditor’s Report
Ruihua Audit Report [2019] No. No. 44040004
All shareholders of Konka Group Co., Ltd.
I. Opinion
We have audited the accompanying financial statements of Konka Group Co., Ltd. (the
“Company”), which comprise the Company’s and consolidated balance sheets as at 31 December
2018, the Company’s and consolidated income statements, the Company’s and consolidated cash
flow statements, the Company’s and consolidated statements of changes in shareholders’ equity for
the year then ended, as well as the notes to the financial statements.
In our opinion, the financial statements attached were prepared in line with the regulations of
Accounting Standards for Business Enterprises in all significant aspects which gave a true and fair
view of the consolidated and parent financial position of the Company as at 31 December 2018 and
the consolidated and parent business performance and cash flow of the Company for 2018.
II. Basis for Opinion
We conducted our audit in accordance with Standards on Auditing for Certified Public Accountants.
Our responsibilities under those standards are further described in the Auditor’s Responsibilities for
the Audit of the Financial Statements section of our report. In accordance with professional ethics
for certified public accountants, we are independent with Foshan Huaxin Packing Co., Ltd. and we
have fulfilled our other ethical responsibilities. We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our opinion.
III. Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial statements of the Current Period. These matters were addressed in the
context of our audit of the financial statements as a whole, and in forming our opinion thereon, and
we do not provide a separate opinion on these matters. We confirm that the following items are the
key audit items which shall be provided in the audit report.
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Konka Group Co., Ltd. Annual Report 2018
(I) Recognition of Supply Chain Trade Income and Environmental Protection Income
1. Item Description
Please refer to Note 23 of Annotation IV Important Accounting Policies and Accounting Estimation
of the Financial Statement and Note 38 of Annotation VI Notes for Item of Consolidated Financial
Statement for related information disclosed.
Kangjia group's operating income in 2018 was RMB 4,612,679.73 million, an increase of RMB
1,489,903.41 million compared with that in 2017, an increase of 47.71%. It is the growth of income
of supply chain trade business and environmental protection business mainly. Environmental
protection business includes PPP (cooperation between government and social capital), BT (transfer
of construction), public infrastructure construction such as environmental protection and sewage
treatment, and waste material recycling business.
The Company recognizes revenue from supply chain trade and waste material recycling business
based on the following principles: ①Commodities for the domestic market: revenue is recognized
when the commodities are delivered or the commodity right is transferred; Exported commodities:
revenue is recognized after commodities are transferred to the shipper entrusted by the purchaser
after finishing customs declaration; ③Commodities directly traded abroad: revenue is recognized
when customers pick up commodities or commodities are delivered to the places designated by
customers.
For public infrastructure construction business such as environmental protection and sewage
treatment participated by modes of PPP and BT, revenue from construction services provided during
the construction period are recognized according to ASBE No. 15 - Construction Contracts based on
percentage of completion method.
Due to fewer production and processing links and simple trade form of supply chain trade and waste
material recycling business, the percentage of completion method used for the recognition of
revenue from PPP project construction services involves significant accounting estimates and
judgments of the Management, and there is a risk that the Management manipulates revenue in
order to achieve specific objectives or assessment indicators. On this account, we recognized
revenue from supply chain trade and environmental protection business as a key audit matter.
2. Countermeasures of Audit
(1) We adopted the following countermeasures of audit for supply chain trade and waste
material recycling business:
① We have understood and evaluated the effectiveness of key internal control design and operation
related to the recognition of revenue from supply chain trade and environmental protection
business;
② We have checked up the sales contract and sales support documents, checked whether the risk
and reward clauses in sales contracts are consistent with the revenue recognition principle, and
evaluated whether the Company’s principle for revenue recognition based on total business volume
method of supply chain meets the requirements of enterprise accounting standards;
③ We have implemented an analytical procedure for income and cost, and analysed the fluctuation
and causes of sales price in the current year to evaluate the rationality of the changes in gross profit
margin of sales;
④ We have selected samples to execute confirmation procedures for balance of accounts receivable
according to the characteristics and nature of customer transactions, and confirmed sales amounts of
important customers;
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Konka Group Co., Ltd. Annual Report 2018
⑤ We have selected samples of customers and suppliers to check business information and
background, and evaluated the business rationality of transactions with customers;
⑥ We have entrusted lawyers in Hong Kong to check whether there was any relationship between
overseas customers and suppliers, and evaluated lawyers' professional competence, independence
and the availability of lawyers' work;
⑦ We have visited customers and suppliers with large business volume to further understand the
background of transactions and basic information of counterparties, and to check whether there was
any intentionally increased trade links or fictitious trading parties;
⑧ We have conducted spot checks on documents involved in the process of transactions, such as
shipping documents, transfer documents of commodity rights, bank transfer vouchers and invoices,
etc.
(2) We adopted the following countermeasures of audit for recognition of revenue from PPP
and BT projects at the construction stage:
① We have understood and evaluated the effectiveness of key internal control design and operation
related to the recognition of revenue from PPP and BT projects at the construction stage;
② We have checked the key contract terms of the main construction contract;
③ We have reviewed the preparation, review and changing processes of estimated total cost and the
related control procedures, and evaluated the effectiveness of the internal control;
④ We have checked the details of estimated total cost of projects, reviewed the calculation of
percentage of project completion, and evaluated the rationality of major judgments and estimates
made by the Management;
⑤ Obtain the mid-term measurement payment certificate of the project, and check whether the
progress of the project and the amount of the completed project have been confirmed by the
signature and seal of the contractor and the supervisor;
⑥ For major projects, we have conducted on-site inspection of image progress, the use of work of
the Institute's cost engineers in the major projects, and assessed whether the actual completion
schedule of projects is consistent with the completion schedule confirmed by the Company.
(II) Non-business income from business combinations not under the same control, initial
recognition and impairment of business reputation
1. Item Description
Please refer to Note 20 of Annotation IV Important Accounting Policies and Accounting Estimation
of the Financial Statement and Note 16 and 49 of Annotation VI Notes for Item of Consolidated
Financial Statement for related information disclosed.
As of December 31, 2018, the amount of goodwill in the consolidated financial statements of
kangjia group company is 85,5,691,400 yuan. In the year of 2018, non-operating income is
22,0045,200 yuan due to the fact that the cost of enterprise combination under the non-same control
is less than the fair value share of identifiable net assets of the purchaser. The formation of goodwill
comes from the acquisition of yikang technology co., LTD., jiangxi kangjia new material
technology co., ltd. and guangdong xingda hongye electronics co., ltd. by kangjia group in 2018.
The formation of non-operating income is generated by the acquisition of henan xinfei refrigeration
appliance co., LTD., henan xinfei electric appliance co., LTD., and henan xinfei home appliance co.,
LTD., which are not under the same control, through judicial auction.
The Company Management allocated the combination costs and recognized the acquired
identifiable assets, liabilities and contingent liabilities of acquiree on the combination day. The
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Konka Group Co., Ltd. Annual Report 2018
acquirer shall recognize the positive balance between the combination costs and the fair value of the
identifiable net assets it obtained from the acquiree as business reputation. Where the combination
costs are less than the fair value of the identifiable net assets it obtains from the acquiree:
① 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;
②If, after the re-examination, the combination costs are still less than the fair value of the
identifiable net assets it obtains from the acquiree, the acquirer shall record the balance into the
profits and losses of the current period.
The Company Management tested the impairment of business reputation by combining it with
related asset groups or portfolios on the balance sheet date. According to the test result, the
Company did not suffer any impairment of business reputation.
Because of the fair value of identifiable assets, liabilities and contingent liabilities of the aquiree on
the combination date, evaluation work of experts is need for business reputation impairment test on
the balance sheet date. The parameters used in the evaluation involve discount rate, future sales
growth rate, sustainable growth rate in predictive period and gross interest rate, etc. The evaluation
methods used include asset-based method and income method. The evaluation process of fair value
on the combination date and impairment test of business reputation on the balance sheet day is
complex, and the assumptions based on may change due to the influence of expected future market
and economic environment. All of the above mentioned depend on the Management's judgment. On
this account, we identify non-business income from business combinations not under the same
control, initial recognition and impairment test of business reputation as key auditing items.
2. Countermeasures of Audit
(1) We have understood and evaluated the effectiveness of the design and operation of key internal
controls related to business combinations not under the same control and impairment of business
reputation;
(2) We have reviewed the measurement of the fair values of identifiable assets, liabilities and
contingent liabilities obtained from the acquiree and the combination cost;
(3) We have understood the Management's recognition of the asset group or portfolio to which
business reputation belongs, the key assumptions and methods used in the impairment test of
business reputation, and evaluated the rationality of identification of asset group or portfolio, and
related assumptions and methods;
(4) We have evaluated the competence, professional quality and objectivity of external valuation
experts appointed by the Management;
(5) We had the asset group valuation method used and assessment reports made by external
valuation experts reviewed by internal valuation experts of the Firm;
(6) We have reviewed and evaluated the key parameters used by the Management for estimations,
including comparative analysis on income growth rate in predictive period and historical income
growth rate and income growth rate in the same industry; the comparison between estimated gross
interest rate and historical gross interest rate, taking into account of the market trend; and analysis
on the discount rate adopted by the Management;
(7) We have obtained and reviewed the calculation table prepared by the Management for the
recoverable amount of the asset group to which business reputation belongs, and compared the
difference between the book value of the asset group to which business reputation belongs and the
recoverable amount to confirm whether there is any impairment of business reputation.
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Konka Group Co., Ltd. Annual Report 2018
(8) We have checked and evaluated, based on the result of impairment test of business reputation,
the accuracy and appropriateness of presentation and disclosure of business reputation.
(III) Recognition of Investment Income
1. Item Description
Please refer to Note 13 of Annotation IV Important Accounting Policies and Accounting Estimation
of the Financial Statement and Note11 and 46 of Annotation VI Notes for Item of Consolidated
Financial Statement for related information disclosed.
The investment income of the Company in 2018 was RMB927.4144 million, mainly generated from
the investment income arising from disposal of long-term equity investment, returns on purchase of
financial products, and gains arising from re-measurement of residual equity at fair value after
losing the controlling rights. Since the amount of investment income has greatly impacts on profits,
the recognition of investment income involves complicated accounting treatment and the
recognition of the date of losing controlling rights should be based on the professional judgement,
we confirm the recognition of investment income as the key audit item.
2. Countermeasures of Audit
(1) We have understood, estimated and tested design and implementation of key internal control of
the management level related to the investment to confirm the effectiveness of the internal control;
(2) We have checked the stock transfer contracts, evaluation reports, changes in industrial and
commercial registration, changes in the board of directors and accounts of stock transfer received to
confirm having met the recognition conditions of investment income;
(3) We have reviewed the evaluation reports related to stock transfer to judge the fairness of stock
transaction consideration and rationality of the recognition of residual equity by fair value after
losing controlling rights;
(4) We have rechecked the accounting process of the Company’s investment income and
recalculated the investment income arising from the residual equity at fair value after losing
controlling rights to prove the rightness of the accounting of investment income;
(5) We have checked the contracts and bank receipts related to the purchase of financial products;
spot checked the accounting documents and checked the recognition of investment income to prove
the rightness of the investment income of entrust financial management.
IV. Other Information
The management of the Company is responsible for the other information. The other information
comprises all of the information included in the annual report for 2018 other than the financial
statements and our auditor’s report thereon.
Our opinion on the financial statements does not cover the other information and we do not express
any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with
the financial statements or our knowledge obtained in the audit or otherwise appears to be
materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
V. Responsibility of Management and Those Charged with Governance for the Financial
Statements
The management of the Company is responsible for the preparation and fair presentation of these
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Konka Group Co., Ltd. Annual Report 2018
financial statements in accordance with Accounting Standards for Business Enterprises to make
them a fair presentation and designing, implementing and maintaining internal control relevant to
the preparation of financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the management of the Company is responsible for assessing
the Company’s ability to continue as a going concern, disclosing, if applicable, matters related to
going concern and using the going concern basis of accounting unless the management either
intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting
process.
VI. CPA’s Responsibility for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. We report our opinion solely to you, as a body, and for no other purpose.
We do not assume responsibility towards or accept liability to any other person for the contents of
this report. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with auditing standards will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the economic decisions of users taken
on the basis of these financial statements.
As part of an audit in accordance with auditing standards, we exercise professional judgment and
maintain professional skepticism throughout the audit. We also:
1. Identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error, as
fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
2. Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances.
3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the management.
4. Conclude on the appropriateness of the management’ use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists related
to events or conditions that may cast significant doubt on the Company’s ability to continue as a
going concern. If we conclude that a material uncertainty exists, we are required to draw attention in
our auditor’s report to the related disclosures in the financial statements, or if such disclosures are
inadequate, we shall modify our opinion. Our conclusions are based on the audit evidence obtained
up to the date of our auditor’s report. However, future events or conditions may cause the Company
to cease to continue as a going concern.
5. Evaluate the overall presentation, structure and content of the financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and events in
a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned
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Konka Group Co., Ltd. Annual Report 2018
scope and timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with
relevant ethical requirements regarding independence, and to communicate with them all
relationships and other matters that may reasonably be thought to bear on our independence, and
related safeguards (if applicable).
From the matters communicated with those charged with governance, we determine those matters
that were of most significance in the audit of the financial statements of the Current Period and are
therefore the key audit matters. We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances,
we determine that a matter should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest benefits of
such communication.
Ruihua Certified Public Accountants (LLP) CPA (Engagement Partner):
Liu Jianhua
BeijingChina CPA:
Shen Lingzhi
28 March 2019
II Financial Statements
Currency unit for the financial statements and the notes thereto: RMB
1. Consolidated Balance Sheet
Prepared by Konka Group Co., Ltd.
Unit: RMB
Item 31 December 2018 31 December 2017
Current assets:
Monetary capital 4,348,144,129.53 3,212,044,851.08
Settlement reserve
Interbank loans granted
Financial assets at fair value through profit or loss 5,464,984.92 296,799.53
Derivative financial assets
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Konka Group Co., Ltd. Annual Report 2018
Notes and accounts receivable 7,787,765,540.57 8,621,764,935.49
Including: Notes receivable 3,329,711,954.15 5,178,668,988.23
Accounts receivable 4,458,053,586.42 3,443,095,947.26
Prepayments 1,036,979,167.56 467,123,091.74
Premiums receivable
Reinsurance receivables
Receivable reinsurance contract reserve
Other receivables 410,804,180.50 184,218,356.16
Including: Interest receivable 4,059,682.40 1,813,256.77
Dividends receivable 547,848.62
Financial assets purchased under resale agreements
Inventories 5,487,605,227.05 4,690,363,565.53
Assets classified as held for sale
Current portion of non-current assets 22,318,208.13
Other current assets 2,744,216,141.98 1,715,326,868.81
Total current assets 21,843,297,580.24 18,891,138,468.34
Non-current assets:
Loans and advances to customers
Available-for-sale financial assets 633,664,881.33 712,170,399.09
Held-to-maturity investments
Long-term receivables 390,793,038.05
Long-term equity investments 2,637,780,825.53 1,319,987,343.74
Investment property 210,824,355.72 216,455,629.99
Fixed assets 2,410,226,495.81 1,587,170,348.35
Construction in progress 2,176,871,530.80 135,863,821.01
Productive living assets
Oil and gas assets
Intangible assets 737,776,686.34 205,057,773.69
R&D expense
Goodwill 855,691,423.75 3,597,657.15
Long-term prepaid expense 111,223,426.77 150,060,937.30
Deferred income tax assets 639,433,954.30 307,942,263.12
Other non-current assets 337,477,690.39 29,290,828.00
Total non-current assets 11,141,764,308.79 4,667,597,001.44
119
Konka Group Co., Ltd. Annual Report 2018
Total assets 32,985,061,889.03 23,558,735,469.78
Current liabilities:
Short-term borrowings 13,884,132,931.63 6,927,472,037.35
Borrowings from central bank
Customer deposits and interbank deposits
Interbank loans obtained
Financial liabilities at fair value through profit or loss 2,459,603.25 47,482,470.50
Derivative financial liabilities
Notes and accounts payable 5,225,053,739.80 4,153,391,578.68
Advances from customers 723,227,529.20 640,510,784.17
Financial assets sold under repurchase agreements
Handling charges and commissions payable
Payroll payable 376,506,567.71 291,370,297.67
Taxes payable 288,004,192.44 1,326,569,094.53
Other payables 2,024,657,277.74 1,644,083,269.81
Including: Interest payable 27,230,631.41 35,723,963.94
Dividends payable
Reinsurance payables
Insurance contract reserve
Payables for acting trading of securities
Payables for underwriting of securities
Liabilities directly associated with assets classified as held for
sale
Current portion of non-current liabilities 151,792,404.13 374,358.99
Other current liabilities
Total current liabilities 22,675,834,245.90 15,031,253,891.70
Non-current liabilities:
Long-term borrowings 445,000,000.00 167,000,000.00
Bonds payable
Including: Preferred shares
Perpetual bonds
Long-term payables 128,374,597.41 61,538.46
Long-term payroll payable 8,792,614.98 13,361,821.86
Provisions 21,772,898.37 6,181,865.10
Deferred income 112,899,128.24 130,049,911.87
120
Konka Group Co., Ltd. Annual Report 2018
Deferred income tax liabilities 141,020,093.34 12,636,633.40
Other non-current liabilities
Total non-current liabilities 857,859,332.34 329,291,770.69
Total liabilities 23,533,693,578.24 15,360,545,662.39
Owners’ equity:
Share capital 2,407,945,408.00 2,407,945,408.00
Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserves 208,356,624.21 104,732,242.30
Less: Treasury stock
Other comprehensive income -10,538,219.08 3,697,458.95
Specific reserve
Surplus reserves 1,227,564,785.19 1,217,644,874.79
General reserve
Retained earnings 4,271,408,192.21 4,260,125,492.57
Total equity attributable to owners of the Company as the parent 8,104,736,790.53 7,994,145,476.61
Non-controlling interests 1,346,631,520.26 204,044,330.78
Total owners’ equity 9,451,368,310.79 8,198,189,807.39
Total liabilities and owners’ equity 32,985,061,889.03 23,558,735,469.78
Legal representative: Liu Fengxi CFO: Li Chunlei
Head of the financial department: Feng Junxiu
2. Balance Sheet of the Company as the Parent
Unit: RMB
Item 31 December 2018 31 December 2017
Current assets:
Monetary capital 2,124,335,536.69 1,760,838,390.83
Financial assets at fair value through profit or loss 5,464,984.92 296,799.53
Derivative financial assets
Notes and accounts receivable 9,608,713,113.32 7,596,218,302.24
Including: Notes receivable 2,181,466,683.90 2,864,064,309.99
Accounts receivable 7,427,246,429.42 4,732,153,992.25
Prepayments 1,019,335,571.49 1,066,260,182.37
Other receivables 6,667,463,126.57 4,341,467,382.86
121
Konka Group Co., Ltd. Annual Report 2018
Including: Interest receivable 5,769,663.24 23,894,771.88
Dividends receivable 2,690,276.72
Inventories 254,225,716.41 2,090,697,937.23
Assets classified as held for sale
Current portion of non-current assets 100,000,000.00
Other current assets 77,249,216.99 1,547,454,872.74
Total current assets 19,756,787,266.39 18,503,233,867.80
Non-current assets:
Available-for-sale financial assets 326,164,881.33 562,612,236.33
Held-to-maturity investments
Long-term receivables
Long-term equity investments 6,182,962,034.71 2,649,074,424.45
Investment property 210,824,355.72 216,455,629.99
Fixed assets 462,721,018.30 482,020,892.58
Construction in progress 157,356,696.30 79,927,345.88
Productive living assets
Oil and gas assets
Intangible assets 83,593,959.11 91,718,400.70
R&D expense
Goodwill
Long-term prepaid expense 80,388,949.97 78,305,555.97
Deferred income tax assets 516,879,201.66 279,324,511.96
Other non-current assets 20,000,000.00 20,000,000.00
Total non-current assets 8,040,891,097.10 4,459,438,997.86
Total assets 27,797,678,363.49 22,962,672,865.66
Current liabilities:
Short-term borrowings 8,179,564,987.70 3,269,730,888.60
Financial liabilities at fair value through profit or loss 2,459,603.25 47,482,470.50
Derivative financial liabilities
Notes and accounts payable 9,990,213,911.08 8,561,630,481.98
Advances from customers 306,650,717.69 601,036,147.76
Payroll payable 146,199,496.44 163,066,135.71
Taxes payable 10,913,871.30 1,070,771,570.12
Other payables 2,011,494,378.65 1,918,409,927.12
122
Konka Group Co., Ltd. Annual Report 2018
Including: Interest payable 24,158,666.48 50,336,913.53
Dividends payable
Liabilities directly associated with assets classified as held for
sale
Current portion of non-current liabilities 40,000,000.00
Other current liabilities
Total current liabilities 20,687,496,966.11 15,632,127,621.79
Non-current liabilities:
Long-term borrowings 245,000,000.00 167,000,000.00
Bonds payable
Including: Preferred shares
Perpetual bonds
Long-term payables
Long-term payroll payable
Provisions 206,591.51 6,181,865.10
Deferred income 75,705,476.93 94,590,560.82
Deferred income tax liabilities 751,345.42
Other non-current liabilities
Total non-current liabilities 321,663,413.86 267,772,425.92
Total liabilities 21,009,160,379.97 15,899,900,047.71
Owners’ equity:
Share capital 2,407,945,408.00 2,407,945,408.00
Other equity instruments
Including: Preferred shares
Perpetual bonds
Capital reserves 114,018,066.79 111,525,163.22
Less: Treasury stock
Other comprehensive income -1,182,217.31 -1,970,304.62
Specific reserve
Surplus reserves 1,227,564,785.19 1,217,644,874.79
Retained earnings 3,040,171,940.85 3,327,627,676.56
Total owners’ equity 6,788,517,983.52 7,062,772,817.95
Total liabilities and owners’ equity 27,797,678,363.49 22,962,672,865.66
123
Konka Group Co., Ltd. Annual Report 2018
3. Consolidated Income Statement
Unit: RMB
Item 2018 2017
1. Revenue 46,126,797,341.33 31,227,763,249.71
Including: Operating revenue 46,126,797,341.33 31,227,763,249.71
Interest income
Premium income
Handling charge and commission income
2. Costs and expenses 47,263,866,198.50 31,418,151,525.89
Including: Cost of sales 43,227,613,914.45 27,788,985,279.80
Interest expense
Handling charge and commission expense
Surrenders
Net claims paid
Net amount provided as insurance contract reserve
Expenditure on policy dividends
Reinsurance premium expense
Taxes and surcharges 89,689,865.93 208,836,733.61
Selling expense 2,282,174,241.64 2,141,993,558.11
Administrative expense 641,892,996.18 448,036,697.96
R&D expense 396,460,145.24 329,676,982.50
Finance costs 399,165,814.39 340,918,550.61
Including: Interest expense 566,070,556.21 352,438,125.53
Interest income 43,630,012.41 62,735,102.89
Asset impairment loss 226,869,220.67 159,703,723.30
Add: Other income 294,265,632.23 204,979,443.55
Investment income (“-” for loss) 927,414,370.96 6,587,848,357.88
Including: Share of profit or loss of joint ventures and
19,139,381.20 3,953,094.99
associates
Gain on changes in fair value (“-” for loss) 50,191,052.64 -66,221,451.96
Foreign exchange gain (“-” for loss)
Asset disposal income (“-” for loss) -563,894.74 55,945,401.39
3. Operating profit (“-” for loss) 134,238,303.92 6,592,163,474.68
124
Konka Group Co., Ltd. Annual Report 2018
Add: Non-operating income 328,696,140.09 82,832,663.76
Less: Non-operating expense 8,037,851.90 16,521,032.68
4. Profit before tax (“-” for loss) 454,896,592.11 6,658,475,105.76
Less: Income tax expense -213,721,829.46 1,571,641,005.78
5. Net profit (“-” for net loss) 668,618,421.57 5,086,834,099.98
5.1 Net profit from continuing operations (“-” for net loss) 668,618,421.57 5,086,834,099.98
5.2 Net profit from discontinued operations (“-” for net loss)
Net profit attributable to owners of the Company as the parent 411,289,744.68 5,057,025,155.71
Net profit attributable to non-controlling interests 257,328,676.89 29,808,944.27
6. Other comprehensive income, net of tax -12,585,647.54 10,457,550.34
Attributable to owners of the Company as the parent -14,235,678.03 10,629,563.60
6.1 Items that will not be reclassified to profit or loss
6.1.1 Changes caused by remeasurements on defined benefit
pension schemes
6.1.2 Share of other comprehensive income of investees that
will not be reclassified to profit or loss under equity method
6.2 Items that may subsequently be reclassified to profit or loss -14,235,678.03 10,629,563.60
6.2.1 Share of other comprehensive income of investees that
740,697.08 -3,138,048.04
will be reclassified to profit or loss under equity method
6.2.2 Gain/Loss on changes in fair value of
-31,342.07 -6,379,226.68
available-for-sale financial assets
6.2.3 Gain/Loss arising from reclassification of
held-to-maturity investments to available-for-sale financial assets
6.2.4 Effective gain/loss on cash flow hedges
6.2.5 Differences arising from translation of foreign
-14,945,033.04 20,146,838.32
currency-denominated financial statements
6.2.6 Other
Attributable to non-controlling interests 1,650,030.49 -172,013.26
7. Total comprehensive income 656,032,774.03 5,097,291,650.32
Attributable to owners of the Company as the parent 397,054,066.65 5,067,654,719.31
Attributable to non-controlling interests 258,978,707.38 29,636,931.01
8. Earnings per share
8.1 Basic earnings per share 0.1708 2.1001
8.2 Diluted earnings per share 0.1708 2.1001
Legal representative: Liu Fengxi CFO: Li Chunlei
Head of the financial department: Feng Junxiu
125
Konka Group Co., Ltd. Annual Report 2018
4. Income Statement of the Company as the Parent
Unit: RMB
Item 2018 2017
1. Operating revenue 13,377,681,886.45 12,102,478,051.51
Less: Cost of sales 12,572,129,164.32 10,254,093,606.04
Taxes and surcharges 25,843,072.39 32,773,051.99
Selling expense 1,511,526,663.59 1,539,608,039.02
Administrative expense 349,794,611.61 240,683,547.54
R&D expense 148,115,964.90 329,676,982.50
Finance costs 263,729,410.33 275,532,025.79
Including: Interest expense
Interest income
Asset impairment loss 64,312,750.93 133,044,172.18
Add: Other income 73,925,099.14 69,388,626.62
Investment income (“-” for loss) 1,247,079,039.64 6,419,712,482.20
Including: Share of profit or loss of joint ventures and
33,783,935.14 -2,867,529.72
associates
Gain on changes in fair value (“-” for loss) 50,191,052.64 -86,743,251.96
Asset disposal income (“-” for loss) -2,560.75 74,187.45
2. Operating profit (“-” for loss) -186,577,120.95 5,699,498,670.76
Add: Non-operating income 51,273,970.95 38,052,635.22
Less: Non-operating expense 2,556,804.31 10,368,352.12
3. Profit before tax (“-” for loss) -137,859,954.31 5,727,182,953.86
Less: Income tax expense -237,059,058.30 1,414,775,357.96
4. Net profit (“-” for net loss) 99,199,103.99 4,312,407,595.90
4.1 Net profit from continuing operations (“-” for net loss) 99,199,103.99 4,312,407,595.90
4.2 Net profit from discontinued operations (“-” for net loss)
5. Other comprehensive income, net of tax 788,087.31 -8,684,742.24
5.1 Items that will not be reclassified to profit or loss
5.1.1 Changes in caused by remeasurements on defined benefit
pension schemes
5.1.2 Share of other comprehensive income of investees that
will not be reclassified to profit or loss under equity method
5.2 Items that may subsequently be reclassified to profit or loss 788,087.31 -8,684,742.24
5.2.1 Share of other comprehensive income of investees that
788,087.31 -2,274,173.49
will be reclassified to profit or loss under equity method
126
Konka Group Co., Ltd. Annual Report 2018
5.2.2 Gain/Loss on changes in fair value of available-for-sale
-6,410,568.75
financial assets
5.2.3 Gain/Loss arising from reclassification of
held-to-maturity investments to available-for-sale financial assets
5.2.4 Effective gain/loss on cash flow hedges
5.2.5 Differences arising from translation of foreign
currency-denominated financial statements
5.2.6 Other
6. Total comprehensive income 99,987,191.30 4,303,722,853.66
7. Earnings per share
7.1 Basic earnings per share
7.2 Diluted earnings per share
5. Consolidated Cash Flow Statement
Unit: RMB
Item 2018 2017
1. Cash flows from operating activities:
Proceeds from sale of commodities and rendering of services 46,363,698,743.08 31,446,609,731.30
Net increase in customer deposits and interbank deposits
Net increase in borrowings from central bank
Net increase in loans from other financial institutions
Premiums received on original insurance contracts
Net proceeds from reinsurance
Net increase in deposits and investments of policy holders
Net increase in proceeds from disposal of financial assets at fair
value through profit or loss
Interest, handling charges and commissions received
Net increase in interbank loans obtained
Net increase in proceeds from repurchase transactions
Tax rebates 475,610,439.41 306,536,483.85
Cash generated from other operating activities 3,714,670,493.13 9,189,740,317.98
Subtotal of cash generated from operating activities 50,553,979,675.62 40,942,886,533.13
Payments for commodities and services 45,867,095,178.07 32,945,586,384.73
Net increase in loans and advances to customers
Net increase in deposits in central bank and in interbank loans
granted
Payments for claims on original insurance contracts
127
Konka Group Co., Ltd. Annual Report 2018
Interest, handling charges and commissions paid
Policy dividends paid
Cash paid to and for employees 1,659,612,131.21 1,521,219,551.03
Taxes paid 1,648,013,358.42 538,733,487.55
Cash used in other operating activities 4,609,082,880.58 10,251,604,732.29
Subtotal of cash used in operating activities 53,783,803,548.28 45,257,144,155.60
Net cash generated from/used in operating activities -3,229,823,872.66 -4,314,257,622.47
2. Cash flows from investing activities:
Proceeds from disinvestment 106,597,820.94 72,257,309.01
Investment income 146,065,795.48 126,829,624.00
Net proceeds from disposal of fixed assets, intangible assets and
2,372,418.53 101,598,096.61
other long-lived assets
Net proceeds from disposal of subsidiaries or other business units 252,468,488.60 6,904,949,434.52
Cash generated from other investing activities 2,393,028,228.96 1,847,480,775.61
Subtotal of cash generated from investing activities 2,900,532,752.51 9,053,115,239.75
Payments for acquisition of fixed assets, intangible assets and
486,058,229.18 252,512,252.89
other long-lived assets
Payments for investments 597,975,935.00 1,185,098,584.39
Net increase in pledged loans granted
Net payments for acquisition of subsidiaries and other business
1,118,860,395.37
units
Cash used in other investing activities 2,949,519,200.00 2,885,988,913.10
Subtotal of cash used in investing activities 5,152,413,759.55 4,323,599,750.38
Net cash generated from/used in investing activities -2,251,881,007.04 4,729,515,489.37
3. Cash flows from financing activities:
Capital contributions received 332,513,927.94 50,430,511.80
Including: Capital contributions by non-controlling interests to
203,580,594.60 50,430,511.80
subsidiaries
Increase in borrowings obtained 14,681,965,477.02 9,997,566,758.22
Net proceeds from issuance of bonds
Cash generated from other financing activities 330,951,745.42 478,604,496.40
Subtotal of cash generated from financing activities 15,345,431,150.38 10,526,601,766.42
Repayment of borrowings 8,081,422,372.12 9,541,243,861.75
Payments for interest and dividends 709,581,026.62 215,250,211.08
Including: Dividends paid by subsidiaries to non-controlling
960,052.07 746,714.88
interests
128
Konka Group Co., Ltd. Annual Report 2018
Cash used in other financing activities 757,534,424.92 23,263,067.97
Subtotal of cash used in financing activities 9,548,537,823.66 9,779,757,140.80
Net cash generated from/used in financing activities 5,796,893,326.72 746,844,625.62
4. Effect of foreign exchange rate changes on cash and cash
21,061,330.94 -85,105,733.90
equivalents
5. Net increase in cash and cash equivalents 336,249,777.96 1,076,996,758.62
Add: Cash and cash equivalents, beginning of the period 3,097,899,703.76 2,020,902,945.14
6. Cash and cash equivalents, end of the period 3,434,149,481.72 3,097,899,703.76
6. Cash Flow Statement of the Company as the Parent
Unit: RMB
Item 2018 2017
1. Cash flows from operating activities:
Proceeds from sale of commodities and rendering of services 10,411,822,006.27 12,663,519,862.71
Tax rebates 162,545,714.88 101,117,712.70
Cash generated from other operating activities 3,664,490,303.85 11,750,343,362.91
Subtotal of cash generated from operating activities 14,238,858,025.00 24,514,980,938.32
Payments for commodities and services 8,349,385,730.39 11,671,178,195.40
Cash paid to and for employees 917,379,288.04 913,094,001.19
Taxes paid 1,163,848,413.52 153,133,718.08
Cash used in other operating activities 8,371,093,126.27 13,492,237,043.23
Subtotal of cash used in operating activities 18,801,706,558.22 26,229,642,957.90
Net cash generated from/used in operating activities -4,562,848,533.22 -1,714,662,019.58
2. Cash flows from investing activities:
Proceeds from disinvestment 545,729,039.58 7,213,519,480.00
Investment income 229,742,943.89 157,605,497.94
Net proceeds from disposal of fixed assets, intangible assets and
585,065.19 202,036.88
other long-lived assets
Net proceeds from disposal of subsidiaries or other business
units
Cash generated from other investing activities 2,389,727,049.76 1,771,357,091.35
Subtotal of cash generated from investing activities 3,165,784,098.42 9,142,684,106.17
Payments for acquisition of fixed assets, intangible assets and
91,684,045.40 69,689,987.87
other long-lived assets
Payments for investments 3,064,767,387.50 1,434,196,953.00
Net payments for acquisition of subsidiaries and other business
units
129
Konka Group Co., Ltd. Annual Report 2018
Cash used in other investing activities 1,178,410,798.39 2,997,732,417.74
Subtotal of cash used in investing activities 4,334,862,231.29 4,501,619,358.61
Net cash generated from/used in investing activities -1,169,078,132.87 4,641,064,747.56
3. Cash flows from financing activities:
Capital contributions received
Increase in borrowings obtained 14,232,230,155.56 6,424,596,805.22
Net proceeds from issuance of bonds
Cash generated from other financing activities 181,269,884.31 165,396,024.39
Subtotal of cash generated from financing activities 14,413,500,039.87 6,589,992,829.61
Repayment of borrowings 7,474,353,929.91 8,507,218,581.45
Payments for interest and dividends 665,807,835.95 199,017,294.57
Cash used in other financing activities 758,694,935.20 598,314.20
Sub-total of cash used in financing activities 8,898,856,701.06 8,706,834,190.22
Net cash generated from/used in financing activities 5,514,643,338.81 -2,116,841,360.61
4. Effect of foreign exchange rate changes on cash and cash
-28,192,061.54 -39,905,176.10
equivalents
5. Net increase in cash and cash equivalents -245,475,388.82 769,656,191.27
Add: Cash and cash equivalents, beginning of the period 1,743,269,944.67 973,613,753.40
6. Cash and cash equivalents, end of the period 1,497,794,555.85 1,743,269,944.67
130
Konka Group Co., Ltd. Annual Report 2018
7. Consolidated Statements of Changes in Owners’ Equity
2018
Unit: RMB
2018
Equity attributable to owners of the Company as the parent
Other equity
instruments
Less: Spe Gene
Item Pre Per Other Non-controlli Total owners’
Treas cific Surplus ral Retained
Share capital ferr pet Ot Capital reserves comprehensi ng interests equity
ury rese reserves reser earnings
ed ual he ve income
stock rve ve
sha bo r
res nds
1. Balances as at the
2,407,945,408.0 1,217,644,874 4,260,125,492 204,044,330.7 8,198,189,807.3
end of the prior 104,732,242.30 3,697,458.95
0 .79 .57 8 9
year
Add: Adjustments
for changed
accounting policies
Adjustments for
corrections of
previous errors
Adjustments for
business
combinations under
common control
Other
adjustments
2. Balances as at the 2,407,945,408.0 104,732,242.30 3,697,458.95 1,217,644,874 4,260,125,492 204,044,330.7 8,198,189,807.3
131
Konka Group Co., Ltd. Annual Report 2018
beginning of the 0 .79 .57 8 9
year
3. Increase/
decrease in the -14,235,678. 1,142,587,189 1,253,178,503.4
103,624,381.91 9,919,910.40 11,282,699.64
period (“-” for 03 .48 0
decrease)
3.1 Total
-14,235,678. 411,289,744.6 258,978,707.3
comprehensive 656,032,774.03
03 8 8
income
3.2 Capital
884,568,534.1
increased and 884,568,534.17
7
reduced by owners
3.2.1 Ordinary
204,255,406.7
shares increased by 204,255,406.70
0
shareholders
3.2.2 Capital
increased by
holders of other
equity instruments
3.2.3
Share-based
payments included
in owners’ equity
680,313,127.4
3.2.4 Other 680,313,127.47
7
3.3 Profit -400,007,045.
9,919,910.40 -960,052.07 -391,047,186.71
distribution 04
3.3.1
9,919,910.40 -9,919,910.40
Appropriation to
132
Konka Group Co., Ltd. Annual Report 2018
surplus reserves
3.3.2
Appropriation to
general reserve
3.3.3
Appropriation to -390,087,134.
-960,052.07 -391,047,186.71
owners (or 64
shareholders)
3.3.4 Other
3.4 Transfers
within owners’
equity
3.4.1 Increase
in capital (or share
capital) from capital
reserves
3.4.2 Increase
in capital (or share
capital) from
surplus reserves
3.4.3 Loss
offset by surplus
reserves
3.4.4 Other
3.5 Specific
reserve
3.5.1 Increase
in the period
3.5.2 Used in
133
Konka Group Co., Ltd. Annual Report 2018
the period
3.6 Other 103,624,381.91 103,624,381.91
4. Balances as at the 2,407,945,408.0 -10,538,219. 1,227,564,785 4,271,408,192 1,346,631,520 9,451,368,310.7
208,356,624.21
end of the period 0 08 .19 .21 .26 9
2017
Unit: RMB
2017
Equity attributable to owners of the Company as the parent
Other equity
instruments Spe
Less: Gene
Item Other cifi Non-controlli Total owners’
Pre Per
Treas Surplus ral Retained
Share capital Capital reserves comprehensi c ng interests equity
fer pet Ot
ury reserves reser earnings
red ual he ve income rese
stock ve
sha bo r rve
res nds
1. Balances as at
2,407,945,408.0 -6,932,104.6 847,908,466.2 -427,163,254. 417,017,287.6 3,318,498,894.6
the end of the prior 79,723,092.04
0 5 8 63 3 7
year
Add: Adjustments
for changed
accounting policies
Adjustments for
corrections of
previous errors
Adjustments for
business
combinations
under common
134
Konka Group Co., Ltd. Annual Report 2018
control
Other
adjustments
2. Balances as at
2,407,945,408.0 -6,932,104.6 847,908,466.2 -427,163,254. 417,017,287.6 3,318,498,894.6
the beginning of 79,723,092.04
0 5 8 63 3 7
the year
3. Increase/
decrease in the 10,629,563.6 369,736,408.5 4,687,288,747 -212,972,956. 4,879,690,912.7
25,009,150.26
period (“-” for 0 1 .20 85 2
decrease)
3.1 Total
10,629,563.6 5,057,025,155 5,097,291,650.3
comprehensive 29,636,931.01
0 .71 2
income
3.2 Capital
-241,190,603.
increased and -241,190,603.80
80
reduced by owners
3.2.1
Ordinary shares -235,037,235.
-235,037,235.08
increased by 08
shareholders
3.2.2 Capital
increased by
holders of other
equity instruments
3.2.3
Share-based
-1,419,284.06 -1,419,284.06
payments included
in owners’ equity
3.2.4 Other
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Konka Group Co., Ltd. Annual Report 2018
3.3 Profit 369,736,408.5 -369,736,408.
-1,419,284.06 -1,419,284.06
distribution 1 51
3.3.1
369,736,408.5 -369,736,408.
Appropriation to
1 51
surplus reserves
3.3.2
Appropriation to
general reserve
3.3.3
Appropriation to
-1,419,284.06 -1,419,284.06
owners (or
shareholders)
3.3.4 Other
3.4 Transfers
within owners’
equity
3.4.1 Increase
in capital (or share
capital) from
capital reserves
3.4.2 Increase
in capital (or share
capital) from
surplus reserves
3.4.3 Loss
offset by surplus
reserves
3.4.4 Other
3.5 Specific
136
Konka Group Co., Ltd. Annual Report 2018
reserve
3.5.1 Increase
in the period
3.5.2 Used in
the period
3.6 Other 25,009,150.26 25,009,150.26
4. Balances as at
2,407,945,408.0 1,217,644,874 4,260,125,492 204,044,330.7 8,198,189,807.3
the end of the 104,732,242.30 3,697,458.95
0 .79 .57 8 9
period
8. Statements of Changes in Owners’ Equity of the Company as the Parent
2018
Unit: RMB
2018
Other equity
instruments Specif
Less: Other
Item Prefe Perp ic Surplus Retained Total owners’
Share capital Capital reserves Treasury comprehens
rred etual Oth reserv reserves earnings equity
stock ive income
share bond er e
s s
1. Balances as at the end of the 2,407,945,408.0 -1,970,304. 1,217,644,874 3,327,627,676. 7,062,772,817.9
111,525,163.22
prior year 0 62 .79 56 5
Add: Adjustments for changed
accounting policies
Adjustments for corrections of
previous errors
Other adjustments 8,575,762.89 13,352,205.34 21,927,968.23
2. Balances as at the beginning of
2,407,945,408.0 120,100,926.11 -1,970,304. 1,217,644,874 3,340,979,881. 7,084,700,786.1
the year
137
Konka Group Co., Ltd. Annual Report 2018
0 62 .79 90 8
3. Increase/ decrease in the period -300,807,941.0
-6,082,859.32 788,087.31 9,919,910.40 -296,182,802.66
(“-” for decrease) 5
3.1 Total comprehensive income 788,087.31 99,199,103.99 99,987,191.30
3.2 Capital increased and
reduced by owners
3.2.1 Ordinary shares
increased by shareholders
3.2.2 Capital increased by
holders of other equity instruments
3.2.3 Share-based payments
included in owners’ equity
3.2.4 Other
-400,007,045.0
3.3 Profit distribution 9,919,910.40 -390,087,134.64
4
3.3.1 Appropriation to surplus
9,919,910.40 -9,919,910.40
reserves
3.3.2 Appropriation to owners -390,087,134.6
-390,087,134.64
(or shareholders) 4
3.3.3 Other
3.4 Transfers within owners’
equity
3.4.1 Increase in capital (or
share capital) from capital
reserves
3.4.2 Increase in capital (or
share capital) from surplus reserves
138
Konka Group Co., Ltd. Annual Report 2018
3.4.3 Loss offset by surplus
reserves
3.4.4 Other
3.5 Specific reserve
3.5.1 Increase in the period
3.5.2 Used in the period
3.6 Other -6,082,859.32 -6,082,859.32
4. Balances as at the end of the 2,407,945,408.0 -1,182,217. 1,227,564,785 3,040,171,940. 6,788,517,983.5
114,018,066.79
period 0 31 .19 85 2
2017
Unit: RMB
2017
Other equity
instruments Specifi
Less: Other
Item Prefe Perp c Surplus Retained Total owners’
Share capital Capital reserves Treasury comprehens
rred etual Oth reserv reserves earnings equity
stock ive income
share bond er e
s s
1. Balances as at the end of the prior 2,407,945,408.0 6,714,437.6 847,908,466.2 -589,696,203. 2,737,666,216.3
64,794,108.39
year 0 2 8 91 8
Add: Adjustments for changed
accounting policies
Adjustments for corrections of
previous errors
-25,347,306.9
Other adjustments 7,350,000.00 -17,997,306.92
2
2. Balances as at the beginning of 2,407,945,408.0 72,144,108.39 6,714,437.6 847,908,466.2 -615,043,510. 2,719,668,909.4
139
Konka Group Co., Ltd. Annual Report 2018
the year 0 2 8 83 6
3. Increase/ decrease in the period -8,684,742. 369,736,408.5 3,942,671,187 4,343,103,908.4
39,381,054.83
(“-” for decrease) 24 1 .39 9
-8,684,742. 4,312,407,595 4,303,722,853.6
3.1 Total comprehensive income
24 .90 6
3.2 Capital increased and reduced
by owners
3.2.1 Ordinary shares increased
by shareholders
3.2.2 Capital increased by
holders of other equity instruments
3.2.3 Share-based payments
included in owners’ equity
3.2.4 Other
369,736,408.5 -369,736,408.
3.3 Profit distribution
1 51
3.3.1 Appropriation to surplus 369,736,408.5 -369,736,408.
reserves 1 51
3.3.2 Appropriation to owners
(or shareholders)
3.3.3 Other
3.4 Transfers within owners’
equity
3.4.1 Increase in capital (or
share capital) from capital
reserves
3.4.2 Increase in capital (or
share capital) from surplus reserves
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Konka Group Co., Ltd. Annual Report 2018
3.4.3 Loss offset by surplus
reserves
3.4.4 Other
3.5 Specific reserve
3.5.1 Increase in the period
3.5.2 Used in the period
3.6 Other 39,381,054.83 39,381,054.83
4. Balances as at the end of the 2,407,945,408.0 -1,970,304. 1,217,644,874 3,327,627,676 7,062,772,817.9
111,525,163.22
period 0 62 .79 .56 5
141
Konka Group Co., Ltd. Annual Report 2018
Konka Group Co., Ltd.
Notes to Financial Statements 2018
(All amounts are expressed, unless otherwise stated, in Renminbi (RMB).)
I. Company Profile
1. Establishment
Konka Group Co., Ltd. (hereinafter referred to as “Company” or “the Company”), is a
joint-stock limited company reorganized from the former Shenzhen Konka Electronic Co.,
Ltd. in August 1991 upon approval of the People’s Government of Shenzhen Municipality,
and has its ordinary shares (A-share and B-share) listed on Shenzhen Stock Exchange with
prior consent from the People’s Bank of China Shenzhen Special Economic Zone Branch. On
29 August 1995, the Company was renamed to “Konka Group Co., Ltd.” (Credibility code:
914403006188155783) with its main business electronic industry. And now the headquarters
locates in No. 28 of No. 12 of Keji South Rd., Science & Technology Park, Yuehai Street,
Nanshan District, Shenzhen, Guangdong Province.
2. Share Capital Changes upon Establishment
On 27 November 1991, with approval from the SRYFZ No. 102 [1991] document as issued
by the People’s Bank of China Shenzhen Special Economic Zone Branch, Shenzhen Konka
Electronic Co., Ltd., during 8 December 1991—31 December 1991, has issued 128,869,000
RMB ordinary shares (A-share) at a par value of RMB1.00 per share, of which the original
net assets were converted into 98,719,000 state-owned institutional shares, 30,150,000 new
shares were issued, including 26,500,000 circulating shares issued to the public and
3,650,000 staff shares issued to the staff of the Company.
On 29 January 1992, with approval from the SRYFZ No. 106 [1991] document as issued by
the People’s Bank of China Shenzhen Special Economic Zone Branch, Shenzhen Konka
Electronic Co., Ltd., during 20 December 1991— 31 January 1992, has issued to investors
abroad 58,372,300 RMB special shares (B-share) at a par value of RMB1.00 per share, of
which 48,372,300 shares held by the former foreign investor and founder—Hong Kong
Ganghua Electronic Group Co., Ltd. are converted into foreign legal person’s shares, and
10,000,000 B-shares are issued additionally.
On 10 April 1993, the Proposal on Profit Distribution and Dividend Payout 1992 was
adopted at the second general meeting of shareholders of the Company. With approval from
the SZBF No. 2 [1993] document as issued by Shenzhen Securities Regulatory Office, the
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Konka Group Co., Ltd. Annual Report 2018
Company began to perform dividend policy for FY 1992 as of 30 April 1993: distributing
RMB 0.90 in cash plus 3.5 bonus shares for every 10 shares to all shareholders. The total
capital stock reached 187,473,150 shares after this distribution.
On 18 April 1994, the Proposal on Profit Distribution and Dividend Payout 1993 was
adopted at the third general meeting of shareholders of the Company. With approval from the
SZBF No. 115 [1994] document as issued by Shenzhen Securities Regulatory Office, the
Company began to perform dividend policy for FY1993 as of 10 June 1994: distributing
RMB 1.10 in cash plus 5 bonus shares (including 4.4 profit bonus shares and 0.6 bonus share
capitalized from capital public reserve) for every 10 shares to all shareholders. The total
capital stock reached 281,209,724 shares after this distribution and capitalization from capital
public reserve.
On 2 June 1994, in accordance with the provisions that “staff shares could go public and be
transferred six months after listing”, as jointly promulgated by the State Commission for
Restructuring the Economic System and the State Council’s Securities Commission, the staff
shares of the Company was planned to be listed on the flow on 6 June 1994, with the prior
consent of Shenzhen Securities Regulatory Office and Shenzhen Stock Exchange.
On 8 October 1994, the Proposal on Negotiable Bonus Shares of B-Share Corporate
Shareholders 1992 was adopted at the interim general meeting of shareholders of the
Company. With approval from the SZBF No. 224 [1994] document as issued by Shenzhen
Securities Regulatory Office, the 16,930,305.00 bonus shares for FY 1992 granted to foreign
legal persons were listed and negotiated at B-share market on 26 October 1994.
On 6 February 1996, the Proposal on Share Allotment Modes 1996 was adopted at the
interim general metering of shareholders of the Company. With approval from the SZBF No.
5 [1996] document as issued by Shenzhen Securities Regulatory Office, and re-examination
from the ZJPSZ No. 16 [1996] document and ZJGZ No. 2 [1996] document as issued by
China Securities Regulatory Commission, on 16 July 1996 and 29 October 1996, all
shareholders were respectively allotted three shares for every ten existing shares held at
RMB6.28/A-share and HKD5.85/B-share. Corporate shareholders took their respective
existing shares as bases for full subscription of the allocable shares. The total capital stock
reached 365,572,641.00 shares after this allotment.
On 25 January 1998, the Plan on Share Allotment 1998 was adopted at the interim general
meeting of shareholders of the Company. With approval from the ZZBZ No. 29 [1998]
144
Konka Group Co., Ltd. Annual Report 2018
document as issued by Shenzhen Securities Regulatory Office, and ZJSZ No.64 [1998]
document as issued by China Securities Regulatory Commission, on 15 July 1998, negotiable
A-shares were allotted in proportion of 3:10 at RMB10.50/A-share. For such reasons as
continued weakness in B-share secondary market (lower than share allotment price), B-share
negotiation and allotment plan was cancelled, and the corporate shareholders of the Company
waived the preemptive right. The total capital stock reached 389,383,603 shares after this
allotment.
On 30 June 1999, the Proposal on Profit Distribution and Capitalization from Capital Public
Reserve 1998 was adopted at the eighth general meeting of shareholders of the Company. On
20 August 1999, the profit distribution for FY 1998 was carried out: all shareholders were
presented RMB3.00 in cash for every 10 shares, plus 2 shares capitalized from capital public
reserve. The total capital stock reached 467,260,323.00 shares after this capitalization.
On 30 June 1999, the Plan on A-Share Issue for Capital Increase was adopted at the eighth
general meeting of shareholders of the Company. With approval from the ZJFXZ No.140
[1999] document as issued by China Securities Regulatory Commission, on 1 November
1999, 80,000,000.00 A-shares were additionally issued to the public at RMB15.50/share. The
total capital stock reached 547,260,323.00 shares after this additional issue.
On 30 May 2000, the Plan on Profit Distribution and Dividend Payout 1999 was adopted at
the ninth general meeting of shareholders of the Company. On 25 July 2000, the profit
distribution for FY 1999 was carried out: all shareholders were distributed RMB4.00 in cash
plus 1 bonus shares for every 10 shares. The total capital stock reached 601,986,352.00
shares after this distribution.
On 26 May 2008, the 2017 general meeting of shareholders s was convened, during which
the following resolutions were discussed and adopted: based on the total capital stock of
601,986,352.00 shares for the year ended 31 December 2007, capitalization from capital
public reserve was made to all shareholders at a proportion of 1:1, namely 10 new shares for
every 10 existing shares. On 16 December 2008, with approval from the SMGZF No. 2662
[2008] document as issued by Shenzhen Bureau of Trade and Industry, the Company was
agreed to increase its share capital, and went through the formalities for registration of
changes with the administration for industry and commerce on 10 April 2009. The total
capital stock reached 1,203,972,704.00 shares after change.
According to the regulations of the 2015 1st Extraordinary General Meeting and the revised
145
Konka Group Co., Ltd. Annual Report 2018
articles of the Company, the Company applied to increase the registered capital of
RMB1,203,972,704.00, which totally turned into capital reserve with the altered registered
capital of RMB2,407,945,408.00 and managed the industrial and commercial alternation
registration on 28 January 2016 with the altered share capital of 2,407,945,408.00 shares.
3. Approved business scope: research and development, production and operation of such
intelligent household electric appliances as televisions, refrigerators, washing machines, and
personal electronic appliances, and kitchen and bathroom electronic appliances;
manufacturing and application of home AV, IPTV set-top boxes, OTT terminal products,
digital TV receivers (including ground receiving equipment of satellite television
broadcasting), digital products, intelligent wearable products, intelligent health products,
intelligent electric products, intelligent switch plug, power bank, mobile communication
equipments and terminal products, daily-use electronic products, automotive electronic
products, satellite navigation systems, intelligent transportation systems, fire-fighting and
security systems, office equipments, computers, displays, large screen display systems; LED
(OLED) back light, illumination, light-emitting devices, and packaging thereof; Touch TV
AIO, wireless broadcasting television transiting equipment; emergency broadcast system
equipment, electronic parts and components, moulds, plastic and rubber products, and
packing materials, design and in-door installation security products, monitoring products,
wireless and cable digital television system and system integration, and technical consultancy
and after-sale paid services of related products (except mobile phone, the other products in
the above business scope are manufactured in other places outside Shenzhen); Wholesale,
retail, import & export and relevant support services of the aforesaid products (including
spare parts) (Commodities subject to state trading management are not involved. Products
involved in quota, license management and other specified management shall be subject to
the relevant state provisions.); sale of self-developed technological achievements; provision
of maintenance services, technical consultant service for electronic products; ordinary cargo
transportation, domestic freight forwarding, international freight forwarding, and
warehousing services; management of supply chain, consultancy on enterprise management;
and self-owned property leasing and management services, recovery of waste electrical
appliances and electronic products (excluding dissembling) (operated by branch offices); and
outsourcing services of information technology and business procedures by means of
undertaking services in the way of outsourcing, including management and maintenance of
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Konka Group Co., Ltd. Annual Report 2018
system application, management of information technology, bank background service,
financial settlement, human resource service, software development, call centre, and data
processing. Import & export business: domestic trade; international trade (excluding
monopoly, exclusive control, and monopolized commodities); selling security products,
intelligent household products, door lock, and hardware; doing various business entrusted by
(Mobile, Unicom, Telecom, and BC&TV); Water pollution control, solid waste pollution
treatment, hazardous waste pollution control, air pollution control, soil pollution control and
remediation;production (excluding mining) and sales of non-metallic mineral products and
materials; development, production and sales of specific materials for semiconductor
integrated circuits and component; assembly, production and sales of integrated device
electronics, design, R&D, manufacturing, testing, packaging and sales of semiconductor
integrated circuits, and sales, integrated circuit products and related technical services,
technology development, transfer, import and export in the field of semiconductor integrated circuit
technology.
4. The Company and its subsidiaries are mainly engaged in the production and sales of colour
TVs, white goods, mobile phones, etc.; trade business of supply chain, environmental
protection, commercial factoring, and etc.
5. The financial statements contained herein have been approved for issue by the Board of
Directors of the Company on 28 March 2018.
6. There were 114 subsidiaries included in the consolidation scope of 2018 of the Company,
and please refer to the Notes VIII. “Equities among other entities” for details. There were 68
subsidiaries increased and 6 decreased in the consolidation scope of the Reporting Period
over the last period of the Company, for details, see the Notes VII. “Changes of the
consolidation scope”.
7. A check list of corporate names and their abbreviations mentioned in this Report
Corporate name Abbreviation
Shenzhen Konka E-display Co., Ltd. Konka E-display
Shenzhen E-display Service Co., Ltd. E-display Service
Shenzhen Kangqiao Easy Chain Technology Co., Ltd. Kangqiao Easy Chain
Konka Ventures Development (Shenzhen) Co., Ltd. Konka Ventures
Yantai Konka Healthcare Enterprise Service Co., Ltd. Yantai Konka
Chengdu Konka Incubator Management Co., Ltd. Chengdu Konka Incubator
Chengdu Anren Konka Cultural and Creative Incubator Management Co., Ltd. Chengdu Anren
147
Konka Group Co., Ltd. Annual Report 2018
Corporate name Abbreviation
Guiyang Konka Enterprise Service Co., Ltd. Konka Enterprise Service
Nanjing Chuanghui Smart Technology Co., Ltd. Chuanghui Smart
Guizhou Konka Enterprise Management Service Co., Ltd. Konka Enterprise Management
Yibin Konka Incubator Management Co., Ltd. Yibin Konka Incubator
Shenzhen Konka Cross-Border Technological Innovation Service Co., Ltd. Cross-Border Technological Innovation
Anhui Konka Electronic Co., Ltd. Anhui Konka
Anhui Kangzhi Trade Co., Ltd. Kangzhi Trade
Konka Factoring (Shenzhen) Co., Ltd. Konka Factoring
Youshi Kangrong Culture Communication Co., Ltd. Youshi Kangrong
Chuzhou Konka Technology & Industry Development Co., Ltd. Chuzhou Konka TID
Shenzhen Konka Unifortune Supply Chain Management Co., Ltd. Konka Unifortune
Jiali International (Hong Kong) Limited Jiali International
Shenzhen Wankaida Science and Technology Co., Ltd. Wankaida
Dongguan Konka Electronic Co., Ltd. Dongguan Konka
Shenzhen Konka Telecommunications Technology Co., Ltd. Telecommunication Technology
Shenzhen Konka Electrical Appliances Co., Ltd. Konka Electrical Appliances
Mudanjiang Arctic Ocean Appliances Co., Ltd. Mudanjiang Appliances
Konka (Europe) Co., Ltd. Konka Europe
Shenzhen Konka Commercial System Technology Co., Ltd. Commercial System Technology
Shenzhen Konka Electrical Appliances Co., Ltd. Konka Electrical Appliances
Hainan Konka Material Technology Co., Ltd. Konka Material
Shenzhen Shushida Logistics Service Co., Ltd. Shushida Logistics
Shenzhen Konka Mobile Interconnection Technology Co., Ltd. Mobile Interconnection
Sichuan Konka Smart terminal Technology Co., Ltd Sichuan Konka
Anhui Konka Tongchuang Electrical Appliances Co., Ltd. Anhui Tongchuang
Anhui Konka Electrical Appliance Technology Co., Ltd. Anhui Electrical Appliance
Henan Frestec Refrigeration Appliance Co., Ltd. Frestec Refrigeration
Henan Frestec Electrical Appliances Co., Ltd. Frestec Electrical Appliances
Henan Frestec Household Appliances Co., Ltd. Frestec Household Appliances
Shenzhen Konka Pengrun Technology & Industry Co., Ltd. Konka Pengrun
Jiaxin Technology Co., Ltd. Jiaxin Technology
E3info (Hainan) Technology Co., Ltd. E3info
Shenzhen Konka Yifang Technology Co., Ltd. Yifang Technology
Dongguan Konka Packing Materials Co., Ltd. Dongguan Packing
148
Konka Group Co., Ltd. Annual Report 2018
Corporate name Abbreviation
Shenzhen E2info Network Technology Co., Ltd. E2info
Beijing Konka Electronic Co., Ltd. Beijing Konka Electronic
Tianjin Konka Leasing Co., Ltd. Konka Leasing
Shenzhen Konka Electronic Fittings Technology Co., Ltd. Fittings Technology
Boluo Konka Precision Technology Co., Ltd. Boluo Konka Precision
Xiamen Dalong Trading Co., Ltd. Xiamen Dalong
Boluo Konka PCB Co., Ltd. Boluo Konka
Chongqing Qingjia Electronics Co., Ltd. Chongqing Qingjia
Kunshan Kangsheng Investment Development Co., Ltd. Kunshan Kangsheng
Anhui Kaikai Shijie E-commerce Co., Ltd. Kaikai Shijie
Hong Kong Konka Co., Ltd. Hong Kong Konka
Konka Electrical Appliances
Konka Electrical Appliances Investment & Development Co., Ltd.
Investment
Chain Kingdom Co., Limited Chain Kingdom
Chain Kingdom (Shenzhen) Co., Limited Chain Kingdom (Shenzhen)
Shenzhen Konka Plastic Products Co., Ltd. Plastic Products
Konka SmartTech Limited Konka SmartTech
Kangjietong (Hong Kong) Limited Kangjietong
Konka Electrical Appliances
Konka Electrical Appliances International Trading Co., Ltd.
International Trading
Shenzhen Konka Investment Holding Co., Ltd. Konka Investment
Yibin Konka Technology Park Operation Co., Ltd. Yibin Konka Technology Park
Sichuan Konka Industrial New Town Development Co., Ltd. Industrial New Town
Shenzhen Konka Capital Equity Investment Management Co., Ltd. Konka Capital
Konka Suiyong Investment (Shenzhen) Co., Ltd. Konka Suiyong
Hainan Konka Technology Industry Development Co., Ltd. Hainan Technology
Shenzhen Kangquan Enterprise Management Consulting Co., Ltd. Kangquan Enterprise
Shenzhen Konka Electronics Technology Co., Ltd. Electronics Technology
GuangDong XingDa HongYe Electronic Co., Ltd. XingDa HongYe
Shanghai Xinfeng Zhuoqun PCB Co., Ltd. Shanghai Xinfeng
Zhongshan Zewei Kechuang Investment Management Co., Ltd. Zhongshan Zewei
Nanjing Konka Smart Technology Co., Ltd. Nanjing Konka
Anhui Konka Zhilian E-Commerce Co., Ltd. Anhui Zhilian
Konka Huanjia (Dalian) Environmental Technology Co., Ltd. Konka Huanjia
Shanghai Konka Industrial Co., Ltd. Shanghai Konka
149
Konka Group Co., Ltd. Annual Report 2018
Corporate name Abbreviation
Chuzhou Kangyong Health Industry Development Co., Ltd. Chuzhou Kangyong
Yantai Konka Industrial Co., Ltd. Yantai Konka
Yantai Kangjin Technology Development Co., Ltd. Yantai Kangjin
Shandong Kangxin Industrial Development Co., Ltd. Shandong Kangxin
Shandong Econ Technology Co., Ltd. (inclusive of its consolidated subsidiaries) Econ Technology
Jiangxi Konka New Material Technology Co., Ltd. Jiangxi Konka
Jiangxi Xinfeng Microcrystalline Jade Co., Ltd. Xinfeng Microcrystalline
Jiangxi Golden Phoenix Nano Crystallized Glass Co., Ltd. Nano Crystallized Glass
Shenzhen Kangxinwei Semiconductor Co., Ltd. Shenzhen Kangxinwei
Shenzhen Meixin Semiconductor Technology Co., Ltd. Shenzhen Meixin
Hefei Kangxinwei Storage Technology Co., Ltd. Hefei Kangxinwei
Shenzhen Nianhua Enterprise Management Co., Ltd. Shenzhen Nianhua
Shenzhen Konka Eco-Development Investment Co., Ltd. Konka Eco-Development
Konka Ronghe Industrial Technology (Foshan) Co., Ltd. Konka Ronghe
Suining Konka Industrial Park Development Co., Ltd. Suining Konka Industrial Park
Sichuan Kangjiatong Supply Chain Management Co., Ltd. Kangjiatong
Shenzhen Konka Suyuan Investment Industrial Co., Ltd. Konka Suyuan
II. Basis for the Preparation of Financial Statements
With the going-concern assumption as the basis and based on transactions and other events
that actually occurred, the Group prepared financial statements in accordance with The
Accounting Standards for Business Enterprises—Basic Standard issued by the Ministry of
Finance with Decree No. 33 and revised with Decree No. 76, the 42 specific accounting
standards, the Application Guidance of Accounting Standards for Business Enterprises, the
Interpretation of Accounting Standards for Business Enterprises and other regulations issued
and revised from 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 and
investment properties, the financial statements are based on historic costs to measure.
Non-current assets held for sale is priced by the lower amount between the amounts that fair
150
Konka Group Co., Ltd. Annual Report 2018
value minus estimated amount and the original book value that meets the held for sale
requirement. Where impairment occurred on an asset, an impairment reserve was withdrawn
accordingly pursuant to relevant requirements.
III. Statement of Compliance with the Accounting Standards for Business Enterprises
The financial statements prepared by the Group are in compliance with in compliance with
the Accounting Standards for Business Enterprises, which factually and completely present
the Company’s financial positions as at 31 December 2018, business results and cash flows
for 2018, and other relevant information. In addition, the Company’s and the Group’s
financial statements meet the requirements of disclosing financial statements and notes
thereto stated in the Rules for Preparation Convention of Disclosure of Public Offering
Companies No.15 – General Regulations for Financial Reporting (revised in 2014) by China
Securities Regulatory Commission.
IV. Important Accounting Policies and Estimations
The Company and its subsidiaries are mainly engaged in the production and sales of colour
TVs, white goods, mobile phones, etc.; trade business of supply chain, environmental
protection, commercial factoring, and etc. The Company and its subsidiaries formulated
certain specific accounting policies and accounting estimates according to the actual
production and operation characteristics and the regulations of the relevant ASBE on the
transactions and events of the revenues recognition, the recognition of completion of
construction contract, and research development expenditure. For the details, please refer to
each description of Notes IV. 23 “Revenues”. For the notes of the significant accounting
judgment and estimations made by the management layer, please refer to Notes IV. 29
“Significant accounting judgment and estimations”.
1. Fiscal Period
The Group’s fiscal periods include fiscal years and fiscal periods shorter than a complete
fiscal year. The Group’s fiscal year starts on January 1 and ends on December 31 of every
year according to the Gregorian calendar.
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Konka Group Co., Ltd. Annual Report 2018
2. Operating Cycle
A normal operating cycle refers to a period from the Group purchasing assets for processing
to realizing cash or cash equivalents. An operating cycle for the Group is 12 months, which
is also the classification criterion for the liquidity of its assets and liabilities.
3. Recording Currency
Renminbi is the dominant currency used in the economic circumstances where the Group and
its domestic subsidiaries are involved. Therefore, the Group and its domestic subsidiaries use
Renminbi as their bookkeeping base currency. The overseas subsidiaries of the Company
should confirm the HK Dollar and Euro a as their recording currency according its major
economic environment of their operating address. And the Group adopted Renminbi as the
bookkeeping base currency when preparing the financial statements for the Reporting Year.
4. Accounting Treatment Methods for Business Combinations under the Same Control
or not under the Same Control
Business combinations, it is refer to two or more separate enterprises merge to form a
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
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additional paid-in capital (share premium) is not sufficient to be offset, the retained earnings
shall be adjusted.
The direct cost for the business combination of the combining party shall be recorded into the
profits and losses at the current period.
(2) Business combinations not under the same control
A business combination not under the same control is a business combination in which the
combining enterprises are not ultimately controlled by the same party or the same parties
both before and after the business combination. In a business combination not under the same
control, the party which obtains the control on other combining enterprise(s) on the purchase
date is the acquirer, and other combining enterprise(s) is (are) the acquiree.
For a business combination not under the same control, the combination costs shall include
the fair values, on the acquisition date, of the assets paid, the liabilities incurred or assumed
and the equity securities issued by the acquirer in exchange for the control on the acquiree,
the expenses for audit, legal services and assessment, and other administrative expenses,
which are recorded into the profits and losses in the current period. The trading expenses for
the equity securities or debt securities issued by the acquirer as the combination
consideration shall be recorded into the amount of initial measurement of the equity
securities or debt securities. The involved contingent consideration shall be recorded into the
combination costs at its fair value on the acquiring date. Where new or further evidences
emerge, within 12 months since the acquiring date, against the existing circumstances on the
acquiring date and the contingent consideration thus needs to be adjusted, the combined
goodwill shall be adjusted accordingly. The combination costs of the acquirer and the
identifiable net assets obtained by it in the combination shall be measured according to their
fair values at the acquiring date. The acquirer shall recognize the positive balance between
the combination costs and the fair value of the identifiable net assets it obtains from the
acquiree as business reputation. Where the combination costs are less then the fair value of
the identifiable net assets it obtains from the acquiree, the acquirer shall re-examine the
measurement of the fair values of the identifiable assets, liabilities and contingent liabilities it
obtains from the acquiree as well as the combination costs. If, after the re-examination, the
combination costs are still less than the fair value of the identifiable net assets it obtains from
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the acquiree, the acquirer shall record the balance into the profits and losses of the current
period.
As for the deductible temporary differences the acquirer obtains from the acquiree which are
not recognized into deferred income tax liabilities due to their not meeting the recognition
standards, if new or further information shows that the relevant situation has existed on the
acquiring date and the economic benefits brought by the deductible temporary differences the
acquirer obtains from the acquiree on the acquiring date can be realized, they shall be
recognized into deferred income tax assets and the relevant goodwill shall be reduced. Where
the goodwill is not sufficient to be offset, the difference shall be recognized into the profits
and losses in the current period. In other circumstances than the above, where the deductible
temporary differences are recognized into deferred income tax assets on the acquiring date,
they shall be recorded into the profits and losses in the current period.
In a business combination not under same control realized by two or more transactions of
exchange, according to about the No. 5 Notice about the Treasury Issuing the Accounting
Standards for Enterprises (Finance accounting) [2012] No. 19 and the Article 51 of
Accounting Standards for Enterprises No. 33—Consolidated Financial Statements Criterion
about the “package deal” (see Note IV, 5 (2)), Whether the deals are “package deal” or not,
belong to the “package deal”, see the previous paragraphs described in this section and Note
IV, 13 “long term equity investment” and conduct accounting treatment, those not belong to
the “package deal” distinguish between the individual financial statements and the
consolidated financial statements and conduct relevant accounting treatment.
In the individual financial statements, the sum of the book value and new investment cost of
the Group holds in the acquiree before the acquiring date shall be considered as initial cost of
the investment. Other related comprehensive gains in relation to the equity interests that the
Group holds in the acquiree before the acquiring date shall be treated on the same basis as the
acquiree directly disposes the related assets or liabilities when disposing the investment (that
is, except for the corresponding share in the changes in the net liabilities or assets with a
defined benefit plan measured at the equity method arising from the acquiree’s
re-measurement, the others shall be transferred into current investment gains).
In the Group’s consolidated financial statements, as for the equity interests that the Group
holds in the acquiree before the acquiring date, they shall be re-measured according to their
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fair values at the acquiring date; the positive difference between their fair values and carrying
amounts shall be recorded into the investment gains for the period including the acquiring
date. Other related comprehensive gains in relation to the equity interests that the Group
holds in the acquiree before the acquiring date shall be treated on the same basis as the
acquiree directly disposes the related assets or liabilities when disposing the investment (that
is, except for the corresponding share in the changes in the net liabilities or assets with a
defined benefit plan measured at the equity method arising from the acquiree’s
re-measurement, the others shall be transferred into current investment gains on the acquiring
date).
5. Methods for Preparing Consolidated Financial Statements
(1) Principle for determining the consolidation scope
The consolidation scope for financial statements is determined on the basis of control. The
term “control” is the power of the Group upon an investee, with which it can take part in
relevant activities of the investee to obtain variable returns and is able to influence the
amount of returns. The scope of consolidation includes the Company and its all subsidiaries.
A subsidiary is an enterprise or entity controlled by the Group.
Once any changes in the relevant facts or situations resulted in any changes in the elements
involved in the aforesaid definition of “control”, the Company shall carry out a reassessment.
(2) Methods for preparing the consolidated financial statements
Subsidiaries are fully consolidated from the date on which the Group obtains control on their
net assets and operation decision-making and are de-consolidated from the date when such
control ceases. As for a disposed subsidiary, its operating results and cash flows before the
disposal date has been appropriately included in the consolidated income statement and cash
flow statement; and as for subsidiaries disposed in the current period, the opening items in
the consolidated balance sheet are not adjusted. For a subsidiary acquired in a business
combination not under the same control, its operating results and cash flows after the
acquiring date have been appropriately included in the consolidated income statement and
cash flow statement, and the opening items and comparative items in the consolidated
financial statements are not adjusted. For a subsidiary acquired in a business combination
under the same control, its operating results and cash flows from the beginning of the
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Reporting Period of the combination to the combination date have been appropriately
included in the consolidated income statement and cash flow statement, and the comparative
items in the consolidated financial statements are adjusted at the same time.
The financial statements of subsidiaries are adjusted in accordance with the accounting
policies and accounting period of the Group during the preparation of the consolidated
financial statements, where the accounting policies and the accounting periods are
inconsistent between the Group and subsidiaries. For a subsidiary acquired from a business
combination not under the same control, the individual financial statements of the subsidiary
are adjusted based on the fair value of the identifiable net assets at the acquisition date.
All significant inter-group balances, transactions and unrealized profits are offset in the
consolidated financial statements.
The portion of a subsidiary’s shareholders’ equity and the portion of a subsidiary’s net profits
and losses for the period not held by the Group are recognized as minority interests and
minority shareholder profits and losses respectively and presented separately under
shareholders’ equity and net profits in the consolidation financial statements. The portion of
a subsidiary’s net profits and losses for the period that belong to minority interests is
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
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liabilities or assets with a defined benefit plan resulted from re-measurement of the original
subsidiary, the rest shall all be transferred into current investment gains) when such control
ceases. And subsequent measurement is conducted on the residual equity interests according
to the No. 2 Accounting Standard for Business Enterprises —Long-term Equity Investments
or the No. 22 Accounting Standard for Business Enterprises—Recognition and Measurement
of Financial Instruments. For details, see Note IV. 13 “long term equity investment” or Note
IV. 9 “financial instruments”.
If the company disposals the equity investment in the subsidiary company until the loss of
control through multiple transactions, it is necessary to distinguish whether the transactions
disposing the equity investment in the subsidiary company until the loss of control belong to
package transactions. 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
principles of “part disposal of subsidiaries of a long-term equity investment under the
condition of not losing control on its subsidiaries” (see Note IV. 13. (2) ④) and “Where the
Group losses control on its original subsidiaries due to disposal of some equity investments
or other reasons” (See the front paragraph) relevant transactions of the Group losses control
on its subsidiaries due to disposal of equity investments belonging to a package deal,
considered as a transaction and conduct accounting treatment. However, Before losing
control, every disposal cost and corresponding net assets balance of subsidiary of disposal
investment are confirmed as other comprehensive income in consolidated financial
statements, which together transferred into the current profits and losses in the loss of
control , when the Group losing control on its subsidiary.
6. Classification of Joint Arrangements and Accounting Treatment of Joint Operations
A joint arrangement refers to an arrangement jointly controlled by two participants or above.
The Group classifies joint arrangements into joint operations and joint ventures according to
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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 Accounting Standard No. 8 for Business Enterprises—Asset
Impairment, the Group shall fully recognizes the loss for a transfer or sale of assets to a joint
operation; and shall recognize the loss according to its stake in the joint operation for a
purchase of assets from the joint operation.
7. Recognition Standard for Cash and Cash Equivalents
In the Group’s understanding, cash and cash equivalents include cash on hand, any deposit
that can be used for cover, and short-term (usually due within 3 months since the day of
purchase) and high circulating investments, which are easily convertible into known amount
of cash and whose risks in change of value are minimal.
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8. Foreign Currency Businesses and Translation of Foreign Currency Financial
Statements
(1) Accounting treatments for translation of foreign currency transactions
As for a foreign currency transaction, the Company shall convert the amount in a foreign
currency into amount in its bookkeeping base at the spot exchange rate (usually referring to
the central parity rate that day announced by the People’s Bank of China, the same below) of
the transaction date, while as for such transactions as foreign exchange or involving in
foreign exchange, the Company shall converted into amount in the bookkeeping base
currency at actual exchange rate the transaction is occurred.
(2) Accounting treatments for translation of foreign currency monetary items and
non-monetary items
On the balance sheet date, the foreign currency monetary items shall be translated at the spot
exchange rate on the balance sheet date. The exchange difference arising from the difference
between the spot exchange rate on the balance sheet date and the spot exchange rate at the
time of initial recognition or prior to the balance sheet date shall be recorded in the profits
and losses in the current period, excluding the following situations: ① the exchange
difference arising from foreign currency loans related to acquisition of fixed assets shall be
treated at the principle of capitalization of borrowing costs; ② the exchange difference
arising from the hedging instruments used for effective hedging of net overseas operation
investments shall be recorded into other comprehensive incomes, and shall be recognized
into current gains and losses when the net investments are disposed; and ③ the exchange
difference arising from change in the book balance of foreign currency monetary items
available for sale except the amortized costs shall be recorded into other comprehensive
gains and losses.
When it involves overseas business in preparing the consolidated financial statement, for the
translation difference of foreign currency monetary items of net investment in overseas
business arising from the change in exchange rate, it shall be recorded into the other
comprehensive income; and be recorded into disposal gains and losses at current period when
disposing overseas business.
A foreign currency non-monetary item measured at the historical costs shall still be translated
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at the spot exchange rate on the transaction date. Where the foreign non-monetary items
measured at the fair value shall be converted into amount in its bookkeeping base currency at
spot exchange rate, the exchange gains and losses arising thereof shall be treated as change in
fair value, and recorded into the current period gains and losses or as other comprehensive
incomes.
(3) Translation of foreign currency financial statements
When it involves overseas business in preparing the consolidated financial statement, for the
translation difference of foreign currency monetary items of net investment in overseas
business arising from the change in exchange rate, it shall be recorded into the item of
“difference of foreign currency financial statement translation” under the owners’ equity; and
be recorded into disposal gains and losses at current period when disposing overseas
business.
The foreign currency financial statement of overseas business should be translated in to RMB
financial statement by the following methods: The asset and liability items in the balance
sheets shall be translated at a spot exchange rate on the balance sheet date. Among the
owner’s equity items, except for the items as “undistributed profits”, other items shall be
translated at the spot exchange rate at the time when they are incurred. The income and
expense items in the profit statements shall be translated at the spot exchange rate of the
transaction date. The undistributed profits at year-begin is the undistributed profits at the end
of last year after the translation; undistributed profits at year-end shall be listed as various
distribution items after the translation; after the translation, the balance between assets and
the sum of liabilities and shareholders’ 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 shareholders’ equities in the balance sheet and which arises
from the translation of foreign currency financial statements relating to this overseas business,
into the disposal profits and losses of the current period by all or proportion of the disposed
overseas business.
Foreign cash flow shall be translated at the spot exchange rate of the current period of the
date of cash flow incurred. The influence of exchange rate on the cash flow shall be
adjustment item and individually listed in the cash flow statement.
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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
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concerned shall adopt value appraisal techniques, including the prices adopted by the parties,
who are familiar with the condition, in the latest market transaction upon their own free will,
the current fair value obtained by referring to other financial instruments of the same
essential nature, the cash flow capitalization method and the option pricing model, etc., to
determine its fair value.
(2) Classification, recognition and measurement of financial assets
The purchase and sale of financial assets under the normal ways shall be recognized and
stopped to be recognized respectively at the price of transaction date. Financial assets shall
be classified into the following four categories when they are initially recognized: (a) the
financial assets which are measured at their fair values and the variation of which is recorded
into the profits and losses of the current period, (b) the investments which will be held to
their maturity; (c) loans and the account receivables; and (d) financial assets available for
sale.
① The financial assets which are measured at their fair values and the variation of which is
recorded into the profits and losses of the current period
Including transactional financial assets and the financial assets which are designated to be
measured at their fair value when they are initially recognized and of which the variation is
recorded into the profits and losses of the current period;
The financial assets meeting any of the following requirements shall be classified as
transactional financial assets：A. The purpose to acquire the said financial assets is mainly for
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.
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The financial assets meeting any of the following requirements shall be designated as
financial assets which are measured at their fair values and the variation of which is recorded
into the profits and losses of the current period for initial recognition: A. the designation can
eliminate or significantly reduce the difference of relevant gains and losses between
recognition and measurement causing from different bases for measurement of financial
assets; B. The official written documents for risk management and investment strategies of
the enterprise have clearly stated that it shall ,manage, evaluate and report to important
management personnel based on the fair value, about the financial assets group or the group
of financial assets & liabilities which the financial assets are belong to.
For the financial assets which are measured at their fair values and the variation of which is
recorded into the profits and losses of the current period shall continue to be measured by fair
value, gains and losses of change in fair value, dividends and interest related with these
financial assets should be recorded into gains and losses of current period.
② Held-to-maturity investment
The term “held-to-maturity investment” refers to a non-derivative financial asset with a fixed
date of maturity, a fixed or determinable amount of repo price and which the enterprise holds
for a definite purpose or the enterprise is able to hold until its maturity.
For the held-to-maturity investment adopting actual interest rate method, which is measured
at the post-amortization costs, the profits and losses that arise when such financial assets or
financial liabilities are terminated from recognition, or are impaired or amortized, shall be
recorded into the profits and losses of the current period.
The actual interest rate method refers to the method by which the post-amortization costs and
the interest incomes of different instalments or interest expenses are calculated in light of the
actual interest rates of the financial assets or financial liabilities (including a set of financial
assets or financial liabilities). The actual interest rate refers to the interest rate adopted to
cash the future cash flow of a financial asset or financial liability within the predicted term of
existence or within a shorter applicable term into the current carrying amount of the financial
asset or financial liability.
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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.
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Financial assets available-for-trade are subsequently measured at fair value, and gains or
losses arising from changes in the fair value are recognized as other comprehensive income，
and be carried forward when the said financial assets stopped recognition, then it shall be
recorded into the profits and losses of the current period. But, the equity instrument
investment which neither have quotation in the active market nor its fair value could not be
reliable measured, as well as the derivative financial assets that concern with the equity
instruments and should be settled through handing over to its equity instruments, should take
the follow-up measurement according to the cost.
Interest receive during the holding of assets available for sales and cash dividends with
distribution announcement by invested companies, it shall be recorded into the profits and
losses of the current period.
(3) Impairment of financial assets
The Group assesses at the balance sheet date the carrying amount of every financial asset
except for the financial assets that measured by the fair value. If there is objective evidence
indicating a financial asset may be impaired, a provision is provided for the impairment.
The Group carries out a separate impairment test for every financial asset which is
individually significant. As for a financial asset which is individually insignificant, an
impairment test is carried out separately or in the financial asset group with similar credit risk.
Where the financial asset (individually significant or insignificant) is found not impaired
after the separate impairment test, it is included in the financial asset group with similar
credit risk and tested again on the group basis. Where the impairment loss is recognized for
an individual financial asset, it is not included in the financial asset group with similar credit
risk for an impairment test.
① Impairment on held-to maturity investment, loans and receivables
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
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impairment loss reversed shall not exceed the amortized cost of the financial assets without
provisions of impairment loss on the reserving date.
② Impairment of available-for-sale financial assets
When it judged that the decrease of fair value of the available-for-sale equity instrument
investment is serious and not temporarily after comprehensive considering relevant factors, it
reflected that the available-for-sale equity instrument investment occurred impairment. Of
which, the “serious decline” refers to the accumulative decline range of the fair value over
20%; while the “non-temporary decline” refers to the consecutive decline time of the fair
value over 12 months.
Where an available-for-sale financial asset is impaired, the accumulative losses arising from
the decrease of the fair value of the capital reserve which is directly included are transferred
out and recorded in the profits and losses for the current period. The accumulative losses
transferred out are the balance obtained from the initially obtained cost of the said financial
asset after deducting the principals as taken back, the amortized amount, the current fair
value and the impairment loss originally recorded in the profits and losses.
Where the impairment loss has been recognized for an available-for-sale financial asset, if,
within the accounting periods thereafter, there is any objective evidence proving that the
value of the said financial asset has been restored and the restoration is objectively related to
the events that occur after the impairment loss was recognized, the originally recognized
impairment loss is reversed. The impairment losses on the available-for-sale equity
instrument investments are reversed and recognized as other comprehensive incomes, and the
impairment losses on the available-for-sale liability instruments are reversed and recorded in
the profits and losses for the current period.
The impairment loss incurred to an equity instrument investment for which there is no quoted
price in the active market and whose fair value cannot be reliably measured, or incurred to a
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
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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
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ownership are transferred. If almost all of the risks and rewards of the financial asset
ownership had been transferred to the transferee, derecognize the financial assets. For almost
all of the risks and rewards of the financial asset ownership retained, do not end to recognize
the financial assets. For which neither transfer or retain almost all of the risks and rewards of
the financial asset ownership, continuously judge whether the Company retain the control of
the assets, and conduct accounting treatment according to the principle of mentioned in the
previous paragraphs.
(5) Classification and measurement of financial liabilities
In the initial recognition, financial liabilities are divided into the financial liabilities measured
at fair values and whose changes are recorded in current gains and losses and other financial
liabilities. Financial liabilities are initially recognized at their fair values. As for a financial
liability measured at fair value and whose changes are recorded in current gains and losses,
the relevant trading expense is directly recorded in the profits and losses for the current
period. As for other financial liabilities, the relevant trading expenses are recorded in the
initially recognized amounts.
① Financial liabilities measured at fair values and whose changes are recorded in current
gains and losses
Such financial liabilities are divided into transactional financial liabilities and financial
liabilities designated to be measured at fair values and whose changes are recorded in current
gains and losses in the initial recognition under the same conditions where such financial
assets are divided into transactional financial assets and financial assets designated to be
measured at fair values and whose changes are recorded in current gains and losses in the
initial recognition.
Financial liabilities measured at fair values and whose changes are recorded in current gains
and losses are subsequently measured at their fair values. Gains or losses arising from the fair
value changes, as well as the dividend and interest expenses in relation to the said financial
liabilities, are recorded in the profits and losses for the current period.
② Other financial liabilities
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As for a derivative financial liability connected to an equity instrument for which there is not
quoted price in an active market and whose fair value cannot be reliably measured and which
must be settled by delivering the equity instrument, it is subsequently measured on the basis
of costs. Other financial liabilities are subsequently measured according to the amortized cost
using the actual interest rate method. Gains or losses arising from de-recognition or
amortization of the said financial liabilities is recorded in the profits and losses for the
current period.
③ Financial guarantee contract and loan commitment
For the financial guarantee contracts which are not designated as a financial liability
measured at its fair value and the variation thereof is recorded into the profits and losses of
the current period, or the loan commitment which is not designated as a financial liability
measured at its fair value and the variation thereof is recorded into the gains and losses that
will be loaned lower than the market interest rate, which shall be initially recognized by fair
value, and the subsequent measurement shall be made after they are initially recognized
according to the higher one of the following: a. the amount as determined according to the
Accounting Standards for Enterprises No. 13 – Contingencies; b. the surplus after
accumulative amortization as determined according to the principles of the Accounting
Standards for Enterprises No. 14 - Revenues is subtracted from the initially recognized
amount.
(6) De-recognition of financial liabilities
Only when the prevailing obligations of a financial liability are relieved in all or in part may
the recognition of the financial liability be terminated in all or partly. Where the Group
(debtor) enters into an agreement with a creditor so as to substitute the existing financial
liabilities by way of any new financial liability, and if the contractual stipulations regarding
the new financial liability is substantially different from that regarding the existing financial
liability, it terminates the recognition of the existing financial liability, and at the same time
recognizes the new financial liability.
Where the recognition of a financial liability is totally or partially terminated, the enterprise
concerned shall include into the profits and losses of the current period for the gap between
the book value which has been terminated from recognition and the considerations it has paid
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(including the non-cash assets it has transferred out and the new financial liabilities it has
assumed)
(7) Derivatives and embedded derivatives
Derivative financial instruments include derivatives are initially measured at fair value at the
date when the derivative contracts are entered into and are substantially re-measured at fair
value. Except that derivative instruments designated as arbitrage tool with highly effective
hedging whose gains or losses formed by changes in fair value recognized the periods for
being recorded into profit or loss according to the nature of hedging relations and
requirements of hedging accounting, the fair value changes of other derivative instruments
are recognized into the current 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),
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re-purchases, sells or written-offs the equity instrument as the disposing of the changes of the
equity. 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
impairment provision shall be made.
① Debtor has serious financial difficult;
② Debtor goes against the contract clause (for instance, breach of faith or overdue paying
interests or principal);
③ Debtors have a great probability of bankruptcy or other financial reorganization;
④ Other objective evidence proving such accounts receivable has been impaired;
(2) Withdraw method of provision for bad debts
① The recognition criteria and method of individual provision for bad debts of receivables
that are individually significant
The Group recognized the receivables with amount above RMB20 million and other
receivables above RMB10 million as receivables with significant single amounts and
withdrawn the provision for bad debts.
The Group made an independent impairment test on receivables with significant single
amounts; the financial assets without impairment by independent impairment test should be
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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
Divide the groups according to the credit risks characteristics of the accounts
Group 1: Aging group
receivable
Group 2: Internal related party groups Divide the groups according to the credit risks characteristics of whether the
in the scope of consolidation of the creditor is the internal related party in the scope of consolidation of the
Company Company
B. Withdrawal method of provision for bad debts recognized by credit risk group
For the impairment test implemented by groups, the amount of provision for bad debts was
appraised and recognized in accordance with the structure of accounts receivable group and
similar characteristics of credit risk (the debtor’s ability to pay off the loans in accordance
with the provisions of contract), experience of losses, current economic status and the
predicted losses in the accounts receivable group.
Methods of making provisions for bad debt in different groups:
Item Withdrawal method
Group 1: Aging group Aging analysis method
Group 2: Internal related party groups To make an independent impairment test and if there was no impairment,
in the scope of consolidation of the should not withdraw the bad debts provision.
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Item Withdrawal method
Company
In the group, except subsidiary Econ Technology, adopting aging analysis method to
withdraw bad debt provision:
Withdrawal proportion for accounts Withdrawal proportion for other
Age
receivable (%) accounts receivable (%)
Within 1 year (including 1 year, similarly
2 2
hereinafter)
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
In the group, subsidiary Econ Technology 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
5 5
hereinafter)
1-2 years 10 10
2-3 years 30 30
3-4 years 50 50
4-5 years 80 80
Over 5 years 100 100
③ Receivables with insignificant amount but being individually withdrawn the provision for
bad debts
The Group made independent impairment test on receivables with insignificant amount but
with the following characteristics, if any objective evidence shows that the accounts
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receivable has been impaired, impairment loss shall be recognized on the basis of the gap
between the current values of the future cash flow lower than its book value so as to
withdraw provision for bad debts:
A. Receivables have dispute with the other parties or involving lawsuit and arbitration;
B. Receivables have obvious indication showing that the debtors are likely to fail to perform
the duty of repayment, etc.
C. There is other evidence of impairment and the impairment amount can estimated reliably.
(3) Reversal of provision for bad debts
If there is any objective evidence proving that the value of the said receivables has been
restored, and it is objectively related to the events occurred after such loss is recognized, the
impairment-related losses as originally recognized shall be reversed and be recorded into the
profits and losses of the current period. However, the reversed carrying amount shall not be
any more than the post-amortization costs of the said accounts receivable on the day of
reverse under the assumption that no provision is made for the impairment.
if the Company transfers accounts receivable to financial institutions not by right of recourse,
the balance between transaction amounts deducting the carrying value of written-off accounts
receivable and relevant taxes shall be recorded into the current profit and loss.
11. Inventory
(1) Classification
The Group’s inventories mainly include raw materials, goods in process; merchandise on
hand, goods delivered, circulating materials, and property inventories (development product,
and development cost), and finished but unsettled assets of construction contract.
① Development product refers to the finished and held-for-sale property.
② Development costs refers to the unfinished property with the development purpose for
sale.
The finished but unsettled assets of construction contract refers to the excess amount of
the sum of accumulatively incurred costs and recognized gross margin (loss) of contract in
process over the settled amount.
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(2) Pricing method for outgoing inventories
Pricing method of common inventories
The inventories shall be measured in light of their cost when obtained. The cost of inventory
consists of purchase costs, processing costs and other costs. Inventory is accounted by weight
average method upon receiving and giving. For merchandise on hand shall be accounted by
planned cost, if the difference between planned cost of and actual cost of raw materials is
accounted through the cost variance item, and the planned cost is adjusted to the actual cost
according to the cost difference which the carryover and given-out inventory should shoulder
in the period.
Pricing method of property inventories
The property inventories are initially measured at the costs, and inventories mainly include
materials in stock, development product in process (development costs), finished
development product, and development product intended to sell but rent temporarily, and etc.
The costs of the development product 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. When the inventories are delivered, its actual costs shall be recognized
by weighted average method.
Pricing method of construction contract
The construction contracts shall be measured at actual cost, including all direct and indirect
costs related to the execution of the contract from the time signing the contract to completing
the contract. The expenses such as travel expenses and bidding fees incurred for the purpose
of signing the contract, which can be separately and reliably measured and the contract is
likely to be concluded, are included in the contract cost when the contract is obtained; if the
above conditions are not met, they are included in the current profit and loss.
The accumulated costs incurred in the contract in progress, the accumulated recognized gross
profit (loss) and the settled price are stated in the balance sheet as net offset. The part of the
sum of the accumulated costs incurred in the contract in progress and the accumulated
recognized gross profit (loss) that exceeds the settled price is stated as the inventory; the part
of the settlement costs of the contract in progress that exceeds the sum of the accumulated
costs incurred and the accumulated recognized gross profit (loss) are stated as account
collected in advance.
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(3) Recognition basis of net realizable value and withdrawal method of depreciation reserves
for inventories
The net realizable value refers, in the ordinary course of business, to the account after
deducting the estimated cost of completion, estimated sale expense and relevant taxes from
the estimated sale price of inventories. The net realizable value of inventories shall be fixed
on the basis of valid evidence as well as under consideration of purpose of inventories and
the effect of events after balance-sheet-date.
On the balance sheet date, the inventories shall be measured according to the cost or the net
realizable value, whichever is lower. If the net realizable value is lower than the cost, it shall
withdraw the depreciation reserves for inventories, which was withdrawn in accordance with
the balance that the cost of individual inventory item exceeding the net realizable value. The
inventories with various numbers and low unit price shall be made provisions for
depreciation reserves of inventories according to the category of inventories. For inventories
that are produced and sold in the same region with same or similar end use or purposes, and
hard to be measured separately from other items, it shall be made merger provisions for
falling price of inventories.
After withdrawing the depreciation reserves for inventories, if the factors, which cause any
write-down of the inventories, have disappeared, causing the net realizable value of
inventories is higher than its carrying amount; the amount of write-down shall be reversed
from the original amount of depreciation reserve for inventories. The reversed amount shall
be included in the profits and losses of the current period.
(4) The perpetual inventory system is maintained for stock system.
(5) Amortization method of the low-value consumption goods and packing articles
The low-value consumption goods should be amortized by one time amortization when
acquiring and the packing articles are amortized by one time amortization when acquiring.
12. Assets Held for Sale and Disposal Group
When a company relies mainly on selling (including the exchanges of non-monetary assets
with commercial substance, similarly hereinafter) instead of continuing to use a non-current
asset or disposal group to recover its book value, then the non-current asset or disposal group
is classified as assets held for sale. The specific standards are simultaneously meeting the
following conditions: assets or disposal groups can be sold immediately under current
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conditions based on the practice of selling such assets or disposal groups in similar
transactions; the Company has already made a resolution on the sale plan and obtained a
certain purchase commitment, and the sale is expected to be completed within one year. A
disposal group refers to a group of assets that are disposed of together as a whole by sale or
other means in a transaction and the liabilities directly related to these assets transferred in
the transaction. Where the asset group or combination of asset groups to which a disposal
group belongs apportions the goodwill acquired in the business combination in accordance
with the Accounting Standards for Enterprises No. 8 - Asset Impairment, the disposal group
shall include the goodwill allocated to it.
If there are non-current assets or disposal groups held for sale during initial measurement or
on the balance sheet day based on remeasurement of this Company, if the book value is
higher than the net amount by deducting the selling expenses with the fair value, the book
value shall be written down and be equal to the net amount by deducting the selling expenses
with the fair value. The write-down amount shall be confirmed as the loss of depreciation of
assets and shall be included into the profits and losses of the current period. At the same time,
prepare to calculate and withdraw the assets purchased and under agreements to resell. For
the disposal group, deduct the book value of the goodwill in the disposal group with the asset
depreciation losses confirmed, then deduct the book value of each non-current asset in the
disposal group conforming to the measurement regulations of Accounting Standards for
Business Enterprises No. 42-non-current Assets Purchased and under Agreements to Resell,
Disposal Group and Operation Termination (herein after referred to as "the Standard for
Assets Purchased and under Agreements to Resell"). If the net amount by deducting the
selling expenses with the fair value of the disposal group purchased and under agreements to
resell on the subsequent balance sheet date, the previous write-down amount shall be
recovered and shall be reversed within the asset depreciation losses amount of the
non-current confirmed as per regulation of the Standard for Assets Purchased and under
Agreements to Resell after being classified into the category purchased and under agreements
to resell. The reverse amount shall be included into the current profits and losses, and the
book value shall be added as per the proportion of the book value of each non-current asset in
the disposal group applicable to the Standard for Assets Purchased and under Agreements to
Resell except for the goodwill; The goodwill book value deducted and the asset depreciation
losses of the non-current assets applicable to the measurement regulations of the Standard for
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Assets Purchased and under Agreements to Resell before its confirmation of being classified
into the category purchased and under agreements to resell shall not be reversed.
Depreciation or amortization in the non-current assets held for sale or the non-current assets
in the disposal group shall not be calculated or withdrawn. Interests of liabilities and other
expenses in the disposal group purchased and under agreements to resell shall be confirmed
continuously.
When a non-current asset or disposal group fail to meet the classification conditions for the
category of held-for-sale, the Company will no longer classify a non-current asset or disposal
group as held-for-sale or remove out a non-current asset from the held-for-sale disposal
group, and it will be measured by one of the followings whichever is lower: (1) The book
value before being classified as held for sale will be adjusted according to the depreciation,
amortization or impairment that would have been recognized under the assumption that it
was not classified as held for sale; (2) The recoverable amount.
13. Long-term Equity Investments
The long-term equity investments of this part refer to the long-term equity investments that
the Group has control, joint control or significant influence over the investees. The long-term
equity investment that the Group does not have control, joint control or significant influence
over the investees, should be recognized as available-for-sale financial assets or be measured
by fair value with the changes should be included in the financial assets accounting of the
current gains and losses, and please refer the details of the accounting policies to Notes IV 9
“Financial Instrument”.
Joint control, refers to the control jointly owned according to the relevant agreement on an
arrangement by the Group and the relevant activities of the arrangement should be decided
only after the participants which share the control right make consensus. Significant
influence refers to the power of the Group which could anticipate in the finance and the
operation polices of the investees, but could not control or jointly control the formulation of
the policies with the other parties.
(1) Recognition of investment costs
As for long-term equity investments acquired by enterprise merger, if the merger is under the
same control, the share of the book value of the shareholders’ equity of the merged enterprise,
on the date of merger, is regarded as the initial cost of the long-term equity investment. The
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difference between the initial cost of the long-term equity investment and the payment in
cash, non-cash assets transferred as well as the book value of the debts borne by the merging
party shall offset against the capital reserve. If the capital reserve is insufficient to dilute, the
retained earnings shall be adjusted. If the consideration of the merging enterprise is that it
issues equity securities, it shall, on the date of merger, regard the share of the book value of
the shareholder's equity of the merged enterprise on the consolidated financial statement of
the ultimate control party as the initial cost of the long-term equity investment. The total face
value of the stocks issued shall be regarded as the capital stock, while the difference between
the initial cost of the long-term equity investment and total face value of the shares issued
shall offset against the capital reserve. If the capital reserve is insufficient to dilute, the
retained earnings shall be adjusted. The equities of the combined party which respectively
acquired through multiple transaction under the same control that ultimately form into the
combination of the enterprises under the same control, should be disposed according whether
belongs to package deal; if belongs to package deal, each transaction would be executed
accounting treatment by the Company as a transaction of acquiring the control right. If not
belongs to package deal, it shall, on the date of merger, regard the enjoyed share of the book
value of the shareholder's equity of the merged enterprise on the consolidated financial
statement of the ultimate control party as the initial cost of the long-term equity investment,
and as for the difference between the initial investment cost of the long-term equity
investment and sum of the book value of the long-term equity investment before the
combination and the book value of the consideration of the new payment that further
required on the combination date, should adjust the capital reserve; if the capital reserve is
insufficient to dilute, the retained earnings shall be adjusted. The equity investment held
before the combination date which adopted the equity method for accounting, or the other
comprehensive income confirmed for the available-for-sale financial assets, should not have
any accounting disposal for the moment.
For the long-term investment required from the business combination under different control,
the initial investment cost regarded as long-term equity investment on the purchasing date
according to the combination cost, the combination costs shall be the sum of the fair values
of the assets paid, the liabilities incurred or assumed and the equity securities issued by the
Company. The equities of the acquirees which respectively acquired through multiple
transaction that ultimately form into the combination of the enterprises under the different
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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
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A long-term equity investment where the investing enterprise has joint control (except for
which forms into common operators) or significant influence over the investors should be
measured by equity method. Moreover, long-term equity investment adopting the cost
method in the financial statements, and which the Company has control on invested entity.
① Long-term equity investment measured by adopting cost method
The price of a long-term equity investment measured by adopting the cost method shall be
included at its initial investment cost and append as well as withdraw the cost of investing
and adjusting the long-term equity investment. The return on investment at current period
shall be recognized in accordance with the cash dividend or profit announced to distribute by
the invested entity, except the announced but not distributed cash dividend or profit included
in the actual payment or consideration upon gaining the investment.
② Long-term equity investment measured by adopting equity method
If the initial cost of a long-term equity investment is more than the Company's attributable
share of the fair value of the invested entity's identifiable net assets for investment, the initial
cost of the long-term equity investment may not be adjusted. If the initial cost of a long-term
equity investment is less than the Company's attributable share of the fair value of the
invested entity's identifiable net assets for investment, the difference shall be included in the
current profits and losses and the cost of the long-term equity investment shall be adjusted
simultaneously.
When measured by adopting equity method, respectively recognize investment income and
other comprehensive income according to the net gains and losses as well as the portion of
other comprehensive income which should be enjoyed or be shared, and at the same time
adjust the book value of the long-term equity investment; corresponding reduce the book
value of the long-term equity investment according to profits which be declared to distribute
by the investees or the portion of the calculation of cash dividends which should be enjoyed;
for the other changes except for the net gains and losses, other comprehensive income and
the owners’ equity except for the profits distribution of the investees, should adjust the book
value of the long-term equity investment as well as include in the capital reserve. The
investing enterprise shall, on the ground of the fair value of all identifiable assets of the
invested entity when it obtains the investment, recognize the attributable share of the net
profits and losses of the invested entity after it adjusts the net profits of the invested entity. If
the accounting policies adopted by the investees are not accord with that of the Group,
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should be adjusted according to the accounting policies of the Group and the financial
statement of the investees during the accounting period and according which to recognize the
investment income as well as other comprehensive income. For the transaction happened
between the Group and associated enterprises as well as joint ventures, if the assets launched
or sold not form into business, the portion of the unrealized gains and losses of the internal
transaction, which belongs to the Group according to the calculation of the enjoyed
proportion, should recognize the investment gains and losses on the basis. But the losses of
the unrealized internal transaction happened between the Group and the investees which
belongs to the impairment losses of the transferred assets, should not be neutralized. If the
assets launched by this Company to the associated enterprise or joint ventures constitute the
business, and the investor obtains the long-term equity investment but fails to obtain the
control right, the fair value of business launched is taken as the initial investment cost of
newly-increased long-term equity investment, and the difference between initial investment
cost and book value of business launched will be included in current profit and loss. If the
assets sold by this Company to the associated enterprises or joint ventures constitute the
business, the difference between consideration and book value of business will be included in
current profit and loss. If this Company's assets purchased from the associated enterprises or
joint ventures constitute business, accounting treatment shall be conducted in accordance
with the provisions of the Accounting Standards for Business Enterprises No. 20 -- Business
Combination, fully recognize the gains or losses related to the transaction.
The Group shall recognize the net losses of the invested enterprise until the book value of the
long-term equity investment and other long-term rights and interests which substantially
from the net investment made to the invested entity are reduced to zero. However, if the
Group has the obligation to undertake extra losses, it shall be recognized as the estimated
liabilities in accordance with the estimated duties and then recorded into investment losses at
current period. If the invested entity realizes any net profits later, the Group shall, after the
amount of its attributable share of profits offsets against its attributable share of the
un-recognized losses, resume recognizing its attributable share of profits.
For the long-term equity investment held by the Group before the first execution of the new
accounting criterion of the associated enterprises and joint ventures, if there is debit
difference of the equity investment related to the investment, should be included in the
current gains and losses according to the amount of the straight-line amortization during the
original remained period.
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③ Acquiring shares of minority interest
In the preparation for the financial statements, the balance existed between the long-term
equity investment increased by acquiring shares of minority interest and the attributable net
assets on the subsidiary calculated by the increased shares held since the purchase date (or
combination date), the capital reserves shall be adjusted, if the capital reserves are not
sufficient to offset, the retained profits shall be adjusted.
④ Disposal of long-term equity investment
In the preparation of financial statements, the Company disposed part of the long-term equity
investment on subsidiaries without losing its controlling right on them, the balance between
the disposed price and attributable net assets of subsidiaries by disposing the long-term
equity investment shall be recorded into owners’ equity; where the Company losses the
controlling right by disposing part of long-term equity investment on such subsidiaries, it
shall treated in accordance with the relevant accounting policies in Note IV. 5 (2) “Method on
preparation of combined financial statements”.
For other ways on disposal of long-term equity investment, the balance between the book
value of the disposed equity and its actual payment gained shall be recorded into current
profits and losses.
For the long-term equity investment measured by adopting equity method, if the remained
equity after disposal still adopts the equity method for measurement, the other
comprehensive income originally recorded into shareholders’ equity should adopt the same
basis of the accounting disposal of the relevant assets or liabilities directly disposed by the
investees according to the corresponding proportion. The owners’ equity recognized owning
to the changes of the other owners’ equity except for the net gains and losses, other
comprehensive income and the profits distribution of the investees, should be transferred into
the current gains and losses according to the proportion.
For the long-term equity investment which adopts the cost method of measurement, if the
remained equity still adopt the cost method, the other comprehensive income recognized
owning to adopting the equity method for measurement or the recognition and measurement
standards of financial instrument before acquiring the control of the investees, should adopt
the same basis of the accounting disposal of the relevant assets or liabilities directly disposed
by the investees and should be carried forward into the current gains and losses according to
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the proportion; the changes of the other owners’ equity except for the net gains and losses,
other comprehensive income and the profits distribution among the net assets of the investees
which recognized by adopting the equity method for measurement, should be carried forward
into the current gains and losses according to the proportion.
For those the Group lost the control of the investees by disposing part of the equity
investment as well as the remained equity after disposal could execute joint control or
significant influences on the investees, should change to measure by equity method when
compiling the individual financial statement and should adjust the measurement of the
remained equity to equity method as adopted since the time acquired; if the remained equity
after disposal could not execute joint control or significant influences on the investees,
should change the accounting disposal according to the relevant regulations of the
recognition and measurement standards of financial instrument, and its difference between
the fair value and book value on the date lose the control right should be included in the
current gains and losses. For the other comprehensive income recognized by adopting equity
method for measurement or the recognition and measurement standards of financial
instrument before the Group acquired the control of the investees, should execute the
accounting disposal by adopting the same basis of the accounting disposal of the relevant
assets or liabilities directly disposed by the investees when lose the control of them, while the
changes of the other owners’ equity except for the net gains and losses, other comprehensive
income and the profits distribution among the net assets of the investees which recognized by
adopting the equity method for measurement, should be carried forward into the current
gains and losses according to the proportion. Of which, for the disposed remained equity
which adopted the equity method for measurement, the other comprehensive income and the
other owners’ equity should be carried forward according to the proportion; for the disposed
remained equity which changed to execute the accounting disposal according to the
recognition and measurement standards of financial instrument, the other comprehensive
income and the other owners’ equity should be carried forward in full amount.
For those the Group lost the control of the investees by disposing part of the equity
investment, the disposed remained equity should change to calculate according to the
recognition and measurement standards of financial instrument, and difference between the
fair value and book value on the date lose the control right should be included in the current
gains and losses. For the other comprehensive income recognized from the original equity
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investment by adopting the equity method, should execute the accounting disposal by
adopting the same basis of the accounting disposal of the relevant assets or liabilities directly
disposed by the investees when terminate the equity method for measurement, while for the
owners’ equity recognized owning to the changes of the other owner’s equity except for the
net gains and losses, other comprehensive income and the profits distribution of the investees,
should be transferred into the current investment income with full amount when terminate
adopting the equity method.
The Group respectively disposes the equity investment of the subsidiaries through multiple
transactions until lose the control right, if the above transactions belongs to the package deal,
should execute the accounting disposal by regarding each transaction as a deal of disposing
the equity investment of the subsidiaries until lose the control right, while the difference
between each expenses of the disposal and the book value of the long-term equity investment
in accord with the disposed equity before losing the control right, should firstly be
recognized as other comprehensive income then be transferred into the current gains and
losses of losing the control right along until the time when lose it.
14. Investment Real Estates
The term “investment real estate” refers to the real estate held for generating rent and/or
capital appreciation. Investment real estates of the Group include the right to use any land
which has already been rented; the right to use any land which is held and prepared for
transfer after appreciation; and the right to use any building which has already been rented.
The initial measurement of the investment real estate shall be made at its cost. Subsequent
expenditures incurred for an investment real estate is included in the cost of the investment
real estate when it is probable that economic benefits associated with the investment real
estate will flow to the Group and the cost can be reliably measured, otherwise the
expenditure is recognized in profit or loss in the period in which they are incurred.
The Group shall make a follow-up measurement to the investment real estate by employing
the cost pattern on the date of the balance sheet. An accrual depreciation or amortization shall
be made for the investment real estates in the light of the accounting policies of the use right
of buildings or lands.
For details of impairment test method and withdrawal method of impairment provision of
investment real estates, please refer to Note IV. 20. “Long-term assets impairment”.
When owner-occupied real estate or inventories are changed into investment real estate or
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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.
15. Fixed Assets
(1) Conditions for recognition of fixed assets
The term "fixed assets" refers to the tangible assets that simultaneously possess the features
as follows: (a) they are held for the sake of producing commodities, rendering labour service,
renting or business management; and (b) their useful life is in excess of one fiscal year. The
fixed assets are only recognized when the relevant economic benefits probably flow in the
Group and its cost could be reliable measured. The fixed assets should take the initial
measurement according to the cost and at the same time consider the influences of the factors
of the estimated discard expenses.
(2) Depreciation methods of each fixed asset
The fixed assets should be withdrawn and depreciation by straight-line depreciation within
the useful life since the next month when the fixed assets reach the estimated available state.
The useful life, estimated net salvage and the yearly discounted rate of each fixed asset are as
follows:
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Expected net
Annual
Category of fixed assets Method Useful life (Year) salvage value
deprecation (%)
(%)
Housing and building Straight-line
20-40 5-10.00 2.25-4.75
depreciation
Machinery equipment Straight-line 5-10.00
5-10 9.00-19.00
depreciation
Electronic equipment Straight-line 5-10.00
3-5 18.00-31.67
depreciation
Transportation vehicle Straight-line 5-10.00
3-5 18.00-31.67
depreciation
Other equipment Straight-line 5 5-10.00
18.00-19.00
depreciation
The “expected net salvage value” refers to the expected amount that the Group may obtain
from the current disposal of a fixed asset after deducting the expected disposal expenses at
the expiration of its expected useful life.
(3) Testing method of impairment and withdrawal method of provision for impairment on
fixed assets
For details of the testing method of impairment and withdraw method of impairment
provision for impairment on fixed assets, please refer to Note IV. 20 “Long-term assets
impairment”.
(4) Recognition basis, pricing and depreciation method of fixed assets by finance lease
The “finance lease” shall refer to a lease that has transferred in substance all the risks and
rewards related to the ownership of an asset. Its ownership may or may not eventually be
transferred. The fixed assets by finance lease shall adopt the same depreciation policy for
self-owned fixed assets. If it is reasonable to be certain that the lessee will obtain the
ownership of the leased asset when the lease term expires, the leased asset shall be fully
depreciated over its useful life. If it is not reasonable to be certain that the lessee will obtain
the ownership of the leased asset at the expiry of the lease term, the leased asset shall be fully
depreciated over the shorter one of the lease term or its useful life.
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(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.
The Group shall check the useful life, expected net salvage value and depreciation method of
the fixed assets at the end of the year at least, if there is any change, it shall be regarded as a
change of the accounting estimates.
16. Construction in Progress
Construction in process is measured at actual cost. Actual cost comprises construction costs,
borrowing costs that are eligible for capitalization before the fixed assets being ready for
their intended us and other relevant costs. Construction in process is transferred to fixed
assets when the assets are ready for their intended use.
For details of the testing method of impairment and withdraw method of impairment
provision on construction in progress, please refer to Note IV. 20 “Long-term assets
impairment”.
17. Borrowing Costs
The borrowing costs shall include interest on borrowings, amortization of discounts or
premiums on borrowings, ancillary expenses, and exchange balance on foreign currency
borrowings. When the borrowing costs can be directly attributable to the construction or
production of assets eligible for capitalization, and the asset disbursements or the borrowing
costs have already incurred, and the construction or production activities which are necessary
to prepare the asset for its intended use or sale have already started, the capitalization of
borrowing costs begins. When the asset eligible for capitalization under acquisition and
construction or production is ready for the intended use or sale, the capitalization of the
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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.
18. Intangible Assets
(1) Pricing method, useful life and impairment test
The term “intangible asset” refers to the identifiable non-monetary assets possessed or
controlled by enterprises which have no physical shape.
The intangible assets shall be initially measured according to its cost. The costs related with
the intangible assets, if the economic benefits related to intangible assets are likely to flow
into the enterprise and the cost of intangible assets can be measured reliably, shall be
recorded into the costs of intangible assets; otherwise, it shall be recorded into current profits
and losses upon the occurrence.
The use right of land gained is usually measured as intangible assets. For the self-developed
and constructed factories and other constructions, the related expenditures on use right of
land and construction costs shall be respectively measured as intangible assets and fixed
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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;
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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
For details of the testing method of impairment and withdraw method of impairment
provision on intangible assets, see Notes IV. 20 “Long-term assets impairment”.
19. Amortization Method of Long-term Deferred Expenses
Long-term deferred expenses refer to general expenses with the apportioned period over one
year (one year excluded) that have occurred but attributable to the current and future periods.
Long-term deferred expense shall be amortized averagely within benefit period.
20. Impairment of Long-term Assets
For non-current financial Assets of fixed Assets, projects under construction, intangible
Assets with limited service life, investing real estate with cost model, long-term equity
investment of subsidiaries, cooperative enterprises and joint ventures, the Group should
judge whether decrease in value exists on the date of balance sheet. Recoverable amounts
should be tested for decrease in value if it exists. Other intangible Assets of reputation and
uncertain service life and other non-accessible intangible assets should be tested for decrease
in value no matter whether it exists.
If the recoverable amount is less than book value in impairment test results, the provision for
impairment of differences should include in impairment loss. Recoverable amounts would be
the higher of net value of asset fair value deducting disposal charges or present value of
predicted cash flow. Asset fair value should be determined according to negotiated sales price
of fair trade. If no sales agreement exists but with asset active market, fair value should be
determined according to the Buyer’s price of the asset. If no sales agreement or asset active
market exists, asset fair value could be acquired on the basis of best information available.
Disposal expenses include legal fees, taxes, cartage or other direct expenses of merchantable
Assets related to asset disposal. Present value of predicted asset cash flow should be
determined by the proper discount rate according to Assets in service and predicted cash flow
of final disposal. Asset depreciation reserves should be calculated on the basis of single
Assets. If it is difficult to predict the recoverable amounts for single Assets, recoverable
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Konka Group Co., Ltd. Annual Report 2018
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.
21. Employee Compensation
Employee compensation of the Company mainly includes short-term employee
compensation, departure benefits, demission benefits and other long-term employee
compensation. Of which:
Short-term compensation mainly including salary, bonus, allowances and subsidies,
employee services and benefits, medical insurance premiums, birth insurance premium,
industrial injury insurance premium, housing fund, labour union expenditure and personnel
education fund, non-monetary benefits etc. The short-term compensation actually happened
during the accounting period when the active staff offering the service for the Group should
be recognized as liabilities and is included in the current gains and losses or relevant assets
cost. Of which the non-monetary benefits should be measured according to the fair value.
Welfare after demission mainly includes setting drawing plan. Defined contribution plans
include basic endowment insurance, unemployment insurance and annuity. Deposited
amounts are charged to relevant asset costs or current profits and losses during the
period in which they are incurred. Defined benefit plan of the Company is internal early
retirement plan. According to anticipated accumulative welfare unit, the Company makes
estimates by unbiased and consistent actuarial assumption for the demographic variables and
financial variables, measures the obligations produced in defined benefit plans, and
determines the vesting period. On balance sheet date, the Company will list all obligations in
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Konka Group Co., Ltd. Annual Report 2018
defined benefit plans as present value and include current service costs into current profits
and losses.
When terminating labour relations before expiration of contract, or layoffs with
compensations, and the Company cannot terminate the labour relations unilaterally or reduce
the demission welfare, remuneration and liabilities produced from the demission welfare
should be determined and included in current profits and losses when determining the costs
of demission welfare and recombination. However, demission welfare not fully paid within
12 months after annual Reporting Period should be handled the same as other long-term
employees’ payrolls.
The inside employee retirement plan is treated by adopting the same principle with the above
dismiss ion welfare. The group would recorded the salary and the social security insurance
fees paid and so on from the employee’s service terminative date to normal retirement date
into current profits and losses (dismiss ion welfare) under the condition that they meet the
recognition conditions of estimated liabilities.
The other long-term welfare that the Group offers to the staffs, if met with the setting
drawing plan, should be accounting disposed according to the setting drawing plan, while the
rest should be disposed according to the setting revenue plan.
22. Estimated Liabilities
The company should recognize the related obligation as a provision for liability when the
obligation meets the following conditions: (1) That obligation is a present obligation of the
enterprise; (2) It is probable that an outflow of economic benefits from the enterprise will be
required to settle the obligation; (3) A reliable estimate can be made of the amount of the
obligation.
On the balance sheet date, an enterprise shall take into full consideration of the risks,
uncertainty, time value of money, and other factors pertinent to the Contingencies to measure
the estimated liabilities in accordance with the best estimate of the necessary expenses for the
performance of the current obligation.
When all or some of the expenses necessary for the liquidation of an estimated liabilities of
an enterprise is expected to be compensated by a third party, the compensation should be
separately recognized as an asset only when it is virtually certain that the reimbursement will
be obtained. Besides, the amount recognized for the reimbursement should not exceed the
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Konka Group Co., Ltd. Annual Report 2018
book value of the estimated liabilities.
23. Revenue
(1) Revenue from selling goods
No revenue from selling goods may be recognized unless the following conditions are met
simultaneously: the significant risks and rewards of ownership of the goods have been
transferred to the buyer by the enterprise; the enterprise retains neither continuous
management right that usually keeps relation with the ownership nor effective control over
the sold goods; the relevant amount of revenue can be measured in a reliable way; the
relevant economic benefits may flow into the enterprise; and the relevant costs incurred or to
be incurred can be measured in a reliable way.
The recognition of revenue from commodities for the home market when shipping the goods
or transferring property in goods; for goods exported, the revenue shall be recognized once
the goods are cleared through customs and delivered to the carrier designated by the
purchaser; for goods directly traded in overseas, the revenue shall be recognized when
customers pick up the goods or the goods are delivered to the assigned place by customers.
(2) Providing labour services
If the Group can reliably estimate the outcome of a transaction concerning the labour services
it provides, it shall recognize the revenue from providing services employing the
percentage-of-completion method on the date of the balance sheet. The completed proportion
of a transaction concerning the providing of labour services shall be decided by the
proportion of the labour service already provided to the total labour service to provide.
The outcome of a transaction concerning the providing of labour services can be measured in
a reliable way, means that the following conditions shall be met simultaneously: ① The
amount of revenue can be measured in a reliable way; ② The relevant economic benefits
are likely to flow into the enterprise; ③ The schedule of completion under the transaction
can be confirmed in a reliable way; and ④ The costs incurred or to be incurred in the
transaction can be measured in a reliable way.
If the outcome of a transaction concerning the providing of labour services cannot be
measured in a reliable way, the revenue from the providing of labour services shall be
recognized in accordance with the amount of the cost of labour services incurred and
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Konka Group Co., Ltd. Annual Report 2018
expected to be compensated, and make the cost of labour services incurred as the current
expenses. If it is predicted that the cost of labour services incurred couldn’t be compensated,
thus no revenue shall be recognized.
Where a contract or agreement signed between Group and other enterprises concerns selling
goods and providing of labour services, if the part of sale of goods and the part of providing
labour services can be distinguished from each other and can be measured respectively, the
part of sale of goods and the part of providing labour services shall be treated respectively. If
the part of selling goods and the part of providing labour services cannot be distinguished
from each other, or if the part of sale of goods and the part of providing labour services can
be distinguished from each other but cannot be measured respectively, both parts shall be
conducted as selling goods.
(3) Construction contract income
Under circumstance of that the outcome of the construction contract can be reliably estimated,
the contract income and costs are confirmed on the balance sheet date in accordance with the
percentage of completion method. The completion of the contract is determined by the
proportion of the incurred labor costs to the estimated total costs.
That the result of the construction contract can be reliably estimated refers to that: ① the
total income of the contract can be reliably measured; ②the economic benefits related to the
contract are likely to flow into the enterprise; ③ The actual contract costs can be clearly
differentiated and reliably measured; ④ the completion of the contract and the costs needed
to complete the contract can be reliably determined.
If the result of the construction contract cannot be reliably estimated, but the contract cost
can be recovered, the contract income can be confirmed according to the actual contract cost
that can be recovered, and the contract cost is confirmed as the contract expense in the
current occurring period; for the contract cost that cannot be recovered, it is immediately
confirmed as the contract cost but not the contract income when it occurs. If the uncertainties
that make the results of the construction contract cannot be reliably estimated are no longer
in existence, the income and expenses related to the construction contract are determined
according to the percentage of completion method.
If the estimated total cost of the contract exceeds the total contract income, the estimated loss
is confirmed as the current expense.
The accumulated costs incurred in the contract in progress, the accumulated recognized gross
profit (loss) and the settled price are stated in the balance sheet as net offset. The part of the
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Konka Group Co., Ltd. Annual Report 2018
sum of the accumulated costs incurred in the contract in progress and the accumulated
recognized gross profit (loss) that exceeds the settled price is stated as the inventory; the part
of the settlement costs of the contract in progress that exceeds the sum of the accumulated
costs incurred and the accumulated recognized gross profit (loss) are stated as account
collected in advance.
(4) Business income of BOT and PPP
The Company participates in the construction of public infrastructure by means of BOT and
PPP. During the construction period, the Company recognizes the relevant revenue and
expenses from providing services in accordance with ASBE No. 15 - Construction Contracts.
After the completion of infrastructure, the Company recognizes the revenue from related to
follow-up services in accordance with ASBE No. 14 - Revenue.
Revenue from construction contracts is measured at the fair value of collected consideration
or consideration receivable (generally the amount of construction contracts), and financial
assets or intangible assets are recognized, in the recognition of revenue, in the following
circumstances:
① The contract stipulates that within a certain period after the completion of infrastructure,
the company undertaken the project may unconditionally collect money or other financial
assets of a fixed amount from the party awarding the contract; or, where the services fee
charged by the company undertaken the project is lower than a specified amount, and the
party awarding the contract is responsible for compensating the relevant price difference to
the company undertaken the project in accordance with the contract, in the recognition of
revenue, financial assets are recognized and treated in accordance with the provisions of
ASBE No. 22 - Recognition and Measurement of Financial Instruments.
② The contract stipulates that the Company has the right to collect fees from the party
receiving services within a certain period of time after the completion of relevant
infrastructure. However, if the amount of fees is uncertain, this right does not constitute an
unconditional right to collect cash. The Company undertaken the project shall recognize
intangible assets in the recognition of revenue.
In case that interest on borrowing occurs in the construction process, it shall be treated in
accordance with the provisions of ASBE No. 17 - Borrowing Costs.
In case that the project company fails to provide actual construction services and contracts
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Konka Group Co., Ltd. Annual Report 2018
the infrastructure construction to other parties, there will be no recognition of revenue from
construction services, and the project price paid in the construction process is recognized as
financial assets or intangible assets in accordance with the contract.
(5) Interest revenue
The amount of interest revenue should be measured and confirmed in accordance with the
length of time for which the Group’s monetary fund is used by others and the agreed interest
rate.
(6) Property leasing revenue
For the recognition method of the property leasing revenue, please refer to Notes IV. 26.
(7) Factoring business revenue
Take the paid-in factoring payment as the fair value to carry out initial measurement.
Subsequent measurement shall be carried out as per the effective interest method according
to the amortized cost. Take the balance between the fair value initially confirmed and
transferred amount of accounts receivable or face value of notes receivable as the interest
income by effective interests method and amortized costs during the financing period or the
rest credit period; interest income shall be recognized by straight-line method if it is due
within 1 year. The profits and losses from termination of recognition, impairment, and
amortization shall be included into the current profits and losses.
(8) Finance lease income
As a financial lessor, the Company recognizes, on the beginning date of the lease term, the
sum of the minimum rental receivables on the lease start date and the initial direct costs as
the entry value of financial lease receivable, and records the unguaranteed residential value.
The difference between the sum of minimum rental receivables plus the unguaranteed
residential value and the present value is recognized as unrealized financing revenue.
Unrealized financing revenue is measured using the real interest rate method during the lease
term and recognized as current financing lease revenue. Contingent rents are included in
current profits and losses when they actually occur.
24. Government Subsidies
A government subsidy means the monetary or non-monetary assets obtained free by the
Group from the government, but excluding the capital invested by the government as the
investor with corresponding owner’s equity. Government subsidies consist of the government
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subsidies pertinent to assets and government subsidies pertinent to income. Government
subsidy that is obtained by this Company used for purchasing or acquisition and construction,
or forming the long-term assets by other ways, which is confirmed the government subsidy
related to assets; Other government subsidies shall be defined as the government subsidy that
related with interest. If it does not clear the subsidy object in the government document, the
grants will be divided based on the following modes into government subsidy related to
earnings and government subsidy related to assets: (1) If the particular project of the grants is
clear in the government document, make a division according to the relative proportion of
expense amount of the formed assets in the budget of the particular project and the expense
amount included in the cost, shall review the division ratio required at each balance sheet
date and make changes if necessary; (2) Only make general statements for the application in
the government document, for not specifying the particular item, as the governmental
subsidy related to earnings. If a government subsidy is a monetary asset, it shall be measured
in the light of the received or receivable amount. If a government subsidy is a non-monetary
asset, it shall be measured at its fair value. If its fair value cannot be obtained in a reliable
way, it shall be measured at its nominal amount. The government subsidies measured at their
nominal amounts shall be directly included in the current profits and losses.
When this Company actually received the government subsidy, recognize and measure as the
actual measured amount.
If the government grants related to assets are recognized as deferred income and are included
in the profits and losses by instalments in a reasonable and systematic way within the service
life of underlying assets. The government grants related to income, using to compensate the
relevant expenses or losses in the later period shall be recognized as the deferred income and
are included in the current profit or loss in the period of confirming the related expenses or
losses; If the government grant is used for compensating the occurred costs or loss, include it
in the current profit and loss directly.
At the same time, for the government subsidies related to assets and profits, carry out
different accounting processing for different parts; for the governmental subsidy hard to
differentiate, the overall governmental subsidies are taken as the governmental subsidy
related to revenue.
The government grants related to daily activities of this Company shall be included in other
revenues or offset related costs according to the economic business nature; Government
subsidies unrelated to daily activities shall be included into the non-operating profits.
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If the governmental subsidies confirmed needs to be returned and there is the deferred
earnings balance concerned, the book balance of relevant deferred earnings shall be offset
against, but the excessive part shall be included into current profits and losses; Government
subsidies belonging to other situations shall be directly included into current losses and
profits.
25. Deferred Income Tax Assets/Deferred Income Tax Liabilities
(1) Income tax of the current period
On the balance sheet date, for the current income tax liabilities (or assets) of the current
period as well as the part formed during the previous period, should be measured by the
income tax of the estimated payable (returnable) amount which be calculated according to
the regulations of the tax law. The amount of the income tax payable which is based by the
calculation of the current income tax expenses, are according to the result measured from the
corresponding adjustment of the pre-tax accounting profit of 2014 which in accord to the
relevant regulations of the tax law.
(2) Deferred income tax assets and deferred income tax liabilities
The difference between the book value of certain assets and liabilities and their tax
assessment basis, as well as the temporary difference occurs from the difference between the
book value of the items which not be recognized as assets and liabilities but could confirm
their tax assessment basis according to the regulations of the tax law, the deferred income tax
assets and the deferred income tax liabilities should be recognized by adopting liabilities law
of the balance sheet.
No deferred tax liability is recognized for a temporary difference arising from the initial
recognition of goodwill, the initial recognition of assets or liabilities due to a transaction
other than a business combination, which affects neither accounting profit nor taxable profit
(or deductible loss). Besides, no deferred tax assets is recognized for the taxable temporary
differences related to the investments of subsidiary companies, associated enterprises and
joint enterprises, and the investing enterprise can control the time of the reverse of temporary
differences as well as the temporary differences are unlikely to be reversed in the excepted
future. Otherwise, the Group should recognize the deferred income tax liabilities arising from
other taxable temporary difference.
No deferred taxable assets should be recognized for the deductible temporary difference of
initial recognition of assets and liabilities arising from the transaction which is not business
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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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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.
26. Leasing
Financing leasing virtually transferred the whole risks and leasing of the compensation
related to the assets ownership and their ownership may eventually be transferred or maybe
not. Other leasing except for the financing leasing is operating leasing.
(1) Business of operating leases recorded by the Group as the lessee
The rent expenses from operating leases shall be recorded by the lessee in the relevant asset
costs or the profits and losses of the current period by using the straight-line method over
each period of the lease term. The initial direct costs shall be recognized as the profits and
losses of the current period. The contingent rents shall be recorded into the profits and losses
of the current period in which they actually arise.
(2) Business of operating leases recorded by the Group as the lessor
The rent incomes from operating leases shall be recognized as the profits and losses of the
current period by using the straight-line method over each period of the lease term. The
initial direct costs of great amount shall be capitalized when incurred, and be recorded into
current profits and losses in accordance with the same basis for recognition of rent incomes
over the whole lease term. The initial direct costs of small amount shall be recorded into
current profits and losses when incurred. The contingent rents shall be recorded into the
profits and losses of the current period in which they actually arise.
(3) Business of finance leases recorded by the Group as the lessee
On the lease beginning date, the Group shall record the lower one of the fair value of the
leased asset and the present value of the minimum lease payments on the lease beginning
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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
an account of the financing lease values receivable, and record the unguaranteed residual
value at the same time. The balance between the sum of the minimum lease receipts, the
initial direct costs and the unguaranteed residual value and the sum of their present values
shall be recognized as unrealized financing income. The balance through deducting
unrealized financing incomes from the finance lease accounts receivable shall be respectively
stated in long-term claims and long-term claims due within 1 year.
Unrecognized financing incomes shall be adopted by the effective interest rate method in the
lease term, so as to calculate and recognize current financing revenues. The contingent rents
shall be recorded into the profits and losses of the current period in which they actually arise.
27. Other Main Accounting Policies and Estimates
(1)Termination of operation
Termination of operation refers to a separately identifiable constituent part that satisfies one
of the following conditions that has been disposed of by the Company or is classified as
held-for-sale: This constituent part represents an independent main business or a separate
main business area; This constituent part is part of an associated plan that is intended to be
disposed of in an independent main business or a separate major business area; This
constituent part is a subsidiary that is specifically acquired for resale.
For accounting method of termination of operation, please refer to relevant description of
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Notes IV. 12 “Assets held for sale and disposal group”
(1) Hedging Accounting
To avoid certain risks, the Company carries out hedging of some financial instruments as
hedging tools. The Company treats hedging that meets specified conditions using hedging
accounting method. The Company's hedging is fair -value hedging, and treats the hedging of
foreign exchange risk with definite undertaking at fair value. At the beginning of hedging,
the Company records the relationship between hedging tools and hedged items, risk
management objectives and strategies for different hedging transactions. In addition, at the
beginning and after the hedging, the Company conducts continuous evaluation of the
effectiveness of hedging to check whether the hedging is highly effective during the
accounting period in which the hedging relationship is designated.
Fair value hedging is a qualified derivative instrument designated for fair value hedging, and
the gains or losses resulting from its changes in fair value are included in the current profits
and losses. The gains or losses of the hedged items due to hedged risks are also included in
the current profits and losses, and the book value of the hedged items is also adjusted. When
the Company cancels the designation of hedging relationship, the hedging instrument expires
or is sold, the contract is terminated or exercised, or the conditions are no longer satisfied, the
use of hedging accounting is terminated.
28. Changes in Main Accounting Policies and Estimates
(1) Changes of accounting policies
In accordance with the Notes on Revising and Printing the Format of 2018 General
Enterprises Financial Statement (CK [2018] No. 15) issued by the Ministry of Finance 15
June 2018, the Company revised the format of Financial Statements as follows:
Balance sheet: the items of original “Notes receivable” and “Accounts receivable” are
incorporated into the item of “Notes and accounts receivable”; the items of original “Interest
receivable”, “Dividends receivable” and “Other receivables” are incorporated into the item of
“Other receivables”; the items of “Fixed assets” and “Disposal of fixed assets” are
incorporated into the item of “Fixed assets”; the items of original “Engineering material” and
“Construction in process” are incorporated into the item of “Construction in process”; the
items of original “Notes payable” and “Accounts payable” are incorporated into the item of
“Notes and accounts payable”; the items of original “Interest payable”, “Dividends payable”,
and “Other payables” are incorporated into the item of “Other payables”; the items of
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original “long-term accounts payable” and “specific payable” are incorporated into the item
of “long-term accounts payable”.
Income Statement; the item of “Administrative expense” is divided into “Administrative
expense” and “R&D expense” to be presented and listed; the item of “financial cost” in
income statement add the items of “interest cost” and “interest income” to be presented and
listed.
Statements of Changes in Owners’ Equity: newly adding the item of “Changes in defined
benefit pension schemes transferred to retained earnings”
The items of 2017 financial statements after retroactive adjustment are as follows:
Unit: RMB
Before After
Item Amount Item Amount
Notes receivable 5,178,668,988.23
Notes and accounts
8,621,764,935.49
Accounts receivable
3,443,095,947.26 receivable
Interest receivable 1,813,256.77
Dividends receivable - Other receivables 184,218,356.16
Other receivables 182,405,099.39
Fixed assets 1,587,170,348.35
Fixed assets 1,587,170,348.35
Disposal of fixed assets -
Construction in process 135,863,821.01
Construction in process 135,863,821.01
Engineering material -
Notes payable 541,175,312.09 Notes and accounts
4,153,391,578.68
Accounts payable 3,612,216,266.59 payable
Interest payable 35,723,963.94
Dividends payable - 1,644,083,269.81
Other payables
Other payables 1,608,359,305.87
Administrative expense 448,036,697.96
Administrative expense
777,713,680.46
R&D expense 329,676,982.50
(2) Change of accounting estimates
There was no any change of accounting estimate of the Company in the Reporting Period.
29. Critical Accounting Judgments and Estimates
Due to the inside uncertainty of operating activity, the Group needed to make judgments,
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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) Revenue Recognition - Construction Contract
If the construction contract results can be reliably estimated, the Company adopts the method
of completion percentage to confirm the contract income on the balance sheet date. The
percentage of contract completion is confirmed in accordance with the method described in
Note IV, 233, Revenue, and is cumulatively calculated in each fiscal year in which each
construction contract is executed.
Significant judgment is required in determining the percentage of completion, contract costs
incurred, estimated total contract income and total cost, and contract recyclability, and the
project management personnel usually make judgments mainly based on past experience and
work. The estimated total contract income and total cost, as well as estimated changes in
contract execution results, may have an impact on operating income, operating costs, and
profit or loss for the current or subsequent period of the change, and may have a significant
impact.
(2) Categorization of leasing
In accordance with Accounting Standards for Enterprises No. 21 – Leasing, the Group
categorized the leasing into operating lease and finance lease. During the categorization, the
management level needed to make analysis and judgment on whether all the risk and
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compensation related with the leased assets had been transferred to the leasee, or whether the
Group had already undertaken all the risk and compensation related with the leased assets.
(3) Provision for bad debts
In accordance with the accounting policies of accounts receivable, the Group measured the
losses for bad debts by adopting allowance method. The impairment of accounts receivable
was based on the appraisal of the recoverability of accounts receivable. The impairment of
accounts receivable was dependent on the judgment and estimates. The actual amount and
the difference of previous estimates would affect the book value of accounts receivable and
the withdrawal and reversal on provision for bad debts of accounts receivable during the
period of estimates being changed.
(4) Provision for falling price of inventories
In accordance with the accounting policies of inventories, for the inventories that the costs
were more than the net realizable value as well as out-of-date and dull-sale inventories, the
Group withdrawn the provision for falling price of inventories on the lower one between
costs and net realizable value. Evaluating the falling price of inventories needed the
management level gain the valid evidence and take full consideration of the purpose of
inventories, influence of events after balance sheet date and other factors, and then made
relevant judgments and estimates. The actual amount and the difference of previous estimates
would affect the book value of inventories and the withdrawal and reversal on provision for
bad debts of inventories during the period of estimates being changed.
(5) The fair value of financial instrument
For the financial instruments without active market, the Group recognized the fair value by
various methods. These evaluation methods included discounted cash flow mode analysis,
etc. The Group needed to estimate the future cash flow, credit risk, fluctuation rate of market
and relativity and other factors, as well as choose the property discount rate. Due to the
uncertainty of relevant assumptions, so their changes would affect the fair value of financial
instrument.
(6) Held-to-maturity investments
The Company classifies the non-derivative financial asset with a fixed or determinable
amount of repo price, and a fixed date of maturity, which the enterprise holds for a definite
purpose or the enterprise is able to hold until its maturity, to held-to-maturity investment.
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Such classification concerns lots of judgments. During the judgment process, the Company
will assess the purpose and capability for holding such kind of investment to maturity. Except
for special cases (for example, selling investment with no-large amount when the maturity
date is closely to come), if the Company can’t hold the investment to maturity date, the
Company should re-classify all that investment to available-for-sale financial assets, and
shouldn’t classify those financial assets into hold-to-maturity investment in the current fiscal
year and the next two complete fiscal years. Such cases may have significant impact on
related financial assets value stated in financial statements, and may influence the risk
management strategy for financial tools of the Company.
(7) Impairment of held-to-maturity investment
The decision about confirming the impairment of the investment held-to-maturity by the
Company depends on the judgment of the management layer to a great extent. The objective
evidences of the occurrence of the impairment include there is serious financial difficulties of
the issuer which lead the financial assets could not be continued to deal in the active market
and could not execute the clauses of the contracts (for example, to pay for the interests or the
principal occurs default) and so on. When executing the judgment, the Company should
assess the influences of the objective evidences of the occurrence of the impairment on the
estimated future cash flow of the investment.
(8) The impairment of financial assets available for sale
The Group judged whether the financial assets available for sale were impaired relying
heavily on the judgment and assumption of the management team, so as to decide whether
recognized the impairment losses in the income statement. During the process of making the
judgment and assumption, the Group needed to appraise the balance of the cost of the
investment exceeding its fair value and the continuous period, the financial status and
business forecast in a short period, including the industrial situation, technical reform, credit
level, default rate and risk of counterparty.
(9) Provision for impairment of long-term assets
The Group made a judgment on the non-current assets other than financial assets whether
they had any indication of impairment on the balance sheet date. For the intangible assets
without finite service life, other than the annual impairment test, they should be subject to the
impairment test when there was any indication of impairment. For other non-current
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non-financial assets, which should be subjected to impairment test when there was indication
of impairment indicated that the book value can’t be recoverable.
When the book value of the assets or assets portfolio was more than the recoverable amount,
which was the higher one between the net amount of fair value after deducting the disposal
expenses and the discounted amount of the estimated future cash flow, it means impairment
incurred.
The net amount of fair value after deducting the disposal expenses should be fixed the price
in the sale agreement for similar assets in the fair transaction minus the increased costs
directly attributable to the assets disposal.
When estimated the discounted value of future cash flow, the Group needed to make
important judgment on the output, selling price, relevant costs and the discount rate for
calculating the discounted amount, etc. When estimated the recoverable amount, the Group
would adopt all the available documents, including the prediction for relevant output, selling
price and relevant operating costs arising from reasonable and supportive assumptions.
The Group made the impairment test on goodwill at least one time per year, which required
to predict the discounted amount of the future cash flow of the assets or assets portfolio with
the distributed good will, for which, the Group needed to predict the future cash flow of the
assets or assets portfolio, and adopt the property discounted rate to decide the discounted
amount of future cash flow.
(10) Depreciation and amortization
For the investment real estate, fixed assets and intangible assets, the Group withdrew the
depreciation and amortization by adopting the straight-line method during the service life
after full consideration of the salvage value. The Group checked the service life periodically
so as to decide the amount of depreciation and amortization at each Reporting Period. The
service life was fixed by the Group in accordance with the previous experience of the similar
assets and the expected technical update. If there was any significant change on the previous
estimates, the depreciation and amortization expenses should be adjusted.
(11) Deferred income tax assets
Within the limit that it was likely to have sufficient taxable profits to offset the losses, the
Group recognized the deferred income tax assets by all the unused tax losses, which needed
the management level of the Group to estimate time and amount of the future taxable profits
incurred with many judgments, as well as integrate strategy of tax payment, to decide the
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amount of deferred income tax assets which should be recognized.
(12) Income tax
During the routine operating activities, there were some uncertainty in the ultimate tax
treatment and calculation for parts of transactions. Some accounts of such transaction could
be listed as pre-tax expenditures only after the approval of taxation authorities. If there were
any differences between the ultimate result of recognition for these taxation maters and their
initial estimates, the differences would affect the current income tax and deferred income tax
at the period of ultimate recognition.
(13) Internal early retirement welfare and supplementary retirement welfare
Amounts of expenditures and liabilities of internal early retirement welfare and
supplementary retirement welfare should be determined according to assumption terms.
Assumption terms include discount rate, average growth rate of medical costs, growth rate of
subsidies for early retirement employees and retirees and other factors. The differences of
actual results and assumption should be confirmed immediately and included into costs of
current year. Although the management have adopted reasonable assumption terms, changes
of actual experience value and assumption terms may affect the internal early retirement
welfare, supplementary retirement benefits and balance of liabilities.
(14) Estimated liabilities
The Group made the estimation on product quality guarantee, predicted loss of contract and
the fine for delayed delivery etc. and withdrew the relevant provision for estimated liabilities
in accordance the provisions of contract, current knowledge and experience. Under the
condition that the contingent event has formed a current duty and fulfilling the duty is likely
to cause the economical interest outflow the Group, the Group measures the estimated
liabilities in accordance with the best estimate of the necessary expenses for the performance
of the current duty. The recognition and measurement of estimated liabilities were heavily
relied on the judgment of the management team. During the process of making judgment, the
Group needed to appraise the relevant risks, uncertainty and the time value of money and etc.
Of which, the Group estimated the liabilities basing on the after-sale services commitments
to the customers upon the sale, repair and reform of goods. When estimating the liabilities,
the Group has fully taken the consideration of the latest repair experience, but which may not
reflect the repair situation in the future. Any increase / decrease of the provision for estimated
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Konka Group Co., Ltd. Annual Report 2018
liabilities may affect the profits and losses in the future periods.
(15) Measurement for fair value
Some assets and liabilities of this Company will be measured at fair value in the financial
statements. The board of directors of this Company has established the appraisement
committee (led by the CFO of this Company) to confirm appropriate appraisement
technology and input value for measurement of fair value. This Company will apply
available and observable market data during estimating the fair value of some assets and
liabilities. If the input value in Level 1 is not available, this Company will entrust a third
qualified appraiser for the estimation. The appraisement committee will closely cooperate
with the outside appraiser to determine proper estimation technology and input values of the
related models. CFO submits a report to the discoveries of the appraisement committee to the
board of directors of this Company to explain the reasons of fluctuation of fair value of
related assets and liabilities. Related information of the appraisement technology and input
value during the process of confirming the fair value of various assets and liabilities shall be
disclosed in Note X.
V. Taxation
1. Main Taxes and Tax Rate
Category of taxes Specific situation of the taxes rate
VAT Calculated the output tax at 3%, 5%, 6%, 10%, 11%, 13%, 16%, 17% and paid the
VAT by the amount after deducting the deductible withholding VAT at current
period, of which the VAT applicable to easy collection won’t belong to the
deductible withholding VAT.
Paid at 7% of the circulating tax actually paid, of which Dongguan Packing,
Urban maintenance and
construction tax Dongguan Konka, Boluo Konka, Boluo Konka Precision, and Chengdu Anren of
5%.
For Hong Kong Konka, Konka Household Appliances Investment, Konka
Household Appliances International Trading, Konka Zhisheng, Jiali International,
Jiaxin Technology, Kangjietong and Chain Kingdom whose assessable profit did
not exceed HKD2,000,000.00, they paid at 8.25%, and if their assessable profit
exceeded HKD2,000,000.00, they paid at 16.5%; Anhui Konka, E-display, Boluo
Enterprise income tax
Konka Precision, Telecommunication Technology, Wankaida, Jiangxi Konka,
Xinfeng Microcrystalline, Nano Crystallized Glass , Commercial System
Technology, Dongguan Konka, Econ Technology, E2info, XingDa HongYe and
Kangqiao Easy Chain of 15%; and Europe Konka of 31.8%. The Company as the
parent and the other subsidiaries paid at 25% of the taxable income.
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Konka Group Co., Ltd. Annual Report 2018
Education surtax Paid at 3% of the circulating tax actually paid.
Local education surtax Paid at 2% of the circulating tax actually paid. Shanghai Konka paid at 1%.
Note: (1) The original tax rate applied by the Company on VAT taxable sales or imported
goods was 17%/11%. According to the Circular of the Ministry of Finance and the State
Administration of Taxation on the Adjustment of VAT Tax Rate (CS [2018] No. 32), the
applicable tax rate is adjusted to 16%/10%, being effective from 1 May 2018.
(2) In accordance with the Notice on Printing the Administration Method on Charging and
Use of the Treatment Funds of Discarded Electronic Appliance and Electric Products issued
by the Ministry of Finance, Ministry of Environmental Protection, National Development
and Reform Commission, Ministry of Industry and Information, General Administration of
Customs and National Taxation Bureau (CZ [2012] No. 34), and the Administration Method
on Charging and Use of the Treatment Funds of Discarded Electronic Appliance and Electric
Products issued by National Taxation Bureau (GJSWZJGG [2012] No. 41), the domestic
manufacturer of the electrical appliances and electronic products of PRC started to pay the
treatment funds for discarded electrical appliance and electronic products according the sales
volume (trusted processing amount) and relevant charging standards from 1 July 2012.
According to the regulations, the Group’s charging standards were RMB13 per set of TV,
RMB12 per set of refrigerator and RMB7 per set of washing machine.
(3) 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 1
January 2008. According to the above methods, the Company’s sales branch companies in
each area will hand in the corporate income taxes in advance from 1 January 2008 and will
be final settled uniformly by the Company at the year-end.
2. Tax Preference and Approved Documents
(1) On 21 October 2016, the subsidiary of the Company, Anhui Konka acquired the
certificate of high-technology enterprises joint issued by Anhui Province Science and
Technology Department, Department of Finance of Anhui Province, Anhui Provincial Office,
SAT, and Anhui Local Taxation Bureau with the certification number of GR201634000520
and the validity of three years. According to the relevant taxation regulations, the Anhui
Konka could enjoy the relevant preferential tax policy on the high-tech enterprise for
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Konka Group Co., Ltd. Annual Report 2018
continuous 3 years from 2016 to 2018, and pay for the corporate income tax according to
15% of the preferential tax rate.
(2) On 21 November 2016, the subsidiary of the Company, Konka E-display acquired the
certificate of high-technology enterprises joint issued by Shenzhen Science and Technology
Innovation Committee, Finance Commission of Shenzhen Municipality, Shenzhen Municipal
Office, SAT, and Shenzhen Local Taxation Bureau with the certification number of
GR201644201332 and the validity of three years. According to the relevant taxation
regulations, the Konka E-display could enjoy the relevant preferential tax policy on the
high-tech enterprise for continuous 3 years from 2016 to 2018, and pay for the corporate
income tax according to 15% of the preferential tax rate.
(3) On 30 November 2016, Boluo Konka Precision Technology Co., Ltd., the subsidiary of
this Company obtained the High-tech Enterprise Certificate (certificate No.:
GR201644001388) jointly issued by Department of Science and Technology of Guangdong
Province, Department of Finance of Guangdong Province, Guangdong Provincial Office,
SAT, Guangdong Local Taxation Bureau with a valid period of three years. According to
related taxation regulations, the company enjoys related taxation preferential policies as a
high-tech enterprise from 2016 to 2018 and pays the enterprise income tax as per the
preferential tax rate of 15%.
(4) On 15 August 2017, Shenzhen Konka Telecommunications Technology Co., Ltd., the
subsidiary of this Company obtained the high-tech enterprise certificate (certificate No.:
SZ20170142) jointly issued by Shenzhen Technology Innovation Committee, Finance
Commission of Shenzhen Municipality, Shenzhen Municipal Office, SAT, Shenzhen Local
Taxation Bureau, with a valid period of three years. According to related taxation regulations,
Shenzhen Konka Telecommunications Technology Co., Ltd. enjoys related taxation
preferential policies as a high-tech enterprise from 2017 to 2019 and pays the enterprise
income tax as per the preferential tax rate of 15%.
(5) On 31 October 2017, Wankaida, the subsidiary of this Company obtained the High-tech
Enterprise Certificate (certificate No.: GR201744204716) joint issued by Shenzhen
Technology Innovation Committee, Finance Committee of Shenzhen Municipality, Shenzhen
Municipal Office, SAT and Shenzhen Local Taxation Bureau with a valid period of three
years. According to related taxation regulations, Wankaida enjoys related taxation
preferential policies as a high-tech enterprise from 2017 to 2019 and pays the enterprise
income tax as per the referential tax rate of 15%.
212
Konka Group Co., Ltd. Annual Report 2018
(6) On 23 August 2017, Jiangxi Konka New Material Technology Co., Ltd., the subsidiary of
this Company obtained the High-tech Enterprise Certificate (certificate No.:
GR201736000497) jointly issued by Department of Science and Technology of Jiangxi
Province, Department of Finance of Jiangxi Province, Jiangxi Provincial Office, SAT, Jiangxi
Local Taxation Bureau with a valid period of three years. According to related taxation
regulations, the company enjoys related taxation preferential policies as a high-tech
enterprise from 2017 to 2019 and pays the enterprise income tax as per the preferential tax
rate of 15%.
(7) On 23 August 2017, Jiangxi Golden Phoenix Nano Crystallized Glass Co., Ltd., the
subsidiary of Jiangxi Konka obtained the High-tech Enterprise Certificate (certificate No.:
GR201736000110) jointly issued by Department of Science and Technology of Jiangxi
Province, Department of Finance of Jiangxi Province, Jiangxi Provincial Office, SAT, Jiangxi
Local Taxation Bureau with a valid period of three years. According to related taxation
regulations, the company enjoys related taxation preferential policies as a high-tech
enterprise from 2017 to 2019 and pays the enterprise income tax as per the preferential tax
rate of 15%.
(8) On 15 November 2016, Jiangxi Xinfeng Microcrystalline Jade Co., Ltd the subsidiary of
Jiangxi Konka obtained the High-tech Enterprise Certificate (certificate No.:
GR201636000487) jointly issued by Department of Science and Technology of Jiangxi
Province, Department of Finance of Jiangxi Province, Jiangxi Provincial Office, SAT, Jiangxi
Local Taxation Bureau with a valid period of three years. According to related taxation
regulations, the company enjoys related taxation preferential policies as a high-tech
enterprise from 2016 to 2018 and pays the enterprise income tax as per the preferential tax
rate of 15%.
(9) On 31 October 2017, Shenzhen Konka Commercial System Technology Co., Ltd., the
subsidiary of this Company obtained the high-tech enterprise certificate (certificate No.:
GR201744202349) jointly issued by Shenzhen Technology Innovation Committee, Finance
Committee of Shenzhen Municipality, Shenzhen Municipal Office, SAT, Shenzhen Local
Taxation Bureau with a valid period of three years. According to related taxation regulations,
the company enjoys related taxation preferential policies as a high-tech enterprise from 2017
to 2019 and pays the enterprise income tax as per the preferential tax rate of 15%.
(10) On 1 November 2017, Dongguan Konka Electronic Co., Ltd., the subsidiary of this
Company obtained the High-tech Enterprise Certificate (certificate No.: GR201744003812)
213
Konka Group Co., Ltd. Annual Report 2018
jointly issued by Department of Science and Technology of Guangdong Province,
Department of Finance of Guangdong Province, Guangdong Provincial Office, SAT,
Guangdong Local Taxation Bureau with a valid period of three years. According to related
taxation regulations, the company enjoys related taxation preferential policies as a high-tech
enterprise from 2017 to 2019 and pays the enterprise income tax as per the preferential tax
rate of 15%.
(11) On 28 December 2017, Econ Technology, a subsidiary of the Company, obtained the
High-tech Enterprise Certificate (certificate No.: GR201737001495) jointly issued by
Department of Science and Technology of Shangdong Province, Department of Finance of
Shangdong Province, Shangdong Provincial Office, SAT, Shangdong Local Taxation Bureau
with a valid period of three years. According to the relevant tax regulations, the company
enjoys related tax incentives for high-tech companies for three consecutive years from 2017
to 2019, and is subject to corporate income tax at a preferential rate of 15%.
(12) On16 October 2018, Shenzhen E2info Network Technology Co., Ltd., the subsidiary of
this Company obtained the high-tech enterprise certificate (certificate No.:
GR201844201969) jointly issued by Shenzhen Technology Innovation Committee, Finance
Committee of Shenzhen Municipality, Shenzhen Taxation Bureau of SAT with a valid period
of three years. According to related taxation regulations, the company enjoys related taxation
preferential policies as a high-tech enterprise from 2018 to 2020 and pays the enterprise
income tax as per the preferential tax rate of 15%.
(13) On 28 November 2018, GuangDong XingDa HongYe Electronic Co., Ltd., the
subsidiary of this Company, was listed in the Second Batch of Name List of Proposed
Hi-tech Enterprise in Guangdong Province for Y2018 published by the National Leading
Group Office for the Management of High-tech Enterprises Recognition, which has a great
possibility of getting the high-tech enterprise certificate. The company shall pay the
enterprise income tax as per the preferential tax rate of 15%.
(14) According to the Overall Development Plan on Shenzhen-Hong Kong Cooperation on
Modern Service Industries in Qianhai Area approved by the State Council and the Industry
Access Catalogue of Modern Service Industry in Qianhai, Shenzhen issued by the National
Development and Reform Commission, Shenzhen Kangqiao Easy Chain Technology Co.,
Ltd., a subsidiary of the Company was established in Qianhai, and enjoyed a 15% income tax
rate, and the privileges in Qianhai can be superimposed with others.
(15) According to the Notice on Promoting the Development of VAT, Business Tax and
214
Konka Group Co., Ltd. Annual Report 2018
Enterprise Income Tax Policy for Energy-Saving Service Industry issued by the Ministry of
Finance and the State Administration of Taxation (Finance and Taxation [2010] No. 110),
Lairun Holdings enjoys the preferential policy of tax exemptions for three years and halved
in next three years. Lairun Holdings was registered and recorded in 12 April 2018 in Laizhou
Taxation Bureau of Shandong Province.
(16) According to the fiscal and taxation document [2011] No. 100 published by the Ministry
of Finance and the State Administration of Taxation, for the VAT general taxpayers who sell
their self-developed and produced software products, the VAT shall be levied at the rate of
17%, and then the part that the actual tax burden on their VAT exceeds 3 will be implemented
with the policy of immediate withdrawal. The Company and its subsidiaries,
Telecommunication Technology, Wankaida Technology, E-display Service and Electronics
Technology all enjoy this preferential policy.
(17) According to the regulations of the Special Catalogue of VAT Concessions for Products
and Labors with Comprehensive Utilization of Resources issued by the Ministry of Finance
and the State Administration of Taxation (Finance and Taxation [2015] No. 78), the
wastewater treatment business operated by Lairun Holdings, a subsidiary of Econ
Technology, belongs to the this catalogue. Then after it has been levied the VAT at a rate of
17 %, the actual tax burden on the wastewater treatment income tax will be refunded in
accordance with the 70% of the actual tax burden, and the actual tax burden on the renewable
water income VAT will be refunded immediately at 50%. That Lairun Holdings enjoyed the
tax concession was registered and recorded in 25 August 2017 in Laizhou Taxation Bureau of
Shandong Province.
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
2018, the period-end refers to 31 December 2018 and this period refers to Y2018 with the
last period of Y2017.
1. Monetary Funds
Item Ending balance Beginning balance
Cash on hand 130,105.31 49,343.08
Bank deposits 3,440,007,099.2 3,097,850,360.68
Other monetary funds 908,006,925.02 114,145,147.32
Total 4,348,144,129.53 3,212,044,851.08
215
Konka Group Co., Ltd. Annual Report 2018
Of which: total amount deposited in overseas 518,005,414.06 528,061,190.55
Notes: The ending balance of other monetary fund was the deposits of each margin deposit
not withdrawn at any time.
As of 31 December 2018, the monetary funds deposited in overseas by the Company was
RMB518,005,414.06 (RMB535,621,931.96on 31 December 2017)
2. Financial Assets at Fair Value through Profit or Loss
Item Ending balance Beginning balance
forward exchange contract income 5,464,984.92 296,799.53
Total 5,464,984.92 296,799.53
3. Notes and Accounts Receivable
Item Ending balance Beginning balance
Notes receivable 3,329,711,954.15 5,178,668,988.23
Accounts receivable 4,458,053,586.42 3,443,095,947.26
Total 7,787,765,540.57 8,621,764,935.49
(1)Notes Receivable
Notes Receivable Listed by Category
Item Ending balance Beginning balance
Bank acceptance bill 2,507,070,633.02 3,324,023,541.23
Commercial acceptance bill 822,641,321.13 1,854,645,447.00
Total 3,329,711,954.15 5,178,668,988.23
Notes Receivable Pledged by the Company at the Period-end
Item Amount
Bank acceptance bill 1,320,095,737.06
Commercial acceptance bill 1,359,122.95
Total 1,321,454,860.01
Notes Receivable which Had Endorsed by the Company or had Discounted and had not
Due on the Balance Sheet Date at the Period-end
Amount of recognition termination Amount of not terminated
Item
at the period-end recognition at the period-end
Bank acceptance bill 4,639,449,373.06
Commercial acceptance bill 64,349,424.18
216
Konka Group Co., Ltd. Annual Report 2018
Amount of recognition termination Amount of not terminated
Item
at the period-end recognition at the period-end
Total 4,703,798,797.24
Notes Transferred to Accounts Receivable because Drawer of the Notes Failed to Execute
the Contract or Agreement
Item Amount of the notes transferred to accounts receivable at the period-end
Bank acceptance bill
Commercial acceptance bill 940,027,889.84
Total 940,027,889.84
(2)Accounts Receivable
Accounts Receivable Classified by Category
Ending balance
Carrying amount Bad debt provision
Category Withdra
wal Carrying value
Amount Proportion Amount
proporti
on
Accounts receivable
with significant individual
amount and make 964,449,440.20 19.79 85,924,060.45 8.91 878,525,379.75
independent provision for
bad debt
Accounts receivable
withdrawn bad debt
provision according to
credit risks characteristics
Group 1: aging
3,833,070,919.30 78.66 275,332,151.06 7.18 3,557,738,768.24
group
Subtotal of groups 3,833,070,919.30 78.66 275,332,151.06 7.18 3,557,738,768.24
Accounts receivable with
insignificant single
amount for which bad debt 75,459,154.80 1.55 53,669,716.37 71.12 21,789,438.43
provision separately
accrued
Total 4,872,979,514.30 100.00 414,925,927.88 8.51 4,458,053,586.42
217
Konka Group Co., Ltd. Annual Report 2018
(Continued)
Beginning balance
Carrying amount Bad debt provision
Category Withdra
wal Carrying value
Amount Proportion Amount
proporti
on
Accounts receivable
with significant individual
amount and make 23,250,858.84 0.62 23,250,858.84 100.00 —
independent provision for
bad debt
Accounts receivable
withdrawn bad debt
--- --- --- --- ---
provision according to
credit risks characteristics
Group 1: aging
3,664,952,156.09 97.62 241,524,112.19 6.59 3,423,428,043.90
group
Subtotal of groups 3,664,952,156.09 97.62 241,524,112.19 6.59 3,423,428,043.90
Accounts receivable with
insignificant single
amount for which bad debt 65,920,181.32 1.76 46,252,277.96 70.16 19,667,903.36
provision separately
accrued
Total 3,754,123,196.25 100.00 311,027,248.99 8.28 3,443,095,947.26
A. Accounts receivable with significant individual amount and make independent provision
for bad debt at the period-end
Ending balance
Withdrawal
Accounts receivable (classified by units)
Account receivable Bad debt provision proportion Withdrawal Reason
(%)
Shanghai Huaxin International Group
300,027,889.84 27,002,510.09 9.00
Co., Ltd Difficult to recover all
Hiteker SanPower High-tech Co., Ltd 200,000,000.00 10,000,000.00 5.00
Difficult to recover all
218
Konka Group Co., Ltd. Annual Report 2018
Yizhong Energy International Logistics
130,000,000.00 6,500,000.00 5.00
Group Co., Ltd Difficult to recover all
Elion Resources Group Co., Ltd 120,000,000.00 6,000,000.00 5.00
Difficult to recover all
China Nuclear Engineering Construction
90,000,000.00 4,500,000.00 5.00
Group Co., Ltd Difficult to recover all
Tahoe Group Co. Ltd 50,000,000.00 2,500,000.00 5.00
Difficult to recover all
China Energy Electric Fuel Co., Ltd 50,000,000.00 5,000,000.00 10.00
Difficult to recover all
DSC HOLDINGS LIMITED 24,421,550.36 24,421,550.36 100.00
Difficult to recover all
Total 964,449,440.20 85,924,060.45 — ---
B. Top five of account receivable with insignificant single amount for which bad debt
provision separately accrued
Ending balance
Withdrawa
Accounts receivable (classified by units) l
Account receivable Bad debt provision Withdrawal Reason
proportion
(%)
H-BUSTER DO BRASIL INDUSTRIA 18,875,942.72 18,875,942.72 100.00
Difficult to recover all
TREEVIEWBUSINESS REGITER 11,801,034.50 1,341,891.83 11.37
Difficult to recover all
HENAN BROADCAST &
4,580,000.00 1,374,000.00 30.00
TELEVISION NETWORK CO., LTD. Difficult to recover all
HILEVEL CONSUMER ITALIA S.P.A 3,543,056.03 3,543,056.03 100.00
Difficult to recover all
XINJIANG UYGUR AUTONOMOUS
REGION BROADCAST FILM 1,708,054.00 546,577.28 32.00
&TELEVISION BUREAU Difficult to recover all
Total 40,508,087.25 25,681,467.86 --- ---
C. In the groups, accounts receivable adopting aging analysis method to withdraw bad debt
provision:
Ending balance
Aging Withdrawal proportion
Account receivable Bad debt provision
(%)
219
Konka Group Co., Ltd. Annual Report 2018
Ending balance
Aging Withdrawal proportion
Account receivable Bad debt provision
(%)
Within 1 year 3,394,733,686.71 80,508,855.01 2.37
1 to 2 years 251,520,114.19 20,648,490.82 8.21
2 to 3 years 4,459,922.55 1,104,904.60 24.77
3 to 4 years 18,380,302.26 9,190,151.14 50.00
4 to 5 years 196,721.54 99,577.45 50.62
Over 5 years 163,780,172.05 163,780,172.05 100.00
Total 3,833,070,919.30 275,332,151.06
Accounts Receivable Withdraw, Reversed or Collected during the Reporting Period
The withdrawal amount of the bad debt provision during the Reporting Period was of
RMB97,556,693.52, and the increased amount of bad debt provision due to combination was
of RMB24,919,241.85; the amount of the reversed or collected part during the Reporting
Period was of RMB13,371,164.31. The decreased amount was RMB5,206,092.17 due to the
loss of controlling right of subsidiaries.
Top 5 of the Ending Balance of the Accounts Receivable Collected according to the
Arrears Party
The total amount of top five of account receivable of ending balance collected by arrears
party was RMB1,321,080,092.52, accounting for 27.11% of total closing balance of account
receivable, the relevant ending balance of bad debt provision withdrawn was
RMB62,512,522.50.
4. Prepayments
(1) List by Aging Analysis
Ending amount Beginning amount
Carrying amount Carrying amount
Aging Bad debt Bad debt
Proporti Proportion (
Amount provision Amount provision
on (%) %)
Within 1 year 1,029,600,745.72 98.97 57,459.57 466,156,792.72 99.06 175,964.90
220
Konka Group Co., Ltd. Annual Report 2018
Ending amount Beginning amount
Carrying amount Carrying amount
Aging Bad debt Bad debt
Proporti Proportion (
Amount provision Amount provision
on (%) %)
1 to 2 years 7,171,926.78 0.69 435,914.85 1,199,279.69 0.25 565,892.65
2 to 3 years 543,662.41 0.05 --- 23,736.73 0.01 ---
Over 3 years 3,034,224.15 0.29 2,878,017.08 3,208,755.30 0.68 2,723,615.15
Total 1,040,350,559.06 100.00 3,371,391.50 470,588,564.44 100.00 3,465,472.70
Notes: (1) Significant prepayment with aging more than 1 year was mainly the prepayment
of companies with no cooperation.
(2) The total amount of top five of prepayment of ending balance collected by arrears party
was RMB375,850,722.16, accounting for 36.13% of total ending balance of prepayment.
(3) The withdrawal amount of bad debt provision this year was of RMB33,969.26; the
collected or reversed bad debt provision was RMB151,142.26 this year; and there was no
write-off bad debt provision; the increased amount was of RMB23,091.80 due to changes in
exchange rate.
5. Other Receivables
Item Ending balance Beginning balance
Interest receivable 4,059,682.40 1,813,256.77
Dividends receivable 547,848.62 -
Other receivables 406,196,649.48 182,405,099.39
Total 410,804,180.50 184,218,356.16
(1) Interest Receivable
Item Ending balance Beginning balance
Fixed time deposits 3,440,237.63 1,422,238.38
Entrusted loans 48,888.89 391,018.39
Factoring interest 570,555.88
Total 4,059,682.40 1,813,256.77
(2) Dividends receivable
221
Konka Group Co., Ltd. Annual Report 2018
Item (or investees) Ending balance Beginning balance
Chongqing qingjia 547,848.62 ---
Total 547,848.62 ---
(3) Other Receivables
Other Receivables Classified by Category
Ending balance
Carrying amount Bad debt provision
Category
Withdrawal Carrying value
Amount Proportion Amount
proportion
Other receivables with
significant individual amount
183,915,489.33 29.70 173,300,179.23 94.23 10,615,310.10
and make independent
provision for bad debt
Other receivables withdrawn
bad debt provision according to
credit risks characteristics
Group 1: aging group 434,706,709.91 70.19 39,622,114.57 9.11 395,084,595.34
Subtotal of groups 434,706,709.91 70.19 39,622,114.57 9.11 395,084,595.34
Other receivables with
insignificant single amount for
703,518.00 0.11 206,773.96 29.39 496,744.04
which bad debt provision
separately accrued
Total 619,325,717.24 100.00 213,129,067.76 34.41 406,196,649.48
(Continued)
Beginning balance
Carrying amount Bad debt provision
Category
Withdrawal Carrying value
Amount Proportion Amount
proportion
Other receivables with
significant individual amount and
183,915,489.33 47.74 173,320,694.97 94.24 10,594,794.36
make independent provision for
bad debt
Other receivables withdrawn bad
222
Konka Group Co., Ltd. Annual Report 2018
Beginning balance
Carrying amount Bad debt provision
Category
Withdrawal Carrying value
Amount Proportion Amount
proportion
debt provision according to credit
risks characteristics
Group 1: aging group 198,796,860.68 51.61 28,768,843.02 14.47 170,028,017.66
Subtotal of groups 198,796,860.68 51.61 28,768,843.02 14.47 170,028,017.66
Other receivables with
insignificant single amount for
2,516,181.05 0.65 733,893.68 29.17 1,782,287.37
which bad debt provision
separately accrued
Total 385,228,531.06 100.00 202,823,431.67 52.65 182,405,099.39
A. Other receivables with significant individual amount and make independent provision for
bad debt at the period-end
Ending balance
Other receivables (by unit) Withdrawal
Other receivables Bad debt provision Withdrawal reason
proportion
Energy saving subsidy 152,402,680.00 152,402,680.00 100.00% Irrecoverable
Shenzhen Konka Video & Assessment
Communication Systems 18,115,952.51 7,500,642.41 41.40% irrecoverable for part
Engineering Co., Ltd. of the amount
Irrecoverable,
Chongqing Konka Auto
13,396,856.82 13,396,856.82 100.00% under bankruptcy
Electronic Company
liquidation
Total 183,915,489.33 173,300,179.23 — —
B. In the groups, other receivables adopting aging analysis method to withdraw bad debt
provision:
Ending balance
Aging
Other receivables Bad debt provision Withdrawal proportion
Within 1 year 282,147,748.63 6,123,073.51 2.17
1 to 2 years 111,966,212.63 8,340,278.22 7.45
2 to 3 years 8,970,642.49 1,836,551.60 20.47
3 to 4 years 5,459,223.01 2,729,611.51 50.00
223
Konka Group Co., Ltd. Annual Report 2018
Ending balance
Aging
Other receivables Bad debt provision Withdrawal proportion
4 to 5 years 9,940,013.33 4,969,729.92 50.00
Over 5 years 16,222,869.82 16,222,869.82 100.00
Total 434,706,709.91 39,622,114.57
② Other Account Receivable Classified by Account Nature
Nature Ending carrying amount Beginning carrying amount
Energy-saving subsidies 152,402,680.00 152,402,680.00
Intercourse funds 51,914,614.91 68,258,009.31
Borrowings of related-parties 190,535,636.18 27,396,856.82
Buyout financial service income
29,403,385.01 17,115,968.70
receivable
Other external borrowings 53,891,530.62 -
Deposit and margin 59,252,474.98 31,270,504.40
Equity transferred money 18,228,687.41 23,715,952.51
Pretty cash 3,500,807.51 5,595,851.91
Others 60,195,900.62 59,472,707.41
Total 619,325,717.24 385,228,531.06
③ Bad Debt Provision Withdrawal, Reversed or Recovered in the Reporting Period
The withdrawal amount of the bad debt provision during the Reporting Period was of RMB
6,618,105.76. the amount of the reversed or collected part during the Reporting Period was
of RMB 3,788,310.66. The decreased amount was RMB329,503.85 due to the loss of
controlling right of subsidiaries. The increased bad debt provision was RMB7,781,717.39
due to subsidiaries’ corporation; the increased bad debt provision was RMB23,627.45 due to
changes in exchange rate.
④Top 5 Other Accounts Receivable in Ending Balance Collected according to the Arrears
Party
Proportion of
ending balance of Ending balance of
Name of units Nature Ending balance Aging
the total other bad debt provision
accounts receivable
National energy-saving and 3-4 years,
Subsidies 152,402,680.00 24.61 152,402,680.00
benefiting people over 5 years
224
Konka Group Co., Ltd. Annual Report 2018
Proportion of
ending balance of Ending balance of
Name of units Nature Ending balance Aging
the total other bad debt provision
accounts receivable
(Energy-saving subsidies)
Equity transfer of Dai
Intercourse
Rongxing and other 81,450,139.05 Within 1 year 13.15 1,629,002.78
funds
intercourse funds
Intercourse
Jiangxi Meiji Industry Co., ltd 74,788,640.31 12.08 1,495,772.81
funds Within 1 year
Private equity investment
Intercourse
funds No. 1 of Tianrong 48,000,000.00 1-2 years 7.75 2,400,000.00
funds
Rongfeng
Shenzhen Konka Video &
Transferred
Communication Systems 18,115,952.51 4-5 years 2.93 7,500,642.41
funds
Engineering Co., Ltd.
Total —— 374,757,411.87 —— 60.52 165,428,098.00
6. Inventory
(1) Category of Inventory
Ending balance
Of which: the
Item capitalized Falling price
Carrying amount Carrying value
reserves
amount of the
borrowings
Development projects of
the property:
Development cost 85,167,073.18 2,470,133.87 - 85,167,073.18
Development products - - - -
Land intended to develop 70,855,200.00 - - 70,855,200.00
Subtotal 156,022,273.18 2,470,133.87 - 156,022,273.18
Non-development
projects of the
property:
Raw materials 1,122,370,078.37 - 73,754,748.97 1,048,615,329.40
Semi-finished product 89,334,764.13 - 10,260,152.74 79,074,611.39
225
Konka Group Co., Ltd. Annual Report 2018
Ending balance
Of which: the
Item capitalized Falling price
Carrying amount Carrying value
reserves
amount of the
borrowings
Inventory goods 4,518,051,460.16 - 330,081,328.25 4,187,970,131.91
Finished but unsettled
assets from construction 70,767,724.57 - - 70,767,724.57
contract
Subtotal 5,800,524,027.23 - 414,096,229.96 5,386,427,797.27
Total 5,956,546,300.41 2,470,133.87 414,096,229.96 5,542,450,070.45
(Continued)
Beginning balance
Of which:
the
Item capitalized Falling price
Carrying amount Carrying value
reserves
amount of
the
borrowings
Development projects of the property:
Development cost 382,096,368.17 — — 382,096,368.17
Development products 17,203,260.25 94,119.39 — 17,203,260.25
Subtotal 399,299,628.42 94,119.39 — 399,299,628.42
Non-development projects of the property:
Raw materials 761,148,857.65 — 22,807,431.06 738,341,426.59
Semi-finished product 112,079,579.22 — 8,475,640.99 103,603,938.23
Inventory goods 3,740,419,327.12 — 291,591,777.78 3,448,827,549.34
Turnover material 291,022.95 — — 291,022.95
Subtotal 4,613,938,786.94 — 322,874,849.83 4,291,063,937.11
Total 5,013,238,415.36 94,119.39 322,874,849.83 4,690,363,565.53
(2) List of the Development Cost
226
Konka Group Co., Ltd. Annual Report 2018
Expected completion
Name of item Starting time Beginning amount Ending amount
time of the next batch
Finishing by phases,
Phases of Shuiyue 2015 Phase IV is estimated to 304,110,330.47 -
Zhouzhuang Project be finished in 2018
Innovation Center April 2018 December 2022 77,986,037.70 85,167,073.18
Total 382,096,368.17 85,167,073.18
(3) List of the Developed Products
Completion Beginning Increase Other Ending
Name of item Decreased
time amount d decrease amount
Shuiyue Zhouzhuang Project (Phase
2014 3,955,097.73 - - 3,955,097.73 -
I)
Shuiyue Zhouzhuang Project (Phase
2015 2,072,508.39 - - 2,072,508.39 -
II)
Shuiyue 5,473,448.5
2017 11,175,654.13 - 5,702,205.56 -
7
Zhouzhuang Project (Phase III)
5,473,448.5 11,729,811.6
Total 17,203,260.25 - -
7 8
Note: other increase was due to the loss of the controlling right of subsidiaries in the
Reporting Period.
(4) Falling Price Reserves of Inventory
Increased amount Decreased amount
Decrease of
Item Beginning balance Increase of Reverse or losing Ending balance
Withdrawal
merger write-off controlling
right
Raw
22,807,431.06 15,659,755.51 57,178,835.96 21,891,273.56 - 73,754,748.97
materials
Goods in
8,475,640.99 9,762,469.66 - 7,977,957.91 - 10,260,152.74
process
Inventory
291,591,777.78 113,999,616.04 3,004,465.39 70,759,603.19 7,754,927.77 330,081,328.25
goods
Total 322,874,849.83 139,421,841.21 60,183,301.35 100,628,834.66 7,754,927.77 414,096,229.96
227
Konka Group Co., Ltd. Annual Report 2018
(5) Withdrawal Provision Basis of the Falling Price of the Inventory and the Reasons of the
Reversed or Write-off
Specific basis of withdrawal of
Item falling price reserves of Reasons for reverse Reasons for write-off
inventory
The realizable net value was Sold or disposed in the current
Raw materials —
lower than the carrying value period
The realizable net value was Sold or disposed in the current
Goods in process —
lower than the carrying value period
The realizable net value was
Inventory goods — Sold in the current period
lower than the carrying value
(6) Ending balance of the inventory which includes capitalized borrowing expenses was
RMB2,470,133.87
(7) Finished but Unsettled Assets from Construction Contract
Item Amount
Accumulatively incurred costs 1,059,617,631.78
Accumulatively recognized gross margin 442,360,457.21
Less: estimated loss -
Settled amounts 1,486,055,207.82
Finished but Unsettled Assets from Construction Contract 15,922,881.17
7. Current Portion of Non-current Assets
Item Ending balance Beginning balance Remark
For details, see Note
Current portion of long-term receivable 22,318,208.13 -
VI. 10
Total 22,318,208.13 -
8. Other Current Assets
Item Ending balance Beginning balance
Financial products - 400,063,013.70
Principal and interest of entrusted loans to joint ventures 1,824,523,111.11 -
Entrusted financing 30,000,000.00 979,000,000.00
Unreached bank deposits - 4,401,110.41
228
Konka Group Co., Ltd. Annual Report 2018
Item Ending balance Beginning balance
Prepayments and deductible taxes, and refund of tax for
794,991,256.00 331,862,744.70
report receivable
Prepayment of land purchase 75,450,000.00 -
Investment amount to television program 18,900,000.00 -
Others 351,774.87 -
Total 2,744,216,141.98 1,715,326,868.81
229
Konka Group Co., Ltd. Annual Report 2018
9. Available-for-sale Financial Assets
(1) List of Available-for-sale Financial Assets
Ending balance Beginning balance
Item Depreciation
Carrying amount Depreciation reserves Carrying value Carrying amount Carrying value
reserves
Available-for-sale equity instruments 644,412,666.97 10,747,785.64 633,664,881.33 722,918,184.73 10,747,785.64 712,170,399.09
Of which: measured at fair value - - - 58,162.76 - 58,162.76
Measured by cost 644,412,666.97 10,747,785.64 633,664,881.33 722,860,021.97 10,747,785.64 712,112,236.33
Total 644,412,666.97 10,747,785.64 633,664,881.33 722,918,184.73 10,747,785.64 712,170,399.09
(2) Available-for-sale Financial Assets Measured by Cost at the Period-end
Carrying amount
Investee
Period-begin Increased Decreased Period-end
Shenzhen Qianhai Qingsong Venture Capital Fund Enterprise 20,000,000.00 - 20,000,000.00 -
Shenzhen Tianyilian Science & Technology Co., Ltd. 4,800,000.00 - - 4,800,000.00
Shenzhen A Dot TV Co., Ltd. 5,750,000.00 - - 5,750,000.00
Feihong Electronics Co., Ltd. 1,300,000.00 - - 1,300,000.00
ZAEFI 100,000.00 - - 100,000.00
Shenzhen Chuangce Investment Development Co., Ltd. 485,000.00 - - 485,000.00
Shanlian Information Technology Engineering Center 5,000,000.00 - - 5,000,000.00
Shenzhen CIU Science & Technology Co., Ltd. 1,153,000.00 - - 1,153,000.00
229
Konka Group Co., Ltd. Annual Report 2018
Carrying amount
Investee
Period-begin Increased Decreased Period-end
Shenzhen Digital TV National Engineering Laboratory Co., Ltd. 6,000,000.00 3,000,000.00 - 9,000,000.00
Shanghai National Engineering Research Center of Digital TV Co., Ltd. 2,400,000.00 - - 2,400,000.00
ChinaAMC - Jiayi Overseas Orientation Programs 203,000,000.00 - - 203,000,000.00
Hunan Vary Science & Technology Co., Ltd. 47,230,000.00 - - 47,230,000.00
Beijing Konka Technology Co., Ltd 4,700,000.00 - - 4,700,000.00
Yibin OCT Sanjiang Real Estate Co., Ltd 120,000,000.00 80,000,000.00 - 200,000,000.00
Enraytek Optoelectronics (Shanghai) Co., Ltd. 61,494,666.97 - - 61,494,666.97
Wuhan Tianyuan Environmental Protection Co., Ltd (Note ) 239,447,355.00 - 239,447,355.00 -
Ningbo Yuanqing No.9 Investment Partnership Business - 98,000,000.00 - 98,000,000.00
Chongqing Konka Eurotomotive Electronic Co., Ltd. (Note ) - - - -
Total 722,860,021.97 181,000,000.00 259,447,355.00 644,412,666.97
(Continued)
Depreciation reserves
Shareholding Cash bonus of
Investee proportion among the Reporting
Period-begin Increased Decreased Period-end
the investees (%) Period
Shenzhen Qianhai Qingsong Venture Capital Fund Enterprise - - - - - -
Shenzhen Tianyilian Science & Technology Co., Ltd. - - - - 6.10 -
Shenzhen A Dot TV Co., Ltd. - - - - 12.67 -
230
Konka Group Co., Ltd. Annual Report 2018
Depreciation reserves
Shareholding Cash bonus of
Investee proportion among the Reporting
Period-begin Increased Decreased Period-end
the investees (%) Period
Feihong Electronics Co., Ltd. 5,750,000.00 - - 5,750,000.00 9.60 -
ZAEFI 1,300,000.00 - - 1,300,000.00 - -
Shenzhen Chuangce Investment Development Co., Ltd. 100,000.00 - - 100,000.00 1.00 -
Shanlian Information Technology Engineering Center 485,000.00 - - 485,000.00 9.62 -
Shenzhen CIU Science & Technology Co., Ltd. 1,639,190.80 - - 1,639,190.80 11.50 -
Shenzhen Digital TV National Engineering Laboratory Co.,
200,000.00 - - 200,000.00 6.00 -
Ltd.
Shanghai National Engineering Research Center of Digital
1,273,594.84 - - 1,273,594.84 4.26 -
TV Co., Ltd.
ChinaAMC - Jiayi Overseas Orientation Programs - - - - - 17,920,000.00
Hunan Vary Science & Technology Co., Ltd. - - - - 8.38
Beijing Konka Technology Co., Ltd - - - - 3.23 -
Yibin OCT Sanjiang Real Estate Co., Ltd - - - - 20.00 -
Enraytek Optoelectronics (Shanghai) Co., Ltd. - - - - 18.90 -
Wuhan Tianyuan Environmental Protection Co., Ltd (Note
- - - - 20.02 -
)
Ningbo Yuanqing No.9 Investment Partnership Business - - - - 13.33 -
231
Konka Group Co., Ltd. Annual Report 2018
Depreciation reserves
Shareholding Cash bonus of
Investee proportion among the Reporting
Period-begin Increased Decreased Period-end
the investees (%) Period
Chongqing Konka Eurotomotive Electronic Co., Ltd. (Note
- - - - - -
)
Total 10,747,785.64 - - 10,747,785.64 - 17,920,000.00
Note: ① The Shareholding ratio of Wuhan Tianyuan Environmental Protection Co., Ltd in the Reporting Period increase to 20.02%. And the
Company officially dispatched members of Board, which had a great impact on the Wuhan Tianyuan Environmental Protection Co., Ltd, so it
shall transferred to long-term equity investment measured by equity method.
(4) Changes of the Impairment of the Available-for-sale Financial Assets in the Reporting Period
Category of available-for-sale financial assets Available-for-sale equity instruments
Withdrawn impairment balance at the period-begin 10,747,785.64
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 10,747,785.64
232
Konka Group Co., Ltd. Annual Report 2018
10. Long-term Receivables
(1) List of Long-term Receivables
Ending balance Beginning balance
Interval of discount
Impair Carryi Impair
Carryi rate
Item ment ng ment
Carrying amount Carrying value ng
provisi amoun provisi
value
on t on
Finance leasing amount 33,575,058.68 - 33,575,058.68 - - - 4.35%-8.78%
Of which: unrealized
2,045,709.65 - 2,045,709.65 - - - 4.35%-8.78%
financing income
Current portion of long-term
receivables (for details, see 22,318,208.13 - 22,318,208.13 - - - -
Note VI. 7)
Cash deposits of long-term
7,801,495.81 - 7,801,495.81 - - - -
receivables
Long-term receivables of
349,416,483.56 - 349,416,483.56 - - - -
projects with franchise tights
Total 390,793,038.05 - 390,793,038.05 - - - -
(2) List of Projects with Franchise Rights
Operatio
Item Type Project scale Franchise right Date of contract
n
PPP Project of water
Right of charge for
supply and sewage PPP 163,558,100.00 July 2016 Good
sewage disposal
Rushan Silver Beach
234
Konka Group Co., Ltd. Annual Report 2018
(3) Changes in Long-term Receivables of Projects with Franchise Rights
Increased decreased Of which:
reclassified into
Initial invested Beginning Newly
Item Merger increase Ending balance current portion of
amount balance increased Interest Principal Interest Other
in the Reporting long-term
investment income recover recover decrease
Period receivables
amount
PPP Project
of water
supply and
349,416,483.56 - 344,183,646.57 5,232,836.99 - - - - 349,416,483.56 -
sewage of
Rushan Silver
Beach
Total 349,416,483.56 - 344,183,646.57 5,232,836.99 - - - - 349,416,483.56 -
11. Long-term Equity Investment
Increase/decrease in the Reporting Period
Investment profit and loss
Investee Beginning balance Adjustment of other
Additional Increase for Decreased Other equity
recognized under the equity
investment combinations investment comprehensive income changes
method
Konka Ventures
Development (Shenzhen) - 2,450,000.00 - - -90,951.96 - -
Co., Ltd.
Nanjing Intelligence
Optical Information - 2,000,000.00 - - -394,530.13 - -
Technology Research
235
Konka Group Co., Ltd. Annual Report 2018
Increase/decrease in the Reporting Period
Investment profit and loss
Investee Beginning balance Adjustment of other
Additional Increase for Decreased Other equity
recognized under the equity
investment combinations investment comprehensive income changes
method
Institute Co., Ltd
Guoguang Ruilian
(Shenzhen) Internet 2,425,262.66 - - - -1,647,306.08 - -
Technology Co., Ltd.
Chongqing Qingjia
- - - - - - -
Electronics Co., Ltd. (①)
Shenzhen Jielunte
Technology Co., Ltd.
(formerly known as:
99,562,391.48 - - - -16,232,947.80 - -
Shenzhen Konka Precision
Mould Manufacturing Co.,
Ltd)
Panxu Intelligence Co., Ltd 48,417,046.08 - - - 800,503.44 -47,390.23 -
Beijing Konka Jingyuan
- 760,000.00 - - -741.06 - -
Technology Co., Ltd
Shenzhen Konka Suyuan
Investment Industrial Co., - - - - - - -
Ltd.
Xiamen Konka Panxu
Equity Investment - - - - - - -
Management Co., Ltd
236
Konka Group Co., Ltd. Annual Report 2018
Increase/decrease in the Reporting Period
Investment profit and loss
Investee Beginning balance Adjustment of other
Additional Increase for Decreased Other equity
recognized under the equity
investment combinations investment comprehensive income changes
method
Oriexcellent (Zhuhai)
Assets Management Co., - 6,000,000.00 - - -3,242,442.69 - -
Ltd
Ningbo Yongkang
Investment Management - - - - - - -
Co., Ltd
Flying Tech (Shenzhen)
- 6,000,000.00 - - -1,131,201.64 - -
Co., Ltd
Weihai City Water
Environmental Protection - 51,000,000.00 - - -70,570.55 - -
Technology Co., Ltd (②)
Weihai Yiheng
Environment Technology - - 2,027,201.88 - 413,231.38 - -
Co.,Ltd (②)
Laizhou Lairun Financial
- - 4,337,942.19 - 233,530.51 - -
Leasing Co., Ltd (②)
Binzhou Beihai Weiqiao
Solid Waste Disposal Co., - - 100,033,567.26 100,033,567.26 - - -
Ltd (②)
Shandong Bishuiyuan
Environmental Protection - - 63,492,789.75 - -3,820,856.12 - -
Technology Co., Ltd (②)
237
Konka Group Co., Ltd. Annual Report 2018
Increase/decrease in the Reporting Period
Investment profit and loss
Investee Beginning balance Adjustment of other
Additional Increase for Decreased Other equity
recognized under the equity
investment combinations investment comprehensive income changes
method
Shenzhen RF-LINK
- - 22,232,418.57 - 2,512,650.91 - -
Technology Co., Ltd.
Shenzhen Yaode
- 98,000,000.00 - - 2,627,067.11 - -349,514.56
Technology Co., Ltd.
Chutian Dragon Co., Ltd 26,462,212.34 - - - 194,455.24 - -
Konka Green, and Konka
210,279,132.55 - - - 11,931,702.63 - -
Technology (③)
Zhuhai Jinsu Plastic Co.,
617,214,571.50 - - - 13,423,191.54 - -5,792,158.11
Ltd.
Shenzhen Konka Intelligent
Electrical Appliance 79,729,560.91 - - - -2,107,745.08 788,087.31 -
Technology Co., Ltd
Shenzhen Zhongbing
9,444,160.97 - - - 1,596,085.85 - -
Konka technology Co., Ltd.
Guangdong Hotcomm
Information Technology 4,927,589.47 - - - -2,640,110.95 - -
Co., Ltd
Zhonggao Konka Intelligent
Technology (Beijing) Co., 14,317,400.80 - - - -3,699,527.01 - -
Ltd
Shenzhen OCT Life 1,523,166.24 - - - -1,523,166.24 - -
238
Konka Group Co., Ltd. Annual Report 2018
Increase/decrease in the Reporting Period
Investment profit and loss
Investee Beginning balance Adjustment of other
Additional Increase for Decreased Other equity
recognized under the equity
investment combinations investment comprehensive income changes
method
Network Technology Co.,
Ltd
Kunshan Konka Electronics
- - - - - - -
Co., Ltd.
Kunshan Kangsheng
Investment Development -22,084.12 3,771,400.00 - - -156,801.82 - -
Co., Ltd.
Anhui Kaikai Shijie
205,706,932.86 - - - -5,012,466.06 - -
E-commerce Co., Ltd.
Shenzhen Bosser New
- - - - - - -
Materials Co., Ltd.
Heilongjiang Longkang
- - - 35,053,749.75 11,738,814.32 - -
Zhijia Technology Co., Ltd
Shanxi Silk Road Yunqi
Intelligent Technology Co., - 75,000,000.00 - - 4,859,338.44 - -
Ltd
Wuhan Tianyuan
Environmental Protection - 7,000,000.00 - - -599,519.48 - -
Co., Ltd
Konka Ventures
- 5,400,000.00 - - -877,490.67 - -
Development (Shenzhen)
239
Konka Group Co., Ltd. Annual Report 2018
Increase/decrease in the Reporting Period
Investment profit and loss
Investee Beginning balance Adjustment of other
Additional Increase for Decreased Other equity
recognized under the equity
investment combinations investment comprehensive income changes
method
Co., Ltd.
Nanjing Intelligence
Optical Information
- - - - 12,822,900.47 - -
Technology Research
Institute Co., Ltd
Total 1,319,987,343.74 257,381,400.00 192,123,919.65 135,087,317.01 19,905,096.50 740,697.08 -6,141,672.67
(Continued)
Increase/decrease in the Reporting Period
Ending balance
of impairment
Investee Declaration of Withdrawn Cost method Ending balance
Financial assets provision for
cash dividends or impairment converted into converted into Other assets
equity method
profits provision equity method
Konka Ventures Development (Shenzhen) Co., Ltd. - - - - - 2,359,048.04 -
Nanjing Intelligence Optical Information Technology
- - - - - 1,605,469.87 -
Research Institute Co., Ltd
Guoguang Ruilian (Shenzhen) Internet Technology
- - - - - 777,956.58 -
Co., Ltd.
Chongqing Qingjia Electronics Co., Ltd. (①) - - 19,750,739.24 - - 19,750,739.24 -
Shenzhen Jielunte Technology Co., Ltd. (formerly - - - - - 83,329,443.68 -
240
Konka Group Co., Ltd. Annual Report 2018
Increase/decrease in the Reporting Period
Ending balance
of impairment
Investee Declaration of Withdrawn Cost method Ending balance
Financial assets provision for
cash dividends or impairment converted into converted into Other assets
equity method
profits provision equity method
known as: Shenzhen Konka Precision Mould
Manufacturing Co., Ltd)
Panxu Intelligence Co., Ltd - - - - - 49,170,159.29 -
Beijing Konka Jingyuan Technology Co., Ltd - - - - - 759,258.94 -
Shenzhen Konka Suyuan Investment Industrial Co.,
- - - - - - -
Ltd.
Xiamen Konka Panxu Equity Investment
- - - - - - -
Management Co., Ltd
Oriexcellent (Zhuhai) Assets Management Co., Ltd - - - - - 2,757,557.31 -
Ningbo Yongkang Investment Management Co., Ltd - - - - - - -
Flying Tech (Shenzhen) Co., Ltd - - - - - 4,868,798.36 -
Nanjing K-Star Technology Industrial Park
- - - - - 50,929,429.45 -
Operation Management Co., Ltd
Weihai City Water Environmental Protection
- - - - - 2,440,433.26 -
Technology Co., Ltd ()
Weihai Yiheng Environment Technology Co., Ltd
- - - - - 4,571,472.70 -
()
Laizhou Lairun Financial Leasing Co., Ltd () - - - - - - -
Binzhou Beihai Weiqiao Solid Waste Disposal Co., - - - - - 59,671,933.63 -
241
Konka Group Co., Ltd. Annual Report 2018
Increase/decrease in the Reporting Period
Ending balance
of impairment
Investee Declaration of Withdrawn Cost method Ending balance
Financial assets provision for
cash dividends or impairment converted into converted into Other assets
equity method
profits provision equity method
Ltd ()
Shandong Bishuiyuan Environmental Protection
- - - - - 24,745,069.48 -
Technology Co., Ltd ()
Shenzhen RF-LINK Technology Co., Ltd. - - - - - 100,277,552.55 -
Shenzhen Konka Information Network Co., Ltd - - - - - 26,656,667.58 -
Shenzhen Yaode Technology Co., Ltd. - - - - - 222,210,835.18 -
Chutian Dragon Co., Ltd - - - - - 624,845,604.93 -
Konka Green, and Konka Technology (③) - - - - - 78,409,903.14 -
Zhuhai Jinsu Plastic Co., Ltd. - - - - - 11,040,246.82 -
Shenzhen Konka Intelligent Electrical Appliance
- - - - - 2,287,478.52 -
Technology Co., Ltd
Shenzhen Zhongbing Konka technology Co., Ltd. - - - - - 10,617,873.79 -
Guangdong Hotcomm Information Technology Co.,
- - - - - - -
Ltd
Zhonggao Konka Intelligent Technology (Beijing)
- - - - - - -
Co., Ltd
Shenzhen OCT Life Network Technology Co., Ltd - - - - - 3,592,514.06 -
Kunshan Konka Electronics Co., Ltd. - - - - - 200,694,466.80 -
Kunshan Kangsheng Investment Development Co., - - 269,673,264.00 - - 269,673,264.00 -
242
Konka Group Co., Ltd. Annual Report 2018
Increase/decrease in the Reporting Period
Ending balance
of impairment
Investee Declaration of Withdrawn Cost method Ending balance
Financial assets provision for
cash dividends or impairment converted into converted into Other assets
equity method
profits provision equity method
Ltd.
Anhui Kaikai Shijie E-commerce Co., Ltd. - - 460,000,000.00 - - 436,685,064.57 -
Shenzhen Bosser New Materials Co., Ltd. - - - - - 79,859,338.44 -
Heilongjiang Longkang Zhijia Technology Co., Ltd - - - - - 6,400,480.52 -
Shanxi Silk Road Yunqi Intelligent Technology Co.,
- - - - - 4,522,509.33 -
Ltd
Wuhan Tianyuan Environmental Protection Co., Ltd - - - 239,447,355.00 - 252,270,255.47 -
Total - - 749,424,003.24 239,447,355.00 - 2,637,780,825.53 -
On 25 October2018, Runtas Group delegated 20% of Chongqing Qingjia's voting rights to Chongqing Machinery Mechanical& Electronics
Holding (Group) Co., Ltd. (CME) for management and exercise. Runtas Group and CME jointly hold 60% of Chongqing Qingjia's equity, and
the Company has no control rights thereafter.
② Weihai Water Environmental Protection Technology Co., Ltd., Weihai Yiheng Environmental Technology Co., Ltd., Laizhou Lairun Financial
Leasing Co., Ltd., Beihai Weiqiao Solid Waste Disposal Co., Ltd., Shandong Bishuiyuan Environmental Protection Technology Co., Ltd. and
Yantai Econ Enterprise Management Centre (Limited Partnership) are included by the acquisition of Econ Technology.
243
Konka Group Co., Ltd. Annual Report 2018
12. Investment Property
Item Houses and buildings
I. Original carrying value
1. Beginning balance 249,923,047.75
2. Increased amount of the period -
3. Decreased amount of the period -
4. Ending balance 249,923,047.75
II. The accumulative depreciation and accumulative amortization
1. Beginning balance 33,467,417.76
2. Increased amount of the period 5,631,274.27
3. Decreased amount of the period -
4. Ending balance 39,098,692.03
III. Impairment provision
1. Beginning balance -
2. Increased amount of the period -
3. Decreased amount of the period -
4. Ending balance -
IV. Carrying value -
1. Ending carrying value 210,824,355.72
2. Beginning carrying value 216,455,629.99
242
Konka Group Co., Ltd. Annual Report 2018
13. Fixed Assets
Item Ending balance Beginning balance
Fixed assets 2,410,226,495.81 1,587,170,348.35
Disposal of fixed assets - -
Total 2,410,226,495.81 1,587,170,348.35
① List of Fixed Assets
Transportation
Item Houses and buildings Machinery equipment Electronic equipment Other equipment Total
equipment
I. Original carrying value
1. Beginning balance 1,559,039,774.48 715,947,835.05 187,109,755.76 49,930,623.13 174,208,488.89 2,686,236,477.31
2. Increased amount of the
878,508,516.33 1,217,123,051.09 10,278,955.72 19,078,735.09 58,839,237.85 2,183,828,496.08
period
(1) Purchase 43,542,282.87 23,350,323.15 7,680,377.27 4,957,588.71 11,673,334.48 91,203,906.48
(2) Transfer of project
17,060,762.76 29,253,668.91 - 2,184,602.05 8,610,729.69 57,109,763.41
under construction
(3) increase of business
817,905,470.70 1,164,519,059.03 2,598,578.45 11,936,544.33 38,555,173.68 2,035,514,826.19
combination
3. Decreased amount of the
277,466,887.58 85,505,352.10 24,595,294.23 10,349,106.07 34,606,392.44 432,523,032.42
period
243
Konka Group Co., Ltd. Annual Report 2018
Transportation
Item Houses and buildings Machinery equipment Electronic equipment Other equipment Total
equipment
(1) Disposal or Scrap 715,368.47 24,410,163.74 14,512,579.21 7,536,214.81 8,627,755.03 55,802,081.26
(2) decrease of loss of
276,751,519.11 61,095,188.36 10,082,715.02 2,812,891.26 25,978,637.41 376,720,951.16
controlling right
4. Ending balance 2,160,081,403.23 1,847,565,534.04 172,793,417.25 58,660,252.15 198,441,334.30 4,437,541,940.97
II. Accumulative
depreciation
1. Beginning balance 367,660,000.41 428,143,422.45 129,422,777.12 36,768,297.26 115,293,690.98 1,077,288,188.22
2. Increased amount of the
282,165,213.57 602,360,748.24 15,329,048.32 12,593,260.99 38,233,764.95 950,682,036.07
period
(1) Withdrawal 51,611,558.12 83,338,994.96 13,709,033.18 5,431,201.87 16,443,707.94 170,534,496.07
(2) Increase of business
230,553,655.45 519,021,753.28 1,620,015.14 7,162,059.12 21,790,057.01 780,147,540.00
merger
3. Decreased amount of the
15,029,283.71 29,175,127.41 8,843,791.51 9,175,013.31 11,795,734.84 74,018,950.78
period
(1) Disposal or Scrap - 19,302,965.44 5,600,809.43 6,543,813.95 8,113,672.20 39,561,261.02
(2) decrease of loss of
15,029,283.71 9,872,161.97 3,242,982.08 2,631,199.36 3,682,062.64 34,457,689.76
controlling right
4. Ending balance 634,795,930.27 1,001,329,043.28 135,908,033.93 40,186,544.94 141,731,721.09 1,953,951,273.51
244
Konka Group Co., Ltd. Annual Report 2018
Transportation
Item Houses and buildings Machinery equipment Electronic equipment Other equipment Total
equipment
III. Depreciation reserves
1. Beginning balance 1,064,479.47 17,067,824.99 1,249,373.18 862,703.36 1,533,559.74 21,777,940.74
2. Increased amount of the
183,326.44 52,635,761.20 43,490.00 - 117,720.40 52,980,298.04
period
(1) Withdrawal 183,326.44 204,691.31 43,490.00 - 117,720.40 549,228.15
(2) Increase of business
- 52,431,069.89 - - - 52,431,069.89
merger
3. Decreased amount of the
- 1,093,434.15 77,411.53 42,488.12 180,733.33 1,394,067.13
period
(1) Disposal or Scrap - 1,093,434.15 77,411.53 21,775.12 176,761.39 1,369,382.19
(2) decrease of loss of
- - - 20,713.00 3,971.94 24,684.94
controlling right
4. Ending balance 1,247,805.91 68,610,152.04 1,215,451.65 820,215.24 1,470,546.81 73,364,171.65
IV. Carrying value
1. Ending carrying value 1,524,037,667.05 777,626,338.72 35,669,931.67 17,653,491.97 55,239,066.40 2,410,226,495.81
2. Beginning carrying
1,190,315,294.60 270,736,587.61 56,437,605.46 12,299,622.51 57,381,238.17 1,587,170,348.35
value
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Konka Group Co., Ltd. Annual Report 2018
(2) List of Temporarily Idle Fixed Assets
Original Accumulative
Item Impairment provision Carrying value
carrying value depreciation
Mechanical equipment 18,685,829.77 7,995,125.86 7,850,744.40 2,839,959.51
Electronic equipment 3,236,737.14 2,890,671.44 — 346,065.70
Transportation equipment 125,981.91 113,383.72 — 12,598.19
Other equipment 470,432.84 393,805.77 42,128.24 34,498.83
Total 22,518,981.66 11,392,986.79 7,892,872.64 3,233,122.23
(3) Fixed Assets Leased in from Financing Lease
Original carrying Accumulative
Item Impairment provision Carrying value
value depreciation
Mechanical equipment 9,451,353.39 2,420,688.00 7,030,665.39
Electronic equipment 205,128.20 157,264.95 47,863.25
Total 9,656,481.59 2,577,952.95 7,078,528.64
(4) Fixed Assets Leased out from Operation Lease
Item Ending carrying value
Houses and buildings 59,291,614.06
Total 59,291,614.06
(5) Details of Fixed Assets Failed to Accomplish Certification of Property
Original Accumulative Impairment
Item Net carrying value Reason
carrying value depreciation provision
Huaguoyuan Project
in Huaguoyuan Road, 3,628,629.00 210,914.08 — 3,417,714.92 Under processing
Guiyang
Pangjiang Street
The problems of
Property in Dadong 10,189,892.23 1,084,002.58 — 9,105,889.65
developers
District, Shenyang
Yinhai Shangyu
Property in Guandu 5,432,239.86 366,676.23 — 5,065,563.63 Under processing
District, Kunming
Jingyuan Building
20,018,497.00 8,644,518.56 — 11,373,978.44 Historical reasons
property
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Konka Group Co., Ltd. Annual Report 2018
Yikang Building
76,610,752.33 33,457,332.77 — 43,153,419.56 Historical reasons
property
Frestec Electrical
39,524,551.28 — — 39,524,551.28 Under processing
Appliances property
Workshops and
buildings of Jiangxi 112,397,538.12 30,253,765.60 — 82,143,772.52 Under processing
konka
Purification tank for
liquid waste of 2,653,000.00 1,243,593.75 — 1,409,406.25 Under processing
XingDa HongYe
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14. Construction in Progress
Item Ending balance Beginning balance
Construction in Progress 2,176,871,530.80 135,863,821.01
Engineering material - -
Total 2,176,871,530.80 135,863,821.01
① List of Construction in Progress
Ending balance Beginning balance
Impairme Impairme
Item Carrying Carrying Carrying
nt Carrying value nt
amount amount value
provision provision
451,789,427. 451,789,427.
Comprehensive improvement engineering project of drainage basins in the city of Donggang - - - -
70 70
552,055,516. 552,055,516.
Water supply engineering project in Mazongshan Town, Subei Mongol Autonomous County, Gansu Province - - - -
50 50
Central City Comprehensive accelerated programs in Economic and Technological Development Zone of 261,826,586. 261,826,586.
Binhai, Weifang - - - -
30 30
365,069,872. 365,069,872.
The second line of Xinfeng Microcrystalline Jade - - - -
84 84
303,533,244. 303,533,244.
The second line of Jiangxi Nano Crystallized Glass - - - -
21 21
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Konka Group Co., Ltd. Annual Report 2018
Ending balance Beginning balance
Impairme Impairme
Item Carrying Carrying Carrying
nt Carrying value nt
amount amount value
provision provision
153,577,240. 153,577,240. 76,514,067. 76,514,067
Guangming Project - -
57 57 90 .90
89,019,642.6 89,019,642.6 59,349,753. 59,349,753
Other small projects - -
8 8 11 .11
2,176,871,53 2,176,871,53 135,863,821 135,863,82
Total - -
0.80 0.80 .01 1.01
② Changes of Significant Construction in Progress
Amount that
Other
transferred to
Estimated Increase decreased
Name o f item Beginning balance Merger increase amount long-term fixed Ending balance
number Amount amount of the
assets of the
period
period
Comprehensive improvement engineering
RMB952
project of drainage basins in the city of - 451,789,427.70 - - - 451,789,427.70
million
Donggang
Water supply engineering project in
RMB810
Mazongshan Town, Subei Mongol - 552,055,516.50 - - - 552,055,516.50
million
Autonomous County, Gansu Province
Central City Comprehensive accelerated RMB404
million - 261,826,586.30 - - - 261,826,586.30
programs in Economic and Technological
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Konka Group Co., Ltd. Annual Report 2018
Amount that
Other
transferred to
Estimated Increase decreased
Name o f item Beginning balance Merger increase amount long-term fixed Ending balance
number Amount amount of the
assets of the
period
period
Development Zone of Binhai,
Weifang
The second line of Xinfeng RMB381
Microcrystalline Jade million - 92,065,729.57 273,004,143.27 - - 365,069,872.84
The second line of Jiangxi Nano RMB434
Crystallized Glass million - 60,247,959.78 243,285,284.43 - - 303,533,244.21
Project of Guangming Science and RMB241
Technology Center million 76,514,067.90 77,063,172.67 - - - 153,577,240.57
Other small projects — 59,349,753.11 75,034,778.61 33,952,139.17 76,403,862.10 2,913,166.11 89,019,642.68
Total 135,863,821.01 1,570,083,171.13 550,241,566.87 76,403,862.10 2,913,166.11 2,176,871,530.80
（Continued）
Proportion estimated of Of which: the amount of the Capitalization rate of
Accumulative amount of
Project name the project Project progress capitalized interests of the the interests of the Capital resources
capitalized interests
accumulative input (%) period period (%)
Comprehensive improvement Self-owned fund
engineering project of
47.57 47.57 - - -
drainage basins in the city of
Donggang
Water supply engineering Self-owned fund
project in Mazongshan Town, 68.15 68.15 - - -
Subei Mongol Autonomous
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Konka Group Co., Ltd. Annual Report 2018
Proportion estimated of Of which: the amount of the Capitalization rate of
Accumulative amount of
Project name the project Project progress capitalized interests of the the interests of the Capital resources
capitalized interests
accumulative input (%) period period (%)
County, Gansu Province
Central City Comprehensive
accelerated programs in
Economic and Technological 64.84 64.84 - - - Self-owned fund
Development Zone of
Binhai, Weifang
The second line of Xinfeng Self-owned fund and finance
95.76 95.76 22,768,437.98 - -
Microcrystalline Jade leasing
The second line of Jiangxi Self-owned fund and finance
70.00 70.00 26,846,701.03 - -
Nano Crystallized Glass leasing
Project of Guangming Science
63.72 63.72 - - - Self-owned fund
and Technology Center
Other small projects - - - - -
-
Total - - 49,615,139.01 - -
-
15. Intangible Assets
(1) List of intangible assets
Intellectual property
Item Land use right Right to use Total
Trademark right Patent and know-how Franchise rights Subtotal
software and others
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Konka Group Co., Ltd. Annual Report 2018
Intellectual property
Item Land use right Right to use Total
Trademark right Patent and know-how Franchise rights Subtotal
software and others
I. Original carrying value
1. Beginning balance 196,989,129.47 3,519,159.61 40,234,111.64 - 66,665,916.59 110,419,187.84 307,408,317.31
2. Increased amount of the period 331,993,452.03 44,077,946.62 155,333,340.10 111,050,625.01 22,998,965.55 333,460,877.28 665,454,329.31
(1) Purchase - - - - 15,416,017.19 15,416,017.19 15,416,017.19
(2) Transfer of project under construction 14,220,053.65 - - - 3,396,945.27 3,396,945.27 17,616,998.92
(3) increase of business combination 317,773,398.38 44,077,946.62 155,333,340.10 111,050,625.01 4,186,003.09 314,647,914.82 632,421,313.20
3. Decreased amount of the period 88,441,823.98 106,944.53 75,600.00 - 9,291,693.11 9,474,237.64 97,916,061.62
(1) Disposal - - - - 7,040,396.58 7,040,396.58 7,040,396.58
(2) decrease of losing controlling right 88,441,823.98 106,944.53 75,600.00 - 2,251,296.53 2,433,841.06 90,875,665.04
4. Ending balance 440,540,757.52 47,490,161.70 195,491,851.74 111,050,625.01 80,373,189.03 434,405,827.48 874,946,585.00
II. Accumulated amortization - -
1. Beginning balance 34,734,302.29 3,519,159.61 34,420,126.84 - 26,775,872.27 64,715,158.72 99,449,461.01
2. Increased amount of the period 21,976,106.08 1,952,456.42 11,874,182.60 6,663,037.50 9,271,399.44 29,761,075.96 51,737,182.04
(1) Withdrawal 7,941,501.90 1,874,509.80 11,855,942.50 2,961,350.00 7,788,411.38 24,480,213.68 32,421,715.58
(2) increase of business combination 14,034,604.18 77,946.62 18,240.10 3,701,687.50 1,482,988.06 5,280,862.28 19,315,466.46
3. Decreased amount of the period 16,048,172.82 106,944.54 - - 762,709.64 869,654.18 16,917,827.00
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Intellectual property
Item Land use right Right to use Total
Trademark right Patent and know-how Franchise rights Subtotal
software and others
(1) Disposal - - - - 762,709.64 762,709.64 762,709.64
(2) decrease of losing controlling right 16,048,172.82 106,944.54 - - - 106,944.54 16,155,117.36
4. Ending balance 40,662,235.55 5,364,671.49 46,294,309.44 6,663,037.50 35,284,562.07 93,606,580.50 134,268,816.05
III. Depreciation reserves - -
1. Beginning balance - - 2,901,082.61 - - 2,901,082.61 2,901,082.61
2. Increased amount of the period - - - - - - -
(1) Withdrawal - - - - - - -
(2) increase of business combination - - - - - - -
3. Decreased amount of the period - - - - - - -
(1) Disposal - - - - - - -
(2) decrease of losing controlling right - - - - - - -
4. Ending balance - - 2,901,082.61 - - 2,901,082.61 2,901,082.61
IV. Carrying value - -
1. Ending carrying value 399,878,521.97 42,125,490.21 146,296,459.69 104,387,587.51 45,088,626.96 337,898,164.37 737,776,686.34
2. Beginning carrying value 162,254,827.18 - 2,912,902.19 - 39,890,044.32 42,802,946.51 205,057,773.69
253
Konka Group Co., Ltd. Annual Report 2018
(2) Land Use Right with Certificate of Title Uncompleted
Item Carrying value Reason
Land usage right of the subsidiary Econ
9,209,966.67 Under processing
Technology A-18
Land usage right of the subsidiary
5,456,515.11 Under processing
Nanocrystalline
(3) Significant Intangible Assets
Item Ending carrying value Remaining amortization period
Franchise rights of sewage treatment in Laizhou 104,387,587.51 23.50
Various patent right of Jiangxi Konka 101,647,058.82 5.67
Land usage right of XGY (2006) No. 04049 73,587,031.11 37.75
Land usage right of Guangming land parcel No.
39,503,358.75 25.33
A518-0103
Right to use the trademark of Frestec 39,866,666.67 9.58
(4) Intangible Assets with restricted ownership or using right
Item Ending carrying value Reasons
Land usage right of XingDa
38,040,981.20 Mortgage loan of land
HongYe
Land usage right of Jiangxi Mortgage loan of land
5,065,400.00
Konka
Land usage right of Yinbin
14,101,553.20 Land mortgage guarantee
Konka
16. Goodwill
(1) Original Carrying Value of Goodwill
Name of the investees Increased Decreased
Beginning
or the events formed Formed from the Ending balance
balance Other Dispose Other
goodwill business combination
Anhui Konka 3,597,657.15 - - - - 3,597,657.15
Econ Technology - 470,769,220.06 - - - 470,769,220.06
Jiangxi konka - 340,111,933.01 - - - 340,111,933.01
254
Konka Group Co., Ltd. Annual Report 2018
XingDa HongYe - 44,156,682.25 - - - 44,156,682.25
Total 3,597,657.15 855,037,835.32 - - - 858,635,492.47
(2) Provisions for Goodwill Impairment
Name of the investees or the Increased Decreased
Beginning balance Ending balance
events formed goodwill Withdrawal Other Dispose Other
Anhui Konka - - - - - -
Econ Technology - - - - - -
Jiangxi konka - - - - - -
XingDa HongYe - - - - - -
Total - - - - - -
(3) Impairment test of business reputation
In the impairment test of business reputation, the whole assets and business of the acquired
companies are taken as an asset group for impairment test. The main cash inflow of this asset
group is independent of the cash inflow of other assets or asset groups, and this asset group is
consistent with the asset group confirmed on the purchase date.
The recoverable amount of Econ Technology is determined according to the present value of
expected future cash flows. Future cash flows are determined based on the financial budget
approved by the Management for the period from 2019 to 2023, with a discount rate of
14.06%. The cash flows of Econ Technology over 5 years are measured on the basis of a
growth rate of 0%. Other key assumptions used in measuring future cash flows include
estimated sales and gross profit based on the past performance of the asset group and the
expectation of the Management on market development. The Management believes that no
reasonable change in the above assumptions will lead to a result that the total book value of
Econ Technology exceeds its recoverable amount.
The recoverable amount of Jiangxi Konka is determined according to the present value of
expected future cash flows. Future cash flows are determined based on the financial budget
approved by the Management for the period from 2019 to 2023, with a discount rate of ×%.
The cash flows of Jiangxi Konka over 5 years are measured on the basis of a growth rate of
0%. Other key assumptions used in measuring future cash flows include estimated sales and
gross profit based on the past performance of the asset group and the expectation of the
Management on market development. The Management believes that no reasonable change
in the above assumptions will lead to a result that the total book value of Jiangxi Konka
255
Konka Group Co., Ltd. Annual Report 2018
exceeds its recoverable amount.
The recoverable amount of XingDa HongYe is determined according to the present value of
expected future cash flows. Future cash flows are determined based on the financial budget
approved by the Management for the period from 2019 to 2023, with a discount rate of
11.51%. The cash flows of XingDa HongYe over 5 years are measured on the basis of a
growth rate of 0%. Other key assumptions used in measuring future cash flows include
estimated sales and gross profit based on the past performance of the asset group and the
expectation of the Management on market development. The Management believes that no
reasonable change in the above assumptions will lead to a result that the total book value of
XingDa HongYe exceeds its recoverable amount.
(4) The impact of impairment test of business reputation
According to the result of impairment test of business reputation, the Company did not suffer
any impairment of business reputation in this current year.
17. Long-term Unamortized Expenses
Amortization Other decrease
Item Beginning balance Increased amount Ending amount
amount amount
Renovation
23,241,203.51 25,554,662.96 11,216,384.16 2,674,942.19 34,904,540.12
costs
Shoppe expe
56,402,256.28 58,885,461.34 52,649,531.01 1,270,114.37 61,368,072.24
nse
Other 70,417,477.51 20,180,981.61 11,065,898.43 64,581,746.28 14,950,814.41
Total 150,060,937.30 104,621,105.91 74,931,813.60 68,526,802.84 111,223,426.77
18. Deferred Income Tax Assets/Deferred Income Tax Liabilities
(1) Deferred Income Tax Assets without Offset
Ending balance Beginning balance
Item Deductible temporary Deferred income tax Deductible temporary Deferred income tax
difference assets difference assets
Deductible losses 1,358,336,470.51 336,401,597.67 2,250,284.11 364,943.32
Assets impairment
936,009,764.81 226,316,093.63 796,345,288.62 197,835,345.27
provision
Deferred income 85,456,786.55 20,389,065.68 106,943,380.58 25,500,563.17
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Konka Group Co., Ltd. Annual Report 2018
Ending balance Beginning balance
Item Deductible temporary Deferred income tax Deductible temporary Deferred income tax
difference assets difference assets
Accrued expenses 72,865,789.50 17,320,299.04 118,441,697.07 28,839,536.61
Unrealized internal sales
35,916,413.76 8,979,103.44 32,715,116.95 8,178,779.24
profits
Changes in fair value of
transactional financial --- --- 47,482,470.52 11,870,617.63
liabilities
others 123,082,867.34 30,027,794.84 141,409,911.41 35,352,477.88
Total 2,611,668,092.47 639,433,954.30 1,245,588,149.26 307,942,263.12
(2) Lists of Deferred Income Tax Liabilities without Offset
Item Ending balance Beginning balance
Taxable temporary Deferred income tax Taxable temporary Deferred income tax
difference liabilities difference liabilities
Estimated added value not
597,961,840.34 119,325,356.84 --- ---
under the same control
Prepaid interest 71,719,199.88 17,929,799.97 45,386,505.16 11,346,626.29
Accelerated depreciation of
5,929,959.47 889,493.92 6,889,703.33 1,033,455.50
fixed assets
Change in fair value of trading
3,005,381.67 751,345.42 --- ---
financial assets
Prepaid taxes --- --- 1,026,206.42 256,551.61
Other 8,496,388.76 2,124,097.19 --- ---
Total 687,112,770.12 141,020,093.34 53,302,414.91 12,636,633.40
(3) List of Unrecognized Deferred Income Tax Assets
Item Ending balance Beginning balance
Deductible losses 2,688,310,555.91 1,085,593,457.20
Deductible temporary difference 294,734,548.10 132,372,523.56
Total 2,983,045,104.01 1,217,965,980.76
19. Other Non-current Assets
Item Ending balance Beginning balance
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Konka Group Co., Ltd. Annual Report 2018
Item Ending balance Beginning balance
Orient kangjia no.1 (zhuhai) private equity
investment fund (limited partnership) 158,810,750.31 -
Entrusted loans 120,000,000.00 20,000,000.00
Construction of government projects 41,410,334.97 -
Prepayment for house-purchase 10,099,279.84 8,167,948.00
Prepayment for equipment 6,497,317.32 1,122,880.00
Other 12,193.56 -
Total 337,477,690.39 29,290,828.00
20. Short-term Loans
Item Ending balance Beginning balance
Credit loan 12,471,968,199.93 6,033,663,163.14
Guaranteed loan 1,113,964,731.70 -
Mortgage loan 30,000,000.00 -
Pledged loan - 893,808,874.21
A loan secured, pledged, or pledged（note②、
268,200,000.00 -
③）
Total 13,884,132,931.63 6,927,472,037.35
Note: ① with the book value of RMB 129,749,184.23 as the collateral of the second phase
plant, dongguan kangjia obtained the loan of RMB 30,000,000.00 from the dongguan branch
of industrial bank co., LTD.
② With the book value of RMB 38,965,300.00 for plant and equipment, the land use right of
RMB 5,065,400.00 and the equity of jiangxi xinzixin real estate co., ltd. under the name of
minority shareholders as collateral, zhu xinming, zeng xiaoying and zhu qingming provide
joint and several liability guarantee, and nano-microcrystal and xinfeng microcrystal provide
the highest guarantee. The total amount of the loan is RMB 128,500,000.00 from the sales
department of jiangxi yongxiu rural commercial bank co., LTD., agricultural bank of China
yongxiu county branch and jiujiang branch of bank of communications respectively..
③ Xingda hongye to book value RMB 58241167 index of the workshop, the land use right of
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Konka Group Co., Ltd. Annual Report 2018
$38040981.20, RMB 19800000.00 unit certificates of deposit and the minority shareholder's
name property as collateral, shenzhen city xingda circuit board co., LTD., ze-hong hu, Jiang
Jiezhen, Dai Rongxing, Hu Liying, Dai Yanhua provide maximum amount guarantee,
respectively from the bank of guangzhou, zhongshan, the agricultural bank of China
zhongshan rural commercial bank branches and mound mound sand sand branch loan
borrowing amount RMB 139700000.00.
21. Financial Liabilities at Fair Value through Profit or Loss
Item Ending balance Beginning balance
Loss of forward exchange contract 2,459,603.25 47,482,470.50
Total 2,459,603.25 47,482,470.50
22. Notes and Accounts Payable
Category Ending balance Beginning balance
Notes payable 862,330,689.47 541,175,312.09
Accounts payable 4,362,723,050.33 3,612,216,266.59
Total 5,225,053,739.80 4,153,391,578.68
(1) Notes Payable
Category Ending balance Beginning balance
Trade acceptance 131,907,909.16 133,211,455.00
Bank’s acceptance bill 730,422,780.31 407,963,857.09
Total 862,330,689.47 541,175,312.09
(2) Accounts Payable
Item Ending balance Beginning balance
Within 1 year 4,041,645,573.26 3,519,530,711.60
1 to 2 years 262,217,987.99 53,966,422.15
2 to 3 years 12,677,653.94 5,991,933.36
Over 3 years 46,181,835.14 32,727,199.48
Total 4,362,723,050.33 3,612,216,266.59
(3) Significant Accounts Payable Aging over One Year
Item Ending balance Unpaid/ Un-carry-over reason
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Konka Group Co., Ltd. Annual Report 2018
Estimated project funds 217,495,088.56 Settlement conditions not met
Total 217,495,088.56
23. Advances from Customers
(1) List of Advances from Customers
Item Ending balance Beginning balance
Within 1 year 654,982,234.51 571,998,516.53
1 to 2 years 32,910,085.56 36,662,083.53
2 to 3 years 13,172,633.37 14,937,831.50
Over 3 years 22,162,575.76 16,912,352.61
Total 723,227,529.20 640,510,784.17
(2) Significant Advances from Customers Aging over One Year
Item Ending balance Unpaid/ Un-carry-over reason
Dongguan Konka Mould Plastic Co.,Ltd 24,974,635.75
Shenzhen Konka Video & Communication
15,357,854.41
Systems Engineering Co., Ltd.
Total 40,332,490.16 ——
260
Konka Group Co., Ltd. Annual Report 2018
24. Payroll Payable
(1) List of Payroll Payable
Increase by merger Decrease Decrease by losing
Item Beginning balance Increase Ending balance
controlling right
I. Short-term salary 289,046,664.85 1,629,631,704.71 19,030,255.97 1,553,586,493.74 8,837,938.67 375,284,193.12
II. Post-employment benefit-defined
2,323,632.82 148,304,799.23 6,597.36 149,084,438.77 328,216.05 1,222,374.59
contribution plans
III. Termination benefits - 9,207,455.27 - 9,207,455.27 - -
IV. Current portion of other benefits - - - - - -
Total 291,370,297.67 1,787,143,959.21 19,036,853.33 1,711,878,387.78 9,166,154.72 376,506,567.71
(2) List of Short-term Salary
Increase by merger Decrease Decrease by losing
Item Beginning balance Increase Ending balance
controlling right
1. Salary, bonus, allowance, subsidy 275,524,552.33 1,430,621,311.75 18,757,618.25 1,356,836,794.50 8,408,941.91 359,657,745.92
2. Employee welfare 4,562,983.10 60,231,443.27 - 59,170,452.19 3,235.51 5,620,738.67
3. Social insurance 2,816,379.51 64,388,768.20 3,199.92 63,924,256.44 145,919.69 3,138,171.50
Of which: 1. Medical insurance premiums 815,364.61 55,260,964.35 2,529.60 55,188,962.37 121,485.35 768,410.84
Work-related injury insurance 247,215.23 3,785,199.77 352.80 3,857,848.63 14,575.35 160,343.82
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Konka Group Co., Ltd. Annual Report 2018
Increase by merger Decrease Decrease by losing
Item Beginning balance Increase Ending balance
controlling right
Maternity insurance 1,753,799.67 5,342,604.08 317.52 4,877,445.44 9,858.99 2,209,416.84
4. Housing fund 299,531.17 41,957,039.83 41,637,147.87 73,924.63 545,498.50
5. Labor union budget and employee
3,624,491.64 11,173,641.63 269,437.80 9,280,552.32 205,916.93 5,581,101.82
education budget
6.Short-term absence with payment - - - - - -
7. Short-term profit sharing plan - - - - - -
8. Other 2,218,727.10 21,259,500.03 - 22,737,290.42 - 740,936.71
Total 289,046,664.85 1,629,631,704.71 19,030,255.97 1,553,586,493.74 8,837,938.67 375,284,193.12
(3) List of Defined Contribution Plan
Increase by merger Decrease Decrease by losing
Item Beginning balance Increase Ending balance
controlling right
1. Basic pension benefits 2,096,931.52 144,568,375.95 6,350.40 145,214,564.00 309,294.17 1,147,799.70
2. Unemployment insurance 226,701.30 3,736,423.28 246.96 3,869,874.77 18,921.88 74,574.89
3. Annuity - - - - - -
Total 2,323,632.82 148,304,799.23 6,597.36 149,084,438.77 328,216.05 1,222,374.59
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
263
Konka Group Co., Ltd. Annual Report 2018
longer shoulder the further payment obligation, the relevant expense occurred was recorded into current profits and losses or related assets costs.
264
Konka Group Co., Ltd. Annual Report 2018
25. Taxes Payable
Ending Beginning
Item
balance balance
127,267,736.
VAT 47,749,976.31
84
Corporate income tax 111,659,382. 1,124,832,572.9
84 6
Fund for disposing abandoned appliances and electronic products 9,508,557.03 4,155,984.89
Land use tax 6,842,959.97 4,749,633.12
Real estate tax 3,390,503.70 1,855,882.68
Business tax 3,162,037.00 1,851,821.21
Tariff 2,867,887.18 3,451,843.43
Personal income tax 2,444,284.96 4,802,640.61
Urban maintenance and construction tax 1,757,048.49 3,570,618.46
16,496,706.0
Stamp duty 23,666,123.67
0
Education fees and local education Surcharge 1,057,937.59 344,630.28
Flood control fund, fund for embankment, fund for water conservancy and fund for river
management 401,823.10 401,823.10
Land VAT - 104,967,760.07
Others 1,147,327.74 167,783.74
288,004,192. 1,326,569,094.5
Total 44 3
26. Other Payables
Item Ending balance Beginning balance
Interest payable 27,230,631.41 35,723,963.94
Dividend payable - -
Other payables 1,997,426,646.33 1,608,359,305.87
Total 2,024,657,277.74 1,644,083,269.81
(1) Interest Payable
Item Ending balance Beginning balance
265
Konka Group Co., Ltd. Annual Report 2018
Item Ending balance Beginning balance
Interest on borrowings 27,230,631.41 35,723,963.94
Total 27,230,631.41 35,723,963.94
(2) Other Payables
Listed by Nature of Account
Item Ending balance Beginning balance
Accrued expenses 971,679,417.48 826,839,671.60
Come-and-go money 280,592,078.50 222,637,701.31
Equity transfer payment 380,180,000.00 -
deposit 196,746,104.46 472,308,401.08
Related party borrowing 108,233,202.82 -
Generation of advances 49,796,310.13 3,606,727.50
other 10,199,532.94 82,966,804.38
Total 1,997,426,646.33 1,608,359,305.87
② Significant Other Payables Aging over One Year
Item Ending balance Unpaid/Un-carry-over reason
Energy saving subsidies 89,960,000.00 Expected to be returned
Cash deposit 83,666,951.46 Unsettled
Total 173,626,951.46 —
27. Current Portion of Non-current Liabilities
Item Ending balance Beginning balance
Current portion of long-term borrowings (Note VI-28) 40,000,000.00 -
Current portion of long-term payables (Note VI-29) 111,792,404.13 374,358.99
Total 151,792,404.13 374,358.99
28. Long-term Borrowings
Item Ending balance Beginning balance
Credit loan 245,000,000.00 167,000,000.00
Guarantee loan (Note①) 50,000,000.00 -
Pledge loan (Note②) 150,000,000.00 -
Minus: the portion due within one year (noteVI-27) 40,000,000.00
Total 445,000,000.00 167,000,000.00
266
Konka Group Co., Ltd. Annual Report 2018
Note:①Sichuan kangjia took the land use right with the book value of 14,101,553.20 yuan as
the mortgage, and communication technology provided joint and several liability guarantee
for the loan, and obtained the entrusted loan of 50 million yuan from sichuan gangrong
investment and development group co., LTD.
②YiKang rushan mountain fseko environmental control technology of subsidiary co., LTD.
The formation of rushan city bureau of government procurement of pledge of accounts
receivable as applies for loan to the bank of China everbright, yantai economic development
zone branch limit is ten thousand yuan RMB 29000.00, loan term on December 29 2016
solstice December 28, 2026, during the pledge for 29 December 2016 solstice December 28,
2026; Meanwhile, icom technology will provide joint and several liability guarantee. As of
December 31, 2018, the actual amount of the loan is RMB 15,000.00 million.
29. Long-term Payables
Item Ending balance Beginning balance
Accrued financing lease outlay 240,167,001.54 435,897.45
Less: current portion (Note VI-27) 111,792,404.13 374,358.99
Total 128,374,597.41 61,538.46
30. Long-term Payroll Payable
(1) List of Long-term Payroll Payable
Item Ending balance Beginning balance
I. Termination benefits-net liabilities of defined contribution
8,792,614.98 13,361,821.86
plans
II. Termination benefits - -
III. Other long term welfare - -
Total 8,792,614.98 13,361,821.86
(2) Changes in Defined Benefit Plans
①Obligation present value of defined benefit plans:
Item Reporting period Same period of last year
I. Beginning balance 13,361,821.86 18,151,659.90
II. Defined benefit cost recorded into current profits and
- -
losses
1. Current service cost - -
267
Konka Group Co., Ltd. Annual Report 2018
Item Reporting period Same period of last year
2. Previous service cost - -
3. Settlement gains (loss “－”) - -
4. Net interest - -
III. The cost of defined benefit recorded into other
- -
comprehensive income
1. Actuarial gains (loss “-“) - -
IV. Other changes 4,569,206.88 4,789,838.04
1. Consideration paid when settled - -
2.Welfare paid 4,569,206.88 4,789,838.04
V. Ending balance 8,792,614.98 13,361,821.86
② Notes to the influence of the content and related risk of defined benefit pension schemes
to the future cash flows, time and uncertainty of the Company:
Due to upgrading and reconstruction of current work sites of the subsidiary, communication
technology, it is to adjust the labor relations according to Implementation Measures for
Accompanying Employees in manufacturing system of Shenzhen Konka Telecommunication
Technology Co., Ltd on the premise to balance the Company’s and employees’ benefits and
voluntary selection, Telecommunication Technology provides early retirement plans for
senior employees (employed before 31 December 1990 and signed non-fixed term labor
contract with the Company or Communication Technology).
The accumulative compensation paid to the internal early retirement pensions in future year
is 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.
③Notes to Actuarial Assumptions and Sensibility Analysis Result of Defined Benefit
Pension Schemes
Significant assumptions estimated Period-end of Reporting Period Period-end of last year
Discount rate Treasury bond rate in same period —
Death rate 0% —
268
Konka Group Co., Ltd. Annual Report 2018
Expected average life expectancy Over legal emeritus age —
Expected compensation growth rate 0% —
31. Provisions
Item Beginning balance Ending balance Reason for formation
Pending litigations 4,711,597.59 21,566,306.86 Litigation (Note)
Other 1,470,267.51 206,591.51 Contract consideration
Total 6,181,865.10 21,772,898.37 ——
Note: In 2016, Jiangxi Longji Construction Engineering Co., Ltd. filed a lawsuit with
Nanchang Intermediate People's Court against Jiangxi Xinfeng Microcrystalline Jade Co.,
Ltd. over the dispute arisen from a construction contract. According to the first-instance
decision made by Nanchang Intermediate People's Court, Jiangxi Xinfeng Microcrystalline
Jade Co., Ltd. should compensate Jiangxi Longji for the loss of RMB 19,741,456.02 and the
interest therefrom (Interest was calculated according to the similar lending rate for the same
period issued by the People's Bank of China based on the principle of RMB 19,741,456.02
from November 24, 2016 to the date when the principal amount was paid off). Jiangxi
Xinfeng Microcrystalline Jade Co., Ltd. appealed to the Higher People's Court of Jiangxi
Province. As of December 31, 2018, the expected losses related to the lawsuit suffered by the
Company are RMB 21,566,306.86.
32. Deferred Income
Reason
for
Item Beginning balance Increase Decrease Other decrease Ending balance
formati
on
Related
Government to
130,049,911.87 13,283,000.00 29,357,262.38 1,076,521.25 112,899,128.24
assets/i
subsidies
ncome
Total 130,049,911.87 13,283,000.00 29,357,262.38 1,076,521.25 112,899,128.24 —
269
Konka Group Co., Ltd. Annual Report 2018
Of which, items related to government subsidies:
Amount recorded
Amount recorded into Related to
Amount of newly into non-operating
Item Beginning balance other income in the Other changes Ending balance assets/related
subsidy income in the
Reporting Period income
Reporting Period
Smart TV industrial chain of Konka
19,848,500.00 - - 4,494,000.00 - 15,354,500.00 Related to assets
Group Co., Ltd
R & D of double
HDR OLED smart television and 13,300,000.00 - - - - 13,300,000.00 Related to assets
industrialization
Decoration subsidy for Konka Zhifu
- 10,000,000.00 - 1,499,999.94 - 8,500,000.06 Related to assets
Life Science Innovation Center
Research, production and
industrialization smart terminal system 7,761,844.66 - - 1,981,747.56 - 5,780,097.10 Related to assets
of next-generation internet
Research, development and
industrialization of new smart TV of 5,256,893.21 - - 3,679,825.38 - 1,577,067.83 Related to assets
man-machine interaction
Investment items located in the weak
sector of Shenzhen industrial link in 4,500,000.00 - - - - 4,500,000.00 Related to assets
2017
Konka Smart Home Project of
Constructing Cloud Smart Control 3,620,000.00 - - - - 3,620,000.00 Related to assets
Platform
Laboratory project of next-generation
Konka multimedia terminal 4,500,000.02 - - 999,999.96 - 3,500,000.06 Related to assets
technology
270
Konka Group Co., Ltd. Annual Report 2018
Amount recorded
Amount recorded into Related to
Amount of newly into non-operating
Item Beginning balance other income in the Other changes Ending balance assets/related
subsidy income in the
Reporting Period income
Reporting Period
Project of display terminal smart plant
3,822,000.00 - - 819,000.00 - 3,003,000.00 Related to assets
with new pattern based on NB-IOT
Funds of Shenzhen Industrial Design
Center from Shenzhen Economic, 3,000,000.00 - - - - 3,000,000.00 Related to assets
Trade and Information in 2015
Post rewards and
subsidies for technical transformation 3,281,040.00 - - 546,840.00 - 2,734,200.00 Related to assets
of industrial enterprises in 2016
Research, development and
industrialization of digital products of 2,600,000.00 - - - - 2,600,000.00 Related to assets
synergetic interconnection
AVS/DRA terminal and matched core
5,620,000.00 - - 3,184,666.78 - 2,435,333.22 Related to assets
chip R & D
Industrialization of mobile internet
and 4th generation mobile 2,754,867.45 - - 535,790.04 - 2,219,077.41 Related to assets
communication industry
Comprehensive integration and
innovation project of lean 2,100,000.00 - - - - 2,100,000.00 Related to assets
manufacturing implementation system
R & D and industrialization of new
application service system of mobile 2,809,233.44 - - 795,649.92 - 2,013,583.52 Related to assets
smart terminal
Design and achievement 1,960,000.00 - - - - 1,960,000.00 Related to assets
271
Konka Group Co., Ltd. Annual Report 2018
Amount recorded
Amount recorded into Related to
Amount of newly into non-operating
Item Beginning balance other income in the Other changes Ending balance assets/related
subsidy income in the
Reporting Period income
Reporting Period
transformation of surface OLED V9X
series TV
Provincial major special projects in
2,360,000.00 - - 480,000.00 - 1,880,000.00 Related to assets
2017
Special funds of provincial strategic
emerging industry of Dongguan 2,400,000.00 - - 600,000.00 - 1,800,000.00 Related to assets
Finance Bureau
Project subsidy for vein R&D center - 1,750,000.00 - - - 1,750,000.00 Related to income
Whole machine integration of module 1,875,000.00 - - 300,000.00 - 1,575,000.00 Related to assets
Glasses-free 3D Smart LCD TV with
1,500,000.00 - - - - 1,500,000.00 Related to assets
Multi-view and High Definition
Embedded OS development and
terminal system development for TV 1,951,430.02 - - 459,159.96 - 1,492,270.06 Related to assets
application
Real-time Synthesis and Pilot of True
3D Video with Continuous Viewpoint 1,420,000.00 - - - - 1,420,000.00 Related to assets
R & D and industrialization of
Information Terminal based on the 1,400,000.00 - - - - 1,400,000.00 Related to assets
IGRS
R & D of UST Laser Projection Smart
1,500,000.00 - - 125,000.00 - 1,375,000.00 Related to assets
TV
R & D and industrialization of 1,320,000.00 - - - - 1,320,000.00 Related to assets
272
Konka Group Co., Ltd. Annual Report 2018
Amount recorded
Amount recorded into Related to
Amount of newly into non-operating
Item Beginning balance other income in the Other changes Ending balance assets/related
subsidy income in the
Reporting Period income
Reporting Period
operation system for exploiting users
based on big data
R & D of key technologies of
information safety system for mobile 2,400,000.00 - - 1,084,812.96 - 1,315,187.04 Related to assets
smart terminal
R & D and engineering of 3D TV
1,300,000.00 - - - - 1,300,000.00 Related to assets
Terminal
Research, development and
industrialization project of new 1,590,166.71 405,999.96 1,184,166.75 Related to assets
two-channel 3D smart TV
Special fund of 2010-2012 industrial
1,680,000.00 - - 420,000.00 - 1,260,000.00 Related to assets
technology
Provincial fiscal subsidies for R & D
1,375,319.98 - - 229,220.04 - 1,146,099.94 Related to assets
of Guangdong enterprises in 2016
Central infrastructure investment
budget for premilinary work of PPP - 1,000,000.00 - - - 1,000,000.00 Related to assets
project
Satellite Receiving Facility based on
1,000,000.00 - - - - 1,000,000.00 Related to assets
safe and reliable chips
Special fund for industrial structural
1,199,999.88 - - 200,000.04 - 999,999.84 Related to assets
adjustment
Post rewards and
1,100,220.00 - - 183,369.96 - 916,850.04 Related to assets
subsidies received for technical
273
Konka Group Co., Ltd. Annual Report 2018
Amount recorded
Amount recorded into Related to
Amount of newly into non-operating
Item Beginning balance other income in the Other changes Ending balance assets/related
subsidy income in the
Reporting Period income
Reporting Period
transformation of industrial enterprises
in 2016
Research, development and
industrialization of Major technology 1,750,000.13 - - 999,999.96 - 750,000.17 Related to assets
of LED backlight FPTV
Smart TV and system supporting
platform of three networks 1,066,666.76 - - 399,999.96 - 666,666.80 Related to assets
combination
Subsidy for R&D instrument from
Department of Science and - 225,000.00 - 3,750.00 - 221,250.00 Related to assets
Technology of Anhui Province
Provincial special fund for work
- 200,000.00 - - - 200,000.00 Related to income
related to intellectual property
Transformation subsidy for
- 60,000.00 - 1,000.00 - 59,000.00 Related to assets
environmental protection project
Subsidy for R&D instrument - 48,000.00 - 800.00 - 47,200.00 Related to assets
Development subsidies for tourist
1,094,583.35 - - 18,499.98 1,076,083.37 - Related to assets
resort in 2014
Other government subsidies related to
1,429,395.04 - - 486,318.96 437.88 942,638.20 Related to income
income
Other government subsidies related to
10,602,751.22 - - 4,421,811.02 - 6,180,940.20 Related to assets
assets
Total 130,049,911.87 13,283,000.00 - 29,357,262.38 1,076,521.25 112,899,128.24
274
Konka Group Co., Ltd. Annual Report 2018
33. Share Capital
Increase/decrease (+/-)
New
Item Beginning balance Bonus Bonus issue Ending balance
shares Other Subtotal
shares from profit
issued
The sum of shares 2,407,945,408.00 - - - - - 2,407,945,408.00
34. Capital Reserves
Item Beginning balance Increase Decrease Ending balance
Capital premium 7,393,378.55 - - 7,393,378.55
Other capital reserves 97,338,863.75 120,473,886.76 16,849,504.85 200,963,245.66
Total 104,732,242.30 120,473,886.76 16,849,504.85 208,356,624.21
Note: Due to the loss of control, the disposal of part of the equity of E2info resulted in an
increase of RMB120,473,886.76 in other capital reserves; due to the disposal of part of the
equity of Kaikai Shijie, plastic products and Chongqing Qingjia, the capital reserve was
reduced by RMB10,707,832.18; due to changes in other owners' equity other than net profit
or loss of Guangdong Chutian Dragon Smart Card Co., Ltd. and Shenzhen RF-LINK
Technology Co., Ltd., other capital reserves have reduced by RMB 6,141,672.67.
275
Konka Group Co., Ltd. Annual Report 2018
35. Other Comprehensive Income
Reporting Period
Less: recorded in
other
comprehensive
Beginning Income before income in prior Attributable to owners Attributable to
Item Less: Income Ending balance
balance taxation in the period and of the Company as the non-controlling
tax expense
Current Period transferred in parent after tax interests after tax
profit or loss in
the Current
Period
I. Items that will not be reclassified to
- - - - - - -
profit or loss
II. Items that may subsequently be
3,697,458.95 -12,596,094.90 - -10,447.36 -14,235,678.03 1,650,030.49 -10,538,219.08
reclassified to profit or loss
Of which: Share of other
comprehensive income of investees that
-3,138,048.04 740,697.08 - - 740,697.08 - -2,397,350.96
will be reclassified into profit or loss
under equity method
Gain/Loss on changes in fair value of
31,342.08 -41,789.44 - -10,447.36 -31,342.08 - -
available-for-sale financial assets
Differences arising from translation of
foreign currency-denominated financial 6,804,164.91 -13,295,002.54 - - -14,945,033.03 1,650,030.49 -8,140,868.12
statements
Total of other comprehensive income 3,697,458.95 -12,596,094.90 - -10,447.36 -14,235,678.03 1,650,030.49 -10,538,219.08
276
Konka Group Co., Ltd. Annual Report 2018
36. Surplus Reserves
Item Beginning balance Increase Decrease Ending balance
Statutory surplus reserves 963,582,609.22 9,919,910.40 - 973,502,519.62
Discretional surplus reserves 254,062,265.57 - - 254,062,265.57
Total 1,217,644,874.79 9,919,910.40 - 1,227,564,785.19
Notes: Based on the regulations of the Corporation Law and Constitution, the Company
should withdraw 10% of the statutory surplus reserves according to the net profits. If the
accumulated amount of the statutory surplus reserves exceeded the 50% of the registered
capital, the Company could no more withdraw.
The Company can withdraw the discretional surplus reserves after withdrawing the statutory
surplus reserves. The discretional surplus reserves can be used to make up for the previous
losses or to increase share capital once approved.
37. Retained Earnings
Item 2018 2017
Beginning balance of retained earnings before adjustments 4,260,125,492.57 -427,163,254.63
Total beginning balance of retained earnings before adjustments (increase+, decrease -) - -
Beginning balance of retained earnings after adjustments 4,260,125,492.57 -427,163,254.63
Add: Net profit attributable to owners of the Company as the parent 411,289,744.68 5,057,025,155.71
Less: Withdrawal of statutory surplus reserves 9,919,910.40 369,736,408.51
Withdrawal of discretional surplus reserves - -
Dividend of ordinary shares payable 390,087,134.64 -
Ending retained earnings 4,271,408,192.21 4,260,125,492.57
38. Operating Revenue and Cost of Sales
(1) Operating Revenue and Cost of Sales
Reporting Period Same Period of last year
Item
Operating revenue Cost of sales Operating revenue Cost of sales
Main operations 44,539,559,406.49 41,961,861,198.85 29,801,098,730.20 26,643,986,715.11
Other operations 1,587,237,934.84 1,265,752,715.60 1,426,664,519.51 1,144,998,564.69
Total 46,126,797,341.33 43,227,613,914.45 31,227,763,249.71 27,788,985,279.80
(2) Main Operations (Classified by product)
Product name Reporting Period Same period of last year
277
Konka Group Co., Ltd. Annual Report 2018
Operating revenue Cost of sales Operating revenue Cost of sales
Color TV business 9,892,486,636.93 8,689,731,404.20 11,994,950,476.66 10,062,760,446.56
Mobile phone business 331,298,592.29 327,425,343.91 918,711,012.38 827,228,372.16
Consumer appliances business 2,127,731,143.29 1,767,282,597.98 1,737,464,511.08 1,404,308,959.94
Environmental protection business 3,020,514,260.13 2,634,491,782.63 - -
Supply chain trade business 28,348,817,442.89 28,068,819,224.05 13,652,512,654.75 13,501,073,391.55
Other 818,711,330.96 474,110,846.08 1,497,460,075.33 848,615,544.90
Total 44,539,559,406.49 41,961,861,198.85 29,801,098,730.20 26,643,986,715.11
(3) Main Operations (Classified by area)
Reporting Period Same period of last year
Area
Operating revenue Cost of sales Operating revenue Cost of sales
Domestic sales 15,280,905,528.09 13,378,114,102.53 14,605,075,686.89 12,525,699,043.61
Overseas sales 29,258,653,878.40 28,583,747,096.32 15,196,023,043.31 14,118,287,671.50
Total 44,539,559,406.49 41,961,861,198.85 29,801,098,730.20 26,643,986,715.11
(4) Other Operations (Classified by product)
Reporting Period Same period of last year
Product name
Operating revenue Cost of sales Operating revenue Cost of sales
Sale of materials 1,061,823,529.60 1,125,521,149.81 655,914,026.56 685,360,932.34
Maintenance cost 14,768,368.18 3,339,815.57 8,173,452.85 5,530,168.79
Sale of waste 15,009,489.99 666,256.53 11,089,872.64 2,561,519.32
Housing lease 107,020,774.99 19,678,154.79 74,440,747.48 6,447,669.25
Others 388,615,772.08 116,547,338.90 677,046,419.98 445,098,274.99
Total 1,587,237,934.84 1,265,752,715.60 1,426,664,519.51 1,144,998,564.69
(5) Operating Revenue from Top 5 Customers
Total operating revenue from top 5 Proportion to operating revenue of
Period
customers Reporting Period (%)
13,375,164,153.90 29.00
2018
7,077,286,124.31 22.66
2017
39. Taxes and Surtaxes
Item Reporting Period Same Period of last year
Urban maintenance and construction tax 24,828,107.02 22,176,591.33
278
Konka Group Co., Ltd. Annual Report 2018
Item Reporting Period Same Period of last year
Stamp duty 15,162,609.72 15,520,219.86
Property tax 14,178,084.66 15,088,906.82
Land use tax 12,019,009.56 9,959,196.22
Education surcharge 11,001,522.37 10,051,601.65
Local education surcharge 7,345,690.22 6,807,461.39
Water resources fund 1,309,631.97 548,589.88
Vehicle and vessels usage tax 16,094.66 341,052.18
Business tax - 2,295,449.95
Others 3,829,115.75 126,047,664.33
Total 89,689,865.93 208,836,733.61
Note: Refer to Note V Taxation for details of the measurement standards of various taxes and
surtaxes.
40. Selling Expense
Item Reporting Period Same Period of last year
Salary 730,468,898.17 791,375,434.96
Promotional activities 342,640,120.91 373,118,418.23
Logistic Fee 337,227,473.98 321,989,098.63
Warranty fee 202,084,416.68 166,475,580.70
Advertising expense 349,308,929.28 219,633,787.72
Taxes and fund 53,380,828.00 67,614,333.51
Business travel charges 35,211,979.96 33,971,957.80
Exhibition expenses 25,377,016.80 14,958,812.83
Rental charges 23,247,889.18 23,122,212.30
Business entertainment expenses 21,055,262.45 22,760,942.79
Other 162,171,426.23 106,972,978.64
Total 2,282,174,241.64 2,141,993,558.11
41. Administrative Expense
Item Reporting Period Same Period of last year
Salary 278,758,343.19 196,593,346.39
Depreciation charge 71,547,932.45 39,733,413.81
Consulting fees 42,016,562.62 25,807,304.97
279
Konka Group Co., Ltd. Annual Report 2018
Item Reporting Period Same Period of last year
Social security charges 23,520,903.01 18,845,381.77
Business entertainment expense 22,609,874.52 13,634,367.93
Patent fee 22,483,701.61 20,607,523.97
Business travel charges 22,475,469.34 12,847,093.80
Employee welfare 15,390,406.89 10,398,246.45
Water & electricity fees 11,658,004.88 -
Labor-union expenditure 10,237,943.20 8,758,356.31
Housing allowance 5,597,428.25 4,827,139.40
Other 115,596,426.22 95,984,523.16
Total 641,892,996.18 448,036,697.96
42. R&D Expense
Item Reporting Period Same Period of last year
Salary 176,668,069.66 146,606,511.30
Expenses on trial production of new products 112,453,347.32 117,019,889.74
Material drawing out 47,815,656.03 14,274,438.17
Depreciation and amortization 11,820,275.57 11,535,501.37
Testing fees 11,555,165.21 7,589,058.90
Information charges 10,466,824.02 6,522,293.88
Water & electricity fees 5,399,670.34 4,888,311.12
Business travel charges 3,309,558.94 2,464,463.80
Hand model fees 2,420,847.59 1,192,401.74
Other 14,550,730.56 17,584,112.48
Total 396,460,145.24 329,676,982.50
43. Finance Costs
Item Reporting Period Same Period of last year
Interest expense 566,070,556.21 352,438,125.53
Less: Interest income 43,630,012.41 62,735,102.89
Foreign exchange profit or loss -174,702,042.10 33,585,873.68
Other 51,427,312.69 17,629,654.29
Total 399,165,814.39 340,918,550.61
44. Asset Impairment Loss
280
Konka Group Co., Ltd. Annual Report 2018
Item Reporting Period Same Period of last year
Bad debt loss 86,898,151.31 -12,753,051.08
Inventory falling price loss 139,421,841.21 164,992,959.69
Impairment losses of available-for-sale financial assets - 5,750,000.00
Fixed assets impairment losses 549,228.15 1,713,814.69
Total 226,869,220.67 159,703,723.30
45. Other Income
Reporting Same Period Amount recorded into the current non-recurring profit or
Item
Period of last year
loss
173,850,805.3 53,426,592.8
Rewards and subsidies 173,850,805.31
1 0
56,782,742.2
Software tax rebates 64,656,609.96 -
1
Transfer of deferred 29,182,496.4
29,357,262.38 29,357,262.38
income 9
49,848,202.2
Support fund 18,108,788.00 18,108,788.00
3
L/C export subsidy 3,821,338.00 2,817,636.00 3,821,338.00
Land tax rebates 2,248,900.00 8,829,600.00 2,248,900.00
Post subsidies 1,796,103.67 2,038,431.45 1,796,103.67
Other 425,824.91 2,053,742.37 425,824.91
294,265,632.2 204,979,443.
Total 229,609,022.27
3 55
46. Investment Income
Item Reporting Period Same Period of last year
Long-term equity investment income measured by equity method 19,139,381.20 3,953,094.99
Investment income from disposal of long-term equity investment 185,587,193.61 6,419,583,589.12
Investment income from holding of financial assets at fair value through
- 248,207.55
profit or loss
Investment income from disposal of financial assets at fair value through
-45,928,989.49 -23,444,831.75
profit or loss
Investment income from holding of available-for-sale financial assets 17,920,000.00 4,310,000.00
Investment income from disposal of available-for-sale financial assets 17,360,398.59 25,486,800.02
281
Konka Group Co., Ltd. Annual Report 2018
Item Reporting Period Same Period of last year
Income from re-measurement of residual stock rights at fair value after
551,089,548.47 53,847,856.66
losing control power
Income from purchase of financial products and entrust loans 183,411,695.80 70,070,846.08
Transfer of equity investment by equity method into financial assets - 33,792,795.21
Countercurrent trading produces unrealized profit adjusted investment
-1,164,857.22 -
income
Total 927,414,370.96 6,587,848,357.88
47. Gain on Changes in Fair Value
Sources Reporting Period Same period of last year
Financial assets at fair value through profit or loss 5,168,185.39 -39,598,044.59
Of which: gain on changes in fair value of derivative financial
5,168,185.39 -39,598,044.59
instruments
Trading financial assets - 20,521,800.00
Financial liabilities measured at fair value and recorded in current
45,022,867.25 -47,145,207.37
profits and losses
Of which:: fair value variation income generated by derivative
45,022,867.25 -47,145,207.37
financial instruments
Total 50,191,052.64 -66,221,451.96
48. Asset Disposal Income
Amount recorded in
the current
Item Reporting Period Same Period of last year
non-recurring profit
or loss
Fixed assets disposal income -563,894.74 22,576,235.00 -563,894.74
Intangible assets disposal income - 33,369,166.39 -
Total -563,894.74 55,945,401.39 -563,894.74
49. Non-operating Income
Amount recorded in the
Same Period of last
Item Reporting Period current non-recurring
year
profit or loss
Gains on the damage and scrapping of 209,465.30 90,088.16 209,465.30
282
Konka Group Co., Ltd. Annual Report 2018
Amount recorded in the
Same Period of last
Item Reporting Period current non-recurring
year
profit or loss
non-current assets
Government subsidies unrelated to the normal
30,000,000.00 30,176,000.00 30,000,000.00
operation of the Company
Gains on debt restructuring 46,445,749.23 3,714,592.49 46,445,749.23
Compensation income 55,281.81 449,085.66 55,281.81
Penalty income 14,987,008.86 4,378,369.42 14,987,008.86
Compensation from suppliers 421,248.97 - 421,248.97
Negative goodwill generated from shares whose
combination cost less than the fair value of 220,045,229.63 - 220,045,229.63
recognizable net assets obtained
Other 16,532,156.29 44,024,528.03 16,532,156.29
Total 328,696,140.09 82,832,663.76 328,696,140.09
Of which, government subsidies recorded into current profit or loss:
Item Reporting Period Same period of last year Related to the
assets/ income
Recorde
Recorded into Recorded Recorded into
d into Offset
non-operating into other Offset costs non-operating
other costs
income income income
income
Related to in
Rewards and subsidies 30,000,000.00 - - 30,000,000.00 - -
come
Related to in
Other - - - 176,000.00 - -
come
Total 30,000,000.00 - - 30,176,000.00 - -
50. Non-operating Expense
Amount recorded into the
Item Reporting Period Same Period of last year current non-recurring
profit or loss
Losses on damage and scraping of
3,503,737.74 5,408,316.93 3,503,737.74
non-current assets
Compensation expense 118,766.24 5,757,816.49 118,766.24
Donations 177,601.00 437,976.34 177,601.00
283
Konka Group Co., Ltd. Annual Report 2018
Amount recorded into the
Item Reporting Period Same Period of last year current non-recurring
profit or loss
Penalty 2,727,629.00 - 2,727,629.00
Liquidated damages 1,049,718.66 - 1,049,718.66
Losses on damage and scrapping of
11,658,004.88 - 11,658,004.88
inventories
Other 460,399.26 4,916,922.92 460,399.26
Total 19,695,856.78 16,521,032.68 19,695,856.78
51. Income Tax Expense
(1) Lists of Income Tax Expense
Item Reporting Period Same period of last year
Current income tax expense 145,391,357.02 1,181,682,531.53
Deferred income tax expense -359,113,186.48 389,958,474.25
Total -213,721,829.46 1,571,641,005.78
(2) Adjustment Process of Accounting Profit and Income Tax Expense
Item Reporting Period
Profit before taxation 454,896,592.11
Current income tax expense accounted at statutory/applicable tax rate 113,724,148.03
Influence of applying different tax rates by subsidiaries -54,083,374.50
Influence of income tax before adjustment -2,392,637.36
Influence of non-taxable income -56,565,083.87
Influence of not deductable costs, expenses and losses 7,573,086.74
Influence of deductable loss of unrecognized deferred income tax assets in prior period -26,901,514.84
Influence of deductable temporary difference or deductable losses of unrecognized
-17,477,843.08
deferred income tax in the Reporting Period
Changes in the balance of deferred income tax assets/ liabilities in previous period due
68,188.24
to adjustment of tax rate
Other -177,666,798.82
Income tax expense -213,721,829.46
52. Other Comprehensive Income
Refer to Note VI-35 for details.
53. Cash Flow Statement
284
Konka Group Co., Ltd. Annual Report 2018
(1) Cash Generated from Other Operating Activities
Item Reporting Period Same Period of last year
Commercial factoring accounts received 3,046,250,433.88 6,151,752,072.71
Intercourse funds 48,357,936.24 2,535,878,629.20
Income from government subsidy 240,968,351.06 205,972,947.06
Front money and guarantee deposit 150,767,666.31 59,127,499.85
Interest income from bank deposits 21,754,813.26 68,495,305.71
Income from waste 6,630,095.00 1,067,599.66
Repayment of individual borrowings 20,958,954.89 9,724,120.10
Insurance indemnity 27,704,625.75 30,158,139.90
Temporary received repair fund 1,499,503.30 7,053,099.89
Income from penalty and default money 9,721,141.07 4,378,369.42
Other income 140,056,972.37 116,132,534.48
Total 3,714,670,493.13 9,189,740,317.98
(2) Cash Used in Other Operating Activities
Item Reporting Period Same Period of last year
The commercial factoring payment (Note) 2,925,211,901.01 8,852,860,166.99
Expense for cash payment 1,150,343,818.19 1,167,232,783.76
Payment made on behalf 51,369,090.01 27,188,407.90
Payment for guarantee deposit, cash deposit and repair 344,427,373.48 123,627,145.04
Petty cash for employees 27,655,007.55 19,067,788.75
Expense for bank handling charges 31,199,551.45 18,648,034.00
Donation expense 102,578.10 437,976.34
Default money 44,675.99 119,593.48
Other expense
Total 78,728,884.80 42,422,836.03
(3) Cash Generated from Other Investing Activities
Item Reporting Period Same Period of last year
285
Konka Group Co., Ltd. Annual Report 2018
Item Reporting Period Same Period of last year
Recovery of financial products 2,145,785,000.00 1,620,800,000.00
Transfer of stock - 220,507,387.99
Recovery of entrusted loans 17,600,000.00 -
Other 229,643,228.96 6,173,387.62
Total 2,393,028,228.96 1,847,480,775.61
(4) Cash Used in Other Investing Activities
Item Reporting Period Same Period of last year
Purchase of financial products 1,028,080,000.00 2,872,800,000.00
Payment for entrusted loans 1,819,000,000.00 -
Other 2,439,200.00 13,188,913.10
Total 2,849,519,200.00 2,885,988,913.10
(5) Cash Generated from Other Financing Activities
Item Reporting Period Same Period of last year
Government subsidies related to assets - 41,176,150.00
Disposal of minority interest of subsidiaries 128,933,333.34 2,400,000.00
Receiving entrused loans 298,225,230.01 -
Other 32,726,515.41 -
Solution pay of pledged certificate of RMB time deposit at maturity - 435,028,346.40
Total 459,885,078.76 478,604,496.40
(6) Cash Used in Other Financing Activities
Item Reporting Period Same Period of last year
Deposit as margin for pledge 116,939,471.09 22,664,753.77
Repayment of entrusted loans 226,425,248.50 -
Finance lease 412,777,454.04 -
Financing expense 1,392,251.29 598,314.20
Total 757,534,424.92 23,263,067.97
54. Supplemental Information for Cash Flow Statement
(1) Supplemental Information for Cash Flow Statement
286
Konka Group Co., Ltd. Annual Report 2018
Same period of last
Supplemental information Reporting Period
year
1. Reconciliation of net profit to net cash flows generated
from operating activities
Net profit 668,618,421.57 5,086,834,099.98
Add: Provision for impairment of assets 226,869,220.67 159,703,723.30
Depreciation of fixed assets, oil-gas assets, and productive living
assets 170,534,496.07 116,653,496.12
Amortization of intangible assets 32,421,715.58 12,612,406.59
Amortization of long-term prepaid expenses 74,931,813.60 58,694,071.62
Losses on disposal of fixed assets, intangible assets and other
563,894.74 -55,945,401.39
long-lived assets (gains: negative)
Losses on scrap of fixed assets (gains: negative) 3,294,272.44 5,318,228.77
Losses on changes in fair value (gains: negative) -50,191,052.64 66,221,451.96
Finance costs (gains: negative) 544,195,357.06 352,438,125.53
Investment loss (gains: negative) -927,414,370.96 -6,587,848,357.88
Decrease in deferred income tax assets (gains: negative) -323,517,091.85 393,791,889.56
Increase in deferred income tax liabilities
(“-” means decrease) 37,991,934.70 -4,396,482.52
Decrease in inventories (gains: negative) -668,140,011.75 -3,657,857,260.85
Decrease in accounts receivable generated from operating
activities (gains: negative) 261,056,969.48 -3,952,004,354.33
Increase in accounts payable used in operating activities
(decrease: negative) -3,251,682,178.99 3,720,709,237.56
Other -29,357,262.38 -29,182,496.49
Net cash generated from/used in operating activities -3,229,823,872.66 -4,314,257,622.47
2. Significant investing and financing activities without
involvement of cash receipts and payments
Transfer of debt to capital - -
Current portion of convertible corporate bonds - -
Fixed assets leased in by financing - -
3. Net increase/decrease of cash and cash equivalent:
287
Konka Group Co., Ltd. Annual Report 2018
Same period of last
Supplemental information Reporting Period
year
Ending balance of cash 3,434,149,481.72 3,097,899,703.76
Less: beginning balance of cash 3,097,899,703.76 2,020,902,945.14
Add: Ending balance of cash equivalents - -
Less: Beginning balance of cash equivalents - -
Net increase in cash and cash equivalents 336,249,777.96 1,076,996,758.62
(2) Net Cash Paid For Acquisition of Subsidiaries
Item Amount
Cash or cash equivalents paid currently for current business combinations in the Reporting
1,531,450,000.00
Period
Of which: Shandong Econ Technology Co., Ltd. 400,000,000.00
Jiangxi Konka New Material Technology Co., Ltd. 598,000,000.00
Henan Frestec Refrigeration Appliance Co., Ltd. 455,000,000.00
GuangDong XingDa HongYe Electronic Co., Ltd. 78,450,000.00
Less: cash and cash equivalents held by subsidiaries on the purchase date 414,139,604.63
Of which: Shandong Econ Technology Co., Ltd. 178,434,322.05
Jiangxi Konka New Material Technology Co., Ltd. 208,815,770.16
Henan Frestec Refrigeration Appliance Co., Ltd. -
GuangDong XingDa HongYe Electronic Co., Ltd. 25,339,512.42
Net cash paid for acquisition of subsidiaries 1,118,860,395.37
(3) Net Cash Receive from Disposal of the Subsidiaries
Item Amount
Cash or cash equivalents received in the Reporting Period from disposal of subsidiaries in the
Current Period 330,680,336.00
Of which: Kaikai Shijie 50,000,000.00
Kunshan Kangsheng 280,680,336.00
288
Konka Group Co., Ltd. Annual Report 2018
Item Amount
Chongqing Qingjia -
Zewei Kechuang -
Less: cash and cash equivalents held by subsidiaries on the date of losing control power 78,211,847.40
Of which: Kaikai Shijie 7,488,940.78
Kunshan Kangsheng 69,624,314.96
Chongqing Qingjia 1,065,835.71
Zewei Kechuang 32,755.95
Net cash received from disposal of subsidiaries 252,468,488.60
(4) Cash and Cash Equivalents
Item Ending balance Beginning balance
I. Cash 3,434,149,481.72 3,097,899,703.76
Including: Cash on hand 130,105.31 49,343.08
Bank deposit on demand 3,434,019,376.41 3,097,850,360.68
II. Ending balance of cash and cash equivalents 3,434,149,481.72 3,097,899,703.76
55. Assets with Restricted Ownership or Right to Use
Ending carrying
Item Reason for restriction
value (RMB)
Among which: RMB451.6092 million was all kinds of deposit that cannot be
withdrawn at any time; RMB235 million was fixed time deposits; RMB201.0352
Monetary
91,399.46 million was supervised account capital for reimbursement; RMB19.8 million was
capital
deposits pledged as loans; RMB4.3466 million was frozen capital for lawsuits;
RMB2.2036 million was restricted for other reasons.
As of 31 December 2018, the Company pledged notes receivables with carrying value
Notes
132,145.49 of RMB1,321,454,900 for conducting comprehensive financing businesses such as
receivable
opening of banker’ s acceptance bill, L/C, L/G and trade financing.
Fixed assets 22,695.57 For mortgage borrowings. Refer to 20. Short-term Borrowings in Note VI
289
Konka Group Co., Ltd. Annual Report 2018
Intangible For mortgage borrowings. Refer to 20. Short-term Borrowings in Note VI
5,720.79
assets For mortgage borrowings. Refer to 28. Long-term Borrowings in Note VI
Long-term
34,941.65 Mortgage borrowings. Refer to 28. Long-term Borrowings in Note VI
receivables
Total 286,902.96
56. Foreign Currency Monetary Items
(1) Foreign Currency Monetary Items
Ending foreign currency Ending balance converted to
Item Exchange rate
balance RMB
Monetary capital
Of which: USD 135,723,407.43 6.8632 931,496,889.87
EUR 1,817.87 7.8473 14,265.37
HKD 12,449,667.60 0.8762 10,908,398.75
Accounts receivable
Of which: USD 130,507,627.96 6.8632 895,699,952.22
HKD 3,531,401.47 0.8762 3,094,213.97
AUD 49,764.00 4.825 240,111.30
Other receivables
Of which: USD 13,848,369.43 6.8632 95,044,129.07
Interest receivable
Of which: USD 54,781.10 6.8632 375,973.65
Accounts payable
Of which: USD 21,644,634.75 6.8632 148,551,457.22
HKD 529,791,419.53 0.8762 464,203,241.79
Other payables
Of which: HKD 23,657,224.69 0.8762 20,728,460.27
290
Konka Group Co., Ltd. Annual Report 2018
Ending foreign currency Ending balance converted to
Item Exchange rate
balance RMB
Short-term borrowings
Of which: USD 208,330,389.67 6.8632 1,429,813,130.38
Interest payable
Of which: USD 1,302,303.49 6.8632 8,937,969.31
(2) Notes to Overseas Entities
The significant overseas entities include Hong Kong Konka, Konka Electrical Appliances International
Trading, Chain Kingdom Shenzhen, Kangjietong and Jiali International. The main overseas operating place is Hong Kong.
The Company’s recording currency is HKD since the main currency in circulation in Hong Kong is HKD.
57. Arbitrage
Refer to relevant contents in items notes of in 2. Financial Assets at Fair Value through Profit
or Loss in Note VI.
58. Government Subsidy
(1) Basic Information on Government Subsidy
Amount recorded in the
Category Amount Listed items
current profit or loss
Subsidy for Chuzhou Tongsheng Investment Non-operating
30,000,000.00 30,000,000.00
Development Co., Ltd. income
Rewards and subsidies 173,850,805.31 Other income 173,850,805.31
Tax rebates of software 64,656,609.96 Other income 64,656,609.96
Support fund 18,108,788.00 Other income 18,108,788.00
Subsidy for L/C export 3,821,338.00 Other income 3,821,338.00
Land tax rebates 2,248,900.00 Other income 2,248,900.00
Post subsidies 1,796,103.67 Other income 1,796,103.67
Other 425,824.91 Other income 425,824.91
Deferred
Subsidy for decoration of Konka Zhifu Life
10,000,000.00 income/Other 1,499,999.94
Science Innovation Center
income
Subsidy for project of vein R&D Center 1,750,000.00 Deferred income -
Subsidy for centre infrastructure investment
1,000,000.00 Deferred income -
budget in premilinary work of PPP project
R&D instrument subsidy from Science and Deferred
225,000.00 3,750.00
Technology Bureau of Anhui Province income/Other
291
Konka Group Co., Ltd. Annual Report 2018
Amount recorded in the
Category Amount Listed items
current profit or loss
income
Provincial special fund for intellectual property 200,000.00 Deferred income -
Deferred
Subsidy for transformation of environmental
60,000.00 income/Other 1,000.00
protection project
income
Deferred
R&D instrument subsidy 48,000.00 income/Other 800.00
income
Total 308,191,369.85 296,413,919.79
(2) Return of Government Subsidy
No such cases in the Reporting Period.
VII. Changes of Consolidation Scope
1. Business Combination Not under the Same Control
(1) Business Combination Not under the Same Control during the Reporting Period
Net profits
Income of
Time and of acquiree
Cost of gaining Proportion Way to Recognition acquiree
Name of place of Purchase from the
the equity of equity gain the basis of from the
acquiree gaining the date purchase
(RMB’0,000) (%) equity purchase date purchase date
equity date to
to period-end
period-end
Econ 4 May 201 Purchase in 4 May 20 Actual
68,850.00 51.00
Technology 8 cash 18 control 109,722.71 14,336.84
Jiangxi 16 August Purchase in 16 August Actual
68,968.00 51.00
Konka 2018 cash 2018 control 12,393.18 3,766.31
XingDa 29 June 20 Purchase in 29 June 2 Actual
9,945.00 51.00
HongYe 18 cash 018 control 18,272.14 -1,989.34
Henan
Frestec
Refrigeration 3 August 2 Purchase in 3 August Actual
45,500.00 100.00
Appliance 018 cash 2018 control
Co., Ltd.,
Henan 12,517.13 -1,245.05
(2) Combination Cost and Goodwill
292
Konka Group Co., Ltd. Annual Report 2018
Henan Frestec Refrigeration
Appliance Co., Ltd., Henan
Econ XingDa Frestec Electrical
Item Jiangxi Konka
Technology HongYe Appliances Co., Ltd. and
Henan Frestec Household
Appliances Co., Ltd.
Combination cost
—cash 40,000.00 59,800.00 7,845.00 45,500.00
—intercourse 28,850.00 9,168.00 2,100.00 -
Total combination cost 68,850.00 68,968.00 9,945.00 45,500.00
Less: shares of fair value of recognizable
22,373.91 34,917.24 5,529.33 67,504.52
net assets obtained
Amount of shares of fair value of
recognizable net assets deducting 46,476.09 34,050.76 4,415.67 -22,004.52
goodwill/combination cost
1. The fair value of the identifiable part of the identifiable assets or liabilities has been
determined by the valuation results determined by Shenzhen Pengxin Assets Appraisal Land
Real Estate Appraisal Co., Ltd.
2. The main reason for the formation of large-value goodwill
The reason for the formation of the above-mentioned large-value goodwill is the acquisition
of Econ Technology, Jiangxi Konka and Xingda Hongye not under the same control. It is a
market-oriented transaction. The pricing is based on the valuation of the evaluation experts
and the results of negotiations between the two parties.
293
Konka Group Co., Ltd. Annual Report 2018
(3) The Identifiable Assets and Liabilities of Acquiree on Purchase Date
Henan Frestec Refrigeration Appliance
Co., Ltd., Henan Frestec Electrical
Econ Technology Jiangxi Konka XingDa HongYe
Appliances Co., Ltd. and Henan Frestec
Item Household Appliances Co., Ltd.
Fair value on Carrying value on Fair value on Carrying value on Fair value on Carrying value on Fair value on Carrying value on
purchase date purchase date purchase date purchase date purchase date purchase date purchase date purchase date
Assets:
Monetary capital 17,843.43 17,843.43 23,537.18 23,537.18 6,462.69 6,462.69 - -
Inventories 690.08 690.08 10,694.34 10,694.34 4,628.41 4,628.41 - -
Accounts receivable 28,624.03 28,624.03 - - 15,380.36 15,380.36 - -
Fixed assets 1,697.30 1,697.30 62,529.03 55,923.94 22,187.76 16,195.68 33,879.53 33,791.33
Intangible assets 14,472.32 11,672.32 15,831.87 4,014.75 9,127.53 3,911.13 21,878.87 5,409.74
Other assets 68,372.99 68,973.82 80,340.05 80,340.05 12,060.72 12,060.72 22,501.14 22,501.14
Liabilities:
Borrowings 18,750.00 18,750.00 21,187.00 21,187.00 21,070.00 21,070.00 - -
Accounts payable 26,604.55 26,604.55 15,832.33 15,832.33 31,218.63 31,218.63 - -
Deferred income tax liabilities 420.00 - 2,763.33 - 1,681.27 - 9,764.33 -
Deferred income - - - - - - - 22,500.00
Other liabilities 32,370.38 32,370.38 84,607.05 84,607.05 4,535.51 4,535.50 990.69 990.69
295
Konka Group Co., Ltd. Annual Report 2018
Henan Frestec Refrigeration Appliance
Co., Ltd., Henan Frestec Electrical
Econ Technology Jiangxi Konka XingDa HongYe
Appliances Co., Ltd. and Henan Frestec
Item Household Appliances Co., Ltd.
Fair value on Carrying value on Fair value on Carrying value on Fair value on Carrying value on Fair value on Carrying value on
purchase date purchase date purchase date purchase date purchase date purchase date purchase date purchase date
Net assets 53,555.22 51,776.05 68,542.76 52,883.88 11,342.06 1,814.86 67,504.52 38,211.52
Less: non-controlling interests 31,487.74 33,585.95 5,812.73 -
Net assets obtained 22,067.48 34,956.81 5,529.33 67,504.52
296
Konka Group Co., Ltd. Annual Report 2018
2. Disposal of Subsidiary
A single disposal of the investment to the subsidiary and lost control
The differences of
enjoyed net assets share
Equity
Method of Recognition basis for of the subsidiary in
Name of the The equity disposal disposal Time of losing
equity the time of losing corresponding
price proportion control
subsidiary disposal control power consolidated statements
(%)
of the disposal price and
the disposal investment
Transfer of equity,
operation and
Kaikai Shijie 5,000.00 5 Transfer 28 June 2018 4,712.62
financial controlling
power
Transfer of equity,
Kunshan operation and
28,068.03 51 Transfer 25 June 2018 9,827.25
Kangsheng financial controlling
power
(Continued)
Recognition Amount of other
Residual
Carrying value Fair value of Gains or losses method and main comprehensive
equity
of residual residual equity from assumption of income related to
Name of the proportion on
equity on the on the date of re-measurement of fair value of former subsidiaries
the date of
subsidiary date of losing losing control residual equity at residual equity on transferred into
losing control
control power power fair value the date of losing investment profit or
power (%)
control power loss
Market trading
Kaikai Shijie 2,643.91 46,000.00 43,356.09 —
46.00 price
297
Konka Group Co., Ltd. Annual Report 2018
Recognition Amount of other
Residual
Carrying value Fair value of Gains or losses method and main comprehensive
equity
of residual residual equity from assumption of income related to
Name of the proportion on
equity on the on the date of re-measurement of fair value of former subsidiaries
the date of
subsidiary date of losing losing control residual equity at residual equity on transferred into
losing control
control power power fair value the date of losing investment profit or
power (%)
control power loss
Kunshan Market trading
17,525.46 26,967.33 9,441.87 —
Kangsheng 51.00 price
3. Changes in Combination Scope for Other Reasons
(1) Subsidiaries Established by the Company in 2018
Registered capital Shareholding percentage (%) Time and place of obtaining control
Name Method of obtaining
power
Chengdu Konka 5,000,000.00 51.00 5 February 2018 Establishment
Chengdu Anren 5,000,000.00 51.00 16 August 2018 Establishment
Konka Enterprise Service 5,000,000.00 51.00 5 September 2018 Establishment
Chuanghui Intelligent 1,000,000.00 40.80 26 July 2018 Establishment
Konka Enterprise management 5,000,000.00 51.00 8 November 2018 Establishment
Yibin konka Incubator 20,000,000.00 51.00 18 October 2018 Establishment
Cross-border Kechuang 1,000,000.00 26.01 21 November 2018 Establishment
Jiali International HKD5000000 51.00 2 February 2018 Establishment
Sichuan Konka 100,000,000.00 51.00 15 January 2018 Establishment
Electrical Appliance Technology 100,000,000.00 51.00 12 June 2018 Establishment
Jiaxin Technology HKD10000000 51.00 25 January 2018 Establishment
298
Konka Group Co., Ltd. Annual Report 2018
Registered capital Shareholding percentage (%) Time and place of obtaining control
Name Method of obtaining
power
Yifang Technology 10,000,000.00 60.00 3 December 2018 Establishment
Kangjietong HKD1000000 51.00 9 January 2018 Establishment
Yibin Konka 100,000,000.00 100.00 15 January 2018 Establishment
Industry New Town 100,000,000.00 51.00 7 March 2018 Establishment
Konka Suiyong 50,000,000.00 51.00 11 May 2018 Establishment
Hainan Technology 100,000,000.00 51.00 9 August 2018 Establishment
Kangquan Enterprise 10,000,000.00 51.00 26 June 2018 Establishment
Electronics Technology 1,000,000,000.00 100.00 16 January 2018 Establishment
Nanjing Konka 50,000,000.00 100.00 28 December 2018 Establishment
Anhui Zhilian 50,000,000.00 100.00 20 September 2018 Establishment
Konka Huanjia 180,000,000.00 51.00 6 June 2018 Establishment
Shanghai Konka 100,000,000.00 100.00 11 April 2018 Establishment
Chuzhou Kangyong 50,000,000.00 100.00 18 July 2018 Establishment
Yantai Konka 100,000,000.00 0.90 5 September 2018 Establishment
Yantai kangjin 100,000,000.00 62.80 7 September 2018 Establishment
Shangdong Kangxin 100,000,000.00 51.00 7 December 2018 Establishment
Shenzhen kangxinwei 100,000,000.00 100.00 19 October 2018 Establishment
Shenzhen Meixin 10,000,000.00 51.00 31 October 2018 Establishment
Hefei kangxinwei 50,000,000.00 51.00 7 November 2018 Establishment
Shenzhen Nianhua 30,000,000.00 100.00 22 August 2018 Establishment
Konka Eco-development 5,000,000.00 51.00 27 December 2018 Establishment
299
Konka Group Co., Ltd. Annual Report 2018
Registered capital Shareholding percentage (%) Time and place of obtaining control
Name Method of obtaining
power
Konka Ronghe 50,000,000.00 51.00 26 December 2018 Establishment
Suining Konka Industry Park 200,000,000.00 100.00 26 December 2018 Establishment
Sichuan Kangjiatong 30,000,000.00 51.00 26 March 2018 Establishment
Konka Suyuan 10,000,000.00 51.00 5 February 2018 Establishment
(2) Changes in Combination Scope for Other Reasons
The Company's subsidiary, Shushida Logistics (formerly known as Shenzhen Shushida Logistics Service Co., Ltd.) and Plastic Products were
liquidated during the year and the remaining assets were distributed.
On 25 October 2018, Runtian Group Co., Ltd. entrusted 20% of the equity voting rights of Chongqing Qingjia held by it to Chongqing
Electromechanical Holding (Group) Co., Ltd., for management. Runtian Group Co., Ltd. and Chongqing Electromechanical Holding (Group)
Co., Ltd. jointly hold a 60% stake in Chongqing Qingjia, the Company no longer has control power.
VIII. Equity in Other Entities
1. Equity in Subsidiary
(1) Subsidiaries
Holding percentage
Main
Registration (%)
Name operating Nature of business Way of gaining
place Indirectl
place Directly
y
Shenzhen, Shenzhen, Establishment
Konka E-display Manufacturing industry 60.00
Guangdong Guangdong or investment
E-display Service Shenzhen, Shenzhen, Manufacturing industry 60.00 Establishment
300
Konka Group Co., Ltd. Annual Report 2018
Holding percentage
Main
Registration (%)
Name operating Nature of business Way of gaining
place Indirectl
place Directly
y
Guangdong Guangdong or investment
Shenzhen, Shenzhen, Establishment
Kangqiao Easy Chain Commerce 60.00
Guangdong Guangdong or investment
Shenzhen, Shenzhen, Other organization and Establishment
Konka Ventures 51.00
Guangdong Guangdong management service or investment
Other professional
Yantai, Yantai, Establishment
Yantai Konka consultancy and 51.00
Shandong Shandong or investment
investigation
Chengdu, Chengdu, Establishment
Chengdu Konka Commercial service 51.00
Sichuan Sichuan or investment
Chengdu, Chengdu, Establishment
Chengdu Anren Commercial service 51.00
Sichuan Sichuan or investment
Guiyang, Guiyang, Headquarters Establishment
Konka Enterprise Service 51.00
Guizhou Guizhou management or investment
Nanjing, Nanjing, Entrepreneurial space Establishment
Chuanghui Intelligent 40.80
Jiangsu Jiangsu service or investment
Konka Enterprise Guiyang, Guiyang, Other Commercial Establishment
51.00
management Guizhou Guizhou service not listed clearly or investment
Yibin, Yibin, Establishment
Yibin konka Incubator Commercial service 51.00
Sichuan Sichuan or investment
Shenzhen, Shenzhen, Other IT service industry Establishment
Cross-border Kechuang 26.01
Guangdong Guangdong not listed clearly or investment
301
Konka Group Co., Ltd. Annual Report 2018
Holding percentage
Main
Registration (%)
Name operating Nature of business Way of gaining
place Indirectl
place Directly
y
Chuzhou, Chuzhou, Establishment
Anhui Konka Manufacturing industry 78.00
Anhui Anhui or investment
Chuzhou, Chuzhou, Establishment
Kangzhi Trade Wholesale industry 78.00
Anhui Anhui or investment
Shenzhen, Shenzhen, Insurance agents Establishment
Konka Factoring 100.00
Guangdong Guangdong (non-bank finance) or investment
Establishment
Youshi Kangrong Tianjin Tianjin Advertisement 70.00
or investment
Chuzhou, Chuzhou, Science and technology Establishment
Chuzhou Konka TID 100.00
Anhui Anhui industry or investment
Shenzhen, Shenzhen, Establishment
Konka Unifortune Retail industry 51.00
Guangdong Guangdong or investment
Hong Kong, Hong Kong, Establishment
Jiali International Retail industry 51.00
China China or investment
Shenzhen, Shenzhen, Establishment
Wankaida Software development 100.00
Guangdong Guangdong or investment
Dongguan, Dongguan, Establishment
Dongguan Konka Manufacturing industry 75.00 25.00
Guangdong Guangdong or investment
Telecommunication Shenzhen, Shenzhen, Establishment
Manufacturing industry 75.00 25.00
Technology Guangdong Guangdong or investment
Electrical Appliances Shenzhen, Shenzhen, Manufacturing industry 75.00 25.00 Establishment
302
Konka Group Co., Ltd. Annual Report 2018
Holding percentage
Main
Registration (%)
Name operating Nature of business Way of gaining
place Indirectl
place Directly
y
Guangdong Guangdong or investment
Mudanjiang, Mudanjiang, Establishment
Mudanjiang Appliances Manufacturing industry 60.00
Heilongjiang Heilongjiang or investment
Frankfurt, Frankfurt, Establishment
Konka Europe International Trading 100.00
Germany Germany or investment
Commercial System Shenzhen, Shenzhen, Establishment
Commerce 81.00
Technology Guangdong Guangdong or investment
Shenzhen, Shenzhen, Manufacturing industry, Establishment
Konka Electrical Appliances 100.00
Guangdong Guangdong commerce or investment
Haikou, Haikou, Establishment
Konka Materials Commercial service 51.00
Hainan Hainan or investment
Shenzhen, Shenzhen, Establishment
Mobile Interconnection Commerce 51.00
Guangdong Guangdong or investment
Yibin, Yibin, Establishment
Sichuan Konka Manufacturing industry 51.00
Sichuan Sichuan or investment
Chuzhou, Chuzhou, Establishment
Anhui Tongchuang Manufacturing industry 100.00
Anhui Anhui or investment
Electrical Appliance Chuzhou, Chuzhou, Establishment
Manufacturing industry 51.00
Technology Anhui Anhui or investment
Xinxiang, Xinxiang, Establishment
Frestec Refrigeration Manufacturing industry 51.00
Henan Henan or investment
303
Konka Group Co., Ltd. Annual Report 2018
Holding percentage
Main
Registration (%)
Name operating Nature of business Way of gaining
place Indirectl
place Directly
y
Frestec Electrical Xinxiang, Xinxiang, Establishment
Manufacturing industry 51.00
Appliances Henan Henan or investment
Frestec Household Xinxiang, Xinxiang, Establishment
Manufacturing industry 51.00
Appliances Henan Henan or investment
Shenzhen, Shenzhen, Establishment
Pengrun Technology Retail industry 51.00
Guangdong Guangdong or investment
Hong Kong, Hong Kong, Establishment
Jiaxin Technology Retail industry 51.00
China China or investment
Haikou, Haikou, Network platform Establishment
E3info 60.00
Hainan Hainan development or investment
Shenzhen, Shenzhen, Network platform Establishment
Yifang Technology 60.00
Guangdong Guangdong development or investment
Dongguan, Dongguan, Establishment
Dongguan Packing Manufacturing industry 75.00 25.00
Guangdong Guangdong or investment
Shenzhen, Shenzhen, Establishment
E2info Information service 96.61
Guangdong Guangdong or investment
Establishment
Beijing Konka Electronic Beijing Beijing Sale of home appliance 100.00
or investment
Tianjin Pilot Tianjin Pilot
Establishment
Konka Leasing Free Trade Free Trade Leasing industry 100.00
or investment
Zone Zone
Fittings Technology Shenzhen, Shenzhen, Investment holding 75.00 25.00 Establishment
304
Konka Group Co., Ltd. Annual Report 2018
Holding percentage
Main
Registration (%)
Name operating Nature of business Way of gaining
place Indirectl
place Directly
y
Guangdong Guangdong or investment
Boluo, Boluo, Establishment
Boluo Konka Precision Manufacturing industry 100.00
Guangdong Guangdong or investment
Xiamen, Xiamen, Establishment
Xiamen Dalong Commerce 69.23
Fujian Fujian or investment
Boluo, Boluo, Establishment
Boluo Konka Manufacturing industry 100.00
Guangdong Guangdong or investment
Establishment
Chongqing Qingjia Chongqing Chongqing Manufacturing industry 40.00
or investment
Hong Kong, Hong Kong, Establishment
Hong Kong Konka International Trading 100.00
China China or investment
Konka Household Hong Kong, Hong Kong, Establishment
Investment holding 100.00
Appliances Investment China China or investment
Hong Kong, Hong Kong, Establishment
Chain Kingdom International Trading 51.00
China China or investment
Shenzhen, Shenzhen, Establishment
Chain Kingdom Shenzhen Wholesale industry 51.00
Guangdong Guangdong or investment
Hong Kong, Hong Kong, Establishment
Konka SmartTech International Trading 61.00
China China or investment
Hong Kong, Hong Kong, Establishment
Kangjietong Service industry 51.00
China China or investment
305
Konka Group Co., Ltd. Annual Report 2018
Holding percentage
Main
Registration (%)
Name operating Nature of business Way of gaining
place Indirectl
place Directly
y
Konka Household
Hong Kong, Hong Kong, Establishment
Appliances International International Trading 100.00
China China or investment
Trading
Shenzhen, Shenzhen, Establishment
Konka Investment Capital markets service 100.00
Guangdong Guangdong or investment
Development and
Yibin, Yibin, Establishment
Yibin Konka management of industrial 100.00
Sichuan Sichuan or investment
park
Chengdu, Chengdu, Establishment
Industry New Town Real estate industry 51.00
Sichuan Sichuan or investment
Shenzhen, Shenzhen, Establishment
Konka Capital Capital markets service 100.00
Guangdong Guangdong or investment
Investment in industry,
Shenzhen, Shenzhen, commercial information Establishment
Konka Suiyong 51.00
Guangdong Guangdong consultancy and or investment
investment advisor
Haikou, Haikou, Municipal road, Establishment
Hainan Technology 51.00
Hainan Hainan engineering and buildings or investment
Shenzhen, Shenzhen, Establishment
Kangquan Enterprise Commercial service 51.00
Guangdong Guangdong or investment
Sichuan Kangjiatong Yibin, Yibin, Service industry 51.00 Establishment
306
Konka Group Co., Ltd. Annual Report 2018
Holding percentage
Main
Registration (%)
Name operating Nature of business Way of gaining
place Indirectl
place Directly
y
Sichuan Sichuan or investment
Shenzhen, Shenzhen, Establishment
Electronics Technology Manufacturing industry 100.00
Guangdong Guangdong or investment
Zhongshan, Zhongshan, Establishment
XingDa HongYe Manufacturing industry 51.00
Guangdong Guangdong or investment
Establishment
Shanghai Xinfeng Shanghai Shanghai Commerce 51.00
or investment
Zhongshan, Zhongshan, Establishment
Zewei Kechuang Manufacturing industry 25.50
Guangdong Guangdong or investment
Nanjing, Nanjing, Establishment
Nanjing Konka Wholesale industry 100.00
Jiangsu Jiangsu or investment
Chuzhou, Chuzhou, Establishment
Anhui Zhilian e-commerce 100.00
Anhui Anhui or investment
Environmental
Yantai, Yantai, Establishment
Econ Technology technology service 51.00
Shandong Shandong or investment
industry
Environmental
Establishment
Beijing Econ Beijing Beijing technology service 51.00
or investment
industry
Environmental
Weihai, Weihai, Establishment
Rushan Econ technology service 51.00
Shandong Shandong or investment
industry
307
Konka Group Co., Ltd. Annual Report 2018
Holding percentage
Main
Registration (%)
Name operating Nature of business Way of gaining
place Indirectl
place Directly
y
Environmental
Establishment
Shanghai Jiyi Shanghai Shanghai technology service 51.00
or investment
industry
Environmental
Binzhou, Binzhou, Establishment
Binzhou Econ technology service 51.00
Shandong Shandong or investment
industry
Environmental
Yantai, Yantai, Establishment
Lairun Holdings technology service 30.60
Shandong Shandong or investment
industry
Environmental
Laizhou Lairun Yantai, Yantai, Establishment
technology service 30.60
Environmental Protection Shandong Shandong or investment
industry
Environmental
Yantai, Yantai, Establishment
Binhai Sewage Treatment technology service 30.60
Shandong Shandong or investment
industry
Environmental
Yantai, Yantai, Establishment
Lairun Heating technology service 30.60
Shandong Shandong or investment
industry
Environmental
Yantai, Yantai, Establishment
Lairun Green Energy technology service 30.60
Shandong Shandong or investment
industry
Econ Environmental Chengdu, Chengdu, Environmental Establishment
51.00
Engineering Sichuan Sichuan technology service or investment
308
Konka Group Co., Ltd. Annual Report 2018
Holding percentage
Main
Registration (%)
Name operating Nature of business Way of gaining
place Indirectl
place Directly
y
industry
Qingdao Kangrun Honghui Environmental
Qingdao, Qingdao, Establishment
Photovoltaic Power technology service 51.00
Shandong Shandong or investment
Generation Co., Ltd. industry
Yantai Kangrun Honghui Environmental
Yantai, Yantai, Establishment
Photovoltaic Power technology service 51.00
Shandong Shandong or investment
Generation Co., Ltd. industry
Environmental
Weihai, Weihai, Establishment
Rushan Yike technology service 44.37
Shandong Shandong or investment
industry
Environmental
Binzhou, Binzhou, Establishment
Binzhou Weiyijie technology service 35.70
Shandong Shandong or investment
industry
Environmental
Binzhou, Binzhou, Establishment
Beihai Jingmai technology service 24.99
Shandong Shandong or investment
industry
Environmental
Yantai, Yantai, Establishment
Yantai Chunzhiran technology service 35.70
Shandong Shandong or investment
industry
Environmental
Yantai, Yantai, Establishment
Lairun Huayang technology service 26.01
Shandong Shandong or investment
industry
Huanhai Xinze Yantai, Yantai, Environmental 51.00 Establishment
309
Konka Group Co., Ltd. Annual Report 2018
Holding percentage
Main
Registration (%)
Name operating Nature of business Way of gaining
place Indirectl
place Directly
y
Shandong Shandong technology service or investment
industry
Donggang Kangrun Environmental
Dandong, Dandong, Establishment
Environment Management technology service 50.63
Liaoning Liaoning or investment
Co., Ltd. industry
Environmental
Dayi Kangrun Water Co., Chengdu, Chengdu, Establishment
technology service 51.00
Ltd. Sichuan Sichuan or investment
industry
Subei Mongol Autonomous Environmental
Jiuquan, Jiuquan, Establishment
County Kangrun Water Co., technology service 39.78
Gansu Gansu or investment
Ltd. industry
Suining Pengxi Kangrun Environmental
Suining, Suining, Establishment
Environment Management technology service 40.75
Sichuan Sichuan or investment
Co., Ltd. industry
Weifang Sihai Kangrun Environmental
Weifang, Weifang, Establishment
Investment Operation Co., technology service 27.96
Shandong Shandong or investment
Ltd. industry
Dalian, Dalian, Processing of renewable Establishment
Konka Huanjia 51.00
Liaoning Liaoning resources or investment
Establishment
Shanghai Konka Shanghai Shanghai Real estate industry 100.00
or investment
Chuzhou, Chuzhou, Establishment
Chuzhou Kangyong Real estate industry 100.00
Anhui Anhui or investment
310
Konka Group Co., Ltd. Annual Report 2018
Holding percentage
Main
Registration (%)
Name operating Nature of business Way of gaining
place Indirectl
place Directly
y
Yantai, Yantai, Establishment
Yantai Konka Real estate industry 89.71
Shandong Shandong or investment
Yantai, Yantai, Establishment
Yantai kangjin Real estate industry 62.80
Shandong Shandong or investment
Yantai, Yantai, Establishment
Shangdong Kangxin Real estate industry 51.00
Shandong Shandong or investment
Production,
Jiujiang, Jiujiang, Establishment
Jiangxi Konka manufacturing and 51.00
Jiangxi Jiangxi or investment
processing
Production,
Nanchang, Nanchang, Establishment
Xinfeng Microcrystalline manufacturing and 51.00
Jiangxi Jiangxi or investment
processing
Production,
Jiujiang, Jiujiang, Establishment
Nanocrystalline manufacturing and 51.00
Jiangxi Jiangxi or investment
processing
Shenzhen, Shenzhen, Establishment
Shenzhen kangxinwei Semi-conductor 100.00
Guangdong Guangdong or investment
Shenzhen, Shenzhen, Establishment
Shenzhen Meixin Commerce 51.00
Guangdong Guangdong or investment
Design of integrated Establishment
Hefei kangxinwei Hefei, Anhui Hefei, Anhui 51.00
circuit or investment
Shenzhen, Shenzhen, Establishment
Shenzhen Nianhua Commercial service 100.00
Guangdong Guangdong or investment
311
Konka Group Co., Ltd. Annual Report 2018
Holding percentage
Main
Registration (%)
Name operating Nature of business Way of gaining
place Indirectl
place Directly
y
Shenzhen, Shenzhen, Establishment
Konka Eco-development Commercial service 51.00
Guangdong Guangdong or investment
Foshan, Foshan, Wholesale and retail Establishment
Konka Ronghe 51.00
Guangdong Guangdong industry or investment
Development and
Suining Konka Industry Suining, Suining, Establishment
management of industrial 100.00
Park Sichuan Sichuan or investment
park
Shenzhen, Shenzhen, Establishment
Konka Suyuan Commercial service 51.00
Guangdong Guangdong or investment
(2) Significant Non-wholly-owned Subsidiary
Shareholding The profit or loss Declaring dividends Balance of
proportion of attributable to the distributed to non-controlling
Name
non-controlling non-controlling non-controlling interests at the
interests (%) interests interests period-end
Chain Kingdom Shenzhen 49.00 21,583,722.75 - 37,273,148.54
Econ Technology 49.00 69,656,420.50 - 387,887,875.23
(3) The Main Financial Information of Significant Not Wholly-owned Subsidiary
Ending balance
Name Non-current
Current assets Non-current assets Total assets Current liabilities Total liabilities
liability
Chain 1,815,121,230.64 293,862.12 1,815,415,092.76 1,739,347,442.71 - 1,739,347,442.71
312
Konka Group Co., Ltd. Annual Report 2018
Name Ending balance
Kingdom
Shenzhen
Econ
917,994,237.75 1,929,339,202.58 2,847,333,440.33 2,005,644,529.55 156,350,000.00 2,161,994,529.55
Technology
(Continued)
Beginning balance
Non-cur
Name Non-current
Current assets Total assets Current liabilities rent Total liabilities
assets
liability
Chain Kingdom
1,162,693,203.78 129,592.90 1,162,822,796.68 1,134,435,779.93 — 1,134,435,779.93
Shenzhen
Econ
- - - - - -
Technology
Reporting Period
Name
Operating revenue Net profit Total comprehensive income Cash flows from operating activities
Chain Kingdom Shenzhen 8,838,797,265.88 44,048,413.75 44,048,413.75 134,780,094.30
Econ Technology 1,097,227,129.62 143,368,372.61 143,368,372.61 26,365,193.10
(Continued)
Same period of last year
Name
Operating revenue Net profit Total comprehensive income Cash flows from operating activities
Chain Kingdom Shenzhen 5,535,614,456.54 18,722,147.92 17,353,646.69 25,288,584.51
313
Konka Group Co., Ltd. Annual Report 2018
Name Same period of last year
Econ Technology - - - -
2. The Transaction of the Company with Its Owner’s Equity Share Changed but Still Controlling the Subsidiary
(1) Note to the Owner’s Equity Share Changed in Subsidiary
On 18 December 2018, the Company signed an equity transfer agreement with Alibaba (China) Network Technology Co., Ltd., and the
Company will transfer 3.3898% equity of E2info to at the price of RMB123.33 million to Alibaba (China) Network. Technology Co., Ltd. After
completing the above transfer, the Company's shareholding ratio of E3info is 96.6102%, and it still be controlled by the Company and is still
included in the scope of consolidation.
(2) The Transaction’s Influence on the Equity of Non-controlling Interests and the Owner's Equity Attributable to the Company as the Parent
Item E2info
Disposal consideration -
—cash 123,333,333.34
—fair value of non-cash assets -
Total disposal consideration 123,333,333.34
Less: Share of net assets accounted by percentage of stock rights disposed 2,859,446.58
Difference 120,473,886.76
Of which: adjustment of capital reserves 120,473,886.76
Adjustment of surplus reserve -
Adjustment of retained earnings -
314
Konka Group Co., Ltd. Annual Report 2018
3. Equity in Joint Ventures or Associated Enterprises
(1) Significant Joint Ventures or Associated Enterprises
Holding Accounting
Main Registrat percentage (%) treatment of the
Name operating ion Nature of business investment to joint
Indirectl
place place Directly venture or
y
associated enterprise
Manufacturing industry in
Donggu
Chutian Dragon Co., Ltd. Dongguan computer, communication and other Equity method
an 21.95
electronic equipment
Kaikai Shijie Shenzhen Anhui E-commerce Equity method
42.61
Wuhan Tianyuan
Environmental protection and
Environmental Protection Wuhan Wuhan Equity method
environment management 20.02
Co., Ltd.
Manufacturing industry in
Shenzhen Yaode Shenzhe
Shenzhen computer, communication and other Equity method
Technology Co., Ltd. n 20.00
electronic equipment
Kunshan Konka Manufacturing industry in
Electronics Technology Kunshan Kunshan computer, communication and other Equity method
49.00
Co., Ltd. electronic equipment
(2) Main Financial Information of Significant Associated Enterprise
Ending balance/Reporting Period
Wuhan Tianyuan
Item Shenzhen Yaode Technology Kunshan Konka Electronics
Chutian Dragon Co., Ltd. Kaikai Shijie Environmental Protection Co.,
Co., Ltd. Technology Co., Ltd.
Ltd.
315
Konka Group Co., Ltd. Annual Report 2018
Ending balance/Reporting Period
Wuhan Tianyuan
Item Shenzhen Yaode Technology Kunshan Konka Electronics
Chutian Dragon Co., Ltd. Kaikai Shijie Environmental Protection Co.,
Co., Ltd. Technology Co., Ltd.
Ltd.
Current assets 1,222,095,636.91 686,309,035.24 230,469,218.29 698,493,882.82 132,379,197.79
Non-current assets 278,261,091.56 3,549,521.27 365,139,896.53 95,652,906.71 322,419,882.21
Total assets 1,500,356,728.47 689,858,556.51 595,609,114.82 794,146,789.53 454,799,080.00
Current liabilities 515,045,146.59 606,863,177.36 83,949,518.05 229,286,124.16 55,865,275.98
Non-current liability 16,794,877.63 - 52,271,637.67 1,656,838.09 6,565,214.27
Total liabilities 531,840,024.22 606,863,177.36 136,221,155.72 230,942,962.25 62,430,490.25
Equity of non-controlling
5,361,673.58 - 1,300,578.22 - -
interests
Equity attributable to
shareholders of the Company as 963,155,030.67 82,995,379.15 458,087,380.88 563,203,827.28 392,368,589.75
the parent
Share of net assets accounted
211,383,634.58 35,364,497.05 91,708,111.68 112,640,765.46 192,260,608.98
by shareholding percentage
Adjusted events
316
Konka Group Co., Ltd. Annual Report 2018
Ending balance/Reporting Period
Wuhan Tianyuan
Item Shenzhen Yaode Technology Kunshan Konka Electronics
Chutian Dragon Co., Ltd. Kaikai Shijie Environmental Protection Co.,
Co., Ltd. Technology Co., Ltd.
Ltd.
-Goodwill 413,461,970.35 - 160,562,143.79 109,570,069.72 -
-Unrealized internal sales gain
- - - - -
and loss
-Other - 401,320,567.52 - - 8,433,857.82
Carrying value of equity
investment to associated 624,845,604.93 436,685,064.57 252,270,255.47 222,210,835.18 200,694,466.80
enterprises
Fair value of equity investment
to joint ventures with public - - - - -
offer
Operating revenue 1,024,123,239.82 1,077,935,788.28 302,542,158.18 788,986,575.09 1,383,992,676.29
Finance costs 129,755.99 8,481,874.17 1,702,872.19 -6,879,619.57 -9,619,653.24
Income tax expense 13,562,988.17 9,477,685.35 11,312,091.14 12,318,087.85 -
Net profit 59,788,036.94 28,069,833.35 64,051,137.74 59,658,513.13 -10,229,522.57
317
Konka Group Co., Ltd. Annual Report 2018
Ending balance/Reporting Period
Wuhan Tianyuan
Item Shenzhen Yaode Technology Kunshan Konka Electronics
Chutian Dragon Co., Ltd. Kaikai Shijie Environmental Protection Co.,
Co., Ltd. Technology Co., Ltd.
Ltd.
Net profit from discontinued
- - - - -
operations
Other comprehensive income - - - - -
Total comprehensive income 59,788,036.94 28,069,833.35 64,051,137.74 59,658,513.13 -10,229,522.57
Dividends received from joint
- - - - -
venture in Reporting Period
(Continued)
Beginning balance/The same period of last year
Wuhan Tianyuan
Item Shenzhen Yaode Technology Kunshan Konka Electronics
Chutian Dragon Co., Ltd. Kaikai Shijie Environmental Protection
Co., Ltd. Technology Co., Ltd.
Co., Ltd.
Current assets 1,275,973,644.95 - - 529,254,428.27 450,377,789.88
Non-current assets 265,717,459.13 - - 81,833,013.73 339,299,159.57
Total assets 1,541,691,104.08 - - 611,087,442.00 789,676,949.45
Current liabilities 610,280,220.79 - - 102,411,669.34 393,186,594.32
318
Konka Group Co., Ltd. Annual Report 2018
Beginning balance/The same period of last year
Wuhan Tianyuan
Item Shenzhen Yaode Technology Kunshan Konka Electronics
Chutian Dragon Co., Ltd. Kaikai Shijie Environmental Protection
Co., Ltd. Technology Co., Ltd.
Co., Ltd.
Non-current liability 14,700,720.45 - - 5,130,458.50 652,129.50
Total liabilities 624,980,941.24 - - 107,542,127.84 387,078,837.13
Equity of non-controlling
9,178,745.28 - - - -
interests
Equity attributable to
shareholders of the Company as 907,531,417.56 - - 503,545,314.16 402,598,112.32
the parent
Share of net assets accounted by
203,752,601.15 - - 100,709,062.83 197,273,075.04
shareholding percentage
Adjusted events
-Goodwill 413,461,970.35 - - 109,570,069.72 8,433,857.82
-Unrealized internal sales gain
- - - - -
and loss
-Other - - - - -
319
Konka Group Co., Ltd. Annual Report 2018
Beginning balance/The same period of last year
Wuhan Tianyuan
Item Shenzhen Yaode Technology Kunshan Konka Electronics
Chutian Dragon Co., Ltd. Kaikai Shijie Environmental Protection
Co., Ltd. Technology Co., Ltd.
Co., Ltd.
Carrying value of equity
investment to associated 617,214,571.50 - - 210,279,132.55 205,706,932.86
enterprises
Fair value of equity investment
to joint ventures with public - - - - -
offer
Operating revenue 927,468,144.67 - - 782,641,588.11 1,843,565,739.98
Finance costs 8,182,245.66 - - 23,563,857.52 5,261,591.15
Income tax expense 12,858,203.25 - - 6,679,871.51 -
Net profit 91,253,269.69 - - 39,929,305.04 -1,656,818.45
Net profit from discontinued
- - - -
operations
Other comprehensive income - - - -
Total comprehensive income 91,253,269.69 - - 39,929,305.04 -1,656,818.45
320
Konka Group Co., Ltd. Annual Report 2018
Beginning balance/The same period of last year
Wuhan Tianyuan
Item Shenzhen Yaode Technology Kunshan Konka Electronics
Chutian Dragon Co., Ltd. Kaikai Shijie Environmental Protection
Co., Ltd. Technology Co., Ltd.
Co., Ltd.
- -
Dividends received from joint
- - - - -
venture in Reporting Period
(4) Summary Financial Information of Insignificant Joint Ventures or Associated Enterprises
Beginning balance/The same
Item Ending balance/Reporting Period
period of last year
Associated enterprise:
Total carrying value of investment 1,060,533,163.28 286,786,706.83
The total of following items according to the
shareholding proportions
--Net profit -25,764,761.70 -267,212.72
--Other comprehensive income 740,697.08 -3,138,048.04
--Total comprehensive income -25,024,064.62 -3,405,260.76
X. The Risk Related to Financial Instruments
The Company's main financial instruments include equity investment, credit investment, borrowings, accounts receivable, accounts payable, etc.
Details of the various financial instruments are shown in the relevant notes to Annotation VI. Risks related to these financial instruments, and
risk management policies the Company has adopted to reduce these risks are described as follows. The Company management manages and
monitors the risk exposure in order to ensure the above risks to be controlled in a limited scope.
321
Konka Group Co., Ltd. Annual Report 2018
The Company use sensitivity analysis technology to analyze the reasonable of risk variables, influence of probable changes to the current profit
or loss and Stockholders’ equity. Because rarely any risk variables change in isolation, and the correlation between variables for the eventual
impact of the change of a risk variables will have a significant effect, thus, the aforesaid content was processing under the assumption of the
change of each variable was conducted independently.
(I) Risk Management Objectives and Policies
The goals of Company engaged in the risk management is to achieve the proper balance between the risks and benefits, reduced the negative
impact to the Company operating performance risk to a minimum, maximized the profits of shareholders and other equity investors. Based on
the risk management goal, the basic strategy of the Company's risk management is determine and analyze the various risks faced by the
Company, set up the bottom line of risk and conducted appropriate risk management, and timely supervised various risks in a reliable way and
controlled the risk within the range of limit.
1. Market Risk
(1) Foreign Exchange Risk
Foreign exchange risk 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. Except the procurement and sales by US dollars for several subsidiaries of the Company, the other main businesses
of the Company were settled by RMB. As of 31 December 2018, except for the assets or liabilities mentioned in the table below, the assets and
liabilities of the Company are mainly the balance of RMB. The foreign exchange risks produced by the assets and liabilities balance may affect
the business performance of the Company.
Item Period-end Period-begin
Cash and cash equivalents 135,723,407.43 215,226,442.86
Accounts receivable 130,507,627.96 225,058,783.20
Other receivables 13,848,369.43 32,570,569.60
322
Konka Group Co., Ltd. Annual Report 2018
Item Period-end Period-begin
Interest receivable 54,781.10 -
Accounts payable 21,644,634.75 183,857,953.53
Short-term borrowings 208,330,389.67 331,453,218.73
Interest payable 1,302,303.49 44,195.93
The Company timely paid attention to the influence of change of the exchange rate to the Company's foreign exchange risk, which required the
Group and others which conducted purchase and sale with settlement by foreign currency to purchase foreign currency long-term forward
contract to lock the cost of purchase on forward date to reduce the risk exposure of foreign exchange.
Foreign exchange risk sensitivity analysis:
The foreign exchange risk sensitivity analysis assumes that all overseas business net investment hedging and cash flow hedging are highly
effective. On the basis of the above assumptions, the pre-tax effects of reasonable changes in exchange rates on current profits and losses and
shareholders' equity are as follows, with other variables unchanged:
Item Change in interest rate Influence on shareholders’ equity
Net assets in USD Up 1.00% to RMB 2,514,857.91
Net assets in USD Down 1.00% to RMB -2,514,857.91
(2) Interest Rate Risk- Cash Flow Change Risk
Cash flow change risk caused by financial instruments due to interest rate change is related to bank loans. By establishing good relations with
banks and reasonable planning of credit line, credit varieties and credit period, it is to guarantee sufficient band line of credit and satisfy all
financial demands. Moreover, it is to reduce risks of interest rate uncertainty by shortening single loan term and establishing repayment terms.
323
Konka Group Co., Ltd. Annual Report 2018
The risk of change in cash flow of financial instruments due to the change of interest rate of the Company is mainly related to the borrowing of
banks. As of 31 December 2018, the long-term and short-term borrowings had a total balance of RMB14,815,132,931.63.
Interest rate risk sensitivity analysis:
The Sensitivity analysis to interest rate risk was based on the follow assumption:
● Market interest rates change may affect the interest income or expense of variable rate financial instruments;
For fixed-rate financial instruments measured at fair value, changes in market interest rates only affect their interest income or expenses;
For derivative financial instruments designated as hedging instruments, changes in market interest rates affect their fair value, and all interest
rate hedges are expected to be highly effective;
Calculate the fair value changes of derivative financial instruments and other financial assets and liabilities using the discounted cash flow
method at the market interest rate on the balance sheet date.
On the basis of the above assumptions, the pre-tax effects of reasonable changes in interest rates on current profits and losses and shareholders'
equity are as follows, with other variables unchanged:
Reporting Period Same period of last year
Change in Influence on Influence on
Item Influence on
interest rate Influence on profits shareholders’ shareholders’
profits
equity equity
Interest of
short-term and
Up 1% -148,151,329.32 -111,113,496.99 -70,944,720.37 -53,208,540.28
long-term
borrowings
Interest of
Down 1% 148,151,329.32 111,113,496.99 70,944,720.37 53,208,540.28
short-term and
324
Konka Group Co., Ltd. Annual Report 2018
long-term
borrowings
2. Credit Risk
On 30 December 2018, the biggest credit risk exposure may lead to the financial assets losses of the Company was mainly from the one party
fail to perform its obligation, which included: carrying amount recognized in consolidated balance sheet. For financial instruments measured at
fair value, the carrying value reflect its risk exposure, but not the biggest one, and the biggest risk exposure will change along with the change of
future fair value.
In order the reduce the credit risk, the Company establish a group response for recognizing line of credit, conducting credit approval and other
monitor procedures to ensure that the necessary measures were used to recycle expired claims. In addition, the Company at each balance sheet
date, review every single receivables recycling situation, to ensure that the money unable to recycle withdrawn provision for bad debt fully. Thus,
the Company management believed that have assume the credit risk the Company shouldered had been greatly reduced.
The Company's working capital was in bank with higher credit rating, so credit risk of working capital was low.
An analysis of a financial asset that has suffered a single impairment, including factors that determine the impairment of the financial asset.
The Company has adopted the necessary policies to ensure that all sales customers have a good credit history. Except for the items listed in the
table below, the company has no other major credit concentration risks.
Item Ending balance e Beginning balance
Accounts receivable
CEFC(Shanghai)Group Co.,Ltd. 300,027,889.84 -
Jiangsu Hongtu Sanbao High-Tech Technology Co.,Ltd. 200,000,000.00 -
Elion Resources Group Limited. 120,000,000.00 -
325
Konka Group Co., Ltd. Annual Report 2018
Jizhong Energy International Logistics Group Co., Ltd. 130,000,000.00 -
China Nuclear Engineering Construction Group Co., Ltd. 90,000,000.00 -
Tahoe Group Co, Ltd. 50,000,000.00 -
China Energy Power Fuel Co., Ltd. 50,000,000.00 -
DSC HOLDINGS LIMITED 24,421,550.36 23,250,858.84
Other receivables
Subsidy for energy saving 152,402,680.00 152,402,680.00
Shenzhen Konka Video&Communication Systems Engineering Co.,Ltd. 18,115,952.51 18,115,952.51
Chongqing Kangjia Auto Electronic Co.,Ltd. 13,396,856.82 13,396,856.82
3. Liquidity Risk
When managing liquidity risk, the Company maintained the management’s believe that supervising the sufficient cash and cash equivalents to
meet the operating demand of the Company and reduce the influence of the fluctuation of cash flow. The management of the Company
monitored the use of bank’s loans and guaranteed the observance of the borrowing agreements.
The Company took the bank’s loans as the main financing channel. The retained amount of loans of the Company by the end of 30 December
2018 was RMB8,240,271,900.
The maturity of the financial liabilities held by the Company according to the undiscounted remaining contractual obligations is as follows:
Item Within 1 year Over 1 year
Non-derivative financial assets and liabilities:
Accounts receivable 4,792,910,963.36 509,863,364.49
Other receivables 295,170,628.74 337,177,968.61
326
Konka Group Co., Ltd. Annual Report 2018
Item Within 1 year Over 1 year
Short-term borrowings 14,370,132,931.63 -
Accounts payable 4,039,580,367.14 321,077,477.07
Interest payable 27,230,631.41 -
(II) Offset between Financial Assets and Financial Liabilities
At the end of the year, the status of confirmed financial assets under an enforceable total offset agreement or similar agreement is as follows:
Period-end
Item Amount offset of confirmed financial liabilities Net financial assets listed in the balance sheet
Total confirmed financial assets (RMB’0,000)
(RMB’0,000) (RMB’0,000)
Bank deposits and other Fix time deposit or financial products of Commercial financing of USD89.0451 and
USD75,000 and RMB3,863,500
current assets USD822,9751 million and RMB RMB820 million. RMB5460.8959 million
Bank acceptance bill or L/C of RMB1200.87
Fix time deposit Fix time deposit of RMB124,6.0687 million RMB5,7.3080 million
million
At the end of the year, the status of confirmed financial liabilities under an enforceable total offset agreement or similar agreement is as follows:
Period-end
Item Amount offset of confirmed financial liabilities Net financial liabilities listed in the balance
Total confirmed financial liabilities (RMB’0,000)
(RMB’0,000) sheet (RMB’0,000)
Short-term borrowings Commercial financing of USD89,045,100 and Fix time deposit or financial products of USD75,000
RMB5,460,895,900
USD822,975,100 and RMB820 million RMB3,863,500
Notes payable or L/C Bank acceptance bill or L/C of RMB1200.87 million Fix time deposit of RMB124,6.0687 million RMB5,7.3080 million
payable
327
Konka Group Co., Ltd. Annual Report 2018
X. The Disclosure of Fair Value
1. Ending Fair Value of Assets and Liabilities at Fair Value
Ending fair value
Fair value Fair value Fair value
Item
measurement measurement measurement Total
items at level 1 items at level 2 items at level 3
I. Consistent fair value measurement
(I) Financial assets at fair value through
5,464,984.92 - - 5,464,984.92
profit or loss
1. Trading financial assets - - - -
2. Income from purchase agreement of
5,464,984.92 - - 5,464,984.92
forward foreign exchange
(II)Available-for-sale financial assets - - - -
1. Debt instrument investment - - - -
2. Equity instrument investment - - - -
3. Other - - - -
Total assets of consistent fair value
5,464,984.92 5,464,984.92
measurement
(III) Financial liabilities at fair value
2,459,603.25 - - 2,459,603.25
through profit or loss
1. Income from purchase agreement of
2,459,603.25 - - 2,459,603.25
forward foreign exchange
Total liabilities of consistent fair value 2,459,603.25 2,459,603.25
328
Konka Group Co., Ltd. Annual Report 2018
Ending fair value
Fair value Fair value Fair value
Item
measurement measurement measurement Total
items at level 1 items at level 2 items at level 3
measurement
Total assets of inconsistent fair value
- - - -
measurement
Total liabilities of inconsistent fair value
- - - -
measurement
2. Market Price Recognition Basis for Consistent and Inconsistent Fair Value Measurement Items at Level 1
As of the end of Reporting Period, the Company in line with the difference of DF forward foreign exchange purchase cost ( DF base price on
balance sheet date) on assets balance sheet and agreement DF forward foreign exchange purchase cost (DF exchange rate agreed) recognized as
losses or profits.
XI. Related Party and Related-party Transactions
1. Information Related to the Company as the Parent of the Company
Proportion of Proportion of
share held by voting rights
Registrat
Registered the Company as owned by the
Name ion Nature of business
capital the parent Company as the
place
against the parent against the
Company (%) Company (%)
Overseas Chinese Town Shenzhe Tourism, real estate, electronics
RMB12 billion 29.999997% 29.999997%
Enterprises Co. n industry
Note: the final controller of the Company is State-owned Assets Supervision and Administration Commission
329
Konka Group Co., Ltd. Annual Report 2018
2. Subsidiaries of the Company
Refer to Note VIII-1. Equity in Subsidiaries
3. Information on the Associated Enterprises of the Company
Refer to Note VIII-3. Equity in Associated Enterprises for details of significant associated enterprises of the Company. Information on other joint
ventures or associated enterprises occurring connected transactions with the Company in Reporting Period, or forming balance due to connected
transactions made in previous period:
Name Relationship with the Company
Beijing Konka Technology Co., Ltd. Associated enterprise
Kunshan Konka Electronic Co., Ltd. Associated enterprise
Anhui Kaikai Shijie E-commerce Co., Ltd. Associated enterprise
Shenzhen Yaode Technology Co., Ltd. Associated enterprise
Nanjing Smart Light Information Technology Research Institute Co., Ltd. Associated enterprise
Shenzhen Zhongbing Konka Technology Co., Ltd. Associated enterprise
Shenzhen RF-LINK Technology Co., Ltd. Associated enterprise
Chengdu One Belt Communication Equipment Co., Ltd. Associated enterprise
Oriental Huijia (Zhuhai) Asset Management Co., Ltd. Associated enterprise
Zhuhai Jinsu Plastic Co., Ltd. Associated enterprise
Shenzhen Konka Intelligent Electrical Apparatus Co., Ltd. Associated enterprise
Shenzhen Konka Information Network Co., Ltd. Associated enterprise
Shenzhen Konka Precision Mould Manufactory Co., Ltd. Associated enterprise
Binzhou Beihai Weiqiao Solid Waste Disposal Co., Ltd. Associated enterprise
Nanjing Smart Light Information Technology Research Institute Co., Ltd. Associated enterprise
330
Konka Group Co., Ltd. Annual Report 2018
Name Relationship with the Company
Helongjiang Longkang Zhijia Technology Co., Ltd. Associated enterprise
Anhui Konka Green Lighting Technology Co., Ltd. Associated enterprise
Feidi Technology (Shenzhen) Co., Ltd. Associated enterprise
Chongqing Qingjia Associated enterprise
Konka Ventures Associated enterprise
Anhui Konka Green Lighting Technology Co., Ltd. Associated enterprise
4. Information on Other Related Parties
Name Relationship with the Company
Guoguang Eastern Network (Beijing) Co., Ltd. Shareholder of the associated enterprise
Guangan Ouqishi Electronic Technology Co., Ltd. Majority-owned company controlled by minority shareholder
Guizhou Jiaguida Technology Co., Ltd. Majority-owned company controlled by minority shareholder
Guoguang Ruilian (Shenzhen) Internet Technology Co., Ltd. Associated enterprise of subsidiary
UNIFORTUNE （HK） COMPANY LIMITED Minority shareholder of subsidiary
AUJET INDUSTRY LIMITED Minority shareholder of subsidiary
Shenzhen Trade Link Supply Chain Management Co., Ltd. Minority shareholder of subsidiary
Chuzhou Hanshang Electric Appliance Co.,Ltd. Minority shareholder of subsidiary
Shenzhen Henglongtong Technology Co., Ltd. Minority shareholder of subsidiary
Jiangxi Meiji Industry Co., Ltd. Minority shareholder of subsidiary
Shenzhen Shangyongtong Investment Development Co., Ltd. Minority shareholder of subsidiary
Changrong Media Co., Ltd. Final controller of minority shareholder of subsidiary
Shenzhen Zhonglian Datong Supply Chain Management and Consulting Co., Ltd Controlled by the final controller of minority shareholder of subsidiary
331
Konka Group Co., Ltd. Annual Report 2018
5. List of Related-party Transactions
(1) Information on Acquisition of Goods and Reception of Labor Service
①Information on acquisition of goods and reception of labor service
Related party Content Reporting Period Same period of last year
Purchase of
Shenzhen Konka Precision Mould Manufactory Co., Ltd. and its subsidiaries 240,287,126.86 284,465,554.74
materials
Purchase of
OCT Group and its subsidiaries materials 23,908,088.67 77,699,708.46
and service
Commodity
Shenzhen Konka Information Network Co., Ltd. 307,872,053.25 162,997,919.05
purchase
Commodity
Guangan Ouqishi Electronic Technology Co., Ltd. 2,072,830,346.78 —
purchase
Purchase of
materials
Kunshan Konka Electronic Co., Ltd. 1,264,029,751.78 219,855,232.07
and
commodity
Purchase of
Guizhou Jiaguida Technology Co., Ltd. mobile 399,857,353.52 —
phones
332
Konka Group Co., Ltd. Annual Report 2018
Related party Content Reporting Period Same period of last year
Purchase of
Shenzhen Trade Link Supply Chain Management Co., Ltd. 126,942,856.71 —
materials
Commodity
Chuzhou Hanshang Electric Appliance Co.,Ltd. 34,645,938.39 —
purchase
Commodity
Anhui Kaikai Shijie E-commerce Co., Ltd. 19,313,938.76 —
purchase
Purchase of
Zhuhai Jinsu Plastic Co., Ltd. 4,604,195.82 15,492,478.63
materials
Advertising
Changrong Media Co., Ltd. 3,041,943.35 —
agency
Commodity
Shenzhen Konka Intelligent Electrical Apparatus Co., Ltd. 1,812,643.12 4,137,056.47
purchase
Commodity
Guoguang Ruilian (Shenzhen) Internet Technology Co., Ltd. 1,284,602.58 326,074.94
purchase
Shenzhen Zhonglian Datong Supply Chain Management and Consulting Co., Ltd Consultancy 1,160,469.47 3,784,772.66
Purchase of
Shenzhen Yaode Technology Co., Ltd. 930,320.20 —
materials
Shenzhen Henglongtong Technology Co., Ltd. Purchase of 228,709.45 —
333
Konka Group Co., Ltd. Annual Report 2018
Related party Content Reporting Period Same period of last year
materials
Purchase of
Shenzhen Zhongbing Konka Technology Co., Ltd. 180,683.76 —
materials
Purchase of
Shenzhen RF-LINK Technology Co., Ltd. 151,150.76 —
materials
Advertising
Jiangxi Youshi Xinrong Culture Communication Co., Ltd. — 19,811,320.75
agency
Commodity
Beijing Konka Technology Co., Ltd. 240,225.43 551,481.65
purchase
②Information of sales of goods and provision of labor service
Related party Content Reporting Period Same period of last year
UNIFORTUNE （HK） COMPANY LIMITED Sales of materials 3,595,163,483.38 —
AUJET INDUSTRY LIMITED Sales of materials 3,543,163,233.52 —
Kunshan Konka Electronic Co., Ltd. Sales of materials 895,011,807.00 260,670,330.28
Anhui Kaikai Shijie E-commerce Co., Ltd. Commodity sales 534,811,373.44 —
Guangan Ouqishi Electronic Technology Co., Ltd. Sales of materials 200,316,791.46 —
Sales of materials and
Shenzhen Konka Information Network Co., Ltd. 124,076,873.37 61,695,634.89
providing services
Guizhou Jiaguida Technology Co., Ltd. Sales of materials 57,213,274.71 —
Shenzhen Yaode Technology Co., Ltd. Sales of materials 52,989,502.78 —
334
Konka Group Co., Ltd. Annual Report 2018
Related party Content Reporting Period Same period of last year
Sales of commodity and
OCT Group and its subsidiaries 38,726,630.10 25,425,675.14
providing services
Shenzhen Konka Precision Mould Manufactory Co., Ltd. and its
Providing labor service 18,596,740.44 18,956,689.52
subsidiaries
Helongjiang Longkang Zhijia Technology Co., Ltd. Commodity sales 15,030,200.64 —
Shenzhen Trade Link Supply Chain Management Co., Ltd. Sales of materials 12,952,947.60 —
Guoguang Ruilian (Shenzhen) Internet Technology Co., Ltd. Advertising service 3,487,294.25 940,650.14
Nanjing Smart Light Information Technology Research Institute Co.,
Providing service 1,456,310.70 —
Ltd.
Sales of materials and
Shenzhen Zhongbing Konka Technology Co., Ltd. 999,326.31 2,568,447.15
providing services
Feidi Technology (Shenzhen) Co., Ltd. Rental service 977,117.64 —
Guoguang Eastern Network (Beijing) Co., Ltd. Advertising service 793,092.82 3,100,030.29
Shenzhen RF-LINK Technology Co., Ltd. Rental service 593,665.05 —
Chengdu One Belt Communication Equipment Co., Ltd. Commodity sales 564,655.17 —
Oriental Huijia (Zhuhai) Asset Managemnt Co., Ltd. Rental service 191,099.97 —
Anhui Konka Green Lighting Technology Co., Ltd. Providing service — 648,888.41
Beijing Konka Technology Co., Ltd. Providing service — 62,966.96
Shenzhen Konka Intelligent Electrical Apparatus Co., Ltd. Commodity sales — 20,150.77
(2) Information on Related-party Lease
The lease fee The lease fee
Name of lessor Category of leased assets confirmed in the confirmed in the
Reporting Period same period of last
335
Konka Group Co., Ltd. Annual Report 2018
year
OCT Group and its subsidiaries Commercial residential building and office building 1,541,573.44 601,969.48
(3) Information on Related-party Guarantee
①The Company was guarantor
Guarantee Execution
Secured party amount Currency Start date End date accomplished
(RMB’0,000) or not
Anhui Tongchuang 1,410.00 CNY 7 November 2018 7 November 2019 Not
Anhui Tongchuang 2,000.00 CNY 9 May 2018 9 May 2019 Not
Anhui Tongchuang 2,150.00 CNY 19 June 2018 12 June 2019 Not
Anhui Tongchuang 5,000.00 CNY 20 September 2018 14 August 2019 Not
Telecommunication
5,35.46 CNY 5 February 2018 4 February 2019 Not
Technology
Konka Commercial
Factoring (Shenzhen) Co., 13,580.00 CNY 27 June 2018 26 June 2019 Not
Ltd.
Konka Commercial
Factoring (Shenzhen) Co., 10,000.00 CNY 21 September 2018 29 August 2019 Not
Ltd.
Hong Kong Konka 3,000.00 USD 31 May 2018 30 May 2019 Not
Hong Kong Konka 350.00 USD 25 July 2018 25 March 2019 Not
Hong Kong Konka 1,500.00 USD 7 August 2018 6 August 2019 Not
336
Konka Group Co., Ltd. Annual Report 2018
Guarantee Execution
Secured party amount Currency Start date End date accomplished
(RMB’0,000) or not
Anhui Konka 20,000.00 CNY 2 May 2018 9 April 2019 Not
Anhui Konka 8,000.00 CNY 1 June 2018 1 June 2019 Not
Anhui Konka 10,000.00 CNY 6 December 2018 6 December 2019 Not
Sichuan Konka 5,000.00 CNY 28 May 2018 24 May 2025 Not
21 November
XingDa HongYe 5,800.00 CNY 21 November 2018 Not
2020
13 November
XingDa HongYe 950.00 CNY 13 November 2018 Not
2020
Econ Technology 3,135.00 CNY 10 October 2018 10 October 2019 Not
31 December
Jiangxi Konka 10,000.00 CNY 4 December 2018 Not
2019
Rushan Yike Water 28 December
15,000.00 CNY 29 December 2016 Not
Treatment Co., Ltd. 2026
Jiangxi Xinxin Jianan 16 December
10,000.00 CNY 16 December 2016 Not
Engineer Co., Ltd. 2018
Jiangxi Zhongyi
16 December
Decoration Material Co., 10,000.00 CNY 16 December 2016 Not
2018
Ltd.
Jiangxi Shanshi
16 December
Technology Development 10,000.00 CNY 16 December 2016 Not
2018
Co., Ltd.
337
Konka Group Co., Ltd. Annual Report 2018
Refer to Note XII-2.-(2) Contingent Liabilities Generated from Providing Debt Guarantees for Other Entities and Financial Influence thereof for
details of external guarantees of the Company.
②The Company was secured party
Guarantee amount Execution
Guarantor: Currency Start date End date
(RMB’0,000) accomplished or not
Chuzhou State-owned Assets Management
4,400.00 CNY 2 May 2018 9 April 2019 Not
Co., Ltd.
Chuzhou State-owned Assets Management
1,760.00 CNY 1 June 2018 1 June 2019 Not
Co., Ltd.
Chuzhou State-owned Assets Management
2,200.00 CNY 6 December 2018 6 December 2019 Not
Co., Ltd.
Shenzhen Kangwei Investment Partnership
2,450.00 CNY 28 May 2018 24 May 2025 Not
(Limited Partnership)
Hu Zehong 2,610.00 CNY 21 November 2018 21 November 2020 Not
Hu Zehong 465.50 CNY 13 November 2018 13 November 2020 Not
Yantai Baijiangyuan Business Management
816.35 CNY 10 October 2018 10 October 2019 Not
Center (Limited Partnership)
Yantai Fengqingtai Investment Center (Limited
363.03 CNY 10 October 2018 10 October 2019 Not
Partnership)
Yantai Qingrunyuan Business Management
333.56 CNY 10 October 2018 10 October 2019 Not
Center (Limited Partnership)
Yantai Qingjiangchuan Business Management
23.20 CNY 10 October 2018 10 October 2019 Not
Center (Limited Partnership)
Zhu Xinming 4,900.00 CNY 4 December 2018 31 December 2019 Not
338
Konka Group Co., Ltd. Annual Report 2018
Hunan Vary Tech Packing Co., Ltd. 2,000.00 CNY 5 April 2017 --- Not
Guizhou Huajinrun Technology Group Co.,
75.59 CNY 16 April 2018 --- Not
Ltd.
Huanjia Group Co., Ltd. 24,500.00 CNY 7 August 2018 6 August 2023 Not
AUJET INDUSTRY LIMITED 245.00 USD 18 May 2018 17 May 2019 Not
AUJET INDUSTRY LIMITED 147.00 USD 6 August 2018 5 August 2019 Not
AUJET INDUSTRY LIMITED 98.00 USD 14 August 2018 13 August 2019 Not
AUJET INDUSTRY LIMITED 147.00 USD 17 August 2018 16 August 2019 Not
AUJET INDUSTRY LIMITED 147.00 USD 27 August 2018 26 August 2019 Not
AUJET INDUSTRY LIMITED 98.00 USD 14 September 2018 13 September 2019 Not
AUJET INDUSTRY LIMITED 245.00 USD 26 September 2018 25 September 2019 Not
AUJET INDUSTRY LIMITED 98.00 USD 28 September 2018 27 September 2019 Not
AUJET INDUSTRY LIMITED 245.00 USD 9 October 2018 8 October 2019 Not
AUJET INDUSTRY LIMITED 686.00 USD 11 October 2018 10 October 2019 Not
AUJET INDUSTRY LIMITED 392.00 USD 16 October 2018 15 October 2019 Not
AUJET INDUSTRY LIMITED 245.00 USD 23 October 2018 22 October 2019 Not
AUJET INDUSTRY LIMITED 49.00 USD 26 October 2018 25 October 2019 Not
AUJET INDUSTRY LIMITED 171.50 USD 1 November 2018 31 October 2019 Not
AUJET INDUSTRY LIMITED 34.30 USD 28 December 2018 27 December 2019 Not
339
Konka Group Co., Ltd. Annual Report 2018
Guizhou Huajinrun Technology Group Co.,
1,620.00 USD 9 May 2018 --- Not
Ltd.
Shenzhen Musen Industry Co., Ltd. 9,800.00 CNY 18 April 2018 18 March 2019 Not
Shenzhen Unifortune Supply Chain
1,470.00 USD 26 September 2018 29 October 2019 Not
Management Co., Ltd.
Shenzhen Unifortune Supply Chain
2,940.00 USD 28 May 2018 29 October 2019 Not
Management Co., Ltd.
Wu Guoren and Xiao Yongsong 2,000.00 USD 21 August 2017 31 December 2018 Not
Wu Guoren and Xiao Yongsong 3,500.00 USD 11 November 2016 17 October 2018 Not
Wu Guoren and Xiao Yongsong 1,000.00 USD 6 March 2016 31 December 2018 Not
Wu Guoren and Xiao Yongsong 1,000.00 USD 24 April 2017 31 December 2018 Not
Wu Guoren and Xiao Yongsong 1,000.00 USD 11 May 2017 31 December 2018 Not
Wu Guoren and Xiao Yongsong 500.00 USD 21 June 2017 20 June 2018 Not
Wu Guoren and Xiao Yongsong 500.00 USD 3 July 2017 2 July 2018 Not
Wu Guoren and Xiao Yongsong 500.00 USD 24 July 2017 24 July 2018 Not
Wu Guoren and Xiao Yongsong 500.00 USD 9 August 2017 8 August 2018 Not
Wu Guoren and Xiao Yongsong 2,000.00 USD 6 September 2017 5 September 2018 Not
Note: The reason for the Company’s acting as the secured party was that the Company was provided with counter guarantee regarding entrusted
loans from the Company to non-wholly-owned subsidiaries by minority shareholders of aforesaid non-wholly-owned subsidiaries.
(6) Information on Inter-bank Lending of Capital of Related Parties
340
Konka Group Co., Ltd. Annual Report 2018
Related party Amount Start date End date Duration
Interest rate
Borrowing:
12 April 202 14 June 2018 to 6
OCT Group 10,000.00 25 June 2018 5.40%
3 June 2021
19 July 2018 to 14
OCT Group 2,000.00 25 June 2018 12 April 2023 5.60%
June 2021
14 May 2018 to 13
OCT Group 140,000.00 25 June 2018 12 April 2023 6.00%
May 2019
19 July 2018 to 19
OCT Group 48,000.00 25 June 2018 12 April 2023 6.00%
July 2019
19 October 2018 to 18
OCT Group 100,000.00 25 June 2018 12 April 2023 6.00%
October 2019
22 December 2 22 December 2018 to
OCT Group 50,000.00 21 April 2019 5.00%
018 21 April 2019
31 August 26 April 2018 to 31
OCT Group 27,656.00 26 April 2018 5.00%
2019 August 2019
17 December 12 December 17 December 2018 to
OCT Group 50,000.00 5.00%
2018 2019 12 December 2019
Chuzhou Hanshang Electric 4,395.00 21 September 31 December 21 September 2018 to 7.00%
341
Konka Group Co., Ltd. Annual Report 2018
Related party Amount Start date End date Duration
Interest rate
Appliance Co.,Ltd.
2018 2018 31 December 2018
Chuzhou Hanshang Electric 31 December 17 July 2018 to 31
Appliance Co.,Ltd. 6,000.00 17 July 2018 7.00%
2018 December 2018
Lending:
Nanjing Kangxing Technology
22 October 2018 to 21
Industrial Park Operation and 77,600.00 22 October 2018 21 April 2019 8.00%
April 2019
Management Co., Ltd.
Nanjing Kangxing Technology
21 December 20 March 21 December 2018 to
Industrial Park Operation and 29,400.00 8.00%
2018 2019 20 March 2019
Management Co., Ltd.
Nanjing Kangxing Technology
22 October 2018 to 21
Industrial Park Operation and 54,400.00 22 October 2018 21 April 2019 8.00%
April 2019
Management Co., Ltd.
Nanjing Kangxing Technology
21 December 20 December 21 December 2018 to
Industrial Park Operation and 20,500.00 8.00%
2018 2019 20 December 2019
Management Co., Ltd.
Yibin OCT Sanjiang Real Estate 24 October 25 October 2018 to 24
4,000.00 25 October 2018 5.70%
Co., Ltd. 2021 October 2021
342
Konka Group Co., Ltd. Annual Report 2018
Related party Amount Start date End date Duration
Interest rate
Yibin OCT Sanjiang Real Estate 25 October 2018 to 24
6,000.00 25 October 2018 24 April 2020 5.70%
Co., Ltd. April 2020
15 March 16 March 2017 to 15
Hunan Vary Tech Packing Co., Ltd. 2,000.00 16 March 2017 8.00%
2019 March 2019
Note 1: In 2018, the Company was provided loans by OCT Group with recognized interest expense of RMB107,474,353.32.
Note 2: In 2018, Chuzhou Hanshang Electric Appliance Co.,Ltd. provided the loan of RMB1,039,500 million for Electrical Appliance
Technology with recognized interest expense of RMB4,284,773.93 recognized by Electrical Appliance Technology.
Note 3: In 2018, Electronics Technology, the Company’s subsidiary, provided a loan of RMB776,000,000.00 and a loan of RMB294,000,000.00
for Nanjing Konka Star Technology Industrial Park Management Co., Ltd. with interest income of RMB12,962,222.22 by Electronics
Technology.
Note 4: In 2018, Shenzhen Konka Investment Holding Co., Ltd., the subsidiary of the Company, provided a loan of RMB544,000,000.00 and a
loan of RMB205,000,000.00 for Nanjing Konka Star Technology Industrial Park Management Co., Ltd. with interest income of
RMB9,084,222.23 recognized by Konka Investment Holding Co., Ltd.
Note 5: In 2018, Communication Technology, the subsidiary of the Company, provided a loan of RMB100,000,000.00 for Yibin OCT Sanjiang
Real Estate Co., Ltd. with interest income of RMB1,076,666.66 recognized by Communication Technology.
Note 6: The entrusted loan provided by the Company for Vary Packing recognized the investment income of RMB1,389,042.49 in 2018.
(5) Information on Remuneration for Key Management Personnel
Item Reporting period Same period of last year
343
Konka Group Co., Ltd. Annual Report 2018
Remuneration for key management personnel 2,132.92 1,292.40
6. Accounts Receivable and Payable of Related Party
(1) Accounts Receivable
Ending balance Beginning balance
Item Bad debt
Carrying amount Bad debt provision Carrying amount
provision
Accounts receivable:
Kunshan Konka Electronic Co., Ltd. 498,176,202.82 34,872,334.20 340,827,332.77 6,816,546.66
Anhui Kaikai Shijie E-commerce Co.,
225,683,544.96 15,797,848.15 — —
Ltd.
Guizhou Jiaguida Technology Co.,
34,560,012.48 2,419,200.87 — —
Ltd.
Shenzhen Konka Information
20,049,748.74 1,403,482.41 50,237,204.89 1,586,224.62
Network Co., Ltd.
Shenzhen Konka Precision Mould
Manufactory Co., Ltd. and its 13,445,059.89 941,154.19 13,685,968.41 614,448.23
subsidiaries
OCT Group and its subsidiaries 12,212,400.48 1,606,135.40 12,597,677.70 398,014.48
Binzhou Beihai Weiqiao Solid Waste
6,096,891.16 426,782.38 — —
Disposal Co., Ltd.
Guoguang Ruilian (Shenzhen)
3,696,532.00 258,757.24 — —
Internet Technology Co., Ltd.
Nanjing Smart Light Information
1,500,000.00 105,000.00 — —
Technology Research Institute Co.,
344
Konka Group Co., Ltd. Annual Report 2018
Ending balance Beginning balance
Item Bad debt
Carrying amount Bad debt provision Carrying amount
provision
Ltd.
Helongjiang Longkang Zhijia
822,825.15 57,597.76 — —
Technology Co., Ltd.
Guoguang Eastern Network
430,948.43 30,166.39 889,327.11 17,786.54
(Beijing) Co., Ltd.
Anhui Konka Green Lighting
— — 2,479.62 49.59
Technology Co., Ltd.
Total 816,674,166.11 57,918,458.99 418,239,990.50 9,433,070.12
Notes receivable:
Anhui Kaikai Shijie E-commerce Co.,
240,100,000.00 — — —
Ltd.
Kunshan Konka Electronic Co., Ltd. — — 20,000,000.00 —
Shenzhen Konka Precision Mould
Manufactory Co., Ltd. and its — — 657,263.10 —
subsidiaries
Total 240,100,000.00 — 20,657,263.10 —
Other receivables:
Jiangxi Meiji Industry Co., Ltd. 74,788,640.31 1,495,772.81 — —
OCT Group and its subsidiaries 20,520,295.97 8,654,793.94 20,335,596.53 8,752,805.29
Shenzhen Konka Precision Mould
Manufactory Co., Ltd. and its 4,448.00 2,224.00 4,448.00 2,224.00
subsidiaries
345
Konka Group Co., Ltd. Annual Report 2018
Ending balance Beginning balance
Item Bad debt
Carrying amount Bad debt provision Carrying amount
provision
Guoguang Eastern Network (Beijing)
— — 5,600.00 112.00
Co., Ltd.
Total 95,313,384.28 10,152,790.75 20,345,644.53 8,755,141.29
Long-term receivables:
Shenzhen RF-LINK Technology Co.,
14,086,876.64 — — —
Ltd.
Feidi Technology (Shenzhen) Co.,
43,476,841.21 — — —
Ltd. and its subsidiaries
Total 57,563,717.85 — — —
Prepayments:
Anhui Kaikai Shijie E-commerce Co.,
5,852,304.78 — — —
Ltd.
Shenzhen Konka Precision Mould
Manufactory Co., Ltd. and its 4,673,013.98 — — —
subsidiaries
Shenzhen Konka Information
4,488,599.93 — — —
Network Co., Ltd.
Changrong Media Co., Ltd. 800,000.00 — — —
Chongqing Qingjia 499,972.16 — — —
Guoguang Ruilian (Shenzhen)
9,209.28 — — —
Internet Technology Co., Ltd.
OCT Group and its subsidiaries 5,000.00 — — —
346
Konka Group Co., Ltd. Annual Report 2018
Ending balance Beginning balance
Item Bad debt
Carrying amount Bad debt provision Carrying amount
provision
Total 16,328,100.13 — — —
(2) Accounts Payable
Item Ending balance Beginning balance
Accounts payable:
Kunshan Konka Electronic Co., Ltd. 475,848,121.39 17,018,441.87
Anhui Kaikai Shijie E-commerce Co., Ltd. 209,523,283.33 —
Shenzhen Konka Precision Mould Manufactory Co., Ltd. and its subsidiaries 17,153,118.33 37,592,153.20
Shenzhen Shangyongtong Investment Development Co., Ltd. 9,543,100.00 9,543,100.00
OCT Group and its subsidiaries 1,289,224.82 23,738,766.66
Shenzhen Konka Information Network Co., Ltd. 369,488.00 31,386,862.99
Shenzhen RF-LINK Technology Co., Ltd. 128,562.88 —
Shenzhen Henglongtong Technology Co., Ltd. 122,247.47 —
Shenzhen Yaode Technology Co., Ltd. 77,602.03 —
Zhuhai Jinsu Plastic Co., Ltd. 55,912.37 181,072.00
Shenzhen Trade Link Supply Chain Management Co., Ltd. 38,426.68 —
Shenzhen Konka Intelligent Electrical Apparatus Co., Ltd. — 1,686,317.71
Shenzhen Dekang Electronics Co., Ltd. — 358,929.03
Guoguang Ruilian (Shenzhen) Internet Technology Co., Ltd. — 326,074.94
Total 714,149,087.30 121,831,718.40
347
Konka Group Co., Ltd. Annual Report 2018
Item Ending balance Beginning balance
Notes payable:
Shenzhen Konka Precision Mould Manufactory Co., Ltd. and its subsidiaries 4,290,778.05 55,513,548.64
Shenzhen Henglongtong Technology Co., Ltd. 224,422.12 —
OCT Group and its subsidiaries — 9,341,980.07
Kunshan Konka Electronic Co., Ltd. — 2,348,210.23
Zhuhai Jinsu Plastic Co., Ltd. — 1,000,000.00
Total 4,515,200.17 68,203,738.94
Advances from customers:
OCT Group and its subsidiaries 3,333,333.32 15,416,818.63
Kunshan Konka Electronic Co., Ltd. — 7,105,969.56
Shenzhen Konka Information Network Co., Ltd. — 151,922.19
Shenzhen Zhongbing Konka Technology Co., Ltd. — 38,133.55
Guoguang Ruilian (Shenzhen) Internet Technology Co., Ltd. — 9,390.72
Total 3,333,333.32 22,722,234.65
Other payables:
Chuzhou Hanshang Electric Appliance Co.,Ltd. 108,380,202.82 —
Feidi Technology (Shenzhen) Co., Ltd. and its subsidiaries 5,638,548.27 —
Shenzhen RF-LINK Technology Co., Ltd. 5,100,000.00 —
Nanjing Smart Light Information Technology Research Institute Co., Ltd. 3,000,000.00 —
Konka Ventures 2,500,000.00 —
348
Konka Group Co., Ltd. Annual Report 2018
Item Ending balance Beginning balance
OCT Group and its subsidiaries 280,218.08 224,428.80
Guoguang Ruilian (Shenzhen) Internet Technology Co., Ltd. 100,000.00 100,000.00
Shenzhen Konka Intelligent Electrical Apparatus Co., Ltd. 35,755.00 101,885.00
Anhui Kaikai Shijie E-commerce Co., Ltd. 23,695.00 —
Shenzhen Konka Information Network Co., Ltd. 20,000.00 2,369,781.35
Kunshan Konka Electronic Co., Ltd. 10,000.00 10,000.00
Changrong Media Co., Ltd. 7,000.00 —
Chongqing Konka Auto Electronics Co., Ltd. — 1,070,875.91
Shenzhen Konka Precision Mould Manufactory Co., Ltd. and its subsidiaries — 590,000.00
Shenzhen Zhonglian Datong Supply Chain Management and Consulting Co., Ltd — 79,533.29
Anhui Konka Green Lighting Technology Co., Ltd. — 3,338.38
Total 125,095,419.17 4,549,842.73
Interest payable:
OCT Group and its subsidiaries 24,158,666.48 5,834,416.68
Total 24,158,666.48 5,834,416.68
XII. Commitments and Contingency
1. Significant Commitments
(1) Capital Commitment
Item Ending balance Beginning balance
349
Konka Group Co., Ltd. Annual Report 2018
Commitments signed but hasn’t been recognized in
financial statements
—Commitment on construction and purchase of
— —
long-lived assets
- Contract with large amount 1,011,650,352.93 247,552,974.60
- Foreign investment commitments — —
Total 1,011,650,352.93 247,552,974.60
(2) Operating Lease Commitments
As of the balance sheet date, the irrevocable operating lease commitments that the Company signed were as followed:
Item Ending balance Beginning balance
Minimum lease payments of irrevocable operating lease
1 year after balance date 21,179,914.81 19,362,845.58
2 year after balance date 10,038,667.42 10,257,149.32
3 year after balance date 3,662,167.92 4,199,375.82
Following years 3,938,998.40 2,570,971.55
Total 38,819,748.55 36,390,342.27
(3) Other Commitments
As of 31 December 2018, there were no other significant commitments for the Company to disclose.
350
Konka Group Co., Ltd. Annual Report 2018
2. Contingency
(1) Contingent Liabilities Generated from Pending Action and Arbitration and Financial Influence thereof
① Due to the problems of quality and construction delay in the settlement of intelligent engineering project between the Company and
Shenzhen GNG Co., Ltd, they didn’t agree on the related deductions. On 28 September 2017, Shenzhen GNG Co., Ltd filed a lawsuit to People’s
Court of Nanshan District, Shenzhen for the payment in project arrears in the Construction Contract of Konka R&D Building Intelligent
Engineering, which required the Company to pay RMB2,770,487.13 for the project arrears and RMB340,761.69 for the interests of the project
arrears. Up to the issuance date of this Report, People’s Court of Nanshan District, Shenzhen hasn’t gave judgment.
② Due to the dispute in rent lease contract among the Company’s subsidiary-Mudanjiang Appliances, Heilongjiang Jinri Optoelectronics
Technology Co., Ltd. and Jinyue Group Co., Ltd., the People's Court of Aimin District, Mudanjiang City, Helongjiang Province made the main
civil judgment (2016) Hei 1004 Minchu No. 604 on 25 August 2017. The Judgment was as follows: The defendants Heilongjiang Jinri
Optoelectronics Technology Co., Ltd. and Jinyue Group Co., Ltd. should jointly pay the plaintiff-Mudanjiang Appliances a total of
RMB3,656,910.82 in occupancy fees, rent, and interest. As of the issue date of this report, it has not yet been implemented completely.
③ According to the civil judgment (2018) GMC No.110 made by the Higher People's Court of Jiangxi Province on September 27, 2018 on the
disputes arisen from a loan contract between the minority shareholders of Jiangxi Konka, a subsidiary of the Company, and China Great Wall
AMC Jiangxi Branch, the 100% equity of Nanocrystalline and the 100% equity of Xinfeng Microcrystaline held by Jiangxi Konka were frozen;
On September 30, 2018, Jiangxi Konka filed an application for reconsideration, and on October 11, 2018, Jiangxi Konka filed an application for
supplementary reconsideration. According to one of the civil judgments (2018) GMC No.110 made by the Higher People's Court of Jiangxi
Province on November 16, 2018, the collateral of the first trial was sealed up or detained.
④ According to the civil judgment (2016) Gan 01 MC No. 628 made by Nanchang Intermediate People's Court on July 25, 2016 on the disputes
arisen from the construction contract between Xinfeng Microcrystalline, a subsidiary of Jiangxi Konka, and Jiangxi Longji Construction
Engineering Co., Ltd., the defendant Xinfeng Microcrystalline should pay the plaintiff RMB19,741,456.02 for the project and the interest
351
Konka Group Co., Ltd. Annual Report 2018
therefrom within 10 days after the judgment took effect. Interest was calculated according to the similar lending rate for the same period issued
by the People's Bank of China based on the principal of RMB 19,741,456.02 from November 24, 2016 to the date when the principal amount
was paid off.
Both Xinfeng Microcrystalline and Jiangxi Longji Construction Engineering Co., Ltd. refused to accept the above judgment and filed an appeal.
The Higher People's Court of Jiangxi Province made a civil judgment (2018) GMZ No. 519 on November 6, 2018 to maintain the original
judgment. On February 21, 2019, Nanchang Intermediate People's Court issued the (2018) Gan 01 Z No. 620 Announcement on the plan of
evaluation and auction of the land owned by Xinfeng Microcrystalline, which locates at Fenghuangshan, Anyi County, Jiangxi Province for
industrial development. Xinfeng Microcrystalline and the above-ground leaseholders are requested to move out the area within 60 days from the
date of the announcement posting, and compulsory execution will be carried out for overstay.
(2) Contingent Liabilities Generated from Providing Debt Guarantees for Other Entities and Financial Influence thereof
①The Company signed the maximum amount guarantee contract (No. 18czA0012-a-XCYZGBZD2018) with Chuzhou Branch of China Citic
Bank on Nov.7, 2018, in which the Company provided the maximum credit guarantee of RMB 58 million to Anhui Konka Tongchuang
International Trade Co., Ltd. within three years from the day when the obligation fulfillment period stipulated in the specific business contract
expired, and the guarantee mode was the joint liability guaranty. The credit line is mainly used to open and accept the letter of credit of Anhui
Tongchuang International Trade Co., Ltd. and obtain the financing credit and other daily businesses from the bank. The guarantee amount has
been used RMB 14,100,000.00 by Dec. 31, 2018.
② The Company signed the guarantee contract of maximum amount (No. CZZHZGBZ 2018 No.0103) with Chengzhong Branch of Chuzhou
Eastern Anhui Rural Commercial Bank on 9 May 2018, in which the Company provided credit guarantee of RMB45,000,000.00 to Anhui
Tongchuang from 9 May 2018 to 9 May 2019. The credit line is mainly used to open and accept the letter of credit of Anhui Tongchuang and
obtain the financing credit and other daily businesses from the bank. As of 30 June 2018, the guarantee amount has been used RMB
20,000,000.00.
352
Konka Group Co., Ltd. Annual Report 2018
③ The Company signed the maximum amount guarantee contract (No. CZGSBOZGBT20180011) with Chuzhou Branch of China Everbright
Bank on June 19, 2018, in which the Company provided the maximum credit guarantee of RMB 30 million to Anhui Konka Tongchuang
International Trade Co., Ltd. From June19, 2018 to June 12, 2019, and the guarantee mode was the joint liability guaranty. The credit line is
mainly used to open and accept the letter of credit of Anhui Tongchuang International Trade Co., Ltd. and obtain the financing credit and other
daily businesses from the bank. The guarantee amount has been used RMB 21,500,000.00 by Dec. 31, 2018.
④ The Company signed the maximum amount guarantee contract (No. 00035 ZSYGBZD2018) (361006) with Hefei Branch of China Zheshang
Bank on Sep. 20, 2018, in which the Company provided the maximum credit guarantee of RMB 55 million to Anhui Konka Tongchuang
International Trade Co., Ltd. within two years from the day when the debtor’s obligation fulfillment period stipulated in the debt contract signed
between Anhui Tongchuang and Hefei Branch of China Zheshang Bank expired, and the guarantee mode was the joint liability guaranty. The
credit line is mainly used to open and accept the letter of credit of Anhui Tongchuang International Trade Co., Ltd. and obtain the financing
credit and other daily businesses from the bank. The guarantee amount has been used RMB 50,000,000.00 by Dec. 31, 2018.
⑤The Company signed the credit line agreement (No.1000014 ZZYFEXZD2018)with Bank of China Shenzhen Futian Branch and Shenzhen
Konka Telecommunication Technology Co., Ltd. to apply for a credit line of RMB 5,500,000,000.00, and stipulate that the credit line RMB
500,000,000.00 in the comprehensive credit line would be provided to the subsidiary (Telecommunication Technology Company) for use. The
credit line type was the acceptance bill, non-financial guarantee and trade financing credit, and the Company assumed joint liability for the
repayment. The credit line period shall be valid from the date of the above agreement to February 4, 2019. As of December 31, 2018, the
Company’s guarantee balance for the subsidiary was RMB 5,354,631.23.
⑥ On June 27, 2018, the Company signed Issuing Guarantee/SLC Agreement with Shenzhen Overseas Chinese Town Branch of Agricultural
Bank of China to provide the guarantee for Konka Factoring to apply for the financing loan from Agricultural Bank of China (Dubai Branch),
and the amount guaranteed is RMB 140,000,000.00 with one-year guarantee period. As of December 31, 2018, Konka Factoring obtained a loan
of RMB 135,800,000.00 from Agricultural Bank of China (Dubai Branch).
⑦The Company signed Comprehensive Credit Line Contract (No. HXSFZLZZD20180921001) and applied to Shenzhen Branch of Guangdong
353
Konka Group Co., Ltd. Annual Report 2018
Huaxing Bank for comprehensive credit line of RMB 1,000,000,000.00. The guarantee period is from September 21, 2018 to August 29, 2019.
The Company has sub-licensed the comprehensive credit line RMB 200,000,000.00 the subsidiary Konka Factoring (Shenzhen), and will assume
the joint liability for guarantee. As of December 31, 2018, Konka Factoring used RMB 100,000,000.00.
⑧ The Company signed Issuing Guarantee/SLC Agreement (No.81050120180000032) with Shenzhen Overseas Chinese Town Branch of
Agricultural Bank of China and applied for issuing the letter of guarantee of USD 30,000,000.00 on May 31, 2018 for Hong Kong Konka Co.,
Ltd. to obtain the financing loan from the bank. The guarantee period is from May 31, 2018 to May 30, 2019. As of December 31, 2018, Hong
Kong Konka Co., Ltd. obtained the loan of USD30,000,000.00 from Bank of China (Hong Kong) Co., Ltd.
⑨ On July 25, 2018, the Company signed the guarantee contract with Shenzhen Shennan Branch of China Minsheng Bank to provide the joint
and several liability guarantee for the debts under the foreign currency loan contract signed by Hong Kong Konka Co., Ltd. and Shenzhen
Branch of China Minsheng Bank. The guarantee period is two years from the date of expiration of the debt period, and the amount guaranteed is
USD 3,500,000.00.
⑩ On July 11, 2018, the Company applied to Shenzhen Branch of HSBC Bank (China) Co., Ltd. for a letter of guarantee of USD 15,000,000.00,
helping the subsidiary Hong Kong Konka Co., Ltd. to obtain the financing loan from the bank. The guarantee period is from August 7, 2018 to
The Company signed the guarantee contract (No.CZYEDBZ006 2018) with Chuzhou Branch of Bank of China, providing the joint and
August 6, 2019. As of December 31, 2018, Hong Kong Konka obtained a loan of USD 15,000,000 from HSBC Limited.
several liability guarantee for the debts under the credit line agreement (No.CZYEDZ006 2018) signed by Anhui Konka and Chuzhou Branch of
Bank of China. The guarantee amount is RMB 200,000,000.00, and the guarantee period is two years from the expiration of the debt settlement
period under the credit line agreement. The balance of the guarantee amount provided by the Company to Anhui Konka is RMB 200,000,000.00.
Anhui Konka’ another shareholder, Chuzhou State-owned Assets Operation Co., Ltd. provided the counter-guarantee to the Company for 22% of
On June 1, 2018, the Company signed the maximum amount guarantee contract (No.CZZHZGBZD0133 2018) with Chengzhong Branch of
the guarantee amount.
354
Konka Group Co., Ltd. Annual Report 2018
Chuzhou Wandong Rural Commercial Bank, providing the joint and several liability guarantee for the debts under the comprehensive credit line
agreement signed by Anhui Konka and Chengzhong Branch of Chuzhou Wandong Rural Commercial Bank. The guarantee amount is RMB
80,000,000.00, and the guarantee period is two years from the expiration of the debt settlement period under the credit line agreement. The
balance of the guarantee amount provided by the Company to Anhui Konka is RMB 80,000,000.00. Anhui Konka’ another shareholder, Chuzhou
The Company signed the maximum amount guarantee contract (No.GGBZDDB1800000101834) with Ma’anshan Branch of China
State-owned Assets Operation Co., Ltd. provided the counter-guarantee to the Company for 22% of the guarantee amount.
Minsheng Bank, providing the joint and several liability guarantee for the debts under the comprehensive credit line agreement signed by Anhui
Konka and Ma’anshan Branch of China Minsheng Bank. The guarantee amount is RMB 100,000,000.00, and the guarantee period is two years
from the expiration of the debt settlement period under the main contract. As of December 31, 2018, the balance of the guarantee amount
provided by the Company to Anhui Konka is RMB 100,000,000.00. Anhui Konka’ another shareholder, Chuzhou State-owned Assets Operation
Co., Ltd. provided the counter-guarantee to the Company for 22% of the guarantee amount.
On May 28, 2018, the Company’s subsidiary Telecommunication Technology signed the guarantee contract
(No.(23301)YSHBZ(180525)00001) with Lingang Branch of Yibin Commercial Bank, providing the joint and several liability guarantee for the
debts under the entrusted loan contract jointly signed by its subsidiary Konka Intelligent Terminal, Gloport Group and Lingang Branch of Yibin
Commercial Bank. The guarantee amount is RMB 140,000,000.00, and the guarantee period is from May 28, 2018 to May 24, 2025. The
guaranteed credit line is mainly used for obtaining the loan from the bank for the production and operation of Konka Intelligent Terminal. As of
December 31, 2018, the guarantee amount RMB 50,000,000.00 was used. Konka Intelligent Terminal’ another shareholder, Shenzhen Kangwei
Investment Partnership (Limited Partnership) provided the counter-guarantee to Telecommunication Technology for 49% of the guarantee
On November 21, 2018, the Company signed the guarantee contract (No.1510201811120052BZ-1) with Zhuhai Branch of Xiamen
amount.
International Bank, providing the joint and several liability guarantee for the debts under the comprehensive credit line contract signed by the
subsidiary Xingye Hongda and Zhuhai Branch of Xiamen International Bank. The guarantee amount is RMB 58,000,000.00, and the guarantee
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Konka Group Co., Ltd. Annual Report 2018
period is two years from the expiration of the debt settlement period stipulated in the contract. As of December 31, 2018, Xingye Hongda used
the guarantee amount RMB 58,000,000.00. Xingye Hongda’ another shareholder, Hu Zehong provided the counter-guarantee to the Company for
On October 16, 2018, the Company’s subsidiary Electronics Technology signed the guarantee contract (No.IFELC18D29PS7Y-U-03) with
49% of the guarantee amount.
Far Eastern Leasing, providing the guarantee for the fulfillment of rent payment and other obligations under the after-sales lease back contract
signed by the subsidiary Xingye Hongda and Far Eastern Leasing. The guarantee amount is RMB 10,000,000.00, and the guarantee period is
from November 13, 2018 to November 13, 2020. As of December 31, 2018, the guarantee amount RMB 9,500,000.00 was used. Xingye
On August 29, 2018, the Company signed Issuing Guarantee/SLC Agreement with Shenzhen Branch of Bank of China for issuing the letter
Hongda’ another shareholder, Hu Zehong provided the counter-guarantee to the Company for 49% of the guarantee amount.
of guarantee to CTCE Group and providing the pledge guarantee for the capital contribution obligation of Econ Technology in the central urban
upgrading project of Weifang Binhai Economic and Technological Development Zone. The guarantee amount is RMB 31,350,000.00. Other
shareholders of Econ Technology including Yantai Baijiangyuan Enterprise Management Center (Limited Partnership), Yantai Fengqingtai
Investment Center (Limited Partnership), Yantai Qingrunyuan Enterprise Management Center (Limited Partnership) and Yantai Qingjiangchuan
Enterprise Management Center (Limited Partnership) respectively provided the counter-guarantee to the Company for 26.04%, 11.58%, 10.64%
On December 4, 2018, the Company signed the maximum amount guarantee contract (No. XYGXGBZD20180208) with Nanchang Branch
and 0.74% of the maximum debt amount.
of China’s Industrial Bank, providing the credit guarantee for the maximum amount RMB 100,000,000.00 of Jiangxi Konka New Material
Technology Co., Ltd. The guarantee period is two years from the expiration of the debt settlement period stipulated in the main contract, and the
guarantee mode is the joint liability guaranty. As of December 31, 2018, the guarantee amount RMB 100,000,000.00 was used. Another
shareholder of Jiangxi Konka New Material Technology Co., Ltd., Zhu Xinming provided the counter-guarantee to the Company for 49% of the
On December 27, 2016, the Company’s subsidiary Econ Group signed the guarantee contract (No. YKB2016-167) with Yantai Branch of
guarantee amount.
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Konka Group Co., Ltd. Annual Report 2018
China Everbright Bank, providing the guarantee for Rushan Yike. The guarantee amount is RMB 29,000.00, and the guarantee period is from
On December 19, 2016, the company’s subsidiary Jiangxi Konco New Material Technology Co., Ltd. (previously known as Jiujiang Golden
December 29, 2016 to December 28, 2026. As of December 31, 2018, the guarantee amount RMB 15,000.00 was used.
Phoenix Decorative Material Co., Ltd.) signed the entrusted loan guarantee contract (No.NNYWBZDB10611201612190004 2016) with
Nanchang Rural Commercial Bank to provide the guarantee for RMB 10,000.00 for Jiangxi Xinxin Jian’an Engineering Co., Ltd., and the
guarantee period is two years from the expiration of the debt settlement period stipulated in the contract.
21 On December 19, 2016, the company’s subsidiary Jiangxi Konco New Material Technology Co., Ltd. (previously known as Jiujiang Golden
Phoenix Decorative Material Co., Ltd.) signed the entrusted loan guarantee contract (No.NNYWBZDB10611201612190003 2016) with
Nanchang Rural Commercial Bank to provide the guarantee for RMB10,000.00 for Jiangxi Zhongyi Decorative Material Co., Ltd., and the
guarantee period is two years from the expiration of the debt settlement period stipulated in the contract.
22 On December 16, 2016, the company’s subsidiary Jiangxi Konco New Material Technology Co., Ltd. (previously known as Jiujiang Golden
Phoenix Decorative Material Co., Ltd.) signed the entrusted loan guarantee contract (No.NNYWBZDB10611201612190002 2016) with
Nanchang Rural Commercial Bank to provide the guarantee for RMB 10,000.00 for Jiangxi Shanshi Science and Technology Co., Ltd., and the
guarantee period is two years from the expiration of the debt settlement period stipulated in the contract.
XIII. Events after Balance Sheet Date
1. Significant Non-adjusted Events
Influence number to the
Reason of inability to
Item Content financial position and
estimate influence number
operating results
Issuance of stocks and Complete the private placement of Increase in bonds payable of
bonds N/A
corporate bonds of RMB2.5 billion on 15
RMB2.5 billion
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Konka Group Co., Ltd. Annual Report 2018
Influence number to the
Reason of inability to
Item Content financial position and
estimate influence number
operating results
January 2019
Transfer 17% shares of Nanjing Kangxing
Significant share Technology Industrial Park Operation and Investment income confirmed
transfer Management Co., Ltd. held by Electronics N/A
of RMB0.197 billion
Technology by listing
After the above-mentioned transfer of
shares, the Company will provide financial
aid not more than RMB1.088 billion at
annual interest rate of 8% with term not
Significant external longer than 3 years for Nanjing Kangxing Increase in the Company’s
investments Technology Industrial Park Operation and N/A
external credits at 34%
Management Co., Ltd. with other
shareholders through the Company’s
wholly-owned subsidiary Konka
Investment by shareholding ratio
2. Profit Distribution
The 7th Meeting of the 9th Board of Directors was held by the Company on 28 March 2019, on which the Profit Distribution Plan in 2018 that
distributed RMB240,794,540.80 of cash dividend was approved. The profit distribution plan should be submitted to the 2018 Annual General
Meeting for review and approval.
3. Influence of Implementation of New Accounting Standards since 1 January 2019
The Ministry of Finance issued the following standards on 31 March 2017: Accounting Standards for Business Enterprises No.22-Recognization
and Measurement of Financial Instruments (revised in 2017) (CK [2017] No.7), Accounting Standards for Business Enterprises No.23-Transfer
of Financial Assets (revised in 2017) (CK [2017] No.8), Accounting Standards for Business Enterprises No.24-Hedge Accounting (revised in
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Konka Group Co., Ltd. Annual Report 2018
2017) (CK [2017] No.9), and issued the Accounting Standards for Business Enterprises No.37-Presentation of Financial Instruments (revised in
2017) (CK [2017] No. 14) on 2 May 2017 (the above standards were referred to as “new financial instrument standards” collectively hereafter)
and required all domestically listed companies to implement since 1 January 2019. Approved by the 7th Meeting of the 9th Board of Directors, the
Company will carry out the aforesaid new financial instrument standards since 1 January 2019 and made changes in relevant accounting policies
pursuant to above new financial instrument standards.
Accounting policy changes mainly involve the following:
Under new Financial Instruments Standards, all recognized financial assets are subsequently measured at amortized cost or fair value.
On the date of implementation of new financial instrument standards, the business model of managing financial assets is evaluated on the basis
of the existing facts and circumstances of the Company on the same date, the characteristics of contractual cash flow on financial assets are
evaluated on the basis of facts and circumstances at the time of initial recognition of the financial assets, and financial assets are classified into
three categories: measured at amortized cost, measured at fair value with changes included in other comprehensive income, measured at fair
value with changes included in profits and losses. For equity instrument investments measured at fair value with changes included in other
comprehensive income, when the recognition of the financial asset is terminated, the accumulated gains or losses previously included in other
comprehensive income will be transferred from other comprehensive income to retained income, and not included in the current profits and
losses.
Under new financial instrument standards, the Company makes provisions for impairment and recognition of credit impairment losses, based on
the expected credit loss, for financial assets measured at amortized cost, investment in debt instruments measured at fair value with changes
included in other comprehensive income, lease receivables, contractual assets and financial guarantee contracts.
XVI. Other Significant Events
1. On January 3, 2019, the Company signed Maximum Amount Guarantee Contract with Shenzhen Branch of Ningbo Bank. According to the
contract, the Company provides the joint liability guarantee for the creditor’s rights arising under the credit contract signed by Shenzhen Branch
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Konka Group Co., Ltd. Annual Report 2018
of Ningbo Bank and the company’s holding subsidiary E-DISPLAY. The guarantee amount is RMB 20 million, and the guarantee period is two
years from the expiration of the debt performance period agreed in the credit contract.
2. On January 14, 2019, the Company respectively signed Maximum Amount Guarantee Contract with Chuzhou Branch of China’s Industrial
Bank and Shenzhen Branch of China Minsheng Bank. According to the contract, the Company respectively provides the joint liability guarantee
for the creditor’s rights arising under the credit contract signed by Chuzhou Branch of China’s Industrial Bank and Shenzhen Branch of China
Minsheng Bank and the company’s wholly-owned subsidiary Anhui Tongchuang. The guarantee amounts are respectively RMB 100 million and
RMB 30 million, and the guarantee period is two years from the expiration of the debt performance period agreed in the credit contract.
3. On January 17, 2019, the Company signed Maximum Amount Guarantee Contract with Nanchang Honggutan Branch of Bank of Beijing.
According to the contract, the Company provides the joint liability guarantee for the creditor’s rights arising under the comprehensive credit line
contract signed by Nanchang Honggutan Branch of Bank of Beijing and the company’s holding subsidiary Jiangxi Konka. The guarantee amount
is RMB 100 million, and the guarantee period is two years from the expiration of the debt performance period agreed in the credit contract.
4. On January 24, 2019, the Company signed Maximum Amount Guarantee Contract with Huangshan Road Branch of Hefei Science &
Technology Commercial Bank. According to the contract, the Company provides the joint liability guarantee for the creditor’s rights arising
under the comprehensive credit line contract signed by Anhui Konka and Huangshan Road Branch of Hefei Science & Technology Commercial
Bank. The guarantee amount is RMB 50 million, and the guarantee period is two years from the expiration of the debt performance period
agreed in the main contract.
5. On February 21, 2019, the Company signed Guarantee Contract with Ma’anshan Branch of China Minsheng Bank. According to the contract,
the Company provides the joint liability guarantee for the creditor’s rights arising under Merger Loan Contract signed by Anhui Electric
Appliances and Ma’anshan Branch of China Minsheng Bank. The guarantee amount is RMB 130 million, and the guarantee period is two years
from the expiration of the debt performance period agreed in the main contract.
6. On March 13, 2019, the Company signed Guarantee Contract with Haitong Unitrust International Leasing Co., Ltd. According to the contract,
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Konka Group Co., Ltd. Annual Report 2018
the Company provides the joint liability guarantee for the debts arising under Financing Lease-back Contract and all attachments signed by
Haitong Unitrust and the company’s holding subsidiary Jiangxi Konka. The guarantee amount is RMB 119 million, and the guarantee period is
two years from the expiration of the debt performance period agreed in the main contract.
7. Loan by mandate:
(1) The Company, together with Shenzhen Overseas Chinese Town Co., Ltd. and China CITIC Bank Co., Ltd. Shenzhen Branch, has concluded
the Sub-agreement for Electronic Loan by Mandate on Cash Management by CITIC Bank, numbered 811038022341. The amount of loan by
mandate under the Agreement is RMB 2,000,000,000.00, with a term from the date of entry into force of the Agreement to April 12, 2023. The
annual interest rate of the loan is 4% to 10%, subject to the confirmation of the borrower and the principal in the electronic loan by mandate on
cash management. Subsequently, the three parties signed a Supplementary Agreement to the Sub-agreement for Electronic Loan by Mandate on
Cash Management by CITIC Bank, numbered 811038022341-1, in which the amount of loan by mandate was changed to RMB
3,000,000,000.00. As of December 31, 2018, Shenzhen Overseas Chinese Town Co., Ltd. actually provided the Company with a loan balance by
mandate of RMB 3,000,000,000.00 through China CITIC Bank Shenzhen Branch.
(2) On September 14, 2017, the Company and OCT Group Co., Ltd. and Shenzhen OCT Branch of China Construction Bank jointly signed
Entrusted Loan Contract (No. JSWD 2017141). The total entrusted loan amount is RMB 5,000,000,000.00, and the loan term is from September
14, 2017 to December 31, 2018. Later, the three parties signed the entrusted loan extension contract on December 14, 2018 and December 19,
2018, and the total amount subject to such extension is RMB 1,276,560,000.00. As of December 31, 2018, the balance of the entrusted loan
provided by OCT Group Co., Ltd. to the Company via OCT Branch of China Construction Bank was RMB 1,276,560,000.00.
8. Credit Granting:
(1) The Company, Shenzhen Futian Branch of Bank of China and Shenzhen Konka Telecommunication Technology Co., Ltd. jointly signed the
credit line agreement (No. ZZYFEXZD1000014 2018), applying for a credit line of RMB 5,500,000,000.00 for issuing the acceptance bills, the
non-financing guarantee and the trade financing. The Company provided RMB 1.3 billion bank acceptance bills for pledge, and agreed to
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Konka Group Co., Ltd. Annual Report 2018
provide the amount of RMB 500,000,000.00 in the comprehensive credit line to the subsidiary Telecommunication Technology for use. The
Company would be jointly and severally liable for the comprehensive credit. The credit line shall be valid from the date of the above credit line
agreement to February 4, 2019. As of December 31, 2018, a total of RMB 2,943,479,305.08 was used from the above credit line, and the
remaining credit line is RMB 2,556,520,694.92.
(2) The Company signed the credit line extension contract with Shenzhen OCT Branch of Industrial and Commercial Bank of China to apply for
the maximum credit line of RMB 1.9 billion and extend the credit line period to September 30, 2019. As of December 31, 2018, a total of RMB
1525.7625 million was used from the above credit line, and the remaining credit line is RMB 374.2375 million.
(3) On January 2, 2018, the Company and Shenzhen Branch of Ping An Bank signed the comprehensive credit line contract
(No.PYSZZZDA596201711270001), applying for the comprehensive credit line of RMB 400,000,000.00 for loaning working capital, opening
the bank acceptance bills, opening the import letters of credit, opening the domestic letters of credit, the import and export documentary credit,
the import and export payment withholding, the financing guarantees, and the discounting of commercial bills and other businesses etc. The
credit line period is valid within 12 months from the day when the credit line contract becomes effective. As of December 31, 2018, the balance
of the credit line is RMB 400,000,000.00.
(4) The Company and Shenzhen Branch of China Minsheng Bank signed the comprehensive credit line contract (No.GSXZDJT18006), applying
for the maximum credit line of RMB 500,000,000.00 for the loan business based on RMB, bill of exchange acceptance, bill of exchange
discount, guarantee; foreign currency loans, guarantees, letters of credit, financing guarantees, and buyer factoring guarantees in relation to the
trade financing business. Konka Group Co., Ltd. agreed that its subsidiary, Anhui Konka Tongchuang could use the credit line under the
comprehensive credit contract and provided the maximum guarantee for the amount used. It’s also agreed that the Company could use RMB
350,000,000.00 from the above-mentioned credit line, of which, the financing guarantee was limited to USD 50 million, and the guaranteed
Hong Kong Konka Co., Ltd. for overseas procurement of raw materials; Anhui Konka Tongchuang could use the above credit line RMB 30
million, and the Company provided the joint liability guarantee. The types of credit line are limited to the draft acceptance, the discount of bill,
the redemption limit of commercial bills and the replacement of bills. As of December 31, 2018, a total of RMB 184.2749 million was used from
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Konka Group Co., Ltd. Annual Report 2018
the above credit line, and the remaining credit line is RMB 325.7251 million.
(5) The Company signed the comprehensive credit line contract with Shenzhen Branch of Bank of Communications, applying for the credit line
of RMB 500,000,000.00 for the RMB working fund loan, the bank acceptance, the opening of e-bank acceptance bill, the letter of guarantee, the
import letters of credit, and the import documentary bills, the financing of import outward remittance, the opening of domestic letters of credit,
and the buyer’s documentary bills of domestic LC. The credit line is valid from April 11, 2017 to April 11, 2019. As of December 31, 2018, a
total of RMB 300,000,000.00 was used from the above credit line, and the remaining credit line is RMB 200,000,000.00.
(6) The Company signed the comprehensive credit line contract (No.SYQHZZD0006 2018) with Shenzhen Branch of China Citic Bank,
applying for the comprehensive credit line of RMB 400,000,000.00. The credit line period is from October 12, 2018 to July 27, 2019. As of
December 31, 2018, a total of RMB 400,000,000.00 was used from the above credit line.
(7) On November 15, 2018, the Company signed the comprehensive credit line contract (No.ZSYZSZD00009 (584600) 2018) with Shenzhen
Branch of China Zheshang Bank, applying for the maximum credit line of RMB 1,000,000,000.00. The credit line period is from November 15,
2018 to August 14, 2019. As of December 31, 2018, a total of RMB 300,000,000.00 was used from the above credit line, and the remaining
credit line is RMB 700,000,000.00.
(8) The Company signed the Comprehensive Credit Line Contract (No. HXSFZLZZD20180921001) and applied to Shenzhen Branch of
Guangdong Huaxing Bank for the comprehensive credit line of RMB 1,000,000,000.00. The guarantee period is from September 21, 2018 to
August 29, 2019. The Company has sub-licensed the comprehensive credit line RMB 200,000,000.00 the subsidiary Konka Factoring
(Shenzhen). As of December 31, 2018, a total of RMB 600 million was used from the above credit line, and the remaining credit line is RMB
400 million.
(9) On May 10, 2018, the Company signed the comprehensive credit line contract (No.BSFZ(2018)9) and the supplementary agreement with
Shenzhen Branch of China Bohai Bank, applying for the total credit line of RMB500,000,000.00. The credit line term is one year, and the credit
line is used for the working capital loan, the trade bill acceptance, the opening of the import LC, the export LC documentary bills, the import
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Konka Group Co., Ltd. Annual Report 2018
documentary bills and the opening of domestic LC. As of December 31, 2018, a total of RMB 366,660,000.00 was used from the above credit
line, and the remaining credit line is RMB 133,340,000.00.
(10) On November 26, 2018, the Company signed the credit line agreement (No.BY(2018)ZFJGBSXZD1126001) with Shenzhen Nanshan
Baosheng Village Bank, applying for the credit line of RMB 20,000,000.00, and the credit line period is from November 26, 2018 to November
26, 2019. The credit line is used for the opening of bank acceptance bills, the working capital loans and the discounting of commercial
acceptance bills etc. As of December 31, 2018, a total of RMB 20,000,000.00 was used from the above credit line.
(11) On November 28, 2018, the Company signed the credit line contract (No. XYSHSXZ(2018)D0152) with Shenzhen Branch of China
Industrial Bank, applying for the maximum credit line of RMB 2,000,000,000.00, and the credit line could be used to (but not limited to) the
working capital loan, the bank acceptance, the non-financing guarantee, and the letters of credit etc. The credit line period is valid from
November 28, 2018 to November 28, 2019. As of December 31, 2018, a total of RMB 200,000,000.00 was used from the above credit line, and
the remaining credit line is RMB 1,800,000,000.00.
(12) The Company applied the credit line of RMB1,200,000,000.00 via Shenzhen OCT Branch of Agricultural Bank of China which could be
used for the loans, the bill acceptance, the notes discounted, the opening of LC, the packing loan, the import bill advance, the export bill
purchase and the opening of letters of guarantee. The credit line shall be valid from February 28, 2018 to February 28, 2019. As of December 31,
2018, a total of RMB 1,057,030,000.00 was used from the above credit line, and the remaining credit line is RMB 142,970,000.00.
(13) The Company applied the credit line no more than RMB180,000,000.00 via Shenzhen Branch of Ningbo Bank which could be used for the
loans, the bill acceptance, the notes discounted, the opening of LC, the packing loan, the import bill advance, the export bill purchase and the
opening of letters of guarantee. The credit line shall be valid from November 29, 2018 to November 29, 2019. As of December 31, 2018, a total
of RMB 180,000,000.00 was used from the above credit line.
(14) The Company applied the credit line no more than RMB 500,000,000.00 via Shenzhen Branch of Shanghai Pudong Development Bank
which could be used for the loans, the bill acceptance, the notes discounted, the opening of LC, and the packing loan etc. The credit line shall be
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Konka Group Co., Ltd. Annual Report 2018
valid from January 21, 2018 to January 21, 2019. As of December 31, 2018, a total of RMB 500,000,000.00 was used from the above credit line.
(15) The Company applied the credit line no more than RMB 100,000,000.00 via Shenzhen Nantou Branch of Hua Xia Bank which could be
used for the loans, the bill acceptance, the notes discounted, and the opening of LC etc. The credit line shall be valid from January 21, 2018 to
January 21, 2019. As of December 31, 2018, a total of RMB 100,000,000.00 was used from the above credit line.
(16) The Company applied the non-commitment combined revolving credit line no more than USD 15,000,000.00 via Shenzhen Nantou Branch
of HSBC which could be used for the financial guarantee business. As of December 31, 2018, a total of USD 15,000,000.00 was used from the
above credit line.
(17) The Company applied for the credit line of RMB 2,200,000,000.00 via Shenzhen OCT Branch of China Construction Bank, of which, RMB
940,000,000.00 was used as the comprehensive credit line, RMB 200,000,000.00 the financing credit line, RMB 500,000,000.00 the bonds,
RMB 40,000,000.00 the working capital loan, RMB 20,000,000.00 the capital transaction credit line and RMB 500,000,000.00 other businesses.
As of December 31, 2018, a total of RMB 982.5214 million was used from the above credit line, and the remaining credit line is RMB
1217.4786 million.
9. Trust:
On August 17, 2017, the Company entered into the “Project Individual Fund Trust Contract for Konka-COS Capital” numbered bitc2017(t)-7335
with the trustee Bohai International Trust Co., Ltd. in Shijiazhuang, instructing the trustee to invest the trust funds in the limited partnership
share of Zhuhai Oriental Longchen Capital Management Centre (Limited Partnership) in accordance with the Contract. The partnership business
invests the funds in the supply chain financial products approved by clients and debt financing of upstream and downstream enterprises of the
Company, and executes the creditor's rights investment or equity investment projects perceived by business partners. Trust funds are delivered in
stages with a period of no more than 9 months and a net return on investment of 9% per year. Partnership profits are distributed on December 20
of the Gregorian calendar in the duration and the expiration date of the trust. As of December 31, 2018, the investment amount reached RMB30
million.
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Konka Group Co., Ltd. Annual Report 2018
10. CCB financing trust:
The Company entered into two cooperation agreement on online platform cloud-loan product with CCB Shenzhen Branch, specifically, a quota
contract numbered L2018 P1161 Overseas Chinese Town and an agreement numbered C2018 P1161 Overseas Chinese Town. It is a loan
transaction developed within the approved maximum cooperation quota for legal or individual business or natural person customers
recommended by the Company by agreement, with joint liability guaranty or compensation commitment of the Company.
The cooperation quota approved by CCB Shenzhen Branch is RMB 200,000,000.00, with validity from August 9, 2018 to June 5, 2019. Within
the approved cooperation quota, the Company enjoys a self-use quota of RMB 90,000,000.00, within which, RMB 80,000,000.00 was allocated
to Shenzhen Konka Electronic Co., Ltd., a subsidiary of the Company, and RMB 30,000,000.00 was allocated to Shenzhen Konka E-display Co.,
Ltd., another subsidiary of the Company. As of December 31, 2018, an amount of RMB 44,841,523.41 of the financing trust was used by the
Company, of which, RMB 35,297,625.17 was used by Shenzhen Konka Electronic Co., Ltd. and RMB 18,494,293.54 was used by Shenzhen
Konka E-display Co., Ltd.
11. Accounts receivable in Guangdong Huaxing Bank:
The Company entered into the Domestic Factoring Business Contract with Guangdong Huaxing Bank Shenzhen Branch (Contract No.
HXSZF20181130001). According to the Contact, Guangdong Huaxing Bank Shenzhen Branch provides the Company with a factoring quota not
exceeding RMB500 million, with a validity from November 30, 2018 to November 29, 2019. As of December 31, 2018, the factoring of
accounts receivable of the Company in the bank amounted to RMB 486,000,000.00.
XVII. Notes of Main Items in the Financial Statements of the Company
1. Notes Receivable and Accounts Receivable
Item Ending balance Beginning balance
Notes receivable 2,181,466,683.90 2,864,064,309.99
Accounts receivable 7,427,246,429.42 4,732,153,992.25
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Konka Group Co., Ltd. Annual Report 2018
Item Ending balance Beginning balance
Total 9,608,713,113.32 7,596,218,302.24
(1) Notes Receivable
① Notes Receivable Listed by Category
Item Ending balance Beginning balance
Bank acceptance bill 2,176,711,080.13 2,862,824,536.60
Trade acceptance 4,755,603.77 1,239,773.39
Total 2,181,466,683.90 2,864,064,309.99
② Notes Receivable Pledged by the Company at the Period-end
Item Amount
Bank acceptance bill 1,308,095,737.06
Trade acceptance 1,359,122.95
Total 1,309,454,860.01
③ Notes Receivable Endorsed by the Company or Discounted and not due on the Balance Sheet Date at the Period-end
Derecognized Amount at the Non-derecognized amount at the
Item
period-end period-end
Bank acceptance bill 330,783,688.83 -
Trade acceptance - -
Total 330,783,688.83 -
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Konka Group Co., Ltd. Annual Report 2018
④ Notes Transferred to Accounts Receivable because Drawer of the Notes Failed to Execute the Contract or Agreement
Item Amount of the notes transferred to accounts receivable at the period-end
Bank acceptance bill 3,135,022.00
Trade acceptance 952,561,680.41
Total 955,696,702.41
(2) Accounts Receivable
① Accounts Receivable Classified by Category
Ending balance
Carrying amount Bad debt provision
Category
Withdrawal
Carrying value
Amount Proportion (%) Amount proportion
(%)
Accounts receivable with significant
single amount for which bad debt 740,027,889.84 9.64 51,502,510.09 6.96 688,525,379.75
provision separately accrued
Accounts receivable withdrawal of bad
debt provision of by credit risks
characteristics:
Group 1: aging group 1,029,783,688.54 13.42 177,758,725.88 17.26 852,024,962.66
Group 2: related party group 5,876,525,075.32 76.58 --- --- 5,876,525,075.32
Subtotal of groups 6,906,308,763.86 90.00 177,758,725.88 2.57 6,728,550,037.98
Accounts receivable with insignificant 27,458,788.03 0.36 17,287,776.34 62.96 10,171,011.69
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Konka Group Co., Ltd. Annual Report 2018
Ending balance
Carrying amount Bad debt provision
Category
Withdrawal
Carrying value
Amount Proportion (%) Amount proportion
(%)
single amount for which bad debt
provision separately accrued
Total 7,673,795,441.73 100.00 246,549,012.31 3.21 7,427,246,429.42
(Continued)
Beginning balance
Carrying amount Bad debt provision
Category Withdrawal
Carrying value
Amount Proportion (%) Amount proportion
(%)
Accounts receivable with significant
single amount for which bad debt --- --- --- --- ---
provision separately accrued
Accounts receivable withdrawal of bad
debt provision of by credit risks --- --- --- --- ---
characteristics:
Group 1: aging group 2,082,823,910.69 42.10 197,902,700.06 9.50 1,884,921,210.63
Group 2: related party group 2,827,688,037.26 57.16 --- --- 2,827,688,037.26
Subtotal of groups 4,910,511,947.95 99.26 197,902,700.06 4.03 4,712,609,247.89
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Konka Group Co., Ltd. Annual Report 2018
Beginning balance
Carrying amount Bad debt provision
Category
Withdrawal
Carrying value
Amount Proportion (%) Amount proportion
(%)
Accounts receivable with insignificant
single amount for which bad debt 36,839,946.40 0.74 17,295,202.04 46.95 19,544,744.36
provision separately accrued
Total 4,947,351,894.35 100.00 215,197,902.10 4.35 4,732,153,992.25
A. Accounts receivable with significant single amount for which bad debt provision separately accrued at the period-end
Ending balance
Withdrawa
Accounts receivable (by unit) l
Accounts receivable Bad debt provision Withdrawal reason
proportion
(%)
Expected to be difficult
CEFC(Shanghai)Group Co.,Ltd. 300,027,889.84 27,002,510.09 9.00
to recover in full
Jiangsu Hongtu Sanbao High-Tech Expected to be difficult
200,000,000.00 10,000,000.00 5.00
Technology Co.,Ltd. to recover in full
Jizhong Energy International Logistics Expected to be difficult
100,000,000.00 5,000,000.00 5.00
Group Co., Ltd. to recover in full
China Nuclear Engineering Construction Expected to be difficult
90,000,000.00 4,500,000.00 5.00
Group Co., Ltd. to recover in full
Expected to be difficult
China Energy Power Fuel Co., Ltd. 50,000,000.00 5,000,000.00 10.00
to recover in full
370
Konka Group Co., Ltd. Annual Report 2018
Total 740,027,889.84 51,502,510.09 — ---
B. Top 5 Accounts receivable with insignificant single amount for which bad debt provision separately accrued
Ending balance
Withdrawa
Accounts receivable (by unit) l
Accounts receivable Bad debt provision Withdrawal reason
proportion
(%)
Henan Radio and Television Network Expected to be difficult
4,580,000.00 1,374,000.00 30.00
Co., Ltd. to recover in full
Administration of Radio, Film and
Expected to be difficult
Television in Xinjiang Uygur 1,708,054.00 546,577.28 32.00
to recover in full
Autonomous Region
Expected to be difficult
Beijing CP Lotus Store 1,656,628.91 1,656,628.91 100.00
to recover in full
Qinhuangdao Baihai Electric Appliance Expected to be difficult
1,430,290.00 430,290.00 30.08
Co., Ltd. to recover in full
Yunnan Radio and Television Network Expected to be difficult
1,317,242.76 461,034.97 35.00
Group Co., Ltd. to recover in full
Total 10,692,215.67 4,468,531.16 --- ---
C. Among these groups, accounts receivable adopting aging analysis method to withdraw bad debt provision
Ending balance
Aging Withdrawal proportion
Accounts receivable Bad debt provision
(%)
371
Konka Group Co., Ltd. Annual Report 2018
Ending balance
Aging Withdrawal proportion
Accounts receivable Bad debt provision
(%)
Within 1 year 832,664,457.75 16,653,289.15 2.00
1 to 2 years 37,336,460.30 1,866,823.02 5.00
2 to 3 years 416,541.03 83,308.21 20.00
3 to 4 years 263,411.99 131,706.00 50.00
4 to 5 years 158,435.94 79,217.97 50.00
Over 5 years 158,944,381.53 158,944,381.53 100.00
Total 1,029,783,688.54 177,758,725.88
D. Among these groups, accounts receivable adopting balance percentage method to withdraw bad debt provision
Ending balance
Group name Withdrawal proportion
Accounts receivable Bad debt provision
(%)
Related party group in the Company’s
5,876,525,075.32 --- ---
combination scope
Total 5,876,525,075.32 --- ---
② Bad Debt Provision Withdrawal, Reversed or Recovered in the Reporting Period
The withdrawal amount of the bad debt provision during the Reporting Period was of 31,674,284.72.
③Top5 of the Ending Balance of the Accounts Receivable Collected according to Arrears Party
Total amount of Top 5 of ending balance of the accounts receivable collected according to arrears party was RMB6,372,877,322.39 accounting
for 83.05% of total ending balance of accounts receivable. Total ending balance of bad debt provision withdrawn was RMB37,002,510.09.
372
Konka Group Co., Ltd. Annual Report 2018
2. Other Receivables
Item Ending balance Beginning balance
Interest receivable 5,769,663.24 23,894,771.88
Dividends receivable - 2,690,276.72
Other receivables 6,661,693,463.33 4,314,882,334.26
Total 6,667,463,126.57 4,341,467,382.86
(1) Interest Receivable
Item Ending balance Beginning balance
Fix time deposit 3,435,261.69 -
Entrusted loans 2,328,939.05 22,409,519.80
Wealth management income 5,462.50 1,485,252.08
Total 5,769,663.24 23,894,771.88
(2) Dividends Receivable
Item (or investees) Ending balance Beginning balance
Kaikai Shijie - 2,690,276.72
Total - 2,690,276.72
(3) Other Receivables
① Other Receivables Disclosed by Category
373
Konka Group Co., Ltd. Annual Report 2018
Ending balance
Carrying amount Bad debt provision
Category
Withdrawal
Carrying value
Amount Proportion (%) Amount proportion
(%)
Other receivables with significant single amount for which
173,061,959.33 2.53 162,446,649.23 93.87 10,615,310.10
bad debt provision separately accrued
Other receivables withdrawn bad debt provision according
to credit risks characteristics
Group 1: aging group 153,289,974.82 2.24 25,171,956.87 16.42 128,118,017.95
Group 2: related party group 6,522,463,391.24 95.22 - - 6,522,463,391.24
Subtotal of groups 6,675,753,366.06 97.46 25,171,956.87 0.38 6,650,581,409.19
Other receivables with insignificant single amount for which
703,518.00 0.01 206,773.96 29.39 496,744.04
bad debt provision separately accrued
Total 6,849,518,843.39 100.00 187,825,380.06 2.74 6,661,693,463.33
(Continued)
Beginning balance
Carrying amount Bad debt provision
Category Withdrawal
Carrying value
Amount Proportion (%) Amount proportion
(%)
Other receivables with significant single amount for which
bad debt provision separately accrued 173,061,959.33 3.84 162,467,164.97 93.88 10,594,794.36
374
Konka Group Co., Ltd. Annual Report 2018
Beginning balance
Carrying amount Bad debt provision
Category
Withdrawal
Carrying value
Amount Proportion (%) Amount proportion
(%)
Other receivables withdrawn bad debt provision according
to credit risks characteristics
Group 1: aging group 121,170,320.79 2.69 24,301,146.90 20.06 96,869,173.89
Group 2: related party group 4,205,636,078.64 93.41 - - 4,205,636,078.64
Subtotal of groups 4,326,806,399.43 96.10 24,301,146.90 0.56 4,302,505,252.53
Other receivables with insignificant single amount for which
bad debt provision separately accrued 2,516,181.05 0.06 733,893.68 29.17 1,782,287.37
Total 4,502,384,539.81 100.00 187,502,205.55 4.16 4,314,882,334.26
Other receivables with significant single amount for which bad debt provision separately accrued at the end of the period
Ending balance
Other receivables (unit) Withdrawal
Other receivables Bad debt provision Withdrawal reason
proportion (%)
Energy saving subsidy 141,549,150.00 141,549,150.00 100.00 Irrecoverable
Shenzhen Konka Video & Difficult to recover in
Communication Systems 18,115,952.51 7,500,642.41 41.40 full amount after
Engineering Co., Ltd. evaluated
Chongqing Konka Auto Difficult to recover due
13,396,856.82 13,396,856.82 100.00
Electronic Company to bankruptcy
375
Konka Group Co., Ltd. Annual Report 2018
Ending balance
Other receivables (unit) Withdrawal
Other receivables Bad debt provision Withdrawal reason
proportion (%)
liquidation
Total 173,061,959.33 162,446,649.23 — —
Among these groups, other receivables adopting aging analysis method to withdraw bad debt provision:
Ending balance
Aging
Other receivables Bad debt provision Withdrawal proportion
Within 1 year 86,586,186.05 1,731,723.72 2.00
1 to 2 years 32,418,836.83 1,620,941.84 5.00
2 to 3 years 9,081,802.21 1,816,360.44 20.00
3 to 4 years 6,783,232.88 3,391,616.44 50.00
4 to 5 years 3,617,204.83 1,808,602.41 50.00
Over 5 years 14,802,712.02 14,802,712.02 100.00
Total 153,289,974.82 25,171,956.87
②Bad Debt Provision Withdrawal, Reversed or Recovered in the Reporting Period
The withdrawal amount of the bad debt provision during the Reporting Period was of RMB323,174.51; the amount of the reversed or collected
part during the Reporting Period was of RMB0.00; there was no other receivables actually verified in the Reporting Period.
③Top 5 of the Ending Balance of Other Receivables Collected according to the Arrears Party
Ending
Proportion to ending
balance of
Name of the entity Nature Ending balance Aging balance of total other
bad debt
receivables%
provision
376
Konka Group Co., Ltd. Annual Report 2018
Ending
Proportion to ending
balance of
Name of the entity Nature Ending balance Aging balance of total other
bad debt
receivables%
provision
Related-party Within 1
Electronics Technology 1,072,615,555.55 -
borrowings year 15.66
Related-party Within 1
Konka Investment 962,025,708.34 -
borrowings year 14.05
Related-party Within 1
Anhui Tongchuang 597,681,244.45 -
borrowings year 8.73
Within 1
Related-party
Kangzhi Trade 539,227,362.73 year, 1 to 2 -
borrowings
years 7.87
Related-party Within 1
Konka Huanjia 510,130,555.56 -
borrowings year 7.45
Total — 3,681,680,426.63 — 53.75 -
3. Long-term Equity Investment
(1) Category of Long-term Equity Investment
Ending balance Beginning balance
Item
Carrying amount Depreciation reserve Carrying value Carrying amount Depreciation reserve Carrying value
Investment to
4,562,175,372.51 46,732,484.69 4,515,442,887.82 1,592,732,345.01 46,732,484.69 1,545,999,860.32
subsidiaries
Investment to
1,672,678,055.95 5,158,909.06 1,667,519,146.89 1,108,233,473.19 5,158,909.06 1,103,074,564.13
associated enterprises
Total 6,234,853,428.46 51,891,393.75 6,182,962,034.71 2,700,965,818.20 51,891,393.75 2,649,074,424.45
377
Konka Group Co., Ltd. Annual Report 2018
(2) Investment to Subsidiaries
Depreciation reserve Ending balance of
Investee Beginning balance Increase Decrease Ending balance
withdrawn depreciation reserve
Mudangjiang electric appliances 36,000,000.00 - - 36,000,000.00 - 36,000,000.00
Anhui Konka 122,780,937.98 - - 122,780,937.98 - -
Dongguan Konka 274,783,988.91 - - 274,783,988.91 - -
Hong Kong Konka 781,828.61 - - 781,828.61 - -
Konka Europe 261,482.50 3,375,987.50 - 3,637,470.00 - -
Plasthetics 4,655,000.00 - 4,655,000.00 - - -
Konka Household Appliances 10,732,485.69 - - 10,732,485.69 - 10,732,484.69
Telecommunication Technology 90,000,000.00 210,000,000.00 - 300,000,000.00 - -
Domestic appliance 31,500,000.00 - - 31,500,000.00 - -
Fittings Technology 48,750,000.00 - - 48,750,000.00 - -
Kunshan Kangsheng 350,000,000.00 - 350,000,000.00 - - -
Konka Factoring 200,000,000.00 100,000,000.00 - 300,000,000.00 - -
Wankaida 10,000,000.00 - - 10,000,000.00 - -
Anhui Tongchuang 249,702,612.22 232,000,000.00 - 481,702,612.22 - -
Shushida Logistics 10,000,000.00 - 10,000,000.00 - - -
Beijing Konka 30,000,000.00 170,000,000.00 - 200,000,000.00 - -
Konka E-display 7,200,000.00 - - 7,200,000.00 - -
Kaikai Shijie 16,000,000.00 - 16,000,000.00 - - -
378
Konka Group Co., Ltd. Annual Report 2018
Depreciation reserve Ending balance of
Investee Beginning balance Increase Decrease Ending balance
withdrawn depreciation reserve
Commercial Technology 5,832,000.00 - - 5,832,000.00 - -
Mobile Internet 10,200,000.00 - - 10,200,000.00 - -
E2info - 20,000,000.00 677,960.00 19,322,040.00 - -
E3info 12,000,000.00 - - 12,000,000.00 - -
Dongguan Packing 8,602,009.10 - - 8,602,009.10 - -
Chuzhou Konka TID 40,000,000.00 - - 40,000,000.00 - -
Konka Ventures 2,550,000.00 - - 2,550,000.00 - -
Konka Pengrun 5,100,000.00 20,400,000.00 - 25,500,000.00 - -
Konka Unifortune 15,300,000.00 - - 15,300,000.00 - -
Konka Investment - 40,000,000.00 - 40,000,000.00 - -
Jiangxi Konka - 689,680,000.00 - 689,680,000.00 - -
Electronics Technology - 1,000,000,000.00 - 1,000,000,000.00 - -
Sichuan Kangjiatong - 1,020,000.00 - 1,020,000.00 - -
Econ Technology - 688,500,000.00 - 688,500,000.00 - -
Konka Huanjia - 91,800,000.00 - 91,800,000.00 - -
Shenzhen Nianhua - 30,000,000.00 - 30,000,000.00 - -
Shanghai Konka - 40,000,000.00 - 40,000,000.00 - -
Shenzhen kangxinwei - 14,000,000.00 - 14,000,000.00 - -
379
Konka Group Co., Ltd. Annual Report 2018
Depreciation reserve Ending balance of
Investee Beginning balance Increase Decrease Ending balance
withdrawn depreciation reserve
Total 1,592,732,345.01 3,350,775,987.50 381,332,960.00 4,562,175,372.51 - 46,732,484.69
(2) Investment to Joint Ventures and Associated Enterprises
Increase/decrease
Beginning
Investee Additional Reduced
balance Gains and losses recognized under the equity method Adjustment of other comprehensive income Changes of other equity
investment investment
Shenzhen
Konka
Information 18,960,898.67 5,158,909.06 - - 194,455.24 -
Network Co.,
Ltd.
Shenzhen
Yaode
210,279,132.55 - - - 11,931,702.63 -
Technology
Co., Ltd.
Chutian
Dragon Co., 617,214,571.50 - - - 13,423,191.54 -
Ltd.
Konka Green,
79,729,560.91 - - - -2,107,745.08 788,087.31
Konka
380
Konka Group Co., Ltd. Annual Report 2018
Increase/decrease
Beginning
Investee Additional Reduced
balance Gains and losses recognized under the equity method Adjustment of other comprehensive income Changes of other equity
investment investment
Technology
Zhuhai Jinsu
Plastic Co., 9,444,160.97 - - - 1,596,085.85 -
Ltd.
Shenzhen
Konka
Intelligent
4,927,589.47 - - - -2,640,110.95 -
Electrical
Apparatus
Co., Ltd.
Shenzhen
Zhongbing
Konka 14,317,400.80 - - - -3,699,527.01 -
Technology
Co., Ltd.
Guangdong
Hotcomm
Information 1,523,166.24 - - - -1,523,166.24 -
Technology
Co., Ltd.
381
Konka Group Co., Ltd. Annual Report 2018
Increase/decrease
Beginning
Investee Additional Reduced
balance Gains and losses recognized under the equity method Adjustment of other comprehensive income Changes of other equity
investment investment
Zhonggao
Konka
Intelligent
- - - - - -
Technology
(Beijing) Co.,
Ltd.
Shenzhen
OCT LIFE
Network -22,084.12 - 3,771,400.00 - -156,801.82 -
Technology
Co., Ltd.
Kunshan
151,859,076.20 - - - -5,012,466.06 -
Konka
Kunshan
- - - - - -
Kangsheng
Kaikai Shijie - - - 2,813,377.36 11,738,814.32 -
Shenzhen
- - 75,000,000.00 - 4,859,338.44 -
Bosser New
382
Konka Group Co., Ltd. Annual Report 2018
Increase/decrease
Beginning
Investee Additional Reduced
balance Gains and losses recognized under the equity method Adjustment of other comprehensive income Changes of other equity
investment investment
Materials Co.,
Ltd.
Helongjiang
Longkang
Zhijia - - 7,000,000.00 - -599,519.48 -
Technology
Co., Ltd.
Shaanxi Silk
Road Cloud
- - 5,400,000.00 - -877,490.67 -
Smart Tech
Co., Ltd.
Wuhan
Tianyuan
Environmental - - - - 12,822,900.47 -
Protection
Co., Ltd.
Total 1,108,233,473.19 5,158,909.06 91,171,400.00 2,813,377.36 39,949,661.18 788,087.31
(Continued)
383
Konka Group Co., Ltd. Annual Report 2018
Increase/decrease
Ending balance of
Investee Cash bonus or profits Ending balance
Withdrawal of impairment provision Other depreciation reserve
announced to issue
Shenzhen Konka Information Network Co., Ltd. - - - 19,155,353.91 5,158,909.06
Shenzhen Yaode Technology Co., Ltd. - - - 222,210,835.18 -
Chutian Dragon Co., Ltd. - - - 624,845,604.93 -
Konka Green, Konka Technology - - - 78,409,903.14 -
Zhuhai Jinsu Plastic Co., Ltd. - - - 11,040,246.82 -
Shenzhen Konka Intelligent Electrical Apparatus Co.,
- - - 2,287,478.52 -
Ltd.
Shenzhen Zhongbing Konka Technology Co., Ltd. - - - 10,617,873.79 -
Guangdong Hotcomm Information Technology Co.,
- - - - -
Ltd.
Zhonggao Konka Intelligent Technology (Beijing) Co.,
- - - - -
Ltd.
Shenzhen OCT LIFE Network Technology Co., Ltd. - - - 3,592,514.06 -
Kunshan Konka - - - 146,846,610.14 -
Kunshan Kangsheng - - 175,254,554.65 175,254,554.65 -
Kaikai Shijie - - 26,439,060.09 35,364,497.05 -
Shenzhen Bosser New Materials Co., Ltd. - - - 79,859,338.44 -
384
Konka Group Co., Ltd. Annual Report 2018
Increase/decrease
Ending balance of
Investee Cash bonus or profits Ending balance
Withdrawal of impairment provision Other depreciation reserve
announced to issue
Helongjiang Longkang Zhijia Technology Co., Ltd. - - - 6,400,480.52 -
Shaanxi Silk Road Cloud Smart Tech Co., Ltd. - - - 4,522,509.33 -
Wuhan Tianyuan Environmental Protection Co., Ltd. - - 239,447,355.00 252,270,255.47 -
Total - - 441,140,969.74 1,672,678,055.95 5,158,909.06
385
Konka Group Co., Ltd. Annual Report 2018
4. Operating Revenue and Cost of Sales
(1) Operating Revenue and Cost of Sales
Reporting Period Same period of last year
Item
Operating revenue Cost of sales Operating revenue Cost of sales
Main operations 10,132,713,516.14 9,524,363,828.80 10,023,055,904.38 8,361,637,131.46
Other operations 3,244,968,370.31 3,047,765,335.52 2,079,422,147.13 1,892,456,474.58
Total 13,377,681,886.45 12,572,129,164.32 12,102,478,051.51 10,254,093,606.04
(2) Main Operations (Classified by Industry)
Reporting Period Same period of last year
Industry
Operating revenue Cost of sales Operating revenue Cost of sales
Electronic industry 10,132,713,516.14 9,524,363,828.80 10,023,055,904.38 8,361,637,131.46
Total 10,132,713,516.14 9,524,363,828.80 10,023,055,904.38 8,361,637,131.46
(3) Main Operations (Classified by Product)
Reporting Period Same period of last year
Product
Operating revenue Cost of sales Operating revenue Cost of sales
Color TV business 9,972,096,889.35 9,375,225,354.05 9,630,486,646.20 8,000,876,316.98
Consumer appliances business 159,656,497.00 148,343,199.68 257,783,425.06 227,475,631.58
Other 960,129.79 795,275.07 134,785,833.12 133,285,182.90
Total 10,132,713,516.14 9,524,363,828.80 10,023,055,904.38 8,361,637,131.46
(4) Main Operations (Classified by Area)
Reporting Period Same period of last year
Area
Operating revenue Cost of sales Operating revenue Cost of sales
Domestic sales 8,273,508,840.42 7,739,284,541.71 8,939,568,192.59 7,308,147,553.78
Overseas sales 1,859,204,675.72 1,785,079,287.09 1,083,487,711.79 1,053,489,577.68
Total 10,132,713,516.14 9,524,363,828.80 10,023,055,904.38 8,361,637,131.46
(5) Operating Revenue from the Top 5 Customers
Proportion to the operating revenue of the
Period Total operating revenue from the top 5 customers
Reporting Period
2018 2,144,554,134.92 16.03
2017 3,106,309,264.79 25.67
386
Konka Group Co., Ltd. Annual Report 2018
5. Investment Income
Same period of last
Item Reporting Period
year
Long-term equity investment income accounted by cost method 711,492,879.96 35,923,429.08
Long-term equity investment income accounted by equity method 33,783,935.14 5,042,389.64
Investment income from disposal of long-term equity investment 342,201,410.67 6,325,965,280.00
Investment income from disposal of financial assets at fair value through
-45,748,200.91 -15,756,828.90
profit or loss
Investment income from holding of held-to-maturity investments - -
Investment income from disposal of held-to-maturity investments - -
Investment income from holding of available-for-sale financial assets 17,920,000.00 4,310,000.00
Investment income from disposal of available-for-sale financial assets - -
Income from entrust financial products and entrust loans 187,429,014.78 70,030,692.89
Financial assets transferred from equity investments accounted by equity
- -5,802,480.51
method
Total 1,247,079,039.64 6,419,712,482.20
Notes: the number “+” among the non-recurring profit or loss items refers to revenue and income, while “-”referred to losses
or expense.
The recognition of the non-recurring profit or loss items was executed according to the
regulations of No.1 of the Information Disclosure Explanatory Notice of the Companies
Public Offering Securities-Non- recurring Profit or Loss (ZJH Announcement [2008] No.
43) .
Item Amount Reason
Government grants recognized in the current period, and
acquired in the ordinary course of business or granted at certain
Software tax rebates 64,656,609.96
quotas or amounts according to the government’s unified
standards
2. Return on Equity and Earnings Per Share
Weighted average ROE EPS (Yuan/share)
Profit as of Reporting Period
(%) EPS-basic EPS-diluted
Net profit attributable to ordinary shareholders of the 5.14 0.1717 0.1717
387
Konka Group Co., Ltd. Annual Report 2018
Weighted average ROE EPS (Yuan/share)
Profit as of Reporting Period
(%) EPS-basic EPS-diluted
Company
Net profit attributable to ordinary shareholders of the
-9.74 -0.3255 -0.3255
Company after deduction of non-recurring profit or loss
XVI. Supplementary Materials
1. Items and Amounts of Non-recurring Profit or Loss
Item Amount Note
Gain/Loss arising from disposal of non-current assets 732,818,574.90
Tax rebates, reductions or exemptions due to approval beyond authority or the lack of
-
official approval documents
Government subsidies recognized in the current period, except for those acquired in the
ordinary course of business or granted at certain quotas or amounts according to the 259,609,022.27
government’s unified standards
Capital occupation charges on non-financial enterprises that are recorded into current
-
profit or loss
Gains due to that the investment costs for the Company to obtain subsidiaries, associates
and joint ventures are lower than the enjoyable fair value of the identifiable net assets of 220,045,229.63
the investees when making the investments
Gain/Loss on non-monetary asset swap -
Gain/Loss on entrusting others with investments or asset management 182,022,653.32
Asset impairment provisions due to acts of God such as natural disasters -
Gain/Loss from debt restructuring -
Expenses on business reorganization, such as expenses on staff arrangements,
-
integration, etc.
Gain/Loss on the part over the fair value due to transactions with distinctly unfair prices -
Current net profit or loss of subsidiaries acquired in business combination under the same
-
control from period-beginning to combination date
Gain/Loss incurred from contingency unrelated to the Company’s normal operating
-
businesses.
388
Konka Group Co., Ltd. Annual Report 2018
Item Amount Note
Gain/Loss on changes in fair value arising from holding of trading financial assets and
liabilities and investment income from disposal of trading financial assets, financial
39,542,461.74
liabilities and available-for-sale financial assets other than effective hedge business
related to the Company’s normal operating businesses
Reverse of bad debt provision of accounts receivable individually conducting
-
impairment test
Gain/loss on entrustment loans 1,389,042.48
Gain/loss on change in fair value of investment property of which the subsequent
-
measurement is carried out adopting fair value method
Effect on current profit or loss when a one-off adjustment is made to current profit or
loss according to requirements of taxation, accounting and other relevant laws and -
regulations
Custody fee income when entrusted with operation -
Other non-operating income and expense other than the above 62,249,326.12
Project confirmed with the definition of non-recurring gains and losses and losses 17,974,523.98
Subtotal 1,515,650,834.44
Income tax effects 251,343,320.95
Non-controlling interests effects (after tax) 67,121,398.75
Total 1,197,186,114.73
389
Konka Group Co., Ltd. Annual Report 2018
Part XII Documents Available for Reference
I. The financial statements with the signatures and seals of the Company’s legal
representative, Chief Financial Officer and head of the financial department;
II. The original copy of the Independent Auditor’s Report with the seal of the CPA firm and
the signatures & seals of the certified public accountants;
III. The originals of all the Company’s documents and announcements disclosed to the public
via newspapers designated by the CSRC in the Reporting Period; and
IV. Other relevant materials.
The Board of Directors
Konka Group Co., Ltd.
28 March 2019
390
